2
3
TABLE OF
CONTENTS
Message from the President and CEO 6
Genesis Projects and Communities 8
Community Involvement 10
Management’s Discussion & Analysis 12
Consolidated Financial Statements 46
Contact Information 85
5
MESSAGE FROM THE
PRESIDENT AND CEO
This last year was a most challenging one for many, with Genesis
being no exception. Notwithstanding the many tests we faced
from the volatile business environment of a global pandemic, we
are proud to report we ended 2020 with strong cash flows from
operating activities and returned a dividend to shareholders.
Cash flows from operating activities in 2020 was $48 million, or $1.14
per share. Overall, we were able to report positive earnings for the
20th consecutive year – no small feat at the best of times.
Much of the early part of 2020 was spent undertaking defensive
measures such as preserving cash and paying down debt. We
wanted to protect our already strong balance sheet and position
ourselves to ride out the unknown and ever-changing economic
and social conditions arising from the unprecedented fight against
COVID-19.
Sales activity in both our housing and land development divisions
dipped at first, but our team adapted and adjusted as these
changing conditions required. We implemented new on-site and
in-office protocols, including for many staff working from home.
As we implemented changes, and moved toward online sales, our
customers responded positively, and business activity began to shift.
Along with the help of a low-interest rate environment, sales picked
up beyond expectations and gained momentum throughout the
latter part of the year, helping us deliver the strong results and prove
the resilience of the Genesis portfolio. Genesis ended the year in a
net-cash position (cash less outstanding loans) of $8.2 million and
83 new home sales orders on hand.
This positioned us to get off to a great start in 2021, with an early
announcement of a major land acquisition for a future residential
development in east Calgary.
Such results couldn’t have been achieved without the efforts of
our people. I want to thank all members of our team, including our
consultants and contractors, for their extraordinary work, and our
board of directors for their consistent support and guidance. Our
strong performance during the unique business environment of
2020 is a testament to the entire team.
Operational Highlights from 2020:
• Cash Flows – Cash flows from operating activities reached
$48.0 million ($ 1.14 per share) up from $9.5 million ($0.23
per share) in 2019. This result is directly attributed to strong
home and lot sales activity, combined with a reduced
capital program and an intense focus on cash preservation.
Revenues topped $100 million at $103.9 million, an increase
of 53% from 2019 and $17.6 million was invested in our
capital program, down from $20.5 million in 2019.
• Shareholder Returns – A dividend of $0.15 per share ($6.3
million) was declared in December 2020.
• Development Approvals – Development approvals
continued to advance on all Genesis projects including three
important future developments, being the Logan Landing
(354 acres), Lewiston (130 acres) and the OMNI (185 acres).
One disappointment was that the City of Calgary elected to
not remove Growth Management Overlays (“GMOs”), which
are applied to all new residential lands as a final approval
prior to development, at Logan Landing and Lewiston in
2020. These two projects met or exceeded, to the best of
Genesis’ understanding, all pre-identified criteria for removal
of their respective GMOs. Genesis will be reapplying for
removal of these GMOs at the earliest opportunity.
• Cash Preservation – At December 31, 2020 Genesis held
$29.7 million of cash, which was $8.2 million higher than our
total outstanding loans of $21.5 million. This conservative
cash/debt position enables Genesis to be nimble in this
uncertain environment.
• New $50 Million Credit Facility – In 2020 Genesis secured
a $50 million revolving credit facility with a three year term
at an attractive interest rate. The term nature of this facility
provides additional certainty to our development planning
and allow Genesis to pursue opportunities that may arise
in the market.
We are also extremely pleased about our land acquisition
announced on February 8, 2021. Genesis has entered into
a binding agreement to acquire a 157-acre parcel of future
residential development land in east Calgary at a cost of $29.15
million. With development expected to commence in 2022, this
community is expected to include over 1,200 housing units.
Overall, we expect increased demand for new suburban homes
to continue, driven by the work from home (or from anywhere)
trend, affordability and continued low interest rates. Working
from home, or in some cases working from anywhere, were
trends that accelerated in 2020. Genesis benefits from this shift,
as it increases demand for the types of homes and communities
we are best known for and cater to -- suburban homes which
contain an office or flex room and are in communities that
provide recreation areas, including walking paths, playgrounds,
parks and other amenities.
Genesis heads into 2021 with well-located assets, a conservative
debt structure and great anticipation for growth opportunities
and advantages in this current market.
IAIN STEWART
President and Chief Executive Officer
March 1, 2021
6
GENESIS
PROJECTS AND
COMMUNITIES
4
5
2
1
6
7
8
3
8
2
9
23785164NE CALGARYBelvedere COMMUNITY
INVOLVEMENT
NE CALGARY
Genesis Centre
Inspiring Community Wellness
The Genesis Centre of Community Wellness is a great example of our
role as a community builder Community leaders in Northeast Calgary
were determined to bring the dynamic and diverse cultures of the local
communities together to promote safe, cooperative and actively healthy
neighbourhoods. To realize their dream, these visionary leaders founded
the Northeast Centre of Community Society (NECCS), an organization
dedicated to the challenge of building a facility that would serve the
sport, recreation, educational and cultural needs of the northeast. We
educational and cultural needs of the northeast. We saw the opportunity
to support and fund this incredible facility as a perfect alignment of our
core values. The dream quickly started to take shape, gaining support
and funding from the City of Calgary and YMCA, along with a generous
naming sponsorship from Genesis.
Genesis continues to play a part in the support of The Genesis Centre – a
225,000 square foot, $120 million multi-purpose complex built to enrich
the health, wellness, and unity of communities in Northeast Calgary.
10
AIRDRIE
Genesis Place
Genesis Place, the amazing recreation facility in Airdrie, acts as a
gathering place, hub of activity and true heart of the community. We are
proud of our commitment and on-going support of Genesis Place and
what it means to the quality of life for the community of Airdrie.
11
MANAGEMENT’S
DISCUSSION AND
ANALYSIS
FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2020
The Management’s Discussion and Analysis (“MD&A”) of the financial condition and results of operations of Genesis Land
Development Corp. (“Genesis”, “the Corporation”, “we”, “us”, or “our”) should be read in conjunction with the consolidat-
ed financial statements and the notes thereto for years ended December 31, 2020 and 2019, prepared in accordance with
International Financial Reporting Standards (“IFRS”).
The consolidated financial statements and comparative information have been reviewed by the Corporation’s audit com-
mittee, consisting of three independent directo rs, and approved by the board of directors of the Corporation. Additional
information, including the Corporation’s Annual Information Form (“AIF”) is available on SEDAR at www.sedar.com.
All amounts are in thousands of Canadian dollars, except per share amounts or unless otherwise noted. This MD&A
is dated as of March 1, 2021.
12
STRATEGY AND 2020 BUSINESS PLAN
Strategy
Genesis Land Development Corp. (“Genesis” or the “Corporation”) is an integrated land developer and residential home builder
operating in the Calgary Metropolitan Area (“CMA”), owning and developing a portfolio of well-located, entitled and unentitled
residential, commercial and mixed-use lands and serviced lots in the CMA.
As a land developer, Genesis acquires, plans, rezones, subdivides, services and sells residential lots and commercial and industrial
lands to third-party developers and builders, and sells lots and completed homes through its home building division. The land
portfolio is planned, developed, serviced and sold as single-family lots and townhouse and commercial parcels at opportune times
with the objective of maximizing the risk adjusted net present value of the land and to maximize net cash flow.
Through a wholly-owned subsidiary, Genesis Builders Group Inc. (“GBG”), Genesis also designs, builds and sells homes on a
significant portion of its single-family lots and, in some cases, its townhouse land parcels. GBG also acquires single-family lots
from other land developers to build and sell single-family homes in additional CMA communities.
As part of its overall strategy, Genesis is focused on minimizing overhead costs and long-term commitments, where possible, to
preserve flexibility.
Genesis manages its financial position by prudently and opportunistically allocating its cash resources among the following:
• Maintaining a strong balance sheet as the priority;
• Acquiring and developing land either directly or through land development entities; and
• Paying dividends and/or buying back its common shares.
13
1
Highlights:
•
•
$47,983 Cash Flows from Operating Activities: Genesis generated cash flows from operating activities (“CFOA”) of
$47,983 ($1.14 per share - basic and diluted) in YE 2020, up from $9,537 ($0.23 per share - basic and diluted) for YE
2019. In Q4 2020, CFOA was $22,858 ($0.54 per share - basic and diluted) up from the $7,969 ($0.19 per share - basic
and diluted) generated in Q4 2019.
$103,933 of Revenues in YE 2020: Higher sales volumes generated revenue of $103,933 in YE 2020 up from $68,097
achieved in YE 2019. Q4 2020 revenues of $19,817 were lower when compared to $26,081 generated in Q4 2019.
• Net Earnings were positive for the 20th consecutive year: Net earnings attributable to equity shareholders in YE
2020 were $199 ($0.00 net earnings per share - basic and diluted), compared to $1,701 ($0.04 net earnings per share -
basic and diluted) in YE 2019. Net earnings attributable to equity shareholders in Q4 2020 were $125 ($0.00 net earnings
per share - basic and diluted) compared to $1,684 ($0.04 net earnings per share - basic and diluted) in Q4 2019. Earnings
were negatively impacted by net write-downs of $11,637 during YE 2020 (YE 2019 - $800) on land parcels and a
townhouse project.
•
•
•
163 Homes Sold up 27% from 2019: In YE 2020, Genesis sold 163 homes, an increase of 27% from the 128 sold in
YE 2019. In Q4 2020, Genesis sold 28 homes, compared to 43 sold in Q4 2019. During YE 2020, Genesis had 192 new
home orders compared to 148 for YE 2019. Genesis had 83 outstanding new home orders on hand at December 31,
2020 (54 at December 31, 2019).
225 Lots sold up 40% from 2019: In YE 2020, Genesis sold 225 residential lots (62 to third-party builders and 163
through its home building division), an increase of 40% from 161 lots in YE 2019 (33 to third-party builders and 128
through its home building division). In Q4 2020, Genesis sold 30 residential lots (2 to third-party builders and 28 through
its home building division) compared to 64 lots in Q4 2019 (21 to a third-party builder and 43 through its home building
division).
$16,628 of Development Land Sales: In YE 2020, Genesis sold five development land parcels for $16,628 versus one
parcel for $550 owned by a limited partnership in YE 2019. Genesis sold two development land parcels for $7,146 in Q4
2020 versus one parcel for $550 owned by a limited partnership in Q4 2019.
• Cash on hand of $29,743: On December 31, 2020, Genesis had $29,743 in cash and cash equivalents, which exceeded
outstanding loans and credit facilities balances of $21,470 by $8,273.
• Dividend declared in Q4 2020: A dividend of $0.15 per share totaling $6,280 was declared in December 2020 and paid
in January 2021. Dividends are a key component of the strategic and business plan and will continue to be a priority in
the allocation of cash resources as noted above.
•
•
$50,000 Corporate Revolving Line of Credit: Subsequent to December 31, 2020, Genesis finalized a $50,000
three-year fixed term secured corporate revolving line of credit with MCAP Financial Corporation at an interest rate per
annum equal to the higher of prime +1.90% or 4.35%.
$29,150 land acquisition: Subsequent to December 31, 2020, Genesis entered into a binding agreement to acquire
approximately 157 acres of future residential development land in the City of Calgary. Genesis paid a non-refundable
deposit of $2,186, with the balance of $26,964 to be paid on closing, currently scheduled for April 2022. Upon completion,
the community is expected to yield over 1,200 housing units.
14
2
OPERATING HIGHLIGHTS
Key financial results and operating data for Genesis were as follows:
($000s, except for per share items or unless otherwise noted)
2020
2019
2020
2019
Three months ended
December 31, (1)
Year ended
December 31, (2)
Key Financial Data
Total revenues
Direct cost of sales
Gross margin before write-down (3)
Gross margin before write-down (%) (3)
Write-down of real estate held for development and sale
Gross margin
Net earnings attributable to equity shareholders
Net earnings per share - basic and diluted
Cash flows from operating activities
Cash flows from operating activities per share - basic and diluted
Key Operating Data
Land Development
Total residential lots sold (units)
Residential lot revenues
Gross margin on residential lots sold
Gross margin on residential lots sold (%)
Average revenue per lot sold
Development land revenues
Home Building
Homes sold (units)
Revenues (4)
Gross margin before write-down (3)
Gross margin before write-down (%) (3)
Gross margin on homes sold
Average revenue per home sold
New home orders (units)
Outstanding new home orders at period end (units)
Key Balance Sheet Data
Cash and cash equivalents
Total assets
Loans and credit facilities
Total liabilities
Shareholders’ equity
Total equity
19,817
(14,306)
5,511
27.8%
(822)
4,689
125
0.00
22,858
0.54
30
4,772
2,560
53.6%
159
7,146
28
12,198
1,620
13.3%
1,620
436
54
26,081
(17,530)
8,551
32.8%
-
8,551
1,684
0.04
7,969
0.19
64
12,230
5,471
44.7%
191
550
43
20,551
3,068
14.9%
3,068
478
36
103,933
(76,581)
27,352
26.3%
(11,637)
15,715
199
0.00
47,983
1.14
225
39,189
16,336
41.7%
174
16,628
163
75,025
9,485
12.6%
8,670
459
192
83
68,097
(45,877)
22,220
32.6%
(800)
21,420
1,701
0.04
9,537
0.23
161
29,071
13,942
48.0%
181
550
128
59,746
8,266
13.8%
8,266
467
148
54
As at Dec. 31,
2020
As at Dec. 31,
2019 (2)
29,743
266,494
21,470
66,734
187,676
199,760
16,248
296,268
51,546
83,373
193,957
212,895
Loans and credit facilities (debt) to total assets
(1) Three months ended December 31, 2020 and 2019 (“Q4 2020” and “Q4 2019”)
(2) Year ended December 31, 2020 and 2019 (“YE 2020” and “YE 2019”)
(3) Non-GAAP financial measure. Refer to heading “Non-GAAP Measures” in this MD&A
(4) Includes other revenues and revenues of $4,299 for 28 lots in Q4 2020 and $26,909 for 163 lots in YE 2020 purchased by the Home Building division from the Land Development
division ($7,250 and 43 in Q4 2019; $21,270 and 128 in YE 2019) and sold with the home. These amounts are eliminated on consolidation.
8%
17%
15
3
Results from operations, including earnings and cash flows, vary considerably between periods for the reasons explained below:
Factors Affecting Results of Operations
When reviewing the results, there are a number of factors that have historically affected Genesis’ results of operations, including:
•
•
•
•
•
•
the volatility of oil and gas prices and changes in the Canadian US dollar exchange rate, both of which impact the Alberta
oil and gas industry, and have significant impact on the CMA real estate market and economy;
changes to the regulatory environment, both direct and indirect, including for example, the land development approval
process, mortgage lending rules, immigration policies and economic restrictions imposed by regulatory authorities;
changes in interest rates, including residential mortgage rates and the rates of interest charged to Genesis on its various
credit facilities;
costs incurred for the development and servicing of land and the sale of residential lots and other land parcels occurs
over a substantial period of time and results in cash flows that vary considerably between periods, creating significant
volatility in the revenues, earnings and cash flows from operating activities;
land, lot and home prices and gross margins vary by community and lot/home type, the nature of the development work
required to be undertaken before the land and lots are ready for sale, and the original cost of the land and servicing; and
seasonality which has historically resulted in higher revenues in the summer and fall months when home building sales
often peak.
Market Overview
Economic conditions have been difficult as the COVID-19 pandemic has caused governments around the world, including in
Alberta, to shutdown parts of the economy. In addition, the energy industry which is a leading contributor to Alberta’s Gross
Domestic Product (“GDP”) continues to be negatively impacted by volatile Canadian energy prices. These factors have had a
negative impact on the Alberta economy with Royal Bank of Canada estimating that Alberta’s GDP shrank by over 8% in 2020.
Various initiatives have been undertaken by governments and central banks in an effort to reduce the impact of the economic
restrictions. These initiatives (which include reducing interest rates), along with the acceleration of the trend to “work from home”,
led to stronger demand for new homes in suburban communities in the second half of 2020. According to the Calgary Real Estate
Board (“CREB”), the local real estate market initially fell quite dramatically as a result of the restrictions but has rebounded during
the remainder of 2020. In April 2020 Calgary home sales were down 63% and in May 2020 home sales decreased by 44% as
compared to the same months in 2019, the lowest levels recorded since 1995. The second half of the year saw a reversal of this
trend as home sales in the third and fourth quarters were some of the strongest seen in the last 5 years. For full year 2020, home
sales were only 1% lower than in 2019. In particular, the 2020 market produced gains in single family home sales in the $400 to
$600 price range, which benefited Genesis as it focuses a large part of its housing products in this price range.
Resale listing inventory levels continued to decline and as at December 2020 the months of supply of inventory in the Calgary
market was 3.06 months, down from 4.56 months in December 2019. As of December 2020, the benchmark prices for detached
homes had increased by 3% to $491 as compared to $477 in 2019.
Despite the strong second half of 2020 Genesis remains cautious. In addition to the extent and duration of the current economic
downturn being unpredictable and unknown, the impact of very low levels of immigration in 2020 is expected to eventually have a
negative impact on housing demand.
16
4
2020 Business Plan
Focus on Liquidity and Cash Flow
Given the uncertain market conditions in 2020, Genesis prioritized the preservation of cash resources and protecting its balance
sheet. As of December 31, 2020, Genesis had $29,743 of cash and cash equivalents on hand (YE 2019 - $16,248), loans and
credit facilities of $21,470 (YE 2019 - $51,546), real estate assets of $193,309 (YE 2019 - $222,269) and total assets of $266,494
(YE 2019 - $296,268). The ratio of loans and credit facilities to total assets was 8% at December 31, 2020 compared to 17% at
December 31, 2019.
The Corporation continues to closely review all expenditures to determine which capital and operating costs can be deferred,
eliminated or reduced.
Progress on 2020 Business Plan
During Q4 2020, Genesis continued to execute on its business plan, adjusting to reflect current and expected market conditions.
1) Obtaining Additional Zoning and Servicing Entitlements
Genesis continued to make progress in obtaining additional zoning and servicing entitlements for its land, with no noticeable impact
from the COVID-19 restrictions on these activities. As zoning and servicing entitlements are granted by the applicable municipal
authorities, there can be no assurance as to if and (or) when the following communities will be available for development or sale:
• Ricardo Ranch Area Structure Plan (“ASP”): Genesis owns 354 acres of undeveloped land in Calgary’s southeast
quadrant referred to as Logan Landing. An ASP for a new residential community on these lands was approved by Calgary
City Council (“Council”) in November 2019. An outline plan and land use applications have been submitted and approval
is expected by the middle of 2021. There is a Growth Management Overlay (“GMO”) restricting development of these
lands. Genesis will apply for GMO removal at the earliest next available opportunity (see further discussion below).
•
Lewiston: Genesis acquired 130 acres of residential development land in north Calgary in 2019. There is a GMO
restricting development of these lands. Genesis will apply for GMO removal at the earliest next available opportunity
(see further discussion below).
• OMNI ASP (in North Conrich): Genesis controls 610 acres of undeveloped land in Rocky View County bordering the
northeast quadrant of the City of Calgary. Genesis has received ASP approval for a 185-acre commercial and retail
project on a portion of these lands. Approval of the conceptual scheme for this project is expected to be received in 2021.
The remaining 425 acres are included in a special study area, with land use still to be determined. As these lands are in
Rocky View County, there is no GMO restriction.
The timelines discussed above are management’s best estimates at this time. Approvals for new developments continue to be a
challenge. On November 3, 2020, Council reviewed 11 applications by a number of landowners for the removal of GMOs, which
must be removed prior to receiving final development approvals. This included applications for the two proposed Genesis projects,
Ricardo Ranch and Lewiston, both of which met or exceeded, to the best of Genesis’ understanding, all pre-identified criteria for
removal of their respective GMOs. Council did not remove the GMOs for any of the 11 projects including the two Genesis projects.
2) Planning for the Development and Sale of Land
Genesis continues to develop and implement detailed plans for each of its core land holdings, with the objective of maximizing the
risk adjusted net present value of the land and to sell or develop the land at the most opportune time. Please see information
provided under the heading Real Estate Held for Development and Sale in this MD&A.
The sale of the 8.17-acre multi-family parcel in Genesis’ Sage Hill community contracted in early 2019 closed in the first quarter of
2020 for $8,987. Genesis also closed two sales of multi-family land parcels in Q4 2020: the first being a 4.94-acre parcel in its
Sage Meadows community for $6,546 in October 2020; the second being a 0.77-acre parcel in Saddlestone community for $600
in December 2020.
