CONSOLIDATED FINANCIAL STATEMENTS

Linamar Corporation

December 31, 2022 and December 31, 2021

(in thousands of dollars)

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TABLE OF CONTENTS

Management’s Responsibility for the Consolidated Financial Statements ..................................................................................................... 3

Independent Auditor’s Report ......................................................................................................................................................................... 4
Consolidated Statements of Financial Position .............................................................................................................................................. 7
Consolidated Statements of Earnings ............................................................................................................................................................ 8
Consolidated Statements of Comprehensive Earnings .................................................................................................................................. 9
Consolidated Statements of Changes in Equity ........................................................................................................................................... 10
Consolidated Statements of Cash Flows...................................................................................................................................................... 11
Notes to the Consolidated Financial Statements
1 General Information ....................................................................................................................................................................... 12
2 Basis of Preparation ....................................................................................................................................................................... 12
3 Significant Accounting Policies ...................................................................................................................................................... 12
4 Changes in Accounting Policies ..................................................................................................................................................... 21
5 Critical Accounting Estimates and Judgements ............................................................................................................................. 22
6 Sale of Receivables ....................................................................................................................................................................... 23
7 Inventories...................................................................................................................................................................................... 23
8 Income Taxes................................................................................................................................................................................. 24
9 Property, Plant and Equipment ...................................................................................................................................................... 26
10 Intangible Assets ............................................................................................................................................................................ 28
11 Goodwill ......................................................................................................................................................................................... 28
12 Provisions....................................................................................................................................................................................... 29
13 Long-Term Debt ............................................................................................................................................................................. 30
14 Capital Stock .................................................................................................................................................................................. 31
15 Revenue from Contracts with Customers ...................................................................................................................................... 31
16 Expenses by Nature ....................................................................................................................................................................... 32
17 Employee Benefits ......................................................................................................................................................................... 33
18 Share-Based Compensation .......................................................................................................................................................... 33
19 Other Income and (Expenses) ....................................................................................................................................................... 34
20 Finance Income and (Expenses) ................................................................................................................................................... 34
21 Earnings per Share ........................................................................................................................................................................ 34
22 Commitments ................................................................................................................................................................................. 35
23 Related Party Transactions ............................................................................................................................................................ 35
24 Segmented Information .................................................................................................................................................................. 35
25 Supplemental Cash Flow Information ............................................................................................................................................ 37
26 Business Acquisitions .................................................................................................................................................................... 38
27 Financial Instruments ..................................................................................................................................................................... 40

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MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED
FINANCIAL STATEMENTS

The management of Linamar Corporation (the “Company”) is responsible for the preparation of all information included in this annual report.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, and necessarily
include some amounts that are based on management’s best estimates and judgements. Financial information included elsewhere in this
annual report is consistent with that in the consolidated financial statements.
Management maintains a system of internal accounting controls to provide reasonable assurance that the consolidated financial statements
are accurate and reliable and that the assets are safeguarded from loss or unauthorized use.
The Company’s independent auditor, appointed by the shareholders, has prepared their report, which outlines the scope of their
examination and expresses their opinion on the consolidated financial statements.
The Board of Directors, through its Audit Committee, is responsible for ensuring that management fulfills its financial reporting
responsibilities. The Audit Committee is composed of independent directors who are not employees of the Company.
The Audit Committee meets periodically with management and with the auditors to review and to discuss accounting policy, auditing and
financial reporting matters. The Committee reports its findings to the Board of Directors for their consideration in reviewing and approving
the consolidated financial statement for issuance to the shareholders.

(Signed) “Linda Hasenfratz” (Signed) “Dale Schneider”

Linda Hasenfratz Dale Schneider
Chief Executive Officer Chief Financial Officer

March 8, 2023

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INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Linamar Corporation

Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Linamar
Corporation and its subsidiaries (together, the Company) as at December 31, 2022 and 2021, and its financial performance and its cash
flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (IFRS).
What we have audited
The Company's consolidated financial statements comprise:
 the consolidated statements of financial position as at December 31, 2022 and 2021;
 the consolidated statements of earnings for the years then ended;
 the consolidated statements of comprehensive earnings for the years then ended;
 the consolidated statements of changes in equity for the years then ended;
 the consolidated statements of cash flows for the years then ended; and
 the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Goodwill impairment assessment for MacDon Group of Companies Our approach to addressing the matter involved the following procedures,
and Montupet Group of Companies cash generating units (CGUs) amongst others:
 Evaluated how management determined the recoverable amounts
Refer to Note 3 - Significant accounting policies and Note 11 - of the MacDon Group of Companies and Montupet Group of
Goodwill to the consolidated financial statements. Companies CGUs, which included the following:
 Evaluated the appropriateness of the method used and the
Management performs an impairment assessment annually for goodwill, or mathematical accuracy of the models for the five year
more frequently when there is an indication of impairment. An impairment period.
loss is recognized if the carrying value of a CGU or grouped CGUs to which  Evaluated the reasonableness of the forecast growth
the goodwill relates exceeds its recoverable amount. The carrying values rates, and forecasted operating costs and capital
of goodwill for the MacDon Group of Companies and Montupet Group of expenditures applied by management in the models by (i)
Companies CGUs are $388.8 million and $438.4 million respectively. The comparing to the approved budget, (ii) comparing to
recoverable amounts of those CGUs were determined on a value in use current and past performance of the CGUs, (iii) assessing
calculation (the method) using discounted future operating cash flows (the consistency with available third party published industry
models) covering a five-year period. The key assumptions used in the data, (iv) evaluating whether these assumptions were
models included forecast growth rates, discount rates, forecasted operating consistent with management’s strategic plans.
costs and capital expenditures. No impairment loss was recognized as a  Professionals with specialized skill and knowledge in the
result of the current year impairment assessment. field of valuation assisted in testing the reasonableness of
the discount rates applied by management based on
available data of comparable companies.
We considered this a key audit matter due to the judgement made by  Tested the underlying data used in the models.
management in determining the recoverable amounts of the CGUs,  Tested the disclosures made in the consolidated financial
including the use of key assumptions. This has resulted in a high degree of statements related to goodwill.
subjectivity and audit effort in performing audit procedures to test the key

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INDEPENDENT AUDITOR’S REPORT

assumptions. Professionals with specialized skill and knowledge in the field

of valuation assisted us in performing our procedures.

Other information
Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis and the
information, other than the consolidated financial statements and our auditor’s report thereon, included in the annual report.
Our opinion on the consolidated financial statements does not cover the other information and we 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.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and
for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management
either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
 Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
 Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, 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 the disclosures, and
whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.

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INDEPENDENT AUDITOR’S REPORT

 Obtain 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 responsible for the direction, supervision and performance of
the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Aneil Manji.

(Signed) “PricewaterhouseCoopers LLP”

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario
March 8, 2023

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LINAMAR CORPORATION
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)

December 31 December 31
2022 2021
$ $
ASSETS
Cash and cash equivalents 860,515 928,428
Accounts and other receivables (Note 27) 1,160,509 870,551
Inventories (Note 7) 1,509,302 1,066,456
Income taxes recoverable (Note 8) 76,733 23,188
Current portion of long-term receivables (Note 27) 24,754 43,883
Current portion of derivative financial instruments (Note 27) 14,160 9,099
Prepaid expenses and other current assets 47,313 40,588
Current Assets 3,693,286 2,982,193

Long-term receivables (Notes 23 and 27) 47,630 186,186

Derivative financial instruments (Note 27) 2,247 1,031
Property, plant and equipment (Note 9) 2,793,091 2,415,916
Investments 18,185 14,375
Deferred tax assets (Note 8) 170,115 130,925
Intangible assets (Note 10) 902,918 806,476
Goodwill (Note 11) 948,919 853,288
Assets 8,576,391 7,390,390

LIABILITIES
Accounts payable and accrued liabilities (Note 27) 2,011,694 1,603,466
Provisions (Note 12) 35,599 35,910
Income taxes payable (Note 8) 50,425 77,390
Current portion of long-term debt (Note 13) 26,733 21,055
Current portion of derivative financial instruments (Note 27) 31,974 7,299
Current Liabilities 2,156,425 1,745,120

Long-term debt (Note 13) 1,281,641 770,490

Derivative financial instruments (Note 27) 3,677 1,044
Deferred tax liabilities (Note 8) 322,937 274,940
Liabilities 3,764,680 2,791,594

EQUITY
Capital stock (Note 14) 138,925 146,204
Retained earnings 4,597,513 4,449,643
Contributed surplus 31,359 28,816
Accumulated other comprehensive earnings (loss) 43,914 (25,867)
Equity 4,811,711 4,598,796
Liabilities and Equity 8,576,391 7,390,390

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

On behalf of the Board of Directors:

(Signed) “Linda Hasenfratz” (Signed) “Jim Jarrell”

Linda Hasenfratz Jim Jarrell

Director Director

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LINAMAR CORPORATION
Consolidated Statements of Earnings
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except per share figures)

2022 2021
$ $
Sales (Note 15) 7,917,911 6,536,574
Cost of sales (Note 16) 6,943,101 5,598,922
Gross Margin 974,810 937,652

Selling, general and administrative (Note 16) 411,176 349,649

Other income and (expenses) (Note 19) 31,197 13,230
Operating Earnings (Loss) 594,831 601,233

Share of net earnings (loss) of investments accounted for using the equity method (Note 23) (6,086) (28,345)
Finance income and (expenses) (Note 20) (25,657) (10,722)
Net Earnings (Loss) before Income Taxes 563,088 562,166

Provision for (recovery of) income taxes (Note 8) 136,894 141,608

Net Earnings (Loss) for the Year 426,194 420,558

Net Earnings (Loss) per Share: (Note 21)

Basic 6.67 6.43
Diluted 6.67 6.41

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

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LINAMAR CORPORATION
Consolidated Statements of Comprehensive Earnings
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars)

2022 2021
$ $
Net Earnings (Loss) for the Year 426,194 420,558

Items that may be reclassified subsequently to net income

Unrealized gains (losses) on translating financial statements of foreign operations 84,120 (155,212)
Change in unrealized gains (losses) on net investment hedges (Note 27) (3,072) 45,558
Change in unrealized gains (losses) on cash flow hedges (Note 27) (33,798) (9,336)
Change in cost of hedging (Note 27) 4,441 (2,962)
Reclassification to earnings of gains (losses) on cash flow hedges (Note 27) 21,750 (15,641)
Tax impact of above (Note 8) 3,756 3,841
Other Comprehensive Earnings (Loss) 77,197 (133,752)
Comprehensive Earnings (Loss) for the Year 503,391 286,806

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

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LINAMAR CORPORATION
Consolidated Statements of Changes in Equity
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars)

Cumulative
Retained Contributed translation Hedging
Capital stock earnings surplus adjustment reserves Total Equity
$ $ $ $ $ $
Balance at January 1, 2021 146,204 4,073,591 25,546 91,598 16,559 4,353,498

Net Earnings (Loss) - 420,558 - - - 420,558

Other comprehensive earnings (loss) - - - (112,882) (20,870) (133,752)
Comprehensive Earnings (Loss) - 420,558 - (112,882) (20,870) 286,806
Hedging transferred to the carrying value of inventory - - - - (272) (272)
Share-based compensation - - 3,270 - - 3,270
Dividends - (44,506) - - - (44,506)
Balance at December 31, 2021 146,204 4,449,643 28,816 (21,284) (4,583) 4,598,796

Net Earnings (Loss) - 426,194 - - - 426,194

Other comprehensive earnings (loss) - - - 81,048 (3,851) 77,197
Comprehensive Earnings (Loss) - 426,194 - 81,048 (3,851) 503,391
Hedging transferred to the carrying value of inventory - - - - (7,416) (7,416)
Share-based compensation - - 3,059 - - 3,059
Shares issued on exercise of options 1,595 - (516) - - 1,079
Common shares repurchased and cancelled (Note 14) (8,874) (227,203) - - - (236,077)
Dividends - (51,121) - - - (51,121)
Balance at December 31, 2022 138,925 4,597,513 31,359 59,764 (15,850) 4,811,711

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

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LINAMAR CORPORATION
Consolidated Statements of Cash Flows
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

