ANNUAL REPORT | 2018

corporate profile
Brampton Brick is Canada’s second largest manufacturer
of clay brick, serving markets in Ontario, Quebec and the
Northeast and Midwestern United States from its brick
manufacturing plants located in Brampton, Ontario and
near Terre Haute, Indiana.

To complement the clay brick product line, the Company

also manufactures a range of concrete masonry products,
including concrete brick and block as well as stone veneer
products.

Concrete interlocking paving stones, retaining walls, garden

walls and enviro products are manufactured in Markham,
Hillsdale, Brockville, Cambridge and Brampton, Ontario, in
Boisbriand, Quebec, and in Wixom, Michigan and sold to
markets in Ontario, Quebec, Michigan, New York, Pennsylvania,
Ohio, Kentucky, Illinois and Indiana under the Oaks™ and
Boehmers ™ trade names.

The Company’s products are used for residential construction

and for industrial, commercial and institutional building
projects.

contents
Financial Overview.......................................................... 3

President’s Message......................................................... 4

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.................................. 5

Auditor’s Report............................................................. 20

Financial Statements....................................................... 21

Five Year Financial Review................................................ 48

Corporate Directory........................................................ 51

Cover images:
top: Pavers: Presidio Marble Grey with Onyx accent
mid-top: Stone; Bonneville, Cloudburst & Twilight
mid-bottom: Pavers: Presidio, Marble Grey & Onyx
bottom: Brick: Historic Series, Westmont
Stone: Finesse, Ebony

2
Financial Overview

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

2018 2017
Operations
Revenues $ 159,885 $ 156,244
Operating Income 19,347 12,004
Net income 13,444 5,944
Cash provided from operations 18,922 21,960
Purchase of property, plant and equipment 5,254 7,333

Share Data
Net income per share $ 1.23 $ 0.54
Book value per share 15.69 14.22
Weighted average number of shares outstanding (thousands) 10,968 10,969

Financial Position
Working capital $ 57,547 $ 48,365
Total assets 251,516 240,383
Total liabilities 79,396 84,393
Shareholders' equity 172,120 155,990
Total liabilities to shareholders' equity 0.46:1 0.54:1

Shares Outstanding
The Company has 10,961,654 common shares outstanding as at December 31, 2018 comprised of 9,223,023 Class A
Subordinate Voting shares and 1,738,631 Class B Multiple Voting shares. The Class A Subordinate Voting shares trade
on the Toronto Stock Exchange under the ticker symbol “BBL.A”.

Annual Meeting
The Annual General Meeting of the Shareholders of the Company will be held on May 22, 2019
at 9:30 a.m. at the Company’s head office, 225 Wanless Drive, Brampton, Ontario.

Annual Report
Additional copies of the 2018 Annual Report may be obtained from the Vice-President, Finance,
Brampton Brick Limited, 225 Wanless Drive, Brampton, Ontario L7A 1E9.

3
 President’s Message
The momentum established in Brampton Brick’s Starts for Canadian single-family homes are expected
business over the last few years continued through to decline in 2019 due to the introduction of mandated
2018 in both our masonry and landscape products’ fiscal measures adopted in the Canadian mortgage
operations. Overall revenues increased by 2.5% to market as well as the Non-resident speculation
$160 million, reflecting both increases in volumes tax imposed in the province of Ontario to curtail
and improved operational efficiencies. This increased overheated housing market conditions. In this regard,
performance resulted in net income increasing to $13.4 cost reduction initiatives are being put in place to offset,
million for the year. as much as is possible, any further declines in 2019
residential activity.
Our Canadian markets remained buoyant in 2018, even
though year-over-year growth did slow for single-family In our U.S. clay brick market, sales of masonry products
housing starts in the latter half of the year. Nevertheless, continue to be impacted by industry wide capacity
we did achieve record performance levels in many under-utilization and a difficult pricing environment. In
aspects of our operations, which should support both early 2018, we introduced a number of manufacturing
our masonry and landscape businesses in 2019. enhancements to improve production efficiency and
to reduce operating costs. These changes resulted in a
Our landscape operations had a record year, as we
significant year-over-year improvement and we remain
realigned our plant manufacturing network in order
optimistic that 2019 will build on these trends.
to limit certain individual plant capacity constraints.
Our marketing initiatives were reinforced through the During April 2018, the Company closed a transaction
introduction of a number of new products and services purchasing the remaining 50% of Universal Resource
as we strive to differentiate Brampton Brick’s overall Recovery Inc. from its joint venture partner. The assets of
competitive position in the market place. this business includes a 65-acre site in Welland, Ontario
and two large scale facilities of 400,000 and 200,000
In early 2019, the Company purchased the assets of
square feet respectively. It is the company’s intention
Hargest Block Ltd. operating under the trade name
to develop this site as part of our ongoing strategy to
Boehmer’s based in Cambridge, Ontario. Boehmer’s is
further enhance the Company’s masonry and landcape
a concrete block manufacturer producing concrete,
businesses, but at this time, no specific plans have been
lightweight and architectural block serving primarily the
finalized.
Southwestern Ontario market. Known as a long term
quality manufacturer, Boehmer’s is a key supplier of While 2019 will present a variety of both market
block products to the commercial mason contractors in and operational challenges, we, as a Company, are
their area. This strategic acquisition will further expand committed to take the actions necessary to produce a
our geographic footprint into Southwestern Ontario stronger and more focused business going forward.
and strengthen the distribution capabilities of our other
masonry products and enhance market positions in
Quebec and the Western provinces. /s/Jeffrey G. Kerbel

Jeffrey G. Kerbel
President and Chief Executive Officer
4
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
FOR THE YEAR ENDED DECEMBER 31, 2018 Revenues for the year ended December 31, 2018 increased
PREPARED AS OF MARCH 19, 2019
to $159,885 from $156,244 for the corresponding period
The following management’s discussion and analysis of in 2017. Higher shipments in the first half of 2018 were
financial condition and results of operations (“MD&A”) supported by mild weather conditions, the carry-forward
for the year ended December 31, 2018, should be read of the backlog in residential construction from 2017
in conjunction with the Company’s accompanying and an increase in multi-family housing construction in
Consolidated Financial Statements, including the summary Ontario, Canada. In addition, 2018 first-quarter landscape
of significant accounting policies, and the Annual revenues were higher under the 2017-2018 dealer winter
Information Form dated March 19, 2019, which may be booking program due to a deferral of the 2017 fourth-
found on SEDAR at www.sedar.com. All amounts are stated quarter shipments to 2018 because of production capacity
in thousands of Canadian dollars, except per share amounts, constraints in 2017. However, during the second half of
unless otherwise indicated. 2018, the momentum in residential construction eased off
from the high levels experienced in the prior year, due, in
DISCUSSION OF OPERATIONS part, to fiscal measures introduced in Ontario to moderate
Year Ended December 31, 2018 the recent rapid appreciation in house prices in the
For the year ended December 31, 2018, the Company province. This decrease was partially offset by an increase in
recorded net income of $13,444, or $1.23 per Class A landscape product shipments under the Company’s 2018-
Subordinate Voting share and Class B Multiple Voting share 2019 dealer winter booking program during the fourth
outstanding, compared to net income of $5,944, or $0.54 quarter of 2018.
per Class A Subordinate Voting share and Class B Multiple
Voting share outstanding in 2017. The aggregate weighted Cost of sales for the year ended December 31, 2018
average number of Class A Subordinate Voting shares and increased to $120,289 from $118,307 for the corresponding
Class B Multiple Voting shares outstanding were 10,968,227 period in 2017 due to higher shipments and higher freight
and 10,969,180 in 2018 and 2017, respectively. costs for product transfers to facilitate customer deliveries.
This increase was offset, in part, by lower natural gas costs,
Impacting the year-over-year comparative results were efficiencies in electric power consumption and a reduction
certain non-recurring factors in 2017 and 2018. When in certain plant-related expenditures from 2017 levels.
excluded, net income for the year ended December 31,
2018 increased to $12,682, or $1.16 per Class A Subordinate Selling expenses for the year ended December 31, 2018
Voting share and Class B Multiple Voting share outstanding increased to $13,390 from $12,625 in 2017. This increase was
in 2018 compared to $10,354, or $0.94 per Class A due to marketing costs for product promotional displays
Subordinate Voting share and Class B Multiple Voting share in the Company’s expanding Eastern Canadian markets, as
outstanding for the year ended December 31, 2017. well as marketing costs to improve the customer experience
on the Company’s social media platforms, and higher
These items were: cloud-based application costs for improved customer online
- an asset impairment charge of $6,285 on the interactivity.
Farmersburg, Indiana clay brick plant was recorded
in 2017, as described in Note 8 to the Consolidated General and administrative expenses for the year ended
Financial Statements; December 31, 2018 decreased to $7,964 from $9,003 for
- an impairment reversal of $2,143 and a provision for the prior year. This decrease was mainly due to the 2017
income taxes of $268 on the loan receivable from cash settlement of certain employee stock options which
Universal Resource Recovery Inc. (“Universal”) was amounted to an expense of $771 compared to a credit
recognized in 2017, as described in Note 9 to the of $13 to share-based compensation cost recognized in
Consolidated Financial Statements; and 2018. Upon settlement of these employee stock options,
the increase (decrease) in the settlement-date fair market
- a net gain of $762 was recognized in April 2018 on value (“FMV”) from the grant-date FMV is recognized as
the acquisition of the remaining 50% interest in the an expense (income) in share-based compensation cost.
Universal joint venture as described in Note 9 to the In addition, compensation cost recognized on share
Consolidated Financial Statements.
5
appreciation rights amounted to $112 (2017 – $452), for the between the Canadian and U.S. dollar during the year.
year ended December 31, 2018. Compensation costs on
Operating income increased to $19,347 for the year ended
share appreciation rights are measured at fair value at each
December 31, 2018, from operating income of $12,004 in
reporting period and are impacted by estimated changes
2017. Excluding the non-recurring transactions described
in the Company’s exchange-traded share price. These
above, operating income for the year ended December 31,
transactions are described in more detail in Note 16 to the
2018 increased to $18,585 from $16,146 for the prior year.
Consolidated Financial Statements.
Finance expense for the year ended December 31, 2018
On April 2, 2018, the acquisition of the remaining 50%
was $1,114 compared to a finance expense of $666 in 2017.
interest in Universal was accounted for as an effective sale
Excluding the unrealized loss on the interest rate swap
of the existing 50% interest in the joint venture and the
of $31 (2017 – unrealized gain of $596), finance expense
acquisition of a 100% interest in Universal at fair value on
for the current year decreased to $1,083 compared to
the acquisition date. Based on the fair valuation of the
$1,262 for the corresponding prior year. The decrease in
underlying property in Universal, which was estimated to
finance expense was due to a decrease in debt balances
be $13,000, the Company recognized a net gain of $762.
outstanding as a result of scheduled repayments totaling
This gain effectively represented the Company’s partial
$1,950, in each of 2018 and 2017.
recovery of the previously recorded impairment charges on
its investment in the joint venture. The provision for income taxes amounted to $ 4,789 for the
year ended December 31, 2018, compared to a provision of
As at December 31, 2017, the estimated fair value of the
$5,394 for the 2017 fiscal year. No deferred tax assets were
secured, non-interest bearing, non-current loan receivable
recorded with respect to the potential deferred tax benefit
from Universal was estimated at $6,393. This amount
pertaining to non-capital losses carried forward by the
exceeded its carrying value of $4,250. Accordingly, an
Company’s U.S. operations.
impairment reversal of $2,143 and a provision for income
taxes of $268 was recognized as at December 31, 2017 to Fourth Quarter Ended December 31, 2018
write up the loan receivable to its fair value. This transaction For the fourth quarter ended December 31, 2018, the
is discussed in Note 9 to the Consolidated Financial Company recorded net income of $991, or $0.09 per Class
Statements. A Subordinate Voting share and Class B Multiple Voting
share, compared to a net loss of $3,066, or $0.28 per Class A
For the year 2018, the asset impairment evaluation on the
Subordinate Voting share and Class B Multiple Voting share,
property, plant and equipment of the Farmersburg, Indiana
for the fourth quarter of 2017. The aggregate weighted
clay brick plant, cash generating unit (“CGU”) did not result
average number of Class A Subordinate Voting shares and
in any impairment charge. An impairment charge of $6,285
Class B Multiple Voting shares outstanding was 10,960,130
was recorded for the prior year. The asset impairment
and 10,973,754 for the fourth quarter of 2018 and 2017,
tests resulted from an assessment of the Company’s U.S.
respectively.
residential and commercial markets, which indicated
continuing uncertain economic conditions in 2018. This is Excluding the impact of the asset impairment charge of
described in greater detail in Note 8 to the Consolidated $6,285 and the impairment reversal on the Universal loan
Financial Statements. Management’s assessment of the receivable of $1,875, net of taxes, as discussed above, the
external and internal indicators of impairment, as per IAS Company’s net income for the fourth quarter of 2017 was
36, Impairment of Assets, (“IAS 36”) determined that there $1,344, or $0.12 per Class A Subordinate Voting share and
was no indication that the Brampton clay brick plant, the Class B Multiple Voting share.
Canadian concrete plants and the Michigan concrete plant For the fourth quarter of 2018, revenues were $34,244
may be impaired. compared to $36,567 for the same period in 2017. The
Other income of $294 for the year ended December 31, decrease in shipments in the Masonry Products business
2018 compared to an expense of $120 for the prior year segment was partially offset by an increase in the
was primarily due to the translation of foreign currency Landscape Products business segment compared to the
transactions as a result of currency exchange fluctuations corresponding prior period. Costs of sales and freight costs
6
also decreased primarily due to lower shipments. Although Note 8 to the Consolidated Financial Statements.
lower production volumes increased per unit costs, lower
Operating income from the Masonry Products business
natural gas costs recorded in the fourth quarter of 2018,
segment for the year ended December 31, 2018 increased
partially offset these increases.
to $14,275 compared to an operating income of $3,502
As a result, operating income for the fourth quarter of 2018 in 2017. Excluding the impairment loss of $6,285 on the
was $2,136, compared to an operating loss of $1,920 for the Farmersburg, Indiana clay brick plant in 2017, the operating
corresponding quarter in 2017. Excluding the non-recurring income for the prior year was $9,787.
transactions, noted above, the operating income for the
For the fourth quarter of 2018, revenues were $22,326
fourth quarter of 2017 was $2,222.
compared to $26,069 for the corresponding quarter in
For the fourth quarter of 2018, finance expense amounted 2017. Fourth-quarter shipments of 2018 were affected by
to $501 compared to $159 for the corresponding period of the moderated pace of residential construction following
2017. Excluding the unrealized loss on the interest rate swap the introduction of mandated fiscal measures adopted in
of $283 (2017 – unrealized gain of $123), finance expense the Canadian mortgage market as well as the Non-Resident
for the fourth quarter of 2018 decreased to $218 compared Speculation Tax imposed in the Province of Ontario to curtail
to $282 for the corresponding quarter of 2017. overheated housing market conditions in Ontario.
A more detailed discussion with respect to each operating Cost of sales for the fourth quarter of 2018 decreased to
business segment follows: $18,448 from $21,009 for the corresponding prior quarter
of 2017. The decrease in cost of sales from lower shipments
MASONRY PRODUCTS was partially offset by higher per unit manufacturing costs
For the year ended December 31, 2018, revenues increased on lower production volumes.
to $111,570 from $110,433 in 2017. Higher shipments in
The operating income for the fourth quarter of 2018
the first half of 2018 were supported by higher multi-family
was $429 compared to operating loss of $4,995 for the
housing starts, a reduction in the backlog of residential
corresponding quarter in 2017. Excluding the impact of the
construction carried forward from 2017 and higher demand
asset impairment charge of $6,285, the operating income
for new products. However, in the second half of 2018, the
for the fourth quarter of 2017 was $1,290.
pace of home construction in Ontario pared back following
the introduction of fiscal measures to curb the rise in
LANDSCAPE PRODUCTS
housing demand.
Revenues of the Landscape Products business segment for
Cost of sales decreased to $82,895 from $85,799 in 2017. the year ended December 31, 2018 increased to $48,212
The cost of sales from higher shipments was offset by from $45,811 in 2017 due to a significant increase in
the favourable impact of lower required repair and shipments. This increase was supported by strong first-half
maintenance costs in 2018, lower natural gas costs and shipments under the 2017-2018 dealer winter booking
improved efficiencies in electric power consumption, program that were deferred from the fourth quarter of 2017
largely attributed to the Brampton clay brick facility. In due to production capacity constraints in the Company’s
addition, higher production volumes and cost effective landscape product facilities in 2017. The winter booking
improvements in the product mix at the Farmersburg, program is a landscape sales program designed to help the
Indiana clay brick plant positively contributed to lower per Company’s dealer network pre-order landscape inventory in
unit production costs. In the Company’s masonry concrete the fourth quarter of the year to ensure that dealer inventory
plant network higher production volumes had a favourable levels are optimized prior to the commencement of the
impact on cost of sales. However, this benefit was offset, in seasonal sales increase in the spring and summer months.
part, by higher freight costs for product transfers to facilitate
Unfavourable weather conditions in the spring and the
customer deliveries.
subdued pace of economic activity impacted landscape
No asset impairment charge was recorded during 2018 shipments in the second-half of 2018. These decreases
(2017 - $6,285).This analysis is discussed in more detail in were offset by higher revenues under the 2018-2019 dealer

7
winter booking program during the fourth quarter of 2018. Scheduled and other principal repayments were made on
term loans during 2018 in accordance with the terms of
Cost of sales for the year ended December 31, 2018
the Company’s credit agreement and amounted to $1,959
increased to $36,841 compared to $32,508 in 2017.
(2017 - $1,960).
The increase was due to higher shipments but was
favourably impacted by lower per unit manufacturing
Financial condition
costs on comparatively higher production volumes.
The Company’s Masonry Products and Landscape Products
Higher freight costs on product transfers to meet
business segments are seasonal in nature. The Landscape
customer demand and higher selling expenses
Products business is affected by seasonality to a greater
were incurred as described under the discussion of
degree than the Masonry Products business. As a result of
operations for the year ended December 31, 2018.
this seasonality, operating results are impacted accordingly
For the year ended December 31, 2018, the operating and cash requirements are generally expected to increase
income of the Landscape Products business segment through the first half of the year and decline through the
decreased to $4,734 from $6,359 for the prior year. second half of the year.
The operating income of the Landscape Products business Cash and cash equivalents totaled $27,043 and $22,010 at
segment was $1,702 for the fourth quarter of 2018 on December 31, 2018 and December 31, 2017, respectively.
revenues of $11,883 compared to operating income of $932 As a result, bank operating advances were nil at the end of
on revenues of $10,498 for the fourth quarter of 2017. each of 2018 and 2017.
Trade payables totaled $17,429 at December 31, 2018
cash flows
compared to $20,485 at December 31, 2017.
For the year ended December 31, 2018, cash provided from
operating activities decreased to $18,922 from $21,960 The ratio of total liabilities to shareholders’ equity was 0.46:1
in 2017. The decrease in cash provided from operating at December 31, 2018 compared to 0.54:1 at December
activities was primarily due to higher disbursements of 31, 2017. The decrease in this ratio from December 2017
trade payables. This decrease was offset by an improvement to December 2018 was primarily due to higher retained
in operating income, production plant efficiencies, higher earnings resulting from the improvement in operating results
collections of trade and other receivables and lower income in 2018, a decrease in trade payables, lower income taxes
tax payments in 2018. Final income tax remittances for 2016, payable, lower term debt outstanding, and an increase in the
as well as 2017 income tax instalment payments were paid foreign currency translation gain included in ‘Accumulated
in 2017. other comprehensive income’, due to the relative
strengthening of the U.S. dollar as at December 31, 2018.
Cash utilized for purchases of property, plant and
equipment totaled $5,254 in 2018, compared to $7,333 in As at December 31, 2018, the Company’s current ratio is
2017. This amount includes additions in 2018 totaling $6,290 3.33:1, representing working capital of $57,547, compared
(2017 - $6,608) and net amounts paid relating to capital to 2.74:1 and $48,365, respectively, as at December 31, 2017.
expenditures in the prior year. Non-cash capital expenditure The increase in working capital was primarily due to an
relating to estimated future quarry rehabilitation costs increase in cash and cash equivalents, higher inventories
amounted to $186 (2017 - $116). Additions included $4,133 and a decrease in trade payables and income taxes payable.
(2017 - $5,149) for production equipment and $1,646 (2017 This increase was partially offset by a decrease in trade and
– 1,035) for mobile equipment, of which $707 was financed other receivables.
by finance leases in 2018 (2017 - $323).
On the purchase of the remaining 50% interest in Universal
The purchase of the remaining shares in Universal Resource on April 2, 2018, the secured, non-interest bearing, loan
Recovery Inc. (“Universal”) totaled $6,500. This transaction payable by Universal to its former 50% joint venture owner
closed on April 2, 2018, and represented the acquisition of totaling $5,691, became payable to the Company. As a
the remaining 50% interest in the company. As noted earlier, result, the secured, non-interest bearing, non-current loan
this transaction is described in greater detail in Note 9 to the payable by Universal totaled $12,084 as at December 31,
Consolidated Financial Statements. 2018 (December 31, 2017 - $6,393). In accordance with IAS
8
10, Consolidated Financial Statements, inter-company assets The Company’s bank credit agreement provides for
and liabilities held by the Company and its wholly-owned operating borrowings up to $22,000 based on margin
subsidiaries are eliminated upon consolidation and therefore formulae for trade receivables, certain other qualified
are not presented in the Consolidated Financial Statements. receivables and inventories, less priority claims. It is a
As at December 31, 2017, the Company’s 50% investment demand facility secured by a general security agreement
in Universal was accounted for using the equity method of over all assets. The agreement contains certain financial
accounting. Accordingly, the loan receivable outstanding covenants. As at December 31, 2018 and 2017, the Company
balance was presented in the Consolidated Balance Sheet as was in compliance with all the financial covenants under its
at that date. term financing agreement and operating credit facility and
anticipates that it will maintain compliance throughout 2019.
Effective April 2, 2018, rental revenues, related expenses,
The term financing agreement was amended on October
as well as individual assets and liabilities of Universal are
2, 2018 to extend the maturity date of the committed term
included in the Consolidated Financial Statements and the
A and committed term B credit facilities to January 29,
investment in joint venture and related income (loss) from
2021 from December 29, 2019, under prevailing terms and
investment in joint venture no longer exist.
conditions. The Company’s credit facilities are discussed
On February 4, 2019, the Company acquired a concrete in greater detail in Note 12 to the Consolidated Financial
block plant located in Southwestern Ontario for a purchase Statements.
consideration of $7,500. The concrete block production
The Company expects that future cash flows from operations,
facility will increase the masonry concrete production
cash and cash equivalents on hand and the unutilized
capacity of the Company’s plant network and provide
balance of its operating credit facility will be sufficient to
greater proximity to the Southwestern Ontario market. The
satisfy its financial obligations as they become due.
purchase consideration was settled by a cash payment of
$2,500 on February 4, 2019, and a vendor take-back loan A summary of the Company’s contractual obligations
in the form of two non-interest bearing promissory notes over the next five years and thereafter, determined as at
totaling $5,000, payable in equal instalments over five years. December 31, 2018, is as follows:
2019 2020 - 2021 2022 - 2023 Thereafter Total
Debt(1) $ 3,348 $ 33,234 $ - - $ 36,582
Finance lease obligations (2)
$ 479 $ 434 $ - - $ 913
Other obligations(3) $ - $ 387 $ 1,618 $ 6,232 $ 8,237
Trade payables(4) $ 22,268 $ 431 $ 40 - $ 22,739
Operating leases(5) $ 128 $ 142 $ 7 - $ 277
Purchase obligations (6)
$ 3,744 $ 313 $ - - $ 4,057
Total contractual obligations $ 29,967 $ 34,941 $ 1,665 $ 6,232 $ 72,805
(1) Debt reflects the aggregate amount of future payments including interest, and includes all debt items listed in Note 12 to the Consolidated Financial
Statements, except finance lease obligations.
(2) Finance lease obligations disclosed above reflect the aggregate amount of future payments including principal and interest.
(3) Other obligations represent the undiscounted estimated future costs for the decommissioning provisions with respect to the Company’s shale quarries. These
obligations are discussed in more detail in Note 14 to the Consolidated Financial Statements.
(4) Trade payables represents vendor accounts and includes accrued liabilities, other liabilities and provisions for share appreciation rights.

Off Balance Sheet Commitments

(5) Operating leases represent future aggregate minimum lease payments (mobile equipment and vehicles), which are off balance sheet transactions.
Effective January 1, 2019, the Company will adopt the new IFRS 16, Leases accounting standard in accordance with International Financial Reporting
Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The new standard eliminates the classification of leases as either
operating leases or finance leases as is required by IAS 17, Leases.
For operating leases, a lessee is required to recognize:
a) assets by recognizing either the present value of the lease payments or an amount equal to the lease liability, adjusted for prepaid or accrued lease
payments;
b) liabilities by recognizing its obligation to make future payments; and
c) depreciation of lease assets separately from interest on lease liabilities in the income statement.

9
 The impact of this standard on the Opening Balance Sheet as at January 1, 2019 will increase property, plant and equipment and lease obligations as follows:
January 1, 2019
Future aggregate minimum payments $ 277
Less: Finance costs (interest) 14
Cost of Right-of-use assets (operating leases) $ 263

Current operating lease obligations $ 119

Non-current operating lease obligations $ 144
Operating lease obligations $ 263

(6) Off balance sheet commitments include purchase obligations relating to natural gas supply and transportation contracts totaling $1,863 and commitments to
purchase property, plant and equipment, and consultancy services from vendors totaling $2,194. These commitments are described in more detail in Note 22
to the Consolidated Financial Statements.

SELEC TED ANNUAL FINANCIAL INFORMATION

The following is a summary of selected annual financial information of the Company for each of the three most recently
completed financial years prepared in accordance with IFRS:
2018 2017 2016
Revenues $ 159,885 $ 156,244 $ 143,026
Total assets $ 251,516 $ 240,383 $ 236,387
Total non-current financial liabilities $ 32,402 $ 34,180 $ 36,114
Cash dividends declared per share $ – $ – $ –

Net income $ 13,444 $ 5,944 $ 7,474

Net income per share
Basic $ 1.23 $ 0.54 $ 0.68
Diluted $ 1.20 $ 0.53 $ 0.66
The major factors which affect the comparability of the above data are as follows:
Revenues as well as individual assets and liabilities of Universal are
Revenues in 2018 increased from 2017 due to higher included in the Consolidated Financial Statements from
masonry product shipments on strong multi-family that date. The fair value of land and buildings acquired
housing construction in the first-half of 2018 and from was estimated to be $13,000 and is included in property,
higher landscape product shipments recorded under the plant and equipment (“PP&E”). Other additions to PP&E
Company’s dealer winter booking program. However, include equipment upgrades at certain Canadian plants
the introduction of fiscal measures to moderate demand and both U.S. facilities.
for housing impacted housing starts, partially offsetting The increase in total assets in 2017 compared to 2016
the growth in the Company’s masonry and landscape was due to the increase in cash and cash equivalents,
business operations. In 2017, revenues increased by 9% inventories held and the increase in the loan receivable
over 2016 on the continuing strength in residential and outstanding due to the impairment reversal recognized
commercial construction and the positive impact of the as at December 31, 2017 as described in Note 9 to the
Company’s marketing initiatives and expanded product Consolidated Financial Statements. The decrease in PP&E,
offerings. partially offset the increase in total assets primarily due
to the asset impairment charge described in Note 8 to
Total assets
the Consolidated Financial Statements. Additionally, the
Total assets in 2018 increased due to higher cash and
decrease in depreciation expense and the PP&E of the
cash equivalents and inventories. On April 2, 2018,
Company’s U.S. subsidiaries on translation to the Canadian
the Company acquired the remaining 50% interest in
dollar as the December 31, 2017 exchange rate also offset,
Universal. Accordingly, rental revenues, related expenses,
in part, the increase in total assets.
10
Total non-current financial liabilities - a net gain of $762 was recognized in April 2018
The non-current portion of debt decreased in 2018 from on the acquisition of the remaining 50% interest
2017 and in 2017 from 2016 due to the reclassification to in the Universal joint venture as described in Note
current liabilities for repayments of scheduled and other 9 to the Consolidated Financial Statements.
term debt, as well as finance leases in 2019 and 2018, Excluding the impact of these non-recurring transactions,
respectively. net income for the year ended December 31, 2018
increased to $12,682, compared to $10,354 for the year
Cash dividends declared per share
ended December 31, 2017. Higher revenues from an
The Board of Directors did not declare any dividends
increase in shipments of both masonry concrete and
in 2018, 2017 and 2016. Declaration of the amount
landscape products, and operating cost efficiencies
and payment of future dividends will be subject to the
largely attributed to the Brampton and Farmersburg clay
discretion of the Board of Directors and will be dependent
brick plants, supported this increase in net income.
upon the results of operations, financial condition, cash
requirements and other factors deemed relevant by the The decrease in net income in 2017 from 2016 was
Board of Directors. primarily due to the non-recurring transactions
of 2017 noted above. Excluding the impact of
Net income and earnings per share the two non-recurring transactions, net income
The increase in net income for 2018 from 2017 was as at December 31, 2017 was $10,354, compared
due, in part, to the following non-recurring factors: to $7,474 for the corresponding prior year.
- the recognition of an asset impairment charge In 2017, a significant increase in shipments in both
of $6,285 on the Farmersburg, Indiana clay the Masonry Products and the Landscape Products
brick plant in 2017 as described in Note 8 to business segments contributed to the increase in
the Consolidated Financial Statements; revenues compared to 2016. The costs of sales benefited
- an impairment reversal on the Loan receivable of from the decrease in per unit costs of production on
$2,143, and a provision for income taxes of $268 was higher production volumes and were partially offset
recognized as at December 31, 2017 and is described in by higher maintenance expenses incurred in certain
Note 9 to the Consolidated Financial Statements; and Canadian manufacturing plants and storage yards.

SELECTED QUARTERLY FINANCIAL INFORMATION

The following is a summary of selected quarterly financial information for each of the eight most recently completed
quarters (in thousands of dollars, except per share amounts):
Total Operations December 31 September 30 June 30 March 31
2018 2017 2018 2017 2018 2017 2018 2017
Revenues $ 34,244 $ 36,567 $ 49,832 $ 50,194 $ 50,852 $ 47,814 $ 24,957 $ 21,669
Net income (loss) $ 991 $ (3,066) $ 5,359 $ 7,232 $ 8,043 $ 4,679 $ (949) $ (2,901)

Net income (loss) per share

Basic $ 0.09 $ (0.28) $ 0.49 $ 0.66 $ 0.73 $ 0.43 $ (0.09) $ (0.26)
Diluted $ 0.09 $ (0.28) $ 0.48 $ 0.64 $ 0.72 $ 0.41 $ (0.09) $ (0.26)

