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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

Commission file number 001-04192

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(Exact name of Registrant as specified in its charter)

Cayman Islands

(Jurisdiction of incorporation or organization)

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c/o Room 2103 Shanghai Mart Tower, 2299 Yan An Road West, Changning District, Shanghai China 200336

(Address of office)

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​ |  | ​
Samuel S. Morrow c/o Room 2103 Shanghai Mart Tower 2299 Yan An Road West, Changning District Shanghai China 200336 Telephone: 1 (844) 331-3343 Facsimile: + (86) 21 6115-6995 | ​ | with a copy to: Rod Talaifar Sangra Moller LLP 1000 Cathedral Place, 925 West Georgia Street Vancouver, British Columbia, Canada V6C 3L2 ​

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(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

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Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Shares of US$0.001 par value each | ​ | SRL | ​ | New York Stock Exchange

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Securities registered or to be registered pursuant to Section 12(g) of the Act: None.

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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

There were 14,822,251 Common Shares of US$0.001 par value each issued and outstanding as at December 31, 2024.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ YES ☒ NO

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ YES ☒ NO

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒YES ☐ NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ YES ☐ NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer, “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ Emerging growth company ☐

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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ | Other ☐

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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ◻ Item 17 ◻ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ YES ☒ NO

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April 30, 2025

DEAR FELLOW SHAREHOLDERS:

We are pleased to present the financial results of Scully Royalty Ltd. for the year ended December 31, 2024 and provide you with an update on recent corporate developments. All dollar amounts are in Canadian dollars unless otherwise provided.

| I. | Update on the Scully Mine

Overview

The Company owns a royalty interest in the Scully iron ore mine located in the Province of Newfoundland and Labrador, Canada. This royalty rate entitles the Company to 7.0% of the revenue from iron ore shipped from the mine and 4.2% from shipments derived from tailings and other disposed material, with minimum payments of $3.25 million per annum.

The Scully Iron Ore Mine

i

Letter to Shareholders

Table of Contents

Iron ore is a key raw material in steel production, making it essential for global economic development. Its demand and pricing are closely tied to the material needs of integrated steel producers. As steel produced via blast furnaces is subject to cyclical demand patterns, the iron ore market inherently experiences similar fluctuations.

Location of the Scully Iron Ore Mine

Key Ingredient for Green Steel

The Scully iron ore mine produces premium-grade ore with over 65% iron content and favorable characteristics, including low levels of contaminants such as silica, alumina, and phosphorous. Such high-grade iron ore with minimal impurities is highly valued by steelmakers worldwide, as it enhances both environmental and financial performance through more efficient raw material utilization, higher plant yields, and lower emissions. As a result, the Scully Mine’s high-quality concentrate plays a vital role in supporting the global shift toward “green” steel production. The mine is well-situated to address this growing demand because of, among other things:

Iron ore with 65% Fe content, such as the product from the Scully Iron Ore Mine, typically commands a premium over 62% Fe iron ore due to its superior quality. In 2024, the Platts 65% Fe index traded at an approximate 13% premium (US$14), with an average price of US$123 per tonne compared to US$109 per tonne for the Platts 62% Fe index.

ii

Letter to Shareholders

Table of Contents

The following chart illustrates the premium between 65% Fe and 62% Fe Iron Ore:

Tacora Resources

In 2017, Tacora Resources Inc. (“Tacora”) acquired the mine and achieved several milestones, including completing a US$276 million financing and commencing operations at the mine in 2019. Tacora disclosed that the mine has a capacity of six million tonnes per annum and produces what is considered a premium iron ore product, with Fe content in excess of 65%.

Despite nearly four years of continuous production, Tacora filed for reorganization under the Companies’ Creditors Arrangement Act (“CCAA”) in October 2023. This decision was driven primarily by challenges related to over-indebtedness.

Tacora’s New Shareholders:

In September 2024, Tacora successfully emerged from CCAA proceedings as a significantly stronger entity. The company restructured with a reduced debt burden, a leaner operating cost profile, and a newly appointed, experienced management team. Most notably, Tacora gained the backing of a new consortium of well-capitalized shareholders, demonstrating a strong commitment to the long-term success and sustainability of the Scully Mine. The consortium of investors consists of (i) Cargill, (ii) Millstreet Capital Management, and (iii) O’Brien Staley Partners. The transaction involved a US$250 million equity injection, a significantly strengthened balance sheet, new senior management and a revised business plan.

| (i) | Cargill

Cargill is the largest privately held company in the United States in terms of revenue. Cargill, Incorporated is committed to providing food, ingredients, agricultural solutions, and industrial products to nourish the world in a safe, responsible, and sustainable manner. With 159 years of experience, Cargill partners with farmers and customers to source, make, and deliver products vital for living.

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iii

Letter to Shareholders

Table of Contents

| (ii) | Millstreet Capital Management LLC

Millstreet Capital Management LLC (“Millstreet” or the “Firm”) is a Boston based SEC-registered investment adviser. Millstreet invests on behalf of endowments, foundations and other institutional investors with the goal to compound superior absolute returns that are uncorrelated to traditional asset classes. The firm focuses on exploiting inefficiencies within the small-to-mid cap segment of the high yield and leveraged loan markets. Millstreet had assets under management of almost $3 billion as at December 31, 2023.

| (iii) | O’Brien Staley Partners

O’Brien-Staley Partners (“OSP”) operates across four discrete financial business strategies: alternative asset management, market-rate impact investing, nationwide loan servicing, and deposit management. Founded by Jerry O’Brien and Warren Staley in 2010, OSP is imbued with core credit and fundamental investing discipline, risk management, and governance that are hallmarks of their personal and professional brands. O’Brien Staley Partners had assets under management of almost $2 billion as at December 31, 2023.

Historical Mine Production

The following table sets forth the total iron ore products shipped from the mine from from the second half of 2019 through 2024:

iv

Letter to Shareholders

Table of Contents

Production of iron ore at the Scully mine in 2024 was impacted by several factors, including wildfires in the Province of Newfoundland and Labrador during the summer months.

The Scully Iron Ore Mine

With the new shareholders in place, Tacora announced that it commenced a multi-year capital investment and ramp-up plan aimed at restoring the Scully Mine to its historic nameplate production capacity of six million tonnes per annum of high-grade iron ore concentrate. This initiative underscores Tacora’s commitment to optimizing operations and enhancing the mine’s long-term productivity.

Labrador Trough

The Scully Mine is located in the Labrador Trough, one of the world’s most resource-rich iron ore mining regions in eastern Canada. Renowned for its extensive high-grade iron ore deposits, including hematite and magnetite, the Labrador Trough offers exceptional long-term mining potential. The region benefits from well-developed infrastructure, such as railways and ports, enabling efficient transportation of ore to key global markets, including Asia, Europe, and the Middle East. Canada’s stable political environment and supportive regulatory framework further enhance the area’s appeal for sustainable and profitable mining operations.

Recent investment activity in the Labrador Trough is encouraging to the Eastern Canadian iron ore industry. For instance, Champion Iron Ore announced a $245 million investment from Nippon Steel and Sojitz for a minority stake in the Kami iron ore mine, located just six kilometers from the Scully Mine. This move underscores the strategic importance of high-grade iron ore assets in geopolitically stable regions and reflects the strong demand among global steel producers for reliable, premium-quality supply sources. These investments highlight the confidence in the Labrador Trough as a leading mining hub and further validate the Scully Mine’s position as a critical asset in the global iron ore market.

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v

Letter to Shareholders

Table of Contents

| II. | Dividends

The Company prioritizes enhancing shareholder value and maximizing earnings and dividends from its iron ore royalty interest. As part of this commitment, the Company’s board of directors approved the implementation of a cash dividend policy, reinforcing its focus on delivering consistent returns to shareholders.

The Scully Iron Ore Mine

In December, we announced that we had resumed our cash dividend policy with the following dividend:

| - | $0.37 (US$0.26) per Common Share to be paid on February 21, 2025 to shareholders of record on January 24, 2024.

The declaration, timing, record date and payment of future dividends will depend on, among other things, royalty payments received, and the Company's Royalty operator’s financial condition and operating results.

| III. | Rationalization of Non-Core Assets

As part of our ongoing strategy to streamline our operations and concentrate our efforts on our core asset - the Scully iron ore royalty - we previously announced that we have initiated a process to rationalize certain underperforming or non-core assets, and their associated liabilities, classified within our “All Other” segment. This strategic refocusing reflects our intent to simplify our corporate structure, reduce operating complexity, and unlock shareholder value by concentrating capital and management attention on our core asset.

As a result of this initiative, we determined that the criteria for classification as “held for sale” under IFRS 5 were met with respect to certain assets and related liabilities as at December 31, 2024. As a result, the assets and related liabilities relating to these businesses were classified as held for sale as at December 31, 2024. In aggregate, the assets held for sale represented approximately 20% (after impairment losses) of our consolidated total assets at December 31, 2024. These assets held for sale generated revenue from third parties of $9.0 million, loss before taxes of $3.3 million and a net loss of $4.5 million in 2024.

The following sets forth the assets held for sale and related liabilities as of December 31, 2024:

​ | ​ | ​
Rationalization of Non-Core Assets |  | 31-Dec-24
Total Assets | ​ | 88,500
Total Liabilities | ​ | (18,107)
Net |  | 70,393

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All intercompany assets and liabilities have been eliminated in connection with this classification. An impairment loss of $18.6 million was included in our consolidated statement of operations in 2024 in connection with the classification.

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vi

Letter to Shareholders

Table of Contents

As previously disclosed, we entered into an agreement to rationalize these assets and liabilities. This transaction is not expected to have any material impact on our net book value. Upon closing of the transaction as currently anticipated, we expect to recognize approximately $15 million of securities and approximately $55.4 million as an equity method investment. For illustrative purposes, if this transaction had closed on December 31, 2024, our shareholders’ equity would have remained at $302.3 million at such date.

| IV. | Liquid Assets

Liquidity is a cornerstone of our business. We monitor our cash balances and overall liquidity position on a regular basis to ensure we have adequate financial and operational flexibility. We seek to maintain sufficient liquid assets and working capital at all times to fund our operations.

Included in our liquid assets are: (i) cash and cash equivalents, (ii) short-term securities, which are primarily comprised of government debt securities and term deposits; and (iii) receivables collectible in the ordinary course.

The following sets forth these liquid assets and working capital for December 31, 2024, June 30, 2024, and December 31, 2023:

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31 (in C$’000s) |  | 31-Dec-24 |  | 30-Jun-24 |  | 31-Dec-23
Cash | ​ | $ | 19,052 | ​ | $ | 35,897 | ​ | $ | 78,252
Short-term securities | ​ | ​ | 23,487 | ​ | ​ | 10,259 | ​ | ​ | 12,958
Receivables | ​ | ​ | 42,274 | ​ | ​ | 72,450 | ​ | ​ | 70,330
Classified within assets held for sale: |  | ​ |  |  | ​ |  |  | ​ |
Cash |  | ​ | 32,704 |  | ​ | 32,015 |  | ​ | —
Short-term securities |  | ​ | 4,638 |  | ​ | 3,471 |  | ​ | —
Receivables |  | ​ | 42,905 |  | ​ | 8,668 |  | ​ | —
Total liquid assets | ​ | $ | 165,060 | ​ | $ | 162,760 | ​ | $ | 161,540
Current assets | ​ |  | 175,319 | ​ | ​ | 172,275 | ​ | ​ | 164,545
Current liabilities | ​ |  | 38,488 | ​ | ​ | 30,859 | ​ | ​ | 20,573
Working Capital | ​ | $ | 136,831 | ​ | $ | 141,416 | ​ | $ | 143,972

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In the ordinary course of managing our treasury, we monitor opportunities to increase the interest income we earn while maintaining a prudent risk profile and equivalent liquidity position. In 2024, we made the decision to invest in various term deposits and short-term government securities, which enhanced the yields on our liquid assets. Notwithstanding the reduction in our cash balance, our overall liquidity profile remained unchanged, as we maintain access to various liquidity facilities through our bank subsidiary that enable us to borrow against these short-term securities. As at December 31, 2024, there were no amounts drawn against these facilities. However, we may utilize them in the future should opportunities arise to generate adequate returns on a risk-adjusted basis.

vii

Letter to Shareholders

Table of Contents

| V. | Goal

Our goal and ongoing initiative is to restructure the group in a manner that substantially reduces the discount between the market price of our common shares and our stated net book value per share.

The Scully Iron Ore Mine

In the past few years, we have made substantial progress toward this goal. Today, we more cleanly fit into iron ore royalty peers than ever before:

​ |  |  |
​ | Labrador Iron Ore Royalty | Deterra Royalties | Mesabi Trust
Share Price | 27.52 | 3.56 | 26.39
Market Cap | 1.761 Billion | 1.88 | 347.55 Million
Forward Dividend Yield | 11.08% | 5.13% | 5.86%
Price / Earnings | 8.92 | 13.37 | N/A
Price / Book | 2.74 | 18.36 | 3.65

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viii

Letter to Shareholders

Table of Contents

| VI. | 2024 Financial Results

A summary of our financial position at December 31, 2024 is as follows:

​ | ​ | ​ | ​ | ​ | ​ | ​
Scully Royalty Ltd. (in C$'000s, except per share amount) |  | 31-Dec-24 |  | 31-Dec-23
Cash | ​ | $ | 19,052 | ​ | $ | 78,252
Short-term securities | ​ | ​ | 23,487 | ​ | ​ | 12,958
Trade receivables |  | ​ | 861 |  | ​ | 1,907
Tax receivables |  | ​ | 699 |  | ​ | 640
Other receivables |  | ​ | 40,714 |  | ​ | 67,783
Inventories |  | ​ | 1 |  | ​ | 1,199
Restricted cash |  | ​ | 194 |  | ​ | 397
Deposits, prepaid and other |  | ​ | 1,811 |  | ​ | 1,409
Assets held for sale |  | ​ | 88,500 |  | ​ | —
Total current assets |  | ​ | 175,319 |  | ​ | 164,545
Working capital |  | ​ | 136,831 |  | ​ | 143,972
Total assets |  | ​ | 438,095 |  | ​ | 452,467
​ | ​ | ​ | ​ | ​ | ​ | ​
Account payables and accrued expenses |  | ​ | 14,788 |  | ​ | 16,044
Income tax liabilities |  | ​ | 48 |  | ​ | 4,529
Liabilities relating to assets held for sale |  | ​ | 18,107 |  | ​ | —
Dividend payable | ​ | ​ | 5,545 | ​ | ​ | —
Total current liabilities |  | ​ | 38,488 |  | ​ | 20,573
Bonds payable, long-term |  | ​ | 36,545 |  | ​ | 36,107
Loan payable, long-term |  | ​ | — |  | ​ | 7,610
Deferred income tax liabilities |  | ​ | 51,514 |  | ​ | 58,370
Total liabilities |  | ​ | 127,770 |  | ​ | 122,797
Book Value | ​ | $ | 302,277 | ​ | $ | 322,459
Book Value per Share | ​ | $ | 20.39 | ​ | $ | 21.76

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Revenue for 2024 decreased to $35.3 million from $54.9 million in the same period of 2023 mainly as a result of the disposition of our energy interests in March 2023 and decreased royalty income in 2024. Costs of sales and services decreased to $7.1 million in 2024 from $19.1 million in 2023, primarily as a result of a merchant banking gain included in costs of sales and services, a fair value gain on our investment property, and the disposition of certain energy assets in March 2023.

Selling, general and administrative expenses increased to $25.3 million in 2024 from $24.2 million in 2023 primarily due to the stronger Euro against the Canadian dollar and other expenses.

In 2024, we recognized a non-cash impairment loss of $18.6 million on assets held for sale in connection with the aforementioned rationalization transaction.

We recognized an income tax recovery (other than resource property revenue taxes) of $2.6 million in 2024, compared to an income tax expense (other than resource property revenue taxes) of $1.9 million in 2023. Excluding resource property revenue taxes, we paid $0.3 million in income tax in cash during 2024 and, in 2023, excluding resource property revenue taxes, we paid $0.4 million in income tax in cash during 2023. We also recognized a resource property revenue tax expense of $3.9 million in 2024, compared to $6.9 million in 2023.

In 2024, our net loss attributable to shareholders was $20.6 million, or $1.39 per share on a basic and diluted basis, compared to net income attributable to shareholders of $1.4 million, or $0.09 per share on a basic and diluted basis attributable to shareholders in 2023.

As at December 31, 2024, cash decreased to $19.1 million from $78.3 million as at December 31, 2023. The decrease was primarily the result of increased investments in securities and the classification of assets as held for sale.

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We had short-term securities of $23.5 million as at December 31, 2024 and $13.0 million as at December 31, 2023, which comprised of government and other securities.

Trade receivables and other receivables were $0.9 million and $40.7 million, respectively, as at December 31, 2024, compared to $1.9 million and $67.8 million, respectively, as at December 31, 2023.

We had bonds payable of $36.5 million as at December 31, 2024 and $36.1 million as at December 31, 2023. In 2024, the terms of these bonds were amended to extend their maturity date from August 2026 to August 2033 and increase the interest rate from 4.00% to 5.70% per annum.

As at December 31, 2024, we had deferred income tax liabilities of $51.5 million compared to $58.4 million as at December 31, 2023. These deferred income tax liabilities primarily relate to the difference in the tax basis and the carrying value of our iron ore royalty interest.

| VII. | Stakeholder Communication

We welcome any questions you may have and looks forward to discussing our operations, results and plans with stakeholders. Further:

| - | stakeholders are encouraged to read our entire Annual Report on form 20-F for the year ended December 31, 2024, which includes our audited financial statements and management’s discussion and analysis for such period for a greater understanding of our business and operations; and

| - | direct any questions regarding the information in this report to our North American toll-free line at 1 (844) 331 3343 or email info@scullyroyalty.com to book a conference call with our senior management.

Respectfully Submitted,

​
Samuel Morrow
President, Chief Executive Officer
& Chief Financial Officer

​

​

​

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SCULLY ROYALTY LTD.

Form 20-F

TABLE OF CONTENTS

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INTRODUCTORY MATTERS |  | 1
PART I | ​ | 1
FORWARD-LOOKING STATEMENTS | ​ | 1
CURRENCY INFORMATION | ​ | 1
NOTE ON FINANCIAL AND OTHER INFORMATION | ​ | 2
ITEM 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | ​ | 2
ITEM 2: OFFER STATISTICS AND EXPECTED TIMETABLE | ​ | 2
ITEM 3: KEY INFORMATION | ​ | 2
A. [RESERVED] | ​ | 2
B. Capitalization and Indebtedness | ​ | 2
C. Reasons for the Offer and Use of Proceeds | ​ | 2
D. Risk Factors | ​ | 2
ITEM 4: INFORMATION ON THE COMPANY | ​ | 11
A. History and Development of the Company | ​ | 11
B. Business Overview | ​ | 12
C. Organizational Structure | ​ | 15
D. Property, Plants and Equipment | ​ | 15
ITEM 4A: UNRESOLVED STAFF COMMENTS | ​ | 21
ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS | ​ | 21
General | ​ | 21
Business Environment | ​ | 22
Rationalization of Non-Core Assets | ​ | 22
Results of Operations | ​ | 23
Liquidity and Capital Resources | ​ | 28
Critical Accounting Estimates | ​ | 35
New Standards and Interpretations Not Yet Adopted | ​ | 38
Trend Information | ​ | 38
Safe Harbor | ​ | 38
ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | ​ | 39
A. Directors and Senior Management | ​ | 39
B. Compensation | ​ | 40
C. Board Practices | ​ | 42
D. Employees | ​ | 43
E. Share Ownership | ​ | 43
F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation | ​ | 44
ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | ​ | 44
A. Major Shareholders | ​ | 44
B. Related Party Transactions | ​ | 45
C. Interests of Experts and Counsel | ​ | 45
ITEM 8: FINANCIAL INFORMATION | ​ | 45
A. Consolidated Statements and Other Financial Information | ​ | 45
B. Significant Changes | ​ | 46
ITEM 9: THE OFFER AND LISTING | ​ | 46
A. Offer and Listing Details | ​ | 46
B. Plan of Distribution | ​ | 46
C. Markets | ​ | 46
D. Selling Shareholders | ​ | 46
E. Dilution | ​ | 47
F. Expenses of the Issue | ​ | 47

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ITEM 10: ADDITIONAL INFORMATION | ​ | 47
A. Share Capital | ​ | 47
B. Memorandum and Articles of Association | ​ | 47
C. Material Contracts | ​ | 49
D. Exchange Controls | ​ | 49
E. Taxation | ​ | 49
F. Dividends and Paying Agents | ​ | 53
G. Statement by Experts | ​ | 53
H. Documents on Display | ​ | 53
I. Subsidiary Information | ​ | 53
J. Annual Report to Security Holders | ​ | 53
ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | ​ | 54
ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | ​ | 54
PART II | ​ | 55
ITEM 13: DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | ​ | 55
ITEM 14: MATERIAL MODIFICATIONS TO RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | ​ | 55
ITEM 15: CONTROLS AND PROCEDURES | ​ | 55
ITEM 16: [RESERVED] | ​ | 56
ITEM 16A: AUDIT COMMITTEE FINANCIAL EXPERT | ​ | 56
ITEM 16B: CODE OF ETHICS | ​ | 56
ITEM 16C: PRINCIPAL ACCOUNTANT FEES AND SERVICES | ​ | 56
ITEM 16D: EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES | ​ | 57
ITEM 16E: PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | ​ | 57
ITEM 16F: CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT | ​ | 57
ITEM 16G: CORPORATE GOVERNANCE | ​ | 58
ITEM 16H: MINE SAFETY DISCLOSURE | ​ | 58
ITEM 16I: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | ​ | 58
ITEM 16J: INSIDER TRADING POLICIES | ​ | 58
ITEM 16K: CYBERSECURITY | ​ | 58
ITEM 17: FINANCIAL STATEMENTS | ​ | 59
ITEM 18: FINANCIAL STATEMENTS | ​ | 60
ITEM 19: EXHIBITS | ​ | 121

​

​

​

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INTRODUCTORY MATTERS

All references in this document to “$” and “dollars” are to Canadian dollars, all references to “US$” are to United States dollars and all references to “Euro” or “€” are to the European Union Euro, unless otherwise indicated.

Unless the context otherwise indicates, references herein to “we”, “us”, “our” or the “Company” are to Scully Royalty Ltd. and its consolidated subsidiaries.

PART I

FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking information and statements, including statements relating to matters that are not historical facts and statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, including “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, as amended, collectively referred to as “forward-looking statements”. Forward-looking statements are typically identified by words such as “anticipate”, “could”, “should”, “expect”, “may”, “intend”, “will”, “plan”, “estimate”, “believe” and similar expressions suggesting future outcomes or statements or their negative or other comparable words. Forward-looking statements include, but are not limited to, statements with respect to: future performance, business plans and prospects and expectations regarding economic conditions, our markets, legal proceedings and other future events. All such forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. These forward-looking statements are, however, subject to known and unknown risks and uncertainties and other factors. As a result, actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits will be derived therefrom. These risks, uncertainties and other factors include, among others, those set forth under the heading entitled “Item 3: Key Information – D. Risk Factors”.

Although we believe that the expectations reflected in such forward-looking information and statements are reasonable, we can give no assurance that such expectations will prove to be accurate. Accordingly, readers should not place undue reliance upon any of the forward-looking information and statements set out in this document. The forward-looking information and statements are made as of the date of this document and we assume no obligation to update or revise them except as required pursuant to applicable securities laws.

CURRENCY INFORMATION

The following table sets forth the exchange rates for the translation of United States dollars to Canadian dollars in effect at the end of each of the three most recent financial years. The exchange rates are based on the average daily rate of exchange as reported by the Bank of Canada.

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Years Ended December 31,
​ |  | 2024 |  | 2023 |  | 2022
​ |  | ($/US$)
End of period |  | 1.4389 | ​ | 1.3226 | ​ | 1.3544
High for period |  | 1.3316 | ​ | 1.3128 | ​ | 1.2451
Low for period |  | 1.4416 | ​ | 1.3857 | ​ | 1.3856
Average for period |  | 1.3698 | ​ | 1.3497 | ​ | 1.3013
​ |  | ($/€)
End of period |  | 1.4928 | ​ | 1.4626 | ​ | 1.4458
High for period |  | 1.4490 | ​ | 1.4211 | ​ | 1.2897
Low for period |  | 1.5141 | ​ | 1.5053 | ​ | 1.4606
Average for period |  | 1.4818 | ​ | 1.4597 | ​ | 1.3696

​

On April 28, 2025, the average daily rate of exchange for the translation of United States dollars and Euros to Canadian dollars were US$1.00 = $1.3850 and €1.00 = $1.5773, respectively.

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NOTE ON FINANCIAL AND OTHER INFORMATION

Unless otherwise stated, all financial information presented herein has been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, referred to as “IFRS” and the “IASB”, respectively, which may not be comparable to financial data prepared by many U.S. companies.

Due to rounding, numbers presented throughout this document may not add up precisely to the totals we provide and percentages may not precisely reflect the absolute figures.

All websites referred to herein are inactive textual references only, meaning that the information contained on such websites is not incorporated by reference herein and you should not consider information contained on such websites as part of this document unless expressly specified.

​

NON-IFRS FINANCIAL MEASURES

​

This document includes “non-IFRS financial measures”, that is, financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measure calculated and presented in accordance with IFRS. Specifically, we make use of the non-IFRS measures “EBITDA”.

​

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Our management uses EBITDA as a measure of our operating results and considers it to be a meaningful supplement to net income as a performance measurement, primarily because we incur significant depreciation and EBITDA eliminates the non-cash impact.

​

EBITDA is used by investors and analysts for the purpose of valuing an issuer. The intent of EBITDA is to provide additional useful information to investors and the measure does not have any standardized meaning under IFRS. Accordingly, this measure should not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. For a reconciliation of net income from continuing operations to EBITDA, please see “Item 5: Operating and Financial Review and Prospects – Results of Operations”.

​

ITEM 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

​

ITEM 2: OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

​

ITEM 3: KEY INFORMATION

A. [RESERVED]

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

An investment in our common shares of US$0.001 par value each, referred to as the “Common Shares”, involves a number of risks. You should carefully consider the following risks and uncertainties in addition to other information in this annual report on Form 20-F in evaluating our Company and our business before making any investment decisions. Our business, operating and financial condition could be harmed due to any of the following risks.

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Risk Factors Relating to Our Business

Our financial results may fluctuate substantially from period to period.

We expect our business to experience significant periodic variations in its revenue and results of operations in the future. These variations may be attributed to varying iron ore prices and production levels at the mine underlying our royalty interest. Additionally, they may result from the fact that our merchant banking revenue is often earned upon the successful completion of a transaction, the timing of which is uncertain and beyond our control. In many cases, we may receive little or no payment for engagements that do not result in the successful completion of a transaction. Additionally, we seek to acquire undervalued assets where we can use our experience and management to realize upon the value. Often, we will hold or build upon these assets over time and we cannot predict the timing of when these assets’ values may be realized. As a result, we are unlikely to achieve steady and predictable earnings, which could in turn adversely affect our financial condition and results of operations.

A weakening of the global economy, including capital and credit markets, could adversely affect our business and financial results and have a material adverse effect on our liquidity and capital resources.

Our business, by its nature, does not produce predictable earnings and it may be materially affected by conditions in the global financial markets and economic conditions generally. As demand for our products and merchant banking services has historically been determined by general global macro-economic activities, demand and prices for our products and services have historically decreased substantially during economic slowdowns. A significant economic downturn may affect our sales and profitability and may adversely affect our suppliers and customers. Further, an economic downturn may impact the operations and production of the iron ore mine underlying our royalty interest. Depending on their severity and duration, the effects and consequences of a global economic downturn could have a material adverse effect on our liquidity and capital resources, including our ability to raise capital, if needed, and otherwise negatively impact our business and financial results.

A weakening of global economic conditions would likely aggravate the adverse effects of difficult economic and market conditions on us and on others in our industries. In particular, we may face, among others, the following risks related to any future economic downturn: reduced or volatile iron ore prices, increased regulation of our banking operations; compliance with such regulation may increase the costs of our banking operations, may affect the pricing of our products and services and limit our ability to pursue business opportunities; reduced demand for our products and services; inability of our customers to comply fully or in a timely manner with their existing obligations; and the degree of uncertainty concerning economic conditions may adversely affect the accuracy of our estimates, which, in turn, impact the reliability of the process and the sufficiency of our credit loss allowances.

Further, any disruption or volatility in the global financial markets could have a material adverse effect on us, including our ability to access capital and liquidity on financial terms acceptable to us, if at all. Market deterioration and weakness can result in a material decline in the number and size of the transactions that we execute for our own account or for our clients and a corresponding decline in our revenue. Any market weakness can further result in losses to the extent that we hold assets in such market. If all or some of the foregoing risks were to materialize, this could have a material adverse effect on us.

Our business is highly competitive.

Aspects of our business are highly competitive and we expect them to remain so.

Our competitors include merchant and investment banks, brokerage firms, commercial banks, private equity firms, hedge funds, financial advisory firms and mineral royalty companies. Some of our competitors have substantially greater capital and resources, including access to supply, than we do. We believe that the principal factors affecting competition in our business include transaction execution, our products and services, client relationships, reputation, innovations, credit worthiness and price.

The scale of our competitors has increased in recent years as a result of substantial consolidation. These firms may have the ability to offer a wider range of products than we do, which may enhance their competitive position.

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Our earnings and, therefore, our profitability may be affected by price volatility in our various products.

A significant portion of our revenue in 2024 was derived from our iron ore royalty interest. Any revenues from our royalty interest are impacted by the price of iron ore. As such, our earnings are directly related to the price of iron ore and demand for steel products. There are many factors influencing the price and demand for these products, including: expectations for inflation; global and regional demand and production; international trade policy and developments; political and economic conditions; and production costs in major producing regions. These factors are beyond our control and are impossible for us to predict. Changes in the prices of our products may adversely affect our operating results.

Continued volatile global financial and geopolitical conditions may negatively impact us or our counterparties.

Global financial conditions have been characterized by ongoing volatility. Global financial conditions could suddenly and rapidly destabilize in response to future events, as government authorities may have limited resources to respond to future crises. Global capital markets have continued to display increased volatility in response to global events. Future crises may be precipitated by any number of causes, including natural disasters, geopolitical instability, civil unrest, changes to energy prices or sovereign defaults. Ongoing geopolitical challenges such as the Ukraine-Russia war, conflict in the Middle East, tensions between the United States and China, imposition of new tariffs by the U.S. government and related countermeasures and other proposed changes to international trade policies have contributed to volatility in global financial conditions.

The United States of America has recently enacted and proposed to enact significant new tariffs on Canada, China and other countries and certain of the countries have enacted countermeasures. These and related developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions, the stability of global financial markets and the price and demand for iron ore. The economic impact of tariffs and countermeasures on the Canadian, American and global economy could result in increased volatility in commodity prices and negatively impact capital markets and the operations of the iron ore mine underlying our royalty interest, which may negatively impact our business, results of operations, cash flows and financial condition.

We may face a lack of suitable acquisition, merger or other proprietary investment candidates, which may limit our growth.

In order to grow our business, we may seek to acquire, merge with or invest in new companies or opportunities. Our failure to make acquisitions or investments may limit our growth. In pursuing acquisition and investment opportunities, we face competition from other companies having similar growth and investment strategies, many of which may have substantially greater resources than us. Competition for these acquisitions or investment targets could result in increased acquisition or investment prices, higher risks and a diminished pool of businesses, services or products available for acquisition or investment.

We manage transaction risks through allocating and monitoring our capital investments in circumstances where the risk to our capital is minimal, carefully screening clients and transactions and engaging qualified personnel to manage transactions. Nevertheless, transaction risks can arise from our proprietary investing activities. These risks include market and credit risks associated with our operations. We intend to make investments in highly unstructured situations and in companies undergoing severe financial distress and such investments often involve severe time constraints. These investments may expose us to significant transaction risks. An unsuccessful investment may result in the total loss of such investment and may have a material adverse effect on our business, results of operations, financial condition and cash flow.

The operation of the iron ore mine underlying our royalty interest is generally determined by a third-party operator and we currently have no decision-making power as to how the property is operated. In addition, we have no or very limited access to technical or geological data respecting the mine, including as to mineralization or reserves. The operator’s failure to perform or other operating decisions could have a material adverse effect on our revenue, results of operations and financial condition.

The operator of the iron ore mine underlying our royalty interest generally has the power to determine the manner in which the property is operated. The interests of the operator and our interests may not always be aligned. Our inability to control the operations of the mine can adversely affect our profitability, results of operations and financial condition. In addition, we have no or very limited access to technical or geological data respecting the mine, including as to mineralization and reserves.

To the extent grantors of royalties and other interests do not abide by their contractual obligations, we may be forced to take legal action to enforce our contractual rights. Should any decision with respect to such action be determined adversely to us, such decision may have a material adverse effect on our profitability, results of operations and financial condition.

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In addition, we have no or very limited access to technical or geological data relating to the mine and operations underlying our interest, including reserves data. Accordingly, we can provide no assurances as to the level of reserves at the mine. If the operator determines there are insufficient reserves to economically operate the mine, it may abandon, scale back or cease operations, which could have a material adverse effect on our profitability, results of operations and financial condition.

Our activities are subject to counterparty risks associated with the performance of obligations by our counterparties.

Our business is subject to commercial risks, which include counterparty risk, such as failure of performance by our counterparties. We seek to reduce the risk of non-performance by requiring credit support from creditworthy financial institutions where appropriate. We also attempt to reduce the risk of non-payment by customers or other counterparties by imposing limits on open accounts extended to creditworthy customers and imposing credit support requirements for other customers. Nevertheless, we are exposed to the risk that parties owing us or our clients and other financial intermediaries may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. These counterparty obligations may arise, for example, from placing deposits, the extension of credit or guarantees in trading and investment activities and participation in payment, securities and supply chain transactions on our behalf and as an agent on behalf of our clients. If any such customers or counterparties default on their obligations, our business, results of operations, financial condition and cash flow could be adversely affected.

In addition, we evaluate the credit risk in respect of accounts receivable and other amounts owed to us by counterparties, including loss allowances. We may recognize losses on such amounts where, based on such evaluations, we determine that the related credit risk has increased significantly. Furthermore, while we take steps to mitigate such credit risks, our actual losses on such balances may differ from our assessments and currently anticipated loss allowances and, as a result, we may recognize impairments in the future.

Our risk management strategies may leave us exposed to unidentified or unanticipated risks that could impact our risk management strategies in the future and could negatively affect our results of operations and financial condition.

We use a variety of instruments and strategies to manage exposure to various types of risks. For example, we may use derivative foreign exchange contracts to manage our exposure and our clients’ exposure to foreign currency exchange rate risks. If any of the variety of instruments and strategies we utilize to manage our exposure to various types of risk are not effective, we may incur losses. Many of our strategies are based on historical trading patterns and correlations. However, these strategies may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk. Unexpected market developments may affect our risk management strategies and unanticipated developments could impact our risk management strategies in the future.

If the fair values of our long-lived assets or their recoverable amounts fall below our carrying values, we would be required to record non-cash impairment losses that could have a material impact on our results of operations.

We review the carrying value of long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Should the markets for our products deteriorate, should we decide to invest capital differently or should other cash flow assumptions change, it is possible that we will be required to record non-cash impairment losses in the future that could have a material adverse effect on our results of operations.

A significant portion of our revenue comes from our iron ore royalty interest, which means that adverse developments at this project could have a more significant or lasting impact on our results of operations than if our revenue was less concentrated.

Approximately 57% of our revenue for the year ended December 31, 2024 came from our royalty interest in the Scully iron ore mine (the “Scully Mine”). We expect this interest to continue to represent a significant portion of our revenue going forward. This concentration of revenue could mean that adverse developments, including any adverse decisions made by the operator thereof could have a more significant or longer-term impact on our results of operations than if our revenue was less concentrated.

The value and revenue from our royalty interest are subject to many of the risks faced by the operator of the underlying project.

Our royalty interest generally generates revenue when the operator of the underlying project generates meaningful production. Ongoing revenue from our interest is dependent on the operator achieving sustained production levels. As such, we are subject to the risk factors applicable to the owners and operators of mining projects.

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We are also subject to business risks that may impact the operator of the project underlying our royalty interest, including: failures to execute its business plans; any inability to obtain necessary financing on acceptable terms or at all, to finance operations; changes in mining taxes; litigation risks; permitting risks; title risks; general market risks and operational disruptions. These risks and others consistently faced by mine operators may adversely impact the value of our royalty and our financial results and position.

