Badger Daylighting Ltd. Announces Results for the Year Ended De

 
FSC / Press Release 
Badger Daylighting Ltd. Announces Results for the Year Ended December 31, 2012 
Calgary, Alberta CANADA, March 18, 2013 /FSC/ - Badger Daylighting Ltd. (BAD -
TSX), Badger Daylighting Ltd. is pleased to announce its results for the year
and three months ended December 31, 2012. 
Management's Discussion and Analysis 
The following Management's Discussion and Analysis (MD&A) should be read in
conjunction with the audited consolidated financial statements and related notes
of Badger Daylighting Ltd. (the "Company" or "Badger") for the year ended
December 31, 2012. The audited consolidated financial statements were prepared
in accordance with International Financial Reporting Standards (IFRS).  Readers
should also refer to the Annual Information Form for the year ended December 31,
2012, which along with further information relating to Badger may be found on
SEDAR at www.sedar.com. 
This MD&A has been prepared taking into consideration information available to
March 15, 2013. 
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS 
Certain statements and information contained in this MD&A and other continuous
disclosure documents of the Company referenced herein, including statements
related to the Company's capital expenditures, projected growth, view and
outlook toward margins, cash dividends, customer pricing, future market
opportunities and statements, and information that contain words such as
"could", "should", "can", "anticipate", "expect", "believe", "will", "may" and
similar expressions relating to matters that are not historical facts,
constitute "forward-looking information" within the meaning of applicable
Canadian securities legislation. These statements and information involve known
and unknown risks, uncertainties and other factors that may cause actual results
or events to differ materially from those anticipated in such forward-looking
statements and information. The Company believes the expectations reflected in
such forward-looking statements and information are reasonable, but no assurance
can be given that these expectations will prove to be correct. Such
forward-looking statements and information included in this MD&A should not be
unduly relied upon. These forward-looking statements and information speak only
as of the date of this MD&A. 
In particular, forward-looking information and statements include discussion
concerning: 
* That internal preparations for anticipated growth in 2013 will be completed; 
* That as long as overall activity in the economy and the oil and natural gas
industry remains essentially constant, Badger will be able to continue to grow
the business in 2013; 
* That Badger in 2013 can further develop the organization to position itself to
be able to handle the planned future growth; 
* That the new locations opened in the United States will provide an increased
contribution to cash flows from operations and net profit during 2013; 
* That the current business development initiative will provide Badger with the
additional new customers necessary to grow the business in 2013 and the future; 
* That Eastern Canada will continue with steady growth, driven by activity
levels in the utility and construction segments that are forecast to be stable
in 2013; 
* That there will be an increase in Western Canada revenue during 2013 due to
anticipated project volume and spending in the oil and natural gas sector; 
* That an increase in Company capital will be required to finance the
anticipated capital expenditure program; and, 
* That the extendable revolving credit facility will be renewed and fully
available during 2013 for an additional 364-day period. 
The forward-looking statements rely on certain expected economic conditions and
overall demand for Badger's services and are based on certain assumptions. The
assumptions used to generate forward- looking statements are, among other
things, that: 
* Badger has the ability to achieve its internal revenue, net profit and cash
flow forecasts for 2013; 
* There will be long-term demand for hydrovac services from oil refineries,
petro-chemical plants, power plants and other large industrial facilities
throughout North America; 
* Badger will maintain relationships with current customers and develop
successful relationships with new customers; 
* The Company will collect customer obligations in a timely manner; and 
* Badger will execute its growth strategy. 
Risk factors and other uncertainties that could cause actual results to differ
materially from those anticipated in such forward-looking statements include,
but are not limited to: price fluctuations for oil and natural gas and related
products and services; political and economic conditions; industry competition;
Badger's ability to attract and retain key personnel; the availability of future
debt and equity financing; changes in laws or regulations, including taxation
and environmental regulations; and fluctuations in foreign exchange or interest
rates. 
Readers are cautioned that the foregoing factors are not exhaustive. Additional
information on these and other factors that could affect the Company's
operations and financial results is included in reports on file with securities
regulatory authorities in Canada and may be accessed through the SEDAR website
(www.sedar.com) or at the Company's website. The forward-looking statements and
information contained in this MD&A are expressly qualified by this cautionary
statement. The Company does not undertake any obligation to publicly update or
revise any forward-looking statements or information, whether as a result of new
information, future events or otherwise, except as may be required by applicable
securities laws. 
NON-IFRS FINANCIAL MEASURES 
This MD&A contains references to certain financial measures, including some that
do not have any standardized meaning prescribed by IFRS and that may not be
comparable to similar measures presented by other corporations or entities.
These financial measures are identified and defined below: 
"Cash available for growth and dividends" is used by management to supplement
cash flow as a measure of operating performance and leverage. The objective of
this measure is to calculate the amount of cash available for growth and/or
dividends to shareholders. It is defined as funds generated from operations less
required debt repayments and maintenance capital expenditures, plus any proceeds
received on the disposal of assets. 
"EBITDA" is earnings before interest, taxes, depreciation and amortization and
is a measure of the Company's operating profitability and is therefore useful to
management and investors. EBITDA provides an indication of the results generated
by the Company's principal business activities prior to how these activities are
financed, assets are amortized or the results are taxed in various
jurisdictions. EBITDA is calculated from the consolidated statement of
comprehensive income as gross profit less selling, general and administrative
costs. It is calculated as follows: 
-***- 
Three months ended                Year ended 
December 31,              December 31,
----------------------------------------------------------------------
$                           2012        2011         2012         2011
----------------------------------------------------------------------
Gross profit 
22,086,654  20,199,195   75,555,298   64,779,472
Selling, general and
administrative costs (4,053,391) (3,912,611) (14,060,502) (11,974,119) 
----------------------------------------------------------------------
EBITDA                18,033,263  16,286,584   61,494,796   52,805,353
---------------------------------------------------------------------- 
-****- 
"Funded debt" is a measure of Badger's long-term debt position. Funded debt is
long-term debt. 
"Funds generated from operations" is used to assist management and investors in
analyzing operating performance and leverage. It is not intended to represent
operating cash flow or operating profits for the period nor should it be viewed
as an alternative to cash flow from operating activities, net profit or other
measures of financial performance calculated in accordance with IFRS. Funds
generated from operations are derived from the consolidated statement of cash
flows and is calculated as follows: 
-***- 
Three months ended            Year ended 
December 31,          December 31,
-----------------------------------------------------------------------
$                                2012        2011       2012       2011
-----------------------------------------------------------------------
Cash provided by           13,193,282  15,437,743 46,200,783 33,469,398
  operating activities
Add (deduct):
Net change in non-cash
  working capital relating  2,427,846 (1,714,802)  4,655,475 10,313,247
  to operating activities
Equity-settled share plan           -           -    655,316  2,191,648
  settled in cash
-----------------------------------------------------------------------
Funds generated from       15,621,128  13,722,941 51,511,574 45,974,293
  operations
----------------------------------------------------------------------- 
-****- 
"Growth capital expenditures" are capital expenditures that are intended to
improve Badger's efficiency, productivity or overall capacity and thereby allow
Badger to access new markets. They generally represent any net additions to the
daylighting fleet. Growth capital expenditures exclude acquisitions. 
"Maintenance capital expenditures" are any amounts incurred during a reporting
period to keep the Company's daylighting fleet at the same number of units, plus
any other capital expenditures required to maintain the capacities of the
existing business. They also include any costs incurred to extend the
operational life of a daylighting unit. This amount will fluctuate from
period-to-period depending on the number of units retired from the fleet. 
"Net debt" is funded debt less cash and cash equivalents. 
Cash available for growth and dividends, EBITDA, funded debt, funds generated
from operations, growth capital expenditures, maintenance capital expenditures
and net debt throughout this document have the meanings set out above. 
FINANCIAL HIGHLIGHTS 
-***- 
THREE MONTHS  THREE MONTHS          YEAR         YEAR 
ENDED         ENDED         ENDED        ENDED 
DECEMBER 31,  DECEMBER 31,  DECEMBER 31, DECEMBER 31, 
2012          2011          2012         2011
------------------------------------------------------------------------
Revenues                 69,249        56,549       239,229      194,178
EBITDA                   18,033        16,287        61,495       52,805
Profit before tax        12,841        11,925        42,008       35,813
Income tax expense 
Current               2,546         2,019         7,945        5,158 
Deferred              2,407         1,201         6,013        4,852
Net profit                7,888         8,705        28,050       25,803
Profit per share
  diluted ($)              0.69          0.80          2.41         2.38
Funds generated from
  operations             15,621        13,723        51,512       45,974
Funds generated from
  operations per share
  diluted ($)              1.26          1.27          4.42         4.24
Maintenance capital
  expenditures            1,089         1,135         3,670        2,037
Required long-term
 debt repayments              -             -             -        3,259
Cash available for
  growth and dividends   14,611        12,553        48,053       40,810
Dividends declared        3,267         2,757        12,058       11,030
Growth capital
  expenditures           13,768        11,307        50,423       35,194
Total shares outstanding
  (end of the
  period)            12,326,631    10,813,631    12,326,631   10,813,631 
-****- 
OVERVIEW 
Highlights for the year ended December 31, 2012 are as follows: 
* Revenues increased by 23 percent to $239.2 million in 2012 from $194.2 million
in 2011, while EBITDA increased by 16 percent to $61.5 million in 2012 from
$52.8 million in 2011. 
* Cash available for growth and dividends increased by 18 percent to $48.1
million in 2012 from $40.8 million in 2011, due to increased funds generated
from operations and no required debt repayments. 
* In June 2012, Badger completed an equity financing for gross proceeds of $37.5
million through the issuance of 1,500,000 common shares at a price of $25.00 per
share. 
* Net debt decreased to $27.3 million at December 31, 2012 from $43.9 million at
December 31, 2011 due to the funds received on closing the equity financing in
June 2012. 
* The Company renewed its extendable revolving credit facility in June 2012.  At
the request of Badger the maximum principal was reduced from $60 million to $55
million. 
* The Company added 131 new hydrovac units and removed five from service,
exiting the year with 630 hydrovac units. Of the total, 307 units were operating
in Canada and 323 in the United States at year-end. They were financed from cash
generated from operations, existing credit facilities and the equity financing. 
* Effective November 2012 Badger's Board of Directors approved a one-half-cent
increase to the monthly dividend, increasing the total amount by 6 percent, from
8.5 cents to 9 cents per month. 
Selected Annual Financial Information 
-***- 
------------------------------------------------------------ 
Year ended December 31, 
------------------------------------
($)                         2012        2011        2010
------------------------------------------------------------
Revenues                 239,228,701 194,178,089 139,610,783
------------------------------------------------------------
Net profit                28,049,759  25,803,156  19,633,096
------------------------------------------------------------
Net profit per                  2.41        2.39        1.82
  share *  basic
------------------------------------------------------------
Net profit                      2.41        2.38        1.81
  per share *
  diluted
------------------------------------------------------------
Total assets             225,582,408 183,866,809 151,196,167
  (end of year)
------------------------------------------------------------
Total long-term           29,773,229  46,554,454  40,671,395
  debt (1) (end of year)
------------------------------------------------------------
Distributions/            12,057,659  11,029,907  13,618,878
  dividends declared
------------------------------------------------------------ 
-****- 
(1) Includes the current portion of long-term debt. 
OUTLOOK 
2012 was a good year for Badger in terms of results for the fiscal year and for
investments made to generate future growth.  The United States generated strong
revenue growth during the year through the addition of 11 new locations, adding
64 new hydrovac units and as a result of increased business development.  Gross
margins were slightly reduced in the United States due to inefficiencies caused
by rapid growth and also investments in personnel for the future.  In Canada the
Company also generated strong revenue growth in a market that is more mature
than the United States.  Again margins were slightly reduced due to Western
Canada generating reduced margins and investments made in Eastern Canada to
ready the organization for future growth.  Western Canada in 2011 had delivered
a great year with above average margins and very good operational efficiencies. 
In 2012 the market was a bit tougher in the fall and Badger invested in various
operational expenses in preparation for even higher revenue.  The region did
generate higher revenue but not to the level expected when the investments were
made.  It should be noted that while 2012 had lower margins than 2011, it was
still a good year for Badger in Western Canada.  The manufacturing group built
an additional 131 hydrovac units in 2012, which was a very satisfying milestone
and Badger's largest one-year build ever, which is very positive for the future.
 If the overall economy in North America and the oil and natural gas industry
remain relatively stable, Badger will continue its growth and deliver good
results in 2013. 
Major initiatives in 2013 will consist of: 
1. Further develop the organization to continue to grow the existing business. 
In the United States Badger intends to add personnel which will add current
costs, but position the organization for future returns.  This will continue to
dampen margins in the United States in the short term, but as the organization
develops, margins should improve. 
2. Continue with the business development initiative launched in 2012 to ensure
new customers are constantly being added.  Badger has an internal goal to double
its United States customer base over the next couple of years. 
3. In 2012 Badger commenced an initiative to streamline its administration
system through the use of electronic forms and systems to transfer data from the
field to Badger and the Company's customers.  Badger is behind schedule on this
initiative but early indications show that it will be worth the commitment of
time and resources. 
4. Add new locations in market areas where there is good future potential. 
These investments are necessary to help grow the business. 
5. Badger is currently building about three trucks per week in its Red Deer,
Alberta manufacturing facility.  This will continue as long as there is a market
demand for new hydrovac units from Badger's various operational areas.  Badger
expects to retire approximately 15 to 25 hydrovac units from the fleet in 2013. 
Regional outlook: 
1. Badger's Western Canada business is showing a good deal of strength in early
2013.  There is, however, some uncertainty in the overall market due to concerns
over the mild winter perhaps causing an early spring break-up, plus some
pressure on the oil industry due to pricing differentials.  Notwithstanding the
above, Badger is expecting another good year in Western Canada. 
2. Eastern Canada has been and should continue to be a steady, moderate growth
area for Badger.  The expectations for 2013 will be the same. 
3. The United States offers Badger large market potential.  Currently Badger has
only slightly more hydrovac units in the United States than Canada.  The United
States economy being many times the size of Canada's creates lots of growth
potential.  Badger will continue to develop this market, add more locations and
further develop the organization to take advantage of this opportunity. 
Badger is pleased with the 2012 results.  There, as always, were certain items
the Company would like to have done better but overall a strong year.  Badger
intends to further build on this success in 2013 while remaining flexible to
take advantage of opportunities as they present themselves. 
OVERALL PERFORMANCE FOR THE YEAR ENDED DECEMBER 31, 2012 COMPARED TO THE YEAR
ENDED DECEMBER 31, 2011 
Results of Operations 
Revenues 
Revenues were $239.2 million for the year ended December 31, 2012 compared to
$194.2 million for the year ended December 31, 2011. The increase is
attributable to the following: 
* Canadian revenues increased by 17 percent from $111.0 million in 2011 to
$129.3 million in 2012. Western Canada hydrovac revenue increased due to
increased demand for hydrovac services in various areas generated by higher
activity in the oil and natural gas industry, plus the addition of two new
areas.  Eastern Canada revenue remained almost unchanged; and 
* United States revenue grew from $83.2 million in 2011 to $110.0 million in
2012. Removing the effect of foreign exchange rate changes, revenues increased
by 31 percent year-over-year. The increase is due to more work in the United
States generated by new locations added over the last couple of years and
positive results from business development. 
Badger's average revenue per truck per month was $32,900 for 2012 versus $32,500
for 2011. The increase is due to a focused business development effort, more
mature United States locations and additional customers. 
Direct Costs 
Direct costs for 2012 were $163.7 million compared to $129.4 million for 2011.
The increase of 26 percent is greater than the revenue growth of 23 percent due
to increased costs in Western Canada not being matched by revenue growth over
2011.  It was, however, still a good year.  Costs in the United States increased
due to growth investments and some operational inefficiency. 
Gross Profit 
The gross profit percentage was 31.6 percent for 2012, a decrease from the 33.4
percent generated in 2011. The Canadian gross profit percentage decreased from
38.7 percent for 2011 to 36.4 percent for 2012 as a result of higher costs in
Western Canada. United States gross profit percentage decreased very slightly
from 26.2 percent in 2011 to 25.9 percent in 2012 due to growth investments and
some operational inefficiency. 
Depreciation of Property, Plant and Equipment 
Depreciation of property, plant and equipment was $18.4 million in 2012 or $3.8
million higher than the $14.6 million incurred in 2011 due to the increased
number of hydrovac units in the fleet. 
Finance Cost 
Finance cost was $1.2 million in 2012, unchanged from 2011. The average debt
outstanding during 2012 was nearly unchanged from 2011. 
Selling, General and Administrative Expenses 
Selling, general and administrative expenses increased by 17 percent to $14.1
million in 2012 from $12.0 million in 2011.  The main reason for the increase
was the additional cost associated with the incentive compensation due to the
increase in the price of Badger's shares.  Other reasons were an increase in
personnel salary costs resulting from the growth in Badger's business, increases
in employee bonuses due to the good financial results and costs associated with
implementing the use of electronic forms and other measures to transfer data
electronically from the field to offices and from offices to Badger's customers
in order to streamline certain of Badger's administrative processes.  As a
percentage of revenues, selling, general and administrative expenses decreased
to 5.9 percent for 2012 from 6.2 percent for 2011. 
Income Taxes 
The effective tax rate was 33 percent for 2012 versus 28 percent for 2011. 
Profit before tax in the United States for 2012 increased relative to Canadian
profit before tax during 2011, resulting in the increase in the effective tax
rate given that corporate income tax rates are higher in the United States. 
Exchange Differences on Translation of Foreign Operations 
The exchange rate differences result from converting the balance sheet and
profit statement related to the United States operations into Canadian currency. 
Liquidity and Dividends 
Funds generated from operations increased to $51.5 million in 2012 from $46.0
million in 2011 (excluding the $1.1 million payment to Clean Harbors, Inc.,
funds generated from operations were $47.1 million in 2011) due primarily to
increased revenues and EBITDA. The Company uses its cash to pay dividends to
shareholders, build additional hydrovac units, invest in maintenance capital
expenditures and repay long-term debt. 
The Company had working capital of $43.9 million at December 31, 2012, compared
to $39.7 million at December 31, 2011. 
The following table outlines the cash available to fund growth and pay dividends
to shareholders in 2012 compared to 2011: 
-***- 
Year ended        Year ended 
December 31, 2012 December 31, 2011 
Funds generated from operations            51,511,574        45,974,293
Add: proceeds from sale of 
property, plant and equipment           211,471           131,867
Deduct: required repayments of                      -       (3,258,554) 
long-term debt
Deduct: maintenance capital               (3,669,569)       (2,037,325) 
Expenditures
-----------------------------------------------------------------------
Cash available for growth capital 
expenditures and dividends           48,053,476        40,810,281
----------------------------------------------------------------------- 
Growth capital expenditures                50,423,156        35,193,970
----------------------------------------------------------------------- 
Dividends declared                         12,057,659        11,029,907 
-****- 
In determining cash available for dividends, the Company excludes non-cash
working capital changes for the year as well as growth capital expenditures.
Changes in non-cash working capital items are excluded so as to remove the
effects of timing differences in cash receipts and disbursements, which
generally reverse themselves and can vary significantly between fiscal periods.
Growth capital expenditures are excluded so as to include only the maintenance
capital expenditures required for the sustainability of the existing asset base. 
The following table outlines the excess of cash provided by operating activities
and net profit over dividends declared during the years ended December 31, 2012
and 2011: 
-***- 
Year ended         Year ended
($)                                   December 31, 2012 December 31, 2011 
Cash provided by operating activities  46,200,783        33,469,398
Net profit                             28,049,759        25,803,156
Dividends declared                     12,057,659        11,029,907
Excess of cash provided by operating 
activities over dividends declared 34,143,124        22,439,491
Excess of net profit over 
dividends declared                 15,992,100        14,773,249 
-****- 
The Company pays cash dividends monthly to its shareholders.   They may be
reduced, increased or suspended by the Board of Directors depending on the
operations of Badger and the performance of its assets. The actual cash flow
available for dividends to shareholders of Badger is a function of numerous
factors, including: the Company's financial performance; debt covenants and
obligations; working capital requirements; maintenance and growth capital
expenditure requirements for the purchase of property, plant and equipment; and
the number of shares outstanding. 
The Company maintains a strong balance sheet. The debt management strategy
includes retaining sufficient funds from available distributable cash to finance
maintenance capital expenditures as well as working capital needs. Growth
capital expenditures will generally be financed through existing debt
facilities, proceeds received from equity financings or cash retained from
operating activities. The majority of the cash provided by operating activities
during 2012 and 2011 was used to finance growth capital expenditures and to pay
dividends to shareholders. 
If maintenance capital expenditures increase in future periods, the Company's
cash available for growth capital expenditures and dividends will be negatively
affected. Due to Badger's growth rate in recent years, the majority of the
hydrovac units are relatively new, with an average age of approximately
four-and-a-half years. As a result, Badger is experiencing relatively low levels
of maintenance capital expenditures. Over time, Badger would expect to incur
annual maintenance capital expenditures approximately equalling the year's
depreciation expense. Badger estimates it will remove approximately 15 to 25
hydrovac units from the fleet in 2013. Badger expects that cash provided by
operations and cash available for growth capital expenditures and dividends will
be sufficient to fund the maintenance capital expenditures in the future. 
Badger is restricted from declaring dividends if it is in breach of the
covenants under its credit facilities. As at the date of this MD&A the Company
is in compliance with all debt covenants and is able to fully utilize its credit
facilities as well as declare dividends. Badger does not have a credit rating. 
Capital Resources 
Investing 
In 2012 the Company spent $54.1 million on property, plant and equipment
compared to $37.2 million in 2011. During 2011 the Company's capital program
consisted of the addition of 97 new hydrovac units and $1.2 million spent on the
construction of new operational facilities, compared to a capital program of 131
new hydrovac units built in 2012 and $1.9 million spent on the construction of
new operational facilities. The costs to build a hydrovac unit remained
consistent with the average for 2011. 
Maintenance capital expenditures are incurred during a period to keep the
hydrovac fleet at the same number of units plus any other capital expenditures
required to maintain the business. This amount will fluctuate from
period-to-period depending on the number of units retired from the fleet. During
the year ended December 31, 2012 Badger added 131 units to the fleet, of which
five have been reflected as maintenance capital expenditures. Total maintenance
capital expenditures for the year were $3.7 million, which includes the $1.9
million spent on the construction of facilities. 
Financing 
On June 19, 2012 the Company completed an equity financing pursuant to a
prospectus dated June 13, 2012 for gross proceeds of $37.5 million through the
issuance of 1,500,000 common shares at a price of $25.00 per share.  Badger
intends to use the net proceeds to fund growth initiatives (ie. to fund its
capital expenditure program and other growth initiatives it may pursue from time
to time), for working capital, and for other general corporate purposes.  It is
anticipated that the full amount of the net proceeds will be used, over time, to
finance the manufacture by Badger of additional hydrovacs.  However, the exact
timing of the build of these additional hydrovacs, and the number of additional
hydrovacs to be built, will depend on (i) Badger's assessments from time to time
of the economy and the need for Badger's hydrovac services and (ii) any increase
or decrease in the cost of parts and labour over time associated with the
manufacture of hydrovacs.  The net proceeds were initially used to pay down
amounts drawn under the extendable revolving credit facility. 
In June 2012 the Company's extendable revolving credit facility was renewed. The
principal amount was decreased from $60 million to $55 million at Badger's
request. The facility was used and will continue to be used to help finance
Badger's capital expenditure program and support corporate activities. The
facility has no required principal repayments. It expires on June 23, 2013 and
is renewable by mutual agreement of the Company and the lender for an additional
364-day period. If not renewed, interest is payable on the facility for 364
days, after which the entire amount must be repaid. The facility bears interest
at the bank's prime rate or bankers' acceptance rate plus 1.25 percent plus 0 to
0.75 percent depending on Badger's ratio of funded- debt-to-EBITDA. 
The Company's net debt decreased by 38 percent during 2012.  As at December 31,
2012 Badger's cash and cash equivalents were $2.5 million, resulting in net debt
of $27.3 million versus net debt of $43.9 million at December 31, 2011. The main
reason for the decrease was the funds received on closing the June 2012 equity
financing. 
At December 31, 2012 the Company had a long-term debt-to-equity ratio of 0.21:1
and a long-term debt-to-trailing-funds-generated-from-operations ratio of
0.58:1. Management believes that the Company's healthy balance sheet, combined
with funds generated from operations, will provide sufficient capital to fund
ongoing operations, pay dividends to shareholders, finance future capital
expenditures and execute its strategic plan for the foreseeable future. Based on
the expected capital required to fund the anticipated 2013 capital expenditure
program, additional financing may be required. This could be comprised of
additional debt, equity or a combination thereof. Currently the Company has a
$55 million extendable, revolving facility to fund working capital requirements
and finance capital expenditures, of which $29.8 million was used at December
31, 2012. The Company also had a cash and cash equivalents balance of $2.5
million at December 31, 2012. The Company's practice is to utilize an
appropriate mix of debt and equity to finance its maintenance capital
expenditures and growth initiatives. 
Badger is in compliance with all financial covenants under the credit facility
agreement. Financial performance relative to the financial ratio covenants under
the extendable revolving credit facility is reflected in the table below: 
-***- 
Ratio                        December  December       Threshold 
31, 2012  31, 2011
---------------------------------------------------------------
Funded Debt (1) to EBITDA(2)   0.44:1    0.85:1  2.25:1 maximum
Fixed Charge Coverage(3)       4.58:1    2.11:1  1.00:1 minimum
--------------------------------------------------------------- 
-****- 
1 Funded debt is long-term debt less cash and cash equivalents. 
2 Funded debt to EBITDA means the ratio of consolidated funded debt to the
aggregated EBITDA for the trailing 12 months. EBITDA is defined as the Company's
actual EBITDA for the trailing 12 months. 
3 Fixed charge coverage ratio means the trailing 12-month EBITDA less unfinanced
capital expenditures and cash taxes, plus the unused portion of the extendable
revolving credit facility, to the sum of the aggregate of scheduled long-term
debt principal payments, interest and dividends. 
Contractual Obligations and Committed Capital Investment 
The Company intends to meet its contractual obligations through funds generated
by operating activities. The Company's contractual obligations for the next five
years relating to repayment of long-term debt (assuming the extendable revolving
credit facility is not renewed on June 23, 2013) and lease payments for shop and
office premises are as follows: 
-***- 
-------------------------------------------------------------------------
($000s)                         Total     2013   2014 - 2017   Thereafter
Long-term debt                 29,773        -        29,773            -
Shop and office leases          4,250    1,849         2,401            -
Total contractual 
Obligations                 34,023    1,849        32,174            -
------------------------------------------------------------------------- 
-****- 
In addition to the contractual obligations above, at year-end 2012 the Company
had committed to certain capital expenditures totalling approximately $14.2
million. They will be financed with existing credit facilities and funds
generated from operations. There are no set terms for remitting payment for
these financial commitments. 
SHARE CAPITAL 
Shareholders' capital increased from $44.5 million at December 31, 2011 to $80.6
million at December 31, 2012 due to the June 2012 equity financing and certain
employees exercising their options.  Shares outstanding at December 31, 2012
were 12,326,631.  Due to certain employees exercising options there were
12,332,631 shares outstanding as of March 15, 2013. 
OFF-BALANCE-SHEET ARRANGEMENTS 
At December 31, 2012 and 2011, the Company had no material off-balance-sheet
arrangements. 
TRANSACTIONS WITH RELATED PARTIES 
Shea Nerland Calnan LLP provides legal services to Badger at market rates. David
Calnan, a Director and the Corporate Secretary of the Company, is a partner in
this law firm and is involved in providing and managing Badger's legal services.
The total cost of these legal services in 2012 was $201,000 compared to $356,000
in 2011. 
