Annual Report Delivering During the Pandemic EIC 2020 Annual Report Delivering During the Pandemic Chairman’S Message Hon

EIC 2020 Annual Report Delivering During the Pandemic EIC 2020 Annual Report Delivering During the Pandemic Chairman’s Message Hon. Gary Filmon, P.C., O.C., O.M., LLD., ICD.D. Chairman, Board of Directors

As I think we can all agree, 2020 was a That said, I wanted to use this Chairman’s uniquely challenging year. The bulk of Message to shift focus a bit by sharing some this annual report will focus on how EIC’s details about what has impressed me most businesses performed admirably through over the course of the last year at EIC. Namely, the pandemic. Our results demonstrate the dedication and integrity of our people. resilience and diversity that continue to validate our investment strategy and the trust Consistently, in the face of adversity, EIC we have placed in management throughout and our subsidiaries found ways to adapt our organization. We are proud of the results and continue delivering for our customers EIC has achieved and pleased with how and investors who we know are counting the company continues to consistently drive on us. At the same time, throughout our value for our investors. Perhaps more than organization, we demonstrated sensitivity in any other year, the strength of our and care for our employees as they worked foundation has been tested. their way through the challenges of the pandemic. This adaptability furthered The successes we have been able to achieve our efforts to make meaningful, positive through this time support the conﬁdence we contributions to the communities in which have in a strong future for the Corporation. we operate.

2020 Annual Report -1- Exchange Income Corporation

EIC and our subsidiaries found ways to adapt and continue delivering for our customers and PAL Airlines Dash 8 investors who we know

We have seen first hand this year the powerful are counting on us. contribution that EIC’s entrepreneurial spirit has made to the national efforts to combat the spread of COVID-19. Practically, we recognized the need to As the pandemic hit and its implications quickly adapt to ensure we remained for travel became clear, EIC quickly made the present in the communities we serve while conscious choice to continue providing protecting the health of our employees essential aviation services across our networks and our customers, operating in the most at Calm Air, PAL Airlines, Air Borealis, Bearskin responsible way possible. Our individual Airlines, Perimeter Aviation, Keewatin Air, airline operations worked together to Custom Helicopters, and Wasaya Airways. become industry leaders in onboard illness We have remained firm in that commitment prevention almost overnight. EIC carriers despite experiencing precipitous declines moved quickly to implement health check in the year over year passenger traffic of questionnaires before travel and integrated approximately 90% at points in the pandemic. temperature checks during the check-in and boarding processes. We have also In contrast with other Canadian airlines who enhanced cleaning protocols at the airport have built their businesses in larger southern and on board our aircraft, switched to direct markets relying on leisure passengers and flights to communities where feasible, and international connectivity, our airlines are implemented mandatory mask mandates critical infrastructure providers to rural, remote, on all flights. northern, and Indigenous communities across Canada.

We have always understood the trust placed in us to deliver essential services and prided ourselves on ensuring reliable access not only to passenger services, but also to critical medical services and supplies, reliable food delivery, cargo services, mail delivery, and economic linkages our communities rely on, perhaps more than ever before.

So, we kept ﬂying. Perimeter Aviation Dash 8 & Bearskin Airlines Metroliner

2020 Annual Report -2- Exchange Income Corporation I must emphasize the signiﬁcance and scope of this undertaking. We leveraged the strength and operational experience we have as an airline family that, when viewed collectively, is one of the largest air services suppliers in Canada. In doing so, our management teams shared best practices and acted cohesively to develop and implement industry leading practices and protocols in a rapidly changing Disinfecting aircraft interior environment. We are proud of what we were able to achieve through this process.

We know our passengers appreciate these changes. We have seen air traffic quickly return during periods of relative stability in the ongoing battle against COVID-19. We also know that the communities we serve have appreciated the commitment we have demonstrated to them through this unprecedented time and we are grateful Calm Air ground staff performing temperature check to the EIC employees throughout our operation who continue to deliver day in and day out.

We are grateful to the EIC employees throughout our operation who continue to deliver day in and day out.

2020 Annual Report -3- Exchange Income Corporation Indigenous Services Canada charter network

EIC’s ability to continue providing safe We further invested significant effort to and reliable air transportation through ensure our air ambulance providers are fully the pandemic has also drawn notice prepared to continue serving Canadians with from governments across Canada. Our the unique services the pandemic demands subsidiaries are currently actively involved we provide. For example, to facilitate the in vaccine distribution efforts throughout transport of symptomatic COVID-19 patients, multiple jurisdictions and we continue Keewatin Air moved quickly to procure and to deploy the collective capacity of our certify four highly specialized EpiShuttle medical airlines in partnership with Indigenous isolation units allowing for the transportation of Services Canada to manage logistics and sick, infectious patients from remote communities transport for essential medical personnel to larger facilities better prepared to provide – on charter flights operated with strict, acute care as required. These units are a safety-first health protocols – serving significant new tool Keewatin Air can now fly-in Indigenous communities and deploy as appropriate and together with our protecting against COVID-19. To date, other approved aircraft configurations for we have completed over 2,500 of these the transport of infectious patients, ultimately flight segments, delivering over 4,000 benefiting patients and front-line health care vital medical professionals to communities providers in the communities we serve. across Canada and returning them safely to their families.

2020 Annual Report -4- Exchange Income Corporation EIC’s air operators are not the only element of our business that have answered the call from our communities to assist in the battle against COVID-19. Our Manufacturing segment quickly shifted and scaled up production capacity and made our expertise available to provide in-demand services and medical supplies to pandemic response efforts, leveraging our expertise to deliver critical goods for front-line applications. Collectively, we have more than 100 talented design, drafting and engineering professionals in the EIC family of companies who turned their focus to developing products and services to help in the ﬁght against COVID-19. WesTower Communications deploys cell site on wheels in They produced some remarkable results. Eden Valley, AB

For example, Ben Machine led in the design and manufacturing of face shields for eventual use by an Ontario Health region and Water Blast Manufacturing designed and manufactured IV poles for the Province of Manitoba. In Alberta, WesTower Communications Our worked closely with our partners at Telus to deploy a cell site on wheels, better known as a “COW,” to the town of Eden Valley. This Manufacturing remote community, home to approximately 700 members of the segment provided Bearspaw First Nation, experienced a COVID-19 outbreak in April and May. Reliable communication links that would allow residents in-demand to connect with Alberta Health Services were immediately required services and to facilitate contact tracing and limit the spread of the virus. medical supplies WesTower responded swiftly to assist with the successful set up of the COW, accomplished within 72 hours of the call for assistance to pandemic from the Alberta government. response efforts, leveraging our Consistently in these and many more examples, EIC’s people have come together to make it happen. expertise to deliver critical goods for front-line applications.

Water Blast Manufacturing distributes fogging machines ideal for disinfecting & sanitizing insitutional areas.

2020 Annual Report -5- Exchange Income Corporation In both our Manufacturing and Aerospace & Aviation segments, the crisis created by the COVID-19 pandemic served to highlight the character we have always known exists across our organization. Our people care deeply about the communities we serve. EIC has always respected that spirit in our business practices and encouraged corporate giving and employee-led community initiatives throughout our organization.

Unfortunately, during the pandemic, some of our long-standing community initiatives have had to temporarily suspend operation. As an example, Wasaya Airways was not able to offer its popular First Nations Youth Aviation Camp in 2020. Traditionally the camp provides First Nations youth an opportunity to explore careers in aviation, learn through hands on experimentation, participate in group tours, and enjoy learning activities over the course of a week in Thunder Bay. This year, challenges associated with COVID-19 made offering the program impossible.

Similarly, PAL was forced to cancel its annual Kite Festival, a family event organized and hosted by PAL employees on an annual basis to support a charity of the employees’ choosing. In 2019 the festival supported Choices for Youth, a St. John’s based organization supporting stable housing, offering employment training and mental and physical health supports for at risk youth in Newfoundland and Labrador.

Santa visits Nunatsiavut with Air Borealis and Custom Helicopters

2020 Annual Report -6- Exchange Income Corporation At EIC’s corporate head offices, we have had to temporarily suspend our program of bringing children, selected by their participating communities in Nunavut, Northern Manitoba, and Northern Ontario, to Winnipeg to enjoy a Jets or Bombers game. These trips have historically been an opportunity for the children to enjoy a trip they might not otherwise be able to make and to experience, along with their peers in a comfortable and supportive environment, some of the things those of us living in southern Canadian communities probably take for granted. Equally, these trips are incredibly meaningful for EIC staff participants, affording our people an important chance to meet residents of the communities we serve and better understand some of the challenges they face. PAL Airlines receives Outstanding Philanthropist (Corporate) Award from Ronald McDonald House in Newfoundland and Labrador These events, and the dozens like them at other EIC companies that could not safely proceed due to COVID-19, will return as soon as circumstances allow. The last year has shown us just how much we appreciate these opportunities to directly engage with our communities and we are looking forward to returning to these traditions once we can do so safely. In other instances, we have found unique ways to continue supporting our communities during the pandemic by developing new initiatives or maintaining existing programs that contribute to ongoing positive change in our communities.

PAL formed a partnership with Project Grow, an Perimeter Aviation initiative established to address food insecurity in is proud to partner with Newfoundland and Labrador through community gardening, to deliver over 500 container gardens Books with Wings. to residents of at-risk communities in St. John’s. PAL also established a separate partnership with 17,000 brand new the Government of Newfoundland and Labrador children’s books to connect those experiencing food insecurity with community food programs by donating staff were delivered to time, personal protective equipment, vehicles, and isolated communities administrative capacity to support food delivery services in St. John’s, Wabush, Deer Lake, and in Manitoba Happy Valley-Goose Bay.

2020 Annual Report --7-7- Exchange Income CorporationCorporation Perimeter Aviation continues to maintain In the EIC family of companies, this kind the Bill Wehrle Scholarship Program, of responsible business practice and created to provide ﬁnancial assistance and community contribution has always been encouragement to First Nations students central to our corporate character. This pursuing careers in commercial aviation. outcome is perhaps not a surprise given Calm Air made a donation of 10,000 face the orientation of our investment strategy. masks to the residents of the Kivalliq region Our team is built on entrepreneurs and in Nunavut to help prevent the spread of leaders that thrive in the areas of essential COVID, provided Christmas stockings for services and specialized applications, who nearly 1,000 Nunavut students to spread bring that same spirit to everything they do, some cheer during the holiday season, and which includes lending a meaningful hand continued to offer its program of collecting to strengthen the communities where we and removing recyclable materials from have an established presence. Practising Nunavut communities and returning them responsibility, doing the right thing, and to southern destinations for processing and building our presence for the long term repurposing to make sure the airline is doing have been built into EIC’s entrepreneurial what it can to preserve the natural beauty of DNA from the start. Canada’s North.

Practising responsibility, doing the right thing, and building our presence for the long term have been built into EIC’s entrepreneurial DNA from the start.

Perimeter Aviation & Bearskin Airlines proud to receive InteliSys Humanitarian Excellence Award 2021

2020 Annual Report -8- Exchange Income Corporation

EIC has always embraced this corporate participation in our communities, not to attract attention or build a social licence for some other aspect of our business, but because we view it as a fundamental component of our healthy corporate culture. At the same time, we have come to appreciate the investment community is looking for enhanced transparency in the reporting of strategies and outcomes to build and maintain sustainable businesses.

That is why earlier this year, EIC launched an initiative to assess our Environmental Social and Governance (ESG) performance and improve our reporting. In support of these objectives, we are in the process of completing our ﬁrst ESG Quest Window Systems Dallas plant has not had a work place injury since opening. materiality assessment and gap analysis.

Quest Window Systems facilities are zero waste.

2020 Annual Report -9- Exchange Income Corporation Wasaya Airways delivers the COVID-19 Vaccination team to Sandy Lake First Nation in Northern Ontario

In the near term, we will start the formal process of consulting with stakeholders, internal leaders, and operational personnel from EIC’s corporate offices and subsidiaries to develop a list of priority ESG issues most material to EIC. From there, we will construct an action plan for ESG program development. We will be reporting on that activity regularly, describing the progress we are making and the positive change we are creating as an organization.

As important as it is for our employees and investors to understand the fundamentals of our business, we are committed to bringing that same level of transparency to how we are practising our fundamental values as a corporation. We think this is vital information, and we are proud to share it with you going forward.

Hon. Gary Filmon, P.C., O.C., O.M., LLD., ICD.D. Chairman, Board of Directors

2020 Annual Report -10- Exchange Income Corporation CEO’s Message Mike Pyle, MBA, ICD.D. Chief Executive Officer

Despite the remarkable challenges 2020 Our investment strategy has always been presented across our business, EIC again rooted in a focus on the long term rather than delivered remarkable financial and operational emphasizing immediate returns. Prioritizing performance throughout the year. In many consistency in the calculated expansion of ways, the tests we have faced and the results our existing operations, while continuing to we have achieved are a validation of the follow sound process in the identification and core character of EIC as a company and an completion of strategic acquisitions, has built endorsement of how we have progressively EIC a considerable foundation from which we built our organization since our inception have historically driven exceptional results. in 2004. Despite the challenges of the pandemic, this model remained effective as EIC once again We have seen time and again how following benefitted throughout the year from returns on our business plan and trusting our people sound investments made in previous periods. has insulated us in part from the COVID-19 pandemic. We are more determined than ever to carry our approach forward, understanding that although we may not be EIC again delivered able to accurately predict the future course of ľãę¾ľĐ¾Øēãϰżě¾ěÙÿ¾ēϰ¾ěßϰ the pandemic in Canada and globally, we can draw confidence from how effectively we have operational performance managed ourselves in getting to this point. throughout the year.

2020 Annual Report --11-11- Exchange Income CorporationCorporation PAL Aerospace employees perform maintenance & modification on Dash 8 airframe

EIC’s continued stable results have allowed Excluding that purchase, the combined us to meet our dividend obligation to impact of management’s actions and shareholders, reduce our leverage, complete the impact of foreign exchange reduced accretive acquisitions, and bolster EIC and our long-term debt, net of cash, by more our subsidiaries with targeted investments. than $100 million. EIC’s Free Cash Flow These collective accomplishments guide less Maintenance Capital Expenditures our confidence in the future of the company. payout ratio of 71% while weaker compared to 2019, is not materially different when The value of EIC’s diversification has never compared to 5 and 10 year averages shone as brightly as it did in 2020. (60% and 76%,respectively). The airline industry as a whole was defined in 2020 by cash burn per day headlines, In 2020, EIC generated with airlines around the world consuming tens of billions of dollars to get through the revenue of $1.1 billion and pandemic. Not at EIC. The diversification EBITDA of $284.5 million. within our operations that has been one of our cornerstones since inception provided Free Cash Flow less Maintenance Capital the buffer required during this economic Expenditures was $3.23 per share and uncertainty to still generate Free Cash Adjusted Net Earnings per share was Flow. Our diligent management of capital $1.35. While some subsidiaries were expenditures, working capital, and costs in impacted more than others by the general generated results that were truly pandemic, our diversification allowed remarkable under the circumstances. Since EIC as a whole to achieve positive Free the onset of the pandemic in March, EIC’s Cash Flow less Maintenance Capital long-term debt, net of cash, has decreased Expenditures and positive Adjusted by over $50 million, even after the US $38.4 Net Earnings in a period wrought with million in cash used to purchase WIS. economic uncertainty.

2020 Annual Report -12- Exchange Income Corporation

Time and time again our people met challenges head on, żěßÿě÷ϰěãţϰţ¾ũłϰŊĢϰÙĢěŊÿěŏãϰßãēÿŢãľÿě÷ϰöĢľϰŊüãϰÙŏłŊĢęãľłϰ and communities we know are counting on us.

While it is clear the challenges of the Within EIC’s aerospace operations, we have pandemic are not behind us, with significant seen several important examples of consistent disruptions felt again throughout the Canadian delivery and innovation that both reward prior economy in the first quarter of 2021, EIC investment and justify future optimism for remains optimistic about our ability to manage the company. PAL Aerospace is introducing through the remainder of the pandemic and into service two state-of-the-art long range maritime patrol aircraft required to support the emerge quickly in a post-pandemic economy. Federal Department of Fisheries and Oceans Addressing COVID-19 as successfully as we (“DFO”) Aerial Surveillance and Enforcement have thus far demonstrates the stability of our program. The execution of this program has business model and validates our long-standing included an extensive modification process practice of cultivating strong leadership teams. that started in earnest in early March of 2019, Our continued emphasis on facilitating the when the Government of Canada awarded entrepreneurial energy we have throughout PAL Aerospace the contract to provide aerial our subsidiaries has been on particular display surveillance for Canada’s inland, coastal, and this year. Time and time again our people offshore waters for a period of up to ten years. met challenges head on, finding new ways to continue delivering for the customers and communities we know are counting on us.

In that respect, perhaps more than in previous years, I want to focus the bulk of my message on the successes EIC has achieved throughout 2020 and discuss how those accomplishments position us favourably for the future. DFO Dash 8-100 long range surveillance aircraft

DFO Beechcraft King Air surveillance aircraft Name of Vice President, Position

2020 Annual Report -13- Exchange Income Corporation PAL Aerospace hangar in Campbell River, B.C.

Significant work to design and modify these aircraft and meet the other obligations associated with this government contract,including the modification and delivery of two additional Beechcraft King Air B200 medium-range aircraft and the construction of a new hangar facility for the program in Campbell River, B.C., took place during the pandemic. Logistical challenges were addressed, production schedules were maintained, and collaborative working relationships were redefined in the context of our new operating reality. PAL Aerospace and EIC still found a way to get the job done, delivering this essential service to a vital customer, and positioning the program for a decade of future success. Similarly, PAL Aerospace has seamlessly PAL Aerospace and EIC continued its preparations for the entry into service of Canada’s new fixed-wing search still found a way to get the and rescue fleet of CC-295 Kingfisher aircraft. job done, delivering this As these cutting-edge aircraft begin their vital operation on behalf of the Government of essential service to a vital Canada, PAL Aerospace will be responsible customer, and positioning for in-service support for the aircraft, covering all aspects of maintenance work the program for a decade not undertaken by Royal Canadian Air Force of future success. Technicians. This considerable and complex scope of work includes essential high value activities such as repairs, second and third level maintenance, future modification work, and depot-level maintenance of the aircraft.

These are inherently essential activities requiring years of careful planning and liaison with our partners at Airbus Defence and Space and the Canadian Forces to ensure that as these aircraft come into service, we are immediately prepared to FWSAR CC-295 Kingfisher - PAL Aerospace is responsible for support their operation. In-Service Support for the program

20202020 Annual Report -14-14-- Exchange Income CorporationCorporation As with the DFO program, we found new ways within the bounds of pandemic restrictions to keep this important effort on track and ensure we remain properly positioned to meet our obligations as the program becomes operational. We quickly pivoted to work safely and efficiently with our partners while progressively managing through an evolving global supply chain to make sure we were staying on track, readying facilities across the country from which these new Canadian search and rescue aircraft will operate for the next generation.

Netherlands Coastguard Dash 8 maritime surveillance aircraft It has been gratifying to see our initial investments in While adapting and executing these complex both the program itself and programs, PAL Aerospace was able to continue building its outstanding international reputation the people we have entrusted as a leader in maritime surveillance and with its management intelligence, surveillance, and reconnaissance solutions by reaching across the Atlantic and progressively return our securing an exciting new contract with the ÙĢěżßãěÙãϰØũϰßãēÿŢãľÿě÷ϰ Netherlands Coastguard. Working closely with exceptional performance our new local partners at JetSupport, PAL Aerospace will modify and deliver two fully throughout the year. missionized DHC-8 maritime surveillance aircraft for the Netherlands Coastguard. This includes With that firmly in mind, we were incredibly the provision of crew training on all systems and proud to be included in the ceremony held in support for the operations of the aircraft for an Comox B.C. in September 2020 that officially initial ten year period. welcomed the CC-295 Kingfisher to Canada. Throughout the bid process, working We are looking forward to being a fundamental against a field of sophisticated international part of this program for years to come. competitors, our people again found ways to manage communication, build collaboration and come together as a formidable winning team. The PAL Aerospace and JetSupport Again, this win was bid was ultimately found to present the Best- delivered during the Price-Quality-Ratio following a careful and thorough evaluation of tenders submitted to pandemic, despite the Netherlands Coastguard. Again, this win łÿ÷ěÿżÙ¾ěŊϰÙü¾ēēãě÷ãłϰ was delivered during the pandemic, despite significant challenges in the global economy. in the global economy.

2020 Annual Report -15- Exchange Income Corporation Keewatin Air ambulance Cessna Citation

This is a signiﬁcant strategic accomplishment for PAL Aerospace and a validation of EIC’s long-standing support for the company’s In EIC’s air development of its unmatched credentials in Special Missions Aircraft operations. Consistently ranked in the Top Ten Defense ambulance Companies in Canada by Canadian Defense Review, PAL business, we Aerospace’s new operations at Schiphol Airport in Amsterdam and active partnership with JetSupport are important steps have also had in penetrating the European market and building on existing to adjust the international operations in the Dutch Caribbean and the United Arab Emirates. The vital support PAL Aerospace receives from way we operate EIC helped facilitate this important award, which will in turn to continue generate significant value for EIC through the operational delivering phase of the program. essential services In EIC’s air ambulance business, we have also had to adjust the way we operate to continue delivering essential services for the for the customers customers and communities relying on us. We have accomplished and communities this by trusting in our management team’s ability to make the sound relying on us. decisions we have needed to remain operational through the pandemic while at the same time working collaboratively to identify appropriate strategic investments that will position us to continue effectively driving value in the future.

Keewatin Air’s investment in four EpiShuttle units, manufactured by EpiGuard Medical Isolation and Transportation Systems for the transportation of sick, infectious patients from remote communities to larger facilities better prepared to provide acute care, as required is an excellent example in that respect. While EIC believes the technology associated with these units is important now to support care for COVID-19 patients, we also believe there will be signiﬁcant future applications for the EpiShuttle, as society’s approach to the treatment of infectious disease evolves in a post-pandemic world.

2020 Annual Report -16- Exchange Income Corporation By being an early adopter of this technology, leading the way in obtaining Canadian regulatory approvals for its deployment, and integrating the EpiShuttle seamlessly into our service offering, Keewatin and EIC are fortifying our leadership position in the Canadian medevac industry. We are convinced that the EpiShuttle will make medical transports better, safer, and more efficient. These units are important investments, not just in our current capacities, but also in our future as a company EpiShuttle unit committed to working collaboratively with our partners. We are positioned to lead in the heavily on our management teams to figure out development of practices and protocols that will how to meet community needs and extend our protect the health and safety of our passengers, vital presence in these important markets. employees, and the community at large for years to come. To accomplish this goal, we remained flexible in our approach to the challenges at hand, right Fundamentally, the most significant operational sizing services to meet community demand, changes EIC has had to make across our and investing in the maintenance of our key operations this year can be found in our family presence without jeopardizing the economic of regional airlines. sustainability of our business. We had to be sensitive to concerns about the safety of air At EIC, we have charted our course through travel, quickly introducing industry leading the pandemic based on a simple, core protections across our network and moving understanding. Our services are essential, ahead of regulators to establish controls for and we need to keep flying. Termination of connecting traffic. We have also invested in services to vulnerable communities, in which enhanced pre-board screening procedures, the presence of an EIC airline is in many adjusted service offerings and onboard instances the only way to move passengers protocols to heighten disease prevention and and goods in and out, has never been an option led the way by investing in and implementing for management. As in many other instances augmented sanitization protocols on our throughout our operation this year, we leaned aircraft and at our airport facilities.

Regional One parts inventory

2020 Annual Report -17- Exchange Income Corporation EIC destinations include over 50 Northern, First Nations & Indigeneous communities

This was an iterative process, undertaken Speciﬁc to the CEWS, we were able to with collaboration across our operations retain workers on the payroll who would and in partnership with the communities we otherwise have been laid off, to re-hire workers serve. In many cases we relied on the strong who were previously laid off, and to continue pre-existing links our operators have developed essential business activities. The CEWS and with our communities and customers, taking other programs have been valuable tools for EIC’s their lead as to what services were required airlines as we worked to preserve our network and how we could deploy our resources most and continue serving our customers. effectively to maintain trust in our operation. Ultimately, EIC airlines have found ways We were also persistent in our engagement with to continue maintaining vital air access governments at all levels, clearly expressing for all our pre-pandemic destinations the challenges of maintaining essential services including over 50 Northern, First Nations during times of decreased demand. EIC is and Indigenous communities. We have the recipient of government assistance in this kept on delivering medical services and respect, most notably through the Canadian supplies, ensuring reliable food delivery, Emergency Wage Subsidy (“CEWS”) program. handling cargo, sustaining mail delivery, and continuing a host of other essential We have been diligent about using Government services irrespective of signiﬁcant declines funds exactly how the programs we have in passenger volumes that made certain accessed are intended. routes uneconomical at times.

2020 Annual Report -18- Exchange Income Corporation Our investments in ensuring the reliability of Our success has again been defined by our services over this time made us a logical strong management teams making the critical partner for the Government of Canada as decisions required to maintain production and they looked for a solution to facilitate the meet customer needs while being supported by safe deployment of their nursing workforce strategic investments we believe continue to Indigenous communities across Canada. to position EIC for future success. We are proud to have facilitated eighteen full rotations of Indigenous Services Canada’s Once again, EIC operations have worked nursing workforce to date, providing a stable diligently to maintain production and meet link for the movement of medical personnel the needs of our clients by explicitly making as well as infrastructure professionals and operational and investment decisions equipment to maintain critical infrastructure that prioritize the health and safety of our such as water treatment plants. Our flights also employees above all other considerations. We provide flexibility to support other needs such have increased employee screening at all EIC as emergency management response, food manufacturing facilities, enhanced our cleaning security, or medevac services as required. and sanitization practices, and worked diligently to meet or exceed all public health guidance from We are also extremely proud to be involved jurisdictions in which we maintain operations. in vaccine rollout efforts involving multiple EIC carriers and notably including the two Our formula in this respect has been to again draw airlines we operate in partnership with First heavily on the collective strength of the exceptional Nations, Wasaya Airways and Air Borealis. It is management teams we have in place across our tremendously gratifying to be able to support Manufacturing segment. We have ensured that our communities this way and allows us a we are facilitating the implementation of best tangible glimpse of what a post-pandemic practices, making educated investments in future might look like in Canada. protections where appropriate and distributing resources quickly and efficiently between Although perhaps not garnering as much public teams. At the same time, we are continually attention as our airline businesses, the story of sharing valuable lessons learned to protect EIC’s manufacturing segment through 2020 is employees, overcome operational impediments, considerably similiar. and maintain efficiency in the face of robust customer demand.

Stainless Fabrication electropolished pharma vessels (50 to 700 litres)

2020 Annual Report -19- Exchange Income Corporation Quest Window Systems product

Notably in the segment, we have been We are also extremely proud that several able to continue building on the success of companies from the EIC Manufacturing Quest Window Systems through the ramp segment have been able to shift capacity up of production at our new Texas plant at critical times in 2020 to meet the and the successful acquisition of WIS in the Government of Canada’s call for increased third quarter of 2020. Again, accomplished production of PPE and key strategic during the pandemic and in the face of a medical supplies to support front-line challenging economic environment, this workers in the battle against COVID-19. transaction extends our strategic positioning Once again, these exceptional efforts of Quest as a fullservice manufacturer and speak to the commitment of EIC and our installer of our own products through the employees to bring our skills and resources integration of a full-service window glazing to bear in making tangible contributions to company with established operations on the communities we call home. the West Coast of the United States. We are confident the synergies EIC gains by solidifying Quest in the market as a functional single point of accountability for our customers builds on our already significant competitive advantages in the space. We have experienced firsthand the benefits of this type of strategic investment through the acquisition of AWI in 2019 and believe firmly this is another investment that will return substantial value to EIC in the WesTower Communications, essential service providers across Canada long term.

2020 Annual Report -20- Exchange Income Corporation Our efforts to redeploy production capacity so that we were able to support the manufacturing and distribution of essential medical equipment is also a perhaps perfect illustration of the unpredictability of the COVID-19 pandemic. Obviously, in an ordinary year, this was not something we would have contemplated.

While 2020 has in many ways been defined by unforeseen circumstances and adverse events globally, at EIC our year has equally been characterized by our progressive ability to manage through these challenges by finding solutions and delivering on our commitments. Although we cannot say for certain what the next year will bring, we now have the benefit of reflecting on our accomplishments and internalizing our lessons learned. Guided by that experience, we are confident in our path forward for the coming year and focused on a future we believe will yield opportunities to continue Mandatory mask wearing at all EIC manufacturing facilities building on our success while strategically positioning EIC for the long term.

In closing this year’s CEO message, I want to sincerely thank the management teams At EIC our year has and employees across all EIC’s operations for their exceptional efforts during this equally been characterized particularly challenging year. As I have noted throughout this report, your hard work and by our progressive ability unwavering commitment to meet the to manage through these needs of our customers and make positive contributions for our communities have Ùü¾ēēãě÷ãłϰØũϰżěßÿě÷ϰ allowed us to excel during one of the most difficult times in our history. solutions and delivering on our commitments.

2020 Annual Report -21- Exchange Income Corporation Students at MFC Training

Your diligence and determination are even more exceptional given the challenges we have all faced in our personal lives. The collective toll of living through the pandemic has been signiﬁcant. I know all of you have had to confront the realities of lockdowns, isolation from friends and family, the challenges of balancing work and childcare responsibilities, and in some cases losing loved ones to this terrible disease. I hope at times that your work with us has given you both a sense of normalcy and an opportunity to do your part in a meaningful way to make life better for those around you during these trying times.

I would also like to take this opportunity to thank our shareholders, stakeholders, customers, and communities for the support you have shown us in 2020. While we have worked hard to meet your collective expectations, we also appreciate that we can count on you as willing partners who are meaningfully invested in EIC’s success. Although the pandemic has been unpredictable, your faith in us has remained solid. We are looking forward to working with you and delivering for you for years to come.

Thank you,

Mike Pyle, MBA, ICD.D. Chief Executive Officer

2020 Annual Report -22- Exchange Income Corporation Stronger Together Resilience & diversity continue to validate our investment strategy

The value of EIC’s diversification has never shone as brightly as it did in 2020.

2020 Annual Report -23- Exchange Income Corporation Annual Dividends (000,000’S)

$90 $80 $70 $60 $50 $40 $30 $20 $10

Stable and Growing Dividends

At EIC, meeting expectations is built The diversity of our enterprise and the into both the design and culture of our efforts of our people allowed us to honour company. Despite the challenges we’ve this commitment while strengthening faced this year, we fulﬁlled our longstanding the company. Over the course of the commitment of providing our shareholders year, we have materially improved our with stable and growing dividends. ﬁnancial position by reducing net debt and completing strategic acquisitions to build our business for the future.

We’ve delivered Most importantly, we’ve delivered our our dividend while dividend while maintaining essential service for the communities that count on us and maintaining essential being there for our customers. Maintaining service for the our dividend while extending our reputation communities that as a responsible partner is a signature accomplishment for 2020. count on us.

2020 Annual Report -24- Exchange Income Corporation Quest Window Systems facility in Dallas, Texas Building Value Through our Subsidiaries

EIC’s strength lies in our ability to unlock Our success this year, in the face of the entrepreneurial potential we have at our challenging and unpredictable economic subsidiaries. circumstances, is a testament to the strong management teams we have in place We’ve continued to see the beneﬁts of that and encourages us to continue investing approach through 2020, winning important responsibly for the future. international contracts at PAL Aerospace, ramping up production at our new Quest Windows plant in Texas and sharing in the success of previous investments across the EIC family which have contributed to our strong bottom line.

PAL Airlines Dash 8 Q400

2020 Annual Report -25- Exchange Income Corporation Expanding and Diversifying our Investments

EIC’s proven approach to identifying and completing accretive acquisitions continues to drive value and strategically position the company and our subsidiaries for long term success.

In 2020 EIC beneﬁtted from a full year of results from LV Control, whose industry speciﬁc knowledge and unique product offering continue to make them world L.V. Control Manufacturing designed equipment leaders in agriculture process control.

We also fortiﬁed our position in Quest Windows through the strategic acquisitions of both Advanced Window Inc. in October 2019 and Window Installation Specialists Inc. in August 2020. These vertically integrated acquisitions enhance Quest’s competitive advantage in their ﬁeld, positioning the company as a single point of accountability for window production and installation. W.I.S. window installation in Los Angeles, CA

Fundamental to the success of our acquisitions is our ability to access the collective strength of our organization to welcome new additions into the EIC family. We pride ourselves on fostering entrepreneurial spirit throughout our organization and we are always looking for our next great success story.

Quest Window Systems fabrication process

2020 Annual Report -26- Exchange Income Corporation Built to Contribute

AT EIC we understand that the nature That spirit of contribution is knit into the of our operations gives us the ability to fabric of the EIC family of companies. It make unique positive contributions to shows itself in our business initiatives like the communities we serve. The ability our commitment to zero waste manufacturing to leverage our operations to deliver at our new Quest facility in Texas. It shows COVID-19 vaccines to remote communities, itself in our investments, like our aviation to safely transport essential Indigenous assets that regularly allow us the privilege Services Canada health care providers of intervening directly to save lives in the to ﬂy in communities across the country, communities we serve. Most importantly, it to contribute to local search and rescue shows itself in our people, who are excited initiatives and to manufacture essential to work at EIC companies and eager to see medical equipment is not accidental – we how we can help next. are able to do the right thing because we plan and invest to put us in position to do the right thing. We are able to do Knowing that EIC companies are committed to a principled approach to our business, and the right thing because that we’re often able to help our customers and communities in times of need, is the most we plan and invest to rewarding part of the EIC story. put us in position to do the right thing.

The strategic way EIC has built our portfolio of air assets often means that we are uniquely capable of getting the job done. In multiple instances this year, it’s also meant that our fixed-wing and rotary aircraft have been called on to make invaluable contributions to search and rescue efforts that prevented serious injury and ultimately saved lives. We’re proud of our employees who answered these calls for assistance, and proud to be a company capable of contributing in this way for the communities where we operate.

2020 Annual Report -27- Exchange Income Corporation February 17, 2021

TABLE OF CONTENTS

FINANCIAL HIGHLIGHTS AND SIGNIFICANT EVENTS ______BBB

ANNUAL RESULTS OF OPERATIONS ______BBB

FOURTH QUARTER RESULTS ______BBB

INVESTING ACTIVITIES ______BBB

DIVIDENDS AND PAYOUT RATIOS______BBB

OUTLOOK ______BBB

LIQUIDITY AND CAPITAL RESOURCES______BBB

RELATED PARTY TRANSACTIONS ______BBB

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS ______BBB5

ACCOUNTING POLICIES ______BB

CONTROLS AND PROCEDURES ______

RISK FACTORS ______

NON-IFRS FINANCIAL MEASURES AND GLOSSARY ______

SELECTED ANNUAL AND QUARTERLY INFORMATION ______

INDEPENDENT AUDITOR’S REPORT ______

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ______84

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 PREFACE 7KLV0DQDJHPHQW¶V'LVFXVVLRQDQG$QDO\VLV ³0' $´ VXSSOHPHQWVWKHDXGLWHGFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDQGUHODWHGQRWHV IRU WKH \HDU HQGHG 'HFHPEHU ³&RQVROLGDWHG )LQDQFLDO 6WDWHPHQWV´ RI ([FKDQJH ,QFRPH &RUSRUDWLRQ ³(,&´ RU ³WKH &RUSRUDWLRQ´ $OO DPRXQWV DUH VWDWHG LQ WKRXVDQGV RI &DQDGLDQ GROODUV H[FHSW SHU VKDUH LQIRUPDWLRQ DQG VKDUH GDWD XQOHVV RWKHUZLVHVWDWHG 7KLV 0' $ VKRXOG EH UHDG LQ FRQMXQFWLRQ ZLWK WKH &RQVROLGDWHG )LQDQFLDO 6WDWHPHQWV RI WKH &RUSRUDWLRQ IRU WKH \HDU HQGHG 'HFHPEHU 7KH &RQVROLGDWHG )LQDQFLDO 6WDWHPHQWV KDYH EHHQ SUHSDUHG LQ DFFRUGDQFH ZLWK ,QWHUQDWLRQDO )LQDQFLDO 5HSRUWLQJ6WDQGDUGV ³,)56´ FORWARD-LOOKING STATEMENTS 7KLV UHSRUW DQG WKH GRFXPHQWV LQFRUSRUDWHG E\ UHIHUHQFH KHUHLQ FRQWDLQ IRUZDUGORRNLQJ VWDWHPHQWV $OO VWDWHPHQWV RWKHU WKDQ VWDWHPHQWV RI KLVWRULFDO IDFW FRQWDLQHG LQ WKLV UHSRUW DQG WKH GRFXPHQWV LQFRUSRUDWHG E\ UHIHUHQFH KHUHLQ DUH IRUZDUGORRNLQJ VWDWHPHQWVLQFOXGLQJZLWKRXWOLPLWDWLRQVWDWHPHQWVUHJDUGLQJWKHIXWXUHILQDQFLDOSRVLWLRQEXVLQHVVVWUDWHJ\FRPSOHWHGDQGSRWHQWLDO DFTXLVLWLRQVDQGWKHSRWHQWLDOLPSDFWRIVXFKFRPSOHWHGDQGRUSRWHQWLDODFTXLVLWLRQVRQWKHRSHUDWLRQVILQDQFLDOFRQGLWLRQFDSLWDO UHVRXUFHV DQG EXVLQHVV RI WKH &RUSRUDWLRQ DQGRU LWV VXEVLGLDULHV WKH &RUSRUDWLRQ¶V SROLF\ ZLWK UHVSHFW WR WKH DPRXQW DQGRU IUHTXHQF\RIGLYLGHQGVEXGJHWVOLWLJDWLRQSURMHFWHGFRVWVDQGSODQVDQGREMHFWLYHVRIRULQYROYLQJWKH&RUSRUDWLRQRULWVVXEVLGLDULHV RUDQ\EXVLQHVVHVWRSRWHQWLDOO\EHDFTXLUHGE\WKH&RUSRUDWLRQ3URVSHFWLYHLQYHVWRUVFDQLGHQWLI\PDQ\RIWKHVHVWDWHPHQWVE\ ORRNLQJIRUZRUGVVXFKDV³EHOLHYHV´³H[SHFWV´³ZLOO´³PD\´³LQWHQGV´³SURMHFWV´³DQWLFLSDWHV´³SODQV´³HVWLPDWHV´³FRQWLQXHV´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ection 12 – Risk Factors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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 EXCHANGE INCOME CORPORATION 7KH&RUSRUDWLRQLVDGLYHUVLILHGDFTXLVLWLRQRULHQWHGFRUSRUDWLRQIRFXVHGRQRSSRUWXQLWLHVLQDHURVSDFHDYLDWLRQDQGPDQXIDFWXULQJ 7KHEXVLQHVVSODQRIWKH&RUSRUDWLRQLVWRLQYHVWLQSURILWDEOHZHOOHVWDEOLVKHGFRPSDQLHVZLWKVWURQJFDVKIORZVRSHUDWLQJLQQLFKH PDUNHWV7KHREMHFWLYHVRIWKH&RUSRUDWLRQDUH L WRSURYLGHVKDUHKROGHUVZLWKVWDEOHDQGJURZLQJGLYLGHQGV LL WRPD[LPL]HVKDUHKROGHUYDOXHWKURXJKRQJRLQJDFWLYHPRQLWRULQJRIDQGLQYHVWPHQWLQLWVRSHUDWLQJVXEVLGLDULHV DQG LLL WRFRQWLQXHWRDFTXLUHDGGLWLRQDOEXVLQHVVHVRULQWHUHVWVWKHUHLQWRH[SDQGDQGGLYHUVLI\WKH&RUSRUDWLRQ¶V LQYHVWPHQWV Segment Summary 7KH&RUSRUDWLRQ¶VRSHUDWLQJVHJPHQWVDUHVWUDWHJLFEXVLQHVVXQLWVWKDWRIIHUGLIIHUHQWSURGXFWVDQGVHUYLFHV7KH&RUSRUDWLRQKDVWZR RSHUDWLQJVHJPHQWV$HURVSDFH $YLDWLRQDQG0DQXIDFWXULQJ D Aerospace & Aviation ±LQFOXGHVDYDULHW\RIRSHUDWLRQVZLWKLQWKHDHURVSDFHDQGDYLDWLRQLQGXVWULHV,WLQFOXGHVSURYLGLQJ VFKHGXOHG DLUOLQH FKDUWHU VHUYLFH DQG HPHUJHQF\ PHGLFDO VHUYLFHV WR FRPPXQLWLHV ORFDWHG LQ 0DQLWRED 2QWDULR DQG 1XQDYXW 7KHVH VHUYLFHV DUH SURYLGHG E\ Calm Air Perimeter Bearskin DVDGLYLVLRQRI3HULPHWHU Keewatin Custom Helicopters WKH HTXLW\ LQYHVWPHQW LQ Wasaya, DQG RWKHU DYLDWLRQ VXSSRUWLQJ EXVLQHVVHV ³WKH Legacy Airlines´ Regional One LVIRFXVHGRQVXSSO\LQJ UHJLRQDODLUOLQHRSHUDWRUVDURXQGWKHZRUOGZLWKYDULRXVDIWHUPDUNHW DLUFUDIWHQJLQHVDQGFRPSRQHQWSDUWVProvincial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anufacturing ± SURYLGHV D YDULHW\ RI PDQXIDFWXUHG JRRGV DQG UHODWHG VHUYLFHV LQ VHYHUDO LQGXVWULHV DQG JHRJUDSKLF PDUNHWVWKURXJKRXW1RUWK$PHULFDQuestLVDPDQXIDFWXUHUDQGLQVWDOOHURIDQDGYDQFHGXQLWL]HGZLQGRZZDOOV\VWHP XVHGSULPDULO\LQKLJKULVHPXOWLIDPLO\UHVLGHQWLDOSURMHFWVLQ&DQDGDDQGWKH8QLWHG6WDWHVWesTower LVIRFXVHGRQWKH HQJLQHHULQJ GHVLJQ PDQXIDFWXULQJ DQG FRQVWUXFWLRQ RI FRPPXQLFDWLRQ LQIUDVWUXFWXUH DQG WKH SURYLVLRQ RI WHFKQLFDO VHUYLFHVBen Machine LVDPDQXIDFWXUHURISUHFLVLRQSDUWVDQGFRPSRQHQWVSULPDULO\XVHGLQWKHDHURVSDFHDQGGHIHQFH VHFWRUStainless PDQXIDFWXUHVVSHFLDOL]HGVWDLQOHVVVWHHOWDQNVYHVVHOVDQGSURFHVVLQJHTXLSPHQWLV ControlLVDQ HOHFWULFDO DQG FRQWURO V\VWHPV LQWHJUDWRU IRFXVHG RQ WKH DJULFXOWXUDO PDWHULDO KDQGOLQJ VHJPHQW 7KH Alberta Operations PDQXIDFWXUHVVSHFLDOL]HGKHDY\GXW\SUHVVXUHZDVKLQJDQG VWHDP V\VWHPV FRPPHUFLDO ZDWHU UHF\FOLQJ V\VWHPV DQG FXVWRP WDQNV IRU WKH WUDQVSRUWDWLRQ RI YDULRXV SURGXFWVSULPDULO\RLOJDVROLQHDQGZDWHUOverlanders PDQXIDFWXUHVSUHFLVLRQVKHHWPHWDODQGWXEXODUSURGXFWV 0DQDJHPHQWRIWKH&RUSRUDWLRQFRQWLQXRXVO\PRQLWRUVDQGSURYLGHVVXSSRUWWRWKHRSHUDWLQJVXEVLGLDULHV7KHRSHUDWLQJVXEVLGLDULHV RIWKH&RUSRUDWLRQKRZHYHURSHUDWHDXWRQRPRXVO\DQGPDLQWDLQWKHLULQGLYLGXDOEXVLQHVVLGHQWLWLHV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 1. FINANCIAL HIGHLIGHTS AND SIGNIFICANT EVENTS 7KHILQDQFLDOKLJKOLJKWVIRUWKH&RUSRUDWLRQIRUWKHSHULRGVLQGLFDWHGDUHDVIROORZV

FINANCIAL PERFORMANCE per share SHUVKDUH per share fully SHUVKDUH IXOO\ 2020 basic diluted EDVLF GLOXWHG )RUWKH\HDUHQGHG'HFHPEHU 5HYHQXH $ 1,149,629 (%,7'$ 284,535 1HW(DUQLQJV 28,055 $ 0.80 $ 0.78 $GMXVWHG1HW(DUQLQJV 47,176 1.35 1.31 $GMXVWHG1HW(DUQLQJVSD\RXWUDWLR 169% 174% )UHH&DVK)ORZ 198,400 5.66 5.03 )UHH&DVK)ORZOHVV0DLQWHQDQFH&DSLWDO([SHQGLWXUHV 113,331 3.23 2.94 )UHH&DVK)ORZOHVV0DLQWHQDQFH&DSLWDO([SHQGLWXUHVSD\RXW 71% 78% UDWLR 'LYLGHQGVGHFODUHG 80,012 2.28 FINANCIAL POSITION December 31, 2020 'HFHPEHU :RUNLQJFDSLWDO $ 323,625 &DSLWDODVVHWV 950,037 7RWDODVVHWV 2,294,184 6HQLRUGHEW 794,194 (TXLW\ 685,946 SHARE INFORMATION December 31, 2020 'HFHPEHU &RPPRQVKDUHVRXWVWDQGLQJ 35,471,758

December 31, 2020 'HFHPEHU :HLJKWHGDYHUDJHVKDUHVRXWVWDQGLQJGXULQJWKHSHULRGEDVLF 35,048,953

1RWH $VGHILQHGLQSection 13–Non-IFRS Financial Measures and Glossary

SIGNIFICANT EVENTS Normal Course Issuer Bid (“NCIB”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¶VFRPPRQVKDUHV SARS-CoV-2 (“COVID-19”) 2Q 0DUFK WKH :RUOG +HDOWK 2UJDQL]DWLRQ GHFODUHG WKH RXWEUHDN RI &29,' D SDQGHPLF ZKLFK KDV UHVXOWHG LQ JRYHUQPHQWVDURXQGWKHZRUOGLPSRVLQJVHYHUHWUDYHOUHVWULFWLRQVDQGVRFLDOGLVWDQFLQJPHDVXUHVWROLPLWWKHVSUHDGRIWKHYLUXV7KH WUDYHO UHVWULFWLRQV KDYH PDWHULDOO\ LPSDFWHG WKH VXEVLGLDULHV ZLWKLQ WKH $HURVSDFH $YLDWLRQ VHJPHQW DQG WKH VRFLDO GLVWDQFLQJ UHTXLUHPHQWVKDYHQHJDWLYHO\LPSDFWHGWKHHIILFLHQF\RIWKHVXEVLGLDULHVLQWKH0DQXIDFWXULQJVHJPHQW$GGLWLRQDOLQIRUPDWLRQRQWKH LPSDFWVRI&29,'FDQEHIRXQGLQSection 2 – Annual Results of Operations, Section 3 – Fourth Quarter Results,DQGSection 6 – OutlookRIWKH0' $ Government Financial Aid *RYHUQPHQWVDURXQGWKHZRUOGKDYHDQQRXQFHGVLJQLILFDQWILQDQFLDOVXSSRUWIRUEXVLQHVVHVLQOLJKWRIWKH&29,'SDQGHPLF7KH &RUSRUDWLRQUHYLHZHGDOOSURJUDPVLQHDFKMXULVGLFWLRQLQZKLFKLWRSHUDWHV0RVWQRWDEO\WKH&RUSRUDWLRQTXDOLILHGIRUWKH&DQDGD (PHUJHQF\:DJH6XEVLG\ ³&(:6´

