Velan Inc.TSX: VLN

Consolidated Financial Statements (Q3) (Financial statement Q3 F2026 English Final)

· Issued by Velan Inc.
UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Nine-month period ended November 30, 2025

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors PricewaterhouseCoopers LLP have not reviewed the unaudited condensed interim consolidated financial statements for the Nine-month period ended November 30, 2025.

Consolidated Statements of Financial Position

(in thousands of U.S. dollars)

As at

November 30,

2025

$

February 28,

2025

$

Assets

Current assets

Cash and cash equivalents

36,320

34,872

Short-term investments

383

358

Accounts receivable

78,615

62,612

Income taxes recoverable

5,711

5,617

Inventories (note 8)

154,933

134,969

Deposits and prepaid expenses

4,162

3,689

Derivative assets

249

24

Assets held for sale (note 6)

-

176,762

280,373

418,903

Non-current assets

Property, plant and equipment

50,398

51,349

Intangible assets and goodwill

6,375

5,893

Deferred income taxes

5,193

25,101

Other assets

740

720

62,706

83,063

Total assets

343,079

501,966

Liabilities

Current liabilities

Bank indebtedness

16,097

2,508

Accounts payable and accrued liabilities

76,726

78,776

Income taxes payable

2,304

1,818

Customer deposits

11,559

22,338

Provisions

7,875

153,957

Derivative liabilities

145

480

Current portion of long-term lease liabilities

1,560

1,437

Current portion of long-term debt (note 9)

3,722

2,096

Liabilities held for sale (note 6)

-

110,883

119,988

374,293

Non-current liabilities

Long-term lease liabilities

4,221

4,727

Long-term debt (note 9)

13,967

14,107

Income taxes payable

-

692

Deferred income taxes

1,339

737

Customer deposits

11,908

3,876

Other liabilities

5,090

4,796

36,525

28,935

Total liabilities

156,513

403,228

Total equity

186,566

98,738

Total liabilities and equity

343,079

501,966

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

Consolidated Statements of Income (loss)

(in thousands of U.S. dollars, excluding per share amounts)

Three-month periods ended

November 30,

2025

$

November 30,

2024

$

Sales

Cost of sales

71,660

44,483

73,404

45,099

Gross profit

27,177

28,305

Administration costs

16,457

17,003

Restructuring expenses (note 14)

1,305

74,468

Other expenses

3,565

(782)

Operating income (loss)

5,850

(62,384)

Financing expenses

( 259)

(442)

Income (loss) before income taxes

5,591

(62,826)

Income tax expense (recovery)

2,655

(14,930)

Net Income (loss) for the period from continuing operations

2,936

(47,896)

Results from discontinued operations (note 6)

-

(14,262)

2,936

(62,158)

Net Income (loss) attributable to:

Subordinate Voting Shares and Multiple Voting Shares

2,996

(62,097)

Non-controlling interest

(60)

(61)

Net Income (loss) attributable to Shareholders for the period

2,936

(62,158)

Net Income (loss) per Subordinate and Multiple Voting Share

Basic and diluted from continuing operations

0.14

(2.22)

Basic and diluted from discontinued operations

-

(0.66)

Basic and diluted from all operations

0.14

(2.88)

Dividends declared per Subordinate and Multiple

(0.07)

0.02

Voting Share

(CA$ 0.10)

(CA$ 0.03)

Total weighted average number of Subordinate and Multiple Voting Shares

Basic and diluted common number of shares

21,585,635

21,585,635

Net Income (loss) attributable to Shareholders: Continuing operations

2,936

(47,896)

Discontinued operations

-

(14,262)

Net Income (loss) for the period

2,936

(62,158)

Nine-month periods ended

November 30,

2025

$

November 30,

2024

$

211,500

148,022

211,998

146,911

63,478

65,087

50,147

48,348

7,369

81,301

3,520

(192)

2,442

(64,370)

(893)

(966)

1,549

(65,336)

(17,483)

(13,993)

