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Scully Royalty Ltd.

Scully Royalty Ltd.SRL财报

NYSE · 金融 · 矿权使用费交易商

Scully Royalty Ltd. is a specialty alternative asset and finance firm that offers royalty-based financing solutions, structured credit products, and manages royalty interest portfolios spanning mineral, energy, and commercial business segments, primarily serving small and mid-sized enterprises across North America.

What changed in Scully Royalty Ltd.'s 20-F — 2022 vs 2023

Top changes in Scully Royalty Ltd.'s 2023 20-F

248 paragraphs added · 450 removed · 208 edited across 6 sections

Item 2. Properties

Properties — owned and leased real estate

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Business Overview ​ 12 C. Organizational Structure ​ 17 D. Property, Plants and Equipment ​ 17
Business Overview ​ 12 C. Organizational Structure ​ 16 D. Property, Plants and Equipment ​ 16

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Market deterioration and weakness can result in a material decline in the number and size of the transactions that we execute for our own account or for our clients and to a corresponding decline in our revenue. Any market weakness can further result in losses to the extent that we hold assets in such market.
Market deterioration and weakness can result in a material decline in the number and size of the transactions that we execute for our own account or for our clients and a corresponding decline in our revenue. Any market weakness can further result in losses to the extent that we hold assets in such market.
These firms may have the ability to offer a wider range of products than we do, which may enhance their competitive position. 3 Table of Contents If we are unable to compete effectively with our competitors, our business and results of operations will be adversely affected.
These firms may have the ability to offer a wider range of products than we do, which may enhance their competitive position. If we are unable to compete effectively with our competitors, our business and results of operations will be adversely affected.
These risks and others consistently faced by mine operators may adversely impact the value of our royalty and our financial results and position. Mineral development and production generally involves a high degree of risk.
These risks and others consistently faced by mine operators may adversely impact the value of our royalty and our financial results and position. 5 Table of Contents Mineral development and production generally involves a high degree of risk.
Approximately 46% of our revenue for the year ended December 31, 2022 came from our royalty interest in the Scully Iron Ore Mine. We expect this interest to continue to represent a significant portion of our revenue going forward.
Approximately 64% of our revenue for the year ended December 31, 2023 came from our royalty interest in the Scully Iron Ore Mine. We expect this interest to continue to represent a significant portion of our revenue going forward.
A failure to obtain such additional capital could delay our ability to pursue our business plans in the future and adversely affect our future operations. 7 Table of Contents We may substantially increase our debt in the future.
A failure to obtain such additional capital could delay our ability to pursue our business plans in the future and adversely affect our future operations. We may substantially increase our debt in the future.
Our activities are subject to counterparty risks associated with the performance of obligations by our counterparties. Our business is subject to commercial risks, which include counterparty risk, such as failure of performance by our counterparties. We seek to reduce the risk of non-performance by requiring credit support from creditworthy financial institutions where appropriate.
Our business is subject to commercial risks, which include counterparty risk, such as failure of performance by our counterparties. We seek to reduce the risk of non-performance by requiring credit support from creditworthy financial institutions where appropriate.
As such, we are subject to the risk factors applicable to the owners and operators of mining projects. 5 Table of Contents We are also subject to business risks that may impact the operator of the project underlying our royalty interest, including: failures to execute its business plans; any inability to obtain necessary financing on acceptable terms or at all, to finance operations; changes in mining taxes; litigation risks; permitting risks; title risks; general market risks and operational disruptions.
We are also subject to business risks that may impact the operator of the project underlying our royalty interest, including: failures to execute its business plans; any inability to obtain necessary financing on acceptable terms or at all, to finance operations; changes in mining taxes; litigation risks; permitting risks; title risks; general market risks and operational disruptions.
Strategic investments or acquisitions and joint ventures, or our entry into new business areas, may result in additional risks and uncertainties in our business.
Strategic investments or acquisitions and joint ventures, or our entry into new business areas, may result in additional risks and uncertainties in our business. We may make strategic investments and acquisitions or joint ventures and similar transactions in the future.
Any failure to remain in compliance with sanctions, anti-money laundering laws or other applicable regulations in the jurisdictions in which we operate could harm our reputation and/or cause us to become subject to fines, sanctions or legal enforcement, which could have an adverse effect on our business, financial condition and results of operations.
A default by a significant financial counterparty, or liquidity problems in the financial services industry generally, could have a material adverse effect on us. 6 Table of Contents Any failure to remain in compliance with sanctions, anti-money laundering laws or other applicable regulations in the jurisdictions in which we operate could harm our reputation and/or cause us to become subject to fines, sanctions or legal enforcement, which could have an adverse effect on our business, financial condition and results of operations.
Accordingly, we can provide no assurances as to the level of reserves at the mine. If the operator determines there are insufficient reserves to economically operate the mine, it may abandon its currently announced re-start or, thereafter, scale back or cease operations, which could have a material adverse effect on our profitability, results of operations and financial condition.
If the operator determines there are insufficient reserves to economically operate the mine, it may abandon its currently announced re-start or, thereafter, scale back or cease operations, which could have a material adverse effect on our profitability, results of operations and financial condition. Our activities are subject to counterparty risks associated with the performance of obligations by our counterparties.
The operator’s failure to perform or other operating decisions could have a material adverse effect on our revenue, results of operations and financial condition. The iron ore mine underlying our royalty interest was closed in 2014. A new operator acquired the former operator’s interests in the second quarter of 2017.
The operator’s failure to perform or other operating decisions could have a material adverse effect on our revenue, results of operations and financial condition. The operator of the iron ore mine underlying our royalty interest generally has the power to determine the manner in which the property is operated.
As such, our earnings are directly related to the price of iron ore and demand for steel products. There are many factors influencing the price and demand for these products, including: expectations for inflation; global and regional demand and production; political and economic conditions; and production costs in major producing regions.
There are many factors influencing the price and demand for these products, including: expectations for inflation; global and regional demand and production; political and economic conditions; and production costs in major producing regions. These factors are beyond our control and are impossible for us to predict. Changes in the prices of our products may adversely affect our operating results.
In order to grow our business, we may seek to acquire, merge with or invest in new companies or opportunities. Our failure to make acquisitions or investments may limit our growth. In pursuing acquisition and investment opportunities, we face competition from other companies having similar growth and investment strategies, many of which may have substantially greater resources than us.
We may face a lack of suitable acquisition, merger or other proprietary investment candidates, which may limit our growth. In order to grow our business, we may seek to acquire, merge with or invest in new companies or opportunities. Our failure to make acquisitions or investments may limit our growth.
Further, the terms on which amounts may be borrowed – including standard financial covenants regarding the maintenance of financial ratios, the prohibition against engaging in major corporate transactions or reorganizations and the payment of dividends – may impose additional constraints on our business operations and our financial strength.
Further, the terms on which amounts may be borrowed – including standard financial covenants regarding the maintenance of financial ratios, the prohibition against engaging in major corporate transactions or reorganizations and the payment of dividends – may impose additional constraints on our business operations and our financial strength. 7 Table of Contents As a result of our global operations, we are exposed to political, economic, legal, operational and other risks that could adversely affect our business, results of operations, financial condition and cash flow.
During the year ended December 31, 2022, other than revenue from our royalty interest representing approximately 45% of our total revenue, none of our customers accounted for more than 10% of our total revenue. The loss of key customers, due to competitive conditions or otherwise, may adversely affect our results of operations.
During the year ended December 31, 2023, other than revenue from our royalty interest representing approximately 64% of our total revenue, none of our customers accounted for more than 10% of our total revenue.
Our earnings and, therefore, our profitability may be affected by price volatility in our various products. A significant portion of our revenue in 2022 was derived from our iron ore royalty interest. Any revenues from our royalty interest are impacted by the price of iron ore.
The loss of key customers, due to competitive conditions or otherwise, may adversely affect our results of operations. 3 Table of Contents Our earnings and, therefore, our profitability may be affected by price volatility in our various products. A significant portion of our revenue in 2023 was derived from our iron ore royalty interest.
Competition for these acquisitions or investment targets could result in increased acquisition or investment prices, higher risks and a diminished pool of businesses, services or products available for acquisition or investment.
In pursuing acquisition and investment opportunities, we face competition from other companies having similar growth and investment strategies, many of which may have substantially greater resources than us. Competition for these acquisitions or investment targets could result in increased acquisition or investment prices, higher risks and a diminished pool of businesses, services or products available for acquisition or investment.
Should any decision with respect to such action be determined adversely to us, such decision may have a material adverse effect on our profitability, results of operations and financial condition. In addition, we have no or very limited access to technical or geological data relating to the mine and operations underlying our interest, including reserves data.
The interests of the operator and our interests may not always be aligned. Our inability to control the operations of the mine can adversely affect our profitability, results of operations and financial condition. In addition, we have no or very limited access to technical or geological data respecting the mine, including as to mineralization and reserves.
In addition, we have no or very limited access to technical or geological data respecting the mine, including as to mineralization and reserves. To the extent grantors of royalties and other interests do not abide by their contractual obligations, we may be forced to take legal action to enforce our contractual rights.
To the extent grantors of royalties and other interests do not abide by their contractual obligations, we may be forced to take legal action to enforce our contractual rights. Should any decision with respect to such action be determined adversely to us, such decision may have a material adverse effect on our profitability, results of operations and financial condition.
Removed
These factors are beyond our control and are impossible for us to predict. Changes in the prices of our products may adversely affect our operating results. We may face a lack of suitable acquisition, merger or other proprietary investment candidates, which may limit our growth.
Added
Any revenues from our royalty interest are impacted by the price of iron ore. As such, our earnings are directly related to the price of iron ore and demand for steel products.
Removed
The operator generally has the power to determine the manner in which the property is operated. The interests of the operator and our interests may not always be aligned. Our inability to control the operations of the mine can adversely affect our profitability, results of operations and financial condition.
Added
Pursuant to an Order of the Ontario Superior Court of Justice dated October 10, 2023, the operator of the iron ore mine underlying our royalty interest was granted protection under the Companies’ Creditors Arrangement Act (the “CCAA”). A sales and solicitation process was initiated pursuant to the CCAA process on October 30, 2023.
Removed
A default by a significant financial counterparty, or liquidity problems in the financial services industry generally, could have a material adverse effect on us. In February 2020 the Cayman Islands was included in the European Council to the European Union’s list of non-cooperative jurisdictions for tax purposes, referred to as the “EU Blacklist”.
Added
The Company currently has various outstanding claims against the operator that are the subject of a stay under the CCAA proceedings, totaling $20.6 million which includes pre-filing amounts of $12.4 million. The CCAA proceedings are ongoing and there can be no assurance as to their outcome.
Removed
Additionally, Malta has been listed as a jurisdiction subject to increased monitoring by the Financial Action Task Force.
Added
In addition, we have no or very limited access to technical or geological data relating to the mine and operations underlying our interest, including reserves data. Accordingly, we can provide no assurances as to the level of reserves at the mine.
Removed
While the Cayman Islands was removed from the EU Blacklist in October 2020, the reputational damage could cause our clients, customers and other counterparties to lose confidence in the Cayman Islands or Malta as a financial centre and impact their willingness to conduct business with us. 6 Table of Contents In February 2020, the Cayman Islands was added to the EU Blacklist and remained thereon until October 2020.
Added
As such, we are subject to the risk factors applicable to the owners and operators of mining projects.
Removed
This, along with the related reputational damage for the jurisdiction, resulted in clients, customers and other counterparties questioning the integrity and the transparency of the Cayman Islands as a viable financial centre.
Removed
It may also result in their seeking to reduce the amount of business activity they conduct with us or to alter the terms of their business with us so they are less favourable. Such actions may adversely affect our business and operations.
Removed
In addition, in June 2021, the Financial Action Task Force announced that Malta was included in the list of jurisdictions under increased monitoring.
Removed
Countries included on such list have had strategic deficiencies identified by the task force in their regimes to counter money laundering, terrorist financing and proliferation financing, but have committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and are subject to increased monitoring. We have subsidiaries incorporated in Malta, including the Bank.
Removed
The reputational harm to our businesses associated with our being a Cayman Islands entity or as a result of the Bank and certain of our other subsidiaries being Maltese entities could potentially have an adverse impact on our business, financial condition and results of operations if that status continues for an extended period of time.
Removed
As a result of our global operations, we are exposed to political, economic, legal, operational and other risks that could adversely affect our business, results of operations, financial condition and cash flow.
Removed
On March 7, 2022, we announced that our subsidiary, Merkanti Holding plc, referred to as “Merkanti”, entered into a definitive agreement to acquire Sparkasse (Holdings) Malta Ltd., the Maltese parent company of Sparkasse Bank Malta plc, referred to as “Sparkasse Bank”.
Removed
We may fail to satisfy the conditions to the completion of such acquisition, which include receipt of applicable regulatory approvals. In addition, if the transaction is completed, we may fail to realize the anticipated benefits and synergies of the proposed transaction. We may make additional strategic investments and acquisitions or joint ventures and similar transactions in the future.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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The following is a breakdown of our costs of sales and services for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2022 2021 ​ ​ ( In thousands ) Royalty, goods and products and services ​ $ 23,677 ​ $ 22,933 Reversal of write-down of inventories ​ (21) ​ (19) Gain on derivative contracts, net ​ — ​ (1,376) Fair value gain on investment property, net of write-down of real estate for sale ​ (96) ​ (407) Gain on disposition of subsidiary, net ​ (264) ​ — Gains on settlements and derecognition of liabilities ​ (69) ​ (390) Changes in fair value of a loan payable measured at FVTPL ​ 141 ​ 1,616 Losses on securities, net ​ 2,436 ​ 2,320 Other, including medical and real estate sectors ​ 4,078 ​ 6,241 Total costs of sales and services ​ $ 29,882 ​ $ 30,918 ​ We recognized a gain on settlements and derecognition of liabilities of $0.1 million in 2022, compared to $0.4 million in 2021.
The following is a breakdown of our costs of sales and services for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2022 ​ 2021 ​ ​ ( In thousands ) Royalty, goods and products and services $ 23,677 $ 22,933 Reversal of write-down of inventories ​ (21) ​ (19) Gain on derivative contracts, net ​ — ​ (1,376) Net fair value gain on investment property and real estate for sale ​ (96) ​ (407) Gain on disposition of a subsidiary ​ (264) ​ — Gains on settlements and derecognition of liabilities ​ (69) ​ (390) Changes in fair value of a loan payable measured at FVTPL ​ 141 ​ 1,616 Losses on securities, net ​ 2,436 ​ 2,320 Other, including medical and real estate sectors ​ 4,078 ​ 6,241 Total costs of sales and services ​ $ 29,882 ​ $ 30,918 ​ We recognized a gain on settlements and derecognition of liabilities of $0.1 million in 2022, compared to $0.4 million in 2021.
The net debt-to-equity ratio is calculated as net debt divided by shareholders’ equity. Net debt is calculated as total debt less cash. The long-term debt-to-equity ratio is calculated as long-term debt divided by shareholders’ equity.
Net debt is calculated as total debt less cash. The long-term debt-to-equity ratio is calculated as long-term debt divided by shareholders’ equity.
Working capital levels fluctuate throughout the year and are affected by the level of our operations, pricing of iron ore, the timing of collection of receivables and the payment of payables and expenses. Changes in the volume of transactions can affect the level of receivables and influence overall working capital levels.
Working capital levels fluctuate throughout the year and are affected by the level of our operations, pricing of iron ore, the timing of the collection of receivables and the payment of payables and expenses. Changes in the volume of transactions can affect the level of receivables and influence overall working capital levels.
The ratios were stable between 2022 and 2021. Cash Flows Due to the number of businesses we engage in, our cash flows are not necessarily reflective of net earnings and net assets for any reporting period.
The ratios were stable between 2023 and 2022. Cash Flows Due to the number of businesses we engage in, our cash flows are not necessarily reflective of net earnings and net assets for any reporting period.
See “ – Financial Position ”; and (b) long-term lease liabilities of $0.3 million at December 31, 2022 ($0.5 million at December 31, 2021), recognized as a consequence of IFRS 16. There were no amounts in accumulated other comprehensive income relating to cash flow hedges, nor were there any subordinated debt instruments as at December 31, 2022 and 2021.
See “ – Financial Position ”; and (b) long-term lease liabilities of $3,000 at December 31, 2023 ($0.3 million at December 31, 2022), recognized as a consequence of IFRS 16. There were no amounts in accumulated other comprehensive income relating to cash flow hedges, nor were there any subordinated debt instruments as at December 31, 2023 and 2022.
Our net debt-to-equity ratio as at December 31, 2022 and 2021 was not applicable as we had a net cash balance.
Our net debt-to-equity ratio as at December 31, 2023 and 2022 was not applicable as we had a net cash balance.
Please see “ Non-IFRS Financial Measures ” for additional information. Liquidity and Capital Resources General Liquidity is of importance to our business as insufficient liquidity often results in underperformance.
