Our Mission
and Purpose
LOGISTEC’s strategy towards 2023 is guided by our mission
and purpose: We pride ourselves on building and sharing our
expertise in order to contribute to the success of our
customers and our communities. Our people are dedicated
to finding solutions that support reliable supply chains and
protect our environment and our water resources.
IT STARTS WITH
OUR PURPOSE.
Words from our
President and CEO
The LOGISTEC family is today unified under
one strong brand, all working towards the same
purpose, which is anchored by our shared
values. At the core of LOGISTEC’s success is our
people’s pride, ingenuity, resourcefulness and,
most of all, trusted expertise. The result: a
diverse
and
agile
team where
great
achievements come from true collaboration,
empowerment,
integrity, and accountability
towards each other, our customers, and our
communities.
Through our relentless drive to always go
beyond, our people go the extra mile to make
great things happen, enabling us to seize new
opportunities for our customers and our
communities.
A clear purpose, common goals and a well-
defined strategic plan guide us all in this new
decade ahead.
MADELEINE PAQUIN
PRESIDENT AND CEO
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2019 ANNUAL REPORT | LOGISTEC
Our Financial Results in 2019
RESULTS FUELED BY PASSION
We are pleased to report that 2019 was definitely a
comeback year for the LOGISTEC family. This is a
testament to the expertise of our leaders in the field, and
our unwavering passion and determination to strive to
continuously push boundaries and seek new ways to
improve our operations. Our focus in 2019 was to return
to an upward momentum of growth and more
importantly, profitability. This starts with adopting the
right strategy in each of our businesses and, even more
important, ensuring we have the right leaders in the right
places.
Highlights for the year include revenue of $639.9 million,
$55.1 million or 9.4% more than in 2018. The overall
consolidated profitability considerably improved in 2019
with profit before income taxes reaching $35.1 million, a
$13.8 million or 64.9% improvement over 2018. This
translates into a profit for the year attributable to owners
of the Company of $26.2 million and diluted earnings per
share (“EPS”) of $2.00, bolstered up over the 2018 EPS
level of $1.38. Adjusted EBITDA (1) reached a new record,
closing at $89.6 million (2), up 39.6% versus $64.2 million
the previous year.
Overall, the marine services segment performed well
when compared to its 2018 results, with a positive
upswing of $44.5 million or 13.1% to $385.3 million in
revenue, not including our joint ventures, TERMONT
Montréal Inc. (“TERMONT”) and Transport Nanuk Inc.
The environmental services segment, despite a slow start
and some challenges during the year, rallied and delivered
a solid fourth quarter, allowing them to close the year
with revenue of $254.6 million, up 4.3% as compared to
2018.
(1) Adjusted EBITDA is a non-IFRS measure, please refer to the non-
IFRS measure section on page 27.
(2) The 2019 figures reflect the application of IFRS 16 Leases
(“IFRS 16”) which had a favourable impact of $13.7 million on the
adjusted EBITDA and for which the comparative figures have not
been restated. Please refer to Notes 2 and 16 of the notes to 2019.
consolidated financial statements for further details.
The profitability of both marine and environmental
services
improved, and we are pleased to show
significantly better results for FER-PAL Construction
Ltd. (“FER-PAL”), whose results were very disappointing
in 2018.
“We are pleased that the
LOGISTEC family rallied and
delivered a solid financial
performance in 2019.”
Jean-Claude Dugas, CPA, CA
CHIEF FINANCIAL OFFICER
LOGISTEC | 2019 ANNUAL REPORT
5
MARINE SERVICES
Despite continuous market uncertainty and volatility,
customers still rely on their products being shipped and
carried across the globe every day. With this industry so
crucial to global trade, LOGISTEC works very closely with
shippers and carriers, and leverages its network of
terminals to support their specific needs across North
America.
The diversity of cargo types we handled and our extensive
geographic network helped the performance of our cargo-
handling activities. Despite a marked slowdown in the
volume of steel products flowing through various
terminals in our network, and this stemming largely from
trade tariffs and sanctions, we were pleased to see
increased bulk and wind cargo. Project cargo volumes
improved over last year, and more than made up for the
reduced activity in Montréal (QC) related to the build-out
of the Samuel De Champlain Bridge. We also saw
increased activity from our new break-bulk terminal in
Cleveland (OH) as well as overall bulk activity in the
St. Lawrence Seaway. Other terminals also showed ups
and downs, but overall, volumes increased as did results for
our break-bulk and bulk terminals.
Our port logistics business also performed well. These are
composed of three facilities located in Québec and
Virginia, which provide
logistics services such as
transloading of cargoes into containers from/to rail/truck,
and local drayage to port terminals.
Our joint venture container terminals in Montréal did well,
albeit volumes remained flat. Unfortunately, additional
costs were absorbed from the extension of our Viau
terminal, as we get ready for increased capacity. Phase 2 of
our Viau container terminal entails investments of some
$35.0 million, which are being made by all TERMONT
partners, and will add some 250,000 twenty-foot
equivalent unit’s (“TEUs”) of capacity to our container
terminals on the island of Montréal. This will bring our total
capacity to 1.1 million TEUs, or slightly over 50% of the
port’s total capacity. As volumes continue to grow at the
port, we are in discussions with the Montréal Port
Authority
to
develop
further
capacity
at
Contrecoeur (QC).
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2019 ANNUAL REPORT | LOGISTEC
A COMPELLING VISION
FOR OUR CUSTOMERS
“Recognized for our people’s
trusted expertise, we aim to be the
go-to terminal partner, with unique
technology to create
comprehensive solutions for our
customers.”
Rodney Corrigan
PRESIDENT, LOGISTEC STEVEDORING
We are pleased with the results of acquisitions made in
2018. The integration of Gulf Stream Marine, Inc. and Pate
Stevedore Company, Inc. proceeds into a last phase, as we
believe we can continue to strengthen our services through
the integration of our information and cargo-tracking
systems
throughout our network. These strategic
acquisitions further enable us to provide our talent with
more
development
opportunities,
foster
greater
collaboration and leverage best practices and tools, which
in turn improves our service offering to our customers and
our ability to respond to their specific needs.
COASTAL SHIPPING
Our arctic marine transportation business, which operates
as a joint venture with our partners The North West
Company and Makivik Corporation, carried record volumes
in 2019. This was led by the renewal of our contract with
the Government of Nunavut and resulted in 17 voyages
with 107 stops to over 40 communities and mines. The
weather conditions were stable and navigation was quite
fluid, with no major incidents.
“We strongly believe that our
business diversification will be
a key enabler of our ongoing
growth over the next decade.”
Carl Delisle, CPA, CA
VICE-PRESIDENT
CORPORATE CONTROLLER
LOGISTEC | 2019 ANNUAL REPORT
7
ENVIRONMENTAL SERVICES
For more than 30 years, SANEXEN Environmental
Services
Inc.
(“SANEXEN”) has been providing
municipalities and industries with soil management and
environmental assessments as well as customized and
efficient solutions to complex environmental problems.
Our team of engineers, scientists, and project managers
are adept at transforming spent resources that have
traditionally been discarded, into valuable resources –
helping to solve their customers’ most difficult
problems and contributing
to
the
sustainable
development of communities and industries.
The financial performance of our environmental
business improved considerably in 2019 with profit
before income taxes of $9.8 million on revenue of
$254.6 million. This improvement was primarily led by
sustainable improvements in FER-PAL, as well as strong
activity
in our traditional environmental services,
namely site remediation and management of soils and
materials. This is in part due to Montréal’s continued
strong economy
in
real estate and
industrial
development. We also realized a number of projects of
varying sizes and complexities in other communities
across Canada. These projects have allowed us to
continue to build on and implement our technical
capabilities and demonstrate to our customers our
ability to execute large complex projects.
Unfortunately, this strong activity was negatively
affected by reduced rehabilitation contracts
in
Montréal and lower-than-expected revenue coming
from our woven hose manufacturing business. The
latter was affected by lower sales of firehoses, due to
fewer fires in Western North America as compared to
previous years.
We are pleased with the continued improvement of
FER-PAL and are very focused on continuing to invest in
improving our operation through the implementation of
best practices and project management tools. We are
optimistic that the business will continue to evolve over
the coming years.
A COMPELLING VISION
FOR OUR CUSTOMERS
“At the heart of LOGISTEC
Environmental is the unparalleled
energy and creativity necessary
to develop truly innovative and
tailored solutions for our
customers. Our capacity to
leverage these competencies and
to bring them to market is key to
growing.”
Kevin Bourbonnais
PRESIDENT, LOGISTEC ENVIRONMENTAL
AND SANEXEN
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2019 ANNUAL REPORT | LOGISTEC
CELEBRATING 10 MILLION TONNES OF
HIGH-QUALITY IRON ORE SHIPPED AT THE PORT
OF SEPT-ÎLES (QC)
PARK IN CONTRECOEUR (QC),
Leading Safety Together
Safety and security are paramount to the LOGISTEC
family. Our ambition is clear: all our people and partners
must return home safely at the end of each day. As our
most precious asset, our people are encouraged to
make safety their mission every day and strive to find
innovative ways to instill a safe mindset in everything
we do. In the last year, we have strengthened our safety
team and
implemented a comprehensive safety
management system across our network of terminals.
We are also pleased that,
in 2019, total OSHA
recordable incidents were down when compared to
2018. For 2020 onwards, our leaders in the field will
continue to elevate safety to the next level and we will
recognize those who go above and beyond in the drive
for safety excellence.
The LOGISTEC family in our
communities
MULTIPLE SCLEROSIS
LUNCHEON GALA
From day one, the LOGISTEC family has encouraged all
of our teams to make a meaningful contribution to the
social and economic progress of our communities by
getting involved at the local level, by suggesting how to
make things better, and by inspiring innovation. In
2019, we offered our support to organizations active in
communities where our people work through our
program The LOGISTEC Family in Our Communities.
We are happy to back the efforts of our team members
who volunteer their time to various causes related to
social solidarity and mutual assistance. In addition, we
launched the Partners
in Planting
initiative,
in
conjunction with Tree Canada, to introduce more trees
into our communities in a sustainable, environmentally
friendly way.
THE GRAND DÉFI PIERRE LAVOIE
LOGISTEC | 2019 ANNUAL REPORT
9
Driving Innovation for a
Sustainable Future
When we are recognized by experts in the industry for our
innovative approach and for going above and beyond in
what we do, it strongly confirms that we are on the right
path as a leader in marine and environmental services. We
are driven to do even better and push even harder, whether
it
is for an award-winning enviro-project with our
customers and partners, or for being the first in the world
to address important sustainability challenges at ports and
terminals, or for pushing our products almost to the
breaking point to find ways to protect communities around
the world in case of earthquakes, floods and other extreme
weather events. We are continuously looking for ways to
improve the lives of our communities and protect our
environment through our passion, hard work, solid
collaboration, and research and development. We are
pleased to present a selection of honours conferred on
some of our major projects last year.
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2019 ANNUAL REPORT | LOGISTEC
TRACES QUÉBEC PROJECT WINNING AN
ENVIROLYS AWARD
In November 2019, SANEXEN and Avatek Immobilier, along with
Traces Québec, were honoured with the “Innovation et protection
de l’environnement – Projet” Award at the 10th Edition of
innovative project focused on the
ENVIROLYS for their
traceability of residual materials in Québec, a first in the industry.
Turning a landfill into safe and usable land, and tracking each piece
of residual material (construction, renovation and demolition) to
ensure proper disposal or recycling.
“We are proud to have led this
important project. Waste from
materials recovery facilities,
including screened debris, are
complicated types of waste for
which there are few solutions
today. Our team of scientists have
been working on the responsible
management of such waste for
several years. We have developed
advanced knowledge with our
partners allowing us to optimize
management of such waste
and make a difference for our
communities.”
Eric Sauvageau
EXECUTIVE VICE-PRESIDENT, SANEXEN
LOGISTEC | 2019 ANNUAL REPORT
11
SANEXEN AND AVATEK IMMOBILIER
HYBRID FLEET WITH
EFFENCO TECHNOLOGY
Our TERMONT joint venture was recognized in
September 2019 as the first port operator in the world
to use a fully hybrid vehicle fleet. Leveraging
government funding and a collaboration with Effenco,
who converted 57 terminal tractors into diesel-
electric hybrid vehicles equipped with automatic stop-
start technology, we are thereby significantly reducing
green-house gas emissions at our terminals in the Port
of Montréal.
“Thanks to our innovative mindset
and perseverance, our team will have
new equipment to ensure better
management of our environmental
footprint. And that’s just the
beginning. Electrification is a key
project of the future for TERMONT
and our industry.”
Julien Dubreuil
GENERAL MANAGER
TERMONT MONTRÉAL
TERMONT TEAM WITH FRANÇOIS BONNARDEL,
QUÉBEC MINISTER OF TRANSPORT
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2019 ANNUAL REPORT | LOGISTEC
SANEXEN PETROMONT PROJECT, VARENNES (QC)
“Our people are perfectionists.
Resilient. Relentless. Always
ready to go beyond and
challenge the status quo.
Continuously pushing the
boundaries to find new
creative solutions. Whether
they work at our corporate
office, a port terminal, or on a
remediation site, their role at
LOGISTEC will always be
challenging and they
continuously find a way to rise
to the occasion.”
Madeleine Paquin, C.M.
PRESIDENT AND CEO
WINNER OF THE BROWNIE AWARD
The SANEXEN team was recognized at the 2019 Canadian
Brownfields Network’s Brownie Awards as great innovators and
visionaries
in the Sustainable Remediation & Technological
Innovation category, dedicated
to
the rehabilitation of
contaminated land across Canada. SANEXEN demonstrated
leadership and innovation in environmental soil remediation,
promoted solutions that avoided broader environmental impact
and
incorporated ecological principles and cost-effective
technologies in their brownfield projects.
LOGISTEC | 2019 ANNUAL REPORT
13
A LEADER IN RESILIENCE
Aqua-Pipe, SANEXEN’s unique seamless structural
technology, was recognized as an industry-changing
product to protect water infrastructure in the case of
extreme seismic activity and flooding events following
two in-depth tests performed at Cornell University’s
Geotechnical Lifelines Large-Scale Testing Facility in
Ithaca (NY) last December. SANEXEN’s Innovation team
partnered with Cornell’s Lifelines group to advance its
unique seamless structural water technology through
funding
provided
by
Sustainable Development
Technology Canada and Transition énergétique Québec.
With water, utility and environmental engineers from
major cities in the USA present for the testing, Aqua-Pipe
was subjected to real-scale simulated extreme seismic
activity to test the resilience of the product in case of
earthquakes or floods, and the results far surpassed
expectations. Aqua-Pipe maintained its integrity and did
not rupture, protecting water flowing through it, and
demonstrating its superior functionality for protecting
lifelines beyond water such as liquid and gas fuel conduits.
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2019 ANNUAL REPORT | LOGISTEC
CORNELL’S ENGINEERING TEAM AND
SANEXEN AT CORNELL UNIVERSITY
“These exceptional results far
exceed what we had expected
for Aqua-Pipe resilience
through this testing and, most
importantly, communities and
cities now have a clear and
proven solution that can protect
and secure their underground
infrastructure with certainty
for everyday use and in cases of
extreme seismic activity.”
Benoît Côté
PRESIDENT, SANEXEN WATER
Ready for 2020
and beyond
Last November, our leadership team presented the
has required that we anticipate our customers’ future
ACTION2023 Strategic Plan to our Board of Directors,
challenges and deliver creative solutions that bring value
which outlined how we will be expanding our horizons to
not only today, but more importantly for tomorrow. We
become the partner of choice for safe, sustainable and
have and are developing technologies to address many of
creative solutions in the marine and environmental
these challenges. In our suite of water technologies, we
services segments. This exercise drove home the
can rehabilitate aqueducts with minimal excavation, and
profound sense of pride that unites us all, not only with
with our next generation of Aqua-Pipe, we further
regard to our purpose and our values, but also through
differentiate ourselves by safeguarding water resources
our shared objectives.
We have and continue to benefit from our diversity of
services offered, of customers we serve, and of our
geographic network. This solid platform of services which
focuses on customer needs is the base on which we will
continue to grow.
In cargo handling, we will continue to expand our network
of terminals and services, while maximizing cargo
volumes in each facility. Through market intelligence, we
always seek to position our services in line with the
growth of imports and exports. Our growth will come
from both organic and acquisition opportunities.
We also have ambitious plans for our environmental
business. The rapid pace of development in urbanization,
demographic shifts, climate changes and technology
in seismic and flood zones. We have also been pro-active
to develop technologies for the removal of lead in
drinking water, a challenge for many large municipalities
today. Furthermore, we are developing technologies to
deal with per- and polyfluoroalkyl substances (“PFAS”)
and other emerging contaminants.
Our business development team is being strengthened to
ensure increased penetration in not only the Canadian
market, but also in the USA. We are also confident that
our subsidiary FER-PAL is also well-positioned to grow in
its markets, particularly Ontario, Western Canada and
the U.S. Midwest.
In the end, with our new strategic plan, we are not
breaking with our past commitments; we are simply
kickstarting these efforts with renewed impetus and
engaging new stakeholders to make them happen.
LOGISTEC | 2019 ANNUAL REPORT
15
Powered by Talent
To accomplish this vision, our team will continue to focus
on providing our people with a healthy, sound and agile
work environment in which they can go above and
beyond.
It’s also about great leadership. Leaders are people who
make things happen. The most talented people aspire to
work for passionate leaders that guide them with a clear
purpose, and where they have the opportunity to work on
the most captivating projects and learn from the best.
Our 3,000 trusted experts are primed to blaze new trails
and make great things happen. They are steadfast in their
determination to grow our organization profitably.
I would like to take this opportunity to thank them for
their unwavering passion and commitment. I recognize
that their role is essential to realizing our vision and to
continue to grow earnings sustainably. I look forward to
working with them to pursue this journey together.
(signed) Madeleine Paquin
Madeleine Paquin, C.M.
President and CEO, LOGISTEC
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2019 ANNUAL REPORT | LOGISTEC
“I am proud to lead this family. We have a great
opportunity to contribute. With our people’s
ingenuity and trusted expertise, we can be a
catalyst for a new path. We will work closely with
our communities for a more sustainable future.
The LOGISTEC family is definitely ready for this
new decade!”
— MADELEINE PAQUIN
LOGISTEC | 2019 ANNUAL REPORT
17
Financial
Highlights
SOLID TRACK RECORD
$639.9M
IN REVENUE
78.8%
INCREASE FROM 2015’s $358M
$89.6M
ADJUSTED EBITDA (1)
$26.2M
PROFIT ATTRIBUTABLE TO OWNERS OF
THE COMPANY
45.0%
INCREASE OVER LAST YEAR’S $18M
(1) Adjusted EBITDA is a non-IFRS measure, please refer to the non- IFRS measure section on page 27.
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2019 ANNUAL REPORT | LOGISTEC
M A R INE S E RV IC ES
ENV I RO NM EN TAL
S ERV IC ES
WATER TEC HN OLOGY
S ERV IC ES
LOGISTEC | 2019 ANNUAL REPORT
19
22 0 19 F IN AN CIAL HIGHLIGHTS
(in thousands of dollars, except where
indicated)
2019 (5)
2018
2017
2016
2015
Variation
19-18
%
Variation
19-15
%
9.4
39.6
45.0
15.3
19.4
8.9
6.9
78.8
59.1
(10.1)
123.7
36.6
454.6
48.0
Financial Results
Revenue
Adjusted EBITDA (1) (6)
Profit for the year (2)
Financial Position
Total assets
Working capital
639,942
584,878
475,743
343,326
358,008
89,611
64,177
74,741
42,034
56,321
26,194
18,060
27,426
18,858
29,142
734,738
637,103
513,539
355,860
328,415
97,996
82,099
70,196
75,745
71,717
Long-term debt (including the
current portion)
177,900
163,297
83,404
60,325
32,079
Equity (2)
280,371
262,198
228,574
201,383
189,413
Per Share Information (3)
Profit for the year (2) ($)
Equity (2) ($)
Outstanding shares, diluted
(weighted average in thousands)
Share price as at December 31
2.00
1.38
2.11
1.48
2.34
21.40
19.96
17.56
15.77
15.20
13,103
13,135
13,016
12,768
12,458
Class A Common Shares ($)
39.60
40.86
44.04
38.00
44.01
Class B Subordinate Voting
Shares ($)
Dividends declared per share
40.00
43.27
44.75
35.10
38.00
Class A Common Shares ($)
0.3685
0.3465
0.3150
0.3000
0.2750
Class B Subordinate Voting
Shares ($)
Financial Ratios
0.4054
0.3812
0.3465
0.3300
0.3025
Return on average equity (2)
9.66%
7.36%
12.76%
9.65%
16.52%
Profit for the year (2)/ revenue
4.09%
3.09%
5.76%
5.49%
8.14%
Net indebtedness/capitalization (4)
36%
38%
28%
18%
4%
Price/earnings ratio (Class B
Subordinate Voting Shares)
20.00
31.36
21.24
23.76
16.24
(1) Adjusted EBITDA is a non-IFRS measure, please refer to the non-IFRS measure section on page 27.
(2) Attributable to owners of the Company.
(3) For earnings per share per class of share, please refer to the selected quarterly information table on page 41
(4) Net indebtedness and capitalization are non-IFRS measures, please refer to the liquidity and capital resources section on page 32.
(5) The 2019 figures reflect the application of IFRS 16 Leases (“IFRS 16”) which the comparative figures have not been restated. Please
refer to Notes 2 and 16 of the notes to 2019 consolidated financial statements for further details.
(6) The application of IFRS 16 had a favourable impact of $13.7 million on the adjusted EBITDA of 2019.
20
2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Introduction
This management’s discussion and analysis (“MD&A”) of operating results deals with LOGISTEC
Corporation’s operations, results and financial position for the fiscal years ended December 31, 2019 and
2018. All financial information contained in this MD&A and the attached audited consolidated financial
statements (“financial statements”) has been prepared in accordance with International Financial
Reporting Standards (“IFRS”).
In this report, unless indicated otherwise, all dollar amounts are expressed in Canadian dollars. This
MD&A should be read in conjunction with LOGISTEC’s financial statements and the notes (“2019 Notes”)
thereon.
Our Business
The Company is incorporated in the Province of Québec and its shares are listed on the Toronto Stock
Exchange (“TSX”) under the ticker symbols LGT.A and LGT.B. The Company’s largest shareholder is
Sumanic Investments Inc.
The operations of LOGISTEC Corporation, its subsidiaries and its joint ventures (collectively
“LOGISTEC”, the “Company”, “we”, “us”, or “our”) are divided into two segments: marine services and
environmental services.
Marine Services
LOGISTEC provides specialized cargo handling and other services to a wide variety of marine and
industrial customers. The Company is one of Canada’s largest cargo handling companies and a growing
player in the USA. Our services also include marine transportation and marine agency services.
C A RG O H A ND LI N G
With a presence in 34 ports and 60 terminals across North America, our Company specializes in handling
all types of dry cargo, including bulk, break-bulk and containers. Cargoes handled typically consist of
forest products, metals, dry bulk, fruit, grain and bagged cargoes, containers, general and project cargoes.
We also offer container stuffing and destuffing, warehousing and distribution, and other value-added
services to industrial customers.
Our strategy is focused on diversifying our operations to respond to our customers' needs and cover a
wide geographical area with a broad cargo mix and a blend of import-export activities. This helps minimize
the impact of market disruptions affecting any one particular region or cargo type.
Our extended network of port terminals allows us to specialize our facilities and thereby tailor our
services to our customers’ specific cargo handling needs. This improves the quality of services, enhances
operating efficiencies, lowers the risk of cargo damage, and ensures greater control over costs. In general,
this strategy enables us to provide our customers with top-quality cost-competitive services.
We aim to be the go-to terminal partner with unique technology to create comprehensive solutions and
value-added port services.
LOGISTEC | 2019 ANNUAL REPORT
21
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
O TH ER M A RI N E S E R VI C ES
Our other marine services include coastal transportation of cargoes to communities in the Canadian
Arctic through our 50%-owned joint venture Transport Nanuk Inc. (“Nanuk”). Nanuk owns a 50% interest
in NEAS Group Inc. (“NEAS”), in partnership with an Inuit shareholder. NEAS owns five ice-class vessels
and performed 17 voyages to the Arctic in 2019. We served over 40 communities in Nunavut and
Nunavik. Nanuk’s results are included in the Company’s results using the equity method of accounting.
We also offer marine agency services to foreign shipowners and operators active in Canadian waters. A
shipping agent is the local representative of a foreign shipping company and will usually take care of all
routine matters on its behalf. The agency will ensure a berth for the incoming ship, obtain services from
pilots and organize the necessary contacts with the stevedores. The agent also ensures that essential
supplies, crew transfer, customs documentation and waste declarations are all arranged with port
authorities.
Environmental Services
The Company, through its subsidiaries SANEXEN Environmental Services Inc. (“SANEXEN”) and FER-
PAL Construction Ltd. (“FER-PAL”), operates in the environmental sector. We deliver creative and
customized solutions to industrial, municipal and governmental clients and partners. SANEXEN’s expert
environmental engineers and scientists, combined with its in-house research and development teams,
utilizes, amongst others, innovative water technologies and offers key environmental services such as the
rehabilitation of underground water mains, site remediation, soils and materials management, risk
assessment, and manufacturing of woven hoses.
A Q UA -P IPE
SANEXEN has developed the Aqua-Pipe technology, a process involving structural lining with minimal
excavation, for the rehabilitation of drinking water supply lines between 150 millimetres and
600 millimetres in diameter. Aqua-Pipe is a technology which creates a new structural pipe made of
composite materials within aging pipes that have reached the end of their useful life.
SANEXEN owns Niedner Inc. (“Niedner”), a manufacturer of woven hoses. Through Niedner, SANEXEN
manufactures the structural lining used in the Aqua-Pipe process as well as woven hoses destined for the
fire-fighting market and the energy industry. Niedner also produces the resin that is part of the Aqua-Pipe
installation process.
SANEXEN either performs the installation of Aqua-Pipe itself or licenses the technology to certified field
installers. Developing, manufacturing and installing the product gives SANEXEN a competitive advantage
as it allows us to better understand all aspects of the product and its installation, and enables us to
continue to improve the product and better assist our licensees. FER-PAL is a certified field installer of
the Aqua-Pipe technology. Our U.S. operations are handled through SANEXEN Water, Inc., with two
offices, one near Philadelphia (PA) and the other in the vicinity of Los Angeles (CA), and through FER-PAL
Construction USA, LLC, with offices near Chicago (IL) and Detroit (MI). Using this technology,
approximately 2,000 kilometres of water mains have been rehabilitated to date, directly or via licensees.
SANEXEN received $1.0 million from Sustainable Development Technology Canada in 2018 and
directed the funding to test the resiliency of the next generation of our technology under extreme
environmental conditions. In December 2019, SANEXEN confirmed that its trenchless structural cured
in-place pipe technology was capable of withstanding extreme seismic and flooding conditions following
tests performed at Cornell University in a large-scale lifelines testing facility.
22
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22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
O TH ER E N VI RO N M E N TA L S E R VI CES
The Company provides services for the characterization and remediation of sites as well as for risk
assessment and for soils and materials management and has carried out hundreds of projects involving a
wide spectrum of decontamination issues. It offers turnkey solutions for the assessment of properties
(phases I and II) and the clean-up of soils, groundwater, buildings, lagoons and underground tanks.
SANEXEN also analyzes and evaluates the human and environmental risks associated with contamination
issues.
Mission and Development Strategy
LOGISTEC’s strategy towards 2023 is guided by our mission and purpose: we pride ourselves on building
and sharing our expertise in order to contribute to the success of our customers and our communities.
Our people are dedicated to finding solutions that support reliable supply chains and protect our
environment and our water resources.
In cargo handling, LOGISTEC is an innovative, solutions-based service provider in North America. We
provide cargo handling, port logistics and other value-added services to industrial companies and carriers.
Our growth strategy is based on organic growth and business combinations. We aim to maximize cargo
handled through our existing network of terminals while also diversifying our cargo base, where
appropriate, to avoid overexposure to any specific commodity or product. Management is always seeking
new business opportunities, and potential investment projects are regularly analyzed. Such opportunities
may include the acquisition of other operators, the addition of port facilities, outsourcing and providing
turnkey solutions or value-added solutions for existing or new customers. We apply very strict evaluation
criteria from both a financial and a strategic fit perspective to all our projects. Indeed, prior to proceeding
with an acquisition, we make sure that the investment is accretive, that it provides the proper return from
future sustainable cash flows and, if financing is needed, that our financial position continues to present
an acceptable debt level and debt/capitalization ratio. We are striving to expand our geographical
presence while maintaining a balanced portfolio of commodities or products handled. A potential business
combination is pursued only if it will contribute to maximizing shareholder value. Furthermore, the 2018
acquisition of Gulf Stream Marine, Inc. (“GSM”), which we discuss in the business combinations section of
this MD&A, allows LOGISTEC to establish a stronghold in the U.S. Gulf region and represents a major
expansion of our network of terminals in the USA.
SANEXEN’s long-term business development strategy, while maintaining a strong focus on its traditional
business (soils and materials management, site remediation and risk assessment), relies extensively on
the development of Aqua-Pipe and the large potential of the North American market. Through Niedner,
SANEXEN controls the research, development and production of the lining and resin, two of the key
components in the Aqua-Pipe process. The development of large-diameter woven hoses for Aqua-Pipe is
an important part of SANEXEN’s growth plan. Through FER-PAL, the Company consolidates its position
as a North-American leader in the installation of structural lining for the rehabilitation of drinking water
supply lines.
LOGISTEC | 2019 ANNUAL REPORT
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22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Performance Factors
Three performance factors are particularly important for the Company: a qualified and dedicated
workforce, the use of innovative technologies and access to port facilities.
Talent
Our people are key to our successful business strategy, since they ensure the delivery of our services
whether through our cargo handling facilities or on project sites. Our success is a reflection of their skills.
We consider ourselves fortunate to count on a team of passionate and qualified people to manage our
operations despite a competitive job market. We have developed in-house programs to motivate, train
and retain our employees, and we benefit from a low personnel turnover rate. LOGISTEC’s success relies
on its team of some 3,000 people across North America, from the Arctic to Brownsville (TX). This number
is based on the full-time equivalent based on a regular work week of all salaried and hourly employees,
including longshoremen whose services are retained directly or under multi-employer jurisdictions as a
complement to our direct employees. The Company’s involvement in the environmental industry means
that we require highly qualified personnel, as our solid reputation is based on our ability to attract and
retain technical and professional staff.
Being mostly a service provider (as opposed to a manufacturing business), employee benefits expense is
the most significant expense for the Company and represented $313.1 million or 48.9% of revenue in
2019 ($299.7 million or 51.2% of revenue in 2018). Please refer to Notes 5, 22 and 28 of the 2019 Notes
and to page 29 of this MD&A for further details on employee compensation and benefits.
Innovative Technologies
Technology is not only shaping our customers’ needs, but also how our people work together to deliver
our services. To create an increasingly compelling value proposition for our customers, we are constantly
looking at how we can leverage the depth and breadth of our capabilities across our organization. In 2019,
we worked with our experts across our marine and environmental services to identify how to enhance
our processes to enable our professionals to consistently bring our best expertise to bear across all our
projects.
On the marine services front, across our growing network, our terminal operators leverage technology
to optimize our operations, monitor our extensive fleet of equipment, and provide accurate and timely
information to customers. In addition, our leaders in the field are recognized for their ability to develop
unique cargo-handling solutions, addressing the specific challenges each supply chain brings.
As one of Canada’s leading environmental services companies, our team combines deep expertise with
innovation to develop technological solutions suited to meet our industrial customers’, public utilities’ and
municipalities’ challenges, including the next generation of proven water technologies, lead-free
solutions, and per- and polyfluoroalkyl substances (“PFAS”) treatment and removal solutions.
In 2019, our consolidated capital expenditures were at $34.6 million. Equipment and supplies constitute
the second largest expense incurred by the Company as shown in the consolidated statements of
earnings, and, totalled $169.6 million in 2019, which represents 26.5% of revenue ($156.9 million or
26.8% of revenue in 2018).
24
2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Access to Port Facilities
Access to port facilities is a key success factor for a cargo handling company. It is also a barrier to entry in
this segment of our business. The number of port facilities with adequate characteristics (geographical
location, draft, loading and warehousing capacity, access to land transportation, etc.) is limited, and such
facilities are generally leased on a long-term basis. We are present in 34 ports and 60 terminals across
North America.
We lease the terminals where we operate and a majority of the warehouses we use. Most of our sites are
under long-term leases, allowing us to invest in proper infrastructure and cargo handling equipment and
technologies. The rent may be a fixed monthly charge, a throughput fee based on tonnage handled, or a
combination of both. We have access to thousands of square metres of dock space along with several
kilometres of dock front.
In the Company’s consolidated statements of earnings, operating expense, which includes variable rent
on leased properties, municipal taxes and maintenance costs of our sites, is the third largest expense at
$43.2 million or 6.7% of revenue in 2019 ($46.0 million or 7.9% of revenue in 2018). (1)
Tracking Performance
In addition to a sophisticated accounting system that enables us to rigorously analyze the performance of
each of our facilities and business units, we use a costing system that allows us to monitor our operations.
We have developed a multitude of automated reporting and tracking tools that provide our managers
with accurate and timely information, helping to optimize our operations.
Our senior management team meets once a month to discuss results, forecasts and development
projects. This practice enables management to accurately assess results and development, and to allocate
necessary resources as required in a timely manner.
In addition to these monthly meetings, senior management provides our Board of Directors and our Audit
Committee with quarterly performance reports. The Audit Committee’s members question management
and hold regular in camera discussions with the independent auditor to ensure that publicly disclosed
financial reports are accurate.
Finally, before any financial or regulatory information is issued to the public, it is reviewed by a Disclosure
Committee composed of members of the Company’s senior management, the President and Chief
Executive Officer, the Chairman of the Board, and the Chairman of the Audit Committee.
Ability to Perform
We have achieved a profit every year since becoming a public company in 1969. Our history of success
attests to our long-term financial stability and our ability to perform on a sustained basis in a changing
environment.
Business Strategy
In the marine services segment, our business strategy is rooted in the diversification of the cargoes we
handle, the wide geographical area covered by our facilities and a well-balanced mix of import and export
activities. This strategy has proven particularly effective over the years, as we have seen fluctuations in
mining, steel, forest products, containers and other cargo volumes, where negative situations are often
offset by positive ones.
(1) The 2019 figures reflect the application of IFRS 16, which had a favourable impact of $13.7 million and for which the comparative
figures have not been restated. Please refer to Notes 2 and 16 of the 2019 Notes for further details.
LOGISTEC | 2019 ANNUAL REPORT
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22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
In the environmental services segment, we have positioned ourselves as a leader in our traditional
markets, and we are counting on geographic expansion of our environmental services as well as the
commercialization of our unique water technologies across the North American markets. These
technologies include rehabilitation of underground water pipes, protecting water from lead service lines
using an inner liner, and technologies to deal with emerging contaminants such as PFAS.
We have sound internal expertise as well as access to a qualified labour force, an efficient, well-maintained
and well-deployed fleet of equipment, and a solid reputation in both cargo handling and environmental
services. These characteristics have earned the trust of our customers, suppliers and partners, and
contribute to our growth.
Ability to Negotiate with Unions
LOGISTEC employs union and non-union workers depending on the company and location. Over the
years, we have proven our ability to negotiate directly or through employer associations and reach
agreements with unions where applicable. The Company is party to 35 active collective agreements. We
signed two agreements in 2019, while seven were still being negotiated at the end of 2019 and four will
expire in 2020.
Borrowing Capacity
LOGISTEC generates positive cash flows from operating activities. These reached $71.3 million and
$59.1 million in 2019 and 2018, respectively, which is more than sufficient to cover our usual investing
and financing activities.
At the end of 2019, our net indebtedness, defined as long-term debt (including the current portion) and
short-term bank loans net of cash and cash equivalents, was $155.3 million, whereas our equity
attributable to owners of the Company totalled $280.4 million, giving us a net indebtedness/
capitalization ratio of 35.6%.
The Company has organized its banking facilities in order to segregate credits available to its wholly
owned subsidiaries from credits available to non-wholly owned subsidiaries and joint ventures.
LOGISTEC has a committed line of credit provided by a banking syndicate. It allows LOGISTEC
Corporation and a designated subsidiary to borrow funds directly from this credit facility to cover
operating and general corporate expenses and to issue bank guarantees.
In October 2019, to increase its financial flexibility, the Company and its wholly owned subsidiary,
LOGISTEC USA Inc., renegotiated their credit agreement leading to an amendment to the existing credit
agreement. The unsecured revolving credit facility was increased from $175.0 million to $300.0 million
or the U.S. dollar equivalent, with maturity in October 2023.
The total amount available through this committed credit facility as at December 31, 2019 was
$300.0 million ($175.0 million in 2018). There was an equivalent of $115.0 million drawn under the
facility ($104.5 million in 2018), and an additional $3.7 million was used for letters of credit ($3.8 million
in 2018). The applicable interest rate on this revolving credit facility is variable, and depends on the form
of borrowing, to which is added a margin that varies according to the level of leverage ratio achieved by
the Company.
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2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Non-IFRS Measure
In this MD&A, the Company uses a measure that is not in accordance with IFRS. Adjusted earnings before
interest expense, income taxes, depreciation and amortization expense (“adjusted EBITDA”) is not
defined by IFRS and cannot be formally presented in financial statements. The definition of adjusted
EBITDA excludes the Company’s impairment charge and includes the customer repayment of an
investment in a service contract. The definition of adjusted EBITDA used by the Company may differ from
those used by other companies. Even though adjusted EBITDA is a non-IFRS measure, it is used by
managers, analysts, investors and other financial stakeholders to analyze and assess the Company’s
performance and management from a financial and operational standpoint.
The following table provides a reconciliation of profit for the period to adjusted EBITDA.
(in thousands of Canadian dollars, except per share amounts)
2019 (1)
$
2018
$
2017
$
2016
$
2015
$
Profit for the period
PLUS:
Depreciation and amortization expense
Impairment charge
Net finance expense
Income taxes
Customer repayment of an investment in a service
contract
Adjusted EBITDA
26,437
17,994
27,356
18,486
32,873
42,122
—
12,353
8,699
—
89,611
28,580
6,821
7,474
3,308
—
64,177
33,859
2,917
3,533
6,211
865
74,741
14,288
—
1,700
7,268
292
42,034
12,328
—
623
10,288
209
56,321
(1) The 2019 figures reflect the application of IFRS 16 which had a favourable impact of $13.7 million on the adjusted EBITDA and
for which the comparative figures have not been restated. Please refer to Notes 2 and 16 of the 2019 Notes for further details.
Selected Annual Financial Information
Years ended December 31
(in thousands of dollars, except earnings and dividends per share)
2019 (1)
$
2018
$
2017
$
Variation 19-18
$
%
Revenue
Profit attributable to owners of the Company
639,942
26,194
584,878
18,060
475,743
27,426
55,064
8,134
Total basic earnings per share (2)
Total diluted earnings per share (2)
2.05
2.00
1.43
1.38
2.23
2.11
0.62
0.62
Total assets
Total non-current liabilities
Cash dividends per share:
— Class A shares (3)
— Class B shares (4)
Total cash dividends
734,738
338,565
637,103
246,497
513,539
174,455
97,635
92,068
0.3658
0.4023
4,864
0.3383
0.3721
4,452
0.3075
0.3383
3,917
9.4
45.0
43.4
44.9
15.3
37.4
(1) The 2019 figures reflect the application of IFRS 16 for which the comparative figures have not been restated. Please refer to
Notes 2 and 16 of the 2019 Notes for further details.
(2) Combined for both classes of shares.
(3) Class A Common Shares (“Class A shares”).
(4) Class B Subordinate Voting Shares (“Class B shares”).
LOGISTEC | 2019 ANNUAL REPORT
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22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
2019 versus 2018
Revenue was up by 9.4% in 2019, an increase of $55.1 million over 2018. Revenue in the marine services
segment totalled $385.3 million in 2019, up by $44.5 million from $340.8 million last year. The
environmental services segment delivered revenue totalling $254.6 million, an increase of $10.5 million
or 4.3% over revenue of $244.1 million in 2018.
Profit attributable to owners of the Company increased by $8.1 million or 45.0% in 2019. Most of the
variation came from an increase in our environmental services segment, mainly due to the improved
results of FER-PAL when compared to last year.
Total assets amounted to $734.7 million at the end of 2019, up by $97.6 million over 2018. This increase
stems mainly from right-of-use assets following the application of IFRS 16, as fully described in Notes 2
and 16 of the 2019 Notes. Our cash position increased by $7.2 million, this variation was essentially due
to $71.3 million of positive cash flows from operating activities, which was more than enough to cover our
$42.0 million cash outflows from investing and $23.6 million cash outflows from financing activities.
Total non-current liabilities increased to $338.6 million in 2019, compared with $246.5 million in 2018.
This is due mainly from lease liabilities following the application of IFRS 16, as fully described in Notes 2
and 16 of the 2019 Notes.
Cash dividends paid in 2019 increased by 9.3% to $4.9 million, compared with $4.5 million in 2018.
2018 versus 2017
Revenue was up by 22.9% in 2018, an increase of $109.1 million over 2017. The variation came from our
marine services segment, with an increase of $135.5 million or 66.0%, offset by our environmental
services segment, with a decrease of 9.7%.
Profit attributable to owners of the Company decreased by $9.4 million or 34.2% in 2018. The variation
came from a decrease in our environmental services segment, mainly due to a significantly lower
performance by FER-PAL.
Total assets amounted to $637.1 million at the end of 2018, up by $123.6 million over 2017. This growth
in assets is due to investments in capital expenditures and to two business combinations, GSM and Pate
Stevedore Company, Inc. (“Pate”). Please refer to the business combinations section of this MD&A for
details on these business combinations. Our cash position increased by $11.4 million, mainly due to our
issuance in long-term debt, net of repayment, of $72.3 million and cash flows from operating activities of
$59.1 million. This was partly offset by our investing activities of $109.9 million, dividends paid of
$4.5 million, and income taxes paid of $10.0 million.
Total non-current liabilities increased to $246.5 million in 2018, compared with $174.5 million in 2017.
This is due to the $79.9 million increase in our long-term debt in 2018 to finance our investments in
capital expenditures. It also stems from the $5.9 million increase in deferred income tax liabilities. This
was partly offset by a $15.5 million decrease in our other non-current liabilities.
Cash dividends paid in 2018 increased by 13.7% to $4.5 million, compared with $3.9 million in 2017.
28
2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Business Combinations
2018 Business Combinations
GS M
On March 1, 2018, the Company acquired 100% ownership of GSM Maritime Holdings, LLC, the ultimate
owner of GSM, for a purchase price of US$67.6 million ($85.6 million), subject to certain adjustments.
GSM performs cargo handling operations in the U.S. Gulf Coast for a diverse mix of customers.
PA TE
On May 25, 2018, the Company acquired 100% ownership of Pate for a purchase price of US$9.6 million
($12.4 million), subject to certain adjustments. Pate provides cargo handling and distribution services at
its Florida operations.
As at March 30, 2019, the Company finalized estimates of the fair value of assets acquired and liabilities
assumed. Consequently, intangible assets were increased by $5.6 million, property, plant and equipment
was increased by $1.9 million, and current assets were decreased by $0.2 million with an offsetting
adjustment to goodwill in the amount of $7.4 million. The comparative figures of the consolidated
statements of financial position have been changed accordingly.
Please refer to Note 27 of the 2019 Notes for further details.
Results
Significant accounting policies applied in the 2019 financial statements are described in Note 2 of the
2019 Notes.
Revenue
Consolidated revenue totalled $639.9 million in 2019, an increase of $55.1 million or 9.4% over 2018.
Consolidated revenue was positively affected by $4.2 million this year due to a strengthening of the U.S.
dollar against the Canadian dollar.
The marine services segment posted revenue of $385.3 million in 2019, representing higher sales
compared with $340.8 million in 2018. This increase stems from two factors: the business combinations
of GSM and Pate, which contributed an additional $40.8 million in sales during the year and, to a lesser
extent, a general volume increase in our bulk and break-bulk terminals, which saw more activity this year
than in 2018.
Revenue from the environmental services segment totalled $254.6 million, compared with $244.1 million
in 2018, an increase of $10.5 million. This is mainly due to higher revenue from the rehabilitation of
underground water mains, site remediation and decontamination services than last year, which was
partially offset by lower revenue from woven hose manufacturing.
Employee Benefits Expense
For 2019, the employee benefits expense reached $313.1 million, an increase of $13.4 million or 4.5%
over the $299.7 million recorded for the same period last year. The ratio of employee benefits expense
to revenue was 48.9%, slightly down from 51.2% for the same period last year. This decrease stemmed
from the environmental services segment where employee benefits expenses, as a percentage of revenue
from rehabilitation of underground water mains, were more favourable when compared to last year,
mainly following the cost control improvements implemented at FER-PAL in 2019.
LOGISTEC | 2019 ANNUAL REPORT
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22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Equipment and Supplies Expense
Equipment and supplies expense amounted to $169.6 million, an increase of $12.8 million or 8.1% over
the same period in 2018. This variation reflects the overall increase in activity in 2019, as the overall ratio
of equipment and supplies expense to revenue was 26.5%, in line with the 26.8% for the same period in
2018.
Operating Expense
Operating expense stood at $43.2 million, or $56.9 million when we exclude the impact of the application
of IFRS 16 for 2019. The ratio of operating expense to consolidated revenue, excluding the impact of
IFRS 16, was 8.9%, which is in the same range as 7.9% for the same period last year.
IFRS 16 requires the recognition of an asset and a related liability for all contractual obligations previously
accounted for as operating leases under IAS 17 Leases (“IAS 17”), unless the contract term is 12 months or
less or the underlying asset has a low value. Lease payments falling under the scope of IFRS 16 amounted
to $13.7 million during 2019. Lease payments are presented in the consolidated statements of cash flows
as repayment of lease liabilities and interest paid, instead of as an operating expense. Please refer to
Notes 2 and 16 of the 2019 Notes for further details.
Other Expenses
Other expenses stood at $31.9 million, representing a variation of $2.1 million or 7.0% compared with
the same period in 2018. This increase stems from two factors: the integration costs of the two new
business combinations made last year, and the professional fees incurred to analyze business
development opportunities.
Depreciation and Amortization Expense
Depreciation and amortization expense amounted to $42.1 million in 2019, up $13.5 million from
$28.6 million last year. Of this increase, $11.6 million relates to depreciation of the additional right of use
of assets created under IFRS 16.
The increased depreciation expense related to IFRS 16 should be analyzed in conjunction with the
reduced operating expense and increased finance expense. Please refer to Notes 2 and 16 of the 2019
Notes for further details.
Other Gains and Losses
Other gains and losses varied by $4.8 million, from a $3.6 million gain in 2018 to a $1.2 million loss in
2019. This variance is mainly related to unrealized exchange losses incurred in 2019 on translating net
working capital denominated in U.S. dollars, given the stronger Canadian dollar.
Impairment charge
At the end of 2018, the Company reviewed the carrying amount of its intangible assets and determined
that cash generating units associated with our port logistics activities in Virginia had suffered an
impairment loss of $6.8 million. No impairment charge was recorded in 2019.
Finance Expense
Finance expense amounted to $12.9 million in 2019, an increase of $4.9 million over the $8.0 million
reported last year. Of this increase, $4.0 million relates to the accretion expense of the additional
liabilities created under IFRS 16. The remaining variance relates to a higher borrowing base following
financing of the business combinations of GSM and Pate that occurred during the first half of 2018.
The increased finance expense related to IFRS 16 should be analyzed in conjunction with the reduced
operating expense and increased depreciation expense. Please refer to Notes 2 and 16 of the 2019 Notes
for further details.
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2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Income Taxes
Income taxes stood at $8.7 million for 2019. When the profit before income taxes is adjusted to exclude
the effect of the share of the profit of equity accounted investments, the 2019 tax rate computes to 32.9%
compared with 25.1% in 2018. This variation is within normal parameters, and relates primarily to the
$1.3 million non-tax-deductible items and the adjustment in respect to the return to the provision. Please
refer to Note 8 of the 2019 Notes for a full reconciliation of the effective income tax rate and other
relevant income tax information.
Segmented Profit Before Income Taxes
The 2019 profit before income taxes from the marine services segment amounted to $25.3 million, up
$3.6 million from the $21.7 million profit in 2018. From an operational point of view, cargo handling
performance was positive in 2019. The profitability, expressed as the overall ratio of profit before income
taxes to revenue, was 6.6%, in line with the 6.4% last year. These figures reflect the higher finance expense
following financing of the business combinations of GSM and Pate, the incremental expenses related to
the transition to IFRS 16 and the unrealized exchange losses incurred on translating net working capital
denominated in U.S. dollars, partially offset by no impairment charge in 2019.
The 2019 profit before income taxes from the environmental services segment amounted to $9.8 million,
a significant improvement over the $0.4 million loss incurred last year. This increase stems from higher
revenue from the segment combined with a more favourable employee benefits expense as a percentage
of revenue following notably the cost control improvements implemented at FER-PAL in 2019.
Profit for the Year and Earnings per Share
In 2019, the Company reported a profit of $26.4 million, of which $0.2 million was attributable to non-
controlling interest, amounting to a $26.2 million profit attributable to owners of the Company. This
translated into total diluted earnings per share of $2.00 of which $1.92 per share was attributable to
Class A shares and $2.11 per share was attributable to Class B shares.
All other items of the consolidated statements of earnings varied according to normal business
parameters.
Dividends
The Company’s Board of Directors determines the level of dividend payments. Although LOGISTEC does
not have a formal dividend policy, the practice to date has been to maintain regular quarterly dividends
with modest increases over the years.
On August 7, 2019, the Company’s Board of Directors elected to increase the dividend payment by 3.0%.
The following table describes the dividend payments schedule since January 2019, which are all eligible
dividends for Canada Revenue Agency purposes.
(in millions of dollars, except per share amounts)
Declaration date
Record date
Payment date
December 6, 2018
March 15, 2019
May 9, 2019
August 7, 2019
December 4, 2019
March 17, 2020
January 4, 2019
April 4, 2019
June 21, 2019
September 27, 2019
January 3, 2020
April 3, 2020
January 18, 2019
April 18, 2019
July 5, 2019
October 11, 2019
January 17, 2020
April 17, 2020
Per Class A
share
$
0.09075
0.09075
0.09075
0.09350
0.09350
0.09350
Per Class B
share
$
0.099825
0.099825
0.099825
0.102850
0.102850
0.102850
Total
$
1.2
1.2
1.2
1.2
1.2
1.2
LOGISTEC | 2019 ANNUAL REPORT
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22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Liquidity and Capital Resources
Capital Management
The Company’s primary objectives when managing capital are to:
(cid:16) Maintain a capital structure that allows financing options to the Company in order to benefit from
potential opportunities as they arise;
(cid:16) Provide an appropriate return on investment to its shareholders.
The Company includes the following in its capital:
(cid:16) Cash and cash equivalents and short-term investments, if any;
(cid:16) Long-term debt (including the current portion) and short-term bank loans, if any;
(cid:16) Equity attributable to owners of the Company.
The capital is calculated as follows:
(in thousands of dollars)
Short-term bank loans
Long-term debt, including the current portion
Total indebtedness
Less:
Cash and cash equivalents
Total net indebtedness
Equity attributable to owners of the Company
Capitalization
Ratio of net indebtedness/capitalization
As at
December 31,
2019
$
As at
December 31,
2018
$
—
177,900
177,900
22,608
155,292
13,577
163,297
176,874
15,393
161,481
280,371
262,198
435,663
423,679
35.6%
38.1%
The Company’s financial strategy is formulated and adapted according to market conditions in order to
maintain a flexible capital structure that is consistent with the objectives stated above and corresponds
to the risk characteristics of the underlying assets. In order to maintain or adjust its capital structure, the
Company may refinance its existing debt, raise new debt, pay down debt, repurchase shares for
cancellation purposes pursuant to normal course issuer bids or issue new shares.
When looking at business investment opportunities, the Company uses discounted cash flow models to
ensure that the rate of return meets its objectives. Furthermore, investment opportunities must be
accretive, therefore enhancing shareholder value.
The decision to repay debt is based on an assessment of current levels of cash in relation to expected cash
that will be generated from operations. The Company has credit facilities with various financial
institutions that can be utilized when investment opportunities arise.