19,032

(51,343)

58,599

(11,890)

77,631

(63,233)

77,761

(63,081)

(130)

(152)

77,631

(63,233)

0.89

(2.37)

2.71

(0.55)

3.60

(2.92)

(0.38)

0.02

(CA$ 0.53)

(CA$ 0.03)

21,585,635

`

21,585,635

19,032

(51,343)

58,599

(11,890)

77,631

(63,233)

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

Consolidated Statements of Comprehensive Income (loss)

(in thousands of U.S. dollars)

Three-month periods

ended

November

30,

2025

$

November

30,

2024

$

Comprehensive Income (loss)

Net Income (loss) for the period

2 936

(62 158)

Other comprehensive Income (loss)

Foreign currency translation of foreign subsidiaries

11,226

1 188

Foreign currency translation of foreign subsidiaries from discontinued operations

-

(4 297)

Reclassification of foreign currency translation from discontinued operations

-

-

Comprehensive Income (loss)

14 162

(65,267)

Comprehensive Income (loss) attributable to:

Subordinate Voting Shares and Multiple Voting Shares

14,222

(65,206)

Non-controlling interest

(60)

(61)

Comprehensive Income (loss)

14 162

(65,267)

Nine-month periods ended

November

30,

2025

$

November

30,

2024

$

77,631

(63,233)

6,035

(740)

-

(2,123)

12 456

-

96,122

(66,096)

96,252

(65,944)

(130)

(152)

96,122

(66,096)

Other comprehensive Income (loss) is composed solely of items that may be reclassified subsequently to the consolidated statement of Income (loss).

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

Consolidated Statements of Changes in Equity

(in thousands of U.S. dollars, excluding number of shares)

Equity attributable to the Subordinate and Multiple Voting shareholders

Share capital

Contributed

surplus

Accumulated

other comprehensive Income (loss)

Retained earnings

Total

Non-controlling

interest

Total equity

Balance - February 29, 2024

72,695

6,260

(38,692)

141,914

182,177

1,082

183,259

Net Loss for the period

-

-

-

(63,081)

(63,081)

(152)

(63,233)

Other comprehensive Income

-

-

(2,863)

-

(2,863)

-

(2,863)

Comprehensive Income (loss)

-

-

(2,863)

(63,081)

(65,944)

(152)

(66,096)

Other

-

95

-

-

95

-

95

Dividends

Multiple Voting Shares

-

-

-

(333)

(333)

-

(333)

Subordinate Voting Shares

-

-

-

(129)

(129)

-

(129)

Balance - November 30, 2024

72,695

6,355

(41,555)

78,371

115,866

930

116,796

Balance - February 28, 2025

72,695

6,355

(47,141)

65,952

97,861

877

98,738

Net Income (loss) for the period

-

-

-

77,761

77,761

(130)

77,631

Other comprehensive income (loss)

-

-

6,035

-

6,035

-

6,035

Comprehensive Income (loss)

-

-

6,035

77,761

83,796

(130)

83,666

Reclassification of foreign currency translation to

discontinued operations (note 6)

-

-

12,456

-

12,456

-

12,456

Dividends

Multiple Voting Shares

-

-

-

(5,980)

(5,980)

-

(5,980)

Subordinate Voting Shares

-

-

-

(2,314)

(2,314)

-

(2,314)

Balance - November 30, 2025

72,695

6,355

(28,650)

135,419

185,819

747

186,566

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

6

Consolidated Statements of Cash Flow

(in thousands of U.S. dollars)

Three-month periods ended

November 30,

2025

$

November 30,

2024

$

Cash flows from

Operating activities

Net income (loss) for the period

2,936

(62,158)

Less: results from discontinued operations (note 6)

-

14,262

Net Income (loss) for the period for continued operations

2,936

(47,896)

Adjustments to reconcile net loss to cash provided by operating activities (note 12)

5,188

45,240

Changes in non-cash working capital items (note 13)

(15,804)

2,647

Cash provided (used) by operating activities from continued operations (excluding Asbestos settlement)

