ADF Group Inc. — Interim / Quarterly Report 2023

Jun 8, 2022

Management’s Discussion and Analysis of the Financial Position and Operating Results Three-Month Period Ended April 30, 2022

Toronto Stock Exchange : TSX/ DRX

1[st] Quarter Ended April 30, 2022 Page i

Management’s Discussion and Analysis of the Financial Position and Operating Results Table of Contents

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1.	GENERAL ..................................................................................................................................................................................................................................1
2.	FORWARD-LOOKING STATEMENTS..........................................................................................................................................................................................1
3.	GENERAL OVERVIEW ...............................................................................................................................................................................................................1
4.	COMMERCIAL POSITIONING ....................................................................................................................................................................................................1
5.	MARKET TRENDS .....................................................................................................................................................................................................................2
6.	SIGNIFICANT EVENTS OF THE THREE-MONTH PERIOD ENDED APRIL 30, 2022 ........................................................................................................................2
7.	SIGNIFICANT EVENTS THAT OCCURRED SINCE APRIL 30, 2022 ................................................................................................................................................2
8.	CONFLICT IN UKRAINE .............................................................................................................................................................................................................2
9.	EXCHANGE RATE ......................................................................................................................................................................................................................3
10.	NON-GAAP FINANCIAL MEASURES AND OTHER FINANCIAL MEASURES ..................................................................................................................................3
11.	ANALYSIS OF OPERATING RESULTS FOR THE THREE-MONTH PERIOD ENDED APRIL 30, 2022 ................................................................................................4
12.	COMPARATIVE INFORMATION FOR THE LAST EIGHT QUATERS ..............................................................................................................................................7
13.	CASH FLOW AND FINANCIAL POSITION ...................................................................................................................................................................................8
14.	CAPITAL STOCK ......................................................................................................................................................................................................................10
15.	DIVIDEND ...............................................................................................................................................................................................................................10
16.	ORDER BACKLOG(1)...............................................................................................................................................................................................................10
17.	FINANCIAL POSITION .............................................................................................................................................................................................................10
18.	CURRENT ECONOMIC ENVIRONMENT ...................................................................................................................................................................................11
19.	EXTERNAL FACTORS TO WHICH THE CORPORATION’S PERFORMANCE IS EXPOSED .............................................................................................................11
20.	FINANCIAL INSTRUMENTS .....................................................................................................................................................................................................12
21.	CONTROLS AND PROCEDURES ...............................................................................................................................................................................................12
22.	SIGNIFICANT ACCOUNTING POLICIES, ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGEMENTS ..................................................................12
23.	ENVIRONMENT ......................................................................................................................................................................................................................12
24.	HUMAN RESOURCES ..............................................................................................................................................................................................................13
25.	SUBSEQUENT EVENT ..............................................................................................................................................................................................................13
26.	OUTLOOK ...............................................................................................................................................................................................................................13
27.	ADDITIONAL INFORMATION ..................................................................................................................................................................................................13

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Management’s Discussion and Analysis of the Financial Position and Operating Results

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1. GENERAL

The purpose of this management’s discussion and analysis of the financial position and operating results ("MD&A Report") is to provide the reader with an overview of the changes in the financial position of ADF Group Inc. ("ADF", "ADF Group" or "the Corporation") between February 1, 2022 and April 30, 2022. It also compares the operating results and cash flows for the three-month period ended April 30, 2022, to those of the same period of the previous fiscal year. This MD&A Report covers all major events that occurred between February 1, 2022 and June 7, 2022, on which date ADF Group Inc.’s Board of Directors approved the unaudited interim condensed consolidated financial statements, as well as the MD&A Report for the three-month period ended April 30, 2022.

This MD&A Report should be read in conjunction with the Corporation’s Unaudited Interim Condensed Consolidated Financial Statements and the notes thereto for the three-month period ended April 30, 2022, as well with the Audited Consolidated Financial Statement and Management’s Discussion and Analysis of the Financial Position and Operating Results Report for the fiscal year ended January 31, 2022.

The unaudited interim condensed consolidated financial statements and the comparative information for the three-month period ended April 30, 2022, have been prepared in accordance with the International Financial Reporting Standard ("IFRS") as issued by the International Accounting Standards Board ("IASB") and applicable to interim financial reports, including International Accounting Standard 34 Interim Financial Reporting The summary of significant accounting policies applied by the Corporation in accordance with IFRS is presented in Note 2 to the Unaudited Interim Condensed Consolidated Financial Statements for the Three-Month Period Ended April 30, 2022.

The Corporation reports its results in Canadian dollars. All amounts in this MD&A Report are expressed in Canadian dollars, except where otherwise indicated.

2.

FORWARD-LOOKING STATEMENTS

In order to provide shareholders and potential investors with additional information regarding ADF, in particular Management’s assessment of future plans and operations, certain statements in this MD&A Report are forward-looking statements subject to risks, uncertainties and other important factors that could cause the Corporation’s actual performance to differ from those expressed in or implied by these forward-looking statements.

Such factors include, but are not limited to the impact of economic conditions in Canada and the United States; industry conditions including amendments in laws and regulations; increased competition; potential shortfall of qualified personnel or managers; availability and fluctuations in commodity prices; foreign exchange or interest rate fluctuations; stock market volatility; and the impact of accounting policies issued by Canadian, U.S. and international standard setters. Some of these factors are further discussed under Section 19 "External Factors to Which the Corporation’s Performance is Exposed" in this MD&A Report. It should be noted that the list of factors that may affect future growth, results and performance, provided in this MD&A Report, is not exhaustive. The reader should not place undue reliance on forward-looking statements.

The expectations expressed by the forward-looking statements are based on information available to the Corporation on the date such statements were made. However, there can be no assurance that such estimates will prove to be correct. All subsequent forward-looking statements made, whether written or verbally, by the Corporation or persons acting on its behalf, are expressly qualified in their entirety by the caveats referred to above. Unless otherwise required by applicable securities legislation, the Corporation expressly disclaims any intention, and assumes no obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

3.

