REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large Accelerated Filer |
☐ |
Accelerated Filer |
☐ | |||||
☒ |
Emerging growth company |
U.S. GAAP ☐ |
Other ☐ | |||||||
by the International Accounting Standards Board |
☒ |
Auditor Firm ID: |
Auditor Name: |
Auditor Location: |
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F-1 |
• | future financial performance; |
• | future cash flow and liquidity; |
• | future capital investment; |
• | our ability to operate our business, remain in compliance with debt covenants and make payments on our indebtedness, with a substantial amount of indebtedness; |
• | significant domestic and international competition; |
• | macroeconomic pressures in the markets in which we operate; |
• | increased use of competitive products; |
• | a protracted fall in steel prices resulting in impairment of assets; |
• | excess capacity, resulting in part from expanded production in China and other developing economies; |
• | low-priced steel imports and decreased trade regulation, tariffs and other trade barriers; |
• | protracted declines in steel consumption caused by poor economic conditions in North America or by the deterioration of the financial position of our key customers; |
• | increases in annual funding obligations resulting from our under-funded pension plans; |
• | supply and cost of raw materials and energy; |
• | impact of a downgrade in credit rating and its impact on access to sources of liquidity; |
• | currency fluctuations, including an increase in the value of the Canadian dollar against the U.S. dollar; |
• | environmental compliance and remediation; |
• | unexpected equipment failures and other business interruptions; |
• | a protracted global recession or depression; |
• | changes in or interpretation of royalty, tax, environmental, greenhouse gas, carbon, accounting and other laws or regulations, including potential environmental liabilities that are not covered by an effective indemnity or insurance; |
• | risks associated with existing and potential lawsuits and regulatory actions made against us; |
• | impact of disputes arising with our partners; |
• | the ability of Algoma to implement and realize its business plans, including Algoma’s ability to complete its transition to electric arc furnace (“ EAF |
• | Algoma’s ability to operate the EAF; |
• | the risks that higher cost of internally generated power and market pricing for electricity sourced from Algoma’s current grid in Northern Ontario could have an adverse impact on our production and financial performance; |
• | access to an adequate supply of the various grades of steel scrap at competitive prices; |
• | the risks associated with the steel industry generally; |
• | economic, social and political conditions in North America and certain international markets; |
• | changes in general economic conditions, including as a result of the COVID-19 pandemic; or the conflict between Russia and Ukraine that commenced in February 2022; |
• | risks associated with inflation rates; |
• | risks inherent in the Corporation’s corporate guidance; |
• | failure to achieve cost and efficiency initiatives; |
• | risks inherent in marketing operations; |
• | risks associated with technology, including electronic, cyber and physical security breaches; |
• | projected increases in capacity liquid steel as a result of the transformation to EAF steelmaking; |
• | projected cost savings associated with the transformation to EAF steelmaking; |
• | projected reduction in carbon dioxide (“CO2”) emissions associated with the transformation to EAF steelmaking, including with respect to the impact of such reductions on the Green Steel Funding and carbon taxes payable; |
• | construction projects are subject to risks, including delays and cost overruns; |
• | our ability to enter into contracts to source scrap and the availability of scrap; |
• | the availability of alternative metallic supply; |
• | the Company’s to launch and complete the SIB; |
• | the Company’s expectation to declare and pay a quarterly dividend; and |
• | business interruption or unexpected technical difficulties, including impact of weather; counterparty and credit risk; labor interruptions and difficulties |
ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. |
KEY INFORMATION |
• | Whether or not they make a purchase; |
• | Their choice of brand, model or price-point; and |
• | How frequently they upgrade or replace their products containing steel, such as appliances and automobiles. |
• | Unexpected long delivery times for, or shortages of, key equipment, parts and materials; |
• | Shortages of skilled labor and other shipyard personnel necessary to perform the work; |
• | Unforeseen increases in the cost of equipment, labor and raw materials, particularly steel; |
• | Unforeseen design and engineering problems; |
• | Unanticipated actual or purported change orders; |
• | Work stoppages; |
• | Latent damages or deterioration to equipment and machinery in excess of engineering estimates and assumptions; |
• | Failure or delay of third-party service providers and labor disputes; |
• | Disputes with fabricators and other suppliers; |
• | Delays and unexpected costs of incorporating parts and materials needed for the completion of projects; |
• | Financial or other difficulties of suppliers; |
• | Adverse weather conditions; and |
• | Inability to obtain required permits or approvals. |
• | our existing shareholders’ proportionate ownership interest in Algoma may decrease; |
• | the amount of cash available per share, including for payment of dividends in the future, may decrease; |
• | the relative voting strength of each previously outstanding Common Share may be diminished; and |
• | the market price of Common Shares may decline. |
• | actual or anticipated fluctuations in our revenue and results of operations; |
• | the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; |
• | failure of securities analysts to maintain coverage of Algoma, changes in financial estimates or ratings by any securities analysts who follow Algoma or its failure to meet these estimates or the expectations of investors; |
• | announcements by Algoma or its competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations or capital commitments; |
• | changes in operating performance and stock market valuations of other steel companies; |
• | price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; |
• | trading volume of the Common Shares; |
• | the inclusion, exclusion or removal of the Common Shares from any indices; |
• | changes in our board of directors or management; |
• | transactions in the Common Shares by directors, officers, affiliates and other major investors; |
• | lawsuits threatened or filed against us; |
• | changes in laws or regulations applicable to our business; |
• | changes in our capital structure, such as future issuances of debt or equity securities; |
• | short sales, hedging and other derivative transactions involving our capital stock; |
• | general economic conditions in the United States; |
• | pandemics or other public health crises, including, but not limited to, the COVID-19 pandemic; |
• | other events or factors, including those resulting from war, incidents of terrorism or responses to these events; and |
• | the other factors described in this “ Risk Factors |
ITEM 4. |
INFORMATION ON THE COMPANY |
FY2022 Product Shipment Mix |
FY2022 Geographic Shipments |
FY2022 End Market Volume |
||||||||||||||||||||||||||||||
Product |
Volume | Country | Volume | Segment | FY22 | FY21 | FY20 | |||||||||||||||||||||||||
Hot Roll |
80% | United States | 60% | Auto | 38% | 31% | 28% | |||||||||||||||||||||||||
Cold Roll |
8% | Canada | 37% | Manufacturing and Construction | 32% | 30% | 28% | |||||||||||||||||||||||||
Plate |
12% | Mexico | 3% | Tubular | 7% | 9% | 9% | |||||||||||||||||||||||||
Distribution | 23% | 30% | 35% | |||||||||||||||||||||||||||||
Total | 100% | 100% | 100% |
Product Attributes |
End Markets |
Width Range |
Gauge Range | |||||
Hot Rolled Coil |
✓ High strength formable hot rolled grades ✓ Broad width and strength capabilities |
• Automotive Hollow structural product and welded pipe manufacturers • Transportation Light manufacturing |
106”Strip Mill 30”-96” DSPC 32”-63” |
106”Strip Mill 0.070”-0.500” DSPC 0.060”-0.625” | ||||
Cold Rolled Coil |
✓ Commercial grades ✓ High strength formable cold roll grades ✓ Full hard grades (not annealed) |
• Automotive Welded pipe manufacturers • Transportation • Light manufacturing |
36”-74” |
0.015”-0.129” | ||||
Plate |
✓ High strength, low-alloy grades✓ Abrasion resistant and heat treat grades ✓ Only producer in Canada |
• Fabrication industry- constructors or manufactures of railcars, buildings, bridges off-highway equipment, etc. |
72”-154” |
0.236”-4.500” |
• | Pension Plan for Hourly Employees, registered under the Act as number 1079904 (the “Hourly Plan”); and |
• | Pension Plan for Salaried Employees, registered under the Act as number 1079896 (the “Salaried Plan” (together with the Hourly Plan, the “Pension Plans”); |
Twelve Months Ended March 31, 2022 |
Twelve Months Ended March 31, 2021 |
Twelve Months Ended March 31, 2020 |
||||||||||
|
|
|
||||||||||
(in millions) |
||||||||||||
Sheet & Strip |
C$ | 3083.1 | C$ | 1,340.4 | C$ | 1,417.8 | ||||||
Plate |
465.7 | 274.7 | 324.8 | |||||||||
Freight |
172.9 | 150.4 | 175.1 | |||||||||
Non-steel sales |
84.3 | 29.4 | 39.2 | |||||||||
|
|
|
|
|
|
|||||||
Total |
C$ | 3806 | C$ | 1,794.9 | C$ | 1,956.9 | ||||||
|
|
|
|
|
|
April 1, 2021 to March 31, 2022 |
April 1, 2020 to March 31, 2021 |
April 1, 2019 to March 31, 2020 |
||||||||||||||||||||||
Tons (in thousands) |
% |
Tons (in thousands) |
% |
Tons (in thousands) |
% |
|||||||||||||||||||
Steel service center |
528,000 | 23 | 631,000 | 30 | 809,000 | 35 | ||||||||||||||||||
Automotive (direct and indirect) |
873,000 | 38 | 652,000 | 31 | 647,000 | 28 | ||||||||||||||||||
Manufacturing & Construction |
735,000 | 32 | 630,000 | 30 | 647,000 | 28 | ||||||||||||||||||
Tubular and other |
161,000 | 7 | 189,000 | 9 | 208,000 | 9 | ||||||||||||||||||
Total |
2,297,000 | 100 | 2,102,000 | 100 | 2,311,000 | 100 |
B. |
Growth Strategies |
C. |
Organizational Structure |
D. |
Property, Plants and Equipment |
• | three coke batteries; |
• | two blast furnaces (one currently idle); |
• | basic oxygen steelmaking shop consisting of two vessels and secondary steel refining facilities; |
• | DSPC with twin strand thin slab caster coupled with roughing and finishing hot mill; |
• | twin strand conventional slab caster; |
• | combination hot rolling mill capable of switching between plate and sheet products; |
• | plate heat treat facilities and plate finishing facilities; and |
• | downstream finishing operations consisting of pickling, cold rolling, annealing and tempering, sheet slitting, and cut to length facilities. |
Actual Production |
||||||||||||||||
Annual Production Process Line |
Capacity (NT) |
Fiscal 2022 |
Fiscal 2021 |
Fiscal 2020 |
||||||||||||
Coke Batteries No. 7, No. 8 and No. 9 |
900,000 | 713,539 | 830,882 | 765,199 | ||||||||||||
Blast Furnace No. 7 |
2,800,000 | 2,172,776 | 2,010,295 | 2,450,734 | ||||||||||||
Blast Furnace No. 6 |
900,000 | — | — | — | ||||||||||||
Basic Oxygen Furnace (BOF) |
3,700,000 | 2,312,164 | 2,508,871 | 2,727,207 | ||||||||||||
Direct Strip Production Complex |
2,300,000 | 1,869,240 | 1,796,450 | 1,890,436 | ||||||||||||
Slab Caster |
2,000,000 | 572,893 | 625,476 | 742,150 | ||||||||||||
106” Strip Mill |
460,000 | 284,124 | 309,656 | 337,445 | ||||||||||||
166” Plate Mill |
400,000 | 337,699 | 369,627 | 432,865 | ||||||||||||
Heat Treat |
320,000 | 187,501 | 131,246 | 174,775 | ||||||||||||
100” Pickler |
800,000 | 630,470 | 566,041 | 667,306 | ||||||||||||
80” Cold Reduction Mill |
350,000 | 216,680 | 155,430 | 147,923 | ||||||||||||
80” Temper/Skinpass Mill |
800,000 | 528,000 | 602,381 | 692,032 | ||||||||||||
Batch Annealing |
250,000 | 163,924 | 140,846 | 146,007 |
• | C$547 million of EAF installation (C$339 million for building and labor and C$208 million for EAF equipment); |
• | C$68 million for internal cogeneration upgrade and electrical infrastructure; and |
• | C$85 million for contingencies. |
ITEM 4A. |
UNRESOLVED STAFF COMMENTS |
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
• | they do not reflect cash outlays for capital expenditures or contractual commitments; |
• | they do not reflect changes in, or cash requirements for, working capital; |
• | they do not reflect the finance costs, or the cash requirements necessary to service interest or principal payments on indebtedness; |
• | they do not reflect income tax expense or the cash necessary to pay income taxes; |
• | they do not reflect interest on pension and other post-employment benefit obligations; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, as such Adjusted EBITDA and Further Adjusted EBITDA do not reflect cash requirements for such replacements; |
• | they do not reflect the impact of earnings or charges resulting from matters we believe not to be indicative of our ongoing operations; and |
• | other companies, including other companies in our industry, may calculate these measure differently than as presented by us, limiting their usefulness as a comparative measure. |
Average Rate |
Period End Rate |
|||||||||||||||||||
FY 2022 |
FY 2021 | FY 2020 | FY 2022 |
FY 2021 | ||||||||||||||||
April 1 to June 30 |
1.2280 |
1.3859 | 1.3375 | 1.2394 |
1.3576 | |||||||||||||||
July 1 to September 30 |
1.2601 |
1.3316 | 1.3206 | 1.2741 |
1.3319 | |||||||||||||||
October 1 to December 31 |
1.2600 |
1.3030 | 1.3200 | 1.2678 |
1.2732 | |||||||||||||||
January 1 to March 31 |
1.2663 |
1.2666 | 1.3442 | 1.2496 |
1.2575 |
change |
January 1 to March 31, 2022 |
January 1 to March 31, 2021 |
||||||||||||||
tons |
||||||||||||||||
Steel Shipments |
i |
12.0 |
% |
547,217 |
621,843 | |||||||||||
millions of dollars |
||||||||||||||||
Revenue |
C$ |
941.8 |
C$ | 638.5 | ||||||||||||
Less: |
||||||||||||||||
Freight included in revenue |
(48.0 |
) |
(47.3 | ) | ||||||||||||
Non-steel revenue |
(13.9 |
) |
(5.6 | ) | ||||||||||||
|
|
|
|
|||||||||||||
Steel revenue |
h |
50.3 |
% |
C$ |
879.9 |
C$ | 585.6 | |||||||||
|
|
|
|
|||||||||||||
Cost of steel revenue |
C$ |
541.3 |
C$ | 423.1 | ||||||||||||
Amortization included in cost of steel revenue |
(22.7 |
) |
(21.6 | ) | ||||||||||||
Carbon tax included in cost of steel revenue |
(0.4 |
) |
(1.8 | ) | ||||||||||||
|
|
|
|
|||||||||||||
Cost of steel products sold |
h |
29.6 |
% |
C$ |
518.2 |
