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<br /> ProvenSteadyGrowth<br /> Toromont Industries Ltd.<br /> 2016 Annual Report<br /> On tens of thousands of customer sites across many market<br /> sectors in Canada and the United States, Toromont Industries<br /> Ltd. has demonstrated the value and necessity of its products<br /> and service offerings.<br /> When only proven capabilities will do, Toromont is ready to<br /> serve from over 100 locations employing more than 3,600<br /> subject matter experts.<br /> Customers know us by our trading names:<br /> Shareholders know us by our Toronto Stock Exchange<br /> common share trading symbol TIH.<br /> Equipment Group<br /> We are a market leader in the supply of<br /> specialized mobile equipment and industrial<br /> engines. We provide sales and rental solutions as<br /> well as comprehensive product support through<br /> Toromont Cat, Battlefield – The Cat Rental<br /> Store and SITECH Mid-Canada Ltd. in Ontario,<br /> Newfoundland, Manitoba and most of Lab<a title="ToroAR16_170228 page 1" href="http://viewer.zmags.com/publication/9d93b23d?page=1"> ProvenSteadyGrowth Toromont Industries Ltd. 2016</a> <a title="ToroAR16_170228 page 2" href="http://viewer.zmags.com/publication/9d93b23d?page=2"> On tens of thousands of customer sites across man</a> <a title="ToroAR16_170228 page 3" href="http://viewer.zmags.com/publication/9d93b23d?page=3"> This is Toromont. CIMCO’s Darren Blundon ins</a> <a title="ToroAR16_170228 page 4" href="http://viewer.zmags.com/publication/9d93b23d?page=4"> Toromont Cat supplied this Cat 924H wheel loader </a> <a title="ToroAR16_170228 page 5" href="http://viewer.zmags.com/publication/9d93b23d?page=5"> Toromont’s customer relationships are diverse an</a> <a title="ToroAR16_170228 page 6" href="http://viewer.zmags.com/publication/9d93b23d?page=6"> Our Employees 4 Toromont 2</a> <a title="ToroAR16_170228 page 7" href="http://viewer.zmags.com/publication/9d93b23d?page=7"> Our employees create value for our customers and</a> <a title="ToroAR16_170228 page 8" href="http://viewer.zmags.com/publication/9d93b23d?page=8"> Our Shareholders 6 Toromont 201</a> <a title="ToroAR16_170228 page 9" href="http://viewer.zmags.com/publication/9d93b23d?page=9"> 6.2% Toromont strives to create value for shareho</a> <a title="ToroAR16_170228 page 10" href="http://viewer.zmags.com/publication/9d93b23d?page=10"> Fellow Shareholders, Balance is the key to our b</a> <a title="ToroAR16_170228 page 11" href="http://viewer.zmags.com/publication/9d93b23d?page=11"> Refurbishing Highway H 0 </a> <a title="ToroAR16_170228 page 12" href="http://viewer.zmags.com/publication/9d93b23d?page=12"> Message to Shareholders Florida’s largest ice rin</a> <a title="ToroAR16_170228 page 13" href="http://viewer.zmags.com/publication/9d93b23d?page=13"> Building a more effective workforce is another ke</a> <a title="ToroAR16_170228 page 14" href="http://viewer.zmags.com/publication/9d93b23d?page=14"> Message to Shareholders available at the ri</a> <a title="ToroAR16_170228 page 15" href="http://viewer.zmags.com/publication/9d93b23d?page=15"> Canada Malting Brews Up Energy Savings With Help </a> <a title="ToroAR16_170228 page 16" href="http://viewer.zmags.com/publication/9d93b23d?page=16"> Message to Shareholders excellent quality a</a> <a title="ToroAR16_170228 page 17" href="http://viewer.zmags.com/publication/9d93b23d?page=17"> Summary Over the past year, Toromont has achieved</a> <a title="ToroAR16_170228 page 18" href="http://viewer.zmags.com/publication/9d93b23d?page=18"> Sustainability Report By demonstrating leadershi</a> <a