(7,680)

(9)

Asbestos Settlement transaction (note 13)

-

-

Cash provided (used) by operating activities from continued operations

(7,680)

(9)

Investing activities

Short-term investments

-

(193)

Additions to property, plant and equipment

(1,721)

(4,039)

Additions to intangible assets

-

(981)

Proceeds on disposal of property, plant and equipment

25

31

Net change in other assets

26

258

Cash provided (used) by investing activities from continued operations (excluding

proceeds on disposal of France assets)

(1,670)

(4,923)

Proceeds on disposal of France assets

-

-

Cash provided (used) by investing activities from continued operations

(1,670)

(4,923)

Financing activities

Dividends paid to Subordinate and Multiple Voting shareholders

(1,539)

-

Increase in long-term debt

2,168

506

Repayment of long-term debt

(392)

(242)

Repayment of long-term lease liabilities

(420)

-

Cash used by financing activities from continued operations

(183)

264

Effect of exchange rate differences on cash and cash equivalents

279

(315)

Net change in cash during the period from continuated operations

(9,254)

(4,984)

Net change in cash during the period from discontinuing operations (note 6)

-

9,581

Net change in cash and cash equivalents during the period

(9,254)

4,597

Net cash - Beginning of the period

29,477

37,045

Net cash - End of the period

20,223

32,061

Net cash is composed of:

Cash and cash equivalents

36,320

35,051

Bank indebtedness

(16,097)

(2,990)

Net cash - End of the period

20,223

32,061

Supplementary information

Interest paid

320

(206)

Income taxes paid

(1,288)

(3,618)

Nine-month periods ended

November 30,

2025

$

November 30,

2024

$

77,631

(58,599)

(63,233)

11,890

19,032

(51,343)

(9,538)

54,424

(50,679)

16,243

(41,185)

19,324

(143,553)

-

(184,738)

19,324

(33)

472

(4,653)

(7,860)

-

(1,083)

1,158

177

13

(190)

(3,515)

(8,484)

182,363

-

178,848

(8,484)

(8,294)

-

3,311

1,090

(1,904)

(6,753)

(1,232)

(425)

(8,119)

(6,088)

1,868

26

(12,141)

4,778

8,745

4,641

(3,396)

9,420

32,364

27,283

20,223

32,061

36,320

35,051

(16,097)

(2,990)

20,223

32,061

42

(623)

(4,152)

(8,389)

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

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Nine-month period ended November 30, 2025
  1. General information

    These unaudited condensed interim financial statements represent the consolidation of the accounts of Velan Inc. (the "Company") and its subsidiaries. The Company is an international manufacturer of industrial valves and is a public company listed on the Toronto Stock Exchange under the symbol "VLN". It was incorporated under the name Velan Engineering Ltd. on December 12, 1952 and continued under the Canada Business Corporations Act on February 11, 1977. It changed its name to Velan Inc. on February 20, 1981. Velan Inc. maintains its registered head office at 7007 Cote de Liesse, Montreal, Quebec, Canada, H4T 1G2. The Company's controlling shareholder is Velan Holdings Co. Ltd.

    These unaudited condensed interim consolidated financial statements were approved for issue by the Company's Board of Directors on January 14, 2026.

  2. Basis of preparation

    These unaudited condensed interim consolidated financial statements for the Nine-month period ended November 30, 2025 have been prepared in accordance with International Financial Reporting Standards ("IFRS") in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting. These unaudited condensed interim consolidated financial statements have been prepared using the same basis of presentation, accounting policies, and methods of computation as outlined in Note 2, Summary of significant accounting policies, in the Company's annual consolidated financial statements for the year ended February 28, 2025, which have also been prepared in accordance with IFRS. Accordingly, these unaudited condensed interim consolidated financial statements should be read in conjunction with the Company's annual consolidated financial statements for the year ended February 28, 2025.

