/s/ Michael Garcia Michael Garcia |
/s/ Rajat Marwah Rajat Marwah | |
Chief Executive Officer |
Chief Financial Officer |
● |
Evaluated the effectiveness of the Company’s controls over the determination of the recoverable amount, such as controls related to management’s forecasts of future cashflows and selection of terminal growth and discount rates; |
● |
Evaluated management’s ability to reasonably estimate future cash flows by comparing actual results to management’s historical forecasts; |
● |
Evaluated the reasonableness of the forecasted steel selling prices by comparing the forecasts to current steel selling prices and peer group financial information, analysts, and industry reports; |
● |
Evaluated the reasonableness of the forecasted tons shipped by comparing the forecasts to: |
– | Historical tons shipped; |
– | Internal communications to management and the Board of Directors; and |
– | Peer group financial information, analysts, and industry reports; |
● |
With the assistance of fair value specialists: |
– | Evaluated the reasonableness of management’s determination of the terminal growth rate by comparing to independent market data; and |
– | Evaluated the reasonableness of the discount rate by testing the source information underlying the determination of the discount rate and developing a range of independent estimates and comparing those to the discount rate selected by management. |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
expressed in millions of Canadian dollars, except for per share amounts |
||||||||
Revenue (Note 6) |
$ |
$ | ||||||
Operating expenses |
||||||||
Cost of sales (Note 7) |
$ |
$ | |
|||||
Administrative and selling expenses (Note 8) |
||||||||
Income from operations |
$ |
$ | ||||||
Other (income) and expenses |
||||||||
Finance income |
$ |
( |
) |
$ | ( |
) | ||
Finance costs (Note 9) |
||||||||
Interest on pension and other post-employment benefit obligations (Note 10) |
||||||||
Foreign exchange (gain) loss |
( |
) |
||||||
Transaction costs |
||||||||
Listing expense (Note 31) |
||||||||
Change in fair value of warrant liability (Note 31) |
( |
) |
||||||
Change in fair value of earnout liability (Note 31) |
( |
) |
( |
) | ||||
Change in fair value of share-based compensation liability (Note 31) |
( |
) |
||||||
$ |
( |
) |
$ | |||||
Income before income taxes |
$ |
$ | ||||||
Income tax expense (Note 24) |
||||||||
Net income |
$ |
$ | ||||||
Net income per common share |
||||||||
Basic (Note 27) |
$ |
$ | ||||||
Diluted (Note 27) |
$ |
$ | ||||||
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
expressed in millions of Canadian dollars |
||||||||
Net income |
$ |
$ | ||||||
Other comprehensive (loss) income, net of income tax, that are or may be reclassified subsequently to profit or loss |
||||||||
(Loss) income on cash flow hedges reclassified to net income (Note 19) |
$ |
( |
) |
$ | ||||
Income (loss) arising on changes in fair value of cash flow hedges, net of tax expense nil and recovery of $ million, respectively (Note 19) |
$ |
$ | ( |
) | ||||
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 for March 31, 2023 and 2022 21) |
$ |
$ | ||||||
|
$ |
$ | ||||||
Total comprehensive income |
$ |
$ | |
|||||
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
expressed in millions of Canadian dollars |
||||||||
Assets |
||||||||
Current |
||||||||
Cash (Note 11) |
$ |
$ | ||||||
Restricted cash (Note 11) |
||||||||
Accounts receivable, net (Note 12) |
||||||||
Inventories, net (Note 13) |
||||||||
Prepaid expenses and deposits |
||||||||
Margin payments (Note 19) |
||||||||
Other assets |
||||||||
Total current assets |
$ |
$ | ||||||
Non-current |
||||||||
Property, plant and equipment, net (Note 14) |
$ |
$ | ||||||
Intangible assets, net |
||||||||
Other assets |
||||||||
Total non-current assets |
$ |
$ | ||||||
Total assets |
$ |
$ | ||||||