17
5
3) Servicing Additional Phases
The servicing of one new community commenced in 2020:
• Sage Hill: The servicing of the first phase of 20 acres in this 51-acre development is expected to cost $16,673, $4,188
of which was expended in 2020. This well located northwest Calgary community is considered an “infill development”.
The first phase is expected to be completed in mid-late 2021 providing 99 lots and 7.3 acres of multi-family and
commercial parcels.
The servicing of four new residential community phases that commenced in 2018 are complete and lots were available for sale
and building in 2020:
• Saddlestone community: Servicing of the final phase of Genesis’ 160-acre Saddlestone community was completed in
late 2019, adding 121 single-family lots, a 3.2-acre park and two multi-family sites totaling 1.9 acres;
• Sage Meadows community: The final phase of the 80-acre Sage Meadows community was completed in late 2019,
servicing 18.1 acres containing a school site (10 acres), three multi-family sites and 31 single-family lots; and
• Bayside and Bayview communities: The servicing of two new phases in this 720-acre Airdrie development was completed
in late 2019, including the 108 lot Bayside phase 10 and the 102 lot Bayview phase 1. Servicing of a 6-acre park, a key
amenity in the Bayview community, has been completed.
4)
Investing in Additional Lands
Genesis continues to assess suitable acquisition opportunities as they arise.
In 2019 Genesis invested $29,333 through investments in three new land development opportunities. These acquisitions will
provide an inventory of additional lots in three new communities upon which Genesis plans to build and sell new homes beginning
in 2021.
During the year ended December 31, 2020 GBG contracted to acquire 70 lots in the first phase of one of these developments and
also contracted to acquire 33 lots from a third-party land developer in an unrelated project.
Subsequent to December 31, 2020, Genesis entered into a binding agreement to acquire approximately 157 acres of future
residential development land in the City of Calgary. Genesis paid a non-refundable deposit of $2,186, with the balance of $26,964
to be paid on closing, currently scheduled for April 2022. This parcel of land is located within the “Belvedere” ASP on the east side
of the City of Calgary. The land is not subject to a GMO and Genesis plans to immediately commence the process of obtaining
final land use and outline plan approvals from the City of Calgary. Upon completion, the community is expected to yield over 1,200
housing units including single-family, townhouse and multi-family apartment units.
5) Adding Select Third-party Builders in Genesis Communities
To diversify offerings and increase velocity of sales within its residential communities, Genesis holds regular discussions with
reputable third-party builders interested in acquiring lots in future phases in Genesis’ communities. Genesis currently has three
third-party builders building in its communities.
6) Maintaining and when possible increasing the velocity of homes sold by Genesis Builders Group
During Q4 2020, GBG entered into 54 new home sales contracts, an increase of 50% from 36 new home sales contracts in
Q4 2019. In YE 2020, GBG entered into 192 new home sales contracts, an increase of 30% from 148 new home sales contracts
in in YE 2019. As of December 31, 2020, Genesis had 83 outstanding new home orders, an increase of 54% compared to 54 at
December 31, 2019. To maintain home sales velocity, margins and to manage inventory Genesis has:
•
adjusted pricing on select models and completed spec homes;
• managed the timing of construction for any new spec homes with the amount of spec home work-in-progress declining
to $5,553 at December 31, 2020, from $13,183 at December 31, 2019;
refocused marketing with improved on-line sales and marketing tools; and
continued pursuing construction cost efficiencies and managing supply chain challenges.
•
•
18
6
7) Return of capital to shareholders
On December 9, 2020, the Board of Directors declared a cash dividend of $0.15 per common share for a total of $6,280 payable
to shareholders of record on December 23, 2020, which was paid in January 2021.
Since 2014 when it paid its first dividend, Genesis has returned $58,138 to shareholders by way of dividends and bought back
nearly 3.1 million common shares for $8,787.
The following table shows dividends and share repurchases since the first dividend was declared in 2014:
($000s, except for number of shares and per share
items)
Year
2020 (Declared in Dec. 2020 and paid in Jan. 2021)
2019
2018
2017
2016
2015
2014
Total
Outlook
Dividend per
share
$0.15
-
0.24
0.46
0.25
0.12
0.12
$1.34
Total
dividends
declared
$6,280
-
10,309
19,896
10,936
5,331
5,386
Shares
repurchased
and cancelled
296,592
23,694
1,069,100
493,085
551,796
628,598
-
Total Cost of
repurchases
$465
58
3,501
1,456
1,420
1,887
-
$58,138
3,062,865
$8,787
The Calgary Metropolitan Area economy has experienced materially lower economic activity and increased unemployment levels
due to the COVID-19 pandemic and volatility in energy prices. While the Calgary economy improved in the fourth quarter of 2020,
the duration and impact of the COVID-19 pandemic remains unknown and, as a result, it is not possible to reliably estimate the
impact on the financial results and condition of the Corporation in future periods. The Calgary Real Estate Board forecast that the
momentum seen in the housing market in the second half of 2020 will continue into 2021, fueled by low mortgage interest rates,
low levels of housing supply and increased demand for suburban single-family homes. Alberta GDP is forecast to be positive in
2021 by RBC Economics growing by 4.5%. These are both positive signs, but in addition to the ongoing potential impact of COVID
there are still challenges that could have a negative impact including lower immigration and higher than historical unemployment
levels.
Genesis has been able to adapt its operations, capital investments and marketing approaches to address current conditions and
had positive results from these activities in 2020. Genesis is continuing to focus on managing cash, protecting the value of its
assets and limiting financing risk while ensuring that all health and safety recommendations of regulatory authorities are being
followed and, when feasible, exceeded.
In 2021, to add to the inventory of serviced lots and parcels in Bayside, Bayview, Sage Meadows and Saddlestone, Genesis will
be bringing on additional inventory in the first phase of its Sage Hill community and is planning the development of the next phases
in Sage Hill, Bayside and Bayview which will deliver additional lots and parcels in 2022 and 2023. Genesis will be looking to make
progress in 2021 to obtain zoning and servicing approvals in its Lewiston, Logan Landing and OMNI developments.
Genesis is committed to implementing its strategy to develop and realize the value of its land holdings, while prudently managing
its financial and other resources and controlling costs.
19
7
Land Development
Three months ended December 31,
Year ended December 31,
2020
2019
% change
2020
2019
% change
Key Financial Data
Residential lot revenues (1)
Development land revenues
4,772
7,146
Direct cost of sales
(8,027)
(7,297)
Gross margin before write-down (2)
Gross margin before write-down (%) (2)
Write-down of land held for
development
Gross margin
Other expenses (3)
Earnings (loss) before taxes
Key Operating Data
Residential lots sold to third-parties
Residential lots sold through GBG -
home building
Total residential lots sold
3,891
32.6%
(822)
3,069
(2,199)
870
2
28
30
550
5,483
42.9%
5,483
(2,718)
2,765
21
43
64
12,230
(61.0%)
N/R (4)
10.0%
(29.0%)
(24.0%)
39,189
16,628
29,071
550
34.8%
N/R (4)
(37,950)
(15,667)
142.2%
17,867
32.0%
13,954
28.0%
47.1%
(32.1%)
-
N/R (4)
(10,822)
(800)
N/R (4)
(44.0%)
(19.1%)
(68.5%)
(90.5%)
(34.9%)
(53.1%)
(16.8%)
7,045
(7,407)
(362)
13,154
(46.4%)
(6,835)
6,319
8.4%
N/R (4)
62
163
225
174
33
128
161
181
87.9%
27.3%
39.8%
(3.9%)
Average revenue per lot sold
(1) Includes residential lot sales to third-parties and to GBG
(2) Non-GAAP financial measure. Refer to heading “Non-GAAP Measures” in this MD&A
(3) Other expenses include general and administrative, selling and marketing and net finance expense
(4) Not relevant due to the size of the change
159
191
20
8
Gross margin by source of revenue
Three months ended December 31,
Year ended December 31,
2020
2019
% change
2020
2019
% change
Residential lots
Residential lot revenues (1)
Direct cost of sales
Gross margin
Gross margin (%)
(1) Includes residential lot sales to third-parties and to GBG
4,772
(2,212)
2,560
53.6%
12,230
(6,759)
5,471
44.7%
(61.0%)
(67.3%)
(53.2%)
19.9%
39,189
29,071
(22,853)
(15,129)
16,336
41.7%
13,942
48.0%
34.8%
51.1%
17.2%
(13.1%)
Three months ended December 31,
Year ended December 31,
2020
2019
% change
2020
2019
% change
Development land
Development land revenues
Direct cost of sales
Gross margin before write-down (1)
Gross margin before write-down (%) (1)
Write-down of land held for
development
7,146
(5,815)
1,331
18.6%
(822)
Gross margin
(1) Non-GAAP financial measure. Refer to heading “Non-GAAP Measures” in this MD&A
(2) Not relevant due to the size of the change
509
550
(538)
12
2.2%
-
12
N/R (2)
16,628
980.9%
(15,097)
N/R (2)
745.5%
N/R (2)
N/R (2)
1,531
9.2%
(10,822)
(9,291)
550
(538)
12
2.2%
(800)
(788)
N/R (2)
N/R (2)
N/R (2)
318.2%
N/R (2)
N/R (2)
Results from operations, including earnings and cash flows, vary considerably between periods for the reasons explained under
the heading Factors Affecting Results of Operations of this MD&A.
Revenues and unit volumes
Total residential lot sales revenues for the YE 2020 were $39,189 (225 lots), a 35% increase over the $29,071 (161 lots) sold in
YE 2019. In YE 2020, 62 lots were sold to third-party builders compared to 33 lots sold to third-party builders in YE 2019. In YE
2020, GBG also sold 163 homes on lots, up 27% from 128 homes it sold on Genesis lots in YE 2019.
Total residential lot sales revenues in Q4 2020 were $4,772 (30 lots) down from $12,230 (64 lots) in Q4 2019. In Q4 2020, two lots
were sold to third-party builders compared to 21 lots sold to third-party builders in Q4 2019. In Q4 2020, GBG also sold 28 homes
on Genesis lots, down 35% from 43 homes it sold on Genesis lots in Q4 2019. Residential lot sales to third party builders occur
periodically, depending on the timing of contractual arrangements with these builders.
Two parcels of development land were sold in Q4 2020 for $7,146. One parcel of development land owned by a limited partnership
(100% non-controlling interest) was sold in Q4 2019 for $550. During 2020, five parcels of development land (including one owned
by a limited partnership for $320) were sold for total proceeds of $16,628, while one development land parcel, owned by the limited
partnership was sold for $550 during 2019. Development land sales occur periodically and comprise sales of commercial, multi-
family and other lands that Genesis does not intend to build on through GBG.
Gross margin
Residential lots had a gross margin of 54% in Q4 2020 compared to 45% in Q4 2019. Residential lots had a gross margin of 42%
in YE 2020 compared to 48% in YE 2019. Development land margins can vary significantly as described in the Factors Affecting
Results of Operations in this MD&A. During 2020, gross margins on development land were negatively impacted by write-downs.
21
9
Write-down of land held for development
During Q4 2020, the Corporation recorded write-downs of $5,169, net of a recovery of $4,347 on a parcel of land for which a
write-down of $10,000 was recorded in Q1 2020. During 2020, the Corporation recorded the total write-downs of $10,822 (2019 -
$800) on parcels of land held for development and sale. The write-downs were taken based on offers received and third-party
assessments to reflect the estimated returns realizable on the development and sale of these lands.
Other expenses
Other expenses include general and administrative, selling and marketing and net finance expense.
In Q4 2020, other expenses were 19% lower at $2,199 when compared to Q4 2019 ($2,718), mainly due to: (i) lower general and
administrative expenses; and (ii) lower net finance expense.
In YE 2020, other expenses were $7,407 compared to $6,835 incurred in YE 2019. Other expenses were $572 (8%) higher in YE
2020 compared to YE 2019 mainly due to: (i) higher net finance expenses (refer to the heading Finance Expense in this MD&A);
and (ii) higher sales and marketing expenses including sales commissions related to the sale of development land parcels. These
increases were partially offset by savings in general and administrative expenses.
22
10
Home Building – Genesis Builders Group Inc. (GBG)
The home building business of Genesis is operated through its wholly-owned subsidiary, GBG.
Three months ended December 31,
Year ended December 31,
2020
2019
% change
2020
2019
% change
Key Financial Data
Revenues (1)
Direct cost of sales
Gross margin before write-down (2)
Gross margin before write-down (%) (2)
Write-down of real estate held for
development and sale
Gross margin
Other expenses (3)
(Loss) earnings before taxes
Key Operating Data
Homes sold (units)
Average revenue per home sold
New home orders (units)
12,198
20,551
(10,578)
(17,483)
(40.6%)
(39.5%)
(47.2%)
1,620
13.3%
3,068
14.9%
(10.7%)
-
-
-
1,620
(2,120)
(500)
28
436
54
3,068
(47.2%)
(2,277)
791
(6.9%)
N/R (4)
43
478
36
(34.9%)
(8.8%)
50.0%
Outstanding new home orders at period end (units)
(1) Revenues include residential home sales and other revenue
(2) Non-GAAP financial measure. Refer to heading “Non-GAAP Measures” in this MD&A
(3) Other expenses include general and administrative, selling and marketing and net finance expense
(4) Not relevant due to size of the change
75,025
59,746
(65,540)
(51,480)
9,485
12.6%
(815)
8,670
(8,560)
110
163
459
192
83
8,266
13.8%
-
8,266
(8,735)
(469)
128
467
148
54
25.6%
27.3%
14.7%
(8.7%)
N/R (4)
4.9%
(2.0%)
N/R (4)
27.3%
(1.7%)
29.7%
53.7%
Results from operations, including earnings and cash flows, vary considerably between periods for the reasons explained under
the heading Factors Affecting Results of Operations in this MD&A.
Revenues and unit volumes
Revenues for single-family homes and townhouses were $12,198 (28 units) in Q4 2020, 41% lower than Q4 2019 revenues of
$20,551 (43 units). 54 homes were contracted for sale in Q4 2020 as compared to 36 in Q4 2019.
Revenues for single-family homes and townhouses were $75,025 (163 units) in YE 2020, 26% higher than YE 2019 revenues of
$59,746 (128 units). 192 homes were contracted for sale in YE 2020 an increase of 30%, as compared to 148 in YE 2019, resulting
in a backlog of 83 new home orders at the end of Q4 2020 as compared to 54 new home orders at the end of Q4 2019.
Homes sold in YE 2020 had an average price of $459 per home, down 2% compared to $467 in YE 2019. Homes sold in Q4 2020
had an average price of $436 per home, down 9% compared to $478 in Q4 2019. Fluctuations in the average revenue per home
sold are due to differences in product mix and community sales. During 2020 and 2019, GBG's single-family homes product ranged
in price from $292-$842 depending on the location and the model being offered. Similarly, GBG's townhouse product ranged in
price from $155-$298 depending on the location and the model being offered. In Q4 2020, 23 single-family homes and 5
townhouses were sold compared to 40 single-family homes and 3 townhouses in Q4 2019. In YE 2020, 138 single-family homes
and 25 townhouses were sold compared to 111 single-family homes and 17 townhouses in YE 2019.
All homes sold in Q4 2020 and Q4 2019 and in YE 2020 and YE 2019 were built on residential lots or parcels supplied by Genesis,
with Q4 lot revenues of $4,299 and $7,250, respectively and YE lot revenues of $26,909 and $21,270, respectively. Genesis as
part of its investments in a limited partnership and a joint venture has the right to purchase a number of lots as a means to increase
its volumes and will be building on third party lots in 2021. In Q1 2020, GBG contracted to acquire 70 lots in the first phase of one
of these development communities. In addition, during Q2 2020 GBG contracted to acquire 33 lots in a new community from a
third-party land developer.
11
23
GBG builds single-family homes either after receiving a firm sale contract (a “pre-construction home”) or on a quick possession
(“spec”) basis and builds townhouses generally on a quick possession basis. The delivery time of a pre-construction home can be
determined in advance, with a home typically being delivered within 8 to 10 months of a customer signing a purchase agreement.
Construction of quick possession homes is started before GBG receives a firm sale contract to ensure there is sufficient inventory
for buyers seeking possession within a short period of time (often 30-90 days). Townhouses are multi-unit buildings for which GBG
commences construction prior to selling all the units in the building. This provides construction efficiencies and requires GBG to
build some townhouses on a spec basis and to hold them in inventory until sold. The timing of the sale of spec homes is
unpredictable, with spec home buyers usually being time sensitive, wanting to take possession in a short time frame. Genesis
closely monitors its home building work-in-progress to anticipate and react to market conditions in a timely manner. As at YE 2020,
GBG had $16,190 of work in progress, of which approximately $5,553 was related to spec homes (YE 2019 - $21,365 and $13,183,
respectively).
The following table shows the split between quick possession sales (i.e. spec homes that are contracted and delivered within 90
days) and pre-construction homes (i.e. homes built after receiving a firm sale contract). The timeline for pre-construction homes
ranges from around 8 to 10 months and can exceed this depending on the desired possession date.
Three months ended December 31,
Year ended December 31,
2020
2019
% change
2020
2019
% change
Quick possession sales (units)
Pre-construction home sales (units)
Total home sales (units)
19
9
28
19
24
43
-
(62.5%)
(34.9%)
86
77
163
76
52
128
13.2%
48.1%
27.3%
Gross margin
Genesis realized a gross margin before write-down on home sales of 13.3% in Q4 2020 as compared to 14.9% in Q4 2019 and a
gross margin before write-down on home sales of 12.6% in YE 2020 compared to 13.8% in YE 2019. Gross margins in YE 2020
were affected by a previous write-down taken on certain townhouses and the adjustment in pricing on certain units. Fluctuations
in gross margin before write-down are due to differences in product, community mix and market conditions and may drive price
adjustments. In Q4 2020, 23 single-family homes and 5 townhouses were sold compared to 40 single-family homes and 3
townhouses in Q4 2019. In YE 2020, 138 single-family homes and 25 townhouses were sold compared to 111 single-family homes
and 17 townhouses in YE 2019.
Write-down on townhouse project
In Q1 2020, the Corporation recorded a write-down of $815 (2019 - $Nil) on a townhouse project for which a weaker market drove
modest reductions in sales prices.
Other expenses
Other expenses include general and administrative, selling and marketing and net finance expense.
In Q4 2020, other expenses were $157 or 7% lower at $2,120 compared to Q4 2019 ($2,277), mainly due to (i) lower general and
administration expenses; (ii) lower net finance expenses; and lower sales and marketing expenses, partially offset by higher
depreciation expenses.
Other GBG expenses were $175 or 2% lower in YE 2020 compared to YE 2019 mainly due to (i) lower general and administrative
expenses; and (ii) lower net finance expenses, partially offset by higher depreciation expenses.
24
12
LOCATIONS OF GENESIS’ DEVELOPMENTS
25
CITY OF AIRDRIECITY OF CALGARYCALGARYINTERNATIONALAIRPORTTRANS-CANADA HWYSTONEY TRAIL22XCITY LIMITSCITY LIMITSCITY LIMITSCITY LIMITSRESIDENTIAL DEVELOPMENTSTONEY TRAILDEERFOOT TRAILLIART TOOFREEDROCKY VIEW COUNTYNORTHCONRICHSE CALGARYMIXED USE DEVELOPMENT AIRDRIE NE CALGARY NW CALGARY NW CALGARYLOCATIONS OF GENESIS’ DEVELOPMENTS N CALGARYLEWISTONCREST NE CALGARYBELVEDERE Real Estate Held for Development and Sale
Real estate held for development and sale
Provision for write-downs
December 31,
2020
215,050
(21,741)
193,309
2019 % change
236,183
(13,914)
(8.9%)
56.3%
222,269
(13.0%)
Refer to note 5 in the consolidated financial statements for the years ended December 31, 2020 and 2019 which details the
components of the changes in the gross (before provision for write-downs) book value and net book value of real estate held for
development and sale.
Real estate held for development and sale is affected by the sale of residential lots, homes, development land parcels and
development and construction activities. Real estate held for development and sale decreased by $28,960 as at YE 2020 compared
to YE 2019 due to: (i) the write-downs of $11,637 on real estate held for development and sale; (ii) the sale of parcels of
development land for $16,628 and (iii) the reduction in home building inventory by $4,627 due to a high volume of sales.