GENERAL OVERVIEW

From a blacksmith shop founded in 1956, ADF Group has become over the years a North American leader in 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. The Corporation’s products and services are intended for the following five principal segments of the non-residential construction industry: office towers and high-rises, commercial and recreational buildings, airport facilities, industrial complexes and transport infrastructure. The Corporation uses the latest technologies in its industry and operates two state-of-the-art fabrication plants and two cuttingedge paint shops. ADF Group’s complex located in Canada houses the Corporation’s head office, the 58,530-square-metre (630,000-square-foot) fabrication plant, which includes the 3,900 square-meter (42,000 square feet) paint shop. ADF’s complex in the United-States is home to the 9,290-square-metre (100,000 square feet) fabrication plant, the 60-acre pre-assembly yard and the 4,460-square-meter (48,000 square feet) dualpurpose building, adjacent to the fabrication plant, housing a 2,323-square-meter (25,000 square feet) paint and blast zone, and a 2,137-squaremeter (23,000 square feet) area for preparation and detailing work.

A pioneer in the development and implementation of innovative solutions, the Corporation is recognized for its engineering expertise, its project management, its important fabrication capacity and its skills in two specialized market niches: the fabrication of steel superstructures with a high level of architectural and geometric complexity, and projects subject to fast-track schedules. ADF Group’s commitment to deliver every project in accordance with the industry’s highest quality standards constitutes a core aspect of the Corporation’s mission.

4. COMMERCIAL POSITIONING

ADF Group serves a diversified client base in the non-residential construction market in Canada and the United States, including general contractors, project owners, engineering firms and project architects, structural steel erectors, and other steel structure fabricators.

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5. MARKET TRENDS

The non-residential construction industry includes the products and services related to the construction of commercial, institutional and industrial buildings, such as office towers, commercial buildings, hotels, sports complexes, museums, recreational complexes, as well as manufacturing plants and other industrial facilities. This sector also encompasses public works, including the construction and renovation of infrastructure and buildings, notably, hydroelectric dams, airports, bridges and overpasses. It should be noted that the demand in this sector is related to business cycles. Generally, there are more private projects in a bull cycle, whereas government projects take over in a bear cycle.

According to Management, approximately half of the non-residential projects use structural steel as a structural component, while the other half primarily uses concrete. Generally, structural steel accounts for about 10% to 20% of a project’s total cost, depending on the project’s nature. Structural steel offers a number of advantages when compared to other materials, which explains its increasing use in the construction of complex structures. These advantages include durability, speed of installation, greater flexibility in fast-track projects, lower installation and maintenance costs, as well as its high strength/weight ratio as a result of improved alloys.

Generally, there are more complex steel structure projects in the United States than in Canada, which can result in a certain dependence of the Corporation on the U.S. market.

Over the past few months, inflationary pressures have pushed up the costs of several inputs, including the costs of labour, diesel and some raw materials. The conflict in Ukraine (see section 8 "Conflict in Ukraine" of this MD&A report) also adds a certain amount of uncertainty, mainly felt in the stock markets.

These elements will certainly have a short-term impact on the prices and margins of projects, but have not, for the time being, had an impact on the growth and strength of the markets served by ADF.

Two recently published indexes allow us to remain optimistic: The Architectural Billings Index ("ABI")[(1)] of March 2022 has gone up 13 % compared to February 2022. Note that this index reflects the growth of projects under study by architectural firms in the United States. In addition, the number of cranes in operation in North America increased by 4.7%[(2) ] between the third quarter of 2021 and the end of the first quarter of 2022. This index reflects the upward trend in the number of projects currently under construction, which is another promising sign for our Corporation. It should be noted that 10% of the cranes currently in operation are in the Los Angeles area, in the U.S.A., where ADF has been present for several years now.

1 Source: American Institute of Architects (AIA), Apr-20-22

2 Source: Construction Dive, Apr-08-22

6. SIGNIFICANT EVENTS OF THE THREE-MONTH PERIOD ENDED APRIL 30, 2022

6.1.

Dividend

On April 11, 2022, the Corporation’s Board of Directors approved a semi-annual dividend of $0.01 per share, which was paid on May 17, 2022 to shareholders of record as at April 29, 2022.

6.2.

New Financing

On January 14, 2022, and January 18, 2022, the Corporation obtained two bank loans from Investissement Québec (“IQ”), totaling $20.0 million, which went and will go toward financing the capital expenditure program previously announced by the Corporation, and initiated during the fiscal year ended January 31, 2022 (refer to Section 13.5 “Contractual Obligations” for more details).

7. SIGNIFICANT EVENTS THAT OCCURRED SINCE APRIL 30, 2022

7.1.

Forgiveness of a COVID-19- Related Loan

In May 2022, the Corporation obtained the forgiveness of a loan of $1.3 million (US$1.0 million) issued to one of its U.S. subsidiaries. This forgiveness will result in the recognition of a government grant, mostly, against salary expense in the second quarter ending July 31, 2022 (see Section 25 "Subsequent Event" for more details).

7.2.

New Contracts

On June 7, 2022, the Corporation announced the signing of new major contracts, all in the automotive sector in the U.S. Midwest region, with a total value of $90.0 million.

These new orders consist in the fabrication, including the supply of raw materials (steel) and industrial coating, as well as the design and engineering of connections, and the delivery of steel structures used in the construction of new large surface industrial facilities. Fabrication work on these new projects characterized by high tonnage and tight completion schedules, will begin in the coming weeks at ADF's Terrebonne plant, and is scheduled to extend until the first quarter of the fiscal year ending January 31, 2024.

8. CONFLICT IN UKRAINE

For the three-month period ended April 30, 2022 and as of the date hereof, the conflict in Ukraine has not had a direct impact on the Corporation’s operations or financial results, other than the impact that this conflict may have on inflation. The Corporation does not have projects abroad and does not source from the regions affected by this conflict.

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The Corporation will continue to monitor the situation, but does not foresee any impact in the short term, other than the potential impact on inflation.

9. EXCHANGE RATE

The Corporation is subject to foreign currency fluctuations from the translation of revenues, expenses, assets and liabilities of its foreign operations and from commercial transactions denominated in foreign currencies. Average monthly rates (considered a reasonable approximation to actual rates at the date of transactions) are used to translate revenues (except for foreign exchange forward contracts) and expenses for the periods mentioned, while closing rates translate assets and liabilities.

During the three-month period ended April 30, 2022, and during each of the four quarters of the previous fiscal year, the Corporation used the following exchange rates between the Canadian and U.S. dollars:

(CA$/US$)	Consolidated Statements of Income and Comprehensive Income	Consolidated Statements of Financial Position
First quarter (April 30, 2021) Second quarter (July 31, 2021) Third quarter (October 31, 2021) Fourth quarter (January 31, 2022)	1.2585 1.2293 1.2571 1.2661	1.2285 1.2462 1.2384 1.2719 1.2792
Firstquarter(April 30, 2022)	1.2666

The Canadian dollar lost value against the U.S. dollar over the periods analyzed, mainly when comparing the first quarters ended April 30, 2022 and 2021.