Mineral development and production generally involves a high degree of risk. Such operations are subject to all of the hazards and risks normally encountered in the exploration, development and production of metals, including weather related events, unusual and unexpected geology formations, seismic activity, environmental hazards and the discharge of toxic chemicals, explosions and other conditions involved in the drilling, blasting and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to property, injury or loss of life, environmental damage, work stoppages, delays in exploration, development and production, increased production costs and possible legal liability. Any of these hazards and risks and other acts of God could shut down such activities temporarily or permanently. Mineral development and production is subject to hazards such as equipment failure or failure of retaining dams around tailings disposal areas, which may result in environmental pollution and consequent liability for the owners or operators thereof. The exploration for, and development, mining and processing of, mineral deposits involves significant risks that even a combination of careful evaluation, experience and knowledge may not eliminate.

Derivative transactions may expose us to unexpected risk and potential losses.

We, from time to time, enter into derivative transactions that require us to deliver to the counterparty an underlying security, loan or other obligation in order to receive payment. Such derivative transactions may expose us to unexpected market, credit and operational risks that could cause us to suffer unexpected losses. Severe declines in asset values, unanticipated credit events or unforeseen circumstances may create losses from risks not appropriately taken into account in the structuring and/or pricing of a derivative transaction.

The operations of our banking subsidiary are subject to regulation, which could adversely affect our business and operations.

The operations of our regulated bank subsidiary, referred to as the “Bank”, are subject to a number of directives and regulations, which materially affect our businesses. The statutes, regulations and policies to which we are subject may be changed at any time. In addition, the interpretation and the application by regulators of the laws and regulations to which we are subject may also change from time to time. Extensive legislation affecting the financial services industry has recently been adopted in Europe that directly or indirectly affects our business and regulations are in the process of being implemented. The manner in which those laws and related regulations are applied to the operations of credit institutions is still evolving. Any legislative or regulatory actions and any required changes to our business operations resulting from such legislation and regulations could result in significant loss of revenue, limit our ability to pursue business opportunities in which we might otherwise consider engaging or provide certain products and services, affect the value of assets that we hold, require us to increase our prices and therefore reduce demand for our financial products, impose additional compliance and other costs on us or otherwise adversely affect our businesses. Accordingly, there can be no assurance that future changes in regulations or in their interpretation or application will not adversely affect us. Please see “Item 4: Information on the Company – B. Business Overview – Regulation” for further information.

Further, the operations of our Bank may involve transactions with counterparties in the financial services industry, including commercial banks, investment banks and other institutional clients. Defaults by, and even rumors or questions about the solvency of certain financial institutions and the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by other institutions. We may enter into transactions that could expose us to significant credit risk in the event of default by one of our significant counterparties. A default by a significant financial counterparty, or liquidity problems in the financial services industry generally, could have a material adverse effect on us.

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Any failure to remain in compliance with sanctions, anti-money laundering laws or other applicable regulations in the jurisdictions in which we operate could harm our reputation and/or cause us to become subject to fines, sanctions or legal enforcement, which could have an adverse effect on our business, financial condition and results of operations.

Our business has adopted policies and procedures respecting compliance with sanctions and anti-money laundering laws and we have adopted various policies and procedures to ensure compliance with specific laws applicable to it, including internal controls and “know-your-customer” procedures aimed at preventing money laundering and terrorism financing; however, participation of multiple parties in any given transaction can make the process of due diligence difficult. Further, because our Bank’s activities can be more document-based than other banking activities, it is susceptible to documentary fraud, which can be linked to money laundering, terrorism financing, illicit activities and/or the circumvention of sanctions or other restrictions (such as export prohibitions, licencing requirements or other trade controls). While we are alert to high-risk transactions, we are also aware that efforts, such as forgery, double invoicing, partial shipments of goods and use of fictitious goods may be used to evade applicable laws and regulations. If our policies and procedures are ineffective in preventing third parties from using our finance operations as a conduit for money laundering or terrorism financing without our knowledge, our reputation could suffer and/or we could become subject to fines, sanctions or legal action (including being added to any “blacklists” that would prohibit certain parties from engaging in transactions with us, including our banking subsidiary), which could have an adverse effect on our business, financial condition and results of operations. In addition, amendments to sanctions, anti-money laundering laws or other applicable laws or regulations in countries in which we operate could impose additional compliance burdens on our operations.

Fluctuations in interest rates and foreign currency exchange rates may affect our results of operations and financial condition.

Fluctuations in interest rates may affect the fair value of our financial instruments sensitive to interest rates. An increase or decrease in market interest rates may result in changes to the fair value of our fixed interest rate financial instrument liabilities, thereby resulting in a reduction in the fair value of our equity. Similarly, fluctuations in foreign currency exchange rates may affect the fair value of our financial instruments sensitive to foreign currency exchange rates.

Limitations on our access to capital could impair our liquidity and our ability to conduct our business.

Liquidity, or ready access to funds, is essential to companies engaged in our business. Failures of financial firms have often been attributable in large part to insufficient liquidity. Liquidity is of particular importance to our merchant banking business and perceived liquidity issues may affect our clients’ and counterparties’ willingness to engage in transactions with us. Our liquidity could be impaired due to circumstances that we may be unable to control, such as a general market disruption or an operational problem that affects our clients, counterparties, our lenders or us. Further, our ability to sell assets may be impaired if other market participants are seeking to sell similar assets at the same time.

We may require new capital to grow our business and there are no assurances that capital will be available when needed, if at all. It is likely such additional capital will be raised through the issuance of additional equity, which would result in dilution to our shareholders. A failure to obtain such additional capital could delay our ability to pursue our business plans in the future and adversely affect our future operations.

We may substantially increase our debt in the future.

It may be necessary for us to obtain financing with banks or financial institutions to provide funds for working capital, capital purchases, potential acquisitions and business development. Interest costs associated with any debt financing may adversely affect our profitability. Further, the terms on which amounts may be borrowed – including standard financial covenants regarding the maintenance of financial ratios, the prohibition against engaging in major corporate transactions or reorganizations and the payment of dividends – may impose additional constraints on our business operations and our financial strength.

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As a result of our global operations, we are exposed to political, economic, legal, operational and other risks that could adversely affect our business, results of operations, financial condition and cash flow.

In conducting our business in major markets around the world, we are subject to political, economic, legal, operational and other risks that are inherent in operating in other countries. These risks range from difficulties in settling transactions in emerging markets to possible nationalization, expropriation, price controls, other restrictive governmental actions, and terrorism. We also face the risk that exchange controls or similar restrictions imposed by foreign governmental authorities may restrict our ability to convert local currency received or held by us in their countries into Canadian dollars, U.S. dollars, Euros or other hard currencies or to take those other currencies out of those countries. If any of these risks become a reality, our business, results of operations, financial condition and cash flow could be negatively impacted.

As we operate internationally, we are subject to the United States’ Foreign Corrupt Practices Act of 1977 and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by the United States and other business entities that have securities registered in the United States for the purpose of obtaining or retaining business. We have operations and agreements with third parties in countries known to experience corruption. Further international expansion may involve more exposure to such practices. Our activities in these countries create the risk of unauthorized payments or offers of payments by our employees or consultants that could be in violation of various laws including the Foreign Corrupt Practices Act of 1977, even though these parties are not always subject to our control. It is our policy to implement safeguards to discourage these practices by our employees and consultants. However, our existing safeguards and any future improvements may prove to be less than effective and our employees or consultants may engage in conduct for which we might be held responsible. Violations of the Foreign Corrupt Practices Act of 1977 may result in criminal or civil sanctions and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.

We are exposed to litigation risks in our business that are often difficult to assess or quantify and we could incur significant legal expenses every year in defending against litigation.

We are exposed to legal risks in our business and the volume and amount of damages claimed in litigation against financial intermediaries are increasing. These risks include potential liability for advice we provide to participants in corporate transactions and disputes over the terms and conditions of complex trading arrangements. We also face the possibility that counterparties in complex or risky trading transactions will claim that we improperly failed to inform them of the risks involved or that they were not authorized or permitted to enter into such transactions with us and, accordingly, that their obligations to us are not enforceable. During a prolonged market downturn, we expect these types of claims to increase. We are also exposed to legal risks in our merchant banking and proprietary investing activities.

We seek to invest in undervalued businesses or assets often as a result of financial, legal, regulatory or other distress affecting them. Investing in distressed businesses and assets can involve us in complex legal issues relating to priorities, claims and other rights of stakeholders. These risks are often difficult to assess or quantify and their existence and magnitude often remains unknown for substantial periods of time. We may incur significant legal and other expenses in defending against litigation involved with any of these risks and may be required to pay substantial damages for settlements and/or adverse judgments. Substantial legal liability or significant regulatory action against us could have a material adverse effect on our financial condition and results of operations.

We rely significantly on the skills and experience of our executives and the loss of any of these individuals may harm our business.

Our future success depends to a significant degree on the skills, experience and efforts of our executives and the loss of their services may compromise our ability to effectively conduct our business. We do not maintain “key person” insurance in relation to any of our employees.

The loss of any of our management personnel could negatively affect our business operations. From time to time, we will also need to identify and retain additional skilled management and specialized technical personnel to efficiently operate our business. The competition for such persons is intense. Recruiting and retaining qualified personnel is critical to our success and there can be no assurance of our ability to attract and retain such personnel. If we are not successful in attracting and retaining qualified personnel, our ability to execute our business model and strategy could be affected, which could have a material adverse impact on our profitability, results of operations and financial condition.

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We face various risks related to health epidemics, pandemics and similar outbreaks, which could have material adverse effects on our business, results of operations or financial position.

Health epidemics, pandemics and similar outbreaks could cause significant volatility and uncertainty in the global economy and financial markets, supply chain issues, labor shortages, and declines in metal prices, and such events could adversely affect the operations at the project underlying our royalty interest or our merchant banking operations. The effects of health epidemics, pandemics and similar outbreaks will ultimately depend on many factors that are outside of our control (including the severity and duration of such events and government and operator actions in response to such events) and could materially and adversely impact our business, results of operations or financial position.

Strategic investments or acquisitions and joint ventures, or our entry into new business areas, may result in additional risks and uncertainties in our business.

We may make strategic investments and acquisitions or joint ventures and similar transactions in the future. When we make strategic investments or acquisitions or enter into joint ventures, we expect to face numerous risks and uncertainties in combining or integrating the relevant businesses and systems, including the need to combine accounting and data processing systems and management controls and to integrate relationships with customers and business partners. The costs of integrating acquired businesses (including restructuring charges associated with the acquisitions, as well as other related costs, such as accounting, legal and advisory fees) could significantly impact our operating results.

Although we perform due diligence on the businesses we purchase, in light of the circumstances of each transaction, an unavoidable level of risk remains regarding the actual condition of these businesses. We may not be able to ascertain the value or understand the potential liabilities of the acquired businesses and their operations until we assume operating control of these businesses.

Furthermore, any acquisitions of businesses or facilities could entail a number of risks, including, among others: problems with the effective integration of operations; inability to maintain key pre-acquisition business relationships; increased operating costs; exposure to substantial unanticipated liabilities; difficulties in realizing projected efficiencies, synergies and cost savings; the risks of entering markets in which we have limited or no prior experience; and the possibility that we may be unable to recruit additional managers with the necessary skills to supplement the management of the acquired businesses.

In addition, geographic and other expansions, acquisitions or joint ventures may require significant managerial attention, which may be diverted from our other operations. If we are unsuccessful in overcoming these risks, our business, financial condition or results of operations could be materially and adversely affected.

Tax audits or disputes, or changes in the tax laws applicable to us, could materially increase our tax payments.

We exercise significant judgment in calculating our provision for income taxes and other tax liabilities. Although we believe our tax estimates are reasonable, many factors may affect their accuracy. Applicable tax authorities may disagree with our tax treatment of certain material items potentially causing an increase in tax liabilities. Due to the size, complexity and nature of our operations, various tax matters and litigation are outstanding from time to time, including relating to our former affiliates. Currently, based upon information available to us, we do not believe any such matters would have a material adverse effect on our financial condition or results of operations. However, due to the inherent uncertainty, we cannot provide certainty as to their outcome. If our current assessments are materially incorrect or if we are unable to resolve any of these matters favourably, there may be a material adverse impact on our financial performance, cash flows or results of operations.

Furthermore, changes to existing laws may also increase our effective tax rate. A substantial increase in our tax burden could have an adverse effect on our financial results. Please see “Item 8: Financial Information – A. Consolidated Statements and Other Financial Information” for further information.

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Restrictions on the remittance of Renminbi into and out of China and governmental control of currency conversion may limit our ability to pay dividends and other obligations, and affect the value of your investment.

A portion of our assets held for sale consists of cash held in China in Renminbi, referred to as “RMB”. The government of the People’s Republic of China, referred to as the “PRC”, imposes controls on the convertibility of the RMB into foreign currencies and the remittance of currency out of the PRC. We may convert a portion of our revenues held by our subsidiary in the PRC into other currencies to meet our foreign currency obligations. Shortages in the availability of foreign currency may restrict the ability of our PRC subsidiary to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy its foreign currency denominated obligations.

Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the PRC State Administration of Foreign Exchange, referred to as “SAFE”, as long as certain routine procedural requirements are fulfilled. However, approval from or registration with competent government authorities is required where the RMB is to be converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to utilize such funds for purposes outside of the PRC.

Failures or security breaches of our information technology systems could disrupt our operations and negatively impact our business.

We use information technologies, including information systems and related infrastructure as well as cloud applications and services to store, transmit, process and record sensitive information, including employee information and financial and operating data, communicate with our employees and business partners and for many other activities related to our business. Our business partners, including operating partners, suppliers, customers and financial institutions, are also dependent on digital technology. Some of these business partners may be provided limited access to our sensitive information or our information systems and related infrastructure in the ordinary course of business.

Despite security design and controls, our information technology systems, and those of our third-party partners and providers, may be vulnerable to a variety of interruptions, including during the process of upgrading or replacing software, databases or components thereof, natural disasters, terrorist attacks, telecommunications failures, computer viruses, cyber-attacks, the activities of hackers, unauthorized access attempts and other security issues or may be breached due to employee error, malfeasance or other disruptions. Any such interruption or breach could result in operational disruptions or the misappropriation of sensitive data that could subject us to civil and criminal penalties, litigation or have a negative impact on our reputation. There can be no assurance that such disruptions or misappropriations and the resulting repercussions will not negatively impact our cash flows and materially affect our results of operations or financial condition.

General Risks Faced by Us

Investors’ interests may be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.

Our constating documents authorize the issuance of our Common Shares and preference shares, issuable in series. In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors’ interests in us will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we issue any such additional shares, such issuances will also cause a reduction in the proportionate ownership of all other shareholders. Further, any such issuance may result in a change of control of our Company.

Certain factors may inhibit, delay or prevent a takeover of our Company, which may adversely affect the price of our Common Shares.

Certain provisions of our charter documents may discourage, delay or prevent third parties from effecting a change of control or changes in our management in a tender offer or otherwise engaging in a merger or similar type of transaction with us. If a change of control or change of management is delayed or prevented, the market price of our Common Shares could decline.

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Any future weaknesses or deficiencies or failures to maintain internal controls or remediate weaknesses could impair our ability to produce accurate and timely financial statements.

If material weaknesses in our internal controls are discovered in the future, our ability to report our financial results on a timely and accurate basis could be impacted in a materially adverse manner, and, as a result, our financial statements may contain material misstatements or omissions. If we cannot maintain and execute adequate internal control over financial reporting that provides reasonable assurance of the reliability of the financial reporting and preparation of our financial statements for external use, we could suffer harm to our reputation, fail to meet our public reporting requirements on a timely basis, cause investors to lose confidence in our reported financial information or be unable to properly report on our business and the results of our operations, and the trading price of our Common Shares could be materially adversely affected.

Investors may face difficulties in protecting their interests, and their ability to protect their rights through United States courts may be limited, because we are incorporated under Cayman Islands law.

We are incorporated under the laws of the Cayman Islands and substantially all of our operations and assets are located outside the United States. Our corporate affairs are governed by our memorandum and articles of association, the Companies Law of the Cayman Islands (2020 Revision), as amended, referred to as the “Cayman Act” and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. In addition, a majority of our directors and officers are nationals and residents of countries other than the United States. The Cayman Islands courts are also unlikely to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and to impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

​

ITEM 4: INFORMATION ON THE COMPANY

A. History and Development of the Company

We are a company organized under the Cayman Act that was incorporated on June 5, 2017. Our office is located at c/o Room 2103 Shanghai Mart Tower, 2299 Yan An Road West, Changning District, Shanghai China 200336, and its telephone number is +1 844 331 3343. Our registered office is located at P. O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1 – 1205 Cayman Islands. Our website address is www.scullyroyalty.com.

Our core asset is a net revenues royalty interest in the Scully Mine located in the Province of Newfoundland and Labrador, Canada. The royalty rate under this interest is 7.0% on iron ore shipped from the mine and 4.2% on iron ore shipped from tailings and other disposed materials. See “- B. Business Segments – Royalty” and “– D. Property, Plants and Equipment”.

We currently have two primary operating segments: (i) Royalty, which includes our interest in an iron ore mine; and (ii) Merchant Banking, sometimes referred to as “financial services”, which includes our merchant banking activities. We also have an “All Other” segment which includes other assets unrelated to our primary segments and otherwise not individually material. See “All Other” below for further information. The changes in segments resulted from dispositions of entities and businesses in previous years. Results for prior periods have been recast herein to reflect this change in presentation.

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We file reports and other information with the Securities and Exchange Commission, referred to as the “SEC”. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are available to the public over the internet at such website at http://www.sec.gov.

Please see “B. Business Overview” for further information regarding our business and recent developments.

B. Business Overview

The following is a brief description of our business and recent activities.

Recent Developments

Scully Mine Updates

The mine underlying our royalty interest produces a high-grade ore in excess of 65% iron content that also has other favourable characteristics, such as relatively low contaminant ratios. Globally, steelmakers value high grade iron ore with low contaminants (such as silica, alumina, and phosphorus) because they improve environmental and financial performance through more efficient raw material utilization, higher plant yields and lower emissions. Therefore, it is common and generally expected for 65% Fe iron ore, including the Scully Mine’s product, to sell at a premium to 62% Fe iron ore. In 2024, the Platts 65% Fe index sold at approximately a 13% (US$14) premium to the Platts 62% Fe Index.

The following table sets forth the total iron ore products (which include pellets, chips and concentrates) shipped from the mine based upon the amounts reported to us by the Scully Mine for the periods indicated:

​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended
​ | ​ | December 31,
​ | ​ | 2024 | ​ | 2023
​ | ​ | (tonnes)
Iron Ore Products Shipped |  | 3,060,800 |  | 3,535,238

​

Production in 2024 was impacted by, among other things, wildfires in the Province of Newfoundland and Labrador, Canada in the summer of 2024.

In October 2023, the operator of the Scully Mine commenced proceedings under the Companies’ Creditors Arrangement Act (the “CCAA”). In September, 2024, it announced the closing of a transaction under the CCAA process led by an investor group including Cargill Incorporated, Millstreet Capital Management and O’Brien-Staley Partners. The transaction included a US$250 million equity injection, a strengthened balance sheet and an improved business plan. It also disclosed that it had entered into new union, sales offtake and rail transport arrangements.

Cash Dividend Policy

Our board of directors has adopted a dividend policy that is intended to maximize potential future dividends to holders of our Common Shares.

Based upon a review of our financial position, operating results, ongoing working capital requirements and other factors, our board of directors may from time to time and if deemed advisable by it, declare and pay dividends to holders. The timing, payment and amount of any dividends paid on our Common Shares may be determined by our board of directors from time to time.

During the year ended December 31, 2023, a dividend of $0.23 (US$0.17) per common share was paid in U.S. dollars on May 19, 2023 to shareholders of record on May 9, 2023.

On December 31, 2024, we announced that our board of directors declared a dividend of $0.37 (US$0.26) per common share paid on February 21, 2025 to shareholders of record on January 24, 2025.

The declaration, timing, record date and payment of future dividends will depend on, among other things, royalty payments received.

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Change of Auditor

Effective December 5, 2024, AOGB CPA Limited was appointed our auditor. AOGB CPA is an independent registered public accounting firm headquartered at Suite 2501-3, Tesbury Centre, 28 Queen’s Road East, Admiralty, Hong Kong, Hong Kong. See “Item 16F: Change in Registrant’s Certifying Accountant”.

Rationalization of Non-Core Assets

Our board of directors has approved a plan to rationalize various underperforming assets to focus on our core asset, our iron ore royalty. To this end, in 2024, we determined to proceed towards the rationalization of certain assets and liabilities in our All Other segment. This process is ongoing and we currently believe it will be completed in 2025. See “Item 5. - Operating and Financial Review and Prospects – Rationalization of Non-Core Assets”.

Business Segments

Effective from January 1, 2024, we have revised our operating segments such that we have two primary operating segments, being, (i) Royalty, which includes our interest in an iron ore mine; and (ii) Merchant Banking, which includes merchant banking activities. As a result, we no longer present an Industrial segment in our financial statements. The assets and liabilities underlying this former segment are now reflected in our All Other segment. See “Item 5. - Operating and Financial Review and Prospects – Rationalization of Non-Core Assets”.

​

We also have an “All Other” segment which includes other assets unrelated to our primary segments and otherwise not individually material. See “All Other” below for further information. The changes in segments resulted from dispositions of entities and businesses in previous years. Results for prior periods have been recast herein to reflect this change in presentation.

Royalty

We hold a net revenues royalty interest in the Scully Mine located in the Province of Newfoundland and Labrador, Canada. The royalty rate under this interest is 7.0% on iron ore shipped from the mine and 4.2% on iron ore shipped from tailings and other disposed materials.

In 2024, approximately 57% of our total revenues were derived from our royalty interest. As at December 31, 2024, our total assets were $438.1 million, of which $192.1 million was represented by our interest in the underlying iron ore mine. Please see Note 12 to our audited consolidated financial statements for the year ended December 31, 2024 for further information.

The operator of the mine has disclosed that the mine historically extracted approximately 11.8 million tonnes of raw iron per year from which approximately 4.1 million metric tonnes of iron concentrate were produced at an onsite milling facility. It further disclosed that upon-reactivation annual production capacity targeted a capacity of 6.25 million metric tonnes of iron concentrate, with production ranging from 5.80 million to 7.55 million metric tonnes over the subsequent years. Iron concentrate is transported by rail to the port facilities at Point Noire, Quebec, Canada, where it is unloaded, stockpiled and loaded on vessels for sale to the seaborne market.

Under the terms of the sub-lease, we are entitled to minimum royalty payments of $3.25 million per year, payable on a quarterly basis, which quarterly payments may be credited towards earned royalties relating to the same calendar year.

In October 2023, the operator of the Scully Mine commenced proceedings under the CCAA. In September 2024, it announced the closing of a transaction under the CCAA process led by an investor group including Cargill Incorporated, Millstreet Capital Management and O’Brien-Staley Partners. The transaction included a US$250 million equity injection, a strengthened balance sheet and an improved business plan. It also disclosed that it had entered into new union and rail transport arrangements. See “– Recent Developments - Scully Mine Update” for further information.

Merchant Banking

Our Merchant Banking segment, also referred to as “financial services”, comprises regulated merchant banking in Europe, including the activities of the Bank.

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The Bank does not engage in general retail or commercial banking, but provides specialty banking services, focused on merchant banking, to our customers, suppliers and group members. Generally, the Bank earns fees from provisions of a range of financial and consultancy services to the customers and investment income.

In addition, we hold interests in two industrial real estate parks in Europe as investment property.

All Other

The All Other segment includes our corporate and small entities whose quantitative amounts generally are not expected to exceed 10% of any of the following: (a) our reported revenue, including both sales to external customers and intersegment sales or transfer; (b) the greater, in absolute amount, of our (i) combined reported profit of all operating segments that did not report a loss and (ii) combined reported loss of all operating segments that reported a loss; or (c) our total assets. Actual outcome may occasionally exceed these 10% thresholds, though the excess amounts are not expected to be material.

Competitive Conditions

Our business is intensely competitive and we expect it to remain so. We operate in a highly competitive environment in most of our markets and we face competition in all of our activities, principally from international banks, the majority of which are European or North American regulated banks, in our finance and fee-generating activities. Such competition may have the effect of reducing spreads on our financing activities.

Our business is small compared to our competitors in the sector. Many of our competitors have far greater financial resources, a broader range of products and sources of supply, larger customer bases, greater name recognition and marketing resources, a larger number of senior professionals to serve their clients’ needs, greater global reach and more established relationships with clients than we do. These competitors may be better able to respond to changes in business conditions, compete for skilled professionals, finance acquisitions, fund internal growth and compete for market share generally.

We believe that our experience and operating structure permit us to respond more rapidly to our clients’ needs than many of our larger competitors. These traits are important to small and mid-sized business enterprises, many of which do not have large internal corporate finance departments to handle their capital requirements. We develop a partnership approach to assist our clients. This often permits us to develop multiple revenue sources from the same client. For example, we may commit our own capital to make a proprietary investment in its business or capital structure.

Regulation

Our operations are international in nature and are subject to the laws and regulations of a number of international jurisdictions, as well as oversight by regulatory agencies and bodies in those jurisdictions.

The operator of the mine that is the subject to our iron ore royalty interest must comply with numerous environmental, mine safety, land use, waste disposal, remediation and public health laws and regulations promulgated by federal, provincial and local governments in Canada. Although we, as a royalty owner, are not responsible for ensuring compliance with these laws and regulations, failure by the operator to comply with applicable laws, regulations and permits can result in injunctive action, orders to suspend or cease operations, damages, and civil and criminal penalties on the operators, which could have a material adverse effect on our results of operations and financial condition.

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In particular, the banking industry is subject to extensive regulation and oversight. The operations of our Bank are subject to the regulations and directives issued by governments. The Bank is subject to direct supervision by direct and indirect financial regulators in Europe. There are various regulations and guidelines that the Bank needs to adhere to but the most noticeable ones relate to capital requirements, liquidity and the funding and the Anti-Money Laundering and Anti-Terrorist Financing. As a Maltese credit institution, the Bank is subject to the Capital Requirements Directive and Regulatory Frameworks, referred to as the “CRD and CRR Framework” (as updated from time to time), through which the European Union implements the Basel Capital reforms. The CRD and CRR Framework, among other things, impose minimum statutory capital requirements based on risk adjusted credit exposures and requires extensive regulatory reporting on own funds, large exposures, liquidity requirements and various other regulatory requirements. Large exposures consist of credit exposures to a client or group of connected clients in excess of 10% of the Bank’s statutory capital base and such large exposures cannot exceed 25% of the Bank’s statutory capital base, after taking into account eligible credit risk mitigation. The main liquidity requirements imposed by the CRD and CRR Framework are the liquidity coverage ratio, referred to as “LCR”, which refers to the proportion of highly liquid assets held by the Bank to ensure its ongoing ability to meet short-term liquidity obligations. The Bank must maintain a minimum statutory LCR of 100%. The CRD and CRR Framework also establish a minimum Net Stable Funding Ratio (referred to “NSFR”) of 100%. Unlike the LCR, the NSFR is a liquidity standard requiring the Bank to hold enough stable funding to cover the duration of its long-term assets.

The Bank is currently working on the requirements of the revised CRD and CRR Framework, commonly referred to as the CRD6/CRR3 package, which will be wide-ranging, but is expected to include core Basel III components as well as market risk. However, the European Commission also introduces further initiatives in the package, which include: the revision of certain credit risk-weights used to determine the Bank’s statutory capital adequacy ratio; new capital calculation requirements relating to operational risk; governance and reporting requirements relating to environmental, social and governance (ESG) risks; and digital operational resilience (DORA).

A portion of our assets held for sale as at December 31, 2024 is in China in RMB. Under the 2008 Foreign Currency Administration Rules, if documents certifying the purposes of the conversion of RMB into foreign currency are submitted to the relevant foreign exchange conversion bank, the RMB may be convertible for current account items, including the distribution of dividends, interest and royalty payments, and trade and service-related foreign exchange transactions. Conversion of RMB for capital account items, such as direct investment, loans, securities investment and repatriation of investment, however, is subject to the approval of the government of SAFE and its local counterparts.

Under the 1996 Administration Rules of the Settlement, Sale and Payment of Foreign Exchange, foreign-invested enterprises may only buy, sell and/or remit foreign currencies at banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from SAFE or its local counterparts. Capital investments by PRC entities outside of China, after obtaining the required approvals from the relevant approval authorities, such as the Ministry of Commerce and the National Development and Reform Commission or their local counterparts, are also required to register with SAFE or its local counterparts.

C. Organizational Structure

The following table describes our material subsidiaries as at December 31, 2024, their respective jurisdictions of organization and our interest in respect of each subsidiary. The table excludes subsidiaries that only hold inter-company assets and liabilities and do not have active businesses or whose results and net assets do not materially impact our consolidated results and net assets.

​

​ | ​ | ​ | ​ | ​ | ​
Subsidiaries |  | Country of Incorporation |  | Interest | ​
Merkanti Holding plc. |  | Malta |  | 99.96 | %
1178936 B.C. Ltd. |  | Canada |  | 100 | %

​

Please see Note 27 to our audited consolidated financial statements for the year ended December 31, 2024 for further information.

D. Property, Plants and Equipment

We have offices at c/o Room 2103 Shanghai Mart Tower, 2299 Yan An Road West, Changning District, Shanghai China 200336.

We believe that our existing facilities are adequate for our needs through the end of the year ending December 31, 2024. Should we require additional space at that time or prior thereto, we believe that such space can be secured on commercially reasonable terms.

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Royalty Interest

Our core asset is a net revenues royalty interest in the Scully iron ore mine located in the Province of Newfoundland and Labrador, Canada. The royalty rate under this interest is 7.0% on iron ore shipped from the mine and 4.2% on iron ore shipped from tailings and other disposed materials. Under the terms of the sub-lease, we are entitled to minimum payments of $3.25 million per year. The mine site is located approximately three kilometers west of the town of Wabush and is connected by rail access to the Port of Sept-Îles, Quebec, Canada.

The royalty is payable by the operator to us pursuant to a mining sub-lease related to the lands on which the mine is situated. This lease commenced in 1956 and expires in 2055.

Pursuant to an Order of the Ontario Superior Court of Justice dated October 10, 2023, the operator of the Scully Mine underlying our royalty interest was granted protection under CCAA. A sales and solicitation process was initiated pursuant to the CCAA process on October 30, 2023. In September, 2024, it announced the closing of a transaction under the CCAA process led by an investor group including Cargill Incorporated, Millstreet Capital Management and O’Brien-Staley Partners. The transaction included a $250 million equity injection, a strengthened balance sheet and an improved business plan. It also disclosed that it had entered into new union and rail transport arrangements. See “– B. Business Overview – Recent Developments” for further information.

Iron ore is primarily used to make steel, which is considered to be a critical commodity for global economic development. As such, the demand and consequently the pricing of iron ore are dependent upon the raw material requirements of integrated steel producers. Demand for blast furnace steel is in turn cyclical in nature and is influenced by, among other things, the level of global economic activity.

The Scully Mine produces a high-grade ore in excess of 65% iron content that also has other favourable characteristics, such as relatively low contaminant ratios. Globally, steelmakers value high grade iron ore with low contaminants (such as silica, alumina, and phosphorus) because they improve environmental and financial performance through more efficient raw material utilization, higher plant yields, and lower emissions. Therefore, it is common and generally expected for 65% Fe iron ore, including the Scully Mine’s product, to sell at a premium to 62% Fe iron ore. In 2024, the Platts 65% Fe Index sold at approximately a 13% (US$14) premium to the Platts 62% Fe Index.

Description of Scully Iron Ore Mine

As we are not the operator and generally not the owner of the property underlying our royalty interest, we have limited or no access to related exploration, development or operational data or to the properties itself. As such, the disclosure herein is based on information publicly disclosed by the operator of the Scully Mine. Although we do not have any knowledge that such information may not be accurate, there can be no assurance that such third-party information is complete or accurate.

The disclosure of scientific and technical information regarding the property underlying our royalty interest contained herein is presented in accordance with subpart 1300 of Regulation S-K under the Exchange Act, referred to as the “SEC Mining Rules”. The SEC Mining Rules requires a registrant that has mining operations to, among other things: (i) obtain a dated and signed “technical report summary” from a qualified person with respect to each material mining property, and (ii) file such technical report summary as an exhibit to the relevant registration statement or other prescribed filing with the SEC. We consider our royalty interest in the Scully mine, being the only mining interest we hold, as our material property for the purposes of the SEC Mining Rules. As we do not operate such property, for the purposes of this Annual Report on Form 20-F, we have relied on the exemption set forth in Item 1302(b)(3)(ii) of the SEC Mining Rules and have not obtained or filed a technical report summary as: (i) obtaining such report would result in an unreasonable burden or expense; and (ii) we have requested such technical report summary from the operators of the Scully mine and were denied the request.

The property information included herein contains information reported by the operator of the Scully mine under Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects, referred to as “NI 43-101”. Specifically, unless otherwise stated, the information contained herein has been derived from a technical report prepared for the operator under NI 43-101 titled “Feasibility Study Technical Report – Update, Scully Mine Re-Start Projects, Wabush, Newfoundland & Labrador, Canada” with an effective date of May 31, 2021.

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Under the SEC Mining Rules, we may not disclose such Mineral Resource and Mineral Reserve estimates herein unless the operator has filed a Technical Report Summary under Item 1300 of Regulation S-K or unless we have filed a Technical Report Summary containing such estimates. As a result of this requirement and the relief provided to holders of royalties and other similar interests under the SEC Mining Rules, the disclosure contained herein does not include estimates of Mineral Resources or Mineral Reserves that may have been prepared by the operator of the mine underlying our royalty interest.

Certain information regarding the Scully Mine as contemplated under the SEC Mining Rules has not been included herein on the basis that it is unavailable to us in our capacity as a royalty holder on the applicable properties and that obtaining such information would result in an unreasonable burden and expense. Such excluded information includes:

| 1. | Mineral Resources and Mineral Reserves estimates;

| 2. | Specific information regarding the age of and condition of project infrastructure;

| 3. | The total cost for or book value of the underlying property and its associated plant and equipment; and

| 4. | Descriptions of significant encumbrances on the property.

Measurement units presented in this document are metric units and converted to US standard units where applicable. There may be small rounding differences due to unit conversions. Additional specific information on the principal property is available under Material Properties, below.

Summary

The Scully Mine is production stage iron ore mine, which is operated as an open-pit operation. The mine is located in Newfoundland & Labrador, Canada. The mine site includes a concentration plant with a 6.0 million tonnes per year capacity. The geographic location of Scully is set forth below.

Figure 1. Scully Mine Location

Source: Google Earth (March, 2022)

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The mine covers a Superior-type banded iron formation of mineralization. Key operating infrastructure at the mine comprises a 6 million tonne per annum iron ore concentrator plant producing iron ore concentrate.

The operator of the mine that is subject to our royalty interest must comply with environmental, mine safety, land use, waste disposal, remediation and public health laws and regulations promulgated by federal, state, provincial and local governments in Canada where we hold an interest. Although we, as a royalty interest owner, are not responsible for ensuring compliance with these laws and regulations, failure by the operator to comply with applicable laws, regulations and permits can result in injunctive action, orders to suspend or cease operations, damages, and civil and criminal penalties on the operators, which could have a material adverse effect on our results of operations and financial condition.

In general, we have no decision-making authority regarding the development or operation of the mineral property underlying our royalty interest. The operator makes all development and operating decisions, including decisions about permitting, feasibility analysis, mine design and mine operation, processing, plant, equipment matters, and temporary or permanent suspension of operations.

Location

Scully is an open-pit mine and mineral processing operation located in the southwest corner of Labrador, in the Province of Newfoundland and Labrador, Canada, at 52°54’26.7” N and 66°54’ 34.6” W. The nearest local communities are the Town of Labrador City (3.5 km or 2.2 miles north), Town of Wabush (2.5 km or 1.6 miles east), and Town of Fermont (Quebec; 18 km or 11 miles southwest). From Wabush, the City of Sept-Îles is located 320 km (or 199 miles) away (on the north shore of the St. Lawrence River), the City of St. John’s 1,200 km (or 746 miles) to the southeast, and the City of Montreal 1,020 km (or 634 miles) to the southwest.

The Scully Mine property lies in the sub-arctic region of northern Canada, in an area of undulating hills with an elevation high of 686 m (2,251 ft) and elevation low of 533 m (1,749 ft). There are several lakes within the mine property area. As for climate, temperatures range from-40°C to 25°C (-40°F to 77°F). In a wet year, Wabush can receive up to 1,185 mm (47 inches) of precipitation (Environment Canada, 2012). In a dry year, Wabush receives only 675 mm (27 inches) of precipitation.

Infrastructure

Access to the Scully Mine site is provided by a four km road from Highway 500. The latter is accessible via Highway 389 from Baie-Comeau on the north shore of the Saint Lawrence River. The Wabush airport is 2 miles or 3 km from the mine site, within the town limits of Wabush.

Rail access from the Scully Mine site to the port at Sept-Îles consists of two separate segments. The first segment uses the QNS&L railway from Wabush to Arnaud Junction in Sept-Îles. From there, the second section is from Arnaud junction to Pointe-Noire (Sept-Îles), property of “Les Chemins de Fer Arnaud”, Sept-Îles, Quebec, where the iron ore concentrate is unloaded, stockpiled, and loaded on sea-going vessels. The second rail segment is owned by the Government of Quebec through the Sociéte du Plan Nord, which acquired these assets from Cliffs Natural Resources, Inc. bankruptcy of Canadian assets. The second segment was owned originally by the Wabush Railway Company Limited.

The Scully Mine site is connected to the Newfoundland & Labrador Hydro electrical network. Electric power is generated at Churchill Falls, 200 km to the east. The Churchill power station has the second largest hydroelectric generating capacity in North America at 5,428 MW installed. An on-site 46-kV electrical grid electrifies the mine area and powers mine equipment and pumping stations.

The mine site contains necessary structures including: mine electrical infrastructure; a maintenance facility with five bays and cranes; warehouses; wash bay; explosive storage; machine shop; dewatering equipment; fuel storage; administration buildings; an iron ore concentrator plant; and required rail load-out and track infrastructure. The concentrator underwent some maintenance and installation of additional processing equipment prior to the restart.

A pumping station and water intake structure located east of the process facility provides water for iron ore beneficiation and potable water consumption.

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Area of Interest

The Scully Mine property consists of five Mining Leases; namely Mining Lease Lot No. 1, Lot No. 2, Lot No. 3, Lot No. 4, and the Wabush Mountain Area (Figures 3 and 4). The Scully Mine Royalty pertains only to Newfoundland & Labrador Corp. Ltd. Mining Lease Lot No. 1 (“Mining Lease Lot No. 1”). The industrial site and open pits are located within the Mining Lease Lot No. 1 area, which is 14.43 square km (5.57 square miles or 3,565.73 acres) in area. The surface and mineral rights on this Mining Lease are leased from the Government of Newfoundland and Labrador. This 99-year lease expires in 2055.

Property Description

The Scully Mine is a production stage property consisting of an open pit mine and an iron ore concentrator plant.

The operation consists of a conventional surface mining method using an owner mining approach with electric and diesel hydraulic shovels and mine trucks. The open pit mine is designed with a 12 m to 24 m bench height and pit slopes of 32° to 46°. Mining is carried out by two hydraulic front shovels equipped with 24 m3 (31.3 yard3) buckets. The shovels are matched with a fleet of up to sixteen 211-tonne payload mine haulage trucks.

For the life of mine, the overall strip ratio will be 0.87:1 (waste to ore), with ore transiting through stockpiles for blending purposes and to balance mining and processing plant constraints. Waste rock storage is planned in waste dumps outside the pits and in depleted pits.

Iron ore concentrate is produced by processing iron ore through autogenous grinding mills and gravity and magnetic separation and a drying concentrator plant at a planned rate of up to 2,400 tonnes per hour. The concentrator plant produces iron ore concentrate with a grade of approximately 65.9% Fe, a level that exceeds the industry standard 62% benchmark and high-grade 65% benchmark. The concentrate also has low levels of deleterious elements (including silica and manganese) and very low moisture content.

From the Scully Mine iron concentrator, the iron ore concentrate is rail shipped to the Port of Sept-Îles for loading onto ships and transport overseas. Tacora has an agreement with Cargill, a leading independent iron ore trader, for purchase of 100% of the iron ore concentrate produced by the Scully Mine. Cargill has rolling options to extend this agreement over the life of the Scully Mine. The Scully Mine has a forecast mine life in excess of 25 years.

Tailings from the iron ore processing plant are stored in historical disposal areas to the north and south of the open pits. The tailings are considered low risk of acid generation and relatively coarse, allowing for use as material for future tailings storage area embankments.

Age and Condition of Infrastructure

The Scully Mine and concentrator was originally commissioned in the 1960s. The facilities were reactivated by the current operator in 2019.

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Property History

The Scully Mine operated from 1965 to February 2014 with the mining and concentrating at Wabush and the subsequent stage of pelletizing done at Pointe Noire near the port of Sept-Îles, Quebec. Iron deposits were first reported in 1933. In 1956, Picklands began work on the project and started the first intensive geological, metallurgical and economic investigation. A pilot plant was built and successfully produced 100,000 tonnes of iron ore concentrate. From 1965 to 2014, the Scully Mine produced between 2.7 million and 6.1 million tonnes of iron ore concentrate annually. The following chart sets forth shipments of concentrate from the mine (as reported by the respective operators) for the years indicated.

The Scully Mine was operated by Picklands from 1965 to 1986 when Picklands was acquired by Cliffs Natural Resources Inc., who operated it from 1986 until 2014. The current operator acquired the mine in July 2017. It then restarted mining operations and commercial production at the mine, and shipped its first seaborne iron ore concentrate in August 2019. Such feasibility study was not completed under the SEC Mining Rules.

Permitting

The operator has disclosed that it is fully permitted to operate the mine. The most recent overall environmental study completed at the Scully Mine site is the Environmental Assessment Registration submitted by the operator to the Government of Newfoundland and Labrador on September 28, 2017. The Government placed the document on a public notice period, responded to public comments, and released the Scully Mine reactivation project from further environmental assessment on November 21, 2017. Such feasibility study was not completed under the SEC Mining Rules.

Property Geology

The deposit is a Proterozoic age Superior-type banded iron formation. The mine lies within the southern end of the Labrador Trough in Western Labrador. The Labrador Trough comprises a sequence of Proterozoic sedimentary rocks, including iron formations, volcanic rocks and mafic intrusions. The principal iron formation unit, the Sokoman Formation, forms a regionally continuous stratigraphic unit. The Sokoman Formation is more than 300 m thick near the mine and has been subjected to two episodes of folding and metamorphism during the Hudsonian and Greenville Orogenies, resulting in a complex structural pattern in the Wabush area.

Other iron deposits in the area of the Labrador Trough are Bloom Lake, Lac Jeannine, Fire Lake, Mounts Wright and Reed, Luce, and Humphrey. During high‐grade metamorphism, the iron oxides and quartz recrystallized to produce coarse‐grained sugary quartz, magnetite, specular hematite schists (meta‐taconites) that are of improved quality for processing and concentrating.

The deposit consists of folded and faulted stratigraphic beds of iron-bearing units within the Sokoman Iron Formation. The geological understanding of the deposit is based primarily on diamond drilling data and two-dimensional sectional interpretations by the prior operator. The ore minerals are hematite (specularite), magnetite, and martite hematite pseudomorphs after magnetite). The waste minerals are hydrated iron oxides, such as limonite and goethite, and quartz. Manganese oxides also occur in bands or are disseminated throughout the iron-bearing units.

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The mine site includes electrical infrastructure, a maintenance facility with five bays and cranes, warehouses, a wash bay, explosive storage, a machine shop, dewatering equipment, fuel storage, administration buildings, a concentrator plant and rail load-out and track infrastructure.

Production

The following table sets forth the total iron ore products shipped from the mine based upon the amounts reported to us by the mine operator in 2024 and 2023:

​

​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended
​ | ​ | December 31,
​ | ​ | 2024 | ​ | 2023
​ | ​ | (tonnes)
Iron Ore Products Shipped |  | 3,060,800 |  | 3,535,238

​

Production in 2024 was impacted by, among other things, wildfires in the Province of Newfoundland and Labrador, Canada in the summer of 2024.

Other Interests

We own two industrial real estate parks in Germany, which primarily lease out space for storage and production facilities. One of these parks is located in Arneburg, Germany and is 1,553,113 square meters, currently houses approximately 27 buildings and offers developed industrial and commercial land for greenfield investments as well as warehouses, production halls, workshops and offices. The property has railway, road and harbour connections. The other industrial park is located in Dessau, Germany and is a 109,804 square meter development property that currently houses approximately 21 buildings and offers office and administrative buildings, production halls and warehouses and land for industrial investments. The property has connections to railway and roads. Both of these industrial parks are part of the security package for the €25.0 million in principal amount of bonds issued by a subsidiary in 2019, and to the extent that any sales of these properties, in whole or in part, cause the security to fall below a certain ratio, proceeds of said sale, up to an amount of the collateral shortfall, are required to be placed as cash collateral with the bondholder trustee until maturity.

​

ITEM 4A: UNRESOLVED STAFF COMMENTS

None.

​

ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2024, 2023 and 2022 should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere herein.

General

Our core asset is an interest in a mining sub-lease of the lands upon which the Scully Mine is situated in the Province of Newfoundland and Labrador, Canada. Pursuant to this sub-lease, which expires in 2055, we hold a 7.0% net revenues royalty interest on iron ore shipped from the mine and a 4.2% net revenues royalty interest on iron ore shipped from tailings and other disposed materials. Under the terms of the sub-lease, we are entitled to quarterly minimum royalty payments of $3.25 million per year, which quarterly payments may be credited towards earned royalties relating to the same calendar year.

We specialize in markets that are not adequately addressed by traditional sources of supply and finance, with an emphasis on providing solutions for small and medium sized enterprises. We operate in multiple geographies and participate in industries including manufacturing, natural resources and medical supplies and services.

As a supplement to our operating business, we commit proprietary capital to assets and projects where intrinsic values are not properly reflected. These investments can take many forms, and our activities are generally not passive. The structure of each of these opportunities is tailored to each individual transaction.

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Our results of operations have been and may continue to be affected by many factors of a global nature, including economic and market conditions, the availability of capital, the level and volatility of equity prices and interest rates, currency values, asset prices and other market indices, technological changes, the availability of credit, inflation and legislative and regulatory developments. Our results of operations may also be materially affected by competitive factors. Our competitors include firms traditionally engaged in merchant banking such as investment banks, along with other capital sources such as hedge funds, private equity firms and insurance companies on a global basis.

Our results of operations for any particular period may also be materially affected by our realization on proprietary investments. These investments are made to maximize total return through long-term appreciation and recognized gains on divestment. We realize on our proprietary investments through a variety of methods including sales, capital restructuring or other forms of divestment.

As previously announced, our management is committed to a plan to rationalize non-core assets, and substantial progress has been made. These assets have not produced returns commensurate to that of our royalty interest, and our Board of Directors believes that these actions provide compelling benefits to our shareholders and to all aspects and business segments of the Company. It simplifies the Company’s corporate structure by separating its non-strategic assets and allows the independent business lines to focus on pursuing and operating their respective businesses.

Business Environment

Our financial performance is, and our consolidated results in any period can be, materially affected by economic conditions and financial markets generally, including the availability of capital, the availability of credit and the level of market and commodity price volatility. Our results of operations may also be materially affected by competitive factors. Our competitors include firms traditionally engaged in merchant banking as well as other capital sources such as hedge funds and private equity firms and other companies engaged in similar activities in Europe, Asia and globally.

The average price of 62% iron ore, as reported by Platts, was US$109 per tonne in 2024, compared to US$120 per tonne in 2023. Overall, the average iron price for 65% Fe iron ore, as reported by Platts was US$123 per tonne in 2024, compared to US$132 per tonne in 2023.

Our financial performance is, and our consolidated results in any period can be, materially affected by economic conditions and financial markets generally, including the availability of capital, the availability of credit and the level of market and commodity price volatility. Our results of operations in our merchant banking segment may also be materially affected by competitive factors. Our competitors include firms traditionally engaged in merchant banking as well as other capital sources such as hedge funds and private equity firms and other companies engaged in similar activities in Europe, Asia and globally.

We operate internationally and therefore our financial performance and position are impacted by changes in the Canadian dollar, our reporting currency, against the other functional currencies of our international subsidiaries and operations, particularly the Euro. As at December 31, 2024, the Canadian dollar had depreciated by approximately 9% against the Euro from the end of 2023. We recognized a $6.2 million currency translation adjustment gain in accumulated other comprehensive income within equity in 2024, compared to a currency translation adjustment loss of $1.2 million in accumulated other comprehensive income within equity in 2023. In addition, we recognized net losses of $0.8 million on exchange differences on foreign currency transactions in our consolidated statement of operations in 2024, compared to $0.4 million on exchange differences on foreign currency transactions in our consolidated statement of operations in 2023.

Rationalization of Non-Core Assets

As part of our ongoing strategy to streamline our operations and concentrate our efforts on our core asset - our iron ore royalty – in 2024, we initiated a process to rationalize certain underperforming or non-core assets and their associated liabilities classified within our “All Other” segment. This strategic refocusing reflects our intent to simplify our corporate structure, reduce operating complexity, and unlock shareholder value by concentrating capital and management attention on our core asset.

​

As a result of this initiative, we determined that the criteria for classification as “held for sale” under IFRS 5 were met with respect to certain assets and related liabilities as at December 31, 2024. As a result, the assets and related liabilities relating to these businesses were classified as held for sale as at December 31, 2024.

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Our management, when exercising its judgments in terms of the assets’ contribution to net loss, total assets and net assets, concluded that these assets did not constitute a separate major line of business or geographical area of operations. In aggregate, the assets held for sale represented approximately 20% (after recognition of impairment losses) of our consolidated total assets as at December 31, 2024. These assets held for sale generated revenue from third parties of $9.0 million, loss before taxes of $3.3 million and a net loss of $4.5 million in 2024.

The following sets forth a breakdown of the assets held for sale and related liabilities as of December 31, 2024.

​

​ | ​ | ​ | ​
​ | ​ | Year Ended
​ |  | December 31, 2024
​ | ​ | (In thousands)
Total Assets | ​ | $ | 88,500
Total Liabilities | ​ | ​ | (18,107)
Net |  | ​ | 70,393

​

All intercompany assets and liabilities were eliminated in connection with this classification. We recognized a non-cash provision for impairment loss of $18.6 million in connection with the classification of these assets and liabilities as held for sale. The disposal group is presented in our All Other reportable segment.

​

In late 2024, we announced that we entered into an agreement to rationalize these assets and liabilities. This transaction is not expected to have any material impact on our net book value. Upon the closing of this transaction as currently anticipated, we expect to recognize approximately $15 million of securities and approximately $55.4 million as an equity method investment. For illustrative purposes, if this rationalization had completed on December 31, 2024, our shareholders’ equity would have remained at approximately $302.3 million.

Results of Operations

The following table sets forth certain selected operating results and other financial information for each of the years ended December 31, 2024, 2023 and 2022:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31,
​ |  | 2024 |  | 2023 |  | 2022
​ |  | (In thousands, except per share amounts)
Revenue | ​ | $ | 35,302 | ​ | $ | 54,944 | ​ | $ | 63,689
Costs of sales and services | ​ |  | 7,063 | ​ |  | 19,074 | ​ |  | 29,882
Selling, general and administrative expenses | ​ |  | 25,335 | ​ |  | 24,182 | ​ |  | 28,480
Finance costs | ​ |  | 2,493 | ​ |  | 1,763 | ​ |  | 1,809
Credit losses (recovery) | ​ |  | 22 | ​ |  | 547 | ​ |  | (47)
Impairment (reversal) of assets held for sale | ​ |  | 18,579 | ​ |  | (1,246) | ​ |  | 31,443
Net (loss) income(1) | ​ |  | (20,588) | ​ |  | 1,391 | ​ |  | (23,398)
(Loss) earnings per share – basic and diluted | ​ |  | (1.39) | ​ |  | 0.09 | ​ |  | (1.58)

Note:

(1) | Attributable to the owners of the parent company.

The following table provides a breakdown of revenue for each of the years ended December 31, 2024, 2023 and 2022:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31,
​ |  | 2024 |  | 2023 |  | 2022
​ | ​ | ​ | ​ |  | (In thousands) | ​ | ​ | ​
Royalty, goods and products and services | ​ | $ | 24,279 | ​ | $ | 43,330 | ​ | $ | 52,218
Interest | ​ |  | 3,210 | ​ |  | 3,717 | ​ |  | 3,712
Dividends | ​ |  | 166 | ​ |  | 146 | ​ |  | 268
Other, including medical and real estate sectors | ​ |  | 7,647 | ​ |  | 7,751 | ​ |  | 7,491
Revenue | ​ | $ | 35,302 | ​ | $ | 54,944 | ​ | $ | 63,689

​

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Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023

The following is a breakdown of our revenue by segment for each of the years indicated:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31,
​ |  | 2024 |  | 2023
​ | ​ | (In thousands)
Revenue: |  | ​ |  |  | ​ |
Royalty | ​ | $ | 20,053 | ​ | $ | 35,323
Merchant Banking | ​ |  | 6,221 | ​ |  | 7,374
All Other | ​ |  | 9,028 | ​ |  | 12,247
​ | ​ | $ | 35,302 | ​ | $ | 54,944

​

In 2024, 64% of our revenues were from the Americas, 22% was from Europe and 14% were from Africa, Asia and other regions. In 2023, 74% of our revenues were from the Americas, 16% was from Europe and 10% were from Africa, Asia and other regions.

Based upon the average exchange rates for 2024, the Canadian dollar was weaker by 2% in value against the Euro compared to the average exchange rates for 2023.

Revenue for 2024 decreased to $35.3 million from $54.9 million in 2023, mainly as a result of the disposition of our energy interests in March 2023 and decreased royalty income in 2024. A customer in the Royalty segment located in Canada represented approximately 57% and 64%, respectively, of our total revenue for the years ended December 31, 2024 and 2023.

Revenue for our Royalty segment for 2024 decreased to $20.1 million from $35.3 million in 2023 primarily as a result of lower production at the mine and volatility in iron ore prices.

Revenue for our Merchant Banking segment for 2024 decreased to $6.2 million from $7.4 million in 2023. The decrease primarily resulted from decreased merchant banking activities.

Revenue for our All Other segment was $9.0 in 2024 compared to $12.2 million in 2023. The decrease primarily resulted from the disposition of hydrocarbon assets in the first half of 2023.

In 2024, total revenues include revenues of $24.3 million from royalty, goods and products and services, of which 83% was from our iron ore royalty and 17% was from energy. In 2023, total revenues included revenues of $43.3 million from royalty, goods and products and services, of which 84% was from our iron ore royalty and approximately 16% was from energy.

Costs of sales and services decreased to $7.1 million in 2024 from $19.1 million in 2023, primarily as a result of a merchant banking gain included in costs of sales and services, a fair value gain on our investment property and the disposition of certain energy assets in March 2023. The following is a breakdown of our costs of sales and services for each of the years indicated:

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Years Ended December 31,
​ | ​ | 2024 |  | 2023
​ | ​ | (In thousands)
Royalty, goods and products and services | ​ | $ | 8,532 | ​ | $ | 12,689
Write-down (reversal of write-down) of inventories | ​ |  | 19 | ​ |  | (27)
Net fair value (gain) loss on investment property and real estate for sale | ​ |  | (2,005) | ​ |  | 59
Gain on dispositions of a subsidiary | ​ |  | (3,646) | ​ |  | —
Gains on settlements and derecognition of liabilities | ​ |  | — | ​ |  | (1,313)
Changes in fair value of a loan payable measured at FVTPL | ​ |  | (1,197) | ​ |  | 360
Losses on securities, net | ​ |  | 218 | ​ |  | 2,794
Other, including medical and real estate sectors | ​ |  | 5,142 | ​ |  | 4,512
Total costs of sales and services | ​ | $ | 7,063 | ​ | $ | 19,074

​

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We recognized a net fair value gain on investment property of $2.0 million in 2024, compared to a net fair value loss of $0.1 million in 2023. The gain in 2024 primarily resulted from increased industrial real estate pricing in the area and additional activity on our investment property. In 2024, we recognized a gain of $1.2 million in change in fair value of a loan payable measured at FVTPL.

We recognized a net loss on securities primarily relating to trading securities of $0.2 million in 2024, compared to $2.8 million in 2023. These losses primarily related to realized and fair value losses on certain trading securities and a fair value gain on an unlisted security measured at fair value through profit and loss, which was reclassified to equity method securities in 2024.

We also recognized $5.1 million of other costs relating to medical and real estate sectors in 2024, compared to $4.5 million in 2023.

In 2024, we recognized an impairment on assets held for sale of $18.6 million, which related to the classification of assets held for sale. See “– Rationalization of Non-Core Assets”. In 2023, we recognized a reversal of previous impairments of $1.2 million.

We recognized a net gain on the disposition of a subsidiary of $3.6 million in 2024, compared to $nil in 2023. The net gain on disposition of a subsidiary consisted of the difference between the book value of such net assets and the consideration received.

Selling, general and administrative expenses increased to $25.3 million in 2024 from $24.2 million in 2023 primarily due to the stronger Euro against the Canadian dollar and other expenses.

In 2024, we recognized a net foreign currency transaction loss of $0.8 million compared to $0.4 million in 2023, in our consolidated statement of operations. The foreign currency transaction loss represents exchange differences arising on the settlement of monetary items or on translating monetary items into our functional currencies at rates different from those at which they were translated on initial recognition during the period or in previous financial statements.

In 2024, finance costs were $2.5 million compared to $1.8 million in 2023. These related primarily to the increase interest rates and costs due on a subsidiary’s publicly listed bonds in connection with the bond maturity extension completed in 2024.

In 2024, we recognized credit losses of $22,000 on receivables, compared to $0.5 million on receivables in 2023.

We recognized an income tax recovery (other than resource property revenue taxes) of $2.6 million in 2024, compared to an income tax expense (other than resource property revenue taxes) of $1.9 million in 2023. Excluding resource property revenue taxes, we paid $0.3 million in income tax in cash during 2024 and, excluding resource property revenue taxes, we paid $0.4 million in income tax in cash during 2023. We also recognized a resource property revenue tax expense of $3.9 million in 2024, compared to $6.9 million in 2023.

Overall, we recognized an income tax expense of $1.3 million (income tax recovery of $2.6 million and resource property revenue tax expense of $3.9 million) in 2024, compared to an income tax expense of $8.8 million (income tax expense of $1.9 million and resource property revenue tax expense of $6.9 million) in 2023.

In 2024, our net loss attributable to shareholders was $20.6 million, or $1.39 per share on a basic and diluted basis, compared to net income attributable to shareholders of $1.4 million, or $0.09 per share on a basic and diluted basis attributable to shareholders in 2023.

In 2024, our EBITDA loss was $9.3 million, compared to EBITDA of $19.9 million in 2023. Our EBITDA loss in 2024 included a non-cash impairment of $18.6 million in 2024 relating to the classification of assets held for sale in the period and, in 2023, included a non-cash reversal of impairment of assets held for sale of $1.2 million.

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The following is a reconciliation of our net (loss) income to EBITDA (loss) for each of the years indicated:

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Years Ended December 31,
​ | ​ | 2024 |  | 2023
​ | ​ | (In thousands)
Net (loss) income for the year(1)(2) | ​ | $ | (20,268) | ​ | $ | 1,399
Income tax expense (recovery) | ​ |  | 1,245 | ​ |  | 8,798
Finance costs | ​ |  | 2,493 | ​ |  | 1,763
Depreciation, depletion and amortization | ​ |  | 7,221 | ​ |  | 7,929
EBITDA (loss)(2) | ​ | $ | (9,309) | ​ | $ | 19,889

Note:

(1) | Includes net income and loss attributable to non-controlling interests.

(2) | Includes $18.6 million in non-cash impairment costs recognized in connection with the classification of assets held for sale in 2024.

Please see “Non-IFRS Financial Measures” for additional information.

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022

The following is a breakdown of our revenue by segment for each of the years indicated:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Years Ended December 31,
​ |  | 2023 |  | 2022
​ | ​ | (In thousands)
Revenue: | ​ | ​ | ​ | ​ | ​ | ​
Royalty | ​ | $ | 35,323 | ​ | $ | 29,167
Merchant Banking | ​ |  | 7,374 | ​ |  | 5,486
All Other | ​ |  | 12,247 | ​ |  | 29,036
​ | ​ | $ | 54,944 | ​ | $ | 63,689

​

In 2023, 74% of our revenues were from the Americas, 16% was from Europe and 10% were from Africa, Asia and other regions. In 2022, 77% of our revenues were from the Americas, 9% was from Europe and 14% were from Africa, Asia and other regions.

Based upon the average exchange rates for 2023, the Canadian dollar was weaker by 6.2% in value against the Euro compared to the average exchange rates for 2022.

Revenue for 2023 decreased to $55.0 million from $63.7 million in 2022, mainly as a result of the disposition of our hydrocarbon interests in March 2023, partially offset by increased royalty income resulting from higher iron ore prices in 2023. A customer in the Royalty segment located in Canada represented approximately 64% and 45%, respectively, of our total revenue for the years ended December 31, 2023 and 2022.

Revenue for our Royalty segment for 2023 increased to $35.3 million from $29.2 million in 2022 primarily as a result of higher production and a stronger iron ore pricing environment in 2023 compared with 2022.

Revenue for our Merchant Banking segment for 2023 increased to $7.4 million from $5.5 million in 2022. The increase primarily resulted from the higher interest rate environment and additional merchant banking transactions.

Revenue for our All Other segment was $12.2 million in 2023 compared to $29.0 million in 2022.

In 2023, total revenues include revenues of $43.3 million from royalty, goods and products and services, of which 84% was from our iron ore royalty, approximately 16% was from energy. In 2022, total revenues include revenues of $52.2 million from royalty, goods and products and services, of which 57% was from our iron ore royalty, 43% was from energy.

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Costs of sales and services decreased to $19.1 million in 2023 from $29.9 million in 2022, primarily as a result of the disposition of our hydrocarbon assets in March 2023. The following is a breakdown of our costs of sales and services for each of the years indicated:

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Years Ended December 31,
​ |  | 2023 |  | 2022
​ | ​ | (In thousands)
Royalty, goods and products and services | ​ | $ | 12,689 | ​ | $ | 23,677
Reversal of write-down of inventories | ​ |  | (27) | ​ |  | (21)
Net fair value loss (gain) on investment property and real estate for sale | ​ |  | 59 | ​ |  | (96)
Gain on disposition of a subsidiary | ​ |  | — | ​ |  | (264)
Gains on settlements and derecognition of liabilities | ​ |  | (1,313) | ​ |  | (69)
Changes in fair value of a loan payable measured at FVTPL | ​ |  | 360 | ​ |  | 141
Losses on securities, net | ​ |  | 2,794 | ​ |  | 2,436
Other, including medical and real estate sectors | ​ |  | 4,512 | ​ |  | 4,078
Total costs of sales and services | ​ | $ | 19,074 | ​ | $ | 29,882

​

We recognized a gain on settlements and derecognition of liabilities of $1.3 million in 2023 including $0.8 million due to a former subsidiary which was determined not to be payable (see Note 23 to our audited consolidated financial statements for the year ended December 31, 2023), compared to $0.1 million in 2022.

We recognized a net loss on securities primarily relating to trading securities of $2.8 million in 2023, compared to $2.4 million in 2022. These losses primarily related to realized and fair value losses on certain trading securities and a fair value gain on an unlisted security (in which we hold a minority interest and that is a subsidiary of the operator of the underlying mine) measured at fair value through profit and loss due to a lower discount rate at year end.

We recognized a net fair value loss on investment property and real estate for sale, of $0.1 million in 2023, compared to a fair value gain of $0.1 million in 2022.

We also recognized $4.5 million of other costs relating to medical and real estate sectors in 2023, compared to $4.1 million in 2022.

We recognized a net gain on the disposition of a subsidiary of $nil in 2023, compared to $0.3 million in 2022. The net gain on disposition of a subsidiary consisted of the reclassification of exchange differences from other comprehensive income and the difference between the book value of such net assets and the consideration received.

In 2023, we recognized a reversal of impairment of assets held for sale of $1.2 million primarily related to a non-cash impairment loss recognized in connection with the reclassification of certain energy assets as assets held for sale as at December 31, 2022. The assets were sold in March 2023.

Selling, general and administrative expenses decreased to $24.2 million in 2023 from $28.5 million in 2022 primarily due to the disposition of our hydrocarbon assets in March 2023 and expense management.

In 2023, we recognized a net foreign currency transaction loss of $0.4 million compared to a gain of $3.9 million in 2022, in our consolidated statement of operations. The foreign currency transaction loss represents exchange differences arising on the settlement of monetary items or on translating monetary items into our functional currencies at rates different from those at which they were translated on initial recognition during the period or in previous financial statements.

In each of 2023 and 2022, finance costs were $1.8 million. These related primarily to interest on a subsidiary’s publicly listed bonds.

In 2023 we recognized credit losses of $0.5 million on receivables, compared to a reversal of credit losses on loans and receivables and guarantees of $47,000 in 2022.

We recognized an income tax expense (other than resource property revenue taxes) of $1.9 million in 2023, compared to an income tax recovery (other than resource property revenue taxes) of $6.2 million in 2022. Excluding resource property revenue taxes, we paid $0.4 million in income tax in cash during 2023 and, in 2022, we paid $0.2 million in income tax in cash. We also recognized a resource property revenue tax expense of $6.9 million in 2023, compared to $5.7 million in 2022.

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Overall, we recognized an income tax expense of $8.8 million (income tax expense of $1.9 million and resource property revenue tax expense of $6.9 million) in 2023, compared to an income tax recovery of $0.5 million (income tax recovery of $6.2 million and resource property revenue tax expense of $5.7 million) in 2022.

In 2023, our net income attributable to shareholders was $1.4 million, or $0.09 per share on a basic and diluted basis, compared to a net loss attributable to shareholders of $23.4 million, or $1.58 per share on a basic and diluted basis in 2022.

In 2023, our EBITDA was $19.9 million, compared to an EBITDA loss of $11.4 million in 2022. Our EBITDA loss in 2022 included a non-cash impairment related to the sale of our hydrocarbon properties of $31.4 million.

The following is a reconciliation of our net income (loss) to EBITDA (loss) for each of the years indicated:

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Years Ended December 31,
​ |  | 2023 |  | 2022
​ | ​ | (In thousands)
Net income (loss) for the year(1) | ​ | $ | 1,399 | ​ | $ | (23,407)
Income tax expense (recovery) | ​ |  | 8,798 | ​ |  | (549)
Finance costs | ​ |  | 1,763 | ​ |  | 1,809
Depreciation, depletion and amortization | ​ |  | 7,929 | ​ |  | 10,699
EBITDA (loss) | ​ | $ | 19,889 | ​ | $ | (11,448)

Note:

(1)Includes net income and loss attributable to non-controlling interests.

Please see “Non-IFRS Financial Measures” for additional information.

Liquidity and Capital Resources

General

Liquidity is of importance to our business as insufficient liquidity often results in underperformance.

Our objectives when managing capital are:

| ● | to safeguard our ability to continue as a going concern so that we can continue to provide returns for shareholders and benefits for other stakeholders;

| ● | to provide an adequate return to our shareholders by pricing products and services commensurately with the level of risk; and

| ● | to maintain a flexible capital structure that optimizes the cost of capital at acceptable risk.

​

We set the amount of capital in proportion to risk. We manage our capital structure and make adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

Consistent with others in our industry, we monitor capital on the basis of our net debt-to-equity ratio and long-term debt-to-equity ratio. The net debt-to-equity ratio is calculated as net debt divided by shareholders’ equity. Net debt is calculated as total debt less cash. The long-term debt-to-equity ratio is calculated as long-term debt divided by shareholders’ equity.

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The following table sets forth the calculation of our net debt-to-equity ratio as at the dates indicated:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31,
​ |  | 2024 |  | 2023
​ | ​ | (In thousands, except ratio amounts)
Total debt(1) | ​ | $ | 36,545 | ​ | $ | 36,107
Less: cash | ​ |  | (19,052) | ​ |  | (78,252)
Net debt | ​ |  | 17,493 | ​ |  | Not applicable
Shareholders’ equity | ​ |  | 302,277 | ​ |  | 322,459
Net debt-to-equity ratio | ​ |  | 0.06 | ​ |  | Not applicable

Note:

(1)Debts includes bonds payable only.

There were no amounts in accumulated other comprehensive income relating to cash flow hedges, nor were there any subordinated debt instruments as at December 31, 2024 and 2023.

The following table sets forth the calculation of our long-term debt-to-equity ratio as at the dates indicated:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31,
​ |  | 2024 |  | 2023
​ | ​ | (In thousands, except ratio amounts)
Long-term debt, less current portion | ​ | $ | 36,545 | ​ | $ | 36,107
Shareholders’ equity | ​ |  | 302,277 | ​ |  | 322,459
Long-term debt-to-equity ratio | ​ |  | 0.12 | ​ |  | 0.11

​

During 2024, our strategy, which was unchanged from 2023 was to maintain our net debt-to-equity ratio and long-term debt-to-equity ratio at a manageable level. The ratios were generally stable between 2024 and 2023.

Cash Flows

Due to the number of businesses we engage in, our cash flows are not necessarily reflective of net earnings and net assets for any reporting period. As a result, in addition to using a traditional cash flow analysis solely based on cash flow statements, our management believes it is more useful and meaningful to analyze our cash flows by overall liquidity and credit availability. Please see the discussion on our financial position and long-term debt below for further information.

Our business can be cyclical and our cash flows can vary accordingly. Our principal operating cash expenditures are for our working capital, proprietary investments and general and administrative expenses.

Working capital levels fluctuate throughout the year and are affected by the level of our operations, pricing of iron ore, the timing of the collection of receivables and the payment of payables and expenses. Changes in the volume of transactions can affect the level of receivables and influence overall working capital levels. We currently have a sufficient level of cash on hand and expected cash flows from operations to meet our working capital and other requirements as well as unexpected cash demands.

The following table presents a summary of cash flows for each of the periods indicated:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Years Ended December 31,
​ |  | 2024 |  | 2023 |  | 2022
​ | ​ | ​ | ​ | ​ | (In thousands) | ​ | ​ | ​
Cash flows (used in) provided by operating activities | ​ | $ | (31,543) | ​ | $ | 26,181 | ​ | $ | 30,637
Cash flows provided by (used in) investing activities | ​ |  | 2,760 | ​ |  | (6,307) | ​ |  | (4,677)
Cash flows used in financing activities | ​ |  | (1,157) | ​ |  | (3,815) | ​ |  | (17,192)
Exchange rate effect on cash | ​ |  | 3,444 | ​ |  | (1,524) | ​ |  | 76
(Decrease) increase in cash | ​ | $ | (26,496) | ​ | $ | 14,535 | ​ | $ | 8,844

​

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Cash Flows from Operating Activities

Operating activities used cash of $31.5 million in 2024, compared to providing cash of $26.2 million in 2023. In 2023, a decrease in assets held for sale related to the sale of our energy assets provided cash of $19.2 million. An increase in receivables used cash of $14.1 million in 2024, compared to an increase in receivables using cash of $16.3 million in 2023. The increase in receivables in 2023 primarily related to the operator being under CCAA protection. An increase in short-term securities used cash of $17.6 million in 2024, compared to a decrease in short-term securities providing cash of $14.6 million in 2023. The decrease in 2023 related primarily to dispositions of the securities. An increase in account payables and accrued expenses provided cash of $3.5 million in 2024, compared to a decrease in account payables and accrued expenses using cash of $4.0 million in 2023. A decrease in income tax liabilities used cash of $0.8 million in 2024, compared to an increase in income tax liabilities providing cash of $3.0 million in 2023. In 2024, an increase in deposits, prepaid and other used cash of $1.0 million, compared to a decrease in deposits, prepaid and other providing cash of $0.3 million in 2023. An increase in inventories used cash of $0.5 million in 2024, compared to an increase in inventories using cash of $0.3 million in 2023. A decrease in restricted cash provided cash of $0.2 million in 2024, compared to an increase in restricted cash used cash of $nil in 2023.

Operating activities provided cash of $26.2 million in 2023 and $30.6 million in 2022. An increase in receivables used cash of $16.3 million in 2023, compared to a decrease in receivables providing cash of $24.3 million in 2022. The increase in receivables in 2023 related to Tacora under CCAA protection. The decrease in receivables in 2022 related to a reduction in receivables. A decrease in short-term securities provided cash of $14.6 million in 2023, compared to an increase in short-term securities using cash of $12.5 million in 2022. This related primarily to bond investments in our banking subsidiary. A decrease in account payables and accrued expenses used cash of $4.0 million in 2023, compared to an increase in account payables and accrued expenses providing cash of $9.9 million in 2022. In 2023, a decrease in deposits, prepaid and other provided cash of $0.3 million, compared to an increase in deposits, prepaid and other using cash of $1.0 million in 2022. An increase in income tax liabilities provided cash of $3.0 million in 2023, compared to $0.5 million in 2022. An increase in inventories used cash of $0.3 million in 2023, compared to a decrease in inventories providing cash of $0.3 million in 2022. In 2023, an increase in restricted cash used cash of $nil, compared to an increase in restricted cash using cash of $0.2 million in 2022.

