2020: A YEAR
OF RESILIENCY
AND GROWTH
2020 ANNUAL REPORT
LOGISTEC | 2020 ANNUAL REPORT
2
OUR
PURPOSE
LOGISTEC’s strategy 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.
03 At a Glance
03 Our Business
04 Our Strategy
05 CEO’s Message
08 Strategic Pillars
08 Stable, Long-Term
Growth
09 Purpose-Driven
11
Innovating for the
Next Generations
13 Financial Highlights
15 Management’s Discussion
and Analysis
54 Consolidated Financial
Statements
67 Notes to Consolidated
Financial Statements
AT A GLANCE:
OUR BUSINESS
For more than 65 years, LOGISTEC has built a business by creating success for our customers, our
partners, our shareholders and our people. Our two business segments, marine and environmental
services, are diverse in scope and geography, and work to find solutions that support reliable
supply chains, protect our environment and our water resources.
79 TERMINALS
in 53 PORTS
5,500
environmental projects
COMPLETED TO DATE
2,715
PEOPLE
2020 total
REVENUE
$604.7M
REDUCTION OF
55M M3
of drinking water leaks
over 2,100km installed
TSX: LGT.A AND LGT.B
2.6B
gallons of water
decontaminated
over the last 35 years
50+
CONSECUTIVE
years of profits
OUR STRATEGY
Anchored by a proven track record of long-term growth, LOGISTEC is driven through
innovation to provide our stakeholders with a sustainable world for the next generations.
Our strategic vision is clear: to be the provider of choice for safe, sustainable, and creative
solutions in our marine and environmental services segments.
STABLE LONG-
TERM GROWTH
PURPOSE
DRIVEN
We deliver consistent,
profitable growth that is stable
and focused on long-term
outcomes.
Our strategic decisions are
grounded in our purpose, our
values, and our commitment
to our customers, our
communities and to each other
as colleagues.
INNOVATING FOR THE
NEXT GENERATIONS
We develop creative solutions
to help shape the future
for our customers and our
communities.
LOGISTEC | 2020 ANNUAL REPORT
4
CEO’S
MESSAGE
2020 was a year like no other —one filled with countless
changes and unique challenges. While the pandemic
disrupted our business, it reinforced one thing: Through
our company’s 65+ year history, we have faced challenges
before, and we always emerge stronger, more resilient
and more innovative than ever.
Just as our purpose guides us in better times, it also
guided our decisions during challenging times, which
enabled us to remain focused on our strategic, financial,
and sustainable long-term priorities. Through it all, our
LOGISTEC
family demonstrated
resiliency
and
determination, which resulted in our ability to continue to
deliver some of our most critical services.
WE ARE INVESTING IN
OUR FUTURE, OUR PEOPLE,
AND OUR COMMUNITIES,
WHICH IN TURN MEANS WE ARE
INVESTING IN OUR SUCCESS.
RESPONDING TO COVID-19 WITH OUR LONG-TERM
ASPIRATIONS IN FOCUS
Our ability to respond to the changing environment enabled
us to execute against our strategy and advance our long-
term sustainability goals.
Designated as an essential service, LOGISTEC’s terminal
operations across our North American network remained
open and functional, allowing us to rapidly respond to and
maintain our customers’ products flowing during lockdown.
As a result, we moved fast to implement health and safety
protocols, ensuring that working conditions were safe for
our people and our customers.
5
2020 ANNUAL REPORT | LOGISTEC
As we worked through the pandemic, our cargo handling
services delivered despite extremely volatile conditions.
Lockdown restrictions and the closure of borders delayed or
stopped raw material supply and contracted manufacturing
everywhere. As a result, we saw full containers with
nowhere to go as businesses were shut down. These created
terrible congestion for both import and export fluidity.
Additionally, consumer demand changed rapidly, focusing on
essential goods and bulk buying—adding more pressure on
the supply chain.
Despite the disruptions, I am proud of our team and their
ability to rise to the challenges and not lose sight of our
long-term strategic priorities. In the height of the pandemic,
we proceeded with our development plan and acquired two
businesses during the year as well as opened new terminal
activities in Newfoundland, British Columbia, and Louisiana.
While cargoes handled in these new terminals did not make
up for the loss in volume as a result of COVID-19, these
investments serve as
for
LOGISTEC.
long-term, strategic assets
Our environmental services segment experienced a larger
impact as a result of the pandemic. The Québec economy
being shut down during the spring led to approximately ten
weeks of inactivity for our operations. When the lockdown
ended, our team of scientists, researchers and in- field
experts accelerated their productivity, delivering nine
months of work in just six months. Through the process, we
are pleased to report that we completed the work while
remaining COVID-19 free.
Looking to 2021, we know that the vaccine rollout for
COVID-19 will impact the speed at which global economies
can begin to reopen. While the full impact of the pandemic
remains to be seen, we are confident in the resilience of our
business model, and the expertise and commitment of our
people. With this, as guidelines related to COVID-19 evolve,
we continue to adopt best practices that prioritize the health
and safety of our employees while ensuring our business
operations within both our marine and environmental
services continue to progress against plan.
impact
There are countless stories of resiliency during
the pandemic, yet one stands out in how we
continued to create positive
in our
communities. In the early days of the pandemic,
we had teams working tirelessly in Montréal,
innovating and revamping the aging water main
infrastructure. Under demanding circumstances,
our teams collaborated with the municipality and
residents, as hundreds of crew members and
engineers repaired kilometres of water main
infrastructure throughout the region.
environmental services segment is backed by a large order
book of projects entering 2021, specifically through our
subsidiaries, FER-PAL Construction Ltd. ("FER-PAL") and
SANEXEN Environmental Services Inc. ("SANEXEN") as well
as plans to expand our ALTRA Proven Solutions ("ALTRA")
invest in our
product in the USA. As we continue to
technologies and further drive
innovation, we expect
environmental services to deliver solid growth by expanding
our service offering to include additional large remediation
sites across Canada and capitalize on the fast emerging
PFAS ("water chemicals") technology market potential.
INVESTING IN GROWTH DESPITE UNCERTAINTY
Our strategy is to leverage our high-quality assets, strong
geographic footprint and culture of innovation to drive
future growth. Utilizing the expertise we have acquired from
over 65 years, we continue to go beyond for our customers,
playing a critical role when it comes to the reliability of their
supply chain; we continue to improve our operational
innovation and
foster a culture of
excellence, and
performance to power growth.
CONTINUING TO DRIVE PROFITABLE
GROWTH AND DELIVER LONG-
TERM, SUSTAINABLE VALUE TO OUR
STAKEHOLDERS REMAINS A KEY
PRIORITY IN 2021 AND BEYOND.
DELIVERING VALUE IN 2020 AND BEYOND
LOGISTEC’s operational resiliency delivered excellent
results in a year of extreme uncertainty, including record
adjusted EBITDA (1) of $101 million. Strong 2020 results
were driven by both our marine and environmental services
segments, as a result of new creative solutions allowing us to
reach new locations and customers.
Looking ahead, we are encouraged that the volumes in cargo
handling will return to pre-pandemic levels, with container
traffic expected to grow again. Our
(1) Adjusted EBITDA is a non-IFRS measure, please refer to the non-IFRS measure section on page 46.
Inc. at
In June, we announced that our cargo handling
and terminal operations in Houston, Texas called
Gulf Stream Marine, Inc. ("GSM") acquired
Coastal Cargo Texas Inc. This includes the Care
terminal at the Port of Houston, and Gulf Coast
Storage
the Port of Pascagoula,
Mississippi, which further expands our footprint
and anchors GSM as the terminal operator of
choice in three Gulf Coast states. Overall, the
operations are strategically located terminals
that complement and expand our growing
network throughout the USA.
LOGISTEC | 2020 ANNUAL REPORT
6
In 2020, we continued to invest in innovative technologies
that resulted in new or elevated solutions to tackle some of
our environmental services segment’s most requested
services. This included investments in our solutions such as
ALTRA 10X liner for resiliency against extreme climate
disruptions (natural disasters), ALTRA Lead Solutions pilot
in Montréal-Est and Laval, Québec, ALTRA PFAS Treatment
Solutions testing, and ALTRA 3D testing for dewatering at
mining sites. We further developed a technology to recycle
construction and demolition debris while working closely
with partners to develop a tracking technology for the
disposal of regulated materials. Finally, we launched a
turnkey solution to manage the life cycle of personal
protective equipment ("PPE") waste, from source to final
disposal, ensuring the safe disposal of PPE through
valorization —a process that involves changing residues into
products at a much greater value.
For our marine services segment, we are focused on
maximizing the use of our facilities for the benefit of our
customers while continuing to grow and strengthen our
network. In addition, we plan to invest in and implement
continuous improvement programs and monetize synergies
across our network, resulting in increased productivity and
improved margins.
In closing, and looking back on this year, I am grateful for
our talented and passionate people who showed up every
day and served our customers by always going beyond. In
turn, our customers stood by us as we navigated the
uncertain conditions to create immediate and practical
solutions. Despite everything, we stayed true to our values
and never lost sight of our greater purpose —to constantly
work to shape a more sustainable business and contribute to
a better future for the next generations. I thank all our
stakeholders for their commitment and look forward to
working together in the year ahead and beyond.
(signed) Madeleine Paquin, C.M.
President and Chief Executive Officer
LOGISTEC Corporation
7
2020 ANNUAL REPORT | LOGISTEC
STABLE LONG-TERM GROWTH
LOGISTEC’s 65+ year history of continuous growth and profitability is in part a result of our prudent financial decisions
and strategic actions including expanding our geographical footprint and launching innovative solutions to achieve a
diverse and robust customer base.
While we never could have predicted the immense impact of the
global pandemic, our values-based decision-making since
inception laid the groundwork for a resilient and innovative
business, allowing us to maintain stable long-term growth. Both
our marine and environmental services continued to perform
well throughout 2020 and are set up to continue to achieve
growth in 2021, with a combination of organic development
initiatives and strategic acquisitions.
•
In the past year, we continued to safeguard our balance
sheet, which has resulted in solid cash flows to support
continued growth plans in 2021.
• We expect that LOGISTEC will see growth in both marine
and environmental services, as we anticipate returning to
revenue levels comparable to 2019 in addition to realizing
benefits from the acquisitions completed in 2020.
•
•
LOGISTEC is well positioned to surpass 2020 results, as our
environmental services segment entered 2021 with a solid
order book of projects equalling approximately $120 million,
representing 46% of that segment’s 2020 revenue.
In 2021, our water technology experts will launch a product
rollout to encourage the commercial adoption of our new
products including ALTRA 3D and ALTRA PFAS Treatment
Solutions in Canada and the United States.
AT LOGISTEC, WE
DIFFERENTIATE OURSELVES
THROUGH INNOVATION AND
TECHNOLOGY WITH A MINDSET
OF LONG-TERM GROWTH AND
SUSTAINABILITY.
JEAN-CLAUDE DUGAS, CPA, CA
CHIEF FINANCIAL OFFICER
Solid profits
every year for
the last 50+
years
Revenue
Profit
attributable to
owners of the
Company (1)
e
u
n
e
v
e
R
n
o
i
l
l
i
M
$660
$600
$540
$480
$420
$360
$300
$240
$180
$120
$60
$0
9.5%
Compound
Annual Growth
Rate
9
6
9
1
2
7
9
1
5
7
9
1
8
7
9
1
1
8
9
1
4
8
9
1
7
8
9
1
0
9
9
1
3
9
9
1
6
9
9
1
9
9
9
1
2
0
0
2
5
0
0
2
8
0
0
2
1
1
0
2
4
1
0
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7
1
0
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0
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2
t
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r
P
$35
$30
$25
$20
$15
$10
n
o
i
l
l
i
M
$5
$0
(1) Compound Annual Growth Rate in graph represents growth since 1969.
LOGISTEC | 2020 ANNUAL REPORT
8
PURPOSE DRIVEN
Our business decisions and actions centre around our purpose and shared values with the clear objective to create value
for our customers, communities, people, shareholders, and all stakeholders alike. Delivering responsibly is at the heart
of how the LOGISTEC family is building a sustainable future for the next generations. It means handling our customers’
goods safely, protecting and renewing our environment and our water infrastructure, attracting and developing the best
and brightest talent, investing in our communities and leading with the highest governance standards.
In 2020, we specifically chose which challenges we wanted to
take on. We focused on addressing the growing water
infrastructure
in
accordance with the United Nation's Sustainable Development
Goals, reducing waste from disposable PPE, and contributing to
our communities in a meaningful way.
challenges by adopting
technologies
the Solar
In November,
Impulse
Foundation recognized our ALTRA
Proven Solutions as one of the 1,000
clean and efficient solutions that will
change the world. The Solar Impulse
Foundation is LOGISTEC’s platform to
enhance worldwide education on our
ability to protect the environment in a
profitable way with a path to potentially
fast-tracking implementation.
Certified by Solar
Impulse label
ADDRESSING GROWING WATER INFRASTRUC TURE
CHALLENGES FOR A SUSTAINABLE FUTURE
• ALTRA renews and protects aging water infrastructure from
the inside with minimal disruption to communities.
OVER THE YEARS, WE HAVE:
saved over
41.2M
litres of fuel
preserved
23M
tonnes of soil
(keeping it out of landfills)
avoided the
emission of over
447
kilotonnes of green
house gas emissions
and avoided the
emission of over
1,250
tonnes of atmospheric
pollution compared
to traditional open-
cut water main
replacement
9
2020 ANNUAL REPORT | LOGISTEC
PROTECTING OUR ENVIRONMENT
FROM DISPOSABLE PPE
• BOX-19 is a turnkey solution that our team developed
during the pandemic that eliminates the risks associated
with the disposal of PPE potentially contaminated by
COVID-19. In January 2021, the Québec government made
an announcement mandating that two disposable masks be
supplied to each high school student and staff member per
day. It was estimated that used masks would accumulate
approximately 100 million by year-end and likely end up in
a landfill.
•
The BOX-19 team quickly mobilized decision-makers within
the Québec Ministries of Health and Education and informed
them of the LOGISTEC solution to address this new challenge.
Early success of
the program
includes preventing
approximately 750,000 masks per month from ending up in
a landfill with consistent uptake growing month over month.
TREE CANADA
Building on our national tree-planting
the
program with Tree Canada,
LOGISTEC
contributions
family’s
resulted in offsetting a fleet of 500
mobile units in the past year. Our
efforts will continue, as we promote
environmental sustainability and help
make the communities where we work
greener across our network.
OUR WORLD IS CHANGING,
AND WE BELIEVE THERE
HAS NEVER BEEN A
MORE IMPORTANT TIME
FOR OUR INNOVATIVE
SOLUTIONS THAN NOW,
AND WE WHOLEHEARTEDLY
ACCEPT THIS IMPORTANT
RESPONSIBILITY.
MARTIN BUREAU
VICE-PRESIDENT, INNOVATION
SANEXEN ENVIRONMENTAL SERVICES INC.
LOGISTEC | 2020 ANNUAL REPORT
10
INNOVATING FOR
THE NEXT GENERATIONS
Throughout the pandemic, we continued to invest and innovate to introduce new solutions while ensuring we remained
focused on our long-term environmental and sustainability goals. Our practical approach to tackling complex matters
through investments, research and development, testing, pilot projects, and challenging the status quo, has helped solve
problems that not only affect our stakeholders today, but for the next generations.
INNOVATING TO SOLVE TODAY’S WATER ISSUES, WITH
AN EYE TO THE FUTURE
This year, we formally launched ALTRA, representing a suite of
innovative water technology solutions. ALTRA combines a series
of comprehensive solutions to protect and renew water
infrastructure including ALTRA Water Technologies (formerly
Aqua-Pipe), which addresses water main infrastructure issues,
ALTRA Lead Solutions (formerly Neofit), which protects people
from lead in their drinking water, and ALTRA PFAS Treatment
Solutions, that eliminates potentially harmful “forever chemicals”
from drinking water. The offering represents LOGISTEC’s latest
commitment to developing innovative solutions that drive
positive and sustainable change and impact. ALTRA serves as
a competitive advantage in the market and we have ambitions
to grow substantially within North America. We are seeing
interest build in the USA, as cities and municipalities face more
climate disruption events. We will continue to invest in our
technologies and attract talented engineers and scientists to
elevate our competitiveness.
OUR PURPOSE IS THE DRIVING
FORCE BEHIND OUR COLLECTIVE
PASSION TO CREATE SOLUTIONS
FOR OUR CUSTOMERS AND
COMMUNITIES TODAY AND FOR
THE NEXT GENERATIONS.
RODNEY CORRIGAN
PRESIDENT
LOGISTEC STEVEDORING INC.
11 2020 ANNUAL REPORT | LOGISTEC
NATIONALLY RECOGNIZED FOR
OUR INNOVATION
in
the award
Our water
team was
technology
recognized and awarded during the 11th
annual Canadian Water Summit. The
team received
the
“Projects and Technology: Drinking
Water” category, for our innovative
Next Generation Water Technology
that is earthquake resilient and NSF 61
certified. The 2020 Water’s Next
Awards recognize individuals, projects,
and technologies that have made
significant contributions to the water
industry in Canada.
Water's Next
Awards 2020
Winner
TAKING ON RESIDUE RECYCLING WITH ONE-OF-A- KIND
TECHNOLOGY
We’ve partnered with RECYC-QUÉBEC for a project to recycle
and reclaim gypsum and fine residues from the construction,
renovation and demolition ("CRD") sector. Our creative solutions
are the first technologically and economically viable solutions
that will result in less than 10% of CRD fine residues ending up
in the landfill in one year’s time. It is also the first project in
the Province of Québec that will trace residual materials coming
directly from the source of production (CRD debris sorting
centres) to a recovery centre dedicated to processing this
material. This traceability
is part of our commitment to
transparent and environmentally responsible management of
these residual materials.
INNOVATING THROUGH
COLLABORATION: DELIVERING
PPE THROUGH ARTIFICIAL
INTELLIGENCE
Inc.
from
When COVID-19 had quickly turned
into a global crisis, there was a sudden
global demand for single-use PPE that
created a strain on the supply chain. The
Port of Montréal needed to streamline
and speed up the process immediately.
TERMONT
Our colleagues
Montréal
joint venture of
(a
LOGISTEC) joined forces with the Port
of Montréal, CargoM, Montréal
Gateway Terminals Partnership, Scale
AI and Ivado Labs to leverage artificial
intelligence
("AI") and create an
innovative solution called CARGO2ai.
