WESTSHORE TERMINALS
INVESTMENT CORPORATION
ANNUAL REPORT
2020
W
estshore Terminals Investment Corporation (the “Corporation”) owns all of
the limited partnership units of Westshore Terminals Limited Partnership, a
partnership established under the laws of British Columbia (“Westshore”). It derives its cash
inflows from its investment in Westshore by way of distributions on its limited partnership
units. Westshore operates the coal storage and loading terminal at Roberts Bank, British
Columbia (the “Terminal”), 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
Directors' Letter and Report to Shareholders
Management's Discussion and Analysis
Consolidated Financial Statements
Corporate Information
2
3
4
21
48
Financial Highlights
(In thousands of Canadian dollars except tonnage and share amounts)
Tonnage (in thousands)
Coal loading revenue
Profit before taxes
Profit for the year
Profit for the year per share
Dividends declared
Dividends declared per share
Funds applied to repurchase shares
Average price paid per repurchased share
2020
2019
29,267
353,568
173,927
126,916
1.96
41,198
0.64
46,744
15.53
$
$
$
$
$
$
$
$
31,033
387,536
190,998
139,385
2.09
42,650
0.64
17,780
20.92
$
$
$
$
$
$
$
$
Shares outstanding at December 31
63,391,535
66,473,855
Share Trading Statistics
High
Low
Close
Annual Volume
19.12
$
11.88
$
$
15.59
60,454,581
24.26
$
17.64
$
$
18.95
46,898,530
2
Westshore Terminals Investment Corporation
Directors’ Letter and Report to Shareholders
Dear Shareholder:
Westshore had a successful year in 2020 amidst a challenging business environment.
Westshore shipped 29.3 million tonnes in 2020 compared to 31.0 million tonnes in 2019. Total revenues of $368.4
million compare to 2019 revenues of $395.4 million and reflect somewhat reduced volumes and throughput rates. Profit
before taxes of $173.9 million was down 9% from $191.0 million in 2019, and after-tax profit per share decreased by 6%.
COVID-19 spurred several heightened safety measures put in place at the terminal to protect our employees and allow
operations to continue. Although commodity prices for metallurgical and thermal coal have fluctuated during the pandemic,
our throughput volumes have remained steady.
Our customer base, and throughput volume by customer, continues to evolve. For 2020, we shipped product for eight
different customers. At least for the next few years, we anticipate throughput volumes to be reduced from recent years,
primarily due the expiry of our prior contract with Teck based on 19 million tonnes annually. Combined 2021 volume for
Teck under the expiring contract and the new contract which commences April 2021 is expected to be 12.5-13.5 million
tonnes. Commencing 2022, the new contract allows for a volume range of 5-7 million tonnes annually. We anticipate total
throughput volume for all customers of approximately 25 million tonnes in 2021.
Westshore intends to continue to maximize throughput volumes by attracting new coal customers and/or increasing
throughput volume of existing customers. Additionally, we are well positioned to handle other bulk commodities in addition
to coal.
At the end of 2020, Westshore reached a two-year labour agreement with Local 502 of the International Longshore and
Warehouse Union (ILWU). The agreement is in effect until January 31, 2022. In February 2021 we reached tentative
agreements with the remaining two locals of ILWU. The agreement with Local 517 was ratified earlier this month and the
agreement with Local 514 is expected to be ratified later this month. These agreements also expire January 31, 2022. .
The Corporation renewed its normal course issuer bid (“NCIB”) effective April 11, 2020 for another year, allowing it
to acquire up to 3,253,787 common shares until April 10, 2021. During 2020, 3,009,912 common shares were purchased
for a total of $46.7 million, of which 16,700 common shares at a cost of $0.3 million were settled in 2021. In 2019, 850,090
common shares were purchased for a total of $17.8 million, of which 88,108 common shares at a cost of $1.7 million were
settled in 2020. Year to date in 2021, a total of 6,000 shares have been purchased for $0.1 million.
The Corporation is pleased to announce a $0.20 dividend for Q1 2021, which represents an increase in the regular
quarterly dividend level, as well as a $0.50 special dividend to be paid to shareholders on record as of March 31, 2021. Both
dividends are payable on or before April 15, 2021.
The Corporation is in the process of preparing its first ESG (environmental, social and governance) report. The report
will be posted on the Corporation’s website in June 2021.
For the Board of Directors,
(Signed) “William Stinson”
William Stinson
Chairman of the Board of Directors
Vancouver, B.C.
March 16, 2021
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, 2020. This discussion and analysis has been based upon the 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 16, 2021.
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 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 risk factors 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 loading rates, strength
of markets for metallurgical and thermal coal, expected throughput volumes, the possible impacts of the COVID-19 pandemic, the effect of
the Canadian/US dollar exchange rate, the future cost of post-retirement benefits, adoption and impact of new accounting standards and the
anticipated level of dividends and share repurchases.
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 risk 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 or deliver coal to the Terminal, fluctuations
in exchange rates, and the Corporation’s ability to renegotiate key customer contracts in the future on favourable terms or at all. See 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
The Corporation was incorporated under the Business Corporations Act (British Columbia) on September 28, 2010
and is domiciled in Canada. The registered and head office of the Corporation is located at Suite 1800, 1067 West
Cordova Street, Vancouver, British Columbia V6C 1C7. The Corporation owns all of the limited partnership units of
Westshore Terminals Limited Partnership (“Westshore”), a limited partnership established under the laws of British
Columbia.
The Corporation derives its cash inflows from its investment in Westshore by way of distributions on Westshore’s
limited partnership units. Westshore operates a coal storage and loading terminal at Roberts Bank, British Columbia
(the “Terminal”). Westshore’s operating revenues are derived from rates charged for loading coal onto seagoing vessels.
Westshore’s results are affected by various factors, including the volume of coal shipped by each customer, and their
contracted rate per tonne, as well as Westshore’s operating costs. Customer contracts continue to provide fixed volume
commitments at fixed rates for a significant portion of the Terminal’s estimated capacity.
This MD&A has been prepared by the Corporation to accompany the financial statements of the Corporation for
the financial year ended December 31, 2020.
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 relationships. The Corporation holds all of the
limited partnership units of Westshore and all of the common shares of Westshore Terminals Ltd. (the “General
Partner”), the general partner of Westshore. Westar Management Ltd. (the “Manager”) provides management services
to Westshore and administrative services to the Corporation and appoints three of the eight directors of the General
Partner. Details of these arrangements will be included in the Information Circular for the Corporation’s 2021 Annual
Meeting.
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, 2020, 2019 and 2018, which were prepared in Canadian dollars using IFRS.
(In thousands of Canadian dollars except per share amounts and where noted)
Tonnage (000 tonnes)
Revenue
Profit before taxes
Profit for the year
Profit for the year per share(1)
Dividends declared
Dividends declared per share
Total assets
Total long term liabilities
2020
$
29,267
368,410
173,927
126,916
1.96
41,198
0.64
1,251,400
434,305
2019
$
31,033
395,422
190,998
139,385
2.09
42,650
0.64
1,207,307
420,882
2018
$
30,464
363,369
169,883
122,131
1.76
44,036
0.64
1,128,820
404,760
(1) The weighted average number of Common Shares outstanding for 2020 was 64,673,615, for 2019 was 66,724,299, and for 2018
was 69,206,278.
The following tables set out selected consolidated financial information for the Corporation on a quarterly basis for
the last eight quarters.