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 2QFHWKHTXDOLILFDWLRQFULWHULDIRUWKH&(:6ZHUHPDGHDYDLODEOHWKH&RUSRUDWLRQLPPHGLDWHO\PDGHSODQVWRNHHSDVPDQ\RILWV HPSOR\HHVDVSRVVLEOHDQGWRPLQLPL]HOD\RIIV'XULQJWKH\HDUHQGHG'HFHPEHUWKH&RUSRUDWLRQUHFRUGHGPLOOLRQLQ VXEVLGLHVXQGHUWKH&(:67KH&(:6SHUPLWWHG(,&WRUHWDLQDZRUNIRUFHZKLFKRWKHUZLVHZRXOGKDYHEHHQVLJQLILFDQWO\UHGXFHG EHFDXVHRIWKHXQFHUWDLQW\FUHDWHGE\&29,'DQGWKHFRUUHVSRQGLQJGURSLQGHPDQGIRUWKH&RUSRUDWLRQ¶VSURGXFWVDQGVHUYLFHV PRVW QRWDEO\ LQ RXU DLUOLQH VXEVLGLDULHV 0DQ\ HPSOR\HHV ZHUH HLWKHU FDOOHG EDFN DIWHU EHLQJ ODLG RII RU DYRLGHG EHLQJ ODLG RII DOWRJHWKHUDVWKH&(:6DFWHGDVDIORZWKURXJKRIZDJHVWRWKRVHHPSOR\HHVZKRVHZRUNKDGHLWKHUGLVDSSHDUHGRUKDGEHHQ GHIHUUHG ,Q DGGLWLRQ WKH VXEVLGLHV UHFHLYHG LQ FRQMXQFWLRQ ZLWK PRGHVW VXSSRUW IURP WKH *RYHUQPHQW RI 1XQDYXW DOORZHG WKH &RUSRUDWLRQWRPDLQWDLQVHUYLFHDWDUHGXFHGOHYHOWRRXU,QGLJHQRXVFXVWRPHUVDWDWLPHZKHQWKHURXWHVZHUHQRWHFRQRPLFDOO\ IHDVLEOHGXHWRDQH[WUHPHGURSRIILQSDVVHQJHUYROXPHV DWWKHRQVHWRI&29,'DSSUR[LPDWHO\RQVRPHURXWHV :LWKRXW WKHVXEVLGLHVUHFHLYHGWKH&RUSRUDWLRQZRXOGKDYHVRXJKWWRPDNHXSDVLJQLILFDQWSRUWLRQRIWKHVXEVLGLHVUHFHLYHGWKURXJKOD\RIIV DQGRWKHUPHDQVRIFRVWUHGXFWLRQVVXFKDVDVLJQLILFDQWUHGXFWLRQLQWKHIUHTXHQF\RIVHUYLFH Moncton Flight College 2Q0DUFKWKHJRYHUQPHQWRI1HZ%UXQVZLFNRUGHUHGWKHVKXWGRZQRIDOOQRQHVVHQWLDOEXVLQHVVHVLQFOXGLQJHGXFDWLRQDO IDFLOLWLHV HIIHFWLYH 0DUFK GXH WR WKH &29,' SDQGHPLF $V D UHVXOW 0RQFWRQ )OLJKW &ROOHJH ZDV IRUFHG WR FORVH LWV IDFLOLWLHVDQGVZLWFKWRRQOLQHRQO\OHDUQLQJZKHUHSRVVLEOH2Q$SULO1HZ%UXQVZLFNUHOD[HGLWVVWDWHRIHPHUJHQF\DOORZLQJ 0RQFWRQ)OLJKW&ROOHJHWRUHVXPHSKDVHGLQIOLJKWRSHUDWLRQVRQ$SULOZLWKDGGLWLRQDOSUHFDXWLRQDU\PHDVXUHVLQSODFH Credit Facility Amendment 2Q-XO\WKH&RUSRUDWLRQDPHQGHGLWVFUHGLWIDFLOLW\7KHDPHQGPHQWLQFUHDVHGWKHVHQLRUOHYHUDJHUDWLRPD[LPXPIURP WRIRUWKHILVFDOTXDUWHUVHQGLQJ'HFHPEHUWKURXJK6HSWHPEHU,QFOXVLYHRIDOODQQRXQFHPHQWVWRGDWH(,& H[SHFWVWRUHPDLQZLWKLQLWVRULJLQDOFRYHQDQWDQGLVFXUUHQWO\DW &RQVLVWHQWZLWK(,&¶VKLVWRULFDOEDODQFHVKHHWPDQDJHPHQWWKH&RUSRUDWLRQFRQWLQXHVWREHSURDFWLYHLQPDQDJLQJLWVOLTXLGLW\VRWKDW VKRXOG DQ RSSRUWXQLW\ SUHVHQW LWVHOI (,& FDQ H[HFXWH ZKHUH RWKHUV PD\ QRW EH DEOH 7KH LQFUHDVHG FRYHQDQW SURYLGHV WKH &RUSRUDWLRQWKHIOH[LELOLW\WRGUDZIXUWKHUFDSLWDOLQWKHIXWXUHWRWDNHDGYDQWDJHRIRSSRUWXQLWLHVDVWKH\DUHXQFRYHUHG Acquisition of Window Installation Specialists, Inc. (“WIS”) 2Q-XO\WKH&RUSRUDWLRQDFTXLUHGDOORIWKHVKDUHVRI:LQGRZ,QVWDOODWLRQ6SHFLDOLVWV,QF ³:,6´ IRU86PLOOLRQ:,6 LVDIXOOVHUYLFHJOD]LQJFRPSDQ\VSHFLDOL]LQJLQVDOHVFRQVXOWDWLRQLQVWDOODWLRQDQGVHUYLFHRISUHJOD]HGIHQHVWUDWLRQSURGXFWV7KH RSHUDWLRQDOIRFXVIRU:,6LVWKH:HVW&RDVWRIWKH8QLWHG6WDWHV7KHWRWDOSXUFKDVHSULFHEHIRUHQRUPDOSRVWFORVLQJDGMXVWPHQWV LQFOXGHG86PLOOLRQLQFDVKSDLGDWFORVLQJDQGVKDUHVRIWKH&RUSRUDWLRQLVVXHGDWFORVLQJZLWKDYDOXHRI86PLOOLRQ Intelligence, Surveillance & Reconnaissance (“ISR”) Contract Award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ubsequent Event – Provincial and Federal Funding Agreement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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 2. ANNUAL RESULTS OF OPERATIONS 7KHIROORZLQJVHFWLRQDQDO\]HVWKHILQDQFLDOUHVXOWVRIWKH&RUSRUDWLRQIRUWKH\HDUHQGHG'HFHPEHUDQGWKHFRPSDUDWLYH SHULRG

Year Ended December 31, 2020 Aerospace & Aviation Manufacturing Head Office(2) Consolidated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

1RWH ([SHQVHV LQFOXGH DHURVSDFH DYLDWLRQ H[SHQVHV H[FOXGLQJ GHSUHFLDWLRQ DQG DPRUWL]DWLRQ PDQXIDFWXULQJ H[SHQVHV H[FOXGLQJ GHSUHFLDWLRQ DQG DPRUWL]DWLRQ DQGJHQHUDODQGDGPLQLVWUDWLYHH[SHQVHV 1RWH +HDG2IILFHLVQRWDVHSDUDWHUHSRUWDEOHVHJPHQW,WLQFOXGHVH[SHQVHVLQFXUUHGDWWKHKHDGRIILFHRIWKH&RUSRUDWLRQDQGLVSUHVHQWHGIRUUHFRQFLOLDWLRQ SXUSRVHV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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¶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¶V UHVXOWV7KHLQFOHPHQWZHDWKHUVKXWGRZQWKHDLUSRUWUHVXOWLQJLQQRUHYHQXHEHLQJHDUQHGGXULQJWKLVWLPH$GGLWLRQDOO\0RQFWRQ )OLJKW&ROOHJHZDVVKXWGRZQIRUWKHVHFRQGKDOIRI0DUFKDQGSDUWRIWKHVHFRQGTXDUWHUGXHWRWKH&29,'SDQGHPLFDVWKH JRYHUQPHQWRUGHUHGFORVXUHVRIHGXFDWLRQDOIDFLOLWLHVLQ1HZ%UXQVZLFN7KHGHPDQGIRU3URYLQFLDO¶VDHURVSDFHRSHUDWLRQVZHUH ODUJHO\XQDIIHFWHGE\WKHSDQGHPLFDVPXFKRIWKHZRUNSHUIRUPHGLVVXEMHFWWRORQJWHUPFRQWUDFWVZLWKJRYHUQPHQWVDURXQGWKH ZRUOG7KHRQO\H[FHSWLRQZDVWKH)RUFH0XOWLSOLHUDLUFUDIWZKLFKZDVLGOHGXULQJWKHVHFRQGTXDUWHUDVJRYHUQPHQWVJOREDOO\IRFXVHG RQWKHSDQGHPLFDQGSURFXUHPHQWSURFHVVHVIRUXWLOL]DWLRQRIWKH)RUFH0XOWLSOLHUZHUHSXWRQKROG7KH)RUFH0XOWLSOLHUZDVEDFNLQ VHUYLFHLQERWKWKHWKLUGDQGIRXUWKTXDUWHUV 5HJLRQDO2QH¶VUHYHQXHVIRUWKHFXUUHQW\HDUGHFUHDVHGE\PLOOLRQRU$VVHHQLQWKHWDEOHEHORZWKLVZDVGULYHQE\D GHFUHDVHLQVDOHVDQGVHUYLFHUHYHQXHDQGOHDVHUHYHQXHIURPWKHFRPSDUDWLYHSHULRG

Regional One Revenue

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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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¶V(%,7'$GHFUHDVHGPLOOLRQRUIURPWKHSULRU\HDU$VLJQLILFDQWUHGXFWLRQLQGHPDQGIRULWVOHDVHGDLUFUDIW DQGHQJLQHVZKLFKJHQHUDWHVPXFKKLJKHUPDUJLQVWKDQRWKHUOLQHVRIEXVLQHVVDQGDUHGXFWLRQLQWKHVDOHVDQGVHUYLFHUHYHQXH VWUHDP FRQWULEXWHG WR GHFUHDVHG (%,7'$ FRPSDUHG WR WKH SULRU \HDU 7KLV ZDV GULYHQ E\ UHJLRQDO DLUOLQHV DURXQG WKH ZRUOG H[SHULHQFLQJORZHUSDVVHQJHUYROXPHVFRPSDUHGWRWKHSULRU\HDU 0DQXIDFWXULQJ6HJPHQW 7KH0DQXIDFWXULQJVHJPHQWUHYHQXHLQFUHDVHGE\PLOOLRQRUWRPLOOLRQDQG(%,7'$LQFUHDVHGE\PLOOLRQRU RYHUWKHSULRU\HDUWRPLOOLRQ $OORIWKH&RUSRUDWLRQ¶VVXEVLGLDULHVZLWKLQWKH0DQXIDFWXULQJVHJPHQWKDYHEHHQGHHPHGHVVHQWLDOEXVLQHVVHVGXULQJWKH&29,' SDQGHPLFDQGKDYHEHHQRSHUDWLQJ6RFLDOGLVWDQFLQJKDVUHGXFHGWKHHIILFLHQF\DQGWKURXJKSXWLQWKHVKRUWWHUPGHVSLWHUREXVW GHPDQG,QFUHDVHGHPSOR\HHVFUHHQLQJDQGIUHTXHQF\RIFOHDQLQJDQGVDQLWL]DWLRQRIWKHIDFLOLWLHVDUHDOOUHDOLWLHVWKHPDQXIDFWXULQJ VXEVLGLDULHVDUHIDFLQJLQOLJKWRI&29,'DQGZLOOFRQWLQXHWRLPSDFWHIILFLHQF\IRUDQXQNQRZQSHULRGRIWLPH:LWKLQWKHVHJPHQW VHYHUDORIWKHVXEVLGLDULHVKDYHKHHGHGWKHJRYHUQPHQW¶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ection 9 – Critical Accounting Estimates and Judgments. NET EARNINGS

1HW(DUQLQJVZDVPLOOLRQDGHFUHDVHRIPLOOLRQIURPWKHSULRU\HDU7KH&RUSRUDWLRQJHQHUDWHGORZHU(%,7'$FRPSDUHG WRWKHSULRU\HDUDVGLVFXVVHGDERYHZKLFKFRQWULEXWHGWRWKHYDULDQFHWRWKHSULRU\HDU,QDGGLWLRQLQFUHDVHGGHSUHFLDWLRQRQDVVHWV SXUFKDVHG WKURXJK DFTXLVLWLRQ DQG *URZWK &DSLWDO ([SHQGLWXUHV UHVXOWHG LQ D PLOOLRQ LQFUHDVH LQ GHSUHFLDWLRQ H[SHQVH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 FRPSDUHGWR$QLPSDLUPHQWORVVRIPLOOLRQZDVUHFRUGHGDWWKH&RUSRUDWLRQ¶V$OEHUWD2SHUDWLRQVGXULQJWKHILUVWTXDUWHURI GXHWRWKHLPSDFWVRIWKHFXUUHQWVWDWHRIWKHRLODQGJDVLQGXVWU\DQG&29,' Section 9 – Critical Accounting Estimates and Judgments),QWKHSULRU\HDUWKHUHPHDVXUHPHQWRIFRQWLQJHQWFRQVLGHUDWLRQLQFUHDVHG1HW(DUQLQJVE\PLOOLRQZKLFKLV PLOOLRQKLJKHUWKDQLQWKHFXUUHQW\HDU3DUWLDOO\RIIVHWWLQJWKHVHQHJDWLYHLPSDFWVRQ1HW(DUQLQJVZDVDPLOOLRQUHGXFWLRQLQ LQWHUHVWH[SHQVHDQGDPLOOLRQUHGXFWLRQLQDFTXLVLWLRQFRVWV ,QFRPHWD[H[SHQVHKDVGHFUHDVHGE\PLOOLRQ7KHHIIHFWLYHUDWHRIWD[LVKLJKHUWKDQLQWKHSULRU\HDUDQGLVUHIOHFWLYHRIORVVHV JHQHUDWHG LQ ORZHU WD[ UDWH MXULVGLFWLRQV RIIVHW E\ HDUQLQJV LQ KLJKHU WD[ UDWH MXULVGLFWLRQV ,Q DGGLWLRQ WKH UHPHDVXUHPHQWRI FRQWLQJHQW FRQVLGHUDWLRQ ZDV VLJQLILFDQWO\ KLJKHU LQ WKH SULRU \HDU DQG JDYH ULVH WR D JDLQ RI PLOOLRQ WKDW ZDV QRW WD[DEOH GHFUHDVLQJWKHHIIHFWLYHUDWHRIWD[LQWKHFRPSDUDWLYH\HDU&XUUHQWLQFRPHWD[H[SHQVHLQFUHDVHGGXULQJWKH\HDUSULPDULO\GXH WRORZHUWD[GHSUHFLDWLRQEHLQJDYDLODEOHLQWKHSHULRGIURPUHGXFHGFDSLWDOH[SHQGLWXUHVLQ 1HW(DUQLQJVSHUVKDUHGHFUHDVHGE\WRIURPWKHSULRU\HDUGXHWRORZHU1HW(DUQLQJVJHQHUDWHGLQWKHSHULRG7KH ZHLJKWHG DYHUDJH VKDUHV RXWVWDQGLQJ LQFUHDVHG E\ RYHU WKH SULRU \HDU ZKLFK DOVR UHGXFHG 1HW (DUQLQJV SHU VKDUH 'HWDLOV DURXQGWKHFKDQJHLQVKDUHVRXWVWDQGLQJFDQEHIRXQGLQSection 7 – Liquidity and Capital Resources ADJUSTED NET EARNINGS (Section 13 – Non-IFRS Financial Measures and Glossary)

$GMXVWHG1HW(DUQLQJVGHFUHDVHGE\PLOOLRQIURPWKHSULRU\HDU$GMXVWHG1HW(DUQLQJVLQFOXGHVWKHDGGEDFNRIDFTXLVLWLRQ UHODWHGFRVWVZKLFKDUHFRPSULVHGRIPLOOLRQLQLQWDQJLEOHDVVHWDPRUWL]DWLRQPLOOLRQLQDFTXLVLWLRQFRVWVDQGPLOOLRQ LQLQWHUHVWDFFUHWLRQRQFRQWLQJHQWFRQVLGHUDWLRQ DOOQHWRIWD[ DQGDPLOOLRQQHWRIWD[DGGEDFNRIDQLPSDLUPHQWORVV Section 9 – Critical Accounting Estimates and Judgments $GMXVWHG1HW(DUQLQJVSHUVKDUHGHFUHDVHGWRIURPLQWKHSULRU\HDUGXHWRORZHU$GMXVWHG1HW(DUQLQJVJHQHUDWHGLQWKH SHULRG7KHZHLJKWHGDYHUDJHQXPEHURIVKDUHVRXWVWDQGLQJLQFUHDVHGE\RYHUWKHSULRU\HDUZKLFKDOVRUHGXFHG$GMXVWHG1HW (DUQLQJVSHUVKDUH'HWDLOVDURXQGWKHFKDQJHLQVKDUHVRXWVWDQGLQJFDQEHIRXQGLQSection 7 – Liquidity and Capital Resources FREE CASH FLOW (Section 13 – Non-IFRS Financial Measures and Glossary)

7KH)UHH&DVK)ORZJHQHUDWHGE\WKH&RUSRUDWLRQGXULQJWKH\HDUZDVPLOOLRQDGHFUHDVHRIPLOOLRQRUIURPWKH FRPSDUDWLYH\HDU7KHPDLQUHDVRQVIRUWKLVGHFUHDVHDUHWKHPLOOLRQGHFUHDVHLQ(%,7'$DQLQFUHDVHLQFXUUHQWWD[H[SHQVH DQGLQFUHDVHGSULQFLSDOSD\PHQWVRQULJKWRIXVHOHDVHOLDELOLWLHVSDUWLDOO\RIIVHWE\DGHFUHDVHLQLQWHUHVWH[SHQVH)UHH&DVK)ORZLV GLVFXVVHGIXUWKHULQSection 13 – Non-IFRS Financial Measures and Glossary

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 %HFDXVHRIWKHGHFUHDVHLQ)UHH&DVK)ORZGHVFULEHGDERYH)UHH&DVK)ORZSHUVKDUHGHFUHDVHGE\WR)UHH&DVK )ORZSHUVKDUHZDVDOVRLPSDFWHGE\WKHLQFUHDVHLQWKHZHLJKWHGDYHUDJHVKDUHVRXWVWDQGLQJLQWKHFXUUHQW\HDUFRPSDUHGWR WKHSULRU\HDU'HWDLOVDURXQGWKHLQFUHDVHLQVKDUHVRXWVWDQGLQJFDQEHIRXQGLQSection 7 – Liquidity and Capital Resources &KDQJHVLQQRQFDVKZRUNLQJFDSLWDODUHLQFOXGHGLQFDVKIORZIURPRSHUDWLRQVSHUWKH6WDWHPHQWRI&DVK)ORZDQGDUHUHPRYHGLQ WKHUHFRQFLOLDWLRQWR)UHH&DVK)ORZ$VDUHVXOWLWKDVQRLPSDFWRQWKHFDOFXODWLRQRI)UHH&DVK)ORZ$GHWDLOHGGLVFXVVLRQRI FKDQJHVLQZRUNLQJFDSLWDOLVLQFOXGHGLQSection 4 – Investing Activities

3. FOURTH QUARTER RESULTS 7KH IROORZLQJ VHFWLRQ DQDO\]HV WKH ILQDQFLDO UHVXOWV RI WKH &RUSRUDWLRQ IRU WKH WKUHH PRQWKV HQGHG 'HFHPEHU DQG WKH FRPSDUDWLYHWKUHHPRQWKSHULRGLQ

Three Months Ended December 31, 2020 Aerospace & Aviation Manufacturing Head Office(2) Consolidated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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020

7KUHH0RQWKV(QGHG'HFHPEHU $HURVSDFH $YLDWLRQ 0DQXIDFWXULQJ +HDG2IILFH &RQVROLGDWHG 5HYHQXH $ $ $ $ ([SHQVHV (%,7'$ 'HSUHFLDWLRQRIFDSLWDODVVHWV $PRUWL]DWLRQRILQWDQJLEOHDVVHWV )LQDQFHFRVWVLQWHUHVW 'HSUHFLDWLRQRIULJKWRIXVHDVVHWV ,QWHUHVWH[SHQVHRQULJKWRIXVHOHDVHOLDELOLWLHV $FTXLVLWLRQFRVWV 2WKHU (DUQLQJVEHIRUHLQFRPHWD[HV &XUUHQWLQFRPHWD[H[SHQVH 'HIHUUHGLQFRPHWD[H[SHQVH 1HW(DUQLQJV 1HW(DUQLQJVSHUVKDUH EDVLF $GMXVWHG1HW(DUQLQJV $GMXVWHG1HW(DUQLQJVSHUVKDUH EDVLF

1RWH ([SHQVHV LQFOXGH DHURVSDFH DYLDWLRQ H[SHQVHV H[FOXGLQJ GHSUHFLDWLRQ DQG DPRUWL]DWLRQ PDQXIDFWXULQJ H[SHQVHV H[FOXGLQJ GHSUHFLDWLRQ DQG DPRUWL]DWLRQ DQGJHQHUDODQGDGPLQLVWUDWLYHH[SHQVHV 1RWH +HDGRIILFHLVQRWDVHSDUDWHUHSRUWDEOHVHJPHQW,WLQFOXGHVH[SHQVHVLQFXUUHGDWWKHKHDGRIILFHRIWKH&RUSRUDWLRQDQGLVSUHVHQWHGIRUUHFRQFLOLDWLRQ SXUSRVHV

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¶ DLUOLQH RSHUDWLRQV ZHUH SDUWLDOO\ RIIVHW E\ LQFUHDVHV ZLWKLQ 3URYLQFLDO¶V DHURVSDFHRSHUDWLRQVDQGDQLQFUHDVHLQFKDUWHURSHUDWLRQVFRPSDUHGWRWKHSULRUSHULRG 5HJLRQDO2QH¶VUHYHQXHGHFUHDVHGE\IURPWKHFRPSDUDWLYHWKUHHPRQWKSHULRG7KLVZDVGULYHQE\GHFUHDVHVLQERWKUHYHQXH VWUHDPVGXHWRWKHLPSDFWRI&29,'

Regional One Revenues 7KUHH0RQWKV(QGHG'HFHPEHU 2020 6DOHVDQGVHUYLFHUHYHQXH 27,594 /HDVHUHYHQXH 4,431 32,025

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 5HYHQXH DW 5HJLRQDO 2QH FRQWLQXHG WR EH LPSDFWHG E\ &29,' GXH WR IDFWRUV FRQVLVWHQW ZLWK WKH GLVFXVVLRQ LQ WKH DQQXDO GLVFXVVLRQ 7KLV KDV UHVXOWHG LQ UHGXFWLRQV LQ ERWK UHYHQXH VWUHDPV DV GHWDLOHG LQ WKH WDEOH DERYH 'XULQJ WKH IRXUWK TXDUWHU 5HJLRQDO2QHEHQHILWWHGIURPWKHVDOHRIODUJHUDVVHWVLPSURYLQJUHVXOWVFRPSDUHGWRWKHVHFRQGDQGWKLUGTXDUWHUVRI ,QWKH$HURVSDFH $YLDWLRQVHJPHQW(%,7'$GHFUHDVHGE\PLOOLRQRU 7KHIRXUWKTXDUWHURIRXWSHUIRUPHGPDQDJHPHQW¶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¶VDHURVSDFHRSHUDWLRQVDQGDOVRFRQWUDFWSULFHDQGVFRSHHVFDODWRUVZLWKLQWKRVHRSHUDWLRQVWKDWERWK SRVLWLYHO\LPSDFWHGWKHFXUUHQWSHULRGFRPSDUHGWRWKHSULRUSHULRG7KHIDFWRUVLPSDFWLQJWKHDLUOLQHRSHUDWLRQVDUHFRQVLVWHQWZLWK WKH DQQXDO GLVFXVVLRQ DERYH ZLWK WKH QHJDWLYH LPSDFWV RI &29,' GXULQJ WKH TXDUWHU EHLQJ SDUWLDOO\ RIIVHW E\ WKH UHFHLSW RI JRYHUQPHQWDVVLVWDQFHDQGLQFUHDVHGGHPDQGIRUFKDUWHUVHUYLFHV 5HJLRQDO2QHFRQWULEXWHG(%,7'$RIPLOOLRQIRUWKHTXDUWHUDGHFUHDVHRIIURPWKHSULRUSHULRG$VGLVFXVVHGDERYHWKH LPSDFWRI&29,'RQDOOOLQHVRIEXVLQHVVGHFUHDVHG(%,7'$FRPSDUHGWRWKHSULRUSHULRG7KHVDOHVRIODUJHUDVVHWVGXULQJWKH IRXUWKTXDUWHULPSURYHG(%,7'$ZKHQFRPSDUHGWRWKHVHFRQGDQGWKLUGTXDUWHUVRI 0DQXIDFWXULQJ6HJPHQW 7KH0DQXIDFWXULQJVHJPHQWUHYHQXHLQFUHDVHGE\PLOOLRQRUWRPLOOLRQDQG(%,7'$LQFUHDVHGE\PLOOLRQRU RYHUWKHSULRUSHULRGWRPLOOLRQ $V GHWDLOHG LQ WKH DQQXDO GLVFXVVLRQ DERYH 4XHVW EHQHILWWHG FRPSDUHG WR WKH SULRU SHULRG IURP WKH DFTXLVLWLRQ RI $:, SDUWZD\ WKURXJKWKHIRXUWKTXDUWHURIDQGWKHDFTXLVLWLRQRI:,6LQWKHWKLUGTXDUWHURI7KHUHDVRQVIRUWKHJURZWKRIWKHEDODQFHRI WKHVHJPHQWLVFRQVLVWHQWZLWKWKHDQQXDOGLVFXVVLRQDERYH NET EARNINGS

7KUHH0RQWKV(QGHG'HFHPEHU 2020 1HW(DUQLQJV 13,479 1HW(DUQLQJVSHUVKDUH 0.38

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ection 9 – Critical Accounting Estimates and Judgments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ection 7 – Liquidity and Capital Resources

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 ADJUSTED NET EARNINGS (Section 13 – Non-IFRS Financial Measures & Glossary)

7KUHH0RQWKV(QGHG'HFHPEHU 2020 Net Earnings 13,479 $FTXLVLWLRQFRVWVQHWRIWD[ 466 $PRUWL]DWLRQRILQWDQJLEOHDVVHWVQHWRIWD[ 4,835 ,QWHUHVWDFFUHWLRQRQDFTXLVLWLRQFRQWLQJHQWFRQVLGHUDWLRQ 67 Adjusted Net Earnings 18,847 SHUVKDUH%DVLF 0.53 SHUVKDUH'LOXWHG 0.52

$GMXVWHG1HW(DUQLQJVGHFUHDVHGE\PLOOLRQRUIURPWKHSULRUSHULRG$GMXVWHG1HW(DUQLQJVLQFOXGHVWKHDGGEDFNRI DFTXLVLWLRQUHODWHGFRVWVZKLFKDUHFRPSULVHGRIPLOOLRQLQLQWDQJLEOHDVVHWDPRUWL]DWLRQPLOOLRQLQLQWHUHVWDFFUHWLRQRQ FRQWLQJHQWFRQVLGHUDWLRQDQGPLOOLRQLQDFTXLVLWLRQFRVWV DOOQHWRIWD[ $GMXVWHG 1HW (DUQLQJV SHU VKDUH GHFUHDVHG E\ IURP WKH SULRU SHULRG WR 7KH ZHLJKWHG DYHUDJH VKDUHV RXWVWDQGLQJ LQFUHDVHGE\RYHUWKHSULRUSHULRGZKLFKDOVRUHGXFHG1HW(DUQLQJVSHUVKDUH'HWDLOVDURXQGWKHFKDQJHLQVKDUHVRXWVWDQGLQJ FDQEHIRXQGLQSection 7 – Liquidity and Capital Resources FREE CASH FLOW (Section 13 – Non-IFRS Financial Measures and Glossary)

FREE CASH FLOW 7KUHH0RQWKV(QGHG'HFHPEHU 2020 &DVKIORZVIURPRSHUDWLRQV $ 63,888 &KDQJHLQQRQFDVKZRUNLQJFDSLWDOLWHPV 2,370 $FTXLVLWLRQFRVWVQHWRIWD[ 466 3ULQFLSDOSD\PHQWVRQULJKWRIXVHOLDELOLWLHV (7,227) $ 59,497 SHUVKDUH%DVLF $ 1.68 SHUVKDUH)XOO\'LOXWHG $ 1.48

7KH)UHH&DVK)ORZJHQHUDWHGE\WKH&RUSRUDWLRQIRUWKHIRXUWKTXDUWHURIZDVPLOOLRQDGHFUHDVHRIPLOOLRQRU IURPWKHFRPSDUDWLYHSHULRG7KHSULPDU\UHDVRQIRUWKHGHFUHDVHLVWKHGHFUHDVHLQ(%,7'$DQGDQLQFUHDVHLQFXUUHQWWD[ H[SHQVHSDUWLDOO\RIIVHWE\DGHFUHDVHLQLQWHUHVWFRVWVGXULQJWKHSHULRG %HFDXVHRIWKHGHFUHDVHLQ)UHH&DVK)ORZGLVFXVVHGDERYH)UHH&DVK)ORZSHUVKDUHGHFUHDVHGE\IURPWKHSULRUSHULRGWR )UHH&DVK)ORZSHUVKDUHZDVDOVRLPSDFWHGE\WKHLQFUHDVHLQWKHZHLJKWHGDYHUDJHVKDUHVRXWVWDQGLQJLQWKHFXUUHQW SHULRGFRPSDUHGWRWKHSULRUSHULRG'HWDLOVDURXQGWKHLQFUHDVHLQVKDUHVRXWVWDQGLQJFDQEHIRXQGLQSection 7 – Liquidity and Capital Resources &KDQJHV LQ QRQFDVK ZRUNLQJ FDSLWDO EDODQFH LV LQFOXGHG LQ FDVK IORZ IURP RSHUDWLRQV SHU WKH 6WDWHPHQW RI &DVK )ORZ DQG LV UHPRYHGLQWKHUHFRQFLOLDWLRQWR)UHH&DVK)ORZ$VDUHVXOWLWKDVQRLPSDFWRQWKHFDOFXODWLRQRI)UHH&DVK)ORZ$GLVFXVVLRQRI FKDQJHVLQZRUNLQJFDSLWDOLVLQFOXGHGZLWKLQSection 4 – Investing Activities

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 4. INVESTING ACTIVITIES ,QYHVWPHQWWKURXJKWKHDFTXLVLWLRQRIQHZEXVLQHVVHVWKHSXUFKDVHRIFDSLWDODVVHWVDQGLQYHVWPHQWLQZRUNLQJFDSLWDOWRPDLQWDLQ DQGJURZWKHH[LVWLQJSRUWIROLRRIVXEVLGLDULHVLVDSULPDU\REMHFWLYHRIWKH&RUSRUDWLRQ ACQUISITIONS :LQGRZ,QVWDOODWLRQ6SHFLDOLVWV,QF

2Q -XO\ WKH &RUSRUDWLRQ DFTXLUHG DOO WKH VKDUHV RI :,6 :,6 LV D IXOOVHUYLFH JOD]LQJ FRPSDQ\ VSHFLDOL]LQJ LQ VDOHV FRQVXOWDWLRQLQVWDOODWLRQDQGVHUYLFHRISUHJOD]HGIHQHVWUDWLRQSURGXFWVRQWKH:HVW&RDVWRIWKH8QLWHG6WDWHV 7KHFRPSRQHQWVRIWKHFRQVLGHUDWLRQSDLGWRDFTXLUH:,6DUHRXWOLQHGLQWKHWDEOHEHORZ

Consideration given: &DVK 51,042 ,VVXDQFHRIVKDUHVRIWKH&RUSRUDWLRQDWSHUVKDUH 9,402 3UHOLPLQDU\ZRUNLQJFDSLWDOVHWWOHPHQWDWFORVH 537 Total purchase consideration 60,981

CAPITAL EXPENDITURES

Year Ended December 31, 2020

CAPITAL EXPENDITURES Aerospace & Aviation Manufacturing Head Office Total 0DLQWHQDQFH&DSLWDO([SHQGLWXUHV $ 81,101 $ 2,326 $ 1,642 $ 85,069 *URZWK&DSLWDO([SHQGLWXUHV 44,404 3,519 - 47,923 $ 125,505 $ 5,845 $ 1,642 $ 132,992

CAPITAL EXPENDITURES $HURVSDFH $YLDWLRQ 0DQXIDFWXULQJ +HDG2IILFH 7RWDO 0DLQWHQDQFH&DSLWDO([SHQGLWXUHV *URZWK&DSLWDO([SHQGLWXUHV

0DLQWHQDQFH&DSLWDO([SHQGLWXUHVIRUWKH\HDUHQGHG'HFHPEHUGHFUHDVHGE\IURPWKHSULRUSHULRG7KHILUVWTXDUWHU RIVDZDVLJQLILFDQWLQFUHDVHRYHUWKHFRPSDUDWLYHSHULRGLQZKLFKZDVFRQVLVWHQWZLWKWKHJXLGDQFHSURYLGHGZLWKWKH &RUSRUDWLRQ¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 PLOOLRQLQ*URZWK&DSLWDO([SHQGLWXUHV7KHYDVWPDMRULW\RIWKHVHH[SHQGLWXUHVUHODWHGWRWKH'HSDUWPHQWRI)LVKHULHVDQG 2FHDQVFRQWUDFWDQG1HWKHUODQGV&RDVW*XDUG,65FRQWUDFWIRU3URYLQFLDODQGDVPDOOLQFUHDVHLQFDSDFLW\LQWKH/HJDF\$LUOLQHV ZKLFKZDVFRPPLWWHGWREHIRUHWKHRQVHWRI&29,' 5HJLRQDO2QH¶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¶VOHDVHSRUWIROLR

Regional One Lease Portfolio December 31, 2020 'HFHPEHU Aircraft Engines $LUFUDIW (QJLQHV /HDVHSRUWIROLR 58 (1) 51

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¶VLQYHVWPHQWLQH[FHVVRI0DLQWHQDQFH&DSLWDO([SHQGLWXUHVLQ5HJLRQDO 2QHUHPDLQHGUHODWLYHO\IODWFRPSDUHGWRWKHEHJLQQLQJRIWKH\HDU5HJLRQDO2QH¶VQHJDWLYH*URZWK&DSLWDO([SHQGLWXUHVRI PLOOLRQ ZHUH DOPRVW HQWLUHO\ RIIVHW E\ D FRUUHVSRQGLQJ LQFUHDVH LQ 5HJLRQDO 2QH¶V LQYHQWRU\ ZKLFK LV GLVFXVVHG IXUWKHU EHORZ LQ Investment in Working Capital7KLVLQFUHDVHLQLQYHQWRU\DQGQHJDWLYH*URZWK&DSLWDO([SHQGLWXUHVLQFOXGHVWKHWUDQVIHURIVHYHUDO ODUJHDVVHWVIURPFDSLWDODVVHWVWRLQYHQWRU\GXULQJWKHIRXUWKTXDUWHUDVLQGLFDWHGLQWKH2XWORRNVHFWLRQRIWKHWKLUGTXDUWHU UHSRUW 7KLV PRGHVW UHGXFWLRQ RI WKH LQYHVWPHQW LQWR 5HJLRQDO 2QH VKRZV WKH GLVFUHWLRQDU\ QDWXUH RI IXUWKHU QHW LQYHVWPHQW LQWR 5HJLRQDO2QH¶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¶VLQWHQWLRQWRPDLQWDLQRUJURZWKHOHDVHSRUWIROLR 7KH&RUSRUDWLRQ¶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ection 6 – Outlook.

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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¶V &DQDGLDQSODQWLQWKHSULRUSHULRG 'XULQJWKH\HDUHQGHG'HFHPEHU*URZWK&DSLWDO([SHQGLWXUHVRIPLOOLRQZHUHPDGHE\WKH0DQXIDFWXULQJVHJPHQW 6XEVWDQWLDOO\DOORIWKHLQYHVWPHQWVZHUHPDGHLQ4XHVW¶VQHZ86SODQWDQGDGGLWLRQDOHTXLSPHQWWRVXSSRUW:HV7RZHU¶VJURZLQJ ZLUHOLQHOLQHRIEXVLQHVV INVESTMENT IN WORKING CAPITAL 'XULQJ WKH \HDU HQGHG 'HFHPEHU WKH &RUSRUDWLRQ JHQHUDWHG PLOOLRQ LQ FDVK IURP ZRUNLQJFDSLWDO 'HWDLOV RI WKH LQYHVWPHQWLQZRUNLQJFDSLWDODUHLQFOXGHGLQ1RWHDQGWKH6WDWHPHQWRI&DVK)ORZVLQWKH&RUSRUDWLRQ¶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¶VLQYHQWRU\RISDUWVDQGDLUFUDIWIRUUHVDOHDV5HJLRQDO2QHKDVGHPRQVWUDWHGDQ DELOLW\ WR JHQHUDWH H[FHSWLRQDO UHWXUQV RQ LQYHVWPHQW 7KH LQYHVWPHQW GXULQJ WKH SHULRG ZDV PLOOLRQ ZKLFK ZLOO VXSSRUW LQFUHDVHGSDUWVDOHVLQWKHIXWXUHDQGLVODUJHO\GULYHQE\WUDQVIHUVIURPFDSLWDODVVHWVGXULQJWKHSHULRGDVGLVFORVHGLQWKHWKLUG TXDUWHUUHSRUW5HJLRQDO2QH¶VSDVWLQYHVWPHQWLQLQYHQWRU\KDVFRQVLVWHQWO\SURYLGHGDFFUHWLYHJURZWKIURPLQFUHDVHGSDUWVUHYHQXH ,QWKH0DQXIDFWXULQJVHJPHQWWKH&RUSRUDWLRQLQYHVWHGZRUNLQJFDSLWDOWRVXSSRUW4XHVW¶V86H[SDQVLRQDVWKHSODQWUDPSHGXS GXULQJWKH\HDU

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 5. DIVIDENDS AND PAYOUT RATIOS 7KHSD\PHQWRIVWDEOHDQGJURZLQJGLYLGHQGVWRVKDUHKROGHUVLVDFRUQHUVWRQHJRDORIWKH&RUSRUDWLRQZKLFKLVDFKLHYHGWKURXJKWKH FRQVLVWHQW H[HFXWLRQ RI LWV FRUH VWUDWHJ\ RI GLYHUVLILFDWLRQ GLVFLSOLQHG LQYHVWPHQW LQ LWV VXEVLGLDULHV DQG GLVFLSOLQHG DFTXLVLWLRQ RI FRPSDQLHVZLWKGHIHQVLEOHDQGVWHDG\FDVKIORZV 'LYLGHQGV

2020 Dividends 'LYLGHQGV Month Record date Per share Amount 5HFRUGGDWH 3HU6KDUH $PRXQW -DQXDU\ -DQXDU\ $ 0.19 $ 6,596 -DQXDU\ )HEUXDU\ )HEUXDU\ 0.19 6,599 )HEUXDU\ 0DUFK 0DUFK 0.19 6,606 0DUFK $SULO $SULO 0.19 6,612 $SULO 0D\ 0D\ 0.19 6,621 0D\ -XQH -XQH 0.19 6,634 -XQH -XO\ -XO\ 0.19 6,707 -XO\ $XJXVW $XJXVW 0.19 6,715 $XJXVW 6HSWHPEHU 6HSWHPEHU 0.19 6,722 6HSWHPEHU 2FWREHU 2FWREHU 0.19 6,728 2FWREHU 1RYHPEHU 1RYHPEHU 0.19 6,732 1RYHPEHU 'HFHPEHU 'HFHPEHU 0.19 6,740 'HFHPEHU Total $ 2.28 $ 80,012

'LYLGHQGVGHFODUHGIRUWKH\HDUHQGHG'HFHPEHULQFUHDVHGRYHUWKHFRPSDUDWLYHSHULRGEHFDXVHRIWKHLQFUHDVHLQWKH GLYLGHQGUDWHSHUPRQWKLQWKHFXUUHQWSHULRG7KH&RUSRUDWLRQLQFUHDVHGWKHPRQWKO\GLYLGHQGUDWHSHUVKDUHE\GXULQJWKH WKLUGTXDUWHURI LQFUHDVH WRSHUDQQXP 7KH&RUSRUDWLRQ¶V%RDUGRI'LUHFWRUVKDYHSXWLQSODFHHQKDQFHGSURFHVVHVWRUHYLHZWKH&RUSRUDWLRQ¶VGLYLGHQGSD\PHQWVGXULQJ WKHXQFHUWDLQWLPHVEURXJKWRQE\WKH&29,'SDQGHPLF7KH%RDUGRI'LUHFWRUVUHYLHZVERWKVKRUWDQGORQJWHUPFDVKIORZDQG ILQDQFLDOIRUHFDVWVWRDVVHVVWKH&RUSRUDWLRQ¶VDELOLW\WRSD\LWVPRQWKO\GLYLGHQGVDQGIXOILOOWKH&RUSRUDWLRQ¶VOHJDOUHTXLUHPHQWVZLWK UHVSHFWWRSD\LQJGLYLGHQGV7KH&RUSRUDWLRQLVIRFXVHGRQRSWLPL]LQJFDVKIORZZKLOHFRQWLQXLQJWRSD\DGLYLGHQGWRVKDUHKROGHUV ZKHUHLWLVDSSURSULDWHWRGRVR 7KH&RUSRUDWLRQXVHVERWKDQHDUQLQJVEDVHGSD\RXWUDWLR $GMXVWHG1HW(DUQLQJV DQGDFDVKIORZEDVHGSD\RXWUDWLR )UHH&DVK )ORZOHVV0DLQWHQDQFH&DSLWDO([SHQGLWXUHV WRDVVHVVLWVDELOLW\WRSD\GLYLGHQGVWRVKDUHKROGHUV%RWKPHWKRGVRIFDOFXODWLQJWKH SD\RXWUDWLRSURYLGHDQLQGLFDWLRQRIWKH&RUSRUDWLRQ¶VDELOLW\WRJHQHUDWHHQRXJKIXQGVIURPLWVRSHUDWLRQVWRSD\GLYLGHQGV $GMXVWHG 1HW (DUQLQJV H[FOXGHV DFTXLVLWLRQ FRVWV DPRUWL]DWLRQ RI LQWDQJLEOH DVVHWV DQG XQXVXDO RQHWLPH LWHPV $PRUWL]DWLRQ RI LQWDQJLEOH DVVHWV UHVXOWV IURP LQWDQJLEOH DVVHWV WKDW DUH UHFRUGHG ZKHQ WKH &RUSRUDWLRQ FRPSOHWHV DQ DFTXLVLWLRQ DV SDUW RI WKH SXUFKDVHSULFHDOORFDWLRQIRUDFFRXQWLQJSXUSRVHV7KHUHDUHQRIXWXUHFDSLWDOH[SHQGLWXUHVDVVRFLDWHGZLWKPDLQWDLQLQJRUUHSODFLQJ WKHVH LQWDQJLEOH DVVHWV WKHUHIRUH LQWDQJLEOH DVVHW DPRUWL]DWLRQ LV QRW FRQVLGHUHG ZKHQ DVVHVVLQJ WKH DELOLW\ WR SD\ GLYLGHQGV $FTXLVLWLRQ FRVWV DUH QRW UHTXLUHG WR PDLQWDLQH[LVWLQJFDVK IORZV DQG WKHUHIRUH WKHVH FRVWV DUH QRWFRQVLGHUHG LQ DVVHVVLQJ WKH SD\PHQWRIGLYLGHQGVDQGLQFOXGHDFTXLVLWLRQFRVWVDQGSUHUHYHQXHUDPSXSFRVWVIRUVLJQLILFDQWH[SDQVLRQV$GMXVWHG1HW(DUQLQJV LQFOXGHV GHSUHFLDWLRQ RQ DOO FDSLWDO H[SHQGLWXUHV DQG LV QRW LPSDFWHG E\ WKH SHULRG WR SHULRG YDULDELOLW\ LQ 0DLQWHQDQFH &DSLWDO ([SHQGLWXUHV7KH$GMXVWHG1HW(DUQLQJVSD\RXWUDWLRLVQHJDWLYHO\LPSDFWHGVWDUWLQJLQDVDUHVXOWRIWKHDGRSWLRQRI,)56 DQGWKHFRPSDUDELOLW\WRUDWLRVEHIRUHWKHSHULRGLVLPSDFWHG )UHH&DVK)ORZOHVV0DLQWHQDQFH&DSLWDO([SHQGLWXUHVLVDPHDVXUHWKDWHQVXUHVWKHUHVXOWLQJSD\RXWUDWLRUHIOHFWVWKHUHSODFHPHQW RIFDSLWDODVVHWVWKDWLVQHFHVVDU\WRPDLQWDLQWKH&RUSRUDWLRQ¶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¶V DLU

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 VHUYLFHV 7KHUHIRUH D VLQJOH TXDUWHU FDQ EH LPSDFWHG E\ VHDVRQDO YDULDWLRQV WKDW GR QRW LPSDFW WKH &RUSRUDWLRQ¶V DELOLW\ WR SD\ GLYLGHQGVRYHUDORQJHUSHULRG 3D\RXW5DWLRV

Basic per Share Payout Ratios for the Corporation 2020

Trailing Twelve 7UDLOLQJ7ZHOYH 3HULRGV(QGHG'HFHPEHU Three Months Months 7KUHH0RQWKV 0RQWKV Adjusted Net Earnings 107% 169% 65% 71% Free Cash Flow less Maintenance Capital Expenditures 49% 71% 52% 57%

7KH&RUSRUDWLRQ¶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ection 4 – Investing Activities 7KH $GMXVWHG 1HW (DUQLQJV SD\RXW UDWLR LV QRW LPSDFWHG E\ WKH WLPLQJ GLIIHUHQFHVLQ0DLQWHQDQFH&DSLWDO([SHQGLWXUHV 7KHJUDSKWKDWIROORZVVKRZVWKH&RUSRUDWLRQ¶VKLVWRULFDO)UHH &DVK)ORZOHVV0DLQWHQDQFH&DSLWDO([SHQGLWXUHVWUDLOLQJWZHOYH PRQWKSD\RXWUDWLRDQG$GMXVWHG1HW(DUQLQJVWUDLOLQJWZHOYHPRQWKSD\RXWUDWLRRQWKHOHIWD[LV2QWKHULJKWD[LVWKHDQQXDOL]HG GLYLGHQGUDWHSHUVKDUHLVVKRZQ

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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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¶VEXVLQHVVLVIRFXVHGRQVPDOOHUUHJLRQDODLUFUDIW7KHGHPDQGIRUVPDOOHU MHWVVKRXOGLQFUHDVHIDVWHUWKDQODUJHUMHWVDVDLUOLQHVVHHNWRXWLOL]HWKHVPDOOHUMHWVWRPDWFKPDUNHWGHPDQG)XUWKHUPRUHPDQ\RI WKHDLUOLQHV¶ILQDQFLDOFRQGLWLRQKDYHGHWHULRUDWHGGXULQJWKHSDQGHPLFUHVXOWLQJLQDLUOLQHVFDUU\LQJOHVVLQYHQWRU\DQGORZHULQJWKHLU DELOLW\WRSXUFKDVHDLUFUDIWZKLFKVKRXOGKHOSWRGULYHGHPDQGIRU5HJLRQDO2QH¶VSDUWVDQGOHDVLQJVHUYLFHV$OWKRXJKGHPDQGLV H[SHFWHGWREHVRIWLQWKHILUVWTXDUWHUEDVHGRQWKHVWDWHRIWKHSDQGHPLFZHVHHRSWLPLVPLQRXURSHUDWLRQVDVWKH\HDUSURJUHVVHV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 7KH YDFFLQH UROORXW ZLOO DOVR KHOS RXU 0DQXIDFWXULQJ VHJPHQW WR DGGUHVV LQFUHDVHG DEVHQWHHLVP DQG WKH UHVXOWLQJ SURGXFWLRQ FKDOOHQJHV 'HPDQG WKURXJKRXW PRVW RI RXU 0DQXIDFWXULQJ VHJPHQW KDV UHPDLQHG VWURQJ WKURXJKRXW WKH SDQGHPLF 3RVLWLYH GHYHORSPHQWVVXFKDVWKHUROORXWRI*DQGKLJKHUVSHQGLQJRQFDSLWDOSURMHFWVLQWKH86SRVWHOHFWLRQVKRXOGGULYHIXUWKHUGHPDQG 7KHDUHDRIGHPDQGWKDWKDVEHHQPRVWLPSDFWHGE\&29,'LVDW4XHVW&RQVWUXFWLRQSURMHFWV¶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¶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¶VOHDVHGDLUFUDIWDUHQRWIO\LQJDVPXFKDVDUHVXOWRI&29,'7KHUHIRUH WKHJUHHQWLPHLVQRWEHLQJFRQVXPHGRQWKHVHDLUFUDIW$VDUHVXOWWKHDFWXDOFDSLWDOH[SHQGLWXUHVRQDVVHWVDOUHDG\RZQHGKDV EHHQXVHGDVWKHFRVWVRIPDLQWDLQLQJWKHIOHHWVWDUWLQJLQWKHVHFRQGTXDUWHURI7KLVZLOOFRQWLQXHXQWLOVXFKWLPHDVWKHLPSDFW RI&29,'ZDQHVDQGWKHIOHHWXWLOL]DWLRQDJDLQZDUUDQWVWKHXVHRIGHSUHFLDWLRQDVDSUR[\IRU0DLQWHQDQFH&DSLWDO([SHQGLWXUHV $NH\WHQHWWR(,&¶VEXVLQHVVPRGHOLVWRFRQWLQXHWRLQYHVWLQRXUVXEVLGLDULHV$VVXFK(,&ZLOOFRQWLQXHWRDVVHVVSURVSHFWVWR JURZWKURXJKDGGLWLRQDOLQYHVWPHQWDVRSSRUWXQLWLHVDUHGHYHORSHGE\RXUVXEVLGLDULHVWKURXJKRXWWKH\HDU5HJLRQDO2QHLVWKHPRVW IOXLGH[DPSOHDVWKHLUEXVLQHVVRSSRUWXQLWLHVFDQDULVHDQGEHDFWHGXSRQLQVKRUWRUGHUDVKDVEHHQGHPRQVWUDWHGLQ\HDUVSDVW 7KHFXUUHQWHQYLURQPHQWLVFUHDWLQJLQWHUHVWLQJRSSRUWXQLWLHVIRU5HJLRQDO2QH¶VOHDGHUVKLSWHDPZLWK(,&¶VDELOLW\WRVXSSRUWWKHP ZLWKFDSLWDO5HJLRQDO2QH¶VDELOLW\WREHRSSRUWXQLVWLFLVDNH\DVSHFWRIWKHLUEXVLQHVVPRGHODQGRXUORQJWHUPLQYHVWPHQWVWUDWHJ\

