Mega Uranium Ltd. — Annual Report 2021

Feb 11, 2021

DECEMBER 31, 2020 ANNUAL FINANCIAL REPORT

INDEPENDENT AUDITORS' REPORT

Key audit matter

How our audit addressed the key audit matter

Impairment assessment of goodwill of certain cash generating units (CGUs) in the Specialized and Industrial Services segment Refer to note 2d - Use of estimates and judgments, note 3 - Significant accounting policies and note 11 - Goodwill to the consolidated financial statements. The Corporation had a carrying value of \$271.3 million of goodwill as at December 31, 2020, which includes \$79.3 million for the Specialized and Industrial Services segment. Goodwill is reviewed for impairment annually at December 31, or more frequently if there are indications that impairment may have occurred. An impairment loss is recognized if the carrying amount of a CGU to which the goodwill relates exceeds its recoverable amount. The recoverable amount was based on a value in use method using a discounted cash flow (DCF) model. The DCF reflects the specifics of each CGU and its business environment and the model calculates the present value of the estimated future earnings of each CGU. Key assumptions used in the DCF model included terminal value growth rate and discount rate. We considered this a key audit matter due to the significant judgments made by management in determining the recoverable amounts of certain CGUs within the Specialized and Industrial Services segment, including the use of key assumptions. This in turn led to a high degree of subjectivity and effort in performing procedures to test the key assumptions. Professionals with specialized skill and knowledge in the field of valuation assisted us in performing our procedures.

Our approach to addressing the matter involved the following procedures, among others: Evaluated how management determined the $\bullet$ recoverable amounts of the goodwill for certain CGUs in the Specialized and Industrial Services segment, which included the following: Tested the appropriateness of the method used and the mathematical accuracy of the DCF model. Tested the underlying data used in the DCF model. Professionals with specialized skill and $\frac{1}{2}$ knowledge in the field of valuation assisted in: assessing the reasonability of the DCF $\circ$ model used; testing the reasonableness of the terminal $\circ$ value growth rate and discount rate applied by management; and assessing the reasonableness of the $\circ$ CGU's implied earnings multiple. Tested the disclosures made in the consolidated $\bullet$ financial statements, particularly on the sensitivity of the terminal value growth rate and discount rate.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		December 31	December 31
(thousands)	Note	2020	2019
Assets
Current assets:
Cash and cash equivalents	6	\$ 105,340	\$ 79,023
Trade and other receivables	7	192,453	211,209
Inventory	8	30,072	33,015
Prepaid expenses		13,910	15,461
Current tax receivable		3,522	10,623
		345,297	349,331
Non-current assets:
Property, plant and equipment	9	939,107	954,604
Right-of-use assets	10	32,186	36,799
Goodwill	11	271,340	268,707
Intangible assets	12	45,867	48,456
Investments	13	35,761	38,491
Deferred tax assets	18	9,072	8,070
Derivative financial instruments	14	37,906	41,375
Other assets	15	1,400	3,459
		1,372,639	1,399,961
Total Assets		\$ 1,717,936	\$ 1,749,292
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	16	\$ 88,153	\$ 90,028
Dividends payable	17	2,906	5,241
Current tax payable		3,687	44
Lease liabilities – current portion	19	11,439	10,711
Current portion of long-term debt		16	—
		106,201	106,024
Non-current liabilities:
Convertible debentures – debt component	20	111,111	108,764
Long-term debt	21	461,713	467,392
Lease liabilities	19	23,593	29,975
Asset retirement obligations		1,609	1,647
Deferred tax liabilities	18	117,291	117,569
		715,317	725,347
Equity:
Share capital	22	874,888	946,910
Convertible debentures – equity component	20	9,116	9,116
Contributed surplus		36,577	16,860
Deficit		(24,163)	(54,965)
		896,418	917,921
Total Liabilities and Equity		\$ 1,717,936	\$ 1,749,292

The notes which begin on page 98 are an integral part of these consolidated financial statements.

Approved by the Board of Directors on February 10, 2021, after review by the Audit Committee.

Murray K. Mullen, Director Philip J. Scherman, Director

"Signed: Murray K. Mullen" "Signed: Philip J. Scherman"

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Years ended December 31
(thousands, except per share amounts)	Note	2020	2019
Revenue	24	\$ 1,164,331	\$ 1,278,502
Direct operating expenses		796,541	909,911
Selling and administrative expenses		150,216	167,679
Operating income before depreciation and amortization		217,574	200,912
Depreciation of property, plant and equipment	9	72,417	80,476
Depreciation of right-of-use assets	10	11,560	11,710
Amortization of intangible assets	12	17,613	19,305
Finance costs	26	28,464	23,625
Net foreign exchange gain	14	(2,393)	(14,140)
Other (income) expense	28	3,779	(201)
Income before income taxes		86,134	80,137
Income tax expense	18	22,155	7,896
Net income and total comprehensive income		\$ 63,979	\$ 72,241
Earnings per share:	23
Basic		\$ 0.64	\$ 0.69
Diluted		\$ 0.64	\$ 0.69
Weighted average number of Common Shares outstanding:	23
Basic		100,624	104,825
Diluted		100,624	104,825

The notes which begin on page 98 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(thousands)	Note	Share capital	Convertible debentures – equity component	Contributed surplus	Deficit	Total
Balance at January 1, 2020		\$ 946,910	\$ 9,116	\$ 16,860	\$ (54,965)	\$ 917,921
Total comprehensive income for the period		—	—	—	63,979	63,979
Common Shares repurchased	22	(72,022)	—	18,613	—	(53,409)
Stock-based compensation expense		—	—	1,104	—	1,104
Dividends declared to common shareholders	17	—	—	—	(33,177)	(33,177)
Balance at December 31, 2020		\$ 874,888	\$ 9,116	\$ 36,577	\$ (24,163)	\$ 896,418

(thousands)	Note	Share capital	Convertible debentures – equity component	Contributed surplus	Deficit	Total
Balance at January 1, 2019		\$ 946,910	\$ —	\$ 15,477	\$ (64,311)	\$ 898,076
Total comprehensive income for the period		—	—	—	72,241	72,241
Convertible debentures issued	20	—	12,403	—	—	12,403
Deferred tax on convertible debentures		—	(3,287)	—	—	(3,287)
Stock-based compensation expense		—	—	1,383	—	1,383
Dividends declared to common shareholders	17	—	—	—	(62,895)	(62,895)
Balance at December 31, 2019		\$ 946,910	\$ 9,116	\$ 16,860	\$ (54,965)	\$ 917,921

The notes which begin on page 98 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

	Years ended December 31
(thousands)	Note		2020		2019
Cash provided by (used in):
Cash flows from operating activities:
Net income		\$	63,979	\$	72,241
Adjustments for:
Depreciation and amortization			101,590		111,491
Finance costs	26		28,464		23,625
Stock-based compensation expense			1,104		1,383
Foreign exchange loss on cross-currency swaps	14		3,469		836
Foreign exchange gain			(4,916)		(14,396)
Change in fair value of investments	28		975		(15)
Loss on sale of property, plant and equipment	28		5,023		2,667
Gain on fair value of equity investment	28		(432)		—
Earnings from equity investments	28		(1,813)		(2,870)
Accretion on asset retirement obligations	28		26		17
Income tax expense	18		22,155		7,896
Cash flows from operating activities before non-cash working capital items			219,624		202,875
Changes in non-cash working capital items from operating activities	33		22,582		(466)
Cash generated from operating activities			242,206		202,409
Income tax paid			(17,385)		(31,756)
Net cash from operating activities			224,821		170,653
Cash flows from financing activities:
Net proceeds of convertible debentures	20		—		119,797
Repurchase of Common Shares	22		(53,409)		—
Cash dividends paid to common shareholders			(35,512)		(62,895)
Interest paid			(27,399)		(23,962)
Repayment of long-term debt and loans	21		(5)		(5,767)
Repayment of bank credit facility			—		(30,000)
Repayment of lease liabilities	19		(12,525)		(12,133)
Changes in non-cash working capital items from financing activities	33		(44)		(112)
Net cash used in financing activities			(128,894)		(15,072)
Cash flows from investing activities:
Acquisitions net of cash (bank indebtedness) acquired	5		(20,216)		(15,699)
Purchase of intangible assets			(224)		(360)
Purchase of property, plant and equipment			(64,946)		(75,022)
Proceeds on sale of property, plant and equipment			14,519		6,548
Proceeds on sale of investments			—		663
Interest received			1,422		2,377
Net investment in finance leases			1,459		1,238
Other assets			(13)		315
Changes in non-cash working capital items from investing activities	33		(665)		46
Net cash used in investing activities			(68,664)		(79,894)
Change in cash and cash equivalents			27,263		75,687
Cash and cash equivalents at January 1			79,023		3,916
Effect of exchange rate fluctuations on cash held			(946)		(580)
Cash and cash equivalents at December 31	6	\$	105,340	\$	79,023

The notes which begin on page 98 are an integral part of these consolidated financial statements.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

Years ended December 31, 2020 and 2019

(Tabular amounts in thousands, except share and per share amounts)

1. Reporting Entity

Mullen Group Ltd. ("Mullen Group" and/or the "Corporation") was incorporated pursuant to the laws of the Province of Alberta and is a publicly-traded company listed on the Toronto Stock Exchange ("TSX") under the symbol 'MTL'. The Corporation maintains its registered office in Okotoks, Alberta, Canada. The business of Mullen Group is operated through wholly-owned (either directly or indirectly) subsidiaries and limited partnerships ("Business Units"). The Corporation is recognized as one of the leading suppliers of trucking and logistics services in Canada providing a wide range of service offerings including less-than-truckload, truckload, warehousing, logistics, transload, oversized and specialized hauling transportation. In addition, Mullen Group provides a diverse set of specialized services related to the energy, mining, forestry and construction industries in western Canada, including water management, fluid hauling and environmental reclamation. These consolidated financial statements ("Annual Financial Statements") include the accounts of the Corporation, its subsidiaries and its limited partnerships.

2. Basis of Presentation

(a) Statement of Compliance

These Annual Financial Statements have been prepared in accordance to and comply with International Financial Reporting Standards ("IFRS"), which include the International Accounting Standards ("IAS") and the interpretations developed by the International Financial Reporting Interpretations Committee ("IFRIC"), as issued by the International Accounting Standards Board ("IASB").

(b) Basis of Measurement

These Annual Financial Statements have been prepared on the historical cost basis except for investments (excluding investments accounted for by the equity method), and derivative financial instruments ("Derivatives"), which are measured at fair value through profit or loss ("FVTPL").

(c) Functional and Presentation Currency

These Annual Financial Statements are presented in Canadian dollars, which is the functional currency of the Corporation and each of its Business Units. All financial information presented in Canadian dollars has been rounded to the nearest thousand except for per share amounts.

(d) Use of Estimates and Judgements

The preparation of these Annual Financial Statements in accordance with IFRS requires the use of certain critical accounting estimates, judgements and assumptions. The carrying amount of assets, liabilities, accruals, provisions, other financial obligations, as well as the determination of fair values, contingent liabilities, reported income and expense in these Annual Financial Statements depends on the use of estimates, judgements and assumptions. In the process of applying the Corporation's accounting policies management takes into consideration existing circumstances and estimates at the date of these Annual Financial Statements, which affects the reported amounts of income and expenses during the reporting periods. Given the uncertainty inherent in determining these factors, actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Assessments about whether line items are sufficiently material to warrant separate presentation in the primary financial statements and, if not, whether they are sufficiently material to warrant separate presentation in the notes to the financial statements.

This section contains the Corporation's estimates and judgements that relate to the financial statements as a whole. When an estimate, judgement or accounting policy is acceptable to a specific note to the financial statements, the estimate, judgement or policy and related disclosures are provided within that note as identified in the table below:

Note	Topic	Page	Note	Topic	Page
6	Cash and cash equivalents	106	16	Accounts payable and accrued liabilities	23
7	Trade and other receivables	106	18	Income taxes	114
8	Inventory	107	19	Lease Liabilities	117
9	Property, plant and equipment	107	20	Convertible Unsecured Subordinated Debentures	118
11	Goodwill	109	23	Earnings per share	121
12	Intangible assets	112	27	Share-based compensation plans	124
14	Derivative Financial Instruments	112	34	Operating segments	131

Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant items impacted by such estimates and judgements are outlined below. Readers are cautioned that the foregoing list is not exhaustive and other items may also be affected by estimates and judgements.

Judgements

(i) Impairment Tests

Mullen Group assesses, at the end of each reporting period, whether there is an indication that an asset or cash generating unit ("CGU") may be impaired. If any indication of impairment exists, Mullen Group determines the recoverable amount of the asset or CGU. External triggering events include, for example, changes in customer or industry dynamics, drilling and other technologies and economic declines, including the decline in the value of Mullen Group's Common Share price. Internal triggering events for impairment include, for example, lower profitability or planned restructuring.

Estimates

(i) Acquisitions

The acquired assets, assumed liabilities (other than deferred taxes) and contingent consideration are recognized at fair value on the date Mullen Group effectively obtains control. The measurement of the assets and liabilities acquired in each business combination is based on the information available on the acquisition date. The estimate of fair value of the acquired intangible assets (including goodwill), property, plant and equipment and other assets and the liabilities assumed at the date of acquisition as well as the useful lives of the acquired intangible assets and property, plant and equipment is based on assumptions. The measurement is largely based on projected cash flows, discount rates and market conditions at the date of acquisition. Contingent consideration is based on the likelihood of various outcomes of specified future events. For more information, refer to Note 5.

(ii) Impairment Tests

Mullen Group's impairment tests compare the carrying amount of the asset or CGU to its recoverable amount. The recoverable amount is the higher of fair value less costs of disposal ("FVLCD") and value in use ("VIU"). FVLCD is the amount obtainable from the sale of an asset or CGU in an arms-length transaction between knowledgeable, willing parties, less the costs of disposal. VIU is the present value of estimated future cash flows expected to arise from the continuing use of an asset or CGU and from the disposal at the end of its useful life. The determination of VIU requires the estimation and discounting of cash flows which involves key assumptions that consider all information available on the respective testing date. Management uses estimates, considering past and actual performance as well as expected developments in the respective markets and in the overall macro-economic environment and economic trends to model and discount future cash flows. For more information, refer to Notes 11 and 12.

3. Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these Annual Financial Statements.

(a) Basis of Consolidation

These Annual Financial Statements include the accounts of Mullen Group, its subsidiaries and its limited partnerships. The financial statements of such subsidiaries and limited partnerships controlled by Mullen Group are included in these Annual Financial Statements from the date that control commenced until the date that control ceases. Control is achieved when the Corporation is exposed to, or has rights to, variable returns from its subsidiaries and limited partnerships and has the ability to affect those returns through its power to direct their activities. The accounting policies of subsidiaries and limited partnerships are the same as those of the Corporation. For the year ended December 31, 2020, the scope of consolidation for these Annual Financial Statements encompassed 84 entities, of which seven were a first time consolidation. The first time consolidations were a result of the acquisitions of Pacific Coast Express Limited ("PCX") and International Warehousing & Distribution Inc. ("IWD"). During 2020 eight entities ceased existence due to internal corporate reorganizations.

