2023 Year in Review

As I reflect on the past year, I am filled with gratitude for the dedication and resilience displayed by each member of our team. Despite the challenges we faced, together we have achieved remarkable milestones and continued to drive our vision forward.

As we embark on another year of growth and success, I want to take a moment to reflect on one of those significant milestones we celebrated last year, our company's 20-year anniversary. It was a momentous occasion that allowed us to look back on two decades of achievements, challenges, and growth, and to celebrate the journey that has brought us to where we are today.

Our 20-year anniversary was not just a celebration of longevity, it was a celebration of resilience, innovation, and the commitment of our team. Over the past two decades, we have faced numerous challenges and uncertainties, but through it all, we have remained steadfast in our dedication to excellence and our passion for making a difference in our industry.

In 2023, Aquatera provided over $224,000 in cash and gift-in-kind sponsorships, and partnered with Recycle Plus to provide an additional $30,000 through the Bottle Donation Program to non-profit organizations in our service region. Since inception, more than $1 million has been invested back into our community though this program.

We are once again pleased to declare $5.5 million in cash dividends for our local Shareholders.

I believe we are strongly placed in the market, with culture being our competitive edge. It is for this reason that Aquatera was named an Alberta Top 75 Employer for a second consecutive year. To continue building a strong workforce and create an optimal employee experience, we remained focussed on our attraction and retention strategies through professional development, succession planning, and promoting career opportunities within our industry.

Training and professional development plays an invaluable role in our organization and the growth of each of our team members. As we continue to strive for excellence in everything we do, investing in the development and enhancement of our skills is paramount. In 2023, Aquatera held our first annual Water|Earth|Innovation Conference (WEIC), continuing to invest in the essential and specialized development of our employees. This was a tremendous success.

Last year, we found ourselves confronted with unforeseen circumstances that prompted a local state of emergency due to widespread fires throughout the County of Grande Prairie. Despite the challenges, I am proud to say that our team rose to the occasion with resilience, creativity, and unwavering dedication. We adapted to the circumstances seamlessly, continued to serve our customers with excellence, and supported each other through uncertain times. Our ability to come together as a community in the face of adversity is a testament to our strength.

As we continue to build on Aquatera's strong foundation, we will focus on developing our people, leveraging our collective expertise and enhancing our working environment. In so doing, we will strengthen the entrepreneurial spirit that underpins our culture, growth, and success. I would like to thank the Aquatera team for their dedication and commitment to our communities.

Aquatera had a safe, successful year in providing excellent services to existing and new customers. The continued focus on building a strong organization and meeting customer needs was recognized when Aquatera was named one of Alberta’s Top 75 Employers for a second consecutive year. Employees can take pride in the recognition their organization receives and the culture they are creating in making the company a great place to work.

With a strong growth strategy approved by the Board and a focus on results, the efforts of management and employees are meeting the economic challenges and ESG (Environment, Social, and Governance) requirements associated with a utility company. The evolution of the organization's culture shows the employees commitment to meet these challenges through innovation and collaboration by achieving key operating parameters while minimizing the financial impact on customers.

Growth through the company's strategy of providing services to other municipalities continues to progress with a major contract for the City of Wetaskiwin’s Peace Hills Utilities. It is very encouraging to see that Aquatera is being considered by other municipalities to provide their region with our services based on Aquatera's organizational strengths, expertise and excellent safety and operational records.

With operating contracts in place or under development with other municipalities, the Board is confident that the company's strategy will continue to grow returns to its Shareholders. The Board-approved strategy is leveraging its core competencies and building a strong organization with individuals with expertise and experience to fill important management and development leadership roles.

The Board has full confidence that the corporation has the ability to sustain high company and performance standards while meeting the expectations of our existing and future customers.

The Board and CEO have built a positive relationship which support the company's strategies and meets the Board's oversight responsibilities for the company. The internal and external third-party audits confirm the integrity of the company's operations.

The Board has undertaken its annual program of recruiting future directors with the skills and experience necessary for ensuring proper guidance and oversight systems are in place. In 2023 we welcomed Tracy Allard, Derek Van Tassell, and Naseem Bashir to the Board as Directors.