7. LIQUIDITY AND CAPITAL RESOURCES 7KH&RUSRUDWLRQ¶VZRUNLQJFDSLWDOSRVLWLRQ)UHH&DVK)ORZDQGFDSLWDOUHVRXUFHVUHPDLQVWURQJDQGWKH&RUSRUDWLRQKDVQRORQJ WHUPGHEWFRPLQJGXHXQWLO'HFHPEHU$VWURQJEDODQFHVKHHWHQKDQFHGZLWKWKH&RUSRUDWLRQ¶VHTXLW\RIIHULQJGXULQJWKHIRXUWK TXDUWHURIFRPELQHGZLWKWKHUHFHQWFKDQJHVWRWKHFUHGLWIDFLOLW\KDYHLQFUHDVHGWKH&RUSRUDWLRQ¶VDFFHVVWRFDSLWDOWRPDNH DFTXLVLWLRQVLQYHVWLQLWVRSHUDWLQJVXEVLGLDULHVDQGSURYLGHVWKHDELOLW\WRZHDWKHUHFRQRPLFGRZQWXUQV 6LQFHWKHRQVHWRI&29,'WKH&RUSRUDWLRQKDVWDNHQVHYHUDOVWHSVWRPDQDJHLWVOLTXLGLW\WKURXJKWKHFULVLVDQGFRQWLQXHGWR H[HFXWHRQWKHSODQVSXWLQSODFHHDUOLHULQWKH\HDU7KH&RUSRUDWLRQ¶VGLOLJHQWPDQDJHPHQWRIERWKFDSLWDOH[SHQGLWXUHVDQGZRUNLQJ FDSLWDOKDVOHIWWKH&RUSRUDWLRQLQDQH[FHOOHQWSRVLWLRQ6LQFHWKHRQVHWRIWKHSDQGHPLFWKH&RUSRUDWLRQKDVJHQHUDWHGVXIILFLHQW FDVKIORZWRFRYHULWV0DLQWHQDQFH&DSLWDO([SHQGLWXUHVLWVGLYLGHQGWRVKDUHKROGHUVDQGDOO*URZWK&DSLWDO([SHQGLWXUHVZKLFKZLOO FRQWULEXWHWRIXWXUHJURZWKLQ)UHH&DVK)ORZ:RUNLQJFDSLWDORYHUWKDWSHULRGJHQHUDWHGPLOOLRQLQFDVKIRUWKH&RUSRUDWLRQ

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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¶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¶VNH\ILQDQFLDOFRYHQDQWIRULWVFUHGLWIDFLOLW\LVLWVVHQLRUOHYHUDJHUDWLRDQGLWVIDFLOLW\DOORZV IRUDPD[LPXPRI[7KH&RUSRUDWLRQ¶VOHYHUDJHUDWLRKDVLQFUHDVHGDVDUHVXOWRIWKHUHGXFWLRQLQ(%,7'$FRPSDUHGWRGXH WR WKH LPSDFW RI &29,' 'XULQJ WKH WKLUG TXDUWHU WKH &RUSRUDWLRQ DPHQGHG LWV FUHGLW IDFLOLW\ WR LQFUHDVH LWV DOORZDEOH VHQLRU OHYHUDJHUDWLRWRIURP[WR[IRUWKHTXDUWHUVHQGLQJ'HFHPEHUWKURXJK6HSWHPEHU7KH&RUSRUDWLRQGRHV QRW DW WKLV WLPH H[SHFW WR UHTXLUH FRYHQDQW UHOLHI EXW VRXJKW WHPSRUDU\ ZDLYHUV DV D SUHFDXWLRQDU\ PHDVXUH ,QFOXVLYH RI DOO DQQRXQFHPHQWVWRGDWH(,&H[SHFWVWREHZLWKLQLWVRULJLQDO[FRYHQDQWDQGLVFXUUHQWO\DW[&RQVLVWHQWZLWK(,&¶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±WR :RUNLQJFDSLWDOLQFUHDVHGDVDUHVXOWRIIXQGVGUDZQRQWKH&RUSRUDWLRQ¶VFUHGLWIDFLOLW\WRKROGLQFDVKGXULQJWKHVH XQFHUWDLQ HFRQRPLF WLPHV DQG WKH DFTXLVLWLRQ RI :,6 7KH GUDZ PDGH GXULQJ WKH ILUVW TXDUWHU ZDV PRVWO\ UHSDLG GXULQJ WKH VXEVHTXHQWTXDUWHUV3DUWLDOO\RIIVHWWLQJWKHLQFUHDVHGFDVKEDODQFHLVDVLJQLILFDQWUHGXFWLRQLQZRUNLQJFDSLWDOGXULQJWKHSHULRG LQFOXGLQJDUHGXFWLRQLQ$FFRXQWV5HFHLYDEOHGXULQJ 2YHUYLHZRI&DSLWDO6WUXFWXUH 7KH&RUSRUDWLRQ¶VFDSLWDOVWUXFWXUHLVVXPPDUL]HGEHORZ

December 31 'HFHPEHU 2020 7RWDOVHQLRUGHEWRXWVWDQGLQJ SULQFLSDOYDOXH $ 797,444 $ &RQYHUWLEOHGHEHQWXUHVRXWVWDQGLQJ SDUYDOXH 335,725 &RPPRQVKDUHV 731,343 7RWDOFDSLWDO $ 1,864,512 $

&UHGLWIDFLOLW\ 7KHVL]HRIWKH&RUSRUDWLRQ¶VFUHGLWIDFLOLW\DVDW'HFHPEHULVDSSUR[LPDWHO\ELOOLRQZLWKELOOLRQDOORFDWHGWRWKH &RUSRUDWLRQ¶V&DQDGLDQKHDGRIILFHDQG86PLOOLRQDOORFDWHGWR(,,)0DQDJHPHQW86$,QF7KHIDFLOLW\DOORZVIRUERUURZLQJVWR EHGHQRPLQDWHGLQHLWKHU&DQDGLDQRU86IXQGV$VRI'HFHPEHUWKH&RUSRUDWLRQKDGGUDZQPLOOLRQDQG86 PLOOLRQ 'HFHPEHUPLOOLRQDQG86PLOOLRQ 7KH&RUSRUDWLRQ¶VORQJWHUPGHEWQHWRIFDVKLQFUHDVHGE\PLOOLRQVLQFH'HFHPEHU7KHLQFUHDVHLVDWWULEXWDEOHWR WKHDFTXLVLWLRQRI:,6GXULQJWKHWKLUGTXDUWHURIDQGZDVSDUWLDOO\RIIVHWE\FDVKIORZJHQHUDWHGGXULQJWKH\HDU,QDGGLWLRQWKH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 VWUHQJWKHQLQJRIWKH&DQDGLDQGROODUVLQFH'HFHPEHUGHFUHDVHGWKH&DQDGLDQFRQYHUWHGDPRXQWRILWV86GROODUORQJWHUP GHEWRXWVWDQGLQJ 'XULQJ WKH SHULRG WKH &RUSRUDWLRQ XVHG GHULYDWLYHV WKURXJK VHYHUDO FURVVFXUUHQF\ EDVLV VZDSV ³VZDS´ ZLWK D PHPEHU RI WKH &RUSRUDWLRQ¶V OHQGLQJ V\QGLFDWH 7KH VZDS UHTXLUHV WKDW IXQGV DUH H[FKDQJHG EDFN LQ RQH PRQWK DW WKH VDPH WHUP XQOHVV ERWK SDUWLHVDJUHHWRH[WHQGWKHVZDSIRUDQDGGLWLRQDOPRQWK%\HQWHULQJLQWRWKHVZDSWKH&RUSRUDWLRQFDQWDNHDGYDQWDJHRIORZHU LQWHUHVWUDWHV7KHVZDSPLWLJDWHVWKHULVNRIFKDQJHVLQWKHYDOXHRIWKH86GROODUERUURZLQJVDVLWZLOOEHH[FKDQJHGIRUWKHVDPH &DQDGLDQ HTXLYDOHQW LQ RQH PRQWK $W 'HFHPEHU 86 PLOOLRQ 'HFHPEHU ± 86 PLOOLRQ RI WKH &RUSRUDWLRQ¶V86GHQRPLQDWHGERUURZLQJVDUHKHGJHGZLWKWKHVHVZDSV 'XULQJWKHVHFRQGTXDUWHUWKH&RUSRUDWLRQDPHQGHGLWVLQWHUHVWUDWHVZDSZLWKPHPEHUVRILWVOHQGLQJV\QGLFDWH7KHDPHQGPHQW UHGXFHGWKHHIIHFWLYHIL[HGLQWHUHVWUDWHXQGHUWKHVZDSDQGH[WHQGHGWKHPDWXULW\RIWKHVZDSWR0D\ &RQYHUWLEOH'HEHQWXUHV 7KH IROORZLQJ VXPPDUL]HV WKH FRQYHUWLEOH GHEHQWXUHV RXWVWDQGLQJ DV DW 'HFHPEHU DQG FKDQJHV LQ WKH DPRXQWV RI FRQYHUWLEOHGHEHQWXUHVRXWVWDQGLQJGXULQJWKH\HDUHQGHG'HFHPEHU

6HULHV

%DODQFHEHJLQQLQJ 5HGHHPHG %DODQFHHQG 3DUYDOXH RI\HDU ,VVXHG &RQYHUWHG 0DWXUHG RI\HDU 8QVHFXUHG'HEHQWXUHV-XQH 8QVHFXUHG'HEHQWXUHV'HFHPEHU 8QVHFXUHG'HEHQWXUHV-XQH 8QVHFXUHG'HEHQWXUHV0DUFK 7RWDO

6KDUH&DSLWDO 7KHIROORZLQJVXPPDUL]HVWKHFKDQJHVLQWKHVKDUHVRXWVWDQGLQJRIWKH&RUSRUDWLRQGXULQJWKH\HDUHQGHG'HFHPEHU

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¶V2FWREHUFRPPRQVKDUHRIIHULQJDQGVKDUHVLVVXHGLQFRQQHFWLRQZLWKWKH DFTXLVLWLRQV RI /9 &RQWURO $:, DQG :,6 7KH LQFUHDVH LV SDUWLDOO\ RIIVHW E\ VKDUHV UHSXUFKDVHG DQG FDQFHOOHG XQGHU WKH &RUSRUDWLRQ¶V1&,%WKURXJKRXW

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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¶V FRPPRQ VKDUHV 0DQDJHPHQW¶V LQWHQWLRQLVWRUHQHZWKH1&,%DQQXDOO\DVSDUWRIQRUPDOFRXUVHDQGSODQVWRDSSO\IRUDUHQHZDORILWV1&,%ZKHQWKHFXUUHQW1&,% H[SLUHVRQ)HEUXDU\ 6FKHGXOHRI)LQDQFLDO&RPPLWPHQWV 7KHIROORZLQJDUHWKHILQDQFLDOFRPPLWPHQWVRIWKH&RUSRUDWLRQDQGLWVVXEVLGLDULHVDW'HFHPEHU

Between 1 year Total Less Than 1 year and 5 years More than 5 years /RQJWHUPGHEW SULQFLSDOYDOXH &RQYHUWLEOHGHEHQWXUHV SDUYDOXH /HDVHSD\PHQWVH[FOXGHGIURPULJKWRIXVHOHDVHOLDELOLW\ 5LJKWRIXVHOHDVHOLDELOLW\SD\PHQWV XQGLVFRXQWHGYDOXH

8. RELATED PARTY TRANSACTIONS 7KHIROORZLQJWUDQVDFWLRQVZHUHFDUULHGRXWE\WKH&RUSRUDWLRQZLWKUHODWHGSDUWLHV 3URSHUW\/HDVHV 7KH&RUSRUDWLRQOHDVHVVHYHUDOEXLOGLQJVIURPUHODWHGSDUWLHVZKRZHUHYHQGRUVRIEXVLQHVVHVWKDWWKH&RUSRUDWLRQKDVDFTXLUHG 7KHVH YHQGRUV DUH FRQVLGHUHG UHODWHG SDUWLHV EHFDXVH RI WKHLU FRQWLQXHG LQYROYHPHQW LQ WKH PDQDJHPHQW RI WKRVH DFTXLUHG EXVLQHVVHV7KHVHOHDVHVDUHFRQVLGHUHGWREHDWPDUNHWWHUPVDQGDUHUHFRJQL]HGLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDWWKH H[FKDQJH DPRXQWV 7KH &RUSRUDWLRQ¶V KHDG RIILFH UHORFDWHG LQ 'HFHPEHU WR D SUHPLVH QRW FRQWUROOHG E\ D GLUHFWRU RI WKH &RUSRUDWLRQ7KHUHIRUHWKHUHDUHQRUHODWHGSDUW\OHDVHFRVWVIRUWKHKHDGRIILFHRIWKH&RUSRUDWLRQLQ7KHWRWDOFRVWVLQFXUUHG LQIRUUHODWHGSDUW\OHDVHVZDVPLOOLRQ ±PLOOLRQ DQGWKHOHDVHWHUPPDWXULWLHVUDQJHIURPWR .H\0DQDJHPHQW&RPSHQVDWLRQ 7KH &RUSRUDWLRQ LGHQWLILHV LWV NH\ PDQDJHPHQW SHUVRQQHO EHLQJ WKRVH SHUVRQV KDYLQJ DXWKRULW\ DQG UHVSRQVLELOLW\ IRU SODQQLQJ GLUHFWLQJDQGFRQWUROOLQJWKHDFWLYLWLHVRIWKHHQWLW\GLUHFWO\RULQGLUHFWO\LQFOXGLQJDQ\GLUHFWRURIWKH&RUSRUDWLRQ¶VERDUG ZKHWKHU H[HFXWLYHRURWKHUZLVH 7KHNH\PDQDJHPHQWSHUVRQQHOLQFOXGHWKHH[HFXWLYHPDQDJHPHQWWHDPDQGWKHERDUGRIGLUHFWRUV &RPSHQVDWLRQH[SHQVHGIRUNH\PDQDJHPHQWGXULQJWKH\HDUDQGWKHFRPSDUDWLYH\HDULVGHWDLOHGLQWKHWDEOHEHORZ 6KDUHEDVHGFRPSHQVDWLRQYHVWVRYHUDSHULRGRIXSWRWKUHH\HDUVDQGLVH[SHQVHGRYHUWKDWSHULRG

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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

9. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS 7KHSUHSDUDWLRQRIFRQVROLGDWHGILQDQFLDOVWDWHPHQWVUHTXLUHVPDQDJHPHQWWRXVHMXGJPHQWLQDSSO\LQJLWVDFFRXQWLQJSROLFLHVDQG HVWLPDWHV DQG DVVXPSWLRQV DERXW WKH IXWXUH (VWLPDWHV DQG RWKHU MXGJPHQWV DUH FRQWLQXRXVO\ HYDOXDWHG DQG DUH EDVHG RQ PDQDJHPHQW¶VH[SHULHQFHDQGRWKHUIDFWRUVLQFOXGLQJH[SHFWDWLRQVDERXWIXWXUHHYHQWVWKDWDUHEHOLHYHGWREHUHDVRQDEOHXQGHUWKH FLUFXPVWDQFHV7KHIROORZLQJGLVFXVVHVWKHPRVWVLJQLILFDQWDFFRXQWLQJMXGJPHQWVDQGHVWLPDWHVWKDWWKH&RUSRUDWLRQKDVPDGHLQ WKHSUHSDUDWLRQRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV7KHVHXQGHUO\LQJDVVXPSWLRQVDUHUHYLHZHGRQDQRQJRLQJEDVLV$FWXDO UHVXOWVFRXOGGLIIHUPDWHULDOO\IURPWKRVHHVWLPDWHV Accounting Estimates %XVLQHVV&RPELQDWLRQV 7KH &RUSRUDWLRQ¶V EXVLQHVV DFTXLVLWLRQV KDYH EHHQ DFFRXQWHG IRU XVLQJ WKH DFTXLVLWLRQ PHWKRG RI DFFRXQWLQJ 8QGHU WKH DFTXLVLWLRQPHWKRGWKHDFTXLULQJFRPSDQ\DGGVWRLWVVWDWHPHQWRIILQDQFLDOSRVLWLRQWKHHVWLPDWHGIDLUYDOXHVRIWKHDFTXLUHG FRPSDQ\¶VDVVHWVDQGDVVXPHGOLDELOLWLHV7KHUHDUHYDULRXVDVVXPSWLRQVPDGHZKHQGHWHUPLQLQJWKHIDLUYDOXHVRIWKHDFTXLUHG FRPSDQ\¶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³,3´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¶VOLDELOLWLHVIRUFRQWLQJHQWFRQVLGHUDWLRQDVVRFLDWHGZLWKWKHHDUQRXWSRUWLRQRILWVDFTXLVLWLRQVDUHUHDVVHVVHG HDFKSHULRGHQGVXEVHTXHQWWRWKHUHODWHGDFTXLVLWLRQ7KHFDUU\LQJYDOXHRIWKHOLDELOLW\LVEDVHGRQDQHVWLPDWHRIERWKWKH DPRXQW RI WKH SRWHQWLDO SD\PHQW DQG SUREDELOLW\ WKDW WKH HDUQ RXW ZLOO EH SDLG 'XULQJ WKH \HDU WKH HVWLPDWHG OLDELOLW\ IRU DGGLWLRQDOSXUFKDVHFRQVLGHUDWLRQDVVRFLDWHGZLWK0RQFWRQ)OLJKW&ROOHJHZDVUHGXFHGWRUHIOHFWH[SHFWHGHDUQLQJVOHYHOVGXULQJ WKHUHPDLQLQJHDUQRXWSHULRG7KLVUHVXOWHGLQDUHFRYHU\RIPLOOLRQ ±PLOOLRQ DQGLVLQFOXGHGZLWKLQ³2WKHU´LQ WKH6WDWHPHQWRI,QFRPH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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¶V ZLQGRZ FRQVWUXFWLRQFRQWUDFWVDVHYLGHQFHRIFRPSOHWLRQRYHUWLPH 6LQFH WKH &RUSRUDWLRQ KDV PDQ\ FRQWUDFWV LQ SURFHVV DW DQ\ JLYHQ WLPH WKHVH FKDQJHV LQ HVWLPDWHV FDQ RIIVHW HDFK RWKHU ZLWKRXWLPSDFWLQJRYHUDOOSURILWDELOLW\+RZHYHUFKDQJHVLQFRVWHVWLPDWHVRQODUJHUPRUHFRPSOH[FRQVWUXFWLRQSURMHFWVFDQ KDYHDPDWHULDOLPSDFWRQWKH&RUSRUDWLRQ¶VFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDQGDUHUHIOHFWHGLQWKHUHVXOWVRIRSHUDWLRQVZKHQ WKH\EHFRPHNQRZQ (VWLPDWLQJWKHWUDQVDFWLRQSULFHRIDFRQWUDFWLVDQLQYROYHGSURFHVVWKDWLVDIIHFWHGE\DYDULHW\RIXQFHUWDLQWLHVWKDWGHSHQGRQ WKHRXWFRPHRIDVHULHVRIIXWXUHHYHQWV7KHHVWLPDWHVPXVWEHUHYLVHGHDFKSHULRGWKURXJKRXWWKHOLIHRIWKHFRQWUDFWZKHQ HYHQWV RFFXU DQG DV XQFHUWDLQWLHV DUH UHVROYHG 7KH PDMRU IDFWRUV WKDW PXVW EH FRQVLGHUHG LQ GHWHUPLQLQJ WRWDO HVWLPDWHG UHYHQXHLQFOXGH a WKHEDVLFFRQWUDFWSULFH b FRQWUDFWRSWLRQV c FKDQJHRUGHUV d FODLPVDQG e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¶VDLUFUDIWIOHHWSODQVDQGWKHFDVKIORZVH[SHFWHG WR EH JHQHUDWHG IURP WKHP&KDQJHV WR WKHVHHVWLPDWHVZKLFK FDQ EHVLJQLILFDQW FRXOG EH FDXVHG E\ DYDULHW\ RI IDFWRUV LQFOXGLQJFKDQJHVWRPDLQWHQDQFHSURJUDPVFKDQJHVLQXWLOL]DWLRQRIWKHDLUFUDIWFKDQJLQJPDUNHWSULFHVIRUDLUFUDIWRIWKHVDPH RU VLPLODU W\SHV DQG FKDQJHV LQ WKH XWLOL]DWLRQ RI RWKHU PDMRU PDQXIDFWXULQJ HTXLSPHQW DQG EXLOGLQJV (VWLPDWHV DQG DVVXPSWLRQVDUHHYDOXDWHGDWOHDVWDQQXDOO\*HQHUDOO\WKHVHDGMXVWPHQWVDUHDFFRXQWHGIRUDVDFKDQJHLQHVWLPDWHRQD SURVSHFWLYHEDVLVWKURXJKGHSUHFLDWLRQRUDPRUWL]DWLRQH[SHQVH)RUWKHSXUSRVHVRIVHQVLWLYLW\DQDO\VLVRQWKHVHHVWLPDWHVD UHGXFWLRQWRUHVLGXDOYDOXHVRQWKH&RUSRUDWLRQ¶VDLUFUDIWZLWKUHPDLQLQJXVHIXOOLYHVJUHDWHUWKDQILYH\HDUVDVDW'HFHPEHU ZRXOGUHVXOWLQDQLQFUHDVHRIDSSUR[LPDWHO\PLOOLRQ PLOOLRQ WRDQQXDOGHSUHFLDWLRQH[SHQVH)RUWKH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 &RUSRUDWLRQ¶VDLUFUDIWZLWKVKRUWHUUHPDLQLQJXVHIXOOLYHVDQGRWKHUPDMRUPDQXIDFWXULQJHTXLSPHQWDQGEXLOGLQJVWKHUHVLGXDO YDOXHVDUHQRWH[SHFWHGWRFKDQJHVLJQLILFDQWO\ ,PSDLUPHQW&RQVLGHUDWLRQVRQ/RQJOLYHG$VVHWV *RRGZLOO DQG LQGHILQLWH OLIH LQWDQJLEOH DVVHWV DUH QRW DPRUWL]HG *RRGZLOO DQG DOO LQGHILQLWH OLIH LQWDQJLEOHV DUH DVVHVVHG IRU LPSDLUPHQWDWOHDVWDQQXDOO\,PSDLUPHQWWHVWLQJLVSHUIRUPHGRQORQJOLYHGDVVHWVE\FRPSDULQJWKHFDUU\LQJDPRXQWRIWKH DVVHW RU FDVK JHQHUDWLQJ XQLW ³&*8´ WR LWV UHFRYHUDEOH DPRXQW ZKLFK LV FDOFXODWHG DV WKH KLJKHU RI DQ DVVHW¶V RU FDVK JHQHUDWLQJXQLW¶VIDLUYDOXHOHVVFRVWVRIGLVSRVDODQGLWVYDOXHLQXVH )DLU YDOXH OHVV FRVWV RI GLVSRVDO FDOFXODWHV WKH UHFRYHUDEOH DPRXQW XVLQJ (%,7'$ PXOWLSOHV EDVHG RQ ILQDQFLDO IRUHFDVWV SUHSDUHGE\PDQDJHPHQW OHYHOZLWKLQWKHIDLUYDOXHKLHUDUFK\ ,QWDQJLEOH$VVHWV 7KH UHFRYHUDEOH DPRXQW LV IRUHFDVWHG ZLWK PDQDJHPHQW¶V EHVW HVWLPDWH XVLQJ PDUNHW SDUWLFLSDQW DVVXPSWLRQV FRQVLGHULQJ KLVWRULFDODQGH[SHFWHGRSHUDWLQJSODQVFXUUHQWVWUDWHJLHVHFRQRPLFFRQGLWLRQVDQGWKHJHQHUDORXWORRNIRUWKHLQGXVWU\DQG PDUNHWVLQZKLFKWKHFDVKJHQHUDWLQJXQLWVRSHUDWH ,QOLJKWRIWKH&29,'SDQGHPLFDQGWKHVWDWHRIWKHRLODQGJDVLQGXVWU\PDQDJHPHQWXVHGDGLVFRXQWHGFDVKIORZPRGHOWR DVVHVVWKHUHFRYHUDELOLW\RIWKHLQGHILQLWHOLYHGLQWDQJLEOHDVVHWVDWWKH&RUSRUDWLRQ¶VVXEVLGLDULHVH[SRVHGWRWKLVVHFWRULQWKH ILUVW TXDUWHU RI 7KH XQSUHFHGHQWHG GURS LQ RLO SULFHV H[DFHUEDWHG E\ D GHFUHDVH LQ GHPDQG GXH WR WKH &29,' SDQGHPLFKDVFDXVHGPDQ\FRPSDQLHVWRGHOD\RUFDQFHOODUJHFDSLWDOSURMHFWV7KHUHIRUHWKHGHPDQGIRUSURGXFWVSURYLGHGE\ WKH &RUSRUDWLRQ¶V RSHUDWLRQV LQ $OEHUWD LV H[SHFWHG WR EH GHSUHVVHG IRU DQ H[WHQGHG SHULRG RI WLPH $V D UHVXOW RI WKH DVVHVVPHQWWKH&RUSRUDWLRQUHFRUGHGDLPSDLUPHQWFKDUJHDJDLQVWLQWDQJLEOHDVVHWVGXULQJWKHILUVWTXDUWHURI 7KHUHFRYHUDEOHDPRXQWRIWKHUHPDLQLQJ&*8VZDVEDVHGRQYDOXHLQXVHXVLQJDGLVFRXQWHGFDVKIORZPRGHOZKLFKUHTXLUHV PDQDJHPHQWWRPDNHDQXPEHURIVLJQLILFDQWDVVXPSWLRQVLQFOXGLQJDVVXPSWLRQVUHODWLQJWRIXWXUHRSHUDWLQJSODQVGLVFRXQW UDWHV DQG IXWXUH JURZWK UDWHV 7KH DVVXPSWLRQV LQFOXGH WKH &RUSRUDWLRQ¶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¶V DVVHVVPHQW RI PDUNHW SDUWLFLSDQW DVVXPSWLRQV 7KH&RUSRUDWLRQXVHGLWVIRUHFDVWHG(%,7'$EDVHGRQLWVDSSURYHGEXGJHWDQGXVHGLWVEHVWHVWLPDWHRIPDUNHWSDUWLFLSDQW (%,7'$PXOWLSOHV /HYHOZLWKLQWKHIDLUYDOXHKLHUDUFK\ 7KH(%,7'$PXOWLSOHXVHGIRUWKH$HURVSDFH $YLDWLRQVHJPHQWZDV [ ±[ DQGZDV[ ±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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 ZHUHLQLWLDOO\UHFRUGHGVXFKGLIIHUHQFHVZLOOLPSDFWWKHFXUUHQWDQGGHIHUUHGWD[DVVHWVDQGOLDELOLWLHVLQWKHSHULRGLQZKLFKVXFK GHWHUPLQDWLRQLVPDGH Critical Accounting Judgments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¶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¶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

10. ACCOUNTING POLICIES 7KHDFFRXQWLQJSROLFLHVRIWKH&RUSRUDWLRQXVHGLQWKHGHWHUPLQDWLRQRIWKHUHVXOWVIRU\HDUVHQGHG'HFHPEHUDQG WKDW DUH GLVFXVVHG DQG DQDO\]HG LQ WKLV UHSRUW DUH GHVFULEHG LQ GHWDLO LQ 1RWH RI WKH &RUSRUDWLRQ¶V FRQVROLGDWHG ILQDQFLDO VWDWHPHQWV

11. CONTROLS AND PROCEDURES Internal Controls over Financial Reporting 0DQDJHPHQWLVUHVSRQVLEOHIRUHVWDEOLVKLQJDQGPDLQWDLQLQJLQWHUQDOFRQWUROVRYHUILQDQFLDOUHSRUWLQJWRSURYLGHUHDVRQDEOHDVVXUDQFH ZLWKUHJDUGVWRWKHUHOLDELOLW\RIILQDQFLDOUHSRUWLQJDQGSUHSDUDWLRQRIILQDQFLDOVWDWHPHQWVLQDFFRUGDQFHZLWK,)56DVGHILQHGXQGHU 1DWLRQDO,QVWUXPHQWLVVXHGE\WKH&DQDGLDQ6HFXULWLHV$GPLQLVWUDWRUV&RQVLVWHQWZLWKWKHFRQFHSWRIUHDVRQDEOHDVVXUDQFH WKH&RUSRUDWLRQUHFRJQL]HVWKDWDOOV\VWHPVRILQWHUQDOFRQWUROVQRPDWWHUKRZZHOOGHVLJQHGKDYHLQKHUHQWOLPLWDWLRQV$VVXFKWKH &RUSRUDWLRQ¶VLQWHUQDOFRQWUROVRYHUILQDQFLDOUHSRUWLQJFDQRQO\SURYLGHUHDVRQDEOHDQGQRWDEVROXWHDVVXUDQFHWKDWWKHREMHFWLYHVRI VXFKFRQWUROVDUHPHW $QDVVHVVPHQWRILQWHUQDOFRQWUROVRYHUILQDQFLDOUHSRUWLQJZDVFRQGXFWHGE\WKH&RUSRUDWLRQ¶VPDQDJHPHQWXQGHUVXSHUYLVLRQE\ WKH&KLHI([HFXWLYH2IILFHUDQG&KLHI)LQDQFLDO2IILFHU0DQDJHPHQWKDVXVHGWKH,QWHUQDO&RQWURO±,QWHJUDWHG)UDPHZRUNWR HYDOXDWHWKH&RUSRUDWLRQ¶VLQWHUQDOFRQWUROVRYHUILQDQFLDOUHSRUWLQJZKLFKLVUHFRJQL]HGDVDVXLWDEOHIUDPHZRUNGHYHORSHGE\WKH &RPPLWWHHRI6SRQVRULQJ2UJDQL]DWLRQVRIWKH7UHDGZD\&RPPLVVLRQ ³&262´ 0DQDJHPHQWKDVHYDOXDWHGWKHGHVLJQDQGRSHUDWLQJHIIHFWLYHQHVVRIWKH&RUSRUDWLRQ¶VLQWHUQDOFRQWUROVRYHUILQDQFLDOUHSRUWLQJDVDW 'HFHPEHUDQGKDVFRQFOXGHGWKDWWKHLQWHUQDOFRQWUROVRYHUILQDQFLDOUHSRUWLQJDUHHIIHFWLYH :,6ZDVDFTXLUHGRQ-XO\,QDFFRUGDQFHZLWKVHFWLRQ E RI1DWLRQDO,QVWUXPHQWPDQDJHPHQWKDVOLPLWHGWKH VFRSHRILWVGHVLJQDQGHYDOXDWLRQRILQWHUQDOFRQWUROVRYHUILQDQFLDOUHSRUWLQJWRH[FOXGHWKHFRQWUROVDW:,6:,6KDGUHYHQXHRI PLOOLRQLQFOXGHGLQWKHFRQVROLGDWHGUHVXOWVRIWKH&RUSRUDWLRQIRUWKHSHULRGHQGHG'HFHPEHU$VDW'HFHPEHU

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 LWKDGFXUUHQWDVVHWVRIPLOOLRQQRQFXUUHQWDVVHWVRIPLOOLRQFXUUHQWOLDELOLWLHVRIPLOOLRQDQGQRQFXUUHQW OLDELOLWLHVRIPLOOLRQ 7KHUHKDYHEHHQQRRWKHUPDWHULDOFKDQJHVWRWKH&RUSRUDWLRQ¶VLQWHUQDOFRQWUROVGXULQJWKH\HDUWKDWZRXOGKDYHPDWHULDOO\ DIIHFWHGRUDUHOLNHO\WRPDWHULDOO\DIIHFWWKHLQWHUQDOFRQWUROVRYHUILQDQFLDOUHSRUWLQJ Disclosure Controls and Procedures 0DQDJHPHQW KDV HVWDEOLVKHG DQG PDLQWDLQHG GLVFORVXUH FRQWUROV DQG SURFHGXUHV WR SURYLGH UHDVRQDEOH DVVXUDQFH WKDW PDWHULDO LQIRUPDWLRQ UHODWLQJ WR WKH &RUSRUDWLRQ LV PDGH NQRZQ WR PDQDJHPHQW LQ D WLPHO\ PDQQHU DQG WKDW LQIRUPDWLRQ UHTXLUHG WR EH GLVFORVHG E\ WKH &RUSRUDWLRQ LV UHSRUWHG ZLWKLQ WKH WLPH SHULRGV SUHVFULEHG E\ DSSOLFDEOH VHFXULWLHV OHJLVODWLRQ 0DQDJHPHQW KDV FRQFOXGHGWKDWGLVFORVXUHFRQWUROVDQGSURFHGXUHVZHUHHIIHFWLYHDVDW'HFHPEHU

12. RISK FACTORS 7KH &RUSRUDWLRQ DQG LWV VXEVLGLDULHV ³6XEVLGLDU\´ RU ³6XEVLGLDULHV´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³(50´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¶V UHVSHFWLYH IXQFWLRQV LH )LQDQFH ,7 2SHUDWLRQV DQGRU +XPDQ 5HVRXUFHV LQ WKH GHVLJQ DQG LPSOHPHQWDWLRQ RI WKH FRUUHVSRQGLQJ ULVN PLWLJDWLQJDFWLRQV7KH5LVNDQG&RQWUROVGHSDUWPHQWZLOOIXUWKHUSURYLGHDOHYHORIDVVXUDQFHRQWKHHIIHFWLYHQHVVDQGHIILFLHQF\RI FRQWUROVRYHUWKHVHPLWLJDWLQJDFWLRQVDVQHFHVVDU\$VXPPDU\RIWKLVULVNHYDOXDWLRQLVSUHVHQWHGHDFKTXDUWHUWRWKHPHPEHUVRI WKH $XGLW &RPPLWWHH DQG WKH %RDUG RI 'LUHFWRUV WR UHSRUW RQ WKH FKDQJHV LQ WKH RYHUDOO SRVLWLRQ RI WKH &RPSDQ\¶V FXUUHQW ULVN H[SRVXUHVDQGPLWLJDWLRQDFWLYLWLHVIURPWKHSUHYLRXVTXDUWHU COVID-19 RELATED RISKS ,Q ODWH D QRYHO VWUDLQ RI FRURQDYLUXV NQRZQ DV &29,' HPHUJHG LQ &KLQD DQG VXEVHTXHQWO\ VSUHDG DURXQG WKH ZRUOG GLVUXSWLQJ HFRQRPLF VRFLDO DQG SROLWLFDO ODQGVFDSHV &29,' ZDV GHFODUHG D ZRUOGZLGH SDQGHPLF E\ WKH :RUOG +HDOWK 2UJDQL]DWLRQRQ0DUFK%RWKWKHGXUDWLRQRIWKLVSDQGHPLFDQGWKHFRQWLQXHGH[WHQWRILWVLPSDFWVDUHFXUUHQWO\XQFHUWDLQ ZLWKUHVSHFWWREURDGHUJOREDOLPSOLFDWLRQVDQGRQWKH&RUSRUDWLRQ¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 6LQFH &29,' UHODWHG ULVNV DUH GLVFXVVHG EHORZ WKH LPSDFW RI &29,' ZLOO QRW EH GLVFXVVHG LQ FRQMXQFWLRQ ZLWK WKH RWKHU LGHQWLILHG ULVNV WKDW IROORZ ZLWKLQ WKLV VHFWLRQ 7KH SRWHQWLDO QHJDWLYH LPSDFWV RI WKH &29,' SDQGHPLF RQ WKH &RUSRUDWLRQ¶V EXVLQHVVUHVXOWVIURPRSHUDWLRQVILQDQFLDOFRQGLWLRQDQGKXPDQFDSLWDOLQFOXGHEXWDUHQRWOLPLWHGWR ([WHUQDO x :HDNHQHG HFRQRPLF FRQGLWLRQV DQG RXWORRNV OHDGLQJ WR ORZHU HFRQRPLF VWLPXOXV HOHYDWHG XQHPSOR\PHQW OHYHOV DQG UHGXFHG GLVSRVDEOH LQFRPH FRXOG OHDG WR D VKLIW LQ FXVWRPHU GHPDQG WR UHWDLQ FHUWDLQ SURGXFWV RU VHUYLFHV WKDW WKH &RUSRUDWLRQGHOLYHUV x ,PSOHPHQWDWLRQRIUHVWULFWLYHPHDVXUHVWRVORZWKHVSUHDGRIWKH&29,'RXWEUHDNDVUHFRPPHQGHGE\YDULRXVIHGHUDO SURYLQFLDOVWDWHDQGORFDOJRYHUQPHQWDODXWKRULWLHVKDYHKDGDQGFRQWLQXHWRKDYHDGLUHFWLPSDFWRQWKH&RUSRUDWLRQE\ GLVUXSWLQJRUVXVSHQGLQJFHUWDLQRILWVRSHUDWLRQV 2SHUDWLRQDO x ,QDELOLW\WRVXVWDLQRSHUDWLRQDOSHUIRUPDQFHOHYHOVEH\RQGLPSOHPHQWHGFRVWUHGXFWLRQPHDVXUHVLQFRQQHFWLRQZLWK&29,' OHDGLQJWRWKHLQDELOLW\WRPHHWILQDQFLDOREOLJDWLRQVRUSD\GLYLGHQGVIURPLWVLQWHUQDOVRXUFHV x 1HZODZVUHJXODWLRQVDQGRWKHUJRYHUQPHQWLQWHUYHQWLRQVLQUHVSRQVHWRWKH&29,'SDQGHPLFLQFOXGLQJZRUNSODFH VDIHW\UHODWHG PHDVXUHV UHTXLULQJ SK\VLFDO GLVWDQFLQJ WKDW KDV UHVXOWHG LQ DGGLWLRQDO FRVWV XQSODQQHG RSHUDWLRQDO LPSOLFDWLRQVRUWKDWFRXOGKDYHDQDGYHUVHHIIHFWRQGHPDQGIRUWKH&RUSRUDWLRQ¶VSURGXFWVDQGVHUYLFHV x 'LVUXSWLRQVLQRSHUDWLRQVUHODWHGWRWKHLQDELOLW\RIWKH&RUSRUDWLRQ¶VHPSOR\HHVVXEFRQWUDFWRUVRURWKHUVWDNHKROGHUVWR ZRUNLQDQRUPDOPDQQHUDVDUHVXOWRILPSRVHG&29,'UHVWULFWLRQVLQFOXGLQJTXDUDQWLQHV x 8QDQWLFLSDWHGFKDQJHVWRVSHFLILFLQGXVWU\UHODWHGILQDQFLDOPXOWLSOHVDSSOLHGWRFRPSDQLHVDVDUHVXOWRI&29,'UHODWHG GLVUXSWLRQV FRXOG UHVXOW LQ OHVV IDYRUDEOH RSSRUWXQLWLHV KDYLQJ D QHJDWLYH LPSDFW RQ WKH FRVW DQG DELOLW\ WR FRPSOHWH DFTXLVLWLRQV,QDGGLWLRQWKHFXUUHQWHQYLURQPHQWFRXOGPDNHSHUIRUPLQJGXHGLOLJHQFHRQSRWHQWLDOWDUJHWFRPSDQLHVPRUH GLIILFXOW x ,QFUHDVHG F\EHUVHFXULW\ DWWDFNV WKURXJK &29,' UHODWHG PDOLFLRXV DFWLYLWLHV FRXOG OHDG WR LQFUHDVHG SRWHQWLDO SULYDF\ EUHDFKHVRUUDQVRPZDUHLQFLGHQWV x ,QFUHDVHGFRQVLGHUDWLRQIRUFXVWRPHUVWRVHHNUHOLHIIURPFRQWUDFWXDOREOLJDWLRQVXQGHUWKHIRUFHPDMHXUHFODXVHOHDGLQJWR GHIHUUDODQGRUUHOHDVHRIWKHREOLJDWLRQ x &29,' KDV VHYHUHO\ LPSDFWHG WKH DYLDWLRQ LQGXVWU\ GXH WR FRQVWDQWO\ FKDQJLQJ WUDYHO UHVWULFWLRQV DQG TXDUDQWLQH SHULRGV7KH&RUSRUDWLRQ¶VDELOLW\WRRSHUDWHFRXOGEHQHJDWLYHO\LPSDFWHGGHSHQGLQJRQWKHQDWXUHDQGGXUDWLRQRIIXWXUH UHVWULFWLRQV x *RYHUQPHQWVDURXQGWKHZRUOGKDYHLPSOHPHQWHGWUDYHOUHVWULFWLRQVZKLFKPD\LPSHGHLQWHUSURYLQFLDODQGLQWHUQDWLRQDO RSHUDWLRQVLQFOXGLQJWKHPRYHPHQWRISHUVRQQHOLQIORZRIIRUHLJQVWXGHQWSLORWVDQGWKHSXUVXLWRIRSSRUWXQLWLHVLQRWKHU MXULVGLFWLRQVDOORIZKLFKFRXOGLPSDFWSURILWDELOLW\ x 3RWHQWLDOGLVUXSWLRQVWRWKH&RUSRUDWLRQ¶VVXSSO\FKDLQGXHWR&29,'FRXOGLPSDFWWKH&RUSRUDWLRQ¶VDELOLW\WRFRQWLQXH RSHUDWLQJDVQRUPDODQGRUUHGXFHSURILWDELOLW\LIDOWHUQDWLYHVDUHPRUHFRVWO\RUFDXVHLQHIILFLHQFLHV )LQDQFLDO x 1HJDWLYHLPSDFWVRQJOREDOFUHGLWDQGFDSLWDOPDUNHWVFRXOGLPSDFWWKH&RUSRUDWLRQ¶VDELOLW\WRUHILQDQFHUDLVHIXQGVIRU QHZHTXLW\RUUHQHZLWVGHEWILQDQFLQJDUUDQJHPHQWVRQUHDVRQDEOHWHUPV x &RQWLQXHGYRODWLOLW\LQWKHSXEOLFWUDGLQJPDUNHWVPD\KDYHDQXQNQRZQRUDEQRUPDOLPSDFWRQIXWXUHVHFXULWLHVSULFLQJ x 6LJQLILFDQW YRODWLOLW\ LQ FRPPRGLW\ SULFLQJ FRXOG UHVXOW IURP LQFUHDVHG FRVWV RU UHGXFHG VXSSO\ UHODWHG WR &29,' HFRQRPLFFRQGLWLRQV x 3HUPDQHQWDVVHWZULWHGRZQVFRXOGUHVXOWIURPDGMXVWPHQWVWRFRVWVWUXFWXUHV x 7LJKWHUFUHGLWFRQGLWLRQVFRXOGEHLPSRVHGE\WKH&RUSRUDWLRQ¶VVWDNHKROGHUVWRPDQDJHFDVKIORZV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 +XPDQ&DSLWDO x /RVVRINH\OHDGHUVKLSSHUVRQQHODWHLWKHUWKH&RUSRUDWLRQ¶VKHDGRIILFHOHYHORU6XEVLGLDU\OHYHOZKHWKHULWEHWKURXJK FRQWUDFWLQJWKHYLUXVRUREVHUYLQJHPHUJHQF\UHVSRQVHPHDVXUHVFRXOGLPSDFWWKHVWUDWHJLFGLUHFWLRQRIWKHEXVLQHVVLQWKH VKRUWWHUP x 7KHUHVWULFWLYHPHDVXUHVWRVORZWKHVSUHDGRIWKH&29,'RXWEUHDNWKDWKDYHEHHQLPSOHPHQWHGRUUHFRPPHQGHGE\ YDULRXVIHGHUDOSURYLQFLDOVWDWHDQGORFDOJRYHUQPHQWDODXWKRULWLHVFRXOGKDYHDGLUHFWLPSDFWRQHPSOR\HHV¶FRQWLQXHG DELOLW\WRZRUN x ,QFUHDVHG ODERXUUHODWHG PDWWHUV FRXOG UHVXOW IURP KDYLQJ WR PDLQWDLQ DOLJQPHQW LQ ODERXU DJUHHPHQWV DQG ODZV ZLWK &29,'SURWRFROV KEY RISKS 7KHPRVWVLJQLILFDQWULVNVDUHFDWHJRUL]HGE\WKHLUVRXUFHDQGGHVFULEHGDVIROORZV (FRQRPLFDQG*HRSROLWLFDO&RQGLWLRQV &RPSHWLWLRQ *RYHUQPHQW)XQGLQJIRU)LUVW1DWLRQV+HDOWK&DUH $FFHVVWR&DSLWDO 0DUNHW7UHQGVDQG,QQRYDWLRQ *HQHUDO8QLQVXUHG/RVV &OLPDWH External $FWVRI7HUURULVP 3DQGHPLF /HYHODQG7LPLQJRI'HIHQFH6SHQGLQJ *RYHUQPHQW)XQGHG'HIHQFHDQG6HFXULW\3URJUDPV 6LJQLILFDQW&RQWUDFWVDQG&XVWRPHUV 2SHUDWLRQDO3HUIRUPDQFHDQG*URZWK /DZV5HJXODWLRQVDQG6WDQGDUGV $FTXLVLWLRQ5LVN &RQFHQWUDWLRQDQG'LYHUVLILFDWLRQ5LVN 0DLQWHQDQFH&RVWV $FFHVVWR3DUWVDQG5HODWLRQVKLSVZLWK.H\6XSSOLHUV &DVXDOW\/RVVHV (QYLURQPHQWDO/LDELOLW\5LVNV 'HSHQGHQFHRQ,QIRUPDWLRQ6\VWHPVDQG7HFKQRORJ\ Operational ,QWHUQDWLRQDO2SHUDWLRQV5LVNV )OXFWXDWLRQVLQ6DOHV3ULFHVRI$YLDWLRQ5HODWHG$VVHWV )OXFWXDWLRQVLQ3XUFKDVH3ULFHVRI$YLDWLRQ5HODWHG$VVHWV :DUUDQW\5LVN *OREDO2IIVHW5LVN ,QWHOOHFWXDO3URSHUW\5LVN $YDLODELOLW\RI)XWXUH)LQDQFLQJ ,QFRPH7D[0DWWHUV &RPPRGLW\5LVN )RUHLJQ([FKDQJH ,QWHUHVW5DWHV &UHGLW)DFLOLW\DQGWKH7UXVW,QGHQWXUHV

Financial Financial 'LYLGHQGV 8QSUHGLFWDELOLW\DQG9RODWLOLW\RI6HFXULWLHV3ULFLQJ 'LOXWLRQ5LVN &UHGLW5LVN 5HOLDQFHRQ.H\3HUVRQQHO (PSOR\HHVDQG/DERXU5HODWLRQV &RQIOLFWVRI,QWHUHVW Capital Capital Human Human

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 EXTERNAL RISKS: Economic and Geopolitical Conditions ([WHUQDOHFRQRPLFIDFWRUVRYHUZKLFKWKH&RUSRUDWLRQH[HUFLVHVQRLQIOXHQFHFRXOGDIIHFWFXVWRPHUGHPDQGDQGGLVSRVDEOHLQFRPH (FRQRPLFDQGJHRSROLWLFDOFRQGLWLRQVPD\LPSDFWGHPDQGIRUSURGXFWVDQGVHUYLFHVSURYLGHGE\WKH&RUSRUDWLRQ¶V6XEVLGLDULHVDQG LQJHQHUDOPD\DOVRLPSDFWWKH&RUSRUDWLRQ¶VRSHUDWLQJFRVWVFRVWVDQGDYDLODELOLW\RIIXHOIRUHLJQH[FKDQJHFRVWVDQGFRVWVDQG DYDLODELOLW\RIFDSLWDO$ZHDNHUHFRQRP\ZLOOLPSDFWWKH&RUSRUDWLRQ¶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¶VDELOLW\WRGHSOR\DLUFUDIWWKDWDUHSDUWRILWVOHDVHSRRO5HGXFHGGHPDQG IURPFXVWRPHUVFDXVHGE\ZHDNHFRQRPLFFRQGLWLRQVLQFOXGLQJWLJKWFUHGLWFRQGLWLRQVDQGFXVWRPHUEDQNUXSWFLHVPD\DGYHUVHO\ LPSDFW5HJLRQDO2QH¶VILQDQFLDOFRQGLWLRQRUUHVXOWVRIRSHUDWLRQV 1HJDWLYHFKDQJHVLQWKHHFRQRP\ZLOOLPSDFWHDFKRIWKH&RUSRUDWLRQ¶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¶ FDSLWDO H[SHQGLWXUH SURJUDPV WKDW DUH RIWHQ RQ D GLIIHUHQW F\FOH WKDQ WKH JHQHUDO HFRQRP\ %HQ 0DFKLQHLVDGLUHFWVXSSOLHUWRDQXPEHURIODUJHPDQXIDFWXUHUVZKRVHVDOHVPD\EHGHSHQGHQWXSRQJRYHUQPHQWDOGHFLVLRQVRQ GHIHQFH DQG VHFXULW\ VSHQGLQJ 7KH 0DQXIDFWXULQJ VHJPHQW KDV KLVWRULFDOO\ H[SHULHQFHG VRPH WLPH ODJ EHWZHHQ WKH HFRQRP\ ZHDNHQLQJDQGWKHUHGXFHGGHPDQGIRULWVSURGXFWVDVWKH0DQXIDFWXULQJVHJPHQWJHQHUDOO\KDVDUHDVRQDEOHRUGHUEDFNORJDV ZHOOVRPHRIWKH0DQXIDFWXULQJVHJPHQW¶VSURMHFWVDUHORQJHULQQDWXUHZKLFKJLYHVLWDEXIIHUWRSUHSDUHIRUDUHGXFWLRQLQGHPDQG Competition 1HZFRPSHWLWLRQRULQFUHDVHGFRPSHWLWLRQFRXOGKDYHDVLJQLILFDQWLPSDFWRQWKH&RUSRUDWLRQ¶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¶VVFKHGXOHGRSHUDWLRQVDVFRPSHWLWLRQZRXOGSXWSUHVVXUHRQORDGIDFWRUVUHVXOWLQJLQ GHFOLQLQJPDUJLQVGXHWRWKHQDWXUHRIIL[HGFRVWVLQWKHVHRSHUDWLQJHQWLWLHV7KLVLPSDFWZRXOGEHPRUHSURQRXQFHGLQWKHVKRUWWHUP XQWLOWKHDIIHFWHG6XEVLGLDU\PDGHWKHDSSURSULDWHRSHUDWLRQDOFKDQJHVWRUHVSRQGWRWKHFRPSHWLWLRQ