Liabilities and Shareholders’ Equity |
||||||||
Current |
||||||||
Bank indebtedness (Note 15) |
$ |
$ | ||||||
Accounts payable and accrued liabilities (Note 16) |
||||||||
Taxes payable and accrued taxes (Note 17) |
||||||||
Current portion of other long-term liabilities |
||||||||
Current portion of governmental loans (Note 18) |
||||||||
Current portion of environmental liabilities (Note 23) |
||||||||
Derivative financial instruments (Note 19) |
||||||||
Warrant liability (Note 31) |
||||||||
Earnout liability (Note 31) |
||||||||
Share-based payment compensation liability (Note 31) |
||||||||
Total current liabilities |
$ |
$ | ||||||
Non-current |
||||||||
Long-term governmental loans (Note 18) |
$ |
$ | ||||||
Accrued pension liability (Note 20) |
||||||||
Accrued other post-employment benefit obligation (Note 21) |
||||||||
Other long-term liabilities (Note 22) |
||||||||
Environmental liabilities (Note 23) |
||||||||
Deferred income tax liabilities (Note 24) |
||||||||
Total non-current liabilities |
$ |
$ | ||||||
Total liabilities |
$ |
$ | ||||||
Shareholders’ equity |
||||||||
Capital stock (Note 26) |
$ |
$ | ||||||
Accumulated other comprehensive income |
||||||||
Retained earnings |
||||||||
Contributed deficit (Note 31) |
( |
) |
( |
) | ||||
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 on pension and other post- employment benefit obligation |
Cash flow hedge reserve - unrealized gain (loss) (Note 19) |
Accumulated other compre- hensive income |
Retained earnings (Deficit) |
Total Shareholders’ equity | ||||||||||||||||||||||||
Balance at March 31, 2021 |
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | $ | |||||||||||||||||||
Net income |
- |
- | - | - | - | - |
||||||||||||||||||||||||||
Other comprehensive income |
- | - | ( |
) | - | |||||||||||||||||||||||||||
Issuance and modification of performance share (Note 31) |
- | ( |
) | - | - | - | - | - | ( |
) | ||||||||||||||||||||||
Issuance of deferred shared units (Note 33) |
- | - | - | - | - | - | ||||||||||||||||||||||||||
Issuance of capital stock (Note 26) |
- | - | - | - | - | - | ||||||||||||||||||||||||||
Return of capital (Note 31) |
( |
) | - | - | - | - | - | - | ( |
) | ||||||||||||||||||||||
Earnout rights (Note 31) |
- | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||
Dividends paid (Note 34) |
- | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||
Balance at March 31, 2022 |
$ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||
Net income |
- | - | - | - | - | - | ||||||||||||||||||||||||||
Other comprehensive income |
- | - | - | |||||||||||||||||||||||||||||
Common shares repurchased and cancelled (Note 26) |
( |
) | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||
Issuance of performance and restricted share units (Note 33) |
- | - | - | - | - | - | ||||||||||||||||||||||||||
Issuance of deferred shared units (Note 33) |
- | - | - | - | - | - | ||||||||||||||||||||||||||
Dividend equivalent on earnout rights (Note 31) |
- | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||
Dividends paid (Note 34) |
- | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||
Balance at March 31, 2023 |
$ |
$ |
( |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
expressed in millions of Canadian dollars |
||||||||
Operating activities |
||||||||
Net income |
$ |
$ | ||||||
Items not affecting cash: |
||||||||
Amortization of property, plant and equipment and intangible assets |
||||||||
Deferred income tax (benefit) expense (Note 24) |
( |
) |
||||||
Pension expense in excess of funding (pension funding in excess of expense) |
||||||||
Post-employment benefit funding in excess of expense |
( |
) |
( |
) | ||||
Unrealized foreign exchange (gain) loss on: |
||||||||
accrued pension liability |
( |
) |
||||||
post-employment benefit obligations |
( |
) |
||||||
Finance costs (Note 9) |
||||||||
