WESTSHORE TERMINALS
INVESTMENT CORPORATION
ANNUAL REPORT
2011
W
estshore Terminals Investment Corporation, through its wholly-owned subsidiary
Westshore Terminals Holdings Ltd., owns all of the limited partnership units of
Westshore Terminals Limited Partnership, a partnership established under the laws of
British Columbia. Westshore Investment’s common shares, and note receipts representing
subordinated notes of Westshore Holdings, trade together as units. On a quarterly basis,
holders receive interest payments on the Holdings notes and such dividends as are declared
by Westshore Investment.
Westshore Investment and Westshore Holdings derive their cash inflows from their
investment in the Partnership by way of distributions on its limited partnership units. The
Partnership operates a coal storage and loading terminal at Roberts Bank, British Columbia,
which is the largest coal loading facility on the west coast of the Americas. The principal
office of the entities is located at 1800 - 1067 West Cordova Street, Vancouver, British
Columbia V6C 1C7.
Table of Contents
Financial Highlights
Letter and Report to Unitholders
Management’s Discussion and Analysis
Consolidated Financial Statements
Corporate Information
1
2
4
22
60
Westshore Terminals Investment Corporation
Financial Highlights
(In thousands of Canadian dollars except per share /Trust Unit amounts and tonnage)
Tonnage (in thousands)
Revenue
Coal
Other
EBITDA
Interest paid and accrued on Holdings Notes
Interest paid and accrued per Note Receipt
Dividends declared
Dividends declared per share
Cash Distributions declared
Cash Distributions per Trust Unit
Units outstanding at December 31
Trading Statistics
High
Low
Close
Volume
2011
2010
27,306
24,678
205,627 $
7,210 $
212,837 $
107,910 $
38,980 $
0.525 $
40,095 $
0.540 $
- $
218,644
4,892
223,536
110,477
-
-
-
-
131,974
- $
1.775
74,250,016
74,250,016
25.85 $
20.00 $
22.88 $
32,197,000
24.59
13.55
22.98
48,809,100
$
$
$
$
$
$
$
$
$
$
$
$
$
1
Westshore Terminals Investment Corporation
Directors’ Letter and Report to Shareholders
Dear Shareholder:
The last several years including 2011 have seen major changes at Westshore. We have gone from operating with
spare capacity to having more demand than we can handle, even factoring in our recent capacity growth. The
completion of a three-year capital upgrade program at the cost of $47 million, combined with the first stage of our
current $10 million maintenance program which involves the change out of a number of transfer chutes, enabled
Westshore to handle a record volume of 27.3 million tonnes in 2011, compared to the previous record of 24.7 million
tonnes in 2010. During 2012, Westshore will complete the current transfer chutes maintenance project and a
$43 million replacement of the single dumper with a double dumper. Once these improvements have been completed,
which is expected to be by the end of 2012, it is anticipated that the rated capacity of the terminal will be
approximately 33 million tonnes per year.
We have continued to see unprecedented demand from shippers (primarily from the U.S.) of thermal coal into
international markets, while the metallurgical coal producers are poised to increase their sales substantially. We do not
know how long the robust thermal coal market will last, but our customers are planning for the long term. The
fundamentals of the metallurgical coal market continue to appear strong. During 2011, we signed a number of long
term agreements with our customers, reflecting the ongoing strong anticipated export demand. For 2012, we
anticipate throughput levels, even after factoring in anticipated operational disruptions to complete the projects
described above, to be close to 2011 levels, but at higher overall loading rates.
Another major change over recent years has been the move away from direct price participation by Westshore in
prices realized for metallurgical coal sales by its principal customer, Teck Coal. Commencing April 1, 2011 all of
Teck’s tonnage through Westshore has been handled at fixed rates. In early 2011, we concluded a contract with Teck
for the four-year period commencing April 1, 2012 providing significant volume commitments at fixed rates. These
arrangements with Teck will make our revenue stream more predictable and, because of higher anticipated
throughput, we expect revenues to remain healthy.
We continue to work at improving efficiency at the Terminal so as to increase our throughput capacity. The
current strong coal markets have brought increased growth opportunities to Westshore. These developments will
require Westshore and the other parties along the coal chain to perform consistently and efficiently over the whole of
each year to be able to achieve further growth by maximizing the use of available capacity.
Effective January 1, 2011, the Corporation was restructured to its current form, having been previously in the form
of an income fund. In July 2011, the Federal Department of Finance issued a news release announcing proposed
amendments to the provisions in the Income Tax Act the effect of which would be to deny the deductibility of
interest on Holdings’ $371 million notes bearing interest at 10.5%. A subcommittee of the board of directors was
formed to explore options for changes, if any, to the capital structure of the Corporation and Holdings. As a result of
this process (as announced on March 20, 2012), the board of directors of the Corporation has approved a capital
restructuring that will involve an exchange of the Note Receipt component of the current trading unit for additional
common shares of the Corporation, which will then be consolidated. The result will be that instead of the currently
outstanding 74,250,016 units, the Corporation will have outstanding 74,250,016 common shares without any debt
component held by the public securityholders. These proposed changes will require approval by securityholders and
will be presented at the June 2012 Annual and Special Meeting. The details of this restructuring will be more fully set
out in the Corporation’s Information Circular to be released in May 2012.
2
Westshore Terminals Investment Corporation
Directors’ Letter and Report to Shareholders
In December 2011, the labour agreement with Local 502 (representing the longshoremen) of the International
Longshore and Warehouse Union, was concluded and ratified. This agreement is for a five year term expiring
January 31, 2016. Subsequently, an agreement was concluded and ratified with Local 517 (representing the clerical
staff). An agreement was reached with Local 514 (representing the foremen) which is subject to ratification. These
latter two agreements also each have five year terms expiring on January 31, 2016.
We look forward to all the growth opportunities and challenges the current strong coal markets are expected to
bring.
For the Board of Directors,
Vancouver, B.C.
William W. Stinson
Chairman of the Board of Directors March 29, 2012
3
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with information contained in the Consolidated Financial Statements of
Westshore Terminals Investment Corporation (“the Corporation”) and the notes thereto for the year ended December 31, 2011. This discussion
and analysis has been based upon consolidated financial statements prepared in accordance with International Financial Reporting Standards
(“IFRS”). This discussion and analysis is the responsibility of management of the Corporation. Additional information and disclosure can be
found on SEDAR at www.sedar.com. Unless otherwise indicated, the information presented in this Management’s Discussion and Analysis
(“MD&A”) is stated as at March 29, 2012.
All amounts are presented in Canadian dollars unless otherwise noted.
Caution Concerning Forward-Looking Statements
This MD&A contains certain forward-looking statements, which reflect the current expectations of the Corporation and Westshore (as
defined below) with respect to future events and performance. Forward-looking statements are based on information available at the time they are
made, assumptions by management, and management’s good faith belief with respect to future events. They speak only as of the date of this
MD&A, and are subject to inherent risks and uncertainties, including those outlined in the annual information form of the Corporation filed on
www.sedar.com, that could cause actual performance or results to differ materially from those reflected in the forward-looking statements, historical
results or current expectations.
Forward-looking information included in this document includes statements with respect to future revenues, expected prices and strength of
markets for metallurgical and thermal coal, expected throughput volumes, future throughput capacity, the proportion of throughput expected to be
shipped at variable rates, the effect of Canadian/U.S. dollar exchange rate, labour negotiations, the future cost of post-retirement benefits, cost of
and timing to complete capital projects and the anticipated level of dividends.
Forward looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications
of whether, or the times at which, such performance or results will be achieved. There is significant risk that estimates, predictions, forecasts,
conclusions and projections will not prove to be accurate, that assumptions may not be correct and that actual results may differ materially from
such estimates, predictions, forecasts, conclusions or projections. Readers of this MD&A should not place undue reliance on forward-looking
statements as a number of factors could cause actual results, conditions, actions or events to differ materially from the targets, expectations,
estimates or intentions expressed in the forward-looking statements. Specific risk factors include global demand and competition in the supply of
seaborne coal, the ability of customers to maintain or increase sales and deliver coal to the Terminal (as defined below), and the Corporation’s
ability in future to renegotiate key customer contracts on favourable terms. See also the risk factors outlined in the annual information form
referred to above.
4
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
General
Effective January 1, 2011, Westshore Terminals Income Fund (the “Fund”) converted (the “Conversion”) to a
corporate structure pursuant to a court-approved plan of arrangement under the Business Corporations Act (British
Columbia) (the “BCBCA”), and the Corporation and its wholly-owned subsidiary Westshore Terminals Holdings Ltd.
(“Holdings”) are the successors to the Fund. Pursuant to the Conversion, units of the Fund (“Trust Units”) were
effectively exchanged for common shares (“Common Shares”) of the Corporation and note receipts (“Note Receipts”)
each representing $5.00 principal amount of 10.5% subordinated notes (“Holdings Notes”) issued by Holdings. The
Common Shares and Note Receipts trade together as units (the “Units”) on the Toronto Stock Exchange (the “TSX”)
under the symbol “WTE.UN”.
The Corporation and Holdings were each incorporated under the BCBCA on September 28, 2010 and did not carry on
any active business prior to the Conversion. The registered and head offices of the Corporation and Holdings are located
at Suite 1800, 1067 West Cordova Street, Vancouver, British Columbia, V6C 1C7. Holdings owns all of the limited
partnership units of Westshore Terminals Limited Partnership (“Westshore”), a partnership established under the laws of
British Columbia.
The Conversion has been accounted for on a continuity of interest basis and accordingly, the consolidated financial
statements reflect the financial position, results of operations and cash flows as if the Corporation had always carried on
the business formerly carried on by the Fund, with all assets and liabilities transferring to the Corporation at their
respective carrying values on January 1, 2011.
The Corporation derives its cash inflows from its investment in Westshore by way of distributions to Holdings on
Westshore’s limited partnership units, and subsequent dividends paid on the common shares of Holdings owned by the
Corporation, after the deduction of interest, taxes and operating expenses paid by Holdings. Westshore operates a coal
storage and loading terminal at Roberts Bank, British Columbia (the “Terminal”). All of Westshore’s operating revenues
are derived from rates charged for loading coal onto seagoing vessels.
Westshore’s results are significantly affected by the volumes of coal shipped by different customers for sale in the
export market, the rates per tonne charged by Westshore and Westshore’s costs. In prior years, a substantial portion of the
throughput of the Teck Coal Partnership (“Teck”) was handled at loading rates that varied with the price of coal. Since
April 1, 2011 none of the contracts with Teck provide for variable pricing. Contracts entered into in 2011 provide
significant volume commitments, much of which are at fixed rates. Shipments under those contracts are expected to
provide a stable base for revenues over the next few years, with the possibility of increased revenues from higher than
committed shipments and increased rates under contracts that provide some element of price participation for the
foreseeable future. The portion of revenues that is based on price participation is expected to be significantly smaller than
in the period prior to 2010.
This MD&A has been prepared by the Corporation to accompany the financial results of the Corporation for the
financial year ended December 31, 2011. The comparable statements for 2010 (and 2009) are the Fund’s statements.
References to the “Corporation” include the Fund for those historical periods.
5
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Structure
The following chart illustrates the Corporation’s primary structural and contractual relationships. The Corporation
indirectly holds all of the limited partnership units of Westshore through its wholly-owned subsidiary Holdings. Westshore
Terminals Ltd. (the “General Partner”) is the general partner of Westshore. Westar Management Ltd. (the “Manager”)
provides management services to Westshore and administrative services to the Corporation and Holdings, and appoints
three of the seven directors of the General Partner. Details of these arrangements will be included in the Information
Circular for the Corporation’s 2012 Annual and Special Meeting.
Shareholders
Common Shares
Note
Receipts
Westshore Terminals
Investment
Corporation
Administration Agreement
Westshore Terminals
Holdings Ltd.
Westar
Management Ltd.
LP Units
Westshore
Terminals Ltd.
Governance
Agreement
Westshore
Terminals LP
General Partner
Management Agreement
This MD&A refers to certain measures other than those prescribed by IFRS. These measures do not have standardized
meanings and may not be comparable to similar measures presented by other corporations. They are however determined
by reference to the Corporation’s financial statements. These non-IFRS measures are discussed because the Corporation
believes they provide investors with useful information in understanding the results of the Corporation’s and Westshore’s
operations and financial position.
6
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Selected Financial Information
The following financial data is derived from the Corporation’s audited consolidated financial statements for the years
ended December 31, 2011, 2010 and 2009, which were prepared in Canadian dollars using IFRS, except for 2009 which
was prepared using Canadian GAAP.
(In thousands of Canadian dollars except per share/Trust Unit
amounts)
Revenue
EBITDA
Profit (loss) before taxes
Profit (loss) for the period
Net Earnings per share / Trust Unit(1)
Interest paid and accrued on Holdings Notes
Interest paid and accrued per Note Receipt
Dividends declared
Dividends declared per share
Cash Distributions declared
Cash Distributions per Trust Unit
Distributions of Trust Units in lieu of cash(2)
Distributions of Trust Units in lieu of cash per Trust Unit(2)
Total Assets
Total Long Term Liabilities
2011
IFRS
$ 212,837
107,910
58,924
42,993
0.58
38,980
0.525
40,095
0.540
-
-
-
-
569,091
428,215
2010
IFRS
$ 223,526
110,477
(45,318)
(45,010)
(0.61)
-
-
-
-
131,794
1.775
-
-
559,653
794,500
2009
CDN GAAP
$ 207,778
113,017
107,118
107,130
1.443
-
-
-
-
92,070
1.240
14,415
0.194
608,763
30,798
(1) The weighted average Common Shares outstanding for 2011 was 74,250,016 (2010 and 2009 – 74,250,016 Trust Units). IFRS requires
Trust Unit distributions to be presented as a finance cost which affects profit or loss for the period.
(2) In 2009, the Fund allocated additional taxable income to holders of Trust Units (“Unitholders”) by issuing additional Trust Units.
These additional Trust Units were automatically consolidated so that the number of Trust Units held by each Unitholder did not
change. For additional information concerning distribution and consolidation of Trust Units in lieu of cash distributions, see the
Fund’s annual information form dated March 29, 2010 available at www.sedar.com.