The following table presents Genesis’ real estate held for development and sale at net book value (that is net of provisions for
write-downs) as at December 31, 2020:
Real Estate Held for Development and Sale
Community
Airdrie - Bayside, Bayview, Canals
Calgary NW - Sage Meadows
Calgary NW - Sage Hill
Calgary NE - Saddlestone
Calgary N - Lewiston
Calgary SE - Logan Landing
Rocky View County - North Conrich (2)
Sub-total
Other assets (3) - non-core
Total land development
Home building work-in-progress
Total land development and home building
Limited Partnerships (2), (4)
Total real estate held for development and sale
(1) Land held for development comprises lands not yet subdivided into single-family lots or parcels
(2) Includes the undivided interest of Genesis and two limited partnerships in North Conrich including the “Omni” project
(3) Other assets are non-core and available for sale.
(4) Net of intra-segment eliminations of $4,194.
26
Net Book Value
Lots, multi-
family &
commercial
parcels
Land held for
development (1)
Total
17,179
10,423
6,366
9,538
-
-
-
43,506
24
43,530
22,290
-
24,693
-
27,954
45,602
5,396
125,935
1,742
127,677
39,469
10,423
31,059
9,538
27,954
45,602
5,396
169,441
1,766
171,207
16,190
187,397
5,912
193,309
14
The following table presents the breakdown of Genesis’ serviced single-family lots, multi-family and commercial parcels shown
above, by community as at December 31, 2020:
Serviced Lots, Multi-family and
Commercial Parcels, by Community
Airdrie - Bayside, Bayview, Canals
Calgary NW - Sage Meadows
Calgary NW - Sage Hill
Calgary NE - Saddlestone
Other assets - non-core
Total
Net Book
Value
17,179
10,423
Single-family
lots
133
23
Townhouse
units
55
-
Townhouse/
multi-family
parcels
1
2
Commercial
parcels
-
-
6,366
9,538
43,506
24
43,530
-
93
249
13
262
-
27
82
-
82
-
1
4
-
4
1
-
1
-
1
The following table presents the estimated equivalent, if and when developed, by community of single-family lots and multi-family
and commercial acres of Genesis’ land held for development (shown previously) as at December 31, 2020. Genesis has detailed
plans, which are in various stages of development, for the development of these lands. Refer to the section of this MD&A entitled
Obtaining Additional Zoning and Servicing Entitlements for the status of Logan Landing, Lewiston and North Conrich. However,
given the uncertainties related to the regulatory approval process and market conditions, there can be no assurance as to when
or if any or all of these lands can or will be fully developed.
Land Held for Development, by
Community
Airdrie - Bayside, Bayview
Calgary NW - Sage Hill
Calgary N - Lewiston
Calgary SE - Logan Landing
Rocky View County - North Conrich (2)
Other assets - non-core
Total
Net Book
Value
22,290
24,693
27,954
45,602
5,396
125,935
1,742
127,677
Land (acres) (1)
186
51
130
354
312
1,033
300
1,333
Estimated Equivalent if/when Developed
Single-family
(lots)
1,112
Multi-family
(acres)
9
Commercial
(acres)
2
282
800
1,190
-
3,384
-
3,384
15
7
16
-
47
-
47
4
-
-
-
6
-
6
(1) Land not yet subdivided into single-family and other lots or parcels
(2) Includes the undivided interest of Genesis in North Conrich including the “Omni” project
27
15
Amounts Receivable
Amounts receivable
December 31,
2020
11,006
2019
% change
6,131
79.5%
Genesis generally receives a minimum 15% non-refundable deposit at the time of entering into a sale agreement for residential
lots with a third-party builder. Title to a lot or home that is contracted for sale is not transferred by Genesis to the builder or purchaser
until full payment is received, thus mitigating credit risk.
The increase of $4,875 in amounts receivable was due to higher lot sales. As at YE 2020, Genesis had $10,466 in amounts
receivable related to the sale of 63 lots to third-party builders compared to $5,515 (related to 31 lots) in amounts receivable as at
YE 2019.
Individual balances due from third-party builders at YE 2020 that were 10% or more of total amounts receivable were $10,235 from
two third-party builders (YE 2019 - $5,515 from two third-party builders).
Vendor-take-back Mortgages Receivable
Vendor-take-back mortgage receivable - purchased from a limited partnership (1)
Vendor-take-back mortgage receivable - granted on sale of a parcel of land
(1) Includes accrued interest
(2) Not relevant due to size of the change
December 31,
2020
-
2,719
2,719
2019
% change
20,558
-
N/R (2)
N/R (2)
20,558
(86.8%)
Limited Partnership Land Pool (“LPLP 2007”), a limited partnership controlled by the Corporation, closed the sale of a 319-acre
parcel of land on December 15, 2017 for gross proceeds of $41,000. As consideration for the sale LPLP 2007 received $20,500 in
cash and a $20,500 three-year vendor-take-back secured first mortgage bearing interest at 6.5% per annum (the “VTB Mortgage”).
On October 17, 2019, Genesis purchased the VTB Mortgage from LPLP 2007. The Corporation received the principal amount of
$20,500 along with the interest of $1,292 (2019 - $1,333) in December 2020.
During Q1 2020, the Corporation closed the sale of an 8.17-acre parcel of development land in northwest Calgary for $8,987 in
consideration for a cash payment of $3,768 and a $5,219 vendor-take-back mortgage with an interest rate of 5% per annum. The
vendor-take-back mortgage is repayable in three installments of which two installments of $1,250 each were paid on March 31,
2020 and June 30, 2020. The last installment of $2,719 is due on December 15, 2021. Interest of $127 was received during 2020
(2019 - $Nil).
28
16
Cash Flows from Operating Activities
Results from operations, including earnings and cash flows, vary considerably between periods for the reasons explained under
the heading Factors Affecting Results of Operations of this MD&A.
Cash flows from operating activities
Cash flows from operating activities per share - basic and diluted
Three months ended
December 31,
2020
2019
22,858
0.54
7,969
0.19
Year ended
December 31,
2020
47,983
1.14
2019
9,537
0.23
The changes in cash flows from operating activities of $14,889 between Q4 2020 and Q4 2019 consist of the following:
Cash inflows from sale of residential homes by GBG
Cash inflows from sale of residential lots
Cash inflows from sale of development land
Cash outflows for home building activity
Cash outflows for land servicing
Cash outflows for lots / land acquisitions
Cash outflows paid to suppliers and employees
Other cash inflows
Income tax refunds / (payments)
Total
Three months ended December 31,
2020
13,488
2,488
26,646
(9,596)
(5,411)
(1,068)
(4,500)
807
4
22,858
2019
Change
20,667
2,994
550
(8,337)
(3,986)
-
(4,693)
1,717
(943)
7,969
(7,179)
(506)
26,096
(1,259)
(1,425)
(1,068)
193
(910)
947
14,889
The changes in cash flows from operating activities of $38,446 between YE 2020 and YE 2019 consist of the following:
Year ended December 31,
2019
Change
Cash inflows from sale of residential homes by GBG
Cash inflows from sale of residential lots
Cash inflows from sale of development land
Cash outflows for home building activity
Cash outflows for land servicing
Cash outflows for lots / land acquisitions
2020
75,255
7,272
33,409
(34,311)
(17,574)
(4,246)
60,543
12,334
550
(25,082)
(20,503)
(5,101)
Cash outflows paid to suppliers and employees
(14,309)
(14,405)
Other cash inflows
Income tax refunds / (payments)
Total
1,076
1,411
47,983
2,345
(1,144)
9,537
29
14,712
(5,062)
32,859
(9,229)
2,929
855
96
(1,269)
2,555
38,446
17
Cash inflows from the sale of residential homes by GBG is related to the volume of homes sold. Genesis sells residential lots to
third-party builders and typically receives 15% of the purchase price as a non-refundable deposit from the builder, at which time it
recognizes all of the sales revenue. The balance of the purchase price is generally received in cash at the time of closing of the
sale by the third-party builder to a home buyer, which can be many months later, resulting in a timing difference between sales
revenue recognition and the actual receipt of cash. Cash flows from operating activities are also impacted by the timing and
amounts of tax installment payments or refunds.
LIABILITIES AND SHAREHOLDERS’ EQUITY
The following table presents Genesis’ liabilities and equity at YE 2020 and YE 2019:
Loans and credit facilities
Dividend payable
Customer deposits
Accounts payable and accrued liabilities
Lease liabilities
Provision for future development costs
Total liabilities
Non-controlling interest
Shareholders’ equity
Total liabilities and equity
Total liabilities to equity is as follows:
Total liabilities
Total equity
Total liabilities to equity (1)
(1) Calculated as total liabilities divided by total equity
December 31,
December 31,
2020
21,470
6,280
3,889
14,092
790
20,213
66,734
12,084
187,676
266,494
% of Total
8%
3%
1%
5%
0%
8%
25%
5%
70%
100%
2019
51,546
-
4,592
7,900
233
19,102
83,373
18,938
193,957
296,268
% of Total
17%
-
2%
3%
0%
6%
28%
6%
66%
100%
December 31,
2020
66,734
199,760
33%
2019
83,373
212,895
39%
30
18
Loans and Credit Facilities
Land development servicing loans
Demand operating line for single-family homes
Project specific townhouse construction loans
Demand operating line of credit
Loan to purchase VTB receivable
Vendor-take-back mortgages payable
Unamortized deferred fees on loans and credit
facilities
Balance, end of period
31 Dec. 2020
31 Dec. 2019
-
1,662
1,185
-
-
18,624
21,471
(1)
21,470
4,145
2,261
4,370
-
14,470
26,634
51,880
(334)
51,546
The continuity of Genesis’ VTB mortgages payable and land development servicing loans, excluding deferred fees on loans and
credit facilities, is as follows:
Balance, beginning of period
Advances
Repayments
Interest expense
Balance, end of period
VTB payable -
Lewiston
VTB payable -
Logan Landing
18,634
-
(10)
-
18,624
8,000
-
(8,000)
-
-
Year ended December 31, 2020
Year ended
December 31,
2019
Total
30,779
3,116
Total
23,301
30,898
Land
development
servicing loans
4,145
3,116
(7,261)
(15,271)
(24,043)
-
-
-
18,624
623
30,779
Loans and credit facilities are used primarily to finance the costs of developing land, building homes and for land purchases.
Genesis has various covenants in place with its lenders with respect to its loan and credit facilities. Such covenants include credit
usage restrictions; cancellation, prepayment, confidentiality and cross default clauses; sales coverage requirements; conditions
precedent for funding; and other terms such as, but not limited to, maintaining contracted lot prices, restrictions on encumbrances,
liens and charges, material changes to project plans, and material changes in the Corporation’s ownership structure.
In addition, GBG has a secured revolving operating line repayable on demand to be used for single-family home construction. This
line has a financial covenant requiring that GBG maintain a net worth of at least $6,500 at all times. Net worth is defined by the
lender as “Retained Earnings plus Shareholders Loans plus Due to Related Parties (excluding lot payables to related parties)
minus Due from Related Parties”.
Genesis and its consolidated entities were in compliance with all lender covenants for all periods in this MD&A.
Subsequent to December 31, 2020, the Corporation arranged a $50,000 three-year fixed term secured corporate revolving line of
credit with MCAP Financial Corporation at an interest rate per annum equal to the higher of prime +1.90% or 4.35%. This is secured
by specific dedicated lands and a general corporate charge on all assets of the Corporation.
31
19
Land development servicing loans
As at December 31, 2020, Genesis has one land project loan facility with $Nil drawn (YE 2019 - four loans and $4,145 drawn). Up
to $4,038 is available to finance future development and servicing costs from this facility as land development activities progress.
Interest on this facility is charged at prime + 0.75% per annum and is due on February 28, 2021.
Demand operating line for single-family homes
GBG has a demand operating line of $6,500 bearing interest at prime + 0.75% per annum. As at December 31, 2020, the amount
drawn on this facility was $1,662 (YE 2019 - $2,261). The Corporation renewed this credit facility in March 2020.
Project specific townhouse construction loans
As at December 31, 2020, GBG has a townhouse project loan facility with $614 drawn (YE 2019 - $1,756). Up to $6,883 is available
from this facility to finance future construction costs on this townhouse project. This facility bears interest at prime +0.90% per
annum and is due on August 28, 2021.
As at December 31, 2020, GBG has a second townhouse project loan facility with $571 currently drawn (YE 2019 - $2,614). Up to
$3,483 is available from this facility to finance future construction costs on this townhouse project. This facility bears interest at
prime +0.90% per annum and is due on September 28, 2021.
In November 2020, the Corporation renewed both of its townhouse development credit facilities.
Demand operating line
Genesis had a demand operating line of credit of up to $10,000 for general corporate purposes at an interest rate of prime +1.00%
per annum. The loan was repaid in full and closed in December 2020 (YE 2019 - $Nil).
Loan to purchase VTB Receivable
Genesis had a loan secured by the $20,500 third-party VTB Mortgage with approximately $15,357 drawn on the loan prior to its
repayment on December 4, 2020 (YE 2019 - $14,470). The loan had an interest rate of 6.50% per annum. The interest rate and
repayment date corresponded with the equivalent terms of the third-party of the $20,500 VTB Mortgage. Please see information
provided under the heading Vendor-take-back Mortgages Receivable in this MD&A.
Vendor-take-back mortgages payable
Genesis entered into a $18,624 VTB on the purchase of its north Calgary lands (Lewiston) in September 2019. The VTB is secured
by the land, has an interest rate of 5% per annum and is repayable in two equal installments of $9,312, in May 2021 and 2022.
Genesis entered into a $40,000 vendor-take-back mortgage (“VTB”) on the purchase of its southeast Calgary lands (Logan
Landing) in January 2015. The VTB is fully repaid with the final installment of $8,000 paid in January 2020.
Provision for Future Development Costs
When Genesis sells lots, land parcels and homes, it remains responsible for paying for certain future development costs known as
provision for future development costs (“FDC”).
In Genesis’ land development business, FDC represents the estimated remaining construction and other development costs related
to each lot or parcel that has previously been sold by Genesis, if any. These estimated costs include the direct and indirect
construction and other development costs, including municipal levies, expected to be incurred by Genesis during the remainder of
the development process, net of expected future recoveries from third-parties that are allocable to the relevant lot or parcel. FDC
is reviewed periodically and, when a prior estimate is known to be different from the actual costs incurred or expected to be incurred,
an adjustment is made to FDC and a corresponding adjustment is made to cost of sales and in some cases, to real estate held for
development and sale.
FDC for GBG are additional future costs relating to previously sold homes estimated to be incurred, which are primarily for seasonal
and other work (such as paving and landscaping) and estimated warranty expenses over the one-year warranty period.
FDC as at YE 2020 was $18,737 for the land division (YE 2019 - $17,828) and $1,476 (YE 2019 - $1,274) for GBG. For additional
details, please see information provided under the heading Critical Accounting Estimates in this MD&A.
32
20
LIQUIDITY AND CAPITAL RESOURCES
Genesis had cash and cash equivalents of $29,743 and loans and credit facilities outstanding of $21,470 at YE 2020 compared to
$16,248 and $51,546 respectively, at YE 2019 resulting in net cash (refer to heading Non-GAAP Measures in this MD&A) of $8,273
at YE 2020 compared to net debt (refer to heading Non-GAAP Measures in this MD&A) of $35,298 at YE 2019. The components
of loans and credit facilities are detailed below. For additional details, please see information provided under the heading Loans
and Credit Facilities.
Cash and cash equivalents
December 31,
2020
29,743
2019 % change
16,248
83.1%
Land development servicing and home building loans
2,846
10,442
(72.7%)
Loan to purchase VTB receivable
VTBs payable
Total loans and credit facilities
Net cash / (net debt) (1) (2)
(1) Calculated as the difference between cash and cash equivalents and total loans and credit facilities
(2) Non-GAAP financial measure. Refer to heading “Non-GAAP Measures” in this MD&A
(3) Not relevant due to size of the change
Loans and credit facilities as a percentage of total assets (1)
Land development servicing and home building loans
Loan to purchase VTB receivable
VTBs payable
Loans and credit facilities (debt) to total assets
Total liabilities to equity (2)
(1) Calculated as each component of loans and credit facilities divided by total assets
(2) Calculated as total liabilities divided by total equity
(3) Not relevant due to size of the change
Net cash / (net debt) (1) as a percentage of total assets
Cash and cash equivalents
Loans and credit facilities
Net cash / (net debt) (1) (2)
Net cash / (net debt) to total assets (3)
(1) Non-GAAP financial measure. Refer to heading “Non-GAAP Measures” in this MD&A
(2) Calculated as the difference between cash and cash equivalents and total loans and credit facilities
(3) Calculated as net cash or net debt divided by total assets
(4) Not relevant due to size of the change
-
18,624
21,470
14,470
26,634
N/R (3)
(30.1%)
51,546
(58.3%)
8,273
(35,298)
(123.4%)
December 31,
2019
3.5%
4.9%
9.0%
17.4%
39.2%
% change
(68.6%)
N/R (3)
(22.2%)
(53.4%)
(14.8%)
December 31,
2019
% change
16,248
51,546
(35,298)
(11.9%)
83.1%
(58.3%)
N/R (4)
N/R (4)
2020
1.1%
-
7.0%
8.1%
33.4%
2020
29,743
21,470
8,273
3.1%
The Corporation continues to ensure that it takes prudent and practical steps (described elsewhere in this MD&A) to manage
liquidity in the challenging environment presented by the COVID-19 pandemic (refer to the heading Outlook in this MD&A for
additional information). Based on the Corporation’s operating history, relationships with lenders and committed sales contracts,
management believes that Genesis has the ability to continue to renew or repay its financial obligations as they become due. The
Corporation expects to generate sufficient liquidity from its cash flows from operating activities, undrawn credit facilities and cash
on hand to meet its financial obligations (including the above liabilities) as they become due.
21
33
Finance Expense
Three months ended December 31,
Year ended December 31,
2020
2019
% change
Interest incurred
Finance expense relating to VTBs (1)
Financing fees amortized
Interest and financing fees capitalized
(1) VTBs related to Logan Landing and Lewiston lands
(2) Not relevant due to size of the change
226
234
75
-
535
273
395
71
-
739
(17.2%)
(40.8%)
5.6%
N/R (2)
2020
1,329
931
333
-
(27.6%)
2,593
2019
% change
722
855
186
(158)
1,605
84.1%
8.9%
79.0%
N/R (2)
61.6%
Finance expense during Q4 2020 was lower than in Q4 2019 mainly due to lower loan balances of $21,470 in Q4 2020 compared
to $51,546 in Q4 2019. Finance expense related to VTBs was lower in Q4 2020 compared to Q4 2019 as payment of the final
installment of $8,000 on a VTB was made in January 2020.
Finance expense was higher in YE 2020 compared to YE 2019 due to the Corporation incurring interest expense on (i) an $18,624
VTB payable for a full year in 2020 compared to only a portion of the year in 2019; and (ii) a $15,192 loan to purchase the $20,500
VTB Mortgage from LPLP 2007 for almost a full year in 2020 compared only a portion of the year in 2019. Financing fees amortized
were higher in 2020 due to expense relating to deferred financing fees being accelerated on repayment and closing of various
loans.
The weighted average interest rate of loan agreements with various financial institutions was 3.26% (YE 2019 - 5.76%) based on
December 31, 2020 balances.
Income Taxes Recoverable
The continuity in income taxes recoverable is follows:
Balance, beginning of period
Provision for current income tax
Net (receipts) payments
Balance, end of period
December 31, 2020
December 31, 2019
1,144
826
(1,411)
559
2,283
(2,283)
1,144
1,144
The year over year decrease of $585 is explained in the above table as refunds related to prior years were received in YE 2020.
34
22
Shareholders’ Equity
As at March 1, 2021, the Corporation had 41,863,335 common shares issued and outstanding. The common shares of the
Corporation are listed for trading on the Toronto Stock Exchange under the symbol “GDC”.
The Corporation purchased and cancelled common shares under its normal course issuer bid (“NCIB”) as follows:
Number of shares purchased and cancelled
106,982
20,394
296,592
Three months ended
December 31,
2020
2019
Year ended
December 31,
2020
Total cost
Average price per share purchased
Shares cancelled as a % of common shares
outstanding at beginning of period
175
1.66
50
2.39
465
1.58
0.25%
0.05%
0.70%
0.06%
2019
23,694
58
2.41
During YE 2020, the Corporation purchased and cancelled 296,592 common shares for $465 at an average cost of $1.58 per
share (representing 0.70% of issued and outstanding shares at the beginning of the year) compared to 23,694 common shares for
$58 at an average cost of $2.41 during YE 2019 (representing 0.06% of issued and outstanding shares at the beginning of 2019).