Due to changes in the weighted average number of shares seasonal nature of the Company’s Masonry Products and
outstanding during the year or due to rounding, the basic Landscape Products business segments. Historically, sales
and diluted net income (loss) per share by quarter may not of these business segments are greater in the second
add up precisely to the total for each year. and third quarters of each year than in the first and fourth
quarters. Consequently, the results of operations and cash
The quarterly financial information presented reflects the
flows reported each quarter are not necessarily indicative
11
of the results for the year, and the financial condition of the levels and higher freight costs incurred on product
Company at the end of each quarter reflects these seasonal transfers to meet customer demand. These increases
fluctuations. in costs were partially offset by higher production
Major factors affecting the comparability of the quarterly volumes at the Farmersburg, Indiana clay brick plant,
results are as follows: which favourably impacted per unit production costs.
In addition, the increase in the value of the average
Quarters ended December 31 U.S. dollar exchange rate during the third quarter of
Revenues for the fourth quarter of 2018 decreased 2018 increased operating costs of the Company’s U.S.
compared to the corresponding quarter of the prior year. operations.
Unfavourable weather conditions and the introduction
of fiscal measures to moderate housing demand slowed Additionally, an unrealized gain on the change in fair
the pace of residential construction in Ontario, Canada. value of the interest rate swap, amounting to $142, was
Higher shipments of landscape products and masonry recorded for the third quarter of 2018 compared to a gain
concrete products partially offset this decrease in of $388 in the comparative quarter of 2017.
shipments. Cost of sales in the last quarter of 2018 were As a result, net income for the quarter ended September
below costs incurred for the corresponding prior quarter. 30, 2018 decreased to $5,359, from $7,232 for the
Operating efficiencies attributed largely to the Brampton corresponding prior quarter.
and Farmersburg, Indiana clay brick plants were partially
Quarters ended June 30
offset by lower production volumes which increased per
For the second quarter of 2018, revenues increased in the
unit costs.
Masonry Products business segments, compared to the
The increase in net income for the fourth quarter of 2018 same quarter of 2017. The continuing strength in multi-
was due to the recognition of an asset impairment charge family housing construction in Ontario, as well as strength
of $6,285 on the Farmersburg, Indiana plant in 2017. This in commercial and other development activity supported
decrease was offset, in part, by an impairment reversal on the increase in masonry product revenues. Relatively
the Loan receivable of $1,875, net of taxes recognized as unfavourable weather conditions in April 2018, affected
at December 31, 2017. These transactions are discussed in shipments of landscape products resulting in slightly
more detail under the caption ‘Discussion of operations’ lower revenues compared to the corresponding quarter
for the year ended December 31, 2018. Excluding the of 2017.
impact of these non-recurring transactions, net income
The increase in costs of sales due to higher shipments
for the fourth quarter of 2018 was $991, compared to
was only partially offset by lower per unit costs on higher
$1,344 for the corresponding quarter of the prior year.
production volumes in the masonry products operations,
Quarters ended September 30 lower natural gas costs and greater efficiencies in electric
Revenues in the third quarter of 2018 were impacted power consumption during the second quarter of 2018,
by lower housing starts in the single-family detached as well as higher repairs and maintenance scheduled in
housing and multi-family housing units. The pace of the second quarter of 2017. In addition, a decrease in
growth in the home buyers’ market moderated slightly the U.S. dollar exchange rate during the second quarter
after the introduction of mandated fiscal measures of 2018, favourably impacted operating costs of the U.S.
adopted in the Canadian mortgage market as well as the operations.
Non-Resident Speculation Tax imposed in the Province of
General and administrative costs decreased during the
Ontario to curtail overheated housing market conditions
second quarter of 2018 compared to the same period
in Ontario. The increase in revenues for the third quarter
of 2017, due to the exercise of certain cash-settled stock
of 2017 was supported by the continuing momentum in
options in the second quarter of 2017. Share-based
residential construction during that period.
compensation costs recorded on the increase in fair
Costs of sales increased due to higher per unit production market value of certain employee stock options, on
costs on lower production volumes to optimize inventory exercise and cash-settlement thereof, totaled $771 during
12
 the second quarter of 2017. Share-based compensation makes judgments such as what are the appropriate cash
costs recorded on share appreciation rights, measured at generating units (“CGUs”), based on the lowest group of
fair value, totaled $39 in the three months ended June 30, assets to which cash flows can be reliably attributed and the
2018 compared to $298 during the corresponding period estimated future cash flows and discount rates to be used
of 2017, due to differences in timing of recognition. in the impairment models. Management has determined
that the Brampton clay brick plant, the Canadian concrete
The Company’s share of income from its joint venture
facilities (Markham, Hillsdale, Brockville, Brampton and
interest in Universal amounted to $762 for the quarter
Boisbriand), the Farmersburg, Indiana clay brick plant and
ended June 30, 2018. This transaction is described in more
the Wixom, Michigan concrete facility were the CGUs for the
detail under the discussion of operations for the year
purposes of asset impairment testing.
ended December 31, 2018.
Management’s judgments are based on significant industry
As a result, net income for the quarter ended June 30,
experience and expectations of future economic conditions.
2018 increased to $8,043, compared to $4,679 for the
same period in 2017. Deferred taxes
Management makes judgments in determining whether
Quarters ended March 31
deferred tax assets are recognized on the balance sheet.
During the first quarter of 2018, revenues increased in Deferred tax assets, including those arising from unutilized
both the Masonry Products and Landscape Products tax losses, require management to assess the probability
business segments. Despite unfavourable weather that the Company will generate taxable earnings in future
conditions in the first two months of the year, higher periods, in order to utilize recognized deferred tax assets.
masonry product shipments were supported by
the reduction of some of the backlog in residential The Company is subject to taxation in a number of
construction carried forward from 2017 in the Greater jurisdictions. There are many transactions and calculations
Toronto Area. In addition, landscape product shipments for which the ultimate tax determination requires judgment.
increased during the first quarter of 2018 compared to the Where the final outcome of these tax-related matters is
different from the amounts that were initially recorded, such
corresponding quarter of 2017 due to timing differences
differences will affect the tax provisions in the period in
in shipments made under the Company’s dealer winter
which such determination is made.
booking program to meet the anticipated seasonal
demand, as well as greater demand for the Company’s Changes in rates of taxation, changes in the estimated
expanded product portfolio. timing or realization of reversals and differences in
interpretation by tax authorities could result in higher or
The improvement in operating results was due to the
lower income tax amounts paid or deducted against future
positive impact of lower per unit manufacturing costs on
tax payables.
higher production volumes, as well as the strength in the
Canadian dollar compared to the same quarter of 2017 ESTIMATES
relating to the Company’s U.S. operations. DepreciatioN
Depreciation is measured as the economic benefit
CRITICAL ACCOUNTING JUDGMENTS AND
ESTIMATES consumed from the use of the Company’s property, plant
and equipment. This amount is determined by apportioning
JUDGMENTS the cost, net of residual value, over the useful life of the
Impairment of non-financial assets individual assets according to an appropriate depreciation
At each reporting date, the Company evaluates the carrying method. Estimates of the useful lives of the components of
value of property, plant and equipment to determine property, plant and equipment and the residual values are
whether there is any indication that an asset may be based on industry practice and expected utilization.
impaired. Impairment is measured as the amount by which
the carrying value of the property, plant and equipment Impairment of non-financial assets
exceeds the recoverable value. In deriving the recoverable An impairment of property, plant and equipment is
value of the property, plant and equipment, management measured as the excess of its carrying value over the
13
recoverable amount. The recoverable amount of the was eliminated, as the Company recognizes Universal as
asset is estimated in order to determine the extent, if a wholly-owned subsidiary (refer to Note 9, Investment
any, of the impairment loss. The recoverable amount in Universal Resource Recovery Inc.). In accordance with
is the higher of an asset’s: fair value less costs to sell; IAS 10, Consolidated Financial Statements, inter-company
and value in use (being the present value of the assets and liabilities held by the Company and its wholly-
expected future cash flows of the relevant asset). owned subsidiaries are eliminated upon consolidation and
therefore are not presented in the Consolidated Financial
Fair value less costs to sell is determined as the amount
Statements.
that would be obtained from the sale of the asset in
an arm’s length transaction between knowledgeable Decommissioning provisions
and willing parties. In the absence of an arm’s length The Company is obligated to rehabilitate its operating
transaction, fair value for assets is generally determined as shale quarry properties in Cheltenham, Ontario and
the present value of estimated future cash flows arising Farmersburg, Indiana as a condition of its licenses to mine
from the continued use of the asset, which includes shale. Significant estimates and assumptions are made
estimates such as the cost of future expansion plans and in determining the provision for quarry rehabilitation as
eventual disposal, using assumptions that an independent there are numerous factors that will affect the ultimate
market participant may take into account. Cash flows amount payable. These factors include estimates of
are discounted to their present value using a post-tax the extent and costs of rehabilitation activities, cost
discount rate that reflects current market assessments of increases due to inflation, and changes in the appropriate
the time value of money and the risks specific to the asset. discount rate. These uncertainties may result in future
Value in use is determined as the present value of actual expenditures differing from the amounts currently
estimated future cash flows arising from continued use provided. The provision at the reporting date represents the
and eventual disposition of the asset, which excludes Company’s best estimate of the present value of the future
future capital expenditures that would increase the rehabilitation costs required.
service potential of the asset. Cash flows are discounted
RISKS AND UNCERTAINTIES
to their present value using a pre-tax discount rate
The Masonry Products business is cyclical in that it
that reflects current market assessments of the time
fluctuates in accordance with the level of new residential
value of money and the risks to the specific asset.
and commercial construction within the Company’s primary
To the extent that future cash flows or discount rates market areas. Sales of new homes are influenced by many
differ from management estimates at the balance sheet factors, including general economic conditions, interest
date, the impairment results may be subject to change. rates and the availability of serviced land in urban areas. This
business segment is also seasonal. Sales are greatest in the
Impairment of financial assets
second and third quarters of each year and less in the first
At each reporting date, the Company must determine
and fourth quarters.
the fair value of the non-interest bearing loan advanced
to Universal in order to assess its recoverability and the The principal raw material in the manufacture of clay bricks
resulting impairment, if any. The recoverability of the is shale. The Company owns its own quarries in Cheltenham,
loan from Universal is determined, in part, by calculating Ontario and Farmersburg, Indiana, which it believes
the estimated fair value of Universal’s property, plant contain sufficient reserves to supply its requirements at
and equipment (“PP&E”). These fair value estimates were full production capacity levels for these manufacturing
based on a range of technical and economic factors and plants for approximately the next 21 years and 39 years,
conditions. Changes to these factors or conditions in future respectively. In 2006, an additional 86-acre property was
periods could alter the fair value assessment of these assets. acquired in Brampton, Ontario. The application for re-
A decrease in the estimated revenues would increase the zoning and licensing this property for shale extraction was
potential shortfall in cash inflows required to repay the loan. withdrawn in April 2018. The Company may resume the
application process at a future date subject to regional
As at December 31, 2018, the Universal loan receivable
plans for land development. The shale quarry operations in
14
both Ontario and Indiana are outsourced. The contracted stone of various sizes) and pigments. Some of the cement
services include quarry preparation, earthmoving and shale and aggregate requirements are purchased under long-
excavation. term supply contracts. However, there are no minimum
purchase requirements under these contracts. Prices are
Major production costs include natural gas, labour,
negotiated annually and the Company retains the right
electricity and depreciation of plant and equipment. As at
to solicit tenders from alternative suppliers. Pigments are
December 31, 2018, the Company had contracted for its
usually purchased under blanket purchase orders covering
estimated 2019 Canadian natural gas supply requirements
estimated annual usage.
at an aggregate estimated cost of $737, forecasted by
the supplier, none of which was at fixed prices, and for its The Landscape Products business also requires significant
estimated 2019 Canadian transportation requirements at capital investment in property, plant and equipment.
an aggregate estimated cost of $1,126, of which 84% was at Consequently, large fluctuations in production levels may
fixed prices. have a material impact on per unit manufacturing costs and
gross margins.
The Cap and Trade Program under the Climate Change
Mitigation and Low-carbon Economy Act, 2016, was revoked The Company has exposure to exchange rate fluctuations as
in the Province of Ontario in 2018. The Company’s Brampton a result of its investment in U.S. businesses and from holding
clay brick manufacturing facility was subject to this monetary assets and liabilities denominated in U.S. dollars.
regulation that came into effect on January 1, 2017. Effective All foreign currency denominated assets and liabilities are
January 1, 2019, the Company’s Brampton clay brick translated at the current exchange rates in effect at the
manufacturing facility is subject to carbon pricing under balance sheet date. Revenue and expense transactions are
the Pan-Canadian Framework on Clean Growth and Climate translated at average exchange rates prevailing during the
Change, which introduces a carbon price in jurisdictions period. Gains and losses on translation of transactions are
with no carbon pricing mechanism that aligns with federal included in income. A strengthening in the value of the U.S.
standards. The actual cost of this program will vary with dollar against the Canadian dollar results in higher revenues
the plant’s production volumes, plant greenhouse gas and earnings or losses, as the case may be, when translated
emissions and changes in legislated carbon prices. into Canadian dollars.
From time to time, the Company may enter into swap In 2018, approximately 12% (2017 – 11%) of the Company’s
contracts to fix the price of its electricity requirements. No revenues were earned in the U.S. or through exports to
such contracts were in effect as at December 31, 2018. The the U.S. Foreign currency forward purchase contracts
Company may enter into such contracts in the future if it are occasionally utilized to manage the foreign currency
deems it appropriate to do so. exchange exposure resulting from significant, anticipated
future cash inflows and/or outflows denominated in a
The Masonry Products business segment requires significant
foreign currency. There were no such contracts outstanding
capital investment in property, plant and equipment. In
at December 31, 2018.
addition, due to the nature of the operation of its kilns, the
clay brick business can be characterized as a relatively high, Interest rate swap agreements are utilized to reduce interest
fixed-cost business. Consequently, large fluctuations in rate risk arising from fluctuations in interest rates and to
production levels may have a material impact on per unit manage the fixed and floating interest rate mix of the
manufacturing costs and gross margins. Company’s total debt portfolio and the related overall cost
of borrowing. On December 31, 2018, the Company had in
The Landscape Products business is cyclical in that it
effect a floating-to-fixed interest rate swap with a notional
fluctuates in accordance with the level of industrial,
value of $24.1 million to hedge its exposure to fluctuating
commercial and institutional construction and consumer
cash flows from changes in interest rates. Further details
spending. This business segment is highly seasonal.
regarding this swap contract are discussed in more detail in
The principal raw materials utilized in the manufacture of Note 13 to the Consolidated Financial Statements.
concrete paving stone, retaining wall and masonry concrete
The Company has a transportation contract with a third
products are cement, aggregates (including sand and
party to outsource shale transport from the quarry to the
15
Brampton clay brick plant and delivery of finished products On September 5, 2018, the TSX accepted a Notice of
from its plants in Ontario, Canada. Customers may also make intention (the “Notice”) filed by the Company to make a
their own arrangements to pick up finished products. Normal Course Issuer Bid (“NCIB”). The Notice provided
that the Company, could purchase on the TSX up to
The Company has not experienced any disruption in
461,431 Class A Subordinate Voting shares in total,
deliveries of either shale or finished products as a result of
being approximately 5% of the total number of Class A
the outsourcing arrangement and does not anticipate any
Subordinate Voting shares outstanding as of August 31,
disruption in its future transportation requirements.
2018, during the 12-month period which commenced
The Company, due to the nature of its masonry and on September 7, 2018 and ends on September 6, 2019.
landscape products manufacturing operations, is subject to A copy of the Company’s Notice filed with the TSX
various environmental laws and regulations. The Company can be obtained by the shareholders, without charge,
maintains ongoing monitoring and testing by its own by contacting the Company. Repurchases of Class A
staff and selective external environmental consultants and Subordinate Voting shares in 2018 are discussed in Note
must remain in compliance as a condition of retaining 15 to the Consolidated Financial Statements. During
its Certificates of Approval to operate. In an effort to the interim period from December 31, 2018, to the date
ensure environmental compliance, the Company has of this MD&A, the Company has not repurchased any
established an Environmental Management System that Class A Subordinate Voting shares under this NCIB.
includes procedures on those processes and preventive
The aggregate number of outstanding stock options and
maintenance plans for equipment that is listed in its
share appreciation rights as at December 31, 2018 that
Certificates of Approval, as well as emergency spill response
were fully vested and exercisable by plan participants
and compliant handling processes.
are disclosed in Note 16 to the Consolidated Financial
The Company does not anticipate any material costs or any Statements for the year ended December 31, 2018.
significant impact on its operations to remain in compliance On exercise, stock options are convertible to Class A
with current environmental regulations. Subordinate Voting shares, whereas share appreciation
The Company owns its own quarries in Cheltenham, Ontario rights are settled in cash. There have been no changes
and Farmersburg, Indiana, in order to provide shale for the to the number of stock options and share appreciation
manufacture of clay brick. Quarry operations are required rights outstanding during the interim period from
to comply with environmental standards established by December 31, 2018 to the date of this MD&A.
provincial and state regulatory authorities, as the case All related party transactions are accounted for at the
may be. Among other things, these standards require the exchange amount, which is the amount of consideration
Company to undertake rehabilitation activities when mining established and agreed to by the related parties. The
operations are completed. Rehabilitation activities typically Company has determined which of its customers
take place in phases over the life of the quarry. Estimated are related to the Company via common directors or
costs to rehabilitate the quarries are reflected in Note 14 to shareholders. Sales to these customers are made under
the Consolidated Financial Statements. competitive terms and conditions. These customers
accounted for 4.5% (2017 – 4.5%) of revenues in
OTHER aggregate for the year ended December 31, 2018, with
Information relating to changes in accounting none accounting for more than 1.6% (2017 – 2.6%).
standards issued but not yet applied may be found in Purchases from related parties amounted to $24 for
Note 2 to the Consolidated Financial Statements. the year ended December 31, 2018 (2017 - $12).
The aggregate number of issued and outstanding Class As at December 31, 2018, the trade receivable balance
A Subordinate Voting shares and Class B Multiple Voting from related customers was $14 (2017 - $26). Trade
shares as at December 31, 2018 is disclosed in Note 15 payables to related parties, including payables for rebates
to the Consolidated Financial Statements. There were no was $176 as at December 31, 2018 (2017 - $46).
other changes to share capital during the interim period
from December 31, 2018 to the date of this MD&A. Information on the compensation of key management
16
personnel comprising of the Company’s directors December 31, 2018, the Company’s internal control over
and executive officers is discussed in Note 23 financial reporting was effective.
to the Consolidated Financial Statements.
There have been no changes to the Company’s internal
CONTROLS AND PROCEDURES control over financial reporting during the quarter ended
In compliance with National Instrument 52-109, December 31, 2018 that have materially affected, or
“Certification of Disclosure in Issuers’ Annual and Interim are reasonably likely to materially affect, the Company’s
Filings”, management is filing certificates signed by the internal control over financial reporting.
Chief Executive Officer (“CEO”) and the Chief Financial
OUTLOOK FOR 2019
Officer (“CFO”) that, among other things, report on the
The Company’s Masonry Products and Landscape Products
design and effectiveness of disclosure controls and
business segments are cyclical. Demand for masonry
procedures and the design and effectiveness of internal
products fluctuates in accordance with the level of new
control over financial reporting.
residential construction as well as industrial, commercial
Disclosure controls and procedures and institutional construction activity. Demand for
The CEO and the CFO have designed disclosure controls landscape products fluctuates in accordance with the level
and procedures in order to provide reasonable assurance of industrial, commercial and institutional construction
that: activity, as well as consumer spending patterns.
• material information relating to the Company has been Both business segments are seasonal with the
made known to them; and Landscape Products business affected to a greater
degree than the Masonry Products business.
• information required to be disclosed in the Company’s
filings is recorded, processed, summarized and reported As the conditions for growth in the Canadian residential
within the time periods specified in securities legislation. construction market began to slow in 2018, the
weakness in housing starts was primarily evident in the
An evaluation was carried out as at December 31, 2018,
low-rise residential sector of the Company’s Canadian
under the supervision of the CEO and the CFO, of the
masonry markets. For 2019, housing starts are expected
design and effectiveness of the Company’s disclosure
to remain relatively soft as the market continues to
controls and procedures. Based on this evaluation, the
adjust to mandated fiscal measures adopted in the
CEO and the CFO concluded that the disclosure controls
Canadian mortgage market as well as the Non-Resident
and procedures are effective.
Speculation Tax imposed in the Province of Ontario
Internal Control over Financial Reporting to curtail overheated housing market conditions.
Internal control over financial reporting is designed to
The landscape business saw gains in 2018 due, in part,
provide reasonable assurance regarding the reliability
to favourable market conditions and by the ability to
of financial reporting and the preparation of financial
now provide the Company’s entire range of products
statements for external purposes in accordance with IFRS. into Eastern Ontario and segments of the Quebec
The internal controls are not expected to prevent and market place through an enhanced distribution
detect all misstatements due to error or fraud. structure. In aggregate, 2019 business activity for
The CEO and CFO are responsible for establishing and concrete products across the Company’s market
maintaining internal control over financial reporting and, region is anticipated to improve upon 2018 results.
under their supervision, an evaluation was conducted The purchase of a concrete block manufacturing
on the effectiveness of the Company’s internal control plant on February 4, 2019, in Southwestern Ontario
over financial reporting based on the criteria set forth will expand the masonry concrete plant production
in Internal Control – Integrated Framework (2013) issued network, allow for improved overall operating
by the Committee of Sponsoring Organizations of the efficiencies, and improve the Company’s profile in that
Treadway Commission (COSO). Based on this evaluation, region as well as other market regions in Canada.
the Company’s certifying officers concluded that as at
17
Throughout 2018, the Company’s U.S. clay brick plant Such forward-looking statements are based on information
operated at the appropriate capacity utilization levels to currently available to management, and are based on
service its commercial and residential product segments, assumptions and analyses made by management in light of
resulting in an improved cost structure for that facility its experience and its perception of historical trends, current
and lower per unit costs. This improved production conditions and expected future developments, including,
capacity utilization, compared to prior years, is expected among others, assumptions regarding pricing, weather
to continue for 2019. At the same time, the Company’s and seasonal expectations, production efficiency, and there
results could still be impacted by historically low industry being no significant disruptions affecting operations or other
capacity utilization levels in its related market regions. material adverse changes.
The Company purchased the remaining 50% interest Such forward-looking statements also involve known
in Universal from its joint venture partner during 2018. and unknown risks, uncertainties and other factors which
The Universal assets consist primarily of a 65-acre may cause actual results, performance or achievements
property containing two industrial buildings totaling of the Company to be materially different from future
approximately 600,000 square feet located in Welland, results, performance or achievements expressed or implied
Ontario. It is the Company’s intention to develop by such forward-looking statements. Such risks and
this site as part of its ongoing strategy to further uncertainties include, among others: changes in economic
enhance its masonry and landscape businesses, but conditions, including the demand for the Company’s
at this time, no specific plans have been finalized. primary products and the level of new home, commercial
and other construction; large fluctuations in production
Additional information about the Company, including the
levels; fluctuations in energy prices and other production
Company’s Annual Report for the year ended December
costs; changes in transportation costs; foreign currency
31, 2017 and Annual Information Form for the year
exchange and interest rate fluctuations; legislative and
ended December 31, 2018, may be found on SEDAR at
regulatory developments; as well as those assumptions,
www.sedar.com. The Company’s Annual Report for the
risks, uncertainties and other factors identified and discussed
year ended December 31, 2018, and the Management
above under “Risks and Uncertainties” and those identified
Information Circular issued in connection with the Annual
and reported in the Company’s other public filings (including
General Meeting of Shareholders to be held on May 22,
the Annual Information Form for the year ended December
2019, will later be found on SEDAR at www.sedar.com.
31, 2018), which may be accessed at www.sedar.com.
FORWARD-LOOKING STATEMENTS The forward-looking information contained herein is made
Certain statements contained herein constitute “forward- as of the date hereof. Other than as specifically required by
looking statements”. All statements that are not historical law, the Company undertakes no obligation to update or
facts are forward-looking statements, including, among revise any forward-looking information, whether as a result
others, statements regarding the expected repayment of new information, future events or otherwise. Readers are
of the loan receivable from Universal and the expected cautioned not to place undue reliance on forward-looking
self-sufficiency on a cash basis of Universal, forecasts of statements.
sufficient cash flows from operations and other sources of
financing, anticipated compliance with financial covenants
under debt agreements, anticipated sales of masonry
and landscape products, anticipated results of strategic
acquisitions and other statements regarding future plans,
objectives, production levels, costs, productivity, results,
business outlook and financial performance. There can be no
assurance that such forward-looking statements will prove to
be accurate.

