GOODFELLOW

ANNUAL REPORT

2024

FINANCIAL HIGHLIGHTS

(in thousands of dollars, except per share amounts)

OPERATING ANNUAL RESULTS

	2024	2023	2022	2021	2020
Sales	$509,541	$512,821	$631,185	$615,946	$454,103
Earnings before income taxes	$18,064	$20,090	$44,716	$50,523	$19,022
Net earnings	$13,369	$14,688	$32,679	$37,836	$13,811
- per share	$1.58	$1.72	$3.82	$4.42	$1.61
Net cash flow from operating activities excluding impact of changes in non-cash working capital, income tax paid and interest paid (1)	$27,988	$29,674	$55,051	$60,003	$28,645
- per share (1)	$3.29	$3.48	$6.43	$7.01	$3.35
Net cash flow from operating activities	$(868)	$42,968	$26,013	$33,278	$11,441
- per share (2)	$(0.10)	$5.03	$3.04	$3.89	$1.34
Shareholders' Equity	$206,208	$195,003	$186,779	$160,948	$121,229
- per share (2)	$24.38	$22.88	$21.83	$18.80	$14.16
Share price at fiscal year-end	$13.99	$14.07	$12.17	$9.56	$6.71
Dividend paid per share (2)	$0.75	$1.00	$0.90	$0.85	$0.20

(1) Non-IFRS financial measure – refer to section "Non-IFRS Financial Measures" for more information and a reconciliation to the most directly comparable IFRS measure, where applicable.
(2) Supplementary financial measure – refer to section "Non-IFRS Financial Measures" for more information.

NET EARNINGS (in million $)

SHARE PRICE as at November 30

Chair's Report to the Shareholders...2
President's Report to the Shareholders...3
Management's Discussion and Analysis...4
Consolidated Financial Statements and Notes ...17
Directors and Officers...47
Sales Offices and Distribution Centres...48

HEAD OFFICE

225 Goodfellow Street
Delson, Quebec
J5B 1V5
Canada

GOODFELLOW

Toll-Free Canada: 800 361-6503
Tel: 450 635-6511
Fax: 450 635-3729
[email protected]
www.goodfellowinc.com

CHAIR'S REPORT TO THE SHAREHOLDERS

The past year brought a complex mix of challenges and opportunities. Against a backdrop of high inflation, rising interest rates, and geopolitical uncertainty, Goodfellow demonstrated its ability to adapt and deliver solid financial results of $1.58 per share.

A key highlight of 2024 was the Board's support of management's strategic initiatives, particularly the expansion of Goodfellow's footprint in the United States. These investments reflect the confidence in the Company's ability to thrive in changing market conditions.

Goodfellow's commitment to sustainable value creation, operational efficiency, fiscal conservatism and customer-centricity remains at the core of its governance philosophy. Looking ahead, the Board is focused on supporting management realize its strategic objectives while navigating economic uncertainties, in particular with regard to changing U.S. Trade policies.

The Board would like to thank Patrick Goodfellow, employees, customers, and suppliers for their trust and dedication, as well as shareholders for their continued confidence.

(Signed) “Robert Hall”
Chair of the Board
February 19, 2025

PRESIDENT'S REPORT TO THE SHAREHOLDERS

Uncertain market conditions played an important role in Goodfellow's performance in 2024. High inflation and elevated interest rates dampened consumer spending, impacting retail sales volumes. However, increased government infrastructure spending bolstered activity in the industrial and commercial construction segments, providing opportunities for growth in demand for Goodfellow's structural and engineered wood products. Additionally, hardwood prices returned to normal levels and stabilized, offering relief after a period of volatility last year, and enabling the Company to better manage margins and respond to increased demand domestically and internationally.

These conditions required Goodfellow to adopt a balanced approach which resulted in a stable result for fiscal 2024 achieving $509.5 million in sales and net earnings of $13.4 million, as compared to $512.8 million in sales and net earnings of $14.7 million last year.

In the third quarter of 2024, Goodfellow completed strategic asset acquisitions in the United States, strengthening its position in the wholesale lumber distribution market. This U.S. expansion serves as a key investment for both domestic and international growth and may help mitigate risks associated with geopolitical uncertainty, supply chain disruptions, and potential trade tariffs.

Looking ahead, trade stability in North America and around the world remains uncertain and repercussions on the lumber and building materials industry are difficult to predict until trade variables are set. While this unfortunate situation presents serious challenges, Goodfellow is focused on doing what they do best: working closely with customers, suppliers and partners to navigate these new challenges together.

(Signed) « Patrick Goodfellow »
President and Chief Executive Officer
February 19, 2025

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following Management's Discussion and Analysis ("MD&A") and Goodfellow Inc. (hereafter the "Company") consolidated financial statements were approved by the Board of Directors on February 19, 2025. The MD&A should be read in conjunction with the consolidated financial statements and the corresponding notes for the years ended November 30, 2024 and November 30, 2023. The MD&A provides a review of the significant developments and results of operations of the Company during the years ended November 30, 2024 and November 30, 2023. The consolidated financial statements ended November 30, 2024 and November 30, 2023 are prepared in accordance with IFRS Accounting Standards (IFRS). All amounts in this MD&A are in Canadian dollars unless otherwise indicated. All tabular dollar amounts are in thousands of Canadian dollars, except amounts per share or unless otherwise indicated. Some amounts included in this MD&A have been rounded to make reading easier, which may affect some calculations. In addition, in this Management's Discussion and Analysis, the Company also uses non-IFRS financial measures for which a complete definition is presented below and for which a reconciliation to financial information in accordance with IFRS is presented in the section "Non-IFRS Financial Measures" and in Note 22 "Segmented Information and Sales" to the annual consolidated financial statements for the years ended November 30, 2024 and November 30, 2023. These measures should be considered as a complement to financial performance measures in accordance with IFRS. They do not substitute and are not superior to them. Additional information relating to Goodfellow Inc., including the Annual Information Form and the Annual Report can be found on SEDAR+ at www.sedarplus.ca and at www.goodfellowinc.com.

FORWARD-LOOKING STATEMENTS

This MD&A contains implicit and/or explicit forward-looking statements relating, inter alia, to objectives, strategies, priorities, goals, plans, financial position, operating results, trends and activities of Goodfellow Inc. and its markets and industries. Forward-looking statements can be identified by words such as: "believe," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements made regarding liquidity and risk management in the current economic conditions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, these statements are forward-looking to the extent that they are based on expectations relative to markets in which the Company exercises its activities and on various assessments and assumptions. Although it is believed that the expectations reflected in the forward-looking statements contained in this document, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations and assumptions will prove to be correct. Some of these expectations and assumptions relate to the state of the global economy and the economies of the regions in which the Company operates; the level of demand for the Company's products including from its recurring client base, including bookings from customers; prices and margins for its products; competitors; reliability of supply chains; inflation; interest rates; foreign currency fluctuations; the COVID-19 pandemic; overhead expenses; working capital requirements and access to capital or funding to finance same; the collection of accounts receivable; the availability and sufficiency insurance coverage; the sufficiency and reliability of the Company's workforce; the successful management of environmental and health and safety risk; the sufficiency, reliability and effectiveness of information systems; the sufficiency, reliability and effectiveness of internal and disclosure controls; and the absence of adverse change in the Company's regulatory environment and legal proceedings. In particular, expectations and assumptions relating to the COVID-19 pandemic are more fully described in the Company's Annual MD&A for the year ended November 30, 2024. Readers are cautioned not to place undue reliance on forward-looking statements included in this document, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur or prove to be accurate. Actual results could differ significantly from management's expectations if recognized or unrecognized risks and uncertainties affect the Company's results or if assessments or assumptions are inaccurate. These risks and uncertainties include, among other things; the effects of general economic and business conditions including the cyclical nature of the Company's business; industry competition; inflation, credit, currency and interest rate risks; environmental risk; level of demand and financial performance of the manufacturing industry; competition from vendors; changes in customer demand; extent to which the Company is successful in gaining new long-term relationships with customers or retaining existing ones and the level of service failures that could lead customers to use competitors' services; increased customer bankruptcies; dependence on key personnel; impact of the COVID-19 pandemic and the related climate of uncertainty; laws and regulation; information systems, cost structure and working capital requirements; governmental actions in respect of trade restrictions, including tariffs; occurrence of hostilities, political instability or catastrophic events and other factors described in the Company's public filings available at www.sedarplus.ca. For these reasons, the Company cannot guarantee the results of these forward-looking statements. The foregoing risks and uncertainties are described in greater detail in this MD&A. The MD&A gives an insight into past performance as well as the future strategies and key performance indicators as viewed by the management team at Goodfellow Inc. The Company disclaims any obligation to update or revise these forward-looking statements, except as required by applicable law.

NON-IFRS FINANCIAL MEASURES

(unaudited)

The Company reports its financial results in accordance with IFRS. However, in this document, the following non-IFRS measures, non-IFRS ratios and supplementary financial measures are used: EBITDA, Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid, Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid per share, Net Cash Flows from Operating Activities per share, Gross Profit, Gross Margin, Shareholders' Equity per share and dividends paid per share. These measures do not have a standardized meaning under IFRS and could be calculated differently by other companies and accordingly, may not be comparable. The Company believes that many readers analyze the financial performance of Goodfellow's activities based on these non-IFRS financial measures as such measures may allow for easier comparisons between periods. The Company also believes that these measures are useful indicators of the performance of its operations and its ability to meet its financial obligations. Furthermore,

management also uses some of these non-IFRS financial measures to assess the performance of its activities and managers. These measures should be considered as a complement to financial performance measures in accordance with IFRS. They do not substitute and are not superior to them. For measures displayed per share, the Company divided the measures by the total number of outstanding shares at November 30 of the period presented in the case of Shareholders Equity per share and by the weighted average number of outstanding shares for the relevant period ended November 30 presented for other measures per share.

"EBITDA" represents earnings before income taxes, net financial costs, depreciation of property, plant and equipment and of right-of-use-assets and amortization of intangible assets. Management believes this metric is useful as it allows comparability of operating results from one period to another by excluding the effects of items that primarily reflect the impact of long-term investment and financing decisions, rather than the results of day-to-day operations.

The table below contains a reconciliation of EBITDA to the most directly comparable IFRS measure, net earnings.

Reconciliation of EBITDA	For the three months ended		For the years ended
	November 30 2024 (unaudited)	November 30 2023 (unaudited)	November 30 2024	November 30 2023
	$	$	$	$
Net earnings	2,418	2,133	13,369	14,688
Income taxes	436	520	4,695	5,402
Net financial costs	717	432	2,379	2,429
Depreciation of property, plant and equipment	1,372	915	4,188	3,311
Depreciation of right-of-use assets	1,398	1,088	4,787	4,697
Amortization of intangible assets	148	150	591	602
EBITDA	6,489	5,238	30,009	31,129

"Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid" represents net cash flows from operating activities before changes in non-cash working capital, income tax paid and interest paid. Management believes this measure is useful as it provides an indication of the Company's financial flexibility, i.e. cash available to the Company to service debt, meet other payment obligations, make investments and execute the Company's strategy.

The tables below contain a reconciliation of Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid to the most directly comparable IFRS measure, Net Cash Flows from Operating Activities.

Reconciliation of Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid – Fourth quarter (unaudited)	For the three months ended
	November 30 2024	November 30 2023
	$	$
Net Cash Flows from Operating Activities	20,167	26,879
Changes in non-cash working capital items	(14,810)	(25,447)
Interest paid	505	191
Income taxes paid	14	3,163
Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid	5,876	4,786
Net Cash Flows from Operating Activities per share	2.38	3.15
Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid per share	0.69	0.56
Weighted Average Number of Share Outstanding (thousands)	8,469	8,537

Reconciliation of Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid

Reconciliation of Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid	For the years ended
	November 30 2024	November 30 2023	November 30 2022	November 30 2021	November 30 2020
	$	$	$	$	$
Net Cash Flows from Operating Activities	(868)	42,968	26,013	33,278	11,441
Changes in non-cash working capital items	24,102	(24,213)	3,734	15,484	14,117
Interest paid	1,918	1,367	1,731	1,541	1,495
Income taxes paid	2,836	9,552	23,573	9,700	1,592
Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid	27,988	29,674	55,051	60,003	28,645
Net Cash Flows from Operating Activities per share	(0.09)	5.03	3.04	3.89	1.34
Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid per share	3.29	3.48	6.43	7.01	3.35
Weighted Average Number of Share Outstanding (thousands)	8,497	8,537	8,563	8,563	8,563

With respect to "Gross Profit" and "Gross Margin", these measures are used under the sections "Cost of Goods Sold" in the discussion below for the results for the year ended November 30, 2024 (and November 30, 2023), and the fourth quarter ended November 30, 2024 (and November 30, 2023). Please refer to such sections for a description of how these measures are calculated and a reconciliation to the most directly comparable IFRS measure.

