Colabor : 1st quarter 2023 (Ended March 23 rd, 2024) - Quarterly Financial

Interim condensed consolidated Financial Statements (unaudited)

First quarter of 2024

12-week period ended March 23, 2024 (in thousands of Canadian dollars)

Notice of No Auditor Review of Interim Condensed Consolidated Financial Statements

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors, PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., have not performed a review of the unaudited interim condensed consolidated financial statements for the 12-week period ended March 23, 2024.

Interim Condensed Consolidated Statements of Loss (unaudited)

For the 12-week periods ended March 23, 2024 and March 25, 2023

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

		12 weeks
		2024	2023
	Notes	$	$
Sales		131,200	133,923
Cost of goods sold		106,622	108,828
Gross margin		24,578	25,095
Operating expenses	3	19,711	19,610
Depreciation and amortization	4	4,571	4,461
Costs not related to current operations		99	49
Operating earnings		197	975
Financial expenses	5	2,589	1,242
Loss before taxes		(2,392)	(267)
Income taxes recovery		(616)	(107)
Net loss from continuing operations		(1,776)	(160)
Net loss from discontinued operations		-	-
Net loss		(1,776)	(160)
Basic and diluted net loss per share from continuing operations	6	(0.02)	-
Basic and diluted net loss per share from discontinued operations	6	-	-
Basic and diluted net loss per share	6	(0.02)	-

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

2

Interim Condensed Consolidated Statements of Comprehensive Loss (unaudited)

For the 12-week periods ended March 23, 2024 and March 25, 2023

(in thousands of Canadian dollars)

	12 weeks
	2024	2023
	$	$
Net loss from continuing operations	(1,776)	(160)
Other comprehensive income (loss) that will be subsequently reclassified to earnings:
Changes in fair value of interest rate swap designated as cash flow hedge	(73)	(197)
Income taxes	19	52
Other comprehensive loss from continuing operations	(54)	(145)
Comprehensive loss from continuing operations	(1,830)	(305)
Net loss from discontinued operations	-	-
Other comprehensive income (loss) that will not be subsequently reclassified to earnings:
Remeasurement of defined benefit pension obligation	-	(51)
Income taxes	-	13
Other comprehensive loss from discontinued operations	-	(38)
Comprehensive loss from discontinued operations	-	(38)
Comprehensive loss	(1,830)	(343)

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

3

Interim Condensed Consolidated Statements of Changes in Equity (unaudited)

For the 12-week periods ended March 23, 2024 and March 25, 2023

(in thousands of Canadian dollars)

				Accumulated
	Share Contributed		other
	Deficit	comprehensive	Total equity
	capital	surplus	income
	$	$	$	$	$
Balance as at December 30, 2023	257,054	6,753	(155,632)	304	108,479
Net loss	-	-	(1,776)	-	(1,776)
Other comprehensive loss	-	-	-	(54)	(54)
Comprehensive loss	-	-	(1,776)	(54)	(1,830)
Stock-based compensation	-	15	-	-	15
Balance as at March 23, 2024	257,054	6,768	(157,408)	250	106,664

				Accumulated
	Share Contributed		other
	Deficit	comprehensive	Total equity
	capital	surplus	income
	$	$	$	$	$
Balance as at December 31, 2022	257,008	6,508	(161,166)	544	102,894
Net loss	-	-	(160)	-	(160)
Other comprehensive loss	-	-	(38)	(145)	(183)
Comprehensive loss	-	-	(198)	(145)	(343)
Stock-based compensation	-	89	-	-	89
Balance as at March 25, 2023	257,008	6,597	(161,364)	399	102,640

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

4

Interim Condensed Consolidated Statements of Cash Flows (unaudited)

For the 12-week periods ended March 23, 2024 and March 25, 2023

(in thousands of Canadian dollars)