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 7KHDHURVSDFHGHVLJQDQGEXLOGEXVLQHVVZLWKLQ3URYLQFLDOLVODUJHO\GULYHQE\WKHFXVWRPL]DWLRQRIDLUFUDIWDQGWKHLQWHJUDWLRQRI YDULRXV FRPSRQHQW V\VWHPV 7KH DFWLYLWLHV RI RULJLQDO HTXLSPHQW PDQXIDFWXUHUV ³2(0´ RI VXFK V\VWHPV FRXOG LPSDFW WKH LQWHJUDWLRQ DFWLYLWLHV DVVRFLDWHG ZLWK WKHVH V\VWHPV UHVXOWLQJ LQ GHFUHDVHG QHHG DQG GHFUHDVHG UHYHQXHV WR 3URYLQFLDO IRU LWV FXVWRPL]DWLRQEXVLQHVV 7KHPDUNHWVIRUWKHSURGXFWVDQGVHUYLFHVRI5HJLRQDO2QHDUHKLJKO\FRPSHWLWLYH5HJLRQDO2QHIDFHVFRPSHWLWLRQIURPDQXPEHURI VRXUFHVERWKGRPHVWLFDQGLQWHUQDWLRQDO5HJLRQDO2QH¶VFRPSHWLWRUVLQFOXGHDLUFUDIWDQGDLUFUDIWSDUWVPDQXIDFWXUHUVDLUOLQHDQG DLUFUDIW VHUYLFH FRPSDQLHV RWKHU FRPSDQLHV SURYLGLQJ PDLQWHQDQFH UHSDLU DQG RYHUKDXO VHUYLFHV RWKHU DLUFUDIW VSDUH SDUWV GLVWULEXWRUV DQG UHGLVWULEXWRUV DLUFUDIW OHDVLQJ FRPSDQLHV DQG RWKHU DIWHUPDUNHW VHUYLFH SURYLGHUV 6RPH RI 5HJLRQDO 2QH¶V FRPSHWLWRUVPD\KDYHVXEVWDQWLDOO\JUHDWHUILQDQFLDODQGRWKHUUHVRXUFHVWKDQLWKDVDQGRWKHUVPD\SULFHWKHLUSURGXFWVDQGVHUYLFHV EHORZ 5HJLRQDO 2QH¶V VHOOLQJ SULFHV 7KHVH FRPSHWLWLYH SUHVVXUHV FRXOG DGYHUVHO\ DIIHFW 5HJLRQDO 2QH¶V EXVLQHVV UHVXOWV IURP RSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ 7KHPDUNHWIRUWKHSURGXFWVRIRXUPDQXIDFWXULQJ6XEVLGLDULHVLVFRPSHWLWLYHKRZHYHUWKHOHYHORIFRPSHWLWLRQLVORZHURQWKHPRUH FXVWRPL]HGSURGXFWVDVDUHVXOWRIWKHXQLTXHQHVVRIWKHSURGXFWV,QFUHDVHGFRPSHWLWLRQIURPFXUUHQWRUQHZFRPSHWLWRUVZRXOGSXW SUHVVXUHRQPDUJLQVDQGUHYHQXHV7KH0DQXIDFWXULQJVHJPHQW¶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overnment Funding for First Nations Health Care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ccess to Capital 2QHRIWKHREMHFWLYHVRIWKH&RUSRUDWLRQLVWRFRQWLQXHWRDFTXLUHDGGLWLRQDOFRPSDQLHVRULQWHUHVWVWKHUHLQWRH[SDQGDQGGLYHUVLI\WKH &RUSRUDWLRQ¶VLQYHVWPHQWV7KHDELOLW\WRH[HFXWHWKLVREMHFWLYHLVGHSHQGHQWRQWKH&RUSRUDWLRQ¶VDELOLW\WRUDLVHIXQGVLQWKHFDSLWDO PDUNHWV,IWKHFDSLWDOPDUNHWV¶GHVLUHIRULQFRPHSURGXFLQJLQYHVWPHQWVVXFKDVWKHFRPPRQVKDUHVDQGGHEHQWXUHVLVVXHGE\WKH &RUSRUDWLRQZHUHWRVLJQLILFDQWO\GHFUHDVHWKH&RUSRUDWLRQZRXOGKDYHGLIILFXOW\LQH[HFXWLQJLWVDFTXLVLWLRQREMHFWLYHVRUIXQGLQJ RUJDQLFJURZWKLQLWLDWLYHV7KH&RUSRUDWLRQ¶VFXUUHQWOHYHORIOHYHUDJHLVFRQVLGHUHGUHDVRQDEOHZKLFKJLYHVWKH&RUSRUDWLRQWKH DELOLW\WRXQGHUWDNHDFTXLVLWLRQVXSWRDJLYHQVL]HLQWKHVKRUWWHUPZLWKRXWEHLQJGHSHQGHQWRQWKHFDSLWDOPDUNHWV Market Trends and Innovation 7KHVXFFHVVRIWKH6XEVLGLDULHVLVGHSHQGHQWRQWKHLUDELOLW\WRDQWLFLSDWHDQGUHVSRQGLQDWLPHO\PDQQHUWRFKDQJLQJFRQVXPHU SUHIHUHQFHV WDVWHV DQG GHPDQGV $FFRUGLQJO\ DQ\ VXVWDLQHGIDLOXUH WR LGHQWLI\ DQG UHVSRQG WR HPHUJLQJ WUHQGV FRXOG DGYHUVHO\ DIIHFW FRQVXPHU DFFHSWDQFH RI SURGXFWV RU WKH DELOLW\ WR FRQWLQXH WR REWDLQ RUGHUV ZKLFK FRXOG KDYH DQ DGYHUVH HIIHFW RQ WKH &RUSRUDWLRQ¶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¶V UHVXOWV RI RSHUDWLRQV DQG ILQDQFLDO FRQGLWLRQ ,Q DGGLWLRQ LI RWKHU WHFKQRORJLHV LQ ZKLFK WKH LQYHVWPHQWRIWKH6XEVLGLDULHVLVQRWDVJUHDWRUWKHLUH[SHUWLVHLVQRWDVIXOO\GHYHORSHGHPHUJHDVWKHLQGXVWU\OHDGLQJWHFKQRORJLHV WKH6XEVLGLDULHVPD\EHSODFHGDWDFRPSHWLWLYHGLVDGYDQWDJHZKLFKFRXOGKDYHDQDGYHUVHHIIHFWRQWKH&RUSRUDWLRQ¶VEXVLQHVV UHVXOWVIURPRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 General Uninsured Loss (DFK RI WKH 6XEVLGLDULHV FDUULHV FRPSUHKHQVLYH JHQHUDO OLDELOLW\ ILUH IORRG DQG H[WHQGHG FRYHUDJH LQVXUDQFH ZLWK SROLF\ VSHFLILFDWLRQVOLPLWVDQGGHGXFWLEOHVFXVWRPDULO\FDUULHGIRUVLPLODUEXVLQHVVHV7KHUHDUHKRZHYHUFHUWDLQW\SHVRIULVNVJHQHUDOO\ RIDFDWDVWURSKLFQDWXUHVXFKDVZDUVIXQJXVYLUXVRUEDFWHULDRUHQYLURQPHQWDOFRQWDPLQDWLRQZKLFKDUHHLWKHUXQLQVXUDEOHRUQRW IXOO\LQVXUDEOHRQDQHFRQRPLFDOO\YLDEOHEDVLV6KRXOGDQXQLQVXUHGRUXQGHULQVXUHGORVVRFFXUDQWLFLSDWHGSURILWVDQGFDVKIORZV FRXOGEHQHJDWLYHO\LPSDFWHG Climate 7KH &RUSRUDWLRQ¶V UHVXOWV RI RSHUDWLRQV FRXOG EH LPSDFWHG E\ IOXFWXDWLRQV IURP ZHDWKHU DQG QDWXUDO GLVDVWHUV 6HYHUH ZHDWKHU FRQGLWLRQVDQGQDWXUDOGLVDVWHUFRQGLWLRQVFDQVLJQLILFDQWO\GLVUXSWVHUYLFHE\LPSHGLQJWKHPRYHPHQWRIJRRGVRUGLVUXSWLRQVZLWK ODQGLQJ DQG WDNHRIIV ZKLFK FRXOG KDYH DQ DGYHUVH HIIHFW RQ WKH &RUSRUDWLRQ¶V EXVLQHVV UHVXOWV RI RSHUDWLRQV DQG ILQDQFLDO FRQGLWLRQ7KLVGLVUXSWLRQFRXOGDOVRLPSDFW0RQFWRQ)OLJKW&ROOHJH¶V ³0)&´ DELOLW\WRPDLQWDLQLWVIOLJKWWUDLQLQJVFKHGXOHOHDGLQJWR IHZHUIOLJKWVEHLQJIORZQ,QDGGLWLRQLQFUHDVHVLQIUHTXHQF\VHYHULW\RUGXUDWLRQRIVHYHUHZHDWKHUHYHQWVLQFOXGLQJFKDQJHVLQWKH JOREDO FOLPDWH FRXOG UHVXOW LQ LQFUHDVHV LQ IXHO FRQVXPSWLRQ WR DYRLG VXFK ZHDWKHU WXUEXOHQFHUHODWHG LQMXULHV GHOD\V DQG FDQFHOODWLRQVDQ\RIZKLFKZRXOGLQFUHDVHWKHSRWHQWLDOIRUORVVRIUHYHQXHDQGKLJKHUFRVWV&HUWDLQRIWKH&RUSRUDWLRQ¶VDLUOLQH VXEVLGLDULHVDUHLPSDFWHGE\WKHOHQJWKRIZLQWHUURDGVHDVRQZKLFKLVLPSDFWHGE\WKHZHDWKHUGXULQJWKHILUVWIHZPRQWKVRIWKH FDOHQGDU\HDU7KHFROGHUWKHZLQWHUVHDVRQWKHORQJHUWKHZLQWHUURDGVDUHDYDLODEOHIRUFXVWRPHUVWRXVHDVDQDOWHUQDWLYHWRIO\LQJ ZLWKWKHDLUOLQH6XEVLGLDULHVRIWKH&RUSRUDWLRQ Acts of Terrorism 7KHRFFXUUHQFHRIDWHUURULVWDWWDFNFRXOGFDXVHDGHFUHDVHLQSDVVHQJHUGHPDQGIRUWUDYHODQGDQLQFUHDVHLQVHFXULW\PHDVXUHV WUDYHOUHVWULFWLRQVDQGUHODWHGFRVWVLQWKHDLUOLQHLQGXVWU\7KLVFRXOGKDYHDQDGYHUVHHIIHFWRQWKH&RUSRUDWLRQ¶VEXVLQHVVUHVXOWV IURPRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ Pandemic 7KHVSUHDGRIFRQWDJLRXVGLVHDVHFRXOGKDYHDVLJQLILFDQWLPSDFWRQSDVVHQJHUGHPDQGIRUDLUWUDYHOFDXVHVKRUWDJHVRIHPSOR\HHV WRVWDIIWKH&RUSRUDWLRQ¶VIDFLOLWLHVLQWHUUXSWVXSSOLHVIURPWKLUGSDUWLHVXSRQZKLFKWKH&RUSRUDWLRQUHOLHVDQGXOWLPDWHO\LWVDELOLW\WR FRQWLQXHIXOORSHUDWLRQV7KHVSUHDGRIFRQWDJLRXVGLVHDVHGHSHQGLQJRQWKHVHYHULW\FRXOGDOVRLPSDFWVXSSO\FKDLQVDURXQGWKH ZRUOGDQGFRXOGQHJDWLYHO\LPSDFWWKH&RUSRUDWLRQ¶VDELOLW\WRDFFHVVLQSXWVUHTXLUHGIRULWVRSHUDWLRQV7KH&RUSRUDWLRQFDQQHYHU SUHGLFWWKHOLNHOLKRRGRIDSDQGHPLFHYHQWRFFXUULQJQRUWKHLPSDFWLWFRXOGKDYHRQRSHUDWLRQV$SDQGHPLFFRXOGKDYHDVLJQLILFDQW LPSDFWRQWKH&RUSRUDWLRQ¶VEXVLQHVVUHVXOWVIURPRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ Level and Timing of Defence Spending $VLJQLILFDQWSRUWLRQRIWKHUHYHQXHVRI3URYLQFLDODQG%HQ0DFKLQHFRPHVIURPVDOHVWRDHURVSDFHDQGGHIHQFHFXVWRPHUVLQFOXGLQJ VDOHVWRJRYHUQPHQWVGLUHFWO\DQGLQGLUHFWO\IURPYDULRXVFRXQWULHV,IGHIHQFHVSHQGLQJRQWKHLUSURGXFWVDQGVHUYLFHVGHFUHDVHV WKHVH 6XEVLGLDULHV ZLOO H[SHULHQFH WKH HIIHFWV RI SURJUDP UHVWUXFWXUHV UHGXFWLRQV DQG FDQFHOODWLRQV 7KHVH HYHQWVFRXOG KDYHD PDWHULDOQHJDWLYHLPSDFWRQWKH&RUSRUDWLRQ¶V6XEVLGLDULHV¶IXWXUHUHYHQXHHDUQLQJVDQGRSHUDWLRQV7RPLQLPL]HWKHVHLPSDFWV PDQDJHPHQWFRQWLQXRXVO\UHYLHZVWKH&RUSRUDWLRQ¶V6XEVLGLDULHV¶FXUUHQWDQGIXWXUHSURJUDPVGHYHORSLQJULVNPLWLJDWLRQVWUDWHJLHV WRDGGUHVVDQ\SRWHQWLDOFKDQJHWRHDFKSURJUDP Government-Funded Defence and Security Programs /LNHPRVWFRPSDQLHVWKDWVXSSO\SURGXFWVDQGVHUYLFHVWRJRYHUQPHQWVWKH&RUSRUDWLRQDQGLWV6XEVLGLDULHVFDQEHDXGLWHGDQG UHYLHZHGIURPWLPHWRWLPH$Q\DGMXVWPHQWVWKDWUHVXOWIURPJRYHUQPHQWDXGLWVDQGUHYLHZVPD\KDYHDQHJDWLYHHIIHFWRQWKH UHVXOWVRIRSHUDWLRQVRIWKH&RUSRUDWLRQ6RPHFRVWVPD\QRWEHUHLPEXUVHGRUDOORZHGLQQHJRWLDWLRQVRIIL[HGSULFHFRQWUDFWV OPERATIONAL RISKS: Significant Contracts and Customers 7KH &RUSRUDWLRQ DQG LWV 6XEVLGLDULHV DUH FXUUHQWO\ SDUWLHV WR D QXPEHU RI VLJQLILFDQW FRQWUDFWV ZLWK NH\ FXVWRPHUV LQFOXGLQJ JRYHUQPHQWV:LWKLQWKH$HURVSDFH $YLDWLRQVHJPHQWWKHVHVLJQLILFDQWFRQWUDFWVDUHIRUDYDULHW\RIVHUYLFHVEXWSULPDULO\UHODWHWR FKDUWHUZRUNFDUJRPHGHYDFVPHGLFDOUHODWHGSDVVHQJHUWUDYHODLUFUDIWPRGLILFDWLRQVDLUERUQHPDULWLPHVXUYHLOODQFHRSHUDWLRQV DQGWKHPDLQWHQDQFHRIFHUWDLQVSHFLDOL]HGVXUYHLOODQFHDLUFUDIWLQFOXGLQJWKH)L[HG:LQJ6HDUFKDQG5HVFXH ³):6$5´ $LUFUDIW 5HSODFHPHQW3URJUDPZLWKWKH*RYHUQPHQWRI&DQDGD:LWKLQWKH0DQXIDFWXULQJVHJPHQWWKHVHVLJQLILFDQWFRQWUDFWVDUHIRUWKH SURGXFWLRQRULQVWDOODWLRQRIFHUWDLQSURGXFWVDQGPDLQWHQDQFHUHODWHGVHUYLFHV2YHUDOOWKH&RUSRUDWLRQ¶VVLJQLILFDQWFRQWUDFWVDUH VSUHDGRYHUDQXPEHURIGLIIHUHQW6XEVLGLDULHVWKHUHE\UHGXFLQJWKH&RUSRUDWLRQ¶VRYHUDOOUHOLDQFHRQDVLQJOHFRQWUDFWRUFXVWRPHU

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 7KHORVVRIDQ\RQHRIWKHVHVLJQLILFDQWFRQWUDFWVRUFXVWRPHUVFRXOGKDYHDQHJDWLYHLPSDFWRQWKHRSHUDWLRQVDQGFDVKIORZRIWKH &RUSRUDWLRQ Operational Performance and Growth 7KH&RUSRUDWLRQ¶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aws, Regulations, and Standards 7KH&RUSRUDWLRQDQGLWV6XEVLGLDULHVDUHVXEMHFWWRDYDULHW\RIIHGHUDOSURYLQFLDOVWDWHDQGORFDOODZVUHJXODWLRQVDQGJXLGHOLQHV LQFOXGLQJEXWQRWOLPLWHGWRLQFRPHKHDOWKDQGVDIHW\FRPSHWLWLRQHPSOR\PHQWVWDQGDUGVVHFXULWLHVODZV GLVFORVXUHDQGLQVLGHU WUDGLQJ SULYDF\ ODZV DQG DLUOLQH VDIHW\ 1HZ RU FKDQJHV LQ DFFRXQWLQJ VWDQGDUGV DQG SURQRXQFHPHQWV PD\ DOVR LPSDFW WKH &RUSRUDWLRQ¶VILQDQFLDOUHVXOWV)DLOXUHE\WKH&RUSRUDWLRQWRFRPSO\ZLWKDSSOLFDEOHODZVUHJXODWLRQVDQGVWDQGDUGVFRXOGUHVXOWLQ ILQDQFLDO SHQDOWLHV DVVHVVPHQWV RU OHJDO DFWLRQ WKDW FRXOG KDYH DQ DGYHUVH HIIHFW RQ WKH UHSXWDWLRQ DQG ILQDQFLDO UHVXOWV RI WKH &RUSRUDWLRQDQGLWV6XEVLGLDULHV)XUWKHUPRUHWKHILQDQFLDODQGPDQDJHULDOUHVRXUFHVQHFHVVDU\WRHQVXUHVXFKFRPSOLDQFHFRXOG HVFDODWHVLJQLILFDQWO\LQWKHIXWXUHZKLFKFRXOGKDYHDQDGYHUVHHIIHFWRQWKH&RUSRUDWLRQ¶VEXVLQHVVUHVXOWVIURPRSHUDWLRQVDQG ILQDQFLDOFRQGLWLRQ 7KH&RUSRUDWLRQ¶VDYLDWLRQ6XEVLGLDULHVDUHPDGHXSRIDQGRSHUDWRUV7UDQVSRUW&DQDGDLVVXHGDQDPHQGPHQWWRWKH &DQDGLDQ$YLDWLRQ5HJXODWLRQV ³&$5´ ZLWKUHVSHFWWR3LORW)DWLJXHDQG)OLJKW'XW\7LPHVRQ'HFHPEHU,PSOHPHQWDWLRQ UHTXLUHPHQWV WRRN HIIHFW LQ 'HFHPEHU IRU &$5 RSHUDWRUV DQG VFKHGXOHG LQ 'HFHPEHU IRU &$5 DQG RSHUDWRUV0HGHYDFRSHUDWLRQVDUHH[HPSWIURPWKHUHJXODWLRQFKDQJHV)XQGDPHQWDOFKDQJHVWR&$5VHULHVDQGVSHFLILFDOO\ ZRUNGXW\IOLJKW KRXUV ZLOO KDYH DQ LPSDFW RQ (,& DYLDWLRQ FRPSDQLHV EDVHG RQ WKH &RPSDQ\¶V DSSURYDO IRU $HULDO RSHUDWLRQV &RPPXWHURU$LUOLQHRSHUDWLRQVDQGPD\UHVXOWLQDQLQFUHDVHLQWKHQXPEHURISLORWVUHTXLUHGE\(,&7KLVLPSDFWLVUHFRJQL]HGDV LQGXVWU\ZLGHDQG(,&DQGLWVDYLDWLRQFRPSDQLHVFRQWLQXHWRHQKDQFHDPXOWLGLPHQVLRQDOVWUDWHJ\WRDGGUHVVDYLDWLRQLQGXVWU\SLORW UHFUXLWPHQWDQGUHWHQWLRQFKDOOHQJHVLQFOXVLYHRIWKLVDGGLWLRQDOUHJXODWRU\LPSDFW)OLJKWVFKHGXOHVRSHUDWLQJVFKHGXOHVDQGIDWLJXH ULVNPDQDJHPHQWV\VWHPVZLOOEHIXUWKHUH[DPLQHGWRPLWLJDWHWKHLPSDFWVRIWKHQHZUHJXODWLRQV$GGLWLRQDOO\WKHDFTXLVLWLRQRI0)& DQGWKHLQWURGXFWLRQRIWKH/LIHLQ)OLJKWSURJUDPSURYLGHVDIXUWKHUPLWLJDWLRQPHDVXUHE\JLYLQJDLUOLQHVXEVLGLDULHVGLUHFWDFFHVVWR SLORWVDQGOLPLWVGLVUXSWLRQWRSODQQHGURXWHV 7UDQVSRUW&DQDGDIXUWKHULVVXHGLQWHULPRUGHUVWKURXJKRXWZKLFKH[WHQGLQWRRXWOLQLQJ&29,'LQGXVWU\UHTXLUHPHQWV IRUHQVXULQJERWKDYLDWLRQDQGSXEOLFVDIHW\7KHLQWHULPRUGHUVLQFOXGHGWKHFRPSOHWLRQRISDVVHQJHUKHDOWKFKHFNVDQGWHPSHUDWXUH VFUHHQLQJ WKH UHTXLUHPHQW WR ZHDU IDFH PDVNV DQG DLUFUDIW GHSODQLQJ SURWRFROV (,& $YLDWLRQ FRPSDQLHV FRQWLQXH DV LQGXVWU\ OHDGHUVLQHQVXULQJWKHVDIHW\RIWKHWUDYHOOLQJSXEOLFDQGPRQLWRULQJIRULPSDFWVRIVXFKFKDQJHVRQRSHUDWLRQV 7KH DLUOLQH LQGXVWU\ LQ &DQDGD WKH 8QLWHG 6WDWHV DQG HOVHZKHUH LQ WKH ZRUOG LV VXEMHFW WR VWULFW JRYHUQPHQW VWDQGDUGV DQG UHJXODWLRQV*RYHUQPHQWHQWLWLHVVXFKDV7UDQVSRUW&DQDGDWKH&RPSHWLWLRQ%XUHDXWKH&DQDGLDQ7UDQVSRUWDWLRQ$JHQF\ ³&7$´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¶VREOLJDWLRQVLQWKHFDVHRIDIOLJKWGHOD\FDQFHOODWLRQRUGHQLDORIERDUGLQJDVZHOODVPLQLPXP VWDQGDUGV RI WUHDWPHQW FRPSHQVDWLRQ DQG DVVLVWDQFH LQ FRPSOHWLQJ WKH SODQQHG LWLQHUDU\ 7KH &RUSRUDWLRQ DQG LWV 6XEVLGLDULHV FRQWLQXH WR PRQLWRU WKH LPSDFW RI VXFK UHJXODWLRQV RQ FXUUHQW RSHUDWLRQV LQFOXVLYH RI FRPSHQVDWLRQ SROLFLHV DOUHDG\ LQ SODFHWR DGGUHVVWKHLULPSDFW7KHVHQHZUHJXODWLRQVFRXOGKDYHDQDGYHUVHHIIHFWRQWKH&RUSRUDWLRQ¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 FKDLQV RI RXU RWKHU LQGXVWULHV )XUWKHUPRUH WKH &RPSDQ\ PD\ EH VXEMHFW WR PDQGDWHG JUHHQKRXVH JDV HPLVVLRQV UHGXFWLRQ UHSRUWLQJRUFDUERQWUDGLQJUHTXLUHPHQWVLQRWKHUMXULVGLFWLRQVZKHUHWKH&RPSDQ\RSHUDWHV7KLVOHJLVODWLRQFRXOGUHVXOWLQDGGLWLRQDO FRVWVZKLFKWKH&RUSRUDWLRQPLJKWEHXQDEOHWRIXOO\SDVVRQWKURXJKLWVVDOHVSULFHVKDYLQJDQDGYHUVHLPSDFWRQWKH&RPSDQ\¶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¶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¶VEXVLQHVVSUDFWLFHVPXVWFRPSO\ZLWK&DQDGD¶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¶VUHSXWDWLRQEXVLQHVVDQGUHVXOWVIURPRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ %HQ0DFKLQHDQG3URYLQFLDODUHSDUWLHVWRQRQGLVFORVXUHDJUHHPHQWVUHODWLQJWRWHFKQLFDODVVLVWDQFHDJUHHPHQWVDQGPDQXIDFWXULQJ OLFHQVLQJDJUHHPHQWVLQYROYLQJ86,QWHUQDWLRQDO7UDIILFLQ$UPV5HJXODWLRQV ³,7$5´ FRQWUROOHGGHIHQFHDUWLFOHVDQGWHFKQLFDOGDWD DQGWKHUHIRUHDVVXPHDOOULJKWVUHVSRQVLELOLWLHVOLDELOLWLHVDQGREOLJDWLRQVWKDWPD\H[LVWUHJDUGLQJWKHWUDQVIHURIVXFKLQIRUPDWLRQ ,QWKHHYHQWWKDW%HQ0DFKLQHRU3URYLQFLDOLVQRWFRPSOLDQWZLWKVXFKUHJXODWLRQVWKHUHLVDULVNRILQFXUULQJILQHVDQGRWKHUSHQDOWLHV WKDWFRXOGOHDGWRLQFUHDVHGFRPSOLDQFHFRVWVRUUHVWULFWLRQRILQIRUPDWLRQWKDWFRXOGKLQGHUWKHDFTXLVLWLRQRIIXWXUHFRQWUDFWV7KLV FRXOGKDYHDQDGYHUVHHIIHFWRQWKH&RUSRUDWLRQ¶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¶VDELOLW\ WRIXOILOOLWVREOLJDWLRQVZLWKRXWKDYLQJWRLPSOHPHQWDGGLWLRQDOSURWRFROVGLVFORVXUHRUWUDLQLQJ7KLVPD\KDYHDQDGYHUVHHIIHFWRQ WKH&RUSRUDWLRQ¶VRSHUDWLRQVDQGILQDQFLDOUHVXOWVWRPDLQWDLQVDIHW\DQGFRPSOLDQFHUHTXLUHPHQWV Acquisition Risk /HGE\DIRUPDOFRUSRUDWHGHYHORSPHQWGHSDUWPHQWWKH&RUSRUDWLRQUHJXODUO\UHYLHZVSRWHQWLDODFTXLVLWLRQRSSRUWXQLWLHVWRVXSSRUWLWV VWUDWHJLFREMHFWLYHWRH[SDQGDQGGLYHUVLI\WKH&RUSRUDWLRQ¶VLQYHVWPHQWV7KH&RUSRUDWLRQ¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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¶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oncentration and Diversification Risk 7KH&RUSRUDWLRQ¶VSHUIRUPDQFHLVGHSHQGHQWRQWKHUHVXOWVRILWV6XEVLGLDULHVZKLFKDUHFRQFHQWUDWHGLQWZRVHJPHQWV$HURVSDFH $YLDWLRQDQG0DQXIDFWXULQJ$OWKRXJKGLYHUVLILFDWLRQH[LVWVILQDQFLDOUHVXOWVDUHKHDYLO\WLHGWRWKH1RUWK$PHULFDQHFRQRP\$Q HFRQRPLF GHFOLQH D PDMRU VKLIW LQ FRQVXPHU GHPDQGV RU WHFKQRORJ\ FKDQJH FRXOG UHVXOW LQ ERWK VHJPHQWV H[SHULHQFLQJ VLPXOWDQHRXVQHJDWLYHUHVXOWV,QWKHHYHQWWKDWERWKVHJPHQWVH[SHULHQFHDGRZQWXUQOHDGLQJWRQHJDWLYHUHVXOWVWKLVFRXOGKDYHDQ DGYHUVHHIIHFWRQWKH&RUSRUDWLRQ¶VEXVLQHVVUHVXOWVIURPRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ 6LPLODUO\EHFRPLQJHFRQRPLFDOO\GHSHQGHQWRQRQH6XEVLGLDU\RUFXVWRPHUFRXOGUHVXOWLQDQLPEDODQFHLQWKHGLYHUVLILFDWLRQOHYHORI WKH &RUSRUDWLRQ 7KLV FRXOG KDYH HLWKHU DQ DGYHUVH RU IDYRXUDEOH HIIHFW RQ WKH &RUSRUDWLRQ¶V ILQDQFLDO FRQGLWLRQ RU UHVXOWV IURP RSHUDWLRQV)XUWKHUPRUHFRQVLGHUDEOHSUHVVXUHPD\EHSODFHGRQUHVRXUFHVDQGV\VWHPVWRPDQDJHWKHLPEDODQFH 5HJLRQDO2QH¶VSRUWIROLRRISDUWVHQJLQHVDQGOHDVHGDLUFUDIWDUHFRQFHQWUDWHGLQVSHFLILFW\SHVRIUHJLRQDODLUFUDIW7KHOHDVLQJDQG VDOHV LQGXVWU\ UHODWHG WR DLUFUDIW DVVHWV FDQ H[SHULHQFH SHULRGV RI XQGHUVXSSO\ DQG RYHUVXSSO\ $V D UHVXOW 5HJLRQDO 2QH¶V SURILWDELOLW\LVVXVFHSWLEOHWRHFRQRPLFFRQGLWLRQVVSHFLILFWRWKHUHJLRQDODLUFUDIWSODWIRUPWKDWXQGHUOLHVLWVEXVLQHVVVWUDWHJ\ Maintenance Costs 7KH&RUSRUDWLRQ¶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¶V EXVLQHVV UHVXOWVIURPRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ Access to Parts and Relationships with Key Suppliers 7KH6XEVLGLDULHVDUHDWWLPHVGHSHQGHQWRQWKHFRQWLQXHGHIILFLHQWVXSSO\RIFRPSRQHQWSDUWVIXHODQGUDZPDWHULDOVIURPYDULRXV VXSSOLHUV$Q\VKRUWDJHRIVXSSO\RIWKHVHUHTXLUHGLWHPVZRXOGMHRSDUGL]HWKHDELOLW\RIWKH6XEVLGLDULHVWRSURYLGHWKHLUSURGXFWVRU VHUYLFHV Casualty Losses 7KH6XEVLGLDULHVDUHVXEMHFWWRWKHLQKHUHQWEXVLQHVVULVNRIOLDELOLW\FODLPVDQGDGYHUVHSXEOLFLW\LIDQ\RIWKHLUVHUYLFHVLVDOOHJHGWR KDYHUHVXOWHGLQDGYHUVHHIIHFWVWRDXVHULQFOXGLQJDQDLUFUDIWDFFLGHQWLQWKHFDVHRIWKHHQWLWLHVZLWKLQWKH$HURVSDFH $YLDWLRQ VHJPHQW7KHUHFDQEHQRDVVXUDQFHWKDWWKH&RUSRUDWLRQ¶VLQVXUDQFHFRYHUDJHZLOOEHVXIILFLHQWRUUHPDLQDYDLODEOHDWUHDVRQDEOH FRVWVWRFRYHURQHRUPRUHODUJHFODLPV$GGLWLRQDOO\DQ\LQFLGHQWRUGLVDVWHULQYROYLQJRQHRIWKHVHJPHQWVFRXOGVLJQLILFDQWO\KDUP WKH&RUSRUDWLRQ¶VUHSXWDWLRQIRUVDIHW\,QHLWKHUHYHQWWKH&RUSRUDWLRQ¶VEXVLQHVVUHVXOWVIURPRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ FRXOGEHDGYHUVHO\DIIHFWHG

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 Environmental Liability Risks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ependence on Information Systems and Technology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¶VEXVLQHVVUHVXOWVIURPRSHUDWLRQVDQG ILQDQFLDOFRQGLWLRQ 7KH LQWHJUDWLRQRI FRPSOH[V\VWHPV DQG WHFKQRORJ\ SUHVHQWVVLJQLILFDQW FKDOOHQJHV LQ WHUPV RIFRVWV KXPDQUHVRXUFHV DQG WKH GHYHORSPHQWRIHIIHFWLYHLQWHUQDOFRQWUROV,QWKHRUGLQDU\FRXUVHRIEXVLQHVVV\VWHPVZLOOUHTXLUHPRGLILFDWLRQVDQGUHILQHPHQWVWR DGGUHVVWKH&RUSRUDWLRQ¶VJURZWKDQGEXVLQHVVUHTXLUHPHQWV7KH6XEVLGLDULHVFRXOGEH DGYHUVHO\DIIHFWHGLIWKH\DUHXQDEOHWR PRGLI\WKHLUV\VWHPVDVQHFHVVDU\ 7KH&RUSRUDWLRQ¶VUHOLDQFHRQLQIRUPDWLRQWHFKQRORJ\WRPDQDJHLWVEXVLQHVVH[SRVHVWKH&RUSRUDWLRQWRSRWHQWLDOULVNVUHODWHGWR F\EHUVHFXULW\DWWDFNVDQGXQDXWKRUL]HGDFFHVVWRWKH&RUSRUDWLRQ¶VFXVWRPHUV¶VXSSOLHUV¶FRXQWHUSDUWLHV¶DQGHPSOR\HHV¶VHQVLWLYH RUFRQILGHQWLDOLQIRUPDWLRQ ZKLFKPD\LQFOXGHSHUVRQDOO\LGHQWLILDEOHLQIRUPDWLRQDQGFUHGLWLQIRUPDWLRQ WKURXJKKDFNLQJYLUXVHVRU RWKHUZLVH FROOHFWLYHO\ ³F\EHUVHFXULW\ WKUHDWV´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nternational Operations Risks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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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luctuations in Sales Prices of Aviation Related Assets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¶VRSHUDWLRQVLQFOXGHOHDVLQJDLUFUDIWDQGHQJLQHVWRLWVFXVWRPHUVRQDQRSHUDWLQJOHDVHEDVLVLQDGGLWLRQWRILQDQFH OHDVHVRUVDOHWUDQVDFWLRQV,WVDELOLW\WRUHOHDVHRUVHOOWKHVHDVVHWVRQDFFHSWDEOHWHUPVZKHQWKHRSHUDWLQJOHDVHH[SLUHVLVVXEMHFW WRDQXPEHURIIDFWRUVWKDWGULYHLQGXVWU\FDSDFLW\LQFOXGLQJQHZDLUFUDIWGHOLYHULHVDYDLODELOLW\RIXVHGDLUFUDIWDQGHQJLQHVLQWKH PDUNHWSODFHFRPSHWLWLRQILQDQFLDOFRQGLWLRQRI FXVWRPHUV RYHUDOOKHDOWKRIWKHDLUOLQHLQGXVWU\DQGJHQHUDOHFRQRPLFFRQGLWLRQV 5HJLRQDO2QH¶VLQDELOLW\WRUHOHDVHRUVHOODLUFUDIWDQGHQJLQHVFRXOGDGYHUVHO\DIIHFWLWVUHVXOWVRIRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ Fluctuations in Purchase Prices of Aviation Related Assets 7KH VXFFHVV RI 5HJLRQDO 2QH¶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arranty Risk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lobal Offset Risk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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 Intellectual Property Risk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vailability of Future Financing 7KH &RUSRUDWLRQ¶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ncome Tax Matters 7KHEXVLQHVVDQGRSHUDWLRQVRIWKH&RUSRUDWLRQDQGLWV6XEVLGLDULHVDUHFRPSOH[DQGWKH&RUSRUDWLRQKDVRYHUWKHFRXUVHRILWV KLVWRU\XQGHUWDNHQDQXPEHURIVLJQLILFDQWILQDQFLQJVUHRUJDQL]DWLRQVDFTXLVLWLRQVGLYHVWLWXUHVDQGRWKHUPDWHULDOWUDQVDFWLRQV7KH FRPSXWDWLRQRILQFRPHWD[HVSD\DEOHDVDUHVXOWRIWKHVHWUDQVDFWLRQVLQYROYHVPDQ\FRPSOH[IDFWRUVLQFOXGLQJWKH&RUSRUDWLRQ¶V LQWHUSUHWDWLRQRIUHOHYDQWWD[OHJLVODWLRQDQGUHJXODWLRQV:KLOHPDQDJHPHQWEHOLHYHVWKDWWKHSURYLVLRQIRULQFRPHWD[LVDGHTXDWH DQGLQDFFRUGDQFHZLWK,)56DQGDSSOLFDEOHOHJLVODWLRQDQGUHJXODWLRQVWD[ILOLQJSRVLWLRQVDUHVXEMHFWWRUHYLHZDQGDGMXVWPHQWE\ WD[DWLRQ DXWKRULWLHV ZKR PD\ FKDOOHQJH WKH &RUSRUDWLRQ¶V LQWHUSUHWDWLRQ RI WKH DSSOLFDEOH WD[ OHJLVODWLRQ DQG UHJXODWLRQV ,I DQ\ FKDOOHQJHWRWKH&RUSRUDWLRQ¶VWD[ILOLQJSRVLWLRQVZHUHWRVXFFHHGLWFRXOGUHVXOWLQDUHDVVHVVPHQWRIWD[HVRURWKHUZLVHKDYHD PDWHULDODGYHUVHHIIHFWRQWKH&RUSRUDWLRQ¶VWD[REOLJDWLRQV )XUWKHUPRUHIHGHUDORUSURYLQFLDORUIRUHLJQWD[OHJLVODWLRQPD\EHDPHQGHGRULWVLQWHUSUHWDWLRQFKDQJHG ZKHWKHUE\OHJLVODWLYHRU MXGLFLDODFWLRQRUGHFLVLRQ UHWURDFWLYHO\RUIRUWKHIXWXUHZKLFKFRXOGDGYHUVHO\DIIHFWWKH&RUSRUDWLRQ¶VWD[SRVLWLRQV Commodity Risk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¶VFXVWRPHUVLVQRWGLVFUHWLRQDU\ LHIRUPHGLFDORURWKHUQHFHVVDU\UHDVRQV DQGRYHUODQGWUDYHOIURP DQGWRPDQ\RIWKHFRPPXQLWLHVVHUYLFHGLVRQO\SRVVLEOHIRUEULHISHULRGVRIWKH\HDURYHUZLQWHUURDGVLISULFHVZHUHWRHVFDODWH VLJQLILFDQWO\LWPD\LPSDFWGHPDQGIRUVHUYLFHV 7KHRSHUDWLRQVRIWKH0DQXIDFWXULQJVHJPHQWHQWLWLHVLQ$OEHUWDKDYHKLVWRULFDOO\EHQHILWWHGIURPULVLQJRLOSULFHV/RZHURLOSULFHV KDYH D QHJDWLYH LPSDFW RQ WKH $OEHUWD RSHUDWLRQV LQ WKH 0DQXIDFWXULQJ VHJPHQW DV ORZHU RLO SULFHV KXUW WKH $OEHUWD RLO DQG JDV PDUNHW$VRLOSULFHVLQFUHDVHGHPDQGIRUSURGXFWVPDQXIDFWXUHGE\WKH$OEHUWD2SHUDWLRQVLQFUHDVH 7KH $HURVSDFH $YLDWLRQ VHJPHQW 6XEVLGLDULHV SURYLGLQJ VFKHGXOHG DQG FKDUWHU VHUYLFHV DUH LPSDFWHG E\ PLQHUDO FRPPRGLW\ SULFLQJDVWKHVHUYLFHUHTXLUHPHQWVRIVHYHUDOPDMRUFXVWRPHUVDUHLPSDFWHGE\PLQHUDOFRPPRGLW\SULFLQJOHYHOV Foreign Exchange 7KH&RUSRUDWLRQ¶VILQDQFLDOUHVXOWVDUHVHQVLWLYHWRWKHIOXFWXDWLQJYDOXHRIWKH&DQDGLDQGROODUSDUWLFXODUO\LQUHODWLRQWRWKH86GROODU 2XU&DQDGLDQDQG866XEVLGLDULHVDUHLPSDFWHGGLIIHUHQWO\IURPIOXFWXDWLRQVLQWKH&DQDGD86GROODUH[FKDQJHUDWH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 2XU&DQDGLDQRSHUDWLRQVKDYHVLJQLILFDQW86GROODULQIORZVDQGRXWIORZVDQGLWYDULHVJUHDWO\E\HQWLW\)RULQVWDQFHPDQ\RIRXU DLUOLQH6XEVLGLDULHVKDYHQHWDQQXDORXWIORZVRI86GROODUVDVSDUWVFRVWHQJLQHVDQGDLUFUDIWSXUFKDVHVDUHRIWHQSXUFKDVHGLQ86 GROODUV$VZHOOWKHSULFHRIIXHOZKLOHSXUFKDVHGLQ&DQDGLDQGROODUVLVLPSDFWHGE\IOXFWXDWLRQVLQWKH&DQDGD86GROODUH[FKDQJH UDWH+RZHYHURWKHUHQWLWLHVLQFOXGLQJ4XHVWDQG3URYLQFLDO$HURVSDFHKDYHVLJQLILFDQWFRQWUDFWVXQGHUZKLFKWKHFXVWRPHUSD\VLQ 86GROODUV:KHQYLHZHGLQWRWDO(,&¶V&DQDGLDQRSHUDWLRQVGRQRWKDYHDODUJHH[SRVXUHWRIOXFWXDWLRQVLQWKH&DQDGD86GROODU H[FKDQJHUDWH,WLVLPSRUWDQWWRQRWHWKDWZKLOHH[FKDQJHUDWHIOXFWXDWLRQVPD\KDYHDVKRUWWHUPLPSDFWRQWKHUHVXOWVIURPDQ\RQH RIWKH&RUSRUDWLRQ¶V6XEVLGLDULHV¶LQ&DQDGDQRQHRIWKHLUEXVLQHVVPRGHOVDUHEDVHGRQDUELWUDJLQJEHWZHHQWKHWZRFXUUHQFLHVDQG XOWLPDWHO\H[FKDQJHUDWHFKDQJHVZLOOEHUHIOHFWHGLQWKHLUSULFLQJFKDUJHGWRFXVWRPHUV 2XU866XEVLGLDULHV¶RSHUDWLRQVDUHQRWLPSDFWHGE\IOXFWXDWLRQVLQWKHH[FKDQJHUDWHDVWKHYDVWPDMRULW\RIWKHLUUHYHQXHVDQG H[SHQGLWXUHV DUH LQ 86 GROODUV +RZHYHU ZKHQ WKHLU UHVXOWV DUH LQFOXGHG LQ (,&¶V FRQVROLGDWHG UHVXOWV IRU ILQDQFLDO UHSRUWLQJ SXUSRVHV(,&¶VFRQVROLGDWHGUHVXOWVZLOOEHLPSDFWHGE\WKHWUDQVODWLRQRIRXU866XEVLGLDULHV UHVXOWVIURPWKHLUGRPHVWLFFXUUHQF\ LQWRWKH&RUSRUDWLRQ¶VUHSRUWLQJFXUUHQF\ZKLFKLV&DQDGLDQGROODUV Interest Rates $VDW'HFHPEHUWKHFUHGLWIDFLOLW\KDVDYDULDEOHLQWHUHVWUDWHRQWKH&DQDGLDQDQG86SRUWLRQVRIWKHDPRXQWRXWVWDQGLQJ XQGHUWKHIDFLOLW\$RQHSHUFHQWDJHSRLQWLQFUHDVHLQDYHUDJHLQWHUHVWUDWHVZRXOGFRVWWKH&RUSRUDWLRQDSSUR[LPDWHO\PLOOLRQ SUHWD[ LJQRULQJWKHLPSDFWRIFKDQJHVLQIRUHLJQH[FKDQJHUDWHV SHUDQQXPIRUWKHFUHGLWIDFLOLW\EDVHGRQWKHDPRXQWVRXWVWDQGLQJ DVDW'HFHPEHU7KHWHUPVRIWKHFUHGLWIDFLOLW\DOORZIRUWKH&RUSRUDWLRQWRFKRRVHWKHEDVHLQWHUHVWUDWHEHWZHHQSULPH EDQNHUV¶DFFHSWDQFHVRU/RQGRQ,QWHU%DQN2IIHU5DWH /,%25 7KH&RUSRUDWLRQPDQDJHVWKHEDVHUDWHXVHGRQWKHRXWVWDQGLQJ IDFLOLW\ DQG VHHNV ILQDQFLQJ WHUPV LQ LQGLYLGXDO DUUDQJHPHQWV WKDW DUH PRVW DGYDQWDJHRXV 7KH &RUSRUDWLRQ FRQVLGHUV GHULYDWLYH LQVWUXPHQWVWRPDQDJHWKHYDULDEOHLQWHUHVWUDWHULVNDQGKDVHQWHUHGLQWRLQWHUHVWUDWHVZDSVRQDSRUWLRQRILWVGHEWWRPDQDJHWKLV ULVN7KH&RUSRUDWLRQ¶VRXWVWDQGLQJGHEHQWXUHVKDYHIL[HGLQWHUHVWUDWHVWKDWDUHQRWDIIHFWHGE\FKDQJHVLQUDWHV Credit Facility and the Trust Indentures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ividends $OWKRXJKWKH&RUSRUDWLRQLQWHQGVWRFRQWLQXHWRGHFODUHDQGSD\PRQWKO\GLYLGHQGVRQFRPPRQVKDUHVWKHUHFDQEHQRDVVXUDQFH WKDWGLYLGHQGVZLOOFRQWLQXHLQWKHIXWXUHDWWKHVDPHIUHTXHQF\ LQWKHVDPHDPRXQWVRUDWDOO7KHDFWXDODPRXQWRIGLYLGHQGV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 GHFODUHGDQGSDLGE\WKH&RUSRUDWLRQLQUHVSHFWRIWKHFRPPRQVKDUHVZLOOGHSHQGXSRQQXPHURXVIDFWRUVLQFOXGLQJSURILWDELOLW\ IOXFWXDWLRQVLQZRUNLQJFDSLWDOFDSLWDOH[SHQGLWXUHVDQGWKHVXVWDLQDELOLW\RIPDUJLQVRILWV6XEVLGLDULHV Unpredictability and Volatility of Securities Pricing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ilution Risk 7KHDXWKRUL]HGVKDUHFDSLWDORIWKH&RUSRUDWLRQLVFRPSULVHGRIDQXQOLPLWHGQXPEHURIFRPPRQVKDUHV7KH&RUSRUDWLRQPD\LVVXH DGGLWLRQDOFRPPRQVKDUHVRUVHFXULWLHVZKLFKDUHFRQYHUWLEOHH[FKDQJHDEOHRUH[HUFLVDEOHLQWRFRPPRQVKDUHVIRUFRQVLGHUDWLRQ DQGRQWKRVHWHUPVDQGFRQGLWLRQVDVDUHHVWDEOLVKHGE\WKH&RUSRUDWLRQZLWKRXWWKHDSSURYDORIVKDUHKROGHUV7KH&RUSRUDWLRQ LQWHQGVWRSXUVXHIXUWKHUDFTXLVLWLRQVZKLFKZLOOOLNHO\UHTXLUHWKHLVVXDQFHRIDGGLWLRQDOFRPPRQVKDUHV Credit Risk &UHGLWULVNDULVHVIURPWKHSRWHQWLDOWKDWDFRXQWHUSDUW\ZLOOIDLOWRSHUIRUPLWVREOLJDWLRQVDQGWKH&RUSRUDWLRQLVH[SRVHGWRFUHGLWULVN IURPLWVFXVWRPHUVRUSDUWLHVZKHUHWKH&RUSRUDWLRQKDVDGYDQFHGIXQGVXQGHUDSURPLVVRU\QRWHRUORDQDUUDQJHPHQW7KLVLQFOXGHV OHDVH DUUDQJHPHQWV IRU 5HJLRQDO 2QH ZKHUH ORQJWHUP UHFHLYDEOHV DUH UHFRJQL]HG ZLWK DYLDWLRQ FRPSDQLHV LQ ILQDQFH OHDVH DUUDQJHPHQWV HUMAN CAPITAL RISKS: Reliance on Key Personnel 7KHVXFFHVVRIWKH&RUSRUDWLRQLVGHSHQGHQWRQDQXPEHURINH\VHQLRUHPSOR\HHVERWKDWWKH&RUSRUDWLRQ¶VKHDGRIILFHOHYHODQGDW WKH6XEVLGLDU\OHYHO7KHORVVRIDQ\RQHRIWKHVHNH\HPSOR\HHVZRXOGLPSDLUWKH&RUSRUDWLRQ¶VDELOLW\WRRSHUDWHDWLWVRSWLPXPOHYHO RI SHUIRUPDQFHDQG FRXOG KDYH DQ DGYHUVH HIIHFW RQ WKH &RUSRUDWLRQ¶V EXVLQHVVUHVXOWV IURP RSHUDWLRQV DQG ILQDQFLDO FRQGLWLRQ 7KHUHFDQEHQRDVVXUDQFHWKDWWKH&RUSRUDWLRQZLOOEHDEOHWRUHWDLQLWVH[LVWLQJVHQLRUPDQDJHPHQWDWWUDFWDGGLWLRQDOTXDOLILHG H[HFXWLYHV RU DGHTXDWHO\ ILOO QHZ VHQLRU PDQDJHPHQW SRVLWLRQV RU YDFDQFLHV FUHDWHG E\ H[SDQVLRQ WXUQRYHU RU LOOQHVV UHODWHG LPSDFWVDWHLWKHULWVKHDGRIILFHRU6XEVLGLDULHV Employees and Labour Relations 7KHVXFFHVVRIWKH6XEVLGLDULHVLVGHSHQGHQWLQODUJHSDUWXSRQWKHLUDELOLW\WRDWWUDFWDQGUHWDLQNH\PDQDJHPHQWDQGHPSOR\HHV 5HFUXLWLQJDQGPDLQWDLQLQJSHUVRQQHOLQWKHLQGXVWULHVLQZKLFKWKH6XEVLGLDULHVDUHLQYROYHGLVKLJKO\FRPSHWLWLYHDQGLWFDQQRWEH JXDUDQWHHGWKDWWKHVHHQWLWLHVZLOOEHDEOHWRDWWUDFWDQGUHWDLQWKHTXDOLILHGSHUVRQQHOQHHGHGIRUWKHLUEXVLQHVVHV,QSDUWLFXODU VNLOOHG ODERXU IRU WKH :HV7RZHU RSHUDWLRQV RI WRZHU PDLQWHQDQFH DQG HUHFWLRQ HQJLQHHUV LQ 3URYLQFLDO¶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¶VEXVLQHVVUHVXOWVIURPRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ &HUWDLQHPSOR\HHVKDYHODERXUUHODWHGDJUHHPHQWVEXWWKHUHFDQEHQRDVVXUDQFHWKDWIXWXUHDJUHHPHQWVZLWKHPSOR\HHXQLRQVRU WKHRXWFRPHRIDUELWUDWLRQVZLOOEHRQWHUPVFRQVLVWHQWZLWKWKH&RUSRUDWLRQ¶VH[SHFWDWLRQVRUFRPSDUDEOHWRDJUHHPHQWVHQWHUHGLQWR E\WKH&RUSRUDWLRQ¶VFRPSHWLWRUV$Q\IXWXUHDJUHHPHQWVRURXWFRPHVRIQHJRWLDWLRQVPHGLDWLRQVRUDUELWUDWLRQVLQFOXGLQJLQUHODWLRQ WRZDJHVRURWKHUODERXUFRVWVRUZRUNUXOHVPD\UHVXOWLQLQFUHDVHGODERXUFRVWVRURWKHUFKDUJHVZKLFKFRXOGKDYHDQDGYHUVHHIIHFW RQWKH&RUSRUDWLRQ¶VEXVLQHVVUHVXOWVIURPRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ 7KHUHFDQEHQRDVVXUDQFHWKDWWKHUHZLOOQRWEHDODERXUFRQIOLFWWKDWFRXOGOHDGWRDQLQWHUUXSWLRQRUVWRSSDJHLQWKH&RUSRUDWLRQ¶V VHUYLFH RU RWKHUZLVH DGYHUVHO\ DIIHFW WKH DELOLW\ RI WKH &RUSRUDWLRQ WR FRQGXFW LWV RSHUDWLRQV DOO RI ZKLFK FRXOG KDYH D PDWHULDO DGYHUVHHIIHFWRQLWVEXVLQHVVUHVXOWVIURPRSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 Conflicts of Interest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¶VOHDVLQJSRRO2WKHUFDSLWDOH[SHQGLWXUHVDUHFODVVLILHGDV*URZWK&DSLWDO([SHQGLWXUHV DVWKH\ZLOOJHQHUDWHQHZFDVKIORZVDQGDUHQRWFRQVLGHUHGE\PDQDJHPHQWLQGHWHUPLQLQJWKHFDVKIORZVUHTXLUHGWRVXVWDLQ WKHFXUUHQWRSHUDWLRQVRIWKH&RUSRUDWLRQ 7KH &RUSRUDWLRQ¶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¶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¶VGHSUHFLDWLRQLVLQFOXGHGLQWKH&RUSRUDWLRQ¶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¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December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¶V PHWKRG RI FDOFXODWLQJ (%,7'$ $GMXVWHG 1HW (DUQLQJV )UHH &DVK )ORZ DQG 0DLQWHQDQFH&DSLWDO([SHQGLWXUHVDQG*URZWK&DSLWDO([SHQGLWXUHVPD\GLIIHUIURPWKDWRIRWKHUHQWLWLHVDQGWKHUHIRUHPD\QRWEH FRPSDUDEOHWRPHDVXUHVXWLOL]HGE\WKHP