Cash Flows from Investing Activities

Investing activities provided cash of $2.8 million in 2024, compared to investing activities using cash of $6.3 million in 2023. In 2024, proceeds from the sale of investment in securities provided cash of $3.0 million, compared to $nil in 2023. In 2024, a decrease in loan receivables provided cash of $0.6 million, compared to an increase in loan receivables using cash of $7.3 million in 2023. This increase related to lending within our bank subsidiary. In 2024, proceeds from the sales of investment property provided cash of $0.1 million, compared to providing cash of $1.2 million in 2023. Purchases of property, plant and equipment, net of sales, used cash of $0.1 million in 2024, compared to using cash of $0.2 million in 2023.

Investing activities used cash of $6.3 million in 2023, compared to using cash of $4.7 million in 2022. In 2023, an increase in loan receivables used cash of $7.3 million, compared to using cash of $6.9 million in 2022. This increase related to lending within our bank subsidiary. Proceeds from the sales of investment property provided cash of $1.2 million in 2023 and $2.6 million in 2022. Purchases of property, plant and equipment, net of sales, used cash of $0.2 million in 2023, compared to $0.5 million in 2022.

Cash Flows from Financing Activities

Net cash used in financing activities was $1.2 million in 2024, compared to $3.8 million in 2023. In 2024, dividends paid to the owners of our Common Shares used cash of $nil, compared using cash of $3.4 million in 2023. Reductions in lease liabilities used cash of $0.4 million in 2024 and in 2023.

Net cash used in financing activities was $3.8 million in 2023, compared to $17.2 million in 2022. In 2023, dividends paid to the owners of our Common Shares used cash of $3.4 million, compared to $16.9 million in 2022. In 2023, the exercise of stock options provided $nil, compared to providing cash of $0.4 million in 2022.

Liquid Assets

Liquidity is a cornerstone of our business. We monitor our cash balances and overall liquidity position on a regular basis to ensure we have adequate financial and operational flexiblity. We seek to maintain sufficient liquid assets and working capital at all times to fund our operations.

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Included in our liquid assets are: (i) cash and cash equivalents, (ii) short-term securities, which are primarily comprised of government debt securities and term deposits; and (iii) receivables collectible in the ordinary course.

The following sets forth these liquid assets and working capital for December 31, 2024, June 30, 2024, and December 31, 2023:

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | December 31, 2024 |  | June 30, 2024 |  | December 31, 2023
​ | ​ | ​ | (In thousands)
Cash | ​ | $ | 19,052 | ​ | $ | 35,897 | ​ | $ | 78,252
Short-term securities |  | ​ | 23,487 | ​ | ​ | 10,259 | ​ | ​ | 12,958
Receivables |  | ​ | 42,274 | ​ | ​ | 72,450 | ​ | ​ | 70,330
Classified within assets held for sale: |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash |  | ​ | 32,704 | ​ | ​ | 32,015 | ​ | ​ | —
Short-term securities |  | ​ | 4,638 | ​ | ​ | 3,471 | ​ | ​ | —
Receivables |  | ​ | 42,905 | ​ | ​ | 8,668 | ​ | ​ | —
Total liquid assets | ​ | $ | 165,060 | ​ | $ | 162,760 | ​ | $ | 161,540
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current assets | ​ | $ | 175,319 | ​ | $ | 172,275 | ​ | $ | 164,545
Current liabilities | ​ |  | 38,488 | ​ | ​ | 30,859 | ​ | ​ | 20,573
​ | ​ | $ | 136,831 | ​ | $ | 141,416 | ​ | $ | 143,972

​

In the ordinary course of managing our treasury, we monitor opportunities to increase the interest income we earn while maintaining a prudent risk profile and equivalent liquidity position. In 2024, we made the decision to invest in various term deposits and short-term government securities, which enhanced the yields on our liquid assets. Notwithstanding the reduction in our cash balance, our overall liquidity profile remained unchanged, as we maintain access to various liquidity facilities through our bank subsidiary that enable us to borrow against these short-term securities. As at December 31, 2024, there were no amounts drawn against these facilities. However, we may utilize them in the future should opportunities arise to generate adequate returns on a risk-adjusted basis.

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Financial Position

The following table sets out our selected financial information as at the dates indicated:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31,
​ |  | 2024 |  | 2023
​ | ​ | (In thousands)
Cash | ​ | $ | 19,052 | ​ | $ | 78,252
Short-term securities | ​ |  | 23,487 | ​ |  | 12,958
Trade receivables | ​ |  | 861 | ​ |  | 1,907
Tax receivables | ​ |  | 699 | ​ |  | 640
Other receivables | ​ |  | 40,714 | ​ |  | 67,783
Inventories | ​ |  | 1 | ​ |  | 1,199
Restricted cash | ​ |  | 194 | ​ |  | 397
Deposits, prepaid and other | ​ |  | 1,811 | ​ |  | 1,409
Assets held for sale | ​ | ​ | 88,500 | ​ | ​ | —
Total current assets | ​ |  | 175,319 | ​ |  | 164,545
Working capital | ​ |  | 136,831 | ​ |  | 143,972
Total assets | ​ |  | 438,095 | ​ |  | 452,467
​ | ​ | ​ | ​ | ​ | ​ | ​
Account payables and accrued expenses | ​ |  | 14,788 | ​ |  | 16,044
Income tax liabilities | ​ |  | 48 | ​ |  | 4,529
Liabilities related to assets held for sale | ​ | ​ | 18,107 | ​ | ​ | —
Dividend payable | ​ | ​ | 5,545 | ​ | ​ | —
Total current liabilities | ​ |  | 38,488 | ​ |  | 20,573
Bonds payable, long-term | ​ |  | 36,545 | ​ |  | 36,107
Loan payable, long-term | ​ |  | — | ​ |  | 7,610
Deferred income tax liabilities | ​ |  | 51,514 | ​ |  | 58,370
Total liabilities | ​ |  | 127,770 | ​ |  | 122,797
Shareholders’ equity | ​ |  | 302,277 | ​ |  | 322,459

​

We maintain an adequate level of liquidity, with a portion of our assets held in cash and securities. The liquid nature of these assets provides us with flexibility in managing and financing our business and the ability to realize upon investment or business opportunities as they arise. We also use liquidity for our own proprietary trading and investing activities.

As at December 31, 2024, cash decreased to $19.1 million from $78.3 million as at December 31, 2023. The decrease primarily related to the purchase of securities, the increase in receivables, and the classification of assets held for sale. See “– Rationalization of Non-Core Assets” and “- Liquid Assets” for further information.

We had short-term securities of $23.5 million as at December 31, 2024 compared to $13.0 million as at December 31, 2023. These mainly comprised of liquid government debt securities and other securities held by our Bank in the ordinary course of business. The increase in short-term securities primarily related to the purchase of government term securities in our bank subsidiary.

Trade receivables and other receivables were $0.9 million and $40.7 million, respectively, as at December 31, 2024, compared to $1.9 million and $67.8 million, respectively, as at December 31, 2023. The decrease in trade and other receivables primarily resulted from the reclassification to assets held for sale. Included in other receivables at December 31, 2024 were receivables of $9.5 million related to our iron ore royalty interest, compared to $20.6 million as at December 31, 2023. Other receivables included aggregate current account receivables of $22.4 million as at December 31, 2024 from a related party. See “Item 7: Major Shareholders and Related Party Transactions – B. Related Party Transactions” for further information.

Current tax receivables, consisting primarily of refundable value-added taxes, were $0.7 million as at December 31, 2024 and $0.6 million as at December 31, 2023.

Inventories decreased to $1,000 as at December 31, 2024, from $1.2 million as at December 31, 2023. The decrease resulted from the classification of certain assets to held for sale.

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Restricted cash was $0.2 million as at December 31, 2024 and $0.4 million as at December 31, 2023.

Deposits, prepaid and other assets were $1.8 million as at December 31, 2024, compared to $1.4 million as at December 31, 2023.

Assets held for sale were $88.5 million as at December 31, 2024, compared to $nil as at December 31, 2023. See “– Rationalization of Non-Core Assets” for further information.

Account payables and accrued expenses were $14.8 million as at December 31, 2024, compared to $16.0 million as at December 31, 2023. The decrease was primarily related to the classification of liabilities held for sale.

We had current income tax liabilities of $48,000 as at December 31, 2024, compared to $4.5 million as at December 31, 2023.

We had bonds payable of $36.5 million as at December 31, 2024, compared to $36.1 million as at December 31, 2023.

We had a non-interest bearing loan payable, which was measured at fair value through profit or loss, of $7.1 million as at December 31, 2024. The loan did not have a fixed repayment date and the estimated fair value was determined using a discount rate for similar investments. As at December 31, 2024, this loan was classified as a liability relating to assets held for sale. Please see Note 25 to our audited consolidated financial statements for the year ended December 31, 2024 for further information.

Long-Term Debt

As at December 31, 2024, we had long-term bonds payable of $36.5 million compared to $36.1 million as at December 31 2023. In August 2019, a subsidiary completed a public issue of bonds with an aggregate nominal amount of €25.0 million. The bonds were redeemable in August 2026, with interest payable in August each year at a nominal interest rate of 4.00% (or an effective interest rate of 4.41%) and secured by our investment property. In August 2024, the bondholders approved a 7-year extension of the maturity of the bonds and an increase in the interest rate thereunder to 5.70%.

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Future Liquidity

We expect that there will be acquisitions of businesses or commitments to projects in the future. To achieve the long-term goals of expanding our assets and earnings, including through acquisitions, capital resources will be required. Depending on the size of a transaction, the capital resources that will be required can be substantial. The necessary resources will be generated from cash flows from operations, cash on hand, borrowings against our assets, sales of proprietary investments or the issuance of securities.

Foreign Currency

Our consolidated financial results are subject to foreign currency exchange rate fluctuations.

Our presentation currency is the Canadian dollar. We translate subsidiaries’ assets and liabilities into Canadian dollars at the rate of exchange on the balance sheet date. Revenue and expenses are translated at exchange rates approximating those at the date of the transactions or, for practical reasons, the average exchange rates for the applicable periods, when they approximate the exchange rate as at the dates of the transactions. As a substantial amount of revenue is generated in Euros, the financial position for any given period, when reported in Canadian dollars, can be significantly affected by the exchange rates for these currencies prevailing during that period. In addition, we also have exposure to the RMB, the United States dollar and the Hong Kong dollar.

In 2024, we reported a $6.1 million currency translation adjustment gain in accumulated other comprehensive income within equity. This compared to a $1.2 million currency translation adjustment loss under accumulated other comprehensive income within equity in 2023. This currency translation adjustment did not affect our profit and loss statement. The gain in 2024 was primarily a result of the appreciation of the Euro against the Canadian dollar.

Contractual Obligations

The following table sets out our obligations and commitments including contractual obligations and bonds payable held at fair value as at December 31, 2024. The below table does not include amounts held in assets held for sale.

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Payments Due by Period(1)
​ | ​ | (In thousands)
​ | ​ | Less than | ​ | ​ | ​ | ​ | ​ | ​ | ​ | More than | ​ | ​ | ​
Contractual Obligations(2) |  | 1 Year |  | 1 – 3 Years |  | 3 – 5 Years |  | 5 Years |  | Total
Bonds payable |  | $ | 2,127 |  | $ | 6,381 |  | $ | 6,381 |  | $ | 41,574 |  | $ | 56,463
Total | ​ | $ | 2,127 | ​ | $ | 6,381 | ​ | $ | 6,381 | ​ | $ | 41,574 | ​ | $ | 56,463

Notes:

(1) | Includes principal and interest.

(2)This table does not include non-financial instrument liabilities and guarantees.

Risk Management

Risk is an inherent part of our business and operating activities. The extent to which we properly and effectively identify, assess, monitor and manage each of the various types of risk involved in our activities is critical to our financial soundness and profitability. We seek to identify, assess, monitor and manage the following principal risks involved in our business activities: market, credit, liquidity, operational, legal and compliance, new business, reputational and other. Risk management is a multi-faceted process that requires communication, judgment and knowledge of financial products and markets. Our management takes an active role in the risk management process and requires specific administrative and business functions to assist in the identification, assessment and control of various risks. Our risk management policies, procedures and methodologies are fluid in nature and are subject to ongoing review and modification.

Inflation

Inflation has had a minimal impact on our costs of sales and services and selling, general administrative expenses over the last two fiscal years. Our management does not consider inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.

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Critical Accounting Estimates

The preparation of financial statements in conformity with IFRS requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.

Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. As the number of variables and assumptions affecting the probable future resolution of the uncertainties increase, these judgments become even more subjective and complex. We have identified certain accounting policies that are the most important to the portrayal of our current financial condition and results of operations. Please refer to Note 2B to our audited consolidated financial statements for the year ended December 31, 2024, for a discussion of the material accounting policies.

In the process of applying our accounting policies, management makes various judgments and estimates that can significantly affect the amounts it recognizes in the consolidated financial statements. The following is a description of the critical judgments and estimates that management has made in the process of applying our accounting policies and that have the most significant effects on the amounts recognized in the consolidated financial statements:

Identification of Cash-generating Units

Our assets are aggregated into cash-generating units, referred to as “CGUs”, for the purpose of assessing and calculating impairment, based on their ability to generate largely independent cash flows. The determination of CGUs requires judgment in defining the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs have been determined based on similar geological structure, shared infrastructure, geographical proximity, product type and similar exposure to market risks. In the event facts and circumstances surrounding factors used to determine our CGUs change, we will re-determine the groupings of CGUs. Please see Notes 11 and 12 to our audited consolidated financial statements for the year ended December 31, 2024 for further information.

Impairment and Reversals of Impairment on Non-Financial Assets

The carrying amounts of our non-financial assets, other than deferred tax assets, are reviewed at the end of each reporting period to determine whether there is an indication of impairment or reversal of previously recorded impairment. If such indication exists, the recoverable amount is estimated.

Determining whether there are any indications of impairment or impairment reversals requires significant judgment of external factors, such as an extended change in prices or margins for iron ore, a significant change in margins or profitability, a decline in market value of an asset, a significant revision of estimated reserves or production volumes, an increase in future development or operating costs or significant shifts in the technological, regulatory, economic or legal environment. Given that the calculations for recoverable amounts require the use of estimates and assumptions, including forecasts of commodity prices, market supply and demand, product margins and in the case of our interests in an iron ore mine and power plant, expected production volumes, it is possible that the assumptions may change, which may impact the estimated life of the CGU and may require a material adjustment to the carrying value of non-financial assets.

Impairment losses recognized in prior years are assessed at the end of each reporting period for indications that the impairment has decreased or no longer exists. An impairment loss is reversed only to the extent that the carrying amount of the asset or CGU does not exceed the carrying amount that would have been determined, net of depreciation, depletion and amortization, if no impairment loss had been recognized.

Valuation of Investment Property

Investment properties are included in the consolidated statement of financial position at their market value, unless their fair value cannot be reliably determined at that time. The market value of investment properties is assessed annually by an independent qualified valuer, who is an authorized expert for the valuation of developed and undeveloped land in Germany, after taking into consideration the net income with inputs on realized basic rents, operating costs and damages and defects. The assumptions adopted in the property valuations are based on the market conditions existing at the end of the reporting period, with reference to current market sales prices and the appropriate capitalization rate. Changes in any of these inputs or incorrect assumptions related to any of these items could materially impact these valuations.

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Assets Held for Sale and Dispositions

We apply judgment to determine whether an asset (or disposal group) is available for immediate sale in its present condition and that its sale is highly probable and therefore should be classified as held for sale at the balance sheet date. In order to assess whether it is highly probable that the sale can be completed within one year, or the extension period in certain circumstances, management reviews the business and economic factors, both macro and micro, which include the industry trends and capital markets, and the progress towards a sale transaction. It is also open to all forms of sales, including exchanges of non-current assets for other non-current assets when the exchange will have commercial substance in accordance with IAS 16, Property, Plant and Equipment for further information.

Credit Losses and Impairment of Receivables

We apply credit risk assessment and valuation methods to our trade and other receivables under IFRS 9, Financial Instruments, which establishes a single forward-looking expected loss impairment model.

We measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on the financial instrument has increased significantly since initial recognition. The objective of the impairment requirements is to recognize lifetime expected credit losses for all financial instruments for which there have been significant increases in credit risk since initial recognition – whether assessed on an individual or collective basis – considering all reasonable and supportable information, including that which is forward-looking.

At each reporting date, our management assesses whether the credit risk on a financial instrument that is measured at amortized cost or at FVTOCI has increased significantly since initial recognition. When making the assessment, management uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, management compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and consider reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.

Allowance for credit losses is maintained at an amount considered adequate to absorb the expected credit losses. Such allowance for credit losses reflects our management’s best estimate of changes in the credit risk on our financial instruments and judgments about economic conditions. The assessment of allowance for credit losses is a complex process, particularly on a forward-looking basis; which involves a significant degree of judgment and a high level of estimation uncertainty. The input factors include the assessment of the credit risk of our financial instruments, legal rights and obligations under all the contracts and the expected future cash flows from the financial instruments, which include inventories, mortgages and other credit enhancement instruments. The major source of estimation uncertainty relates to the likelihood of the various scenarios under which different amounts are expected to be recovered through the security in place on the financial assets. The expected future cash flows are projected under different scenarios and weighted by probability, which involves the exercise of significant judgment. Estimates and judgments could change in the near-term and could result in a significant change to a recognized allowance.

Interest in Resource Properties and Reserve Estimates

Our iron ore royalty interest had an aggregate carrying amount of $192.1 million as at December 31, 2024, and related deferred tax liabilities of $49.0 million.

Generally, estimation of reported recoverable quantities of proved and probable reserves of resource properties include judgmental assumptions regarding production profile, prices of products produced, exchange rates, remediation costs, timing and amount of future development costs and production, transportation and marketing costs for future cash flows. It also requires interpretation of geological and geophysical models and anticipated recoveries. The economical, geological and technical factors used to estimate reserves may change from period to period. Changes in reported reserves can impact the carrying amounts of our interests in resource properties, the recognition of impairment losses and reversal of impairment losses, the calculation of depletion and the recognition of deferred income tax assets or liabilities due to changes in expected future cash flows. In 2023, we did not recognize any impairment in respect of our interests in resource properties.

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Our iron ore reserves are estimates of the amount of product that can be economically and legally extracted from our mining properties. Reserve and resource estimates are an integral component in the determination of the commercial viability of our interest in the iron ore mine, amortization calculations and impairment analyses. In calculating reserves and resources, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, production decline rates, recovery rates, production costs, commodity demand, commodity prices and exchange rates. In addition, future changes in regulatory environments, including government levies or changes in our rights to exploit the resource imposed over the producing life of the reserves and resources may also significantly impact estimates.

Please see Note 12 to our audited consolidated financial statements for the year ended December 31, 2024 for further information.

Impairment of Other Non-Financial Assets

We had property, plant and equipment aggregating $1.5 million as at December 31, 2024, consisting mainly of a power plant. Impairment of our non-financial assets is evaluated at the CGU level. In testing for impairment, the recoverable amounts of the Company’s CGUs are determined as the higher of their values in use and fair values less costs of disposal. In the absence of quoted market prices, the recoverable amount is based on estimates of future production rates, future product selling prices and costs, discount rates and other relevant assumptions. Increases in future costs and/or decreases in estimates of future production rates and product selling prices may result in a write-down of our property, plant and equipment. Please see Note 11 to our audited consolidated financial statements for the year ended December 31, 2024 for further information.

Taxation

We are subject to tax in a number of jurisdictions and judgment is required in determining the worldwide provision for income taxes. Deferred income taxes are recognized for temporary differences using the liability method, with deferred income tax liabilities generally being provided for in full (except for taxable temporary differences associated with investments in subsidiaries and branches where we are able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future) and deferred income tax assets being recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.

We recognized deferred income tax assets of $11.1 million as at December 31, 2024. In assessing the realizability of deferred income tax assets, our management considers whether it is probable that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible or before tax loss and tax credit carry-forwards expire. Our management considers the future reversals of existing taxable temporary differences, projected future taxable income, taxable income in prior years and tax planning strategies in making this assessment. Unrecognized deferred income tax assets are reassessed at the end of each reporting period.

We provide for future income tax liabilities in respect of uncertain tax positions where additional income tax may become payable in future periods and such provisions are based on our management’s assessment of exposure. We did not recognize the full deferred tax liability on taxable temporary differences associated with investments in subsidiaries and branches where we are able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. We may change our investment decision in the normal course of our business, thus resulting in additional income tax liabilities.

Contingencies

Pursuant to IAS 37, Provisions, Contingent Liabilities and Contingent Assets, we do not recognize a contingent liability. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. If it becomes probable that an outflow of future economic benefits will be required for an item previously accounted for as a contingent liability, an accrual or a provision is recognized in the consolidated financial statements in the period in which the change in probability occurs. See Note 22 to our audited consolidated financial statements for the year ended December 31, 2024 for further information.

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New Standards and Interpretations Not Yet Adopted

The Group has not early applied the following new standards and interpretations and amendments to IFRS that have been issued but are not yet effective:

Amendments to IFRS 9 and IFRS 7 |  | Amendments to the Classification and Measurement of Financial Instruments(1) |
Amendments to IFRS 10 and IAS 28 | ​ | Sale or Contribution of Assets between an Investor and its Associate or Joint Venture(2) | ​
Amendments to IFRS Accounting Standards | ​ | Annual Improvements to IFRS Accounting Standards – Volume 11(1) | ​
Amendments to IAS 21 | ​ | Lack of Exchangeability(3) | ​
IFRS 18 | ​ | Presentation and Disclosure in Financial Statements(4) | ​
IFRS 19 | ​ | Subsidiaries without Public Accountability: Disclousures(4) | ​

Notes:

(1)Effective for annual periods beginning on or after 1 January 2026.

(2)Effective for annual periods beginning on or after a date to be determined.

(3)Effective for annual periods beginning on or after 1 January 2025.

(4)Effective for annual periods beginning on or after 1 January 2027.

Except for the new standards and interpretations and amendments to IFRS mentioned below, the directors of the Company anticipate that the application of these amendments to IFRS, which are not yet effective, will have no material impact on the consolidated financial statements in the foreseeable future.

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 18 Presentation and Disclosure in Financial Statements, which sets out requirements on presentation and disclosures in financial statements, will replace IAS 1 Presentation of Financial Statements. This new IFRS Accounting Standard, while carrying forward many of the requirements in IAS 1, introduces new requirements to present specified categories and defined subtotals in the statement of profit or loss; provide disclosures on management-defined performance measures in the notes to the financial statements and improve aggregation and disaggregation of information to be disclosed in the financial statements. In addition, some IAS 1 paragraphs have been moved to IAS 8 and IFRS 7. Minor amendments to IAS 7 Statement of Cash Flows and IAS 33 Earnings per Share are also made.

IFRS 18, and amendments to other standards, will be effective for annual periods beginning on or after 1 January 2027, with early application permitted. The application of the new standard is expected to affect the presentation of the statement of profit or loss and disclosures in the future financial statements. The Group is in the process of assessing the detailed impact of IFRS 18 on the Group's consolidated financial statements.

Trend Information

For a discussion of trends relating to revenue derived from our royalty interest, please see “Item 4: Information on the Company – B. Business Overview – Business Segments – Royalty”.

Safe Harbor

The safe harbor provided in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, applies to forward-looking information provided under “Off-Balance Sheet Arrangements” and “Liquidity and Capital Resources – Contractual Obligations”.

​

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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

We have no arrangement or understanding with major shareholders, customers, suppliers or others pursuant to which any of our directors or officers was selected as a director or officer. Each director holds office until the next annual general meeting of our shareholders or until his or her successor is elected or appointed unless such office is earlier vacated in accordance with our memorandum and articles of association, referred to as the “Articles”, or with the provisions of the Cayman Act. The following table sets forth the names of each of our directors and executive officers as at the date hereof:

​

​ | ​ | ​ | ​ | ​ | ​
Name (Age) |  | Present Position |  | Date of Commencement of Office with our Company |
Michael J. Smith (77) | ​ | Executive Chairman and Director | ​ | 2017 | ​
Samuel Morrow (40) | ​ | President, Chief Executive Officer, Chief Financial Officer and Director | ​ | 2017 | ​
Dr. Shuming Zhao (73)(1)(2) | ​ | Director | ​ | 2017 | ​
Silke S. Stenger (57)(1)(2) | ​ | Director | ​ | 2017 | ​
Jochen Dümler (70)(1)(2) | ​ | Director | ​ | 2017 | ​

Notes:

(1)Member of the Audit Committee.

(2)Member of the Compensation, Nominating and Governance Committee.

In February 2025, our board of directors revised our governance structure to combine the functions of our former Compensation Committee and Nominating and Governance Committee into a new Compensation, Nominating and Governance Committee.

Michael J. Smith – Executive Chairman and Director

Mr. Smith is the Executive Chairman and a director of the Company. He was previously the President and Chief Executive Officer of the Company from June 2017 to May 1, 2021. Mr. Smith has served as a director and in executive positions of various publicly traded and private companies. Mr. Smith has experience in corporate finance and restructuring.

Samuel Morrow – President, Chief Executive Officer, Chief Financial Officer and Director

Mr. Morrow is the Chief Financial Officer of the Company since 2017 and the President and Chief Executive Officer of the Company since 2021. Mr. Morrow has also served as a director of the Company since May 2021. Mr. Morrow is a Chartered Financial Analyst. Prior thereto, Mr. Morrow was previously Vice President of Tanaka Capital Management and Treasurer, Chief Financial Officer and Chief Operating Officer of the Tanaka Growth Fund.

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Dr. Shuming Zhao – Director

Dr. Zhao is the Senior Distinguished Professor and Honorary Dean of the School of Business at Nanjing University, the People’s Republic of China. He was appointed as Dean of Nanjing University Xingzhi College in 2020. He serves as President of the International Association of Chinese Management Research (IACMR, Third Term), Vice President of the Chinese Academy of Management, Lifetime Honorary President for Jiangsu Provincial Association of Human Resource Management, and Vice President of Jiangsu Provincial Association of Professional Managers. Since 1994, Dr. Zhao has acted as a management consultant for several Chinese and international firms. Dr. Zhao is also a director of Daqo New Energy Corp. (China). Dr. Zhao has successfully organized and held ten international symposia on multinational business management. Since 1997, Dr. Zhao has been a visiting professor at the Marshall School of Business, University of Southern California, USA, the College of Business, University of Missouri-St. Louis, USA, Drucker Graduate School of Management, Claremont Graduate University, USA and Honorary Professor of SolBridge International School of Business, South Korea. Dr. Zhao has lectured in countries including the United States, Canada, Japan, Singapore, South Korea, the United Kingdom, Germany, the Netherlands, Portugal and Australia.

Silke S. Stenger – Director

Ms. Stenger is an independent business consultant and business coach, with experience in the automotive, plant engineering and cement, franchising and consulting industries. She was formerly the vice chairperson of KHD Humboldt Wedag International AG. Ms. Stenger was the Chief Financial Officer of Management One Human Capital Consultants Limited and Head of Investor Relations and authorized representative (Prokurist) with Koidl & Cie Holding AG. She holds a Master of Science in Industrial and Communications Psychology from FHWien University of Applied Sciences of WKW in Vienna, Austria and is a certified controller, IFRS accountant, and a certified expert in sustainable finance (ESG).

Jochen Dümler – Director

Mr. Dümler was the President and Chief Executive Officer of Euler Hermes North America from 2010 to 2015. From 2002 to 2010, Mr. Dümler was a member of the Board of Management of Euler Hermes Kreditversicherung AG and, from 1995 to 2002, he was a member of the Board of Management of PRISMA Kreditversicherung AG. Mr. Dümler is a member of the German-American Chamber of Commerce (New York City), a member of the German Executive Roundtable (Washington, D.C.) and a board member of the German-American Partnership Program.

There are no family relationships among any of our directors and executive officers.

B. Compensation

During the fiscal year ended December 31, 2024, we paid an aggregate of approximately $2.1 million in cash compensation to our directors and officers, excluding directors’ fees. No other funds were set aside or accrued by our Company during the fiscal year ended December 31, 2024 to provide pension, retirement or similar benefits for our directors or officers pursuant to any existing plan provided or contributed to by us.

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Executive Officers

The following table provides a summary of compensation paid by us during the fiscal year ended December 31, 2024 to our executive officers:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Non-equity incentive | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | compensation plan | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | compensation | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ($)(1) | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Share- | ​ | Option- | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | based | ​ | based | ​ | Annual | ​ | Long-term | ​ | Pension | ​ | All other | ​ | Total
​ | ​ | Salary | ​ | awards | ​ | awards | ​ | incentive | ​ | incentive | ​ | value | ​ | compensation | ​ | compensation
Name and Principal Position |  | ($) |  | ($) |  | ($) |  | plans |  | plans |  | ($) |  | ($) |  | ($)
Michael J. Smith Executive Chairman | ​ | 650,080 | (2)​ | — | ​ | — | ​ | 82,000 | ​ | — | ​ | — | ​ | 280,730 | (3)​ | 1,012,810
Samuel Morrow President, Chief Executive Officer(4) and Chief Financial Officer | ​ | 532,694 | ​ | — | ​ | — | ​ | 99,000 | ​ | — | ​ | 160,034 | (5)​ | 330,347 | (3)(4)(6)​ | 1,122,066

Notes:

(1) | All awards under our non-equity incentive compensation plans are paid during the financial year they were earned.

(2) | Consists of net pay.

(3) | Consists of housing allowances and expenses.

(4) | Includes payments made directly as well as fees and incentive plan payments made to a controlled company.

(5) | Consists of a defined contribution retirement plan.

(6) | Consists of medical and other customary perquisites.

​

For the purposes of the above table, compensation amounts were translated to Canadian dollars at the applicable exchange rate at the date of the transaction or, for practical reasons, the average exchange rates for the applicable periods, when they approximate the exchange rates as at the date of the transactions.

Directors’ Compensation

The following table provides a summary of compensation paid by us to, or earned by, the directors of our Company during the fiscal year ended December 31, 2024:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Director Compensation Table
​ |  | ​ |  | Share- |  | Option- |  | Non-equity |  | ​ |  | ​ |  | ​
​ | ​ | Fees | ​ | based | ​ | based | ​ | incentive plan | ​ | Pension | ​ | All other | ​ | ​
​ | ​ | Earned | ​ | awards | ​ | awards | ​ | compensation | ​ | Value | ​ | compensation | ​ | Total
Name | ​ | ($) | ​ | ($) | ​ | ($) | ​ | ($) | ​ | ($) | ​ | ($) | ​ | ($)
Michael J. Smith(1) |  | — |  | — |  | — |  | — |  | — |  | — |  | —
Dr. Shuming Zhao |  | 78,764 |  | — |  | — |  | — |  | — |  | — |  | 78,764
Indrajit Chatterjee(2) |  | 75,339 |  | — |  | — |  | — |  | — |  | — |  | 75,339
Silke S. Stenger(3) |  | 172,946 |  | — |  | — |  | — |  | — |  | — |  | 172,946
Jochen Dümler |  | 71,915 |  | — |  | — |  | — |  | — |  | — |  | 71,915
Samuel Morrow(4) | ​ | — | ​ | — | ​ | — | ​ | — | ​ | — | ​ | — | ​ | —

Notes:

(1) | Compensation provided to Mr. Smith, in his capacity as Chairman is disclosed in the table above under the heading “Executive Officers”.

(2) | Mr. Chatterjee passed away on July 30, 2024.

(3) | Includes compensation provided to Ms. Stenger in connection with her acting as a director of a subsidiary.

(4) | Compensation provided to Mr. Morrow, in his capacity as President, Chief Executive Officer and Chief Financial Officer is disclosed in the table above under the heading “Executive Officers”.

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A total of $0.4 million (excluding non-cash option-based awards) was paid to our directors for services rendered as directors (including as directors of our subsidiaries), or for committee participation or assignments, during our most recently completed financial year. Our directors are each paid an annual fee of US$25,000 and an additional US$2,500 per meeting for each director’s meeting attended as well as additional fees, as applicable, for their respective participation on our committees. We also reimburse our directors and officers for expenses incurred in connection with their services as directors and officers.

Pension Plan Benefits

As of December 31, 2024, other than as disclosed herein, we did not have any defined benefit, defined contribution or deferred compensation plans for any of our senior officers or directors.

C. Board Practices

Board of Directors

Our Articles provide that the number of directors shall be the greater of three and the number most recently established by the directors. Our directors have currently fixed the size of our board at five directors.

Pursuant to our Articles, each of our directors holds office until the expiration of his term and until his successor has been elected or qualified. At every annual general meeting of our shareholders, shareholders entitled to vote for the election of directors must, by ordinary resolution, elect the directors. There is no mandatory retirement age for our directors and our directors are not required to own securities of our Company in order to serve as directors.

Our Articles do not restrict a director’s power to vote on a proposal, arrangement or contract in which the director is materially interested, vote on compensation to themselves or any other members of their body in the absence of an independent quorum or exercise borrowing powers.

Our board is currently comprised of Michael J. Smith, Shuming Zhao, Silke S. Stenger, Jochen Dümler and Samuel Morrow.

Other than as discussed elsewhere herein, there are no service contracts between our Company and any of our directors providing for benefits upon termination of employment.

Committees of the Board of Directors

Our board of directors has established an Audit Committee. Our Audit Committee currently consists of Silke S. Stenger, Dr. Shuming Zhao and Jochen Dümler. The Audit Committee operates pursuant to a charter adopted by our board of directors on December 18, 2021, a copy of which is available online at our website at www.scullyroyalty.com. The Audit Committee is appointed by and generally acts on behalf of the board of directors. The Audit Committee is responsible primarily for monitoring: (i) the integrity of our financial statements; (ii) compliance with legal and regulatory requirements; (iii) the independence, qualifications and performance of our independent auditors; and (iv) the performance and structure of our internal audit function. The Audit Committee also reviews and approves our hiring policies, establishes our procedures for dealing with complaints, oversees our financial reporting processes and consults with management and our independent auditors on matters related to our annual audit and internal controls, published financial statements, risk assessment and risk management, accounting principles and auditing procedures being applied.

Our board of directors had previously established a Nominating and Corporate Governance Committee and a Compensation Committee. Effective February 25, 2025, the Nominating and Corporate Governance Committee was dissolved, and all of its former duties were assigned to the Board’s standing Compensation Committee. The Compensation Committee was renamed the Compensation, Nominating and Corporate Governance Committee. Our Compensation, Nominating and Corporate Governance Committee currently consists of Silke S. Stenger, Dr. Shuming Zhao, and Jochen Dümler. Our Compensation, Nominating and Corporate Governance Committee operates pursuant to a charter adopted by our board of directors on February 25, 2025, a copy of which is available online at our website at www.scullyroyalty.com. The Compensation, Nominating and Corporate Governance Committee is appointed and generally acts on behalf of the board of directors.

One of the primary functions of the Compensation, Nominating and Corporate Governance Committee is to assist our board of directors in developing our Corporate Governance Guidelines and monitor the board and management’s performance against the defined approach. The Compensation, Nominating and Corporate Governance Committee is also responsible for evaluating the board and board committees’ structure and size and the independence of existing and prospective directors, identifying and reporting on candidates to be nominated to our board of directors, reporting on the board’s annual performance and overseeing our process for providing information to the board.

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The Compensation, Nominating and Corporate Governance Committee is also responsible for reviewing our board compensation practices and our selection, retention and remuneration arrangements for our executive officers and employees and reviewing and approving our Chief Executive Officer’s compensation in light of our corporate goals and objectives. Except for plans that are, in accordance with their terms or as required by law, administered by our board of directors or another particularly designated group, the Compensation, Nominating and Corporate Governance Committee also administers and implements all of our incentive compensation plans and equity-based compensation plans. The Compensation, Nominating and Corporate Governance Committee also recommends changes or additions to those plans, monitors our succession planning processes and reports to our board of directors on other compensation matters. Our Chief Executive Officer does not vote upon or participate in the deliberations regarding his compensation.

D. Employees

At December 31, 2024, 2023 and 2022, we employed approximately 71, 72 and 71 people, respectively.

E. Share Ownership

There were 14,822,251 Common Shares, 1,516,120 stock options and no share purchase warrants issued and outstanding as at December 31, 2024. Of the Common Shares and stock options issued and outstanding on that date, our directors and senior officers, who served in such positions at any time during the fiscal year ended December 31, 2024, beneficially owned the following Common Shares and held the following stock options:

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Percentage of total | ​ | ​ | ​
​ | ​ | Common Shares | ​ | Common Shares | ​ | Stock options | ​
​ | ​ | beneficially owned | ​ | outstanding | ​ | held(1) | ​
Name and principal position |  | (#) |  | (%) |  | (#) | ​
Michael J. Smith Executive Chairman and Director |  | 28,393 |  | 0.2 | % | — | ​
Samuel Morrow President, Chief Executive Officer and Director | ​ | 9,888 |  | — | * | 541,512 | (2)​
Dr. Shuming Zhao Director |  | — | ​ | — | ​ | 54,150 | (3)​
Silke S. Stenger Director |  | — |  | — |  | 54,150 | (3)​
Jochen Dümler Director |  | — |  | — |  | 54,150 | (3)​

Notes:

(1) | The options are exercisable at a price of US$7.44 per Common Share and expire on December 1, 2027.

