ADF Group Inc. — Annual Report 2021

Apr 30, 2021

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AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Year Ended on January 31, 2021

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Toronto Stock Exchange : TSX : DRX
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Table of Contents

Management’s Report.............................................................. 1

Independent Auditor’s Report ................................................. 2

Audited Consolidated Financial Statements ............................. 8

Notes to the Audited Consolidated Financial Statements ...... 12

FORWARD-LOOKING STATEMENTS

Management of ADF Group Inc. wishes to inform the reader that this document contains forward-looking statements within the meaning of applicable securities laws, in which Management’s expectations regarding ADF Group Inc.’s future performance may be discussed

These forward-looking statements include information concerning ADF Group’s probable or foreseeable future operating results and financial position, and involve certain risks and uncertainties with regard to their future realization. These forward-looking statements are based on currently available data in regard to competition, financial position, economic conditions and operating plans.

The principal risks and uncertainties that could affect ADF Group Inc.’s results, such that those results could differ materially from those expressed in any forward-looking statements, are presented in Sections "Current Economic Environment" and "External Factors to Which the Corporation’s Performance is Exposed" of the Management’s Discussion and Analysis of the Financial Position and Operating Results for the fiscal year ended January 31, 2021.

Audited Consolidated Financial Statements Fiscal year ended on: January 31, 2021 Management’s Report Page: 1 of 36

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To Our Shareholders

The consolidated financial statements and Management’s Discussion and Analysis (“MD&A”) and all other information in the Annual Report, are the responsibility of the Corporation’s Management and have been approved by its Board of Directors.

The consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"). The MD&A has been prepared in accordance with the requirements of Canadian securities regulators. The consolidated financial statements and MD&A include items that are based on Management’s best estimates and judgments. Financial information provided elsewhere in the Annual Report is consistent with that shown in the consolidated financial statements.

Management maintains accounting and internal control systems that are designed to provide reasonable assurance that financial information is reliable and assets are safeguarded.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for the financial reporting and ultimately responsible for reviewing and approving the consolidated financial statements and MD&A, The Board of Directors carries out this responsibility principally through its Audit Committee, consisting of independent directors. The Audit Committee reviews the Corporation’s a consolidated financial statements and MD&A and formulates the appropriate recommendations to the Board of Directors. The independent auditor appointed by the shareholders has full access to the Audit Committee, with or without Management being present.

The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, independent auditor, in accordance with Canadian generally accepted auditing standards on behalf of the shareholders. The independent auditor’s report, hereafter, outlines the scope of its audits and set forth its opinion on the consolidated financial statements.

Mr. Jean Paschini

Mr. Jean-François Boursier, CPA, CA

/ Signed /

/ Signed /

Co-Chairman of the Board of Directors and Chief Executive Officer

Chief Financial Officer

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Independent auditor’s report

To the Shareholders of ADF Group Inc.

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of ADF Group Inc. and its subsidiaries (together, the Corporation) as at January 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

What we have audited

The Corporation’s consolidated financial statements comprise:

• the consolidated statements of financial position as at January 31, 2021 and 2020;

• the consolidated statements of income (loss) for the years then ended;

• the consolidated statements of comprehensive income (loss) for the years then ended;

• the consolidated statements of changes in shareholders’ equity for the years then ended;

• the consolidated statements of cash flows for the years then ended; and

• the notes to consolidated financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.

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

Independence

We are independent of the Corporation in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l. 1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Quebec, Canada H3B 4Y1 T: +1 514 205 5000, F: +1 514 876 1502

“PwC” refers to PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., an Ontario limited liability partnership.

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Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended January 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

Revenue recognition – total anticipated costs on cost-plus contracts with ceilings and on fixed-price contracts

Refer to note 2 – Summary of significant accounting policies, and note 3 – Estimation uncertainty and critical accounting judgements.

For the year ended January 31, 2021, revenue from cost-plus contracts with ceilings and on fixed-price contracts make up a significant portion of the Corporation’s total revenues of $172.6 million.

Revenue from contracts with customers is recognized, for each performance obligation, either over a period of time or at a specific point in time, depending on which method reflects the transfer of control of the goods or services underlying the performance obligation to the customer. For performance obligations satisfied over time, such as for cost-plus and fixed-price contracts, the Corporation recognizes revenue over time using an input method, based on costs incurred to date relative to total anticipated costs at completion, to measure progress toward satisfying such performance obligations. Under this method, costs that do not contribute to the performance of the Corporation in transferring control of goods or services to the customer are excluded from the measurement of progress toward satisfying the performance obligation. In any event, when the total anticipated costs exceed the total anticipated revenues on a contract, such loss is recognized in its entirety in the period it becomes known.

How our audit addressed the key audit matter Our approach to addressing the matter included the following procedures, among others:

• Tested how management determined the total anticipated costs for a sample of contracts, which included the evaluation of the reasonableness of the costs to complete the contract, as follows:

• Obtained and read contract agreements, and change orders when applicable, to understand contract scope and key terms;

• Evaluated the timely identification by management of circumstances that may warrant a modification to the total anticipated costs including, but not limited to, contracts subject to claims and contract modifications;

• Interviewed operational personnel of the Corporation to evaluate progress to date, the total anticipated costs to be incurred, and factors impacting the amount of time and cost to complete the contract and considered consistency with supporting documents;

• Compared the original margin expected on the contract to the actual margin to date; and

• Compared the costs incurred and the anticipated costs to complete to the original total anticipated costs.

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Key audit matter

The determination of total anticipated costs for completing a contract is based on estimates that can be affected by a variety of factors such as potential variances in scheduling and cost of materials along with the availability and cost of qualified labour and subcontractors, productivity, and possible claims from subcontractors. A change in any of those factors could affect revenue recognition.

How our audit addressed the key audit matter

• Tested on a sample basis the costs incurred to supporting documents.

• Compared the original total anticipated costs to the total costs incurred for contracts completed during the year.

We considered this a key audit matter due to the significant judgments made by management when estimating anticipated costs. This in turn led to significant auditor judgments and audit effort in performing procedures to evaluate the total anticipated costs, including the assessment of management’s judgments about its ability to estimate costs required to complete the contract.

Assessment of impairment indicators on property, plant and equipment, right-of-use assets and intangible assets with finite useful life

Refer to note 3 – Estimation uncertainty and critical accounting judgements, to the financial statements.

As at January 31, 2021, the net book value of property, plant and equipment, right-of-use assets and intangible assets with finite useful life (non-financial assets), respectively, amounted to $62.2 million, $22.5 million and $3.3 million. The Corporation’s management reviews the carrying value of the Corporation’s non-financial assets when there are events or circumstances that may indicate impairment. Management makes judgments in assessing whether changes to certain factors would be considered an indicator of impairment, which include both internal and external factors such as (i) changes in signed backlog, (ii) changes in earnings before interest depreciation and amortization (EBITDA) margin, (iii) changes in EBITDA multiples of comparable companies and (iv) the Corporation’s market capitalization compared to its net assets.

Our approach to addressing the matter included the following procedures, among others:

• Evaluated the reasonableness of management’s assessment of impairment indicators, which included the following:

• Assessed the completeness of external or internal factors that could be considered as indicators of impairment on the Corporation’s non-financial assets, including consideration of evidence obtained in other areas of the audit;

• Assessed the reasonableness of factors such as changes in signed backlog and changes in EBITDA margin by considering the current and past performance of the Corporation and evidence obtained in other areas of the audit, as applicable;

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Key audit matter	How our audit addressed the key audit matter	How our audit addressed the key audit matter
We considered this a key audit matter due to (i) the		Recalculated the Corporation’s market
significance of the non-financial assets and (ii) the		capitalization and compared it to the net
significant judgment made by management in		assets as at January 31, 2021; and
assessing any indicator of impairment, which led to subjectivity in performing procedures to test management’s assessment. The audit effort involved the use of professionals with specialized skill and knowledge in the field of valuation.		Professionals with skill and knowledge in the field of valuation assisted us in assessing the changes in EBITDA multiples based on available data of comparable companies.

Other information

Management is responsible for the other information. The other information comprises the Management’s Discussion and Analysis, which we obtained prior to the date of this auditor’s report and the information, other than the consolidated financial statements and our auditor’s report thereon, included in the annual report, which is expected to be made available to us after that date.

Our opinion on the consolidated financial statements does not cover the other information, and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the information, other than the consolidated financial statements and our auditor’s report thereon, included in the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter 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 IFRS, 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.

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In preparing the consolidated financial statements, management is responsible for assessing the Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Corporation’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.

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• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Corporation to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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 Jean-François Lecours.

/s/PricewaterhouseCoopers LLP[1]

Montréal, Quebec April 7, 2021

1 CPA auditor, CA, public accountancy permit No. A126402

Fiscal year ended on: January 31, 2021 Page: 8 of 36

Audited Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at January 31,	2021	2020
(In thousands of Canadian dollars) ASSETS Current assets Cash and cash equivalents Accounts receivable Holdbacks on contracts (Note 15) Current income tax assets Contract assets (Note 15) Inventories (Note 5) Derivative financial instruments (Note 28) Prepaid expenses and other current assets	$ 17,806 50,234 10,785 834 8,790 6,960 517 4,670	$ 3,983 39,555 11,628 882 14,435 7,898 ― 1,581
Total current assets Non-current assets Property, plant and equipment (Note 6) Right-of-use assets (Note 7) Intangible assets (Note 8) Other non-current assets(Note 9)	100,596 62,223 22,478 3,266 1,388	79,962 64,967 23,818 3,354 1,443
Total assets	189,951	173,544
LIABILITIES Current liabilities Credit facilities (Note 10) Accounts payable and other current liabilities (Note 11) Current income tax liabilities Contract liabilities (Note 15) Derivative financial instruments (Note 28) Current portion of lease liabilities (Note 7) Currentportion of long-term debt(Note 12)	― 34,562 1,161 23,278 ― 1,143 1,904	13,105 30,788 216 3,444 123 1,070 1,903
Total current liabilities Non-current liabilities Long-term debt (Note 12) Lease liabilities (Note 7) Deferred income tax liabilities (Note 20) Other non-current liabilities	62,048 18,368 4,166 5,627 177	50,649 19,156 4,930 4,215 187
Total liabilities	90,386	79,137
SHAREHOLDERS’ EQUITY Capital stock (Note 13) Contributed surplus Accumulated other comprehensive income (loss) (Note 14) Retained income	68,120 6,435 5,886 19,124	68,120 6,435 6,942 12,910
Total shareholders’ equity	99,565	94,407
Total liabilities and shareholders’ equity	189,951	173,544

The accompanying notes are an integral part of these audited consolidated financial statements.

ON BEHALF OF THE BOARD OF DIRECTORS,

Director

Director

Jean Paschini

/Signed / / Signed /

Frank Di Tomaso, FCPA, FCA, ICD.D

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Audited Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF INCOME (LOSS)

CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Fiscal Years Ended January 31,	2021	2020
(In thousands of Canadian dollars, except the number of shares and the amounts per share) Revenues (Notes 15 and 29) Cost ofgoods sold(Note 16)	$ 172,593 146,388	$ 179,710 163,203
Gross Margin	26,205	16,507
Selling and administrative expenses (Note 16) Net financial expenses (Note 19) Foreign exchange loss	14,779 1,663 744	16,005 2,082 406
	17,186	18,493
Income (loss) before income tax expense Income tax expense(Note 20)	9,019 2,152	(1,986) 146
Net income(loss)for theyear	6,867	(2,132)
Earnings per share − Basic and dilutedper share(Note 21)	0.21	(0.07)
Average number of outstandingbasic and diluted shares(in thousands) (Note 21)	32,635	32,635

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Fiscal Years Ended January 31,	2021	2020
(In thousands of Canadian dollars) Net income (loss) for the year Other comprehensive income (loss) (Note 14): Exchange differences on translation of foreign operations(a)	$ 6,867 (1,056)	$ (2,132) 294
Comprehensive income(loss)for theyear	5,811	(1,838)

a) Will subsequently be reclassified to net income (loss).