On January 1, 2020, Mullen Group commenced reporting financial results in three new operating segments including the restatement of segmented financial information for the prior year. These three operating segments have been differentiated by the sector of the economy in which the businesses operate, the type of services provided, the equipment requirements and the customer needs. The Less-Than-Truckload segment provides final or last mile delivery of general freight consisting of smaller shipments, packages and parcels. Through an extensive terminal network the pickup, handling and delivery of a wide range of freight including ambient, temperature controlled and consumer goods is coordinated from regional hubs located in Ontario and western Canada. The Logistics & Warehousing segment provides shippers throughout North America with a wide range of trucking and logistics service offerings including full truckload, specialized transportation, warehousing, fulfillment centres that handle e-commerce transactions, and transload facilities designed for intermodal and bulk shipments. The Specialized & Industrial Services segment provides specialized equipment and services to the oil and natural gas, environmental, construction, pipeline, utility, telecom and civil industries.

(b) Changes in Accounting Policies

In 2020, the Corporation adopted the following accounting policy as a result of qualifying for the Canada Emergency Wage Subsidy ("CEWS") program as enacted on April 11, 2020 by the federal Government of Canada.

Government Subsidies

Policy: Government subsidies are recognized when there is reasonable assurance that the subsidy will be received and that the Corporation will comply with all relevant conditions. Government subsidies related to current expenses are recorded as a reduction of the related expenses.

Supporting information: In 2020, the Corporation qualified for the CEWS program and recognized \$26.5 million as a reduction to wage expense. In 2020, \$20.1 million and \$6.4 million was allocated to direct operating expenses and administrative expenses, respectively.

IFRS 16 – Leases

Effective January 1, 2019, Mullen Group adopted IFRS 16 – Leases using the modified retrospective method. Under the modified retrospective method, comparative financial information is not restated and continues to be reported under the accounting standards in effect for those periods. The modified retrospective method does not require restatement of prior period financial information as it recognizes the cumulative effect as an adjustment to opening retained earnings (deficit).

IFRS 3 – Business Combinations

IFRS 3 – Business Combinations has been amended to revise the definition of a business to include an input and a substantive process that together significantly contribute to the ability to create outputs. The amendment to IFRS 3 is effective for the years beginning on or after January 1, 2020. This amendment is not expected to have a material impact on the Corporation's consolidated financial statements.

IFRIC 23 – Uncertainty over Income Tax Treatments

IFRIC 23 – Uncertainty over Income Tax Treatments specifies how to reflect uncertainty in accounting for income taxes and is mandatory for the accounting period beginning on January 1, 2019. There was no impact on the measurement of taxes as a consequence of this adoption.

Annual Improvements to IFRS Standards

On December 12, 2017, the IASB issued narrow-scope amendments to three standards as part of its annual improvements process. The amendments are effective on or after January 1, 2019. Each of the amendments has its own specific transition requirements. Amendments were made to the following standards:

• IFRS 3 Business Combinations and IFRS 11 Joint Arrangements to clarify how an entity accounts for increasing its interest in a joint operation that meets the definition of a business;
• IAS 12 Income Taxes to clarify that all income tax consequences of dividends are recognized consistently with the transactions that generated the distributable profits; and
• IAS 23 Borrowing Costs to clarify that specific borrowings i.e. funds borrowed specifically to finance the construction of a qualifying asset – should be transferred to the general borrowings pool once the construction of the qualifying asset has been completed. They also clarify that an entity includes funds borrowed specifically to obtain an asset other than a qualifying asset as part of general borrowings.

Mullen Group has adopted these amendments in its financial statements effective January 1, 2019. The extent of the impact of adoption of the amendments is not material.

(c) New Standards and Interpretations not yet adopted

Mullen Group has reviewed new and revised standards and interpretations that have been approved by the IASB. There have been no new standards or interpretations issued during 2020 that significantly impact Mullen Group.

(d) Investment Properties

Investment properties consist of real property that are held to earn rental income and are recorded at cost less accumulated depreciation. Cost includes expenditures that are directly attributable to the acquisition or the development of real property held to earn rental income. Subsequent to initial measurement, investment properties are measured using the cost model and are recorded at cost less accumulated depreciation. Depreciation is recorded annually on the buildings included within real property held to earn rental income on the declining balance basis at a rate of 2.5 percent per annum.

(e) Foreign Currency

Transactions in foreign currencies are translated to Canadian dollars, Mullen Group's functional currency, at the exchange rate on the date of the transactions. At each reporting date, monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

(f) Impairment of Assets

Assets are assessed at the end of each reporting period to determine if any indication of impairment exists. If any such indication exists, Mullen Group estimates the recoverable amount of the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash flows of other assets. Recoverability is measured by comparing the carrying amount of the asset or the CGU to which the asset belongs to the higher of its FVLCD and its VIU. VIU is calculated using the estimated discounted future cash flows expected to be generated by the asset or its CGU. Mullen Group estimates FVLCD based upon current market prices for similar assets. If the carrying amount of the asset, or its respective CGU, exceeds its estimated recoverable amount, the difference is recognized as an impairment charge.

Impairment losses are recognized in net income. An impairment loss in respect of goodwill is irreversible. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amounts of any goodwill allocated to the CGU and then to reduce the carrying amount of other assets in the CGU on a pro rata basis.

Mullen Group's corporate assets, which do not generate separate cash inflows, are allocated to the CGUs on a reasonable basis for impairment testing purposes.

• (g) Financial Instruments
• (i) Mullen Group has adopted IFRS 9 (2010) Financial Instruments as it relates to classification and measurement of financial assets and financial liabilities. Mullen Group adopted IFRS 9 (2010) as it is consistent with Mullen Group's objective and approach to managing its financial assets and financial liabilities.
• (ii) Non-Derivative Financial Assets

Financial Assets	Initial Measurement	Subsequent Measurement
Cash and cash equivalents	Fair value	Amortized cost
Trade and other receivables	Fair value	Amortized cost
Investments	Fair value	FVTPL
Investments – equity method	Fair value	Equity method
Other assets	Fair value	Amortized cost

Cash and cash equivalents are recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition these financial assets are measured at amortized cost using the effective interest method.

Mullen Group initially recognizes trade and other receivables and other assets on the date that they originate. Impairment of trade and other receivables is recognized in selling and administrative expenses. If in a subsequent period the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss, or a portion of such is reversed. The amount of the impairment loss reversed may not exceed the original impairment amount.

Mullen Group initially measures investments at fair value. Subsequent to initial recognition these financial assets are measured at FVTPL at the end of each reporting period. The purchase and sale of investments are recognized at the trade date of such transaction. When control of a Business Unit is lost, any retained interest is re-measured to its fair value with any resulting gain or loss being recognized within the statement of comprehensive income. As such, a gain or loss is recognized on the portion retained in addition to the gain or loss on the portion no longer owned.

Mullen Group initially recognizes equity investments at fair value. Subsequent to initial recognition these financial assets are measured using the equity method. Mullen Group uses the equity method to account for investments in which it has significant influence or joint control. Under the equity method, Mullen Group recognizes its share of profits or losses of the investee within the statement of comprehensive income. Dividends received from equity investments are recognized as a reduction in the carrying amount of the investment.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, Mullen Group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Mullen Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by Mullen Group is recognized as a separate asset or liability.

(iii) Non-Derivative Financial Liabilities

Financial Liabilities	Initial Measurement	Subsequent Measurement
Accounts payable and accrued liabilities(1)	Fair value	Amortized cost
Dividends payable	Fair value	Amortized cost
Long-term debt	Fair value	Amortized cost
Convertible debentures – debt component	Fair value	Amortized cost

(1) Includes \$0.2 million of contingent consideration which is subsequently measured at fair value.

Financial liabilities are recognized initially on the trade date at which Mullen Group becomes a party to the contractual provisions of the instrument. Financial liabilities that are not designated at FVTPL are initially measured at fair value plus or minus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, Mullen Group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Mullen Group derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire.

Accounts payable and accrued liabilities and dividends payable are recognized initially at fair value and are subsequently measured at amortized cost using the effective interest method.

Mullen Group initially recognizes debt securities issued and subordinated liabilities on the date that they originate. Mullen Group's longterm debt is comprised of a series of unsecured debt as follows: U.S. \$117.0 million of Series G Notes, U.S. \$112.0 million of Series H Notes, CDN. \$30.0 million of Series I Notes, CDN. \$3.0 million of Series J Notes, CDN. \$58.0 million of Series K Notes and CDN. \$80.0 million of Series L Notes (collectively, the "Private Placement Debt").

In June 2019, Mullen Group issued an aggregate principal amount of \$125.0 million of convertible unsecured subordinated debentures (the "Debentures"). The component parts of the Debentures issued by the Corporation were classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. At the date of issue, the fair value of the debt component was estimated using the prevailing market interest rate for similar non-convertible instruments. This amount was recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date.

The fair value of the conversion option (labelled Convertible debentures – equity component) was determined at issue date by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This conversion option is recognized net of income tax effects as equity and is not subsequently re-measured. In addition, the conversion option remains in equity until the conversion option is exercised, in which case, the balance recognized in equity is transferred to share capital. No gain or loss is recognized in the statement of comprehensive income upon conversion or expiration of the conversion option. As such, a proportionate amount of any unamortized debt issuance costs and accretion related to the Debentures converted into Common Shares is transferred to share capital on the conversion date.

(iv) Derivative Financial Instruments

Derivatives consist of financial contracts that derive their value from underlying changes in foreign exchange rates, interest rates, credit spreads or other financial measures. Mullen Group uses Derivatives such as Cross-Currency Swaps (as hereafter defined on page 25) as part of its foreign exchange risk management strategy. Derivatives are measured initially at fair value. Subsequent to initial recognition, Derivatives are measured at FVTPL and are recorded in the statement of comprehensive income. Mullen Group has not designated any Derivatives as hedges for accounting purposes.

(v) Asset Retirement Obligations

Asset retirement obligations are measured at the present value of the expenditures expected to be incurred to remediate, reclaim and abandon the Corporation's disposal wells and related facilities in future periods. The Corporation uses an estimated inflation rate and a risk-free interest rate in the measurement of the present value of its asset retirement obligations. The associated asset retirement cost is capitalized within property, plant and equipment and is amortized over its estimated useful life. Any revisions to the estimated timing, amount of cash flows, inflation rate or risk-free interest rate are recognized as a change in the asset retirement obligation and the asset retirement cost. Accretion expense is recognized in the consolidated statement of comprehensive income within other (income) expense. The estimated future costs of the Corporation's asset retirement obligations are reviewed and adjusted as required at the end of each reporting period.

(vi) Equity

Common Shares are presented in share capital within equity. Incremental costs directly attributable to the issue of Common Shares and share options are recognized as a deduction from share capital, net of any tax effects. When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs net of any tax effects, is recognized as a deduction from share capital. When Common Shares are repurchased and cancelled, the stated value is deducted from share capital and the resulting surplus or deficit on the transaction is recorded against contributed surplus or retained earnings within equity.

(h) Provisions

A provision is recognized in the financial statements when Mullen Group has an obligation, whether existing or potential, as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the obligation is determined to exist, then the estimated amount of the provision is determined by discounting the expected future cash outflows.

(i) Finance costs

Finance costs encompass interest expense on financial liabilities and accretion expense on debt and are recognized as an expense in the period in which they are incurred. Finance costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that purchase.

(j) Employee Benefits

(i) Short-Term Employee Benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under Mullen Group's profit share plans when a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be reliably estimated.

(k) Acquisitions

Acquisitions of businesses are accounted for using the acquisition method. Acquired assets and assumed liabilities are recognized at their fair values at the acquisition date. For those acquisitions that include a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and subsequent changes in such fair value amounts are recognized in net income. Acquisition-related costs are recognized in net income as incurred.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, Mullen Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted retrospectively during the measurement period to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date.

4. Determination of Fair Values

A number of Mullen Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in Note 2 and in notes specific to that asset or liability.

Financial instruments measured at fair value on the statement of financial position require classification into one of the following levels of the fair value hierarchy:

• Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.
• Level 3 Inputs for the asset or liability that are not based on observable market data.

The fair value hierarchy level at which a fair value measurement is categorized is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

(a) Trade and Other Receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes.

(b) Property, Plant and Equipment

The fair value of property, plant and equipment recognized as a result of a business combination is based on fair values at date of acquisition. The fair value of items of property, plant and equipment is based on market or cost approaches using quoted market prices for similar items when available and replacement cost when appropriate.

(c) Intangible Assets

The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows.

The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.

(d) Investments

The fair value of financial assets designated as measured at fair value, is determined by reference to their quoted closing price at the reporting date. Other than investments accounted for by the equity method, the fair value of all of Mullen Group's investments were determined using Level 1 of the fair value hierarchy.

(e) Derivative Financial Instruments

The fair value of Derivatives is determined using Level 2 of the fair value hierarchy. Level 2 fair values are determined by referencing observable market data, including future foreign currency curves, interest rates, credit spreads and other financial measures. Transaction costs are recognized in net income as incurred.

(f) Accounts Payable and Accrued Liabilities

The fair value of accounts payable and accrued liabilities is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes.

(g) Non-Derivative Financial Liabilities

Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes.

(h) Private Placement Debt

The fair value of Private Placement Debt is determined using Level 2 of the fair value hierarchy. Level 2 values are determined by referencing observable market data, including changes to interest rates and foreign exchange fluctuations.

(i) Convertible debentures – debt component

The fair value of convertible debentures – debt component is determined using Level 1 of the fair value hierarchy. Level 1 values are determined using quoted prices in active markets.

Fair Values Versus Carrying Amounts

The following tables compare the fair value of financial assets and financial liabilities to its corresponding carrying amount as presented in the consolidated statement of financial position:

December 31, 2020
Financial Instrument	Carrying Amount	Fair Value
Cash and cash equivalents	\$ 105,340	\$ 105,340
Trade and other receivables	192,453	192,453
Investments (excluding investments accounted for by using the equity method)	1,179	1,179
Other assets	1,400	1,400
Total financial assets	\$ 300,372	\$ 300,372
Bank indebtedness	\$ —	\$ —
Accounts payable and accrued liabilities	88,153	88,153
Dividends payable	2,906	2,906
Private Placement Debt	461,713	462,755
Convertible debentures - debt component	111,111	117,974
Total financial liabilities	\$ 663,883	\$ 671,788
December 31, 2019
Financial Instrument	Carrying Amount	Fair Value
Cash and cash equivalents	\$ 79,023	\$ 79,023
Trade and other receivables	211,209	211,209
Investments (excluding investments accounted for by using the equity method)	2,154	2,154
Other assets	3,459	3,459
Total financial assets	\$ 295,845	\$ 295,845
Bank indebtedness	\$ —	\$ —
Accounts payable and accrued liabilities	90,028	90,028
Dividends payable	5,241	5,241
Private Placement Debt	467,392	408,836
Convertible debentures – debt component	108,764	112,240
Total financial liabilities	\$ 671,425	\$ 616,345

5. Acquisitions

2020 Acquisitions

Pacific Coast Express Limited – On August 1, 2018, Mullen Group acquired 40.0 percent of the issued and outstanding shares of PCX for \$2.0 million. Mullen Group used the equity method to account for this investment and recognized \$1.6 million of earnings from August 1, 2018 until September 1, 2020. On September 1, 2020, Mullen Group acquired all of the remaining issued and outstanding shares of PCX including two of PCX's operating facilities, one in Calgary, Alberta and one in Winnipeg, Manitoba for cash consideration of \$14.4 million. Mullen Group recorded \$14.4 million of cash used to acquire PCX in its consolidated statement of cash flows, which consists of \$14.2 million of cash consideration paid on closing and \$0.2 million of bank indebtedness acquired. The fair value of PCX was \$18.4 million on the date control was obtained resulting in a \$0.4 million gain on this equity investment being recognized within other (income) expense on the consolidated statement of comprehensive income. PCX is based out of the Lower Mainland of British Columbia and provides expedited handling of international less-than-truckload ("LTL") and truckload shipments to and from western Canada. Mullen Group acquired PCX as part of its strategy to invest in the transportation sector in western Canada. The financial results of PCX's operations are included in the Less-Than-Truckload segment.