SELECTED QUARTERLY FINANCIAL INFORMATION 
-***- 
Quarter Ended
------------------------------------------------------------------------- 
2012
------------------------------------------------------------------------- 
Dec. 31    Sept. 30   June 30    Mar. 31
-------------------------------------------------------------------------
Revenues ($)                  69,248,611 61,961,587 53,984,135 54,034,368
-------------------------------------------------------------------------
Net profit ($)                 7,888,160  7,901,918  6,144,629  6,115,052
-------------------------------------------------------------------------
Net profit per share * basic ($)    0.64       0.64       0.56       0.57
-------------------------------------------------------------------------
Net profit per share * diluted ($)  0.64       0.64       0.56       0.56
------------------------------------------------------------------------- 
Quarter Ended
------------------------------------------------------------------------- 
2011
------------------------------------------------------------------------- 
Dec. 31    Sept. 30   June 30    Mar. 31
-------------------------------------------------------------------------
Revenues ($)                  56,548,569 53,853,710 42,804,832 40,970,978
-------------------------------------------------------------------------
Net profit ($)                 8,704,497  8,152,566  4,564,267  4,381,826
-------------------------------------------------------------------------
Net profit per share * basic ($)    0.80       0.75       0.42       0.41
-------------------------------------------------------------------------
Net profit per share * diluted ($)  0.80       0.75       0.42       0.40
------------------------------------------------------------------------- 
-****- 
FOURTH QUARTER HIGHLIGHTS 
* As a result of increased activity in Canada and the United States, revenue
increased to $69.2 million in the three months ended December 31, 2012 from
$56.5 million in the three months ended December 31, 2011. Canadian revenues
increased by 21 percent, due to a general increase in demand for hydrovac
services in Western Canada. Badger's United States revenue increased to $31.7
million from $25.4 million quarter-over-quarter. Removing the effect of the
change in the foreign exchange rate, United States revenues increased by 27
percent in the fourth quarter of 2012 over the last quarter of 2011. This was
due to additional operating locations and results from investments in business
development. 
* With the increase in revenues, profit before tax increased by 8 percent in the
fourth quarter of 2012 over the same period in 2011. 
* Average revenue per truck per month was $35,100 in the fourth quarter of 2012
compared to $35,600 per month for the same period in 2011. 
* The Company added 31 hydrovac units to the fleet and removed one from service. 
ACCOUNTING STANDARDS PENDING ADOPTION 
The following are the IFRS pronouncements which have been issued but are not yet
effective as at December 31, 2012. The pronouncements may, however, have a
future impact on the measurement and/or presentation of the Company's
consolidated financial statements. The pronouncements are as follows: 
i) IFRS 9, 'Financial Instruments' was issued in November 2009 as the first step
in its project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. IFRS 9 introduces new requirements for classifying and measuring
financial assets that must be applied starting January 1, 2015, with early
adoption permitted. The IASB intends to expand IFRS 9 during the intervening
period to add new requirements for classifying and measuring financial
liabilities, de-recognition of financial instruments, impairment and hedge
accounting. The Company is currently assessing the impact of this standard on
the Company's consolidated financial statements. 
ii) IFRS 10, 'Consolidated Financial Statements' was issued in May 2011 and will
supersede the consolidation requirements in SIC-12 'Consolidation - Special
Purpose Entities' and IAS 27 'Consolidated and Separate Financial Statements'
effective for annual periods beginning on or after January 1, 2013, with early
application permitted. IFRS 10 builds on existing principles by identifying the
concept of control as the determining factor in whether an entity should be
included within the consolidated financial statements of the parent company. The
standard also provides additional guidance to assist in the determination of
control where this is difficult to assess. The Company has assessed this
standard and determined that the standard will not have a material impact on the
Company's consolidated financial statements. 
iii) IFRS 11, 'Joint Arrangements' was issued in May 2011 and will supersede
existing IAS 31, 'Joint Ventures' effective for annual periods beginning on or
after January 1, 2013, with early application permitted. IFRS 11 provides for
the accounting of joint arrangements by focusing on the rights and obligations
of the arrangement, rather than its legal form (as is currently the case). The
standard also eliminates the option to account for jointly controlled entities
using the proportionate consolidation method. The Company has assessed this
standard and determined that the standard is not applicable to the Company. 
iv) IFRS 12, 'Disclosure of Interests in Other Entities' was issued in May 2011
and is a new and comprehensive standard on disclosure requirements for all forms
of interests in other entities, including subsidiaries, joint arrangements,
associates and unconsolidated structured entities. IFRS 12 is effective for
annual periods beginning on or after January 1, 2013, with earlier application
permitted. The Company has assessed this standard and determined that the
standard will result in additional disclosures relating to the Company's
subsidiaries in the consolidated financial statements. 
v) IFRS 13 'Fair Value Measurement' which is effective prospectively for annual
periods beginning on or after January 1, 2013. IFRS 13 replaces fair value
measurement guidance contained in individual IFRSs, providing a single source of
fair value measurement guidance. The standard provides a framework for measuring
fair value and establishes new disclosure requirements to enable readers to
assess the methods and inputs used to develop fair value measurements and for
recurring valuations that are subject to measurement uncertainty and the effect
of those measurements on the financial statements. The Company is currently
assessing the impact of this standard on the Company's consolidated financial
statements. 
CRITICAL ACCOUNTING ESTIMATES 
Management is responsible for applying judgement in preparing accounting
estimates. Certain estimates and related disclosure included in the financial
statements are particularly sensitive because of their significance to the
financial statements and the possibility that future events affecting them may
differ significantly from management's current judgements. An accounting
estimate is considered critical only if it requires the Company to make
assumptions about matters that are highly uncertain at the time the accounting
estimate is made, and if different estimates the Company could have used would
have a material impact on Badger's financial condition, changes in financial
condition or results of operations. 
While there are several estimates and assumptions made by management in the
preparation of financial statements in accordance with IFRS, the following
critical accounting estimates have been identified by management: 
Depreciation of the hydrovac units 
The accounting estimate that has the greatest effect on the Company's financial
results is the depreciation of the hydrovac units. It is carried out on the
basis of the units' estimated useful lives. The Company currently depreciates
them over 10 years based on current knowledge and working experience. There is a
certain amount of business risk that newer technology or some other unforeseen
circumstance could lower this life expectancy. A change in the remaining life of
the hydrovac units or the expected residual value would affect the depreciation
rate used to depreciate the hydrovac units and thus affect depreciation expense
as reported in the Company's consolidated statement of comprehensive income.
These changes are reported prospectively when they occur. 
Tax pools and their recoverability 
Badger has estimated its tax pools for the income tax provision. The actual tax
pools the Company may be able to use could be materially different in the
future. 
Intangible assets 
Intangible assets consist of service rights acquired from Badger's operating
partners.  The initial valuation of intangibles at the closing date of any
acquisition requires judgement and estimates by management with respect to
identification, valuation and determining the expected periods of benefit.
Valuations are based on discounted expected future cash flows and other
financial tools and models and are amortized over their expected periods of
benefit or not amortized if it is determined the intangible asset has an
indefinite life. Intangible assets are reviewed annually with respect to their
useful lives or more frequently if events or changes in circumstances indicate
that the assets might be impaired. Impairment exists when the carrying amount of
the intangible asset exceeds its recoverable amount, which is the higher of its
fair value less costs to sell and its value in use. The fair value less costs to
sell calculation is based on available data from binding sales transactions in
an arm's-length transaction of similar assets or observable market prices less
incremental costs for disposing of the asset. The value in use calculation is
based on a discounted cash flow model. The cash flows are derived from the
projections for the next five years and do not include restructuring activities
that the Company is not yet committed to or significant future investments that
will enhance the asset's performance. When an impairment loss subsequently
reverses, the carrying amount of the intangible asset is increased to the
revised estimate of the recoverable amount but not beyond the carrying amount
that would have been determined had no impairment loss been recognized. 
Goodwill 
Goodwill is the amount that results when the cost of acquired assets exceeds
their fair value at the date of acquisition. Goodwill is recorded at cost, is
not amortized and is tested at least annually for impairment. The impairment
test includes the application of a fair value test, with an impairment loss
recognized when the carrying amount of goodwill exceeds its estimated fair
value. Impairment provisions are not reversed if there is a subsequent increase
in the fair value of goodwill. 
Impairment of long-lived assets 
The carrying value of long-lived assets, which include property, plant and
equipment and intangible assets, is assessed for indications of impairment when
events or circumstances indicate that the carrying amounts may not be
recoverable from estimated cash flows. Estimating future cash flows requires
assumptions about future business conditions and technological developments.
Significant, unanticipated changes to these assumptions could require a
provision for impairment in the future. 
Collectability of trade and other receivables 
The Company estimates the collectability of its trade and other receivables. The
Company continually reviews the balances and makes an allowance when a
receivable is deemed uncollectable. The actual collectability of trade and other
receivables could differ materially from the estimate. 
Share-based compensation 
Compensation expense associated with stock options at grant date is an estimate
based on various assumptions such as volatility, annual dividend yield,
risk-free interest rate and expected life. Badger uses the Black-Scholes
methodology to calculate an estimate of the fair value of such compensation. 
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 
Fair values 
The Company's financial instruments recognized on the consolidated statements of
financial position consist of cash and cash equivalents, trade and other
receivables, trade and other payables, dividends payable and long-term debt. The
fair values of these recognized financial instruments, excluding long-term debt,
approximate their carrying value due to their short-term maturity. The carrying
value of the long-term debt approximates fair value because the long-term
facilities have a floating interest rate. 
Credit risk 
Credit risk arises when a failure by counter parties to discharge their
obligations could reduce the amount of future cash flows from financial assets
on hand at the balance sheet date. A substantial portion of the Company's trade
receivables is with customers in the petroleum and utility industries and is
subject to normal industry credit risks. The Company manages its exposure to
credit risk through standard credit-granting procedures and short payment terms.
The Company attempts to monitor financial conditions of its customers and the
industries in which they operate. 
Liquidity risk 
Liquidity risk is the risk that, as a result of operational liquidity
requirements, the Company will not have sufficient funds to settle an obligation
on the due date and will be forced to sell financial assets at a price less than
what they are worth, or will be unable to settle or recover a financial asset. 
The Company's operating cash requirements are continuously monitored by
management. As factors impacting cash requirements change, liquidity risks may
necessitate the Company raising capital by issuing equity or obtaining
additional debt financing. The Company also mitigates liquidity risk by
maintaining an insurance program to minimize exposure to insurable losses. 
At December 31, 2012, the Company had available $24.6 million of authorized
borrowing capacity on the extendable revolving facility and $2.5 million of cash
and cash equivalents. The credit facility has no required principal repayment.
The credit facility expires June 23, 2013 and is renewable by mutual agreement
of the Company and the lender for an additional 364-day period. If not renewed,
interest is payable monthly on the facility for 364 days after which the entire
amount is to be repaid. The Company believes it has sufficient funding through
operations and the use of this facility to meet foreseeable financial
obligations. 
Market risk 
The significant market risks affecting the financial instruments held by the
Company are those related to interest rates and foreign currency exchange rates,
as follows: 
Interest rate risk 
The Company is exposed to interest rate risk in relation to interest expense on
its long-term debt. Interest is calculated at prime. The prime interest rate is
subject to change. A sensitivity analysis would indicate that net profit for the
year ended December 31, 2012 would have been affected by approximately $0.3
million if the average interest rate changed by 1 percentage point. The Company
does not use interest rate hedges or fixed interest rate contracts to manage its
exposure to interest rate fluctuations. 
Foreign exchange risk 
The Company has United States operations and its Canadian operations purchase
certain products in United States dollars. As a result, fluctuations in the
value of the Canadian dollar relative to the United States dollar can result in
foreign exchange gains and losses. A sensitivity analysis would indicate that a
10 percent strengthening in the Canadian dollar against the United States dollar
would decrease total comprehensive income by approximately $1.4 million, while a
10 percent weakening of the Canadian dollar against the United States dollar
would increase total comprehensive income by approximately $1.5 million. The
Company does not have any agreements to fix the exchange rate of the Canadian
dollar to the United States dollar. 
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING 
Disclosure controls and procedures 
Badger's President and CEO and the VP Finance and CFO have designed, or caused
to be designed under their direct supervision, Badger's disclosure controls and
procedures (as defined by National Instrument 52-109 - Certification of
Disclosure in Issuers' Annual and Interim Filings, adopted by the Canadian
Securities Administrators) to provide reasonable assurance that (i) material
information relating to Badger, including its consolidated subsidiaries, is made
known to them by others within those entities, particularly during the period in
which the annual filings are being prepared; and (ii) material information
required to be disclosed in the annual filings is recorded, processed,
summarized and reported on a timely basis. Further, they have evaluated, or
caused to be evaluated under their direct supervision, the effectiveness of
Badger's disclosure controls and procedures at December 31, 2012 and as a result
of identifying the material weakness outlined below have concluded the
disclosure controls and procedures are not fully effective. 
Internal control over financial reporting 
Badger's President and CEO and the VP Finance and CFO have also designed, or
caused to be designed under their direct supervision, Badger's internal control
over financial reporting to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with IFRS. Further, using the criteria
established in Internal Control - Integrated Framework published by the
Committee of Sponsoring Organizations of the Treadway Commission, they have
evaluated, or caused to be evaluated under their direct supervision, the
effectiveness of Badger's internal control over financial reporting at December
31, 2012 and as a result of identifying the material weakness outlined below
have concluded the internal controls over financial reporting are not fully
effective. 
Material weakness 
Badger has identified that it does not have sufficient accounting personnel with
the appropriate tax expertise to allow for an effective review of the accuracy
of its accounting for income taxes and the determination of the income tax
provision. Management and the Board of Directors have determined that it is not
economically feasible to maintain such personnel in-house or to engage an
external tax consultant to perform an independent review. This material weakness
could result in a misstatement in various tax-related accounts that could result
in a material misstatement to Badger's annual consolidated financial statements
and disclosure that would not be prevented or detected. 
Changes in internal control over financial reporting 
No changes were made to the design of Badger's internal control over financial
reporting during the year ended December 31, 2012 that have materially affected,
or are reasonably likely to materially affect, its internal control over
financial reporting. 
Inherent limitations 
Notwithstanding the foregoing, because of its inherent limitations a control
system can provide only reasonable assurance that the objectives of the control
system are met and may not prevent or detect misstatements. Management's
estimates may be incorrect, or assumptions about future events may be incorrect,
resulting in varying results. In addition, management has attempted to minimize
the likelihood of fraud. However, any control system can be circumvented through
collusion and illegal acts. 
BUSINESS RISKS
(Reference is also made to Badger's Annual Information Form.) 