2022 2021
$ $
Cash generated from (used in)
Operating Activities
Net earnings (loss) 426,194 420,558
Adjustments for:
Amortization of property, plant and equipment 382,755 397,142
Amortization of other intangible assets 58,217 51,612
Deferred income taxes (14,809) (26,244)
Asset impairment provision, net of reversals 68 2,434
Share-based compensation 3,059 3,270
Equity investment (earnings) loss 6,086 28,345
Finance (income) and expenses 25,657 10,722
Gain on bargain purchase (Note 26) (29,440) -
Remeasurement of net investment in joint venture (Note 26) 21,773 -
Other (14,283) (25,460)
865,277 862,379
Changes in operating assets and liabilities
(Increase) decrease in accounts and other receivables (215,353) 24,815
(Increase) decrease in inventories (351,132) (227,446)
(Increase) decrease in prepaid expenses and other current assets (4,777) (6,853)
(Increase) decrease in long-term receivables 19,230 110,758
Increase (decrease) in income taxes (82,870) (19,360)
Increase (decrease) in accounts payable and accrued liabilities 239,287 166,240
Increase (decrease) in provisions (1,531) (1,769)
(397,146) 46,385
Cash generated from (used in) operating activities 468,131 908,764

Financing Activities
Proceeds from (repayments of) long-term debt 462,924 (981,747)
Proceeds from senior unsecured notes - 493,952
Proceeds from exercise of stock options 1,079 -
Repurchase of shares (236,077) -
Dividends (51,121) (44,506)
Finance income received (expenses paid) (20,417) 692
Settlement of derivative contracts - (40,470)
Cash generated from (used in) financing activities 156,388 (572,079)

Investing Activities
Payments for purchase of property, plant and equipment (410,650) (243,058)
Proceeds on disposal of property, plant and equipment 36,170 6,883
Payments for purchase of intangible assets (12,604) (11,483)
Business acquisitions, net of cash acquired (Note 26) (325,533) -
Other (3,125) (19,661)
Cash generated from (used in) investing activities (715,742) (267,319)
(91,223) 69,366
Effect of translation adjustment on cash 23,310 (2,038)
Increase (decrease) in cash and cash equivalents (67,913) 67,328
Cash and cash equivalents - Beginning of Year 928,428 861,100
Cash and cash equivalents - End of Year 860,515 928,428

Comprised of:
Cash in bank 396,162 511,904
Short-term deposits 467,266 429,145
Unpresented cheques (2,913) (12,621)
860,515 928,428

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

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LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

1 General Information
Linamar Corporation and its subsidiaries, including jointly controlled entities, (together, the “Company”) is a diversified global manufacturing
company of highly engineered products. The Company is incorporated in Ontario, Canada with common shares listed on the Toronto Stock
Exchange (“TSX”). The Company is domiciled in Canada and its registered office is 287 Speedvale Avenue West, Guelph, Ontario, Canada.
The consolidated annual financial statements of the Company for the year ended December 31, 2022 were authorized for issue in
accordance with a resolution of the Company’s Board of Directors on March 8, 2023.

2 Basis of Preparation
The Company has prepared its consolidated annual financial statements in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and with interpretations of the International Financial Reporting
Issues Committee.
Certain comparative figures have been reclassified to conform to the current period’s financial presentation adopted.

3 Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies
have been consistently applied to all the periods presented, unless otherwise stated.
Basis of Measurement
These consolidated financial statements were prepared on a going concern basis, under the historical cost convention, as modified by the
revaluation of financial assets and financial liabilities (including derivative instruments) at fair value.
Basis of Consolidation
Subsidiaries are all entities over which the Company has control and all subsidiaries are wholly owned and are located in the geographic
regions of our segments. These consolidated financial statements include the accounts of the Company and its subsidiaries. The Company
controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Company and are deconsolidated from the date that control ceases. All significant intercompany transactions are eliminated on
consolidation.
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred for the
acquisition of a subsidiary is the fair value (at the date of exchange) of the assets acquired, liabilities incurred or assumed, and equity
instruments issued by the Company in exchange for control of the acquiree. Any excess of the acquisition cost over the fair value of the
net assets acquired and liabilities and contingent liabilities recognized, is recorded in assets as goodwill. If this consideration is lower than
the fair value of the net assets acquired, the difference is recognized in profit or loss. Acquisition-related costs are expensed as incurred.
Any contingent consideration to be transferred by the acquirer is recognized and estimated at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognized in accordance with
the applicable standard either in net earnings or as a change to other comprehensive earnings. If the contingent consideration is classified
as equity, it shall not be re-measured and shall be accounted for within equity.
The Company has partial ownership in joint ventures over whose activities the Company has joint control, established by contractual
agreements and requiring unanimous consent for strategic, financial and operating decisions. The Company accounts for the jointly
controlled entities using the equity method after initially being recognized at cost.
The Company has partial ownership in associates over which the Company has significant influence but not control or joint control. This is
generally the case where the Company holds between 20% and 50% of the voting rights. Investments in associates are accounted for
using the equity method after initially being recognized at cost.
Under the equity method of accounting, the consolidated financial statements include the Company’s share of the income and expenses
and equity movements of the investments, after adjustments to align the accounting policies with those of the Company, from the date that
the significant influence or joint control commences until the date that significant influence or joint control ceases. Dividends are recognized

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LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

as a reduction in the carrying amount of the investment. Where the Company’s share of losses in an equity accounted investment equals
or exceeds its interest in the entity, including any other unsecured long-term receivables, the Company does not recognize further losses.
Unrealized gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company’s
interest in these entities. Unrealized losses are eliminated unless the transaction provides evidence of impairment.

Foreign Currency Translation

Functional and presentation currency
The Company’s consolidated financial statements are presented in Canadian dollars (“dollars”), which is also the Company’s functional
currency. Each entity in the Company maintains its accounting records in its functional currency. An entity’s functional currency is the
currency of the principal economic environment in which it operates.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the average exchange rate of the reporting period. At the
end of each reporting period, monetary assets and liabilities denominated in foreign currencies are re-translated at period end exchange
rates. Non-monetary assets and liabilities, which are measured in terms of historical cost in a foreign currency, are not re-translated. Foreign
exchange gains and losses arising from borrowings are presented in the statements of earnings within finance expenses and all other
foreign exchange gains and losses are presented within operating earnings except for those which relate to qualifying cash flow hedges
and qualifying net investment hedges are presented in other comprehensive earnings within accumulated other comprehensive earnings
until realized. Foreign exchange gains and losses arising from long-term intercompany loans, where repayment is neither planned or likely
to occur in the foreseeable future, are considered as part of the net investment in a foreign operation. These are also presented in other
comprehensive earnings within accumulated other comprehensive earnings until realized.
Foreign Operations
For the purposes of presenting consolidated financial statements, the results and financial position of all entities that have a functional
currency different from the presentation currency are translated into the presentation currency as follows:
(a) Assets and liabilities are translated at the closing rate at the reporting period end date;
(b) Income and expenses are translated at average exchange rates for the reporting period; and
(c) All resulting exchange differences are recognized as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to equity. When a
foreign operation is sold, or there is a disposal involving a loss of control, exchange differences that were recorded in equity are recognized
in the statements of earnings as part of the gain or loss on sale or disposal.

Cash and Cash Equivalents

Cash and cash equivalents include cash in bank and short-term deposits. Cash equivalents are short-term, highly liquid investments, that
are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Investments normally
qualify as cash equivalents if they have a term to maturity at the date of purchase of three months or less.

Receivables
Current
Receivables are amounts due from customers for products sold or services performed in the ordinary course of business.
The Company applies the simplified approach, as defined in IFRS, to measure expected credit losses, which requires the use of the lifetime
expected credit loss provision for all trade receivables. To measure lifetime expected credit losses, trade receivables are first categorized
by groups with shared credit characteristics and the age of past due receivables followed by an assessment of the Company’s historical
experience of bad debts including customers’ ability to pay and the current and future economic conditions which are expected during the
life of the balance. The loss allowance is determined according to a provision matrix incorporating historical experiences adjusted for current
and future conditions expected for the life of the balance.
Long-term
The Company provides financing to certain customers through direct financing loans for the sale of industrial access equipment.

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LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

The Company applies the simplified approach, as defined in IFRS, to measure expected credit losses for receivables that contain a
significant financing component (long-term receivables) and applies this approach consistently for all such receivables. To measure lifetime
expected credit losses, long-term receivables are first categorized by groups with shared credit characteristics and the age of past due
receivables followed by an assessment of the Company’s historical experience of bad debts including customers’ ability to pay and the
current and future economic conditions which are expected during the life of the balance. The loss allowance is determined according to
the provision matrix incorporating historical experience by credit risk rating as well as current conditions and forward-looking information.
These may include internal credit ratings, external credit ratings (as available), actual or expected significant adverse changes in business,
financial or economic conditions, changes in the value of collateral and macroeconomic information such as market interest rates.
Impairment
The Company defines default of a financial asset when the Company is no longer reasonably assured of the timely collection of the full
amount of principal and interest. The Company writes off its receivables when there is no realistic prospect of recovery. This is generally
when a debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to write
off or fails to engage in a repayment plan with the Company. Where receivables have been written off, the Company continues to engage
in enforcement activities to attempt to recover the receivable due. Losses are reversed when recoveries are made or the future economic
conditions have improved.

Leases
An agreement is a lease if the agreement conveys the right to obtain substantially all of the economic benefit from the use of the identified
asset and the right to direct the use of the identified asset.
Company as a lessee
The Company leases certain property, plant and equipment as right-of-use assets. Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions. Assets and liabilities arising from a lease are initially measured on a present value
basis, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental
borrowing rate. Lease liabilities include the present value of fixed and variable payments, residual value guarantees, exercise of purchase
options if reasonably certain to be exercised and any penalties for terminating the lease if reasonably certain to terminate. Right-of-use
assets are measured at cost comprised of the amount of the initial measurement of the lease liability plus any lease payments made before
the lease commencement date, any initial direct costs and restoration costs. Lease payments are allocated between finance charges and
a reduction of the outstanding lease obligation. Finance charges are recognized in net earnings, unless they are directly attributable to
qualifying assets, in which case they are capitalized in accordance with the Company’s general policy on borrowing costs. If the underlying
right-of-use asset transfers to the lessee at the end of the lease term or the lessee is reasonably certain to exercise a purchase option, the
depreciation shall be the useful life of the right-of-use asset in accordance with the Company’s depreciation methods and rates based on
the class of the right-of-use asset. Otherwise, the right-of-use assets are depreciated over the shorter of the useful life of the asset and the
lease term on a straight-line basis. The Company is exposed to potential future increases in variable lease payments based on an index or
rate which are not included in the lease liability until they take effect. When the adjustments for variable payments take effect, the lease
liability is reassessed and adjusted against the right-of-use asset.
For any contracts with a short-term or if the present value of the right-of-use asset has a low-value, the Company will expense the lease
payments as incurred and no right-of-use asset will be recorded.
Company as a lessor
The Company leases certain industrial access products to customers. Leases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards of ownership. All other leases are classified as operating leases. Amounts due from
lessees under operating lease arrangements are recognized as revenue over the course of the lease arrangement. Contingent rents are
recognized as revenue in the period in which they are earned. Amounts due from lessees under finance lease arrangements are recognized
as receivables at the amount of the Company’s net investments in the leases. Finance lease income is allocated to accounting periods so
as to reflect a constant rate of return on the Company’s net investment outstanding.

Sale of Receivables
The sale of receivables is recognized when the Company transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another entity. If the Company retains substantially all the risks and rewards of ownership of a transferred financial

14
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

asset, the Company continues to recognize the financial asset and also recognizes a borrowing for the proceeds received. For some
transfers, the Company may provide security in the form of a limited guarantee in regards to the risk of default.

Inventories
Inventories are valued at the lower of cost and net realizable value. The cost of finished goods and work-in-process is comprised of material
costs, direct labour costs and other direct costs and related production overheads (based on normal operating capacity). Costs are allocated
to inventory on the basis of weighted average costs. Net realizable value for finished goods and work-in-process is the estimated selling
price in the ordinary course of business, less estimated costs of completion and applicable variable selling expenses. For raw materials
and general stores inventories the replacement cost is considered to be the best available measure of net realizable value.
The amount of inventories recognized as an expense during the period is shown in cost of sales. Write-downs for inventories are recorded
when the net realizable value is lower than cost. The write-downs may be reversed if the circumstances which caused them no longer exist.

Taxation
Income taxes recoverable and payable
The taxes currently payable are based on taxable earnings for the reporting period. Taxable earnings differs from earnings as reported in
the consolidated statements of earnings because of items of income or expense that are taxable or deductible in other years and items
that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period, in each jurisdiction that the Company operates in.
Deferred tax assets and liabilities
Deferred tax assets and liabilities are recognized on temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable earnings. Deferred tax assets are generally
recognized for all deductible temporary differences to the extent that it is probable that taxable earnings will be available against which
those deductible temporary differences can be utilized. Deferred tax liabilities are generally recognized for all taxable temporary differences.
Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill.
Deferred tax assets and liabilities are not recognized for temporary differences between the carrying amount and tax bases of investments
in foreign operations where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the
temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable
earnings against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The
ability to realize the tax benefits for tax loss carry-forwards is dependent upon a number of factors, including the future profitability of
operations in the jurisdictions in which the tax losses arose.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or
the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the
Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and
liabilities on a net basis.
Provision for current and deferred income taxes
Income tax expense represents the sum of the current and deferred income taxes for the period.
Current and deferred tax are recognized as an expense or income in net earnings, except when they relate to items that are recognized
outside net earnings (whether in other comprehensive earnings or directly in equity), in which case the tax is also recognized outside net
earnings, or where they arise from the initial accounting for a business acquisition. In the case of a business acquisition, the tax effect is
included in the accounting for the business acquisition.