International Warehousing & Distribution Inc. – In October 2020, Mullen Group announced an agreement to acquire all of the issued and outstanding shares of IWD for total cash consideration of \$5.7 million. IWD is based out of Mississauga, Ontario and provides sufferance warehousing and distribution services in Ontario. Mullen Group acquired IWD as part of its strategy to invest in the warehousing and transportation sector in eastern Canada. The acquisition of IWD expands our service offering to the greater Toronto, Ontario market. The financial results of IWD's operations are included in the Logistics & Warehousing segment.

2019 Acquisitions

Argus Carriers Ltd. and Inter-Urban Delivery Service Ltd. – On July 1, 2019, Mullen Group acquired all of the issued and outstanding shares of Argus Carriers Ltd. ("Argus") and Inter-Urban Delivery Service Ltd. ("Inter-Urban") for total cash consideration of \$20.0 million. Mullen Group recorded \$14.2 million of cash used to acquire all of the issued and outstanding shares of Argus and Inter-Urban on its consolidated statement of cash flows, which consists of \$20.0 million of total consideration less \$5.8 million allocated to the repayment of shareholder loans. Both Argus and Inter-Urban provide transportation and logistics services in the Lower Mainland of British Columbia. Mullen Group acquired Argus and Inter-Urban as part of its strategy to invest in transportation and logistics companies that have a strong regional LTL presence centrally located to serve consumers in large urban centres. Argus and Inter-Urban's financial results were included in the Less-Than-Truckload segment.

Jen Express Inc. – On May 1, 2019, Mullen Group acquired the business and assets of Jen Express Inc. ("Jen Express") for cash consideration of \$1.5 million. Included in this amount is \$0.3 million of contingent consideration. Pursuant to the purchase and sale agreement, the vendor may receive cash consideration of up to \$0.3 million for achieving certain financial targets over the two year period ending May 1, 2021. Mullen Group has estimated the fair value of this contingent consideration to be \$0.3 million. In 2020, Jen Express achieved certain financial targets and the vendor received \$0.1 million of contingent consideration. The vendor may receive the remaining \$0.2 million of contingent consideration in 2021 if certain financial targets are met. The funds to settle this liability have been set aside in an escrow account, which have been presented within cash and cash equivalents. Located in Stettler, Alberta, Jen Express offers LTL services and has been integrated into the operations of Hi-Way 9 Express Ltd., whose financial results were included in the Less-Than-Truckload segment.

These acquisitions have been accounted for by the acquisition method, and results of operations have been included in these Annual Financial Statements from the dates of acquisition. The goodwill acquired in these acquisitions primarily relates to the assembled workforce and the synergies from the integration of the acquired businesses.

	PCX	IWD	2020	2019
Assets:
Non-cash working capital items	\$ 1,641	\$ 411	\$ 2,052	\$ 772
Property, plant and equipment	11,111	229	11,340	3,663
Right-of-use assets	1,544	443	1,987	2,531
Intangible assets	10,175	4,625	14,800	17,131
Goodwill (not deductible for tax purposes)	1,048	1,585	2,633	3,430
Other assets	—	19	19	—
	25,519	7,312	32,831	27,527
Assumed liabilities:
Lease liabilities	815	282	1,097	2,531
Long-term debt(1)	3,200	20	3,220	—
Due to shareholder	—	—	—	5,767
Deferred income taxes	3,029	1,269	4,298	3,530
	7,044	1,571	8,615	11,828
Net assets before cash and cash equivalents	18,475	5,741	24,216	15,699
Cash and cash equivalents (bank indebtedness)	(179)	289	110	(95)
Net assets	18,296	6,030	24,326	15,604
Consideration:
Cash	14,296	6,030	20,326	15,304
Fair value of equity investment	4,000	—	4,000	—
Contingent consideration	—	—	—	300
	\$ 18,296	\$ 6,030	\$ 24,326	\$ 15,604

(1) Long-term debt consisted of \$3.2 million (2019 – nil) of a debenture owing to the Corporation from PCX and \$20,000 (2019 – nil) of debt assumed within IWD.

6. Cash and Cash Equivalents

Policy: Cash and cash equivalents are comprised of cash and highly liquid short-term investments originally maturing within three months or less, net of bank indebtedness used for operational purposes. Bank indebtedness is repayable on demand and forms an integral part of the Corporation's cash management and is therefore included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Supporting information:

	December 31	December 31
	2020	2019
Cash(1)	\$ 105,340	\$ 79,023
Bank indebtedness	—	—
Cash and cash equivalents (bank indebtedness)	\$ 105,340	\$ 79,023

(1) Includes \$0.4 million (2019 – \$0.8 million) of cash held in escrow. For more information, refer to Note 5.

Cash and cash equivalents are comprised of cash and bank indebtedness held at Canadian financial institutions that are rated AA- and A-1 S&P Credit Rating as at December 31, 2020. Mullen Group has a \$150.0 million revolving demand unsecured credit facility (the "Bank Credit Facility"). As at December 31, 2020, there were no amounts drawn on this facility.

7. Trade and Other Receivables

Policy: The Corporation applies an expected credit loss approach in determining provisions for financial assets (other than equity instruments) carried at amortized cost or fair value through net income and total comprehensive income. The approach that the Corporation has taken for trade receivables is a provision matrix approach whereby lifetime expected credit losses are recognized based on aging characterization and credit worthiness of customers. Specific provisions may be used where there is information that a specific customer's expected credit losses has increased.

Estimates: The Corporation calculates the expected credit losses on accounts receivable using a provision matrix which is based on the Corporation's historical credit loss experience for accounts receivable to estimate the lifetime expected credit losses. The provision matrix specifies fixed provision rates depending on the number of days that a trade receivable is past due.

Supporting information:

	December 31		December 31
	2020		2019
Trade receivables	\$ 171,221	\$	182,023
Other receivables(1)	19,450		26,907
Net investment in finance leases(2)	1,085		788
Contract assets	697		1,491
	\$ 192,453	\$	211,209

(1) Includes \$2.9 million (2019 – \$11.2 million) of amounts due from related parties. Mullen Group has entered into a \$2.7 million (2019 – \$8.0 million) debenture agreement with Thrive (as hereafter defined on page 112). At December 31, 2020, there was \$2.7 million (2019 – \$7.8 million) drawn on this debenture. The debenture with Thrive matures in 2021 and has therefore been classified as a current asset. In 2019, Mullen Group had a \$3.2 million debenture agreement with PCX. This debenture is now eliminated upon consolidation after the Corporation obtained control of PCX in 2020. For more information, refer to Note 5.

(2) Net investment in finance leases includes amounts owing within 12 months or less and mainly consisted of the net investment in subleases on real property where the Business Unit has entered into the head lease.

A contract asset is recognition of Mullen Group's right to consideration in exchange for goods or services we have transferred to a customer that is conditional on something other than the passage of time. For Mullen Group, the majority of the contract assets consists of amounts recognized on a transportation contract that has been partially transported but not yet delivered to destination at period end.

The classification between current and non-current assets in respect of trade and other receivables was as follows:

	December 31	December 31
	2020	2019
Current	\$ 192,453	\$ 211,209
Non-current	\$ —	\$ —

The aging of trade receivables and allowance for doubtful accounts was as follows:

	December 31	December 31
	2020	2019
Current 0-30 days	\$ 92,426	\$ 94,931
Past due 31-60 days	50,183	56,728
Past due 61-90 days	18,151	17,689
More than 90 days	16,902	20,485
	177,662	189,833
Allowance for doubtful accounts	(6,441)	(7,810)
Total trade receivables (net of impairment)	\$ 171,221	\$ 182,023

The change in the allowance for doubtful accounts in respect of trade and other receivables during the year was as follows:

	2020	2019
Balance at January 1	\$ 7,810	\$ 5,911
Acquired during the year	14	7
Bad debts recognized	(725)	(1,193)
Allowance for doubtful accounts recorded	1,219	3,641
Allowance for doubtful accounts reversed	(1,877)	(556)
Balance at December 31	\$ 6,441	\$ 7,810

The expected credit loss allowance calculated as at December 31, 2020, was \$6.4 million, which represents a decrease of \$1.4 million as compared to the allowance calculated in the prior year.

8. Inventory

Inventory consists primarily of repair parts, fuel and items for resale.

Policy: Inventory is stated at the lower of cost or net realizable value. The cost of inventory is accounted for on a weighted average basis and includes expenditures incurred in acquiring the inventory, and other costs incurred in bringing them to their existing location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated selling expenses.

Supporting information:

	December 31	December 31
	2020	2019
Inventory of repair parts and fuel	\$ 20,205	\$ 24,128
Inventory for resale	9,867	8,887
	\$ 30,072	\$ 33,015

9. Property, Plant and Equipment

Estimates: Depreciation and amortization are calculated using a systematic and rational basis, which are based upon an estimate of each asset's useful life and residual value. The estimated useful life and residual value chosen are Mullen Group's best estimate of such and are based on industry norms, historical experience, market conditions and other estimates that consider the period and distribution of future cash inflows.

Judgements: Mullen Group's depreciation and amortization methods for trucks and trailers as well as other property, plant and equipment and intangible assets are based on management's judgement in selecting methods that most accurately match the pattern of economic benefits consumed by the Corporation from the use of such assets. These judgements are based upon industry norms and Mullen Group's historical experience.

Policy: Property, plant and equipment are recorded at cost less accumulated depreciation. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on qualifying assets.

When the cost of a part of an item of property, plant and equipment is significant in relation to the total cost of an item and the parts have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The costs of day-to-day servicing of property, plant and equipment are recognized in direct operating expenses. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount and are recognized net within other (income) expense. Depreciation of additions and disposals is prorated from the month of purchase or disposal. Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if appropriate. Except for Leasehold improvements, depreciation is recorded annually over the estimated useful lives of the assets on the declining balance basis at the following depreciation rates:

Buildings	2.5 - 8%
Trucks and trailers	10 - 20%
Equipment, satellite communication equipment, furniture and fixtures, automobiles, computer hardware and
systems software ("Miscellaneous Equipment")	20 - 30%

Supporting information:

	Land and buildings	Trucks and trailers	Miscellaneous Equipment	Drilling equipment	Total
Cost
Balance at January 1, 2020	\$ 571,429	\$ 787,854	\$ 280,655	\$ 30,150	\$ 1,670,088
Additions(1)	32,458	17,576	25,413	677	76,124
Disposals	(12,287)	(30,045)	(13,609)	—	(55,941)
Balance at December 31, 2020	591,600	775,385	292,459	30,827	1,690,271
Accumulated Depreciation
Balance at January 1, 2020	76,294	426,100	196,579	16,511	715,484
Depreciation expense	8,430	41,385	21,232	1,370	72,417
Disposals	(2,136)	(24,660)	(9,941)	—	(36,737)
Balance at December 31, 2020	82,588	442,825	207,870	17,881	751,164
Net book value at December 31, 2020	\$ 509,012	\$ 332,560	\$ 84,589	\$ 12,946	\$ 939,107

	Land and buildings	Trucks and trailers	Miscellaneous Equipment	Drilling equipment	Total
Cost
Balance at January 1, 2019	\$ 552,696	\$ 780,052	\$ 269,792	\$ 30,150	\$ 1,632,690
Additions(1)	18,805	39,867	20,643	—	79,315
Disposals	(72)	(32,065)	(9,780)	—	(41,917)
Balance at December 31, 2019	571,429	787,854	280,655	30,150	1,670,088
Accumulated Depreciation
Balance at January 1, 2019	68,449	396,323	187,246	14,989	667,007
Depreciation expense	7,896	54,241	16,817	1,522	80,476
Disposals	(51)	(24,464)	(7,484)	—	(31,999)
Balance at December 31, 2019	76,294	426,100	196,579	16,511	715,484
Net book value at December 31, 2019	\$ 495,135	\$ 361,754	\$ 84,076	\$ 13,639	\$ 954,604

(1) Additions include property, plant, and equipment purchased by way of business acquisitions of \$11.3 million (2019 – \$3.7 million). For more information, refer to Note 5.

At December 31, 2020, land and buildings include \$46.4 million (2019 – \$32.0 million) of investment properties held to earn rental income. The total cost and accumulated depreciation associated with investment properties was \$53.0 million (2019 – \$35.5 million) and \$6.6 million (2019 – \$3.5 million), respectively. Mullen Group generated \$2.5 million of rental income (2019 – \$2.6 million) from investment properties. At December 31, 2020, the fair market value of investment properties was \$70.4 million (2019 – \$55.0 million).

Property, plant and equipment are reviewed for impairment whenever events or conditions indicate that their net carrying amount may not be recoverable. In 2020, the Corporation did not record an impairment loss on property, plant and equipment. During the year ended December 31, 2019, the Corporation recorded an impairment loss of \$7.3 million that was recorded as additional depreciation. This impairment losses related to specialty equipment within the Specialized & Industrial Services segment after an assessment of market conditions for such equipment.

10. Right-of-Use Assets

Policy: As lease liabilities are recognized, there is a corresponding right-of-use asset recorded at the date of which the asset becomes available for use. Right-of-use assets are depreciated over the shorter of the assets useful life and the lease term on a straight line basis. For more information, refer to Note 19.

Supporting information:

	Real Property	Operating Equipment	Total
Cost
Balance at January 1, 2020	\$ 39,126	\$ 8,676	\$ 47,802
Additions	8,034	475	8,509
Subleases(1)	(223)	—	(223)
Disposals	(3,359)	(1,806)	(5,165)
Balance at December 31, 2020	43,578	7,345	50,923
Accumulated Depreciation
Balance at January 1, 2020	8,609	2,394	11,003
Depreciation expense	9,508	2,052	11,560
Disposals	(2,571)	(1,255)	(3,826)
Balance at December 31, 2020	15,546	3,191	18,737
Net book value at December 31, 2020	\$ 28,032	\$ 4,154	\$ 32,186

Real Property Operating Equipment Total Cost Balance at January 1, 2019(1) \$ 39,462 \$ 2,716 \$ 42,178 Additions 5,126 5,980 11,106 Subleases(2) (3,484) (20) (3,504) Disposals(3) (1,978) — (1,978) Balance at December 31, 2019 39,126 8,676 47,802 Accumulated Depreciation Balance at January 1, 2019 — — — Depreciation expense 9,316 2,394 11,710 Disposals (707) — (707) Balance at December 31, 2019 8,609 2,394 11,003 Net book value at December 31, 2019 \$ 30,517 \$ 6,282 \$ 36,799

(1) Includes \$42.2 million of the initial lease liabilities with a corresponding amount recorded in right-of-use assets.