		12 weeks
		2024	2023
	Notes	$	$
Cash flows from operating activities		(1,776)
Net loss from continuing operations		(160)
Non-cash items		(634)
Deferred income taxes		(200)
Depreciation and amortization	4	4,571	4,461
Financial expenses	5	2,589	1,242
Other		16	89
		4,766	5,432
Net changes in working capital		6,979	(4,625)
		11,745	807
Cash flows from investing activities		(1,020)
Acquisitions of property, plant and equipment		(1,377)
Acquisitions of intangible assets	7	(2,501)	(133)
Other		(149)	126
		(3,670)	(1,384)
Cash flows from financing activities		(3,000)
Net change in the credit facility	8	4,000
Lease liability payments		(1,897)	(2,605)
Financing cost paid		(230)	-
Financial expenses paid		(1,192)	(1,041)
		(6,319)	354
Net change in cash and cash equivalents from continuing operations		1,756	(223)
Net change in cash and cash equivalents from discontinued operations		-	-
Bank indebtedness at the beginning		(3,000)	(1,275)
Bank indebtedness at the end		(1,244)	(1,498)

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

5

Interim Condensed Consolidated Statements of Financial Position (unaudited)

(in thousands of Canadian dollars)

		As at	As at
		March 23,	December 30,
		2024	2023
	Notes	$	$
Assets
Current assets		47,436
Trade and other receivables		48,544
Inventories		47,453	50,730
Pension assets		403	403
Other	9	2,859	1,731
		98,151	101,408
Non-current assets		23,296
Property, plant and equipment		23,510
Intangible assets	7	20,359	18,498
Right-of-use assets		105,353	106,954
Goodwill		73,072	73,072
Deferred tax assets		2,789	2,118
Other		1,817	2,270
		226,686	226,422
Total assets		324,837	327,830
Liabilities
Current liabilities		1,244
Bank indebtedness		3,000
Trade and other payables		48,383	45,293
Current portion of long-term debt	8	3,000	3,000
Current portion of lease liabilities		7,669	6,205
Other	9	951	939
		61,247	58,437
Non-current liabilities		52,332
Long-term debt	8	55,522
Lease liabilities		103,560	104,732
Contingent consideration	7	356	-
Deferred tax liabilities		678	660
		156,926	160,914
Total liabilities		218,173	219,351
Equity		106,664
Equity attributable to shareholders		108,479
Total liabilities and equity		324,837	327,830

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

6

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

For the 12-week periods ended March 23, 2024 and March 25, 2023

(in thousands of Canadian dollars, except number of shares and per share data)

1 Nature of operations

Colabor Group Inc. (hereinafter the "Company") is a distributor and wholesaler of food and related products serving the hotel, restaurant and institutional markets or "HRI" in Quebec and in the Atlantic provinces, as well as the retail market.

The Company is incorporated under the Canada Business Corporations Act. It is a Canadian company headquartered at 1601, Rene-Descartes street, Suite 103, Saint-Bruno-de-Montarville, Quebec, J3V 0A6. The Company's shares are listed on the Toronto Stock Exchange under the symbol GCL.

2 Material accounting policies

General information

These interim condensed consolidated financial statements of the Company were prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting. Some information and notes disclosure in the consolidated annual financial statements have not been presented or are summarized when they are not considered essential to understanding the Company's interim financial statements. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 30, 2023.

These interim condensed consolidated financial statements have been prepared in accordance with the same accounting policies that have been adopted by the Company in its consolidated financial statements for the year ended December 30, 2023, except for the accounting policy as described below. The accounting policies have been applied consistently for all the periods presented.

The interim condensed consolidated financial statements have been prepared on a going concern and historical cost basis, except for certain financial instruments and pension plan's assets that are measured at fair value, and for defined pension obligations and provisions that have been recorded at present value. Financial information is presented in Canadian dollars, which is the Company's functional currency.

The net loss for these interim financial statements are not necessarily indicative of the full-year net earnings. The seasonal nature is a significant factor in its quarterly results. Lower earnings are recorded during the first quarter. The second and third quarters are generally recording higher earnings than those recorded during the first quarter. Finally, the fourth quarter is the most important one, since there are 16 weeks of operations in the last quarter compared to 12 weeks in the previous quarters.

These interim condensed consolidated financial statements have been approved by the Company's Board of Directors on May 2, 2024. The Company's auditors have not performed a review of these unaudited interim condensed consolidated financial statements.