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LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

Property, Plant and Equipment

Property, plant and equipment are recorded at cost less accumulated amortization and impairment. Amortization of property, plant and
equipment commences when they are ready for their intended use. Amortization is charged to earnings in amounts sufficient to depreciate
the cost of property, plant and equipment over their estimated useful lives using the diminishing balance and straight-line methods as
follows:
Land-use rights Straight-line over the life of the contract
Buildings 5% diminishing balance
Machinery Straight-line over 5 - 20 years or 15% - 20% diminishing balance
Office equipment Straight-line over 2 - 3 years or 20% diminishing balance
Transportation equipment 10% - 30% diminishing balance
Tooling Straight-line over 1 – 5 years
Where components of more substantial assets have differing useful lives, these are depreciated separately. Subsequent costs are
capitalized 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 of the item can be measured reliably. The carrying amount of the
replaced part is derecognized. The assets’ residual values, useful lives and amortization methods are reviewed, and adjusted if appropriate,
at the end of each reporting period. Repair and maintenance costs are expensed as incurred, except where they serve to increase
productivity or to prolong the useful life of an asset, in which case they are capitalized.
Borrowing costs that are directly attributable to the acquisition, construction or production of qualified assets are capitalized as part of the
acquisition costs of the qualified asset. All other borrowing costs are recognized in net earnings.

Intangibles
Intangible assets acquired through purchase are initially measured at cost. Intangible assets acquired through business combinations are
initially measured at fair value at the date of acquisition. Amortization is charged to earnings in amounts sufficient to depreciate the cost of
intangible assets over their estimated useful lives using the straight-line method or a unit of production basis as follows:
Trade names Straight-line over 20 years or indefinite life
Customer relationships Straight-line over 12 - 25 years
Technology Straight-line over 10 - 15 years
Product development costs Unit of production basis or straight-line over 5 – 15 years
Software Straight-line over 3 – 5 years
The assets’ residual values, useful lives and amortization methods are reviewed, and adjusted if appropriate, at the end of each reporting
period. Intangible assets with indefinite useful lives are not amortized but are reviewed for impairment annually, or more frequently when
there is an indication of impairment.

Goodwill
Goodwill represents the excess of the cost of the acquisition over the fair value of the Company’s share of the net identifiable assets of the
acquired subsidiary at the date of acquisition. Goodwill is not amortized but is reviewed for impairment annually, or more frequently when
there is an indication of impairment.

Impairment of Non-Financial Assets

At the end of each reporting period, or more frequently based on specific events or changes in circumstances, the Company reviews the
carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss
(if any). Where it is not possible to estimate the recoverable amount of an individual asset, the assets are grouped at the lowest level for

16
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

which there are separately identifiable cash inflows and the Company estimates the recoverable amount at the cash-generating or grouped
cash-generating units (“CGU”) level. The Company has determined a CGU to be an individual entity or group of entities with separately
identifiable cash inflows. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to
individual CGUs, or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can
be identified.
For the purpose of impairment testing, goodwill is allocated to each of the Company’s CGUs expected to benefit from the synergies of the
combination.
The recoverable amount is the higher of the fair value less costs of disposal or value in use. Fair value less costs of disposal is based on
the amount that a market participant would pay for the asset or CGU. Value in use calculations utilize discounted future operating cash
flows. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the full impairment loss is charged
against earnings and the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to
the other assets of the unit on a pro-rata basis to the carrying amount of each asset in the unit.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its
recoverable amount, but not in excess of the carrying amount that would have been determined had no impairment loss been recognized
for the asset (or CGU) in prior years. A reversal of an impairment loss is recognized immediately in net earnings. Any impairment loss
recognized for goodwill is not reversed in a subsequent period.

Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash
flows estimated to settle the present obligations, its carrying amount is the present value of those cash flows. The increase in the provision
due to passage of time is recognized as interest expense.
A provision for warranties is recognized when the underlying products or services are sold. The provision is based on historical warranty
data and a weighting of all possible outcomes against their associated probabilities.

Financial Instruments
A financial instrument is any contract that at the same time gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity. Financial instruments are recognized as soon as the Company becomes a contracting party to the financial
instrument.
The classification for some financial assets depends on the entity’s business model for managing its financial assets and the contractual
terms of the cash flows. Debt instruments are assets that are held for collection of contractual cash flows where those cash flows represent
payments of principal and interest or are assets that are held for sale. These are classified as either amortized cost, fair value through other
comprehensive income or at fair value through profit or loss. Investments in equity instruments are classified at fair value through profit or
loss unless an election is applied to classify the investments through other comprehensive income. Financial liabilities are classified as
amortized cost. Derivatives are only used for hedging purposes and not as speculative investments; however, where derivatives do not
meet the hedge accounting criteria, they are classified as held for trading and are accounted for at fair value through profit or loss.
Classification and measurement of financial instruments
At initial recognition for financial assets or liabilities, the Company measures a financial instrument at its fair value including debt issue and
other transaction costs that are directly attributable to the acquisition or issuance of the financial instrument. Where a portion of a financial
instrument is expected to be realized within 12 months of the end of the reporting period, that portion is included in current assets or
liabilities, the remainder is classified as non-current.
(a) Amortized cost: Assets that are held for the collection of contractual cash flows are measured at amortized cost using the effective
interest method. Cash and cash equivalents, accounts and other receivables and the portfolios of long-term receivables are included
in this classification. Short-term bank borrowings, accounts payable and accrued liabilities and long-term debt are financial liabilities
included in this classification.

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LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

(b) Fair value through other comprehensive income: Occasionally, a portion of the Company’s portfolio of long-term receivables may be
determined to be held for collection of contractual cash flows and for selling the financial assets. The recognition of impairment losses
or impairment reversals, interest revenue and foreign exchange gains and losses are recognized in profit or loss similar to assets
classified at amortized cost; however, movements in the carrying value are taken through other comprehensive income until the asset
is de-recognized. At that time the cumulative gain or loss previously recognized in other comprehensive income is reclassified to profit
or loss. Investments in equity instruments that are strategic in nature and therefore are not held for trading may be classified at fair
value through other comprehensive income after an irrevocable election at recognition is completed. The fair value gains and losses
on the investments remain in other comprehensive income with no subsequent reclassification of those fair value gains and losses to
profit or loss on derecognition of the investment. Dividends from such investments are recognized in profit or loss as finance income
when the Company’s right to receive payments is established.
(c) Fair value through profit or loss: Derivatives outside of a hedging relationship and investments in equity instruments held for trading
have movements in carrying value taken through profit or loss.
Fair value hierarchy
The Company estimates fair values related to financial instruments and classifies these measurements using a fair value hierarchy that
reflects the significance of their respective inputs. The Level 1, 2 and 3 classifications utilized by the Company are defined as follows:
Level 1 - Fair values are determined using inputs from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Fair values are determined using inputs other than quoted prices included in Level 1 that are observable for the asset or liability
either directly or indirectly. Derivative financial instruments are valued based on observable market data.
Level 3 - Fair values are determined based on inputs which are not based on observable market data.
The fair value hierarchy is used for all fair value measurement requirements. The Company recognizes transfers into and transfers out of
fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.
Derivative financial instruments and hedge accounting
Risk management is predominantly controlled by the corporate treasury department. The corporate treasury department identifies,
evaluates and hedges financial risks in close cooperation with the Company’s operating entities.
Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently
re-measured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being hedged. The Company uses derivatives as part of its risk management program
to mitigate variability associated with changing market values related to the hedged item. Some of the derivatives used meet hedge
effectiveness criteria and are designated in a hedge accounting relationship.
The Company applies hedge accounting for certain foreign exchange forward contracts and cross currency interest rate swap contracts as
cash flow hedges. The Company uses cash flow hedges for certain risks associated with the cash flows of recognized liabilities and highly
probable forecasted transactions. Amounts accumulated in the hedge reserve within other comprehensive earnings are reclassified to net
earnings in the period in which the hedged transaction occurs. If the hedged transaction subsequently results in the recognition of a non-
financial item, the amounts accumulated in the hedge reserve within other comprehensive earnings are included in the initial cost or other
carrying amount of the non-financial item. The deferred amounts are ultimately recognized in net earnings as the non-financial item impacts
net earnings. In some hedge relationships the Company excludes from the designation the forward element of hedging instruments. The
changes in the forward element of the contract that relate to the hedged item are recognized within other comprehensive earnings in the
cost of hedging reserve within equity and if the hedged transaction subsequently results in the recognition of a non-financial item, the
amount accumulated in equity is removed from the cost of hedging reserve and included in the initial cost or other carrying amount of the
non-financial item. The deferred amounts are ultimately recognized in net earnings as the non-financial item impacts net earnings. For any
other cash flow hedges, the amount accumulated in the cost of hedging reserve is reclassified to net earnings as a reclassification
adjustment in the same period or periods during which the hedged cash flows affect net earnings.
The Company may designate certain portions of its foreign denominated long-term debt or the spot component of a cross currency interest
rate swaps as a net investment hedge. Hedges of net investments are accounted for similarly to cash flow hedges with amounts
accumulated in other comprehensive earnings. The amounts accumulated in other comprehensive earnings are reclassified to net earnings
in the period in which the foreign operation is partially disposed of or sold. When only the spot component of a financial instrument is
designated in the net investment hedge, the change in the forward element of the hedging instrument that relates to the hedged item is

18
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

recognized within other comprehensive earnings in the cost of hedging reserve within equity. Because the net investment is considered a
time period related item, the deferred amounts are recognized in net earnings on a rational basis over the time period during which the
hedge adjustment for the included spot component would affect net earnings.
The fair values are determined based on observable market data.
The Company documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as
well as its risk management objectives and strategy for undertaking various hedging transactions. The Company also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly
effective in offsetting changes in fair values or cash flows of hedged items. Effectiveness is achieved when the hedging relationships meet
all of the following hedge effectiveness requirements:
(a) There is an economic relationship that exists between the hedged item and hedging instrument;
(b) The effect of credit risk does not dominate the value changes that result from that economic relationship; and
(c) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Company
actually hedges and the quantity of the hedging instrument that the Company actually uses to hedge that quantity of hedged item.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or
loss existing in accumulated other comprehensive earnings at that time remains in accumulated other comprehensive earnings until the
forecasted transaction is eventually recognized in net earnings. When a forecasted transaction is no longer expected to occur, the
cumulative gain or loss that was reported in accumulated other comprehensive earnings is immediately transferred to net earnings.

Share-based Compensation
Under the Company’s share-based compensation plan, the Company with the approval of the Board of Directors may grant equity-settled
stock options to its key employees and directors.
The Company recognizes a compensation expense for stock options granted and measures the compensation expense at fair value
calculated on the grant date using the Black-Scholes option pricing model. The expense is recognized on a graded-vesting basis in which
the fair value of each tranche is recognized over its respective vesting period when all of the specified vesting conditions are satisfied.
Contributed surplus consists of accumulated share-based compensation expense less the fair value of options at the grant date that have
been exercised and credited to common shares.

Accumulated Other Comprehensive Earnings Reserves

Hedging reserves
The cash flow hedge reserve contains both the effective portion of the cash flow hedge relationships incurred as at the reporting date and
the excluded component in the hedging designation which is considered a cost of hedging.
Cumulative translation adjustment
The cumulative translation adjustment reserve is used to record exchange differences arising from the translation of the financial statements
of foreign subsidiaries along with the effective portion of the net investment hedge relationship incurred as at the reporting date.

Revenue Recognition
Sale of products
The Company enters into contracts with customers to manufacture and sell a range of products focused on both systems and components
for new energy powertrains, body and chassis, driveline, engine, and transmission systems for both the global electrified and traditionally
powered on and off highway vehicle markets for the Mobility segment. These contracts are entered into with a customer when the Company
can identify each party’s rights and the contract has commercial substance, which generally is when the customer has made a firm volume
commitment. In addition, the Company manufactures and sells a range of industrial equipment such as aerial work platforms, telehandlers
and agricultural equipment. Revenue is recognized when control of the products and equipment has transferred to the customer, generally
being when the products and equipment are shipped. This represents the point in time the customer obtains significant risk and rewards of
ownership and the Company has the right to payment for the products or equipment.