EBITDA is not a defined term under IFRS and herein means earnings before interest, taxes, depreciation, amortization
and unrealized foreign exchange gains and/or losses. The Corporation believes that EBITDA is a useful measure of the
cash flow of the Corporation’s business and an indicator of the ability to fund investing activities such as capital
expenditures and financing activities including servicing of debt obligations. EBITDA is also comparable across periods as
it is unaffected by the changes in accounting from Canadian GAAP to IFRS and changes in the capital structure
(conversion from income fund to corporation). The following table reconciles EBITDA to the Corporation’s income
statement.
7
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
(In thousands of Canadian dollars)
Profit (loss) for the period
Add (deduct):
Income tax expense (recovery)
Net interest expense (recovery)
Depreciation
Unrealized foreign exchange losses (gains)
EBITDA
2011
IFRS
$
42,993
15,931
38,847
10,042
97
107,910
2010
IFRS
$
(45,010)
(308)
131,362
21,934
2,499
110,477
2009
CDN GAAP
$
107,130
(12)
(373)
21,379
(15,107)
113,017
As the foregoing table shows, EBITDA has been consistent over the last three years, as increases in throughput have
substantially offset the reduction in rates. On the basis of contracts now in place, Westshore expects volumes to continue
at or above 2011 levels at higher average rates.
The following tables set out selected consolidated financial information for the Corporation on a quarterly basis for the
last two financial years.
(In thousands of Canadian dollars except per share and
Note Receipt amounts)
Revenue
EBITDA
Profit before income taxes
Profit for the period
Profit for the period per share
Interest paid/accrued on Holdings Notes
Interest paid/accrued per Note Receipt
Dividends declared
Dividends declared per share
Three Months Ended
Dec 31, 2011
$
55,447
30,147
18,119
13,357
0.18
9,745
0.131
9,653
0.130
Sept 30, 2011
$
55,639
27,983
15,212
10,963
0.15
9,745
0.131
11,880
0.160
Jun 30, 2011
$
51,675
26,688
14,524
10,516
0.14
9,745
0.131
8,167
0.110
Mar 31, 2011
$
50,076
23,092
11,069
8,157
0.11
9,745
0.131
10,395
0.140
(In thousands of Canadian dollars except per Trust Unit
amounts)
Revenue
EBITDA
Profit (loss) before income taxes
Profit (loss) for the period
Profit (loss) for the period per unit
Cash Distributions declared (1)
Cash Distributions per Trust Unit
Three Months Ended
Dec 31, 2010
$
55,315
21,812
(19,620)
(18,547)
(0.25)
36,011
0.485
Sept 30, 2010
$
61,632
31,910
(7,432)
(7,415)
(0.10)
34,155
0.460
Jun 30, 2010
$
53,273
27,553
(11,408)
(11,915)
(0.16)
30,443
0.410
Mar 31, 2010
$
53,316
29,202
(6,858)
(7,133)
(0.10)
31,185
0.420
(1) Cash distributions include Trust Unit distributions declared by the trustees of the Fund. IFRS requires Trust Unit distributions to be
presented as an interest expense which affects profit or loss for the period.
8
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Summary Description of Business
General
Westshore operates a coal storage and loading facility at Roberts Bank, British Columbia that is the largest coal loading
facility on the west coast of the Americas. Westshore operates on a throughput basis and receives handling charges from
its customers based on volumes of coal exported through the Terminal. Westshore does not take title to the coal it
handles. Market conditions for coal affect the competitiveness of Westshore’s customers and, together with changes in
customers’ mine output, affect the volume of coal handled by Westshore. Westshore handles coal from mines in British
Columbia and Alberta, as well as from mines in the north-western United States. Coal shipped from the mines owned by
Teck, which is Westshore’s largest customer, accounted for 55% of Westshore’s throughput by volume in 2011 (2010 –
66%).
Coal is delivered to the Terminal in unit trains operated by the Canadian Pacific, CN and BNSF Railways and is then
unloaded and either directly transferred onto a ship or stockpiled for future ship loading. Ultimately, the coal is loaded
onto ships that are destined for approximately 20 countries world-wide, with the largest volumes being shipped to Asia.
Markets & Customers
Shipments of coal through the Terminal by destination for the past three years were as follows:
Shipments by Destination
(Expressed in thousands of metric tonnes)
Asia
Europe
S. America
Other
Total
2011
Tonnes
20,226
3,684
2,810
586
27,306
%
75
13
10
2
100
2010
Tonnes
19,078
3,439
1,680
481
24,678
%
77
14
7
2
100
2009
Tonnes
16,306
3,030
317
400
20,053
%
81
15
2
2
100
During 2011, 58% of Westshore’s volume was metallurgical coal (66% in 2010), 41% was thermal coal (33% in 2010)
and 1% was petroleum coke.
The significant growth from 2009 to 2011 in the throughput destined for Asia from 16.3 to 20.2 million tonnes was as
a result of significant increases in shipments to Korea where the increase was principally in shipments of thermal coal. The
volume of thermal coal increased by 300% between 2008 and 2011, primarily due to the success of producers in the
Powder River Basin in Montana and Wyoming in selling coal into the international market. The market for seaborne
thermal coal has been particularly robust since the latter part of 2009. Any weakening in this market could materially affect
the ability of Westshore’s thermal coal customers to sustain sales at the levels experienced in 2011.
Westshore’s customers compete with other suppliers of coal throughout the world. With respect to metallurgical coal,
Australian coal mines are the most significant competitors. Over the last decade there have been significant variations in
the supply-demand balance in seaborne metallurgical coal, and resulting significant variations in the prices obtained by
Westshore’s customers. Prices for metallurgical coal are now being established on a quarterly basis and rose significantly
since the latter part of 2010 by reason of improved worldwide economic activity.
9
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Pricing of coal is significant to Westshore, even though it will have less direct exposure to rates that vary with coal
prices than prior to 2010, as maintenance of strong throughput levels requires shippers to obtain adequate prices to sustain
their operations.
With its five mines in British Columbia and one in Alberta, Teck is Westshore’s largest customer. It is the second
largest supplier of seaborne hard coking coal in the world. Westshore’s previous contracts with Teck expire March 31,
2012. Westshore’s new agreement to handle coal from Teck’s mines has a four year term from April 1, 2012 to March 31,
2016. Under the new contract, Teck has committed to ship not less than 16 million tonnes per contract year increasing to
at least 17 million tonnes, all at fixed rates. Westshore expects that Teck will ship most of the remaining coal from its
mines through Neptune Terminals, with some being shipped through Ridley Terminals in Prince Rupert.
Westshore has a contract with Coal Valley Resources Ltd. (formerly Luscar Ltd.) which runs to 2017 and covers
thermal coal from the Coal Valley mine and the Obed mine. During 2011, Coal Valley shipped 2.7 million tonnes of
thermal coal through the Terminal compared to 1.6 million tonnes in 2010. The pricing mechanism under this contract is
based on fixed rates with escalation.
In 2011, Westshore renegotiated its contract with Grande Cache Coal Corporation (“Grande Cache”) for handling coal
produced from its operations in Alberta, which will now expire on March 31, 2022. Westshore loaded 1.2 million tonnes
under this contract in 2011, compared to 1.3 million tonnes in 2010. The contract with Grande Cache provides for
shipments through Westshore exclusively.
Westshore has entered into a number of contracts with U.S. thermal coal producers for 2010-12 and in 2011 entered
into new contracts for 2013-22. Contracts with these shippers generally provide for a variable rate based on the U.S. dollar
price received for the product, subject to a floor price denominated in U.S. dollars. These shippers accounted for
approximately 30% of Westshore’s throughput in 2011. The percentage of Westshore’s overall shipments that were
comprised of thermal coal increased from 33% in 2010 to 41% in 2011.
Labour
Labour agreements with all three locals of the International Longshore and Warehouse Union (the longshoremen,
foreman and the clerical workers), which each had a four year term, expired January 31, 2011. A new five year agreement
with Local 502 was reached in December 2011 and a new agreement with Local 517 was reached in January 2012. An
agreement was reached with Local 514 which is subject to ratification.
Facilities
In 2010, Westshore completed a three year program involving the upgrade of certain equipment and the addition of
new equipment at the Terminal site, at a total cost of $47 million. Prior to those improvements the Terminal’s functional
throughput capacity was assessed at somewhat less than 24 million tonnes per annum.
The Terminal has two incoming systems (the tandem and single rotary dumpers) and two outgoing systems (Berths 1
and 2), but had only three stacker/reclaimers to operate between the incoming and outgoing systems. The addition of a
fourth stacker/reclaimer, and associated conveyor system, was the principal recent addition. All four stacker/reclaimers
have been automated and other systems have been updated. As part of this equipment upgrade project, Westshore
converted the second barrel of the tandem rotary dumper to accommodate shorter “U.S. style” aluminum rail cars, the use
10
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
of which has become the industry norm. The first barrel of the tandem dumper was converted for that purpose in 1998.
These additions have increased the Terminal’s capacity, allowing it to handle a record 27.3 million tonnes in 2011.
Despite these improvements Westshore has not been able to meet all the requests for service from its present
customers, and has had to decline requests from others who would like to ship through the Terminal. A significant
maintenance program is underway to replace chutes in four transfer towers at a cost of $10 million, which will improve the
flow of product. Moreover, a further capital expansion has been initiated which consists of replacing the existing single
dumper with a double dumper and addition of related equipment. This project is anticipated to cost approximately
$43 million (to be financed by bank debt) and will take until the end of 2012 to complete. Once these projects are
complete, it is anticipated that the rated terminal throughput will be approximately 33 million tonnes.
Results of Operations
Westshore loaded 27.3 million tonnes during 2011 as compared to 24.7 million tonnes during 2010. Coal loading
revenue decreased by 6% to $205.6 million in 2011 compared with $218.6 million in 2010. The decrease was due to a
lower average rate, which resulted primarily from the elimination of variable loading rates tied to the price of coal shipped
by Teck, substantially offset by higher volumes. In the fourth quarter of 2011, Westshore’s loading revenue was
$52.1 million as compared to $54.1 million in the fourth quarter of 2010, on shipments of 7.0 million tonnes in the fourth
quarter of 2011, as compared to 6.4 million tonnes in the fourth quarter of 2010.
Other income consisted of wharfage income, which was consistent with the prior year, and $2.3 million relating to the
proceeds from a business interruption insurance claim (arising from the shiploader incident in the first quarter).
Operating expenses decreased by 6% from $112.2 million in 2010 to $105.8 million in 2011. Under IFRS, operating
costs include depreciation expense, which reduced from $21.9 in 2010 to $10.0 in 2011 as a result of certain assets being
fully amortized by the end of 2010. Detention and demurrage charges also decreased from a $8.1 million expense in 2010
to a $1.0 million recovery in the current year. Improved operating performance and settlements of prior year obligations
contributed to this decline in detention and demurrage charges. The remaining operating costs increased from $82.2
million in 2010 to $96.8 million in 2011, principally due to increases in wages and outside services resulting from higher
throughput and maintenance projects during the year, and higher lease costs which vary with throughput.
Administration costs decreased from $25.5 million in 2010 to $9.7 million in 2011, primarily as a result of a lower
incentive fee payable to the Manager, along with lower professional fees which were higher in 2010 due to the Fund’s
conversion to a corporate structure. The incentive fee is determined under the management agreement between Westshore
and the Manager (the “Management Agreement”) pursuant to a pre-set formula, which changed effective January 1, 2011.
Net finance costs for 2011 were $38.8 million compared to $131.4 million in 2010. The interest expense in 2011
represents interest accrued on the Holdings Notes whereas the expense in 2010 represents the Fund’s distributions on the
Trust Units which are presented as a liability under IFRS with corresponding distributions shown as an interest cost. The
Holdings Notes are an interest-bearing obligation which did not exist in the prior year. Other interest income decreased
from $0.4 million in 2010 to $0.1 million in 2011, primarily due to a lower average cash balance and a low interest rate
environment.
11
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Foreign exchange gains (realized and unrealized) increased from $0.2 million in 2010 to $0.5 million in 2011. Westshore
previously engaged in more hedging activity due to its greater exposure to foreign exchange fluctuations under prior
contract pricing mechanisms. Fewer forward contracts were executed in 2011 as variable-rate revenues that were impacted
by the Canadian/U.S. dollar exchange rate were lower. In addition, the exchange rate movement in 2011 was much less
significant than in 2010 which resulted in smaller cash settlements on the forward contracts. Westshore anticipates limited
hedging activity going forward given the contract structure now in place.
Income tax expense increased from a $0.4 million recovery in 2010 to a $15.9 million expense in 2011. During 2010,
under the income fund structure no current income taxes were payable. After the Conversion in 2011, the Corporation
and Holdings are responsible for paying corporate income taxes on their earnings. The current tax expense for 2011 was
$15.0 million which was not incurred in the prior year.
Other comprehensive loss increased from $5.2 million in 2010 to $6.4 million in 2011. Other comprehensive income
(loss) includes actuarial gains and losses on the defined benefit post-retirement obligations. In both years, declining bond
interest rates, which are used to discount future obligations, caused the post-retirement obligations to increase significantly
and rates ended 2011 at historic lows. In 2010, pension plan asset values increased which helped to reduce the valuation
loss on the retirement obligations. Plan asset values declined significantly in 2011 but this loss was partially offset by the
reversal of an impairment relating to minimum future funding obligations.
Earnings before depreciation, interest, unrealized foreign exchange and income taxes were slightly lower in 2011, at
$107.9 million as compared to $110.5 million in 2010. Earnings before depreciation, income, unrealized foreign exchange
and income taxes for the fourth quarter of 2011 were $30.1 million, compared to $21.8 million for the fourth quarter of
2010.
Cash Flows
Cash flow from operations, as presented on the consolidated statement of cash flows, represents the funds available to
the Corporation to cover capital expenditures and interest obligations and to pay dividends to shareholders. Cash flow
from operations decreased slightly from $116.0 million in 2010 to $113.3 million in 2011. Cash flows before changes in
working capital were impacted in 2011 by lower average loading rates offset by higher throughput. The decline was
mitigated as Holdings did not have to make any tax instalments for the year. The 2011 current tax expense of $15.0 million
was not paid until February 2012. The Corporation retained funds to cover the February payment.