C$ | 399.7 | |||||||||
|
|
|
|
|||||||||||||
dollars per ton |
||||||||||||||||
Revenue per ton of steel sold |
h |
67.6 |
% |
C$ |
1,721 |
C$ | 1,027 | |||||||||
Cost of steel revenue per ton of steel sold |
h |
45.4 |
% |
C$ |
989 |
C$ | 680 | |||||||||
Average net sales realization on steel sales (i) |
h |
70.8 | % | C$ | 1,608 | C$ | 942 | |||||||||
Cost per ton of steel products sold |
h |
47.3 | % | C$ | 947 | C$ | 643 |
(i) | Represents Steel revenue (being Revenue less (a) Freight included in revenue and (b) Non-steel revenue) divided by the number of tons of Steel Shipments during the applicable period. |
Change (FY2022 to FY2021) |
FY2022 |
Change (FY2021 to FY2020) |
FY2021 | FY2020 | ||||||||||||||||||||||||
tons |
||||||||||||||||||||||||||||
Steel Shipments |
h |
9.3 |
% |
2,297,159 |
i |
8.8 | % | 2,102,086 | 2,305,039 | |||||||||||||||||||
millions of dollars |
||||||||||||||||||||||||||||
Revenue |
C$ |
3,806.0 |
C$ | 1,794.9 | C$ | 1,956.9 | ||||||||||||||||||||||
Less: |
||||||||||||||||||||||||||||
Freight included in revenue |
(172.9 |
) |
(150.4 | ) | (175.1 | ) | ||||||||||||||||||||||
Non-steel revenue |
(84.3 |
) |
(29.4 | ) | (39.2 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
Steel revenue |
h |
119.7 |
% |
C$ |
3,548.8 |
i |
7.3 | % | C$ | 1,615.1 | C$ | 1,742.6 | ||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
Cost of steel revenue |
C$ |
2,054.6 |
C$ | 1,457.9 | C$ | 1,822.7 | ||||||||||||||||||||||
Amortization included in cost of steel revenue |
(86.7 |
) |
(86.8 | ) | (127.6 | ) | ||||||||||||||||||||||
Carbon tax included in cost of steel revenue |
0.6 |
(13.4 | ) | (6.9 | ) | |||||||||||||||||||||||
Business combination adjustments |
— |
— | (1.4 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
Cost of steel products sold |
h |
45.0 |
% |
C$ |
1,968.5 |
i |
19.5 | % | C$ | 1,357.7 | C$ | 1,686.8 | ||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
dollars per ton |
||||||||||||||||||||||||||||
Revenue per ton of steel sold |
h |
94.0 |
% |
C$ |
1,657 |
h |
0.6 | % | C$ | 854 | C$ | 849 | ||||||||||||||||
Cost of steel revenue per ton of steel sold |
h |
28.8 |
% |
C$ |
894 |
h |
12.3 | % | C$ | 694 | C$ | 791 | ||||||||||||||||
Average net sales realization on steel sales (i) |
h |
101.2 |
% |
C$ |
1,545 |
h |
1.6 | % | C$ | 768 | C$ | 756 | ||||||||||||||||
Cost per ton of steel products sold |
h |
32.7 |
% |
C$ |
857 |
i |
11.7 | % | C$ | 646 | C$ | 732 |
(i) | Represents Steel revenue (being Revenue less (a) Freight included in revenue and (b) Non-steel revenue) divided by the number of tons of Steel Shipments during the applicable period. |
millions of dollars |
January 1 to March 31, 2022 |
January 1 to March 31, 2021 |
||||||
Personnel expenses |
C$ |
13.9 |
C$ | 21.9 | ||||
Professional, consulting, legal and other fees |
10.1 |
6.6 | ||||||
Software licenses |
1.1 |
0.8 | ||||||
Amortization of intangible assets and non-production assets |
0.1 |
0.1 | ||||||
Other administrative and selling |
2.8 |
3.1 | ||||||
|
|
|
|
|||||
C$ |
28.0 |
C$ | 32.5 | |||||
|
|
|
|
millions of dollars |
FY2022 |
FY2021 | FY2020 | |||||||||
Personnel expenses |
C$ |
54.2 |
C$ | 39.6 | C$ | 29.7 | ||||||
Professional, consulting, legal and other fees |
36.2 |
22.2 | 17.1 | |||||||||
Software licenses |
4.6 |
3.1 | 2.7 | |||||||||
Amortization of intangible assets and non-production assets |
0.4 |
0.4 | 0.5 | |||||||||
Other administrative and selling |
7.6 |
7.1 | 6.9 | |||||||||
|
|
|
|
|
|
|||||||
C$ |
103.0 |
C$ | 72.4 | C$ | 56.9 | |||||||
|
|
|
|
|
|
millions of dollars |
January 1 to March 31, 2022 |
January 1 to March 31, 2021 |
||||||
Interest on the following facilities |
||||||||
Revolving Credit Facility |
C$ |
0.1 |
C$ | 1.0 | ||||
Secured Term Loan Facility |
— |
9.6 | ||||||
Algoma Docks Term Loan Facility |
— |
1.0 | ||||||
Revolving Credit Facility fees |
0.4 |
0.3 | ||||||
Unwinding of issuance costs of debt facilities and accretion of governmental loan benefits and discounts on environmental liabilities |
3.4 |
3.6 | ||||||
Other interest expense |
0.4 |
0.4 | ||||||
|
|
|
|
|||||
C$ |
4.3 |
C$ | 15.9 | |||||
|
|
|
|
millions of dollars |
FY2022 |
FY2021 | FY2020 | |||||||||
Interest on the following facilities |
||||||||||||
Revolving Credit Facility |
C$ |
0.1 |
C$ | 4.3 | C$ | 2.1 | ||||||
Secured Term Loan Facility |
24.1 |
43.0 | 41.0 | |||||||||
Algoma Docks Term Loan Facility |
2.5 |
4.7 | 6.7 | |||||||||
Revolving Credit Facility fees |
1.6 |
1.2 | 2.2 | |||||||||
Unwinding of issuance costs of debt facilities and discounts on environmental liabilities, and accretion of governmental loan benefits |
18.8 |
13.8 | 10.3 | |||||||||
Other interest expense |
1.5 |
1.5 | 1.5 | |||||||||
|
|
|
|
|
|
|||||||
C$ |
48.6 |
C$ | 68.5 | C$ | 63.8 | |||||||
|
|
|
|
|
|
millions of dollars |
January 1 to March 31, 2022 |
January 1 to March 31, 2021 |
||||||
Recognized in income (loss) before income taxes: |
||||||||
Pension benefits expense |
C$ |
6.1 |
C$ | 6.9 | ||||
Post-employment benefits expense |
3.0 |
3.2 | ||||||
|
|
|
|
|||||
C$ |
9.1 |
C$ | 10.1 | |||||
|
|
|
|
|||||
Recognized in other comprehensive income (loss) (pre-tax): |
||||||||
Pension benefits (gain) loss |
C$ |
0.3 |
C$ | (104.7 | ) | |||
Post-employment benefits (gain) loss |
(71.0 |
) |
(37.7 | ) | ||||
|
|
|
|
|||||
C$ |
(70.7 |
) |
C$ | (142.4 | ) | |||
|
|
|
|
|||||
C$ |
(61.6 |
) |
C$ | (132.3 | ) | |||
|
|
|
|
millions of dollars |
FY2022 |
FY2021 | FY2020 | |||||||||
Recognized in income (loss) before income taxes: |
||||||||||||
Pension benefits expense |
C$ |
24.4 |
C$ | 27.6 | C$ | 31.4 | ||||||
Post-employment benefits expense |
12.0 |
12.8 | 12.9 | |||||||||
|
|
|
|
|
|
|||||||
C$ |
36.4 |
C$ | 40.4 | C$ | 44.3 | |||||||
|
|
|
|
|
|
|||||||
Recognized in other comprehensive income (loss) (pre-tax): |
||||||||||||
Pension benefits (gain) loss |
C$ |
(57.9 |
) |
C$ | (51.8 | ) | C$ | (48.6 | ) | |||
Post-employment benefits (gain) loss |
(60.0 |
) |
28.8 | (33.2 | ) | |||||||
|
|
|
|
|
|
|||||||
C$ |
(117.9 |
) |
C$ | (23.0 | ) | C$ | (81.8 | ) | ||||
|
|
|
|
|
|
|||||||
C$ |
(81.5 |
) |
C$ | 17.4 | C$ | (37.5 | ) | |||||
|
|
|
|
|
|
millions of dollars |
January 1 to March 31, 2022 |
January 1 to March 31, 2021 |
||||||
Net income |
C$ |
242.9 |
C$ | 100.1 | ||||
Amortization of property, plant and equipment and amortization of intangible assets |
22.8 |
21.0 | ||||||
Finance costs |
4.3 |
15.9 | ||||||
Interest on pension and other post-employment benefit obligations |
2.9 |
4.1 | ||||||
Income taxes |
78.0 |
— | ||||||
Foreign exchange loss |
6.3 |
9.9 | ||||||
Finance income |
(0.4 |
) |
— | |||||
Carbon tax |
0.4 |
1.8 | ||||||
Increase in fair value of warrant liability |
13.2 |
— | ||||||
Decrease in fair value of earnout liability |
(44.5 |
) |
— | |||||
Increase in fair value of share-based payment compensation liability |
2.9 |
— | ||||||
Transaction costs |
5.0 |
— | ||||||
Share-based compensation |
0.7 |
14.1 | ||||||
|
|
|
|
|||||
Adjusted EBITDA |
C$ |
334.4 |
C$ | 166.9 | ||||
|
|
|
|
|||||
Net Income Margin |
25.8 |
% |
15.7 | % | ||||
|
|
|
|
|||||
Net Income / ton |
C$ |
443.84 |
C$ | 161.01 | ||||
|
|
|
|
|||||
Adjusted EBITDA Margin |
35.5 |
% |
26.1 | % | ||||
|
|
|
|
|||||
Adjusted EBITDA / ton |
C$ |
611.09 |
C$ | 268.40 | ||||
|
|
|
|
(i) | See “Non-IFRS Measures” for information regarding the limitations of using Adjusted EBITDA. |
(ii) | Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of revenue. |
millions of dollars |
FY2022 |
FY2021 | FY2020 | |||||||||
Net income (loss) |
C$ |
857.7 |
C$ | (76.1 | ) | C$ | (175.9 | ) | ||||
Amortization of property, plant and equipment and amortization of intangible assets |
87.1 |
86.9 | 126.5 | |||||||||
Finance costs |
48.6 |
68.5 | 63.8 | |||||||||
Interest on pension and other post-employment benefit obligations |
11.6 |
17.0 | 17.3 | |||||||||
Income taxes |
298.9 |
— | (4.3 | ) | ||||||||
Foreign exchange loss (gain) |
4.4 |
76.5 | (35.3 | ) | ||||||||
Finance income |
(0.5 |
) |
(1.1 | ) | (2.6 | ) | ||||||
Carbon tax |
(0.6 |
) |
13.4 | 6.9 | ||||||||
Increase in fair value of warrant liability |
6.4 |
— | — | |||||||||
Decrease in fair value of earnout liability |
(78.1 |
) |
— | — | ||||||||
Transaction costs |
26.5 |
— | — | |||||||||
Listing expense |
235.6 |
— | — | |||||||||
Share-based compensation |
5.7 |
14.1 | — | |||||||||
Business combination adjustments |
— |
— | 1.4 | |||||||||
|
|
|
|
|
|
|||||||
Adjusted EBITDA |
C$ |
1,503.2 |
C$ | 199.2 | C$ | (2.2 | ) | |||||
|
|
|
|
|
|
|||||||
Net income (loss) Margin |
22.5 |
% |
-4.2 | % | -9.0 | % | ||||||
|
|
|
|
|
|
|||||||
Net income (loss)/ ton |
C$ |
373.36 |
C$ | (36.19 | ) | C$ | (76.31 | ) | ||||
|
|
|
|
|
|
|||||||
Adjusted EBITDA Margin |
39.5 |
% |
11.1 | % | -0.1 | % | ||||||
|
|
|
|
|
|
|||||||
Adjusted EBITDA / ton |
C$ |
654.37 |
C$ | 94.76 | C$ | — | ||||||
|
|
|
|
|
|
|||||||
Tariff expense included in Net income |
C$ |
— |
C$ | — | C$ | 27.8 | ||||||
Capacity utilization adjustment included in Net income |
— |
— | 32.7 | |||||||||
|
|
|
|
|
|
|||||||
Adjustments to Adjusted EBITDA |
— | — | 60.5 | |||||||||
|
|
|
|
|
|
|||||||
Further Adjusted EBITDA |
C$ |
1,503.2 |
C$ | 199.2 | C$ | 58.3 | ||||||
|
|
|
|
|
|
|||||||
Further Adjusted EBITDA Margin |
39.5 |
% |
11.1 | % | 3.0 | % | ||||||
|
|
|
|
|
|
|||||||
Further Adjusted EBITDA / ton |
C$ |
654.37 |
C$ | 94.76 | C$ | 26.25 | ||||||
|
|
|
|
|
|
(i) | See “Non-IFRS Measures” for information regarding the limitations of using Adjusted EBITDA and Further Adjusted EBITDA. |
(ii) | Adjusted EBITDA and Further Adjusted EBITDA Margin is Adjusted EBITDA and Further Adjusted EBITDA as a percentage of revenue. |
millions of dollars |
January 1 to March 31, 2022 |
January 1 to March 31, 2021 |
||||||
Operating Activities: |
||||||||
Cash generated from operating activities before changes in non-cash working capital and environmental liabilities paid |
C$ |
253.1 |
C$ | 143.3 | ||||
Net change in non-cash working capital |
191.1 |
(9.6 | ) | |||||
Environmental liabilities paid |
(0.4 |
) |
0.2 | |||||
|
|
|
|
|||||
Cash generated by operating activities |
C$ |
443.8 |
C$ | 133.9 | ||||
|
|
|
|
|||||
Investing activities |
||||||||
Acquisition of property, plant and equipment |
C$ |
(93.4 |
) |
C$ | (22.0 | ) | ||
Acquisition of intangible assets |
0.4 |
(0.1 | ) | |||||
Acquisition of right-of-use |
(0.9 |
) |
— | |||||
|
|
|
|
|||||
Cash used in investing activities |
C$ |
(93.9 |
) |
C$ | (22.1 | ) | ||
|
|
|
|
|||||
Financing activities |
||||||||
Bank indebtedness advanced (repaid), net |
C$ |
0.1 |
C$ | (95.3 | ) | |||
Repayment of Senior Secured Term Loan Facility |
— |
(0.9 | ) | |||||
Repayment of Algoma Docks Term Loan Facility |
(0.1 |
) |
(2.6 | ) | ||||
Government loans issued, net of benefit |
1.1 |
(0.1 | ) | |||||
Repayment of govenrment loans |
(0.8 |
) |
— | |||||
Interest paid |
(0.1 |
) |
(11.4 | ) | ||||
Interest cost of right-of-use |
— |
— | ||||||
Proceeds from issuance of shares |
— |
— | ||||||
Dividends paid |
(9.3 |
) |
— | |||||
Other |
(0.4 |
) |
0.2 | |||||
|
|
|
|
|||||
Cash used in financing activities |
C$ |
(9.5 |
) |
C$ | (110.1 | ) | ||
|
|
|
|
|||||
Effect of exchange rate changes on cash |
C$ |
(12.6 |
) |
C$ | (0.2 | ) | ||
|
|
|
|
|||||
Change in cash during the period |
C$ |
327.8 |
C$ | 1.5 | ||||
|
|
|
|
millions of dollars |
FY2022 |
FY2021 | FY2020 | |||||||||
Operating Activities: |
||||||||||||
Cash generated by (used in) operating activities before changes in non-cash working capital and environmental liabilities paid |
C$ |
1,287.8 |
C$ | 147.4 | C$ | (34.5 | ) | |||||
Net change in non-cash working capital |
(21.1 |
) |
(137.7 | ) | 34.3 | |||||||
Environmental liabilities paid |
(3.3 |
) |
(1.6 | ) | (4.5 | ) | ||||||
|
|
|
|
|
|
|||||||
Cash generated by (used in) operating activities |
C$ |
1,263.4 |
C$ | 8.1 | C$ | (4.7 | ) | |||||
|
|
|
|
|
|
|||||||
Investing activities |
||||||||||||
Acquisition of property, plant and equipment |
C$ |
(166.2 |
) |
C$ | (71.7 | ) | C$ | (113.3 | ) | |||
Acquisition of intangible assets |
— |
(0.1 | ) | (0.6 | ) | |||||||
Acquisition of right-of-use |
(1.7 |
) |
— | — | ||||||||
Recovery (issuance) of related party receivable |
2.2 |
(1.1 | ) | (1.2 | ) | |||||||
|
|
|
|
|
|
|||||||
Cash used in investing activities |
C$ |
(165.7 |
) |
C$ | (72.9 | ) | C$ | (115.1 | ) | |||
|
|
|
|
|
|
|||||||
Financing activities |
||||||||||||
Bank indebtedness (repaid) advanced, net |
C$ |
(86.8 |
) |
C$ | (145.2 | ) | C$ | 249.3 | ||||
Repayment of Secured Term Loan |
(381.8 |
) |
(3.8 | ) | (3.8 | ) | ||||||
Repayment of Algoma Docks Term Loan Facility |
(76.0 |
) |
(8.8 | ) | (6.5 | ) | ||||||
Government loans issued, net of benefit |
1.1 |
6.5 | 42.4 | |||||||||
Repayment of government loans |
(0.8 |
) |
— | — | ||||||||
Restricted cash |
— |
— | 7.2 | |||||||||
Interest paid |
(36.3 |
) |
(15.6 | ) | (42.0 | ) | ||||||
Proceeds from issuance of shares |
393.5 |
— | — | |||||||||
Dividends paid |
(9.3 |
) |
— | — | ||||||||
Other |
(2.3 |
) |
(0.5 | ) | 0.1 | |||||||
|
|
|
|
|
|
|||||||
Cash (used in) generated by financing activities |
C$ |
(198.7 |
) |
C$ | (167.4 | ) | C$ | 246.7 | ||||
|
|
|
|
|
|
|||||||
Effect of exchange rate changes on cash |
C$ |
(4.9 |
) |
C$ | (11.6 | ) | C$ | 2.6 | ||||
|
|
|
|
|
|
|||||||
Increase (decrease) in cash during year |
C$ |
894.1 |
C$ | (243.8 | ) | C$ | 129.5 | |||||
|
|
|
|
|
|
millions of dollars |
January 1 to March 31, 2022 |
January 1 to March 31, 2021 |
||||||
Accounts receivable |
$ |
44.2 |
$ | (113.3 | ) | |||
Inventories |
128.9 |
102.7 | ||||||
Prepaid expenses and deposits and other current assets |
23.9 |
(20.7 | ) | |||||
Accounts payable and accrued liabilities |
83.2 |
28.9 | ||||||
Income and other taxes payable |
(116.6 |
) |
8.7 | |||||
Derivative financial instruments (net) |
27.5 |
(15.9 | ) | |||||
|
|
|
|
|||||
Total |
$ |
191.1 |
$ | (9.6 | ) | |||
|
|
|
|
millions of dollars |
FY2022 |
FY2021 | FY2020 | |||||||||
Accounts receivable |
C$ |
(127.0 |
) |
C$ | (47.2 | ) | C$ | 88.4 | ||||
Inventories |
(63.6 |
) |
(33.6 | ) | (36.8 | ) | ||||||
Prepaid expenses, deposits and other current assets |
12.5 |
(70.3 | ) | 20.2 | ||||||||
Accounts payable and accrued liabilities |
166.6 |
(21.2 | ) | (42.4 | ) | |||||||
Taxes payable and accrued taxes |
(22.1 |
) |
16.7 | 3.7 | ||||||||
Derivative financial instruments (net) |
12.5 |
(15.3 | ) | 1.2 | ||||||||
Secured term loan interest payments in kind |
— |
33.2 | — | |||||||||
|
|
|
|
|
|
|||||||
Total |
C$ |
(21.1 |
) |
C$ | (137.7 | ) | C$ | 34.3 | ||||
|
|
|
|
|
|
