MARTINREA INTERNATIONAL INC. CONSOLIDATED
MARTINREA INTERNATIONAL INC.CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED DECEMBER 31, 2020
Martinrea International Inc.Table of ContentsManagement's Responsibility for Financial ReportingIndependent Auditors' ReportConsolidated Balance SheetsConsolidated Statements of OperationsConsolidated Statements of Comprehensive IncomeConsolidated Statements of Changes in EquityConsolidated Statements of Cash FlowsNotes to the Consolidated Financial Statements1.Basis of preparation2.Significant accounting policies3Acquisition4.Trade and other receivables5.Inventories6.Property, plant and equipment7.Right-of-use assets8.Intangible assets9.Investments10. Impairment of assets11. Trade and other payables12. Provisions13. Long-term debt14. Lease liabilities15. Pensions and other post-retirement benefits16. Income taxes17. Capital stock18. Earnings per share19. Research and development costs20. Personnel expenses21. Finance expense and other finance income (expense)22. Operating segments23. Financial instruments24. Commitments and contingencies25. Guarantees26. Transactions with key management personnel27. List of consolidated 2353739404040404146474747
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTINGThe accompanying consolidated financial statements of Martinrea International Inc. are the responsibility of managementand have been prepared in accordance with International Financial Reporting Standards and, where appropriate, reflectbest estimates based on management’s judgment. In addition, all other information contained in the annual report toshareholders and Management Discussion and Analysis for the year ended December 31, 2020 is also the responsibilityof management. The Company maintains systems of internal accounting and administrative controls designed to providereasonable assurance that the financial information provided is accurate and complete and that all assets are properlysafeguarded.The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting, foroverseeing management’s performance of its financial reporting responsibilities, and is ultimately responsible for reviewingand approving the consolidated financial statements. The Board of Directors delegates certain responsibility to the AuditCommittee, which is comprised of independent non-management directors. The Audit Committee meets with managementand KPMG LLP, the external auditors, multiple times a year to review, among other matters, accounting policies, anyobservations relating to internal controls over the financial reporting process that may be identified during the audit, asinfluenced by the nature, timing and extent of audit procedures performed, annual consolidated financial statements, theresults of the external audit and the Management Discussion and Analysis included in the report to shareholders for theyear ended December 31, 2020. The external auditors and internal auditors have unrestricted access to the AuditCommittee. The Audit Committee reports its findings to the Board of Directors so that the Board may properly approve theconsolidated financial statements for issuance to shareholders.(Signed) “Pat D’Eramo”(Signed) “Fred Di Tosto”Pat D’EramoFred Di TostoPresident & Chief Executive OfficerChief Financial Officer
KPMG LLP100 New Park Place, Suite 1400Vaughan, ON L4K 0J3Tel 905-265 5900Fax 905-265 6390www.kpmg.caINDEPENDENT AUDITORS’ REPORTTo the Shareholders of Martinrea International Inc.OpinionWe have audited the consolidated financial statements of Martinrea International Inc. (theEntity), which comprise: the consolidated balance sheets as at December 31, 2020 and December 31, 2019 the consolidated statements of operations for the years then ended the consolidated statements of comprehensive income for the years then ended the consolidated statements of changes in equity for the years then ended the consolidated statements of cash flows for the years then ended and notes to the consolidated financial statements, including a summary of significantaccounting policies(Hereinafter referred to as the “financial statements”).In our opinion, the accompanying financial statements present fairly, in all materialrespects, the consolidated financial position of the Entity as at December 31, 2020 andDecember 31, 2019, and its consolidated financial performance and its consolidated cashflows for the years then ended in accordance with International Financial ReportingStandards (IFRS).Basis for OpinionWe conducted our audit in accordance with Canadian generally accepted auditingstandards. Our responsibilities under those standards are further described in the “Auditors’Responsibilities for the Audit of the Financial Statements” section of our auditors’ report.We are independent of the Entity in accordance with the ethical requirements that arerelevant to our audit of the financial statements in Canada and we have fulfilled our otherethical responsibilities in accordance with these requirements.We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP.
Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the financial statements for the year ended December 31, 2020.These matters were addressed in the context of our audit of the financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinion onthese matters.We have determined the matters described below to be the key audit matters to becommunicated in our auditors’ report.Existence and accuracy of tooling work in progress inventoryDescription of the matterWe draw attention to Notes 1(d), 2(f) and 5 of the financial statements. The Entity entersinto tooling contracts, where tooling work in progress inventory that is internally developedincludes directly attributable labour as well as overhead. The tooling work in progress andother inventory balance was 236.6 million. The Entity uses judgment in determining theappropriateness of costs included in tooling work in progress inventory.Why the matter is a key audit matterWe identified the existence and accuracy of tooling work in progress inventory as a key auditmatter. This matter was a significant risk. Evaluating the existence and accuracy of toolingcosts in inventory required significant judgment related to the nature and amounts of costscapitalized. As a result, significant auditor judgment was required to evaluate the results ofour procedures.How the matter was addressed in our auditThe primary procedures we performed to address this key audit matter included thefollowing:For a sample of tooling contracts with work in progress inventory, we: Compared the costs capitalized to supplier invoices or internal records, as applicable Evaluated the accuracy of the amounts capitalized for labour and overhead costallocations by comparing the underlying inputs to vendor invoices or payroll records Enquired with certain of the Entity’s operational personnel who have direct oversight ofthese contractsOther InformationManagement is responsible for the other information. Other information comprises: the information included in Management’s Discussion and Analysis filed with therelevant Canadian Securities Commissions.2
the information, other than the financial statements and the auditors’ report thereon,included in the Report to Shareholders filed with the relevant Canadian SecuritiesCommissions.Our opinion on the financial statements does not cover the other information and we do notand will not express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the otherinformation identified above and, in doing so, consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in the audit,and remain alert for indications that the other information appears to be materially misstated.We obtained the information included in Management’s Discussion and Analysis and theReport to Shareholders filed with the relevant Canadian Securities Commissions as at thedate of this auditors’ report. If, based on the work we have performed on this otherinformation, we conclude that there is a material misstatement of this other information, weare required to report that fact in the auditors’ report.We have nothing to report in this regard.Responsibilities of Management and Those Charged with Governance for theFinancial StatementsManagement is responsible for the preparation and fair presentation of the financialstatements in accordance with IFRS, and for such internal control as managementdetermines is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.In preparing the financial statements, management is responsible for assessing the Entity’sability to continue as a going concern, disclosing as applicable, matters related to goingconcern and using the going concern basis of accounting unless management either intendsto liquidate the Entity or to cease operations, or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Entity’s financialreporting process.Auditors’ Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statementsas a whole are free from material misstatement, whether due to fraud or error, and to issuean auditors’ report that includes our opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an auditconducted in accordance with Canadian generally accepted auditing standards will alwaysdetect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or inthe aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of the financial statements.3