Contractual Obligations and Debt Repayment
Contractual obligations (excluding accounts payable, accrued liabilities, income taxes payable, customer deposits and provision
for future development costs) at YE 2020 were as follows:
Current
January 2022 to December 2022
January 2023 to December 2023
January 2024 and thereafter
Total
(1) Excludes deferred fees on loans and credit facilities
(2) Includes variable operating costs
Loans and
Credit
Facilities (1)
Levies and
Municipal
Fees
Naming
Rights
Lease
Obligations (2)
12,159
9,312
-
-
21,471
6,415
1,433
1,910
-
9,758
500
-
-
-
500
331
361
455
1,383
2,530
Total
19,405
11,106
2,365
1,383
34,259
Levies and municipal fees are related to municipal agreements signed by Genesis on commencement of development of certain
real estate assets. Non-payment of levies and municipal fees could result in the municipalities drawing upon letters of credit or
surety bonds, impact the development of the associated real estate assets and impact Genesis’ status as a developer with the
municipality. Genesis is current with regard to all levies and fees due to municipal authorities.
Over a period of 10 years, commencing in 2008 and ending in 2017, Genesis contributed $200 each year for a total of $2,000 for
40-year naming rights to “Genesis Place”, a recreation complex in the city of Airdrie.
In 2012, Genesis entered into a memorandum of understanding with the Northeast Community Society to contribute $5,000 over
10 years for 15-year naming rights to the “Genesis Centre for Community Wellness”, a recreation complex in northeast Calgary
($500 each year, ending in 2021). The first nine installments totaling $4,500 were paid as at December 31, 2020. The tenth and
final payment was made in January 2021.
Genesis has certain lease agreements that are entered in the normal course of operations. Genesis signed a sublease for a new
head office location, still within Calgary, in April 2020 and moved in September 2020. The sublease expires in February 2027 and
the total payments over the remaining term of the lease, covering base rent and parking is $844. In the event the office lease is
terminated early, Genesis is liable to pay the landlord for the loss of its income for the unexpired portion of the lease, in addition to
damages and other expenses incurred by the landlord, if any. Genesis also has other minor operating leases.
As a normal part of business, Genesis has entered into arrangements and incurred obligations that will impact future operations
and liquidity, some of which are reflected as short-term liabilities and commitments in note 19 of the consolidated financial
statements for the years ended December 31, 2020 and 2019.
35
23
Current Contractual Obligations, Commitments and Provision
Loans and credit facilities, excluding deferred fees on loans and credit facilities
Accounts payable and accrued liabilities
Dividend payable
Total short-term liabilities
Levies and municipal fees
Commitments (1)
December 31,
2020
12,159
14,092
6,280
32,531
6,415
831
39,777
2019
30,450
7,900
-
38,350
6,406
952
45,708
(1) Commitments comprises naming rights and lease obligations
At YE 2020, Genesis had obligations due within the next 12 months of $39,777 of which $12,159 related to loans and credit
facilities. Repayment is either linked directly to the collection of lot receivables and sales proceeds or due at maturity. Management
expects that Genesis will have sufficient liquidity from its cash flows from operating activities, supplemented by undrawn credit
facilities and cash on hand, to meet its financial obligations (including the above liabilities) as they become due. The cash dividend
declared payable on December 9, 2020 in the aggregate amount of $6,280 was paid on January 11, 2021.
Settlement of Litigation
A settlement has been reached on a statement of claim filed in 2016 by two former employees against the Corporation and a
director. The claim alleged wrongful termination of their employment.
OFF BALANCE SHEET ARRANGEMENTS
Letters of Credit and Surety Bonds
Genesis has an ongoing requirement to provide irrevocable letters of credit and surety bonds to municipalities as part of the sub-
division plan registration process. These letters of credit and surety bonds indemnify the municipalities by enabling them to draw
upon them if Genesis does not perform its contractual obligations. At YE 2020, these amounted to approximately $3,666 (YE 2019
- $4,795).
Levies and Municipal Fees
For additional details, please see information provided under the heading Contractual Obligations and Debt Repayment in this
MD&A.
SELECTED ANNUAL INFORMATION
Total revenues
Gross margin before write-down (1)
Gross margin
Net earnings attributable to equity shareholders
Net earnings per share – basic and diluted
Total assets
Loans and credit facilities
Cash dividends per share, declared
2020
103,933
27,352
15,715
199
0.00
2019
68,097
22,220
21,420
1,701
0.04
2018
81,437
22,233
20,413
4,124
0.10
2017
2016
150,933
115,957
54,324
53,229
16,998
0.39
35,283
26,618
5,906
0.13
266,494
296,268
278,156
301,425
288,995
21,470
0.15 (2)
51,546
31,696
-
0.24
30,135
0.46 (3)
43,295
0.25
(1)) Non-GAAP financial measure. Refer to heading “Non-GAAP Measures” in this MD&A
(2) A cash dividend of $0.15 per share was declared in December 2020 and was paid in January 2021
(3) A cash dividend of $0.25 per share was declared in December 2017 and was paid in January 2018
36
24
Return on shareholders’ equity (“ROE”) (1)
2020
0.1%
2019
0.9%
2018
2.1%
2017
8.3%
2016
2.8%
Average shareholders’ equity (2)
190,817
192,964
196,684
203,574
208,938
(1) Calculated as Net earnings attributable to equity shareholders divided by average Shareholders’ equity
(2) Calculated as the sum of Shareholders’ equity per the financial statements at the beginning and end of each year divided by two
ROE is calculated as net earnings attributable to equity shareholders divided by average shareholders’ equity. The many factors
that affect net earnings have been explained throughout this MD&A. In addition, shareholders’ equity was affected by dividends
and the repurchase and cancellation of shares under Genesis’ NCIB. For additional details on dividends and NCIB, please see
information provided under the heading Return of capital to shareholders in this MD&A.
For additional details, please see information provided under the heading Factors Affecting Results of Operations in this MD&A
which discusses the factors that affect Genesis’ results and seasonality.
Summary analysis for last 3 years
Total revenues are comprised of residential lot sales, development land sales, residential home sales and other revenues.
Residential lot sales volumes were 225, 161 and 176 units in 2020, 2019 and 2018, respectively, reflecting market conditions in
each period. In addition, development land sales were $16,628, $550 and $15,126 for 2020, 2019 and 2018 respectively.
Development land sales are lumpy in nature and comprise sales of non-core lands, commercial lands and other lands that Genesis
does not intend to build on.
Residential homes sold were 163, 128 and 121 in 2020, 2019 and 2018 respectively. Included in this were single-family homes
sales of 138, 111 and 103 units in 2020, 2019 and 2018 respectively.
Gross margins in 2020 were mainly lower due to negative development land margins due to write-downs in YE 2020. These
negative margins were offset by positive margins on residential lots and homes. Gross margins on development land sales can
vary significantly and are also impacted by write-downs of real estate held for development and sale which were $10,822, $800
and $1,820 in 2020, 2019 and 2018 respectively. Net earnings and net earnings per share - basic and diluted were affected as a
result of the above.
Total assets decreased by $29,774 in 2020 compared to 2019. This was mainly due to a decrease in real estate held for
development and sale by $28,960 and a reduction of $17,839 in VTB mortgage receivable, partially offset by an increase in cash
and cash equivalents of $13,495 during the year.
Total assets increased by $18,112 in 2019 compared to 2018. This was mainly due to the purchase of 130 acres of future residential
development land in north Calgary for $23,725 and investments of $5,608 in two land development entities in Calgary. This was
partially offset by a decrease in accounts receivable of $8,829 due to the collection of these amounts during the year.
Total assets decreased by $23,269 in 2018 compared to 2017. This was mainly due to a decrease in accounts receivable by
$15,860 and a reduction of $13,667 in Other operating assets during 2018. In 2017, Other operating assets included $10,813 of
dividends that was declared in 2017 and paid in 2018.
Total loans and credit facilities decreased by $30,076 in 2020 compared to 2019. This was mainly due to the final installment of
$8,000 paid in January 2020 on the VTB related to Genesis’ southeast Calgary lands and the repayment of a $14,470 loan that
was used to fund the $20,500 VTB from a limited partnership. In addition, Genesis paid off and closed several loans and credit
facilities in December 2020.
Total loans and credit facilities increased in 2019 compared to 2018. This was mainly due to the acquisition of a $18,634 VTB
related to the purchase of the Calgary north lands mentioned previously and the acquisition of a $14,470 loan that was used to
fund the $20,500 VTB from a limited partnership.
Total loans and credit facilities were marginally higher in 2018 compared to 2017 mainly due to higher land servicing and home
building project loan draws used to develop new phases and significant townhouse projects. This was offset by the $8,000
installment paid in early January 2018 on the VTB relating to Genesis’ southeast Calgary lands.
37
25
SUMMARY OF QUARTERLY RESULTS
Q4
2020
Q3
2020
Q2
2020
Revenues
19,817
29,739
30,725
Net earnings (loss) (1)
EPS (2)
0.00
(1) Net earnings (loss) attributable to equity shareholders
(2) Net earnings (loss) per share - basic and diluted
125
3,813
0.09
3,644
0.09
Q1
2020
23,652
(7,383)
(0.18)
Q4
2019
Q3
2019
Q2
2019
Q1
2019
26,081
12,786
16,533
12,697
1,684
0.04
300
0.01
(357)
(0.01)
74
0.00
Dividends declared
Dividends paid
Dividends declared - per
share
Dividends paid - per share
Residential lots sold to third-
parties (units)
Homes sold (units)
Development land revenues
Cash flows from (used in)
operating activities
Amount
Per share - basic and
diluted
Q4
2020
6,280
-
0.15
-
Q4
2020
2
28
Q4
2020
7,146
Q4
2020
22,858
0.54
Q3
2020
Q2
2020
Q1
2020
Q4
2019
Q3
2019
Q2
2019
Q1
2019
-
-
-
-
Q3
2020
23
53
Q3
2020
320
Q3
2020
9,893
0.24
-
-
-
-
Q2
2020
35
52
Q2
2020
175
Q2
2020
7,044
0.17
-
-
-
-
Q1
2020
2
30
Q1
2020
8,987
Q1
2020
8,188
0.19
-
-
-
-
Q4
2019
21
43
Q4
2019
550
Q4
2019
7,969
-
-
-
-
-
-
-
-
Q3
2019
Q2
2019
1
26
Q3
2019
-
Q3
2019
(10,076)
4
33
Q2
2019
-
Q2
2019
7,061
0.19
(0.24)
0.17
-
-
-
-
Q1
2019
7
26
Q1
2019
-
Q1
2019
4,583
0.11
In general, revenues and net earnings are mainly affected by the volume of residential lot and home sales, development land
parcel sales, and write-downs or recoveries, if any. Seasonality affects the land development and home building industry in Canada,
particularly winter weather conditions. For additional details, please see information provided under the heading Factors Affecting
Results of Operations in this MD&A which discusses the factors that affect Genesis’ results and seasonality further.
During Q4 2020, Genesis sold two residential lots to third-party builders, 28 homes and two development land parcels. Revenues
were lower in Q4 2020 compared to Q3 2020 due to lower residential lot and home sales in Q4 2020 compared to Q3 2020. This
was partially offset by higher development land revenues in Q4 2020. Gross margins in Q4 2020 affected by the lower volume of
residential homes and lots sold and by a write-down of $822. Gross margins are also affected by the product mix for both residential
homes and residential lots. General and administrative expenses were higher in Q4 2020 compared to Q3 2020 while selling and
marketing expenses and net finance expenses were comparable between Q4 2020 and Q3 2020. Income tax expenses were $496
in Q4 2020 compared to $850 in Q3 2020. As a result of these factors, net earnings in Q4 2020 were lower than in to Q3 2020.
During Q3 2020, Genesis sold 23 residential lots to third-party builders, 53 homes and a development land parcel belonging to a
limited partnership. Revenues were lower in Q3 2020 compared to Q2 2020 due to lower residential lot sales in Q3 2020 compared
to Q2 2020. This was partially offset by higher development land revenues in Q3 2020. Gross margins in Q3 2020 were lower than
in Q2 2020 mainly due to the product mix and impacted both residential homes and residential lots. The development land parcel
sold in Q3 2020 had a slight negative margin. General and administrative expenses, selling and marketing expenses, net finance
and income tax expenses were marginally lower in Q3 2020 than Q2 2020. As a result of these factors, net earnings in Q3 2020
were higher than in to Q2 2020.
38
26
During Q2 2020, Genesis sold 35 residential lots to third-party builders, 52 homes and a non-core development land parcel.
Revenues were higher in Q2 2020 compared to Q1 2020 due to higher residential lot and homes sales in Q2 2020 compared to
Q1 2020. This was partially offset by lower development land revenues in Q2 2020. Gross margins in Q2 2020 were higher than
in Q1 2020 mainly due to there being no write-down of real estate held for development and sale in Q2 2020 while there was a
$10,815 write-down of real estate held for development and sale in Q1 2020. General and administrative expenses, selling and
marketing expenses and net finance expenses were slightly lower in Q2 2020 than Q1 2020. Income tax expenses were incurred
during Q2 2020 due to net earnings for the quarter compared to income tax recoveries due to losses incurred during Q1 2020.
During Q1 2020, Genesis sold 2 residential lots to third-party builders, 30 homes and a development land parcel. Revenues were
lower in Q1 2020 compared to Q4 2019 due to lower residential lot and homes sales in Q1 2020 compared to Q4 2019. This was
partially offset by higher development land revenues in Q1 2020. Gross margins in Q1 2020 were lower than in Q4 2019 due to
the development land parcel which had a negligible margin and the $10,000 write-down of real estate held for development and
sale. Selling and marketing expenses and net finance expenses were comparable in both Q1 2020 and Q4 2019. General and
administrative expenses were lower in Q1 2020 compared to Q4 2019 which include costs incurred to purchase a VTB from LPLP
2007. Due to the net loss incurred in Q1 2020, there were income tax recoveries compared to income tax expenses in Q4 2019.
During Q4 2019, Genesis sold 21 residential lots to third-party builders, 43 homes and a small development land parcel sale
resulting in higher revenues in Q4 2019 compared to Q3 2019. Gross margins in Q4 2019 were higher than in Q3 2019 due to the
higher volume of residential lots and homes sold. The development land parcel had a negligible margin. General and administrative
expenses and net finance expenses were higher in Q4 2019 compared to Q3 2019 costs mainly due to higher loan balances.
Selling and marketing expenses were comparable in Q4 2019 and Q3 2019 while income tax expenses were $841 in Q4 2019
compared to $193 in Q3 2019.
During Q3 2019, Genesis sold 1 residential lot to a third-party builder, 26 homes and had no development land parcel sales
resulting in lower revenues in Q3 2019 compared to Q2 2019. There was no write-down in Q3 2019 while there was a write-down
of $800 in Q2 2019. Gross margins in Q3 2019 were lower than in Q2 2019 due to the lower volume of residential lots and homes
sold. This reduction was partially offset by the impact of the $800 write-down in Q2 2019 with no corresponding write-down in Q3
2019. General and administrative expenses and selling and marketing expenses were higher in Q3 2019 compared to Q2 2019,
including higher stock-based compensation expenses and the write-off of $298 that was accounted for as being due from a limited
partnership. Genesis incurred significantly lower income tax expense of $193 in Q3 2019 compared to $1,610 in Q2 2019. In Q2
2019, legislation enacted to decrease the Alberta corporate income tax rate from 12% to 8% resulted in deferred income tax assets
being reduced by $1,387 with a corresponding increase in deferred income tax expense.
During Q2 2019, Genesis sold 4 residential lots to third-parties, 33 homes and no development land parcels. The higher number
of homes sold in Q2 2019 resulted in higher revenues and higher gross margins in Q2 2019 compared to Q1 2019. This was
despite a write-down of $800 in Q2 2019 with no write-down incurred in Q1 2019. Selling and marketing expenses were comparable
in Q2 2019 and Q1 2019. Genesis incurred higher net finance expenses and income tax expenses in Q2 2019 partially offset by
lower general and administrative expenses compared to Q1 2019. Income tax expense was significantly higher by $1,439 than in
Q1 2019. On June 28, 2019, legislation was enacted to decrease the Alberta corporate income tax rate from 12% to 8% with a 1%
reduction effective July 1, 2019 and further 1% reductions on each of January 1, 2020, 2021 and 2022. As a result, deferred income
tax assets were reduced by $1,387 which was recognized as an increase in deferred income tax expense in Q2 2019. The write-
down and income tax expense resulted in a net loss attributable to equity shareholders of $357 in Q2 2019.
During Q1 2019, Genesis sold 7 residential lots to third-parties, 26 homes and no development land parcels resulting in lower
revenues in Q1 2019 compared to Q4 2018. Gross margins in Q1 2019 were marginally higher than in Q4 2018 mainly due to no
write-down in Q1 2019 compared to $900 in Q4 2018. General and administrative expenses and selling and marketing expenses
were comparable in Q1 2019 and Q4 2018. Genesis incurred lower net finance expenses and income tax expenses in Q1 2019
compared to Q4 2018.
39
27
SUBSEQUENT EVENTS
Subsequent to December 31, 2020, the following occurred:
•
•
•
The Corporation arranged a $50,000 three-year fixed term secured corporate revolving line of credit with MCAP Financial
Corporation at an interest rate per annum equal to the higher of prime +1.90% or 4.35%. This is secured by specific
dedicated lands and a general corporate charge on all assets of the Corporation.
The Corporation cancelled 1,680,000 stock options with a weighted average exercise price of $3.31.
The Corporation entered into a binding agreement to acquire approximately 157 acres of future residential development
land in the City of Calgary. The Corporation paid a non-refundable deposit of $2,186, with the balance of $26,964 to be
paid on closing, currently scheduled for April 2022. This parcel of land is located within the “Belvedere” ASP on the east
side of the City of Calgary. The land is not subject to a GMO and Genesis plans to immediately commence the process
of obtaining final Land Use and Outline Plan approvals from the City of Calgary. Upon completion, the community is
expected to yield over 1,200 housing units including single-family, townhouse and multi-family apartment units.
• A settlement has been reached on a statement of claim filed in 2016 by two former employees against the Corporation
and a director. The claim alleged wrongful termination of their employment.
•
The Corporation entered into a sale agreement to sell a 463.2-acre parcel of land in BC, belonging to a limited
partnership, for a cash consideration of $925. The transaction closed in February 2021.
SUMMARY OF ACCOUNTING CHANGES
The Corporation adopted no new IFRSs or interpretations as of January 1, 2020.
NEW ACCOUNTING PRONOUNCEMENTS
There were no new accounting pronouncements or amendments to existing standards that impacted or are expected to impact the
Corporation in 2020 and 2021.
CRITICAL ACCOUNTING ESTIMATES
The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments and
estimates that affect the reported amounts of revenues, expenses (including stock-based compensation), assets and liabilities,
and the disclosure of contingent liabilities at the reporting date for the land development and the home building businesses. On an
ongoing basis, management evaluates its judgments and estimates in relation to revenues, expenses, assets and liabilities.
Management uses historical experience, third-party appraisals and reports and various other factors it believes to be reasonable
under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates
under different assumptions and conditions. There were no material changes made to the critical accounting estimates for YE 2020
and YE 2019. Refer to note 2(p) in the consolidated financial statements for the years ended December 31, 2020 and 2019 for
additional information on judgments and estimates.
Provision for Future Development Costs
Changes in estimated future development costs (net of recoveries, if any) related to land, lots and homes previously sold by
Genesis and for which it has ongoing obligations directly impacts the amount recorded for the future development liability, cost of
sales, gross margin and, in some cases, the value of real estate under development and held for sale. This liability is subject to
uncertainty due to the longer time frames involved, particularly in land development.
Write-down of Real Estate Held for Development and Sale
The Corporation estimates the net realizable value (“NRV”) of real estate held for development and sale at least annually or
whenever events or changes in circumstances indicate the carrying value may exceed NRV. The estimate is based on valuations
conducted by independent real estate appraisers, other professional reports and estimates and takes into account recent market
transactions of similar and adjacent lands and housing projects in the same geographic area.
40
28
Valuation of amounts receivable
Amounts receivable are reviewed on a regular basis to estimate recoverability of balances. Any overdue amounts and any known
issues about the financial condition of debtors are taken into account when estimating recoverability.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING
The Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) are responsible for establishing and maintaining disclosure
controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined in National
Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings. The CEO and CFO have designed, or caused
to be designed under their direct supervision, Genesis’ DC&P to provide reasonable assurance that:
(i)
(ii)
material information relating to the Corporation, 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
information required to be disclosed in the annual filings, interim filings or other reports filed or submitted under securities
legislation is recorded, processed, summarized and reported on a timely basis.