In addition, the following tables set out the information supporting the per share calculation Shareholders' Equity and dividend paid:

Reconciliation of Shareholders' Equity per share

Reconciliation of Shareholders' Equity per share	For the years ended
	November 30 2024	November 30 2023	November 30 2022	November 30 2021	November 30 2020
	$	$	$	$	$
Shareholders' Equity	206,208	195,003	186,779	160,948	121,229
Shareholders' Equity per share	24.38	22.88	21.83	18.80	14.16
Number of Shares Outstanding (thousands)	8,458	8,521	8,558	8,563	8,563

Reconciliation of Dividend paid per share

Reconciliation of Dividend paid per share	For the years ended
	November 30 2024	November 30 2023	November 30 2022	November 30 2021	November 30 2020
	$	$	$	$	$
Dividend paid	6,375	8,539	7,706	7,279	1,712
Dividend paid per share	0.75	1.00	0.90	0.85	0.20
Weighted average number of share at payment (thousands)	8,497	8,537	8,563	8,563	8,563

BUSINESS OVERVIEW

Goodfellow Inc. is a diversified manufacturer of value-added lumber products and a leading wholesale distributor of building materials and floor coverings. The Company operates in Canada, the United States and the United Kingdom, serving both commercial and residential sectors. In Canada, Goodfellow maintains a strong presence with nine (9) processing plants and thirteen (13) distribution centres strategically located from coast to coast. In the United States, the Company operates four (4) processing plants and two (2) distribution centres, while in the United Kingdom there is one (1) distribution centre. Goodfellow serves a diverse customer base that includes lumberyard retailers, manufacturers, industrial and infrastructure project partners, and floor covering specialists.

ASSET ACQUISITION

As part of additions of Property, plant and equipment for the year, on May 30, 2024 Goodfellow Inc., through its subsidiary Goodfellow Distribution Inc., acquired from Meridian Hardwoods of PA Inc. a facility in Pittsfield, PA (USA) for $1.3 million which included land, machinery and equipment. On August 2, 2024, the Company acquired from Allegheny Wood Products Inc. two dry kiln facilities in Hazelton and Petersburg, WV (USA), which included land, machinery and equipment, and inventory for cash consideration of $6.3 million USD ($8.7 million CAD). The Company financed the asset acquisitions through its existing revolving credit facility.

OVERALL PERFORMANCE

For fiscal year 2024, Goodfellow achieved a stable overall performance, sustained by infrastructure projects and some promising signs from residential housing starts. However, consumer confidence was characterized overall as cautious and restrained a result of high inflation and interest rates. Despite these challenges, the Company capitalized on its diversified operations and broad

customer base across Canada and the United States to maintain its market presence to achieve $509.5 million in sales and net earnings of $13.4 million, as compared to $512.8 million in sales and net earnings of $14.7 million last year. In the third quarter of 2024, Goodfellow completed strategic asset acquisitions in the United States, strengthening its position in the wholesale lumber distribution market. This U.S. expansion serves as a key investment for both domestic and international growth and may help mitigate risks associated with geopolitical uncertainty, supply chain disruptions, and potential trade tariffs.

COMPARISON FOR THE YEARS ENDED NOVEMBER 30, 2024 AND 2023

HIGHLIGHTS	2024	2023	Variance
	$	$	%
Sales	509,541	512,821	-1
Earnings before income taxes	18,064	20,090	-10
Net earnings	13,369	14,688	-9
Net earnings per share – Basic and Diluted	1.58	1.72	-8
Net cash flow from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid (1)	27,988	29,674	-6
Net cash flow from Operating Activities	(868)	42,968	-102
EBITDA (1)	30,009	31,129	-4

(1) Non-IFRS financial measure – refer to section “Non-IFRS Financial Measures” for more information and a reconciliation to the most directly comparable IFRS measure.

Sales in Canada during fiscal 2024 decreased 2% compared to last year due to an overall decrease in sales of all product categories. Quebec sales increased 4% due to an increase in sales of specialty and commodity panels and lumber. Sales in Ontario decreased 5% due to a decrease in sales of all product categories except for specialty and commodity panels. Sales in Western Canada decreased 1% due to a decrease in sales of all product categories except for building material. Atlantic region sales decreased 10% due to a decrease in sales of all product categories.

Geographical Distribution of Sales for Fiscal 2024

Sales in the United States for fiscal 2024 on a U.S. dollar basis increased 8% compared to last year, and on a Canadian dollar basis they increased 9% compared to last year. Finally, export sales increased 17% on a Canadian dollar basis during fiscal 2024 compared to last year mostly due to an increase in sales of lumber.

Product Distribution of Sales for Fiscal 2024

In terms of the distribution of sales by product, lumber and specialty and commodity panel sales saw an increase in sales, but flooring and building material saw decreases. Flooring sales during fiscal 2024 decreased 15%, specialty and commodity panel sales increased 6%, building material sales decreased 6%, and lumber sales increased 2% compared to last year.

Reconciliation of Gross Profit	For the years ended
	November 30 2024	November 30 2023
	$	$
Sales	509,541	512,821
Cost of goods sold	387,796	400,461
Gross profit	121,745	112,360
Gross margins	23.9%	21.9%

Gross Profit and Gross Margins are non-IFRS financial measures. See section "Non-IFRS Financial Measures" for more information. Gross profit is calculated as sales less cost of goods sold. Gross margin is calculated as Gross profit over sales. The table above contains a reconciliation of Gross profit to sales.

Cost of Goods Sold

Cost of goods sold during fiscal 2024 was $387.8 million compared to $400.5 million last year. Cost of goods sold decreased 3% compared to last year. Gross profits were $121.7 million compared to $112.4 million last year, an increase of 8% compared to last year. Gross margins were 23.9% in fiscal 2024 (21.9% last year).

Selling, Administrative and General Expenses

Selling, Administrative and General Expenses during fiscal 2024 were $101.3 million compared to $89.8 million last year representing a 13% increase compared to last year. The increase is mostly due in part to additional costs related to our new operations in the U.S. as we made investments in dry kiln operations in the U.S. in the third and fourth quarter of fiscal 2024 and additional personnel across the Company.

Net Financial Costs

Net financial costs during fiscal 2024 were $2.4 million (same last year). The average Canadian prime rate increased slightly to 6.89% (6.86% last year). The average U.S. prime rate increased slightly to 8.38% (8.09% last year).

COMPARISON FOR THE THREE MONTHS ENDED NOVEMBER 30, 2024 AND 2023

(unaudited)

HIGHLIGHTS	Q4-2024	Q4-2023	Variance
	$	$	%
Sales	124,205	125,415	-1
Earnings before income taxes	2,854	2,653	+8
Net earnings	2,418	2,133	+13
Net earnings per share – Basic and Diluted	0.29	0.25	+16
Net cash flow from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid (1)	5,876	4,786	+23
Net cash flow from Operating Activities	20,167	26,879	-25
EBITDA (1)	6,489	5,238	+24

(1) Non-IFRS financial measure – refer to section "Non-IFRS Financial Measures" for more information and a reconciliation to the most directly comparable IFRS measure.

Sales in Canada during the fourth quarter of 2024 decreased 5% compared to last year due to an overall decrease in sales of all product categories except for specialty and commodity panels. Quebec sales increased 5% due to an increase in sales of specialty and commodity panels. Sales in Ontario were stable mainly due to a decrease in sales of flooring products, specialty and commodity panels and building material, offset by the increase of sales of lumber. Sales in Western Canada decreased 24% due to a decrease in sales of all product categories except for building material. Atlantic region sales decreased 17% due to a decrease in sales of all product categories.

Geographical Distribution of Sales for the Fourth Quarter ended November 30, 2024

Sales in the United States for the fourth quarter of 2024 on U.S. dollar basis increased 6% compared to last year and increased 7% on a Canadian dollar basis mostly due to an increase in sales of specialty and commodity panel and lumber. Finally, export sales increased 128% on a Canadian dollar basis during the fourth quarter of 2024 compared to last year mostly due to an increase in sales of all product categories.

Product Distribution of Sales for the Fourth Quarter ended November 30, 2024

In terms of the distribution of sales by product, lumber and specialty and commodity panel sales saw an increase in sales while flooring products and building material decreased their sales. Flooring sales during the fourth quarter of fiscal 2024 decreased 20%, specialty and commodity panel sales increased 7%, building materials sales decreased 9%, and lumber sales increased 4% compared to last year.

| Reconciliation of Gross Profit
(unaudited) | For the three months ended | |
| --- | --- | --- |
| | November 30
2024 | November 30
2023 |
| | $ | $ |
| Sales | 124,205 | 125,415 |
| Cost of goods sold | 93,771 | 98,632 |
| Gross profit | 30,434 | 26,783 |
| Gross margins | 24.5% | 21.4% |

Gross profit and Gross margins are non-IFRS financial measures. See section "Non-IFRS Financial Measures" for more information. Gross profit is calculated as sales less cost of goods sold. Gross margin is calculated as Gross profit over sales. The table below contains a reconciliation of Gross profit to sales.

Cost of Goods Sold

Cost of goods sold during the fourth quarter of 2024 was $93.8 million compared to $98.6 million for the corresponding period a year ago, a decrease of 5% compared to last year. Gross profits were $30.4 million compared to $26.8 million last year. Gross profits increased 14% compared to last year. Gross margins were 24.5% for the three months ended November 30, 2024 (21.4% last year).

Selling, Administrative and General Expenses

Selling, Administrative and General Expenses during the fourth quarter of 2024 were $26.9 million compared to $23.7 million last year representing an increase of 14% compared to last year. The increase is due in part to additional costs related to our new operations in the U.S. as we made investments in dry kiln operations in the U.S. in the third and fourth quarter of fiscal 2024.

Net Financial Costs

Net financial costs during the three months ended November 30, 2024 were $0.7 million ($0.4 million last year). The average Canadian prime rate decreased to 6.27% (7.20% last year). The average U.S. prime rate decreased to 8.04% (8.50% last year).

SUMMARY OF THE LAST EIGHT MOST RECENTLY COMPLETED QUARTERS

(unaudited)

	Feb-2024	May-2024	Aug-2024	Nov-2024
	$	$	$	$
Sales	105,334	140,334	139,668	124,205
Net (losses) earnings	(108)	5,309	5,750	2,418
Net (losses) earnings per share	(0.01)	0.62	0.68	0.29
	Feb-2023	May-2023	Aug-2023	Nov-2023
	$	$	$	$
Sales	105,925	142,326	139,155	125,415
Net (losses) earnings	(211)	6,575	6,191	2,133
Net (losses) earnings per share	(0.02)	0.77	0.72	0.25

As indicated above, results over the past eight quarters follow a seasonal pattern with sales activities traditionally higher in the second and third quarters.

STATEMENT OF FINANCIAL POSITION

Total assets

Total assets at November 30, 2024 were $291.9 million compared to $252.8 million as at November 30, 2023. Cash at November 30, 2024 was $5.3 million compared to $28.4 million as at November 30, 2023. Trade and other receivables at November 30, 2024 were $56.6 million ($53.7 million as at November 30, 2023). Income taxes receivable was $6.6 million ($6.3 million as at November 30, 2023). Inventories at November 30, 2024 were $131.3 million compared to $98.5 million as at November 30, 2023. Prepaid expenses at November 30, 2024 were $4.0 million ($4.2 million as at November 30, 2023). Defined benefit plan asset was $21.9 million at November 30, 2024 compared to $15.3 million as at November 30, 2023. Other assets were $1.3 million at November 30, 2024 ($0.8 million as at November 30, 2023).

Property, plant, equipment, intangible and right-of-use assets

Property, plant and equipment at November 30, 2024 was $43.9 million compared to $32.8 million as at November 30, 2023, and intangible assets at November 30, 2024 were $0.9 million compared to $1.5 million as at November 30, 2023. Capital expenditures on property, plant and equipment and intangibles during fiscal 2024 amounted to $15.7 million compared to $3.8 million for the same period last year. Property, plant and equipment capitalized during fiscal 2024 mainly included buildings and yard improvements, equipment, computers and rolling stock including assets acquired from Meridian Hardwoods of PA Inc. in Pittsfield, PA, USA for $1.8 million, and acquired from Allegheny Wood Products Inc. in Petersburg and Hazelton, WV, USA for $8.7 million. Right-of-use assets at November 30, 2024 was $19.9 million ($11.4 million as at November 30, 2023). Depreciation / amortization of property, plant, equipment, intangible, and right-of-use assets during fiscal 2024 amounted to $9.6 million compared to $8.6 million last year.