  3. New accounting standards and amendments issued and adopted

    In May 2024, the IASB issued amendments to IFRS 7, Financial Instruments: Disclosures and IFRS 9, Financial Instruments, following the implementation review of the requirements of IFRS 9 and related requirements of IFRS 7.

    The IASB amended IFRS 9 to clarify the timing of recognition and derecognition of certain financial assets and liabilities, with a new exception for certain financial liabilities settled in cash through an electronic payment system, and to clarify and add additional guidance for assessing whether the cash flows associated with a financial asset consist solely of repayments of principal and interest payments on the outstanding principal.

    The IASB amended IFRS 7 to add new disclosures for certain instruments whose contractual terms may modify cash flows, and to improve the presentation of information about equity instruments designated at fair value through other comprehensive income.

    The Company is currently evaluating the impact of adopting the amendments to IFRS 7 and IFRS 9, which will be effective for fiscal years beginning on or after January 1, 2026.

    In April 2024, the IASB issued IFRS 18, Presentation and Disclosures in Financial Statements, which will replace the current IAS 1, Presentation of Financial Statements.

    IFRS 18 introduces three new elements designed to improve the presentation of information in financial statements. It introduces three new categories of revenue and expense (operating, investing, and financing) to improve the comparability of income statements between companies. In addition, IFRS 18 aims to improve the transparency of

    performance indicators defined by management. Finally, IFRS 18 provides guidance on how to present information in financial statements. The Company is currently evaluating the impact of adopting IFRS 18, which will be applicable to fiscal years beginning on or after January 1, 2027.

  4. Estimates

    The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

    In preparing these unaudited condensed interim consolidated financial statements, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual consolidated financial statements for the year ended February 28, 2025.

  5. Seasonality

    The Company's sales are not subject to seasonality. Quarterly sales can vary based on the timing of revenue recognition on large orders.

  6. Disposal of Velan S.A.S. and Segault S.A.S.

    On March 31, 2025, the Company announced the closing of the sale of its French subsidiaries Velan S.A.S. and Segault S.A.S. (the disposal group) for a total consideration of €192,500 ($208,227), including the transfer of an intercompany loan of $24 millions, for a net cash consideration of $183,143 after related finance costs.

    Based on the net book value at the closing of the transaction and the related costs, a gain of $95,824 recorded in the previous quarter of fiscal year 2026.

    1. The assets and liabilities of the disposal group is as follows:

      As at March 31,

      2025

      (thousands) $

      Cash and cash equivalents 25,063

      Accounts receivable 47,700

      Income taxes recoverable 1,042

      Inventories 76,329

      Deposits and prepaid expenses 2,104

      Property, plant and equipment 16,319

      Intangible assets and goodwill 8,960

      Deferred income taxes (51)

      Assets held for sales 177,466

      Accounts payable and accrued liabilities 24,057

      Customer deposits 49,587

      Provisions 3,707

      Current portion of long-term lease liabilities 179

      Current portion of long-term debt 1,129

      Long-term lease liabilities 6,105

      Long-term debt 2,717

      Income taxes payable 861

      Deferred income taxes 1,716

      Other liabilities 89

      Liabilities held for sales 90,147

      Net Assets 87,319

      Net consideration received in cash 183,143

      Proft on disposal 95,824

    2. The income and expenses, gains and losses relating to the discontinuation the disposal group have been subtracted from the Company's net income from continuing operations and are presented on a separate line in the consolidated statement of income. The result for the current period only covers one month due to the closing of the sale on March 31, 2025. The details of the elements making up this result are as follows:

      Three-month periods ended Nine-month periods ended

      (thousands)

      November 30,

      2025

      $

      November 30,

      2024

      $

      November 30, 2025

      $

      November 30, 2024

      $

      Sales

      -

      23,381

      4,764

      60,934

      Cost of sales

      -

      14,728

      3,127

      38,583

      Gross profit

      -

      8,653

      1,637

      22,351

      Administration costs

      -

      5,241

      1,782

      15,852

      Gain on Disposal of SAS and Segault

      -

      -

      (95,824)