18
Table of Contents
Page

Independent Auditor’s Report 20

Annual Consolidated Financial Statements

Consolidated Balance Sheets 22

Consolidated Statements of Comprehensive Income 23

Consolidated Statements of Changes in Equity 24

Consolidated Statements of Cash Flows 25

Notes to Consolidated Financial Statements

1. General information 26

2. Basis of preparation and summary of significant accounting policies 26

3. Summary of critical accounting judgments and estimates 31

4. Cash and cash equivalents 33

5. Trade and other receivables 33

6. Inventories 33

7. Property, plant and equipment 33

8. Asset impairment 34

9. Investment in Universal Resource Recovery Inc. 34

10. Interests in subsidiaries 35

11. Bank operating advances 35

12. Debt 35

13. Derivative financial instrument 36

14. Decommissioning provisions 36

15. Share capital 37

16. Share-based compensation 37

17. Pension plan expense 39

18. Expenses by nature 39

19. Income tax 40

20. Net income per share 41

21. Changes in liabilities arising from financing activities 41

22. Commitments and contingencies 42

23. Related parties 42

24. Operating segments 43

25. Financial instrument disclosures 44

26. Capital management 47

27. Subsequent event 47

19
 Independent Auditor’s Report

To the Shareholders of Brampton Brick Limited:

Opinion
We have audited the consolidated financial statements of Brampton Brick Limited and its subsidiaries (the “Company”), which
comprise the consolidated statements of financial position as at December 31, 2018 and 2017, and the consolidated statements of
comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial
position of the Company as at December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows
for the years then ended in accordance with International Financial Reporting Standards (IFRSs).

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 are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information
Management is responsible for the other information. The other information comprises:
• The information included in Management’s Discussions and Analyses of Financial Condition and Results of Operations.
Our opinion on the consolidated financial statements does not cover the other information and do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management’s Discussions and Analyses of Financial Condition and Results of Operations prior to the date of this auditor’s
report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this
other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

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 IFRSs,
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

20
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 basis
the part of
of these
an audit in accordance
consolidated financialwith Canadian generally accepted auditing standards, we exercise
statements.
professional judgment and maintain professional skepticism throughout the audit. We also:
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether
maintain professional skepticism throughout the audit. We also:
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that
• Identify is assess
and sufficient and appropriate
the risks to provide a basis
of material misstatement of thefor our opinion.
consolidated The risk
financial of not detecting
statements, a due to fraud or error,
whether
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
• onean
Obtain resulting from error,
understanding as fraudcontrol
of internal may involve collusion,
relevant to theforgery,
audit inintentional omissions,
order to design audit misrepresentations,
procedures that or the override of
are internal
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
control.
effectiveness of the Company’s internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
• Evaluate the appropriateness
the circumstances, but notofforaccounting policies
the purpose used andan
of expressing the reasonableness
opinion of accounting
on the effectiveness estimates
of the Company’s internal control.
and related disclosures made by management.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based disclosures made evidence
on the audit by management.
obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt
• Conclude on the appropriateness on the Company’s
of management’s use ofability to continue
the going concernas a going
basis concern. Ifand,
of accounting we based on the audit
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to
modifyCompany’s abilityOur
our opinion. to continue as a are
conclusions going concern.
based If we
on the conclude
audit thatobtained
evidence a materialup
uncertainty exists,
to the date we are required to draw
of our
auditor’s report. However, future events or conditions may cause the Company to cease to continue as ifa such disclosures are
attention in our auditor’s report to the related disclosures in the consolidated financial statements or,
going inadequate,
concern. to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements,
including thethe
• Evaluate disclosures, and whether
overall presentation, the consolidated
structure and contentfinancial statements financial
of the consolidated represent the underlying
statements, including the disclosures,
transactions and events in a manner that achieves fair presentation.
and whether the consolidated financial statements represent the underlying transactions and events in a manner that
• Obtainachieves fair presentation.
sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the consolidated financial statements. We are
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
responsible for the direction, supervision and performance of the audit. We remain solely responsible for
Company
our audit to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
opinion.
performance of the audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
We communicate
timing of the auditwith
andthose charged
significant with
audit governance
findings, regarding,
including among other
any significant matters, in
deficiencies the planned
internal scopethat
control and timing of the audit
we identify
and during
significant auditour audit. including any significant deficiencies in internal control that we identify during our audit.
findings,
We also
We alsoprovide
providethose
thosecharged
charged with
with governance
governance with
with aa statement
statement that
thatwe
wehave
havecomplied
complied with
with relevant
relevantethical
ethicalrequirements regarding
requirements regarding independence, and to communicate with them all relationships and other matters
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
independence, and where applicable, related safeguards.
Theengagement
The engagement partner
partner on
on the
the audit
auditresulting
resultingininthis
thisindependent
independentauditor’s
auditor’sreport
report
is is Daniel
Daniel Hlavacek,
Hlavacek, CPA,
CPA, CA.
CA.

Chartered Professional Accountants, Licensed Public Accountants

Chartered Professional Accountants, Licensed Public Accountants
March19,
March 19, 2019
2019
Toronto,
Toronto, Ontario
Ontario

21
 Consolidated Balance Sheets
December 31, December 31,
(in thousands of Canadian dollars) Notes 2018 2017

Assets
Current assets
Cash and cash equivalents 4 $ 27,043 $ 22,010
Trade and other receivables 5, 25 18,137 21,287
Inventories 6 35,583 31,666
Other assets 1,210 1,065
Income tax recoverable 119 -
Loan receivable 64 94
Current derivative financial instrument 13 77 -
82,233 76,122
Non-current assets
Loans receivable 9 - 6,457
Property, plant and equipment 7, 24 169,075 157,365
Non-current derivative financial instrument 13 129 258
Other assets 79 181
169,283 164,261
Total assets 24 $ 251,516 $ 240,383

liabilities
Current liabilities
Trade payables $ 17,429 $ 20,485
Income tax payable 19 - 746
Current portion of debt 12 2,418 2,129
Current derivative financial instrument 13 - 21
Current provision on share appreciation rights 16 402 308
Decommissioning provisions 14 - 31
Other liabilities 4,437 4,037
24,686 27,757
Non-current liabilities
Non-current portion of debt 12 32,241 34,037
Non-current provision on share appreciation rights 16 161 143
Decommissioning provisions 14 6,974 6,571
Deferred tax liabilities 19 15,334 15,885
54,710 56,636
Total liabilities $ 79,396 $ 84,393

Equity
Share capital 15 $ 33,909 $ 33,915
Contributed surplus 16 3,218 3,146
Accumulated other comprehensive income 10,947 8,240
Retained earnings 15 124,046 110,689
Total equity $ 172,120 $ 155,990

Total liabilities and equity $ 251,516 $ 240,383

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

Approved by the Board of Directors /s/Jeffrey G. Kerbel Jeffrey G. Kerbel, /s/John M. Piecuch John M. Piecuch,
Director Director

22
Consolidated Statements of Comprehensive Income
Year ended December 31

(in thousands of Canadian dollars, except per share amounts) Notes 2018 2017

Revenues 23, 24 $ 159,885 $ 156,244

Cost of sales 6, 7, 18, 24 120,289 118,307

Selling expenses 18, 24 13,390 12,625
General and administrative expenses 7, 16, 18, 24 7,964 9,003
(Gain) loss on disposal of property, plant and equipment 18, 24 (49) 43
Share of income from joint venture interest 9 (762) -
Impairment reversal on loan receivable 9, 18, 24 - (2,143)
Asset impairment 8, 18, 24 - 6,285
Other (income) expense 18, 24 (294) 120

140,538 144,240

Operating income 24 19,347 12,004

Finance expense 11, 12, 13 (1,114) (666)

Income before income taxes 18,233 11,338

(Provision for) recovery of income taxes 19
Current (5,342) (5,395)
Deferred 553 1

(4,789) (5,394)

Net income for the year $ 13,444 $ 5,944

Other comprehensive income

Items that will be reclassified subsequently to profit or loss when
specific conditions are met:
Foreign currency translation gain (loss) $ 2,707 $ (2,589)

Total comprehensive income for the year $ 16,151 $ 3,355

Net income per Class A Subordinate Voting share and Class B Multiple Voting share
Basic 20 $ 1.23 $ 0.54
Diluted 20 $ 1.20 $ 0.53
The accompanying notes are an integral part of these consolidated financial statements.

23
 Consolidated Statements of Changes in Equity

Accumulated
Other
Share Contributed Comprehensive Retained Total
(in thousands of Canadian dollars) Notes Capital Surplus Income (Loss) Earnings Equity

Balance – January 1, 2017 $ 33,755 $ 3,101 $ 10,829 $ 104,745 $ 152,430

Net income for the year 5,944 5,944

Other comprehensive loss (net of taxes, $nil ) (2,589) (2,589)

Total comprehensive (loss) income for the year – – (2,589) 5,944 3,355

Cash-settled, share-based compensation 16 (167) (167)

Stock options exercised 16 160 (25) 135

Share-based compensation 16 237 237

Balance – December 31, 2017 $ 33,915 $ 3,146 $ 8,240 $ 110,689 $ 155,990

Balance – January 1, 2018 $ 33,915 $ 3,146 $ 8,240 $ 110,689 $ 155,990

Net income for the year 13,444 13,444

Other comprehensive income (net of taxes, $nil) 2,707 2,707

Total comprehensive income for the year – – 2,707 13,444 16,151

Cash-settled, share-based compensation 16 (17) (17)

Stock options exercised 16 62 (16) 46

Share-based compensation 16 105 105
Repurchase of Class A Subordinate Voting shares 15 (68) (87) (155)

Balance – December 31, 2018 $ 33,909 $ 3,218 $ 10,947 $ 124,046 $ 172,120

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

24
Consolidated Statements of Cash Flows
Year ended December 31

(in thousands of Canadian dollars) Notes 2018 2017

Cash provided by (used for)

Operating activities
Net income for the year $ 13,444 $ 5,944
Items not affecting cash and cash equivalents
Depreciation 7 9,795 10,316
Current tax provision 19 5,342 5,395
Deferred tax recovery 19 (553) (1)
(Gain) loss on disposal of property, plant and equipment (49) 43
Share of income from joint venture investment 9 (762) –
Unrealized foreign currency exchange (gain) loss (521) 460
Impairment reversal on loan receivable 9 – (2,143)
Asset impairment 8 – 6,285
Net interest expense 11, 12 1,083 1,262
Derivative financial instrument loss (gain) 13 31 (596)
Other 16 203 688
28,013 27,653
Changes in non-cash items
Trade and other receivables 3,362 (369)
Inventories (2,977) (3,247)
Other assets – (513)
Trade payables (3,390) 5,797
Other liabilities 135 126
(2,870) 1,794
Income tax payments (6,206) (7,471)
Payments for decommissioning of assets 14 (15) (16)
Cash provided by operating activities 18,922 21,960

Investing activities
Purchase of property, plant and equipment 7 (5,254) (7,333)
Purchase of investment in Universal 9 (6,500) –
Cash acquired on purchase of investment in Universal 769 –
Proceeds from repayments of loans receivable 94 89
Proceeds from disposal of property, plant and equipment 224 245
Cash used for investing activities (10,667) (6,999)

Financing activities
Payment of term loans 12, 21 (1,959) (1,960)
Interest paid 11, 12 (992) (1,206)
Payments on obligations under finance leases 21 (267) (732)
Proceeds from exercise of stock options 16 46 135
Repurchase of Class A Subordinate Voting shares 15 (155) –

Cash used for financing activities (3,327) (3,763)

Foreign exchange on cash held in foreign currency 105 (111)

Increase in cash and cash equivalents 5,033 11,087

Cash and cash equivalents at the beginning of the year 22,010 10,923

Cash and cash equivalents at the end of the year 4 $ 27,043 $ 22,010
The accompanying notes are an integral part of these consolidated financial statements.

25
 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

1. General information
Brampton Brick Limited and its subsidiaries, together referred to as the (“Company”), manufacture and sell masonry and landscape products. The
Company has clay brick manufacturing plants located in Brampton, Ontario and in Farmersburg, Indiana. Facilities located in Markham, Hillsdale,
Brampton and Brockville, Ontario, Boisbriand, Quebec and Wixom, Michigan manufacture and distribute concrete masonry and landscape products.
On April 2, 2018, the Company increased its 50% investment in Universal Resource Recovery Inc. (“Universal”), a joint venture entity, to 100% and
recognized the entity as a wholly-owned subsidiary as of that date. This transaction is described in more detail in Note 9, Investment in Universal
Resource Recovery Inc.
On February 4, 2019, the Company acquired a concrete block manufacturing plant located in Southwestern Ontario for a purchase consideration of
$7,500. This transaction is described in greater detail in Note 27, Subsequent event.
Brampton Brick Limited is incorporated and domiciled in Canada. The address of its registered office is 225 Wanless Drive, Brampton, Ontario.
The Company’s Class A Subordinate Voting shares trade on the Toronto Stock Exchange under the ticker symbol “BBL.A”. The Company’s Class B
Multiple Voting shares do not trade on any public market.

2. Basis of preparation and summary of significant accounting policies

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by
the International Accounting Standards Board (“IASB”).
These consolidated financial statements are based on the accounting policies as described below. These policies have been consistently applied to
all the periods presented, unless otherwise stated.
These consolidated financial statements were approved and authorized for issuance by the Board of Directors on March 19, 2019.
Basis of measurement
These consolidated financial statements have been prepared under the historical cost convention, except for derivative financial instruments which
are measured at fair value through profit or loss.
Basis of consolidation
The Company consolidates an entity when it exercises power over the entity and is exposed, or has rights, to variable returns and has the ability to
affect those returns through its control. These entities are deconsolidated from the date that control ceases.
These consolidated financial statements include the accounts of Brampton Brick Limited and its wholly-owned subsidiaries, Brampton Brick Inc.,
Oaks Concrete Products Inc., 1813435 Ontario Limited and of Universal Resource Recovery Inc. from April 2, 2018.
All significant intercompany transactions, balances and gains and losses from intercompany transactions are eliminated on consolidation.
Business combinations
Acquisition of a business or entity by the Company is reported as a business combination, applying the acquisition method. Under this method,
assets, liabilities and contingent liabilities acquired are brought into the Company’s consolidated financial statements at the fair value as of the
acquisition date. Transaction costs are expensed as incurred.
Investment in joint venture
Prior to April 2, 2018, the Company’s interest in Universal, a 50/50 joint venture of the Company, was accounted for using the equity method of
accounting. Upon acquisition of the remaining 50% interest, the Company recognizes its investment in Universal as a wholly-owned subsidiary.
Under the equity method of accounting, the consolidated balance sheet carrying amount of the investment in Universal was increased or
decreased to recognize the Company’s share of the profit or loss of Universal. The Company’s share of the profit or loss of Universal was recognized
in the consolidated statement of comprehensive income (loss). If the Company’s share of losses equaled or exceeded its interest in Universal,
including unsecured advances, the Company did not recognize further losses, unless it had incurred obligations or made payments on behalf of
Universal. Dividends, if any, received from Universal reduced the carrying amount of the investment. Additional advances to Universal increased the
carrying amount of the investment.
The Company assessed at each reporting period whether there is objective evidence that its interest in Universal was impaired. If impaired, the
carrying value of the Company’s share of the underlying assets of Universal was written down to its estimated recoverable amount (being the
higher of fair value less costs to sell and value in use) and charged to the consolidated statement of comprehensive income (loss). Reversals of
impairments are recognized when the estimated recoverable amount exceeds the carrying value of underlying assets.
Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each consolidated entity of Brampton Brick Limited are measured using the currency of the primary
economic environment in which the entity operates (the “functional currency”). These consolidated financial statements are presented in Canadian
dollars, which is Brampton Brick Limited’s functional currency. The financial statements of the Company’s U.S. subsidiaries, (Brampton Brick Inc.
and Oaks Concrete Products Inc.) which have the U.S. dollar as the functional currency are translated into Canadian dollars as follows: assets and
liabilities – at the closing rate at the balance sheet statement date, and income and expenses – at the average rate of the reporting period (as this is
considered a reasonable approximation of actual rates). All foreign currency differences are recognized in other comprehensive income.