Loss on disposal of property, plant and equipment (Note 14) |
||||||||
Interest on pension and other post-employment benefit obligations |
||||||||
Interest on finance lease |
||||||||
Accretion of governmental loans and environmental liabilities |
||||||||
Unrealized foreign exchange (gain) loss on government loan facilities |
( |
) |
||||||
(Decrease) increase in fair value of warrant liability (Note 31) |
( |
) |
||||||
Decrease in fair value of earnout liability (Note 31) |
( |
) |
( |
) | ||||
Decrease in fair value of share-based payment compensation liability (Note 31) |
( |
) |
||||||
Listing expense (Note 31) |
||||||||
Other |
( |
) |
||||||
$ |
$ | |||||||
Net change in non-cash operating working capital (Note 28) |
( |
) | ( |
) | ||||
Share-based payment compensation and earnout units settled (Note 31) |
( |
) |
||||||
Environmental liabilities paid (Note 23) |
( |
) |
( |
) | ||||
Cash generated by operating activities |
$ |
$ | ||||||
Investing activities |
||||||||
Acquisition of property, plant and equipment (Note 14) |
$ |
( |
) |
$ | ( |
) | ||
Acquisition of right-of-use |
( |
) | ||||||
Issuance of related party receivable (Note 29) |
||||||||
Cash used in investing activities |
$ |
( |
) |
$ | ( |
) | ||
Financing activities |
||||||||
Bank indebtedness advanced (repaid), net (Note 15) |
$ |
$ | ( |
) | ||||
Repayment of term loans |
( |
) | ||||||
Governmental loans received (Note 18) |
||||||||
Governmental loans benefit on below-market rate of interest loans (Note 18) |
( |
) |
( |
) | ||||
Repayment of governmental loans (Note 18) |
( |
) |
( |
) | ||||
Interest paid |
( |
) |
( |
) | ||||
Proceeds from issuance of shares (Note 26) |
||||||||
Dividends paid (Note 34) |
( |
) |
( |
) | ||||
Common shares repurchased and cancelled (Note 26) |
( |
) |
||||||
Other |
( |
) |
( |
) | ||||
Cash used in financing activities |
$ |
( |
) |
$ | ( |
) | ||
Effect of exchange rate changes on cash |
$ |
$ | ( |
) | ||||
Cash |
||||||||
(Decrease) increase in cash |
( |
) |
||||||
Opening balance |
||||||||
Ending balance (Note 11) |
$ |
$ | |
|||||
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 |
● |
Amortized cost |
● |
Fair value through profit (loss) (FVTP(L)) |
● |
Fair value through other comprehensive income (loss) (FVTOCI(L)) |
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
● |
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) |
● |
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) |
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) |
4. |
CRITICAL ESTIMATES AND JUDGEMENTS |
4. |
CRITICAL ESTIMATES AND JUDGEMENTS (continued) |
5. |
CAPITAL MANAGEMENT |
(a) | to maintain a flexible capital structure which optimizes the cost of capital at acceptable risk; |
(b) | to meet external capital requirements on debt and credit facilities; |
(c) | to ensure adequate capital to support long-term growth strategy; and |
5. |
CAPITAL MANAGEMENT (continued) |
(d) | to provide an adequate return to shareholders. |
6. |
REVENUE |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Total revenue is comprised of: |
||||||||
Sheet & Strip |
$ |
$ |
||||||
Plate |
||||||||
Slab |
- |
|||||||
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 |
||||||||
$ |
$ |
|||||||
7. |
COST OF SALES |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
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. |
ADMINISTRATIVE AND SELLING EXPENSES |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
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 |
||||||||
$ |
$ |
|||||||
9. |
FINANCE COSTS |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Finance costs are comprised of: |
||||||||
Interest on the Revolving Credit Facility (Note 15) |
$ |
$ |
||||||
Interest on the Secured Term Loan Facility |
||||||||
Interest on the Algoma Docks Term Loan Facility |
||||||||
Other interest expense |
||||||||