Total liabilities

Total liabilities at November 30, 2024 were $85.6 million compared to $57.8 million as at November 30, 2023. Bank indebtedness at November 30, 2024 was $5.9 million (nil last year). Trade and other payables at November 30, 2024 were $49.0 million compared to $37.6 million as at November 30, 2023. Current provision at November 30, 2024 was $0.9 million ($2.8 million as at November 30, 2023). Lease liabilities at November 30, 2024 were $21.5 million compared to $13.2 million as at November 30, 2023. Deferred income taxes at November 30, 2024 were $8.3 million ($4.1 million as at November 30, 2023).

Shareholders' Equity

Shareholders' Equity at November 30, 2024 was $206.2 million compared to $195.0 million as at November 30, 2023. The Company generated a return on Shareholders' Equity of 6.5% during fiscal 2024 compared to 7.5% last year (Return on shareholders' equity is the net earnings (loss) divided by shareholders' equity at November 30, expressed as a percentage). The share price closed at $13.99 per share on November 30, 2024 ($14.07 on November 30, 2023). The Shareholders' Equity per share at November 30, 2024 was $24.38 per share compared to $22.88 per share as at November 30, 2023. Share capital was $9.3 million at November 30, 2024 ($9.4 million as at November 30, 2023).

On November 20, 2024 (2023: November 20, 2023), following approval of the Toronto Stock Exchange (the "TSX"), the Company renewed its existing normal course issuer bid (NCIB). This program allows the Company to repurchase up to an aggregate 493,102 common shares (2023: 426,157 common shares). All Shares repurchased under the share repurchase program will be cancelled upon repurchase. The share repurchase period will end no later than November 19, 2025 (2023: November 19, 2024.).

During fiscal year 2024, under the NCIB, the Company purchased 63,700 shares at a weighted-average price of $14.01 for a total aggregate purchase price of $892 thousand (2023: purchased 36,500 shares at a weighted-average price of $12.50 for a total aggregate purchase price of $456 thousand).

Additional information regarding the NCIB is contained in Note 14 of the Consolidated Financial Statements for the year ended November 30, 2024.

The following dividends were declared and paid by the Company for the years ended:

November 30, 2024
Declared
Record date	Per share	Amount	Payment date
	$	$
Mar 5, 2024	0.50	4,256	Mar 19, 2024
Oct 23, 2024	0.25	2,119	Nov 6, 2024
	0.75	6,375
November 30, 2023
---	---	---	---
Declared
Record date	Per share	Amount	Payment date
	$	$
Mar 2, 2023	0.50	4,274	Mar 16, 2023
Oct 19, 2023	0.50	4,265	Nov 2, 2023
	1.00	8,539

The Company is continually assessing its declaration of dividends in the context of overall profitability, cash flows, capital requirements, general economic conditions, and other business needs.

LIQUIDITY AND CAPITAL RESOURCES

Financing

The Company has a credit agreement with two chartered Canadian banks. In May 2024, the Company renewed its credit agreement for a maximum revolving operating facility of $90 million maturing in May 2026 by way of bank loans and/or CORRA loans. In addition, an accordion of $10 million is available once per fiscal year for a maximum of 150 days. Funds advanced under these credit facilities bear interest at the prime rate plus a premium and are secured by first ranking security on the universality of the movable and immovable property of the Company. As at November 30, 2024, the Company was compliant with its financial covenants. As at November 30, 2024, the Company has $1.3 million of issued letters of credit which reduces the availability of its facility ($1.2 million last year).

The Company's business follows a seasonal pattern with sales activities traditionally higher in the second and third quarters. As a result, cash flow requirements are generally higher during these periods. The current facility is considered by management to be adequate to support its current forecasted cash flow requirements. Source of funding and access to capital is disclosed in detail under LIQUIDITY AND RISK MANAGEMENT IN THE CURRENT ECONOMIC CONDITIONS.

Cash Flow

Net cash flow from operating activities for fiscal 2024 was $(0.9) million compared to $43.0 million last year. Financing activities during fiscal 2024 was $(12.4) million compared to $(14.3) million last year. Investing activities during fiscal 2024 was $(15.7) million compared to $(3.7) million last year (See Property, plant, equipment, intangible and right-of use assets for more details).

LIQUIDITY AND RISK MANAGEMENT IN THE CURRENT ECONOMIC CONDITIONS

The Company's objectives are as follows:

Maintain financial flexibility in order to preserve its ability to meet financial obligations;
Maintain a low net debt-to-capital ratio to preserve its capacity to pursue its organic growth strategy;
Maintain financial ratios within covenants requirements; and
Provide an adequate return to its shareholders.

The Company defines its capital as net debt less shareholders' equity as follows

| | November 30
2024 | November 30
2023 |
| --- | --- | --- |
| | $ | $ |
| Cash | 5,314 | 28,379 |
| Bank Indebtedness | (5,913) | - |
| Net (Debt) Cash | (599) | 28,379 |
| Share Capital | 9,309 | 9,379 |
| Retained Earnings | 196,899 | 185,624 |
| Shareholders' Equity | 206,208 | 195,003 |
| Total Capital | 205,609 | 223,382 |

The Company manages its capital and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust its capital, the Company may adjust the amount of dividends paid to shareholders, issue new shares or repurchase shares under a normal course issuer bid, acquire or sell assets to improve its financial performance and flexibility or return capital to shareholders. The Company's primary uses of capital are to finance increases in non-cash working capital and capital expenditures for capacity expansion. The Company currently funds these requirements out of its internally generated cash flows and credit facilities. The Company's financial objectives and strategy remain substantially unchanged.

The Company is subject to certain covenants on its credit facilities. The covenants include a debt-to-capitalization ratio and an interest coverage ratio. The Company monitors the ratios on a monthly basis. The Company currently complies with all externally imposed capital requirements. Other than the covenants required for the credit facilities, the Company is not subject to any externally imposed capital requirements.

General

Management makes every effort to ensure that the Company benefits from effective risk management, which has been strengthened according to even stricter criteria with economic fluctuations. Management is responsible for identifying and assessing the potential risks that could have a material impact on the Company's operations and financial position, as well as the risk management strategies implemented within the Company. It is also responsible for setting up risk management oversight provisions, notably by developing and recommending to the Board of Directors or its Audit Committee various policies and procedures to support effective strategies in regard to internal and external control in order to improve and reduce the impact of business and operational risk factors.

Credit Risk

The Company strictly manages the credit granted to its customers. The accounts receivable collection period has been historically longer in the second and third quarters of its fiscal year. A rapid weakening of the economic conditions could result in further bad debts expenses.

Supplier-Related Risk

The Company's business model is largely built on long-term relationships with a network of international, national and local manufacturers, which enables it to reduce the risks associated with inventory valuation and to adjust to fluctuations in demand. In addition, the Company's practice is to take discounts and pay its suppliers on a timely basis which results in strong relationships with key vendors and partners.

FINANCIAL COMMITMENTS AND CONTINGENCIES

OBLIGATIONS

Payments due by period– undiscounted	Total	Less than 1 year	2-3 Years	4-5 Years	After 5 years
	$	$	$	$	$
Lease liability obligations	28,000	6,862	11,663	7,338	2,137
Purchase obligation	708	708	-	-	-
Total obligations	28,708	7,570	11,663	7,338	2,137

Contingent liabilities

During the normal course of business, certain product liability and other claims have been brought against the Company and, where applicable, its suppliers. While there is inherent difficulty in predicting the outcome of such matters, management has vigorously contested the validity of these claims, where applicable, and based on current knowledge, believes that they are without merit and does not expect that the outcome of any of these matters, in consideration of insurance coverage maintained, or the nature of the claims, individually or in the aggregate, would have a material adverse effect on the consolidated financial position, results of operations or future earnings of the Company.

RISKS AND UNCERTAINTIES

Environmental Risk

The Company's St-André (QC) site shows continued traces of surface contamination from previous treating activities exceeding existing regulatory requirements. In 2022, the Company submitted a revised timetable for the site remediation which was approved by the "Ministère de l'Environnement, de la Lutte contre les changements climatiques, de la Faune et des Parcs". Although, most of the rehabilitation of the site has been done, there is still a small area to decontaminate. In Fiscal 2025, the Company will submit for approval to the Ministère a revised timetable for the remaining remediation.

Based on current available information, the provision is considered by management to be adequate to cover any projected costs that could be incurred in the future.

Because of the nature of the liability, the biggest uncertainty in estimating the provision is the amount of soil to be treated and the costs that will be incurred to remove it. Changes in estimates of future expenditures are the result of periodic reviews of the underlying assumptions supporting the provision, including remediation costs and regulatory requirements.

Competition from Vendors

The Company is exposed to competition from some of its vendors in certain markets. From time to time, vendors might decide to distribute directly to some of its customers and therefore, become competitors. This would adversely affect the Company's ability to compete effectively and thereby potentially impact its sales.

Dependence on Key Personnel

The Company is dependent on the continued services of its senior management team. Although the Company believes that it could replace such key employees in a timely fashion should the need arise, the loss of such key personnel could have a material adverse effect on the Company.

Dependence on Major Customers

The Company does not have long-term contracts with any of its customers. Distribution agreements are usually awarded annually and can be revoked. Only one major customer exceeds 10% of total Company sales during fiscal 2024 (same last year).

The following represents the total sales consisting primarily of various wood products of the major customer:

	For the years ended
	November 30, 2024		November 30, 2023
	$	%	$	%
Sales to the major customer that exceeded 10% of total Company's sales	79,039	15.5	77,976	15.2

The loss of any major customer could have a material effect on the Company's results, operations and financial position. The carrying amounts of financial assets represent the maximum credit exposure.

Dependence on Market Economic Conditions

The demand for the Company's products depends significantly upon the home improvement, new residential and commercial construction markets. The level of activity in the home improvement and new residential construction markets depends on many factors, including the general demand for housing, interest rates, availability of financing, housing affordability, levels of unemployment, shifting demographic trends, gross domestic product growth, consumer confidence and other general economic conditions. Since such markets are sensitive to cyclical changes in the economy, future downturns in the economy or lack of further improvement in the economy could have a material adverse effect on the Company.

Customer Agreements

The majority of the Company's supply and customer arrangements vary significantly in length. Most arrangements are for individual purchase orders and are satisfied upon delivery of the goods to the customer. Some arrangements involve customers purchasing goods several months in advance of delivery. These arrangements, known as bookings, vary in length but are generally less than six months long. There can be no assurance that these customers will renew their bookings or continue to place purchase orders with the Company.

Cyclical Nature

The business of the Company is, to a significant degree, seasonal and cyclical, and fluctuates in advance of the normal building season. Inventory is built up during the second quarter in anticipation of the building seasons, and the busy selling season begins in the last half of that second quarter and extends to the end of the third quarter. Additionally, the Company is subject to the normal economic cycle, the housing cycle and to macroeconomic factors, such as interest rates. Although the Company anticipates that these seasonal and cyclical fluctuations will continue in the foreseeable future, it is seeking to reduce their impact on its operations and sales.

Supply Chain

The Company is exposed to supply chain risks relating mainly to imports from Asia from time to time. Management does not expect to incur any major losses related to supply due to the fact that it has built solid long-term relationships with numerous reputable suppliers.

Laws and regulations

The Company is subject to multiple laws and regulations. These are laws that regulate credit practice, transporting products, importing and exporting products and employment. New laws governing the Company's business could be enacted or changes to existing laws could be implemented, each of which might have a significant impact on the Company's business. Many foreign laws and regulations constrain the Company's ability to compete efficiently on those foreign markets.

In addition, certain of the Company's operations could be negatively affected if import and export duties, tariff barriers or protectionist measures were unpredictably imposed or increased. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could decrease the Company's ability to export or sell its products to its existing or potential customers with international operations and limit its ability to import or source from foreign suppliers. Any limitation on the Company's ability to export or sell its products could adversely affect its business, financial position and results of operations.

Information systems

The Company enterprise resource planning ("ERP") information management system provides information to management which is used to evaluate financial controls, reporting and sales analysis and strategies. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact the Company's results of operations. Furthermore, the Company relies on vendors to support, maintain and periodically upgrade ERP or other systems which are essential in providing management with the appropriate information for decision making. The inability of these vendors to continue to support, maintain and/or upgrade these software programs could disrupt operations if the Company were unable to convert to alternate systems in an efficient and timely manner. Information technology system disruptions, if not anticipated and appropriately mitigated, or the failure to successfully implement new or upgraded systems, could have a material adverse effect on the Business or results of operations.