The accompanying notes are an integral part of these audited consolidated financial statements.

Fiscal year ended on: January 31, 2021 Page: 10 of 36

Audited Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands of Canadian dollars) Balance,February1,2019	Capital Stock (Note 13) Contributed Surplus Accumulated Other Comprehensive Income (Loss) (Note 14) Retained Income Total
	$ $ $ $ $ 68,120 6,432 6,648 15,695 96,895
Net loss for the year Other comprehensive income(loss)	― ― ― (2,132) (2,132) ― ― 294 ― 294
Comprehensive income (loss) for the year Share-based compensation Dividends(Note 13)	― ― 294 (2,132) (1,838) ― 3 ― ― 3 ― ― ― (653) (653)
Balance,January31,2020	68,120 6,435 6,942 12,910 94,407

(In thousands of Canadian dollars) Balance,February1,2020	Capital Stock (Note 13) Contributed Surplus Accumulated Other Comprehensive Income (Loss) (Note 14) Retained Income Total
	$ $ $ $ $ 68,120 6,435 6,942 12,910 94,407
Net income for the year Other comprehensive income(loss)	― ― ― 6,867 6,867 ― ― (1,056) ― (1,056)
Comprehensive income (loss) for the year Dividends(Note 13)	― ― (1,056) 6,867 5,811 ― ― ― (653) (653)
Balance, January 31, 2021	68,120 6,435 5,886 19,124 99,565

The accompanying notes are an integral part of these audited consolidated financial statements.

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Audited Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Years Ended January31,	2021	2020
(In thousands of Canadian dollars) OPERATING ACTIVITIES Net income (loss) for the year Non-cash items: Amortization of property, plant and equipment (Note 6) Amortization of right-of-use assets (Note 7) Amortization of intangible assets (Note 8) Unrealized gain on derivative financial instruments Unrealized foreign exchange loss (gain) Share-based compensation (Note 13) Income tax expense Government grants Net financial expenses (Note 19) Others	$ 6,867 3,465 1,001 449 (640) 359 998 2,152 (6,158) 1,663 49	$ (2,132) 3,387 926 410 (61) (134) 491 146 (243) 2,082 (111)
Net income adjusted for non-cash items Change in non-cash workingcapital items(Note 22)	10,205 18,637	4,761 (5,655)
Cash flows from(used in)operatingactivities	28,842	(894)
INVESTING ACTIVITIES Acquisition of property, plant and equipment (Note 6) Acquisition of intangible assets (Note 8) Government grants Others	(1,460) (361) ― 68	(1,186) (452) 826 142
Cash flows used in investingactivities	(1,753)	(670)
FINANCING ACTIVITIES Variation in credit facilities (Note 22) Issuance of long-term debt (Notes 12 et 22) Repayment of long-term debt (Note 22) Payment of lease liabilities (Note 22) Dividends paid (Note 13) Interestpaid	(13,105) 5,654 (1,918) (961) (653) (1,460)	6,500 ― (1,884) (771) (653) (1,827)
Cash flows(used in)from financingactivities	(12,443)	1,365
Impact of fluctuations in foreign exchange rate on cash flow	(823)	18
Net change in cash and cash equivalents during the year Cash,and cash equivalents,beginningofyear	13,823 3,983	(181) 4,164
Cash and cash equivalents,end ofyear	17,806	3,983

The accompanying notes are an integral part of these audited consolidated financial statements.

Fiscal year ended on: January 31, 2021 Page: 12 of 36

Audited Consolidated Financial Statements Notes to the Audited Consolidated Financial Statements

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Fiscal Years Ended January 31, 2021 and 2020

All tabular figures are in thousands of Canadian dollars (CA$) and in dollars per share, unless otherwise specified.

NOTE 1 NATURE OF BUSINESS

ADF GROUP INC. ("ADF", "ADF Group" or "the Corporation") is the parent company and is incorporated under the Canada Business Corporations Act . Its head office is located at 300 Henry-Bessemer Street, in Terrebonne, Quebec. The Corporation’s securities are traded on the Toronto Stock Exchange under the ticker symbol DRX. The Corporation operates two fabrication plants and two paint shops, in Canada and in the United States. The Corporation concentrates its activities in the design and engineering of connections, fabrication, including industrial coating, and the installation of complex steel superstructures, heavy steel built-ups, as well as miscellaneous and architectural metalwork. The Corporation’s products and services are intended for the following five principal segments of the nonresidential construction industry: office towers and high-rises, commercial and recreational buildings, airport facilities, industrial complexes, and transport infrastructure.

The consolidated financial statements were approved by the Corporation’s Board of Directors on April 7, 2021 and were signed on its behalf.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies are summarized below. These policies have been consistently applied to all the periods presented, except as otherwise stated.

2.1 Basis of Assessment

The consolidated financial statements are established in accordance with the International Financial Reporting Standards (“IFRS”), issued by the International Accounting Standards Board ("IASB"), and have been prepared under the historical cost convention, except for the evaluation of certain financial instruments, which are measured at their fair value, as described in the accounting policies hereinafter. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

2.2 Principles of Consolidation

The consolidated financial statements include the accounts of the Corporation and its subsidiaries. Subsidiaries are entities which the Corporation controls by having the power to govern the financial and operating policies. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Corporation controls another entity. Subsidiaries are fully consolidated from the date on which control is obtained by the Corporation and are de-consolidated from the date that control ceases. Inter-company transactions and balances have been eliminated.

As at January 31, 2021 and 2020, the percentage of ownership held directly or indirectly by the Corporation in its subsidiaries was 100%. These subsidiaries are all incorporated in the United States, and are summarized as follows:

Subsidiaries	Activity Sectors
ADF Group USA Inc. ADF Industrial Coating Inc. ADF International Inc. ADF Steel Corp.	Holding Sales and surface treatment Sales, fabrication and steel erecting services Sales and other services Sales,fabrication,steel erectingand engineeringservices
ADF Structural Steel Inc.

2.3 Foreign Currency Translation

2.3.1 Functional and Reporting Currency

Items included in each of the Corporation’s entities financial statements are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The Corporation's functional currencies are the Canadian dollar for its Canadian entity, and the US dollar for its U.S. entities. The consolidated financial statements are presented in Canadian dollars, which is the Corporation's reporting currency.

The financial statements of entities whose functional currency differs from that of the Corporation (foreign operations) are translated into Canadian dollars as follows:

• Assets and liabilities – at the closing rate at the date of the statement of financial position, and

• Revenues and expenses – at the average rate of the monthly period (considered a reasonable approximation to the actual rates in effect at the date of transactions).

All resulting changes are recognized in other comprehensive income (loss) as exchange differences on translation of foreign operations.

When an entity disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the accumulated exchange differences in other comprehensive income (loss) related to the foreign operation are recognized in net income (loss).

Audited Consolidated Financial Statements Fiscal year ended on: January 31, 2021 Notes to the Audited Consolidated Financial Statements Page: 13 of 36

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2.3.2 Transactions and Balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions. Translation differences resulting from the settlement of foreign currency transactions and from the translation at the exchange rates effective at the reporting date of monetary assets and liabilities denominated in currencies other than an operation’s functional currency are recognized in "Foreign Exchange Loss (Gain) " in the Consolidated Statement of Income (Loss).

2.4

Revenue Recognition

Revenue from contracts with customers is recognized, for each performance obligation, either over a period of time or at a specific point in time, depending on which method reflects the transfer of control of the goods or services underlying the performance obligation to the customer.

In most cases, for performance obligations satisfied over time, such as cost-plus and fixed price contracts, the Corporation recognizes revenue over time using an input method, based on costs incurred to date relative to total estimated costs at completion, to measure progress toward satisfying such performance obligations. Under this method, costs that do not contribute to the performance of the Corporation in transferring control of goods or services to the customer are excluded from the measurement of progress toward satisfying the performance obligation. For certain contracts, notably certain cost-plus contracts or unit-rate contracts, the Corporation recognizes revenue based on its right to consideration when such amount corresponds directly with the value to the customer of the entity’s performance completed to date. In certain other situations, the Corporation might recognize revenue at a point in time, when the criteria to recognize revenue over time are not met. In any event, when the total anticipated costs exceed the total anticipated revenues on a contract, such loss is recognized in its entirety in the period it becomes known.

The amount of revenue recognized by the Corporation is based on the transaction price allocated to each performance obligation. Such transaction price corresponds to the amount of consideration to which the Corporation expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties. The transaction price includes, among other things and when applicable, an estimate of variable consideration only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration is usually derived from incentives, performance bonuses and penalties, and could include claims and unpriced change orders. When a contract includes a significant financing component, the value of such component is excluded from the transaction price and is recognized separately as financial revenue or expense, as applicable.

The Corporation may enter into contractual arrangements with a client to deliver services on one project which span more than one performance obligation, such as particularly in the context of the Corporation’s activities. When entering into such arrangements, the Corporation allocates the transaction price by reference to the stand-alone selling price of each performance obligation. Accordingly, when such arrangements exist on the same project, the value of each performance obligation is based on its stand-alone selling price and recognized according to the respective revenue recognition methods described above.

The Corporation accounts for a contract modification, which consists of a change in the scope or price (or both) of a contract, as a separate contract when the remaining goods or services to be delivered after the modification are distinct from those delivered prior to the modification and the price of the contract increases by an amount of consideration that reflects the Corporation’s stand-alone selling price of the additional promised good or services. When the contract modification is not accounted for as a separate contract, the Corporation recognizes an adjustment to revenue on a cumulative catch-up basis at the date of contract modification.

The Corporation may apply its revenue recognition accounting policy to a portfolio of contracts or performance obligations with similar characteristics if the effect on its financial statements of applying such policy to the portfolio is not reasonably expected to differ materially from applying its policy to the individual contracts or performance obligations within that portfolio.

Contract related balances include contract assets and liabilities presented separately in the consolidated statements of financial position.

• Contract assets are recognized when goods or services are transferred to customers before consideration is received or before the Corporation has an unconditional right to payment for performance completed to date. Contract assets are subsequently transferred to the accounts receivable when the right of payment becomes unconditional. Contract assets comprise cost incurred and recorded margins in excess of advances and progress billings on contracts.

• Contract liabilities are recognized when amounts are received from customers in advance of transfer of goods or services. Contract liabilities are subsequently recognized in revenue as or when the Corporation performs under contracts. Contract liabilities include advances and progress billings in excess of costs incurred and recorded margin on contracts.

A net position of contract asset or contract liability is determined for each contract. The cash flows in respect of advances and progress billings, including amounts received from third parties, are classified as cash flows from operating activities.

2.5 Cash and Cash Equivalents

The cash and cash equivalents items include cash on hand, the bank overdraft and short-term investments, the case may be, with maturities at the time of acquisition generally not exceeding three (3) months or redeemable at any time at full value and for which the risk of change in value is not significant. Bank overdrafts are presented as current liabilities, where applicable.

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2.6 Inventories

Inventories, predominantly raw material (steel), are valued at the lower of cost or net realizable value. The cost is determined using the specific cost method. The net realizable value is the estimated selling price less the estimated costs required to realize the sale. An impairment is recognized if the carrying amount exceeds the net recoverable value. The impairment amount may be reversed during a subsequent period when circumstances justifying that impairment no longer exist.

2.7 Property, Plant and Equipment and Amortization

Property, plant and equipment are recorded at cost, less accumulated amortization and accumulated impairment. The cost includes expenses that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, where appropriate, only when it is likely that future economic benefits associated with the item will flow to the Corporation and the cost of this asset can be measured reliably. Costs of maintenance and repair are recorded as expenses in the consolidated statement of income (loss) in the period in which they are incurred.

The main property, plant and equipment categories are amortized using the straight-line method, which allocates the costs of depreciable assets over the estimated useful life of a component, as follows:

• Buildings and improvement to lands over periods varying from 15 to 110 years;

• Equipment and overhead cranes over periods varying from 2 to 30 years, and

• Office furniture, rolling stock and computer hardware over periods varying from 3 to 30 years.