(2) Includes \$3.5 million of net investment in finance leases, which mainly related to subleases on real property.

(3) Includes \$0.9 million of lease inducements on real property.

11. Goodwill

In general terms, goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

Estimates: The recoverability of Goodwill that involves estimating future cash flows involving Mullen Group's best estimate of the set of economic conditions that are expected to exist over the forecast period, considering past and actual performance as well as expected developments in the perspective markets and in the overall macro-economic environment, forecasted changes in drilling activity and the Business Unit's respective markets. The fair value of each CGU was determined using Level 3 of the fair value hierarchy.

Judgements: Estimating future cash flows requires judgement, considering past and actual performance as well as expected developments in the respective markets and in the overall macro-economic environment. In addition, the allocation of shared corporate and administrative assets to our CGU's requires certain judgements. Key assumptions are detailed below.

Policy: Mullen Group measures goodwill as the fair value of the consideration transferred, less the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. Transaction costs, other than those associated with the issue of debt or equity securities, that Mullen Group incurs in connection with a business combination are expensed as incurred.

For the purpose of calculating goodwill, fair values of acquired assets, assumed liabilities and contingent liabilities are determined by reference to market values or by discounting expected future cash flows to present value. This discounting is either performed using market rates or by using risk free interest rates and risk adjusted expected future cash flows.

Goodwill is reviewed for impairment annually at December 31, or more frequently if there are indications that impairment may have occurred. Goodwill impairment is tested at the CGU level and is determined based upon the recoverable amount of each CGU compared to the CGU's respective carrying amount. At Mullen Group, the CGUs consist of each of its Business Units. The recoverable amount is the higher of FVLCD and the VIU. If the impairment loss exceeds the carrying amount of goodwill, the goodwill is written off completely. Any impairment loss left over is allocated to the remaining assets of the CGU. Impairment losses in respect of goodwill are irreversible.

Supporting information:

The changes in the carrying amount of goodwill are shown below:

	2020	2019
Gross amount of goodwill	\$ 1,266,707	\$ 1,263,277
Accumulated impairment	998,000	998,000
Balance at January 1	\$ 268,707	\$ 265,277
Goodwill acquired during the year	2,633	3,430
Impairment of goodwill	—	—
Balance at December 31	\$ 271,340	\$ 268,707

At December 31, 2020, the Less-Than-Truckload segment had a carrying value of \$120.2 million of goodwill in 2020 as compared to \$119.2 million in 2019. This \$1.0 million increase was a result of recognizing goodwill on the PCX acquisition. The Logistics & Warehousing segment had a carrying value of \$71.8 million of goodwill, an increase of \$1.6 million from the \$70.2 million recorded in 2019. This \$1.6 million increase was a result of recognizing goodwill on the IWD acquisition. The Specialized & Industrial Services segment had a carrying value of \$79.3 million of goodwill in 2020 as compared to \$79.3 million in 2019. For more information, refer to Note 5.

The following table summarizes the significant carrying amounts of goodwill:

	December 31	December 31
	2020	2019
Cash Generating Unit
Gardewine Group Limited Partnership	\$ 79,875	\$ 79,875
Kleysen Group Ltd.	34,099	34,099
Hi-Way 9 Express Ltd.	23,902	23,902
Heavy Crude Hauling L.P.	16,989	16,989
Tenold Transportation Ltd.(1)	15,209	15,209
E-Can Oilfield Services L.P.	12,094	12,094
Canadian Dewatering L.P.	11,674	11,674
Other CGUs	77,498	74,865
Total Goodwill	\$ 271,340	\$ 268,707

(1) In 2020, the Corporation reclassified the carrying amount of \$3.6 million relating to the goodwill of Argus, Inter-Urban and Number 8 Freight Ltd. to their respective CGUs from Tenold Transportation Ltd. The comparative amounts in 2019 have been restated to conform with the current year's presentation.

(a) Impairment Testing for Cash Generating Units Containing Goodwill

At December 31, 2020 and 2019 ("Valuation Dates"), Mullen Group performed its annual impairment test for goodwill and concluded that there was no impairment of goodwill in any of its CGUs as the recoverable amount for these CGUs was higher than their respective carrying amount. Recognition of any impairment of goodwill would be recognized as an expense and reduce book equity and net income but it would not impact cash flows.

At March 31, 2020, the carrying amount of Mullen Group's net assets exceeded its market capitalization. One indication that an asset may be impaired occurs when the carrying amount of the net assets of an entity is more than its market capitalization. At March 31, 2020, the Corporation performed an impairment test for goodwill within certain CGUs, including revising revenue projections downwards and increasing the discount rate, and concluded that there was no impairment of goodwill as the recoverable amount for these CGUs was higher than their respective carrying amount.

(b) Recoverable Amount

The recoverable amounts were determined using the VIU approach. The VIU methodology is based on discounted future cash flows. Management believes that the discounted future cash flows method is appropriate as it allows more precise valuation of the specific future cash flows. The recoverable amount was determined using a discounted cash flow approach for all CGUs. The recoverable value was determined by discounting the future cash flows generated from Mullen Group's continuing use of the CGU. The discounted cash flow model employed by the Corporation reflects the specifics of each CGU and its business environment. The model calculates the present value of the estimated future earnings of each CGU.

Estimating future earnings requires judgement, considering past and actual performance as well as expected developments in the respective markets and in the overall macro-economic environment. The calculation of the recoverable amount using the discounted cash flow approach was based on the following key assumptions:

		Discount rate		Terminal value growth rate
	December 31	December 31	December 31	December 31
	2020	2019	2020	2019
Cash Generating Unit
Gardewine Group Limited Partnership	10.5%	10.5%	2.0%	2.0%
Kleysen Group Ltd.	10.5%	10.5%	2.5%	2.5%
Hi-Way 9 Express Ltd.	11.0%	11.0%	2.5%	2.5%
Tenold Transportation Ltd.	11.0%	11.0%	2.5%	—
Heavy Crude Hauling L.P.	12.0%	12.0%	2.0%	2.0%
E-Can Oilfield Services L.P.	12.0%	12.0%	2.0%	2.0%
Canadian Dewatering L.P.	12.0%	12.0%	2.5%	2.5%
Other	11.0% - 12.0%	11.0% - 12.0%	2.0% - 2.5%	2.0% - 2.5%

• (i) Cash flows were projected based on past experience, actual operating results and the one year business plan for the immediate year. Cash flows for a further four year period were extrapolated using constant growth rates of between 1.5 to 2.5 percent with adjustments reflecting an expectation of changes in the general economy, forecasted changes in drilling activity and the Business Unit's respective markets, and represents the Corporation's best estimate of the set of economic conditions that are expected to exist over the forecast period.
• (ii) The terminal value growth rate is based on management's best estimate of the long-term growth rate for its CGUs after the forecast period, considering historic performance and future economic forecasts.
• (iii) Each CGU's discount rate reflects their individual size, risk profile and circumstance and is based on past experience and industry average weighted average cost of capital.

The Corporation believes that the following changes in the key assumptions would result in a recoverable amount equal to the carrying value of the CGU, with any additional change in the assumptions causing goodwill to become impaired.

		Change in discount rate	Change in terminal value growth rate
	December 31	December 31	December 31	December 31
	2020	2019	2020	2019
Cash Generating Unit
Gardewine Group Limited Partnership	4.0%	4.1%	(6.0)%	(6.1)%
Kleysen Group Ltd.	6.3%	6.4%	(10.7)%	(10.3)%
Hi-Way 9 Express Ltd.	9.7%	12.8%	(18.5)%	(29.2)%
Tenold Transportation Ltd.	4.4%	6.5%	(6.9)%	(8.4)%
Heavy Crude Hauling L.P.	1.6%	3.5%	(2.2)%	(5.4)%
E-Can Oilfield Services L.P.	3.2%	3.0%	(4.8)%	(4.4)%
Canadian Dewatering L.P.	9.4%	8.9%	(18.7)%	(17.5)%

12. Intangible Assets

Intangible assets are mainly comprised of customer relationships and non-competition agreements acquired through business combinations. In 2020, Mullen Group acquired \$14.8 million and \$0.2 million of intangible assets by virtue of the PCX and IWD acquisitions, and from purchasing a customer list, respectively. Intangible assets are amortized over their estimated useful lives on a straight line basis over a period of five to ten years.

Policy: Intangible assets acquired as part of acquisitions are capitalized at fair value as determined at the date of acquisition and are subsequently stated at that capitalized cost less accumulated amortization and impairment losses.

Supporting information:

	Opening balance at January 1 2019	Additions (Amortization)	Closing balance at December 31 2019	Additions (Amortization)	Closing balance at December 31 2020
Cost	\$ 289,716	\$ 17,491	\$ 307,207	\$ 15,024	\$ 322,231
Amortization	(239,446)	(19,305)	(258,751)	(17,613)	(276,364)
Carrying amount	\$ 50,270		\$ 48,456		\$ 45,867

13. Investments

December 31
2020		2019
\$ 1,179	\$	2,154
34,582		36,337
\$ 35,761	\$	38,491

(a) Investments

Mullen Group periodically invests in certain private and public corporations. Mullen Group did not purchase any investments in 2020 or 2019. There were no investments sold in 2020 as compared to selling \$0.7 million of investments in 2019.

(b) Investments accounted for by the equity method

In 2018 Mullen Group invested \$2.0 million to acquire a 40.0 percent equity interest in PCX, a regional LTL company operating out of a number of facilities in western Canada. Mullen Group made this equity investment as part of its strategy to invest in the transportation sector in western Canada. The Corporation granted the majority shareholder of PCX an irrevocable option to sell all of the remaining shares of PCX to Mullen Group at a price to be agreed upon by both parties once certain financial targets have been achieved. On September 1, 2020, Mullen Group acquired all of the remaining issued and outstanding shares of PCX. For more information, refer to Note 5. In 2017, Mullen Group invested \$0.2 million to acquire a 30.0 percent equity interest in Thrive Fluid Management Corp., a fluid management company operating in the Grande Prairie, Alberta region. On December 31, 2018, Thrive Fluid Management Corp. changed its name to Thrive Management Group Ltd. ("Thrive"). Mullen Group made this equity investment as part of its strategy to invest in the energy sector. In 2014, Mullen Group acquired a 30.0 percent interest in Kriska Transportation Group Limited ("Kriska Transportation"). Kriska Transportation is a growth oriented transportation and logistics company based in Prescott, Ontario. At December 31, 2020, the Corporation had a carrying value of \$29.9 million (2019 – \$28.6 million) related to its equity investment in Kriska Transportation. Mullen Group uses the equity method to account for investments from the date in which it obtains significant influence. In 2020, the aggregate amount of Mullen Group's share of net income and total comprehensive income from its investments accounted for by the equity method was \$1.8 million (2019 – \$2.9 million). In 2020, revenue and operating income before depreciation and amortization on the Corporation's equity investments was \$253.7 million (2019 – \$275.1 million) and \$47.9 million (2019 – \$42.6 million), respectively. For more information, refer to Note 28.

14. Derivative Financial Instruments

On July 25, 2014, Mullen Group entered into two cross-currency swap contracts with a Canadian bank to swap \$117.0 million U.S. dollars and \$112.0 million U.S. dollars into Canadian dollars (collectively, the "Cross-Currency Swaps") at foreign exchange rates of \$1.1047 and \$1.1148 that mature on October 22, 2024 and October 22, 2026, respectively. These Cross-Currency Swaps hedge the principal amount of the Series G and Series H Notes. At December 31, 2020, the carrying value of these Cross-Currency Swaps was \$37.9 million (2019 – \$41.4 million) and was recorded in the consolidated statement of financial position within derivative financial instruments.

Estimates: Mullen Group utilizes Derivatives such as Cross-Currency Swaps to manage its exposure to foreign currency risks relating to its U.S. dollar debt. The fair value of Derivatives fluctuate depending on the estimate of certain underlying financial measures. The estimated fair value of Derivatives are based on observable market data, including foreign currency curves, interest rates and credit spreads.

Policy: Mullen Group adopted IFRS 9 (2010) – Financial Instruments as it relates to classification and measurement of financial assets and financial liabilities in advance of its effective date. For more information, refer to Note 3(g).

Supporting information:

For the year ended December 31, 2020, Mullen Group recorded a net foreign exchange gain of \$2.4 million (2019 – \$14.1 million). This was due to the impact of the change over the period in the value of the Canadian dollar relative to the U.S. dollar on the Corporation's U.S. dollar debt and from the change in the fair value of its Cross-Currency Swaps as summarized in the table below:

Net Foreign Exchange (Gain) Loss	CDN. \$ Equivalent
	Years ended December 31
		2020		2019
Foreign exchange (gain) loss on U.S. \$ debt	\$	(5,862)	\$	(14,976)
Foreign exchange loss (gain) on Cross-Currency Swaps		3,469		836
Net foreign exchange (gain) loss	\$	(2,393)	\$	(14,140)

For the year ended December 31, 2020, Mullen Group recorded a foreign exchange gain on U.S. dollar debt of \$5.9 million (2019 – \$15.0 million) as summarized in the table below:

Foreign Exchange (Gain) Loss on U.S. \$ Debt	Years ended December 31
		2020		2019
(\$ thousands, except exchange rate amounts)	U.S. \$ Debt	Exchange Rate	CDN. \$ Equivalent	U.S. \$ Debt	Exchange Rate	CDN. \$ Equivalent
Ending – December 31	229,000	1.2732	291,563	229,000	1.2988	297,425
Beginning – January 1	229,000	1.2988	297,425	229,000	1.3642	312,401
Foreign exchange (gain) loss on U.S. \$ debt			(5,862)			(14,976)

For the year ended December 31, 2020, Mullen Group recorded a foreign exchange loss on its Cross-Currency Swaps of \$3.5 million (2019 – \$0.8 million). This was due to the change over the period in the fair value of these Cross-Currency Swaps as summarized in the table below:

Foreign Exchange Loss (Gain) on Cross-Currency Swaps	Years ended December 31
		2020	2019
	U.S. \$ Swaps	CDN. \$ Change in Fair Value of Swaps	U.S. \$ Swaps	CDN. \$ Change in Fair Value of Swaps
Cross-Currency Swap maturing October 22, 2024	117,000	1,916	117,000	1,153
Cross-Currency Swap maturing October 22, 2026	112,000	1,553	112,000	(317)
Foreign exchange loss (gain) on Cross-Currency Swaps		3,469		836

15. Other Assets

	December 31	December 31
	2020	2019
Promissory notes	725	767
Net investment in finance leases(1)	212	2,284
Other	463	408
	\$ 1,400	\$ 3,459

(1) Net investment in finance leases includes amounts owing after 12 months and mainly consists of the net investment in subleases on real property where the Business Unit has entered into the head lease.