Please see “ Non-IFRS Financial Measures ” for additional information. 29 Table of Contents Liquidity and Capital Resources General Liquidity is of importance to our business as insufficient liquidity often results in underperformance.
In 2022, we recognized a non-cash impairment of $31.4 million related to assets held for sale primarily related to a non-cash impairment loss recognized in connection with the reclassification of our hydrocarbon assets as assets held for sale as at December 31, 2022. The assets were sold in March 2023.
In 2023, we recognized a reversal of impairment of assets held for sale of $1.2 million primarily related to a non-cash impairment loss recognized in connection with the reclassification of our hydrocarbon assets as assets held for sale as at December 31, 2022. The assets were sold in March 2023.
The liquid nature of these assets provides us with flexibility in managing and financing our business and the ability to realize upon investment or business opportunities as they arise. We also use liquidity for our own proprietary trading and investing activities. As at December 31, 2022, cash increased to $63.7 million from $54.9 million as at December 31, 2021.
The liquid nature of these assets provides us with flexibility in managing and financing our business and the ability to realize upon investment or business opportunities as they arise. We also use liquidity for our own proprietary trading and investing activities. As at December 31, 2023, cash increased to $78.3 million from $63.7 million as at December 31, 2022.
Selling, general and administrative expenses increased to $28.5 million in 2022 from $21.1 million in 2021 primarily due to greater legal and consulting fees and reimbursements of expenses. In 2022, we recognized a net foreign currency transaction gain of $3.9 million compared to $2.8 million in 2021, in our consolidated statement of operations.
The assets were sold in March 2023. Selling, general and administrative expenses increased to $28.5 million in 2022 from $21.1 million in 2021 primarily due to greater legal and consulting fees and reimbursements of expenses. In 2022, we recognized a net foreign currency transaction gain of $3.9 million compared to $2.8 million in 2021, in our consolidated statement of operations.
A customer in the Royalty segment located in Canada represented approximately 45% and 56%, respectively, of our total revenue for the years ended December 31, 2022 and 2021.
A customer in the Royalty segment located in Canada represented approximately 64% and 45%, respectively, of our total revenue for the years ended December 31, 2023 and 2022.
We recognized a fair value gain on investment property, net of write-down of real estate for sale of $0.1 million in 2022, compared to $0.4 million in 2021. 26 Table of Contents We also recognized $4.1 million of other costs relating to medical and real estate sectors in 2022, compared to $6.2 million in 2021.
We recognized a fair value gain on investment property and real estate for sale of $0.1 million in 2022, compared to $0.4 million in 2021. We also recognized $4.1 million of other costs relating to medical and real estate sectors in 2022, compared to $6.2 million in 2021.
The following table sets forth the calculation of our net debt-to-equity ratio as at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 ​ ​ (In thousands, except ratio amounts) Total debt (1) ​ $ 35,538 ​ $ 35,227 Less: cash ​ (63,717) ​ (54,873) Net debt ​ Not applicable ​ Not applicable Shareholders’ equity ​ 325,158 ​ 365,600 Net debt-to-equity ratio ​ Not applicable ​ Not applicable Note: (1) Long-term debt includes bonds payable and does not include: (a) a non-interest bearing loan payable of $7.4 million as at December 31, 2022 and $6.8 million as at December 31, 2021 which is measured at fair value through profit or loss and does not have a fixed repayment date.
The following table sets forth the calculation of our net debt-to-equity ratio as at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 ​ ​ (In thousands, except ratio amounts) Total debt (1) ​ $ 36,107 ​ $ 35,538 Less: cash ​ (78,252) ​ (63,717) Net debt ​ Not applicable ​ Not applicable Shareholders’ equity ​ 322,459 ​ 325,158 Net debt-to-equity ratio ​ Not applicable ​ Not applicable Note: (1) Long-term debt includes bonds payable and does not include: (a) a non-interest bearing loan payable of $7.6 million as at December 31, 2023 and $7.4 million as at December 31, 2022 which is measured at fair value through profit or loss and does not have a fixed repayment date.
We operate internationally and therefore our financial performance and position are impacted by changes in the Canadian dollar, our reporting currency, against the other functional currencies of our international subsidiaries and operations, particularly the Euro. As at December 31, 2022, the Canadian dollar had weakened by 0.5% against the Euro from the end of 2021.
We operate internationally and therefore our financial performance and position are impacted by changes in the Canadian dollar, our reporting currency, against the other functional currencies of our international subsidiaries and operations, particularly the Euro. As at December 31, 2023, the Canadian dollar had decreased by 1.2% against the Euro from the end of 2022.
Our EBITDA loss in 2022 included a non-cash impairment related to the sale of our hydrocarbon properties of $31.4 million. 27 Table of Contents The following is a reconciliation of our net loss to EBITDA for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2022 2021 ​ ​ (In thousands) Net (loss) income for the year (1) ​ $ (23,407) ​ $ 7,371 Income tax (recovery) expense ​ (549) ​ 10,176 Finance costs ​ 1,809 ​ 1,935 Depreciation, depletion and amortization ​ 10,699 ​ 11,023 EBITDA (loss) ​ $ (11,448) ​ $ 30,505 Note: (1) Includes net loss attributable to non-controlling interests.
The following is a reconciliation of our net (loss) income to EBITDA (loss) for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2022 ​ 2021 ​ ​ (In thousands) Net (loss) income for the year (1) $ (23,407) $ 7,371 Income tax (recovery) expense ​ (549) ​ 10,176 Finance costs ​ 1,809 ​ 1,935 Depreciation, depletion and amortization ​ 10,699 ​ 11,023 EBITDA (loss) ​ $ (11,448) ​ $ 30,505 Note: (1) Includes net loss attributable to non-controlling interests.
The foreign currency transaction gain represents exchange differences arising on the settlement of monetary items or on translating monetary items into our functional currencies at rates different from those at which they were translated on initial recognition during the period or in previous financial statements. In 2021 and 2020, finance costs were $1.9 million.
The foreign currency transaction loss represents exchange differences arising on the settlement of monetary items or on translating monetary items into our functional currencies at rates different from those at which they were translated on initial recognition during the period or in previous financial statements. In each of 2023 and 2022, finance costs were $1.8 million.
The following table sets forth the calculation of our long-term debt-to-equity ratio as at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 ​ ​ (In thousands, except ratio amounts) Long-term debt, less current portion (1) ​ $ 35,538 ​ $ 35,227 Shareholders’ equity ​ 325,158 ​ 365,600 Long-term debt-to-equity ratio ​ 0.11 ​ 0.10 Note: (1) See note in the table immediately above. ​ During 2022, our strategy, which was unchanged from 2021, was to maintain our net debt-to-equity ratio and long-term debt-to-equity ratio at a manageable level.
The following table sets forth the calculation of our long-term debt-to-equity ratio as at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 ​ ​ (In thousands, except ratio amounts) Long-term debt, less current portion (1) ​ $ 36,107 ​ $ 35,538 Shareholders’ equity ​ 322,459 ​ 325,158 Long-term debt-to-equity ratio ​ 0.11 ​ 0.11 Note: (1) See note in the table immediately above. ​ 30 Table of Contents During 2023, our strategy, which was unchanged from 2022, was to maintain our net debt-to-equity ratio and long-term debt-to-equity ratio at a manageable level.
Other receivables included an indemnification asset of $6.8 million, a loan and aggregate current account receivables of $28.0 million as at December 31, 2022 from a related party, compared to other receivables including an indemnification asset of $6.8 million, a loan and aggregate current account receivables of $47.7 million as at December 31, 2021 from a related party. See “
Other receivables included an indemnification asset of $6.8 million, a loan and aggregate current account receivables of $30.5 million as at December 31, 2023 from a related party compared to an indemnification asset of $6.8 million, a loan and aggregate current account receivables of $28.0 million as at December 31, 2022 from a related party. See “
We had short-term securities of $30.3 million as at December 31, 2022, compared to $19.3 million as at December 31, 2021. These mainly comprised of liquid government debt securities and other securities held by our Bank in the ordinary course of business. The increase in short-term securities primarily related to the purchase of government bonds within our bank subsidiary.
We had short-term securities of $13.0 million as at December 31, 2023 compared to $30.3 million as at December 31, 2022 These mainly comprised of liquid government debt securities and other securities held by our Bank in the ordinary course of business. The decrease in short-term securities primarily related to the sale of government bonds within our bank subsidiary.
Included in other receivables were receivables of $5.8 million related to our iron ore royalty interest, compared to $5.8 million as at December 31, 2021.
Included in other receivables at December 31, 2023 were receivables of $20.6 million related to our iron ore royalty interest, compared to $5.8 million as at December 31, 2022.
In 2020, 81% of our revenues were from the Americas, 12% was from Europe and 7% were from Africa, Asia and other regions. Based upon the average exchange rates for 2021, the Canadian dollar was stronger by 3.2% in value against the Euro compared to the average exchange rates for 2020.
In 2021, 87% of our revenues were from the Americas, 7% was from Europe and 6% were from Africa, Asia and other regions. Based upon the average exchange rates for 2022, the Canadian dollar was stronger by 8.3% in value against the Euro compared to the average exchange rates for 2021.
We manage our capital structure and make adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. 30 Table of Contents Consistent with others in our industry, we monitor capital on the basis of our net debt-to-equity ratio and long-term debt-to-equity ratio.
We manage our capital structure and make adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. Consistent with others in our industry, we monitor capital on the basis of our net debt-to-equity ratio and long-term debt-to-equity ratio. The net debt-to-equity ratio is calculated as net debt divided by shareholders’ equity.
In 2022, an increase in loan receivables used cash of $6.9 million, compared to $nil in 2021. This increase related to lending within our bank subsidiary. In 2022, proceeds from the sales of investment property consisting of dispositions of plots of industrial real estate provided cash of $2.6 million, compared to $11,000 in 2021.
This increase related to lending within our bank subsidiary. In 2022, proceeds from the sales of investment property consisting of dispositions of plots of industrial real estate provided cash of $2.6 million, compared to $11,000 in 2021. Purchases of property, plant and equipment, net of sales, used cash of $0.5 million in 2022, compared to $1.0 million in 2021.
In 2022, dividends paid to the owners of our Common Shares used cash of $16.9 million, compared to $nil in 2021. In 2022, the exercise of stock options provided cash of $0.4 million, compared to $nil in 2021. Reductions in lease liabilities used cash of $0.4 million in 2022 and 2021.
Net cash used in financing activities was $17.2 million in 2022, compared to $0.4 million in 2021. In 2022, dividends paid to the owners of our Common Shares used cash of $16.9 million, compared to $nil in 2021. In 2022, the exercise of stock options provided cash of $0.4 million, compared to $nil in 2021.
Our competitors include firms traditionally engaged in merchant banking as well as other capital sources such as hedge funds and private equity firms and other companies engaged in similar activities in Europe, Asia and globally.
Our results of operations may also be materially affected by competitive factors. Our competitors include firms traditionally engaged in merchant banking as well as other capital sources such as hedge funds and private equity firms and other companies engaged in similar activities in Europe, Asia and globally.
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 The following is a breakdown of our revenue by segment for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2020 Revenue: ​ (In thousands) Royalty $ 40,335 $ 31,360 Industrial ​ 23,428 ​ 17,666 Merchant Banking ​ 6,527 ​ 10,406 All Other ​ 1,001 ​ — ​ ​ $ 71,291 ​ $ 59,432 ​ In 2021, 87% of our revenues were from the Americas, 7% was from Europe and 6% were from Africa, Asia and other regions.
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 The following is a breakdown of our revenue by segment for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2022 ​ 2021 ​ ​ (In thousands) Revenue: ​ ​ ​ ​ ​ ​ Royalty $ 29,167 $ 40,335 Industrial ​ 28,538 ​ 23,428 Merchant Banking ​ 5,486 ​ 6,527 All Other ​ 498 ​ 1,001 ​ ​ $ 63,689 ​ $ 71,291 ​ In 2022, 77% of our revenues were from the Americas, 9% was from Europe and 14% were from Africa, Asia and other regions.
Excluding resource property revenue taxes, we paid $0.6 million in income tax in cash during 2021 and, in 2020, we did not pay any income tax in cash. We also recognized a resource property revenue tax expense of $7.9 million in 2021 compared to $6.1 million in 2020.
Excluding resource property revenue taxes, we paid $0.4 million in income tax in cash during 2023 and, in 2022, we paid $0.2 million in income tax in cash. We also recognized a resource property revenue tax expense of $6.9 million in 2023, compared to $5.7 million in 2022.
Overall, we recognized an income tax expense of $10.2 million (income tax expense of $2.3 million and resource property revenue tax expense of $7.9 million) in 2021, compared to $11.0 million (income tax expense of $4.9 million and resource property revenue tax expense of $6.1 million) in 2020.
Overall, we recognized an income tax expense of $8.8 million (income tax expense of $1.9 million and resource property revenue tax expense of $6.9 million) in 2023, compared to an income tax recovery of $0.5 million (income tax recovery of $6.2 million and resource property revenue tax expense of $5.7 million) in 2022.
Based upon the average exchange rates for 2022, the Canadian dollar was stronger by 8.3% in value against the Euro compared to the average exchange rates for 2021. 25 Table of Contents Revenue for 2022 decreased to $63.7 million from $71.3 million in 2021, mainly as a result of decreased royalty income, partially offset by increased Industrial segment revenues that primarily resulted from higher natural gas prices in 2022.
Revenue for 2022 decreased to $63.7 million from $71.3 million in 2021, mainly as a result of decreased royalty income, partially offset by increased Industrial segment revenues that primarily resulted from higher natural gas prices in 2022.
Business Environment Our financial performance is, and our consolidated results in any period can be, materially affected by economic conditions and financial markets generally, including the availability of capital, the availability of credit and the level of market and commodity price volatility. Our results of operations may also be materially affected by competitive factors.
Item 4: Information on the Company – B. Business Overview – Recent Developments ” for further information. Business Environment Our financial performance is, and our consolidated results in any period can be, materially affected by economic conditions and financial markets generally, including the availability of capital, the availability of credit and the level of market and commodity price volatility.
We recognized a $1.1 million currency translation adjustment gain, before reclassification adjustment for exchange difference to profit or loss for a subsidiary deconsolidated, in accumulated other comprehensive income within equity in 2022, compared to a currency translation adjustment loss of $6.2 million in accumulated other comprehensive income within equity in 2021.
We recognized a $1.2 million currency translation adjustment loss in accumulated other comprehensive income within equity in 2023, compared to a currency translation adjustment gain of $1.1 million in accumulated other comprehensive income within equity in 2022.
Revenue for our Royalty segment for 2022 decreased to $29.2 million from $40.3 million in 2021 primarily as a result of a weaker iron ore pricing environment in 2022 compared with 2021 as well as slightly lower sales tonnage.
A customer in the Royalty segment located in Canada represented approximately 45% and 56%, respectively, of our total revenue for the years ended December 31, 2022 and 2021. 27 Table of Contents Revenue for our Royalty segment for 2022 decreased to $29.2 million from $40.3 million in 2021 primarily as a result of a weaker iron ore pricing environment in 2022 compared with 2021 as well as slightly lower sales tonnage.
Purchases of property, plant and equipment, net of sales, used cash of $0.5 million in 2022, compared to $1.0 million in 2021. Investing activities used cash of $1.0 million in 2021, compared to providing cash of $3.4 million in 2020.
Purchases of property, plant and equipment, net of sales, used cash of $0.2 million in 2023, compared to $0.5 million in 2022. Investing activities used cash of $4.7 million in 2022, compared to $1.0 million in 2021. In 2022, an increase in loan receivables used cash of $6.9 million, compared to $nil in 2021.
In 2021, reductions in lease liabilities used cash of $0.4 million in 2021 compared to $0.5 million in 2020. 32 Table of Contents Financial Position The following table sets out our selected financial information as at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 ​ ​ (In thousands) Cash ​ $ 63,717 ​ $ 54,873 Short-term securities ​ 30,293 ​ 19,256 Trade receivables ​ 3,829 ​ 4,164 Tax receivables ​ 631 ​ 1,092 Other receivables ​ 43,502 ​ 64,446 Inventories ​ 840 ​ 1,100 Restricted cash ​ 365 ​ 142 Deposits, prepaid and other ​ 1,688 ​ 581 Assets held for sale ​ ​ 34,743 ​ ​ — Total current assets ​ 179,608 ​ 145,654 Working capital ​ 136,636 ​ 133,306 Total assets ​ 475,477 ​ 509,966 ​ ​ ​ ​ ​ ​ ​ Account payables and accrued expenses ​ 21,099 ​ 11,346 Income tax liabilities ​ 1,515 ​ 1,002 Liabilities related to assets held for sale ​ ​ 20,358 ​ ​ — Total current liabilities ​ 42,792 ​ 12,348 Bonds payable, long-term ​ 35,538 ​ 35,227 Loan payable, long-term ​ 7,424 ​ 6,817 Decommissioning obligations, long-term ​ — ​ 15,096 Deferred income tax liabilities ​ 56,570 ​ 67,461 Total liabilities ​ 142,970 ​ 137,432 Shareholders’ equity ​ 325,158 ​ 365,600 ​ We maintain an adequate level of liquidity, with a portion of our assets held in cash and securities.