• | $250.0 million in the form of a traditional asset-based revolving credit facility, with a maturity date of November 30, 2023; |
• | a C$60.0 million interest free loan from the Federal Economic Development Agency of the Government of Canada, through the Advanced Manufacturing Fund (the “Federal AMF Loan”). The Company will repay the loan in equal monthly installments beginning on April 1, 2022 with the final installment payable on March 1, 2028.; and |
• | a C$60.0 million low interest loan from the Ministry of Energy, Northern Development and Mines of the Province of Ontario (the “Provincial MENDM Loan”). The Company will repay the loan in monthly blended payments of principal and interest beginning on December 31, 2024 and ending on November 30, 2028. |
millions of dollars |
Total | Less than 1 year |
Year 2 | Years 3-5 |
More than 5 years |
|||||||||||||||
Bank indebtedness |
C$ | 0.1 | C$ | 0.1 | C$ | — | C$ | — | C$ | — | ||||||||||
Long-term governmental loans |
136.5 | 9.9 | 9.9 | 71.5 | 45.2 | |||||||||||||||
Purchase obligations |
551.2 | 323.7 | 130.0 | 97.5 | — | |||||||||||||||
Environmental liabilities |
77.0 | 4.1 | 5.1 | 12.9 | 54.9 | |||||||||||||||
Lease obligations |
5.8 | 3.1 | 2.3 | 0.4 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
C$ | 770.6 | C$ | 340.9 | C$ | 147.3 | C$ | 182.3 | C$ | 100.1 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(millions of dollars, except where otherwise noted) |
2022 |
2021 | ||||||||||||||||||||||||||||||
As at and for the three months ended 1 |
Q4 |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Financial results |
||||||||||||||||||||||||||||||||
Total revenue |
C$ |
941.8 |
C$ | 1,064.9 | C$ | 1,010.2 | C$ | 789.1 | C$ | 638.5 | C$ | 430.0 | C$ | 377.0 | C$ | 349.4 | ||||||||||||||||
Steel products |
879.9 |
1,009.5 | 936.5 | 722.9 | 585.6 | 383.8 | 335.3 | 310.4 | ||||||||||||||||||||||||
Non-steel products |
13.9 |
14.2 | 31.8 | 24.4 | 5.6 | 9.5 | 6.9 | 7.4 | ||||||||||||||||||||||||
Freight |
48.0 |
41.2 | 41.9 | 41.8 | 47.3 | 36.7 | 34.8 | 31.6 | ||||||||||||||||||||||||
Cost of sales |
603.2 |
599.9 | 578.7 | 510.2 | 476.0 | 432.2 | 389.8 | 339.7 | ||||||||||||||||||||||||
Administrative and selling expenses |
28.0 |
18.9 | 29.4 | 26.7 | 32.5 | 15.5 | 11.9 | 12.5 | ||||||||||||||||||||||||
Income (loss) from operations |
310.6 |
446.1 | 402.1 | 252.2 | 130.0 | (17.7 | ) | (24.7 | ) | (2.8 | ) | |||||||||||||||||||||
Net income (loss) |
242.9 |
123.0 | 288.2 | 203.7 | 100.1 | (73.5 | ) | (60.0 | ) | (42.7 | ) | |||||||||||||||||||||
Adjusted EBITDA (loss) |
C$ |
334.4 |
C$ | 457.3 | C$ | 430.6 | C$ | 280.8 | C$ | 166.9 | C$ | 11.7 | C$ | 0 | C$ | 20.5 | ||||||||||||||||
Per common share (diluted) 3 |
||||||||||||||||||||||||||||||||
Net income (loss) |
C$ |
1.45 |
C$ | 0.92 | C$ | 4.02 | C$ | 2.83 | C$ | 1.40 | C$ | (1.02 | ) | C$ | (0.84 | ) | C$ | (0.59 | ) | |||||||||||||
Financial position |
||||||||||||||||||||||||||||||||
Total assets |
C$ |
2,693.6 |
C$ | 2,520.7 | C$ | 2,185.7 | C$ | 1,697.2 | C$ | 1,553.9 | C$ | 1,541.9 | C$ | 1,554.4 | C$ | 1,731.6 | ||||||||||||||||
Total non-current liabilities |
573.5 |
640.1 | 1,038.8 | 1,002.5 | 1,031.5 | 1,184.7 | 1,236.2 | 1,220.1 | ||||||||||||||||||||||||
Operating results |
||||||||||||||||||||||||||||||||
Average NSR per nt2 |
C$ |
1,608 |
C$ | 1,827 | C$ | 1,594 | C$ | 1,185 | C$ | 942 | C$ | 701 | C$ | 649 | C$ | 746 | ||||||||||||||||
Adjusted EBITDA per nt2 |
611.1 |
827.6 | 733.1 | 460.3 | 268.4 | 21.4 | 0.0 | 49.2 | ||||||||||||||||||||||||
Shipping volume (in thousands of nt) |
||||||||||||||||||||||||||||||||
Sheet |
486 |
481 | 514 | 541 | 543 | 470 | 444 | 336 | ||||||||||||||||||||||||
Plate |
61 |
72 | 73 | 69 | 79 | 78 | 72 | 80 |
1 | Period end date refers to the following: “Q4” - March 31, “Q3” - December 31, “Q2” - September 30 and “Q1” - June 30. |
2 | The definition and reconciliation of these non-IFRS measures are included in the “Non-IFRS Financial Measures” section of this MD&A. |
3 | Pursuant to the Merger Agreement with Legato as described in the “Merger Transaction” section of this MD&A, on October 19, 2021, the Company effected a reserve stock split retroactively, such that each outstanding common share became such number of common shares, each valued at $10.00 per share, as determined by the conversion factor of 71.76775% (as defined in the Merger Agreement), with such common shares subsequently distributed to the equity holders of the Company’s former ultimate parent company. |
• | decreased $152.8 million or 30% from $502.2 million in Q4 2020 to $349.4 million in the first quarter of fiscal year end 2021 (“Q1 2021”), a result of decreased steel revenue mainly due to lower steel shipments, represented by a decline of 204 thousand net ton (“nt”) or 33% from 620 thousand nt in Q4 2020 to 416 thousand nt in Q1 2021. |
• | increased $27.6 million or 8% from $349.4 million in Q1 2021 to $377.0 million in the second quarter of fiscal year end 2021 (“Q2 2021”), a result of increased steel revenue due primarily to higher steel shipments, represented by an increase of 100 thousand nt or 24% from 416 thousand nt in Q1 2021 to 516 thousand nt in Q2 2021. |
• | increased $53.0 million or 14% from $377.0 million in Q2 2021 to $430.0 million in the third quarter of fiscal year end 2021 (“Q3 2021”), a result of increased steel revenue mostly due to higher selling prices of steel as average NSR per nt increased by $51.3 from $649 per nt in Q2 2021 to $701 per nt in Q3 2021. Further, steel shipments increased by 31 thousand nt or 6% from 516 thousand nt in Q2 2021 to 547 thousand nt in Q3 2021. |
• | increased $208.5 million or 48% from $430.0 million in Q3 2021 to $638.5 million in the fourth quarter of fiscal year end 2021 (“Q4 2021”), a result of increased steel revenue primarily due to higher selling prices of steel as average NSR per nt increased by $241 from $701 per nt in Q3 2021 to $942 per nt in Q4 2021. Further, steel shipments increased by 75 thousand nt or 14% from 547 thousand nt in Q3 2021 to 622 thousand nt in Q4 2021. |
• | increased $150.6 million or 24% from $638.5 million in Q4 2021 to $789.1 million in Q1 2022, a result of increased steel revenue mainly due to higher selling price of steel as average NSR per nt increased by $243.3 from $942 per nt in Q4 2021 to $1,185 per nt in Q1 2022. |
• | increased $221.1 million or 28% from $789.1 million in Q1 2022 to $1,010.2 million in Q2 2022, a result of increased steel revenue mostly due to higher selling price of steel as average NSR per nt increased by $409.5 from $1,185 per nt in Q1 2022 to $1,594 per nt in Q2 2022. |
• | increased $54.7 million or 5% from $1,010.2 million in Q2 2022 to $1,064.9 million in Q3 2022, a result of increased steel revenue primarily due to higher selling prices of steel as average NSR per nt increased by $233 from $1,594 per nt in Q2 2022 to $1,827 per nt in Q3 2022. |
• | decreased $123.1 million or 12% from $1,064.9 million in Q3 2022 to $941.8 million in Q4 2022, a result of decreased steel revenue primarily due to lower selling prices of steel as average NSR per nt decreased by $219 from $1,827 per nt in Q3 2022 to $1,608 per nt in Q4 2022. |
• | of ($42.7) million in Q1 2021 decreased compared to $19.4 million in Q4 2020 primarily due to decrease in revenue of $152.8 million, a result of lower steel shipments, offset, in part by decrease in cost of sales ($159.6 million) |
• | of ($60.0) million in Q2 2021 decreased compared to ($42.7) million in Q1 2021 mainly due to the increase in cost of sales of $50.1 million, offset, in part by an increase in revenue of $27.6 million, primarily a result of higher steel shipments. |
• | of ($73.5) million in Q3 2021 decreased compared to ($60.0) million in Q2 2021 mostly due an increase in cost of sales of $42.4 million, offset, in part by an increase in revenue of $53.0 million due primarily to higher selling price of steel. |
• | of $100.1 million in Q4 2021 increased compared to ($73.5) million in Q3 2021 mainly to due higher revenue of $208.5 million, a result of higher selling prices of steel and increased steel shipments and proportionately lower increase in cost of sales of $43.8 million. |
• | of $203.7 million in Q1 2022 increased compared to $100.1 million in Q4 2021 due primarily to higher revenue (increased by $150.6 million), a result of higher selling prices of steel, proportionately lower increase in cost of sales of $34.2 million and lower administrative and selling expenses (decreased by $5.8 million). |
• | of $288.2 million in Q2 2022 increased compared to $203.6 million in Q1 2022 primarily due to higher revenue of $221.1 million, a result of higher selling prices of steel with a proportionately lower increase in cost of sales of $68.5 million. |
• | of $123.0 million in Q3 2022 decreased compared to $288.2 million in Q2 2022 mostly due to listing expense ($235.6 million) as a result of the Merger. This was offset, in part, by changes in fair value of warrant liability ($6.8 million), changes in fair value of earnout liability ($33.6 million), changes in fair value of share-based compensation liability ($2.9 million) and increased revenue due primarily to higher selling price of steel. |
• | of $242.9 million in Q4 2022 increased compared to $123.0 million in Q3 2022 mostly due to listing expense ($235.6 million) as a result of the Merger in Q3 2022. This was offset, in part, by decreased revenue due primarily to lower selling price of steel. |
ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Name |
Age |
Position | ||
Michael Garcia |
57 | Chief Executive Officer and Director | ||
Rajat Marwah |
48 | Chief Financial Officer | ||
John Naccarato |
55 | Vice President Strategy and General Counsel | ||
Rory Brandow |
62 | Vice President of Sales | ||
Mark Nogalo |
57 | Vice President, Maintenance and Operating Services | ||
Michael McQuade |
64 | Director | ||
Andy Harshaw |
67 | Director | ||
Andrew E. Schultz |
67 | Director | ||
David D. Sgro |
45 | Director | ||
Eric S. Rosenfeld |
64 | Director | ||
Brian Pratt |
70 | Director | ||
Mary Anne Bueschkens |
60 | Director | ||
Gale Rubenstein |
69 | Director | ||
James Gouin |
62 | Director |
Name |
Fees Earned or Paid in Cash (C$)(1) |
|||
Andy Harshaw |
$ | 253,584 | ||
Andrew E. Schultz |
$ | 210,033 | ||
David D. Sgro |
$ | 123,374 | ||
Eric S. Rosenfeld |
$ | 121,263 | ||
Brian Pratt |
$ | 121,263 | ||
Mary Anne Bueschkens |
$ | 121,864 | ||
Gale Rubenstein |
$ | 132,952 | ||
James Gouin |
$ | 127,774 |
Non-equity incentiveplan compensation (C$) |
||||||||||||||||||||||||||||||||
Name and principal position |
Salary (C$) |
Share-based awards (C$) (2) |
Option-based awards (C$) |
Annual incentive plans (1) |
Long-term incentive plans |
Pension value (C$) |
All other compensation (C$) |
Total compensation (C$) |
||||||||||||||||||||||||
Michael McQuade, CEO |
904,151 | 26,528,402 | N/A | N/A | 29,210 | 13,846 | 28,990,062 | |||||||||||||||||||||||||
Rajat Marwah, CFO |
384,431 | 7,945,104 | N/A | 427,871 | N/A | 29,210 | 5,169 | 8,791,785 | ||||||||||||||||||||||||
John Naccarato, VP – Strategy & General Counsel |
347,500 | 7,945,104 | N/A | 386,767 | N/A | 29,210 | 19,130 | 8,727,711 | ||||||||||||||||||||||||
Mark Nogalo, VP – Maintenance & Operating Services |
345,000 | 6,810,103 | N/A | 369,495 | N/A | 28,610 | 1,130 | 7,554,338 | ||||||||||||||||||||||||
Robert Dionisi, CCO |
325,762 | 4,540,073 | N/A | 348,891 | N/A | 0 | 13,684 | 5,228,410 |
(1) | As a percentage of annualized salary, represents target annual incentive plan compensation of approximately 168% for Mr. McQuade, 111% for Mr. Marwah, 111% for Mr. Naccarato, 107% for Mr. Nogalo, and 107% for Mr. Dionisi. For the year ending March 31, 2022, awards were determined relative to achievement of the applicable criteria for such awards. |
(2) | Represents Replacement Long Term Incentive Plan Awards and Earnout Rights. Refer to Note 4 of the Company’s Consolidated Financial Statements contained elsewhere in the Annual Report. |
Option-based Awards |
Share-based Awards |
|||||||||||||||||||||||||||
Name |
Number of securities underlying unexercised options (#) |
Option exercise price (C$) |
Option expiration date |
Value of unexercised in-the-money options (C$) |
Number of shares or units of shares that have not vested (#) |
Market or payout value of share-based awards that have not vested (C$) |
Market or payout value of vested share -based awards not paid out or distributed (C$) (1) |
|||||||||||||||||||||
Michael McQuade, CEO |
N/A | N/A | N/A | N/A | Nil | Nil | 26,528,402 | |||||||||||||||||||||
Rajat Marwah, CFO |
N/A | N/A | N/A | N/A | Nil | Nil | 7,945,104 | |||||||||||||||||||||
John Naccarato, VP – Strategy & General Counsel |
N/A | N/A | N/A | N/A | Nil | Nil | 7,945,104 | |||||||||||||||||||||
Mark Nogalo, VP – Maintenance & Operating Services |
N/A | N/A | N/A | N/A | Nil | Nil | 6,810,103 | |||||||||||||||||||||
Robert Dionisi, CCO |
N/A | N/A | N/A | N/A | Nil | Nil | 4,540,073 |
(1) | Represents rights to acquire Common Shares that were granted in respect of Replacement LTIP Awards pursuant to the LTIP Exchange, valued at C$14.06 per right. |
Name and principal position |
Option-based awards – Value expected to be vested during the year (C$) |
Share-based awards – Value expected to be vested during the year (C$) (1) |
Non-equity incentive plan compensation – Value expected to be earned during the year (C$) |
|||||||||
Michael McQuade, CEO |
N/A | 26,528,402 | N/A | |||||||||
Rajat Marwah, CFO |
N/A | 7,945,104 | N/A | |||||||||
John Naccarato, VP – Strategy & General Counsel |
N/A | 7,945,104 | N/A | |||||||||
Mark Nogalo, VP – Maintenance & Operating Services |
N/A | 6,810,103 | N/A | |||||||||
Robert Dionisi, CCO |
N/A | 4,540,073 | N/A |
(1) | Represents rights to acquire Common Shares that were granted in respect of Replacement LTIP Awards pursuant to the LTIP Exchange, valued at C$14.06 ($11.25) per right. |
Name |
Number of years credited service as of March 31, 2022 (#) |
Annual benefits payable (C$) |
Opening present value of defined benefit obligation as of April 1, 2021 (C$) |
Compensatory change (C$) |
Non- compensatory change (C$) |
Closing present value of defined benefit obligation (C$) |
||||||||||||||||||||||
At year end |
At age 65 |
|||||||||||||||||||||||||||
Michael McQuade, CEO |
N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Rajat Marwah, CFO |
N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
John Naccarato, VP – Strategy & General Counsel |
N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Mark Nogalo, VP – Maintenance & Operating Services |