26
Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign
operation, the foreign currency gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in
profit or loss. If the Company disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign
currency gains or losses accumulated in other comprehensive income related to the subsidiary is reallocated between controlling and non-
controlling interests.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at month-end exchange
rates of monetary assets and liabilities denominated in currencies other than the Company’s functional currency are recognized in ‘Other expense
(income)’ in the consolidated statement of comprehensive income (loss).
Cash and cash equivalents
Cash and cash equivalents are defined as cash and short-term deposits with original maturities of three months or less that are readily convertible
into a known amount of cash and which are subject to an insignificant risk of changes in value.
Financial instruments
On January 1, 2018, the Company adopted IFRS 9, Financial Instruments. The adoption of this standard, within the scope of the Company’s financial
instruments, did not impact the consolidated financial statements on transition at January 1, 2018 or for the prior year. The new classification of the
Company’s financial instruments is disclosed in Note 25.
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets
are subsequently measured at:
a) amortized cost, where the assets are held to collect contractual cash flows;
b) fair value through other comprehensive income, where the assets are held to collect proceeds from sales or from contractual cash flows; or
c) fair value through profit or loss, for assets not classified as above or have been designated as such.
Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred, and the Company
has transferred substantially all risks and rewards of ownership.
All financial liabilities are subsequently measured at amortized cost with the exception of certain transactions specified within the standard.
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the
recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
The Company classifies its financial instruments in the following categories, depending on the purpose for which the instruments were acquired:
a) Fair value through profit or loss:
A financial asset or liability is classified at fair value through profit or loss if it is a derivative financial instrument or is designated as such upon
initial recognition. Derivatives are included in this category unless they are designated as hedges. The interest rate swap contract and the
provision for share appreciation rights are measured at fair value through profit or loss.
b) Amortized cost:
Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market comprise of trade and other
receivables, loans receivable and cash and cash equivalents. Such assets are recognized initially at the amount expected to be received, less,
when material, a loss allowance at an amount equal to expected lifetime credit losses.
Financial liabilities measured at amortized cost include trade payables, other liabilities, bank debt, term debt and decommissioning provisions.
Trade payables and other liabilities are initially recognized at the amount required to be paid less, when material, a discount to reduce the
payable to fair value. Subsequently, these liabilities are measured at amortized cost using the effective interest method. Bank debt, term debt and
decommissioning provisions are recognized initially at fair value, net of any transaction costs incurred, and subsequently at amortized cost using
the effective interest method.
Financial liabilities are classified as current liabilities if payment is due within twelve months. Otherwise, they are presented as non-current liabilities.
Impairment of financial assets: At each reporting date, the Company assesses whether there is objective evidence that a financial asset (other than
a financial asset classified as fair value through profit or loss) is impaired.
Under the expected credit loss approach, a loss allowance equal to the twelve-month expected credit losses may be recognized at the reporting
date, unless the credit risk on a financial instrument has increased significantly requiring expected lifetime credit losses to be recognized. Alternatively,
under the simplified approach, a loss allowance may be recognized for expected lifetime credit losses, regardless of changes in credit risk.
Expected credit losses of a financial instrument are measured to reflect a range of probability-weighted outcomes, the time value of money and
reasonable information about past, current and future economic conditions.
If evidence of credit risk exists, the Company recognizes an impairment loss, as the difference between the carrying value and the present value of
the estimated future cash flows, discounted using the instrument’s original effective interest rate. The carrying amount of the asset is reduced by
this amount either directly or indirectly through the use of an allowance account.
Impairment losses on financial assets are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized.
27
 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the normal course of business, net of any allowance for
doubtful accounts and sales discounts.
Inventories
Inventories of manufactured items and work-in-process are recorded at the lower of cost, determined on an average production cost basis, and net
realizable value.
Raw materials and resale inventories are recorded at the lower of cost, determined on a first-in, first-out basis, and replacement cost for raw
materials and net realizable value for resale inventory.
Average production cost comprises raw materials, direct labour, other direct costs and related production overheads, based on normal production
capacity, including applicable depreciation on property, plant and equipment. Net realizable value is the estimated selling price in the ordinary
course of business, less the estimated selling cost. If the carrying value exceeds the net realizable amount, a write-down is recognized. The write-
down may be reversed in a subsequent period if the circumstances which caused it no longer exist.
Propert y, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes
expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount or
recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Company and the cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced. Repairs and maintenance
costs are charged to the consolidated statement of comprehensive income (loss) during the period in which they are incurred.
Depreciation
Asset classes are sub-divided into major components to recognize differences in the useful life of the components identified. When parts of an
item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant
and equipment and each component is depreciated separately. Residual values, the method of depreciation and useful lives of assets are reviewed
annually and adjusted if appropriate.
Depreciation is provided on a straight-line basis at rates designed to write off the property, plant and equipment components over their estimated
useful lives, as follows:
Land improvements 10 to 20 years
Buildings 10 to 40 years
Machinery and equipment 3 to 40 years
Mobile equipment 4 to 10 years
Quarries are amortized on the unit of production method based on shale extraction and estimated remaining shale reserves.
Gains and losses on disposals of property, plant and equipment are determined by comparing the proceeds with the carrying amount of the asset
and are presented as ‘(Gains) losses on disposal of property, plant and equipment’ in the consolidated statement of comprehensive income (loss).
Impairment of non-financial assets
Property, plant and equipment are assessed at the end of each reporting period to determine whether there is an indication that an asset may be
impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment
charge. For the purpose of measuring recoverable amounts, assets are grouped into cash-generating units or “CGUs”. These are the lowest levels
at which there are separately identifiable cash flows. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use
(being the present value of the expected future cash flows of the relevant asset or CGU). An impairment charge is recognized for the amount by
which the asset’s carrying amount exceeds its recoverable amount.
The Company evaluates impairment charges for potential reversals when events or circumstances warrant such consideration.
Leases
Leases are classified as finance or operating depending upon the terms and conditions of the contracts. Leases that transfer substantially all of the
risks and rewards of ownership of the asset and to which the criteria as described under IAS 17, Leases, apply are classified as finance leases and are
accounted for as an acquisition of a non-current asset and an assumption of an obligation at the inception of the lease, measured at the present
value of minimum lease payments. Asset values recorded under finance leases are amortized on a straight-line basis over the period of expected
use. Obligations recorded under finance leases are reduced by lease payments net of imputed interest.
Other leases are operating leases and are not recognized in the Company’s balance sheet and are expensed over the lease term on a straight-line
basis.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the normal course of business from suppliers. They are
classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Provisions
Provisions, where applicable, are recognized when the Company has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
28
Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period and
are discounted to present value where the effect is material.
Borrowing costs
Borrowing costs attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use. All other borrowing costs are recognized as interest expense in the consolidated
statement of comprehensive income (loss) in the period in which they are incurred.
Decommissioning provisions
The cost of the Company’s obligation to rehabilitate its shale quarries is estimated based on the present value of expected future rehabilitation costs
and is recognized in the period in which the obligation is incurred. The present value of these costs is added to the cost of the associated asset and
amortized over its useful life, while the corresponding liability will accrete to its future value over the same period.
The present value of the rehabilitation liability is determined based on a pre-tax discount rate that takes into account the time value of money and
the risks specific to the liability. The liability is reviewed at each reporting date to determine if the discount rate is still applicable and to determine if
changes are required to the original estimate.
Changes to estimated future costs are recognized on the balance sheet by either increasing or decreasing the rehabilitation liability and rehabilitation
asset if the initial estimate was originally recognized as part of an asset measured in accordance with IAS 16, Property, Plant and Equipment. Any
reduction in the rehabilitation liability and therefore any deduction from the rehabilitation asset may not exceed the carrying amount of that asset. If
it does, any excess over the carrying value is taken immediately to the consolidated statement of comprehensive income (loss).
Income taxes
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss, except to the extent that it
relates to items recognized directly in other comprehensive income (loss) or directly in equity, in which case the tax is also recognized in other
comprehensive income (loss) or directly in equity.
Current tax expense is based on the results for the period as adjusted for items that are not taxable or not deductible. Current tax is calculated using
tax rates and laws that were enacted or substantively enacted at the end of the reporting period.
Deferred tax is recognized, using the liability method, in respect of temporary differences arising between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is calculated on a non-discounted basis using
tax rates and laws that have been enacted or substantially enacted at the end of the reporting period and are expected to be in effect in the
periods in which the deferred tax assets and liabilities are expected to be realized or settled.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future
taxable income will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred
tax balances relate to the same taxation authority or either the same taxable group company; or different group entities which intend either to
settle current tax assets and liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which
significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.
Share capital
Class A Subordinate Voting shares and Class B Multiple Voting shares are classified as equity. Incremental costs directly attributable to the issuance
of shares are recognized as a deduction from equity.
Dividends
Dividends on Class A Subordinate Voting shares and Class B Multiple Voting shares are recognized in the Company’s consolidated financial
statements in the period in which the dividends are approved by the Board of Directors of the Company.
Revenue recognition
On January 1, 2018, the Company adopted IFRS 15, Revenue from Contracts with Customers. The adoption of this standard, within the scope of the
Company’s revenue recognition framework, did not impact the consolidated financial statements as at January 1, 2018, under the cumulative effect
method which requires the cumulative effect of adjustments to be recorded in retained earnings.
Revenues reflect the consideration to which the Company expects to be entitled to, in exchange for the transfer of promised goods or services. The
five-step model is applied to all customer contracts.
For masonry and landscape products, sales revenue is recognized when the sales price can be measured reliably and collectibility is reasonably
assured. These criteria are generally met at the time the product is shipped to the customer or picked up by the customer.
Revenues are recognized based on contractual performance obligations. Shipments arranged by the Company are sold Free On Board (“F.O.B.”) job
site. Customers therefore take ownership and assume the risk of loss upon delivery at final destination, and all products are invoiced on the same
date as they are shipped. Pick ups arranged by the customer are sold F.O.B. plant. Customers take ownership and assume the risk of loss upon the
shipment leaving the Company’s yard.
The timing of revenue recognition is determined by when performance obligations have been satisfied. Cartage charges are invoiced at the time of
shipment. If ultimate delivery is arranged by the Company, cartage is charged and revenue for cartage is recognized at the time of delivery.
29
 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

The Company does not record a provision for product returns or defective products at the time of sale as the amounts are not significant.
Sales discounts, including volume rebates, sales incentives and prompt payment discounts are classified in revenues. Volume rebates and sales
incentive credits are computed quarterly, on a customer by customer basis, and the provision is adjusted as required. Credit notes are issued
quarterly and processed against the applicable customer account. Prompt payment discounts offered are material on sales under the Winter
Booking Program. A provision is computed quarterly, based on historical payment patterns. For other sales, the prompt payment discount is
recorded at the time payment is received. A general provision, based on historical payment patterns, is reviewed quarterly and adjusted as required.
Cost of sales
Cost of sales includes cost of finished goods sold, costs related to shipping, handling of product and inventory write-downs.
Earnings per share
Basic earnings per share (“EPS”) is calculated by dividing the net income (loss) for the period by the weighted average number of Class A
Subordinate Voting shares and Class B Multiple Voting shares outstanding during the period.
Diluted earnings per share is calculated by adjusting the weighted average number of Class A Subordinate Voting shares and Class B Multiple
Voting shares outstanding to assume conversion of all dilutive outstanding stock options. The number of shares outstanding is increased by the
number of additional shares that would be issued upon the exercise of “in-the-money” stock options, if dilutive, and is reduced by the number of
shares that could be repurchased, at the average market price, with the cash proceeds therefrom.
Share-based compensation
Stock options are accounted for under the fair value method. Each tranche in a grant is considered a separate grant with its own vesting period
and grant date fair value. The fair value of each tranche is measured at the date of grant using the Black-Scholes option pricing model. Forfeitures
are estimated for the purposes of determining the fair value of each tranche. Compensation expense is recognized over the vesting period of each
tranche, based on the number of options expected to vest, with a corresponding credit to contributed surplus. The number of options expected
to vest is reviewed at least annually, with any impact being recognized immediately. For forfeitures, no compensation expense is recognized for
options that do not ultimately vest and previously recognized compensation expense is reversed. For expired and cancelled options, compensation
expense is not reversed and the related credit remains in contributed surplus.
When options are exercised, the Company issues new Class A Subordinate Voting shares. The proceeds received are credited to share capital,
together with the related amounts previously added to contributed surplus.
Share appreciation rights are measured at fair market value (“FMV”) using the Black-Scholes option pricing model. Compensation expense is
recorded for the increase in the FMV of the share appreciation rights over the base price as specified in the Share Appreciation Rights Grant
Agreement until settlement or expiration. The offsetting liability is recognized as Current and Non-Current based on the estimated timing of
settlement. Compensation expense is recognized for share appreciation rights over the vesting period. Each vesting period represents a tranche,
which is treated as a separate grant. Forfeitures are estimated in the determination of vested rights.
Employee benefits — Defined contribution pension plans
The Company’s employee pension plans are defined contribution plans. The Company pays contributions into separate entities and does not have
any legal or constructive obligation to pay further amounts. The obligations are recognized as an employee benefit expense in the consolidated
statement of comprehensive income (loss) in the periods during which services are rendered by employees.
Accounting standards and amendments issued but not yet applied
The following is a brief overview of accounting standard changes and amendments that the Company will be required to adopt in future years.
IFRS 16 Leases is effective for annual periods beginning on or after January 1, 2019. It eliminates the classification of leases as either operating
leases or finance leases as is required by IAS 17, Leases. It establishes principles for the recognition, measurement, presentation and disclosure of
leases with the objective of ensuring that lessees and lessors provide relevant information for all leases with a term of more than twelve months,
unless the underlying asset is of low value for those transactions.
The standard introduces a single lessee accounting model which requires a lessee to recognize:
a) assets by recognizing either the present value of the lease payments or an amount equal to the lease liability, adjusted for prepaid or accrued
lease payments;
b) liabilities by recognizing its obligation to make future payments; and
c) depreciation of lease assets separately from interest on lease liabilities in the income statement.
Under the standard, the following approaches may be applied by a lessee:
a) The Full Retrospective method requires retrospective application of the standard to each prior reporting period presented; or
b) The Modified Retrospective method requires the retrospective cumulative effect of initially applying the standard at the date of initial
application.
Upon adoption of the standard on January 1, 2019, the Modified retrospective method was applied by the Company. The application of this

30
Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

method resulted in additional right-of-use assets and offsetting lease obligations impacting the opening consolidated balance sheet as at
January 1, 2019 as follows:
January 1, 2019 December 31, 2018 December 31, 2017
Cost of Right-of-use (ROU) assets:
ROU assets - finance leases $ 763 $ 763 $ 271
ROU assets - operating leases $ 263 – –

Total Cost of Right-of-use assets $ 1,026 $ 763 $ 271

Lease obligations:
Current finance lease obligations $ 468 $ 468 $ 170
Current operating lease obligations $ 119 – –
$ 587 $ 468 $ 170

Non-current finance lease obligations $ 426 $ 426 $ 272

Non-current operating lease obligations $ 144 – –
$ 570 $ 426 $ 272
Total lease obligations $ 1,157 $ 894 $ 442

Retained Earnings (impact of lease accounting) $ (131) $ (131) $ (171)

The transitional provisions on adoption of this standard will have disclosure requirements in the consolidated financial statements.
IFRS 23 Uncertainty over income tax treatments is effective for annual periods beginning on or after January 1, 2019 and clarifies the approach
to help determine the accounting treatment for uncertain income tax outcomes under IAS 12, Income taxes. The interpretation requires that an
entity:
a) apply judgment in ascertaining if the tax treatment would collectively or individually impact associated transactions;
b) assume that the taxation authority would have full knowledge of all relevant information;
c) ascertain the probability that the relevant taxation authority will accept the tax treatment applied;
d) based upon the best prediction for the resolution of the uncertainty, should apply the corresponding income tax treatment; and
e) in case of any changes to facts and circumstances should require a reassessment of judgments and assumptions to be considered.
This standard provides enhanced guidance for the application of IAS 12, Income taxes. No significant changes to the consolidated financial
statements are expected to result from the adoption of the standard.
Amendment to IAS 23 Borrowing costs is effective for annual periods beginning on or after January 1, 2019. Under the standard when an entity
borrows funds in the ordinary course of business and uses them to purchase a qualifying asset, the capitalization rate used to determine borrowing
costs eligible for capitalization is the weighted average borrowing cost of all borrowings outstanding during the period. However, the amendment
clarifies that an entity shall exclude from this calculation those borrowing costs incurred specifically towards obtaining a qualifying asset until
substantially all activities necessary to prepare the asset for its intended use are completed.
This amendment is not expected to impact the consolidated financial statements.