Financial Position The following table sets out our selected financial information as at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 ​ ​ (In thousands) Cash ​ $ 78,252 ​ $ 63,717 Short-term securities ​ 12,958 ​ 30,293 Trade receivables ​ 1,907 ​ 3,829 Tax receivables ​ 640 ​ 631 Other receivables ​ 67,783 ​ 43,502 Inventories ​ 1,199 ​ 840 Restricted cash ​ 397 ​ 365 Deposits, prepaid and other ​ 1,409 ​ 1,688 Assets held for sale ​ ​ — ​ ​ 34,743 Total current assets ​ 164,545 ​ 179,608 Working capital ​ 143,972 ​ 136,636 Total assets ​ 452,467 ​ 475,477 ​ ​ ​ ​ ​ ​ ​ Account payables and accrued expenses ​ 16,044 ​ 21,099 Income tax liabilities ​ 4,529 ​ 1,515 Liabilities related to assets held for sale ​ ​ — ​ ​ 20,358 Total current liabilities ​ 20,573 ​ 42,972 Bonds payable, long-term ​ 36,107 ​ 35,538 Loan payable, long-term ​ 7,610 ​ 7,424 Deferred income tax liabilities ​ 58,370 ​ 56,570 Total liabilities ​ 122,797 ​ 142,970 Shareholders’ equity ​ 322,459 ​ 325,158 ​ 32 Table of Contents We maintain an adequate level of liquidity, with a portion of our assets held in cash and securities.
In 2022, the average price of 62% iron ore, as reported by Platts, decreased to US$120 from US$185 per tonne in 2021, down almost 45% from its peak of US$214 in 2021. Overall, the average iron price for 65% Fe iron ore, as reported by Platts was US$139 per tonne in 2022, compared to US$185 per tonne in 2021.
The average price of 62% iron ore, as reported by Platts, remained constant at US$120 per tonne in 2023 and 2022. Overall, the average iron price for 65% Fe iron ore, as reported by Platts was US$132 per tonne in 2023, compared to US$139 per tonne in 2022.
Dividends paid to non-controlling interests used cash of $0.3 million, compared to $nil in 2021. Net cash used in financing activities was $0.4 million in 2021, compared to $0.5 million in 2020.
Reductions in lease liabilities used cash of $0.4 million in 2022 and 2021. Dividends paid to non-controlling interests used cash of $0.3 million, compared to $nil in 2021.
An increase in short-term securities used cash of $3.9 million in 2021, compared to $2.6 million in 2020. In 2021, a decrease in account payables and accrued expenses used cash of $1.7 million, compared to an increase in account payables and accrued expenses providing cash of $0.5 million in 2020.
An increase in short-term securities used cash of $12.5 million in 2022, compared to $3.9 million in 2021. This related primarily to bond investments in our banking subsidiary. An increase in account payables and accrued expenses provided cash of $9.9 million in 2022, compared to a decrease in account payables and accrued expenses using cash of $1.7 million in 2021.
A decrease in inventories provided cash of $0.3 million in 2022 and 2021. In 2022, an increase in restricted cash used cash of $0.2 million, compared to a decrease in restricted cash providing cash of $20,000 in 2021. Operating activities used cash of $6.6 million in 2021, compared to $21.3 million in 2020.
In 2022, an increase in restricted cash used cash of $0.2 million, compared to a decrease in restricted cash providing cash of $20,000 in 2021. 31 Table of Contents Cash Flows from Investing Activities Investing activities used cash of $6.3 million in 2023, compared to $4.7 million in 2022.
We currently have a sufficient level of cash on hand and expected cash flows from operations to meet our working capital and other requirements as well as unexpected cash demands. 31 Table of Contents The following table presents a summary of cash flows for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2022 2021 2020 ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ Cash flows provided by (used in) operating activities ​ $ 30,637 ​ $ (6,637) ​ $ (21,271) Cash flows (used in) provided by investing activities ​ (4,677) ​ (971) ​ 3,419 Cash flows used in financing activities ​ (17,192) ​ (424) ​ (498) Exchange rate effect on cash ​ 76 ​ (647) ​ 3,628 Increase (decrease) in cash ​ $ 8,844 ​ $ (8,679) ​ $ (14,722) ​ Cash Flows from Operating Activities Operating activities provided cash of $30.6 million in 2022, compared to using cash of $6.6 million in 2021.
The following table presents a summary of cash flows for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 2021 ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ Cash flows provided by (used in) operating activities ​ $ 26,181 ​ $ 30,637 ​ $ (6,637) Cash flows used in investing activities ​ (6,307) ​ (4,677) ​ (971) Cash flows used in financing activities ​ (3,815) ​ (17,192) ​ (424) Exchange rate effect on cash ​ (1,524) ​ 76 ​ (647) Increase (decrease) in cash ​ $ 14,535 ​ $ 8,844 ​ $ (8,679) ​ Cash Flows from Operating Activities Operating activities provided cash of $26.2 million in 2023, compared to $30.6 million in 2022.
A decrease in inventories provided cash of $0.3 million in 2021, compared to $0.5 million in 2020. In 2021, a decrease in deposits, prepaid and other provided cash of $0.4 million, compared to $0.1 million in 2020. Cash Flows from Investing Activities Investing activities used cash of $4.7 million in 2022, compared to $1.0 million in 2021.
In 2023, a decrease in deposits, prepaid and other provided cash of $0.3 million, compared to an increase in deposits, prepaid and other using cash of $1.0 million in 2022. An increase in inventories used cash of $0.3 million in 2023, compared to a decrease in inventories providing cash of $0.3 million in 2022.
The following is a reconciliation of our net loss to EBITDA for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2020 ​ ​ (In thousands) Net income for the year (1) $ 7,371 $ 212 Income tax expense ​ 10,176 ​ 10,967 Finance costs ​ 1,935 ​ 1,881 Depreciation, depletion and amortization ​ 11,023 ​ 11,470 EBITDA ​ $ 30,505 ​ $ 24,530 ​ Note: (1) Includes net income attributable to non-controlling interests.
The following is a reconciliation of our net income (loss) to EBITDA (loss) for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 ​ ​ (In thousands) Net income (loss) for the year (1) ​ $ 1,399 ​ $ (23,407) Income tax expense (recovery) ​ 8,798 ​ (549) Finance costs ​ 1,763 ​ 1,809 Depreciation, depletion and amortization ​ 7,929 ​ 10,699 EBITDA (loss) ​ $ 19,889 ​ $ (11,448) Note: (1) Includes net income and loss attributable to non-controlling interests.
In 2021, our net income attributable to shareholders was $7.6 million, or $0.51 per share on a basic and diluted basis, compared to net income attributable to shareholders of $0.4 million, or $0.03 per share on a basic and diluted basis in 2020. In 2021, our EBITDA was $30.5 million, compared to $24.5 million in 2020.
In 2023, our net income attributable to shareholders was $1.4 million, or $0.09 per share on a basic and diluted basis, compared to a net loss attributable to shareholders of $23.4 million, or $1.58 per share on a basic and diluted basis in 2022.
An increase in account payables and accrued expenses provided cash of $9.9 million in 2022, compared to a decrease in account payables and accrued expenses using cash of $1.7 million in 2021.
A decrease in account payables and accrued expenses used cash of $4.0 million in 2023, compared to an increase in account payables and accrued expenses providing cash of $9.9 million in 2022. An increase in income tax liabilities provided cash of $3.0 million in 2023, compared to $0.5 million in 2022.
The decrease was primarily the result of lower revenues in the medical sector. We recognized a net gain on derivative contracts of $1.4 million in 2021. This income was generated from premiums of put options sold and gains from futures as a result of a decline in iron ore prices in the second half of 2021.
The decrease was primarily the result of lower revenues in the medical sector. We recognized a net gain on derivative contracts of $1.4 million in 2021.
In 2020, total revenues included revenues of $48.4 million from royalty, goods and products and services, of which 67% was from our iron ore royalty, 16% was from hydrocarbons, 10% was from food products and 7% was from electricity and power.
In 2023, total revenues include revenues of $43.3 million from royalty, goods and products and services, of which 84% was from our iron ore royalty, approximately 8% was from hydrocarbons and 8% was from power and electricity.
We recognized a net loss on securities primarily relating to listed equity securities of $2.3 million in 2021. We recognized a net gain on derivative contracts of $1.4 million in 2021, compared to $nil in 2020.
We recognized a net loss on securities primarily relating to trading securities of $2.8 million in 2023, compared to $2.4 million in 2022.
Trade receivables and other receivables were $3.8 million and $43.5 million, respectively, as at December 31, 2022, compared to $4.2 million and $64.4 million, respectively, as at December 31, 2021. The decrease in other receivables primarily resulted from lower amounts owing by a related party.
Trade receivables and other receivables were $1.9 million and $67.8 million, respectively, as at December 31, 2023, compared $3.8 million and $43.5 million, respectively, as at December 31, 2022. The increase in other receivables primarily resulted from an increase in receivables from Tacora.
We recognized a fair value gain on investment property, net of write-down of real estate for sale of $0.4 million in 2021, compared to $0.8 million in 2020. We recognized a reversal of write-downs of inventories of $19,000 in 2021, compared to a write-down of $0.5 million in 2020.
We recognized a net fair value loss on investment property and real estate for sale, of $0.1 million in 2023, compared to a fair value gain of $0.1 million in 2022. We also recognized $4.5 million of other costs relating to medical and real estate sectors in 2023, compared to $4.1 million in 2022.
The following is a breakdown of our costs of sales and services for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2020 ​ ​ ( In thousands ) Royalty, goods and products and services $ 22,933 $ 22,102 (Reversal) write-down of inventories ​ (19) ​ 469 Gain on derivative contracts, net ​ (1,376) ​ — Fair value gain on investment property, net of write-down of real estate for sale ​ (407) ​ (757) Loss on dispositions of subsidiaries, net ​ — ​ 546 Gains on settlements and derecognition of liabilities ​ (390) ​ (2,600) Changes in fair value of a loan payable measured at FVTPL ​ 1,616 ​ 549 Losses on securities, net ​ 2,320 ​ — Other, including medical and real estate sectors ​ 6,241 ​ 6,561 Total costs of sales and services ​ $ 30,918 ​ $ 26,870 ​ We recognized a gain on settlements and derecognition of liabilities of $0.4 million in 2021, compared to $2.6 million in 2020.
The following is a breakdown of our costs of sales and services for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 ​ ​ ( In thousands ) Royalty, goods and products and services ​ $ 12,689 ​ $ 23,677 Reversal of write-down of inventories ​ (27) ​ (21) Net fair value loss (gain) on investment property and real estate for sale ​ 59 ​ (96) Gain on disposition of a subsidiary ​ — ​ (264) Gains on settlements and derecognition of liabilities ​ (1,313) ​ (69) Changes in fair value of a loan payable measured at FVTPL ​ 360 ​ 141 Losses on securities, net ​ 2,794 ​ 2,436 Other, including medical and real estate sectors ​ 4,512 ​ 4,078 Total costs of sales and services ​ $ 19,074 ​ $ 29,882 ​ We recognized a gain on settlements and derecognition of liabilities of $1.3 million in 2023 including $0.8 million due to a former subsidiary which was determined not to be payable (see Note 23 to our audited consolidated financial statements for the year ended December 31, 2023), compared to $0.1 million in 2022.
This income was generated from premiums of put options sold and gains from futures as a result of a decline in iron ore prices in the second half of 2021. We recognized a net loss on dispositions of subsidiaries of $0.5 million in 2020.
This income was generated from premiums of put options sold and gains from futures as a result of a decline in iron ore prices in the second half of 2021. 28 Table of Contents In 2022, we recognized a non-cash impairment of $31.4 million related to assets held for sale primarily related to a non-cash impairment loss recognized in connection with the reclassification of our hydrocarbon assets as assets held for sale as at December 31, 2022.
In 2022, a decrease in receivables provided cash of $24.3 million, compared to an increase in receivables using cash of $24.5 million in 2021. The decrease in receivables related to a reduction in receivables from an affiliate controlled by our Chairman (see “Item 7: Major Shareholders and Related Party Transactions – B.
The decrease in receivables related to a reduction in receivables from an affiliate controlled by our Chairman (see “Item 7: Major Shareholders and Related Party Transactions – B. Related Party Transactions” and Notes 8 and 24 to our audited consolidated financial statements for the year ended December 31, 2023 for further information).
Revenue for our Industrial segment for 2021 increased to $23.4 million from $17.7 million in 2020, primarily as a result of increased natural gas pricing. Revenue for our Merchant Banking segment for 2021 decreased to $6.5 million from $10.4 million in 2020, primarily as a result of exiting a marginally profitable business line.
Revenue for our Industrial segment for 2023 decreased to $12.2 million from $28.5 million in 2022, primarily as a result of the the disposition of our hydrocarbon interests in March 2023. Revenue for our Merchant Banking segment for 2023 increased to $7.4 million from $5.5 million in 2022.
In 2021, purchases of property, plant and equipment, net of sales, used cash of $1.0 million, compared to $0.2 million in 2020. Cash Flows from Financing Activities Net cash used in financing activities was $17.2 million in 2022, compared to $0.4 million in 2021.
Cash Flows from Financing Activities Net cash used in financing activities was $3.8 million in 2023, compared to $17.2 million in 2022. In 2023, dividends paid to the owners of our Common Shares used cash of $3.4 million, compared to $16.9 million in 2022. Reductions in lease liabilities used cash of $0.4 million in 2023 and in 2022.
In addition, we recognized net gains of $3.9 million on exchange differences on foreign currency transactions in our consolidated statement of operations in 2022, compared to net gains of $2.8 million on exchange differences on foreign currency transactions in our consolidated statement of operations in 2021. 24 Table of Contents Results of Operations The following table sets forth certain selected operating results and other financial information for each of the years ended December 31, 2022, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2022 2021 2020 ​ (In thousands, except per share amounts) ​ Revenue ​ $ 63,689 ​ $ 71,291 ​ $ 59,432 ​ Costs of sales and services ​ 29,882 ​ 30,918 ​ 26,870 ​ Selling, general and administrative expenses ​ 28,480 ​ 21,144 ​ 19,901 ​ Share-based compensation – selling, general and administrative ​ — ​ 2,497 ​ — ​ Finance costs ​ 1,809 ​ 1,935 ​ 1,881 ​ (Reversal of) credit losses ​ (47) ​ 88 ​ (3,108) (1) ​ Impairment of assets held for sale ​ 31,443 ​ — ​ — ​ Net (loss) income (2) ​ (23,398) ​ 7,564 ​ 369 ​ (Loss) earnings per share – basic and diluted ​ (1.58) ​ 0.51 ​ 0.03 ​ Notes: (1) Such credit losses primarily related to former businesses.
Results of Operations The following table sets forth certain selected operating results and other financial information for each of the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 2021 ​ (In thousands, except per share amounts) Revenue ​ $ 54,944 ​ $ 63,689 ​ $ 71,291 Costs of sales and services ​ 19,074 ​ 29,882 ​ 30,918 Selling, general and administrative expenses ​ 24,182 ​ 28,480 ​ 21,144 Share-based compensation–selling, general and administrative ​ — ​ — ​ 2,497 Finance costs ​ 1,763 ​ 1,809 ​ 1,935 Credit losses (recovery) ​ 547 ​ (47) ​ 88 (Reversal of) impairment of assets held for sale ​ (1,246) ​ 31,443 ​ — Net income (loss) (1) ​ 1,391 ​ (23,398) ​ 7,564 Earnings (loss) per share – basic and diluted ​ 0.09 ​ (1.58) ​ 0.51 Note: (1) Attributable to the owners of the parent company. 24 Table of Contents The following table provides a breakdown of revenue for each of the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 2021 ​ ​ ​ ​ (In thousands) ​ ​ ​ Royalty, goods and products and services ​ $ 43,330 ​ $ 52,218 ​ $ 60,201 Interest ​ 3,717 ​ 3,712 ​ 405 Dividends ​ 146 ​ 268 ​ 244 Other, including medical and real estate sectors ​ 7,751 ​ 7,491 ​ 10,441 Revenue ​ $ 54,944 ​ $ 63,689 ​ $ 71,291 ​ Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 The following is a breakdown of our revenue by segment for each of the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 ​ ​ (In thousands) Revenue: ​ ​ ​ ​ ​ ​ Royalty ​ $ 35,323 ​ $ 29,167 Industrial ​ 12,247 ​ 28,538 Merchant Banking ​ 7,374 ​ 5,486 All Other ​ — ​ 498 ​ ​ $ 54,944 ​ $ 63,689 ​ In 2023, 74% of our revenues were from the Americas, 16% was from Europe and 10% were from Africa, Asia and other regions.
Net gain or loss on dispositions of subsidiaries consisted of the reclassification of exchange differences from other comprehensive income and the difference between the book value of such net assets (or net liabilities) and the consideration received. The subsidiaries disposed in 2020 comprised non-operating entities, which will not have an impact on our operations going forward.