Although the Corporation enters into foreign exchange contracts from time to time and according to its internal policy in order to hedge the foreign exchange risk, these exchange rate variations have had an immaterial impact of on the gross margin for the three-month period ended April 30, 2022, and generated a foreign exchange loss of $0.3 million on the Consolidated Statement of Income for the same period.

10. NON-GAAP FINANCIAL MEASURES AND OTHER FINANCIAL MEASURES

This MD&A Report is based on results prepared in accordance with IFRS and includes non-GAAP financial measures and other financial measures. Non-GAAP financial measures provide useful additional information, but do not have standardized meanings established in accordance with GAAP. Readers should be careful not to confuse or substitute them with performance measures prepared in accordance with GAAP. In addition, readers should avoid comparing these non-GAAP financial measures to similarly titled measures provided or used by other issuers. When such indicators are presented, they are defined and the reader is notified.

The Corporation uses the following indicators to measure its operating performance and the achievement of objectives:

Three-Month Periods EndedApril 30,	2022	2021
Non-GAAP financial measures Adjusted earnings before interest, tax, depreciation and amortization (Adjusted EBITDA) (in thousands of dollars) Adjusted EBITDA margin(as a percentage of revenues) Supplementary financial measures Gross margin(as apercentage of revenues)	5,602 8.2% 12.1%	6,112 12.1% 15.4%
As at	April 30, 2022	January 31, 2022
Supplementary financial measures Working capital(in thousands of dollars) Working capital ratio Order backlog (in thousands of dollars)	54,359 1.90:1 325,391	38,713 1.74:1 373,100

10.1. Adjusted EBITDA and Adjusted EBITDA Margin

The adjusted EBITDA and the adjusted EBITDA margin show the extent to which the Corporation generates profits from operations, without considering the following items:

• Financial revenues and financial expenses;

• Income tax expense;

• Foreign exchange losses, and

• Depreciation and amortization of property, plant and equipment, intangible assets and right-of-use assets.

Net income is reconciled with adjusted EBITDA in the table below:

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Three--Month Periods EndedApril 30,	2022	2021
(In thousands of dollars) Net income	$ 4,256	$ 4,395
Income tax expense (recovery) Net financial expenses Amortization Foreign exchange loss	(366) 198 1,183 331	101 293 1,215 108
Adjusted EBITDA — As a % of revenues(1)	5,602 8.2%	6,112 12.1%

(1) The adjusted EBITDA margin results from dividing adjusted EBITDA by revenues.

When compared to the same period ended a year earlier, adjusted EBITDA for the three-month period ended April 30, 2022, benefited a tax recovery and lower financial expenses and amortization. These favorable items were more than offset by a larger foreign exchange loss and higher selling and administrative expenses. These variances are discussed in more detail in this MD&A report.

As for the adjusted EBITDA for the three-month period ended April 30, 2021, it benefited from COVID-19 related subsidies from the Government of Canada. The total amount of the subsidies included in the results, and thus having mainly improved the gross margin, and to a lesser extent the selling and administrative expenses, and therefore the adjusted EBITDA had then totalled $1.9 million.

10.2. Gross Margin as a Percentage of Revenues

The gross margin as a percentage of revenue indicator is used by the Corporation to assess the level of profitability for a given period based on the project mix for that same period. This indicator is subject to fluctuations in project prices and also in the operational efficiency of the Corporation. The indicator of gross margin as a percentage of revenues results from dividing gross margin by revenues.

In general, the Corporation aims to improve this indicator but recognizes that its fluctuation depends on the type of project signed and several other factors, including the economic context.

10.3. Working Capital and Working Capital Ratio

The working capital indicator is used by the Corporation to assess whether current assets are sufficient to meet current liabilities. Working capital is equal to current assets, less current liabilities, whereas the working capital ratio is calculated by dividing current assets by current liabilities.

Generally, Management’s goal is to achieve a working capital ratio of at least 2.0:1. Although this ratio was below this goal as at April 30, 2022 and January 31, 2022, the Corporation establishes the achievement of this goal on the pursuit of its strategy focusing on the execution of contracts generating positive cash flows throughout their execution.

However, the Corporation also recognizes that the growth of its order backlog adds some pressure on working capital, thus explaining the level of this ratio in relation to the Corporation’s long-term objective. It should be noted that the drawing up and/or revision of this corporate goal depends on a number of factors, such as the economic context and development projects that might materialize.

10.4. Order Backlog

The order backlog is a measure used by the Corporation to assess future revenue levels. The order backlog includes firm orders obtained by the Corporation, either through a firm contract or a formal notice to proceed confirmed by the client. The order backlog disclosed by the Corporation therefore includes the portion of confirmed contracts that have not been put into production.

In general, the Corporation aims to improve this indicator but recognizes that its fluctuation is dependent on several factors, including the economic context.

11. ANALYSIS OF OPERATING RESULTS FOR THE THREE-MONTH PERIOD ENDED APRIL 30, 2022

11.1. Revenues and Gross Margin

Revenues and Gross Margin
Three-Month Periods Ended April 30,	2022	2021	Changes 2022/2021
(In thousands of dollars and in percentages) Revenues Cost ofgoods sold	$ 68,008 59,787	$ 50,387 42,615	$ % 17,621 35.0 17,172 40.3
Gross margin — As a % of revenues(1)	8,221 12.1%	7,772 15.4%	449 5.8 (3.3)

(1) Gross margin as a percentage of revenues is a supplementary financial measure. Refer to the Section 10 “Non-GAAP Financial Measures and Other Financial Measures” of this MD&A Report, for definition of this metric.

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a) Revenues

Revenues during the three-month period ended April 30, 2022, totalled $68.0 million, up by $17.6 million or 35% compared with the same period ended April 30, 2021.

Revenues are recognized progressively based on costs incurred to date relative to the total estimated costs at completion on the various projects executed during the periods concerned.

The increase in revenues is mainly due to the execution of projects in the order backlog. The change in the exchange rate during the threemonth period ended April 30, 2022, had a favorable impact of $0.5 million on the level of the revenues.