As part of an audit in accordance with Canadian generally accepted auditing standards, weexercise professional judgment and maintain professional skepticism throughout the audit.We also: Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher thanfor one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the Entity's internal control. Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basisof accounting and, based on the audit evidence obtained, whether a materialuncertainty exists related to events or conditions that may cast significant doubt onthe Entity's ability to continue as a going concern. If we conclude that a materialuncertainty exists, we are required to draw attention in our auditors’ report to therelated disclosures in the financial statements or, if such disclosures are inadequate,to modify our opinion. Our conclusions are based on the audit evidence obtained upto the date of our auditors’ report. However, future events or conditions may causethe Entity to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements,including the disclosures, and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation. Communicate with those charged with governance regarding, among other matters,the planned scope and timing of the audit and significant audit findings, includingany significant deficiencies in internal control that we identify during our audit. Provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence, and communicate withthem all relationships and other matters that may reasonably be thought to bear onour independence, and where applicable, related safeguards. Obtain sufficient appropriate audit evidence regarding the financial information ofthe entities or business activities within the Group Entity to express an opinion onthe financial statements. We are responsible for the direction, supervision andperformance of the group audit. We remain solely responsible for our audit opinion.4
Determine, from the matters communicated with those charged with governance,those matters that were of most significance in the audit of the financial statementsof the current period and are therefore the key audit matters. We describe thesematters in our auditors’ report unless law or regulation precludes public disclosureabout the matter or when, in extremely rare circumstances, we determine that amatter should not be communicated in our auditors’ report because the adverseconsequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.Chartered Professional Accountants, Licensed Public AccountantsThe engagement partner on the audit resulting in this auditors’ report is W. G. Andrew Smith.Vaughan, CanadaMarch 4, 20215
Martinrea International Inc.Consolidated Balance Sheets(in thousands of Canadian dollars)NoteASSETSCash and cash equivalentsTrade and other receivablesInventoriesPrepaid expenses and depositsIncome taxes recoverableTOTAL CURRENT ASSETSProperty, plant and equipmentRight-of-use assetsDeferred tax assetsIntangible assetsInvestmentsTOTAL NON-CURRENT ASSETSTOTAL ASSETSLIABILITIESTrade and other payablesProvisionsIncome taxes payableCurrent portion of long-term debtCurrent portion of lease liabilitiesTOTAL CURRENT LIABILITIESLong-term debtLease liabilitiesPension and other post-retirement benefitsDeferred tax liabilitiesTOTAL NON-CURRENT LIABILITIESTOTAL LIABILITIESEQUITYCapital stockContributed surplusAccumulated other comprehensive incomeRetained earningsTOTAL EQUITYTOTAL LIABILITIES AND EQUITYCommitments and Contingencies (note 24)Subsequent Event (note 9)See accompanying notes to the consolidated financial statements.On behalf of the Board:“Robert Wildeboer”Director“Terry Lyons”DirectorPage 7 Martinrea International Inc.December 31, 2020 45671689 1112 13141314151617 December 31, 5,197192,630195,53852,64440,5572,096,5663,368,403 74974,03086,1741,153,6832,192,679 662,42743,86096,645372,7921,175,7243,368,403 51,218,4233,094,295
Martinrea International Inc.Consolidated Statements of Operations(in thousands of Canadian dollars, except per share amounts)Year endedDecember 31, 2020NoteSALES Cost of sales (excluding depreciation of property, plant and equipment and right-of-use assets)Depreciation of property, plant and equipment and right-of-use assets (production)Total cost of salesGROSS MARGINYear endedDecember 31, 20193,375,286 Research and development costsSelling, general and administrativeDepreciation of property, plant and equipment and right-of-use assets (non-production)Amortization of customer contracts and relationshipsGain (loss) on disposal of property, plant and equipmentImpairment of assetsRestructuring costsOPERATING INCOME19Share of loss of an associateGain on dilution of investment in associateFinance expense (including interest on lease liabilities)Other finance expenseINCOME (LOSS) BEFORE INCOME )(37,997)(786)225,045Income tax expense16(12,007)(43,824) (27,317) 181,221 (0.34) (0.34) 2.202.191012NET INCOME (LOSS) FOR THE PERIODBasic earnings (loss) per shareDiluted earnings (loss) per shareSee accompanying notes to the consolidated financial statements.Page 8 Martinrea International Inc.1818