Reliance on the oil and natural gas sector 
The oil and natural gas sector accounts for approximately 45 percent of the
Company's revenues. The petroleum service industry, in which Badger
participates, relies heavily on the volume of capital expenditures made by oil
and natural gas explorers and producers. These spending decisions are based on
several factors including, but not limited to: hydrocarbon prices, production
levels of current reserves, fiscal regimes in operating areas, technology-driven
exploration and extraction methodologies, and access to capital, all of which
can vary greatly.  To minimize the impact of the oil and natural gas industry
cycles, the Company also focuses on generating revenue from the utility and
general contracting market segments. 
Competition 
The Company operates in a highly competitive environment for hydrovac services
in Canada and the United States. In order to remain the leading provider of
hydrovac services in these regions, Badger continually enhances its safety and
operational procedures to ensure that they meet or exceed customer expectations.
Badger also has the in-house capabilities necessary to continuously improve its
daylighting units so that they remain the most productive and efficient
hydrovacs in the business. There can be no assurance that Badger's competitors
will not achieve greater market acceptance due to pricing, efficiency, safety or
other factors. 
United States operations 
Badger also faces risks associated with doing business in the United States. The
Company has made a significant investment in the United States to develop the
hydrovac market. The growth rate of the United States market is very hard to
predict. The United States has been undergoing significant economic difficulties
and the outlook is further complicated by substantial changes to various laws,
policies and regulations that have a real or apprehended effect on business
operating conditions, approval or delay of potential new projects that could
require Badger's services, current rates of capital investment and the general
level of confidence about future economic conditions among businesses and
organizations that will be required to make decisions about future capital
investment. 
Safety 
Badger is exposed to liabilities that are unique to the services that it
provides.  Such liabilities may relate to an accident or incident involving one
of Badger's hydrovacs or damage to equipment or property caused by one of the
hydrovacs, and could involve significant potential claims or injuries to
employees or third parties.  The amount of Badger's insurance coverage may not
be adequate to cover potential claims or liabilities and Badger may be forced to
bear substantial costs as a result of one or more accidents.  Substantial claims
resulting from an accident in excess of its related insurance coverage would
harm Badger's financial condition and operating results.  Moreover, any accident
or incident involving Badger, even if Badger is fully insured or not held
liable, could negatively affect Badger's reputation among customers and the
public, thereby making it more difficult for Badger to compete effectively, and
could significantly affect the cost and availability of insurance in the future.
 Due to the magnitude of insurance premiums, Badger decided to self-insure
against the physical damage it could incur on the hydrovac units.  This decision
will be re-evaluated periodically as circumstances change. 
Safety is one of the Company's on-going concerns. Badger has implemented
programs to ensure its operations meet or exceed current hydrovac safety
standards. The Company also employs safety advisors in each region who are
responsible for maintaining and developing the Company's safety policies. These
regional safety advisors monitor the Company's operations to ensure they are
operating in compliance with such policies. 
Depreciation of daylighting units 
The Company depreciates the hydrovac units over 10 years, a policy that is based
on its current knowledge and operating experience. There is a certain amount of
business risk that newer technology or some other unforeseen circumstance could
lower this life expectancy. 
Dependence on key personnel 
Badger's success depends on the services of key senior management members. The
experience and talents of these individuals will be a significant factor in
Badger's continued success and growth. The loss of one or more of these
individuals could have a material adverse effect on Badger's operations and
business prospects. 
Availability of labour and equipment 
While Badger has historically been able to source labour and equipment required
to run its business, there can be no assurances it will be able to do so in the
future. 
Reliance on key suppliers 
Badger has established relationships with key suppliers. There can be no
assurance that current sources of equipment, parts, components or relationships
with key suppliers will be maintained. If these are not maintained, Badger's
ability to manufacture its hydrovac units may be impaired. 
Fluctuations in weather and seasonality 
Badger's operating results have been, and are expected to remain, subject to
quarterly and other fluctuations due to a variety of factors including changes
in weather conditions and seasonality. For example, in Western Canada Badger's
results may be negatively affected if there is an extended spring break-up
period since oil and natural gas industry sites may not be accessible during
such periods. In Eastern Canada, Badger has in the past experienced increased
use of its equipment during cold winters, thus improving the results of its
operations during such times. The Company may then experience a slow period
during spring thaw. 
In the Western United States, Badger has from time-to-time been restricted by
the imposition of government regulations from conducting its work in
environmentally sensitive areas during the winter mating seasons of certain
mammals and birds. This has had a negative effect on Badger's results of
operations. As such, changes in the weather and seasonality may, depending on
the location and nature of the event, have either a positive or negative effect
on Badger's results of operations. 
Fluctuations in the economy and political landscape 
Operations could be adversely affected by a general economic downturn, changes
in the political landscape or limitations on spending. 
Compliance with government regulations 
While Badger believes it is in compliance with all applicable government
standards and regulations, there can be no assurance that all of Badger's
business will be able to continue to comply with all applicable standards and
regulations. 
Environmental risk 
As the owner and lessor of real property, Badger is subject to various federal,
provincial and municipal laws relating to environmental matters. Such laws
provide that Badger could be liable for the costs of removal and remediation of
certain hazardous substances or wastes released or deposited on or in its
properties or disposed at other locations. The failure to remove or remediate
such substances, if any, could adversely affect Badger's ability to sell such
real property or borrow using such real property as collateral and could also
result in claims against Badger. 
Litigation 
Legal proceedings may arise from time to time in the course of Badger's
business.  All industries, including the hydrovac industry, are subject to legal
claims, with and without merit.  Such legal claims may be brought against Badger
or one or more of its subsidiaries in the future from time to time.  Defense and
settlement costs of legal claims can be substantial, even with respect to claims
without merit.  Due to the inherent uncertainty of the litigation process, such
process could take away from management time and effort and the resolution of
any particular legal proceeding to which Badger may become subject could have a
material effect on Badger's financial position and results of operations. 
Income tax matters 
Badger and its subsidiaries are subject to federal, provincial and state income
taxes in Canada and the United States, as applicable.  Badger's United States
subsidiary is currently under a routine tax audit by the Internal Revenue
Service in the United States.  Although Badger is of the view that it and its
subsidiaries are in full compliance with all applicable legal requirements
relating to federal, provincial and state legislation on income tax, sales tax,
goods and services tax, excise tax and all other direct or indirect taxes
including business tax, real estate tax, municipal, and other taxes, there can
be no assurance that Badger and its subsidiaries will not be subject to
assessment, reassessment, audit, investigation, inquiry or judicial or
administrative proceedings under any such laws.  As taxing regimes change their
tax basis and rates, or initiate reviews of prior tax returns, Badger's
liability to income tax may increase and Badger could be exposed to increased
costs of taxation, which could, among other things, reduce the amount of funds
available to distribute to shareholders or otherwise have a material adverse
effect on Badger's business, results of operations or financial condition. 
Badger is North America's largest provider of non-destructive excavating
services.  Badger traditionally works for contractors and facility owners in the
utility and petroleum industries.  The Company's key technology is the Badger
Hydrovac, which is used primarily for safe digging in congested grounds and
challenging conditions.  The Badger Hydrovac uses a pressurized water stream to
liquefy the soil cover, which is then removed with a powerful vacuum system and
deposited into a storage tank.  Badger manufactures its truck-mounted hydrovac
units. 
Badger's business model involves the provision of excavating services through
two distinct entities: the Operating Partners (franchisees in the United States
and agents in Canada), and Badger Corporate.  Badger Corporate works with its
Operating Partners to provide Hydrovac service to the end user.  In this
partnership, Badger provides the expertise, the trucks, and North American
marketing and administration support.  The Operating Partners deliver the
service by operating the equipment and developing their local markets.  All work
is invoiced by Badger and then shared with the Operating Partner based upon a
revenue sharing formula.  In certain locations Badger has established corporate
run operations to market and deliver the service in the local area. 
The Toronto Stock Exchange has neither approved nor disapproved the information
contained herein. 
For more information regarding this press release, please contact: 
Tor Wilson
President and CEO 
Greg Kelly, CA
Vice President Finance and CFO 
1000, 635 - 8th Avenue SW
Calgary, Alberta T2P 3M3
Telephone (403) 264-8500
Fax (403) 228-9773 
Badger Daylighting Ltd.
Consolidated Financial Statements
For the year ended December 31, 2012 
Independent Auditor's Report 
To the Shareholders of Badger Daylighting Ltd. 
We have audited the accompanying consolidated financial statements of Badger
Daylighting Ltd., which comprise the consolidated statements of financial
position as at December 31, 2012 and 2011 and the consolidated statements of
comprehensive income, changes in equity and cash flows for the years then ended,
and a summary of significant accounting policies and other explanatory
information. 
Management's responsibility for the consolidated financial statements 
Management is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with International Financial
Reporting Standards, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error. 
Auditor's responsibility 
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits. We conducted our audits in accordance with
Canadian generally accepted auditing standards. Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free from material misstatement. 
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks
of material misstatement of the consolidated financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation and fair presentation of
the consolidated financial statements 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 entity's internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. 
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion. 
Opinion 
In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of Badger Daylighting Ltd. as at
December 31, 2012 and 2011 and its financial performance and its cash flows for
the years then ended in accordance with International Financial Reporting
Standards. 
Calgary, Canada
March 15, 2013
Ernst + Young
Chartered Accountants 
BADGER DAYLIGHTING LTD.
Consolidated Statement of Financial Position
(Expressed in Canadian Dollars) 
-***- 
As at December 31                    Notes        2012        2011 
$           $
------------------------------------------------------------------ 
ASSETS
Current Assets
Cash and cash equivalents                6   2,460,078   2,622,191
Trade and other receivables              7  63,570,409  56,170,776
Prepaid expenses                             1,346,016   1,183,571
Inventories                              8   2,087,289   2,288,716 
------------------------ 
69,463,792  62,265,254 
------------------------
Non-current Assets
Property, plant                          9 149,568,105 115,002,042
  and equipment
Intangible assets                       10   6,550,511   6,599,513 
------------------------ 
156,118,616 121,601,555 
------------------------
Total Assets                               225,582,408 183,866,809 
------------------------ 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade and other payables                11 20,998,787  16,417,395
Income taxes payable                        3,421,007   5,186,568
Dividends payable                       13  1,109,397     919,159 
------------------------ 
25,529,191  22,523,122 
------------------------
Non-current Liabilities
Long-term debt                          14 29,773,229  46,554,454
Deferred income tax                     12 30,572,216  25,408,079 
------------------------ 
60,345,445  71,962,533 
------------------------
Shareholders' Equity
Shareholders' capital                   15 80,640,111  44,473,107
Contributed surplus                     15  2,060,607   2,657,923
Accumulated other                       15 (2,239,192) (1,004,022)
  comprehensive loss
Retained earnings                          59,246,246  43,254,146 
------------------------ 
139,707,772  89,381,154 
------------------------
Total Liabilities and                      225,582,408 183,866,809
  Shareholders' Equity 
------------------------ 
Commitments and                         25
  contingencies 
-****- 
The accompanying notes are an integral part of these consolidated financial
statements. These consolidated financial statements were approved by the Board
on March 15, 2013 and were signed on its behalf. 
Signed: Glen D. Roane
Director 
Signed: David M. Calnan
Director 
BADGER DAYLIGHTING LTD.
Consolidated Statement of Comprehensive Income
(Expressed in Canadian Dollars) 
-***- 
For the year ended                     Notes         2012        2011
December 31                                             $           $
---------------------------------------------------------------------
Revenues                                   17 239,228,701 194,178,089
Direct costs                               18 163,673,403 129,398,617 
------------------------
Gross profit                                  75,555,298  64,779,472 
Depreciation of property,                   9 18,365,480  14,575,817
 plant and equipment
Amortization of intangible assets          10    49,002     196,000
Selling, general and administrative    16, 18 14,060,502  11,974,119 
------------------------
Operating profit                              43,080,314  38,033,536 
Gain on sale of property, plant and           (174,804)    (85,277)
 equipment
Reimbursement to Clean Harbors, Inc.       19         -   1,062,039
Finance cost                                  1,246,636   1,243,454 
------------------------
Profit before tax                             42,008,482  35,813,320
Income tax expense                         12 13,958,723  10,010,164 
------------------------
Net profit for the year                       28,049,759  25,803,156
Other comprehensive income (loss)
Exchange differences on translation of        (1,235,170) 1,108,867
 foreign operations                          ------------------------
Total comprehensive income for the            26,814,589  26,912,023
  year attributable to shareholders of       ------------------------
  the Corporation
Earnings per share
Basic                                      20        2.41        2.39
Diluted                                    20        2.41        2.38 
-****- 
The accompanying notes are an integral part of these consolidated financial
statements. 
BADGER DAYLIGHTING LTD.
Consolidated Statement of Changes in Equity
(Expressed in Canadian Dollars) 
-***- 
Shareholders' Contributed 
capital     surplus
For the year ended      Notes              $           $
-------------------------------------------------------- 
As at December 31, 2010          44,473,107    4,578,771
Net profit for the year                   -            -
Other comprehensive                       -            -
  income for the year
Share-based payment     15, 16            -      270,800
  transactions
Options surrendered     15, 16            -  (2,191,648)
  for cash
Dividends                 13              -            - 
--------------------------
As at December 31, 2011          44,473,107    2,657,923 
Net profit for the year                   -            -
Other comprehensive                       -            -
  income (loss) for
  the year
Share-based payment     15, 16            -       58,000
  transactions
Share options exercised 15, 16      205,170            -
Options surrendered     15, 16            -    (655,316)
  for cash
Shares issued pursuant    15     35,961,834            -
  to Equity financing
Dividends                 13              -            - 
--------------------------
As at December 31, 2012          80,640,111    2,060,607 
-------------------------- 
Accumulated     Retained Total equity 
Other     earnings 
Comprehensive 
loss
For the year ended      Notes               $            $            $
----------------------------------------------------------------------- 
As at December 31, 2010           (2,112,889)   28,480,897   75,419,886
Net profit for the year                     -   25,803,156   25,803,156
Other comprehensive                 1,108,867            -    1,108,867
  income for the year
Share-based payment     15, 16              -            -      270,800
  transactions
Options surrendered     15, 16              -            -  (2,191,648)
  for cash
Dividends                 13                - (11,029,907) (11,029,907) 
-----------------------------------------
As at December 31, 2011           (1,004,022)   43,254,146   89,381,154 
Net profit for the year                 -     28,049,759   28,049,759
Other comprehensive            (1,235,170)             -   (1,235,170)
  income (loss) for
  the year
Share-based payment     15, 16          -            -         58,000
  transactions
Share options exercised 15, 16          -            -        205,170
Options surrendered     15, 16          -            -      (655,316)
  for cash
Shares issued pursuant    15            -            -     35,961,834
  to Equity financing
Dividends                 13            -  (12,057,659)   (12,057,659) 
----------------------------------------
As at December 31, 2012        (2,239,192)    59,246,246  139,707,772 
---------------------------------------- 
-****- 
The accompanying notes are an integral part of these consolidated financial
statements. 