In terms of economic dependency, 76% of the Corporation’s revenues during the three-month period ended April 30, 2022, were realized with four (4) clients (81% of the Corporation’s revenues, were realized with four (4) clients for the quarter ended April 30, 2021), each having represented 10% or more of the Corporation’s revenues. The following table presents the breakdown of revenues for each of these clients:

Three--Month Periods Ended April 30,	2022	2021
(In thousands of dollars) Client A(1) Client B(1) Client C(2) Client D(2) Client E(2)	$ ― 7,695 8,276 21,169 14,852	$ 5,441 7,094 19,704 8,587 ―
	51,992	40,826

(1) From Canada

(2) From United States

Although the Corporation attempts to limit the concentration of its revenues, given the nature of its activities and market, its revenues are likely to remain concentrated among a restricted number of clients in upcoming quarters.

b) Gross Margin

The gross margin, in dollar value, increased by $0.4 million during the three-month period ended April 30, 2022, compared with the same period of the previous fiscal year. As a percentage of revenues, the gross margin went from 15.4% during the three-month period ended April 30, 2021, to 12.1% during the same period ended April 30, 2022.

Gross margin for the three-months ended April 30, 2021, included a $1.6 million subsidy from Canada emergency wage subsidy ("CEWS") program. Excluding this subsidy, gross margin, as a percentage of revenues[(1)] , for the three-months ended April 30, 2021, would have been 12.2%, which is practically the same level as for the quarter ended April 30, 2022.

The margin for the three-month period ended April 30, 2022, was affected downwards by the temporary loss of operational efficiency caused by the installation of the brand-new robotic production line as well as new programmable and automated equipment at our Terrebonne, Quebec plant. While we were able to meet our contractual obligations, the operational adjustments required to carry out our fabrication projects and to proceed with the installation and parallelly testing of new equipment, generated anticipated and temporary inefficiencies. These downward impacts will already be behind us by the next quarter.

As described in Section 16 "Order Backlog", the fabrication hours are not only the Corporation’s core activity, but are also its most valueadded activity. To that effect, the revenues during the three-month period ended April 30, 2022, were comprised of 25% of fabrication hours, compared with 35% of revenues for the three-month period ended April 30, 2021.

Increases or decreases in raw material (mainly steel) prices do not generally have a material impact on the gross margin since in some of the contracts in hand, the clients supply the steel to be transformed by ADF, whereas protection clauses with regard to price changes are usually included in contracts where ADF supplies the steel. In addition, the natural hedge attributable to revenues and the purchase of raw materials in U.S. dollars mitigates the impact of exchange rate fluctuations.

(1) Gross margin as a percentage of revenues is a supplementary financial measure. Refer to the Section 10 “Non-GAAP Financial Measures and Other Financial Measures” of this MD&A Report, for definition of this metric.

11.2. Selling and Administrative Expenses

Selling and Administrative Expenses
Three-Month Periods Ended April 30,	2022	2021	Changes 2022/2021
(In thousands of dollars and in percentages) Selling and administrative expenses — As a % of revenues	$ 3,802 5.6%	$ 2,875 5.7%	$ % 927 32.2 (0.1)

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During the three-month period ended April 30, 2022, selling and administrative expenses amounted to $3.8 million, posting an increase of $0.9 million compared with the same period ended April 30, 2021. This variation is mainly due to the resumption of post-pandemic activities, by certain temporary differences that will be balanced out by the coming quarters, and a $0.3 million COVID-19 related subsidy that reduced selling and administrative expenses for the quarter ended April 30, 2021.

Notwithstanding this increase, selling and administrative expenses as a percentage of revenues for the three- month period ended April 30, 2022, are only 5.6%, compared to 5.7% a year earlier.

11.3. Amortization

In accordance with IFRS standards, amortization expense is included in cost of goods sold and selling and administrative expenses. However, Management considers it appropriate to continue separately commenting on the trend in amortization expense since it is considered a significant, although non-cash, component in the analysis of the Corporation’s profit margins.

Three-Month Periods Ended April 30,	2022	2021	Changes 2022/2021
(In thousands of dollars and in percentages) Amortization — As a % of revenues	$ 1,183 1.7%	$ 1,215 2.4%	$ % (32) (2.6) (0.7)

The amortization expense for the three-month period ended April 30, 2022, was slightly lower than that for the three-month period ended April 30, 2021, as the majority of capital expenditure made over the past year were not yet put into operation and therefore not yet incurred in depreciation.

The amortization expense for the analysed periods was distributed as follows:

Three-Month Periods Ended April 30,	2022	2021	Changes 2022/2021
(In thousands of dollars and in percentages) Amortization expense included in cost of goods sold Amortization expense included in selling and administrative expenses	$ 887 296	$ 902 313	$ % (15) (1.7) (17) (5.4)
Total amortization	1,183	1,215	(32) (2.6)

11.4. Net Financial Expenses

Net Financial Expenses
Three-Month Periods Ended April 30,	2022	2021	Changes 2022/2021
(In thousands of dollars and in percentages) Net financial expenses — As a % of revenues	$ 198 0.3%	$ 293 0.6%	$ % (95) (32.4) (0.3)

Net financial expenses for the three-month period ended April 30, 2022, totaling $0.2 million, are $0.1 million lower than for the corresponding quarter a year earlier, in line with the average debt balance, including the use of credit facilities, during the respective periods. It should be noted that the new financing put in place at the very end of fiscal year ended January 31, 2022, and during the quarter ended April 30, 2022, had little impact on financial expenses thus far, but will lead to increases in the coming quarters.

11.5. Foreign Exchange Loss

Foreign Exchange Loss
Three-Month Periods Ended April 30,	2022	2021	Changes 2022/2021
(In thousands of dollars and in percentages) Foreign exchange loss — As a % of revenues	$ 331 0.5%	$ 108 0.2%	$ % 223 Pos. 0.3

In accordance with its internal policy, and in order to reduce the impact of foreign exchange fluctuations on US-denominated contracts in the order backlog, the Corporation occasionally enters into foreign exchange contracts to cover this foreign exchange risk. In doing so, as required by accounting policies, foreign exchange gains or losses resulting from the valuation of the foreign exchange contracts at their fair values at the end of each presentation period are included in the foreign exchange loss, which partly explains the variation in the quarter.