(In thousands of Canadian dollars except per share amounts and
where noted)
Three Months Ended
Dec 31, 2020
$
Sep 30, 2020
$
Jun 30, 2020 Mar 31, 2020
$
$
Tonnage (000 tonnes)
Revenue
Profit before taxes
Profit for the period
Profit for the period per share
Dividends declared
Dividends declared per share
Shares repurchased (000 shares)
Cost of shares repurchased
6,786
89,449
44,266
32,305
0.50
10,237
0.16
947
15,216
7,683
96,816
47,484
34,653
0.53
10,378
0.16
301
4,025
7,711
92,372
39,842
29,074
0.44
10,441
0.16
1,220
19,523
7,087
89,773
42,335
30,884
0.49
10,142
0.16
542
7,980
7
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
(In thousands of Canadian dollars except per share amounts and
where noted)
Tonnage (000 tonnes)
Revenue
Profit before taxes
Profit for the period
Profit for the period per share
Dividends declared
Dividends declared per share
Shares repurchased (000 shares)
Cost of shares repurchased
Three Months Ended
Dec 31, 2019
$
Sep 30, 2019
$
Jun 30, 2019 Mar 31, 2019
$
$
8,208
102,991
49,994
36,484
0.55
10,636
0.16
312
5,858
8,340
104,918
55,774
40,704
0.61
10,671
0.16
-
-
7,582
98,714
47,923
34,960
0.52
10,672
0.16
-
-
6,903
88,799
37,307
27,237
0.41
10,671
0.16
538
11,922
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 in North America. Westshore receives handling charges from its customers for throughput volume.
Westshore does not take title to the coal it handles. Market conditions for coal affect the competitiveness of Westshore’s
customers and, therefore, may affect the volume of coal handled by Westshore. Westshore has contracts to ship coal
from mines in British Columbia, Alberta and the Northwestern United States.
Coal is delivered to the Terminal in unit trains operated by Canadian Pacific Railway, BNSF Railway, and Canadian
National Railway. The product is unloaded and either directly loaded onto a ship or stockpiled for future ship loading.
The loaded ships are destined around the globe to approximately 18 different countries, with the largest volumes being
shipped to Asia.
The Terminal’s unique location provides strategic advantages with rail access, storage capacity and vessel handling.
These advantages are capable of being utilized for handling other bulk commodities. Westshore will continue to evaluate
the feasibility of proposals to handle other commodities as opportunities arise.
8
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
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)
Japan
South Korea
China and Hong Kong
India
Europe
Taiwan
S. America
Vietnam
Other
Total
2020
Tonnes
8,743
8,578
3,399
3,046
2,697
1,324
709
330
441
29,267
%
30
29
12
10
9
5
2
1
2
100
2019
Tonnes
8,301
10,456
3,126
3,599
2,444
1,745
264
628
470
31,033
%
27
34
10
11
8
6
1
2
1
100
2018
Tonnes
6,490
12,164
2,551
2,708
2,677
1,314
1,539
793
228
30,464
%
21
40
8
9
9
4
5
3
1
100
During 2020, 66% of Westshore’s volume was steel making coal (64% in 2019) and 34% was thermal coal (36% in
2019).
Westshore’s customers compete with other coal miners throughout the world. The major competitors for
Westshore’s customers are producers with mines in Australia, Indonesia, South Africa and Colombia.
Customer Contracts
Westshore operates under term contracts with its customers. Terms of customer contracts range from 2-10 years.
Contracts are often renegotiated and extended prior to their expiry.
In 2020 Westshore shipped product for eight different customers and has contracts in place with six of those
customers for 2021.
Westshore’s 19 million tonne annual contract with Teck Resources expires March 31, 2021. Westshore has entered into
a new agreement with Teck commencing April 1, 2021. Under the terms of the agreement Westshore will load between
7.55-8.55 million tonnes in the nine-month period April – December 2021, and then between 5-7 million tonnes
annually commencing 2022. The total volume shipped under the contract will be a minimum of 33 million tonnes.
Westshore has entered into contracts with two metallurgical coal companies that plan to develop mines in Alberta
and BC. Those companies are paying reservation fees to secure capacity for future shipments, which are expected to
commence after 2022.
9
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Labour
All three union locals (502, 514, & 517 of the International Longshore and Warehouse Union) had collective
agreements with Westshore that expired on January 31, 2020. During 2020, Westshore reached a two-year agreement
with Local 502 expiring January 31, 2022. This Agreement was ratified in December 2020. In February 2021 we
reached tentative agreements with the remaining two locals of ILWU. The agreement with Local 517 was ratified earlier
this month and the agreement with Local 514 is expected to be ratified later this month. These agreements also expire
January 31, 2022.
Results of Operations
(In thousands of Canadian dollars)
Revenue:
Coal loading
Other
Expenses:
Operating
Administrative
Other:
Foreign exchange gain (loss)
Gain (loss) on disposal of property,
plant and equipment
Net finance costs
Profit before income tax
Income tax expense
Profit for the period
Other comprehensive income (loss), net of
income tax
Total comprehensive income for the
period
Quarterly analysis.
Three Months Ended
December 31,
2020
$
December 31,
2019
$
Years Ended
December 31,
2020
$
December 31,
2019
$
86,791
2,982
89,773
40,543
4,279
44,822
100,721
2,270
102,991
44,907
5,390
50,297
353,568
14,842
368,410
167,839
16,370
184,209
387,536
7,886
395,422
176,709
17,030
193,739
(61)
(145)
(229)
867
1
(2,556)
42,335
11,451
30,884
-
(2,555)
49,994
13,510
36,484
25
(10,070)
173,927
47,011
126,916
(152)
(11,400)
190,998
51,613
139,385
5,802
11,379
(8,233)
(2,920)
36,686
47,863
118,683
136,465
Tonnage shipped for Q4 2020 was in line with expectations at 7.1 million tonnes compared to 8.2 million tonnes
for the same period in 2019. Of the tonnes shipped in Q4 2020, 72% was metallurgical coal and 28% was thermal
coal, compared to 67% and 33% respectively for the same period in the prior year.
10
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Coal loading revenue decreased by 13.8% to $86.8 million for Q4 2020 compared to $100.7 million for the same
period in 2019. Volumes were down 13.7% for the quarter (year over year) while the average loading rate in Q4 2020
was $12.25 per tonne compared to $12.27 per tonne for the same period in 2019.
Other revenues, totalling $3.0 million in Q4 2020, consisted of $1.1 million of customer shortfall payments with
the remainder primarily being wharfage fees. Other revenues for the same period in 2019 was $2.3 million and
consisted primarily of wharfage fees.
Operating and administrative expenses decreased by 10.9% to $44.8 million for Q4 2020 compared to $50.3
million for the same period in 2019.Operating cost reductions continue to be a key focus of terminal operations.
Net finance costs were consistent at $2.6 million for both years. The net interest cost components of the employee
benefit plan expense, and the right-of-use capital lease interest costs are recorded in net finance costs.
Income tax expense decreased to $11.5 million in Q4 2020 from $13.5 million in Q4 2019 due to lower profits
before taxes in 2020.
Profit in the quarter decreased to $30.9 million in 2020 from $36.5 million in 2019, as a result of the lower
revenues from lower volumes.
Other comprehensive income or loss includes actuarial gains and losses on the defined benefit post-retirement
obligations which are primarily impacted by the discount rate used, membership assumptions and the plan asset
performance (relative to actuarial expectations).
After-tax other comprehensive income for the fourth quarter decreased to $5.8 million in 2020 from $11.4 million
in 2019. The change in the fourth quarter of 2020 was caused by plan assets performing better than actuarial
expectations. The change in the fourth quarter of 2019 was caused by a 0.25% increase in the discount rate which
decreased the post-retirement obligations and plan experience changes from the inclusion of the most recent valuation
for the post employment benefit plans.