As containers arrive at the port, the AI
algorithm immediately validates which
supplies are urgently required and
where, flagging which container needs
to be picked up first and automatically
adjusting stock levels at the destination.
The innovative solution is shareable
and can be implemented at any port or
other supply chain around the world
and can be used well beyond COVID-
19.
LOGISTEC | 2020 ANNUAL REPORT
12
2020
HIGHLIGHTS
For the year ended December 31
($ except where otherwise indicated).
604.7M
IN REVENUE
100.7M
ADJUSTED EBITDA (1)
32.6M
PROFIT ATTRIBUTABLE TO
OWNERS OF THE COMPANY
24.5%
INCREASE IN PROFIT
ATTRIBUTABLE TO OWNERS OF
THE COMPANY OVER 2019
2.49
EARNINGS PER SHARE (2)
14.12
PRICE/EARNINGS RATIO (3)
(1) Adjusted EBITDA is a non-IFRS measure, please refer to the non-IFRS measures section on page 46.
(2) Attributable to owners of the Company.
(3) Price/earnings ratio calculated with Class B Subordinate Voting Shares.
13 2020 ANNUAL REPORT | LOGISTEC
MARINE SERVICES SEGMENT
ENVIRONMENTAL SERVICES SEGMENT
344.6M
IN REVENUE
260.1M
IN REVENUE
27.2M
PROFIT BEFORE
INCOME TAXES
16.2M
PROFIT BEFORE
INCOME TAXES
523.8M
TOTAL ASSETS
273.6M
TOTAL ASSETS
LOGISTEC | 2020 ANNUAL REPORT
14
MANAGEMENT'S
DISCUSSION &
ANALYSIS
15 2020 ANNUAL REPORT | LOGISTEC
TABLE OF
CONTENTS
17 Forward-Looking
Statements
Introduction
18
19 Our Business
22 Marine Services
24 Environmental Services
26 Commitment to ESG
29 Outlook
31 Our Response to
COVID-19
37 Segmented Results
39 Dividends
40 Liquidity and Capital
Resources
44 Equity in Joint Ventures
Post-Employment Benefits
45 Other Items in the
Consolidated Statements
of Financial Position
46 Non-IFRS Measures
47 Application of IFRS 16
Business Combinations
Financial Risk Management
32 Selected Annual Financial
Information
34 Selected Quarterly
Information
Seasonal Nature of
Operations
35 Consolidated Financial
Review
50 Business Risks
51 Related Party Transactions
Significant Judgments,
Estimates and Assumptions
52 Tracking Performance
Internal Controls over
Financial Reporting
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORWARD-LOOKING
STATEMENTS
This management's discussion and analysis ("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.
17
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
INTRODUCTION
This MD&A of operating results deals with LOGISTEC Corporation’s operations, results and
financial position for the fiscal years ended December 31, 2020 and 2019. 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
(“2020 Notes”) thereon.
(in thousands of dollars, except
where indicated)
2020 (5)
2019 (5)
2018
2017
2016
Variation
20-19
%
Variation
20-16
%
Financial Results
Revenue
Adjusted EBITDA (1) (6)
Profit for the year (2)
Financial Position
Total assets
Working capital
604,701
639,942
584,878
475,743
343,326
(5.5)
76.1
100,658
89,611
64,177
74,741
42,034
32,614
26,194
18,060
27,426
18,858
12.3
24.5
139.5
72.9
797,381
734,738
637,103
513,539
355,860
8.5
124.1
91,604
97,996
82,099
70,196
75,745
(6.5)
20.9
Long-term debt (including the
current portion)
167,680
177,900
163,297
83,404
60,325
(5.7)
178.0
Equity (2)
300,782
280,371
262,198
228,574
201,383
7.3
49.4
Per Share Information (3)
Profit for the year (2) ($)
Equity (2) ($)
Outstanding shares, diluted
(weighted average in thousands)
Share price as at December 31
2.49
23.00
2.00
1.38
2.11
1.48
21.40
19.96
17.56
15.77
13,076
13,103
13,135
13,016
12,768
Class A Common Shares ($)
37.00
39.60
40.86
44.04
38.00
Class B Subordinate Voting
Shares ($)
Dividends declared per share
35.16
40.00
43.27
44.75
35.10
Class A Common Shares ($)
0.3740
0.3685
0.3465
0.3150
0.3000
Class B Subordinate Voting
Shares ($)
Financial Ratios
0.4114
0.4054
0.3812
0.3465
0.3300
Return on average equity (2)
11.22%
9.66%
7.36%
12.76%
9.65%
Profit for the year (2)/ revenue
Net indebtedness/capitalization (4)
5.39%
29%
4.09%
3.09%
5.76%
5.49%
36%
38%
28%
18%
Price/earnings ratio (Class B
Subordinate Voting Shares)
14.12
20.00
31.36
21.24
23.76
(1) Adjusted EBITDA is a non-IFRS measure, please refer to the non-IFRS measures section on page 46.
(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 34.
(4) Net indebtedness and capitalization are non-IFRS measures, please refer to the liquidity and capital resources section on page 40.
(5) The 2020 and 2019 figures reflect the application of IFRS 16 Leases (“IFRS 16”), for which the comparative figures have not been restated.
Please refer to the application of IFRS 16 section on page 47 for further details.
(6) The application of IFRS 16 had a favourable impact of $19.3 million on the adjusted EBITDA of 2020 ($13.7 million in 2019).
LOGISTEC | 2020 ANNUAL REPORT
18
MANAGEMENT'S DISCUSSION AND ANALYSIS
MANAGEMENT'S DISCUSSION AND
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 and environmental services.
KITIMAT
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.
CORPORATE OVERVIEW
LOGISTEC is a North American provider of choice for safe, sustainable and
creative solutions
in the marine and environmental sectors. The
Company’s long-term strategy is supported by a history of consistent,
profitable growth driven by innovation and resiliency within its two
distinct business segments.
LOGISTEC’s people are key to the success of its strategy, as they ensure
the delivery of the Company’s services whether through its cargo handling
facilities or on its project sites. LOGISTEC’s success is a direct reflection of
the skills and dedication of its more than 2,700 people across North
America, from the Arctic to Brownsville (TX), including both union and non-
union workers. LOGISTEC has a proven track record of creating mutually
beneficial outcomes when negotiating with unions. The Company is party to
35 active collective agreements. We signed six agreements in 2020, while
six were still being negotiated at the end of 2020 and eight will expire in
2021.
LOS ANGELES
19
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
Marine services
Environmental services
IQALUIT
DECEPTION BAY
CHURCHILL
REGINA
EMERALD PARK
ROUYN-NORANDA
THUNDER BAY
SPRAGGE
ROGERS CITY
SEPT-ÎLES
PORT-CARTIER
CORNER BROOK
MATANE
DALHOUSIE
GROS-CACOUNA
SAINT JOHN
BÉCANCOUR
SYDNEY
PORT HAWKESBURY
SHEET HARBOUR
HALIFAX
BAYSIDE
POINTE-AU-PIC
QUÉBEC CITY
TROIS-RIVIÈRES
MONTRÉAL
CÔTE-STE-CATHERINE
OTTAWA
NORTH GOWER
CONTRECOEUR
BROSSARD
COATICOOK
GREEN BAY
TORONTO
WELLAND CANAL
MORRISBURG
JOHNSTOWN
OSWEGO
PROVIDENCE
DETROIT
RIVER ROUGE
BUFFALO
DAVISVILLE
NEW BEDFORD
ERIE
CHICAGO
HURON
CLEVELAND
BUFFINGTON
PHILADELPHIA
BALTIMORE
NEWPORT NEWS
PORTSMOUTH
LAKE CHARLES
PASCAGOULA
HOUSTON
FREEPORT
NEW ORLEANS
CORPUS CHRISTI
BROWNSVILLE
MILTON
PENSACOLA
TAMPA BAY
PORT MANATEE
BRUNSWICK
PORT EVERGLADES
LOGISTEC | 2020 ANNUAL REPORT
20
MANAGEMENT'S DISCUSSION AND ANALYSIS
STRATEGY
Anchored by its performance history, LOGISTEC is driven to innovate, providing its
stakeholders a sustainable world for the next generations. The strategic vision is clear: to be the
provider of choice for safe, sustainable and creative solutions in the marine and environmental
sectors.
Since becoming a public company in 1969, LOGISTEC has demonstrated increasing
profitability over the years, creating value for all stakeholders. The Company’s strong financial
discipline, solid balance sheet and achievements support long-term financial stability and
continued growth.
LOGISTEC leverages the breadth of its geographic footprint, invests in innovative solutions
and centres decisions around the Company’s values to deliver unparalleled and sustainable
results. When it comes to strategic expansion through acquisitions, LOGISTEC pursues
opportunities that support and contribute to maximizing shareholder value, undertaking
rigorous evaluations, based on defined financial and strategic criteria. The evaluation looks
to whether the investment is accretive, assesses if it provides the proper return from future
sustainable cash flows, and looks at whether the financial position will minimally be affected (if
financing is needed) to present an acceptable debt level and debt/capitalization ratio.
DIVERSIFIED REVENUE
57%
Marine
Services
43%
Environmental
Services
DIVERSIFIED GEOGRAPHY
44%
USA
56%
Canada
21
2020 ANNUAL REPORT | LOGISTEC
MARINE SERVICES
Consisting of 53 ports and 79 terminals across North America, LOGISTEC’s
marine services segment provides specialized cargo handling and other services
to a wide variety of marine and industrial customers. The marine services segment
is focused on growth through innovation, further embedding operational
excellence and expanding its port facilities through organic and inorganic growth.
LOGISTEC ensures that its infrastructure is optimally leveraged by leasing the
terminals and warehouses that it operates. Most of the sites are under long-
term leases, allowing LOGISTEC 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.
The marine services segment’s competitive advantage is positioned around three
key areas:
•
•
•
Strategically located near road and rail infrastructures, offering specialized cargo
handling capabilities, fast and efficient services, and ease of transport to final
destinations, as well as fast turnaround of cargo and vessels.
Strong, long-term relationships with critical business stakeholders and partners
to support efficient and positive decision-making outcomes for all.
The diversity of cargo types, various industries served, and ultimate revenue
base reduces LOGISTEC’s sensitivity to economic swings in the short and long
term.
CARGO HANDLING
LOGISTEC’s cargo handling services business is one of the largest service
providers in Canada and a growing player in the United States. Cargoes handled
typically consist of essential products like forest products, metals, dry bulk, fruit,
344.6M
revenue for 2020
6.2%
annual revenue
growth over the last
10 years
LOGISTEC | 2020 ANNUAL REPORT
22
MANAGEMENT'S DISCUSSION AND ANALYSIS
grain and bagged cargoes, containers, general and project
cargoes.
The extended network of port terminals allows the Company
to specialize its facilities and tailor the services according to
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. To optimally serve customers, LOGISTEC’s terminal
operators leverage technology to monitor the extensive
fleet of equipment, while providing real-time information
and updates to customers. In addition, LOGISTEC’s leaders
in the field are recognized for their ability to develop unique
cargo handling solutions, addressing the specific challenges
each supply chain brings.
MARINE TRANSPORTATION AND MARINE AGENCIES
Other marine services include marine transportation and
is consistently
marine agencies where the Company
pursuing opportunities to deliver value to its customers and
enhance long-term shareholder value.
The Company has a joint venture to transport cargo to
communities in the Canadian Arctic through the 50%-owned
joint venture Transport Nanuk Inc. (“Nanuk”). Through this
venture, LOGISTEC serves over 40 communities in Nunavut
and Nunavik. LOGISTEC also seeks to increase market share
in the Canadian Arctic for re-supply, develop
new opportunities for the mining industry and develop
short-sea shipping opportunities in non-Arctic Eastern
Canada —all while continuing to monitor and improve the
operational efficiency of its fleet.
PRIORITIES
The marine services segment’s short-term priorities are
focused on accelerating growth and embedding operational
excellence throughout the business. The segment
is
implementing continuous improvement programs across the
network to increase productivity and expand margins, invest
in skills and training to expand its experienced and flexible
labour, and leverage technology to reduce operating costs
and create value-added services. It is also deliberately
focused on stakeholder management initiatives to secure
competitive
labour
contracts with unions.
leases with port authorities and
In the longer term, the marine services segment is focused
on geographic expansion, continued customer growth and
increased market share. The Company expects to expand its
existing cargo handling business
through continued
investment, strategic acquisitions and partnerships with
ports and terminals, and targeted solutions for new strategic
customers.
23
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND
260.1M
revenue for 2020
13.6%
annual revenue growth
over the last 10 years
certified by Solar
Impulse label
LOGISTEC | 2020 ANNUAL REPORT
24
ENVIRONMENTAL
SERVICES
LOGISTEC, through its subsidiaries SANEXEN Environmental Services Inc.
("SANEXEN"), FER-PAL Construction Ltd. ("FER-PAL"), and NIEDNER Inc.
("NIEDNER"), as well as through its brand, ALTRA Proven Solutions ("ALTRA"),
industrial, municipal and
delivers creative and customized solutions to
governmental clients and partners. The subsidiaries work to complement one
another and support different areas of the business, from research and
development to implementation and installation.
The Company’s expert environmental engineers and scientists, combined with its
in-house research and development teams, develop unique water technologies
and offer environmental services, including the renewal of underground water
mains, site remediation, soils and materials management, risk assessment and
manufacturing of woven hoses.
ALTRA combines a series of comprehensive solutions to protect and renew water
infrastructure, including: ALTRA Water Technologies, which addresses water
main infrastructure issues, ALTRA Lead Solutions, which protects people from
lead in their drinking water, and ALTRA PFAS Treatment Solutions, which
eliminates potentially harmful “forever chemicals” from drinking water, offering
flexible, fluid and proven management solutions for long-lasting and sustainable
results.
ALTRA’s next-generation technology protects aging water infrastructure from
the inside with minimal disruption to communities. FER-PAL is a certified field
installer of the ALTRA technology.
Additionally, through NIEDNER, the Company manufactures the structural lining
used in our drinking water infrastructure renewal process.
PRIORITIES
The environmental services segment’s short-term focus is
on continued investment, research and development, pilot
projects, testing and the creation of customized solutions to
meet growing demands and drive overall growth.
Additionally, there is an accelerated urgency, as businesses
and governments realize the necessity to serve communities
facing a growing number of critical environmental
challenges. As a result, LOGISTEC’s field- proven innovative
solutions to solve water issues are expected to see
increased demand.
In the longer term, the Company’s ambition for the segment
is to be recognized as an industry leader with respect to
sustainability across North America. The Company will
continue to grow through geographic expansion of its
environmental services and commercialization of its unique
water technologies across North American markets. The
segment’s business development strategy will also maintain
a strong focus on its traditional business (soils and materials
management, site remediation and risk assessment).
MANAGEMENT'S DISCUSSION AND ANALYSIS
The environmental services segment also offers turnkey
solutions for the assessment of properties (phases I and II)
and the clean-up of soils, groundwater, buildings, lagoons
and underground tanks, including the characterization and
remediation of sites and risk assessment, as well as soils and
materials management. It has carried out hundreds of
projects involving a wide spectrum of decontamination
issues, and analyzes and evaluates the human and
environmental risks associated with contamination issues.
The environmental
advantage is centred around the following areas:
segment’s
services
competitive
• Differentiated
solutions
through
investment
in
innovation and the ability to be agile and resilient. The
environmental services segment takes a common-sense
approach to tackling current and anticipated complex
environmental conditions.
• Develops, manufactures and
its product,
allowing the Company to better understand all aspects
installs
of the product and its installation of solutions enabling
continuous improvement.
•
Positioned as a leader in traditional markets, with strong
opportunities for geographic expansion, as well as further
commercialization of unique water technologies across the
North American markets.
25
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND
COMMITMENT TO ESG
Delivering responsibly is at the heart of how the LOGISTEC family is building
a sustainable future. It means handling the customers’ goods safely, protecting
and renewing the environment, attracting and developing the best and brightest
talent, investing in communities and leading with the highest governance
standards.
Through its three Environmental, Social and Governance ("ESG") priorities,
LOGISTEC is dedicated to finding solutions that support reliable supply chains
and protect the environment and water resources and, in doing so, contribute to
achieving 12 of the 17 United Nations’ Sustainable Development Goals.
PROTECT AND
RENEW OUR
ENVIRONMENT
BE
SOCIALLY
RESPONSIBLE
LEAD WITH
STRONG
GOVERNANCE
PROTECT AND RENEW OUR ENVIRONMENT
LOGISTEC has taken a proactive and voluntary approach to improving its impact
on the environment. The Company has been certified as a Green Marine
participant since 2009 —a joint Canada-USA initiative aimed at implementing a
marine industry environmental program throughout North America. 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 prioritized environmental issues. The program is reviewed and
Goal 3: Good Health and
Well-Being
Addressing lead in drinking
water and emerging
contaminants
Goal 4: Quality Education
Participate in programs to help
youth acquire the knowledge
and skills needed to promote
sustainable development
Goal 5: Gender Equality
Help women have equal rights
to economic resources and
natural resources
Goal 6: Clean Water
Improve water quality and
infrastructure
LOGISTEC | 2020 ANNUAL REPORT
26
MANAGEMENT'S DISCUSSION AND ANALYSIS
adjusted every year to reflect new regulations and keep up with technological
innovation.
To date, LOGISTEC’s environmental efforts have been strategically driven to
create impact for shareholders and broader stakeholders alike, including:
•
Treated over 10 billion litres of contaminated water and more than 15 million
tonnes of impacted soils over the past 35 years;
• Water technology has eliminated 55 million M3 of drinking water leaks, 950
tonnes of atmospheric pollutants, 443 kilotonnes of greenhouse gases, and
removed one million trucks from roads;
•
•
•
The TERMONT Montréal Inc. ("TERMONT") joint venture was recognized in
September 2019 as the first port operator in the world to use a fully hybrid vehicle
fleet;
5,500 projects of site remediation of contaminated soils completed;
2,500 trees planted in partnership with Tree Canada to offset LOGISTEC’s
carbon footprint.
The Solar Impulse Foundation recognized ALTRA as one of the 1,000 clean and
efficient solutions that will change the world.
BE SOCIALLY RESPONSIBLE
Through LOGISTEC’s socially responsible priorities, the Company works to
improve people's lives, including its employees and the many communities the
Company serves.
LOGISTEC believes in the importance of promoting strong labour relations and
supports collective workers’ rights as a party to 35 active union agreements to
ensure its people feel heard and safe. Protecting LOGISTEC’s people and ensuring
the right conditions are in place to foster a culture of health and safety is the
Company’s top priority. LOGISTEC’s occupational health
and safety
commitments are embedded through its values and culture, resulting in a solid
frequency rate improvement in the last 12 months. The Company has developed
and employed a Safety Management System ("SMS"), which contains processes
used to verify the Company’s quality and service. The SMS serves as the
Company’s formal commitment to its people through Health, Safety and
Environment ("HSE") programs. Composed of 14 discrete elements within 50
operations programs, the SMS also includes HSE information to provide guidance
for the Company’s terminals and facilities when developing and implementing
site-specific HSE and quality programs, ensuring that unique precautions are
carefully considered for each site.
Beyond health and safety, LOGISTEC believes that fostering a culture of inclusion
inspires true imagination and innovation. The Company works to implement
strategies and practices to support a diverse workplace. While work in this
regard continues, the Company’s Board of Directors is made up of 36% women;
46% of the Company’s officers are women; 50% of the officers and directors of
LOGISTEC Marine Services Inc. and directors of LOGISTEC
27
2020 ANNUAL REPORT | LOGISTEC
Goal 7: Affordable and
Clean Energy
Support wind energy supply
chains
Goal 8: Decent Work and
Economic Growth
Protect labour rights and
promote safe and secure
working environments for all
workers
Goal 9: Build Resilient
Infrastructure and Foster
Innovation
Facilitate sustainable and
resilient infrastructure
development. ALTRA’s resiliency
was proven
Goal 11: Sustainable
Cities and Communities
Prevent disasters including
water-related disasters
Goal 12: Responsible
Consumption and
Production
Achieve environmentally sound
management of waste (BOX-19)
Environmental Services Inc. are women.
joint ventures
The community impact reach includes programs that support developing talent,
humanitarian initiatives, health and safety, and the environment. LOGISTEC’s
strong ties to the Arctic communities allow for knowledge exchange and
in NEAS Inc. and Qikiqtaaluk
collaboration through the
Environmental Inc.. Broader social and economic impact was realized through the
development of CARGO2ai through a partnership between the Port of Montréal,
CargoM, TERMONT, Montréal Gateway Terminals Partnership, Scale AI and
Ivado Labs. It is a logistics tool that was created to tackle the uncertainty around
COVID-19, using artificial intelligence to quickly identify and prioritize the critical
cargo that Canadians need.
LEAD WITH STRONG GOVERNANCE
Good governance is a fundamental principle at LOGISTEC, and the Company
strives to maintain the highest standards of ethical conduct — reporting results
with accuracy and transparency, and maintaining compliance with the laws, rules
and regulations that govern LOGISTEC’s businesses.
The Board is responsible for the stewardship of the Company and for monitoring
the actions of, and providing overall guidance and direction to management. The
Board established an Audit Committee and a Governance and Human Resources
Committee, each comprised of independent directors to uphold the integrity and
transparency of decision making.
The Board authorizes the Audit Committee to assist in overseeing:
•
•
•
•
The integrity and quality of the Company’s internal control over financial
reporting, disclosure controls and procedures, and risk management;
The Company’s compliance with legal and regulatory requirements;
The qualifications and independence of the Company’s independent auditor;
The performance of the Company’s internal accounting functions and
independent auditor.
The Board considers recommendations of the Governance and Human Resources
Committee with respect to:
•
•
•
•
The appointment and compensation of executive officers of the Company at the
level of Vice-President and above;
The compensation philosophy for the Company;
The adoption of any incentive compensation and equity-based plans, including
stock options, stock purchases or other similar plans, in which officers are or
may be eligible to participate;
The Company’s retirement policies and special cases.
The Board also approves HSE policies and procedures, and reviews any material
issues relating to environmental and safety matters and management’s response
thereto. See the full list of Directors towards the end of the Annual Report.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Goal 13: Climate Action
Strengthen resilience and
adaptive capacity to climate-
related hazards and natural
disasters
Goal 14: Life Under Water
As part of Green Marine,
support all best practices of
international shipping
Goal 15: Life On Land
Ensure the restoration of our
natural ecosystems
LOGISTEC | 2020 ANNUAL REPORT
28
OUTLOOK
2020 was a year of challenges brought on by the COVID-19 pandemic, despite a drop of
revenue in our marine services segment, LOGISTEC’s agile response and commitment to
innovation led to growth initiatives in both the marine and environmental services segments,
while maintaining the quality and productivity of our talented team and positioning the
Company to quickly respond, as the economic recovery continues.
Our path forward is grounded in our commitment to returning capital to stakeholders through
dividends while committing to growing shareholder value through strategic, accretive
acquisitions in both segments, combined with organic growth driven by innovation.
Looking to 2021, we expect that the vaccine for COVID-19 will impact the speed at which
global economies can begin to reopen. In 2020, the Bank of Canada reported a 5.5% decline
in Gross Domestic Product ("GDP"), however GDP is forecast to post growth of about 4%
in 2021 and almost 5% in 2022. This follows the deepest recession in modern times. While
the speed of the economic recovery in Canada has yet to be determined, we believe we have
strong business positioning in both services to navigate through these uncertain times. Our
marine services remain essential and will continue to operate with the health and safety of
our people and customers as a top priority. Additionally, the Canadian federal government’s
$33 billion Investing in Canada Infrastructure Program will no doubt support Canada’s
economic recovery, and may lead to opportunities in both segments. As far as the USA, where
we have 44% of our revenue, we expect more positive recovery, as it has so far demonstrated
a very resilient rebound.
We forecast that LOGISTEC will see growth in both marine and environmental services, as
we anticipate returning to revenue levels comparable to 2019, in addition to realizing the
benefits from the acquisitions completed in 2020.
29
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
In marine services, we expect volumes to return to historical levels as the economy adjusts
to the new normal and vaccines are rolled out. We also remain focused on maximizing the
use of our facilities for the benefit of our customers while continuing to grow and strengthen
our network. In addition, we continue to embed operational excellence in our day-to-day by
applying our innovative approach, resulting in increased productivity and expanding margins.
Supporting our outlook of growth for 2021, we begin the year with a solid project order book
of approximately $120 million in our environmental services segment, representing 46% of
the segment's revenue in 2020, positioning it to surpass 2020 results. We also expect
environmental services to deliver on solid growth by continuing to provide our customers with
innovative solutions. This will be supported by a product rollout to encourage the commercial
adoption of our new products including our suite of ALTRA in Canada and the United States,
large remediation sites across
and expanding the service offering to include additional
Canada.
While the full impact of the pandemic remains to be seen, we remain confident in the resilience
of our business model, and the expertise and commitment of our people to continue to achieve
growth in 2021.
LOGISTEC | 2020 ANNUAL REPORT
30
MANAGEMENT'S DISCUSSION AND ANALYSIS
OUR RESPONSE TO COVID-19
During March 2020, the COVID-19 outbreak was declared a pandemic by the World Health
Organization. The situation is constantly evolving, and the measures put in place have
numerous economic repercussions at the global and national levels. These measures, which
include travel bans, solitary confinement, or quarantine, whether voluntary or not, and social
distancing, have caused significant disruption in the United States and Canada, where the
Company operates.
LOGISTEC rolled out its business continuity plan for its marine operations, which were
deemed essential services by the government authorities in Canada and the United States.
As such, our terminal operations across our North American network remained open and
functional. In addition, our manufacturing of woven hoses, which is essential in providing
communities with drinking water and fighting forest fires, remained operational.
On the environmental services side, we were, as every year, impacted by the seasonality of our
operations; as most activities cannot be performed in the winter season. This includes site
remediation and renewal of water mains. COVID-19 has nonetheless affected some of these
activities, causing significant delays in our projects. However, operating under strict distancing
and sanitation protocols, we were able to recover most of the lost time before the conclusion
of the active season.
As at December 31, 2020, the Company qualified for the Canada Emergency Wage Subsidy
(“CEWS”) and there was reasonable assurance that the amount would be received from the
Canadian federal government in connection with the COVID-19 pandemic. For the year ended
December 31, 2020, the Company recognized $15.8 million of wage subsidy against the salary
expense, which qualified for that subsidy, under employee benefits expense in the consolidated
statements of earnings.
In light of the COVID-19 measures, management has reviewed its judgments, estimates and
assumptions, which are fully described in Note 3 of the 2020 Notes, related to the carrying
amounts of assets and liabilities that are not readily apparent from other sources. As at
December 31, 2020, management has not found any triggering events that could impair its
long-lived assets, including goodwill, that could increase the allowance for doubtful accounts
on its trade receivables, or that could limit its ability to draw on its credit facilities.
BUSINESS COMBINATIONS
2020 BUSINESS COMBINATIONS
CARE AND PASCAGOULA TERMINALS
On June 26, 2020, Gulf Stream Marine, Inc. (“GSM”) acquired the Care terminal at the Port
of Houston in Texas, and on July 15, 2020, acquired an additional terminal at the Port of
Pascagoula in Mississippi for a total purchase price of US$12.0 million (CA$16.5 million),
subject to certain adjustments. These two strategically located marine terminals complement
LOGISTEC’s growing network throughout the U.S. Gulf, which is now operating in 12 terminals
in three Gulf Coast states.
31
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
CASTALOOP INC.
On December 14, 2020, the Company acquired 100% ownership of Gestion Castaloop Inc.
and its subsidiaries (“Castaloop”) for a purchase price of $3.5 million, subject to certain
adjustments. Castaloop provides customized cargo handling services to clients along the Great
Lakes and St. Lawrence Seaway, as well as along the St. Lawrence River and the U.S. East Coast.
This acquisition solidifies LOGISTEC's position as a leading provider of innovative cargo
handling services at ports throughout North America.
Please refer to Note 4 of the 2020 Notes for further details.
2019 BUSINESS COMBINATIONS
On October 31, 2019, the Company acquired the remaining 14.18% interest in MtlLINK
Multimodal Solutions Inc. for cash consideration of $1.8 million.
SELECTED ANNUAL FINANCIAL
INFORMATION
Years ended December 31
(in thousands of dollars, except earnings and dividends per share)
2020 (1)
2019 (1)
$
$
2018
$
Variation 20-19
$
%
Revenue
604,701
639,942
584,878
(35,241)
(5.5)
Profit attributable to owners of the
Company
32,614
26,194
18,060
6,420
24.5
Total basic earnings per share (2)
Total diluted earnings per share (2)
2.53
2.49
2.05
2.00
1.43
1.38
0.48
0.49
Total assets
Total non-current liabilities
Cash dividends per share:
— Class A shares (3)
— Class B shares (4)
Total cash dividends
797,381
365,266
734,738
637,103
338,565
246,497
62,643
26,701
0.3740
0.4114
5,022
0.3658
0.4023
0.3383
0.3721
4,864
4,452
23.4
24.5
8.5
7.9
(1) The 2020 and 2019 figures reflect the application of IFRS 16 Leases (“IFRS 16”), for which the comparative figures have not been restated.
Please refer to Application of IFRS 16 section on page 47.
(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 | 2020 ANNUAL REPORT
32
MANAGEMENT'S DISCUSSION AND ANALYSIS
2020 VERSUS 2019
Revenue reached $604.7 million in 2020, down by 5.5% or $35.2 million over 2019. Revenue
in the marine services segment totalled $344.6 million in 2020, down by $40.7 million from
$385.3 million last year. The environmental services segment delivered revenue totalling
$260.1 million, an increase of $5.5 million or 2.1% over revenue of $254.6 million in 2019.
Profit attributable to owners of the Company increased by $6.4 million or 24.5% in 2020.
Results were positively impacted by an improved performance from FER-PAL. Additionally,
$15.8 million of CEWS were recorded against our salary expense which were instrumental in
maintaining employment.
Total assets amounted to $797.4 million at the end of 2020, up by $62.6 million over 2019.
This increase stems mainly from the additional $43.2 million in right-of-use assets and our
cash position that increased by $22.9 million. The later variation was essentially due to
$108.5 million of positive cash flows from operating activities, which was more than enough to
cover our $44.6 million cash outflows from investing activities and $41.0 million cash outflows
from financing activities.
Total non-current liabilities increased to $365.3 million in 2020, compared with $338.6 million
in 2019. This is due mainly to the additional $35.4 million in lease liabilities.
Cash dividends paid in 2020 increased by 3.2% to $5.0 million, compared with $4.9 million in
2019.
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 in
2018. 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 with 2018.
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 audited consolidated financial statements. 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 activities 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 audited consolidated financial statements.
Cash dividends paid in 2019 increased by 9.3% to $4.9 million, compared with $4.5 million in
2018.
33
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
SELECTED QUARTERLY INFORMATION
(in thousands of dollars, except earnings and dividends per share)
Q1
$
Q2
$
Q3
$
Q4
$
Year
$
2020
Revenue
109,431
123,595
191,847
179,828
604,701
Profit (loss) attributable to owners of the
Company
(5,421)
4,590
20,465
12,980
32,614
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
(0.41)
(0.45)
(0.42)
(0.41)
(0.45)
(0.42)
0.35
0.38
0.36
0.34
0.37
0.35
1.52
1.68
1.58
1.50
1.65
1.56
0.97
1.06
1.01
0.95
1.05
0.99
2.43
2.67
2.53
2.39
2.63
2.49
2019
Revenue
114,748
156,175
195,293
173,726
639,942
Profit (loss) attributable to owners of the
Company
(8,890)
5,927
17,393
11,764
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
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 most of the specialized
services offered involve 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 than the other quarters. The third and fourth quarters are usually the
most active.
LOGISTEC | 2020 ANNUAL REPORT
34
MANAGEMENT'S DISCUSSION AND ANALYSIS
CONSOLIDATED FINANCIAL REVIEW
(in thousands of dollars, except per share amounts)
For the three months ended For the twelve months ended
December 31,
2020
$
December 31,
2019
$
December 31,
2020
$
December 31,
2019
$
Revenue
179,828
173,726
604,701
639,942
Employee benefits expense
Equipment and supplies expense
Operating expense
Other expenses
(86,401)
(46,320)
(10,673)
(8,190)
Depreciation and amortization expense
(11,789)
(10,063)
(80,738)
(287,665)
(313,091)
(45,266)
(155,611)
(169,640)
(12,295)
(8,200)
3,075
357
(41,864)
(27,509)
(45,390)
9,529
(923)
20,596
55,268
(43,173)
(31,936)
(42,122)
8,729
(1,220)
47,489
5,458
(2,167)
19,746
(3,422)
(4,480)
(12,453)
(12,854)
200
16,524
145
16,261
635
43,450
501
35,136
(3,585)
12,939
(4,477)
11,784
(10,662)
32,788
(8,699)
26,437
Share of profit of equity accounted investments
Other gains and (losses)
Operating profit
Finance expense
Finance income
Profit before income taxes
Income taxes
Profit for the period
Profit attributable to:
Owners of the Company
12,980
11,764
32,614
26,194
Non-controlling interest
Profit for the period
(41)
20
174
12,939
11,784
32,788
243
26,437
Basic earnings per Class A share
Basic earnings per Class B share
Diluted earnings per Class A share
Diluted earnings per Class B share
0.97
1.06
0.95
1.05
0.89
0.97
0.86
0.95
2.43
2.67
2.39
2.63
1.97
2.16
1.92
2.11
Significant accounting policies applied in the 2020 financial statements are described in Note
2 of the 2020 Notes.
THREE MONTHS ENDED DECEMBER 31
Consolidated revenue totalled $179.8 million in the fourth quarter of 2020, an increase of
$6.1 million or 3.5% over 2019. Consolidated revenue was negatively affected by $0.4 million
this quarter, due to a strengthening of the Canadian dollar against the U.S. dollar. Please refer
to the segmented results section for the revenue variance explanation of each segment.
Employee benefits expense reached $86.4 million, an increase of $5.7 million or 7.0% over
the $80.7 million recorded for the same period last year. The ratio of employee benefits
expense to revenue was 48.1%, slightly up from 46.5% for the same period last year. The
higher ratio is mainly attributable to the environmental services segment and derived
35
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
from the revenue mix, as revenue relating to the renewal of underground water mains has a
higher labour component. This increase was partly offset by the $3.1 million wage subsidy the
Company claimed under the CEWS program.
Operating expense stood at $10.7 million, down $1.6 million or 13.2% compared with the
same period of 2019. This decrease stems mainly from short-term leases in 2019 that matured
and were renewed for longer terms, thus capitalized in 2020 as right-of-use assets. The
decrease in operating expense should be analysed in conjunction with the increase in
depreciation and amortization expense.
Depreciation and amortization expense amounted to $11.8 million in 2020, up $1.7 million
from $10.1 million last year. This increase is mainly related to the depreciation of additional
right-of-use assets in 2020 compared to 2019.
Share of profit of equity accounted investments reached $5.5 million, an increase of
$2.4 million or 77.5% over the $3.1 million recorded for the same period last year. This
increase stems mainly from the strong performance of our equity accounted investments in
TERMONT Terminal Inc., whose subsidiary specializes in handling containers.
Other gains and losses varied by $2.6 million, from a $0.4 million gain in the fourth quarter
of 2019 to a $2.2 million loss this quarter. The variance is mainly related to unrealized
exchange gains and losses on translating net working capital denominated in U.S. dollars.
Finance expense amounted to $3.4 million in the fourth quarter of 2020, a decrease of
$1.1 million over the $4.5 million reported for the same quarter of 2019. The decrease stems
mainly from a lower weighted average interest rate on our revolving credit facility partly offset
by a higher accretion expense related to additional lease liabilities in 2020 when compared to
2019.
In the fourth quarter of 2020, the Company reported a profit of $12.9 million, which was
mainly attributable to owners of the Company. This translated into total diluted earnings per
share of $0.99, of which $0.95 per share was attributable to Class A shares and $1.05 per share
was attributable to Class B shares.
All other items of the fourth quarter of the consolidated statements of earnings varied
according to normal business parameters and were comparable to 2019 levels.
TWELVE MONTHS ENDED DECEMBER 31
Consolidated revenue totalled $604.7 million in 2020, a decrease of $35.2 million or 5.5%
over 2019. Consolidated revenue was positively affected by $3.9 million this year due to a
strengthening of the U.S. dollar against the Canadian dollar. Please refer to the segmented
results section for the revenue variance explanation of each segment.