BADGER DAYLIGHTING LTD.
Consolidated Statement of Cash Flows
(Expressed in Canadian Dollars) 
-***- 
For the year ended                        Notes         2012         2011
December 31                                                $            $
-------------------------------------------------------------------------
Operating activities
Net profit for the year                           28,049,759   25,803,156
Non-cash adjustments to reconcile
  Profit from operations to net cash
  flows:
  Depreciation of property, plant and        9    18,365,480   14,575,817 
Equipment
  Amortization of intangible assets         10        49,002      196,000
  Deferred income tax                       12     6,012,873    4,852,111
  Share-based payment transaction           15, 16    58,000      270,800 
Expense
  Equity-settled share plan settled         15, 16 (655,316)  (2,191,648) 
in cash
  Gain on sale of property plant                   (174,804)     (85,277) 
and equipment
  Unrealized foreign exchange                      (848,736)      361,686 
(gain) loss on deferred tax                -------------------------- 
50,856,258   43,782,645
Net change in non-cash working                   (4,655,475) (10,313,247)
  capital relating to operating activities     --------------------------
Net cash flows from operating activities          46,200,783   33,469,398 
--------------------------
Investing activities
Purchase of property, plant and equipment     9 (54,092,725) (37,231,295)
Purchase of intangible assets                10            -    (275,000)
Proceeds from sale of property, plant and            211,471      131,867
  equipment 
--------------------------
Net cash flows used in investing activities     (53,881,254) (37,374,428) 
--------------------------
Financing activities
Proceeds from issuance of shares, net of     15    35,961,834           -
  issuance costs
Proceeds received on the exercise of         16       205,170           -
  share options
Proceeds from long-term debt                               -    9,141,613
Repayment of long-term debt                      (16,781,225) (3,258,554)
Dividends paid to owners                     13 (11,867,421) (11,246,179) 
--------------------------
Net cash flows from (used in)                    7,518,358    (5,363,120)
  financing activities                         -------------------------- 
Net decrease in cash and cash equivalents        (162,113)    (9,268,150)
Cash and cash equivalents, beginning         6   2,622,191     11,890,341
of year                                        --------------------------
Cash and cash equivalents, end of year           6 2,460,078    2,622,191 
-------------------------- 
Supplemental cash flow information:
  Interest paid                                    1,246,636    1,234,454 
--------------------------
  Income tax paid (recovered)                      9,711,411    (454,574) 
-------------------------- 
-****- 
The accompanying notes are an integral part of these consolidated financial
statements. 
BADGER DAYLIGHTING LTD.
Notes to the Consolidated Financial Statements
For the year ended December 31, 2012 
1 Incorporation and Operations 
Badger Daylighting Ltd. and its subsidiaries (together "Badger" or the
"Corporation") provide non-destructive excavating services to the utility,
transportation, industrial, engineering, construction and petroleum industries
in Canada and the United States. Badger is a publicly traded corporation. The
address of the registered office is 1000, 635 - 8th Avenue SW, Calgary, Alberta
T2P 3M3. The consolidated financial statement of the Corporation were authorised
for issue by the Board of Directors on March 15, 2013. 
2 Basis of Preparation 
Statement of compliance 
These consolidated financial statements of the Corporation are prepared in
accordance with International Financial Reporting Standards ("IFRS"), as issued
by the International Accounting Standards Board ("IASB"). 
Basis of measurement 
These consolidated financial statements have been prepared under the historical
cost convention. 
Functional and presentation currency
These consolidated financial statements are presented in Canadian dollars, which
is the Corporation's functional currency. 
3 Significant Accounting Judgements, Estimates and Assumptions 
The preparation of these consolidated financial statements in conformity with
IFRS requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities and contingent liabilities at the date
of the consolidated financial statements and reported amounts of revenues and
expenses during the reporting period. Estimates and judgments are continuously
evaluated and are based on management's experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. However, actual outcomes can differ from those estimates. 
The key sources of estimation uncertainty that have a significant risk of
causing material adjustment to the amounts recognized in the consolidated
financial statements are: 
Impairment of non-financial assets 
Impairment exists when the carrying value of an asset or cash generating unit
("CGU") exceeds its recoverable amount, which is the higher of its fair value
less costs to sell and its value in use. The fair value less costs to sell
calculation is based on available data from binding sales transactions in an
arm's length transaction of similar assets or observable market prices less
incremental costs for disposing of the asset. The value in use calculation is
based on a discounted cash flow model. The cash flows are derived from the
projection for the next five years and do not include restructuring activities
that the Corporation is not yet committed to or significant future investments
that will enhance the asset's performance of the CGU being tested. The
recoverable amount is most sensitive to the discount rate used for the
discounted cash flow model as well as the expected future cash inflows and the
growth rate used for extrapolation purposes. 
Taxes 
Provisions for taxes are made using the best estimate of the amount expected to
be paid based on a qualitative assessment of all relevant factors. The
Corporation reviews the adequacy of these provisions at the end of the reporting
period. However, it is possible that at some future date an additional liability
could result from audits by tax authorities of the respective jurisdictions in
which it operates. Where the final outcome of these tax-related matters is
different from the amounts that were initially recorded, such differences will
affect the tax provisions in the period in which such determination is made. 
Useful lives of property, plant and equipment 
The Corporation estimates the useful lives of property, plant and equipment
based on the period over which the assets are expected to be available for use.
The estimated useful lives of property, plant and equipment are reviewed
periodically and are updated if expectations differ from previous estimates due
to physical wear and tear, technical or commercial obsolescence and legal or
other limits on the use of the relevant assets. In addition, the estimation of
the useful lives of property, plant and equipment are based on internal
technical evaluation and experience with similar assets. It is possible,
however, that future results of operations could be materially affected by
changes in the estimates brought about by changes in factors mentioned above.
The amounts and timing of recorded expenses for any period would be affected by
changes in these factors and circumstances. A reduction in the estimated useful
lives of the property, plant and equipment would increase the recorded expenses
and decrease the non-current assets. 
Allowance for doubtful debts 
The Corporation makes allowance for doubtful debts based on an assessment of the
recoverability of receivables. Allowances are applied to receivables where
events or changes in circumstances indicate that the carrying amounts may not be
recoverable. Management specifically analysed historical bad debts, customer
concentrations, customer creditworthiness, current economic trends and changes
in customer payment terms when making a judgement to evaluate the adequacy of
the allowance of doubtful debts of receivables. Where the expectation is
different from the original estimate, such difference will impact the carrying
value of receivables. 
4 Summary of Significant Accounting Policies 
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. 
A) Basis of consolidation 
The consolidated financial statements include the accounts of Badger Daylighting
Ltd. and its subsidiaries, all of which are wholly owned. Subsidiaries are
consolidated from the date of acquisition, being the date on which the
Corporation obtains control, and continue to be consolidated until the date that
such control ceases. The financial statements of the subsidiaries are prepared
for the same reporting period as the parent, using consistent accounting
policies. All intra-company balances, income and expenses, unrealized gains and
losses and dividends resulting from intra-company transactions are eliminated in
full. 
B) Cash and cash equivalents 
Cash and cash equivalents include cash at banks and on hand and short-term
investments with original maturities of three months or less and are recorded at
cost, which approximates fair market value. 
C) Inventories 
Inventories are valued at the lower of cost and net realizable value, with cost
being defined to include laid-down cost for materials on a weighted average
basis. 
D) Leases 
Leases in terms of which the Corporation assumes substantially all the risks and
rewards of ownership are classified as finance leases. Upon initial recognition
the leased asset is measured at an amount equal to the lower of its fair value
and the present value of the minimum lease payments. Lease payments are
apportioned between finance charges and reduction of the lease liability, so as
to achieve a constant rate of interest on the balance of the liability. Finance
charges are recognized in the consolidated statement of comprehensive income.
Subsequent to initial recognition, the asset is accounted for in accordance with
the accounting policy applicable to that asset. 
Other leases are operating leases and the leased assets are not recognized in
the Corporation's consolidated statement of financial position. Operating lease
payments are recognized as a direct cost in the consolidated statement of
comprehensive income. 
E) Property, plant and equipment 
Property, plant and equipment are stated at cost less accumulated depreciation
and/or accumulated impairment losses if any. Such cost includes the cost of
replacing part of the plant and equipment and borrowing costs for long-term
construction projects if the recognition criteria are met. Repair and
maintenance costs are recognized in the consolidated statement of comprehensive
income as incurred. 
Depreciation is calculated on a straight-line basis to recognize the cost less
estimated residual value over the estimated useful life of the assets as
follows: 
Land improvements              10%
Buildings                       5%
Shoring equipment              10%
Shop and office equipment  10%-25%
Truck and trailers         10%-15% 
Depreciation of equipment under construction is not recorded until such time as
the asset is available for use, i.e. when it is in the location and condition
necessary for it to be capable of operating in the manner intended by
management. 
The assets' residual values, useful lives and methods of depreciation are
reviewed at each financial year end and adjusted prospectively, if appropriate. 
Gains or losses arising from derecogniton of an item of property, plant and
equipment are measured as the difference between the net disposal proceeds and
the carrying amount of the asset and are recognized in the consolidated
statement of comprehensive income when the asset is derecognized. 
F)Intangible assets 
Intangible assets represent service rights acquired, customer relationships,
trade name and a non-compete agreement. Intangible assets acquired separately
are measured on initial recognition at cost. The cost of an intangible asset
acquired in a business combination is its fair value as at the date of
acquisition. Following initial recognition, intangible assets are carried at
cost less any accumulated amortization and any accumulated impairment losses. 
The useful lives of intangible assets are assessed as either finite or
indefinite 
Intangible assets with finite lives are amortized over the useful economic life
and assessed for impairment whenever there is an indication that the intangible
asset may be impaired. The amortization period and the amortization method for
an intangible asset with a finite useful life are reviewed at least at each
financial year end. Changes in the expected useful life or the expected pattern
of consumption of future economic benefits embodied in the asset are accounted
for by changing the amortization period or method, as appropriate, and are
treated as changes in accounting estimates. 
Gains or losses arising from derecognition of an intangible asset are measured
as the difference between the net disposal proceeds and the carrying amount of
the asset and are recognized in the consolidated statement of comprehensive
income when the asset is derecognized. 
A summary of the policies applied to the Corporation's intangible assets is as
follows: 
-***- 
Service rights    Other intangibles
-----------------------------------------------------------
Useful lives                Indefinite              5 years
-----------------------------------------------------------
Amortization method    No amortization        Straight-line 
-****- 
G)Impairment of non-financial assets excluding goodwill 
At the end of each reporting period, the Corporation reviews the carrying
amounts of its tangible and intangible 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 Corporation
estimates the recoverable amount of the CGU to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified, corporate
assets are also allocated to individual CGU's, or otherwise they are allocated
to the smallest group of CGU's for which a reasonable and consistent allocation
basis can be identified. 
Intangible assets with indefinite useful lives and intangible assets not yet
available for use are tested for impairment at least annually, and whenever
there is an indication that the asset may be impaired. 
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a post-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted. 
If the recoverable amount of an asset or CGU is estimated to be less than its
carrying amount, the carrying amount of the asset or CGU is reduced to its
recoverable amount. An impairment loss is recognized immediately in the
consolidated statement of comprehensive income. 
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 only
to the extent that the increased carrying amount does not exceed 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 the consolidated statement of comprehensive income. 
H)Provisions 
A provision is recognized if, as a result of a past event, the Corporation has a
present legal or constructive obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The unwinding of the
discount is recognized as finance cost. 
I)Goodwill 
Goodwill represents the excess of the purchase price over the fair value of net
assets acquired and liabilities assumed in a business combination. Goodwill is
not amortized but is reviewed for impairment at least annually. For the purpose
of impairment testing, goodwill is allocated to each of the Corporation's CGU's
expected to benefit from the synergies of the combination. CGU's to which
goodwill has been allocated are tested for impairment annually, or more
frequently when there is an indication that the CGU may be impaired. If the
recoverable amount of the CGU is less than its carrying amount, the impairment
loss is allocated first to reduce the carrying amount of any goodwill allocated
to the unit and then to the other assets of the unit pro-rata on the basis of
the carrying amount of each asset in the unit. An impairment loss recognized for
goodwill is not reversed in a subsequent period. 
J)Taxes 
Tax expense comprises current and deferred tax. Tax is recognized in the
consolidated statement of comprehensive income except to the extent it relates
to items recognized directly in equity. 
Current income tax 
Current tax expense is based on the results for the period as adjusted for items
that are not taxable or not deductible. Current tax is calculated using tax
rates and laws that were enacted or substantively enacted at the end of the
reporting period. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject
to interpretation. Provisions are established where appropriate on the basis of
amounts expected to be paid to the tax authorities. 
Deferred tax 
Deferred tax is recognized, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying
amounts in the consolidated statement of financial position. Deferred tax is
calculated using tax rates and laws that have been enacted or substantively
enacted at the end of the reporting period, and which are expected to apply when
the related deferred income tax asset is realized or the deferred income tax
liability is settled. 
Deferred tax assets: 
* are recognized to the extent it is probable that taxable profits will be
available against which the deductible temporary differences can be utilized;
and 
* are reviewed at the end of the reporting period and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered. 
Deferred tax liabilities: 
*  are generally recognized for all taxable temporary differences; 
*  are recognized for taxable temporary differences arising on investments in
subsidiaries except where the reversal of the temporary difference can be
controlled and it is probable that the difference will not reverse in the
foreseeable future; and 
* are not recognized on temporary differences that arise from goodwill which is
not deductible for tax purposes. 
Deferred tax assets and liabilities are not recognized in respect of temporary
differences that arise on initial recognition of assets and liabilities acquired
other than in a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit. 