16. Accounts Payable and Accrued Liabilities

Policy: Accounts payable and accrued liabilities are obligations to pay for goods or services that have been purchased in the normal course of business and are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Accounts payable and accrued liabilities are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

Supporting information:

	December 31	December 31
	2020	2019
Trade payables	\$ 28,821	\$ 30,322
Amounts due to related parties	38	17
Non-trade payables and accrued liabilities	59,294	59,689
	\$ 88,153	\$ 90,028

17. Dividends Payable

For the year ended December 31, 2020, Mullen Group declared dividends totalling \$0.33 per Common Share (2019 – \$0.60 per Common Share). On February 12, 2020, Mullen Group announced its intention to pay annual dividends of \$0.60 per Common Share (\$0.05 per Common Share on a monthly basis) for 2020. On March 20, 2020, Mullen Group announced the temporary suspension of the monthly dividend of \$0.05 per Common Share for three months, effective April 1, 2020. On July 22, 2020, the Corporation announced that it will resume the monthly dividend by paying \$0.03 per Common Share on a monthly basis. At December 31, 2020, Mullen Group had 96,852,047 Common Shares outstanding and a dividend payable of \$2.9 million (December 31, 2019 – \$5.2 million), which was paid on January 15, 2021. Mullen Group also declared a dividend of \$0.04 per Common Share on January 22, 2021, to the holders of record at the close of business on January 31, 2021.

18. Income Taxes

Estimates: The realization of deferred tax assets depends on the future taxable income of the respective Mullen Group subsidiaries. The continued recognition of deferred tax assets is based on estimates of internal projections of future earnings, tax deductions and anticipated income tax rates.

Policy: Income tax expense for the period consists of current and deferred tax. Tax is recognized in net income, except to the extent that it relates to a business combination or items recognized in other comprehensive income or directly in equity.

Taxable income differs from net income as reported in the consolidated statement of comprehensive income. As a result, current tax is the expected tax due on taxable income less adjustments to prior periods using tax rates enacted, or substantively enacted as at the reporting date in jurisdictions where Mullen Group operates.

In general, deferred income taxes are recognized based on temporary differences arising between the tax value of assets and liabilities and their carrying amounts in the Annual Financial Statements. Deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill and are not accounted for if they arise from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable income. Deferred income taxes are calculated on the basis of the tax laws enacted or substantively enacted as at the reporting date and apply to when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred tax assets are recognized to the extent it is probable that future taxable income will be generated and available to use against the deductible temporary differences, unused tax losses and unused tax credits. Current and deferred income tax assets and liabilities are offset when there is a legally enforceable right to settle on a net basis and when such assets and liabilities relate to income taxes imposed by the same taxation authority.

The provision for income tax expense differs from the amounts that would be obtained by applying the expected Canadian statutory tax rates enacted or substantively enacted as at the respective reporting dates.

Supporting information:

Deferred tax assets totalling \$9.1 million (2019 – \$8.1 million) consist mainly of the temporary differences arising from the purchase of goodwill on asset acquisitions, intangible assets and from loss carry forward balances. Recognized deferred tax assets and liabilities consist of the following:

December 31, 2020	Assets	Liabilities	Net
Property, plant and equipment	\$ 105	\$ (98,923)	\$ (98,818)
Goodwill – asset acquisitions	5,571	(2,068)	3,503
Intangible assets	1,410	(10,157)	(8,747)
Investments	—	(1,944)	(1,944)
Loss carry-forwards	1,884	—	1,884
Financing fees	—	(218)	(218)
Holdbacks and deferred interest	—	(330)	(330)
Debentures	—	(2,250)	(2,250)
Unrealized foreign exchange gain	—	(920)	(920)
Right-of-use assets	102	(481)	(379)
	\$ 9,072	\$ (117,291)	\$ (108,219)

December 31, 2019	Assets	Liabilities	Net
Property, plant and equipment	\$ 149	\$ (100,452)	\$ (100,303)
Goodwill – asset acquisitions	5,891	(2,002)	3,889
Intangible assets	910	(9,763)	(8,853)
Investments	—	(1,852)	(1,852)
Loss carry-forwards	778	—	778
Financing fees	148	—	148
Holdbacks and deferred interest	—	(448)	(448)
Debentures	—	(2,660)	(2,660)
Right-of-use-assets	194	(392)	(198)
	\$ 8,070	\$ (117,569)	\$ (109,499)

The analysis of the components of net deferred tax is as follows:

	Years ended December 31
	2020		2019
Deferred tax to be settled within 12 months	\$ (8,345)	\$	(7,457)
Deferred tax to be settled after more than 12 months	(99,874)		(102,042)
	\$ (108,219)	\$	(109,499)

The following tables summarize the movement of temporary differences during the period:

	Balance January 1 2020	Recognized in net income	Acquired in business combinations	Recognized directly in equity	Balance December 31 2020
Property, plant and equipment	\$ (100,303)	\$ 1,818	\$ (333)	\$ —	\$ (98,818)
Goodwill – asset acquisitions	3,889	(386)	—	—	3,503
Intangible assets	(8,853)	4,071	(3,965)	—	(8,747)
Investments	(1,852)	(92)	—	—	(1,944)
Loss carry-forwards	778	1,106	—	—	1,884
Financing fees	148	(366)	—	—	(218)
Holdbacks and deferred interest	(448)	118	—	—	(330)
Debentures	(2,660)	410	—	—	(2,250)
Unrealized foreign exchange gain	—	(920)	—	—	(920)
Right-of-use assets	(198)	(181)	—	—	(379)
	\$ (109,499)	\$ 5,578	\$ (4,298)	\$ —	\$ (108,219)

	Balance January 1 2019	Recognized in net income	Acquired in business combinations	Recognized directly in equity	Balance December 31 2019
Property, plant and equipment	\$ (109,770)	\$ 9,337	\$ 130	\$ —	\$ (100,303)
Goodwill – asset acquisitions	4,857	(968)	—	—	3,889
Intangible assets	(10,395)	5,203	(3,661)	—	(8,853)
Investments	(933)	(919)	—	—	(1,852)
Loss carry-forwards	844	(66)	—	—	778
Financing fees	649	(501)	—	—	148
Holdbacks and deferred interest	(190)	(258)	—	—	(448)
Debentures	—	627	—	(3,287)	(2,660)
Right-of-use-assets	—	(198)	—	—	(198)
	\$ (114,938)	\$ 12,257	\$ (3,531)	\$ (3,287)	\$ (109,499)

Income tax expense of \$22.1 million (2019 – \$7.9 million) is comprised of current and deferred tax as follows:

	Years ended December 31
	2020		2019
Current	\$ 27,733	\$	20,153
Deferred	(5,578)		(12,257)
	\$ 22,155	\$	7,896

The combined statutory tax rate was approximately 26.0 percent in 2020 (2019 – 27.0 percent). The reconciliation of the effective tax rate is as follows:

	Years ended December 31
		2020		2019
Income before income taxes	\$	86,134	\$	80,137
Combined statutory tax rate		26%		27%
Expected income tax		22,395		21,637
Add (deduct):
Non-deductible (taxable) of net foreign exchange (gain) loss		—		(1,874)
Non-deductible (taxable) of the change in fair value of investments		65		(2)
Stock-based compensation expense		265		367
Decrease in income tax due to changes in income tax rates		(131)		(9,469)
Changes in unrecognized deferred tax asset		—		(1,874)
Other		(439)		(889)
Income tax expense	\$	22,155	\$	7,896

19. Lease Liabilities

Estimates: The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Mullen Group's incremental borrowing rate. Generally, Mullen Group uses its incremental borrowing rate as the discount rate, which is estimated at the inception of the lease. At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at Mullen Group's incremental borrowing rate as at January 1, 2019. Mullen Group's incremental borrowing rate is estimated using prevailing interest rates, market precedents and Mullen Group's credit rating.

Judgements: Mullen Group assesses whether a contract is or contains a lease at inception of the contract. For contracts entered into before January 1, 2019, it was determined whether the arrangement was or contained a lease. This assessment involves the exercise of judgement about whether it depends on a specified asset, whether Mullen Group obtains substantially all the economic benefits from the use of that asset, and whether Mullen Group has the right to direct the use of the asset. Furthermore, Mullen Group assesses and reassess the likelihood of it exercising renewal options.

Policy: Under IFRS 16 – Leases, the Corporation has recognized lease liabilities in relation to leases. Mullen Group assesses whether a contract is or contains a lease at inception of the contract. As lease liabilities are recognized, there is a corresponding right-of-use asset recorded at the date of which the asset becomes available for use. As lease payments are made there is a reduction to the principal portion of the lease liability as well as an amount allocated to finance costs. Finance costs are expensed within the consolidated statement of comprehensive income over the lease term. Right-of-use assets are depreciated over the shorter of the asset's useful life and the lease term on a straight line basis. For more information, refer to Note 10.

The Corporation uses a single discount rate for a portfolio of leases with reasonably similar characteristics. The Corporation is using the following practical expedients permitted under the standard:

• (i) Leases with a remaining lease term of less than twelve months as short-term leases; and
• (ii) Leases of low dollar value are expensed as incurred.

Effective January 1, 2019, Mullen Group adopted IFRS 16 – Leases which resulted in the initial recognition of right-of-use assets and lease liabilities of approximately \$42.2 million.

Supporting information:

	Year ended December 31, 2020
Beginning – January 1, 2020	\$	40,686
Additions		8,509
Disposals		(1,638)
Lease payments		(13,723)
Interest expense		1,198
Ending balance – December 31, 2020		35,032
Less:
Lease liabilities – current portion		11,439
Lease liabilities	\$	23,593

	Year ended December 31, 2019
Beginning – January 1, 2019	\$	42,178
Additions		11,105
Disposals		(464)
Lease payments		(13,512)
Interest expense		1,379
Ending balance – December 31, 2019		40,686
Less:
Lease liabilities – current portion		10,711
Lease liabilities	\$	29,975

The following are the contractual maturities of lease liabilities, including the value of any options to extend a lease where Mullen Group is reasonably certain to do so:

	December 31, 2020
Twelve months or less	\$ 12,385
2022 – 2023	13,645
2024 – 2025	6,441
Thereafter	5,017
Contractual cash flows	\$ 37,488
Carrying amount	\$ 35,032

Mullen Group's lease liabilities mainly relate to real property leases that are utilized by the Business Units within their operations. Certain Business Units have also entered into leases pertaining to various pieces of operating equipment including rail cars, trucks and trailers. Leases are entered into and terminated when they meet specific business requirements. The Corporation has recognized these lease liabilities, which are measured at the present value of the remaining lease payments at an average incremental borrowing rate of 3.2 percent.

On adoption of IFRS 16 – Leases, the Corporation has recognized lease liabilities in relation to all lease arrangements measured at the present value of the remaining lease payments from commitments disclosed as at December 31, 2018, adjusted by commitments in relation to arrangements not containing leases, service contracts, short-term and low-value leases, and discounted using the Corporation's incremental borrowing rate as of January 1, 2019. The associated right-of-use assets were measured at the amount equal to the lease liabilities on January 1, 2019, adjusted by the amount of any lease inducements and subleases relating to the lease recognized in the statement of financial position immediately before the date of transition, with no impact on retained earnings (deficit). There was no impact to lessor accounting from the adoption of IFRS 16 – Leases.

For the year ended December 31, 2020, Mullen Group incurred variable lease payments, short-term and low dollar value lease expense of \$3.9 million (2019 – \$4.2 million), \$5.5 million (2019 – \$6.0 million) and \$0.05 million (2019 – \$0.07 million), respectively. The Corporation also recognized \$0.02 million (2019 – \$0.05 million) of sublease income during the period.

20. Convertible Unsecured Subordinated Debentures

In June 2019, Mullen Group issued Debentures at a price of \$1,000 per Debenture. The Debentures mature on November 30, 2026 and are publiclytraded and listed on the TSX under the symbol 'MTL.DB'. The Debentures bear interest at a rate of 5.75% per annum, payable semi-annually in arrears on May 31 and November 30 of each year, with the first interest payment on November 30, 2019. Mullen Group may elect to satisfy its interest obligation on any interest payment date by issuing and delivering, subject to regulatory approval, Common Shares to debenture holders. Each \$1,000 Debenture is convertible into 71.4286 Common Shares of Mullen Group (or a conversion price of \$14.00) at any time at the option of the holders of the Debentures. As at the date of issuance, an aggregate of 8,928,575 Common Shares would be issued if all holders converted their principal amount. In the event that a holder of the Debentures exercises their conversion right, such holder will be entitled to receive accrued and unpaid interest, in addition to the applicable number of Common Shares to be received on conversion, for the period from the date of the last interest payment to the date of conversion.

The Debentures shall not be redeemable by the Corporation prior to November 30, 2023. On or after November 30, 2023 and prior to November 30, 2025, the Debentures may be redeemed by the Corporation, in whole or in part from time to time, on not more than 60 days and not less than 40 days prior notice at a redemption price equal to their principal amount plus accrued and unpaid interest, if any, up to but excluding the date set for redemption, provided that the arithmetic average of the volume weighted average trading price of the Common Shares on the TSX for the 20 consecutive trading days ending five trading days prior to the date on which notice of redemption is provided is at least 125.0 percent of the conversion price. On or after November 30, 2025 and prior to the maturity date, the Debentures may be redeemed in whole or in part at the option of the Corporation on not more than 60 days and not less than 40 days prior notice at a redemption price equal to their principal amount plus accrued and unpaid interest if any, up to but excluding the date set for redemption.

The Debentures are comprised of both a debt and equity component. The debt component represents the total discounted present value of both the semi-annual interest obligations and the principal payment due at maturity, using the rate of interest that would have been applicable to a nonconvertible debt instrument of comparable term and risk at the date of issue. In the event the Debentures are converted prior to maturity, the difference between the carrying amount of such Debentures and their face value would be charged to interest expense. The remaining equity component of the Debentures represents the difference between the face value of the Debentures (namely, \$125.0 million) and the accounting value assigned to the debt component of the Debentures at the date of issue (namely, \$112.6 million). Subject to the impact of the Debentures being converted, this equity component amount will remain constant over the term of the Debentures. Upon conversion of the Debentures into common shares, a proportionate amount of both the debt and equity components are transferred to Shareholders' capital. Accretion and interest expense on the Debentures are reflected as finance costs in the consolidated statement of comprehensive income.

The transaction costs associated with the Debentures were \$5.2 million and are being amortized over the term of the Debentures. If the holders of the Debentures convert the principal portion to Common Shares prior to maturity, the unamortized transaction costs would be expensed at that time.

As subordinated debt, the accounting value assigned to the Debentures including any related interest expense is excluded from our financial covenant calculations under our Private Placement Debt.