34.4 | 117,700 | 119,700 | 1,725,400 | 46,200 | (148,500 | ) | 1,623,100 | ||||||||||||||||||||
Robert Dionisi, CCO |
35.00 | 119,700 | 119,700 | 1,685,100 | Nil | (97,900 | ) | 1,587,200 |
Name |
Accumulated value as of April 1, 2021 (C$) |
Compensatory (C$) |
Expected accumulated value at year ending March 31, 2022 (C$) |
|||||||||
Michael McQuade, CEO |
66,362 | Nil | 95,572 | |||||||||
Rajat Marwah, CFO |
275,542 | Nil | 302,453 | |||||||||
John Naccarato, VP – Strategy & General Counsel |
52,481 | Nil | 83,756 | |||||||||
Mark Nogalo, VP – Maintenance & Operating Services |
N/A | N/A | N/A | |||||||||
Robert Dionisi, CCO |
N/A | N/A | N/A |
• | reviewing, approving and recommending for board approval Algoma’s financial statements, including any certification, report, opinion or review rendered by the external auditor, the annual information form, and the related management’s discussion and analysis and press release; |
• | receiving periodically management reports assessing the adequacy and effectiveness of Algoma’s disclosure controls and procedures; |
• | reviewing and making recommendations to the board in respect of the mandate of Algoma’s disclosure committee and reviewing the disclosure committee’s quarterly reports pertaining to its activities for the previous quarter; |
• | preparing all disclosure and reports as may be required to be prepared by the committee by any applicable law, regulation, rule or listing standard; |
• | reviewing material prepared by management regarding Algoma’s financial strategy considering current and future capital and operating plans and budgets, Algoma’s capital structure, including debt and equity components, current and expected financial leverage, interest rate and foreign currency exposures and in the committee’s discretion, making recommendations to the board; |
• | reviewing management’s process to identify, monitor and manage the significant risks associated with the activities of Algoma, as well as the steps taken by management to report such risks; |
• | reviewing the effectiveness of the internal control systems for monitoring compliance with applicable laws and regulations; |
• | assessing the qualifications and independence of the external auditor and being directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged (including resolution of disagreements between management of Algoma and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for Algoma; |
• | obtaining and reviewing a report, at least annually, from the external auditor describing (a) the external auditor’s internal quality-control procedures and (b) any material issues raised by the most recent internal quality-control review, or peer review, of the external auditor’s firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues; |
• | reviewing the scope, plan and results of the external auditor’s audit and reviews, including the auditor’s engagement letter, the post-audit management letter, if any, and the form of the audit report, and reviewing the scope and plan of the work to be done by the internal audit group and the responsibilities, budget, audit plan, activities, organizational structure and staffing of the internal audit group as needed; |
• | setting clear policies for audit partner rotation in compliance with applicable laws and regulations; |
• | identifying and informing the board of matters that may significantly impact on the financial condition or affairs of the business, including irregularities in Algoma’s business administration, and, where applicable, suggesting corrective measures to the board; |
• | reviewing the quality and integrity of Algoma’s financial reporting processes, both internal and external, in consultation with the external auditor; |
• | developing and recommending to the board for approval policies and procedures for the review, approval or ratification of related party transactions, overseeing the implementation of and compliance with the such policies regarding related party transactions and reviewing and approving all related party transactions required to be disclosed pursuant to applicable rules prior to us entering into such transactions; |
• | reviewing with management, the external auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters as the committee or the board deems necessary or appropriate, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by applicable accounting boards, the SEC or other regulatory authorities; |
• | establishing and overseeing the effectiveness of procedures for the receipt, retention and treatment of complaints received by Algoma relating to accounting, auditing matters, internal accounting controls or the management of our business under Algoma’s whistleblower policy, including the confidential, anonymous submission by employees of Algoma of concerns regarding questionable accounting or auditing matters; and |
• | performing any other activities as the Committee or the board deems necessary or appropriate. |
• | reviewing and making recommendations to the board with respect to the compensation of directors of Algoma; |
• | reviewing and making recommendations to the board with respect to the corporate goals and objectives relevant to the compensation of the Chief Executive Officer and evaluating the Chief Executive Officer’s performance in light of those goals and objectives; |
• | reviewing and making recommendations to the board with respect to the compensation of the Chief Executive Officer and, based on the recommendation of the Chief Executive Officer, the other members of the executive management group, including salary, incentive compensation plans, equity-based plans, the terms of any employment agreements, severance arrangements and change of control arrangements or provisions, and any special or supplemental benefits; |
• | recommending awards under the incentive compensation and equity-based compensation plans of Algoma; and |
• | from time to time, as appropriate, reviewing Algoma’s policies on salary administration, pay and employment equity, basic incentive and total cash compensation, retirement benefits, and long-term incentives and recommending changes to the board if appropriate. |
• | reporting to the chair of the board with an assessment of the board’s and management’s performance; |
• | considering recommendations from the Chief Executive Officer concerning the hiring and termination of senior executives, and ensuring that the Chief Executive Officer engages senior management with the necessary skills, knowledge, and experience to manage Algoma’s affairs in a sound and responsible manner; |
• | seeking individuals qualified (in the context of the needs of Algoma, any formal criteria established by the board and any obligations under Algoma’s contractual arrangements) to become members of the board for recommendation to the board; |
• | reviewing the competencies, skills and personal qualities required of board members, as a whole, in light of relevant factors, including (i) the objective of adding value to Algoma in light of the opportunities and risks facing Algoma and Algoma’s strategies; (ii) the need to ensure, to the greatest extent possible, that a majority of the board is comprised of individuals who meet the independence requirements of the applicable regulatory, stock exchange and securities law requirements or other guidelines; and (iii) any policies of the board with respect to board member diversity, tenure, retirement and succession and board member commitments; and |
• | reviewing the appropriateness of the governance practices of Algoma and recommending any proposed changes to the board for approval. |
• | assisting the board, the audit and risk management committee, and senior management in designing, implementing and periodically evaluating Algoma’s disclosure controls and procedures; |
• | ensuring that information required to be disclosed by Algoma is made known to the committee by others within Algoma and recorded, processed, summarized, and reported within the time periods specified in the rules and forms for Canadian and U.S. securities regulatory authorities, as applicable; |
• | reviewing all public disclosures of Algoma, including, but not limited to, annual and quarterly reports, proxy circulars, news releases, presentations, and website content; and |
• | evaluating the accuracy, completeness, materiality, timeliness and consistency of Algoma’s public disclosure and advising the board, the audit and risk management committee and senior management with respect to same. |
• | developing, implementing and monitoring the Company’s policies, practices and procedures regarding the operations strategies, and management of major projects; |
• | reviewing the planning and execution of major projects, throughout the project lifecycle, including the planning, construction, approval, and implementations phases of the major projects as well as other applicable responsibilities as determined by the committee; |
• | reviewing and, if appropriate, recommending the board approval of, all project proposals and contracts that (i) are not included in the approved business plan of Algoma; and are anticipated to have a value, in the aggregate, greater than $10,000,000, or as otherwise specified in a policy of the committee; or (ii) determined by the board or management to warrant additional risk review due to complexity and/or increased probability of risk to the Company. |
• | reviewing and making recommendations to the board with respect to (i) material changes to the scope, budget and schedule proposed by management with respect to major projects and (ii) other approvals related to the execution of major projects, as required from time to time; and |
• | retaining qualified advisors, independent of Company management, to monitor and report to the committee on the progress and performance of the major projects against approved execution plans, including scopes, budgets and schedules. |
• | overseeing the Company’s enterprise risk management (“ERM”) program to assist the board in providing oversight of the ERM activities of the Company and its subsidiaries and to advise the board with respect to the effectiveness of the ERM framework of the Company; |
• | receiving periodically management reports on potential emerging risks to the business and how these may interrelate with or compound known risks; |
• | reviewing and evaluating the Company’s overall process for the identification and evaluation of principal business and operational risks and the prevention and/or mitigation thereof; |
• | reviewing all project proposals and contracts that: (i) are not included in the approved business plan of Algoma; and are anticipated to have a value, in the aggregate, greater than $10,000,000 or as otherwise specified in a policy of the committee; or (ii) determined by the board or management to warrant additional risk review due to complexity and/or increased probability of risk to the Company; and |
• | reviewing with management emerging environmental, social and corporate governance (“ESG”) issues affecting the Company and liaise, as appropriate, with other committees of the Board regarding administering the ESG program of the Company and related best practices. |
FY 2022 |
FY 2021 |
FY 2020 |
||||||||||
By Function: |
||||||||||||
Management |
129 | 128 | 125 | |||||||||
Local 2724 |
506 | 492 | 541 | |||||||||
Local 2251 |
2,099 | 2,064 | 2,243 | |||||||||
|
|
|
|
|
|
|||||||
Total |
2,734 | 2,684 | 2,909 | |||||||||
|
|
|
|
|
|
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
• | each person or group who is known by us to own beneficially more than 5% of our subordinate voting shares; |
• | each of our directors; and |
• | each of our executive officers. |
Name and address of beneficial owner |
Number of Algoma Common shares |
Percentage of Algoma Common shares |
||||||
5% shareholders: |
||||||||
Bain Capital Credit, LP (1) |
20,515,674 | 13.9 | ||||||
Barclays Bank PLC (2) |
12,398,564 | 8.4 | ||||||
Contrarian Capital Management, L.L.C. (3) |
8,650,341 | 5.8 | ||||||
Officers and directors: (4) |
||||||||
Michael Garcia |
0 | * | ||||||
Rajat Marwah (5) |
568,352 | * | ||||||
John Naccarato (5) |
569,413 | * | ||||||
Rory Brandow |
0 | * | ||||||
Shawn Galey (5) |
487,341 | * | ||||||
Mark Nogalo (5) |
487,341 | * | ||||||
Brian Pratt (6) |
4, 003,540 |
2.7 | ||||||
Eric S. Rosenfeld (7) |
2, 123,086 |
1.4 | ||||||
Michael McQuade (5) |
1, 900,894 |
1.3 | ||||||
David D. Sgro (8)(9) |
1, 280,981 |
* | ||||||
Andy Harshaw (5) (9) |
33,029 | * | ||||||
Andrew E. Schultz (5)(9) |
32,155 | * | ||||||
Mary Anne Bueschkens (10) |
3,604 | * | ||||||
Gale Rubenstein (10) |
3,931 | * | ||||||
James Gouin (10) |
3,673 | * |
* | Less than 1% |
(1) | Based on information obtained from Schedule 13D filed by Bain Capital Credit, LP on April 13, 2022. According to that report, Bain Capital Credit, LP possesses sole power to vote or to direct the voting of 20,181,720 of such shares and possesses shared power to vote or to direct the voting of none of such shares and possesses sole power to dispose or to direct the disposition of 20,181,720 of such shares and possesses shared power to dispose or to direct the disposition of none of such shares. In addition, according to that report, the business address of Bain Capital Credit, LP is 200 Clarendon Street, Boston, MA 02116. |
(2) | Based on information obtained from Schedule 13G filed by Barclays PLC on February 14, 2022 plus an additional 5,786,480 Common Shares that were subsequently issued pursuant to the contingent right granted to certain shareholders of Algoma to receive a pro rata portion of up to 37.5 million Common Shares if certain targets were met (“Earnout Rights”). According to that report, each of Barclays PLC and Barclays Bank PLC possesses sole power to vote or to direct the voting of 11,577,059 of such shares and possesses shared power to vote or to direct the voting of none of such shares and possesses sole power to dispose or to direct the disposition of 11,577,059 of such shares and possesses shared power to dispose or to direct the disposition of none of such shares. In addition, according to that report, the business address of Barclays PLC and Barclays Bank PLC is 1 Churchill Place, London, E14 5HP, England. |