(2) | 70,632 options are exercisable at a price of US$7.44 per Common Share and expire on December 1, 2027 and 470,880 options are exercisable at a price of US$11.17 per Common Share and expire on May 4, 2031.

(3) | 14,126 options are exercisable at a price of US$7.44 per Common Share and expire on December 1, 2027 and 40,024 options are exercisable at a price of US$11.17 per Common Share and expire on May 4, 2031.

* | Less than 0.1%.

2017 Equity Incentive Plan

The 2017 Equity Incentive Plan, referred to as the “Incentive Plan”, was adopted by the Company on July 14, 2017. At our annual meeting of shareholders held on December 29, 2021, shareholders approved an amendment to the plan to: (i) increase the total number of our Common Shares under the plan by 677,364 Common Shares to 2,239,027 Common Shares (after giving effect to adjustments under the Incentive Plan in connection with stock dividends declared in 2021); (ii) increase the maximum number of Common Shares subject to options and stock appreciation rights that may be granted to any one Covered Employee (as defined in the Incentive Plan) to 400,000; and (iii) increase the maximum number of Common Shares that may be granted to any one Covered Employee during the fiscal year where such participant’s employment commences to 425,000 and 400,000 for all other fiscal years.

Pursuant to the terms of the Incentive Plan, our board of directors, our Compensation Committee or such other committee as is appointed by our board of directors to administer the Incentive Plan, may grant stock options, restricted stock rights, restricted stock, performance share awards, performance share units and stock appreciation rights under the Incentive Plan, establish the terms and conditions for those awards, construe and interpret the Incentive Plan and establish the rules for the Incentive Plan’s administration. Such awards may be granted to employees, non-employee directors, officers or consultants of ours or any affiliate or any person to whom an offer of employment with us or any affiliate is extended. Such committee has the authority to determine which employees, non-employee directors, officers, consultants and prospective employees should receive such awards.

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The maximum number of Common Shares which may be issued as incentive stock options (being stock options intended to meet the requirements of an “incentive stock option” under the U.S. Internal Revenue Code) under the Incentive Plan is limited to 400,000. Further, the maximum number of Common Shares that may be granted to any one participant in the Incentive Plan, who is a Covered Employee (as defined in the Incentive Plan) during the fiscal year where such participant’s employment commences, shall be 425,000 and 400,000 for all other fiscal years.

In addition, the aggregate number of securities issuable to all non-employee directors cannot exceed 1% of the Company’s issued and outstanding Common Shares and the aggregate fair value of Awards (as defined in the Incentive Plan) granted to any one non-employee director cannot exceed US$100,000 in any one year.

As at December 31, 2024 and the date hereof, 1,516,120 Common Shares were subject to outstanding awards under the Incentive Plan and 643,335 Common Shares were available for future awards under the Incentive Plan.

F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation

Not applicable.

​

ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

There were 14,822,251 Common Shares issued and outstanding as of April 24, 2025. Persons known to us to be the beneficial owner of more than five percent (5%) of our Common Shares as of April 24, 2025:

​ | ​ | ​ | ​ | ​ | ​
​ |  | Amount |  | Percent of | ​
Name | ​ | Owned | ​ | Class(1) | ​
Peter Kellogg, group(2) | ​ | 5,293,276 | ​ | 35.7 | %
Lloyd Miller, III(3) |  | 2,008,407 |  | 13.6 | %

Notes:

(1) | Based on 14,822,251 Common Shares issued and outstanding on April 24, 2025.

(2) | As disclosed in a Schedule 13D/A dated July 17, 2022 and other public documents, Mr. Peter Kellogg and/or his family beneficially owns an aggregate of 5,293,276 Common Shares with sole dispositive and voting power. Such Schedule 13D/A filing further disclosed the following reporting person or related party purchases of Common Shares in the 60 days prior to the date of the filing: (i) 200,000 Common Shares purchased by Cynthia Kellogg, Mr. Kellogg’s wife, and (ii) 200,000 Common Shares purchased by IAT Reinsurance Company Ltd. This group may be considered to control our Company as a result of, among other things, its proportionate ownership of our Common Shares.

(3) | Based on a Schedule 13D filed on October 8, 2024 by Mr. Neil Subin. As disclosed in such filing, Neil Subin holds the position of President and Manager of Milfam, LLC which serves as manager, general partner or investment advisor of a number of entities formerly managed by the late Lloyd Miller, III. He also serves as trustee of a number of Miller family trusts.

​

As of April 24, 2025, there were 14,822,251 Common Shares issued and outstanding held by 113 registered shareholders. Of those Common Shares issued and outstanding, 14,821,781 Common Shares were registered in the United States (109 registered shareholders).

The voting rights of our major shareholders do not differ from the voting rights of holders of our shares who are not major shareholders.

There are no arrangements known to us, the operation of which may at a subsequent date result in a change in the control of our Company.

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B. Related Party Transactions

In the normal course of operations, we enter into transactions with related parties, which include affiliates in which we have a significant equity interest (10% or more) or have the ability to influence their operating and financing policies through significant shareholding, representation on the board of directors, corporate charter and/or bylaws. The related parties also include, among other things, the Company’s directors, Chairman, President, Chief Executive Officer and Chief Financial Officer.

We had the following transactions with related parties:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
​ | ​ | (in thousands)
Fee income | ​ | $ | — | ​ | $ | 425 | ​ | $ | 1,191
Interest income | ​ |  | — | ​ |  | 79 | ​ |  | —
Other income | ​ |  | — | ​ |  | — | ​ |  | 462
Dividends received | ​ |  | 109 | ​ |  | 89 | ​ |  | 198
Royalty expenses | ​ |  | (673) | ​ |  | (778) | ​ |  | (682)
Fee expenses | ​ |  | — | ​ |  | (41) | ​ |  | (2,198)
Reimbursements of expenses, primarily including employee benefits and lease and office expenses | ​ |  | (679) | ​ |  | (886) | ​ |  | (4,914)

​

We have, from time to time, entered into arrangements with a company controlled by our Chairman to assist us to comply with various local regulations and requirements, including the recently introduced economic substance legislation for offshore jurisdictions, as well as fiscal efficiency. These arrangements are also utilized to aid in the divestment of financially or otherwise distressed or insolvent assets or businesses that are determined to be unsuitable for our ongoing operations. These arrangements are implemented at cost and no economic benefit is received by, or accrued, by our Chairman or the company controlled by him. Pursuant to this arrangement, there were balances amounting to $22.4 million included in other receivables, which does not include amounts held for sale.

In addition, pursuant to these arrangements, during 2024 and 2023, we reimbursed such company $0.7 million and $0.9 million, respectively, at cost for expenses, primarily consisting of employee benefits and lease and office expenses.

As set forth in the table above, we had royalty expenses of $0.7 million in 2024 and $0.8 million in 2023, that were paid to a company in which we hold a minority interest and that is a subsidiary of the operator of the underlying mine.

Please see Note 24 to our audited consolidated financial statements for the year ended December 31, 2024 for further information.

C. Interests of Experts and Counsel

Not applicable.

​

ITEM 8: FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

Our consolidated financial statements have been prepared in compliance with IFRS. Please see “Item 18: Financial Statements”.

Legal Proceedings

We are subject to routine litigation incidental to our business and are named from time to time as a defendant and are a plaintiff from time to time in various legal actions arising in connection with our activities, certain of which may include large claims for punitive damages. Further, due to the size, complexity and nature of our operations, various legal and tax matters are outstanding from time to time, including periodic audit by various tax authorities.

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We and certain of our subsidiaries have been named as defendants in a legal action relating to guarantees of a former parent. Management believes that such claim is without merit and intends to vigorously defend such claim. Currently, based upon the information available to management, management does not believe that there will be a material adverse effect on our financial position or results of operations as a result of this action. However, due to the inherent uncertainty of litigation, the Company cannot provide certainty as to the outcome. The claim amounted to approximately $121 million (€81 million), plus interest and costs, as at December 31, 2024, compared to $118.1 million (€80.8 million), plus interest and costs, as at December 31, 2023.

Currently, based upon information available to us, we do not believe any such matters would have a material adverse effect upon our financial condition or results of operations as at December 31, 2024. However, due to the inherent uncertainty of litigation, we cannot provide certainty as to their outcome. If our current evaluations are materially incorrect or if we are unable to resolve any of these matters favourably, there may be a material adverse impact on our financial performance, cash flows or results of operations. Please see Note 22 to our audited consolidated financial statements for the year ended December 31, 2024 for further information.

Dividend Distributions

On April 30, 2021, we announced that our board of directors approved a cash dividend policy, which is intended to maximize potential future dividends to holders of our Common Shares.

In 2023, we declared a dividend of $0.23 (US$0.17) per Common Share paid on May 19, 2023 to shareholders of record on May 9, 2023.

In 2024, we declared a dividend of $0.37 (US$0.26) per Common Share to be paid on February 21, 2025 to shareholders of record on January 24, 2025.

The timing, payment and amount of any dividends paid on our Common Shares may be determined by our board of directors from time to time, based upon considerations such as our cash flow, results of operations and financial condition, the need for funds to finance ongoing operations and such other business considerations as our board of directors considers relevant.

B. Significant Changes

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

​

ITEM 9: THE OFFER AND LISTING

A. Offer and Listing Details

Our Common Shares are quoted on the New York Stock Exchange, referred to as the “NYSE”, currently under the symbol “SRL”.

The transfer of our Common Shares is managed by our transfer agent, Computershare Trust Company, N.A. 150 Royall Street, Suite 101, Canton, MA 02021 (Tel: 201-680-6578; Toll Free: 888-478-2338).

B. Plan of Distribution

Not applicable.

C. Markets

See “– A. Offer and Listing Details”.

D. Selling Shareholders

Not applicable.

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E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

​

ITEM 10: ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

We are an exempted company organized under the Cayman Act. Our registered office is located at P. O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1 – 1205 Cayman Islands. Pursuant to Section 4 of our Articles, the objects for which our Company is established are unrestricted and we have full power and authority to carry out any object not prohibited by the Cayman Act, as amended from time to time, or any other law of the Cayman Islands.

The following are summaries of material provisions of our Articles insofar as they relate to our Common Shares.

Board of Directors

Please see “Item 6: Directors, Senior Management and Employees – C. Board Practices”.

Common Shares

General. Our authorized capital consists of US$450,000 divided into 300,000,000 Common Shares of US$0.001 par value each and 150,000,000 preference shares divided into US$0.001 par value each. No preference shares were issued and outstanding as of the date hereof. There are no limitations imposed by our Articles on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our Articles governing the ownership threshold above which shareholder ownership must be disclosed.

Dividends. Holders of our Common Shares may receive dividends when, as and if declared by our board of directors, subject to the preferential rights of any preference shares. Under the Cayman Act, dividends may be declared and paid only out of funds legally available therefor, namely out of either profit or our share premium account, and provided further that a dividend may not be paid if it would result in our Company being unable to pay its debts as they fall due in the ordinary course of business. Our Articles provide that our directors may declare and pay a distribution in money or by distribution of specific assets.

Voting. Holders of our Common Shares are entitled to receive notice of and to attend all general meetings of shareholders or separate meetings of holders of Common Shares and are entitled to one vote per share at any such meeting.

A quorum required for a general meeting of shareholders consists of at least two shareholders present or by proxy, representing not less than 20% of the total voting power entitled to vote on the resolutions to be considered at a meeting, unless only one shareholder is entitled to vote on such resolutions in which case the quorum required shall be only the one shareholder.

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An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes cast by those shareholders entitled to vote who are present in person or by proxy at a general meeting. Holders of our Common Shares may, among other things, divide or consolidate their shares by ordinary resolution. In general and subject to applicable law, all matters will be determined by a majority of votes cast other than fundamental changes with respect to our Company. Various extraordinary corporate transactions including any merger, amalgamation, continuance to another jurisdiction, voluntary winding-up by the court, amendment to the Articles, change of company name or removal of a director must be approved by the shareholders by way of a special resolution. A special resolution is a resolution passed by a majority of not less than two-thirds of such shareholders who, being entitled to do so, vote in person or by proxy at a general meeting of the Company, or approved in writing by all of the shareholders entitled to vote at a general meeting of the Company. Under the Cayman Act, there is no specific requirement to obtain shareholder approval in connection with the sale, lease or exchange of all, or substantially all, of a corporation’s property.

General Meetings of Shareholders and Shareholder Proposals. Our Articles provide that we may hold an annual general meeting and shall specify the meeting as such with notices calling it, and any such annual general meeting shall be held at such time and place as may be determined by our directors. Our directors may convene a meeting of our shareholders with at least 10 days’ prior notice.

Cayman Islands exempted companies are not required by the Cayman Act to call annual general meetings of shareholders. Our Articles provide that so long as the Company’s shares are listed on the NYSE, we shall hold annual general meetings as required under the applicable rules and regulations of the NYSE.

Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our Articles allow shareholders representing in aggregate 20% or more of the voting rights in respect of the matter for which the meeting is requisitioned, to be held within four months of receipt of the requisition. As an exempted Cayman Islands company, we are not obliged under the Cayman Act to call shareholders’ annual general meetings. Under our Articles, directors may be removed by special resolution of our shareholders.

Directors’ Power to Issue Shares. Our Articles authorize our board of directors to issue additional Common Shares from time to time as our board shall determine, to the extent of available authorized but unissued shares. Our board of directors may also issue preference shares from time to time in one or more classes or series, each of such class or series to have such voting powers (full or limited or without voting powers) designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as are stated and expressed, or in any resolution providing for the issue of such class or series adopted by our board.

Our board of directors may also approve the issuance of options, rights or warrants that are exercisable into our shares for such consideration and on such terms as the board may determine.

Variation of Rights. The rights attached to any class or series of our shares (unless otherwise provided by the terms of issue of the shares of that class or series), whether or not our Company is being wound-up, may only be varied with the consent in writing of the holders of a majority of the issued shares of that class or series or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class or series.

Liquidation. The holders of our Common Shares have the right on the winding up, liquidation or dissolution of the Company to participate in the surplus assets of the Company, subject to the rights of any issued and outstanding preference shares.

Redemption, Repurchase and Surrender. We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders thereof, on such terms and in such manner as may be determined, before the issue of such shares, by our board of directors or by a special resolution of our shareholders. We may also repurchase any of our shares provided that the manner and terms of such purchase have been approved by our board of directors or are otherwise authorized by our Articles. Under the Cayman Act, the redemption or purchase of any of our shares may be paid out of our profits or out of the proceeds of a fresh issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if we can, immediately following such payment, pay our debts as they fall due in the ordinary course of business. In addition, under the Cayman Act, no such share may be redeemed or repurchased: (a) unless it is fully paid up; (b) if such redemption or repurchase would result in there being no shares outstanding; or (c) if the Company has commenced liquidation.

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Anti-Takeover Provisions. Our Articles contain certain provisions that would have an effect of delaying, deferring or preventing a change in control of our Company, including provisions that:

| ● | authorize our directors to issue preference shares in one or more classes or series and to designate the price, rights, preferences, rights and restrictions of such preference shares without any further vote or action by our shareholders;

| ● | limit the ability of shareholders to requisition and convene general meetings of shareholders; and

| ● | restrict the nomination of directors without advance notice. In the case of an annual meeting, notice must be given to us not less than 30 nor more than 65 days prior to the date of such meeting; provided that if the meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of such meeting was made, notice may be given no later than the close of business on the 10th day following such announcement. In the case of a special meeting called for the purpose of electing directors that is not also an annual meeting, notice must be provided to us no later than the close of business on the 15th day following the day on which the first public announcement of the date of such special meeting was made. Additionally, our Articles contain a provision requiring a minimum threshold to requisition a special meeting. Such restrictions may make it more difficult to effect changes to our management.

However, under the Cayman Act and applicable Cayman laws, our directors may only exercise the rights and powers granted to them under our Articles for a proper purpose and for what they believe in good faith to be in the best interests of our Company.

Calls on Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares. The shares that have been called upon and remain unpaid are subject to forfeiture. All of our Common Shares are fully paid.

Exempted Company. We are an exempted company with limited liability under the Cayman Act. The Cayman Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. Unlike ordinary resident companies, among other things, an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies, is not required to have its register of members open to inspection, does not have to hold an annual general meeting, may issue no par value, negotiable or bearer shares and may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands.

C. Material Contracts

There are no material contracts outside of the ordinary course of business to which we are a party.

D. Exchange Controls

There are no exchange control regulations or currency restrictions in the Cayman Islands. Under Cayman Islands law, there are no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our Common Shares. Please see “E. Taxation – Cayman Islands Taxation” for further information.

The Bank is subject to regulations and restrictions imposed in Europe and Malta. In addition, a portion of cash included in our assets held for sale is held in the PRC in RMB. Please see “Item 4: Information on the Company – B. Business Overview – Regulation” for further information.

The government of the PRC imposes controls on the convertibility of the RMB into foreign currencies and the remittance of currency out of the PRC. Please see “Item 3: Key Information – D. Risk Factors – Risk Factors Relating to Our Business” for further information.

E. Taxation

The following is a general summary of certain Cayman Islands and United States federal income tax consequences relevant to an investment in our Common Shares. The discussion is not intended to be, nor should it be construed as, legal or tax advice to any particular prospective purchaser. The discussion is based on laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change or different interpretations, possibly with retroactive effect. The discussion does not address U.S. state or local tax laws, or tax laws of jurisdictions other than the Cayman Islands and the United States. You should consult your own tax advisors with respect to the consequences of acquisition, ownership and disposition of our Common Shares.

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Cayman Islands Taxation

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty or withholding tax applicable to us or to any holder of our Common Shares. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within, the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our Company. There are no exchange control regulations or currency restrictions in the Cayman Islands.

Payments of dividends and capital in respect of our Common Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Common Shares, as the case may be, nor will gains derived from the disposal of our Common Shares be subject to Cayman Islands income or corporation tax.

Material United States Federal Income Tax Consequences

The following is a discussion of certain United States federal income tax matters under current law, generally applicable to a U.S. Holder (as defined below) of our Common Shares who holds such shares as capital assets for United States federal income tax purposes (generally, property held for investment). This discussion does not address all aspects of United States federal income tax matters and does not address consequences particular to persons subject to certain special provisions of United States federal income tax law, such as those described below. In addition, this discussion does not cover any state, local or non-United States tax consequences or United States federal estate and gift taxes. Except as specifically set forth below, this summary does not discuss applicable tax reporting requirements.

The following discussion is based upon the Internal Revenue Code of 1986, as amended, referred to as the “Code”, Treasury Regulations (whether final, temporary, or proposed) published by the Internal Revenue Service, referred to as the “IRS”, rulings and published administrative positions of the IRS and court decisions, in each case, as in effect currently, and any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. In addition, this discussion does not consider the potential effects, whether adverse or beneficial, of any recently proposed legislation that, if enacted, could be applied, possibly on a retroactive basis, at any time. No assurance can be given that the IRS will agree with the statements and conclusions herein, or will not take, or that a court will not adopt, a position contrary to any position taken herein.

The following discussion is for general information only and is not intended to be, nor should it be construed to be, legal, business or tax advice to any U.S. Holder or prospective U.S. Holder of our Common Shares and no opinion or representation with respect to the United States federal income tax consequences to any such U.S. Holder or prospective U.S. Holder is hereby made. Accordingly, U.S. Holders and prospective U.S. Holders of our Common Shares are urged to consult their own tax advisors with respect to the United States federal, state and local tax consequences, and any non-United States tax consequences of purchasing, owning and disposing of our Common Shares.

U.S. Holders

As used in this discussion, a “U.S. Holder” is a beneficial owner of our Common Shares that for United States federal income tax purposes, is: (i) an individual who is a citizen or resident of the United States; (ii) a corporation, or any other entity taxable as a corporation for United States federal tax purposes, that is created or organized in or under the laws of the United States, any state in the United States, or the District of Columbia; (iii) an estate, the income of which is subject to United States federal income tax without regard to its source; or (iv) a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.

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This summary does not purport to address all material United States federal income tax consequences that may be relevant to a prospective U.S. Holder’s decision to acquire, own, or dispose of our Common Shares and does not take into account the specific circumstances of any particular U.S. Holder, some of which (such as tax-exempt entities, qualified retirement plans, individual retirement accounts, other tax-deferred accounts or government organizations, banks or other financial institutions, insurance companies, brokers or dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, regulated investment companies, real estate investment trusts, United States expatriates, investors liable for the alternative minimum tax or Medicare contribution tax on net investment income of certain non-corporate U.S. Holders, partnerships and other pass-through entities (or partners or investors therein), investors that own or are treated as owning (by vote or value) 10% or more of our outstanding Common Shares, investors that hold our Common Shares as part of a straddle, hedge, conversion or constructive sale transaction or other integrated transaction, U.S. Holders whose functional currency is not the United States dollar, and persons required to accelerate the recognition of any item of gross income with respect to our Common Shares as a result of such income being recognized on an applicable financial statement) may be subject to special tax rules. This summary does not address U.S. Holders who acquired their shares through the exercise of employee stock options or otherwise as compensation.

If an entity that is classified as a partnership for United States federal income tax purposes holds our Common Shares, the United States federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding our Common Shares and partners in such partnerships should consult their tax advisors as to the particular United States federal income tax consequences of owning and disposing of the Common Shares.

Distributions With Respect to Common Shares

Subject to the “Passive Foreign Investment Company” rules discussed below, the gross amount of a distribution paid to a U.S. Holder with respect to the Common Shares (including amounts withheld for non-United States taxes, if any) will be subject to United States federal income taxation as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Such dividends will generally not be eligible for the dividends-received deduction allowed to corporations. Distributions that are taxable as dividends and that meet certain requirements will be “qualified dividend income” and will generally be taxed to U.S. Holders who are individuals at preferential tax rates for long-term capital gains. Distributions in excess of our current and accumulated earnings and profits will be treated first as a tax-free return of capital to the extent of the U.S. Holder’s tax basis in the Common Shares and, to the extent in excess of such tax basis, will be treated as gain from a sale or exchange of such shares. There can be no assurance that we will maintain calculations of our earnings and profits in accordance with United States federal income tax principles. U.S. Holders should therefore assume that any distribution with respect to the Common Shares will constitute dividend income.

Sale or Other Disposition of Common Shares

Subject to the “Passive Foreign Investment Company” rules discussed below, upon a sale, exchange, or other taxable disposition of the Common Shares, a U.S. Holder will generally recognize a capital gain or loss for United States federal income tax purposes in an amount equal to the difference between the amount realized on the sale or other disposition and the U.S. Holder’s adjusted tax basis in such shares. Such gain or loss generally will be a United States source gain or loss and will be treated as a long-term capital gain or loss if the U.S. Holder’s holding period of the shares exceeds one year. Preferential tax rates apply to long-term capital gains of a U.S. Holder that is an individual. The deductibility of capital losses is subject to significant limitations.

Foreign Tax Credit

Dividends paid by us generally will constitute income from non-United States sources and will be subject to various classification rules and other limitations for United States foreign tax credit purposes. Subject to generally applicable limitations under United States federal income tax law, withholding tax imposed on such dividends, if any, will generally be treated as a foreign income tax eligible for credit against a U.S. Holder’s United States federal income tax liability (or at a U.S. Holder’s election if it does not elect to claim a foreign tax credit for any foreign taxes paid during the taxable year, all foreign income taxes paid may instead be deducted in computing such U.S. Holder’s taxable income). The rules governing the foreign tax credit are complex and U.S. Holders should consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

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Passive Foreign Investment Company

We do not believe that we are currently a passive foreign investment company, referred to as a “PFIC”, however, no opinion of legal counsel or ruling from the IRS concerning our PFIC status has been obtained or is currently planned to be requested. Since PFIC status depends upon the composition of a corporation’s income and assets and the market value of its assets and shares from time to time, there is no assurance that we will not be considered a PFIC for any taxable year. If we were treated as a PFIC for any taxable year during which a U.S. Holder held our Common Shares, we generally would continue to be treated as a PFIC with respect to that U.S. Holder for all succeeding years during which the U.S. Holder holds the shares, even if we ceased to meet the threshold requirements for PFIC status, and certain adverse United States federal income tax consequences would apply to the U.S. Holder.

A non-United States corporation is a PFIC for any taxable year in which either (i) 75% or more of its gross income consists of “passive income” or (ii) 50% or more of the average quarterly gross value of its assets consists of assets that produce, or are held for the production of, “passive income”. For this purpose, subject to certain exceptions, passive income includes interest, dividends, rents, royalties, and gains from transactions in commodities. A non-United States corporation is treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which it owns, directly or indirectly, 25% or more (by value) of the stock (with special look-through rules for partnerships owned by a non-United States corporation).

If we are treated as a PFIC for any taxable year, gains recognized by a U.S. Holder on a sale or other disposition of our Common Shares would be allocated ratably over the U.S. Holder’s holding period for the shares. The amount allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income in the taxable year of the sale or other disposition. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as applicable, in the taxable year to which the income is allocated, and an interest charge would be imposed on the amount allocated to such taxable year. This “deferred tax amount” would be added to the tax imposed in the taxable year of the sale or other disposition. Further, any distribution with respect to the Common Shares in excess of 125% of the average of the annual distributions on shares received by the U.S. Holder during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, would be subject to United States federal income taxation under the same rules that apply to a sale or other disposition. If we are treated as a PFIC in the year in which a distribution is made, or the preceding year, the distribution will not be “qualified dividend income” taxed to U.S. Holders who are individuals at preferential tax rates for long-term capital gains.

For any taxable year in which a U.S. Holder owns shares in a PFIC that is a shareholder of another PFIC (a “Subsidiary PFIC”), the U.S. Holder would generally be deemed to own its proportionate interest (by value) in the Subsidiary PFIC and be subject to the PFIC rules described above with respect to the Subsidiary PFIC regardless of such U.S. Holder’s percentage ownership in the first-tier PFIC. These rules would apply to our subsidiaries if we were classified as a PFIC.

Certain elections might be available to U.S. Holders that may mitigate some of the adverse consequences resulting from PFIC status, but may not be available for a Subsidiary PFIC.

If a U.S. Holder owns our Common Shares during any year in which we are a PFIC, the U.S. Holder generally must file an annual report on IRS Form 8621 (or any successor form), generally with the U.S. Holder’s federal income tax return for that year. Failure to file IRS Form 8621 may result in an extension of the time period during which the IRS can assess a tax.

U.S. Holders and prospective U.S. Holders should consult their own tax advisors regarding the potential application of the PFIC rules to their ownership of our Common Shares, the availability and advisability of making any PFIC elections, and any PFIC filing obligations.

Information Reporting and Backup Withholding

Certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a non-United States corporation. For example, certain U.S. Holders that hold “specified foreign financial assets” in excess of certain threshold amounts must comply with certain reporting obligations. “Specified foreign financial assets” include not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a United States financial institution, any stock or security issued by a non-United States person. U.S. Holders may be subject to these reporting requirements unless their Common Shares are held in an account at a United States financial institution. Penalties for failure to comply with these reporting requirements can be substantial. U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns and, if applicable, filing obligations relating to these rules.

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Dividends paid on, and proceeds from the sale or other taxable disposition of, our Common Shares to a U.S. Holder generally may be subject to United States federal information reporting requirements and may be subject to backup withholding (currently at the rate of 24%) unless the U.S. Holder provides an accurate taxpayer identification number or otherwise demonstrates that it is exempt. The amount of any backup withholding collected from a payment to a U.S. Holder will generally be allowed as a credit against the U.S. Holder’s United States federal income tax liability and may entitle the U.S. Holder to a refund, provided that certain required information is timely submitted to the IRS.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

Documents and agreements concerning our Company may be inspected at c/o Room 2103 Shanghai Mart Tower, 2299 Yan An Road West, Changning District, Shanghai China 200336.

We file reports and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are available to the public over the Internet at such website at http://www.sec.gov.

I. | Subsidiary Information

For a list of our significant wholly-owned direct and indirect subsidiaries and significant non-wholly-owned subsidiaries, please see “Item 4: Information on the Company – C. Organizational Structure”.

J. Annual Report to Security Holders

Not applicable.

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ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks from changes in interest rates, foreign currency exchange rates and equity prices that may affect our results of operations and financial condition and, consequently, our fair value. Generally, our management believes that our current financial assets and financial liabilities, due to their short-term nature, do not pose significant financial risks. We use various financial instruments to manage our exposure to various financial risks. The policies for controlling the risks associated with financial instruments include, but are not limited to, standardized company procedures and policies on matters such as hedging of risk exposures, avoidance of undue concentration of risk and requirements for collateral (including letters of credit) to mitigate credit risk. We have risk managers to perform audits and checking functions to ensure that company procedures and policies are complied with.

We use derivative instruments to manage certain exposures to commodity price and currency exchange rate risks. The use of derivative instruments depends on our management’s perception of future economic events and developments. These types of derivatives are often very volatile, as they are highly leveraged, given that margin requirements are relatively low in proportion to their notional amounts.

Many of our strategies, including the use of derivative instruments and the types of derivative instruments selected by us, are based on historical trading patterns and correlations and our management’s expectations of future events. However, these strategies may not be fully effective in all market environments or against all types of risks. Unexpected market developments may affect our risk management strategies during this time, and unanticipated developments could impact our risk management strategies in the future. If any of the variety of instruments and strategies we utilize are not effective, we may incur losses.

Please refer to Note 25 of our audited consolidated financial statements for the year ended December 31, 2024, for a qualitative and quantitative discussion of our exposure to market risks and the sensitivity analysis of interest rate, currency and other price risks at December 31, 2024.

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ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

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PART II

ITEM 13: DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

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ITEM 14: MATERIAL MODIFICATIONS TO RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

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ITEM 15: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our Company’s reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our Company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the design and operation of our Company’s disclosure controls and procedures as of the end of the period covered by this annual report on Form 20-F, being December 31, 2024. This evaluation was carried out by our Chief Executive Officer (being our principal executive officer) and Chief Financial Officer (being our principal financial officer). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Report of Management on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 13d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS. Our internal control over financial reporting includes those policies and procedures that:

| 1. | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets and our consolidated entities;

​

| 2. | provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with IFRS and that receipts and expenditures of our Company are being made only in accordance with authorizations of management and our directors; and

​

| 3. | provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.

​

Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024. In conducting this evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on this evaluation, management concluded that, as of December 31, 2024, our internal control over financial reporting was effective.

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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

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ITEM 16: [RESERVED]

ITEM 16A: AUDIT COMMITTEE FINANCIAL EXPERT

Silke Stenger was appointed Chair of our Audit Committee with effect from July 14, 2017. Our board of directors had determined that Ms. Stenger qualified as an “audit committee financial expert” and was “independent”, as such terms are used in Section 303A.02 of the NYSE Listed Company Manual.

​

ITEM 16B: CODE OF ETHICS

Code of Ethics and Code of Conduct

Our board of directors encourages and promotes a culture of ethical business conduct through the adoption and monitoring of our codes of ethics and conduct, the insider trading policy and such other policies as may be adopted from time to time.

Our board of directors adopted a written Code of Business Conduct and Ethics and Insider Trading Policy on December 18, 2021, referred to as the “Code of Ethics”, that applies to us and our directors, officers and employees, which complies with the “code of ethics” contemplated by Item 16B of Form 20-F. Since such adoption, our board of directors has conducted an assessment of its performance, including the extent to which the board and each director comply therewith. It is intended that such assessment will be conducted annually.

A copy of our Code of Ethics is available online at our website at www.scullyroyalty.com. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report and is not incorporated by reference herein. A copy of the Code of Ethics is filed as Exhibit 11.1 to this Annual Report on Form 20-F.

We will provide a copy of the Code of Ethics to any person without charge, upon request. Requests can be sent by mail to: c/o Room 2103 Shanghai Mart Tower, 2299 Yan An Road West, Changning District, Shanghai China 200336.

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ITEM 16C: PRINCIPAL ACCOUNTANT FEES AND SERVICES

All dollar amounts in this Item 16C are expressed in thousands.

Audit Fees

The aggregate fees for audit services rendered for the audit of our annual financial statements for the year ended December 31, 2024 by AOGB CPA Limited were US$680.0 (before goods and services tax and reimbursement of expenses). The aggregate fees for audit services rendered for the audit of our annual financial statements for the year ended December 31, 2023 by Smythe LLP were $710.0 (before goods and services tax).

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Change of Auditor

Effective December 5, 2024, AOGB CPA Limited was appointed our auditor. AOGB CPA Limited is an independent registered public accounting firm headquartered at Suite 2501-3, Tesbury Centre, 28 Queen’s Road East, Admiralty, Hong Kong, Hong Kong. See “Item 16F: Change in Registrant’s Certifying Accountant”.

Audit-Related Fees

During the fiscal year ended December 31, 2024, $nil and $435.0 were billed, respectively, by AOGB CPA Limited and Smythe LLP for services that were reasonably related to the performance of the audit of our financial statements and that were not reported under the category “Audit Fees” above. During the fiscal year ended December 31, 2023, $nil was billed by Smythe LLP for services that were reasonably related to the performance of the audit of our financial statements and that were not reported under the category “Audit Fees” above.

Tax Fees

During the fiscal year ended December 31, 2024, $nil and $60.1 (before goods and services tax) were billed by AOGB CPA Limited and Smythe LLP, respectively, for tax, compliance services and $nil was billed by each of AOGB CPA Limited and Smythe LLP for tax advice and tax planning. During the fiscal year ended December 31, 2023, $105.7 (before goods and services tax) was billed by Smythe LLP for tax, compliance services and $nil was billed by Smythe LLP for tax advice and tax planning.

All Other Fees

During the fiscal year ended December 31, 2024, $nil and $8.6 (before goods and services tax) were billed by AOGB CPA Limited and Smythe LLP, respectively. During the fiscal year ended December 31, 2023, $8.3 (before goods and services tax) was billed by Smythe LLP.

Audit Committee Pre-approval Policies and Procedures

The Audit Committee pre-approves all services provided by our independent auditors. All of the services and fees described under the categories of “Audit-Related Fees”, “Tax Fees” and “All Other Fees” were reviewed and approved by the Audit Committee before the respective services were rendered and none of such services were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

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ITEM 16D: EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

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ITEM 16E: PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

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ITEM 16F: CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Effective December 5, 2024, the Company’s former auditors resigned and the Company appointed AOGB CPA Limited as the successor auditor. In connection therewith, the Company provides: (a) the former auditor’s reports on any of the Company’s consolidated financial statements for the fiscal years ended December 31, 2023 or 2022 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles; (b) during the Company’s fiscal years ended December 31, 2023 and 2022 and through the subsequent interim period on or prior to the resignation of the former auditors, there were no disagreements between the Company and the former auditors on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of the former accountant, would have caused it to make reference to the subject matter of the disagreement in connection with its report; and (c) during the Company’s fiscal years ended December 31, 2023 and 2022 and through the subsequent interim period on or prior to the resignation of the former auditors, no reportable events as set forth in Item 16F (a) (1) (v) (A) through (D) of Form 20 - F have occurred.

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The resignation of Smythe LLP and the appointment of AOGB CPA Limited as our independent registered public accounting firm have been considered and approved by our Audit Committee and our board of directors.

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ITEM 16G: CORPORATE GOVERNANCE

Our Common Shares are listed on the NYSE. Summarized below are the significant differences between our corporate governance rules and the corporate governance rules applicable to U.S. domestic issuers under the listing standards of the NYSE:

| ● | Section 303A.03 of the NYSE’s Listed Company Manual requires the non-management directors of a listed company to meet at regularly scheduled executive sessions without management.

While our independent directors (all of whom are non-management directors) meet regularly for committee meetings at which they are all present without non-independent directors or management in attendance, they do not generally hold other regularly scheduled meetings at which non-independent directors and members of management are not in attendance.

| ● | Section 303A.08 of the NYSE’s Listed Company Manual requires shareholder approval of all equity compensation plans and material revisions to such plans.

​

Our current stock option has been approved by our shareholders. However, our plans do not specifically require shareholder approval of material revisions.

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ITEM 16H: MINE SAFETY DISCLOSURE

Not applicable.