19
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

A receivable is recognized when control of goods transfers to the customer, as indicated above, and consideration is unconditional.
Payment terms are generally based on the customers’ payment schedules, which typically range from 30 to 90 days from the invoice date.
Certain industrial equipment and parts sales have significant financing components and have an average term of 3 to 5 years.
Revenue from these sales is recognized based on the transaction price specified in the purchase order and corresponds to the invoice
amount. Sales that include significant financing components are measured and recognized at the purchase order price adjusted for the
time value of money. Mobility product sales are recognized net of expected productivity charges. Consideration paid to the customer, if not
in exchange for distinct goods or services at their fair values, are recorded within prepaid expenses and other current assets. The asset is
amortized as a reduction in sales on a straight-line basis over the term of the specific contract to which the amount paid relates to. Industrial
equipment and part sales are recognized net of the expected discounts, rebates and similar obligations. A refund liability is recognized for
the expected amount payable to customers due to productivity charges, discounts, rebates and similar obligations that are recorded along
with the recognition of the related sales. Productivity charges, rebates, and other similar obligations are classified as a variable
consideration and measured using historical experience and forecasts of expected sales. Revenue is only recognized to the extent that it
is highly probable that a significant reversal will not occur. The Company’s obligation to provide a refund or replacement for products built-
to-print and equipment not in accordance with design specification is considered a standard warranty and recognized as a provision.
Occasionally for Mobility product sales, the Company recognizes retrospective price amendments as a cumulative catch-up adjustment to
sales when the contract modification is approved. When applicable, the revenue from services related to the sale of products is recognized
when the services are rendered. Any incremental costs to obtain or fulfil a contract with a customer are capitalized when those costs are
expected to be recoverable, unless accounted for within another policy.
Sale of customer owned assets
The Company enters into contracts with customers to develop, manufacture, and fabricate customer owned assets used for the purposes
of parts production. Revenue is recognized when control of the asset has transferred to the customer, which occurs when the asset is
substantially complete and the customer approves the initial production sample. This represents the point in time the customer has accepted
the asset, significant risk and rewards of ownership have transferred and the Company has the present right to payment.
A receivable is recognized when control of the asset transfers to the customer, as indicated above, and consideration is unconditional.
Payment terms are generally based on the customers’ payment schedules, which typically range from 30 to 90 days from the invoice date.
Payment is typically made through a lump-sum payment, however, milestone payments throughout the asset fabrication process or
amortization over parts production are sometimes agreed to. Payments made in advance of transfer of control are recorded as a contract
liability and recognized as revenue once control has transferred.
Receivables collected through production parts are adjusted for the time value of money when a significant financing component is present.
If revenue is recognized before the contractual right to payment exists, a contract asset is recorded.
Revenue from these sales is recognized based on the lower of transaction price specified in the purchase order or actual price invoiced by
the Company to fabricate the asset. This amount corresponds to the amount invoiced to the customer by the Company. The invoice amount
represents the standalone selling price of the asset, which is consistent with industry practice.
Engineering services
The Company enters into contracts with customers to design and develop a product or process using advanced engineering. Revenue is
recognized, for contracts that qualify as a sale of service, as the service is being rendered or on completion of the service. Revenue
recognized over time is generally determined based on the proportion of accumulated expenditures to date as compared to total anticipated
expenditures as this depicts the progress towards completion of the service. Revenue is recognized over time for contracts where the
Company creates an asset without an alternative use and the customer controls the asset as it is created. For some contracts revenue is
recognized at a point in time when the customer approves the product or process.
A receivable is recognized as or when the service is rendered based on stages of completion or at completion as indicated above, and at
the time the consideration is unconditional. Payment terms are generally based on the customers’ payment schedules, which typically
range from 30 to 90 days from the invoice date. Certain contracts have significant financing components as payment is amortized over
parts production which is collected over the life of the program and are adjusted for the time value of money. Certain other contracts include
milestone payments throughout the development process. Payments made in advance of the service being rendered are recorded as a
contract liability and recognized as revenue as the service is performed. If revenue is recognized before the contractual right to payment
exists, a contract asset is recorded.

20
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

Revenue from these sales is recognized based on the transaction price specified in the purchase order and corresponds to the invoice
amount. The invoice amount represents the standalone selling price of engineering services, which is consistent with industry practice.
Practical expedients
The Company has elected to use the practical expedient for significant financing components expected to be collected in one year or less
and for incremental costs to obtain a contract that the Company would have recognized in one year or less. Therefore, the Company does
not adjust the transaction price for the time value of money and expenses incremental costs when incurred, respectively. No information is
provided regarding any remaining performance obligations at the end of the period for a contract that has an original expected duration of
one year or less or for which revenue is recognized based on the right to invoice, as allowed by IFRS 15.

Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-makers. The
chief operating decision-makers for the Company who are responsible for allocating resources and assessing performance of the operating
segments have been identified as the Senior Executive Group that makes strategic decisions.

Research and Development

Research costs are expensed as incurred. When certain criteria are met, development costs are accounted for as intangible assets and
capitalized and amortized. Tax credits related to research and development are credited against the related qualifying expense or against
the carrying amount of the related asset.

Government Grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and
the Company will comply with all required conditions.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between
proceeds received and the fair value of the loan based on prevailing market interest rates.
Government grants relating to costs are deferred and recognized in net earnings over the period necessary to match them with the costs
that they are intended to compensate and these are presented as a reduction of the related expense. Government grants relating to
property, plant and equipment are recognized as a reduction in the carrying amount of the related asset.

Pension Costs
The Company has various contributory and non-contributory defined contribution pension plans which cover most employees. The
Company pays these contributions to a privately administered pension insurance plan after which the Company incurs no further payment
obligations. The contributions are accrued and recognized as employee benefit expense when they are due.

4 Changes in Accounting Policies

New Standards and Amendments Adopted

Certain new standards and amendments became effective during the current year; however, the adoption of these new standards and
amendments did not significantly impact the Company’s net earnings or financial position.

New Standards and Interpretations Not Yet Adopted

All pronouncements will be adopted in the Company's accounting policies after the effective date of the pronouncement. At the date of
authorization of these financial statements, there were no new standards, amendments and interpretations to existing standards that were
relevant nor would significantly impact the Company’s net earnings or financial position.

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LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

5 Critical Accounting Estimates and Judgements

The preparation of financial statements in conformity with IFRS requires management to make estimates and judgements about the future.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. Actual results could differ from those estimates under different
assumptions or conditions. The following discussion sets forth management’s most critical estimates and assumptions in determining the
value of assets and liabilities and most critical judgements in applying accounting policies that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next year.

Impairment of Non-Financial Assets

The Company believes that the estimate of impairment for goodwill and non-financial assets is a “critical accounting estimate” because
management is required to assess at the end of each reporting period whether there is any indication that an asset may be impaired and
to make significant forward-looking assumptions. In assessing whether there is an indication that an asset may be impaired, there are a
number of external and internal sources of information which require a high degree of judgement. The recoverable amounts of CGUs have
been determined based on the higher of fair value less costs of disposal or value in use calculations, which require the use of estimates.
Uncertain changes in the discount rate used, and forward-looking assumptions regarding improvement plans, costing assumptions, timing
of program launches, and production volumes may affect the fair value of estimates used. No known trends, commitments, events or other
uncertainties are currently believed to materially affect the assumptions used with the exception of supply chain constraints and escalated
input costs.

Current Income Taxes

The Company is subject to income taxes in numerous jurisdictions where it has foreign operations. Significant judgement is required in
determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination
is uncertain. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the
current and deferred income tax assets and liabilities in the period in which such determination is made.

Deferred Income Tax Assets and Liabilities

Deferred income tax assets and liabilities result from timing differences between the financial reporting and tax bases of assets and
liabilities. Loss carry forwards also comprise a portion of the temporary differences and result in a deferred income tax asset. Deferred
income tax assets are only recognized to the extent that management considers it probable that a deferred income tax asset will be realized.
The assessment for the recognition of a deferred tax asset requires significant judgement. The factors used to assess the likelihood of
realization are the Company’s forecast of future taxable income and available tax planning strategies that could be implemented to realize
the deferred tax assets. The Company has and continues to use tax planning strategies to realize deferred tax assets in order to avoid the
potential loss of benefits. Unknown future events and circumstances, such as changes in tax rates and laws, may materially affect the
assumptions and estimates made from one period to the next. Any significant change in events, tax laws, and tax rates beyond the control
of the Company may materially affect the consolidated financial statements.

Useful Lives of Depreciable Assets

Due to the significance of property, plant and equipment and intangible assets on the Company’s statements of financial position, the
Company considers the amortization policy relating to property, plant and equipment and intangible assets to be a “critical accounting
estimate”. The Company considers the expected useful life of the assets, expected residual value, and contract length when setting the
amortization rates of its assets. Judgement is involved when establishing these estimates as such factors as technological innovation,
maintenance programs, and relevant market information must be taken into consideration. The assets’ residual values, useful lives and
amortization methods are reviewed at the end of each reporting period and are adjusted if expectations differ from previous estimates. If
circumstances impacting these assumptions and estimates change, the change in accounting estimates may represent a material impact
to the consolidated financial statements.

22
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

Purchase Price Allocations

The determination of the purchase price is a critical estimate. The purchase price related to a business combination is allocated to the
underlying acquired assets and liabilities based on their estimated fair values at the time of acquisition. The determination of fair value
requires the Company to make assumptions, estimates and judgements regarding future events. The allocation process is inherently
subjective and impacts the amounts assigned to individually identifiable assets and liabilities; as a result, the purchase price allocation
impacts the Company’s reported assets and liabilities and future net earnings due to its impact on future depreciation and amortization
expense as well as impairment tests.

6 Sale of Receivables
The Company sells a portion of its receivables through various purchase agreements. Under the agreements, the receivables are mostly
sold on a fully serviced basis, so that the Company continues to administer the collection of such receivables. The Company receives no
fee for administration of the collection of such receivables. The Company has derecognized the receivables as substantially all of the risks
and rewards of ownership of the assets have been transferred. Although the receivables have been derecognized, the Company has
provided limited guarantees within the purchase agreements in regards to the risk of default. At December 31, 2022, the maximum exposure
to loss is $33,466 (2021 – $23,610).

7 Inventories
December 31 December 31
2022 2021
$ $
General stores 164,802 141,851
Raw materials 671,034 421,887
Work-in-process 317,481 216,979
Finished goods 355,985 285,739
1,509,302 1,066,456

The cost of inventories recognized as an expense during the year ended December 31, 2022 was $6,272,588 (2021 – $4,893,651).
A provision for obsolescence for slow moving inventory items is estimated by management based on historical and expected future sales
and is included in cost of sales. In the year ended December 31, 2022 the Company recognized a charge to cost of sales for the write-
down of slow moving and obsolete inventory, and adjustments to net realizable value aggregating $47,891 (2021 – $30,973).