title="ToroAR16_170228 page 19" href="http://viewer.zmags.com/publication/9d93b23d?page=19"> Safety At Toromont, our most important objective </a> <a title="ToroAR16_170228 page 20" href="http://viewer.zmags.com/publication/9d93b23d?page=20"> Sustainability Report appropriate decisions</a> <a title="ToroAR16_170228 page 21" href="http://viewer.zmags.com/publication/9d93b23d?page=21"> Workforce Development Although our industry is as</a> <a title="ToroAR16_170228 page 22" href="http://viewer.zmags.com/publication/9d93b23d?page=22"> Sustainability Report Diversity Workforce di</a> <a title="ToroAR16_170228 page 23" href="http://viewer.zmags.com/publication/9d93b23d?page=23"> Our fleet of vehicles is the single-largest contri</a> <a title="ToroAR16_170228 page 24" href="http://viewer.zmags.com/publication/9d93b23d?page=24"> Corporate Governance A strong and effective corp</a> <a title="ToroAR16_170228 page 25" href="http://viewer.zmags.com/publication/9d93b23d?page=25"> Board of Directors L to R: James W. Gill, Robert</a> <a title="ToroAR16_170228 page 26" href="http://viewer.zmags.com/publication/9d93b23d?page=26"> Executive Operating Team L to R: David C. Wether</a> <a title="ToroAR16_170228 page 27" href="http://viewer.zmags.com/publication/9d93b23d?page=27"> Management’s Discussion & Analysis </a> <a title="ToroAR16_170228 page 28" href="http://viewer.zmags.com/publication/9d93b23d?page=28"> Management’s Discussion and Analysis This Manage</a> <a title="ToroAR16_170228 page 29" href="http://viewer.zmags.com/publication/9d93b23d?page=29"> Corporate Profile and Business Segmentation As at</a> <a title="ToroAR16_170228 page 30" href="http://viewer.zmags.com/publication/9d93b23d?page=30"> Primary Objective and Major Strategies The prima</a> <a title="ToroAR16_170228 page 31" href="http://viewer.zmags.com/publication/9d93b23d?page=31"> Consolidated Annual Operating Results ($ thousa</a> <a title="ToroAR16_170228 page 32" href="http://viewer.zmags.com/publication/9d93b23d?page=32"> Business Segment Annual Operating Results The ac</a> <a title="ToroAR16_170228 page 33" href="http://viewer.zmags.com/publication/9d93b23d?page=33"> the competitive landscape which adversely affecte</a> <a title="ToroAR16_170228 page 34" href="http://viewer.zmags.com/publication/9d93b23d?page=34"> CIMCO ($ thousands) Package sales Product suppo</a> <a title="ToroAR16_170228 page 35" href="http://viewer.zmags.com/publication/9d93b23d?page=35"> Consolidated Financial Condition The Company has</a> <a title="ToroAR16_170228 page 36" href="http://viewer.zmags.com/publication/9d93b23d?page=36"> granted prior to 2013 have a seven-year term. At </a> <a title="ToroAR16_170228 page 37" href="http://viewer.zmags.com/publication/9d93b23d?page=37"> cancelled 89,244 common shares for $2.6 million (</a> <a title="ToroAR16_170228 page 38" href="http://viewer.zmags.com/publication/9d93b23d?page=38"> Principal Components of Cash Flow Cash from opera</a> <a title="ToroAR16_170228 page 39" href="http://viewer.zmags.com/publication/9d93b23d?page=39"> Outlook The Equipment Group’s parts and service </a> <a title="ToroAR16_170228 page 40" href="http://viewer.zmags.com/publication/9d93b23d?page=40"> Key Performance Measures Management reviews and </a> <a title="ToroAR16_170228 page 41" href="http://viewer.zmags.com/publication/9d93b23d?page=41"> Consolidated Fourth Quarter Operating Results T</a> <a title="ToroAR16_170228 page 42" href="http://viewer.zmags.com/publication/9d93b23d?page=42"> Business Segment Fourth Quarter Operating Results</a> <a title="ToroAR16_170228 page 43" href="http://viewer.zmags.com/publication/9d93b23d?page=43"> CIMCO Three months ended December 31 ($ thousand</a> <a title="ToroAR16_170228 page 44" href="http://viewer.zmags.com/publication/9d93b23d?page=44"> Quarterly Results The following table summarizes</a> <a title="ToroAR16_170228 page 45" href="http://viewer.zmags.com/publication/9d93b23d?page=45"> Selected Annual Information ($ thousands, excep</a> <a title="ToroAR16_170228 page 46" href="http://viewer.zmags.com/publication/9d93b23d?page=46"> strategies such as expanding the Company’s custom</a> <a title="ToroAR16_170228 page 47" href="http://viewer.zmags.com/publication/9d93b23d?page=47"> overruns. In addition, the manufacturer may, in c</a> <a title="ToroAR16_170228 page 48" href="http://viewer.zmags.com/publication/9d93b23d?page=48"> Critical Accounting Policies and Estimates The C</a> <a title="ToroAR16_170228 page 49" href="http://viewer.zmags.com/publication/9d93b23d?page=49"> Post-Employment Benefit Plans incl</a> <a title="ToroAR16_170228 page 50" href="http://viewer.zmags.com/publication/9d93b23d?page=50"> Disclosure Controls and Procedures and Internal C</a> <a title="ToroAR16_170228 page 51" href="http://viewer.zmags.com/publication/9d93b23d?page=51"> Net Debt to Total Capitalization Net debt to tota</a> <a title="ToroAR16_170228 page 52" href="http://viewer.zmags.com/publication/9d93b23d?page=52"> Non-Cash Working Capital Non-cash working capital</a> <a title="ToroAR16_170228 page 53" href="http://viewer.zmags.com/publication/9d93b23d?page=53"> Return on Capital Employed (“ROCE”) ROCE is utili</a> <a title="ToroAR16_170228 page 54" href="http://viewer.zmags.com/publication/9d93b23d?page=54"> Management’s Report The preparation and presenta</a> <a title="ToroAR16_170228 page 55" href="http://viewer.zmags.com/publication/9d93b23d?page=55"> Independent Auditors’ Report To the Shareholders</a> <a title="ToroAR16_170228 page 56" href="http://viewer.zmags.com/publication/9d93b23d?page=56"> Consolidated Statements of Financial Position A</a> <a title="ToroAR16_170228 page 57" href="http://viewer.zmags.com/publication/9d93b23d?page=57"> Consolidated Income Statements Years ended Dece</a> <a title="ToroAR16_170228 page 58" href="http://viewer.zmags.com/publication/9d93b23d?page=58"> Consolidated Statements of Comprehensive Income </a> <a title="ToroAR16_170228 page 59" href="http://viewer.zmags.com/publication/9d93b23d?page=59"> Consolidated Statements of Cash Flows Years end</a> <a title="ToroAR16_170228 page 60" href="http://viewer.zmags.com/publication/9d93b23d?page=60"> Consolidated Statements of Changes in Equity Sh</a> <a title="ToroAR16_170228 page 61" href="http://viewer.zmags.com/publication/9d93b23d?page=61"> Notes to the Consolidated Financial Statements D</a> <a title="ToroAR16_170228 page 62" href="http://viewer.zmags.com/publication/9d93b23d?page=62"> circumstance is measured based on the relative fa</a> <a title="ToroAR16_170228 page 63" href="http://viewer.zmags.com/publication/9d93b23d?page=63"> • Accounts receivable are classified as l</a> <a title="ToroAR16_170228 page 64" href="http://viewer.zmags.com/publication/9d93b23d?page=64"> The Company bases its impairment </a> <a title="ToroAR16_170228 page 65" href="http://viewer.zmags.com/publication/9d93b23d?page=65"> vesting, each tranche is considered to be a separ</a> <a title="ToroAR16_170228 page 66" href="http://viewer.zmags.com/publication/9d93b23d?page=66"> Standards Issued But Not Yet Effective A number o</a> <a title="ToroAR16_170228 page 67" href="http://viewer.zmags.com/publication/9d93b23d?page=67"> analysis as required. Management reviews its esti</a> <a title="ToroAR16_170228 