​

ITEM 16I: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

ITEM 16J: INSIDER TRADING POLICIES

Our board of directors adopted the Code of Ethics, which includes its Insider Trading Policy, on December 18, 2021. Since such adoption, our board of directors has conducted an assessment of its performance, including the extent to which the board and each director comply therewith. It is intended that such assessment will be conducted annually. We have adopted the Code of Ethics to, among other things, promote compliance with applicable insider trading laws, rules and regulations and the NYSE listing standards. The objective of our policy is to help prevent any actual or apparent impropriety, either of which could lead to allegations of insider trading and the potential for significant liability on the part of any implicated parties. Our policy applies to our directors, officers and employees. Compliance with our policy may be monitored by audits performed by our board of directors, the Audit Committee, our counsel and/or by our outside auditors. The foregoing description of our policy is not complete and is subject to and qualified in its entirety by reference thereto, a copy of which is filed as Exhibit 11.1 to this Annual Report on Form 20 - F, and the terms of which are incorporated by reference herein. See “Item 16B. Code of Ethics”.

ITEM 16K: CYBERSECURITY

Cybersecurity Risk Management and Strategy

Our group has developed and implemented a cybersecurity risk management program to protect our critical systems and information’s confidentiality, integrity, and availability. Our cybersecurity risk management program takes into account the relative complexity and risks that are unique to each of our business segments and includes a cybersecurity incident response plan.

Our cybersecurity risk management program includes:

| ● | risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader IT environment;

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| ● | an information technology team primarily responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;

| ● | cybersecurity awareness training for our employees during the onboarding process;

| ● | ongoing cybersecurity awareness training for our employees and directors; and

| ● | a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents in our businesses that have higher risk exposures.

We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition. We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.

Governance

Our board of directors oversees our risk management processes. The board has delegated to our Audit Committee the authority to review risk exposures and risk management. This includes periodically reviewing and discussing with management our risk exposures relating to data privacy and cybersecurity, and reviewing the steps we have taken to identify, assess, monitor, mitigate and manage such exposure and cybersecurity risks.

At the management level, our Chief Financial Officer is responsible for overseeing our cybersecurity processes and risk management. Our Audit Committee and management meet with the Board at least semi-annually or as required and review various risk areas, including cybersecurity and data privacy risks as they may arise.

ITEM 17: FINANCIAL STATEMENTS

Not applicable. Please see “Item 18: Financial Statements”.

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ITEM 18: FINANCIAL STATEMENTS

The following attached audit reports and financial statements are incorporated herein:

1. | Report of Independent Registered Public Accounting Firm (AOGB CPA Limited, Hong Kong, Hong Kong: PCAOB ID#7020) | ​ | 61
2. | Report of Independent Registered Public Accounting Firm (Smythe LLP Vancouver, Canada: PCAOB ID #995) |  | 63
3. | Consolidated statements of financial position as of December 31, 2024 and 2023 | ​ | 66
4. | Consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022 | ​ | 67
5. | Consolidated statements of comprehensive income (loss) for the years ended December 31, 2024, 2023 and 2022 | ​ | 68
6. | Consolidated statements of changes in equity for the years ended December 31, 2024, 2023 and 2022 | ​ | 69
7. | Consolidated statements of cash flows for the years ended December 31, 2024, 2023 and 2022 | ​ | 70
8. | Notes to consolidated financial statements | ​ | 71

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Scully Royalty Ltd.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Scully Royalty Ltd. and its subsidiaries (the “Group”) as of December 31, 2024, the related consolidated statements of operations, comprehensive (loss) income, changes in equity and cash flows, for the year ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

Basis for Opinion

These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of the recoverable amount of interest in the Scully iron ore mine

As discussed in Notes 12 to the consolidated financial statements, the Group has interests in the Scully iron ore mine of $192.1 million as at December 31, 2024. Indicators of impairment were identified for these assets as a result of the Group’s market capitalization being significantly lower than the net assets of the Group throughout 2024 and significant fluctuations in commodity prices. The Group estimated the recoverable amounts of this asset using forecasted production and sales levels, future prices of the underlying commodities, forecasted operating costs, expected inflation and discount rate.

We identified the assessment of the recoverable amount of interest in the Scully iron ore mine as a critical audit matter. A high degree of auditor judgment was required to evaluate the estimated future cash flows and discount rate used to determine this recoverable amount. Significant assumptions utilized in determining the recoverable amounts included forecasted production and sales levels, future commodity prices, operating costs, and expected inflation and discount rate. Minor changes in any of these assumptions could have had a significant effect on the determination of the estimated recoverable amount. In addition, auditor judgment and reliance on specialists were required to assess the mineral reserves which form the basis of recoverable values.

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Our audit procedures related to the assessment of forecasted production and sales levels, future prices of the underlying commodities, forecasted operating costs, expected inflation rates, and the selection of the discount rate included the following, among others:

·Evaluated the estimate of forecasted production and sales levels by comparing historical estimates to actual results, future estimates to past results, while assessing the anticipated impact of production enhancements and performing sensitivity analysis;

·With the assistance of valuation specialists, evaluated the reasonableness of the valuation methodology and the related discount rates by testing the source information underlying the determination of the discount rates and developing a range of independent estimates and comparing those to the discount rates used by management;

·Reviewed the status of the Scully iron ore operator’s Companies Creditors Arrangement Act proceedings and assessed the impact, if any, on forecasted production; and

·Used the work of management’s specialists in performing the procedures to evaluate the reasonableness of the estimates used to determine the recoverable value of the Group’s interest in the asset.

Fair value of investment properties

As discussed in Note 10 to the consolidated financial statements, the Group has investment properties of $47.7 million as at December 31, 2024. The Group has elected the fair value model for investment properties where these assets are measured at fair value subsequent to initial recognition on the consolidated statements of financial position.

We identified the fair value of investment properties as a critical audit matter. The estimates and assumptions with the highest degree of subjectivity and impact on the fair value of the investment properties are future expected market rents and revenues, vacancy rates, operating costs, and discount rates. Auditing these estimates and assumptions require a high degree of judgment as the estimation made by management contains significant measurement uncertainty. This resulted in an increased extent of audit effort, including the use of fair value specialists.

Our audit procedures related to the future expected market rents and revenues, vacancy rates, operating costs, and discount rates included the following, among others:

·Tested management’s future expected market rents and revenues, vacancy rates, operating costs and discount rates through independent analysis and comparison to external sources including objective contractual information, and observable economic indicators, where applicable;

·Evaluated management’s ability to accurately estimate fair values and future expected market rents and revenues, vacancy rates and operating costs by comparing management’s historical fair value estimates and forecasts to actual results;

·With the assistance of valuation specialists, evaluated the reasonableness of the valuation methodology and determination of discount rates by testing the source information underlying the determination of discount rates, developing a range of independent estimates and comparing those to the discount rates used, and consider recent market transactions; and

·Used the work of management’s specialists in performing the procedures to evaluate the reasonableness of the estimates used to estimate fair values of investment properties.

​

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/s/ AOGB CPA Limited

Hong Kong, Hong Kong

April 30, 2025

​

We have served as the Company’s auditor since 2024.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Scully Royalty Ltd.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Scully Royalty Ltd. and its subsidiaries (the “Group”) as of December 31, 2023, and the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows, for both of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 2023, and the results of its operations and its cash flows for both of the years in the two-year period ended December 31, 2023, in conformity with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

Basis for Opinion

These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of the recoverable amounts of nonfinancial assets: interest in the Scully iron ore mine and power plant and of non-current securities

As discussed in Notes 6, 11 and 12 to the consolidated financial statements, the Group has interests in the Scully iron ore mine of $196.6 million, power plant assets of $23.4 million, and equity securities in an unlisted affiliate of $3.0 million as at December 31, 2023. Indicators of impairment were identified for these assets as a result of the Group’s market capitalization being significantly lower than the net assets of the Group throughout 2023 and significant fluctuations in commodity prices. The Group estimated the recoverable amounts of these assets using forecasted production and sales levels, future prices of the underlying commodities, forecasted operating costs, and expected inflation and discount rates.

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We identified the assessment of the recoverable amounts in these assets as a critical audit matter. A high degree of auditor judgment was required to evaluate the estimated future cash flows and discount rates used to determine these recoverable amounts. Significant assumptions utilized in determining the recoverable amounts included forecasted production and sales levels, future commodity prices, operating costs, and expected inflation and discount rates. Minor changes in any of these assumptions could have had a significant effect on the determination of the estimated recoverable amounts. In addition, auditor judgment and reliance on specialists were required to assess the mineral resources and reserves, replacement cost and salvage values, which form the basis of the recoverable values.

Our audit procedures related to the assessment of forecasted production and sales levels, future prices of the underlying commodities, forecasted operating costs, expected inflation rates, and the selection of the discount rates included the following, among others:

| ● | We evaluated the estimate of forecasted production and sales levels by comparing historical estimates to actual results, future estimates to past results, while assessing the anticipated impact of production enhancements and performing sensitivity analyses.

| ● | With the assistance of valuation specialists, we evaluated the reasonability of the valuation methodology and the related discount rates by testing the source information underlying the determination of the discount rates and developing a range of independent estimates and comparing those to the discount rates used by management.

| ● | We reviewed the status of the Scully iron ore operator’s Companies Creditors Arrangement Act proceedings and assessed the impact, if any, on forecasted production.

| ● | We used the work of management’s specialists in performing the procedures to evaluate the reasonability of the estimates used to determine the recoverable value of the Group’s interest in these assets. As a basis for using the work of management’s specialists, we performed the following:

| - | Ensured the specialists’ qualifications were appropriate, and the Group’s relationship with the specialists was assessed for biases.

| - | We evaluated the methods and assumptions used by the specialists, tested the data used by the specialists and performed an assessment of the specialists’ findings.

| - | We evaluated whether the significant assumptions used, such as expected disposal value of certain assets, were reasonable.

Fair value of investment properties

As discussed in Note 10 to the consolidated financial statements, the Group has investment properties of $31.5 million as at December 31, 2023. The Group has elected the fair value model for investment properties where these assets are measured at fair value subsequent to initial recognition on the consolidated statements of financial position.

We identified the fair value of investment properties as a critical audit matter. The estimates and assumptions with the highest degree of subjectivity and impact on the fair value of the investment properties are future expected market rents and revenues, vacancy rates, operating costs, and discount rates. Auditing these estimates and assumptions require a high degree of judgment as the estimation made by management contains significant measurement uncertainty. This resulted in an increased extent of audit effort, including the use of fair value specialists.

Our audit procedures related to the future expected market rents and revenues, vacancy rates, operating costs, and discount rates included the following, among others:

| ● | Tested management’s future expected market rents and revenues, vacancy rates, operating costs and discount rates through independent analysis and comparison to external sources including objective contractual information, and observable economic indicators, where applicable.

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| ● | Evaluated management’s ability to accurately estimate fair values and future expected market rents and revenues, vacancy rates and operating costs by comparing management’s historical fair value estimates and forecasts to actual results.

| ● | With the assistance of valuation specialists, we evaluated the reasonableness of the valuation methodology and determination of discount rates by testing the source information underlying the determination of discount rates, developing a range of independent estimates and comparing those to the discount rates used, and considered recent market transactions.

| ● | We used the work of management’s specialists in performing the procedures to evaluate the reasonableness of the estimates used to estimate fair values of investment properties. As a basis for using the work of management’s specialists, we performed the following:

| - | We ensured the specialists’ qualifications were appropriate, and the Group’s relationship with the specialists was assessed for biases.

| - | We evaluated the methods and assumptions used by the specialists, tested the data used by the specialists and performed an assessment of the specialists’ findings.

| - | We evaluated whether the significant assumptions used were reasonable considering the past performance of the Group, consistency with industry metrics and whether they were consistent with evidence obtained in other areas of the audit.

/s/ Smythe LLP

Smythe LLP

Chartered Professional Accountants

We have served as the Group’s auditor from 2020 to 2024.

Vancouver, Canada

April 29, 2024

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SCULLY ROYALTY LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Canadian Dollars in Thousands)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | December 31, | ​ | December 31,
​ |  | Notes |  | 2024 |  | 2023
ASSETS |  |  |  | ​ |  |  | ​ |
Current Assets |  |  |  | ​ |  |  | ​ |
Cash |  |  | ​ | $ | 19,052 | ​ | $ | 78,252
Securities |  | 6 | ​ |  | 23,487 | ​ | ​ | 12,958
Trade receivables |  | 7 | ​ |  | 861 | ​ | ​ | 1,907
Tax receivables |  |  | ​ |  | 699 | ​ | ​ | 640
Other receivables |  | 8 | ​ |  | 40,714 | ​ | ​ | 67,783
Inventories |  | 9 | ​ |  | 1 | ​ | ​ | 1,199
Restricted cash |  |  | ​ |  | 194 | ​ | ​ | 397
Deposits, prepaid and other |  |  | ​ |  | 1,811 | ​ | ​ | 1,409
Assets held for sale | ​ | 4 | ​ | ​ | 88,500 | ​ | ​ | —
Total current assets |  |  | ​ |  | 175,319 | ​ |  | 164,545
Non-current Assets |  |  | ​ |  | ​ | ​ |  |
Securities |  | 6 | ​ |  | — | ​ | ​ | 2,966
Equity method investments | ​ | ​ | ​ | ​ | 2,901 | ​ | ​ | —
Real estate for sale |  | 10 | ​ |  | — | ​ | ​ | 12,457
Investment property |  | 10 | ​ |  | 47,661 | ​ | ​ | 31,540
Property, plant and equipment |  | 11 | ​ |  | 1,498 | ​ | ​ | 25,753
Interests in resource properties |  | 12 | ​ |  | 192,142 | ​ | ​ | 196,634
Deferred income tax assets |  | 13 | ​ |  | 11,138 | ​ | ​ | 9,509
Other non-current assets |  | ​ | ​ |  | 7,436 | ​ | ​ | 9,063
Total non-current assets |  |  | ​ |  | 262,776 | ​ |  | 287,922
Total assets | ​ | ​ | ​ | $ | 438,095 | ​ | $ | 452,467
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
LIABILITIES AND EQUITY |  |  | ​ |  |  | ​ |  |
Current Liabilities | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Account payables and accrued expenses |  | 14 | ​ | $ | 14,788 | ​ | $ | 16,044
Income tax liabilities |  |  | ​ |  | 48 | ​ | ​ | 4,529
Dividend payable | ​ | 21 | ​ | ​ | 5,545 | ​ | ​ | —
Liabilities relating to assets held for sale | ​ | 4 | ​ | ​ | 18,107 | ​ | ​ | —
Total current liabilities |  |  | ​ |  | 38,488 | ​ |  | 20,573
Non-current Liabilities |  |  | ​ |  |  | ​ |  |
Bonds payable | ​ | 15,23 | ​ | ​ | 36,545 | ​ | ​ | 36,107
Loan payable |  | ​ | ​ |  | — | ​ | ​ | 7,610
Deferred income tax liabilities |  | 13 | ​ |  | 51,514 | ​ | ​ | 58,370
Other non-current liabilities |  |  | ​ |  | 1,223 | ​ | ​ | 137
Total non-current liabilities |  |  | ​ |  | 89,282 | ​ | ​ | 102,224
Total liabilities |  |  | ​ |  | 127,770 | ​ | ​ | 122,797
Equity |  |  | ​ |  | ​ | ​ |  |
Capital stock, fully paid (Common shares 300,000,000 and preference shares 150,000,000 authorized; common shares 14,822,251 issued and outstanding) |  | 16 | ​ |  | 19 | ​ | ​ | 19
Additional paid-in capital |  | 16 | ​ |  | 313,070 | ​ | ​ | 313,070
Treasury stock |  | 16 | ​ |  | (2,643) | ​ | ​ | (2,643)
Contributed surplus |  |  | ​ |  | 17,833 | ​ | ​ | 18,558
Deficit |  |  | ​ |  | (58,808) | ​ | ​ | (33,400)
Accumulated other comprehensive income |  |  | ​ |  | 32,806 | ​ | ​ | 26,855
Shareholders’ equity |  |  | ​ | $ | 302,277 | ​ | $ | 322,459
Non-controlling interests |  |  | ​ |  | 8,048 | ​ | ​ | 7,211
Total equity |  |  | ​ | $ | 310,325 | ​ | $ | 329,670
​ | ​ | ​ | ​ | $ | 438,095 | ​ | $ | 452,467

​

The accompanying notes are an integral part of these consolidated financial statements.

​

66

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SCULLY ROYALTY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands, Except per Share Amounts)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Notes |  | 2024 |  | 2023 |  | 2022
Gross revenues |  | 17 | ​ | $ | 35,302 | ​ | $ | 54,944 | ​ | $ | 63,689
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Costs and expenses: | ​ | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Costs of sales and services |  | 17 | ​ |  | 7,063 | ​ |  | 19,074 | ​ |  | 29,882
Selling, general and administrative |  | 17 | ​ |  | 25,335 | ​ |  | 24,182 | ​ |  | 28,480
Share-based compensation-selling, general and administrative |  | 18 | ​ |  | — | ​ |  | — | ​ |  | —
Finance costs | ​ | ​ | ​ | ​ | 2,493 | ​ | ​ | 1,763 | ​ | ​ | 1,809
Credit losses (recovery) | ​ | ​ | ​ | ​ | 22 | ​ | ​ | 547 | ​ | ​ | (47)
Impairment of (reversal of impairment of) assets held for sale | ​ | 4 | ​ | ​ | 18,579 | ​ | ​ | (1,246) | ​ | ​ | 31,443
Exchange differences on foreign currency transactions, net loss (gain) | ​ | ​ | ​ |  | 833 | ​ |  | 427 | ​ |  | (3,922)
​ | ​ | ​ | ​ |  | 54,325 | ​ |  | 44,747 | ​ |  | 87,645
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(Loss) income before income taxes | ​ | ​ | ​ |  | (19,023) | ​ |  | 10,197 | ​ |  | (23,956)
Income tax recovery (expense): | ​ | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Income taxes |  | 19 | ​ |  | 2,630 | ​ |  | (1,907) | ​ |  | 6,207
Resource property revenue taxes | ​ | 19 | ​ |  | (3,875) | ​ |  | (6,891) | ​ |  | (5,658)
​ | ​ | ​ | ​ |  | (1,245) | ​ |  | (8,798) | ​ |  | 549
Net (loss) income for the year | ​ | ​ | ​ |  | (20,268) | ​ |  | 1,399 | ​ |  | (23,407)
Net (income) loss attributable to non-controlling interests | ​ | ​ | ​ |  | (320) | ​ |  | (8) | ​ |  | 9
Net (loss) income attributable to owners of the parent company | ​ | ​ | ​ | $ | (20,588) | ​ | $ | 1,391 | ​ | $ | (23,398)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Basic (loss) earnings per share |  | 20 | ​ | $ | (1.39) | ​ | $ | 0.09 | ​ | $ | (1.58)
Diluted (loss) earnings per share |  | 20 | ​ | $ | (1.39) | ​ | $ | 0.09 | ​ | $ | (1.58)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted average number of common shares outstanding | ​ | ​ | ​ |  |  | ​ |  |  | ​ |  |
Basic | ​ | 20 | ​ |  | 14,822,251 | ​ |  | 14,822,251 | ​ |  | 14,811,118
Diluted | ​ | 20 | ​ |  | 14,822,251 | ​ |  | 14,822,261 | ​ |  | 14,811,118
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Dividends per share: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Declared | ​ | ​ | ​ | $ | 0.37 | ​ | ​ | 0.23 | ​ | ​ | 1.13
Paid | ​ | ​ | ​ | $ | — | ​ | ​ | 0.23 | ​ | ​ | 1.13

​

The accompanying notes are an integral part of these consolidated financial statements.

​

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SCULLY ROYALTY LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
Net (loss) income for the year | ​ | $ | (20,268) | ​ | $ | 1,399 | ​ | $ | (23,407)
Other comprehensive income (loss), net of income taxes: | ​ |  | ​ | ​ |  |  | ​ |  |
Items that will be reclassified subsequently to profit or loss | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Exchange differences arising from translating financial statements of foreign operations | ​ |  | 6,145 | ​ |  | (1,205) | ​ |  | 1,136
Reclassification adjustment for exchange differences to consolidated statements of operations for subsidiaries deconsolidated | ​ |  | — | ​ |  | — | ​ |  | 9
Net exchange difference | ​ |  | 6,145 | ​ |  | (1,205) | ​ |  | 1,145
Fair value gain (loss) on securities at fair value through other comprehensive income | ​ |  | 323 | ​ |  | 387 | ​ |  | (920)
Reclassification of impairment charge to consolidated statements of operations | ​ |  | — | ​ |  | 3 | ​ |  | —
Net fair value gain (loss) on securities at fair value through other comprehensive income | ​ |  | 323 | ​ |  | 390 | ​ |  | (920)
​ | ​ |  | 6,468 | ​ |  | (815) | ​ |  | 225
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total comprehensive (loss) income for the year | ​ |  | (13,800) | ​ |  | 584 | ​ |  | (23,182)
Comprehensive (gain) loss attributable to non-controlling interests | ​ |  | (837) | ​ |  | 138 | ​ |  | (382)
Comprehensive (loss) income attributable to owners of the parent company | ​ | $ | (14,637) | ​ | $ | 722 | ​ | $ | (23,564)

​

The accompanying notes are an integral part of these consolidated financial statements.

​

​

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SCULLY ROYALTY LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Accumulated Other | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Capital Stock | ​ | Treasury Stock | ​ | Contributed Surplus | ​ | ​ | ​ | ​ | Comprehensive (Loss) Income | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Securities at | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Fair Value | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Through | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Other | ​ | Currency | ​ | Share- | ​ | Non- | ​ | ​ | ​
​ | ​ | Number | ​ | ​ | ​ | ​ | Number | ​ | ​ | ​ | ​ | Share-based | ​ | Retained | ​ | Comprehensive | ​ | Translation | ​ | holders’ | ​ | controlling | ​ | Total
​ |  | of Shares |  | Amount |  | of Shares |  | Amount |  | Compensation |  | Earnings |  | Income |  | Adjustments |  | Equity |  | Interests |  | Equity
Balance at January 1, 2022 |  | 14,856,581 | ​ | ​ | 312,487 |  | (77,279) | ​ | ​ | (2,643) | ​ | ​ | 18,988 | ​ | ​ | 9,078 | ​ | ​ | 70 | ​ | ​ | 27,620 | ​ | ​ | 365,600 | ​ | ​ | 6,934 | ​ | ​ | 372,534
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net loss |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | — | ​ |  | (23,398) | ​ |  | — | ​ |  | — | ​ |  | (23,398) | ​ |  | (9) | ​ |  | (23,407)
Exercise of stock options (Note 18) | ​ | 42,949 | ​ | ​ | 602 | ​ | — | ​ | ​ | — | ​ | ​ | (196) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 406 | ​ | ​ | — | ​ | ​ | 406
Forfeiture of stock options |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | (105) | ​ |  | 105 | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Share subscription from non-controlling interest |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | 21 | ​ |  | 21
Dividends paid to owners of the Company (Note 21) | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (16,928) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (16,928) | ​ | ​ | — | ​ | ​ | (16,928)
Dividends paid to non-controlling interests |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | (344) | ​ |  | (344)
Disposition of ownership interest to non-controlling interest | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (356) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (356) | ​ | ​ | 356 | ​ | ​ | —
Net fair value loss | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (920) | ​ | ​ | — | ​ | ​ | (920) | ​ | ​ | — | ​ | ​ | (920)
Net exchange differences |  | — | ​ |  | — |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | 754 | ​ |  | 754 | ​ |  | 391 | ​ |  | 1,145
Balance at December 31, 2022 |  | 14,899,530 | ​ | ​ | 313,089 |  | (77,279) | ​ | ​ | (2,643) | ​ | ​ | 18,687 | ​ | ​ | (31,499) | ​ | ​ | (850) | ​ | ​ | 28,374 | ​ | ​ | 325,158 | ​ | ​ | 7,349 | ​ | ​ | 332,507
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 1,391 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 1,391 | ​ | ​ | 8 | ​ | ​ | 1,399
Forfeiture of stock options | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | (129) | ​ | ​ | 129 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Dividends paid to owners of the Company (Note 21) | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (3,421) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (3,421) | ​ | ​ | — | ​ | ​ | (3,421)
Net fair value gain | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 390 | ​ | ​ | — | ​ | ​ | 390 | ​ | ​ | — | ​ | ​ | 390
Net exchange differences | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (1,059) | ​ | ​ | (1,059) | ​ | ​ | (146) | ​ | ​ | (1,205)
Balance at December 31, 2023 | ​ | 14,899,530 | ​ | ​ | 313,089 | ​ | (77,279) | ​ | ​ | (2,643) | ​ | $ | 18,558 | ​ | ​ | (33,400) | ​ | ​ | (460) | ​ | ​ | 27,315 | ​ | ​ | 322,459 | ​ | ​ | 7,211 | ​ | ​ | 329,670
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net income | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (20,588) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (20,588) | ​ | ​ | 320 | ​ | ​ | (20,268)
Forfeiture of stock options | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | (725) | ​ | ​ | 725 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Dividends paid to owners of the Company (Note 21) | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (5,545) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (5,545) | ​ | ​ | — | ​ | ​ | (5,545)
Net fair value gain | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 323 | ​ | ​ | — | ​ | ​ | 323 | ​ | ​ | — | ​ | ​ | 323
Net exchange differences | ​ | — | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 5,628 | ​ | ​ | 5,628 | ​ | ​ | 517 | ​ | ​ | 6,145
Balance at December 31, 2024 | ​ | 14,899,530 | ​ | $ | 313,089 | ​ | (77,279) | ​ | $ | (2,643) | ​ | $ | 17,833 | ​ | $ | (58,808) | ​ | $ | (137) | ​ | $ | 32,943 | ​ | $ | 302,277 | ​ | $ | 8,048 | ​ | $ | 310,325

​

The accompanying notes are an integral part of these consolidated financial statements.

​

​

​

69

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SCULLY ROYALTY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
Cash flows from operating activities: |  | ​ |  |  | ​ |  |  | ​ |
Net (loss) income for the year |  | $ | (20,268) | ​ | $ | 1,399 | ​ | $ | (23,407)
Adjustments for: |  |  | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amortization, depreciation and depletion |  |  | 7,221 | ​ | ​ | 7,929 | ​ | ​ | 10,699
Exchange differences on foreign currency transactions |  |  | 833 | ​ | ​ | 427 | ​ | ​ | (3,922)
Change in financial asset at FVTPL |  |  | 568 | ​ | ​ | 2,794 | ​ | ​ | 2,436
Share result of equity method investments | ​ | ​ | (38) | ​ | ​ | — | ​ | ​ | —
Gain on disposition of a subsidiary |  |  | (3,646) | ​ | ​ | — | ​ | ​ | (264)
(Reversal of) impairment of assets held for sale | ​ | ​ | 18,579 | ​ | ​ | (1,246) | ​ | ​ | 31,443
Impairment loss of property, plant and equipment | ​ | ​ | 19 | ​ | ​ | — | ​ | ​ | —
Deferred income taxes |  |  | (1,666) | ​ | ​ | (1,560) | ​ | ​ | (7,557)
Interest accretion |  |  | 473 | ​ | ​ | 270 | ​ | ​ | 385
Change in fair value of investment property and real estate held for sale | ​ | ​ | (2,005) | ​ | ​ | 59 | ​ | ​ | (96)
Change in fair value of a loan payable measured at FVTPL |  |  | (1,197) | ​ | ​ | 360 | ​ | ​ | 141
Credit losses (recovery) |  |  | 22 | ​ | ​ | 547 | ​ | ​ | (47)
Write-downs (reversal of write-downs) of inventories | ​ | ​ | 19 | ​ | ​ | (27) | ​ | ​ | (21)
Gains on settlements and derecognition of liabilities |  |  | — | ​ | ​ | (1,313) | ​ | ​ | (69)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: |  |  | ​ | ​ |  | ​ | ​ |  | ​
Short-term securities |  |  | (17,567) | ​ | ​ | 14,550 | ​ | ​ | (12,509)
Receivables |  |  | (14,094) | ​ | ​ | (16,264) | ​ | ​ | 24,269
Inventories |  |  | (520) | ​ | ​ | (340) | ​ | ​ | 295
Restricted cash |  |  | 209 | ​ | ​ | (28) | ​ | ​ | (211)
Deposits, prepaid and other |  |  | (1,027) | ​ | ​ | 276 | ​ | ​ | (1,034)
Assets held for sale |  |  | — | ​ | ​ | 19,242 | ​ | ​ | —
Account payables and accrued expenses |  |  | 3,476 | ​ | ​ | (3,993) | ​ | ​ | 9,876
Income tax liabilities |  |  | (821) | ​ | ​ | 3,008 | ​ | ​ | 509
Other |  |  | (113) | ​ | ​ | 91 | ​ | ​ | (279)
Cash flows (used in) provided by operating activities |  |  | (31,543) | ​ | ​ | 26,181 | ​ | ​ | 30,637
Cash flows from investing activities: |  |  | ​ | ​ |  | ​ | ​ |  | ​
Purchases of property, plant and equipment, net |  |  | (89) | ​ | ​ | (180) | ​ | ​ | (472)
Proceeds from sale of investment property | ​ | ​ | 131 | ​ | ​ | 1,172 | ​ | ​ | 2,643
Proceeds from sale of investment in securities | ​ | ​ | 2,964 | ​ | ​ | — | ​ | ​ | —
Payment of additional cost on investment property | ​ | ​ | (811) | ​ | ​ | — | ​ | ​ | —
Cash held by a deconsolidated subsidiary |  |  | (28) | ​ | ​ | — | ​ | ​ | —
Decrease (increase) in loan receivables |  |  | 593 | ​ | ​ | (7,299) | ​ | ​ | (6,848)
Cash flows provided by (used) in investing activities |  |  | 2,760 | ​ | ​ | (6,307) | ​ | ​ | (4,677)
Cash flows from financing activities: |  |  | ​ | ​ |  | ​ | ​ |  | ​
Dividends paid to owners of the Company | ​ | ​ | — | ​ | ​ | (3,421) | ​ | ​ | (16,928)
Reductions in lease liabilities | ​ | ​ | (380) | ​ | ​ | (394) | ​ | ​ | (350)
Exercise of stock options | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 406
Issuance costs of the bond extension | ​ | ​ | (777) | ​ | ​ | — | ​ | ​ | —
Dividends paid to non-controlling interests |  |  | — | ​ | ​ | — | ​ | ​ | (341)
Other |  |  | — | ​ | ​ | — | ​ | ​ | 21
Cash flows used in financing activities |  |  | (1,157) | ​ | ​ | (3,815) | ​ | ​ | (17,192)
Exchange rate effect on cash |  |  | 3,444 | ​ | ​ | (1,524) | ​ | ​ | 76
(Decrease) increase in cash |  |  | (26,496) | ​ | ​ | 14,535 | ​ | ​ | 8,844
Cash, beginning of year |  |  | 78,252 | ​ | ​ | 63,717 | ​ | ​ | 54,873
Cash, end of year |  | $ | 51,756 | ​ | $ | 78,252 | ​ | $ | 63,717
Supplemental cash flows disclosures (see Note 23) |  |  |  | ​ |  |  | ​ |  |
Interest received |  | $ | 3,152 | ​ | $ | 2,548 | ​ | $ | 491
Dividends received |  |  | 166 | ​ | ​ | 146 | ​ | ​ | 268
Interest paid |  |  | (1,716) | ​ | ​ | (1,644) | ​ | ​ | (1,562)
Income taxes paid |  |  | (343) | ​ | ​ | (2,978) | ​ | ​ | (5,876)
Cash represented by: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash | ​ | ​ | 19,052 | ​ | ​ | 78,252 | ​ | ​ | 63,717
Assets held for sale | ​ | ​ | 32,704 | ​ | ​ | — | ​ | ​ | —
Dividends: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total dividends paid | ​ | ​ | — | ​ | ​ | (3,421) | ​ | ​ | (16,928)
Dividends per share | ​ | ​ | — | ​ | ​ | 0.23 | ​ | ​ | 1.13
Declared per share | ​ | ​ | 0.37 | ​ | ​ | 0.23 | ​ | ​ | 1.13

​

​

The accompanying notes are an integral part of these consolidated financial statements.

​

​

70

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SCULLY ROYALTY LTD.

​

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 1. Nature of Business

Scully Royalty Ltd. (“Scully” or the “Company”) is incorporated under the laws of the Cayman Islands. Scully and the entities it controls are collectively known as the “Group” in these consolidated financial statements. The Group’s core asset is a 7% net revenue royalty interest in the Scully iron ore mine in Newfoundland & Labrador, Canada. Scully is listed on the New York Stock Exchange under the symbol SRL. The Company’s primary business office is c/o Room 2103 Shanghai Mart Tower, 2299 Yan An Road West, Changning District, Shanghai China 200336.

​

Note 2. Basis of Presentation and Summary of Material Accounting Policies

A. | Basis of Presentation

Basis of Accounting

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”). Scully complies with all applicable requirements of IFRS. The material accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied.

These consolidated financial statements were prepared using the going concern assumption, the accrual basis of accounting (except for cash flow information), and the historical cost basis, except for investment property and certain financial assets and liabilities which are measured at fair value.

In assessing the Group’s ability to continue as a going concern and the appropriateness of applying the going concern basis in the preparation of these consolidated financial statements, management considered relevant macroeconomic, geopolitical and industry-specific factors, including ongoing risks arising from global political tensions and supply chain disruptions (see Note 2D(v)).

The presentation currency of these consolidated financial statements is the Canadian dollar ($), rounded to the nearest thousand (except per share amounts and exchange rates), unless otherwise indicated.

​

Principles of Consolidation

These consolidated financial statements include the accounts of Scully and the entities it controls. The Company controls an investee if, and only if, it has all the following: (a) power over the investee; (b) exposure, or rights, to variable returns from its involvement with the investee; and (c) the ability to use its power over the investee to affect the amount of its returns. Subsidiaries are consolidated from the date on which the Group obtains control and are deconsolidated from the date that control ceases. All intercompany balances and transactions, including unrealized profits arising from intragroup transactions, have been eliminated in full. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment in the transferred asset.

On the acquisition date, any non-controlling interests are measured at either (i) their fair value, or (ii) the non-controlling interests’ proportionate share of the acquiree’s identifiable net assets, depending on the accounting policy choice applied on a transaction-by-transaction basis. Subsequently, non-controlling interests are adjusted for their share of changes in the subsidiary’s equity and comprehensive income since the acquisition date.

The financial statements of Scully and its subsidiaries used in the preparation of these consolidated financial statements are prepared as of the same reporting date, using consistent accounting policies for like transactions and events in similar circumstances.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

Foreign Currency Translation

The presentation currency of the Group’s consolidated financial statements is the Canadian dollar, though it conducts its business globally through its foreign operations. Foreign operations are subsidiaries or branches, the activities of which are based in, or conducted through, countries or currencies other than those of Scully.

An entity’s functional currency is the currency of the primary economic environment in which it operates and is typically the currency in which it primarily generates and expends cash. A foreign currency is any currency other than the entity’s functional currency.

The functional currencies of the Company and its subsidiaries and branches primarily include the Canadian dollar, the Euro (“EUR” or “€”), and the United States dollar (“USD” or “US$”).

Reporting foreign currency transactions in the functional currency

A foreign currency transaction is a transaction denominated in or requiring settlement in a currency other than the entity’s functional currency. Such transactions are initially recorded by applying the spot exchange rate between the functional and foreign currencies at the transaction date.

At the end of each reporting period:

| (a) | Monetary items denominated in a foreign currency are translated using the closing rate;

| (b) | Non-monetary items that are measured at historical cost are translated using the exchange rate at the date of the transaction; and

| (c) | Non-monetary items measured at fair value are translated using the exchange rate at the date when the fair value was determined.

Exchange differences arising from the settlement of monetary items or from translating monetary items at rates different from those at which they were initially recorded are recognized in profit or loss in the period in which they arise, except where the monetary item is part of a net investment in a foreign operation. In such cases, the exchange differences are initially recognized in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, the exchange component of that gain or loss is also recognized in other comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognized as profit or loss, any related exchange component is recognized as profit or loss.

Use of a presentation currency other than the functional currency

When an entity presents its financial statements in a currency that differs from its functional currency, the financial results and position are translated into the presentation currency using the following procedures: (a) Assets and liabilities for each statement of financial position are translated at the closing exchange rate at the reporting date; (b) Income and expenses for each statement of comprehensive income are translated at exchange rates at the dates of the transactions, or, where appropriate, using average exchange rates for the period when these approximate the actual rates; (c) Components of equity are translated at the historical exchange rates, when practicable, or at the closing exchange rate at the reporting date; and (d) All resulting exchange differences are recognized in other comprehensive income and accumulated in a separate component of equity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

The following table sets out the exchange rates used for translating the Euro and United States dollar—representing the Group’s principal foreign currencies—into the Canadian dollar:

The following table sets out exchange rates for the translation of the Euro and United States dollar, which represented the major trading currencies of the Group, into the Canadian dollar:

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​ | ​ | ​ | ​ | ​
​ |  | EUR |  | US$
Closing rate at December 31, 2024 |  | 1.4928 |  | 1.4389
Average rate for the year 2024 | ​ | 1.4818 | ​ | 1.3698
Closing rate at December 31, 2023 | ​ | 1.4626 | ​ | 1.3226
Average rate for the year 2023 |  | 1.4597 |  | 1.3497
Closing rate at December 31, 2022 |  | 1.4458 |  | 1.3544
Average rate for the year 2022 |  | 1.3696 |  | 1.3013

​

​

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Fair Value Measurement

Certain assets and liabilities of the Group are measured at fair value (see Note 2B).