Cybersecurity

The Company is exposed to risks associated with data breaches, malicious software, unauthorized access, hacking, phishing, identity theft, intellectual property theft, asset theft, industrial espionage, and other cybersecurity threats. Cyberattacks could cause, in particular, loss of data, disruption of business operations, costs relating to restoration and investigation, cost hikes to maintain and upgrade technological infrastructures and systems, increased costs for cybersecurity insurance, financial loss, non-compliance with privacy legislation, legal claims and disputes, fines and reputational damage, all of which could affect the Company's operating results or financial position. Notwithstanding the measures implemented to protect itself against cyberattacks, the Company may be unsuccessful in preventing or implementing effective preventive measures against every potential cyberthreat, as the tactics used are multiplying, change frequently, come from a wide range of sources and are increasingly sophisticated. Moreover, cybersecurity insurance coverage may not be sufficient to insulate the Company from the losses or costs stemming from any or all cybersecurity breaches.

Climate change and focus on sustainability

Certain scientists have concluded that increasing concentrations of greenhouse gases in the Earth's atmosphere may produce climate changes that could have significant physical effects, such as increased frequency and severity of storms, droughts, floods, wildfires and other climatic events. Increased frequency of extreme weather could cause increased incidence of disruption to the production and distribution of the Company's products. Increasing natural disasters in connection with climate change could also be a direct threat to the Company's third-party vendors, service providers or other stakeholders, including disruptions of supply chains or information technology or other necessary services for the Company.

Federal, state, provincial and local governments, as well as some of the Company's customers, are beginning to respond to climate change issues. This increased focus on sustainability is resulting in new legislation, regulations and customer requirements that could negatively affect the Company, as it may incur additional costs or be required to make changes to its operations in order to comply

with any new regulations or customer requirements. Legislation or regulations that potentially impose restrictions, caps, taxes, or other controls on emissions of greenhouse gases such as carbon dioxide, a by-product of burning fossil fuels such as those used in the Company's supply chain, could adversely affect the Company's operations and financial results.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The Company is exposed to risks arising from financial instruments, including Financing and Liquidity Risk, interest rate risk, currency risk, and credit risk. Please refer to Note 18 of the audited annual consolidated financial statements for the year ended November 30, 2024 for additional details.

RELATED PARTY TRANSACTIONS

Related parties include key management and other related parties as described below. Unless otherwise noted, no related party transactions contain special features, conditions and guarantees that have been given or received. Balances are generally settled in cash. Transactions between the parent company and its subsidiaries and between subsidiaries themselves, which are related parties, have been eliminated upon consolidation. These transactions and balances are not presented in this section. The details of these transactions occurred in the normal course of business between the Company and other related parties and are presented below.

Commercial Transactions

During the year ended November 30, 2024, the entities of the Company have not entered into business transactions with related parties that are members of the Board of the Company.

Loans to related parties

No executive officers, senior officers, directors or any person related to them is indebted to the Company.

Key management personnel compensation

Key management includes members of the board of directors, senior management and key executives. The following table shows the remuneration of key management personnel during the years ended:

	November 30	November 30
	2024	2023
	$	$
Salaries and other short-term benefits	3,751	3,422
Post-employment benefits (including remeasurement of defined benefit plan obligation)	(280)	(114)
	3,471	3,308

CRITICAL ACCOUNTING ESTIMATES

These estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future. Estimates are volatile by their nature and are continuously monitored by management. Actual results may differ from these estimates. A discussion of the significant estimates that could have a material effect on the financial statements is provided below:

i. Allowance for sales returns

The Company provides for the possibility that merchandise already sold may be returned by customers. To this end, the Company has made certain assumptions based on the quantity of merchandise expected to be returned in the future.

ii. Measurement of defined benefit plan assets and liabilities

The Company's measurement of defined benefit plan assets and liabilities involves making assumptions about discount rates, the expected rate of compensation increase, the retirement age of employees, and mortality rates. If the actuarial assumptions are found to be significantly different from the actual data subsequently observed, it could lead to changes to the pension expense recognized in net earnings, and the net assets or net liabilities related to these obligations presented in the consolidated statement of financial position.

iii. Valuation of inventory

The cost of inventories may no longer be recoverable if inventories are discontinued, damaged, in excess quantities, or if their selling prices or estimated forecast of product demand decline. In determining the net realizable value of inventories, the Company considers recent sales prices and current market conditions. The Company regularly reviews inventory quantities on hand, current production plans, and forecasted future sales, and inventories are written down to net realizable value when it is determined that they are no longer fully recoverable. There is estimation uncertainty in relation to the identification of excess inventories and in the expected selling prices used in establishing the net realizable value.

iv. Environmental provisions

Environmental provisions relate to the discounted present value of estimated future expenditures associated with the obligations of restoring the environmental integrity of certain properties.

The provision requires the use of estimates and assumptions such as the estimated amount of future remediation expenditures, the anticipated method of remediation, the discount rate and the estimated time frame for remediation. These estimates and assumptions might require additional revisions in the future depending on changes in regulatory requirements, industry practices, current technology, possible uses of the site or the economic environment. See Note 13 to the consolidated financial statements for the year ended November 30, 2024 for further details.

v. Critical judgments in applying accounting policies

The Company did not identify any critical judgements that management has made in the process of applying accounting policies that may have a significant effect on the amounts recognized in the consolidated financial statements.

MATERIAL ACCOUNTING POLICIES

The Company's material accounting policies including Adoption of New Accounting Policies IFRS Standard Issued, But Not Yet Effective are described in Note 3 to the consolidated financial statements for the year ended November 30, 2024.

DISCLOSURE OF OUTSTANDING SHARE DATA

As at November 30, 2024, there were 8,457,754 common shares issued (8,521,454 as at November 30, 2023). The Company has authorized an unlimited number of common shares to be issued, without par value. As at February 19, 2025, there were 8,426,954 common shares outstanding.

SUBSEQUENT EVENT

On February 1, 2025, the President of the United States issued three executive orders directing the United States to impose new tariffs on imports originating from Canada, Mexico and China. These orders call for additional 25% duty on imports into the United States of Canadian-origin and Mexican-origin products and 10% duty on Chinese origin products, except for Canadian energy resources that are subject to an additional 10% duty. The Company is assessing the direct and indirect impacts to its business of such tariffs, retaliatory tariffs or other trade protectionist measures implemented as this situation develops, and such impacts could be material.

OUTLOOK

Looking ahead, trade stability in North America and around the world remains uncertain and repercussions on the lumber and building materials industry are difficult to predict until trade variables are set. Goodfellow's U.S. expansion may help mitigate risks associated with geopolitical uncertainty, supply chain disruptions, and potential trade tariffs.

CERTIFICATION

Disclosure Controls

Management is responsible for establishing and maintaining a system of disclosure controls and procedures to provide reasonable assurance that all material information relating to the Company and its subsidiaries is gathered and reported to senior management on a timely basis so that appropriate decisions can be made regarding public disclosure.

As required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109"), the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO") have caused the effectiveness of the disclosure controls and procedures to be evaluated. Based on that evaluation, they have concluded that the design and operation of the system of disclosure controls and procedures were effective as at November 30, 2024.

Procedures and Internal Controls Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial reports for external purposes in accordance with IFRS.

As required by NI 52-109, the CEO and the CFO have caused the effectiveness of the internal controls over financial reporting to be evaluated using the framework established in 'Internal Control – Integrated Framework (COSO Framework)' published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO), 2013. Based on that evaluation, they have concluded that the design and operation of the Company's internal controls over financial reporting were effective as at November 30, 2024.

In designing such controls, it should be recognized that due to inherent limitations, any controls, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and may not prevent or detect misstatements. Projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Additionally, management is required to use judgment in evaluating controls and procedures.

There has been no change in the Company's internal control over financial reporting that occurred during the three and twelve months ended November 30, 2024 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Delson, February 19, 2025

(Signed) "Patrick Goodfellow"
President and Chief Executive Officer

(Signed) "Charles Brisebois", CPA
Chief Financial Officer

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements, which have been prepared in accordance with IFRS Accounting Standards, and the other financial information provided in the Annual Report, which is consistent with the financial statements, are the responsibility of management and have been approved by the Board of Directors.

The consolidated financial statements include some amounts that are based on management's best estimates and judgment and, in their opinion, present fairly the Company's financial position, results of operations and cash flows. The Company's procedures and internal control systems are designed to provide reasonable assurance that accounting records are reliable and safeguard the Company's assets.

The Audit Committee is responsible for reviewing the consolidated financial statements and Annual Report and recommending their approval to the Board of Directors. In order to fulfill its responsibilities, the Audit Committee meets with management and independent auditors to discuss internal control over financial reporting process, significant accounting policies, other financial matters and the results of the examination by the independent auditors.

These consolidated financial statements have been audited by the independent auditors KPMG LLP, and their report is included herein.

(Signed) "Patrick Goodfellow"
President and Chief Executive Officer

(Signed) "Charles Brisebois", CPA
Chief Financial Officer

KPMG

KPMG LLP
Tour KPMG
600 de Maisonneuve Blvd West, Suite 1500
Montréal, QC H3A 0A3
Canada
Telephone 514 840 2100
Fax 514 840 2187

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Goodfellow Inc.

Opinion

We have audited the consolidated financial statements of Goodfellow Inc. (the "Entity"), which comprise:

the consolidated statements of financial position as at November 30, 2024 and November 30, 2023
the consolidated statements of comprehensive income for the years then ended
the consolidated statements of changes in Shareholders' equity for the years then ended
the consolidated statements of cash flows for the years then ended
and notes to the consolidated financial statements, including a summary of material accounting policy information

(Hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at November 30, 2024 and November 30, 2023, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditor's Responsibilities for the Audit of the Financial Statements" section of our auditor's report.

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

KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.

KPMG

Page 2

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended November 30, 2024. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined the matters described below to be the key audit matters to be communicated in our auditor's report.

Assessment of the existence and accuracy of inventories

Description of the matter

We draw attention to Note 3 and Note 7 of the financial statements.

The Entity's inventory balance is $131.3 million. Inventories, which consist of raw materials, work in process and finished goods are recorded at the lower of cost and net realizable value. Cost is determined using the weighted average cost method. The cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventory to its present location and condition.

The costs of conversion of inventories also include the costs directly related to the conversion of materials to finished goods, such as direct labour and a systematic allocation of fixed and variable production overhead.

Why the matter is a key audit matter

We identified the assessment of the existence and accuracy of inventories as a key audit matter given the magnitude of the inventories balance and the increased extent of audit effort needed to address the matter.

How the matter was addressed in the audit

The following are the primary procedures we performed to address this key audit matter:

We observed the Entity's physical inventory counts for a selection of locations at or close to year-end and performed a sample of independent test counts which we compared to the Entity's records.
We tested a sample of inventory movements to purchase invoices and shipping documents between the count date and the year-end date.
We tested a sample of inventory items to purchase invoices and we recalculated the weighted average cost basis of the sampled inventory items.

KPMG

Page 3

Other Information

Management is responsible for the other information. Other information comprises:

the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions;
the information, other than the financial statements and the auditor's report thereon, included in a document likely to be entitled "Annual Report 2024".

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

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

We obtained the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions and the information, other than the financial statements and the auditor's report thereon, included in a document likely to be entitled "Annual Report 2024" as at the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditor's report.

We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance are responsible for overseeing the Entity's financial reporting process.

KPMG

Page 4

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

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

We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting 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 Entity's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

KPMG

Page 5

Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditor's report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this auditor's report is Giuseppe Funiciello.

KPMG LLP

Montréal, Canada

February 19, 2025

*CPA auditor, public accountancy permit No. A122264

GOODFELLOW INC.
Consolidated Statements of Comprehensive Income
For the years ended November 30, 2024 and 2023
(in thousands of dollars, except per share amounts)

	Years ended
	November 30 2024	November 30 2023
	$	$
Sales (Note 22)	509,541	512,821
Expenses
Cost of goods sold (Note 4)	387,796	400,461
Selling, administrative and general expenses (Note 4)	101,302	89,841
Net financial costs (Note 5)	2,379	2,429
	491,477	492,731
Earnings before income taxes	18,064	20,090
Income taxes (Note 15)	4,695	5,402
Net earnings	13,369	14,688
Items that will not subsequently be reclassified to net earnings
Remeasurement of defined benefit plan obligation
net of taxes of $1,984 ($984 in 2023) (Note 16)	5,103	2,531
Total comprehensive income	18,472	17,219
Net earnings per share – Basic and Diluted (Note 14c)	1.58	1.72

Notes 1 to 23 are an integral part of these consolidated financial statements.