We recognized a net gain on the disposition of a subsidiary of $nil in 2023, compared to $0.3 million in 2022. The net gain on disposition of a subsidiary consisted of the reclassification of exchange differences from other comprehensive income and the difference between the book value of such net assets (or net liabilities) and the consideration received.
Revenue for our Royalty segment for 2021 increased to $40.3 million from $31.4 million in 2020 as a result of the continued ramp-up of operations at the Scully iron ore mine in 2021 and stronger iron ore prices in the first half of 2021.
Revenue for our Royalty segment for 2023 increased to $35.3 million from $29.2 million in 2022 primarily as a result of higher production and a stronger iron ore pricing environment in 2023 compared with 2022.
In 2021, 87% of our revenues were from the Americas, 7% was from Europe and 6% were from Africa, Asia and other regions.
In 2022, 77% of our revenues were from the Americas, 9% was from Europe and 14% were from Africa, Asia and other regions. Based upon the average exchange rates for 2023, the Canadian dollar was weaker by 6.2% in value against the Euro compared to the average exchange rates for 2022.
In 2021, we recognized a net foreign currency transaction gain of $2.8 million compared to a net foreign currency transaction loss of $2.7 million in 2020, in our consolidated statement of operations.
Selling, general and administrative expenses decreased to $24.2 million in 2023 from $28.5 million in 2022 primarily due to the disposition of our hydrocarbon assets in March 2023 and expense management. In 2023, we recognized a net foreign currency transaction loss of $0.4 million compared to a gain of $3.9 million in 2022, in our consolidated statement of operations.
Revenue for our All Other segment was $1.0 million in 2021 and $nil in 2020. 28 Table of Contents In 2021, total revenues include revenues of $60.2 million from royalty, goods and products and services, of which 68% was from our iron ore royalty, 22% was from hydrocarbons, 5% was from food products and 5% was from electricity and power.
In 2022, total revenues include revenues of $52.2 million from royalty, goods and products and services, of which 57% was from our iron ore royalty, 35% was from hydrocarbons and 8% was from electricity and power. 25 Table of Contents Costs of sales and services decreased to $19.1 million in 2023 from $29.9 million in 2022, primarily as a result of the disposition of our hydrocarbon assets in March 2023.
These related primarily to interest on Merkanti’s publicly listed bonds. 29 Table of Contents In 2021 we recognized credit losses of $0.1 million, compared to a reversal of credit losses on loans and receivables and guarantees of $3.1 million in 2020.
In 2023 we recognized credit losses of $0.5 million on receivables, compared to a reversal of credit losses on loans and receivables and guarantees of $47,000 in 2022. 26 Table of Contents We recognized an income tax expense (other than resource property revenue taxes) of $1.9 million in 2023, compared to an income tax recovery (other than resource property revenue taxes) of $6.2 million in 2022.
Removed
ITEM 4: INFORMATION ON THE COMPANY A. History and Development of the Company We are a company organized under the Cayman Act that was incorporated on June 5, 2017. Our office is located at Room 2103 Shanghai Mart Tower, 2299 Yan An Road West, Changning District, Shanghai China 200336, and its telephone number is +1 844 331 3343.
Added
In addition, we recognized net losses of $0.4 million on exchange differences on foreign currency transactions in our consolidated statement of operations in 2023, compared to net gains of $3.9 million on exchange differences on foreign currency transactions in our consolidated statement of operations in 2022.
Removed
Our registered office is located at P. O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1 – 1205 Cayman Islands. Our website address is www.scullyroyalty.com. Our core asset is a net revenues royalty interest in the Scully iron ore mine located in the Province of Newfoundland and Labrador, Canada.
Added
Revenue for 2023 decreased to $55.0 million from $63.7 million in 2022, mainly as a result of the disposition of our hydrocarbon interests in March 2023, partially offset by increased royalty income resulting from higher iron ore prices in 2023.
Removed
The royalty rate under this interest is 7.0% on iron ore shipped from the mine and 4.2% on iron ore shipped from tailings and other disposed materials. The current operator of the mine commenced mining operations in 2019. See “ - B. Business Segments – Royalty ” and “ – D. Property, Plants and Equipment ”.
Added
The increase primarily resulted from the higher interest rate environment and additional merchant banking transactions. Revenue for our All Other segment was $nil in 2023 compared to $0.5 million in 2022.
Removed
In addition, we have two other business segments operating that provide merchant banking and financial services. We specialize in markets that are not adequately addressed by traditional sources of supply and finance, with an emphasis on providing solutions for small and medium sized enterprises.
Added
These losses primarily related to realized and fair value losses on certain trading securities and a fair value gain on an unlisted security (in which we hold a minority interest and that is a subsidiary of the operator of the underlying mine) measured at fair value through profit and loss due to a lower discount rate at year end.
Removed
We operate in multiple geographies and participate in industries including manufacturing, natural resources and medical supplies and services. As a supplement to our operating business, we commit proprietary capital to assets and projects where intrinsic values are not properly reflected. These investments can take many forms, and our activities are generally not passive.
Added
These related primarily to interest on Merkanti’s publicly listed bonds.
Removed
The structure of each of these opportunities is tailored to each individual transaction. We file reports and other information with the Securities and Exchange Commission, referred to as the “SEC”. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
Added
In 2023, our EBITDA was $19.9 million, compared to an EBITDA loss of $11.4 million in 2022. Our EBITDA loss in 2022 included a non-cash impairment related to the sale of our hydrocarbon properties of $31.4 million.
Removed
Our filings with the SEC are available to the public over the internet at such website at http://www.sec.gov. Please see “ B. Business Overview ” for further information regarding our recent developments. B. Business Overview The following is a brief description of our business and recent activities.
Added
Our EBITDA loss in 2022 included a non-cash impairment related to the sale of our hydrocarbon properties of $31.4 million.
Removed
Recent Developments Sale of Hydrocarbon Assets In March 2023, we completed the sale of all of our hydrocarbon interests located in Alberta in consideration for $25.0 million, subject to certain customary adjustments and adjustment for an economic effective date of April 1, 2022.
Added
We currently have a sufficient level of cash on hand and expected cash flows from operations to meet our working capital and other requirements as well as unexpected cash demands.
Removed
At closing, we received $18.2 million in cash consideration (net of GST) and the transaction is subject to a further holdback amount of $2.5 million subject to customary adjustments. Scully Mine Updates The Scully iron ore mine produces a high-grade ore in excess of 65% iron content that also has other favourable characteristics, such as relatively low contaminant ratios.
Added
In 2023, a decrease in assets held for sale related to the sale of our hydrocarbon assets provided cash of $19.2 million. An increase in receivables used cash of $16.3 million in 2023, compared to a decrease in receivables providing cash of $24.3 million in 2022. The increase in receivables in 2023 related to Tacora under CCAA protection.
Removed
Globally, steelmakers value high grade iron ore with low contaminants (such as silica, alumina, and phosphorus) because they improve environmental and financial performance through more efficient raw material utilization, higher plant yields, and lower emissions.
Added
A decrease in short-term securities provided cash of $14.6 million in 2023, compared to an increase in short-term securities utilizing cash of $12.5 million in 2022. The decrease in 2023 related primarily to dispositions of the securities.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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These two segments have not produced returns commensurate to that of our royalty interest, and our board believes that these actions provide compelling benefits to our shareholders and to all aspects and business segments of the Company.
These two segments have not produced returns commensurate to that of our royalty interest, and our Board of Directors believes that these actions provide compelling benefits to our shareholders and to all aspects and business segments of the Company.
It simplifies the Company's corporate structure by separating its non-strategic assets and allows the independent business lines to focus on pursuing and operating their respective businesses.
It simplifies the Company’s corporate structure by separating its non-strategic assets and allows the independent business lines to focus on pursuing and operating their respective businesses. In 2023, we completed the sale of our hydrocarbon assets. See “
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Item 5: Operating and Financial Review and Prospects – Results of Operations ” for a reconciliation of EBITDA to net loss for the applicable period. ​ ​ ii Letter to Shareholders Table of Contents ​ The Scully Mine In 2017, a new operator acquired the Scully mine and has since achieved a number of milestones, including completing a US$276 million financing and commencing operations at the mine in 2019.
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ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS The following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2023, 2022 and 2021 should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere herein.
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The Scully mine has a capacity of six million tonnes per annum and produces what is considered a premium iron ore product, with Fe content in excess of 65%. Iron ore is primarily used to make steel, which is considered to be a critical commodity for global economic development.
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General Our core asset is an interest in a mining sub-lease of the lands upon which the Scully iron ore mine is situated in the Province of Newfoundland and Labrador, Canada. The sub-lease commenced in 1956 and expires in 2055.
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As such, the demand and consequently the pricing of iron ore are largely dependent upon the raw material requirements of integrated steel producers. Demand for blast furnace steel is in turn cyclical.
Added
Pursuant to this sub-lease, we hold a 7.0% net revenues royalty interest on iron ore shipped from the mine and a 4.2% net revenues royalty interest on iron ore shipped from tailings and other disposed materials. The current operator of the mine commenced mining operations in 2019.
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Iron Ore Price & Scully Mine Production The operator of the mine has disclosed that the Scully iron ore mine produces a high-grade ore in excess of 65% iron content that also has other favorable characteristics, such as relatively low contaminant ratios.
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Under the terms of the sub-lease, we are entitled to quarterly minimum royalty payments of $3.25 million per year, which quarterly payments may be credited towards earned royalties relating to the same calendar year.
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Globally, steelmakers value high grade iron ore with low contaminants (such as silica, alumina, and phosphorus) because they improve environmental and financial performance through more efficient raw material utilization, higher plant yields, and lower emissions.
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We specialize in markets that are not adequately addressed by traditional sources of supply and finance, with an emphasis on providing solutions for small and medium sized enterprises. We operate in multiple geographies and participate in industries including manufacturing, natural resources and medical supplies and services.
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Therefore, it is common and generally expected for 65% Fe iron ore, including the Scully iron ore mine's product, to sell at a premium to 62% Fe iron ore. In 2022, the Platts 65% Fe index sold at approximately a 16% (US$19) premium, averaging US$139 per tonne compared to US$120 per tonne for the Platts 62% Fe index.
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As a supplement to our operating business, we commit proprietary capital to assets and projects where intrinsic values are not properly reflected. These investments can take many forms, and our activities are generally not passive. The structure of each of these opportunities is tailored to each individual transaction.
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The following table sets forth total iron ore products shipped by the Scully mine operator in 2020, 2021, and 2022: ​ ​ ​ ​ ​ ​ ​ ​ H1 H2 Full Year ​ ​ (In tonnes) 2020 1,459,162 1,539,492 2,998,654 2021 1,676,321 1,507,682 3,184,003 2022 1,691,184 1,406,746 3,097,930 ​ The operator of the mine remains committed to ramping up production to at least six million tonnes per annum, and, in support of that commitment, is currently executing on several capital improvement and other projects which are expected to reduce bottlenecks, while at the same time investing in human resources and operational efficiency.
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Our results of operations have been and may continue to be affected by many factors of a global nature, including economic and market conditions, the availability of capital, the level and volatility of equity prices and interest rates, currency values, asset prices and other market indices, technological changes, the availability of credit, inflation and legislative and regulatory developments.
Removed
In November 2022, the operator of the mine announced that it had completed a US$15 million preferred share financing, and in January 2023 announced the closing of a US$35 million advance payments facility.
Added
Our results of operations may also be materially affected by competitive factors. Our competitors include firms traditionally engaged in merchant banking such as investment banks, along with other capital sources such as hedge funds, private equity firms and insurance companies on a global basis.
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We continue to closely monitor the operational performance of the mine, as well as the financial performance of the operator. ​ iii Letter to Shareholders Table of Contents III.
Added
Our results of operations for any particular period may also be materially affected by our realization on proprietary investments. These investments are made to maximize total return through long-term appreciation and recognized gains on divestment.
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DIVIDENDS In April 2021, the Company announced that it was determined to focus its efforts on enhancing shareholder value and maximizing earnings and dividends to its shareholders based upon its iron ore royalty interest. Aligned with this focus, the Company announced that its board of directors approved a cash dividend policy.
Added
We realize on our proprietary investments through a variety of methods including sales, capital restructuring or other forms of divestment. 23 Table of Contents As previously announced, our management is committed to a plan to rationalize the assets comprising our industrial and merchant banking segments, and substantial progress has been made on both projects.
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In 2022, we declared the following cash dividends: ● $0.25 (US$0.18) per Common Share paid on March 4, 2022 to shareholders of record on February 21, 2022; ● $0.34 (US$0.27) per Common Share paid on May 23, 2022 to shareholders of record on May 10, 2022; ● $0.33 (US$0.26) per Common Share paid on August 26, 2022 to shareholders of record on August 12, 2022; and ● $0.21 (US$0.16) per Common Share paid on December 6, 2022 to shareholders of record on November 22, 2022.
Removed
Today, we are pleased to announce that our board of directors has approved a dividend of $0.23 (US$0.17) per Common Share payable on May 19, 2023 to shareholders of record on May 9, 2023.
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The amount of this dividend was based upon the recent payments received from our iron ore royalty interest, and also considers the operational performance of the mine and the financial performance of the mine’s operator. The declaration, timing and payment of future dividends will depend on, among other things, royalty payments received, the Company's financial condition and operating results. IV.
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SHARE PRICE & VALUATION It has been and remains our goal and initiative to structure the group in a way that substantially eliminates the discount between the market price of our common shares and our stated net book value per share.
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For example, we believe that the value of our royalty interest in the Scully iron ore mine is not properly reflected in the price of our common shares. We believe that one of the reasons for this discrepancy is our complex group structure and diverse portfolio of assets with different economics, capital requirements, and growth prospects.
Removed
In 2021, we announced that in order to support the Company’s core focus, the other two of our operating segments – Industrial & Merchant Banking – would be rationalized over a period of time.
Removed
As part of this plan to rationalize assets in our non-core segments, in March 2023, we completed the sale of all of our hydrocarbon interests located in Alberta in consideration for $25.0 million, subject to certain customary adjustments and adjustment for an economic effective date of April 1, 2022.
Removed
At closing, we received $18.2 million in cash consideration (net of GST) and the transaction is subject to a further holdback amount of $2.5 million subject to customary adjustments. Industrial Our Industrial segment includes projects in resources and services around the globe. It seeks opportunities to benefit from long-term industrial and services assets with a focus on East Asia.
Removed
This segment makes proprietary investments as part of its overall activities and we seek to realize gains on such investments over time. These investments can take many forms and can include acquiring entire businesses or portions thereof, investing in equity or investing in existing indebtedness (secured and unsecured) of businesses or in new equity or debt issues.
Removed
These activities are generally not passive. The structure of each of these opportunities is tailored to each individual transaction. ​ iv Letter to Shareholders Table of Contents The book value of our Industrial segment was $66.0 million, or $4.45 per share, as at December, 31, 2022. Merchant Banking Our Merchant Banking segment comprises regulated European merchant banking business.
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We own Merkanti Bank Limited, a licensed bank in Europe, which does not engage in general retail, commercial banking or any universal banking operations, but provides specialty banking services, focused on merchant banking, to our customers, suppliers and group members. In addition, we hold an interest in two industrial real estate parks in Europe.
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In March 2022, we announced that Merkanti Holding plc, the parent company of our merchant banking segment, had entered into an agreement to acquire Sparkasse (Holdings) Malta Ltd. the parent of Sparkasse Bank Malta plc.
Removed
Upon closing of this transaction, and subject to regulatory approval, it is the intention to merge Sparkasse Bank and Merkanti Bank, in order to form a larger independent institution with projected combined own funds based upon December 31, 2021 figures of circa €60 million, total assets of €1.1 billion, assets under custody of €8.1 billion and revenues of €17 million.
Removed
The total consideration payable by the Company for Sparkasse Holdings is approximately equal to the net tangible asset value of Sparkasse Holdings, less certain adjustments, and includes (i) a cash payment at closing of the transaction, (ii) three consecutive annual payments of €2.5 million; and (iii) a contingent payment, payable upon the recovery of an asset of Sparkasse Bank which was previously written off in its entirety.
Removed
The consideration is expected to be satisfied through cash on hand, available liquidity, or other means. The transaction is conditional upon regulatory approval from various regulators, including the European Central Bank, the Malta Financial Services Authority and the Central Bank of Ireland. The long-stop date in the Share Purchase Agreement is in the first half of 2023.
Removed
Absent an extension, we expect the transaction to be closed or terminated by this time. The book value of our Merchant Banking segment was $72.7 million, or $4.91 per share, as at December, 31, 2022. V. STAKEHOLDER COMMUNICATIONS We welcome any questions you may have and looks forward to discussing our operations, results and plans with stakeholders.
Removed
Further: - stakeholders are encouraged to read our entire annual report, which includes our audited financial statements and management's discussion and analysis, for the year ended December 31, 2022, for a greater understanding of our business and operations; and - direct any questions regarding the information in this report to our North American toll-free line at 1 (844) 331 3343 or email info@scullyroyalty.com to book a conference call with our senior management.