Working capital provided a source of cash in 2011 as accounts payable balances were high at the end of the year. This
reversed subsequent to year-end.
Cash flow used in investing activities increased from $9.5 million in 2010 to $15.0 million in 2011 as Westshore
incurred higher capital expenditures compared to the prior year. This increase was driven primarily by commencement of
the chute upgrade project, initial spending on the project to install the new double dumper, and improvements to the dust
collection and containment systems.
Cash used in financing activities decreased from $125.1 million in 2010 to $95.5 million in 2011 as distributions were
lower in 2011. The prior year distributions included special distributions from cash reserves which did not reoccur in 2011
and the 2011 distributions were negatively impacted by lower cash flow from operations and higher tax expense.
12
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
It is not anticipated that the Corporation will require significant capital resources to maintain its indirect investment in
Westshore on an ongoing basis or to meet its working capital requirements. Capital expenditures required to maintain the
Terminal’s existing throughput capacity and refurbish equipment in the ordinary course of business have increased over
the past several years, and it is reasonable to expect that recent levels of spending will continue. Meeting these capital
requirements, along with managing variations in working capital, are well within Westshore’s financial capacity based solely
on revenues less expenses, without any need for financing except for material capital additions. As a result, the
Corporation does not anticipate any liquidity concerns with the ongoing operations of Westshore.
Westshore has in place with a Canadian chartered bank a $10 million operating facility that, if required, can be utilized
to meet working capital requirements. This facility was not used during 2011 or 2010 and remained undrawn at
December 31, 2011, although Westshore has an outstanding letter of credit for $4.1 million. Westshore will finance the
expected $43 million cost of its further expansion by way of a five year $50 million revolving bank debt facility which was
secured during the third quarter. This facility also remained undrawn at December 31, 2011, and does not require principal
repayments prior to maturity.
Westshore has post-retirement benefit obligations under its pension plans and other post-retirement benefit plans
which it is required to fund each year. Westshore funding requirements were $5.9 million in 2011, which comprised
$4.6 million for contributions to the pension plans and $1.3 million for payments for other post-retirement benefits.
Westshore anticipates that its funding requirements in 2012 will be higher than in 2011 as the low interest rate
environment will negatively impact the pension plan valuations as of December 31, 2011. Westshore does not anticipate
any problems satisfying its 2012 funding obligations out of current cash flows. The balance sheet reflects a $57.0 million
unfunded obligation for post-retirement benefits which has increased by $6.7 million from the prior year. This balance
would be expected to decline in the future if interest rates increase.
Minimum obligations under operating leases for the years ending December 31 are as follows:
(in thousands of Canadian dollars)
2012
2013
2014
2015
2016
Thereafter to 2026
Terminal lease
$
11,701
11,701
11,701
11,701
11,701
117,218
Other
$
267
267
-
-
-
-
Total
$
11,968
11,968
11,701
11,701
11,701
117,218
Westshore has a commitment of US$38.6 million with respect to equipment purchases that are to be delivered and paid
for in 2012.
The only long-term debt, material capital lease obligations, or other long-term obligations of the Corporation and its
subsidiaries are the Holdings Notes issued by Holdings (effective January 1, 2011) which are represented by Note Receipts
that are traded with the Corporation’s Common Shares. The Holdings Notes mature on December 31, 2040 and bear
interest at 10.5% per annum with interest payable quarterly Interest payments may be deferred for up to one year.
Holdings will depend on distributions from Westshore to satisfy the interest obligations on the Holdings Notes. At the
present time, Holdings does not anticipate any issues meeting its obligations on the Holdings Notes.
13
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Distributions
Distributions by the Corporation over the last three years were as follows:
(in thousands of Canadian dollars except per share, Note Receipt or Trust
Unit amounts)
Total Dividends on Common Shares
Total Dividends per Common Share
Total Interest on Holdings Notes
Total Interest per Note Receipt
Total Cash Distributed on Trust Units
Total Cash Distributed per Trust Unit
Trust Units Distributed in lieu of cash
Trust Units Distributed per Trust Unit
2011
$
40,095
0.540
38,980
0.525
-
-
-
2010
$
-
-
-
-
131,794
1.755
-
-
2009
$
-
-
-
-
92,070
1.240
14,415
0.194
Distributions for 2011 are not comparable to those paid in 2010 and 2009 when the structure of the entity was an
income fund, rather than the corporate form, and no income taxes were paid at the fund level. Distributions in 2010 were
augmented by $27.8 million of cash distributed from Westshore’s cash reserves. Without such distributions, the cash
distribution per Trust Unit in 2010 was $1.40, as compared with a total distribution in 2009 (cash and Trust Units) of $1.43
per Trust Unit. In 2011 and subsequently, the level of dividends will be determined by current operating results without
any addition from cash reserves. Furthermore, because of the Conversion, cash available for future dividends will also be
reduced by provisions for income taxes payable by the Corporation and Holdings.
Prior to the Conversion, quarterly distributions were paid to holders of Trust Units. In connection with the
Conversion, the Directors of the Corporation adopted a dividend policy with the intent to pay dividends to holders of
Common Shares on the same record and payment dates on which holders of Units receive interest payments on the
Holdings Notes. The Holdings Notes accrue interest at 10.5% per annum or $0.13125 quarterly per Note Receipt, and the
interest is paid on the 15th of the month following the quarter-end. The Directors intend to set each quarterly dividend in
the context of the Corporation’s overall profitability, free cash flow and other business needs, including capital and debt
repayment requirements. The Corporation declared a dividend of $0.17 per Common Share to be paid on April 13, 2012
to shareholders of record at the close of business on March 31, 2012. In subsequent quarters, dividends will be declared
based on actual results and the factors identified above.
Holdings’ dividend policy is to declare and pay dividends to the Corporation equal to the amount of distributions
received from Westshore net of interest costs, taxes and other expenses. The Corporation’s dividend policy is to declare
and pay dividends to holders of Common Shares equal to the amount of the dividends received from Holdings, net of the
Corporation’s expenses. It is expected that Westshore’s distribution policy will be to distribute to Holdings all of its
earnings before depreciation and other non-cash items, less amounts to cover its expected cash requirements, such as
capital expenditures, pension contributions and debt repayments.
14
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Outlook
The cash inflows of the Corporation and Holdings are entirely dependent on Westshore’s operating results. They are
significantly affected by the volume and mix of coal shipped through the Terminal, the rates charged to customers for that
coal, and Westshore’s operating and administrative costs. Contracts entered into in 2011 provide significant volume
commitments, much of which are at fixed rates. Shipments under those contracts are expected to provide a stable base for
revenues over the next few years, with the possibility of increased revenues from higher than committed shipments and
increased rates under contracts that provide some element of price participation. The portion of revenues that is based on
price participation is expected to be significantly smaller than in the period prior to 2010. Despite reduced variability in
components of the Corporation’s financial results, by reason of possible variations in tonnage and rates, the Corporation
cannot predict accurately the level of its dividends for 2012 or future years.
The variance in revenues from 2011 will ultimately be impacted by numerous factors, including total volumes shipped
through the Terminal, the distribution of throughput by customer, prices realized by certain shippers and foreign exchange
rates. Based on the information currently available to it and factoring in the expected duration of operational disruptions
resulting from capital projects, Westshore is anticipating volume levels in 2012 to be at similar levels to those in 2011, but
at higher rates. If Westshore’s free cash flow for the calendar year exceeds $42 million, incentive fees will be payable by
Westshore to the Manager under the Management Agreement, to a maximum of $5 million.
Transactions with Related Parties
In 2011, Westshore paid $2.6 million (excluding HST) to the Manager for management services provided under the
Management Agreement between Westshore and the Manager, comprised of the annual base management fee of
$750,000 (excluding HST), an amount unchanged since 1997, and an incentive fee of $1.9 million (excluding HST). The
incentive fee is based on a percentage of free cash flow above $42 million, starting at 1.5% and rising to 6%, subject to an
annual cap on the incentive fee of $5 million. Effective January 1, 2012, the annual base management fee increased to
$950,000 and will increase by 3% each year thereafter.
The Governance Agreement between Holdings and the Manager governs the composition of the board of directors of
the General Partner. Since January 1, 2011, the board of directors of the General Partner consists of seven directors, three
of whom are nominated by the Manager.
In 2011, the Corporation and Holdings paid a total of $250,000 (excluding HST) to the Manager for administration
services provided under the Amended Administration Agreement between the Corporation and the Manager. Effective
January 1, 2012, the annual administration fee increased to $325,000 and will increase by 3% each year thereafter.
Proposed Amendments to Income Tax Act (Canada)
As part of the Conversion, Holdings issued the Holdings Notes, represented by Note Receipts which trade on the TSX
together with Common Shares of the Corporation as Units. On July 20, 2011 the Federal Department of Finance issued a
news release and “backgrounder” (the “Announcement”) announcing proposed amendments to the provisions in the
Income Tax Act concerning the income tax treatment of specified investment flow-through entities and publicly traded
corporations. A portion of the proposed amendments is targeted at so-called “stapled units”, which the Corporation
understands will be defined so as to include the Common Shares and Note Receipts of the type issued by the Corporation
and Holdings respectively. The effect of the proposed amendments would be to deny deductibility of interest on the
Holdings Notes.
15
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
The Announcement states that issuers will have a one-year transition period before deductibility is denied. It is
therefore probable that the current structure of the Corporation and Holdings and their outstanding securities will remain
in place until mid-2012. A subcommittee of the board of directors was formed to explore options for changes, if any, to
the capital structure of the Corporation and Holdings. As a result of this process (and as announced on March 20, 2012),
the board of directors of the Corporation has approved a capital restructuring to be effective July 1, 2012 that will involve
an exchange of the Note Receipt component of the current trading unit for additional common shares of the Corporation,
which will then be consolidated. The result will be that instead of the currently outstanding 74,250,016 units, the
Corporation will have outstanding 74,250,016 common shares without any debt component held by the public
securityholder. The proposed changes will require approval by the securityholders and will be presented at the June 2012
Annual and Special Meeting. The details of the proposed restructuring will be more fully set out in the Corporation’s
Information Circular to be released in May 2012.
Changes In Accounting Policies
The Fund’s accounting policies are found in note 3 of the Fund’s financial statements beginning on page 22. There
were no changes in accounting policies during the year ended December 31, 2011.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in accordance with IFRS requires the Corporation to
make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and
contingencies. These estimates are based on historical experience and on assumptions that are considered at the time to be
reasonable under the circumstances. Under different assumptions or conditions, the actual results may differ, potentially
materially, from those previously estimated.
The following is a discussion of the accounting estimates that are significant in determining the Corporation’s financial
results.
Plant and Equipment: Depreciation
Plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight line
method over the estimated useful production life of the assets. The estimated useful lives of plant and equipment range
from 3 to 35 years. A change in the estimated useful lives of plant and equipment could result in either a higher or lower
depreciation charge to net earnings.
Asset Retirement Obligations
Westshore is required to recognize the fair value of an estimated asset retirement obligation when a legal obligation is
present and a reasonable estimate of fair value can be made. At the expiry of the Terminal’s lease, the VFPA has the
option to acquire the assets of the Terminal at fair value or require Westshore to return the site to its original condition.
Westshore believes that the probability that the VFPA will elect to enforce site restoration is negligible and any liability
related to an asset retirement obligation would not be material, although any change in the estimate of site restoration costs
or the probability of incurring those costs could have a material impact on the asset retirement obligation.
16
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Goodwill
Goodwill is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate
that the asset might be impaired, by comparing the fair value of Westshore to its carrying value, including goodwill. If the
fair value of Westshore is less than its carrying value, a goodwill impairment loss is recognized as the excess of the carrying
value of the goodwill over the fair value of the goodwill. The determination of fair value requires management to make
assumptions and estimates about future coal loading rates, customer shipments, operating costs, foreign exchange rates
and discount rates. Changes in any of these assumptions, such as lower coal loading rates, a decline in customer shipments,
an increase in operating costs or an increase in discount rates could result in an impairment of all or a portion of the
goodwill carrying value in future periods.
Employee Future Benefits
Westshore has post-retirement benefit obligations under its pension plans and other post-retirement benefit plans, the
costs of which are based on estimates. Actuarial calculations of benefit costs and obligations depend on Westshore’s
assumptions about future events. Major estimates and assumptions relate to expected plan investment performance, salary
escalation, retirement ages of employees and expected health care costs, as well as discount rates, withdrawal rates and
mortality rates.
Deferred Income Taxes
Deferred income tax assets and liabilities have been recognized for temporary differences between the tax basis of an
asset or liability and its carrying amount on the balance sheet. The deferred income tax balances can be affected by a
change in the estimate of when temporary differences reverse and the likelihood of realization of deferred tax assets.
Provisions for Estimated Liabilities
Westshore makes certain provisions, including its portion of ship demurrage and train detention costs, which are often
not finally determined until well after the year-end. While Westshore endeavours to ensure that provisions are reasonable
in the circumstances, actual costs may be greater or less than the provisions made for those costs. Because of changes in
contract provisions, the impact of such liabilities is not expected to be material in the future.
International Financial Reporting Standards (IFRS)
The Corporation adopted IFRS in 2011 with a transition date of January 1, 2010. The Corporation’s accounting policies
are found in note 3 of the financial statements included with this annual report.
The use of IFRS for financial reporting in Canada is applicable for fiscal years beginning on or after January 1, 2011.
The following paragraphs provide a more in-depth discussion of the significant accounting changes. A detailed
reconciliation of the financial statement change from Canadian GAAP to IFRS is presented in note 20 to the financial
statements.
17
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
IFRS – Accounting Policies and Choices
Employee Benefits
Under IAS 19 Employee Benefits, there are options for the recognition of actuarial gains and losses for defined benefit
post-retirement plans (which includes pension and non-pension benefits). The Corporation has elected to recognize these
actuarial gains and losses immediately as they occur with changes being recorded through other comprehensive income.