Revolving Credit Facility fees |
||||||||
Unwinding of issuance costs of debt facilities (Note 15) and accretion of governmental loan benefits and discounts on environmental liabilities |
||||||||
$ |
$ |
|||||||
10. |
INTEREST ON PENSION AND OTHER POST-EMPLOYMENT BENEFIT OBLIGATIONS |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Interest on pension and other post-employment benefit obligations is comprised of: |
||||||||
Interest on defined benefit pension obligation (Note 20) |
$ |
$ |
||||||
Interest on other post-employment benefit obligation (Note 21) |
||||||||
$ |
$ |
|||||||
11. |
CASH AND RESTRICTED CASH |
12. |
ACCOUNTS RECEIVABLE, NET |
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
The carrying amount of: |
||||||||
Trade accounts receivable |
$ |
$ |
||||||
Allowance for doubtful accounts |
( |
) |
( |
) | ||||
Governmental loan claims receivable |
||||||||
Federal Ministry of Industry, Strategic Innovation Fund (“Federal SIF”) Agreement |
||||||||
Northern Industrial Electricity Rate program rebate receivable |
||||||||
Other accounts receivable |
||||||||
$ |
$ |
|||||||
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
Opening balance |
$ |
( |
) |
$ |
( |
) | ||
Remeasurement of loss allowance |
( |
) | ||||||
Ending balance |
$ |
( |
) |
$ |
( |
) | ||
13. |
INVENTORIES, NET |
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
The carrying amount of: |
||||||||
Raw materials and consumables |
$ |
$ |
||||||
Work in progress |
||||||||
Finished goods |
||||||||
$ |
$ |
|||||||
14. |
PROPERTY PLANT AND EQUIPMENT, NET |
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
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 construc- tion |
Total | |||||||||||||||||||||
Balance at March 31, 2021 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Additions |
||||||||||||||||||||||||||||
Transfers |
( |
) |
||||||||||||||||||||||||||
Disposals |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||
Foreign exchange |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Additions |
||||||||||||||||||||||||||||
Transfers |
( |
) |
||||||||||||||||||||||||||
Disposals |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||
Foreign exchange |
||||||||||||||||||||||||||||
Balance at March 31, 2023 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
14. |
PROPERTY PLANT AND EQUIPMENT, NET (continued) |
Accumulated Depreciation: |
Freehold Land |
Buildings |
Machinery & Equipment |
Computer Hardware |
Right-of- use assets |
Property under construc- tion |
Total | |||||||||||||||||||||
Balance at March 31, 2021 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Depreciation expense |
||||||||||||||||||||||||||||
Disposals |
||||||||||||||||||||||||||||
Foreign exchange |
( |
) |
( |
) | ||||||||||||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Depreciation expense |
||||||||||||||||||||||||||||
Disposals |
||||||||||||||||||||||||||||
Foreign exchange |
||||||||||||||||||||||||||||
Balance at March 31, 2023 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
14. |
PROPERTY PLANT AND EQUIPMENT, NET (continued) |
15. |
BANK INDEBTEDNESS |
Balance at March 31, 2021 |
$ |
|||
Revolving Credit Facility drawn |
||||
Repayment of Revolving Credit Facility |
( |
) | ||
Foreign exchange |
( |
) | ||
Balance at March 31, 2022 |
$ |
|||
Revolving Credit Facility drawn |
||||
Repayment of Revolving Credit Facility |
( |
) | ||
Balance at March 31, 2023 |
$ |
|||
16. |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
The carrying amount of: |
||||||||
Accounts payable |
$ |
$ |
||||||
Accrued liabilities |
||||||||
Wages and accrued vacation payable |
||||||||
$ |
$ |
|||||||
17. |
TAXES PAYABLE AND ACCRUED TAXES |
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
The carrying amount of: |
||||||||
Payroll taxes payable |
$ |
$ |
||||||
Sales taxes payable |
||||||||