      -

      Reclassification of foreign currency translation of foreign subsidiaries from discontinued operations

      -

      -

      12,456

      -

      Other expense (income)

      -

      360

      782

      348

      Operating income (loss)

      -

      3,052

      82,441

      6,151

      Finance costs - net

      -

      (60)

      (128)

      (118)

      Income (loss) before income taxes

      -

      3,112

      82,569

      6,269

      Income tax expense

      -

      17,374

      23,970

      18,159

      Net profit (loss) for the period

      -

      (14,262)

      58,599

      (11,890)

    3. Cash flows generated by the disposal group for the reporting periods under review until its disposal are as follows:

      Three Month period ended Nine Month period ended

      (thousands)

      November 30, 2025

      $

      November 30,

      2024

      $

      November 30,

      2025

      $

      November 30,

      2024

      $

      Operating activities

      -

      8,429

      (948)

      3,582

      Investing activities

      -

      1,736

      8,912

      1,798

      Financing activities

      -

      (648)

      781

      (931)

      Effect of exchange rate differences on cash and cash equivalents

      -

      64

      -

      192

      Net change in cash during the period from discontinuing operations

      -

      9,581

      8,745

      4,641

  7. Settlement of Asbestos liabilities

    Concurrently with the disposal of Velan S.A.S. and Segault S.A.S. (the disposal, note 6), the Company entered into an agreement to sell to an affiliate of Global Risk Capital its current and future exposure to Asbestos-related litigation in the United States. Part of the proceeds received in previous quarter from the Velan SAS and Segault SAS disposal was used on April 3, 2025, to pay an amount of $143 millions for the asbestos divestiture transaction.

  8. Inventories

    As at

    (thousands)

    November 30,

    2025

    $

    February 28,

    2025

    $

    Raw materials

    15,661

    22,001

    Work in process and finished parts

    99,256

    77,450

    Finished goods

    40,016

    35,518

    154,933

    134,969

    As a result of variations in the ageing of its inventories, the Company recognized a net reduction of inventory provision for the Nine-month period ended November 30, 2025, of $32 (February 28, 2025 - addition of $10,466), including reversals of $10,750 (February 28, 2025 - $6,180).

  9. Long-term debt

    As at

    (thousands)

    November 30,

    2025

    $

    February 28,

    2025

    $

    Canadian subsidiary

    Secured bank loan ($CAD 17,909; February 28, 2025 - $CAD 18,460)

    12,611

    12,760

    Italian subsidiary

    Unsecured bank loan (€832; February 28, 2025 - €1,631)

    965

    1,692

    Unsecured state bank loan (€2,000; February 28, 2025 - €333)

    2,319

    346

    Gulf subsidiary

    Unsecured third-party loan (SAR 1,200; February 28, 2025 - SAR 750)

    320

    200

    Other

    1,474

    1,205

    17,689

    16,203

    Less: current portion

    3,722

    2,096

    13,967

    14,107

    The Company reported that on May 21, 2025, it entered a new, $25 million, three-year, revolving credit facility (the "Credit Agreement"), the Credit Agreement also includes a $5M swing line and a $5M letter of credit facility. The Credit Agreement replaces the prior ABL agreement, dated as of February 28, 2025, which matured on the closing of the French and Asbestos transactions. The revolving credit facility may be used for general corporate purposes. The credit facility was funded and operational on June 25, 2025. The credit facility matures on May 21, 2028, and may be extended at maturity, subject to lender and borrower agreement.

    As at November 30, 2025, the Company had drawn down $3,830 (2025 - $Nil) on the revolving credit facility and had

    $29,948 (February 28, 2025 - $1,789) in the form of outstanding letters of credit and letters of guarantee on a total of

    $60,328 (February 28, 2025 - $35,316) borrowing availability. As at November 30, 2025, and as at February 28, 2025, the Company was in compliance of its financial covenants ratios. The next calculation for compliance of the covenant will be in February 2026.