23
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

8 Income Taxes
(i) Income Tax Recognized in Net Earnings
December 31 December 31
2022 2021
$ % $ %
Earnings before taxes 563,088 562,166

Combined basic Canadian Federal and Ontario Provincial income taxes,

including manufacturing and processing reduction 140,772 25.00% 140,541 25.00%
Increase (decrease) in income taxes resulting from:
Effect of expenses that are not deductible in determining taxable
earnings (551) -0.10% 3,196 0.57%
Effect of unused tax losses not recognized as deferred tax assets (3,135) -0.56% 5,379 0.96%
Effect of different tax rates of subsidiaries operating in other
jurisdictions 963 0.17% (7,298) -1.30%
Adjustments recognized in the current year in relation to the current tax
of prior years (2,410) -0.43% (7,549) -1.34%
Other 1,255 0.22% 7,339 1.31%
Income tax expense and effective income tax rate 136,894 24.31% 141,608 25.19%
Current tax 151,703 167,852
Deferred tax (14,809) (26,244)
Income tax expense 136,894 141,608

The tax rate used in the reconciliation above is the Canadian corporate tax rate of 25.0% (2021 – 25.0%). Deferred income tax expense
(recovery) directly recognized in equity for the year was $(3,756) (2021 – recovery of $3,841).
(ii) Deferred Tax Balances
December 31 December 31
2022 2021
$ $
Tax benefit of tax credits and loss carry forwards 137,359 112,812
Tax benefit (liability) of derivative financial instruments 5,283 1,528
Other assets - tax value in excess of book value 81,609 80,369
Cumulative tax amortization in excess of book amortization (218,845) (207,087)
Other liabilities - book value in excess of tax value (158,228) (131,637)
Deferred tax net position (152,822) (144,015)

Reconciliation of deferred tax net balance:

2022 2021
$ $
At January 1 (144,015) (173,375)
Tax recovery (expense) during the period recognized in earnings 14,809 26,244
Tax recovery (expense) during the period recognized in other comprehensive earnings 3,756 3,841
Impact of foreign currency translation adjustment (3,331) 992
Net tax liability related to business acquisition (31,539) -
Other 7,498 (1,717)
At December 31 (152,822) (144,015)

24
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

Net deferred tax balances in the statements of financial position are comprised of the following:
December 31 December 31
2022 2021
$ $
Deferred tax assets to be recovered after more than 12 months 214,918 189,018
Deferred tax assets to be recovered within 12 months 5,979 7,568
Total deferred tax assets 220,897 196,586

Deferred tax liabilities to be utilized after more than 12 months (364,164) (332,332)
Deferred tax liabilities to be utilized within 12 months (9,555) (8,269)
Total deferred tax liabilities (373,719) (340,601)
Deferred tax balances (net) (152,822) (144,015)

Unrecognized deferred tax assets were as follows:

December 31 December 31
2022 2021
$ $
Tax losses 34,998 35,764
Tax credits 5,432 16,020
Total deferred tax assets not recognized 40,430 51,784

The unrecognized tax losses expire as follows: $5,305 during 2023-2027, $4,115 during 2028-2042 and $25,578 have no expiry date
(2021 - $4,561 during 2022-2026, $4,024 during 2027-2041 and $27,179 had no expiry date). The unrecognized tax credits expire as
follows: $341 during 2023-2027 and $5,091 during 2028-2042 (2021 - $305 during 2022-2026 and $15,715 during 2027-2041).
The temporary difference, for which no deferred tax amounts have been recognized, in respect of the amount of undistributed earnings
of foreign operations for December 31, 2022 was $2,191,444 (2021 – $1,988,364).

25
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

9 Property, Plant and Equipment

Land use Office Transportation
Land rights Buildings Machinery equipment equipment Tooling Total
$ $ $ $ $ $ $ $
Cost 112,010 7,560 772,256 4,100,327 28,716 61,241 23,235 5,105,345
Accumulated amortization - (1,011) (268,149) (2,150,091) (18,073) (30,445) (13,572) (2,481,341)
Book value at January 1, 2021 112,010 6,549 504,107 1,950,236 10,643 30,796 9,663 2,624,004
Effect of cumulative translation
adjustment (2,752) 111 (15,934) (54,122) (232) (552) (143) (73,624)
Additions, net of government grants - - 19,422 237,128 2,633 10,428 7,003 276,614
Impairment provision, net of reversals - - (1,214) 1,044 - - - (170)
Disposals - - (742) (10,929) (129) (1,809) (157) (13,766)
Amortization - (176) (36,791) (339,442) (3,701) (10,136) (6,896) (397,142)
Book value at December 31, 2021 109,258 6,484 468,848 1,783,915 9,214 28,727 9,470 2,415,916

Cost 109,258 7,694 760,426 3,947,169 26,136 61,142 22,543 4,934,368

Accumulated amortization - (1,210) (291,578) (2,163,254) (16,922) (32,415) (13,073) (2,518,452)
Book value at December 31, 2021 109,258 6,484 468,848 1,783,915 9,214 28,727 9,470 2,415,916
Effect of cumulative translation
adjustment 615 (13) 12,062 36,285 68 210 81 49,308
Additions, net of government grants 1,750 7,081 73,812 403,969 1,624 8,780 6,721 503,737
Business acquisitions (Note 26) 12,804 - 97,696 112,680 592 828 140 224,740
Impairment provision, net of reversals - - - (68) - - - (68)
Disposals (6,500) - (4,124) (5,926) (111) (1,111) (15) (17,787)
Amortization - (172) (42,517) (318,181) (3,149) (9,861) (8,875) (382,755)
Book value at December 31, 2022 117,927 13,380 605,777 2,012,674 8,238 27,573 7,522 2,793,091

Cost 117,927 14,748 942,230 4,413,998 27,850 64,349 24,451 5,605,553

Accumulated amortization - (1,368) (336,453) (2,401,324) (19,612) (36,776) (16,929) (2,812,462)
Book value at December 31, 2022 117,927 13,380 605,777 2,012,674 8,238 27,573 7,522 2,793,091

Amortization expense of $380,077 (2021 – $393,971) has been charged in cost of sales and $2,678 (2021 – $3,171) in selling, general
and administration.
Building additions made by a related party, a company owned by the spouse of an officer and director, for 2022 were $13,121 (2021 -
$6,546).
Government grants recognized as a reduction in the carrying amount of the assets during the year was $10,916 (2021 – $10,080). See
Note 16 for more details regarding government grants.
As of December 31, 2022, property, plant and equipment includes $450,194 (2021 – $323,220) of assets in the course of construction for
production purposes.

26
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

The following amounts are included in property, plant and equipment where the Company is a lessee under lease contracts:
December 31 December 31
2022 2021
Amortization Amortization
Year Ended Book value Year Ended Book value
$ $ $ $
Buildings 13,743 62,299 10,311 39,114
Machinery 1,181 507 2,335 2,486
Office equipment 470 1,858 529 2,286
Transportation equipment 7,623 16,160 8,111 16,860
Tooling 73 116 70 157
23,090 80,940 21,356 60,903

December 31 December 31
2022 2021
$ $
Additions to right-of-use assets 44,608 18,505
Lease interest expense 2,233 2,231
Expenses relating to short-term leases 8,943 5,943
Expenses relating to low-value leases 855 747
Total cash outflow for leases 23,477 20,855

The lease agreements do not impose any significant covenants other than the security interests in the leased assets that are held by the
lessor. Some leases contain variable payment terms and future changes under the variable payments terms will not have a significant
impact on future cash flows. There are no significant extension, termination or residual value guarantees that have not already been
accounted for within the value of the right-of-use asset or lease liability.

27
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

10 Intangible Assets
Product
Trade Customer development
names relationships Technology costs Software Total
$ $ $ $ $ $
Cost 228,800 430,451 218,445 157,092 15,204 1,049,992
Accumulated amortization (927) (96,859) (58,207) (27,750) (1,771) (185,514)
Book value at January 1, 2021 227,873 333,592 160,238 129,342 13,433 864,478
Effect of cumulative translation adjustment - (9,315) (4,886) (1,405) (3) (15,609)
Additions - - - 8,678 2,805 11,483
Impairment provision - - - (2,264) - (2,264)
Amortization (70) (21,597) (14,415) (13,472) (2,058) (51,612)
Book value at December 31, 2021 227,803 302,680 140,937 120,879 14,177 806,476

Cost 228,800 415,987 210,628 173,488 18,184 1,047,087

Accumulated amortization (997) (113,307) (69,691) (52,609) (4,007) (240,611)
Book value at December 31, 2021 227,803 302,680 140,937 120,879 14,177 806,476
Effect of cumulative translation adjustment - 134 30 3,335 (4) 3,495
Additions - - - 9,961 2,643 12,604
Business acquisition (Note 26) 17,870 95,170 25,520 - - 138,560
Amortization (70) (23,161) (14,999) (17,497) (2,490) (58,217)
Book value at December 31, 2022 245,603 374,823 151,488 116,678 14,326 902,918

Cost 246,670 512,459 236,788 184,566 18,668 1,199,151

Accumulated amortization (1,067) (137,636) (85,300) (67,888) (4,342) (296,233)
Book value at December 31, 2022 245,603 374,823 151,488 116,678 14,326 902,918

Amortization of intangible assets is included in cost of sales. Product development costs and software are internally generated intangible
assets except for those acquired through a business acquisition or separately acquired. During 2022 and 2021, no product development
costs were separately acquired.
Trade names include the MacDon asset of $227,400 deemed to have an indefinite life. The useful life has been deemed to be indefinite
because there are no legal, regulatory, contractual, competitive, economic, or other factors that limit the useful life of this asset.
Customer relationships includes assets from the MacDon, Montupet and Salford business acquisitions with current carrying amounts of
$185,409 (2021 – $194,641), $96,199 (2021 - $107,383) and $92,660 (2021 - $Nil), respectively, and remaining amortization periods of
20, 8 and 20 years, respectively.
Technology includes proprietary MacDon and Montupet technology assets acquired through business acquisitions with current carrying
amounts of $77,121 (2021 - $84,767) and $49,621 (2021 - $55,390), respectively, and remaining amortization periods of 10 and 8 years,
respectively.

11 Goodwill
2022 2021
$ $
Cost, being book value at January 1 853,288 890,081
Business acquisition (Note 26) 92,572 -
Effect of cumulative translation adjustment 3,059 (36,793)
Cost, being book value at December 31 948,919 853,288

28
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

Goodwill has been allocated for impairment testing purposes to the following CGUs:
December 31 December 31
2022 2021
$ $
Salford Group of Companies (Note 26) 92,572 -
MacDon Group of Companies 388,806 388,806
Montupet Group of Companies 438,351 435,400
Seissenschmidt Group of Companies 4,765 4,734
Linamar Antriebstechnik GmbH 11,442 11,365
Skyjack Group of Companies 12,983 12,983
948,919 853,288

Impairment of assets
Management performed the annual goodwill and indefinite intangible asset impairment analysis during the fourth quarters of 2022 and
2021 and found that there were no impairments. The recoverable amounts of the CGUs were determined on a value in use calculation.
The calculation uses cash flow projections based on financial budgets approved by the Board of Directors, covering a five-year period.
Key assumptions used in the determination of the recoverable amount include:
(a) Operating costs and capital expenditures are based on internal management forecasts. Cost assumptions incorporate the Company’s
experience and expertise, operating costs, the nature and location of each CGU and the risk associated with each CGU. All committed
and anticipated capital expenditures adjusted for future cost estimates have been included in the projected cash flows.
(b) Forecast growth rates are principally based on the Company’s expectations for future performance. For the purpose of the impairment
test, the Company set the terminal value to reflect a 3.0% growth rate for the present value calculation.
(c) Discount rates used reflect specific risks relating to the relevant segments and the countries in which they operate. The pre-tax discount
rates used range from 6.9% to 11.5% (2021 – 6.4% to 9.5%).
Sensitivity of impairment tests were performed. A 1% increase in the discount rate would have no impact on the results of impairment tests.
A 0.25% decrease in the growth rate would have no impact on the results of impairment tests.

12 Provisions
Product
warranties
Claims and and product
litigation defects Other Total
(a) (b) (c)
$ $ $ $
At January 1, 2021 15,614 21,389 1,438 38,441
Charged (credited) to earnings:
Additional provisions 4,452 8,014 48 12,514
Unused amounts reversed (4,328) (4,414) - (8,742)
Used during year (1,621) (3,688) (232) (5,541)
Effect of cumulative translation adjustment (497) (253) (12) (762)
At December 31, 2021 13,620 21,048 1,242 35,910

Charged (credited) to earnings:

Additional provisions 3,003 11,967 23 14,993
Business acquisition (Note 26) 303 733 - 1,036
Unused amounts reversed (5,077) (2,277) - (7,354)
Used during year (882) (7,236) (709) (8,827)
Effect of cumulative translation adjustment 24 (244) 61 (159)
At December 31, 2022 10,991 23,991 617 35,599

29
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

(a) Claims and litigation: Claims and litigation provision relate to certain legal and commercial claims brought against the Company by
stakeholders and potential repayment of government assistance in various jurisdictions. See Note 16 for more details regarding
government assistance. In management’s opinion, after taking appropriate legal advice, the outcome of these claims will not give rise
to any significant loss beyond the amounts provided at December 31, 2022.
(b) Product warranties and product defects: Product warranties and product defects represent the legal or constructive responsibility
of the Company for the proper function of products sold and the obligation arising from the use of products sold.
(c) Other: Includes onerous contracts and decommissioning provision which relates to the legal or constructive obligations for removing
leased equipment at the completion of the lease arrangement. The provision charge is recognized in earnings within cost of sales.