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 14. SELECTED ANNUAL AND QUARTERLY INFORMATION 7KHIROORZLQJWDEOHSURYLGHVVHOHFWHGDQQXDOLQIRUPDWLRQIRUWKH&RUSRUDWLRQIRUWKH\HDUVHQGHGWKURXJKWR

2020 5HYHQXHV 1,149,629 ([SHQVHV 865,094 (%,7'$ 284,535 7RWDOQRQRSHUDWLQJH[SHQVH 256,480 1HW(DUQLQJV 28,055

1HW(DUQLQJVSHUVKDUH %DVLF 0.80 'LOXWHG 0.78

$GMXVWHG1HW(DUQLQJV 47,176 %DVLF 1.35 'LOXWHG 1.31

'LYLGHQGVGHFODUHG 80,012 3HUVKDUH 2.28

)UHH&DVK)ORZ 198,400 3HUVKDUHEDVLF 5.66 3HUVKDUHIXOO\GLOXWHG 5.03

)UHH&DVK)ORZOHVV0DLQWHQDQFH&DSLWDO([SHQGLWXUHV 113,331 3HUVKDUHEDVLF 3.23 3HUVKDUHIXOO\GLOXWHG 2.94

)LQDQFLDO3RVLWLRQ :RUNLQJFDSLWDO 323,625 7RWDODVVHWV 2,294,184 7RWDOORQJWHUPOLDELOLWLHV 1,215,245 7RWDOOLDELOLWLHV 1,608,238

6KDUH,QIRUPDWLRQ &RPPRQVKDUHVRXWVWDQGLQJDVDW'HFHPEHU 35,471,758 :HLJKWHGDYHUDJHFRPPRQVKDUHVRXWVWDQGLQJGXULQJWKH\HDUEDVLF 35,048,953

1RWH ([SHQVHVLQFOXGHGLUHFWRSHUDWLQJH[SHQVHV H[FOXGLQJGHSUHFLDWLRQDQGDPRUWL]DWLRQ FRVWRIJRRGVVROG H[FOXGLQJGHSUHFLDWLRQDQGDPRUWL]DWLRQ DQG JHQHUDODQGDGPLQLVWUDWLYHH[SHQVHVEXWH[FOXGHVDQ\XQXVXDOQRQRSHUDWLQJRQHWLPHLWHPV 1RWH /RQJWHUPOLDELOLWLHVLQFOXGHWKHQRQFXUUHQWSRUWLRQVRIORQJWHUPGHEWDQGILQDQFHOHDVHVFRQYHUWLEOHGHEHQWXUHVORQJWHUPGHIHUUHGUHYHQXHORQJWHUP ULJKWRIXVHOHDVHOLDELOLWLHVDQGRWKHUORQJWHUPOLDELOLWLHV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Management Discussion & Analysis of Operating Results and Financial Position for the year ended December 31, 2020 7KHIROORZLQJVXPPDU\UHIOHFWVTXDUWHUO\UHVXOWVRIWKH&RUSRUDWLRQ

2020 Q4 Q3 Q2 Q1 4 4 4 4 4 5HYHQXH 301,710 297,286 243,657 306,976 (%,7'$ 81,971 83,235 62,075 57,254 1HW(DUQLQJV 13,479 17,244 2,630 (5,298) %DVLF 0.38 0.49 0.08 (0.15) 'LOXWHG 0.37 0.48 0.07 (0.15) $GMXVWHG1HW(DUQLQJV 18,847 20,626 5,645 2,058 %DVLF 0.53 0.59 0.16 0.06 'LOXWHG 0.52 0.57 0.16 0.06 )UHH&DVK)ORZ )&) 59,497 57,886 42,268 38,749 %DVLF 1.68 1.64 1.21 1.12 'LOXWHG 1.48 1.45 1.09 1.01 )&)OHVV0DLQWHQDQFH&DSLWDO 41,270 44,350 25,412 2,299 ([SHQGLWXUHV %DVLF 1.17 1.26 0.73 0.07 'LOXWHG 1.05 1.23 0.71 0.06 0DLQWHQDQFH&DSLWDO 18,227 13,536 16,856 36,450 ([SHQGLWXUHV *URZWK&DSLWDO([SHQGLWXUHV 14,434 6,807 12,301 14,381 1RWH 2Q-DQXDU\WKH&RUSRUDWLRQDGRSWHG,)56XVLQJWKHPRGLILHGUHWURVSHFWLYHPHWKRG$PRXQWVSULRUWRDUHQRWGLUHFWO\FRPSDUDEOHWR UHVXOWVDIWHUWKHDGRSWLRQRI,)56

ADDITIONAL INFORMATION $GGLWLRQDOLQIRUPDWLRQUHODWLQJWRWKH&RUSRUDWLRQLVRQ6('$5DWZZZVHGDUFRP

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Independent auditor’s report

7RWKH6KDUHKROGHUVRI([FKDQJH,QFRPH&RUSRUDWLRQ

2XURSLQLRQ

,QRXURSLQLRQWKHDFFRPSDQ\LQJFRQVROLGDWHGILQDQFLDOVWDWHPHQWVSUHVHQWIDLUO\LQDOOPDWHULDOUHVSHFWV WKHILQDQFLDOSRVLWLRQRI([FKDQJH,QFRPH&RUSRUDWLRQDQGLWVVXEVLGLDULHV WRJHWKHUWKH&RUSRUDWLRQ DV DW'HFHPEHUDQGDQGLWVILQDQFLDOSHUIRUPDQFHDQGLWVFDVKIORZVIRUWKH\HDUVWKHQHQGHG LQDFFRUGDQFHZLWK,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ6WDQGDUGVDVLVVXHGE\WKH,QWHUQDWLRQDO$FFRXQWLQJ 6WDQGDUGV%RDUG ,)56

:KDWZHKDYHDXGLWHG 7KH&RUSRUDWLRQ¶VFRQVROLGDWHGILQDQFLDOVWDWHPHQWVFRPSULVH x WKHFRQVROLGDWHGVWDWHPHQWVRIILQDQFLDOSRVLWLRQDVDW'HFHPEHUDQG x WKHFRQVROLGDWHGVWDWHPHQWVRILQFRPHIRUWKH\HDUVWKHQHQGHG x WKHFRQVROLGDWHGVWDWHPHQWVRIFRPSUHKHQVLYHLQFRPHIRUWKH\HDUVWKHQHQGHG x WKHFRQVROLGDWHGVWDWHPHQWVRIFKDQJHVLQHTXLW\IRUWKH\HDUVWKHQHQGHG x WKHFRQVROLGDWHGVWDWHPHQWVRIFDVKIORZVIRUWKH\HDUVWKHQHQGHGDQG x WKHQRWHVWRWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVZKLFKLQFOXGHVLJQLILFDQWDFFRXQWLQJSROLFLHVDQG RWKHUH[SODQDWRU\LQIRUPDWLRQ

%DVLVIRURSLQLRQ

:HFRQGXFWHGRXUDXGLWLQDFFRUGDQFHZLWK&DQDGLDQJHQHUDOO\DFFHSWHGDXGLWLQJVWDQGDUGV2XU UHVSRQVLELOLWLHVXQGHUWKRVHVWDQGDUGVDUHIXUWKHUGHVFULEHGLQWKHAuditor’s responsibilities for the audit of the consolidated financial statementsVHFWLRQRIRXUUHSRUW

:HEHOLHYHWKDWWKHDXGLWHYLGHQFHZHKDYHREWDLQHGLVVXIILFLHQWDQGDSSURSULDWHWRSURYLGHDEDVLVIRU RXURSLQLRQ

,QGHSHQGHQFH :HDUHLQGHSHQGHQWRIWKH&RUSRUDWLRQLQDFFRUGDQFHZLWKWKHHWKLFDOUHTXLUHPHQWVWKDWDUHUHOHYDQWWR RXUDXGLWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVLQ&DQDGD:HKDYHIXOILOOHGRXURWKHUHWKLFDO UHVSRQVLELOLWLHVLQDFFRUGDQFHZLWKWKHVHUHTXLUHPHQWV

PricewaterhouseCoopers LLP One Lombard Place, Suite 2300, Winnipeg, Manitoba, Canada R3B 0X6 T: +1 204 926 2400, F: +1 204 944 1020

³3Z&´UHIHUVWR3ULFHZDWHUKRXVH&RRSHUV//3DQ2QWDULROLPLWHGOLDELOLW\SDUWQHUVKLS .H\DXGLWPDWWHUV

.H\DXGLWPDWWHUVDUHWKRVHPDWWHUVWKDWLQRXUSURIHVVLRQDOMXGJPHQWZHUHRIPRVWVLJQLILFDQFHLQRXU DXGLWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVIRUWKH\HDUHQGHG'HFHPEHU7KHVHPDWWHUVZHUH DGGUHVVHGLQWKHFRQWH[WRIRXUDXGLWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDVDZKROHDQGLQIRUPLQJ RXURSLQLRQWKHUHRQDQGZHGRQRWSURYLGHDVHSDUDWHRSLQLRQRQWKHVHPDWWHUV

.H\DXGLWPDWWHU +RZRXUDXGLWDGGUHVVHGWKHNH\DXGLWPDWWHU

&RVWRIVDOHVUHFRJQLWLRQí5HJLRQDO2QH¶V 2XUDSSURDFKWRDGGUHVVLQJWKHPDWWHULQFOXGHGWKH DYLDWLRQSDUWVIRUUHVDOH IROORZLQJSURFHGXUHVDPRQJRWKHUV 5HIHUWRQRWHí6LJQLILFDQWDFFRXQWLQJSROLFLHVQRWH x 7HVWHGKRZPDQDJHPHQWHVWLPDWHGWKHDYHUDJH í&ULWLFDODFFRXQWLQJHVWLPDWHVDQGMXGJPHQWVDQG FRVWWRVDOHSHUFHQWDJHEDVHGRQH[SHFWHGVHOOLQJ QRWHí,QYHQWRULHVWRWKHFRQVROLGDWHGILQDQFLDO SULFHVIRUDYLDWLRQSDUWVIRUUHVDOHZKLFKLQFOXGHG statements. WKHIROORZLQJ 7KH&RUSRUDWLRQ¶VDYLDWLRQSDUWVIRUUHVDOHLQYHQWRULHV - (YDOXDWHGWKHDSSURSULDWHQHVVRIWKHDYHUDJH FDUU\LQJYDOXHZDVPLOOLRQDVDW'HFHPEHU FRVWWRVDOHVSHUFHQWDJHPHWKRGDWH[SHFWHG $SRUWLRQRIWKHPLOOLRQRILQYHQWRULHV VHOOLQJSULFHV H[SHQVHGDQGUHFRUGHGZLWKLQDHURVSDFHDQGDYLDWLRQ - 7HVWHGWKHFRPSOHWHQHVVDFFXUDF\DQG H[SHQVHV-H[FOXGLQJGHSUHFLDWLRQDQGDPRUWL]DWLRQRI UHOHYDQFHRIWKHGDWDXVHGLQWKHDYHUDJH UHODWHGWRWKH&RUSRUDWLRQ¶VDYLDWLRQSDUWVIRUUHVDOH FRVWWRVDOHVSHUFHQWDJHPHWKRGDWH[SHFWHG FRVWRIVDOHVIRUWKH\HDUHQGHG'HFHPEHU VHOOLQJSULFHV ,QWKHQRUPDOFRXUVHRIWKH&RUSRUDWLRQ¶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

:HFRQVLGHUHGWKLVDNH\DXGLWPDWWHUGXHWRWKH PDJQLWXGHRIWKHPDWWHUDQGVLJQLILFDQWMXGJPHQW DSSOLHGE\PDQDJHPHQWZKHQGHYHORSLQJWKHDYHUDJH FRVWWRVDOHSHUFHQWDJHHVWLPDWH7KLVLQWXUQOHGWRD KLJKGHJUHHRIDXGLWRUMXGJPHQWVXEMHFWLYLW\DQGHIIRUW LQSHUIRUPLQJSURFHGXUHVDQGHYDOXDWLQJHYLGHQFH UHODWLQJWRWKHGHWHUPLQDWLRQRIWKHH[SHFWHGVHOOLQJ SULFH7KHDXGLWHIIRUWLQYROYHGWKHXVHRI SURIHVVLRQDOVZLWKVSHFLDOL]HGVNLOODQGNQRZOHGJH .H\DXGLWPDWWHU +RZRXUDXGLWDGGUHVVHGWKHNH\DXGLWPDWWHU

5HYHQXHUHFRJQLWLRQí(VWLPDWHGFRVWVWR 2XUDSSURDFKWRDGGUHVVLQJWKHPDWWHULQFOXGHGWKH FRPSOHWHORQJWHUPFRQVWUXFWLRQFRQWUDFWVDW$:, IROORZLQJSURFHGXUHVDPRQJRWKHUV 3URYLQFLDO6WDLQOHVVDQG:HV7RZHUIRU XQFRPSOHWHGFRQWUDFWVDVDW\HDUHQG x 7HVWHGKRZPDQDJHPHQWGHWHUPLQHGWKH HVWLPDWHGFRVWVWRFRPSOHWHWKHVHORQJWHUP 5HIHUWRQRWHí6LJQLILFDQWDFFRXQWLQJSROLFLHVQRWH FRQVWUXFWLRQFRQWUDFWVDW$:,3URYLQFLDO í&ULWLFDODFFRXQWLQJHVWLPDWHVDQGMXGJPHQWVDQG 6WDLQOHVVDQG:HV7RZHUIRUXQFRPSOHWHG QRWHí&RQVWUXFWLRQFRQWUDFWVWRWKHFRQVROLGDWHG FRQWUDFWVDVDW\HDUHQGZKLFKLQFOXGHGWKH financial statements IROORZLQJ - (YDOXDWHGWKHDSSURSULDWHQHVVRI 7KH&RUSRUDWLRQUHFRJQL]HGUHYHQXHRIPLOOLRQ PDQDJHPHQW¶VLQSXWEDVHGPHWKRGDQG IURPXQFRPSOHWHGORQJWHUPFRQVWUXFWLRQFRQWUDFWVIRU WHVWHGWKHPDWKHPDWLFDODFFXUDF\RIWKHUDWLR WKH\HDUHQGHG'HFHPEHUUHODWHGWRUHYHQXH RIDFWXDOFRVWVLQFXUUHGWRGDWHRYHU UHFRJQL]HGRYHUWLPHLQFOXGLQJUHYHQXHIURPORQJ HVWLPDWHGWRWDOFRVWVDWFRPSOHWLRQ WHUPFRQVWUXFWLRQFRQWUDFWVDW$GYDQFHG:LQGRZ - 7HVWHGWKHXQGHUO\LQJGDWDXVHGE\ 6SHFLDOLVWV,QF $:, 3URYLQFLDO$HURVSDFH/WG PDQDJHPHQWLQWKHLQSXWEDVHGPHWKRG 3URYLQFLDO 6WDLQOHVV)DEULFDWLRQ,QF 6WDLQOHVV DQG - )RUDVDPSOHRIXQFRPSOHWHGORQJWHUP :HV7RZHU&RPPXQLFDWLRQV/WG :HV7RZHU )RU FRQVWUXFWLRQFRQWUDFWVDWWKHEHJLQQLQJRIWKH $:,3URYLQFLDO6WDLQOHVVDQG:HV7RZHUUHYHQXHLV \HDUSHUIRUPHGORRNEDFNSURFHGXUHVDQG UHFRJQL]HGRYHUWLPHXVLQJDQLQSXWEDVHGPHDVXUH FRPSDUHGWKHRULJLQDOO\HVWLPDWHGFRVWVWR VXFKDVWKHUDWLRRIDFWXDOFRVWVLQFXUUHGWRGDWHRYHU DFWXDOFRVWVLQFXUUHGRQVLPLODUFRPSOHWHG HVWLPDWHGWRWDOFRVWV0DQDJHPHQWDSSOLHVVLJQLILFDQW FRQWUDFWV MXGJPHQWWRHVWLPDWHWKHFRVWVWRFRPSOHWHWKHVH - )RUDVDPSOHRIXQFRPSOHWHGORQJWHUP ORQJWHUPFRQVWUXFWLRQFRQWUDFWVLQFOXGLQJWKHXVHRI FRQVWUXFWLRQFRQWUDFWVDVDW\HDUHQG VLJQLILFDQWDVVXPSWLRQVZLWKUHVSHFWWRHVWLPDWHG HYDOXDWHGWKHUHDVRQDEOHQHVVRIVLJQLILFDQW ODERXUFRVWVPDWHULDODQGVXEFRQWUDFWLQJFRVWVDV DVVXPSWLRQVXVHGE\PDQDJHPHQWZLWK DSSOLFDEOH UHVSHFWWRHVWLPDWHGODERXUFRVWVPDWHULDO DQGVXEFRQWUDFWLQJFRVWVE\ :HFRQVLGHUHGWKLVDNH\DXGLWPDWWHUGXHWRWKH VLJQLILFDQWMXGJPHQWDSSOLHGE\PDQDJHPHQWLQ o 7HVWLQJWKHHVWLPDWHGFRVWVWRFRPSOHWH GHWHUPLQLQJWKHHVWLPDWHGFRVWVWRFRPSOHWHORQJWHUP E\FRPSDULQJWKHFRVWVLQLWLDOO\EXGJHWHG FRQVWUXFWLRQFRQWUDFWV7KLVLQWXUQOHGWRDKLJK IRUWKHFRPSOHWHGSKDVHVRIWKHFRQWUDFWV GHJUHHRIDXGLWRUMXGJPHQWVXEMHFWLYLW\DQGHIIRUWLQ WRWKHDFWXDOFRVWVLQFXUUHGIRUWKRVH SHUIRUPLQJSURFHGXUHVDQGHYDOXDWLQJDXGLWHYLGHQFH SKDVHVDQG UHODWLQJWRWKHVLJQLILFDQWDVVXPSWLRQVXVHGE\ o ,QTXLULQJZLWKPDQDJHPHQWLQFOXGLQJ PDQDJHPHQW SURMHFWPDQDJHUVUHJDUGLQJWKHVWDWXVRI FRQWUDFWVDQGWKHHVWLPDWHVRIFRVWVWR FRPSOHWH ,PSDLUPHQWDVVHVVPHQWRILQGHILQLWHOLIHLQWDQJLEOH 2XUDSSURDFKWRDGGUHVVLQJWKHPDWWHULQFOXGHGWKH DVVHWV±:DWHU%ODVWDQG:DWHU%ODVW1RUWK'DNRWD IROORZLQJSURFHGXUHVDPRQJRWKHUV EUDQGQDPHV 7HVWHGKRZPDQDJHPHQWGHYHORSHGWKHUHFRYHUDEOH 5HIHUWRQRWHí6LJQLILFDQWDFFRXQWLQJSROLFLHVQRWH DPRXQWHVWLPDWHVIRUWKH:DWHU%ODVWDQG:DWHU%ODVW í&ULWLFDODFFRXQWLQJHVWLPDWHVDQGMXGJPHQWVDQG 1RUWK'DNRWD&*8VZKLFKLQFOXGHGWKHIROORZLQJ QRWHí,QWDQJLEOHDVVHWVDQGJRRGZLOOWRWKH - (YDOXDWHGWKHDSSURSULDWHQHVVRIDQGWHVWHGWKH consolidated financial statements. PDWKHPDWLFDODFFXUDF\RIPDQDJHPHQW¶V GLVFRXQWHGFDVKIORZPRGHOV $W'HFHPEHUWKH:DWHU%ODVWDQG:DWHU - 7HVWHGWKHXQGHUO\LQJGDWDXVHGLQPDQDJHPHQW¶V %ODVW1RUWK'DNRWDEUDQGQDPHVUHSUHVHQWHG GLVFRXQWHGFDVKIORZPRGHOV PLOOLRQRIWKH&RUSRUDWLRQ¶VLQGHILQLWHOLIHLQWDQJLEOH - (YDOXDWHGWKHUHDVRQDEOHQHVVRIPDQDJHPHQW¶V DVVHWV,QGHILQLWHOLIHLQWDQJLEOHDVVHWVDUHLQFOXGHGLQ VLJQLILFDQWDVVXPSWLRQVUHODWHGWRIXWXUHJURZWK WKHUHODWHGFDVKJHQHUDWLQJXQLW &*8 DQGDUHWHVWHG UDWHVE\ IRULPSDLUPHQWDQQXDOO\RUZKHQHYHQWVRUFKDQJHVLQ FLUFXPVWDQFHVLQGLFDWHWKDWWKHFDUU\LQJDPRXQWPD\ o FRQVLGHULQJWKHFXUUHQWDQGSDVWSHUIRUPDQFH QRWEHUHFRYHUDEOH0DQDJHPHQWDVVHVVHVWKH RIWKH:DWHU%ODVWDQG:DWHU%ODVW1RUWK LPSDLUPHQWRILQGHILQLWHOLIHLQWDQJLEOHDVVHWVE\ 'DNRWD&*8V FRPSDULQJWKHFDUU\LQJDPRXQWRIHDFK&*8WRLWV o FRQVLGHULQJFRQVLVWHQF\ZLWKH[WHUQDOPDUNHW UHFRYHUDEOHDPRXQW7KHUHFRYHUDEOHDPRXQWVRIWKH DQGLQGXVWU\GDWDDQG &*8VZHUHEDVHGRQYDOXHLQXVHXVLQJDGLVFRXQWHG o FRQVLGHULQJFRQVLVWHQF\ZLWKHYLGHQFH FDVKIORZPRGHO0DQDJHPHQWDSSOLHGVLJQLILFDQW REWDLQHGLQRWKHUDUHDVRIWKHDXGLW MXGJPHQWLQHVWLPDWLQJWKHUHFRYHUDEOHDPRXQWVRIWKH - 3URIHVVLRQDOVZLWKVSHFLDOL]HGVNLOODQGNQRZOHGJH :DWHU%ODVWDQG:DWHU%ODVW1RUWK'DNRWD&*8V ZHUHXVHGWRDVVLVWLQWKHHYDOXDWLRQRI ZKLFKLQFOXGHGWKHXVHRIVLJQLILFDQWDVVXPSWLRQVZLWK PDQDJHPHQW¶VGLVFRXQWHGFDVKIORZPRGHOVDQG UHVSHFWWRIXWXUHJURZWKUDWHVDQGGLVFRXQWUDWHV WKHGLVFRXQWUDWHDVVXPSWLRQV

)RUWKH\HDUHQGHG'HFHPEHUPDQDJHPHQW UHFRUGHGDQLPSDLUPHQWFKDUJHRIPLOOLRQDJDLQVW WKH:DWHU%ODVWDQG:DWHU%ODVW1RUWK'DNRWDEUDQG QDPHV

:HFRQVLGHUHGWKLVDNH\DXGLWPDWWHUGXHWRWKH VLJQLILFDQWMXGJPHQWDSSOLHGE\PDQDJHPHQWZKHQ GHYHORSLQJWKHUHFRYHUDEOHDPRXQWHVWLPDWHVRIWKH :DWHU%ODVWDQG:DWHU%ODVW1RUWK'DNRWD&*8V 7KLVLQWXUQOHGWRDKLJKGHJUHHRIDXGLWRUMXGJPHQW VXEMHFWLYLW\DQGHIIRUWLQSHUIRUPLQJSURFHGXUHVDQGLQ HYDOXDWLQJDXGLWHYLGHQFHUHODWLQJWRWKHVLJQLILFDQW DVVXPSWLRQVXVHGE\PDQDJHPHQW7KHDXGLWHIIRUW LQYROYHGWKHXVHRISURIHVVLRQDOVZLWKVSHFLDOL]HGVNLOO DQGNQRZOHGJH 2WKHULQIRUPDWLRQ

0DQDJHPHQWLVUHVSRQVLEOHIRUWKHRWKHULQIRUPDWLRQ7KHRWKHULQIRUPDWLRQFRPSULVHVWKH0DQDJHPHQW¶V 'LVFXVVLRQDQG$QDO\VLVZKLFKZHREWDLQHGSULRUWRWKHGDWHRIWKLVDXGLWRU¶VUHSRUWDQGWKHLQIRUPDWLRQ RWKHUWKDQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDQGRXUDXGLWRU¶VUHSRUWWKHUHRQLQFOXGHGLQWKHDQQXDO UHSRUWZKLFKLVH[SHFWHGWREHPDGHDYDLODEOHWRXVDIWHUWKDWGDWH

2XURSLQLRQRQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVGRHVQRWFRYHUWKHRWKHULQIRUPDWLRQDQGZHGRQRW DQGZLOOQRWH[SUHVVDQRSLQLRQRUDQ\IRUPRIDVVXUDQFHFRQFOXVLRQWKHUHRQ

,QFRQQHFWLRQZLWKRXUDXGLWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRXUUHVSRQVLELOLW\LVWRUHDGWKHRWKHU LQIRUPDWLRQLGHQWLILHGDERYHDQGLQGRLQJVRFRQVLGHUZKHWKHUWKHRWKHULQIRUPDWLRQLVPDWHULDOO\ LQFRQVLVWHQWZLWKWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRURXUNQRZOHGJHREWDLQHGLQWKHDXGLWRU RWKHUZLVHDSSHDUVWREHPDWHULDOO\PLVVWDWHG

,IEDVHGRQWKHZRUNZHKDYHSHUIRUPHGRQWKHRWKHULQIRUPDWLRQWKDWZHREWDLQHGSULRUWRWKHGDWHRIWKLV DXGLWRU¶VUHSRUWZHFRQFOXGHWKDWWKHUHLVDPDWHULDOPLVVWDWHPHQWRIWKLVRWKHULQIRUPDWLRQZHDUH UHTXLUHGWRUHSRUWWKDWIDFW:HKDYHQRWKLQJWRUHSRUWLQWKLVUHJDUG:KHQZHUHDGWKHLQIRUPDWLRQRWKHU WKDQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDQGRXUDXGLWRU¶VUHSRUWWKHUHRQLQFOXGHGLQWKHDQQXDOUHSRUW LIZHFRQFOXGHWKDWWKHUHLVDPDWHULDOPLVVWDWHPHQWWKHUHLQZHDUHUHTXLUHGWRFRPPXQLFDWHWKHPDWWHUWR WKRVHFKDUJHGZLWKJRYHUQDQFH

5HVSRQVLELOLWLHVRIPDQDJHPHQWDQGWKRVHFKDUJHGZLWKJRYHUQDQFHIRUWKH FRQVROLGDWHGILQDQFLDOVWDWHPHQWV

0DQDJHPHQWLVUHVSRQVLEOHIRUWKHSUHSDUDWLRQDQGIDLUSUHVHQWDWLRQRIWKHFRQVROLGDWHGILQDQFLDO VWDWHPHQWVLQDFFRUGDQFHZLWK,)56DQGIRUVXFKLQWHUQDOFRQWURODVPDQDJHPHQWGHWHUPLQHVLV QHFHVVDU\WRHQDEOHWKHSUHSDUDWLRQRIFRQVROLGDWHGILQDQFLDOVWDWHPHQWVWKDWDUHIUHHIURPPDWHULDO PLVVWDWHPHQWZKHWKHUGXHWRIUDXGRUHUURU

,QSUHSDULQJWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVPDQDJHPHQWLVUHVSRQVLEOHIRUDVVHVVLQJWKH &RUSRUDWLRQ¶VDELOLW\WRFRQWLQXHDVDJRLQJFRQFHUQGLVFORVLQJDVDSSOLFDEOHPDWWHUVUHODWHGWRJRLQJ FRQFHUQDQGXVLQJWKHJRLQJFRQFHUQEDVLVRIDFFRXQWLQJXQOHVVPDQDJHPHQWHLWKHULQWHQGVWROLTXLGDWH WKH&RUSRUDWLRQRUWRFHDVHRSHUDWLRQVRUKDVQRUHDOLVWLFDOWHUQDWLYHEXWWRGRVR

7KRVHFKDUJHGZLWKJRYHUQDQFHDUHUHVSRQVLEOHIRURYHUVHHLQJWKH&RUSRUDWLRQ¶VILQDQFLDOUHSRUWLQJ SURFHVV $XGLWRU¶VUHVSRQVLELOLWLHVIRUWKHDXGLWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV

2XUREMHFWLYHVDUHWRREWDLQUHDVRQDEOHDVVXUDQFHDERXWZKHWKHUWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDV DZKROHDUHIUHHIURPPDWHULDOPLVVWDWHPHQWZKHWKHUGXHWRIUDXGRUHUURUDQGWRLVVXHDQDXGLWRU¶V UHSRUWWKDWLQFOXGHVRXURSLQLRQ5HDVRQDEOHDVVXUDQFHLVDKLJKOHYHORIDVVXUDQFHEXWLVQRWD JXDUDQWHHWKDWDQDXGLWFRQGXFWHGLQDFFRUGDQFHZLWK&DQDGLDQJHQHUDOO\DFFHSWHGDXGLWLQJVWDQGDUGV ZLOODOZD\VGHWHFWDPDWHULDOPLVVWDWHPHQWZKHQLWH[LVWV0LVVWDWHPHQWVFDQDULVHIURPIUDXGRUHUURUDQG DUHFRQVLGHUHGPDWHULDOLILQGLYLGXDOO\RULQWKHDJJUHJDWHWKH\FRXOGUHDVRQDEO\EHH[SHFWHGWRLQIOXHQFH WKHHFRQRPLFGHFLVLRQVRIXVHUVWDNHQRQWKHEDVLVRIWKHVHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV

$VSDUWRIDQDXGLWLQDFFRUGDQFHZLWK&DQDGLDQJHQHUDOO\DFFHSWHGDXGLWLQJVWDQGDUGVZHH[HUFLVH SURIHVVLRQDOMXGJPHQWDQGPDLQWDLQSURIHVVLRQDOVNHSWLFLVPWKURXJKRXWWKHDXGLW:HDOVR x ,GHQWLI\DQGDVVHVVWKHULVNVRIPDWHULDOPLVVWDWHPHQWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV ZKHWKHUGXHWRIUDXGRUHUURUGHVLJQDQGSHUIRUPDXGLWSURFHGXUHVUHVSRQVLYHWRWKRVHULVNVDQG REWDLQDXGLWHYLGHQFHWKDWLVVXIILFLHQWDQGDSSURSULDWHWRSURYLGHDEDVLVIRURXURSLQLRQ7KHULVNRI QRWGHWHFWLQJDPDWHULDOPLVVWDWHPHQWUHVXOWLQJIURPIUDXGLVKLJKHUWKDQIRURQHUHVXOWLQJIURPHUURU DVIUDXGPD\LQYROYHFROOXVLRQIRUJHU\LQWHQWLRQDORPLVVLRQVPLVUHSUHVHQWDWLRQVRUWKHRYHUULGHRI LQWHUQDOFRQWURO x 2EWDLQDQXQGHUVWDQGLQJRILQWHUQDOFRQWUROUHOHYDQWWRWKHDXGLWLQRUGHUWRGHVLJQDXGLWSURFHGXUHV WKDWDUHDSSURSULDWHLQWKHFLUFXPVWDQFHVEXWQRWIRUWKHSXUSRVHRIH[SUHVVLQJDQRSLQLRQRQWKH HIIHFWLYHQHVVRIWKH&RUSRUDWLRQ¶VLQWHUQDOFRQWURO x (YDOXDWHWKHDSSURSULDWHQHVVRIDFFRXQWLQJSROLFLHVXVHGDQGWKHUHDVRQDEOHQHVVRIDFFRXQWLQJ HVWLPDWHVDQGUHODWHGGLVFORVXUHVPDGHE\PDQDJHPHQW x &RQFOXGHRQWKHDSSURSULDWHQHVVRIPDQDJHPHQW¶VXVHRIWKHJRLQJFRQFHUQEDVLVRIDFFRXQWLQJDQG EDVHGRQWKHDXGLWHYLGHQFHREWDLQHGZKHWKHUDPDWHULDOXQFHUWDLQW\H[LVWVUHODWHGWRHYHQWVRU FRQGLWLRQVWKDWPD\FDVWVLJQLILFDQWGRXEWRQWKH&RUSRUDWLRQ¶VDELOLW\WRFRQWLQXHDVDJRLQJFRQFHUQ ,IZHFRQFOXGHWKDWDPDWHULDOXQFHUWDLQW\H[LVWVZHDUHUHTXLUHGWRGUDZDWWHQWLRQLQRXUDXGLWRU¶V UHSRUWWRWKHUHODWHGGLVFORVXUHVLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRULIVXFKGLVFORVXUHVDUH LQDGHTXDWHWRPRGLI\RXURSLQLRQ2XUFRQFOXVLRQVDUHEDVHGRQWKHDXGLWHYLGHQFHREWDLQHGXSWR WKHGDWHRIRXUDXGLWRU¶VUHSRUW+RZHYHUIXWXUHHYHQWVRUFRQGLWLRQVPD\FDXVHWKH&RUSRUDWLRQWR FHDVHWRFRQWLQXHDVDJRLQJFRQFHUQ x (YDOXDWHWKHRYHUDOOSUHVHQWDWLRQVWUXFWXUHDQGFRQWHQWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV LQFOXGLQJWKHGLVFORVXUHVDQGZKHWKHUWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVUHSUHVHQWWKHXQGHUO\LQJ WUDQVDFWLRQVDQGHYHQWVLQDPDQQHUWKDWDFKLHYHVIDLUSUHVHQWDWLRQ x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

:HDOVRSURYLGHWKRVHFKDUJHGZLWKJRYHUQDQFHZLWKDVWDWHPHQWWKDWZHKDYHFRPSOLHGZLWKUHOHYDQW HWKLFDOUHTXLUHPHQWVUHJDUGLQJLQGHSHQGHQFHDQGWRFRPPXQLFDWHZLWKWKHPDOOUHODWLRQVKLSVDQGRWKHU PDWWHUVWKDWPD\UHDVRQDEO\EHWKRXJKWWREHDURQRXULQGHSHQGHQFHDQGZKHUHDSSOLFDEOHUHODWHG VDIHJXDUGV

)URPWKHPDWWHUVFRPPXQLFDWHGZLWKWKRVHFKDUJHGZLWKJRYHUQDQFHZHGHWHUPLQHWKRVHPDWWHUVWKDW ZHUHRIPRVWVLJQLILFDQFHLQWKHDXGLWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRIWKHFXUUHQWSHULRGDQG DUHWKHUHIRUHWKHNH\DXGLWPDWWHUV:HGHVFULEHWKHVHPDWWHUVLQRXUDXGLWRU¶VUHSRUWXQOHVVODZRU UHJXODWLRQSUHFOXGHVSXEOLFGLVFORVXUHDERXWWKHPDWWHURUZKHQLQH[WUHPHO\UDUHFLUFXPVWDQFHVZH GHWHUPLQHWKDWDPDWWHUVKRXOGQRWEHFRPPXQLFDWHGLQRXUUHSRUWEHFDXVHWKHDGYHUVHFRQVHTXHQFHVRI GRLQJVRZRXOGUHDVRQDEO\EHH[SHFWHGWRRXWZHLJKWKHSXEOLFLQWHUHVWEHQHILWVRIVXFKFRPPXQLFDWLRQ

7KHHQJDJHPHQWSDUWQHURQWKHDXGLWUHVXOWLQJLQWKLVLQGHSHQGHQWDXGLWRU¶VUHSRUWLV+DQV$QGHUVHQ

&KDUWHUHG3URIHVVLRQDO$FFRXQWDQWV

:LQQLSHJ0DQLWRED )HEUXDU\ Exchange Income Corporation CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands of Canadian dollars) December 31 'HFHPEHU As at 2020 ASSETS &855(17 &DVKDQGFDVKHTXLYDOHQWV 69,862 $FFRXQWVUHFHLYDEOH 263,885 $PRXQWVGXHIURPFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV 1RWH 21,372 ,QYHQWRU\ 1RWH 235,870 3UHSDLGH[SHQVHVDQGGHSRVLWV 27,967 ,QFRPHWD[HVUHFHLYDEOH - 618,956

27+(5$66(76 1RWH 75,347 &$3,7$/$66(76 1RWH 950,037 5,*+72)86($66(76 1RWH 90,483 ,17$1*,%/($66(76 1RWH 161,772 *22':,// 1RWH 397,589 2,294,184

LIABILITIES &855(17 $FFRXQWVSD\DEOHDQGDFFUXHGH[SHQVHV 214,504 ,QFRPHWD[HVSD\DEOH 5,253 'HIHUUHGUHYHQXH 27,973 $PRXQWVGXHWRFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV 1RWH 24,997 &XUUHQWSRUWLRQRIULJKWRIXVHOHDVHOLDELOLW\ 1RWH 22,604 295,331

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ǣ ǡ ǡ Signed Signed

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Exchange Income Corporation CONSOLIDATED STATEMENTS OF INCOME (in thousands of Canadian dollars, except for per share amounts)

For the years ended December 31 2020

5(9(18( $HURVSDFH $YLDWLRQ 687,321 0DQXIDFWXULQJ 462,308 1,149,629

(;3(16(6 $HURVSDFH $YLDWLRQH[SHQVHVH[FOXGLQJGHSUHFLDWLRQDQGDPRUWL]DWLRQ 372,250 0DQXIDFWXULQJH[SHQVHVH[FOXGLQJGHSUHFLDWLRQDQGDPRUWL]DWLRQ 320,703 *HQHUDODQGDGPLQLVWUDWLYH 172,141 865,094

23(5$7,1*352),7%()25('(35(&,$7,21$0257,=$7,21),1$1&(&2676$1'27+(5 1RWH 284,535

'HSUHFLDWLRQRIFDSLWDODVVHWV 1RWH 139,898 $PRUWL]DWLRQRILQWDQJLEOHDVVHWV 1RWH 17,573 )LQDQFHFRVWVLQWHUHVW 47,000 'HSUHFLDWLRQRIULJKWRIXVHDVVHWV 1RWH 25,374 ,QWHUHVWH[SHQVHRQULJKWRIXVHOHDVHOLDELOLWLHV 3,934 $FTXLVLWLRQFRVWV 1,816 ,PSDLUPHQWORVV 1RWH 6,117 2WKHU 1RWH (177)

($51,1*6%()25(,1&20(7$;(6 43,000

,1&20(7$;(;3(16( 5(&29(5< 1RWH &XUUHQW 17,007 'HIHUUHG (2,062) 14,945 1(7($51,1*6 28,055 1(7($51,1*63(56+$5( 1RWH %DVLF 0.80 'LOXWHG 0.78 7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHJUDOSDUWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV

Exchange Income Corporation CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands of Canadian dollars) Attributable to common shareholders For the years ended December 31 2020

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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Exchange Income Corporation CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in thousands of Canadian dollars) 5HWDLQHG(DUQLQJV

&RQYHUWLEOH &RQWULEXWHG &XPXODWLYHLPSDFW $FFXPXODWHG 'HEHQWXUHV 6XUSOXV RIVKDUH 2WKHU (TXLW\ 0DWXUHG 'HIHUUHG &XPXODWLYH &XPXODWLYH UHSXUFKDVHV &RPSUHKHQVLYH 6KDUH&DSLWDO &RPSRQHQW 'HEHQWXUHV 6KDUH3ODQ (DUQLQJV 'LYLGHQGV XQGHU1&,% ,QFRPH /RVV Total %DODQFH-DQXDU\ $ 614,491 6KDUHVLVVXHGWRDFTXLVLWLRQYHQGRUV 9,360 3URVSHFWXVRIIHULQJ 1RWH 77,596 &RQYHUWLEOHGHEHQWXUHV &RQYHUWHGLQWRVKDUHV 1RWH 23,994 ,VVXHG 1RWH 2,497 0DWXUHG5HGHHPHG - 6KDUHVLVVXHGXQGHUGLYLGHQGUHLQYHVWPHQWSODQ 7,417

6KDUHVLVVXHGXQGHU)LUVW1DWLRQVFRPPXQLW\ SDUWQHUVKLSDJUHHPHQWV 321 'HIHUUHGVKDUHSODQYHVWLQJ 1RWH 2,806 'HIHUUHGVKDUHSODQLVVXDQFH - 6KDUHVLVVXHGXQGHU(633 1,913 6KDUHVFDQFHOOHGXQGHU1&,% (2,192) &RPSUHKHQVLYHLQFRPH 64,382 'LYLGHQGVGHFODUHG 1RWH (72,742) Balance, December 31, 2019 $ 709,546 $ 13,214 $ 9,837 $ 15,854 $ 471,569 $ (496,920) $ (26,122) $ 32,865 $ 729,843 %DODQFH-DQXDU\ $ 729,843 6KDUHVLVVXHGWRDFTXLVLWLRQYHQGRUV 1RWH 9,402 6KDUHVLVVXHGXQGHUGLYLGHQGUHLQYHVWPHQWSODQ 1RWH 9,427 6KDUHVLVVXHGXQGHU)LUVW1DWLRQVFRPPXQLW\ 50 SDUWQHUVKLSDJUHHPHQWV - 'HIHUUHGVKDUHSODQYHVWLQJ 1RWH 1,645 'HIHUUHGVKDUHSODQLVVXDQFH 1RWH - 6KDUHVLVVXHGXQGHU(633 1RWH 2,312 &RPSUHKHQVLYHLQFRPH 13,279 'LYLGHQGVGHFODUHG 1RWH (80,012) Balance, December 31, 2020 $ 731,343 $ 13,214 $ 9,837 $ 16,893 $ 499,624 $ (576,932) $ (26,122) $ 18,089 $ 685,946 7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHJUDOSDUWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV Exchange Income Corporation CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of Canadian dollars)

For the years ended December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

),1$1&,1*$&7,9,7,(6 3URFHHGVIURPORQJWHUPGHEWQHWRILVVXDQFHFRVWV 1RWH 177,908 5HSD\PHQWRIORQJWHUPGHEW 1RWH (100,118) 3ULQFLSDOSD\PHQWVRQULJKWRIXVHOHDVHOLDELOLWLHV 1RWH (24,667) 3URFHHGVIURPLVVXDQFHRIFRQYHUWLEOHGHEHQWXUHVQHWRILVVXDQFHFRVWV 1RWH - 5HGHPSWLRQRIFRQYHUWLEOHGHEHQWXUHV1RWH - ,VVXDQFHRIVKDUHVQHWRILVVXDQFHFRVWV 11,739 3D\PHQWIRUUHSXUFKDVHRIVKDUHVXQGHU1&,% 1RWH - &DVKGLYLGHQGV 1RWH (80,012) 2WKHU - (15,150)

,19(67,1*$&7,9,7,(6 3XUFKDVHRIFDSLWDODVVHWV (141,650) 3URFHHGVIURPGLVSRVDORIFDSLWDODVVHWV 13,263 3XUFKDVHRILQWDQJLEOHDVVHWV (4,605) ,QYHVWPHQWLQRWKHUDVVHWV (4,985) &DVKRXWIORZIRUDFTXLVLWLRQVQHWRIFDVKDFTXLUHG (51,046) 3D\PHQWRIFRQWLQJHQWDFTXLVLWLRQFRQVLGHUDWLRQDQGZRUNLQJFDSLWDOVHWWOHPHQWV (7,255) (196,278)

1(7,1&5($6( '(&5($6( ,1&$6+$1'&$6+(48,9$/(176 48,546 &$6+$1'&$6+(48,9$/(176%(*,11,1*2)<($5 22,055 ())(&762)(;&+$1*(5$7(&+$1*(621&$6+$1'&$6+(48,9$/(176 (739)

&$6+$1'&$6+(48,9$/(176(1'2)<($5 69,862 6XSSOHPHQWDU\FDVKIORZLQIRUPDWLRQ ,QWHUHVWSDLG 41,317 ,QFRPHWD[HVSDLG 9,711 7KHDFFRPSDQ\LQJQRWHVDUHDQLQWHJUDOSDUWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Exchange Income Corporation 1RWHVWRWKH&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV )RUWKH\HDUVHQGHG'HFHPEHUDQG

(in thousands of Canadian dollars, unless otherwise noted and except per share information and share data)

1. ORGANIZATION ([FKDQJH,QFRPH&RUSRUDWLRQ ³(,&´RUWKH³&RUSRUDWLRQ´ LVDGLYHUVLILHGDFTXLVLWLRQRULHQWHGFRUSRUDWLRQIRFXVHGRQRSSRUWXQLWLHVLQ WKHDHURVSDFHDYLDWLRQDQGPDQXIDFWXULQJVHFWRUV7KHEXVLQHVVSODQRIWKH&RUSRUDWLRQLVWRLQYHVWLQSURILWDEOHZHOOHVWDEOLVKHG FRPSDQLHVZLWKVWURQJFDVKIORZVRSHUDWLQJLQQLFKHPDUNHWV7KH&RUSRUDWLRQLVLQFRUSRUDWHGLQ&DQDGDDQGWKHDGGUHVVRIWKH UHJLVWHUHGRIILFHLV±/RULPHU%RXOHYDUG:LQQLSHJ0DQLWRED&DQDGD53= $VDW'HFHPEHUWKHSULQFLSDORSHUDWLQJVXEVLGLDULHVRIWKH&RUSRUDWLRQDUH&DOP$LU,QWHUQDWLRQDO/33HULPHWHU$YLDWLRQ/3 LQFOXGLQJLWVRSHUDWLQJGLYLVLRQ%HDUVNLQ$LUOLQHV .HHZDWLQ$LU/3&XVWRP+HOLFRSWHUV/WG5HJLRQDO2QH,QF(,&$LUFUDIW/HDVLQJ /LPLWHG3URYLQFLDO$HURVSDFH/WG&$1/LQN$YLDWLRQ,QF ³0RQFWRQ)OLJKW&ROOHJH´ 4XHVW:LQGRZ6\VWHPV,QF4XHVW86$,QF :HV7RZHU&RPPXQLFDWLRQV/WG%HQ0DFKLQH3URGXFWV&RPSDQ\,QFRUSRUDWHG6WDLQOHVV)DEULFDWLRQ,QF/9&RQWURO0IJ/WG :DWHU%ODVW0DQXIDFWXULQJ/3DQG2YHUODQGHUV0DQXIDFWXULQJ/35HJLRQDO2QH,QF4XHVW86$,QFDQG6WDLQOHVV)DEULFDWLRQ ,QFDUHZKROO\RZQHGVXEVLGLDULHVRI(,,)0DQDJHPHQW86$,QF7KURXJKWKH&RUSRUDWLRQ¶VVXEVLGLDULHVSURGXFWVDQGVHUYLFHVDUH SURYLGHGLQWZREXVLQHVVVHJPHQWV$HURVSDFH $YLDWLRQDQG0DQXIDFWXULQJ 7KH&RUSRUDWLRQ¶VLQWHULPUHVXOWVDUHLPSDFWHGE\VHDVRQDOLW\IDFWRUV7KH$HURVSDFH $YLDWLRQVHJPHQWKDVKLVWRULFDOO\KDGWKH VWURQJHVWUHYHQXHVLQWKHVHFRQGDQGWKLUGTXDUWHUVZKHQGHPDQGWHQGVWREHKLJKHVWUHODWLYHO\PRGHVWLQWKHIRXUWKTXDUWHUDQGWKH ORZHVW LQ WKH ILUVW TXDUWHU DV FRPPXQLWLHV VHUYLFHG E\ FHUWDLQ RI WKH DLUOLQHV DUH OHVV LVRODWHG ZLWK WKH XVH RI ZLQWHU URDGV IRU WUDQVSRUWDWLRQGXULQJWKHZLQWHU:LWKWKHGLYHUVLW\RIWKH0DQXIDFWXULQJVHJPHQWWKHVHDVRQDOLW\RIWKHVHJPHQWLVUHODWLYHO\IODW WKURXJKRXWWKHILVFDOSHULRG SARS-CoV-2 (“COVID-19”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¶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