GOODFELLOW INC.
Consolidated Statements of Financial Position
(in thousands of dollars)

| | As at
November 30
2024 | As at
November 30
2023 |
| --- | --- | --- |
| Assets | $ | $ |
| Current Assets | | |
| Cash | 5,314 | 28,379 |
| Trade and other receivables (Note 6) | 56,601 | 53,674 |
| Income taxes receivable | 6,634 | 6,286 |
| Inventories (Note 7) | 131,284 | 98,473 |
| Prepaid expenses | 4,047 | 4,215 |
| Total Current Assets | 203,880 | 191,027 |
| Non-Current Assets | | |
| Property, plant and equipment (Note 8) | 43,883 | 32,761 |
| Intangible assets (Note 9) | 896 | 1,487 |
| Right-of-use assets (Note 10) | 19,936 | 11,354 |
| Defined benefit plan asset (Note 16) | 21,925 | 15,347 |
| Other assets | 1,336 | 777 |
| Total Non-Current Assets | 87,976 | 61,726 |
| Total Assets | 291,856 | 252,753 |
| Liabilities | | |
| Current Liabilities | | |
| Bank indebtedness (Note 11) | 5,913 | - |
| Trade and other payables (Note 12) | 49,028 | 37,620 |
| Provision (Note 13) | 930 | 2,789 |
| Current portion of lease liabilities (Note 10) | 6,271 | 4,732 |
| Total Current Liabilities | 62,142 | 45,141 |
| Non-Current Liabilities | | |
| Lease liabilities (Note 10) | 15,203 | 8,497 |
| Deferred income taxes (Note 15) | 8,303 | 4,112 |
| Total Non-Current Liabilities | 23,506 | 12,609 |
| Total Liabilities | 85,648 | 57,750 |
| Shareholders' Equity | | |
| Share capital (Note 14) | 9,309 | 9,379 |
| Retained earnings | 196,899 | 185,624 |
| | 206,208 | 195,003 |
| Total Liabilities and Shareholders' Equity | 291,856 | 252,753 |

Contingent liabilities and commitments (Note 20)

Notes 1 to 23 are an integral part of these consolidated financial statements.

Approved by the Board of Directors,

(Signed) "Robert Hall"
Chair of the Board

(Signed) "Alain Côté"
Director & Chair of the Audit Committee

GOODFELLOW INC.
Consolidated Statements of Cash Flows
For the years ended November 30, 2024 and 2023
(in thousands of dollars)

Years ended
	November 30 2024	November 30 2023
	$	$
Operating Activities
Net earnings	13,369	14,688
Adjustments for:
Depreciation and amortization of:
Property, plant and equipment (Note 8)	4,188	3,311
Intangible assets (Note 9)	591	602
Right-of-use assets (Note 10)	4,787	4,697
Gain on disposal of property, plant and equipment	(183)	(139)
Accretion expense on provision (Note 13)	-	271
Provision (Note 13)	(1,859)	(397)
Income taxes (Note 15)	4,695	5,402
Interest expense (Note 5)	1,077	996
Interest on lease liabilities (Note 5)	768	431
Funding in (deficit) excess of pension plan expense (Note 16)	509	(212)
Other	46	24
	27,988	29,674
Changes in non-cash working capital items (Note 17)	(24,102)	24,213
Interest paid (Note 17)	(1,918)	(1,367)
Income taxes paid	(2,836)	(9,552)
	(28,856)	13,294
Net Cash Flows from Operating Activities	(868)	42,968
Financing Activities
Payment of lease liabilities (Note 10)	(5,170)	(5,350)
Redemption of shares (Note 14b)	(892)	(456)
Dividends paid (Note 14d)	(6,375)	(8,539)
Net Cash Flows from Financing Activities	(12,437)	(14,345)
Investing Activities
Acquisition of property, plant and equipment	(15,690)	(3,836)
Decrease in intangible assets	-	7
Proceeds on disposal of property, plant and equipment	576	147
Other assets	(559)	18
Net Cash Flows from Investing Activities	(15,673)	(3,664)
Net change in cash (outflow)	(28,978)	24,959
Cash beginning of year	28,379	3,420
Cash (bank indebtedness), end of year	(599)	28,379
Cash position is comprised of:
Cash	5,314	28,379
Bank overdraft (Note 11)	(5,913)	-
	(599)	28,379

Notes 1 to 23 are an integral part of these consolidated financial statements.

GOODFELLOW INC.
Consolidated Statements of Changes in Shareholders' Equity
For years ended November 30, 2024 and 2023
(in thousands of dollars)

	Share Capital	Retained Earnings	Total
	$	$	$
Balance as at November 30, 2022	9,419	177,360	186,779
Net earnings (Note 14c)	-	14,688	14,688
Other comprehensive income	-	2,531	2,531
Total comprehensive income	-	17,219	17,219
Dividend (Note 14d)	-	(8,539)	(8,539)
Redemption of Shares (Note 14b)	(40)	(416)	(456)
Balance as at November 30, 2023	9,379	185,624	195,003
Net earnings (Note 14c)	-	13,369	13,369
Other comprehensive income	-	5,103	5,103
Total comprehensive income	-	18,472	18,472
Dividend (Note 14d)	-	(6,375)	(6,375)
Redemption of Shares (Note 14b)	(70)	(822)	(892)
Balance as at November 30, 2024	9,309	196,899	206,208

Notes 1 to 23 are an integral part of these consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

Status and nature of activities

Goodfellow Inc. (hereafter the "Company"), incorporated under the Canada Business Corporations Act, carries on various business activities related to remanufacturing and distribution of lumber and wood products. The Company's head office and primary place of business is located at 225 Goodfellow Street in Delson (Quebec), Canada, J5B 1V5.

The consolidated financial statements of the Company as at and for the years ended November 30, 2024 and 2023 include the accounts of the Company and its wholly-owned subsidiaries.

Basis of preparation

a) Statement of compliance

The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Boards ("IASB").

These consolidated financial statements were authorized for issue by the Board of Directors on February 19, 2025.

b) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for the following material items:

Environmental provision is recorded at the present value of the expected expenditures to be paid.
Defined benefit plan assets and liabilities are measured at the present value of the defined benefit obligation less the fair value of the plan assets.

c) Functional and presentation currency

The consolidated financial statements are presented in Canadian dollars, which is the Company's functional currency. All financial information presented in Canadian dollars has been rounded to the nearest thousand unless otherwise noted.

d) Use of estimates, judgments and assumptions

Key sources of estimation uncertainty:

The preparation of financial statements in compliance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future. Estimates are volatile by their nature and are continuously monitored by management. Actual results may differ from these estimates. A discussion of the significant estimates that could have a material effect on the financial statements is provided below:

i. Allowance for sales returns

ii. Measurement of defined benefit plan assets and liabilities

iii. Valuation of inventory

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

iv. Environmental provisions

Environmental provisions relate to the discounted present value of estimated future expenditures associated with the obligations of restoring the environmental integrity of certain properties.

v. Critical judgments in applying new accounting policies

Material Accounting Policies

a) Adoption of New Accounting Policies

Amendments to IAS 1 Presentation of Financial Statements

In February 2021, the IASB issued amendments to IAS 1 Disclosure of Accounting Policies. The amendments are intended to help entities in disclosing useful accounting policy information. The main amendments: – require entities to disclose their material accounting policies rather than their significant accounting policies; – specify that accounting policies that relate to immaterial transactions, other events or conditions are immaterial and need not be disclosed; – specify that not all accounting policies that relate to material transactions, other events or conditions are material to the Company's financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2023, but earlier application is permitted. The Company has updated its accounting policy information disclosures in these consolidated financial statements.

Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimate and Errors

In February 2021, the IASB issued amendments to IAS 8 Definition of Accounting Estimates, to help entities make a distinction between accounting policies and accounting estimates. The amendments present a new definition of accounting estimates, which specifies that they are monetary amounts in financial statements that are subject to measurement uncertainty. The amendments also specify the relationship between accounting policies and accounting estimates by stating that an entity develops an accounting estimate to achieve the objective set out by the accounting policy. The amendments are effective for annual reporting periods beginning on or after January 1, 2023. The amendments to IAS 8 had no impact on the Company's consolidated financial statements.

Amendments to IAS 12 Income Taxes In May 2021, the IASB issued amendments to IAS 12

Deferred Tax related to Assets and Liabilities arising from a Single Transaction. The amendments limit the scope of the initial recognition exemption so that it does not apply to transactions that give rise to offsetting and equal temporary differences. As a result, entities will have to recognize deferred tax assets and liabilities for temporary differences arising from the initial recognition of a lease and a decommissioning provision. The amendments are effective for annual reporting periods beginning on or after January 1, 2023. The amendments to IAS 12 had no impact on the Company's consolidated financial statements.

b) Principles of Consolidation

The consolidated financial statements incorporate the Company's accounts and the accounts of the subsidiaries (Goodfellow Distribution Inc., Quality Hardwoods Ltd.), all wholly-owned, that it controls. Control exists when the Company has the existing rights that give it the current ability to direct the activities that significantly affect the entities' returns. The financial statements of subsidiaries are prepared with the same reporting period of the Company. The accounting policies of subsidiaries are aligned with the policies of the Company. All intercompany transactions, balances, revenues and expenses were fully eliminated upon consolidation.

c) Inventories

Inventories, which consist of raw materials, work in process and finished goods are recorded at the lower of cost and net realizable value. Cost is determined using the weighted average cost method. The cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventory to its present location and condition. The costs of conversion of inventories also include the costs directly related to the conversion of materials to finished goods, such as direct labour and a systematic allocation of fixed and variable production overhead. Net realizable value is the estimated selling price in the ordinary course of business less any applicable estimated selling expenses. The cost of inventory is recognized as an expense when the inventory is sold. Previous write-downs to net realizable value are reversed if there is a subsequent increase in the value of the related inventories.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

d) Property, Plant, Equipment and Intangible assets

Items of property, plant, equipment and intangible assets are measured at cost less accumulated depreciation and accumulated impairment losses. Government grants received in respect of property, plant and equipment are recognized as a reduction to the cost.

Cost includes expenditures that are directly attributable to the acquisition of the asset, including any costs directly attributable to bringing the asset to a working condition for its intended use, and borrowing costs.

When an item of property, plant, equipment and intangible assets is made up of components that have differing useful lives, cost is allocated among the different components that are depreciated separately.

Leasehold improvements are amortized using the straight-line method over the terms of the leases. Other capital assets are amortized using the declining balance method with the following rates:

Buildings	4% to 20%
Yard improvements	8% to 10%
Furniture and fixtures	4% to 20%
Equipment	4% to 20%
Computer equipment	20%
Rolling stock	30%

Estimated useful lives, depreciation methods, rates and residual values are reviewed at each annual reporting date, with the effect of any changes accounted for on a prospective basis.

e) Intangible assets

Intangible assets consist of Computer Software and Enterprise resource planning system. Computer software is subject to the declining balance method at a rate of 20%. The Company's Enterprise Resource Planning system is subject to a linear amortization of 10 years.

f) Leases

The Company recognizes a right-of-use asset and a lease liability based on the present value of future lease payments when the leased asset is available for use by the Company. The lease payments include fixed and in-substance fixed payments and variable lease payments that depend on an index or rate, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in the lease or the lessee's incremental borrowing rate. Generally, the Company uses the lessee's incremental borrowing rate for its present value calculations. Lease payments are discounted over the lease term, which includes the fixed term and renewal options that the Company is reasonably certain to exercise. Lease payments are allocated between the lease liability and a finance cost, which is recognized in finance costs over the lease term in the consolidated statement of earnings.

When a contract contains both lease and non-lease components, the Company will allocate the consideration in the contract to each of the components on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. Relative stand-alone prices are determined by maximizing the most observable prices for a similar asset and/or service.

Lease payments for assets that are exempt through the short-term exemption and variable payments not based on an index or rate are recognized in selling, distribution and administrative expenses as incurred.

Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment losses, and adjusted for any re-measurement of lease liabilities. Cost is calculated as the initial measurement of the lease liability plus any initial direct costs and any lease payments made at or before the commencement date. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term or the useful life.

The Company leases buildings, furniture and equipment, and rolling stock.

g) Impairment of Non-Financial Assets

On each reporting date, the Company reviews the carrying amounts of property, plant and equipment, intangible assets and right-of-use assets for any indication of impairment. If there is such an indication, the recoverable amount of the asset is estimated in order to determine the amount of any impairment loss. If the recoverable amount of the individual asset cannot be estimated, the Company estimates the recoverable amount of the cash generating unit (CGU) to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual CGUs; otherwise, they are allocated to the smallest group of CGUs for which a reasonable and consistent basis of allocation can be identified.

Recoverable amount is the higher of fair value less costs to sell and the value in use. To measure value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the estimated recoverable amount of an asset or of a CGU is less than its carrying amount, the carrying amount of the asset or of the CGU is reduced to its recoverable amount. An impairment loss is immediately recognized in net earnings.