13 Long-Term Debt
The following amounts represent the Company’s long-term debt obligations:
December 31 December 31
2022 2021
Note $ $
Senior unsecured notes (i) 461,782 458,521
Bank borrowings (ii) 694,940 198,007
Lease liabilities (iii) 79,526 59,296
Government borrowings (iv) 72,126 75,721
1,308,374 791,545
Less: current portion 26,733 21,055
1,281,641 770,490

Principal payments required to meet the long-term obligations were as follows:

December 31 December 31
2022 2021
$ $
Not later than 1 year 26,733 21,055
Later than 1 year and not later than 5 years 770,852 255,595
Later than 5 years 514,271 518,403
Total principal payments 1,311,856 795,053
Less: debt issue costs 3,482 3,508
1,308,374 791,545

(i) Senior unsecured notes

The Senior unsecured notes consisted of:
Euro $320 million effective January 2021, coming due January 2031 and paying interest at 1.37%.
In January 2021, the Company received funding through a note purchase agreement with certain institutional investors for a private
placement of Euro (“EUR”) 320 million aggregate principal amount issued at an annual rate of 1.37%, coming due January 2031 and
paying interest semi-annually. The senior unsecured notes are guaranteed by material subsidiaries of the Company as defined in the
agreement. The senior unsecured notes require the Company to maintain certain financial ratios and impose limitations on specific
activities. The Company is in compliance with all financial covenants. The EUR denominated notes have been designated as a net
investment hedge for the net investments in EUR foreign operations. The Company applied the proceeds of the notes towards the
repayment of a non-revolving term credit facility maturing in January 2021 under the bank credit facility (see (ii) below).
(ii) Bank borrowings
The Company’s credit facility outstanding at December 31, 2021 was last amended and restated in February 2018 (“Prior Facility”). In
November 2022, the Company’s credit facility was again amended and restated (“New Facility”). The New Facility includes a revolving
credit facility for up to $1.175 billion which will expire in November 2026 and is under terms and conditions largely consistent with the
Company’s previously existing credit facilities. Borrowings are subject to short-term market rates, plus applicable margin. The New

30
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

Facility includes the use of alternative benchmark rates in order to complete the transition due to the IBOR reform. The facility is
unsecured and guaranteed by material subsidiaries of the Company, as defined in the credit agreement. The bank borrowings require
the Company to maintain certain financial ratios and impose limitations on specified activities. The Company is in compliance with all
financial covenants.
The Prior Facility included a non-revolving term credit facility in the original aggregate principal amount of up to $572 million which
expired and was repaid in January 2021, The Prior Facility had a second non-revolving term credit facility to the original aggregate
principal amount of up to $1.2 billion. The second non-revolving term credit facility was terminated with the New Facility and its
outstanding balance of $25 million at November 2022 (2021 - $25 million) was rolled into the New Facility’s revolving credit facility.
Finally, the Prior Facility had a revolving credit facility to the aggregate principal amount of up to $1.15 billion that was set to expire in
February 2023. This revolving credit facility has been included in the New Facility with the increased available credit of $1.175 billion.
As of December 31, 2022, $462,483 was available under the Company’s credit facility.
(iii) Lease liabilities
The Company has various leases which are included in property, plant and equipment. The Company’s obligations under the leases
are secured by the Lessors’ title to the assets.
Present value of minimum
Minimum lease payments lease payments
December 31 December 31 December 31 December 31
2022 2021 2022 2021
$ $ $ $
Not later than 1 year 23,877 17,942 21,774 16,069
Later than 1 year and not later than 5 years 52,875 37,201 48,401 32,955
Later than 5 years 11,036 12,634 9,351 10,272
87,788 67,777 79,526 59,296
Less: future finance charges 8,262 8,481 - -
Present value of minimum lease payments 79,526 59,296 79,526 59,296

(iv) Government borrowings

The Company has two unsecured non-revolving interest free government loans due in annual payments through 2034.

14 Capital Stock
The Company is incorporated under the Ontario Business Corporations Act in Canada and is authorized to issue an unlimited number of
common and special shares.
Common Shares
Issued/(Cancelled) Stated capital
# $
At January 1, 2021 and December 31, 2021 65,450,697 146,204

Stock options exercised 50,000 1,595

Repurchase of shares under normal course issuer bid (3,972,540) (8,874)
At December 31, 2022 61,528,157 138,925

In November 2021, the Company announced TSX approval to commence a normal course issuer bid. This bid permitted the Company to
acquire for cancellation up to 4,421,507 common shares between November 30, 2021 and November 29, 2022. This bid was subject to
daily limits and blackout periods.

15 Revenue from Contracts with Customers

The disaggregated revenue from contracts with customers aligns with the revenue information as disclosed for each reportable segment
in Note 24.

31
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

Revenue-related receivables, contract assets and contract liabilities

The Company has recognized revenue-related receivables, contract assets and contract liabilities in its consolidated statements of financial
position. Accounts and other receivables and long-term receivables include $1,088,683 and $42,647, respectively, of receivables from
contracts with customers (2021 - $783,179 and $62,876, respectively). Accounts payable and accrued liabilities include $157,490 of
liabilities from contracts with customers (2021 - $157,103) (Note 27).
(i) Significant changes in contract liabilities
There have been no significant changes in the contract liabilities during the year.
(ii) Revenue recognized in relation to contract liabilities
Revenue recognized during the year that was included in the contract liability balance at the beginning of the period was $137,977
(2021 - $138,990).
(iii) Remaining performance obligations
The aggregate amount of the transaction price allocated to remaining performance obligations as of the end of the year amounted to
$128,602, of which $96,945 was attributable to customer owned asset contracts, $30,555 to engineering services contracts and $1,102
to other (2021 - $135,521, of which $103,814 was attributable to customer owned asset contracts, $30,058 to engineering services
contracts and $1,649 to other).
Management expects that $76,296 of the transaction price allocated to remaining performance obligations will be recognized during
the next year, $37,157 in 2024, $10,573 in 2025 and the remaining balance in 2026 and beyond. Remaining performance obligations
do not include variable consideration which is constrained.

16 Expenses by Nature
2022 2021
$ $
Cost of materials 4,263,955 3,379,949
Employee benefits (Note 17) 1,770,665 1,500,076
Amortization (Notes 9, 10) 440,972 448,754
Other 878,685 619,792
7,354,277 5,948,571

In response to COVID-19, many governments around the world have provided various subsidy programs to assist companies during the
crisis. The Company received government assistance in certain regions where such assistance was available and where the Company
was eligible for the subsidy programs. The Company has recognized these subsidy programs as a reduction to the related expenses. A
significant benefit to Linamar was from a subsidy program in Canada. The Canada Emergency Wage Subsidy (“CEWS”) program was
announced in March 2020 and the program came to an end in October 2021. CEWS provided a wage subsidy on eligible remuneration,
subject to limits per employee, to eligible employers based on certain criteria, including a demonstration of revenue declines. The direct
benefit of CEWS and other COVID-19 related programs recorded in the consolidated statements of earnings was $46,242 for the year
ended December 31, 2021. There are no significant repayment requirements of this assistance contingent on employment related
measures, investment related measures or both.
During 2022, the balance of the benefits of government grants recorded in the statements of earnings was $18,168 (2021 - $12,316). In all
cases, repayment of government grants is contingent on employment related measures, investment related measures or both.

32
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

17 Employee Benefits
2022 2021
$ $
Wages, salaries and commissions 1,395,891 1,151,558
Social charges and other personnel expenses 335,008 304,131
Termination benefits 4,327 11,011
Share-based compensation (Note 18) 3,059 3,270
Pension expenses under defined contribution plans 32,380 30,106
1,770,665 1,500,076

18 Share-Based Compensation
The Company is authorized to grant options for common stock to its key employees and directors. The exercise price of each option equals
the average of the high and low market price of the Company’s stock for the five trading days prior to the date of grant. An option’s maximum
term is 10 years and vesting is determined by the Board of Directors. The Company issues new common shares to satisfy stock options
exercised. Options are forfeited when the option holder ceases to be an employee or director of the Company.
2022 2021
Weighted Weighted
Number of average Number of average
options exercise price options exercise price
$ $
At January 1 1,050,000 58.80 900,000 56.18
Granted 150,000 64.74 150,000 74.57
Exercised (50,000) 21.59 - -
At December 31 1,150,000 61.20 1,050,000 58.80

Vested at December 31 540,000 59.67 475,000 55.29

In 2022, the average share price, during the period the share options were exercised, was $63.49 (2021 – $Nil).
The following table is a summary of information about the stock options outstanding at December 31, 2022:
Number of Weighted
options average
Exercise outstanding remaining life
Year of Grant Price in years
2013 $41.11 50,000 1.0
2014 $66.63 100,000 1.9
2015 $73.52 100,000 2.9
2016 $50.14 100,000 3.9
2018 $73.96 100,000 5.0
2018 $45.40 100,000 6.0
2019 $44.30 150,000 6.9
2020 $65.42 150,000 7.9
2021 $74.57 150,000 8.9
2022 $64.74 150,000 9.9
1,150,000 6.1

33
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

For all grants, the weighted average fair value of share options granted, and weighted average assumptions used in the fair value estimation
at the time of grant, using the Black-Scholes model, are as follows:
Granted in Granted in
2022 2021
Share option fair value (per share) $24.84 $26.58
Risk free interest rate 2.79% 1.47%
Expected life (years) 10 10
Expected volatility 32.23% 31.53%
Dividend yield 1.32% 0.93%

The expected life used in the Black-Scholes model is the same as the contractual term of the options. The risk free interest rate used in
determining the fair value of the options granted is based on a Government of Canada zero coupon yield that was current at the time of
grant and has a term corresponding to the contractual term of the options. The expected volatility considers the historical volatility of the
Company’s shares for the 10 year period preceding the share option grant date. The dividend yield is the annualized dividend at the date
of grant divided by the average exercise price.

19 Other Income and (Expenses)

2022 2021
$ $
Foreign exchange gain (loss) (70) 12,426
Gain on sale of unused land 22,157 -
Gain on bargain purchase (Note 26) 29,440 -
Remeasurement of net investment in joint venture (Note 26) (21,773) -
Other income (expense) 1,443 804
31,197 13,230

20 Finance Income and (Expenses)

2022 2021
$ $
Interest expense (28,337) (18,436)
Foreign exchange gain (loss) on debt and derivatives (1,647) (6,237)
Interest earned 18,916 21,505
Other (14,589) (7,554)
(25,657) (10,722)

21 Earnings per Share

Basic earnings per share are calculated by dividing the net earnings attributable to equity holders of the Company by the weighted average
number of ordinary shares outstanding throughout the year. Diluted earnings per share are calculated by adjusting the weighted average
number of shares outstanding during the year to assume conversion of all dilutive potential shares.
2022 2021
$ $
Net earnings (loss) 426,194 420,558

Weighted average common shares 63,877,686 65,450,697

Incremental shares from assumed conversion of stock options 54,981 117,635
Adjusted weighted average common shares for diluted earnings per share 63,932,667 65,568,332

Net earnings (loss) per share:

Basic 6.67 6.43
Diluted 6.67 6.41

34
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

22 Commitments
As at December 31, 2022, outstanding commitments for capital expenditures under purchase orders and contracts amounted to $400,953
(December 31, 2021 - $209,096). Of this amount $346,701 (December 31, 2021 - $193,034) relates to the purchase of manufacturing
equipment and $54,252 (December 31, 2021 - $16,062) relates to general contracting and construction costs in respect of plant
construction. Of the commitments for plant construction, $2,467 (December 31, 2021 - $13,699) were commitments to a related party, a
company owned by the spouse of an officer and director. The majority of these commitments are due within the next twelve months.

23 Related Party Transactions

Details of the transactions between the Company and related parties are disclosed below:
(i) Key Management Personnel
The Company’s key management includes members of the Senior Executive Group and Board of Directors. The compensation paid,
or payable, to key management for employee services during the year was as follows:
2022 2021
$ $
Compensation and short-term benefits 28,740 35,515
Share-based compensation (Notes 17, 18) 3,059 3,270
Total compensation 31,799 38,785

(ii) Other Related Party Transactions

Related party transactions include long-term receivables due from an investee accounted for using the equity method at December
31, 2022 of $Nil (December 31, 2021 - $133,184). Interest earned on the receivable included in finance income was $1,470 for the
year ended December 31, 2022 (December 31, 2021 - $5,049). Included in the cost of sales are material purchases from the same
related party of $7,458 for the year ended December 31, 2022 (December 31, 2021 - $27,474), with amounts payable at December
31, 2022 of $Nil (December 31, 2021 - $10,110). Please see Note 26 regarding the business acquisition of the remaining 50% interest
in the joint venture, GF Linamar LLC, on April 1, 2022.