I would like to thank all the company's directors for their contributions and commitment over the past year. Corporate Governance is well managed by the Board's composition. Our independent Board is an essential part of company governance to meet the Shareholders expectations of growth and results that benefit the regions they represent.

SAFETY

Aquatera's employees are the driving force behind our strong, safety-focussed culture. They play an integral role in helping Aquatera deepen it's understanding of the safety culture within the company, and their perspective ensures we achieve our safety goals related to risk reduction, safety engagement, and the provision of water, wastewater, and solid waste services.

In 2023, Aquatera refined process improvements, increased reporting targets, and actively campaigned to focus on identifying risks in the workplace. Employees have embraced these improvements, supporting us in sustaining our safety performance. In 2023, we documented a Total Recordable Incident Rate (TRIR) of 1.88.

In an effort to prioritize the safety of our workers and raise awareness with drivers about the hazards associated with work on roadways, Aquatera organized an internal contest focussed on designing safety signage to be displayed on fleet vehicles. These signs act as a visual cue for drivers, reminding them that the workers in the area have families and loved ones who are expecting them to arrive home safely at the end of the day. The purpose is to encourage drivers to reduce speed and adhere to signage, thereby supporting the safety of workers and preventing accidents.

The success of our safety focus was also demonstrated through the completion of our Certificate of Recognition (CORTM) internal audit. Aquatera achieved a score of 84 per cent, maintaining our Partnership in Injury Reduction Certificate of Recognition.

We continue to focus our efforts on creating a safer work environment and reducing our TRIR.

COMMUNITY

Aquatera is committed to strengthening and empowering the communities we serve. We invest in programs and initiatives that demonstrate goodwill, positively impact our environment and support our Core Purpose of Growing Healthy Communities.

Shareholder engagement is important to our success and 2023 saw meaningful and intentional communication between Aquatera and our Shareholders. At the Annual General Meeting, Director and current Board Chair Lionel Laflamme was reappointed for a term of three years; Mary Bulmer was reappointed as a Director for a one year term. We also welcomed three new Directors, Tracy Allard, Derek Van Tassell and Naseem Bashir, and said goodbye to Directors Dave Urness and Jim Smith who retired from the Board.

Our Board of Directors and Executive team are committed to the highest standards of corporate governance and believe that sound corporate governance contributes to stakeholder value, trust and confidence. In 2023, Aquatera's Board of Directors approved the company's inaugural Environmental, Social, and Governance (ESG) Report and Scorecard, which serves as a tool for tracking progress and demonstrating Aquatera's ongoing commitment to environmental stewardship, social responsibility, and effective governance.

Quarterly meetings with Shareholder leaders occurred throughout the year reviewing a number of key metrics including quarterly financial results. Shareholders were also invited to provide input on Aquatera's 2024 Business Plan.

EMPLOYEE ENGAGEMENT

Employee engagement isn't just a metric; it's a reflection of our commitment to fostering a culture where every voice is valued, every idea is heard, and every individual feels empowered to contribute to our collective success. In 2023 we saw the passion, dedication, and innovation of our team members, whose unwavering commitment continues to drive our organization forward.

To measure employee satisfaction, Aquatera obtained confidential feedback through our Employee Engagement Surveys which were conducted in April and September. Through qualitative and quantitative data, the survey measures employee engagement and satisfaction, allowing us to identify positive qualities of Aquatera's culture, as well as areas for improvement. Results of this survey indicate that Aquatera employees are highly engaged and 89 per cent of employees would recommend Aquatera as an employer.

To increase engagement, Aquatera established annual focus groups providing a collaborative environment for employees to discuss the results and identify action items to support continued improvement. This initiative not only supports Aquatera's leadership to better understand employees but allows employees to take ownership of Aquatera's culture.