Full year analysis
Tonnage shipped in 2020 was 29.3 million tonnes compared to 31.0 million tonnes in 2019. Of the tonnes shipped
in 2020, 66% was metallurgical coal and 33% was thermal coal, compared to 64% and 36% respectively for 2019. Coal
loading revenue decreased by 8.8% to $353.6 million in 2020 from $387.5 million in 2019. Volumes were down 5.7%
year over year and the average loading rate for 2020 was $12.08 per tonne compared to $12.49 per tonne for 2019.
Other revenue totalling $14.8 million, consisted of $6.7 million of customer shortfall payments with the remainder
primarily being wharfage income. Other revenue for the same period in 2019 was $7.9 million and consisted primarily
of wharfage income.
Operating and administrative expenses decreased by 4.9% to $184.2 million compared to $193.7 million for the
same period in 2019, reflecting reduced volume and Westshore’s focus on cost reductions.
11
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Net finance costs decreased to $10.1 million in 2020 from $11.4 million in 2019, due to lower interest expense on
the employee benefit plan expense and higher interest income on excess cash. The net interest cost components of
the employee benefit plan expense, and the right-of-use capital lease interest costs are recorded in net finance costs.
Income tax expense decreased to $47.0 million in 2020 from $51.6 million in 2019 due to the lower profits before
taxes.
Profit decreased to $126.9 million in 2020 from $139.4 million in 2019, primarily as a result of the lower revenues.
On a per share basis this is a decrease of 6.2% at $1.96 in 2020 compared to $2.09 in 2019.
Other comprehensive income or loss includes actuarial gains and losses on the defined benefit post-retirement
obligations which are primarily impacted by the discount rate used, membership assumptions and the plan asset
performance (relative to actuarial expectations).
After tax other comprehensive loss increased to $8.2 million in 2020 from $2.9 million in 2019. The change in
2020 was caused by a 0.50% (2019 – 0.75%) decrease in the discount rate which increased the post-retirement
obligations. In both years, this was partially offset by plan assets performing better than actuarial expectations and
plan experience changes from the inclusion of the most recent valuation for the post employment benefit plans.
Cash Flow
Cash flows from operations are available to the Corporation to fund capital and other expenditures, establish
reserves and pay dividends to and repurchase shares from shareholders.
(In thousands of Canadian dollars)
Three Months Ended
December 31,
2020
$
December 31,
2019
$
Years Ended
December 31,
2020
$
December 31,
2019
$
Operating cash flows before working capital
changes, lease obligation interest and
income tax payments
Working capital changes
Lease obligation interest paid
Income tax paid
Cash flows provided by operations
Cash flows used in financing activities
Cash flows used in investing activities
54,331
8,959
(2,280)
(9,825)
51,185
(19,167)
(3,020)
58,929
7,363
(2,300)
(9,601)
54,391
(14,871)
(1,235)
215,622
4,806
(9,119)
(34,915)
176,394
(90,749)
(16,071)
226,371
(5,955)
(9,198)
(47,202)
164,016
(61,491)
(20,715)
Increase in cash and cash equivalents
28,998
38,285
69,574
81,810
12
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Quarterly analysis
Operating cash flows before changes in working capital, lease obligation interest payments and income tax
payments for the fourth quarter decreased by 8% to $54.3 million in 2020 from $58.9 million for the same period in
2019. Working capital changes in the fourth quarter resulted in a $9.0 million inflow in 2020 compared to a $7.4
million inflow for the same period in 2019, primarily due to change in accounts payable which fluctuates depending
on timing of payments. Lease obligation interest payments are marginally lower as the lease liability is paid down.
Income tax payments in the fourth quarter increased marginally to $9.8 million in 2020 from $9.6 million for the same
period in 2019. Cash flow from operations in the fourth quarter decreased to $51.2 million in 2020 from $54.4
million for the same period in 2019.
Cash used in financing activities for the fourth quarter increased to $19.2 million in 2020 from $14.9 million for
the same period in 2019. During Q4 2020, the Corporation purchased under its NCIB 541,377 shares for
approximately $8.0 million of which $0.3 million remained unpaid at period end due to the timing of settlements.
During Q4 2020, the Corporation also paid $1.0 million for shares repurchased at the end of the previous quarter,
resulting in a total cash outflow of $8.7 million for the share buybacks. For Q4 2019, 311,878 shares were purchased
for approximately $5.9 million of which $1.7 million remained unpaid at period end resulting in a total cash outflow of
$4.2 million for share buybacks. Total cash outlay for dividends paid to shareholders decreased compared to 2019 as
there were fewer shares outstanding.
Cash used in investing activities for the fourth quarter increased to $3.0 million in 2020 from $1.2 million for the
same period in 2019 primarily due to timing of payments for capital expenditures. At the end of the quarter, $1.2
million had been incurred but was not yet invoiced or paid for.
Full year analysis
Operating cash flows before changes in working capital, lease obligation interest payments and income tax
payments decreased by 5% to $215.6 million in 2020 from $226.4 million in 2019. Working capital changes resulted in
a $4.8 million inflow in 2020 compared to a $6.0 million outflow in 2019. Lease obligation interest payments are
marginally lower as the lease liability is paid down. Income tax payments decreased to $34.9 million in 2020 from
$47.2 million in 2019. 2019 tax payments included a catch up payment for the prior tax year which was not required in
2020. Tax instalment payments are usually based on the previous year’s profit, and a final payment for the prior year
taxes payable is made in the first quarter of each year. Cash flow from operations increased to $176.4 million in 2020
from $164.0 million in 2019.
Cash flows used in financing activities increased to $90.7 million in 2020 from $61.5 million in 2019. This increase
is primarily due to normal course issuer bid share purchases. For the year ended December 31, 2020, the Corporation
purchased 3,009,912 shares under its NCIB for approximately $46.7 million of which $0.3 million remained unpaid at
year end due to the timing of settlements. The Corporation also paid $1.7 million for shares repurchased at the end of
the previous year, resulting in a total cash outflow of $48.2 million for share buybacks. For the year ended December
31, 2019, 850,090 shares were purchased for approximately $17.8 million, of which $1.7 million remained unpaid at
year end due to timing of settlements. The Corporation also paid $1.1 million for shares repurchased at the end of the
previous year, resulting in a total cash outflow of $17.2 million for share buybacks.
13
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Cash flows used in investing activities decreased to $16.1 million in 2020 from $20.7 million in 2019 primarily
driven by a decrease in capital expenditures. Westshore expects that $1.2 million of accruals will be paid within the
next 12 months.
Liquidity and Capital Resources
Meeting annual 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 improvements. As a result, the Corporation does not anticipate any liquidity concerns with the
ongoing operations of Westshore.
Westshore has a $40 million operating facility that is primarily used for a letter of credit related to pension funding
and day to day operational liquidity. The facility matures on August 30, 2022 and is secured by a pledge of all the
assets of Westshore. The operating facility bears interest at the 1 month BA rate plus a margin and no repayments
will be required until maturity. There is an outstanding letter of credit of $15.3 million issued under this facility. This
is the only amount drawn on the facility at year end.
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’s cash funding requirements were $4.9 million in 2020 (2019 - $5.7
million), which was comprised of $2.8 million (2019 - $3.6 million) for contributions to the pension plans and $2.1
million (2019 - $2.1 million) for payments for other post-retirement benefits.
The statement of financial position at December 31, 2020 reflects $100.3 million of net obligations for post-
retirement pension benefits and other post-retirement benefits compared to $80.9 million at December 31, 2019. The
change in 2020 was primarily caused by a decrease in the discount rate, somewhat offset by stronger plan asset
performance. This obligation amount will decline in the future if long term interest rates increase and will increase if
such rates fall. Based on current benefit levels, every 0.25% decrease or increase in interest rates results in a $9.5
million increase or decrease respectively in the post-retirement benefits obligations.