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2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Capital Resources
Total assets amounted to $734.7 million as at December 31, 2019, up by $97.6 million over the closing
balance of $637.1 million as at December 31, 2018. As mentioned earlier, this increase is mainly due to
the application of IFRS 16, as fully described in Notes 2 and 16 of the 2019 Notes.
Cash and cash equivalents totalled $22.6 million at the end of 2019, up by $7.2 million from $15.4 million
as at December 31, 2018. The main items behind this increase were as follows:
(in thousands of dollars)
Sources:
Cash generated from operations
Issuance of long-term debt, net of repayment
Uses:
Acquisition of property, plant and equipment, net of proceeds from disposal
Net change in short-term bank loans
Interest paid
Income taxes paid
Repayment of lease liabilities
Cash paid to non-controlling interests
Changes in non-cash working capital items
Dividends paid on Class A and Class B shares
82,349
18,619
100,968
(33,142)
(13,577)
(12,269)
(11,947)
(9,726)
(7,972)
(2,049)
(4,864)
(95,546)
Working Capital
As at December 31, 2019, current assets totalled $213.2 million and current liabilities totalled
$115.2 million, computing into working capital of $98.0 million for a current ratio of 1.85:1. This
compares with working capital of $82.1 million and a 1.65:1 ratio as at December 31, 2018. The increase
is due to the repayment of the short-term bank loans and trade and other payables, partly offset by the
current portion of lease liabilities recorded in 2019 following the application of IFRS 16, as fully described
in Notes 2 and 16 of the 2019 Notes.
Long-Term Debt
Total net indebtedness amounted to $161.5 million as at December 31, 2018, down by $6.2 million to
$155.3 million as at December 31, 2019. This decrease is mainly attributable to positive cash flows from
operating activities, which was more than sufficient to cover the usual investing and financing activities
including the repayment of $13.6 million in short-term bank loans outstanding as at December 31, 2018.
Under the terms of our various financing agreements, the Company, its subsidiaries and its joint ventures
must satisfy certain restrictive covenants with respect to minimum financial ratios. As at December 31,
2019, LOGISTEC Corporation complied with such covenants. In some cases, financing covenants may
limit the ability of some subsidiaries or joint ventures to pay dividends to LOGISTEC. However,
LOGISTEC generates sufficient cash flows from its wholly owned subsidiaries to meet its financial
obligations.
LOGISTEC | 2019 ANNUAL REPORT
33
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Payments Due by Period
The following table provides a summary of the Company’s long-term debt and contractual obligations:
Contractual Obligations
as at December 31, 2019
(in thousands of dollars)
Long-term debt (1)
Lease liabilities
— Equipment
— Occupancy
Long-term liabilities due to non-
controlling interest
Non-current liabilities (2)
Total contractual obligations
Total
$
Less than
1 year
$
1 - 3
years
$
4 - 5
years
$
More than
5 years
$
190,744
11,842
10,758
138,691
29,453
6,550
117,209
41,553
11,012
367,068
2,518
11,075
738
935
27,108
2,861
20,292
16,633
2,896
53,440
967
17,285
24,182
6,168
187,293
204
68,557
—
1,013
99,227
Includes capital and interest.
(1)
(2) Excluding long-term liabilities to shareholders.
The reader is referred to Notes 10, 16, 21, 22, 23, and 30 of the 2019 Notes for further details about
financial risk management, lease arrangements, long-term debt, post-employment benefit assets and
obligations, non-current liabilities, and contingent liabilities and guarantees.
Equity Attributable to Owners of the Company
Equity attributable to owners of the Company amounted to $280.4 million as at December 31, 2019.
Adding total net indebtedness yields a capitalization of $435.7 million, which computes to a net
indebtedness/capitalization ratio of 35.6%. This means that the Company has financial leverage available
should the need arise. The net indebtedness/capitalization ratio is a non-IFRS measure and is reconciled
above in the liquidity and capital resources section.
As at March 17, 2020, 7,382,422 Class A shares and 5,388,701 Class B shares were issued and
outstanding. Each Class A share is convertible at any time by its holder into one Class B share. Please refer
to Note 24 of the 2019 Notes for full details on the Company’s share capital.
Normal Course Issuer Bid (“NCIB”)
The Company repurchased some of its shares for cancellation purposes pursuant to NCIBs. Pursuant to
the current NCIB, which was launched on October 28, 2019, and will terminate on October 27, 2020,
LOGISTEC intends to repurchase, for cancellation purposes, up to 369,296 Class A shares and
270,195 Class B shares, representing 5% of the issued and outstanding shares of each class as at
October 15, 2019.
Shareholders may obtain a free copy of the notice of intention regarding the NCIB filed with the TSX by
contacting the Company.
During 2019, under the NCIB programs, 9,100 Class A shares and 39,800 Class B shares were
repurchased at average prices per share of $42.47 and $41.05, respectively. Please refer to Note 24 of
the 2019 Notes for further details.
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2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Equity in Joint Ventures
The Company’s results include its share of operations in joint ventures, which are accounted for in the
share of profit of equity accounted investments. The closing balance of $42.3 million at the end of 2019
is mainly the result of the 2018 closing balance of $38.0 million, plus the 2019 share of profit of equity
accounted investments of $8.7 million, less $4.1 million in dividends received, and our share of losses of
a joint venture of $0.2 million.
As at December 31, 2019, the Company’s 50%-equity interests are in the following joint ventures:
TERMONT Terminal Inc., Transport Nanuk Inc., Québec Mooring Inc., Moorings (Trois-Rivières) Ltd.,
Québec Maritime Services Inc., 9260-0873 Québec Inc. and Flexiport Mobile Docking Structures Inc.
The Company also owns 49%-equity interests in Qikiqtaaluk Environmental Inc. and Avataani
Environmental Services Inc.
None of the Company’s joint ventures are publicly listed entities and, consequently, do not have published
price quotations.
The Company has one significant joint venture, TERMONT Terminal Inc., specialized in handling
containers, which is aligned with the Company’s core business. Please refer to Note 14 of the 2019 Notes.
Post-Employment Benefits
The Company offers either defined benefit retirement plans or defined contribution retirement plans to
its employees. The Company sponsors two defined benefit retirement plans.
Considering that a majority of beneficiaries from the defined benefit retirement plans were pensioners
already, the Company elaborated a derisking strategy with regard to these plans.
A summary of the fair value of plan assets, benefit obligation, funded status of the retirement plans, and
significant assumptions can be found in Note 22 of the 2019 Notes.
Calculations on the retirement plans’ funded statuses have been performed by the Company’s
independent actuaries as of December 31, 2019. They calculated a benefit obligation of $39.4 million,
compared with a fair value of plan assets of $21.4 million, which computed into a funded status deficit of
$18.0 million. The Company offers supplemental retirement plans to senior executives (“SERP”). The
reader is referred to the description of the Senior Management Pension Plan in our information circular.
These SERP are unfunded and the related obligation of $16.8 million is included in the above numbers.
Excluding the SERP obligation, the funded status deficit amounts to $1.2 million.
Management’s assumption for the discount rate was 4.0% in 2018 and 3.3% in 2019. Actuarial
calculations made for actual funding and cash disbursements use different assumptions and therefore
compute into different funded statuses. The Company’s SERP are non-registered plans and, therefore,
are not subject to actuarial valuations.
The last actuarial valuation for the Senior Management Pension Plan of LOGISTEC Corporation is dated
December 31, 2016 and the last actuarial valuation for the Employee Pension Plan of LOGISTEC
Corporation is dated December 31, 2018. Based on these valuations, the Company’s combined surplus
amounts to $2.1 million when calculated using the going concern method, and to a combined deficit of
$1.4 million when using the solvency method.
LOGISTEC | 2019 ANNUAL REPORT
35
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Other Items in the Consolidated Statements of Financial
Position
Financial position as at
(in millions of dollars)
December 31,
2019
$
December 31,
2018
$
Var.
$
Var.
%
Explanation of variation
Contract assets represent the gross
unbilled amount that will be collected from
customers for contract work performed in
our environmental services segment. The
decrease is mainly due to a greater number
of contracts completed and invoiced prior
to the year end in 2019, compared with the
same period of 2018.
The increase is due to 2019 tax instalments
made which were higher than the current
income taxes.
This increase stems mainly from capital
expenditures of $34.5 million, which
exceeded the depreciation expense of
$26.3 million.
This increase stems from the application of
IFRS 16, as fully described in Notes 2 and
16 of the 2019 Notes.
Contract assets
10.6
14.3
(3.7)
(25.8)
Current income tax assets
6.0
3.0
3.0
100
184.3
181.3
3.0
1.7
Property, plant and
equipment
Right-of-use assets
Intangible assets
Short-term bank loans
89.6
40.7
—
—
89.6
n.m.
47.0
(6.3)
(13.3)
This decrease stems mainly from the
amortization expense of $4.3 million.
13.6
(13.6)
n.m.
The decrease is due to the repayment in
short-term bank loans in 2019.
Trade and other payables
86.2
98.7
(12.5)
(12.6)
The decrease is in line with the reduction of
contract assets as at December 31, 2019
and stems mainly from a greater number of
contracts completed prior to the year end
in 2019.
Current portion of lease
liabilities
Non-current lease
liabilities
Current portion of
long-term debt
9.8
81.5
9.4
—
—
3.3
Long-term debt
168.5
160.0
Share capital
Share capital to be issued
n.m.: not meaningful
40.2
9.8
9.8
81.5
6.1
8.5
5.2
n.m. This increase stems from the application of
IFRS 16, as fully described in Notes 2
and 16 of the 2019 Notes.
n.m.
n.m. This variance stems from the $84.6 million
issuance of long-term debt, partly offset by
repayment of long-term debt of
$66.0 million.
5.3
14.9 The variation is mainly due to the issuance
35.0
14.7
(4.9)
(33.3)
of Class B shares in accordance with the
terms of the 2016 acquisition of the non-
controlling interest in SANEXEN.
Other items in the consolidated statements of financial position varied according to normal business parameters.
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2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Financial Risk Management
By the nature of the activities carried out and as a result of holding financial instruments, the Company is
exposed to credit risk, liquidity risk and market risk, especially interest rate risk and foreign exchange risk.
Credit Risk
Credit risk arises from the possibility that a counterpart will fail to perform its obligations. The Company’s
exposure to credit risk is primarily attributable to its cash and cash equivalents, trade and other
receivables and non-current financial assets. Management believes the credit risk is limited for its cash
and cash equivalents as the Company deals with major North American financial institutions.
The Company conducts a thorough assessment of credit issues prior to committing to the investment and
actively monitors the financial health of its investees on an ongoing basis. In addition, the Company is
exposed to credit risk from customers. On the one hand, the Company does business mostly with large
industrial, municipal and well-established customers, thus reducing its credit risk. On the other hand, the
number of customers served by the Company is limited, which increases the risk of business
concentration and economic dependency.
Overall, the Company serves some 2,200 customers. In 2019, the 20 largest customers account for
39.7% (35.9% in 2018) of consolidated revenue, and not a single customer accounts for more than 10%
of consolidated revenue and trade receivables in 2019 and 2018.
Allowance for doubtful accounts and past due receivables are reviewed by management on a monthly
basis. Trade and other receivables are written off once determined not to be collectable.
Pursuant to their respective terms, net trade receivables are aged as follows:
(in thousands of dollars)
0-30 days
31-60 days
61-90 days
Over 90 days (1)
(1)
Includes contract holdbacks amounting to $11,200 ($12,428 in 2018).
The movements in the allowance for doubtful accounts were as follows:
(in thousands of dollars)
Balance, beginning of year
Bad debt expense
Write offs
Balance, end of year
As at
December 31,
2019
$
As at
December 31,
2018
$
56,528
32,379
16,635
33,042
138,584
39,393
39,183
26,305
37,076
141,957
2019
$
2,364
1,410
(721)
3,053
2018
$
4,053
1,126
(2,815)
2,364
The Company’s maximum exposure to credit risk with respect to each of its financial assets (cash and cash
equivalents, trade and other receivables, and non-current financial assets) corresponds to its carrying
amount.
Liquidity Risk
Liquidity risk is the Company’s exposure to the risk of not being able to meet its financial obligations when
they become due. The Company monitors its levels of cash and debt, and takes appropriate actions to
ensure it has sufficient cash to meet operational needs while ensuring compliance with covenants.
LOGISTEC | 2019 ANNUAL REPORT
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22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
The following are the contractual maturities of financial obligations:
As at December 31, 2019
(in thousands of dollars)
Trade and other payables
Dividends payable
Lease liabilities
Long-term debt
Non-current liabilities
As at December 31, 2018
(in thousands of dollars)
Short-term bank loans
Trade and other payables
Dividends payable
Long-term debt
Non-current liabilities
(1)
Includes principal and interest.
Carrying
amount
$
Contractual
cash flows (1)
$
Less than
1 year
$
86,217
1,245
91,315
177,900
46,088
402,765
86,217
1,245
123,759
190,744
52,565
454,530
86,217
1,245
13,593
11,842
1,673
114,570
Carrying
amount
$
Contractual
cash flows (1)
$
Less than
1 year
$
13,577
98,668
1,973
163,297
46,980
324,495
13,577
98,668
1,973
180,691
53,969
348,878
13,577
98,668
1,973
11,331
1,046
126,595
1-3 years
$
—
—
23,153
10,758
19,529
53,440
1-3 years
$
—
—
—
113,851
19,989
133,840
More than
3 years
$
—
—
87,013
168,144
31,363
286,520
More than
3 years
$
—
—
—
55,509
32,934
88,443
Given the actual liquidity level combined with future cash flows that will be generated by operations, the
Company believes that its liquidity risk is low to moderate.
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates,
will affect the Company’s results or the value of its financial instruments. The Company is mainly exposed
to interest rate risk and foreign exchange risk.
IN TE RE S T R A TE RIS K
The Company is exposed to market risk related to interest rate fluctuations because a portion of its long-
term debt bear interest at floating rates. The Company manages this risk by maintaining a mix of fixed and
floating rate borrowings in accordance with the Company’s policies. The Company had an interest rate
swap contract with the Company’s main bank for an original principal notional amount of $25.0 million
which was settled on October 31, 2019, following the renegotiation of the credit agreement. The interest
rate swap contract was designated as a cash flow hedge to swap the floating rate of its debts to a fixed
rate, thus decreasing the Company's sensitivity to interest rate fluctuations. As at December 31, 2018,
the degressive notional principal amount of the outstanding interest rate swap contract was
$18.8 million. The floating interest rate on the interest rate swap was CDOR and the fixed interest rate
was 1.80%. The Company continues to monitor opportunities to reduce interest rate risk.
SENS IT IV IT Y A N A L YS IS
As at December 31, 2019, the floating rate portion of the Company’s long-term debt is 70.5% (64.7%
in 2018). All else being equal, a hypothetical variation of +1.0% in the prime interest rate on the floating
rate portion of the Company’s long-term debt held as at December 31, 2019, would have had a
negative impact of $1.3 million ($0.9 million in 2018) on profit for the year. A hypothetical variation of
–1.0% in the prime interest rate would have had the opposite impact on profit for the year.
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2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
F O REI G N E X CH A N GE RIS K
The Company provides services which it invoices in U.S. dollar and purchases equipment denominated in
U.S. dollar. In addition, a portion of the Company's long-term debt is denominated in U.S. dollar.
Consequently, it is exposed to risks arising from foreign currency rate fluctuations. The Company
considers the risk to be limited and, therefore, does not use derivative financial instruments to reduce its
exposure.
During 2019, all else being equal, a hypothetical strengthening of 5.0% of the U.S. dollar against the
Canadian dollar would have had a positive impact of $2.6 million ($2.2 million in 2018) on profit for the
year and a positive impact of $12.0 million ($12.2 million in 2018) on total comprehensive income. A
hypothetical weakening of 5.0% of the U.S. dollar against the Canadian dollar would have the opposite
impact on profit for the year and total comprehensive income.
As at December 31, 2019, a total of $95.2 million or US$73.3 million ($78.1 million or US$57.1 million in
2018) of cash and cash equivalents and trade and other receivables is denominated in foreign currencies.
As at December 31, 2019, a total of $61.7 million or US$47.5 million ($46.3 million or US$33.9 million in
2018) of trade and other payables is denominated in foreign currencies.
Fair Value of Financial Instruments
As at December 31, 2019 and 2018, the estimated fair values of cash and cash equivalents, trade and
other receivables, short-term bank loans, trade and other payables, and dividends payable approximated
their respective carrying values due to their short-term nature.
The estimated fair value of long-term notes receivable, included in non-current financial assets, was not
significantly different from their carrying value as at December 31, 2019 and 2018, based on the
Company’s estimated rate for long-term notes receivable with similar terms and conditions.
The estimated fair value of long-term debt was $0.9 million higher than its carrying value as at
December 31, 2019 ($0.3 million higher in 2018) as a result of a change in financial conditions of similar
instruments available to the company. The fair value of long-term debt is determined using the discounted
future cash flows method and management's estimates for market interest rates for identical or similar
issuances.
Please refer to Note 10 of the 2019 Notes for further information related to the Company's fair value
hierarchy.
Business Risks
The business risks to which we are exposed have been fairly consistent over the last few years. The
following is a summary of these major risks:
Market Risk — The Company handles a wide variety of commodities and, although our geographical and
product diversification strategy should protect us against significant impacts, major fluctuations in
specific commodities or in specific regions may affect our performance.
Port Terminal Related Risks — Access to strategic terminals is critical to a successful cargo handling
operation. Our facilities are generally leased on a long-term basis. Such leases give us operating rights in
exchange for rent that are, to a large extent, fixed for the Company. Consequently, we quickly feel the
financial impact of a major decline in cargo volumes.
LOGISTEC | 2019 ANNUAL REPORT
39
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Government Policies — Government investment in port infrastructure, legislation, tariffs or taxation
powers can have a direct impact on profitability.
Currency Fluctuations — Fluctuations in the Canadian/U.S. dollar conversion rate may affect
Canadian companies. This situation, although it may affect our customers, does not affect us directly.
Indeed, we usually provide services locally and are paid in the same currency in which we incur costs.
Hence, fluctuations in the U.S. dollar do not usually have a significant impact on our results, as our
U.S. subsidiaries are financially self-sustaining. As discussed in the previous section entitled financial risk
management, the Company is mainly exposed to fluctuations in the U.S. dollar versus the Canadian dollar,
particularly for its consolidated statements of financial position items held in U.S. dollars. However, the
Company considers this risk to be relatively limited.
Personnel and Labour Related Risks — Some of our facilities are located near small urban centres
where it can be difficult to find qualified labour. In addition, the industry in our marine services segment
is strongly unionized and there is always a risk of labour disturbance when negotiating collective
agreements.
Other external factors — Our marine services segment may be influenced by factors touching global
trade and the movement of goods such as: extreme weather conditions, climate changes, political
instability or pandemic outbreak. Such factors could impact supply and demand of goods, affect the
availability of labor, reduce volume, and change or create new customer trends which could impact our
performance.
Related Party Transactions
In addition to compensation to key management personnel and dividends to shareholders that occur in
the normal course of business and that are quantified in Note 28 of 2019 Notes, services rendered to or
by related parties are essentially professional services, rent, management fees, and operational costs
charged to or by joint ventures. These transactions are also in the normal course of business, and their
consideration is established and agreed to by the related parties. Included in the amounts owed from joint
ventures is Nanuk’s share of the post-employment benefit obligation of one of the Company’s sponsored
retirement plans.
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2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Selected Quarterly Information
(in thousands of Canadian dollars, except per share amounts)
Q1
$
Q2
$
Q3
$
Q4
$
Year
$
2019 (1)
Revenue
Profit (loss) attributable to owners of the Company
114,748
(8,890)
156,175
5,927
195,293
17,393
173,726
11,764
639,942
26,194
Basic earnings (loss) per Class A share
Basic earnings (loss) per Class B Share
Total basic earnings (loss) per share
Diluted earnings (loss) per Class A share
Diluted earnings (loss) per Class B share
Total diluted earnings (loss) per share
(0.67)
(0.74)
(0.70)
(0.67)
(0.74)
(0.70)
0.44
0.49
0.46
0.43
0.48
0.45
1.31
1.44
1.37
1.27
1.40
1.33
0.89
0.97
0.92
0.86
0.95
0.90
1.97
2.16
2.05
1.92
2.11
2.00
2018
Revenue
Profit (loss) attributable to owners of the Company
82,442
(9,477)
149,182
1,868
184,537
22,256
168,717
3,413
584,878
18,060
Basic earnings (loss) per Class A share
Basic earnings (loss) per Class B share
Total basic earnings (loss) per share
Diluted earnings (loss) per Class A share
Diluted earnings (loss) per Class B share
Total diluted earnings (loss) per share
(0.72)
(0.80)
(0.75)
(0.72)
(0.80)
(0.75)
0.14
0.16
0.15
0.14
0.15
0.14
1.68
1.85
1.75
1.62
1.78
1.69
0.26
0.28
0.27
0.25
0.27
0.26
1.37
1.51
1.43
1.32
1.45
1.38
(1) The 2019 figures reflect the application of IFRS 16 for which the comparative figures have not been restated. Please refer to
Notes 2 and 16 of the 2019 Notes for further details.
Seasonal Nature of Operations
Marine services are affected by weather conditions and are therefore of a seasonal nature. During the
winter months, the St. Lawrence Seaway is closed. There is no activity on the Great Lakes, reduced activity
on the St. Lawrence River, and no activity in Arctic transportation due to ice conditions.
Environmental services are also affected by weather conditions, as the majority of the specialized services
offered involve upon the excavation of soils, which is more difficult during the winter.
Historically, the first quarter and, to a lesser extent, the second quarter have always presented a lower
level of activity and yielded weaker results than the other quarters. The third and fourth quarters are
usually the most active.
LOGISTEC | 2019 ANNUAL REPORT
41
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Fourth Quarter of 2019 Results and Comparative Figures
(in thousands of dollars, except per share amounts)
Revenue
Employee benefits expense
Equipment and supplies expense
Operating expense
Other expenses
Depreciation and amortization expense
Share of profit of equity accounted investments
Other gains and losses
Impairment charge
Operating profit
Finance expense
Finance income
Profit before income taxes
Income taxes
Profit for the period
Profit attributable to:
Owners of the Company
Non-controlling interest
Profit for the period
Basic earnings per Class A share
Basic earnings per Class B share
Diluted earnings per Class A share
Diluted earnings per Class B share
Revenue
Q4 2019
$
Q4 2018
$
173,726
168,717
(80,738)
(45,266)
(12,295)
(8,200)
(10,063)
3,075
357
—
20,596
(4,480)
145
16,261
(4,477)
11,784
11,764
20
11,784
0.89
0.97
0.86
0.95
(88,313)
(46,026)
(12,405)
(8,023)
(8,627)
2,505
2,841
(6,821)
3,848
(2,128)
60
1,780
1,658
3,438
3,413
25
3,438
0.26
0.28
0.25
0.27
Consolidated revenue totalled $173.7 million in the fourth quarter of 2019, an increase of $5.0 million or
3.0% over 2018. Consolidated revenue was negatively affected by $1.3 million this quarter due to a
strengthening of the Canadian dollar against the U.S. dollar.
Revenue from the environmental services segment grew by 2.2% while revenue from the marine services
segment increased by 3.6% quarter over quarter. This increase stems from a general volume increase in
our bulk and break-bulk terminals, which saw more activity this quarter than in 2018.
Employee Benefits Expense
Employee benefits expense to revenue ratio for the fourth quarter of 2019 was lower at 46.5% compared
with 52.3% for the same period in 2018. The lower ratio is mainly derived from the environmental
services segment where employee benefits expense, as a percentage of revenue from rehabilitation of
underground water mains, was more favourable when compared to the same period of last year, mainly
following the cost control improvements implemented at FER-PAL in 2019.
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2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Other Gains and Losses
Other gains and losses for the fourth quarter of 2019 was $0.4 million, a decrease of $2.5 million
compared with the fourth quarter of 2018. This variance is mainly related to lower unrealized exchange
gains incurred in 2019 on translating net working capital denominated in U.S. dollars, given the stronger
Canadian dollar.
Impairment Charge
At the end of 2018, the Company reviewed the carrying amount of its intangible assets and determined
that cash generating units associated with our port logistics activities in Virginia had suffered an
impairment loss of $6.8 million. No impairment charge was recorded in 2019.
Finance Expense
Finance expense amounted to $4.5 million in the fourth quarter of 2019, an increase of $2.4 million over
the $2.1 million reported for the same quarter of 2018. Of this increase, $1.1 million relates to the
accretion expense of the additional liabilities created under IFRS 16.
The increased finance expense related to IFRS 16 should be analyzed in conjunction with the reduced
operating expense and increased depreciation expense. Please refer to Notes 2 and 16 of the 2019 Notes
for further details.
Profit for the Quarter and Earnings per Share
In the fourth quarter of 2019, the Company reported a profit of $11.8 million, which was mainly
attributable to owners of the Company. This translated into total diluted earnings per share of $0.90 of
which $0.86 per share was attributable to Class A shares and $0.95 per share was attributable to Class B
shares. The primary driver of these excellent fourth quarter results came from SANEXEN, where site
remediation and soils and materials management were extremely strong, following a very slow start of
the year. Marine services also performed well.
All other items of the fourth quarter of the consolidated statements of earnings varied according to
normal business parameters and were comparable to 2018 levels.
Significant Judgments, Estimates and Assumptions
In the application of the Company’s significant accounting policies, management is required to make
judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors considered to be relevant. Actual results may differ from those estimates.
The measurement of some assets and liabilities in the preparation of the financial statements includes
assumptions made by management that are described in Note 3 of the 2019 Notes. Further details on
judgments, estimates and assumptions can be found in the 2019 Notes, particularly regarding trade
receivables (Notes 10 and 12), equity accounted investments (Note 14), lease arrangements (Note 16)
goodwill (Note 17), finite-life intangible assets (Note 18), impairment of long-lived assets including
goodwill (Note 17), deferred income taxes (Note 8), post-employment benefits (Note 22), and non-
current liabilities (Note 23). The Company’s significant accounting policies are applied consistently to all
its reportable industry segments (Note 29).
LOGISTEC | 2019 ANNUAL REPORT
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Application of New and Revised IFRS
Accounting Standard and Interpretation Issued and Adopted
On January 1, 2019, the Company adopted the following standard and interpretation:
I F RS 1 6 LE AS ES
The financial statements have been prepared in accordance with IFRS 16. The Company adopted this
standard using the modified retrospective approach, therefore the comparative information has not been
restated and continues to be reported under IAS 17. The Company used the practical expedients
exemptions for short-term leases, leases for which the underlying asset is of low value and applied a single
discount rate to a portfolio of leases with similar remaining lease terms and relied on assessment of the
onerous lease provisions, instead of performing an impairment review.
The Company used the practical expedients exemptions not to reassess whether a contract is, or contains,
a lease as at January 1, 2019. Instead, the Company reviewed and assessed its existing lease
arrangements that were previously identified as leases under IAS 17 and, based on the facts and
circumstances that existed at that date, concluded that the initial application of IFRS 16 has had the
following impact regarding its recognition, measurement and disclosures:
(cid:16) Record of right-of-use assets of $76.5 million, representing the Company’s right to use the
underlying assets included in lease arrangements;
(cid:16) Record of lease liabilities (including the current portion) of $76.5 million, representing the present
value of lease payments, discounted using the interest rate implicit in these lease arrangements;
(cid:16) Right of use of assets are depreciated in accordance with IAS 16 Property, Plant and Equipment. The
expenses for the year ended December 31, 2019, amount to $11.6 million and is recorded in
depreciation and amortization in the consolidated statements of earnings;
(cid:16) Accretion interest expenses on the lease liability amount to $4.0 million for the year ended
December 31, 2019 and is recorded in finance expense in the consolidated statements of earnings.
Please refer to Notes 2 and 16 of the 2019 Notes for further details.
IF RI C 2 3 A C C O U NT I NG F O R U N CE R TA I NT IES I N I N C O ME T AX ES ( “IF RI C 2 3” )
The financial statements have been prepared in accordance with IFRIC 23. The Company completed its
assessment of the impact of this interpretation and the adoption does not have a material impact on the
financial statements.
Environmental Matters
Climate Change
It is not possible to assess the impact of climate change on our business at this time. We believe it may
create concerns but also opportunities. Although it may have an impact on water levels in certain ports, it
may also lead to a longer season for Arctic transportation. These are monitored regularly to ensure that
we will be well positioned to deal with any changes that may occur in the flow of trade.
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Other Environmental Concerns
We handle various bulk commodities on sites that have had industrial activities for many years. It is more
than likely that some sites were already contaminated from such activities prior to our arrival. We
normally make a baseline assessment of the sites’ contamination prior to signing a new lease. This limits
our liability to our own operations. LOGISTEC takes environmental matters very seriously and is
committed to limiting and reducing its environmental footprint.
EN VI R O N ME N T AL P OLI C Y
LOGISTEC has a health, safety and environment policy that recognizes the importance of environmental
aspects of the business. It commits us to take into account the possible repercussions on the environment
of all our current and future decisions and operations.
The policy states that the Company will subscribe to certain principles, such as:
(cid:16) Meet or exceed current environmental laws and regulations in the conduct of all our operations;
(cid:16) Reduce our possible impacts on the environment by adopting protective and preventive measures;
(cid:16) Promote the installation and use of new technologies that consume less energy and are more
environmentally friendly;
(cid:16) Adopt and apply an Environmental Management Program aimed at continuous improvement, as
measured through the monitoring of the environmental impact of our activities;
(cid:16)
(cid:16)
Implement and maintain Emergency Preparedness Plans designed to allow an immediate response
to incidents and situations that may have an impact on the environment;
Implement an Environmental Training Program to inform our people of existing environmental
laws and regulations, to communicate to them the corporate Environmental Policy and to make
them aware of the importance of their participation in attaining the environmental protection
objectives adopted by LOGISTEC;
(cid:16) Regularly communicate the environmental performance results of our operations to the Board of
Directors;
(cid:16) We are also committed to reviewing our Policy periodically and revising it in light of new
information regarding the types and locations of our activities.
G REE N M A RI NE
As proof of its commitment towards the environment, LOGISTEC has been a certified Green Marine
participant since 2009. Green Marine is a joint Canada-USA initiative aimed at implementing a marine
industry environmental program throughout North America. Founded in 2008 by CEOs of leading marine
services companies in Eastern Canada, including our CEO, Green Marine has rapidly gained a reputation
for credibility and transparency, and for challenging participant companies to
improve their
environmental performance beyond regulatory compliance. The cornerstone of the Green Marine
initiative is its far-reaching environmental program, which makes it possible for any marine company
operating in Canada or the USA to voluntarily improve its environmental performance by undertaking
concrete and measurable actions.
Although the program was originally conceived for the Great Lakes and St. Lawrence corridor, the
interest it has generated throughout the marine industry has enabled it to evolve and cover North
America in its entirety. Companies participating in the voluntary program evaluate their performance
yearly on a scale that ranges from regulatory compliance to excellence in their practices with respect to
twelve priority environmental issues. The program is reviewed and adjusted every year to reflect new
regulations and keep up with technological innovation.
LOGISTEC | 2019 ANNUAL REPORT
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OP P O RT U NI TI ES
Serving the marine industry may represent an opportunity from an environmental point of view. Indeed,
carrying goods by ship is one of the most economical and environmentally friendly means of
transportation. The large volume of cargoes being transported on each sailing generally converts into a
lower consumption of energy per tonne of cargo handled versus ground transportation. Environmental
pressures from authorities to lower greenhouse gas emissions may favour marine transportation (via the
St. Lawrence Seaway for instance) which in turn may favour our business, since such ships will need to be
loaded and unloaded.
Our subsidiary SANEXEN is active in the field of environmental cleanup and rehabilitation of water mains,
and the more conscientious businesses and municipalities become, the more opportunities this may
represent for SANEXEN.
Corporate Governance
LOGISTEC has implemented high standards of corporate governance. LOGISTEC has in place corporate
governance practices that are consistent with the requirements of National Policy 58-201 “Corporate
Governance Guidelines” and National Instrument 58-101 “Disclosure of Corporate Governance
Practices”. Of LOGISTEC’s 12 directors, nine are independent, four are women, and the roles of
Chairman and Chief Executive Officer are separate. The Governance and Human Resources Committee
and the Audit Committee consist exclusively of independent directors. The Audit Committee, which is
involved in the review of interim and annual reports and financial statements prior to their submission to
the Board of Directors for approval, meets separately with the Company’s independent auditor. The
Board of Directors recommends the appointment of the independent auditor to shareholders after the
Audit Committee has made a proper analysis.
Pursuant to the requirements of National Instrument 52-109 “Certification of Disclosure in Issuers’
Annual and Interim Filings”, the President and Chief Executive Officer and the Chief Financial Officer are
responsible for the establishment and maintenance of disclosure controls and procedures (“DC&P”) and
internal control over financial reporting (“ICFR”). They are assisted in these tasks by a Certification
Steering Committee, which is comprised of members of the Company’s senior management including the
two previously mentioned executives.
They have reviewed this MD&A, the annual financial statements, the annual information form and the
information circular, which includes a compensation disclosure and analysis (the “Annual Filings”). Based
on their knowledge, the Annual Filings do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated or that is necessary to make a statement not misleading in light
of the circumstances under which it was made, for the period covered by the Annual Filings. Based on
their knowledge, the annual financial statements, together with the other financial information included
in the Annual Filings, fairly present in all material respects the financial condition, financial performance
and cash flows of the Company, as of the date and for the periods presented in the Annual Filings.
Under the supervision of the Certification Steering Committee, the effectiveness of DC&P was
evaluated. Based upon this evaluation, the President and Chief Executive Officer and the Chief Financial
Officer concluded that the DC&P were effective as at the end of the fiscal period ended
December 31, 2019, and that the design of these DC&P provided reasonable assurance that material
information relating to the Company, including its consolidated subsidiaries, was communicated to them
in a timely manner for the preparation of the Annual Filings, and that information required to be disclosed
in its Annual Filings was recorded, processed, summarized and reported within the required time periods.
The President and Chief Executive Officer and the Chief Financial Officer have also designed such ICFR,
or caused it to be designed under their supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements in accordance with IFRS.
Under the supervision of the Certification Steering Committee, the effectiveness of ICFR was evaluated.
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2019 ANNUAL REPORT | LOGISTEC
22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Based upon this evaluation, the President and Chief Executive Officer and the Chief Financial Officer
concluded that ICFR is adequate and effective to provide such assurance as at December 31, 2019.
There has been no change in the Company’s ICFR that occurred during the fourth quarter of 2019 that
has materially affected, or is reasonably likely to materially affect, the Company’s ICFR.
Outlook
We can qualify 2019 as a good recovery year. Total consolidated revenue closed at $639.9 million, a 9.4%
increase over 2018, while the profit before income taxes jumped back to $35.1 million in 2019 from some
$21.3 million in 2018, a 64.9% improvement. As a comparison, in 2017, the profit before income taxes
was $33.6 million. The progression of the Company's consolidated adjusted EBITDA (1) was even more
impressive with a final $89.6 million (2) for 2019, compared to $64.2 million in 2018 and $74.7 million in
2017.
The improvement of our results came from both business segments, but more particularly from our
environmental business where the financial improvement of FER-PAL had a positive impact on earnings.
With respect to the marine services segment, it benefited from a full-year of activity from the 2018
business combinations.
We actually started 2019 with a few uncertainties: U.S. tariffs and increasing trade tensions with China
and Canada, together with the uncertainty related to Brexit, all elements that could influence the flow of
cargo and the economy in general. Fortunately, these situations did not create a recession in 2019.
The marine services industry often feels the trends of the economy sooner than other industries. Indeed,
the cargo transported will be either transformed or sold, so if the owners of such cargo were to foresee
trends ahead, they would adjust their procurement, affecting demand in the marine industry. In this
regard, although global container volumes are still growing, the pace has decreased considerably:
container growth volumes at the Port of Montréal reached 3.9% in 2019, slower than the 2018 and 2017
rates of 9.2% and 6.2%, respectively. Another indicator of cargo movement is the Baltic Exchange Dry
Index, which tracks freight rates for the world’s largest cargo ships. In early February 2020, this index
dropped to the lowest level since March 2016, apparently influenced, amongst other things, by the
outbreak of the coronavirus in China, leading to lower activity from that country. The outbreak which is
now spreading to other countries may also lead to lower global trade. These statistics and indices could
be early indicators of a slowdown in the global economy. Furthermore, rail barricades in Canada and
continued U.S. tariffs could also impact our economy.
Nevertheless, we are cautiously optimistic about our business for 2020. The marine services segment
should stay the course and remain stable. Our environmental services segment is also expected to
perform well. As mentioned, FER-PAL’s financial performance has improved considerably, and we expect
even better returns following last year’s corrective efforts.
We are particularly proud of the outstanding performance of our Aqua-Pipe technology in its seismic
resistance tests. SANEXEN, together with a group of North America’s leading environmental public and
municipal utility services and the world-renowned research team at Cornell University’s School of Civil
and Environmental Engineering, subjected the Aqua-Pipe technology to a series of extreme seismic force
testing at the university’s Geotechnical Lifelines Large-Scale Testing Facility in Ithaca (NY). The resilience
achieved by the Aqua-Pipe technology surpassed the facility’s maximum testing capacity. Needless to say,
many of our targeted customers in the USA were positively impressed by these results, which bodes well
for future business.
(1) Adjusted EBITDA is a non-IFRS measure, please refer to the Non- IFRS Measure section on page 27.
(2) The 2019 figures reflect the application of IFRS 16 which had a favourable impact of $13.7 million on the adjusted EBITDA and for
which the comparative figures have not been restated. Please refer to Notes 2 and 16 of the 2019 Notes to 2019 for further details.
LOGISTEC | 2019 ANNUAL REPORT
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22 0 19 M AN AGEMEN T’S DIS C US SION AN D AN ALYS IS
Our consolidated balance sheet is very sound which positions LOGISTEC favourably for growth
opportunities. With this in mind, we have renegotiated our banking facilities in 2019. We are now
equipped with a four-year $300.0 million credit facility, providing us the resources we need to serve our
growth ambitions. Indeed, we are still in acquisition mode and are continuing to look at opportunities in
both business segments, in order to create value for our shareholders.
This MD&A along with the annual report, audited annual consolidated financial statements, the annual information form
and the information circular and compensation disclosure and analysis are all filed on SEDAR’s website (www.sedar.com)
and some of these documents can also be consulted on LOGISTEC’s website (www.logistec.com), in the investors section.
The interim financial reports and financial press releases can also be consulted on SEDAR and LOGISTEC’s website.
For the purpose of informing shareholders and potential investors about the Company’s prospects, sections of this document
may contain forward-looking statements, within the meaning of securities legislation, about the Company’s activities,
performance and financial position and, in particular, hopes for the success of the Company’s efforts in the development and
growth of its business. These forward-looking statements express, as of the date of this document, the estimates, predictions,
projections, expectations or opinions of the Company about future events or results. Although the Company believes that
the expectations produced by these forward-looking statements are founded on valid and reasonable bases and
assumptions, these forward-looking statements are inherently subject to important uncertainties and contingencies, many
of which are beyond the Company’s control, such that the Company’s performance may differ significantly from the
predicted performance expressed or presented in such forward-looking statements. The important risks and uncertainties
that may cause the actual results and future events to differ significantly from the expectations currently expressed are
examined under business risks in this document and include (but are not limited to) the performances of domestic and
international economies and their effect on shipping volumes, weather conditions, labour relations, pricing and competitors’
marketing activities. The reader of this document is thus cautioned not to place undue reliance on these forward-looking
statements. The Company undertakes no obligation to update or revise these forward-looking statements, except as required
by law.
(signed) Jean-Claude Dugas
Jean-Claude Dugas, CPA, CA
Chief Financial Officer
March 17, 2020
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22 0 19 C ONS OLIDATED F IN AN CIAL S TATEM EN TS
Independent Auditors’ Report
To the Shareholders of Logistec Corporation
Opinion
We have audited the consolidated financial statements of Logistec Corporation (the "Entity"), which
comprise:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the consolidated statements of financial position as at December 31, 2019 and 2018;
the consolidated statements of earnings for the years then ended;
the consolidated statements of comprehensive income for the years then ended;
the consolidated statements of changes in equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
(cid:120) notes to the consolidated financial statements, including a summary of significant accounting policies
(Hereinafter referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the
consolidated financial position of the Entity as at December 31, 2019 and 2018, and its consolidated
financial performance and its consolidated cash flows 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. Our
responsibilities under those standards are further described in the "Auditors’ Responsibilities for the Audit
of the Financial Statements" section of our auditors’ report.
We are independent of the Entity in accordance with the ethical requirements that are relevant to our
audit of the financial statements in Canada and we have fulfilled our other 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.
Emphasis of Matter – Change in Accounting Policy
We draw attention to Note 2 to the consolidated financial statements which indicates that the Entity has
changed its accounting policy for leases and has applied that change using a modified retrospective
transition approach.
Our opinion is not modified in respect of this matter.
Other Information
Management is responsible for the other information. Other information comprises:
(cid:120)
(cid:120)
the information included in Management’s Discussion and Analysis filed with the relevant Canadian
Securities Commissions;
the information, other than the financial statements and the auditors’ report thereon, included in the
Annual report 2019.
LOGISTEC | 2019 ANNUAL REPORT
49
22 0 19 C ONS OLIDATED F IN AN CIAL S TATEM EN TS
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 the information included in Management’s Discussion and Analysis filed with the relevant
Canadian Securities Commissions and the information, other than the financial statements and the
auditors’ report thereon, included in the Annual report 2019 as at the date of this auditors’ 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 the auditors’ report.
We have nothing to report in this regard.
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 International Financial Reporting Standards (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 Entity’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 Entity or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity’s financial reporting process.
Auditors’ 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 auditors’ report that
includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit.
We also:
(cid:120)
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.
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(cid:120) 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 Entity's internal control.
(cid:120) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
(cid:120) 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 Entity's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditors’ 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 auditors’
report. However, future events or conditions may cause the Entity to cease to continue as a going
concern.
(cid:120) 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.
(cid:120) 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.
(cid:120) Provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
(cid:120) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group Entity 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.
The engagement partner on the audit resulting in this auditors’ report is Yvon Dupuis.
Montréal, Canada
March 17, 2020
___________
*CPA auditor, CA, public accountancy permit No. A114306
LOGISTEC | 2019 ANNUAL REPORT
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Consolidated Statements of Earnings
Years ended December 31
(in thousands of Canadian dollars, except for per share amounts)
Revenue
Employee benefits expense
Equipment and supplies expense
Operating expense
Other expenses
Depreciation and amortization expense
Share of profit of equity accounted investments
Other gains and losses
Impairment charge
Operating profit
Finance expense
Finance income
Profit before income taxes
Income taxes
Profit for the year
Profit attributable to:
Owners of the Company
Non-controlling interest
Profit for the year
Basic earnings per Class A Common Share (1)
Basic earnings per Class B Subordinate Voting Share (2)
Diluted earnings per Class A share
Diluted earnings per Class B share
(1) Class A Common Share (“Class A share”)
(2) Class B Subordinate Voting Share (“Class B share”)
See accompanying notes to the consolidated financial statements.
Notes
4
5
15, 16, 18
14
6
18
7
8
9, 24
9, 24
9, 24
9, 24
2019
$
2018
$
639,942
584,878
(313,091)
(169,640)
(43,173)
(31,936)
(42,122)
8,729
(1,220)
—
47,489
(12,854)
501
35,136
(8,699)
26,437
26,194
243
26,437
1.97
2.16
1.92
2.11
(299,682)
(156,859)
(46,028)
(29,839)
(28,580)
8,111
3,596
(6,821)
28,776
(8,046)
572
21,302
(3,308)
17,994
18,060
(66)
17,994
1.37
1.51
1.32
1.45
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2019 ANNUAL REPORT | LOGISTEC
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Consolidated Statements of Comprehensive Income
Years ended December 31
(in thousands of Canadian dollars)
Profit for the year
Other comprehensive income (loss)
Notes
2019
$
2018
$
26,437
17,994
Items that are or may be reclassified to the consolidated statements of earnings
Currency translation differences arising on translation of foreign operations
Unrealized gain (loss) on translating debt designated as hedging item of the net investment in
foreign operations
Loss on derivatives designated as cash flow hedges
Income taxes relating to derivatives designated as cash flow hedges
Total items that are or may be reclassified to the consolidated statements of earnings
Items that will not be reclassified to the consolidated statements of earnings
Remeasurement (losses) gains on benefit obligation
Variation on retirement plan assets excluding amounts included in profit for the year
Income taxes on remeasurement loss (gain) on benefit obligation and variation on retirement
plan assets excluding amounts included in profit for the year
Total items that will not be reclassified to the consolidated statements of earnings
22
22
8
Share of other comprehensive (loss) income of equity accounted investments, net of income
taxes
Items that will not be reclassified to the consolidated statements of earnings
Total share of other comprehensive (loss) income of equity accounted investments, net of income
taxes
Other comprehensive (loss) income for the year, net of income taxes
Total comprehensive income for the year
Total comprehensive income (loss) attributable to:
Owners of the Company
Non-controlling interest
Total comprehensive income for the year
See accompanying notes to the consolidated financial statements.
(5,916)
9,871
3,653
(174)
47
(2,390)
(4,384)
1,680
719
(1,985)
(4,377)
(5)
2
5,491
1,850
(1,637)
(41)
172
(26)
(26)
118
118
(4,401)
22,036
5,781
23,775
21,819
217
22,036
23,805
(30)
23,775
LOGISTEC | 2019 ANNUAL REPORT
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Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Current income tax assets
Inventories
Prepaid expenses and other
Equity accounted investments
Property, plant and equipment
Right-of-use assets
Goodwill
Intangible assets
Non-current assets
Non-current financial assets
Deferred income tax assets
Total assets
Liabilities
Current liabilities
Short-term bank loans
Trade and other payables
Contract liabilities
Current income tax liabilities
Dividends payable
Current portion of lease liabilities
Current portion of long-term debt
Lease liabilities
Long-term debt
Deferred income tax liabilities
Post-employment benefit obligations
Contract liabilities
Non-current liabilities
Total liabilities
Equity
Share capital
Share capital to be issued
Retained earnings
Accumulated other comprehensive income
Equity attributable to owners of the Company
Non-controlling interest
Total equity
Total liabilities and equity
As at
December 31,
2019
$
As at
December 31,
2018
$
Notes
12
8
13
14
15
16
17
18
19
8
21
20
8
24
16
21
16
21
8
22
23
24
24
25
22,608
156,228
10,593
6,028
12,569
5,129
213,155
42,349
184,304
89,581
140,617
40,735
2,417
8,829
12,751
734,738
—
86,217
5,356
3,131
1,245
9,820
9,390
115,159
81,495
168,510
21,156
18,383
2,933
46,088
453,724
40,222
9,811
220,641
9,697
280,371
643
281,014
15,393
160,067
14,282
2,964
10,711
4,899
208,316
38,005
181,284
—
142,672
47,006
2,173
6,328
11,319
637,103
13,577
98,668
5,225
3,480
1,973
—
3,294
126,217
—
160,003
21,465
14,716
3,333
46,980
372,714
35,016
14,717
200,404
12,061
262,198
2,191
264,389
734,738
637,103
Commitments, contingent liabilities and guarantees
16, 30
See accompanying notes to the consolidated financial statements.
On behalf of the Board
(signed) James C. Cherry
James C. Cherry, FCPA, FCA
Director
(signed) Madeleine Paquin
Madeleine Paquin, C.M.
Director
54
2019 ANNUAL REPORT | LOGISTEC
22 0 19 C ONS OLIDATED F IN AN CIAL S TATEM EN TS
Consolidated Statements of Changes in Equity
(in thousands of Canadian dollars)
Attributable to owners of the Company
Notes
Share
capital
$
Share
capital
to be
issued
$
Accumulated
other comprehensive
income (Note 25)
$
Retained
earnings
$
Non-
controlling
interest
$
Total
$
Total
equity
$
Balance as at January 1, 2019
35,016
14,717
12,061
200,404
262,198
2,191 264,389
Profit for the year
—
—
—
26,194
26,194
243
26,437
Other comprehensive (loss) income
Currency translation differences
arising on translation of foreign
operations
Unrealized gain on translating debt
designated as hedging item of the
net investment in foreign
operations
Remeasurement losses on benefit
obligation and return on
retirement plan assets, net of
income taxes
Cash flow hedges, net of income
taxes
Share of other comprehensive
income of equity accounted
investments, net of income taxes
Total comprehensive income (loss)
for the year
Remeasurement of written put
option liability
Repurchase of non-controlling
interests
Repurchase of Class A shares
Issuance and repurchase of Class B
shares
Issuance of Class B share capital to a
subsidiary shareholder
Dividends on Class A shares
Dividends on Class B shares
Balance as at December 31, 2019
—
—
—
—
—
—
—
—
(6)
22
23
23, 28
24
24
306
24
24
24
4,906
—
—
40,222
—
—
—
—
—
—
—
—
—
—
(5,890)
—
(5,890)
(26)
(5,916)
3,653
—
3,653
—
3,653
—
(1,985)
(1,985)
(127)
—
(127)
—
(26)
(26)
—
—
—
(1,985)
(127)
(26)
(2,364)
24,183
21,819
217
22,036
—
—
—
—
2,766
2,766
—
2,766
(35)
(381)
(35)
(387)
(1,765)
—
(1,800)
(387)
(1,384)
(1,078)
—
(1,078)
(4,906)
—
—
9,811
—
—
—
9,697
—
(2,722)
(2,190)
220,641
—
(2,722)
(2,190)
280,371
—
—
—
—
(2,722)
(2,190)
643 281,014
See accompanying notes to the consolidated financial statements.
LOGISTEC | 2019 ANNUAL REPORT
55
22 0 19 C ONS OLIDATED F IN AN CIAL S TATEM EN TS
Consolidated Statements of Changes in Equity (Continued)
(in thousands of Canadian dollars)
Attributable to owners of the Company
Share
capital
$
Notes
Share
capital
to be
issued
$
Accumulated
other comprehensive
income (Note 25)
$
Retained
earnings
$
Non-
controlling
interest
$
Total
$
Total
equity
$
Balance as at January 1, 2018
29,019
19,820
6,606
173,129
228,574
2,221 230,795
Profit (loss) for the year
—
—
—
18,060
18,060
(66)
17,994
Other comprehensive income (loss)
Currency translation differences
arising on translation of foreign
operation
Unrealized loss on translating debt
designated as hedging item of the
net investment in foreign
operations
Remeasurement gains on benefit
obligation and variation on
retirement plan assets excluding
amounts included in profit for the
year, net of income taxes
Cash flow hedges, net of income
taxes
Share of other comprehensive
income of equity accounted
investments, net of income taxes
Total comprehensive income (loss)
for the year
Remeasurement of written put
option liability
Repurchase of Class A shares
Issuance and repurchase of Class B
shares
Issuance of Class B share capital to a
subsidiary shareholder
Other dividend
Dividends on Class A shares
Dividends on Class B shares
Balance as at December 31, 2018
—
—
—
—
—
—
22
23
24
24
—
(10)
904
—
—
—
—
—
—
—
—
—
9,835
—
9,835
36
9,871
(4,377)
—
(4,377)
—
(4,377)
—
(3)
172
172
—
(3)
—
118
118
—
—
—
172
(3)
118
5,455
18,350
23,805
(30)
23,775
—
—
—
15,644
(174)
15,644
(184)
(1,195)
(291)
—
—
—
15,644
(184)
(291)
24
24
24
5,103
—
—
—
35,016
(5,103)
—
—
—
14,717
—
—
—
—
12,061
—
(776)
(2,565)
(2,009)
200,404
—
(776)
(2,565)
(2,009)
262,198
—
—
—
—
—
(776)
(2,565)
(2,009)
2,191 264,389
See accompanying notes to the consolidated financial statements.
56
2019 ANNUAL REPORT | LOGISTEC
22 0 19 C ONS OLIDATED F IN AN CIAL S TATEM EN TS
Consolidated Statements of Cash Flows
Years ended December 31
(in thousands of Canadian dollars)
Notes
2019
$
2018
$
Operating activities
Profit for the year
Items not affecting cash and cash equivalents
Cash generated from operations
Dividends received from equity accounted investments
Contributions to defined benefit retirement plans
Settlement of provisions
Changes in non-cash working capital items
Income taxes paid
Financing activities
Net change in short-term bank loans
Issuance of long-term debt, net of transaction costs
Repayment of long-term debt
Repayment of lease liabilities
Interest paid
Issuance of Class B shares
Repurchase of Class A shares
Repurchase of Class B shares
Dividends paid on Class A shares
Dividends paid on Class B shares
Investing activities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Acquisition of other non-current assets
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of other non-current assets
Business combinations
Cash acquired in a business combination
Interest received
Cash paid to non-controlling interests
Cash received on other non-current financial assets
Repayment of other non-current liabilities
26
14
22
23
26
21, 26
21, 26
24
24
24
24
24
15
18
15
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Effect of exchange rate on balances held in foreign currencies of foreign
operations
Cash and cash equivalents, end of year
Non-cash transactions and supplemental information
26
See accompanying notes to the consolidated financial statements.
26,437
55,912
82,349
4,113
(991)
(194)
(2,049)
(11,947)
71,281
(13,577)
84,649
(66,030)
(9,726)
(12,269)
258
(387)
(1,635)
(2,703)
(2,161)
(23,581)
(34,974)
(122)
(944)
1,832
151
—
—
439
(7,972)
211
(571)
(41,950)
5,750
15,393
1,465
22,608
17,994
43,823
61,817
4,596
(1,049)
(359)
4,119
(10,037)
59,087
3,747
134,653
(62,382)
—
(7,241)
562
(177)
(1,349)
(2,505)
(1,947)
63,361
(16,131)
(208)
(286)
1,416
215
(97,998)
2,501
539
(157)
211
—
(109,898)
12,550
3,963
(1,120)
15,393
LOGISTEC | 2019 ANNUAL REPORT
57
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
1. General Information
LOGISTEC Corporation (the “Company”) provides specialized cargo handling and other services to a
wide variety of marine, industrial and municipal customers. The Company has cargo handling facilities in
34 ports across North America, and offers marine agency services to foreign shipowners and operators
serving the Canadian market. The Company is widely diversified on the basis of cargo type and port
location with a balance between import and export activities. Furthermore, the Company, through its
subsidiaries SANEXEN Environmental Services Inc. (“SANEXEN”) and FER-PAL Construction Ltd. (“FER-
PAL”), operates in the environmental services segment where it provides services for the rehabilitation
of underground water mains, soils and materials management, site remediation, risk assessment and
manufacturing of woven hoses.
The Company is incorporated in the Province of Québec and is governed by the Québec Business
Corporations Act. Its shares are listed on the Toronto Stock Exchange (“TSX”) under the ticker symbols
LGT.A and LGT.B. The address of its registered office is 360 Saint-Jacques Street, Suite 1500,
Montréal (QC) H2Y 1P5, Canada.
The Company’s largest shareholder is Sumanic Investments Inc.
These audited consolidated financial statements were approved by the Company’s Board of Directors on
March 17, 2020.
2. Summary of Significant Accounting Policies
Significant accounting policies used in the preparation of these consolidated financial statements are set
out below.
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.
Accounting Standard and Interpretation Issued and Adopted
On January 1, 2019, the Company adopted the following standard and interpretation:
I F RS 1 6 LE AS ES
IFRS 16 Leases (“IFRS 16”) specifies how to recognize, evaluate and present leases and provide
information about them. The standard contains a unique model for lessee accounting which requires the
recognition of assets and liabilities for all contracts unless the contract term is 12 months or less or the
underlying asset has a low value. This standard replaces IAS 17 Leases (“IAS 17”), IFRIC 4 Determining
whether an arrangement contains a lease, SIC-15 Operating Leases — Incentives and SIC-27 Evaluating the
substance of transactions in the legal form of a lease.
The consolidated financial statements have been prepared in accordance with IFRS 16. The Company
adopted this standard using the modified retrospective approach, therefore the comparative information
has not been restated and continues to be reported under IAS 17. The Company used the practical
expedients exemptions for short-term leases, leases for which the underlying asset is of low value and
applied a single discount rate to a portfolio of leases with similar remaining lease terms and relied on
assessment of the onerous lease provisions, instead of performing an impairment review.
58
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
The Company used the practical expedients exemptions not to reassess whether a contract is, or contains,
a lease as at January 1, 2019. Instead, the Company reviewed and assessed its existing lease
arrangements that were previously identified as leases under IAS 17 and, based on the facts and
circumstances that existed at that date, concluded that the initial application of IFRS 16 has had the
following impact regarding its recognition, measurement and disclosures:
(cid:16) Record of right-of-use assets of $76,517 representing the Company’s right to use the underlying
assets included in lease arrangements;
(cid:16) Record of lease liabilities (including the current portion) of $76,517 representing the present value
of lease payments, discounted using the interest rate implicit in these lease arrangements;
(cid:16) Additional disclosures related to IFRS 16 are provided in Note 16.
The following table reconciles the operating lease commitments disclosed under IAS 17 as at December
31, 2018 and the lease liabilities recognized on January 1, 2019:
Operating lease commitment as at December 31, 2018, as disclosed in the Company’s consolidated
financial statements
Recognition exemption for short-term and low-value asset leases
Extension and termination options reasonably certain to be exercised
Variable lease payments based on an index or a rate
Discounted using the incremental weighted average borrowing rate of 4.70%
Lease liabilities recognized as at January 1, 2019
IF RI C 2 3 U N CE R T AI N TIE S O VE R I N C O ME T AX T R EA T ME N TS
January 1,
2019
$
85,229
(1,587)
24,322
(23,672)
(7,775)
76,517
IFRIC 23 Uncertainty over Income Tax Treatments (“IFRIC 23”), clarifies how to apply the recognition and
measurement requirements in IAS 12 Income Taxes, when there is uncertainty over income tax
treatments.
The consolidated financial statements have been prepared in accordance with IFRIC 23. The Company
completed its assessment of the impact of this interpretation and the adoption does not have a material
impact on the consolidated financial statements.
The Company has updated its significant accounting policies in the section below.
Preparation
The consolidated financial statements have been prepared on a historical cost basis, with the exception
of certain financial instruments that are measured at fair value, including derivative financial instruments,
post-employment benefit assets, post-employment benefit obligations, and provisions for asset
retirement obligations. Historical cost is generally based on the fair value of the consideration given in
exchange for services. Fair value is defined as the price that would be received for the sale of an asset or
paid for the transfer of a liability in a normal transaction between market participants on the valuation
date.
LOGISTEC | 2019 ANNUAL REPORT
59
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries.
SUBS IDI A RI ES
Subsidiaries are all entities controlled by the Company. Control is achieved where the Company has
power over the investee, exposure or rights to variable returns from its involvement with the investee,
and the ability to use its power over the investee to affect the amount of these returns. The subsidiaries
continue to be consolidated until the date that such control ceases.
Revenue and expenses of subsidiaries acquired or disposed of during the year are included in the
consolidated statements of earnings and of comprehensive income from the effective date of acquisition
of control and up to the effective date of loss of control, as appropriate. Total comprehensive income of
subsidiaries is attributed to owners of the Company and to non-controlling interests.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies in line with those used by the Company.
All intra-group transactions, balances, revenue, expenses, and cash flows are eliminated on consolidation
until they are realized with a third party. Exchange differences on monetary items are recognized in profit
or loss in the period in which they arise except for exchange differences on monetary items receivable
from or payable to a foreign operation for which settlement is neither planned nor likely to occur
(therefore forming part of the net investment in the foreign operation), which are recognized initially in
other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary
items.
The following subsidiaries are wholly owned by the Company:
BalTerm, LLC, CrossGlobe Transport, Ltd., GSM Intermediate Holdings, Inc., GSM Maritime Holdings,
LLC, Gulf Stream Marine, Inc. (“GSM”), Les Terminaux Rideau Bulk Terminals Inc., LOGISTEC
Environmental Services Inc., LOGISTEC Marine Agencies Inc., LOGISTEC Marine Services Inc.,
LOGISTEC Stevedoring Inc., LOGISTEC Stevedoring (New Brunswick) Inc., LOGISTEC Stevedoring
(Nova Scotia) Inc., LOGISTEC Stevedoring (Ontario) Inc., LOGISTEC Stevedoring U.S.A. Inc., LOGISTEC
USA Inc., MtlLINK Multimodal Solutions Inc. (85.82% in 2018), Niedner Inc., Pate Stevedore Company,
Inc. (“Pate”), Ramsey Greig & Co. Ltd., SANEXEN Environmental Services Inc., SANEXEN Water, Inc.,
SETL Real Estate Management Inc., Sorel Maritime Agencies Inc., and Tartan Terminals, Inc.
The Company also holds a 51.03% investment in FER-PAL (51% in 2018) and a 77.91% investment in
LOGISTEC Gulf Coast LLC (“LGC”) (70% in 2018). Refer to Note 23 for further details.
BUS I NES S C O MBI N A TI O NS
The Company uses the acquisition method of accounting to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair value of assets transferred,
liabilities incurred and equity interests issued by the Company. The consideration transferred includes
the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-
(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:71)(cid:3) (cid:68)(cid:86)(cid:3) (cid:76)(cid:81)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71)(cid:17)(cid:3) (cid:44)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:262)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) (cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3) (cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:72)(cid:81)(cid:87)(cid:3)
liabilities assumed in a business combination are initially measured at their fair values at the acquisition
date. On an acquisition-by-acquisition basis, the Company recognizes any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest’s proportionate share in the recognized
amounts of the acquiree’s net assets.
Changes in the parent company’s ownership interest in subsidiaries that do not result in a loss of control
are accounted for as equity transactions.
60
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
N O N- C O N T R OL LI N G I N T E RE S TS
Non-controlling interests represent equity interests in subsidiaries owned by outside parties. The share
of net assets of subsidiaries attributable to non-controlling interests is presented as a component of
equity.
EQ UI T Y A C CO U N TE D I N V ES T ME N TS
Equity accounted investments consist of investments in joint ventures and associates of the Company.
J OI N T VE N T U RE S
A joint venture is a contractual arrangement whereby the Company and other parties undertake to
have joint control over an arrangement, which exists only when decisions about the activities that
significantly affect the returns of the arrangement require the unanimous consent of the parties
sharing control. It involves the establishment of a corporation or a partnership and the parties having
joint control have rights to the net assets of the arrangement.
AS S O CI A TES
An associate is an entity over which the Company has significant influence and that is neither a
subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the
financial and operating policy decisions of the investee, but is not control or joint control over those
policies.
The profit or loss, assets and liabilities of equity accounted investments are incorporated in these
consolidated financial statements using the equity method of accounting. Under the equity method, an
investment in a joint venture or associate is initially recognized in the consolidated statements of financial
position at cost, and adjusted thereafter to recognize the Company’s share of profit or loss and of other
comprehensive income or loss of the joint venture or associate. When the Company’s share of loss of a
joint venture or associate exceeds the Company’s interest in that joint venture or associate (which
includes any long-term interests that, in substance, form part of the Company’s net investment in the joint
venture or associate), the Company discontinues recognizing its share of further losses unless the
Company has incurred legal or constructive obligations or made payments on behalf of the joint venture
or associate.
Any excess of the acquisition cost over the Company’s share of the net fair value of the identifiable assets,
liabilities and contingent liabilities of a joint venture or associate recognized at the acquisition date is
recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the
Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over
the acquisition cost, after reassessment, is recognized immediately in the consolidated statements of
earnings.
When the Company transacts with its joint venture or associate, profit or loss resulting from transactions
with the joint venture or associate is recognized in the Company’s consolidated financial statements only
to the extent of interests in the joint venture or associate that are not related to the Company.
Revenue Recognition
Revenue is measured based on the consideration specified in a contract with a customer and excludes
amounts collected on behalf of third parties. The Company recognizes revenue when it transfers control
of a service or product to a customer. Determining the timing of the transfer of control (“at a point in time”
or “over time”) requires judgment. The Company recognizes revenue from the following major sources:
M A RI NE S ER VI C E S
The Company earns revenue from stevedoring, cargo loading and unloading, container stuffing and
destuffing, ship dockage, road transportation, storage and tailgating (truck loading and discharging).
LOGISTEC | 2019 ANNUAL REPORT
61
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Revenue from these services is recognized over time as the services are performed during the period
between the arrival and departure of the cargo to or from the terminal.
Fees for storage are recognized over time for material stored by customers under short-term
arrangements at the Company’s facilities based on a time-proportion basis.
For arrangements that involve multiple performance obligations, the total consideration in the contract
is allocated to the separate performance obligations based on their stand-alone selling prices, and
revenue is recognized when, or as, performance obligations in the contract are satisfied. The stand-alone
selling price is determined based on the list prices at which the Company sells the services in separate
transactions.
E N VI R O N ME N T AL S E R VI CE S
The Company earns revenue in the environmental services segment, where it provides services to
industrial, municipal and other governmental customers for the rehabilitation of underground water
mains, site remediation, soils and materials management and risk assessment.
Contracts with customers for these services generally comprise multiple performance obligations. There
is significant integration of services performed by the Company and, as such, they are considered to
represent a single distinct performance obligation. Revenue from these services is recognized over time
based on the stage of completion of work, which is determined on the basis of costs incurred.
Under the cost method, the stage of completion at any given time is measured by dividing the cumulative
costs incurred at the period end date by the sum of incurred costs and anticipated costs for completing a
contract. The cumulative effect of changes to anticipated costs and revenue for completing a contract are
recognized in the period in which the revisions are identified. In the event that the total anticipated costs
exceed the total anticipated revenue on a contract, such loss is recognized in its entirety in the period in
which it becomes known. Estimates are required to determine the appropriate anticipated costs and
revenue.
EN VI R O N ME N T AL G O OD S
Revenue from the manufacturing of woven hoses is recognized at a point in time when control of the asset
is transferred to the customer, generally when a customer takes possession of the goods. In contracts
under which the Company provides custom products or services and for which it has an enforceable right
to payment for performance completed, the criteria for revenue recognition over time are met and,
consequently, revenue is recognized under that method.
Foreign Currencies
F U N C TI O N AL A ND P RE S EN T A TI O N C UR R E N C Y
Items included in the financial statements of each of the Company’s foreign operations are measured
using the currency of the primary economic environment in which the entity operates (the “functional
currency”). The Company’s functional and presentation currency is the Canadian dollar.
The financial statements of foreign operations that have a functional currency different from that of the
Company’s presentation currency are translated into Canadian dollars. Assets and liabilities are
translated at the rates in effect at the end of the reporting period; revenue and expense items are
translated at the rates in effect on transaction dates. Gains or losses arising from translation are recorded
in equity under the heading accumulated other comprehensive income — foreign currency translation.
62
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
T R A NS AC TI O NS A N D B A LA N C E S
Revenue and expense items arising from transactions in foreign currencies are converted into the
functional currency at the rates in effect on transaction dates. Monetary asset and liability items on the
consolidated statements of financial position are translated into the functional currency at the rates in
effect at the end of the reporting period; non-monetary items are translated at the rates in effect on
transaction dates. Exchange gains or losses arising from translation are recognized in the consolidated
statements of earnings under the heading other gains and losses, except where hedge accounting is
applied, as described under derivative financial instruments.
Income Taxes
Income tax expense comprises current and deferred income taxes. The income tax expense is recognized
in the consolidated statements of earnings except to the extent that it relates to items recognized directly
in equity or in other comprehensive income, in which case it is recognized in equity or other
comprehensive income.
C U R RE N T I N C O ME T AXE S
Current income taxes are the expected taxes payable on the taxable profit for the year, using tax rates
enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable
with respect to previous years.
DEF E R RE D I N C O ME T AX ES
Deferred income taxes are recognized on temporary differences between the carrying amounts of assets
and liabilities in the consolidated financial statements and the corresponding tax basis used in the
computation of taxable profit. Deferred income tax assets and liabilities are measured at the tax rates that
are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates
that have been enacted or substantively enacted by the end of the reporting period. The measurement of
deferred income tax assets and liabilities reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
DEF E R RE D I N C O ME T AX AS S E TS
Deferred income tax assets are generally recognized for all deductible temporary differences to the
extent that it is probable that taxable profit will be available against which the deductible temporary
differences can be utilized. Such deferred income tax assets are not recognized if the temporary
difference arises from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred income tax assets are recognized for the carry forward of unused tax losses and unused tax
credits to the extent that it is probable that future taxable profit will be available against which the
unused tax losses and unused tax credits can be utilized.
Deferred income tax assets arising from deductible temporary differences associated with
investments in subsidiaries and associates, and interests in joint ventures are only recognized to the
extent that it is probable that there will be sufficient taxable profit against which the benefits of the
temporary differences can be utilized and they are expected to reverse in the foreseeable future.
The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow
all or part of the asset to be recovered.
LOGISTEC | 2019 ANNUAL REPORT
63
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years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
DEF E R RE D I N C O ME T AX LI ABI LI TIES
Deferred income tax liabilities are generally recognized for all taxable temporary differences. Such
deferred income tax liabilities are not recognized if the temporary difference arises from the initial
recognition of goodwill or from the initial recognition of other assets and liabilities in a transaction
(other than in a business combination) that affects neither the taxable profit nor the accounting profit.
Deferred income tax liabilities are recognized for taxable temporary differences associated with
investments in subsidiaries and associates, and interests in joint ventures, except where the Company
is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and in banks, highly liquid investments with maturity
dates less than three months from the acquisition date, and highly liquid investments redeemable at all
times without penalty.
Trade and Other Receivables
Trade receivables are amounts due from customers for the rendering of services or sale of goods in the
normal course of business. Invoices are issued according to contractual terms and are usually payable
upon receipt. The period between performance and payments for the performance is generally less than
one year. Uninvoiced amounts are presented as contract assets. Trade and other receivables are
classified as current assets if payment is due within one year or less. Trade and other receivables are
initially recognized at fair value and subsequently measured at amortized cost, less impairment. The
Company maintains an allowance for doubtful accounts to provide for impairment of trade receivables.
The expense relating to doubtful accounts is included within other expenses in the consolidated
statements of earnings.
Contract Assets or Contract Liabilities
Contract assets primarily relate to the gross unbilled amount for a given project that is expected to be
collected from customers for contract work performed to date. It is measured at cost plus profit
recognized by the Company to date less progress billings. The contract assets are transferred to trade
and other receivables when the rights become unconditional. This usually occurs when the Company
issues an invoice to the customer. If progress billings for a given project exceed costs incurred plus
recognized profit, then the difference is presented as contract liabilities.
Contract liabilities also relate to the advance consideration received from customers, for which revenue
is usually recognized when the service is rendered or upon delivery of the goods. The contract liabilities
are presented as either current or non-current based on the timing of when the Company expects to
recognize revenue.
The Company used the practical expedients exemptions as allowed by IFRS 15 Revenue from Contracts
with Customers, therefore no information is provided about the remaining performance obligations as at
December 31, 2019 and 2018 that have an original expected duration of one year or less.
Inventories
Inventories are measured at the lower of cost and net realizable value. Cost is determined on a first-in,
first-out basis. Cost of work in progress and finished goods includes raw material cost, labour cost and
appropriate overhead cost. Net realizable value represents the estimated sale price for inventories less
all estimated costs of completion and costs necessary to make the sale.
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2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of government grants, less accumulated
depreciation and accumulated impairment losses. Cost includes expenditures that are directly
attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount
or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost can be measured reliably. The carrying
amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are recorded
in the consolidated statements of earnings during the period in which they are incurred.
Property, plant and equipment, less their residual value, are depreciated using the straight-line method
over their estimated useful lives. The estimated useful lives are as follows:
Buildings
Machinery and automotive equipment
Computer equipment
Furniture and fixtures
Leasehold improvements
5 to 25 years
3 to 20 years
3 to 7 years
3 to 10 years
4 to 10 years
The estimated useful lives, residual values and method of depreciation are reviewed annually, with the
effect of any changes in estimates accounted for on a prospective basis.
The gain or loss on disposal of property, plant and equipment is determined by comparing the sales
proceeds with the carrying amount of the asset and is included in the consolidated statements of earnings.
Leases
LE AS E A R RA N GE M E N TS – A C C OU N TI N G PO LI C Y AP PL I C A B LE B E F O RE J A N U A R Y 1, 2 0 1 9
Leases were classified as either operating or finance leases based on the substance of the transaction at
the inception of the lease.
OP E RA TI N G LE AS ES
Leases in which a significant portion of the risks and rewards of ownership were retained by the lessor
were classified as operating leases. Expenses under an operating lease were recognized in operating
expenses in the consolidated statements of earnings on a straight-line basis over the period of the
lease.
F I N A N CE LE AS E S
Leases in which substantially all the risks and rewards of ownership were transferred to the Company
were classified as finance leases.
Assets held under finance leases were initially recognized as assets of the Company at their fair value
at the inception of the lease or, if lower, at the present value of the minimum lease payments. The
corresponding liability to the lessor was included in the consolidated statements of financial position
as a finance lease obligation and was classified in long-term debt.
Lease payments were apportioned between finance expense and reduction of the lease obligation
using the effective interest method so as to achieve a constant rate of interest on the remaining
balance of the liability. A finance expense was charged directly to the consolidated statements of
earnings, unless it was directly attributable to qualifying assets, in which case it was capitalized.
LE AS E A R RA N GE M E N TS – A C C OU N TI N G PO LI C Y AP PL I C A B LE AF TE R J A N U A R Y 1, 2 0 1 9
At inception of a lease arrangement, the Company assesses whether a contract is or contains a lease,
based on whether the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration.
LOGISTEC | 2019 ANNUAL REPORT
65
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
S H OR T - TE R M O R L OW V AL UE LE AS ES
The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases
that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes
the lease payment associated with these leases as an expense on a straight-line basis over the lease
term in the consolidated statements of earnings under the caption operating expense.
AL L O THE R LE AS ES
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date.
The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date, plus any initial direct costs incurred
and estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset
or site on which it is located, less any lease incentives received. The assets are depreciated using the
straight-line method over the earlier of the end of their estimated useful lives or the lease term. The
lease term includes periods covered by an option to extend if the Company is reasonably certain to
exercise that option.
Lease liability is initially measured at the present value of the lease payments, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s
incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the
discount rate.
The lease liability is measured at amortized cost using the effective interest method. Lease payments
are apportioned between finance expense and reduction of the lease liability using the effective
interest method to achieve a constant rate of interest on the remaining balance of the liability. A
finance expense is charged directly to the consolidated statements of earnings.
Lease liability is remeasured when there is a change in future lease payments arising from a change in
an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable
under a residual value guarantee, or if the Company changes its assessment of whether it will exercise
a purchase, extension or termination option. When it is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset.
Government Grants
Government grants related to the acquisition of capital expenditures are reflected as a reduction of the
cost of the related assets. Accordingly, they are recognized in the consolidated statements of earnings
over the life of the depreciable asset as a reduced depreciation expense. Government grants for expenses
are recognized as a reduction of the related expenses. The benefit of a government loan at a below-
market rate of interest is treated as a government grant, measured as the difference between proceeds
received and the fair value of the loan based on prevailing market interest rates.
Goodwill
Goodwill is measured as the excess of the acquisition cost over the Company’s share in the fair value of
all identified assets and liabilities. Goodwill is initially recognized as an asset at fair value and is
subsequently measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Company’s cash-generating
units (“CGU”) (or groups of CGUs) expected to benefit from the synergies of the combination, and which
represent the lowest level within the Company at which goodwill is monitored for internal purposes.
CGUs to which goodwill has been allocated are tested for impairment annually, except when certain
criteria are met, or more frequently when there is an indication that the unit may be impaired.
Recoverable amount is the higher of fair value less cost of disposal to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
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2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
rate that reflects current market assessments of the time value of money and the risks specific to the CGU
for which the estimates of future cash flows have not been adjusted. If the recoverable amount of the
CGU is less than the carrying amount of the unit, 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 unit pro-rated on
the basis of the carrying amount of each asset in the unit. An impairment loss recognized on goodwill is
not reversed in subsequent periods.
On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of
the gain or loss on disposal.
Intangible Assets
Intangible assets consist primarily of lease rights and location, and client relationships. Intangible assets
have finite useful lives and are stated at cost less accumulated amortization and impairment losses.
Intangible assets are amortized using the straight-line method over their estimated useful lives. The
estimated useful lives are as follows:
Client relationships
Computer software
Lease rights and location
2 to 15 years
3 to 5 years
15 to 21 years
Research expenditures are recognized as an expense as incurred. Development expenditures are
recognized as an intangible asset when all the following criteria can be 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 measure reliably the expenditure attributable to the intangible asset during its
development.
Development expenditures that do not meet these criteria are recognized as an expense as incurred.
Development expenditures previously recognized as an expense are not recognized as an intangible asset
in a subsequent year.
Impairment of Non-Financial Assets Other Than Goodwill
At the end of each reporting date, the Company reviews the carrying amount 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 is estimated in order to determine the extent of the
impairment loss (if any). Where it is not possible to estimate the recoverable amount for an individual
asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.
If the carrying amount of an asset (or CGU) exceeds its recoverable amount, the carrying amount of the
asset (or CGU) is reduced to its recoverable amount. An impairment loss is immediately recognized in the
consolidated statements of earnings. 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 the consolidated statements of earnings.
LOGISTEC | 2019 ANNUAL REPORT
67
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Provisions
Provisions include provisions for warranty, claims and litigation, provisions to further recognize the
Company’s share of losses of certain joint ventures for which it has incurred constructive obligations, and
asset retirement obligations. Provisions are recognized when the Company has a legal or constructive
obligation as a result of a past event, when it is probable that the Company will be required to settle the
obligation, and when 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. When 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 (where the effect of the
time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered
from a third party, a 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.
W A R R A N T Y
A subsidiary of the Company provides a limited warranty on its products to be free of defects in material
and workmanship for a period of five years from the date goods are sold. The provision is based on
management’s best estimate of the amount required to settle the obligation.
CL AI M S A N D L IT IG A TI O N
A provision for claims and litigation is recognized when it is probable that the Company will be held
responsible. The provision is based on management’s best estimate of the amount required to settle the
obligation.
AS S E T RE TI RE M E N T O B LIG A TI O NS
The Company’s asset retirement obligations essentially derive from its obligations to remove assets and
to restore its sites under lease arrangements. The fair value of a liability for an asset retirement obligation
is recorded in the year in which it is incurred and when a reasonable estimate of fair value can be made.
The fair value of a liability for an asset retirement obligation is the amount at which that liability could be
settled in a current transaction between independent parties that is other than in a forced or liquidation
transaction. The asset retirement cost is capitalized as part of the related asset and is amortized using a
systematic and rational method over the asset’s useful life.
Post-Employment Benefits
Certain employees have entitlements under the Company’s retirement plans which are either defined
contribution or defined benefit retirement plans. These plans take different forms depending on the legal,
financial and tax regime of each country.
For defined benefit retirement plans, the level of benefit provided is based on the length of service and
earnings of the person entitled. Also, the cost of retirement is actuarially determined using the projected
unit credit method pro-rated on service and management’s best estimate of expected plan investment
performance, salary escalation and retirement ages of employees.
The retirement liability recognized in the consolidated statements of financial position represents the
present value of the defined benefit obligation as reduced by the fair value of plan assets. Any asset
resulting from this calculation is limited to the present value of available refunds and reductions in future
contributions to the plan.
The net interest expense is calculated on the net defined benefit liability (asset) by applying the discount
rate used to calculate the defined benefit obligation at the beginning of the year.
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2019 ANNUAL REPORT | LOGISTEC
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years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Remeasurements are included in other comprehensive income, namely actuarial gains and losses on
benefit obligations and variation on plan assets excluding amounts included in profit for the year.
Actuarial gains and losses are recognized in full in the period in which they occur, in other comprehensive
income, without recycling to the consolidated statements of earnings in subsequent periods.
Past service cost is recognized at the earlier of the following two dates:
i. When the plan amendment or curtailment occurs; or
ii. When the entity recognizes related restructuring costs or termination benefits.
Contributions for defined contribution retirement plans are recognized as an expense when employees
have rendered service entitling them to the contributions.
Financial Instruments
Trade receivables and debt securities issued are initially recognized when they are originated. All other
financial assets and liabilities are initially recognized when the Company becomes a party to the
contractual provisions of the instruments. Financial assets, unless it is a trade receivable without a
significant financing component, and financial liabilities are initially recorded at fair value. A trade
receivable without a significant financing component is initially measured at the transaction price.
Transaction costs that are directly attributable to the acquisition or issuance of financial assets and
financial liabilities (other than financial assets and financial liabilities measured at fair value through profit
or loss (“FVTPL”)) are added to or deducted from the fair value of the financial assets or liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial
assets or financial liabilities measured at FVTPL are recognized immediately in profit or loss.
F I N A N CI A L AS S E TS
CL AS S IF I C AT IO N
All financial assets that do not meet a “solely payment of principal and interest” condition shall be
classified at FVTPL. For those that meet this condition, classification at initial recognition will be
determined based on the business model under which these assets are managed. Financial assets that
are being managed on a “held for trading” or fair value basis are classified at FVTPL. Financial assets
that are being managed on a “hold to collect and for sale” basis are classified at fair value through other
comprehensive income. Finally, financial assets that are being managed on a “hold to collect” basis are
classified at amortized cost.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably
elect to present subsequent changes in the investment’s fair value in other comprehensive income.
This election is made on an investment-by-investment basis.
Cash and cash equivalents, trade and other receivables and non-current financial assets are classified
at amortized cost.
Interest income is recognized by applying the effective interest rate. The effective interest method is
a method of calculating the amortized cost of a financial asset and of allocating interest income over
the corresponding period. The effective interest rate is the rate that discounts estimated future cash
receipts over the expected life of the financial asset, or, where appropriate, a shorter period.
I M P AI R ME N T OF F I N A N C I A L AS S E TS
The Company recognizes a loss allowance for expected credit losses (“ECL”) on financial assets that
are measured at amortized cost.
The Company elected to apply the simplified impairment approach. Therefore, the Company
recognizes lifetime ECL for financial assets that are measured at amortized cost. Lifetime ECL
represents the expected credit losses that will result from all possible default events over the expected
LOGISTEC | 2019 ANNUAL REPORT
69
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
life of a financial instrument. ECL are estimated using a provision matrix based on the Company’s
historical credit loss experience, 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 when
appropriate.
The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit
obligation in full.
DE RE C O G NI TI O N OF F I N A N CI AL AS S ETS
The Company derecognizes a financial asset only when the contractual rights to the cash flow from the
asset expire or when it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another party.
F IN A N CI A L LI AB ILI TI E S
Financial liabilities are classified either at FVTPL or at amortized cost.
CL AS S IF I C AT IO N
Short-term bank loans, trade and other payables, dividends payable, long-term debt and liabilities due
to non-controlling interests are classified 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 discounts estimated future cash
payments over the expected life of the financial liability, or, where appropriate, a shorter period.
Long-term liabilities due to non-controlling interests included in the caption non-current liabilities in
the consolidated statements of financial position include a written put option that is recognized at the
present value of its exercise price. The Company has chosen to account for the remeasurement of the
written put option liability at each reporting period within the retained earnings.
DE RE C O G NI TI O N OF F I N A N CI AL LI ABI LI TIES
The Company derecognizes financial liabilities when, and only when, the Company’s obligations are
discharged, cancelled or expired.
HED GE OF A NE T I N V ES T ME N T I N F O REI G N OP E R A TI O NS
The Company designated a debt denominated in U.S. dollars as a hedging item of a portion equivalent to
its net investment in foreign operations, which uses the U.S. dollar as their functional currency. Hence,
the effective portion of unrealized exchange gains or losses on translating debts denominated in U.S.
dollars and designated as hedging items, net of related income taxes, is recognized in other
comprehensive income (loss) and the ineffective portion is recognized in profit or loss. Unrealized
exchange gains or losses on translating debts denominated in U.S. dollars and designated as hedging
items of the net investment in foreign operations, that are recognized in other comprehensive income
(loss), are reclassified to profit or loss when they are subject to a total or partial disposal.
Earnings per Share (“EPS”)
Basic EPS are calculated by dividing the profit (loss) for the year attributable to owners of the Company
by the weighted average number of Class A and Class B shares outstanding during the year.
Diluted EPS are calculated by adjusting the weighted average number of Class A and Class B shares
outstanding for dilutive instruments. Diluted EPS are calculated using the treasury stock method.
Share Capital
Class A and Class B shares are classified as equity. Incremental costs directly attributable to the issuance
of shares are recognized as a deduction from equity.
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2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Share-Based Payment
Equity-settled share-based payment to employees is measured at the fair value of the equity instruments
at the grant date. The fair value determined at the grant date of the equity-settled share-based payments
is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of equity
instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting
period, the Company revises its estimate of the number of equity instruments expected to vest. The
impact of the revision of the original estimates, if any, is recognized prospectively in the consolidated
statements of earnings such that the cumulative expense reflects the revised estimate, with a
corresponding adjustment to the equity-settled employee benefits reserve.
Accounting Standards and Amendments issued but not yet applied
A number of new amendments are effective for annual periods beginning on or after January 1, 2020 and
earlier application is permitted. The Company has not early adopted these amended standards in
preparing these consolidated financial statements:
(cid:16) Amendments to Hedge Accounting Requirements - IBOR Reform and its Effects on Financial
Reporting (Phase 1);
(cid:16) Amendments to References to Conceptual Framework in IFRS Standards;
(cid:16) Definition of a Business (Amendments to IFRS 3);
(cid:16) Definition of Material (Amendments to IAS 1 and IAS 8).
These amendments should not have a significant impact on the Company’s financial statements.
3. Critical Accounting Judgments and Key Sources of Estimation
Uncertainty
In the application of the Company’s significant accounting policies, which are described in Note 2,
management is required to make judgments, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current and future
periods.
The measurement of some assets and liabilities in the preparation of these consolidated financial
statements includes assumptions made by management, in particular regarding the following items:
Lease Term and Incremental Borrowing Rate
The measurement of lease liabilities requires management to make assumptions about the lease term.
The lease term includes periods covered by an option to extend if the Company is reasonably certain to
exercise that option. In addition, the lease liability is remeasured if the Company changes its assessment
of whether it will exercise a purchase, extension or termination option.
Lease liability is initially measured at the present value of the lease payments, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental
borrowing rate.
LOGISTEC | 2019 ANNUAL REPORT
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years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Significant changes to the assumptions used in the determination of the lease term or the incremental
borrowing rate could significantly change the lease liabilities, and consequently the carrying amount of
the right-of-use asset, which would impact the interest and amortization expenses.
Business Combinations
The determination of fair value associated with identifiable property, plant and equipment and intangible
assets following a business combination requires management to make assumptions. More specifically,
this is the case when the Company calculates fair values using appropriate valuation techniques, which
are generally based on a forecast of expected future cash flows for intangible assets, and on a replacement
cost approach, an income-based approach and/or a market-based approach for property, plant and
equipment. These valuations are closely related to the assumptions made by management about the
future return on the related assets and the discount rate applied. Significant changes to these
assumptions could significantly change the fair values associated with identifiable intangible assets
following a business combination, which would impact the amortization expense.
Impairment of Long-Lived Assets, Including Goodwill
At each reporting date, if any indication of impairment exists for long-lived assets, including goodwill, and
at least annually for the goodwill, the Company performs an impairment test to determine if the carrying
amounts are recoverable. The impairment review process is subjective and requires significant estimates
throughout the analysis. Refer to Note 17 for a discussion on the Company’s goodwill impairment test.
Income Taxes
The Company determines its income tax expense and its income tax assets and liabilities based on its
interpretation of applicable tax legislation, including tax treaties between Canada and the United States,
as well as underlying rules and regulations. Such interpretations involve judgments and estimates that
may be challenged in government tax audits, to which the Company is regularly subject. New information
may also become available, which would cause the Company to change its judgment regarding the
adequacy of existing income tax assets and liabilities. Any such changes will have an impact on net
earnings for the period in which they occur.
In the calculation of income taxes and deferred tax assets and liabilities, estimates must be used to
determine the appropriate rates and amounts, and to take into account the probability of realization of
tax assets. Deferred tax assets also reflect the benefit of unused tax losses and deductions that can be
carried forward to reduce current income taxes in future years. This assessment requires the Company
to make significant estimates in determining whether or not it is probable that the deferred tax assets can
be recovered from future taxable income and therefore, that they can be recognized in the Company's
consolidated financial statements. The Company relies, among other things, on its past experience to
make this assessment.
Contract Assets
Contract assets are being measured at cost plus profit recorded by the Company to date, from which
progress billings are subtracted. The Company must assess the profit to be accounted for on a given
contract, which is based under the anticipated profit on the contract and the history for that type of
contract.
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years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Post-Employment Benefits
The actuarial techniques used to assess the value of defined benefit retirement plans involve significant
financial (discount rate) and demographic (compensation growth and mortality rates) assumptions. The
Company uses the assistance of an independent actuary in the assessment of these assumptions.
The actuarial assumptions used by the Company may differ materially from actual results in future years
due to changing market and economic conditions, regulatory events, judicial rulings, withdrawal rates, or
participant life spans. Refer to Note 22 for further details on the significant actuarial assumptions used in
the measurement of the Company’s net benefit liability.
Long-term Liabilities due to Non-Controlling Interests
The determination of the liability resulting from the written put options granted to FER-PAL’s and the
liability related to LGC’s non-controlling interest shareholders require the use of estimates and
assumptions regarding the future performance of the entities. The actual amounts payable may be
materially different from those estimates at the reporting date as a result of unforeseen events, changes
in circumstances and other matters outside of the Company’s control. Refer to Note 23 for further details.
Long-Term Incentive Plans
To determine the expense relating to long-term incentive plans, the Company must assess the probability
of attaining each threshold creating a right to the long-term bonus, which depends on the expected results
to be achieved.
4. Revenue
Revenue from cargo handling services
Revenue from services relating to the rehabilitation of underground water mains
Revenue from site remediation and soils and materials management services
Revenue from the sale of goods
2019
$
382,651
145,660
81,614
30,017
639,942
2018
$
338,790
134,554
71,042
40,492
584,878
Contract in the scope of IFRIC 12 Service Concession Arrangements
In 2015, the Company entered into a service contract with a federal Crown corporation and a department
of the Québec government whereby the Company was required to design, construct and operate a
groundwater pumping and treatment system (the “System”) to better control migration of groundwater
and to prevent it from flowing into the St. Lawrence River. The federal Crown corporation and the
department of the Québec government jointly assume the management of the land bordering the
St. Lawrence River.
The contract is for a period of 15 years and the construction of the System was completed in 2016.
Management, maintenance and operating services are spread over a 15-year period and revenues are
recognized over that period. They are subject to annual indexation, which will be based on the Consumer
Price Index. These services are payable quarterly. In connection with the management, maintenance and
operating services, the Company recorded revenue of $603 ($606 in 2018).
An amount of $335 ($292 in 2018) is recorded in trade and other receivables and an amount of $222
($211 in 2018) is recorded in other financial assets. In addition, an amount of $3,325 ($3,547 in 2018),
which bears interest at a rate of 5.00%, is included in non-current financial assets.
LOGISTEC | 2019 ANNUAL REPORT
73
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years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
5. Employee Benefits Expense
The aggregate compensation of the Company’s employees, including that of members of key management
personnel, is as follows:
Wages, salaries and fringe benefits
Defined benefit retirement plans (Note 22)
Defined contribution retirement plans (Note 22)
Government pension plans
Other long-term benefits
2019
$
302,825
2,060
3,140
3,373
1,693
313,091
2018
$
290,448
1,897
2,706
3,149
1,482
299,682
The compensation of key management personnel is further disclosed in Note 28.
6. Other Gains and Losses
Net foreign exchange (losses) gains
Gain on disposal of property, plant and equipment
Gain on remeasurement of a long-term liability due to a non-controlling interest
Gain on post-closing adjustment for a purchase consideration related to a business
combination
7. Finance Expense
Interest on short-term bank loans and other interest expense
Interest on long-term debt
Interest on lease liabilities
2019
$
(2,994)
1,166
608
—
(1,220)
2019
$
33
8,861
3,960
12,854
2018
$
2,258
838
—
500
3,596
2018
$
404
7,642
—
8,046
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2019 ANNUAL REPORT | LOGISTEC
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years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
8. Income Taxes
The reconciliation of income taxes calculated at the statutory income tax rate to the income tax expense
is as follows:
Profit before income taxes
Less: share of profit of equity accounted investments
Parent company’s and subsidiaries’ profit before income taxes
Income tax expense calculated at the statutory income tax rate of 26.60% (26.70% in
2018)
Non-deductible items and other
Non-taxable income
Change in deferred tax assets or tax losses not previously recognized
Effect of foreign tax differences
Adjustments in respect of the prior year
Income tax expense recognized in profit or loss
2019
$
35,136
(8,729)
26,407
7,024
1,314
—
(540)
177
724
8,699
2018
$
21,302
(8,111)
13,191
3,522
1,443
(341)
(943)
—
(373)
3,308
Effective income tax rate
32.94%
25.08%
Components of the income tax expense for the years are as follows:
Current income taxes
Current income tax expense in respect of the current year
Adjustments in respect of the prior year
Deferred income taxes
Deferred income tax expense recognized in the year
Adjustments in respect of the prior year
Income tax expense recognized in profit or loss
Deferred Income Tax Balances
2019
$
8,751
324
(776)
400
8,699
2018
$
8,697
18
(5,016)
(391)
3,308
The amounts recognized in the consolidated statements of financial position are as follows:
Deferred income tax assets
Deferred income tax liabilities
As at
December 31,
2019
$
As at
December 31,
2018
$
12,751
(21,156)
(8,405)
11,319
(21,465)
(10,146)
Deferred income tax balances for which a right of offset exists within the same entity and jurisdiction are
presented net in the consolidated statements of financial position as permitted by IAS 12 Income Taxes.
LOGISTEC | 2019 ANNUAL REPORT
75
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
The movements in deferred income tax assets and liabilities, prior to this offsetting of balances, are shown
below:
Deferred income tax assets
Property,
plant and
equipment
$
Unused tax
losses
$
Post-
employment
benefits
$
Lease
liabilities
$
As at January 1, 2018
486
5,124
3,540
Other
$
Total
$
2,979
12,129
932
2,597
2,370
4,179
2
(39)
260
6,543
418
19,284
—
—
—
—
—
—
1,665
1,272
—
158
8,219
—
179
(41)
—
3,678
—
358
—
—
844
158
—
—
1,002
(3,358)
31
(545)
(12,720)
(190)
(4,397)
20,085
3,600
19,256
—
222
8,251
719
—
—
—
47
766
(244)
19,841
(295)
9,895
(317)
38,989
Property,
plant and
equipment
$
Right-of-
use assets
$
Contract
holdbacks
and backlog
$
Intangible
assets
$
Other
$
Total
$
—
—
—
—
—
(6,046)
(3,401)
(191)
(18,486)
—
(7,532)
—
(10,890)
2,627
2,312
(3,900)
1,070
—
(3,419)
(579)
(9,200)
—
(4,091)
(1,124)
(29,430)
(3,490)
(19,634)
708
2,482
1,454
(18,480)
171
(16,039)
239
(19,395)
—
(2,711)
106
(6,612)
—
(2,637)
516
(47,394)
As at January 1, 2018
(8,848)
Acquisitions through business
combinations
Expense to statement of
earnings
Expense (benefit) to statement
of comprehensive income
Effect of foreign currency
exchange differences
As at December 31, 2018
Expense (benefit) to statement
of earnings
Expense (benefit) to statement
of comprehensive income
Effect of foreign currency
exchange differences
As at December 31, 2019
Deferred income tax liabilities
Acquisitions through business
combinations
Benefit (expense) to statement
of earnings
Effect of foreign currency
exchange differences
As at December 31, 2018
Benefit (expense) to statement
of earnings
Effect of foreign currency
exchange differences
As at December 31, 2019
76
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Unused Tax Losses
The Company has unused non-capital tax losses in the amount of $33,570 ($40,009 in 2018) of which
$3,738 has not been recognized ($4,681 in 2018). These losses are expiring in the following years:
Year
2028 to 2031
2032
2033
2034
2035
2036
2037
2038
2039
Indefinite
As at
December 31,
2019
$
As at
December 31,
2018
$
558
1,096
950
3,071
3,321
1,841
6,975
662
3,296
11,800
1,320
1,221
2,583
6,397
5,587
3,691
13,157
6,053
—
—
Tax benefits of $8,251 ($8,219 in 2018) have been recorded related to unused non-capital tax losses,
including $4,489 ($5,552 in 2018) from foreign subsidiaries. The Company also has $1,935 ($5,755 in
2018) of unrecognized capital losses and deductible temporary differences that may be carried forward
indefinitely. As at December 31, 2019, no deferred tax liability was recognized for temporary differences
arising from investments in subsidiaries and joint ventures because the Company controls the decisions
affecting the realization of such liabilities and it is probable that the temporary differences will not reverse
in the foreseeable future.
9. Earnings Per Share
The earnings and weighted average number of Class A shares and Class B shares used in the calculation
of basic and diluted earnings per share are as follows:
Profit attributable to owners of Class A shares, basic ($)
Profit attributable to owners of Class B shares, basic ($)
Weighted average number of Class A shares outstanding, basic
Weighted average number of Class B shares outstanding, basic
Basic earnings per Class A share
Basic earnings per Class B share
Profit attributable to owners of Class A shares, diluted ($)
Profit attributable to owners of Class B shares, diluted ($)
Weighted average number of Class A shares outstanding, diluted
Weighted average number of Class B shares outstanding, diluted
Diluted earnings per Class A share
Diluted earnings per Class B share
2019
2018
14,540
11,654
26,194
10,145
7,915
18,060
7,388,122
5,383,398
12,771,520
7,402,697
5,250,558
12,653,255
1.97
2.16
14,152
12,042
26,194
1.37
1.51
9,753
8,307
18,060
7,388,122
5,715,329
13,103,451
7,402,697
5,732,050
13,134,747
1.92
2.11
1.32
1.45
LOGISTEC | 2019 ANNUAL REPORT
77
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
10. Financial Risk Management
Capital Management
The Company’s primary objectives when managing capital are to:
— Maintain a capital structure that allows financing options to the Company in order to benefit from
potential opportunities as they arise;
— Provide an appropriate return on investment to its shareholders.
The Company includes the following in its capital:
— Cash and cash equivalents and short-term investments, if any;
— Long-term debt (including the current portion) and short-term bank loans, if any;
— Equity attributable to owners of the Company.
The Company’s financial strategy is formulated and adapted according to market conditions in order to
maintain a flexible capital structure that is consistent with the objectives stated above and corresponds
to the risk characteristics of the underlying assets. In order to maintain or adjust its capital structure, the
Company may refinance its existing debt, raise new debt, pay down debt, repurchase shares for
cancellation purposes pursuant to normal course issuer bids or issue new shares.
The Company’s Board of Directors determines the level of dividend payments. To date, the practice has
been to maintain regular quarterly dividend payments with increases over the years.
The capital is calculated as follows:
Short-term bank loans
Long-term debt, including the current portion
Total indebtedness
Less:
Cash and cash equivalents
Total net indebtedness
Equity attributable to owners of the Company
Capitalization
As at
December 31,
2019
$
As at
December 31,
2018
$
—
177,900
177,900
22,608
155,292
280,371
435,663
13,577
163,297
176,874
15,393
161,481
262,198
423,679
Ratio of net indebtedness/capitalization
35.6%
38.1%
As at December 31, 2019, the Company is in compliance with all of its obligations under the terms of its
banking agreements.
Financial Risk Management
By the nature of the activities carried out and as a result of holding financial instruments, the Company is
exposed to credit risk, liquidity risk and market risk, especially interest rate risk and foreign exchange risk.
C RE DI T RIS K
Credit risk arises from the possibility that a counterpart will fail to perform its obligations. The Company’s
exposure to credit risk is primarily attributable to its cash and cash equivalents, trade and other
receivables and non-current financial assets. Management believes the credit risk is limited for its cash
and cash equivalents as the Company deals with major North American financial institutions.
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years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
The Company conducts a thorough assessment of credit issues prior to committing to the investment and
actively monitors the financial health of its investees on an ongoing basis. In addition, the Company is
exposed to credit risk from customers. On the one hand, the Company does business mostly with large
industrial, municipal and well-established customers, thus reducing its credit risk. On the other hand, the
number of customers served by the Company is limited, which increases the risk of business
concentration and economic dependency.
Overall, the Company serves some 2,200 customers. In 2019, the 20 largest customers account for
39.7% (35.9% in 2018) of consolidated revenue, and not a single customer accounts for more than 10%
of consolidated revenue and trade receivables in 2019 and 2018.
Allowance for doubtful accounts and past due receivables are reviewed by management on a monthly
basis. Refer to Note 12 for further details.
The Company’s maximum exposure to credit risk with respect to each of its financial assets corresponds
to its carrying amount.
LI QU IDI T Y RIS K
Liquidity risk is the Company’s exposure to the risk of not being able to meet its financial obligations when
they become due. The Company monitors its levels of cash and debt and takes appropriate actions to
ensure it has sufficient cash to meet operational needs while ensuring compliance with covenants.
The following are the contractual maturities of financial obligations:
As at December 31, 2019
Trade and other payables
Dividends payable
Lease liabilities
Long-term debt
Non-current liabilities
As at December 31, 2018
Short-term bank loans
Trade and other payables
Dividends payable
Long-term debt
Non-current liabilities
(1)
Includes principal and interest.
Carrying
amount
$
Contractual
cash flows (1)
$
Less than
1 year
$
86,217
1,245
91,315
177,900
46,088
402,765
86,217
1,245
123,759
190,744
52,565
454,530
86,217
1,245
13,593
11,842
1,673
114,570
Carrying
amount
$
Contractual
cash flows (1)
$
Less than
1 year
$
13,577
98,668
1,973
163,297
46,980
324,495
13,577
98,668
1,973
180,691
53,969
348,878
13,577
98,668
1,973
11,331
1,046
126,595
1-3 years
$
—
—
23,153
10,758
19,529
53,440
1-3 years
$
—
—
—
113,851
19,989
133,840
More than
3 years
$
—
—
87,013
168,144
31,363
286,520
More than
3 years
$
—
—
—
55,509
32,934
88,443
Given the actual liquidity level combined with future cash flows that will be generated by operations, the
Company believes that its liquidity risk is low to moderate.
M A RKE T RIS K
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates,
will affect the Company’s results or the value of its financial instruments. The Company is mainly exposed
to interest rate risk and foreign exchange risk.
IN TE RE S T R A TE RIS K
The Company is exposed to market risk related to interest rate fluctuations because a portion of its
long-term debt bear interest at floating rates. The Company manages this risk by maintaining a mix of
LOGISTEC | 2019 ANNUAL REPORT
79
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
fixed and floating rate borrowings in accordance with the Company’s policies. The Company had an
interest rate swap contract with the Company’s main bank for an original principal notional amount of
$25,000 which was settled on October 31, 2019, following the renegotiation of the credit agreement.
The interest rate swap contract was designated as a cash flow hedge to swap the floating rate of its
debts to a fixed rate, thus decreasing the Company's sensitivity to interest rate fluctuations. As at
December 31, 2018, the degressive notional principal amount of the outstanding interest rate swap
contract was $18,750. The floating interest rate on the interest rate swap was CDOR and the fixed
interest rate was 1.80%. The Company continues to monitor opportunities to reduce interest rate risk.
SENS IT IV IT Y A N A L YS IS
As at December 31, 2019, the floating rate portion of the Company’s long-term debt is 70.5% (64.7%
in 2018). All else being equal, a hypothetical variation of +1.0% in the prime interest rate on the
floating rate portion of the Company’s long-term debt held as at December 31, 2019 would have
had a negative impact of $1,253 ($870 in 2018) on profit for the year. A hypothetical variation of
–1.0% in the prime interest rate would have had the opposite impact on profit for the year.
F O REI G N E X CH A N GE RIS K
The Company provides services which is invoices in U.S. dollar and purchases equipment denominated
in U.S. dollar. In addition, a portion of the Company's long-term debt is denominated in U.S. dollar.
Consequently, it is exposed to risks arising from foreign currency rate fluctuations. The Company
considers the risk to be limited and, therefore, does not use derivative financial instruments to reduce
its exposure.
During 2019, all else being equal, a hypothetical strengthening of 5.0% of the U.S. dollar against the
Canadian dollar would have had a positive impact of $2,649 ($2,194 in 2018) on profit for the year
and a positive impact of $11,991 ($12,189 in 2018) on total comprehensive income. A hypothetical
weakening of 5.0% of the U.S. dollar against the Canadian dollar would have had the opposite impact
on profit for the year and total comprehensive income.
As at December 31, 2019, a total of $95,209 or US$73,306 ($78,058 or US$57,121 in 2018) of cash
and cash equivalents and trade and other receivables is denominated in foreign currencies. As at
December 31, 2019, a total of $61,711 or US$47,514 ($46,313 or US$33,889 in 2018) of trade and
other payables is denominated in foreign currencies.
Fair Value of Financial Instruments
As at December 31, 2019 and 2018, the estimated fair values of cash and cash equivalents, trade and
other receivables, short-term bank loans, trade and other payables, and dividends payable approximated
their respective carrying values due to their short-term nature.
The estimated fair value of long-term notes receivable, included in non-current financial assets, was not
significantly different from their carrying value as at December 31, 2019 and 2018, based on the
Company’s estimated rate for long-term notes receivable with similar terms and conditions.
The estimated fair value of long-term debt was $921 higher than its carrying value as at
December 31, 2019 ($300 higher in 2018) as a result of a change in financial conditions of similar
instruments available to the Company. The fair value of long-term debt is determined using the
discounted future cash flows method and management's estimates for market interest rates for identical
or similar issuances.
Financial instruments recognized at fair value are classified using a hierarchy that reflects the significance
of the inputs used to measure the fair value.
80
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
The fair value hierarchy requires that observable market inputs be used whenever such inputs exist. A
financial instrument is classified in the lowest level of the hierarchy for which a significant input has been
used to measure fair value.
An entity’s own credit risk and the credit risk of the counterparty, in addition to the credit risk of the
financial instrument, were factored into the fair value determination of the financial liabilities, including
derivative instruments.
The Company presents a fair value hierarchy with three levels that reflects the significance of inputs used
in determining the fair value assessments. The fair value of financial assets and liabilities classified in these
three levels is evaluated as follows:
— Level 1: valuation based on quoted prices (unadjusted) observed in active markets for identical assets
or liabilities;
— Level 2: valuation techniques based on inputs that are quoted prices of similar instruments in active
markets, quoted prices for identical or similar instruments in markets that are not active, inputs other
than quoted prices used in a valuation model that are observable for the instrument being valued, and
inputs that are derived mainly from or corroborated by observable market data using correlation or
other forms of relationship;
— Level 3: valuation techniques based significantly on inputs that are not observable in the market.
For the year ended December 31, 2019, no financial instruments were recorded at fair value and
transferred between levels 1, 2 and 3.
Sensitivity analysis
On December 31, 2019, all other things being equal, a 10.0% increase of pre-established financial
performance threshold of acquired businesses related to the written put option would have resulted in a
decrease of $2,923 in retained earnings for the year ended December 31, 2019 and an increase of the
same amount in total liabilities. A 10.0% decrease of pre-established financial performance threshold
would have had the opposite estimated impact.
11. Financial Instruments
Financial assets and financial liabilities in the consolidated statements of financial position are as follows:
Carrying amount
Financial assets classified at amortized cost
Cash and cash equivalents
Trade and other receivables
Non-current financial assets
Financial liabilities classified at amortized cost
Short-term bank loans
Trade and other payables
Dividends payable
Long-term debt, including current portion
Non-current liabilities
As at
December 31,
2019
$
As at
December 31,
2018
$
22,608
156,228
8,829
187,665
—
86,217
1,245
177,900
46,088
311,450
15,393
160,067
6,177
181,637
13,577
98,668
1,973
163,297
46,980
324,495
The fair value of the Company’s financial instruments is disclosed in Note 10.
LOGISTEC | 2019 ANNUAL REPORT
81
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
12. Trade and Other Receivables
Trade receivables
Allowance for doubtful accounts
Contract holdbacks
Net trade receivables
Accrued revenue
Commodity taxes
Insurance reimbursement receivable related to claims
Other
As at
December 31,
2019
$
As at
December 31,
2018
$
125,389
(3,053)
16,248
138,584
11,985
1,664
1,633
2,362
156,228
125,365
(2,364)
18,956
141,957
10,720
1,566
1,055
4,769
160,067
Pursuant to their respective terms, net trade receivables are aged as follows since issuance of the invoice:
0-30 days
31-60 days
61-90 days
Over 90 days (1)
(1)
Includes contract holdbacks amounting to $11,200 ($12,428 in 2018).
The movements in the allowance for doubtful accounts were as follows:
Balance, beginning of year
Bad debt expense
Write offs
Balance, end of year
Credit risk exposure and mitigation are further discussed in Note 10.
13. Inventories
Consumables
Raw materials
Work in progress
Finished goods
As at
December 31,
2019
$
As at
December 31,
2018
$
56,528
32,379
16,635
33,042
138,584
39,393
39,183
26,305
37,076
141,957
2019
$
2,364
1,410
(721)
3,053
2018
$
4,053
1,126
(2,815)
2,364
As at
December 31,
2019
$
As at
December 31,
2018
$
6,251
2,412
3,332
574
12,569
5,274
1,932
3,098
407
10,711
The cost of inventories recognized as an expense during the year is $45,935 ($51,795 in 2018) and was
recorded in equipment and supplies expense in the consolidated statements of earnings.
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2019 ANNUAL REPORT | LOGISTEC
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years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
14. Equity Accounted Investments
Investments in Joint Ventures
The Company’s results include its share of operations in joint ventures, which are accounted for using the
equity method. The Company’s 50%-equity interests are in the following joint ventures: TERMONT
Terminal Inc., Transport Nanuk Inc., Québec Mooring Inc., Moorings (Trois-Rivières) Ltd., Québec
Maritime Services Inc., 9260-0873 Québec Inc. and Flexiport Mobile Docking Structures Inc. The
Company also owns 49%-equity interests in Qikiqtaaluk Environmental Inc. and Avataani Environmental
Services Inc.
None of the Company’s joint ventures are publicly listed entities and, consequently, do not have published
price quotations.
The Company has one significant joint venture, TERMONT Terminal Inc., specialized in handling
containers, which is aligned with the Company’s core business. The address of TERMONT Terminal Inc.’s
registered office is Port of Montréal, Section 68, P.O. Box 36, Station K, Montréal (QC) H1N 3K9,
Canada.
The following tables summarize the financial information of TERMONT Terminal Inc.:
Statement of financial position
Current assets (including cash and cash equivalents of $2,455 ($1,973 in 2018))
Non-current assets (1)
Current liabilities
Non-current liabilities (1)
Net assets
2019
$
2018
$
3,870
85,108
(787)
(36,816)
51,375
3,432
44,786
(543)
—
47,675
The Company’s share of net assets presented as an equity accounted investment
25,694
23,841
Results
Revenue
Share of profit of an equity accounted investment
Interest expense (1)
Interest income (1)
Income taxes
Profit and total comprehensive income for the year
The Company’s share of profit and total comprehensive income for the year
Dividend received by the Company
3,914
6,006
(1,749)
1,783
(797)
8,204
4,102
2,250
3,714
6,907
—
29
(760)
8,984
4,492
2,250
(1) Increases in non-current assets, non-current liabilities, interest expense and interest income are related to the application of IFRS 16.
The Company also has interests in individually immaterial joint ventures. The following table provides, in
aggregate, the financial information for those joint ventures:
2019
$
2018
$
Carrying amount of interests in individually immaterial joint ventures
16,655
14,164
Profit for the year
Other comprehensive (loss) income
Total comprehensive income for the year
Dividends received by the Company
4,627
(43)
4,584
1,863
3,619
114
3,733
2,346
LOGISTEC | 2019 ANNUAL REPORT
83
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
15. Property, Plant and Equipment
Cost
Machinery and
automotive
equipment
$
Computer
equipment,
furniture
and fixtures
$
Land and
buildings
$
Leasehold
improvements
$
Construction
in progress
$
Total
$
As at January 1, 2018
66,747
174,384
3,873
11,101
9,955
266,060
Additions
Additions through business
combinations
Disposals
Transfers
Effect of foreign currency
exchange differences
As at December 31, 2018
Additions
Disposals
Transfers
Effect of foreign currency
exchange differences
As at December 31, 2019
Accumulated depreciation
131
5,433
291
615
129
—
(328)
4,580
85
(18)
271
1,206
7,820
14,881
353
(308)
2,054
(464)
13,942
20
(10)
792
—
—
(14,200)
24,563
(5,614)
—
(619)
2,956
5,402
305,292
10,295
—
(11,044)
34,557
(10,299)
—
20,248
(5,056)
8,633
6,555
210,197
24,121
(9,468)
7,978
(4,108)
228,720
(83)
4,835
(519)
14,225
(41)
2,166
(5,722)
323,828
3,347
(379)
3,513
258
73,617
36
(803)
2,003
(971)
73,882
Land and
buildings
$
Machinery and
automotive
equipment
$
Computer
equipment,
furniture and
fixtures
$
Leasehold
improvements
$
Construction
in progress
$
As at January 1, 2018
10,082
87,448
Depreciation expense
Disposals
Effect of foreign currency
exchange differences
As at December 31, 2018
Depreciation expense
Disposals
Effect of foreign currency
exchange differences
As at December 31, 2019
Carrying amount
As at December 31, 2018
As at December 31, 2019
2,022
(357)
1,219
12,966
2,734
(795)
(156)
14,749
Land and
buildings
$
60,651
59,133
19,441
(6,913)
1,934
101,910
22,075
(7,969)
(1,498)
114,518
3,038
1,136
7
(446)
3,735
364
(2)
(78)
4,019
4,775
823
(229)
28
5,397
1,102
(56)
(205)
6,238
—
—
—
—
—
—
—
—
—
Total
$
105,343
23,422
(7,492)
2,735
124,008
26,275
(8,822)
(1,937)
139,524
Machinery and
automotive
equipment
$
Computer
equipment,
furniture and
fixtures
$
Leasehold
improvements
$
Construction
in progress
$
Total
$
108,287
114,202
845
816
8,545
7,987
2,956
2,166
181,284
184,304
As at December 31, 2019, the Company has no property, plant and equipment under order, not yet
delivered ($1,601 in 2018).
84
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
16. Lease Arrangements
Leases relate to lease agreements to rent offices, port facilities, and equipment that expire until 2039. The
Company has the option to purchase some of the leased equipment at the end of the lease terms. The
Company also has the option to renew certain lease arrangements to rent offices, port facilities and
equipment. Contingent rentals are determined based on the volume and type of cargo handled.
Right-of-use assets
Carrying amount
Machinery
and
automotive
equipment
$
Computer
equipment,
furniture and
fixtures
$
Land and
buildings
$
Total
$
As at January 1, 2019
69,102
7,201
214
76,517
Additions
Derecognition
Depreciation expense
Effect of foreign currency exchange differences
As at December 31, 2019
28,479
(2,336)
(9,190)
(2,413)
83,642
892
(45)
(2,290)
(265)
5,493
339
(11)
(88)
(8)
446
29,710
(2,392)
(11,568)
(2,686)
89,581
Lease liabilities
Contractual undiscounted cash flows
Less than 1 year
Between 1 and 5 years
More than 5 years
Total undiscounted lease liabilities
Lease liabilities as at December 31, 2019
Current
Non-current
Amount recognized in the consolidated statements of earnings
Leases under IFRS 16
Interest on lease liabilities
Expense related to variable lease payments, short-term and low-value assets not
included in the measurement of lease liabilities
Operating leases under IAS 17
Minimum lease payments
Variable payments
As at
December 31,
2019
$
13,593
41,405
68,761
123,759
9,820
81,495
2019
$
3,960
34,312
38,272
2018
$
18,032
16,920
34,952
LOGISTEC | 2019 ANNUAL REPORT
85
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
17. Goodwill
Cost, beginning of year
Business combinations (Note 27)
Effect of foreign currency exchange differences
Cost, end of year
Accumulated impairment losses
Net carrying amount
Impairment Testing
As at
December 31,
2019
$
As at
December 31,
2018
$
143,972
—
(2,055)
141,917
106,918
33,629
3,425
143,972
(1,300)
(1,300)
140,617
142,672
The carrying amount of goodwill has been allocated to the following CGUs or groups of CGUs:
Carrying amount
Stevedoring
Aqua-Pipe
Environment
Agencies
As at
December 31,
2019
$
As at
December 31,
2018
$
48,306
86,445
5,681
185
140,617
50,361
86,445
5,681
185
142,672
The recoverable amount of all CGUs or groups of CGUs has been determined based on value in use, which
is calculated by discounting five-year cash flow projections from the budget approved by the Board of
Directors covering a one-year period. These cash flow projections reflect past experience and future
expectations of financial performance. A growth rate of 3.0% (3.0% in 2018) has been used to extrapolate
cash flow projections beyond that one-year period.
The discount rates, before income taxes, used to calculate value in use are based on market data and were
8.95% (12.80% in 2018) for Stevedoring and 8.95% (12.46% in 2018) for Aqua-Pipe and Environment.
The decrease in the discount rate is mainly attributable to the adoption of IFRS 16, which has modified
the debt/capitalization ratio used in this calculation.
86
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
18. Intangible Assets
Cost
Lease
rights and
location
$
Client
relationships
and backlog
$
Computer
software
$
Total
$
As at January 1, 2018
16,980
20,388
1,961
39,329
Additions
Addition through business combinations (Note 27)
Impairment charge and disposal
Effect of foreign currency exchange differences
As at December 31, 2018
Additions
Effect of foreign currency exchange differences
As at December 31, 2019
Accumulated amortization
—
14,632
(6,821)
2,608
27,399
—
(1,313)
26,086
62
24,106
—
2,025
46,581
—
(1,430)
45,151
146
1,099
—
460
3,666
122
(371)
3,417
Lease
rights and
location
$
Client
relationships
and backlog
$
Computer
software
$
208
39,837
(6,821)
5,093
77,646
122
(3,114)
74,654
Total
$
As at January 1, 2018
4,754
17,824
1,848
24,426
Amortization expense
Effect of foreign currency exchange differences
As at December 31, 2018
Amortization expense
Effect of foreign currency exchange differences
As at December 31, 2019
Carrying amount
As at December 31, 2018
As at December 31, 2019
Accumulated Impairment Losses
1,906
465
7,125
1,374
(406)
8,093
2,820
214
20,858
2,270
(208)
22,920
432
377
2,657
635
(386)
2,906
Lease
rights and
location
$
Client
relationships
and backlog
$
Computer
software
$
5,158
1,056
30,640
4,279
(1,000)
33,919
Total
$
20,274
17,993
25,723
22,231
1,009
511
47,006
40,735
Balance, beginning of year
Impairment charge on lease rights and location of the Company’s marine services segment
Balance, end of year
2019
$
9,738
—
9,738
2018
$
2,917
6,821
9,738
LOGISTEC | 2019 ANNUAL REPORT
87
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
During 2018, the Company has performed an impairment test for a CGU (port logistics activities in
Virginia) which had an indication that assets might be impaired and recorded an impairment charge of
$6,821. The depreciation was explained by a decrease in profitability of the CGU. When calculating the
value in use of these activities, the Company updates the projected cash flows according to the remaining
useful life of the main assets of the CGU. The sales forecasts were based on actual operating results,
expected growth rates of the sector and management’s experience. The recoverable amounts of CGUs
subject to impairment tests were based on the highest value between the fair value, less costs to sell value,
and value in use. The recoverable amount was determined to be its value in use using a discount rate
before income tax of 13.4%.
19. Non-Current Financial Assets
Non-current financial assets
Contract holdbacks
Other
20. Trade and Other Payables
Trade payables and accrued liabilities
Payroll accruals
Due to a non-controlling interest
Provisions (Note 23)
Other
As at
December 31,
2019
$
As at
December 31,
2018
$
6,225
2,600
4
8,829
3,547
2,627
154
6,328
As at
December 31,
2019
$
As at
December 31,
2018
$
75,918
4,741
—
593
4,965
86,217
81,394
5,284
6,137
823
5,030
98,668
88
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
21. Indebtedness
Short-term bank loans
As at December 31, 2018, FER-PAL had an overdraft lending facility of up to $15,000 available secured
by all existing property of the business of FER-PAL, including equipment, trade and other receivables, and
all property to be acquired in the future, it was due on demand and was bearing interest at the bank at a
prime lending rate plus 0.75%. As at December 31, 2018, the bank’s lending rate was 2.70% and the
overdraft facility was drawn at $13,577. Short-term bank loans have been repaid in full in 2019.
Long-term debt
As at
December 31,
2019
$
As at
December 31,
2018
$
Revolving credit facility, bearing interest at bankers’ prime rate and/or acceptance
and LIBOR loans, with no principal repayment required until October 2023. The
weighted average interest rate was 3.54% at December 31, 2019 (1)
115,003
104,527
Unsecured long-term debt, bearing interest at 4.82% and 4.64%, without any principal
repayment due before December 2022, to be paid in 20 equal consecutive quarterly
payments, maturing in 2027 (2)
50,000
50,000
Term credit facilities, bearing interest at prime rate plus 0.25% to 0.75%, with
maturities ranging up to 4 years from the advance date (3)
Non-interest-bearing government loan, maturing in 2022
Loan for equipment purchases bearing interest from 0.50% to 6.20%
Other
Less:
Current portion
10,333
1,200
1,364
—
177,900
9,390
168,510
574
1,600
3,932
2,664
163,297
3,294
160,003
(1) As of October 31, 2019, the Company and its wholly owned subsidiary, LOGISTEC USA Inc., solidarily renegotiated their
credit agreement leading to an amendment to the existing credit agreement.
The credit facility details are as follows:
— The unsecured revolving credit facility was increased from $175,000 to $300,000 or the U.S. dollar equivalent, with
maturity in October 2023.
— The unsecured revolving credit facility is to be used for short-term and long-term cash flow needs and investment purposes,
and to refinance existing indebtedness. The facility can be used in the form of direct advances, bankers’ acceptances, and
letters of credit. As at December 31, 2019, US$50,049 ($65,004) was drawn from the credit facility.
— The interest rate charged on the borrowings made under this agreement depends on the form of the borrowing, to which is
added a margin that varies according to the level of leverage ratio achieved by the Company.
(2) The unsecured long-term debt details are as follows:
— A $25,000 unsecured loan maturing in September 2027, and bearing interest at 4.82%, paid quarterly. The repayment
schedule begins in December 2022 and is to be paid in 20 equal consecutive quarterly instalments of $1,250.
— A $25,000 unsecured loan maturing in September 2027, and bearing interest at 4.64%, paid quarterly. The repayment
schedule begins in December 2022 and is to be paid in 20 equal consecutive quarterly instalments of $1,250.
(3) As of June 28, 2019, FER-PAL, extended their credit agreement to $21,750 by refinancing the overdraft lending facility and
adding a demand loan.
LOGISTEC | 2019 ANNUAL REPORT
89
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
The credit facility details are as follows:
— A $10,000 overdraft facility due on demand, to be used for operating requirements. The facility can be used in the form of
overdrafts, bankers’ acceptances and letters of credit. The advances are based on accounts receivable’s estimated worth of
good quality.
— A demand loan for an amount of $10,000 due over 48 months in equal principal repayments plus monthly interests, bearing
interest at prime rate plus 0.75%.
— A $750 corporate credit card credit facility.
— A risk management facility for an amount of $1,000 to be used in the form of foreign exchange forward contracts.
The facility is secured by a general security agreement on all of its current and future assets.
Long-term debt matures as follows:
Total principal repayments required
Less than 1 year
Between 1 and 5 years
More than 5 years
Hedging instruments
As at
December 31,
2019
$
As at
December 31,
2018
$
9,390
141,010
27,500
177,900
3,294
121,339
38,664
163,297
During the year ended December 31, 2019, an average amount of US$50,583 ($66,962) of the revolving
credit facility denominated in U.S. dollars had been designated by the Corporation as hedging instruments
of its net investment in foreign operations. As there was no hedge ineffectiveness during the year ended
December 31, 2019, there was no impact on the consolidated statements of earnings. Consequently, a
foreign exchange loss of $3,653 was reclassified to other comprehensive income.
22. Post-Employment Benefit Assets and Obligations
The Company has various defined benefit and defined contribution retirement plans providing
retirement benefits to its employees.
The projected benefit obligation as at December 31, 2019, has been extrapolated using the projected
benefit obligation based on the latest actuarial valuations.
The last actuarial valuation for the Supplemental Retirement Plans for Senior Executives (“SERP”) of
LOGISTEC Corporation is dated December 31, 2017.
The Company’s retirement plans may be exposed to various types of risks. The Company has not
identified any unusual risks to which its retirement plans are exposed. Regular asset-liability matching
analyses are performed in order to align the investment policy with the plans’ obligations. Allocation to
fixed-income investments is then adjusted following the evolution of the plans’ obligations. Fixed income
investments are made up of bonds and annuities. Annuities are purchased when opportunities arise on
financial markets.
The weighted average duration of the defined benefit obligation is 15.7 years.
90
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
The following table presents information concerning the defined benefit retirement plans, as established
by an independent actuary:
Benefit obligation, beginning of year
Current service cost
Interest cost
Employees’ contributions
Actuarial (loss) gain arising from experience adjustments
Benefits paid
Benefit obligation, end of year
Fair value of plan assets, beginning of year
Interest income
Variation on plan assets, excluding amounts included in interest income
Administrative fees
Employer’s contributions (1)
Employees’ contributions
Benefits paid
Fair value of plan assets, end of year
2019
$
(33,703)
(1,548)
(1,345)
(114)
(4,464)
1,765
(39,409)
19,371
762
1,906
(16)
1,079
114
(1,765)
21,451
2018
$
(34,387)
(1,498)
(1,215)
(126)
2,046
1,477
(33,703)
20,606
717
(1,736)
(13)
1,148
126
(1,477)
19,371
Net benefit liability, end of year (2)
(17,958)
(14,332)
(1) Employer’s contributions include contributions made by an equity accounted investment of the Company of $83 ($96 in 2018).
(2) Post-employment benefit obligations in the consolidated statements of financial position include $425 ($384 in 2018) for defined
contribution retirement plans provided to certain members of key management personnel, for which no contributions were made.
The following table provides the reconciliation of the benefit obligation, the fair value of plan assets and
plan deficit in respect of wholly and partially funded plans, and unfunded plans:
Wholly and partially funded
2018
$
2019
$
Unfunded (1)
2019
$
2018
$
(13,326)
—
(13,326)
Total
2019
$
(39,409)
21,451
(17,958)
2018
$
(33,703)
19,371
(14,332)
Benefit obligation
Fair value of plan assets
Plan deficit
(22,634)
21,451
(1,183)
(20,377)
19,371
(1,006)
(16,775)
—
(16,775)
(1) The unfunded plans consist of SERP. As at December 31, 2019, the plan deficit for the Canadian executives is $15,819 ($12,700
in 2018) and $956 ($626 in 2018) for the American executives. The SERP are non-contributory and the Company plans to fund
the benefits with future cash flows that will be generated by operations.
Plan assets consist of:
Derived from observable market data – Level 2 fair value
Cash
Bonds
Canadian & foreign stock
Non-observable market inputs – Level 3 fair value
Annuity contracts
As at
December 31,
2019
$
As at
December 31,
2018
$
—
7,950
10,281
3,220
21,451
147
7,263
8,874
3,087
19,371
LOGISTEC | 2019 ANNUAL REPORT
91
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
The following table provides the reconciliation of the net expense for all defined benefit and defined
contribution retirement plans in the employee benefits expense in the consolidated statements of
earnings for the years ended December 31:
Current service cost
Net interest expense
Administrative fees
Less: net expense assumed by an equity accounted investment of the Company
Defined benefit cost recognized
Net expense on defined contribution retirement plans
Net expense for all defined benefit and defined contribution retirement plans
Significant Actuarial Assumptions
2019
$
1,548
583
16
2,147
(87)
2,060
3,140
5,200
2018
$
1,498
499
13
2,010
(113)
1,897
2,706
4,603
The significant actuarial assumptions used in the measurement of the Company’s net benefit liability are
as follows:
Accrued benefit liability
Discount rate, end of year
Expected rate of compensation increase
Benefit cost
Discount rate
Expected rate of compensation increase
SENS IT IV IT Y A N A L YS IS
2019
%
2018
%
3.3
3.8
4.0
3.8
4.0
3.8
3.5
3.8
As at December 31, 2019, all else being equal, a hypothetical variation of +1.0% in the discount rate would
have a positive impact of $5,574 ($4,535 in 2018), whereas a hypothetical variation of –1.0% would have
a negative impact of $6,623 ($5,698 in 2018) on the benefit obligation.
As at December 31, 2019, all else being equal, a hypothetical variation of +1.0% in the expected rate of
compensation increase would have a negative impact of $1,294 ($1,155 in 2018), whereas a hypothetical
variation of–1.0% would have a positive impact of $1,224 ($1,075 in 2018) on the benefit obligation.
Contributions to Retirement Plans
Total cash payments for post-employment benefits for 2019, consisting of cash contributed by the
Company to its funded retirement plans, cash payments made directly to beneficiaries for its unfunded
other benefit retirement plans, and cash contributed to its defined contribution retirement plans, were
$1,505 ($1,463 in 2018).
The Company expects to make a contribution of $932 to the defined benefit retirement plans in 2020.
92
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
23. Non-Current Liabilities
Long-term liability due to a non-controlling interest in FER-PAL
Long-term liability due to a non-controlling interest in SANEXEN (Note 24)
Long-term liability due to a non-controlling interest in LGC
Long-term incentive plans
Advance due to a non-controlling interest
Provisions
Other
Repurchase of Non-Controlling Interests
F E R -P A L
As at
December 31,
2019
$
As at
December 31,
2018
$
29,231
6,394
1,079
2,541
4,895
1,013
935
46,088
32,783
5,765
2,399
4,197
—
790
1,046
46,980
Following the business combination of FER-PAL on July 6, 2017, the Company granted the 49% non-
controlling interest shareholders a put option, exercisable at any time after July 6, 2021, allowing them
to sell all the remaining shares to LOGISTEC in three equal tranches over three fiscal years for cash
consideration based on a predetermined purchase price formula based on FER-PAL’s performance. On
December 31, 2019, FER-PAL repurchased 0.03% interest held by the non-controlling interest for an
aggregate purchase price of $786. As at December 31, 2019, following the accretion of interest and the
reevaluation of the put option, a liability of $29,231 has been included in non-current liabilities in the
consolidated statements of financial position. For the year ended December 31, 2019, the Company
recognized a gain on remeasurement of $2,766 ($15,644 in 2018) in retained earnings.
The Company also has a call option, exercisable by LOGISTEC at any time after July 6, 2022, to purchase
the remaining 48% shares from the non-controlling interest shareholders on the same terms as the put
option.