2. BASIS OF PREPARATION 7KH&RUSRUDWLRQSUHSDUHVLWVILQDQFLDOVWDWHPHQWVLQDFFRUGDQFHZLWK&DQDGLDQJHQHUDOO\DFFHSWHGDFFRXQWLQJSULQFLSOHV ³&DQDGLDQ *$$3´ ±3DUW,DVVHWRXWLQWKH&3$&DQDGD+DQGERRN±$FFRXQWLQJ ³&3$+DQGERRN´ 3DUW,RIWKH&3$+DQGERRNLQFRUSRUDWHV ,QWHUQDWLRQDO )LQDQFLDO 5HSRUWLQJ 6WDQGDUGV ³,)56´ DV LVVXHG E\ WKH ,QWHUQDWLRQDO $FFRXQWLQJ 6WDQGDUGV %RDUG ³,$6%´ 7KHVH FRQVROLGDWHGILQDQFLDOVWDWHPHQWVDUHSUHVHQWHGLQWKRXVDQGVRI&DQDGLDQGROODUVH[FHSWSHUVKDUHLQIRUPDWLRQDQGVKDUHGDWD 7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVZHUHDSSURYHGE\WKH%RDUGRI'LUHFWRUVRIWKH&RUSRUDWLRQIRULVVXHRQ)HEUXDU\

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

3. SIGNIFICANT ACCOUNTING POLICIES 7KHVLJQLILFDQWDFFRXQWLQJSROLFLHVXVHGLQWKHSUHSDUDWLRQRIWKHVHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVZKLFKKDYHEHHQFRQVLVWHQWO\ DSSOLHGWRDOOWKH\HDUVSUHVHQWHGXQOHVVRWKHUZLVHVWDWHGDUHDVIROORZV a) Basis of Measurement 7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVKDYHEHHQSUHSDUHGXQGHUWKHKLVWRULFDOFRVWFRQYHQWLRQH[FHSWIRUWKHUHYDOXDWLRQRI FHUWDLQILQDQFLDODVVHWVILQDQFLDOOLDELOLWLHVDQGGHULYDWLYHLQVWUXPHQWVPHDVXUHGDWIDLUYDOXH b) Principles of Consolidation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c) Revenue Recognition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erospace & Aviation Segment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¶V OHDVH FRQWUDFWV FDOO IRU ELOOLQJV HLWKHU LQ DGYDQFH RI RU VXEVHTXHQWWRWKHFXVWRPHU¶VXVDJHRIWKHDLUFUDIWXQGHUWKHOHDVH/HDVHUHYHQXHUHFHLYHGLQDGYDQFHLVUHFRUGHGDV GHIHUUHGUHYHQXHXQWLOVXFKWLPHWKDWLWKDVEHHQHDUQHG6HFXULW\GHSRVLWVUHFHLYHGIURPFXVWRPHUVDUHUHFRUGHGDVD OLDELOLW\ZLWKLQ³2WKHU/RQJ7HUP/LDELOLWLHV´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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data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³$PRXQWV GXH IURP FXVWRPHUV RQ FRQVWUXFWLRQ FRQWUDFWV´ RU D OLDELOLW\ ³$PRXQWV GXH WR FXVWRPHUV RQ FRQVWUXFWLRQFRQWUDFWV´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³)%2´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anufacturing Segment L 6DOHRIHTXLSPHQWDQGPDQXIDFWXUHGJRRGV 5HYHQXHIURPWKHVDOHRIHTXLSPHQWDQGPDQXIDFWXUHGJRRGVLVUHFRJQL]HGZKHQFRQWURORIWKHDVVHWKDVSDVVHGWRWKH FXVWRPHUZKLFKLVJHQHUDOO\DWWKHWLPHRIGHOLYHU\3D\PHQWVUHFHLYHGIURPFXVWRPHUVLQDGYDQFHRIWKHGHOLYHU\RIWKH JRRGVDUHUHFRUGHGDVGHIHUUHGUHYHQXH LL 0DQXIDFWXUHGZLQGRZVDOHV 5HYHQXHIURPWKHPDQXIDFWXUHRIZLQGRZV\VWHPVLVUHFRJQL]HGRYHUWLPHEDVHGRQRXWSXWPHDVXUHVVXFKDVVXUYH\VRI ZRUN SHUIRUPHG DQG XQLWV GHOLYHUHG ZKLFK UHSUHVHQWV WKH FRQWLQXRXV WUDQVIHU RI FRQWURO RI JRRGV DQG VHUYLFHV WR WKH FXVWRPHU6XFKFRQWUDFWVSURYLGHWKDWWKHFXVWRPHUDFFHSWFRPSOHWLRQRISURJUHVVWRGDWHDQGFRPSHQVDWHWKH&RUSRUDWLRQ IRUVHUYLFHVUHQGHUHG5HYHQXHIURPWKHLQVWDOODWLRQRIZLQGRZV\VWHPVLVUHFRJQL]HGRYHUWLPHEDVHGRQLQSXWPHDVXUHV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data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³$PRXQWVGXHIURPFXVWRPHUV RQFRQVWUXFWLRQFRQWUDFWV´ RUDOLDELOLW\ ³$PRXQWVGXHWRFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV´ LY 6WDLQOHVVWDQNVDOHV 5HYHQXHIURPWKHFRQVWUXFWLRQRIVWDLQOHVVWDQNVLVUHFRJQL]HGRYHUWLPHEDVHGRQWKHVWDJHRIFRPSOHWLRQ7KHVWDJHRI FRPSOHWLRQLVGHWHUPLQHGEDVHGRQWKHFRVWVLQFXUUHGWRGDWHLQFRPSDULVRQWRWKHH[SHFWHGWRWDOFRVWV6XFKFRQWUDFWV SURYLGHWKDWWKHFXVWRPHUDFFHSWFRPSOHWLRQRISURJUHVVWRGDWHDQGFRPSHQVDWHWKH&RUSRUDWLRQIRUVHUYLFHVUHQGHUHG 7KHWLPLQJRIELOOLQJVWRWKHFXVWRPHUDQGFXVWRPHUSD\PHQWVFDQUHVXOWLQHLWKHUDQDVVHW ³$PRXQWVGXHIURPFXVWRPHUV RQFRQVWUXFWLRQFRQWUDFWV´ RUDOLDELOLW\ ³$PRXQWVGXHWRFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV´ d) Expenses Aerospace & Aviation expenses – excluding depreciation and amortization 7KHIL[HGDQGYDULDEOHFRVWVDORQJZLWKWKHFRVWRIVDOHVLQFXUUHGLQWKHRSHUDWLRQVRIWKH&RUSRUDWLRQ¶V$HURVSDFH $YLDWLRQ VHJPHQWDUHLQFOXGHGLQWKLVOLQHLWHPRQWKH&RQVROLGDWHG6WDWHPHQWVRI,QFRPH7KLVLQFOXGHVFRVWVUHODWHGWRVKLSSLQJDQG KDQGOLQJDQGWKHFRVWRIVDOHVRILQYHQWRU\'HSUHFLDWLRQDQGDPRUWL]DWLRQDUHSUHVHQWHGVHSDUDWHO\RQDFRQVROLGDWHGEDVLV Manufacturing expenses – excluding depreciation and amortization 7KHFRVWRIVDOHVIRUWKH&RUSRUDWLRQ¶V0DQXIDFWXULQJVHJPHQWLVLQFOXGHGLQWKLVOLQHLWHPRQWKH&RQVROLGDWHG6WDWHPHQWVRI ,QFRPH7KLVLQFOXGHVFRVWVUHODWHGWRVKLSSLQJDQGKDQGOLQJDQGWKHFRVWRIVDOHVRIILQLVKHGJRRGVLQYHQWRU\'HSUHFLDWLRQDQG DPRUWL]DWLRQDUHSUHVHQWHGVHSDUDWHO\RQDFRQVROLGDWHGEDVLV e) Government Grants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± H[FOXGLQJGHSUHFLDWLRQDQGDPRUWL]DWLRQ0DQXIDFWXULQJH[SHQVHV±H[FOXGLQJGHSUHFLDWLRQDQGDPRUWL]DWLRQDQG*HQHUDO DQG$GPLQLVWUDWLYHH[SHQVHVRQWKH&RQVROLGDWHG6WDWHPHQWRI,QFRPH*UDQWVWKDWDUHLQWHQGHGDVDUHYHQXHJXDUDQWHHDUH UHFRUGHGZLWKLQUHYHQXHLQWKHSHULRGLQZKLFKWKH\DUHHDUQHG$Q\JUDQWVWKDWEHFRPHUHFHLYDEOHLQDSHULRGWKDWVXFFHHGV ZKHQWKHH[SHQVHVDUHLQFXUUHGDUHDFFUXHGLQWKHSHULRGLQZKLFKWKH\EHFRPHUHFHLYDEOH 'XULQJWKHWZHOYHPRQWKVHQGHG'HFHPEHUWKH&RUSRUDWLRQZDVHOLJLEOHIRUWKH&DQDGD(PHUJHQF\:DJH6XEVLG\ ³&(:6´ 'XULQJWKLVSHULRGWKH&RUSRUDWLRQUHFRUGHGUHODWHGWRWKH&(:6DVDUHGXFWLRQWRWKHH[SHQVHVIRUZKLFK WKHJUDQWLVLQWHQGHGWRFRYHU$W'HFHPEHUWKH&RUSRUDWLRQKDVDFFUXHGIRUDPRXQWVWREHUHFHLYHGXQGHU WKH&(:6SURJUDPLQ$FFRXQWV5HFHLYDEOH f) Foreign Currency Translation )XQFWLRQDODQGSUHVHQWDWLRQFXUUHQF\ ,WHPVLQFOXGHGLQWKHILQDQFLDOVWDWHPHQWVRIHDFKFRQVROLGDWHGHQWLW\LQWKH(,&JURXSDUHPHDVXUHGXVLQJWKHFXUUHQF\RIWKH SULPDU\HFRQRPLFHQYLURQPHQWLQZKLFKWKHHQWLW\RSHUDWHV WKH³IXQFWLRQDOFXUUHQF\´ 7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDUH SUHVHQWHGLQ&DQDGLDQGROODUVZKLFKLV(,&¶VIXQFWLRQDODQGSUHVHQWDWLRQFXUUHQF\ 7KHILQDQFLDOVWDWHPHQWVRIHQWLWLHVWKDWKDYHDIXQFWLRQDOFXUUHQF\GLIIHUHQWIURPWKDWRIWKH&RUSRUDWLRQ ³IRUHLJQRSHUDWLRQV´ DUHWUDQVODWHGLQWR&DQDGLDQGROODUVDVIROORZVDVVHWVDQGOLDELOLWLHV±DWWKHFORVLQJH[FKDQJHUDWHDWWKHGDWHRIWKHVWDWHPHQW RIILQDQFLDOSRVLWLRQDQGLQFRPHDQGH[SHQVHV±DWWKHDYHUDJHH[FKDQJHUDWHRIWKHSHULRG DVWKLVLVFRQVLGHUHGDUHDVRQDEOH DSSUR[LPDWLRQWRDFWXDOUDWHV $OOUHVXOWLQJFKDQJHVDUHUHFRJQL]HGLQRWKHUFRPSUHKHQVLYHLQFRPHDVFXPXODWLYHWUDQVODWLRQ DGMXVWPHQWV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data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¶V IXQFWLRQDOFXUUHQF\DUHUHFRJQL]HGLQWKHVWDWHPHQWRILQFRPH g) Cash and Cash Equivalents &DVKDQGFDVKHTXLYDOHQWVDUHFRPSULVHGRIFDVKDQGWHPSRUDU\LQYHVWPHQWVFRQVLVWLQJRIKLJKO\OLTXLGLQYHVWPHQWVKDYLQJ PDWXULWLHVRIWKUHHPRQWKVRUOHVV,QWHUHVWLVUHFRUGHGRQDQDFFUXDOEDVLV h) Financial Instruments 5HFRJQLWLRQ )LQDQFLDO DVVHWV DQG OLDELOLWLHV DUH UHFRUGHG RQ WKH VWDWHPHQW RI ILQDQFLDO SRVLWLRQ RI WKH &RUSRUDWLRQ ZKHQ WKH &RUSRUDWLRQ EHFRPHVDSDUW\WRWKHILQDQFLDOLQVWUXPHQW &ODVVLILFDWLRQ 7KH&RUSRUDWLRQFODVVLILHVLWVILQDQFLDODVVHWVDQGOLDELOLWLHVLQWRWKHIROORZLQJPHDVXUHPHQWFDWHJRULHV x WKRVHPHDVXUHGVXEVHTXHQWO\DWIDLUYDOXHHLWKHUWKURXJKSURILWRUORVVRUWKURXJK2&, x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³)92&,´ 7KH&RUSRUDWLRQ¶VFDVKDQGFDVKHTXLYDOHQWVDUHFODVVLILHGDVILQDQFLDODVVHWVPHDVXUHGDWIDLUYDOXHWKURXJKSURILWRUORVV ³)973/´ $FFRXQWV DQG RWKHU UHFHLYDEOHV ORDQV UHFHLYDEOH DQG GHSRVLWV DUH FODVVLILHG DV ILQDQFLDO DVVHWV PHDVXUHG DW DPRUWL]HGFRVW$FFRXQWVSD\DEOHWKH&RUSRUDWLRQ¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) )92&,'HEWLQVWUXPHQWVWKDWDUHKHOGIRUFROOHFWLRQRIFRQWUDFWXDOFDVKIORZVDQGIRUVHOOLQJWKHILQDQFLDODVVHWVZKHUHWKH DVVHWV¶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¶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¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 'HULYDWLYHILQDQFLDOLQVWUXPHQWV 7KH&RUSRUDWLRQPD\HQWHULQWRGHULYDWLYHILQDQFLDOLQVWUXPHQWVWRKHGJHLWVIRUHLJQFXUUHQF\H[SRVXUHDVVRFLDWHGZLWKLWV QHW LQYHVWPHQW LQ D IRUHLJQ RSHUDWLRQ *DLQV DQG ORVVHV RQ VXFK GHULYDWLYH LQVWUXPHQWV DUH UHFRJQL]HG LQ RWKHU FRPSUHKHQVLYHLQFRPHWRWKHH[WHQWWKHKHGJHLVHIIHFWLYH &DVKIORZKHGJHVRIIRUHLJQFXUUHQF\LQWHUHVWUDWHDQG5HVWULFWHG6KDUH3ODQOLDELOLWLHV 7KH &RUSRUDWLRQ DSSOLHV KHGJH DFFRXQWLQJ WR FHUWDLQ GHVLJQDWHG GHULYDWLYHV UHODWHG WR WKH FDVK IORZ KHGJH RI IRUHLJQ FXUUHQF\LQWHUHVWUDWHDQG5HVWULFWHG6KDUH3ODQOLDELOLWLHV8QGHUKHGJHDFFRXQWLQJWRWKHH[WHQWHIIHFWLYHWKHJDLQRU ORVVRQWKHKHGJLQJGHULYDWLYHVLVUHFRUGHGLQRWKHUFRPSUHKHQVLYHLQFRPH3UHPLXPVSDLGIRURSWLRQFRQWUDFWVDQGWKH WLPH YDOXH RI WKH RSWLRQ FRQWUDFWV DUH GHIHUUHG DV D FRVW RI WKH KHGJH LQ RWKHU FRPSUHKHQVLYH LQFRPH LI DSSOLFDEOH $PRXQWVDFFXPXODWHGLQRWKHUFRPSUHKHQVLYHLQFRPHDUHUHFODVVLILHGWRWKHVWDWHPHQWRILQFRPHLQWKHFRUUHVSRQGLQJOLQH LWHPWRWKHKHGJHGULVN 2QLQLWLDOGHVLJQDWLRQRIWKHGHULYDWLYHRUILQDQFLDOOLDELOLW\DVDKHGJLQJLQVWUXPHQWWKH&RUSRUDWLRQIRUPDOO\GRFXPHQWVWKH UHODWLRQVKLSEHWZHHQWKHKHGJLQJLQVWUXPHQWDQGWKHKHGJHGLWHPLQFOXGLQJWKHULVNPDQDJHPHQWREMHFWLYHVWKHVWUDWHJ\LQ XQGHUWDNLQJWKHKHGJHWUDQVDFWLRQDQGWKHKHGJHGULVNWKHLGHQWLILFDWLRQRIWKHQDWXUHRIWKHULVNEHLQJKHGJHGDQGKRZWKH &RUSRUDWLRQZLOODVVHVVZKHWKHUWKHKHGJLQJUHODWLRQVKLSPHHWVWKHKHGJHHIIHFWLYHQHVVUHTXLUHPHQWV7KH&RUSRUDWLRQ PDNHV DQ DVVHVVPHQW ERWK DW WKH LQFHSWLRQ RI WKH KHGJH UHODWLRQVKLS DV ZHOO DV RQ DQ RQJRLQJ EDVLV RI ZKHWKHU WKH KHGJLQJUHODWLRQVKLSPHHWVWKHKHGJHHIIHFWLYHQHVVUHTXLUHPHQWVLQFOXGLQJWKHHFRQRPLFUHODWLRQVKLSWKHFRQFOXVLRQWKDW FUHGLWULVNGRHVQRWGRPLQDWHWKHYDOXHFKDQJHVIURPWKDWHFRQRPLFUHODWLRQVKLSDQGWKHKHGJHUDWLRLVDSSURSULDWH7RWKH H[WHQWWKDWWKHKHGJHLVLQHIIHFWLYHVXFKGLIIHUHQFHVDUHUHFRJQL]HGLQWKHVWDWHPHQWRILQFRPH:KHQWKHKHGJHGQHW LQYHVWPHQWLVGLVSRVHGRIWKHUHOHYDQWDPRXQWLQWKHWUDQVODWLRQUHVHUYHLVWUDQVIHUUHGWRWKHVWDWHPHQWRILQFRPHDVSDUWRI WKHJDLQRUORVVRQGLVSRVDO :KHQ D KHGJLQJ LQVWUXPHQW H[SLUHV LV VROG RU WHUPLQDWHG RU ZKHQ D KHGJH QR ORQJHU PHHWV WKH FULWHULD IRU KHGJH DFFRXQWLQJDQ\FXPXODWLYHGHIHUUHGJDLQRUORVVDQGGHIHUUHGFRVWVRIKHGJLQJLQHTXLW\DWWKDWWLPHUHPDLQVLQHTXLW\XQWLO WKHIRUHFDVWWUDQVDFWLRQRFFXUV:KHQWKHIRUHFDVWWUDQVDFWLRQLVQRORQJHUH[SHFWHGWRRFFXUWKHFXPXODWLYHJDLQRUORVV DQGGHIHUUHGFRVWVRIKHGJLQJWKDWZHUHUHSRUWHGLQHTXLW\DUHLPPHGLDWHO\UHFODVVLILHGWRWKHVWDWHPHQWRILQFRPH i) Inventory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x 3DUWVDQGRWKHUFRQVXPDEOHVWKLVLQFOXGHVWKHLQYHQWRU\RIWKH$HURVSDFH $YLDWLRQVHJPHQWVXEVLGLDULHVDQGUHSUHVHQWV LWHPVXWLOL]HGLQWKHRSHUDWLRQVDQGUHSDLURIWKHDLUFUDIWDQGLWHPVSXUFKDVHGIRUUHVDOHDVDSSOLFDEOH x 5DZPDWHULDOVWKLVLQFOXGHVLWHPVXVHGLQWKHPDQXIDFWXULQJRISURGXFWVE\WKH0DQXIDFWXULQJVHJPHQWVXEVLGLDULHVWKDW KDYHQRODERXUZRUNSHUIRUPHGRQWKHP x :RUN LQ SURFHVV WKLV LQFOXGHV LWHPV WKDW KDYH EHJXQ WR EH XWLOL]HG LQ SURGXFWLRQ E\ WKH 0DQXIDFWXULQJ VHJPHQW VXEVLGLDULHV x )LQLVKHGJRRGVWKLVLQFOXGHVLWHPVWKDWKDYHFRPSOHWHGWKH PDQXIDFWXULQJSURFHVVDQGDUHDYDLODEOHIRUVDOHRULWHPV SXUFKDVHGIRUUHVDOHE\WKH0DQXIDFWXULQJVHJPHQWVXEVLGLDULHVLQFOXGLQJFRQVLJQPHQWLQYHQWRU\KHOGDWFHUWDLQHQWLWLHVLQ WKH0DQXIDFWXULQJVHJPHQW x $YLDWLRQSDUWVIRUUHVDOH&RVWIRUDYLDWLRQSDUWVDQGFRPSRQHQWVLVHVWDEOLVKHGEDVHGXSRQWKHSULFHSDLGIRUWKHLQYHQWRU\ LQFOXGLQJDQ\FRVWVRISXUFKDVHFRVWVRIFRQYHUVLRQDQGRWKHUFRVWVWREULQJVXFKLQYHQWRULHVWRWKHLUSUHVHQWORFDWLRQDQG FRQGLWLRQ5HJLRQDO2QH¶VSDUWVLQYHQWRU\FDUU\LQJYDOXHLVVXEVHTXHQWO\LPSDFWHGE\WKHXVHRIWKHDYHUDJHFRVWWRVDOHV SHUFHQWDJHPHWKRGDWH[SHFWHGVHOOLQJSULFHVWRUHFRUGFRVWRIVDOHV7KHDYHUDJHFRVWWRVDOHVSHUFHQWDJHLVEDVHGRQ KLVWRULFDOSURILWDELOLW\RUIURPFRQWUDFWHGUDWHVXQGHUFHUWDLQSURFXUHPHQWDUUDQJHPHQWV5HPDQXIDFWXUHGLQYHQWRU\FRVWLV EDVHGXSRQWKHSULFHSDLGIRUWKHFRUHVDQGDOVRLQFOXGHVH[SHQVHVLQFXUUHGIRUIUHLJKWGLUHFWPDQXIDFWXULQJFRVWVWKLUG SDUW\UHSDLUFRVWVDQGRYHUKHDGDVDSSOLFDEOH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) j) Capital Assets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¶VDLUFUDIWFRVWVIRUURXWLQHDLUFUDIWPDLQWHQDQFHDVZHOODVUHSDLUFRVWVDUH FKDUJHG DV PDLQWHQDQFH H[SHQVH DV LQFXUUHG &RVWV IRU PDMRU DLUFUDIW IUDPH HQJLQH RYHUKDXOV DQG RWKHU PDMRU DLUFUDIW FRPSRQHQWVLQFXUUHGRQDLUFUDIWDUHFDSLWDOL]HGDQGDPRUWL]HGRYHUWKHXVHIXOHFRQRPLFOLIHRIWKHFRPSRQHQWVFRQFHUQHG 'HSUHFLDWLRQLVFKDUJHGWRWKHVWDWHPHQWRILQFRPHRQDVWUDLJKWOLQHEDVLVRYHUWKHHVWLPDWHGXVHIXOOLYHVRIWKHDVVHWV)RUWKH $HURVSDFH $YLDWLRQVHJPHQW¶VDLUFUDIWUHODWHGDVVHWVWKHXVHIXOOLYHVDUHSULPDULO\EDVHGRQPLOHVIORZQRQWKHDLUFUDIWUHODWHG LWHP/DQGLVQRWGHSUHFLDWHG5HVLGXDOYDOXHVPHWKRGRIGHSUHFLDWLRQDQGXVHIXOOLYHVRIWKHDVVHWVDUHUHYLHZHGDQQXDOO\DQG DGMXVWHGLIDSSURSULDWHLQWKHSHULRGRIWKHFKDQJH7KHHVWLPDWHGXVHIXOOLYHVRIWKHPDLQFDWHJRULHVRIGHSUHFLDEOHFDSLWDO DVVHWVDUH %XLOGLQJV ±\HDUV $LUFUDIWIUDPHVDQGURWDEOHV ±\HDUV $LUFUDIWHQJLQHV ±\HDUV $LUFUDIWSURSHOOHUV ±\HDUV $LUFUDIWODQGLQJJHDU ±\HDUV (TXLSPHQW ±\HDUV 2WKHU ±\HDUV /HDVHKROGLPSURYHPHQWVRYHUWKHWHUPRIWKHOHDVH 7KH DYLDWLRQ UHODWHG FDSLWDO DVVHWV RI 5HJLRQDO 2QH KDYH XVHIXO OLYHV WKDW UDQJH EHWZHHQ ± \HDUV DQG GHSHQG RQ WKH FRQGLWLRQDQGH[SHFWHGXVHIXOOLYHVRIWKHDVVHWVLQOHDVLQJDUUDQJHPHQWV *DLQV RU ORVVHV DULVLQJ RQ WKH GLVSRVDO RI WDQJLEOH IL[HG DVVHWV DUH LQFOXGHG LQ WKH VWDWHPHQW RI LQFRPH LQ HDUQLQJV EHIRUH LQFRPHWD[HV k) Intangible Assets ,QWDQJLEOH DVVHWV DUH UHFRUGHG DW FRVW 7KH &RUSRUDWLRQ KDV LQWDQJLEOH DVVHWV ZLWK LQGHILQLWH OLYHV ZKLFK DUH QRW DPRUWL]HG ,QWDQJLEOHDVVHWVZLWKILQLWHOLYHVDUHDPRUWL]HGDVIROORZV &XVWRPHUFRQWUDFWV 6WUDLJKWOLQHEDVHGRQFRQWUDFWWHUP &XVWRPHUUHODWLRQVKLSV 6WUDLJKWOLQHRYHU\HDUV 1RQFRPSHWHFRQWUDFWV 6WUDLJKWOLQHRYHUWKHQRQFRPSHWHWHUP 2SHUDWLQJFHUWLILFDWHV 6WUDLJKWOLQHRYHU±\HDUVRUXQWLOH[SLU\ ,QIRUPDWLRQWHFKQRORJ\V\VWHPV 6WUDLJKWOLQHRYHU±\HDUV %DFNORJ 2YHUWKHWHUPRIWKHEDFNORJ 7KHGHSUHFLDWLRQPHWKRGDQGHVWLPDWHVRIXVHIXOOLYHVDVFULEHGWRVHSDUDWHO\LGHQWLILDEOHLQWDQJLEOHDVVHWVDUHUHYLHZHGDWOHDVW HDFKILQDQFLDO\HDUHQGDQGLIQHFHVVDU\DPRUWL]DWLRQLVDGMXVWHGIRURQDSURVSHFWLYHEDVLV 7KHLQGHILQLWHOLIHLQWDQJLEOHDVVHWVLQFOXGLQJWUDGHQDPHVDUHWHVWHGIRULPSDLUPHQWDQQXDOO\RUPRUHIUHTXHQWO\LIHYHQWVRU FKDQJHVLQFLUFXPVWDQFHVLQGLFDWHWKDWWKHDVVHWPD\EHLPSDLUHG7KHDVVHVVPHQWRILQGHILQLWHOLIHLVUHYLHZHGHDFKSHULRGWR GHWHUPLQHZKHWKHUWKHLQGHILQLWHOLIHDVVXPSWLRQFRQWLQXHVWREHVXSSRUWDEOH,ILWLVGHHPHGXQVXSSRUWDEOHWKHFKDQJHLQWKH XVHIXOOLIHIURPLQGHILQLWHWRILQLWHOLIHLVPDGHDQGDPRUWL]DWLRQLVUHFRJQL]HGRQDSURVSHFWLYHEDVLV l) Goodwill *RRGZLOOLVUHFRJQL]HGWRWKHH[WHQWRIWKHH[FHVVRIWKHSXUFKDVHSULFHRYHUWKHIDLUYDOXHRIWKHXQGHUO\LQJLGHQWLILDEOHQHW DVVHWV DFTXLUHG LQ D EXVLQHVV FRPELQDWLRQ *RRGZLOO DFTXLUHG WKURXJK D EXVLQHVV FRPELQDWLRQ LV DOORFDWHG WR HDFK FDVK

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) JHQHUDWLQJ XQLW ³&*8´ RU JURXS RI &*8V WKDW DUH H[SHFWHG WR EHQHILW IURP WKH UHODWHG EXVLQHVV FRPELQDWLRQ $IWHU LQLWLDO UHFRJQLWLRQJRRGZLOOLVPHDVXUHGDWFRVWOHVVDQ\DFFXPXODWHGLPSDLUPHQWORVVHV m) Impairment of Long-Lived Assets &DSLWDO DVVHWV DQG LQWDQJLEOH DVVHWV DUH WHVWHG IRU LPSDLUPHQW ZKHQ HYHQWV RU FKDQJHV LQ FLUFXPVWDQFHV LQGLFDWH WKDW WKH FDUU\LQJ DPRXQW PD\ QRW EH UHFRYHUDEOH /RQJOLYHG DVVHWV WKDW DUH QRW DPRUWL]HG VXFK DV WKH &RUSRUDWLRQ¶V LQGHILQLWH OLIH LQWDQJLEOH DVVHWV DUH LQFOXGHG LQ WKH UHODWHG &*8 DQG DUH WHVWHG DQQXDOO\ IRU LPSDLUPHQW RU ZKHQ HYHQWV RU FKDQJHV LQ FLUFXPVWDQFHVLQGLFDWHWKDWWKHFDUU\LQJDPRXQWPD\QRWEHUHFRYHUDEOH)RUWKHSXUSRVHRIPHDVXULQJUHFRYHUDEOHDPRXQWV DVVHWVDUHJURXSHGDWWKHORZHVWOHYHOVIRUZKLFKWKHUHDUHVHSDUDWHO\LGHQWLILDEOHFDVKLQIORZV FDVKJHQHUDWLQJXQLWVRU&*8V 7KHUHFRYHUDEOHDPRXQWLVWKHKLJKHURIDQDVVHWRU&*8¶VIDLUYDOXHOHVVFRVWVRIGLVSRVDODQGYDOXHLQXVH$QLPSDLUPHQWORVV LVUHFRJQL]HGIRUWKHDPRXQWE\ZKLFKWKHDVVHWRU&*8¶VFDUU\LQJDPRXQWH[FHHGVLWVUHFRYHUDEOHDPRXQW7KH&RUSRUDWLRQ GHWHUPLQHVWKHIDLUYDOXHOHVVFRVWVRIGLVSRVDODVDQDPRXQWREWDLQDEOHIURPWKHVDOHRIDQDVVHWRU&*8LQDQDUP¶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n) Current and Deferred Income Taxes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o) Employee Benefits 6KDUH%DVHG&RPSHQVDWLRQ±'HIHUUHG6KDUH3ODQ &HUWDLQHPSOR\HHVRIWKH&RUSRUDWLRQDQGWKH&RUSRUDWLRQ¶V%RDUGRI'LUHFWRUVSDUWLFLSDWHLQDVKDUHEDVHGFRPSHQVDWLRQSODQ RIWKH&RUSRUDWLRQ¶VVKDUHV 1RWH 7KHSODQFRQVLVWVRILQGLYLGXDOVEHLQJJUDQWHG³GHIHUUHGVKDUHV´ZKLFKDUHHVVHQWLDOO\ SKDQWRPVKDUHV7KHGHIHUUHGVKDUHVJUDQWHGWRWKH&RUSRUDWLRQ¶VQRQPDQDJHPHQW%RDUGRI'LUHFWRUVYHVWLPPHGLDWHO\DWWKH WLPHRIWKHJUDQWDQGWKHGHIHUUHGVKDUHVJUDQWHGWRWKHHPSOR\HHVRIWKH&RUSRUDWLRQYHVWHYHQO\RYHUDWKUHH\HDUSHULRG7KH GHIHUUHGVKDUHVDUHUHGHHPDEOHXSRQFHUWDLQHYHQWVDQGWKH&RUSRUDWLRQZLOOLVVXHFRPPRQVKDUHVIURPWUHDVXU\HTXDOWRWKH QXPEHURIGHIHUUHGVKDUHVWKDWKDYHYHVWHG

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 7KHGLYLGHQGUDWHGHFODUHGE\WKH&RUSRUDWLRQRQLVVXHG&RUSRUDWLRQVKDUHVLVDOVRDSSOLHGWRWKHGHIHUUHGVKDUHV7KHGLYLGHQG DPRXQWRQWKH GHIHUUHGVKDUHVLVFRQYHUWHGLQWRDGGLWLRQDOGHIHUUHGVKDUHVEDVHGRQWKHPDUNHWYDOXHRIWKH&RUSRUDWLRQ¶V VKDUHV DW WKH WLPH RI WKH GLYLGHQG 7KHVH DGGLWLRQDO GHIHUUHG VKDUHVYHVW DW WKH VDPH WLPH DV WKH GHIHUUHGVKDUHV WKDW WKH GLYLGHQGUDWHZDVDSSOLHGWR 7KH 'HIHUUHG 6KDUH 3ODQ LV DFFRXQWHG IRU DV DQ HTXLW\VHWWOHG DZDUG 8QGHU WKLV PHWKRG WKH GHIHUUHG VKDUHV JUDQWHG DUH YDOXHGDWWKHJUDQWGDWHZKHQWKHJUDQWLVDSSURYHGE\WKH&RUSRUDWLRQ¶VERDUG7KHJUDQWGDWHYDOXHLVEDVHGRQWKHPDUNHW SULFHRIWKH&RUSRUDWLRQ¶VVWRFNDWWKHJUDQWGDWH$VWKHGHIHUUHGVKDUHVYHVWWKH&RUSRUDWLRQUHFRUGVDQH[SHQVHDQGLQFUHDVHV HTXLW\LQDFFRUGDQFHZLWKWKHJUDGHGYHVWLQJPRGHOLQFOXGLQJDQHVWLPDWHRIIRUIHLWXUHV 6KDUH%DVHG&RPSHQVDWLRQ±5HVWULFWHG6KDUH3ODQ 'XULQJWKH&RUSRUDWLRQUHSODFHGLWVGHIHUUHGVKDUHSODQZLWKDUHVWULFWHGVKDUHSODQIRUHPSOR\HHVRIWKH&RUSRUDWLRQ7KH SODQFRQVLVWVRILQGLYLGXDOVEHLQJJUDQWHG³UHVWULFWHGVKDUHV´ZKLFKDUHHVVHQWLDOO\SKDQWRPVKDUHV7KHILUVWJUDQWXQGHUWKLV QHZSODQRFFXUUHGLQ0DUFK7KHUHVWULFWHGVKDUHVJUDQWHGWRHPSOR\HHVRIWKH&RUSRUDWLRQYHVWRQ'HFHPEHURIWKH \HDUWKDWLVWZR\HDUVIROORZLQJWKHDSSOLFDEOHDZDUGGDWH7KH&RUSRUDWLRQUHFRUGVDQH[SHQVHRYHUWKHYHVWLQJSHULRGUHODWLQJ WR WKH IDLU YDOXH RI WKH LQLWLDO JUDQW DQG DQ\ FKDQJHV LQ WKH YDOXH RI WKH &RUSRUDWLRQ¶V VKDUH SULFH ZLOO UHVXOW LQ D IDLU YDOXH PHDVXUHPHQWDGMXVWPHQWLQWKH&RQVROLGDWHG6WDWHPHQWRI,QFRPH 7KH GLYLGHQG UDWH GHFODUHG E\ WKH &RUSRUDWLRQ RQ LVVXHG &RUSRUDWLRQ VKDUHV LV DOVR DSSOLHG WR WKH UHVWULFWHG VKDUHV 7KH GLYLGHQG DPRXQW RQ WKH UHVWULFWHG VKDUHV LV FRQYHUWHG LQWR DGGLWLRQDO UHVWULFWHG VKDUHV EDVHG RQ WKH PDUNHW YDOXH RI WKH &RUSRUDWLRQ¶V VKDUHV DW WKH WLPH RI WKH GLYLGHQG 7KHVH DGGLWLRQDO UHVWULFWHG VKDUHV YHVW DW WKH VDPH WLPH DV WKH UHVWULFWHG VKDUHVWKDWWKHGLYLGHQGUDWHZDVDSSOLHGWR 7KH5HVWULFWHG6KDUH3ODQLVDFFRXQWHGIRUDVDFDVKVHWWOHGDZDUG8QGHUWKLVPHWKRGWKHUHVWULFWHGVKDUHVJUDQWHGDUHYDOXHG DWWKHJUDQWGDWHZKHQWKHJUDQWLVDSSURYHGE\WKH&RUSRUDWLRQ¶VERDUG2YHUWKHYHVWLQJSHULRGWKHFRVWRIWKHSURJUDP LQFOXGLQJDQ\IDLUYDOXHDGMXVWPHQWVEDVHGRQWKHFKDQJHLQWKHWUDGLQJSULFHRIWKH&RUSRUDWLRQ¶VVKDUHVDQGDQHVWLPDWHIRU IRUIHLWXUHVLVUHFRUGHGDVDQH[SHQVHLQWKH6WDWHPHQWRI,QFRPHZLWKDFRUUHVSRQGLQJOLDELOLW\UHFRUGHGLQ$FFRXQWV3D\DEOH DQG$FFUXHG/LDELOLWLHV7KHJUDQWGDWHYDOXHLVEDVHGRQWKHPDUNHWSULFHRIWKH&RUSRUDWLRQ¶VVKDUHVDWWKHJUDQWGDWH 6KDUH%DVHG&RPSHQVDWLRQ±(PSOR\HH6KDUH3XUFKDVH3ODQ &HUWDLQHPSOR\HHVRIWKH&RUSRUDWLRQSDUWLFLSDWHLQDVKDUHEDVHGFRPSHQVDWLRQSODQRIWKH&RUSRUDWLRQ¶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¶VDFFRXQWLQJSROLF\LVWRH[SHQVHFRQWULEXWLRQVDVHDUQHGGXULQJWKHSHULRGZKHQWKHFRQWULEXWLRQV EHFRPHSD\DEOHDQGDUHUHFRUGHGZLWKLQJHQHUDODQGDGPLQLVWUDWLYHH[SHQVHV'XULQJWKH&RUSRUDWLRQUHFRUGHGGHILQHG FRQWULEXWLRQSHQVLRQSODQFRVWVRI ± p) Provisions 3URYLVLRQVDUHUHFRJQL]HGZKHQWKH&RUSRUDWLRQKDVDSUHVHQWOHJDORUFRQVWUXFWLYHREOLJDWLRQDVDUHVXOWRISDVWHYHQWVLWLV SUREDEOH WKDW DQ RXWIORZ RI UHVRXUFHV ZLOO EH UHTXLUHG WR VHWWOH WKH REOLJDWLRQ DQG WKH DPRXQW FDQ EH UHOLDEO\ HVWLPDWHG 3URYLVLRQVDUHPHDVXUHGDWWKH&RUSRUDWLRQ¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) q) Borrowing Costs %RUURZLQJFRVWVDWWULEXWDEOHWRWKHDFTXLVLWLRQFRQVWUXFWLRQRUSURGXFWLRQRITXDOLI\LQJDVVHWVDUHDGGHGWRWKHFRVWRIWKRVH DVVHWVXQWLOVXFKWLPHDVWKHDVVHWVDUHVXEVWDQWLDOO\UHDG\IRUWKHLULQWHQGHGXVH$OORWKHUERUURZLQJFRVWVDUHUHFRJQL]HGDV LQWHUHVWH[SHQVHLQWKHVWDWHPHQWRILQFRPHLQWKHSHULRGLQZKLFKWKH\DUHLQFXUUHG r) Leases and Right of Use Assets 7KH&RUSRUDWLRQOHDVHVYDULRXVEXLOGLQJVODQGDQGHTXLSPHQW/HDVHWHUPVDUHQHJRWLDWHGRQDQLQGLYLGXDOEDVLVDQGFRQWDLQD ZLGHUDQJHRIGLIIHUHQWWHUPVDQGFRQGLWLRQV/HDVHVDUHUHFRJQL]HGDVDULJKWRIXVHDVVHWDQGFRUUHVSRQGLQJOLDELOLW\DWWKH GDWHRIZKLFKWKHOHDVHGDVVHWLVDYDLODEOHIRUXVHE\WKH&RUSRUDWLRQ $VVHWVDQGOLDELOLWLHVDULVLQJIURPDOHDVHDUHLQLWLDOO\PHDVXUHGRQDSUHVHQWYDOXHEDVLV/HDVHOLDELOLWLHVLQFOXGHWKHQHWSUHVHQW YDOXHRIWKHIROORZLQJOHDVHSD\PHQWV Ȭ )L[HGSD\PHQWV LQFOXGLQJLQVXEVWDQFHIL[HGSD\PHQWV OHVVDQ\OHDVHLQFHQWLYHVUHFHLYDEOH Ȭ 9DULDEOHOHDVHSD\PHQWVWKDWDUHEDVHGRQDQLQGH[RUDUDWH Ȭ 7KHH[HUFLVHSULFHRIDSXUFKDVHRUH[WHQVLRQRSWLRQLIWKHOHVVHHLVUHDVRQDEO\FHUWDLQWRH[HUFLVHWKDWRSWLRQDQG Ȭ 3D\PHQWVRISHQDOWLHVIRUWHUPLQDWLQJWKHOHDVHLIWKHOHDVHWHUPUHIOHFWVWKHOHVVHHH[HUFLVLQJWKDWRSWLRQ 9DULDEOHOHDVHSD\PHQWVWKDWDUHQRWEDVHGRQDQLQGH[RUUDWHVXFKDVWKRVHWKDWDUHEDVHGRQXVDJHDUHH[FOXGHGIURP,)56 DQG DUH UHFRUGHG DV DQ RSHUDWLQJ H[SHQVH 6HYHUDO RI WKH &RUSRUDWLRQ¶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s) Share Capital &RPPRQVKDUHVDUHFODVVLILHGDVHTXLW\,QFUHPHQWDOFRVWVGLUHFWO\DWWULEXWDEOHWRWKHLVVXDQFHRIVKDUHVDUHUHFRJQL]HGDVD GHGXFWLRQIURPHTXLW\ t) Dividends 'LYLGHQGVRQFRPPRQVKDUHVRIWKH&RUSRUDWLRQDUHUHFRJQL]HGLQWKH&RUSRUDWLRQ¶VILQDQFLDOVWDWHPHQWVLQWKHSHULRGLQZKLFK WKHGLYLGHQGVDUHGHFODUHG u) Earnings per Share %DVLFHDUQLQJVSHUVKDUH ³(36´ LVFDOFXODWHGE\GLYLGLQJWKHQHWLQFRPHIRUWKHSHULRGDWWULEXWDEOHWRHTXLW\RZQHUVRIWKH &RUSRUDWLRQE\WKHZHLJKWHGDYHUDJHQXPEHURIFRPPRQVKDUHVRXWVWDQGLQJGXULQJWKHSHULRG 'LOXWHG(36LVFDOFXODWHGE\DGMXVWLQJWKHZHLJKWHGDYHUDJHQXPEHURIFRPPRQVKDUHVRXWVWDQGLQJIRUGLOXWLYHLQVWUXPHQWV7KH &RUSRUDWLRQ¶VSRWHQWLDOGLOXWLYHLQVWUXPHQWVDUHFRQYHUWLEOHGHEHQWXUHVDQGGHIHUUHGVKDUHVXQGHUWKH&RUSRUDWLRQ¶V'HIHUUHG 6KDUH3ODQ7KHGLOXWLYHLPSDFWRIFRQYHUWLEOHGHEHQWXUHVLVFDOFXODWHGXVLQJWKH³LIFRQYHUWHG´PHWKRG

4. OPERATING PROFIT BEFORE DEPRECIATION, AMORTIZATION, FINANCE COSTS, AND OTHER 7KH&RUSRUDWLRQSUHVHQWVDVDQDGGLWLRQDO,)56PHDVXUHRSHUDWLQJSURILWEHIRUHGHSUHFLDWLRQDPRUWL]DWLRQILQDQFHFRVWVDQGRWKHU LQWKHFRQVROLGDWHGVWDWHPHQWRILQFRPHWRDVVLVWXVHUVLQDVVHVVLQJILQDQFLDOSHUIRUPDQFH7KH&RUSRUDWLRQ¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS 7KHSUHSDUDWLRQRIFRQVROLGDWHGILQDQFLDOVWDWHPHQWVUHTXLUHVPDQDJHPHQWWRXVHMXGJPHQWLQDSSO\LQJLWVDFFRXQWLQJSROLFLHVDQG HVWLPDWHV DQG DVVXPSWLRQV DERXW WKH IXWXUH (VWLPDWHV DQG RWKHU MXGJPHQWV DUH FRQWLQXRXVO\ HYDOXDWHG DQG DUH EDVHG RQ PDQDJHPHQW¶VH[SHULHQFHDQGRWKHUIDFWRUVLQFOXGLQJH[SHFWDWLRQVDERXWIXWXUHHYHQWVWKDWDUHEHOLHYHGWREHUHDVRQDEOHXQGHUWKH FLUFXPVWDQFHV7KHIROORZLQJGLVFXVVHVWKHPRVWVLJQLILFDQWDFFRXQWLQJMXGJPHQWVDQGHVWLPDWHVWKDWWKH&RUSRUDWLRQKDVPDGHLQ WKHSUHSDUDWLRQRIWKHVHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV7KHVHXQGHUO\LQJDVVXPSWLRQVDUHUHYLHZHGRQDQRQJRLQJEDVLV$FWXDO UHVXOWVFRXOGGLIIHUPDWHULDOO\IURPWKRVHHVWLPDWHV Accounting Estimates %XVLQHVV&RPELQDWLRQV 7KH &RUSRUDWLRQ¶V EXVLQHVV DFTXLVLWLRQV KDYH EHHQ DFFRXQWHG IRU XVLQJ WKH DFTXLVLWLRQ PHWKRG RI DFFRXQWLQJ 8QGHU WKH DFTXLVLWLRQPHWKRGWKHDFTXLULQJFRPSDQ\DGGVWRLWVVWDWHPHQWRIILQDQFLDOSRVLWLRQWKHHVWLPDWHGIDLUYDOXHVRIWKHDFTXLUHG FRPSDQ\¶VDVVHWVDQGDVVXPHGOLDELOLWLHV7KHUHDUHYDULRXVDVVXPSWLRQVPDGHZKHQGHWHUPLQLQJWKHIDLUYDOXHVRIWKHDFTXLUHG FRPSDQ\¶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³,3´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¶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± DQG LV LQFOXGHG ZLWKLQ ³2WKHU´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¶V ZLQGRZ FRQVWUXFWLRQFRQWUDFWVDVHYLGHQFHRIFRPSOHWLRQRYHUWLPH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 6LQFH WKH &RUSRUDWLRQ KDV PDQ\ FRQWUDFWV LQ SURFHVV DW DQ\ JLYHQ WLPH WKHVH FKDQJHV LQ HVWLPDWHV FDQ RIIVHW HDFK RWKHU ZLWKRXWLPSDFWLQJRYHUDOOSURILWDELOLW\+RZHYHUFKDQJHVLQFRVWHVWLPDWHVRQODUJHUPRUHFRPSOH[FRQVWUXFWLRQSURMHFWVFDQ KDYHDPDWHULDOLPSDFWRQWKH&RUSRUDWLRQ¶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¶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¶VDLUFUDIWZLWKUHPDLQLQJXVHIXOOLYHVJUHDWHUWKDQILYH\HDUVDVDW'HFHPEHU ZRXOG UHVXOW LQ DQ LQFUHDVH RI DSSUR[LPDWHO\ WR DQQXDO GHSUHFLDWLRQ H[SHQVH )RU WKH &RUSRUDWLRQ¶VDLUFUDIWZLWKVKRUWHUUHPDLQLQJXVHIXOOLYHVDQGRWKHUPDMRUPDQXIDFWXULQJHTXLSPHQWDQGEXLOGLQJVWKHUHVLGXDO YDOXHVDUHQRWH[SHFWHGWRFKDQJHVLJQLILFDQWO\ ,PSDLUPHQW&RQVLGHUDWLRQVRQ/RQJOLYHG$VVHWV *RRGZLOO DQG LQGHILQLWH OLIH LQWDQJLEOH DVVHWV DUH QRW DPRUWL]HG *RRGZLOO DQG DOO LQGHILQLWH OLIH LQWDQJLEOHV DUH DVVHVVHG IRU LPSDLUPHQWDWOHDVWDQQXDOO\,PSDLUPHQWWHVWLQJLVSHUIRUPHGRQORQJOLYHGDVVHWVE\FRPSDULQJWKHFDUU\LQJDPRXQWRIWKH DVVHW RU FDVK JHQHUDWLQJ XQLW ³&*8´ WR LWV UHFRYHUDEOH DPRXQW ZKLFK LV FDOFXODWHG DV WKH KLJKHU RI DQ DVVHW¶V RU FDVK JHQHUDWLQJXQLW¶VIDLUYDOXHOHVVFRVWVRIGLVSRVDODQGLWVYDOXHLQXVH )DLU YDOXH OHVV FRVWV RI GLVSRVDO FDOFXODWHV WKH UHFRYHUDEOH DPRXQW XVLQJ (%,7'$ PXOWLSOHV EDVHG RQ ILQDQFLDO IRUHFDVWV SUHSDUHGE\PDQDJHPHQW OHYHOZLWKLQWKHIDLUYDOXHKLHUDUFK\ ,QWDQJLEOH$VVHWV 7KH UHFRYHUDEOH DPRXQW LV IRUHFDVWHG ZLWK PDQDJHPHQW¶V EHVW HVWLPDWH XVLQJ PDUNHW SDUWLFLSDQW DVVXPSWLRQV FRQVLGHULQJ KLVWRULFDODQGH[SHFWHGRSHUDWLQJSODQVFXUUHQWVWUDWHJLHVHFRQRPLFFRQGLWLRQVDQGWKHJHQHUDORXWORRNIRUWKHLQGXVWU\DQG PDUNHWVLQZKLFKWKHFDVKJHQHUDWLQJXQLWVRSHUDWH ,QOLJKWRIWKH&29,'SDQGHPLFDQGWKHVWDWHRIWKHRLODQGJDVLQGXVWU\PDQDJHPHQWXVHGDGLVFRXQWHGFDVKIORZPRGHOWR DVVHVVWKHUHFRYHUDELOLW\RIWKHLQGHILQLWHOLYHGLQWDQJLEOHDVVHWVDWWKH&RUSRUDWLRQ¶VVXEVLGLDULHVH[SRVHGWRWKLVVHFWRULQWKH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) ILUVW TXDUWHU RI 7KH XQSUHFHGHQWHG GURS LQ RLO SULFHV H[DFHUEDWHG E\ D GHFUHDVH LQ GHPDQG GXH WR WKH &29,' SDQGHPLFKDVFDXVHGPDQ\FRPSDQLHVWRGHOD\RUFDQFHOODUJHFDSLWDOSURMHFWV7KHUHIRUHWKHGHPDQGIRUSURGXFWVSURYLGHGE\ WKH &RUSRUDWLRQ¶V RSHUDWLRQV LQ $OEHUWD LV H[SHFWHG WR EH GHSUHVVHG IRU DQ H[WHQGHG SHULRG RI WLPH $V D UHVXOW RI WKH DVVHVVPHQWWKH&RUSRUDWLRQUHFRUGHGDLPSDLUPHQWFKDUJHDJDLQVWLQWDQJLEOHDVVHWVGXULQJWKHILUVWTXDUWHURI 7KHUHFRYHUDEOHDPRXQWRIWKHUHPDLQLQJ&*8VZDVEDVHGRQYDOXHLQXVHXVLQJDGLVFRXQWHGFDVKIORZPRGHOZKLFKUHTXLUHV PDQDJHPHQWWRPDNHDQXPEHURIVLJQLILFDQWDVVXPSWLRQVLQFOXGLQJDVVXPSWLRQVUHODWLQJWRIXWXUHRSHUDWLQJSODQVGLVFRXQW UDWHV DQG IXWXUH JURZWK UDWHV 7KH DVVXPSWLRQV LQFOXGH WKH &RUSRUDWLRQ¶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¶V DVVHVVPHQW RI PDUNHW SDUWLFLSDQW DVVXPSWLRQV 7KH&RUSRUDWLRQXVHGLWVIRUHFDVWHG(%,7'$EDVHGRQLWVDSSURYHGEXGJHWDQGXVHGLWVEHVWHVWLPDWHRIPDUNHWSDUWLFLSDQW (%,7'$PXOWLSOHV /HYHOZLWKLQWKHIDLUYDOXHKLHUDUFK\ 7KH(%,7'$PXOWLSOHXVHGIRUWKH$HURVSDFH $YLDWLRQVHJPHQWZDV [ ±[ DQGZDV[ ±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ritical Accounting Judgments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¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) PD\GLIIHUVLJQLILFDQWO\IURPHDUOLHUHVWLPDWHV0DQDJHPHQWEHOLHYHVEDVHGRQLWVLQGXVWU\H[SHULHQFHWKDWLWVFXUUHQWV\VWHPVRI PDQDJHPHQW DQG DFFRXQWLQJ FRQWUROV DOORZ WKH&RUSRUDWLRQ WR SURGXFH PDWHULDOO\UHOLDEOH HVWLPDWHV RI WKHFDUU\LQJ YDOXH RI LQYHQWRU\DQGUHODWHGFRVWRIVDOHV+RZHYHUPDQ\IDFWRUVFDQDQGGRFKDQJHWKURXJKRXWDFRPSRQHQWSDUW¶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