When an impairment loss subsequently reverses, the carrying amount of the asset or of the CGU is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or the CGU in the prior periods. Reversals of impairment losses are immediately recognized in net earnings.

h) Foreign Currency Translation

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the respective transaction dates. Revenues and expenses denominated in foreign currencies are translated into the functional currency at average rates of exchange prevailing during the period. The resulting gains or losses on translation are included in cost of goods sold in the determination of net earnings.

i) Revenue Recognition

Revenue from the sale of goods from activities relating to remanufacturing, distribution of lumber and wood products is recognized, net of discounts and customer rebates, at the point in time when the transfer of control of the related products has taken place (based on shipping or delivery terms as specified in the sales contract), and collectability is reasonably assured. Revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur.

j) Post-Employment Benefits

a) Defined Contribution Plans

Defined contribution plans include pension plans offered by the Company that are regulated by the Régie des rentes du Québec and by the Canada Revenue Agency and 408 Simple IRA plans (for its U.S. employees). The Company recognizes the contributions paid under defined contribution plans in net earnings in the period in which the employees rendered service entitling them to the contributions. The Company has no legal or constructive obligation to pay additional amounts other than those set out in the plans.

b) Defined Benefit Plans

The Company accrues its obligations under employee benefit plans and the related costs, net of plan assets, as the services are rendered. The Company's net liability in respect of defined benefits is calculated separately for each plan by estimating the amount of future benefits that plan members have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The Company has a number of defined benefit pension plans and has adopted the following policies:

i. The cost of pensions earned by employees is actuarially determined using the projected unit credit method based on management's best estimate of salary escalation, retirement ages of employees, discount rates and mortality rates. Actuarial valuations are performed by independent actuaries on each reporting date of the annual financial statements.

ii. For the purpose of calculating the costs of the plans, assets are recorded at fair value and interest on the service cost is allowed for in the interest cost.

iii. Actuarial gains or losses are recognized, for each reporting period, through other comprehensive income. Past service costs arising from plan amendments are recognized in net earnings in the period that they arise.

iv. The defined benefit plans are subject to minimum funding requirements which under certain circumstances could generate an additional liability under IFRIC 14. Any variation in that liability would be recognized immediately in net earnings.

k) Income taxes

The Company's income tax expense is based on tax rules and regulations that are subject to interpretation and require estimates and assumptions that may be challenged by taxation authorities. Current income tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to taxes payable in respect of previous years. The Company's estimates of current income tax assets and liabilities are periodically reviewed and adjusted as circumstances warrant, such as changes to tax laws and administrative guidance, and the resolution of uncertainties through either the conclusion of tax audits or expiration of prescribed time limits within the relevant statutes.

The final results of government tax audits and other events may vary materially compared to estimates and assumptions used by management in determining the income tax expense and in measuring current income tax assets and liabilities.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

Deferred tax is recognized on the temporary differences between the carrying amounts of the assets and liabilities presented in the consolidated statement of financial position and the corresponding tax bases used for tax purposes. Deferred income tax assets and liabilities are measured using enacted or substantively enacted income tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is included in net earnings in the period that includes the enactment or substantively enacted date except to the extent that it relates to an item recognized either in other comprehensive income or directly in equity in the current or in a previous period.

A deferred income tax asset is recognized to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred income tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

i) Financial Instruments

Financial assets and liabilities are initially recognized at fair value and their subsequent measurement depends on their classification.

If the financial asset is not subsequently accounted for at fair value through profit or loss, then the initial measurement includes transaction costs that are directly attributable to the asset's acquisition or origination.

i. Financial assets measured at amortized cost

A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment loss.

The Company currently classifies its cash and trade and other receivables as assets measured at amortized cost.

Impairment of financial assets

The Company uses the "expected credit loss" model for calculating impairment and recognizes expected credit losses as a loss allowance if they relate to a financial asset measured at amortized cost. The carrying amount of these assets in the consolidated statement of financial position is stated net of any loss allowance.

ii. Financial assets measured at fair value

These assets are measured at fair value and changes therein, including any interest or dividend income, are recognized in profit or loss. There are currently no financial assets measured at fair value with changes in fair value recognized in profit or loss.

iii. Financial liabilities are classified into the following categories:

Financial liabilities measured at amortized cost

The Company classifies non-derivative financial liabilities as measured at amortized cost. Non-derivative financial liabilities are initially recognized at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method. The Company currently classifies trade and other payables, and bank indebtedness as financial liabilities measured at amortized cost.

Financial liabilities measured at fair value

Financial liabilities measured at fair value are initially recognized at fair value and are re-measured at each reporting date with any changes therein recognized in profit or loss. The Company currently has no financial liabilities measured at fair value.

iv. Non-hedge derivative financial instruments measured at fair value

Non-hedge derivative financial instruments, if any, are recorded as either assets or liabilities measured initially at their fair value. Attributable transaction costs are recognized in profit or loss as incurred. All derivative financial instruments not designated in a hedge relationship are classified as financial instruments at fair value through profit and loss. Any subsequent change in the fair value of non-hedge foreign exchange contracts are accounted for in cost of goods sold for the period in which it arises. The Company currently has no derivative financial instruments measured at fair value.

m) Provisions

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties related to the obligation. If the effect of the time value of money is material, the provisions are measured at their present value.

i) Environmental provisions

Environmental provisions relate to the discounted present value of estimated future expenditures associated with the obligations of restoring the environmental integrity of certain properties. Environmental expenditures are estimated taking into consideration the anticipated method and extent of the remediation consistent with regulatory requirements, industry

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

practices, current technology and possible uses of the site. The estimated amount of future remediation expenditures is reviewed periodically based on available information. The amount of the provision is the present value of the estimated future remediation expenditures discounted using a pre-tax rate that reflects current market assessments of time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as financial costs, while the revision of estimates of environmental expenditures and discount rates are recorded in selling, administrative and general expenses in the consolidated statement of comprehensive income.

n) Presentation of Dividends and Interest Paid in Cash Flow Statements

IFRS permits dividends and interest paid to be shown as operating or financing activities, as deemed relevant for the entity. The Company has elected to classify dividends paid as cash flows used in financing activities and interest paid as cash flows used in operating activities.

o) Financial costs

Financial costs comprise interest expense on borrowings (including on lease liabilities), unwinding of the discount on provisions and other financial charges. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in net earnings using the effective interest method.

p) IFRS Standard Issued, But Not Yet Effective

IFRS 18 presentation and disclosure in financial statements

In April 2024, IASB issued IFRS 18 Presentation and Disclosure in Financial Statements ("IFRS 18") to replace IAS 1 Presentation of Financial Statements. IFRS 18 introduces three sets of new requirements to improve companies' reporting of financial performance and give investors a better basis for analyzing and comparing companies, namely:

Improved comparability in the statement of profit or loss by introducing separate income and expense categories and requiring new subtotals; Management-defined performance measures are disclosed in a single note in the financial statements;
Enhanced transparency of management-defined performance measures by requiring explanations on these measures; and
More useful grouping of information in the financial statements by providing guidance on how to organize information and whether to provide it in the primary financial statements or in the notes.

These changes apply to annual periods beginning on or after January 1, 2027. The Company is currently assessing the estimated impact of this new standard on its consolidated financial statements.

New standards, amendments and interpretations not adopted in the current year that are not expected to have a material impact on the Company's consolidated financial statements have not been disclosed.

Additional information on:

Cost of goods sold	November 30	November 30
	2024	2023
	$	$
Employee benefits expense	1,445	1,291
Depreciation	1,478	1,148
Foreign exchange losses	371	234
Selling, administrative and general expenses	November 30	November 30
	2024	2023
	$	$
Employee benefits expense	62,466	54,247
Depreciation and amortization	8,088	7,462

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

Net financial costs

	November 30 2024	November 30 2023
	$	$
Interest expense	1,077	996
Interest expense on lease liabilities	768	431
Accretion expense on provision (Note 13)	-	271
Other financial costs	1,002	970
Financial cost	2,847	2,668
Financial income	(468)	(239)
Net financial costs	2,379	2,429

Trade and other receivables

	November 30 2024	November 30 2023
	$	$
Trade receivables	57,085	54,131
Allowance for doubtful accounts	(880)	(594)
	56,205	53,537
Other receivables	396	137
	56,601	53,674

Inventories

	November 30 2024	November 30 2023
	$	$
Raw materials	16,615	11,450
Work in process	12,913	7,433
Finished goods	104,578	82,801
	134,106	101,684
Provision for obsolescence	(2,822)	(3,211)
	131,284	98,473

For the year ended November 30, 2024, $370.2 million (2023 - $383.7 million) of inventories were expensed as cost of goods sold. Included in inventories is a return asset for the right to recover returned goods in the amount of $1.5 million as at November 30, 2024 (November 30, 2023 - $1.2 million). For the year ended November 30, 2024, $0.3 million of write-down of inventories was recognized as an expense in the period as cost of goods sold (2023 - $0.4 million).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

Property, plant and equipment

	Land	Buildings, Yard and Leasehold improvements	Equipment, Furniture and Fixtures	Rolling Stock	Computer Equipment	Total
	$	$	$	$	$	$
Cost
Cost at November 30, 2022	6,262	52,360	31,596	8,159	4,970	103,347
Additions	-	1,123	-	2,638	76	3,837
Disposals	-	-	(26)	(67)		(93)
Cost at November 30, 2023	6,262	53,483	31,570	10,730	5,046	107,091
Additions (1)	335	3,657	7,521	3,619	572	15,704
Disposals	(77)		-	(373)	-	(450)
Cost at November 30, 2024	6,520	57,140	39,091	13,976	5,618	122,345
Accumulated depreciation
Accumulated depreciation at November 30, 2022	-	33,431	26,645	6,713	4,289	71,078
Depreciation	-	1,358	983	826	144	3,311
Disposals	-		-	(59)	-	(59)
Accumulated depreciation at November 30, 2023	-	34,789	27,628	7,480	4,433	74,330
Depreciation	-	1,315	1,269	1,399	205	4,188
Disposals	-	-	-	(56)	-	(56)
Accumulated depreciation at November 30, 2024	-	36,104	28,897	8,823	4,638	78,462
Carrying Value
At November 30, 2023	6,262	18,694	3,942	3,250	613	32,761
At November 30, 2024	6,520	21,036	10,194	5,153	980	43,883

(1) As part of additions for the year, on August 2, 2024, Goodfellow Inc., through its subsidiary Goodfellow Distribution Inc., acquired from Allegheny Wood Products Inc. two dry kiln facilities in West Virginia, including land, machinery and equipment, and inventory for cash consideration of $6.3 million USD ($8.7 million CAD). The Company financed the acquisition through its existing revolving credit facility. The cost of $6.3 million USD was allocated to the individual identifiable assets acquired on the basis of their relative fair values at the date of purchase. The Company made estimates when determining the fair values of assets acquired, using appropriate valuation techniques, which were generally based on cost and market approaches.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

Intangible assets

	Computer Software and Enterprise Resource Planning system
	$
Cost
Cost at November 30, 2022	6,635
Disposals	(7)
Cost at November 30, 2023	6,628
Additions (Disposals)	-
Cost at November 30, 2024	6,628
Accumulated amortization
Accumulated amortization at November 30, 2022	4,539
Amortization	602
Accumulated amortization at November 30, 2023	5,141
Amortization	591
Accumulated amortization at November 30, 2024	5,732
Carrying Value
At November 30, 2023	1,487
At November 30, 2024	896

Right-of-use assets and lease liabilities

Right-of-use assets

	Buildings	Furniture and Equipment	Rolling Stock	Total
	$	$	$	$
Balance at November 30, 2022	10,602	219	4,178	14,999
Additions	993	-	845	1,838
Depreciation	(2,569)	(117)	(2,011)	(4,697)
Disposals	(772)	-	(14)	(786)
Balance at November 30, 2023	8,254	102	2,998	11,354
Additions	10,721	7	2,679	13,407
Depreciation	(3,030)	(57)	(1,700)	(4,787)
Disposals	-	-	(38)	(38)
Balance at November 30, 2024	15,945	52	3,939	19,936

Lease liabilities

	November 30 2024	November 30 2023
	$	$
Balance beginning of year	13,229	17,506
Additions	13,407	1,838
Early repayment of lease liabilities	(43)	(950)
Interest expense on lease liabilities (Note 5)	768	431
Payment of lease liabilities	(5,938)	(5,781)
Foreign exchange movements	51	185
Balance end of year	21,474	13,229
Less: current portion	(6,271)	(4,732)
Balance end of year – long term portion	15,203	8,497

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

The following table presents additional amounts recognized in the statement of comprehensive income for the years ended November 30, 2024 and 2023 related to leases:

	November 30	November 30
	2024	2023
	$	$
Expense related to low value and short-term leases	427	355
Variable lease payments (not included in the measurement of lease liabilities)	1,572	1,463
	1,999	1,818

The following table presents a maturity analysis of future undiscounted cash flows from lease liabilities:

	November 30	November 30
	2024	2023
	$	$
Less than one year	6,862	5,008
One to two years	6,261	3,510
Two to three years	5,402	2,800
Three to four years	4,429	1,851
Four to five years	2,909	1,024
More than five years	2,137	1,128
Total undiscounted lease liabilities	28,000	15,321

11. Bank indebtedness

	November 30	November 30
	2024	2023
	$	$
Bank overdraft	5,913	-
Debt	5,913	-

The Company had a credit agreement with two chartered Canadian banks for a maximum revolving operating facility of $90 million which matured in May 2024 by way of bank loans and/or banker's acceptances. In addition, an accordion of $10 million was available once per fiscal year for a maximum of 150 days. Funds advanced under these credit facilities bore interest at the prime rate plus a premium and were secured by first ranking security on the universality of the movable and immovable property of the Company.