The CEO and CFO have also designed, or caused to be designed under their direct supervision, Genesis’ ICFR to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with IFRS. The ICFR have been designed using the control framework established in Internal Control –
Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
The CEO and CFO have evaluated the design and operating effectiveness of Genesis' DC&P and ICFR and concluded that
Genesis' DC&P and ICFR were effective as at December 31, 2020. While Genesis’ CEO and CFO believe that the Corporation’s
internal controls and procedures provide a reasonable level of assurance that such controls and procedures are reliable, an internal
control system cannot prevent all errors and fraud. It is management’s belief that any control system, no matter how well conceived
or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
There were no changes in the Corporation’s ICFR during the three months and year ended December 31, 2020 that have materially
affected or are reasonably likely to materially affect the Corporation’s ICFR. Due to the COVID-19 pandemic, Genesis successfully
transitioned to working remotely in March 2020.
RISKS AND UNCERTAINTIES
The Calgary Metropolitan Area economy is experiencing materially lower economic activity due to the COVID-19 pandemic and
volatile energy prices, resulting in a significant decrease in economic activity and increased unemployment levels. These and other
factors are expected to have a materially negative impact on the Calgary Metropolitan Area. The duration and impact of the COVID-
19 pandemic and the future price of oil are unknown at this time. As a result, it is not possible to reliably estimate the length and
severity of these developments and the impact on the financial results and condition of the Corporation in future periods.
In the normal course of business, Genesis is exposed to certain risks and uncertainties inherent in the real estate development
and home building industries. Real estate development and home building are cyclical and capital-intensive businesses. As a
result, the profitability and liquidity of Genesis could be adversely affected by external factors beyond the control of management.
Risks and uncertainties faced by Genesis include industry risk, competition, supply and demand, geographic risk, development
and construction costs, credit and liquidity risks, finance risk, interest risk, management and key personnel risk, mortgage rates
and financing risk, general uninsured losses, cyber-security and business continuity risk, environmental risk and government
regulations.
There may be additional risks that management may need to consider from time to time. For a more detailed discussion on the
Corporation’s risk factors, refer to Genesis’ AIF for the year ended December 31, 2020 available on SEDAR at www.sedar.com.
Development and Construction Cost Risk
Genesis may be impacted by higher prices of labour, consulting fees, construction services and materials. Costs of development
and building have fluctuated over the past several years and are typically passed on to the end customer through higher pricing.
Any significant increase that Genesis cannot pass on to the end customer may have a negative material impact on profits. The
impact of COVID-19 on the supply chain is unknown but it could impact both the price and timely availability of materials.
41
29
Credit and Liquidity Risk
Credit risk arises from the possibility that third-party builders who agree to acquire lots from Genesis may experience financial
difficulty and be unable to fulfill their lot purchase commitments.
Liquidity risk is the risk that Genesis will not be able to obtain financing for its servicing and other needs or be able to meet its
financial obligations as they fall due. If Genesis is unable to generate sufficient sales, renew existing credit facilities or secure
additional financing, its ability to meet its obligations as they become due may be impacted. Based on the Corporation’s operating
history, relationships with lenders and committed sales contracts, management believes that Genesis has the ability to continue to
renew or repay its financial obligations as they become due.
Finance Risk
Genesis uses debt and other forms of financing in its business to execute the corporate strategy. Genesis uses project specific
credit facilities to fund land development costs and construction operating lines for home construction purposes. Should Genesis
be unable to retain or obtain such credit facilities, its ability to achieve its goals could be impacted. In order to reduce finance risk,
Genesis endeavors to match the term of financing with the expected revenues of the underlying land asset.
Management regularly reviews the Corporation’s credit facilities in accordance with review and renewal dates prescribed in the
related agreements. The Corporation has successfully managed the requirements in accordance with project development plans
and operating requirements.
Litigation Risk
All industries are subject to legal claims, with or without merit. The Corporation may be involved from time to time in various legal
proceedings which may include potential liability from its operating activities and, as a public company, possibly from violations of
securities laws or breach of fiduciary duty by its directors or officers. Defense and settlement costs can be substantial, even with
respect to legal claims that have no merit. Due to the inherent uncertainty associated with litigation, the resolution of any legal
proceeding could have a material effect on the financial position and results of operations of the Corporation.
Cybersecurity and Business Continuity Risk
Genesis’ operations, performance and reputation depend on how its technology networks, systems, offices and sensitive
information are protected from cyberattacks. Genesis’ operations and business continuity depend on how well it protects, tests,
maintains and replaces its networks, systems and associated equipment. The protection and effective organization of Genesis’
systems, applications and information repositories are central to the security and continuous operation of its business.
Cyberattacks and threats (such as hacking, computer viruses, denial of service attacks, industrial espionage, unauthorized access
to confidential information, or other breaches of network or IT security) continue to evolve and Genesis’ IT defenses need to be
regularly monitored and adapted. Vulnerabilities could harm Genesis’ brand and reputation as well as its business relationships
and could adversely affect its operations and financial results.
Genesis continues to carefully manage this risk and has the following in place to reduce and/or manage cybersecurity and business
continuity risk: enterprise grade firewalls with the ability to detect port scanning, denial of service attacks and content filtering and
application control to permit or deny traffic on the network. Genesis also has anti-virus software with behaviour based real-time
threat end-point protection, ability to scan and lock down unauthorized system changes and/or file encryption and prevent
suspicious network behaviour. In addition, all incoming and outgoing emails are scanned for content, suspicious URLs and the
existence of recipients within the organization. Regular internal backups of network databases and files are made in case of data
corruption or encryption. Internet facing services are additionally protected by MFA security methods. The Corporation maintains
various types of insurance to cover certain potential risks and regularly evaluates the adequacy of this coverage.
There may be additional risks that management may need to consider as circumstances require. For a more detailed discussion
on the Corporation’s risk factors, refer to Genesis’ AIF for the year ended December 31, 2020 available on SEDAR at
www.sedar.com.
42
30
NON-GAAP MEASURES
Non-GAAP measures do not have any standardized meaning according to IFRS, and therefore may not be comparable to similar
measures presented by other reporting issuers.
Gross margin before write-down is a non-GAAP measure, and therefore may not be comparable to similar measures presented
by other reporting issuers. Gross margin before write-down is calculated by adjusting for write-down of real estate held for
development and sale. Gross margin before write-down of real estate held for development and sale is used to assess the
performance of the business without the effects of the non-cash write-down of real estate held for development and sale.
Management believes it is useful to exclude write-down from the analysis as it could affect the comparability of financial results
between periods and could potentially distort the analysis of trends in business performance. Excluding this item does not imply it
is non-recurring. The most comparable GAAP financial measure is gross margin.
The tables below show the calculation of gross margin before write-down, which is derived from gross margin:
Residential Lots
Residential lot revenues
Gross margin
Write-down of real estate held for development and sale
Gross margin before write-down
Gross margin before write-down (%)
Development Land
Development land revenues
Gross margin
Write-down of real estate held for development and sale
Gross margin before write-down
Gross margin before write-down (%)
Homes
Revenues for homes
Gross margin
Write-down of real estate held for development and sale
Gross margin before write-down
Gross margin before write-down (%)
Three months ended
December 31,
Year ended
December 31,
2020
4,772
2,560
-
2,560
53.6%
2019
12,230
5,471
-
5,471
44.7%
2020
39,189
16,336
-
16,336
41.7%
Three months ended
December 31,
Year ended
December 31,
2020
7,146
509
822
1,331
18.6%
2019
550
12
-
12
2.2%
2020
16,628
(9,291)
10,822
1,531
9.2%
Three months ended
December 31,
Year ended
December 31,
2020
12,198
1,620
-
1,620
13.3%
2019
20,551
3,068
-
3,068
14.9%
2020
75,025
8,670
815
9,485
12.6%
2019
29,071
13,942
-
13,942
48.0%
2019
550
(788)
800
12
2.2%
2019
59,746
8,266
-
8,266
13.8%
43
31
Residential Lots, Development Land and
Homes
Three months ended
December 31,
Year ended
December 31,
Total revenues
Gross margin
Write-down of real estate held for development and sale
Gross margin before write-down
Gross margin before write-down (%)
2020
19,817
4,689
822
5,511
27.8%
2019
26,081
8,551
-
8,551
32.8%
2020
103,933
15,715
11,637
27,352
26.3%
2019
68,097
21,420
800
22,220
32.6%
Net cash / (net debt) is a non-GAAP measure, and therefore may not be comparable to similar measures presented by other
reporting issuers. Net cash / (net debt) is calculated as the difference between cash and cash equivalents and loans and credit
facilities. Management believes that net cash / (net debt) is an important measure to monitor leverage and evaluate the balance
sheet. The most comparable GAAP financial measure is loans and credit facilities.
The table below show the calculation of net cash / (net debt):
Cash and cash equivalents
Loans and credit facilities
Net cash / (net debt)
TRADING AND SHARE STATISTICS
The Corporation’s trading and share statistics for 2020 and 2019 are provided below:
Average daily trading volume
Share price ($/share)
High
Low
Close
Market capitalization at December 31,
Shares outstanding
OTHER
December 31,
2020
December 31,
2019
29,743
21,470
8,273
16,248
51,546
(35,298)
2020
22,219
2.45
0.81
2.09
2019
10,467
3.19
1.96
2.27
87,494
41,863,335
95,703
42,159,927
Additional information relating to the Corporation can be found on SEDAR at www.sedar.com.
ADVISORIES
Cautionary Note Regarding Forward-Looking Statements
This MD&A contains certain statements which constitute forward-looking statements or information (“forward-looking statements”) within the
meaning of applicable securities legislation, including Canadian Securities Administrators’ National Instrument 51-102 - Continuous Disclosure
Obligations, concerning the business, operations and financial performance and condition of Genesis. Generally, these forward-looking
statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”,
“proposed”, “scheduled”, “future”, “likely”, “seeks”, “estimates”, “plans”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”,
or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur”
or “be achieved”.
44
32
Although Genesis believes that the anticipated future results, performance or achievements expressed or implied by forward-looking statements
are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements because
they involve assumptions, known and unknown risks, uncertainties and other factors many of which are beyond the Corporation’s control, which
may cause the actual results, performance or achievements of Genesis to differ materially from anticipated future results, performance or
achievement expressed or implied by such forward-looking statements. Accordingly, Genesis cannot give any assurance that its expectations
will in fact occur and cautions that actual results may differ materially from those in the forward-looking statements.
Forward-looking statements are based on material factors or assumptions made by us with respect to, among other things, opportunities that
may or may not be pursued by us; changes in the real estate industry; fluctuations in the Canadian and Alberta economy; changes in the number
of lots sold and homes delivered per year; and changes in laws or regulations or the interpretation or application of those laws and regulations.
Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are
difficult to predict and many of which are outside of our control. Forward-looking statements in this MD&A and factors that could cause actual
results to differ materially from such statements include, but are not limited to, those outlined in the following table:
Forward-looking statements in this MD&A include, but are not limited to:
•
•
•
•
•
statements relating to the COVID-19 pandemic;
the availability of excess cash on hand and its proposed use;
the future exercise of any right to purchase;
the future payment of dividends and/or common share buybacks;
the anticipated amount and timing of the Sage Hill first phase development
costs;
the timing for removal of the GMO restricting development of the Logan
Landing lands and the Lewiston lands;
the timing and approval of the Logan Landing outline plan and land use
applications, and anticipated commencement of development of these
lands;
the timing and approval of the Lewiston outline plan and land use
applications, and anticipated commencement of development of these
lands;
the timing and approval of the conceptual scheme for the OMNI ASP;
timing for closing of the acquisition of approximately 157 acres of future
residential development land in the City of Calgary, and the anticipated
number of housing units in the community upon completion;
the expected completion dates of various projects that GBG is currently
engaged in, the timeline for pre-construction homes and anticipated lot
yields for projects under development;
plans and strategies surrounding the acquisition of additional land;
commencement of the servicing phase and the construction phase of
various communities and projects;
the financing of such phases and expected increased leverage;
anticipated general economic and business conditions;
potential changes, if any, to the federal mortgage lending rules;
expectations for lot and home prices;
construction starts and completions;
future development costs;
anticipated expenditures on land development activities;
GBG’s sales process and construction margins;
the ability to continue to renew or repay financial obligations and to meet
liabilities as they become due; and
the aggregate number of common shares that may be repurchased by
Genesis’ under the renewed NCIB.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Factors that could cause actual results to differ
materially from those set forth in the forward-
looking statements include, but are not limited to:
•
•
•
•
•
•
•
•
•
•
•
•
•
the impact of contractual arrangements and
incurred obligations on future operations and
liquidity;
local real estate conditions, including the
development of properties in close proximity
to Genesis’ properties;
the uncertainties of real estate development
and acquisition activity;
fluctuations in interest rates;
ability to access and raise capital on
favourable terms, or at all;
not realizing on the anticipated benefits from
transactions or not realizing on such
anticipated benefits within the expected time
frame;
the cyclicality of the oil and gas industry;
changes in the Canadian US dollar exchange
rate;
labour matters;
governmental regulations;
general economic and financial conditions;
stock market volatility; and
other risks and factors described from time to
time in the documents filed by Genesis with
the securities regulators in Canada available
at www.sedar.com, including in this MD&A
under the heading “Risks and Uncertainties”
and the AIF under the heading “Risk Factors”.
The forward-looking statements contained in this MD&A are made as of the date of this MD&A, based only on information currently available to
us, and, except as required by applicable law, Genesis does not undertake any obligation to publicly update or to revise any of the forward-
looking statements, whether as a result of new information, future events or otherwise.
45
33
CONSOLIDATED
FINANCIAL
STATEMENTS
DECEMBER 31, 2020 AND 2019
46
MANAGEMENT’S REPORT
To the Shareholders of Genesis Land Development Corp.:
The consolidated financial statements and all information in the
Management’s Discussion and Analysis (“MD&A”) are the responsibility
of management. The consolidated financial statements have been
prepared by management in accordance with the accounting
policies in the notes to the consolidated financial statements. In the
opinion of management, the consolidated financial statements have
been prepared within acceptable limits of materiality, and are in
accordance with International Financial Reporting Standards (“IFRS”)
appropriate in the circumstances. The financial information in the
MD&A has been reviewed by management to ensure consistency
with the consolidated financial statements.
Management maintains appropriate systems of internal control.
Policies and procedures are designed to give reasonable assurance
that transactions are properly authorized, assets are safeguarded
and financial records properly maintained to provide reliable
information for the preparation of consolidated financial statements.
The consolidated financial statements have been further examined
by the Board of Directors and by its Audit Committee, which meets
regularly with the auditors and management to review the activities
of each. The Audit Committee is composed of three independent
directors, and reports to the Board of Directors.
MNP LLP, an independent firm of Chartered Professional Accountants,
was engaged to audit the consolidated financial statements in
accordance with Canadian generally accepted auditing standards
and IFRS to provide an independent auditors’ opinion.
IAIN STEWART
President and Chief Executive Officer
WAYNE KING
Chief Financial Officer
March 1, 2021
47
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Genesis Land Development Corp.:
Basis for Opinion
Opinion
We have audited the consolidated financial statements of Genesis
Land Development Corp. and its subsidiaries (the “Corporation”),
which comprise the consolidated balance sheets as at December
31, 2020 and December 31, 2019, and the consolidated statements
of comprehensive income (loss), changes in equity and cash flows
for the years then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements
present fairly, in all material respects, the consolidated financial
position of the Corporation as at December 31, 2020 and December
31, 2019, and its consolidated financial performance and its
consolidated cash flows for the years then ended in accordance
with International Financial Reporting Standards.
We conducted our audits in accordance with Canadian generally
accepted auditing standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities
for the Audit of the Consolidated Financial Statements section of
our report. We are independent of the Corporation in accordance
with the ethical requirements that are relevant to our audits of
the consolidated financial statements in Canada, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in
the context of our audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
KEY AUDIT MATTERS DESCRIPTION
AUDIT RESPONSE
Real Estate Held for Development and Sale
As at December 31, 2020, approximately 73% of the Corporation’s
assets or $193.3 million are comprised of real estate held for
development and sale (refer to Note 5). As described in Note 2e,
real estate held for development and sale is measured at lower of
cost or net realizable value.
The determination of the net realizable value of real estate
held for development and sale is considered to be a significant
estimate. Each valuation requires consideration of various inputs
including, but not limited to, the type of real estate, its location,
stage of development and comparable market transactions. We
therefore considered real estate held for development and sale
to be a key audit matter.
We responded to this matter by performing audit procedures in
relation to real estate held for development and sale. Our audit
work in relation to this included, but was not restricted to, the
following:
• We obtained the independent appraisals completed for
the Corporation’s real estate holdings. We verified that
management had appropriately deducted future development
costs and estimated selling costs from the appraised values to
determine the net realizable value. We compared the carrying
value to the estimated net realizable value.
• We obtained reliance letters from the independent appraisers
and confirmed their professional qualifications and their role
as specialists.
• We engaged our internal valuations group to review
the independent appraisals to verify that the valuation
methodologies used by the independent appraisers was
generally accepted.
• For real estate held for development and sale in which no
appraisal was obtained, we assessed the carrying value based
on recent sales made in the various phases. We performed a
recalculation using the current year average sales price,
48
Provision for Future Development Costs
As described in Notes 2n) and 12, the Corporation has obligations
related to the completion of land under development and housing
projects. The Corporation recognizes a liability for the future costs
to be incurred.
The liability recognized for future land development and housing
project costs involves inputs which rely on significant judgment
from management, as well as significant reliance on the estimates
made by third party engineers and architects. As such, future
development and housing project costs have a high degree of
subjectivity. We therefore considered the provision for future
development costs to be a key audit matter.
multiplied by the number of lots remaining in each phase. We
ensured expected future development costs and estimated
selling costs were applied to the values in order to analyze
the reasonability of net realizable value when compared to the
carrying values in the general ledger.
• We assessed the appropriateness of the disclosures relating
to the assumptions used in real estate held for development
and sale in the notes to the consolidated financial statements.
We responded to this matter by performing procedures in relation
to the provision for future land development and housing project
costs. Our audit work in relation to this included, but was not
restricted to, the following:
• We obtained copies of the estimated cost reports prepared by
independent experts (engineers and architects) engaged by
management.
• We obtained reliance letters from the independent appraisers
and confirmed their professional qualifications and their role
as specialists.
• For internally estimated future development costs, we had
thorough discussions with managers in the land and home
divisions of the Corporation to understand management’s
estimation process. We assessed the reasonableness of the
internal estimates based on known historical and current
information. We compared the prior year costs to complete
(“CTC”) balance to current year CTC by community and
analyzed significant variances to ensure that the change in
CTC from the prior year is reasonable.
• We also compared estimates in managements calculation to
the reports obtained from independent engineer specialists.
In addition, we recalculated the allocation of common land
development costs to specific development phases and
completed analytical procedures based on the percentage of
lots sold to identify unexpected and unusual variances in the
expected CTC balance.
• We performed a look back analysis by comparing the previous
provision for future development cost estimates to subsequent
actual costs incurred to gain comfort over management’s
process for determining estimates of future development
costs.
• We assessed the appropriateness of the disclosures relating
to the assumptions used in the provision for future land
development costs in the notes to the consolidated financial
statements.
49
Other Information
Management is responsible for the other information. The other
information comprises:
• Management’s Discussion and Analysis.
• The information, other than the consolidated financial statements
and our auditor’s report thereon, in the Annual Report.
Our opinion on the consolidated financial statements does not cover
the other information and we do not and will not express any form of
assurance conclusion thereon.
In connection with our audits of the consolidated financial statements,
our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements or
our knowledge obtained in the audits or otherwise appears to be
materially misstated.
We obtained Management’s Discussion and Analysis prior to
the date of this auditor’s report. If, based on the work we have
performed on the other information, we conclude that there is a
material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the
date of the auditor’s report. If, based on the work we will perform
on this other information, we conclude that there is a material
misstatement therein, we are required to communicate the matter to
those charged with governance.
Responsibilities of Management and Those Charged with
Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation
of the consolidated financial statements in accordance with
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.
In preparing the consolidated financial statements, management is
responsible for assessing the Corporation’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
management either intends to liquidate the Corporation or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the
Corporation’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing
standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted
auditing standards, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Corporation’s internal control.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
• disclosures made by management.
• Conclude on the appropriateness of management’s use of the
going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the
Corporation’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in
the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the
Corporation to cease to continue as a going concern.
50
• Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the Corporation to express an opinion on the consolidated
financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audits
and significant audit findings, including any significant deficiencies
in internal control that we identify during our audits.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
the matters communicated with
From
those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements
of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
The engagement partner on the audit resulting in this independent
auditor’s report is Stephen Bonnell.
