2022 ANNUAL REPORT
TOGETHER, WE MAKE
A BETTER PLACE.
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT TOGETHER, WE MAKE
A BETTER PLACE.
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
TABLE OF
CONTENTS
07 Message from the President and CEO
09 Genesis Projects and Communities
11 Community Involvement
12 Genesis Builders Show Homes
15 Management’s Discussion & Analysis
50 Consolidated Financial Statements
87 Contact Information
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
MESSAGE FROM THE
PRESIDENT AND CEO
G enesis is pleased to report after tax earnings of $4.5 million
for 2022 ($0.08 per share), with our home building division
contributing earnings of $3.3 million and our land development
division contributing $1.2 million. This marks the 22nd consecutive
year of positive earnings. Annual revenue increased by 27% to $140.4
million driven by 169 home sales, 236 lot sales and 15.29 acres of multi-
family and commercial land parcel sales.
The first quarter of 2022 saw a very strong housing market in
Calgary, but as interest rates started to climb, the housing market
started to cool. In the first quarter of 2022, Genesis entered into
175 new home sales contracts, by year end this figure had risen to
233. Supply chain issues impacted the delivery of homes, and 169
home sales were closed during the year, down from 191 in 2021.
The company enters 2023 with an order book of 205 firm sales
contracts, up from 141 at the start of 2022. Genesis is currently
building homes in 5 Genesis communities and 5 third party
communities where we have 396 lots under contract, providing a
clear avenue of growth for our home building division.
Our land development division invested $38.3 million in our
communities in 2022, creating 288 new residential lots and 6.5
acres of multifamily and commercial land parcels. The company
was also successful in having Growth Management Overlays
(“GMOs) removed from our Lewiston (130 acres) and Logan
Landing (354 acres) projects, allowing Genesis to apply for final
development approvals. In 2023, pending final approvals, three
new Genesis communities, including these two, could be under
development. Genesis also completed the acquisition of a 157 acre
parcel in east Calgary and announced that it had entered into a
contract to acquire a 160 acre parcel in southeast Calgary.
2022 marked the culmination of a transition period for Genesis,
with significant progress in implementing our growth plan. From
2016 through 2019, Genesis focused on rationalizing its operations,
disposing of non-core assets, and reducing debt. In 2019 we began
acquiring new land positions and embarked on an ambitious plan to
expand our home building operations. From the beginning of 2019
through to the end of 2022 Genesis has acquired or committed to
acquire 447 acres of new development land, entered into contracts
to acquire 477 lots in third party communities for our home building
division, invested in two communities being developed by other
developers and entered into a partnership to develop a multi-family
project. Total capital investment in these activities exceeds $167
million.
In January 2023, a significant step in executing our growth plan
was achieved with two high quality builders investing in our first
community development limited partnership. This partnership
now owns our Lewiston community, with Genesis retaining a 60%
interest in the partnership and each of the builders owning 20%.
Genesis is the manager of this development, and each of the
builders has a right of refusal to acquire 30% of the residential
lots created in Lewiston. The creation of this partnership and
related project financing surfaced $31.8 million of cash for Genesis,
which may be used to fund additional growth and other corporate
purposes.
Partnerships such as this, allow Genesis to immediately realize
a portion of the value created through the land acquisition and
approval processes once the land is “shovel ready”, while retaining
the role as manager and having several quality builders as partners
and likely buyers of a large number of lots.
Other achievements during this period (2016 to 2022) include
returning $66 million to shareholders by way of dividends,
completing a $30 million equity issue in December of 2021 and
ending 2022 with a low debt to assets ratio of 18%.
Moving forward, we expect tight housing market conditions to
continue, fueled by Alberta’s strong economy, the relative price and
lifestyle attractiveness of the Calgary Metropolitan Area compared
to other Canadian markets and expanded international immigration
targets set by the federal government. Nonetheless, we remain
cautious as the dramatic increases in interest rates seen in 2022
are having a dampening effect on the North American economy,
including the Calgary housing market.
Our team remains focused on delivering homes and communities
that people want to live in now and in the future, creating a
workplace people thrive in and delivering exceptional results to
our investors. The company enters 2023 with low debt levels, 205
home sales under contract, high quality home building partners,
and with the challenges of securing final approvals for the Huxley
and Logan Landing projects, commencing on-site development at
Lewiston and managing supply chain issues.
I would like to welcome Mr. Calvin Younger to our Board of
Directors. Mr. Younger is Senior Vice President and Head, Real
Estate Finance – Canada, Business and Corporate Banking with
CIBC. Mr. Younger has a wealth of knowledge about the residential
real estate industry through his long career with CIBC, other banks
and as a partner in the real estate advisory business of Ernst &
Young. I look forward to his guidance, advice, and oversight –
particularly as Genesis executes its growth business plan.
Finally, I want to thank all members of our team, including staff,
consultants, and contractors, for their extraordinary work, and our
board of directors and shareholders for their consistent support
and guidance. The growth platform created through the efforts of
the last several years is a testament to the entire team.
After many years of transition, the Genesis team is excited about
the prospects ahead.
IAIN STEWART
President and Chief Executive Officer
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT I
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS PROJECTS
AND COMMUNITIES
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Genesis CommunitiesNon-Genesis Communities -Genesis Home Sales ActivitiesE CALGARYNE CALGARYROCKY VIEW COUNTYN CALGARYSTONEY TRAIL NWSTONEY TRAIL SEYANKEE VALLEYBOULEVARDHWY 1 (16TH AVE)GLENMORE TRAIL SEMACLEOD TRAILCROWCHILD TRAIL NWHWY 22XDEERFOOT TRAILQE II HIGHWAYSE CALGARYNW CALGARYAIRDRIENW CALGARYCOCHRANESW CALGARYSW CALGARYVermilion HillSW CALGARYNorth ConrichNE CALGARYCHESTERMEREClearwater ParkTown ofChestermereSE CALGARYHotchkissGENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORTGenesis CommunitiesNon-Genesis Communities -Genesis Home Sales ActivitiesE CALGARYNE CALGARYROCKY VIEW COUNTYN CALGARYSTONEY TRAIL NWSTONEY TRAIL SEYANKEE VALLEYBOULEVARDHWY 1 (16TH AVE)GLENMORE TRAIL SEMACLEOD TRAILCROWCHILD TRAIL NWHWY 22XDEERFOOT TRAILQE II HIGHWAYSE CALGARYNW CALGARYAIRDRIENW CALGARYCOCHRANESW CALGARYSW CALGARYVermilion HillSW CALGARYNorth ConrichNE CALGARYCHESTERMEREClearwater ParkTown ofChestermereSE CALGARYHotchkiss Y
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
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.
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.
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT S
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
MANAGEMENT’S
DISCUSSION AND
ANALYSIS
FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022
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 consolidated financial statements and the
notes thereto for years ended December 31, 2022 and 2021, prepared in accordance with International Financial Reporting Standards
(“IFRS”).
The consolidated financial statements and comparative information have been reviewed by the Corporation’s audit committee,
consisting of four 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. Basic and diluted earnings
(loss) per share, cash flows from operating activities per share (basic and diluted), and dividends per share for prior periods have
been recalculated to account for the impact of the Corporation’s share issue pursuant to a rights offering that closed on December
17, 2021. This MD&A is dated as of March 2, 2023.
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT STRATEGY AND 2022 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”) with a strategy to grow its portfolio of well-located, entitled and unentitled
primarily residential 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 a wholly-owned subsidiary, Genesis
Builders Group Inc. (“GBG”), its home building division. The land portfolio is planned, developed, serviced and sold as single-family
lots and townhouse, multi-family 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.
GBG designs, builds and sells homes on a significant portion of Genesis’ single-family lots and townhouse land parcels. GBG also
acquires single-family lots from other land developers to build and sell single-family homes in additional CMA communities.
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.
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Highlights:
•
$140,357 of Revenues in year-end (“YE”) 2022: Genesis generated revenue of $140,357 in YE 2022 up from $109,761
achieved in YE 2021. Fourth quarter (“Q4”) 2022 revenues of $54,157 were higher when compared to $26,531 generated
in Q4 2021.
• Net Earnings in YE 2022 were $4,520: Net earnings were positive for the 22nd consecutive year with net earnings
attributable to equity shareholders in YE 2022 of $4,520 ($0.08 net earnings per share - basic and diluted), compared to
$10,877 ($0.24 net earnings per share - basic and diluted) in YE 2021. Net earnings attributable to equity shareholders
in Q4 2022 were $3,062 ($0.05 net earnings per share - basic and diluted) compared to $4,252 ($0.09 net earnings per
share - basic and diluted) in Q4 2021.
•
•
•
236 Lots Sold: In YE 2022, Genesis sold 236 residential lots (144 to third-party builders and 92 through its home building
division, GBG), a decrease of 5% from 247 lots in YE 2021 (60 to third-party builders and 187 through GBG). In Q4 2022,
Genesis sold 106 residential lots (84 to third-party builders and 22 through GBG) compared to 49 lots in Q4 2021 (2 to
third-party builders and 47 through GBG).
169 Homes Sold: In YE 2022, Genesis sold 169 homes, a decrease of 12% from the 191 sold in YE 2021. In Q4 2022,
Genesis sold 57 homes, compared to 51 sold in Q4 2021. During YE 2022, Genesis had 233 new home orders compared
to 249 for YE 2021. Genesis had 205 outstanding new home orders on hand at December 31, 2022 (141 at December
31, 2021).
$15,991 of Development Land Sales: In YE 2022, Genesis sold five development land parcels for $15,991 versus four
parcels for $5,870 (including one owned by a limited partnership for $925) in YE 2021. Genesis sold two development
land parcels for $6,338 in Q4 2022 versus no development land sold in Q4 2021.
• Cash on Hand of $36,598: On December 31, 2022, Genesis had $36,598 in cash and cash equivalents.
• Dividends of $0.15 per share in 2022: Total cash dividends of $8,530 ($0.15 per share) were paid during the year
ended December 31, 2022 of which $0.075 was declared and paid in Q4 2022.
•
•
Land Acquisitions: In Q2 2022, Genesis closed the acquisition of approximately 157 acres of future residential
development land (Huxley) in the east sector of the City of Calgary for a total purchase price of $29,150. In Q3 2022,
Genesis paid $6,699 to two limited partnerships (controlled entities within the consolidated entity) resulting in Genesis
directly owning 100% of three land parcels totaling 456 acres in North Conrich, immediately east of Calgary in Rocky
View County. In Q2 2022, Genesis entered into an agreement to acquire approximately 160 acres of future residential
development land in the southeast sector of the City of Calgary for a total purchase price of up to $30,000. Genesis has
paid a non-refundable deposit of $3,300 with the balance due on closing which is scheduled for January 31, 2025.
Lewiston Lands Limited Partnership (“LLLP”): During the year ended December 31, 2022, the Corporation
transferred approximately 130 acres of residential development land located in north Calgary in the Keystone Area
Structure Plan to LLLP. At December 31, 2022, 100% of LLLP was owned by Genesis. Subsequent to December 31,
2022, Genesis sold a 20% ownership stake in LLLP to each of two Calgary based third party builders. The transaction
closed on January 16, 2023, for a cash consideration for each 20% ownership stake of $5,880 (net of assumption of debt
of $4,000 each) resulting in gross proceeds for the sale of a 40% ownership interest of $11,760 (net of assumption of
debt of $8,000).
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
OPERATING HIGHLIGHTS
Key financial results and operating data for Genesis were as follows:
($000s, except for per share items or unless otherwise noted)
2022
2021
2022
2021
Three months ended
December 31, (1)
Year ended
December 31, (2)
Key Financial Data
Total revenues
Direct cost of sales
Gross margin before reversal of write-down (3)
Gross margin before reversal of write-down (%) (3)
Reversal of 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 (used in) from operating activities
Cash flows (used in) 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 on homes sold
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
Loan and credit facilities
Total liabilities
Shareholders’ equity
Total equity
54,157
(45,487)
8,670
16.0%
1,086
9,756
3,062
0.05
(1,686)
(0.03)
106
18,015
3,808
21.1%
170
6,338
57
33,799
4,783
14.2%
593
31
26,531
(19,594)
6,937
26.1%
3,265
10,202
4,252
0.09
(6,326)
(0.15)
49
8,423
3,540
42.0%
172
-
51
26,024
3,397
13.1%
510
81
140,357
(114,285)
26,072
18.6%
1,086
27,158
4,520
0.08
(43,756)
(0.77)
236
40,639
8,113
20.0%
172
15,991
169
100,680
16,931
16.8%
596
233
205
109,761
(82,186)
27,575
25.1%
4,268
31,843
10,877
0.24
2,388
0.05
247
41,095
14,698
35.8%
166
5,870
191
92,416
12,226
13.2%
484
249
141
As at Dec. 31,
2022 (2)
As at Dec. 31,
2021 (2)
36,598
364,140
65,057
136,803
224,632
227,337
63,975
324,929
32,668
88,991
228,624
235,938
Loan and credit facilities to total assets
(1) Three months ended December 31, 2022 and 2021 (“Q4 2022” and “Q4 2021”)
(2) Year ended December 31, 2022 and 2021 (“YE 2022” and “YE 2021”)
(3) Non-GAAP financial measure. Refer to heading “Non-GAAP Measures” in this MD&A
(4) Includes other revenues and revenues of $3,995 for 22 lots in Q4 2022 and $16,953 for 92 lots in YE 2022 purchased by the Home Building division from the Land Development division
18%
10%
($7,916 and 47 in Q4 2021; $29,620 and 187 in YE 2021) and sold with the home. These amounts are eliminated on consolidation
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
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.
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
energy 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;
changes in home construction costs due to the availability and timing of trades, material and overall supply chain issues;
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 and higher cash outflows in the summer and fall months
when home building sales and land servicing often peak.
Market Overview
The Alberta economy remained relatively strong through Q4 2022 as prices for the key natural resources, oil and natural gas,
produced in the province remained stable. The Royal Bank of Canada (“RBC”) estimates Alberta’s 2022 GDP grew by 4.9% (2021
- 4.8%) but is forecasting growth slowing to 1.9% in 2023 reflecting the increasing economic headwinds caused by higher interest
rates and inflation.