The details of the Debentures are as follows:

		December 31, 2020			December 31, 2019
Year of Maturity	Interest Rate	Face Value		Carrying Amount	Face Value		Carrying Amount
2026	5.75%	\$ 125,000	\$	111,111	\$ 125,000	\$	108,764

The cumulative carrying amount of the Debentures is as follows:

	Cumulative as at
	December 31, 2020		December 31, 2019
Proceeds from issue of the Debentures	\$ 125,000	\$	125,000
Debt issuance costs	(5,203)		(5,203)
Net proceeds	119,797		119,797
Amount classified as equity	(12,403)		(12,403)
Accretion on debt	3,717		1,370
Carrying amount of the Debentures	\$ 111,111	\$	108,764

21. Long-Term Debt and Credit Facility

On October 24, 2018, Mullen Group entered into an agreement with its lender to amend the amount available to be borrowed on its Bank Credit Facility. The amount available to be borrowed on the Bank Credit Facility was increased by \$50.0 million to \$125.0 million. On June 21, 2019, the amount available to be borrowed on the Bank Credit Facility was increased by \$25.0 million to \$150.0 million. Interest on the Bank Credit Facility is payable monthly and is based on either the bank prime rate plus 0.50 percent or bankers' acceptance rates plus an acceptance fee of 1.50 percent. As at December 31, 2020, no amounts were drawn on this facility. All other terms under the Bank Credit Facility remain the same. This facility does not have any financial covenants, however, Mullen Group cannot be in default of its Private Placement Debt and it must be in compliance with certain reporting and general covenants. Mullen Group is in compliance with all of these reporting and general covenants.

Mullen Group has \$3.9 million of letters of credit outstanding, which were issued to guarantee certain performance and payment obligations. These letters of credit reduce the amount available under the Bank Credit Facility.

Mullen Group's long-term debt is mainly comprised of a series of Private Placement Debt, the details of which are set forth below:

Notes	Principal amount	Maturity	Interest Rate(1)
Series G	\$ 117,000 U.S.	October 22, 2024	3.84%
Series H	\$ 112,000 U.S.	October 22, 2026	3.94%
Series I	\$ 30,000 CDN.	October 22, 2024	3.88%
Series J	\$ 3,000 CDN.	October 22, 2026	4.00%
Series K	\$ 58,000 CDN.	October 22, 2024	3.95%
Series L	\$ 80,000 CDN.	October 22, 2026	4.07%

(1) Interest is payable semi-annually.

Mullen Group's unamortized debt issuance costs of \$0.8 million related to its Private Placement Debt have been netted against its carrying value at December 31, 2020 (December 31, 2019 – \$1.0 million). Mullen Group has certain financial covenants that must be met under its unsecured Private Placement Debt, which include a total net debt to operating cash flow ratio and a total earnings available for fixed charges to total fixed charges ratio. Mullen Group's total net debt cannot exceed 3.5 times operating cash flow calculated using the trailing twelve months financial results normalized for acquisitions. The term "total net debt" means all debt excluding the Debentures less any unrealized gain on Cross-Currency Swaps plus any unrealized loss on Cross-Currency Swaps, as disclosed within Derivatives on the consolidated statement of financial position but includes the Private Placement Debt, lease liabilities, the Bank Credit Facility and letters of credit. The term "operating cash flow" means, for any quarterly period, the trailing twelve month consolidated net income adjusted for all amounts deducted in the computation thereof on account of (i) taxes imposed on or measured by income or excess profits, (ii) depreciation and amortization taken during such period, (iii) total interest charges, including interest on the Debentures and lease liabilities; and (iv) non-cash charges. Mullen Group cannot have a fixed charge coverage ratio less than 1.75:1 calculated using the trailing twelve months financial results. Mullen Group is in compliance with all the Private Placement Debt financial covenants.

Mullen Group entered into Cross-Currency Swaps to swap the Series G and Series H Notes into Canadian dollars at foreign exchange rates of \$1.1047 and \$1.1148 that mature on October 22, 2024 and October 22, 2026, respectively. For more information, refer to Note 14.

The following table summarizes the Corporation's total debt:

	December 31, 2020			December 31, 2019
Current liabilities:
Private Placement Debt	\$	—	\$	—
Lease liabilities – current portion		11,439		10,711
Current portion of long-term debt		16		—
Bank Credit Facility		—		—
		11,455		10,711
Non-current liabilities:
Private Placement Debt		461,713		467,392
Lease liabilities		23,593		29,975
		485,306		497,367
	\$	496,761	\$	508,078

The details of long-term debt, as at the date hereof, are as follows:

			December 31, 2020			December 31, 2019
	Year of Maturity	Interest Rate	Face Value	Carrying Amount	Face Value	Carrying Amount
			\$	\$	\$	\$
Bank Credit Facility	—	Variable	—	—	—	—
Lease liabilities	2021 – 2028	3.20%	37,488	35,032	43,754	40,686
Private Placement Debt	2024 – 2026	3.84% - 4.07%	462,563	461,713	468,425	467,392
Various financing loans	2021	1.90%	16	16	—	—
			500,067	496,761	512,179	508,078

22. Share Capital

The authorized share capital of Mullen Group consists of an unlimited number of no par value Common Shares and an unlimited number of Preferred Shares, issuable in series.

The number of, and the specific rights, privileges, restrictions and conditions attaching to any series of Preferred Shares shall be determined by the Board of Directors (the "Board") of Mullen Group prior to the creation and issuance thereof. With respect to the payment of dividends and distribution of assets in the event of liquidation, dissolution or winding-up of Mullen Group, whether voluntarily or involuntarily, the Preferred Shares are entitled to preference over the Common Shares and any other shares ranking junior to the Preferred Shares from time to time and may also be given such other preferences over the Common Shares and any other shares ranking junior to the Preferred Shares as may be determined at the time of creation of such series. As at the date hereof, no series of Preferred Shares had been created.

All of the issued Common Shares of Mullen Group have been paid in full.

	# of Common Shares
	2020	2019
Issued Common Shares at January 1	104,824,973	104,824,973
Common Shares repurchased and cancelled	(7,972,926)	—
Issued Common Shares at December 31	96,852,047	104,824,973

On March 4, 2020, Mullen Group announced a normal course issuer bid ("NCIB"), commencing March 9, 2020, to purchase for cancellation up to 7,972,926 Common Shares in the open market on or before March 8, 2021. As at December 31, 2020, Mullen Group had purchased and cancelled 7,972,926 Common Shares for \$53.4 million under this NCIB program.

All purchases were made in accordance with the NCIB at prevalent market prices as permitted by the Toronto Stock Exchange, with consideration allocated to share capital up to the average carrying amount of the shares and any excess allocated to contributed surplus. The NCIB can be cancelled at the discretion of the Corporation at any time.

23. Earnings per Share

Policy: Basic per share amounts are calculated using the weighted average number of Common Shares outstanding during the period. Diluted per share amounts are calculated considering the effects of all dilutive potential ordinary shares. Mullen Group's dilutive potential ordinary shares assumes dilutive stock options are exercised and that the proceeds obtained on the exercise of dilutive stock options would be used to purchase Common Shares at the average market price during the period. The weighted average number of Common Shares outstanding is then adjusted accordingly.

Supporting information:

(a) Basic Earnings per Share

Basic earnings per share is calculated as net income attributable to common shareholders divided by the weighted average number of Common Shares outstanding for the period. Net income attributable to common shareholders for the year ended December 31, 2020, was \$64.0 million (2019 – \$72.2 million). The weighted average number of Common Shares outstanding for the years ended December 31, 2020 and 2019 was calculated as follows:

		Years ended December 31
	Note	2020	2019
Issued Common Shares at beginning of period	22	104,824,973	104,824,973
Effect of Common Shares repurchased and cancelled	22	(4,200,746)	—
Weighted average number of Common Shares at end of period – basic		100,624,227	104,824,973

(b) Diluted Earnings per Share

Diluted earnings per share is calculated by adjusting net income attributable to common shareholders and the basic weighted average number of Common Shares outstanding by the effects of all potentially dilutive transactions to existing common shareholders. In calculating diluted earnings per share, net income was adjusted as follows:

	Years ended December 31
	2020		2019
Net income	\$ 63,979	\$	72,241
Effect on finance costs from conversion of Debentures (net of tax)	—		—
Net income – adjusted	\$ 63,979	\$	72,241

The diluted weighted average number of Common Shares was calculated as follows:

	Years ended December 31
	2020	2019
Weighted average number of Common Shares – basic	100,624,227	104,824,973
Effect of "in the money" stock options	—	—
Effect of the Debentures	—	—
Weighted average number of Common Shares at end of period – diluted	100,624,227	104,824,973

For the year ended December 31, 2020, 2,995,000 stock options (2019 – 3,280,000) were excluded from the diluted weighted average number of Common Shares calculation as their effect would have been anti-dilutive. The average market value of the Corporation's Common Shares for the purposes of calculating the dilutive effect of stock options was based on quoted market prices for the periods ended December 31, 2020 and 2019. For the years ended December 31, 2020 and 2019, the 8,928,575 Common Shares that would be issued upon conversion of the Debentures were excluded in the diluted weighted average calculation as their effect was anti-dilutive. For more information on Debentures and stock options, refer to Notes 20 and 27, respectively.

24. Revenue

Policy: Mullen Group's services are provided based upon orders and contracts with customers that include fixed or determinable prices and are based upon daily, hourly or contracted rates. Contract terms do not include the provision of post-service obligations. Mullen Group recognizes the amount of revenue to which it expects to be entitled for the transfer of promised services or goods to customers. Revenue is measured based on the consideration specified in a contract with a customer on either an "over time" or "point in time" basis.

Mullen Group's primary service offering is the transportation of goods. The transportation of goods involves the physical process of transporting commodities and goods from point of origin to destination using company equipment and contracted owner operators. Each individual Business Unit offers published rates or signed master service agreements with specific customers that dictate future services it is to perform for a customer at the time a bill of lading or service request is received. Each bill of lading represents a separate distinct performance obligation that the company is obligated to satisfy. The transaction price is generally in the form of a fixed fee determined at the inception of the bill of lading. Transportation services revenue is recognized using the "over time" method.

Mullen Group's second highest revenue stream is logistics services. Logistics services involves the planning, implementing, and controlling the efficient, effective forward and reverse transport of goods. These services are governed by contract law. Mullen Group uses Subcontractors to perform the work. Subcontractors have their own insurance and operating authorities. When Mullen Group hires a Subcontractor, it remains the primary obligor, has the ability to set prices, retains the risk of loss in the event of a cargo claim and bears the credit risk of customer default. As such, Mullen Group acts as the principal of the arrangement and recognize revenue on a gross basis. Logistics services revenue is recognized using the "point in time" method.

The business of Mullen Group is operated through its Business Units, which are divided into three distinct operating segments for reporting purposes – Less-Than-Truckload, Logistics & Warehousing and Specialized & Industrial Services. The segments are differentiated by the type of service provided, equipment requirements and customer needs. Mullen Group provides the capital and financial expertise, technology and systems support, shared services and strategic planning (the "Corporate Office") for the Business Units. The Corporate Office also invests in certain public and private corporations. In addition, the Corporate Office, through its subsidiary MT Investments Inc. ("MT"), owns a network of real estate holdings and facilities that are leased primarily to the Business Units. Such properties are leased by MT to the Business Units on commercially reasonable terms. The day to day management of the Business Units is conducted at the subsidiary level. For more information, refer to Notes 32 and 34.

At December 31, 2020, the Less-Than-Truckload segment consisted of 9 Business Units and is often referred to as the final or last mile delivery of general freight consisting of smaller shipments, packages and parcels. Through an extensive terminal network the pickup, handling and delivery of a wide range of freight including ambient, temperature controlled and consumer goods is coordinated from regional hubs located in Ontario and western Canada. We are committed to investing in the most advanced technologies available ensuring the continued improvement in all aspects of our business, shortening delivery times and providing customers with visibility, via tracking and tracing, to their shipments during transit.

At December 31, 2020, the Logistics & Warehousing segment consisted of 10 Business Units and provides shippers throughout North America with a wide range of trucking and logistics service offerings including full truckload, specialized transportation, warehousing, fulfillment centres that handle ecommerce transactions, and transload facilities designed for intermodal and bulk shipments. Operations and customer service are supported by a robust suite of leading edge technology solutions including a fully integrated transportation management system, customized inventory management and warehouse systems along with our proprietary Moveitonline® and HaulisticTM technology platforms, applications that are positioning our organization for an evolving and changing supply chain.

At December 31, 2020, the Specialized & Industrial Services segment consisted of 15 Business Units and is comprised of a wide range of unique businesses providing specialized equipment and services to the oil and natural gas, environmental, construction, pipeline, utility, telecom and civil industries. Strategically located throughout western Canada, these specialty Business Units are focused on providing advanced technology solutions and leading edge service capabilities.

Disaggregation of revenue:

The following tables detail Mullen Group's revenue by type of service and timing of the transfer of goods or services by segment and has been restated on a retrospective basis for comparative purposes:

			Specialized
Year ended December 31, 2020	Less-than Truckload	Logistics & Warehousing	& Industrial Services	Corporate	Intersegment eliminations	Total
	\$	\$	\$	\$	\$	\$
Revenue by service line
Transportation	429,278	206,852	191,552	—	—	827,682
Logistics	16,798	75,502	7,342	—	—	99,642
Other(1)	5,405	84,087	166,529	3,142	—	259,163
Eliminations	(7,689)	(4,434)	(3,382)	—	(6,651)	(22,156)
	443,792	362,007	362,041	3,142	(6,651)	1,164,331
Timing of revenue recognition
Over time	429,511	211,319	265,440	2,539	—	908,809
Point in time	21,970	155,122	99,983	603	—
Eliminations	(7,689)	(4,434)	(3,382)	—	(6,651)	(22,156)
	443,792	362,007	362,041	3,142	(6,651)	1,164,331

(1) Included within other revenue is \$34.3 million of rental revenue comprised of \$0.2 million, \$4.5 million, \$27.1 million and \$2.5 million recorded in the Less-Than-Truckload segment, the Logistics & Warehousing segment, the Specialized & Industrial Services segment and Corporate, respectively.

Year ended	Less-than	Logistics &	Specialized & Industrial		Intersegment
December 31, 2019	Truckload	Warehousing	Services	Corporate	eliminations	Total
	\$	\$	\$	\$	\$	\$
Revenue by service line
Transportation	433,490	236,967	217,300	—	—	887,757
Logistics	17,379	96,859	4,764	—	—	119,002
Other(1)	6,116	76,482	207,640	3,881	—	294,119
Eliminations	(5,403)	(5,468)	(3,392)	—	(8,113)	(22,376)
	451,582	404,840	426,312	3,881	(8,113)	1,278,502
Timing of revenue recognition
Over time	433,663	241,191	297,425	2,585	—	974,864
Point in time	23,322	169,117	132,279	1,296 —		326,014
Eliminations	(5,403)	(5,468)	(3,392)	—	(8,113)	(22,376)
	451,582	404,840	426,312	3,881	(8,113)	1,278,502

(1) Included within other revenue is \$40.1 million of rental revenue comprised of \$0.2 million, \$4.2 million, \$33.1 million and \$2.6 million recorded in the Less-Than-Truckload segment, the Logistics & Warehousing segment, the Specialized & Industrial Services segment and Corporate, respectively.

During the year, 92.7 percent of revenue was from the rendering of services, 4.6 percent of revenue was from the sale of goods and 2.7 percent was from construction contracts as compared to 93.4 percent, 3.9 percent, and 2.7 percent, respectively, for the year ended December 31, 2019.