Future undiscounted minimum payments under Westshore’s material lease obligations are as follows:
(In thousands of Canadian dollars)
Less than 1 year
Between 1 and 5 years
More than 5 years
December 31,
2020
11,701
46,962
488,395
547,058
$
$
In addition to the above minimum lease payments, Westshore also pays an annual participation rental fee to
Vancouver Fraser Port Authority (“VFPA”) based on the volume of coal shipped in excess of 17.6 million tonnes.
As at December 31, 2020, Westshore has a commitment of $1.2 million with respect to equipment purchases that
are to be delivered and paid for in the next 12 months.
Westshore does not have any material other long-term obligations.
14
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Financial Instruments
Westshore receives some of its revenue in U.S. dollars and is therefore exposed to foreign currency exchange rate
risk. Westshore enters into foreign currency contracts for a portion of its exposed revenue to mitigate that risk. The
value of these financial instruments fluctuates with changes in the USD/CAD dollar exchange rate.
Financial instruments carried at fair value, by the levels in the fair value hierarchy, are as follows:
Fair Value Hierarchy
Level
December 31
2020
December 31
2019
Financial assets:
Derivative instruments:
Foreign exchange contracts
Level 2
$
4 $
50
As at December 31, 2020, Westshore has entered into option collars with notional amounts totaling US$16.5
million to exchange U.S. dollars for Canadian dollars if the exchange rate drops below 1.240 or rises above 1.314.
These foreign exchange contracts have not been designated as hedges.
The following table summarizes the gains (losses) on foreign exchange contracts for the years ended December 31,
2020 and 2019:
Foreign exchange contracts
2020
2019
$
(46)
$
1,068
The fair value asset is recorded in other assets. The unrealized hedging gain (loss) was recorded in foreign exchange
gain (loss) in the consolidated statement of comprehensive income.
The carrying amounts of these contracts are equal to fair value, which is based on valuations obtained from the
counterparties. 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.
15
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Distributions
Distributions by the Corporation over the last two years were as follows:
(In thousands of Canadian dollars except per share amounts)
Total Dividends on Common Shares
Total Dividends per Common Share
2020
$
41,198
0.64
2019
$
42,650
0.64
The dividend is subject to periodic review based on factors including operating performance, current and anticipated
market conditions, funds applied to repurchase shares, other opportunities that may come before Westshore, and other
potential capital upgrade projects. In circumstances where the price of the Corporation’s shares makes share repurchases
advantageous to the Corporation, a portion of excess cash from operations may be used to repurchase common shares.
Following review on March 16, 2021, the directors have determined to increase the quarterly dividend from $0.16
per share to $0.20 per share ($0.80 per share annually), and to pay a special dividend of $0.50 per share to shareholders
of record on March 31, 2021.
Outlook
The cash inflows of the Corporation are entirely dependent on Westshore’s operating results. They are affected by
the volume and mix of coal shipped through the Terminal, the rates charged to customers for the handling of that coal,
and Westshore’s operating and administrative costs.
Westshore has assessed the potential impacts of the COVID-19 pandemic on its operations, which are designated
as an essential service. To date, Westshore has been able to continue its normal operations at the Terminal, and currently
there is no expectation that these conditions will change and impact Westshore. Having only one operating facility has
allowed Westshore a singular focus on adopting significant additional health, safety and cleaning measures.
The pandemic did not cause any significant change in Westshore’s estimated throughput volumes in 2020 and
provided the situation does not worsen, should not cause an impact on estimated volumes in 2021. Westshore relies on
its customers’ throughput, rail service to deliver that throughput and other essential service providers. Restrictions which
are imposed on any of these by reason of the pandemic could have a negative impact on Westshore. Westshore also
recognizes that broader impacts of the pandemic on the global economy could negatively impact customers, and in turn
could negatively affect Westshore.
We anticipate total throughput volume for all customers of approximately 25 million tonnes in 2021.
At least for the next few years, Westshore anticipates throughput volumes to be reduced from recent years, primarily
due the expiry of our prior contract with Teck.
Westshore is well positioned to handle other bulk commodities in addition to coal. We continue to attract the interest
of producers of other products, and we evaluate the feasibility of these opportunities as they arise.
16
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Related Party Transactions
The Manager provides management services to Westshore pursuant to a management agreement (the “Management
Agreement”). Westshore pays an annual management fee to the Manager and an incentive fee based on a percentage
of annual profit above $42 million, subject to a cap of $7.5 million per annum. The annual base management fee for
2020 was $1,688,000 (2019 - $1,639,000) which will escalate at 3% annually. The incentive fee for the year ended
December, 31, 2020 was $5,787,000 and was paid subsequent to December 31, 2020 (2019 - $6,759,000 paid in 2020).
The Manager also provides administration services to the Corporation pursuant to an administration agreement.
The Corporation pays an annual administration fee in monthly installments. The fee paid to the Manager for 2020 was
$563,000 (2019 - $546,000), which will increase by 3% per annum.
Changes in Accounting Policies
The Corporation’s accounting policies are found in note 3 of the Corporation’s financial statements. There were no
significant changes in accounting policies in 2020.
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.
Property, plant and equipment: Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and
remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease
incentives received. Depreciation is calculated using the straight line method over the estimated useful production life
of the assets. The estimated useful lives of property, plant and equipment range from 3 to 35 years and are reviewed
annually. A change in the estimated useful lives of property, plant and equipment could result in either a higher or
lower depreciation charge to profit for the period.
Asset Retirement Obligations
Westshore is required to recognize the fair value of an estimated asset retirement obligation when a legal or
constructive obligation is present, a reliable estimate of the obligation can be made and it is probable that Westshore
will be required to settle the obligation. 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 remote. Any change in the estimate of the
probability of incurring such costs could have a material impact on the asset retirement obligation.
17
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
Lease Obligation
The lease obligation is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using Westshore’s incremental borrowing rate. The lease obligation is measured at
amortised cost using the effective interest rate method. It is remeasured when there is a change in future lease
payments arising from a change in an index or rate, if there is a change in Westshore’s estimate of the amount
expected to be payable under a residual value guarantee or if Westshore changes its assessment of whether it will
exercise a purchase, extension or termination option. Any change in the incremental borrowing rate of Westshore
could have a material impact on the lease obligation.
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, the likelihood of realization of deferred tax assets,
and the classification of assets for tax purposes.
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 caused to be evaluated under their
supervision, the effectiveness of the Corporation’s internal controls over financial reporting as of December 31, 2020.
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
18
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
financial reporting during the year ended December 31, 2020 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 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.
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 and the
Corporation as of December 31, 2020 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 and Westshore, including the Corporation’s annual information
form, is available at www.sedar.com.
19
Westshore Terminals Investment Corporation
Management’s Discussion & Analysis of
Financial Condition and Results of Operations
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
Professional 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.
(Signed) “William W. Stinson”
William W. Stinson
Director
(Signed) “M. Dallas H. Ross”
M. Dallas H. Ross
Director
20
WESTSHORE TERMINALS INVESTMENT CORPORATION
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
December 31,
2020
December 31,
2019
Assets
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses
Income taxes recoverable
Property, plant and equipment:
At cost
Accumulated depreciation
Right-of-use assets
Goodwill
Other assets
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities
Income tax payable
Deferred revenue
Lease obligation current portion
Dividends payable to shareholders
Deferred revenue
Deferred income taxes
Employee future benefits
Lease obligation
Shareholders' equity:
Share capital
Deficit
$
$
$
$
$
$
201,432
11,644
18,212
2,552
-
233,840
658,032
(280,099)
377,933
274,082
365,541
4
1,251,400
44,708
5,964
13,040
2,664
10,142
76,518
20,917
29,802
100,263
283,323
510,823
1,456,354
(715,777)
740,577
131,858
20,252
16,122
2,319
4,330
174,881
645,987
(260,008)
385,979
280,040
365,541
866
1,207,307
56,244
-
7,126
2,582
10,637
76,589
22,940
31,045
80,910
285,987
497,471
1,525,522
(815,686)
709,836
5
14
13
14
9
8
11
14
9
Commitments and contingencies (note 15)
See accompanying notes to unaudited condensed consolidated financial statements.