  10. Fair value of financial instruments

    The fair value hierarchy has the following levels:

    • Level 1 - quoted market prices in active markets for identical assets or liabilities;

    • Level 2 - inputs other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and

    • Level 3 - unobservable inputs such as inputs for the asset or liability that are not based on observable market data. The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

    The Company does not have any financial instruments measured and recognized at fair value that are material. For other financial instruments not recognized at fair value, their fair value is approximately the carrying amount as at November 30, 2025.

  11. Segment reporting

    The Company reflects its results under a single reportable operating segment. The geographic distribution of its sales by origination country is as follows:

    Three-month period ended November 30, 2025

    (thousands)

    Canada

    $

    United

    States Europe

    $ $

    Consolidation

    Other adjustment

    $ $

    Consolidated

    $

    Sales

    Customers -

    Domestic

    7,316

    21,641

    12

    3,923

    -

    32,892

    Export

    14,459

    43

    23,025

    1,241

    -

    38,768

    Intercompany (export)

    9,007

    1,593

    349

    20,300

    (31,249)

    -

    30,782

    23,277

    23,386

    25,464

    (31,249)

    71,660

    Three-month period ended November 30, 2024

    (thousands)

    Canada

    $

    United

    States Europe

    $ $

    Consolidation

    Other adjustment

    $ $

    Consolidated

    $

    Sales

    Customers -

    Domestic

    2,451

    25,923

    5,791

    1,834

    -

    35,999

    Export

    13,899

    116

    10,798

    12,592

    -

    37,405

    Intercompany (export)

    12,992

    2,411

    1

    15,972

    (31,376)

    -

    29,342

    28,450

    16,590

    30,398

    (31,376)

    73,404

    Nine-month period ended November 30, 2025

    (thousands)

    Canada

    $

    United

    States Europe

    $ $

    Consolidation

    Other adjustment

    $ $

    Consolidated

    $

    Sales

    Customers -

    Domestic

    23,842

    70,693

    273

    15,739

    -

    110,547

    Export

    30,082

    220

    65,681

    4,970

    -

    100,953

    Intercompany (export)

    24,502

    5,659

    2,395

    49,292

    (81,848)

    -

    78,426

    76,572

    68,349

    70,001

    (81,848)

    211,500

    Nine-month period ended November 30, 2024

    (thousands)

    Canada

    $

    United

    States Europe

    $ $

    Consolidation

    Other adjustment

    $ $

    Consolidated

    $

    Sales

    Customers -

    Domestic

    13,659

    87,295

    6,305

    14,006

    -

    121,265

    Export

    25,812

    694

    40,993

    23,234

    -

    90,733

    Intercompany (export)

    38,610

    7,891

    113

    41,029

    (87,643)

    -

    78,081

    95,880

    47,411

    78,269

    (87,643)

    211,998

    The sales distribution by customer geographic location is as follows:

    Three-month period ended November 30, 2025

    (thousands)

    Africa / Middle

    East Europe

    $ $

    North Asia /

    America Pacific

    $ $

    South & Central America

    $

    Consolidated

    $

    Sales

    6,770

    5,457

    34,232

    23,362

    1,779

    71,660

    Three-month period ended November 30, 2024

    (thousands)

    Africa / Middle

    East Europe

    $ $

    North Asia /

    America Pacific

    $ $

    South & Central America

    $

    Consolidated

    $

    Sales

    103

    (323)

    40,350

    32,195

    1,079

    73,404

    Nine-month period ended November 30, 2025

    (thousands)

    Africa / Middle

    East Europe

    $ $

    North Asia /

    America Pacific

    $ $

    South & Central America

    $

    Consolidated

    $

    Sales

    13,523

    16,025

    107,097

    70,069

    4,786

    211,500

    Nine-month period ended November 30, 2024

    (thousands)