25. Personnel Costs

	Years ended December 31
Wages, salaries and benefits	2020		2019
	\$ 335,176	\$	383,186
Stock-based compensation expense	1,104		1,383
	\$ 336,280	\$	384,569

In 2020 personnel costs of \$236.1 million (2019 – \$271.8 million) were recognized within direct operating expenses and \$100.2 million (2019 – \$112.8 million) were recognized within selling and administrative expenses.

26. Finance Costs

	Years ended December 31
	2020		2019
Interest expense on financial liabilities measured at amortized cost	\$ 27,355	\$	24,449
Accretion on debt	2,531		1,553
Finance expense	29,886		26,002
Less: Interest income from cash and cash equivalents	(1,422)		(2,377)
Finance costs	\$ 28,464	\$	23,625

27. Share-Based Compensation Plans

Mullen Group is permitted to grant stock options to directors, officers, employees and consultants of Mullen Group or its affiliates under its stock option plan ("Stock Option Plan"). Options under the Stock Option Plan are normally granted at the weighted average trading price of the Common Shares of Mullen Group for the five consecutive trading days immediately preceding the day of grant of the stock option. Stock options vest in the manner determined by the Board at the time of the grant. The term of an option is five to ten years from the date of grant.

Estimates: Mullen Group estimates the fair value of its stock options using the Black-Scholes option pricing model. This requires the estimation of certain variables including: the expected risk-free interest rate, the expected life of the stock option, the forfeiture rate, the expected dividend yield of Mullen Group's Common Shares and expected share price volatility.

Judgement: The estimation of certain variables within the Black-Scholes model require judgement. The risk-free interest rates used were the Canadian Treasury zero-coupon rates for bonds matching the expected term of the option on the date of grant. In determining the expected term of the option grants, Mullen Group has observed the actual terms of prior grants with similar characteristics and the actual vesting schedule of the grant. The expected forfeiture rate was determined based on the Corporation's prior historical forfeiture rates on the date of grant. This estimate is adjusted to reflect the actual experience. The expected dividend yield of Mullen Group's Common Shares over the expected term of the option was determined based on the Corporation's dividend policy on the date of grant. The expected stock price volatility at the time of the particular stock option grant, Mullen Group relies on observations of historical volatility trends.

Policy: Mullen Group accounts for stock-based compensation using the fair-value method of valuing any stock options granted using the Black-Scholes model. Under the fair value method, the fair value of options is calculated at the date of grant and that value is recorded as compensation expense over the vesting periods of those grants, with a corresponding increase to contributed surplus less an estimated forfeiture rate. The forfeiture rate is based on past experience of actual forfeitures. When options are exercised, the proceeds received by Mullen Group, along with the amount in contributed surplus, will be credited to share capital.

Supporting information:

On May 3, 2017, Mullen Group's shareholders approved a resolution to amend the Stock Option Plan. The amendment increases the number of Common Shares reserved for issuance by 4,000,000. As such, 3,772,500 (2019 – 3,487,500) options are available to be issued under the Stock Option Plan as at December 31, 2020. Each stock option will entitle the option-holder to acquire one Common Share of Mullen Group. Under the Stock Option Plan, the exercise price of a stock option granted shall be as determined by the Board when the stock option is granted subject to any limitations imposed by any relevant stock exchange or regulatory authority, and shall be an amount at least equal to the weighted average trading price of the Common Shares of Mullen Group for the five consecutive trading days immediately preceding the day of grant of the stock option. These options vest in one to five years and expire in five to ten years.

Volatility was determined on the basis of the daily closing prices over a historical period corresponding to the expected term of the options.

Stock Option Plan:	Options	Weighted average exercise price
Outstanding December 31, 2018	3,462,500	\$ 19.15
Granted	—	—
Exercised	—	—
Forfeited	(182,500)	(17.91)
Outstanding December 31, 2019	3,280,000	\$ 19.22
Granted	—	—
Exercised	—	—
Forfeited	(285,000)	(17.50)
Outstanding December 31, 2020	2,995,000	\$ 19.38
Stock options exercisable December 31, 2019	2,794,981	\$ 19.66
Stock options exercisable December 31, 2020	2,990,000	\$ 19.39

	Options Outstanding
Range of Exercise Prices	Number	Weighted average remaining contractual life (years)		Weighted average exercise price	Number		Weighted average exercise price
\$16.15 to \$16.72	1,320,000	6.86	\$	16.72	1,315,000	\$	16.72
\$16.73 to \$20.77	1,150,000	3.21		20.35	1,150,000		20.35
\$20.78 to \$28.07	525,000	2.21		23.94	525,000		23.94
\$16.15 to \$28.07	2,995,000	4.64	\$	19.38	2,990,000	\$	19.39

The range of exercise prices for options outstanding at December 31, 2020 was as follows:

There were no stock options issued in 2020 or 2019.

28. Other (Income) Expense

	Years ended December 31
	2020		2019
Change in fair value of investments	\$ 975	\$	(15)
Loss on sale of property, plant and equipment	5,023		2,667
Gain on fair value of equity investment	(432)		—
Earnings from equity investments	(1,813)		(2,870)
Accretion on asset retirement obligations	26		17
Other (income) expense	\$ 3,779	\$	(201)

For more information on the gain on fair value of equity investment, refer to Note 5.

29. Contingent Liabilities

Mullen Group is involved in various claims and actions arising in the course of its operations and is subject to various legal actions and possible claims. Although the outcome of these claims cannot be predicted with certainty, Mullen Group does not expect these matters to have a material adverse effect on its financial position, cash flows or results from operations. Accruals for litigation, claims and assessments are recognized if Mullen Group determines that the loss is probable and the amount can be reasonably estimated. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on Mullen Group's consolidated net earnings in the period in which the outcome is determined.

30. Capital Commitments

Capital expenditures approved and committed to but not provided for in these accounts at December 31, 2020, amounted to \$13.1 million. These capital expenditure commitments will be completed in fiscal 2021.

31. Financial Instruments

Mullen Group's operating activities expose it to a variety of financial risks. These financial risks consist of certain credit, liquidity, and market risks associated with Mullen Group's financial assets and financial liabilities. Mullen Group has established and follows certain policies and procedures to mitigate these risks and continually monitors its exposure to all significant risks to assess the impact on its operating activities. Mullen Group does not hold or use any derivative financial instruments for trading or speculative purposes. The following details Mullen Group's exposure to credit, liquidity, and market risks.

(a) Credit Risk

Credit risk is the possibility of a financial loss to Mullen Group if a customer or counterparty to a financial asset fails to meet its contractual obligations. This risk arises predominately from Mullen Group's trade and other receivables from its customers. The carrying amount of financial assets represents Mullen Group's maximum credit risk exposure. The maximum exposure to credit risk at the reporting date was as follows:

				December 31
Carrying amount	Note		2020		2019
Cash and cash equivalents	6	\$	105,340	\$	79,023
Trade and other receivables	7		192,453		211,209
Derivative financial instruments	14		37,906		41,375
Other assets	15		1,400		3,459
		\$	337,099	\$	335,066

Credit risk related to trade and other receivables is initially managed by each Business Unit. Each Business Unit is responsible for reviewing the credit risk for each of their customers before standard payment and delivery terms and conditions are offered. The Business Units review consists of external ratings, when available, and in some cases bank and trade references. Management has established a credit policy under which new customers are analyzed for creditworthiness before Mullen Group extends credit. Mullen Group monitors its trade and other receivables aging

on an ongoing basis as part of its process in managing its credit risk. Mullen Group also manages credit risk related to trade and other receivables on a consolidated basis whereby the aggregate exposure to individual customers is reviewed and their credit quality is assessed. In the unlikely event of default by its customers, Mullen Group secures a security interest for items in possession prior to commencing work and registers liens when appropriate. Further, the federal Bill of Lading Act, its provincial counterparts and various other acts afford Mullen Group further protection in the event of default. Mullen Group also attends industry forums to assess credit worthiness of customers related predominately to the oil and natural gas industry. No customer accounted for more than ten percent of Mullen Group's consolidated revenue for the fiscal years ended 2020 and 2019.

Impairment losses arise when trade receivables are written off directly against the financial asset, which results from customers who cannot pay their outstanding balance. In 2020 an impairment loss of \$0.7 million (2019 – \$1.2 million) was recognized which related to customers that were not able to pay their outstanding balances, mainly due to the customer having insufficient cash or other financial assets. During the period, the impairment loss as a percentage of consolidated revenue was less than 0.07 percent (2019 – 0.09 percent). Mullen Group establishes, on a specific account basis, an allowance for impairment loss that represents its estimate of potential losses in respect of trade receivables. For more information, refer to Note 7.

(b) Liquidity Risk

Liquidity risk is the risk that Mullen Group will not be able to satisfy its obligations associated with its financial liabilities that are to be settled by delivering cash as they become due. Mullen Group's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to satisfy its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to Mullen Group's reputation. Typically, Mullen Group ensures that it has sufficient cash or available credit facilities to meet expected operational expenses; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. Mullen Group manages liquidity risk by preparing, monitoring and approving annual operating budgets to ensure it has sufficient cash to meet operational requirements, and to ensure its ongoing compliance with its Private Placement Debt covenants. The Board also considers liquidity risk when approving Mullen Group's annual net capital expenditure budget and when declaring dividends to shareholders. Mullen Group's surplus cash is invested in short-term highly liquid term deposits. At December 31, 2020, Mullen Group did not have any amounts drawn on its \$150.0 million Bank Credit Facility. For more information, refer to Note 21.

The following are the contractual maturities of financial liabilities, excluding the impact of any option to purchase equipment at the end of the term:

December 31, 2020	Carrying amount	Contractual cash flows	Twelve months or less	2022 - 2023	2024 - 2025	Thereafter
Private Placement Debt*	\$ 461,713	\$ 462,563	\$ —	\$ —	\$ 236,964	\$ 225,599
Interest on Private Placement Debt*	3,483	90,667	18,170	36,339	27,164	8,994
Debentures	111,111	125,000	—	—	—	125,000
Interest on the Debentures	599	42,535	7,188	14,375	14,375	6,597
Lease liabilities	35,032	37,488	12,385	13,645	6,441	5,017
Various financing loans	16	16	16	—	—	—
Accounts payable and accrued liabilities(1)	84,071	84,071	84,071	—	—	—
Dividends payable	2,906	2,906	2,906	—	—	—
Total	\$ 698,931	\$ 845,246	\$ 124,736	\$ 64,359	\$ 284,944	\$ 371,207

* Assumes a U.S. dollar foreign exchange rate of \$1.2732.

(1) Accounts payable and accrued liabilities of \$84,071 plus \$3,483 of interest on Private Placement Debt and \$599 of interest on the Debentures agrees to the \$88,153 of accounts payable and accrued liabilities on the Consolidated Statement of Financial Position.

December 31, 2019	Carrying amount	Contractual cash flows	Twelve months or less	2021 - 2022	2023 - 2024	Thereafter
Private Placement Debt*	\$ 467,392	\$ 468,425	\$ —	\$ —	\$ 239,960	\$ 228,465
Interest on Private Placement Debt*	3,526	110,203	18,398	36,795	36,795	18,215
Debentures	108,764	125,000	—	—	—	125,000
Interest on the Debentures	599	49,714	7,188	14,375	14,375	13,776
Lease liabilities	40,686	43,754	12,125	16,615	7,381	7,633
Accounts payable and accrued liabilities(1)	85,903	85,903	85,903	—	—	—
Dividends payable	5,241	5,241	5,241	—	—	—
Total	\$ 712,111	\$ 888,240	\$ 128,855	\$ 67,785	\$ 298,511	\$ 393,089

* Assumes a U.S. dollar foreign exchange rate of \$1.2988.

(1) Accounts payable and accrued liabilities of \$85,903 plus \$3,526 of interest on Private Placement Debt and \$599 of interest on the Debentures agrees to the \$90,028 of accounts payable and accrued liabilities on the Consolidated Statement of Financial Position.

All of the above amounts relate to non-derivative financial instruments.

(c) Market Risk

Market risk is the potential for adverse changes associated with fluctuations in foreign exchanges rates, interest rates and equity prices and their corresponding impact on the fair value or future cash flows of Mullen Group's financial instruments. The objective of management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

(i) Foreign Exchange Risk

Foreign exchange risk arises as Mullen Group enters into commercial transactions that are not denominated in its functional currency. Mullen Group is exposed to foreign exchange risk, primarily with respect to the U.S. dollar which mainly arises from its U.S. \$229.0 million Senior Guaranteed Unsecured Notes ("U.S. Notes"). These U.S. Notes mature in 2024 (U.S. \$117.0 million) and in 2026 (U.S. \$112.0 million). Mullen Group has mitigated its foreign exchange risk with respect to the principal portion of its U.S. Notes by entering into the Cross-Currency Swaps. Annual interest of U.S. \$8.9 million is payable on these U.S. Notes which also exposes Mullen Group to foreign exchange risk. This foreign exchange risk is mitigated as some of Mullen Group's Business Units generate a portion of their revenue in U.S. dollars in excess of their U.S. dollar expenses. At December 31, 2020, Mullen Group had U.S. dollar cash of \$24.2 million (2019 – \$12.5 million), U.S. dollar trade receivables of \$6.8 million (2019 – \$5.1 million) and U.S. dollar accounts payable and accrued liabilities of \$2.0 million (2019 – \$2.9 million). Mullen Group does not hedge any of its U.S. dollar denominated commercial and financing transactions.

All of the amounts expressed in the following table are in U.S. dollars and set forth Mullen Group's exposure to foreign currency risk:

	December 31	December 31
	2020	2019
Cash and cash equivalents	\$ 24,224	\$ 12,452
Trade and other receivables	6,797	5,149
Derivative financial instruments	29,772	31,857
Private Placement Debt	(229,000)	(229,000)
Accounts payable and accrued liabilities	(2,037)	(2,858)
Net exposure	\$ (170,244)	\$ (182,400)

At December 31, 2020, assuming all other variables were held constant, a \$0.01 strengthening of the Canadian dollar relative to the U.S. dollar would have increased income before income taxes by approximately \$1.7 million. Similarly, a \$0.01 weakening of the Canadian dollar relative to the U.S. dollar at December 31, 2020 would have had the equal but opposite effect on income before income taxes.

(ii) Interest Rate Risk and Fair Value Sensitivity Analysis for Fixed Rate Instruments

Interest rate risk arises on borrowings issued at variable rates which exposes risk to future cash flows if interest rates were to rise. This risk would be partially offset by cash held at variable rates. Mullen Group's Private Placement Debt and the Debentures are issued at fixed rates while the Bank Credit Facility is issued at variable rates. Borrowings issued at fixed rates expose Mullen Group to fair value interest rate risk. Mullen Group is susceptible to the opportunity costs associated with interest rate decreases as the interest rate on the majority of its borrowings is at fixed interest rates. Assuming all other variables were held constant, if interest rates increase by 1.0 percent on the contractual cash flows of \$587.6 million of Mullen Group's Private Placement Debt and the Debentures, Mullen Group would incur additional annual interest expense of approximately \$5.9 million. Mullen Group does not account for any fixed rate financial assets and liabilities at FVTPL. Mullen Group does not hedge interest rates or have any interest rate swaps.