As such, the foreign exchange loss recorded during the quarter ended April 30, 2022, includes a $0.1 million foreign exchange gain on ongoing operations and a $0.5 million realized and not realized foreign exchange loss relating to the fair value of financial derivatives. During the threemonth period ended April 30, 2022, a $0.3 million foreign exchange gain on the translation of foreign subsidiaries was recorded in Comprehensive Income.

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As such, the foreign exchange loss recorded during the quarter ended April 30, 2021, includes a $0.8 million foreign exchange loss on ongoing operations and a $0.7 million realized and not realized foreign exchange gain relating to the fair value of financial derivatives. During the threemonth period ended April 30, 2021, a $1.4 million foreign exchange loss on the translation of foreign subsidiaries was recorded in Comprehensive Income.

The Corporation is exposed to exchange rate fluctuations between the Canadian and U.S. dollars since a significant portion of its revenues is usually generally recorded in U.S. dollars.

During the three-month periods ended April 30, 2022 and 2021, the portion of revenues realized in U.S. dollars was 80% and 74% respectively. Considering the improvement in U.S. markets and our facilities in Great Falls, Montana, the Corporation expects that the percentage of its revenues in U.S. dollars should remain at a fairly high level in the fiscal year ending January 31, 2023.

11.6.

Income Tax Expense (Recovery)

Income Tax Expense (Recovery)
Three-Month Periods Ended April 30,	2022	2021	Changes 2022/2021
(In thousands of dollars and in percentages) Income tax expense (recovery) — As a % of revenues	$ (366) **(0.5)% **	$ 101 0.2%	$ % (467) Neg. (0.7)

The effective tax rates during the analyzed periods are hard to compare with the Corporation’s Canadian effective rate, which is 26.5%.

The income tax recovery for the quarter ended April 30, 2022, stems primarily from the mix in profits or losses of ADF’s various subsidiaries, according to their respective legal and tax jurisdictions.

In addition, and as discussed in previous MD&A Reports, and in light of the tax assets write-off recorded in the fiscal year ended January 31, 2018, the Corporation recognizes progressively some of these previously written off tax assets based on the pre-tax earnings level of its U.S. subsidiaries, virtually eliminating any income tax expense from the Corporation’s US subsidiaries.

As at April 30, 2022, the Corporation had operating tax losses estimated at $26.6 million in the United States available for carry forwards, for which no deferred tax benefit has been recorded in the Corporation’s Consolidated Statements of Income. This will have a favourable impact on future cash outflows of the Corporation, which will not have to pay future income tax until the full amount of available tax attributes has been used in the different jurisdictions where the Corporation executes contracts.

11.7. Net Income, Basic and Diluted Earnings per Share

Net Income, Basic and Diluted Earnings per Share
Three-Month Periods Ended April 30,	2022	2021
(In thousands of dollars and in dollars per share) Total net income — As a % of revenues Total basic and diluted earningsper share	$ 4,256 6.3% 0.13	$ 4,395 8.7% 0.13

The change in net income during the quarter ended April 30, 2022, compared with the same period a year ago, is for the most part explained by the elements previously mentioned.

12. COMPARATIVE INFORMATION FOR THE LAST EIGHT QUATERS

The trends observed in the analysis of quarterly results do not necessarily represent those of the future results of the Corporation. ADF’s fabrication activities are not, as such, subject to seasonal fluctuations. However, the non-residential construction market in which the Corporation is active goes through upward and downward cycles.

Overall, quarterly fluctuations in the following indicators result mainly from the changes in the revenue mix and accrued costs within different projects and for every given period, together with the lags between the recognition of costs and revenues, where appropriate, that could result from the use of estimates based on the percentage-of-completion method.

More specifically, and in light of the results for the last eight (8) quarters presented hereinafter, these quarterly fluctuations to another are mostly explained by the fabrication schedules of the different projects underway. Considering that revenues is recognized progressively based on costs incurred to date relative to the total estimated costs at completion on the various projects executed by the Corporation, revenue and operating results can differ significantly from quarter to quarter because of these execution schedules.

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Interim MD&A Report

Fiscal Years	2022	2021		2020
Three-Month Periods Ended	1stQuarter (30.04.2022)	4thQuarter (31.01.2022) 3rdQuarter (31.10.2021) 2ndQuarter (31.07.2021) 1stQuarter (30.04.2021)	4thQuarter (31.01.2021)	3rdQuarter (31.10.2020) 2ndQuarter (31.07.2020)
(In thousands of dollars and in dollars per share) Revenues Gross margin — As a % of revenues(1) Adjusted EBITDA(2) — As a % of revenues(2) Income before income tax expense (recovery) Net income — Basic and diluted per share	$ 68,008 8,221 12% 5,602 8% 3,890 4,256 0.13	$ $ $ $ 46,993 110,189 73,171 50,387 5,081 6,202 5,639 7,772 11% 6% 8% 15% 3,875 4,698 3,074 6,112 8% 4% 4% 12% 1,954 3,247 1,362 4,496 882 2,788 1,498 4,395 0.03 0.09 0.05 0.13	$ 37,142 6,453 17% 3,777 10% 2,263 2,108 0.06	$ $ 47,158 42,496 7,507 7,407 16% 17% 5,020 4,577 11% 11% 3,421 3,895 2,579 2,112 0.08 0.06

(1) Gross margin as a percentage of revenues is a supplementary financial measure. Refer to the Section 10 “Non-GAAP Financial Measures and Other Financial Measures” of this MD&A Report, for definition of this metric.

(2) Adjusted EBITDA and adjusted EBITDA margin (as a percentage of revenues) are non-GAAP financial measures. A non-GAAP financial measure is not a standardized financial measure under the financial reporting framework used to prepare the Corporation’s financial statements and might not be comparable to similar financial measures used by other issuers. Refer to the Section 10 “Non-GAAP Financial Measures and Other Financial Measures” of this MD&A Report, for definition of these metrics and the reconciliation to the most comparable IFRS.

13. CASH FLOW AND FINANCIAL POSITION

The Corporation has a sound financial position and is on a solid footing to address its financial needs. Taking into account its cash and cash equivalents position, its credit facilities and the level of planned capital spending, the Corporation does not expect any liquidity risk in a foreseeable future.

On April 30, 2022, cash and cash equivalents totalled $12.8 million, up by $5.7 million compared with January 31, 2022. In addition, the Corporation did not use its credit facilities during both periods analyzed, being as at April 30, 2022 and January 31, 2022.