Chartered Professional Accountants
Calgary, Alberta
March 1, 2021
51
GENESIS LAND DEVELOPMENT CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars)
Assets
Real estate held for development and sale
Amounts receivable
Vendor-take-back mortgage receivable
Investments in land development entities
Other operating assets
Right-of-use assets
Deferred tax assets
Income tax recoverable
Cash and cash equivalents
Total assets
Liabilities
Loans and credit facilities
Dividend payable
Customer deposits
Accounts payable and accrued liabilities
Lease liabilities
Provision for future development costs
Total liabilities
Commitments and contingencies
Subsequent events
Equity
Share capital
Contributed surplus
Retained earnings
Shareholders’ equity
Non-controlling interest
Total equity
Notes
December 31, 2020
December 31, 2019
5
6
7
8
9
10
11
13
14d
10
12
19
13,
14d,15a,
19a, 20, 24
14
15c
23
193,309
11,006
2,719
5,608
14,750
712
8,088
559
29,743
266,494
21,470
6,280
3,889
14,092
790
20,213
66,734
52,489
868
134,319
187,676
12,084
199,760
222,269
6,131
20,558
5,608
15,251
192
8,867
1,144
16,248
296,268
51,546
-
4,592
7,900
233
19,102
83,373
52,867
603
140,487
193,957
18,938
212,895
Total liabilities and equity
266,494
296,268
See accompanying notes to the consolidated financial statements
ON BEHALF OF THE BOARD:
/s/ Stephen J. Griggs
Director and Chair
Director and Chair of the Audit Committee
/s/ Steven Glover
52
7
GENESIS LAND DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31, 2020 and 2019
(In thousands of Canadian dollars except per share amounts)
Year ended December 31,
Notes
2020
2019
Revenues
Sales revenue
Other revenue
Direct cost of sales
Write-down of real estate held for development and sale
Gross margin
General and administrative
Selling and marketing
Earnings from operations
Finance income
Finance expense
(Loss) earnings before income taxes
Income tax recovery (expense)
Net (loss) earnings being comprehensive (loss) earnings
Attributable to non-controlling interest
Attributable to equity shareholders
22
5
16
17
18
11
23
Net earnings per share - basic and diluted
14b
See accompanying notes to the consolidated financial statements
103,443
490
103,933
(76,581)
(11,637)
(88,218)
15,715
(10,408)
(4,463)
(14,871)
844
1,497
(2,593)
(252)
47
(205)
(404)
199
0.00
67,530
567
68,097
(45,877)
(800)
(46,677)
21,420
(11,220)
(4,234)
(15,454)
5,966
1,489
(1,605)
5,850
(2,815)
3,035
1,334
1,701
0.04
53
8
GENESIS LAND DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
GENESIS LAND DEVELOPMENT CORP.
For the years ended December 31, 2020 and 2019
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands of Canadian dollars except number of shares)
For the years ended December 31, 2020 and 2019
(In thousands of Canadian dollars except number of shares)
Equity attributable to Corporation’s shareholders
Equity attributable to Corporation’s shareholders
Common shares - Issued
Common shares - Issued
Notes
At December 31, 2018
At December 31, 2018
Share-based payments
Share-based payments
15c
14c
Normal course issuer bid
Normal course issuer bid
Distributions
Distributions
Net earnings being comprehensive
Net earnings being comprehensive
earnings and other
earnings and other
At December 31, 2019
At December 31, 2019
Notes
Number of Shares
Number of Shares
Amount
42,183,621
42,183,621
52,898
15c
14c
-
-
-
(23,694)
(23,694)
(31)
-
-
42,159,927
-
-
-
-
52,867
42,159,927
Contributed
Amount
Surplus
52,898
259
-
344
-
(31)
-
-
-
-
603
52,867
Contributed
Retained
Surplus
Earnings
259
138,813
344
-
(27)
-
1,701
-
-
-
Retained
Total
Shareholders’
Earnings
Equity
Total
Shareholders’
Non-
Controlling
Equity
Interest
Total Equity
Non-
Controlling
Interest
Total Equity
138,813
191,970
344
(58)
-
-
(27)
-
1,701
1,701
17,799
191,970
209,769
17,799
209,769
-
-
(518)
1,657
344
(58)
-
1,701
344
(58)
(518)
3,358
-
-
(518)
1,657
140,487
193,957
18,938
212,895
603
140,487
193,957
18,938
212,895
At December 31, 2019
42,159,927
52,867
603
140,487
193,957
18,938
212,895
15c
14c
14d
5, 23
Share-based payments
At December 31, 2019
Normal course issuer bid
Share-based payments
Dividends declared
Normal course issuer bid
Distributions
Dividends declared
Net earnings (loss) being
comprehensive earnings (loss) and
Distributions
other
Net earnings (loss) being
At December 31, 2020
comprehensive earnings (loss) and
other
15c
14c
14d
5, 23
-
42,159,927
-
(296,592)
(378)
-
-
-
-
-
-
-
(296,592)
-
-
41,863,335
52,489
-
265
52,867
-
-
-
(378)
-
-
-
-
868
-
-
603
(87)
265
(6,280)
-
199
134,319
-
-
-
-
265
140,487
(465)
(6,280)
-
(87)
-
(6,280)
-
193,957
-
265
265
(465)
-
(6,409)
(465)
(6,280)
(6,409)
(6,280)
18,938
212,895
-
-
-
199
-
(445)
(246)
-
(6,409)
187,676
12,084
199,760
199
199
(445)
(246)
See accompanying notes to the consolidated financial statements
At December 31, 2020
41,863,335
52,489
868
134,319
187,676
12,084
199,760
See accompanying notes to the consolidated financial statements
54
344
(58)
(518)
3,358
265
(465)
(6,280)
(6,409)
9
9
GENESIS LAND DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2020 and 2019
(In thousands of Canadian dollars)
Notes
Year ended December 31,
2020
2019
Operating activities
Receipts from residential lot sales
Receipts from development land sales
Receipts from residential home sales
Other cash (payments) / receipts
Paid for land development
Paid for lots / land acquisition
Paid for residential home construction
Paid to suppliers and employees
Interest received
Income tax refunds / (payments)
Cash flows from operating activities
Investing activities
Acquisition of equipment
Change in restricted cash
Investments in land development entities
Cash flows used in investing activities
Financing activities
Advances from loans and credit facilities
Repayments of loans and credit facilities
Payment on vendor-take-back mortgage payable
Interest and fees paid on loans and credit facilities
Distributions to unit holders of limited partnerships
Repurchase and cancellation of shares under NCIB
Cash flows used in financing activities
Change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
See accompanying notes to the consolidated financial statements
7,272
33,409
75,255
(421)
(17,574)
(4,246)
(34,311)
(14,309)
1,497
1,411
47,983
(815)
(256)
-
(1,071)
17,241
(40,539)
(8,000)
(1,337)
(317)
(465)
(33,417)
13,495
16,248
29,743
12,334
550
60,543
856
(20,503)
(5,101)
(25,082)
(14,405)
1,489
(1,144)
9,537
(242)
(10,364)
(5,608)
(16,214)
39,847
(31,295)
(8,000)
(1,093)
(518)
(58)
(1,117)
(7,794)
24,042
16,248
9
8
13b
5
14c
55
10
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
1.
DESCRIPTION OF BUSINESS
Genesis Land Development Corp. (the “Corporation” or “Genesis”) was incorporated under the Business Corporation Act (Alberta)
on December 2, 1997.
The Corporation is engaged in the acquisition, development and sale of land, residential lots and homes primarily in the greater
Calgary area. The Corporation reports its activities as two business segments: land development and home building.
The Corporation is listed for trading on the Toronto Stock Exchange under the symbol “GDC”. Genesis’ head office and registered
office are located at 6240, 333 - 96 Ave. NE, Calgary, AB T3K 0S3.
Despite limited impact in 2020, the Corporation remains cautious going forward as the extent and duration of the current economic
conditions as a result of regulatory aspects of COVID-19 are unpredictable and unknown.
In response to COVID-19, the Corporation has been able to adapt its operations, capital investments and marketing approaches to
address current conditions and had positive results from these activities in 2020. The Corporation is continuing to focus on managing
cash, protecting the value of its assets and limiting financing risks while ensuring that all health and safety recommendations of
regulatory authorities are being followed and, when feasible, exceeded.
The consolidated financial statements of Genesis were approved for issuance by the Board of Directors on March 1, 2021.
2.
SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies of the Corporation are set out below. These policies have been consistently applied to each of the
years presented, unless otherwise indicated.
a)
Statement of compliance
The 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”).
b) Basis of presentation
The consolidated financial statements have been prepared under the historical cost convention except for the financial assets
classified as fair value through profit or loss and stock options and deferred share units that have been measured at fair value.
The consolidated financial statements are presented in Canadian dollars, which is the Corporation’s functional currency, and
all values are rounded to the nearest thousand, except per share values and where otherwise indicated.
56
11
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
2.
c)
SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of consolidation
The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiaries, as well as
the consolidated revenues, expenses, assets, liabilities and cash flows of limited partnership entities that the Corporation
controls. When the Corporation has less than 50% equity ownership in these limited partnership entities, the Corporation may
still have control over these entities’ activities, projects, financial and operating policies due to contractual arrangements.
Accordingly, the accounts of the limited partnerships have been consolidated in the Corporation’s financial statements.
Controlled entities are fully consolidated from the date of acquisition, being the date on which the Corporation obtains control,
and continues to be consolidated until the date when such control ceases. Control exists when the Corporation has the power,
directly or indirectly, to govern the financial and operating policies of an entity. All intra-group transactions, balances, dividends
and unrealized gains and losses resulting from intra-group transactions are eliminated on consolidation.
Non-controlling interests represent the portion of profit or loss and net assets not owned by the Corporation and are presented
separately from shareholders’ equity in the consolidated statements of comprehensive income (loss) and within equity in the
consolidated balance sheets. Losses within a controlled entity are attributed to the non-controlling interest even if that results
in a deficit balance.
d) Revenue recognition
(i) Residential lot sales
Lot sales to third parties are recognized when the Corporation’s performance obligations are satisfied, and transfer of
control has passed to the purchaser.
Performance obligations are considered satisfied when the Corporation has the ability to release the lot to the purchaser
after agreed to services pertaining to the property have been substantially performed.
Indicators of transfer of control to a purchaser include a present right to payment at the closing date of the contract, the
purchaser having full access to the lot and the purchaser’s ability to obtain a building permit from the relevant authority,
all indicating that significant risk and rewards of ownership have been transferred to the purchaser who has signed a
contract and has made a minimum 15% non-refundable deposit. In order to mitigate credit risk, the Corporation does
not transfer title to sold residential lots until full payment is received.
Deposits received upon signing of contracts for purchases of lots on which revenue recognition criteria have not been
met are recorded as customer deposits.
(ii) Development land sales
Development land sales to third parties are recognized when the Corporation’s performance obligations are satisfied,
and transfer of control has passed to the purchaser.
Performance obligations are satisfied after agreed to services pertaining to the property have been substantially
performed.
Indications of transfer of control to a purchaser include registering the subdivision plan with the land titles office and
transferring title of the land to the purchaser on receipt of full payment, all indicating significant risk and rewards of
ownership are transferred to the purchaser. In situations where extended payment terms are provided to a purchaser,
an appropriate rate of interest is included, and the Corporation secures appropriate security for the remaining unpaid
portion before title to the land is transferred to the purchaser.
Deposits received upon signing of contracts for purchases of land on which revenue recognition criteria have not been
met are recorded as customer deposits.
57
12
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(iii) Residential home sales
Home sales to third parties are recognized when the Corporation’s performance obligations are satisfied, and transfer
of control has passed to the purchaser.
Performance obligations are considered satisfied when title to the completed home is conveyed to the purchaser, at
which time all proceeds are received or collection is reasonably assured.
Deposits received from customers upon signing of contracts for purchases of completed homes for which revenue
recognition criteria have not been met are recorded as customer deposits.
(iv) Finance income
Finance income is recognized as it accrues using the effective interest rate method.
(v) Other revenue
Rental income is recognized on a straight-line basis over the term of the rental agreement. Rental income is incidental
to ownership of real estate and does not result in classification of real estate as investment property. All real estate is
classified as inventory. Deposits forfeited are recognized as income.
e) Real estate held for development and sale
Land under development, land held for future development and housing projects under construction are inventory and are
measured at the lower of cost and estimated net realizable value (“NRV”). NRV is the estimated selling price in the ordinary
course of the business at the balance sheet date, less costs to complete and estimated selling costs.
Cost includes land acquisition costs, other direct costs of development and construction, borrowing costs, property taxes and
legal costs. These costs are allocated to each phase of the project in proportion to saleable acreage.
f)
Borrowing costs
Borrowing costs consist of interest and other costs incurred in connection with the borrowing of the funds. The acquisition or
construction of real estate assets takes a substantial period of time to develop it for its intended use or sale. Borrowing costs
attributable to real estate held for development and sale are recorded as part of the respective inventory carrying cost from the
date of commencement of development work until the date of completion. All other borrowing costs are expensed in the period
in which they are incurred. The recording of interest to inventory is suspended if the project’s development is suspended for a
prolonged period.
g)
Property and equipment
Property and equipment is stated at cost, net of any accumulated depreciation and accumulated impairment losses.
Depreciation is provided on all operating property and equipment based on the straight-line method over the estimated useful
lives of the property and equipment. The useful lives of the properties are as follows:
• Vehicles and other equipment
• Office equipment and furniture
• Computer hardware and software
• Showhome furniture
• Leasehold improvements
5 years
7 years
3 years
3 years
Lesser of useful life of the improvement or the lease term
58
13
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
h)
Income taxes
Income tax is recognized in the consolidated statements of comprehensive income (loss) except to the extent that it related to
items recognized directly in equity, in which case it is recognized in equity.
Income taxes comprise the following:
(i) Current income tax
Current income tax assets and liabilities are measured at the amount expected to be paid to tax authorities, net of
recoveries, using tax rates and laws that are enacted or substantively enacted as at the balance sheet date.
(ii) Deferred tax
Deferred tax is provided at the balance sheet date using the liability method on all temporary differences between the
tax basis of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets are recognized to the extent that it is probable that taxable income will be available, against which
deductible temporary differences, carried forward tax credits or tax losses can be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at
the balance sheet date.
The Corporation’s consolidated financial statements include some entities that are limited partnerships (note 23) and
are not subject to income taxes. The income or loss for Canadian tax purposes is attributable to the taxable income of
the limited partners in accordance with the provisions of the Income Tax Act (Canada). The calculation of income tax
expense reflects the exclusion of taxable income allocated to limited partners that form part of the non-controlling
interest.
i)
Cash and cash equivalents
Cash and cash equivalents consist of cash held with banks and short-term deposits of original maturity of three months or less.
j)
Leases
The Corporation adopted IFRS 16, “Leases” as of January 1, 2019 and elected to use the modified retrospective approach in
its adoption of IFRS 16. Prior to that, operating lease payments were recognized as an operating expense in the consolidated
statements of comprehensive income (loss) on a straight-line basis over the lease term.
The modified retrospective method does not require restatement of prior period financial information as the Corporation may
recognize the cumulative effect as an adjustment to opening retained earnings and applies the standard prospectively.
The Corporation recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset
is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier
of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use
assets are determined on the same basis as those of property and equipment.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate, if there is a change in the Corporation’s estimate of the
amount expected to be payable under a residual value guarantee, or if the Corporation changes its assessment of whether it
will exercise a purchase, extension or termination option.
59
14
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
The Corporation applied the following practical expedients:
(i)
(ii)
The Corporation elected not to recognize right-of-use assets and lease liabilities for short-term leases of machinery
with a lease term of 12 months or less and leases of low-value assets. The Corporation recognizes the lease
payments associated with these leases as an expense on a straight-line basis over the lease term.
The Corporation used hindsight in determining the lease term where the contract contained an option to extend or
terminate the lease.
k)
Financial assets
Financial assets are classified and measured based on the business model in which they are held and the characteristics of
their contractual cash flows. The three primary measurement categories for financial assets are: amortized cost, fair value
through profit and loss (“FVTPL”), and fair value through other comprehensive income (“FVOCI”).
Financial assets measured at amortized cost are assets that are held within a business model whose objective is to hold assets
to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding. Financial instruments classified as amortized cost are initially
measured at fair value plus directly attributable transaction costs and are subsequently measured at amortized cost using the
effective interest rate method, less impairment. The amortization and losses arising from impairment are recognized in the
consolidated statements of comprehensive income (loss).
Financial assets at FVOCI are assets that are held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets and its contractual terms give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Financial assets at FVTPL are assets that do not meet the criteria for amortized cost or FVOCI. Financial assets classified as
FVTPL are carried on the balance sheet at fair value with changes in fair value recognized in the consolidated statements of
comprehensive income. Transaction costs are expensed as incurred.
Financial assets are derecognized when the contractual rights to the cash flows from the asset expire, or the Corporation
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the
risks and rewards of ownership of the financial assets are transferred. Any interest in transferred financial assets that is created
or retained is recognized as a separate asset or liability.
Loss allowance for trade receivables is calculated using the expected lifetime credit loss model and recorded at the time of
initial recognition. Title to land sold is typically transferred on receipt of full payment from the purchaser. In situations where
extended payment terms are provided to a purchaser, the Corporation secures adequate security for the remaining unpaid
portion before title to the land is transferred to the purchaser. The Corporation experiences no material impact of the loss
allowance for trade receivables due to the above. The expected loss allowance using the lifetime credit loss approach, has no
material impact on the consolidated financial statements.
The Corporation recognizes bad debt expense or recovery relating to amounts receivable on sold lots, net of the value of the
related sold lots, on the termination of the relevant agreement, which are taken back into the Corporation’s lot inventory. Bad
debt expense or recovery is included in the Corporation’s general and administrative expenses.
l)
Financial liabilities
The classification of financial liabilities is determined by the Corporation at initial recognition. The classification categories are:
amortized cost and FVTPL.
Financial liabilities classified as amortized cost are financial liabilities initially measured at fair value less directly attributable
transaction costs and are subsequently measured at amortized cost using the effective interest method. Interest expense is
recognized in the consolidated statements of comprehensive income.
Financial liabilities measured at FVTPL are financial liabilities measured at fair value with changes in fair value and interest
expense recognized in the consolidated statements of comprehensive income.
Financial liabilities are derecognized when the contractual obligations are discharged, cancelled or expire.
60
15
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial assets and financial liabilities are offset, and the net amount presented on the balance sheet when, and only when,
the Corporation has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and
settle the liability simultaneously.
The Corporation’s financial instruments (assets and liabilities) are classified as follows:
• Cash
• Cash equivalents
• Deposits
• Equity investments in land development entities
• Restricted cash
• Amounts receivable
• Vendor-take-back mortgage receivable
• Accounts payable and accrued liabilities
•
Loans and credit facilities
m) Earnings per share
FVTPL
Amortized cost
Amortized cost
FVTPL
FVTPL
Amortized cost
Amortized cost
Amortized cost
Amortized cost
The amount of basic earnings per share is calculated by dividing the comprehensive earnings attributable to equity holders by
the weighted average number of shares outstanding during the period. The diluted earnings per share amount is calculated
giving effect to the potential dilution that would occur if stock options were exercised. The treasury stock method is used to
determine the dilutive effect of stock options.
n)
Provision for future development costs
The Corporation sells land, lots and homes for which it is responsible to pay for future development costs. For land
development, the provision for future development costs represents the estimated remaining construction costs related to
previously sold land, including all direct and indirect costs expected to be incurred during the remainder of the servicing period,
net of expected recoveries. The provision is reviewed periodically and, when the estimate is known to be different from the
actual costs incurred or expected to be incurred, an adjustment is made to the provision for future development costs and a
corresponding adjustment is made to land under development and/or cost of sales. For home building, the provision for future
development costs represents the costs likely to be incurred on remaining seasonal work and estimated warranty charges over
the one-year warranty period.
o)
Share-based compensation
The Corporation has a long-term incentive plan comprised of a stock option plan and a deferred share unit (“DSU”) plan.
(i) Stock options
The Corporation’s stock option plan allows for the recipients to purchase common shares. Vesting provisions and
exercise prices are set at the time of issuance by the Board of Directors. Options vest over a number of years on
various anniversary dates from the date of the original grant. Options are issued with exercise prices not less than the
fair market value of the common shares at the date of grant and with terms not exceeding ten years from the date of
grant.
The fair value of share-based payments related to the stock options granted is calculated at the grant date using the
Black-Scholes Option-Pricing Model. The costs of the share-based payments are recognized on a proportionate basis
over the related vesting period of each tranche of the grant as an expense with recognition of the corresponding
increase in contributed surplus. Any consideration paid on the exercise of stock options, together with any related
contributed surplus, is credited to the share capital account.
Share-based payments may be settled in cash or equity at the sole discretion of the Corporation and are accounted
for as equity-settled plans.