Removed
VI. MANAGEMENT COMMENTARY Today, we are pleased to announce a cash dividend of $0.23 per share as well as the additional steps that we have made towards rationalizing our industrial and merchant banking segments. We continue to make progress towards our strategic goals that we believe will maximize value for our shareholders over the long-term.
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Respectfully Submitted, ​ ​ April 26, 2023 Samuel Morrow ​ President, Chief Executive Officer ​ & Chief Financial Officer ​ ​ ​ ​ v Letter to Shareholders Table of Contents SCULLY ROYALTY LTD.
Removed
Form 20-F TABLE OF CONTENTS ​ INTRODUCTORY MATTERS 1 PART I ​ 1 FORWARD-LOOKING STATEMENTS ​ 1 CURRENCY INFORMATION ​ 1 NOTE ON FINANCIAL AND OTHER INFORMATION ​ 2

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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However, since PFIC status depends upon the composition of a corporation’s income and assets and the market value of its assets and shares from time to time, there is no assurance that we will not be considered a PFIC for any taxable year. If we were treated as a PFIC for any taxable year during which a U.S.
Since PFIC status depends upon the composition of a corporation’s income and assets and the market value of its assets and shares from time to time, there is no assurance that we will not be considered a PFIC for any taxable year. If we were treated as a PFIC for any taxable year during which a U.S.
Holder” is a beneficial owner of our Common Shares that for United States federal income tax purposes, is: (i) an individual who is a citizen or resident of the United States; (ii) a corporation, or any other entity taxable as a corporation for United States federal tax purposes, that is created or organized in or under the laws of the United States, any state in the United States, or the District of Columbia; (iii) an estate, the income of which is subject to United States federal income tax without regard to its source; or (iv) a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
Holder” is a beneficial owner of our Common Shares that for United States federal income tax purposes, is: (i) an individual who is a citizen or resident of the United States; (ii) a corporation, or any other entity taxable as a corporation for United States federal tax purposes, that is created or organized in or under the laws of the United States, any state in the United States, or the District of Columbia; (iii) an estate, the income of which is subject to United States federal income tax without regard to its source; or (iv) a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.
The Nominating and Corporate Governance Committee is also responsible for evaluating the board and board committees’ structure and size and the independence of existing and prospective directors, identifying and reporting on candidates to be nominated to our board of directors, reporting on the board’s annual performance and overseeing our process for providing information to the board.
The Nominating and Corporate Governance Committee is also responsible for evaluating the board and board committees’ structure and size and the independence of existing and prospective directors, identifying and reporting on candidates to be nominated to our board of directors, reporting on the board’s annual performance and overseeing our process for providing information to the board. D.
The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are available to the public over the Internet at such website at http://www.sec.gov. I.
We file reports and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are available to the public over the Internet at such website at http://www.sec.gov. I.
Sale or Other Disposition of Common Shares Subject to the “Passive Foreign Investment Company” rules discussed below, upon a sale, exchange, or other disposition of the Common Shares, a U.S.
Sale or Other Disposition of Common Shares Subject to the “Passive Foreign Investment Company” rules discussed below, upon a sale, exchange, or other taxable disposition of the Common Shares, a U.S.
Directors’ Compensation The following table provides a summary of compensation paid by us to, or earned by, the directors of our company during the fiscal year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Director Compensation Table ​ ​ Share- Option- Non-equity ​ ​ ​ ​ ​ Fees ​ based ​ based ​ incentive plan ​ Pension ​ All other ​ ​ ​ ​ Earned ​ awards ​ awards ​ compensation ​ Value ​ compensation ​ Total Name ​ ($) ​ ($) ​ ($) ​ ($) ​ ($) ​ ($) ​ ($) Michael J.
Directors’ Compensation The following table provides a summary of compensation paid by us to, or earned by, the directors of our company during the fiscal year ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Director Compensation Table ​ ​ Share- Option- Non-equity ​ ​ ​ ​ ​ Fees ​ based ​ based ​ incentive plan ​ Pension ​ All other ​ ​ ​ ​ Earned ​ awards ​ awards ​ compensation ​ Value ​ compensation ​ Total Name ​ ($) ​ ($) ​ ($) ​ ($) ​ ($) ​ ($) ​ ($) Michael J.
Currently, based upon information available to us, we do not believe any such matters would have a material adverse effect upon our financial condition or results of operations as at December 31, 2022. However, due to the inherent uncertainty of litigation, we cannot provide certainty as to their outcome.
Currently, based upon information available to us, we do not believe any such matters would have a material adverse effect upon our financial condition or results of operations as at December 31, 2023. However, due to the inherent uncertainty of litigation, we cannot provide certainty as to their outcome.
Our board of directors has established a Compensation Committee. Our Compensation Committee currently consists of Indrajit Chatterjee, Silke S. Stenger, Dr. Shuming Zhao and Jochen Dümler. Our Compensation Committee operates pursuant to a charter adopted by our board of directors on December 18, 2021, a copy of which is available online at our website at www.scullyroyalty.com.
Our Compensation Committee currently consists of Indrajit Chatterjee, Silke S. Stenger, Dr. Shuming Zhao and Jochen Dümler. Our Compensation Committee operates pursuant to a charter adopted by our board of directors on December 18, 2021, a copy of which is available online at our website at www.scullyroyalty.com.
Of the Common Shares and stock options issued and outstanding on that date, our directors and senior officers, who served in such positions at any time during the fiscal year ended December 31, 2022, beneficially owned the following Common Shares and held the following stock options: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of total ​ ​ ​ ​ ​ Common Shares ​ Common Shares ​ Stock options ​ ​ ​ beneficially owned ​ outstanding ​ held ​ Name and principal position ​ (#) ​ (%) ​ (#) ​ Michael J.
Of the Common Shares and stock options issued and outstanding on that date, our directors and senior officers, who served in such positions at any time during the fiscal year ended December 31, 2023, beneficially owned the following Common Shares and held the following stock options: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of total ​ ​ ​ ​ ​ Common Shares ​ Common Shares ​ Stock options ​ ​ ​ beneficially owned ​ outstanding ​ held ​ Name and principal position ​ (#) ​ (%) ​ (#) ​ Michael J.
Holder with respect to the Common Shares (including amounts withheld for Canadian taxes, if any) will be subject to United States federal income taxation as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles.
Holder with respect to the Common Shares (including amounts withheld for non-United States taxes, if any) will be subject to United States federal income taxation as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles.
Accordingly, holders and prospective holders of our Common Shares are urged to consult their own tax advisors with respect to the United States federal, state and local tax consequences, and any non-United States tax consequences of purchasing, owning and disposing of our Common Shares. U.S. Holders As used in this discussion, a “U.S.
Holders of our Common Shares are urged to consult their own tax advisors with respect to the United States federal, state and local tax consequences, and any non-United States tax consequences of purchasing, owning and disposing of our Common Shares. U.S. Holders As used in this discussion, a “U.S.
No other funds were set aside or accrued by our company during the fiscal year ended December 31, 2022 to provide pension, retirement or similar benefits for our directors or officers pursuant to any existing plan provided or contributed to by us. 41 Table of Contents Executive Officers The following table provides a summary of compensation paid by us during the fiscal year ended December 31, 2022 to our executive officers: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-equity incentive ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ compensation plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($) (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Share- ​ Option- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ based ​ based ​ Annual ​ Long-term ​ Pension ​ All other ​ Total ​ ​ Salary ​ awards ​ awards ​ incentive ​ incentive ​ value ​ compensation ​ compensation Name and Principal Position ($) ($) ($) plans plans ($) ($) ($) Michael J.
No other funds were set aside or accrued by our company during the fiscal year ended December 31, 2023 to provide pension, retirement or similar benefits for our directors or officers pursuant to any existing plan provided or contributed to by us. 40 Table of Contents Executive Officers The following table provides a summary of compensation paid by us during the fiscal year ended December 31, 2023 to our executive officers: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-equity incentive ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ compensation plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($) (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Share- ​ Option- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ based ​ based ​ Annual ​ Long-term ​ Pension ​ All other ​ Total ​ ​ Salary ​ awards ​ awards ​ incentive ​ incentive ​ value ​ compensation ​ compensation Name and Principal Position ($) ($) ($) plans plans ($) ($) ($) Michael J.
The following are summaries of material provisions of our Articles insofar as they relate to our Common Shares. 48 Table of Contents Board of Directors Please see “ Item 6: Directors, Senior Management and Employees – C. Board Practices ”. Common Shares General.
The following are summaries of material provisions of our Articles insofar as they relate to our Common Shares. Board of Directors Please see “ Item 6: Directors, Senior Management and Employees – C. Board Practices ”. 47 Table of Contents Common Shares General.
(3) 14,126 options are exercisable at a price of US$7.44 per Common Share and expire on December 1, 2027 and 40,024 options are exercisable at a price of US$11.17 per Common Share and expire on May 4, 2031. * Less than 0.1%. ​ 2017 Equity Incentive Plan The 2017 Equity Incentive Plan, referred to as the “Incentive Plan”, was adopted by the Company on July 14, 2017.
(3) 14,126 options are exercisable at a price of US$7.44 per Common Share and expire on December 1, 2027 and 40,024 options are exercisable at a price of US$11.17 per Common Share and expire on May 4, 2031. * Less than 0.1%. 43 Table of Contents 2017 Equity Incentive Plan The 2017 Equity Incentive Plan, referred to as the “Incentive Plan”, was adopted by the Company on July 14, 2017.
Partnerships holding our Common Shares and partners in such partnerships should consult their tax advisors as to the particular United States federal income tax consequences of owning and disposing of the Common Shares. 52 Table of Contents Distributions With Respect to Common Shares Subject to the “Passive Foreign Investment Company” rules discussed below, the gross amount of a distribution paid to a U.S.
Partnerships holding our Common Shares and partners in such partnerships should consult their tax advisors as to the particular United States federal income tax consequences of owning and disposing of the Common Shares. Distributions With Respect to Common Shares Subject to the “Passive Foreign Investment Company” rules discussed below, the gross amount of a distribution paid to a U.S.
Pension Plan Benefits As of December 31, 2022, other than as disclosed herein, we did not have any defined benefit, defined contribution or deferred compensation plans for any of our senior officers or directors. C.
Pension Plan Benefits As of December 31, 2023, other than as disclosed herein, we did not have any defined benefit, defined contribution or deferred compensation plans for any of our senior officers or directors. C.
Please see “ Item 18: Financial Statements ”. 46 Table of Contents Legal Proceedings We are subject to routine litigation incidental to our business and are named from time to time as a defendant and are a plaintiff from time to time in various legal actions arising in connection with our activities, certain of which may include large claims for punitive damages.
Please see “ Item 18: Financial Statements ”. Legal Proceedings We are subject to routine litigation incidental to our business and are named from time to time as a defendant and are a plaintiff from time to time in various legal actions arising in connection with our activities, certain of which may include large claims for punitive damages.
The timing, payment and amount of any dividends paid on our Common Shares may be determined by our board of directors from time to time, based upon considerations such as our cash flow, results of operations and financial condition, the need for funds to finance ongoing operations and such other business considerations as our board of directors considers relevant. B.
The timing, payment and amount of any dividends paid on our Common Shares may be determined by our board of directors from time to time, based upon considerations such as our cash flow, results of operations and financial condition, the need for funds to finance ongoing operations and such other business considerations as our board of directors considers relevant. 46 Table of Contents B.
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares. The shares that have been called upon and remain unpaid are subject to forfeiture. All of our Common Shares are fully paid. 50 Table of Contents Exempted Company. We are an exempted company with limited liability under the Cayman Act.
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares. The shares that have been called upon and remain unpaid are subject to forfeiture. All of our Common Shares are fully paid. Exempted Company. We are an exempted company with limited liability under the Cayman Act.
The Compensation Committee also recommends changes or additions to those plans, monitors our succession planning processes and reports to our board of directors on other compensation matters. Our Chief Executive Officer does not vote upon or participate in the deliberations regarding his compensation. 43 Table of Contents Our board of directors has established a Nominating and Corporate Governance Committee.
The Compensation Committee also recommends changes or additions to those plans, monitors our succession planning processes and reports to our board of directors on other compensation matters. Our Chief Executive Officer does not vote upon or participate in the deliberations regarding his compensation. Our board of directors has established a Nominating and Corporate Governance Committee.
Pursuant to this arrangement, as at December 31, 2022, we held: (i) an indemnification asset of $6.8 million relating to a secured indemnity provided by such company to our subsidiary to comply with local regulations and requirements, in an amount equal to the amount advanced to it, for certain short-term intercompany balances involving certain of our subsidiaries and another subsidiary that was put into dissolution by us in 2019; (ii) a loan to such company of $0.9 million, which was made in 2019 in order to facilitate the acquisition of securities for our benefit.
Pursuant to this arrangement, as at December 31, 2023, we held: (i) an indemnification asset of $6.8 million relating to a secured indemnity provided by such company to our subsidiary to comply with local regulations and requirements, in an amount equal to the amount advanced to it, for certain short-term intercompany balances involving certain of our subsidiaries and another subsidiary that was put into dissolution by us in 2019; (ii) a non-interest bearing loan to such company of $0.9 million, which was made in 2019 in order to facilitate the acquisition of securities for our benefit.
Morrow, in his capacity as President, Chief Executive Officer and Chief Financial Officer is disclosed in the table above under the heading “ Executive Officers ”. 42 Table of Contents A total of $0.7 million (excluding non-cash option-based awards) was paid to our directors for services rendered as directors (including as directors of our subsidiaries), or for committee participation or assignments, during our most recently completed financial year.
Morrow, in his capacity as President, Chief Executive Officer and Chief Financial Officer is disclosed in the table above under the heading “ Executive Officers ”. 41 Table of Contents A total of $0.5 million (excluding non-cash option-based awards) was paid to our directors for services rendered as directors (including as directors of our subsidiaries), or for committee participation or assignments, during our most recently completed financial year.
Persons known to us to be the beneficial owner of more than five percent (5%) of our Common Shares as of April 20, 2023: ​ ​ ​ ​ ​ ​ Amount Percent of Name ​ Owned ​ Class (1) Peter Kellogg, group (2) ​ 5,293,276 ​ 35.7% Lloyd Miller, III (3) 1,842,087 12.4% Notes: (1) Based on 14,822,251 Common Shares issued and outstanding on April 20, 2023.
Persons known to us to be the beneficial owner of more than five percent (5%) of our Common Shares as of April 19, 2024: ​ ​ ​ ​ ​ ​ Amount Percent of Name ​ Owned ​ Class (1) Peter Kellogg, group (2) ​ 5,293,276 ​ 35.7% Lloyd Miller, III (3) 1,842,087 12.4% Notes: (1) Based on 14,822,251 Common Shares issued and outstanding on April 19, 2024.
The deductibility of capital losses is subject to significant limitations. Foreign Tax Credit Dividends paid by us generally will constitute income from non-United States sources and will be subject to various classification rules and other limitations for United States foreign tax credit purposes.
The deductibility of capital losses is subject to significant limitations. 51 Table of Contents Foreign Tax Credit Dividends paid by us generally will constitute income from non-United States sources and will be subject to various classification rules and other limitations for United States foreign tax credit purposes.
If our current evaluations are materially incorrect or if we are unable to resolve any of these matters favourably, there may be a material adverse impact on our financial performance, cash flows or results of operations. Please see Note 23 to our audited consolidated financial statements for the year ended December 31, 2022 for further information.
If our current evaluations are materially incorrect or if we are unable to resolve any of these matters favourably, there may be a material adverse impact on our financial performance, cash flows or results of operations. Please see Note 22 to our audited consolidated financial statements for the year ended December 31, 2023 for further information.
Under our Articles, directors may be removed by special resolution of our shareholders. 49 Table of Contents Directors’ Power to Issue Shares . Our Articles authorize our board of directors to issue additional Common Shares from time to time as our board shall determine, to the extent of available authorized but unissued shares.
Under our Articles, directors may be removed by special resolution of our shareholders. Directors’ Power to Issue Shares . Our Articles authorize our board of directors to issue additional Common Shares from time to time as our board shall determine, to the extent of available authorized but unissued shares.
The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as applicable, and an interest charge would be imposed on the amount allocated to such taxable year.
The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as applicable, in the taxable year to which the income is allocated, and an interest charge would be imposed on the amount allocated to such taxable year.
C. Material Contracts There are no material contracts outside of the ordinary course of business to which we are a party. D. Exchange Controls There are no exchange control regulations or currency restrictions in the Cayman Islands.
C. Material Contracts There are no material contracts outside of the ordinary course of business to which we are a party. 49 Table of Contents D. Exchange Controls There are no exchange control regulations or currency restrictions in the Cayman Islands.
A non-U.S. corporation is a PFIC for any taxable year in which either (i) 75% or more of its gross income consists of “passive income” or (ii) 50% or more of the average quarterly gross value of its assets consists of assets that produce, or are held for the production of, “passive income”.