Carbon tax accrual |
||||||||
Income taxes payable (Note 24) |
||||||||
$ |
$ |
|||||||
1 8 . |
GOVERNMENTAL LOANS |
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
The carrying amount of: |
||||||||
Long-term portion |
||||||||
Federal AMF Loan, denominated in |
$ |
$ |
||||||
Provincial MENDM Loan, denominated in |
||||||||
Federal SIF Agreement loan, denominated in |
||||||||
Federal SIF Agreement loan, denominated in |
||||||||
$ |
$ |
|||||||
Current portion |
||||||||
Federal AMF Loan, denominated in Canadian dollars |
$ |
$ |
||||||
$ |
$ |
|||||||
18. |
GOVERNMENTAL LOANS (continued) |
18. |
GOVERNMENTAL LOANS (continued) |
18. |
GOVERNMENTAL LOANS (continued) |
Governmental Loan Issued (Repaid) |
Governmental loan benefit recognized immediately |
Accretion of governmental loan benefit |
Carrying value | |||||||||||||
Federal AMF Loan |
||||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Movement in the period |
(10.0 |
) |
- |
4.5 |
(5.5 |
) | ||||||||||
Balance at March 31, 2023 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Provincial MENDM Loan |
||||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Movement in the period |
- |
- |
3.5 |
3.5 |
||||||||||||
Balance at March 31, 2023 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Federal SIF Loan |
||||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Movement in the period |
- |
- |
0.9 |
0.9 |
||||||||||||
Balance at March 31, 2023 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Federal SIF EAF Loan |
||||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Movement in the period |
63.3 |
(37.6 |
) |
0.6 |
26.3 |
|||||||||||
Balance at March 31, 2023 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Total, Governmental Loans |
||||||||||||||||
Balance at March 31, 2022 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Movement in the period |
53.3 |
(37.6 |
) |
9.5 |
25.2 |
|||||||||||
Balance at March 31, 2023 |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
19. |
DERIVATIVE FINANCIAL INSTRUMENTS |
19. |
DERIVATIVE FINANCIAL INSTRUMENTS (continued) |
Fair Value Liability (Asset) |
Notional Amounts (tons, in thousands) |
Average Price (USD) (per ton) | ||||||||||||||||||||||
March 31, 2023 |
March 31, 2022 |
March 31, 2023 |
March 31, 2022 |
March 31, 2023 |
March 31, 2022 | |||||||||||||||||||
Cash flow hedges - commodity price risk |
||||||||||||||||||||||||
Natural gas swaps |
$ |
$ |
$ |
|||||||||||||||||||||
Steel swaps |
$ |
|||||||||||||||||||||||
$ |
$ |
|||||||||||||||||||||||
19. |
DERIVATIVE FINANCIAL INSTRUMENTS (continued) |
As at, | March 31, 2023 |
March 31, 2022 |
||||||
Opening balance |
$ |
$ | ||||||
(Income) loss arising on changes in fair value of cash flow hedges, net of tax expense of |
( |
) |
||||||
Loss (income) reclassified to net income |
( |
) | ||||||
Income on cash flow hedges |
( |
) |
( |
) | ||||
Ending balance - loss |
$ |
$ | ||||||
20. |
PENSION BENEFITS |
20. |
PENSION BENEFITS (continued) |
Year ended, |
March 31, 2023 1 |
March 31, 2023 2 |
March 31, 2022 | |||||||||
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 |
CPM2014 Private Projection CPM-B |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Amounts recognized in net income were as follows: |
||||||||
Current service cost |
$ |
$ |
||||||
Past service cost |
- |
|||||||
Net interest cost |
||||||||
$ |
$ |
|||||||
Defined benefit costs recognized in: |
||||||||
Cost of sales |
$ |
$ |
||||||
Administrative and selling expenses |
||||||||
Interest on pension liability |
||||||||
$ |
$ |
|||||||
20. |
PENSION BENEFITS (continued) |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Amounts recognized in other comprehensive income, were as follows: |
||||||||
Actuarial loss (gain) on accrued pension liability |
$ |
$ |
( |
) | ||||
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
Present value of defined benefit obligation |