For 2020, the employee benefits expense reached $287.7 million, a decrease of $25.4 million
or 8.1% over the $313.1 million recorded for the same period last year. The ratio of employee
benefits expense to revenue was 47.6%, slightly down from 48.9% for the same period last
year. The decrease stemmed mainly from three factors: the wage subsidy the Company
claimed under the CEWS program, lower revenue, since a portion of the employee benefits
expense related to our field operations is variable in nature, and a $2.5 million reduction of
LOGISTEC | 2020 ANNUAL REPORT
36
MANAGEMENT'S DISCUSSION AND ANALYSIS
the long-term incentive plan (“LTIP”) provision for executives, considering the economic
slowdown due to COVID-19. Please refer to Note 7 to the 2020 Notes for further details on
the government assistance.
Equipment and supplies expense amounted to $155.6 million, a decrease of $14.0 million or
8.3% over the same period in 2019. This variation reflects the overall decrease in activity in
2020, as the overall ratio of equipment and supplies expense to revenue was 25.7%, in line with
the 26.5% for the same period in 2019.
Other expenses stood at $27.5 million, down $4.4 million or 13.9% compared to the same
period of 2019. This decrease stems mainly from lower travel costs and professional fees
incurred in 2020 compared to 2019.
Depreciation and amortization expense amounted to $45.4 million in 2020, up $3.3 million
from $42.1 million last year. This increase is mainly related to the depreciation of additional
right-of-use assets in 2020 compared to 2019.
Income taxes stood at $10.7 million for 2020. When the profit before income taxes is adjusted
to exclude the effect of share of the profit of equity accounted investments, the 2020 tax rate
computes to 31.4% compared with 32.9% in 2019. This variation is within normal parameters
and relates to lower non-tax-deductible expenses incurred in 2020 when compared with
2019. Please refer to Note 10 of the 2020 Notes for a full reconciliation of the effective
income tax rate and other relevant income tax information.
In 2020, the Company reported a profit of $32.8 million, of which $0.2 million was attributable
to a non-controlling interest, amounting to a $32.6 million profit attributable to owners of
the Company. This translated into total diluted earnings per share of $2.49, of which $2.39
per share was attributable to Class A shares and $2.63 per share was attributable to Class B
shares.
SEGMENTED RESULTS
(in thousands of dollars)
For the three months ended
For the twelve months ended
December 31,
2020
$
December 31,
2019
$
December 31,
2020
$
December 31,
2019
$
Revenue
Marine services
Environmental services
Total
Profit before income taxes
Marine services
Environmental services
Total
93,607
86,221
98,805
74,921
179,828
173,726
344,622
260,079
604,701
385,305
254,637
639,942
11,201
5,323
16,524
5,426
10,835
16,261
27,233
16,217
43,450
25,338
9,798
35,136
37
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
MARINE SERVICES
THREE MONTHS ENDED DECEMBER 31
Revenue from the marine services segment reached $93.6 million in 2020, down $5.2 million
or 5.3% when compared with $98.8 million in 2019. The decrease is primarily attributable to
COVID-19, which negatively impacted trade volumes following the measures put in place by
governments to suppress the virus and thus reducing revenue throughout our port terminals.
This was especially true in the U.S. Gulf region, where the slowdown of the oil and gas industry
negatively impacted the level of cargo. In addition, volumes in the United States further
suffered from an extremely active hurricane season, which disrupted some of our operations
along the Florida and Texas coastlines.
The 2020 profit before income taxes from the marine services segment amounted to
$11.2 million, up $5.8 million from the $5.4 million profit in 2019. This increase stems mainly
from the CEWS recorded against our salary expense which was instrumental in maintain
employment and a $3.0 million additional year-over-year share of profit of equity accounted
investments mainly related to TERMONT Terminal Inc.
TWELVE MONTHS ENDED DECEMBER 31
The marine services segment posted revenue of $344.6 million in 2020, representing lower
sales compared with $385.3 million in 2019. The decrease is primarily attributable to COVID-
19, which negatively impacted trade volumes in general and more specifically cargo related to
the oil and gas industry, and an extremely active hurricane season.
The 2020 profit before income taxes from the marine services segment amounted to
$27.2 million, up $1.9 million from the $25.3 million profit in 2019. Results were positively
impacted by a $8.3 million CEWS recorded against our salary expense which was instrumental
in maintaining employment, and lower travel costs and professional fees incurred in 2020
compared with 2019. These increases were partially offset by lower cargo volumes, primarily
attributable to COVID-19 and higher depreciation and amortization expense from the
additional right-of-use assets in 2020 compared with 2019.
ENVIRONMENTAL SERVICES
THREE MONTHS ENDED DECEMBER 31
Revenue from the environmental services segment stood at $86.2 million, up $11.3 million
from the $74.9 million in 2019. The increase is related to higher revenue from services relating
to the renewal of underground water mains; as we operated at full capacity to execute our
strong order book before the end of the year.
The 2020 profit before income taxes from the environmental services segment amounted to
$5.3 million, down $5.5 million over the $10.8 million profit incurred last year. The decreased
profitability is mainly attributable to higher employee benefits expense and equipment and
supplies expense derived from the revenue mix, as higher revenue in 2020 related to the
renewal of underground water mains has higher labour and supplies components when
compared to revenue from site remediation and soils and materials management we had in
2019.
LOGISTEC | 2020 ANNUAL REPORT
38
MANAGEMENT'S DISCUSSION AND ANALYSIS
TWELVE MONTHS ENDED DECEMBER 31
Revenue from the environmental services segment totalled $260.1 million, compared with
$254.6 million in 2019, an increase of $5.5 million. The increase is mainly attributable to higher
revenue from services relating to the renewal of underground water mains.
The 2020 profit before income taxes from the environmental services segment amounted to
$16.2 million, a significant improvement over the $9.8 million profit incurred last year. Results
were positively impacted by the $7.5 million CEWS recorded against our employee benefits
expense, which was instrumental in maintaining employment, and to an improved performance
at FER-PAL as a result of better cost control measures.
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.
The following table describes the dividend payments schedule since January 2020, which are
all eligible dividends for Canada Revenue Agency purposes.
(in millions of dollars, except per share amounts)
Declaration date
Record date
Payment date
Per Class A
share
$
Per Class B
share
$
Total
$
December 4, 2019
January 3, 2020
January 17, 2020
0.09350
0.10285
March 17, 2020
April 3, 2020
April 17, 2020
0.09350
0.10285
May 6, 2020
June 19, 2020
July 3, 2020
0.09350
0.10285
August 6, 2020 September 25, 2020
October 9, 2020
0.09350
0.10285
December 10, 2020
January 4, 2021
January 18, 2021
0.09350
0.10285
March 16, 2021
April 1, 2021
April 15, 2021
0.09350
0.10285
1.2
1.2
1.3
1.3
1.3
1.3
The Board of Directors has maintained the dividend payment for now, and will reassess the
decision at the upcoming Board meetings, depending on the evolution of the economic
situation.
39
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
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);
Equity attributable to owners of the Company.
The capital is calculated as follows:
(in thousands of dollars)
As at
December 31,
2020
$
As at
December 31,
2019
$
Long-term debt, including the current portion
167,680
177,900
Less:
Cash and cash equivalents
Total net indebtedness
Equity attributable to owners of the Company
Capitalization
45,498
122,182
300,782
422,964
22,608
155,292
280,371
435,663
Ratio of net indebtedness/capitalization
28.9%
35.6%
The Company’s financial strategy is formulated and adapted according to market conditions to
maintain a flexible capital structure that is consistent with the objectives stated above and
corresponds to the risk characteristics of the underlying assets. 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.
LOGISTEC | 2020 ANNUAL REPORT
40
MANAGEMENT'S DISCUSSION AND ANALYSIS
BORROWING CAPACITY
LOGISTEC generates positive cash flows from operating activities. These reached
$108.5 million and $71.3 million in 2020 and 2019, respectively, which is more than sufficient
to cover our usual investing and financing activities.
At the end of 2020, our net indebtedness, defined as long-term debt (including the current
portion) net of cash and cash equivalents, was $122.2 million, whereas our equity attributable
to owners of the Company totalled $300.8 million, giving us a net indebtedness/capitalization
ratio of 28.9%.
The Company has organized its banking facilities to segregate credits available to its wholly
owned subsidiaries from credits available to non-wholly owned subsidiaries and joint ventures.
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.
LOGISTEC has a committed line of credit provided by a banking syndicate supported by six
major Canadian banks and financial institutions. 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. Since the beginning of the pandemic
and the resulting financial crisis, we have made sure that our cash balance of immediately
available funds remained above $20.0 million, as a precautionary measure. In addition, the
banking syndicate has assured us that our facility is secure and that funds will be available,
should the need arise.
The total amount available through this committed credit facility as at December 31, 2020, was
$300 million ($300.0 million in 2019). There was an equivalent of $106.7 million drawn under
the facility ($115.0 million in 2019), and an additional $4.1 million was used for letters of credit
($3.7 million in 2019). 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.
In addition to the line of credit described above, the Company also entered, in 2017, into a 10-
year unsecured loan agreement of $50.0 million with a Canadian financial institution, which is
fully drawn. Please refer to Note 23 of the 2020 Notes for further details.
CAPITAL RESOURCES
Total assets amounted to $797.4 million as at December 31, 2020, up by $62.7 million over
the closing balance of $734.7 million as at December 31, 2019 This increase stems mainly from
the additional $43.2 million in right-of-use assets and our cash position that increased by
$22.9 million as explained below.
41
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
Cash and cash equivalents totalled $45.5 million at the end of 2020, up by $22.9 million from
$22.6 million as at December 31, 2019. The main items behind this increase were as follows:
(in thousands of dollars)
Sources:
Cash generated from operations
Changes in non-cash working capital items
Uses:
Acquisition of property, plant and equipment, net of proceeds from disposal
Business combinations
Repayment of lease liabilities
Interest paid
Repayment of long-debt, net of issuance
Income taxes paid
Dividends paid on Class A and Class B shares
WORKING CAPITAL
93,305
15,066
108,371
(22,741)
(19,957)
(14,049)
(10,755)
(7,444)
(5,164)
(5,022)
(85,132)
As at December 31, 2020, current assets totalled $222.1 million and current liabilities totalled
$130.5 million, computing into working capital of $91.6 million for a current ratio of 1.70:1.
This compares with working capital of $98.0 million and a 1.85:1 ratio as at December 31,
2019. The decrease is due to a higher current portion of lease liabilities recorded in 2020
compared with 2019.
LONG-TERM DEBT
Total net indebtedness amounted to $122.2 million as at December 31, 2020, down by
$33.1 million when compared with $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.
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, 2020, 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 | 2020 ANNUAL REPORT
42
MANAGEMENT'S DISCUSSION AND ANALYSIS
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, 2020
(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
$
Less than 1
year
$
1 - 3
years
$
4 - 5 More than
5 Years
years
$
$
180,035
6,592
130,027
23,610
19,806
7,839
3,381
3,593
865
—
171,286
14,772
25,556
23,423
107,535
34,350
5,658
—
34,350
—
4,194
—
1,464
—
—
Total contractual obligations
399,168
28,939
193,526
49,362
127,341
(1) Includes capital and interest.
(2) Excluding long-term liabilities to non-controlling interests.
The reader is referred to Notes 12, 18, 23, 24, 25, and 31 of the 2020 Notes for further details
about financial risk management, lease arrangements, indebtedness, 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 $300.8 million as at December 31,
2020. Adding total net indebtedness yields a capitalization of $423.0 million, which computes
to a net indebtedness/capitalization ratio of 28.9%. 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 capital management section.
As at March 16, 2021, 7,377,022 Class A shares and 5,529,969 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 26 of the 2020 Notes for full details on the Company’s share capital.
NORMAL COURSE ISSUER BID (“NCIB”)
Pursuant to the current NCIB, which was launched on October 28, 2020, and will terminate on
October 27, 2021, LOGISTEC intends to repurchase, for cancellation purposes, up to 368,881
Class A shares and 277,113 Class B shares, representing 5% of the issued and outstanding
shares of each class as at October 16, 2020.
Shareholders may obtain a free copy of the notice of intention regarding the NCIB filed with
the TSX by contacting the Company.
During 2020, under the NCIB programs, 5,900 Class A shares and 34,600 Class B shares were
repurchased at average prices per share of $31.51 and $32.66, respectively. Please refer to
Note 26 of the 2020 Notes for further details.
43
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
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 $45.1 million
at the end of 2020 is mainly the result of the 2019 closing balance of $42.3 million, plus the
2020 share of profit of equity accounted investments of $9.5 million, less $6.6 million in
dividends received, and our share of losses of a joint venture of $0.1 million.
As at December 31, 2020, the Company’s 50%-equity interest are in the following joint
ventures: TERMONT Terminal Inc., Transport Nanuk Inc. ("Nanuk"), 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., whose subsidiary
specializes in handling containers, which is aligned with the Company’s core business. Please
refer to Note 16 of the 2020 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 24 of the 2020 Notes.
Calculations on the retirement plans’ funded statuses have been performed by the Company’s
independent actuaries as of December 31, 2020. They calculated a benefit obligation of
$44.1 million, compared with a fair value of plan assets of $22.5 million, which computed into
a funded status deficit of $21.6 million. The Company offers supplemental retirement plans to
senior executives (“SERP”). These SERP are unfunded and the related obligation of
$18.9 million is included in the above numbers. Excluding the SERP obligation, the funded
status deficit amounts to $2.7 million. The reader is referred to the description of the Senior
Management Pension Plan in our information circular.
Management’s assumption for the discount rate was 3.3% in 2019 and 2.5% in 2020. 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 valuations for the Senior Management Pension Plan and the Employee
Pension Plan of LOGISTEC Corporation are dated December 31, 2019. Based on these
LOGISTEC | 2020 ANNUAL REPORT
44
MANAGEMENT'S DISCUSSION AND ANALYSIS
valuations, the Company’s combined surplus amounts to $1.6 million when calculated using
the going concern method, and to a combined deficit of $2.6 million when using the solvency
method.
OTHER ITEMS IN THE CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
Financial position as at
(in millions of dollars)
DEC 31,
2020
$
DEC 31,
2019
$
Var.
$
Var.
% Explanation of variation
Trade and other
receivables
137.9
156.2
(18.3)
(11.7)
Contract assets
7.6
10.6
(3.0)
(28.1)
Prepaid expenses and
other
9.0
5.1
3.9
75.6
Right-of-use assets
132.8
89.6
43.2
48.2
Goodwill
149.8
140.6
9.2
6.6
Contract liabilities
8.7
5.4
3.3
62.4
Current income tax
liabilities
Current portion of lease
liabilities
Non-current lease
liabilities
8.6
3.1
5.5
n.m.
18.3
9.8
8.5
85.9
116.9
81.5
35.4
43.5
The decrease stems from lower revenue
in 2020 when compared with 2019 and
an increased focus on collection given
to
the economic
COVID-19.
slowdown due
Contract assets represent the gross
unbilled amount that will be collected
from customers for contract work
environmental
performed
in our
services segment. The decrease
is
mainly due to invoices being issued
more rapidly in 2020 to reduce credit
risk as explained above.
This variation is primarily explained by
the timing of payments of worker’s
compensation and higher
insurance
premium.
acquired
This increase stems from the addition
of $60.6 million, of which $32.8 million
were
through business
combinations, partly offset by the
$13.8 million depreciation expense and
the revaluation of right-of-use assets
denominated in foreign currency in the
amount of $3.1 million.
The majority of the increase stems from
the acquisition of Castaloop and two
terminals, as discussed in the business
combinations section of this MD&A.
Contract liabilities represent advance
consideration received from customers,
for which revenue will be recognized
when contract work is performed in our
environmental services segment. The
2020 season was completed later than
the 2019 season given the late start,
which led to higher deferred revenue at
the end of 2020.
The increase is due to higher profit
before income taxes once adjusted to
exclude the effect of the share of profit
of equity accounted
in
investments
2020 when compared with last year.
The increase stems mainly from the
addition of $60.9 million partly offset by
the repayment of lease liabilities in the
the
amount of $14.0 million and
liabilities
of
revaluation
denominated in foreign currency in the
amount of $3.0 million.
lease
45
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial position as at
(in millions of dollars)
DEC 31,
2020
$
DEC 31,
2019
$
Var.
$
Var.
%
Explanation of variation
Non-current liabilities
38.4
46.1
(7.7)
(16.7)
Share capital
45.6
40.2
5.4
13.3
Share capital to be issued
4.9
9.8
(4.9)
(50)
n.m.: not meaningful
This decrease stems mainly from a
$6.3 million short-term reclassification
of a due to a non-controlling interest in
SANEXEN, the reversal of the
$2.5 million LTIP provision and the
repayment of a $2.5 million advance
due to a non-controlling interest. The
decrease
is partially offset by the
revaluation of a due to a non-controlling
interest in FER-PAL.
The variation
is mainly due to the
issuance of Class B shares in accordance
with the terms of the 2016 acquisition
of
in
SANEXEN.
the non-controlling
interest
Other items in the consolidated statements of financial position varied according to normal
business parameters.
NON-IFRS MEASURES
In this MD&A, the Company uses measures that are not in accordance with IFRS. Adjusted
earnings before interest expense, income taxes, depreciation and amortization expense
(“adjusted EBITDA”) and net indebtedness/capitalization ratio are 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 and net indebtedness/
capitalization ratio 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. Net indebtedness/capitalization
ratio is a leverage ratio used by our fund providers.
The following table provides a reconciliation of profit for the year to adjusted EBITDA.
(in thousands of dollars, except earnings and dividends per share)
Profit for the year
PLUS:
2020 (1)
2019 (1)
2018
2017
2016
$
$
$
$
$
32,788
26,437
17,994
27,356
18,486
Depreciation and amortization expense
45,390
42,122
28,580
33,859
14,288
Impairment charge
Net finance expense
Income taxes
Customer repayment of an investment in
—
11,818
10,662
—
12,353
8,699
6,821
7,474
3,308
2,917
3,533
6,211
—
1,700
7,268
a service contract
Adjusted EBITDA
—
—
—
865
292
100,658
89,611
64,177
74,741
42,034
(1) The 2020 and 2019 figures reflect the application of IFRS 16, for which the comparative figures have not been restated. Please refer to the
Application of IFRS 16 section for further details.
LOGISTEC | 2020 ANNUAL REPORT
46
MANAGEMENT'S DISCUSSION AND ANALYSIS
APPLICATION OF IFRS 16
The following table provides the estimated impact of the adoption of IFRS 16:
(in thousands of dollars)
Statement of earnings line items:
Operating expense (1)
Depreciation and amortization expense (2)
Finance expense (3)
Profit (loss) before income taxes
2020
$
19,288
(13,833)
(5,239)
216
2019
$
13,686
(11,568)
(3,960)
(1,842)
(1) 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, 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 are presented in the audited consolidated statements of cash flows as repayment of lease liabilities and interest paid, instead of as
operating expense.