In May 2024, the Company renewed its credit agreement for a maximum revolving operating facility of $90 million maturing in May 2026 by way of bank loans and/or CORRA loans. In addition, an accordion of $10 million is available once per fiscal year for a maximum of 150 days. Funds advanced under these credit facilities bear interest at the prime rate plus a premium and are secured by first ranking security on the universality of the movable and immovable property of the Company. As at November 30, 2024, the Company was compliant with its financial covenants. As at November 30, 2024, the Company has $1.3 million of issued letters of credit which reduces the availability of its facility ($1.2 million last year).

12. Trade and other payables

	November 30	November 30
	2024	2023
	$	$
Trade payables and accruals	37,745	26,975
Payroll related liabilities	6,985	6,492
Other payables	4,298	4,153
	49,028	37,620

13. Provision

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

Based on current available information, the provision is considered by management to be adequate to cover any projected costs that could be incurred in the future.

	November 30 2024	November 30 2023
	$	$
Balance, beginning of the year	2,789	2,915
Changes due to:
Revision of future expected expenditures	(1,312)	(37)
Accretion expense	-	271
Expenditures incurred	(547)	(360)
Balance, end of the year	930	2,789

14. Share Capital

a) Authorized

An unlimited number of common shares, without par value

	November 30 2024	November 30 2023	November 30 2024	November 30 2023
	Number of shares	Number of shares	Carrying value ($)	Carrying value ($)
Shares outstanding at the beginning of the year	8,521,454	8,557,954	9,379	9,419
Repurchased and cancelled (b)	(63,700)	(36,500)	(70)	(40)
Shares outstanding at the end of the year	8,457,754	8,521,454	9,309	9,379

b) Share repurchase program (NCIB)

During fiscal year 2024, under the NCIB the Company purchased 63,700 shares at a weighted-average price of $14.01 for a total aggregate purchase price of $892 thousand (2023: purchased 36,500 shares at a weighted-average price of $12.50 for a total aggregate purchase price of $456 thousand).

The following table summarizes the Company's share repurchase activities under both the renewed and the previous NCIB:

	November 30 2024	November 30 2023
Common shares repurchased for cancellation (number of shares)	63,700	36,500
Average price per share	$14.01	$12.50
Total repurchase cost	$892	$456
Repurchase resulting in a reduction of:
Share Capital	$70	$40
Deficit (1)	$822	$416

(1) The excess of repurchase cost over the average carrying value of the common shares.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

c) Net earnings

The calculation of basic and diluted net earnings per share was based on the following:

	November 30, 2024	November 30, 2023
	$	$
Net earnings, basic and diluted	13,369	14,688
Weighted average number of common shares, basic and diluted	8,496,521	8,536,512

d) Dividends

The following dividends were declared and paid by the Company for the years ended:

November 30, 2024				November 30, 2023
	Declared			Declared
Record date	Per share	Amount	Payment date	Record date	Per share	Amount	Payment date
	$	$			$	$
Mar 5, 2024	0.50	4,256	Mar 19, 2024	Mar 2, 2023	0.50	4,274	Mar 16, 2023
Oct 23, 2024	0.25	2,119	Nov 6, 2024	Oct 19, 2023	0.50	4,265	Nov 2, 2023
	0.75	6,375			1.00	8,539

15. Income Taxes

The income tax expense is as follows:

	November 30, 2024	November 30, 2023
	$	$
Current	2,488	5,705
Deferred	2,207	(303)
	4,695	5,402

The provision for income taxes is at an effective tax rate, which differs from the basic corporate statutory tax rate as follows:

	November 30, 2024	November 30, 2023
	$	$
Earnings before income taxes	18,064	20,090
Statutory income tax rate (%)	26.5	26.8
Income taxes based on above rates	4,787	5,384
Adjusted for:
Permanent differences	62	(1)
Difference in expected rate of reversal versus current rate	(169)	(77)
Other	15	96
	4,695	5,402

Temporary differences that give rise to deferred income tax assets and liabilities are as follows:

	November 30, 2024	November 30, 2023
	$	$
Deferred income tax (liabilities) assets:
Deferred pension asset	(6,104)	(4,109)
Provisions and other	1,727	2,327
Property, plant and equipment	(3,926)	(2,330)
Net deferred tax liability	(8,303)	(4,112)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

Changes in deferred tax assets and liabilities are as follows:

	Balance at December 1, 2023	Recognized in profit or loss	Recognized in OCI	Net	Deferred tax assets	Deferred tax liabilities
	$	$	$	$	$	$
Deferred Pension Asset	(4,109)	(11)	(1,984)	(6,104)	-	(6,104)
Provisions and other	2,327	(600)	-	1,727	1,727	-
Property, Plant and Equipment (including Right-of-Use assets)	(2,330)	(1,596)	-	(3,926)	5,747	(9,673)
Net tax assets (liabilities)	(4,112)	(2,207)	(1,984)	(8,303)	7,474	(15,777)
	Balance at December 1, 2022	Recognized in profit or loss	Recognized in OCI	Net	Deferred tax assets	Deferred tax liabilities
---	---	---	---	---	---	---
	$	$	$	$	$	$
Deferred Pension Asset	(3,108)	(17)	(984)	(4,109)	-	(4,109)
Provisions and other	2,186	141	-	2,327	2,327	-
Property, Plant and Equipment (including Right-of-Use assets)	(2,509)	179	-	(2,330)	3,542	(5,872)
Net tax assets (liabilities)	(3,431)	303	(984)	(4,112)	5,869	(9,981)

16. Post-employment benefits

The Company has a number of pension plans providing pension benefits to most of its employees.

The Pension Plan for the Hourly Employees of Goodfellow Inc. ("Hourly Plan") is a hybrid pension plan funded by employer and member contributions. Defined benefits are based on career average earnings for service up to April 30, 2008. The Hourly Plan was a pure defined benefit plan until April 30, 2008 but was amended effective May 1, 2008 to introduce a defined contribution (DC) component.

The Pension Plan for the Salaried Employees of Goodfellow Inc. ("Salaried Plan") is also a hybrid pension plan funded by employer and member contributions. Defined benefits are based on length of service up to May 31, 2007 and final average earnings calculated at the earliest of retirement, termination or death. The Salaried Plan was a pure defined benefit plan until May 31, 2007 but has been amended effective June 1, 2007 to introduce a defined contribution (DC) component.

All employees have ceased to accrue service under the defined benefit portions of the plans. As for the DC components, the Company matches employee contributions.

A. Defined Contribution Plans

The Company contributes to several defined contribution plans and 408 Simple IRA plans (for its U.S. employees). The pension expense under these plans is equal to the Company's contributions, without regard to any surplus amount used from the defined benefit plans to reduce cash contributions. The pension expense for the year ended November 30, 2024 was $1.6 million ($1.5 million last year).

B. Defined Benefit Plans

The measurement date for the plan assets and obligations is November 30. The most recent actuarial valuations for funding purposes were filed with the pension regulators effective December 31, 2021 for both plans. The next actuarial valuation for both plans for funding will be no later than as of December 31, 2024.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

Information about the Company's defined benefit plans is as follows:

	November 30 2024	November 30 2023
Defined benefit obligation	$	$
Balance, beginning of year	38,792	40,324
Interest cost	1,917	1,954
Benefits paid	(2,395)	(3,263)
Actuarial (gain) loss
Changes in financial assumptions	2,288	(223)
Balance, end of year	40,602	38,792
	November 30 2024	November 30 2023
---	---	---
Plan assets	$	$
Fair value, beginning of year	54,139	51,944
Interest income	2,673	2,531
Benefits paid	(2,395)	(3,263)
Administrative expenses paid from plan assets	(385)	(365)
Other payments (1)	(669)	-
Return on plan assets in excess of interest income	9,164	3,292
Fair value, end of year	62,527	54,139
Net asset	21,925	15,347

(1) The Company used a portion of the surplus assets in the defined benefit plans ($0.7 million in the year ending on November 30, 2024), to reduce its contribution obligations in the defined contributions plans.

The actual return on plan assets was $11.8 million in 2024 and $5.8 million in 2023.

The significant actuarial weighted average assumptions used are as follows:

	November 30 2024	November 30 2023
Defined benefit obligation:	%	%
Discount rate	4.50	5.10
Rate of compensation increase	3.00	3.00

Net benefit plan expense:

	November 30 2024	November 30 2023
	$	$
Interest cost	1,917	1,954
Interest income	(2,673)	(2,531)
Administrative expenses	385	365
Net benefit plan income	(371)	(212)

The net benefit plan income is included in Cost of goods sold, and Selling, Administrative, and General Expenses in the consolidated statement of comprehensive income.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

The plan assets by asset category are as follows:

	November 30 2024	November 30 2023
	%	%
Equity security:
Canadian stocks	18	23
U.S. stocks	34	22
International stocks	16	23
Fixed income:
Short/Mid Term bonds	28	26
Cash and equivalents	4	6
All investments are quoted on an active market

Amount, timetable and uncertainty of future cash flows:

Sensitivity analysis

Sensitivity to the discount rate:
	Down by 0.25%	Assumption used	Up by 0.25%
Defined benefit obligation	$41,629	$40,602	$39,637
Discount rate	4.25%	4.50%	4.75%
Sensitivity to the life expectancy:
		Increase of one year	Assumption used
Defined benefit obligation		$41,813	$40,602
Mortality rates (CPM2014Priv – MI2017)
Life expectancy of men of 65 years (90% - 120% of CPM2014Priv – MI2017)		21.8 - 23.9 years	20.8 - 22.9 years
Life expectancy of women of 65 years (100% - 110% of CPM2014Priv – MI2017)		24.8 - 25.5 years	23.8 - 24.5 years

Goodfellow Inc. contributes amounts required to comply with provincial and federal legislation.

The total cash payment for post-employment benefits for 2024, consisting of cash contributed by the Company to its funded pension plans, was nil (same in 2023). Based on the latest filed actuarial valuation for funding purposes as at December 31, 2021, the Company expects to contribute nil in 2025.

The weighted average duration of the defined benefit obligation is 10 years.

17. Additional Cash Flow Information

Changes in Non-Cash Working Capital Items

	November 30 2024	November 30 2023
	$	$
Trade and other receivables	(2,927)	10,749
Inventories	(32,811)	13,821
Prepaid expenses	238	(1,730)
Trade and other payables	11,398	1,373
	(24,102)	24,213

Non-cash transactions

The Company purchased property, plant, equipment and intangible assets for which an amount of $62 thousand was unpaid as at November 30, 2024 ($49 thousand as at November 30, 2023).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

The reconciliation of movements of liabilities to cash flows arising from financing activities is as follows:

	Bank loans	Banker's acceptances	CORRA loans	Lease liabilities	Total
Liability related changes	$	$	$	$	$
Year ended November 30, 2023
Interest expense	367	629	-	431	1,427
Interest paid	378	558	-	431	1,367
Year ended November 30, 2024
Interest expense	424	128	525	768	1,845
Interest paid	427	128	595	768	1,918

18. Financial Instruments and other instruments

Risk Management

The Company is exposed to financial risks that arise from fluctuations in interest rates and foreign exchange rates and the degree of volatility of these rates.

Financing and Liquidity Risk

The Company makes use of short-term financing with two chartered Canadian banks.

The following are the contractual maturities of financial liabilities as at November 30, 2024:

FINANCIAL LIABILITIES	Carrying Amount	Contractual cash flows	0 to 12 Months	12 to 36 Months
	$	$	$	$
Bank indebtedness	5,913	5,913	5,913	-
Trade and other payables	49,028	49,028	49,028	-
Total financial liabilities	54,941	54,941	54,941	-

The following are the contractual maturities of financial liabilities as at November 30, 2023:

FINANCIAL LIABILITIES	Carrying Amount	Contractual cash flows	0 to 12 Months	12 to 36 Months
	$	$	$	$
Trade and other payables	37,620	37,620	37,620	-
Total financial liabilities	37,620	37,620	37,620	-

Interest Rate Risk

The Company uses a credit facility to finance working capital requirements. The interest cost of this facility bears interest at floating rates. The profitability of the Company could be adversely affected with increases in rates. Management does not believe that the impact of interest rate fluctuations will be significant on its operating results. A 100-basis point fluctuation of interest rate on average bank indebtedness throughout 2024 would have impacted interest expense by $0.1 million (November 30, 2023 - $0.1 million).