Management believes that these available funds are sufficient to support the execution of its order backlog in hand on April 30, 2022, and to meet its financial commitments for the 2023 fiscal year.

Furthermore, the Corporation continually appraises the opportunities to use part of its liquidities to finance certain projects that could provide additional long-term competitive advantages. It also looks at opportunities for accelerated payments discounts negotiated with suppliers.

13.1. Operating Activities

During the three-month period ended April 30, 2022, the Corporation’s operating activities required funds and the cash flows were assigned as follows:

follows:
Three-Month Periods Ended April 30,	2022	2021
(In thousands of dollars) Net income adjusted for non-cash items	$ 5,466	$ 7,006
Changes in non-cash operating working capital items: Accounts receivable Contract assets Inventories Prepaid expenses and other current assets Accounts payable and other current liabilities Contract liabilities Others	(12,880) (4,541) (95) 260 13,246 (6,191) (2)	1,983 (2,668) (4,433) 911 5,080 5,054 (3)
	(10,203)	5,924
Income taxpaid	—	(700)
Cash flows(used in)from operatingactivities	(4,737)	12,230

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Net income adjusted for non-cash items totalled $5.5 million during the three-month period ended April 30, 2022, which is $1.5 million lower than for the three-month period ended April 30, 2021. This difference is for the most part explained by the change in the gains and losses in noncash operating working capital.

The change in non-cash working capital items required $10.2 million during the three-month period ended April 30, 2022. This cash outflow is mainly due to the increase in accounts receivable ($12.9 million) and the net change in contract assets and liabilities ($10.7 million), net of the increase in accounts payable and other current liabilities ($13.2 million). These variations are concurrent with the start of the new contracts announced on January 31, 2022.

During the three-month period ended April 30, 2021, change in non-cash working capital, generated $5.9 million. The cash inflow was mainly due to higher accounts payable and other current liabilities ($5.1 million) and contract liabilities ($5.1 million), net of inventory growth ($4.4 million). These changes were related to the increase in the level of activity as at April 30, 2021, compared to the same date a year earlier.

13.2. Investing Activities

The Corporation’s investing activities are summarized as follows:

The Corporation’s investing activities are summarized as follows:
Three-Month Periods Ended April 30,	2022	2021
(In thousands of dollars) Acquisition of property, plant and equipment Acquisition of intangible assets Others	$ (3,297) (160) (154)	$ (4,031) (140) —
Cash flows used in investingactivities	(3,611)	(4,171)

During the three-month period ended April 30, 2022, liquidities of $3.6 million were required primarily for the continuation of the investment program to automate production equipment at our Terrebonne, Quebec plant.

During the three-month period ended April 30, 2021, a total of $4.2 million in liquidities were required, mostly related to beginning of this same investment program.

The Corporation estimates total capital expenditures to reach approximately $8.0 million for fiscal 2023, which will be committed primarily to the completion of the above-mentioned investment program, as well as to maintaining production equipment current at ADF's fabrication facilities in Terrebonne, Quebec, and Great Falls, Montana, USA.

13.3. Financing Activities

The Corporation’s financing activities were as follows:

The Corporation’s financing activities were as follows:
Three-Month Periods Ended April 30,	2022	2021
(In thousands of dollars) Issuance of long-term debt Repayment of long-term debt Payment of lease liabilities Interestpaid	$ 15,003 (467) (232) (366)	$ — (476) (238) (252)
Cash flow from(used in)financingactivities	13,938	(966)

During the quarter ended April 30, 2022, financing activities generated liquidities of $13.9 million, compared with a cash outflow of $1.0 million during the same period the previous fiscal year.

Cash flows generated from financing activities during the quarter ended April 30, 2022, mainly relate to the issuance of new long-term debts, as described in Section 13.5 "Contractual Obligations".

During and for each of the three-month periods ended April 30, 2022 and 2021, the Corporation reimbursed a total of $0.7 million on its longterm debts and lease liabilities.

13.4. Debt Covenants

As at April 30, 2022, the Corporation respected all of the covenants with its lenders, and still did at the date hereof. Management expects it will continue to respect its commitments during the fiscal year 2023.

13.5. Contractual Obligations

No significant change has occurred in contractual obligations since the publication of the tables summarizing the information relating to contractual obligations in Section 14.6 of the annual MD&A Report for the fiscal year ended January 31, 2022, except of the following bank loans:

During the fiscal year ended January 31, 2022, being January 14, 2022 and January 18, 2022, the Corporation obtained from IQ, two authorized bank loans with progressive disbursements totaling $20.0 million to finance its equipment modernization and robotization program at its Terrebonne plant. These two loans, which progressive disbursements began in February 2022, are detailed as follows:

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• ⎯ The first of these two bank loans, which will total $12.3 million, will bear interest at IQ's annual prime rate plus 1.5% and will benefit from a 24-month capital repayment moratorium at the end of which it will be repayable by 96 capital payments of $128,125 starting in March 2024 and ending in February 2032. As at April 30, 2022, the Corporation had drawn down $9.2 million on this loan.

• ⎯ The second of these two bank loans, which will total $7.7 million will benefit from a 36-month capital repayment moratorium, at the end of which it will be repayable by 83 capital installments of $91,667 beginning in March 2025 to end with a final capital payment of $91,639 in February 2032. As at April 30, 2022, the Corporation had drawn an amount of $5.8 million on this loan. This loan, which bears no interest has been valued at fair value using an interest rate commonly used on the market. Therefore, interest at the implicit annual rate of 3.95% is calculated monthly. The difference of $1.3 million between this fair value of $4.5 million and the cash received in the amount of $5.8 million has been accounted for as a grant against the fixed assets to which it relates.

These two loans will be guaranteed by a first rank movable hypothec in the amount total of $24.0 million on the universality of machinery and equipment, present and future. They will also be subject to compliance with certain financial ratios.

14. CAPITAL STOCK

Information on the outstanding shares:

Information on the outstanding shares:
	Subordinate Voting Shares	Multiple Voting Shares(1)	Total Outstanding Shares
(In thousands of dollars and in number of shares)	Number $	Number $	Number $ 32,635,206 68,120
As at April 30, 2021 and 2022	18,292,099 52,119	14,343,107 16,001

(1) These shares carry 10 votes per share.

At the date hereof, the number of shares outstanding remained unchanged.

15.