$
1,251,400
$
1,207,307
Approved on behalf of the Board:
(Signed) "William W. Stinson"
William W. Stinson
Director
(Signed) "M. Dallas H. Ross"
M. Dallas H. Ross
Director
21
WESTSHORE TERMINALS INVESTMENT CORPORATION
Consolidated Statements of Comprehensive Income
(Expressed in thousands of Canadian dollars)
Years ended December 31, 2020 and 2019
Note
2020
2019
Revenue:
Coal loading
Other
Expenses:
Operating
Administrative
Other:
Foreign exchange gain (loss)
Gain (loss) on disposal of property, plant and
equipment
Net finance costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive loss:
Items that will not be recycled to net income:
Defined benefit plan actuarial losses
Income tax recovery on other
comprehensive loss
Other comprehensive loss for the
year, net of income tax
Total comprehensive income for the year
Profit per share:
Basic and diluted earnings per share
Weighted average number of shares outstanding
See accompanying notes to consolidated financial statements.
22
$
$
$
353,568
14,842
368,410
167,839
16,370
184,209
(229)
25
(10,070)
173,927
47,011
126,916
(11,278)
3,045
(8,233)
118,683
1.96
64,673,615
$
$
$
387,536
7,886
395,422
176,709
17,030
193,739
867
(152)
(11,400)
190,998
51,613
139,385
(4,000)
1,080
(2,920)
136,465
2.09
66,724,299
4
6
7
11
7
10
WESTSHORE TERMINALS INVESTMENT CORPORATION
Consolidated Statements of Changes in Equity
(Expressed in thousands of Canadian dollars)
Years ended December 31, 2020 and 2019
Balance at January 1, 2019
$
1,545,057 $
(911,256) $
633,801
Share capital
Deficit
Total
Profit for the year
Other comprehensive loss:
Defined benefit plan actuarial losses, net of tax
Total comprehensive income for the year
Distributions to shareholders of the Corporation:
Dividends declared to shareholders
-
-
-
-
Adjustments due to share repurchases
(19,535)
139,385
139,385
(2,920)
(2,920)
136,465
136,465
(42,650)
1,755
(42,650)
(17,780)
Balance at December 31, 2019
$
1,525,522
$
(815,686)
$
709,836
Balance as at January 1, 2020
$
1,525,522 $
(815,686) $
709,836
Share capital
Deficit
Total
Profit for the year
Other comprehensive loss:
Defined benefit plan actuarial losses, net of tax
Total comprehensive income for the year
Distributions to shareholders of the Corporation:
Dividends declared to shareholders
-
-
-
-
Adjustments due to share repurchases
(69,168)
126,916
126,916
(8,233)
(8,233)
118,683
118,683
(41,198)
22,424
(41,198)
(46,744)
Balance at December 31, 2020
$
1,456,354
$
(715,777)
$
740,577
See accompanying notes to consolidated financial statements.
23
WESTSHORE TERMINALS INVESTMENT CORPORATION
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
Years ended December 31, 2020 and 2019
Cash provided by (used in):
Operations:
Profit for the year
Adjustments for:
Foreign exchange contracts
Depreciation
Employee future benefits liability
Net finance costs
Income tax expense
Loss (gain) on disposal of property, plant and equipment
Changes in non-cash operating working capital and other:
Accounts receivable
Inventories
Prepaid expenses
Accounts payable and accrued liabilities
Deferred revenue
Lease obligation interest paid
Income taxes paid
Financing:
Interest received
Dividends paid to shareholders
Share purchases
Lease obligation
Investments:
Property, plant and equipment, net
Other assets
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of the year
Cash and cash equivalents, end of the year
Supplemental information:
Non-cash transactions:
Shares purchased but not settled at year end
Capital expenditures unpaid at year end
See accompanying notes to consolidated financial statements.
$
$
24
2020
2019
$
126,916
$
139,385
46
26,179
5,425
10,070
47,011
(25)
215,622
8,608
(2,090)
(233)
(5,369)
3,891
4,806
(9,119)
(34,915)
176,394
1,699
(41,693)
(48,173)
(2,582)
(90,749)
(16,887)
816
(16,071)
69,574
131,858
201,432
(259)
1,205
$
$
(1,068)
24,868
21
11,400
51,613
152
226,371
(4,822)
(1,762)
(138)
(859)
1,626
(5,955)
(9,198)
(47,202)
164,016
1,020
(42,780)
(17,228)
(2,503)
(61,491)
(21,532)
817
(20,715)
81,810
50,048
131,858
(1,688)
5,942
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
1. Reporting entity:
Westshore Terminals Investment Corporation was incorporated under the Business Corporation Act (British
Columbia) on September 28, 2010 and is domiciled in Canada. The registered and head office is located at Suite
1800, 1067 West Cordova Street, Vancouver, British Columbia, V6C 1C7. These consolidated financial statements
as at and for the year ended December 31, 2020 comprises Westshore Terminals Investment Corporation and its
subsidiaries (together referred to as the “Corporation”). The Corporation owns all of the limited partnership units
of Westshore Terminals Limited Partnership (“Westshore”), a partnership established under the laws of British
Columbia.
The Corporation derives its cash inflows from its investment in Westshore by way of distributions on
Westshore’s limited partnership units. Westshore operates a coal storage and loading terminal at Roberts Bank,
British Columbia (the “Terminal”). Substantially all of Westshore’s operating revenues are derived from rates
charged for loading coal onto seagoing vessels.
2. Basis of preparation:
(a) Statement of compliance:
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS).
The consolidated financial statements were authorized for issue by the Board of Directors on March 16,
2021.
(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:
• non derivative financial instruments classified as fair value through profit or loss are measured at fair
value;
• derivative financial instruments are measured at fair value;
• the defined benefit obligation is recognized as the present value of the defined benefit obligation, less plan
assets at fair value; and
•
lease obligations are measured at amortised cost using the effective interest rate method.
(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 IFRS 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.
25
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
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.
Assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment
relate to the determination of net recoverable value of assets, useful lives of plant and equipment, asset
retirement obligations, measurement of lease obligations, measurement of defined benefit obligations,
derivative instruments and deferred income tax amounts.
3. Significant accounting policies:
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements.
(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 profit or loss.
(c) Financial instruments:
Financial instruments comprise cash and cash equivalents, accounts receivable, derivative instruments and
accounts payable and accrued liabilities. The Corporation uses derivative financial instruments in the normal
course of its operations as a means to manage its foreign exchange risk. The Corporation’s policy is not to
utilize derivative financial instruments for trading or speculative purposes. The Corporation’s derivative
financial instruments are not designated as hedges for accounting purposes.
26
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
The Corporation’s financial instruments are classified and measured as follows:
Financial Assets
Cash and cash equivalents
Accounts receivable
Derivative instruments
Financial Liabilities
Accounts payable and accrued liabilities
Derivative instruments
Classification and measurement of financial assets
Amortized cost
Amortized cost
FVTPL
Amortized cost
FVTPL
Financial assets are classified as: measured at amortized cost; fair value through other comprehensive income
(“FVOCI”); or fair value through profit and loss (“FVTPL”) based on the business model in which a
financial asset is managed and its contractual cash flow characteristics and when certain conditions are met:
• Amortized cost – measured at amortized cost using the effective interest rate method. Where applicable,
amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and
impairment are recognized in net income.