Currency Risk

Certain valuation risks exist depending on the performance of the Canadian dollar compared to the U.S. dollar, Euro and the Pound sterling. From time-to-time, the Company could enter into forward exchange contracts to hedge certain accounts payable and certain future purchase commitments denominated in U.S. dollars, Euros and Pound sterling. During the twelve months ended November 30, 2024, the Company did not use foreign exchange contracts to mitigate its effect on sales and purchases. Consequently, as at November 30, 2024, there were no outstanding foreign exchange contracts. A fluctuation in the Canadian dollar of 5% in relation to foreign currencies would not have a significant effect on the Company's net earnings.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

As at November 30, 2024, the Company had the following currency exposure on:

Financial assets and liabilities measured at amortized costs

	USD	GBP	Euro
Cash	1,383	1,330	9
Bank indebtedness	(1,463)	-	-
Trade and other receivables	3,915	(16)	44
Trade and other payables	(4,729)	(8)	(839)
Net exposure	(894)	1,306	(786)
CAD exchange rate as at November 30, 2024	1.4027	1.7942	1.4850
Impact on net earnings based on a fluctuation of 5% on CAD	(45)	84	(42)

As at November 30, 2023, the Company had the following currency exposure on:

Financial assets and liabilities measured at amortized costs

	USD	GBP	Euro
Cash	5,701	651	14
Trade and other receivables	3,751	16	-
Trade and other payables	(1,644)	(2)	(141)
Net exposure	7,808	665	(127)
CAD exchange rate as at November 30, 2023	1.3560	1.7117	1.4765
Impact on net earnings based on a fluctuation of 5% on CAD	381	41	(7)

Credit Risk

The Company is exposed to credit risks from customers. As a result of having a diversified customer mix, this risk is alleviated by minimizing the amount of exposure the Company has to any one customer. Additionally, the Company has a system of credit management to mitigate the risk of losses due to insolvency or bankruptcy of its customers. It also utilizes credit insurance to reduce the potential for credit losses. Finally, the Company has adopted a credit policy that defines the credit conditions to be met by its customers, and specific credit limit for each customer is established and regularly revised. Based on historical payment behaviour and current credit information and experience available, the Company believes that, apart from the provision for doubtful accounts recorded, no impairment allowance is necessary in respect of trade receivables that are current or past due.

The following table presents information on credit risk exposure and expected credit losses related to trade accounts receivable:

	November 30 2024	November 30 2023
	$	$
Current	49,888	48,841
31 - 60 days past due	2,793	1,980
61 - 90 days past due	1,238	1,035
91 - 120 days past due	874	386
Over 120 days past due	2,292	1,889
	57,085	54,131
Loss allowance	(880)	(594)
Balance, end of period	56,205	53,537

As at November 30, 2024, since expected credit losses are limited to $0.9 million and because movements during the year in the allowance for expected credit losses are minimal, the expected credit losses by trade accounts receivable aging and the movement in the allowance for expected credit losses in respect of trade receivables have not been presented separately.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

Economic Dependence

The following represents the total sales consisting primarily of various wood products of the major customer:

	For years ended
	November 30, 2024		November 30, 2023
	$	%	$	%
Sales to the major customer that exceeded 10% of total Company's sales	79,039	15,5	77,976	15.2

Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is based on available public market information or, when such information is not available, is estimated using present value techniques and assumptions concerning the amount and timing of future cash flows and discount rates which factor in the appropriate level of risk for the instrument. The estimated fair values may differ in amount from that which could be realized in an immediate settlement of the instruments. The carrying amounts of cash, trade and other receivables, bank indebtedness (if any) and trade and other payables approximate their fair values.

19. Capital management

The Company's objectives are as follows:

Maintain financial flexibility in order to preserve its ability to meet financial obligations;
Maintain a low net debt-to-capital ratio to preserve its capacity to pursue its organic growth strategy;
Maintain financial ratios within covenants requirements; and
Provide an adequate return to its shareholders.

The Company defines its capital as net debt less shareholders' equity as follows:

	November 30	November 30
	2024	2023
	$	$
Cash	5,314	28,379
Bank indebtedness	(5,913)	-
Net (Debt) Cash	(599)	28,379
Share capital	9,309	9,379
Retained earnings	196,899	185,624
Shareholders' Equity	206,208	195,003
Total Capital	205,609	223,382

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

20. Contingent liabilities and commitments

Contingent liabilities

Commitments

As at November 30, 2024, the minimum future purchase obligation for the next year was $0.7 million (November 30, 2023 - nil).

21. Related party transactions

Commercial Transactions

During the year ended November 30, 2024, the entities of the Company have not entered into business transactions with related parties that are members of the Board of the Company.

Loans to related parties

No executive officers, senior officers, directors or any person related to them is indebted to the Company.

Key management personnel compensation

Key management includes members of the board of directors, senior management and key executives. The following table shows the remuneration of key management personnel during the years ended:

	November 30 2024	November 30 2023
	$	$
Salaries and other short-term benefits	3751	3,422
Post-employment benefits (including remeasurement of defined benefit plan obligation)	(280)	(114)
	3,471	3,308

22. Segmented Information and Sales

The Company manages its operations under one operating segment. Revenues are generated from the sale of various wood products and operating expenses are managed at the aggregate Company level. All significant property, plant and equipment, and right-of-use assets are located in Canada.

The following table presents sales disaggregated by geographic markets and by categories, as this best depicts how the nature, amount, timing and uncertainty of sales and cash flows are affected by economic factors.

Primary geographic markets

The Company's sales to clients located in Canada represent approximately 88% (90% in 2023) of total sales, the sales to clients located in the United States represent approximately 8% (7% in 2023) of total sales, and the sales to clients located in other markets represent approximately 4% (3% in 2023) of total sales.

	November 30 2024	November 30 2023
	$	$
Canada	450,032	459,328
U.S.	40,426	37,162
Export	19,083	16,331
	509,541	512,821

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30, 2024 and 2023

(tabular amounts are in thousands of dollars, except per share amounts)

Sales categories

	November 30	November 30
	2024	2023
	$	$
Lumber	289,727	282,910
Specialty and commodity panels	96,915	91,700
Flooring	63,759	75,446
Building material	59,140	62,765
	509,541	512,821

23. Subsequent events

The Company is assessing the direct and indirect impacts to its business of such tariffs, retaliatory tariffs or other trade protectionist measures implemented as this situation develops, and such impacts could be material.

CORPORATE INFORMATION

BOARD OF DIRECTORS

| Robert Hall
Chair of the Board | Alain Côté * / **
Director and Chair of the Audit Committee | David Goodfellow
Director |
| --- | --- | --- |
| Douglas Goodfellow **
Director | James Hewitt *
Director | Marie-Hélène Nolet *
Director |
| Sarah Prichard * / **
Director and Chair of the Compensation and Human Resources Committee | | |

Member of the Audit Committee
** Member of the Compensation and Human Resources Committee

OFFICERS

| Patrick Goodfellow
President and Chief Executive Officer | Charles Brisebois
Chief Financial Officer | Mary Lohmus
Executive Vice-President, Ontario and Western Canada |
| --- | --- | --- |
| Éric Bisson
Vice-President, Quebec | Pedro Da Silva
Vice-President, Industrial | Luc Dignard
Vice-President, Sales, Quebec |
| Olivia Goodfellow
Corporate Secretary | Robert Guy
Vice-President, Business Development - Softwood and Siding | Harry Haslett
Vice-President, Sales and Marketing, Atlantic |
| Eric McNeely
Vice-President, Business Development - Flooring | Jeff Morrison
Vice-President, National Accounts | Luc Pothier
Vice-President, Operations |

OTHER INFORMATION

| Head Office
225 Goodfellow Street
Delson, Quebec J5B 1V5
Tel.: 450-635-6511
Fax: 450-635-3730 | Solicitors
Bernier Beaudry
Quebec, Quebec | Fasken
Montreal, Quebec | Auditors
KPMG LLP
Montreal, Quebec |
| --- | --- | --- | --- |
| Transfer Agent
Computershare Investor Services Inc.
Montreal, Quebec | Stock Exchange
Toronto
Trading Symbol: GDL | | Wholly-owned Subsidiaries
Goodfellow Distribution Inc. |

goodfellowinc.com

GOODFELLOW

SALES BRANCHES

HEAD OFFICE

MONTREAL / DELSON
450 635-6511
800 361-6503

NEWFOUNDLAND/	HALIFAX /	MONCTON	QUEBEC
DEER LAKE	DARTMOUTH	506 857-2134	418 650-5100
709 635-2991	902 468-2256	800 561-7965	800 463-4318
866 220-2212	800 565-7563
OTTAWA	TORONTO /	POWASSAN	WINNIPEG
613 244-3169	CAMPBELLVILLE	705 724-2424	204 779-3370
800 577-7842	905 854-5800	800 263-3249	800 955-9436
	800 263-6269
SASKATOON	EDMONTON	CALGARY	VANCOUVER /
306 242-9977	780 469-1299	403 252-9638	RICHMOND
800 667-2693	877 463-1299	888 316-7208	604 940-9640
			800 821-2053
U.S. /	U.S. /	U.K.
MANCHESTER	PETERSBURG	01691 718872
603 623-9811	304 802-2150	goodfellowuk.com
800 990-0722

DIVISIONS

| canbar | OLIVER LUMBER
A Division of Goodfellow Inc. | Quality Hardwoods | AMH | ALLEGHENY MOUNTAIN HARDWOODS
A Division of Goodfellow Inc. |
| --- | --- | --- | --- | --- |
| 905 854-5800 | 416 233-1227 | 705 724-2424 | 304 802-2150 | |
| 800 263-6269 | 800 268-2471 | 800 263-3249 | | |
| canbar.com | oliverumber.com | qualityhardwoodsltd.com | | |

AI assistant

Goodfellow Inc. — Annual Report 2024

44135_rns_2025-02-19_833af979-50e6-4122-b179-7ea9994d2995.pdf

ANNUAL REPORT

FINANCIAL HIGHLIGHTS

TABLE OF CONTENTS

HEAD OFFICE

GOODFELLOW

FORWARD-LOOKING STATEMENTS

NON-IFRS FINANCIAL MEASURES

BUSINESS OVERVIEW

ASSET ACQUISITION

OVERALL PERFORMANCE

COMPARISON FOR THE YEARS ENDED NOVEMBER 30, 2024 AND 2023

Cost of Goods Sold

Selling, Administrative and General Expenses

Net Financial Costs

COMPARISON FOR THE THREE MONTHS ENDED NOVEMBER 30, 2024 AND 2023

Cost of Goods Sold

Selling, Administrative and General Expenses

Net Financial Costs

SUMMARY OF THE LAST EIGHT MOST RECENTLY COMPLETED QUARTERS

STATEMENT OF FINANCIAL POSITION

Total assets

Cash Flow

LIQUIDITY AND RISK MANAGEMENT IN THE CURRENT ECONOMIC CONDITIONS

General

Credit Risk

Supplier-Related Risk

FINANCIAL COMMITMENTS AND CONTINGENCIES

OBLIGATIONS

Contingent liabilities

RISKS AND UNCERTAINTIES

Environmental Risk

Competition from Vendors

Dependence on Key Personnel

Dependence on Major Customers

Dependence on Market Economic Conditions

Customer Agreements

Cyclical Nature

Supply Chain

Laws and regulations

Information systems

Cybersecurity

Climate change and focus on sustainability

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

RELATED PARTY TRANSACTIONS

Commercial Transactions

Loans to related parties

Key management personnel compensation

CRITICAL ACCOUNTING ESTIMATES

MATERIAL ACCOUNTING POLICIES

DISCLOSURE OF OUTSTANDING SHARE DATA

SUBSEQUENT EVENT

OUTLOOK

CERTIFICATION

Disclosure Controls

Procedures and Internal Controls Over Financial Reporting

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

INDEPENDENT AUDITOR'S REPORT

Opinion

Basis for Opinion

Key Audit Matters

Assessment of the existence and accuracy of inventories

Description of the matter

Why the matter is a key audit matter

How the matter was addressed in the audit

Other Information

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Auditor's Responsibilities for the Audit of the Financial Statements

i) Financial Instruments

i. Financial assets measured at amortized cost

Impairment of financial assets

ii. Financial assets measured at fair value

iii. Financial liabilities are classified into the following categories:

Financial liabilities measured at amortized cost

Financial liabilities measured at fair value

iv. Non-hedge derivative financial instruments measured at fair value

m) Provisions

i) Environmental provisions

Goodfellow Inc. Annual Report 2024