K)Revenue recognition 
Revenue is recognized to the extent that it is probable that the economic
benefits will flow to the Corporation and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received or
receivable, excluding discounts, rebates, sales taxes or duty. The Corporation
assesses its revenue arrangements against specific criteria in order to
determine if it is acting as principal or agent. The Corporation has concluded
that it is acting as a principal in all of its revenue arrangements. The
following specific recognition criteria must also be met before revenue is
recognized: 
Rendering of services 
The Corporation recognizes revenue from services when the services are provided. 
Truck placement fees 
Truck placement fees are recognized when the truck is delivered to the operating
partner. 
L)Share-based payment 
The Corporation operates a number of equity-settled and cash-settled share-based
compensation plans under which it receives services from employees as
consideration for equity instruments of the Corporation or cash payments. 
Equity-settled awards 
The Corporation uses the Black-Scholes pricing model to estimate the fair value
of equity-settled awards at the grant date. The expense is recognized over the
vesting period, which is the period over which all of the specified vesting
conditions are satisfied. For awards with graded vesting, the fair value of each
tranche is recognized over its respective vesting period. 
No expense is recognized for awards that do not ultimately vest, except for
equity-settled awards where vesting is conditional upon a market or non-vesting
condition, which are treated as vesting irrespective of whether or not the
market or non-vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied. 
Cash-settled awards 
The Corporation uses the market price of its shares to estimate the fair value
of cash-settled awards. Fair value is established initially at the grant date
and the obligation is revalued each reporting period until the awards are
settled with any changes in the obligation recognized in selling, general and
administrative expenses in the consolidated statement of comprehensive income. 
M) Finance costs 
Finance costs comprise interest expense on borrowings. Borrowing costs that are
not directly attributable to the acquisition, construction or production of a
qualifying asset are recognized in profit or loss using the effective interest
rate method. 
N)Segment reporting 
An operating segment is a component of the Corporation that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Corporation's
other components. All operating segments' operating results are reviewed
regularly by the Corporation's President and CEO to make decisions about
resources to be allocated to the segment and assess its performance, and for
which discrete financial information is available. 
O) Foreign currency translation 
Items included in the financial statements of each consolidated entity are
measured using the currency of the primary economic environment in which the
entity operates (the "functional currency"). Foreign currency transactions are
translated into the functional currency using the exchange rates prevailing at
the dates of the transaction. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation of monetary assets
and liabilities not denominated in the functional currency of an entity are
recognized in the consolidated statement of comprehensive income. 
Assets and liabilities of entities with functional currencies other than
Canadian dollars are translated at the period end rates of exchange, and the
results of their operations are translated at average rates of exchange for the
period. The resulting translation adjustments are included in the accumulated
other comprehensive loss when settlement of which is neither planned nor likely
to occur in the foreseeable future. 
When settlement of a monetary item receivable from or payable to a foreign
operation is neither planned nor likely to occur in the foreseeable future,
foreign exchange gain or losses related to such items are recognized in other
comprehensive income, and presented in accumulated other comprehensive loss in
equity. 
P)Financial assets 
The Corporation classifies its financial assets as loans and receivables. The
classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at
initial recognition. 
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are included
in current assets, except for those with maturities greater than 12 months after
the end of the reporting period. These are classified as non-current assets. The
Corporation's loans and receivables comprise 'trade and other receivables' and
cash and cash equivalents in the consolidated statement of financial position. 
Loans and receivables are initially recognized at fair value plus transaction
costs and subsequently carried at amortized cost using the effective interest
rate method. 
A provision for impairment of trade receivables is established when there is
objective evidence that the Corporation will not be able to collect all amounts
due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganization, and default or delinquency in payments are considered
indicators that the trade receivable is impaired. The amount of the provision is
the difference between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance
account, and the amount of the loss is recognized in the consolidated statement
of comprehensive income. When a trade receivable is uncollectible, it is written
off against the allowance account for trade receivables. 
Financial assets are de-recognized when the contractual rights to the cash flows
from the financial asset expire or when the contractual rights to those assets
are transferred. 
Q)Financial liabilities 
The Corporation classifies its financial liabilities as other financial
liabilities. Management determines the classification of its financial
liabilities at initial recognition. Other financial liabilities are recognized
initially at fair value and subsequently measured at amortized cost using the
effective interest rate method. 
Other financial liabilities include trade and other payables, dividends payable
and long-term debt. Trade payables are obligations to pay for goods or services
that have been acquired in the ordinary course of business from suppliers. 
Financial liabilities are classified as current liabilities if payment is due
within one year or less, if not, they are presented as non-current liabilities. 
R)Equity instruments 
Equity instruments issued by the Corporation are recorded at the proceeds
received net of direct issue costs. 
5 Recent accounting pronouncements 
The Corporation has reviewed new and revised accounting pronouncements that have
been issued but are not yet effective and determined that the following may have
an impact on the Corporation: 
i) IFRS 9, 'Financial Instruments' was issued in November 2009 as the first step
in its project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. IFRS 9 introduces new requirements for classifying and measuring
financial assets that must be applied starting January 1, 2015, with early
adoption permitted. The IASB intends to expand IFRS 9 during the intervening
period to add new requirements for classifying and measuring financial
liabilities, de-recognition of financial instruments, impairment and hedge
accounting. The Corporation is currently assessing the impact of this standard
on the consolidated financial statements. 
ii) IFRS 10, 'Consolidated Financial Statements' was issued in May 2011 and will
supersede the consolidation requirements in SIC-12 'Consolidation - Special
Purpose Entities' and IAS 27 'Consolidated and Separate Financial Statements'
effective for annual periods beginning on or after January 1, 2013, with early
application permitted. IFRS 10 builds on existing principles by identifying the
concept of control as the determining factor in whether an entity should be
included within the consolidated financial statements of the parent company. The
standard also provides additional guidance to assist in the determination of
control where this is difficult to assess.  The Corporation has assessed this
standard and determined that the standard will not have a material impact on the
Corporation's consolidated financial statements. 
iii) IFRS 11, 'Joint Arrangements' was issued in May 2011 and will supersede
existing IAS 31, 'Joint Ventures' effective for annual periods beginning on or
after January 1, 2013, with early application permitted. IFRS 11 provides for
the accounting of joint arrangements by focusing on the rights and obligations
of the arrangement, rather than its legal form (as is currently the case). The
standard also eliminates the option to account for jointly controlled entities
using the proportionate consolidation method. The Corporation has assessed this
standard and determined that the standard is not applicable to the Corporation's
consolidated financial statements. 
iv) IFRS 12, 'Disclosure of Interests in Other Entities' was issued in May 2011
and is a new and comprehensive standard on disclosure requirements for all forms
of interests in other entities, including subsidiaries, joint arrangements,
associates and unconsolidated structured entities. IFRS 12 is effective for
annual periods beginning on or after January 1, 2013, with earlier application
permitted. The Corporation has assessed this standard and determined that the
standard will result in additional disclosures relating to the Corporation's
subsidiaries in the consolidated financial statements. 
v) IFRS 13 'Fair Value Measurement' which is effective prospectively for annual
periods beginning on or after January 1, 2013. IFRS 13 replaces fair value
measurement guidance contained in individual IFRSs, providing a single source of
fair value measurement guidance. The standard provides a framework for measuring
fair value and establishes new disclosure requirements to enable readers to
assess the methods and inputs used to develop fair value measurements and for
recurring valuations that are subject to measurement uncertainty and the effect
of those measurements on the financial statements. The Corporation is currently
assessing the impact of this standard on the consolidated financial statements. 
6 Cash and cash equivalents 
-***- 
2012        2011 
$           $
---------------------------------------------------
Cash at banks and on hand     2,366,950   1,509,364
Short-term investments           93,128   1,112,827
--------------------------------------------------- 
2,460,078   2,622,191
--------------------------------------------------- 
-****- 
Cash at banks earn interest at floating rates based on daily bank deposit rates.
Short-term investments are made for varying periods of between one and three
months, depending on the immediate cash requirements of the Corporation, and
earn interest at the respective short-term investment rates. 
7 Trade and other receivables 
-***- 
2012           2011 
$              $
------------------------------------------------------
Trade receivables            63,163,216     56,056,591
Other sundry receivables        407,193        114,185
------------------------------------------------------ 
63,570,409     56,170,776
------------------------------------------------------ 
-****- 
Trade receivables are non-interest bearing and are generally on 30-90 day terms.
 The allowance for doubtful debts as at December 31, 2012 is $123,462 (2011 -
$127,080). 
The ageing analysis of trade receivables is as follows: 
Past due but not impaired 
-***- 
Total Not past due 
$            $ 
-------------------------
December 31, 2012  63,163,216   35,032,656 
-------------------------
December 31, 2011  56,056,591   30,954,093 
------------------------- 
Past due but not impaired 
------------------------------------ 
Greater than 
31-60 days 61-90 days      90 days 
$          $            $ 
------------------------------------
December 31, 2012  16,512,276  5,896,730    5,721,554 
------------------------------------
December 31, 2011  12,434,335  5,653,622    7,014,541 
------------------------------------ 
-****- 
8 Inventories 
-***- 
2012          2011 
$             $
-----------------------------------------
Raw materials     2,087,289     2,288,716
----------------------------------------- 
-****- 
9 Property, plant and equipment 
-***- 
Land          Land  Buildings     Equipment 
$  improvements          $         Under 
$             construction 
$
------------------------------------------------------------------------
Cost
At December 31, 2010    5,127,287       366,643  8,956,025     5,571,565
Additions/transfers       130,000       147,374  1,198,813     (711,785)
Disposals                       -     (366,643)          -             -
Exchange differences        2,600             -      6,592             - 
-------------------------------------------------
At December 31, 2011    5,259,887       147,374 10,161,430     4,859,780
Additions/transfers        35,000        79,500  1,918,015     1,482,088
Disposals                       -             -          -             -
Exchange differences      (2,600)             -    (6,592)             - 
-------------------------------------------------
At December 31, 2012    5,292,287       226,874 12,072,853     6,341,868 
------------------------------------------------- 
Depreciation
At December 31, 2010            -       366,643  2,461,282             -
Depreciation charge for         -        29,334    481,068             -
  the year
Disposals                       -     (366,643)          -             -
Exchange differences            -             -        110             - 
-------------------------------------------------
At December 31, 2011            -        29,334  2,942,460             -
Depreciation charge for         -        90,551    528,613             -
  the year
Disposals                       -             -          -             -
Exchange differences            -             -       (73)             - 
-------------------------------------------------
At December 31, 2012            -       119,885  3,471,000             - 
------------------------------------------------- 
Net book value
At December 31, 2011    5,259,887       118,040  7,218,970     4,859,780 
-------------------------------------------------
At December 31, 2012    5,292,287       106,989  8,601,853     6,341,868 
------------------------------------------------- 
Shoring   Shop and  Trucks and 
equipment     Office    trailers 
$  equipment           $        Total 
$                        $
----------------------------------------------------------------------
Cost
At December 31, 2010     2,287,990    735,047  135,601,494  158,646,051
Additions/transfers        103,831    144,194   36,218,868   37,231,295
Disposals                (136,694)  (323,969)  (2,558,851)  (3,386,157)
Exchange differences            -       4,046    1,690,989    1,704,227 
------------------------------------------------
At December 31, 2011    2,255,127     559,318  170,952,500  194,195,416
Additions/transfers       120,109     280,859   50,177,154   54,092,725
Disposals                (58,521)           -   (1,878,223) (1,936,744)
Exchange differences            -     (4,046)   (1,690,989) (1,704,227) 
------------------------------------------------
At December 31, 2012    2,316,715     836,131  217,560,442  244,647,170 
------------------------------------------------ 
Depreciation
At December 31, 2010    1,300,365     506,638   62,677,393   67,312,321
Depreciation charge for   182,733      80,585   13,802,097   14,575,817
  the year
Disposals                (95,400)   (348,465)  (2,529,059)  (3,339,567)
Exchange differences           -        2,019      642,674      644,803 
------------------------------------------------
At December 31, 2011    1,387,698     240,777   74,593,105   79,193,374
Depreciation charge for   160,990     104,962   17,480,364   18,365,480
  the year
Disposals                (34,228)           -   (1,865,849) (1,900,077)
Exchange differences           -      (1,755)    (577,884)    (579,712) 
------------------------------------------------
At December 31, 2012    1,514,460    343,984    89,629,736   95,079,065 
------------------------------------------------ 
Net book value
At December 31, 2011      867,429    318,541    96,359,395  115,002,042 
------------------------------------------------
At December 31, 2012      802,255    492,147   127,930,706  149,568,105 
------------------------------------------------ 
-****- 
10 Intangible assets 
-***- 
Service        Other    Goodwill     Total 
rights  intangibles 
$            $           $         $
-------------------------------------------------------------------------
Cost
At December 31, 2011         4,929,511      980,000   1,621,000 7,530,511
Additions                            -            -           -         - 
--------------------------------------------
At December 31, 2012         4,929,511      980,000   1,621,000 7,530,511 
-------------------------------------------- 
Amortization and impairment
At December 31, 2011                 -      930,998           -   930,998
Amortization for the year            -       49,002           -    49,002 
--------------------------------------------
At December 31, 2012                 -      980,000           -   980,000 
-------------------------------------------- 
Net book value
At December 31, 2011         4,929,511       49,002  1,621,000  6,599,513 
--------------------------------------------
At December 31, 2012         4,929,511            -  1,621,000  6,550,511 
-****- 
Impairment testing of goodwill and intangibles with indefinite lives
For impairment testing purposes, goodwill acquired through business combinations
and service rights with indefinite lives have been allocated to the Eastern
Canada and Western Canada cash-generating units respectively. 
The Corporation performed the annual impairment tests of goodwill and service
rights at December 31. The recoverable amount of the Eastern Canada and Western
Canada cash-generating units have been determined based on a value in use
calculation using post-tax cash flow projections from financial budgets approved
by senior management, and projected over a five year period based on a growth
rate of 6%. The post-tax discount rate applied to cash flow projections is
11.05% (2011 - 10.66%). As a result of this analysis, management did not
identify any impairment. 
11 Trade and other payables 
-***- 
2012         2011 
$            $
-----------------------------------------------------
Current
Trade payables                12,355,617   11,957,190
Deferred unit plan (Note 16)   3,923,000    1,603,000
Bonuses payable                2,087,835    1,523,560
Accrued expenses               1,873,442    1,282,040
Other sundry payables            758,893       51,605 
------------------------- 
20,998,787   16,417,395 
------------------------- 
-****- 
Trade payables are non-interest bearing and are normally settled on 45 day
terms. 