The Corporation allocates the initially recognized amount of property, plant and equipment to its significant components and depreciates each component separately. The carrying amount of a replaced component is derecognized upon replacement. The residual value, amortization method and useful life of property, plant and equipment are reviewed every year and adjusted as required.

2.8

Borrowing Costs

Borrowing costs attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs are recognized as financial expenses in the consolidated statement of income (loss) in the period in which they are incurred.

2.9

Intangible Assets and Amortization

Identifiable intangible assets, which are mainly made up of software with a determined useful life are recognized at cost and amortized at fixed rates based on their estimated useful life that is, based on the straight-line method on a 3 to 18-year period.

The amortization method and useful life of intangible assets are reviewed every year and adjusted as required.

2.10 Impairment of Non-Financial Assets

Non-financial assets are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units or "CGU"). The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use, being the present value of the expected future cash flows of the relevant asset or CGU.

The impairment losses, as well as profits and losses resulting from the disposal of non-financial assets, are included in the Consolidated Statement of Income (Loss). The Corporation evaluates impairment losses for potential reversals when events or circumstances warrant such consideration.

2.11 Lease Agreements

The Corporation leases various office space, equipment, office furniture, rolling stock and computer hardware. Lease agreements are typically made for fixed periods of 2 to 6 years and may be subject to extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.

The accounting policies related to the lease agreements are described below.

• At inception, the Corporation 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.

• Leases are recognized as a right-of-use asset and a corresponding lease liability at the commencement date of the lease, i.e. the date the underlying asset is available for use. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. The right-of-use asset is amortized over the shorter of the asset's useful life or the lease term on a straight-line basis except for lease agreements that have the effect, at the end of their term, of transferring ownership to the Corporation the property of the underlying good. In these cases, the Corporation amortize the right-of-use assets until the end of the useful life. Right-of-use assets are assessed for impairment whenever there is an indication that the right-of-use assets may be impaired.

• The lease liability is measured at the present value of lease payments to be made over the lease term, discounted using the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily available. Lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on index or a rate and amounts expected to be

Audited Consolidated Financial Statements Fiscal year ended on: January 31, 2021 Notes to the Audited Consolidated Financial Statements Page: 15 of 36

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paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Corporation or payment of penalties for termination of a lease. Each lease payment is allocated between the repayment of the principal portion of lease liability and the interest portion. The interest expense is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Payments associated with shortterm leases and leases of low-value assets are recognized on a straight-line basis as an expense in the Consolidated Statement of Income (Loss).

• After the commencement date, the carrying amount of lease liabilities is increased to reflect the accretion of interest and reduced to reflect lease payments made. In addition, the carrying amount of lease liabilities is revaluated when there is a change in future lease payments arising from a change in an index or specified rate, if there is a modification to the lease terms and conditions, a change in the estimate of the amount expected to be payable under residual value guarantee, or if the Corporation changes its assessment of whether it will exercise a termination, extension or purchase option. The revaluation amount of the lease liabilities is recognized as an adjustment to the right-ofuse asset, or in the Consolidated Statement of Income (Loss) when the carrying amount of the right-of-use asset is reduced to zero.

2.12

Income Tax

Income tax expense includes current and deferred income tax expenses. Income tax is recognized in the Consolidated Statement of Income (Loss) except to the extent that it relates to items recognized directly in other comprehensive income (loss) or in shareholders’ equity, in which case, the income tax is also recognized directly in other comprehensive income (loss) or in shareholders’ equity.

Current tax is the expected income tax payable on the taxable income for the fiscal year, using tax rates enacted or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous fiscal years.

In general, deferred income tax is recognized in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the closing date and are expected to apply when the deferred income tax asset or liability is settled. A deferred income tax asset is recognized to the extent that it is likely that the asset can be recovered.

Deferred income tax assets and liabilities are recognized on temporary differences arising on investments in subsidiaries, unless the timing of the reversal of the temporary difference is controlled by the Corporation and it is likely that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are classified as non-current assets and liabilities in the Consolidated Statement of Financial Position. They are offset only when the Corporation has a right and the intention to offset these tax assets and liabilities from the same tax authority.

2.13 Tax Credits and Government Grants

In the course of its business, the Corporation may receive government grants, which are accounted for in accordance with IAS 20, Accounting for Government Grants, and recorded against the expenses or in reduction of the related capital assets. The Corporation also benefits from tax credits derived from investments, jobs creation, labor force training and scientific research and experimental development ("SR&ED") activities. These tax credits are also recorded using the cost reduction method, under which the tax credits related to eligible expenditures, capitalized or expensed, as long as their realization is reasonably assured, are recognized in reduction of the related costs during the period in which they are incurred.

Tax credits and government grants receivable are discounted when the effect of the time value of money is material.

2.14 Share-Based Compensation and Other Share-Based Payments

The Corporation awards stock options to certain of its employees and external directors. These options vest equally over a period of up to fiveyear and all options have 10-years life from the grant date. Each tranche is considered as a separate award with its own vesting period and its own fair value at the grant date. The fair value of each tranche is measured using the Black-Scholes valuation model at the date of the grant. The compensation expense is recognized over the tranche’s vesting period of the options, and increases contributed surplus. The number of options expected to vest is revised at least once a year, and changes in estimates are immediately charged to compensation expense, with a corresponding amount recognized as a contributed surplus adjustment.

2.15 Deferred Share Units ("DSU")

The DSU Plan allows every external director, who elects to participate, to defer in whole or in part his director’s compensation (including annual and attendance fees), by choosing to receive a percentage of this compensation in the form of DSU, which will be bought back in cash by the Corporation on the date the external director ceases to be a director of the Corporation by reason of death, retirement or loss of function as director. When an external director elects to participate in this plan, the Corporation credits the director’s account for a number of units equal to the deferred compensation, divided by the market value of the Corporation’s subordinate voting shares calculated using the average closing price of the five (5) trading days preceding the date of award. DSU are not convertible into shares of the Corporation and do not result in a dilution to shareholders.

In addition, and independently to DSU that can be granted to external directors for the purposes of deferring their directors’ compensation, the DSU Plan also allows the Corporation’s Board of Directors to grant, at its discretion, DSU to any external director, executive officer and key employee. If it sees fit, the Board of Directors can attach conditions related to time and/or to the Corporation’s performance to the vesting of these DSU. In the event a condition is attached to a DSU, every unvested DSU at the date of repurchase will be cancelled without consideration.

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However, in the event of a change of control, unvested DSU will be considered vested, immediately prior to the occurrence of this change of control.

When the Corporation pays dividends on subordinate voting shares, the accounts of the Directors, Executive Officers and key employees are credited for the amount in the form of additional units using the same calculation method previously described.

For each DSU awarded and changes in the fair value, the Corporation recognizes a compensation expense with the counterpart entry in "Accounts Payable and Other Current Liabilities" of the Consolidated Statement of Financial Position.

2.16

Performance Share Units Plan ("PSU")

As part of its long-term compensation plan, the Corporation may issue PSU to its Executive Officers and key employees. PSU are not convertible into shares of the Corporation and do not result in dilution for shareholders. The acquired PSU are only redeemable in cash by the Corporation upon the expiration of three (3) years after their grant (the "PSU Settlement Date"), subject to the achievement of financial targets. PSU tranches whose vesting conditions have not been met on the applicable vesting date are canceled, without compensation.

PSU also entitle holders to receive additional units each time dividends are paid on the Corporation’s subordinate voting shares.

Compensation expense is recognized in the Consolidated Statement of Income (Loss) over the vesting period and the counterpart is recognized in current liabilities in the Consolidated Statement of Financial Position. Changes in fair value between the grant date and the valuation date result in a change in liability and compensation expense.

The fair value of a PSU at any given date (for example, its grant date, vest date or PSU settlement date, etc.) is equal to the market value of the subordinate voting shares of the Corporation on that date, calculated using the average closing price subordinate voting shares of the Corporation on the Toronto Stock Exchange during the five (5) trading days immediately preceding that date.

2.17 Earnings Per Share

Basic earnings per share are based using the weighted average number of voting shares issued and outstanding and is obtained by dividing net income (loss) by the weighted average number of outstanding shares during the period. Diluted earnings per share are obtained by dividing basic net income (loss) by the sum of the weighted average number of voting shares used to calculate basic earnings per share and the weighted average number of voting shares that would be issued if all of the potentially dilutive outstanding voting shares were converted using the treasury stock method for stock options.

2.18

Financial Instruments

Financial instruments are recognized in the consolidated statement of financial position when the Corporation becomes a party to the contractual obligations of the instrument.

a) Classification

The Corporation determines the classification of financial instruments at initial recognition and classifies its financial instruments in the following measurement categories:

• Those to be measured subsequently at fair value, either through net income (loss) ("FVTPL") or through other comprehensive income (loss) ("FVOCI"), or

• Those to be measured at amortized cost.

The classification of debt instruments held is driven by the Corporation’s business model for managing the financial assets and their contractual cash flow characteristics. Assets that are held to collect contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Equity instruments that are held for trading and all derivative instruments are classified as FVTPL. For other equity instruments, on the day of acquisition, the Corporation may irrevocable elect (on an instrument-byinstrument basis) to classify them at FVOCI whereby subsequent gains and losses will never be reclassified to net income (loss). Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Corporation was eligible and elected to measure them at FVTPL. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

b) Measurement

i. Financial Instruments at Amortized Cost

Financial instruments at amortized cost are initially recognized at fair value, and subsequently carried at amortized cost less any impairment. The transaction costs are capitalized to the costs of financial assets and liabilities. Therefore, the transaction costs applied to the long-term debt are classified against the long-term debt and amortized using the effective interest method.

Currently, the Corporation classifies cash and cash equivalents, accounts receivable and holdback on contracts as financial assets measured at amortized cost and credit facilities, accounts payable and other current liabilities and long-term debt as financial liabilities measured at amortized cost.

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ii. Financial Instruments at Fair Value

Financial instruments are initially recorded at fair value and transaction costs are expensed in the consolidated statements of income (loss). When the Corporation has elected to classify a financial liability at FVTPL, any changes associated with the Corporation’s own credit risk will be recognize in Other Comprehensive Income (Loss).

Currently, the Corporation’s derivative financial instruments are classified at FVTPL.

c) Impairment

The Corporation prospectively assesses the expected credit losses associated with debt instruments and contract assets carried at amortized cost or at FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The Corporation assumes that there is no significant increase in the credit risk regarding low-credit risk instruments.

For accounts receivable and contract assets, the Corporation applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized at the time of initial recognition.

d) Derecognition

i. Financial Assets

The Corporation derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and nearly all the associated risks and rewards of ownership to another entity. Gains and losses upon derecognition are generally recognized in the Consolidated Statements of Comprehensive Income (Loss).

ii. Financial Liabilities

The Corporation derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid or payable, including any non-cash assets transferred or liabilities assumed, is recognized in the Consolidated Statements of Income (Loss).

e) Compensation

Financial assets and liabilities are offset with the net balance recorded in the Consolidated Statement of Financial Position when there is an unconditional and legally enforceable and unconditional right to set off the recognized amounts, and there is an intention to settle on a net basis or to realize the asset and settle the liability simultaneously.

2.19

Hedging Relationships

In accordance with its foreign currency hedge policy, the Corporation can use financial derivative instruments such as foreign exchange contracts and foreign currency options to eliminate or mitigate the risk of exchange rate fluctuations on its foreign currency transactions, assets and liabilities. Management is responsible for establishing acceptable risk levels and does not use derivatives for speculation purposes. The Corporation only uses these derivatives to hedge possible future transactions. Since the Corporation did not elect to apply hedge accounting, the foreign exchange forward contracts and foreign currency options are recognized at their fair value at the end of each period. Consequently, the gains or losses from the revaluation are presented in net income (loss) under "Foreign Exchange (Gain) Loss" as previously defined under Note 2.18.