(3) | Based on information obtained from Schedule 13G filed by Contrarian Capital Management, L.L.C. (“Contrarian”) on February 14, 2022 plus an additional 3,037,603 Common Shares that were subsequently issued pursuant to the Earnout Rights. According to that report, Contrarian possesses sole power to vote or to direct the voting of 6,075,238 of such shares and possesses shared power to vote or to direct the voting of none of such shares and possesses sole power to dispose or to direct the disposition of 6,075,238 of such shares and possesses shared power to dispose or to direct the disposition of none of such shares. In addition, according to that report, Contrarian’s business address is 11 West Putnam Avenue, Suite 425, Greenwich, CT 06830. |
(4) | Unless otherwise indicated, the business address of each of the officers, directors and 5% holders is 105 West Street, Sault Ste. Marie, Ontario, P6A 7B4, Canada. |
(5) | Represents and/or includes Common Shares issuable pursuant to Replacement LTIP Awards. |
(6) | Includes 350,000 Common Shares held by the Pratt Grandchildren’s Trust and 220,000 Common Shares issuable upon the exercise of Warrants (of which 50,000 Warrants are held by the Pratt Grandchildren’s Trust), which Warrants became exercisable on November 18, 2021. Mr. Pratt is the trustee and has sole voting and dispositive power over the shares held by the Pratt Grandchildren’s Trust. Mr. Pratt disclaims beneficial ownership of the shares held by Pratt Grandchildren’s Trust except to the extent of his ultimate pecuniary interest therein. |
(7) | Includes 36,794 Common Shares issuable upon the exercise of Warrants, which Warrants became exercisable on November 18, 2021. |
(8) | Includes an aggregate of 507,937 Common Shares held by trusts established for Mr. Rosenfeld’s children (the “Rosenfeld Children’s Trusts”) and 5,460 Common Shares issuable upon the exercise of Warrants held by Mr. Sgro, which Warrants became exercisable on November 18, 2021. Mr. Sgro is the trustee of the Rosenfeld Children’s Trusts and has sole voting and dispositive power over the shares held by the Rosenfeld Children’s Trusts. Mr. Sgro disclaims beneficial ownership of such shares except to the extent of his ultimate pecuniary interest therein. |
(9) | Includes Common Shares issuable pursuant to the Omnibus Equity Incentive Plan. |
(10) | Represents Common Shares issuable pursuant to the Omnibus Equity Incentive Plan. |
ITEM 8. |
FINANCIAL INFORMATION |
ITEM 9. |
THE OFFER AND LISTING |
ITEM 10. |
ADDITIONAL INFORMATION |
• | incur liens; |
• | engage in mergers, consolidations or amalgamations; |
• | make certain investments or acquisitions; |
• | make certain restricted payments, including the payment of dividends, the repurchase of our capital stock, and the repayment of junior indebtedness prior to maturity; |
• | incur additional indebtedness; |
• | engage in certain transactions with our affiliates; |
• | amend or modify certain indebtedness; |
• | sell or transfer assets; |
• | in the case of Algoma Steel Intermediate Holdings Inc., engage in any material business or operations; and |
• | make changes to our defined benefit pension plans. |
• | sell, transfer or dispose of SIF Project assets the cost of which has been contributed to by the federal Minister of Industry under the Federal SIF Agreement; |
• | pay dividends or other shareholder distributions; and |
• | license intellectual property relating to the SIF Project or to utilize such intellectual property outside of Canada. |
• | banks, insurance companies, and certain other financial institutions; |
• | regulated investment companies and real estate investment trusts; |
• | brokers, dealers, or traders in securities; |
• | traders in securities that elect to mark to market; |
• | tax-exempt organizations or governmental organizations; |
• | U.S. expatriates and former citizens or long-term residents of the U.S.; |
• | persons holding Common Shares and/or Warrants, as the case may be, as part of a hedge, straddle, constructive sale, or other risk reduction strategy or as part of a conversion transaction or other integrated or similar transaction; |
• | persons subject to special tax accounting rules as a result of any item of gross income with respect to Common Shares and/or Warrants, as the case may be, being taken into account in an applicable financial statement; |
• | persons that actually or constructively own 5% or more (by vote or value) of the outstanding Common Shares; |
• | founders, sponsors, officers or directors of Legato or holders of private placement warrants; |
• | “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax (and their shareholders); |
• | S corporations, partnerships, or other entities or arrangements treated as partnerships or other flow-through entities for U.S. federal income tax purposes (and investors therein); |
• | U.S. Holders having a functional currency other than the U.S. dollar; |
• | persons who hold or received Common Shares and/or Warrants, as the case may be, pursuant to the exercise of any employee stock option or otherwise as compensation; and |
• | tax-qualified retirement plans. |
• | an individual who is a citizen or resident of the U.S.; |
• | a corporation (or other entity taxable as a corporation) created or organized in, or under the laws of, the U.S., any state thereof, or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
• | a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes. |
• | either (a) the shares are readily tradable on an established securities market in the U.S. or (b) Algoma is eligible for the benefits of a qualifying income tax treaty with the U.S. that includes an exchange of information program; |
• | Algoma is neither a PFIC (as discussed below under below under “– Passive Foreign Investment Company Rules”) nor treated as such with respect to the U.S. Holder for Algoma’s taxable year in which the dividend is paid or the preceding taxable year; |
• | the U.S. Holder satisfies certain holding period requirements; |
• | the U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property; and |
• | the taxpayer does not take the dividends into account as investment income under Section 163(d)(4)(B) of the Code. |
• | at least 75% of its gross income for such year is passive income (such as interest, dividends, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of assets giving rise to passive income); or |
• | at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. |
• | the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the Common Shares or Warrants; |
• | the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution or to the period in the U.S. Holder’s holding period before the first day of Algoma’s first taxable year in which Algoma is a PFIC will be treated as ordinary income; |
• | the amount allocated to each other taxable year (or portions thereof) of the U.S. Holder and included in such holder’s holding period will be subject to the highest tax rate in effect for individuals or corporations, as applicable, for each such year without regard to the U.S. Holder’s other items of income and loss for such year; and |
• | the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder with respect to the resulting tax attributable to each such year. |
• | a nonresident alien individual, other than certain former citizens and residents of the U.S. subject to U.S. tax as expatriates; |
• | a foreign corporation; or |
• | a foreign estate or trust; |
• | the gain or dividend is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment or a “fixed base” in the United States to which such gain is attributable); or |
• | in the case of any gain, the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met. |
ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. |
CONTROLS AND PROCEDURES |
ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. |
CODE OF ETHICS |
ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
For the year ended |
||||||||
C$ millions |
March 31, 2022 |
March 31, 2021 |
||||||
Audit fees (1) |
2, 168,565 |
939,825 | ||||||
Audit-related fees (2) |
516,922 |
78,345 | ||||||
Tax fees (3) |
365,269 | 67,839 | ||||||
All other fees (4) |
— | 171,200 | ||||||
|
|
|
|
|||||
Total |
3,050,756 | 1,257,209 | ||||||
|
|
|
|
(1) | “Audit fees” means the aggregate fees billed in each of the fiscal years for professional services rendered by Deloitte LLP for the audit of our annual financial statements and review of our interim financial statements. |
(2) | “Au dit-related fees” includes assurance and related services reasonably related to the financial statement audit and not included in audit services, including those pertaining to the merger transaction. |
(3) | “Tax fees” means the aggregate fees billed in each of the fiscal years for professional services rendered by Deloitte LLP for tax compliance and tax advice. |
(4) | “A ll other fees” not included above including transaction related services. |
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16G. |
CORPORATE GOVERNANCE |
ITEM 16H. |
MINE SAFETY DISCLOSURE |
ITEM 17. |
FINANCIAL STATEMENTS. |
ITEM 18. |
FINANCIAL STATEMENTS. |
ITEM 19. |
EXHIBITS |
Algoma Steel Group Inc. | ||
By: | /s/ Michael Garcia | |
Name: | Chief Executive Officer | |
Title: | Michael Garcia |
• | With the assistance of technical accounting specialists: |
• | Assessed the information in the Merger agreements to assess whether all key facts and circumstances were incorporated into management’s assessment. |
• | Evaluated management’s determination of the accounting treatment of the Merger by analyzing specific facts and circumstances against relevant accounting guidance. |
• | With the assistance of fair value specialists, evaluated the appropriateness of using the market price of the Company’s common shares as an approximation of fair value for each earnout right. |
• | With the assistance of financial instruments specialists: |
• | Read the key steel price hedge agreements, including their legal terms, and other supporting documents and assessed whether all key facts and circumstances were incorporated into management’s assessment. |
• | Evaluated management’s assessment of the hedge documentation to assess whether the related accounting treatment was in accordance with the relevant accounting guidance and that the hedge was effective. |
• | With the assistance of fair value specialists, evaluate the fair value of the steel price hedge by developing a range of independent estimates using market price of steel and other third party data, and comparing it to the fair value recorded by management. |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
expressed in millions of Canadian dollars |
||||||||||||
Revenue (Note 7) |
$ |
$ | $ | |||||||||
Operating expenses |
||||||||||||
Cost of sales (Note 8) |
$ |
$ | $ | |||||||||
Administrative and selling expenses (Note 9) |
||||||||||||
|
|
|
|
|
|
|||||||
Profit (loss) from operations |
$ |
$ | $ | ( |
) | |||||||
|
|
|
|
|
|
|||||||
Other (income) and expenses |
||||||||||||
Finance income |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
Finance costs (Note 10) |
||||||||||||
Interest on pension and other post-employment benefit obligations (Note 11) |
||||||||||||
Foreign exchange loss (gain) |
( |
) | ||||||||||
Transaction costs |
||||||||||||
Listing expense (Note 4) |
||||||||||||
Change in fair value of warrant liability (Note 4) |
||||||||||||
Change in fair value of earnout liability (Note 4) |
( |
) |
||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Income (loss) before income taxes |
$ |
$ | ( |
) | $ | ( |
) | |||||
Income tax expense (recovery) (Note 26) |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net income (loss) |
$ |
$ | ( |
) | $ | ( |
) | |||||
|
|
|
|
|
|
|||||||
Net income (loss) per common share |
||||||||||||
Basic (Note 29) |
$ |
$ |
( |
) | $ | ( |
) | |||||
Diluted (Note 29) |
$ |
$ |
( |
) | $ | ( |
) |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
expressed in millions of Canadian dollars |
||||||||||||
Net income (loss) |
$ |
$ | ( |
) | $ | ( |
) | |||||
Other comprehensive income (loss), net of income tax, that will be reclassified subsequently to profit or loss |
||||||||||||
Net unrealized income (loss) on cash flow hedges, net of tax recovery of $ the years ended March 31, 2022, March 31, 2021 and March 31, 2020, respectively (Note 21) |
$ |
$ | ( |
) | $ | |||||||
Other comprehensive income (loss), net of income tax, that will not be reclassified subsequently to profit or loss |
||||||||||||
Foreign exchange gain (loss) on translation to presentation currency |
$ |
( |
) |
$ | ( |
) | $ | |||||
Remeasurement of pension and other post-employment benefit obligations, net of tax March 31, 2022 and March 31, 2021 and ( $) million for the year ended March 31, 2020 (Notes 22, 23) |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
|||||||
$ |
$ | ( |
) | $ | ||||||||
|
|
|
|
|
|
|||||||
Total comprehensive income (loss) |
$ |
$ | ( |
) | $ | ( |
) | |||||
|
|
|
|
|
|
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
expressed in millions of Canadian dollars |
||||||||
Assets |
||||||||
Current |
||||||||
Cash (Note 12) |
$ |
$ | ||||||
Restricted cash (Note 12) |
||||||||
Accounts receivable, net (Note 13) |
||||||||
Inventories, net (Note 14) |
||||||||
Prepaid expenses and deposits |
||||||||
Margin payments (Note 21) |
||||||||
Other assets |
||||||||
|
|
|
|
|||||
Total current assets |
$ |
$ | ||||||
|
|
|
|
|||||
Non-current |
||||||||
Property, plant and equipment, net (Note 15) |
$ |
$ | ||||||
Intangible assets, net |
||||||||
Related party receivable (Note 31) |
||||||||
Other assets |
||||||||
|
|
|
|
|||||
Total non-current assets |
$ |
$ | ||||||
|
|
|
|
|||||
Total assets |
$ |
$ | ||||||
|
|
|
|
|||||
Liabilities and Shareholders’ Equity |
||||||||
Current |
||||||||
Bank indebtedness (Note 16) |
$ |
$ | ||||||
Accounts payable and accrued liabilities (Note 17) |
||||||||
Taxes payable and accrued taxes (Note 18) |
||||||||
Current portion of other long-term liabilities |
||||||||
Current portion of long-term debt (Note 19) |
||||||||
Current portion of governmental loans (Note 20) |
||||||||
Current portion of environmental liabilities (Note 25) |
||||||||
Derivative financial instruments (Note 21) |
||||||||
Warrant liability (Note 4) |
||||||||
Earnout liability (Note 4) |
||||||||
Share-based payment compensation liability (Note 4) |
||||||||
|
|
|
|
|||||
Total current liabilities |
$ |
$ | ||||||
|
|
|
|
|||||
Non-current |
||||||||
Long-term debt (Note 19) |
$ |
$ | ||||||
Long-term governmental loans (Note 20) |
||||||||
Accrued pension liability (Note 22) |
||||||||
Accrued other post-employment benefit obligation (Note 23) |
||||||||
Other long-term liabilities (Note 24) |
||||||||
Environmental liabilities (Note 25) |
||||||||
Deferred income tax liabilities (Note 26) |
||||||||
|
|
|
|
|||||
