Aecon : 2024 - Q4 Financial Statements (aecon group inc fs q4 2024 final)

Published: 2025-03-05 16:53:29 ET ARE.TO

AECON GROUP INC.

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

TABLE OF CONTENTS

INDEPENDENT AUDITOR'S REPORT

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

2. DATE OF AUTHORIZATION FOR ISSUE

3. BASIS OF PRESENTATION

4. CRITICAL ACCOUNTING ESTIMATES

5. SUMMARY OF MATERIAL ACCOUNTING POLICIES

6. NEW ACCOUNTING STANDARDS

7. FUTURE ACCOUNTING CHANGES

8. CASH AND CASH EQUIVALENTS

9. TRADE AND OTHER RECEIVABLES

10. UNBILLED REVENUE AND DEFERRED REVENUE

11. INVENTORIES

12. PROJECTS ACCOUNTED FOR USING THE EQUITY METHOD

13. PROPERTY, PLANT AND EQUIPMENT

14. INTANGIBLE ASSETS

15. TRADE AND OTHER PAYABLES

16. PROVISIONS

17. LONG-TERM DEBT

18. PREFERRED SHARES OF AECON UTILITIES

19. BANK INDEBTEDNESS

20. BUSINESS COMBINATIONS

21. INCOME TAXES

22. EMPLOYEE BENEFIT PLANS

23. CONTINGENCIES

24. CAPITAL STOCK

25. EXPENSES

26. OTHER INCOME

27. FINANCE COST

28. EARNINGS PER SHARE

29. SUPPLEMENTARY CASH FLOW INFORMATION

30. FINANCIAL INSTRUMENTS

31. CAPITAL DISCLOSURES

32. OPERATING SEGMENTS

33. REMAINING PERFORMANCE OBLIGATIONS

34. RELATED PARTIES

35. SUBSEQUENT EVENT

AECON GROUP INC.

Page 1

Independent auditor's report

To the Shareholders of Aecon Group Inc.

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Aecon Group Inc. and its subsidiaries (together, the Company) as at

December 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

What we have audited

The Company's consolidated financial statements comprise:

Basis for opinion

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

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

Independence

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

PricewaterhouseCoopers LLP

PwC Tower, 18 York Street, Suite 2500, Toronto, Ontario, Canada M5J 0B2

T.: +1 416 863 1133, F.: +1 416 365 8215, Fax to mail: [email protected]

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2024. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

Revenue recognition from long-term construction contracts

Refer to note 4.1 - Major sources of estimation uncertainty - Revenue and gross profit recognition and note 5.1 - Revenue recognition to the consolidated financial statements.

The Company recognized revenue of $4.2 billion for the year ended December 31, 2024. A significant portion of this revenue is generated from long-term construction contracts. The Company typically transfers control of goods or services to the customer by satisfying performance obligations over time and recognizes revenue over time as these performance obligations are satisfied. Revenue is recognized based on the extent of progress towards completion of the performance obligation.

Revenue for fixed-price contracts is generally determined on the percentage of completion method, based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is generally recorded proportionally as costs are incurred. Due to the nature of the work required to be performed on many of the performance obligations, management's estimation of total contract revenue and costs at completion is complex and requires significant judgment. Some of the factors that can change the estimates of total contract revenue and costs at completion include differing site conditions, the availability of skilled contract labour, the

How our audit addressed the key audit matter

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

Key audit matter

performance of major material suppliers to deliver on time, the performance of major subcontractors, unusual weather conditions and the accuracy of the original bid estimate.

The Company's long-term construction contracts may include change orders and claims that impact the transaction price and the measure of progress for the performance obligation to which it relates. Unpriced change orders and claims are recognized in revenue at the amount the Company expects to be entitled to, where it is highly probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with them is resolved. Management uses significant judgment to determine whether unpriced change orders and claims should be included in the transaction price. Internal and external legal counsels, as well as other claim specialists are often used by management in making those judgments (management's experts).

We considered this a key audit matter due to the significant judgment applied by management, including the use of management's experts, in determining the estimate of total contract revenue and costs at completion and the amount to be recognized for unpriced change orders and claims. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate evidence relating to revenue recognition from long-term construction contracts.

How our audit addressed the key audit matter

(if applicable), factors that can change the total contract revenue and costs at completion and any claims.

Other information

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

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

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

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

Responsibilities of management and those charged with governance for the consolidated financial statements

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

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

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

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

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

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

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Sal Bianco.

/s/PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario

March 5, 2025

CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31, 2024 AND 2023

(in thousands of Canadian dollars)

December 31

Note

2024

2023

ASSETS

Current assets

Cash and cash equivalents

438,025

645,784

Trade and other receivables

897,316

969,756

Unbilled revenue

743,198

719,243

Inventories

21,526

20,815

Income tax recoverable

36,675

23,863

Prepaid expenses

91,874

93,795

Non-current assets

2,228,614

2,473,256

Long-term financial assets

21,423

38,375

Projects accounted for using the equity method

237,939

232,752

Deferred income tax assets

117,939

93,285

Property, plant and equipment

360,022

251,899

Intangible assets

243,335

123,013

997,610

722,372

TOTAL ASSETS

3,226,224

3,195,628

LIABILITIES

Current liabilities

Trade and other payables

1,060,415

1,017,836

Provisions

21,555

35,270

Deferred revenue

595,482

519,084

Income taxes payable

64,911

11,359

Current portion of long-term debt

40,765

42,608

Preferred Shares of Aecon Utilities

160,300

157,110

Non-current liabilities

1,943,428

1,783,267

Bank indebtedness

111,700

152,847

Provisions

4,707

3,976

Long-term debt

110,804

106,770

Deferred income tax liabilities

50,236

125,337

Other liabilities

1,766

252

320,360

348,035

TOTAL LIABILITIES

2,263,788

2,131,302

EQUITY

Capital stock

430,709

442,334

Contributed surplus

70,649

80,706

Retained earnings

440,841

551,263

Accumulated other comprehensive income

2,296

1,648

Equity attributable to Aecon shareholders

956,120

1,064,326

Non-controlling interests

6,316

TOTAL EQUITY

962,436

1,064,326

TOTAL LIABILITIES AND EQUITY

3,226,224

3,195,628

Contingencies (Note 23)

Approved by the Board of Directors

John M. Beck, Director

Deborah S. Stein, Director

AECON GROUP INC.

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

Page 8

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

(in thousands of Canadian dollars, except per share amounts)

December 31

Note

2024

2023

Revenue

4,242,731

4,643,842

Direct costs and expenses

(4,060,184)

(4,388,216)

Gross profit

182,547

255,626

Marketing, general and administrative expense

(213,248)

(177,839)

Depreciation and amortization

(87,849)

(79,087)

Income from projects accounted for using the equity method

21,210

18,747

Other income

37,288

223,467

Operating profit (loss)

(60,052)

240,914

Finance income

8,637

7,665

Finance cost

(25,114)

(71,034)

Profit (loss) before income taxes

(76,529)

177,545

Income tax recovery (expense)

17,089

(15,655)

Profit (loss) for the year

(59,440)

161,890

Profit (loss) attributable to:

(59,524)

Aecon shareholders

161,890

Non-controlling interests

(59,440)

161,890

Basic earnings (loss) per share

(0.95)

2.62

Diluted earnings (loss) per share

(0.95)

2.10

AECON GROUP INC.

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

Page 9

Disclaimer

Aecon Group Inc. published this content on March 05, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on March 05, 2025 at 21:52:33.312.