$ |
$ |
||||||
Fair value of plan assets |
||||||||
Net accrued pension liability |
$ |
$ |
||||||
20. |
PENSION BENEFITS (continued) |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
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, 2023 and March 31, 2022, 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 |
||||||||
Past service cost |
||||||||
Actuarial gains arising from financial assumptions |
( |
) |
( |
) | ||||
Effect of experience adjustments |
( |
) |
||||||
Benefits paid |
( |
) |
( |
) | ||||
Defined benefit obligation at end of the year |
||||||||
March 31, 2023 and March 31, 2022, respectively |
$ |
$ | ||||||
Actuarial (gain) loss immediately recognized |
Tax effect |
Actuarial (gain) immediately recognized, net of tax | ||||||||||
Balance at March 31, 2021 |
$ | ( |
) | $ | ( |
$ | ( |
) | ||||
Actuarial gain immediately recognized |
( |
) | ( |
) | ||||||||
Balance at March 31, 2022 |
$ | ( |
) | $ | ( |
$ | ( |
) | ||||
Actuarial loss immediately recognized |
||||||||||||
Balance at March 31, 2023 |
$ |
( |
) |
$ |
( |
$ |
( |
) | ||||
20. |
PENSION BENEFITS (continued) |
As at |
March 31, 2023 |
March 31, 2022 | ||
Cash and cash equivalents |
||||
Equity instruments |
||||
Debt instruments |
||||
Other |
||||
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Effect of change in discount rate assumption |
||||||||
$ |
( |
) |
$ |
( |
) | |||
$ |
$ |
|||||||
Effect of change in salary scale |
||||||||
$ |
$ |
|||||||
$ |
( |
) |
$ |
( |
) | |||
Effect of change in mortality assumption |
||||||||
Set forward |
$ |
$ |
||||||
Set back |
$ |
( |
) |
$ |
( |
) |
21. |
OTHER POST-EMPLOYMENT BENEFITS |
Year ended, |
March 31, 2023 1 |
March 31, 2023 2 |
March 31, 2022 | |||||||||
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 |
2014 Private Projection CPM-B |
21. |
OTHER POST-EMPLOYMENT BENEFITS (continued) |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Amounts recognized in net income were as follows: |
||||||||
Current service cost |
$ |
$ |
||||||
Past service cost |
||||||||
Net interest cost |
||||||||
$ |
$ |
|||||||
Post employment benefit costs recognized in: |
||||||||
Cost of sales |
$ |
$ |
||||||
Administrative and selling expenses |
||||||||
Interest on pension liability |
||||||||
$ |
$ |
|||||||
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Amounts recognized in other comprehensive income, were as follows: |
||||||||
Actuarial income on accrued post employment benefit liability |
$ |
( |
) |
$ |
( |
) | ||
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
Present value of post-employment benefit obligation |
$ |
$ |
||||||
Fair value of plan assets |
||||||||
Accrued other post-employment benefit obligation |
$ |
$ |
||||||
21. |
OTHER POST-EMPLOYMENT BENEFITS (continued) |
Actuarial (gain) loss immediately recognized |
Tax effect |
Actuarial (gain) loss immediately recognized, net of tax | ||||||||||
Balance at March 31, 2021 |
$ |
$ |
$ |
|||||||||
Actuarial gain immediately recognized |
( |
) |
( |
) | ||||||||
Balance at March 31, 2022 |
$ |
( |
) |
$ |
$ |
( |
) | |||||
Actuarial gain immediately recognized |
( |
) |
( |
) | ||||||||
Balance at March 31, 2023 |
$ |
( |
) |
$ |
$ |
( |
) | |||||
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
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, 2023 and March 31, 2022, 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 |
$ |
$ |
||||||
Defined benefit obligation assumed in business combination |
||||||||
Current service cost |
||||||||
Interest cost |
||||||||
Past service cost |
||||||||
Actuarial gains arising from financial assumptions |
( |
) |
( |
) | ||||
Actuarial gains arising from demographic assumptions |
( |
) | ||||||
Actuarial gains from experience adjustments |
( |
) |
( |
) | ||||
Benefits paid |
( |
) |
( |
) | ||||
Defined benefit obligation at end of the year |