The Corporation is also exposed to a foreign exchange risk stemming from net investments in its foreign subsidiaries having a functional currency that differs from the Corporation’s functional currency. To protect itself against this risk, the Corporation can use hedge accounting by assigning certain of its U.S.-denominated debts as a hedge of net investments in foreign operations.

Hedges of net investments are as follows:

• All gains or losses on the hedging instrument relating to the effective portion of the hedge are recognized in other comprehensive income (loss). The gains or losses relating to the ineffective portion are directly recognized in the Consolidated Statement of Income (Loss), and

• The gains or losses accumulated in shareholders’ equity are included in the Consolidated Statement of Income (Loss) when the foreign operation is partially divested or sold.

2.20 Pension Plans

The Corporation offers its eligible employees defined contribution pension plans for which it can contribute an amount equal to the employee’s contribution or an amount predetermined under the collective bargaining agreements. The contributions to the pension plans are primarily disbursed on a monthly basis. Contributions are charged to net income (loss) under "Cost of goods sold" and "Selling and administrative expenses", when they are payable.

2.21 Segmented Information

The Corporation operates in the nonresidential construction industry, primarily in the United States and Canada. The Corporation operational areas are consistently presented with the internal reports provided to the Chief Executive Officer (the chief operating decision–maker).

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2.22 Dividends

The dividends on shares approved by the Board of Directors are recognized in the financial statements in the period in which they are declared.

NOTE 3 ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGEMENTS

The preparation of financial statements in accordance with IFRS requires Management to make judgements in the application of accounting policies used and to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods. Because financial reporting involves accounting judgements and entails the use of estimates, actual results could differ from those estimates. Underlying estimates and assumptions are periodically reviewed and the impact of any changes is immediately recognized.

The significant accounting judgements and estimates used by the Corporation to prepare the financial statements are:

3.1 Revenues Recognition

The identification of revenue-generating contracts with customers, the identification of performance obligations, the determination of the transaction price and its allocation between identified performance obligations, the use of the appropriate revenue recognition method (over time or at a specific point in time) for each performance obligation and the measure of progress for performance obligation satisfied over time are the main aspects of the revenue recognition process, all of which require judgment and the use of assumptions.

The transaction price corresponds to the amount of consideration to which the Corporation expects to be entitled in exchange for transferring promised goods or services to a customer. Such amount may require the Corporation to estimate an amount of a variable consideration, notably from estimated volume of work, claims and unpriced change orders, incentives or penalties, among others. Furthermore, the Corporation needs to constraint the transaction price by including only the amount for which it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The amount of variable consideration to be included in the transaction price of a given contract is determined by using various estimates and assumptions, which could be based on historical experience with the same customer or other similar contracts, third-party assessments, legal interpretation of relevant contractual clauses and probabilistic methodologies, among others. Due to the uncertain nature of the estimations, the amount of a variable consideration may vary significantly over time. Such estimated amount of a variable consideration then needs to be updated at the end of each reporting period.

The determination of total anticipated costs for completing a contract is based on estimates that can be affected by a variety of factors such as potential variances in scheduling and cost of materials along with the availability and cost of qualified labour and subcontractors, productivity, and possible claims from subcontractors. A change in any of those factors could affect revenues recognition.

3.2 Assessment and Amortization of Long-Lived Assets

Management reviews the useful lives of its amortizable assets at each reporting date. As at January 31, 2021, Management estimated that the useful lives represented the expected useful life of the Corporation’s assets. The carrying amounts are analyzed at the end of each fiscal year. Actual results could however differ because of technical obsolesce, particularly with regard to hardware and software.

3.3 Significant Judgment in Determining the Lease Term of Contracts

The Corporation determines the lease term as the non-cancellable period of the lease, together with any periods covered by an option to extend the lease, if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Corporation applies judgment in assessing whether it is reasonably certain to exercise its options to extend its leases or to not exercise its options to terminate its leases, by considering all facts and circumstances that create an economic incentive to exercise an extension option or not to exercise a termination option. The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the Corporation’s control.

3.4 Income Tax

The Corporation calculates the income tax expense for each jurisdiction where it operates. However, the actual income tax amounts become definitive only upon the filing of income tax returns and acceptance thereof by the competent authorities, which occur after the financial statements are published.

Judgements must periodically be made to determine if deferred income tax assets must be recognized in the Consolidated Statement of Financial Position. Deferred income tax assets, including unused tax losses, require Management to assess whether the Corporation will generate taxable income in subsequent periods, in order to use deferred income tax assets. Once the assessment is done, if the Corporation believes that it is likely that a portion of its deferred income tax assets will not be realized, the deferred income tax asset is derecognized. The estimate of future taxable income is based on cash flow from operations forecasts and applicable tax laws in effect in each jurisdiction. Should future cash flows and taxable profit differ materially from these estimates, it could have an impact on the Corporation’s ability to realize the net deferred income tax assets at the reporting date of the financial position.

3.5 Impairment of Non-Financial Assets

The Corporation’s management reviews the carrying value of the Corporation’s non-financial assets when there are events or circumstances that may indicate impairment.

Management makes judgments in assessing whether changes to certain factors would be considered an indicator of impairment, which include both internal and external factors such as:

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• i. changes in signed backlog,

• ii. changes in earnings before interest depreciation and amortization (EBITDA) margin,

• iii. changes in EBITDA multiples of comparable companies and

• iv. the Corporation’s market capitalization compared to its net assets.

An impairment loss is recognized, if any, for the amount by which an assets or CGUs carrying amount exceeds its recoverable amount, which is the higher of fair value less cost of disposal and value in use.

For the purpose of assessing the potential impairment of the Corporation's non-financial assets, management would use the fair value less costs of disposal model to estimate the fair value based on earnings before interest depreciation and amortization (EBITDA) multiple approach. The significant assumptions, which affect the financial analysis include revenues, operating costs and margins, foreign exchange rates and comparable companies EBITDA multiple. These estimates are subject to certain risks and uncertainties that may affect the determination of the recoverability of the Corporation’s non-financial assets.

As of January 31, 2021, the Corporation’s management has determined that there is no indicator of impairment and therefore no impairment test has been performed.

NOTE 4 COVID-19

Since March 2020, the COVID-19 pandemic has spread to North America. The markets served by the Corporation have, of course, not been spared by the many waves that continue to affect these same markets as of the date of this Report.

A number of Canadian provinces and U.S. states, including Quebec and Montana, have instituted confinement periods or have introduced certain restrictions to contain the spread of the virus, except for essential services. Since the beginning of this pandemic and at the as of the date hereof, all of Corporation’s facilities, including all of its job sites, remained open and operational.

The Corporation has taken steps to care for its employees, including allowing them to work remotely and implementing strategies to support appropriate social distancing techniques for employees who cannot work remotely. The Corporation has also taken precautions with regard to the hygiene of employees, facilities and offices, as well as the implementation of significant travel restrictions. The Corporation is also evaluating its business continuity plans for all of its operations in the context of this pandemic. This situation is evolving rapidly and the Corporation will continue to monitor and mitigate developments affecting its staff, suppliers, customers and the general public as much as it can.

However, in order for ADF’s fabrication plant in Terrebonne, Quebec, to remain in operation, and in addition to the required sanitary and physical distancing measures, the Corporation initially had to limit the number of employees per work shift. This limitation has allowed the Corporation to maintain a sufficient level of fabrication in order to serve its various customers, but has resulted in some operational limitations. In addition, some additional costs have also been incurred as a result of the various measures taken. At the date hereof, the number of employees per shift has virtually returned to the pre-pandemic level.

During the health crisis, various government programs were put in place in Canada and the United States allowing the Corporation and some of its subsidiaries to benefit from government grants totalling $6,347,000 recognized as a reduction of salaries expense in the Consolidated Statement of Income (Loss) for the Fiscal Year Ended January 31, 2021, of which an amount of $2,209,000 was included in other current assets in the Consolidated Statement of Financial Position as at January 31, 2021.

So, although for the moment the impact of COVID-19 on the Corporation’s operations is limited, the extent to which the virus can have an impact on its results will depend on future developments, which are very uncertain and cannot be predicted at the time of this filing, including new information that may emerge regarding the severity of COVID-19 and the measures taken to contain it or address its impact, among others.

Management's estimates and judgments considered the uncertainties, including the uncertainty that the pandemic is causing in the various markets where the Corporation operates, and economic implications of the COVID-19 pandemic on the Corporation's business, financial performance and financial position, and did not result in material impacts for the fiscal year ended January 31, 2021.

However, at the date of publication of these audited consolidated financial statements, although the Corporation was able to reduce the short-term impact of the virus without significant reduction of its activities, it is not possible at this time to reliably assess the duration and the severity the global pandemic nor the long-term consequences it may have on the Corporation’s financial results and cash flows.

NOTE 5 INVENTORIES

NOTE 5 INVENTORIES
As at January31,	2021	2020
(In thousands of CA$) Inventories Inventories depreciation	$ 7,825 (865)	$ 8,700 (802)
	6,960	7,898

During the fiscal year ended January 31, 2021, the inventories amount recognized as cost of goods sold totalled $50,658,000 and $40,193,000 during the fiscal year ended January 31, 2020.

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NOTE 6 PROPERTY, PLANT AND EQUIPMENT

	Land	Buildings and Improvement to Lands	Equipment and Overhead Cranes	Office Furniture, Rolling Stock, and Computer Hardware	Total
(In thousands of CA$)	$	$	$	$	$
As at February 1, 2019
Cost	5,743	61,971	42,139	8,057	117,910
Accumulated amortization	―	(20,009)	(24,542)	(6,133)	(50,684)
Net book value	5,743	41,962	17,597	1,924	67,226
Acquisitions	―	115	846	225	1,186
Disposal	―	―	(147)	(64)	(211)
Effect of fluctuations in exchange rates	9	70	66	8	153
Amortization expenses	―	(1,211)	(1,864)	(312)	(3,387)
Balance at January 31, 2020	5,752	40,936	16,498	1,781	64,967
As at January 31, 2020
Cost	5,752	62,162	42,878	6,406	117,198
Accumulated amortization	―	(21,226)	(26,380)	(4,625)	(52,231)
Net book value	5,752	40,936	16,498	1,781	64,967
Acquisitions	―	(45)	1,262	243	1,460
Disposal	―	―	―	(3)	(3)
Effect of fluctuations in exchange rates	(51)	(340)	(313)	(32)	(736)
Amortization expenses	―	(1,223)	(1,935)	(307)	(3,465)
Balance at January31,2021	5,701	39,328	15,512	1,682	62,223
As at January 31, 2021
Cost	5,701	61,732	43,249	6,561	117,243
Accumulated amortization	―	(22,404)	(27,737)	(4,879)	(55,020)
Net book value	5,701	39,328	15,512	1,682	62,223

For the fiscal year ended January 31, 2021, the amortization of property, plant and equipment totalled $3,465,000 ($3,387,000 for the fiscal year ended January 31, 2020) of which $3,110,000 is included in the cost of goods sold, and $355,000 is included in the selling and administrative expenses (respectively $3,020,000 and $367,000 for the fiscal year ended January 31, 2020).

The book value of the property, plant and equipment under construction and not amortized stood at $356,000 as at January 31, 2021 ($425,000 as at January 31, 2020). These amounts were mainly related to additions made to the Corporation’s facilities in Terrebonne, Quebec, and in Great Falls, Montana.