LG C
The Company has an obligation to repurchase the 30% non-controlling interest shareholders in LGC on
December 31, 2021, at the latest, or sooner upon the occurrence of certain events. The purchase price is
the greater of: i) the book value of the 30% non-controlling interests or ii) a multiple of an agreed upon
measure of financial performance, minus LGC’s debt. On August 9, 2019, the Company repurchased
7.91% interest in LGC held by the non-controlling interest for an aggregate purchase price of $610. For
the year ended December 31, 2019, the Company recognized a gain on remeasurement of $608 in other
gains and losses in the consolidated statements of earnings. As at December 31, 2019, a liability of $1,079
is included in non-current liabilities in the consolidated statements of financial position.
As a result of the non-participant nature of the non-controlling interests in the results of both FER-PAL
and LGC, no profit is attributed to the non-controlling interests.
LOGISTEC | 2019 ANNUAL REPORT
93
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Provisions
As at December 31, 2018
Additional provisions
Settlement of provisions
Reversal of provisions
As at December 31, 2019
Less: current provisions
Non-current provisions
Claims and
litigation
$
Deferred
share units
$
Share of losses
of certain joint
ventures
$
623
517
(194)
(508)
438
438
—
136
347
—
—
483
—
483
480
—
(229)
—
251
—
251
Other
$
374
172
(3)
(109)
434
155
279
Total
$
1,613
1,036
(426)
(617)
1,606
593
1,013
Other provisions include provisions for warranty and provisions for asset retirement obligations.
Provisions for asset retirement obligations essentially derive from the obligation to remove assets and to
restore the sites under lease arrangements expiring until 2025.
Reimbursements
An amount of $1,633 ($1,055 in 2018) is recognized as an asset in trade and other receivables relative to
the reimbursement to be received from the insurance company in connection with claims.
24. Share Capital
Authorized in an unlimited number:
— First Ranking Preferred Shares, non-voting, issuable in series;
— Second Ranking Preferred Shares, non-voting, issuable in series;
— Class A Common Shares, without par value, 30 votes per share, convertible into Class B
Subordinate Voting Shares at the holder’s discretion;
— Class B Subordinate Voting Shares, without par value, one vote per share, entitling their holders to
receive a dividend equal to 110% of any dividend declared on each Class A Common Share.
Issued and outstanding (1)
7,383,622 Class A shares (7,392,722 in 2018)
5,396,901 Class B shares (5,273,334 in 2018)
(1) All issued and outstanding shares are fully paid.
As at
December 31,
2019
$
As at
December 31,
2018
$
4,879
35,343
40,222
4,885
30,131
35,016
Repurchase of the Non-Controlling Interest in SANEXEN
LOGISTEC entered into an agreement to acquire the remaining 29.78% equity interest it did not already
own in SANEXEN for an aggregate consideration of $40,818 (the “SANEXEN Transaction”).
As part of the SANEXEN transaction, the non-controlling interest shareholders of SANEXEN exchanged
their common shares in the capital of SANEXEN for two classes of newly created non-voting and non-
dividend bearing preferred shares of SANEXEN, Class G Preferred Shares (“Class G shares”) and Class H
Preferred Shares (“Class H shares”), resulting in LOGISTEC holding 100% of the common shares of
SANEXEN.
94
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Immediately following the share exchange, LOGISTEC and the non-controlling interest shareholders
entered into a put and call option agreement (“Option Agreement”) pursuant to which LOGISTEC was
granted call options, exercisable in whole or in part at any time, to acquire from the non-controlling
interest shareholders their Class G shares for cash consideration of $15,920, and to acquire their Class H
shares in exchange for 754,015 Class B shares in the capital of LOGISTEC with a value of $24,898.
Pursuant to the Option Agreement, each non-controlling interest shareholder was granted a put option
to sell to LOGISTEC their Class G shares upon certain events, including termination of employment, and
a put option to sell to LOGISTEC their Class H shares as to one-fifth (1/5) on each of the first five
anniversaries of the signature of the Option Agreement, each at the same price and consideration as the
call options granted to LOGISTEC. A 40% discount, representing $4,518, will be applied to the purchase
price of the Class G shares of certain non-controlling interest shareholders should they leave SANEXEN
voluntarily before March 24, 2021.
During 2019, 148,567 Class B shares were issued to acquire Class H shares of SANEXEN. As at
December 31, 2019, there are 297,135 Class B shares to be issued and the related amount recorded in
the Company’s financial statements as share capital to be issued is $9,811.
The balances are as follows:
Non-current liabilities
Share capital to be issued
Executive Stock Option Plan
As at
December 31,
2019
$
As at
December 31,
2018
$
6,394
9,811
5,765
14,717
The Company had set aside 580,000 Class B shares pursuant to the Executive Stock Option Plan. Said
options are granted at market price. There remains an unallocated balance of 180,000 Class B shares
reserved for issuance pursuant to the plan. There were no outstanding options as at December 31, 2019
and 2018.
Employee Stock Purchase Plan (“ESPP”)
Pursuant to the ESPP, 600,000 Class B shares were reserved for issuance. As at January 1, 2019, there
remained an unallocated balance of 208,500 Class B shares reserved pursuant to this ESPP. Eligible
employees designated by the Board of Directors need to have at least two years of service. Participation
is on a voluntary basis. The subscription price is determined by the average high and low board lot trading
prices of the Class B shares on the TSX during five days, consecutive or not, preceding the last Thursday
of the month of May of the year the shares are issued (or the last Thursday of such other month as shall
be determined by the Board, which shall be the month preceding the date of issuance), less a maximum
10% discount. A non-interest-bearing loan offered by the Company is available to acquire said shares.
The loans are reimbursed over a two-year period by way of payroll deductions. As at December 31, 2019,
following the issuance of 14,800 (23,250 in 2018) Class B shares under this ESPP, there remains an
unallocated balance of 193,700 Class B shares reserved for issuance pursuant to this ESPP. Those
14,800 (23,250 in 2018) Class B shares were issued for cash consideration of $258 ($562 in 2018) and
for non-interest-bearing loans of $298 ($489 in 2018), repayable over two years with a carrying value of
$328 as at December 31, 2019 ($482 in 2018).
LOGISTEC | 2019 ANNUAL REPORT
95
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Normal Course Issuer Bid (“NCIB”)
The Company repurchased some of its shares for cancellation purposes pursuant to NCIBs. Pursuant to
the current NCIB, which was launched on October 28, 2019, and will terminate on October 27, 2020,
LOGISTEC intends to repurchase for cancellation purposes, up to 369,296 Class A shares and 270,195
Class B shares, representing 5% of the issued and outstanding shares of each class as at October 15,
2019.
Shareholders may obtain a free copy of the notice of intention regarding the NCIB filed with the TSX by
contacting the Company.
Under the various NCIBs, repurchases were made through the TSX or alternative Canadian trading
systems. The tables below summarize the number of shares repurchased by NCIB and by year:
Shares repurchased by bid
Class A shares
Class B shares
Class A shares
Average price
$
Class B shares
Average price
$
NCIB 2017 (October 26, 2017 to October 25, 2018)
Repurchase in 2017
Repurchase in 2018
Total NCIB 2017
NCIB 2018 (October 26, 2018 to October 25, 2019)
Repurchase in 2018
Repurchase in 2019
Total NCIB 2018
NCIB 2019 (October 28, 2019 to October 27, 2020)
Repurchase in 2019
Total NCIB 2019
Shares repurchased by year
2018
NCIB 2017
NCIB 2018
Total 2018
2019
NCIB 2018
NCIB 2019
Total 2019
3,700
700
4,400
3,000
6,800
9,800
2,300
2,300
6,700
7,800
14,500
19,700
32,800
52,500
7,000
7,000
41.85
46.48
42.59
48.34
42.71
44.43
41.78
41.78
43.69
48.73
46.40
49.15
41.16
44.16
40.52
40.52
Class A
shares
Class B
shares
700
3,000
3,700
6,800
2,300
9,100
7,800
19,700
27,500
32,800
7,000
39,800
96
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
The number of shares varied as follows:
Number of
Class A
shares
Number of
Class B
shares
Class A
shares
$
Class B
shares
$
As at January 1, 2018
7,406,222
5,113,255
4,895
24,124
Repurchased under the NCIBs
ESPP
Conversion
Exercise of option pursuant to the SANEXEN
Transaction
As at December 31, 2018
Repurchased under the NCIBs
ESPP
Exercise of option pursuant to the SANEXEN
Transaction
As at December 31, 2019
Dividends
(3,700)
—
(9,800)
(27,500)
23,250
9,800
—
7,392,722
154,529
5,273,334
(9,100)
—
(39,800)
14,800
—
7,383,622
148,567
5,396,901
Details of dividends declared per share are as follows:
Class A shares
Class B shares
Details of dividends paid per share are as follows:
Class A shares
Class B shares
(3)
—
(7)
—
4,885
(6)
—
—
4,879
2019
$
0.37
0.41
2019
$
0.37
0.40
(154)
1,051
7
5,103
30,131
(250)
556
4,906
35,343
2018
$
0.35
0.38
2018
$
0.34
0.37
On March 17, 2020, the Board of Directors declared a dividend of $0.09350 per Class A share and
$0.10285 per Class B share, which will be paid on April 17, 2020, to all shareholders of record as of
April 3, 2020. The estimated dividend to be paid is $690 on Class A shares and $555 on Class B shares.
25. Accumulated Other Comprehensive Income, Net of Taxes
Gains on financial instruments designated as cash flow hedges
Currency translation differences arising on translation of foreign operations
Unrealized losses on translating debt designated as hedging item of the net
investment in foreign operations
As at
December 31,
2019
$
As at
December 31,
2018
$
8
10,414
(725)
9,697
135
16,304
(4,378)
12,061
LOGISTEC | 2019 ANNUAL REPORT
97
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
26. Consolidated Statements of Cash Flows
Items not Affecting Cash and Cash Equivalents
Defined benefit and defined contribution retirement plan expense
Depreciation and amortization expense
Share of profit of equity accounted investments
Finance expense
Finance income
Current income taxes
Deferred income taxes
Non-current assets
Contract liabilities
Non-current liabilities
Impairment charge (Note 18)
Other
Changes in Non-Cash Working Capital Items
Decrease (increase) in:
Trade and other receivables
Income taxes
Prepaid expenses and other
Inventories
Increase (decrease) in:
Trade and other payables
Contract liabilities
Non-Cash Transactions
2019
$
2,099
42,122
(8,729)
12,854
(501)
9,075
(376)
(2,650)
(400)
3,749
—
(1,331)
55,912
2019
$
8,034
(808)
(231)
(1,861)
(7,313)
130
(2,049)
2018
$
1,922
28,580
(8,111)
8,046
(572)
8,715
(5,407)
173
(400)
1,727
6,821
2,329
43,823
2018
$
9,881
(1,323)
979
1,297
(8,528)
1,813
4,119
During 2019, the Company acquired property, plant and equipment, of which $400 ($817 in 2018) is
unpaid at the end of the year.
98
2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Reconciliation of liabilities arising from financing activities
The following table provides a reconciliation between the opening and closing balances for financing
activities, including cash and non-cash flow changes for the year 2019:
Opening
December 31,
2018
$
Cash
changes
Non-cash
changes
Non-cash
changes
Ending
Repayments
$
Borrowings
$
Debt from
acquisitions/
adjustments
$
Borrowings
$
Foreign
exchange
$
December
31, 2019
$
Revolving credit
facility
Unsecured loan debt
Term credit facility
Government loan
Equipment loan
Lease liabilities
Other
Total
104,527
50,000
574
1,600
3,932
—
2,664
163,297
(58,660)
—
(2,449)
(400)
(1,920)
(9,726)
(2,601)
(75,756)
72,917
—
11,634
—
98
—
—
84,649
—
—
614
—
(688)
—
(13)
(87)
—
—
—
—
—
103,800
—
103,800
(3,781)
—
(40)
—
(58)
(2,759)
(50)
(6,688)
115,003
50,000
10,333
1,200
1,364
91,315
—
269,215
The following table provides a reconciliation between the opening and closing balances for financing
activities, including cash and non-cash flow changes for the year 2018:
Opening
December 31,
2017
$
Cash
changes
Repayments
$
Borrowings
$
Non-cash
changes
Ending
Foreign
exchange
$
December 31,
2018
$
Debt from
acquisitions/
adjustments
$
Revolving credit facility
Unsecured loan debt
Term credit facility
Government loan
Equipment loan
Balance of sale
Other
Total
47,962
25,000
1,861
2,000
3,686
650
2,245
83,404
(56,188)
—
(2,787)
(400)
(1,543)
(650)
(814)
(62,382)
107,921
25,000
1,500
—
222
—
10
134,653
—
—
—
—
1,379
—
1,066
2,445
4,832
—
—
—
188
—
157
5,177
104,527
50,000
574
1,600
3,932
—
2,664
163,297
27. Business Combinations
2019 Business Combinations
On October 31, 2019, the Company acquired the remaining 14.18% interest in MtlLINK Multimodal
Solutions Inc. for a cash consideration of $1,800.
2018 Business Combinations
GS M
On March 1, 2018, the Company acquired 100% ownership of GSM Maritime Holdings, LLC, the ultimate
owner of GSM, which performs cargo handling operations in the U.S. Gulf Coast for a diverse mix of
customers, for a purchase price of US$67,600 ($85,634), subject to certain adjustments.
This acquisition expands the Company’s network of marine terminals and provides LOGISTEC with a
strategic position in that region.
LOGISTEC | 2019 ANNUAL REPORT
99
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
Prior to the acquisition, a note receivable of US$4,000 ($5,067) was issued to an associate to acquire
excluded assets from the transaction. On August 31, 2018 the Company completed the sale of its
associate for a minimal cash consideration. Prior to the sale, the Company received a cash consideration
of US$4,000 ($5,067) as reimbursement of the note receivable.
The acquisition costs for GSM, included in the caption other expenses, amounted to $1,100.
PA TE
On May 25, 2018, the Company acquired 100% ownership of Pate for a purchase price of US$9,599
($12,364), subject to certain adjustments.
Pate provides cargo handling and distribution services at its Florida operations. This acquisition continues
to expand the Company’s network of marine terminals and strategically positions LOGISTEC in the U.S.
Gulf Coast region.
As at March 30, 2019, the Company finalized estimates of the fair value of assets acquired and liabilities
assumed. Consequently, intangible assets were increased by $5,620, property, plant and equipment was
increased by $1,945 and current assets were decreased by $177 with an offsetting adjustment to
goodwill in the amount of $7,388. The comparative figures of the consolidated statements of financial
position have been changed accordingly.
At the acquisition date, the fair value of the underlying identifiable assets acquired and liabilities assumed
was as follows:
Cash and cash equivalents
Current assets
Property, plant and equipment
Goodwill (1)
Intangible assets
Current liabilities
Long-term debt
Deferred income tax liabilities
Purchase consideration
Cash
GSM
$
Pate
$
Total
$
2,377
23,815
18,410
30,229
34,170
(15,074)
(cid:16)
(8,293)
85,634
124
1,093
6,039
3,400
5,667
(201)
(3,758)
(cid:16)
12,364
2,501
24,908
24,449
33,629
39,837
(15,275)
(3,758)
(8,293)
97,998
85,634
85,634
12,364
12,364
97,998
97,998
(1) The goodwill related to the acquisition of Pate is deductible for tax purposes.
The fair value of receivables acquired of $22,530, which includes a negligible amount deemed
uncollectible as at the acquisition date, is included in the current assets.
The purchase price allocation of GSM and Pate are final.
Impact of the Business Combinations on the Results of the Company
The Company’s results for the year ended December 31, 2018, include $98,531 in revenue, and an
additional profit of $614 generated by GSM. They also include $3,913 in revenue and a profit of $842
generated by additional business at Pate for the year ended December 31, 2018.
If these business combinations had been completed on January 1, 2018, the Company’s consolidated
revenue and profit for the year ended December 31, 2018 would have totaled $598,735 and $18,718,
respectively.
100 2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
In determining these estimated amounts, the Company assumes that the fair value adjustments that
arose on the acquisition dates would have been the same had the acquisitions occurred on
January 1, 2018.
Goodwill
Goodwill mainly arose in the acquisitions as a result of synergies attributable to the expected future
growth potential from the expanded locations and intangible assets not qualifying for separate
recognition.
28. Related Party Transactions
Balances and transactions between the Company and its subsidiaries, which are related parties of the
Company, have been eliminated on consolidation and are not disclosed in this note. Details of
transactions between the Company and other related parties are disclosed hereafter.
Trading Transactions
The following tables summarize the Company’s related party transactions with its joint ventures for the
years:
Sale of services
Purchase of services
Amounts owed to joint ventures
Amounts owed from joint ventures
2019
$
7,174
767
2018
$
3,910
845
As at
December 31,
2019
$
As at
December 31,
2018
$
1,736
2,929
3,249
975
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or
received.
Transactions with Shareholders
Transactions with the Company’s largest shareholder, Sumanic Investments Inc., were as follows:
Dividends paid to Sumanic Investments Inc.
Compensation of Key Management Personnel
2019
$
2,125
2018
$
1,963
The compensation of directors and of other members of key management personnel(1) during the years
ended was as follows:
Short-term benefits
Post-employment benefits
Other long-term benefits
2019
$
4,684
209
(250)
4,643
2018
$
7,966
758
1,030
9,754
(1) The compensation of members of key management personnel includes the compensation of the president of one of the Company’s
joint ventures.
LOGISTEC | 2019 ANNUAL REPORT
101
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
29. Segmented Information
The Company and its subsidiaries are organized and operate primarily in two reportable industry
segments: marine services and environmental services. The accounting policies used within the segments
are applied in the same manner as for the consolidated financial statements.
The Company discloses information about its reportable segments based upon the measures used by
management in assessing the performance of those reportable segments. The Company uses segmented
profit before income taxes to measure the operating performance of its segments.
The financial information by industry and geographic segments is as follows:
Industry Segments
RE VE N UE , R ES UL TS A N D O T HE R I NF O R M A TI O N
2019
Revenue
Depreciation and amortization expense
Share of profit of equity accounted investments
Finance expense
Finance income
Profit before income taxes
Acquisition of property, plant and equipment
2018
Revenue
Depreciation and amortization expense
Share of profit of equity accounted investments
Impairment charge
Finance expense
Finance income
Profit (loss) before income taxes
Marine
services
$
Environmental
services
$
Total
$
385,305
254,637
639,942
29,803
7,463
9,581
277
25,338
26,114
12,319
1,266
3,273
224
9,798
42,122
8,729
12,854
501
35,136
8,443
34,557
Marine
services
$
Environmental
services
$
Total
$
340,759
244,119
584,878
18,167
7,588
6,821
5,904
260
21,713
10,413
523
—
2,142
312
(411)
28,580
8,111
6,821
8,046
572
21,302
Acquisition of property, plant and equipment, including business
combinations
28,588
10,856
39,444
102 2019 ANNUAL REPORT | LOGISTEC
NN OTES TO 20 19 C ON S OLIDATED F IN AN CIAL S TATEM EN TS
years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for per share amounts)
AS S E TS A N D LI A BILI TI E S
2019
Total assets
Equity accounted investments
Total liabilities
2018
Total assets
Equity accounted investments
Total liabilities
Geographic Segments
Marine
services
$
Environmental
services
$
Total
$
463,823
40,419
323,674
377,876
36,524
242,708
270,915
1,930
130,050
734,738
42,349
453,724
259,227
1,481
130,006
637,103
38,005
372,714
The Company's revenue from external customers by country of origin and information about its
non-current assets by location of assets are detailed below:
Revenue
2019
2018
Non-current assets (1)
As at December 31, 2019
As at December 31, 2018
Canada
$
329,031
327,236
USA
$
Total
$
310,911
257,642
639,942
584,878
259,185
231,466
240,818
179,674
500,003
411,140
(1) Non-current assets exclude non-current financial assets and deferred income tax assets.
30. Contingent Liabilities and Guarantees
As at December 31, 2019, the Company has outstanding letters of credit for an amount of $3,695
($3,820 in 2018) relating to financial guarantees issued in the normal course of business. These letters of
credit mature within the next 12 months.
The Company, together with one of its partners, severally guarantees the obligations of a lease
arrangement in one of its joint ventures. The guarantee is limited to a cumulative amount of $2,199
($4,319 in 2018).
As at December 31, 2019, the Company has contingent liabilities totalling $1,941 ($1,879 in 2018) for
contingent obligations to remove assets and to restore sites under lease arrangements.
The Company indemnifies its directors and officers for prejudices suffered by reason or in respect of the
execution of their duties for the Company to the extent permitted by law. The Company has underwritten
and maintains directors’ and officers’ liability insurance coverage.
No amounts have been recorded in the consolidated financial statements related to the above contingent
liabilities and guarantees.
LOGISTEC | 2019 ANNUAL REPORT
103
DDIRECTORS AND OFFICERS
Directors
James C. Cherry,, FCPA, FCA (1) (2) (3)
Corporate Director
Serge Dubreuil, Eng. (1)
Consultant
Corporate Director
Curtis Jay Foltz (1)
Consultant
Corporate Director
George Gugelmann (2)
Private Investor
George R. Jones (2)
Corporate Director
Madeleine Paquin, C.M. (3)
President and Chief Executive Officer
LOGISTEC Corporation
Nicole Paquin
Vice-President, Information Systems
LOGISTEC Corporation
Suzanne Paquin (3)
President
Transport Nanuk Inc.
J. Mark Rodger (2) (3)
Partner
Borden Ladner Gervais LLP
Luc Sabbatini (1) (2)
Chief Executive Officer
PBSC Urban Solutions Inc.
Dany St-Pierre (2)
President
Cleantech Expansion LLC
Luc Villeneuve, FCPA, FCA (1) (3)
Corporate Director
(1) Member of the Audit Committee
(2) Member of the Governance and Human Resources Committee
(3) Member of the Executive Committee
Officers
James C. Cherry,, FCPA, FCA
Chairman of the Board
Madeleine Paquin, C.M.
President and Chief Executive Officer
Jean-Claude Dugas, CPA, CA
Chief Financial Officer
Assistant-Secretary
Stéphane Blanchette, CHRP
Vice-President, Human Resources
Nicole Paquin
Vice-President, Information Systems
Marie--Chantal Savoy
Vice-President, Strategy and Communications
Ingrid Stefancic, LL.B., FCIS, ACC. DIR.
Vice-President, Corporate and Legal Services
Corporate Secretary
Suzanne Paquin
Vice-President
Carl Delisle, CPA, CA
Vice-President
Corporate Controller
Mathieu Brunet, CPA, CGA
Treasurer
104 2019 ANNUAL REPORT | LOGISTEC
CCORPORATE INFORMATION
Subsidiaries
Joint Ventures / Partnerships
Banks
BalTerm, LLC
CrossGlobe Transport, Ltd.
FER-PAL Construction Ltd.
FER-PAL Construction USA, LLC
GSM Intermediate Holdings, Inc.
GSM Maritime Holdings, LLC
Gulf Stream Marine, Inc.
Les Terminaux Rideau Bulk Terminals Inc.
LOGISTEC Environmental Services Inc.
LOGISTEC Everglades LLC
LOGISTEC Gulf Coast LLC
LOGISTEC Marine Agencies Inc.
LOGISTEC Marine Services Inc.
LOGISTEC Stevedoring Inc.
LOGISTEC Stevedoring (New Brunswick) Inc.
LOGISTEC Stevedoring (Nova Scotia) Inc.
LOGISTEC Stevedoring (Ontario) Inc.
LOGISTEC Stevedoring U.S.A. Inc.
LOGISTEC USA Inc.
MtlLINK Multimodal Solutions Inc.
Niedner Inc.
Pate Stevedore Company, Inc.
Ramsey Greig & Co. Ltd.
SANEXEN Environmental Services Inc.
SANEXEN Water, Inc
SETL Real Estate Management Inc.
Sorel Maritime Agencies Inc.
Tartan Terminals, Inc.
Associates
St-Lawrence Mooring Inc.
Avataani Environmental Services Inc.
Flexiport Mobile Docking
Structures Inc.
Moorings (Trois-Rivières) Ltd.
NEAS Inc.
NEAS Group Inc.
Northern Bear Shipping B.V.
Northern Fox Shipping B.V.
Northern Hare Shipping B.V.
Northern Loon Shipping B.V.
Northern Wolf Shipping B.V.
Nunavik Eastern Arctic Shipping Inc.
Nunavut Eastern Arctic Shipping Inc.
Qikiqtaaluk Environmental Inc.
Québec Maritime Services Inc.
Québec Mooring Inc.
TERMONT Montréal Inc.
TERMONT Terminal Inc.
Transport Aujaq Inc.
Transport Inukshuk Inc.
Transport Mitiq Inc.
Transport Nanuk Inc.
Transport Nunalik Inc.
Transport Qamutik Inc.
Transport Sinaaq Inc.
Transport Umialarik Inc.
9260-0873 Québec Inc.
Independent Auditor
KPMG LLP
Bank of Montréal
BMO Harris Bank
Canadian Imperial Bank of
Commerce
Fédération des Caisses
Desjardins du Québec
HSBC Bank Canada
National Bank of Canada
Royal Bank of Canada
The Bank of Nova Scotia
The Toronto-Dominion Bank
Transfer Agent and
RRegistrar
Computershare Investor
Services Inc.
1500 Robert-Bourassa Blvd.
7th Floor
Montréal (QC) H3A 3S8
Shares Listed
Toronto Stock Exchange
Head Office
LOGISTEC Corporation
360 Saint-Jacques Street
Suite 1500
Montréal (QC) H2Y 1P5
Tel.: (514) 844-9381
Fax: (514) 844-9650
E-mail addresses:
info@logistec.com
ir@logistec.com
Internet: www.logistec.com
Annual General and Special Meeting of Shareholders
Wednesday, May 6, 2020 at 11:30 a.m.
National Bank of Canada, 600 de La Gauchetière Street West, 4th Floor, Montréal (QC)
Ticker Symbols
LGT.A and LGT.B
Trademarks
LOGISTEC is a registered trademark in Canada and in the USA
Aqua-Pipe is a registered trademark in Canada and in the USA
CrossGlobe and logo are registered trademarks in the USA
MtlLINK is a registered trademark in Canada
SANEXEN is a registered trademark in Canada and in the USA
LOGISTEC | 2019 ANNUAL REPORT
105
LOGISTEC Corporation
360 Saint-Jacques Street
Suite 1500
Montréal (QC) H2Y 1P5
www.logistec.com