12 Income taxes 
The major components of income tax expense for the years are as follows: 
-***- 
2012        2011 
$           $
------------------------------------------------
Current income tax         7,945,850   5,158,053
Deferred income tax        6,012,873   4,852,111 
------------------------
Total income tax expense  13,958,723  10,010,164 
------------------------ 
-****- 
The provision for income taxes, including deferred taxes, reflects an effective
income tax rate that differs from the actual combined Canadian federal and
provincial statutory rates of 25.85% (2011 - 27.35%). The Corporation's U.S.
subsidiaries are subject to federal and state statutory tax rates of
approximately 40% for both 2012 and 2011. The main differences are as follows: 
-***- 
2012         2011 
$            $
----------------------------------------------------------------------
Profit before tax                              42,008,482   35,813,320 
-----------------------
Income tax expense at the statutory rate       10,859,193    9,794,943
Increase (decrease) resulting from:
Losses not previously recognized/not recognized   650,000    (765,842)
Tax rates in other jurisdictions                2,135,674    1,252,915
Reduction of deferred tax balances
due to reduced tax rate                                 -    (258,256)
Other items                                       313,856     (13,596) 
-----------------------
Income tax expense                             13,958,723   10,010,164 
----------------------- 
-****- 
All deferred taxes are classified as non-current, irrespective of the
classification of the underlying assets or liabilities to which they relate, or
the expected reversal of the temporary difference. In addition, deferred tax
assets and liabilities have been offset if there is a legally enforceable right
to offset current tax liabilities and assets, and they relate to income taxes
levied by the same tax authority on the same taxable entity. 
-***- 
As at December   Recognized in  As at December 
31, 2011  profit or loss        31, 2012 
$               $               $
-------------------------------------------------------------------------
Deferred tax assets
Tax loss carry-forwards         5,085,852     (2,661,852)       2,424,000
Deferred unit plan                408,765        591,600        1,000,365
Share issue costs                       -        421,192          421,192 
---------------------------------------------- 
5,494,617     (1,649,060)       3,845,557 
---------------------------------------------- 
Deferred tax liabilities
Property, plant and equipment  25,628,817      4,198,534       29,827,351
Intangible assets                 248,010         61,686          309,696
Partnership income              4,583,714       (736,473)       3,847,241
Reserve                           442,155         (8,670)         433,485 
---------------------------------------------- 
30,902,696      3,515,077       34,417,773 
----------------------------------------------
Net deferred tax liability     25,408,079      5,164,137       30,572,216 
-****- 
12 Income taxes (continued) 
Tax loss carry forward
As at December 31, 2012, one of the Corporation's U.S. subsidiaries had net
operating losses carried forward of approximately US$5,431,000 which expire in
2032. 
13 Dividends payable 
During the year ended December 31, 2012, the Corporation paid cash dividends of
$11,867,421 (or $1.025 per common share) and declared a $1,109,397 cash dividend
(or $0.09 per common share) to its shareholders of record at the close of
business on December 31, 2012 to be paid January 15, 2013. 
The Corporation declares dividends monthly to its shareholders. Determination of
the amount of cash dividends for any period is at the sole discretion of the
directors and is based on certain criteria including financial performance as
well as the projected liquidity and capital resource position of the
Corporation. Dividends are declared to shareholders of the Corporation on the
last business day of each month and paid on the 15th day of the month following
the declaration (or if such day is not a business day, the next following
business day). 
14 Long-term debt 
-***- 
2012        2011 
$           $
------------------------------------------------------------
Extendable revolving credit facility  29,773,229  46,554,454 
------------------------ 
-****- 
The Corporation has established a $55,000,000 extendable revolving credit
facility.  The purpose of the credit facility is to finance the Corporation's
capital expenditure program and for general corporate purposes. The credit
facility bears interest, at the Corporation's option, at either the bank's prime
rate [December 31, 2012 - 3.00%] or bankers' acceptance rate plus 1.25%
[December 31, 2012 - 2.44%]. An additional stand-by fee calculated at an annual
rate of 0.275% per annum is also required on the unused portion of the credit
facility. This fee is expensed as incurred. 
The credit facility has no required principal repayment. The credit facility
expires on June 23, 2013 and is renewable by mutual agreement of the Corporation
and the lender for an additional 364 day period, after which the entire amount
must be repaid. If not renewed, interest is payable monthly on the facility for
364 days after which the entire amount is to be repaid. 
The extendable revolving credit facility is collateralized by a general security
interest over the Corporation's assets, property and undertaking, present and
future. 
Under the terms of the credit facilities, the Corporation must comply with
certain financial and non-financial covenants, as defined by the bank.
Throughout 2012, and as at December 31, 2012, the Corporation was in compliance
with all of these covenants (see Note 23). 
As at December 31, 2012, the Corporation has issued letters of credit in the
amount of approximately $635,000. The outstanding letters of credit reduce the
amount available under the extendable revolving credit facility. 
At December 31, 2012, the Corporation had available $24,591,771 (December 31,
2011 - $13,445,546) of undrawn committed borrowing facilities in respect of
which all conditions precedent had been met. 
15 Shareholders' capital and reserves 
A) Authorized shares
An unlimited number of voting common shares are authorized without nominal or
par value. 
B) Issued and outstanding 
-***- 
Number of Shares        Amount 
$ 
---------------------------------
At December 31, 2010 and December 31, 2011       10,813,631    44,473,107
Shares issued pursuant to equity
financing, net of issuance costs                  1,500,000    35,961,834
Shares issued pursuant to the share option plan      13,000       205,170
At December 31, 2012                             12,326,631    80,640,111 
-****- 
On June 19, 2012, the Corporation completed an equity financing through the
issuance of 1,500,000 common shares at a price of $25.00 per common share for
gross proceeds of $37,500,000.  The Corporation incurred share issue costs of
$1,538,166 (net of income taxes of $526,500), in connection with the equity
financing, including a commission fee paid to the underwriters of $1,687,500 and
professional and miscellaneous fees of $377,166. 
C) Accumulated other comprehensive loss
The accumulated other comprehensive loss is used to record exchange differences
arising from the translation of the financial statements of foreign
subsidiaries. 
D) Contributed surplus
The contributed surplus reserve is used to recognize the fair value of share
options granted to employees, including key management personnel, as part of
their remuneration. When options are subsequently exercised, the fair value of
such options in contributed surplus is credited to share capital. Refer to Note
16 for further details of these plans. 
-***- 
2012        2011 
$           $
---------------------------------------------------------------
Opening balance                           2,657,923   4,578,771
Share-based payment transactions             58,000     270,800
Equity-settled share plan settled in cash (655,316) (2,191,648) 
----------------------
Closing balance                           2,060,607   2,657,923 
---------------------- 
-****- 
16 Share-based payment plans 
Share plan (equity-settled)
Under the Share Plan, directors, officers, employees and consultants of the
Corporation are eligible to receive share options to acquire ordinary shares of
the Corporation, with terms not to exceed 10 years from the date of the grant.
The exercise price shall not be less than the closing price of the shares traded
on the Toronto Stock Exchange on the first date preceding the date of the grant.
Under the Share Plan, vesting periods are determined by the directors of the
Corporation at the time of the grant. All share options granted through to
December 31, 2012 vest equally over a period of three years from the date of
grant. The maximum number of shares to be issued under this plan may not exceed
250,000 shares. 
A summary of the share-based payment transactions for the years ended December
31, 2012 and 2011 are as follows: 
-***- 
2012                  2011
------------------------------------------------------------------------- 
Number of    Weighted    Number   Weighted 
options    average         of    average 
exercise   options   exercise 
price                 price 
$                     $
-------------------------------------------------------------------------
Outstanding at beginning of year  187,750     19.00    768,280      16.96
Share options exercised          (13,000)     15.78          -          -
Options surrendered for cash     (52,375)     13.69   (568,530)     16.27
Forfeited                        (12,000)     22.45    (12,000)     18.07
Outstanding at end of year        110,375     21.54    187,750      19.00 
-****- 
Pursuant to the share plan the Corporation had 52,375 (2011 - 568,530) vested
share options surrendered by employees in return for a cash settlement of
$655,316 (2011 - $2,191,648). 
For the year ended December 31, 2012 the Corporation recorded compensation
expense, included as part of selling, general and administrative expense, of
$58,000 (2011 - $270,800) with an offsetting increase to contributed surplus in
respect of the share options granted and outstanding as of December 31, 2012. 
The following provides a summary of the Share Plan as at December 31, 2012: 
-***- 
Options outstanding                 Options exercisable
-------------------------------------------------------------------------
Outstanding at  Weighted average   Weighted average   Number     Weighted 
December 3,         remaining   exercise price  exercisable    average 
2012       contractual                $          at    exercise 
life                     December       price 
31, 2012          $
------------------------------------------------------------------------- 
98,375               0.4             22.45      98,375      22.45 
3,000               1.4             13.69       3,000      13.69 
9,000               2.7             14.20       6,000      14.20 
-****- 
16 Share-based payment plans (continued) 
Performance Trust Share Plan (the "PTU Plan") 
The Corporation established the PTU Plan to reward officers and employees. The
number of shares earned is dependent upon the achievement of certain financial
targets over a three-year period. The PTUs are earned over the same three-year
period and vest on the third anniversary of the grant, at which time the holder
is entitled to cash equal to the aggregate current market value of the number of
shares subject to the PTUs. Dividends per PTU are added to the entitlement after
the PTUs are earned. Compensation expense is based on the estimated fair value
of the award determined at the end of each quarter and recognized on a
straight-line basis throughout the term of the vesting period, with a
corresponding credit to liabilities. On May 13, 2008, May 15, 2009 and May 11,
2010, the Corporation granted awards pursuant to the plan. Upon implementation
of the Deferred Unit Plan the PTU Plan was terminated. PTU's which had been
earned were transferred to deferred units. 
Deferred Unit Plan (cash-settled) 
In May 2011, the Corporation established the Deferred Unit Plan ("DUP"), which
was approved by the shareholders at the September 22, 2011 Annual General
Meeting. The DUP was established to reward officers and employees. Directors may
also participate in the plan whereby they will be paid 60% to 100% of the annual
retainer in the form of deferred units. Pursuant to the terms of the DUP,
participants are granted deferred units with a value equivalent to the value of
a Badger share. The deferred units granted earn additional deferred units for
the dividends that would otherwise have been paid on the deferred units as if
they instead had been issued as Badger shares on the date of the grant. The
deferred units granted other than to the directors, which vest immediately, vest
equally over a period of three years from the date of the grant. Upon vesting,
the participant may elect to redeem the deferred units for an equal number of
Badger shares or the cash equivalent. The DUP has been accounted for as a
cash-settled plan. The compensation expense is based on the estimated fair value
of the deferred units outstanding at the end of each quarter and recognized
using graded vesting throughout the term of the vesting period, with a
corresponding credit to liabilities. The Corporation has recorded a compensation
expense of $2,320,000 (2011 - $1,034,865), which is included in selling, general
and administrative expenses. 
The liability of deferred units outstanding as at December 31, 2012 is
$3,923,000.  The intrinsic value of deferred units exercisable as at December
31, 2012 is $1,437,644.  Changes in the number of deferred units under the
Badger DUP were as follows: 
-***- 
Units
-----------------------------------------
At January 1, 2011                      -
Granted                            49,313
Transferred from PTU Plan          79,688
Dividends earned                    2,177 
---------
At December 31, 2011              131,178
Granted                            48,170
Dividends earned                    4,067
Redeemed                          (5,003)
Forfeited                        (12,287) 
---------
At December 31, 2012              166,125 
---------
Exercisable at December 31, 2012   46,586 
--------- 
-****- 
17 Revenues 
-***- 
2012         2011 
$            $
-----------------------------------------------
Rendering of services  237,838,700  193,040,976
Truck placement fees     1,390,001    1,137,113 
-------------------------- 
239,228,701  194,178,089 
-------------------------- 
-****- 
18 Expenses by nature 
Direct costs and selling, general and administrative expenses include the
following major expenses by nature: 
-***- 
2012        2011 
$           $
-------------------------------------------------------
Wages, salaries and benefits     92,953,844  65,664,672
Fees paid to operating partners  42,441,046  43,729,653
Fuel                             11,955,708   8,408,118
Repairs and maintenance          14,616,783  11,358,307 
-****- 
19 Reimbursement to Clean Harbors, Inc. 
On January 26, 2011, the Corporation signed an agreement to be acquired by Clean
Harbors, Inc. ("Clean Harbors"). Under the terms of the agreement, Clean Harbors
was to acquire 100% of the Corporation's outstanding common shares for cash
consideration of $20.50 per common share (the "Transaction").  The Transaction
was conditional on the approval of not less than 66 2/3 percent of the votes
cast by the shareholders and optionholders. The Corporation held a meeting to
consider the Transaction on April 26, 2011. The shareholder and optionholder
vote did not receive the requisite number of votes required to approve the
Transaction and as a result the Transaction was not completed. As a result,
pursuant to the terms of a settlement agreement, the Corporation reimbursed
Clean Harbors $1,062,039.
20 Earnings per share 
Basic earnings per share ("EPS") 
Basic EPS is calculated by dividing profit or loss attributable to ordinary
equity holders (the numerator) by the weighted average number of ordinary shares
outstanding (the denominator) during the year. The denominator is calculated by
adjusting the shares in issue at the beginning of the year by the number of
shares bought back or issued during the year, multiplied by a time-weighting
factor. 
The calculation of basic earnings per share for the year ended December 31,
2012, was based on the profit available to common shareholders of $28,049,759
(2011 - $25,803,156), and a weighted average number of common shares outstanding
of 11,623,680 (2011 - 10,813,631). 
Weighted average number of common shares 
-***- 
2012         2011 
$            $
----------------------------------------------------------------
Issued common shares outstanding,
beginning of year                        10,813,631   10,813,631
Effect of share options exercised            10,869            -
Effect of equity financing                  799,180            - 
-----------------------
Weighted average number of common
shares, end of year                      11,623,680   10,813,631 
----------------------- 
-****- 
20 Earnings per share (continued) 
Diluted EPS 
Diluted EPS is calculated by adjusting the earnings and number of shares for the
effects of dilutive options and other dilutive potential shares. The effects of
anti-dilutive potential shares are ignored in calculating diluted EPS. All
options are considered anti-dilutive when the Corporation is in a loss position. 