A non-United States corporation is a PFIC for any taxable year in which either (i) 75% or more of its gross income consists of “passive income” or (ii) 50% or more of the average quarterly gross value of its assets consists of assets that produce, or are held for the production of, “passive income”.
As set forth in the table above, we had royalty expenses of $0.7 million in each of 2022, 2021 and 2020, that were paid to a company in which we hold a minority interest and that is a subsidiary of the operator of the underlying mine.
As set forth in the table above, we had royalty expenses of $0.8 million in 2023 and $0.7 million in each of 2023 and 2022, that were paid to a company in which we hold a minority interest and that is a subsidiary of the operator of the underlying mine.
In the second half of 2021, we were informed of a proposed amendment to the claim which, if allowed, would increase the principal amount to approximately $116.8 million (€80.8 million), plus interest and costs, as at December 31, 2022.
In the second half of 2021, we were informed of a proposed amendment to the claim which, if allowed, would increase the principal amount to approximately $118.2 million (€80.8 million), plus interest and costs, as at December 31, 2023.
The loan initially bore interest at 6.3% and subsequently became non-interest bearing; and (iii) current account receivables of $27.1 million. We also had current accounts payable of $3.8 million due to the aforesaid affiliate as at December 31, 2022.
The loan initially bore interest at 6.3% and subsequently became non-interest bearing; and (iii) current account receivables of $29.6 million. We also had current accounts payable of $1.6 million due to the aforesaid affiliate as at December 31, 2023.
Stenger Director — — 54,150 (3) ​ Jochen Dümler Director — — 54,150 (3) ​ Friedrich Hondl Former Director ​ 2,353 ​ —* ​ 54,150 (3) ​ Notes: (1) The options are exercisable at a price of US$7.44 per Common Share and expire on December 1, 2027.
Stenger Director — — 54,150 (3) ​ Jochen Dümler Director — — 54,150 (3) ​ Notes: (1) The options are exercisable at a price of US$7.44 per Common Share and expire on December 1, 2027.
Please see Note 25 to our audited consolidated financial statements for the year ended December 31, 2022 for further information. C. Interests of Experts and Counsel Not applicable. ​ ITEM 8: FINANCIAL INFORMATION A. Consolidated Statements and Other Financial Information Our consolidated financial statements have been prepared in compliance with IFRS.
Please see Note 24 to our audited consolidated financial statements for the year ended December 31, 2023 for further information. C. Interests of Experts and Counsel Not applicable. ​ 45 Table of Contents ITEM 8: FINANCIAL INFORMATION A. Consolidated Statements and Other Financial Information Our consolidated financial statements have been prepared in compliance with IFRS.
Compensation During the fiscal year ended December 31, 2022, we paid an aggregate of approximately $2.0 million in cash compensation to our directors and officers, excluding directors’ fees.
Compensation During the fiscal year ended December 31, 2023, we paid an aggregate of approximately $1.9 million in cash compensation to our directors and officers, excluding directors’ fees.
The Audit Committee also reviews and approves our hiring policies, establishes our procedures for dealing with complaints, oversees our financial reporting processes and consults with management and our independent auditors on matters related to our annual audit and internal controls, published financial statements, risk assessment and risk management, accounting principles and auditing procedures being applied.
The Audit Committee also reviews and approves our hiring policies, establishes our procedures for dealing with complaints, oversees our financial reporting processes and consults with management and our independent auditors on matters related to our annual audit and internal controls, published financial statements, risk assessment and risk management, accounting principles and auditing procedures being applied. 42 Table of Contents Our board of directors has established a Compensation Committee.
We had the following transactions with related parties: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31: 2022 ​ 2021 ​ 2020 ​ ​ (In thousands) Fee income ​ $ 1,191 ​ $ 1 ​ $ 9 Other income ​ 462 ​ — ​ 86 Dividends received ​ 198 ​ 198 ​ — Royalty expenses ​ (682) ​ (700) ​ (660) Reversal of expected credit loss allowance ​ — ​ — ​ 15 Fee expenses ​ (2,198) ​ — ​ (80) Reimbursements of expenses, primarily including employee benefits and lease and office expenses ​ (4,914) ​ (1,007) ​ (276) ​ We have, from time to time, entered into arrangements with a company owned by our Chairman to assist us to comply with various local regulations and requirements, including the recently introduced economic substance legislation for offshore jurisdictions, as well as fiscal efficiency.
We had the following transactions with related parties: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31: 2023 2022 2021 ​ ​ (in thousands) Fee income ​ $ 425 ​ $ 1,191 ​ $ 1 Interest income ​ 79 ​ — ​ — Other income ​ — ​ 462 ​ — Dividends received ​ 89 ​ 198 ​ 198 Royalty expenses ​ (778) ​ (682) ​ (700) Fee expenses ​ (41) ​ (2,198) ​ — Reimbursements of expenses, primarily including employee benefits and lease and office expenses ​ (886) ​ (4,914) ​ (1,007) ​ We have, from time to time, entered into arrangements with a company owned by our Chairman to assist us to comply with various local regulations and requirements, including the recently introduced economic substance legislation for offshore jurisdictions, as well as fiscal efficiency.
Employees At December 31, 2022, 2021 and 2020, we employed approximately 71, 78 and 81 people, respectively. E. Share Ownership There were 14,822,251 Common Shares, 1,894,127 stock options and no share purchase warrants issued and outstanding as of December 31, 2022.
Employees At December 31, 2023, 2022 and 2021, we employed approximately 72, 71 and 78 people, respectively. E. Share Ownership There were 14,822,251 Common Shares, 1,839,977 stock options and no share purchase warrants issued and outstanding as at December 31, 2023.
In addition, pursuant to this arrangement, during 2022, 2021 and 2020, we reimbursed such company $4.9 million, $1.0 million and $0.3 million (as set forth in the table above), respectively, at cost for expenses, primarily consisting of employee benefits and lease and office expenses.
In addition, pursuant to these arrangements, during 2023 and 2022, we reimbursed such company $0.9 million and $4.9 million (as set forth in the table above), respectively, at cost for expenses, primarily consisting of employee benefits and lease and office expenses.
Our board of directors may also issue preference shares from time to time in one or more classes or series, each of such class or series to have such voting powers (full or limited or without voting powers) designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as are stated and expressed, or in any resolution providing for the issue of such class or series adopted by our board.
Our board of directors may also issue preference shares from time to time in one or more classes or series, each of such class or series to have such voting powers (full or limited or without voting powers) designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as are stated and expressed, or in any resolution providing for the issue of such class or series adopted by our board. 48 Table of Contents Our board of directors may also approve the issuance of options, rights or warrants that are exercisable into our shares for such consideration and on such terms as the board may determine.
Smith was the President and Chief Executive Officer of the Company from June 2017 to May 1, 2021, at which time he became our Executive Chairman. Mr. Smith has served as a director and in executive positions of various publicly traded and private companies. Mr. Smith has experience in corporate finance and restructuring.
He was previously the President and Chief Executive Officer of the Company from June 2017 to May 1, 2021. Mr. Smith has served as a director and in executive positions of various publicly traded and private companies. Mr. Smith has experience in corporate finance and restructuring. Samuel Morrow – President, Chief Executive Officer, Chief Financial Officer and Director Mr.
We and certain of our subsidiaries have been named as defendants in a legal action relating to an alleged guarantee of the former parent of the group in the amount of approximately $68.4 million (€43.8 million) as at December 31, 2020. We believe that such claim is without merit and intend to vigorously defend such claim.
We and certain of our subsidiaries have been named as defendants in a legal action relating to an alleged guarantee of the former parent of the group in the amount of approximately $68.4 million (€43.8 million) as at December 31, 2020.
Holders and prospective holders should consult their own tax advisors regarding the potential application of the PFIC rules to their ownership of our Common Shares, the availability and advisability of making any PFIC elections, and any PFIC filing obligations. Medicare Tax A U.S.
Holders should consult their own tax advisors regarding the potential application of the PFIC rules to their ownership of our Common Shares, the availability and advisability of making any PFIC elections, and any PFIC filing obligations. Information Reporting and Backup Withholding Certain categories of U.S.
This summary does not address holders who acquired their shares through the exercise of employee stock options or otherwise as compensation.
Holders who acquired their shares through the exercise of employee stock options or otherwise as compensation.
As at December 31, 2022 and the date hereof, 1,894,127 Common Shares were subject to outstanding awards under the Incentive Plan and 278,405 Common Shares were available for future awards under the Incentive Plan. ​ ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders There were 14,822,251 Common Shares issued and outstanding as of April 20, 2023.
As at December 31, 2023 and the date hereof, 1,839,977 Common Shares were subject to outstanding awards under the Incentive Plan and 332,555 Common Shares were available for future awards under the Incentive Plan. ​ ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders There were 14,822,251 Common Shares issued and outstanding as of April 19, 2024.
Dümler was the President and Chief Executive Officer of Euler Hermes North America from 2010 to 2015. From 2002 to 2010, Mr. Dümler was a member of the Board of Management of Euler Hermes Kreditversicherung AG and, from 1995 to 2002, he was a member of the Board of Management of PRISMA Kreditversicherung AG. Mr.
From 2002 to 2010, Mr. Dümler was a member of the Board of Management of Euler Hermes Kreditversicherung AG and, from 1995 to 2002, he was a member of the Board of Management of PRISMA Kreditversicherung AG. Mr.
A non-U.S. corporation is treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which it owns, directly or indirectly, 25% or more (by value) of the stock (with special look-through rules for partnerships owned by a non-United States corporation). 53 Table of Contents If we are treated as a PFIC for any taxable year, gains recognized by a U.S.
A non-United States corporation is treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which it owns, directly or indirectly, 25% or more (by value) of the stock (with special look-through rules for partnerships owned by a non-United States corporation).
In addition, this discussion does not cover any state, local or non-United States tax consequences. 51 Table of Contents The following discussion is based upon the Internal Revenue Code of 1986, as amended, referred to as the “Code”, Treasury Regulations (whether final, temporary, or proposed) published by the Internal Revenue Service, referred to as the “IRS”, rulings and published administrative positions of the IRS, court decisions, and the Canada-United States Income Tax Convention (1980), as amended, in each case, as in effect currently, and any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time.
The following discussion is based upon the Internal Revenue Code of 1986, as amended, referred to as the “Code”, Treasury Regulations (whether final, temporary, or proposed) published by the Internal Revenue Service, referred to as the “IRS”, rulings and published administrative positions of the IRS, and court decisions, in each case, as in effect currently, and any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time.
At our annual meeting of shareholders held on December 29, 2021, shareholders approved an amendment to the plan to: (i) increase the total number of our Common Shares under the plan by 677,364 Common Shares to 2,239,027 (after giving effect to adjustments under the Incentive Plan in connection with stock dividends declared in 2021); (ii) increase the maximum number of Common Shares subject to options and stock appreciation rights that may be granted to any one Covered Employee (as defined in the Incentive Plan) to 400,000; and (iii) increase the maximum number of Common Shares that may be granted to any one Covered Employee during the fiscal year where such participant’s employment commences to 425,000 and 400,000 for all other fiscal years. 44 Table of Contents Pursuant to the terms of the Incentive Plan, our board of directors, our Compensation Committee or such other committee as is appointed by our board of directors to administer the Incentive Plan, may grant stock options, restricted stock rights, restricted stock, performance share awards, performance share units and stock appreciation rights under the Incentive Plan, establish the terms and conditions for those awards, construe and interpret the Incentive Plan and establish the rules for the Incentive Plan’s administration.
At our annual meeting of shareholders held on December 29, 2021, shareholders approved an amendment to the plan to: (i) increase the total number of our Common Shares under the plan by 677,364 Common Shares to 2,239,027 (after giving effect to adjustments under the Incentive Plan in connection with stock dividends declared in 2021); (ii) increase the maximum number of Common Shares subject to options and stock appreciation rights that may be granted to any one Covered Employee (as defined in the Incentive Plan) to 400,000; and (iii) increase the maximum number of Common Shares that may be granted to any one Covered Employee during the fiscal year where such participant’s employment commences to 425,000 and 400,000 for all other fiscal years.
He also serves as trustee of a number of Miller family trusts. ​ As of April 20, 2023, there were 14,822,251 Common Shares issued and outstanding held by 127 registered shareholders. Of those Common Shares issued and outstanding, 14,724,706 Common Shares were registered in the United States (123 registered shareholders).
He also serves as trustee of a number of Miller family trusts. ​ 44 Table of Contents As of April 19, 2024, there were 14,822,251 Common Shares issued and outstanding held by 123 registered shareholders. Of those Common Shares issued and outstanding, 14,821,781 Common Shares were registered in the United States (119 registered shareholders).
Smith (75) ​ Executive Chairman and Director ​ 2017 ​ Samuel Morrow (38) (1) ​ President, Chief Executive Officer, Chief Financial Officer and Director ​ 2017 ​ Dr. Shuming Zhao (71) (2)(3)(4) ​ Director ​ 2017 ​ Indrajit Chatterjee (77) (3)(4) ​ Director ​ 2017 ​ Silke S.
Smith (76) ​ Executive Chairman and Director ​ 2017 ​ Samuel Morrow (39) ​ President, Chief Executive Officer, Chief Financial Officer and Director ​ 2017 ​ Dr. Shuming Zhao (72) (1)(2)(3) ​ Director ​ 2017 ​ Indrajit Chatterjee (78) (2)(3) ​ Director ​ 2017 ​ Silke S.
Certain elections might be available to U.S. Holders that may mitigate some of the adverse consequences resulting from PFIC status, but may not be available for a Subsidiary PFIC. If a U.S.
Certain elections might be available to U.S. Holders that may mitigate some of the adverse consequences resulting from PFIC status, but may not be available for a Subsidiary PFIC. If a U.S. Holder owns our Common Shares during any year in which we are a PFIC, the U.S.
Holder on a sale or other disposition of our Common Shares would be allocated ratably over the U.S. Holder’s holding period for the shares. The amount allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income.
If we are treated as a PFIC for any taxable year, gains recognized by a U.S. Holder on a sale or other disposition of our Common Shares would be allocated ratably over the U.S. Holder’s holding period for the shares.
“Specified foreign financial assets” include not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a United States financial institution, any stock or security issued by a non-United States person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person, and any interest in a non-United States entity.
“Specified foreign financial assets” include not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a United States financial institution, any stock or security issued by a non-United States person. U.S.
U.S. Holders may be subject to these reporting requirements unless their Common Shares are held in an account at a United States financial institution. Penalties for failure to comply with these reporting requirements can be substantial. U.S.
Holders may be subject to these reporting requirements unless their Common Shares are held in an account at a United States financial institution. Penalties for failure to comply with these reporting requirements can be substantial. U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns and, if applicable, filing obligations relating to these rules.
Holder generally may be subject to United States federal information reporting requirements and may be subject to backup withholding (currently at the rate of 24%) unless the U.S. Holder provides an accurate taxpayer identification number or otherwise demonstrates that it is exempt. The amount of any backup withholding collected from a payment to a U.S.
Holder provides an accurate taxpayer identification number or otherwise demonstrates that it is exempt. The amount of any backup withholding collected from a payment to a U.S. Holder will generally be allowed as a credit against the U.S. Holder’s United States federal income tax liability and may entitle the U.S.
Smith (1) — — — — — — — Dr. Shuming Zhao 97,398 — — — — — 97,398 Indrajit Chatterjee 90,704 — — — — — 90,704 Silke S.
Smith (1) — — — — — — — Dr. Shuming Zhao 104,717 — — — — — 104,717 Indrajit Chatterjee 97,976 — — — — — 97,976 Silke S.
There are no arrangements known to us, the operation of which may at a subsequent date result in a change in the control of our company. 45 Table of Contents B.
The voting rights of our major shareholders do not differ from the voting rights of holders of our shares who are not major shareholders. There are no arrangements known to us, the operation of which may at a subsequent date result in a change in the control of our company. B.
He serves as President of the International Association of Chinese Management Research (IACMR, Third Term), Vice President of the Chinese Academy of Management, President for Jiangsu Provincial Association of Human Resource Management, and Vice President of Jiangsu Provincial Association of Professional Managers. Since 1994, Dr. Zhao has acted as management consultant for several Chinese and international firms. Dr.
He was appointed as Dean of Nanjing University Xingzhi College in 2020. He serves as President of the International Association of Chinese Management Research (IACMR, Third Term), Vice President of the Chinese Academy of Management, Lifetime Honorary President for Jiangsu Provincial Association of Human Resource Management, and Vice President of Jiangsu Provincial Association of Professional Managers. Since 1994, Dr.
The above stock dividends received requisite stock exchange approvals. No fractional shares were issued by us in connection with such stock dividends. On April 30, 2021, we announced that our board of directors approved a cash dividend policy, which is intended to maximize potential future dividends to holders of our Common Shares.
Dividend Distributions On April 30, 2021, we announced that our board of directors approved a cash dividend policy, which is intended to maximize potential future dividends to holders of our Common Shares.