The dilutive effect of outstanding options is reflected in the computation of earnings per share.
61
16
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(ii) Deferred share unit plan
DSUs are notional common shares of the Corporation that do not settle until the recipient leaves the Corporation. The
Corporation’s DSU plan allows for the participants to receive cash-settled DSUs. The fair value of DSUs and the cash
payment, when made, is based on the common share price of the Corporation at the relevant time. Vesting provisions
for DSUs are determined at the time of issuance.
The fair value of the DSUs is recognized as share-based compensation expense, with a corresponding increase in
accrued liabilities over the vesting period. The amount recognized as an expense is based on the estimate of the
number of DSUs expected to vest. DSUs are measured at their fair value at each reporting period on a mark-to-market
basis. The accrued liability is reduced on the cash payout of any DSU.
p)
Significant accounting judgments and estimates
The preparation of consolidated financial statements requires management to make judgments and estimates that affect the
reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date.
On an ongoing basis, management evaluates its judgments and estimates in relation to revenues, expenses, assets and
liabilities. Management uses historical experience and various other factors it believes to be reasonable under the given
circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates under different
assumptions and conditions.
The following are the most significant accounting judgments and estimates made by the Corporation in applying accounting
policies:
Judgments
(i) Revenue recognition
Revenue recognition for development lands requires judgment to determine when performance obligations are satisfied
and transfer of control has passed to the purchaser. The Corporation reviews each contract and evaluates all the factors
to determine the appropriate date to recognize revenue.
(ii) Consolidation
The Corporation applies judgment in determining control over certain limited partnerships based on a review of all
contractual agreements to determine if the Corporation has control over the activities, projects, financial and operating
policies of the limited partnerships.
(iii)
Income taxes
The Corporation applies judgment in determining the total provision for current and deferred taxes. There are many
transactions and calculations for which the ultimate tax determination and timing of payment is uncertain due to the
interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income.
Given the long-term nature and complexity of the business, differences arising between the actual results and the
assumptions made, or future changes to such assumptions, could necessitate future adjustments to the provision for
current and deferred taxes.
(iv) Net realizable value (“NRV”)
NRV for land and housing projects held for development and sale is estimated with reference to market prices and
conditions existing at the balance sheet date. This is determined by the Corporation having considered suitable external
advice including independent real estate appraisers and recent market transactions of similar and adjacent lands and
housing projects in the same geographic area.
62
17
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(v) Legal contingencies
The Corporation applies judgment as it relates to the outcome of legal proceedings to determine whether a provision
and disclosure in the consolidated financial statements is required. Among the factors considered in making such
judgments are the nature of litigation, claim or assessment, the legal process and potential level of damages, the
progress of the case, the opinions or views of legal advisers and any decision of the Corporation’s management as to
how it will respond to the litigation, claim or assessment.
Estimates
(i)
Provision for future development costs
Changes in estimated future development costs, which are generally provided by third party service providers, directly
impact the amount recorded for the future development liability, cost of sales, gross margin and, in some cases, the
value of real estate under development and held for sale. This liability is subject to uncertainty due to the long time
frames involved, specifically in land development.
(ii)
Impairment of real estate held for development and sale
The Corporation estimates the NRV of real estate held for development and sale and investments in land development
entities at least annually for impairment or whenever events or changes in circumstances indicate the carrying value
may exceed NRV. The estimate is based on valuations conducted by independent real estate appraisers and other
third-party advisors and is also based on housing projects in the same geographic area.
(iii) Valuation of amounts receivable and vendor-take-back mortgage receivable
Amounts receivable are reviewed on a regular basis to estimate recoverability of balances. Any amounts becoming
overdue and any known issues about the financial condition of debtors are taken into account when estimating
recoverability.
(iv) Share-based compensation
The fair values of equity-settled share-based payments are estimated using the Black-Scholes options pricing model.
These estimates are based on the Corporation’s share price and on several assumptions, including the risk-free interest
rate, the future forfeiture rate, time to expiry, and the expected volatility of the Corporation's share price. Accordingly,
these estimates are subject to measurement uncertainty.
(v)
Investments in land development entities
The fair value of investments in land development entities are based on the market approach method. This method
uses prices and other relevant information that have been generated by market transactions involving identical or
comparable assets.
3.
STANDARDS AND AMENDMENTS TO EXISTING STANDARDS DURING 2020
The Corporation adopted no new IFRSs and interpretations during 2020.
4.
NEW ACCOUNTING PRONOUNCEMENTS
There were no new accounting pronouncements or amendments to existing standards that impacted or are expected to impact the
Corporation in 2020 and 2021.
63
18
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
5.
REAL ESTATE HELD FOR DEVELOPMENT AND SALE
Lots, Multi-
family &
Commercial
Parcels
Land Held
for
Development
Home
Building
Total
Limited
Partnerships
Intra-
segment
Elimination
Consolidated
Total
Gross book value
As at December 31, 2019
70,776
134,631
21,365
226,772
13,605
(4,194)
236,183
Development activities
Transfer
Sold
5,679
2,330
11,739
30,873
48,291
(2,330)
-
-
289
-
(30,086)
(2,228)
(35,500)
(67,814)
(1,899)
-
-
-
48,580
-
(69,713)
As at December 31, 2020
48,699
141,812
16,738
207,249
11,995
(4,194)
215,050
Provision for write-downs
As at December 31, 2019
1,639
8,825
-
10,464
Sold
Transfer
Write-down of real estate held for
development and sale
As at December 31, 2020
Net book value
As at December 31, 2019
As at December 31, 2020
(1,639)
5,169
5,169
69,137
43,530
-
(1,982)
(267)
(2,249)
1,639
5,653
14,135
-
815
548
-
11,637
19,852
3,450
(1,561)
-
-
1,889
-
-
-
-
-
13,914
(3,810)
-
11,637
21,741
125,806
21,365
216,308
10,155
(4,194)
222,269
127,677
16,190
187,397
10,106
(4,194)
193,309
During the year ended December 31, 2020, no interest (2019 - $158) was capitalized as a component of development activities.
During the year ended December 31, 2020, the Corporation closed the sales of five development land parcels for $16,628 (2019 -
$550). This included the sale of a 320-acre parcel of development land, located in British Columbia, belonging to a limited partnership
for $320. The limited partnership made a distribution of $317 to its unit holders from the proceeds of this sale.
The sale of another parcel for $8,987 was structured as a cash payment of $3,768 on closing with the remainder being in the form of
a $5,219 vendor-take-back mortgage receivable at an interest rate of 5% per annum. The vendor-take-back mortgage is repayable
in three installments. Two installments of $1,250 each, were paid on March 31, 2020 and June 30, 2020 and the last installment of
$2,719 is due on December 15, 2021.
During the year ended December 31, 2020, the Corporation recorded a net write-down of $10,822 (2019 - $800) on three parcels of
land inventory and a parcel of land held for development. The write-down was taken based on third-party assessment and offers
received to reflect the estimated returns realizable on completion of development and sale of these lands. The Corporation also
recorded a write-down of $815 (2019 - $Nil) relating to a townhouse project. The write-down was taken to reflect the estimated returns
realizable on the sale of completed townhouse units and on the completion of construction and sale of units that are partially
constructed.
64
19
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
6.
AMOUNTS RECEIVABLE
Agreements receivable
Other receivables
2020
10,466
540
11,006
2019
5,515
616
6,131
Agreements receivable for lot sales have various terms of repayment with purchasers generally having between 6 and 24 months to
pay the balance owing for the purchased lots. On receipt of a minimum 15% non-refundable deposit the purchaser is deemed to
have control over the lot and is permitted to start construction. In order to mitigate credit risk, the Corporation does not transfer title
to sold residential lots until full payment is received. Certain agreements receivable and mortgages receivable, if any, are interest
bearing.
7.
VENDOR-TAKE-BACK MORTGAGE RECEIVABLE
Vendor-take-back mortgage receivable – purchased from a limited partnership (1)
Vendor-take-back mortgage receivable – granted on sale of a parcel of land
2020
-
2,719
2,719
2019
20,558
-
20,558
(1) Includes accrued interest
Limited Partnership Land Pool (“LPLP 2007”), a limited partnership controlled by the Corporation closed the sale of a 319-acre parcel
of land on December 15, 2017 for gross proceeds of $41,000. LPLP 2007 received $20,500 in cash and a $20,500 three-year
vendor-take-back first mortgage bearing interest at 6.5% per annum. Interest on the vendor-take-back mortgage receivable is payable
annually, in arrears. On October 17, 2019, the Corporation completed a transaction with LPLP 2007, whereby the Corporation
acquired the third-party, secured vendor-take-back mortgage receivable held by LPLP 2007 for $22,020. The vendor-take-back
mortgage receivable was due by December 15, 2020. The Corporation received the principal amount of $20,500 along with the
interest of $1,292 (2019 - $1,333) in December 2020.
During 2020, the Corporation closed the sale of an 8.17-acre parcel of development land in northwest Calgary for $8,987 in
consideration for a cash payment of $3,768 and a $5,219 vendor-take-back mortgage with an interest rate of 5% per annum. The
vendor-take-back mortgage is repayable in three installments of which two installments of $1,250 each were paid on March 31, 2020
and June 30, 2020. The last installment of $2,719 is due on December 15, 2021. The interest of $127 was received during 2020
(2019 - $Nil).
65
20
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
8.
INVESTMENTS IN LAND DEVELOPMENT ENTITIES
Investment in land development limited partnership – 5% interest
Investment in land development joint venture – 8% interest
9.
OTHER OPERATING ASSETS
Deposits
Prepayments
Restricted cash
Property and equipment
2020
1,850
3,758
5,608
2020
5,960
480
7,351
959
14,750
2019
1,850
3,758
5,608
2019
2,357
370
12,077
447
15,251
Deposits include amounts paid to development authorities as security to guarantee the completion of construction projects under
development. The deposits are refundable upon completion of the related projects and earn interest at rates approximating those
earned on guaranteed investment certificates. The Corporation has also provided letters of credit and surety bonds as security to
guarantee the completion of certain construction projects (see note 19b for additional information). Deposits also include amounts
paid towards purchase of lots and land. Restricted cash includes $4,009 which is part of $10,360 that was previously paid to LPLP
2007 by the Corporation and has been placed in trust pending distribution to its unit holders (refer to note 23 for additional information).
10.
LEASES
ROU Assets
As at January 1, 2020
Additions
Depreciation charge for the year (1)
As at December 31, 2020
As at December 31, 2019
Lease Liabilities
As at January 1, 2020
Additions
Lease payments
Interest for the year (1)
As at December 31, 2020
As at December 31, 2019
(1) Depreciation rate used ranged between 4.76% and 4.84%.
Photocopiers
Office Building
Trucks
78
-
(18)
60
78
79
708
(157)
630
79
35
-
(13)
22
35
Photocopiers
Office Building
Trucks
79
-
(20)
3
62
79
118
708
(144)
23
705
118
36
-
(14)
1
23
36
Total
192
708
(188)
712
192
Total
233
708
(178)
27
790
233
66
21
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
10.
LEASES (continued)
Lease liabilities – undiscounted cash flows
Photocopiers
Office Building
Trucks
Total
January 1, 2021 to December 31, 2021
January 1, 2022 to February 27, 2027
As at December 31, 2020
As at December 31, 2019
Amounts recognized in statements of comprehensive
income
Interest on lease liabilities
Total for the year ended December 31, 2020
Total for the year ended December 31, 2019
20
47
67
87
40
804
844
121
14
10
24
38
74
861
935
246
Photocopiers
Office Building
Trucks
Total
3
3
3
23
23
7
1
1
2
Amounts recognized in the statement of cash flows (2)
Photocopiers
Office Building
Trucks
Interest paid
Payment of lease liabilities
Total for the year ended December 31, 2020
Total for the year ended December 31, 2019
3
17
20
14
23
121
144
73
1
13
14
14
(2) These amounts are included in the line item Paid to suppliers and employees in the consolidated statements of cash flows
27
27
12
Total
27
151
178
101
67
22
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
11.
INCOME TAXES
a) On June 28, 2019, legislation was enacted to decrease the Alberta corporate income tax rate from 12% to 8% with a 1%
reduction effective July 1, 2019 and further 1% reductions on each of January 1, 2020, 2021 and 2022. Subsequently, on
October 20, 2020 legislation was enacted to decrease the Alberta corporate income tax rate from 10% to 8% effective July 1,
2020. Income tax was recognized in the consolidated statements of comprehensive income (loss) as follows:
Current income tax (recovery) expense
Deferred income tax expense
Income tax (recovery) expense
2020
(826)
779
(47)
2019
2,283
532
2,815
b)
Income tax expense differed from that which would be expected from applying the combined statutory Canadian federal and
provincial income tax rates of 24.00% (2019 - 26.50%) to earnings before income taxes. The difference resulted from the
following:
(Loss) earnings before income taxes
Statutory tax rate
Expected income tax (recovery) expense
Change in tax rate impact on future tax
Share-based compensation
Other
Non-controlling interest
Tax (recovery) expense for the year
c)
The deferred tax assets (liabilities) of the Corporation were as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
d)
The components of the net deferred tax asset were as follows:
Real estate held for development and sale
Reserves from land sales
Unamortized financing costs
Other temporary differences
Net deferred tax assets
2020
(252)
24.00%
(60)
201
172
(457)
97
(47)
2020
8,911
(823)
8,088
2020
5,417
(555)
2,740
486
8,088
2019
5,850
26.50%
1,550
1,359
113
147
(354)
2,815
2019
9,275
(408)
8,867
2019
5,677
(209)
2,862
537
8,867
68
23
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
12.
PROVISION FOR FUTURE DEVELOPMENT COSTS
The movement in the provision for future development costs is as follows:
Opening Balance, January 1, 2020
Additions
Changes to estimates
Development activities
Closing Balance, December 31, 2020
Land Development
Home Building
17,828
7,729
(554)
(6,266)
18,737
1,274
7,008
(306)
(6,500)
1,476
Opening Balance, January 1, 2019
Additions
Changes to estimates
Development activities
Closing Balance, December 31, 2019
Land Development
Home Building
20,033
3,613
(224)
(5,594)
17,828
868
4,410
(247)
(3,757)
1,274
Total
19,102
14,737
(860)
(12,766)
20,213
Total
20,901
8,023
(471)
(9,351)
19,102
69
24
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
13.
LOANS AND CREDIT FACILITIES
Secured by agreements receivable and real estate held for development and sale
(a) Demand land project servicing loans from major Canadian chartered banks, payable on
collection of agreements receivable, bearing interest at prime +0.75% per annum, secured by real
estate held for development and sale with a carrying value of $8,049. Three loans were closed in
December 2020 and the loan agreement for a remaining loan, with $Nil drawn on it, expires on
February 28, 2021.
Secured by real estate held for development and sale
(b) Vendor-take-back mortgage payable (“VTB”) at 0% per annum measured at amortized cost
and whose fair value is based on discounted future cash flows, using an 8% discount rate. The
final installment of $8,000 was paid in January 2020.
(c) The VTB bearing interest at 5% per annum was entered into on September 13, 2019 in partial
payment for the purchase of approximately 130 acres of future residential development land in
north Calgary. The VTB is secured by these lands which have a carrying value of $27,954. The
VTB is to be repaid in two installments of approximately $9,312 each in May 2021 and 2022.
(d) A loan facility for $15,375 bearing interest at 6.50% per annum, due on December 15, 2020
and is secured by a $20,500 VTB. The loan was fully repaid on December 4, 2020.
(e) Demand operating line of credit up to $10,000 from a major Canadian chartered bank bearing
interest at prime +1.00% per annum. The loan was closed in December 2020.
Secured by housing projects under development
(f) Demand operating line of credit up to $6,500 from a major Canadian chartered bank, bearing
interest at prime +0.75% per annum, secured by a general security agreement over assets of the
home building division.
(g) Demand project specific townhouse construction loans from a major Canadian chartered bank,
both renewed in March 2020, payable on collection of sale and closing proceeds, bearing interest
at prime +0.90% per annum, secured by the project with a carrying value of $5,500. One loan is
due on August 28, 2021 and the other is due on September 28, 2021.
Deferred fees on loans and credit facilities
2020
2019
-
-
4,145
8,000
18,624
18,634
-
-
14,470
-
1,662
2,261
1,185
4,370
21,471
(1)
21,470
51,880
(334)
51,546
Subsequent to December 31, 2020, the Corporation arranged a $50,000 three-year fixed term secured corporate revolving line of
credit with MCAP Financial Corporation at an interest rate per annum equal to the higher of prime +1.90% or 4.35%. This is secured
by specific dedicated lands and a general corporate charge on all assets of the Corporation.
70
25
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
13.
LOANS AND CREDIT FACILITIES (continued)
A lender has a general security agreement on all property of the Corporation and its subsidiaries, in addition to specific security
mentioned above.
The weighted average interest rate of loan agreements with financial institutions was 3.26% (December 31, 2019 - 5.76%) based on
December 31, 2020 balances.
During the year ended December 31, 2020, the Corporation received advances of $17,241 (2019 - $39,847) relating to various loan
facilities. These are secured by agreements receivable, real estate held for development and sale, housing projects under
development and a $20,500 VTB mortgage receivable. These loan facilities bear interest ranging from prime +0.75% to prime +0.90%
per annum, with due dates ranging from February 28, 2021 to September 28, 2021.
The VTB at 0% per annum was measured at amortized cost and its fair value was based on discounted future cash flows using an
8% discount rate, resulting in interest expense of $Nil (2019 - $613) for the year ended December 31, 2020.
The Corporation and its subsidiaries have various covenants in place with their lenders with respect to credit facilities including credit
usage restrictions; cancellation, prepayment, confidentiality and cross default clauses; sales coverage requirements; conditions
precedent for funding; and other terms such as, but not limited to, maintaining contracted lot prices, restrictions on encumbrances,
liens and charges, material changes to project plans, and material changes in the Corporation’s ownership structure. As at December
31, 2020 and 2019, the Corporation and its subsidiaries were in compliance with all loan covenants.
Based on the contractual terms, the Corporation’s loans and credit facilities are to be repaid within the following time periods
(excluding deferred fees on loans and credit facilities):
January 1, 2021 to December 31, 2021
January 1, 2022 to December 31, 2022
14.
SHARE CAPITAL
a) Authorized
Unlimited number of common shares without par value.
Unlimited number of preferred shares without par value, none issued.
b) Weighted average number of shares
12,159
9,312
21,471
The following table sets forth the weighted average number of common shares outstanding for the year ended December 31, 2020
and 2019:
Basic
Effect of dilutive securities - stock options
Diluted
Year ended December 31,
2020
2019
42,081,235
42,181,015
-
-
42,081,235
42,181,015
All 2,535,000 options outstanding at the year ended December 31, 2020 (2019 - 2,535,000) were excluded in calculating diluted
earnings per share as their weighted average exercise price was higher than the average market price of the Corporation’s shares
during the period.
71
26
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
14.
c)
SHARE CAPITAL (continued)
Normal course issuer bid (“NCIB”)
The Corporation renewed its NCIB on October 7, 2020. The renewed NCIB commenced on October 13, 2020 and will terminate on
the earlier of: (i) October 12, 2021; and (ii) the date on which the maximum number of common shares are purchased pursuant to
the bid. The Corporation may purchase for cancellation up to 2,098,885 common shares under the renewed NCIB.
The prior NCIB, which expired on October 9, 2020, allowed the Corporation to purchase for cancellation up to 2,109,016 common
shares.
The following table sets forth the number of common shares repurchased and cancelled during the year ended December 31, 2020
and 2019 under the NCIB(s).
Number of shares repurchased and cancelled
Reduction in share capital
Change in retained earnings
Reduction in shareholders’ equity
Average purchase price per share
d)
Dividends
Year ended December 31,
2020
296,592
378
87
465
1.58
2019
23,694
31
27
58
2.41
Cash dividends of $6,280 ($0.15 per share) were declared on December 9, 2020 and paid to shareholders on January 11, 2021. No
dividends were declared or paid in 2019.
72
27
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
15.
SHARE-BASED COMPENSATION
a)
Stock Option Plan
Share-based payments may be settled in cash or equity at the sole discretion of the Corporation and are accounted for as
equity-settled plans. Stock options have a 7-year term and vest 25% on each of the first, second, third and fourth anniversary dates
of the grant.