(2) Right-of-use assets are depreciated in accordance with IAS 16 Property, Plant and Equipment using the straight-line method over the earlier of the
end of their estimated useful lives or the lease term.
(3) Accretion interest expenses on the lease liability were created under IFRS 16.
FINANCIAL RISK MANAGEMENT
Due to 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 2020, the 20 largest customers
account for 40.0% (39.7% in 2019) of consolidated revenue, and not a single customer
accounts for more than 10% of consolidated revenue and trade receivables in 2020 and 2019.
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.
47
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
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)
As at
December 31,
2020
$
As at
December 31,
2019
$
45,251
26,903
13,944
25,885
56,528
32,379
16,635
33,042
111,983
138,584
(1) Includes contract holdbacks amounting to $6,360 ($11,200 in 2019).
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
2020
$
3,053
873
(567)
3,359
2019
$
2,364
1,410
(721)
3,053
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.
The following are the contractual maturities of financial obligations:
As at December 31, 2020
(in thousands of dollars)
Trade and other payables
Dividends payable
Lease liabilities
Long-term debt
Non-current liabilities
(1) Includes principal and interest.
Carrying
amount
Contractual
cash flows (1)
Less than
1 year
1 - 3
years
More than
5 Years
$
$
$
$
—
—
$
—
—
90,046
1,259
135,168
167,680
38,400
90,046
90,046
1,259
1,259
179,125
18,153
29,149
131,823
180,035
6,592
130,027
40,787
4,973
34,350
43,416
1,464
432,553
491,252
121,023
193,526
176,703
LOGISTEC | 2020 ANNUAL REPORT
48
MANAGEMENT'S DISCUSSION AND ANALYSIS
Carrying
amount
Contractual
cash flows (1)
Less than
1 year
1 - 3
years
More than
5 Years
$
$
$
86,217
1,245
91,315
177,900
46,088
86,217
86,217
1,245
123,759
190,744
52,565
1,245
13,593
11,842
1,673
402,765
454,530
114,570
$
—
—
$
—
—
23,153
10,758
19,529
53,440
87,013
168,144
31,363
286,520
As at December 31, 2019
(in thousands of dollars)
Trade and other payables
Dividends payable
Lease liabilities
Long-term debt
Non-current liabilities
(1) Includes principal and interest.
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.
INTEREST RATE RISK
The Company is exposed to market risk related to interest rate fluctuations because a portion
of its long-term debt bears 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. In addition, in 2020, the Company entered into an interest rate swap contract with the
Company’s main banks for an amount of $15.0 million. The interest rate swap contract is
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. The floating interest rate on
the interest rate swap is CDOR and the fixed interest rate is 0.78%. The interest rate swap
contract settles on a monthly basis and will mature in June 2023. The Company continues to
monitor opportunities to reduce interest rate risk.
SENSITIVITY ANALYSIS
As at December 31, 2020, the floating rate portion of the Company’s long-term debt is
60.4% (70.5% in 2019). 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, 2020 would have had a negative impact of $1.0 million ($1.3 million in
2019) 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.
FOREIGN EXCHANGE RISK
The Company provides services invoiced in U.S. dollars and purchases equipment denominated
in U.S. dollars. In addition, a portion of the Company's long-term debt is denominated in U.S.
dollars. 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.
49
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
During 2020, 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 $1.2 million ($2.6 million in 2019) on
profit for the year and a positive impact of $12.5 million ($12.0 million in 2019) 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, 2020, a total of $60.6 million or US$47.6 million ($95.2 million or
US$73.3 million in 2019) of cash and cash equivalents and trade and other receivables is
denominated in foreign currencies. As at December 31, 2020, a total of $39.0 million or
US$30.6 million ($61.7 million or US$47.5 million in 2019) of trade and other payables is
denominated in foreign currencies.
FAIR VALUE OF FINANCIAL INSTRUMEN TS
As at December 31, 2020 and 2019, the estimated fair values of cash and cash equivalents,
trade and other receivables, 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, 2020 and 2019,
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 $3.3 million higher than its carrying value as
at December 31, 2020 ($0.9 million higher in 2019), 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 2 of the 2020 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 from 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 is, to a large extent, fixed for the Company.
Consequently, we quickly feel the financial impact of a major decline in cargo volumes.
LOGISTEC | 2020 ANNUAL REPORT
50
MANAGEMENT'S DISCUSSION AND ANALYSIS
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 labour, reduce volumes, 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 29 of the 2020 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.
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 2020 Notes. Further details on judgments, estimates and
assumptions can be found in the 2020 Notes, particularly regarding trade receivables
51
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Notes 12 and 14), equity accounted investments (Note 16), lease arrangements (Note 18),
goodwill (Note 19), finite-life intangible assets (Note 20), impairment of long-lived assets
including goodwill (Note 19), deferred income taxes (Note 10), post-employment benefits
(Note 24), and non-current liabilities (Note 25). The Company’s significant accounting policies
are applied consistently to all its reportable industry segments (Note 30).
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.
INTERNAL CONTROLS OVER
FINANCIAL REPORTING
LOGISTEC has implemented high standards of corporate governance. LOGISTEC has in
place corporate governance practices that are consistent with the requirements of National
Instrument 58-101
Policy 58-201 “Corporate Governance Guidelines” and National
“Disclosure of Corporate Governance Practices”. Of LOGISTEC’s 11 directors, eight 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.
LOGISTEC | 2020 ANNUAL REPORT
52
MANAGEMENT'S DISCUSSION AND 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, 2020, 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. Despite the COVID-19 outbreak and the necessity of
physical distancing, there has been no change in the Company’s ICFR that occurred in 2020
that has materially affected, or is reasonably likely to materially affect, the Company’s ICFR.
Under the supervision of the Certification Steering Committee, the effectiveness of ICFR was
evaluated. 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, 2020.
(signed) Jean-Claude Dugas
Jean-Claude Dugas, CPA, CA
Chief Financial Officer
March 16, 2021
53
2020 ANNUAL REPORT | LOGISTEC
MANAGEMENT'S DISCUSSION AND ANALYSIS
CONSOLIDATED
FINANCIAL
STATEMENTS
LOGISTEC | 2020 ANNUAL REPORT
54
TABLE OF
CONTENTS
56
61
Independent Auditors’ Report
97
13. Financial Instruments
Consolidated Financial Statements
14. Trade and Other Receivables
61
62
63
64
66
Consolidated Statements of
Earnings
Consolidated Statements of
Comprehensive Income
Consolidated Statements of
Financial Position
Consolidated Statements of
Changes In Equity
Consolidated Statements of
Cash Flows
67
Notes to Consolidated Financial
Statements
67
1. General Information
2. Summary of Significant
Accounting Policies
3. Critical Accounting Judgments
and Key Sources of Estimation
Uncertainty
4. Business Combinations
5. Revenue
6. Employee Benefits Expense
7. Government Assistance
8. Other Losses
9. Finance Expense
10. Income Taxes
11. Earnings Per Share
12. Financial Risk Management
82
85
87
88
89
92
98
99
100
101
103
104
105
106
107
15. Inventories
16. Equity Accounted Investments
17. Property, Plant and Equipment
18. Lease Arrangements
19. Goodwill
20. Intangible Assets
21. Non-Current Financial Assets
22. Trade and Other Payables
23. Indebtedness
24. Post-Employment Benefit
Assets And Obligations
110
25. Non-Current Liabilities
112
26. Share Capital
116
27. Accumulated Other
Comprehensive Income, Net of
Taxes
28. Consolidated Statements of
Cash Flows
29. Related Party Transactions
30. Segmented Information
31. Contingent Liabilities and
Guarantees
118
119
121
122
Board of Directors
123 Officers of the Company
124
Shareholder and Investor Information
CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITORS’
REPORT
To the Shareholders of LOGISTEC Corporation
OPINION
We have audited the consolidated financial statements of Logistec Corporation (the "Entity"),
which comprise:
•
•
•
•
•
•
the consolidated statements of financial position as at December 31, 2020 and 2019
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 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, 2020 and 2019, 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.
in the "Auditors’
Our responsibilities under those standards are further described
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.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements for the year ended December 31, 2020.
These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. We have determined the matters described below to be the key audit matters to be
communicated in our auditors’ report.
LOGISTEC | 2020 ANNUAL REPORT
56
CONSOLIDATED FINANCIAL STATEMENTS
EVALUATION OF THE GOODWILL IMPAIRMENT ASSESSMENT OF THE ALTRA
WATER TECHNOLOGIES CASH GENERATING UNIT (“CGU”)
Description of the matter
We draw attention to Notes 2, 3 and 19 to the financial statements. The goodwill balance as of
December 31, 2020 is $149,848, of which $86,445 relates to the ALTRA Water Technologies
CGU. CGUs to which goodwill has been allocated are tested for impairment annually by the
Entity, except when certain criteria are met, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the CGU is less than its the carrying
amount, an impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the CGU and then to the other assets of the CGU pro-rated on the basis of the
carrying amount of each asset in the CGU.
Recoverable amount of a CGU is the higher of fair value less cost of disposal and value in use.
The Entity’s key assumptions used in establishing the recoverable amount of the ALTRA Water
Technologies CGU, which is calculated by discounting five-year cash flow projections are as
follows:
• Budgeted cash flow projections covering a one-year period
•
Forecasted cash flow projections growth rate beyond that one-year period
• Discount rate.
Why the matter is a key audit matter
We identified the evaluation of the goodwill impairment assessment of the ALTRA Water
Technologies CGU as a key audit matter. This matter represented an area of significant risk
of material misstatement given the magnitude of the ALTRA Water Technologies CGU and the
high degree of estimation uncertainty in determining the recoverable amount. In addition,
significant auditor judgment and specialized skills and knowledge were required in evaluating
the results of our audit procedures due to the sensitivity of the determination of the
recoverable amount of the ALTRA Water Technologies CGU to minor changes to significant
assumptions.
How the matter was addressed in the audit
The following are the primary procedures we performed to address this key audit matter:
We evaluated the appropriateness of the Entity’s one-year period budgeted cash flow
projections assumption used in establishing the recoverable amount of the ALTRA Water
Technologies CGU by comparing it to the Entity’s actual historical cash flows. We took into
account changes in conditions and events affecting the Entity to assess the adjustments or lack
of adjustments made by the Entity in arriving at the one-year period budgeted cash flow
projections assumption.
We compared the Entity’s historical forecasts to actual results to assess the Entity’s ability to
accurately predict the forecasted cash flow projections growth rate assumptions beyond the
one-year period.
57
2020 ANNUAL REPORT | LOGISTEC
CONSOLIDATED FINANCIAL STATEMENTS
We involved valuation professionals with specialized skills and knowledge, who assisted in:
•
•
Evaluating the appropriateness of the Entity’s discount rate assumption used in establishing
the recoverable amount, by comparing inputs into the discount to publicly available data for
comparable entities;
Evaluating the appropriateness of the discounted cash flow model used by the Entity to
calculate the recoverable amount of the ALTRA Water Technologies CGU based on the
knowledge of the valuation professional;
• Assessing the reasonableness of the Entity’s estimate of the recoverable amount of the
ALTRA Water Technologies CGU by comparing the Entity’s estimated earnings before
interest, tax, depreciation, and amortization (“EBITDA”) multiple to publicly available
EBITDA multiples for comparable entities.
OTHER INFORMATION
Management is responsible for the other information. Other information comprises:
•
•
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 2020".
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 2020 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
LOGISTEC | 2020 ANNUAL REPORT
58
CONSOLIDATED FINANCIAL STATEMENTS
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:
•
Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Entity's internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the 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.
•
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.
59
2020 ANNUAL REPORT | LOGISTEC
CONSOLIDATED FINANCIAL STATEMENTS
• 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.
•
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.
• 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 16, 2021
*CPA auditor, CA, public accountancy permit No. A114306
LOGISTEC | 2020 ANNUAL REPORT
60
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF
EARNINGS
Years ended December 31
(in thousands of dollars, except per share amounts)
Revenue
Employee benefits expense
Equipment and supplies expense
Operating expense
Other expenses
Notes
5
6
Depreciation and amortization expense
17, 18, 20
Share of profit of equity accounted investments
Other losses
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”)
2020
$
2019
$
604,701
639,942
(287,665)
(155,611)
(313,091)
(169,640)
(41,864)
(27,509)
(45,390)
9,529
(923)
55,268
(43,173)
(31,936)
(42,122)
8,729
(1,220)
47,489
16
8
9
(12,453)
(12,854)
635
43,450
(10,662)
32,788
501
35,136
(8,699)
26,437
32,614
26,194
174
32,788
243
26,437
2.43
2.67
2.39
2.63
1.97
2.16
1.92
2.11
10
11
11
11
11
See accompanying notes to the consolidated financial statements.
61
2020 ANNUAL REPORT | LOGISTEC
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
Years ended December 31
(in thousands of dollars)
Profit for the year
Other comprehensive (loss) income
Items that are or may be reclassified to the consolidated statements of
earnings
Net change in value of currency translation differences arising on
translation of foreign operations, net of $302 tax recovery in 2020
(nil in 2019)
Net change in value of unrealized gain on translating debt designated
as hedging item of the net investment in foreign operations, net of
$1,053 tax expense in 2020 (nil in 2019)
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 on benefit obligation
Return on retirement plan assets
Income taxes on remeasurement gain on benefit obligation and return
on retirement plan assets
Total items that will not be reclassified to the consolidated statements of
earnings
Share of other comprehensive (loss) income of equity accounted
investments, net of income taxes
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
Total share of other comprehensive loss of equity accounted investments,
net of income taxes
Other comprehensive loss for the year, net of income taxes
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the Company
Non-controlling interest
Total comprehensive income for the year
Notes
2020
$
2019
$
32,788
26,437
(2,921)
(5,916)
1,253
(92)
(11)
3,653
(174)
47
(1,771)
(2,390)
24
24
10
(2,732)
333
(4,384)
1,680
636
719
(1,763)
(1,985)
(199)
—
53
(26)
(146)
(26)
(3,680)
29,108
(4,401)
22,036
28,962
21,819
146
217
29,108
22,036
See accompanying notes to the consolidated financial statements.
LOGISTEC | 2020 ANNUAL REPORT
62
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(in thousands of Canadian dollars)
Notes
As at
December 31,
2020
$
As at
December 31,
2019
$
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
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
14
10
15
16
17
18
19
20
21
10
22
10
26
18
23
18
23
10
24
25
26
26
27
45,498
137,911
7,617
9,171
12,946
9,005
222,148
45,061
185,181
132,795
149,848
38,422
2,381
9,160
12,385
797,381
90,046
8,700
8,570
1,259
18,251
3,718
130,544
116,917
163,962
21,399
22,055
2,533
38,400
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
495,810
453,724
45,575
4,906
242,358
7,943
300,782
789
301,571
40,222
9,811
220,641
9,697
280,371
643
281,014
797,381
734,738
Commitments, contingent liabilities and guarantees
18, 31
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
63
2020 ANNUAL REPORT | LOGISTEC
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY
(in thousands of Canadian dollars)
Attributable to owners of the Company
Share
capital
to be
issued
$
Accumulated
other
comprehensive
income
(Note 27)
$
Share
capital
$
Notes
Retained
earnings
$
Non-
controlling
interest
$
Total
$
Total
equity
$
Balance as at January 1, 2020
40,222
9,811
9,697
220,641
280,371
643
281,014
Profit for the year
—
—
—
32,614
32,614
174
32,788
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
Share of other
comprehensive loss
of equity accounted
investments, net of
income taxes
Cash flow hedges, net of
income taxes
Total comprehensive (loss)
income for the year
Issuance of Class B shares
capital to a subsidiary
shareholder
Class B shares to be issued
under the Executive Stock
Option Plan
Other dividends
Dividends on Class A shares
Dividends on Class B shares
Balance as at December 31,
2020
Remeasurement of written put
option liability
Repurchase of Class A shares
Issuance and repurchase of
25
26
Class B shares
26
452
—
—
(2,893)
—
(2,893)
(28)
(2,921)
—
—
1,253
—
1,253
—
1,253
24
—
—
—
(1,763)
(1,763)
—
(1,763)
—
—
—
—
(4)
—
—
—
—
—
—
26
4,905
(4,905)
26
26
26
—
—
—
—
—
—
—
—
(11)
(135)
(146)
(103)
—
(103)
—
—
(146)
(103)
(1,754)
30,716
28,962
146
29,108
—
—
—
—
—
—
—
—
(2,732)
(2,732)
(182)
(186)
(888)
(436)
—
—
136
136
(299)
(299)
(2,758)
(2,758)
(2,276)
(2,276)
—
—
—
—
—
—
—
—
(2,732)
(186)
(436)
—
136
(299)
(2,758)
(2,276)
45,575
4,906
7,943
242,358
300,782
789
301,571
See accompanying notes to the consolidated financial statements.
LOGISTEC | 2020 ANNUAL REPORT
64
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY (CONTINUED)
(in thousands of Canadian dollars)
Attributable to owners of the Company
Share
capital
to be
issued
$
Accumulated
other
comprehensive
income
(Note 27)
$
Share
capital
$
Notes
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
—
—
(5,890)
—
(5,890)
(26)
(5,916)
—
—
3,653
—
3,653
—
3,653
24
—
—
—
(1,985)
(1,985)
—
(1,985)
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
Share of other
comprehensive loss
of equity accounted
investments, net of
income taxes
Cash flow hedges, net of
income taxes
Total comprehensive (loss)
income for the year
—
—
—
—
—
(6)
—
—
—
—
—
—
—
—
(26)
(26)
(127)
—
(127)
—
—
(26)
(127)
(2,364)
24,183
21,819
217
22,036
—
2,766
2,766
—
2,766
—
—
(35)
(35)
(1,765)
(1,800)
(381)
(387)
—
(387)
—
(1,384)
(1,078)
—
(1,078)
Remeasurement of written put
option liability
Repurchase of non-controlling
interests
25
25, 29
Repurchase of Class A shares
26
Issuance and repurchase of
Class B shares
26
306
Issuance of Class B shares
capital to a subsidiary
shareholder
Dividends on Class A shares
Dividends on Class B shares
Balance as at December 31,
2019
26
26
26
4,906
(4,906)
—
—
—
—
—
—
—
—
—
(2,722)
(2,722)
(2,190)
(2,190)
—
—
—
—
(2,722)
(2,190)
40,222
9,811
9,697
220,641
280,371
643
281,014
See accompanying notes to the consolidated financial statements.