NOTE 7 LEASE AGREEMENTS

7.1 Right-of-Use Assets

During the fiscal year ended January 31, 2021, the Corporation entered into lease agreements relating primarily for office spaces, equipment and rolling stock. The net book value of the right-of- use assets, are as follows:

	Land	Buildings and Improvement to Land	Office Space	Equipment and Overhead Cranes	Office Furniture, Rolling Stock and Computer Hardware	Total
(In thousands of CA$) As at February 1, 2019 Cost Accumulated amortization	$ 1,638 ―	$ 23,225 (2,913)	$ 189 ―	$ ― ―	$ 1,136 (58)	$ 26,188 (2,971)
Net book value	1,638	20,312	189	―	1,078	23,217
New leases Disposal of leases Amortization expenses Effect of fluctuations in exchange rates	― ― ― 12	― ― (552) 140	350 ― (145) 4	299 ― (4) 2	739 (17) (225) (2)	1,388 (17) (926) 156
Balance as January31,2020	1,650	19,900	398	297	1,573	23,818

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	Land	Buildings and Improvement to Land	Office Space	Equipment and Overhead Cranes	Office Furniture, Rolling Stock and Computer Hardware	Total
(In thousands of CA$) As at January 31, 2020 Cost Accumulated amortization	$ 1,650 ―	$ 23,382 (3,482)	$ 543 (145)	$ 301 (4)	$ 1,854 (281)	$ 27,730 (3,912)
Net book value	1,650	19,900	398	297	1,573	23,818
New leases Disposal of leases Amortization expenses Effect of fluctuations in exchange rates	― ― ― (57)	― ― (504) (658)	― ― (178) (6)	― ― (12) (10)	629 (234) (307) (3)	629 (234) (1,001) (734)
Balance as January31,2021	1,593	18,738	214	275	1,658	22,478
As at January 31, 2021 Cost Accumulated amortization	1,593 ―	22,582 (3,844)	524 (310)	291 (16)	2,171 (513)	27,161 (4,683)
Net book value	1,593	18,738	214	275	1,658	22,478

For the fiscal year ended January 31, 2021, the amortization of right-of-use assets totalled $1,001,000 ($926,000 for the fiscal year ended January 31, 2020), of which $491,000 is included in the cost of goods sold, and $510,000 is included in selling and administrative expenses ($454,000 and $472,000 respectively for the fiscal year ended January 31, 2020).

7.2 Lease Liabilities

The balance of lease liabilities is detailed as follows:

Lease Liabilities The balance of lease liabilities is detailed as follows:
As at January31,	2021	2020 $ 1,070 4,930 6,000
(In thousands of CA$) Current portion Non-currentportion	$ 1,143 4,166
	5,309

The most important of these liabilities was contracted on April 18, 2014, by a subsidiary of the Corporation from a U.S. government agency. This loan was structured according to a sale and leaseback contract, resulting in a lease liability in the amount of US$4,999,800. This liability bears a below-market interest rate of 1.98%, and was measured at fair value based on the prevailing market interest rate. Consequently, monthly interest is calculated using the annual implicit rate of 4.48%. The US$794,000 difference between the fair value of US$4,206,000 and the cash received, in the amount of US$4,999,800, was recorded as a grant against the related property, plant and equipment.

The capital of this liability is repayable in equal monthly installments estimated at US$28,000 began in May 2014 and ending in May 2029, with a bargain purchase option for of $10. This lease is also subject to certain covenants, including covenants related to job creation.

This lease will be eligible for a maximum tax credit of up to US$5,783,000, corresponding to payments of principal and interest, the use of which is dependent on future taxable profits in Montana, U.S.A. Based on the level of historical taxable income and uncertainty on projected taxable income in that state, At the date hereof Management believes there is no reasonable assurance that this asset will be realized, and consequently no asset related to these investment tax credits were recorded as at January 31, 2021 and 2020.

7.3 Amounts Recognized in the Consolidated Statements of Income (Loss)

Amounts Recognized in the Consolidated Statements of Income (Loss)
Fiscal Years Ended January 31,	2021	2020
(In thousands of CA$) Expenses relating to leases of low-value assets or short-term Interest on lease liabilities (Note 19)	$ ― 258	$ 62 256

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NOTE 8 INTANGIBLE ASSETS

NOTE 8 INTANGIBLE ASSETS
	Total
(In thousands of CA$)	$
As at February 1, 2019
Cost	10,643 (7,331)
Accumulated amortization
Net book value	3,312
Acquisitions	452 (410)
Amortization expenses
Balance at January31,2020	3,354
As at January 31, 2020	9,187 (5,833)
Cost
Accumulated amortization
Net book value	3,354
Acquisitions	361
Amortization expenses	(449)
Balance at January31,2021	3,266
As at January 31, 2021 Cost Accumulated amortization	9,547 (6,281)
Net book value	3,266

As at January 31, 2021 and 2020, all intangible assets were subject to amortization and were mostly comprised of in-house software development. The remaining weighted average amortization period of intangible assets was seven (7) years as at January 31, 2021.

For the fiscal year ended January 31, 2021, amortization of intangible assets totalled $449,000 ($410,000 for the fiscal year ended January 31, 2020) of which $112,000 is included in the cost of goods sold, and $337,000 is included in selling and administrative expenses (respectively $112,000 and $298,000 for the fiscal year ended January 31, 2020).

NOTE 9 OTHER NON-CURRENT ASSETS

NOTE 9 OTHER NON-CURRENT ASSETS
As at January31,	2021	2020
(In thousands of CA$) Investment tax credits Other	$ 1,332 56	$ 1,332 111
	1,388	1,443

NOTE 10 CREDIT FACILITIES

10.1 Canadian Operating Credit Facility

On February 28, 2020, the Corporation obtained an increase in its credit facility, which increased from $20,000,000 to $30,000,000 at that date. This credit facility was renewed on September 28, 2020, with no change in terms. The available amount of $30,000,000 is subject to a monthly margination calculation on accounts receivable and inventory, thus limiting the amount of the eligible credit facility. Taking into account this calculation and the letter of credit issued for US$3,419,000 ($4,445,200) as security for two long-term debts, the available balance of this credit facility as at January 31, 2021, was $25,410,000. As at January 31, 2021, no amount was drawn from the credit facility ($13,105,000 as at January 31, 2020).

This credit facility bears interest at the bank’s prime Canadian rate plus 1.0%. This credit facility is secured by inventories and accounts receivable, excluding holdbacks receivable.

This credit agreement contains covenants that, among other things, require the Corporation to maintain certain financial ratios, which were all respected as at January 31, 2021.

10.2 U.S. Revolving Credit

In November 2020, the Corporation renewed the revolving credit agreement with a U.S. bank. This renewal, without changing the terms, raises the limit available to US$2,018,360 compared with US$1,560,700 as at January 31, 2020. This credit is renewable annually and may also be used for the issuance of letters of credit.

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As at January 31, 2021 and 2020, this revolving credit was unused.

This revolving credit facility bears LIBOR (US$) one-month interest rate, plus 2.0%, and is subject to the same guarantees as the long-term bank loan (see Note 12).

NOTE 11 ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES

NOTE 11 ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
As at January31,	2021	2020
(In thousands of CA$) Accounts payable Salaries and fringe benefits payable Accrued liabilities Share-based compensation (Note 13) Indirect taxes	$ 12,124 6,371 12,657 1,891 1,519	$ 15,365 4,622 8,626 905 1,270
	34,562	30,788

NOTE 12 LONG-TERM DEBT

NOTE 12 LONG-TERM DEBT
As at January31,	2021	2020
(In thousands of CA$) Bank loan, secured by a hypothec on the universality of all assets, movable and immovable, tangible and intangible, present and future of ADF Group Inc., the parent company.(1) Bank loan secured by a first rank movable security interest on certain property, plant, and equipment of a subsidiary of the Corporation and by a US$3,419,000 letter of credit (Note 10). This US-denominated loan amounted to US$1,112,000 as at January 31, 2021 (US$1,457,400 as at January 31, 2020).(2) Secured term loan by a second rank movable security interest on certain property, plant, and equipment of a subsidiary of the Corporation. This US-denominated loan amounted to US$297,000 as at January 31, 2021 (US$397,800 as at January 31, 2020). (3) Bank loan secured by a US$3,419,000 letter of credit (Note 10). This US-denominated loan amounted to US$158,000 as at January 31, 2021 (US$264,300 as at January 31, 2020).(4) Bank loan issued on May 5, 2020 and guaranteed by the SBA. This loan, denominated in US dollars, was in the amount of US$930,000 as at January31,2021 (5)	$ 17,082 1,421 379 202 1,188	$ 18,252 1,931 526 350 ―
Currentportion	20,272 1,904	21,059 1,903
	18,368	19,156

(1) This loan bears interest at the annual floating interest rate of the DBC, and is payable monthly. The balance of the debt was $17,159,000 as at January 31, 2021 ($18,335,000 as at January 31, 2020).

The $107,000 financing costs are recorded against the debt and amortized over the debt’s expected life using the effective interest rate method. As at January 31, 2021, the balance of the financing cost was $77,000 ($83,000 as at January 31, 2020).

• (2) Debt contracted by a subsidiary of the Corporation to the initial amount of US$3,419,000 with a U.S. bank. This debt bears a below-market rate of interest of 2.721%, and was measured at fair value based on the prevailing market interest rate. Therefore, monthly interest is calculated using the annual implicit rate of 3.42%. The capital of this debt is repayable in monthly installments estimated at US$31,000 which began in February 2014 and will end in January 2024.

• (3) A subsidiary of the Corporation contracted a US$990,000 debt with the U.S. government agency. This debt bears a below-market interest rate of 2.785%, and was measured at fair value based on the prevailing market interest rate. Consequently, monthly interest is calculated using the annual implicit rate of 3.5%. The capital of this debt is repayable in monthly installments estimated at US$9,000 which began in November 2013 and will end in October 2023.

• (4) In May 2017, a subsidiary of the Corporation contracted a new loan to finance the purchase of equipment for its fabrication plant in Great Falls, Montana. This US$520,000 loan from a U.S. bank has a 5-year term and bears an annual 3.84% fixed interest rate. The principal will be repaid by monthly installments of approximately US$9,000 began in July 2017 and ending in May 2022.

• (5) On May 5, 2020, under the US Care Act and as part of a paycheck protection program, the US Small Business Administration (SBA) in response to COVID-19, the Corporation obtained two loans from a US bank totalling $5,654,000 (US$4,014,000). These loans are guaranteed by the SBA and was issued to two US subsidiaries. Under the original terms, the principal of these loans was to be repaid over two years. However, if certain conditions are met, these loans could be partially or fully forgiven.

• (a) One of these loans, with an initial amount of US$3,045,000, met the conditions for full forgiveness. The Corporation has therefore recognized the cash received of US$3,045,000 as a government grant of $3,897,000 and was recognized as a reduction of the salaries expense in the Consolidated Statement of Income(Loss) for the Fiscal Year Ended January 31, 2021.

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• (b) As of the date hereof, no reasonable assurance has been established that these conditions will be met for the other loan in the original amount of US$969,000. This loan bears interest at a below market rate of 1% and has been measured at fair value using an estimated market rate of interest for similar financial instruments. Therefore, interest at the implied annual rate of 3.25% is calculated monthly. The difference of $52,000 (US$39,000) between this fair value of $1,313,000 (US$930,000) and the cash received in the amount of $1,365,000 (US$969,000), has been considered as a government assistance and recognized as a reduction in the wage cost. The monthly payments must begin from the date on which the pardon request will be refused by the SBA, estimated at four (4) monthly payments of $310,000 (US$242,000) starting in February 2022, ending in May 2022.

Certain property, plant and equipment having a carrying value of $27,935,000 as at January 31, 2021, and $28,333,000 as at January 31, 2020, are pledged as collateral for the long-term debt.

As at January 31, 2021, the Corporation was in compliance with its covenants of its long-term loans and bonding agreements (See Note 24).

NOTE 13 CAPITAL STOCK

13.1 Capital Stock

Authorized: Unlimited number of subordinate voting shares, carrying one (1) vote per share. Unlimited number of multiple voting shares, carrying ten (10) votes per share. Unlimited number of preferred shares, issuable in series.

	subordinate voting shares	Multiple Voting Shares	Total
(In thousands of CA$ and in number of shares)	Number $	Number $	Number $ 32,635,206 68,120
As at January31,2020 and 2021	18,292,099 52,119	14,343,107 16,001

13.2 Dividend

During the fiscal year ended January 31, 2021, the Corporation recognized, as distribution to its Shareholders of Record as at April 30, 2020 and September 30, 2020, semi-annual dividends totaling $326,000 and $327,000 respectively, each representing $0.01 per share, for a total of $653,000 or $0.02 per share, of which $367,000 for subordinate voting shares and $286,000 for Multiple Voting Shares. These sums were paid on May 15, 2020 and October 16, 2020, respectively.