(iii) Price Risk

Price risk arises from changes in quoted prices on investments in equity securities that impact the underlying value of investments. Mullen Group has investments measured at fair value with an initial cost of \$11.5 million. A \$1.0 million decrease in the fair value of these investments was recorded in 2020 as compared to a \$15,000 increase in 2019. Mullen Group recorded a \$10.3 million decrease in the fair value of these investments on a cumulative basis. Assuming all other variables were held constant, a 1.0 percent increase in the value of the investments would have increased income before income taxes by approximately \$12,000. Similarly, a 1.0 percent decrease in the value of investments would have an equal but opposite effect on income before income taxes.

(d) Capital Management

Mullen Group's objectives when managing capital are to safeguard the Corporation's ability to continue as a going concern, and manage capital that will maintain compliance with its financial covenants so that it can continue to provide returns for shareholders and benefits for other stakeholders and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk. Mullen Group manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, Mullen Group may adjust the amount of dividends paid to shareholders, issue new debt, sell assets to reduce debt, or issue new shares.

Consistent with others in the industry, Mullen Group also monitors capital on the basis of debt-to-equity and total debt to operating cash flow. The debt-to-equity ratio is calculated as total debt divided by equity. Total debt is calculated as the total of bank indebtedness, current portion of long-term debt, long-term debt and the debt component of Debentures. Equity comprises all of the components of equity (i.e. share capital, Debentures – equity component, contributed surplus and retained earnings (deficit)). Mullen Group's strategy is to maintain its debt-to-equity ratio below 1:1. The debt-to-equity ratio calculations at December 31, 2020 and at December 31, 2019 were as follows:

	December 31 2020	December 31 2019
Bank indebtedness	\$ —	\$ —
Lease liabilities	35,032	40,686
Long-term debt	461,713	467,392
Debentures – debt component	111,111	108,764
Various financing loans	16	—
Total debt	607,872	616,842
Share capital	874,888	946,910
Debentures – equity component	9,116	9,116
Contributed surplus	36,577	16,860
Deficit	(24,163)	(54,965)
Equity	\$ 896,418	\$ 917,921
Debt to equity	0.68:1	0.67:1

Mullen Group also monitors capital on the basis of total debt to operating cash flow. The total debt to operating cash flow ratio is calculated as per the Private Placement Debt agreements. Other than the financial covenants under its Private Placement Debt, Mullen Group is not subject to externally imposed capital requirements. For more information, refer to Note 21.

32. Subsidiaries

The tables set forth below provide information relative to Mullen Group's significant subsidiaries and its Business Units, including each entity's name, its jurisdiction of incorporation/formation, the percentage of securities directly or indirectly owned by Mullen Group, a brief description of the entity, and the market areas served, if applicable. The percentages of ownership set forth below include the approximate one percent interest owned by the general partner of each limited partnership.

Significant Subsidiaries:
Company (Jurisdiction of Incorporation / Formation)	Percentage owned by Mullen Group (directly / indirectly)	Overview	Primary Market Area
MT Investments Inc. (Alberta)	100%	Wholly-owned subsidiary of Mullen Group Ltd. It was formed on July 1, 2005, when Mullen Transportation Inc. was amalgamated with certain other corporations pursuant to a plan of arrangement under the Business Corporations Act (Alberta) to form a corporation known as MT Investments Inc.	N/A
MGL Holding Co. Ltd. (Alberta)	100%	Wholly-owned subsidiary of MT Investments Inc., which was incorporated in Alberta on December 22, 2016. It is the limited partner of various Business Units.	N/A

Less-Than-Truckload Segment:
Business Unit (Jurisdiction of Incorporation / Formation)	Percentage owned by Mullen Group (indirectly)	Primary Market Area
Argus Carriers Ltd.(1) (British Columbia)	100%	British Columbia and U.S.
Courtesy Freight Systems Ltd. (Ontario)	100%	Northwestern Ontario
Gardewine Group Limited Partnership (Manitoba)	100%	Manitoba and Ontario
Grimshaw Trucking L.P. (Alberta)	100%	Western Canada
Hi-Way 9 Express Ltd. (2) (3) (4) (Alberta)	100%	Western Canada
Inter-Urban Delivery Service Ltd.(1) (British Columbia)	100%	Lower Mainland British Columbia
Jay's Transportation Group Ltd. (Saskatchewan)	100%	Saskatchewan
Number 8 Freight Ltd. (British Columbia)	100%	Lower Mainland British Columbia
Pacific Coast Express Limited(5)	100%	Western Canada

(1) Acquired July 1, 2019.

(2)On January 1, 2019, the operations of Bernard Transport Ltd. were combined into Hi-Way 9 Express Ltd.

(3) Includes Jen Express Inc., which was acquired on May 1, 2019.

(4)On January 1, 2020, the operations of Load-Way Ltd. and Streamline Logistics Inc., were integrated into Hi-Way 9 Express Ltd.

(5) Acquired September 1, 2020.

Logistics & Warehousing Segment:
Business Unit (Jurisdiction of Incorporation / Formation)	Percentage owned by Mullen Group (indirectly)	Primary Market Area
24/7 The Storehouse (2015) Ltd. (British Columbia)	100%	British Columbia
Caneda Transport Ltd. (Alberta)	100%	Canada and U.S.
Cascade Carriers L.P. (Alberta)	100%	Western Canada
International Warehousing & Distribution Inc.(1) (Ontario)	100%	Ontario
DWS Logistics Inc. (Ontario)	100%	Ontario
Kleysen Group Ltd. (Alberta)	100%	Western Canada
Mullen Trucking Corp. (Alberta)	100%	Canada and U.S.
Payne Transportation Ltd. (Alberta)	100%	Canada and U.S.
RDK Transportation Co. Inc. (Saskatchewan)	100%	Canada and U.S.
Tenold Transportation Ltd. (Alberta)	100%	Canada and U.S.

(1) Acquired October 2020.

Specialized & Industrial Services Segment:
Business Unit (Jurisdiction of Incorporation / Formation)	Percentage owned by Mullen Group (indirectly)	Primary Market Area
Canadian Dewatering L.P. (Alberta)	100%	Western Canada
Cascade Energy Services L.P. (Alberta)	100%	Western Canada
Canadian Hydrovac Ltd. (Alberta)	100%	Western Canada
E-Can Oilfield Services L.P. (Alberta)	100%	Western Canada
Envolve Energy Services Corp. (Alberta)	100%	Western Canada
Formula Powell L.P. (Alberta)	100%	Western Canada
Heavy Crude Hauling L.P.(1) (Alberta)	100%	Western Canada
Mullen Oilfield Services L.P. (2) (Alberta)	100%	Western Canada
OK Drilling Services L.P. (Alberta)	100%	Western Canada
Pe Ben Oilfield Services L.P.(3) (Alberta)	100%	Western Canada
Premay Equipment L.P. (Alberta)	100%	Western Canada
Premay Pipeline Hauling L.P. (Alberta)	100%	Western Canada
Recon Utility Search L.P. (Alberta)	100%	Western Canada
Smook Contractors Ltd. (Manitoba)	100%	Northern Manitoba
Spearing Service L.P. (Alberta)	100%	Western Canada
TREO Drilling Services L.P. (Alberta)	100%	Western Canada

(1) On April 1, 2020, the operations of R. E. Line Trucking (Coleville) Ltd. were combined into Heavy Crude Hauling L.P.

(2) On January 1, 2020, the operations of Withers L.P. were combined into Mullen Oilfield Services L.P.

(3) On March 31, 2020, Pe Ben Oilfield Services L.P. ceased operations and is no longer considered a Business Unit for reporting purposes.

33. Changes in Non-Working Capital

	Years ended December 31
	2020		2019
Trade and other receivables	\$ 24,386	\$	13,335
Inventory	2,943		863
Prepaid expenses	1,986		(3,472)
Accounts payable and accrued liabilities	(7,442)		(11,258)
	\$ 21,873	\$	(532)

	Years ended December 31
	2020		2019
Changes in non-cash working capital items from:
Operating activities	\$ 22,582	\$	(466)
Financing activities	(44)		(112)
Investing activities	(665)		46
	\$ 21,873	\$	(532)

34. Operating Segments

Judgements: Judgements are made by management in applying the aggregation criteria to allow two or more operating segments to be aggregated based upon similar economic characteristic and other similarities.

Policy: Business Units are grouped into three distinct operating segments: Less-Than-Truckload segment, Logistics & Warehousing segment and Specialized & Industrial Services segment (the "Operating Segments"), all of which are supported by a Corporate segment. The Business Units within each of the Operating Segments share common economic characteristics and are differentiated by the type of service provided, equipment requirements and customer needs. The Operating Segments' financial results are reviewed regularly by the Corporation's chief operating decisionmaker who makes decisions about resource allocation and assess segment performance based on the internally prepared segment information.

Supporting information:

As disclosed in the first quarter, Mullen Group has commenced reporting financial results in three new operating segments. These three operating segments have been differentiated by the sector of the economy in which the businesses operate, the type of services provided, the equipment requirements and the customer needs. The Less-Than-Truckload segment provides final or last mile delivery of general freight consisting of smaller shipments, packages and parcels. Through an extensive terminal network the pickup, handling and delivery of a wide range of freight including ambient, temperature controlled and consumer goods is coordinated from regional hubs located in Ontario and western Canada. The Logistics & Warehousing segment provides shippers throughout North America with a wide range of trucking and logistics service offerings including full truckload, specialized transportation, warehousing, fulfillment centres that handle e-commerce transactions, and transload facilities designed for intermodal and bulk shipments. The Specialized & Industrial Services segment provides specialized equipment and services to the oil and natural gas, environmental, construction, pipeline, utility, telecom and civil industries. For more information, refer to Note 24.

The following tables provide financial information that conforms to the Corporation's new segment presentation on a retrospective basis for comparative purposes:

					Intersegment eliminations
Year ended December 31, 2020	Less-than Truckload	Logistics & Warehousing	Specialized & Industrial Services	Corporate	Less-than Truckload	Logistics & Warehousing	Specialized & Industrial Services	Total
	\$	\$	\$	\$	\$	\$	\$	\$
Revenue	443,792	362,007	362,041	3,142	(734)	(3,949)	(1,968)	1,164,331
Income (loss) before income taxes	32,192	41,935	21,454	(9,447)	—	—	—	86,134
Depreciation of property, plant and equipment	15,022	11,283	40,014	6,098	—	—	—	72,417
Amortization of intangible assets	7,827	6,325	3,461	—	—	—	—	17,613
Capital expenditures(1)	25,169	7,675	11,465	22,679	—	(412)	(1,630)	64,946
Total assets at December 31, 2020	363,517	249,470	420,104	684,845	—	—	—	1,717,936

(1) Excludes business acquisitions

					Intersegment eliminations
Year ended December 31, 2019	Less-than Truckload	Logistics & Warehousing	Specialized & Industrial Services	Corporate	Less-than Truckload	Logistics & Warehousing	Specialized & Industrial Services	Total
	\$	\$	\$	\$	\$	\$	\$	\$
Revenue	451,582	404,840	426,312	3,881	(503)	(5,808)	(1,802)	1,278,502
Income before income taxes	30,833	33,832	3,985	11,487	—	—	—	80,137
Depreciation of property, plant and equipment	13,282	12,350	48,698	6,146	—	—	—	80,476
Amortization of intangible assets	9,215	6,094	3,996	—	—	—	—	19,305
Capital expenditures(1)	26,280	17,160	19,907	17,092	(7)	(670)	(4,740)	75,022
Total assets at December 31, 2019	355,764	263,161	475,028	655,339	—	—	—	1,749,292

(1) Excludes business acquisitions

Performance is measured based on segment income before income tax, as included in the internal management reports that are reviewed by Mullen Group's CEO and President. Segment income is used to measure performance as management believes that such information is the most relevant in evaluating the results of segments relative to other entities that operate within these industries.

35. Related Party Disclosures

(a) Key Management Personnel Compensation

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the business activities of Mullen Group, including all of its directors along with certain executives. Directors are remunerated for services rendered in their capacity as directors by way of a combination of retainer fees and meeting attendance fees. The overall compensation program for executives is comprised of base salary and benefits, annual profit share and share-based compensation payments. Executives of Mullen Group do not have formal employment contracts. Similar to the employment processes established for all Mullen Group employees, each executive's personnel file contains a memorandum outlining the basic terms of an executive's employment relationship with Mullen Group. Mullen Group has no agreement or arrangement with any executive for the payment of compensation in the case of resignation, retirement, or termination of employment, a change of control of Mullen Group or its Business Units or a change in an executive's responsibilities following a change of control. Key management personnel do not participate in a defined benefit or actuarial pension plan, however, key management personnel do participate in the Stock Option Plan. Total remuneration to key management personnel including directors' fees, salaries and benefits, annual profit share, and the value attributable to stock-based compensation expense was as follows: For more information, refer to Note 27.

	Years Ended December 31
Category		2020		2019
Salaries and benefits (including profit share)	\$	1,600	\$	1,636
Share-based payments		41		50
Total	\$	1,641	\$	1,686

Mullen Group had no outstanding amounts owing to or amounts receivable from directors or officers at December 31, 2020, and 2019, with respect to the overall compensation program for executives. As at December 31, 2020, directors and officers of Mullen Group collectively held 5,550,064 Common Shares (2019 – 5,505,008) representing 5.7 percent (2019 – 5.3 percent) of all Common Shares of the Corporation. As at December 31, 2020, directors and officers of Mullen Group held \$4.9 million (2019 – \$4.8 million) of Debentures under the same terms and conditions as those issued to unrelated third parties. The majority of the Debentures outstanding at December 31, 2020 were held by Murray K. Mullen (\$4.4 million). Other than these \$4.9 million of Debentures, Mullen Group has no contracts with its key management personnel.

(b) Related Party Transactions

During the year, Mullen Group generated revenue of \$17,418 (2019 – \$16,070) and incurred expenses of \$934 (2019 – \$25,025) with entities that are related by virtue of David E. Mullen, a Board member having control or joint control over the other entities. There was \$3,733 (2019 – nil) of accounts receivable amounts due from these related parties as at December 31, 2020.

During the year, Mullen Group generated revenue of \$3.0 million (2019 – \$4.9 million), incurred expenses of \$0.5 million (2019 – \$0.6 million) and sold \$81,309 (2019 – nil) of property, plant and equipment with its equity investees, which are accounted for by the equity method of accounting. As at December 31, 2020, there was \$2.9 million (2019 – \$11.2 million) of accounts receivable amounts due from equity investees, including debentures and there was \$37,946 (2019 – \$16,554) of accounts payable amounts due to equity investees. At December 31, 2020, Mullen Group had \$2.7 million (2019 – \$7.8 million) of debentures owing from Thrive at an interest rate of 10.0 percent per annum calculated and payable semi-annually that mature in 2021. In 2020, Murray K. Mullen purchased a condominium in Palm Springs, California from the Corporation for \$0.4 million resulting in a \$0.2 million gain on sale of property, plant and equipment recognized within other (income) expense on the consolidated statement of comprehensive income.

All related party transactions were provided in the normal course of business materially under the same commercial terms and conditions as transactions with unrelated companies and recorded at the exchange amount.