24 Segmented Information
Management has determined the operating segments based on the reports reviewed by the Senior Executive Group that are used to make
strategic decisions.
Mobility: The Mobility segment derives revenues from the collaborative design, development and manufacture of both systems and
components for new energy powertrains, body and chassis, driveline, engine, and transmission systems for both the global electrified and
traditionally powered on and off highway vehicle markets.
Industrial: The Industrial segment is a world leader in the design and production of innovative mobile industrial equipment, notably its
class-leading aerial work platforms, telehandlers and agricultural equipment.
The segments are differentiated by the products that each produces and reflects how the Senior Executive Group manages the business.
Corporate headquarters and other small operating entities are allocated to the Mobility and Industrial operating segments accordingly.
The Company accounts for inter-segment sales and transfers as arm’s length transactions at current market rates. The Company ensures
that the measurement and policies are consistently followed among the Company’s reportable segments for sales, operating earnings, net
earnings and assets.
The Company’s three largest customers are in the Mobility segment and account for 21.3%, 18.1% and 5.0% of total revenue (2021 –
21.1%, 17.4% and 5.2%).
The Company derives revenue from the transfer of goods and services at a point in time and over time in the following operating segments.
These segments best depict how economic factors affect the nature, amount, timing and uncertainty of revenue and cash flows.

35
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

Operational Segments Mobility Industrial 2022

$ $ $
Total revenue 6,041,075 1,923,925
Inter-segment sales (36,446) (10,643)
Sales to external customers 6,004,629 1,913,282 7,917,911

Cost of sales before amortization 4,998,093 1,506,714 6,504,807

Amortization 384,808 53,486 438,294
Selling, general and administration 250,341 160,835 411,176
Other income and (expenses) 21,850 9,347 31,197
Operating earnings (loss) 393,237 201,594 594,831

Share of net earnings (loss) of investments accounted for using the equity method (6,086)
Finance income and (expenses) (25,657)
Income taxes 136,894
Net earnings (loss) 426,194

Payments for property, plant and equipment 388,523 22,127 410,650

Operational Segments Mobility Industrial 2021

$ $ $
Total revenue 5,097,413 1,478,044
Inter-segment sales (29,564) (9,319)
Sales to external customers 5,067,849 1,468,725 6,536,574

Cost of sales before amortization 4,023,853 1,129,486 5,153,339

Amortization 398,220 47,363 445,583
Selling, general and administration 235,744 113,905 349,649
Other income and (expenses) 23,270 (10,040) 13,230
Operating earnings (loss) 433,302 167,931 601,233

Share of net earnings (loss) of investments accounted for using the equity method (28,345)
Finance income and (expenses) (10,722)
Income taxes 141,608
Net earnings (loss) 420,558

Payments for property, plant and equipment 238,977 4,081 243,058

The Company operates in four geographic segments – Canada, Rest of North America, Asia Pacific and Europe.
Rest of North
Geographic Segments Canada America Asia Pacific Europe 2022
$ $ $ $ $
Total sales 4,479,263 1,380,060 650,584 2,245,443
Inter-segment sales (348,766) (314,958) (7,427) (166,288)
Sales to external customers 4,130,497 1,065,102 643,157 2,079,155 7,917,911

Goodwill 494,361 - - 454,558 948,919

Intangible assets 687,882 58,788 - 156,248 902,918
Property, plant and equipment 884,925 765,598 302,617 839,951 2,793,091

36
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

Rest of North
Geographic Segments Canada America Asia Pacific Europe 2021
$ $ $ $ $
Total sales 3,540,769 994,096 651,979 1,953,307
Inter-segment sales (256,190) (217,734) (5,655) (123,998)
Sales to external customers 3,284,579 776,362 646,324 1,829,309 6,536,574

Goodwill 401,789 - - 451,499 853,288

Intangible assets 572,615 54,424 - 179,437 806,476
Property, plant and equipment 880,829 444,894 253,201 836,992 2,415,916

25 Supplemental Cash Flow Information

2022 2021
$ $
Interest paid 39,382 20,534
Interest received 18,965 20,658
Finance income received - 568
Taxes paid 232,386 186,944

Net Debt Reconciliation of Liabilities Arising from Financing Activities

Derivative
financial
Cash and instruments
cash Long-term Asset
equivalents debt Net debt (Liability) Total
$ $ $ $ $
At January 1, 2021 861,100 (1,303,214) (442,114) (44,604) (486,718)
Cash flow activity 69,366 487,795 557,161 40,470 597,631
Additions, net of disposals - leases - (16,381) (16,381) - (16,381)
Effect of cumulative translation adjustment (2,038) 2,105 67 - 67
Effect of foreign exchange adjustments - 7,774 7,774 (7,769) 5
Amount recognized in other comprehensive earnings - 33,728 33,728 12,060 45,788
Other changes - (3,352) (3,352) (157) (3,509)
At December 31, 2021 928,428 (791,545) 136,883 - 136,883
Cash flow activity (91,223) (462,924) (554,147) - (554,147)
Additions, net of disposals - leases - (40,645) (40,645) - (40,645)
Effect of cumulative translation adjustment 23,310 (311) 22,999 - 22,999
Amount recognized in other comprehensive earnings - (3,072) (3,072) - (3,072)
Business acquisitions, net of cash acquired (Note 26) - (5,952) (5,952) - (5,952)
Other changes - (3,925) (3,925) - (3,925)
At December 31, 2022 860,515 (1,308,374) (447,859) - (447,859)

The table above details changes in the Company’s liabilities arising from financing activities, including both cash and non-cash changes.
Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Company’s
consolidated statements of cash flows as cash flows from financing activities. This also applies to derivative financial instruments held to
hedge liabilities arising from financing activities. The Company is also presenting cash and cash equivalents to reflect net debt.

37
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

26 Business Acquisitions
(i) GF Linamar LLC
On April 1, 2022, the Company acquired the remaining 50% interest in the joint venture, GF Linamar LLC (“GFL”), from GF Casting
Solutions, a division of Georg Fischer AG thereby assuming 100% ownership and operational control. GFL will continue operations
as LLM Mills River (“Mills River”). The ownership change will help secure the Company’s long-term growth plan in lightweight structural
castings; a critical component in electrified vehicles. The preliminary purchase price was USD $73,000 plus an earn-out of up to a
maximum of USD $24,000. The earn-out contingent consideration has been estimated at $8,424 for a total preliminary purchase price
in CAD of $99,513. The earn-out was calculated based on cash flow projections covering a five-year period. Key assumptions used
for the cash flow projections included operating costs and capital expenditures based on internal management forecasts, forecast
growth rates based on the Company’s expectations for future performance and an appropriate discount rate reflecting specific risks
related to Mills River.
Due to the timing of the close and complexities associated with these transactions, the determination of the fair value of the purchase
price, including the earn-out, assets acquired and liabilities assumed, is not yet complete and are subject to further adjustments. The
Company will disclose the finalized purchase price allocation when the determination of the fair value is complete. The acquisition of
Mills River has been accounted for as a step business combination. The original net investment in the joint venture was remeasured
for fair value. Using the cash flow projections to calculate the fair value, the carrying value of the original 50% interest in the joint
venture of $120,817 was remeasured by a decrease of $21,773. The following table summarizes the consideration paid or payable
for the remaining 50% interest for Mills River’s acquired net assets, recognized at the acquisition date. The gain recognized for the
bargain purchase was the result of the preliminary purchase price being below the fair value of the preliminary net identifiable assets
acquired. This gain, along with the remeasurement for fair value on the original 50% interest in the joint venture, were included in other
income and expenses (Note 19).
Preliminary summary of identifiable assets acquired and liabilities assumed after step acquisition completed on April 1, 2022:
$
Cash consideration 91,089
Earn-out contingent consideration 8,424
Preliminary purchase price 99,513

Cash and cash equivalents 8,132

Accounts and other receivable 37,551
Inventories 38,610
Prepaids expenses and other current assets 844
Property, plant and equipment 197,243
Total assets acquired 282,380

Accounts payable and accrued liabilities 48,431

Long-term debt 5,952
Total liabilities assumed 54,383

Preliminary net identifiable assets acquired 227,997

Less: fair value of net investment and preliminary purchase price

Net investment of original 50% equity investment in joint venture 120,817
Remeasurement of net investment in joint venture (21,773)
Preliminary purchase price 99,513
Gain on bargain purchase 29,440

Gain on bargain purchase 29,440

Remeasurement of net investment in joint venture (21,773)
Net impact to other income and expenses (Note 19) 7,667

38
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

The sales included in the consolidated statements of earnings from April 1, 2022 to December 31, 2022 contributed by Mills River
were $146,651, which does not include sales to another Linamar facility of $35,172. Mills River also contributed net losses of $39,369
over the same period. Mills River is included in the Mobility segment.
(ii) Salford Group of Companies
On June 3, 2022, the Company acquired 100% of the issued and outstanding equity of the Salford Group of Companies (“Salford”).
The ownership will expand the Company’s agricultural portfolio into crop nutrition application and tillage products. The preliminary
purchase price is CAD $245,174.
Due to the timing of the close and complexities associated with these transactions, the determination of the fair value of the purchase
price, assets acquired and liabilities assumed, is not yet complete and are subject to further adjustments. The Company has recorded
a provisional amount of $92,572 to goodwill as the current unallocated portion of the purchase price. The Company will update this
balance and disclose the finalized purchase price allocation when the determination of the fair value is complete. The following table
summarizes the consideration paid for Salford’s acquired net assets, recognized at the acquisition date, which has been accounted
for as a business combination.
Preliminary summary of identifiable assets acquired and liabilities assumed after acquisition completed on June 3, 2022:
$
Cash and cash equivalents 2,598
Accounts and other receivables 14,593
Inventories 39,586
Prepaid expenses and other current assets 717
Property, plant and equipment 27,497
Intangible assets 138,560
Goodwill 92,572
Total assets acquired 316,123

Accounts payable and accrued liabilities 37,024

Provisions 1,036
Income taxes payable 1,350
Deferred tax liabilities 31,539
Total liabilities assumed 70,949

Preliminary net identifiable assets acquired 245,174

The goodwill is attributable to expanding the Company’s capabilities and further diversifies the Company’s end markets. The
acquisition further positions the Company as a global agricultural equipment manufacturer. The goodwill arising from this acquisition
is not deductible for tax purposes.
The sales included in the consolidated statements of earnings from June 3, 2022 to December 31, 2022 contributed by Salford were
$107,505. Salford also contributed net earnings of $8,362 over the same period. Salford is included in the Industrial segment.
(iii) Consolidated Pro-forma Sales and Earnings
If both acquisitions had occurred on January 1, 2022, the Company’s consolidated pro-forma sales and net earnings for the period
ended December 31, 2022 would have been $8,046,009 and $430,324, respectively. These amounts have been calculated using Mills
River and Salford’s results adjusted for the additional depreciation and amortization that would have been charged assuming the
preliminary fair value adjustments to property, plant and equipment and intangible assets had applied from January 1, 2022, together
with the consequential tax effects.

39
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

27 Financial Instruments
(i) Accounts Payable and Accrued Liabilities
December 31 December 31
2022 2021
$ $
Accounts payable 1,231,468 984,488
Accrued liabilities 622,736 461,875
Financial liabilities 1,854,204 1,446,363
Contract liabilities (Note 15) 157,490 157,103
Accounts payable and accrued liabilities 2,011,694 1,603,466

(ii) Composition of Financial Instruments

The comparison of fair values to carrying amounts of financial assets and financial liabilities along with the fair value hierarchy for
financial assets and financial liabilities carried at fair value on a recurring basis is as follows:
December 31, 2022 December 31, 2021
Carrying Carrying
Subsequent Value Asset Value Asset
Measurement (Liability) Fair Value (Liability) Fair Value
$ $ $ $
Long-term receivables Amortized cost (Level 2) 72,384 71,305 230,069 240,456
Derivative financial instruments (hedge relationships) (iii):
USD sales forwards – CAD functional entities Fair value (Level 2) (30,651) (30,651) (3,880) (3,880)
USD sales forwards – MXN functional entities Fair value (Level 2) 11,414 11,414 3,323 3,323
USD sales forwards – CNY functional entities Fair value (Level 2) 392 392 1,045 1,045
CAD purchase forwards – GBP functional entities Fair value (Level 2) (399) (399) 1,299 1,299
Investments designated at fair value through other
comprehensive income Fair value (Level 3) 7,952 7,952 6,794 6,794
Long-term debt, excluding lease liabilities (Note 13) Amortized cost (Level 2) (1,228,848) (1,156,636) (732,249) (700,197)

The fair value of the long-term receivables, derivative financial instruments, and long-term debt are determined by using valuation
techniques based on observable market data other than quoted prices. The Company determined that the fair value of its investments,
is equal to its carrying values. The fair value of other financial instruments such as cash and cash equivalents, accounts and other
receivables, short-term bank borrowings and accounts payable and accrued liabilities approximate their carrying values due to the
short-term maturities of these instruments. There were no transfers in the fair value hierarchy between Levels 1, 2 and 3 during the
year.
Specific valuation techniques used to value financial instruments include:
(a) Quoted market prices for similar instruments;
(b) The fair value of forward foreign exchange contracts is determined using forward exchange rates at the reporting date; or
(c) Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