During the fiscal year ended January 31, 2020, the Corporation recognized, as distribution to its Shareholders of Record as at April 30, 2019 and September 30, 2019, semi-annual dividends totaling $326,000 and $327,000 respectively, each representing $0.01 per share, for a total of $653,000 or $0.02 per share, of which $367,000 for subordinate voting shares and $286,000 for Multiple Voting Shares. These sums were paid on May 15, 2019 and October 16, 2019, respectively.

13.3 Stock Option Plan

At January 31, 2021, a total of 3,263,521 subordinate voting shares (idem as at January 31, 2020) were reserved for the Stock Option Plan, of which 1,564,921 at January 31, 2021 (1,514,921 as at January 31, 2020) had not yet been granted.

The plan requires that the exercise price of the options granted must not be less than the closing market value on the day the options are granted by the Corporation’s Board of Directors. For the majority of these options, the right to exercise is acquired one year after the grant date, at the rate of 20% per year. All options have a 10-year life from the grant date.

As at January31,	2021	2020
	Options Weighted Average Exercise Price	Options Weighted Average Exercise Price
(In number of options and in dollars per option) Outstanding, at the beginning Expired Forfeited	Number $ 55,000 1.82 (50,000) 1.88 ― ―	Number $ 371,000 2.94 (156,000) 3.68 (160,000) 2.61
Outstanding,at the end	5,000 1.21	55,000 1.82
Exercisable,at the end	5,000 1.21	55,000 1.82

At January 31, 2021, the weighted average remaining contractual life of the options was 1.36 year.

13.4 Deferred Share Units Plan (“DSU”)

a) External Directors

The DSU are re-evaluated at fair value at the end of each reporting period until the vesting date, using the market price of the Corporation’s subordinate voting shares.

During the fiscal years ended January 31, 2021 and 2020, DSU compensation to External Directors recorded in the Consolidated Statement of Income (Loss) amounted to an expense of $344,000 and $428,000 respectively, including the impact of the change in the market price of the Corporation’s share, which amounted to an expense of $208,000 and $118,000, respectively during the fiscal years ended January 31, 2021 and 2020.

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The fluctuation in DSU for External Directors was as follows:

The fluctuation in DSU for External Directors was as follows:
Fiscal Years Ended January 31,	2021	2020
(In number of deferred share units) Outstanding, at the beginning of year Granted Distributed	Number 464,467 155,054 ―	Number 403,827 265,772 (205,132)
Outstandingand vested,at the end ofyear	619,521	464,467

The carrying amount and the intrinsic value of the liabilities related to the External Directors vested DSU amounted to $985,000 as at January 31, 2021, ($641,000 as at January 31, 2020), and is recorded in "Accounts Payable and Other Current Liabilities" in the Consolidated Statements of Financial Position.

b) Executive Officers and Key Employees

As set forth in the DSU Plan (as described in Note 2.15), the Corporation may grant DSU, on a discretionary basis, Executive Officers and key employees. These DSU usually vest gradually over a 2 to 5-year period, at a rate of 20% to 50% per year. The vested DSU will be bought back in cash by the Corporation on the date its holder ceases to be an officer or employee of the Corporation by reason of death, retirement or loss of function as officer or employee.

The DSU are recognized progressively in the Consolidated Statement of Income (Loss) over the vesting period and their costs is determined using a valuation model based on the market price of the Corporation’s subordinate voting shares.

The DSU compensation for Executive Officers and key employees, amounted to an expense of $125,000 for the fiscal year ended January 31, 2021 (an expense of $61,000 for the fiscal year ended January 31, 2020) and includes the impact of the change in the market price of the Corporation’s share, which amounted to an expense of $43,000 during the fiscal year ended January 31, 2021 (an expense of $41,000 during the fiscal year ended January 31, 2020).

The fluctuation in DSU for the Executive Officers and key employees was as follows:

$41,000 during the fiscal year ended January 31, 2020). The fluctuation in DSU for the Executive Officers and key employees was as follows:
Fiscal Years Ended January31,	2021	2020
(In number of deferred share units) Outstanding, at the beginning of year Granted Distributed Forfeited	Number 198,208 95,252 ― ―	Number 272,444 2,332 (67,465) (9,103)
Outstanding,at the end ofyear	293,460	198,208
Vested, at the end ofyear	174,125	136,559

The carrying amount of the liabilities related to Executive Officers and key employees’ DSU, amounting to $386,000 as at January 31, 2021 ($264,000 as at January 31, 2020), is recorded in "Accounts Payable and Other Current Liabilities" in the Consolidated Statements of Financial Position, and of which $277,000 correspond to the intrinsic value of vested DSU as at January 31, 2021 ($188,000 as at January 31, 2020).

13.5 Performance Share Units Plan (“PSU”)

During the fiscal year ended January 31, 2021, PSU compensation for Executive Officers and key employees (as described in Note 2.16) amounted to an expense of $529,000 (no amount for the fiscal year ended January 31, 2020) including the impact of the variation in the Corporation's share price, which amounted to an expense of $90,000 during the fiscal year ended January 31, 2021 (no impact from the variation in the Corporation’s share price during the fiscal year ended January 31, 2020).

Fluctuations in PSU for Executive Officers and key employees were as follows:

share price during the fiscal year ended January 31, 2020). Fluctuations in PSU for Executive Officers and key employees were as follows:
Fiscal Years Ended January31,	2021	2020
(In number of performance share units) Outstanding, at the beginning of year Granted	Number 211,373 134,875	Number ― 211,373
Outstanding,at the end ofyear	346,248	211,373
Vested, at the end ofyear	126,948	―

As at January 31, 2021, the carrying amount of the liabilities related the Executive Officers and key employees’ PSU, amounted to $520,000 (no amount as at January 31, 2020), including an amount of $202,000, which corresponds to the intrinsic value of the vested PSU as at January 31, 2021.

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NOTE 14 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 14 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Fiscal Years Ended January31,	2021	2020
(In thousands of CA$) Exchange differences on translation of foreign operations(1) Opening balance Changes duringtheperiod	$ 6,942 (1,056)	$ 6,648 294
Closingbalance	5,886	6,942

(1) The component "Translation of foreign operations" represents exchange differences relating to the translation from the functional currencies of the Corporation’s foreign operations into Canadian dollars. On the loss of control of a foreign operation, the cumulative translation differences are reclassified to the Consolidated Statement of Income (loss) as part of the gain or loss on disposal.

NOTE 15 INFORMATION RELATED TO CONTRACTS WITH CUSTOMERS

All revenues recognized during the fiscal years ended January 31, 2021 and 2020, derived from contracts with customers and have been included in revenues of the reporting period. The amounts recorded in the Consolidated Statement of Financial Position relate to current contracts at the end of the reporting period.

The amounts are calculated as net incurred costs, plus profits, less recognized losses and billings for the period. The carrying amount of assets and liabilities is as follows:

liabilities is as follows:
As at January31,	2021	2020
(In thousands of CA$) Total amount of costs incurred and margins recorded on all ongoing contracts Less advances andprogress billings	$ 610,820 (625,308)	$ 524,635 (513,644)
	(14,488)	10,991
Recognized as follows:
As at January31,	2021	2020
(In thousands of CA$) Amount owed by clients for work performed on contracts, recorded in contract assets Amount owed to clients for workperformed on contracts,recorded in contract liabilities	$ 8,790 (23,278)	$ 14,435 (3,444)
	(14,488)	10,991

Holdbacks on contracts amounted to $10,785,000 as at January 31, 2021, will be received at the time of the client’s approval of the work performed during the next 12 months ($11,628,000 as at January 31, 2020) and are included in current assets in the Consolidated Statement of Financial Position.

In addition to the foreign exchange fluctuations, the variation in contract assets and liabilities is mainly attributable to additional revenues recognized within the Corporation's normal course of business, and the billing of these activities to customers. The Corporation also receive advances and deposits from its customers before revenues were recognized.

The Corporation determined that less than 5% of its total revenues from performance obligations, recorded during the fiscal year ended January 31, 2021, were earned during previous periods. These revenues are primarily attributable to price adjustments approved by customers during the fiscal year ended January 31, 2021, for services earned in prior fiscal years as per the Corporation’s normal course of business.

In addition, revenues recorded during the fiscal year ended January 31, 2021, included the amount of $2,085,000 ($9,861,000 during the fiscal year ended January 31, 2020) as part of the opening balance of contract liabilities.

The amount of the transaction price related to performance obligations that were not fulfilled (or partially fulfilled) as at January 31, 2021, on all contracts with customers, is expected to be recognized in revenues as follows: 2022: $270,871,000 and thereafter: $165,286,000. It should be noted that these amounts exclude any estimated amounts of variable considerations that are excluded from the transaction price.

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NOTE 16 CLASSIFICATION OF EXPENSES BY NATURE

NOTE 16 CLASSIFICATION OF EXPENSES BY NATURE
Fiscal Years Ended January31,	2021	2020
(In thousands of CA$) Raw material, consumables and subcontracting Salaries and employees’ benefit expenses (Note 17) Transportation Drafting and engineering Amortization expenses Travelling and representation expenses Professional fees Maintenance and repairs Rental equipment Electricity and heating Management fees with related companies (Note 18) Insurance Taxes and permits Office expenses Other	$ 93,096 37,087 4,095 7,149 4,915 1,772 4,806 1,333 614 1,262 1,216 1,735 1,068 746 273	$ 89,069 52,684 6,041 7,431 4,723 3,299 5,488 1,298 2,491 1,589 1,401 1,528 999 826 341
	161,167	179,208

Distributed as follows:

Distributed as follows:
Fiscal Years Ended January31,	2021	2020
(In thousands of CA$) Cost of goods sold Sellingand administrative expenses	$ 146,388 14,779	$ 163,203 16,005
	161,167	179,208
Cost of goods sold is as follows:
Fiscal Years Ended January31,	2021	2020
(In thousands of CA$) Cost of goods sold excluding amortization Amortization ofproperty, plant and equipment,intangible assets and right-of-use assets	$ 142,675 3,713	$ 159,617 3,586
	146,388	163,203

NOTE 17 SALARIES AND EXPENSES RELATED TO EMPLOYEES BENEFITS

NOTE 17 SALARIES AND EXPENSES RELATED TO EMPLOYEES BENEFITS
Fiscal Years Ended January31,	2021	2020
(In thousands of CA$) Salaries and other short-term benefits(1) Social security costs Pension plan contributions Share-based compensation (Note 13) Others	$ 26,819 7,326 1,670 998 274	$ 38,481 11,793 1,634 491 285
	37,087	52,684

(1) Net of government grants totaling $6,347,000 for the year ended January 31, 2021 see note 4 (no amount for the fiscal year ended January 31, 2020).

NOTE 18 EXECUTIVE OFFICERS’ COMPENSATION

The Corporation’s principal Executive Officers are members of the Board of Directors and of the Management Committee of ADF Group Inc. (the parent company) and their related persons. Their compensation includes the following expenses:

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Fiscal Years Ended January31,	2021	2020
(In thousands of CA$) Salaries and other short-term benefits Social security costs Management fees(1) Pension plan contributions Share-based compensation Attendance fees	$ 1,953 210 1,216 140 998 274	$ 1,917 208 1,401 129 493 285
	4,791	4,433

(1) In the normal course of business, management agreements have been reached with companies held by a group of majority shareholders and are measured at exchange amount.