• FVOCI – measured at FVOCI if not designated as FVTPL. Interest income, foreign exchange gains and
losses and impairment are recognized in net income. Other net gains and losses are recognized in other
comprehensive income (“OCI”). On derecognition, gains and losses accumulated in OCI are reclassified
to net income.
• FVTPL – measured at FVTPL if not classified as amortized cost or FVOCI with net gains and losses,
including any interest or dividend income, recognized in net income.
Equity investments are required to be classified as measured at fair value. However, on initial recognition of
an equity investment that is not held-for-trading, the Corporation may irrevocably elect to present subsequent
changes in the investments fair value in OCI. This election is made on an investment by investment basis.
The Corporation does not have any equity investments.
Classification and measurement of financial liabilities
Financial liabilities are classified as either measured at amortized cost or FVTPL. A financial liability is
classified as FVTPL if it is held-for-trading, a derivative or it is designated as such on initial recognition.
Financial liabilities at FVTPL are measured at fair value with net gains and losses, including interest expense,
recognized in net income. Other financial liabilities are subsequently measured at amortized cost using the
effective interest rate method. Interest expense and foreign exchange gains and losses are recognized in net
income. Any gains or losses on derecognition are also recognized in net income.
(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.
27
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
Cost includes expenditures that are 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.
Borrowing costs attributable to the construction of a qualifying asset are included in the cost of the asset.
Other borrowing costs are recognized as an expense.
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 lives 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.
(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.
28
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
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.
The Corporation applies the simplified approach in determining expected credit losses (“ECLs”), which
requires a probability-weighted estimate of expected lifetime credit losses to be recognized upon initial
recognition of financial assets measured at amortized cost, contract assets and debt investments at FVOCI.
Credit losses are measured as the present value of cash shortfalls from all possible default events, discounted
at the effective interest rate of the financial asset. Loss allowances for financial assets at amortized cost are
deducted from the gross carrying amount of the assets.
(f) Goodwill:
Goodwill is recognized on a business combination at the acquisition date and is initially measured at the fair
value of the consideration transferred less the net recognized amount (generally fair value) of the identifiable
assets acquired and liabilities assumed.
Goodwill is subsequently 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) Leases
At inception of a contract, the Corporation assesses whether a contract is, or contains, a lease. A contract is,
or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration. To assess whether a contract conveys the right to control the use of an
identified asset, the Corporation uses the definition of a lease in IFRS 16.
29
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
As a lessee:
At commencement or on modification of a contract that contains a lease component, the Corporation
allocates the consideration in the contract to each lease component on the basis of its relative stand-alone
prices. However, for the leases of property the Corporation has elected not to separate non-lease components
and account for the lease and non-lease components as a single lease component.
The Corporation recognizes a right-of-use asset and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted
for any lease payments made at or before the commencement date, plus any initial direct costs incurred and
an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site
on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the
Corporation by the end of the lease term or the cost of the right-of-use asset reflects that the Corporation will
exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the
underlying asset, which is determined on the same basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Corporation’s incremental borrowing rate. Generally, the Corporation uses its incremental
borrowing rate as the discount rate.
The Corporation determines its incremental borrowing rate by obtaining interest rates from various external
financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
-
-
-
-
fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at
the commencement date;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Corporation is reasonably certain to exercise, lease
payments in an optional renewal period if the Corporation is reasonably certain to exercise an extension
option, and penalties for early termination of a lease unless the Corporation is reasonably certain not to
terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if there is a change in the
Corporation’s estimate of the amount expected to be payable under a residual value guarantee, if the
Corporation changes its assessment of whether it will exercise a purchase, extension or termination option or
if there is a revised in-substance fixed lease payment.
30
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has
been reduced to zero.
The Corporation presents right-of-use assets that do not meet the definition of investment property in ‘right-
of-use asset’ and lease liabilities in ‘lease obligation’ in the statement of financial position.
Short-term leases and leases of low-value assets
The Corporation has elected not to recognize right-of-use assets and lease liabilities for leases of low-value
assets and short-term leases, including IT equipment and vehicles. The Corporation recognizes the lease
payments associated with these leases as an expense on a straight-line basis over the lease term.
(h) 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.
(i) 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 used to determine the present value of the obligation is the yield at the
reporting date on high quality corporate 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.
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 the date of improvement.
The Corporation recognizes all actuarial gains and losses arising from defined benefit plans immediately in
other comprehensive income and expenses related to defined benefit plans in profit or loss.
31
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
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 high quality corporate 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.
(j) Revenue:
Coal loading revenue is recognized when a customer’s coal is loaded onto a ship. Coal loading revenue is
recorded based on contract specific loading rates. Other revenue includes all revenue other than coal loading
revenue and principally relates to fees earned under take or pay contracts where the coal has not been
delivered. Other revenue also includes revenue earned for securing future volumes which is initially deferred
and recognized over the term of the contract and wharfage fees which are recorded based upon the period of
time a ship is at the terminal.
(k) 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.
Decommissioning liabilities
The Corporation’s terminal site is leased from the Vancouver Fraser Port Authority (the “VFPA”). The
current lease agreement became effective as of January 1, 2015 and runs until December 31, 2026. It may be
extended at Westshore’s option for further periods up to 40 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 remote.
(l) 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.
32
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
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.
4. Expenses:
Recorded in operating and administrative expenses on the consolidated statements of comprehensive income
was:
Salaries, wages and benefits
Depreciation
Other
2020
2019
$
93,509
26,179
64,521
$ 184,209
$
96,789
24,868
72,082
$ 193,739
33
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
5. Property, plant and equipment:
Buildings and land
improvements
Machinery and
equipment
Construction in
progress
Cost:
Balance at January 1, 2019
Additions
Transfers
Disposals
Balance at December 31, 2019
Balance at January 1, 2020
Additions
Transfers
Disposals
Balance at December 31, 2020
Accumulated depreciation:
Balance at January 1, 2019
Depreciation
Disposals
Balance at December 31, 2019
Balance at January 1, 2020
Depreciation
Disposals
Balance at December 31, 2020
Carrying amounts:
At December 31, 2019
At December 31, 2020
$
$
$
$
$
$
$
$
$
$
458,439
-
83,280
(731)
540,988
540,988
-
3,599
(130)
544,457
206,681
17,141
(530)
223,292
223,292
18,384
(130)
241,546
317,696
302,911
$
$
$
$
$
96,202
11,461
(85,157)
-
22,506
22,506
12,175
(3,873)
-
30,808
-
-
-
-
-
-
-
-
22,506
30,808
$
$
$
$
$
80,616
-
1,878
-
82,494
82,494
-
274
-
82,768
34,947
1,769
-
36,716
36,716
1,837
-
38,553
45,778
44,215
34
Total
635,257
11,461
-
(731)
645,987
645,987
12,175
-
(130)
658,032
241,628
18,910
(530)
260,008
260,008
20,221
(130)
280,099
385,979
377,933
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
6. Finance costs:
Interest income, net
Employee benefit interest expense, net
Capital lease interest
2020
2019
$
$
(1,699)
2,650
9,119
(1,020)
3,222
9,198
Net finance costs
$
10,070
$
11,400
7. Income tax expense:
Tax expense recognized in profit
Current income tax expense
Deferred tax expense
Tax recovery recognized in other comprehensive income
Defined benefit plans
Reconciliation of effective tax rate:
Profit before income tax
Statutory rate
Expected income tax expense
Permanent differences
Other
2020
2019
$
45,209
1,802
47,011
$
39,006
12,607
51,613
$
(3,045)
$
(1,080)
2020
2019
$ 173,927
27.00%
$ 190,998
27.00%
46,960
17
34
51,570
43
-
Actual income tax expense
$
47,011
$
51,613
35
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
8. Deferred tax assets and liabilities:
Deferred tax assets:
Non-pension defined benefits liability
Post-retirement benefits
Financing fees
Lease obligation
Total assets
Deferred tax liabilities:
Property, plant and equipment
Foreign exchange contracts
Right-of-use assets
Total liabilities
December 31,
2020
December 31,
2019
$
25,656
1,415
11
77,216
104,298
(60,097)
(1)
(74,002)
(134,100)
$
21,619
227
15
77,914
99,775
(55,196)
(13)
(75,611)
(130,820)
Net deferred income tax liabilities
$
(29,802)
$
(31,045)
9. Share capital:
Authorized:
Unlimited number of common shares, no par value
Issued:
Common shares
2020
2019
63,391,535 (2019 - 66,473,855) issued and outstanding
common shares
$
1,456,354
$
1,525,522
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.