On the date hereof, we announced a dividend of $0.23 (US$0.17) per Common Share payable on May 19, 2023 to shareholders of record on May 9, 2023. 47 Table of Contents Based upon a review of our financial position, operating results, ongoing working capital requirements and other factors, our board of directors may from time to time and if deemed advisable by it, declare and pay cash dividends to holders.
Based upon a review of our financial position, operating results, ongoing working capital requirements and other factors, our board of directors may from time to time and if deemed advisable by it, declare and pay cash dividends to holders.
For any taxable year in which a U.S. Holder owns shares in a PFIC that is a shareholder of a corporation that is a PFIC (a “Subsidiary PFIC”), the U.S.
Holders who are individuals at preferential tax rates for long-term capital gains. For any taxable year in which a U.S. Holder owns shares in a PFIC that is a shareholder of another PFIC (a “Subsidiary PFIC”), the U.S.
Chatterjee is a retired businessman and formerly was responsible for marketing with the Transportation Systems Division of General Electric for India. Mr. Chatterjee is experienced in dealing with Indian governmental issues.
Zhao has lectured in countries including the United States, Canada, Japan, Singapore, South Korea, the United Kingdom, Germany, the Netherlands, Portugal and Australia. Indrajit Chatterjee – Director Mr. Chatterjee is a retired businessman and formerly was responsible for marketing with the Transportation Systems Division of General Electric for India. Mr. Chatterjee is experienced in dealing with Indian governmental issues.
Holder owns our Common Shares during any year in which we are a PFIC, the holder generally must file an annual report on IRS Form 8621 (or any successor form), generally with the holder’s federal income tax return for that year. U.S.
Holder generally must file an annual report on IRS Form 8621 (or any successor form), generally with the U.S. Holder’s federal income tax return for that year. Failure to file IRS Form 8621 may result in an extension of the time period during which the IRS can assess a tax. 52 Table of Contents U.S. Holders and prospective U.S.
The following discussion is for general information only and is not intended to be, nor should it be construed to be, legal, business or tax advice to any holder or prospective holder of our Common Shares and no opinion or representation with respect to the United States federal income tax consequences to any such holder or prospective holder is hereby made.
Holder or prospective U.S. Holder of our Common Shares and no opinion or representation with respect to the United States federal income tax consequences to any such U.S. Holder or prospective U.S. Holder is hereby made. Accordingly, U.S. Holders and prospective U.S.
Samuel Morrow – President, Chief Executive Officer, Chief Financial Officer and Director Mr. Morrow was our Deputy Chief Executive Officer from 2017 to 2021 and has been our Chief Financial Officer since 2017. On May 1, 2021, Mr. Morrow became our President and Chief Executive Officer. Mr. Morrow is a Chartered Financial Analyst. Prior thereto, Mr.
Morrow is the Chief Financial Officer of the Company since 2017 and the President and Chief Executive Officer of the Company since 2021. Mr. Morrow has also served as a director of the Company since May 2021. Mr. Morrow is a Chartered Financial Analyst. Prior thereto, Mr.
Stenger 184,828 — — — — — 184,828 Friedrich Hondl 181,091 — — — — — 181,091 Jochen Dümler 112,131 — — — — — 112,131 Samuel Morrow (2) ​ — ​ — ​ — ​ — ​ — ​ — ​ — Notes: (1) Compensation provided to Mr.
Stenger 197,284 — — — — — 197,284 Friedrich Hondl 27,183 — — — — — 27,183 Jochen Dümler 101,387 — — — — — 101,387 Samuel Morrow (2) ​ — ​ — ​ — ​ — ​ — ​ — ​ — Notes: (1) Compensation provided to Mr.
Smith Executive Chairman ​ 466,104 (2) ​ — ​ — ​ 120,000 ​ — ​ — ​ 264,137 (3) ​ 850,241 Samuel Morrow President, Chief Executive Officer (4) and Chief Financial Officer ​ 363,063 ​ — ​ — ​ — ​ — ​ 142,362 (5) ​ 603,720 (4)(6) ​ 1,109,145 Notes: (1) All awards under our non-equity incentive compensation plans are paid during the financial year they were earned.
Smith Executive Chairman ​ 463,882 (2) ​ — ​ — ​ 100,000 ​ — ​ — ​ 294,753 (3) ​ 858,635 Samuel Morrow President, Chief Executive Officer (4) and Chief Financial Officer ​ 464,742 ​ — ​ — ​ 120,000 ​ — ​ 147,657 (5) ​ 317,021 (3)(4)(6) ​ 1,049,420 Notes: (1) All awards under our non-equity incentive compensation plans are paid during the financial year they were earned.
Morrow was previously Vice President of Tanaka Capital Management and Treasurer, Chief Financial Officer and Chief Operating Officer of the Tanaka Growth Fund. Mr. Morrow is a graduate of St. Lawrence University in New York. 40 Table of Contents Dr. Shuming Zhao – Director Dr.
Morrow was previously Vice President of Tanaka Capital Management and Treasurer, Chief Financial Officer and Chief Operating Officer of the Tanaka Growth Fund. 39 Table of Contents Dr. Shuming Zhao – Director Dr. Zhao is the Senior Distinguished Professor and Honorary Dean of the School of Business at Nanjing University, the People’s Republic of China.
No assurance can be given that the IRS will agree with the statements and conclusions herein, or will not take, or that a court will not adopt, a position contrary to any position taken herein.
No assurance can be given that the IRS will agree with the statements and conclusions herein, or will not take, or that a court will not adopt, a position contrary to any position taken herein. 50 Table of Contents The following discussion is for general information only and is not intended to be, nor should it be construed to be, legal, business or tax advice to any U.S.
(2) Based on a Schedule 13D/A filed by Peter R. Kellogg and dated July 17, 2022, in which Mr. Kellogg disclosed that he beneficially owns an aggregate of 5,293,276 Common Shares over which Mr. Kellogg has sole dispositive and voting power. (3) Based on a Schedule 13G/A filed on February 7, 2022 by Mr. Neil Subin.
(2) As disclosed in a Schedule 13D/A dated July 17, 2022 and other public documents, Mr. Peter Kellogg and/or his family beneficially owns an aggregate of 5,293,276 Common Shares with sole dispositive and voting power.
Further, any distribution with respect to the Common Shares in excess of 125% of the average of the annual distributions on shares received by the U.S. Holder during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, would be subject to United States federal income taxation as described above.
This “deferred tax amount” would be added to the tax imposed in the taxable year of the sale or other disposition. Further, any distribution with respect to the Common Shares in excess of 125% of the average of the annual distributions on shares received by the U.S. Holder during the preceding three years or the U.S.
This summary does not purport to address all material United States federal income tax consequences that may be relevant to a U.S.
This summary does not purport to address all material United States federal income tax consequences that may be relevant to a prospective U.S. Holder’s decision to acquire, own, or dispose of our Common Shares and does not take into account the specific circumstances of any particular U.S.
Holders should consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances. Passive Foreign Investment Company We do not believe that we are currently a passive foreign investment company, referred to as a “PFIC”.
Holders should consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
Holders that hold “specified foreign financial assets” in excess of certain threshold amounts must comply with certain reporting obligations.
Holders must file information returns with respect to their investment in, or involvement in, a non-United States corporation. For example, certain U.S. Holders that hold “specified foreign financial assets” in excess of certain threshold amounts must comply with certain reporting obligations.
Documents on Display Documents and agreements concerning our company may be inspected at Room 2103 Shanghai Mart Tower, 2299 Yan An Road West, Changning District, Shanghai China 200336. We file reports and other information with the SEC.
Holder to a refund, provided that certain required information is timely submitted to the IRS. F. Dividends and Paying Agents Not applicable. G. Statement by Experts Not applicable. H. Documents on Display Documents and agreements concerning our company may be inspected at Room 2103 Shanghai Mart Tower, 2299 Yan An Road West, Changning District, Shanghai China 200336.
Zhao is also a director of Daqo New Energy Corp. (China) and JSTI Group (China) Ltd. Dr. Zhao has successfully organized and held nine international symposia on multinational business management. Since 1997, Dr. Zhao has been a visiting professor at the Marshall School of Business, University of Southern California, USA, the College of Business, University of Missouri-St.
Zhao has acted as a management consultant for several Chinese and international firms. Dr. Zhao is also a director of Daqo New Energy Corp. (China). Dr. Zhao has successfully organized and held ten international symposia on multinational business management. Since 1997, Dr.
Stenger (55) (2)(3)(4) ​ Director ​ 2017 ​ Jochen Dümler (68) (1)(2)(3) ​ Director ​ 2017 ​ Notes: (1) Member of the Risk Committee. (2) Member of the Audit Committee. (3) Member of the Compensation Committee.
Stenger (56) (1)(2)(3) ​ Director ​ 2017 ​ Jochen Dümler (69) (1)(2)(3) ​ Director ​ 2017 ​ Notes: (1) Member of the Audit Committee. (2) Member of the Compensation Committee. (3) Member of the Nominating and Corporate Governance Committee. Michael J. Smith – Executive Chairman and Director Mr. Smith is the Executive Chairman and a director of the Company.
Holder and does not take into account the specific circumstances of any particular holder, some of which (such as tax-exempt entities, qualified retirement plans, individual retirement accounts, other tax-deferred accounts or government organizations, banks or other financial institutions, insurance companies, broker-dealers, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, regulated investment companies, real estate investment trusts, U.S. expatriates, investors liable for the alternative minimum tax, partnerships and other pass-through entities, investors that own or are treated as owning (by vote or value) 10% or more of our outstanding Common Shares, investors that hold our Common Shares as part of a straddle, hedge, conversion or constructive sale transaction or other integrated transaction, U.S. holders whose functional currency is not the United States dollar, and persons required to accelerate the recognition of any item of gross income with respect to our Common Shares as a result of such income being recognized on an applicable financial statement) may be subject to special tax rules.
Holder, some of which (such as tax-exempt entities, qualified retirement plans, individual retirement accounts, other tax-deferred accounts or government organizations, banks or other financial institutions, insurance companies, brokers or dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, regulated investment companies, real estate investment trusts, United States expatriates, investors liable for the alternative minimum tax or Medicare contribution tax on net investment income of certain non-corporate U.S.
She holds a Masters of Science in Industrial and Communications Psychology from FHWien University of Applied Sciences of WKW in Vienna, Austria and is a certified controller (German Chamber of Commerce IHK) and IFRS accountant, specializing in corporate governance and Sarbanes-Oxley Act of 2002 compliance. Furthermore, she is a business coach by training. Jochen Dümler – Director Mr.
She holds a Master of Science in Industrial and Communications Psychology from FHWien University of Applied Sciences of WKW in Vienna, Austria and is a certified controller, IFRS accountant and a certified expert in sustainable finance (ESG). Jochen Dümler – Director Mr. Dümler was the President and Chief Executive Officer of Euler Hermes North America from 2010 to 2015.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

43 edited+1 added−10 removed37 unchanged
Given that the calculations for recoverable amounts require the use of estimates and assumptions, including forecasts of commodity prices, market supply and demand, product margins and in the case of our interests in an iron ore mine, power plant and hydrocarbon properties, expected production volumes, it is possible that the assumptions may change, which may impact the estimated life of the CGU and may require a material adjustment to the carrying value of non-financial assets.
Given that the calculations for recoverable amounts require the use of estimates and assumptions, including forecasts of commodity prices, market supply and demand, product margins and in the case of our interests in an iron ore mine and power plant, expected production volumes, it is possible that the assumptions may change, which may impact the estimated life of the CGU and may require a material adjustment to the carrying value of non-financial assets.
In addition, future changes in regulatory environments, including government levies or changes in our rights to exploit the resource imposed over the producing life of the reserves and resources may also significantly impact estimates. Please see Note 12 to our audited consolidated financial statements for the year ended December 31, 2022 for further information.
In addition, future changes in regulatory environments, including government levies or changes in our rights to exploit the resource imposed over the producing life of the reserves and resources may also significantly impact estimates. Please see Note 12 to our audited consolidated financial statements for the year ended December 31, 2023 for further information.
Increases in future costs and/or decreases in estimates of future production rates and product selling prices may result in a write-down of our property, plant and equipment. Please see Note 11 to our audited consolidated financial statements for the year ended December 31, 2022 for further information.
Increases in future costs and/or decreases in estimates of future production rates and product selling prices may result in a write-down of our property, plant and equipment. Please see Note 11 to our audited consolidated financial statements for the year ended December 31, 2023 for further information.
Business Overview – Business Segments – Royalty ”. 39 Table of Contents Safe Harbor The safe harbor provided in Section 27A of the Securities Act of 1933 , as amended, and Section 21E of the Securities Exchange Act of 1934 , as amended, applies to forward-looking information provided under “Off-Balance Sheet Arrangements ” and “ Liquidity and Capital Resources – Contractual Obligations ”. ​
Business Overview – Business Segments – Royalty ”. 38 Table of Contents Safe Harbor The safe harbor provided in Section 27A of the Securities Act of 1933 , as amended, and Section 21E of the Securities Exchange Act of 1934 , as amended, applies to forward-looking information provided under “Off-Balance Sheet Arrangements ” and “ Liquidity and Capital Resources – Contractual Obligations ”. ​
In the event facts and circumstances surrounding factors used to determine our CGUs change, we will re-determine the groupings of CGUs. Please see Notes 11 and 12 to our audited consolidated financial statements for the year ended December 31, 2022 for further information.
In the event facts and circumstances surrounding factors used to determine our CGUs change, we will re-determine the groupings of CGUs. Please see Notes 11 and 12 to our audited consolidated financial statements for the year ended December 31, 2023 for further information.
It is also open to all forms of sales, including exchanges of non-current assets for other non-current assets when the exchange will have commercial substance in accordance with IAS 16, Property, Plant and Equipment .
It is also open to all forms of sales, including exchanges of non-current assets for other non-current assets when the exchange will have commercial substance in accordance with IAS 16, Property, Plant and Equipment for further information.
The necessary resources will be generated from cash flows from operations, cash on hand, borrowings against our assets, sales of proprietary investments or the issuance of securities. 34 Table of Contents Foreign Currency Our consolidated financial results are subject to foreign currency exchange rate fluctuations. Our presentation currency is the Canadian dollar.
The necessary resources will be generated from cash flows from operations, cash on hand, borrowings against our assets, sales of proprietary investments or the issuance of securities. Foreign Currency Our consolidated financial results are subject to foreign currency exchange rate fluctuations. Our presentation currency is the Canadian dollar.
We may change our investment decision in our normal course of business, thus resulting in additional income tax liabilities. 38 Table of Contents We comply with IFRIC 23, Uncertainty over Income Tax Treatments, which provides guidance on the recognition and measurement of tax assets and liabilities under IAS 12, Income Taxes, referred to “IAS 12” when there is uncertainty over income tax treatments.
We may change our investment decision in our normal course of business, thus resulting in additional income tax liabilities. We comply with IFRIC 23, Uncertainty over Income Tax Treatments, which provides guidance on the recognition and measurement of tax assets and liabilities under IAS 12, Income Taxes, referred to as “IAS 12” when there is uncertainty over income tax treatments.
The actual repayment may be materially different from the amount disclosed herein. See “– Financial Position ” for further information. Risk Management Risk is an inherent part of our business and operating activities.
The actual repayment may be materially different from the amount disclosed herein. See “– Financial Position ” for further information. 34 Table of Contents Risk Management Risk is an inherent part of our business and operating activities.
We have identified certain accounting policies that are the most important to the portrayal of our current financial condition and results of operations. Please refer to Note 2B to our audited consolidated financial statements for the year ended December 31, 2022, for a discussion of the significant accounting policies.
We have identified certain accounting policies that are the most important to the portrayal of our current financial condition and results of operations. Please refer to Note 2B to our audited consolidated financial statements for the year ended December 31, 2023, for a discussion of the material accounting policies.
Long-Term Debt As at December 31, 2022, we had long-term bonds payable of $35.5 million compared to $35.2 million as at December 31 2021. In August 2019, Merkanti Holding plc completed a public issue of bonds with an aggregate nominal amount of €25.0 million.
Long-Term Debt As at December 31, 2023, we had long-term bonds payable of $36.1 million compared to $35.5 million as at December 31 2022. In August 2019, Merkanti Holding plc completed a public issue of bonds with an aggregate nominal amount of €25.0 million.
The undiscounted contractual amount due to former subsidiary out of surplus cash of the applicable subsidiary note holder is $57.0 million (US$42.1 million). The payment amount disclosed here represents its fair value as at December 31, 2022. The total amount due on December 31, 2022 or within 12 months thereafter is $nil.
The undiscounted contractual amount due to former subsidiary out of surplus cash of the applicable subsidiary note holder is $55.6 million (US$42.1 million). The payment amount disclosed here represents its fair value as at December 31, 2023. The total amount due on December 31, 2023 or within 12 months thereafter is $nil.
Impairment and Reversals of Impairment on Non-Financial Assets The carrying amounts of our non-financial assets, other than deferred tax assets, are reviewed at the end of each reporting period to determine whether there is an indication of impairment or reversal of previously recorded impairment. If such indication exists, the recoverable amount is estimated.