65
2020 ANNUAL REPORT | LOGISTEC
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Years ended December 31
(in thousands of Canadian dollars)
Notes
2020
$
2019
$
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 other non- current liability
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
Proceeds from disposal of property, plant and equipment
Business combinations
Interest received
Acquisition of other non-current assets
Proceeds from disposal of other non-current assets
Cash paid to non-controlling interests
Cash received on other non-current financial assets
28
16
24
25
28
23, 28
23, 28
26
26
26
26
26
17
20
17
4
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
28
See accompanying notes to the consolidated financial statements.
32,788
60,517
93,305
6,600
(871)
(481)
15,066
(5,164)
108,455
—
76,518
(83,962)
(2,557)
(14,049)
(10,755)
190
(186)
(1,131)
(2,760)
(2,262)
26,437
55,912
82,349
4,113
(991)
(194)
(2,049)
(11,947)
71,281
(13,577)
84,649
(66,030)
(571)
(9,726)
(12,269)
258
(387)
(1,635)
(2,703)
(2,161)
(40,954)
(24,152)
(23,375)
(34,974)
(248)
634
(19,957)
330
(228)
109
(2,056)
222
(44,569)
22,932
22,608
(42)
45,498
(122)
1,832
—
439
(944)
151
(7,972)
211
(41,379)
5,750
15,393
1,465
22,608
LOGISTEC | 2020 ANNUAL REPORT
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(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 53 ports across North America, and offers marine agency services
to foreign shipowners and operators serving the Canadian market. The Company is widely
diversified in terms 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 renewal 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 600 de la
Gauchetière Street West, 14th Floor, Montréal, Québec H3B 4L2, 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 16, 2021.
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Significant accounting policies used in the preparation of these consolidated financial
statements are set out below.
STATEMENT OF COMPLIA NCE
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, 2020, the Company adopted the following new amendments:
• Amendments to Hedge Accounting Requirements - IBOR Reform and its Effects on Financial
Reporting (Phase 1);
• Amendments to References to Conceptual Framework in IFRS Standards;
• Definition of a Business (Amendments to IFRS 3);
• Definition of Material (Amendments to IAS 1 and IAS 8).
67 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
The Company completed its assessment of the impact of these amendments and concluded
that the adoption does not have a material impact on its consolidated financial statements.
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.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and its
subsidiaries.
SUBSIDIARIES
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, Castaloop Inc., Castaloop USA Inc., 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)
LOGISTEC | 2020 ANNUAL REPORT
68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
Inc., LOGISTEC Stevedoring U.S.A. Inc., LOGISTEC USA Inc., MtlLINK Multimodal Solutions
Inc. ("MtlLINK"), 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 and a 77.91% investment in
LOGISTEC Gulf Coast LLC (“LGC”).
BUSINESS COMBINATIONS
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-related costs are expensed as incurred. Identifiable
assets acquired, and liabilities and contingent 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.
NON-CONTROLLING INTERESTS
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.
EQUITY ACCOUNTED INVESTMENTS
Equity accounted investments consist of investments in joint ventures and associates of the
Company.
JOINT VENTURES
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.
ASSOCIATES
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.
69 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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:
MARINE SERVICES
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). 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.
LOGISTEC | 2020 ANNUAL REPORT
70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
ENVIRONMENTAL SERVICES
The Company earns revenue in the environmental services segment, where it provides services
to industrial, municipal and other governmental customers for the renewal 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.
ENVIRONMENTAL GOODS
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
FUNCTIONAL AND PRESENTATION CURRENCY
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.
TRANSACTIONS AND BALANCES
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
71 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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 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.
CURRENT INCOME TAXES
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.
DEFERRED INCOME TAXES
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.
DEFERRED INCOME TAX ASSETS
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.
LOGISTEC | 2020 ANNUAL REPORT
72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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.
DEFERRED INCOME TAX LIABILITIES
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
73 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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, 2020 and 2019, 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.
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 16 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
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 | 2020 ANNUAL REPORT
74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
SHORT-TERM OR LOW-VALUE LEASES
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.
ALL OTHER LEASES
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.
The 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.
The 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.
75 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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 CGU may
be impaired. Recoverable amount of a CGU is the higher of fair value less cost of disposal
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 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 its
carrying amount, an impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the CGU and then to the other assets of the CGU pro-rated on the
basis of the carrying amount of each asset in the CGU. 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;
LOGISTEC | 2020 ANNUAL REPORT
76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
•
•
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- FIN ANCIAL 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.
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.
77 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
WARRANTY
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.
CLAIMS AND LITIGATION
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.
ASSET RETIREMENT OBLIGATIONS
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.
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.
LOGISTEC | 2020 ANNUAL REPORT
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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.
FINANCIAL ASSETS
CLASSIFICATION
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.
79 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
IMPAIRMENT OF FINANCIAL ASSETS
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 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.
DERECOGNITION OF FINANCIAL ASSETS
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.
FINANCIAL LIABILITIES
Financial liabilities are classified either at FVTPL or at amortized cost.
CLASSIFICATION
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.
DERECOGNITION OF FINANCIAL LIABILITIES
The Company derecognizes financial liabilities when, and only when, the Company’s
obligations are discharged, cancelled or expired.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments recognized at fair value are classified using a hierarchy that reflects the
significance of the inputs used to measure the fair value.
LOGISTEC | 2020 ANNUAL REPORT
80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(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.
HEDGE OF A NET INVESTMENT IN FOREIGN OPERATIONS
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.
81 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(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
CLASSIFICATION OF LIABILITIES AS CURRENT OR NON-CURRENT (AMENDMENTS TO
IAS 1)
On January 23, 2020, the IASB issued amendments to IAS 1 Presentation of Financial
Statements, to clarify the classification of liabilities as current or non-current. For the purposes
of non-current classification, the amendment removed the requirement for a right to defer
settlement or roll over of a liability for at least twelve months to be unconditional. Instead, such
a right must have substance and exist at the end of the reporting period.
The amendment is effective for annual periods beginning on or after January 1, 2023. It is
not expected that this amendment will 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.
LOGISTEC | 2020 ANNUAL REPORT
82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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:
COVID-19 MEASURES
During March 2020, the COVID-19 outbreak was declared a pandemic by the World Health
Organization. The situation is constantly evolving, and the measures put in place have
numerous economic repercussions at the global and national levels. These measures, which
include travel bans, solitary confinement or quarantine, whether voluntary or not, and social
distancing, have caused significant disruption in the United States and Canada, where the
Company operates.
The Company rolled out its business continuity plan for its marine operations, which were
deemed essential services by the government authorities in Canada and the United States.
As such, our terminal operations across our North American network remained open and
functional. In addition, our manufacturing of woven hoses, which is essential in providing
communities with drinking water and fighting forest fires, remained operational.
On the environmental services side, we were, as every year, impacted by the seasonality of our
operations, as most activities cannot be performed in the winter season. This includes site
remediation and renewal of water mains. COVID-19 has nonetheless affected some of these
activities, causing significant delays in our projects. However, operating under strict distancing
and sanitation protocols, we were able to recover most of the lost time before the conclusion
of the active season.
In light of the COVID-19 measures, management has reviewed its judgments, estimates and
assumptions related to the carrying amounts of assets and liabilities that are not readily
apparent from other sources. As at December 31, 2020, management has not found any
triggering events that could impair its long-lived assets, including goodwill, that could increase
the allowance for doubtful accounts on its trade receivables, or that could limit its ability to
draw on its credit facilities.
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.
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.
83 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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 19 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.
LOGISTEC | 2020 ANNUAL REPORT
84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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 25 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. BUSINESS COMBINATIONS
2020 BUSINESS COMBINATIONS
CARE AND PASCAGOULA TERMINALS
On June 26, 2020, GSM acquired the Care terminal at the Port of Houston in Texas, and on
July 15, 2020, acquired an additional terminal at the Port of Pascagoula in Mississippi for
a total purchase price of US$12,033 (CA$16,457), subject to certain adjustments. These two
strategically located marine terminals complement LOGISTEC’s growing network throughout
the U.S. Gulf, which is now operating in 12 terminals in three Gulf Coast states. The purchase
price is final.
CASTALOOP INC.
On December 14, 2020, the Company acquired 100% ownership of Gestion Castaloop Inc.
and its subsidiaries (“Castaloop”) for a purchase price of $3,500, subject to certain
adjustments. Castaloop provides customized cargo handling services to clients along the Great
Lakes and St. Lawrence Seaway as well as along the St. Lawrence River and U.S. East Coast.
This acquisition solidifies LOGISTEC's position as a leading provider of innovative cargo
handling services at ports throughout North America. The purchase price has been allocated
on a preliminary basis and will be finalized as soon as the Company has obtained all the
information it considers necessary. As at December 31, 2020, we are currently evaluating the
property, plant and equipment, intangible assets and working capital.
85 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
At the acquisition date, the fair value of the underlying identifiable assets acquired and
liabilities assumed was as follows:
Current assets
Property, plant and equipment
Right-of-use assets
Goodwill (1)
Intangible assets
Current liabilities
Lease liabilities
Cash purchase consideration
Care and
Pascagoula
Terminals
$
134
7,317
32,706
7,042
2,051
(87)
(32,706)
16,457
Castaloop
$
—
—
127
3,500
—
—
(127)
3,500
Total
$
134
7,317
32,833
10,542
2,051
(87)
(32,833)
19,957
(1) The goodwill related to the acquisition of Care and Pascagoula terminals is deductible for tax purposes.
The acquisition transition costs for these assets, included under other expenses, amounted to
$89.
IMPACT OF THE BUSINESS COMBINATIONS ON THE RESULTS OF THE
COMPANY
The Company’s results for the year ended December 31, 2020, include $4,743 in revenue, and
a loss before income taxes of $2,070 generated by these business combinations. If these
business combinations had been completed on January 1, 2020, in the Company’s best
estimate, revenue and loss before income taxes for the year ended December 31, 2020, would
have been $13,206 and $240, respectively.
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, 2020.
GOODWILL
Goodwill mainly arose in the acquisition, as a result of synergies attributable to the expected
future growth potential from the expanded locations and intangible assets not qualifying for
separate recognition.
2019 BUSINESS COMBINATIONS
On October 31, 2019, the Company acquired the remaining 14.18% interest in MtlLINK for a
cash consideration of $1,800.
LOGISTEC | 2020 ANNUAL REPORT
86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
5. REVENUE
Revenue from cargo handling services
Revenue from services relating to the renewal of underground water
mains
Revenue from site remediation and soils and materials management
services
Revenue from the sale of goods
2020
$
343,538
152,252
82,989
25,922
604,701
2019
$
382,651
145,660
81,614
30,017
639,942
CONTRACT IN THE SCOPE OF IFRIC 12 SERVICE CONCESSION A RRANGE MENTS
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
revenue is recognized over that period. It is 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
$617 ($603 in 2019).
An amount of $202 ($335 in 2019) is recorded in trade and other receivables and an amount
of $233 ($222 in 2019) is recorded in other financial assets. In addition, an amount of $3,093
($3,325 in 2019), which bears interest at a rate of 5.00%, is included in non- current financial
assets.
87 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
6. 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 24)
Defined contribution retirement plans (Note 24)
Government pension plans
Other long-term (recovery) expense (1)
2020
$
2019
$
281,309
302,825
1,906
3,423
3,568
(2,541)
287,665
2,060
3,140
3,373
1,693
313,091
(1) In 2020, in light of the economic slowdown caused by COVID-19, the Company reassessed the probability to attain the threshold creating the
right to the long-term bonus, which resulted in the reversal of $2.541 of employee benefits expense.
The compensation of key management personnel is further disclosed in Note 29.
7. GOVERNMENT ASSISTANCE
As at December 31, 2020, the Company qualified for the Canada Emergency Wage Subsidy
and that there was reasonable assurance that the amount would be received from the
Canadian federal government in connection with the COVID-19 pandemic. For the year ended
December 31, 2020, the Company recognized $15,802 of wage subsidy against the salary
expense, which qualified for that subsidy, under employee benefits expense in the consolidated
statements of earnings. As at December 31, 2020, $4,776 was included in trade and other
receivables.
8. OTHER LOSSES
Net foreign exchange losses
(Loss) gain on disposal of property, plant and equipment
Gain on remeasurement of a long-term liability due to a non-controlling
interest
9. FINANCE EXPENSE
Interest on long-term debt
Interest on lease liabilities
Other interest expense
2020
$
(756)
(476)
309
(923)
2020
$
7,163
5,239
51
12,453
2019
$
(2,994)
1,166
608
(1,220)
2019
$
8,861
3,960
33
12,854
LOGISTEC | 2020 ANNUAL REPORT
88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
10. 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
26.50% (26.60% in 2019)
Non-deductible items and other
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
2020
$
43,450
(9,529)
33,921
8,989
1,028
(302)
374
573
10,662
2019
$
35,136
(8,729)
26,407
7,024
1,314
(540)
177
724
8,699
Effective income tax rate
31.43%
32.94%
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
2020
$
9,735
256
354
317
10,662
2019
$
8,751
324
(776)
400
8,699
DEFERRED INCOME TAX BALANCES
The amounts recognized in the consolidated statements of financial position are as follows:
Deferred income tax assets
Deferred income tax liabilities
Income tax expense recognized in profit or loss
As at
December 31,
2020
$
As at
December 31,
2019
$
12,385
(21,399)
(9,014)
12,751
(21,156)
(8,405)
89 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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.
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 (1)
$
Lease
liabilities
$
Other
$
Total
$
As at January 1, 2019
844
8,219
3,678
—
6,543
19,284
Expense (benefit) to statement of
earnings
Expense (benefit) to statement of
comprehensive income
Effect of foreign currency exchange
differences
158
(190)
170
20,085
(967)
19,256
—
—
—
719
—
47
766
222
—
(244)
(295)
(317)
As at December 31, 2019
1,002
8,251
4,567
19,841
5,328
38,989
Expense (benefit) to statement of
earnings
Expense (benefit) to statement of
comprehensive income
Effect of foreign currency exchange
differences
(531)
(447)
145
3,317
380
2,864
—
—
(240)
636
—
(11)
385
(33)
—
(266)
(42)
(341)
As at December 31, 2020
471
7,531
5,348
22,892
5,655
41,897
(1) The 2019 figure have been reclassified to conform with this year presentation.
Deferred income tax liabilities
Contract
Property,
Plant and
equipment
$
Right-
of-use
assets
$
holdbacks
and
backlog
$
Intangible
assets
$
Other
$
Total
$
As at January 1, 2019
(12,720)
—
(3,419)
(9,200)
(4,091)
(29,430)
Benefit (expense) to statement of
earnings
Effect of foreign currency exchange
differences
(3,490)
(19,634)
708
2,482
1,454
(18,480)
171
239
—
106
—
516
As at December 31, 2019
(16,039)
(19,395)
(2,711)
(6,612)
(2,637)
(47,394)
Benefit (expense) to statement of
earnings
Expense (benefit) to statement of
comprehensive income
Effect of foreign currency exchange
differences
1,122
(2,793)
(2,728)
(752)
1,616
(3,535)
—
—
162
253
—
—
—
(511)
(511)
103
11
529
As at December 31, 2020
(14,755)
(21,935)
(5,439)
(7,261)
(1,521)
(50,911)
LOGISTEC | 2020 ANNUAL REPORT
90
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(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 $32,057 ($33,570 in 2019)
of which $2,990 has not been recognized ($3,738 in 2019). These losses are expiring in the
following years:
2029 to 2032
2033
2034
2035
2036
2037
2038
2039
2040
Indefinite
As at
December 31,
2020
$
As at
December 31,
2019
$
689
530
1,823
2,570
1,282
5,097
3,714
1,679
28
1,654
950
3,071
3,321
1,841
6,975
662
3,296
—
14,645
11,800
Tax benefits of $7,531 ($8,251 in 2019) have been recorded related to unused non-capital tax
losses, including $4,856 ($4,489 in 2019) from foreign subsidiaries. The Company also has
$1,216 ($1,935 in 2019) of unrecognized capital losses and deductible temporary differences
that may be carried forward indefinitely. As at December 31, 2020, no deferred tax liability
was recognized for temporary differences arising from investments in subsidiaries and joint
ventures because the Company controls the decisions affecting the realization of such
liabilities and it is probable that the temporary differences will not reverse in the foreseeable
future.
91 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
11. EARNINGS PER SHARE
The earnings and weighted average number of Class A shares and Class B shares used in the
calculation of basic and diluted earnings per share are as follows:
Profit attributable to owners of Class A shares, basic ($)
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
2020
2019
17,901
14,713
32,614
14,540
11,654
26,194
7,378,964
5,513,258
7,388,122
5,383,398
12,892,222
12,771,520
2.43
2.67
17,637
14,977
32,614
1.97
2.16
14,152
12,042
26,194
7,378,964
5,696,621
7,388,122
5,715,329
13,075,585
13,103,451
2.39
2.63
1.92
2.11
12. 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);
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
LOGISTEC | 2020 ANNUAL REPORT
92
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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:
As at
December 31,
2020
$
As at
December 31,
2019
$
Long-term debt, including the current portion
167,680
177,900
Less:
Cash and cash equivalents
Total net indebtedness
Equity attributable to owners of the Company
Capitalization
45,498
122,182
300,782
422,964
22,608
155,292
280,371
435,663
Ratio of net indebtedness/capitalization
28.9%
35.6%
As at December 31, 2020, the Company was in compliance with all of its obligations under the
terms of its banking agreements.
FINANCIAL RISK MANAGEMENT
Due to 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.
93 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
Overall, the Company serves some 2,200 customers. In 2020, the 20 largest customers
account for 40.0% (39.7% in 2019) of consolidated revenue, and not a single customer
accounts for more than 10% of consolidated revenue and trade receivables in 2020 and 2019.
Allowance for doubtful accounts and past due receivables are reviewed by management on
a monthly basis. Refer to Note 14 for further details.
The Company’s maximum exposure to credit risk with respect to each of its 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.
The following are the contractual maturities of financial obligations:
As at December 31, 2020
Trade and other payables
Dividends payable
Lease liabilities
Long-term debt
Non-current liabilities
Carrying
amount
Contractual
cash
flows (1)
Less than
1 year
1-3 years
More than
3 years
$
$
$
90,046
90,046
90,046
1,259
1,259
1,259
$
—
—
$
—
—
135,168
179,125
18,153
29,149
131,823
167,680
180,035
6,592
130,027
43,416
38,400
40,787
4,973
34,350
1,464
432,553
491,252
121,023
193,526
176,703
As at December 31, 2019
Carrying
amount
Contractual
cash
flows (1)
Less than
1 year
1-3 years
More than
3 years
$
$
$
Trade and other payables
86,217
86,217
86,217
Dividends payable
Lease liabilities
Long-term debt
1,245
1,245
91,315
123,759
177,900
190,744
1,245
13,593
11,842
$
—
—
$
—
—
23,153
87,013
10,758
168,144
Non-current liabilities
46,088
52,565
1,673
19,529
31,363
402,765
454,530
114,570
53,440
286,520
(1) Includes principal and interest.