Total non-current liabilities |
$ |
$ | ||||||
|
|
|
|
|||||
Total liabilities |
$ |
$ | ||||||
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
||||||||
Capital stock (Note 28) |
$ |
$ | ||||||
Accumulated other comprehensive income |
||||||||
Retained earnings (deficit) |
( |
) | ||||||
Contributed (deficit) surplus (Note 4) |
( |
) |
||||||
|
|
|
|
|||||
Total shareholders’ equity |
$ |
$ | ||||||
|
|
|
|
|||||
Total liabilities and shareholders’ equity |
$ |
$ | ||||||
|
|
|
|
expressed in millions of Canadian dollars |
Capital stock |
Contributed (Deficit) Surplus |
Foreign exchange gain (loss) on translation to presentation currency |
Actuarial gain (loss) on pension and other post- employment benefit obligation, net of tax |
Cash flow hedge reserve - unrealized loss (Note 21) |
Accumulated other compre- hensive income (loss) |
Retained earnings (deficit) |
Total Shareholders’ equity |
||||||||||||||||||||||||
Balance at March 31, 2019 |
$ | $ | — | $ | $ | ( |
) | $ | — | $ | ( |
) | $ | $ | ||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Other comprehensive income |
— | — | — | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at March 31, 2020 |
$ | $ | — | $ | $ | $ | — | $ | $ | ( |
) | $ | ||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Other comprehensive loss |
— | — | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at March 31, 2021 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Other comprehensive (loss) income |
— | — | ( |
) | — | |||||||||||||||||||||||||||
Issuance and modification of performance share units (Note 4) |
— |
( |
) | — | — | — | — | — | ( |
) | ||||||||||||||||||||||
Issuance of deferred share units (Note |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Issuance of capital stock |
— |
— | — | — | — |
— | ||||||||||||||||||||||||||
Return of capital (Note 28) |
( |
) |
— | — | — | — | — | — | ( |
) | ||||||||||||||||||||||
Earnout rights (Note 4) |
— |
— | — | — | — | — | ( |
) |
( |
) | ||||||||||||||||||||||
Dividends paid (Note 35) |
— | — | — | — | — | — | ( |
) |
( |
) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
expressed in millions of Canadian dollars |
||||||||||||
Operating activities |
||||||||||||
Net income (loss) |
$ |
$ | ( |
) | $ | ( |
) | |||||
Items not affecting cash: |
||||||||||||
Amortization of property, plant and equipment and intangible assets |
||||||||||||
Deferred income tax expense (Note 26) |
— | ( |
) | |||||||||
Pension expense in excess of funding (pension funding in excess of expense) |
( |
) | ( |
) | ||||||||
Post-employment benefit funding in excess of expense |
( |
) |
( |
) | ( |
) | ||||||
Unrealized foreign exchange loss (gain) on: |
||||||||||||
accrued pension liability |
( |
) | ||||||||||
post-employment benefit obligations |
( |
) | ||||||||||
Finance costs (Note 10) |
||||||||||||
Loss on disposal of property, plant and equipment (Note 15) |
— | |||||||||||
Interest on pension and other post-employment benefit obligations |
||||||||||||
Accretion of governmental loans and environmental liabilities |
||||||||||||
Unrealized foreign exchange loss (gain) on government loan facilities |
( |
) | ||||||||||
Increase in fair value of warrant liability (Note 4) |
— | — | ||||||||||
Decrease in fair value of earnout liability (Note 4) |
( |
) |
— | — | ||||||||
Listing expense (Note 4) |
— | — | ||||||||||
Other |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ( |
) | ||||||||
Net change in non-cash operating working capital (Note 30) |
( |
) |
( |
) | ||||||||
Environmental liabilities paid (Note 25) |
( |
) |
( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Cash generated by (used in) operating activities |
$ |
$ | $ | ( |
) | |||||||
|
|
|
|
|
|
|||||||
Investing activities |
||||||||||||
Acquisition of property, plant and equipment (Note 15) |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
Acquisition of intangible asset |
— |
( |
) | ( |
) | |||||||
Acquisition of right-of-use |
( |
) |
— | — | ||||||||
Recovery (issuance) of related party receivable (Note 31) |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Cash used in investing activities |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Financing activities |
||||||||||||
Bank indebtedness (repaid) advanced, net (Note 16) |
$ |
( |
) |
$ | ( |
) | $ | |||||
Repayment of term loans (Note 19) |
( |
) |
( |
) | ( |
) | ||||||
Governmental loans received, net of benefit (Note 20) |
||||||||||||
Repayment of government loans (Note 20) |
( |
) |
— | — | ||||||||
Restricted cash (Note 12) |
— |
— | ||||||||||
Interest paid |
( |
) |
( |
) | ( |
) | ||||||
Proceeds from issuance of shares |
— | |||||||||||
Dividends paid (Note 35) |
( |
) |
— | — | ||||||||
Other |
( |
) |
( |
) | ||||||||
|
|
|
|
|
|
|||||||
Cash (used in) generated by financing activities |
$ |
( |
) |
$ | ( |
) | $ | |||||
|
|
|
|
|
|
|||||||
Effect of exchange rate changes on cash |
$ |
( |
) |
$ | ( |
) | $ | |||||
Cash |
||||||||||||
Increase (decrease) in cash |
( |
) | ||||||||||
Opening balance |
||||||||||||
|
|
|
|
|
|
|||||||
Ending balance (Note 12) |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
1. |
GENERAL INFORMATION |
• | Algoma Steel Holdings Inc. |
• | Algoma Steel Intermediate Holdings Inc. |
• | Algoma Steel Inc. |
• | Algoma Steel Inc. USA |
• | Algoma Docks GP Inc. |
• | Algoma Docks Limited Partnership |
2. |
BASIS OF PRESENTATION |
2. |
BASIS OF PRESENTATION (continued) |
3. |
SIGNIFICANT ACCOUNTING POLICIES |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
• | Amortized cost |
• | Fair value through profit (loss) (FVTP(L)) |
• | Fair value through other comprehensive (loss) income (FVTOCI(L)) |
• | The financial asset is held within a business model with the objective of holding the financial asset in order to collect contractual cash flows; and |
• | The contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
• | there is an economic relationship between the hedged item and the hedging instrument; |
• | the effect of credit risk does not dominate the value changes that result from that economic relationship; and |
• | the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Company actually hedges and the quantity of the hedging instrument that the Company actually uses to hedge that quantity of hedged item. |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
Category of Property, Plant and Equipment |
Range of Estimated Useful Life | |
Buildings |
||
Machinery and equipment |
||
Vehicles |
||
Computer hardware |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
• | service cost, past-service cost, gains and losses on curtailments and settlements; |
• | net interest expense; and |
• | remeasurement. |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
4. |
MERGER TRANSACTION |
4. |
MERGER TRANSACTION (continued) |
Merger transaction under IFRS 2 |
||||
Total fair value of consideration: |
||||
|
$ | |||
|
|
|||
Net assets acquired: |
||||
Cash (US $ |
$ | |||
Intercompany loan settled the subsequent day of transaction close (US $ |
||||
Less: warrant liability (US $ |
( |
) | ||
Less: Legato liabilities assumed (US $ |
( |
) | ||
|
|
|||
Total listing expense (US $ |
$ |
|||
|
|
Number of Common Shares |
||||
Common shares outstanding prior to Merger (post stock-split) |
||||
Common shares issued to Legato shareholders |
||||
Common shares issued to PIPE investors |
||||
Total |
4. |
MERGER TRANSACTION (continued) |
(i) |
Public Warrants |
(ii) |
Private Warrants |
4. |
MERGER TRANSACTION (continued) |
4. |
MERGER TRANSACTION (continued) |
5. |
CRITICAL ESTIMATES AND JUDGEMENTS |
5. |
CRITICAL ESTIMATES AND JUDGEMENTS (continued) |
6. |
CAPITAL MANAGEMENT |
6. |
CAPITAL MANAGEMENT (continued) |
7. |
REVENUE AND SEGMENTED INFORMATION |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Total revenue is comprised of: |
||||||||||||
Sheet & Strip |
$ |
$ | $ | |||||||||
Plate |
||||||||||||
Freight |
||||||||||||
Non-steel revenue |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
|||||||
The geographical distribution of total revenue is as follows: |
||||||||||||
Sales to customers in Canada |
$ |
$ | $ | |||||||||
Sales to customers in the United States |
||||||||||||
Sales to customers in the rest of the world |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
8. |
COST OF SALES |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Total cost of sales is comprised of: |
||||||||||||
Cost of steel revenue |
$ |
$ | $ | |||||||||
Cost of freight revenue |
||||||||||||
Cost of non-steel revenue |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Inventories recognized as cost of sales: |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
|||||||
Net inventory write-downs as a result of net realizable value lower than cost included in cost of sales: |
$ |
$ | $ | — | ||||||||
|
|
|
|
|
|
8. |
COST OF SALES (continued) |
9. |
ADMINISTRATIVE AND SELLING EXPENSES |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Administrative and selling expense is comprised of: |
||||||||||||
Personnel expenses |
$ |
$ | $ | |||||||||
Professional, consulting, legal and other fees |
||||||||||||
Software licenses |
||||||||||||
Amortization of intangible assets and non-producing assets |
||||||||||||
Other administrative and selling |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
10. |
FINANCE COSTS |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Finance costs are comprised of: |
||||||||||||
Interest on the Revolving Credit Facility (Note 16) |
$ |
$ | $ | |||||||||
Interest on the Secured Term Loan Facility (Note 19) |
||||||||||||
Interest on the Algoma Docks Term Loan (Note 19) |
||||||||||||
Other interest expense |
||||||||||||
Revolving Credit Facility fees |
||||||||||||
Unwinding of issuance costs of debt facilities (Note 16 and Note 19) and accretion of governmental loan benefits and discounts on environmental liabilities |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
11. |
INTEREST ON PENSION AND OTHER POST-EMPLOYMENT BENEFIT OBLIGATIONS |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Interest on pension and other post-employment benefit obligations is comprised of: |
||||||||||||
Interest on defined benefit pension obligation (Note 22) |
$ |
$ | $ | |||||||||
Interest on other post-employment benefit obligation (Note 23) |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
12. |
CASH AND RESTRICTED CASH |
13. |
ACCOUNTS RECEIVABLE, NET |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
The carrying amount of: |
||||||||
Trade accounts receivable |
$ |
$ | ||||||
Allowance for doubtful accounts |
( |
) |
( |
) | ||||
Governmental loan claims receivable |
||||||||
Federal Advanced Manufacturing Fund (“Federal AMF”) Loan |
||||||||
Federal Ministry of Industry, Strategic Innovation Fund (“Federal SIF”) Agreement |
||||||||
Canada Emergency Wage Subsidy receivable |
||||||||
Northern Industrial Electricity Rate program rebate receivable |
||||||||
Ontario Workplace Safety and Insurance Board New Experimental Experience Rating rebate receivable |
||||||||
Other accounts receivable |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
Opening balance |
$ |
( |
) |
$ | ( |
) | ||
Remeasurement of loss allowance |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Ending balance |
$ |
( |
) |
$ | ( |
) | ||
|
|
|
|
14. |
INVENTORIES, NET |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
The carrying amount of: |
||||||||
Raw materials and consumables |
$ |
$ | ||||||
Work in progress |
||||||||
Finished goods |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
15. |
PROPERTY, PLANT AND EQUIPMENT, NET |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
The carrying amount of: |
||||||||
Freehold land |
$ |
$ | ||||||
Buildings |
||||||||
Machinery and equipment |
||||||||
Computer hardware |
||||||||
Right-of-use |
||||||||
Property under construction |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
Cost |
Freehold Land |
Buildings |
Machinery & Equipment |
Computer Hardware |
Right-of-use assets |
Property under construction |
Total |
|||||||||||||||||||||
Balance at March 31, 2020 |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Additions |
||||||||||||||||||||||||||||
Transfers |
( |
) | ||||||||||||||||||||||||||
Disposals |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Foreign exchange |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at March 31, 2021 |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Additions |
||||||||||||||||||||||||||||
Transfers |
( |
) | ||||||||||||||||||||||||||
Disposals |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Foreign exchange |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15. |
PROPERTY, PLANT AND EQUIPMENT, NET (continued) |
Accumulated Amortization: |
Freehold Land |
Buildings |
Machinery & Equipment |
Computer Hardware |
Right-of-use assets |
Property under construction |
Total |
|||||||||||||||||||||
Balance at March 31, 2020 |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Amortization expense |
||||||||||||||||||||||||||||
Foreign exchange |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at March 31, 2021 |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Amortization expense |
||||||||||||||||||||||||||||
Disposals |
||||||||||||||||||||||||||||
Foreign exchange |
( |
) | ( |
) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15. |
PROPERTY, PLANT AND EQUIPMENT, NET (continued) |
15. |
PROPERTY, PLANT AND EQUIPMENT, NET (continued) |
16. |
BANK INDEBTEDNESS |
16. |
BANK INDEBTEDNESS (continued) |
Balance at March 31, 2020 |
$ | |||
Revolving Credit Facility drawn |
||||
Repayment of Revolving Credit Facility |
( |
) | ||
Exchange |
( |
) | ||
|
|
|||
Balance at March 31, 2021 |
$ | |||
Revolving Credit Facility drawn |
||||
Repayment of Revolving Credit Facility |
( |
) | ||
Foreign exchange |
( |
) | ||
|
|
|||
Balance at March 31, 2022 |
$ |
|||
|
|
17. |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
The carrying amount of: |
||||||||
Accounts payable |
$ |
$ | ||||||
Accrued liabilities |
||||||||
Wages and accrued vacation payable |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
18. |
TAXES PAYABLE AND ACCRUED TAXES |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
The carrying amount of: |
||||||||
Payroll taxes payable |
$ |
$ | ||||||
Sales taxes payable |
||||||||
Carbon tax accrual |
||||||||
Income taxes payable |
— | |||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
19. |
LONG-TERM DEBT |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
The carrying amount of: |
||||||||
Secured Term Loan Facility due November 30, 2025 |