6. ACQUISITIONS :LQGRZ,QVWDOODWLRQ6SHFLDOLVWV,QF 2Q-XO\WKH&RUSRUDWLRQDFTXLUHGDOOWKHVKDUHVRI:LQGRZ,QVWDOODWLRQ6SHFLDOLVWV,QF ³:,6´ :,6LVDIXOOVHUYLFHJOD]LQJ FRPSDQ\VSHFLDOL]LQJLQVDOHVFRQVXOWDWLRQLQVWDOODWLRQDQGVHUYLFHRISUHJOD]HGIHQHVWUDWLRQSURGXFWV 7KHFRPSRQHQWVRIWKHFRQVLGHUDWLRQSDLGWRDFTXLUH:,6DUHRXWOLQHGLQWKHWDEOHEHORZ

Consideration given: &DVK 51,042 ,VVXDQFHRIVKDUHVRIWKH&RUSRUDWLRQDWSHUVKDUH 9,402 3UHOLPLQDU\ZRUNLQJFDSLWDOVHWWOHPHQWDWFORVH 537 Total purchase consideration 60,981

7KHSXUFKDVHSULFHLQFOXGHGDQLQLWLDOSD\PHQWRIFDVKDQGWKHLVVXDQFHRIFRPPRQVKDUHVWRWKHYHQGRUVQHWRIQRUPDOFORVLQJ DGMXVWPHQWV7KHSUHOLPLQDU\SXUFKDVHSULFHDOORFDWLRQZLOOEHILQDOL]HGLQZKHQWKHILQDOVHWWOHPHQWRIZRUNLQJFDSLWDODQGRWKHU SRVWFORVLQJDGMXVWPHQWVZLOORFFXU7KHSUHOLPLQDU\DOORFDWLRQRIWKHSXUFKDVHSULFHLVUHIOHFWHGLQWKHWDEOHWKDWIROORZV

Fair value of assets acquired: &DVK 533 $FFRXQWVUHFHLYDEOH 21,538 $PRXQWVGXHIURPFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV 537 ,QYHQWRU\ 17 3UHSDLGH[SHQVHVDQGGHSRVLWV 362 &DSLWDODVVHWV 28 5LJKWRIXVHDVVHWV 517 ,QWDQJLEOHDVVHWV 17,354 40,886 /HVVIDLUYDOXHRIOLDELOLWLHVDVVXPHG $FFRXQWVSD\DEOHDQGDFFUXHGOLDELOLWLHV 13,771 $PRXQWVGXHWRFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV 6,200 ,QFRPHWD[HVSD\DEOH 617 5LJKWRIXVHOHDVHOLDELOLWLHV 517 )DLUYDOXHRILGHQWLILDEOHQHWDVVHWVDFTXLUHG 19,781 *RRGZLOO 41,200 Total purchase consideration 60,981

2IWKHDFTXLUHGLQWDQJLEOHDVVHWVZDVDVVLJQHGWREDFNORJZDVDVVLJQHGWRFXVWRPHUUHODWLRQVKLSVDQG ZDVDVVLJQHGWRWUDGHQDPH7KHFXVWRPHUUHODWLRQVKLSDQGEDFNORJLQWDQJLEOHDVVHWVDUHVXEMHFWWRDPRUWL]DWLRQZKLOHWKH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) WUDGHQDPHLVFRQVLGHUHGWRKDYHDQLQGHILQLWHOLIH7KHJRRGZLOOLVDWWULEXWDEOHWRWKHVNLOOHGZRUNIRUFHH[SDQVLRQFDSDELOLWLHVLQWR RWKHUJHRJUDSKLHVDQGWKHSURILWDELOLW\RIWKHDFTXLUHGEXVLQHVV

7. INVENTORIES 7KHLQYHQWRU\RIWKH&RUSRUDWLRQ¶VRSHUDWLQJVXEVLGLDULHVLVFODVVLILHGLQWRWKHIROORZLQJFDWHJRULHV

December 31 'HFHPEHU 2020 3DUWVDQGRWKHUFRQVXPDEOHV 48,402 $ $YLDWLRQSDUWVIRUUHVDOH 141,235 5DZPDWHULDOV 22,533 :RUNLQSURFHVV 3,783 )LQLVKHGJRRGV 19,917 7RWDOLQYHQWRU\ 235,870 $

'XULQJ LQYHQWRU\ IURP WKH $HURVSDFH $YLDWLRQ VHJPHQW ZLWK DYDOXHRI ± ZDVUHFRUGHG DV DQ H[SHQVHZLWKLQWKH$HURVSDFH $YLDWLRQH[SHQVHV±H[FOXGLQJGHSUHFLDWLRQDQGDPRUWL]DWLRQDQGLQYHQWRU\IURPWKH0DQXIDFWXULQJ VHJPHQW ZLWK D YDOXH RI ± ZDV UHFRUGHG DV DQ H[SHQVH ZLWKLQ 0DQXIDFWXULQJ H[SHQVHV ± H[FOXGLQJ GHSUHFLDWLRQDQGDPRUWL]DWLRQ

8. OTHER ASSETS 7KHRWKHUDVVHWVRIWKH&RUSRUDWLRQFRQVLVWRIWKHIROORZLQJ

December 31 'HFHPEHU 2020 /RQJWHUPSUHSDLGH[SHQVHVDQGVHFXULW\GHSRVLWV 1,929 $ /RQJWHUPUHFHLYDEOHV 5,458 /RQJWHUPKROGEDFNUHFHLYDEOHV 5,060 (TXLW\PHWKRGLQYHVWPHQWV 41,019 2WKHULQYHVWPHQWV)DLUYDOXHWKURXJK2&, 1RWH 7,975 'HULYDWLYHILQDQFLDOLQVWUXPHQWV)DLUYDOXHWKURXJKSURILWDQGORVV 1RWH - /RDQWR:DVD\D 12,363 /RDQWR1XQDWVLDYXW*URXSRI&RPSDQLHV 1,543 7RWDORWKHUDVVHWV 75,347 $

7KH&RUSRUDWLRQLVLQYHVWHGLQIRXUHTXLW\DFFRXQWHGLQYHVWPHQWVLQQRQWUDGLQJHQWLWLHVDW'HFHPEHU7KHLQYHVWPHQWLQ $HUR(QJLQHV//&LVGLVFXVVHGEHORZ7KH&RUSRUDWLRQ¶VRZQHUVKLSSHUFHQWDJHVLQWKHHQWLWLHVDUHDQGDQG WKHFDUU\LQJYDOXHVDW'HFHPEHUDUH ± ± DQG UHVSHFWLYHO\7KHUHSRUWLQJSHULRGHQGIRUWKHHTXLW\DFFRXQWHGLQYHVWPHQWVLV'HFHPEHU7KHVH HQWLWLHVKDYHWRWDODVVHWVRI DQGWRWDOOLDELOLWLHVRI DW'HFHPEHU7KH HQWLWLHVKDGUHYHQXHVRI DQGQHWLQFRPHRI IRUWKH\HDUHQGHG'HFHPEHU 7KHVHLQYHVWPHQWVIRUZKLFKIDLUPDUNHWYDOXHLVQRWDYDLODEOHKDYHEHHQLQFOXGHGZLWKLQWKHHTXLW\PHWKRGLQYHVWPHQWVOLQH DERYH

7KH&RUSRUDWLRQLVLQYHVWHGLQQRQWUDGLQJHQWLWLHVWKDWDUHDFFRXQWHGIRUDWIDLUYDOXHWKURXJK2&,$W'HFHPEHUWKH FDUU\LQJYDOXHRIWKHVHHQWLWLHVLV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 7KH&RUSRUDWLRQDVSDUWRILWVFRQVWUXFWLRQFRQWUDFWVZLWKFXVWRPHUVKDYHDPRXQWVWKDWDUHKHOGEDFNDQGWKHUHIRUHQRWH[SHFWHGWR EHFROOHFWHGZLWKLQWZHOYHPRQWKV$VDW'HFHPEHUWKHORQJWHUPKROGEDFNVGXHIURPFXVWRPHUVZDV DQGDUHUHFRUGHGZLWKLQ2WKHU$VVHWV

$HUR(QJLQHV//& ,QWKHSULRUSHULRGWKH&RUSRUDWLRQDQQRXQFHGWKDWLWKDGFRPSOHWHGDMRLQWYHQWXUHZLWK6N\:HVW,QF ³6N\:HVW´ WRDFTXLUHOHDVH DQGVHOO&)HQJLQHV'XULQJWKHSULRU\HDUWKH&RUSRUDWLRQLQYHVWHGLQDVKDUHRIDMRLQWYHQWXUHZKLFKSXUFKDVHGHQJLQHV DQGDFFRXQWVIRULWVLQYHVWPHQWXVLQJWKHHTXLW\PHWKRG

9. CAPITAL ASSETS 7KH&RUSRUDWLRQ¶VFDSLWDODVVHWVFRQVLVWRIWKHIROORZLQJ

'HFHPEHU $FFXPXODWHG 1HW &RVW 'HSUHFLDWLRQ %RRN9DOXH /DQG %XLOGLQJV $LUFUDIWIUDPHV $LUFUDIWHQJLQHV $LUFUDIWSURSHOOHUVDQGURWRUV $LUFUDIWODQGLQJJHDU $LUFUDIWURWDEOHSDUWV (TXLSPHQW 2WKHU /HDVHKROGLPSURYHPHQWV $VVHWVIRUOHDVHWRWKLUGSDUWLHV DLUFUDIWDQGHQJLQHV 7RWDO

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

'XULQJWKH\HDUWKH&RUSRUDWLRQKDGQHWWUDQVIHUVRIIURPFDSLWDODVVHWVWRLQYHQWRU\ 'HFHPEHUIURP FDSLWDODVVHWVWRLQYHQWRU\ 7KH&RUSRUDWLRQWUDQVIHUVFDSLWDODVVHWVRXWRIWKHOHDVHSRUWIROLRLQWRLQYHQWRU\IRUSDUWRXWDQGUHVDOH ZKHQLWLVGHWHUPLQHGEHQHILFLDOWRGRVRDVSDUWRIWKHQRUPDOOLIHF\FOHRIROGHUDLUFUDIW,QDGGLWLRQWKH&RUSRUDWLRQPD\DOVRWUDQVIHU DVVHWVIURPLQYHQWRU\WRFDSLWDODVVHWVWRLQFUHDVHWKHIXWXUHHFRQRPLFEHQHILWRILWVRSHUDWLQJDLUFUDIW7KHQHWRIWKHVHWUDQVIHUVLV LQFOXGHGZLWKLQWKH$GGLWLRQV7UDQVIHUFROXPQ

'XULQJWKH\HDUWKH&RUSRUDWLRQDJUHHGWRH[FKDQJHDVVHWVZLWKDWKLUGSDUW\7KHH[FKDQJHWUDQVDFWLRQZDVPHDVXUHGDWIDLUYDOXH DQGQRJDLQRUORVVZDVUHFRUGHGDVWKHIDLUYDOXHRIWKHDVVHWVDFTXLUHG86DSSUR[LPDWHGWKHERRNYDOXHRIWKHDVVHWV JLYHQXS

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

10. LEASES 7KH&RUSRUDWLRQ¶VULJKWRIXVHDVVHWVFRQVLVWRIWKHIROORZLQJ

January 1, 2020 Exchange December 31, 2020 1HW%RRN9DOXH Opening Additions Disposals Depreciation Differences Ending /DQG $ 21,982 $ 26 $ - $ (1,318) $ - $ 20,690 %XLOGLQJ 60,349 2,973 (160) (11,645) (282) 51,235 $LUFUDIW 19,777 1,712 - (9,100) - 12,389 (TXLSPHQW 1,501 194 (34) (402) (8) 1,251 2WKHU 5,068 2,792 (24) (2,909) (9) 4,918 7RWDO $ 108,677 $ 7,697 $ (218) $ (25,374) $ (299) $ 90,483

-DQXDU\ ([FKDQJH 'HFHPEHU 1HW%RRN9DOXH 2SHQLQJ $GGLWLRQV 'LVSRVDOV 'HSUHFLDWLRQ 'LIIHUHQFHV (QGLQJ /DQG %XLOGLQJ $LUFUDIW (TXLSPHQW 2WKHU 7RWDO

5LJKWRI8VH/HDVH/LDELOLW\ December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

8QGLVFRXQWHG5LJKWRI8VH/HDVH/LDELOLW\3D\PHQWV December 31, 2020 'HFHPEHU /HVVWKDQ\HDU $ 25,646 %HWZHHQ\HDUDQG\HDUV 45,614 0RUHWKDQ\HDUV 39,832 $ 111,092

11. INTANGIBLE ASSETS & GOODWILL 7KHIROORZLQJVXPPDUL]HVWKH&RUSRUDWLRQ¶VLQWDQJLEOHDVVHWVDVDW'HFHPEHUDQG

'HFHPEHU $FFXPXODWHG 1HW &RVW $PRUWL]DWLRQ %RRN9DOXH

,QGHILQLWH/LIH$VVHWV %UDQGQDPH )LQLWH/LIH$VVHWV &XVWRPHUFRQWUDFWVDQGUHODWLRQVKLSV

&HUWLILFDWLRQV

,QIRUPDWLRQWHFKQRORJ\V\VWHPV

%DFNORJ

2WKHU

7RWDO

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

$FTXLVLWLRQ $GGLWLRQV ([FKDQJH 1HW%RRN9DOXH 2SHQLQJ 1RWH 7UDQVIHUV 'LVSRVDOV ,PSDLUPHQW $PRUWL]DWLRQ 'LIIHUHQFHV (QGLQJ ,QGHILQLWH/LIH$VVHWV %UDQGQDPH )LQLWH/LIH$VVHWV &XVWRPHUFRQWUDFWVDQGUHODWLRQVKLSV

&HUWLILFDWLRQV

,QIRUPDWLRQWHFKQRORJ\V\VWHPV

%DFNORJ

2WKHU

7RWDO

'HFHPEHU $FFXPXODWHG 1HW &RVW $PRUWL]DWLRQ %RRN9DOXH ,QGHILQLWH/LIH$VVHWV %UDQGQDPH )LQLWH/LIH$VVHWV &XVWRPHUFRQWUDFWVDQGUHODWLRQVKLSV

&HUWLILFDWLRQV

,QIRUPDWLRQWHFKQRORJ\V\VWHPV

%DFNORJ

2WKHU

7RWDO

&HUWLILFDWLRQV

,QIRUPDWLRQWHFKQRORJ\V\VWHPV

%DFNORJ

2WKHU

7RWDO

7KH&RUSRUDWLRQKDVEUDQGQDPHLQGHILQLWHOLIHDVVHWVIRUWKHRSHUDWLRQVRI%HDUVNLQ&DOP$LU&XVWRP:HV7RZHU5HJLRQDO2QH 3URYLQFLDO%HQ0DFKLQH&DUWH1DY4XHVW0RQFWRQ)OLJKW&ROOHJH/9&RQWURO$:,DQG:,67KHVHHQWLWLHVDOOKDYHDEUDQGQDPH WKDWUHSUHVHQWVWKHTXDOLW\RIJRRGVRUVHUYLFHVDQGVDIHW\VWDQGDUGVWKDWWKRVHHQWLWLHVSURYLGHWRWKHLUFXVWRPHUV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 'XULQJWKHILUVWTXDUWHUWKH&RUSRUDWLRQUHFRUGHGDQLPSDLUPHQWFKDUJHDJDLQVWLQWDQJLEOHDVVHWVZLWKLQLWVRSHUDWLRQVLQ$OEHUWD6HH 1RWHIRUIXUWKHUGLVFXVVLRQ

*RRGZLOO 2020

%DODQFHEHJLQQLQJRI\HDU $ 359,764 $ *RRGZLOOIURPEXVLQHVVDFTXLVLWLRQV 41,200 0HDVXUHPHQWSHULRGDGMXVWPHQWVHWWOHPHQWRIZRUNLQJFDSLWDODQGRWKHU 172 7UDQVODWLRQRIJRRGZLOORIIRUHLJQRSHUDWLRQV (3,547)

%DODQFHHQGRI\HDU $ 397,589 $

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¶V DVVHVVPHQWZLWKWKHH[FHSWLRQRIWKHLPSDLUPHQWQRWHGDERYH

12. LONG-TERM DEBT 7KHIROORZLQJVXPPDUL]HVWKH&RUSRUDWLRQ¶VORQJWHUPGHEWDVDW'HFHPEHUDQG'HFHPEHU

December 31 'HFHPEHU 2020 5HYROYLQJWHUPIDFLOLW\ &DQDGLDQGROODUDPRXQWVGUDZQ $ 190,000 8QLWHG6WDWHVGROODUDPRXQWVGUDZQ 86DQG86UHVSHFWLYHO\ 607,444 7RWDOFUHGLWIDFLOLW\GHEWRXWVWDQGLQJSULQFLSDOYDOXH 797,444 OHVVXQDPRUWL]HGWUDQVDFWLRQFRVWV (3,087) OHVVXQDPRUWL]HGGLVFRXQWRQRXWVWDQGLQJ%DQNHU V$FFHSWDQFHV (163) /RQJWHUPGHEW $ 794,194

7KH&RUSRUDWLRQ¶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

,QWHUHVWH[SHQVHUHFRUGHGE\WKH&RUSRUDWLRQGXULQJWKH\HDUHQGHG'HFHPEHUIRUORQJWHUPGHEWZDV ±

Year Ended December 31, 2020 Exchange Opening Withdrawals Repayments Differences Ending &UHGLWIDFLOLW\DPRXQWVGUDZQ &DQDGLDQGROODUDPRXQWV 8QLWHG6WDWHVGROODUDPRXQWV

,Q WKH WDEOHV DERYH ZLWKGUDZDOV DQG UHSD\PHQWV LQFOXGH WKH LPSDFW RI HQWHULQJ LQWR FURVVFXUUHQF\VZDSV ZLWK PHPEHUV RI WKH &RUSRUDWLRQ¶VOHQGLQJV\QGLFDWHZKHUHE\DQH[FKDQJHRI&DQDGLDQDQG86GHQRPLQDWHGGHEWRFFXUV7KHUHLVQRLPSDFWRQFDVK IORZDQGWKHUHIRUHWKHLPSDFWKDVEHHQQHWWHGRQWKH6WDWHPHQWRI&DVK)ORZ0RUHLQIRUPDWLRQRQWKHFURVVFXUUHQF\VZDSVFDQEH IRXQGLQ1RWH

13. CONVERTIBLE DEBENTURES

Series - Year of Issuance Trade Symbol Maturity Interest Rate Conversion Price 8QVHFXUHG'HEHQWXUHV (,)'%+ -XQH 8QVHFXUHG'HEHQWXUHV (,)'%, 'HFHPEHU 8QVHFXUHG'HEHQWXUHV (,)'%- -XQH 8QVHFXUHG'HEHQWXUHV (,)'%. 0DUFK

6XPPDU\RIWKHGHEWFRPSRQHQWRIWKHFRQYHUWLEOHGHEHQWXUHV

2020 Balance, Debentures Accretion Debentures Redeemed / 2020 Balance, Beginning of Year Issued Charges Converted Matured End of Year 8QVHFXUHG $ 66,314 $ - $ 700 $ - $ - $ 67,014 8QVHFXUHG 96,643 - 1,049 - - 97,692 8QVHFXUHG 75,922 - 716 - - 76,638 8QVHFXUHG 82,972 - 441 - - 83,413

324,757 OHVVXQDPRUWL]HGWUDQVDFWLRQFRVWV (8,927)

&RQYHUWLEOH'HEHQWXUHV'HEW&RPSRQHQWHQGRI\HDU $ 315,830

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

%DODQFH 'HEHQWXUHV $FFUHWLRQ 'HEHQWXUHV 5HGHHPHG %DODQFH %HJLQQLQJRI

OHVVXQDPRUWL]HGWUDQVDFWLRQFRVWV

&RQYHUWLEOH'HEHQWXUHV'HEW&RPSRQHQWHQGRI\HDU

'XULQJWKH\HDUHQGHG'HFHPEHUFRQYHUWLEOHGHEHQWXUHVWRWDOLQJDIDFHYDOXHRIQLOZHUHFRQYHUWHGE\WKHKROGHUVDW YDULRXVWLPHVLQWRQLOVKDUHVRIWKH&RUSRUDWLRQ ±IDFHYDOXHLQWRVKDUHV ,QWHUHVWH[SHQVHUHFRUGHGGXULQJ WKH\HDUIRUWKHFRQYHUWLEOHGHEHQWXUHVZDV 2Q0DUFKWKH&RUSRUDWLRQFORVHGDERXJKWGHDORIIHULQJRIFRQYHUWLEOHXQVHFXUHGVXERUGLQDWHGGHEHQWXUHV$WWKHFORVLQJ RIWKHRIIHULQJWKH&RUSRUDWLRQLVVXHGSULQFLSDODPRXQWRIGHEHQWXUHV7KHGHEHQWXUHVEHDULQWHUHVWDWSHUDQQXP SD\DEOHVHPLDQQXDOO\7KHGHEHQWXUHVDUHFRQYHUWLEOHDWWKHKROGHU¶VRSWLRQLQWRFRPPRQVKDUHVRIWKH&RUSRUDWLRQDWDFRQYHUVLRQ SULFHRISHUVKDUH7KHPDWXULW\GDWHRIWKHGHEHQWXUHVLV0DUFK 2Q$SULOWKH&RUSRUDWLRQUHGHHPHGLWV\HDUFRQYHUWLEOHGHEHQWXUHVZKLFKZHUHWRPDWXUHRQ0DUFK2Q WKHUHGHPSWLRQGDWHWKHUHPDLQLQJRXWVWDQGLQJGHEHQWXUHVLQWKHSULQFLSDODPRXQWRIZHUHUHGHHPHGE\WKH&RUSRUDWLRQ 0DUFK8QVHFXUHG&RQYHUWLEOH'HEHQWXUH2IIHULQJ (DFK GHEHQWXUH LV FRQYHUWLEOH DW WKH GHEHQWXUHKROGHUV¶ RSWLRQ LQWR VKDUHV RI WKH &RUSRUDWLRQ DW DQ\ WLPH SULRU WR WKH FORVHRI EXVLQHVVRQWKHGD\SULRUWRWKHPDWXULW\GDWHDWDFRQYHUVLRQSULFHRI $W WKH &RUSRUDWLRQ¶V RSWLRQ RQ WKH PDWXULW\ GDWH WKH GHEHQWXUHV RU DQ\ SRUWLRQ WKHUHRI VKDOO EH FRQYHUWLEOH LQWR VKDUHV DWWKH &RUSRUDWLRQ¶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¶V RSWLRQ LQWR VKDUHV RI WKH &RUSRUDWLRQ DW DQ\ WLPH SULRU WR WKH FORVH RI EXVLQHVVRQWKHGD\SULRUWRWKHPDWXULW\GDWHDWDFRQYHUVLRQSULFHRI $W WKH &RUSRUDWLRQ¶V RSWLRQ RQ WKH PDWXULW\ GDWH WKH GHEHQWXUHV RU DQ\ SRUWLRQ WKHUHRI VKDOO EH FRQYHUWLEOH LQWR VKDUHV DWWKH &RUSRUDWLRQ¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 'HFHPEHU8QVHFXUHG&RQYHUWLEOH'HEHQWXUH2IIHULQJ (DFK GHEHQWXUH LV FRQYHUWLEOH DW WKH GHEHQWXUHKROGHU¶V RSWLRQ LQWR VKDUHV RI WKH &RUSRUDWLRQ DW DQ\ WLPH SULRU WR WKH FORVH RI EXVLQHVVRQWKHGD\SULRUWRWKHPDWXULW\GDWHDWDFRQYHUVLRQSULFHRI $W WKH &RUSRUDWLRQ¶V RSWLRQ RQ WKH PDWXULW\ GDWH WKH GHEHQWXUHV RU DQ\ SRUWLRQ WKHUHRI VKDOO EH FRQYHUWLEOH LQWR VKDUHV DWWKH &RUSRUDWLRQ¶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¶V RSWLRQ LQWR VKDUHV RI WKH &RUSRUDWLRQ DW DQ\ WLPH SULRU WR WKH FORVH RI EXVLQHVVRQWKHGD\SULRUWRWKHPDWXULW\GDWHDWDFRQYHUVLRQSULFHRI $W WKH &RUSRUDWLRQ¶V RSWLRQ RQ WKH PDWXULW\ GDWH WKH GHEHQWXUHV RU DQ\ SRUWLRQ WKHUHRI VKDOO EH FRQYHUWLEOH LQWR VKDUHV DWWKH &RUSRUDWLRQ¶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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) WR WKH GHEW FRPSRQHQW VXFK WKDW RQ PDWXULW\ WKH GHEW FRPSRQHQW HTXDOV WKH SULQFLSDO DPRXQW RI WKH FRQYHUWLEOH GHEHQWXUHV RXWVWDQGLQJ 6XPPDU\RIWKHHTXLW\FRPSRQHQWRIWKHFRQYHUWLEOHGHEHQWXUHV

December 31 'HFHPEHU 2020 8QVHFXUHG'HEHQWXUHV $ 3,261 8QVHFXUHG'HEHQWXUHV 3,590 8QVHFXUHG'HEHQWXUHV 3,866 8QVHFXUHG'HEHQWXUHV 2,497

&RQYHUWLEOH'HEHQWXUHV(TXLW\&RPSRQHQWHQGRI\HDU $ 13,214

$OOFRQYHUWLEOHGHEHQWXUHVRXWVWDQGLQJDW'HFHPEHUUHSUHVHQWGLUHFWXQVHFXUHGGHEWREOLJDWLRQVRIWKH&RUSRUDWLRQ

14. SHARE CAPITAL &KDQJHVLQWKHVKDUHVLVVXHGDQGRXWVWDQGLQJGXULQJWKH\HDUHQGHG'HFHPEHUDUHDVIROORZV

2020 Number of Shares Amount

6KDUHFDSLWDOEHJLQQLQJRI\HDU 34,703,237 $ 709,546 ,VVXHGXQGHUGLYLGHQGUHLQYHVWPHQWSODQ 319,265 9,427 ,VVXHGXQGHUHPSOR\HHVKDUHSXUFKDVHSODQ 69,654 2,312 ,VVXHGXQGHUGHIHUUHGVKDUHSODQ 30,618 606 ,VVXHGXQGHU)LUVW1DWLRQVFRPPXQLW\SDUWQHUVKLSDJUHHPHQWV 2,039 50 ,VVXHGWR:LQGRZ,QVWDOODWLRQ6SHFLDOLVWV,QFYHQGRURQFORVLQJ 1RWH 346,945 9,402

6KDUHFDSLWDOHQGRI\HDU 35,471,758 $ 731,343

&KDQJHVLQWKHVKDUHVLVVXHGDQGRXWVWDQGLQJGXULQJWKH\HDUHQGHG'HFHPEHUDUHDVIROORZV

1XPEHURIVKDUHV $PRXQW 6KDUHFDSLWDOEHJLQQLQJRI\HDU ,VVXHGXSRQFRQYHUVLRQRIFRQYHUWLEOHGHEHQWXUHV ,VVXHGXQGHUGLYLGHQGUHLQYHVWPHQWSODQ 6KDUHVFDQFHOOHGXQGHU1&,% ,VVXHGXQGHUHPSOR\HHVKDUHSXUFKDVHSODQ ,VVXHGXQGHUGHIHUUHGVKDUHSODQ ,VVXHGXQGHU)LUVW1DWLRQVFRPPXQLW\SDUWQHUVKLSDJUHHPHQW ,VVXHGWR/9&RQWURO0IJ/WGYHQGRUVRQFORVLQJ 1RWH ,VVXHGWR$GYDQFHG:LQGRZ,QFYHQGRUVRQFORVLQJ 1RWH 3URVSHFWXVRIIHULQJ2FWREHU

6KDUHFDSLWDOHQGRI\HDU

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 2Q)HEUXDU\WKH&RUSRUDWLRQUHFHLYHGDSSURYDOIURPWKH76;IRUWKHUHQHZDORILWV1&,%WRSXUFKDVHXSWRDQDJJUHJDWHRI VKDUHVUHSUHVHQWLQJRIWKHLVVXHGDQGRXWVWDQGLQJVKDUHVDVDW)HEUXDU\3XUFKDVHVRIVKDUHVSXUVXDQWWR WKHUHQHZHG1&,%FDQEHPDGHWKURXJKWKHIDFLOLWLHVRIWKH76;GXULQJWKHSHULRGFRPPHQFLQJRQ)HEUXDU\DQGHQGLQJRQ )HEUXDU\7KHPD[LPXPQXPEHURIVKDUHVWKDWFDQEHSXUFKDVHGE\WKH&RUSRUDWLRQGDLO\LVOLPLWHGWRVKDUHV RWKHUWKDQEORFNSXUFKDVHH[HPSWLRQV$VDPDWWHURIQRUPDOFRXUVHWKH&RUSRUDWLRQLQWHQGVWRUHQHZWKH1&,%LQZKHQWKH FXUUHQW1&,%H[SLUHV 'XULQJWKH\HDUHQGHG'HFHPEHUWKH&RUSRUDWLRQGLGQRWPDNHDQ\SXUFKDVHVRIVKDUHV,QWKHSULRU\HDUWKH&RUSRUDWLRQ SXUFKDVHGWKHVKDUHVDWDQDYHUDJHFRVWRISHUVKDUHIRUDQDJJUHJDWHFRQVLGHUDWLRQRIH[FOXGLQJWD[RIOHVVWKDQ $OO WKH VKDUHV SXUFKDVHG LQ WKH SULRU SHULRG ZHUH FDQFHOOHG 7KH H[FHVV RI WKH FRVW RYHU WKH DYHUDJH ERRN YDOXH RI IRU SXUFKDVHVPDGHLQZDVFKDUJHGWRUHWDLQHGHDUQLQJV 'XULQJ WKH \HDU WKH &RUSRUDWLRQ LVVXHG VKDUHV WR WKH YHQGRUV RI :LQGRZ ,QVWDOODWLRQ 6SHFLDOLVWV ,QF 2Q -XO\ WKH &RUSRUDWLRQLVVXHGVKDUHVZLWKDYDOXHRIDVSDUWRIWKHDFTXLVLWLRQRI:,6 1RWH

15. DIVIDENDS DECLARED 7KH&RUSRUDWLRQSD\VFDVKGLYLGHQGVRQRUDERXWWKHWKRIHDFKPRQWKWRVKDUHKROGHUVRIUHFRUGRQWKHODVWEXVLQHVVGD\RIWKH SUHYLRXVPRQWK7KH&RUSRUDWLRQ¶V%RDUGRI'LUHFWRUVUHJXODUO\H[DPLQHVWKHGLYLGHQGVSDLGWRVKDUHKROGHUV &XPXODWLYHGLYLGHQGVGXULQJWKH\HDUDQGWKHFRPSDUDWLYH\HDUDUHDVIROORZV

Year Ended December 31 2020 &XPXODWLYHGLYLGHQGVEHJLQQLQJRI\HDU $ 496,920 'LYLGHQGVGXULQJWKH\HDU 80,012

&XPXODWLYHGLYLGHQGVHQGRI\HDU $ 576,932

7KHDPRXQWVDQGUHFRUGGDWHVRIWKHGLYLGHQGVGXULQJWKH\HDUDQGWKHFRPSDUDWLYH\HDUDUHDVIROORZV

$IWHU'HFHPEHUDQGEHIRUHWKHVHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVZHUHDXWKRUL]HGWKH&RUSRUDWLRQGHFODUHGDPRQWKO\ GLYLGHQGRISHUVKDUHIRU-DQXDU\DQG)HEUXDU\

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

16. SEGMENTED AND SUPPLEMENTAL INFORMATION 2SHUDWLQJVHJPHQWVDUHUHSRUWHGLQDPDQQHUWKDWLVFRQVLVWHQWZLWKWKHLQWHUQDOUHSRUWLQJSURYLGHGWRWKHFKLHIRSHUDWLQJGHFLVLRQ PDNHU 7KH FKLHI RSHUDWLQJ GHFLVLRQPDNHU ZKR LV UHVSRQVLEOH IRU DOORFDWLQJ UHVRXUFHV DQG DVVHVVLQJ WKH SHUIRUPDQFH RI WKH RSHUDWLQJVHJPHQWVKDVEHHQLGHQWLILHGDVWKH&KLHI([HFXWLYH2IILFHU 7KH &RUSRUDWLRQ¶V RSHUDWLQJ EXVLQHVV VHJPHQWV LQFOXGH VWUDWHJLF EXVLQHVV XQLWV WKDW RIIHU GLIIHUHQW SURGXFWV DQG VHUYLFHV 7KH &RUSRUDWLRQKDVWZRRSHUDWLQJEXVLQHVVVHJPHQWV$HURVSDFH $YLDWLRQDQG0DQXIDFWXULQJ7KH$HURVSDFH $YLDWLRQVHJPHQW SURYLGHVDLUOLQHVHUYLFHVWRFRPPXQLWLHVLQ0DQLWRED2QWDULR1XQDYXWDQGHDVWHUQ&DQDGDDQGDOVRVHOOVDLUFUDIWHQJLQHVDQG DIWHUPDUNHW SDUWV WR UHJLRQDO DLUOLQH RSHUDWRUV DURXQG WKH ZRUOG ,Q DGGLWLRQ 3URYLQFLDO¶V DHURVSDFH EXVLQHVV GHVLJQV PRGLILHV PDLQWDLQVDQGRSHUDWHVFXVWRPVHQVRUHTXLSSHGDLUFUDIW0RQFWRQ)OLJKW&ROOHJHSURYLGHVSLORWWUDLQLQJVHUYLFHV7KH0DQXIDFWXULQJ VHJPHQWFRQVLVWVRIQLFKHVSHFLDOW\PDQXIDFWXUHUVLQPDUNHWVWKURXJKRXW&DQDGDDQGWKH8QLWHG6WDWHV7KHUHVXOWVRI:,6DUH LQFOXGHGLQWKH0DQXIDFWXULQJVHJPHQWUHVXOWVVXEVHTXHQWWRWKHGDWHRIDFTXLVLWLRQ 1RWH 7KH&RUSRUDWLRQHYDOXDWHVHDFKVHJPHQW¶VSHUIRUPDQFHEDVHGRQ(DUQLQJVEHIRUH,QWHUHVW7D[HV'HSUHFLDWLRQDQG$PRUWL]DWLRQ ³(%,7'$´ 7KH&RUSRUDWLRQ¶VPHWKRGRIFDOFXODWLQJ(%,7'$PD\GLIIHUIURPWKDWRIRWKHUFRUSRUDWLRQVDQGWKHUHIRUHPD\QRWEH FRPSDUDEOH WR PHDVXUHV XWLOL]HG E\ WKHP 7KH &RUSRUDWLRQ¶V PHWKRG RI FDOFXODWLQJ (%,7'$ LV FRQVLVWHQW ZLWK WKH &RUSRUDWLRQ¶V 2SHUDWLQJ3URILWEHIRUH'HSUHFLDWLRQ$PRUWL]DWLRQ)LQDQFH&RVWVDQG2WKHUSUHVHQWHGLQWKH&RQVROLGDWHG6WDWHPHQWRI,QFRPH$OO LQWHUVHJPHQW DQG LQWUDVHJPHQW WUDQVDFWLRQV DUH HOLPLQDWHG DQG DOO VHJPHQW UHYHQXHV SUHVHQWHG LQ WKH WDEOHV EHORZ DUH IURP H[WHUQDOFXVWRPHUV ³+HDG2IILFH´XVHGLQWKHIROORZLQJVHJPHQWWDEOHVLVQRWDVHSDUDWHVHJPHQWDQGLVRQO\SUHVHQWHGWRUHFRQFLOHWRWKH&RUSRUDWLRQ¶V WRWDO(%,7'$FHUWDLQVWDWHPHQWRIILQDQFLDOSRVLWLRQDPRXQWVDQGFDSLWDODVVHWDGGLWLRQV,WLQFOXGHVH[SHQVHVLQFXUUHGDWWKHKHDG RIILFHRIWKH&RUSRUDWLRQ

Year Ended December 31, 2020 Aerospace & Aviation Manufacturing Head Office Consolidated 5HYHQXH $ 687,321 $ 462,308 $ - $ 1,149,629 ([SHQVHV 469,244 374,327 21,523 865,094 (%,7'$ 218,077 87,981 (21,523) 284,535 'HSUHFLDWLRQRIFDSLWDODVVHWV 139,898 $PRUWL]DWLRQRILQWDQJLEOHDVVHWV 17,573 )LQDQFHFRVWVLQWHUHVW 47,000 'HSUHFLDWLRQRIULJKWRIXVHDVVHWV 25,374 ,QWHUHVWH[SHQVHRQULJKWRIXVHOHDVHOLDELOLWLHV 3,934 $FTXLVLWLRQFRVWV 1,816 ,PSDLUPHQWORVV 6,117 2WKHU 1RWH (177) (DUQLQJVEHIRUHLQFRPHWD[HV 43,000 &XUUHQWLQFRPHWD[H[SHQVH 17,007 'HIHUUHGLQFRPHWD[UHFRYHU\ (2,062) 1HW(DUQLQJV $ 28,055

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

For the period ended December 31, 2020 Aerospace & Aviation Manufacturing Head Office(1) Consolidated

7RWDODVVHWV $ 1,623,340 $ 548,476 $ 122,368 $ 2,294,184 1HWFDSLWDODVVHWDGGLWLRQV 122,310 5,037 1,040 128,387 ,QGHILQLWHOLYHGLQWDQJLEOHDVVHWV 53,852 32,370 - 86,222 *RRGZLOO 218,164 179,425 - 397,589

)RUWKH\HDUHQGHG'HFHPEHU $HURVSDFH $YLDWLRQ 0DQXIDFWXULQJ +HDG2IILFH &RQVROLGDWHG 7RWDODVVHWV 1HWFDSLWDODVVHWDGGLWLRQV ,QGHILQLWHOLYHGLQWDQJLEOHDVVHWV *RRGZLOO

1RWH ,QFOXGHVFRUSRUDWHDVVHWVQRWGLUHFWO\DWWULEXWDEOHWRRSHUDWLQJVHJPHQWV6XFKXQDOORFDWHGDVVHWVLQFOXGHFRUSRUDWHFDVKWKDWLVSDUWRIWKH&RUSRUDWLRQ¶V PLUURUEDQNLQJDUUDQJHPHQWV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) Revenues 7KH IROORZLQJ WDEOH SURYLGHV GLVDJJUHJDWHG LQIRUPDWLRQ DERXW UHYHQXH IURP FRQWUDFWV ZLWK FXVWRPHUV 0DQDJHPHQW EHOLHYHV WKDW GLVDJJUHJDWLRQE\W\SHRIVDOHLVPRVWDSSURSULDWH7KHSXUSRVHRIWKLVGLVFORVXUHLVWRSURYLGHLQIRUPDWLRQDERXWWKHQDWXUHRIWKH &RUSRUDWLRQ¶VFRQWUDFWVDQGWKHWLPLQJDPRXQWDQGXQFHUWDLQWLHVDVVRFLDWHGZLWKFXVWRPHUFRQWUDFWV

December 31 'HFHPEHU Revenue Streams 2020 Aerospace & Aviation Segment 6DOHRIJRRGVSRLQWLQWLPH $ 119,826 6DOHVRIVHUYLFHVSRLQWLQWLPH 565,783 6DOHRIJRRGVDQGVHUYLFHVRYHUWLPH 1,712

Manufacturing Segment 6DOHRIJRRGVSRLQWLQWLPH 93,184 6DOHRIJRRGVDQGVHUYLFHVRYHUWLPH 369,124 7RWDOUHYHQXH $ 1,149,629

7KHIROORZLQJLVWKHJHRJUDSKLFEUHDNGRZQRIUHYHQXHVIRUWKH\HDUHQGHG'HFHPEHUDQGWKHFRPSDUDWLYH\HDU EDVHGRQWKHORFDWLRQRIWKHFXVWRPHUDQGWKHFDSLWDODVVHWVDQGJRRGZLOODVDWWKHEDODQFHVKHHWGDWHV

Year Ended December 31 2020

&DQDGD $ 702,303 $ 8QLWHG6WDWHV 292,843 (XURSH 16,129 2WKHU 138,354 7RWDOUHYHQXHIRUWKH\HDU $ 1,149,629 $

As at December 31, 2020 $VDW'HFHPEHU Capital Assets Goodwill &DSLWDO$VVHWV *RRGZLOO

&DQDGD $ 622,302 $ 289,242 $ 8QLWHG6WDWHV 79,211 108,347 (XURSH 248,524 - 2WKHU - - $ 950,037 $ 397,589 $ $

December 31 'HFHPEHU Contract Assets 2020 $FFRXQWVUHFHLYDEOHLQFOXGLQJORQJWHUPSRUWLRQ $ 274,403 $PRXQWVGXHIURPFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV 21,372 7RWDO $ 295,775 $ &XUUHQW $ 285,257 $ 1RQFXUUHQW $ 10,518

$PRXQWVUHODWLQJWRFRQWUDFWDVVHWVDUHEDODQFHVGXHIURPFXVWRPHUVXQGHUFRQVWUXFWLRQFRQWUDFWVWKDWDULVHZKHQWKH&RUSRUDWLRQ UHFHLYHV SD\PHQWV IURP FXVWRPHUV LQ OLQH ZLWK D VHULHV RI SHUIRUPDQFH UHODWHG PLOHVWRQHV 7KH &RUSRUDWLRQ ZLOO SUHYLRXVO\ KDYH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) UHFRJQL]HGDFRQWUDFWDVVHWIRUDQ\ZRUNSHUIRUPHG$Q\DPRXQWSUHYLRXVO\UHFRJQL]HGDVDFRQWUDFWDVVHWLVUHFODVVLILHGWRWUDGH UHFHLYDEOHVDWWKHSRLQWDWZKLFKLWLVLQYRLFHGWRWKHFXVWRPHU

December 31 'HFHPEHU Contract Liabilities 2020 &XVWRPHUOR\DOW\SURJUDPV$LUOLQHV $ 940 'HIHUUHGUHYHQXHQHWRIFXVWRPHUOR\DOW\SURJUDPV 27,033 $PRXQWVGXHWRFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV 24,997 7RWDO $ 52,970 $ &XUUHQW $ 52,970 $

&RQWUDFWOLDELOLWLHVUHODWLQJWRFRQVWUXFWLRQFRQWUDFWVDUHEDODQFHVGXHWRFXVWRPHUVXQGHUFRQVWUXFWLRQFRQWUDFWV7KHVHDULVHLID SDUWLFXODUPLOHVWRQHSD\PHQWH[FHHGVWKHUHYHQXHUHFRJQL]HG

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± 7KH IROORZLQJ VXPPDUL]HV WKH FRVWV DQG HVWLPDWHG HDUQLQJV RQ XQFRPSOHWHG FRQWUDFWV DV RI 'HFHPEHU DQG WKH FRPSDUDWLYH\HDU

As at December 31 2020 &RVWVLQFXUUHGRQXQFRPSOHWHGFRQWUDFWV $ 277,366 $ (VWLPDWHGHDUQLQJV 53,723

331,089 OHVVELOOLQJVWRGDWH (334,714)

7RWDO $ (3,625) $

$PRXQWVGXHIURPFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV $ 21,372 $ $PRXQWVGXHWRFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV (24,997)

7RWDO $ (3,625) $

18. EARNINGS PER SHARE %DVLFHDUQLQJVSHUVKDUHIRUWKH&RUSRUDWLRQLVFDOFXODWHGE\GLYLGLQJWKH1HW(DUQLQJVE\WKHZHLJKWHGDYHUDJHQXPEHURIFRPPRQ VKDUHVRXWVWDQGLQJGXULQJWKH\HDU 'LOXWHG1HW(DUQLQJVSHUVKDUHLVFDOFXODWHGE\DGMXVWLQJWKHZHLJKWHGDYHUDJHQXPEHURIFRPPRQVKDUHVRXWVWDQGLQJWRDVVXPH FRQYHUVLRQ RI DOO GLOXWLYH VHFXULWLHV WR FRPPRQ VKDUHV 7KH &RUSRUDWLRQ KDV WZR FDWHJRULHV RI GLOXWLYH SRWHQWLDO FRPPRQ VKDUHV GHIHUUHG VKDUHV XQGHU WKH &RUSRUDWLRQ¶V 'HIHUUHG 6KDUH 3ODQ DQG FRQYHUWLEOH GHEHQWXUHV )RU WKH FRQYHUWLEOH GHEHQWXUHV WKH FRQYHUWLEOH GHEW LV DVVXPHG WRKDYH EHHQ FRQYHUWHG LQWR FRPPRQ VKDUHV DQG 1HW (DUQLQJVLV DGMXVWHG WR HOLPLQDWH WKH LQWHUHVW H[SHQVHIURPWKHFRQYHUWLEOHGHEWOHVVWKHWD[HIIHFW

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 7KHFRPSXWDWLRQIRUEDVLFDQGGLOXWHGHDUQLQJVSHUVKDUHIRUWKH\HDUHQGHG'HFHPEHUDQGWKHFRPSDUDWLYHIRUWKH \HDUDUHDVIROORZV