NOTE 19 NET FINANCIAL EXPENSES

Net financial expenses were as follows:

NOTE 19 NET FINANCIAL EXPENSES Net financial expenses were as follows:
Fiscal Years Ended January31,	2021	2020
(In thousands of CA$) Interest on long-term debt Interest on lease liabilities (Note 7) Interest on credit facilities Others	$ 938 258 323 144	$ 1,189 256 484 153
	1,663	2,082

NOTE 20 INCOME TAX

20.1 Income Tax Expense

0 INCOME TAX Income Tax Expense
Fiscal Years Ended January31,	2021	2020
(In thousands of CA$) Current Income tax expense duringthe fiscalyear	$ 740	$ (137)
Deferred Unrecognized deferred income tax assets from the United States Adjustments for prior fiscal years Recognition and reversal of temporarydifferences	702 20 690	515 41 (273)
	1,412	283
Income tax expense	2,152	146

The next table reconciles the Corporation’s income tax expense and the amount which would be obtained by multiplying income (loss) before income tax expense and the combined Canadian federal and provincial tax rates:

income tax expense and the combined Canadian federal and provincial tax rates:
Fiscal Years Ended January31,	2021	2020
(In thousands of CA$ and in percentage) Allowance using basic income tax rates Increase (decrease) resulting from: Difference in rates for foreign subsidiaries Non-taxable income related to the forgiveness of a COVID-19-related loan (Note 12) Unrecognized deferred income tax assets from the United States(1) Others	$ % 2,390 26.5 (19) (0.2) (968) (10.7) 702 7.8 47 0.5	$ % (528) (26.6) 66 3.4 ― ― 515 25.9 93 4.7
Income tax expense	2,152 23.9	146 7.4

(1) In light of the results of its U.S. subsidiaries, the Corporation has no recognized its new deferred income tax assets related to U.S. operations.

20.2 Deferred Income Tax Assets and Liabilities

The tables below provide the movement in deferred income tax assets and liabilities during the fiscal year, without taking into account the offsetting of the balances within the same tax jurisdiction:

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a) Deferred Income Tax Assets

	Tax Loss Carryovers	SR&ED Expenses	Financial Expenses and Other Deferred Charges	Foreign Exchange Forward Contracts	Others	Total
(In thousands of CA$) As at February 1, 2019 Recognized in the Consolidated Statement of Income (Loss) Exchange differences	$ ― 364 ―	$ 917 (6) ―	$ 309 74 ―	$ 49 (16) ―	$ 183 313 (11)	$ 1,458 729 (11)
As at January 31, 2020 Recognized in the Consolidated Statement of Income(Loss)	364 (364)	911 (361)	383 208	33 (33)	485 18	2,176 (532)
As at January 31, 2021	―	550	591	―	503	1,644

b) Deferred Income Tax Liabilities

of Income(Loss) As at January 31, 2021 Deferred Income Tax Liabilities	(364) ―	(361) 550	208 591	(33) ―	18 503	(532) 1,644
	Property, Plant and Equipment, Right- of-Use assets and Intangible Assets	Holdbacks on Contracts Receivable	Investment Tax Credits	Contract Assets	Foreign Exchange Forward Contracts	Total
(In thousands of CA$) As at February 1, 2019 Recognized in the Consolidated Statement of Income(Loss)	$ 3,823 399	$ 439 578	$ 353 —	$ 764 35	$ ― —	$ 5,379 1,012
As at January 31, 2020 Recognized in the Consolidated Statement of Income(Loss)	4,222 440	1,017 673	353 ―	799 (370)	― 137	6,391 880
As at January 31, 2021	4,662	1,690	353	429	137	7,271

The deferred income tax assets and liabilities are presented as follows in the Consolidated Statements of Financial Position:

As at January31,	2021	2020
(In thousands of CA$) Non-current deferred income tax assets Compensationper fiscaljurisdiction	$ 1,644 (1,644)	$ 2,176 (2,176)
	―	―
Non-current deferred income tax liabilities Compensationper fiscaljurisdiction	(7,271) 1,644	(6,391) 2,176
	(5,627)	(4,215)
Deferred income tax liabilities(net)	(5,627)	(4,215)

As at January 31, 2021, the Corporation had operating tax losses of $37,812,000 available in the United States ($33,334,000 as at January 31, 2020) which can be utilised in future periods, for which no deferred tax asset has been recognized. These losses carry forwards expire between 2024 and 2040.

The movement in the net deferred income tax assets and liabilities is provided in the table below:

As at January31,	2021	2020
(In thousands of CA$) Beginning of fiscal year Recognized in the Consolidated Statement of Income (Loss) Effect of fluctuations in exchange rates	$ (4,215) (1,412) ―	$ (3,921) (283) (11)
End of fiscalyear	(5,627)	(4,215)

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Audited Consolidated Financial Statements Notes to the Audited Consolidated Financial Statements

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NOTE 21 EARNINGS PER SHARE

Diluted income per share were calculated using the treasury stock method. The table hereafter reconciles the numerator and denominator used in the calculation of basic and diluted earnings per share.

calculation of basic and diluted earnings per share.
Fiscal Years Ended January31,	2021	2020
Numerator(in thousands of CA$) Numerator applicable to basic and diluted earningsper share	6,867	(2,132)
Denominator(in thousands) Basic and diluted weighted average number of shares	32,635	32,635

For the purpose of computing diluted earnings per share, the Corporation must account for stock options as a dilutive instrument.

During the fiscal years ended January 31, 2020 and 2021, no stock options were included in the computation of diluted earnings per share because of their antidilutive effect.

NOTE 22 SUPPLEMENTAL CASH FLOWS INFORMATION

22.1 Change in Non-Cash Working Capital Items

The following table sets out in detail the components of the "Change in non-cash working capital items":

Fiscal Years Ended January 31,	2021	2020 $ (10,360) (5,491) 3,660 554 74 13,597 (7,679) (10) (5,655)
(In thousands of CA$) Accounts receivable Holdbacks on contracts Contract assets Inventories Prepaid expenses and other current assets Accounts payable and other current liabilities Contract liabilities Other	$ (11,378) 508 5,236 830 (922) 3,580 20,793 (10)
Change in non-cash workingcapital items	18,637

22.2 Changes in Liabilities Arising from Financing Activities

The following tables reconcile the beginning and ending balances of the consolidated statement of financial position for long-term debt, lease liabilities and credit facilities, including the current portion of long-term debt:

a) Long-Term Debts

Long-Term Debts
Fiscal Years Ended January 31,	2021	2020
(In thousands of CA$) Balance, beginning of fiscal year Repayment of long-term debt Issuance of long-term debt Government grants (Note 12) Effect of fluctuations in exchange rates	$ 21,059 (1,918) 5,654 (3,949) (574)	$ 22,912 (1,884) ― ― 31
Balance, end of fiscal year	20,272	21,059

b) Lease Liabilities

Lease Liabilities
Fiscal Years Ended January 31,	2021	2020
(In thousands of CA$) Balance, beginning of fiscal year New leases Disposal of leases Payment Effect of fluctuations in exchange rates	$ 6,000 637 (232) (961) (135)	$ 5,367 1,388 (17) (771) 33
Balance,end of fiscalyear	5,309	6,000

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c) Credit Facilities

Credit Facilities
Fiscal Years Ended January31,	2021	2020
(In thousands of CA$) Balance at the beginning of fiscal year Net variation	$ 13,105 (13,105)	6,605 6,500
Balance, end of fiscalyear	―	13,105

NOTE 23 COMMITMENTS

As at January 31, 2021, the Corporation’s commitments totalled $180,000 under long-term contracts with suppliers for the current and future services provided. The minimum annual payments due are spread over the next two (2) fiscal years and are as follows:

provided. The minimum annual payments due are spread over the next two (2) fiscal years and are as follows:
Fiscal Years Ended January31,	2022	2023
(In thousands of CA$)	$	$ 67
Long-term contracts	113

NOTE 24 CONTINGENCIES

24.1 Bonding Agreements

In the normal course of business, the Corporation may be required by clients to provide performance bonds for the execution of work. In order to provide such bonds, some subsidiaries of the Corporation have entered into general indemnity agreements with bonding companies. To guarantee their obligations under the terms of these agreements, the Corporation and these subsidiaries have granted the bonding companies a movable hypothec on certain assets such as rights, titles, licences, and equipment, work in progress and accounts receivable. The bonding issued on the ongoing projects as at January 31, 2021, stood at $438,750,000.

24.2 Litigation

In the normal course of business, the Corporation becomes involved in various legal proceedings. While the final outcome with respect to legal proceedings pending as at January 31, 2021, cannot be predicted with certainty, Management believes that their resolution will not have a material adverse effect on the financial position or results of the Corporation.

NOTE 25 PENSION PLANS

The Corporation offers to all eligible employees defined contribution pension plans in Canada and the United-States (401k), for which the Corporation contributes an amount equal to a percentage of the employee’s salary or equal to a predetermined amount.

The expense related to these pension plans amounted to $802,000 during the fiscal year ended January 31, 2021 ($777,000 in the fiscal year ended January 31, 2020).

NOTE 26 CAPITAL DISCLOSURES

The Corporation’s objectives when managing capital are to:

• Maintain a structure in order to optimize the cost of capital based on an acceptable risk level, while offering an adequate return to shareholders;

• Manage capital in an optimal manner, while ensuring that the lenders’ financial covenants are respected;

• Manage capital in order to uphold a bonding capacity in line with the Corporation’s growth objectives; and

• Further increase capital in order to preserve the trust of investors, lenders, suppliers and clients.

The Corporation defines capital as the sum of shareholders’ equity, long-term debt and lease liabilities, including current portion, and short-term bank loans, where appropriate.

The Corporation has not made any changes to its capital management since the last fiscal years. Generally, the Corporation manages its capital structure and make adjustments based on the objectives previously mentioned, economic trends, as well as all underlying risks related to the contracts in hand.

In order to uphold or readjust its capital structure, the Corporation can:

• Issue new treasury shares;

• Amend the dividend paid to shareholders;

• Redeem subordinate voting shares;

• Incur new debts, and

• Sell certain assets to reduce indebtedness.

In addition, the Corporation periodically monitor its capital, namely with regard to a number of financial indicators, of which the “Total of the credit facilities and long-term debt including lease liabilities, net of cash and cash equivalents, to shareholders’ equity” ratio. This ratio measures the level of the credit facilities and long-term financing including lease liabilities, net of cash and cash equivalents, in relation to the capital invested by shareholders. This financial indicator does not have standardized meaning as prescribed by IFRS and therefore may not be comparable to similar measurements presented by other issuers.

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As at January 31,	2021	2020
Total credit facilities and current portion and long-term debt and lease liabilities, net of cash and cash equivalents(In thousands of CA$) Shareholders’ equity(In thousands of CA$) Total credit facilities and current portion and long-term debt and lease liabilities, net of cash and cash equivalents,to shareholders’ equityratio	7,775 99,565 0.08 :1	36,181 94,407 0.38 :1

The Corporation’s goal is to maintain a positive ratio of 0.50:1 or less. Moreover, this goal could be revised in light of developing projects that will be considered strategic and conducive.

NOTE 27 FINANCIAL RISK MANAGEMENT

The Corporation is party to financial instruments, and thus, is particularly exposed to market risks (Section 27.1), credit and credit concentration risks (Section 27.2), and liquidity risks (Section 27.3).

27.1 Market Risk

The risk that the fair value of future cash flows of financial instruments will fluctuate because of changes in market prices, whether those changes are caused by factors specific to distinct financial instruments or its issuer, or factors affecting all similar financial instruments traded in the market. The Corporation is particularly exposed to the following market risks:

• a) Foreign exchange risk

• b) Interest rate risk

The Corporation is exposed to risks of various importance that could have an impact on its capacity to reach its strategic growth objectives. The Corporation aims to control and mitigate its financial risks through management practices that require the identification and analysis of the risks related to its operations. Periodic monitoring and review of these risks are performed based on market conditions and the Corporation’s level of activity.