This is a departure from the Corporation’s historical accounting practice of amortizing actuarial gains and losses over the
average remaining service life of the employees. This accounting policy choice is consistent with the revised rules in
IAS 19 which eliminate the corridor approach for amortizing actuarial gains and losses over a period of time effective
January 1, 2013.
IAS 19 requires past service costs for defined benefit plans to be amortized through net income over the vesting
period. Under Canadian GAAP, these costs were amortized through net income over the average remaining service life of
the employees which is a longer period of time.
The pension expense under IFRS is less than it was under Canadian GAAP because the pension expense does not
include any amortization of actuarial losses and past service costs. The impact on profit before tax for 2010 was a decrease
of $3.9 million to the amounts reported under Canadian GAAP. The total post-retirement benefit expense for 2011 under
IFRS was $4.1 million compared to $3.6 million in 2010.
Under IFRS, actuarial gains and losses do not need to be recognized in interim financial statements unless there are
significant changes from the estimates used in the most recent set of actuarial calculations, which could include changes in
interest rates and updated valuations. IFRS also requires companies to assess the impact of future minimum funding
requirements and record an impairment charge if these funding requirements will create a pension asset that cannot be
utilized. The impact on other comprehensive income for 2011 was an $8.5 million loss compared to a $7.0 million loss in
2010, excluding the associated changes in deferred taxes. These changes were not recorded under Canadian GAAP in the
prior year.
Depreciation
IAS 16 Property, Plant & Equipment requires depreciation to start once an asset is available for use. The Corporation’s
historical accounting policy resulted in depreciation commencing at a later date. This change resulted in a $0.9 million
increase in depreciation expense for 2010.
Presentation of the Fund’s Trust Units
Under IFRS, the Fund’s Trust Units are presented as a liability due to the Fund’s requirement to distribute taxable
income to the unitholders. This change in presentation only affects the comparative financial information as the Fund was
wound up on January 1, 2011. The liability was measured at the original issue price of the Trust Units of $744.2 million.
Under IFRS, debt issue costs are netted against a liability and amortized until the maturity date. Since the Trust Units had
no maturity date for IFRS purposes, the Fund expensed the issue costs immediately which resulted in a $40.2 million
decrease to retained earnings on the transition date. The quarterly distributions on the Trust Units are presented as a
financing expense rather than an equity distribution.
18
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
New standards and interpretations not yet adopted:
IFRS 10 – Consolidated Financial Statements
In May 2011, the IASB issued IFRS 10 – Consolidated Financial Statements. The objective of IFRS 10 is to establish
principles for the presentation and preparation of consolidated financial statements when an entity controls one or more
other entities. The effective date of this standard is January 1, 2013, but early adoption is permitted. The Corporation has
not determined the impact of the new standards on the consolidated financial statements and has not decided whether the
standard will be early adopted.
IFRS 12 – Disclosure of Interests in Other Entities
In May 2011, the IASB issued IFRS 12 – Disclosure of Interests in Other Entities. The objective of IFRS 12 is to require the
disclosure of information that enables users of financial statements to evaluate the nature of, and risks associated with, its
interests in other entities and the effects of those interests on its financial position, financial performance, and cash flows.
The effective date of this standard is January 1, 2013, but early adoption is permitted. The Corporation has not determined
the impact of the new standards on the consolidated financial statements and has not decided whether the standard will be
early adopted.
IFRS 13 – Fair Value Measurement
In May 2011, the IASB issued IFRS 13 – Fair Value Measurement. The objective of IFRS 13 is to define fair value, set
out in a single IFRS framework for measuring fair value, and establish disclosure requirements regarding fair value
measurements. The effective date of this standard is January 1, 2013, but early adoption is permitted. The Corporation has
not determined the impact of the new standards on the consolidated financial statements and has not decided whether the
standard will be early adopted.
Internal Controls Over Financial Reporting
The Corporation maintains a system of internal controls over financial reporting, as defined by National Instrument
52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings (“National Instrument 52-109”), in order to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial information for
external purposes in accordance with IFRS.
The Chief Executive Officer and Chief Financial Officer of the Corporation have evaluated, or caused to be evaluated
under their supervision, the effectiveness of the Corporation’s internal controls over financial reporting as of
December 31, 2011. Based on that assessment, it was determined that the internal controls over financial reporting were
appropriately designed and were operating effectively. No material changes were identified in the Corporation’s internal
controls over financial reporting during the year ended December 31, 2011 that have materially affected the Corporation’s
internal controls over financial reporting, or are reasonably likely to materially affect the Corporation’s internal controls
over financial reporting.
It should be noted that a control system, including the Corporation’s disclosure and internal controls and procedures,
no matter how well conceived can provide only reasonable, but not absolute, assurance that the objectives of the control
system will be met and it should not be expected that the disclosure and internal controls and procedures will prevent all
errors or fraud.
19
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
The design of any system of controls is also based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions.
Disclosure Controls And Procedures
“Disclosure controls and procedures” are defined as follows in National Instrument 52-109:
“Disclosure controls and procedures” means controls and other procedures of an issuer that are designed to
provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim
filings or other reports filed or submitted by it under provincial and territorial securities legislation is recorded,
processed, summarized and reported within the time periods specified in the provincial and territorial securities
legislation and include, without limitation, controls and procedures designed to ensure that information required
to be disclosed by an issuer in its annual filings, interim filings or other reports filed or submitted under provincial
and territorial securities legislation is accumulated and communicated to the issuer’s management, including its
chief executive officer and chief financial officer (or persons who perform similar functions to a chief executive
officer or a chief financial officer), as appropriate to allow timely decisions regarding required disclosure.”
As required by National Instrument 52-109, the Chief Executive Officer and the Chief Financial Officer of the
Corporation, in conjunction with management of the General Partner, have evaluated the effectiveness of the design and
tested the operation of the disclosure controls and procedures of Westshore, the General Partner, Holdings and the
Corporation as of December 31, 2011 and have concluded that such disclosure controls and procedures provide
reasonable assurance that information required to be disclosed in the annual filings, interim filings or other reports filed or
submitted under provincial and territorial securities legislation is recorded, processed, summarized and reported within the
time periods specified in such legislation.
Additional information relating to the Corporation, Holdings and Westshore, including the Corporation’s annual
information form, is available at www.sedar.com.
20
Westshore Terminals Investment Corporation
Financial Reporting
Management’s Report
The consolidated financial statements and other information in this annual report have been prepared by and are the
responsibility of the management of the Corporation. The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards and reflect where necessary management’s best estimates and
judgments.
Management is also responsible for maintaining systems of internal and administrative controls to provide reasonable
assurance that the Corporation’s assets are safeguarded, that transactions are properly executed in accordance with
appropriate authorization and that the accounting systems provide timely, accurate and reliable financial information.
The Directors are responsible for assuring that management fulfills its responsibility for financial reporting and internal
control. The Directors perform this responsibility at meetings where significant accounting, reporting and internal control
matters are discussed and the consolidated financial statements and annual report are reviewed and approved.
The consolidated financial statements have been audited on behalf of the shareholders by KPMG LLP, Chartered
Accountants, in accordance with International Financial Reporting Standards. The Auditors’ Report outlines the scope of
their examination and their independent professional opinion on the fairness of these financial statements.
William W. Stinson
Director
____________________________________________________________________________________________________
M. Dallas H. Ross
Director
21
KPMG LLP
Chartered Accountants
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Telephone (604) 691-3000
(604) 691-3031
Fax
www.kpmg.ca
Internet
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Westshore Terminals Investment Corporation
We have audited the accompanying consolidated financial statements of Westshore Terminals Investment Corporation,
which comprise the consolidated statements of financial position as at December 31, 2011, December 31, 2010 and January
1, 2010, the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended
December 31, 2011 and December 31, 2010, and notes, comprising a summary of significant accounting policies and other
explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance
with International Financial Reporting Standards, and for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our
audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements 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. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position
of Westshore Terminals Investment Corporation as at December 31, 2011, December 31, 2010 and January 1, 2010, and its
consolidated financial performance and its consolidated cash flows for the years ended December 31, 2011 and December
31, 2010 in accordance with International Financial Reporting Standards.
Chartered Accountants
March 29, 2012
Vancouver, Canada
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
KPMG Canada provides services to KPMG LLP.
22
WESTSHORE TERMINALS INVESTMENT CORPORATION
Consolidated Statement of Financial Position
(Expressed in thousands of Canadian dollars)
December 31,
2011
December 31,
2010
Note
January 1,
2010
Assets
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses
Other assets
Property, plant, and equipment:
At cost
Accumulated depreciation
Goodwill
Deferred income taxes
$
65,587
21,780
8,308
734
-
96,409
538,039
(436,858)
101,181
365,541
5,960
17
4
7
$
62,900
22,654
6,918
654
18
93,144
522,997
(426,816)
96,181
365,541
4,787
$
81,486
19,512
6,284
684
2,517
110,483
513,588
(405,017)
108,571
365,541
2,732
$
569,091
$
559,653
$
587,327
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities
Provisions
Income tax payable
Other liabilities
Accrued interest payable
Dividends payable to shareholders
Employee future benefits
Holdings notes payable
Trust Units
Shareholders’ equity / Unitholders’ deficit:
Share capital
Retained deficit
12
17
8
10
11
11
8
$
31,073
2,631
14,979
79
9,757
9,653
68,172
56,965
371,250
-
496,387
1,335,015
(1,262,311)
72,704
$
20,993
4,958
-
-
36,011
-
61,962
50,259
-
744,241
856,462
-
(296,809)
(296,809)
$
13,095
3,253
-
-
29,700
-
46,048
43,597
-
744,241
833,886
-
(246,559)
(246,559)
$
569,091
$
559,653
$
587,327
Subsequent event (note 21)
Commitments (notes 14 and 15)
See accompanying notes to consolidated financial statements.
Approved on behalf of the Board:
William W. Stinson, Director
M. Dallas H. Ross, Director
23
WESTSHORE TERMINALS INVESTMENT CORPORATION
Consolidated Statements of Comprehensive Income
(Expressed in thousands of Canadian dollars)
Years ended December 31, 2011 and 2010
Note
2011
2010
Revenue:
Coal loading
Other
Expenses:
Operating
Administrative
Other:
Foreign exchange gain
Profit from operating activities
Net finance costs
Profit (loss) before income tax
Income tax expense (recovery)
Profit (loss) for the year
Other comprehensive loss:
5
6
Defined benefit plan actuarial losses 10
Income tax recovery on other comprehensive loss
$
205,627
7,210
212,837
$
105,832
9,690
115,522
218,644
4,892
223,536
112,149
25,499
137,648
456
157
97,771
86,045
(38,847)
(131,362)
58,924
15,931
42,993
(8,502)
2,126
(45,317)
(307)
(45,010)
(6,987)
1,747
Other comprehensive loss for the year,
net of income tax
(6,376)
(5,240)
Total comprehensive income (loss) for the year
$
36,617
$
(50,250)
Profit per share:
Basic and diluted profit (loss) per share 9
$
0.579
$
(0.606)
See accompanying notes to consolidated financial statements.
24
WESTSHORE TERMINALS INVESTMENT CORPORATION
Consolidated Statement of Changes in Equity
(Expressed in thousands of Canadian dollars)
Years ended December 31, 2011 and 2010
Share
capital
Retained
Deficit
Total
-
-
-
-
-
-
-
-
-
$
(246,559)
$
(246,559)
(45,010)
(45,010)
(5,240)
(5,240)
(50,250)
(50,250)
$
(296,809)
$
(296,809)
$
(296,809)
$
(296,809)
42,993
42,993
(6,376)
(6,376)
36,617
36,617
Balance at January 1, 2010
$
Loss for the year
Other comprehensive loss:
Defined benefit plan actuarial losses, net of tax of $1,747
Total comprehensive loss for the year
Balance at December 31, 2010
Balance at January 1, 2011
Profit for the year
$
$
Other comprehensive loss:
Defined benefit plan actuarial losses, net of tax of $2,126
Total comprehensive income for the year
Contributions by and distributions to
shareholders of the Corporation:
Issuance of common shares on
exchange of Trust Units
Dividends to shareholders
1,335,015
-
(962,024)
(40,095)
372,991
(40,095)
Total contributions by and distributions to
shareholders of the Corporation
1,335,015
(1,002,119)
332,896
Balance at December 31, 2011
$ 1,335,015
$
(1,262,311)
$
72,704
See accompanying notes to consolidated financial statements.
25
WESTSHORE TERMINALS INVESTMENT CORPORATION
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
Years ended December 31, 2011 and 2010
Cash provided by (used in):
Operations:
Profit (loss) for the year
Adjustments for:
Foreign exchange contracts
Depreciation
Employee future benefits liability
Net finance costs
Income tax expense (recovery)
Gain on sale of fixed assets
Changes in non-cash operating working capital and other:
Accounts receivable
Inventories
Prepaid expenses
Accounts payable and accrued liabilities & provisions
Financing:
Interest received
Interest paid to noteholders/unitholders
Dividends paid to shareholders
Investments:
Property, plant and equipment, net
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of the year
2011
2010
$
42,993
$
(45,010)
97
10,042
(1,796)
38,847
15,931
-
106,114
874
(1,390)
(80)
7,754
2,499
21,932
(325)
131,362
(308)
(18)
110,132
(3,142)
(634)
30
9,603
113,272
115,989
146
(65,247)
(32,442)
(95,543)
432
(125,483)
-
(125,051)
(15,042)
(9,524)
2,687
62,900
(18,586)
81,486
Cash and cash equivalents, end of the year
$
65,587
$
62,900
Supplementary information:
Non-cash transactions:
Issuance of common shares
Issuance of notes payable
Exchange of Trust Units
$
1,335,015
371,250
744,241
$
-
-
-
See accompanying notes to consolidated financial statements.
26
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
1. Reporting entity:
Effective January 1, 2011, Westshore Terminals Income Fund (the “Fund”) converted (the “Conversion”) to a
corporate structure pursuant to a court-approved plan of arrangement under the Business Corporations Act
(British Columbia) (the “BCBCA”), and Westshore Terminals Investment Corporation (the “Corporation”) and
its wholly-owned subsidiary Westshore Terminals Holdings Ltd. (“Holdings”) are the successors to the Fund.