During the year ended December 31, 2020, the Corporation repurchased 3,009,912 (2019 - 850,090) shares for
$46,744,000 (2019 - $17,780,000), under the Corporation’s normal course issuer bid. Of these shares, 16,700 shares
valued at $259,000 settled in 2021.
Subsequent to year end, the Corporation repurchased 6,000 shares for a total cost of $93,000. The shares have been
cancelled and will result in a decrease to deficit and share capital.
36
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
The Corporation has declared the following dividends in 2020 (2019 - $42,650,000).
Record Date
March 31
June 30
September 30
December 31
10. Profit per share:
Earnings per share:
Payment Date
April 15
July 15
October 15
January 15
$
Per Share
0.16
0.16
0.16
0.16
Total
10,441
10,378
10,237
10,142
41,198
$
$
The calculation of basic profit per share for the year ended December 31, 2020 was based on profit attributable to
shareholders and a weighted average number of common shares outstanding.
Profit for the year
$
126,916
$
139,385
Weighted average number of Common shares outstanding
64,673,615
66,724,299
2020
2019
Basic and diluted earnings per share
Shares repurchased
Total cost of shares repurchased
The Corporation has no dilutive securities.
$
$
1.96
$
2.09
3,009,912
46,744
$
850,090
17,780
37
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
11. Employee future benefits:
The Corporation makes contributions to two non-contributory defined benefit plans and one non-contributory
defined contribution plan 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.
Present value of unfunded obligations
Present value of funded obligations
Total present value of obligations
Fair value of plan assets
December 31,
2020
December 31,
2019
$
95,022
158,910
253,932
(153,669)
$
80,070
146,954
227,024
(146,114)
Recognized liability for defined benefit obligations
$
100,263
$
80,910
Plan assets are comprised of the following investments:
Equity securities
Fixed income securities
Alternatives
Cash and cash equivalents
$
2020
75,591
39,786
37,020
1,272
$
2019
70,266
36,090
36,558
3,200
$
153,669
$
146,114
38
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
Asset and Liability Movements:
Movement in the present value of the
defined benefit obligations
Defined benefit obligation 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)
Pension obligations
December 31,
2020
2019
Other post-retirement
benefits
December 31,
2020
2019
$ 146,954
(5,925)
$ 134,228
$
(5,690)
80,070
(2,069)
$
71,303
(2,146)
9,723
8,158
7,838
10,578
7,375
9,646
5,792
5,121
Defined benefit obligations
$ 158,910
$ 146,954
$
95,022
$
80,070
Movement in the fair value of the defined
benefit plan assets
Pension assets
December 31,
2020
2019
Other post-retirement
benefits
December 31,
2020
2019
Fair value of plan assets at January 1
Contributions paid into the plan
Benefits paid by the plan
Expected return on plan assets (see below)
Non-investment expense (see below)
Actuarial gains in other
$ 146,114
2,840
(5,925)
4,334
(220)
$
$ 131,921
3,560
(5,690)
4,903
(220)
-
2,069
(2,069)
-
-
comprehensive income (see below)
6,526
11,640
Fair value of plan assets
$ 153,669
$ 146,114
$
-
-
$
$
-
2,146
(2,146)
-
-
-
-
39
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
Profit and Loss:
Profit and loss includes the following amounts in respect of post-retirement obligations:
Pension obligations expense recognized in profit and loss
2020
2019
Service costs:
Current service costs
Past service costs
Non-investment expenses
Net interest costs
Interest cost
Expected return on plan assets
$
1,934
3,337
220
5,491
$
1,732
1,003
220
2,955
4,452
(4,334)
118
5,105
(4,903)
202
$
5,609
$
3,157
Other post-retirement benefits expense recognized in profit and loss
2020
2019
Current service costs
Past service costs
Interest costs
$
4,093
750
2,532
$
2,770
-
3,022
$
7,375
$
5,792
The current and past service costs are recognized in operating expenses and net interest costs are included in net
finance costs.
Actuarial gains (losses) recognized in other comprehensive income
2020
2019
Cumulative amount at beginning of year
Actuarial gain - plan experience
Actuarial loss - financial assumption changes
Actuarial gain - maximum balance sheet item
Return on plan assets greater than expected return
Cumulative amount at December 31
$
$
1,611
1,322
(19,126)
-
6,526
5,611
9,519
(25,218)
59
11,640
$
(9,667) $
1,611
40
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
Funding and Assumptions:
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.
During the year ended December 31, 2020, the Corporation made total contributions of $4,909,000 (2019 -
$5,706,000) to all of its pension and other benefit plans.
The financial information with respect to the defined benefit pension plan obligations is based on the following
funding valuations:
Union Pension plan
Salaried Retirement plan
Most recent valuation
date
Date of next required
valuation
January 1, 2020
January 1, 2019
January 1, 2021
January 1, 2022
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):
2020
2019
Pension
benefits
Other
benefits
Pension
benefits
Other
benefits
Benefit obligations:
Discount rate at December 31
2.50%
2.50%
3.00%
3.00%
Benefit costs:
Discount rate at January 1
Expected long-term rate of return on plan assets
3.00%
3.00%
3.00%
-
3.75%
3.75%
3.75%
-
For measurement purposes, a 7.0% per annum increase in the per capita cost of covered extended health care
benefits was assumed for 2019, grading down by 0.25% per annum to 4.50% in 2029. The annual rate of increase
in the per capita cost of dental benefits is 4.00%.
Sensitivity Analysis:
Assumed discount rates and medical cost trend rates have a significant effect on the accrued benefit obligation. A
one percentage point change in these assumptions would have the following effects on the accrued benefit
obligation for 2020:
41
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
Pension benefit plans
Discount rate
Other post-retirement benefit plans
Discount rate
Initial medical cost trend rate
12. Loans and borrowings:
1% decrease
1% increase
$
22,044
$
(22,044)
20,678
(15,257)
(20,678)
15,257
The Corporation has a $40 million operating facility that is primarily used for a letter of credit relating to pension
funding and day to day operations. The facility matures on August 30, 2022 and is secured by a pledge of all of
the assets of the Corporation. The operating facility bears interest at the 1 month BA rate plus a margin and no
repayments will be required until maturity. There is an outstanding letter of credit of $15.3 million drawn on this
facility (see Note 15).
Under its credit facility, the Corporation is required to comply with certain financial covenants. At December 31,
2020, the Corporation was in compliance with these financial covenants.