DIVERSITY AND INCLUSION

Over the past number of years, it has become increasingly clear that diversity and inclusion provide multiple benefits to organizations and their employees. Aquatera launched its second biennial Diversity and Inclusion survey in September 2023. One hundred and twenty-six (126) employees responded to the survey, approximately 65 per cent. Results indicate that Aquatera has a good foundation in both diversity and inclusion and is well aligned with the Grande Prairie region. To further lead our efforts, we developed a Diversity and Inclusion Policy and led diversity and inclusion training for all employees.

In 2023, Aquatera continued to invest in the essential and specialized development of our employees by holding our first annual Water|Earth|Innovation Conference (WEIC). Similar to the Water Week North Conference Aquatera has been hosting since 2004, WEIC continued to provide learning and training opportunities to water and wastewater owners and operators in northern Alberta, while expanding our course offerings to include solid waste, engineering, safety, and personal development.

Aquatera continues to participate in co-op student programs through various educational institutions. One student was stationed in Aquatera’s City of Wetaskiwin location, while the two others were placed in the Grande Prairie operational area, with one assigned to Distribution and Collection and the other assigned to the Water and Wastewater Treatment Plant. The students worked on several projects providing support to operations. As a result of the successful work terms, Aquatera looks forward to continuing the program into the foreseeable future and collaborating with Northwestern Polytechnic on their Water and Wastewater Certification Program in 2024.

Aquatera's workforce is comprised of both union and non-union employees. Union employees negotiate the terms of employment through a collective bargaining process that is conducted on a multi-year basis. Negotiations for a new contract began in 2023, resulting in a ratified agreement in early 2024. Non-union employees are evaluated through market comparisons and regular performance reviews on an annual basis, with compensation changes being approved by the Board. Director compensation is reviewed every three years by a third-party and approved by the shareholders, with the next review scheduled for 2025.

FINANCIAL AND BUSINESS PLAN OBJECTIVES

Aquatera continues to maintain a strong financial foundation that promotes long-term sustainability. Our investments and borrowings are structured to ensure appropriate cash flows are available for capital investments and growth.

Operational efficiency and customer service remain key areas of focus. In 2023, economic activity gradually increased as the impacts of the pandemic continued to dissipate. Water consumption trended upward from previous years.

Aquatera was able to deliver on aggressive profitability and cost saving targets in 2023 while sustainably growing the business and providing excellent customer service. Aquatera delivered $26.9 million in cash flow from operations in 2023, an excellent achievement highlighting its strength and resiliency in challenging economic times.

Under the Unanimous Shareholders Agreement (USA), annual dividends are paid at the mandatory rate of five per cent. In addition to the mandatory dividend of $2.5 million, the Board declared a discretionary dividend of $3 million. Dividends to Shareholders in 2023 totalled $5.5 million, a four per cent increase over 2022.

Debt levels remain very conservative and well within stakeholder expectations. To date, Aquatera has provided $286.2 million in benefits to shareholders directly in the form of cash dividends, franchise fees and payment for service, and indirectly with stock dividends.

GROWING THE BUSINESS

Throughout 2023, Aquatera continued to focus efforts on growing our business through service expansion and enhancement. To support our strategic vision, our Business Development team works with internal and external stakeholders, with the goal of establishing community and government relationships, and encouraging partnerships where it is beneficial to all stakeholders.

In 2023, Aquatera was approached to supply treated wastewater effluent as an alternative water source for fracturing fluid. The use of treated wastewater effluent promotes efficient water reuse, opposed to using fresh water from alternative water sources like the Wapiti River. Aquatera is always seeking new opportunities to foster growth in the communities it serves and, as a result, supplied treated wastewater effluent from its Grande Prairie final wastewater effluent lagoon; the effluent was safely transferred to site and utilized resulting in a reduced environmental footprint overall.

Aquatera continues to provide contracted services to the Town of Hinton, Town of Manning, Municipality of Jasper and Silver Pointe Village. In 2023, Aquatera was contracted by the Municipal District of Greenview, Teck Coal Limited and West Fraser Hinton Pulp to provide support for their water and wastewater facilities. In 2023 Aquatera's Wetaskiwin operations team continued to provide services and support the City of Wetaskiwin’s Peace Hills Utilities.