3. Summary of critical accounting judgments and estimates

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
The following are the judgments and estimates applied by management that most significantly affect the Company’s consolidated financial
statements:
Judgments
i) Impairment of non-financial assets
At each reporting date, the Company evaluates the carrying value of property, plant and equipment to determine whether there is any
indication that an asset may be impaired. Impairment is measured as the amount by which the carrying value of the property, plant and
equipment exceeds the recoverable value. In deriving the recoverable value of the property, plant and equipment, management makes
judgments such as determining the cash generating units (“CGUs”), based on the lowest group of assets to which cash flows can be reliably
attributed, the estimated future cash flows and discount rates to be used in the impairment models. Management has determined that the
Brampton clay brick plant, the Canadian concrete facilities (Markham, Hillsdale, Brampton, Brockville and Boisbriand), the Farmersburg, Indiana
31
 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

clay brick plant and the Wixom, Michigan facility were the cash generating units (“CGUs”) for the purposes of asset impairment testing.
Management’s judgments are based on significant industry experience and expectations of future economic conditions.
ii) Deferred taxes
Management makes judgments in determining whether deferred tax assets are recognized on the balance sheet. Deferred tax assets, including
those arising from unutilized tax losses, require management to assess the probability that the Company will generate taxable earnings in future
periods, in order to utilize recognized deferred tax assets.
The Company is subject to taxation in a number of jurisdictions. There are many transactions and calculations during the course of business for
which the ultimate tax determination requires judgment. Where the final outcome of these tax-related matters is different from the amounts
that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made.
Changes in rates of taxation, changes in the estimated timing or realization of reversals and differences in interpretation by tax authorities could
result in higher or lower income tax amounts paid or deducted against future tax payables.
Estimates
i) Depreciation
Depreciation is measured as the economic benefit consumed from the use of the Company’s property, plant and equipment. This amount is
determined by apportioning the cost, net of residual value, over the useful life of the individual assets according to an appropriate depreciation
method. Estimates of the useful lives of the components of property, plant and equipment and the residual values are based on industry
practice and expected utilization.
ii) Impairment of non-financial assets
An impairment of property, plant and equipment is measured as the excess of its carrying value over the recoverable amount. The recoverable
amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. The recoverable amount is the higher of an
asset’s fair value less costs to sell and value in use (being the present value of the expected future cash flows of the relevant asset).
Fair value less costs to sell is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction
between knowledgeable and willing parties. In the absence of an arm’s length transaction, fair value of assets is generally determined as the
present value of estimated future cash flows arising from the continued use of the asset, which includes estimates such as the cost of future
expansion plans and eventual disposal, using assumptions that an independent market participant may take into account. Cash flows are
discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset.
Value in use is determined as the present value of estimated future cash flows arising from continued use and eventual disposition of the asset,
which excludes future capital expenditures that would increase the service potential of the asset. Cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks to the specific asset.
To the extent that future cash flows or discount rates differ from management estimates at the balance sheet date, the impairment results may
be subject to change.
(iii) Impairment of financial assets
At each reporting date, the Company must determine the fair value of the non-interest bearing loan advanced to Universal in order to assess
its recoverability and the resulting impairment, if any. The recoverability of the loan from Universal is determined, in part, by calculating the
estimated fair value of Universal’s property, plant and equipment (“PP&E”). These fair value estimates were based on a range of technical and
economic factors and conditions. Changes to these factors or conditions in future periods could alter the fair value assessment of these assets. A
decrease in the estimated revenues would increase the potential shortfall in cash inflows required to repay the loan.
As at December 31, 2018, the Loan receivable was nil, as the Company recognizes Universal as a wholly-owned subsidiary (refer to Note 9,
Investment in Universal Resource Recovery Inc.). In accordance with IAS 10, Consolidated Financial Statements, inter-company assets and
liabilities held by the Company and its wholly-owned subsidiaries are eliminated upon consolidation and therefore are not presented in the
Consolidated Financial Statements.
Trade and other receivables are assessed for impairment at each reporting date based on expected lifetime credit losses under the Simplified
Expected Credit Loss approach as described in Note 2. An allowance for bad debt is recognized for expected losses based on an evaluation of
each past-due customer account balance and future expectations of recoverability.
iv) Decommissioning provisions
The Company is obligated to rehabilitate its operating shale quarry properties in Cheltenham, Ontario and Farmersburg, Indiana, as a condition
of its licenses to mine shale. Significant estimates and assumptions are made in determining the provision for quarry rehabilitation as there are
numerous factors that will affect the ultimate amount payable. These factors include estimates of the extent and costs of rehabilitation activities,
cost increases due to inflation and changes in the discount rate. These uncertainties may result in future actual expenditures differing from
the amounts currently provided. The provision at the reporting date represents the Company’s best estimate of the present value of the future
rehabilitation costs required.

32
Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

4. Cash and cash equivalents

December 31, 2018 December 31, 2017
$ $
Cash on hand and balances with banks 27,043 22,010
Cash and cash equivalents 27,043 22,010

5. Trade and other receivables

December 31, 2018 December 31, 2017
$ $
Trade receivables 18,269 21,382
Less: Allowance for doubtful accounts (note 25) (155) (148)
Trade receivables – net 18,114 21,234

Other receivables 23 53
Trade and other receivables 18,137 21,287

Trade receivables from related parties (included above) 14 26

6. Inventories
December 31, 2018 December 31, 2017
$ $
Merchandise 29,779 25,657
Raw materials and production supplies 5,804 6,009
Inventories 35,583 31,666
The cost of inventories recognized as an expense and included in cost of sales was $96,908 (2017 - $97,375), which includes inventories written off
primarily for damaged product, and inventory valuation and cycle count adjustments in the amount of $1,827 (2017 - $2,205).

7. property, plant and equipment

Land and Land Machinery and Mobile
Buildings Total
Improvements Equipment Equipment
As at December 31, 2016
Cost 89,462 35,774 159,149 7,712 292,097
Accumulated depreciation and impairment loss (18,807) (17,859) (79,239) (6,120) (122,025)
Net book value 70,655 17,915 79,910 1,592 170,072

 or the year ended December 31, 2017

F
Additions 424 – 5,149 1,035 6,608
Disposals – – (245) (43) (288)
Depreciation (1,294) (1,040) (6,990) (992) (10,316)
Asset impairment (see note 8) (414) (1,117) (4,754) – (6,285)
Exchange differences (341) (405) (1,663) (17) (2,426)
(1,625) (2,562) (8,503) (17) (12,707)

As at December 31, 2017

Cost 89,075 34,855 159,051 7,982 290,963
Accumulated depreciation and impairment loss (20,045) (19,502) (87,644) (6,407) (133,598)
Net book value 69,030 15,353 71,407 1,575 157,365

 or the year ended December 31, 2018

F
Additions 467 44 4,133 1,646 6,290
Assets acquired on purchase of
2,500 10,500 – – 13,000
investment in Universal
Disposals – – (174) - (174)
Depreciation (1,185) (1,241) (6,541) (828) (9,795)
Exchange differences 347 384 1,615 43 2,389
2,129 9,687 (967) 861 11,710
33
 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

As at December 31, 2018

Cost 93,087 46,548 167,202 9,140 315,977
Accumulated depreciation and impairment loss (21,928) (21,508) (96,762) (6,704) (146,902)
Net book value 71,159 25,040 70,440 2,436 169,075
For the year ended December 31, 2018, depreciation expense totaled $9,795 (2017 - $10,316) of which $9,504 (2017 - $9,988) was included in Cost
of sales and $291 (2017 - $328) was included in General and administrative expenses. Refer to Note 18, ‘Expenses by nature’.
No asset impairment charge or reversal was recorded for the year ended December 31, 2018 (2017 – $6,285) on the Farmersburg, Indiana plant, as is
described in Note 8 below.
On April 2, 2018, assets acquired on purchase of the remaining 50% interest in Universal totaled $13,000. This transaction is discussed below in Note 9.
During 2018, property, plant and equipment were acquired at an aggregate cost of $6,290, (2017 – $6,608) of which $707 (2017 - $323), were
acquired by means of finance leases. Capital expenditures incurred in prior years and unpaid in the current year was $143 (2017 – $1,164 paid).
Non cash capital expenditure relating to estimated future quarry rehabilitation costs amounted to $186 (2017 – $116).
Net cash flow used for the purchase of property, plant and equipment was $5,254 (2017 - $7,333).
Mobile equipment and machinery and equipment includes the following amounts acquired by means of finance leases:

December 31, 2018 December 31, 2017

Cost – finance leases $ 1,388 $ 1,237
Accumulated depreciation (625) (966)
$ 763 $ 271

8. Asset Impairment
The Company has determined that the Brampton clay brick plant, the Canadian concrete plants (Markham, Hillsdale, Brampton, Brockville and
Boisbriand), the Farmersburg, Indiana clay brick plant and the Wixom, Michigan concrete plant were the cash generating units (“CGUs”) for the
purposes of asset impairment testing. Management’s assessment of the external and internal indicators of impairment, as per IAS 36, Impairment of
Assets, (“IAS 36”) determined there was no indication that the Brampton clay brick plant, the Canadian concrete plants and the Michigan concrete
plant may be impaired. Management also assessed the indicators of impairment for the Indiana clay brick plant and concluded that impairment
testing was necessary.
As at December 31, 2018, an assessment of the Company’s U.S. residential and commercial markets indicated continuing uncertain economic
conditions in 2018. Based on this assessment, an asset impairment evaluation was required to determine any potential impairment of the property,
plant and equipment at the Farmersburg, Indiana, clay brick plant.
An impairment of property, plant and equipment is measured as the excess of its carrying value over the recoverable amount. The recoverable
amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. The recoverable amount is the higher of an asset’s:
fair value less costs to sell; and value in use (being the present value of the expected future cash flows of the relevant asset).
For the year ended December 31, 2018, the impairment tests did not result in any impairment charge or reversal (2017 - $6,285 impairment
charge). An impairment results in a decrease in property, plant and equipment with a corresponding charge to the consolidated statement
of comprehensive income (loss). The impairment charge is recorded on a pro-rata basis to the individual depreciable assets of the CGU. The
recoverable amount was estimated using the approved business plan for a period of five years. The forecasted cash flows assume revenue growth
in future periods with cash flows beyond five years extrapolated using an estimated growth rate of 1.50% (2017 - 1.50%). The forecasted cash flows
assume a pre-tax discount rate of 14.30% (2017 - 15.02%). The assumptions are subject to sensitivity and a reduction of revenue by 1% would
reduce the carrying value by $832 and an increase of pre-tax discount rate by 1% would reduce the carrying value by $2,226.

9. Investment in Universal Resource Recovery Inc.

On April 2, 2018, the Company acquired the remaining 50% interest in Universal, a 50% joint venture entity, for a purchase consideration of $6,500.
This acquisition increased the Company’s investment in Universal to 100%.
The acquisition of the remaining 50% interest in Universal is accounted for as an effective sale of the existing 50% interest in the joint venture
and the acquisition of a 100% interest in Universal at fair value on the acquisition date. Based on the fair valuation of the underlying property in
Universal, which was estimated to be $13,000, at the date of acquisition of the remaining 50% interest, the Company recognized a net gain of
$762. This gain effectively represented the Company’s partial recovery of the previously recorded impairment charges on its investment in the joint
venture.
On purchase of the remaining 50% interest in Universal, the secured, non-interest bearing, loan payable by Universal to its former 50% joint venture
owner totaling $5,691, as at April 2, 2018 became payable to the Company. As a result, the secured, non-interest bearing, non-current loan payable
by Universal totaled $12,084 as at December 31, 2018 (December 31, 2017 - $6,393). In accordance with IAS 10, Consolidated Financial Statements,
inter-company assets and liabilities held by the Company and its wholly-owned subsidiaries are eliminated upon consolidation and therefore are
not presented in the Consolidated Financial Statements.
Effective April 2, 2018, rental revenues, related expenses, as well as individual assets and liabilities of Universal are included in the Consolidated
34 Financial Statements and the investment in the joint venture and related income (loss) from investment in joint venture no longer exist.
Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

As at December 31, 2017, the Company’s 50% investment in Universal was accounted for using the equity method of accounting. Accordingly,
the loan receivable outstanding balance is presented in the Consolidated Balance Sheet as at that date. As at December 31, 2017, the Company
estimated the fair value of its secured, non-interest bearing, non-current loan receivable at the recoverable amount of Universal’s property, plant
and equipment. The recoverable amount was determined by the then proposed purchase and sale agreement, effective April 2, 2018, to purchase
the remaining 50% interest in Universal from its joint venture partner for $6,500. This amount along with the book values of other assets and
liabilities exceeded the carrying value of the loan receivable of $4,250 and accordingly an impairment reversal of $2,143 and a provision for income
taxes of $268 was recognized as at December 31, 2017 to write up the loan receivable to its fair value of $6,393.

10. Interests in subsidiaries

The Company’s interest in subsidiaries as at December 31, 2018 are detailed below. These subsidiaries have share capital consisting of common
shares and are held by the Company as noted below. The proportion of ownership interests held equals the voting rights held by the Company. The
country of incorporation or registration is also their principal place of business.

Place of business/ % of ownership % of ownership

Name of Entity country of Parent interest held by interest held by non- Principal activities
incorporation the parent controlling interests
Oaks U.S. Holdings Inc. United States Brampton Brick Limited 100 0 Holding company
 anufacture of clay
M
Brampton Brick Inc. United States Oaks U.S. Holdings Inc. 100 0
brick
Manufacture of
concrete paving stones,
Oaks Concrete Products Inc. United States Oaks U.S. Holdings Inc. 100 0
retaining and garden
walls
Universal Resource Recovery Inc. Canada Brampton Brick Limited 100 0 Commercial leasing
1813435 Ontario Limited Canada Brampton Brick Limited 100 0 Non-operating

11. Loans receivable

The Company’s operating credit facility provides for borrowings up to a maximum of $22,000 (2017 - $22,000) based on margin formulae for trade
receivables and inventories, less priority claims. It is a demand facility secured by a general security agreement over all assets. The agreement
contains certain financial covenants. As at December 31, 2018 and 2017, the Company was in compliance with all the financial covenants.
As at December 31, 2018, the borrowing limit available based on the margin formulae was at the maximum available amount of $22,000 (2017 -
$22,000). The utilization was $386 (2017 - $356) and comprised only of outstanding letters of credit.
As at December 31, 2018, the rate of interest on the current account overdraft is based on the Canadian bank prime rate plus a credit spread of 0.25%.

12. Debt
Debt consists of the following:

December 31, 2018 December 31, 2017

$ $
 ommitted term A credit facility – monthly instalments commenced July 2017
C
to November 2020, maturing January 29, 2021 (a) 24,100 25,550
 ommitted term B credit facility – monthly instalments commenced July 2017
C
to November 2020, maturing January 29, 2021 (b) 9,665 10,165
Other term loans (d) – 9
(e) 33,765 35,724
Obligations under finance leases (f ) 894 442
34,659 36,166
Less: Payments due within one year – current portion 2,418 2,129
Non-current portion of debt 32,241 34,037
The credit agreement is secured by a general security agreement over all assets and a first-priority mortgage over certain properties located in
Canada. Pursuant to the acquisition of certain concrete block manufacturing assets in early 2019, certain payments are restricted between the
parties to the purchase agreement and / or payments in the form of dividends, under the Company’s credit facility. There are no other restrictions
on the Company’s ability to use the assets and settle the liabilities of the subsidiary companies. However, until the credit facilities are repaid in full
and cancelled, without the prior consent of the bank, the Company may not permit substantially all of its assets to be acquired by another person
or entity; or permit any reorganization or change in ownership or corporate structure; or conduct the purchase or sale of any assets outside the
normal course of business.
35
 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

Effective October 2, 2018, this credit agreement was amended to extend the maturity date of the committed term A and term B credit facilities to
January 29, 2021 from December 29, 2019 under prevailing terms and conditions.
The credit facilities available are as follows:
(a) The committed term A credit facility is a non-revolving term loan, which bears interest at the bankers’ acceptance rate plus 1.60%. The term
loan requires monthly interest payments for its duration and is to be repaid by way of principal repayments of $290 per month during the
months of July to November from 2017 each year to maturity date.
(b) The committed term B credit facility is a non-revolving term loan, bearing interest at the bankers’ acceptance rate plus 1.60%. The term loan
requires monthly interest payments for its duration and is to be repaid by way of principal repayments of $100 per month during the months
of July to November each year from 2017 to maturity date.
(c) The committed capital expenditure credit facility is a revolving term loan, which provides up to a maximum amount of $5,000, none of which
had been utilized, as at December 31, 2018.
 T he agreements for these loans contain certain financial covenants. As at December 31, 2018, the Company was in compliance with all the
financial covenants.
(d) Other term loans represent vendor financing to acquire certain production assets.
(e) Repayments on debt (excluding finance leases) include the following:
$
2019 1,950
2020 1,950
2021 29,865
33,765
(f ) Obligations under finance leases include the following:
Future minimum lease payments $
2019 480
2020 289
2021 144
Total minimum lease payments 913
Less: Amount representing interest 19
894
The weighted average effective interest rate for obligations under finance leases during 2018 was approximately 2.56% (2017 – 3.1%).

13. Derivative financial instrument

The Company has a floating-to-fixed interest rate swap with a notional value of $24,100, as at December 31, 2018 (December 31, 2017 - $25,550),
to minimize its exposure to fluctuations in cash flows from changes in interest rates on term debt of the same amount. The swap notional value
decreases proportionately with the outstanding balance of the underlying committed term A credit facility as scheduled repayments are made over
its duration. As a result of this transaction, the Company’s interest rate for the committed term A credit facility is fixed at 3.48%.
The Company has not applied hedge accounting for the year ended December 31, 2018 or in the prior year. The change in fair value of the interest
rate swap recognized in ‘Finance expense’ on the Consolidated Statement of Comprehensive Income (Loss) for the year ended December 31,
2018 amounted to an unrealized loss of $31 (2017 – $596 unrealized gain). The fair value of the interest rate swap derivative in the amounts of $77
(December 31, 2017 - $21, current financial liability) and $129 (December 31, 2017 - $258, non-current financial asset) were classified as a current
derivative financial asset and a non-current derivative financial asset, respectively.