Pursuant to the Conversion, units of the Fund (“Trust Units”) were effectively exchanged for common shares
(“Common Shares”) of the Corporation and note receipts (“Note Receipts”) representing $5.00 aggregate
principal amount of 10.5% subordinated notes (“Holdings Notes”) issued by Holdings. The Common Shares
and Note Receipts trade together as units (the “Units”) on the Toronto Stock Exchange (the “TSX”) under
the symbol “WTE.UN”. Holdings owns all of the limited partnership units of Westshore Terminals Limited
Partnership (“Westshore”).
The Conversion has been accounted for on a continuity of interest basis and accordingly, the consolidated
financial statements reflect the financial position, results of operations and cash flows as if the Corporation
had always carried on the business formerly carried on by the Fund, with all assets and liabilities transferring
to the Corporation at their respective carrying values on January 1, 2011.
Information herein with respect to Westshore Terminals Investment Corporation includes information in
respect of the Fund prior to completion of the Conversion to the extent applicable unless the context
otherwise requires.
Westshore operates a coal storage and loading terminal at Roberts Bank, British Columbia.
The Corporation is domiciled in Canada. The address of the Corporation’s registered office is 1800 – 1067
West Cordova St., Vancouver, BC V6C 1C7. The consolidated financial statements of the Corporation as at
and for the year ended December 31, 2011 comprise the Corporation and its subsidiaries (together referred
to as the “Corporation”). The comparative figures include the results for the Fund to provide shareholders
with comparative information for Westshore’s operations.
The consolidated financial statements of the Fund as at and for the period ended December 31, 2010 which
were prepared under Canadian generally accepted accounting principles are available upon request from
the Corporation’s registered office, at www.westshore.com or on SEDAR at www.sedar.com.
2. Basis of preparation:
(a) Statement of compliance:
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs). These are the Corporation’s first consolidated financial statements
prepared in accordance with IFRSs and IFRS 1 First-time Adoption of International Financial Reporting
Standards has been applied.
An explanation of how the transition to IFRSs has affected the reported financial position, financial
performance and cash flows of the Corporation is provided in note 20.
The consolidated financial statements were authorized for issue by the Board of Directors on March 29,
2012.
27
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
2. Basis of preparation (continued):
(b) Basis of measurement:
These consolidated financial statements have been prepared on the historical cost basis except for the
following material items in the statement of financial position:
financial instruments classified as fair value through profit and loss are measured at fair value;
derivative financial instruments are measured at fair value; and
the defined benefit obligation is recognized as the present value of the defined benefit obligation,
measured at fair value, less plan assets at fair value.
(c) Functional and presentation currency:
These consolidated financial statements are presented in Canadian dollars, which is the Corporation
and its subsidiaries’ functional currency. All financial information presented in Canadian dollars has
been rounded to the nearest thousand.
(d) Use of estimates and judgments:
The preparation of the consolidated financial statements in conformity with IFRSs requires management
to make judgments, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future periods
affected.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a
material adjustment within the next financial year are included in the following notes:
Note 10 – measurement of defined benefit obligations
Note 12 – provisions.
28
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
3. Significant accounting policies:
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements and in preparing the opening IFRS statement of financial position as at
January 1, 2010 for the purposes of the transition to IFRSs, unless otherwise indicated.
(a) Basis of consolidation:
(i) Subsidiaries:
Subsidiaries are entities controlled by the Corporation. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control commences until the
date the control ceases.
(ii) Transactions eliminated on consolidation:
Intra-corporation balances and transactions, and any unrealized income and expenses arising from
intra-corporation transactions, are eliminated in preparing the consolidated financial statements.
(b) Foreign currency:
The functional and reporting currency of the Corporation and its subsidiaries is the Canadian dollar.
Transactions which are denominated in other currencies are translated into their Canadian dollar
equivalents at exchange rates prevailing at the transaction date. The carrying values of monetary
assets and liabilities denominated in foreign currencies are adjusted at each reporting date to reflect
exchange rates prevailing at that date. The foreign currency gain or loss on monetary items is the
difference between amortized cost in the functional currency at the beginning of the period, adjusted for
effective interest and payments during the period, and the amortized cost in the foreign currency
translated at the exchange rate at the end of the period. Foreign exchange gains and losses are
recognized under ‘Foreign exchange gain (loss)’ in the statement of comprehensive income.
(c) Financial instruments:
The Corporation’s financial instruments include cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities, provisions, income tax payable, interest payable to
noteholders, dividends payable to shareholders and notes payable.
Financial assets and financial liabilities are recognized when the Corporation becomes a party to the
contractual provisions of the financial instrument. Financial assets are derecognized when the
contractual rights to the cash flows from the financial asset expire, or when the financial asset and all
substantial risks and rewards are transferred. A financial liability is derecognized when it is
extinguished, discharged, cancelled or expires.
Financial assets and financial liabilities are measured initially at fair value plus transactions cost, except
for financial assets and financial liabilities carried at fair value through profit or loss, which are measured
initially at fair value.
29
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
3. Significant accounting policies (continued):
(c) Financial instruments (continued):
Cash and cash equivalents
The Corporation considers deposits in banks, certificates of deposit and short-term investments with
original maturities of three months or less when acquired as cash and cash equivalents. Cash and cash
equivalents are classified as loans and receivables.
Receivables
Receivables are classified as loans and receivables. Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in an active market. After initial
recognition these are measured at amortized cost using the effective interest method, less provision for
impairment. Discounting is omitted where the effect of discounting is immaterial.
Individual receivables are considered for impairment when they are past due or when other objective
evidence is received that a specific counterparty will default.
Financial liabilities
Financial liabilities are classified as loans and payables. Loans and payables are non-derivative
financial liabilities with fixed or determinable payments that are not quoted in an active market. After
initial recognition these liabilities are measured at amortized cost using the effective interest method,
less provision for impairment. Discounting is omitted where the effect of discounting is immaterial.
The Corporation has chosen to early adopt IFRS 9, Financial Instruments, with an effective date of
January 1, 2010. Under this new standard, financial assets are measured at fair value unless those
assets are held to collect contractual cash flows which include only principal and interest payments on
those assets, in which case they are recorded at historical amortized cost. Financial liabilities are
measured at amortized cost unless they are designated as fair value through profit or loss. The early
adoption of this standard did not have a material impact on the financial statements.
30
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
3. Significant accounting policies (continued):
(d) Property, plant and equipment:
(i) Recognition and measurement:
Items of property, plant, and equipment are measured at historical cost less accumulated
depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of
self-constructed assets includes the cost of materials and direct labour, any other costs directly
attributable to bringing the assets to a working condition for their intended use, the costs of
dismantling and removing the items and restoring the site on which they are located, and borrowing
costs on qualifying assets for which the commencement date for capitalization is on or after
January 1, 2010.
When parts of an item of property, plant, and equipment have different useful lives, they are
accounted for as separate items of property, plant, and equipment.
The gain or loss on disposal of an item of property, plant, and equipment is determined by
comparing the proceeds from disposal with the carrying amount of the property, plant, and
equipment, and is recognized net within other income/expenses in profit or loss.
(ii) Depreciation:
Depreciation is based on the cost of an asset less its residual value. Significant components of
individual assets are assessed, and if a component has a useful life that is different from the
remainder of the asset, then that component is depreciated separately.
Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of
each component of an item of property, plant, and equipment. The estimated useful live for the
current and comparative periods are as follows:
Asset
Automobiles
Conveyor belts
Computer software
Mobile equipment
Land improvements
Buildings
Fixed machinery
Term
3 years
5 years
3 years to 5 years
5 years to 25 years
15 years to 30 years
8 years to 35 years
8 years to 35 years
Depreciation methods, useful lives, and residual values are reviewed at each financial year end
and adjusted if appropriate.
31
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
3. Significant accounting policies (continued):
(d) Property, plant and equipment (continued):
(ii) Depreciation (continued):
The Corporation has changed its accounting policy with respect to depreciation. Under IFRS,
depreciation must start once the asset is available for use. This is different from the Corporation’s
previous accounting policy of starting depreciation at a later date. The change in accounting policy
has been applied retroactively and did not have a material effect on these consolidated financial
statements.
(e) Impairment:
Non-Financial assets
The carrying values of the Corporation’s non-financial assets are reviewed at each reporting date to
assess whether there is any indication of impairment. If any such indication is present, then the
recoverable amount of the assets is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs to sell. 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 asset. For the purposes of impairment testing, assets are
grouped at the lowest levels that generate cash inflows from continuing use that are largely independent
of the cash inflows of other assets or groups of assets (the “cash-generating unit”).
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds
its estimated recoverable amount. Impairment losses are recognized in profit and loss. Impairment
losses recognized in prior periods are assessed at each reporting date for any indications that the loss
has decreased or no longer exists. An impairment charge is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been recognized.
Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective
evidence that it is impaired. A financial asset is considered to be impaired if objective evidence
indicates that one or more events have had a negative effect on the estimated future cash flows of that
asset.
Objective evidence that financial assets are impaired can include default or delinquency by a debtor,
restructuring of an amount due to the Corporation on terms that the Corporation would not consider
otherwise, or indications that a debtor or issuer will enter bankruptcy.
The Corporation considers evidence of impairment for financial assets, and in particular receivables, at
both a specific asset and collective level.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash flows,
discounted at the original effective interest rate.
32
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
3. Significant accounting policies (continued):
(e) Impairment (continued):
Financial assets (continued)
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the
impairment loss is recognized. For financial assets measured at amortized cost, this reversal is
recognized in the statement of comprehensive income.
(f) Goodwill:
In respect of acquisitions prior to January 1, 2010, goodwill is included on the basis of its deemed cost,
which represents the amount recorded under previous Canadian GAAP.
Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment on
an annual basis, or more frequently if events or changes in circumstances indicate that the asset might
be impaired. Any excess of the carrying value over fair value is charged to profit or loss in the period in
which the impairment is determined.
(g) Inventories:
Inventories of spare parts and supplies are measured at the lower of cost and net realizable value.
Cost is determined using the weighted average cost method and includes the invoiced cost and other
directly attributable costs of acquiring the inventory.
(h) Employee benefits:
Defined benefit plans
A defined benefit plan is a post-retirement benefit plan other than a defined contribution plan. The
Corporation’s net obligation in respect of defined benefit pension plans is calculated separately for each
plan by estimating the amount of future benefit that employees have earned in return for their service in
the current and prior periods; that benefit is discounted to determine its present value and the fair value
of plan assets is deducted. The discount rate is the yield at the reporting date on AA credit-rated bonds
that have maturity dates approximating the term of the Corporation’s obligations and that are
denominated in the same currency in which the benefits are expected to be paid.
33
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
3. Significant accounting policies (continued):
(h) Employee benefits (continued):
Defined benefit plans (continued)
The calculation is performed annually by a qualified actuary using the projected unit credit method.
When the calculation results in a benefit to the Corporation, the recognized asset is limited to the
present value of economic benefits available in the form of any future refunds from the plan or
reductions in the future contributions to the plan. In order to calculate the present value of economic
benefits, consideration is given to any minimum funding requirements that apply to any plan in the
Corporation. An economic benefit is available to the Corporation if it is realizable during the life of the
plan, or on settlement of the plan liabilities. When the benefits of a plan are improved, the portion of the
increased benefit relating to past service by employees is recognized in profit or loss on a straight-line
basis over the average period until the benefits become vested. To the extent that the benefits vest
immediately, the expense is recognized immediately in profit or loss.
All actuarial gains and losses at January 1, 2010, the date of transition to IFRSs, were recognized in
retained earnings (deficit). The Corporation recognizes all actuarial gains and losses arising
subsequently from defined benefit plans immediately in other comprehensive income and expenses
related to defined benefit plans in profit or loss.
Other long-term employee benefits
The Corporation’s net obligation in respect of long-term employee benefits other than pension plans is
the amount of future benefit that employees have earned in return for their service in the current and
prior periods; that benefit is discounted to determine its present value, and the fair value of any related
assets is deducted. The discount rate is the yield at the reporting date on AA credit-rated bonds that
have maturity dates approximating the terms of the Corporation’s obligations. The calculation is
performed using the projected unit credit method. Any actuarial gains and losses are recognized
immediately in other comprehensive income in the period in which they arise.
(i) Revenue:
Coal loading revenue is recognized when a customer’s coal is completely loaded onto a ship and ready
for export from the terminal site. Coal loading revenue is recorded based on contract specific loading
rates. Other revenue consists primarily of wharfage fees which are recorded based upon the period of
time a ship is at the terminal.
34
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
3. Significant accounting policies (continued):
(j) Provisions:
A provision is recognized if, as a result of a past event, the Corporation has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation.
Ship demurrage & train detention costs
The Corporation makes certain provisions, including its portion of ship demurrage and train detention
costs, which are often not finally determined until well after the period-end.
Decommissioning liabilities
The Corporation’s terminal site is leased from the Vancouver Fraser Port Authority (the “VFPA”). A new
lease agreement was signed on November 2, 2006, and became effective as of January 1, 2007. The
current lease runs until December 31, 2026, and may be extended at the Partnership's option for further
periods up to 25 years. At the expiry of the lease term, assuming the Corporation has not been
successful in further extending the lease, the VFPA has the option to acquire the assets of the terminal
at fair value or require the Corporation to return the site to its original condition. The Corporation
believes that the probability that the VFPA will elect to enforce site restoration is negligible and any
decommissioning liability would not be material.
(k) Income tax:
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in
profit or loss except to the extent they relate to items recognized directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using
tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when
they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same authority on the same taxable
entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis
or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary
difference, to the extent that it is probable that future taxable profits will be available against which they
can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realized.
35
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
3. Significant accounting policies (continued):
(l) Borrowing costs:
The Corporation has elected to apply the transitional provisions of IAS 23, Borrowing Costs,
prospectively from the date of transition. This did not have any material immediate impact on the
financial statements but will have a material effect if the Corporation funds the capital projects using
borrowed funds.
(m) New standards and interpretations not yet adopted
A number of new standards, and amendments to standards and interpretations, are not yet effective for
the year ended December 31, 2011, and have not been applied in preparing these consolidated
financial statements. None of these is expected to have a significant effect on the consolidated financial
statements of the Corporation.