page 68" href="http://viewer.zmags.com/publication/9d93b23d?page=68"> 3. Accounts Receivable Trade receivables Less:</a> <a title="ToroAR16_170228 page 69" href="http://viewer.zmags.com/publication/9d93b23d?page=69"> 5. Property, Plant and Equipment and Rental Equip</a> <a title="ToroAR16_170228 page 70" href="http://viewer.zmags.com/publication/9d93b23d?page=70"> 6. Other Assets Equipment sold with guaranteed</a> <a title="ToroAR16_170228 page 71" href="http://viewer.zmags.com/publication/9d93b23d?page=71"> calculation using cash flow projections from financ</a> <a title="ToroAR16_170228 page 72" href="http://viewer.zmags.com/publication/9d93b23d?page=72"> 9. Long-Term Debt All debt is unsecured. 3.71</a> <a title="ToroAR16_170228 page 73" href="http://viewer.zmags.com/publication/9d93b23d?page=73"> holder, other than the acquiring person and relat</a> <a title="ToroAR16_170228 page 74" href="http://viewer.zmags.com/publication/9d93b23d?page=74"> The fair value was determined using the discounte</a> <a title="ToroAR16_170228 page 75" href="http://viewer.zmags.com/publication/9d93b23d?page=75"> default on their obligations. In order to minimiz</a> <a title="ToroAR16_170228 page 76" href="http://viewer.zmags.com/publication/9d93b23d?page=76"> 14. Income Taxes Significant components of the pr</a> <a title="ToroAR16_170228 page 77" href="http://viewer.zmags.com/publication/9d93b23d?page=77"> The movement in net deferred tax assets was as fo</a> <a title="ToroAR16_170228 page 78" href="http://viewer.zmags.com/publication/9d93b23d?page=78"> 17. Stock-based Compensation The Company maintai</a> <a title="ToroAR16_170228 page 79" href="http://viewer.zmags.com/publication/9d93b23d?page=79"> The fair value of the stock options granted durin</a> <a title="ToroAR16_170228 page 80" href="http://viewer.zmags.com/publication/9d93b23d?page=80"> 18. Employee Future Benefits Defined Contribution </a> <a title="ToroAR16_170228 page 81" href="http://viewer.zmags.com/publication/9d93b23d?page=81"> Risks </a> <a title="ToroAR16_170228 page 82" href="http://viewer.zmags.com/publication/9d93b23d?page=82"> The changes in the fair value of assets and the p</a> <a title="ToroAR16_170228 page 83" href="http://viewer.zmags.com/publication/9d93b23d?page=83"> The fair values of the plan assets was determined</a> <a title="ToroAR16_170228 page 84" href="http://viewer.zmags.com/publication/9d93b23d?page=84"> 20. Supplemental Cash Flow Information Net cha</a> <a title="ToroAR16_170228 page 85" href="http://viewer.zmags.com/publication/9d93b23d?page=85"> 22. Segmented Information The Company has two re</a> <a title="ToroAR16_170228 page 86" href="http://viewer.zmags.com/publication/9d93b23d?page=86"> Selected statements of financial position informat</a> <a title="ToroAR16_170228 page 87" href="http://viewer.zmags.com/publication/9d93b23d?page=87"> 23. Related Party Disclosures Key management per</a> <a title="ToroAR16_170228 page 88" href="http://viewer.zmags.com/publication/9d93b23d?page=88"> Ten-Year Financial Review (1) For the years </a> <a title="ToroAR16_170228 page 89" href="http://viewer.zmags.com/publication/9d93b23d?page=89"> 2012(6) 2011 </a> <a title="ToroAR16_170228 page 90" href="http://viewer.zmags.com/publication/9d93b23d?page=90"> Corporate Information Toromont Cat 3131 Highway</a> <a title="ToroAR16_170228 page 91" href="http://viewer.zmags.com/publication/9d93b23d?page=91"> How to Get in Touch With Us Tel: 416.667.5511 Fa</a> <a title="ToroAR16_170228 page 92" href="http://viewer.zmags.com/publication/9d93b23d?page=92"> Toromont Industries Ltd. Corporate Office 3131 Hi</a>