Martinrea International Inc.Consolidated Statements of Comprehensive Income(in thousands of Canadian dollars)Year endedDecember 31, 2020NET INCOME (LOSS) FOR THE PERIODOther comprehensive income (loss), net of tax:Items that may be reclassified to net income (loss)Foreign currency translation differences for foreign operationsCash flow hedging derivative and non-derivative financial instruments:Unrealized gain in fair value of financial instrumentsReclassification of loss to net incomeItems that will not be reclassified to net income (loss)Change in fair value of investmentsTransfer of unrealized gain on investments to retained earningson change in accounting method (note 9)Share of other comprehensive loss of an associate (note 9)Remeasurement of defined benefit plansOther comprehensive loss, net of taxTOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIODSee accompanying notes to the consolidated financial statements.Page 9 Martinrea International Inc. (27,317) 181,2213,900(69,195)2,7151,0023,7351,288- Year endedDecember 31, 2019(79)(8,413)(875)(28,192) (776)(4,314)(26)(3,781)(73,069)108,152
Martinrea International Inc.Consolidated Statements of Changes in Equity(in thousands of Canadian dollars)Capital stockBALANCE AT DECEMBER 31, 2018Net income for the periodCompensation expense related to stock optionsDividends ( 0.18 per share)Exercise of employee stock optionsRepurchase of common sharesOther comprehensive income (loss) net of taxRemeasurement of defined benefit plansForeign currency translation differencesChange in fair value of investmentsTransfer of unrealized gain on investments to retainedearnings on change in accounting method (note 9)Share of other comprehensive loss of an associateCash flow hedging derivative and non-derivativefinancial instruments:Unrealized gain in fair value of financial instrumentsReclassification of loss to net incomeBALANCE AT DECEMBER 31, 2019Net loss for the periodCompensation expense related to stock optionsDividends ( 0.20 per share)Exercise of employee stock optionsRepurchase of common sharesOther comprehensive income (loss) net of taxRemeasurement of defined benefit plansForeign currency translation differencesShare of other comprehensive loss of an associateCash flow hedging derivative and non-derivativefinancial instruments:Unrealized gain in fair value of financial instrumentsReclassification of loss to net incomeBALANCE AT DECEMBER 31, 2020 158,395 -270,981 314)(26)4,314-- 42,016 1,195(762)-Retainedearnings-661,4223,479(2,474)See accompanying notes to the consolidated financial statements.Page 10 Martinrea International Inc.680,157 prehensiveincome662,427 42,4492,416(1,005)-43,860 3,7351,28889,107-Total equity1,151,549181,2211,195(14,738)1,919(33,968)
Consolidated Statements of Operations 8 Consolidated Statements of Comprehensive Income 9 Consolidated Statements of Changes in Equity 10 Consolidated Statements of Cash Flows 11 Notes to the Consolidated Financial Statements 1. Basis of preparation 12 2. Significant accounting policies
Financial reporting 94 Consolidated financial statements 94 Consolidated income statement 95 Consolidated statement of comprehensive income 96 Consolidated balance sheet 97 Consolidated statement of changes in equity 98 Consolidated statement of cash flows 99 Notes to the consolidated
Consolidated Balance Sheet . 60 Consolidated Statement of Income. 62 Consolidated Statement of Comprehensive Income . 63 Consolidated Statement of Changes in Equity . 64 Consolidated Statement of Cash Flows. 66 Notes to Consolidated
3. EU bond consolidated tape - background 9 3.1 Introduction 9 3.2 The importance of a consolidated tape 9 3.3 ICMA CT Taskforce 10 3.4 Bond/Equity markets - drivers for CT 11 3.5 Benefits of an EU post-trade bond consolidated tape 11 4. Principles for an EU Consolidated Post-Trade Tape for bonds 13 5.
07 Condensed consolidated statement of financial position 08 Condensed consolidated statement of changes in equity 09 Condensed consolidated statement of cash flows . MultiChoice Group / Condensed consolidated interim financial statements for the period ended 30 September 2020 / 01. slightly more than the prior year due to higher
Consolidated financial statements 1 2 President’s report 9 Financial performance review 12 The Audit and Finance Committee 13 Independent auditors’ report 15 Consolidated statement of comprehensive income 16 Consolidated statement of financial position 17 Consolidated statement of cash flows 18
balance sheet as at November 30, 2019; the consolidated profit and loss account, the consolidated statement of comprehensive income, and the consolidated statement of changes in equity for the year ended; and the notes to the consolidated financial information, which include a description of the significan
Consolidated Statement of Profit or Loss and Other Comprehensive Income 10 Consolidated Statement of Financial Position 13 Consolidated Statement of Changes in Equity 16 Consolidated Statement of Cash Flows 19 Notes to the consolidated financial statements 20 1 Nature of operations 20 .
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