Amendments to IAS 1 Presentation of Financial Statements
In June 2011 the IASB published amendments to IAS 1 Presentation of Financial Statements:
Presentation of Items of Other Comprehensive Income, which are effective for annual periods beginning
on or after July 1, 2012 and are to be applied retrospectively. Early adoption is permitted. The
amendments require that an entity present separately the items of OCI that may be reclassified to profit
or loss in the future from those that would never be reclassified to profit or loss. Consequently an entity
that presents items of OCI before related tax effects will also have to allocate the aggregated tax
amount between these categories. The existing option to present the profit or loss and other
comprehensive income in two statements has remained unchanged. The Corporation intends to adopt
the amendments in its financial statements for the annual period beginning on January 1, 2013. As the
amendments only require changes in the presentation of items in other comprehensive income, the
Corporation does not expect the amendments to IAS 1 to have a material impact on the financial
statements.
IFRS 10 Consolidated Financial Statements
In May 2011 the IASB issued IFRS 10 Consolidated Financial Statements, which is effective for annual
periods beginning on or after January 1, 2013, with early adoption permitted. IFRS 10 replaces the
guidance in IAS 27 Consolidated and Separate Financial Statements. The Corporation intends to adopt
IFRS 10 in its financial statements for the annual period beginning on January 1, 2013. The Corporation
does not expect IFRS 10 to have a material impact on the financial statements.
IFRS 13 Fair Value Measurement
In May 2011 the IASB published IFRS 13 Fair Value Measurement, which is effective prospectively for
annual periods beginning on or after January 1, 2013. IFRS 13 replaces the fair value measurement
guidance contained in individual IFRSs with a single source of fair value measurement guidance. It
defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date, i.e. an exit price. The
standard also establishes a framework for measuring fair value and sets out disclosure requirements for
fair value measurements to provide information that enables financial statement users to assess the
methods and inputs used to develop fair value measurements and, for recurring fair value
36
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
3. Significant accounting policies (continued):
(m) New standards and interpretations not yet adopted (continued):
IFRS 13 Fair Value Measurement (continued)
measurements that use significant unobservable inputs (Level 3), the effect of the measurements on
profit or loss or other comprehensive income. IFRS 13 explains how to measure fair value when it is
required or permitted by other IFRSs. IFRS 13 does not introduce new requirements to measure assets
or liabilities at fair value, nor does it eliminate the practicability exceptions to fair value measurements
that currently exist in certain standards. The Corporation intends to adopt IFRS 13 prospectively in its
financial statements for the annual period beginning on January 1, 2013. The Corporation does not
expect IFRS 13 to have a material impact on the financial statements.
Amendments to IAS 19 Employee Benefits
In June 2011 the IASB published an amended version of IAS 19 Employee Benefits. Adoption of the
amendment is required for annual periods beginning on or after January 1, 2013, with early adoption
permitted. The amendments require the following:
Recognition of actuarial gains and losses immediately in other comprehensive income
Full recognition of past service costs immediately in profit or loss
Recognition of expected return on plan assets in profit or loss to be calculated based on the rate
used to discount the defined benefit obligation
Additional disclosures that explain the characteristics of the entity’s defined benefit plans and risks
associated with the plans, as well as disclosures that describe how defined benefit plans may affect
the amount, timing and uncertainty of future cash flows, and details of any asset-liability match
strategies used to manage risks.
The amendments also impact termination benefits, which would now be recognized at the earlier of
when the entity recognizes costs for a restructuring within the scope of IAS 37 Provisions, and when the
entity can no longer withdraw the offer of the termination benefits.
The Corporation intends to adopt the amendments in its financial statements for the annual period
beginning on January 1, 2013. The Corporation does not expect the amendments to IAS 19 to have a
material impact on the financial statements.
37
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
4. Plant and equipment:
Buildings and
land improvements
Machinery
and equipment
Construction
in progress
Total
Cost
Balance at January 1, 2010
Additions
Transfers
Disposals
Balance at December 31, 2010
Balance at January 1, 2011
Additions
Transfers
Disposals
Balance at December 31, 2011
Accumulated Depreciation
Balance at January 1, 2010
Depreciation for the year
Disposals
Balance at December 31, 2010
Balance at January 1, 2011
Depreciation for the year
Disposals
Balance at December 31, 2011
Carrying amounts
At January 1, 2010
At December 31, 2010
At December 31, 2011
$ 34,041
-
117
-
34,158
34,158
-
307
-
$ 34,465
$ 28,165
897
-
29,062
29,062
913
-
$ 29,975
$ 454,717
-
33,469
(133)
488,053
488,053
-
2,796
-
$ 490,849
$ 376,852
21,035
(133)
397,754
397,754
9,129
-
$ 406,883
$ 24,830 $ 513,588
9,542
-
(133)
522,997
9,542
(33,586)
-
786
786
15,042
(3,103)
-
522,997
15,042
-
-
$ 12,725 $ 538,039
- $ 405,017
21,932
-
(133)
-
426,816
-
426,816
-
10,042
-
-
-
- $ 436,858
$ 5,876
5,096
4,490
$ 77,865
90,299
83,966
$ 24,830 $ 108,571
96,181
101,181
786
12,725
38
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
5. Finance costs:
Interest income on bank deposits
$
134
$
Interest income
Interest accrued to noteholders
Distributions declared to Unitholders
134
(38,981)
-
2011
2010
432
432
-
(131,794)
Finance costs
(38,981)
(131,794)
Net finance costs recognized in profit or loss
$
(38,847)
$
(131,362)
The distributions declared to holders of Trust Units are classified as a finance cost as the Trust Units are
classified as a liability under IFRS.
6.
Income tax expense:
Current tax expense
Deferred tax expense (recovery)
2011
$
14,979
$
952
2010
-
(307)
Total tax expense (recovery)
$
15,931
$
(307)
Reconciliation of effective tax rate:
Profit (loss) before income tax
Statutory rate
Expected income tax expense (recovery)
Permanent differences
Difference between current and future tax rates
Other
Impact of Trust distributions
$
58,924
26.50%
$
(45,317)
28.00%
15,615
35
7
274
-
(12,689)
-
-
-
12,382
Actual income tax expense (recovery)
$
15,931
$
(307)
39
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
7. Deferred tax assets and liabilities:
December 31,
2011
December 31,
2010
January 1,
2010
Deferred tax assets:
Non-pension defined benefits liability
Pension defined benefits liability
Foreign exchange contracts
Non-capital loss carryforwards
Total assets
$
Deferred tax liabilities:
Foreign exchange contracts
Other
Property, plant and equipment
Total liabilities
11,238
3,003
20
1,551
15,812
-
(949)
(8,903)
(9,852)
$
9,945
2,619
-
1,278
13,842
(5)
-
(9,050)
(9,055)
$
7,382
3,517
-
418
11,317
-
-
(8,585)
(8,585)
Net deferred income tax assets
$
5,960
$
4,787
$
2,732
8. Share capital:
Common shares
2011
2010
74,250,016 issued on January 1, 2011 and in exchange
for Trust Units
$ 1,335,015
$
-
Effective January 1, 2011, the Fund was reorganized. As part of the reorganization, Unitholders received, for
each Trust Unit held, one common share of the Corporation and one Note Receipt representing $5.00
principal amount of Holdings Notes bearing interest at 10.5%. After the reorganization, there are 74,250,016
common shares of the Corporation recorded at fair value of $1,335,015 as at January 1, 2011 and Note
Receipts representing $371,250,000 aggregate principal amount issued and outstanding. The carrying value
of the trust units was reduced from $744,241,000 to nil and the resulting difference of $962,024,000 has
been recorded as an increase to retained deficit.
The authorized share capital is unlimited and the shares have no par value.
The holders of the common shares are entitled to receive dividends as declared from time to time, and are
entitled to one vote per share at meetings of the Corporation.
The Corporation has declared the following dividends in 2011 (2010 - nil):
Record date
March 31
June 30
September 30
December 31
Payment date
Per share
Total
April 15
July 15
October 15
January 13
40
$ 0.14
0.11
0.16
0.13
$ 10,395
8,167
11,880
9,653
$ 40,095
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
9. Profit per share:
Basic earnings per share:
The calculation of basic profit per share for the year ended December 31, 2011 was based on profit
attributable to shareholders of $42,993,000 and a weighted average number of common shares outstanding
of 74,250,016 common shares calculated as follows:
Profit (loss) for the period
Profit attributable to common shareholders
Weighted average number of common shares/Trust Units:
December 31,
2011
December 31,
2010
$
$
42,993
42,993
$
$
(45,010)
(45,010)
December 31,
2011
December 31,
2010
Trust Units prior to exchange on January 1, 2011
Issued in exchange of Trust Units on January 1, 2011
-
74,250,016
74,250,016
-
Weighted average number of common shares/Trust Units
74,250,016
74,250,016
10. Employee benefits:
December 31,
2011
December 31,
2010
January 1,
2010
Present value of unfunded obligations
Present value of funded obligations
Impairment for minimum funding obligations
$
44,952
85,471
-
$
39,781
78,612
5,071
$
29,527
69,697
11,737
Total present value of obligations
Fair value of plan assets
130,423
(73,458)
123,464
(73,205)
110,961
(67,364)
Recognized liability for defined benefit obligations $
56,965
$
50,259
$
43,597
41
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
10. Employee benefits (continued):
The Corporation makes contributions to two non-contributory defined benefit plans that provide pension
benefits for employees upon retirement. The Corporation also provides two non-contributory other post
retirement benefit plans that provide retiring allowances and other medical benefits after retirement.
The Corporation had previously determined that its minimum funding requirements would give rise to
contributions that cannot be refunded or utilized to reduce future contributions. Legislation changes in 2011
have reduced Westshore’s minimum funding requirements for accounting purposes to a level where no
future liability is required. The decrease in the defined benefit obligation was $5,071,000 during the year
ended December 31, 2011. The Corporation recognizes the changes in this impairment through other
comprehensive income in accordance with its policy of recognizing actuarial gains and losses.
Plan assets comprise:
December 31,
2011
December 31,
2010
January 1,
2010
Equity securities
Fixed income securities
Cash and cash equivalents
$
46,051
25,776
1,631
$
49,999
22,108
1,098
$
46,010
20,209
1,145
$
73,458
$
73,205
$
67,364
Movements in defined benefit obligations:
Movement in the present value of the
Defined benefit obligations
Pension obligations
2011
2010
Other post
retirement benefits
2011
2010
Defined benefit obligations at January 1
Benefits paid by the plan
Current and past service costs and
interest (see below)
Actuarial losses in other
comprehensive income (see below)
Adjustment to impairment for future
contributions in other
comprehensive income (see below)
$ 83,683
(4,386)
$ 81,434
(4,083)
$
39,781
(1,303)
$
29,527
(1,236)
5,999
5,246
5,286
7,712
3,264
3,210
3,013
8,477
(5,071)
(6,666)
-
-
Defined benefit obligations at December 31 $ 85,471
$ 83,683
$
44,952
$
39,781
42
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
10. Employee benefits (continued):
Movements in plan assets:
Movement in plan asset value
Pension obligations
2011
2010
Other post
retirement benefits
2011
2010
Fair value of plan assets at January 1
Contributions paid into the plan
Benefits paid by the plan
Expected return on plan assets
Actuarial gains (losses) in other
$ 73,205
4,623
(4,386)
5,132
$ 67,364
2,721
(4,083)
4,668
$
-
1,303
(1,303)
-
comprehensive income (see below)
(5,116)
2,535
Fair value of plan assets at December 31
$ 73,458
$ 73,205
$
-
-
$
$
-
1,236
(1,236)
-
-
-
Components of pension expense:
Pension obligations expense recognized
in profit or loss
Pension obligations
2011
2010
Other post
retirement benefits
2011
2010
Current service costs
Past service costs
Interest on obligation
Expected return on plan assets
$
1,263
657
4,079
(5,132)
$
1,057
-
4,229
(4,668)
$
1,150
-
2,114
-
$
934
-
2,079
-
$
867
$
618
$
3,264
$
3,013
The expense is recognized in operating expenses in the statement of comprehensive income.
Actual return on plan assets
$
244
$
7,057
2011
2010
The pension plans are entirely funded by the Corporation. The Corporation’s contributions to the pension
plans are based on independent actuarial valuations. The other benefit plans have no assets and an annual
expense is recorded on an accrual basis based on independent actuarial determinations, considering among
other factors, health care cost escalation.
The financial information with respect to the defined benefit pension plans and other benefit obligations is
based on the following funding valuations:
Most recent
valuation date
Date of next
required
valuation
January 1, 2010
January 1, 2010
January 1, 2012
January 1, 2013
Pension plan
Retirement plan
43
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
10. Employee benefits (continued):
The significant actuarial assumptions adopted in measuring the Corporation's accrued benefit obligations
(and costs) are as follows (weighted average assumptions as of December 31):
2011
2010
Pension
benefits
%
Other
benefits
%
Pension
benefits
%
Other
benefits
%
Benefit obligations:
Discount rate at December 31
Rate of increase in future
compensation
Benefit costs:
Discount rate at January 1
Rate of increase in future
compensation
Expected long-term rate
of return on plan assets
4.75
3.00
5.25
3.50
6.75
4.75
-
5.25
3.50
-
5.25
3.00
6.00
3.50
7.00
5.25
-
6.00
3.50
-
The average rate of compensation increase is expected to be inflation with an adjustment for merit and
productivity gains.
For measurement purposes, a 10% per annum increase in the per capita cost of covered extended health
care benefits was assumed for 2011, grading down by 0.50% to 4.50%. The per annum increase in the per
capita cost of medical service plan is 6.14% for 2011, grading down by 0.50% to 3.50%. The annual rate of
increase in the per capita cost of dental benefits is 4%.
The impact of a 100 basis point difference in assumed changes in drug and other health benefit costs would
have the following effects:
Effect on benefit costs
Effect on benefit obligation
Actuarial gains and losses recognized in other comprehensive income:
Cumulative amount at January 1
Recognized during the period
Cumulative amount at December 31
44
1% decrease
1% increase
$
(331)
(3,847)
$
419
4,737
2011
(6,987)
(8,502)
(15,489)
$
$
$
$
2010
-
(6,987)
(6,987)
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
11. Loans and borrowings:
This note provides information about the contractual terms of the Corporation’s interest-bearing loans and
borrowings, which are measured at amortized cost. For more information about the Corporation’s exposure
to interest rate, foreign currency and liquidity risk, see note 17.