A description of the main financial risks to which the Corporation is exposed is provided below:

a) Foreign Exchange Risk

The Corporation is exposed to exchange rate fluctuations between the Canadian and US dollar, since a significant portion of its revenues is generally recorded in US dollars. For the year ended January 31, 2021, 81% of the Corporation’s revenues were recorded in US dollars (92% during the fiscal year ended January 31, 2020). Notwithstanding these variations and pursuant to its foreign currency hedge policy, the Corporation uses different mechanisms to mitigate the impact of these fluctuations on its results, such as:

• Maximizing purchases in US dollars when possible to avail itself of a natural hedging;

• Acquiring fabrication equipment in US dollars;

• Issuance of long-term debt in US dollars;

• Using hedge accounting, the case may be, and

• Using foreign exchange forward contracts and/or foreign currency options to hedge part of the residual exchange risk.

In line with its hedging policy, to manage its net risk between the future US-denominated cash inflows and outflows, the Corporation entered into foreign exchange forward contracts.

As at January 31, 2021, the Corporation was party to foreign exchange forward contracts for the sale of US$24,058,000 (US$50,568,000 as at January 31, 2020) with maturities varying between three (3) months to nine (9) months with rates between 1.2763 and 1.3412 (between 1.3005 and 1.3415 as at January 31, 2020). These derivative financial instruments are classified as held for trading and are measured at their fair value at the end of each period since they are not designated as part of an effective hedging relationship.

For this purpose, the fair value of foreign exchange forward contracts recorded in current liabilities under "Derivative Financial Instruments" was $517,000 as at January 31, 2021, and $123,000 as at January 31, 2020. During the fiscal year ended January 31, 2021, a realized and unrealized gain of $946,000 (a realized and unrealized loss of $174,000 for the fiscal year ended January 31, 2020, was recorded in the Consolidated Statement of Income (Loss) under the item "Foreign Exchange (Gain) Loss").

The following table summarizes significant non-derivative financial assets and liabilities that are subject to a foreign currency exposure as at January 31, 2021 and 2020, and whose foreign currency exposure is recognized in income:

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As at January31,	2021	2020
(In thousands of US$) Financial assets Cash and cash equivalents Accounts receivable Holdbacks on contracts Current advances to subsidiaries(1)	$ 1,390 10,080 3,139 20,397	$ 47 13,331 2,844 22,848
	35,006	39,070
Financial liabilities Accountspayable and other current liabilities	6,016	4,771
	6,016	4,771
Net exposure	28,990	34,299

(1) Although these balances are eliminated in the Consolidated Statement of Financial Position, the effects of currency fluctuations are recorded in net income (loss).

Based on the balance, as at January 31, 2021, of the Corporation’s financial instruments denominated in foreign currencies, a 10% fluctuation in the exchange rate between the Canadian and US dollars, while all other variables remaining constant, would have an impact of $630,000 on net income before tax (a non-material impact for the year ended January 31, 2020).

b) Interest Rate Risk

The Corporation is exposed to interest rate fluctuations mainly because of the floating interest rate of its credit facilities and a portion of its long-term debt, where applicable (Notes 10 and 12). In addition, the interest rate fluctuations could also affect the Corporation’s financial revenues generated by the cash and cash equivalents.

The Corporation’s interest rate policy generally requires that an appropriate mix between fixed interest and floating interest debts be maintained in order to reduce the net impact of interest rate fluctuations. According to this policy, if this combination is unsuitable, the Corporation can use interest-rate swaps so as to achieve a less volatile interest expense.

According to the Corporation’s Management, as at January 31, 2021 and 2020, the use of interest rate swap was no longer required to hedge the interest rate risk, given that the balance of the long-term debt, including the short-term credit facilities, included a reasonable combination of fixed and floating interest rates.

Based on the balance of the floating interest rate debt as at January 31, 2021 and 2020, the impact of an upward or downward 0.5% change in interest rates, assuming all other variables remain constant, would have had an immaterial impact on the Corporation's net income (loss) over a horizon of 12 months.

27.2 Credit and Credit Concentration Risks

a) Credit Risk

Risk, that a party to a financial instrument neglecting its obligations will cause a financial loss for the other party.

b) Credit Concentration Risk

Risk that the business deals with a limited number of clients and financial institutions, which might increase the credit risk, as defined above.

In the normal course of business, the Corporation's exposure to credit risks results from the possibility that a client or financial institution may default, in part or in whole, on their financial obligations as they come due. Concentration of credit risk relates to cash equivalents, when applicable, accounts receivable and holdbacks on contracts.

Cash equivalents are usually risk-free or low risk investments. Where this is the case, the Corporation deposit its cash equivalents with recognized financial institutions, the most important of which are Canadian chartered banks.

In the normal course of business, the Corporation grants credit to its clients. The Corporation carries out credit checks on its clients, declares their contracts directly to the owner and when relevant, to the bonding company involved in the project. Finally, the Corporation establishes allowances for credit losses, if applicable, using the expected credit losses to estimate this allowance. This method takes into account the credit risks of its customers, the expected life of these financial assets, historical trends and economic conditions.

Credit risk with respect to accounts receivable is mitigated by the available mechanisms of protection in case of non-payment, including liens on buildings, and given that the Corporation's clients tend to be general contractors, or companies doing business with contractors governed by rigorous practices and servicing adequately funded projects.

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As at January 31, 2021, 4% of accounts receivable, representing $1,958,000 (14% or $5,392,000 as at January 31, 2020) was overdue under contractual terms (over 90 days). Management believes that most of these accounts are with established corporations or were cashed since, and therefore, the Corporation does not believe that it is exposed to an unusual or significant level of risk as at January 31, 2021 and 2020.

As previously described, credit risk arising from the concentration of its clients is also mitigated through monitoring and the measures available to the Corporation. January 31, 2021, 63% of accounts receivable was concentrated with three (3) clients (47% of accounts receivable attributable to two (2) clients as at January 31, 2020). It should be noted that given the specialization of its market niches and the nature of the contracts that the Corporation submits bids for, such concentration regularly occurs in the Corporation’s activities.

27.3 Liquidity Risk

Liquidity risk is the risk that the Corporation is unable to fulfill its obligations as they come due. The Corporation manages its liquidity risk by forecasting cash flows from operating, investing and financing activities. The senior management is also actively involved in the review and approval of contracts with clients and planned capital expenditures. To fund its liquidity requirements, the Corporation uses cash flows from its operating activities, the credit facilities, issuance of debts and shares. In addition, in order to alleviate this risk, the Corporation has a policy that essentially targets contracts that can generate positive cash flows throughout their execution.

As at January 31, 2021, the maturity analysis of financial liabilities was as follows:

	Book Value as at January 31, 2021	Less than 1 year	From 1 to 3 Years	From 4 to 5 Years	More than 5 years	Total
(In thousands of CA$) Accounts payable and other current liabilities Long-term debt Principal Interest Lease liabilities Principal Interest	$ 34,562 20,272 5,309	$ 34,562 1,909 864 1,143 206	$ ― 4,811 1,531 1,568 288	$ ― 2,353 1,213 1,084 180	$ ― 11,276 2,643 1,514 119	$ 34,562 20,349 6,251 5,309 793
	60,143	38,684	8,198	4,830	15,552	67,264

As at January 31, 2020, the maturity analysis of financial liabilities was as follows:

	Book Value as at January 31, 2020	Less than 1 year	From 1 to 3 Years	From 4 to 5 Years	More than 5 years	Total
(In thousands of CA$) Credit facilities Accounts payable and other current liabilities Long-term debt Principal Interest Lease liabilities Principal Interest	$ 13,105 30,788 21,059 6,000	$ 13,105 30,788 1,909 950 1,070 244	$ ― ― 3,808 1,648 1,837 342	$ ― ― 2,972 1,338 1,090 223	$ ― ― 12,453 3,221 2,003 203	$ 13,105 30,788 21,142 7,157 6,000 1,012
	70,952	48,066	7,635	5,623	17,880	79,204

Balances in US dollars and/or subject to floating interest rates are established based on the relevant spot rates at the respective dates.

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NOTE 28 FINANCIAL INSTRUMENTS

28.1 Categories for Measurement

The next table provides the book value per class of financial instruments:

8 FINANCIAL INSTRUMENTS Categories for Measurement The next table provides the book value per class of financial instruments:
As at January31,	2021	2020
(In thousands of CA$) Financial assets at amortized cost Cash and cash equivalents Accounts receivable Holdbacks on contracts	$ 17,806 50,234 10,785	$ 3,983 39,555 11,628
	78,825	55,166
Financial assets at fair value through net income Derivative financial instruments	517	―
	517	―
Financial liabilities at fair value through net income Derivative financial instruments	―	123
	―	123
Financial liabilities to amortized cost Credit facilities Accounts payable and other current liabilities(1) Long-term debt(2)	― 24,781 20,272	13,105 23,991 21,059
	45,053	58,155

(1) Excludes amounts due for statutory liabilities, employee benefits and share-based payments.

(2) Excludes lease liabilities.

As at January 31, 2021 and 2020, given the upcoming maturity dates of cash and cash equivalents, accounts receivable, other current assets, holdbacks on contracts, contract assets, credit facilities, accounts payable and other current liabilities, as well as contract liabilities, their fair value was approximately equal to their book value.

The fair value of the long-term debt (excluding the lease liabilities) did not differ significantly from its book value as at January 31, 2021 and 2020, as the effective interest rates reflect current market conditions.

28.2 Fair Value Hierarchy of Financial Assets and Liabilities

In accordance with IFRS, the Corporation measures its financial assets and liabilities using the following fair value hierarchies, which have been defined as follows:

• Fair value - Level 1: Quoted price (unadjusted) in active markets for identical assets or liabilities.

• Fair value - Level 2: For inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices).

• Fair value - Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

For all financial instruments measured at fair value, the Corporation classified fair value measurements at level 2, as they are primarily based on observable data other than in an active market.

NOTE 29 SEGMENTED INFORMATION

The Corporation operates one operational sector, being, the nonresidential construction industry, primarily in the United States and Canada. This sector includes the following areas of expertise: the design and engineering of connections, fabrication, including industrial coating, and installation of complex steel structures, heavy steel built-ups, as well as miscellaneous and architectural metalwork.

steel structures, heavy steel built-ups, as well as miscellaneous and architectural metalwork.
Fiscal Years Ended January31,	2021	2020
(In thousands of CA$) Revenues Canada United States	$ 32,025 140,568	$ 13,906 165,804
	172,593	179,710

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Audited Consolidated Financial Statements Notes to the Audited Consolidated Financial Statements

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As at January31,	2021	2020
(In thousands of CA$) Non-current assets(1) Canada United States	$ 46,794 42,561	$ 48,281 45,301
	89,355	93,582

(1) The non-current assets mainly include property, plant and equipment, intangible assets, right-of-use assets. investment tax credits and others non-current assets.

Revenues from external clients were allocated to each country on the basis of the project’s location.

During the fiscal year ended January 31, 2021, 66% of the Corporation’s revenues was realized with three (3) clients, each representing 10 % and more of its revenues (72% with four (4) clients during the fiscal year ended January 31, 2020).

The following table presents the breakdown of revenues for each of these clients:

its revenues (72% with four (4) clients during the fiscal year ended January 31, 2020). The following table presents the breakdown of revenues for each of these clients:
Fiscal Years Ended January31,	2021(1)	2020(2)
(In thousands of Canadian dollars) Client A Client B Client C Client D Client E Client F Client G	$ ― ― ― ― 63,613 28,141 21,517	$ 20,518 32,812 43,415 31,894 ― ― ―
	113,271	128,639

(1) All from the United States, except for an amount of $21,517,000 from Canada.

(2) All from the United States.

NOTE 30 SUBSEQUENT EVENT

Dividend

On April 7, 2021, the Corporation’s Board of Directors approved a semi-annual dividend of $0.01 per share payable on May 17, 2021 to shareholders of record as at April 30, 2021.

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The electronic version of this document is also available ADF GROUP INC. at www.adfgroup.com and at www.sedar.com. 300 Henry-Bessemer Terrebonne, Quebec, Canada J6Y 1T3 Ce document est aussi disponible en français. T. (450) 965-1911 / 1 800) 263-7560 infos@adfgroup.com / www.adfgroup.com Toronto Stock Exchange: TSX: DRX*