||||||||
March 31, 2023 and March 31, 2022, respectively |
$ |
$ |
||||||
21. |
OTHER POST-EMPLOYMENT BENEFITS (continued) |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
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 |
$ |
( |
) |
$ |
( |
) |
22. |
OTHER LONG-TERM LIABILITIES |
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
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 |
||||||||
$ |
$ |
|||||||
22. |
OTHER LONG-TERM LIABILITIES (continued) |
23. |
ENVIRONMENTAL LIABILITIES |
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
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 |
||||||||
$ |
$ |
|||||||
23. |
ENVIRONMENTAL LIABILITIES (continued) |
The Company’s Operation Site |
Northern Ontario mine sites owned by Old Steelco Inc. |
Total | ||||||||||
Balance at March 31, 2021 |
$ |
$ |
$ |
|||||||||
Payments |
( |
) |
( |
) |
( |
) | ||||||
Accretion of discount |
||||||||||||
Balance at March 31, 2022 |
$ |
$ |
$ |
|||||||||
Payments |
( |
) |
( |
) |
( |
) | ||||||
Accretion of discount |
||||||||||||
Balance at March 31, 2023 |
$ |
$ |
$ |
|||||||||
24. |
TAX MATTERS |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Income tax expense recognized in net income: |
||||||||
Current tax expense |
$ |
$ |
||||||
Deferred income tax (benefit) expense |
( |
) |
||||||
$ |
$ |
|||||||
Income tax expense recognized in other comprehensive income: |
||||||||
Tax effect of net unrealized loss on cash flow hedges |
$ |
- |
$ |
|||||
$ |
- |
$ |
||||||
24. |
TAX MATTERS (continued) |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Income before income taxes |
$ |
$ |
||||||
Income tax expense 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 |
( |
) |
( |
) | ||||
Changes in fair value of share-based payment liability |
( |
) |
||||||
Other |
( |
) |
||||||
Income tax expense |
$ |
$ |
||||||
Balance at March 31, 2022 |
Movements in: |
Balance at March 31, 2023 | ||||||||||||||
Profit (loss) |
Other Comprehensive Income | |||||||||||||||
Accounting reserves |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Inventory reserve |
( |
) |
( |
) | ||||||||||||
Defined benefit pension - past service costs (Note 20) |
- |
- |
||||||||||||||
Other post-employment benefits - past service costs (Note 21) |
||||||||||||||||
Capital tax loss carryforward |
||||||||||||||||
Property, plant and equipment and intangible assets |
( |
) |
( |
) |
( |
) | ||||||||||
Unrealized exchange loss (gain) on US dollar debt |
( |
) |
( |
) | ||||||||||||
Governmental loans benefit |
( |
) |
( |
) |
( |
) | ||||||||||
Financing expenses |
||||||||||||||||
Deferred revenue |
||||||||||||||||
SRED expenditures |
( |
) |
( |
) | ||||||||||||
Transaction costs |
( |
) |
- |
|||||||||||||
Unrealized loss on cash flow hedges |
( |
) |
||||||||||||||
Other |
( |
) |
( |
) |
( |
) | ||||||||||
$ |
( |
) |
$ |
$ |
( |
) |
$ |
( |
) | |||||||
2 4 . |
TAX MATTERS (continued) |
Balance at March 31 2021 |
Movements in: |
Balance at March 31, 2022 | ||||||||||||||
Profit (loss) |
Other Comprehensive Income | |||||||||||||||
Accounting reserves |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Inventory reserve |
( |
) |
( |
) | ||||||||||||
Non-capital tax loss carryforward |
( |
) |
||||||||||||||
Capital tax loss carryforward |
||||||||||||||||
Property, plant and equipment and intangible assets |
( |
) |
( |
) | ||||||||||||
Unrealized exchange loss (gain) on US dollar debt |
( |
) |
||||||||||||||
Governmental loans benefit |
( |
) |
( |
) | ||||||||||||
Financing expenses |
( |
) |
||||||||||||||
Deferred revenue |
( |
) |
||||||||||||||
SRED expenditures |
( |
) |
( |
) | ||||||||||||
Transaction costs |
- |
|||||||||||||||
Unrealized loss on cash flow hedges |
( |
) |
||||||||||||||
Other |
( |
) |
( |
) | ||||||||||||
$ |
$ |
( |
) |
$ |
$ |
( |
) | |||||||||
2 5 . |
COMMITMENTS AND CONTINGENCIES |