Non-current liabilities:
Notes payable
Trust Units
December 31,
2011
December 31,
2010
January 1,
2010
$
371,250
-
$
-
744,241
$
-
744,241
$ 371,250
$
744,241
$
744,241
Westshore has a $10 million operating facility which remained undrawn at December 31, 2011. The term of
this operating facility expires in August 2012.
Westshore has a $50 million revolving credit facility to be utilized for capital expenditures and investments,
which remained undrawn at December 31, 2011. The credit facility has a five-year term ending August 31,
2016.
At December 31, 2011, the Corporation has $371,250,000 of Holdings Notes payable outstanding. The
Holdings Notes mature on December 31, 2040 and will be payable in cash at that time. Holdings may at any
time on or after January 1, 2013 redeem the notes in whole or in part, provided that, so long as the Holdings
Notes and Common Shares are trading as units, a partial redemption must be ratable among all
noteholders, so that following such redemption each unit comprises the same principal amount of the notes
and one common share. The Holdings Notes bear interest at a rate of 10.5% per annum, to be paid to
holders quarterly. Interest accrued to March 31, June 30, September 30, and December 31 of each year will
be paid on the 15th of the month next following each interest accrual date.
Interest payments may be deferred by Holdings for up to one year, in which event failure to pay interest will
not constitute an event of default for the deferral period. In the event of any such deferral, interest will
continue to accrue on the notes but will not compound. During the period of any such deferral, no dividends
or other distributions may be paid by Holdings on any class of shares.
The Corporation may elect to satisfy all or part of its obligation to pay interest on any interest payment date
in form of a combination of common shares and additional notes.
Prior to the reorganization, the Fund’s trust units are presented as a liability due to the Fund’s requirement to
distribute taxable income to the unitholders. The liability was measured at the original issue price of the
Trust Units.
45
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
12. Provisions:
Westshore makes certain provisions, including its portion of ship demurrage and train detention costs, which
are often not finally determined until well after the period end.
Balance at January 1, 2010
Provisions made during the period
Provisions used during the period
Balance at December 31, 2010
Balance at January 1, 2011
Provisions made during the period
Provisions used during the period
Provisions reversed during the period
Train
detention
Ship
demurrage
$
$
$
1,331
1,321
(1,331)
1,321
1,321
863
(650)
(205)
$
$
$
1,922
7,014
(5,299)
3,637
3,637
1,310
(1,956)
(1,689)
$
$
$
Total
3,253
8,335
(6,630)
4,958
4,958
2,173
(2,606)
(1,894)
Balance at December 31, 2011
$
1,329
$
1,302
$
2,631
Train Detention:
The railways that deliver coal to the terminal claim railcar detention charges from Westshore’s customers in
respect of any delays beyond a specified number of hours that occur between the commencement of
loading at the mine and the completion of unloading at the terminal. The railways also grant credits in
respect of trains that complete the process in less than the specified number of hours. With certain
exceptions, Westshore shares these charges and credits in respect of certain mines.
Ship Demurrage:
Westshore’s customers incur demurrage penalties if a ship being loaded with their coal is not loaded within a
specified number of hours after it is ready to load at the terminal. They also receive credits for early
completion of loading, but only at half the hourly rate of the demurrage penalty. Westshore shares in these
penalties and credits in respect of certain mines, expect in certain situations where the customer bears the
entire penalty and receives the entire credit. One such situation is if the coal to be loaded on the vessel is
not at the terminal when the vessel arrives.
13. Financial instruments:
The carrying amounts reported in the consolidated statement of financial position for short term financial
assets and liabilities, which includes cash and cash equivalents, accounts receivable, accounts payable and
accrued liabilities, provisions, income tax payable and interest payable to noteholders and dividends payable
to shareholders, approximate fair values due to the immediate short-term maturities of these financial
instruments.
46
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
13. Financial instruments (continued):
The Corporation has $371,250,000 of notes payable outstanding as at December 31, 2011. The Holdings
Notes bear interest at a rate of 10.5% per annum, to be paid to holders quarterly. The Holdings Notes
mature on December 31, 2040 and will be payable in cash at that time. The Corporation believes the
carrying value of the notes payable approximates the fair value. Market interest rates as at December 31,
2011 are similar to those at the date of issue. The fair value of the notes payable may differ from the
carrying value if interest rates increase or decrease in the future.
Following is a classification of fair value measurements recognized in the consolidated balance sheet using
a fair value hierarchy that reflects the significance of the inputs used in making the measurements.
Fair value measurement at reporting date using:
Quoted prices in
December 31,
2011
active markets Significant other
observable
identical assets
inputs (Level 2)
(Level 1)
Significant
unobservable
inputs (Level 3)
Financial assets (liabilities):
Derivative instruments:
Foreign exchange contracts
(79)
-
(79)
-
The carrying amounts of foreign exchange contracts are equal to fair value, which is based on valuations
obtained from the counterparty. The mark-to-market value is determined by the counterparty by multiplying
the notional amount of the trade with the difference between the forward rate and the contract rate and
discounting the resultant asset or liability by an applicable discount factor.
14. Operating leases:
The Corporation is committed under operating leases to the rental of property, facilities, and equipment.
The Corporation's terminal site is leased from the VFPA. The term of the lease is until December 31, 2026,
with the Corporation having further options to extend the term to December 31, 2051. Charges payable by
the Corporation under the Lease comprise an annual base land and waterlot rental fee of $5,207,000
(2010 - $5,207,000) and an annual participation rental based on the volume of coal shipped. A minimum
participation rental of $6,494,000 (2010 - $6,494,000) is charged based on a minimum annual tonnage
(“MAT”) of 17.6 million tonnes. A higher participation rental per tonne is charged on tonnage in excess of the
MAT. In 2011, the Corporation paid $8,547,000 (2010 - $6,832,000) in relation to the higher participation
rental.
47
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
14. Operating leases (continued):
Future minimum operating lease payments for the years ending December 31 (assuming minimum annual
tonnes) are as follows:
$
Terminal
lease
11,701
11,701
11,701
11,701
11,701
117,218
Other
Total
$ 267
267
-
-
-
-
$
11,968
11,968
11,701
11,701
11,701
117,218
2012
2013
2014
2015
2016
Thereafter to 2026
15. Capital commitments:
The Corporation has a commitment of approximately $4,403,000 (2010 - $2,909,000) with respect to
equipment purchases that have been accrued for at December 31, 2011 and that are to be paid in 2012.
The Corporation also has total commitments of US$38.6 million for equipment purchases to be delivered
and paid for in 2012.
The Corporation has provided a letter of credit of $4,080,000 (2010 - $4,080,000).
16. Significant customer:
Teck Resources Limited holds a 100% interest in Teck Coal Partnership (the Coal Partnership). During the
year ended December 31, 2011, approximately 55% (2010 - 66%) of Westshore’s throughput was from
mines owned by the Coal Partnership.
17. Financial risk management:
The Corporation is exposed to various risks associated with its financial instruments, which include credit
risk, liquidity risk and market risk. Further quantitative disclosures are included throughout these
consolidated financial statements.
(a) Credit risk:
Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. Credit risk arises primarily from accounts receivable
and cash and cash equivalents. Credit risk can also arise on foreign currency contracts held by the
Corporation.
48
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
(a) Credit risk (continued):
The Corporation’s exposure to credit risk is influenced by the profitability of coal mining companies,
which is heavily impacted by the price of the coal. Westshore does not have any collateral or security
for its receivables. Westshore monitors the financial health of its customers and regularly reviews its
accounts receivable for impairment. As at December 31, 2011 and 2010, there were no trade accounts
receivable past due which were considered uncollectible and no reserve in respect of doubtful accounts
was recorded.
The Corporation limits its exposure to credit risk arising from cash equivalents by only investing in
money market funds with a major Canadian financial institution. The Corporation does not expect any
credit losses in the event of non-performance by counter parties to its foreign exchange forward
contracts as the counter parties are major Canadian financial institutions.
The carrying amount of financial assets represents the maximum credit exposure. The maximum
exposure to credit risk is:
December 31,
2011
December 31,
2010
January 1,
2010
$ 65,587
Cash and cash equivalents
Accounts receivable 21,780
Other assets – foreign currency contracts -
$
62,900
22,654
18
$
81,486
19,512
2,517
$ 87,367
$
85,572
$
103,515
(b) Liquidity risk:
Liquidity risk is the risk that the Corporation will not be able to meet its obligations as they fall due. The
Corporation continually monitors its financial position to ensure that it has sufficient liquidity to discharge
its obligations when due. The Corporation’s interest obligation to note holders is funded from operating
income.
The current financial liabilities of the Corporation, which include accounts payable and accrued
liabilities, income tax payable, interest payable to debtholders and dividends payable to shareholders,
have a contractual maturity of less than 1 year. The Corporation’s foreign exchange contracts have
maturities ranging from one month to three months as at December 31, 2011.
The Holdings Notes have a maturity date of December 2040 and no principal repayments are required
until that time. They have quarterly interest payment requirements of $9,745,000, which can be deferred
for up to one year. The Corporation anticipates making these interest payments from cash flows
provided by operations each quarter.
Westshore also maintains a $10 million operating facility that can be drawn down to meet short term
financing needs. This facility was not used during the year ended and remained undrawn at
December 31, 2011, although Westshore has an outstanding letter of credit for $4.1 million.
49
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
(b) Liquidity risk (continued):
Westshore secured a new five-year $50 million credit facility during 2011 that will be used to finance its
previously announced capital upgrade project. The facility was not used during the year and remained
undrawn at December 31, 2011.
(c) Market risk:
The significant market risk exposures affecting the financial instruments held by the Corporation are
those related to foreign currency exchange rates and interest rates.
(i) Foreign currency exchange rates:
The Corporation holds some cash denominated in foreign currencies and the Canadian-dollar value
of these cash balances fluctuates with changes in the exchange rate. As at December 31, 2011,
the Corporation held US$10.9 million (2010 – US$5.0 million). A $0.01 increase in the
US/Canadian exchange rate would have increased the Canadian dollar value of this cash balance
and increased foreign exchange gains by $109,000 for the year.
The accounts receivable due from US customers are denominated in US dollars. The US dollar
denominated accounts receivable outstanding as at December 31, 2011 was $4,815,000 (2010 -
$4,346,000).
The fair value of the Corporation’s outstanding foreign currency contracts at December 31, 2011 is
a liability of $79,000 (2010 – asset of $18,000). The fair market value of the Corporation’s foreign
currency contracts has decreased by $97,000 in 2011. The Corporation is exposed to foreign
currency exchange rate risk on its foreign currency contracts. The value of these financial
instruments fluctuates with changes in the US/CAD dollar exchange rate. As at December 31,
2011, the Corporation has put options with notional amounts totaling $8.0 million to exchange
US dollars for Canadian dollars with a strike price of $1.037. The counterparty has call options with
notional amounts totaling $8.0 million to exchange US dollars for Canadian dollars with a strike
price from $0.955. A $0.01 increase in the US/Canadian exchange rate at December 30, 2011
would have reduced the value of the US dollar foreign exchange contracts by approximately
$79,000, which would have resulted in a reduction in pre-tax profit by $79,000 for the year then
ended. From January 1, 2011 to December 31, 2011, the US dollar has strengthened by
approximately 2% against the Canadian dollar.
(ii)
Interest rates:
The Corporation has limited exposure to interest rate risk on the cash equivalents. Money market
fund returns are correlated with Canadian T-bills and Bankers’ Acceptances of major Canadian
financial institutions. Based on the cash balance at December 31, 2011, a 1% change in interest
rates would have impacted profit for the year by approximately $656,000.
The Holding Notes bear a fixed interest rate of 10.5%.
50
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
18. Capital management:
The capital of the Corporation consists solely of shareholders equity which includes issued share capital and
retained deficit.
The objective of the Corporation is to maintain a stable capital base and ensure that the capital structure
does not interfere with the Corporation’s ability to meet its distribution policy or fund future projects. The
Corporation expects to declare and pay dividends to holders of its Common Shares equal to amounts
received from Holdings after payment of operating costs. It is not anticipated that the Corporation will
require significant capital resources to maintain its indirect investment in Westshore on an ongoing basis or
to meet its working capital requirements. In 2011, the Corporation expects that its quarterly dividends to
shareholders will be funded by earnings and operating cash flows.
19. Related party transactions:
Administration agreement:
Westar Management Ltd.
Management agreement:
Westar Management Ltd. – base fee
Management agreement:
Westar Management Ltd. – incentive fee
Vehicle leases:
Affiliate of Westar Management Ltd.
Directors and Key Management Personnel:
Directors and Key Management Personnel fees
2011
2010
$
250
$
250
750
750
1,857
16,900
393
280
313
248
20. Explanation of transition to IFRSs:
As stated in note 2, these are the Corporation’s first annual consolidated financial statements prepared in
accordance with IFRSs.
The accounting policies set out in note 3 have been applied in preparing the financial statements for the year
ended December 31, 2011, the comparative information presented in these consolidated financial
statements for the year ended December 31, 2010 and in the preparation of an opening IFRS statement of
financial position as at January 1, 2010 (the Corporation’s date of transition).
In preparing its opening IFRS statement of financial position, the Corporation has adjusted amounts reported
previously in financial statements prepared in accordance with previous Canadian generally accepted
accounting principles. An explanation of how the transition from previous Canadian GAAP to IFRSs has
affected the Corporation’s financial position, comprehensive income, and cash flows is set out in the
following tables and notes that accompany the tables.