DIVIDEND

On April 11, 2022, the Corporation’s Board of Directors approved the payment of a semi-annual dividend of $0.01 per share that was paid on May 17, 2022, to shareholders of record as at April 29, 2022.

16. ORDER BACKLOG[ (1)]

ADF Group’s order backlog totalled $325.4 million on April 30, 2022, compared with $394.9 million on the same date a year earlier and $373.1 million on January 31, 2022. This variation is attributable to the execution of contracts net of newly signed contracts and contractual changes.

As at April 30, 2022, 41% of the order backlog consisted of fabrication hours – the Corporation’s core business and most value-added activity – compared with 40% as at January 31, 2022. Most of the contracts on hand as at April 30, 2022, will be progressively executed between now and the end of the fiscal year ending January 31, 2024.

• (1) The order backlog is a supplementary financial measure. Refer to the Section 10 “Non-GAAP Financial Measures and Other Financial Measures” of this MD&A Report, for the definition of this metric.

17. FINANCIAL POSITION

As at April 30, 2022, the Corporation had a sound financial position. The Corporation’s solid consolidated statement of financial position allowed it to obtain, when required, the necessary bonding for the award of large-scale contracts. This represents a major advantage for ADF within its markets.

The following table provides details on the major changes in the Consolidated Statement of Financial Position between January 31, 2022 and April 30, 2022.

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Sections	Changes	Explanatory Notes
Cash and cash equivalents	(In millions of dollars) 5.7	See Section 13 "Cash Flow and Financial Position" hereinabove.
Accounts receivable	13.1	Increase in billing, in line with the activity level and work progress schedules.
Contract assets, net of contract liabilities	10.8	Net difference between work progress and progressive revenue billing; the increase reflecting the level of activity during the period.
Property, plant and equipment, intangible assets and right-of-use assets	1.1	Change mainly from acquisitions ($3.5 million), net of amortization ($1.2 million).
Accounts payable and other current liabilities	13.5	In line with the activity level at April 30, 2022.
Long-term debt and lease liabilities (including current portions)	13.2	Change mainly from the issuance of new debts ($15.0 million) net of repayments of long-term debt ($0.5 million) as well as lease liabilities ($0.2 million) and government grants ($1.3 million).
Accumulated other comprehensive income	0.3	Variation mostly caused by the impact of the variation in the foreign exchange rates on the translation of foreign operations.

18. CURRENT ECONOMIC ENVIRONMENT

Although the trends are improving in certain markets served by the Corporation, a degree of uncertainty remains regarding the economic context. In times of economic uncertainty, the Corporation is faced with the following challenges:

• Its business segment is strongly dependent on project owners’ capacity to finance their projects. For lack of financing, certain projects can be delayed or simply abandoned. Although the Corporation strives to mitigate this risk by focusing its marketing efforts on projects whose financing is most likely to materialize, it has no control over financial market trends, and

• Certain project owners who secured financing on the start-up of projects could be forced to cease the work pursuant to the withdrawal of financing, due to a lack of capital of either the project lender or the owner. The Corporation mitigates this risk by ensuring that amounts due are diligently collected and, insofar as possible, maintaining at all times a positive cash flow for every project. Moreover, the Corporation does business with owners who are financially solid. At the date hereof, no project of the Corporation is subject to such constraints.

From a financing point of view, the Corporation has a sound financial position and currently respects all its financial covenants. It expects it will continue to do so during the next 12 months. Capital expenditures are closely monitored by Management. The Corporation does not anticipate any liquidity problems, in particular since its principal credit facility is issued by a Canadian chartered bank with a solid credit rating, and the Corporation’s major clients are leaders in their respective fields. Based on the foregoing, the Corporation maintains its short-term prospects (see Section 26 "Outlook") and does not currently foresee any short-term elements that could compromise its course of business.

That being said, and in light of the fact that the Corporation does not enjoy all the visibility from which it normally benefits in its markets, the Corporation will continue to use caution and will closely monitor the situation (see Sections 8 "Conflict in Ukraine", 19 "External Factors to Which the Corporation’s Performance is Exposed" and 26 "Outlook").

19. EXTERNAL FACTORS TO WHICH THE CORPORATION’S PERFORMANCE IS EXPOSED

19.1. Global Pandemic

A pandemic outbreak, as COVID-19 demonstrates, must now be considered in external factors that may influence ADF’s performance. Although the type of pandemic or future variant is innumerable, and the impacts of these pandemics on the sector in which our Corporation operates can be multiple, the Corporation will now have to monitor this new risk. The measures taken by ADF to minimize the impacts of COVID-19 on all operations will serve as the basis for future years and will need to be adjusted, if necessary, according to the potential impacts of future pandemics.

19.2. Exchange Rate

The exchange rate fluctuation between the Canadian and U.S. dollars has an impact on the Corporation’s results. Thus, a $0.3 million foreign exchange loss was recorded for the three-month period ended April 30, 2022, compared with a $0.1 million foreign exchange loss for three-month period ended April 30, 2021.

In order to minimize the impact of exchange rate fluctuations on its results, the Corporation implemented the following protective measures:

• Issuance of new debts in U.S. dollars;

• When advantageous, the raw material (steel) and welding products required for fabrication are purchased in U.S. dollars, and

• A foreign exchange policy to protect a portion of the net exchange risk between cash inflows and outflows denominated in U.S. dollars.

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19.3. Risks and Uncertainties Related to the Corporation’s Operations

ADF’s markets are subject to several risk and uncertainty factors, which could have an impact on its business, financial position and operating results. These risks and uncertainties include, but are not limited to the following factors, which are further detailed in the Section 23 "External Factors to Which the Corporation’s Performance is Exposed" in the MD&A Report for the fiscal year ended January 31, 2022:

• Uncertainties relating to the world economy including the impact of conflicts on it;

• Bonding capacity and irrevocable letters of credit, and

• Operational risks and uncertainties that could have an impact on the Corporation’s financial position and operating results.

20. FINANCIAL INSTRUMENTS

A significant number of items in the Corporation’s Consolidated Statement of Financial Position include financial instruments. The Corporation’s financial assets consist of cash, cash equivalents, accounts receivable, contract assets, as well as derivative financial instruments, whose fair market value is positive. Financial liabilities include credit facilities, accounts payable and other current liabilities, contract liabilities, long-term debt and derivative financial instruments, whose fair market value is negative.