Impairment and Reversals of Impairment on Non-Financial Assets The carrying amounts of our non-financial assets, other than deferred tax assets, are reviewed at the end of each reporting period to determine whether there is an indication of impairment or reversal of previously recorded impairment.
Deferred income taxes are recognized for temporary differences using the liability method, with deferred income tax liabilities generally being provided for in full (except for taxable temporary differences associated with investments in subsidiaries and branches where we are able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future) and deferred income tax assets being recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.
Deferred income taxes are recognized for temporary differences using the liability method, with deferred income tax liabilities generally being provided for in full (except for taxable temporary differences associated with investments in subsidiaries and branches where we are able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future) and deferred income tax assets being recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized. 37 Table of Contents We recognized deferred income tax assets of $9.5 million as at December 31, 2023.
Impairment of Other Non-Financial Assets We had property, plant and equipment aggregating $28.9 million as at December 31, 2022, consisting mainly of a power plant. Impairment of our non-financial assets is evaluated at the CGU level.
Impairment of Other Non-Financial Assets We had property, plant and equipment aggregating $25.8 million as at December 31, 2023, consisting mainly of a power plant. Impairment of our non-financial assets is evaluated at the CGU level.
Item 7: Major Shareholders and Related Party Transactions – B. Related Party Transactions ” for further information. Current tax receivables, consisting primarily of refundable value-added taxes, were $0.6 million as at December 31, 2022, compared to $1.1 million as at December 31, 2021.
Item 7: Major Shareholders and Related Party Transactions – B. Related Party Transactions ” for further information. Current tax receivables, consisting primarily of refundable value-added taxes, were $0.6 million as at December 31, 2023 and December 31, 2022. Inventories increased to $1.2 million as at December 31, 2023, from $0.8 million as at December 31, 2022.
Determining whether there are any indications of impairment or impairment reversals requires significant judgment of external factors, such as an extended change in prices or margins for iron ore, hydrocarbon commodities or refined products, a significant change in an asset's market value, a significant revision of estimated volumes, revision of future development costs, a change in the entity's market capitalization or significant changes in the technological, market, economic or legal environment that would have an impact on our CGUs.
If such indication exists, the recoverable amount is estimated. 35 Table of Contents Determining whether there are any indications of impairment or impairment reversals requires significant judgment of external factors, such as an extended change in prices or margins for iron ore, a significant change in an asset’s market value, a significant revision of estimated volumes, revision of future development costs, a change in the entity's market capitalization or significant changes in the technological, market, economic or legal environment that would have an impact on our CGUs.
The increase resulted from a change in fair value due to interest accretion. The loan does not have a fixed repayment date and the estimated fair value has been determined using a discount rate for similar investments. Please see Note 26 to our audited consolidated financial statements for the year ended December 31, 2022 for further information.
The loan does not have a fixed repayment date and the estimated fair value has been determined using a discount rate for similar investments. Please see Note 25 to our audited consolidated financial statements for the year ended December 31, 2023 for further information.
To make that assessment, management compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and consider reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
To make that assessment, management compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and consider reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. 36 Table of Contents Allowance for credit losses is maintained at an amount considered adequate to absorb the expected credit losses.
To the extent that any sales of these properties, in whole or in part, cause the security to fall below a certain ratio, proceeds of said sale, up to an amount of the collateral shortfall, are required to be placed as cash collateral with the bondholder trustee until maturity.
To the extent that any sales of these properties, in whole or in part, cause the security to fall below a certain ratio, proceeds of said sale, up to an amount of the collateral shortfall, are required to be placed as cash collateral with the bondholder trustee until maturity. 33 Table of Contents Future Liquidity We expect that there will be acquisitions of businesses or commitments to projects in the future.
Future Liquidity We expect that there will be acquisitions of businesses or commitments to projects in the future. To achieve the long-term goals of expanding our assets and earnings, including through acquisitions, capital resources will be required. Depending on the size of a transaction, the capital resources that will be required can be substantial.
To achieve the long-term goals of expanding our assets and earnings, including through acquisitions, capital resources will be required. Depending on the size of a transaction, the capital resources that will be required can be substantial.
Our management takes an active role in the risk management process and requires specific administrative and business functions to assist in the identification, assessment and control of various risks.
Our management takes an active role in the risk management process and requires specific administrative and business functions to assist in the identification, assessment and control of various risks. Our risk management policies, procedures and methodologies are fluid in nature and are subject to ongoing review and modification.
We recognized deferred income tax assets of $9.7 million as at December 31, 2022. In assessing the realizability of deferred income tax assets, our management considers whether it is probable that some portion or all of the deferred income tax assets will be realized.
In assessing the realizability of deferred income tax assets, our management considers whether it is probable that some portion or all of the deferred income tax assets will be realized.
Deposits, prepaid and other assets were $1.7 million as at December 31, 2022, compared to $0.6 million as at December 31, 2021. We had assets held for sale of $34.7 million as at December 31, 2022, compared to $nil as at December 31, 2021.
Restricted cash was $0.4 million as at December 31, 2023 and December 31, 2022. Deposits, prepaid and other assets were $1.4 million as at December 31, 2023, compared to $1.7 million as at December 31, 2022. Assets held for sale were $nil as at December 31, 2023, compared to $34.7 million as at December 31, 2022.
We had bonds payable of $35.5 million as at December 31, 2022, compared to $35.2 million as at December 31, 2021. We had a non-interest bearing loan payable, which is measured at fair value through profit or loss, of $7.4 million as at December 31, 2022, compared to $6.8 million as at December 31, 2021.
We had a non-interest bearing loan payable, which is measured at fair value through profit or loss, of $7.6 million as at December 31, 2023, compared to $7.4 million as at December 31, 2022. The increase resulted from a change in fair value due to interest accretion.
The recoverable quantities of reserves and estimated cash flows from our hydrocarbon interests are independently evaluated by reserve engineers at least annually. In 2022, we did not recognize any impairment in respect of our interests in resource properties. Our iron ore reserves are estimates of the amount of product that can be economically and legally extracted from our mining properties.
In 2023, we did not recognize any impairment in respect of our interests in resource properties. Our iron ore reserves are estimates of the amount of product that can be economically and legally extracted from our mining properties.
Contractual Obligations The following table sets out our obligations and commitments including contractual obligations, bonds payable and loan payable held at fair value as at December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by Period (1) ​ ​ (In thousands) ​ ​ Less than ​ ​ ​ ​ ​ ​ ​ More than ​ ​ ​ Contractual Obligations (2) 1 Year 1 – 3 Years 3 – 5 Years 5 Years Total Lease liabilities ​ $ 412 ​ $ 317 ​ $ — ​ $ — ​ $ 729 Bonds payable ​ 1,446 ​ 2,892 ​ 36,984 ​ — ​ 41,322 Loan payable (3) ​ — ​ — ​ — ​ 7,424 ​ 7,424 Total ​ $ 1,858 ​ $ 3,209 ​ $ 36,984 ​ $ 7,424 ​ $ 49,475 Notes: (1) Includes principal and interest, except for loan payable which is measured at FVTPL.
Contractual Obligations The following table sets out our obligations and commitments including contractual obligations, bonds payable and loan payable held at fair value as at December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by Period (1) ​ ​ (In thousands) ​ ​ Less than ​ ​ ​ ​ ​ ​ ​ More than ​ ​ ​ Contractual Obligations (2) 1 Year 1 – 3 Years 3 – 5 Years 5 Years Total Lease liabilities ​ $ 316 ​ $ 3 ​ $ — ​ $ — ​ $ 319 Bonds payable ​ 1,463 ​ 39,003 ​ — ​ — ​ 40,466 Loan payable (3) ​ — ​ — ​ — ​ 7,610 ​ 7,610 Total ​ $ 1,779 ​ $ 39,006 ​ $ — ​ $ 7,610 ​ $ 48,395 Notes: (1) Includes principal and interest, except for loan payable which is measured at FVTPL.
The assessment of allowance for credit losses is a complex process, particularly on a forward-looking basis; which involves a significant degree of judgment and a high level of estimation uncertainty.
Such allowance for credit losses reflects our management’s best estimate of changes in the credit risk on our financial instruments and judgments about economic conditions. The assessment of allowance for credit losses is a complex process, particularly on a forward-looking basis; which involves a significant degree of judgment and a high level of estimation uncertainty.
It also requires interpretation of geological and geophysical models and anticipated recoveries. The economical, geological and technical factors used to estimate reserves may change from period to period.
The economical, geological and technical factors used to estimate reserves may change from period to period.
Management does not expect that there will be material effects from these amendments on the Group’s consolidated financial statements. Trend Information For a discussion of trends relating to revenue derived from our royalty interest, please see “ Item 4: Information on the Company – B.
Trend Information For a discussion of trends relating to revenue derived from our royalty interest, please see “ Item 4: Information on the Company – B.
In 2022, we reported a $1.1 million currency translation adjustment gain, before reclassification adjustment for exchange difference to profit or loss for a subsidiary deconsolidated, in accumulated other comprehensive income within equity. This compared to a $6.2 million currency translation adjustment loss under accumulated other comprehensive income within equity in 2021.
In 2023, we reported a $1.2 million currency translation adjustment loss in accumulated other comprehensive income within equity. This compared to a $1.1 million currency translation adjustment gain under accumulated other comprehensive income within equity in 2022. This currency translation adjustment did not affect our profit and loss statement.
The changes in Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1) defers the effective date of the January 2020 Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) to annual reporting periods beginning on or after January 1, 2024.
Amendments to IAS 1 , Non-current Liabilities with Covenants, which were issued in 2022, modifies the 2020 amendments to IAS 1, Classification of Liabilities as Current or Non-Current, which further clarifies the classification, presentation, and disclosure requirements in the standard for non-current liabilities with covenants and defers the effective date of the 2020 amendments to IAS 1, Classification of Liabilities as Current or Non-Current, to annual reporting periods beginning on or after January 1, 2024.
An impairment loss is reversed only to the extent that the carrying amount of the asset or CGU does not exceed the carrying amount that would have been determined, net of depreciation, depletion and amortization, if no impairment loss had been recognized. 36 Table of Contents Valuation of Investment Property Investment properties are included in the consolidated statement of financial position at their market value, unless their fair value cannot be reliably determined at that time.
An impairment loss is reversed only to the extent that the carrying amount of the asset or CGU does not exceed the carrying amount that would have been determined, net of depreciation, depletion and amortization, if no impairment loss had been recognized.
Our management does not consider inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.
Inflation Inflation has had a minimal impact on our costs of sales and services and selling, general administrative expenses over the last two fiscal years. Our management does not consider inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.
Interests in Resource Properties and Reserve Estimates Our iron ore royalty interest had an aggregate carrying amount of $201.8 million as at December 31, 2022. 37 Table of Contents Generally, estimation of reported recoverable quantities of proved and probable reserves of resource properties include judgmental assumptions regarding production profile, prices of products produced, exchange rates, remediation costs, timing and amount of future development costs and production, transportation and marketing costs for future cash flows.
Generally, estimation of reported recoverable quantities of proved and probable reserves of resource properties include judgmental assumptions regarding production profile, prices of products produced, exchange rates, remediation costs, timing and amount of future development costs and production, transportation and marketing costs for future cash flows. It also requires interpretation of geological and geophysical models and anticipated recoveries.
This currency translation adjustment did not affect our profit and loss statement. The gain in 2022 was primarily a result of the weakening of the Canadian dollar against the Euro.
The loss in 2023 was primarily a result of the weakening of the Canadian dollar against the Euro.
Management has chosen to adopt these amendments on January 1, 2023 and does not expect that there will be material effects from these amendments on the Group’s consolidated financial statements. In May 2021, the IASB issued targeted amendments to IAS 12, Income Taxes .
Management is assessing the impacts, if any, the amendments to existing standards will have on the Group and does not expect that there will be material effects from these amendments on the Group’s consolidated financial statements.
See Note 23 to our audited consolidated financial statements for the year ended December 31, 2022 for further information. New Standards and Interpretations Not Yet Adopted In January 2020, the IASB issued the final amendments in Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) which affect the presentation of liabilities in the statement of financial position.
New Standards and Interpretations Not Yet Adopted The IASB has issued the following amendments to existing standards that will become effective in future years: ● Amendments to IAS 1- Classification of Liabilities as Current or Non-current , which were issued in 2020, clarifies the classification requirements in the standard for liabilities as current or non-current .
Account payables and accrued expenses were $21.1 million as at December 31, 2022, compared to $11.3 million as at December 31, 2021. The increase was primarily related to increased deposits within our bank subsidiary. We had deferred income tax liabilities of $56.6 million as at December 31, 2022, compared to $67.5 million as at December 31, 2021.
The decrease was the result of the disposition of our hydrocarbon assets in March 2023. Account payables and accrued expenses were $16.0 million as at December 31, 2023, compared to $21.1 million as at December 31, 2022. The decrease was primarily related to the sale of Notine.
Estimates and judgments could change in the near-term and could result in a significant change to a recognized allowance.
Estimates and judgments could change in the near-term and could result in a significant change to a recognized allowance. Interest in Resource Properties and Reserve Estimates Our iron ore royalty interest had an aggregate carrying amount of $196.6 million as at December 31, 2023.
As at December 31, 2022, we had liabilities relating to such assets held for sale of $20.4 million, which consisted of decommissioning obligations of $16.6 million and deferred income tax liabilities of $3.7 million, compared to $nil as at the end of 2021.
We had deferred income tax liabilities of $58.4 million as at December 31, 2023, compared to $56.6 million as at December 31, 2022. We had bonds payable of $36.1 million as at December 31, 2023, compared to $35.5 million as at December 31, 2022.
Management does not expect that there will be material effects from these amendments on the Group’s consolidated financial statements. In February 2021, the IASB issued narrow-scope amendments to IAS 1, Presentation of Financial Statements , IFRS Practice Statement 2, Making Materiality Judgements , and IAS 8.
Management does not expect that there will be material effects from these amendments on the Group’s consolidated financial statements; and ● Amendments to IFRS 16, Leases-Lease Liability in a Sale and Leaseback , which clarifies subsequent measurement requirements for sale and leaseback transactions for sellers-lessees. The amendments are effective for annual periods beginning on or after January 1, 2024.
In connection therewith, we also recognized a non-cash impairment loss of $31.4 million for an initial write-down of the assets held for sale to fair values less costs to sell. See Note 4 to our audited consolidated financial statements for the year ended December 31, 2022 for further information.
See Note 22 to our audited consolidated financial statements for the year ended December 31, 2023 for further information.
Removed
Inventories decreased to $0.8 million as at December 31, 2022, from $1.1 million as at December 31, 2021. 33 Table of Contents Restricted cash increased to $0.4 million as at December 31, 2022, compared to $0.1 million as at December 31, 2021.
Added
Valuation of Investment Property Investment properties are included in the consolidated statement of financial position at their market value, unless their fair value cannot be reliably determined at that time.
Removed
In the fourth quarter of 2022, we entered into an agreement to sell our hydrocarbon assets located in Alberta, Canada.
Removed
As the carrying amount of these assets were to be recovered through a sale transaction, the assets and related liabilities were reclassified as assets held for sale and liabilities relating to assets held for sale, respectively, as at December 31, 2022.
Removed
As at December 31, 2022, we had long-term decommissioning obligations of $nil, compared to $15.1 million as at December 31, 2021 relating to our former hydrocarbon properties. Such decommissioning obligations were reclassified as liabilities relating to assets held for sale as at December 31, 2022.
Removed
Our risk management policies, procedures and methodologies are fluid in nature and are subject to ongoing review and modification. 35 Table of Contents Inflation Inflation has had a minimal impact on our costs of sales and services and selling, general administrative expenses over the last two fiscal years.
Removed
During the fourth quarter of 2022, we entered into an agreement of purchase and sale with a third-party whereby we agreed to sell them our hydrocarbon assets located in Alberta, Canada. As such these assets were classified as held for sale as at December 31, 2022. Please see “- Liquidity and Capital Resources ” for further information.
Removed
Allowance for credit losses is maintained at an amount considered adequate to absorb the expected credit losses. Such allowance for credit losses reflects our management’s best estimate of changes in the credit risk on our financial instruments and judgments about economic conditions.
Removed
The amendments clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the “right” to defer settlement by at least twelve months and make explicit that only rights in place “at the end of the reporting period” should affect the classification of a liability; clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
Removed
The amendments are effective for annual periods beginning on or after January 1, 2023, although earlier application is permitted. The amendments will require the disclosure of material accounting policy information rather than disclosing significant accounting policies and clarifies how to distinguish changes in accounting policies from changes in accounting estimates.
Removed
The amendments are effective for annual periods beginning on or after January 1, 2023, although earlier application is permitted. With a view to reducing diversity in reporting, the amendments will clarify that companies are required to recognize deferred taxes on transactions where equal assets and liabilities are recognized, such as leases and asset retirement (decommissioning) obligations.

Other SRL 10-K year-over-year comparisons