7

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

For the 12-week periods ended March 23, 2024 and March 25, 2023

(in thousands of Canadian dollars, except number of shares and per share data)

Operating segments

As at December 30, 2023, the Company had two operating segments: distribution of food products (the Distribution segment) and sales of general food-related products to distributors (the Wholesale segment). On December 31, 2023, the Company has aggregated these two business segments into one segment due to the operational and organizational changes, including the move to new facilities in Saint-Bruno-de-Montarville which now serve a common clientele. The Company's strategic vision is developing in a more global approach to activities. Management now evaluates the Company's operating results as a whole and make decisions on this basis, unlike previously by segment separately. In addition, separate financial information for the Wholesale segment is no longer available.

3		Operating expenses
			12 weeks
			2024	2023
			$	$
		Employee compensation	13,801	13,225
		Service contracts and variable portion related to lease contracts	680	1,236
		Repair and maintenance	840	851
		Utilities	1,011	1,050
		Other expenses	3,379	3,248
			19,711	19,610
4	Depreciation and amortization
			12 weeks
			2024	2023
			$	$
		Depreciation of property, plant and equipment	716	1,006
		Amortization of intangible assets	996	945
		Depreciation of right-of-use assets	2,859	2,510
			4,571	4,461

8

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

For the 12-week periods ended March 23, 2024 and March 25, 2023

(in thousands of Canadian dollars, except number of shares and per share data)

5 Financial expenses

	12 weeks
	2024	2023
	$	$
Interest on credit facility	670	476
Interest on subordinated debt	250	250
Interest on lease obligations	1,548	378
Other	121	138
Financial expenses	2,589	1,242

6 Net loss per share

Loss per share
The following table presents the basic and diluted loss per share:
	2024	2023
	$	$
Net loss from continuing operations	(1,776)	(160)
Net loss from discontinued operations	-	-
Net loss	(1,776)	(160)
Weighted average number of basic and diluted outstanding shares	101,986,464	101,954,885
Basic and diluted net loss per share from continuing operations	(0.02)	-
Basic and diluted net loss per share from discontinued operations	-	-
Basic and diluted net loss per share	(0.02)	-

As at March 23, 2024, 4,159,352 stock options (4,698,982 stock options in 2023) were not included in the calculation of diluted loss per share for the 12-week periods because of their non-dilutive effect.

7 Intangible assets

On March 15, 2024, the Company has acquired customer contracts related to foodservice activities from Beaudry & Cadrin Inc. for an amount of $3,000, of which $2,500 was paid at the effective date and $500 will be payable in contingent consideration based on the achievement of certain income thresholds.

9

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

For the 12-week periods ended March 23, 2024 and March 25, 2023

(in thousands of Canadian dollars, except number of shares and per share data)

8 Long-term debt

	As at	As at
	March 23,	December 30,
	2024	2023
	$	$
Credit facility (a)
Term loan	21,750	21,750
Revolving credit	19,000	22,000
Subordinated debts	15,000	15,000
Less unamortized financing costs	(418)	(228)
Total debt	55,332	58,522
Current portion of long-term debt	3,000	3,000
Total long-term debt	52,332	55,522

(a) Credit facility

On March 18, 2024, the Company entered into an amended and restated senior secured credit facility for a total amount of $71,750 including a term loan of $21,750 and a revolving credit of $50,000, of which $5,000 in operating swingline. The amended and restated facility matures on February 18, 2028. The facility bears interest at the cost of funds, plus a margin varying between 1.75% to 2.75% depending on the Company's financial ratios. The credit facility is guaranteed by the assets of the Company and by those of some of its subsidiaries and provides limits on the operations and activities, particularly regarding the authorized investments as well as some ratios essentially related to consolidated adjusted EBITDA, financial expenses and total debt which were met as at March 23, 2024. The term loan is repayable quarterly, for an annual amount of $3,000. By mutual agreement, the credit facility may be increased by $35,000 and thus authorizing the repayment at maturity of the subordinated debt if the related conditions are met. As at March 23, 2024, the availability under the credit facility is $24,986.

Financing costs of $230 were incurred during the 12-week period ended on March 23, 2024, in connection with the execution of this credit agreement.

9 Financial Instruments

A) Fair value

Fair value of cash and cash equivalent, trade and other receivables as well as trade and other payables is equivalent to the carrying amount due to their short-term maturity. Therefore, the time value of money is non-significant.

The carrying amount and fair value of the other financial instruments in the consolidated statements of financial position are as follows:

10