According to the Calgary Real Estate Board (“CREB”) year to date ("YTD") 2022 residential home sales in Calgary increased by
8% and the benchmark home sales price was up 10% over the same period in the prior year. Home sales inventories as at
December 31, 2022 remain at historically low levels in Calgary with supply at 1.84 months and in neighboring Airdrie, where
Genesis has two active projects, there was only 1.37 months of home supply. Four months of supply is generally considered to
reflect a balanced market. The rising lending rates, higher home prices and inflationary pressures are weighing on demand,
resulting in the pace of home sales slowing, with December 2022 sales being 30% lower than in 2021. However, the limited supply
may continue to provide support for home prices.
RBC publishes an affordability measure that calculates the share on income that a household would need to cover ownership costs
and notes that the Calgary market still remains affordable. As at December 2022, RBC’s aggregate affordability measure is 41.6%,
for Calgary, which is above the long-term average of 38.7% but well below that of Canada’s largest markets of Toronto and
Vancouver, at 85% and 96% respectively. RBC notes that the higher interest rates are having a significant negative impact on
prices in major markets however the impact in Calgary has been much less severe.
Supply chain issues continue to impact construction costs and timelines in both our land development and home building divisions.
Some of the strain has eased as home sales activity has slowed across most North American markets, however restrictions in the
availability of skilled labor and some products and materials such as appliances, PVC products, concrete and electrical
transformers remain an issue. The result has been delays in delivering lots and homes to customers together with cost increases.
Genesis addressed these concerns by working proactively with key contractor partners, advising home buyers that delays were
inevitable (and to plan accordingly) and by increasing home pricing where possible to address cost pressures.
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
2022 Business Plan
Progress on 2022 Business Plan
During 2022, Genesis continued to execute its growth business plan. Genesis achieved some significant milestones, including the
removal of Growth Management Overlays (“GMOs”) which, more fully described below, prohibited development of our Lewiston
and Logan Landing lands. Through GBG, Genesis has contracted to purchase 477 lots through third party developers and is now
building homes in 10 communities which provides additional growth opportunities. In addition, subsequent to December 31, 2022,
Genesis sold 40% of Lewiston by way of two 20% interests in a land development partnership sold to local third party builders.
This approach to realizing land values and accelerating absorption of lots will be considered for other communities in Genesis’
inventory.
The following discussion provides additional discussion of progress made on key elements of the growth plan.
1) Obtaining Additional Zoning and Servicing Entitlements
Progress in obtaining additional zoning and servicing entitlements for land continues, although approval processes continue to be
subject to delays and uncertainty. Zoning and servicing entitlements are granted by the applicable municipal authorities. The
timelines discussed below are management’s best estimates at this time, given the uncertainties related to the regulatory approval
process and market conditions.
The following three core projects have made substantial progress in the approval processes at the City of Calgary:
•
•
Logan Landing: Genesis owns 354 acres of undeveloped land in Calgary’s southeast quadrant referred to as “Logan
Landing”. An Area Structure Plan (“ASP”) for a new residential community on these lands was approved by Calgary City
Council (“Council”) in November 2019. Outline plan and land use applications have been submitted and City of Calgary
Planning Commission approval is anticipated in Q1 2023. A GMO preventing development of these lands was removed
in September 2022. Council adopts GMOs to control the supply of land available for development at any time. Final pre-
development approvals are expected to be in place in mid-2023.
Lewiston: Genesis acquired 130 acres of residential development land in north Calgary in 2019, which was subsequently
sold to LLLP in 2022. The GMO preventing development was removed by Council in September 2022. Outline plan and
land use applications approvals were received from Council in November 2022. Site grading has been completed and
Genesis is ready to develop this community. Phase 1 Tentative Plan and engineering drawings have been submitted for
approval and Genesis plans to proceed with servicing in Spring 2023.
• Huxley (Belvedere): Genesis has prepared and submitted an outline plan and land use plans to the City of Calgary for
the 157 acres it acquired in Q2 2022, in the Belvedere ASP. These lands are not subject to a GMO and Genesis is
working to have Outline Plan and Land Use approvals in Q2 2023 to allow site grading to commence in Q3 2023.
The following project is progressing through approval process at Rocky View County and no changes occurred in Q4 2022:
• OMNI ASP (in North Conrich): Genesis has received ASP approval on a 185-acre commercial and retail project on a
portion of the lands as Genesis controls 610 acres of undeveloped land in the County bordering the northeast quadrant
of the City of Calgary. Progress continues with the County on the development of a conceptual scheme for this project,
with first reading received in September 2022. Genesis is working with the County, City of Calgary and the Province to
finalize plans for an interchange at Stoney and Airport Trails to enhance transportation access to these lands and a plan
to address other intermunicipal services.
2) Development and Sale of Land Parcels
Genesis continues to develop and implement 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.
Genesis periodically sells land parcels, generally for multi-family or commercial use, that have been developed within its
communities. Non-core land positions are also sold to third parties from time to time in the ordinary course of Genesis’ business.
During 2022, Genesis completed the sales of four development land parcels in the City of Calgary; a 2.65-acre parcel for cash
consideration of $3,192, a 2.42-acre for cash consideration of $3,146, a 3.68-acre parcel for cash consideration of $3,864, and
closed the sale of a 3.32-acre parcel of development land in the City of Airdrie for cash consideration of $2,200.
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
In addition, Genesis sold a 3.22-acre multi-family site, with a value of $3,589, to Sage Hill Estates Apartment LP (“SHEA LP”) in
return for 50% of the units in SHEA LP. SHEA LP plans to build a 300-unit rental apartment complex on this land which is a new
growth initiative by Genesis.
3) Servicing Additional Phases
Genesis commenced servicing of new phases in 2022:
• Bayside: The servicing of Bayside phase 14 in Airdrie will add 108 single-family lots and a 1.3-acre park. Single-family
lots became available to builders in Q3 2022 and are expected to be fully serviced in 2023. Construction of a vehicle
bridge to increase the connectivity of the community has been completed. GBG and a third party are the home builders
in this phase;
• Bayview: Servicing of two phases - Bayview phase 4 in Airdrie will add 120 single-family lots and a 3.6-acre multi-family
parcel. Single-family lots became available to builders in Q3 2022 and are expected to be fully serviced in 2023. GBG
and a third party are the home builders in this phase. In addition, Bayview phase 6 is under construction and will add
224 lots which will be available to builders in the fall of 2023 and fully serviced in 2024. GBG and two third parties will be
the home builders in this phase; and
• Sage Hill: This well-located northwest Calgary community is considered an “infill development”. Servicing of the final
phase of this 51-acre development commenced in 2022. This phase will provide 60 lots and a 2.9-acre multi-family
parcel. Single-family lots became available to builders in Q3 2022 and are expected to be fully serviced in 2023. GBG
and a third party are the home builders in this phase.
4)
Investing in Additional Lands
Genesis entered into a binding agreement to acquire approximately 157 acres of future residential development land (Huxley) in
the Belvedere ASP on the east side of the City of Calgary in Q1 2021. A non-refundable deposit of $2,186 was paid in February
2021. Genesis closed the transaction on April 4, 2022 and the balance of $26,964 was paid to the seller. The land is not subject
to a GMO and Genesis is in the process of obtaining final land use and outline plan approvals from the City of Calgary. The Huxley
land is expected to yield about 1,400 housing units including single-family and townhome units once fully developed. In addition,
during Q4 2021, Genesis entered into a binding agreement to acquire approximately 3.56 acres of land adjacent to this land for
$663. Genesis paid a deposit of $132, with the balance of $531 to be paid on closing, which is expected to be in the second quarter
of 2023.
In Q2 2022, The Corporation entered into an agreement to acquire approximately 160 acres of future residential development land
in the southeast sector of the City of Calgary for $30,000. The Corporation has paid a non-refundable deposit of $3,300 with the
balance due on closing which is scheduled for January 31, 2025.
During Q3 2022, Genesis paid $6,699 to Genesis Limited Partnership #4 and GLP5 NE Calgary Development Inc. (controlled
entities within the consolidated entity) to acquire their 49% undivided interest in 456 acres of land in North Conrich in Rocky View
County (adjacent to the eastern boundary of Calgary). This transaction brings Genesis interest in these lands to 100%. Refer to
heading “Related Party Transactions” in this MD&A for additional information.
Building and selling homes in communities developed by other parties is one of the strategies being implemented to drive growth
and profitability in Genesis’ home building division, GBG. GBG is now active in 10 third party communities and to date has
contracted a total of 477 lots in these communities.
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 works with 3 third party
builders of which 2 are currently building in communities for which Genesis is the land developer.
6
21
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
6)
Increasing the Velocity of Homes Sold by GBG
As of December 31, 2022, Genesis had 205 outstanding new home orders, an increase of 45% compared to 141 as at December
31, 2021. In Q4, GBG entered into 31 new home sales contracts, a decrease of 62% from 81 new home sales contracts in Q4
2021. In YE 2022, GBG entered into 233 new home sales contracts, a decrease of 6% from 249 new home sales contracts in YE
2021. To increase the velocity of homes sold, adapt to the current market conditions, and manage supply chain and cost increases,
Genesis:
•
•
•
•
acquires lots in several communities from third party developers;
adjusts pricing on select models to meet market conditions;
pursues construction cost efficiencies and actively manages supply chain challenges; and
continues to monitor and control overhead costs.
Since 2020, GBG has contracted to acquire 477 lots in the CMA, for total consideration of $72,577 from third party developers in
the communities of Alpine Park, Clearwater, Fireside, Homestead, Silverton and Vermilion Hill. As of December 31, 2022, 81
homes built on these lots have been sold to date and a further 68 new homes are under contract in these communities.
7) Liquidity and Return of Capital
Liquidity: As of December 31, 2022, Genesis had $36,598 of cash and cash equivalents on hand (YE 2021 - $63,975), loan and
credit facilities of $65,057 (YE 2021 - $32,668), real estate assets of $265,683 (YE 2021 - $218,855) and total assets of $364,140
(YE 2021 - $324,929). Cash and cash equivalents at December 31, 2021 included the proceeds of the December 2021 equity
issue of approximately $30,000. The ratio of loan and credit facilities to total assets was 18% as at December 31, 2022 compared
to 10% at December 31, 2021.
Return of Capital to Shareholders: In 2022 Genesis declared and paid dividends of $0.15 per share ($8,530), being $0.075 in Q3
and $0.075 in Q4. Since 2014, when Genesis paid its first dividend, it has returned an aggregate of $66,668 to shareholders by
way of dividends and bought back nearly 3.1 million common shares for an aggregate cost of $8,787.
Outlook
Supported by a solid financial position, a backlog of new-home orders at December 31, 2022 and the relative strength of the
Calgary economy, Genesis continues to consider growth opportunities, while carefully monitoring new home orders and the Calgary
housing market. Housing price increases in recent years, rapidly increasing interest rates, inflationary pressures, tight labour
markets and continuing supply chain constraints are impacting new home sales, home affordability and our ability to build new
homes. These and other factors will likely negatively impact Genesis new home orders in 2023, although the supply of homes for
sale in the Calgary market remains tight at 1.87 months, the lowest level reported for December in over a decade. In its December
2022 report, the Calgary Real Estate Board (CREB) noted that further interest rate increases are expected to slow sales activity,
with some slippage in price growth possible in 2023. CREB is forecasting a reduction in home sales in 2023, to 25,920, down from
a record high in 2022 of 27,672. RBC forecasts that Alberta will avoid a recession in 2023, and forecasts 1.9% growth in 2023, a
marked deceleration from the 4.9% rate projected for 2022. Given the changing market conditions and general economic
uncertainty, Genesis remains cautious in planning and executing its strategic and business plans.
22
7
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Land Development
Three months ended December 31,
Year ended December 31,
2022
2021
% change
2022
2021
% change
Key Financial Data
Residential lot revenues (1)
Development land revenues
18,015
6,338
Direct cost of sales
(20,466)
(4,883)
Gross margin before reversal of write-
down (2)
Gross margin before reversal of write-
down (%) (2)
Reversal of write-down of real estate
held for development and sale
Gross margin
Gain in investments in land
development entities
Other expenses
Earnings before income taxes
Key Operating Data
Residential lots sold to third parties
Residential lots sold through GBG -
home building
Total residential lots sold
8,423
113.9%
-
N/R (3)
N/R (3)
9.8%
40,639
15,991
41,095
5,870
(47,489)
(31,616)
(1.1%)
172.4%
50.2%
9,141
15,349
(40.4%)
3,887
3,540
16.0%
42.0%
(61.9%)
16.1%
32.7%
(50.8%)
1,086
4,973
560
(2,726)
2,807
84
22
106
3,265
6,805
562
(2,458)
2
47
49
(66.7%)
1,086
4,268
(74.6%)
(26.9%)
10,227
19,617
(47.9%)
(0.4%)
10.9%
N/R (3)
(53.2%)
116.3%
(1.2%)
560
(9,061)
1,726
144
92
236
172
562
(8,138)
12,041
60
187
247
166
(0.4%)
11.3%
(85.7%)
140.0%
(50.8%)
(4.5%)
3.6%
4,909
(42.8%)
172
Average revenue per lot sold
(1) Includes residential lot sales to third parties, residential lot sales to GBG and other revenues
(2) Non-GAAP financial measure. Refer to heading “Non-GAAP Measures” in this MD&A
(3) Not relevant due to the size of the change
170
Gross margin by source of revenue
Three months ended December 31,
Year ended December 31,
2022
2021
% change
2022
2021
% change
Residential lots
Residential lot revenues (1)
Direct cost of sales
Gross margin
18,015
(14,207)
3,808
8,423
(4,883)
3,540
42.0%
Gross margin (%)
(1) Includes residential lot sales to third parties, residential lot sales to GBG and other revenues
(2) Not relevant due to the size of the change
21.1%
113.9%
40,639
41,095
N/R (2)
7.6%
(49.8%)
(32,526)
(26,397)
8,113
20.0%
14,698
35.8%
(1.1%)
23.2%
(44.8%)
(44.1%)
8
23
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Development land
Development land revenues
Direct cost of sales
Gross margin before reversal of write-
down (1)
Gross margin before reversal of write-
down (%) (1)
Reversal of write-down of real estate
held for development and sale
Gross margin
Three months ended December 31,
Year ended December 31,
2022
2021
% change
2022
2021
% change
6,338
(6,259)
79
1.2%
1,086
1,165
-
-
-
-
3,265
3,265
N/R (2)
N/R (2)
N/R (2)
N/R (2)
(66.7%)
(64.3%)
15,991
(14,963)
1,028
6.4%
1,086
2,114
5,870
(5,219)
651
172.4%
N/R (2)
57.9%
11.1%
(42.3%)
4,268
4,919
(74.6%)
(57.0%)
(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
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
Total residential lot sales revenues in YE 2022 were $40,639 (236 lots) down from $41,095 (247 lots) in YE 2021. In YE 2022, 144
lots were sold to third party builders compared to 60 lots sold to third party builders in YE 2021. In YE 2022, GBG sold 92 homes
on Genesis lots, down 51% from 187 homes sold on Genesis lots in YE 2021. Residential lot sales to third party builders occur
periodically, usually when newly developed phases first become available for sale.
Total residential lot sales revenues in Q4 2022 were $18,015 (106 lots) up from $8,423 (49 lots) in Q4 2021. In Q4 2022, 84 lots
were sold to third party builders compared to two lots sold to third party builders in Q4 2021. In Q4 2022, GBG also sold 22 homes
on Genesis lots, down 53% from 47 homes sold on Genesis lots in Q4 2021.
Five parcels of development land were sold in YE 2022 for $15,991 while four parcels of development land were sold in YE 2021
for $5,870 (including one owned by a limited partnership for $925). In Q4 2022, two development land parcels were sold for $6,338
while there were no development land parcel sales in Q4 2021. 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 20% in YE 2022 compared to 36% in YE 2021. Residential lots had a gross margin of 21%
in Q4 2022 compared to 42% in Q4 2021. Gross margins were lower in both Q4 2022 and YE 2022 compared to the same periods
in 2021, as the sales in 2022 included 81 lots (2021 - 35 lots) in the community of Sage Hill which have no margin due to write-
downs previously taken. Residential lot and development land margins can vary significantly as described in the “Factors Affecting
Results of Operations” in this MD&A. Gross margin before reversal of write-down is a non-GAAP financial measure. Refer to
heading “Non-GAAP Measures” in this MD&A.
Reversal of write-down of real estate held for development and sale
During 2022, Genesis recorded a net reversal of write-down of $1,086 related to write-downs previously taken on real estate held
for development and sale. The reversal of the write-down was taken to reflect the estimated returns realizable on completion of
development and sale of these lands (2021 - $4,268).
24
9
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
LOCATION OF GENESIS’ LAND DEVELOPMENT PROJECTS
25
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT10 Gain in investments in land development entities The fair value of investments in land development entities are based on the market value approach method which were obtained from external third-party appraisals. This method uses prices and other relevant information that have been generated by market transactions involving identical or comparable assets. The Corporation recorded $560 as a gain in investment in land development entities during 2022 (2021 - $562). Other expenses Three months ended December 31, Year ended December 31, 2022 2021 % change 2022 2021 % change Other expenses General and administrative expense (1,788) (1,754) 1.9% (6,435) (5,541) 16.1% Selling and marketing expense (567) (496) 14.3% (1,756) (1,753) 0.2% Finance income 352 81 N/R (1) 488 266 83.5% Finance expense (723) (289) N/R (1) (1,358) (1,110) 22.3% Total (2,726) (2,458) 10.9% (9,061) (8,138) 11.3% (1) Not relevant due to the size of the change The components of other expenses and the changes are shown in the table above. In YE 2022, other expenses totaled $9,061 or 11% higher than $8,138 incurred in YE 2021. Other expenses were higher in YE 2022 due to higher general and administrative expense, specifically cash and share-based compensation expenses. General and administrative expenses in YE 2022 included higher share-based compensation expenses of $613 compared to $352 in YE 2021 resulting from an increase in DSUs issued and the associated vesting. Higher compensation expenses in 2022 also resulted from higher headcount in 2022 compared to 2021. In Q4 2022, other expenses totaled $2,726 or 11% higher than $2,458 incurred in Q4 2021. Other expenses were higher in Q4 2022 due to higher finance expense generated from higher interest rates and higher average loan balances compared to Q4 2021. LOCATION OF GENESIS’ LAND DEVELOPMENT PROJECTS
Location of Genesis’ Land Development Projects
26
11
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
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,
2022
2021
% change
2022
2021
% change
Key Financial Data
Revenues (1)
Direct cost of sales
Gross margin
Gross margin (%)
Other expenses
Earnings before income taxes
Key Operating Data
Homes sold (units)
Average revenue per home sold
New home orders (units)
33,799
26,024
(29,016)
(22,627)
4,783
14.2%
(3,732)
1,051
57
593
31
3,397
13.1%
(2,769)
628
51
510
81
Outstanding new home orders at period end (units)
(1) Revenues include residential home sales and other revenue
29.9%
28.2%
40.8%
8.4%
34.8%
67.4%
11.8%
16.3%
(61.7%)
100,680
(83,749)
16,931
16.8%
(12,640)
4,291
169
596
233
205
92,416
(80,190)
12,226
13.2%
(9,912)
2,314
191
484
249
141
8.9%
4.4%
38.5%
27.3%
27.5%
85.4%
(11.5%)
23.1%
(6.4%)
45.4%
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 $100,680 (169 units) in YE 2022, 9% higher than YE 2021 revenues of
$92,416 (191 units). In addition, 233 homes were contracted for sale in YE 2022, a decrease of 6%, as compared to 249 in YE
2021, resulting in 205 outstanding new home orders at the end of 2022 as compared to 141 outstanding new home orders at the
end of 2021.
Revenues for single-family homes and townhouses were $33,799 (57 units) in Q4 2022, 30% higher than Q4 2021 revenues of
$26,024 (51 units). In addition, 31 homes were contracted for sale in Q4 2022, a decrease of 62%, as compared to 81 in Q4 2021.
Homes sold in YE 2022 had an average price of $596 per home compared to $484 in YE 2021. Homes sold in Q4 2022 had an
average price of $593 per home compared to $510 in Q4 2021. Fluctuations in the average revenue per home sold are due to
differences in product mix, community, and market conditions. During 2022 and 2021, GBG's single-family homes product ranged
in price from $315-$1,900 depending on the location and the model being offered. Similarly, GBG's townhouse product ranged in
price from $165-$355 depending on the location and the models being offered. In Q4 2022, 56 single-family homes and one
townhouse were sold compared to 42 single-family homes and 9 townhouses in Q4 2021. In YE 2022, 162 single-family homes
and 7 townhouses were sold compared to 150 single-family homes and 41 townhouses in YE 2021.
92 of the 169 homes sold in YE 2022 were built on residential lots supplied by Genesis, with lot revenues of $16,953 while 187 of
the 191 homes sold in YE 2021 were built on residential lots or parcels supplied by Genesis, with lot revenues of $29,620. In Q4
2022, 22 of the 57 homes sold were built on residential lots supplied by Genesis, with lot revenues of $3,995 while 47 of the 51
homes sold in Q4 2021 were built on residential lots or parcels supplied by Genesis, with lot revenues of $7,916.
Since 2020, GBG has contracted to acquire 477 lots in the CMA from third party developers in the communities of Alpine Park,
Clearwater, Fireside, Homestead, Silverton and Vermilion Hill. As of December 31, 2022, 81 homes built on these lots have been
sold to date and a further 68 new homes are under contract in these communities. Genesis views this as one of its key strategies
to drive growth in GBG and believes this strategy has been very successful.
12
27
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
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. Historically, the delivery time of a pre-construction
home was determined at the time of sale and typically ranged between 6 to 10 months; in 2021 supply chain issues became a
significant concern, with the supply of some materials and products being unpredictable, and delivery timelines have increased to
10 to 12 months. 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
complexes for which GBG commences construction prior to selling all the units in any individual 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 2022, GBG had $48,506 of work in progress, of which approximately $1,378 was related to spec homes (YE
2021 - $28,870 and $2,602, respectively).
The following table shows the split between quick possession sales (spec homes that are contracted and delivered within 90 days)
and pre-construction homes (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,
2022
2021
% change
2022
2021
% change
Quick possession sales (units)
Pre-construction home sales (units)
Total home sales (units)
7
50
57
7
44
51
0.0%
13.6%
11.8%
20
149
169
66
125
191
(69.7%)
19.2%
(11.5%)
Gross margin
Genesis realized gross margin on home sales of 16.8% in YE 2022 as compared to 13.2% in YE 2021 and gross margin on home
sales of 14.2% in Q4 2022 compared to 13.1% in Q4 2021. Fluctuations in gross margin are due to differences in product and
community mix. Market conditions may also drive price adjustments which could impact gross margin. In YE 2022, 162 single-
family homes and 7 townhouses were sold compared to 150 single-family homes and 41 townhouses in YE 2021. In Q4 2022, 56
single-family homes and one townhouse were sold compared to 42 single-family homes and 9 townhouses in Q4 2021.
Other expenses
Other expenses
General and administrative expense
Selling and marketing expense
Finance income
Finance expense
Total
(1) Not relevant due to the size of the change
Three months ended December 31,
Year ended December 31,
2022
2021
% change
2022
2021
% change
(2,338)
(1,248)
1
(147)
(1,867)
(885)
16
(33)
(3,732)
(2,769)
25.2%
41.0%
(93.8%)
N/R (1)
34.8%
(8,351)
(4,059)
24
(254)
(6,484)
(3,390)
28.8%
19.7%
72
(66.7%)
(110)
N/R (1)
27.5%
(12,640)
(9,912)
The components of other expenses and the changes are shown in the table above.
In YE 2022, other expenses were $12,640, 28% higher than $9,912 incurred in YE 2021. In Q4 2022, other expenses totaled
$3,732, 35% higher than $2,769 incurred in Q4 2021. Other expenses were higher in both Q4 and YTD 2022 due to higher selling
and marketing expenses and general and administrative expense, specifically compensation expense. Higher compensation
expenses in 2022 resulted from higher headcount supporting the growth strategy, in 2022 compared to 2021. General and
administrative expenses in YE 2022 included higher share-based compensation expenses of $408 compared to $235 in YE 2021
resulting from the increase in DSUs issued and the associated vesting. Increase in selling and marketing expenses was primarily
due to higher levels of activity in the home building business.
13
28
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
LOCATION OF GBG BUILDING COMMUNITIES
29
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT14 Location of GBG Building Communities 14 Location of GBG Building Communities Real Estate Held for Development and Sale
Real estate held for development and sale
Provision for write-downs
Net book value
December 31,
2022
270,214
(4,531)
265,683
2021
% change
227,984
18.5%
(9,129)
(50.4%)
218,855
21.4%
Refer to note 5 in the consolidated financial statements for the years ended December 31, 2022 and 2021 which details the
components of the changes in the gross book value and net book value of real estate held for development and sale.
Real estate held for development and sale increases as a result of acquisitions and development activities and declines as a result
of sales of residential lots, homes and development land parcels. Real estate held for development and sale increased by $46,828
as at YE 2022 compared to YE 2021 mainly due to: (i) the acquisition of 157 acres of future residential development land (Huxley)
in the Belvedere ASP in the City of Calgary for $29,150; (ii) increase in residential lots from third party developers for $10,881; (iii)
active development and construction activities; and (iv) the net reversal of $1,068 of write-downs previously taken on real estate
held for development and sale.
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, 2022:
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
Calgary E - Huxley
Rocky View County - North Conrich
Rocky View County - OMNI
Sub-total
Other lands (2) - non-core
Total land development
Home building construction work-in-progress
Third party lots
Total home building
Total land development and home building
Limited Partnerships (3)
Total real estate held for development and sale
Net Book Value
Lots, multi-
family &
commercial
parcels
Land held for
development (1)
16,093
3,786
22,580
315
-
-
-
-
-
42,774
34
42,808
32,578
-
9,142
-
42,002
46,671
30,219
6,794
2,983
170,389
1,841
172,230
Total
48,671
3,786
31,722
315
42,002
46,671
30,219
6,794
2,983
213,163
1,875
215,038
24,802
23,704
48,506
263,544
2,139
265,683
(1) Land held for development comprises lands not yet subdivided into single-family lots or parcels
(2) Other lands are non-core and available for sale
(3) Undivided interest of two limited partnerships in the North Conrich “OMNI” project. Net of intra-segment eliminations of $970
30
15
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
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, 2022:
Serviced Lots, Multi-family and
Commercial Parcels, by Community
Airdrie - Bayside, Bayview, Canals
Net Book
Value
16,093
Single-family
lots
127
Townhouse
units
34
Townhouse/
multi-family
parcels
1
Commercial
parcels
-
Calgary NW - Sage Meadows
Calgary NW - Sage Hill
Calgary NE - Saddlestone
Other lots - non-core
Total
3,786
22,580
315
42,774
34
42,808
-
76
5
208
13
221
-
-
-
34
-
34
1
1
-
3
-
3
-
2
-
2
-
2
The following table presents the estimated equivalent, by community of single-family lots and multi-family and commercial acres
of Genesis’ land held for development (shown previously) as at December 31, 2022, based on the Corporation’s plans for the
development of its lands. Refer to the section in this MD&A entitled “Obtaining Additional Zoning and Servicing Entitlements” for
the status of Lewiston, Logan Landing, Huxley (Belvedere) and North Conrich. The timelines discussed are management’s best
estimates at this time, given the uncertainties related to the regulatory approval process and market conditions.
Land Held for Development, by
Community
Airdrie - Bayside, Bayview
Calgary NW - Sage Hill
Calgary N - Lewiston
Calgary SE - Logan Landing
Calgary E - Huxley
Rocky View County - North Conrich
Rocky View County - OMNI
Other lands - non-core
Total
(1) Land not yet subdivided into single-family and other lots or parcels
Amounts Receivable
Amounts receivable
Net Book
Value
Land (acres) (1)
Estimated Equivalent if/when Developed
Single-family
(lots)
Multi-family
(acres)
Commercial
(acres)
32,578
9,142
42,002
46,671
30,219
6,794
2,983
170,389
1,841
172,230
133
10
134
354
157
425
110
1,323
300
1,623
910
60
915
1,587
1,433
-
-
4,905
-
4,905
5
3
3
7
-
-
-
18
-
18
2
-
4
3
-
-
-
9
-
9
December 31,
2022
22,165
2021
% change
13,632
62.6%
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. There are no amounts receivable past due.
The increase of $8,533 in amounts receivable was mainly due to higher lot sales to third party builders. As at YE 2022, Genesis
had $21,207 in amounts receivable related to the sale of 155 lots to third party builders compared to $12,135 (related to 77 lots) in
amounts receivable as at YE 2021.
Individual balances due from third party builders at YE 2022 that were 10% or more of total amounts receivable were $21,207 from
two third party builders (YE 2021 - $12,135 from three third party builders).
16
31
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Cash Flows (used in) 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” in this MD&A.
Three months ended
December 31,
2022
2021
Year ended
December 31,
2022
Cash flows (used in) from operating activities
(1,686)
(6,326)
(43,756)
Cash flows (used in) from operating activities per share - basic and
diluted
(0.03)
(0.15)
(0.77)
The changes in cash flows from operating activities between Q4 2022 and Q4 2021 consist of the following:
2021
2,388
0.05
Three months ended December 31,
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 land and lot acquisitions
Cash outflows paid to suppliers and employees
Other cash inflows
Income tax payments
Total
2022
33,425
3,135
6,338
(26,032)
(8,215)
(3,394)
(6,787)
388
(544)
2021
$ change
26,776
3,220
2,719
(16,675)
(17,277)
(1,165)
(4,434)
510
-
6,649
(85)
3,619
(9,357)
9,062
(2,229)
(2,353)
(122)
(544)
4,640
(1,686)
(6,326)
The changes in cash flows from operating activities between YE 2022 and YE 2021 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 land and lot acquisitions
Cash outflows paid to suppliers and employees
Other cash inflows
Income tax (payments) refunds
Total
Year ended December 31,
2022
104,049
16,742
15,991
(84,478)
(33,820)
(39,245)
(19,572)
823
(4,246)
(43,756)
2021
$ change
95,480
13,981
8,589
8,569
2,761
7,402
(57,323)
(27,155)
(39,868)
6,048
(3,993)
(35,252)
(16,053)
(3,519)
1,115
460
(292)
(4,706)
2,388
(46,144)
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. On receipt of a
minimum 15% non-refundable deposit after agreed to services pertaining to the property have been substantially performed,
17
32
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Genesis 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.
The year over year change in cash flows from operating activities is mainly due to higher cash outflows for land and lot acquisitions,
home building activities and income tax payments. These were partially offset by higher cash inflows from residential lot, residential
homes and development land sales. Cash outflows for lots and land acquisitions include the $26,964 payment in respect of the
acquisition of approximately 157 acres of future residential development land (Huxley) in the Belvedere ASP in the City of Calgary
as well as the payment of a $3,300 non-refundable deposit for the acquisition of approximately 160 acres of future residential
development land in southeast Calgary. Higher outflows on home building activities reflect the large number of outstanding new
home orders for which homes are being built. In addition, higher income tax payments were made in YE 2022 compared to YE
2021.
LIABILITIES AND SHAREHOLDERS’ EQUITY
The following table presents Genesis’ liabilities and equity at YE 2022 and YE 2021:
Loan and credit facilities
Customer deposits
Accounts payable and accrued liabilities
Accounts payable related to residential lot purchases
Lease liabilities
Provision for future development costs
Income tax payable
Total liabilities
Non-controlling interest
Shareholders’ equity
Total liabilities and equity
The ratio of 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,
2022
65,057
15,753
12,470
17,944
841
24,034
704
136,803
2,705
224,632
364,140
% of total
18%
4%
3%
5%
0%
7%
0%
37%
1%
62%
100%
2021
32,668
9,002
16,808
9,600
842
17,979
2,092
88,991
7,314
228,624
324,929
% of total
10%
3%
5%
3%
0%
6%
1%
28%
2%
70%
100%
December 31, 2022 December 31, 2021
136,803
227,337
60%
88,991
235,938
38%
18
33
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Loan and Credit Facilities
Corporate revolving line of credit
Demand land project servicing loans
Demand operating line – LLLP
Demand operating line for single-family homes
Vendor-take-back mortgage payable - Lewiston
Unamortized deferred fees on loan and credit
facilities
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Q4 2021
25,626
12,522
20,198
7,364
-
28,688
8,450
-
4,163
-
11,538
4,186
-
3,014
-
12,219
3,997
-
27
-
16,237
5,794
-
1,917
9,312
65,710
41,301
18,738
16,243
33,260
(653)
(639)
(724)
(810)
(592)
Balance, end of period
65,057
40,662
18,014
15,433
32,668
The continuity of Genesis’ loan and credit facilities, excluding deferred fees, is as follows:
Balance, beginning of year
Advances
Repayments
Balance, end of year
Year ended
December 31, 2022
Year ended
December 31, 2021
33,260
84,151
(51,701)
65,710
21,471
61,517
(49,728)
33,260
Loan and credit facilities are used primarily to finance the costs of developing land, building homes and for land purchases. Genesis
accesses these facilities, cash from operations and cash on hand in a balanced manner to finance its operations.
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.
Genesis and its consolidated entities were in compliance with all lender covenants for all periods in this MD&A.
Corporate revolving line of credit
Genesis has a corporate revolving line of credit with a major Canadian financial institution at an interest rate per annum of prime
+1.90%. This is secured by specific dedicated lands and a general corporate charge on all assets of the Corporation. As at
December 31, 2022, the amount drawn on this facility was $25,626 (YE 2021 - $16,237). In January 2023, the facility was extended
and now matures on February 1, 2026.
Demand land project servicing loans
As at December 31, 2022, Genesis had land project servicing facilities with $12,522 drawn (YE 2021 - $5,794). Up to $14,555 is
available to finance future development and servicing costs as land development activities progress. These facilities bear interest
at prime +0.50% per annum and loan amounts are payable between May 12, 2024 and March 19, 2025.
Demand operating line for LLLP
During Q4 2022, LLLP put in place a demand operating credit facility of $21,500 with a major Canadian financial institution at an
interest rate per annum of prime +0.50%. This facility is secured by specific dedicated land, and a corporate guarantee by Genesis
and matures on October 27, 2025. As at December 31, 2022, the amount drawn on this facility was $20,198.
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19
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Demand operating line for single-family homes
GBG has a demand operating line of $10,000 bearing interest at prime +0.75% per annum. During Q1 2022, the facility increased
from $6,500 to $10,000. As at December 31, 2022, the amount drawn on this facility was $7,364 (YE 2021 - $1,917).
Vendor-take-back mortgage payable
Genesis entered into an $18,624 vendor-take-back mortgage on the purchase of its north Calgary lands (Lewiston) in September
2019. The vendor-take-back mortgage was secured by the land, had an interest rate of 5% per annum and was repayable in two
equal installments of $9,312 in May 2021 and 2022. The final installment of $9,312 was paid in January 2022.
Provision for Future Development Costs
When Genesis sells lots, land parcels and homes, it remains responsible for the payment of 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 estimated future costs relating to previously sold homes, which are primarily for seasonal and other work (such
as finishing and landscaping) and estimated warranty expenses over the one-year warranty period.
FDC as at YE 2022 was $20,105 for the land division (YE 2021 - $15,096) and $3,929 for GBG (YE 2021 - $2,883). For additional
details, please see information provided under the heading “Critical Accounting Estimates” in this MD&A.
LIQUIDITY AND CAPITAL RESOURCES
Genesis had cash and cash equivalents of $36,598 and loan and credit facilities of $65,057 at YE 2022 compared to $63,975 and
$32,668 respectively at YE 2021, resulting in net debt (refer to heading “Non-GAAP Measures” in this MD&A) of $28,459 at YE
2022 compared to net cash (refer to heading “Non-GAAP Measures” in this MD&A) of $31,307 at YE 2021. Cash and cash
equivalents at YE 2021 included $29,894 of net proceeds from the December 2021 rights offering. The reduction of cash and cash
equivalents in YE 2022 is mainly due to the payment of $26,964 relating to the acquisition of the Huxley land, the payment of a
deposit of $3,300 for the acquisition of approximately 160 acres of future residential development land in southeast Calgary and
the payment of the final $9,312 installment relating to the VTB payable on the Lewiston lands. The components of loan and credit
facilities are detailed below. For additional details, please see information provided under the heading “Loan and Credit Facilities”
in this MD&A.
Cash and cash equivalents
Corporate revolving line of credit
Demand land project servicing and home building loans
Demand operating line - LLLP
VTB payable
Total loan and credit facilities
Net (debt) cash (1) (2)
(1) Calculated as the difference between cash and cash equivalents and total loan 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
20
December 31,
2021
% change
63,975
15,723
7,633
-
9,312
32,668
31,307
(42.8%)
59.7%
N/R (3)
N/R (3)
N/R (3)
99.1%
N/R (3)
2022
36,598
25,104
19,815
20,138
-
65,057
(28,459)
35
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Loan and credit facilities as a percentage of total assets (1)
Corporate revolving line of credit
Demand land project servicing and home building loans
Demand operating line - LLLP
VTB payable
Loan and credit facilities to total assets
Total liabilities to equity (2)
(1) Calculated as each component of loan 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 (debt) cash (1) as a percentage of total assets
Cash and cash equivalents
Loan and credit facilities
Net (debt) cash (1) (2)
Net (debt) cash to total assets (3)
December 31,
2021
4.8%
2.3%
-
2.9%
10.0%
37.7%
December 31,
2021
63,975
32,668
31,307
9.6%
2022
6.9%
5.4%
5.5%
-
17.8%
60.2%
2022
36,598
65,057
(28,459)
(7.8%)
% change
43.8%
N/R (3)
N/R (3)
N/R (3)
78.0%
59.7%
% change
(42.8%)
99.1%
N/R (4)
N/R (4)
(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 loan and credit facilities
(3) Calculated as net (debt) cash divided by total assets
(4) Not relevant due to size of the change
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) and commitments as they become due.
Finance Expense
Interest incurred
Interest relating to VTB (1)
Financing fees amortized
Interest and financing fees capitalized
Three months ended December 31,
Year ended December 31,
2022
(1,092)
-
(87)
309
(870)
2021
(200)
(117)
(74)
69
(322)
% change
N/R (2)
N/R (2)
17.6%
N/R (2)
N/R (2)
2022
(1,989)
(105)
(340)
822
2021
(479)
(658)
(249)
166
(1,612)
(1,220)
% change
N/R (2)
(84.0%)
36.5%
N/R (2)
32.1%
(1) VTB related to Lewiston lands. VTB was repaid in January 2022
(2) Not relevant due to size of the change
Finance expense was higher in Q4 2022 and YE 2022 due to higher interest rates and higher average loan balances. This was
partially offset by (i) lower interest relating to the VTB which was repaid in January 2022; and (ii) higher interest and financing fees
capitalized as a component of development activities in 2022.
The weighted average interest rate of loan agreements with various financial institutions was 7.52% (YE 2021 - 3.92%) based on
December 31, 2022 balances.
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21
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Income Tax Payable
The continuity in income tax payable is as follows:
Balance, beginning of year
Provision for current income tax
Net (payments) receipts
Balance, end of year
December 31, 2022
December 31, 2021
2,092
2,858
(4,246)
704
(559)
2,191
460
2,092
As at December 31, 2022, income tax payable is a result of tax on the current year’s income, offset by installments payments made
during the year.
Shareholders’ Equity
As at March 2, 2023, the Corporation had 56,855,107 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 initiated an NCIB on December 14, 2022. The NCIB commenced on December 16, 2022 and will terminate on
the earlier of: (i) December 15, 2023; 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 2,843,166 common shares under the NCIB.
The prior NCIB, which expired on October 12, 2021, allowed the Corporation to purchase for cancellation up to 2,098,885 common
shares.
The Corporation repurchased 9,863 common shares between January 1, 2023 and March 2, 2023 for cancellation. As of the date
of this MD&A, there are 2,833,303 common shares remaining for purchase under the currently authorized NCIB.
No purchases were made under the NCIB during the years ended December 31, 2022 and 2021.
Contractual Obligations and Debt Repayment
Contractual obligations (excluding accounts payable, accrued liabilities, income tax payable, customer deposits and provision for
future development costs) at YE 2022 were as follows:
Loan and
Credit
Facilities (1)
Levies and
Municipal Fees
Land and Lot
Purchase
Contracts
Lease
Obligations (2)
7,475
3,841
800
-
7,932
5,262
44,231 (3)
181
547
447
421
493
Total
23,318
18,072
69,650
26,300
Current
January 2024 to December 2024
January 2025 to December 2025
January 2026 and thereafter
Total
7,364
8,522
24,198
25,626 (4)
65,710
12,116
57,606
1,908
137,340
(1) Excludes deferred fees on loan and credit facilities
(2) Includes variable operating costs
(3) Includes $26,700 related to the purchase of approximately 160 acres of future residential development land in the southeast sector of the City of Calgary. The purchase is scheduled
to close on January 31, 2025
(4) Subsequent to December 31, 2022, Genesis’ corporate revolving credit facility of up to $50,000 was extended and now matures on February 1, 2026.
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.
Land and lot purchase contracts of $57,606 include $30,375 relating to the purchase of lots as part of GBG’s operations. These
contracts generally require an initial deposit with the balance of the contract price being paid at agreed future dates.
Genesis has certain lease agreements that are entered in the normal course of operations. Genesis signed a sublease for a new
head office in Calgary in April 2020 and moved in September 2020. The sublease expires in February 2027 and the total payments
22
37
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
over the remaining term of the lease for base rent and parking is $741. 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.
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). All ten installments totaling $5,000 were paid as at December 31, 2021. 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.
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.
Current Contractual Obligations and Commitments
Loan and credit facilities, excluding deferred fees on loan and credit facilities
Accounts payable and accrued liabilities
Accounts payable related to residential lot purchases
Total short-term liabilities
Levies and municipal fees
Land and lot purchase contracts
Lease obligations
December 31, 2022
December 31, 2021
7,364
12,470
13,036
32,870
7,475
7,932
547
48,824
11,229
16,808
7,789
35,826
4,942
33,563
427
74,758
At YE 2022, Genesis had obligations due within the next 12 months of $48,824 of which $7,364 related to loan 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.
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 2022, these amounted to approximately $5,414 (YE 2021
- $7,747).
Levies and Municipal Fees
For additional details, please see information provided under the heading “Contractual Obligations and Debt Repayment” in this
MD&A.
Land and Lot Purchase Contracts
For additional details, please see information provided under the heading “Contractual Obligations and Debt Repayment” in this
MD&A.
38
23
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
SELECTED ANNUAL INFORMATION
Total revenues
Gross margin before reversal of 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
2022
2021
2020
140,357
109,761
103,933
26,072
27,158
4,520
0.08
27,575
31,843
10,877
0.24
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
0.09
364,140
324,929
266,494
296,268
278,156
65,057
32,668
21,470
51,546
31,696
0.15
0.14
-
-
0.23
(1)) Non-GAAP financial measure. Refer to heading “Non-GAAP Measures” in this MD&A
Return on shareholders’ equity (“ROE”) (1)
2022
2.0%
2021
5.2%
2020
0.1%
2019
0.9%
2018
2.1%
Average shareholders’ equity (2)
226,628
208,150
190,817
192,964
196,684
(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 Liquidity and return of capital 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 consist of residential lot sales, development land sales, residential home sales and other revenues. Residential lot
sales volumes were 236, 247 and 225 units in 2022, 2021 and 2020, respectively, reflecting market conditions in each period. In
addition, development land sales were $15,991, $5,870 and $16,628 for 2022, 2021 and 2020 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 169, 191 and 163 in 2022, 2021 and 2020 respectively. Included in this were single-family homes
sales of 162, 150 and 138 units in 2022, 2021 and 2020 respectively.
Gross margin in 2022 was lower mainly due to lower margins of residential lots and development land sales. This was partially
offset by higher margins on residential home sales. Gross margins on development land sales can vary significantly and are also
impacted by write-downs or reversal of write-downs on real estate held for development and sale. There was a net reversal of
write-down of $1,086 in 2022, a reversal of write-down of $4,268 in 2021 and write-downs of $10,822 in 2020 respectively. Net
earnings and net earnings per share - basic and diluted were affected as a result of the above.
Total assets increased by $39,211 in 2022 compared to 2021. This was mainly due to an increase in real estate held for
development and sale by $46,828 and an increase of $8,533 in amounts receivable, partially offset by a reduction of $27,377 in
cash and cash equivalents during the year.
Total assets increased by $58,435 in 2021 compared to 2020. This was mainly due to an increase in real estate held for
development and sale by $25,546 and an increase in cash and cash equivalents of $34,232 primarily from proceeds of rights
offering.
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.
24
39
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Total loans and credit facilities increased by $32,389 in 2022 compared to 2021. This was mainly due to addition of a LLLP loan
of $20,198, higher land project servicing and home building project loan draws used to develop new phases and home building
projects. The increase was partially offset by the repayment of the final $9,312 installment related to the acquisition of a $18,624
VTB for the purchase of the Calgary north lands.
Total loans and credit facilities increased by $11,198 in 2021 compared to 2020. This was mainly due to higher loan balances for
active land development and home building activities. The increase was partially offset by the payment of the first $9,312 installment
related to the acquisition of a $18,624 VTB for the purchase of the Calgary north lands.
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 used cash to pay off and close several loan and
credit facilities in December 2020.
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
SUMMARY OF QUARTERLY RESULTS
Q4
2022
Q3
2022
Q2
2022
Q1
2022
Q4
2021
Q3
2021
Q2
2021
Q1
2021
Revenues
Net earnings (loss) (1)
EPS (2)
54,157
43,610
22,211
20,379
26,531
34,988
29,529
18,713
3,062
0.05
1,857
0.04
97
0.00
(496)
(0.01)
4,252
0.09
2,615
0.06
2,688
0.06
1,322
0.03
(1) Net earnings (loss) attributable to equity shareholders
(2) Net earnings (loss) per share - basic and diluted
Dividends declared
Dividends paid
Dividends declared - per
share
Dividends paid - per share
Residential lots sold to third
parties (units)
Residential lots sold through
GBG (units)
Total residential lots sold
(units)
Homes sold (units)
Development land revenues
Q4
2022
4,265
4,265
0.075
0.075
Q4
2022
84
22
106
Q4
2022
57
Q4
2022
6,338
Q3
2022
4,265
4,265
0.075
0.075
Q3
2022
54
20
74
Q3
2022
45
Q3
2022
7,453
Q2
2022
Q1
2022
Q4
2021
Q3
2021
Q2
2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Q1
2021
-
6,280
-
0.14
Q2
2022
Q1
2022
Q4
2021
Q3
2021
Q2
2021
Q1
2021
2
22
24
Q2
2022
36
Q2
2022
-
4
28
32
Q1
2022
31
Q1
2022
2,200
2
47
49
Q4
2021
51
Q4
2021
-
38
47
85
Q3
2021
47
Q3
2021
4,945
Q3
2021
1,247
0.03
4
62
66
Q2
2021
62
Q2
2021
-
Q2
2021
7,084
0.16
16
31
47
Q1
2021
31
Q1
2021
925
Q1
2021
383
0.01
Cash flows (used in) from
operating activities
Amount
Q4
2022
(1,686)
Per share - basic and diluted
(0.03)
Q3
2022
(2,737)
(0.05)
Q2
2022
(12,891)
Q1
2022
(26,442)
(0.22)
(0.47)
Q4
2021
(6,326)
(0.15)
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 reversals of write-downs, 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 2022, Genesis sold 84 residential lots to third party builders and 57 homes of which 22 homes were built on Genesis’
lots. Revenues were higher in Q4 2022, compared to Q3 2022, due to higher residential home sales and residential lot sales to
third parties, partially offset by lower development land sales during the quarter. Q4 2022 included $1,086 related to net reversal
of write-downs previously taken, while Q3 2022 included no write-down or reversal of write-down. Gross margins in Q4 2022 were
higher than in Q3 2022 with residential lots and development land sales all contributing to this. In Q4 2022, the Corporation recorded
$560 as a gain in investments in land development entities with no gain recorded in Q3 2022. Selling and marketing expenses,
general and administrative expenses and net finance expenses were higher in Q4 2022 compared to Q3 2022. Income tax
expenses were $836 in Q4 2022 compared to $680 in Q3 2022. As a result, net earnings of $3,062 were incurred in Q4 2022
compared to net earnings of $1,857 in Q3 2022.
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
During Q3 2022, Genesis sold 54 residential lots to third party builders and 45 homes of which 20 homes were built on Genesis’
lots. Revenues were higher in Q3 2022, compared to Q2 2022, due to higher residential home sales, residential lot sales to third
parties and development land sales during the quarter. As a result, gross margins in Q3 2022 were higher than in Q2 2022. Selling
and marketing expenses and net finance expenses were higher while general and administrative expenses were lower in Q3 2022
compared to Q2 2022. Income tax expenses were $680 in Q3 2022 compared to $84 in Q2 2022. As a result of these factors, net
earnings were $1,857 in Q3 2022 compared to net earnings of $97 in Q2 2022.
During Q2 2022, Genesis sold 2 residential lots to third party builders and 36 homes of which 22 homes were built on Genesis’
lots. Revenues were higher in Q2 2022, compared to Q1 2022, due to higher residential home sales, partially offset by lower
development land sales and residential lot sales to third parties during the quarter. As a result, gross margins in Q2 2022 were
higher than in Q1 2022. General and administrative, selling and marketing, net finance expenses and income tax expenses were
comparable between Q2 2022 to Q1 2022. As a result of these factors, net earnings were $97 in Q2 2022 compared to a net loss
of $496 in Q1 2022.
During Q1 2022, Genesis sold 4 residential lots to third party builders and 31 homes of which 28 homes were built on Genesis’
lots. Revenues were lower in Q1 2022, compared to Q4 2021, due to lower residential home sales, partially offset by higher
development land and residential lot sales to third parties during the quarter. Q1 2022 included no write-down or reversal of write-
down, while Q4 2021 included a reversal of write-down of $3,265. Gross margins in Q1 2022 were lower than in Q4 2021
accordingly. In Q1 2022, there was no change in investments in land development entities, while the Corporation recorded a gain
of $562 in Q4 2021. General and administrative expenses and net finance expenses were marginally higher while selling and
marketing expenses were lower in Q1 2022 compared to Q4 2021. Income tax expenses were $28 in Q1 2022 compared to $1,226
in Q4 2021. As a result of these factors, a net loss of $496 was incurred in Q1 2022 compared to net earnings of $4,252 in Q4
2021.
During Q4 2021, Genesis sold 2 residential lots to third party builders and 51 homes of which 47 homes built on Genesis’ lots.
Revenues were lower in Q4 2021, compared to Q3 2021, due to no development land sales and significantly lower residential lot
sales, with this being partially offset by higher residential home sales during the quarter. Q4 2021 included $3,265 related to
reversal of write-downs previously taken, while Q3 2021 included a $1,003 corresponding reversal of a write-down. Gross margins
in Q4 2021 were higher than in Q3 2021 with residential lots and home sales all contributing to this. In Q4 2021, the Corporation
recorded $562 as a gain in investments in land development entities with no gain recorded in Q3 2021. General and administrative
expenses, selling and marketing expenses and net finance expenses were higher in Q4 2021 compared to Q3 2021. Income tax
expenses were $1,226 in Q4 2021 compared to $801 in Q3 2021. As a result of these factors, net earnings in Q4 2021 were higher
than in Q3 2021.
During Q3 2021, Genesis sold 38 residential lots to third party builders and 47 homes. Revenues were higher in Q3 2021, compared
to Q2 2021, due to higher development land and residential lot sales, with this being partially offset by lower residential home sales
during the quarter. Gross margins in Q3 2021 were marginally lower than in Q2 2021. While development land sales had a higher
gross margin than in Q2 2021, this higher gross margin was offset by lower gross margins on residential lots and homes in Q3
2021. Q3 2021 gross margins also included $1,003 related to the reversal of a write-down previously taken with no corresponding
reversal of write-down or write-down in Q2 2021. Both selling and marketing expenses and net finance expenses were lower in Q3
2021 compared to Q2 2021 while general and administrative expenses were higher between Q3 2021 and Q2 2021. Income tax
expenses were $801 in Q3 2021 compared to $955 in Q2 2021. As a result of these factors, net earnings in Q3 2021 were
comparable to Q2 2021.
During Q2 2021, Genesis sold 4 residential lots to third party builders and 62 homes. Revenues were higher in Q2 2021, compared
to Q1 2021, due to higher residential home sales, with this being partially offset by lower development land and residential lot sales
during the quarter. Gross margins in Q2 2021 were significantly higher than in Q1 2021 mainly due to the higher volume of homes
and total residential lots sold. Both general and administrative expenses, selling and marketing expenses were higher in Q2 2021
compared to Q1 2021 while net finance expenses were marginally lower between Q2 2021 and Q1 2021. Income tax expenses
were $955 in Q2 2021 compared to $393 in Q1 2021. As a result of these factors, net earnings in Q2 2021 were higher than in Q1
2021.
During Q1 2021, Genesis sold 16 residential lots to third party builders, 31 homes and one development land parcel held by a
controlled limited partnership. Revenues were lower in Q1 2021, compared to Q4 2020, due to lower development land revenues
in Q1 2021, with this being partially offset by higher residential lot and home sales during the quarter. Gross margins in Q1 2021
were higher than in Q4 2020 mainly due to no write-down of real estate held for development and sale in Q1 2021 compared to
$822 in Q4 2020. While residential lots and homes had a higher gross margin than in Q4 2020, this higher gross margin was offset
by lower gross margin on development land sales in Q1 2021. General and administrative expenses were lower in Q1 2021
27
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
compared to Q4 2020 while selling and marketing expenses and net finance expenses were comparable between Q1 2021 and
Q4 2020. Income tax expenses were $393 in Q1 2021 compared to $496 in Q4 2020. As a result of these factors, net earnings in
Q1 2021 were higher than in Q4 2020.
RELATED PARTY TRANSACTIONS
Transactions occurred during the year ended December 31, 2022, with the following related parties:
a) In 2005, the Corporation sold a 49% undivided interest in approximately 610 acres to Genesis Limited Partnership #4 and GLP5
NE Calgary Development Inc. for $7,670. These entities are part of LP 4/5 group and are consolidated in the Corporation’s financial
statements. A margin of $4,194 was deferred at that point and would have been recognized when the lands were sold to an arm’s
length third party. In July 2022, the Corporation repurchased from LP4/5 group their 49% undivided interest in 456 acres of land
for $6,699 with LP4/5 group still owning a 49% undivided interest in the remaining 154 acres of land. Cash proceeds were $5,038
with the remainder of $1,661 being applied against debt owed to the Corporation by LP4/5 group. The margin deferred on
completion of the repurchase was $4,130 and will be recognized when the lands are sold to an arm’s length third party.
b) Genesis and a private company created a limited partnership called SHEA LP to develop a two-building purpose built rental
project containing approximately 300 units in the Corporation’s Sage Hill Crest community. Genesis and the private company each
own 50% of the units in SHEA LP (49% directly and 1% though the general partner Sage Hill Estates Apartments GP Inc.). Genesis
sold a 3.22-acre multi-family site for $3,589 to SHEA LP and used the gross sale proceeds to purchase 50% of the units in SHEA
LP by way of a capital contribution of $3,589. The private company will contribute cash equity until it is equal with Genesis’
contribution after which all future contributions will be 50/50.
SUBSEQUENT EVENTS
Subsequent to December 31, 2022, the following occurred:
a) In Q4 2022, Genesis entered into binding agreements to sell a 20% ownership stake in LLLP to each of two Calgary based third
party home builders. LLLP owns 130 acres of residential development land located in north Calgary in the Keystone Area Structure
Plan. The transaction closed on January 16, 2023, for a cash consideration for each 20% ownership stake of $5,880 (net of
assumption of debt of $4,000 each) resulting in gross proceeds for sale of a 40% ownership interest of $11,760 (net of assumption
of debt of $8,000).
b) Genesis extended its $50,000 corporate revolving line of credit facility in January 2023 with a new maturity date of February 1,
2026.
c) In February 2023, Genesis paid $1,253 to GLP5 NE Calgary Development Inc. to acquire an additional 25 acres in the OMNI
project in North Conrich. This results in Genesis holding a 73% interest (previously 59%) in the 185-acre OMNI project with the
remaining 27% being held by Genesis Limited Partnership #4.
SUMMARY OF ACCOUNTING CHANGES
The Corporation adopted no new IFRSs or interpretations as of January 1, 2022.
NEW ACCOUNTING PRONOUNCEMENTS
There were no new accounting pronouncements or amendments to existing standards that impacted or are expected to impact
the Corporation in 2022 and 2023.
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 2022
28
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
and YE 2021. Refer to note 2(q) in the consolidated financial statements for the years ended December 31, 2022 and 2021 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.
Reversal of Write-down / 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.
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.
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.
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, 2022. 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, 2022 that have materially
affected or are reasonably likely to materially affect the Corporation’s ICFR.
RISKS AND UNCERTAINTIES
In 2022, the Alberta economy continued its recovery with strong prices for oil and natural gas and increased immigration fueling
this growth. Despite the strong start to the year, in the second half of 2022 the increase in home prices, rising lending rates and
continued inflationary pressures are weighing on demand. This is offset by low home supply and continued population growth.
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
Given the volatile economy, it is not possible to reliably estimate the length and overall impact 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, 2022 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. Supply
chain pressures have become an increasing risk due to economic restrictions put in place and the impacts are unknown and largely
unpredictable but could impact both the price and timely availability of materials.
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
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
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 cybersecurity risk. To do so, Genesis has the following in place: third party reviews and
implementation of all reasonable recommendations, 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, 2022 available on SEDAR at
www.sedar.com.
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 reversal of write-down / 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 reversal of write-down, which is derived from gross margin:
Development Land
Development land revenues
Gross margin
(Reversal of write-down) of real estate held for development and
sale
Gross margin before reversal of write-down
Gross margin before reversal of write-down (%)
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 (%)
Three months ended
December 31,
2022
2021
6,338
1,165
-
3,265
(1,086)
(3,265)
79
1.2%
-
-
Three months ended
December 31,
2022
2021
18,015
3,808
-
3,808
21.1%
8,423
3,540
-
3,540
42.0%
Year ended
December 31,
2022
15,991
2,114
(1,086)
1,028
6.4%
Year ended
December 31,
2022
40,639
8,113
-
8,113
20.0%
2021
5,870
4,919
(4,268)
651
11.1%
2021
41,095
14,698
-
14,698
35.8%
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
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 (%)
Development Land, Residential Lots and
Homes
Total revenues
Gross margin
(Reversal of write-down) of real estate held for development and
sale
Gross margin before reversal of write-down
Gross margin before reversal of write-down (%)
Three months ended
December 31,
Year ended
December 31,
2022
33,799
4,783
-
4,783
14.2%
2021
26,024
3,397
-
3,397
13.1%
2022
100,680
16,931
-
16,931
16.8%
2021
92,416
12,226
-
12,226
13.2%
Three months ended
December 31,
Year ended
December 31,
2022
54,157
9,756
2021
26,531
10,202
2022
140,357
27,158
2021
109,761
31,843
(1,086)
(3,265)
(1,086)
(4,268)
8,670
16.0%
6,937
26.1%
26,072
18.6%
27,575
25.1%
Net (debt) cash is a non-GAAP measure, and therefore may not be comparable to similar measures presented by other reporting
issuers. Net (debt) cash is calculated as the difference between cash and cash equivalents and loan and credit facilities.
Management believes that net (debt) cash is an important measure to monitor leverage and evaluate the balance sheet. The most
comparable GAAP financial measure is loan and credit facilities.
The table below shows the calculation of net (debt) cash:
Cash and cash equivalents
Loan and credit facilities
Net (debt) cash
TRADING AND SHARE STATISTICS
The Corporation’s trading and share statistics for 2022 and 2021 are provided below:
Average daily trading volume
Share price ($/share)
High
Low
Close
Market capitalization at December 31,
Shares outstanding
OTHER
December 31,
2022
December 31,
2021
36,598
65,057
(28,459)
2022
7,581
2.98
1.83
2.03
63,975
32,668
31,307
2021
11,857
3.00
1.97
2.31
115,433
56,863,335
131,354
56,863,335
Additional information relating to the Corporation can be found on SEDAR at www.sedar.com.
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GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
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”.
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:
•
•
•
•
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 timing and approval of the Logan Landing outline plan and land use
applications and final pre-development approvals;
the timing and approval of Huxley 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 and
planning for an interchange to provide site access;
the anticipated number of housing units in the various communities 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, including forecasted
economic growth;
potential changes, if any, to the federal mortgage lending rules and other
rules that may impact home ownership in Canada;
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 payment of dividends; and
the ability to continue to renew or repay financial obligations and to meet
liabilities as they become due.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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 and inflation rates;
ability to access and raise capital and debt
financing on favorable 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;
product availability due to supply chain issues
and (or) cost increases;
governmental laws and 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.
33
48
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
E
M
O
H
W
O
H
S
d
a
e
t
s
e
m
o
H
49
49
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
CONSOLIDATED
FINANCIAL
STATEMENTS
DECEMBER 31, 2022 AND 2021
50
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT 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.
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.
the opinion of management,
In
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 four 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.
Management maintains appropriate systems of internal control.
Policies and procedures are designed to give reasonable
assurance that transactions are properly authorized, assets are
IAIN STEWART
President and Chief Executive Officer
WAYNE KING
Chief Financial Officer
March 2, 2023
51
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT 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, 2022 and December 31, 2021, and the consolidated statements
of comprehensive income, 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, 2022 and December
31, 2021, 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, 2022, approximately 73% of the Corporation’s
assets or $265.7 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.
• 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,
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.
52
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT Provision for Future Development Costs
As described in Notes 2n and 14, 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.
• 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 management’s 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.
53
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT 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.
• 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.
• Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and
54
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair
presentation.
• 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 2, 2023
55
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT GENESIS LAND DEVELOPMENT CORP.
CONSOLIDATED BALANCE SHEETS
GENESIS LAND DEVELOPMENT CORP.
(In thousands of Canadian dollars)
CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars)
Assets
Real estate held for development and sale
Assets
Amounts receivable
Real estate held for development and sale
Investments in land development entities
Amounts receivable
Investment in joint venture
Investments in land development entities
Other operating assets
Investment in joint venture
Right-of-use assets
Other operating assets
Deferred tax assets
Right-of-use assets
Cash and cash equivalents
Deferred tax assets
Total assets
Cash and cash equivalents
Liabilities
Total assets
Loan and credit facilities
Liabilities
Customer deposits
Loan and credit facilities
Accounts payable and accrued liabilities
Customer deposits
Accounts payable related to residential lot purchases
Accounts payable and accrued liabilities
Lease liabilities
Accounts payable related to residential lot purchases
Income tax payable
Lease liabilities
Provision for future development costs
Income tax payable
Total liabilities
Provision for future development costs
Commitments and contingencies
Total liabilities
Subsequent events
Commitments and contingencies
Equity
Subsequent events
Share capital
Equity
Contributed surplus
Share capital
Retained earnings
Contributed surplus
Shareholders’ equity
Retained earnings
Non-controlling interest
Shareholders’ equity
Total equity
Non-controlling interest
Total equity
Total liabilities and equity
Total liabilities and equity
See accompanying notes to the consolidated financial statements.
See accompanying notes to the consolidated financial statements.
ON BEHALF OF THE BOARD:
Notes
Notes
5
December 31, 2022
December 31, 2021
December 31, 2022
265,683
December 31, 2021
218,855
6
5
7
6
8
7
9
8
10
9
11
10
11
12
13
12
21a
13
21a
14
14
20
12a, 16b,
20
25
12a, 16b,
25
15
16c
15
16c
22,165
265,683
6,730
22,165
3,588
6,730
20,679
3,588
562
20,679
8,135
562
36,598
8,135
364,140
36,598
364,140
65,057
15,753
65,057
12,470
15,753
17,944
12,470
841
17,944
704
841
24,034
704
136,803
24,034
136,803
82,383
1,063
82,383
141,186
1,063
224,632
141,186
2,705
224,632
227,337
2,705
227,337
364,140
364,140
13,632
218,855
6,170
13,632
-
6,170
14,738
-
655
14,738
6,904
655
63,975
6,904
324,929
63,975
324,929
32,668
9,002
32,668
16,808
9,002
9,600
16,808
842
9,600
2,092
842
17,979
2,092
88,991
17,979
88,991
82,383
1,045
82,383
145,196
1,045
228,624
145,196
7,314
228,624
235,938
7,314
235,938
324,929
324,929
ON BEHALF OF THE BOARD:
/s/ Stephen J. Griggs
Director and Chair
/s/ Stephen J. Griggs
Director and Chair
/s/ Steven Glover
Director and Chair of the Audit Committee
/s/ Steven Glover
Director and Chair of the Audit Committee
56
8
8
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended December 31, 2022 and 2021
(In thousands of Canadian dollars except per share amounts)
Year ended December 31,
Notes
2022
2021
Revenues
Sales revenue
Other revenue
Direct cost of sales
Reversal of write-down of real estate held for development and sale
Gross margin
Gain in investments in land development entities
General and administrative
Selling and marketing
Earnings from operations
Finance income
Finance expense
Earnings before income taxes
Income tax expense
Net earnings being comprehensive earnings
Attributable to non-controlling interest
Attributable to equity shareholders
22
5
7
17
18
19
11
24
Net earnings per share - basic and diluted
15b
See accompanying notes to the consolidated financial statements.
140,241
116
140,357
(114,285)
1,086
(113,199)
27,158
560
(14,786)
(5,815)
(20,041)
7,117
512
(1,612)
6,017
(1,628)
4,389
(131)
4,520
0.08
109,713
48
109,761
(82,186)
4,268
(77,918)
31,843
562
(12,025)
(5,143)
(16,606)
15,237
338
(1,220)
14,355
(3,375)
10,980
103
10,877
0.24
9
57
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the years ended December 31, 2022 and 2021
(In thousands of Canadian dollars except number of shares)
Equity attributable to Corporation’s shareholders
At December 31, 2020
Notes
Common shares - Issued
Number of
Shares
41,863,335
Amount
52,489
Share-based payments
16c
-
-
Issued on rights offering,
net
Distributions
24
Net earnings being
comprehensive earnings
and other
At December 31, 2021
15,000,000
29,894
-
-
-
-
Contributed
Surplus
868
177
-
-
-
Retained
Earnings
134,319
Total
Shareholders’
Equity
Non-
Controlling
Interest
Total
Equity
187,676
12,084
199,760
-
-
-
177
29,894
-
-
177
29,894
-
(4,773)
(4,773)
10,877
10,877
3
10,880
56,863,335
82,383
1,045
145,196
228,624
7,314
235,938
At December 31, 2021
56,863,335
82,383
1,045
145,196
228,624
7,314
235,938
16c
15d
24
Share-based payments
Dividends
Distributions and other
Net earnings being
comprehensive earnings
At December 31, 2022
-
-
-
-
-
-
-
-
18
-
-
-
-
18
(8,530)
(8,530)
-
-
18
(8,530)
-
-
(4,478)
(4,478)
4,520
4,520
(131)
4,389
56,863,335
82,383
1,063
141,186
224,632
2,705
227,337
See accompanying notes to the consolidated financial statements.
58
10
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2022 and 2021
(In thousands of Canadian dollars)
Notes
Year ended December 31,
2022
2021
Operating activities
Receipts from residential lot sales
Receipts from development land sales
Receipts from residential home sales
Other cash receipts
Paid for land development
Paid for lots / land acquisition
Paid for residential home construction
Paid to suppliers and employees
Interest received
Income tax (payments) refunds
Cash flows (used in) from operating activities
Investing activities
Investment in joint venture
Acquisition of equipment
Change in restricted cash
Contribution made for joint venture
Cash flows used in investing activities
Financing activities
Advances from loans and credit facilities
Repayments of loans and credit facilities
Repayment of vendor-take-back mortgage payable
Interest and fees paid on loans and credit facilities
Distributions to unit holders of limited partnerships
Dividends paid
Proceeds from rights offering, net
Cash flows from financing activities
Change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
See accompanying notes to the consolidated financial statements.
16,742
15,991
104,049
311
(33,820)
(39,245)
(84,478)
(19,572)
512
(4,246)
(43,756)
(3,589)
(607)
2,093
-
(2,103)
84,151
(42,389)
(9,312)
(2,452)
(2,986)
(8,530)
-
18,482
(27,377)
63,975
36,598
13,981
8,589
95,480
777
(39,868)
(3,993)
(57,323)
(16,053)
338
460
2,388
-
(875)
250
(260)
(885)
61,517
(40,416)
(9,312)
(1,871)
(803)
(6,280)
29,894
32,729
34,232
29,743
63,975
8
12
12e
15d
11
59
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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.
In March 2022, all COVID health recommendations applied by the Province of Alberta were removed. However, as a result of the
restrictions placed by regulatory authorities there remain numerous supply chain issues that impact the procurement and availability
of multiple components required to build homes and develop land. To this point, the Corporation has been able to manage these
issues. The Corporation remains cautious as there is continued uncertainty as to the extent and duration of the future economic
implications which could have an adverse impact on the Corporation’s financial position, negatively impact the value of its long term
assets, future revenue and profitability.
The consolidated financial statements of Genesis were approved for issuance by the Board of Directors on March 2, 2023.
2.
SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
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.
60
12
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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 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.
13
61
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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, which is a year or more, 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
62
14
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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 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 24) 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 with an original maturity of three months
or less.
j)
Leases
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.
15
63
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
64
16
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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
• Accounts payable and accrued liabilities
• Cash settled deferred share units
•
Loans and credit facilities
m) Earnings per share
FVTPL
Amortized cost
Amortized cost
FVTPL
FVTPL
Amortized cost
Amortized cost
FVTPL
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.
The calculation of basic and diluted earnings per share for all periods presented is adjusted retrospectively when the number
of common shares outstanding increases as a result of a rights offering.
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.
17
65
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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)
Interest in joint venture
The Corporation has an interest in a joint venture, Sage Hill Estates Apartments LP, (“SHEA LP” or the “JV”) which is a jointly
controlled entity. The Corporation recognizes its interest in the JV using the equity method of accounting.
q)
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.
66
18
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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) Reversal of write-down / Write-down 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 and lot sales 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 or from external third-party appraisals.
3.
STANDARDS AND AMENDMENTS TO EXISTING STANDARDS DURING 2022
The Corporation adopted no new IFRSs and interpretations during 2022.
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 2022 and 2023.
19
67
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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, 2021
41,892
151,852
28,870
222,614
9,564
(4,194)
227,984
Development activities
3,180
31,168
53,727
88,075
308
41,791
(41,791)
-
-
-
35,849
22,188
58,037
-
-
(41,212)
-
(56,279)
(97,491)
(6,763)
64
(104,190)
-
-
-
88,383
-
58,037
Transfer
Acquisitions
Sold
As at December 31, 2022
45,651
177,078
48,506
271,235
3,109
(4,130)
270,214
Provision for write-downs
As at December 31, 2021
Sold
Transfer
Write-down / (reversal of write-
down) of real estate held for
development and sale
4,402
(3,512)
4,727
-
1,841
(1,841)
112
(1,198)
As at December 31, 2022
2,843
1,688
-
-
-
-
-
9,129
(3,512)
-
(1,086)
4,531
-
-
-
-
-
-
-
-
-
-
9,129
(3,512)
-
(1,086)
4,531
Net book value
As at December 31, 2021
As at December 31, 2022
37,490
42,808
147,125
28,870
213,485
175,390
48,506
266,704
9,564
3,109
(4,194)
(4,130)
218,855
265,683
During the year ended December 31, 2022, the Corporation closed the sales of five parcels of development land for $15,991 (2021
- four parcels for $5,870). This included the sale of a 3.22-acre multi-family site for $3,589 to SHEA LP and the gross sale proceeds
from the sale being used to purchase 50% of the units in SHEA LP by way of a capital contribution of $3,589 (note 8).
During the year ended December 31, 2022, the Corporation closed the acquisition of approximately 157 acres of future residential
development land in the City of Calgary for $29,150 pursuant to a binding agreement entered into in 2021.
During the year ended December 31, 2022, the Corporation closed the acquisition of the 49% undivided interest in three parcels
totaling 456 acres in North Conrich, on the eastern edge of Calgary, in Rocky View County from Genesis Limited Partnership #4 and
Genesis Limited Partnership #5 (controlled entities within the consolidated entity) for $6,699. Genesis now owns 100% interest in
these lands (see note 22 for additional information).
During the year ended December 31, 2022, the Corporation entered into a binding agreement to acquire 132 residential lots in the
Calgary Metropolitan Area for $22,188. The Corporation paid non-refundable deposits of $6,277 with the balance of $15,911, due on
closing which is scheduled between January 2023 and January 2025.
During the year ended December 31, 2022, interest of $822 (2021 - $166) was capitalized as a component of development activities.
During the year ended December 31, 2022, the Corporation recorded a net reversal of write-down of $1,086 related to write-downs
previously taken on real estate held for development and sale. The reversal of the write-down was taken to reflect the estimated
returns realizable on completion of development and sale of these lands (2021 - $4,268).
68
20
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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
2022
21,207
958
22,165
2021
12,135
1,497
13,632
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 and after agreed to services
pertaining to the property have been substantially performed, 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 (see note 21a). Certain agreements receivable and mortgages receivable, if any, are interest bearing.
7.
INVESTMENTS IN LAND DEVELOPMENT ENTITIES
As at December 31, 2021
Gain in Fair Value
As at December 31, 2022
As at December 31, 2020
Gain in Fair Value
As at December 31, 2021
Investment in land development
limited partnership - 5% interest
Investment in land development
joint venture - 8% interest
1,890
340
2,230
4,280
220
4,500
Investment in land development
limited partnership - 5% interest
Investment in land development
joint venture - 8% interest
1,850
40
1,890
3,758
522
4,280
Total
6,170
560
6,730
Total
5,608
562
6,170
The fair value of investments in land development entities is based on the market approach method. Fair values were obtained from
external third-party appraisals. This method uses prices and other relevant information that have been generated by market
transactions involving identical or comparable assets. During the year ended December 31, 2022, the Corporation recorded $560 as
a gain in investment in land development entities (2021 - $562).
8.
JOINT VENTURE
The Corporation and a private company entered into a limited partnership agreement to form SHEA LP, for the purpose of acquiring,
developing and renting certain real estate. The Corporation sold a 3.22-acre multi-family site for $3,589 to SHEA LP and used the
gross sale proceeds to purchase 50% of the units in SHEA LP by way of a capital contribution of $3,589. The private company will
contribute cash equity until it is equal with Genesis’s contribution after which all future contributions will be 50/50.
SHEA LP is accounted for using the equity method with the Corporation’s share of net assets being $3,588 at December 31, 2022
(December 31, 2021 - $Nil).
21
69
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
9.
OTHER OPERATING ASSETS
Deposits
Restricted Cash
Prepayments
Property, equipment and other
2022
11,122
6,849
1,118
1,590
20,679
2021
6,676
5,992
589
1,481
14,738
Deposits include amounts paid by the Corporation towards the purchase of lots and land as well as amounts paid to development
authorities as security to guarantee the completion of construction projects under development. Restricted cash includes funds held
in trust related to acquisition and sale of development land and lots. The Corporation also provides letters of credit and surety bonds
as security to guarantee the completion of certain construction projects (see note 20a for additional information).
70
22
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
10.
LEASES
Right-of-Use Assets
As at January 1, 2022
Additions
Depreciation charge for the year (1)
As at December 31, 2022
As at December 31, 2021
Lease Liabilities
As at January 1, 2022
Additions
Lease payments
Interest for the year (1)
As at December 31, 2022
As at December 31, 2021
Photocopiers
50
17
(20)
47
50
Photocopiers
53
17
(22)
2
50
53
(1) Discount rate used ranged between 3.26% and 7.55%.
Lease Liabilities – undiscounted cash flows
Photocopiers
January 1, 2023 to December 31, 2023
January 1, 2024 to November 30, 2027
As at December 31, 2022
As at December 31, 2021
Amounts recognized in statements of
comprehensive income
Interest on lease liabilities
Total for the year ended December 31, 2022
Total for the year ended December 31, 2021
26
27
53
56
2
2
3
Amounts recognized in the statement of cash
flows (2)
Photocopiers
Interest paid
Payment of lease liabilities
Total for the year ended December 31, 2022
Total for the year ended December 31, 2021
2
20
22
21
Office
Building
528
-
(102)
426
528
Office
Building
699
-
(63)
34
670
699
Office
Building
178
563
741
804
Trucks
9
-
(9)
-
9
Trucks
10
-
(10)
-
-
10
Showhomes
Leaseback
68
168
(147)
89
68
Showhomes
Leaseback
80
209
(174)
6
121
80
Trucks
-
-
-
10
Showhomes
Leaseback
106
19
125
81
34
34
34
Office
Building
34
29
63
40
-
-
1
Trucks
-
10
10
14
6
6
3
Showhomes
Leaseback
6
168
174
86
Photocopiers
Office
Building
Trucks
Showhomes
Leaseback
Total
655
185
(278)
562
655
Total
842
226
(269)
42
841
842
Total
310
609
919
951
Total
42
42
41
Total
42
227
269
161
(2) These amounts are included in the line item “paid to suppliers and employees” in the consolidated statements of cash flows.
23
71
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
11.
a)
INCOME TAXES
Income tax was recognized in the consolidated statements of comprehensive income as follows:
Current income tax expense
Deferred income tax expense
Income tax expense
2022
2,859
(1,231)
1,628
2021
2,191
1,184
3,375
b)
Income tax expense differed from that which would be expected from applying the combined statutory Canadian federal and
provincial income tax rates of 23.00% (2021 - 23.00%) to earnings before income taxes. The difference resulted from the
following:
Earnings before income taxes
Statutory tax rate
Expected income tax expense
Share-based compensation
Other
Non-controlling interest
Tax expense for the year
c)
The deferred tax assets 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
2022
6,017
23.00%
1,384
235
(27)
36
1,628
2022
9,033
(898)
8,135
2022
5,756
(612)
2,780
211
8,135
2021
14,355
23.00%
3,302
135
(38)
(24)
3,375
2021
7,672
(768)
6,904
2021
4,542
(598)
2,810
150
6,904
72
24
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
12.
LOAN AND CREDIT FACILITIES
Secured by specific dedicated lands and a general corporate charge on all assets of the
Corporation
a) Corporate revolving credit facility up to $50,000 with a major Canadian financial institution at
an interest rate per annum of prime +1.90%. Subsequent to December 31, 2022, in January 2023,
the facility was extended and matures on February 1, 2026.
Secured by agreements receivable and real estate held for development and sale
b) Demand land project servicing facilities from a major Canadian chartered bank, payable on
collection of agreements receivable, bearing interest at prime +0.50% per annum, secured by real
estate held for development and sale with a carrying value of $15,480. Loan amounts are due
between May 12, 2024, and March 19, 2025.
2022
2021
25,626
16,237
12,522
5,794
c) Demand operating credit facility up to $21,500 from a major Canadian chartered bank, bearing
interest at prime +0.50% per annum, secured by real estate held for development and sale with
a carrying value of $44,345 and a corporate guarantee. Loan amount is due on October 27, 2025.
20,198
-
Secured by housing projects under development
d) Demand operating credit facility up to $10,000 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. The facility was amended in January 2022 to increase from $6,500 to
$10,000.
Secured by real estate held for development and sale
e) The vendor-take-back facility 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 final installment of $9,312 was paid in January 2022.
Deferred fees on loan and credit facilities
7,364
1,917
-
9,312
65,710
(653)
65,057
33,260
(592)
32,668
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 7.52% (December 31, 2021 - 3.92%) based on
December 31, 2022 balances.
During the year ended December 31, 2022, the Corporation received advances of $84,151 (2021 - $61,517) and made repayments
of $42,389 (2021 - $40,416) relating to various loan facilities. These are secured by real estate held for development and sale,
housing projects under development, specific dedicated lands and a general corporate charge on all assets of the Corporation. These
loan facilities bear interest ranging from prime +0.50% to prime +1.90% per annum, with maturity dates ranging from May 12, 2024
to February 1, 2026. During the year ended December 31, 2022, the Corporation incurred interest expense of $2,027 directly related
to these loans (2021 - $1,096).
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, 2022 and 2021, the Corporation and its subsidiaries were in compliance with all loan covenants.
25
73
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
12.
LOAN AND CREDIT FACILITIES (continued)
Based on the contractual terms, the Corporation’s loan and credit facilities are to be repaid within the following time periods (excluding
deferred fees on loan and credit facilities):
January 1, 2023 to December 31, 2023
January 1, 2024 to December 31, 2024
January 1, 2025 to December 31, 2025
January 1, 2026 to December 31, 2026
13.
CUSTOMER DEPOSITS
Customer deposits on residential home sales
Customer deposits on residential lot and development land sales
7,364
8,522
24,198
25,626
65,710
2021
5,588
3,414
9,002
2022
9,194
6,559
15,753
Customer deposits are amounts received upon signing of contracts for purchases of residential homes, lots and development land
on which revenue recognition criteria have not yet been met.
14.
PROVISION FOR FUTURE DEVELOPMENT COSTS
The movement in the provision for future development costs is as follows:
As at December 31, 2021
Additions
Changes to estimates
Development activities
As at December 31, 2022
As at December 31, 2020
Additions
Changes to estimates
Development activities
As at December 31, 2021
74
Total
17,979
22,534
(184)
(16,295)
24,034
Total
20,213
17,011
(483)
(18,762)
17,979
Land Development
Home Building
15,096
9,927
(297)
(4,621)
20,105
2,883
12,607
113
(11,674)
3,929
Land Development
Home Building
1,476
11,758
(416)
(9,935)
2,883
18,737
5,253
(67)
(8,827)
15,096
26
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
15.
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
The following table sets forth the weighted average number of common shares outstanding for the year ended December 31, 2022
and 2021:
Basic
Effect of dilutive securities - stock options
Diluted
Year ended December 31,
2022
2021
56,863,335
44,642,895
-
-
56,863,335
44,642,895
In calculating diluted earnings per share for the year ended December 31, 2022, the Corporation excluded all options as all
outstanding options were cancelled effective May 25, 2022. In calculating the diluted earnings for the year ended December 31,
2021, the Corporation excluded 855,000 options as their weighted exercise price was higher than the average market price of the
Corporation’s shares during the period.
Basic and diluted earnings per share and weighted average number of shares for prior periods have been recalculated to account
for the impact of the Corporation’s share issue pursuant to a rights offering that closed on December 17, 2021.
c)
Normal course issuer bid (“NCIB”)
The Corporation initiated an NCIB on December 14, 2022. The NCIB commenced on December 16, 2022 and will terminate on the
earlier of: (i) December 15, 2023; 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 2,843,166 common shares under the NCIB.
The prior NCIB, which expired on October 12, 2021, allowed the Corporation to purchase for cancellation up to 2,098,885 common
shares.
No purchases were made under the NCIB during the year ended December 31, 2022 and 2021.
d)
Dividends paid
Cash dividends of $8,530 ($0.15 per share) were declared and paid during the year ended December 31, 2022. No dividends were
declared during the year ended December 31, 2021. Cash dividends of $6,280 ($0.15 per share), declared on December 9, 2020,
were paid on January 11, 2021.
27
75
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
16.
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. During the year ended December 31, 2022, 855,000 stock options with a weighted average exercise price of
$3.31 were cancelled.
Details of stock options are as follows:
Outstanding - beginning of year
Options cancelled pursuant to revised long-term
incentive plan
Outstanding - end of year
Exercisable - end of year
b) Deferred share unit plan (“DSU”)
Year ended December 31,
2022
2021
Number of
Options
855,000
(855,000)
-
-
Weighted
Average
Exercise Price
$3.31
Number of
Options
2,535,000
$3.31
(1,680,000)
-
-
855,000
641,250
Weighted
Average
Exercise Price
$3.31
$3.31
$3.31
$3.31
The Corporation’s cash settled DSU plan provides for DSUs to be issued to directors and designated employees. DSUs are issued
with various vesting terms, currently ranging from immediately vesting up to four years. Details of the number of outstanding DSUs
are as follows:
Outstanding - beginning of year
DSUs granted
DSUs cancelled
Outstanding - end of year
Vested - end of year
Year ended December 31,
2022
573,743
491,317
-
1,065,060
641,043
2021
354,258
334,033
(114,548)
573,743
115,490
The outstanding liability related to cash settled DSUs as at December 31, 2022 was $1,950 (December 31, 2021 - $947) 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.
Subsequent to December 31, 2022, the Corporation granted 211,241 DSUs at $2.03 each.
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 related to grants which are to be cash settled
Total share-based compensation expense
Year ended December 31,
2022
18
1,003
1,021
2021
177
410
587
76
28
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
17.
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,
2022
9,499
1,021
2,930
1,336
2021
7,359
587
2,291
1,788
14,786
12,025
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
18.
SELLING AND MARKETING
Selling and marketing expenses of the Corporation consisted of the following:
Advertising and marketing
Sales commissions
19.
FINANCE EXPENSE
Finance expense of the Corporation consisted of the following:
Interest incurred
Interest relating to VTB (note 12)
Financing fees amortized
Interest and financing fees capitalized (note 5)
Years ended December 31,
2022
2,423
1,021
3,444
Years ended December 31,
2022
3,452
2,363
5,815
Years ended December 31,
2022
1,989
105
340
(822)
1,612
2021
2,112
587
2,699
2021
3,114
2,029
5,143
2021
479
658
249
(166)
1,220
29
77
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
20. COMMITMENTS AND CONTINGENCIES
a)
b)
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, 2022, these amounted
to $5,414 (December 31, 2021 - $7,747).
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 future payments:
January 1, 2023 to December 31, 2023
January 1, 2024 to December 31, 2024
January 1, 2025 to December 31, 2025
7,475
3,841
800
12,116
c)
The Corporation has contracted to acquire 243 residential lots in the Calgary Metropolitan Area for $36,984 from third-party
land developers. The Corporation has paid deposits totaling $6,609 with the remainder being payable as follows:
January 1, 2023 to December 31, 2023
January 1, 2024 to December 31, 2024
January 1, 2025 to December 31, 2025
January 1, 2026 to December 31, 2026
7,401
5,262
17,531
181
30,375
d)
The Corporation entered into an agreement to acquire approximately 160 acres of future residential development land in the
southeast sector of the City of Calgary for $30,000. The Corporation has paid a non-refundable deposit of $3,300 with the
balance due on closing which is scheduled for January 31, 2025. In addition, the Corporation has contracted to acquire
approximately 3.56 acres of land for $663. The Corporation paid a deposit of $132, with the balance of $531 to be paid on
closing, currently scheduled for Q2 2023.
78
30
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
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 loan 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, 2022 and December 31, 2021 are
presented in the following table:
Carrying Value
Fair Value
Fair Value
Hierarchy
Measurement
Basis
As at
Dec. 31, 2022
As at
Dec. 31, 2021
As at
Dec. 31, 2022
As at
Dec. 31, 2021
Financial Assets
Cash
Investments in land development
entities
Restricted cash (1)
Financial Liabilities
Cash settled DSUs
(1) Included in other operating assets.
Level 1
Level 3
Level 1
FVTPL
FVTPL
FVTPL
Level 1
FVTPL
36,598
6,730
6,849
1,950
63,975
6,170
5,992
947
36,598
6,730
6,849
1,950
63,975
6,170
5,992
947
During the year ended December 31, 2022 and 2021, no transfers were made between the levels in the fair value hierarchy.
31
79
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an
obligation. The financial assets that are exposed to credit risk consist of cash and cash equivalents, restricted cash and amounts
receivable. The Corporation’s cash is held in bank accounts with major Canadian chartered banks. Restricted cash amounts are held
in trust by reputable law firms.
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, 2022, which comprise greater than 10% of total amounts receivable, totaled $21,207 from two customers
(December 31, 2021 - $12,135 from three customers).
Aging of amounts receivable, none of which are past due, was as follows:
Due on sold lots
Other receivables
(ii) Liquidity risk
2022
21,207
958
22,165
2021
12,135
1,497
13,632
The contractual maturities of financial liabilities and other commitments as at December 31, 2022 were as follows:
<1 Year
>1 Year
Total
Financial liabilities
Accounts payable and accrued liabilities
Accounts payable related to residential lot purchases
Loan and credit facilities excl. deferred fees on loan and credit facilities (note 12)
Commitments
Lease obligations (including variable operating costs)
Land and lot purchase contracts (note 20c and note 20d)
Levies and municipal fees (note 20b)
12,470
13,036
7,364
32,870
547
7,932
7,475
15,954
48,824
-
4,908
58,346
63,254
1,361
49,674
4,641
55,676
12,470
17,944
65,710
96,124
1,908
57,606
12,116
71,630
118,930
167,754
As at December 31, 2022, the Corporation had obligations due within the next 12 months of $48,824 (December 31, 2021 - $74,758).
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. During the year ended
December 31, 2022, the Corporation’s operating line of credit facility was increased from $6,500 to $10,000 (note12d) and the
corporate revolving line of credit was extended until February 2026 (note 12a). The Corporation also put in place a demand operating
credit facility of $21,500 (note 12c).
80
32
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
21.
FINANCIAL INSTRUMENTS (continued)
(iii) Market risk
The Corporation is exposed to interest rate risk to the extent that certain agreements receivable and certain loan 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 $657
annually on floating rate facilities (2021 - $239).
b) Capital management
The Corporation’s policy is to maintain a sufficient capital base in order to retain investor, creditor and market confidence and to
sustain the future development of the business. The Corporation is in compliance with all 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:
Loan and credit facilities (note 12)
Shareholders’ equity
2022
65,057
224,632
289,689
2021
32,668
228,624
261,292
33
81
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(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, 2022 and
2021:
Year ended December 31, 2022
Revenues
Revenues - development lands
Genesis
40,564
15,991
Land Development Segment
Intrasegment
Elimination
-
LP
75
Total
40,639
Home
Building
Segment
100,680
Intersegment
Elimination
(16,953)
6,699
(6,699)
15,991
-
-
Total
124,366
15,991
Direct cost of sales
(47,489)
(6,763)
6,763
(47,489)
(83,749)
16,953
(114,285)
Reversal of write-down of real
estate held for development and
sale
Gross margin
Gain in investments in land
development entities
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, 2022
Segmented liabilities as at
December 31, 2022 (1), (2)
Segmented net assets as at
December 31, 2022 (1), (2)
Year ended December 31, 2021
Revenues
Revenues - development lands
Direct cost of sales
Reversal of write-down of real
estate held for development and
sale
Gross margin
Gain in investments in land
development entities
G&A, selling & marketing and net
finance expense or income
Earnings before income taxes and
non-controlling interest
Segmented assets as at
December 31, 2021
Segmented liabilities as at
December 31, 2021 (1), (2)
Segmented net assets as at
December 31, 2021 (1), (2)
1,086
10,152
560
-
11
-
(8,919)
(142)
-
1,086
-
64
10,227
16,931
-
-
560
-
(9,061)
(12,640)
1,793
(131)
64
1,726
4,291
-
-
-
-
-
1,086
27,158
560
(21,701)
6,017
302,477
3,701
(4,495)
301,683
64,777
(2,320)
364,140
95,658
996
(365)
96,289
42,834
(2,320)
136,803
206,819
2,705
(4,130)
205,394
21,943
-
227,337
Land Development Segment
Intrasegment
Elimination
(184)
LP
203
Home
Building
Segment
92,416
-
Intersegment
Elimination
(29,620)
-
Total
41,095
5,870
(31,616)
(80,190)
29,620
-
-
-
4,268
-
(184)
19,617
12,226
-
562
-
Genesis
41,076
4,945
(30,771)
4,268
19,518
562
925
(845)
-
283
-
(8,142)
(180)
184
(8,138)
(9,912)
11,938
103
-
12,041
2,314
276,751
13,895
(6,482)
284,164
39,527
62,653
6,609
(2,288)
66,974
20,779
Total
103,891
5,870
(82,186)
4,268
31,843
562
(18,050)
14,355
324,929
88,991
-
-
-
-
-
1,238
1,238
214,098
7,286
(4,194)
217,190
18,748
-
235,938
(1) Segmented liabilities under the Genesis home building segment include $61 due to the land development segment (December 31, 2021 - $3,113 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 $365 (December 31, 2021 -$2,288) due to
Genesis.
82
34
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
23.
RELATED PARTY TRANSACTIONS
Transactions occurred with the following related parties:
a)
In 2005, the Corporation sold a 49% undivided interest in approximately 610 acres to Genesis Limited Partnership #4 and
GLP5 NE Calgary Development Inc. for $7,670. These entities are part of LP 4/5 group and are consolidated in the
Corporation’s financial statements (note 24). A margin of $4,194 was deferred at that point and would have been recognized
when the lands were sold to a third-party. In July 2022, the Corporation repurchased from LP4/5 group their 49% undivided
interest in 456 acres of land for $6,699 with LP4/5 group still owning a 49% undivided interest in the remaining 154 acres
of land. The cash proceeds were $5,038 with the remainder of $1,661 being applied against debt owed to the Corporation
by LP4/5 group. The margin deferred on completion of the repurchase was $4,130 and will be recognized when the lands
are sold to a third party.
b) The Corporation and a private company entered into a Limited Partnership, SHEA LP to develop a two-building purpose
built rental project containing approximately 300 units in the Corporation’s Sage Hill Crest community. The Corporation and
the private company each own 50% of the units in SHEA LP (49% directly and 1% though the general partner Sage Hill
Estates Apartments GP Inc.). See note 8 for additional information.
24.
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.
Genesis Limited Partnership #8 and Genesis Limited Partnership #9, part of the LP8/9 group, paid a final distribution to their unit
holders during the year ended December 31, 2021. Genesis held 53.63% equity interest in Genesis Limited Partnership#8. The LP
8/9 Group entities no longer have any assets or liabilities and have been wound up. The entities are no longer being consolidated
effective January 1, 2022.
LPLP 2007 is a limited partnership controlled by the Corporation. This limited partnership no longer has any real estate assets and
is in the process of distributing all remaining cash, held in trust, to the limited partners following which it will be wound up.
35
83
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
24.
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
Genesis Land Development (Ricardo Ranch) Corp.
Sage Hill Crest Apartments Corp.
Siseneg Holding Inc.
GLDC Management Inc.
Lewiston Lands Limited Partnership (2)
Lewiston Lands GP Inc.
Home Building
Genesis Builders Group Inc.
The Breeze Inc.
Joint Venture
Sage Hill Estates Apartments LP
Sage Hill Estates Apartments GP Inc.
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, 2022
December 31, 2021
100%
100%
0.0002%
99.9998%
100%
100%
0.0002%
99.9998%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
2%
50%
0.001%
0%
100%
-
-
-
0.023%
100%
0%
0%
0%
100%
100%
100%
100%
100%
-
-
-
-
100%
100%
49%
2%
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.
(2) During the year ended December 31, 2022, the Corporation sold approximately 130 acres to Lewiston Lands Limited Partnership (“LLLP”) for $42,830. 100% of
LLLP was owned by Genesis Land Development Corporation at December 31, 2022. This transaction was eliminated on consolidation.
84
36
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
24.
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
Real estate held for development and sale
Other operating assets including restricted
cash
Cash and cash equivalents
Total assets
Liabilities
Accounts payable and accrued liabilities
Due to related parties
Total liabilities
Net assets
Non-controlling interest (%)
December 31, 2022
LP 4/5
LP 8/9
LPLP 2007
3,109
22
-
3,131
98
328
426
2,705
100%
-
-
-
-
-
-
-
-
-
532
38
570
533
37
570
-
0%
100%
December 31, 2021
Total
3,109
554
38
3,701
631
365
996
2,705
LP 4/5
LP 8/9
LPLP 2007
Total
Assets
Real estate held for development and sale
9,564
Amounts receivable
Due from related parties
Other operating assets including restricted
cash
Cash and cash equivalents
Total assets
Liabilities
Accounts payable and accrued liabilities
Due to related parties
Total liabilities
Net assets
Non-controlling interest (%)
-
-
-
-
9,564
3
2,288
2,291
7,273
100%
37
-
-
45
-
-
45
45
-
45
-
100%
-
6
51
4,198
31
4,286
4,273
-
4,273
13
100%
9,564
6
96
4,198
31
13,895
4,321
2,288
6,609
7,286
85
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT
GENESIS LAND DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
(All tabular amounts and amounts in footnotes to tables are in thousands of Canadian dollars except number of shares)
24.
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
Net increase in cash and cash equivalents
Cash flows (used in) / from operating
activities
Cash flows used in financing activities
Net (decrease) / increase in cash and cash
equivalents
Year ended December 31, 2022
LP 8/9
LPLP 2007
-
-
n/a
61
-
100%
Year ended December 31, 2021
LP 8/9
1,109
211
100%
LPLP 2007
-
76
100%
LP 4/5
6,713
(131)
100%
LP 4/5
19
(184)
100%
Year ended December 31, 2022
LP 4/5
LP 8/9
LPLP 2007
-
-
LP 4/5
-
-
-
-
-
7
7
Year ended December 31, 2021
LP 8/9
(13)
-
(13)
LPLP 2007
90
(74)
16
Total
6,774
(131)
Total
1,128
103
Total
7
7
Total
77
(74)
3
86
38
OFFICERS
IAIN STEWART
President and CEO
WAYNE KING
Chief Financial Officer
PARVESHINDERA SIDHU
President, Genesis Builders Group Inc.
and Senior Vice-President, Home Building
of Genesis Land Development Corp.
BRIAN WHITWELL
Senior Vice-President, Asset Management
ARNIE STEFANIUK
Vice-President, Regional Planning
BRENDAN McCASHIN
Vice-President, Land Development
DIRECTORS
STEPHEN J. GRIGGS
Chair
STEVEN GLOVER
Lead Director
MARK W. MITCHELL
Director
LOUDON OWEN
Director
IAIN STEWART
Director
CALVIN YOUNGER
Director
GENESIS LAND DEVELOPMENT CORP.
CORPORATE OFFICE
6240, 333 - 96 Avenue NE
Calgary, AB T3K 0S3
MAIN 403 265 8079
EMAIL info@genesisland.com
www.genesisland.com
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. | 2022 ANNUAL REPORT
OFFICERS
IAIN STEWART
President and CEO
WAYNE KING
Chief Financial Officer
PARVESHINDERA SIDHU
President, Genesis Builders Group Inc.
and Senior Vice-President, Home Building
of Genesis Land Development Corp.
BRIAN WHITWELL
Senior Vice-President, Asset Management
ARNIE STEFANIUK
Vice-President, Regional Planning
BRENDAN McCASHIN
Vice-President, Land Development
DIRECTORS
STEPHEN J. GRIGGS
Chair
STEVEN GLOVER
Lead Director
MARK W. MITCHELL
Director
LOUDON OWEN
Director
IAIN STEWART
Director
CALVIN YOUNGER
Director
CORPORATE OFFICE
GENESIS LAND DEVELOPMENT CORP.
6240, 333 - 96 Avenue NE
Calgary, AB T3K 0S3
MAIN 403 265 8079
EMAIL info@genesisland.com
www.genesisland.com
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
87
87
GENESIS LAND DEVELOPMENT CORP. | 2022 ANNUAL REPORT Genesis Land Development Corp. 6240, 333 – 96 Avenue NECalgary, AB T3K 0S3Main: 403 265 8079Email: info@genesisland.comwww.genesisland.com