Details of stock options are as follows:
Outstanding - beginning of year
Options forfeited
Options issued
Outstanding - end of year
Exercisable - end of year
Year ended December 31,
2020
2019
Number of
Options
2,535,000
Weighted
Average
Exercise Price
$3.31
-
-
2,535,000
1,072,500
-
-
$3.31
$3.34
Number of
Options
2,025,000
(270,000)
780,000
2,535,000
438,750
Weighted
Average
Exercise Price
$3.36
$3.12
$3.11
$3.31
$3.40
Outstanding
Exercisable
Range of Exercise
Prices ($)
Number at
December 31, 2020
Weighted Average
Exercise Price
Number at
December 31, 2020
Weighted Average
Exercise Price
Weighted Average
Remaining
Contractual Life in
Years
3.11 - 3.48
2,535,000
$3.31
1,072,500
$3.34
4.85
The following assumptions were used in estimating the fair value of options granted using the Black-Scholes Option-Pricing Model:
Risk-free interest rate
Estimated term/period prior to exercise (years)
Volatility in the price of the Corporation’s common shares
Forfeiture rate
Dividend yield rate
2020
2019
-
-
-
-
-
1.50 - 1.59%
5.50
28.8 - 29.1%
0.00%
0.00%
Subsequent to December 31, 2020, 1,680,000 stock options with a weighted average exercise price of $3.31 were cancelled.
73
28
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
15.
SHARE-BASED COMPENSATION (continued)
b) Deferred Share Unit Plan (“DSU”)
The Corporation’s cash settled DSU plan provides DSUs to be issued to directors and designated employees. DSUs vest 25% on
each of the first, second, third and fourth anniversary of the issue date and shall not be redeemed except upon the occurrence of the
earlier of any one of the following: the death of a participant; the retirement of a participant; or in the case of an employee, the
termination of a participant. Details of the DSUs are as follows:
Outstanding - beginning of year
DSUs granted
Outstanding - end of year
Vested - end of year
Year ended December 31,
2020
2019
Cash settled
Cash settled
70,941
283,317
354,258
92,068
-
70,941
70,941
-
The outstanding liability related to cash settled DSUs as at December 31, 2020 was $537 (2019 - $84) and is recorded in accounts
payable and accrued liabilities. DSUs are measured at fair value at each reporting period on a mark-to-market basis.
c) Share-based compensation expense
Share-based compensation was recorded and included as a part of general and administrative expense and is comprised of the
following:
Stock options
Deferred share units - cash settled grants
Total share-based compensation expense
16.
GENERAL AND ADMINISTRATIVE
The general and administrative expense of the Corporation consisted of the following:
Compensation and benefits
Share-based compensation
Corporate administration
Professional services
Years ended December 31,
2020
265
453
718
Years ended December 31,
2020
6,855
718
1,775
1,060
2019
344
84
428
2019
6,761
428
2,754
1,277
10,408
11,220
74
29
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
16.
GENERAL AND ADMINISTRATIVE (continued)
Compensation and benefits of the directors and key management personnel, included in the general and administrative expenses
above, were as follows:
Salaries, wages and benefits
Share-based compensation
17.
SELLING AND MARKETING
Selling and marketing expenses of the Corporation consisted of the following:
Advertising and marketing
Sales commissions
18.
FINANCE EXPENSE
Finance expense of the Corporation consisted of the following:
Interest incurred
Finance expense relating to VTBs (note 13)
Financing fees amortized
Interest and financing fees capitalized (note 5)
Years ended December 31,
2020
1,951
718
2,669
Years ended December 31,
2020
2,786
1,677
4,463
Years ended December 31,
2020
1,329
931
333
-
2,593
2019
1,904
428
2,332
2019
2,970
1,264
4,234
2019
722
855
186
(158)
1,605
19. COMMITMENTS AND CONTINGENCIES
a)
b)
c)
In 2012, the Corporation entered into a memorandum of understanding with the Northeast Community Society to contribute
$5,000 over 10 years for 15-year naming rights to “Genesis Centre for Community Wellness”, a recreation complex in northeast
Calgary ($500 each year, terminating in 2021). The first nine installments totaling $4,500 have been paid. The tenth and final
payment was made in January 2021.
The Corporation has issued letters of credit and surety bonds pursuant to servicing agreements with municipalities to indemnify
them in the event that the Corporation does not perform its contractual obligations. As at December 31, 2020, these amounted
to $3,666 (December 31, 2019 - $4,795).
The Corporation is committed to pay levies and municipal fees relating to signed municipal agreements on commencement of
development of certain real estate assets with the following payments:
January 1, 2021 to December 31, 2021
January 1, 2022 to December 31, 2022
January 1, 2023 to December 31, 2023
75
6,415
1,433
1,910
9,758
30
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
19. COMMITMENTS AND CONTINGENCIES (continued)
d)
The Corporation is a co-defendant in a statement of claim initiated by limited partners of LPLP 2007 and its affiliated RRSP
limited partnerships. The statement of claim is brought as a class action but has not yet been certified as such and is seeking
damages of at least $16,585. Any potential liability to the Corporation and/or the Partnership is indeterminate, and no provision
has been made. The Corporation’s view is that this action is without merit and is actively contesting it. The Corporation and
the limited partners have each applied for summary judgement and the Corporation is contesting the certification of this matter
as a class proceeding.
20.
SETTLEMENT OF LITIGATION
A settlement has been reached on a statement of claim filed in 2016 by two former employees against the Corporation and a director.
The claim alleged wrongful termination of their employment.
21.
FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their carrying
values as they are typically expected to be settled within twelve months. The fair value of deposits approximates their carrying value
as the terms of deposits are comparable to the market terms for similar instruments.
The fair values of the Corporation’s loans and credit facilities, amounts receivable and vendor-take-back mortgage receivable were
estimated based on current market rates for loans of the same risk and maturities.
The fair value of investments in land development entities are based on the market approach method. This method uses prices and
other relevant information that have been generated by market transactions involving identical or comparable assets.
Fair value measurements recognized in the consolidated balance sheets are categorized using a fair value hierarchy that reflects the
significance of inputs used in determining the fair values. The three fair value hierarchy levels are as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices); and
Level 3: Inputs for the asset or liability that is not based on observable market data (unobservable inputs).
The Corporation’s current financial assets are measured at amortized cost or fair value through profit and loss (“FVTPL”). The
estimated fair value of financial assets and liabilities measured at FVTPL as at December 31, 2020 and December 31, 2019 are
presented in the following table:
Carrying Value
Fair Value
Fair Value
Hierarchy
Measurement
Basis
As at
Dec. 31, 2020
As at
Dec. 31, 2019
As at
Dec. 31, 2020
As at
Dec. 31, 2019
Financial Assets
Cash
Investments in land development
entities
Restricted cash
Level 1
Level 3
Level 1
FVTPL
FVTPL
FVTPL
29,743
5,608
7,351
16,248
5,608
12,077
29,743
5,608
7,351
16,248
5,608
12,077
During the year ended December 31, 2020 and 2019, no transfers were made between the levels in the fair value hierarchy.
76
31
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
21.
FINANCIAL INSTRUMENTS (continued)
a) Risks associated with financial instruments
(i) Credit risk
The Corporation recognizes bad debt expense (or recovery) relating to amounts receivable on sold lots, net of the value of the related
sold lots which are taken back into the Corporation’s lot inventory on the termination of the relevant agreement. Termination could
occur when the buyer fails to perform or observe terms of covenants of the relevant agreement. Agreements receivable for lot sales
have various terms of repayment with purchasers generally having between 6 and 24 months to pay the balance owing for the
purchased lots.
Recovery of bad debt expense is included in the Corporation’s general and administrative expenses. In order to mitigate credit risk,
the Corporation does not transfer title to sold residential lots until full payment is received. Individual balances due from customers
as at December 31, 2020, which comprise greater than 10% of total amounts receivable, totaled $10,235 from two customers (2019
- $5,515 from two customers).
Aging of amounts receivable was as follows:
Not past due
(ii) Liquidity risk
2020
11,006
11,006
2019
6,131
6,131
The contractual maturities of financial liabilities and other commitments as at December 31, 2020 were as follows:
<1 Year
>1 Year
Total
Financial liabilities
Accounts payable and accrued liabilities
Dividend payable (note 14d)
Loans and credit facilities excl. deferred fees on loans and credit facilities (note 13)
Commitments
Lease obligations (including variable operating costs)
Naming rights (note 19a)
Levies and municipal fees (note 19c)
14,092
6,280
12,159
32,531
331
500
6,415
7,246
39,777
-
-
9,312
9,312
2,199
-
3,343
5,542
14,854
14,092
6,280
21,471
41,843
2,530
500
9,758
12,788
54,631
At December 31, 2020, the Corporation had obligations due within the next 12 months of $39,777 (December 31, 2019 - $45,708).
Based on the Corporation’s operating history, its relationship with its lenders and committed sales contracts, management believes
that the Corporation has the ability to continue to renew or repay its financial obligations as they come due. The Corporation renewed
three loans in 2020 (note 13f and note 13g).
(iii) Market risk
The Corporation is exposed to interest rate risk to the extent that certain agreements receivable and certain loans and credit facilities
are at a floating rate of interest. A 1% change in interest rates would result in a change in interest incurred of approximately $28
annually on floating rate loans.
77
32
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
21.
FINANCIAL INSTRUMENTS (continued)
b) Capital management
The Corporation’s policy is to maintain a sufficient capital base in order to maintain investor, creditor and market confidence and to
sustain future development of the business. The Corporation is not subject to externally imposed capital requirements.
The Corporation manages its capital structure and makes adjustments to it in light of changes in regional economic conditions and
the risk characteristics of the underlying real estate industry within that region.
The Corporation considered its capital structure at the following dates to specifically include:
Loans and credit facilities (note 13)
Shareholders’ equity
2020
21,470
187,676
209,146
2019
51,546
193,957
245,503
78
33
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
22.
SEGMENTED INFORMATION
The income producing business units of the Corporation reported the following activities for the year ended December 31, 2020 and
2019:
Year ended December 31, 2020
Revenues
Revenues - development lands
Direct cost of sales
Write-down of real estate held for
development and sale
Gross margin
G&A, selling & marketing and net
finance expense or income
Earnings (loss) before income
taxes and non-controlling interest
Segmented assets as at
December 31, 2020
Segmented liabilities as at
December 31, 2020(1), (2)
Segmented net assets as at
December 31, 2020(1), (2)
Year ended December 31, 2019
Revenues
Revenues - development lands
Direct cost of sales
Write-down of real estate held for
development and sale
Gross margin
G&A, selling & marketing and net
finance expense or income
Earnings (loss) before income
taxes and non-controlling interest
Segmented assets as at
December 31, 2019
Segmented liabilities as at
December 31, 2019(1), (2)
Segmented net assets as at
December 31, 2019(1), (2)
Genesis
39,140
16,308
(37,612)
(10,822)
7,014
320
(338)
-
31
(6,971)
(436)
43
(405)
Land Development Segment
Intrasegment
Elimination
-
LP
49
Home
Building
Segment
75,025
-
Intersegment
Elimination
(26,909)
-
Total
39,189
16,628
Total
87,305
16,628
(37,950)
(65,540)
26,909
(76,581)
(10,822)
7,045
(815)
8,670
(7,407)
(8,560)
(362)
110
-
-
-
-
2,122
2,122
(11,637)
15,715
(15,967)
(252)
266,494
66,734
232,166
14,701
(6,320)
240,547
23,825
57,181
2,744
(2,226)
57,699
6,913
174,985
11,957
(4,094)
182,848
16,912
-
199,760
Land Development Segment
Intrasegment
Elimination
-
LP
511
Genesis
28,560
-
(15,129)
(800)
12,631
(7,646)
550
(538)
-
523
811
4,985
1,334
Home
Building
Segment
59,746
-
Intersegment
Elimination
(21,270)
-
Total
29,071
550
Total
67,547
550
(15,667)
(51,480)
21,270
(45,877)
(800)
-
13,154
8,266
(6,835)
(8,735)
6,319
(469)
-
-
-
-
(800)
21,420
(15,570)
5,850
254,898
20,574
(5,804)
269,668
28,940
(2,340)
296,268
73,463
1,805
(1,752)
73,516
12,197
(2,340)
83,373
181,435
18,769
(4,052)
196,152
16,743
-
212,895
-
-
-
-
-
-
-
-
-
-
-
-
(1) Segmented liabilities under the Genesis land development segment include $4,118 due to the home building segment (December 31, 2019 -
$392 due from the land development segment to the home building segment).
(2) Segmented liabilities under the LP segment is comprised of accounts payable and accrued liabilities and includes $2,226 (December 31, 2019 -
$1,752) due to Genesis.
79
34
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
23.
CONSOLIDATED ENTITIES
The Statements include the accounts of the Corporation and its wholly-owned subsidiaries, as well as the consolidated revenues,
expenses, assets, liabilities and cash flows of limited partnership entities that the Corporation controls. The Corporation has less than
50% equity ownership in these limited partnership entities; however, the Corporation has control over these entities’ activities,
projects, financial and operating policies due to contractual arrangements. As such, the relationship between the Corporation and
the limited partnership entities indicates that they are controlled by the Corporation. Accordingly, the accounts of the limited
partnerships have been consolidated in the Corporation’s financial statements. Subsidiaries of the Corporation are general partners
in three limited partnership group structures.
The Corporation is a co-defendant in a statement of claim initiated by a limited partner of Limited Partnership Land Pool (“LPLP 2007”)
and its affiliated RRSP limited partnerships. The statement of claim seeks to be certified as a class action and is seeking damages
of $60,000. Any potential liability to the Corporation and/or the Partnership is indeterminate, and no provision has been made.
LPLP 2007 is a limited partnership controlled by the Corporation. In 2019 the Corporation completed a transaction with LPLP 2007,
whereby the Corporation acquired the third-party, secured vendor-take-back mortgage receivable held by LPLP 2007. Consideration
paid to LPLP 2007 included a cash payment of $10,360 to LPLP 2007 by the Corporation, which was placed in trust pending pro rata
distribution to its unit holders. Early in 2020 limited partners were given the option to receive their pro rata distribution of the amount
held in trust, provided the limited partner signed a letter of transmittal in which the limited partner released LPLP 2007, Genesis and
related entities from any liabilities in respect of the statement of claim described above. During the year ended December 31, 2020,
unitholders holding 25,619,829 (58.4%) limited partnership units submitted such transmittal letters, and $6,092 of the available trust
funds have been distributed. The offer to the limited partners expired on September 18, 2020. All remaining funds which are held in
trust will be used by LPLP 2007 to fund its operations, including its share of any costs incurred in respect of the proposed class
action.
80
35
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
23.
CONSOLIDATED ENTITIES (continued)
All entities are incorporated in Canada and are listed in the following table:
Name
Land Development
Genpol Inc.
Genpol LP
1504431 Alberta Ltd.
Genesis Sage Meadows Partnership
Genesis Land Development (Southeast) Corp.
Genesis Keystone Ltd.
Polar Hedge Enhanced Income Trust
Home Building
Genesis Builders Group Inc.
The Breeze Inc.
Joint Venture
Kinwood Communities Inc.
Limited Partnerships
LP 4/5 Group
Genesis Limited Partnership #4 (1)
Genesis Limited Partnership #5, GLP5 GP Inc., GLP5 NE Calgary Development Inc.
Genesis Northeast Calgary Ltd.
LP 8/9 Group
Genesis Limited Partnership #8 (1)
Genesis Limited Partnership #9, GP GLP9 Inc., GLP9 Subco Inc.
GP GLP8 Inc.
LPLP 2007 Group
Limited Partnership Land Pool (2007)
GP LPLP 2007 Inc.
GP RRSP 2007 Inc., LPLP 2007 Subco Inc.
LPLP 2007 Subco #2 Inc., LP RRSP Limited Partnership #1
LP RRSP Limited Partnership #2
% equity interest as at
December 31, 2020
December 31, 2019
100%
100%
0.0002%
99.9998%
100%
100%
100%
100%
100%
50%
0.001%
0%
100%
53.63%
0%
100%
0.023%
100%
0%
0%
0%
100%
100%
0.0002%
99.9998%
100%
100%
100%
100%
100%
50%
0.001%
0%
100%
53.63%
0%
100%
0.023%
100%
0%
0%
0%
(1) The allocation of profit or loss is 0% in accordance with the terms of the limited partnership agreement.
81
36
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
23.
CONSOLIDATED ENTITIES (continued)
The following tables summarize the information relating to the Corporation's subsidiaries that have material non-controlling interests
and may include inter-group balances that are eliminated on consolidation and become a component of the net non-controlling
interest:
BALANCE SHEETS
Assets
December 31, 2020
LP 4/5
LP 8/9
LPLP 2007
Total
Real estate held for development and sale
9,263
Amounts receivable
Other operating assets including restricted
cash (refer to note 9)
Cash and cash equivalents
Total assets
Liabilities
Customer deposits
Accounts payable and accrued liabilities
Due to related parties
Total liabilities
Net assets
Non-controlling interest (%)
-
-
-
9,263
-
-
1,805
1,805
7,458
100%
844
-
100
13
957
100
17
248
365
592
100%
-
8
4,458
15
4,481
-
401
173
574
3,907
100%
10,107
8
4,558
28
14,701
100
418
2,226
2,744
11,957
December 31, 2019
LP 4/5
LP 8/9
LPLP 2007
Total
Assets
Real estate held for development and sale
8,980
1,176
Amounts receivable
Other operating assets including restricted
cash (refer to note 9)
Cash and cash equivalents
Total assets
Liabilities
Customer deposits
Accounts payable and accrued liabilities
Due to related parties
Total liabilities
Net assets
Non-controlling interest (%)
-
-
-
1
30
9
8,980
1,216
30
2
246
278
938
100%
-
-
1,400
1,400
7,580
100%
82
-
5
10,364
9
10,378
-
21
106
127
10,251
100%
10,156
6
10,394
18
20,574
30
23
1,752
1,805
18,769
37
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
23.
CONSOLIDATED ENTITIES (continued)
SUMMARIZED STATEMENTS OF COMPREHENSIVE INCOME
Revenues
Net loss
Non-controlling interest (%)
Revenues
Net (loss) earnings
Non-controlling interest (%)
SUMMARIZED STATEMENT OF CASH FLOWS
Cash flows from operating activities
Cash flows used in financing activities
Net increase in cash and cash equivalents
Cash flows from operating activities
Cash flows used in financing activities
Net increase in cash and cash equivalents
Year ended December 31, 2020
LP 8/9
350
(30)
100%
LPLP 2007
-
(252)
100%
Year ended December 31, 2019
LP 8/9
550
(22)
100%
LPLP 2007
492
1,448
100%
LP 4/5
19
(122)
100%
LP 4/5
19
(92)
100%
Year ended December 31, 2020
LP 4/5
LP 8/9
LPLP 2007
-
-
-
4
-
4
125
(119)
6
Year ended December 31, 2019
LP 4/5
LP 8/9
LPLP 2007
-
-
-
8
-
8
1,454
(1,454)
-
Total
369
(404)
Total
1,061
1,334
Total
129
(119)
10
Total
1,462
(1,454)
8
83
38
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
24. SUBSEQUENT EVENTS
Subsequent to December 31, 2020, the following occurred:
a) The Corporation arranged a $50,000 three-year fixed term secured corporate revolving line of credit with MCAP Financial
Corporation at an interest rate per annum equal to the higher of prime +1.90% or 4.35%. This is secured by specific dedicated lands
and a general corporate charge on all assets of the Corporation.
b) The Corporation entered into a binding agreement to acquire approximately 157 acres of future residential development land in
the City of Calgary. The Corporation has paid a non-refundable deposit of $2,186, with the balance of $26,964 to be paid on closing,
currently scheduled for April 2022.
c) The Corporation settled an ongoing litigation. Refer to note 20 for additional information.
d) The Corporation entered into a sale agreement to sell a 463.2-acre parcel of land in BC, belonging to a limited partnership, for a
cash consideration of $925. The transaction closed in February 2021.
84
39
IAIN STEWART
President and CEO
WAYNE KING
PARVESHINDERA SIDHU
President, Genesis Builders Group Inc.
and Vice-President, Home Building
ARNIE STEFANIUK
Vice-President, Land Development
BRIAN WHITWELL
Vice-President, Asset Management
Directors
STEPHEN J. GRIGGS
Chair
STEVEN GLOVER
Lead Director
MARK W. MITCHELL
Director
LOUDON OWEN
Director
IAIN STEWART
Director
Transfer Agent
COMPUTERSHARE TRUST
COMPANY OF CANADA
600, 530 - 8th Avenue SW
Calgary, AB T2P 3S8
Stock Exchange
TORONTO STOCK EXCHANGE
Stock Symbol – GDC
Auditors
MNP LLP
1500, 640 - 5th Avenue SW
Calgary, AB T2P 3G4
Genesis Land Development Corp.
6240, 333 – 96 Ave NE
Calgary, AB T3K 0S3
Main 403 265 8079
Email info@genesisland.com
www.genesisland.com
85