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.
LOGISTEC | 2020 ANNUAL REPORT
94
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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.
INTEREST RATE RISK
The Company is exposed to market risk related to interest rate fluctuations because a
portion of its long-term debt bears 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. In addition, in 2020, the Company entered into an interest rate
swap contract with the Company’s main banks for an amount of $15,000. The interest
rate swap contract is 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. The floating interest rate on the interest rate swap is CDOR and the fixed
interest rate is 0.78%. The interest rate swap contract settles on a monthly basis and
will mature in June 2023. The Company continues to monitor opportunities to reduce
interest rate risk.
SENSITIVITY ANALYSIS
As at December 31, 2020, the floating rate portion of the Company’s long-term
debt is 60.4% (70.5% in 2019). 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, 2020 would have had a negative impact of
$1,014 ($1,253 in 2019) 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.
FOREIGN EXCHANGE RISK
The Company provides services invoiced in U.S. dollars and purchases equipment
denominated in U.S. dollars. 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 remaining risk to be limited and,
therefore, does not use derivative financial instruments to reduce its exposure.
During 2020, 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 $1,195 ($2,649 in 2019)
on profit for the year and a positive impact of $12,474 ($11,991 in 2019) 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, 2020, a total of $60,575 or US$47,577 ($95,209 or US$73,306 in
2019) of cash and cash equivalents and trade and other receivables is denominated in
foreign currencies. As at December 31, 2020, a total of $39,004 or US$30,634 ($61,711
or US$47,514 in 2019) of trade and other payables is denominated in foreign currencies.
95 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
FAIR VALUE OF FINANCIAL INSTRUMEN TS
As at December 31, 2020 and 2019, the estimated fair values of cash and cash equivalents,
trade and other receivables, 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, 2020 and 2019,
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 $3,349 higher than its carrying value as at
December 31, 2020 ($921 higher in 2019), 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.
For the year ended December 31, 2020, no financial instruments were recorded at fair value
and transferred between levels 1, 2 and 3.
SENSITIVI TY ANALYSIS
On December 31, 2020, 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 $3,196 ($2,923 in 2019) in retained earnings for the year
ended December 31, 2020, 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.
LOGISTEC | 2020 ANNUAL REPORT
96
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
13. 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
Trade and other payables
Dividends payable
Long-term debt, including current portion
Non-current liabilities
As at
December 31,
2020
$
As at
December 31,
2019
$
45,498
137,911
9,160
192,569
90,046
1,259
167,680
38,400
297,385
22,608
156,228
8,829
187,665
86,217
1,245
177,900
46,088
311,450
The fair value of the Company’s financial instruments is disclosed in Note 12.
14. TRADE AND OTHER RECEIVABLES
Carrying amount
Trade receivables
Allowance for doubtful accounts
Contract holdbacks
Net trade receivables
Canada Emergency Wage Subsidy receivables
Accrued revenue
Commodity taxes
Insurance reimbursement receivable related to claims
Other
As at
December 31,
2020
$
As at
December 31,
2019
$
100,887
(3,359)
14,455
111,983
4,776
12,868
3,637
509
4,138
125,389
(3,053)
16,248
138,584
—
11,985
1,664
1,633
2,362
137,911
156,228
97 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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)
As at
December 31,
2020
$
As at
December 31,
2019
$
45,251
26,903
13,944
25,885
56,528
32,379
16,635
33,042
111,983
138,584
(1) Includes contract holdbacks amounting to $6,360 ($11,200 in 2019).
The movements in the allowance for doubtful accounts were as follows:
2020
$
3,053
873
(567)
3,359
2019
$
2,364
1,410
(721)
3,053
Balance, beginning of year
Bad debt expense
Write offs
Balance, end of year
Credit risk exposure and mitigation are further discussed in Note 12.
15. INVENTORIES
Consumables
Raw materials
Work in progress
Finished goods
As at
December 31,
2020
$
As at
December 31,
2019
$
7,598
2,201
2,656
491
6,251
2,412
3,332
574
12,946
12,569
The cost of inventories recognized as an expense during the year was $44,212 ($45,935 in
2019) and was recorded in equipment and supplies expense in the consolidated statements of
earnings.
LOGISTEC | 2020 ANNUAL REPORT
98
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
16. 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 $1,431
($2,455 in 2019))
Non-current assets
Current liabilities
Non-current liabilities
Net assets
The Company’s share of net assets presented as an equity accounted
investment
Results
Revenue
Share of profit of an equity accounted investment
Interest expense
Interest income
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
2020
$
2019
$
3,197
92,119
(1,129)
(38,613)
55,574
3,870
85,108
(787)
(36,816)
51,375
27,795
25,694
4,112
12,713
(1,834)
1,844
(717)
14,702
7,351
5,250
3,914
6,006
(1,749)
1,783
(797)
8,204
4,102
2,250
99 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
The Company also has interests in individually immaterial joint ventures. The following table
provides, in aggregate, the financial information for those joint ventures:
2020
$
2019
$
Carrying amount of interests in individually immaterial joint ventures
17,266
16,655
Profit for the year
Other comprehensive loss
Total comprehensive income for the year
Dividends received by the Company
2,178
(146)
2,032
1,350
4,627
(43)
4,584
1,863
17. PROPERTY, PLANT AND EQUIPMENT
Cost
Machinery
and
automotive
equipment
$
Computer
equipment,
furniture and
fixtures
$
Land and
buildings
$
Leasehold Construction
in progress (1)
$
improvements
$
Total
$
As at January 1, 2019
73,617
210,197
4,580
13,942
2,956
305,292
Additions
Disposals
Transfers
Effect of foreign currency
exchange differences
36
24,121
(803)
(9,468)
2,003
7,978
85
(18)
271
20
(10)
792
10,295
34,557
—
(10,299)
(11,044)
—
(971)
(4,108)
(83)
(519)
(41)
(5,722)
As at December 31, 2019
73,882
228,720
93
—
(124)
698
8,641
7,317
(4,222)
4,813
4,835
198
—
(836)
1,197
14,225
2,166
323,828
130
15,366
24,428
—
(1,183)
3,148
—
—
7,317
(6,365)
(9,856)
—
Additions
Additions through business
combinations (Note 4)
Disposals
Transfers
Effect of foreign currency
exchange differences
(429)
(1,649)
(35)
(212)
(752)
(3,077)
As at December 31, 2020
74,120
243,620
5,359
16,108
6,924
346,131
(1) During 2020, the Company reclassified $137 of assets under construction to intangible assets.
LOGISTEC | 2020 ANNUAL REPORT
100
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
Accumulated depreciation
Machinery
and
automotive
equipment
$
Computer
equipment,
furniture and
fixtures
$
Land and
buildings
$
Leasehold Construction
in progress
$
improvements
$
Total
$
As at January 1, 2019
12,966
101,910
3,735
5,397
—
124,008
Depreciation expense
2,734
22,075
Disposals
(795)
(7,969)
364
(2)
1,102
(56)
Effect of foreign currency
exchange differences
(156)
(1,498)
(78)
(205)
As at December 31, 2019
14,749
114,518
Depreciation expense
3,139
23,150
Disposals
(22)
(3,247)
Effect of foreign currency
exchange differences
(136)
(927)
As at December 31, 2020
17,730
133,494
4,019
376
(809)
(35)
3,551
6,238
1,184
(1,139)
(108)
6,175
—
—
—
—
—
—
—
—
26,275
(8,822)
(1,937)
139,524
27,849
(5,217)
(1,206)
160,950
Carrying amount
Machinery
and
automotive
equipment
$
Computer
equipment,
furniture and
fixtures
$
Land and
buildings
$
Leasehold Construction
in progress
$
improvements
$
Total
$
As at December 31, 2019
59,133
114,202
As at December 31, 2020
56,390
110,126
816
1,808
7,987
9,933
2,166
184,304
6,924
185,181
As at December 31, 2020 and 2019, the Company has no property, plant and equipment under
order, or not yet delivered.
18. LEASE ARRANGEMENTS
Leases relate to lease agreements to rent offices, port facilities, and equipment that expire until
2040. 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. Lease liabilities are discounted using the incremental
weighted average borrowing rate of 4.70%.
101 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
RIGHT-OF-USE ASSETS
Carrying amount
Land and
buildings
$
Machinery and
automotive
equipment
$
Computer
equipment,
furniture and
fixtures
$
As at January 1, 2019
69,102
7,201
Additions
Derecognition
Depreciation expense
Effect of foreign currency exchange
differences
As at December 31, 2019
Additions
Derecognition
Depreciation expense (1)
Effect of foreign currency exchange
differences
As at December 31, 2020
Total
$
76,517
29,710
(2,392)
(11,568)
214
339
(11)
(88)
28,479
(2,336)
(9,190)
892
(45)
(2,290)
(2,413)
(265)
(8)
(2,686)
83,642
55,959
(455)
(10,722)
(2,907)
125,517
5,493
4,613
—
446
52
—
89,581
60,624
(455)
(2,977)
(134)
(13,833)
(211)
6,918
(4)
360
(3,122)
132,795
(1) In 2020, during the construction of a leasehold improvement, the Company capitalized $266 of depreciation expense to its property, plant and
equipment.
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, 2020
Current
Non-current
As at
December 31,
2020
$
As at
December 31,
2019
$
18,153
53,437
107,535
179,125
13,593
41,405
68,761
123,759
18,251
116,917
9,820
81,495
AMOUNT RECOGNIZED IN THE CONSOLIDATED STATEMENTS OF EARNINGS
Leases under IFRS 16
Interest on lease liabilities (1)
Expense related to variable lease payments, short-term and low-value
assets not included in the measurement of lease liabilities (2)
2020
$
5,239
30,766
36,005
2019
$
3,960
34,312
38,272
(1) In 2020, during the construction of a leasehold improvement the Company capitalized $150 of interest expense to its property, plant and equipment
(2) Recognized as operating expense in the consolidated statements of earnings.
LOGISTEC | 2020 ANNUAL REPORT
102
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
19. GOODWILL
Carrying amount
Cost, beginning of year
Business combinations (Note 4)
Effect of foreign currency exchange differences
Cost, end of year
Accumulated impairment losses
Net carrying amount
IMPAIRMENT TESTING
As at
December 31,
2020
$
As at
December 31,
2019
$
141,917
10,542
(1,311)
151,148
143,972
—
(2,055)
141,917
(1,300)
(1,300)
149,848
140,617
The carrying amount of goodwill has been allocated to the following CGUs or groups of CGUs:
Carrying amount
Stevedoring
ALTRA Proven Water Technologies
Environment
Agencies
As at
December 31,
2020
$
As at
December 31,
2019
$
57,537
86,445
5,681
185
48,306
86,445
5,681
185
149,848
140,617
The recoverable amount of the groups of CGUs Stevedoring and Environment have 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
and forecasts for the subsequent four years. The recoverable amount of the ALTRA Water
Proven Technologies has been determined based on a fair value less costs to disposal, which is
calculated by discounting five-year cash flow projections from the budget approved by the
Board of Directors covering a one-year period, forecasts for the subsequent four years and
adjusted for market participant assumptions. These cash flow projections reflect past
experience, future expectations of financial performance and current economic situation,
including the Covid-19.
The key assumptions used in establishing the recoverable amount for the groups of CGU are
as follows:
• A growth rate between 3.0% to 5.0% (3.0% in 2019) has been used to extrapolate cash flow
projections for the forecasted subsequent four years and a growth rate of 2.0% (3.0% in 2019)
for the terminal value.
• The discount rate used to calculate the recoverable amount is based on market data and was
9.1% (9.0% in 2019).
103 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
Projected cash flows are most sensitive to assumptions regarding the impact of COVID-19,
future profitability, replacement capital expenditure requirements and working capital
investment and tax considerations. The values applied to these key assumptions are derived
from a combination of external and internal factors, based on past experience together with
management’s future expectations about business performance.
The discount rates were estimated based on an appropriate weighted average cost of capital
(WACC) for each group of CGUs. The discount rates were estimated by applying the
Company’s weighted average cost of capital as adjusted to reflect the market assessment of
risks and for which the cash flow projections have not been adjusted.
20. INTANGIBLE ASSETS
Cost
Lease rights
and location
$
Client
relationships
and backlog
$
Computer
software
$
Total
$
As at January 1, 2019
27,399
46,581
3,666
77,646
Additions
—
—
122
122
Effect of foreign currency exchange
differences
As at December 31, 2019
Additions
Additions through business combinations
(Note 4)
Disposals
Effect of foreign currency exchange
differences
As at December 31, 2020
(1,313)
26,086
—
—
—
(515)
25,571
(1,430)
45,151
—
2,051
(50)
(701)
46,451
(371)
3,417
385
—
—
(31)
3,771
(3,114)
74,654
385
2,051
(50)
(1,247)
75,793
Total
$
Accumulated amortization
As at January 1, 2019
Amortization expense
Effect of foreign currency exchange
differences
As at December 31, 2019
Amortization expense
Disposals
Effect of foreign currency exchange
differences
As at December 31, 2020
Carrying amount
As at December 31, 2019
As at December 31, 2020
Lease rights
and location
$
Client
relationships
and backlog
$
Computer
software
$
7,125
1,374
(406)
8,093
1,395
—
(230)
9,258
20,858
2,657
30,640
2,270
635
4,279
(208)
22,920
2,209
(10)
(248)
24,871
(386)
2,906
370
—
(1,000)
33,919
3,974
(10)
(34)
(512)
3,242
37,371
Lease rights
and location
$
Client
relationships
and backlog
$
17,993
16,313
22,231
21,580
Computer
software
$
511
529
Total
$
40,735
38,422
LOGISTEC | 2020 ANNUAL REPORT
104
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
Accumulated Impairment Losses
As at
December 31,
2020
$
As at
December 31,
2019
$
Balance, end of year
9,738
9,738
21. NON-CURRENT FINANCIAL ASSETS
Non-current financial assets
Contract holdbacks
As at
December 31,
2020
$
As at
December 31,
2019
$
4,826
4,334
9,160
6,225
2,604
8,829
22. TRADE AND OTHER PAYABLES
Trade payables and accrued liabilities
Payroll accruals
Due to a non-controlling interest (Note 26)
Provisions (Note 25)
Other
(1) The 2019 figure have been reclassified to conform with this year presentation.
As at
December 31,
2020
$
As at
December 31,
2019 (1)
$
60,750
18,920
5,857
636
3,883
90,046
60,383
20,276
—
593
4,965
86,217
105 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
23. INDEBTEDNESS
LONG-TERM DEBT
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 1.65%
as at December 31, 2020 (1)
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)
Term credit facilities, bearing interest at prime rate plus 0.75% to
2.00%, with maturities ranging up to 5 years from the advance
date (3) (4)
Non-interest-bearing government loan, maturing in 2023
Loan for equipment purchases, bearing interest from 0.50% to 5.36%
Less:
Current portion
As at
December 31,
2020
$
As at
December 31,
2019
$
106,670
115,003
50,000
50,000
9,701
1,100
209
10,333
1,200
1,364
167,680
177,900
3,718
163,962
9,390
168,510
(1) The revolving credit facility details are as follows:
— A $300,000 or the U.S. dollar equivalent unsecured revolving credit facility maturing 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, LIBOR, and letters of credit. As at
December 31, 2020, US$72,000 ($91,670) 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) The credit facility details of FER-PAL 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. As at December 31, 2020,
no amount was drawn on this credit facility.
— 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%. As at December 31, 2020, the loan amounted to $6,250.
— 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.
(4) As of June 26, 2020, LGC extended its credit agreement to U S $6,500 by refinancing the overdraft lending facility and an equipment
financing loan balance by converting it to a demand term loan and increasing the revolving demand credit facility lending capacity.
— A US$4,000 revolver demand facility to be used for operating requirements. The facility can be used in the form of Prime rate advances plus
2.00%.
— A demand loan facility for an amount of US$2,000 due over 60 months in equal principal repayments plus monthly interests, bearing interest
at prime rate plus 2.00%.
— A US$500 corporate credit card credit facility.
— The facility is secured by a general security agreement on all of its current and future assets.
LOGISTEC | 2020 ANNUAL REPORT
106
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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,
2020
$
As at
December 31,
2019
$
3,718
145,316
18,646
167,680
9,390
141,010
27,500
177,900
During the year ended December 31, 2020, an average amount of US$56,280 ($50,583 in
2019) 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, 2020, there was no impact on
the consolidated statements of earnings. Consequently, a foreign exchange gain of $2,306
(gain of $3,653 in 2019) was reclassified to other comprehensive income.
24. 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, 2020, 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 15.9 years.
107 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(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:
2020
$
2019
$
Benefit obligation, beginning of year
(39,409)
(33,703)
Current service cost
Interest cost
Employees’ contributions
Actuarial loss arising from experience adjustments
Benefits paid
Benefit obligation, end of year
(1,418)
(1,280)
(96)
(3,076)
1,134
(1,548)
(1,345)
(114)
(4,464)
1,765
(44,145)
(39,409)
Fair value of plan assets, beginning of year
21,451
19,371
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
696
485
—
935
96
(1,134)
22,529
762
1,906
(16)
1,079
114
(1,765)
21,451
Net benefit liability, end of year (2)
(21,616)
(17,958)
(1) Employer’s contributions include contributions made by an equity accounted investment of the Company of $64 ($88 in 2019).
(2) Post-employment benefit obligations in the consolidated statements of financial position include $439 ($425 in 2019) 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
2020
$
2019
$
Unfunded (1)
2020
$
2019
$
Total
2020
$
2019
$
Benefit obligation
Fair value of plan assets
(25,272)
(22,634)
(18,873)
(16,775)
(44,145)
(39,409)
22,529
21,451
—
—
22,529
21,451
Plan deficit
(2,743)
(1,183)
(18,873)
(16,775)
(21,616)
(17,958)
(1) The unfunded plans consist of SERP. As at December 31, 2020, the plan deficit for the Canadian executives is $17,760 ($15,819 in 2019) and
$1,113 ($956 in 2019) 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.