Year Ended December 31 2020 1HW(DUQLQJV /RVV $ 28,055 (IIHFWRIGLOXWLYHVHFXULWLHV

&RQYHUWLEOHGHEHQWXUHLQWHUHVW -

'LOXWHG1HW(DUQLQJV /RVV $ 28,055

%DVLFZHLJKWHGDYHUDJHQXPEHURIVKDUHV 35,048,953 (IIHFWRIGLOXWLYHVHFXULWLHV 'HIHUUHGVKDUHV 928,471

&RQYHUWLEOHGHEHQWXUHV -

'LOXWHGEDVLVZHLJKWHGDYHUDJHQXPEHURIVKDUHV 35,977,424 1HW(DUQLQJV /RVV SHUVKDUH %DVLF $ 0.80 'LOXWHG $ 0.78

19. EXPENSES BY NATURE 7KHIROORZLQJGLVDJJUHJDWHVH[SHQVHVE\QDWXUHIRUGLUHFWRSHUDWLQJH[SHQVHVFRVWRIJRRGVVROGDQGJHQHUDODQGDGPLQLVWUDWLYH H[SHQVHV DOOH[FOXGLQJGHSUHFLDWLRQDQGDPRUWL]DWLRQ ZKLFKDUHSUHVHQWHGLQWKHVWDWHPHQWRILQFRPH

2020 6DODULHVZDJHV EHQHILWV $ 275,505 $ $LUFUDIWRSHUDWLQJDQGVDOHH[SHQVHV 238,773 0DWHULDOVDQGLQVWDOODWLRQFRVWV 228,897 *HQHUDODQGDGPLQLVWUDWLYH 46,704 %XLOGLQJUHQWDQGPDLQWHQDQFH 10,895 &RPPXQLFDWLRQDQGLQIRUPDWLRQWHFKQRORJ\ 12,374 $GYHUWLVLQJ 2,981 6XEFRQWUDFWLQJVHUYLFHV 28,175 2WKHU 20,790 $ 865,094 $

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

20. EMPLOYEE BENEFITS 'HIHUUHG6KDUH3ODQ 7KHQXPEHURIGHIHUUHGVKDUHVJUDQWHGXQGHUWKH'HIHUUHG6KDUH3ODQZDVDVIROORZV

2020 'HIHUUHGVKDUHVRXWVWDQGLQJEHJLQQLQJRI\HDU 870,972 *UDQWHGGXULQJWKH\HDU 18,741 *UDQWHGWKURXJKGLYLGHQGVGHFODUHGGXULQJWKH\HDU 69,376 5HGHHPHGGXULQJWKH\HDU (30,618) )RUIHLWHGGXULQJWKH\HDU - 'HIHUUHGVKDUHVRXWVWDQGLQJHQGRI\HDU 928,471 9HVWHGSRUWLRQRIGHIHUUHGVKDUHVRXWVWDQGLQJHQGRI\HDU 892,004

7KHIDLUYDOXHRIWKHGHIHUUHGVKDUHVJUDQWHGGXULQJWKH\HDUZDVDWWKHWLPHRIWKHJUDQW ZHLJKWHGDYHUDJHJUDQWSULFHRI SHUVKDUH DQGZDVEDVHGRQWKHPDUNHWSULFHRIWKH&RUSRUDWLRQ¶VVKDUHVDWWKDWWLPH ±ZHLJKWHGDYHUDJHJUDQW SULFHRISHUVKDUH 'XULQJWKH\HDUWKH&RUSRUDWLRQUHFRUGHGDFRPSHQVDWLRQH[SHQVHRIIRUWKH'HIHUUHG6KDUH 3ODQZLWKLQKHDGRIILFHH[SHQVHV ± 5HVWULFWHG6KDUH3ODQ 'XULQJWKH\HDUHQGHG'HFHPEHUWKH&RUSRUDWLRQJUDQWHG ± UHVWULFWHGVKDUHVWRFHUWDLQSHUVRQQHO 7KHIDLUYDOXHRIWKHUHVWULFWHGVKDUHXQLWVJUDQWHGZDV DWWKHWLPHRIWKHJUDQWDQGZDVEDVHGRQWKHPDUNHW SULFHRIWKH&RUSRUDWLRQ¶VVKDUHVDWWKDWWLPH'XULQJWKH\HDUHQGHG'HFHPEHUWKH&RUSRUDWLRQUHFRUGHGFRPSHQVDWLRQ H[SHQVHRIIRUWKH&RUSRUDWLRQ¶V5HVWULFWHG6KDUH3ODQZLWKLQWKHJHQHUDODQGDGPLQLVWUDWLYHH[SHQVHVRIKHDGRIILFH ZLWKDFRUUHVSRQGLQJOLDELOLW\UHFRUGHGLQ$FFRXQWV3D\DEOHDQG$FFUXHG([SHQVHV (PSOR\HH6KDUH3XUFKDVH3ODQ &HUWDLQHPSOR\HHVRIWKH&RUSRUDWLRQSDUWLFLSDWHLQDQ(PSOR\HH6KDUH3XUFKDVH3ODQ ³(633´ 8QGHUWKH(633HPSOR\HHVFDQ PDNHFRQWULEXWLRQVRIXSWRRIWKHLUEDVHVDODULHVWRSXUFKDVH&RUSRUDWLRQVKDUHVRXWRI7UHDVXU\DQGXSRQWKHHPSOR\HHV UHPDLQLQJ HPSOR\HG ZLWK WKH &RUSRUDWLRQ RU LWV VXEVLGLDULHV GXULQJ DQ PRQWK YHVWLQJ SHULRG WKH\ DUH HQWLWOHG WR UHFHLYH DQ DGGLWLRQDOQXPEHURIVKDUHV ³DGGLWLRQDOVKDUHV´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¶VVKDUHSULFHDWWKHSHULRGHQGDQ\FKDQJHVLQWKH&RUSRUDWLRQ¶VGLYLGHQG UDWHDQGDQ\HVWLPDWHGIRUIHLWXUHV'XULQJWKHWRWDOH[SHQVHUHFRUGHGIRUWKH(633LQKHDGRIILFHH[SHQVHVZDV ± $W'HFHPEHUWKH&RUSRUDWLRQKDG UHFRUGHGZLWKLQ$FFRXQWV3D\DEOHDQG$FFUXHG([SHQVHV UHSUHVHQWLQJWKHSRUWLRQRIDGGLWLRQDOVKDUHVWKDWKDYHYHVWHGDWWKDWGDWH

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

21. CONTINGENCIES AND COMMITMENTS 7KH&RUSRUDWLRQDQGLWVVXEVLGLDULHVUHQWSUHPLVHVDQGHTXLSPHQWXQGHURSHUDWLQJOHDVHDJUHHPHQWVVRPHRIZKLFKIDOORXWVLGHWKH VFRSHRI,)567KHPLQLPXPOHDVHSD\PHQWVXQGHUWKHVHFRQWUDFWXDOREOLJDWLRQVDUHDVIROORZV

&RPPLWPHQWV December 31, 2020 'HFHPEHU /HVVWKDQ\HDU $ 2,399 %HWZHHQ\HDUDQG\HDUV 3,118 0RUHWKDQ\HDUV 626 $ 6,143

,QFOXGHGLQWKHWDEOHDERYHDUHFRPPLWPHQWVWRUHODWHGSDUWLHVLQDVVRFLDWLRQZLWKOHDVHGSURSHUW\XVHGLQWKHRSHUDWLRQVZKLFKDUH GHVFULEHGIXUWKHULQ1RWH 7KH&RUSRUDWLRQKDVOHWWHUVRIFUHGLWDQGVXUHW\ERQGVRXWVWDQGLQJZLWKYDU\LQJPDWXULWLHVWKDWDUHFRQWLQJHQWRQFHUWDLQRSHUDWLRQDO SURGXFWVDQGVHUYLFHVEHLQJSURYLGHGE\WKH&RUSRUDWLRQ¶VVXEVLGLDULHV$VRI'HFHPEHUWKHWRWDOYDOXHRIWKHVHOHWWHUVRI FUHGLWDQGVXUHW\ERQGVZDV 7KHLQFUHDVHRYHUWKHSULRU\HDUUHODWHVSULPDULO\WRWKH&RUSRUDWLRQVZLQGRZ LQVWDOODWLRQEXVLQHVVHV :,6DQG$:,

22. RELATED PARTY TRANSACTIONS

7KHIROORZLQJWUDQVDFWLRQVZHUHFDUULHGRXWE\WKH&RUSRUDWLRQZLWKUHODWHGSDUWLHV 3URSHUW\/HDVHV 7KH&RUSRUDWLRQOHDVHVVHYHUDOEXLOGLQJVIURPUHODWHGSDUWLHVZKRZHUHYHQGRUVRIEXVLQHVVHVWKDWWKH&RUSRUDWLRQKDVDFTXLUHG 7KHVH YHQGRUV DUH FRQVLGHUHG UHODWHG SDUWLHV EHFDXVH RI WKHLU FRQWLQXHG LQYROYHPHQW LQ WKH PDQDJHPHQW RI WKRVH DFTXLUHG EXVLQHVVHV7KHVHOHDVHVDUHUHFRJQL]HGLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDWWKHH[FKDQJHDPRXQWV7KH&RUSRUDWLRQ¶VKHDG RIILFHUHORFDWHGLQ'HFHPEHUWRDSUHPLVHQRWFRQWUROOHGE\DGLUHFWRURIWKH&RUSRUDWLRQ7KHUHIRUHWKHUHDUHQRUHODWHGSDUW\ OHDVHFRVWVIRUWKHKHDGRIILFHRIWKH&RUSRUDWLRQLQ7KHWRWDOFRVWVLQFXUUHGLQXQGHUWKHVHOHDVHVZDV ± DQGWKHOHDVHWHUPPDWXULWLHVUDQJHIURPWR .H\0DQDJHPHQW&RPSHQVDWLRQ 7KH &RUSRUDWLRQ LGHQWLILHV LWV NH\ PDQDJHPHQW SHUVRQQHO EHLQJ WKRVH SHUVRQV KDYLQJ DXWKRULW\ DQG UHVSRQVLELOLW\ IRU SODQQLQJ GLUHFWLQJDQGFRQWUROOLQJWKHDFWLYLWLHVRIWKHHQWLW\GLUHFWO\RULQGLUHFWO\LQFOXGLQJDQ\GLUHFWRURIWKH&RUSRUDWLRQ¶VERDUG ZKHWKHU H[HFXWLYHRURWKHUZLVH 7KHNH\PDQDJHPHQWSHUVRQQHOLQFOXGHWKHH[HFXWLYHPDQDJHPHQWWHDPDQGWKH%RDUGRI'LUHFWRUV &RPSHQVDWLRQH[SHQVHGIRUNH\PDQDJHPHQWGXULQJWKH\HDUDQGWKHFRPSDUDWLYH\HDULVGHWDLOHGLQWKHWDEOHEHORZ 6KDUHEDVHGFRPSHQVDWLRQYHVWVRYHUDSHULRGRIXSWRWKUHH\HDUVDQGLVH[SHQVHGRYHUWKDWSHULRG

6DODULHVDQGVKRUWWHUPEHQHILWV $ 3,372 $ 6KDUHEDVHGFRPSHQVDWLRQH[SHQVH 3,902

$ 7,274 $

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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 'XULQJWKHFXUUHQWSHULRG&5-&DSLWDO&RUSLQYHVWHG86 86 JHQHUDWLQJUHWXUQVSDLGRUSD\DEOHWR&5- &DSLWDO&RUSRI86 86 $VDUHVXOWRIWKHVDOHRIFHUWDLQRIWKHVHDVVHWVDQGWKHUHWXUQRIWKHLQLWLDOLQYHVWPHQW WR &5- &DSLWDO&RUS LWV UHPDLQLQJ LQYHVWPHQW DW 'HFHPEHU ZDV 86 'HFHPEHU 86 $W 'HFHPEHU86LVUHFRUGHGDVDFFRXQWVSD\DEOHGXHWR&5-&DSLWDO&RUS 'HFHPEHU86DFFRXQWV SD\DEOHGXHWR&5-&DSLWDO&RUS

23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 7KH&RUSRUDWLRQ¶VDFWLYLWLHVH[SRVHLWWRDYDULHW\RIILQDQFLDOULVNVPDUNHWULVNFUHGLWULVNDQGOLTXLGLW\ULVN6HQLRUPDQDJHPHQWLV UHVSRQVLEOHIRUVHWWLQJDFFHSWDEOHOHYHOVRIULVNDQGUHYLHZLQJULVNPDQDJHPHQWDFWLYLWLHVDVQHFHVVDU\ 0DUNHW5LVN 0DUNHWULVNLVWKHULVNWKDWWKHIDLUYDOXHRUIXWXUHFDVKIORZVRIDILQDQFLDOLQVWUXPHQWZLOOIOXFWXDWHEHFDXVHRIFKDQJHVLQPDUNHW SULFHV0DUNHWULVNLVFRPSULVHGRIFXUUHQF\LQWHUHVWUDWHDQGRWKHUSULFHULVN Currency Risk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³VZDS´ ZLWKD PHPEHURIWKH&RUSRUDWLRQ¶VOHQGLQJV\QGLFDWH7KHVZDSUHTXLUHVWKDWIXQGVDUHH[FKDQJHGEDFNLQRQHPRQWKDWWKHVDPH WHUPVXQOHVVERWKSDUWLHVDJUHHWRH[WHQGWKHVZDSIRUDQDGGLWLRQDOPRQWK%\ERUURZLQJLQ86GROODUVWKH&RUSRUDWLRQFDQ WDNHDGYDQWDJHRIORZHULQWHUHVWUDWHV7KHVZDSPLWLJDWHVWKH ULVNRIFKDQJHVLQWKHYDOXHRIWKH&RUSRUDWLRQ¶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¶V86ILQDQFLDO LQVWUXPHQWVRXWVWDQGLQJDW'HFHPEHUZRXOGKDYHDQLO QLO LPSDFWRQQHWHDUQLQJVDQGGHFUHDVHWKHIRUHLJQ FXUUHQF\WUDQVODWLRQDGMXVWPHQWLQ2WKHU&RPSUHKHQVLYH,QFRPHE\DSSUR[LPDWHO\ Interest Rate Risk 7KH&RUSRUDWLRQLVVXEMHFWWRWKHULVNWKDWIXWXUHFDVKIORZVDVVRFLDWHGZLWKWKHFUHGLWIDFLOLW\RXWVWDQGLQJ 1RWH ZLOOIOXFWXDWH GXHWRIOXFWXDWLRQVLQLQWHUHVWUDWHV7KH&RUSRUDWLRQPDQDJHVWKLVULVNDQGVHHNVILQDQFLQJWHUPVLQLQGLYLGXDODUUDQJHPHQWV WKDWDUHPRVWDGYDQWDJHRXVLQFOXGLQJDQDVVHVVPHQWRIZKDWSRUWLRQRIWKH&RUSRUDWLRQ¶VRYHUDOOGHEWOHYHOLVFRPSULVHGRI IL[HGUDWHLQVWUXPHQWVFRPSDUHGWRYDULDEOHUDWHLQVWUXPHQWV 7KHWHUPVRIWKHFUHGLWIDFLOLW\DOORZIRUWKH&RUSRUDWLRQWRFKRRVHWKHEDVHLQWHUHVWUDWHEHWZHHQ3ULPH%DQNHUV$FFHSWDQFHV RUWKH/RQGRQ,QWHU%DQN2IIHU5DWH ³/,%25´ $W'HFHPEHU x 86 ±86 ZDVRXWVWDQGLQJXQGHU86/,%25DQG x QLO ±86 ZDVRXWVWDQGLQJXQGHU863ULPHDQG x ± ZDVRXWVWDQGLQJXQGHU%DQNHU¶V$FFHSWDQFHV %DVHGRQWKHRXWVWDQGLQJFUHGLWIDFLOLW\WKURXJKRXWDLQFUHDVHLQLQWHUHVWUDWHVIRUWKH&RUSRUDWLRQZRXOGGHFUHDVHSUH WD[QHWHDUQLQJVE\DSSUR[LPDWHO\ DIWHUWD[ DIWHUWD[

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 7KHLQWHUHVWUDWHVRIWKHFRQYHUWLEOHGHEHQWXUHV 1RWH KDYHIL[HGLQWHUHVWUDWHV 7KH&RUSRUDWLRQDPHQGHGLWVLQWHUHVWUDWHVZDSZLWKFHUWDLQPHPEHUVRILWVOHQGLQJV\QGLFDWHZKHUHE\WKH&RUSRUDWLRQKDV IL[HGLQWHUHVWUDWHVRQRILWV&DQDGLDQFUHGLWIDFLOLW\GHEWGXULQJWKH\HDU7KHDPHQGPHQWUHGXFHGWKHHIIHFWLYHIL[HG LQWHUHVWUDWHRQWKHVZDSDQGH[WHQGHGWKHPDWXULW\E\RQH\HDU7KHGHULYDWLYHILQDQFLDOLQVWUXPHQWKHGJHVWKHH[SRVXUHWR YDULDELOLW\LQFDVKIORZDVVRFLDWHGZLWKWKHIXWXUHSD\PHQWRILQWHUHVWRQ%DQNHUV¶$FFHSWDQFHGHEWWKDWZRXOGLPSDFWSURILWRU ORVVDQGWKHUHIRUHTXDOLILHVDVDFDVKIORZKHGJH7KHLQWHUHVWUDWHVZDSFODVVLILHGDVDORQJWHUPILQDQFLDOOLDELOLW\RI ± ORQJWHUP ILQDQFLDO DVVHW RI LV UHFRUGHG DV D VHSDUDWH OLQH ZLWKLQ RWKHU FRPSUHKHQVLYH LQFRPH 1R KHGJH LQHIIHFWLYHQHVVZDVUHFRUGHGLQRU Other Price Risk 7KH&RUSRUDWLRQ¶V5HVWULFWHG6KDUH3ODQLVDFDVKVHWWOHGSODQ3DUWLFLSDQWVDUHDZDUGHGUHVWULFWHGVKDUHVDQGWKHSD\PHQWWR WKHSDUWLFLSDQWVDWWKHHQGRIWKHYHVWLQJSHULRGIOXFWXDWHVEDVHGRQWKHFKDQJHLQWKH&RUSRUDWLRQ¶VVKDUHSULFHIURPWKHJUDQW GDWHWRWKHYHVWLQJGDWH 7RPLWLJDWHWKHLQFRPHVWDWHPHQWLPSDFWRIDFKDQJHLQWKH&RUSRUDWLRQ¶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±ORQJWHUPILQDQFLDODVVHWRI DQGDUHUHFRUGHG DVDVHSDUDWHOLQHZLWKLQRWKHUFRPSUHKHQVLYHLQFRPH +HGJLQJJDLQVDQGORVVHVDUHUHFODVVLILHGIURPRWKHUFRPSUHKHQVLYHLQFRPHWRWKHFRQVROLGDWHGVWDWHPHQWRILQFRPHWRWKH H[WHQW HIIHFWLYH $FFRUGLQJO\ ZDV UHFODVVLILHG IURP RWKHU FRPSUHKHQVLYH LQFRPH LQ 1R KHGJH LQHIIHFWLYHQHVVZDVUHFRUGHGGXULQJRU Credit Risk &UHGLWULVNDULVHVIURPWKHSRWHQWLDOWKDWDFRXQWHUSDUW\ZLOOIDLOWRSHUIRUPLWVREOLJDWLRQV7KHPD[LPXPFUHGLWH[SRVXUHWRFUHGLW ULVNDWWKHUHSRUWLQJGDWHLVWKHFDUU\LQJYDOXHRIFDVKDQGFDVKHTXLYDOHQWVDFFRXQWVUHFHLYDEOHGHSRVLWVRWKHULQYHVWPHQWV DQGWKHOHQGHU¶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± RIWKLVUHODWHVWRWKH0DQXIDFWXULQJVHJPHQWDQG ± UHODWHVWR WKH $HURVSDFH $YLDWLRQ VHJPHQW 0DQDJHPHQW DW HDFK RI WKH &RUSRUDWLRQ¶V VXEVLGLDULHV PRQLWRU DFFRXQWV UHFHLYDEOHV RYHUGXHDPRXQWVRQDGDLO\EDVLVDQGUHVSRQGDFFRUGLQJO\7KH&RUSRUDWLRQ¶VVXEVLGLDULHVPDLQWDLQDQDGHTXDWHDOORZDQFHIRU GRXEWIXODFFRXQWVDQGUHYLHZWKHDOORZDQFHRQDPRQWKO\EDVLV 7KH &RUSRUDWLRQ KDVFUHGLWULVNH[SRVXUH RQ WKH DPRXQWV DGYDQFHG XQGHU DQ\ SURPLVVRU\ QRWH RU ORDQ DUUDQJHPHQW 7KLV LQFOXGHVWKHLWHPVZLWKLQ2WKHU$VVHWVRQWKH&RUSRUDWLRQ¶VFRQVROLGDWHGVWDWHPHQWRIILQDQFLDOSRVLWLRQLQSDUWLFXODUWKHOHVVRU DUUDQJHPHQWV RI 5HJLRQDO 2QH ZKHUH ORQJWHUP UHFHLYDEOHV DUH UHFRJQL]HG ZLWK DYLDWLRQ FRPSDQLHV LQ ILQDQFH OHDVH DUUDQJHPHQWV7KHVHFXULW\WKH&RUSRUDWLRQKDVIURPWKHVHDUUDQJHPHQWVLVFRQVLGHUHGDGHTXDWHWRFRYHUWKHFDUU\LQJYDOXH RIWKHVHLWHPV $VSDUWRIWKHSDUWQHUVKLSLQ$LU%RUHDOLVWKH&RUSRUDWLRQORDQHGIXQGVWRRQHRILWVSDUWQHUV1*&7KHLQLWLDOORDQRI ZDVVXEVHTXHQWO\UHSDLGLQSDUWDQGWKHFDUU\LQJYDOXHZDVDW'HFHPEHU ± DQGWKHORDQLV VHFXUHGDJDLQVWWKHFDVKIORZVWKHERUURZHULVHQWLWOHGWRIURPWKHSDUWQHUVKLSXQWLOWKHORDQLVUHSDLG $VSDUWRIWKHLQYHVWPHQWLQ:DVD\DWKH&RUSRUDWLRQORDQHGWR:DVD\D7KHWHUPRIWKHORDQLVWKUHH\HDUVDQG SULQFLSDOUHSD\PHQWVEHJDQLQUHVXOWLQJ LQDFDUU\LQJYDOXHDW'HFHPEHURI $Q\ XQSDLGSULQFLSDOEDODQFHLVGXHRQPDWXULW\7KHORDQLVVHFXUHGDJDLQVWWKHXQGHUO\LQJDVVHWVRI:DVD\D

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) Liquidity Risk /LTXLGLW\ULVNLVWKHULVNWKDWWKH&RUSRUDWLRQLVQRWDEOHWRPHHWLWVILQDQFLDOREOLJDWLRQVDVWKH\EHFRPHGXHRUFDQGRVRRQO\DW H[FHVVLYHFRVW7KH&RUSRUDWLRQ¶VJURZWKLVILQDQFHGWKURXJKDFRPELQDWLRQRIWKHFDVKIORZVIURPRSHUDWLRQVERUURZLQJV XQGHU H[LVWLQJ FUHGLW IDFLOLWLHV DQG WKH LVVXDQFH RI HLWKHU RU D FRPELQDWLRQ RI GHEHQWXUHV DQG HTXLW\ 3UXGHQW OLTXLGLW\ ULVN PDQDJHPHQW LPSOLHV PDLQWDLQLQJ VXIILFLHQW FDVK DQG FDVK HTXLYDOHQWV DQG WKH DYDLODELOLW\ RI IXQGLQJ WKURXJK DQ DGHTXDWH DPRXQWRIFRPPLWWHGFUHGLWIDFLOLWLHV2QHRIPDQDJHPHQW¶VSULPDU\JRDOVLVWRPDLQWDLQDQRSWLPDOOHYHORIOLTXLGLW\WKURXJKWKH DFWLYHPDQDJHPHQWRIWKHDVVHWVDQGOLDELOLWLHVDVZHOODVFDVKIORZV'XHWRWKHQDWXUHRIWKHEXVLQHVVWKH&RUSRUDWLRQDLPV WR PDLQWDLQ IOH[LELOLW\ LQ IXQGLQJ E\ PDLQWDLQLQJ FRPPLWWHG DQG DYDLODEOH FUHGLW IDFLOLWLHV 1RWH 'XULQJ WKH \HDU WKH &RUSRUDWLRQDPHQGHGLWVFUHGLWIDFLOLW\DVGLVFXVVHGLQ1RWHWRSURYLGHDGGLWLRQDOIOH[LELOLW\GXHWRXQFHUWDLQW\FUHDWHGE\ &29,' 7KH&RUSRUDWLRQ¶VILQDQFLDOOLDELOLWLHVDQGUHODWHGFDSLWDODPRXQWVKDYHFRQWUDFWXDOPDWXULWLHVZKLFKDUHVXPPDUL]HGEHORZLQWR UHOHYDQWPDWXULW\JURXSLQJVEDVHGRQWKHUHPDLQLQJSHULRGIURPWKHEDODQFHVKHHWGDWHWRWKHFRQWUDFWXDOPDWXULW\GDWH7KH DPRXQWVGLVFORVHGLQWKHIROORZLQJWDEOHDUHWKHFRQWUDFWXDOXQGLVFRXQWHGFDVKIORZV

Less than Between 1 year More than 5 Total 1 year and 5 years years $FFRXQWVSD\DEOHDQGDFFUXHGH[SHQVHV $ 214,504 $ 214,504 $ - $ - /RQJWHUPGHEW SULQFLSDOYDOXH 797,444 - 797,444 - &RQYHUWLEOHGHEHQWXUHV SDUYDOXH 335,725 - 249,475 86,250 &RQWUDFWXDOLQWHUHVW 113,710 33,555 75,196 4,959

Total $ 1,461,383 $ 248,059 $ 1,122,115 $ 91,209

1RWH 7KHFRQWUDFWXDOLQWHUHVWUHIOHFWVWKHDVVXPSWLRQWKDWDPRXQWVRXWVWDQGLQJDQGIORDWLQJLQWHUHVWUDWHVDW'HFHPEHUZLOOUHPDLQDWFXUUHQWOHYHOV XQWLOPDWXULW\

)DLU9DOXHRI)LQDQFLDO,QVWUXPHQWV 7KH IROORZLQJ WDEOH SURYLGHV IDLU YDOXH LQIRUPDWLRQ DERXW ILQDQFLDO DVVHWV DQG OLDELOLWLHV LQ WKH FRQVROLGDWHG EDODQFH VKHHW DQG FDWHJRUL]HGE\OHYHODFFRUGLQJWRWKHVLJQLILFDQFHRIWKHLQSXWVXVHGLQPDNLQJWKHPHDVXUHPHQWVDQGWKHLUUHODWHGFODVVLILFDWLRQV

Fair Value Significant Quoted prices in Significant other unobservable Carrying Value an active market observable inputs inputs Recurring fair value measurements December 31, 2020 Level 1 Level 2 Level 3 Financial Assets 7,975 - - 7,975 2WKHUDVVHWV)DLUYDOXHWKURXJK2&, 1RWH

Financial Liabilities &RQVLGHUDWLRQOLDELOLWLHV)LQDQFLDOOLDELOLW\DWIDLUYDOXHWKURXJKSURILWDQG (5,714) - - (5,714) ORVV 2WKHUORQJWHUPOLDELOLWLHV&URVVFXUUHQF\EDVLVVZDS)LQDQFLDOOLDELOLW\ (4,433) - (4,433) - DWIDLUYDOXHWKURXJKSURILWDQGORVV 2WKHUORQJWHUPOLDELOLWLHV5HVWULFWHG6KDUHKHGJH)LQDQFLDOOLDELOLW\DW (43) - (43) - IDLUYDOXHWKURXJKSURILWDQGORVV 2WKHUORQJWHUPOLDELOLWLHV,QWHUHVW5DWH6ZDS)LQDQFLDOOLDELOLW\DWIDLU (7,407) - (7,407) - YDOXHWKURXJK2&,

Fair Value Disclosures 2WKHUDVVHWV$PRUWL]HGFRVW 26,353 - 26,353 - /RQJWHUPGHEW$PRUWL]HGFRVW (794,194) - - (797,444) &RQYHUWLEOHGHEW$PRUWL]HGFRVW (315,830) (335,454) - -

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

)DLU9DOXH 6LJQLILFDQW 4XRWHGSULFHVLQ 6LJQLILFDQWRWKHU XQREVHUYDEOH &DUU\LQJ9DOXH DQDFWLYHPDUNHW REVHUYDEOHLQSXWV LQSXWV Recurring fair value measurements 'HFHPEHU /HYHO /HYHO /HYHO Financial Assets 2WKHUORQJWHUPDVVHWV5HVWULFWHG6KDUHKHGJH)LQDQFLDODVVHWDWIDLU YDOXHWKURXJKSURILWDQGORVV 2WKHU ORQJWHUP DVVHWV ,QWHUHVW 5DWH 6ZDS )LQDQFLDO DVVHW DW IDLU YDOXHWKURXJK2&, 2WKHUDVVHWV)DLUYDOXHWKURXJK2&, Financial Liabilities &RQVLGHUDWLRQOLDELOLWLHV)LQDQFLDOOLDELOLW\DWIDLUYDOXHWKURXJKSURILWDQG ORVV 2WKHUORQJWHUPOLDELOLWLHV&URVVFXUUHQF\EDVLVVZDS)LQDQFLDOOLDELOLW\ DWIDLUYDOXHWKURXJKSURILWDQGORVV

Fair Value Disclosures 2WKHUDVVHWV$PRUWL]HGFRVW /RQJWHUPGHEW$PRUWL]HGFRVW &RQYHUWLEOHGHEW$PRUWL]HGFRVW

7KH&RUSRUDWLRQYDOXHGWKHOHYHOFRQVLGHUDWLRQOLDELOLWLHVEDVHGRQWKHSUHVHQWYDOXHRIHVWLPDWHGFDVKRXWIORZVXVLQJSUREDELOLW\ ZHLJKWHGFDOFXODWLRQVGLVFRXQWUDWHVDQGWKHREVHUYDEOHIDLUPDUNHWYDOXHRILWVHTXLW\DVDSSOLFDEOH

7KHIROORZLQJWDEOHVXPPDUL]HVWKHFKDQJHVLQWKHFRQVLGHUDWLRQOLDELOLWLHVUHFRUGHGRQWKHDFTXLVLWLRQVRI&DUWH1DY4XHVW0RQFWRQ )OLJKW &ROOHJH :LQJV 2YHU .LVVLVVLQJ /9 &RQWURO DQG $:, LQFOXGLQJ DQ\ FKDQJHV IRU VHWWOHPHQWV FKDQJHV LQ IDLU YDOXH DQG FKDQJHVGXHWRIRUHLJQFXUUHQF\IOXFWXDWLRQV

Consideration Liability Summary December 31 'HFHPEHU )RUWKHSHULRGVHQGHG 2020

2SHQLQJ $ 12,411 $ $FFUHWLRQ 272

6HWWOHGGXULQJWKHSHULRG (7,255)

&KDQJHLQHVWLPDWH 1RWH (177)

$FTXLVLWLRQRI/9&RQWURO -

$FTXLVLWLRQRI$GYDQFHG:LQGRZLQFOXGLQJFKDQJHLQHVWLPDWH 422

7UDQVODWLRQORVV 41

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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) ,QFOXGHGLQWKHDERYHLVWKHHDUQRXWOLDELOLW\IRU/9&RQWURO'XULQJWKH\HDUHQGHG'HFHPEHUWKH&RUSRUDWLRQ VHWWOHGWKHHDUQRXWOLDELOLW\DVVRFLDWHGZLWK0RQFWRQ)OLJKW&ROOHJH7KH&RUSRUDWLRQDOVRVHWWOHG86DQGIRU ZRUNLQJFDSLWDODPRXQWVDVVRFLDWHGZLWK:LQJV2YHU.LVVLVVLQJ$:,DQG/9&RQWUROUHVSHFWLYHO\

)LQDQFLDO,QVWUXPHQW)DLU9DOXH'LVFORVXUHV

7KHIDLUYDOXHVRIFDVKDQGFDVKHTXLYDOHQWVDFFRXQWVUHFHLYDEOHGHSRVLWVDFFRXQWVSD\DEOHDQGDFFUXHGH[SHQVHVDSSUR[LPDWH WKHLUFDUU\LQJYDOXHVGXHWRWKHLUVKRUWWHUPQDWXUH

$VDW'HFHPEHUPDQDJHPHQWKDGGHWHUPLQHGWKDWWKHIDLUYDOXHRILWVORQJWHUPGHEWDSSUR[LPDWHVLWVFDUU\LQJYDOXH7KH IDLUYDOXHRIORQJWHUPGHEWKDVEHHQFDOFXODWHGE\GLVFRXQWLQJWKHH[SHFWHGIXWXUHFDVKIORZVXVLQJDGLVFRXQWUDWHRI7KH GLVFRXQW UDWH LV GHWHUPLQHG E\ XVLQJ D ULVNIUHH EHQFKPDUN ERQG \LHOG IRU LQVWUXPHQWV RI VLPLODU PDWXULW\ DGMXVWHG IRU WKH &RUSRUDWLRQ¶V VSHFLILF FUHGLW ULVN ,Q GHWHUPLQLQJ WKH DGMXVWPHQW IRU FUHGLW ULVN WKH &RUSRUDWLRQ FRQVLGHUV PDUNHW FRQGLWLRQV WKH XQGHUO\LQJYDOXHRIDVVHWVVHFXUHGE\WKHDVVRFLDWHGLQVWUXPHQWDQGRWKHULQGLFDWRUVRIWKH&RUSRUDWLRQ¶VFUHGLWZRUWKLQHVV

$V DW 'HFHPEHU PDQDJHPHQW HVWLPDWHG WKH IDLU YDOXH RI WKH FRQYHUWLEOH GHEHQWXUHV EDVHG RQ WUDGLQJ YDOXHV 7KH HVWLPDWHGIDLUYDOXHRILWVFRQYHUWLEOHGHEHQWXUHVLV 'HFHPEHU ZLWKDFDUU\LQJYDOXHRI 'HFHPEHU

7KH&RUSRUDWLRQ¶VSROLF\LVWRUHFRJQL]HWUDQVIHUVLQDQGRXWRIWKHIDLUYDOXHKLHUDUFK\DVRIWKHGDWHRIWKHHYHQWRUFKDQJHLQ FLUFXPVWDQFHVWKDWFDXVHGWKHWUDQVIHU7KHUHZHUHQRVXFKWUDQVIHUVGXULQJWKHFXUUHQWSHULRG

24. CHANGES IN WORKING CAPITAL ITEMS 7KHFKDQJHVLQQRQFDVKRSHUDWLQJZRUNLQJFDSLWDOLWHPVDUHDVIROORZV

Year Ended December 31 2020 $FFRXQWVUHFHLYDEOHLQFOXGLQJORQJWHUPSRUWLRQ $ 47,289 $PRXQWVGXHIURPFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV 5,625 ,QYHQWRU\ (14,400) 3UHSDLGH[SHQVHVDQGGHSRVLWVLQFOXGLQJORQJWHUPSRUWLRQ 3,513 $FFRXQWVSD\DEOHDQGDFFUXHGH[SHQVHVLQFOXGLQJORQJWHUPSRUWLRQ (10,772) ,QFRPHWD[HVUHFHLYDEOHSD\DEOH 6,218 'HIHUUHGUHYHQXHLQFOXGLQJORQJWHUPSRUWLRQ (3,750) $PRXQWVGXHWRFXVWRPHUVRQFRQVWUXFWLRQFRQWUDFWV 4,732 1HWFKDQJHLQZRUNLQJFDSLWDOLWHPV $ 38,455

25. CAPITAL MANAGEMENT 7KH&RUSRUDWLRQPDQDJHVLWVFDSLWDOWRXWLOL]HSUXGHQWOHYHOVRIGHEW7KH&RUSRUDWLRQ¶VJRDOLVWRPDLQWDLQLWVOHYHORIVHQLRUGHEW ZLWKLQDUDQJHRI±WLPHVIXQGHGVHQLRUGHEWWRDGMXVWHG2SHUDWLQJSURILWEHIRUH'HSUHFLDWLRQ$PRUWL]DWLRQ)LQDQFH&RVWV DQG2WKHUQRUPDOL]HGIRUWKHIXOO\HDUFRQWULEXWLRQRIUHFHQWDFTXLVLWLRQV'XHWRWKHLPSDFWRI&29,'WKH&RUSRUDWLRQ¶VOHYHUDJH UDWLRKDVWHPSRUDULO\LQFUHDVHG&29,'KDVGHFUHDVHG2SHUDWLQJSURILWEHIRUH'HSUHFLDWLRQ$PRUWL]DWLRQ)LQDQFH&RVWVDQG 2WKHUFRPSDUHGWRWKHSULRU\HDUDQGWKHOHYHUDJHUDWLRZLOOUHPDLQDWWKHVHOHYHOVXQWLOWKHLPSDFWRI&29,'ZDQHV 7KH&RUSRUDWLRQ¶VREMHFWLYHLQPDQDJLQJFDSLWDOLVWR HQVXUHIOH[LELOLW\LQWKHFDSLWDOVWUXFWXUHWRIXQGWKHRSHUDWLRQVGLVWULEXWLRQVWRVKDUHKROGHUVFDSLWDOLQYHVWPHQWVDQGWR VXSSRUWWKHH[WHUQDOJURZWKVWUDWHJ\ PDLQWDLQDGHTXDWHOLTXLGLW\DWDOOWLPHVDQG PDLQWDLQDGLYHUVLILHGFDSLWDOVWUXFWXUH 7KH &RUSRUDWLRQ DFWLYHO\ PDQDJHV DQG PRQLWRUV WKH FDSLWDO VWUXFWXUH DQG PDNHV DGMXVWPHQWV EDVHG RQ WKH REMHFWLYHV GHVFULEHG DERYHLQUHVSRQVHWRFKDQJHVLQHFRQRPLFFRQGLWLRQVDQGWKHULVNFKDUDFWHULVWLFVRIWKHXQGHUO\LQJDVVHWV

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) 7KH IROORZLQJ LV FRQVLGHUHG E\ WKH &RUSRUDWLRQ DV FDSLWDO DQG PD\ QRW EH FRPSDUDEOH WR PHDVXUHV SUHVHQWHG E\ RWKHU SXEOLF FRPSDQLHV

December 31 'HFHPEHU 2020 7RWDOVHQLRUGHEWRXWVWDQGLQJ SULQFLSDOYDOXH $ 797,444 $ &RQYHUWLEOHGHEHQWXUHVRXWVWDQGLQJ SDUYDOXH 335,725 &RPPRQVKDUHV 731,343 7RWDOFDSLWDO $ 1,864,512 $

7KHUHDUHFHUWDLQUHTXLUHPHQWVRIWKH&RUSRUDWLRQ¶VFUHGLWIDFLOLW\WKDWLQFOXGHILQDQFLDOFRYHQDQWVDQGUDWLRVLQFOXGLQJOHYHUDJHUDWLRV WKDWDVVHVVWKHIXQGHGVHQLRUGHEWWRDGMXVWHGHDUQLQJVEHIRUHLQWHUHVWLQFRPHWD[H[SHQVHGHSUHFLDWLRQDPRUWL]DWLRQDFTXLVLWLRQ FRVWVDQGRWKHUQRQFDVKLWHPV ³(%,7'$´ UDWLR0DQDJHPHQWFRQVLGHUVWKHVHUHTXLUHPHQWVLQWKHGHFLVLRQVPDGHLQPDQDJLQJWKH OHYHODQGPDNHXSRIWKH&RUSRUDWLRQ¶VFDSLWDOVWUXFWXUH7KH&RUSRUDWLRQKDVEHHQLQFRPSOLDQFHZLWKDOORIWKHILQDQFLDOFRYHQDQWV GXULQJ WKH \HDU $V SUHYLRXVO\ GLVFXVVHG LQ 1RWH WKH &RUSRUDWLRQ DPHQGHG LWV FUHGLW IDFLOLW\ GXULQJ WKH \HDU WR SURYLGH DGGLWLRQDOIOH[LELOLW\GXHWRWKHXQFHUWDLQW\FUHDWHGE\&29,' &KDQJHV LQ WKH FDSLWDO RI WKH &RUSRUDWLRQ GXULQJ WKH \HDU HQGHG 'HFHPEHU DUH PDLQO\ DWWULEXWHG WR WKH IROORZLQJ WKDW RFFXUUHG GXULQJ WKH \HDU )LUVW WKH DFTXLVLWLRQ RI :,6 UHVXOWHG LQ D FDVK SD\PHQW RI ZKLFK ZDV IXQGHG XVLQJ WKH &RUSRUDWLRQ¶VFUHGLWIDFLOLW\DQGWKHLVVXDQFHRIVKDUHVZLWKDYDOXHRI7KH&RUSRUDWLRQ¶VVHQLRUGHEWQHWRIFDVKLQFUHDVHG E\GXULQJWKH\HDUDVFDVKIORZIURPRSHUDWLRQVSDUWLDOO\RIIVHWWKHRXWIORZVIRUWKHDFTXLVLWLRQRI:,6DQGLQYHVWPHQWVLQ RWKHUORQJWHUPJURZWKLQLWLDWLYHV7KH&RUSRUDWLRQ¶VFDVKEDODQFHLQFUHDVHGE\GXULQJ

26. INCOME TAX

5HFRQFLOLDWLRQRI(IIHFWLYH7D[5DWH 7KHWD[RQWKH&RUSRUDWLRQ VHDUQLQJVEHIRUHWD[GLIIHUVIURPWKHDPRXQWWKDWZRXOGDULVHE\DSSO\LQJWKHVWDWXWRU\LQFRPHWD[UDWHWR SUHWD[HDUQLQJVRIWKHFRQVROLGDWHGHQWLWLHVDVIROORZV

2020

(DUQLQJVEHIRUHSURYLVLRQIRULQFRPHWD[HV 43,000 $ &RPELQHG&DQDGLDQIHGHUDODQGSURYLQFLDOWD[UDWHV 27.0%

,QFRPHWD[H[SHQVHDWVWDWXWRU\UDWHV 11,610

,QFUHDVH GHFUHDVH LQWD[HVUHVXOWLQJIURP 3HUPDQHQWGLIIHUHQFHV 3,317 5HDOL]HGFDSLWDOJDLQV ORVVHV (3) $FFRXQWLQJLQFRPHQRWVXEMHFWWRWD[ (48) ,PSDFWRIIRUHLJQMXULVGLFWLRQGLIIHUHQFHV (276) 'HUHFRJQLWLRQ EHQHILW RIGHIHUUHGWD[DVVHWV - $PRXQWVLQUHVSHFWRISULRUSHULRGV 186 2WKHU 159

3URYLVLRQIRULQFRPHWD[HV 14,945 $

8QUHFRJQL]HG'HIHUUHG7D[/LDELOLWLHV $W 'HFHPEHU QR GHIHUUHG WD[ OLDELOLW\ IRU WHPSRUDU\ GLIIHUHQFHV UHODWHG WR LQYHVWPHQWV LQ VXEVLGLDULHV ZDV UHFRJQL]HG EHFDXVHWKH&RUSRUDWLRQFRQWUROVWKHWLPLQJDQGUHYHUVDORIWKHGLIIHUHQFHVDQGLVVDWLVILHGWKDWVXFKGLIIHUHQFHVZLOOQRWUHYHUVHLQ

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data) WKHIRUHVHHDEOHIXWXUH7KHWHPSRUDU\GLIIHUHQFHVDVVRFLDWHGZLWKWKH&RUSRUDWLRQ¶VIRUHLJQVXEVLGLDULHVDUHDSSUR[LPDWHO\ 0RYHPHQWLQ'HIHUUHG7D[%DODQFHVGXULQJWKH

&UHGLWHG &UHGLWHG FKDUJHG FKDUJHG WR &UHGLWHG WKURXJK RWKHU FKDUJHG 'HFHPEHU VWDWHPHQWRI FRPSUHKHQVLYH WKURXJK December LQFRPH LQFRPH HTXLW\ 31, 2020

'HIHUUHGLQFRPHWD[DVVHWV $FFUXDOVGHGXFWLEOHZKHQSDLG 734 )LQDQFLQJFRVWV - 528OHDVHOLDELOLWLHV 26,124 &DSLWDODQGQRQFDSLWDOORVVFDUU\IRUZDUGV 12,528 1RQGHGXFWLEOHUHVHUYHV 2,448 $PRXQWVUHFRJQL]HGLQ2&, 2,011 2WKHU 740 7RWDOGHIHUUHGLQFRPHWD[DVVHW 44,585

'HIHUUHGLQFRPHWD[OLDELOLW\ &DSLWDODVVHWV (76,518) 528DVVHWV (24,658) ,QWDQJLEOHDVVHWV (35,949) )LQDQFLQJFRVWV (225) &RQYHUWLEOHGHEHQWXUHV (2,961) 1RQGHGXFWLEOHUHVHUYHV - $PRXQWVUHFRJQL]HGLQ2&, - ,QYHVWPHQWV (1,936) 7RWDOGHIHUUHGLQFRPHWD[OLDELOLW\ (142,247)

1HW (97,662)

,QFRPHWD[HVFUHGLWHG FKDUJHG WKURXJKWKH6WDWHPHQWRI,QFRPHLQFOXGHVLQYHVWPHQWWD[FUHGLWVRIZKLFKZHUHFODVVLILHGDV UHGXFWLRQVRIWKHUHODWHGH[SHQGLWXUHVLQFXUUHG ±

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ Notes to the Consolidated Financial Statements (amounts in thousands of Canadian dollars, unless otherwise noted except per share information and share data)

&UHGLWHG &UHGLWHG FKDUJHG FKDUJHG WR &UHGLWHG WKURXJK RWKHU FKDUJHG 'HFHPEHU $GRSWLRQRI %XVLQHVV VWDWHPHQWRI FRPSUHKHQVLY WKURXJK 'HFHPEHU ,)56 $FTXLVLWLRQV LQFRPH HLQFRPH HTXLW\

'HIHUUHGLQFRPHWD[DVVHWV $FFUXDOVGHGXFWLEOHZKHQSDLG )LQDQFLQJFRVWV 528OHDVHOLDELOLWLHV &DSLWDODQGQRQFDSLWDOORVVFDUU\IRUZDUGV 2WKHU 7RWDOGHIHUUHGLQFRPHWD[DVVHW

'HIHUUHGLQFRPHWD[OLDELOLW\ &DSLWDODVVHWV 528DVVHWV ,QWDQJLEOHDVVHWV )LQDQFLQJFRVWV &RQYHUWLEOHGHEHQWXUHV 1RQGHGXFWLEOHUHVHUYHV $PRXQWVUHFRJQL]HGLQ2&, ,QYHVWPHQWV 7RWDOGHIHUUHGLQFRPHWD[OLDELOLW\

1HW

'HIHUUHG LQFRPH WD[ DVVHWV DQG OLDELOLWLHV DUH RIIVHW RQ WKH EDODQFH VKHHW ZKHQ WKH\ UHODWH WR LQFRPH WD[HV OHYLHG E\ WKH VDPH WD[DWLRQDXWKRULW\

December 31 'HFHPEHU

2020

'HIHUUHGWD[OLDELOLWLHV $ (97,662)

27. SUBSEQUENT EVENTS Subsequent Event – Provincial and Federal Funding Agreement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

$QQXDO5HSRUW ([FKDQJH,QFRPH&RUSRUDWLRQ

SHAREHOLDER INFORMATION

BOARD OF DIRECTORS LEGAL COUNSEL CORPORATE OFFICE

Hon. Gary Filmon, P.C., O.C., O.M. MLT Aikins LLP 101 – 990 Lorimer Blvd. LLD., ICD.D. Winnipeg, MB Winnipeg, MB R3P 0Z9 Chairman Tel: (204) 982-1857 Duncan D. Jessiman, Q.C. AUDITORS Fax: (204) 982-1855 Executive Vice-Chairman & Chair, exchangeincomecorp.ca Disclosure & Competition PricewaterhouseCoopers LLP Committee Winnipeg, MB WEBSITE LISTINGS FOR SUBSIDIARY COMPANIES Brad Bennett, C.M., O.B.C. BANKERS Gary Buckley Calm Air Chair, Compensation Committee National Bank Financial calmair.com Polly Craik Canadian Imperial Custom Helicopters Bank of Commerce customheli.com Michael Pyle, MBA, ICD.D. Chief Executive Officer The Toronto-Dominion Bank Keewatin Air keewatinair.com Grace Schalkwyk The Bank of Nova Scotia Bank of Montreal MFC Training Melissa Sonberg, B.Sc., M.H.A., ICD.D mfctraining.com Chair, Corporate Governance Committee ATB Financial Perimeter Aviation Laurentian Bank of Canada perimeter.ca Donald Streuber, F.C.P.A., F.C.A bearskinairlines.com Chair, Audit Committee & HSBC Bank Canada Aerospace & Aviation Sector Provincial Aerospace Raymond James Finance Advisory Committee provincialaerospace.com Company of Canada provincialairlines.ca Edward Warkentin , LL.B. Royal Bank of Canada cartenav.com Chair, Manufacturing Sector Advisory Committee Wells Fargo Bank, Regional One N.A. Canadian Branch regionalone.com SENIOR MANAGEMENT teamjas.com AND OFFICERS TRANSFER AGENT Alberta Operations hotsyab.com AST Trust Company (Canada) Michael Pyle, MBA, ICD.D. jaspertank.com Chief Executive Officer Calgary, AB Ben Machine Carmele Peter, Q.C., LL.B. STOCK EXCHANGE benmachine.com President LISTING & SYMBOL TSX: EIF L.V. Control Manufacturing Duncan D. Jessiman, Q.C. lvcontrol.com Executive Vice-Chairman VIRTUAL ANNUAL GENERAL MEETING Overlanders Manufacturing Darryl Bergman, MBA, C.P.A. overlanders.com Chief Financial Officer Date: May 14, 2021 Time: 10:30 am CT Quest Window Systems Adam Terwin, C.P.A., C.A., C.F.A. questwindows.com Chief Corporate Development See company website advancedwindow.net Officer for access details wiswindows.com Darwin Sparrow Stainless Fabrication Chief Operating Officer stainlessfab.com David White Executive Vice-President, Aviation WesTower Communications westower.ca Dianne Spencer Corporate Secretary exchangeincomecorp.ca