As at April 30, 2022, the carrying amount of these financial instruments did not significantly differ from the fair market value, either because of their forthcoming maturity date (in the case of cash, cash equivalents, accounts receivable, contract assets and liabilities, credit facilities, and accounts payable and other current liabilities), or because the Corporation believed it could obtain similar conditions and schedules (in the case of the long-term debt) or since they are re-evaluated at their fair value at the end of every period (in the case of derivative financial instruments) (see Note 6 "Financial Instruments" in the Unaudited Interim Condensed Consolidated Financial Statements for the Three-Month Period Ended April 30, 2022).

Derivative financial instruments are typically used to manage the Corporation’s foreign exchange and interest rate risk exposure. They are generally comprised of foreign exchange forward contracts.

The Corporation is mostly exposed to credit, liquidity and market risks, including exchange rate and interest rate risks, when using financial instruments. A description of how the Corporation manages these risks is included in Note 24 "Financial Risk Management" in the Corporation’s Audited Consolidated Financial Statements for the Fiscal Year Ended January 31, 2022, and has remained unchanged for the interim period ended April 30, 2022.

21. CONTROLS AND PROCEDURES

In accordance with National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings, disclosure controls and procedures have been designed to provide reasonable assurance that the information that must be presented in Corporation’s interim and annual reports is accumulated and communicated to management on a timely basis, including the Chief Executive Officer and the Chief Financial Officer, so that appropriate decisions can be made regarding disclosure. Internal control over financial reporting has also been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS.

During the quarter ended April 30, 2022, no changes were made to internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal controls and procedures.

22. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGEMENTS

The unaudited interim condensed consolidated financial statements have been prepared using the same accounting policies as the ones used in the preparation of the Corporation’s audited consolidated financial statements for the fiscal year ended January 31, 2022.

Refer the Corporation’s audited consolidated financial statements for the fiscal year ended January 31, 2022, and the unaudited interim condensed consolidated financial statements for the quarter and three-month period ended April 30, 2022, for more information about the significant accounting policies, estimation uncertainty, as well as the critical accounting judgements used to prepare the financial statements.

23. ENVIRONMENT

ADF’s operations are subject to various laws and regulations adopted by federal, provincial, state and local governments pertaining to environmental protection.

The Corporation’s Terrebonne and Great Falls facilities were built on vacant lands. The operations that could have a potential impact on the environment are welding, which generates smoke, and equipment maintenance, which generates waste oil, and industrial coating, which generate fumes and vapours. ADF has installed appropriate pollution control equipment in order to comply with the existing laws and regulations and ensures to perform in the normal course of business, the investments required to meet the highest standards.

Waste oil is recuperated by specialized firms. The Corporation has the necessary environmental certificates of authorization for its facilities and for all expansion phases subsequently carried out.

Moreover, as part of the construction of its new paint shop in Terrebonne, the Corporation updated its environmental certificate of authorization for all its operations located in Terrebonne, including its fabrication plant. Following these investments, ADF Group’s facilities in Terrebonne meet the highest environmental standards. More recently, during the fiscal year ended January 31, 2022, as part of the new financing that the Corporation obtained (see Section 14.3 "Financing Activities" to the MD&A Report for the fiscal year ended January 31, 2022), the Corporation conducted phase I and phase II environmental assessments at its Terrebonne, Quebec site, which did not identify any deficiencies or contaminants requiring corrective action in accordance with applicable environmental standards.

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For the three-month periods ended April 30, 2022 and 2021, and taking into account the preceding paragraph, the requirements with regard to environmental protection did not have a significant financial or operational impact on the Corporation’s capital expenditures, net income and competitive position. The Corporation does not expect to incur any costs outside the normal course of business to comply with environmental requirements.

24.

HUMAN RESOURCES

As at April 30, 2022, the Corporation employed a total of 636 people across its head office, fabrication complex and paint shop in Terrebonne, Quebec, Canada, and its office, fabrication plant and paint shop in Great Falls, Montana, U.S.A., and as well as various construction sites in United States.

25.

SUBSEQUENT EVENT

On May 5, 2020, under the US Care Act and as part of a US Small Business Administration (SBA) paycheck protection program in response to COVID-19, the Corporation obtained a loan from a US bank totaling US$1.0 million. This loan was guaranteed by the SBA and was issued to a US subsidiary. According to the initial terms, the capital of this loan was to be repaid over two years. However, if certain conditions were met, this loan could be partially or totally forgiven. In May 2022, this loan met the conditions to be forgiven in full. The cash received of $1.3 million (US$1.0 million) will therefore be recognize as a government grant, mostly, against salary expense in the Consolidated Statement of Income for the period ending July 31, 2022.

26.

OUTLOOK

The results for the quarter ended April 30, 2022 are encouraging. While our operational efficiency was affected by the installation and commissioning of our new automated equipment, which temporarily impacted our margins downward, our quarterly revenues have nonetheless recorded an increase compared with the same period last year, and we have also been able to achieve an adequate net income.

Our order backlog[(1)] remains above the $300 million mark and it will be increased with the announcement of new contracts worth a total of $90.0 million (see Section 7 "Significant Events that Occurred Since April 30, 2022").

With regard to our equipment automatization program at our Terrebonne plant, we have recently started implementation and the training sessions related to the new equipment. We expect to fabricate the first steel beam in the coming weeks. Taking into account the normal rolling out period for this type of equipment, we will start reaping the benefits of our investments in the second semester of our fiscal year currently under way.

We are therefore continuing our efforts to grow the backlog, and are optimistic that we will be able to announce the signing of new projects in the weeks and months to come. At the same time, we are keeping a close eye on the potential impacts related to the inflation by maintaining our prudent management of our liquidities.

(1) The order backlog is a supplementary financial measure. Refer to the Section 10 “Non-GAAP Financial Measures and Other Financial Measures” of this MD&A Report, for the definition of this metric.

27. ADDITIONAL INFORMATION

The Corporation regularly discloses information through press releases, quarterly and annual reports and the Annual Information Form, available on the Corporation’s website at www.adfgroup.com and the SEDAR (System for Electronic Document Analysis and Retrieval) website at www.sedar.com.

Mr. Jean-Francois Boursier, CPA

Ms. Marise Paschini

/ Signed /

Chief Financial Officer

/ Signed /

Executive Vice-President, Treasurer and Corporate secretary

Terrebonne, Quebec, Canada, June 7, 2022

ADF Group Inc.

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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*