WEST FRASER TIMBER CO., LTD

Goodwill

For the purposes of impairment testing, goodwill has been allocated to the following CGU groups:

The recoverable amounts of the above CGU groups as at December 31, 2024 were determined based on their estimated fair value less costs of disposal using discounted cash flow models. The fair value measurements were classified as Level 3 fair value measurements.

Cash flow forecasts were based on internal estimates for 2025 through 2028 and a terminal value. Key assumptions include production volumes, product pricing, operating costs, terminal multiple, and discount rate. Key assumptions were derived using external sources and historical data from internal sources. Specifically, product pricing has been estimated by reference to average historical prices as well as third-party analyst projections of long-term product pricing. Production volume and operating costs have been estimated by reference to historical data from internal sources. The post-tax discount rate used ranged from 10.8% to 12.8% (2023 -10.2%).

We recorded an impairment loss of $70 million in relation to Europe EWP goodwill during the year ended December 31, 2024. The impairment loss was driven primarily by an extension of the expected duration of the recovery to mid-cycle profitability and weaker macroeconomic conditions in the U.K. and Europe.

OSB comprises the most significant component of our Europe EWP segment. We forecasted OSB production volumes ranging from 1,045 MMsf 3/8” to 1,321 MMsf 3/8” in determining the recoverable amount. The post-tax discount rate used in determining the recoverable amount of the Europe EWP CGU group was 12.8% (2023 –10.2%).

The recoverable amount of the Europe EWP CGU group was determined to be $391 million. Following the impairment loss recognized in the Europe EWP CGU group, the recoverable amount was equal to the carrying amount. Therefore, any adverse movement in a key assumption would lead to further impairment.

The following table lists the key assumptions and sensitivities:

The estimated recoverable amounts of all other CGU groups exceeded their respective carrying amounts.

As it relates to the U.S. lumber CGU group, a reasonably possible change in certain key assumptions could cause the carrying amount to exceed the recoverable amount. We forecasted U.S. lumber production volumes ranging from 2,785 MMfbm to 3,250 MMfbm in determining the recoverable amount. The post-tax discount rate used in determining the recoverable amount of the U.S. lumber CGU group was 10.8% (2023 –10.2%).

-21-

The estimated recoverable amount of the U.S. Lumber CGU group exceeded its carrying amount by approximately $140 million. The following table indicates the percentages by which key assumptions would need to change individually for the recoverable amount to equal the carrying amount: