Annual Report
About Us
Headquartered in Canada, ISC (TSX:ISV) is the leading
provider of registry and information management services
for public data and records. Throughout our history, we
have delivered value to our clients by providing solutions
to manage, secure and administer information through
our Registry Operations, Services and Technology
Solutions segments.
Highlights
Revenue
Net Income
EBITDA1
2021
Results
2020
Results
Revenue Distribution by Segment for
the year ended December 31,
$169.4 M
$136.7 M
$32.1 M
$20.8 M*
$60.5 M
$43.4 M*
2021
5%
8%
51%
44%
51%
41%
Free Cash Flow1
$44.8 M
$36.2 M
Earnings per share (diluted)
$1.78
$1.18
*as restated
• Ratified new six-year collective agreement with the membership of SGEU Local 2214 with respect
to in-scope employees of ISC, ending September 30, 2025.
5%
• Filed a preliminary short form base shelf prospectus with the securities regulatory authorities in
each province and territory of Canada, other than Quebec. The filing allows ISC to make offerings
of common shares, preferred shares, debt securities, subscription receipts, units, warrants or any
combination thereof of up to $200 million during the 25 months ending June 4, 2023.
51%
44%
• Entered into an amended and extended credit facility agreement relating to the existing credit
facility. The aggregate amount under the credit facility is $150 million. The term was extended to
September 17, 2026. In addition, the amended agreement simplified the pricing structure.
Registry Operations
Services
Technology Solutions
2020
8%
51%
200
41%
150
100
• Increased the expected annual dividend on Class A Limited Voting Shares from $0.80 to $0.92.
Registry Operations
Services
Technology Solutions
2
2021 ISC® Annual Report
50
0
200
150
100
50
0
80
70
60
50
40
30
20
10
0
EBITDA
Adjusted EBITDA
80
70
60
50
40
30
20
10
0
EBITDA
Adjusted EBITDA
5%
5%
51%
51%
44%
44%
Our Business
8%
8%
51%
We operate three segments defined by their primary type of service offerings.
41%
41%
51%
Registry Operations
Delivery of registry services on behalf of governments and private sector organizations.
Services
Delivery of products and services that utilize public records and data to provide value to
customers in the legal and financial sectors.
80
Technology Solutions
70
Development, delivery and support of registry (and related) technology solutions.
80
70
1
2
3
200
200
150
150
100
100
50
0
Consolidated Revenue for the year
ended December 31,
50
(CAD millions)
0
60
50
40
30
20
10
0
60
50
40
30
Consolidated EBITDA1 and Adjusted
EBITDA1 and Related Margins1 for the
year ended December 31,
20
10
(CAD millions)
0
EBITDA
EBITDA
Adjusted EBITDA
Adjusted EBITDA
36.0%
31.7%
29.3% 30.1%
40.0%
35.7%
.
0
3
3
1
.
7
6
3
1
.
4
9
6
1
.
0
9
3
.
0
0
4
.
4
3
4
.
2
9
4
.
5
0
6
.
8
7
6
2019
2020
2021
2019
2020
2021
* Percentages expressed represent the EBITDA and
adjusted EBITDA margin percentages, respectively
1 EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow are not recognized as measures
under IFRS and do not have a standardized meaning prescribed by IFRS and, therefore, they may not be comparable
to similar measures reported by other companies. For a full description of these measures, see section 8.8, Non-IFRS
financial measures, and section 8.9, Non-IFRS financial measures definition of the MD&A.
Contents
2
4
5
7
9
About Us
Letter from the Chair
Letter from the President
and CEO
Corporate Social
Responsibility
Management’s Discussion
and Analysis
54
2021 Consolidated
Financial Statements
100 Board of Directors and
ISC Leadership
101 Corporate Information
3
2021 ISC® Annual Report Letter from the Chair
Joel Teal
Chair, Board of Directors
The last year was another successful one for ISC and I am as
confident as I ever have been that our business foundation
is strong, our people are talented and dedicated, and we will
continue to deliver exceptional results.
As Board Chair, I have always considered it
important to have an eye on the future and
ensuring that ISC is prepared. However, I also
believe it is as important to deliberate on the
past and ensure that the foundation we have
built remains intact as we continue to build.
As I’ve reflected on 2021, it was a year of
exceptional financial performance in the
face of continued uncertainty. Looking back
even further, “exceptional” or “great” financial
performance has been a consistent theme
since ISC became a publicly traded company
in July 2013. There are many factors that have
contributed to our success but, in particular,
I would like to recognize in my letter to you
this year the contribution of Jeff Stusek, now
former President and CEO of ISC.
As you know, in the fourth quarter of 2021,
we announced that Jeff Stusek had decided
to step down from his role as President
and CEO. Throughout his tenure, Jeff was a
determined, committed and guiding force in
achieving all that we have, especially since we
went public in 2013. His calm and determined
manner has been synonymous with his
leadership and he has led the Company
through a time of transformational change
and helped create a highly successful, well-
positioned and diversified business.
4
Now as I think to the future, we are well
positioned because of the strength of the
leadership team Jeff assembled. As the Board
contemplated who should be appointed
as President and CEO, our succession plan
came into focus. Shawn Peters is a well-
rounded and experienced executive with
strong strategic acumen who has proven to
be an exceptional leader since joining ISC
in April 2012. The Board and I are confident
that, under his leadership and through his
deep familiarity with the Company, ISC will
continue to grow in a strategic manner and
deliver long-term value to shareholders.
In addition to our excellent financial
performance and Shawn’s appointment
we also achieved a number of other
milestones including the announcement of
an increase to our expected annual dividend
of the Class A Limited Voting Share, from
$0.80 to $0.92. The decision to increase
the dividend reflects the strength of the
Company’s current business and affirms the
Board’s commitment to continue to reward
shareholders as ISC grows.
Looking forward to our annual general
meeting, all of our current Board members
who are not appointed by the Government
of Saskatchewan have agreed to stand
for election again and we intend to keep
the number of Board members to 10. All
our Board members are very experienced
business leaders and I look forward to
working with them again in 2022. I encourage
you to read the full biographies of all the
members of the Board in the management
information circular, which is available on our
website at www.company.isc.ca.
With Shawn now at the helm of ISC, we are
at the start of a new era for the Company.
However, the cornerstone of what ISC is
about – “being in it for the long term” – remains.
This means that our focus on long-term,
rather than short-term, success is a guiding
principle. This will ensure that ISC will continue
to thrive and with even greater success.
The Board and I are excited to be working
with Shawn and know that he will lead ISC
to even greater heights. The last year was
another successful one for ISC and I am
as confident as I ever have been that our
business foundation is strong, our people are
talented and dedicated, and we will continue
to deliver exceptional results.
Yours sincerely,
Joel Teal
Chair, Board of Directors
2021 ISC® Annual Report Letter from the President and CEO
Shawn B. Peters
President and CEO
Looking ahead, ISC will stay focused on delivering excellence
within our existing businesses, by providing outstanding
customer service to our clients and by taking care of our people.
As our Chair noted in his letter, 2021 was
indeed a remarkable year for ISC. Not only did
we continue to grow our Services business
in the face of a global pandemic, but we
also delivered outstanding results in our
Saskatchewan-based registries. Much of
this success was fuelled by robust economic
activity in the markets in which we operate
and contributions from our organic growth
strategies, especially in Services.
the commencement of potential new
opportunities. As a result, we saw weaker
results in Technology Solutions in 2021
compared to prior years. Despite this,
we’re confident about the potential of the
business and are investing to help drive new
opportunities, including with jurisdictions
that are able to re-focus on moving their
various technology-related projects forward,
post-COVID.
In Registry Operations, the year was driven
by a strong Saskatchewan real estate sector,
resulting in increased transaction levels
over the prior year, accompanied by higher
average land values transacted through the
Saskatchewan Land Registry and record high-
value transactions. During the year, we also
saw increases in the Saskatchewan Corporate
and Personal Property Registries, again
underscored by higher transaction volumes.
Services revenue was also up, a combination
of favourable economic conditions and
continued organic growth across our
product lines. In addition, we successfully
transitioned many of our existing customers
from our legacy platform to our new Registry
Complete platform, giving them access to a
more comprehensive suite of services.
Technology Solutions continues to be
impacted by COVID-19, which slowed
our progress on active projects and
In addition to our financial success, we also
executed on a number of key initiatives to
support the business and our continued
growth. We completed our integration of
Paragon, acquired in August 2020, and are
actively optimizing the technology for an
even more efficient operation and enhanced
client experience.
For a second year, we very successfully
continued our work-from-home program,
combined with providing in-person customer
support where required, to ensure the
health and safety of our staff and customers,
without sacrificing our service levels. As part
of our ongoing support of our Saskatchewan
employees, in January we ratified a new
six-year collective agreement with the
membership of SGEU Local 2214 with respect
to in-scope employees of ISC.
We reinforced our capital allocation strategy
with the filing of a preliminary short form
base shelf prospectus, which allows ISC
to make offerings of debt and equity
instruments of up to $200 million. We
entered into an amended and extended
credit facility agreement for $150 million, and
as our Chair also mentioned in his letter, we
increased our annual dividend in recognition
of the ongoing strength of the business, and
our confidence in our forward strategy.
Overall, it has been an extremely successful
year for ISC with increases in revenue, net
income, EBITDA and free cash flow. The
performance of our overall business in
uncertain economic environments, our ability
to adapt to and take advantage of changing
consumer behaviours (including those during
COVID-19), and our relentless pursuit of
organic growth, where available to us, were
on full display in 2021, and are evident in our
Management’s Discussion & Analysis and our
Financial Statements, which follow.
My appointment as President and CEO on
February 1, 2022, marks a new era for me and
for ISC. I thoroughly enjoyed the past 10 years
as ISC’s Chief Financial Officer and I’m excited
to bring my energy and enthusiasm for our
business to my new role. I wish to thank our
Chair and the Board for their confidence in
me. I would also like to thank Jeff Stusek for
his support over the years and for facilitating
such a smooth transition.
5
2021 ISC® Annual Report Letter from the President and CEO
As we start this journey together, I would
like to take the opportunity to acknowledge
all of our employees for their commitment
and dedication to ISC. Together, we have
accomplished a lot over the past few years
and have grown into a unique company that
combines the strength of our Saskatchewan
business with opportunities across Canada
and around the world. ISC is certainly a
different company than when I joined
10 years ago.
Looking ahead, ISC will stay focused on
delivering excellence within our existing
businesses, by providing outstanding
customer service to our clients and by taking
care of our people. I’m excited about the
opportunities ahead and I see continued
strength across our business. I’m looking
forward to building upon that strength with
further customer acquisitions and expanded
products and services, while putting our
balance sheet to work and executing on our
acquisition strategy.
Yours sincerely,
Shawn B. Peters, CPA, CA, ICD.D
President and CEO
6
2021 ISC® Annual Report Corporate Social Responsibility
ISC is proud to support programs, causes and
initiatives that make a difference in people’s lives
and have an impact on the communities we serve.
Once again, ISC and our employees
demonstrated that we are a socially
responsible corporate neighbour. In 2021,
we invested over $145,000 in support
of non-profit organizations, community
events and cultural programs.
Our partnerships and sponsorships
Habitat for Humanity Saskatchewan
In 2021, ISC entered into a three-year partnership with Habitat for Humanity Saskatchewan. Through this
partnership, ISC will help fund the construction of two Habitat homes in Regina, and one Habitat home in
Saskatoon, to help families build a place they can call home.
Nature Conservancy of Canada – Summer Internship Sponsor
ISC once again partnered with Nature Conservancy of Canada (NCC) to support its Saskatchewan Legacy
Stewardship Project, helping NCC to achieve its science and stewardship goals. Our sponsorship provides
funding for an intern position as well as a donation of Geomatics Information System (GIS) data. This year, the
ISC-funded GIS summer intern developed a paperless mobile survey data collection tool for NCC.
Saskatchewan Games Council – Provincial Partner
ISC is proud to partner with the Saskatchewan Games Council, supporting the Saskatchewan Winter Games.
More than 2,000 athletes, coaches and officials will participate in this event, with the goal of moving on to even
higher levels of sport, including the Olympic Games, Paralympic Games and North American Indigenous Games.
Jim Pattison Children’s Hospital – Radiothon
This year, ISC was a Power-Hour sponsor for the Jim Pattison Children’s Hospital radiothon and matched all
donations made during that hour. This gave ISC the unique opportunity to showcase our community spirit
while helping to provide hope and healing to Saskatchewan kids and families.
Albert Community School
In 2021, ISC continued its sponsorship of Albert Community School in Regina. Funding provides supplies
for the school’s nutrition program, which feeds over 200 students daily and readies the children for
learning. Support also provides teachers with classroom resources, and special care packages including art
projects for students to take home for the holiday season.
7
2021 ISC® Annual Report Our Dedicated Spirit of Giving
United Way
In 2021, ISC continued its tradition of supporting United Way
through our workplace fundraising campaign. While pandemic
restrictions remained in place, ISC employees came together online
and delivered another impressive campaign.
Through personal giving and participating in online events,
employees raised $17,303, which was matched and topped up by
ISC for a total donation of $40,000.
Environmental, Social and Governance (ESG)
We are committed to following sustainable and responsible business practices, including those
relating to ESG matters, to strengthen workplace culture, expand opportunities, reduce risks and
enhance ISC’s corporate reputation. ISC takes pride in giving back to the communities in which we
operate and having robust corporate governance practices. We passionately support programs,
causes and initiatives that make a difference to the people and places we serve.
ISC is also aware of the increased interest by a wide range of stakeholders in ESG. These three
factors are important in investor and shareholder confidence, in customers’ decision making,
to employees who value working with organizations that support these goals, and to the
communities in which the Company operates.
Century Family Farm Awards
As the safekeeper of original land title documentation, ISC
annually celebrates Saskatchewan’s agricultural history
with the Century Family Farm Awards program. The award
recognizes family-owned farms that have operated in
the province for 100 years or more. In 2021, the program
received nearly 200 applications. Due to pandemic
restrictions, each recipient received their award by mail
again this year, including a copy of the original land title
issued to their ancestor who homesteaded the land.
8
2021 ISC® Annual Report
Community Food Banks
This year, ISC chose to honour the
communities we serve by making donations to
local food banks during the holiday season:
• Food Banks of Saskatchewan
• Food Banks of BC – Vernon, BC
• Daily Bread Food Bank – Toronto, ON
• Moisson Montreal – Montreal, QC
• Crosscare – Dublin, Ireland
Life, Culture and Growth
ISC is a proud supporter of events and activities
that enhance culture, economic growth and
life events. Events and organizations supported
by ISC in 2021 included:
• Heritage Festival of Saskatoon
• Saskatchewan Science Centre
• Canadian Mental Health Association
• Dress for Success
• Women Entrepreneurs of Saskatchewan
• Women of the Dawn Counselling Centre
• YouthBiz Student Awards
•
Saskatchewan Prairie Conservation
Action Plan Speaker Series
• Hill Business Students’ Society
In Honour of the National
Day for Truth and
Reconciliation
The Government of Canada has designated
September 30 as the National Day for Truth and
Reconciliation. This day answers one of the 94
calls to action of The Truth and Reconciliation
Commission, commemorating the history
of residential schools and the ongoing
intergenerational impacts they continue to
have on Indigenous communities in Canada.
In recognition of this National Day for Truth
and Reconciliation, ISC was proud to support
and make a donation to these deserving
organizations:
• North Okanagan Friendship Center Society
• Rainbow Youth Centre
• Gord Downie & Chanie Wenjack Fund
• Native Friendship Centre of Montreal
Management’s Discussion & Analysis
For the Fourth Quarter and Year Ended December 31, 2021
Contents
1
2
3
4
5
6
7
8
Overview ............................................................................................................................................... 11
Consolidated Financial Analysis ........................................................................................................... 16
Business Segment Analysis ...................................................................................................................21
Summary of Consolidated Quarterly Results .........................................................................................41
Business Strategy ................................................................................................................................. 42
Financial and Capital Management....................................................................................................... 43
Business Risks ......................................................................................................................................46
Accounting Policies, Financial Measures and Control ...........................................................................49
Introduction
This Management’s Discussion and Analysis (“MD&A”) for
Information Services Corporation (“ISC”) discusses our financial
and operating performance, business indicators and outlook
from management’s viewpoint.
This document should be read in its entirety and is intended
to complement and supplement ISC’s audited Consolidated
Financial Statements (“Financial Statements”) for the years
ended December 31, 2021, and 2020. Additional information,
including our Annual Information Form for the year ended
December 31, 2021, is available on the Company’s website at
www.company.isc.ca and in the Company’s profile on SEDAR at
www.sedar.com.
This MD&A contains information from the Financial Statements
for the years ended December 31, 2021, 2020, and 2019,
prepared in accordance with International Financial Reporting
Standards (“IFRS”), as issued by the International Accounting
Standards Board (“IAS Board”). The financial information that
appears throughout our MD&A is consistent with the Financial
Statements.
This MD&A also includes certain measures, which have not
been prepared in accordance with IFRS, such as EBITDA,
EBITDA margin, adjusted EBITDA, adjusted EBITDA margin
and free cash flow. Rather, these measures are provided as
additional information to complement those IFRS measures.
Refer to section 8.8 “Non-IFRS financial measures” for discussion
of why we use these measures and their most closely related
IFRS measures within the Financial Statements. Refer to section
2 “Consolidated Financial Analysis” for a reconciliation of EBITDA
and adjusted EBITDA to net income and section 6.1 “Cash flow”
for a reconciliation of free cash flow.
Unless otherwise noted, or unless the context indicates
otherwise, “ISC”, the “Company”, “we”, “us” and “our” refer
to Information Services Corporation and its subsidiaries.
Any statements in this MD&A made by, or on behalf of,
management are made in such persons’ capacities as officers
of ISC and not in their personal capacities.
The Financial Statements are presented in Canadian dollars
(“CAD”). In this MD&A, all references to “$” or “dollars” are to
Canadian dollars and amounts are stated in Canadian dollars
unless otherwise indicated.
This MD&A contains forward-looking information and should
be read in conjunction with the “Caution Regarding Forward-
Looking Information” that follows. This MD&A is current as of
March 15, 2022.
A reference made in this MD&A to other documents or to
information or documents available on a website does not
constitute the incorporation by reference into this MD&A
of such other documents or such other information or
documents available on such website, unless otherwise stated.
9
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report with respect to our ability to implement our business strategy
and compete for business (other than our exclusive service
offerings to the Government of Saskatchewan), and market
our technology assets and capabilities, as well as business,
economic, market and other conditions, availability of
financing, currency exchange rates, consumer confidence,
interest rates, level of unemployment, inflation, liabilities,
income taxes and our ability to attract and retain skilled staff,
are material factors in preparing forward-looking information.
Forward-looking information involves known and unknown
risks, uncertainties and other factors that may cause actual
results or events to differ materially from those expressed or
implied by such forward-looking information. Factors that
could cause our actual results or events to differ materially
from those expressed or implied by such forward-looking
information include, without limitation, operational, economic,
market, financial, competitive, regulatory, technological and
other risks (including those arising from public health concerns
such as COVID-19) detailed from time to time in the filings
made by the Company, including those detailed in our Annual
Information Form for the year ended December 31, 2021, and
the Financial Statements, copies of which are available on
our website at www.company.isc.ca and in the Company’s
profile filed on SEDAR at www.sedar.com. You should consider
these factors carefully. We caution that the foregoing list is
not exhaustive. Other events or circumstances could cause
actual results to differ materially from those estimated or
projected and expressed in, or implied by, this forward-
looking information. See section 7.2 “Business risks and risk
management”.
Furthermore, unless otherwise stated, the forward-looking
information contained in this MD&A is made as of the date of
this MD&A. We have no intention and undertake no obligation
to update or revise any forward-looking information, whether
as a result of new information, future events or otherwise,
except as required by law. The forward-looking information
contained in this MD&A is expressly qualified by this cautionary
statement. You should not place undue reliance on forward-
looking information contained herein.
Responsibility For Disclosure
The ISC Board of Directors (“Board”) carries out its responsibility
for review of this disclosure primarily through the Audit
Committee (“Audit Committee”) of the Board, which is
comprised exclusively of independent directors.
The Audit Committee reviews the fiscal year-end MD&A and
recommends it to the Board for approval. Interim MD&As are
reviewed and approved by the Audit Committee.
Caution Regarding Forward-Looking Information
Certain statements in this MD&A and certain information
incorporated by reference herein contains forward-looking
information within the meaning of applicable Canadian
securities laws. The purpose of the forward-looking information
is to provide a description of management’s expectations
regarding future events or developments and may not be
appropriate for other purposes.
Forward-looking information which may be found in this
MD&A includes, without limitation, that contained in the
“Outlook” section hereof, and management’s expectations,
intentions and beliefs concerning the industries in which
we operate, business strategy and strategic direction,
growth opportunities, integration, contingent consideration,
development and completion of projects, the competitive
landscape, seasonality, our future financial position and results
of operations, capital and operating expectations, projected
costs, the impact of certain payments to the Government
of Saskatchewan, access to financing, debt levels, free cash
flow, expectations for meeting future cash requirements, the
economy and the real estate market, reporting currency and
currency fluctuations, dividend expectations, market trends
and other plans and objectives of or involving ISC. The words
may, will, would, should, could, expect, plan, intend, anticipate,
believe, estimate, predict, strive, strategy, continue, likely, potential
or the negative or other variations of these words or other
comparable words or phrases are intended to identify forward-
looking information.
Forward-looking information is based on estimates and
assumptions made by us in light of ISC’s experience and
perception of historical trends, current conditions and
expected future developments, as well as other factors
that ISC believes are appropriate and reasonable in the
circumstances. There can be no assurance that such estimates
and assumptions will prove to be correct. Certain assumptions
10
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021 1 Overview
ISC delivered strong results throughout 2021, fuelled by robust economic activity in the markets in which we operate and
contributions from our organic growth strategies, especially in Services. This has resulted in increased profitability across our
Registry Operations and Services segments.
In Registry Operations, the fourth quarter and full-year performance have been driven by a strong Saskatchewan real estate sector,
resulting in increased transaction levels, accompanied by higher average land values in the Land Registry and record high-value
transactions. During the year, we also saw increases in the Corporate and Personal Property Registries, again underscored by
higher transaction volumes.
Our Services segment similarly experienced increased revenues in the fourth quarter and during the year. This was due to a
combination of favourable economic conditions and continued organic growth across our product lines, and the transition of
many of our existing customers from our legacy platform to our new Registry Complete platform, giving them access to a more
comprehensive suite of services. In 2021, we had a full year of stable Recovery Solutions results compared to only five months1
in the prior year. Recovery Solutions revenue has been impacted by multiple factors present in the current Canadian COVID-19
impacted economy, including the lack of availability of new vehicles inflating prices in the used vehicle market, government
support programs that existed throughout the year, low interest rates and hesitation by lenders to implement asset recovery
processes due to current COVID-19 circumstances.
Our Technology Solutions segment continued to be the most affected by COVID-19, which impacted our progress on active
projects and the commencement of potential new opportunities. As a result, Technology Solutions saw weaker results in 2021
compared to prior years.
Overall, it has been an extremely successful year for ISC with increases in revenue, net income, EBITDA, and free cash flow. The
stability of our overall business in uncertain economic environments, our ability to adapt to and take advantage of changing
consumer behaviours (including those during COVID-19) and our relentless pursuit of organic growth, where available to us, were
on full display in 2021, and are evident in the pages that follow.
1 On July 31, 2020, The Company’s Services segment, through its wholly-owned subsidiary, ESC, acquired substantially all of the assets used in the business of Paragon. See
Note 25 in the Financial Statements.
1.1 Consolidated highlights
2021 CONSOLIDATED RESULTS
Revenue
$169.4M
+24% vs 2020
Net income
$32.1M
+54% vs 2020
EBITDA1
Adjusted EBITDA1
Free cash flow1
$60.5M
+40% vs 2020
$67.8M
+38% vs 2020
$44.8M
+24% vs 2020
Earnings per share, diluted
$1.78
+51% vs 2020
Dividends Paid
$14.0M
1 EBITDA, adjusted EBITDA and free cash flow are not recognized as measures under IFRS and do not have a standardized meaning prescribed by IFRS and, therefore,
they may not be comparable to similar measures reported by other companies; refer to section 8.8 “Non-IFRS financial measures”. Refer to section 2 “Consolidated
Financial Analysis” for a reconciliation of EBITDA and adjusted EBITDA to net income. Refer to section 6.1 “Cash flow” for a reconciliation of free cash flow.
11
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report SELECT FINANCIAL INFORMATION
The select annual financial information set out for the years ended December 31, 2021, 2020, and 2019, is derived from the
Financial Statements and has been prepared on a consistent basis. In the opinion of the Company’s management, such financial
data reflects all adjustments necessary for a fair presentation of the results for those periods.
(thousands of CAD)
Revenue
Net income
EBITDA1
Adjusted EBITDA1
EBITDA margin (% of revenue)1
Adjusted EBITDA margin (% of revenue)1
Free cash flow1
Dividend declared per share
Earnings per share, basic
Earnings per share, diluted
Total assets
Total non-current liabilities
2021
$ 169,379
32,078
$ 60,532
67,815
35.7%
40.0%
$ 44,800
0.83
$
1.83
1.78
2020 (restated)2
Year Ended December 31,
2019
$ 136,723
20,825
$ 43,392
49,210
31.7%
36.0%
$ 36,235
0.80
$
1.19
1.18
$ 132,968
19,400
$ 39,026
40,028
29.3%
30.1%
$ 29,996
0.80
$
1.11
1.11
2021
2020 (restated)2
As at December 31,
2019
$ 232,498
$ 57,888
$ 241,377
$ 92,963
$ 171,579
$ 32,683
1 EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow are not recognized as measures under IFRS and do not have a standardized meaning
prescribed by IFRS and, therefore, they may not be comparable to similar measures reported by other companies; refer to section 8.8 “Non-IFRS financial measures”. Refer
to section 2 “Consolidated Financial Analysis” for a reconciliation of EBITDA and adjusted EBITDA to net income. Refer to section 6.1 “Cash flow” for a reconciliation of free
cash flow.
2 During the year, the Company revised its accounting policy related to the configuration and customization costs incurred in implementing Software-as-a-service (“SaaS”)
arrangements in response to the International Financial Reporting Interpretations Committee agenda decision released in April 2021. This accounting policy change resulted
in the expense of formerly capitalized financial system implementation costs incurred in 2018 through 2021. This change resulted in a retroactive adjustment to expense
these costs effective January 1, 2020. This change did not result in a change in basic or diluted earnings per share for the current or prior year.
ISC has generated very strong results over the past three years across all metrics. Our overall results for 2021 are up well over the
previous year despite the global pandemic that dominated much of 2020 and 2021.
• Revenue rose by 24 per cent to $169.4 million in 2021 from $136.7 million in 2020, driven by economic strength in the Canadian
markets positively impacting both Registry Operations and Services, our continued focus on organic growth in Services, and a
full year of the Recovery Solutions business acquired in July 2020.
• Registry Operations continued its strong performance across all registries in 2021, most notably in the Land Registry, where
revenue was up 30 per cent over 2020.
• Services also grew its revenue in 2021 compared to 2020 through strong new customer acquisitions, the addition of new
services and technologies for all customers, and the addition of our Recovery Solutions services in the third quarter of 2020.
• These results demonstrate the strength of our business, with consolidated EBITDA up 40 per cent.
•
Free cash flow increased to record levels at $44.8 million in 2021, up 24 per cent over 2020.
12
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
Consolidated Revenue
for the year ended December 31,
(CAD millions)
Consolidated EBITDA and Consolidated Adjusted EBITDA
for the year ended December 31,
(CAD millions)
EBITDA Adjusted EBITDA
40.0%
35.7%
36.0%
31.7%
.
4
3
4
.
2
9
4
.
5
0
6
.
8
7
6
29.3% 30.1%
0
0
0
9
4
3
.
.
2019
2020
2021
.
0
3
3
1
2019
.
7
6
3
1
2020
.
4
9
6
1
2021
Consolidated Free Cash Flow
for the year ended December 31,
(CAD millions)
.
0
0
3
2019
.
2
6
3
2020
.
8
4
4
2021
FOURTH QUARTER CONSOLIDATED HIGHLIGHTS
• Revenue was $44.2 million for the quarter, an increase of
13 per cent compared to the fourth quarter of 2020. The
increase was due to strong activity in the Saskatchewan
real estate sector, which drove increased revenue in the
Saskatchewan Land Registry coupled with continued
organic growth in our Services segment through integrated
technology-driven product offerings.
• Net income was $10.3 million or $0.59 per basic share
and $0.57 per diluted share compared to $7.9 million or
$0.45 per basic and diluted share in the fourth quarter
of 2020. The increase is due to the increased revenue in
Registry Operations and Services, lower professional and
consulting expenses in 2021 and a reduction in share-based
compensation expense in the quarter.
• EBITDA was $17.6 million compared to $15.7 million for the
same quarter in 2020. This increase was largely driven by
the same reasons as net income: increased revenue, lower
professional and consulting expenses and a reduction in
share-based compensation during the quarter. Consolidated
EBITDA margin was 39.8 per cent for the quarter compared
to 40.2 per cent in 2020 resulting from lower EBITDA in
Technology Solutions largely due to COVID-19 impacts,
and in Services, the transition of customers to the Registry
Complete platform, which provides additional services, and
hence changes our revenue recognition by accounting on
a gross instead of net basis. Adjusted EBITDA was $17.2
million for the quarter compared to $17.0 million in the
same quarter in 2020. The increase is due to the strong
EBITDA, however, during the quarter, our total share-based
compensation expense reduced, which caused adjusted
EBITDA to be marginally lower than EBITDA. Adjusted
EBITDA margin was 38.9 per cent compared to 43.6 per
cent in 2020.
• Free cash flow for the quarter was $13.7 million, an increase
of 9 per cent compared to the fourth quarter of 2020 due
to the strong free cash flow nature of the higher results of
operations.
• On October 13, 2021, the Board concurrently announced
that Jeff Stusek had decided to step down from his role
as President & Chief Executive Officer of the Company at
13
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report the end of January 2022 and the appointment of Shawn
Peters as President & Chief Executive Officer of ISC, effective
February 1, 2022.
• On November 3, 2021, our Board declared a quarterly cash
dividend of $0.23 per Class A Limited Voting Share (“Class A
Share”), paid on January 15, 2022, to shareholders of record
as of December 31, 2021.
• On December 16, 2021, the Company announced the
appointment of Robert (Bob) Antochow as the Company’s
Chief Financial Officer, effective February 1, 2022.
• On December 22, 2021, the Company made a voluntary
prepayment of $15.0 million against its long-term debt
reducing its debt to $41.0 million.
YEAR-END CONSOLIDATED HIGHLIGHTS
• Revenue was $169.4 million for the full year, an increase
of 24 per cent compared to 2020. Much like reported for
the fourth quarter, the increase was due to higher revenue
in Registry Operations driven by robust activity in the
Saskatchewan real estate sector, increases in personal
property security registrations and new business entity
registrations. This was accompanied by continued organic
growth in our Services segment through new customer
acquisition and the use of technology, including Registry
Complete, offering an integrated suite of services to our
clients and a full year of operations from our new Recovery
Solutions division compared to five months in the prior year.
• Net income was $32.1 million or $1.83 per basic share and
$1.78 per diluted share compared to $20.8 million or $1.19
per basic share and $1.18 per diluted share in 2020. The
increase was the result of increased revenue in Registry
Operations and Services, lower professional and consulting
expenses, offset by increases in share-based compensation
due to strong performance of the Company’s share price
during the year, and increased expenses in both cost of
goods sold and financial services due to revenue growth.
• EBITDA was $60.5 million in 2021 compared to $43.4 million
for the 12 months ended December 31, 2020, again due to
increased revenue in Registry Operations and Services, lower
professional and consulting expenses, offset by increases in
share-based compensation, and increased costs in both cost
of goods sold and financial services due to revenue growth.
Consolidated EBITDA margin was 35.7 per cent compared
to 31.7 per cent in 2020.
• Adjusted EBITDA was $67.8 million compared to $49.2
million in 2020. The increase is due to strong EBITDA and
the removal through adjustments of year-to-date share-
based compensation and acquisition and integration costs.
Adjusted EBITDA margin was 40.0 per cent compared to
36.0 per cent in 2020.
• Free cash flow for the year ended December 31, 2021,
was $44.8 million, an increase of $8.6 million compared to
$36.2 million in 2020 due to higher results of operations and
strong cash flow conversion of the business.
• On September 20, 2021, ISC announced an extension to
its existing credit agreement with a new maturity date of
September 17, 2026. In addition, the amended agreement
simplifies the pricing structure and offers better terms.
The aggregate amount available under the Credit Facility
remains $150.0 million. During the year, ISC made voluntary
prepayments of $35.0 million against its long-term debt
reducing its debt to $41.0 million.
• On September 21, 2021, our Board announced that it
had approved an increase in the expected annual dividend
on its Class A Shares from $0.80 to $0.92, or $0.20 to $0.23
per quarter.
1.2 Subsequent events
• On February 15, 2022, the Company announced that its
Services segment, through its wholly-owned subsidiary ESC,
acquired all of the shares of a group of companies operating
as UPLevel. The purchase consideration is $9.0 million,
subject to working capital and other post-closing
adjustments set out in the share purchase agreement.
• On March 15, 2022, our Board declared a quarterly cash
dividend of $0.23 per Class A Share, payable on or before
April 15, 2022, to shareholders of record as of March 31, 2022.
1.3 Outlook
The following section includes forward-looking information,
including statements related to the industries in which we
operate growth opportunities, our future financial position and
results of operations, capital and operating expectations and
the expected impact of COVID-19. Refer to “Caution Regarding
Forward-Looking Information”.
The Company expects to see continued strength in 2022
across its two largest operating segments, Registry Operations
and Services. Both have benefitted from strong economic
conditions in 2021, including an overall positive impact on
transaction and seasonality trends during the pandemic.
While the pandemic has disrupted various sectors of the
Saskatchewan economy, Registry Operations has experienced
exceptional results in 2021, mainly due to the robust real
estate sector in Saskatchewan. While we do not expect the
strong economic activity experienced in 2021 will continue
indefinitely, we believe 2022 will still exceed pre-pandemic
14
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021 levels. Saskatchewan’s economy and registry transactions are
expected to begin to return to more normalized levels midway
through 2022 and finish the year just below 2021 record levels.
Consequently, we expect that Registry Operations will
continue to be a robust contributor to our results in 2022, due
largely to the strong cash flow this business generates on a
consistent basis. Additional investments in 2022 related to
people and technology will be made within this segment to
ensure continued high levels of service as well as secure and
efficient systems.
We expect Services to continue to deliver organic growth in
2022, driven by continuous technology advancements driving
operational efficiency and new product innovation. We are
deliberate in growing our business with existing customers
and the acquisition and onboarding of new customers,
particularly with our new cloud-based Registry Complete
software. A focus on investments in people and technology
to advance our growth will be important. This will allow us to
expand our offering to existing customers and facilitate the
acquisition of new customers throughout the year.
In Technology Solutions, we expect to see continued
progress and completion of solution delivery projects where
COVID-19 and other related delays have resulted in certain
milestones being deferred to 2022. Governments are expected
to continue directing their efforts to managing COVID-19,
but we are seeing the re-commencement of early-stage
procurement activity, which could translate into additional
projects commencing later in 2022. An investment in our
sales and technology development teams will be necessary
to support these activities, as well as provide support across
the organization on our technology initiatives. We have also
begun the search to find an Irish-based leader for our Dublin
subsidiary to support and drive their growth.
As economic trends potentially revert to pre-COVID-19 levels,
we expect our results to mildly follow suit. Over the past two
years, Registry Operations has delivered exceptionally strong
EBITDA, which is above historical levels. This strong EBITDA has
been propelled by a combination of a robust Saskatchewan
real estate market driving higher average transaction values,
increased ‘high value transactions’ and slightly higher
transaction volumes in the Land Registry. While we expect
continued strength in Registry Operations’ EBITDA margin, we
anticipate it to trend closer to pre-pandemic levels as depicted
in section 3.1.
Based on the previous details, in 2022 we expect revenue to
be between $168.0 million and $173.0 million, net income to
be between $23.0 million and $27.0 million, and EBITDA1 to be
between $48.0 million and $53.0 million.
Our results from the last seven quarters have demonstrated
the resilience of our business to economic adversity as well as
its ability to benefit from a strong economy, and we expect
that to continue. The Company’s diversified range of services,
pursuit of growth opportunities, and strong core offerings have
positioned us well for continued success in the years to come.
In keeping with our strategy, the Company will also actively
explore appropriate acquisition targets in 2022 that
complement or add value to our existing lines of business or
provide new key service offerings that will also drive value.
1 EBITDA is not recognized as a measure under IFRS and does not have a
standardized meaning prescribed by IFRS and, therefore, it may not be comparable
to similar measures reported by other companies; refer to section 8.8 “Non-IFRS
financial measures”. Refer to section 2 “Consolidated Financial Analysis” for a
reconciliation of historical EBITDA to net income.
15
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report 2 Consolidated Financial Analysis
Consolidated revenue was up 13 per cent and 24 per cent for the three months and year ended December 31, 2021, compared
to the same periods in 2020. Similarly, net income was up 29 per cent and 54 per cent compared to the same periods in 2020,
primarily due to increased revenue in Registry Operations and Services.
2.1 Consolidated statements of comprehensive income
(thousands of CAD)
Revenue
Registry Operations
Services
Technology Solutions
Corporate and other
Total revenue
Expenses
Wages and salaries
Cost of goods sold
Depreciation and amortization
Information technology services
Occupancy costs
Professional and consulting services
Financial services
Other
Total expenses
Net income before items noted below
Finance income (expense)
Interest income
Interest expense
Net finance (expense)
Income before tax
Income tax expense
Net income
Other comprehensive (loss) income
Un realized (loss) gain on translation of financial
Three Months Ended December 31,
2020 (restated) 1,2
2021
Year Ended December 31,
2020 (restated) 1,2
2021
$ 21,076
20,549
2,613
–
44,238
$ 19,452
15,744
3,815
2
39,013
$ 85,567
75,165
8,644
3
169,379
$ 69,535
56,398
10,782
8
136,723
9,600
12,331
3,153
2,111
946
692
559
383
29,775
14,463
42
(524)
(482)
13,981
(3,695)
10,286
10,680
7,799
3,767
2,117
880
785
779
279
27,086
11,927
(192)
(924)
(1,116)
10,811
(2,888)
7,923
48,757
40,359
13,778
7,992
3,430
3,872
3,044
1,393
122,625
46,754
140
(2,813)
(2,673)
44,081
(12,003)
32,078
41,708
31,271
12,724
7,896
3,004
5,461
2,654
1,337
106,055
30,668
172
(2,217)
(2,045)
28,623
(7,798)
20,825
statements of foreign operations
(269)
(69)
(1,048)
732
Ch ange in fair value of marketable securities,
net of tax
Other comprehensive (loss) income for the period
Total comprehensive income
7
(262)
$ 10,024
–
(69)
7,854
$
(13)
(1,061)
$ 31,017
(31)
701
$ 21,526
1 During the year, the Company changed the presentation of board compensation costs, including certain share-based compensation expenses related to the deferred share
units on the consolidated statements of comprehensive income to reflect them in wages and salaries expense instead of professional and consulting services. With this
change, all share-based compensation, including deferred share units, performance share units, share appreciation rights and stock options, is reflected in wages and salaries
on the consolidated statements of comprehensive income. Management believes the revised presentation provides more relevant information to users. Refer to Note 2 in
the Financial Statements for information on reclassifications.
2 During the year, the Company revised its accounting policy related to the configuration and customization costs incurred in implementing SaaS arrangements in response
to the International Financial Reporting Interpretations Committee agenda decision released in April 2021. This accounting policy change resulted in the expense of
formerly capitalized financial system implementation costs incurred in 2018 through 2021. This change resulted in a retroactive adjustment to expense these costs effective
January 1, 2020. This change did not result in a change in basic or diluted earnings per share for the current or prior year.
16
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
2.2 Consolidated revenue
Consolidated Revenue
for the three months ended December 31,
(CAD millions)
44.2
39.0
Consolidated Revenue
for the year ended December 31,
(CAD millions)
169.4
136.7
+13%
+24%
2020
2021
2020
2021
(thousands of CAD)
Registry Operations
Services
Technology Solutions
Corporate and other
Total revenue
Three Months Ended December 31,
2020
2021
Year Ended December 31,
2020
2021
$ 21,076
20,549
2,613
–
$ 44,238
$
$
19,452
15,744
3,815
2
39,013
$ 85,567
75,165
8,644
3
$ 169,379
$
69,535
56,398
10,782
8
$ 136,723
Total revenue for the quarter increased by $5.2 million compared to the fourth quarter of 2020 as a result of:
•
•
increased revenue of $1.6 million in Registry Operations related to the Land Registry driven by continued strong activity in the
Saskatchewan real estate sector; and
increased revenue of $4.8 million in Services, resulting from continued organic growth in Services and economic strength in
our markets. As well, a portion of this increase results from the transition of customers to the Registry Complete platform, which
provides additional services and hence changes our revenue recognition by accounting on a gross instead of net basis. This
results in an increase in revenue and a corresponding increase in cost of goods sold with no change in net income or EBITDA.
While this accounts for a portion of revenue growth, overall Services results are strong, as evidenced by a 44 per cent increase in
EBITDA over the prior year.
Total revenue for the year increased by $32.7 million or 24 per cent compared to the prior year as a result of:
•
•
increased revenue of $16.0 million in Registry Operations, $14.4 million of which relates to the Land Registry. Additionally, both
the Corporate and Personal Property Registries have demonstrated growth over 2020; and
increased revenue of $18.8 million in Services, resulting from continued organic growth in Regulatory Solutions as well as
an increase of $5.8 million in Recovery Solutions revenue resulting from a full 12 months of revenue in 2021 compared to
five months in the prior year. A portion of the increase in Regulatory Solutions results from the transition of customers to the
Registry Complete platform, which provides additional services and hence changes our revenue recognition by accounting on
a gross instead of net basis. This results in an increase in revenue and a corresponding increase in cost of goods sold with no
change in net income or EBITDA. While this accounts for a portion of revenue growth, Services saw strong growth in 2021, as
evidenced by a 44 per cent increase in EBITDA over the prior year.
These increases for the quarter and year were partially offset by reduced revenue in Technology Solutions from delays in solution
implementation projects.
17
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
2.3 Consolidated expenses
Consolidated Expenses
for the three months ended December 31,
(CAD millions)
Consolidated Expenses
for the year ended December 31,
(CAD millions)
27.1
18%
29%
14%
29.8
16%
41%
11%
39%
32%
2020
2021
Other
Costs of Goods Sold
Depreciation and Amortization
Employee Expenses
106.1
19%
29%
12%
40%
122.6
16%
33%
11%
40%
2020
2021
Other
Costs of Goods Sold
Depreciation and Amortization
Employee Expenses
(thousands of CAD)
Wages and salaries
Cost of goods sold
Depreciation and amortization
Information technology services
Occupancy costs
Professional and consulting services
Financial services
Other
Total expenses
Three Months Ended December 31,
2020 (restated)1,2
2021
Year Ended December 31,
2020 (restated)1,2
2021
$ 9,600
12,331
3,153
2,111
946
692
559
383
$ 29,775
$ 10,680
7,799
3,767
2,117
880
785
779
279
27,086
$
$ 48,757
40,359
13,778
7,992
3,430
3,872
3,044
1,393
$ 122,625
$ 41,708
31,271
12,724
7,896
3,004
5,461
2,654
1,337
$ 106,055
1 During the year, the Company changed the presentation of board compensation costs, including certain share-based compensation expenses related to the deferred share
units on the consolidated statements of comprehensive income to reflect them in wages and salaries expense instead of professional and consulting services. With this
change, all share-based compensation, including deferred share units, performance share units, share appreciation rights and stock options, is reflected in wages and salaries
on the consolidated statements of comprehensive income. Management believes the revised presentation provides more relevant information to users. Refer to Note 2 in
the Financial Statements for information on reclassifications.
2 During the year, the Company revised its accounting policy related to the configuration and customization costs incurred in implementing SaaS arrangements in response
to the IFRIC agenda decision released in April 2021. This accounting policy change resulted in the expense of formerly capitalized financial system implementation costs
incurred in 2019 through 2021. This change resulted in a retroactive adjustment to expense these costs effective January 1, 2020. This change did not result in a change in
basic or diluted earnings per share for the current or prior year.
Consolidated expenses were $29.8 million for the fourth quarter, an increase of $2.7 million compared to the same quarter in 2020
and were $122.6 million for the year compared to $106.1 million in 2020.
The increase in expenses during the quarter relates to increases in cost of goods sold of $4.5 million, driven by increased Services
revenue during the quarter. This was offset by lower professional and consulting services than in the same period in 2020, which
included expenses related to the acquisition of Paragon Inc. (“Paragon”). There was also a reduction in share-based compensation
linked to the Company’s share price during the quarter which resulted in a decrease to salaries and wages expense. While there
was a reduction in the share price during the quarter, the price has increased by 27 per cent year-over-year.
The year-over-year rise in expenses compared to the prior year was due to increased:
• wages and salaries related to additional staff in Recovery Solutions after the acquisition of Paragon in the third quarter of 2020,
additional amounts under our share-based compensation plans as a result of the strong performance of the Company’s share
price, and normal merit-based increases and performance compensation across our business;
• cost of goods sold associated with higher revenue in Services; and
• depreciation and amortization in Recovery Solutions after the acquisition of Paragon in the third quarter of 2020.
The increases were partially offset by the reduction in professional and consulting services due to costs in the prior year related to
the Paragon acquisition not being present in the current year.
18
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
2.4 Consolidated net income
Consolidated Net Income
for the three months ended December 31,
(CAD millions)
10.3
7.9
Consolidated Net Income
for the year ended December 31,
(CAD millions)
32.1
20.8
+30%
+54%
2020
2021
2020
2021
Net income for the quarter was $10.3 million or $0.59 per basic share and $0.57 per diluted share, an increase compared to $7.9
million or $0.45 per basic and diluted share in the fourth quarter of 2020. For the year, net income was $32.1 million or $1.83 per
basic share and $1.78 per diluted share compared to net income of $20.8 million or $1.19 per basic share and $1.18 per diluted
share in 2020.
As noted earlier, the increase in net income for the quarter and year-over-year is a result of higher revenue from Registry
Operations and Services and the reduction in professional and consulting services. This was partially offset by lower revenue in
Technology Solutions and year-over-year higher expenses associated with share-based compensation plans related to the strong
performance of the Company’s share price this year.
2.5 Consolidated EBITDA and adjusted EBITDA
Consolidated EBITDA and Adjusted EBITDA
for the three months ended December 31,
(CAD millions)
Consolidated EBITDA and Adjusted EBITDA
for the year ended December 31,
(CAD millions)
17.2
17.6
17.0
15.7
EBITDA
Adjustments
+1%
1.3
2020
2021
(0.4)
67.8
60.5
49.2
43.4
5.8
2020
7.3
2021
EBITDA
Adjustments
+38%
19
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report (thousands of CAD)
Net income
Depreciation and amortization
Net finance expense
Income tax expense
EBITDA
Adjustments
Share-based compensation expense
Stock option expense
Acquisition and integration costs
(Gain) loss on disposal of property, plant and
equipment assets
Adjusted EBITDA
EBITDA margin (% of revenue)
Adjusted EBITDA margin (% of revenue)
Three Months Ended December 31,
2020 (restated)1
2021
Year Ended December 31,
2020 (restated)1
2021
$ 10,286
3,153
482
3,695
17,616
$
(553)
13
150
$
7,923
3,767
1,116
2,888
$ 15,694
1,054
38
207
$ 32,078
13,778
2,673
12,003
$ 60,532
5,972
88
1,225
$ 20,825
12,724
2,045
7,798
43,392
$
2,969
222
2,618
(1)
$ 17,225
39.8%
38.9%
9
$ 17,002
40.2%
43.6%
(2)
$ 67,815
35.7%
40.0%
9
$ 49,210
31.7%
36.0%
1 During the year, the Company changed its accounting policy with respect to customization and configuration of SaaS arrangements. See section 1.1 “Consolidated
highlights” – footnote 2 for further details.
Due to our strong earning profile and margins, revenue increases translate well into strong EBITDA and adjusted EBITDA. For the
fourth quarter of 2021, EBITDA was $17.6 million compared to $15.7 million for the same quarter in 2020, up 12 per cent as a
result of economic strength in the markets in which we operate, organic new customer growth, and prudently managing costs
throughout the year. Similarly, adjusted EBITDA was $17.2 million for the quarter compared to $17.0 million in 2020, largely due to
revenue growth this year marginally offset by a reduction in share-based compensation in the quarter.
For the year, EBITDA was $60.5 million compared to $43.4 million in 2020, an increase of 40 per cent, as a result of strong
operational performance and growth consistent with that outlined above. Adjusted EBITDA was $67.8 million for the year
compared to $49.2 million in 2020, up 38 per cent, and driven by the same strong performance. Adjustments include share-based
compensation expense, which for the full year increased significantly from a 27 per cent increase in the share price during the
year, and acquisition and integration costs, which were lower in 2021 as a result of less merger and acquisitions activity.
2.6 Consolidated finance costs
Net finance expense was $0.5 million for the quarter, down from the $1.1 million in the prior year due to long-term debt
repayments made on our Credit Facility during 2021, resulting in less debt outstanding in the quarter when compared to the
fourth quarter of 2020.
For the year, net finance expense was $2.7 million in 2021 compared to $2.0 million in 2020 due to increased interest expenses
from our Credit Facility. A larger outstanding balance on the Credit Facility was held for the majority of 2021 compared to about
five months in 2020.
20
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
2.7 Tax provision
The Company is subject to federal and provincial income taxes at an estimated combined statutory rate of 27.0 per cent (2020 –
27.0 per cent). Income tax expense varies from the amounts that would be computed by applying the statutory income tax rate
to earnings before taxes for the following reasons:
(thousands of CAD)
Net income before tax
Combined statutory income tax rate
Expected income tax expense
Increase (decrease) in income tax resulting from:
Non-deductible expenses
Foreign income tax rate differential
Adjustment to prior years’ deferred tax assets
Other
Income tax expense
2021
2020 (restated)1
$ 44,081
27.0%
11,902
49
39
(25)
38
$ 12,003
$
28,623
27.0%
7,729
67
(278)
269
11
7,798
$
1 During the year, the Company changed its accounting policy with respect to customization and configuration of SaaS arrangements. See section 1.1 “Consolidated
highlights” – footnote 2 for further details.
In assessing the recovery of deferred income tax assets, management considers whether it is more likely than not that the
deferred income tax assets will be realized. The recognition and measurement of the current and deferred income tax assets
and liabilities involve dealing with uncertainties in the application of complex tax regulations and in the assessment of the
recoverability of the deferred income tax assets. The ultimate realization of deferred income tax assets is dependent upon the
generation of future taxable income during the periods in which the temporary differences are deductible.
3 Business Segment Analysis
Headquartered in Canada, ISC is the leading provider of registry and information management services for public data and
records. Throughout our history, we have delivered value to our clients by providing solutions to manage, secure and administer
information.
ISC currently has three operating segments:
Registry Operations delivers registry
and information services on behalf
of governments and private sector
organizations.
Services delivers products and services
that utilize public records and data
to provide value to customers in the
financial and legal sectors.
Technology Solutions provides the
development, delivery and support
of registry (and related) technology
solutions.
The balance of our corporate activities and shared services are reported as Corporate and other.
21
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
Revenue by Segment1
for the three months ended December 31,
Revenue by Segment1
for the year ended December 31,
6%
46%
10%
40%
Technology Solutions
Services
Registry Operations
50%
48%
+13%
5%
44%
Technology Solutions
Services
Registry Operations
51%
+24%
8%
41%
51%
2020
2021
2020
2021
1 Corporate and other and Inter-segment eliminations are excluded. Values may not add due to rounding.
EBITDA by Segment1
for the three months ended December 31,
EBITDA by Segment1
for the year ended December 31,
8%
21%
14%
24%
Technology Solutions
Services
Registry Operations
71%
62%
+11%
25%
72%
9%
24%
67%
3%
Technology Solutions
Services
Registry Operations
+33%
2020
2021
2020
2021
1 Corporate and other and Inter-segment eliminations are excluded. Values may not add due to rounding.
3.1 Registry Operations
When providing registry and information services to governments and private sector organizations, we work with those clients to
support their policies and execute procedures to ensure the integrity of the data and manage the information technology, data
management and authentication processes.
Most significantly, Registry Operations provides services on behalf of the Province of Saskatchewan under a 20-year Master
Service Agreement (“MSA”), in effect until 2033, and is the exclusive full-service solution provider of the Saskatchewan Land
Registry (including the Saskatchewan Land Titles Registry (“Land Titles Registry”), the Saskatchewan Land Surveys Directory
(“Land Surveys”) and Saskatchewan Geomatics services (“Geomatics”), collectively the “Land Registry”), the Saskatchewan Personal
Property Registry (“Personal Property Registry”) and the Saskatchewan Corporate Registry (“Corporate Registry”). Additional
information about the MSA is available in our Annual Information Form for the year ended December 31, 2021, on our website at
www.company.isc.ca and in the Company’s profile on SEDAR at www.sedar.com.
Competitors in this segment include infrastructure funds and private equity firms as well as information services companies,
registry software providers and other such information-based companies that develop and provide software platforms to manage
registry and related information services. These types of companies may compete with ISC by acting as, or partnering with,
22
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021 Customers are charged flat fees per transaction, and the
automated web-based system enables real-time completion
of search and registration services as well as minimizes
operational effort to deliver services.
General provincial economic drivers, including vehicle sales,
interest rates and the strength of commercial activity across
the province, influence the revenue in the Personal Property
Registry.
Customers complete almost all searches in the registry online.
The high online usage is stable, with minimal numbers of
end-use consumers needing staff assistance to complete
their transactions.
Saskatchewan Corporate Registry
The Corporate Registry is a province-wide system for
the registration of business entities, including business
corporations, non-profit corporations, co-operatives, sole
proprietorships, partnerships and business names. Entities
must maintain an active registration in the Corporate Registry
to legally carry on business within Saskatchewan.
Unlike other registries, the Corporate Registry earns most of its
revenue from maintenance services, including annual returns
and changes to corporate articles, ownership, or directorship.
Approximately 93 per cent of all registrations in the Corporate
Registry were submitted online in 2021.
businesses that can provide other required processes, such as
customer service and delivery, in conjunction with software
platforms to provide full-service solutions.
Registry Operations experiences moderate seasonality,
primarily because land titles revenue fluctuates in line with
real estate transaction activity in Saskatchewan. Typically, our
second and third quarters generate higher revenue during
the fiscal year when real estate activity is traditionally highest;
however, the COVID-19 pandemic has disrupted our normal
pattern of seasonality.
Saskatchewan Land Registry
The Land Titles Registry issues titles to land and registers
transactions affecting titles, including changes of ownership
and the registration of interests in land, in Saskatchewan.
Revenue for the Land Titles Registry is earned through
registration, search and maintenance fees. Registration
fees are either a flat fee or value-based, calculated as a
percentage of the value of the land and/or property being
registered. Approximately 86 per cent of all Land Titles Registry
registration transactions were submitted online in 2021.
We typically charge a flat fee per transaction for search and
maintenance transactions. However, in certain instances,
we may charge a negotiated fee for a customized search or
maintenance transaction such as certain mineral certification
or bulk data requests.
Because the Land Titles Registry revenue is comprised of
both residential and non-residential activity, mortgage rates
and business lending rates may affect revenue. Changes in
land values, provincial population and mortgage qualifying
requirements also affect the housing market, which, in turn,
influences changes of ownership and revenue.
Land Surveys registers land survey plans and creates a
representation of Saskatchewan land parcels in the cadastral
parcel mapping system. Revenue related to all Land Survey
services is earned as a flat fee per transaction.
Geomatics manages geographic data related to the cadastral
parcel mapping system, which is integrated with the Land
Titles Registry and Land Surveys. Fees for Geomatics services
are typically negotiated per transaction, based on the type and
nature of services required.
Saskatchewan Personal Property Registry
The Personal Property Registry is a notice-based public
registry in which security interests and other certain interests
in personal property (property other than land, buildings and
other property affixed to land) may be registered.
23
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report REGISTRY OPERATIONS REVENUE
Registry Operations Revenue
for the three months ended December 31,
(CAD millions)
21.1
13%
12%
19.5
14%
13%
73%
75%
Corporate Registry
Personal Property Registry
Land Registry
+8%
Registry Operations Revenue
for the year ended December 31,
(CAD millions)
85.6
13%
13%
74%
69.6
15%
15%
70%
Corporate Registry
Personal Property Registry
Land Registry
+23%
2020
2021
2020
2021
Note: Other revenue is not shown in the chart however included within the total. Values may not add due to rounding.
(thousands of CAD)
Land Registry
Personal Property Registry
Corporate Registry
Other
Registry Operations revenue
Three Months Ended December 31,
2020
2021
Year Ended December 31,
2020
2021
$
$
15,742
2,563
2,771
–
21,076
$
$
14,119
2,625
2,709
32
19,485
$
63,141
10,993
11,164
269
85,567
$
$ 48,694
10,055
10,537
282
69,568
$
Corporate Registry
85.6
11.2
11.0
63.1
Registry Operations Revenue
for the year ended December 31,
(CAD millions)
100.0
Land Registry
Personal Property Registry
70.4
10.2
10.2
48.9
69.6
10.5
10.1
48.7
80.0
60.0
40.0
20.0
0.0
2019
2020
2021
Note: Other revenue is not shown in the chart however included within
the total. Values may not add due to rounding.
The top five customers for Registry Operations comprised just
over 20 per cent of the total segment revenue for 2021. Of
those customers, no single customer represented more than
10 per cent of total Registry Operations revenue.
Revenue for Registry Operations was $21.1 million for the
quarter, up $1.6 million or 8 per cent compared to $19.5 million
in the fourth quarter of 2020. The fourth-quarter increase was
primarily due to growth from the Land Registry, where volume
was driven by the activity in the Saskatchewan real estate
sector, and an increase in the average land values transacted
through the registry, as well as strong high-value transactions.
For the year, revenue was $85.6 million, a rise of $16.0 million or
23 per cent compared to $69.6 million in 2020.
Other revenue consists mainly of fees associated with the
Multi-jurisdictional Registry Access Service (“MRAS”), which
operates in the Saskatchewan Corporate Registry and other
corporate registries in Canada. It enables businesses in Canada
to register seamlessly in select provinces and territories without
having to provide the same information to each jurisdiction.
24
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
Saskatchewan Land Registry
Revenue for the Land Registry during the fourth quarter of 2021 was $15.7 million, up by $1.6 million or 11 per cent compared to the
fourth quarter of 2020. For the year, revenue was $63.1 million in 2021 compared to $48.7 million in 2020. The increase in revenue is
primarily due to the positive results in the Land Titles Registry, which continued to experience brisk activity in the real estate sector.
Most of the revenue generated from the Land Registry is from the Land Titles Registry and is derived from value-based (ad valorem)
fees. Land Titles Registry revenue for the quarter was $15.0 million, up $1.7 million or 12 per cent compared to the fourth quarter
in 2020. The growth was primarily due to higher revenue from regular land transfers (changes of ownership), including increased
high-value property registrations and title searches during the quarter relative to the same period in 2020. The real estate sector saw
increases in resale volumes during the fourth quarter of 2021 when compared to the unusually high fourth quarter in 2020, meaning
volumes remain well above typical levels seen during this time of year. Based on this strong activity in the sector, overall Land Titles
Registry transaction volume increased by 19 per cent in the fourth quarter. Average land values for regular land transfers were also
higher during the fourth quarter of 2021 compared to the same period in 2020.
Saskatchewan Land Registry Revenue,
for the year ended December 31, 2021
Saskatchewan Land Registry Revenue,
for the year ended December 31, 2020
95.1%
3.2%
1.7%
93.6%
4.3%
2.1%
Land Titles Registry
Geomatics
Land Surveys Directory
Land Titles Registry
Geomatics
Land Surveys Directory
Note: Values may not add due to rounding.
High-value property registration revenue was again strong this period, coming in at $1.8 million in the fourth quarter. Each high-
value registration generates revenue of $10,000 or more and is typically seen in both commercial and larger agricultural transactions.
The following graphs show the Land Registry revenue by type of transaction and the overall transaction volume, respectively.
Typically, the second and third quarters generate the most revenue for the Land Registry. COVID-19 restrictions resulted in lower
revenue during the second quarter of 2020, after which we observed higher revenue in the third and fourth quarters, unusual
compared to our historical pattern of seasonality. Results for all four quarters of 2021 are higher than we traditionally experience,
although the pattern in 2021 is more indicative of our normal seasonality, as shown in the following graphs. For more information
on seasonality, refer to section 4 “Summary of Consolidated Quarterly Results”.
18.0
12.0
6.0
0.0
Saskatchewan Land Registry Revenue by Type
(CAD millions)
0.5
10.4
1.8
8.0
0.6
11.2
1.7
8.9
0.6
13.0
1.8
10.7
0.5
14.1
1.8
11.8
13.3
2.0
10.7
Registration
Search
Maintenance/Services
17.9
2.2
0.6
0.6
15.1
0.5
16.2
1.9
13.8
0.5
15.7
2.1
13.1
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Note: Values may not add due to rounding.
25
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
Saskatchewan Land Registry Transaction Volume
(Number of transactions)
240,000
200,000
160,000
120,000
80,000
,
1
1
7
7
7
1
,
7
3
2
1
7
1
,
2
0
6
9
7
1
,
1
6
8
1
8
1
,
6
1
7
3
0
2
,
0
0
5
6
2
2
,
6
5
7
7
9
1
5
8
8
4
1
2
,
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Revenue-generating transactions in the Land Titles Registry rose by 19 per cent for the fourth quarter of 2021 when compared
to the same period in 2020. The volume of regular land transfers and title searches improved by 5 per cent, and 20 per cent,
respectively, while the volume of mortgage registrations saw a modest decline of 1 per cent. Title searches make up the largest
component of transaction volumes, comprising 75 per cent of the volume for the registry in the fourth quarter of 2021.
For the year, Land Registry revenue was $63.1 million, an increase of 30 per cent or $14.4 million compared to the $48.7 million
recorded in 2020. Of that, Land Titles Registry revenue was higher by 32 per cent, coming in at $60.1 million compared to $45.6
million in 2020. This was mainly due to a 19 per cent increase in transaction volumes, greater revenue from high-value property
registrations, and a rise in average land values for regular land transfers during the period.
The following tables present Land Registry results over the past five years to highlight historical trends, the impact of COVID-19 in
2020 and the corresponding strength in 2021.
Saskatchewan Land Registry Revenue by Type
for the year ended December 31,
(CAD millions)
Registration
Search
Maintenance
Saskatchewan Land Registry Transaction Volume
for the year ended December 31,
(Number of transactions)
54.8
7.8
44.5
2.4
50.0
7.3
2.3
48.9
7.3
2.4
48.7
7.0
2.2
40.4
39.1
39.5
63.1
8.3
2.2
52.7
0
4
9
1
9
8
,
7
6
3
6
1
8
,
3
4
0
4
7
7
,
1
1
4
0
1
7
,
7
5
8
2
4
8
,
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Note: Values may not add due to rounding from maintenance transactions that were too small to display in chart.
High-value property registration revenue was a record-high $6.2 million in 2021. This represents an increase of $2.4 million
compared to revenue of $3.8 million in 2020. In 2017, our previous best year on record, we saw stronger revenue due in large part
to a few unusually high-value transactions. In 2020, high-value registration revenue was closer to average, however in 2021, the
revenue was significantly above average as a result of increased volume of high-value transactions processed this year.
26
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
Saskatchewan Land Titles Registry - High Value Transaction Revenue
(CAD millions)
5.6
6.2
4.1
3.9
4.2
3.6
3.1
3.9
4.3
3.8
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
6.0
5.0
4.0
3.0
2.0
1.0
0.0
The following additional graph presents the split of high-value
transactions over the past five years between commercial,
agricultural and other.
Saskatchewan Land Titles Registry – High Value
Transaction Revenue
(CAD millions)
Commercial
Ag
Other
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
5.6
0.8
1.1
3.6
0.2
4.3
0.4
0.9
2.9
3.9
1.0
2.6
6.2
0.4
2.3
3.5
0.2
3.8
1.3
2.2
2017
2018
2019
2020
2021
Note: Values may not add due to rounding.
Overall revenue-generating transactions in the Land Titles
Registry rose by 19 per cent in 2021 compared to 2020. This was
primarily due to the increase in regular land transfers, mortgage
registrations and title searches, which improved by 27 per cent,
18 per cent, and 17 per cent, respectively, compared to 2020.
Title searches make up the largest component of transaction
volume, comprising 74 per cent of the volume for the registry.
The major customers of the Land Registry include law firms,
financial institutions, governments, surveyors, developers,
resource companies as well as the general public. For 2021,
our top 20 Land Registry customers made up over 41 per cent
of revenue, and our top 100 Land Titles Registry customers
represented 78 per cent of revenue.
Saskatchewan Personal Property Registry
For the fourth quarter of 2021, revenue for the Personal Property
Registry was $2.6 million, down $0.1 million or 2 per cent
compared to the same quarter in 2020. Overall volume was
effectively flat during the period when compared to the fourth
quarter of 2020 as a result of search volume growth offsetting
declines elsewhere.
Search volume, which comprises 64 per cent of the volume
for the registry, grew 3 per cent during the quarter. As a result,
search revenue increased by 3 per cent for the fourth quarter of
2021 compared to the same quarter in 2020.
Registration revenue in the fourth quarter was negatively
impacted due to supply chain issues, particularly in the new
motor vehicle sales segment, reduced inventories, and limited
sales. Volume dropped by 7 per cent during the quarter, and
revenue was 6 per cent lower compared to 2020. Revenue
declined at a lesser rate than volume due to the increases in
average term-length for personal property security registration
setups compared to the same quarter in 2020.
Maintenance revenue increased by 5 percent in the fourth
quarter due to the increase in average term-length for renewals
of personal property security registrations, while volume was
flat when compared to the same period in 2020. Normally, the
pattern of seasonality for this registry contains higher revenue
during the second and third quarters of each year. COVID-19 has
impacted that trend in recent periods, where it appears to have
affected customer behaviour. The registry observed stronger
revenue during the last half of 2020 and the first half of 2021, as
illustrated in the following graph.
27
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Saskatchewan Personal Property Registry Revenue by Type
(CAD millions)
Registration
Search
Maintenance/Services
2.2
0.3
0.6
1.3
2.4
0.3
0.5
1.5
2.8
0.3
0.6
1.9
2.6
0.3
0.7
1.7
2.7
0.3
0.7
1.6
3.1
0.3
0.8
2.0
2.7
0.3
0.7
1.8
2.6
0.3
0.7
1.6
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Note: Values may not add due to rounding.
Saskatchewan Personal Property Registry Transaction Volume
(Number of transactions)
130,000
120,000
110,000
100,000
90,000
80,000
70,000
60,000
50,000
3
7
3
3
0
1
,
1
4
2
3
0
1
,
8
9
3
3
1
1
,
6
0
3
7
0
1
,
6
9
4
0
1
1
,
8
6
8
2
2
1
,
7
5
2
7
0
1
,
5
3
2
7
0
1
,
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Annual revenue for the Personal Property Registry was $11.0 million in 2021, an increase of $0.9 million or 9 per cent compared
to 2020. Overall volume for 2021 grew by 5 per cent compared to the previous year largely driven by search activity, which rose
by 8 per cent. Registration volume was flat in 2021, while maintenance volume dropped 1 per cent. Personal property security
registration setup volume was even in 2021 when compared to 2020.
Pricing changes made in August of 2020 and increases in average term-length of personal property security registrations resulted
in a higher revenue growth rate than volume growth rate in 2021. Registration, search, and maintenance revenue rose by 7 per
cent, 16 per cent and 6 per cent, respectively. Additionally average term-length for both personal property security registration
setups and renewals saw a modest increase in 2021 when compared to 2020.
The following tables present Personal Property Registry results over the past five years showing further trends, the reduction in
revenue and volumes that COVID-19 contributed to in 2020, as well as the recovery in 2021. Despite the recovery in volumes in
2021, these remain impacted by previously referenced supply chain issues impacting the availability of new vehicles.
28
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
Saskatchewan Personal Property Registry Revenue by Type
for the year ended December 31,
(CAD millions)
Registration
Search
Maintenance
Saskatchewan Personal Property Registry Transaction Volume
for the year ended December 31,
(Number of transactions)
10.0
1.1
2.0
6.9
10.2
1.3
2.2
6.7
10.2
1.1
2.5
6.5
10.1
1.1
2.4
6.5
11.0
1.2
2.8
7.0
,
7
3
2
5
6
4
,
7
1
9
2
6
4
,
7
2
5
7
5
4
,
8
1
3
7
2
4
,
6
5
8
7
4
4
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Note: Values may not add due to rounding.
Customers of the Personal Property Registry are primarily in the financial sector but also include law firms. The top 20 Personal
Property Registry customers encompassed about 83 per cent of the revenue for 2021, while the top 100 generated close to
95 per cent of revenue.
Saskatchewan Corporate Registry
Revenue for the Corporate Registry for the fourth quarter of 2021 was $2.8 million, up 2 per cent, or $62 thousand compared to
the same period in 2020, while overall transaction volume grew by 3 per cent.
Registration and search revenue grew by 4 per cent and 6 per cent, respectively. Maintenance revenue, the largest of the three
revenue streams, was up nearly 1 per cent.
As of December 31, 2021, there were 77,450 active Saskatchewan Business Corporations registered with the Corporate Registry
compared to 75,248 as of December 31, 2020.
The following graph illustrates the Corporate Registry revenue by type of transaction. Quarterly revenue in this registry continues
to mirror the usual pattern of seasonality, as seen below.
Saskatchewan Corporate Registry Revenue by Type
(CAD millions)
Registration
Search
Maintenance
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2.9
1.9
0.4
0.6
2.5
1.6
0.3
0.6
2.4
1.5
0.3
0.6
2.7
1.6
0.3
0.7
3.2
2.0
0.4
0.8
2.7
1.6
0.4
0.7
2.5
1.5
0.3
0.6
2.8
1.6
0.4
0.8
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Note: Values may not add due to rounding.
29
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
The following graph shows the transaction volumes for the Corporate Registry by quarter.
Saskatchewan Corporate Registry Transaction Volume
(Number of transactions)
120,000
100,000
80,000
6,0000
40,000
20,000
0
4
7
6
2
9
,
4
7
2
3
8
,
5
0
9
6
7
,
1
4
6
5
8
,
,
5
3
9
0
0
1
6
4
3
0
9
,
2
9
4
9
7
,
0
8
3
8
8
,
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
As mentioned earlier, transaction volume for the fourth quarter rose by 3 per cent compared to the same period in 2020. Search
volume grew by 6 per cent compared to the same period in 2020. This growth offset the decline in registration volume during the
quarter, which dropped 2 per cent despite revenue growth of 1 per cent. Maintenance volume was essentially flat for the quarter.
On an annual basis, revenue for the Corporate Registry was $11.2 million, up 6 per cent or $0.6 million compared to 2020. In 2021,
registration, search, and maintenance revenue increased by 14 per cent, 9 per cent, and 2 per cent, respectively, when compared
to 2020. More specifically, 2021 revenue from the incorporation and registration of new business entities, up 16 per cent, drove
registration revenue growth, while revenue from the filing of annual returns and renewals was flat for the year, which impacts
maintenance revenue.
Annual transaction volume for 2021 rose by 6 per cent compared to 2020. Registration, search, and maintenance volume grew by
11 per cent, 8 per cent and 2 per cent, respectively, compared to the previous year.
The following tables present Corporate Registry results over the past five years demonstrating further trends, the reduction in
volumes that COVID-19 contributed to in 2020, as well as strength in 2021.
Saskatchewan Corporate Registry Revenue by Type
for the year ended December 31,
(CAD millions)
Registration
Search
Maintenance
Saskatchewan Corporate Registry Transaction Volume
for the year ended December 31,
(Number of transactions)
10.1
1.4
2.6
6.2
10.0
1.4
2.5
6.1
10.2
1.4
2.5
6.3
10.5
1.3
2.6
6.6
11.2
1.5
3.0
6.8
,
0
0
6
0
5
3
,
1
7
3
5
4
3
,
5
9
2
7
4
3
,
4
9
4
8
3
3
,
3
5
1
9
5
3
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
Note: Values may not add due to rounding.
For the Corporate Registry, customers include law firms, companies in the financial sector, as well as the Government of
Saskatchewan. They also include businesses such as corporations, non-profit corporations, co-operatives and sole proprietorships
that are, were or will be, registered in the Corporate Registry. The top 20 Corporate Registry customers accounted for about 32 per
cent of revenue for 2021, and the top 100 customers comprised around 50 per cent of revenue.
30
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
REGISTRY OPERATIONS EXPENSES AND EBITDA
Registry Operations EBITDA
for the three months ended December 31,
(CAD millions)
13.5
10.6
Registry Operations EBITDA
for the year ended December 31,
(CAD millions)
49.0
34.6
+27%
+42%
2020
2021
2020
2021
(thousands of CAD)
Revenue
Total expenses1
EBITDA
Three Months Ended December 31,
2020
2021
Year Ended December 31,
2020
2021
$
$
21,076
7,572
13,504
$ 19,485
8,882
10,603
$
$ 85,567
36,585
48,982
$
$ 69,568
34,955
$ 34,613
1 Total expenses exclude interest, taxes, depreciation and amortization.
EBITDA for Registry Operations for the fourth quarter was $13.5 million, up 27 per cent compared to the same period in 2020
and was $49.0 million in 2021 compared to $34.6 million in 2020. The increase was due to increased revenue across all registries,
primarily the Land Registry.
Expenses decreased during the quarter, primarily from reductions in share-based compensation plans expense allocated during
the quarter and reductions in professional and consulting fees.
For the year, expenses increased compared to last year primarily due to higher allocated share-based compensation plans
expense related to the strong performance of the Company’s share price. Additionally, we experienced increased financial services
costs related to increased volumes and increased employee-related costs resulting from strong performance.
Over the past two years, Registry Operations has delivered exceptionally strong EBITDA, which is above historical levels. This strong
EBITDA has been propelled by a combination of a robust Saskatchewan real estate market driving higher average transaction values,
increased high value transactions and slightly higher transaction volumes in the Land Registry. While we expect continued strength
in Registry Operations’ EBITDA margin, we anticipate it to trend closer to pre-pandemic levels as depicted in the following graph.
Registry Operations EBITDA Margin
for the year ended December 31,
Registry Operations EBITDA Margin
Typical margin
57.2%
48.4%
49.8%
Additional margin
from higher average
value transactions
47.6%
46.1%
2017
2018
2019
2020
2021
31
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
3.2 Services
Services delivers solutions uniting public records data, customer authentication, corporate services, collateral management and
asset recovery to support registration, due diligence and lending practices of clients across Canada.
Our offerings are generally categorized into three divisions, namely “Corporate Solutions”, “Regulatory Solutions”, and “Recovery
Solutions”. The table below sets out the various offerings provided by our Services segment.
Category
Offering
Software
Products
Corporate
Solutions
Incorporation Services
Custom in-house
Corporate Supplies
Custom in-house
Know-Your-Customer
(“KYC”)
SIDni®,
AttestaNet®
LEV®
Regulatory
Solutions
Public Records Searches
Custom in-house
Registry Complete
Collateral Management
Custom in-house (AVS)
Recovery
Solutions
Asset Recovery
Repo>>Connect
Nationwide Business Name Registration and
Renewals
Security Filings and Registrations
Minute Books
Seals and Stamps
Corporate Legal Packages
Individual Identification
Legal Entity Validation
Beneficial Ownership Validation
Account Onboarding Services
US & International Corporate Entity Validation
Corporate Profile or Business Name Searches
NUANS1 Searches
PPSA2 Searches
Real Estate Searches
Vital Statistics Searches
PPSA2 /RDPRM3 Search & Registrations
Bank Act Filing
Notice of Security Interest (Fixture) Registrations
US UCC4 Search & Filings
Fully managed service across Canada and the US
Id entification, retrieval and disposition of
movable assets
1 A NUANS® report is a search that provides a comprehensive comparison of proposed corporate, business or trademark names with existing names already in use by
other businesses and corporations. NUANS® name reports reserve the proposed name for 90 days providing the time necessary to prepare and file incorporation, extra-
provincial registrations, amalgamations or other relevant corporate filings.
2 Personal Property Security Act.
3 Registre des Droits Personnels et Réels Mobiliers (translated as Register of Personal and Real Movable Rights).
4 Uniform Commercial Code.
Competition
Our competitors vary by market and geography. They primarily include other intermediaries and suppliers to lenders and legal
professionals.
Corporate Solutions
Corporate Solutions captures revenue from nationwide search, business name registration and corporate filing services sold to
legal professionals or the general public directly or indirectly through our government relationships. It also captures revenue from
our corporate supplies business. Our customers include legal professionals, the consumer market and the general public.
32
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021 Incorporation Services
• We provide a convenient, cost-effective method to
incorporate businesses online or through our staff-assisted
process. Leveraging our online technology platforms we
service legal customers and the general public through a
team of experienced law clerks in both Ontario and Quebec.
• Currently, we hold one of the two exclusive licences
which allows us to access the Ontario Corporate Registry
electronically on behalf of clients. Ontario intends to
transition to a new licencing model and launched the
first phase of their new public portal on October 19,
2021. Until the new model is fully rolled out, we expect
to continue to hold one of the two exclusive licences. We
also have non-exclusive licences to do the same in all other
provincial and federal (Corporations Canada) corporate
registries across Canada.
•
In addition to incorporations, various other corporate
filings are often required to operate a business. Items
such as amendments to a company’s governing articles,
amalgamations, the continuance of a company, a change
in registered address or changes to a board of directors.
We also provide online and real-time NUANS and business
name searches, registered agents of service and corporate
document preparation to assist in the organization and
maintenance of a business.
Corporate Supplies
We provide a comprehensive array of corporate supplies to
help companies organize and maintain their corporate legal
documents. This is primarily done through the most common
corporate supplies in packaged or individual formats, including
customized corporate minute books, corporate seals/
embossers, by-laws and share certificates, as well as a large
variety of rubber and self-inking stamps.
Regulatory Solutions
Regulatory Solutions captures revenue from our KYC, collateral
management and general due diligence service offerings.
We use our proprietary platform to assist clients with intuitive
business rules and advanced automation to deliver regulatory
services to support their credit/banking and legal processes.
We leverage the public registry data to provide insights and
improved customer experience through a single technology.
We supplement all our technology with deep subject-matter
knowledge offered through our legal professionals located in
three locations (Montreal, QC, Toronto, ON, and Vernon, BC).
Our newest technology platform, Registry Complete, is
a unified and streamlined platform that enables legal
organizations to search and register with the various ministries
across Canada in a secure cloud-based environment. This
service allows legal organizations to take advantage of
expanded Application Programming Interface (“API”) service
offerings, improved tools, faster turnaround, and a greater
array of services in the pursuit of exceptional and expedient
due diligence checks and client service. It also addresses key
operational gaps in the modern legal industry landscape.
Our customers include non-legal customers, such as financial
institutions and auto and equipment finance companies.
Know-Your-Customer
• We support legal and financial institution due diligence
activities for compliance purposes through the KYC
verification (corporate and individual), public records
search and registration services across Canada. Clients can
obtain numerous reports and intelligence to verify and
authenticate customer data to comply with their internal
customer onboarding policies mandated by FINTRAC /Anti-
Money Laundering regulations. Using a web-based tool and
associated APIs that provide real-time access to validate and
verify an individual or business’s existence, our KYC services
aggregates information from multiple trusted sources to
provide reliable and accurate identification of an individual
and/or a business and its principals.
Collateral Management
•
In order to ensure or “perfect” a security interest against
the personal property of a debtor, secured parties need
to register in the statutory registry under the applicable
personal property legislation. Registering provides the
secured party with statutory protection and priority against
other parties with competing security interests against
the applicable movable collateral. Once a secured party
has been paid out, or the security against the debtor is
otherwise terminated, registrations (or liens) are then
discharged and removed from the applicable security
legislation.
• We service the adjudication and complete the loan
fulfilment process, which involves detailed searches and
registrations to be completed to perfect the security
interest. We have invested in our technology, processes, and
innovation to ensure we support customer and industry
digitization strategies. This allows us to offer a complete lien
registry solution that reaches further than the traditional
registry submission services and includes PPSA/RDPRM
searches and management, fixture filings, garage/repair
liens, and US UCC Filings.
Public Records Search Services/Due Diligence
• Our public records search offerings include corporate
profiles, business name searches, NUANS, PPSA searches,
33
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report either embedded in the transaction or management service
fee or charged in addition to the service transaction fee.
Additional revenue is earned in Recovery Solutions through
management fees and commissions earned by the provision of
asset recovery services. Corporate supplies are charged a per-
unit fee in the same manner as a retail transaction product.
Key drivers for our revenue include increased regulatory
and compliance requirements; the growing trend towards
outsourcing business processes and services to realize cost
savings and focus on core business activities; economic
activity that can affect credit lending, mergers, acquisitions,
incorporations and various new business startup activities;
and economic conditions impacting consumer behaviour
which can affect the financing or default of new and used
movable property in our collateral management and asset
recovery business.
Our revenue in Corporate Solutions and Regulatory Solutions
is reasonably diversified and has little seasonality; instead, it
fluctuates in line with general economic drivers. Some smaller
categories of products or services can have some seasonal
variation, increasing slightly during the second and fourth
quarters. In particular, our collateral management services
experiences seasonality aligned to vehicle and equipment
financing cycles, which are generally more robust in the
second and fourth quarters. Recovery Solutions does not have
specific seasonality but is countercyclical to our other business
in that it can perform better in poor economic conditions.
security searches, real estate searches, and birth, death and
marriage certificate searches.
• Due diligence is an essential component of most merger
and acquisition and financing transactions, where searches
are performed to obtain a complete understanding of all
legal obligations associated with a person or business. In
the course of a due diligence undertaking, law firms, lenders
and/or other professional advisors will often order a series
of public records searches to verify third-party information.
These searches are commonly referred to as security (or
securities) searches.
• We provide security searches that can be conducted
against an individual, business or corporation, property
and assets across the country. Searches will reveal both
present and historical information relating to debts and
liabilities, pending and potential lawsuits, bankruptcy, liens,
judgments, and sales of assets across Canada.
Recovery Solutions
Recovery Solutions offers a fully managed service across
Canada and the US, which aids in facilitating and co-ordinating
asset recovery on behalf of our clients. Asset recovery involves
identification, retrieval, and disposal of movable assets such
as automobiles, boats, aircraft, and other forms of portable
physical assets used as collateral security for primarily
consumer-focused credit transactions.
Our clients enjoy a complete turnkey solution where our team
manages every step in the recovery process, including co-
ordinating bailiffs, investigators and auctions. Our customers
include most of the major banks that are involved in lending in
the movable asset market in Canada.
Recovery Solutions allows us to offer our clients a complete
solution in the credit life cycle, from origination to recovery.
By connecting the registrations from our existing Services
offerings to our new Recovery Solutions offering, our clients
can leverage our lien registry services platform to optimize
an early-stage portfolio assessment to validate the borrower’s
identity and ensure that their security on the asset in their
portfolio is perfected.
Our process also allows us to increase recoveries through
our superior supply chain management experience
and performance management of bailiffs, investigators
and auctions.
Revenue
We earn revenue through transaction fees for search and
registration services provided through incorporation, KYC,
public records and due diligence, and collateral management
services. All government fees associated with the service are
34
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021 SERVICES REVENUE
Services Revenue1
for the three months ended December 31,
(CAD millions)
20.5
10%
15%
75%
15.7
12%
9%
79%
Recovery Solutions
Corporate Solutions
Regulatory Solutions
+31%
Services Revenue1
for the year ended December 31,
(CAD millions)
56.4
7%
9%
84%
75.2
13%
10%
77%
2021
Recovery Solutions
Corporate Solutions
Regulatory Solutions
+33%
2020
2021
2020
1 Internal related parties and other revenue not displayed in the graph. Values may not add due to rounding.
(thousands of CAD)
Regulatory Solutions
Recovery Solutions
Corporate Solutions
Internal related parties and other
Services revenue
Three Months Ended December 31,
2020
2021
Year Ended December 31,
2020
2021
$ 15,485
1,953
3,111
–
$ 20,549
$
$
12,396
1,821
1,495
33
15,745
$ 58,263
9,516
7,386
–
75,165
$
$ 47,730
3,721
4,911
40
$ 56,402
Revenue for Services was $20.5 million for the fourth quarter, an improvement of 31 per cent or $4.8 million compared to the
same period in 2020. This increase was driven by continued organic growth in Regulatory and Corporate Solutions, as well as
the inclusion of new revenue from Recovery Solutions. Our organic growth comes from the addition of new legal customers,
increased KYC financial customers and the uptake of new services from existing customers. As we seek to improve the client
experience through technology, customers transitioned through 2021 from our legacy platform to our new Registry Complete
platform received a more comprehensive suite of services. The response from customers has been very positive, and as a result we
have recognized increased revenue.
A portion of the revenue increase in Regulatory Solutions and Corporate Solutions for both the fourth quarter and the year relates
to changes in accounting for revenue as customers migrate to the Registry Complete technology, where additional value-added
services are provided. This results in an increase in revenue and a corresponding increase in cost of goods sold with no change in
net income or EBITDA. While this accounts for a portion of revenue growth, the Services segment has seen strong growth during
the year, as evidenced by a 44 per cent increase in EBITDA over the prior year.
For the year ended December 31, 2021, revenue in the Services segment was $75.2 million compared to $56.4 million in 2020,
representing a boost of 33 per cent or $18.8 million. Annual revenue increases in all three revenue streams were recognized.
Regulatory and Corporate Solutions experienced organic growth and new customer acquisitions. Recovery Solutions benefited
from a full year of revenue realization in 2021, compared to five months in the prior year.
The following table demonstrates the growth in Services revenue over the past five years. The year-over-year revenue increases
have resulted from the organic growth of the business combined with the acquisition and integration of various businesses
since 2017.
35
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
Services Revenue by Type1
for the year ended December 31,
(CAD millions)
Services Revenue by Type1
Services Revenue by Type1
for the year ended December 31, 2021
for the year ended December 31, 2021
Regulatory Solutions
Corporate Solutions
Recovery Solutions
51.0
5.0
46.0
3.7
56.4
4.9
47.7
Services
75.2
9.5
7.4
58.3
42.4
4.8
37.6
2018
2019
2020
2021
14.9
14.9
2017
12.7%
12.7%
9.8%
9.8%
77.5%
77.5%
Regulatory Solutions
Regulatory Solutions
Corporate Solutions
Corporate Solutions
Recovery Solutions
Recovery Solutions
1 Internal related parties and other revenue not displayed in the graph. Revenue for 2017 does not display the disaggregation by revenue type as the data was not available for
current Services revenue categories. Values may not add due to rounding.
Regulatory Solutions
Revenue in Regulatory Solutions for the fourth quarter of 2021 was $15.5 million, up 25 per cent compared to $12.4 million for
the same period of 2020. Revenue grew in the quarter due to organic customer growth in the following sectors: KYC, alternative
small business lending and auto financing. We also onboarded new legal customers recognizing the value add services of
Registry Complete.
For the year, revenue rose by 22 per cent, coming in at $58.3 million compared to $47.7 million in 2020. Revenue for the year
increased because of the organic and new acquisition growth from our customer technology transition project initiative. There
was also a return to normal transaction levels from the pandemic-impacted period in the prior year.
A portion of this revenue increase for both the fourth quarter and the year relates to changes in accounting for revenue as
customers migrate to the Registry Complete technology where additional value added services are provided. This results in an
increase in revenue and corresponding increase in cost of goods sold with no change in EBITDA.
Recovery Solutions
Revenue in Recovery Solutions for the fourth quarter was $2.0 million, a rise over the same period in 2020 of $0.1 million. The
increase was due to an increase in assignment levels as the government subsidy programs ended, accompanied by some return
to improved transaction levels from the pandemic-impacted period in the prior year.
On an annual basis, revenue in 2021 was $9.5 million compared to $3.7 million in the prior year. When comparing these results, it is
important to remember that the assets of Paragon were acquired on July 31, 2020.
Growth of Recovery Solutions revenue has been impacted by multiple factors present in the Canadian economy, including the
lack of availability of new vehicles inflating prices in the used market, government support programs that existed throughout the
year, low interest rates and hesitation by lenders to take action due to current COVID-19 circumstances.
Corporate Solutions
Corporate Solutions revenue for the quarter was $3.1 million, increasing by 108 per cent or $1.6 million compared to $1.5 million
in the fourth quarter of 2020. This increase for the quarter is primarily related to the transition of customers to the Registry
Complete platform, where revenue is accounted for on a gross basis instead of net accounting as a result of additional value-
added services being provided. As a result of this change in accounting treatment, both revenue and cost of goods sold increased
by the same amount causing no impact to net income or EBITDA.
For the year, revenue increased by 50 per cent or $2.5 million, coming in at $7.4 million compared to $4.9 million in 2020. This
growth is a combination of the launch of additional corporate value-add products as a result of our continued technology
investment in Registry Complete combined with the change in accounting treatment of this revenue now being accounted for
on a gross basis. While this change in accounting treatment increases both revenue and cost of goods sold, it has no impact on
net income or EBITDA.
36
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021 Our Services revenue by solution is shown in the following graph.
Services Revenue by Type1
(CAD millions)
Regulatory Solutions
Corporate Solutions
11.8
1.3
10.6
12.4
1.0
11.4
16.4
1.9
1.1
13.4
15.7
1.8
1.5
12.4
16.2
2.1
1.6
12.5
20.1
3.2
1.4
15.5
18.3
2.3
1.2
14.8
Recovery Solutions
20.5
2.0
3.1
15.5
20.0
15.0
10.0
5.0
0.0
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
1 Internal related parties and other revenue not displayed in graph. Values may not add due to rounding.
For 2021, the top 20 Services customers accounted for nearly 74 per cent of the revenue, while the top 100 Services customers
comprised approximately 88 per cent of the revenue. No single customer accounted for more than 25 per cent of Services
revenue in the period.
SERVICES EXPENSES AND EBITDA
Services EBITDA
for the three months ended December 31,
(CAD millions)
4.1
4.0
Services EBITDA
for the year ended December 31,
(CAD millions)
17.4
12.1
(1)%
+44%
2020
2021
2020
2021
(thousands of CAD)
Revenue
Total expenses1
EBITDA
Three Months Ended December 31,
2020
2021
Year Ended December 31,
2020
2021
$ 20,549
16,515
$ 4,034
$
$
15,745
11,679
4,066
$ 75,165
57,788
17,377
$
$ 56,402
44,327
12,075
$
1 Total expenses exclude interest, taxes, depreciation and amortization.
EBITDA for Services was $4.0 million for the quarter compared to $4.1 million for the same period in 2020 and was $17.4 million
in 2021 compared to $12.1 million in 2020. This 44 per cent increase in EBITDA for the year resulted from the continued use
of automation and cross-selling to drive organic growth, additional new revenue from Recovery Solutions and ongoing
cost management.
37
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
Services expenses were $16.5 million for the quarter compared to $11.7 million in 2020 and were $57.8 million in 2021 compared
to $44.3 million in 2020. The increase for the quarter and the year was largely due to higher cost of goods sold related to both
increased revenue and changes in accounting for revenue and related cost of goods sold as customers began to use the Registry
Complete technology. These increases were partially offset by savings due to continued cost management. Additionally, the year-
over-year results include a full year of our Recovery Solutions division compared to five months in the prior year and an increase
in corporate allocated costs mainly due to higher share-based compensation plans expense related to the strong performance of
the Company’s share price in 2021.
3.3 Technology Solutions
Technology Solutions provides the development, delivery and support of registry (and related) technology solutions, generating
revenue through the following:
• sale of software licences related to our technology platforms;
• provision of technology solution definition and implementation services; and
• provision of monthly hosting, support and maintenance services.
We offer RegSys — a complete registry solution that provides a readily transferable technology platform capable of serving a wide
range of registry needs. RegSys is a multi-register platform that delivers the flexibility, scalability and features that enable public
sector organizations to deliver enhanced services to businesses and citizens.
With a full suite of integrated modules that provide core functionality for submission, enforcement and enquiry processing,
RegSys delivers solutions enabling the provision of core services to citizens in a user-friendly, efficient manner across multiple
access points. The RegSys solution has also been used to manage other legal registers such as intellectual property, securities,
licenses, charities, UCC and pension schemes.
Competitors in this segment include technology services organizations that provide application development, systems
integration and/or application management services. This includes large multinationals or local niche players, both of which we
can partner with to complement our offering depending on the clients’ needs.
Technology Solutions does not experience seasonality but does fluctuate due to the timing of project-related revenue.
TECHNOLOGY SOLUTIONS REVENUE
Technology Solutions Revenue
for the three months ended December 31,
(CAD millions)
6.2
38%
4.9
Internal parties
Third parties
(20)%
47%
53%
62%
Technology Solutions Revenue
for the year ended December 31,
(CAD millions)
20.6
48%
18.1
52%
Internal parties
Third parties
52%
48%
(12)%
2020
2021
2020
2021
(thousands of CAD)
Third parties
Internal related parties
Technology Solutions revenue
38
Three Months Ended December 31,
2020
2021
Year Ended December 31,
2020
2021
$ 2,613
2,317
4,930
$
$
$
3,815
2,380
6,195
$ 8,644
9,475
18,119
$
$ 10,782
9,769
$ 20,551
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
Revenue in Technology Solutions was $4.9 million for the quarter, a decrease of $1.3 million compared to $6.2 million for the same
period in 2020.
Revenue from external parties for the quarter decreased $1.2 million compared to the fourth quarter of 2020 and decreased $2.1
million for the full year compared to the same period in 2020. The decrease was due to the timing of solution implementation
projects, which impacts the timing of revenue recognition in the quarter and year over year compared to the same periods
in 2020. Our Technology Solutions segment continues to be the most affected by COVID-19, which has impacted the
commencement of potential new opportunities as well as progress on active projects as governments around the world have
been responding to the pandemic. While we continue to see progress on solution delivery projects, certain milestones anticipated
to be completed this year have been delayed into 2022. Revenue on our solution implementation projects will continue to be
recognized in the quarters in which they are earned either through the achievement of milestones or a percentage of completion,
consistent with the revenue recognition method adopted for projects.
Internal related party revenue in any quarter is dependent on resources used or consumed internally, particularly in Registry
Operations. Our intent is to continue to service the needs of internal customers as efficiently and effectively as possible, including
the provision of service via related party resources; therefore, this figure may continue to fluctuate over time, particularly as we
pursue additional external revenue.
Technology Solutions Revenue by Type
(CAD millions)
8.0
6.0
4.0
2.0
0.0
4.7
2.4
2.2
4.9
2.5
2.4
1.9
4.8
2.4
2.3
6.2
2.4
3.8
6.0
2.3
3.7
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Note: Values may not add due to rounding.
Third Party Revenue
Related Party Revenue
3.2
3.0
2.4
2.3
4.2
2.5
1.8
2.0
4.9
2.3
2.6
0.6
Q2 2021
Q3 2021
Q4 2021
Revenue in our Technology Solutions segment was $18.1 million for the year ended December 31, 2021, compared to $20.6
million in 2020, a decrease of $2.5 million.
Revenue from external parties was $8.6 million compared to $10.8 million in 2020. Revenue from external third parties decreased
in 2021 versus 2020, as delivery against milestones on signed contracts was delayed.
Internal related party revenue year-to-date decreased as we continued to reduce our internal support costs through continuous
improvements in providing application maintenance and operations services.
The following table provides details on Technology Solutions revenue over the past five years. Technology Solutions third-party
revenue has been impacted by the COVID-19 pandemic through delays in active solution delivery projects, as well as new projects
coming to market as governments around the world have focused on healthcare and pandemic measures.
39
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
Technology Solutions Revenue by Type
(CAD millions)
Technology Solutions Revenue
Technology Solutions Revenue
for the year ended December 31, 2021
for the year ended December 31, 2021
Third parties
Internal related parties
25.0
20.0
15.0
10.0
5.0
0.0
20.4
21.2
16.7
14.8
24.3
12.8
20.5
9.8
11.4
10.8
6.4
3.7
2017
2018
2019
2020
2021
18.1
9.5
8.6
52.1%
52.1%
47.9%
47.9%
Third parties
Third parties
Internal related parties
Internal related parties
Note: Values may not add due to rounding.
TECHNOLOGY SOLUTIONS EXPENSES AND EBITDA
Technology Solutions EBITDA
for the three months ended December 31,
(CAD millions)
2.5
Technology Solutions EBITDA
for the year ended December 31,
(CAD millions)
4.4
1.4
(42)%
(59)%
1.8
2020
2021
2020
2021
(thousands of CAD)
Revenue
Total expenses1
EBITDA
1 Total expenses exclude interest, taxes, depreciation and amortization.
Three Months Ended December 31,
2020
2021
Year Ended December 31,
2020
2021
$ 4,930
3,489
$ 1,441
$
$
6,195
3,710
2,485
$
18,119
16,317
1,802
$
$
$
20,551
16,116
4,435
EBITDA for Technology Solutions was $1.4 million for the quarter compared to $2.5 million in the fourth quarter of 2020 and was
$1.8 million for the year compared to $4.4 million in 2020.
For the quarter, Technology Solutions expenses were down $0.2 million compared to the same period in 2020 and were up $0.2
million for the year compared to 2020. EBITDA was down for the quarter and the year primarily due to lower third-party revenue
from the delays in completion of certain milestones on solution implementation projects. In addition, the year-to-date results
were impacted by an impairment loss recorded on a customer contract and increased corporate allocated costs driven primarily
by the share-based compensation plans.
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2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
3.4 Corporate and other
Corporate and other includes expenses related to our corporate activities and shared services functions. The Company previously
included eliminations of Inter-segment revenue and costs in Corporate and other. These are now presented separately in
the Financial Statements and, therefore, excluded below. Management believes this format provides a more transparent
representation of the Corporate and other activities.
(thousands of CAD)
Third parties
Internal related parties
Corporate and other revenue
Total expenses1
EBITDA
Three Months Ended December 31,
2020 (restated)2
2021
Year Ended December 31,
2020 (restated)2
2021
$
$
$
–
34
34
(1,397)
(1,363)
$
$
$
2
35
37
(1,496)
(1,459)
$
$
$
3
157
160
(7,789)
(7,629)
$
$
$
8
140
148
(7,879)
(7,731)
1 Total expenses exclude interest, taxes, depreciation and amortization.
2 During the year, the Company changed its accounting policy with respect to customization and configuration of SaaS arrangements. See section 1.1 “Consolidated
highlights” – footnote 2 for further details.
EBITDA for the quarter increased compared to the same period in 2020, primarily as a result of reduced professional and
consulting services and reduced share-based compensation plans expense during the quarter. For the year, the decrease in
expenses results from a reduction in corporate professional and consulting expenses not allocated to the segments.
4 Summary of Consolidated Quarterly Results
The following table sets out select quarterly results for the past eight quarters. As outlined earlier, Registry Operations
experiences moderate seasonality, primarily because Land Titles revenue fluctuates in line with real estate transaction activity
in Saskatchewan. Typically, our second and third quarters generate higher revenue during the fiscal year when real estate activity
is traditionally highest.
In Services, our Corporate Solutions and Regulatory Solutions services revenue is relatively diversified and has little seasonality;
instead, it fluctuates in line with general economic drivers. Some smaller categories of products or services can have some
seasonal variation, increasing slightly during the second and fourth quarters. In particular, our collateral management services
experiences seasonality aligned to vehicle and equipment financing cycles, which are generally stronger in the second and fourth
quarters. Our Recovery Solutions revenue also does not have specific seasonality but is countercyclical to our other business in
that it can perform better in poor economic conditions.
The Company has observed that its historical pattern of seasonality in Registry Operations, and to some degree in Services, has
been impacted due to the COVID-19 pandemic. Although the current year trends would support historical patterns, at this time,
we are uncertain if or when seasonality will fully return to historical patterns.
Technology Solutions does not experience seasonality, however, it is the segment that has been most impacted by COVID-19 as
a result of governments and clients being focused on responding to COVID-19. This has, therefore, resulted in delays in solution
implementation as well as new business development opportunities coming to market. The balance of our corporate activities
and shared services functions do not experience seasonality. Expenses are generally consistent from quarter to quarter but can
fluctuate due to the timing of project-related or acquisition activities. As a result, our EBITDA margin fluctuates in line with the
cumulative impact of the above factors.
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For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
(thousands of CAD)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
2021
2020 (restated)1
Revenue
Expenses
Net income before items noted
below
Net finance (expense)
Income before tax
Income tax expense
Net income
Other comprehensive (loss)
income
Total comprehensive income
EBITDA margin
Adjusted EBITDA margin
Earnings per share, basic
Earnings per share, diluted
$ 44,238 $ 41,369
27,268
29,775
$ 44,623
34,627
14,463
(482)
13,981
(3,695)
$ 10,286 $
14,101
(661)
13,440
(3,706)
9,734
9,996
(737)
9,259
(2,749)
$ 6,510
$ 39,148 $ 39,013 $ 37,120 $ 30,993 $ 29,596
24,626
29,637
30,954
24,707
27,086
8,194
(793)
7,401
(1,853)
5,548 $ 7,923 $
11,927
(1,116)
10,811
(2,888)
$
7,483
(397)
7,086
(1,999)
5,087 $
6,286
(258)
6,028
(1,607)
4,421 $
4,970
(274)
4,696
(1,303)
3,393
(262)
$ 10,024 $
39.8%
38.9%
$
$
0.59 $
0.57 $
(4)
9,730
42.3%
41.8%
0.56
0.54
(37)
$ 6,473
30.4%
41.5%
0.37
$
0.36
$
$
30.3%
37.7%
$
$
0.32 $
0.31 $
(759)
(69)
4,789 $ 7,854 $
331
5,418 $
(226)
4,195 $
40.2%
43.6%
29.4%
38.0%
29.2%
33.5%
0.45 $
0.45 $
0.29 $
0.29 $
0.25 $
0.25 $
666
4,059
26.1%
26.8%
0.19
0.19
1 During the year, the Company changed its accounting policy with respect to customization and configuration of SaaS arrangements. See section 1.1 “Consolidated
highlights” – footnote 2 for further details.
5 Business Strategy
STRATEGIC PRIORITIES
ISC’s strategy focuses on delivering value to shareholders through the consistent performance of its existing business and the
execution of appropriate growth opportunities. The Company’s strategy is realized through three key functions:
• operating registries on behalf of governments;
•
implementing and supporting registry and regulatory technology solutions; and
• delivering value-add services utilizing public data and records.
Through these functions, ISC’s strategy is executed with the intent to:
• deliver leading registry and regulatory services and solutions to customers around the world through existing lines of business
and potential extension into adjacent opportunities through innovation and/or acquisition;
• produce increasing revenue with continued emphasis on EBITDA growth; and
• provide an enhanced customer experience for those interacting with ISC’s systems, people and information.
ISC’s strategy is influenced by a set of principles:
Long-term Orientation – strategic focus on the
sustainability of the business and the services we deliver;
Growth – active pursuit of attainable organic and
inorganic growth;
Innovation – emphasis on product and service innovation
and exploration of new verticals;
Company Values – prominent focus on quality of
service delivery and the engagement of our customers
and employees.
As the jurisdictions in which we operate begin to emerge from the COVID-19 pandemic and remove restrictions, the Company
remains well positioned to thrive through adherence to and execution of its priorities, principles, and long-term strategy. As
always, we will review and adjust our strategy to ensure the consistent delivery of the intended outputs listed above.
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2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
6 Financial and Capital Management
6.1 Cash flow
Our primary source of operating cash flow is generated from revenue related to our Registry Operations and Services segments.
Our primary uses of funds are operational expenses, capital and other growth-related expenditures and the payment of dividends.
Historically, ISC has financed its operations and met its capital and finance expenditure requirements through cash provided from
operating activities. Most recently, the Company has also utilized borrowing to supplement cash generated from operations to
finance acquisition activities. The Company believes that internally generated cash flow, supplemented by additional borrowing
that may be available to us through our existing Credit Facility, will be sufficient to meet cash requirements, capital expenditures
and anticipated dividend payments (refer to Note 16 in the Financial Statements, which are available on our website at www.
company.isc.ca and in the Company’s profile on SEDAR at www.sedar.com for our existing Credit Facility).
Liquidity risk is managed based on financial forecasts and anticipated cash flow. The majority of cash is held with Canadian
chartered banks, and the risk of loss is believed to be minimal. As at December 31, 2021, the Company held $40.1 million in cash
compared to $33.9 million as at December 31, 2020, an increase of $6.2 million.
The Company expects to be able to meet its cash requirements, including being able to settle current liabilities of $36.9 million
(December 31, 2020 – $27.3 million) and meet any unanticipated cash requirements due to changes in working capital
commitments. Such changes that would affect our liquidity may arise from, among other factors, general economic conditions
and the failure of one or more customers to pay their obligations. Deficiencies arising from short-term working capital
requirements and capital expenditures may be financed on a short-term basis with bank indebtedness or on a permanent basis
with offerings of securities.
CONSOLIDATED FREE CASH FLOW
(thousands of CAD)
Net cash flow provided by operating activities
Net change in non-cash working capital1
Cash provided by operating activities excluding
working capital
Cash additions to property, plant and
equipment
Cash additions to intangible assets
Consolidated free cash flow
Three Months Ended December 31,
2020
2021
Year Ended December 31,
2020 (restated)2
2021
$ 17,471
(3,142)
$
17,598
(3,962)
$ 61,212
(14,185)
$
40,979
(3,521)
$ 14,329
$
13,636
$ 47,027
$
37,458
(10)
(587)
$ 13,732
–
(985)
12,651
$
(10)
(2,217)
44,800
$
(63)
(1,160)
36,235
$
1 Refer to Note 26 of the Financial Statements for reconciliation.
2 During the year, the Company changed its accounting policy with respect to customization and configuration of SaaS arrangements. See section 1.1 “Consolidated
highlights” – footnote 2 for further details.
Consolidated free cash flow for the quarter was $13.7 million compared to $12.7 million for the same quarter in 2020 and was
$44.8 million for the year compared to $36.2 million in 2020. For the quarter and year, the increase primarily relates to higher cash
flows provided by our operations. For the year, this was partially offset by an increase in capital expenditures in 2021; specifically,
increased spending on intangible assets in Technology Solutions for product development.
43
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
The following table summarizes our sources and uses of funds for the three months and years ended December 31, 2021, and 2020:
(thousands of CAD)
Net cash flow provided by operating activities
Net cash flow (used in) investing activities
Net cash flow (used in) provided by
financing activities
Effects of exchange rate changes on cash held
in foreign currencies
(Decrease) increase in cash
Cash, beginning of period
Cash, end of period
Three Months Ended December 31,
2020
2021
Year Ended December 31,
2020 (restated)1
2021
$ 17,471
(553)
$
17,598
(925)
$
61,212
(366)
$
40,979
(70,815)
(19,541)
(4,894)
(54,274)
40,244
$
(133)
(2,756)
42,860
$ 40,104
(349)
11,430
22,516
33,946
$
$
(414)
6,158
33,946
40,104
$
$
(193)
10,215
23,731
33,946
$
$
1 During the year, the Company changed its accounting policy with respect to customization and configuration of SaaS arrangements. See section 1.1 “Consolidated highlights”
– footnote 2 for further details.
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
Net cash flow provided by operating activities was $17.5 million for the quarter compared to $17.6 million for the same period last
year and was $61.2 million for the year compared to $41.0 million in 2020.
For the fourth quarter of 2021, net cash flow provided by operating activities is similar to last year’s quarter, as higher quarter over
quarter cash flows from operations were more than offset by higher current taxes and lower cash flow from net changes in non-
cash working capital. The working capital variance is primarily attributable to lower share-based compensation liabilities, due to a
reduction of the share price in the quarter relative to the prior year.
The increase year over year is primarily due to strong results from operations, and to a lesser extent improved cash flow from
non-cash working capital items, partly offset by higher current income taxes. Improved cash flow from non-cash working capital
is largely due to a reduction of receivables due to the timing of contracts and enhanced collections, increases to share-based
compensation and corporate tax liabilities for items accrued but not yet paid, and partly offset by outflows associated with contract
assets and contract liabilities due to timing.
NET CASH FLOW USED BY INVESTING ACTIVITIES
Net cash flow used in investing activities for the quarter decreased by $0.4 million compared to the same period in 2020 and $70.4
million for the year compared to 2020. For the quarter, this resulted from less additions to intangible assets, while the reduction for
the year primarily resulted from the purchase of Paragon on July 31, 2020, for $70.2 million.
NET CASH FLOW USED IN FINANCING ACTIVITIES
Net cash flow used in financing activities for the quarter was $19.5 million, while in the same period in 2020, $4.9 million was used
by financing activities. During the current quarter, the cash used in financing activities predominantly related to a $15.0 million
voluntary prepayment of long-term debt.
For the year, cash flow used in financing activities was $54.3 million compared to cash flows provided by financing activities in
the prior year of $40.2 million. In 2021, this primarily relates to $35.0 million in voluntary debt prepayments and $14.0 million in
dividends, however, in the prior year, additional borrowings were secured to finance the Paragon acquisition.
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2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
6.2 Capital expenditures
Capital expenditures were $0.6 million for the quarter, compared to $1.0 million in 2020 and were $2.5 million for the year,
compared to $1.5 million in 2020. Capital expenditures in 2021 were partially related to system development work across our
business segments and increased spending for product development in Technology Solutions.
(thousands of CAD)
Registry Operations
Services
Technology Solutions
Corporate and other
Total capital expenditures
Three Months Ended December 31,
2020
2021
Year Ended December 31,
2020 (restated)1
2021
$
$
30
171
396
–
597
$
$
–
189
791
5
985
$
$
299
557
1,640
–
2,496
$
$
249
350
828
45
1,472
1 During the year, the Company changed its accounting policy with respect to customization and configuration of SaaS arrangements. See section 1.1 “Consolidated
highlights” – footnote 2 for further details.
6.3 Debt
At December 31, 2021, our debt was $41.0 million compared to $76.3 million at December 31, 2020. During the quarter, the
Company made a $15.0 million voluntary prepayment against its revolving facility due to excess cash and the desire to minimize
interest expense. During the year ended December 31, 2021, the Company made a total of $35.0 million of voluntary prepayments
compared to prepayments totalling $68.0 million in the prior year towards our previous facility. No new borrowings were drawn
during 2021.
On September 17, 2021, the Company entered into an amended and extended credit agreement in connection with its secured
Credit Facility provided by its lenders. The aggregate amount available under the Credit Facility remains at $150.0 million and the
term of the Credit Facility has been extended from the previous expiry date of August 5, 2022, to September 17, 2026. In addition,
the amended agreement simplifies the pricing structure. For further information on our Credit Facility, refer to Note 16 in our
Financial Statements, which are available on our website at www.company.isc.ca and in the Company’s profile on SEDAR at www.
sedar.com.
The Company was in compliance with all covenants throughout the period. The amount of borrowing costs capitalized during
2021 and 2020 was nil.
6.4 Total assets
Total assets were $232.5 million at December 31, 2021, compared to $241.4 million at December 31, 2020.
(thousands of CAD)
Total assets excluding intangibles,
goodwill and cash
Intangibles
Goodwill
Cash
Total assets
(thousands of CAD)
Total assets excluding intangibles,
goodwill and cash
Intangibles2
Goodwill
Cash
Total assets
Registry
Operations
$ 23,108
1,506
1,200
–
$ 25,814
Registry
Operations
$ 25,758
2,395
1,200
–
$ 29,353
Services
12,516
54,794
67,372
–
134,682
Services
13,952
63,203
67,372
–
144,527
$
$
$
$
Technology
Solutions
Corporate
and other
As at December 31,
2021
$
4,099
4,755
8,562
–
$ 17,416
$
$
14,470
12
–
40,104
54,586
$
$
54,193
61,067
77,134
40,104
232,498
Technology
Solutions
Corporate
and other
As at December 31,
2020 (restated)1
$
5,505
4,332
8,883
–
$ 18,720
$
$
14,807
24
–
33,946
48,777
$
$
60,022
69,954
77,455
33,946
241,377
1 During the year, the Company changed its accounting policy with respect to customization and configuration of SaaS arrangements. See section 1.1 “Consolidated
highlights” – footnote 2 for further details.
2 Certain prior year segment amounts have been changed to reflect the current year classifications.
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For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
6.5 Working capital
At December 31, 2021, working capital was $19.5 million compared to $28.1 million at December 31, 2020. The decrease in
working capital is primarily the result of increased trade payables, incomes taxes payable and lower trade receivables. This is offset
by a larger cash balance due to increased operational cash flow, and despite $35.0 million in debt repayments during the year.
(thousands of CAD)
Current assets
Current liabilities
Working capital
6.6 Outstanding share data
As at December 31, As at December 31,
2020
2021
$ 56,447
(36,905)
$ 19,542
$ 55,383
(27,289)
$ 28,094
The number of issued and outstanding Class A Shares as at December 31, 2021, was 17.5 million and the number of issued and
outstanding share options as of December 31, 2021, was 1,548,247. These amounts are unchanged as of the filing date.
6.7 Common share dividend
On November 3, 2021, our Board declared a quarterly cash dividend of $0.23 per Class A Share, paid on January 15, 2022, to
shareholders of record as of December 31, 2021.
6.8 Commitments
The Company has commitments over the next five years that include future minimum payments for leasing of office space,
an information technology service agreement with Information Systems Management Canada Corporation (“ISM”), other
management services contracts and a commitment to the Government of Saskatchewan under the MSA. The following table
summarizes our commitments as of December 31, 2021:
(thousands of CAD)
2022
2023
2024
2025
2026
Thereafter
Total
Operating leases and non-lease
component of office leases1
Information technology2 and other
service agreements
Master Service Agreement3
Total
$ 1,620
$ 1,149
$ 1,030
$
298
$
300
$
942
$ 5,339
3,978
500
$ 6,098
3,303
500
$ 4,952
490
500
$ 2,020
13
500
811
7
500
807
–
3,500
$ 4,442
$
$
7,791
6,000
$ 19,130
1 The Company leases all of its office space and certain office equipment. The office spaces have lease terms of between two and 10 years, with various options to extend. The
office equipment leases relate to photocopiers and have lease terms of three years. The Company does not have an option to purchase the leased assets at the expiry of the
lease period.
2 The Company has service agreements related to Information Technology with various service providers, including lease commitments for computer equipment where the
Company has taken the exemption for low-value assets. Other service agreements relate to service contracts associated with corporate and shared services infrastructure.
3 The MSA requires the Company to pay the Government of Saskatchewan the sum of $0.5 million annually, in a single instalment payable on or before March 1, in each
calendar year of the term for a 20-year period expiring on May 30, 2033.
7 Business Risks
7.1 Financial instruments and financial risks
Financial instruments held in the normal course of business included in our consolidated statements of financial position as at
December 31, 2021, consist of cash, short-term investments, trade and other receivables, accounts payable and accrued liabilities
excluding share-based accrued liabilities, and long-term debt.
The Company does not currently use any form of derivative financial instruments to manage our exposure to credit risk, interest
rate risk, market risk or foreign currency exchange risk. Refer to Note 20 of the Financial Statements for information pertaining to
financial instruments and related risk management.
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2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash, short-term investments, trade and
other receivables, accounts payable and accrued liabilities
excluding share-based accrued liabilities approximate fair value
due to their immediate or relatively short-term maturity. With
long-term debt, ISC has amended and restated its borrowings
under the Credit Facility, which is managed with prime loans,
short-term bankers’ acceptance, letters of credit or letters of
guarantee. These borrowings will bear interest at a base rate of
prime plus applicable margin varying between 0.20 per cent
and 1.00 per cent per annum. The Company is not exposed to
significant interest rate risk because interest bearing financial
instruments are at a low level relative to total assets and equity.
CREDIT RISK
Credit risk is the risk that one party to a transaction will fail to
discharge an obligation and cause the other party to incur a
financial loss. The Company extends credit to its customers
in the normal course of business and is exposed to credit
risk in the event of non-performance by customers but does
not anticipate such non-performance would be material.
The Company monitors the credit risk and credit rating of
customers on a regular basis. The Company has significant
concentration of credit risk among government sectors. Its
customers are predominantly provincial, federal and municipal
government ministries and agencies, and its private sector
customers are diverse.
The majority of cash is held with Canadian chartered banks,
and the Company believes the risk of loss to be minimal.
The maximum exposure to credit risk at December 31, 2021,
is $52.9 million (December 31, 2020 — $51.0 million), equal
to the carrying value of the Company’s financial assets,
those being cash at $40.1 million (December 31, 2020 —
$33.9 million), short-term investments at $36 thousand
(December 31, 2020 — $52 thousand) and trade and
other receivables at $12.8 million (December 31, 2020 —
$17.0 million). Quarterly reviews of the aged receivables are
completed. The Company expects to fully collect the carrying
value on all outstanding receivables. Therefore, the risk to the
Company is low.
LIQUIDITY RISK
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due. The Company’s
cash resources are managed based on financial forecasts and
anticipated cash flows.
MARKET RISK
The Company’s exposure to market risk is limited to
the deferred share units, share appreciation rights and
performance share unit liabilities whose fair values are affected
by equity prices.
INTEREST RATE RISK
Interest rate risk arises from the effect of changes in prevailing
interest rates on the Company’s financial instruments. The
Company is subject to interest rate risks on its debt. This debt
bears interest at rates that float, which can vary with changes
in prime borrowing rates. The Company manages interest rate
risk by monitoring its balance sheet, cash flows and the effect
of market changes in interest rates. The Company has the
option of using short-term bankers’ acceptance notes to lock in
rates at any time.
FOREIGN CURRENCY EXCHANGE RISK
The Company operates internationally and is exposed to
fluctuations in various currencies, with the euro being the
most material, followed by the US dollar. Movements in foreign
currencies against the Canadian dollar may impact revenue,
the value of assets and liabilities and affect the Company’s
profit and loss. The Company’s exposure to other currencies is
not significant at the end of the period.
7.2 Business risks and risk management
All companies are exposed to risk and are required to mitigate
risks on a daily and long-term basis. A key component of
creating strong and sustainable corporate performance is to
balance risk and reward.
ISC considers risks that may affect the Company’s ability
to achieve its goals and objectives on an ongoing basis
and implements processes to manage those risks. ISC is
continuously monitoring numerous existing and emerging
risks. Our corporate strategies and plans are designed
to implement effective risk mitigation or management
approaches on an ongoing basis.
The Board oversees ISC’s Enterprise Risk Management
(“ERM”) framework. This includes ensuring appropriate
management systems are in place to ensure ISC’s risks are
prudently managed.
The senior leadership team is accountable for providing
executive oversight of ISC’s ERM activities, including the
ongoing identification and assessment of risks and the
development of mitigation strategies to manage the corporate
risks facing the Company.
The following is a high-level list of ISC’s key business risks. A
complete list of risk factors is contained in the Company’s
Annual Information Form available on the Company’s website
at www.company.isc.ca and in the Company’s profile on SEDAR
at www.sedar.com.
47
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report Cyber and Data Security
There is a risk that ISC could experience unplanned outages, unauthorized access, or
unplanned disclosure of confidential information or loss of critical corporate or customer
data due to a cybersecurity incident.
Technology Infrastructure and
Applications
Competition
There is a risk that ISC’s information technology systems and services, including
applications, may become ineffective, inadequate, unreliable or incapable of effectively
facilitating current and future requirements to support our business needs and the
achievement of our strategic goals.
We also rely on third-party service providers for aspects of our IT infrastructure and the
provision of critical IT-related services.
ISC may be ineffective in its ability to compete against current or future competitors, in
some cases given others’ potential advantage having more innovative products, greater
longevity in the market, access to low-cost capital, private ownership, etc. or as a result of
ISC’s potential requirement to receive service or other approvals from the Office of Public
Registry Administration or other regulators.
Revenue Diversification
There is a risk that ISC’s current revenue sources are not significantly diversified to
withstand economic challenges or downturns connected to common revenue drivers.
Talent and Teams
ISC may not have the required competencies, skills and knowledge to execute on strategic
priorities and achieve its strategic goals.
Compliance with Customer
Contracts
Acquisitions
Cost/Efficiency/Profitability
Economic Conditions
Inability to comply with the requirements in customer contracts, including the Master
Service Agreement with the Government of Saskatchewan, could result in the loss/
termination of customer contracts as well as impacting ISC’s reputation and future
growth strategies.
There is a risk that acquisitions are not fully aligned with ISC’s lines of business or
appropriately and efficiently integrated with ISC’s operations, brand and information
technology systems.
There is a risk that ISC’s business model and resourcing mix will not allow ISC to achieve
cost efficiencies in new or existing product lines or be sufficiently nimble to take
advantage of business development opportunities or adapt to volume changes within
its business.
Changes in the condition of the economy, including those arising from public health
concerns relating to emerging diseases such as COVID-19, could also adversely affect our
employees and our operations, as well as our ability to implement our strategy to look for
opportunities to grow revenue in other jurisdictions, which could have an adverse effect
on our business, financial performance and financial condition.
The COVID-19 pandemic continues to impact Canadians and economies around the world. At the outset of the pandemic, we
took swift action to ensure our customers and employees remained safe and healthy. To reduce the risk of transmission, we
enabled most of our employees to work from home while we maintained continued communication and business activity
virtually. Some precautions implemented to ensure our employees working from our office locations had a safe environment to
work in include the implementation of social distancing procedures, availability of safety and sanitation products, and alternate
arrangements for courier deliveries and pick-ups. Most of these procedures remain in place/available, and we will continue to
revisit them as public health guidelines evolve.
As conditions allow, we will be introducing a methodical, cautious, phased approach as we prepare our organization to adapt to
our “new normal” in the workplace. However, all of our segments have remained operational throughout the pandemic, and our
staff have provided service to customers virtually, either online or by telephone. In the fourth quarter, the Company implemented
48
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021 Estimates and underlying assumptions are reviewed on
an ongoing basis. Actual results may differ from these
estimates. Revisions to accounting estimates are recognized
in the period in which the estimates are revised and in any
future periods affected. Critical accounting estimates and
judgments are those that have a significant risk of causing
material adjustment.
8.4 Changes in accounting policies
The Company has adopted the following new and revised
standards, along with any consequential amendments,
effective January 1, 2021, or on such date as they became
applicable. These changes were made in accordance with
the applicable transitional provisions. Refer to Note 2 of the
Financial Statements for further information pertaining to the
adoption and changes in these policies.
Accounting for configuration and customization costs
related to implementing SaaS arrangements
During the year, the Company revised its accounting policy
in relation to configuration and customization costs incurred
in implementing Software-as-a-service (“SaaS”) arrangements
in response to the International Financial Reporting
Interpretations Committee (“IFRIC”) agenda decision clarifying
its interpretation of how current accounting standards apply to
these types of arrangements.
The Company’s accounting policy has historically been to
capitalize costs related to the configuration and customization
of SaaS arrangements as intangible assets in the consolidated
statements of financial position. Following the issuance of
this new IFRIC agenda decision, current SaaS arrangements
were identified and assessed to determine if the Company has
control of the software. For those arrangements where control
does not exist, the Company derecognized the intangible
previously capitalized. Adjustments were identified related to
the capitalization of financial system implementation costs
incurred in 2019 through 2021. See Note 2 of the Financial
Statements for further information.
The IAS Board and IFRIC issued the following new standards
and amendments to standards and interpretations, which
become effective for future periods.
a COVID-19 Vaccination Policy (the “Policy”) for all of its
employees. This Policy was implemented to ensure the health
and safety of our employees and their families, our customers
and all other stakeholders. Employees who choose not to be
fully vaccinated or not to disclose their vaccination status will
be required to provide proof of a negative test on a consistent
basis, prior to entering any location maintained by ISC or any of
its subsidiaries.
Notwithstanding the above, any prolonged economic
downturn resulting from COVID-19 could have an
adverse effect on our business, results of operations and
financial condition.
8 Accounting Policies, Financial
Measures and Controls
8.1 Off-balance sheet arrangements
The Company had no off-balance sheet arrangements as at
December 31, 2021.
8.2 Related party transactions
Routine operating transactions with related parties are settled
at agreed-upon exchange amounts under normal trade
terms. Refer to Note 22 in the Financial Statements, which are
available on our website at www.company.isc.ca and in the
Company’s profile on SEDAR at www.sedar.com for information
about transactions with related parties.
8.3 Critical accounting estimates
ISC’s critical accounting estimates are contained in Note 2
of the Financial Statements under the summary of use of
estimates and judgments and include references to:
• the carrying value, impairment and estimated useful lives of
property, plant and equipment;
• the carrying value, impairment and estimated useful lives of
intangible assets and goodwill;
• the recoverability of deferred tax assets; and
• the amount and timing of revenue from contracts from
customers recognized over time with milestones.
The preparation of the Financial Statements, in conformity with
IFRS, requires management to make estimates and underlying
assumptions and judgments that affect the accounting
policies and reported amounts of assets, liabilities, revenue
and expenses.
49
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report Proposed Standard
Description
Amendments to
IAS 37 — Onerous
Contracts – Cost of
Fulfilling a Contract
The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that
relate directly to the contract’. Costs that relate directly to a contract consist of both
the incremental costs of fulfilling that contract (examples would be direct labour or
materials) and an allocation of other costs that relate directly to fulfilling contracts (an
example would be the allocation of the depreciation charge for an item of property,
plant and equipment used in fulfilling the contract).
Effective Date
January 1, 2022
Amendments to
IFRS 3 — Reference
to the Conceptual
Framework
The amendments apply to contracts for which the entity has not yet fulfilled all its
obligations at the beginning of the annual reporting period in which the entity first
applies the amendments. Comparatives are not restated. Instead, the entity shall
recognize the cumulative effect of initially applying the amendments as an adjustment
to the opening balance of retained earnings or other component of equity, as
appropriate, at the date of initial application.
The amendments are effective for annual periods beginning on or after January 1,
2022, with early application permitted. The Company does not have any onerous
contracts as of December 31, 2021, and as a result will not have an adjustment to
equity associated with adoption of this standard on January 1, 2022.
The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework
instead of the 1989 Framework. They also add to IFRS 3 a requirement that, for
obligations within the scope of IAS 37, an acquirer applies IAS 37 to determine whether
at the acquisition date a present obligation exists as a result of past events. For a levy
that would be within the scope of IFRIC 21 — Levies, the acquirer applies IFRIC 21 to
determine whether the obligating event that gives rise to a liability to pay the levy has
occurred by the acquisition date.
Finally, the amendments add an explicit statement that an acquirer does not recognize
contingent assets acquired in a business combination.
The amendments are effective for business combinations for which the date of
acquisition is on or after the beginning of the first annual period beginning on or after
January 1, 2022. Early application is permitted if an entity also applies all other updated
references (published together with the updated Conceptual Framework) at the same
time or earlier.
This change will impact the analysis of business combinations. The amendment is
prospective, and the Company will apply it to transactions after the effective date of
January 1, 2022.
January 1, 2022
50
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021
Proposed Standard
Description
Amendments to IAS
1 — Classification of
Liabilities as Current
or Non-current
The amendments to IAS 1 affect only the presentation of liabilities as current or
non-current in the statement of financial position and not the amount or timing of
recognition of any asset, liability, income or expenses, or the information disclosed
about those items.
Effective Date
January 1, 2023
The amendments clarify that the classification of liabilities as current or non-current
is based on rights that are in existence at the end of the reporting period, specify that
classification is unaffected by expectations about whether an entity will exercise its
right to defer settlement of a liability, explain that rights are in existence if covenants
are complied with at the end of the reporting period, and introduce a definition of
‘settlement’ to make clear that settlement refers to the transfer to the counterparty of
cash, equity instruments, other assets or services.
The amendments are applied retrospectively for annual periods beginning on or after
January 1, 2023, with early application permitted. This amendment is currently being
assessed by the Company to determine the impact.
Amendments to
IAS 1 and IFRS
Practice Statement
2 — Disclosure of
Accounting Policy
Information
Amendments to IAS
8 — Definition of
Accounting Estimates
The amendments to IAS 1 — Presentation of Financial Statements and IFRS Practice
Statement 2 — Making Material Judgements require that an entity discloses its material
accounting policies, instead of its significant accounting policies.
January 1, 2023
The amendment is effective for annual periods beginning on or after January 1, 2023.
This change will impact disclosures in Note 2 to the Notes to the Consolidated
Financial Statements.
The amendments introduce a definition of accounting estimates and are intended to
help entities distinguish changes in accounting policies from changes in accounting
estimates. Under the new definition, accounting estimates are “monetary amounts in
financial statements that are subject to measurement uncertainty”. This distinction is
important because changes in accounting policies must be applied retrospectively
while changes in accounting estimates are accounted for prospectively.
The amendment is effective for annual periods beginning on or after January 1, 2023.
This amendment is currently being assessed by the Company to determine the impact.
January 1, 2023
Amendments to IAS
12 — Deferred Tax
related to Assets and
Liabilities arising from
a Single Transaction
The amendments narrow the scope of the initial recognition exemption to clarify
that the initial recognition exemption does not apply to transactions in which equal
amounts of deductible and taxable temporary differences arise on initial recognition.
January 1, 2023
The amendment is effective for annual periods beginning on or after January 1, 2023.
This amendment is currently being assessed by the Company to determine the impact.
51
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report 8.5 Financial measures and key performance
8.8 Non-IFRS financial measures
This MD&A includes certain measures that have not been
prepared in accordance with IFRS, such as EBITDA, EBITDA
margin, adjusted EBITDA, adjusted EBITDA margin and free
cash flow. Rather, these measures are provided as additional
information to complement those IFRS measures by providing
further understanding of our financial performance from
management’s perspective, to provide investors with
supplemental measures of our operating performance
and, thus, highlight trends in our core business that may
not otherwise be apparent when relying solely on IFRS
financial measures.
Management also uses non-IFRS measures to facilitate
operating performance comparisons from period to
period, prepare annual operating budgets, and assess our
ability to meet our future capital expenditure and working
capital requirements.
Accordingly, these non-IFRS measures should not be
considered in isolation or as a substitute for analysis of our
financial information reported under IFRS. Such measures
do not have any standardized meaning prescribed by IFRS
and, therefore, may not be comparable to similar measures
presented by other companies.
indicators
Revenue, expenses and net income are key performance
indicators the Company uses to manage its business and
evaluate its financial results and operating performance. In
addition to these results, which are reported in accordance
with IFRS, certain non-IFRS measures are supplemental
indicators of operating performance and financial position
as well as for internal planning purposes. The Company
evaluates its performance against these metrics by comparing
actual results to management budgets, forecasts and prior
period results. These non-IFRS financial measures include
EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA
margin and free cash flow. Refer to section 8.8 “Non-IFRS
financial measures”.
8.6 Internal controls over financial reporting
The Company’s management, including the President and
Chief Executive Officer and the Chief Financial Officer, is
responsible for establishing and maintaining appropriate
internal controls over financial reporting. Internal controls
over financial reporting have been designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in
accordance with IFRS.
No changes in our internal controls over financial reporting
that have occurred during the period have materially affected
or are reasonably likely to materially affect our internal controls
over financial reporting.
It should be noted that all internal control systems, no matter
how well designed, have inherent limitations. Therefore, even
those systems determined to be effective can provide only
reasonable assurance with respect to financial statement
preparation and presentation.
8.7 Disclosure controls and procedures
The Company’s management, including the President and
Chief Executive Officer and the Chief Financial Officer, is
responsible for establishing and maintaining appropriate
disclosure controls and procedures. Disclosure controls and
procedures are designed to provide reasonable assurance
that relevant information is gathered and reported to
senior management, including the President and Chief
Executive Officer and the Chief Financial Officer, on a timely
basis so that appropriate decisions can be made regarding
public disclosures.
52
2021 ISC® Annual Report | Management’s Discussion and Analysis For the Fourth Quarter and Year Ended December 31, 2021 Most comparable IFRS
financial measure
Net income
Non-GAAP Performance
Measure
Why we use it
EBITDA
• To evaluate performance and
EBITDA Margin
profitability of segments and subsidiaries
as well as the conversion of revenue.
• We believe that certain investors and
analysts use EBITDA to measure our
ability to service debt and meet other
performance obligations.
• EBITDA is also used as a component
of determining short-term incentive
compensation for employees.
How we calculate it
EBITDA:
Net income
add
Depreciation and amortization,
net finance expense, income
tax expense
EBITDA Margin:
EBITDA
divided by
Total revenue
Adjusted EBITDA
• To evaluate performance and
Adjusted EBITDA:
Net income
Adjusted EBITDA Margin
profitability of segments and subsidiaries
as well as the conversion of revenue
while excluding non-operational and
share-based volatility.
• We believe that certain investors
and analysts use Adjusted EBITDA to
measure our ability to service debt and
meet other performance obligations.
EBITDA
add (remove)
Share-based compensation
expense, stock option expense,
acquisition and integration
costs, gain on disposal of
property, plant and equipment
assets
Adjusted EBITDA Margin:
Adjusted EBITDA
divided by
Total revenue
Free Cash Flow
• To show cash available for debt
repayment and reinvestment into the
Company.
• We believe that certain investors and
analysts use this measure to value a
business and its underlying assets.
Net cash flow provided by
operating activities
Net cash flow provided
by operating activities
deduct (add)
Net change in non-cash
working capital, cash additions
to property, plant and
equipment, cash additions to
intangible assets
8.9 Non-IFRS financial measures definition
EBITDA is defined as earnings before interest, taxes, depreciation and amortization expense. Adjusted EBITDA adjusts EBITDA for
share-based compensation expense or income, stock option expense, transactional gains or losses on assets, asset impairment
charges, and acquisition and integration costs. These measures, in addition to net income and income from operations, measure
business performance and cash flow generation because it removes cash flow fluctuations caused by the above adjustments.
Furthermore, we use adjusted EBITDA for business planning purposes and to evaluate and price potential acquisitions. In addition
to use by management, we also believe these measures are widely used by securities analysts, investors and others to evaluate the
financial performance of the Company and for comparing our results with those of other companies. EBITDA margin and adjusted
EBITDA margin are calculated as a percentage of overall revenue.
Free cash flow is used as a financial measure in our evaluation of liquidity and financial strength. Adjusting for the swings in non-
cash working capital items due to seasonality or other timing issues and cash additions to property, plant and equipment and
intangible assets, free cash flow assists in the long-term assessment of liquidity and financial strength. This measurement is useful
as an indicator of our ability to service our debt, meet other payment obligations and make strategic investments. Free cash flow
does not represent residual cash flow available for discretionary expenditures.
53
For the Fourth Quarter and Year Ended December 31, 2021 Management’s Discussion and Analysis | 2021 ISC® Annual Report
2021 Consolidated Financial Statements
For the Year Ended December 31, 2021
Table of Contents
Management’s Responsibility ............................................................................................................................55
Independent Auditor’s Report ...........................................................................................................................56
Consolidated Statements of Financial Position ..................................................................................................59
Consolidated Statements of Comprehensive Income ...................................................................................... 60
Consolidated Statements of Changes in Equity ................................................................................................. 61
Consolidated Statements of Cash Flows ............................................................................................................62
Notes to the Consolidated Financial Statements ...............................................................................................63
1 Nature of the Business ................................................................................................................................63
2 Basis of Presentation...................................................................................................................................63
3
Summary of Significant Accounting Policies .............................................................................................. 66
4 Trade and Other Receivables ...................................................................................................................... 77
5 Contract Assets ........................................................................................................................................... 77
6
Seasonality .................................................................................................................................................. 77
7 Property, Plant and Equipment ..................................................................................................................78
8 Right-of-use Assets .....................................................................................................................................79
9
Intangible Assets ........................................................................................................................................ 80
10 Goodwill ...................................................................................................................................................... 81
11 Accounts Payable and Accrued Liabilities ...................................................................................................82
12 Contract Liabilities ......................................................................................................................................82
13 Lease Obligations ........................................................................................................................................82
14 Tax Provision ...............................................................................................................................................83
15 Share-Based Compensation Plans ..............................................................................................................85
16 Debt.............................................................................................................................................................87
17 Liabilities Arising from Financing Activities ................................................................................................ 89
18 Earnings Per Share ..................................................................................................................................... 89
19 Equity and Capital Management ................................................................................................................ 90
20 Financial Instruments and Related Risk Management ............................................................................... 90
21 Revenue ......................................................................................................................................................93
22 Related Party Transactions ........................................................................................................................ 94
23 Compensation of Key Management Personnel ......................................................................................... 94
24 Segment Information ................................................................................................................................. 94
25 Acquisitions ................................................................................................................................................ 96
26 Net Change in Non-Cash Working Capital ...................................................................................................97
27 Government Grants ....................................................................................................................................97
28 Commitments and Contingencies.............................................................................................................. 98
29 Pension Expense ........................................................................................................................................ 98
30 Subsequent Events .................................................................................................................................... 99
54
2021 ISC® Annual Report | Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021 Management’s Responsibility
Management’s Report on Consolidated Financial Statements
The accompanying consolidated financial statements of Information Services Corporation were prepared by management,
which is responsible for the integrity and fairness of the information presented, including the many amounts that must, of
necessity, be based on estimates and judgments. These consolidated financial statements were prepared in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board. Financial information
appearing throughout our Management’s Discussion and Analysis is consistent with these consolidated financial statements.
In discharging our responsibility for the integrity and fairness of the consolidated financial statements and for the accounting
systems from which they are derived, we maintain the necessary system of internal controls designed to ensure that transactions
are authorized, assets are safeguarded and proper records are maintained. These controls include quality standards in hiring
employees, policies and procedure manuals, a corporate code of conduct, and accountability for performance within
appropriate and well-defined areas of responsibility.
The Board of Directors oversees management’s responsibilities for financial reporting through an Audit Committee, which is
composed entirely of directors who are neither officers nor employees of Information Services Corporation. This Committee
reviews our consolidated financial statements and recommends them to the Board of Directors for approval. Other key
responsibilities of the Audit Committee include reviewing our existing internal control procedures and planned revisions to
those procedures, and advising the directors on auditing matters and financial reporting issues.
Deloitte LLP, who was appointed by the shareholders of Information Services Corporation upon the recommendation of the
Audit Committee and the Board of Directors’ approval, has performed an independent audit of the consolidated financial
statements and that report follows. The auditor has full and unrestricted access to the Audit Committee to discuss the audit and
related findings.
Shawn B. Peters, CPA, CA, ICD.D
President and Chief Executive Officer
March 15, 2022
Robert (Bob) Antochow, CPA, CA, CMA
Chief Financial Officer
55
For the Fourth Quarter and Year Ended December 31, 2021 Consolidated Financial Statements | 2021 ISC® Annual Report Independent Auditor’s Report
To the Shareholders and the Board of Directors of Information Services Corporation:
Opinion
We have audited the consolidated financial statements of Information Services Corporation (the “Company”), which comprise
the consolidated statements of financial position as at December 31, 2021 and December 31, 2020, 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 (collectively referred to as the
“financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the
Company as at December 31, 2021 and 2020, and its financial performance and its cash flow for the years then ended in
accordance with International Financial Reporting Standards (“IFRS”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the ethical requirements that
are relevant to our audit of the 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 Matter
Key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the financial
statements for the year ended December 31, 2021. This matter was addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.
Goodwill- Services Segment— Refer to Notes 3 and 10 to the financial statements
Key Audit Matter Description
The Company’s annual assessment for goodwill impairment involves the comparison of the recoverable amount of each
cash generating unit (“CGU”) to its carrying value. The Company determines the recoverable amount of its CGUs based on a
value in use (“VIU”) analysis under the income approach. The Company used the discounted cash flow method to determine
the recoverable amount of the Services CGU, which required management to make significant estimates and assumptions
related to revenue forecasts, related party costs, direct employee costs, corporate cost allocations, perpetual growth rates
and discount rates. The estimates and assumptions are highly sensitive to changes in customer demand and changes in the
assumptions could have a significant impact on the recoverable amount, the amount of any goodwill impairment charge,
or both. The recoverable amount of the Services CGU exceeded its carrying value as of the measurement date and no
impairment was recognized.
While there are several estimates and assumptions that are required to determine the recoverable amount of the Services
CGU, the estimates and assumptions with the highest degree of subjectivity are revenue forecasts, perpetual growth rate
and the selection of the discount rate. This required a high degree of auditor judgment and an increased extent of effort,
including the involvement of fair value specialists.
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures related to the revenue forecasts, perpetual growth rate and the selection of the discount rate used to
determine the recoverable amount for the Services CGU included the following, among others:
• Evaluated management’s ability to accurately forecast by comparing management’s historical forecasts to actual results.
• Evaluated the reasonableness of management’s revenue forecasts by comparing to (1) historical results, (2) internal
communications to management and the Board of Directors, and (3) forecasted information included in Company press
releases, analyst and industry reports.
56
2021 ISC® Annual Report | Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021 • With the assistance of fair value specialists:
– Evaluated the selection of the perpetual growth rate by comparing management’s selected perpetual growth rate to
forecasted inflationary and economic growth applicable to Canada.
– Evaluated the selection of the discount rate by testing the source information underlying the determination of the discount
rate and developing a range of independent discount rates and comparing to the discount rate selected by management.
Other Information
Management is responsible for the other information. The other information comprises:
• Management’s Discussion and Analysis
• The information, other than the financial statements and our auditor’s report thereon, in the Annual Report.
Our opinion on the 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 audit of the 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 financial
statements or our knowledge obtained in the audit, 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 this other information, we conclude that there is a material misstatement of this other information, we are required
to report that fact in this auditor’s report. 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 of this other information, we are required to
report that fact to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for
such internal control as management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’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 Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 GAAS 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
financial statements.
As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the 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 Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
57
For the Fourth Quarter and Year Ended December 31, 2021 Consolidated Financial Statements | 2021 ISC® Annual Report • 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
Company’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 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 Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
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
Company to express an opinion on the 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
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
From the matters communicated with those charged with governance, we determine those matters that
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
were of most significance in the audit of the financial statements of the current period and are therefore
bear on our independence, and where applicable, related safeguards.
the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes
From the matters communicated with those charged with governance, we determine those matters that were of most
public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
should not be communicated in our report because the adverse consequences of doing so would
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely
reasonably be expected to outweigh the public interest benefits of such communication.
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 Brian Ralofsky.
The engagement partner on the audit resulting in this independent auditor’s report is Brian Ralofsky.
Chartered Professional Accountants
Chartered Professional Accountants
Regina, Saskatchewan
Regina, Saskatchewan
March 15, 2022
March 15, 2022
58
2021 ISC® Annual Report | Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
Consolidated Statements of Financial Position
(thousands of CAD)
Assets
Current assets
Cash
Short-term investments
Trade and other receivables
Contract assets
Income tax recoverable
Prepaid expenses and deposits
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Goodwill
Deferred tax asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Contract liabilities
Lease obligations – current portion
Income tax payable
Long-term debt – current portion
Provisions
Total current liabilities
Non-current liabilities
Lease obligations
Deferred tax liability
Long-term debt
Other liabilities
Total non-current liabilities
Shareholders’ equity
Share capital
Equity settled employee benefit reserve
Accumulated other comprehensive (loss) income
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
*See Note 2
See Note 28 for Commitments and Contingencies
See accompanying Notes
As at December 31,
2021
As at December 31,
2020 (restated*)
Note
As at January 1,
2020 (restated*)
4
5
7
8
9
10
14
11
12
13
14
16
13
14
16
15
19
15
$
40,104
36
12,771
866
8
2,662
56,447
1,351
7,861
61,067
77,134
28,638
176,051
$ 232,498
$
26,482
1,488
1,847
7,008
–
80
36,905
7,186
6,181
40,975
3,546
57,888
19,955
2,464
(355)
115,641
137,705
$ 232,498
$
$
$
$
33,946
52
17,031
1,053
476
2,825
55,383
2,160
7,580
69,954
77,455
28,845
185,994
241,377
21,944
2,024
1,996
1,179
–
146
27,289
6,856
7,695
76,316
2,096
92,963
19,955
2,376
706
98,088
121,125
241,377
$
$
$
23,731
475
12,648
1,623
1,736
2,120
42,333
2,998
9,668
40,011
45,529
30,175
128,381
170,714
18,096
1,436
1,845
810
2,000
468
24,665
8,967
7,543
16,000
173
32,683
19,955
2,153
5
91,263
113,376
170,714
$
APPROVED BY THE BOARD OF DIRECTORS ON MARCH 15, 2022:
Joel Teal
Director
Tony Guglielmin
Director
59
For the Fourth Quarter and Year Ended December 31, 2021 Consolidated Financial Statements | 2021 ISC® Annual Report
Consolidated Statements of Comprehensive Income
Note
21
27
7, 8, 9
(thousands of CAD)
Revenue
Expenses
Wages and salaries
Cost of goods sold
Depreciation and amortization
Information technology services
Occupancy costs
Professional and consulting services
Financial services
Other
Total expenses
Net income before items noted below
Finance income (expense)
Interest income
Interest expense
Net finance (expense)
Income before tax
Income tax expense
Net income
Other comprehensive (loss) income
Items that may be subsequently reclassified to net income
Unrealized (loss) gain on translation of financial
statements of foreign operations
Change in fair value of marketable securities,
net of tax
Other comprehensive (loss) income
Total comprehensive income
Earnings per share ($ per share)
Total, basic
Total, diluted
*See Note 2
See accompanying Notes
14
18
18
Year Ended December 31,
2021
Year Ended December 31,
2020 (restated*)
$
169,379
$
136,723
48,757
40,359
13,778
7,992
3,430
3,872
3,044
1,393
122,625
46,754
140
(2,813)
(2,673)
44,081
(12,003)
32,078
(1,048)
(13)
(1,061)
31,017
1.83
1.78
$
$
$
$
41,708
31,271
12,724
7,896
3,004
5,461
2,654
1,337
106,055
30,668
172
(2,217)
(2,045)
28,623
(7,798)
20,825
732
(31)
701
21,526
1.19
1.18
$
$
$
$
60
2021 ISC® Annual Report | Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
Consolidated Statements of Changes in Equity
Note
2
15
15
(thousands of CAD)
Balance at January 1, 2020 as audited
IFRIC adjustment*
Restated balance at January 1, 2020
Restated net income for the period
Other comprehensive income
Stock option expense
Dividend declared
Restated balance at December 31, 2020
Balance at January 1, 2021
Net income
Other comprehensive (loss)
Stock option expense
Dividend declared
Balance at December 31, 2021
*See Note 2
See accompanying Notes
Accumulated
Other
Share Comprehensive
Income
Capital
Retained
Earnings
92,128
(865)
91,263
20,825
–
–
(14,000)
98,088
$
$
$
$
19,955
–
19,955
–
–
–
–
19,955
Equity
Reserve
2,153
–
2,153
–
–
223
–
2,376
$
$
5
–
5
–
701
–
–
706
$
98,088
32,078
–
–
(14,525)
$ 115,641
$
19,955
–
–
–
–
$ 19,955
$
706
–
(1,061)
–
–
2,376
–
–
88
–
(355) $ 2,464
$
$
$
$
Total
$ 114,241
(865)
113,376
20,825
701
223
(14,000)
$ 121,125
$ 121,125
32,078
(1,061)
88
(14,525)
$ 137,705
61
For the Fourth Quarter and Year Ended December 31, 2021 Consolidated Financial Statements | 2021 ISC® Annual Report
Consolidated Statements of Cash Flows
(thousands of CAD)
Operating
Net income
Year Ended December 31,
2021
Year Ended December 31,
2020 (restated*)
Note
$
32,078
$
20,825
Add: Charges not affecting cash
Depreciation
Amortization
Foreign exchange (gain) loss
Deferred tax expense recognized in net income
Service concession arrangements
Right-of-use asset modifications loss
(Gain) loss on disposal of property, plant and equipment
Net finance expense
Stock option expense
Net change in non-cash working capital
Net cash flow provided by operating activities
Investing
Interest received
Cash received on disposal of property, plant and equipment
Short-term investments
Additions to property, plant and equipment
Additions to intangible assets
Acquisition through business combination
Recovery on acquisition post-closing adjustments
Net cash flow used in investing activities
Financing
Interest paid
Interest paid on lease obligations
Principal repayments on lease obligations
Repayment of long-term debt
Financing fees
Proceeds of long-term debt
Repayment of operating loan
Proceeds of operating loan
Dividend paid
Net cash flow (used in) provided by financing activities
Effects of exchange rate changes on cash held in foreign currencies
Increase in cash
Cash, beginning of year
Cash, end of year
7, 8
9
21
15
26
25
4
13
13
16
16
16
17
17
*See Note 2
See accompanying Notes
2,728
11,050
(21)
(1,298)
(269)
–
(2)
2,673
88
14,185
61,212
140
2
–
(10)
(2,217)
–
1,719
(366)
(2,547)
(354)
(2,014)
(35,000)
(359)
–
–
–
(14,000)
(54,274)
(414)
6,158
33,946
40,104
$
$
2,888
9,836
325
1,483
(249)
73
9
2,045
223
3,521
40,979
172
2
395
(63)
(1,160)
(70,161)
–
(70,815)
(1,365)
(425)
(1,920)
(68,000)
(362)
126,316
(9,816)
9,816
(14,000)
40,244
(193)
10,215
23,731
33,946
62
2021 ISC® Annual Report | Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
1 Nature of the Business
Information Services Corporation is the parent company of its
subsidiary group (collectively, the “Company”, or “ISC”) and is
a Canadian corporation with its Class A Limited Voting Shares
(“Class A Shares”) listed on the Toronto Stock Exchange (“TSX”)
under the symbol ISV. The Company is a provider of registry
and information management services for public data and
records. The head and registered office of the Company is
300 - 10 Research Drive, Regina, Saskatchewan, S4S 7J7. The
Company maintains Canadian office locations in Regina,
Saskatoon, Vernon, Toronto and an international office located
in Dublin, Ireland. ISC’s head office is located in Regina. The
Company has three reportable segments: Registry Operations,
Services and Technology Solutions. A functional summary of
these segments is as follows:
• Registry Operations delivers registry services on behalf of
governments and private sector organizations. Currently,
through this segment, ISC provides registry and information
services on behalf of the Province of Saskatchewan under
a 20-year Master Service Agreement (“MSA”), in effect
until 2033.
• Services delivers products and services that utilize public
records and data to provide value to customers in the
financial and legal sectors.
• Technology Solutions provides the development, delivery
and support of registry (and related) technology solutions.
The balance of our corporate activities and shared services
functions are reported as Corporate and other.
As at December 31, 2021, ISC’s principal revenue-generating
segments were Registry Operations and Services.
2 Basis of Presentation
Statement of compliance
These consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
(“IFRS”), as issued by the International Accounting Standards
Board (“IAS Board”).
The Company’s Board of Directors (the “Board”) authorized
the consolidated financial statements for the year ended
December 31, 2021, for issue on March 15, 2022.
Basis of measurement
The consolidated financial statements have been prepared on
a going concern basis using the historical cost basis except for
financial instruments that are measured at fair values at the
end of each reporting period, as explained in the accounting
policies below.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of
whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of
an asset or a liability, the Company takes into account the
characteristics of the asset or liability if market participants
would take those characteristics into account when pricing
the asset or liability at the measurement date. Fair value
for measurement and/or disclosure purposes in these
consolidated financial statements is determined on such
a basis, except for share-based payment transactions that
are within the scope of IFRS 2 – Share-based Payment and
measurements that have some similarities to fair value but
are not fair value, such as net realizable value in International
Accounting Standards (“IAS”) 2 — Inventories or value in use in
IAS 36 — Impairment of Assets.
In addition, for financial reporting purposes, fair value
measurements are categorized into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset
or liability.
Functional and presentation currency
These consolidated financial statements are presented in
Canadian dollars (“CAD”), which is the functional currency of
the parent company.
Basis of consolidation
The consolidated financial statements incorporate the
financial statements of Information Services Corporation
and its wholly owned significant operating subsidiaries: ISC
Saskatchewan Inc. (“ISC Sask”), ISC Enterprises Inc. (“ISC Ent”),
ESC Corporate Services Ltd. (“ESC”) and Enterprise Registry
Solutions Limited (“ERS”). All intragroup assets and liabilities,
equity, income, expenses and cash flows are eliminated in full
on consolidation.
63
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report Use of estimates and judgments
The preparation of these consolidated financial statements, in conformity with IFRS, requires management to make estimates and
underlying assumptions and judgments that affect the accounting policies and reported amounts of assets, liabilities, revenue
and expenses.
Estimates and underlying assumptions are reviewed on an ongoing basis. Actual results may differ from these estimates.
Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods
affected. Critical accounting estimates and judgments are those that have a significant risk of causing material adjustment.
Management believes that the following are the significant accounting estimates and judgments used in the preparation of
the consolidated financial statements.
Significant items subject to estimates and underlying assumptions include:
• the carrying value, impairment and estimated useful lives of property, plant and equipment (Note 7);
• the carrying value, impairment and estimated useful lives of intangible assets (Note 9) and goodwill (Note 10);
• the recoverability of deferred tax assets (Note 14); and
• the amount and timing of revenue from contracts from customers recognized over time with milestones (Note 21).
The relevant accounting policies in Note 3 contain further details on the use of these estimates and assumptions.
Changes in accounting policies
The Company has adopted the following new accounting pronouncements or policies and revised standards, along with any
consequential amendments, effective January 1, 2021, or on such date as they became applicable. These changes were made in
accordance with the applicable transitional provisions.
Accounting for configuration and customization costs related to implementing SaaS arrangements
During the year, the Company revised its accounting policy in relation to configuration and customization costs incurred in
implementing Software-as-a-service (“SaaS”) arrangements in response to the International Financial Reporting Interpretations
Committee (“IFRIC”) agenda decision clarifying its interpretation of how current accounting standards apply to these types of
arrangements.
The Company’s accounting policy has historically been to capitalize costs related to the configuration and customization of
SaaS arrangements as intangible assets in the consolidated statements of financial position. Following the issuance of this new
IFRIC agenda decision, current SaaS arrangements were identified and assessed to determine if the Company has control of the
software. For those arrangements where control does not exist, the Company derecognized the intangible previously capitalized.
Adjustments were identified related to the capitalization of financial system implementation costs incurred in 2019 through 2021.
The adoption of the above agenda decision has resulted in recognition of costs to configure SaaS arrangements as a before-tax
expense of $60 thousand in the consolidated statements of comprehensive income in the current year.
In addition to the impacts noted below to the consolidated statements of income and financial position, on the consolidated
statements of cash flows for the year ended December 31, 2020, additions to intangible assets were reduced by $220 thousand
offset by a reduction in net income of $58 thousand, reduction in amortization of $141 thousand and deferred tax expense
recognized in net income of $21 thousand. As a result of this adjustment, there is no impact on earnings per share at the end of
December 31, 2021 and 2020.
64
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021 Reconciliation of consolidated statements of income for the year ended December 31, 2020
Below is the effect of transition of the adoption of the IFRIC agenda decision item on our consolidated statements of income for
the year ended December 31, 2020.
(thousands of CAD, unaudited)
Revenue
Wages and salaries
Depreciation and amortization
Professional and consulting services
Total other expense excluding the above
Total expenses
Net income before items noted below
Net finance (expense)
Income before tax
Income tax expense
Net income
2020
(as reported)
IFRIC
Adjustment
$
$
136,723
40,165
12,865
6,784
46,162
105,976
30,747
(2,045)
28,702
(7,819)
20,883
$
$
–
31
(141)
189
–
79
(79)
–
(79)
21
(58)
2020
Restated
$ 136,723
40,196
12,724
6,973
46,162
106,055
30,668
(2,045)
28,623
(7,798)
$ 20,825
Reconciliation of consolidated statements of financial position as at January 1, 2020 and December 31, 2020
Below is the effect of transition of the adoption of the IFRIC agenda decision item on our consolidated statements of financial
position as at January 1, 2020 and December 31, 2020.
As Previously
Reported
(thousands of CAD, unaudited)
Assets
41,196
Intangible assets
Deferred tax asset
29,855
Other current and non-current assets 100,528
Total assets
$ 171,579
Liabilities
Total current and non-current
$
As at January 1, 2020
As at December 31, 2020
IFRIC
Adjustment
Restated
As Previously
Reported
IFRIC
Adjustment
$
$
(1,185)
320
–
(865)
$ 40,011
30,175
100,528
$ 170,714
$ 71,218
28,504
142,578
$ 242,300
$
$
(1,264) $
341
–
(923) $
Restated
69,954
28,845
142,578
241,377
liabilities
$
57,338
$
$ 57,338
$ 120,252
$
–
$
120,252
Shareholders’ equity
Share capital
Equity settled employee benefit
reserve
Accumulated other
comprehensive income
Retained earnings
Total shareholders’ equity
Total liabilities and
shareholders’ equity
19,955
2,153
5
92,128
114,241
–
–
–
19,955
19,955
2,153
2,376
–
(865)
(865)
5
91,263
113,376
706
99,011
122,048
–
–
–
(923)
(923)
19,955
2,376
706
98,088
121,125
$ 171,579
$
(865)
$ 170,714
$ 242,300
$
(923) $
241,377
65
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
Reclassifications
On January 1, 2021, the Company changed the presentation of board compensation costs, including certain share-based
compensation expenses related to the deferred shared units (“DSUs”) on the consolidated statements of comprehensive income
to reflect them in wages and salaries expense instead of professional and consulting services. With this change, all share-based
compensation, including DSUs, performance share units (“PSUs”), share appreciation rights (“SARs”) and stock options, is reflected
in wages and salaries on the consolidated statements of comprehensive income. Management believes the revised presentation
provides more relevant information to users. The impacts of the reclassification on the comparative 2020 results are as follows:
(thousands of CAD)
Wages and salaries
Professional and consulting services
All other expenses in total expenses
Total expenses
2020
(restated*)
40,196
6,973
58,886
106,055
$
$
$
Year Ended December 31,
2020
(as reclassified)
$ 41,708
5,461
58,886
$ 106,055
Reclassification
1,512
(1,512)
–
–
$
*See table called “Reconciliation of consolidated statements of income for the year ended December 31, 2020” on the previous page.
These reclassifications have no impact on net income or earnings per share.
3 Summary of Significant Accounting Policies
Property, plant and equipment
Property, plant and equipment are recorded at cost less accumulated depreciation and any provisions for impairment. Cost
includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-developed assets includes
materials, services, direct labour and directly attributable overhead. Interest costs associated with major capital and development
projects are capitalized during the development period. Depreciation of assets under development will commence once they are
operational and available for use.
The costs of maintenance, repairs, renewals or replacements that do not extend the productive life of an asset are charged to
operations when incurred. The costs of replacements and improvements that extend the productive life are capitalized.
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured
reliably. The carrying amount of the replaced part is derecognized.
Depreciation is recorded on property, plant and equipment on the straight-line basis, which is the cost of the asset less its residual
value over the estimated productive life of each asset. The useful life of each asset is as follows:
Leasehold improvements
Office furniture
Office equipment
Hardware
Shorter of lease term or period of usefulness
2-10 years
2-10 years
3-4 years
The estimated useful life and depreciation methods are reviewed at the end of each annual reporting period, with the effect of
any changes in estimate being accounted for on a prospective basis. Gains or losses arising from the disposition or retirement of
an item of property, plant and equipment are measured at the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the consolidated statements of comprehensive income.
Intangible assets
Intangible assets consist of acquired and internally developed internal-use software and business solutions. It also includes
externally acquired customer contracts, customer and partner relationships, brand, non-competes, other intangible assets, and
assets under development.
66
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
Intangible assets acquired
Internal-use software and business solutions acquired are
carried at cost less accumulated amortization and any
accumulated impairment losses. Internal-use software,
business solutions, customer and partner relationships, brand,
non-competes, and other intangible assets acquired through
business combinations are initially recorded at their fair values
based on the present value of expected future cash flows,
which involves estimates about the future cash flows and
discount rates.
Internally generated intangible assets
Research expenditures are expensed while expenditures
for internal-use software developed internally, and business
solutions developed internally and marketed externally are
capitalized only when they meet the recognition criteria for
internally generated intangible assets as provided under
IFRS. An internally generated intangible asset arising from
development is recognized if, and only if, all of the following
have been demonstrated:
• the technical feasibility of completing the intangible asset so
that it will be available for use or sale;
• the intention to complete the intangible asset and use or
sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future
economic benefits;
• the availability of adequate technical, financial and other
resources to complete the development and to use or sell
the intangible asset; and
• the ability to reliably measure the expenditure attributable
to the intangible asset during its development.
The amount initially recognized for an internally generated
intangible asset is the sum of the expenditures incurred
from the date when the intangible asset first meets the
recognition criteria. If no internally generated intangible
asset can be recognized, development expenditures are
charged to operations in the period in which they are
incurred. Subsequent to initial recognition, an internally
generated intangible asset is reported at cost less accumulated
amortization and accumulated impairment losses, on the same
basis as an intangible asset acquired separately.
Amortization of intangible assets
Amortization is recorded on intangible assets using the
straight-line method over the corresponding estimated
useful life of the applicable assets. The estimated useful life
and amortization methods are reviewed at the end of each
annual reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis. Gains or
losses arising from the derecognition of an intangible asset are
measured at the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the
consolidated statements of comprehensive income.
Internal-use software
Business solutions
3-15 years
3-7 years
Contracts
Term of contract
Customer and partner relationships
5-15 years
Brand, non-competes and other
1-15 years
Assets under development
N/A (not ready
for use)
Impairment of tangible and intangible assets
At each statement of financial position date, ISC reviews the
carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where
it is not possible to estimate the recoverable amount of an
individual asset, ISC estimates the recoverable amount of
the cash generating unit (“CGU”) to which the asset belongs.
Where a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual
CGUs; otherwise, they are allocated to the smallest group of
CGUs for which a reasonable and consistent allocation basis
can be identified. Intangible assets not yet available for use are
tested for impairment annually in December and whenever
there is an indication that the asset may be impaired.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using
a discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset
for which the estimates of future cash flows have not been
adjusted. If the recoverable amount of an asset (or CGU) is
estimated to be less than its carrying amount, the carrying
amount of the asset (or CGU) is reduced to its recoverable
amount. An impairment loss is recognized immediately in
comprehensive income.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (or CGU) is increased to
the revised estimate of its recoverable amount, but so
that the increased carrying amount does not exceed the
carrying amount that would have been determined had no
impairment loss been recognized for the asset (or CGU) in
prior years. A reversal of an impairment loss is recognized
immediately in comprehensive income.
67
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
Goodwill
Goodwill arising on the acquisition of a business represents
the excess of the purchase price over the net fair value of
the identifiable assets, liabilities and contingent liabilities of
the acquired business recognized at the date of acquisition.
Goodwill is initially recognized as an asset at cost and is
subsequently measured at cost less any accumulated
impairment losses.
Impairment of goodwill
For the purpose of impairment testing, goodwill is allocated
to the CGUs expected to benefit from the synergies of the
combination. CGUs are tested for impairment annually or more
frequently if events indicate that the units may be impaired.
The Company’s reporting segments that correspond to the
CGUs for impairment testing are disclosed in Note 10.
When the recoverable amount of the CGU is less than the
carrying amount of the CGU, the impairment loss is allocated
first to reduce the carrying amount of any goodwill allocated
to the unit and then to the other assets of the CGU on a
pro-rata basis. An impairment loss recognized for goodwill is
not reversed in a subsequent year. The Company performs its
annual review of goodwill in December each year.
Business acquisition
Business acquisitions are accounted for using the acquisition
method. The consideration transferred in a business
combination is measured at fair value, which is calculated
at the date of acquisition as the sum of the fair values of the
assets transferred by the Company and the liabilities incurred
by the Company to the former owners of the acquiree in
exchange for the control of the acquiree. Acquisition costs are
recognized in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the
liabilities assumed are recognized at their fair values, except
the deferred tax assets and liabilities, which are recognized and
measured in accordance with IAS 12 — Income Taxes.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer’s
previously held equity interest in the acquiree, if applicable,
over the net of the identifiable assets acquired and the
liabilities assumed at the date of acquisition.
When the consideration transferred by the Company in a
business combination includes assets or liabilities resulting
from a contingent consideration arrangement, the contingent
consideration is measured at its acquisition-date fair value and
included as part of the consideration transferred in a business
combination. Changes in the fair value of the contingent
consideration that qualify as measurement period adjustments
are adjusted retrospectively, with corresponding adjustments
against goodwill. Measurement period adjustments are
adjustments that arise from additional information obtained
during the “measurement period” (which cannot exceed one
year from the acquisition date) about facts and circumstances
that existed at the acquisition date.
The subsequent accounting for changes in fair value of the
contingent consideration that do not qualify as a measurement
period adjustment depends on how the contingent
consideration is classified. Contingent consideration classified
as equity is not measured at subsequent reporting dates,
and its subsequent settlement is accounted for within equity.
Contingent consideration that is classified as an asset or
a liability is remeasured at subsequent reporting dates in
accordance with IFRS 9 — Financial Instruments, or IAS 37
— Provisions, Contingent Liabilities and Contingent Assets, as
appropriate, with the corresponding gain or loss recognized in
net earnings or loss.
Leases
The Company assesses whether a contract is or contains a
lease at inception of the contract. The Company recognizes
a right-of-use asset and a corresponding lease obligation
for all lease arrangements in which it is the lessee, except for
short-term leases (defined as leases with a lease term of 12
months or less) and leases of low-value assets (such as tablets
and personal computers, small items of office furniture and
telephones). For these leases, the Company recognizes the
lease payments as an operating expense on a straight-line
basis over the term of the lease unless another systematic basis
is more representative of the time pattern in which economic
benefits from the leased assets are consumed.
The lease obligation is initially measured at the present value
of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease, or,
if that rate cannot be readily determined, the Company uses its
incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease
obligation are comprised of the following:
• fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a
rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable under a residual
value guarantee;
• the exercise price under a purchase option that the
Company is reasonably certain to exercise and lease
payments in an optional renewal period if the Company
is reasonably certain not to terminate early; and
68
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021 • payments of penalties for terminating the lease if the lease
term reflects the exercise of an option to terminate the lease.
The lease obligation is presented in the consolidated
statements of financial position with current and long-
term classifications.
The lease obligation is subsequently measured by
increasing the carrying amount to reflect the interest on
the lease obligation (using the effective interest method)
and by reducing the carrying amount to reflect the lease
payments made.
The Company remeasures the lease obligation (and makes
a corresponding adjustment to the related right-of-use
asset) whenever:
• the lease term has changed, or there is a significant event
or change in circumstances resulting in a change in the
assessment of exercise of a purchase option, in which case
the lease obligation is remeasured by discounting the
revised lease payments using a revised discount rate
• the lease payments change due to changes in an index or
rate or a change in expected payment under a guaranteed
residual value, in which cases the lease obligation is
remeasured by discounting the revised lease payment using
an unchanged discount rate (unless the lease payments
change is due to a change in a floating interest rate, in which
case a revised discount rate is used)
• a lease contract is modified, and the lease modification is
not accounted for as a separate lease, in which case the
lease obligation is remeasured based on the lease term
of the modified lease by discounting the revised lease
payments using a revised discount rate at the effective date
of the modification.
Right-of-use assets comprise the initial measurement of the
corresponding lease obligation, and lease payments made at
or before the commencement day, less any lease incentives
received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.
Whenever the Company incurs an obligation for costs to
dismantle and remove a leased asset, restore the site on which
it is located or restore the underlying asset to the condition
required by the terms and conditions of the lease, a provision
is recognized and measured under IAS 37. To the extent that
the costs relate to a right-of-use asset, the costs are included in
the related right-of-use asset, unless those costs are incurred to
produce inventories.
Right-of-use assets are depreciated over the shorter period of
the lease term and the useful life of the right-of-use asset. If a
lease transfers ownership of the underlying asset or the cost
of the right-of-use asset reflects that the Company expects
to exercise a purchase option, the related right-of-use asset
is depreciated over the useful life of the underlying asset. The
depreciation starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in the
consolidated statements of financial position.
The Company applies IAS 36 to determine whether a right-
of-use asset is impaired and accounts for any identified
impairment loss as described in the “Property, Plant and
Equipment” policy.
Variable rents that do not depend on an index or rate are not
included in the measurement of the lease obligation and
the right-of-use asset. The related payments are recognized
as an expense in the period in which the event or condition
that triggers those payments occurs and are included in
the line “occupancy costs” in the consolidated statements of
comprehensive income.
As a practical expedient, IFRS 16 — Leases permits a lessee
not to separate non-lease components and, instead, account
for any lease and associated non-lease components as a
single arrangement. The Company has not used this practical
expedient. For contracts that contain a lease component and
one or more additional lease or non-lease components, the
Company allocates the consideration in the contract to each
lease component on the basis of the relative stand-alone price
of the lease component and the aggregate stand-alone price
of the non-lease components at amortized cost using the
effective interest method.
Revenue
The Company recognizes revenue either at a point in time
or over time as determined by an analysis of the terms and
performance conditions of each individual customer contract
on a contract-by-contract basis. The individual contract
terms determine whether, when, and the amount of the
revenue recognized.
The Company considers and assesses enforceability,
collectability, contract combinations and modifications as part
of the revenue recognition process.
The revenue recognition policies associated with each of the
Company’s revenue streams are as follows:
Registry Operations revenue
Our Registry Operations segment delivers registry services to
governments and private sector organizations. Our revenue
is generated by providing registry and information services to
end-users on behalf of the Province of Saskatchewan under
the MSA. The majority of revenue is generated by earning
69
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report fees from end-use customers through registrations, searches,
maintenance transactions and value-added services.
The majority of the associated transaction fees are based on
a flat price per transaction or a percentage of the transaction
value (ad valorem), or stand-alone selling price for each distinct
service that is recognized at a point in time. There is a smaller
amount of fees generated under the MSA related to programs
and other registries whereby the Company earns an annual
operating fee or hosting and management fees versus revenue
per transaction. Revenue from annual operating fees and
hosting and management contracts is recognized over time on
a monthly basis.
A smaller portion of revenue in the Saskatchewan Land
Registry is from value-added services and relates to our
Geomatics business. Geomatics revenue is contract
dependent, based on the distinct goods or service promised
to the customer, and is either recognized at a point in time or
over time for support and maintenance contracts.
Amounts received from customers in advance of the
satisfaction of our performance obligations are recorded as
“contract liabilities” on our consolidated statements of financial
position. Amounts in “contract liabilities” are recognized as
revenue as we render services to our customers.
Services revenue
Our Services segment delivers solutions uniting public records
data, customer authentication, corporate services, collateral
management and asset recovery to support registration, due
diligence and lending practices of clients across Canada.
The Company categorizes its Services revenue into three
categories, namely Corporate Solutions, Regulatory Solutions,
and Recovery Solutions.
Corporate Solutions captures revenue from nationwide search,
business name registration and corporate filing services sold
to legal professionals or the general public directly or indirectly
through our government relationships. It also captures revenue
from our corporate supplies business. Revenue for Corporate
Solutions is recognized at a point in time when services are
rendered, or goods are delivered.
Regulatory Solutions captures revenue from our Know-Your-
Customer, collateral management and general due diligence
service offerings. We use our proprietary platform to assist
clients with intuitive business rules and advanced automation
to deliver regulatory services to support their credit/banking
and legal processes. Revenue for Financial Support Services is
recognized at a point in time when services are rendered.
Recovery Solutions offers a fully managed service across
Canada and the United States, which aids in facilitating and
co-ordinating asset recovery on behalf of our clients. Asset
recovery involves the identification, retrieval and disposal
of movable assets such as automobiles, boats, aircraft and
other forms of portable physical assets used as collateral
security for primarily consumer-focused credit transactions.
Recovery Solutions revenue in our Services segment includes
administration fees and commissions earned by the provision
of asset recovery services. Administration fee revenue is
earned over time throughout the management of each
asset recovery file, however, commissions and other revenue
is earned at a point in time when services are delivered.
In the case of commissions, they are not recognized until
any variable component can be determined with sufficient
certainty such that a significant reversal in the amount
recognized will not occur.
Much of our Services revenue involves interacting with
government registries to access public records to provide
services to our customers. For this access, our Services segment
usually pays a fee to the government. Where we provide
simple searches to our customers, government fees are not
included in our revenue (record government fees on a net
basis) as they are passed through to our customers. Where our
services include a number of collateral management services,
government fees are a key input to these services and are
recorded in revenue (record government fees on a gross basis)
as well as cost of goods sold.
Technology Solutions revenue
Our Technology Solutions segment provides the development,
delivery and support of registry (and related) technology
solutions. We generate revenue through the following:
• sale of software licences related to the technology platform;
• provision of technology solution definition and
implementation services; and
• provision of monthly hosting, support and
maintenance services.
Licencing revenue is determined by assessing each individual
contract to determine whether the licence obligation is
distinct from the other performance obligations within the
contract. The Company may have various types of licence
obligations depending on the contract:
•
If the licence obligation is distinct, the Company determines
if the licence should be recognized at a point in time (“right
to use”) or over time (“right to access”) throughout the
licence period.
– For contracts that provide the customer with a right to
use the Company’s intellectual property (“IP”) at a point in
time, licence revenue is recognized once the technology is
available for use and the control over the right to use the
IP is transferred to the customer.
70
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021 – For contracts that provide the customer with a right to
access the Company’s IP over time, licence revenue is
recognized over the licence period.
• For those contracts where the licence obligation is
determined not to be distinct from other performance
obligations, the licence revenue is allocated to the
associated performance obligations and recognized
upon achievement of performance applicable to
those obligations.
The Company is currently allocating the majority of its licence
revenue along with the associated performance obligations
and recognizing it upon achievement of performance
applicable to those obligations.
Revenue associated with solution definition and
implementation services is recognized either at a point in time
or over time depending on the terms of the contract and the
performance obligations therein. Most prevalent are contracts
where the revenue is recognized over a period of time. The
Company has an enforceable right to payment for service
work done and revenue is recognized over time using either a
milestone-based approach or an estimate of the proportion of
costs incurred for work performed to date, relative to the total
estimated cost of completing the performance obligations
of the contract. Contract terms determine which method is
more appropriate.
Hosting, support and maintenance revenue is recognized
according to the delivery of the performance obligations in
the contract and the stand-alone selling price allocated to the
obligations. These services may be provided through either
fixed-price, deliverable-based contracts or fee-for-service
contracts. Hosting contracts generally result in linear monthly
revenue recognition over the term of the contract. Service
revenue from fixed-price contracts to provide services is
recognized by reference to the stage of completion as defined
in the contract when the outcome of the contract can be
estimated reliably. Service revenue from time and material
contracts is recognized at the contractual rates as labour hours
are delivered, and direct expenses are incurred.
Amounts received from customers in advance of the
satisfaction of our performance obligations are recorded as
“contract liabilities” on our consolidated statements of financial
position. Amounts in “contract liabilities” are recognized
into revenue as we render services or achieve performance
milestones. Costs the Company incurs related to the fulfilment
of a contract, but prior to reaching a performance milestone
are recorded as a “contract asset” on the consolidated
statements of financial position. Once the milestone is
achieved, these costs are recorded in the consolidated
statements of comprehensive income.
Service concession arrangements
Service concession arrangements are contracts between
the Company and government entities and can involve the
design, build, finance, operation, and maintenance of public
infrastructure in which the government entity controls:
• the services provided by the Company under the concession
arrangement; and
• a significant residual interest in the infrastructure.
The Company recognizes an intangible asset arising from a
service concession arrangement when it has a right to charge
for the usage of the concession infrastructure. The intangible
asset is measured at fair value upon initial recognition and
is then amortized over its expected useful life. Amortization
commences when the infrastructure is available for use.
Revenue related to construction or upgrade services under a
concession arrangement is recognized based on the stage of
completion of the work performed.
Government grants
Government grants are recognized when there is reasonable
assurance that the Company will comply with the conditions
on which they are based and that the grants will be received.
These grants are recognized as a reduction to the associated
expenses in the consolidated statements of comprehensive
income on a systematic basis over the periods in which the
Company recognizes as expenses the related costs for which
the assistance is intended to compensate. Government grants
that become receivable as compensation for expenses or
losses already incurred or for the purpose of giving immediate
financial support to the entity with no future related costs are
recognized in the consolidated statements of comprehensive
income in the period the grant becomes receivable. Any grants
that have been received but are not yet eligible for recognition
in the consolidated statements of comprehensive income are
reflected as contract liabilities in the consolidated statements
of financial position.
Employee benefits
The Company provides pension plans for all
eligible employees.
Saskatchewan employees make contributions to the Public
Employees Pension Plan, a defined contribution plan.
The Company’s obligations are limited to making regular
payments to the plan for current services. These contributions
are expensed.
ESC and ERS employees have an option to make contributions
to a defined contribution plan. The Company’s obligations are
limited to matching employee contributions up to a maximum
of 5.0 per cent of salary. These contributions are expensed.
71
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report Financial instruments
Financial assets
The Company’s financial assets are classified as either financial
assets at fair value through profit or loss (“FVTPL”), fair value
through other comprehensive income (“FVTOCI”) or amortized
cost. The Company determines the classification of financial
assets at initial recognition.
(i) Financial Assets at FVTPL
Financial assets carried at FVTPL are initially recorded at fair
value and transaction costs are expensed in profit or loss.
Realized and unrealized gains and losses arising from changes
in the fair value of the financial assets held at FVTPL are
included in profit or loss in the period in which they arise. The
Company does not have any assets classified as FVTPL.
(ii) Financial Assets at FVTOCI – Equity investments
Financial assets carried at FVTOCI are initially recorded at fair
value plus transaction costs with all subsequent changes in
fair value recognized in other comprehensive income (loss).
For investments in equity instruments that are not held for
trading, the Company can make an irrevocable election (on
an instrument-by-instrument basis) at initial recognition to
classify them as FVTOCI. On the disposal of the investment,
the cumulative change in fair value remains in other
comprehensive income (loss) and is not recycled to profit
or loss.
(iii) Financial Assets at amortized cost (“AC”)
Financial assets are classified at amortized cost if the objective
of the business model is to hold the financial asset for the
collection of contractual cash flows, and the assets’ contractual
cash flows are comprised solely of payments of principal and
interest. The Company’s cash, short-term investments (GICs)
and trade and other receivables are recorded at amortized cost
as they meet the required criteria.
Financial liabilities
The Company’s financial liabilities are initially recorded at fair
value, net of transaction costs, and are subsequently measured
at amortized cost, using the effective interest method, with
interest expense recognized on an effective yield basis.
The effective interest method is a method of calculating the
amortized cost of a financial liability and of allocating interest
expenses over the corresponding period. The effective interest
rate is the rate that exactly discounts estimated future cash
payments over the expected life of the financial liability,
or, where appropriate, a shorter period, to the net carrying
amount on initial recognition.
The Company’s financial liabilities include accounts payable
and accrued liabilities excluding share-based accrued liabilities
and long-term debt which are classified at amortized cost.
Below is a summary showing the classification and
measurement bases of our financial instruments.
Financial Instrument
IFRS 9
Classification
Measurement
Assets
Cash
Short-term investments (GICs)
AC
AC
Short-term investments – marketable
FVTOCI
securities
Trade and other receivables
Liabilities
Accounts payable and accrued
liabilities excluding share-based
accrued liabilities
Long-term debt
AC
AC
AC
AC
AC
FVTOCI
AC
Amortized cost using effective interest rate method
Amortized cost using effective interest rate method
72
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
Impairment of financial assets
The Company recognizes lifetime expected credit losses (“ECL”)
for trade and other receivables. The expected credit losses on
these financial assets are estimated based on the Company’s
historical credit loss experience, adjusted for factors that are
specific to the debtors, general economic conditions and
an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including time
value of money where appropriate. The Company’s credit
losses are historically low as most customers with credit
are governments, banking institutions, and legal firms with
strong credit.
For all other financial instruments, the Company recognizes
lifetime ECL when there has been a significant increase in
credit risk since initial recognition. However, if the credit risk
on the financial instrument has not increased significantly
since initial recognition, the Company measures the loss
allowance for that financial instrument at an amount equal to
12-month ECL.
Lifetime ECL represents the expected credit losses that will
result from all possible default events over the expected life of
a financial instrument. In contrast, 12-month ECL represents
the portion of lifetime ECL that is expected to result from
default events on a financial instrument that are possible
within 12 months after the reporting date.
Borrowing costs
Borrowing costs directly attributable to the purchase,
construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get
ready for their intended use or sale, are added to the cost of
those assets until the assets are substantially ready for their
intended use or sale.
Investment income earned on the temporary investment
of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs
eligible for capitalization.
All other borrowing costs are recognized in profit or loss in the
period in which they are incurred.
Provisions
Provisions are recognized when the Company has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Company will be required to settle the
obligation, and a reliable estimate can be made of the amount
of the obligation. The amount recognized as a provision is
the best estimate of the consideration required to settle the
present obligation at the end of the reporting period, taking
into account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount
is the present value of those cash flows.
When some or all of the economic benefits required to settle
a provision are expected to be recovered from a third party,
the receivable is recognized as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
Share-based compensation plans
The Company has established share-based compensation
plans to provide directors and management of the Company
with the opportunity to participate in the long-term success of
ISC and promote a greater alignment of interests between its
directors, management and shareholders.
A long-term incentive plan utilizing PSUs and SARs was
approved by the Board on May 15, 2020, which is described
in Note 15.
PSUs are cash-settled share-based units that are contingent
on the Company achieving specified performance criteria. A
performance factor adjustment is made if there is an over-
achievement (or under-achievement) of specified performance
criteria, resulting in additional (or fewer) PSUs being converted.
The Company has recognized an obligation at an estimated
amount based on the arithmetic average of the closing prices
per share on the TSX on the five days immediately preceding
the grant date, which is recorded in other long-term liabilities.
Compensation expense is recognized in proportion to the
number of PSUs vested. At the end of each reporting period,
the estimates are reassessed based on the fair value of the
PSUs as of the reporting period. Any change in estimate is
recognized as a liability and an expense at the end of the
reporting period.
SARs are also cash-settled share-based units. The Black-Scholes
methodology is used to value each SAR grant when awarded.
The inputs used in this valuation are described below. At
the end of each reporting period, the market value of the
Company’s Class A Shares at the reporting date in excess of
the SAR value multiplied by the number of SARs vested is
recognized as an obligation in other long-term liabilities, and
the offsetting amount is recorded in compensation expense.
The Company also has a DSU plan and a stock option plan,
each of which is described in Note 15.
The Company has recognized an obligation at an estimated
amount based on the fair value of the DSUs as of the grant
date using the market value of the Company’s Class A Shares
on the TSX. At the end of each reporting period, the estimates
are reassessed based on the fair value of the DSUs at the end
of the reporting period. Compensation expense is recognized
in proportion to the number of DSUs vested. The DSUs can be
settled in cash or shares purchased from the open market by
73
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report For the purpose of presenting consolidated financial
statements, the assets and liabilities of the Company’s foreign
operations are expressed in Canadian dollars using exchange
rates prevailing at the end of the reporting period. Income and
expense items are translated at the average exchange rates for
the period. Foreign currency gains and losses are recognized
in other comprehensive income. The relevant amount in
the cumulative foreign currency translation adjustment is
reclassified into earnings upon disposition or partial disposition
of a foreign operation and attributed to non-controlling
interests as appropriate.
Recent accounting pronouncements
The IAS Board and IFRIC issued the following new standards
and amendments to standards and interpretations, which
become effective for future periods.
a broker. As a result, at the end of each reporting period, the
estimates are reassessed based on the fair value of the DSUs
with any change in estimate recognized in the obligation
and expense.
The Company has recognized an obligation at an estimated
amount based on the fair value of the stock options as of the
grant date using the Black-Scholes option-pricing model.
The share-based compensation expense is recognized in
proportion to the number of stock options vested. This
expense for the reporting period also represents the total
carrying amount of the equity settled employee benefit
reserve arising from these stock options. It is anticipated that
no new stock options will be awarded in the near term. The
existing stock options will remain outstanding until exercised,
expired or terminated.
The Company has used the following variables as inputs
in the Black-Scholes methodology for the valuation of the
SARs and the stock options. The inputs are subject to review
as applicable.
• Option term: the maximum duration before expiry
• Risk-free rate: estimated based on 10-year Canada bond rate
• Dividend yield: based on ISC’s three-year average annual
yield rate
• Equity volatility: based on ISC’s three-year standard deviation
of Total Shareholder Return
Foreign currency
The individual financial statements of each subsidiary entity
are presented in the currency of the primary economic
environment in which the entity operates (its functional
currency). For the purpose of the consolidated financial
statements, the results and financial position of each subsidiary
entity are presented in Canadian dollars, which is the functional
currency of the parent company and the presentation currency
for the financial statements.
In preparing the individual subsidiaries’ financial statements,
transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognized at the rates of
exchange prevailing at the dates of the transactions. At the
end of each reporting period, monetary items denominated in
foreign currencies are translated at the rates prevailing at that
date. Exchange differences are recognized in earnings in the
period in which they arise. Non-monetary items carried at fair
value that are denominated in foreign currencies are translated
at the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured in terms
of historical cost in a foreign currency are not translated.
74
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021 Proposed Standard
Description
Amendments to
IAS 37 — Onerous
Contracts – Cost of
Fulfilling a Contract
The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that
relate directly to the contract’. Costs that relate directly to a contract consist of both
the incremental costs of fulfilling that contract (examples would be direct labour or
materials) and an allocation of other costs that relate directly to fulfilling contracts (an
example would be the allocation of the depreciation charge for an item of property,
plant and equipment used in fulfilling the contract).
Effective Date
January 1, 2022
Amendments to
IFRS 3 — Reference
to the Conceptual
Framework
The amendments apply to contracts for which the entity has not yet fulfilled all its
obligations at the beginning of the annual reporting period in which the entity first
applies the amendments. Comparatives are not restated. Instead, the entity shall
recognize the cumulative effect of initially applying the amendments as an adjustment
to the opening balance of retained earnings or other component of equity, as
appropriate, at the date of initial application.
The amendments are effective for annual periods beginning on or after January 1,
2022, with early application permitted. The Company does not have any onerous
contracts as of December 31, 2021, and as a result will not have an adjustment to
equity associated with adoption of this standard on January 1, 2022.
The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework
instead of the 1989 Framework. They also add to IFRS 3 a requirement that, for
obligations within the scope of IAS 37, an acquirer applies IAS 37 to determine whether
at the acquisition date a present obligation exists as a result of past events. For a levy
that would be within the scope of IFRIC 21 — Levies, the acquirer applies IFRIC 21 to
determine whether the obligating event that gives rise to a liability to pay the levy has
occurred by the acquisition date.
Finally, the amendments add an explicit statement that an acquirer does not recognize
contingent assets acquired in a business combination.
The amendments are effective for business combinations for which the date of
acquisition is on or after the beginning of the first annual period beginning on or after
January 1, 2022. Early application is permitted if an entity also applies all other updated
references (published together with the updated Conceptual Framework) at the same
time or earlier.
This change will impact the analysis of business combinations. The amendment is
prospective, and the Company will apply it to transactions after the effective date of
January 1, 2022.
January 1, 2022
75
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report Proposed Standard
Description
Amendments to IAS
1 — Classification of
Liabilities as Current
or Non-current
The amendments to IAS 1 affect only the presentation of liabilities as current or
non-current in the statement of financial position and not the amount or timing of
recognition of any asset, liability, income or expenses, or the information disclosed
about those items.
Effective Date
January 1, 2023
The amendments clarify that the classification of liabilities as current or non-current
is based on rights that are in existence at the end of the reporting period, specify that
classification is unaffected by expectations about whether an entity will exercise its
right to defer settlement of a liability, explain that rights are in existence if covenants
are complied with at the end of the reporting period, and introduce a definition of
‘settlement’ to make clear that settlement refers to the transfer to the counterparty of
cash, equity instruments, other assets or services.
The amendments are applied retrospectively for annual periods beginning on or after
January 1, 2023, with early application permitted. This amendment is currently being
assessed by the Company to determine the impact.
Amendments to
IAS 1 and IFRS
Practice Statement
2 — Disclosure of
Accounting Policy
Information
Amendments to IAS
8 — Definition of
Accounting Estimates
The amendments to IAS 1 — Presentation of Financial Statements and IFRS Practice
Statement 2 — Making Material Judgements require that an entity discloses its material
accounting policies, instead of its significant accounting policies.
January 1, 2023
The amendment is effective for annual periods beginning on or after January 1,
2023. This change will impact disclosures in Note 2 to the Notes to the Consolidated
Financial Statements.
The amendments introduce a definition of accounting estimates and are intended to
help entities distinguish changes in accounting policies from changes in accounting
estimates. Under the new definition, accounting estimates are “monetary amounts in
financial statements that are subject to measurement uncertainty”. This distinction is
important because changes in accounting policies must be applied retrospectively
while changes in accounting estimates are accounted for prospectively.
The amendment is effective for annual periods beginning on or after January 1, 2023.
This amendment is currently being assessed by the Company to determine the impact.
January 1, 2023
Amendments to IAS
12 — Deferred Tax
related to Assets and
Liabilities arising from
a Single Transaction
The amendments narrow the scope of the initial recognition exemption to clarify
that the initial recognition exemption does not apply to transactions in which equal
amounts of deductible and taxable temporary differences arise on initial recognition.
January 1, 2023
The amendment is effective for annual periods beginning on or after January 1, 2023.
This amendment is currently being assessed by the Company to determine the impact.
76
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021 4 Trade and Other Receivables
The components of trade and other receivables are as follows:
(thousands of CAD)
Trade receivables
Consideration due from vendor1
Government grants receivable2
GST/HST/VAT receivables
Other
Total trade and other receivables
December 31,
2021
$ 12,679
–
–
61
31
$ 12,771
1 During the second quarter of 2021, working capital of $1.7 million related to the Paragon acquisition was settled (see Note 25).
2 See Note 27.
5 Contract Assets
The components of contract assets are as follows:
(thousands of CAD)
Unbilled revenue
Contract fulfilment costs
Total contract assets
$
December 31,
2021
724
142
866
$
$
December 31,
2020
14,247
1,919
525
284
56
17,031
$
$
December 31,
2020
349
704
1,053
$
Unbilled revenue represents the aggregate asset value on the consolidated statements of financial position of all instances where
revenue has been recognized but not yet invoiced to the customer. Contract assets in this category are reclassified to trade
receivables when the customer is invoiced.
Contract fulfilment costs are costs the Company incurs related to the fulfilment of performance obligations in contracts where
revenue is recognized over time, but prior to reaching a performance milestone. Once the milestone is achieved, these costs,
along with the associated revenue, are recorded in the consolidated statements of comprehensive income.
The Company does not have any contract acquisition costs at the end of the reporting period and did not recognize any
amortization of contract acquisition costs during the year (2020 — nil).
During the year, the Company recognized an impairment loss of $0.3 million on unbilled revenue related to a customer contract
(2020 — nil). The impairment is included in financial services in the consolidated statements of comprehensive income.
6 Seasonality
Our Registry Operations segment experiences moderate seasonality, primarily because Land Titles revenue fluctuates in line with
real estate transaction activity in Saskatchewan. Typically, our second and third quarters generate higher revenue during the fiscal
year when real estate activity is traditionally highest. In our Services segment, our Corporate Solutions and Regulatory Solutions
revenue is reasonably diversified and has little seasonality; instead, it fluctuates in line with the general economic drivers. Some
smaller categories of products or services can have some seasonal variation, increasing slightly during the second and fourth
quarters. In particular, our collateral management services experiences seasonality aligned to vehicle and equipment financing
cycles, which are generally stronger in the second and fourth quarters. Our Recovery Solutions revenue also does not have specific
seasonality but is countercyclical to our other business, in that it can perform better in poor economic conditions. The Company
has observed that its historical pattern of seasonality in Registry Operations, and to some degree in Services, has been impacted
due to the COVID-19 pandemic. Although the current year trends would support historical patterns, at this time, we are uncertain
if or when seasonality will return to historical patterns. Our Technology Solutions segment does not experience seasonality but
does fluctuate due to the timing of project-related revenue. The balance of our corporate activities and shared services functions,
reported under Corporate and other, do not experience seasonality. Expenses are generally consistent from quarter to quarter but
can fluctuate due to the timing of project-related or acquisition activities.
77
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
7 Property, Plant and Equipment
(thousands of CAD)
Cost
Balance at December 31, 2019
Acquired assets1
Additions
Disposals
Transfers
Foreign exchange adjustments
Balance at December 31, 2020
Additions
Disposals
Foreign exchange adjustments
Balance at December 31, 2021
Accumulated depreciation
Balance at December 31, 2019
Depreciation
Disposals
Foreign exchange adjustments
Balance at December 31, 2020
Depreciation
Impairment2
Disposals
Foreign exchange adjustments
Balance at December 31, 2021
Carrying value
At December 31, 2020
At December 31, 2021
Leasehold
Improvements
Office
Furniture
Office
Equipment
Hardware
Assets Under
Development
Total
$ 10,324
–
–
(430)
–
2
9,896
–
(1,922)
(3)
$ 7,971
$ 8,462
458
(430)
1
$ 8,491
361
128
(1,922)
(1)
$ 7,057
$ 3,259
–
–
(26)
–
3
3,236
–
(131)
(3)
$ 3,102
$ 2,996
76
(26)
–
$ 3,046
50
7
(131)
(1)
$ 2,971
$ 1,405
914
$
$
$
190
131
$
$
$
$
$
$
$
194
–
6
(23)
–
–
177
–
(16)
–
161
169
17
(23)
–
163
7
–
(16)
–
154
$ 3,058
3
13
(15)
30
15
3,104
–
(278)
(18)
$ 2,808
$ 2,210
363
(15)
9
$ 2,567
260
–
(278)
(16)
$ 2,533
14
7
$
$
537
275
$
$
$
$
$
$
$
–
–
44
–
(30)
–
14
10
–
–
24
–
–
–
–
–
–
–
–
–
–
$ 16,835
3
63
(494)
–
20
16,427
10
(2,347)
(24)
$ 14,066
$ 13,837
914
(494)
10
$ 14,267
678
135
(2,347)
(18)
$ 12,715
14
24
$ 2,160
$ 1,351
1 Acquired assets – see Note 25.
2 Impairment - During the third quarter of 2021, the Company made the decision to close three of its regional service centres in Saskatchewan. The Company recorded
impairments of $0.1 million in leasehold improvements (2020 — nil) related to these regional service centres.
78
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
8 Right-of-use Assets
(thousands of CAD)
Cost
Balance at January 1, 2020
Additions and modifications
Disposals
Foreign exchange adjustments
Balance at December 31, 2020
Additions and modifications
Disposals
Foreign exchange adjustments
Balance at December 31, 2021
Accumulated depreciation
Balance at January 1, 2020
Depreciation
Disposals
Foreign exchange adjustments
Balance at December 31, 2020
Depreciation
Impairment2
Disposals
Foreign exchange adjustments
Balance at December 31, 2021
Carrying value
At December 31, 2020
At December 31, 2021
Property and Equipment1
$
$
$
$
$
$
$
$
17,504
229
(811)
71
16,993
2,223
(166)
(96)
18,954
7,836
1,974
(436)
39
9,413
1,902
13
(166)
(69)
11,093
7,580
7,861
1 The Company’s right-of-use assets consist primarily of property leases associated with the lease of office space.
2 Impairment – During the third quarter of 2021, the Company made the decision to close three of its regional service centres in Saskatchewan. The Company recorded
impairments of $13 thousand in right-of-use assets (2020 — nil) related to these regional service centres.
79
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
9 Intangible Assets
Internal Use
Software –
Internal Use
Software –
Internally
Acquired Developed
Business
Business
Solutions –
Acquired
Solutions – Brand, Non-
competes,
Internally
Developed
Assets
Under
Other Relationships Development
Total
Contracts,
Customer
& Partner
$ 2,412 $ 28,286 $ 2,885 $ 147,333
(1,185)
(1,185)
–
–
$ 2,412 $ 28,286 $ 1,700 $ 146,148
38,120
1,409
(3,722)
–
402
37,600
–
(560)
–
49
–
1,379
–
(2,126)
2
$
$ 2,391 $ 65,375
–
–
–
(58)
$ 182,357
2,486
(1,870)
–
(560)
$ 65,317 $ 2,808 $ 182,413
955
2,486
–
(545)
(88)
–
–
–
–
–
–
–
136
260
–
(320)
–
39
260
–
(2,726)
–
–
–
–
(116)
1,738
–
$ 26,951 $ 78,502 $ 2,174 $ 6,009
–
–
237
(217)
$ 29,417 $ 76,880 $ 2,038 $ 5,415
–
30
–
388
176
(thousands of CAD)
Cost
Balance at December 31, 2019 $ 29,417 $ 76,880 $ 2,038 $ 5,415
IFRIC adjustment*
–
Restated balance at
January 1, 2020
Acquired assets1
Additions
Disposals
Transfers
Foreign exchange adjustments
Restated balance at
December 31, 2020
–
Additions
(959)
Disposals
–
Transfers
(34)
Foreign exchange adjustments
Balance at December 31, 2021 $ 26,079 $ 78,771 $ 2,011 $ 6,029 $ 1,398
Accumulated depreciation
Balance at December 31, 2019 $ 16,603 $ 76,569 $
Amortization
Disposals
Foreign exchange adjustments
Restated balance at
$ 17,363 $ 76,937 $ 1,267 $ 3,515
December 31, 2020
538
3,046
Amortization
–
(911)
Disposals
(70)
–
Foreign exchange adjustments
Balance at December 31, 2021 $ 19,498 $ 77,323 $ 1,471 $ 3,983 $
Carrying value
Restated balance at
December 31, 2020
At December 31, 2021
$ 9,588 $ 1,565 $
$ 6,581 $ 1,448 $
907 $ 2,494 $
540 $ 2,046 $
3,476
(2,716)
–
–
(911)
39
–
157
(959)
(34)
663
–
–
–
(163)
–
–
269
–
484
(116)
–
332
(320)
31
309
–
(105)
761
–
29
386
–
–
884 $ 2,725 $ 1,456 $ 7,900 $
318
–
65
4,465
(560)
17
$ 1,499 $ 11,822 $
6,614
–
(28)
$ 18,408 $
–
–
–
–
$ 106,137
9,836
(3,712)
142
$ 112,403
–
11,050
–
(1,870)
–
(237)
–
– $ 121,346
955 $ 69,954
892 $ 53,553 $
735 $ 46,909 $ 2,808 $ 61,067
1 Acquired assets – see Note 25
* See Note 2
80
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
13.7 per cent (2020 — 12.3 per cent) and a perpetual growth
rate of 2.0 per cent (2020 — 2.0 per cent). Given the large and
strong cash flow in Registry Operations relative to the size of
goodwill, the risk of impairment is remote and, as a result, the
traditional cash flow approach was used for this segment.
Services
Key assumptions for this segment include the performance of
the Canadian economy, revenue growth, including attracting
new customers and adding incremental value to existing
customers, related party costs, corporate cost allocations
required to support infrastructure, and future technological
investment in, and related to, this infrastructure. The estimates
and assumptions with the highest degree of subjectivity
are revenue forecasts, perpetual growth rates and discount
rates. Performance during the multi-year planning period is
consistent with past performance, which experienced growth
in operating cash flow in excess of the perpetual growth rate of
2.75 per cent (2020 — 2.75 per cent) used in the annual test. In
2021, annual impairment testing for this segment used a pre-
tax discount rate of 18.2 per cent (2020 — 18.2 per cent).
Technology Solutions
Key assumptions for this segment, which has operations in
both Ireland and Canada, include revenue growth, including
the ability to attract new customers, actual contract delivery
performance compared to the level of performance
anticipated when the contract was negotiated, the level of
support required by related party customers, direct employee
costs, and corporate cost allocations required to support
infrastructure, as well as future technological investment
in, and related to, intellectual property. The estimates and
assumptions with the highest degree of subjectivity are
revenue forecasts, perpetual growth rates and discount rates.
This segment has been negatively impacted by COVID-19
as local governments have deferred registry projects and
redirected attention to the preservation of the health and
safety of their populations. Performance during the multi-
year planning period is consistent with past pre-COVID-19
performance, which experienced growth in operating cash
flow in excess of the perpetual growth rate of 2.0 per cent
(2020 — 2.0 per cent) used in the annual test. In 2021, annual
impairment testing for this segment used a pre-tax discount
rate of 14.9 per cent (2020 — 15.2 per cent) in its Canadian-
based operations and 15.0 per cent (2020 — 13.3 per cent) in
its Ireland-based operations.
10 Goodwill
The components of goodwill are as follows:
(thousands of CAD)
December 31, December 31,
2020
2021
Balance, beginning of the year
Additions1
Foreign exchange adjustment
Balance, end of year
$ 77,455
–
(321)
$ 77,134
$ 45,529
31,657
269
$ 77,455
1 Acquisitions – see Note 25
For the purposes of the annual impairment testing, goodwill
is allocated to the following CGUs which are the groups of
units expected to benefit from the synergies of the business
combinations:
(thousands of CAD)
Registry Operations
Services
Technology Solutions
Balance, end of year
December 31, December 31,
2020
2021
$ 1,200
67,372
8,562
$ 77,134
$ 1,200
67,372
8,883
$ 77,455
The Company performs a goodwill impairment test annually
on December 31 and whenever there is an indication of
impairment. No impairment of goodwill was identified as a
result of the Company’s most recent annual impairment test.
The Company uses the traditional cash flow approach for
determining value in use for the Registry Operations segment,
while value in use for each of the Services and Technology
Solutions segments was determined using the expected cash
flow approach. The Company uses the discounted cash flow
method to determine the recoverable amount, which required
management to make estimates and assumptions related
to revenue forecasts, related party costs, direct employee
costs, corporate cost allocations, perpetual growth rates and
discount rates. The estimates and assumptions are highly
sensitive to changes in customer demand, and changes in
the assumptions could significantly impact the recoverable
amount, the amount of any goodwill impairment charge, or
both. In all cases, the operating and investing cash flows of
the segments used the Company’s most recent multi-year
plan, with assumptions based on experience and future
expectations for business performance.
Registry Operations
Key assumptions for this segment include the performance
of the Saskatchewan economy, revenue growth, related
party costs, corporate cost allocations required to support
infrastructure, and future technological investment in, and
related to, this infrastructure. In 2021, annual impairment
testing for this segment used a pre-tax discount rate of
81
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
11 Accounts Payable and Accrued Liabilities
The components of accounts payable and accrued liabilities are as follows:
(thousands of CAD)
Trade payables
Accrued liabilities
Customer deposits
Dividend payable
Share-based accrued liabilities
Total accounts payable and accrued liabilities
12 Contract Liabilities
The components of contract liabilities are as follows:
(thousands of CAD)
December 31,
2021
December 31,
2020
$
2,497
8,957
4,093
4,025
6,910
$ 26,482
$
$
3,338
8,939
3,664
3,500
2,503
21,944
December 31,
2021
December 31,
2020
Amounts received in advance of Registry Operations transaction,
maintenance and support contracts (i)
Amounts received in advance of Technology Solutions support and delivery contracts (ii)
Total contract liabilities
$
329
1,159
$ 1,488
$
$
326
1,698
2,024
(i) Revenue that relates to Registry Operations transactions is recognized at a point in time. Revenue that relates to Registry Operations maintenance and support contracts
is recognized over time. A contract liability is recognized for payments received from end-use customers in advance of services being provided and is recognized into
revenue either at the point in time the service is rendered or over the service period.
(ii) Revenue and other income related to Technology Solutions contracts, including government assistance, is recognized over time as the performance obligations in the
contract are achieved. These obligations may be based on a time period or on performance-based milestones identified in the contract. A contract liability is recognized for
payments received from customers in advance and is recognized into revenue either over the service period or when performance milestones are achieved.
Revenue recognized in 2021 that was included in the contract liability balance at December 31, 2020 is as follows:
(thousands of CAD)
Registry Operations transaction, maintenance and support contracts
Technology Solutions support and delivery contracts
Total revenue recognized that was included in the balance at the
beginning of the period
Year Ended December 31,
2020
2021
$
326
1,406
$
331
924
$ 1,732
$
1,255
The Company has elected to apply the practical expedient as per IFRS 15 B16 and does not disclose the value of unsatisfied
performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the
Company recognizes revenue at the amount to which it has the right to invoice for services performed.
13 Lease Obligations
(thousands of CAD)
Balance, beginning of year
Additions
Interest expense
Effect of modification to lease terms
Lease payments1
Foreign exchange adjustments
Balance, end of year
Year Ended December 31,
2020
2021
$
8,852
–
354
2,223
(2,368)
(28)
$ 9,033
$ 10,812
106
425
(178)
(2,345)
32
8,852
$
1 Lease payments net of interest expense represents the principal portion of lease payments reflected on the consolidated statements of cash flows.
82
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
The Company’s lease obligations consist primarily of property leases associated with the lease of office space. Expenses for short-
term leases and leases of low-dollar value items are not material. All extension options have been included in the measurement of
lease obligations.
The following table presents the contractual undiscounted cash flows for lease obligations:
(thousands of CAD)
Year 1
Year 2
Year 3
Year 4
Year 5
Thereafter
Balance, end of year
Unearned interest
Balance, end of year
Reflected as:
Lease obligations – current portion
Lease obligations
Balance, end of year
14 Tax Provision
Year Ended December 31,
2020
2021
$
2,201
2,056
2,010
816
829
2,426
$ 10,338
(1,305)
$ 9,033
$
2,342
1,798
1,663
1,659
462
2,289
$ 10,213
(1,361)
8,852
$
1,847
7,186
$ 9,033
1,996
6,856
8,852
$
The Company is subject to federal and provincial income taxes at an estimated combined statutory rate of 27.0 per cent
(2020 — 27.0 per cent).
(thousands of CAD)
Current tax expense
Deferred tax (recovery) expense
Income tax expense
*See Note 2
Year Ended December 31,
2020 (restated*)
2021
$
13,301
(1,298)
$ 12,003
$
$
6,315
1,483
7,798
Income tax expense varies from the amounts that would be computed by applying the statutory income tax rate to earnings
before taxes for the following reasons:
(thousands of CAD)
Net income before tax
Combined statutory income tax rate
Expected income tax expense
Increase (decrease) in income tax resulting from:
Non-deductible expenses
Foreign income tax differential
Adjustment to prior years’ deferred tax liabilities
Other
Income tax expense
*See Note 2
Year Ended December 31,
2020 (restated*)
2021
$ 44,081
27.00%
11,902
$ 28,623
27.00%
7,729
49
39
(25)
38
$ 12,003
67
(278)
269
11
7,798
$
83
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
Income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as
follows:
(thousands of CAD)
Property, plant and equipment
Right-of-use assets
Intangible assets
Goodwill
Lease obligations
Share-based compensation and other
Net deferred tax assets (liabilities)
Net Balance Recognized
in Profit
or Loss Movement
$
Foreign
$
$
Net Balance
Exchange December 31,
2021
340
(1) $
(1,880)
15
20,311
10
(1,376)
–
2,196
(15)
–
2,866
9 $ 22,457
253
105
(25)
(460)
(130)
1,555
January 1,
2021
88
(2,000)
20,326
(916)
2,341
1,311
$ 21,150 $ 1,298 $
(thousands of CAD)
Property, plant and equipment
Right-of-use assets
Intangible assets
Goodwill
Non-capital losses
Lease obligations
Share-based compensation and other
Net deferred tax assets (liabilities)
*See Note 2
$
Net Balance
January 1,
2020
(restated*)
154
(2,531)
21,534
–
200
2,835
440
$ 22,632
Recognized
in Profit
or Loss
(restated*)
$
$
(66) $
535
(1,194)
(916)
(214)
(499)
871
(1,483) $
Exchange
Movement
Net Balance
Foreign December 31,
2020
(restated*)
88
(2,000)
20,326
(916)
–
2,341
1,311
21,150
- $
(4)
(14)
–
14
5
–
1 $
$
Deferred
Tax Asset
145
(1,621)
25,316
–
1,934
2,864
$ 28,638
Deferred
Tax Liability
195
$
(259)
(5,005)
(1,376)
262
2
(6,181)
$
Deferred
Tax Asset
(restated*)
38
$
(1,900)
27,179
–
–
2,230
1,298
$ 28,845
Deferred
Tax Liability
50
(100)
(6,853)
(916)
–
111
13
(7,695)
$
$
The increase in tax bases of certain of the Company’s assets upon the change in tax status related to the Company’s Initial Public
Offering created a deferred income tax asset. Upon acquisition of AVS Systems Inc. in 2017, the value of the acquired assets was
greater on an accounting basis than on a tax basis, resulting in a deferred income tax liability.
In assessing the recovery of deferred income tax assets, management considers whether it is more likely than not that the
deferred income tax assets will be realized. The recognition and measurement of the current and deferred income tax assets
and liabilities involves dealing with uncertainties in the application of complex tax regulations and in the assessment of the
recoverability of the deferred income tax assets. The ultimate realization of deferred income tax assets is dependent upon the
generation of future taxable income during the periods in which the temporary differences are deductible.
Actual income taxes could vary from these estimates as a result of future events, including changes in income tax laws or
the outcome of tax reviews by tax authorities and related appeals. To the extent the outcome is different from the amounts
initially recorded, such differences, which could be significant, will impact the tax provision in the period in which the outcome
is determined.
No deferred tax has been recognized in respect of temporary differences associated with investments in the Company’s
subsidiaries where the Company can control the timing and reversal of the temporary differences, and it is probable that such
differences will not reverse in the foreseeable future.
84
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
15 Share-Based Compensation Plans
The Company has established share-based compensation plans to provide directors and management of the Company with the
opportunity to participate in the long-term success of ISC and to promote a greater alignment of interests between its directors,
management and shareholders.
Performance share units
Introduced in 2019, PSUs are granted with the objective of recognizing and rewarding management for performance
and retention.
A PSU is a notional unit equivalent to a Class A Share granted by the Company to the participant, entitling such participant to
receive the PSU payment value, which is conditional on attaining specific PSU performance criteria.
PSU awards vest at the end of the specified vesting period if the performance conditions determined by the Board in the grant
agreement are met. PSUs earn dividend equivalent units in the form of additional PSUs at the same rate as dividends on Class A
Shares. The cash redemption value of the PSUs is equivalent to the market value of the Class A Shares when redemption takes
place multiplied by a multiplier based on the grant agreement and the performance against the performance conditions as
specified. The maximum PSU payout multiplier is 150.0 per cent.
On the settlement date, the Company delivers to each participant a cash payment equal to the redemption value of the PSU.
A summary of the status of the PSU plan and the changes within the period ended December 31, 2021, are as follows:
Balance at December 31, 2019
PSUs granted March 26, 2020
PSUs credited as a result of cash dividends paid
Balance at December 31, 2020
PSUs granted March 25, 2021
PSUs credited as a result of cash dividends paid
Balance at December 31, 2021
Units
33,000.32
38,701.00
3,545.90
75,247.22
22,900.00
3,114.31
101,261.53
Weighted Average
Award Price
16.10
$
13.71
16.51
14.89
23.86
26.46
$ 17.28
$
The Company has recognized an obligation at an estimated amount based on the arithmetic average of the closing prices per
share on the TSX on the five days immediately preceding the grant date. Compensation expense is recognized in proportion to
the number of PSUs vested. At the end of each reporting period, the estimates are reassessed based on the fair value of the PSUs
as of the reporting period. Any change in estimate is recognized as a liability and an expense at the end of the reporting period.
The share-based compensation expense related to the PSUs for the year ended December 31, 2021, totalled $1.7 million (2020
— $0.7 million). The total carrying amount of the liability arising from the PSUs as of December 31, 2021, totalled $2.5 million
(December 31, 2020 — $0.9 million). The short-term portion of the liability amount, which amounts to $1.3 million, is included
within accounts payable and accrued liabilities and the remaining $1.2 million is included within other non-current liabilities on
the consolidated statements of financial position.
Share appreciation rights
Introduced in 2019, SARs are granted with the objective of recognizing and rewarding management for creating sustainable, long-
term shareholder value, as well as retention. A SAR is a right granted by the Company to a participant to receive a cash payment
equal to any appreciation in the Class A Shares in excess of the SAR price at the grant date during a specified period.
SAR awards vest and become exercisable at a rate of 25.0 per cent on each anniversary of the grant date beginning with the first
anniversary, unless an alternate vesting schedule is specified by the Board at the time of the award.
The participant is able to exercise the SARs as they vest. The cash redemption value of the SARs is equivalent to the excess of the
market value of the Class A Shares at the exercise date over the SAR price in the grant agreement.
On the settlement date, the Company delivers to each participant a cash payment equal to the redemption value of the SARs.
85
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
A summary of the status of the SAR plan and the changes within the year ended December 31, 2021, are as follows:
Balance at December 31, 2019
SARs granted March 31, 2020
Balance at December 31, 2020
SARs granted March 25, 2021
SARs redeemed
Balance at December 31, 2021
Units
243,116.00
291,386.00
534,502.00
133,791.00
(1,100.00)
667,193.00
Weighted Average
Award Price
16.11
$
13.71
14.80
23.86
16.11
$ 16.61
$
The share-based compensation expense related to the SARs for the year ended December 31, 2021, totalled $3.1 million (2020
— $1.2 million). The total carrying amount of the liability arising from SARs as of December 31, 2021, was $4.3 million (December
31, 2020 — $1.2 million). The short-term portion of the liability, which amounts to $1.9 million, is included within accounts
payable and accrued liabilities and the remaining $2.4 million of the liability is included within other non-current liabilities on the
consolidated statements of financial position.
Deferred share units
The Company has established a DSU plan to provide directors of ISC with the opportunity to participate in the long-term success
of ISC and to promote a greater alignment of interests between its directors and shareholders. The Board may award DSUs at its
discretion, from time to time, in accordance with the plan and upon such other terms and conditions as the Board may prescribe.
DSU awards vest immediately unless an alternate vesting schedule is specified by the Board at the time of the award.
DSUs earn dividend equivalent units in the form of additional DSUs at the same rate as dividends on Class A Shares. The
participant is not allowed to redeem the DSUs until termination of employment/directorship or death. The cash value of the DSUs
is equivalent to the market value of the Class A Shares when redemption takes place.
On each applicable redemption date, the Company delivers to each participant a cash payment equal to the redemption value
of the DSUs, or an equivalent number of Class A Shares purchased on the TSX. A summary of the status of the DSU plan and the
changes within the years ended December 31, 2021, and 2020 are as follows:
Balance at December 31, 2019
DSUs granted June 30, 2020
DSUs credited as a result of cash dividends paid
Balance at December 31, 2020
DSUs granted May 12, 2021
DSUs credited as a result of cash dividends paid
DSUs redeemed
Balance at December 31, 2021
Units
98,313.15
23,800.00
5,554.00
127,667.15
14,855.00
4,222.00
(3,601.11)
143,143.04
Weighted Average
Award Price
17.05
$
15.00
16.66
16.65
26.26
26.54
27.10
$ 17.68
$
The Company has recognized an obligation based on the fair value of the DSUs as of the grant date. Compensation expense is
recognized in proportion to the amount of DSUs vested. At the end of each reporting period, the obligation is reassessed based
on the fair value of the DSUs as of the reporting period. Any change in estimate is recognized as a liability and an expense at the
end of the reporting period.
Share-based compensation expense related to the DSUs for the year ended December 31, 2021, totalled $1.1 million (2020 — $1.0
million). The total carrying amount of the liability arising from the DSUs as of December 31, 2021, totalled $3.6 million (December
31, 2020 — $2.5 million). The liability amount is included within accounts payable and accrued liabilities on the consolidated
statements of financial position.
The fair value of the DSUs at December 31, 2021, has been calculated using the market value of the Company’s Class A Shares on
the TSX.
86
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
Stock options
The Company established a stock option plan approved by shareholders in 2014 and subsequently amended and restated at
various points. The exercise price of options issued under the stock option plan is determined by the Board at the time of the
grant, but shall not be less than the closing price for the Class A Shares on the TSX on the trading day immediately preceding the
date of the grant.
Unless the Board determines otherwise, options granted will vest and become exercisable in equal tranches over the four years
following the date of the grant. Once vested, options may be exercised at any time within eight years of the date of the grant, after
which they expire and terminate.
A summary of the status of the stock option plan and the changes within the years ended December 31, 2021, and 2020 are
as follows:
Balance at December 31, 2019
Stock options granted during the year
Balance at December 31, 2020
Stock options granted during the year
Balance at December 31, 2021
Options
1,548,247
–
1,548,247
–
1,548,247
Average
Exercise Price
17.27
$
–
17.27
–
$ 17.27
$
At the end of the period, the outstanding share options had a weighted average exercise price of $17.27 (December 31, 2020 —
$17.27). The number of options exercisable at the end of the period was 1,430,339 (December 31, 2020 — 1,233,095) and had
a weighted average exercise price of $17.22 (December 31, 2020 — $17.05) based on a range of exercise prices from $15.04 to
$18.85 (December 31, 2020 — $15.04 to $18.85).
Compensation expense is recognized in proportion to the number of stock options vested. Share-based compensation expense
related to the stock options for the year ended December 31, 2021, totalled $0.1 million (2020 — $0.2 million). The total carrying
amount of the equity settled employee benefit reserve arising from these stock options as of December 31, 2021, totalled $2.4
million (December 31, 2020 — $2.3 million).
16 Debt
On September 17, 2021, the Company entered into an amended and extended credit agreement in connection with its secured
credit facility (the “Credit Facility”) initially provided by its lenders on August 5, 2020. The maturity date of the Credit Facility was
extended from August 5, 2022, to September 17, 2026. In addition, the amended agreement simplifies the pricing structure of the
facility. The 2021 extension was considered to be a modification of debt for accounting purposes, whereas the August 5, 2020,
agreement, which added an additional Canadian chartered bank as a lender and increased the amount available on the Credit
Facility to $150.0 million from $80.0 million under the previous facility, was an extinguishment of debt for accounting purposes.
The Credit Facility bears interest at a base rate of prime, bankers’ acceptance, or letter of credit fee plus a margin varying between
0.20 per cent and 2.00 per cent per annum depending on the type of advance and the performance on certain covenants (2020
— 0.75 per cent and 3.25 per cent per annum).
The Company is also required to pay a commitment fee quarterly in arrears on the unutilized portion of the Credit Facility, at a rate
between 0.24 per cent and 0.40 per cent per annum depending on the performance on certain covenants (2020 — 0.35 per cent
and 0.65 per cent per annum).
Prior to maturity there are no mandatory repayments on the Credit Facility, except for repayments associated with significant
asset sales. However, the Company may make voluntary prepayments at any time provided they are in minimum aggregate
amounts of $1.0 million.
The Company is amortizing costs of $0.4 million attributable to modifying the Credit Facility over the life of the facility using an
effective interest rate that is currently 3.43 per cent. For the year ended December 31, 2021, an expense of $18 thousand (2020 —
$0.4 million) was recognized in the consolidated statements of comprehensive income.
The Credit Facility can be used for working capital needs and for general corporate purposes.
87
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
Term debt is as follows:
(thousands of CAD)
Non-current
Revolving term facility
Total non-current
Total debt
December 31,
2021
December 31,
2020
$ 40,975
$ 40,975
$ 40,975
$ 76,316
$ 76,316
$ 76,316
At December 31, 2021, non-cash drawings, consisting of letters of credit and similar, were nil (2020 — $0.2 million). The total
unused and available portion of the Credit Facility at December 31, 2021, was $108.7 million (2020 — $73.5 million).
The Credit Facility contains financial covenants that require the Company to maintain a ratio of Consolidated Net Funded Debt to
earnings before interest, taxes, depreciation and amortization (“EBITDA”) of less than 4:1 and an EBITDA to interest expense ratio of
greater than 3:1.
The Credit Facility also contains other positive covenants, negative covenants, events of default, representations and warranties
customary for credit facilities of this nature. The Company was in compliance with all covenants throughout the period.
The indebtedness under the Credit Facility is secured by a first ranking security interest over substantially all of the Company’s
assets (subject to the Government of Saskatchewan’s security under a debenture), including security interests, pledges and
guarantees granted by certain of its subsidiaries.
The amount of borrowing costs capitalized during 2021 and 2020 was nil.
88
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
17 Liabilities Arising from Financing Activities
The tables below provide the reconciliation of movements of liabilities to cash flows arising from financing activities.
(thousands of CAD)
Financing activities
Interest paid
Interest paid on lease obligations
Principal repayments on lease obligations
Repayment of long-term debt
Financing fees
Proceeds of long-term debt
Repayment of operating loan
Proceeds of operating loan
Dividends paid
Net cash flow (used in) provided by financing activities
(a)
(b)
(b)
(c)
(c)
(c)
(d)1
(d)1
(e)
1 The operating loan was drawn and paid off in 2020, so no balance exists as at December 31, 2020.
Year Ended December 31,
2020
2021
$
(2,547)
(354)
(2,014)
(35,000)
(359)
–
–
–
(14,000)
$ (54,274)
$
(1,365)
(425)
(1,920)
(68,000)
(362)
126,316
(9,816)
9,816
(14,000)
40,244
$
As at December 31,
2020
Cash Flows
Non-cash Changes
As at December 31,
2021
$
223
Interest payable
Lease obligation including
current portion and interest paid
8,852
Long-term debt including current portion 76,316
3,500
Dividends payable
$ 88,891
Dividends Declared
Other
$
(2,547)
(a)
$
–
$
2,440
$
116
(2,368) (b)
(c)
(35,359)
(14,000)
(e)
(54,274)
$
$
–
–
14,525
14,525
2,549
18
–
5,007
$
9,033
40,975
4,025
54,149
$
As at December 31,
2019
Cash Flows
Non-cash Changes
As at December 31,
2020
$
203
Interest payable
Lease obligation including
current portion and interest paid
10,812
Long-term debt including current portion 18,000
3,500
Dividends payable
$ 32,515
Dividends Declared
Other
$
(1,365) (a)
$
–
$
1,385
$
223
(2,345) (b)
57,954
(c)
(14,000) (e)
40,244
$
$
–
–
14,000
14,000
385
362
–
2,132
$
$
8,852
76,316
3,500
88,891
18 Earnings Per Share
The calculation of earnings per share is based on net income after tax and the weighted average number of shares outstanding
during the period. Details of the earnings per share are set out below:
(thousands of CAD, except number of shares and earnings per share)
Net income
Weighted average number of shares, basic
Potential dilutive shares resulting from stock options
Weighted average number of shares, diluted
Earnings per share ($ per share)
Total, basic
Total, diluted
*See Note 2
Year Ended December 31,
2020 (restated*)
2021
$ 32,078
17,500,000
517,509
18,017,509
20,825
$
17,500,000
156,857
17,656,857
$
$
1.83
1.78
$
$
1.19
1.18
89
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
19 Equity and Capital Management
The Company’s authorized share capital consists of an unlimited number of Class A Shares, one Class B Golden Share (the “Golden
Share”) and an unlimited number of Preferred Shares, issuable in series. The Company currently has 17,500,000 Class A Shares
issued and outstanding, one Golden Share issued and outstanding, and no Preferred Shares issued or outstanding. Class A Shares
are entitled to one vote per share. The Golden Share, held by Crown Investments Corporation of Saskatchewan on behalf of the
Government of Saskatchewan, has certain voting rights and obligations including regarding the location of the head office and
the sale of certain of the assets of the Company. The Golden Share has no pre-emptive, redemption, purchase or conversion
rights and is not eligible to receive dividends declared by the Company. The Preferred Shares can be issuable at any time and may
include voting rights.
(thousands of CAD, except number of shares)
Balance at January 1, 2020
No movement
Balance at December 31, 2020
Balance at January 1, 2021
No movement
Balance at December 31, 2021
Capital management
Class A
Class B
Number
of Shares
17,500,000
–
17,500,000
17,500,000
–
17,500,000
Share Capital
$ 19,955
–
19,955
$ 19,955
–
$ 19,955
Number
of Shares
1
–
1
1
–
1
Share Capital
–
$
–
–
–
–
–
$
$
$
The Company’s objective in managing capital is to ensure that adequate resources are available to fund organic growth and to
enable it to undertake future growth opportunities while continuing as a going concern. The Company’s capital is composed of
debt and shareholders’ equity.
Operating cash flows are used to provide sustainable cash dividends to shareholders and fund capital expenditures in support of
organic growth. In addition, operating cash flows, supplemented throughout the year with the operating facility if necessary, are
used to fund working capital requirements.
Equity and the available but undrawn portion of the term facility will assist in financing future growth opportunities.
The Company’s capital at December 31, 2021, consists of long-term debt, share capital, employee benefit reserve, accumulated
other comprehensive income and retained earnings (comprising total shareholders’ equity).
(thousands of CAD)
Long-term debt
Share capital
Accumulated other comprehensive income
Equity settled employee benefit reserve
Retained earnings
Capitalization
*See Note 2
$
December 31,
2021
40,975
19,955
(355)
2,464
115,641
$ 178,680
December 31,
2020 (restated*)
$ 76,316
19,955
706
2,376
98,088
$ 197,441
20 Financial Instruments and Related Risk Management
The Company does not currently use any form of derivative financial instruments to manage its exposure to credit risk, interest
rate risk, market risk or foreign currency exchange risk.
Credit risk
Credit risk is the risk that one party to a transaction will fail to discharge an obligation and cause the other party to incur a financial
loss. The Company extends credit to its customers in the normal course of business and is exposed to credit risk in the event
of non-performance by customers but does not anticipate such non-performance would be material. The Company monitors
the credit risk and credit rating of customers on a regular basis. The Company has significant concentration of credit risk among
90
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
government sectors. Its customers are predominantly provincial, federal, and municipal government ministries and agencies, and
its private sector customers are diverse.
The majority of cash is held with Canadian chartered banks, and the Company believes the risk of loss to be minimal. The
maximum exposure to credit risk at December 31, 2021, is $52.9 million (December 31, 2020 — $51.0 million), equal to the
carrying value of the Company’s financial assets, which are itemized in the table below. Quarterly reviews of the aged receivables
are completed. The Company expects to fully collect the carrying value on all outstanding receivables. Therefore, the risk to the
Company is low.
The following table sets out details of cash and aging of receivables:
(thousands of CAD)
Cash
Short-term investments
Trade and other receivables:
- current
- up to three months past due date
- greater than three months past due date
Total credit risk
Interest rate risk
December 31,
2021
$ 40,104
36
8,328
3,527
916
$ 52,911
December 31,
2020
$ 33,946
52
9,808
5,868
1,355
$ 51,029
Interest rate risk arises from the effect of changes in prevailing interest rates on the Company’s financial instruments.
The Company is subject to interest rate risks on its debt (Note 16). This debt bears interest at rates that float, which can vary with
changes in prime borrowing rates. The Company manages interest rate risk by monitoring its balance sheet, cash flows and the
effect of market changes in interest rates. The Company has the option of using short-term bankers’ acceptance notes to lock in
rates at any time.
The following table presents a sensitivity analysis to changes in market interest rates and their potential impact on the Company
for the periods ended December 31, 2021, and 2020. As the sensitivity is hypothetical, it should be used with caution. The
Company is not exposed to significant interest rate risk.
(thousands of CAD)
December 31, 2021
December 31, 2020
+ 100 bps*
– 100 bps
+ 100 bps
– 100 bps
Increase (decrease) in interest expense
Decrease (increase) in net income before tax
Decrease (increase) in total comprehensive income
$ 669
$ 669
$ 488
$
$
$
(669)
(669)
(488)
$
$
$
423
423
309
$
$
$
(423)
(423)
(309)
* bps = basis point spread
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s cash
resources are managed based on financial forecasts and anticipated cash flows.
The following summarizes the contractual maturities for the Company’s financial liabilities at December 31, 2021:
(thousands of CAD)
Long-term debt
Lease obligations
Accounts payable and accrued liabilities
Total liabilities
$
Carrying
Amount
40,975
9,033
26,482
$ 76,490
$
Contractual
Cash Flows
47,705
10,338
26,482
$ 84,525
$
0-6
months
672
1,140
26,482
$ 28,294
$
7-12
months
683
1,061
–
$ 1,744
12+
months
$ 46,350
8,137
–
$ 54,487
Contractual cash flows for long-term debt and lease obligations includes principal and interest.
91
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
Market risk
The carrying amount and fair value of the financial assets and financial liabilities are as follows:
Classification
Level
December 31, 2021
December 31, 2020
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
AC
FVTOCI
AC
AC
AC
L2
L1
L2
L2
L2
$ 40,104
$ 40,104
$ 33,946
$ 33,946
36
12,771
36
12,771
52
17,031
52
17,031
19,572
40,975
19,572
41,272
19,441
76,316
19,441
76,316
(thousands of CAD)
Financial assets
Cash
Short-term investments
Marketable securities
Trade and other receivables
Financial liabilities
Accounts payable and accrued
liabilities excluding share-based
accrued liabilities
Long-term debt
Fair value of financial instruments
The carrying values of cash, short-term investments, trade and other receivables, accounts payable, and accrued liabilities
excluding share-based accrued liabilities approximate fair value due to their immediate or relatively short-term maturity. With
long-term debt, the Company has amended and restated its borrowings under the Credit Facility, which is managed with prime
loans, short-term bankers’ acceptance, letters of credit or letters of guarantee. These borrowings will bear interest at a base rate
of prime plus applicable margin varying between 0.20 per cent and 1.00 per cent per annum. The Company is not exposed to
significant interest rate risk because interest bearing financial instruments are at a low level relative to total assets and equity.
Foreign currency exchange risk
The Company operates internationally and is exposed to fluctuations in various currencies, with the euro being the most material,
followed by the US dollar. Movements in foreign currencies against the Canadian dollar may impact revenue, the value of assets
and liabilities, and affect the Company’s profit and loss.
Based on the balance of foreign net monetary assets and net assets carried on the consolidated statements of financial position,
the impact of an increase (decrease) of 10.0 per cent in the euro relative to the Canadian dollar as at December 31, 2021, on net
monetary assets was a decrease (increase) of $0.4 million (December 31, 2020 — $0.6 million) and on net assets was an increase
(decrease) of $1.3 million (December 31, 2020 — $1.4 million). The impact of an increase (decrease) of 10.0 per cent in the US
dollar relative to the Canadian dollar as at December 31, 2021, on net monetary assets was a decrease (increase) of $0.6 million
(December 31, 2020 — $0.3 million). The Company’s exposure to other currencies is not significant at the end of the period.
92
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
21 Revenue
The Company derives its revenue from the transfer of goods or services either at a point in time or over time. This is consistent
with the revenue from third parties’ information disclosed for each reportable segment under IFRS 8 — Operating Segments
(see Note 24). The following table presents our revenue disaggregated by revenue type. Sales and usage tax are excluded
from revenue.
Segment revenue
(thousands of CAD)
Registry Operations
Services
Technology Solutions
Corporate and other
Total revenue
The following table presents our revenue disaggregated by timing of revenue recognition:
Timing of revenue recognition
(thousands of CAD)
At a point in time
Registry Operations revenue
Services revenue1
Corporate and other
Over time
Registry Operations revenue
Services revenue1
Technology Solutions revenue
Total revenue
Year Ended December 31,
2020
2021
$ 85,567
75,165
8,644
3
$ 169,379
$ 69,535
56,398
10,782
8
$ 136,723
Year Ended December 31,
2020
2021
$ 82,553
73,765
3
$ 156,321
3,014
1,400
8,644
$ 13,058
$ 169,379
$ 66,462
55,700
8
$ 122,170
3,073
698
10,782
$ 14,553
$ 136,723
1 In 2021, the Company changed the presentation of some Services revenue in the Paragon business to better reflect the performance obligations in the underlying
customer contracts. As a result of this change, $3.1 million of the 2020 comparatives were reclassified to the “point in time” category from the “over time” category. These
reclassifications have no impact on revenue, net income or earnings per share.
In the “over time” category, some Land Registry and Corporate Registry contracts result in linear revenue recognition over the life
of the contract. In Services, Recovery Solutions administration fee revenue is also recognized over the life of the asset recovery file.
Likewise, the hosting, support and maintenance portion of contracts related to Technology Solutions revenue primarily results in
linear revenue recognition over the life of the contract. Conversely, revenue recognition associated with the licence and solution
definition and implementation portion of contracts depends on milestone achievement or percentage of completion. In 2021,
the portion of Technology Solutions contract revenue recognized that was dependent on milestone achievement or percentage
of completion versus total revenue recognized was 40.0 per cent (2020 — 69.0 per cent). At December 31, 2021, the Company
has contracts where the milestone was either in progress or expected to be satisfied in the near term. For the unsatisfied portion
of milestone-based contracts, the Company expects that 100.0 per cent (2020 — 100.0 per cent) of the total will be recognized in
the next fiscal year.
Service concession arrangement
The Company entered into a change order pursuant to its MSA with the Government of Saskatchewan to continue the
development of its registry systems. Under the MSA, the Company owns the IP during the term of the MSA.
As at December 31, 2021, the development associated with the change order is 100.0 per cent complete (2020 — 100.0 per
cent) and an incremental $0.2 million increase to both intangible assets and other revenue has been recorded in 2021 in Registry
Operations related to the project (2020 — $0.2 million). The intangible asset was put into use in the third quarter of 2020 and
depreciation commenced in this quarter.
93
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
22 Related Party Transactions
24 Segment Information
Included in these consolidated financial statements are
transactions with various Saskatchewan Crown corporations,
ministries, agencies, boards and commissions related to the
Company by virtue of common control by the Government of
Saskatchewan and non-Crown corporations and enterprises
subject to joint control and significant influence by the
Government of Saskatchewan (collectively referred to as
“related parties”). The Company has elected to take the
exemption under IAS 24 — Related Party Disclosures which
allows government-related entities to limit the extent of
disclosures about related party transactions with government
or other government-related entities.
Routine operating transactions with related parties are settled
at agreed-upon exchange amounts under normal trade terms.
In addition, the Company pays provincial sales tax to the
Saskatchewan Ministry of Finance on all its taxable purchases.
Taxes paid are recorded as part of the cost of those purchases.
Other amounts and transactions due to and from related
parties and the terms of settlement are described separately in
these consolidated financial statements and the Notes thereto.
23 Compensation of Key Management
Personnel
Key management personnel includes the directors, President
and Chief Executive Officer, Chief Financial Officer, Executive
Vice-Presidents, Vice-Presidents and President, ESC. The
compensation of the key management team during the period
was as follows:
(thousands of CAD)
Year Ended December 31,
2020
2021
Wages, salaries and short-term benefits $ 4,220
6,061
Share-based compensation
221
Defined contribution plan
$ 10,502
Total compensation
$ 3,953
3,191
209
$ 7,353
The compensation of directors and the President and
Chief Executive Officer is determined by the Board upon
recommendation of its Compensation Committee having
regard to the performance of individuals and market trends.
The values in the table above represent amounts included in
expenses during the year. Portions not paid in cash have been
accrued as liabilities on the statement of financial position.
Operating segments are identified as components of a
company where separate discrete financial information
is available for evaluation by the chief operating decision
maker regarding allocation of resources and assessment of
performance. The Company uses EBITDA and earnings before
interest and taxes (“EBIT”) as key measures of profit to assess
each segment’s performance and make decisions about
the allocation of resources. EBITDA is calculated as income
before depreciation and amortization, net finance expense,
and income tax expense. EBIT is calculated as income after
depreciation and amortization expense but before gain or loss
on disposition of property, plant and equipment, net finance
expense, and income tax expense.
ISC has three reportable segments – Registry Operations,
Services, and Technology Solutions, summarized as follows:
• Registry Operations delivers registry services on behalf of
governments and private sector organizations.
• Services delivers products and services that utilize public
records and data to provide value to customers in the
financial and legal sectors.
• Technology Solutions provides the development, delivery
and support of registry (and related) technology solutions.
Corporate and other includes our corporate activities and
shared services functions. The Registry Operations and Services
segments operate substantially in Canada. The Technology
Solutions segment operates in both Canada and Ireland.
We have restated our 2020 comparative segment results
using the full retrospective method as a result of revising
our accounting policy in relation to configuration and
customization costs incurred in implementing SaaS
arrangements in response to the IFRIC agenda decision
clarifying its interpretation of how current accounting
standards apply to these types of arrangements (see Note 2).
Segment results include items directly attributable to a
segment as well as those that can be allocated on a reasonable
basis. We account for transactions between reportable
segments in the same way we account for transactions with
external parties; however, we eliminate them on consolidation.
94
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
Revenue and EBIT
For the year ended December 31, 2021
(thousands of CAD)
Revenue from third parties
Plus: Inter-segment revenue
Total revenue
Expenses excluding depreciation
and amortization
EBITDA
Depreciation and amortization
EBIT
Net finance (expense)
Income tax expense
Net income
Registry
Operations
$ 85,567
–
$ 85,567
Services
$ 75,165
–
$ 75,165
$
Technology
Solutions
8,644
9,475
$ 18,119
Corporate
and other
3
157
160
$
$
Inter-Segment
Eliminations
Consolidated
Total
– $ 169,379
(9,632)
–
(9,632) $ 169,379
$
$
(36,585)
48,982
(2,071)
$ 46,911
(57,788)
17,377
(9,206)
8,171
$
(16,317)
1,802
(1,405)
397
$
(7,789)
(7,629)
(1,096)
(8,725) $
$
9,632
–
–
– $
$
(108,847)
60,532
(13,778)
46,754
(2,673)
(12,003)
32,078
Additions to non-current assets,
including acquisitions
$
310
$
557
$ 1,640
$
–
$
(11) $
2,496
Registry
Operations
69,535
33
69,568
$
$
(34,955)
34,613
(2,482)
32,131
$
$
$
$
For the year ended December 31, 2020
(thousands of CAD)
Revenue from third parties
Plus: Inter-segment revenue
Total revenue
Expenses excluding depreciation
and amortization
EBITDA
Depreciation and amortization
EBIT
Net finance (expense)
Income tax expense
Net income
Additions to non-current assets,
Services
56,398
4
56,402
Technology
Solutions
$ 10,782
9,769
$ 20,551
Corporate
and other
8
140
148
$
$
Inter-Segment
Eliminations
–
(9,946)
(9,946) $
$
Consolidated
Total
136,723
–
136,723
$
$
(44,327)
12,075
(7,203)
4,872
(16,116)
4,435
(1,833)
2,602
$
$
(7,879)
(7,731)
(1,206)
(8,937)
$
9,946
–
–
–
(93,331)
43,392
(12,724)
30,668
(2,045)
(7,798)
20,825
$
$
including acquisitions
$
249
$
70,130
$
828
$
45
$
–
$
71,252
Inter-segment revenue is charged among segments at arm’s-length rates, based on rates charged to third parties. Total
consolidated revenue is attributed to customers within Ireland and Canada. For the year ended December 31, 2021, revenue
within Ireland was $7.7 million (2020 — $10.3 million), and the remainder was in Canada. No single customer represented more
than 10.0 per cent of the total consolidated revenue.
95
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
Assets and liabilities
As at December 31, 2021
(thousands of CAD)
Assets
Total assets, excluding
Registry
Operations
Services
Technology
Solutions
Corporate
and other
Inter-Segment
Eliminations
Consolidated
Total
intangibles, goodwill and cash $ 23,108
1,506
Intangibles
1,200
–
$ 25,814
$ 10,797
Goodwill
Cash
Total assets
Liabilities
$ 12,516
54,794
67,372
–
$ 134,682
$ 13,381
$
4,099
4,755
8,562
–
$ 17,416
$ 5,695
$ 14,470
12
–
40,104
$ 54,586
$ 64,920
$
$
$
54,193
– $
61,067
–
77,134
–
–
40,104
– $ 232,498
94,793
– $
As at December 31, 2020
(thousands of CAD)
Assets
Total assets, excluding
intangibles, goodwill and cash $
Intangibles*
Goodwill
Cash
Total assets
Liabilities
$
$
Registry
Operations
Services
Technology
Solutions
Corporate
and other
Inter-Segment
Eliminations
Consolidated
Total
25,758
2,395
1,200
–
29,353
10,092
$
13,952
63,203
67,372
–
$ 144,527
13,270
$
$
5,505
4,332
8,883
–
$ 18,720
4,844
$
$ 14,807
24
–
33,946
$ 48,777
$ 92,046
$
$
$
–
–
–
–
–
–
$
$
$
60,022
69,954
77,455
33,946
241,377
120,252
*See Note 2. In addition, certain of the prior year segment amounts have been changed to reflect the current year classifications.
Non-current assets are held in Canada and Ireland. At December 31, 2021, non-current assets held in Ireland were $10.4 million
(December 31, 2020 — $8.9 million), while the remainder were held in Canada.
25 Acquisitions
2020 acquisition
On July 31, 2020, the Company’s Services segment, through its wholly owned subsidiary, ESC, acquired substantially all of the
assets used in the business of Paragon Inc. for $70.0 million, subject to customary purchase price adjustments, by way of an asset
purchase agreement.
A table outlining the net cash flow related to the acquisition is provided below.
Net cash flows related to the acquisition
(thousands of CAD)
Consideration paid in cash
Working capital adjustment
Consideration from operating loan
Consideration from long-term debt
Subtotal
Add (deduct) items not yet paid in cash:
Working capital not yet cash settled at December 31, 20201
Recovery on acquisition post-closing adjustments
Total net cash flows related to the acquisition
1 See Note 4.
96
2021
2020
$
–
–
–
–
–
–
1,719
1,719
$
$
$
$
(10,345)
1,719
(9,816)
(50,000)
(68,442)
(1,719)
–
(70,161)
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
The table below presents the final allocation of the net purchase price for accounting purposes for the Paragon acquisition.
(thousands of CAD)
Assets
Trade and other receivables
Prepaid expenses and deposits
Property, plant and equipment
Intangible assets
Liabilities
Accounts payable and accrued liabilities
Net assets acquired
Goodwill arising on acquisition
Total consideration allocated
Net assets acquired
Total goodwill arising on acquisition
26 Net Change in Non-Cash Working Capital
The net change during the period comprised the following:
(thousands of CAD)
Trade and other receivables
Prepaid expenses
Contract assets
Accounts payable and accrued liabilities
Contract liabilities
Provisions and other liabilities
Income taxes
Net change in non-cash working capital
Final
$
399
148
3
38,120
$ 38,670
1,885
$ 36,785
68,442
36,785
$ 31,657
Year Ended December 31,
2020
2021
$
2,386
159
150
4,237
(433)
1,384
6,302
$ 14,185
$
$
(2,162)
(556)
663
1,834
512
1,601
1,629
3,521
Income taxes paid, net of refunds received, for the year ended December 31, 2021, totalled $7.0 million (2020 — $4.7 million).
27 Government Grants
In 2021, a government grant of $0.1 million (2020 — $0.1 million) was recognized by the Company to finance a project designed
to provide simplified and unified access to business registry data on business ownership and control structures to aid certain users
in the fight against financial and economic crime. To be eligible for this funding, at the end of the project the Company is required
to submit a final technical report and a final financial report detailing the eligible costs for reimbursement. The grant amount of
$0.1 million (2020 — $0.1 million) was recognized as a reduction to wages and salaries expense in the year.
In April 2020, the Government of Canada announced the Canada Emergency Wage Subsidy to help employers keep and/or
retain Canadian-based employees on payrolls in response to challenges posed by the COVID-19 pandemic. For the year ended
December 31, 2021, the Company did not recognize a wage subsidy under this program (2020 — $0.5 million) as a reduction to
wages and salary expense. The amount recognized in 2020 was received in the current year (see Note 4).
97
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
28 Commitments and Contingencies
As of December 31, 2021, the Company has commitments over the next five years as follows:
(thousands of CAD)
2022
2023
2024
2025
2026
Thereafter
Total commitments
$
IT and Other
Service
Agreements1
3,978
3,303
490
13
7
–
$ 7,791
Master Service
Agreement
500
$
500
500
500
500
3,500
6,000
$
Operating Leases
and non-Lease
Component of
Office Leases
1,620
$
1,149
1,030
298
300
942
5,339
$
$
Total
6,098
4,952
2,020
811
807
4,442
$ 19,130
1 Includes minimum lease commitments for low-value assets not recognized under IFRS 16.
Information technology and other service agreements
The Company has a service agreement related to information technology with Information Systems Management Canada
Corporation, including lease commitments for computer equipment where the Company has taken the exemption for low-value
assets. Other service agreements relate to service contracts associated with corporate and shared services infrastructure.
Master Service Agreement
Pursuant to the MSA with the Government of Saskatchewan dated May 30, 2013, the Company was appointed, on an exclusive
basis, to manage and operate the Saskatchewan Land Titles Registry, Saskatchewan Land Surveys Directory, Saskatchewan
Personal Property Registry and Saskatchewan Corporate Registry on behalf of the Government of Saskatchewan for a 20-year term
expiring on May 30, 2033. The MSA was amended, effective December 1, 2015, appointing ISC to continue to manage and operate
the Common Business Identifier Program and the Business Registration Saskatchewan Program for the same term as the MSA. The
MSA requires the Company to pay to the Government of Saskatchewan the sum of $0.5 million annually, in a single instalment
payable on or before March 1, in each calendar year of the term.
Non-lease component of office leases
The Company leases all of its office space and certain office equipment. The office spaces have lease terms of between two and
10 years, with various options to extend. The office equipment leases relate to photocopiers and have lease terms of three years.
The Company does not have an option to purchase the leased assets at the expiry of the lease period.
The Company separates the lease and non-lease components of office space, accounting for the lease payment commitments in
Note 15.
Contingencies
Management’s estimate of liability for claims and legal actions that may be made by customers pursuant to the assurance
provision and the MSA is based upon claims submitted. As at December 31, 2021, the liability was nil (December 31, 2020 — nil).
At times, in the normal course of operations, the Company will enter into an indemnity agreement with a surety company to
provide a surety bond required under a contract with a customer. As at December 31, 2021, the aggregate amount outstanding of
the surety bond total was nil (December 31, 2020 — nil).
29 Pension Expense
The total pension costs under the Company’s defined contribution plans for the year were $1.9 million (2020 — $1.8 million).
98
2021 ISC® Annual Report | Notes to the Consolidated Financial Statements For the Fourth Quarter and Year Ended December 31, 2021
30 Subsequent Events
On February 15, 2022, the Company announced that its Services segment, through its wholly-owned subsidiary ESC, acquired all
of the shares of a group of companies operating as UPLevel. The purchase consideration is $9.0 million, subject to working capital
and other post-closing adjustments set out in the share purchase agreement. Given the timing of the transaction and the post-
closing adjustments, the final purchase price allocation is not yet determinable. Professional fees associated with the cost of the
acquisition expensed during the year were $0.1 million.
On March 15, 2022, the Board declared a quarterly cash dividend of $0.23 per Class A Share, payable on or before April 15, 2022, to
shareholders of record as of March 31, 2022.
99
For the Fourth Quarter and Year Ended December 31, 2021 Notes to the Consolidated Financial Statements | 2021 ISC® Annual Report
Board of Directors
Joel Teal
Saskatoon, Saskatchewan
Director since: 2013
Chair of the Board of Directors
Roger Brandvold
Calgary, Alberta
Director since: 2021
Member of the Audit Committee
Tom Christiansen
Swift Current, Saskatchewan
Director since: 2009
Member of the Compensation Committee
Doug Emsley
Regina, Saskatchewan
Director since: 2013
Chair of the Compensation Committee
Tony Guglielmin
Vancouver, British Columbia
Director since: 2013
Chair of the Audit Committee
ISC Leadership
Iraj Pourian
Vancouver, British Columbia
Director since: 2016
Member of the Governance and Nominating Committee
Laurie Powers
Kelowna, British Columbia
Director since: 2018
Member of the Audit Committee
Jim Roche
Ottawa, Ontario
Director since: 2021
Member of the Compensation Committee
Heather Ross
Toronto, Ontario
Director since: 2018
Member of the Governance and Nominating Committee
Dion E. Tchorzewski
Regina, Saskatchewan
Director since: 2013
Chair of the Governance and Nominating Committee
Shawn B. Peters, CPA, CA, ICD.D
President and Chief Executive Officer
Laurel Garven
Vice-President, Corporate Development and Business Strategy
Robert (Bob) Antochow, CPA, CA, CMA
Kathy E. Hillman-Weir, Q.C.
Chief Financial Officer
Ken Budzak
Executive Vice-President, Registry Operations
Loren Cisyk
Executive Vice-President, Technology Solutions
Executive Vice-President, Chief Corporate Officer, General
Counsel and Corporate Secretary
Catherine McLean
Vice-President, People and Culture
Clare Colledge
President, ESC Corporate Services Ltd.
More information on our directors and officers can be found in our most recent Annual Information Form or Management Information Circular,
which are available on our website at www.company.isc.ca, or through the System for Electronic Document Analysis and Retrieval (SEDAR) at
www.sedar.com.
100100 2021 ISC® Annual Report
Corporate Information
Head Office
Suite 300 – 10 Research Drive
Regina, Saskatchewan S4S 7J7 Canada
Stock Exchange Listing and Symbol
Toronto Stock Exchange: ISV
Share Capital
Authorized – the Company’s authorized share capital consists
of an unlimited number of Class A Limited Voting Shares
(“Class A Shares”), one Class B Golden Share (“Golden Share”)
and an unlimited number of Preferred Shares.
Class A Limited Voting Shares
Issued and outstanding – 17,500,000 Class A Shares as at
December 31, 2021.
The Company’s articles and the ISC Act limit ownership of
Class A Shares, including joint ownership to no more than
15.0 per cent of the Class A Shares issued and outstanding.
Class B Golden Share
Issued and outstanding – 1 Class B Golden Share as at
December 31, 2021.
The Golden Share held by the Government of Saskatchewan
has certain voting rights with respect to the location of the
head office and the sale of all or substantially all of the assets
of the Company.
The Golden Share has no pre-emptive, redemption, purchase
or conversion rights and is not eligible to receive dividends
declared by the Company.
Preferred Shares
Issued and outstanding – nil as at December 31, 2021.
Preferred Shares are issuable at any time and may include
voting rights.
Ownership
As of March 15, 2022, the Board and management are not
aware of any shareholder who directly or indirectly owns or
exercises, or directs control over, more than 10.0 per cent of
our Class A Shares, other than:
a)
b)
CIC, which holds 5,425,000 Class A Shares representing
31.0 per cent of the issued and outstanding Class A Shares;
QV Investors Inc., which holds 2,290,736 representing
13.1 per cent of the issued and outstanding Class A Shares;
and
c)
CI Investments Inc., which holds 1,939,970 representing
11.2 per cent of the issued and outstanding Class A shares.
Auditor
Deloitte LLP
Suite 900 – 2103 11th Avenue
Regina, Saskatchewan S4P 3Z8 Canada
Transfer Agent
TSX Trust Company
For inquiries related to shares, dividends, changes of address:
Toll-free inside North America: 1-800-387-0825
www.tsxtrust.com
shareholderinquiries@tmx.com
Regulatory Filings
The Company’s filings are available through the System
for Electronic Document Analysis and Retrieval (SEDAR) at
www.sedar.com
Investor Contact Information
Jonathan Hackshaw
Senior Director, Investor Relations & Capital Markets
Toll-free in North America: 1-855-341-8363
Outside North America: 1-306-798-1137
investor.relations@isc.ca
2021 ISC® Annual Report
101101
Dividends on Class A Shares
Our objective is to achieve dividend growth over time while balancing our strategic business priorities.
The payment of dividends is not guaranteed and the amount and timing of any dividends payable by the Company will be at
the discretion of the Board and will be established based on our cash available for distribution, our financial requirements, any
restrictions imposed by our credit facilities, the requirements of any future financings and other factors existing at the time. The
table below shows annual dividends per Class A Share that have been declared by the Board for the last three years:
Year
2021
2021
2021
2021
2020
2020
2020
2020
2019
2019
2019
2019
Type
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Ex-Dividend Date
Dec 30, 2021
Sep 28, 2021
Jun 29, 2021
Mar 30, 2021
Dec 30, 2020
Sep 29, 2020
Jun 29, 2020
Mar 30, 2020
Dec 30, 2019
Sep 27, 2019
Jun 27, 2019
Mar 28, 2019
Record Date
Dec 31, 2021
Sept 30, 2021
Jun 30, 2021
Mar 31, 2021
Dec 31, 2020
Sept 30, 2020
Jun 30, 2020
Mar 31, 2020
Dec 31, 2019
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Payable Date
Amount
Jan 15, 2022
Oct 15, 2021
Jul 15, 2021
Apr 15, 2021
Jan 15, 2021
Oct 15, 2020
Jul 15, 2020
Apr 15, 2020
Jan 15, 2020
Oct 15, 2019
July 15, 2019
Apr 15, 2019
$0.23
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
Dividends are eligible dividends pursuant to the Income Tax Act (Canada) as amended. An eligible dividend paid to a Canadian
resident is entitled to the enhanced dividend tax credit. For further information on tax implications, please consult a tax advisor.
Non-IFRS Financial Measures
This report also includes certain measures, which have not been prepared in accordance with International Financial Reporting
Standards (“IFRS”), such as EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow. Rather, these
measures are provided as additional information to complement those IFRS measures. Refer to section 8.8 “Non-IFRS financial
measures” in ISC’s Management’s Discussion and Analysis for the fourth quarter and year ended December 31, 2021 (“MD&A”),
included herein and filed on SEDAR at www.sedar.com, for discussion of why we use these measures and their most closely
related IFRS measures within the Financial Statements. Refer to section 2 “Consolidated Financial Analysis” of the MD&A for a
reconciliation of EBITDA and adjusted EBITDA to net income and section 6.1 “Cash flow” of the MD&A for a reconciliation of
free cash flow.
102
2021 ISC® Annual Report
Cautionary Note Regarding Forward-Looking Information
This report contains forward-looking information within the meaning of applicable Canadian securities legislation including,
without limitation, statements related to the industries in which we operate, growth opportunities and our future financial
position and results, including expected revenue, EBITDA margin and EBITDA. Forward-looking information involves known and
unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed
or implied by such forward-looking information. Important factors that could cause actual results to differ materially from the
Company’s plans or expectations include risks relating to changes in the condition of the economy, including those arising from
public health concerns, reliance on key customers and licences, dependence on key projects and clients, securing new business
and fixed-price contracts, identification of viable growth opportunities, implementation of our growth strategy, competition and
other risks detailed from time to time in the filings made by the Company, including those detailed in ISC’s Annual Information
Form for the year ended December 31, 2021, and ISC’s audited Consolidated Financial Statements and Notes and Management’s
Discussion and Analysis for the fourth quarter and year ended December 31, 2021, included herein, copies of which are filed on
SEDAR at www.sedar.com. The forward-looking information in this report is made as of the date hereof and, except as required
under applicable securities laws, ISC assumes no obligation to update or revise such information to reflect new events or circumstances.
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company.isc.ca
TSX:ISV
Information Services Corporation
300 - 10 Research Drive
Regina, Saskatchewan S4S 7J7 Canada
1 (306) 787-8179