14. Decommissioning provisions

The Company makes a provision for the future rehabilitation of its shale quarries. The present value of the obligations was estimated using discount
rates ranging from 1.92% to 2.15% (2017 – 1.39% to 2.20%). The total undiscounted amount of the estimated cash flows required to settle the
obligations at December 31, 2018 is $8,237 (2017 - $7,934). These obligations are expected to be settled over a fourteen year period (2017 – one to
fifteen year period) and are expected to be funded from general Company resources.
The following table presents the reconciliation of the beginning and ending aggregate carrying amount of the decommissioning provisions:

2018 2017
$ $
Balance at the beginning of the year 6,602 6,459
Increase in provision 186 116
Payments during the year (15) (16)
Unwinding of the discount and effect of changes in the discount rate 93 121

36
Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

Impact of currency exchange on opening balance 108 (78)

Balance at the end of the year 6,974 6,602
Less: Payments due within one year – current portion – (31)
6,974 6,571

15. Share capital

The authorized capital of the Company consists of an unlimited number of Preference shares, Class A Subordinate Voting shares and Class B
Multiple Voting shares. The Class B Multiple Voting shares are convertible into Class A Subordinate Voting shares on a share-for-share basis at any
time. Class A Subordinate Voting shares may be converted into Class B Mutiple Voting shares in certain circumstances in connection with a takeover
bid. Class A Subordinate Voting shareholders are entitled to one vote per share and Class B Multiple Voting shareholders are entitled to ten votes per
share at any meeting of shareholders. The shares issued do not have a specified par value.
No dividends were paid in 2018 and 2017.
On July 12, 2017, the Toronto Stock Exchange (the “TSX”) accepted a notice of intention (the “Notice”) filed by the Company to make a Normal
Course Issuer Bid (“NCIB”). The Notice provided that the Company, could purchase on the TSX up to 461,756 Class A Subordinate Voting shares in
total, being approximately 5% of the total number of Class A Subordinate Voting shares outstanding as of July 10, 2017, during the 12-month period
which commenced on July 17, 2017 and ended on July 16, 2018. Under this NCIB, 6,500 Class A Subordinate Voting shares were repurchased at an
average market price of $8.19 and subsequently cancelled on September 28, 2018.
On September 5, 2018, the TSX accepted a notice of intention filed by the Company to make a NCIB. The Notice provided that the Company, could
purchase on the TSX up to 461,431 Class A Subordinate Voting shares in total, being approximately 5% of the total number of Class A Subordinate
Voting shares outstanding as of August 31, 2018, during the 12-month period which commenced on September 7, 2018 and ends on September 6,
2019. Under this NCIB, 12,000 Class A Subordinate Voting shares were repurchased at an average market price of $8.36 and subsequently cancelled.
As at December 31, 2018 issued and outstanding share capital consisted of 9,223,023 Class A Subordinate Voting shares (December 31, 2017 –
9,235,123) and 1,738,631 Class B Multiple Voting shares (December 31, 2017 – 1,738,631).
Changes to issued and outstanding share capital during the current and prior years due to the exercise of stock options are discussed in Note 16.
Changes to share capital during 2018 and 2017 were as follows:
Class A Subordinate Voting shares December 31, 2018 December 31, 2017
Number Stated Number Stated
of shares capital of shares capital
(thousands) $ (thousands) $
Balance at the beginning of the year 9,235 33,914 9,209 33,754
Stock options exercised for Class A Subordinate
6 46 27 135
Voting shares

Repurchase of Class A Subordinate Voting shares (18) (68) – –

T ransfer from contributed surplus on exercise of

– 17 – 25
stock options
Balance at the end of the year 9,223 33,909 9,235 33,914

Class B Multiple Voting shares December 31, 2018 December 31, 2017
Number Stated Number Stated
of shares capital of shares capital
(thousands) $ (thousands) $
Balance at the beginning of the year 1,739 1 1,739 1
Balance at the end of the year 1,739 1 1,739 1

16. Share-based compensation

a) Equity-settled stock options:
Under the Brampton Brick Limited Stock Option Incentive Plan (“the Plan”), the Company may grant stock options to the officers, full-time
employees and directors of the Company and its subsidiaries up to an aggregate of 1,680,965 (December 31, 2017 – 1,680,965) Class A
Subordinate Voting shares. The exercise price of each stock option is equal to the volume-weighted average trading price of the Company’s
Class A Subordinate Voting shares for the five trading days immediately preceding the date of the grant and the maximum term of each option
is ten years. As at December 31, 2018, a total of 255,065 (December 31, 2017 – 148,065) stock options were available for grant under the Plan.
There were no stock options granted during the year ended December 31, 2018 and the prior year. A total of 4,000 stock options were forfeited
in 2018 (2017 – 1,800).
During 2018, 6,400 stock options were exercised at an average price of $7.12. Proceeds from the issue of an equal number of Class A
Subordinate Voting shares amounted to $46. In addition, 6,000 stock options with an average exercise price of $7.90 were exercised and cash-
37
 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

settled in the amount of $3. Compensation cost previously recognized on these stock options totaled $17, of which $14 was credited to stock
option compensation cost in 2018.
In 2017, 26,500 stock options were exercised at an average price of $5.08. Proceeds from the issue of an equal number of Class A Subordinate
Voting shares amounted to $135.
During 2017, 173,700 stock options were exercised and cash-settled in the amount of $938, of which $167 was previously recognized over the
vesting period of these stock options. Cash paid in excess of the fair market value (“FMV”) at grant date amounted to $771 and was expensed to
compensation cost. No Class A Subordinate Voting shares were issued on exercise of these options.
For the year ended December 31, 2018, the total compensation cost charged against income with respect to all stock options granted was $91
(2017 - $1,008).
Information with respect to stock option transactions in each of the past two years and stock options outstanding at the end of the year is as
follows:
2018 2017
Weighted Weighted
Number average Number average
of stock exercise price of stock exercise price
options $ options $
Balance at the beginning of the year 1,086,500 6.44 1,372,500 6.57
Exercised during the year (12,400) 7.49 (200,200) 4.87
Forfeited during the year (4,000) 7.90 (1,800) 7.90
Cancelled during the year – – (10,000) 6.59
Expired during the year (103,000) 10.51 (74,000) 13.00
Balance at the end of the year 967,100 5.99 1,086,500 6.44
At December 31, 2018 and 2017, outstanding stock options were as follows:
Number of shares
Year of expiry Option price $ 2018 2017
2018 10.51 - 103,000
2019 4.99 47,500 47,500
2020 5.76 69,200 69,200
2021 5.10 66,500 66,500
2022 3.60 86,500 86,500
2022 4.61 30,000 30,000
2023 5.52 151,500 151,500
2024 5.60 158,500 159,300
2025 6.90 177,300 180,500
2026 7.90 180,100 192,500
967,100 1,086,500
As at December 31, 2018, an aggregate of 967,100 (December 31, 2017 – 1,086,500) stock options were outstanding, of which 858,000
(December 31, 2017 – 864,700) were fully vested and exercisable by the holders thereof at a weighted average exercise price of $5.79
(December 31, 2017 - $6.24) per share.
b) S hare appreciation rights:
Under the Brampton Brick Limited Share Appreciation Rights Plan (the “SARs Plan”), the Company may grant share appreciation rights to all
executive officers, certain employees and to all non-management members of the Board of directors of the Company. The base price of each
share appreciation right is determined by the Board of Directors and cannot be less than the volume weighted average trading price (”VWAP”)
of the Company’s Class A Subordinate Voting shares for the five trading days immediately preceding the effective date of the grant, and the
maximum exercise term of a share appreciation right is ten years. Upon exercise of the share appreciation right, the excess of the FMV, being the
five-day VWAP, as of the day preceding the date of exercise, over the base price will be payable to the participant.
On March 28, 2018 and on March 31, 2017, the Company granted share appreciation rights to all executive officers, certain employees and to all
non-management members of the Board of directors of the Company. Share appreciation rights in each grant vest as follows: 20% on the date
immediately following the date of the grant; and an additional 20% on each anniversary of the grant date thereof until fully vested.

38
Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

Date of grant March 28, 2018 March 31, 2017

Number of share appreciation rights granted 207,500 205,500
Base price $ 8.48 $ 9.01
Fair value of each share appreciation right as at December 31, 2018 $ 2.23 $ 2.19
Assumptions:
Risk-free interest rate 1.85% 1.85%
Expected life 6.25 years 6.5 years
Volatility (determined by reference to historically observed prices of Class A Subordinate Voting
Shares) 30.99% 31.86%
Expected dividend yield 0.0% 0.0%
Expected forfeitures Nil Nil
No share appreciation rights were exercised during 2018. 15,000 share appreciation rights were forfeited during the second quarter of 2018.
In 2017, 600 share appreciation rights were exercised and settled in cash, for the increase in FMV over the Base price amounting to $1. A total of
2,400 share appreciation rights were forfeited in 2017.
For the year ended December 31, 2018, total compensation cost recorded was $112 (2017 – $452). As at December 31, 2018, an aggregate of
395,000 (December 31, 2017 – 202,500) share appreciation rights were outstanding, of which 117,500 (December 31, 2017 – 40,500) were fully
vested and exercisable. The fair value of the share appreciation rights recognized, in the amounts of $402 (December 31, 2017 – $308) and $161
(December 31, 2017 – $143), were classified as current and non-current provisions for share appreciation rights, respectively.

17. Pension plan expense

The Company has a defined contribution pension plan covering all participating Canadian employees and a 401(k) plan covering all participating
U.S. employees. The Company’s pension plan expense in 2018 totaled $918 (2017 - $872).

18. Expenses by nature

Year ended December 31, 2018
Share of
Personnel Cost of Cost of Other
Depreciation Freight Joint Venture Total
expenses Materials Energy expense
Income
Cost of sales $ 26,378 $ 58,606 $ 7,786 $ 9,504 $ 13,369 $ 4,646 – $ 120,289
Selling expenses 8,313 483 – – 20 4,574 – 13,390
General and administrative 4,653 325 – 291 52 2,643 – 7,964
expenses
 ain on disposal of property,
G – – – – – (49) – (49)
plant and equipment
S hare of income from joint – – – – – – (762) (762)
venture interest
Other income – – – – – (294) – (294)
$ 39,344 $ 59,414 $ 7,786 $ 9,795 $ 13,441 $ 11,520 (762) $ 140,538

Year ended December 31, 2017

Personnel Cost of Cost of Other Impairment

Depreciation Freight Total
expenses Materials Energy expense (reversal)

Cost of sales $ 26,435 $ 55,713 $ 9,361 $ 9,988 $ 12,907 $ 3,903 – $ 118,307

Selling expenses 7,676 586 – – 26 4,337 – 12,625
General and administrative 5,656 355 – 328 69 2,595 – 9,003
expenses
L oss on disposal of property, – – – – – 43 – 43
plant and equipment
Other expense – – – – – 120 – 120
Impairment reversal on loan – – – – – – (2,143) (2,143)
receivable
Asset impairment – – – – – – 6,285 6,285
$ 39,767 $ 56,654 $ 9,361 $ 10,316 $ 13,002 $ 10,998 4,142 $ 144,240

39
 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

19. Income tax

The Company computes an income tax provision in each of the jurisdictions in which it operates. The operations in Canada and the United States
are subject to income tax at the following rates 26.5% (2017 – 26.5%) in the Canadian jurisdictions and from 21.0% to 23.2% (2017 – 34.0% to 36.5%)
in the U.S. jurisdictions.
The provision for income taxes recorded in the consolidated statements of operations differs from the statutory federal and provincial income tax,
as follows:
2018 2017
$ % $ %
Income before income taxes 18,233 11,338
Income tax provision calculated at statutory federal and
(4,832) (26.5) (3,005) (26.5)
provincial income tax rates – 26.50% (2017 – 26.50%)
(Increase) decrease in rate resulting from:
Manufacturing and processing profits deduction 279 1.5 306 2.7
Tax rate and other differences in foreign subsidiaries 365 2.0 865 7.6
Change in deferred tax assets not recognized (1,829) (10.0) 11,138 98.2
C
 hange in unrecognized deferred tax assets due to changes
– – (12,613) (111.3)
in U.S. deferred income tax rates
Change
 in unrecognized deferred tax assets due to changes
1,573 8.6 (2,057) (18.1)
in exchange rates
Other non-taxable and non-deductible items (345) (1.9) (28) (0.2)
Total change in income tax rates 43 0.2 (2,389) (21.1)
Effective provision for income taxes (4,789) (26.3) (5,394) (47.6)

The movement in deferred tax liabilities is as follows:

2018 2017
As at January 1 $ (15,885) $ (15,889)
Recovery of (provision for) deferred income taxes 553 1
Impact of exchange rate on change in deferred tax liabilities (2) 3
As at December 31 $ (15,334) $ (15,885)

Deferred taxes applicable to temporary differences are as follows:

December 31, 2018 December 31, 2017

$ $
Depreciable property, plant and equipment (11,115) (11,545)
Losses available for carry-forward 21,828 20,153
IFRS transition adjustment, January 1, 2010 - land (4,432) (4,432)
Other (1,302) (1,577)
4,979 2,599
Less: Deferred tax assets not recognized (20,313) (18,484)
Deferred tax liability (15,334) (15,885)

40
Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

Deferred tax assets were not recorded on the following non-capital losses carried forward relating to the U.S. subsidiaries:

Year of expiry $
2024 3,046
2025 4,487
2026 4,065
2027 2,048
2028 4,855
2029 14,076
2030 14,964
2031 12,360
2032 9,184
2033 7,016
2034 5,741
2035 4,521
2036 8,203
2037 2,815
2038 20
97,401

20. Net income per share

Earnings per share is calculated on net income using the weighted average number of shares outstanding for the year. As referred to in Note 2, the
diluted earnings per share is calculated to reflect the dilutive effect of the exercise of the outstanding stock options on earnings per share.
The weighted average number of outstanding Class A Subordinate Voting shares and Class B Multiple Voting shares utilized in the calculations of
earnings per share is as follows:
Year ended December 31
2018 2017
Per share Per share
Net income Shares amount Net Income Shares amount
$ (thousands) $ $ (thousands) $
Net income 13,444 10,968 1.23 5,944 10,969 0.54
Dilutive effect of options 244 (0.03) 323 (0.01)
Diluted income per share 11,212 1.20 11,292 0.53
In determining the diluted earnings per share, for the year ended December 31, 2018, 20,600 options to purchase Class A Subordinate Voting shares
were considered anti-dilutive (2017 – 120,815).

21. Changes in liabilities arising from financing activities

For the years ended December 31, 2018 and December 31, 2017, cash provided by (used for) financing activities resulted in the following changes
to the Company’s financing liabilities:
Term Finance Leases
Current Non-current Current Non-current
Balance as at December 31, 2016 $ 1,960 $ 35,724 $ 678 $ 186
Cash flows:
Payments during the year (1,960) (732)
Changes from cash flows (1,960) (732)
Non-cash changes:
Increase in financial obligations 110 213
Impact of currency exchange rates (4) (9)
Other non-cash movements 1,959 (1,959) 118 (118)
Non-cash changes 1,959 (1,959) 224 86
Balance as at December 31, 2017 $ 1,959 $ 33,765 $ 170 $ 272

41
 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

Term Finance Leases

Current Non-current Current Non-current
Balance as at December 31, 2017 $ 1,959 $ 33,765 $ 170 $ 272
Cash flows:
Payments during the year (1,959) (267)
Changes from cash flows (1,959) (267)
Non-cash changes:
Increase in financial obligations 231 476
Impact of currency exchange rates 2 10
Other non-cash movements 1,950 (1,950) 332 (332)
Non-cash changes 1,950 (1,950) 565 154
Balance as at December 31, 2018 $ 1,950 $ 31,815 $ 468 $ 426

22. Commitments and contingencies

The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the Company’s financial position or liquidity.
The future aggregate minimum lease payments under operating leases, (mobile equipment and vehicles) are as follows:
$
2019 128
2020 89
2021 53
2022 7
277
Effective January 1, 2019, these operating leases were recognized as Right-of-Use assets in property, plant and equipment (refer to Note 2), with an
offsetting lease obligation at the present value of their future lease payments as follows:
$
Cost of Right-of-Use assets (operating leases) 263
Add: Interest cost 14
277

As at December 31, 2018, the Company entered into commitments to purchase property, plant and equipment, and consultancy services from
vendors totaling $2,194.
The Company normally enters into supply and transportation contracts for natural gas to satisfy its future requirements. As at December 31, 2018,
the Company had contracted for its estimated 2019 Canadian natural gas supply requirements at an aggregate estimated cost of $737, forecasted
by the supplier, none of which was at fixed prices, and for its estimated 2019 Canadian transportation requirements at an aggregate estimated cost
of $1,126, of which 84% was at fixed prices. The potential unrealized gain on the fixed price transportation contracts was approximately $227 (2017
– unrealized gain of $170), which was not taken to income since these are supply contracts that will be charged to operations in the period the gas
is consumed.
Letters of credit are issued by the Company’s lender to provide security to certain service providers and in connection with certain governmental
operating permits. The aggregate amount of letters of credit outstanding as at December 31, 2018 was $386 (2017 - $356).

23. Related parties

a) Compensation of key management personnel
Year ended December 31
2018 2017
Salaries, incentives, short-term benefits and pension expense $ 4,143 $ 4,159
Share-based payments 203 1,460
Total $ 4,346 $ 5,619
Key management personnel is comprised of the Company’s directors and executive officers.
b) Other related party transactions
The Company has determined which of its customers are related to the Company via common directors or shareholders. Sales to these
customers are made under competitive terms and conditions. These customers accounted for 4.5% (2017 – 4.5%) of revenues in aggregate for
the year ended December 31, 2018, with none accounting for more than 1.6% (2017 – 2.6%). Purchases from related parties amounted to $24
(2017 - $12) for the year ended December 31, 2018.
42
Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

All related party transactions are accounted for at the exchange amount which is the amount of consideration established and agreed to by the
related parties.
c) Other related party balances
As at December 31, 2018, the trade receivable balance from related customers was $14 (2017 - $26). Trade payables to related parties,
including payables for rebates was $176 as at December 31, 2018 (2017 - $46).