    Africa / Middle

    East Europe

    $ $

    North Asia /

    America Pacific

    $ $

    South & Central America

    $

    Consolidated

    $

    Sales

    21,083

    19,212

    120,124

    49,002

    2,577

    211,998

  12. Adjustments to reconcile net loss to cash provided (used) by operating activities

    Three-month period ended Nine-month period ended

    (thousands)

    November

    30,

    2025

    $

    November

    30,

    2024

    $

    November 30, 2025

    $

    November

    30,

    2024

    $

    Depreciation of property, plant and equipment

    1,732

    1,545

    5,084

    5,091

    Amortization of intangible assets

    595

    570

    1,655

    1,558

    Deferred income taxes

    -

    (16,714)

    (24,022)

    (16,551)

    Loss (gain) on disposal of property, plant and equipment

    -

    25

    25

    157

    Net change in long-term provisions

    -

    58,176

    -

    55,989

    Net change in customer deposits

    2,388

    738

    8,030

    8,431

    Net change in derivative assets and liabilities

    593

    524

    (605)

    181

    Net change in other liabilities

    (120)

    376

    295

    (432)

    5,188

    45,240

    (9,538)

    54,424

  13. Changes in non-cash working capital items

    Three-month period ended Nine-month period ended

    November

    November

    November

    November

    (thousands)

    30,

    2025

    30,

    2024

    30,

    2025

    30,

    2024

    $

    $

    $

    $

    Accounts receivable

    (11,564)

    2,098

    (12,856)

    8,522

    Inventories

    (17,680)

    (14,801)

    (17,329)

    (24,718)

    Income taxes recoverable

    285

    (70)

    754

    266

    Deposits and prepaid expenses

    100

    954

    (327)

    1,588

    Accounts payable and accrued liabilities

    17,465

    7,924

    (4,843)

    22,722

    Income taxes payable

    (45)

    1,178

    (1,083)

    1,310

    Customer deposits

    (3,346)

    4,766

    (11,849)

    3,725

    Provisions

    (1,019)

    598

    (146,699)

    2,828

    (15,804)

    2,647

    (194,232)

    16,243

  14. Restructuring expenses

    Three-month period ended Nine-month period ended

    (thousands)

    November 30,

    2025

    $

    November 30, November 30,

    2024 2025

    $ $

    November 30,

    2024

    $

    Transaction-related costs

    1,305

    5,404 8,123

    7,556

    Asbestos-related costs

    -

    69,064 (754)

    73,745

    1,305

    74,468 7,369

    81,301

  15. Subsequent event

On January 14, 2026, the Company announced that its controlling shareholder, Velan Holding Co. Ltd. ("Velan Holding"), the sole holder of the Company's multiple voting shares, has agreed to sell its 15,566,567 multiple voting shares and one subordinate voting share (representing approximately 72.1% of the Company's outstanding shares and 92.8% of its aggregate voting rights) to funds managed by Birch Hill Equity Partners Management Inc. ("Birch Hill"), at a price of C$13.10 per share, for aggregate gross proceeds of C$203,922,040.80 to Velan Holding and two other entities associated with shareholders of Velan Holding (the "VH Transaction").

Pursuant to a pre-closing reorganization, Velan Holding will, among other things, convert 2,290,075 multiple voting shares into the same number of subordinate voting shares. Therefore, giving effect to such pre-closing reorganization, 13,276,492 multiple voting shares and 2,290,076 subordinate voting shares will be sold to Birch Hill on closing of the VH Transaction (representing approximately 72.1% of the Company's outstanding shares and 91.9% of its aggregate voting rights) (collectively the "VH Transaction Shares").

The VH Transaction is expected to close in the first half of 2026, subject to the receipt of the required regulatory approvals and other customary closing conditions. The completion of the VH Transaction is not subject to any financing condition or approval by the Company's shareholders.

The Company estimates that transaction related fees will be approximately $12 million, as well as additional change of control triggered costs of approximately $5 million relating mostly to the vesting and accelerated vesting of various incentive plans already in place at the time of the transaction. Of this total amount, $4 million has already been paid or accrued.

Company analysis

Earlier from Velan

All Velan news releases