LOGISTEC | 2020 ANNUAL REPORT
108
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
Plan assets consist of:
Derived from observable market data – Level 2 fair value
Bonds
Canadian & foreign stock
Non-observable market inputs – Level 3 fair value
Annuity contracts
As at
December 31,
2020
$
As at
December 31,
2019
$
8,894
10,271
3,364
22,529
7,950
10,281
3,220
21,451
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
2020
$
1,418
584
—
2,002
(96)
1,906
3,423
5,329
2019
$
1,548
583
16
2,147
(87)
2,060
3,140
5,200
SIGNIFIC ANT ACTUARIAL ASSU MPTION S
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
2020
%
2019
%
2.5
3.8
3.3
3.8
3.3
3.8
4.0
3.8
109 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
SENSITIVITY ANALYSIS
As at December 31, 2020, all else being equal, a hypothetical variation of +1.0% in the discount
rate would have a positive impact of $6,197 ($5,574 in 2019), whereas a hypothetical variation
of –1.0% would have a negative impact of $7,918 ($6,623 in 2019) on the benefit obligation.
As at December 31, 2020, all else being equal, a hypothetical variation of +1.0% in the
expected rate of compensation increase would have a negative impact of $1,332 ($1,294
in 2019), whereas a hypothetical variation of–1.0% would have a positive impact of $1,252
($1,224 in 2019) on the benefit obligation.
CONTRIBUTIO NS TO RETIREMENT PLANS
Total cash payments for post-employment benefits for 2020, 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 $4,294 ($4,131 in 2019).
The Company expects to make a contribution of $882 to the defined benefit retirement plans
in 2021.
25. NON-CURRENT LIABILITIES
As at
December 31,
2020
$
As at
December 31,
2019
$
Long-term liability due to a non-controlling interest in FER-PAL
31,963
29,231
Long-term liability due to a non-controlling interest in SANEXEN
(Note 26)
Advance due to a non-controlling interest
Long-term incentive plans
Provisions
Long-term liability due to a non-controlling interest in LGC
Other
—
2,447
—
1,464
779
1,747
6,394
4,895
2,541
1,013
1,079
935
38,400
46,088
REPURCHASE OF NON- CONTROLLING INTERESTS
FER-PAL
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 a
LOGISTEC | 2020 ANNUAL REPORT
110
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
0.03% interest held by the non-controlling interest for an aggregate purchase price of $786.
As at December 31, 2020, following the accretion of interest and the reevaluation of the put
option, a liability of $31,963 ($29,231 in 2019) has been included in non-current liabilities
in the consolidated statements of financial position. For the year ended December 31, 2020,
the Company recognized a loss on remeasurement of $2,732 (gain on remeasurement of
$2,766 in 2019) 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.
LGC
On August 9, 2019, the Company repurchased a 7.91% interest in LGC held by the non-
controlling interest for an aggregate purchase price of $610. The Company has an obligation
to repurchase the 22% 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 22% non-controlling interests or ii) a multiple of an
agreed upon measure of financial performance, minus LGC’s debt. For the year ended
December 31, 2020, the Company recognized a gain on remeasurement of $300 ($608 in
2019) in other losses in the consolidated statements of earnings. As at December 31, 2020,
a liability of $779 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.
PROVISIONS
As at December 31, 2019
Additional provisions
Settlement of provisions
Reversal of provisions
Claims and
litigation
$
438
1,179
(481)
(594)
As at December 31, 2020
542
1,002
Less: current provisions
Non-current provisions
542
—
—
1,002
Shares-
based
payments
$
Share of
losses of
certain joint
ventures
$
Other
$
Total
$
483
519
—
—
251
434
1,606
—
—
(71)
180
—
180
13
(9)
(62)
1,711
(490)
(727)
376
2,100
94
282
636
1,464
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.
111 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
REIMBURSEMEN TS
An amount of $509 ($1,633 in 2019) 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.
26. 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)
7,377,022 Class A shares (7,383,622 in 2019)
5,535,869 Class B shares (5,396,901 in 2019)
(1) All issued and outstanding shares are fully paid.
As at
December 31,
2020
$
As at
December 31,
2019
$
4,875
40,700
45,575
4,879
35,343
40,222
REPURCHASE OF THE NON- CONTROLLING INTEREST IN SANEXEN
Following the 2016 agreement with the non-controlling interest shareholders of SANEXEN to
acquire the remaining equity interest LOGISTEC did not already own in SANEXEN, as at
March 24, 2020, LOGISTEC issued 148,568 Class B shares at $33.02 per share. As at
December 31, 2020, there are 148,567 Class B shares to be issued and the related amount
recorded in the Company’s financial statements as share capital to be issued is $4,906.
In addition, during the fourth quarter of 2020, LOGISTEC has exercised its call option to
acquire from the non-controlling interest shareholders their non-voting and non-dividend
bearing Class G Preferred Shares of SANEXEN for cash consideration of $7,634 of which
$1,777 was paid on December 17, 2020, and the remaining $5,857 paid on January 14, 2021.
LOGISTEC | 2020 ANNUAL REPORT
112
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
The following table provides a reconciliation between the opening and closing balances for the
year 2020:
As at
December31
2019
$
Employee
benefits
expense
$
Trade and other payables
Non-current liabilities
Share capital to be issued
—
6,394
9,811
—
503
—
EXECUTIVE STOCK OPTION PLAN
Finance
expense
$
—
737
—
Reclassification
$
Settlement
$
As at
December 31,
2020
$
7,634
(1,777)
(7,634)
—
—
(4,905)
5,857
—
4,906
The Company has an Executive Stock Option Plan under which 60,658 options to subscribe
for the Company’s Class B shares have been granted to certain senior executives. The exercise
price of the options is $24.86 and is equal to the average of the daily high and low trading prices
for the five days, consecutive or not, preceding the date of grant. The options granted vest over
a period of four years at the rate of 25% per year, starting at the grant date. The fair value of
the options was estimated at $5.77 at the grant date using the Black- Scholes option pricing
model, taking into account the terms and conditions on which the options were granted. The
is ten years. There are no cash settlement
contractual term of each option granted
alternatives. The Company accounts for the Executive Stock Option Plan as an equity-settled
plan. The expenses recorded in the consolidated financial statements of earnings for the year
ended December 31, 2020 was $136.
EMPLOYEE STOCK PURCHASE PLAN (“ESPP”)
Pursuant to the ESPP, 600,000 Class B shares were reserved for issuance. As at January 1,
2020, there remained an unallocated balance of 193,700 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,
2020, following the issuance of 24,300 (14,800 in 2019) Class B shares under this ESPP, there
remains an unallocated balance of 169,400 Class B shares reserved for issuance pursuant to
this ESPP. Those 24,300 (14,800 in 2019) Class B shares were issued for cash consideration
of $190 ($258 in 2019) and for non-interest- bearing loans of $505 ($298 in 2019),
repayable over two years with a carrying value of $443 as at December 31, 2020 ($328 in
2019).
NORMAL COURSE ISSUER BID (“NCIB”)
Pursuant to the current NCIB, which was launched on October 28, 2020, and will terminate on
October 27, 2021, LOGISTEC intends to repurchase for cancellation purposes, up to 368,881
Class A shares and 277,113 Class B shares, representing 5% of the issued and outstanding
shares of each class as at October 16, 2020.
113 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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
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
Repurchase in 2020
Total NCIB 2019
NCIB 2020 (October 28, 2020 to
October 27, 2021)
Repurchase in 2020
Total NCIB 2020
Shares repurchased by year
2019
NCIB 2018
NCIB 2019
Total 2019
2020
NCIB 2019
NCIB 2020
Total 2020
Class A
shares
Class B
shares
Class A shares
Average price
$
Class B shares
Average price
$
3,000
6,800
9,800
2,300
5,300
7,600
19,700
32,800
52,500
7,000
28,100
35,100
48.34
42.71
44.43
41.78
30.73
34.08
49.15
41.16
44.16
40.52
31.98
33.69
600
600
6,500
6,500
38.41
38.41
35.59
35.59
Class A
shares
Class B
shares
6,800
2,300
9,100
5,300
600
5,900
32,800
7,000
39,800
28,100
6,500
34,600
LOGISTEC | 2020 ANNUAL REPORT
114
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
The number of shares varied as follows:
Shares repurchased by bid
Number of
Class A shares
Number of
Class B shares
Class A
shares
$
Class B
shares
$
As at January 1, 2019
7,392,722
5,273,334
4,885
30,131
Repurchased under the NCIBs
(9,100)
ESPP
Exercise of option pursuant to the
SANEXEN transaction
—
—
(39,800)
14,800
148,567
(6)
—
—
(250)
556
4,906
As at December 31, 2019
7,383,622
5,396,901
4,879
35,343
Repurchased under the NCIBs
Conversion
ESPP
Exercise of option pursuant to the
SANEXEN transaction
(5,900)
(700)
—
—
(34,600)
700
24,300
148,568
(4)
—
—
—
As at December 31, 2020
7,377,022
5,535,869
4,875
(243)
—
695
4,905
40,700
DIVIDENDS
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
2020
$
0.37
0.41
2020
$
0.37
0.41
2019
$
0.37
0.41
2019
$
0.37
0.40
On March 16, 2021, the Board of Directors declared a dividend of $0.0935 per Class A share
and $0.10285 per Class B share, which will be paid on April 15, 2021, to all shareholders of
record as of April 1, 2021. The estimated dividend to be paid is $690 on Class A shares and
$569 on Class B shares.
115 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
27. ACCUMULATED OTHER COMPREHENSIVE
INCOME, NET OF TAXES
(Losses) gains on financial instruments designated as cash flow
hedges
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
As at
December 31,
2020
$
As at
December 31,
2019
$
(106)
8
7,521
10,414
528
7,943
(725)
9,697
28. 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
Other
2020
$
1,937
45,390
(9,529)
12,453
(635)
9,991
671
525
(400)
(2,517)
2,631
60,517
2019
$
2,099
42,122
(8,729)
12,854
(501)
9,075
(376)
(2,650)
(400)
3,749
(1,331)
55,912
LOGISTEC | 2020 ANNUAL REPORT
116
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
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
2020
$
2019
$
22,692
(2,532)
(3,874)
(386)
(4,345)
3,511
15,066
8,034
(808)
(231)
(1,861)
(7,313)
130
(2,049)
NON-CASH TRANSAC TION S
During 2020, the Company acquired property, plant and equipment, of which $1,174 ($400
in 2019) was unpaid at the end of the year.
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:
2020
Opening
Cash
changes
Non-cash
changes
Non-cash
changes
Ending
December
31, 2019
$
Repayments Borrowings
$
$
Debt from
acquisitions/
adjustments Borrowings
$
$
Foreign
exchange
$
December
31, 2020
$
Revolving credit
facility
115,003
(80,064)
74,381
Unsecured loan
debt
Term credit
facility
Government
loan
Equipment loan
50,000
—
—
10,333
(2,698)
2,137
1,200
1,364
(100)
(1,100)
—
—
—
Lease liabilities
91,315
(14,049)
—
—
—
—
(44)
—
—
—
—
—
—
(2,650)
106,670
—
50,000
(71)
9,701
—
(11)
1,100
209
60,927
(3,025)
135,168
Total
269,215
(98,011)
76,518
(44)
60,927
(5,757)
302,848
117 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
2019
Opening
Cash
changes
Non-cash
changes
Non-cash
changes
Ending
December
31, 2018
$
Repayments Borrowings
$
$
Debt from
acquisitions/
adjustments Borrowings
$
$
Foreign
exchange
$
December
31, 2019
$
Revolving credit
facility
104,527
(58,660)
72,917
Unsecured loan
debt
Term credit
facility
Government
loan
Equipment loan
Lease liabilities
Other
Total
50,000
—
—
574
(2,449)
11,634
614
1,600
3,932
—
2,664
(400)
(1,920)
(9,726)
(2,601)
—
98
—
—
163,297
(75,756)
84,649
—
—
—
(688)
—
—
—
—
—
(3,781)
115,003
—
50,000
(40)
10,333
—
(58)
1,200
1,364
—
103,800
(2,759)
91,315
(13)
(87)
—
(50)
—
103,800
(6,688)
269,215
29. 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 TRANSAC TIONS
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
2020
$
5,028
921
2019
$
7,174
767
As at
December 31,
2020
$
As at
December 31,
2019
$
640
2,045
1,736
2,929
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been
given or received.
LOGISTEC | 2020 ANNUAL REPORT
118
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
TRANSACTIO NS WITH SHAREHOLDERS
Transactions with the Company’s largest shareholder, Sumanic Investments Inc., were as
follows:
Dividends paid to Sumanic Investments Inc.
2020
$
2,173
2019
$
2,125
COMPENSATION OF KEY MANAGEMENT PERSONNEL
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
2020
$
5,789
248
(879)
5,158
2019
$
4,684
209
(250)
4,643
(1) The compensation of members of key management personnel includes the compensation of the president of one of the Company’s joint ventures.
30. 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:
119 2020 ANNUAL REPORT | LOGISTEC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
INDUSTRY SEGMENTS
REVENUE, RESULTS AND OTHER INFORMATION
2020
Revenue
Marine
services
$
Environmental
services
$
Total
$
344,622
260,079
604,701
Depreciation and amortization expense
33,094
12,296
45,390
Share of profit of equity accounted
investments
Finance expense
Finance income
Profit before income taxes
Acquisition of property, plant and
equipment, including business
combinations
2019
Revenue
9,239
8,980
100
27,233
290
3,473
535
16,217
9,529
12,453
635
43,450
23,775
7,970
31,745
Marine
services
$
Environmental
services
$
Total
$
385,305
254,637
639,942
Depreciation and amortization expense
29,803
12,319
42,122
Share of profit of equity accounted
investments
Finance expense
Finance income
Profit before income taxes
Acquisition of property, plant and
equipment
ASSETS AND LIABILITIES
2020
Total assets
Equity accounted investments
Total liabilities
2019
Total assets
Equity accounted investments
Total liabilities
7,463
9,581
277
25,338
1,266
3,273
224
9,798
8,729
12,854
501
35,136
26,114
8,443
34,557
Marine
services
$
523,762
42,913
372,275
463,823
40,419
323,674
Environmental
services
$
273,619
2,148
123,535
270,915
1,930
130,050
Total
$
797,381
45,061
495,810
734,738
42,349
453,724
LOGISTEC | 2020 ANNUAL REPORT
120
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year ended December 31, 2020 and 2019
(in thousands of Canadian dollars, except for per share amounts)
GEOGRAPHIC SEGMENTS
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
2020
2019
Non-current assets (1)
As at December 31, 2020
As at December 31, 2019
Canada
$
338,396
329,031
USA
$
266,305
310,911
Total
$
604,701
639,942
281,283
259,185
272,405
240,818
553,688
500,003
(1) Non-current assets exclude non-current financial assets and deferred income tax assets.
31. CONTINGENT LIABILITIES AND GUARANTEES
As at December 31, 2020, the Company has outstanding letters of credit for an amount of
$4,108 ($3,695 in 2019) relating to financial guarantees issued in the normal course of
business. Most of 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 $2,222 ($2,199 in 2019).
As at December 31, 2020, the Company has contingent liabilities totalling $2,025 ($1,941
in 2019) 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.
121 2020 ANNUAL REPORT | LOGISTEC
BOARD OF DIRECTORS
Madeleine
Paquin, C.M. (1)
President & Chief
Executive Officer
James C. Cherry,
FCPA, FCA (1) (2) (3)
Corporate
Director
Michael
Dodson (2) (3)
Corporate
Director
Serge Dubreuil,
Eng. (2)
Corporate
Director
Curtis J.
Foltz (2) (3)
Consultant -
Corporate Director
Nicole Paquin
Vice-President,
Mergers &
Acquisitions
George
Gugelmann (3)
Private Investor
J. Mark
Rodger (1) (3)
Partner - Borden
Ladner Gervais
LLP
Dany St-
Pierre (3)
President -
Cleantech
Expansion LLC
Suzanne
Paquin (1)
President -
Transport Nanuk
Inc.
Luc Villeneuve,
FCPA, FCA (1) (2)
Corporate
Director
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Governance and Human Resources Committee
LOGISTEC | 2020 ANNUAL REPORT
122
OFFICERS OF THE COMPANY
James C. Cherry,
FCPA, FCA
Chairman of the
Board
Madeleine
Paquin, C.M.
President & Chief
Executive Officer
Jean-Claude
Dugas, CPA, CA
Chief Financial
Officer
Stéphane
Blanchette,
CHRP
Vice-President,
Human Resources
Carl Delisle,
CPA, CA
Vice-President
and Corporate
Controller
Nicole Paquin
Vice-President,
Mergers &
Acquisitions
Suzanne Paquin
Vice-President
Martin Ponce
Vice-President,
Information
Technology
Marie-Chantal
Savoy
Vice-President,
Strategy &
Communications
Ingrid Stefancic,
LL.B., FCG, Acc. Dir.
Vice-President,
Corporate & Legal
Services -
Corporate Secretary
Mathieu Brunet,
CPA, CGA
Treasurer
Rodney
Corrigan
President-
Logistec
Stevedoring Inc.
123 2020 ANNUAL REPORT | LOGISTEC
SHAREHOLDER AND
INVESTOR INFORMATION
ANNUAL MEETING
STOCK EXCHANGES
The annual meeting of shareholders will be held on
May 4, 2021.
LOGISTEC common shares are listed on the Toronto Stock
Exchange.
Please refer to www.logistec.com/investors for meeting
details.
Ticker symbols:
LGT.A for Class A Common Shares
LGT.B for Class B Subordinate Voting Shares
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company of Canada
1500 Robert-Bourassa Boulevard, Suite 700
Montréal, QC H3A 3S8
Tel.: (514) 982-7270
or 1-800-564-6253
Fax: (416) 263-9394
or 1-888-453-0330
caregistryinfo@computershare.com
INDEPENDENT AUDITOR
KPMG LLP
KPMG Tower
600 De Maisonneuve Blvd. West
Suite 1500
Montréal, Qc H3A 0A3
Tel.: (514) 840-2100
www.kpmg.com
INVESTOR RELATIONS
Jean-Claude Dugas
Chief Financial Officer
600 de la Gauchetière Street West
14th Floor
Montréal, Qc H3B 4L2
Tel.: (514) 844-9381
ir@logistec.com
HEAD OFFICE
600 de la Gauchetière Street West
14th Floor
Montréal, Qc H3B 4L2
Tel.: (514) 844-9381
Toll Free: 1-888-844-9381
LOGISTEC | 2020 ANNUAL REPORT
124
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