24. Operating Segments

The Company considers that for purposes of operating decision making and assessing performance it operates within two dominant business
segments: Masonry Products and Landscape Products. Although the Company operates several plants, the nature of products, production methods
and type of customers for their products and services, share similar economic characteristics within each segment.
Masonry Produc ts
Manufacture of clay brick and a range of concrete masonry products including stone veneer, concrete brick and block for use in residential
construction and institutional, commercial and industrial building projects.
Landscape Produc ts
Manufacture of concrete paving stones, retaining walls, garden walls and sales of accessory products for use in residential construction and
institutional, commercial and industrial building projects.
Other
Other business operations and assets consist primarily of the Company’s share of income from its joint venture investment in Universal prior
to April 2, 2018, as well as post-acquisition rental revenues, related costs and assets of the wholly-owned subsidiary. The purchase transaction on
April 2, 2018, is described in Note 9, ‘Investment in Universal Resource Recovery Inc.’ In 2017, ‘Other assets’ comprised primarily of the loan receivable
from Universal.
Segmented information, with comparative information for 2017, is as follows:
2018
Masonry Landscape Other Total
$ $ $ $
Revenues 111,570 48,212 103 159,885
Cost of sales 82,895 36,841 553 120,289
Selling expenses 8,535 4,855 – 13,390
General and administrative expenses 5,852 2,138 (26) 7,964
Gain on disposal of property, plant and equipment (32) (17) – (49)
Share of income from joint venture interest – – (762) (762)
Other expense (income) 45 (339) – (294)
97,295 43,478 (235) 140,538
Operating income 14,275 4,734 338 19,347
Finance expense (1,114)
Income before income taxes 18,233
Income tax provision (4,789)
Net income for the year 13,444
Depreciation of property, plant and equipment 7,251 2,229 315 9,795

2017
Masonry Landscape Other Total
$ $ $ $
Revenues 110,433 45,811 – 156,244
Cost of sales 85,799 32,508 – 118,307
Selling expenses 8,311 4,314 – 12,625
General and administrative expenses 6,782 2,221 – 9,003
Loss on disposal of property, plant and equipment 20 23 – 43
Other (income) expense (266) 386 – 120
Impairment reversal on loan receivable – – (2,143) (2,143)
Asset impairment 6,285 – – 6,285
106,931 39,452 (2,143) 144,240
Operating income 3,502 6,359 2,143 12,004
Finance expense (666)
Income before income taxes 11,338
Income tax provision (5,394)
Net income for the year 5,944
Depreciation of property, plant and equipment 8,146 2,170 – 10,316
43
 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

Certain non-current assets are used for both the Masonry Products and Landscape Products business segments. Assets and liabilities do not form a
part of management’s evaluation of performance of individual business segments and therefore are not reported on a segmented basis.
2018
Masonry and
Landscape Other Total
$ $ $
Additions to property, plant and equipment 6,290 – 6,290
Consolidated total assets 238,113 13,403 251,516

2017
Masonry and
Landscape Other Total
$ $ $
Additions to property, plant and equipment 6,608 – 6,608
Consolidated total assets 233,987 6,396 240,383
Geographical information is as follows:
2018 2017
Property, Property,
plant and plant and
Revenues equipment Revenues equipment
$ $ $ $
Canada 141,476 136,833 139,407 127,237
United States 18,409 32,242 16,837 30,128
159,885 169,075 156,244 157,365

25. Financial instrument disclosures

Measurement categories
Financial assets and liabilities have been classified into categories which determine the basis of measurement. Those categories are: fair value
through profit or loss; loans and receivables; available for sale assets; financial liabilities measured at amortized cost; and financial liabilities at fair
value through profit or loss. The following table shows the carrying values and fair values of assets and liabilities for each of these categories at
December 31, 2018 and 2017.

Assets December 31, 2018 December 31, 2017

Fair Value
Hierarchy $ $ $ $
Level Carrying Fair Carrying Fair
values values values values
Loans and receivables
Cash and cash equivalents 1 27,043 27,043 22,010 22,010
Trade and other receivables 2 18,137 18,137 21,287 21,287
Loans receivable 2 64 64 6,551 6,551
Financial assets at fair value through profit or loss
Derivative financial instrument 2 206 206 237 237

Liabilities
Financial liabilities at amortized cost
Trade payables 2 17,429 17,429 20,485 20,485
Other liabilities 2 4,437 4,437 4,037 4,037
Debt 2 34,659 34,659 36,166 36,166

The carrying values of the cash and cash equivalents, trade and other receivables, trade payables and other liabilities approximate their fair values
due to the short term nature of these financial instruments.
The fair values of the loans receivable and debt approximate their carrying values and were determined based on expected cash flows and
observable market data for similar instruments which is considered comparable for the estimation of fair values.
The derivative financial instrument comprising the interest rate swap is measured at fair value based on observable market data for similar
instruments considered to be comparable for the estimation of its fair value.

44
Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

Fair Value Hierarchy

Fair value measurements recognized in the consolidated balance sheets are categorized in accordance with the following levels:
• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly.
• Level 3 – Prices or valuations that require management inputs that are both significant to the fair value measurement
and unobservable.
Financial risk fac tors
The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk. Management identifies and evaluates the
financial risks in co-operation with the Company’s operating units. The Company’s overall risk management program seeks to minimize potential
adverse effects on the company’s financial performance.
a) Credit Risk
The Company has credit risk exposure with respect to trade receivables, cash and cash equivalents and the counterparties to its financial
instruments.
i) Trade receivables
The Company grants credit to its customers in the normal course of business on terms that are consistent with the industries in which it
operates. Credit evaluations are performed on a regular basis taking into consideration the customer’s financial position, past experience and
other factors which form part of the ongoing credit evaluations. Based on these evaluations, credit limits were established for each customer
and are monitored and amended as appropriate throughout the year. The financial statements take into account an allowance for bad debts.
At December 31, 2018, four customers represented approximately 27.5%, in aggregate, (2017 - four customers – 32.4%) of the Company’s trade
receivables at year-end. Sales to these customers represented 16.3% (2017 – 14.1%) of the Company’s revenues.
The Masonry Products business segment is characterized by a relatively small number of customers with higher average balances outstanding.
Trade receivables attributable to this business segment represented 64.5% (2017 – 75.6%) of consolidated trade and other receivables
outstanding as at December 31, 2018.
The Landscape Products business segment is characterized by a larger number of customers with lower average balances outstanding. This
business segment represented 34.2% (2017 – 24.4%) of consolidated trade and other receivables outstanding as at December 31, 2018.
The remaining 1.3% represents receivables outstanding from Universal’s business operations as at December 31, 2018.
In aggregate, 92.8% (2017 – 92.6%) of the trade and other receivables balance was due in Canadian dollars and 7.2% (2017 – 7.4%) was due in
U.S. dollars.
Accounts receivable that were past due as at December 31, 2018 totaled $4,503 (2017 - $10,340), of which $3,286 (2017- $9,605) was less than
three months past due, $1,210 (2017 - $496) was more than three months but less than six months past due and $7 (2017 - $239) was more
than six months but less than one year past due.
Of the past due amount, accounts totaling $155 (2017 - $148) were considered to be impaired and were recorded in the allowance for doubtful
accounts and charged to general and administrative expenses in the consolidated statements of comprehensive income (loss).
Changes in the allowance for doubtful accounts were as follows:

2018 2017
$ $
Balance at the beginning of the year 148 153
Accounts added 69 23
Accounts removed (37) (28)
Accounts written off during the year as uncollectible (27) –
Foreign exchange translation gain 2 –
Balance at the end of the year 155 148
ii) Cash and counterparties
The Company’s credit risk with respect to its cash and cash equivalents and counterparties to its financial instruments is minimized
substantially by seeking to ensure that these financial instruments are placed with well-capitalized financial institutions and other creditworthy
counterparties.
b) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in discharging its financial liabilities as they become due. The Company
manages liquidity risk by maintaining cash balances, adequate borrowing facilities and monitoring forecast and actual cash flows.

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 Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

The summary of financial obligations and contractual maturities relating to undiscounted non-derivative financial liabilities is as follows:

2018 2017
$ $
Not later than 3 months 22,720 25,186
Later than 3 months and not later than 12 months 3,375 2,942
Later than one year and not later than five years 34,139 35,325
60,234 63,453
 Non-derivative financial liabilities include trade payables and accrued liabilities, other liabilities, provision for share appreciation rights, debt
and finance lease commitments.
The summary of contractual maturities relating to undiscounted derivative financial (assets) liabilities is as follows:

2018 2017
$ $
Not later than 3 months (22) 24
Later than 3 months and not later than 12 months (56) (3)
Later than one year and not later than five years (134) (271)
(212) (250)
At December 31, 2018, the Company had a borrowing limit of $22,000, on an operating credit facility of $22,000, of which $386 had been
utilized. The Company’s operating credit facility is further described in Note 11.
The Company expects that future cash flows from operations, cash and cash equivalents on hand and the unutilized balances of its credit
facilities will be sufficient to satisfy these obligations as they become due.
c) Market Risk
i) Foreign exchange risks
The Company has exposure to exchange rate fluctuations as a result of holding monetary assets and liabilities denominated in U.S. dollars.
Currency exchange rate conversions utilized in the preparation of the consolidated financial statements are as follows:

USD $1 =
December 31, 2017 1.2571 CAD
December 31, 2018 1.3639 CAD

High – 2018 1.3639 CAD

Low – 2018 1.2308 CAD
Average – 2018 1.2967 CAD
Variances in the rate of exchange of USD $0.10 are considered reasonably possible.
At December 31, 2018, the Company had net monetary liabilities denominated in U.S. dollars totaling USD $266. A variance of USD $0.10 in the
December 31, 2018 rates of exchange would have resulted in the total comprehensive income (loss) before income taxes being approximately
$27 higher or lower, as the case may be.
For the year ended December 31, 2018, the Company’s U.S. dollar revenues amounted to USD $14,170. A variance of USD $0.10 in average rates
of exchange during 2018 would have resulted in the revenues being approximately $1,417 higher or lower, as the case may be.
Foreign currency forward purchase contracts are occasionally utilized to manage the foreign currency exchange exposure resulting from future
cash flows. There were no contracts outstanding as at December 31, 2018 or December 31, 2017.
ii) Interest rates
The Company has exposure to interest rate fluctuations as a result of having variable interest rate bearing financial liabilities.
The Canadian bank prime interest rate was 3.95% on December 31, 2018. At December 31, 2018, the Company had a total of $9,665 of variable
interest rate bearing debt outstanding. A variance of 0.25% in the rate of interest would have resulted in the income before income taxes being
approximately $24 higher or lower, as the case may be, on an annualized basis.
The Company utilizes a floating-to-fixed interest rate swap to minimize its exposure to fluctuations in cash flows from changes in interest rates
on the committed term loan of the same amount. The interest rate swap contract as at December 31, 2018 is described further in Note 13. As a
result of this transaction, the Company’s interest rate for the committed term A credit facility is fixed at 3.48%.
The Company has not applied hedge accounting for the years ended December 31, 2018 and December 31, 2017. The change in fair value
of the interest rate swap recognized in ‘Finance expense’ on the Consolidated Statement of Comprehensive Income (Loss) amounted to an
unrealized loss of $31 for the year ended December 31, 2018 (December 31, 2017 – $596 unrealized gain).

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Notes to Consolidated Financial Statements
December 31, 2018 and 2017 (in thousands of Canadian dollars, unless otherwise stated)

iii) Energy contracts

The Company occasionally enters into fixed price swap contracts to fix the price of its electricity requirements. Settlements on the swap
contracts are made monthly and recorded in the consolidated statements of comprehensive income (loss). There were no swap contracts
outstanding as at December 31, 2018 or December 31, 2017.

26. Capital management

The Company’s primary business segments are both seasonal and cyclical. The Company manages its capital structure to reflect the underlying risk
characteristics of the industries in which it operates. Its strategy is to maintain a conservatively structured balance sheet in order to secure access to
financing at a reasonable cost.
The Company monitors capital on the basis of the total liabilities to tangible net worth ratio. This ratio is calculated as total liabilities divided
by tangible net worth. Tangible net worth is the total of shareholders’ equity reduced by the loan receivable from Universal as shown in the
consolidated balance sheets.
The Company’s objective is to maintain the total liabilities to tangible net worth ratio at less than 2.00:1. The net adjusted funded debt to
shareholders equity ratios at December 31, 2018 and December 31, 2017 are as follows:

December 31, 2018 December 31, 2017

$ $
Total liabilities 79,396 84,393

Share capital 33,909 33,915

Contributed surplus 3,218 3,146
Accumulated other comprehensive income 10,947 8,240
Retained earnings 124,046 110,689
Shareholders equity 172,120 155,990

Less: Loan receivable from Universal – (6,393)

Tangible Net Worth 172,120 149,597

Total Liabilities to Tangible Net Worth ratio 0.46:1 0.56:1

As at December 31, 2018 and December 31, 2017, the Company’s objective with respect to the total liabilities to tangible net worth ratio was
achieved.

27. Subsequent event

On February 4, 2019, the Company acquired a concrete block manufacturing plant located in Southwestern Ontario for a purchase consideration
of $7,500. The purchase consideration was settled by a cash payment of $2,500 on February 4, 2019, and a vendor take-back loan in the form of
two non-interest bearing promissory notes totaling $5,000, payable in equal instalments over five years. The Company is evaluating the accounting
treatment of these assets to determine if they constitute a business combination or a purchase of assets.

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 Five Year Financial Review

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

Operations 2018 2017 2016 2015 2014
Revenues $ 159,885 $ 156,244 $ 143,026 $ 127,028 $ 110,329

Net Income (loss) 13,444 5,944 7,474 4,820 (13,961)

Depreciation 9,795 10,316 9,749 9,119 8,215

Cash provided by operations 18,922 21,960 19,975 14,281 8,713

Payments for purchase of property, plant and equipment 5,254 7,333 11,306 4,441 11,377
Financial Position

Current Assets $ 82,233 $ 76,122 $ 61,907 $ 56,091 $ 47,244

Working Capital 57,547 48,365 36,382 27,125 8,878

Property, plant and equipment (net) 169,075 157,365 170,072 168,091 165,236

Total assets 251,516 240,383 236,387 229,129 217,680

Non-current portion of debt 32,241 34,037 35,910 32,970 26,064

Shareholders' equity attributable to Brampton Brick Limited 172,120 155,990 152,430 145,842 133,177
Financial Ratios

Current ratio 3.33:1 2.74:1 2.43:1 1.94:1 1.23:1

T otal liabilities (excluding non-controlling interests) to shareholders’ equity
attributable to Brampton Brick Limited 0.46:1 0.54:1 0.55:1 0.57:1 0.63:1
 eturn on average shareholders’ equity attributable
R
to shareholders of Brampton Brick Limited(%) 8.2 3.9 5.0 3.3 -10.1
Share Data

Net income (loss) per share $ 1.23 $ 0.54 $ 0.68 $ 0.43 $ (1.28)

Book value per share 15.69 14.22 13.92 13.33 12.17

Dividends per share – – – – –

Weighted average number of shares outstanding (thousands) 10,968 10,969 10,947 10,944 10,940

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50
corporate directory

directors corporate office

Christopher R. Bratty* †
225 Wanless Drive
Brampton, Ontario L7A 1E9
Jim V. De Gasperis Telephone: (905) 840-1011
P. David Grant, CPA, CA* Facsimile: (905) 840-1535
Web site: www.bramptonbrick.com
Howard C. Kerbel e-mail: [email protected]
Jeffrey G. Kerbel
investor relations
Adam K. Peterson e-mail: [email protected]

John M. Piecuch*† stock listing

Peter R. Smith Toronto Stock Exchange

Kenneth M. Tanenbaum*† share symbol

*Member of Audit Committee “BBL.A”
†Member of Compensation Committee

registrar & transfer agent

senior officers AST Trust Company (Canada)
Jeffrey G. Kerbel Halifax, Montreal, Toronto, Calgary and Vancouver
President and Chief Executive Officer

Trevor M. Sandler shareholder enquiries

Vice-President, Finance and Chief Financial Officer
of AST Trust Company (Canada)
David R. Carter Toll free in Canada and United States: 1-800-387-0825
Chief Operating Officer
In Toronto: 416-682-3860
Bradley S. Cobbledick
Vice-President, Technical Services general counsel
J. Bradley Duke Fogler, Rubinoff LLP
Senior Vice-President, Manufacturing

George S. Housh auditors

Vice-President, Manufacturing, Concrete Products BDO Canada LLP
Marilia Macias
Controller operations
Brampton Brick Limited
Antonio M. Neves
225 Wanless Drive, Brampton, Ontario
Vice-President, Sales, Concrete Products
455 Rodick Road, Markham, Ontario
Judy H. Pryma 2108 Flos Road Four East, Hillsdale, Ontario
Vice-President, Sales, Clay Products
3007 County Road 29, Brockville, Ontario
1038 Rife Road, Cambridge, Ontario
4200, Marcel-Lacasse, Boisbriand, Québec
Brampton Brick Inc.
1256 East County Road 950 North,
Farmersburg, Indiana
Oaks Concrete Products Inc.
51744 Pontiac Trail, Wixom, Michigan
Universal Resource Recovery Inc.
615 Rusholme Road, Welland, Ontario

51
225 Wanless Drive
Brampton, ON L7A 1E9
www.bramptonbrick.com