For more information about the Corporation’s exposure to interest rate, foreign currency and liquidity risk, please
see note 17.
13. Financial instruments:
The carrying amounts of financial assets and liabilities reported in the consolidated statement of financial position
approximate their fair values.
IFRS 13, Fair Value Measurement, requires classification of financial instruments within a hierarchy that prioritizes
the inputs to fair value measurement. The three levels of the fair value hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability, directly or indirectly;
Level 3 – Inputs that are not based on observable market data.
Financial instruments carried at fair value, by the levels in the fair value hierarchy, are as follows:
Financial assets:
Derivative instruments:
Foreign exchange contracts
Fair Value Hierarchy
Level
December 31
2020
December 31
2019
Level 2
$
4
$
50
42
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
As at December 31, 2020, Westshore has entered into option collars with notional amounts totaling US$16.5 million
to exchange U.S. dollars for Canadian dollars if the strike price drops below $1.240 or above $1.314. These foreign
exchange contracts have not been designated as hedges.
The following table summarizes the gains (losses) on foreign exchange contracts for the years ended December 31,
2020 and 2019:
Foreign exchange contracts
2020
2019
$
(46)
$
1,068
The fair value asset is recorded in other assets. The unrealized hedging gain (loss) was recorded in foreign exchange
gain (loss) in the consolidated statement of comprehensive income.
The carrying amounts of these contracts are equal to fair value, which is based on valuations obtained from the
counterparties. 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. Leases:
The Corporation is committed to low value, short term leases related to the rental of vehicles and equipment.
The Corporation has a land lease with the Vancouver Fraser Port Authority (“VFPA”) which has been identified
as a material lease contract. The term of the lease is until December 31, 2026 with the Corporation having further
options to extend the term to December 31, 2066.
Charges payable by the Corporation under the lease comprise an annual base land and waterlot rental fee of
$5,207,000 (2019 - $5,207,000) and an annual participation rental fee based on the volume of coal shipped. A
minimum participation rental fee of $6,494,000 (2019 - $6,494,000) is charged based on a minimum annual tonnage
(MAT) of 17.6 million tonnes. A higher participation rental fee per tonne is charged on tonnage in excess of the
MAT. In 2020, the Corporation paid $9,494,000 (2019 - $10,097,000) in relation to the higher participation rental
fee.
Additional information about this lease is presented below. No other material lease contracts were identified.
43
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
Right-of-use asset
2019
Balance at January 1
Depreciation charge for the year
Balance at December 31
2020
Balance at January 1
Depreciation charge for the year
Balance at December 31
$
$
285,998
(5,958)
280,040
280,040
(5,958)
274,082
There were no additions to right-of-use assets during 2020 (2019 – nil).
Lease obligation
2020
2019
Maturity analysis – contractual undiscounted cash flows
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities at year end
$
$
$
11,701
46,962
488,395
547,058 $
11,701
46,856
500,158
558,715
Amounts recognised in profit or loss
Interest on lease liabilities
Variable lease payments not included in the measurement of lease
liabilities
Expenses relating to short-term and low value asset leases
2020
$
9,119 $
9,494
178
2019
9,198
10,097
199
Amounts recognised in the statement of cash flows
2020
2019
Total cash outflow for leases
$
11,879 $
11,900
44
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
15. Commitments and Contingencies:
The Corporation has provided a letter of credit of $15,269,000 (December 31, 2019: $15,269,000) related to pension
funding.
The Corporation has commitments of $1,205,000 with respect to equipment purchases that are to be delivered and
paid for in the next 12 months.
The Corporation also pays an annual participation rental fee based on the volume of coal shipped in excess of 17.6
million tonnes (Note 14).
Although the Corporation does not expect that COVID-19 will significantly impact the Company’s operations,
assets or liabilities, there is no certainty or guarantee that future events related to COVID-19 won’t impact the
Corporation and such impacts could potentially be material.
16. Major Customers:
The Corporation had certain customers whose throughput individually represented 10% or more of the
Corporation’s total throughput.
For the year ended December 31, 2020, two customers accounted for 82% (2019 - 81%) and three customers
accounted for 90% (2019 - 92%) of throughput.
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.
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. The Corporation does not have any collateral or security for its
receivables. The Corporation monitors the financial health of its customers and regularly reviews its accounts
receivable for impairment. As at December 31, 2020 and 2019, 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:
45
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
Cash and cash equivalents
Accounts receivable
(b) Liquidity risk:
2020
201,432
11,644
213,076
$
$
2019
131,858
20,252
152,110
$
$
Liquidity risk is the risk that the Corporation will not be able to meet its obligations as they become due. The
Corporation continually monitors its financial position to ensure that it has sufficient liquidity to discharge its
obligations when due.
The current financial liabilities of the Corporation, which include accounts payable and accrued liabilities,
income tax payable and dividends payable to shareholders, have a contractual maturity of less than 1 year.
The Corporation also maintains a $40 million operating facility that is primarily used for pension funding. The
Corporation has an outstanding letter of credit for $15,269,000 against this facility.
(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, 2020, the
Corporation held US$11.4 million (2019 – US$9.8 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 $114,000 for the year.
The accounts receivable due from U.S. customers are denominated in U.S. dollars. The U.S. dollar
denominated accounts receivable outstanding as at December 31, 2020 was $781,000 (2019 - $5,506,000).
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. See note
13 for more information.
(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.
The Corporation also has interest rate risk on the revolving credit facility. The revolving credit facility
carries an interest rate that floats with market rates.
46
WESTSHORE TERMINALS INVESTMENT CORPORATION
Notes to the Consolidated Financial Statements
(Tabular amounts expressed in thousands of Canadian dollars, except share amounts)
Years ended December 31, 2020 and 2019
18. Capital management:
The capital of the Corporation consists solely of shareholders’ equity which includes issued share capital and 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’s
quarterly dividend is subject to periodic review based on factors including funds applied to repurchase shares, other
opportunities that may come before Westshore, other potential capital upgrade projects, operating performance
and current market conditions.
19. Related party transactions:
Administration agreement
Westar Management Ltd.
Management agreement:
Westar Management Ltd. - base fee
Management agreement:
Westar Management Ltd. - Incentive fee
Insurance premiums:
Affiliate of Westar Management Ltd.
Vehicle leases:
Affiliate of Westar Management Ltd.
Director fees:
Director fees
2020
2019
$
563
$
546
1,688
1,639
5,787
6,759
1,183
178
643
992
199
653
47
Corporate Information
Westshore Terminals Investment Corporation
Stock Exchange Listing
Toronto Stock Exchange
Trading Symbol
WTE
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:
Facsimile:
604.688.6764
604.687.2601
Directors
William W. Stinson
Corporate Director
M. Dallas H. Ross
Partner, Kinetic Capital Partners
H. Clark Hollands
Private Investor
Steve Akazawa
Corporate Director
Brian A. Canfield
Corporate Director
Nick Desmarais
Managing Director Legal Services, The Jim Pattison
Group
Glen Clark
President, The Jim Pattison Group
Dianne Watts
Corporate Director
Officers
William W. Stinson
Chairman, Chief Executive Officer &President
M. Dallas H. Ross
Chief Financial Officer
Nick Desmarais
Secretary & Vice President of Corporate Development
48
Corporate Information
Westshore Terminals Ltd.
William W. Stinson
Corporate Director
M. Dallas H. Ross
Partner, Kinetic Capital Partners
H. Clark Hollands
Private Investor
Steve Akazawa
Corporate Director
Brian A. Canfield
Corporate Director
Nick Desmarais
Managing Director Legal Services, The Jim Pattison
Group
Glen Clark
President, The Jim Pattison Group
Dianne Watts
Corporate Director
49