2 5 . |
COMMITMENTS AND CONTINGENCIES (continued) |
2 6 . |
CAPITAL STOCK |
Number of shares issued and outstanding |
Stated capital value | |||||||
Balance at March 31, 2021 1 |
$ | |||||||
Issuance of capital stock: |
||||||||
Merger transaction |
||||||||
Earnout rights |
||||||||
Return of capital |
( |
) | ||||||
Balance at March 31, 2022 |
$ | |
||||||
Common shares repurchased and cancelled: |
||||||||
Normal Course Issuer Bid |
( |
) | ( |
) | ||||
Substantial Issuer Bid |
( |
) | ( |
) | ||||
Balance at March 31, 2023 |
$ |
|||||||
2 6 . |
CAPITAL STOCK (continued) |
2 7 . |
NET INCOME PER SHARE |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
(in millions) |
||||||||
Net income attributable to ordinary shareholders |
$ |
$ |
||||||
(Gain) loss on change in fair value of warrants (i) |
( |
) |
||||||
Net income attributable to ordinary shareholders (diluted) |
$ |
$ |
||||||
(in millions) |
||||||||
Weighted average common shares outstanding (ii) |
||||||||
Dilutive effect of warrants, restricted share units and performance share units (i) |
||||||||
Dilutive weighted average common shares outstanding |
||||||||
Net income 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 |
2 7 . |
NET INCOME PER SHARE (continued) |
2 8 . |
NET CHANGE IN NON-CASH OPERATING WORKING CAPITAL |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Accounts receivable |
$ |
$ |
( |
) | ||||
Net taxes payable and accrued taxes |
( |
) | ( |
) | ||||
Inventories |
( |
) |
( |
) | ||||
Prepaid expenses and other current assets |
||||||||
Accounts payable and accrued liabilities |
( |
) |
||||||
Derivative financial instruments (net) |
||||||||
$ |
( |
) | $ |
( |
) | |||
29 . |
RELATED PARTY TRANSACTIONS AND BALANCES |
3 0 . |
FINANCIAL INSTRUMENTS |
3 0 . |
FINANCIAL INSTRUMENTS (continued) |
As at, |
March 31, 2023 |
March 31, 2022 | ||||||||||||||||
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 |
$ |
$ |
$ |
$ |
|||||||||||||
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 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) |
$ |
$ |
$ |
$ |
|||||||||||||
Share-based payment compensation liability (4) |
Financial instruments at FVTP(L) |
$ |
$ |
$ |
$ |
1 2 3 4 |
3 0 . |
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 |
( |
) |
( |
) |
||||||||||||||||||||
Governmental Loans |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||
Interest on Provincial MENDM Loan |
( |
) |
( |
) |
||||||||||||||||||||
$ |
$ |
( |
) | $ |
( |
) | $ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||||
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 |
( |
) |
( |
) |
||||||||||||||||||||
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||||
3 0 . |
FINANCIAL INSTRUMENTS (continued) |
As at, |
March 31, 2023 |
March 31, 2022 | ||||||
Cash |
$ |
$ |
||||||
Restricted cash |
||||||||
Accounts receivable |
||||||||
Bank indebtedness |
( |
) | ||||||
Accounts payable and accrued liabilities |
( |
) |
( |
) | ||||
Governmental loans |
( |
) |
( |
) | ||||
Other long-term liabilities |
( |
) |
||||||
Net Canadian dollar denominated financial instruments |
$ |
( |
) |
$ |
( |
) | ||
3 0 . |
FINANCIAL INSTRUMENTS (continued) |
3 1 . |
MERGER TRANSACTION |
3 1 . |
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 $ |
$ |
|||
(i) |
Public Warrants |
(ii) |
Private Warrants |
3 1 . |
MERGER TRANSACTION (continued) |
3 1 . |
MERGER TRANSACTION (continued) |
3 2 . |
KEY MANAGEMENT PERSONNEL |
3 2 . |
KEY MANAGEMENT PERSONNEL (continued) |
Year ended, |
March 31, 2023 |
March 31, 2022 | ||||||
Salaries and benefits |
$ |
$ |
||||||
Director fees |
||||||||
Share-based compensation (Note 33) |
||||||||
$ |
$ |
|||||||
3 3 . |
SHARE BASED COMPENSATION |
3 3 . |
SHARE BASED COMPENSATION (continued) |
3 4 . |
DIVIDENDS |
Record date | Payment date | Total Dividends on Common Stock | ||||
$ |
||||||
$ |
||||||