||||||||
Current portion |
$ |
$ | ||||||
Long-term portion |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
|||||
Algoma Docks Term Loan Facility due May 31, 2025 |
||||||||
Current portion |
$ |
$ | ||||||
Long-term portion |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
|||||
Less: unamortized financing costs |
||||||||
Current portion |
$ |
$ | ||||||
Long-term portion |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
|||||
Current portion of long-term debt |
$ |
$ | ||||||
Long-term portion of long-term debt |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
19. |
LONG-TERM DEBT (continued) |
Secured Term Loan Facility |
Algoma Docks Term Loan Facility |
|||||||
Balance at March 31, 2019 |
|
$ |
|
|
|
$ |
|
|
Facility repaymen t |
|
|
( |
) |
|
|
( |
) |
Unwinding of issuance costs of debt facilit y |
|
|
|
|
|
|
— |
|
Foreign exchang e |
|
|
|
|
|
|
|
|
Balance at March 31, 2020 |
$ | $ | ||||||
Interest payment in kind |
||||||||
Facility repayment |
( |
) | ( |
) | ||||
Unwinding of issuance costs of debt facility |
||||||||
Foreign exchange |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Balance at March 31, 2021 |
$ | $ | ||||||
Facility repayment |
( |
) | ( |
) | ||||
Unwinding of issuance costs of debt facility |
||||||||
Foreign exchange |
( |
) | ||||||
|
|
|
|
|||||
Balance at March 31, 2022 |
$ | $ | ||||||
|
|
|
|
20. |
GOVERNMENTAL LOANS |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
The carrying amount of: |
||||||||
Long-term portion |
||||||||
Federal AMF Loan, denominated in |
$ |
$ | ||||||
Provincial MENDM Loan, denominated in 2028 |
||||||||
Federal SIF Agreement loan, denominated in 2031 |
||||||||
Federal SIF Agreement loan, denominated in 2030 |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
|||||
Current portion |
||||||||
Federal AMF Loan, denominated in Canadian dollars |
$ |
$ | ||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
20. |
GOVERNMENTAL LOANS (continued) |
December 1, 2019 to November 30, 2020 |
% | |||
December 1, 2020 to November 30, 2021 |
% |
20. |
GOVERNMENTAL LOANS (continued) |
Governmental Loan Issued (Repaid) |
Governmental loan benefit recognized immediately |
Acretion of governmental loan benefit |
Carrying value |
|||||||||||||
Federal AMF Loan |
||||||||||||||||
Balance at March 31, 2021 |
$ | $ | ( |
) | $ | $ | ||||||||||
( |
) |
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provincial MENDM Loan |
||||||||||||||||
Balance at March 31, 2021 |
$ | $ | ( |
) | $ | $ | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Federal SIF Loan |
||||||||||||||||
Balance at March 31, 2021 |
$ | $ | ( |
) | $ | $ | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Federal SIF Loan (EAF) |
||||||||||||||||
Balance at March 31, 2021 |
$ | $ | $ | $ | ||||||||||||
( |
) |
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total, Governmental Loans |
||||||||||||||||
Balance at March 31, 2021 |
$ | $ | ( |
) | $ | $ | ||||||||||
( |
) | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21. |
DERIVATIVE FINANCIAL INSTRUMENTS |
21. |
DERIVATIVE FINANCIAL INSTRUMENTS (continued) |
Fair Value Liability |
Notional Amounts |
Average Price (USD) |
||||||||||||||||||||||
|
(tons, in thousands) |
(per ton) |
||||||||||||||||||||||
March 31, 2022 |
March 31, 2021 |
March 31, 2022 |
March 31, 2021 |
March 31, 2022 |
March 31, 2021 |
|||||||||||||||||||
Cash flow hedges - commodity price risk |
||||||||||||||||||||||||
Natural gas swaps |
$ | $ | $ | |||||||||||||||||||||
Steel swaps |
$ | |||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
$ |
$ | |
||||||||||||||||||||||
|
|
|
|
21. |
DERIVATIVE FINANCIAL INSTRUMENTS (continued) |
As at, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Opening balance |
$ |
$ | |
$ |
||||||||
Loss arising on changes in fair value of cash flow hedges, net of tax of $ million, $million and |
|
|||||||||||
Loss reclassified to net income (loss) |
( |
) |
( |
) | |
( |
) | |||||
|
|
|
|
|
|
|||||||
Net unrealized (income) loss on cash flow hedges |
( |
) |
|
|||||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ |
$ | |
$ |
||||||||
|
|
|
|
|
|
22. |
PENSION BENEFITS |
22. |
PENSION BENEFITS (continued) |
Years ended, |
March 31, 2022 |
March 31, 2021 |
||||||
Assumptions for determination of defined benefit cost: |
||||||||
Defined obligation and past service cost |
||||||||
Net interest cost |
||||||||
Current service cost |
||||||||
Interest cost on current service cost |
||||||||
Discount rate for determination of defined benefit obligation |
||||||||
Assumptions for determination of defined benefit cost and defined benefit obligation: |
||||||||
Ultimate rate of compensation increase |
||||||||
Mortality |
CPM2014 Private Projection CPM-B |
|
CPM2014 Private Projection CPM-B |
|
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Amounts recognized in net income (loss) were as follows: |
||||||||||||
Current service cost |
$ |
$ | $ | |||||||||
Net interest cost |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Defined benefit costs recognized in: |
||||||||||||
Cost of sales |
$ |
$ | $ | |||||||||
Administrative and selling expense |
||||||||||||
Interest on pension liability |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
22. |
PENSION BENEFITS (continued) |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Amounts recognized in other comprehensive income (loss), were as follows: |
||||||||||||
Actuarial gain on accrued pension liability |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Less tax effect |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
( |
) |
$ | ( |
) | $ | ( |
) | ||||
|
|
|
|
|
|
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
Present value of defined benefit obligation |
$ |
$ | ||||||
Fair value of plan assets |
||||||||
|
|
|
|
|||||
Net accrued pension liability |
$ |
$ | ||||||
|
|
|
|
Years ended, |
||||||||
Movements in the present value of the plan assets were as follows: |
||||||||
Fair value of plan assets at beginning of year |
$ |
$ | ||||||
Actual return (net of investment management expenses) |
( |
) |
||||||
Administration expenses |
( |
) |
( |
) | ||||
Employer contributions |
||||||||
Benefits paid |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Fair value of plan assets at end of the year, March 31, 2022 and March 31, 2021, respectively |
$ |
$ | ||||||
|
|
|
|
|||||
Movements in the present value of the defined benefit obligation were as follows: |
||||||||
Defined benefit obligation at the beginning of the year |
$ |
$ | ||||||
Current service cost |
||||||||
Interest cost |
||||||||
Actuarial (gains) losses arising from financial assumptions |
( |
) |
||||||
Effect of experience adjustments |
( |
) | ||||||
Effect of demographic assumptions |
( |
) | ||||||
Benefits paid |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Defined benefit obligation at end of the y e ar, March 31, 2022 and March 31, 2021, respectively |
$ |
$ | ||||||
|
|
|
|
22. |
PENSION BENEFITS (continued) |
Actuarial gain immediately recognized |
Tax effect |
Actuarial gain immediately recognized, net of tax |
||||||||||
Balance at March 31, 2020 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Actuarial gain immediately recognized |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Balance at March 31, 2021 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Actuarial gain immediately recognized |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Balance at March 31, 2022 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
|
|
|
|
|
|
As at |
March 31, 2022 |
March 31, 2021 |
||||||
Cash and cash equivalents |
% |
% | ||||||
Equity instruments |
% |
% | ||||||
Debt instruments |
% |
% | ||||||
Other |
% |
% | ||||||
|
|
|
|
|||||
% |
% | |||||||
|
|
|
|
22. |
PENSION BENEFITS (continued) |
Years ended, |
March 31, 2022 |
March 31, 2021 |
||||||
Effect of change in discount rate assumption |
||||||||
|
$ |
( |
) |
$ | ( |
) | ||
|
$ |
$ | ||||||
Effect of change in salary scale |
||||||||
|
$ |
$ | ||||||
|
$ |
( |
) |
$ | ( |
) | ||
Effect of change in mortality assumption |
||||||||
Set forward |
$ |
$ | ||||||
Set back |
$ |
( |
) |
$ | ( |
) |
23. |
OTHER POST-EMPLOYMENT BENEFITS |
23. |
OTHER POST-EMPLOYMENT BENEFITS (continued) |
As at and for the years ended, |
March 31, 2022 |
March 31, 2021 |
||||||
Assumptions for determination of defined benefit cost: |
||||||||
Discount rate |
||||||||
Defined benefit obligation |
||||||||
Current service cost |
||||||||
Interest cost on benefit obligation |
||||||||
Interest cost on current service cost |
||||||||
Health care cost immediate trend rate |
||||||||
Assumptions for determination of defined benefit obligation: |
||||||||
Effective discount rate |
||||||||
Health care cost immediate trend rate |
||||||||
Assumptions for determination of defined benefit cost and defined benefit obligation: |
||||||||
Health care cost ultimate trend rate |
||||||||
Year ultimate health care cost trend rate reached |
||||||||
Salary Increases per annum |
||||||||
Mortality |
2014 Private Projection CPM-B |
|
2014 Private Projection CPM-B |
|
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Amounts recognized in net income (loss) were as follows: |
||||||||||||
Current service cost |
$ |
$ | $ | |||||||||
Net interest cost |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Post employment benefit costs recognized in: |
||||||||||||
Cost of sales |
$ |
$ | $ | |||||||||
Administrative and selling expense |
||||||||||||
Interest on pension liability |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
23. |
OTHER POST-EMPLOYMENT BENEFITS (continued) |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Amounts recognized in other comprehensive (income) loss, were as follows: |
||||||||||||
Actuarial (income) losses on accrued post employment benefit liability |
$ |
( |
) |
$ | $ | ( |
) | |||||
Less tax effect |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
( |
) |
$ | $ | ( |
) | ||||||
|
|
|
|
|
|
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
Present value of post-employment benefit obligation |
$ |
$ | ||||||
Fair value of plan assets |
||||||||
|
|
|
|
|||||
Accrued other post-employment benefit obligation |
$ |
$ | ||||||
|
|
|
|
Actuarial (gain) loss immediately recognized |
Tax effect |
Actuarial (gain) loss immediately recognized, net of tax |
||||||||||
Balance at March 31, 2020 |
$ | ( |
) | $ | $ | ( |
) | |||||
Actuarial loss immediately recognized |
||||||||||||
|
|
|
|
|
|
|||||||
Balance at March 31, 2021 |
$ | $ | $ | |||||||||
Actuarial gain immediately recognized |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Balance at March 31, 2022 |
$ |
( |
) |
$ |
$ |
( |
) | |||||
|
|
|
|
|
|
23. |
OTHER POST-EMPLOYMENT BENEFITS (continued) |
Movements in the present value of the post-employment benefit plan assets were as follows: |
||||||||
Fair value of plan assets at beginning of year |
$ |
$ | ||||||
Employer contributions |
( |
) | ||||||
Benefits paid |
( |
) |
||||||
|
|
|
|
|||||
Fair value of plan assets at end of the year, March 31, 2022 and March 31, 2021, respectively |
$ |
$ | ||||||
|
|
|
|
|||||
Movements in the present value of the other post-employment benefit obligation were as follows: |
||||||||
Defined benefit obligation at the beginning of the year |
$ |
$ | ||||||
Current service cost |
||||||||
Interest cost |
||||||||
Actuarial (gains) losses arising from financial assumptions |
( |
) |
||||||
Actuarial gains arising from demographic assumptions |
( |
) |
||||||
Actuarial gains from experience adjustments |
( |
) |
( |
) | ||||
Benefits paid |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Defined benefit obli g ation at end of the year, March 31, 2022 and March 31, 2021, respectively |
$ |
$ | ||||||
|
|
|
|
23. |
OTHER POST-EMPLOYMENT BENEFITS (continued) |
Years ended, |
March 31, 2022 |
March 31, 2021 |
||||||
Effect of change in discount rate assumption |
||||||||
One percentage point increase |
$ |
( |
) |
$ | ( |
) | ||
One percentage point decrease |
$ |
$ | ||||||
Effect of change in health care cost trend rates |
||||||||
One percentage point increase |
$ |
$ | ||||||
One percentage point decrease |
$ |
( |
) |
$ | ( |
) | ||
Effect of change in mortality assumption |
||||||||
Set forward one year |
$ |
$ | ||||||
Set back one year |
$ |
( |
) |
$ | ( |
) |
24. |
OTHER LONG- TERM LIABILITIES |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
The carrying amount of the following other long term liabilities: |
||||||||
Accrued interest payable, Provincial MENDM Loan |
$ |
$ | ||||||
Long-term disability plan obligation |
||||||||
Long-term portion of lease liability |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
24. |
OTHER LONG-TERM LIABILITIES |
25. |
ENVIRONMENTAL LIABILITIES |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
The carrying amount of Environmental liabilities in respect of: |
||||||||
The Company’s Operation Site |
$ |
$ | ||||||
Northern Ontario mine sites owned by Old Steelco Inc. |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
|||||
Current portion |
$ |
$ | ||||||
Long-term portion |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
25. |
ENVIRONMENTAL LIABILITIES (continued) |
The Company’s Operation Site |
Northern Ontario mine sites owned by Old Steelco Inc. |
Total | ||||||||||
Balance at March 31, 2020 |
$ | $ | $ | |||||||||
Payments |
( |
) | ( |
) | ||||||||
Accretion of discount |
||||||||||||
|
|
|
|
|
|
|||||||
Balance at March 31, 2021 |
$ | $ | $ | |||||||||
Payments |
( |
) | ( |
) | ( |
) | ||||||
Accretion of discount |
||||||||||||
|
|
|
|
|
|
|||||||
Balance at March 31, 2022 |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
26. |
TAX MATTERS |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Income tax expense (recovery) recognized in net income (loss): |
||||||||||||
Current tax expense |
$ |
$ | $ | |||||||||
Deferred income tax expense |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Income tax expense recognized in other comprehensive income (loss): |
||||||||||||
Tax effect of net unrealized loss on cash flow hedges flow hedges |
$ |
$ | — | $ | ||||||||
Tax effect of actuarial gains on defined benefit pension obligation |
||||||||||||
Tax effect of actuarial gains on other post-employment benefits |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
26. |
TAX MATTERS (continued) |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Income (loss) before income taxes |
$ |
$ | ( |
) | $ | ( |
) | |||||
|
|
|
|
|
|
|||||||
Income tax expense (recovery) based on the applicable tax rate of |
$ |
$ | ( |