Fair value is defined as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement applies to a specific asset or liability and reflects assumptions that market participants would use when pricing the asset or liability, including assumptions about risk.

When measuring fair value, the Group considers the characteristics of the asset or liability if market participants would take those characteristics into account in a market-based transaction, including, for example, the condition and location of the asset and any restrictions on its sale or use.

A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place:

(a)In the principal market for the asset or liability; or

(b)In the absence of a principal market, in the most advantageous market to which the Group has access at the measurement date.

The Group measures fair value using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest.

The Group applies appropriate valuation techniques in the circumstances and for which sufficient data is available, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. FRS 13, Fair Value Measurement, establishes a fair value hierarchy that categorizes inputs to valuation techniques into three levels:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

Determining the significance of a particular input to the entire fair value measurement requires judgment and involves consideration of factors specific to the asset or liability.

Non-current Assets Held for Sale

A non-current asset (or disposal group) is classified as held for sale when its carrying amount is expected to be recovered principally through a sale transaction rather than through continued use.

For classification as held for sale:

| - | The asset (or disposal group) must be available for immediate sale in its present condition, subject only to terms that are usual and customary for such sales;

| - | The appropriate level of management must be committed to a plan to sell the asset (or disposal group);

| - | An active program to locate a buyer and complete the plan must have been initiated;

| - | The asset (or disposal group) must be actively marketed at a price that is reasonable in relation to its current fair value; and

| - | The sale must be highly probable and expected to be completed within one year from the date of classification, except as permitted under specific circumstances defined by IFRS 5.

If these criteria are no longer met, the Group ceases to classify the asset (or disposal group) as held for sale.

Non-current assets (or disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Assets classified as held for sale are not depreciated or amortized while they are in that classification. Immediately prior to classification as held for sale, the carrying amount of the asset (or the assets and liabilities in the disposal group) is measured in accordance with applicable IFRS.

Use of Estimates and Assumptions and Measurement Uncertainty

The preparation of these consolidated financial statements in accordance with IFRS requires management to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, income, and expenses, as well as the related disclosures at the reporting date. These estimates and assumptions are based on management’s best knowledge of current facts and circumstances, historical experience, prevailing economic and market conditions, and other factors that are considered to be reasonable and relevant. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and prospectively in future periods if applicable. Actual results may differ from these estimates, and such differences could be material to the financial statements.

For critical judgments in applying accounting policies and major sources of estimation uncertainty, refer to Notes 2C and 2D.

B. Material Accounting Policies

Accounting policy information is considered material if omitting, misstating, or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements. Accounting policies that relate to immaterial transactions, events, or conditions are considered immaterial and are not required to be disclosed.

The Group discloses only those accounting policies that are relevant to understanding the financial statements and that provide insight into how material items, transactions, or events are accounted for in accordance with IFRS.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

(i) Financial Instruments

Financial assets and liabilities are recognized in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the financial instrument.

A financial asset is derecognized when (i) the contractual rights to the cash flows from the financial asset expire, or (ii) the Group transfers the financial asset and substantially all the risks and rewards of ownership. A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled, or expires.

The Group classifies its financial assets into the following measurement categories: (a) those measured subsequently at fair value, either through profit or loss (“FVTPL”) or through other comprehensive income (“FVTOCI”) and (b) and those measured subsequently at amortized cost.

The classification of financial assets depends on the Group’s business model for managing the financial assets, and the contractual cash flow characteristics of the financial asset.

Financial liabilities are generally classified as measured at amortized cost, except for those designated or required to be measured at FVTPL. Changes in the fair value of financial liabilities measured at FVTPL (such as certain loan payables) are recognized in profit or loss, and are typically presented in costs of sales and services. Regular purchases and sales of financial assets are accounted for on the settlement date.

On initial recognition, financial instruments are measured at fair value, plus, in the case of instruments not measured at FVTPL, transaction costs are directly attributable to the acquisition or issuance of the instrument. Transaction costs related to instruments measured at FVTPL are expensed as incurred.

Subsequent measurement depends on the classification. For instruments measured at FVTPL, gains and losses are recognized in profit or loss in the period they arise. For instruments measured at FVTOCI, gains and losses are recognized in other comprehensive income, except for impairment and foreign exchange gains or losses, which are recognized in profit or loss. Upon derecognition, accumulated reference to the fair value of substantially similar instruments, (iii) discounted cash flow models, or (iv) option pricing models and other techniques used by market participants. OCI is reclassified to profit or loss. For assets and liabilities measured at amortized cost, gains and losses are recognized in profit or loss upon derecognition, impairment, or through the effective interest method of amortization.

Net gains or losses on financial instruments measured at FVTPL exclude interest and dividend income, which are recognized separately.

Where market prices are available, bid prices are used for financial assets and ask prices for financial liabilities. If there is no active market, fair value is determined using valuation techniques, which may include: (i) recent arm’s length market transactions, (ii) reference to the fair value of substantially similar instruments, (iii) discounted cash flow models, or (iv) option pricing models and other techniques used by market participants.

​

(ii) Cash

Cash includes cash on hand and cash held at banks with original maturities of three months or less from the date of acquisition. These balances are generally interest-bearing and readily convertible to known amounts of cash.

Restricted cash refers to funds that are legally or contractually restricted for a specific purpose and are therefore not available for immediate or general use by the Group. Restricted cash is presented separately from unrestricted cash on the Group’s consolidated statements of financial position and is excluded from cash and cash equivalents in the consolidated statement of cash flows unless the restrictions are expected to be released within three months.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

(iii) Securities

Investments in equity securities are measured at fair value through profit or loss, unless the Group makes an irrevocable election at initial recognition to present changes in fair value in other comprehensive income for investments that are not held for trading.

Debt securities are classified based on both (i) the Group’s business model for managing the financial asset, and (ii) the asset’s contractual cash flow characteristics. Debt securities are measured at FVTOCI if they (i) are held within a business model whose objective is both to collect contractual cash flows and sell the assets; and (ii) have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt securities that do not meet these criteria are measured at FVTPL.

Gains and losses on the sale of securities are calculated using either the average cost method or a specific identification

(iv) Derivatives

Derivative financial instruments may be either exchange-traded or over-the-counter. Derivatives are recognized in the consolidated statements of financial position as either financial assets or financial liabilities and are measured at fair value through FVTPL.

Changes in the fair value of derivatives that do not qualify for hedge accounting under IFRS 9 are recognized immediately in profit or loss in the period in which they arise.

(v) Receivables

Trade and other receivables are measured at amortized cost and are presented net of any allowance for expected credit losses (“ECL”).

The Group performs ongoing credit evaluations of its customers’ financial condition and creditworthiness. A loss allowance is recognized based on the probability-weighted estimate of credit losses, using forward-looking information and considering historical loss experience.

Receivables are evaluated on an individual basis and are considered past due when the contractual payment terms have not been met.

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(vi) Allowance for Credit Losses

The Group recognizes and measures a loss allowance for expected credit losses on financial assets measured at amortized cost or at fair value through other comprehensive income, as well as for contract assets, loan commitments, and financial guarantee contracts.

The ECL model distinguishes between (i) 12-month expected credit losses, which apply when there has not been a significant increase in credit risk since initial recognition; and (ii) lifetime expected credit losses, which apply when there has been a significant increase in credit risk, or the asset becomes credit-impaired.

To assess whether there has been a significant increase in credit risk, the Group compares the risk of default as at the reporting date with the risk of default at initial recognition. This assessment incorporates all reasonably available information, including forward-looking indicators.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

When a significant increase in credit risk is identified, or if the asset is credit-impaired, the Group recognizes a lifetime ECL, defined as the expected credit losses resulting from all possible default events over the expected life of the financial instrument. If the credit risk has not increased significantly, the Group recognizes a 12-month ECL, which reflects the portion of lifetime ECL resulting from default events that are possible within the next 12 months.

In accordance with IFRS 9, Financial Instruments, the Group always measures the loss allowance at an amount equal to lifetime ECL for trade receivables and contract assets arising from transactions within the scope of IFRS 15, Revenue from Contracts with Customers.

(vii) Inventories

Inventories principally consist of raw materials, work-in-progress, and finished goods. Inventories are measured at the lower of cost and net realizable value.

The cost of inventories includes (i) all costs of purchase, (ii) costs of conversion (including a systematic allocation of fixed and variable manufacturing overheads), and (iii) other costs incurred in bringing the inventories to their present location and condition. Cost is assigned using the first-in, first-out (FIFO) or weighted average cost method, depending on the nature and class of inventory.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale, including marketing, selling, and distribution expenses. Any write-down of inventories to net realizable value, and all inventory losses, are recognized as an expense in the period in which the write-down or loss occurs. A reversal of a previous write-down is recognized in the period in which the net realizable value increases, but only to the extent of the original write-down. Reversals are recorded as a reduction in cost of sales and services.

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(viii) Real Estate for Sale

Real estate for sale comprises properties that were previously held for sale in the ordinary course of business.

During the year ended December 31, 2024, all properties previously classified as real estate for sale were reclassified to investment property, reflecting a change in use from sale in the ordinary course of business to long-term holding for rental income or capital appreciation.

This reclassification was made in accordance with IAS 40, Investment Property and reflects management’s updated strategy for these assets. Upon reclassification, the assets were measured at fair value, with any resulting gain or loss recognized in profit or loss in accordance with the Group’s policy for investment property (see Note 2B(ix)).

As a result, these properties are no longer accounted for as Real Estate for Sale and there were no amounts classified reported as Real Estate for Sale as of December 31, 2024.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

(ix) Investment Property

Investment property is property that is held to earn rental income, for capital appreciation, or for both, rather than for (a) use in the production or supply of goods or services or for administrative purposes; or (b) sale in the ordinary course of business.

The Group’s investment property comprises freehold land and buildings, including all properties reclassified in 2024 from Real Estate for Sale (see Note 2B(viii)). These properties are now held for long-term investment purposes, consistent with the definition of investment property under IAS 40.

Investment property is initially recognized at cost, including directly attributable transaction costs.

Upon reclassification from Real Estate for Sale in 2024, the properties were measured at fair value at the date of reclassification, with any difference being recognized in profit and loss.

Subsequent to initial recognition or reclassification, investment property is measured at fair value, with changes in fair value recognized in profit or loss in the period in which they arise. Fair value is determined without deducting transaction costs that may be incurred on sale or other disposal.

Fair values are based on independent external valuations prepared annually in accordance with guidance issued by the International Valuation Standards Council and IFRS 13 – Fair Value Measurement. Where there are no significant changes in valuation inputs since the previous external valuation, management may update the valuation using internal assumptions and current market data.

(x) Property, Plant and Equipment

Property, plant and equipment are measured at cost, less accumulated depreciation and any accumulated impairment losses. The initial cost of an item of property, plant and equipment includes: (i) its purchase price or construction cost, (ii) costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating as intended, (iii) the initial estimate of the cost of dismantling and removing the asset and restoring the site (i.e., a decommissioning or restoration obligation), and (iv) for qualifying assets, borrowing costs capitalized in accordance with IAS 23 – Borrowing Costs. The purchase price or construction cost includes the fair value of any non-cash consideration given.

When a component of property, plant and equipment is replaced and it is probable that future economic benefits associated with the replacement will flow to the Group, the cost of the replacement is capitalized and the carrying amount of the replaced component is derecognized. All other repairs and maintenance are recognized in profit or loss as incurred.

Inspection costs that are a condition of continuing use of an asset are capitalized and amortized over the period to the next scheduled inspection.

Right-of-use assets acquired under lease arrangements are measured at cost at the commencement date of the lease, in accordance with IFRS 16 – Leases. The cost includes: (i) the amount of the initial lease liability, (ii) any lease payments made at or before the commencement date, (iii) initial direct costs, and (iv) an estimate of costs to restore the underlying asset.

Right-of-use assets are depreciated over the shorter of the lease term or the asset’s useful life.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

​

The depreciable amount of each class of property, plant and equipment is allocated over its useful life using the following methods and estimated useful lives:

​

​ | ​ | ​ | ​ | ​
​ |  | Lives |  | Method
Processing plant and equipment |  | 5 to 20 years |  | straight-line
Refinery and power plants |  | 20 to 30 years |  | straight-line
Office equipment and other |  | 3 to 10 years |  | straight-line
Office premises |  | 2 to 10 years |  | straight-line

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Depreciation expense is included in either cost of sales and services or selling, general and administrative expenses, depending on the nature and use of the underlying asset.

The residual value, useful life, and depreciation method of each asset are reviewed at least annually, at the end of each reporting period. If expectations differ from previous estimates, the change is accounted for as a change in accounting estimate in accordance with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors. Where there is a significant change in the expected pattern of consumption of the future economic benefits embodied in an asset, the depreciation method is adjusted prospectively to reflect the new pattern.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its continued use or disposal. Any resulting gain or loss on derecognition is calculated as the difference between the net disposal proceeds and the carrying amount of the asset. Such gains or losses are recognized in profit or loss in the period in which derecognition occurs.

(xi) Interests in Resource Properties

The Group’s interest in resource properties consists primarily of a royalty interest in the Scully iron ore mine, located in the Province of Newfoundland and Labrador, Canada. The Group derives royalty revenue under a mining sub-lease agreement which expires in 2055. Prior to December 31, 2022, the Group also held interests in energy assets, all of which were classified as held for sale as of that date.

Interests in resource properties are initially measured at cost and are subsequently carried at cost less accumulated depletion and any accumulated impairment losses.

The carrying amount of an interest in a resource property is depleted using the unit-of-production method, which reflects the ratio of current period production to the total proven and probable reserves. Estimates of iron ore reserves are reviewed at least annually, or more frequently if significant new geological or technical information becomes available.

The Group assesses its resource property interests for indicators of impairment in accordance with IAS 36 – Impairment of Assets, and recognizes a loss if the asset’s recoverable amount is less than its carrying amount.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

(xii) Investments in associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. The financial statements of associates used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for like transactions and events in similar circumstances. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. Changes in net assets of the associate other than profit or loss and other comprehensive income are not accounted for unless such changes resulted in changes in ownership interest held by the Group. When the Group’s share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognizing its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The Group assesses whether there is an objective evidence that the interest in an associate may be impaired. When any objective evidence exists, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the entire interest in the investee with a resulting gain or loss being recognised in profit or loss. When the Group retains an interest in the former associate and the retained interest is a financial asset within the scope of IFRS 9, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition. The difference between the carrying amount of the associate and the fair value of any retained interest and any proceeds from disposing of the relevant interest in the associate is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) upon disposal/partial disposal of the relevant associate.

When a group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are recognised in the consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

(xiii) Impairment of Non-financial Assets

The Group reviews the carrying amounts of its non-financial assets (excluding inventories, deferred tax assets, and assets measured at fair value) at each reporting date to assess whether there is any indication of impairment. If such an indication exists, the Group estimates the asset’s recoverable amount, which is the higher of (i) its fair value less costs of disposal, and (ii) its value in use.

If the asset does not generate independent cash inflows, the impairment test is performed at the level of the relevant cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset or CGU is considered impaired and is written down to its recoverable amount.

Value in use is determined by estimating the future cash flows expected to be derived from the asset or CGU, and discounting them to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs of disposal is determined using appropriate valuation techniques, supported by market-based evidence where available.

At each reporting date, the Group also assesses whether there is any indication that a previously recognized impairment loss may no longer exist or may have decreased. If such an indication exists, the recoverable amount is re-estimated and the impairment loss is reversed, but only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, amortization, or depletion, had no impairment been recognized in prior periods.

Reversals of impairment losses for a CGU are allocated pro rata to the non-financial assets within the CGU, based on their carrying amounts.

The Group’s interest in an iron ore mine is assessed at each reporting date for indicators of impairment. As it generates independent cash flows, it is tested for impairment on a standalone basis. Impairment is recognized if the asset’s recoverable amount, determined based on its value in use, is less than its carrying amount.

(xiv) Provisions, Financial Guarantee Contracts and Contingencies

Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the reporting date. Where appropriate, the estimated future cash flows are adjusted for risks specific to the liability. If the effect of the time value of money is material, provisions are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

The unwinding of the discount (accretion of the liability) is recognized as a finance cost in the consolidated statements of operations.

A financial guarantee contract is initially recognized at fair value. If the guarantee is issued to an unrelated party on a commercial basis, the initial fair value is generally equal to the premium received. If no premium is received, the fair value is determined using a method that quantifies the economic benefit of the guarantee to the holder.

At each subsequent reporting date, financial guarantees are measured at the higher of: (i) the loss allowance under IFRS 9 – Financial Instruments, and (ii) the amount initially recognized, less cumulative amortization, if applicable.

Contingent liabilities are possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

Contingent liabilities are not recognized in the consolidated financial statements, except for those assumed in a business combination, which are measured at fair value at the acquisition date. They are disclosed unless the probability of an outflow of resources is remote. Legal costs in connection with a contingency are recognized in profit or loss as incurred.

The Group recognizes a contingent asset or a reimbursement right only when it is virtually certain that the asset will be received.

(xv) Own Equity Instruments

The Group’s holdings of its own equity instruments, including common shares and preferred shares, are presented as “treasury stock” and deducted from shareholders’ equity at cost. These instruments are excluded from the calculation of the number of equity shares outstanding. No gain or loss is recognized in profit or loss on the purchase, sale, reissuance, or cancellation of the Group’s own equity instruments. Any consideration received or paid in connection with such transactions is recognized directly in equity.

(xvi) Revenue Recognition

The Group recognizes revenue in accordance with IFRS 15 – Revenue from Contracts with Customers when or as it satisfies a performance obligation by transferring control of a promised good or service to a customer. Performance obligations are satisfied either (i) at a point in time, typically upon shipment or delivery, or (ii) over time, as services are rendered or progress is made toward completion.

The Group primarily acts as a principal in its revenue arrangements. It does not have material obligations for returns, refunds, warranties, or similar arrangements.

For performance obligations satisfied over time, the Group generally uses a time-based measure of progress, particularly when services provided are distinct but have the same pattern of transfer.For obligations satisfied at a point in time, the Group assesses control transfer based on shipment or delivery, as appropriate.

A significant financing component is recognized if the timing of payments agreed between the parties provides the customer or the Group with a significant benefit of financing the transfer of goods or services.

As a practical expedient, the Group does not adjust the transaction price for the effects of a financing component if, at contract inception, the period between the transfer of goods or services and customer payment is expected to be one year or less.

The Group’s revenue and income recognition policies by source are mainly as follows:

| (a) | Royalty income – Royalty revenues are based on iron ore sold and shipped by the operator and are measured at the fair value of the consideration received or receivable. Revenue is recognized when control over the iron ore transfers to the operator’s customer, consistent with the Group’s rights under the mineral sublease, and collectability is probable.

| (b) | Merchant banking goods and products – These primarily include power and electricity. Revenue is recognized when products have been delivered, the amount of revenue can be reliably measured, and collectability is probable. The Group performs credit evaluations both at contract inception and throughout the term. These sales generally do not involve multiple-element arrangements or a financing component.

| (c) | Rental income – Lease income from investment properties under operating leases is recognized on a straight-line basis over the lease term, unless another systematic basis better reflects the consumption of benefits. Contingent rental income is recognized in the period it is earned.

| (d) | Property management income – Revenue from property and facilities management is recognized over time, as services are rendered.

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DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

| (e) | Property sales – Gains on property sales are recognized at the point in time when control is transferred to the buyer, typically upon legal title transfer or physical possession, in accordance with contract terms.

| (f) | Financial services income – Interest income from merchant banking activities is accrued using the effective interest method. Fee income is recognized as earned unless it is integral to a financing arrangement, in which case it is amortized over the term of the loan using the effective interest method.

| (g) | Investment income – Dividend income is recognized when the right to receive payment is established. Interest income from financial investments is recognized using the effective interest method, in accordance with IFRS 9 – Financial Instruments.

(xvii) Costs of Sales and Services

Costs of sales and services include the costs of goods and services provided by the Group, including: (i) royalty-related expenses, (ii) merchant banking goods and products, (iii) real estate for sale (prior to reclassification as investment property), (iv) medical instruments and supplies, and (v) related services.

The cost of goods sold includes both direct costs (e.g., raw materials, utilities) and indirect costs, such as: (i) freight and shipping, (ii) purchasing and receiving, (iii) inspection, (iv) distribution, and (v) provisions for warranties, where applicable.

Other items within costs of sales and services include income and expenses related to the Group’s operations that do not arise from core inventory or service delivery. These include (i) write-downs of inventories and real estate for sale, (ii) net losses on securities and investment property, (iii) credit losses on financial assets under IFRS 9, (iv) fair value changes in investment property and (v) fair value changes in loans payable measured at FVTPL.

Other income items may include gains or losses on the disposition of subsidiaries or non-currency derivative contracts.

The reversal of previously recognized write-downs of inventories or real estate for sale, and credit losses, is recorded as a reduction in costs of sales and services in the period in which the reversal occurs.

(xviii) Employee Benefits

Short-term employee benefits, including wages, salaries, bonuses, social security contributions, and paid annual and sick leave, are accrued in the period in which the related services are rendered by employees of the Group. These amounts are recognized as expenses and are included in either (i) costs of sales and services, or (ii) selling, general and administrative expenses, depending on the nature and function of the employee’s role.

(xix) Share-Based Compensation

The cost of equity-settled share-based payment transactions with employees is measured by reference to the fair value of the equity instruments at the grant date, in accordance with IFRS 2 – Share-based Payment.

The expense is recognized in profit or loss over the vesting period, which ends when the relevant employees become unconditionally entitled to the award. Fair value is determined using an appropriate valuation model, such as the Black-Scholes model or binomial option pricing model, depending on the characteristics of the grant. At each reporting date before vesting, the cumulative expense is calculated, representing: (i) the proportion of the vesting period that has expired, and (ii) management’s best estimate of the number of equity instruments expected to vest, taking into account non-market performance conditions. Changes in the cumulative expense are recognized in profit or loss, with a corresponding adjustment to equity.

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DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

Share-based compensation expenses are presented in selling, general and administrative expenses unless they are directly attributable to a specific function.

When stock options are exercised, the cash proceeds received, together with the amount previously recorded in contributed surplus, are credited to capital stock and additional paid-in capital.

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(xx) Finance Costs

Finance costs primarily comprise (i) interest expense on borrowings, (ii) accretion of discounts on provisions and other liabilities, and (iii) fees and charges incurred in connection with financing transactions.

Interest expense is recognized using the effective interest method, in accordance with IFRS 9.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset, in accordance with IAS 23 – Borrowing Costs. All other borrowing costs are recognized in profit or loss as incurred.

Shares and debt instruments issued are recognized at the amount of proceeds received, net of directly attributable transaction costs. Transaction costs attributable to debt instruments are amortized over the term of the debt using the effective interest method and included in finance costs.

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(xxi) Income Taxes

Income tax expense (or recovery) comprises (i) current income tax and (ii) deferred income tax, and includes both domestic and foreign taxes based on taxable profits, including taxes on resource property revenues where applicable.

The current income tax provision is based on taxable profit for the period. Taxable profit differs from accounting profit before tax as reported in the consolidated statements of operations, due to items that are (i) taxable or deductible in different periods or (ii) never taxable or deductible.

Deferred income tax is recognized using the liability method, based on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the consolidated statement of financial position. Deferred income tax liabilities are recognized for all taxable temporary differences, except when (i) the liability arises from non-deductible goodwill, or (ii) from the initial recognition of an asset or liability in a transaction that is not a business combination, and (iii) at the time of the transaction, affects neither accounting profit nor taxable profit, and (iv) does not give rise to equal taxable and deductible temporary differences.

Deferred tax liabilities related to investments in subsidiaries and branches are recognized unless the Group is able to control the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future.

Deferred income tax assets are recognized for (i) deductible temporary differences, (ii) unused tax losses, and (iii_ unused tax credits, to the extent that it is probable that future taxable profit will be available to utilize these amounts.

Deferred tax assets are not recognized when they arise from the initial recognition of an asset or liability in a transaction that (i) is not a business combination, (ii) affects neither accounting nor taxable profit, and (iii) does not give rise to equal taxable and deductible temporary differences.

For deductible temporary differences relating to investments in subsidiaries and branches, deferred tax assets are recognized only if it is probable that the differences will reverse in the foreseeable future and taxable profit will be available to utilize the differences.

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DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

At each reporting date, management reviews recognized and unrecognized deferred tax assets to assess whether it is probable that the related benefits will be realized. Deferred tax assets and liabilities are measured at the tax rates and laws that are expected to apply in the periods in which the assets are realized or the liabilities settled, based on tax rates and laws enacted or substantively enacted by the reporting date. Deferred taxes related to items recognized in other comprehensive income or equity are also recognized in other comprehensive income or equity, respectively.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets and liabilities and when they relate to income taxes levied by the same taxation authority on the same taxable entity or on different entities that intend to settle current tax balances on a net basis.

Withholding taxes (including those payable by subsidiaries on distributions to the parent) are treated as income taxes if they have the characteristics of an income tax—i.e., imposed by a government authority and calculated by reference to income.

Interest and penalties on current income tax liabilities are classified as a component of finance costs.

(xxii) Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to ordinary equity holders of Scully by the weighted average number of common shares outstanding during the period, net of treasury shares.

Diluted earnings per share is calculated using the same method as basic earnings per share, adjusted for the effects of all dilutive potential ordinary shares outstanding during the period. For the purpose of calculating diluted earnings per share, the Group assumes (i) the exercise of stock options and similar instruments, and (ii) that the proceeds from such exercises are used to repurchase common shares at the average market price during the period.

The difference between the number of shares issued on assumed exercise and the number of shares that would have been repurchased at the average market price is treated as an issue of common shares for no consideration and is added to the weighted average number of shares outstanding. Potential ordinary shares are considered dilutive when, and only when, their conversion would decrease earnings per share or increase loss per share from continuing operations.

Retrospective adjustments are made to prior period earnings per share amounts to reflect the impact of stock dividends, stock splits, or reverse stock splits, if any.

C. Critical Judgments in Applying Accounting Policies

In applying the Group’s accounting policies, management makes various significant judgments, apart from those involving estimation uncertainty (which are discussed in Note 2D), that have a material impact on the amounts recognized in the consolidated financial statements. These judgments relate to the selection, application, and interpretation of accounting policies under IFRS, and they may have a significant effect on the reported amounts of assets, liabilities, income, and expenses. The following are the critical judgments made by management in the application of the Group’s accounting policies that have the most significant effect on the consolidated financial statements:

(i) Identification of CGUs

The Group’s assets are aggregated into cash-generating units (“CGUs”) for the purpose of assessing and calculating impairment of non-financial assets, based on their ability to generate largely independent cash inflows. The determination of CGUs requires significant management judgment in defining the smallest identifiable group of assets that generates cash inflows independent from those of other assets or groups of assets, in accordance with IAS 36 – Impairment of Assets.

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DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

CGUs are determined based on factors such as (i) similar geological structure, (ii) shared infrastructure, (iii) geographical proximity, (iv) product type, and (v) exposure to market risks. If facts and circumstances change—such as asset reconfiguration, changes in product markets, or operational restructuring—the Group reassesses and, if necessary, redefines its CGU structure to reflect the updated pattern of independent cash inflows.

(ii) Impairment and Reversals of Impairment on Non-Financial Assets

The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at the end of each reporting period to assess whether there is any indication of impairment or of a potential reversal of a previously recognized impairment. If such indications exist, the Group estimates the recoverable amount of the asset or its related cash-generating unit (“CGU”).

Determining whether indicators of impairment or impairment reversal are present requires significant judgment. Indicators may include, but are not limited to: (i) a sustained change in commodity prices (e.g., iron ore), (ii) significant changes in margins or profitability, (iii) a decline in the market value of an asset, (iv) a revision to estimated reserves or production volumes, (v) an increase in future development or operating costs, or (vi) significant shifts in the technological, regulatory, economic, or legal environment.

Estimating the recoverable amount involves the use of assumptions and projections, including (i) forecasts of commodity prices, (ii) supply and demand trends, (iii) cost structures, and (iv) expected production volumes.

Changes in these assumptions may affect the useful life of the CGU and may lead to material adjustments in the carrying values of the related non-financial assets. Impairment losses recognized in prior years are reassessed at each reporting date to determine whether there are indicators that the loss has decreased or no longer exists. A reversal of impairment is recognized only to the extent that the asset’s or CGU’s revised carrying amount does not exceed the carrying amount that would have been determined (net of depreciation, depletion and amortization) had no impairment been recorded previously.

See Notes 11 and 12.

(iii) Valuation of Investment Property

Investment properties are presented in the consolidated statement of financial position at their fair value unless fair value cannot be reliably determined at the measurement date. Fair value is assessed annually by an independent qualified valuer, who is authorized to perform valuations of developed and undeveloped real estate in Germany and other relevant jurisdictions in accordance with recognized professional valuation standards, including those issued by the International Valuation Standards Council (IVSC).

The valuation methodology is based primarily on a discounted cash flow approach or a capitalization of net income method, with key inputs including (i) market rent levels, (ii) actual and expected occupancy rates, (iii) operating and maintenance costs, (iv) property condition and capital expenditures, and (v) the prevailing capitalization rate or discount rate, derived from comparable market transactions.

Assumptions reflect market conditions as of the reporting date, including observable market data on recent sales of comparable properties. Changes in these assumptions, or use of incorrect or outdated inputs, could materially affect the fair value of investment property and impact the Group’s profit or loss for the reporting period, as all changes in fair value are recognized in profit or loss.

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DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

(iv) Assets Held for Sale and Discontinued Operations

The Group applies judgment in determining whether a non-current asset or disposal group meets the criteria to be classified as held for sale in accordance with IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations.

An asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use, and when all of the following conditions are met as of the reporting date (i) the asset is available for immediate sale in its present condition, (ii) the sale is highly probable, (iii) the appropriate level of management is committed to a plan to sell, (iv) an active program to locate a buyer and complete the plan has been initiated, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) the sale is expected to be completed within one year (or within the extension period permitted under IFRS).

In assessing whether the sale is highly probable, management considers a range of macro- and micro-economic factors, including (i) conditions in the industry and capital markets, and (ii) progress toward executing the sale transaction, including buyer interest, due diligence and binding agreements. The Group also considers other forms of disposal, including non-cash exchanges of non-current assets, when such exchanges have commercial substance.

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(v) Credit Losses and Impairment of Receivables

In accordance with IFRS 9 – Financial Instruments, the Group applies credit risk assessment and valuation methods on financial assets measured at amortized cost or at FVTOCI, including trade receivables, contract assets, loan commitments, and financial guarantee contracts.

The Group recognizes a loss allowance equal to the lifetime expected credit losses if the credit risk on the financial instrument has significantly increased since initial recognition. At each reporting date, management evaluates whether a significant increase in credit risk has occurred by comparing the risk of default as at the reporting date with the risk of default as at initial recognition. To make that assessment, management compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.

Allowance for credit losses is maintained at an amount considered adequate to absorb the expected credit losses. Such allowance for credit losses reflects management’s best estimate of changes in the credit risk on the Group’s financial instruments and judgments about economic conditions. The assessment of allowance for credit losses is a complex process, particularly on a forward-looking basis, which involves a significant degree of judgment and a high level of estimation uncertainty. The input factors include the assessment of the credit risk of the Group’s financial instruments, legal rights and obligations under all the contracts and the expected future cash flows from the financial instruments, which may include credit enhancement instruments. The major sources of estimation uncertainty relate to the likelihood of the various scenarios under which different amounts are expected to be recovered through the security on the financial assets. The expected future cash flows are projected under different scenarios and weighted by probability, which involves the exercise of significant judgment. Estimates and judgments could change in the near-term and could result in a significant change to a recognized allowance.

D. Major Sources of Estimation Uncertainty

The timely preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

The major assumptions about the future and other major sources of estimation uncertainty at the end of the reporting period that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. These items require management’s most difficult, subjective or complex estimates. Actual results may differ materially from these estimates.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

(i) Interest in Resource Properties and Reserve Estimates

The Group owns an interest in the Scully iron ore mine with an aggregate carrying amount of $192,142 as at December 31, 2024.

Generally, estimation of reported recoverable quantities of proved and probable reserves of resource properties include judgmental assumptions regarding production profile, prices of products produced, exchange rates, remediation costs, timing and amount of future development costs and production, transportation and marketing costs for future cash flows. It also requires interpretation of geological and geophysical models and anticipated recoveries. The economical, geological and technical factors used to estimate reserves may change from period to period. Changes in reported reserves can impact the carrying amounts of the Group’s interest in resource properties, the recognition of impairment losses and reversal of impairment losses, the calculation of depletion and the recognition of deferred income tax assets or liabilities due to changes in expected future cash flows. During the year ended December 31, 2024, the Group did not recognize any impairment in respect of its interest in resource properties.

The Group’s iron ore reserves are estimates of the amount of product that can be economically and legally extracted from the Group’s mining properties. Reserve and resource estimates are an integral component in the determination of the commercial viability of the Group’s interest in the iron ore mine, amortization calculations and impairment analyses. In calculating reserves and resources, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, production decline rates, recovery rates, production costs, commodity demand, commodity prices and exchange rates. In addition, future changes in regulatory environments, including government levies or changes in the Group’s rights to exploit the resource imposed over the producing life of the reserves and resources may also significantly impact estimates. See Note 12.

(ii) Impairment of Other Non-Financial Assets

As at December 31, 2024, the Group had property, plant and equipment with a carrying amount of $1,498, comprised primarily of a office assets.

The Group assesses non-financial assets (excluding goodwill) for indicators of impairment at each reporting date in accordance with IAS 36 – Impairment of Assets. When such indicators exist, the Group estimates the recoverable amount of the asset or CGU. A CGU is the smallest group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount is the higher of (i) value in use, which is based on the present value of expected future cash flows from the asset or CGU, and (ii) fair value less costs of disposal, which reflects an estimate of the price that would be received in a sale in an orderly transaction between market participants.

In the absence of quoted market prices, the recoverable amount is determined using discounted cash flow models, which incorporate assumptions such as (i) forecast production volumes and utilization rates, (ii) expected commodity prices and market conditions, (iii) future operating and capital expenditures, and (iv) a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

Changes in any of these key assumptions, including increases in expected costs, or decreases in projected production or sales prices, could result in a material write-down of the Group’s non-financial assets. Management exercises significant judgment in identifying CGUs and in selecting assumptions used in impairment testing.

See Note 11.

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DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 2. Basis of Presentation and Summary of Material Accounting Policies (continued)

(iii) Taxation

The Group is subject to tax in a number of jurisdictions and judgment is required in determining the worldwide provision for income taxes. Deferred income taxes are recognized for temporary differences using the liability method, with deferred income tax liabilities generally being provided for in full (except for taxable temporary differences associated with investments in subsidiaries and branches where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future) and deferred income tax assets being recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.

The Group recognized deferred income tax assets of $11,138 as at December 31, 2024. In assessing the realizability of deferred income tax assets, management considers whether it is probable that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income in Malta and Canada during the periods in which temporary differences become deductible or before tax loss and tax credit carry-forwards expire. Management considers the future reversals of existing taxable temporary differences, projected future taxable income, taxable income in prior years and tax planning strategies in making this assessment. Unrecognized deferred income tax assets are reassessed at the end of each reporting period.

The Group does not recognize the full deferred tax liability on taxable temporary differences associated with investments in subsidiaries and branches where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. The Group may change its investment decision in its normal course of business, thus resulting in additional income tax liabilities.

The Group complies with IFRIC 23, Uncertainty over Income Tax Treatments, which provides guidance on the recognition and measurement of tax assets and liabilities under IAS 12, Income taxes (“IAS 12”) when there is uncertainty over income tax treatments. The operations and organization structures of the Group are complex, and the complex tax laws are potentially subject to different interpretations by management and the relevant taxation authorities. Significant judgement is required in the interpretations of the relevant tax laws and in assessing the probability of acceptance of the Group’s tax positions, which includes the Group’s best estimate of tax positions that are under audit or appeal by relevant taxation authorities in numerous jurisdictions. There are audits in progress and items under review, some of which may increase the Group’s income tax liabilities. The Group performs a review on a regular basis to incorporate management’s best assessment based on information available, but additional liability and income tax expense could result based on the non-acceptance of the Group’s tax positions by the relevant taxation authorities.