40
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

(iii) Derivative Financial Instruments and Hedge Accounting

The summary of the Company’s derivative financial instruments and hedge accounting is as follows:
Hedging reserves Other comprehensive earnings
Gain/(loss)
Cost of Unrealized Amount reclassified to
Carrying hedging gain/(loss) reclassified to sales and Change in cost
value reserve Total recognized inventory finance expense of hedging
$ $ $ $ $ $ $
a) USD sales forward contracts (20,146) 4,703 (15,443) (39,561) - 21,750 4,531
b) CAD purchase forward contracts (435) 28 (407) 5,763 (7,416) - (90)
c) Long-term debt designated as net
investment hedge - - - (3,072) - - -
December 31, 2022, gross (20,581) 4,731 (15,850) (36,870) (7,416) 21,750 4,441
Deferred tax 8,450 1,854 (5,438) (1,110)
December 31, 2022, net (28,420) (5,562) 16,312 3,331

Hedging reserve Other comprehensive earnings

Gain/(loss)
Cost of Unrealized Amount reclassified to
Carrying hedging gain/(loss) reclassified to sales and Change in cost
value reserve Total recognized inventory finance expense of hedging
$ $ $ $ $ $ $
a) USD sales forward contracts (6,787) 1,303 (5,484) (4,956) - (23,410) (2,262)
b) CAD purchase forward contracts 805 96 901 2,307 (272) - 151
c) Long-term debt designated as net
investment hedge - - - 33,728 - - -
d) USD cross currency interest rate
swap contract - - - (6,687) - 7,769 4
e) EUR cross currency interest rate
swap contract - - - 11,830 - - (855)
December 31, 2021, gross (5,982) 1,399 (4,583) 36,222 (272) (15,641) (2,962)
Deferred tax (623) - 3,724 740
December 31, 2021, net 35,599 (272) (11,917) (2,222)

There was no ineffectiveness in any of the hedge relationships in 2021 and 2022.
a) USD Sales Forward Contracts
The Company enters into a series of forward exchange contracts to hedge a portion of the ultimate cash flows arising from highly
probable forecasted consolidated USD sales. The Company’s program hedges a portion of USD sales contracts entered into by
entities with various functional currencies. Every quarter, additional contracts will be initiated in order to maintain a proportional
coverage for up to 18 months of forecasted USD sales.
All the contracts are designated as cash flow hedges for accounting purposes for the spot component only, up until the month of the
sales activity. The change in the forward element (the excluded component) of the contracts are recognized within other
comprehensive earnings in the cost of hedging reserve within equity and is reclassified to net earnings in sales when the hedging
relationship ends. The derivatives are in the same currency and notional amounts as a portion of the anticipated USD sales; therefore
the hedge ratio is on a one to one basis. It is anticipated that all critical terms will match during the period they are outstanding,
therefore the economic relationship will remain 100% effective. After the month the sales activity occurs, the net fair value on the
derivatives outstanding until maturity is recognized in other income and (expenses). For the current year, this was a loss of $3,400
(2021 – gain of $2,084).

41
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

The summary of contracts in place with USD notional hedge values and average forward rates back to the respective functional
currencies is as follows:
December 31, 2022 December 31, 2021
Average
Notional Average Notional Forward
Hedge Value Forward Rate Hedge Value Rate
USD USD
$ $
USD sales forwards – CAD functional entities 693,300 1.3071 542,250 1.2593
USD sales forwards – MXN functional entities 132,975 21.4926 127,050 21.7832
USD sales forwards – CNY functional entities 37,100 6.8096 20,675 6.7006
863,375 689,975

b) CAD Purchase Forward Contracts

The Company enters into a series of forward exchange contracts to hedge a portion of the ultimate cash flows arising from highly
probable forecasted consolidated CAD purchases. The Company’s program hedges a portion of CAD purchase contracts entered into
by entities with various functional currencies. Every quarter, additional contracts will be initiated in order to maintain a proportional
coverage for up to 18 months of forecasted CAD purchases.
All the contracts are designated as cash flow hedges for accounting purposes for the spot component only, up until the month of the
purchase activity when the change in the spot component of the contracts in the hedges reserve within equity is reclassified to inventory
recognized with the hedging transaction. The change in the forward element (the excluded component) of the contracts are recognized
within other comprehensive earnings in the cost of hedging reserve within equity and is reclassified to inventory recognized with the
hedging transaction, when the hedging relationship ends. The deferred amounts carried in inventory are recognized in net earnings
as the inventory impacts net earnings approximately 90 days later. The derivatives are in the same currency and notional amounts as
a portion of the anticipated CAD purchases; therefore, the hedge ratio is on a one to one basis. It is anticipated that all critical terms
will match during the period they are outstanding, therefore the economic relationship will remain 100% effective. After the month the
purchase activity occurs, the net fair value on the derivatives outstanding until maturity is recognized in other income and (expenses).
For the current year, this was a gain of $1,358 (2021 – $182).
The contracts in place have notional hedge values of CAD $127,500 (2021 – CAD $150,946) at an average forward rate of 1.6408
(2021 – 1.7238) back to the GBP functional currency.
c) Long-term Debt Designated as Net Investment Hedge
In 2021, EUR denominated notes used towards the repayment of a non-revolving term credit facility were designated as a net
investment hedge for the net investments in EUR foreign operations. As all critical terms matched during the period, the economic
relationship was 100% effective.
Further terms of the EUR denominated notes are disclosed in Note 13(i).
d) USD Cross Currency Interest Rate Swap Contracts
The USD cross currency interest rate swaps contracts matured and were settled in January 2021 at the same time that underlying
USD borrowings were repaid, ending a hedge for accounting purposes.
e) EUR Cross Currency Interest Rate Swap Contracts
The EUR cross currency interest rate swaps contracts matured and were settled in January 2021, ending a net investment hedge on
EUR foreign operations.

(iv) Financial Risk Management

The Company is primarily exposed to market risk, liquidity risk, credit risk and capital risk as a result of holding financial instruments.
Market Risk – Foreign Exchange Risk
The Company operates in several different geographical regions in the world and has many business arrangements with customers
and suppliers also based in different geographical regions. The Company therefore is impacted by changes in foreign exchange rates.
These foreign exchange rate changes affect net sales and expenses based in foreign currencies and the translation of monetary

42
LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

balances in relation to functional currencies. In order to minimize the adverse effects on the financial performance of the Company,
foreign exchange derivative contracts, which may or may not be designated in a hedge accounting relationship, and certain portions
of its foreign denominated long-term debt may be used to mitigate certain foreign currency risk exposures to reduce the uncertainty
from foreign currency transactions and functional currency translations.
Approximate Foreign Exchange Exposure as related to the following currencies:
December 31 December 31
2022 2021
% %
USD activity 84.5 79.7
EUR activity 8.3 0.4
British pound activity 3.3 14.4
Mexican peso activity 1.1 2.3

The Company has foreign operations with the following functional currencies that differ from the parent: Hungarian forint, Mexican
peso, USD, Euro, British pound, Korean won, Chinese renminbi, Japanese yen, Australian dollar, Swedish krona, Brazilian real, Indian
rupee and Bulgarian lev.
Assuming all other variables are constant a 5% strengthening of the following currencies against the functional currency of the
Company and its foreign subsidiaries would result in gains/(losses) by the amounts shown below:
Impact on net earnings Impact on hedging
gain/(loss) reserve gain/(loss)
December 31 December 31 December 31 December 31
2022 2021 2022 2021
$ $ $ $
USD (13,884) 775 (29,055) (22,421)
EUR (972) 119 - -
British pound 1,650 1,940 3,580 4,724
Mexican peso (356) (828) (5,329) (4,687)

A weakening of the same above currencies at December 31 would have had the equal but opposite effect, on the basis that all other
variables remain constant.
Market Risk – Interest Rate Risk
Due to the Company’s capital structure, there is some degree of exposure to changes in the Canadian, US, European and Asian
money market rates of interest. The Company does invest excess funds at times to maximize interest income earned. The investment
quality must meet internal standards for ratings and liquidity to safeguard the Company’s cash and cash equivalents. Interest rate or
cross currency interest rate swap agreements are used by the Company from time to time to manage the fixed and floating interest
rate mix of the Company’s total debt portfolio and related overall cost of borrowing.
The interest rate swap agreements involved the periodic exchange of interest payments with or without the exchange of the notional
principal amount upon which the payments were based. Interest expense on the debt was then adjusted to include the payments
made or received under the interest rate swaps.
As at December 31, 2022, an interest rate change of 50 basis points (all other variables held constant) would have an impact on net
earnings for the year of $3,182 (2021 - $1,256).
Liquidity Risk
Liquidity risk is the Company’s ability to meet its financial obligations when they come due. The Company manages the liquidity risk
of forecasted cash flows from operations, by ensuring that there are cash resources available to meet these needs. As at
December 31, 2022, the Company’s revolving bank facility had available credit of $462,483. The revolving facility matures in 2026.
The amount of financial resources available to invest in a Company’s growth is dependent upon its size and willingness to utilize debt
and issue equity. If the Company deviates from its growth expectations, it may require additional debt or equity financing. There is no
assurance that the Company will be able to obtain additional financial resources that may be required to successfully compete in its

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LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

markets on favourable commercial terms. Failure to obtain such financing could result in the delay or abandonment of certain strategic
plans for product manufacturing or development.
The undiscounted contractual maturities of the Company’s financial liabilities are as follows:
Maturing in 1 Maturing after
Current year to 2 years 2 years Total
December 31, 2022 $ $ $ $
Accounts payable and accrued liabilities 1,854,204 - - 1,854,204
Long-term debt and contractual interest payments, derivative instruments,
and financial guarantees 146,874 35,959 1,313,743 1,496,576
2,001,078 35,959 1,313,743 3,350,780

Maturing in 1 Maturing after

Current year to 2 years 2 years Total
December 31, 2021 $ $ $ $
Accounts payable and accrued liabilities 1,446,363 - - 1,446,363
Long-term debt and contractual interest payments, derivative instruments,
and financial guarantees 113,974 225,524 622,971 962,469
1,560,337 225,524 622,971 2,408,832

Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meets its contractual
obligations. The maximum exposure to credit risk at the reporting date is represented by the net carrying amount of the Company’s
cash and cash equivalents, accounts and other receivables, long-term receivables, derivative financial instruments and financial
guarantees. The Company is exposed to credit risk from potential default by counterparties that carry the Company’s cash and cash
equivalents and derivative financial instruments. The Company attempts to mitigate this risk by dealing only with large financial
institutions with investment grade credit ratings. All of the financial institutions within the bank syndicate providing the Company’s
credit facility meet these qualifications.
A substantial portion of the Company’s receivables are with large customers in the automotive, truck and industrial sectors and are
subject to normal industry credit risks. At December 31, 2022, the receivables from the Company’s three largest customers amounted
to 15.6%, 12.6% and 3.7% (December 31, 2021 – 15.0%, 9.7%, and 4.0%) of customer receivables.
The following represents the weighted-average expected credit loss rate of the Company’s accounts and other receivables and long-
term receivables. For credit risk management, the Company assesses the age of past due receivables to determine if credit risk has
increased significantly. The aging of receivables is as follows:
December 31, 2022 December 31, 2021
Accounts and Long-term Accounts and Long-term
other receivables receivables other receivables receivables
$ $ $ $
Current 942,083 71,579 733,064 229,418
Past due 1-30 days 128,477 679 87,393 187
Past due 31-60 days 40,730 9 15,690 9
Past due 61-90 days 13,848 5 7,983 4
Past due >91 days 37,143 1,269 32,574 1,469
Gross carrying amount 1,162,281 73,541 876,704 231,087
Loss allowance provision 1,772 1,157 6,153 1,018
1,160,509 72,384 870,551 230,069
Expected loss rate 0.2% 1.6% 0.7% 0.4%

The above gross carrying amounts represent the maximum exposure to credit risk without taking into consideration any collateral held
or other credit enhancements. This is mitigated as the Company may hold a security interest in the underlying asset until the balance
is fully settled by the customer, resulting in a reduced actual exposure.

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LINAMAR CORPORATION
Notes to Consolidated Financial Statements
For the years ended December 31, 2022 and December 31, 2021
(in thousands of Canadian dollars, except where otherwise noted)

Capital Risk Management

The Company’s capital management objectives are to ensure the stability of its capital so as to support continued operations, provide
an adequate return to shareholders and generate benefits for other stakeholders. The Company’s capital is composed of shareholders’
equity, and is not subject to any capital requirements imposed by a regulator.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk
characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue or re-acquire
shares, acquire or dispose of assets, and adjust the amount of cash and cash equivalents. There were no changes in the Company’s
capital risk management strategy during the year.

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