The calculation of diluted earnings per share for the year ended December 31,
2012, was based on a weighted average number of common shares outstanding after
adjustment for the effects of all dilutive potential common shares of 11,641,980
(2011 - 10,836,589), calculated as follows: 
-***- 
2012         2011 
$            $
-------------------------------------------------------------
Weighted average number of
common shares (basic)                 11,623,680   10,813,631
Effect of share options                   18,300       22,958 
-----------------------
Weighted average number of
common shares (diluted)               11,641,980   10,836,589 
----------------------- 
-****- 
For the year ended December 31, 2012, there were no options (2011 - 110,375)
excluded from the diluted weighted average number of common shares calculation.
The average market value of the Corporation's shares for purposes of calculating
the dilutive effect of share options was based on quoted market prices for the
year during which the options were outstanding. 
21 Segment reporting 
The Corporation operates in two geographic/reportable segments providing
non-destructive excavating services in each of these segments. The following is
selected information for the years ended December 31, 2012 and 2011 based on
these geographic segments. 
-***- 
For the year ended:              December 31, 2012
----------------------------------------------------------------- 
Canada($)       U.S.($)       Total($)
-----------------------------------------------------------------
Revenues               129,270,392    109,958,309    239,228,701
Direct costs            82,193,266     81,480,137    163,673,403
Depreciation of property,
plant and equipment      9,081,043      9,284,437     18,365,480
Amortization of
intangible assets           49,002              -         49,002
Selling, general and
administrative          10,908,573      3,151,929     14,060,502
Profit before tax       26,002,118     16,006,364     42,008,482 
For the year ended:                     December 31, 2011
----------------------------------------------------------------- 
Canada($)        U.S.($)        Total($)
-----------------------------------------------------------------
Revenues              110,952,822     83,225,267      194,178,089
Direct costs           67,986,521     61,412,096      129,398,617
Depreciation of property,
plant and equipment     8,131,895      6,443,922       14,575,817
Amortization of
intangible assets         196,000              -          196,000
Selling, general and
administrative          9,511,602      2,462,517       11,974,119
Profit before tax      24,077,585     11,735,735       35,813,320 
-****- 
-***- 
For the year ended:                 December 31, 2012
----------------------------------------------------------------------- 
Canada ($)      U.S. ($)     Total ($)
Additions to non-current assets:
Property, plant and equipment    30,095,361   23,997,364     54,092,725
Intangible assets                         -            -              - 
December 31, 2011
----------------------------------------------------------------------- 
Canada ($)      U.S. ($)     Total ($)
Additions to non-current assets:
Property, plant and equipment    13,268,269   23,963,026     37,231,295
Intangible assets                   275,000            -        275,000 
-****- 
21 Segment reporting (continued) 
-***- 
------------------------------------------------------------------- 
Canada ($)    U.S. ($)    Total ($)
-------------------------------------------------------------------
As at December 31, 2012
Property, plant and equipment  77,969,436  71,598,669   149,568,105
Intangible assets               6,550,511           -     6,550,511
Total assets                  126,315,547  99,266,861   225,582,408 
As at December 31, 2011
Property, plant and equipment  57,651,769  57,350,273   115,002,042
Intangible assets               6,599,513           -     6,599,513
Total assets                  100,078,941  83,787,868   183,866,809
------------------------------------------------------------------- 
-****- 
22 Related party disclosure 
The consolidated financial statements include the financial statements of Badger
Daylighting Ltd. and the subsidiaries listed in the following table: 
-***- 
% equity interest
-------------------------------------------------------------------------
Name                           Country of Incorporation     2012     2011
-------------------------------------------------------------------------
Badger Daylighting
(Fort McMurray) Inc.                             Canada     100%     100%
Badger Edmonton Ltd.                             Canada     100%     100%
1095909 Alberta Ltd.                             Canada     100%     100%
Badger ULC                                       Canada     100%     100%
Badger Daylighting USA, Inc.   United States of America     100%     100%
Badger Daylighting Corp.       United States of America     100%     100%
Badger, LLC                    United States of America     100%     100% 
-****- 
Balances and transactions between Badger Daylighting Ltd. and its subsidiaries
have been eliminated on consolidation and are not disclosed in this Note.
Details of transactions between the Corporation and other related parties are
disclosed below. 
Transactions with related parties 
During the year ended December 31, 2012, the Corporation was charged $201,106
(2011 - $356,128) for professional fees by a partnership in which a director of
the Corporation is a partner. These transactions were incurred during the normal
course of operations on similar terms and conditions to those entered into with
unrelated parties. These transactions are measured at the exchange amount, which
is the amount of consideration established and agreed to by the related parties. 
Related party balances 
As at December 31, 2012 and December 31, 2011 there were no significant
outstanding balances with related parties. 
Compensation of key management personnel 
The remuneration of directors and other members of key management personnel were
as follows: 
-***- 
2012       2011 
$          $ 
----------------------
Compensation, including bonuses  1,935,348  1,577,416
Share-based payments               678,940    637,789 
---------------------- 
2,614,288  2,215,205 
---------------------- 
-****- 
Key management personnel and director transactions 
Key management and directors of the Corporation control 2.9 percent of the
voting shares of the Corporation. 
23 Capital management 
The Corporation's strategy is to carry a capital base to maintain investor,
creditor and market confidence and to sustain future development of the
business.  The Corporation considers the capital structure to consist of net
debt and shareholders' equity. The Corporation considers net debt to be total
long-term debt less cash and cash equivalents. The Corporation seeks to maintain
a balance between the level of net debt and shareholders' equity to facilitate
access to capital markets to fund growth and working capital. On a historical
basis, it is management's objective and view that the Corporation has maintained
a conservative and appropriate ratio of net debt to net debt plus shareholders'
equity. The Corporation may occasionally need to increase these levels to
facilitate acquisition or expansion activities. This ratio was as follows: 
-***- 
2012         2011 
$            $ 
------------------------- 
Long-term debt                        29,773,229   46,554,454
Cash and cash equivalents            (2,460,078)  (2,622,191) 
-------------------------
Net debt                              27,313,151   43,932,263
Shareholders' equity                 139,707,772   89,381,154 
-------------------------
Total capitalization                 167,020,923  133,313,417 
-------------------------
Net debt to total capitalization (%)         16%          33% 
------------------------- 
-****- 
The Corporation sets the amounts of its various forms of capital in proportion
to risk. The Corporation manages the capital structure and makes adjustments to
it in light of changes in economic conditions and the risk characteristics of
the underlying assets. In order to maintain or adjust the capital structure, the
Corporation may adjust the amount of dividends to shareholders, return capital
to shareholders, issue new shares, or sell assets to reduce net debt. 
The Corporation is bound by certain financial and non-financial covenants as
defined by its bank. If the Corporation is in violation of any of these
covenants its ability to pay dividends may be inhibited. The Corporation
monitors these covenants to ensure it remains in compliance. The financial
covenants are as follows: 
-***- 
Ratio                   December 31,    December 31,        Threshold 
2012            2011
---------------------------------------------------------------------
Funded Debt[1]
to EBITDA[2]                 0.44:1          0.85:1    2.25:1 maximum
Fixed Charge Coverage[3]     4.58:1          2.11:1    1.00:1 minimum
--------------------------------------------------------------------- 
-****- 
[1] Funded Debt is long-term debt, less cash and cash equivalents.
[2] Funded Debt to EBITDA (earnings before interest, taxes, depreciation and
amortization) means the ratio of consolidated Funded Debt to the aggregated
EBITDA for the trailing twelve-months. Funded Debt is defined as long-term debt
including any current portion thereof. EBITDA is defined as the trailing
twelve-months of EBITDA for the Corporation.
[3] Fixed Charge Coverage Ratio means, based on the trailing twelve-month EBITDA
less unfinanced capital expenditures and cash taxes, plus the unused portion of
the extendable revolving credit facility to the sum of the aggregate of
scheduled long-term debt principal payments, interest and dividends. 
Throughout 2012 and as at December 31, 2012 the Corporation was in compliance
with all of these covenants. 
There were no changes in the Corporation's approach to capital management during
the year. 
The Corporation's activities expose it to a variety of financial risks: credit
risk, liquidity risk and market risk. The Corporation's overall risk management
program focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on the Corporation's financial performance. 
Risk management is carried out by senior management, and the Board of Directors. 
24 Financial instruments and risk management 
Fair values 
The Corporation's financial instruments recognized on the consolidated statement
of financial position consist of cash and cash equivalents, trade and other
receivables, trade and other payables, dividends payable and long-term debt. The
fair values of these recognized financial instruments, excluding long-term debt,
approximate their carrying values due to their short-term maturity. The carrying
value of the long-term debt approximates fair value because each of the
long-term facilities has a floating interest rate. 
Credit risk
Credit risk arises when a failure by counter parties to discharge their
obligations could reduce the amount of future cash inflows from financial assets
on hand at the reporting date. A substantial portion of the Corporation's trade
receivable balance is with customers in the petroleum and utility industries and
is subject to normal industry credit risks. The Corporation manages its exposure
to credit risk through standard credit granting procedures and short payment
terms. The Corporation attempts to monitor financial conditions of its customers
and the industries in which they operate. 
Liquidity risk
Liquidity risk is the risk that, as a result of operational liquidity
requirements, the Corporation will not have sufficient funds to settle an
obligation on the due date and will be forced to sell financial assets at a
price which is less than what they are worth, or will be unable to settle or
recover a financial asset. 
The Corporation's operating cash requirements are continuously monitored by
management. As factors impacting cash requirements change, liquidity risks may
necessitate the need for the Corporation to raise capital by issuing equity or
obtaining additional debt financing. The Corporation also mitigates liquidity
risk by maintaining an insurance program to minimize exposure to insurable
losses. 
At December 31, 2012, the Corporation had available $24,591,771 of authorized
borrowing capacity on the extendable revolving credit facility. The credit
facility expires on June 23, 2013 and is renewable by mutual agreement of the
Corporation and the lender for an additional 364-day period. If not renewed,
interest is payable monthly on the facility for 364 days after which the entire
amount is to be repaid. The Corporation believes it has sufficient funding
through operations and the use of this facility to meet foreseeable financial
obligations. 
The table below summarizes the maturity profile of the Corporation's financial
liabilities at December 31, 2012 based on contractual undiscounted payments. 
-***- 
Less than   1 to 2   2 to 5   > 5 years    Total 
1 year    years    years
-------------------------------------------------------------------------
As at December 31, 2012
Trade and
other payables          20,998,787         -       -         - 20,998,787
Long-term debt                   - 29,773,229      -         - 29,773,229 
20,998,787  29,773,229     -         - 50,772,016 
-****- 
24 Financial instruments and risk management (continued) 
Market risk 
The significant market risk exposures affecting the financial instruments held
by the Corporation are those related to interest rates and foreign currency
exchange rates which are explained as follows: 
Interest rate risk
The Corporation is exposed to interest rate risk in relation to interest expense
on its long-term debt. Interest is calculated at prime on its borrowing
facilities. The prime interest rate is subject to change. A sensitivity analysis
would indicate that net profit for the year ended December 31, 2012 would have
been affected by approximately $296,000 if the average interest rate changed by
one percent. The Corporation does not currently use interest rate hedges or
fixed interest rate contracts to manage the Corporation's exposure to interest
rate fluctuations. 
Foreign exchange risk
The Corporation has United States operations and Canadian operations which
purchase certain products in United States dollars. As a result, fluctuations in
the value of the Canadian dollar relative to the United States dollar can result
in foreign exchange gains and losses. The Corporation does not currently have
any agreements to fix or hedge the exchange rate of the Canadian dollar to the
United States dollar. 
United States dollar denominated balances, subject to exchange rate
fluctuations, were as follows (amounts shown in Canadian dollar equivalent): 
-***- 
2012         2011 
$            $ 
--------------------------
Cash and cash equivalents      2,460,078    2,622,191
Trade and other receivables   24,186,701   23,047,656
Trade and other payables     (6,092,815)  (5,796,719)
Income taxes payable           (335,000)            -
Long-term debt              (25,500,000) (26,010,000) 
-------------------------- 
(5,281,036)  (6,136,872) 
-------------------------- 
-****- 
The following table demonstrates the Corporation's sensitivity to a 10% increase
or decrease in the Canadian dollar against the foreign exchange rates. The
sensitivity analysis includes only foreign currency denominated monetary items
and adjusts their translation at the year end for a 10% change in the foreign
currency rate (amounts shown in Canadian dollar equivalent). 
-***- 
Increase/decrease in                Effect on profit/   Effect on profit/
foreign exchange rate              (loss) before tax    (loss) before tax 
2012                 2011 
$                    $
-------------------------------------------------------------------------
10% strengthening in the Canadian
dollar against the US dollar             (1,365,000)          (1,000,000)
10% weakening in the Canadian
 dollar against the US dollar             1,517,000             1,150,000 
-****- 
25 Commitments and contingencies 
Legal disputes 
The Corporation is not involved in any legal disputes that would generate a
material impact to the financial results of the Corporation. 
Operating leases
The Corporation has entered into operating leases for shop and office premises. 
Future minimum rentals payable under non-cancellable operating leases are as
follows: 
-***- 
2012       2011 
$          $ 
----------------------
Within one year                              1,849,000    923,000
After one year but not more than five years  2,401,000  1,124,000 
----------------------
Total                                        4,250,000  2,047,000 
---------------------- 
-****- 
Purchase commitments 
At December 31, 2012 the Corporation has commitments to purchase approximately
$14,204,000 worth of capital assets and various parts and materials.  There are
no set terms for remitting payment for these financial obligations. 
26 Subsequent event 
During April, 2012 the Corporation executed a non-binding letter of intent
whereby it will acquire service rights and operating assets from certain of its
operating partners for cash consideration of $2,635,000.  The date the
transaction will be completed is not known at this time. 
This release is available as a PDF. Please click on the following link to view
the PDF:
http://www.usetdas.com/pr/badger03182013.pdf 
Source: Badger Daylighting Ltd.  (TSX - BAD) www.badgerinc.com
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-0- Mar/18/2013 12:01 GMT