51
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
20. Explanation of transition to IFRSs (continued):
Reconciliation of equity:
Previous
GAAP
Effect of
transition
to IFRSs
IFRSs
Notes
January 1, 2010
$
$ 81,486
19,512
6,284
684
2,517
110,483
513,588
(405,017)
108,571
24,168
365,541
-
-
-
-
-
-
-
-
-
-
$ 81,486
19,512
6,284
684
2,517
110,483
513,588
(405,017)
108,571
(24,168)
-
2,732
-
365,541
2,732
$ 608,763
$
(21,436) $ 587,327
$
16,348
-
-
29,700
46,048
22,118
8,680
-
76,846
$
(3,253) $ 13,095
3,253
3,253
29,700
29,700
-
(29,700)
46,048
-
21,479
(8,680)
744,241
757,040
43,597
-
744,241
833,886
704,032
-
726,380
(898,495)
531,917
(704,032)
(246,559)
(726,380)
898,495
(778,476)
-
(246,559)
-
-
(246,559)
$ 608,763
$
(21,436) $ 587,327
(b)
(f)
(c)
(c)
(d)
(d)
(b)
(f)
(d)
(d)
(g)
(d)
(d)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses
Other assets
Plant and equipment
At cost
Accumulated depreciation
Employee future benefits
Goodwill
Future income taxes
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities
Provisions
Accrued interest payable
Distributions payable to unitholders
Employee future benefits
Future income tax
Trust Units
Unitholders’ / Shareholders’ equity:
Trust Units
Retained earnings
Cumulative earnings
Cumulative distributions / dividends declared
52
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
20. Explanation of transition to IFRSs (continued):
Reconciliation of equity (continued):
Previous
GAAP
Effect of
transition
to IFRSs
December 31, 2010
IFRSs
$
$ 62,900
22,654
6,918
654
18
93,144
-
-
-
-
-
-
$ 62,900
22,654
6,918
654
18
93,144
522,997
(425,916)
97,081
23,420
365,541
-
-
(900)
(900)
522,997
(426,816)
96,181
(23,420)
-
4,787
-
365,541
4,787
$ 579,186
$
(19,533) $ 559,653
$ 25,951
-
-
36,011
61,962
24,923
7,608
-
94,493
(4,958) $ 20,993
4,958
4,958
36,011
36,011
-
(36,011)
61,962
-
25,336
(7,608)
744,241
761,969
50,259
-
744,241
856,462
704,032
-
810,950
(1,030,289)
484,693
(704,032)
(296,809)
(810,950)
1,030,289
(781,502)
-
(296,809)
-
-
(296,809)
$ 579,186
$
(19,533) $ 559,653
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses
Other assets
Plant and equipment
At cost
Accumulated depreciation
Employee future benefits
Goodwill
Future income taxes
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities
Provisions
Accrued interest payable
Distributions payable to unitholders
Employee future benefits
Future income tax
Trust Units
Unitholders’ / Shareholders’ equity:
Trust Units
Retained earnings (deficit)
Cumulative earnings
Cumulative distributions / dividends declared
Notes
(b)
(f)
(c)
(c)
(d)
(d)
(b)
(f)
(d)
(d)
(g)
(d)
(d)
53
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
20. Explanation of transition to IFRSs (continued):
Reconciliation of comprehensive income for year ended December 31, 2010:
Previous
GAAP
Effect of
transition
to IFRSs
IFRSs
Notes
December 31, 2010
Revenue:
Coal loading
Other
Expenses:
Operating
Administrative
Other:
Interest
Depreciation
Foreign exchange gain
Profit from operating activities
Interest income
Interest expense
Net finance costs
(b), (e)
(e)
(d)
$
218,644
4,892
$
223,536
94,097
25,499
119,596
432
(21,031)
157
-
-
-
18,052
-
18,052
(432)
21,031
-
$
218,644
4,892
223,536
112,149
25,499
137,648
-
-
157
83,498
2,547
86,045
-
-
-
432
(131,794)
432
(131,794)
(131,362)
(131,362)
Profit before income tax
83,498
(128,815)
(45,317)
Income tax expense
(1,072)
765
(307)
Profit for the period
84,570
(129,580)
(45,010)
Other comprehensive income (loss):
Defined benefit plan
actuarial gains (losses)
Income tax on other comprehensive
income (loss)
(b)
(b)
Other comprehensive income (loss)
for the period, net of income tax
-
-
-
(6,987)
1,747
(6,987)
1,747
(5,240)
(5,240)
Total comprehensive income for the period
$
84,570
$
(134,820)
$
(50,250)
54
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
20. Explanation of transition to IFRSs (continued):
(a) Principal exemptions elected on transition to IFRS:
IFRS 1 sets out the requirements that the Corporation must follow when it adopts IFRS for the first time
as the basis for preparing its consolidated financial statements. The Corporation is required to establish
its IFRS accounting policies for the year ended December 31, 2011, and apply these retrospectively to
determine the IFRS opening consolidated statement of financial position at the date of transition of
January 1, 2010. To assist companies in the transition process, the standard permits a number of
specified exemptions from the general principle of retrospective restatement. The Corporation has
elected a number of specified exemptions from the general principal of retrospective application as
follows:
(i) Business combinations:
The Corporation has elected to apply IFRS 3, Business Combinations (”IFRS 3”), retrospectively to
all business combinations that took place on or after the date of transition, January 1, 2010. Under
previous Canadian GAAP, the Corporation had elected to early adopt The Canadian Institute of
Chartered Accountants' Handbook Section 1582, Business Combinations, effective January 1,
2010, the requirements of which are converged with IFRS; consequently there is no impact to the
opening statement of financial position or the results for the year ended December 31, 2010 upon
transition. As a condition under IFRS 1 of applying this exemption, goodwill relating to business
combinations that occurred prior to January 1, 2010 was tested for impairment even though no
impairment indicators were identified. No impairment existed at the date of transition.
(ii) Leases:
The Corporation has elected to apply the transitional provisions in International Financial Reporting
Interpretations Committee (“IFRIC”) 4, Determining whether an Arrangement contains a Lease,
thereby determining whether the Corporation has any arrangements that exist at the date of
transition to IFRS that contain a lease on the basis of facts and circumstances existing at
January 1, 2010. No adjustment was required to the opening consolidated statement of financial
position.
(iii) Changes in existing decommissioning, restoration and similar liabilities included in the cost of
property, plant, and equipment:
The Corporation has elected to apply the exemption to full retrospective application of IFRIC 1,
Changes in Existing Decommissioning, Restoration and Similar Liabilities. This election allows the
Corporation to measure the impact of any changes to its decommissioning and restoration liabilities
using estimates applicable at the date of transition to IFRS. Consequently, no adjustment was
required to the opening consolidated statements of financial position as a result of applying this
election and IFRIC 1.
55
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
20. Explanation of transition to IFRSs (continued):
(a) Principal exemptions elected on transition to IFRS (continued):
(iv) Borrowing costs:
The Corporation has elected to apply the transitional provisions of IAS 23, Borrowing Costs
(“IAS 23”), prospectively from the date of transition.
(b) Under IFRSs the Corporation’s accounting policy is to recognize all actuarial gains and losses
immediately in other comprehensive income. Under its previous GAAP the Corporation recognized
actuarial gains and losses in profit and loss over the employees’ remaining service period. At the date
of transition, all previously unrecognized cumulative actuarial gains and losses were recognized in
retained earnings and the amortization of such amounts was reversed in the previous year’s statement
of profit or loss.
The impact arising from the change is summarized as follows:
Actuarial gain and losses
For the period ended:
Consolidated profit or loss:
Decrease in operating expenses,
before income taxes
Other comprehensive income:
Defined benefit plan actuarial
losses
Related tax effect
Other comprehensive loss, net of tax
As at period end:
Consolidated statement of
financial position:
Decrease in employee future
benefits asset
Increase in employee future
benefits liability
Related tax effect
January 1,
2010
December 31,
2010
$
$
$
-
-
-
-
$
(3,879)
$
(6,987)
1,747
$
(5,240)
$
(24,168)
$
(23,420)
(21,479)
11,412
(25,336)
12,183
Decrease to retained earnings
$
(34,235)
$
(36,573)
(c) Under IFRSs, the Corporation’s accounting policy is to record provisions separate from accounts
payable. At the date of transition, all previously recognized provisions in accounts payable and accrued
liabilities were reclassified to provisions. The provisions relate to certain provisions, including the
Corporation’s portion of ship demurrage and train detention costs, which are often not finally determined
until well after the period end.
56
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
(c) (continued):
The impact arising from the change is summarized as follows:
Provisions
Consolidated statement of financial position:
Decrease in accounts payable and
accrued liabilities
Increase in provisions
Adjustment to retained earnings
January 1,
2010
December 31,
2010
$
$
3,253
(3,253)
-
$
$
4,958
(4,958)
-
(d) Previously under Canadian GAAP, the Trust Units were classified as equity instruments. In accordance
with IAS 32, Financial Instruments: Presentation, the Fund Units are classified as a long-term liability as
the Units are considered puttable financial instruments as the holder has the option to redeem the Units
for amounts related to market prices at the time of the redemption and the Units impose an obligation
requiring delivery of income to the unitholders. Certain exceptions provided in IAS 32 allow some
puttable instruments to be classified as equity under IFRS, however these conditions are much more
restrictive than previous Canadian GAAP. The Fund does not meet the exceptions in IAS 32 for equity
presentation, as the Fund has a contractual obligation to distribute its taxable income to unitholders on
an annual basis.
The Fund has made the following two accounting policy elections with respect to these units:
(i)
it has not separated the income distribution stream as an embedded derivative as it is considered
to be dependent on a non-financial variable specific to a party to the contract; and
(ii)
it has elected to treat the distribution stream based on income as a floating rate financial
instrument.
As a result, the Fund has recorded the liability at the cash amount originally exchanged for the Units,
being $744.2 million. The effect of classification of the Fund Units as a long-term liability is to reduce
Unitholders’ equity and increase long-term liabilities by $744.2 million at January 1, 2010 and December
31, 2010 as compared to amounts reported under previous Canadian GAAP. The Fund has transferred
$40.2 million of related unit issuance costs previously netted against the Unitholders’ equity balance to
deficit as a financing cost expensed prior to the IFRS adoption date.
Consistent with the classification of the Fund units as a liability, distributions paid to Unitholder’s are
considered a financing cost in the statement of comprehensive income.
As the Fund units are treated as a floating rate liability, any changes in the distributions based on
changes to income levels are expensed in the period in which they occur.
57
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
20. Explanation of transition to IFRSs (continued):
(d) (continued):
The impact arising from the change is summarized as follows:
Trust units
For the period ended:
Consolidated statement of
comprehensive income:
Increase in financing expenses
As at period end:
Consolidated statement of
financial position:
Increase in Trust Units
Decrease in capital contributions
Adjustment to retained earnings
January 1,
2010
December 31,
2010
$
$
$
-
$
(131,794)
(744,241)
704,032
$
(744,241)
704,032
40,209
$
40,209
(e) Under IFRS, depreciation must start once the asset is available for use. This is different from the
Corporation’s previous accounting policy of starting depreciation at a later date. Depreciation has also
been reclassified in the statement of comprehensive income as the Corporation presents its operating
expenses by function.
The impact arising from the change is summarized as follows:
January 1,
2010
December 31,
2010
$
$
$
$
$
-
-
-
-
-
-
$
$
(21,931)
21,031
(900)
$
$
(900)
212
$
(688)
Property, plant and equipment
For the period ended:
Consolidated statement of
comprehensive income:
Increase in operating expenses
Decrease in depreciation expense
Adjustment before income tax
As at period end:
Consolidated statement of
financial position:
Decrease in plant and equipment
Related tax effect
Adjustment to retained earnings
58
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except unit amounts)
Years ended December 31, 2011 and 2010
20. Explanation of transition to IFRSs (continued):
(f) The above changes increased the deferred tax assets as follows:
Deferred tax
Employee future benefits
Property, plant and equipment
Increase in deferred tax assets
January 1,
2010
December 31,
2010
$
$
11,412
-
$
12,183
212
11,412
$
12,395
(g) The above changes decreased retained earnings (each net of related tax) as follows:
Changes in retained earnings
Employee future benefits
Trust Units
Increase in depreciation expense
January 1,
2010
December 31,
2010
$
(34,235)
(40,209)
-
$
(36,573)
(40,209)
(688)
Decrease in retained earnings
$
(74,444)
$
(77,470)
21. Subsequent event:
The board of directors of the Corporation have approved a capital restructuring that will involve an
exchange of the Note Receipt component of the current trading unit for additional common shares
of the Corporation, which will then be consolidated. The result will be that instead of the currently
outstanding 74,250,016 units, the Corporation will have outstanding 74,250,016 common shares
without any debt component held by the public securityholder.
These proposed changes will require approval by the securityholders and will be presented at the
June 2012 Annual General Meeting.
59
Corporate Information
Westshore Terminals Investment Corporation
Directors
William W. Stinson
Corporate Director
M. Dallas H. Ross
Partner, Kinetic Capital Partners
Jim G. Gardiner
Corporate Director
Gordon Gibson
Corporate Director
Michael J. Korenberg
Deputy Chairman & Managing Director,
The Jim Pattison Group
Officers
William W. Stinson
Chairman, Chief Executive Officer &President
M. Dallas H. Ross
Director &Chief Financial Officer
Nick Desmarais
Secretary
Stock Exchange Listing
Toronto Stock Exchange
Trading Symbol
WTE.UN
Registrar and Transfer Agent
Computershare Investor Services Inc.
Vancouver and Toronto
Auditors
KPMG LLP
Vancouver, British Columbia
Principal Office
1800 – 1067 West Cordova Street
Vancouver, British Columbia V6C 1C7
Telephone: 604.688.6764
604.687.2601
Facsimile:
Westshore Terminals Holdings Ltd.
Westshore Terminals Ltd.
Directors
M. Dallas H. Ross
Partner, Kinetic Capital Partners
Glen Clark
President, The Jim Pattison Group
Doug Souter
Corporate Director
Officers
M. Dallas H. Ross
Chairman, President, Chief Executive Officer
and Chief Financial Officer
Nick Desmarais
Secretary
William W. Stinson
Director & President and Chairman
M. Dallas H. Ross
Director
Glen Clark
Director
Gordon Gibson
Director
Michael J. Korenberg
Director
Doug Souter
Director
Nick Desmarais
Director & Secretary
Denis Horgan
Vice-President & General Manager
60