) | $ | ( |
) | |||||
Add / (deduct): |
||||||||||||
Non-deductible post-employment benefits payments |
||||||||||||
Non-deductible pension contributions |
||||||||||||
Non-deductible accretion of financial obligations |
||||||||||||
Change in unrecognized tax benefits |
( |
) |
||||||||||
Adjustment in respect of prior years |
( |
) | ||||||||||
Share-based payment compensation |
||||||||||||
Listing expense |
||||||||||||
Changes in fair value of warrant liability |
||||||||||||
Changes in fair value of earnout liability |
( |
) |
||||||||||
Other |
||||||||||||
|
|
|
|
|
|
|||||||
Income tax expense (recovery) based on the applicable |
$ |
$ | $ | ( |
) | |||||||
|
|
|
|
|
|
26. |
TAX MATTERS (continued) |
Balance at March 31, 2021 |
Movements in: |
Balance at March 31, 2022 |
||||||||||||||||||
Profit (loss) |
Other Comprehensive Income |
Unrecognized deferred tax asset |
||||||||||||||||||
Accounting reserves |
$ | $ | ( |
) | $ | $ | $ |
|||||||||||||
Inventory reserve |
( |
) | ( |
) | ||||||||||||||||
Non-capital tax loss carryforward |
( |
) | ( |
) | ||||||||||||||||
Capital tax loss carryforward |
||||||||||||||||||||
Property, plant and equipment and intangible assets |
( |
) | ( |
) | ||||||||||||||||
Unrealized exchange gain on US dollar debt |
( |
) | ||||||||||||||||||
Governmental loans benefit |
( |
) | ( |
) | ||||||||||||||||
Financing expenses |
( |
) | ||||||||||||||||||
Deferred revenue |
( |
) | ||||||||||||||||||
SRED expenditures |
( |
) | ( |
) | ||||||||||||||||
Transaction costs |
||||||||||||||||||||
Unrealized loss on cash flow hedges |
( |
) | ||||||||||||||||||
Other |
( |
) | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | $ | ( |
) | $ | $ | $ |
( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2020 |
Movements in: |
Balance at March 31, 2021 |
||||||||||||||||||
Profit (loss) |
Other Comprehensive Loss |
Unrecognized deferred tax asset |
||||||||||||||||||
Accounting reserves |
$ | $ | $ | $ | $ | |||||||||||||||
Inventory reserve |
( |
) | ( |
) | ( |
) | ||||||||||||||
Non-capital tax loss carryforward |
( |
) | ( |
) | ||||||||||||||||
Capital tax loss carryforward |
||||||||||||||||||||
Property, plant and equipment and intangible assets |
( |
) | ( |
) | ||||||||||||||||
Unrealized exchange gain on US dollar debt |
||||||||||||||||||||
Financing expenses |
( |
) | ( |
) | ||||||||||||||||
Deferred revenue |
( |
) | ||||||||||||||||||
SRED expenditures |
||||||||||||||||||||
Other |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | $ | $ | $ | ( |
) | $ | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
26. |
TAX MATTERS (continued) |
27. |
COMMITMENTS AND CONTINGENCIES |
28. |
CAPITAL STOCK |
Number of shares issued and outstanding |
Stated capital value |
|||||||
Balance at March 31, 2020 |
|
|
|
|
|
$ |
|
|
Issuance of capitial stock1 |
|
|
|
|
|
|
|
|
Balance at March 31, 2021 |
$ | |||||||
Issuance of capital stock: |
||||||||
Merger transaction |
||||||||
Earnout rights |
||||||||
Return of capital |
( |
) | ||||||
|
|
|
|
|||||
Balance at March 31, 2022 |
$ |
|||||||
|
|
|
|
2 8 . |
NET INCOME (LOSS) PER SHARE |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
||||||||||
(in millions) |
||||||||||||
Net income (loss) attributable to ordinary shareholders |
$ |
$ | ( |
) | $ | ( |
) | |||||
Loss on change in fair value of warrants(i) |
||||||||||||
|
|
|
|
|
|
|||||||
Net income (loss) attributable to ordinary shareholders (diluted) |
$ |
$ | ( |
) | $ | ( |
) | |||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||||||||||
Weighted average common shares outstanding(ii) |
||||||||||||
Dilutive effect of warrants(i) |
||||||||||||
|
|
|
|
|
|
|||||||
Dilutive weighted average common shares outstanding |
||||||||||||
|
|
|
|
|
|
|||||||
Net income (loss) per common share: |
||||||||||||
Basic |
$ |
$ | ( |
) | $ | ( |
) | |||||
Diluted |
$ |
$ | ( |
) | $ | ( |
) |
(i) | In connection with the Merger, |
(ii) | Pursuant to the Merger, on October 19, 2021, the Company effected a reverse stock split, such that each outstanding common share became such number of common shares as determined by the conversion factor of |
29. |
NET INCOME (LOSS) PER SHARE (continued) |
30. |
NET CHANGE IN NON-CASH OPERATING WORKING CAPITAL |
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
Accounts receivable |
$ |
( |
) |
$ | ( |
) | $ | |||||
Taxes payable and accrued taxes |
( |
) |
||||||||||
Inventories |
( |
) |
( |
) | ( |
) | ||||||
Prepaid expenses and other current assets |
( |
) | ||||||||||
Accounts payable and accrued liabilities |
( |
) | ( |
) | ||||||||
Derivative financial instruments (net) |
( |
) | ||||||||||
Secured term loan interest payment in kind |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
( |
) |
$ | ( |
) | $ | ||||||
|
|
|
|
|
|
31. |
RELATED PARTY TRANSACTIONS AND BALANCES |
32. |
FINANCIAL INSTRUMENTS |
32. |
FINANCIAL INSTRUMENTS (continued) |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||||||||||||
Category |
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
||||||||||||||
Financial assets |
||||||||||||||||||
Cash (1) |
Financial assets at amortized cost |
$ |
$ |
$ |
$ |
|||||||||||||
Restricted cash (1) |
Financial assets at amortized cost |
$ |
$ |
$ |
$ |
|||||||||||||
Accounts receivable (2) |
Financial assets at amortized cost |
$ |
$ |
$ |
$ |
|||||||||||||
Margin payments (1) |
Financial assets at amortized cost |
$ |
$ |
$ |
$ |
|||||||||||||
Related party receivable (1) |
Financial assets at amortized cost |
$ |
$ |
|||||||||||||||
Financial liabilities |
||||||||||||||||||
Bank indebtedness (1) |
Financial liabilities at amortized cost |
$ |
$ |
$ |
$ |
|||||||||||||
Accounts payable and accrued liabilities (1) |
Financial liabilities at amortized cost |
$ |
$ |
$ |
$ |
|||||||||||||
Current portion of governmental loans (1) |
Financial liabilities at amortized cost |
$ |
$ |
$ |
$ |
|||||||||||||
Long-term debt (1) |
Financial liabilities at amortized cost |
$ |
$ |
$ |
$ |
|||||||||||||
Long-term governmental loans (1) |
Financial liabilities at amortized cost |
$ |
$ |
$ |
$ |
|||||||||||||
Derivative instruments (3) |
Financial instruments at FVTOCI(L) |
$ |
$ |
$ |
$ |
|||||||||||||
Warrant liability (4) |
Financial instruments at FVTP(L) |
$ |
$ |
$ |
$ |
|||||||||||||
Earnout liability (4) |
Financial instruments at FVTP(L) |
$ |
$ |
$ |
$ |
1 - |
Initial measurement at fair value and subsequent remeasurement at amortized cost. |
2 - |
Initial measurement at transaction price and subsequent remeasurement at amortized cost. |
3 - |
Level 2; Initial measurement at fair value and subsequent remeasurement at FVTOCI(L) |
4 - |
Level 1; Initial measurement at fair value and subsequent remeasurement at FVTP(L) |
Carrying Amount |
Contractual Cash Flows |
Year 1 | Year 2 | Years 3 to 5 |
Greater than 5 Years |
|||||||||||||||||||
Revolving Credit Facility |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Accounts payable and accrued liabilities |
( |
) | ( |
) | ||||||||||||||||||||
Taxes payable |
( |
) | ( |
) | ||||||||||||||||||||
Governmental Loans |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
Interest on Provincial MENDM Loan |
( |
) |
( |
) |
||||||||||||||||||||
Derivative financial instruments |
( |
) | ( |
) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
32. |
FINANCIAL INSTRUMENTS (continued) |
Carrying Amount |
Contractual Cash Flows |
Year 1 |
Year 2 |
Years 3 to 5 |
Greater than 5 Years |
|||||||||||||||||||
Revolving Credit Facility |
$ | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||
Accounts payable and accrued liabilities |
( |
) | ( |
) | ||||||||||||||||||||
Taxes payable |
( |
) | ( |
) | ||||||||||||||||||||
Secured Term Loan Facility |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Interest on Secured Term Loan |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Algoma Docks Term Loan |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Interest on Algoma Docks Term Loan |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Governmental Loans |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Interest on Provincial MENDM Loan |
||||||||||||||||||||||||
Available for use asset costs |
( |
) | ( |
) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
32. |
FINANCIAL INSTRUMENTS (continued) |
As at, |
March 31, 2022 |
March 31, 2021 |
||||||
Cash |
$ |
$ | ||||||
Restricted cash |
||||||||
Accounts receivable |
||||||||
Bank indebtedness |
( |
) |
( |
) | ||||
Accounts payable and accrued liabilities |
( |
) |
( |
) | ||||
Long-term governmental loans |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Net Canadian dollar denominated financial instruments |
$ |
( |
) | $ | ( |
) | ||
|
|
|
|
32. |
FINANCIAL INSTRUMENTS (continued) |
33. |
KEY MANAGEMENT PERSONNEL |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
||||||||||
Salaries and benefits |
$ |
$ | $ | |||||||||
Director fees |
||||||||||||
Share-based compensation (Note 34) |
— | |||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
34. |
SHARE BASED COMPENSATION |
34. |
SHARE BASED COMPENSATION (continued) |
35. |
DIVIDENDS |
36. |
SUBSEQUENT EVENTS |
March 31, |
March 31, |
March 31, |
||||||||||
Years ended, |
2022 |
2021 |
2020 |
|||||||||
expressed in millions of Canadian dollars |
||||||||||||
Equity in income (loss) of subsidiary |
$ |
$ |
( |
) |
$ |
( |
) | |||||
Operating expenses |
||||||||||||
Administrative and selling expenses |
— |
|||||||||||
|
|
|
|
|
|
|||||||
Profit (loss) from operations |
$ |
$ |
( |
) |
$ |
( |
) | |||||
|
|
|
|
|
|
|||||||
Other (income) and expenses |
||||||||||||
Listing expense |
$ |
$ |
— |
$ |
— |
|||||||
Change in fair value of warrant liability |
— |
— |
||||||||||
Change in fair value of earnout liability |
( |
) |
— |
— |
||||||||
|
|
|
|
|
|
|||||||
$ |
$ |
— |
$ |
— |
||||||||
|
|
|
|
|
|
|||||||
Income (loss) before income taxes |
$ |
$ |
( |
) |
$ |
( |
) | |||||
Income tax recovery |
( |
) |
— |
— |
||||||||
|
|
|
|
|
|
|||||||
Net income (loss) |
$ |
$ |
( |
) |
$ |
( |
) | |||||
|
|
|
|
|
|
March 31, |
March 31, |
March 31, |
||||||||||
Years ended, |
2022 |
2021 |
2020 |
|||||||||
expressed in millions of Canadian dollars |
||||||||||||
Net income (loss) |
$ |
$ |
( |
) |
$ |
( |
) | |||||
Other comprehensive loss that wil not be reclassified subsequently to profit or loss |
||||||||||||
Foreign exchange loss on translation to presentation currency |
$ |
( |
) |
$ |
— |
$ |
— |
|||||
Equity (deficit) in other comprehensive income of subsidiary |
( |
) |
||||||||||
|
|
|
|
|
|
|||||||
( |
) |
|||||||||||
|
|
|
|
|
|
|||||||
Total comprehensive income (loss) |
$ |
$ |
( |
) |
$ |
( |
) | |||||
|
|
|
|
|
|
March 31, |
March 31, |
|||||||
As at, |
2022 |
2021 |
||||||
expressed in millions of Canadian dollars |
||||||||
Assets |
||||||||
Investment in subsidiaries |
$ |
$ |
||||||
|
|
|
|
|||||
Total assets |
$ |
$ |
||||||
|
|
|
|
|||||
Liabilities and Shareholders’ Equity |
||||||||
Accounts payable and accrued liabilities |
$ |
$ |
— |
|||||
Due to related party |
— |
|||||||
Warrant liability |
— |
|||||||
Earnout liability |
— |
|||||||
Share-based payment compensation liability |
— |
|||||||
|
|
|
|
|||||
Total liabilities |
$ |
$ |
— |
|||||
|
|
|
|
|||||
Shareholders’ equity |
||||||||
Capital stock |
$ |
$ |
||||||
Accumulated other comprehensive income |
||||||||
Retained earnings (deficit) |
( |
) | ||||||
Contributed (deficit) surplus |
( |
) |
||||||
|
|
|
|
|||||
Total shareholders’ equity |
$ |
$ |
||||||
|
|
|
|
|||||
Total liabilities and shareholders’ equity |
$ |
$ |
||||||
|
|
|
|
expressed in millions of Canadian dollars |
Capital stock |
Contributed Surplus |
Foreign exchange loss on translation to presentation currency |
Equity (Deficit) in Other Compre- hensive income of subsidiary |
Accumulated other compre- hensive income (loss) |
Retained earnings (Deficit) |
Total Shareholders’ equity |
|||||||||||||||||||||
Balance at March 31, 2019 |
$ |
$ |
— |
$ |
— |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
|||||||||||||||
Net loss |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||
Equity in other comprehensive income of subsidiary |
— |
— |
— |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at March 31, 2020 |
— |
— |
( |
) |
||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||
Deficit in other comprehensive income of subsidiary |
— |
— |
— |
( |
) |
( |
) |
— |
( |
) | ||||||||||||||||||
Exercise of performance share units and director units |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at March 31, 2021 |
$ |
$ |
$ |
— |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||
Net income |
— |
— |
— |
— |
||||||||||||||||||||||||
Equity in other comprehensive income of subsidiary |
— |
|||||||||||||||||||||||||||
Other comprehensive loss |
— |
— |
( |
) |
— |
( |
) |
— |
( |
) | ||||||||||||||||||
Issuance and modification of performance share units |
— |
( |
) |
— |
— |
— |
— |
( |
) | |||||||||||||||||||
Issuance of deferred share units |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Issuance of capital stock |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Return of capital |
( |
) |
— |
— |
— |
— |
— |
( |
) | |||||||||||||||||||
Earnout rights |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||
Dividends paid |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
$ |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended, |
March 31, 2022 |
March 31, 2021 |
March 31, 2020 |
|||||||||
expressed in millions of Canadian dollars |
||||||||||||
Operating activities |
||||||||||||
Net income (loss) |
$ |
$ |
( |
) |
$ |
( |
) | |||||
Items not affecting cash: |
||||||||||||
Increase in fair value of warrant liability |
— |
— |
||||||||||
Decrease in fair value of earnout liability |
( |
) |
— |
— |
||||||||
Listing expense |
— |
— |
||||||||||
Investment in shares of subsidiary |
( |
) |
||||||||||
|
|
|
|
|
|
|||||||
( |
) |
( |
) |
— |
||||||||
Net change in non-cash operating working capital |
— |
|||||||||||
|
|
|
|
|
|
|||||||
Cash used in operating activities |
$ |
$ |
— |
$ |
— |
|||||||
|
|
|
|
|
|
|||||||
Cash used in investing activities |
$ |
— |
$ |
— |
$ |
— |
||||||
|
|
|
|
|
|
|||||||
Financing activities |
||||||||||||
Dividends paid |
$ |
( |
) |
$ |
— |
$ |
— |
|||||
|
|
|
|
|
|
|||||||
Cash used in financing activities |
$ |
( |
) |
$ |
— |
$ |
— |
|||||
|
|
|
|
|
|
|||||||
Cash |
||||||||||||
Decrease in cash |
$ |
— |
$ |
— |
$ |
— |
||||||
Opening balance |
— |
— |
— |
|||||||||
|
|
|
|
|
|
|||||||
Ending balance |
$ |
— |
$ |
— |
$ |
— |
||||||
|
|
|
|
|
|
1. |
GENERAL INFORMATION |
2. |
COMMITMENTS AND CONTINGENCIES |