(iv) Contingencies

Pursuant to IAS 37 – Provisions, Contingent Liabilities and Contingent Assets, the Group does not recognize a contingent liability unless it becomes probable that an outflow of economic benefits will be required to settle a present obligation arising from a past event. By their nature, contingencies will only be resolved when one or more future uncertain events occur or fail to occur. The assessment of contingencies requires the exercise of significant judgment, including evaluation of the probability and financial impact of potential outcomes. If it becomes probable that an outflow of economic benefits will be required, a provision is recognized in the period in which the change in probability occurs, and the amount can be reliably estimated. See Note 22 for further disclosures on contingencies.

(v) Geo-Political Risks and Going Concern

During the reporting period, the global macroeconomic environment continued to experience heightened uncertainty, driven by a combination of factors including (i) ongoing geopolitical tensions, particularly in Eastern Europe and the Middle East; (ii) inflationary pressures; (iii) volatility in commodity prices; and (iv) disruption in global supply chains and financing markets. Management considered these external factors, along with internal forecasts and stress-testing analyses, in assessing the Group’s ability to continue as a going concern.

Management took into consideration all of these various factors and risks when concluding on the Group’s ability to continue as a going concern and the appropriateness of this presentation when preparing these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 3. Disclosure on the Group’s Objectives, Policies and Processes for Managing Its Capital Structure

The Group’s objectives when managing capital are to: (a) safeguard the entity’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; (b) provide an adequate return to shareholders by pricing products and services commensurately with the level of risk; and (c) maintain a flexible capital structure which optimizes the cost of capital at acceptable risk.

The Group allocates capital in proportion to risk. The 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, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or issue new debt.

Consistent with others in its industry, the Group monitors its capital on the basis of the debt-to-adjusted capital ratio and long-term debt-to-equity ratio. The debt-to-adjusted capital ratio is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt less cash. Adjusted capital comprises all components of shareholders’ equity. The long-term debt-to-equity ratio is calculated as long-term debt divided by shareholders’ equity.

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​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: |  | 2024 |  | 2023
Total debt | ​ | $ | 36,545 | ​ | $ | 36,107
Less: cash | ​ |  | (19,052) | ​ |  | (78,252)
Net debt | ​ |  | 17,493 | ​ |  | Not applicable
Shareholders’ equity | ​ |  | 302,277 | ​ |  | 322,459
Net debt-to-adjusted capital ratio | ​ |  | 0.06 |  |  | Not applicable

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​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: |  | 2024 |  | 2023
Long-term debt | ​ | $ | 36,545 | ​ | $ | 36,107
Shareholders’ equity | ​ |  | 302,277 | ​ |  | 322,459
Long-term debt-to-equity ratio | ​ |  | 0.12 | ​ |  | 0.11

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The above tables do not include amounts in assets held for sale, except for in Shareholders’ equity.

During 2024, the Group’s strategy, which was unchanged from 2023, was to maintain the debt-to-adjusted capital ratio and the long-term debt-to-equity ratio at a manageable level. The ratios were stable between 2024 and 2023.

Liquidity is a cornerstone of the Group’s business. The Group monitors its cash balances and overall liquidity position on a regular basis to ensure we have adequate financial and operational flexiblity. The Group seeks to maintain sufficient liquid assets and working capital at all times to fund its operations.

Included in liquid assets are: (i) cash and cash equivalents, (ii) short-term securities, which are primarily comprised of government debt securities and term deposits; and (iii) receivables collectible in the ordinary course.

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DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 3. Disclosure on the Group’s Objectives, Policies and Processes for Managing Its Capital Structure (continued)

The following sets forth these liquid assets and working capital for December 31, 2024 and December 31, 2023:

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​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | December 31,2024 |  | December 31,2023
​ | ​ | ​ | ​ | ​ | ​ | ​
Cash | ​ | $ | 19,052 | ​ | $ | 78,252
Short-term securities |  | ​ | 23,487 |  | ​ | 12,958
Receivables |  | ​ | 42,274 |  | ​ | 70,330
Classified within assets held for sale: |  | ​ |  |  | ​ |
Cash |  | ​ | 32,704 |  | ​ | —
Short-term securities |  | ​ | 4,638 |  | ​ | —
Receivables |  | ​ | 42,905 |  | ​ | —
Total liquid assets | ​ | $ | 165,060 | ​ | $ | 161,540
​ | ​ | ​ | ​ | ​ | ​ | ​
Current assets | ​ | $ | 175,319 | ​ | $ | 164,545
Current liabilities | ​ |  | 38,488 | ​ |  | 20,573
​ | ​ | $ | 136,831 | ​ | $ | 143,972

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In the ordinary course of managing treasury, the Group monitors opportunities to increase interest income while maintaining a prudent risk profile and equivalent liquidity position. In 2024, the Group made the decision to invest in various term deposits and short-term government securities, which enhanced the yields on its liquid assets. Notwithstanding the reduction in its cash balance, the Group’s overall liquidity profile remained unchanged, as the Group maintains access to various liquidity facilities through its bank subsidiary that enables borrowing against these short-term securities. As at December 31, 2024, there were no amounts drawn against these facilities. However, the Group may utilize them in the future should opportunities arise to generate adequate returns on a risk-adjusted basis.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 4. Assets Classified as Held for Sale

Year 2024:

As part of the Group’s ongoing strategy to streamline its operations and concentrate efforts on its core asset - our iron ore royalty - it previously announced that it has initiated a process to rationalize certain underperforming or non-core assets, and their associated liabilities, classified within the “All Other” segment. This strategic refocusing reflects the intent to simplify the Group’s corporate structure, reduce operating complexity, and unlock shareholder value by concentrating capital and management attention.

As a result of this initiative, management determined that the criteria for classification as “held for sale” under IFRS 5 were met with respect to certain assets and related liabilities as at December 31, 2024. As a result, the assets and related liabilities relating to these businesses were classified as held for sale as at December 31, 2024.

Management, when exercising its judgments in terms of the assets’ contribution to net loss, total assets and net assets, concluded that these assets did not constitute a separate major line of business or geographical area of operations. In aggregate, the assets held for sale represented approximately 20% (after recognition of impairment losses) of consolidated total assets. These assets held for sale generated revenue from third parties of $9,019, loss before taxes of $3,282 and a net loss of $4,516 during the twelve months ended December 31, 2024.

The assets held for sale and related liabilities as of December 31, 2024 comprised:

​

​ | ​ | ​ | ​
Asset held for sale: |  | ​ | ​
Total Assets | ​ | ​ | 88,500
Total Liabilities | ​ | ​ | (18,107)
Net | ​ | ​ | 70,393

​

All intercompany assets and liabilities have been eliminated. The impairment loss of $18,579 was included in the consolidated statement of operations for the twelve months ended December 31, 2024. The disposal group is presented in the All Other reportable segment.

The Company entered into an agreement to rationalize these non-core assets and liabilities. The transaction is not expected to impact the Company’s net book value. Upon the closing of this transaction as currently anticipated, the Company expects to recognize approximately $15,000 of securities and approximately $55,393 as an equity method investment. For illustrative purposes, if this rationalization had completed on December 31, 2024, the Company’s shareholders’ equity would have remained at approximately $302,277.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 5. Business Segment Information

Effective from the fiscal year beginning January 1, 2024, changes to the internal organization structure resulted in a revised composition of the Company’s reportable segments. The change primarily resulted from the disposition of certain entities in prior years which made a former segment insignificant on a going-forward basis and, thus, its operating results are no longer regularly reviewed by the chief operating decision maker. The Company’s assets include its iron ore royalty, financial services and other proprietary investments. In addition, the merchant banking subsidiaries seek to invest in businesses or assets whose intrinsic value is not properly reflected. These activities are generally not passive, as the merchant banking subsidiaries seek investments where their financial expertise and management can add or unlock value.

There are two separate and independently managed operating subgroups within the Group. In reporting to management, these operating results are currently categorized into the following operating segments: Royalty, Merchant Banking and All Other segments which include corporate activities. The total external revenue reported by the royalty and merchant banking segments generally constitutes approximately 74% of revenue. As a result of the changes in the structure of its internal organization, the corresponding information for earlier period has been recast.

Basis of Presentation

In reporting segments, certain of the Group’s business lines have been aggregated where they have similar economic characteristics and are similar in each of the following areas: (a) the nature of the products and services; (b) the methods of distribution; and (c) the types or classes of customers/clients for the products and services.

The Group’s Royalty segment includes an interest in an iron ore mine in the Province of Newfoundland and Labrador, Canada. The Group’s Merchant Banking segment comprises regulated merchant banking businesses with a focus on Europe. In addition, the Merchant Banking segment holds two industrial real estate parks in Europe.

The All Other segment includes corporate and small entities whose quantitative amounts generally are not expected to exceed 10% of any of the following: (a) the reported revenue, including both sales to external customers and intersegment sales or transfer; (b) the greater, in absolute amount, of the (i) combined reported profit of all operating segments that did not report a loss and (ii) combined reported loss of all operating segments that reported a loss; or (c) the total assets. Actual outcomes may occasionally exceed these 10% thresholds, though the excess amounts are not expected to be material.

The accounting policies of the operating segments are the same as those described in the summary of material accounting policies in Note 2B. The chief operating decision-maker evaluates performance on the basis of income or loss from operations before income taxes and does not consider acquisition accounting adjustments in assessing the performance of the Group’s reporting segments. The segment information presented below is prepared according to the following methodologies: (a) revenue and expenses directly associated with each segment are included in determining pre-tax earnings; (b) intersegment sales and transfers are accounted for as if the sales or transfers were to third parties at current market prices; (c) certain selling, general and administrative expenses paid by corporate, particularly incentive compensation and share-based compensation, are not allocated to reporting segments; (d) all intercompany investments, receivables and payables are eliminated in the determination of each segment’s assets and liabilities; (e) deferred income tax assets and liabilities are not allocated; and (f) gains or losses on dispositions of subsidiaries which include reclassification of realized cumulative translation adjustments from equity to profit or loss on disposals of subsidiaries, write-offs of intercompany accounts, changes in intercompany account balances and cash used (received) in acquisition (disposition) of a subsidiary are allocated to corporate and included within the Group’s All Other segment.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 5. Business Segment Information (continued)

Segment Operating Results

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year ended December 31, 2024
​ | ​ | ​ | ​ | Merchant | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Royalty |  | Banking |  | All Other |  | Total
Revenue from external customers | ​ | $ | 20,053 | ​ | $ | 6,221 | ​ | $ | 9,028 | ​ | $ | 35,302
Intersegment sale | ​ | ​ | — | ​ |  | 10,866 | ​ |  | 14,270 | ​ |  | 25,136
Interest expense | ​ | ​ | — | ​ |  | 2,465 | ​ |  | 28 | ​ |  | 2,493
Depreciation, depletion and amortization | ​ | ​ | 4,492 | ​ | ​ | 389 | ​ | ​ | 2,340 | ​ | ​ | 7,221
Income (loss) before income taxes | ​ | ​ | (3,469) | ​ |  | 1,797 | ​ |  | (17,351) | ​ |  | (19,023)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year ended December 31, 2023*
​ | ​ | ​ | ​ | Merchant | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Royalty |  | Banking |  | All Other |  | Total
Revenue from external customers | ​ | $ | 35,323 | ​ | $ | 7,374 | ​ | $ | 12,247 | ​ | $ | 54,944
Intersegment sale | ​ | ​ | — | ​ |  | 6,857 | ​ |  | 13,561 | ​ |  | 20,418
Interest expense | ​ | ​ | 4 | ​ |  | 1,629 | ​ |  | 130 | ​ |  | 1,763
Depreciation, depletion and amortization | ​ | ​ | 5,168 | ​ | ​ | 450 | ​ | ​ | 2,311 | ​ | ​ | 7,929
Income (loss) before income taxes | ​ | ​ | 11,120 | ​ |  | (55) | ​ |  | (868) | ​ |  | 10,197

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year ended December 31, 2022*
​ | ​ | ​ | ​ | Merchant | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Royalty |  | Banking |  | All Other |  | Total
Revenue from external customers | ​ | $ | 29,167 | ​ | $ | 5,486 | ​ | $ | 29,036 | ​ | $ | 63,689
Intersegment sale | ​ | ​ | — | ​ |  | 6,212 | ​ |  | 14,786 | ​ |  | 20,998
Interest expense | ​ | ​ | 2 | ​ |  | 1,554 | ​ |  | 253 | ​ |  | 1,809
Depreciation, depletion and amortization | ​ | ​ | 4,637 | ​ | ​ | 321 | ​ | ​ | 5,741 | ​ | ​ | 10,699
Income (loss) before income taxes | ​ | ​ | 1,012 | ​ |  | 2,900 | ​ |  | (27,868) | ​ |  | (23,956)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As at December 31, 2024
​ | ​ | ​ | ​ | Merchant | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Royalty |  | Banking |  | All Other |  | Total
Segment assets | ​ | $ | 215,827 | ​ | $ | 100,367 | ​ | $ | 121,901 | ​ | $ | 438,095
Segment liabilities | ​ | ​ | 49,857 | ​ | ​ | 51,862 | ​ | ​ | 26,051 | ​ | ​ | 127,770

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As at December 31, 2023*
​ | ​ | ​ | ​ | Merchant | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Royalty |  | Banking |  | All Other |  | Total
Segment assets | ​ | $ | 221,116 | ​ | $ | 128,977 | ​ | $ | 102,374 | ​ | $ | 452,467
Segment liabilities | ​ | ​ | 51,617 | ​ | ​ | 50,804 | ​ | ​ | 20,376 | ​ | ​ | 122,797

​

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 5. Business Segment Information (continued)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Year ended December 31, 2024
​ | ​ | ​ | ​ | Merchant | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Royalty |  | Banking |  | All Other |  | Total
Cash provided by (used in) operating activities | ​ | $ | (40,438) | ​ | $ | (35,731) | ​ | $ | 44,626 | ​ | $ | (31,543)
Cash used in investing activities | ​ | ​ | 30,501 | ​ | ​ | 3,158 | ​ | ​ | (30,899) | ​ | ​ | 2,760
Cash used in financing activities | ​ | ​ | — | ​ | ​ | (1,027) | ​ | ​ | (130) | ​ | ​ | (1,157)
Exchange rate effect on cash | ​ | ​ | 51 | ​ | ​ | 1,258 | ​ | ​ | 2,135 | ​ | ​ | 3,444
Change in cash | ​ | ​ | (9,886) | ​ | ​ | (32,342) | ​ | ​ | 15,732 | ​ | ​ | (26,496)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Year ended December 31, 2023*
​ | ​ | ​ | ​ | Merchant | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Royalty |  | Banking |  | All Other |  | Total
Cash provided by (used in) operating activities | ​ | $ | (7,028) | ​ | $ | 25,455 | ​ | $ | 7,754 | ​ | $ | 26,181
Cash used in investing activities | ​ |  | — | ​ |  | (6,298) | ​ |  | (9) | ​ |  | (6,307)
Cash used in financing activities | ​ |  | — | ​ |  | (236) | ​ |  | (3,579) | ​ |  | (3,815)
Exchange rate effect on cash | ​ |  | (576) | ​ |  | 1,103 | ​ |  | (2,051) | ​ |  | (1,524)
Change in cash | ​ | ​ | (7,604) | ​ | ​ | 20,024 | ​ | ​ | 2,115 | ​ | ​ | 14,535

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Year ended December 31, 2022*
​ | ​ | ​ | ​ | Merchant | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Royalty |  | Banking |  | All Other |  | Total
Cash provided by (used in) operating activities | ​ | $ | 3,866 | ​ | $ | 6,949 | ​ | $ | 19,822 | ​ | $ | 30,637
Cash used in investing activities | ​ |  | — | ​ |  | (4,670) | ​ |  | (7) | ​ |  | (4,677)
Cash used in financing activities | ​ |  | — | ​ |  | (521) | ​ |  | (16,671) | ​ |  | (17,192)
Exchange rate effect on cash | ​ |  | 3 | ​ |  | 1,625 | ​ |  | (1,552) | ​ |  | 76
Change in cash | ​ | ​ | 3,869 | ​ | ​ | 3,383 | ​ | ​ | 1,592 | ​ | ​ | 8,844

*The comparative tables have been reclassified to conform to changes in presentation in the current year.

​

Geographic Information

Due to the highly integrated nature of international products and services, merchant banking activities and markets, and a significant portion of the Group’s activities requiring cross-border coordination in order to serve the Group’s customers and clients, the methodology for allocating the Group’s profitability to geographic regions is dependent on estimates and management judgment.

Geographic results are generally determined as follows:

​ | ​ | ​
Segment |  | Basis for attributing revenue
Royalty | ​ | Locations of operations
Merchant Banking | ​ | Locations of external customers or the reporting units, whichever is appropriate
All Other | ​ | Locations of the reporting units

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 5. Business Segment Information (continued)

Due to the nature of cross-border business, the Group presents its geographic information by geographic regions, instead of by countries. The following table presents revenue from external customers by geographic region of such customers, locations of operations or the reporting units, whichever is appropriate:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Canada | ​ | $ | 20,668 | ​ | $ | 39,066 | ​ | $ | 47,537
Africa | ​ |  | 4,171 | ​ |  | 3,557 | ​ |  | 3,974
Americas, excluding Canada | ​ |  | 1,999 | ​ |  | 1,860 | ​ |  | 1,541
Asia | ​ |  | 769 | ​ |  | 1,434 | ​ |  | 4,951
Europe | ​ |  | 7,695 | ​ |  | 9,027 | ​ |  | 5,686
​ | ​ | $ | 35,302 | ​ | $ | 54,944 | ​ | $ | 63,689

​

Except for the geographic concentrations as indicated in the above table and a customer in the Royalty segment located in Canada representing approximately 57%, 64% and 45%, respectively, of the Group’s revenue for the years ended December 31, 2024, 2023 and 2021, there were no other revenue concentrations during the years ended December 31, 2024, 2023 and 2022.

The following table presents non-current assets other than financial instruments, deferred income tax assets and other non-current assets by geographic area based upon the location of the assets.

​

​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: |  | 2024 |  | 2023
Canada | ​ | $ | 195,047 | ​ | $ | 197,144
Americas, excluding Canada | ​ | ​ | — | ​ | ​ | 27
Africa | ​ | ​ | — | ​ | ​ | 23,433
Asia | ​ |  | — | ​ |  | 29
Europe | ​ |  | 49,155 | ​ |  | 45,751
​ | ​ | $ | 244,202 | ​ | $ | 266,384

​

​

Note 6. Securities

​

​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: |  | 2024 |  | 2023
Short-term securities |  | ​ |  |  | ​ |
Equity securities at FVTPL, publicly traded | ​ | $ | — | ​ | $ | 2,798
Debt securities at FVTPL, unlisted | ​ | ​ | 15,806 | ​ | ​ | —
Debt securities at FVTOCI, publicly traded | ​ |  | 7,681 | ​ |  | 10,160
​ | ​ | $ | 23,487 | ​ | $ | 12,958
Long-term securities | ​ | ​ | ​ | ​ | ​ | ​
Equity securities in an affiliate at FVTPL, unlisted | ​ | $ | — | ​ | $ | 2,966

​

Debt securities at FVTOCI included sovereign bonds issued by a European government of $7,358 and $9,840 respectively, as at December 31, 2024 and 2023, which represented 31% and 76%, respectively, of total short-term securities. Equity securities in an affiliate at FVTPL were reclassified to equity method investments in 2024.

Debt securities at FVTPL included a term deposit in a European bank with a maturity period of six months.

Equity securities at FVTPL included investments in publicly traded stock markets of Asia.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 7. Trade Receivables

​

​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: |  | 2024 |  | 2023
Trade receivables, gross amount | ​ | $ | 875 | ​ | $ | 1,924
Less: Allowance for expected credit losses | ​ |  | (14) | ​ |  | (17)
Trade receivables, net amount | ​ | $ | 861 | ​ | $ | 1,907

​

All trade receivables comprise accounts from contracts with customers.

As at December 31, 2024, the Group recognized a loss allowance of $14 (2023: $17) against its trade receivables. The movements in the loss allowance during the years ended December 31, 2024 and 2023 were as follows:

​

​ | ​ | ​ | ​
​ | ​ | Equal to lifetime expected credit losses
​ | ​ | Financial assets that
​ | ​ | are credit-impaired
​ |  | at year-end
Loss allowance: as at January 1, 2023 | ​ | $ | 16
Additions for the year | ​ |  | 292
Charge-off for the year | ​ |  | (291)
Exchange effect | ​ |  | —
Loss allowance: as at December 31, 2023 | ​ | ​ | 17
Additions for the year | ​ | ​ | —
Charge-off for the year | ​ | ​ | —
Exchange effect | ​ | ​ | (3)
Loss allowance: as at December 31, 2024 | ​ | $ | 14

​

In accordance with IFRS 9, management reviews the expected credit losses based upon, among other things, the credit-worthiness of the exposure, collateral and other risk mitigation instruments, and the nature of the underlying business transaction.

For further discussions on credit risk, see Note 25.

​

Note 8. Other Receivables

​

​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: |  | 2024 |  | 2023
Royalty receivables | ​ | $ | 9,492 | ​ | $ | 20,584
Interest receivables | ​ | ​ | 196 | ​ | ​ | 1,093
Loans and current accounts (net of allowance of $nil as of both December 31, 2024 and 2023)* | ​ |  | 22,394 | ​ |  | 30,489
Bank loans | ​ | ​ | 7,736 | ​ | ​ | 6,850
Other | ​ | $ | 896 | ​ |  | 8,767
​ | ​ | $ | 40,714 | ​ | $ | 67,783

​

* The Group had various amounts owing from an affiliate controlled by the Executive Chairman of the Company.

Other receivables primarily arise in the normal course of business and are expected to be collected within one year from the reporting date.

Royalty receivables were due from a customer (i.e. the Operator) in the Royalty segment (see Note 5).

For further discussions on credit risk, see Note 25.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 9. Inventories

​

​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: |  | 2024 |  | 2023
Raw materials | ​ | $ | 1 | ​ | $ | 1,111
Work-in-progress | ​ |  | — | ​ |  | 88
Finished goods | ​ |  | — | ​ |  | —
​ | ​ | $ | 1 | ​ | $ | 1,199

​

​

Note 10. Investment Property

All of the Group’s investment property is located in Europe and forms part of the security granted in connection with bonds issued by a subsidiary of the Group (see Note 15).

​

​ | ​ | ​ | ​ | ​ | ​ | ​
Changes in investment property included in non-current assets: |  | 2024 |  | 2023
Balance, beginning of year | ​ | $ | 31,540 | ​ | $ | 31,850
Additions | ​ |  | 811 | ​ |  | —
Changes in fair value during the year | ​ | ​ | 2,005 | ​ | ​ | 554
Disposals | ​ |  | (81) | ​ |  | (1,232)
Reclassification from Real Estate for Sale | ​ | ​ | 12,620 | ​ | ​ | —
Currency translation adjustments | ​ |  | 766 | ​ |  | 368
Balance, end of year | ​ | $ | 47,661 | ​ | $ | 31,540

​

The amounts recognized in profit or loss in relation to investment property during the years ended December 31, 2024, 2023 and 2022 were as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Rental income | ​ | $ | 2,192 | ​ | $ | 1,473 | ​ | $ | 1,356
Direct operating expenses (including repairs and maintenance) arising from investment property during the year | ​ |  | 692 | ​ | ​ | 398 | ​ | ​ | 324

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 11. Property, Plant and Equipment

The following changes in property, plant and equipment were recorded during the year ended December 31, 2024:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Reclassification | ​ | Currency | ​ | ​ | ​
​ | ​ | Opening | ​ | ​ | ​ | ​ | ​ | ​ | ​ | to Assets | ​ | translation | ​ | Ending
Costs |  | balance |  | Additions |  | Disposal |  | Held for Sale |  | adjustments |  | balance
Plants and equipment | ​ | $ | 44,492 | ​ | $ | 2 | ​ | $ | (257) | ​ | $ | (47,935) | ​ | $ | 3,698 | ​ | $ | —
Office equipment | ​ |  | 2,352 | ​ |  | 149 | ​ |  | (157) | ​ |  | (3) | ​ |  | 47 | ​ |  | 2,388
Right-of-use assets* | ​ | ​ | 1,347 | ​ | ​ | 313 | ​ | ​ | (143) | ​ | ​ | (463) | ​ | ​ | 27 | ​ | ​ | 1,081
​ | ​ | $ | 48,191 | ​ | $ | 464 | ​ | $ | (557) | ​ | $ | (48,401) | ​ | $ | 3,772 | ​ | $ | 3,469

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Reclassification | ​ | Currency | ​ | ​ | ​
​ | ​ | Opening | ​ | ​ | ​ | ​ | ​ | ​ | ​ | to Assets | ​ | translation | ​ | Ending
Accumulated depreciation |  | balance |  | Additions |  | Disposal |  | Held for Sale |  | adjustments |  | balance
Plants and equipment | ​ | $ | 20,565 | ​ | $ | 2,182 | ​ | $ | (227) | ​ | $ | (24,244) | ​ | $ | 1,724 | ​ | $ | —
Office equipment | ​ |  | 791 | ​ |  | 187 | ​ |  | (108) | ​ |  | (3) | ​ |  | 23 | ​ |  | 890
Right-of-use assets* | ​ | ​ | 1,082 | ​ | ​ | 360 | ​ | ​ | (143) | ​ | ​ | (240) | ​ | ​ | 22 | ​ | ​ | 1,081
​ | ​ |  | 22,438 | ​ | $ | 2,729 | ​ | $ | (478) | ​ | $ | (24,487) | ​ | $ | 1,769 | ​ |  | 1,971
Net book value | ​ | $ | 25,753 | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ | $ | 1,498

* Primarily consisting of office premises.

The following changes in property, plant and equipment were recorded during the year ended December 31, 2023:

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Currency | ​ | ​ | ​
​ | ​ | Opening | ​ | ​ | ​ | ​ | ​ | ​ | ​ | translation | ​ | Ending
Costs |  | balance |  | Additions |  | Disposals |  | adjustments |  | balance
Plants and equipment | ​ | $ | 45,488 | ​ | $ | 19 | ​ | $ | — | ​ | $ | (1,015) | ​ | $ | 44,492
Office equipment | ​ |  | 2,311 | ​ |  | 174 | ​ |  | (156) | ​ |  | 23 | ​ |  | 2,352
Right-of-use assets* | ​ |  | 1,341 | ​ |  | — | ​ |  | — | ​ |  | 6 | ​ |  | 1,347
​ | ​ | $ | 49,140 | ​ | $ | 193 | ​ | $ | (156) | ​ | $ | (986) | ​ | $ | 48,191

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Currency | ​ | ​ | ​
​ | ​ | Opening | ​ | ​ | ​ | ​ | ​ | ​ | ​ | translation | ​ | Ending
Accumulated depreciation |  | balance |  | Additions |  | Disposals |  | adjustments |  | balance
Plants and equipment | ​ | $ | 18,854 | ​ | $ | 2,156 | ​ | $ | — | ​ | $ | (445) | ​ | $ | 20,565
Office equipment | ​ |  | 702 | ​ |  | 242 | ​ |  | (155) | ​ |  | 2 | ​ |  | 791
Right-of-use assets* | ​ |  | 713 | ​ |  | 364 | ​ |  | — | ​ |  | 5 | ​ |  | 1,082
​ | ​ | ​ | 20,269 | ​ | $ | 2,762 | ​ | $ | (155) | ​ | $ | (438) | ​ | ​ | 22,438
Net book value | ​ | $ | 28,871 | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ | $ | 25,753

* Primarily consisting of office premises.

In 2024, the Group reclassified the subsidiary which owned various plants and equipmenty to assets held for sale.

During the years ended December 31, 2024, 2023 and 2022, no expenditures were recognized in the carrying amounts of items of property, plant and equipment in the course of their construction.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 12. Interests in Resource Properties

The Group’s interests in resource properties as at December 31, 2024 and 2023 comprised the following:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023
Iron ore royalty interest | ​ | $ | 192,142 | ​ | $ | 196,634

​

The movements in the iron ore royalty interest during the year ended December 31, 2024 were as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Opening | ​ | ​ | ​ | Ending
Costs | ​ | balance | ​ | Additions | ​ | balance
Iron ore royalty interest |  | $ | 218,203 |  | $ | — |  | $ | 218,203

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Opening | ​ | ​ | ​ | Ending
Accumulated depreciation | ​ | balance | ​ | Additions | ​ | balance
Iron ore royalty interest |  | $ | 21,569 |  | $ | 4,492 |  | $ | 26,061
Net book value | ​ | $ | 196,634 | ​ | ​ | ​ | ​ | $ | 192,142

​

The movements in the iron ore royalty interest during the year ended December 31, 2023 were as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Opening | ​ | ​ | ​ | Ending
Costs | ​ | balance | ​ | Additions | ​ | balance
Iron ore royalty interest | ​ | $ | 218,203 | ​ | $ | — | ​ | $ | 218,203

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Opening | ​ | ​ | ​ | Ending
Accumulated depreciation | ​ | balance | ​ | Additions | ​ | balance
Iron ore royalty interest |  | $ | 16,401 |  | $ | 5,168 |  | $ | 21,569
Net book value | ​ | $ | 201,802 | ​ | ​ | ​ | ​ | $ | 196,634

​

Iron ore royalty interest

The Group derives revenue from a mining sub-lease on an iron ore mine situated in the Province of Newfoundland and Labrador, Canada. The sub-lease expires in 2055. The iron ore deposit is currently sub-leased to a third-party entity under certain lease agreements which will also expire in 2055. Pursuant and subject to the terms of the lease agreements, the Group collects royalty payments directly from a third-party operator based on a pre-determined formula, with a minimum payment of $3,250 per year.

Management performed assessments on December 31, 2024, 2023 and 2022 utilizing the value-in-use methodology using a pre-tax discount rate of 10.42%, 10.39% and 13.18%, respectively, and concluded that there was no impairment on those dates.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 13. Deferred Income Tax Assets and Liabilities

The tax effect of temporary differences and tax loss carry-forwards that give rise to significant components of the Group’s deferred income tax assets and liabilities are as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: |  | 2024 |  | 2023
Non-capital tax loss carry-forwards | ​ | $ | 12,479 | ​ | $ | 18,717
Interests in resource properties | ​ |  | (49,246) | ​ |  | (52,364)
Other assets | ​ |  | — | ​ |  | (5,900)
Other liabilities | ​ |  | (3,609) | ​ |  | (9,314)
​ | ​ | $ | (40,376) | ​ | $ | (48,861)
Presented on the consolidated statements of financial position as follows: | ​ |  | ​ | ​ |  | ​
Deferred income tax assets | ​ | $ | 11,138 | ​ | $ | 9,509
Deferred income tax liabilities | ​ |  | (51,514) | ​ |  | (58,370)
Net | ​ | $ | (40,376) | ​ | $ | (48,861)

​

As at December 31, 2024, the Group had estimated accumulated non-capital losses, which expire in the following countries and regions as follows. Management is of the opinion that not all of these non-capital losses are probable to be utilized in the future.

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ | ​ |  | Amount for which |  | ​
​ | ​ | ​ | ​ | ​ | no deferred | ​ | ​
​ | ​ | ​ | ​ | ​ | income tax asset | ​ | ​
Country / Region | ​ | Gross amount | ​ | is recognized | ​ | Expiration dates
Canada | ​ | $ | 10,060 | ​ | $ | — |  | 2037‑2042
Germany | ​ | ​ | 603 | ​ |  | — | ​ | Indefinite
Malta | ​ |  | 83,696 | ​ |  | 56,541 |  | Indefinite
Africa | ​ |  | 13,278 | ​ | ​ | — |  | 2031-2037
China | ​ |  | 828 | ​ |  | — |  | 2026-2029

​

The utilization of the deferred tax assets is dependent on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences and the Group companies have suffered losses in either the current or preceding period(s) in the tax jurisdictions to which the deferred tax assets relate.

The Group companies’ income tax, value-added tax and payroll tax filings are also subject to audit by taxation authorities in numerous jurisdictions. There are audits in progress and items under review, some of which may increase the Group’s income tax, value-added tax and payroll tax liability. If it is probable that management’s estimate of the future resolution of these matters changes, the Group will recognize the effects of the changes in its consolidated financial statements in the appropriate period when such changes occur.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 14. Account Payables and Accrued Expenses

​

​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: |  | 2024 |  | 2023
Trade and account payables | ​ | $ | 4,455 | ​ | $ | 2,244
Deposit liabilities | ​ | ​ | 7,443 | ​ | ​ | 7,767
Interest payables | ​ |  | 725 | ​ |  | 500
Value-added, goods and services and other taxes (other than income taxes) | ​ | ​ | 2,026 | ​ | ​ | 1,353
Compensation | ​ | ​ | 139 | ​ | ​ | 159
Contract liabilities under contracts with customers | ​ | ​ | — | ​ | ​ | 2,088
Lease liabilities | ​ | ​ | — | ​ | ​ | 311
Due to an affiliate (see Note 24) | ​ | ​ | — | ​ | ​ | 1,622
​ | ​ | $ | 14,788 | ​ | $ | 16,044

​

Trade payables arise from the Group’s day-to-day activities. The Group’s expenses for services and other operational expenses are included in account payables. Generally, these payables and accrual accounts do not bear interest and have a maturity of less than one year.

Contract liabilities under contracts with customers

​

The movements of contract liabilities under contracts with customers for the years ended December 31, 2024 and 2023 were as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023
Balance, beginning of the year | ​ | $ | 2,149 | ​ | $ | 1,916
Considerations received | ​ | ​ | 1,668 | ​ | ​ | 1,142
Reclassification to profit or loss upon satisfaction of performance obligations | ​ |  | (1,266) | ​ |  | (909)
Reclassification to liabilities related to assets held for sale | ​ | ​ | (2,551) | ​ | ​ | —
Balance, end of the year | ​ | $ | — | ​ | $ | 2,149

​

The Group expects to recognize the contract liabilities as revenue upon satisfaction of performance obligations in the following years:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023
Year 1 after the year-end (included in current liabilities) | ​ | $ | — | ​ | $ | 2,088
Year 2 after the year-end (included in non-current liabilities) | ​ | ​ | — | ​ |  | 61
​ | ​ | $ | — | ​ | $ | 2,149

​

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 14. Account Payables and Accrued Expenses (continued)

Lease liabilities

​

The Group recognized the following associated with its lease liabilities for the years ended December 31, 2024, 2023 and 2022:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | ​ | 2022
Interest expense | ​ | $ | 3 | ​ | $ | 20 | ​ | $ | 28
Expense relating to short-term leases with payments directly charged to profit or loss | ​ | ​ | 376 | ​ |  | 484 | ​ | ​ | 438
Expense relating to leases of low-value assets with payments directly charged to profit or loss | ​ | ​ | — | ​ |  | 9 | ​ | ​ | —
Expense relating to variable lease payments not included in the measurement of lease liabilities | ​ | ​ | — | ​ | ​ | — |  | ​ | —
Total cash outflows for leases | ​ | ​ | 792 | ​ |  | 907 | ​ | ​ | 816
Gain on COVID-19-related rent concessions | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (47)
Depreciation charge for right-of-use assets (see Note 11) | ​ | ​ | 360 | ​ | ​ | 364 | ​ | ​ | 349
Carrying amount of right-of-use assets at the end of the reporting period (see Note 11) | ​ | ​ | — | ​ | ​ | 265 | ​ | ​ | 628

​

As at December 31, 2024, management does not expect material exposure arising from variable lease payments, extension options and termination options, residual value guarantees and leases not yet commenced to which the Group is committed. The above numbers do not include lease liabilities within assets held for sale.

Future lease payments included in the measurement of the lease liabilities as at the reporting dates are as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | December 31, 2024 |  | December 31, 2023
2024 | ​ | $ | — | ​ | $ | 316
2025 | ​ |  | — | ​ |  | 3
​ | ​ | $ | — | ​ | $ | 319

​

​

Note 15. Bonds Payable

In August 2019, a subsidiary completed a public issue of bonds with an aggregate nominal amount of $36,511 (€25,000), less commissions and issuance costs totalling $1,078 (€738) secured by the Group’s investment property. In 2024, the maturity of the bonds were extended to 2033 and the interest rate was increased to 5.70% per annum. Concurrent with this, the subsidiary wrote off the previously capitalized costs of $336 and the costs associated with the modification, totaling $783, were capitalized.

As at December 31, 2024, the carrying and nominal amounts of the bonds payable were $36,545 (€24,481) and $37,320 (€25,000), respectively.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 15. Bonds Payable (continued)

For the movements of bonds payable in the years ended December 31, 2024, 2023 and 2022, see Note 23.

As at December 31, 2024, the contractual maturities of the bonds payable are as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ending December 31: |  | Principal |  | Interest |  | Total
2025 | ​ | $ | — | ​ | ​ | 2,127 | ​ | ​ | 2,127
2026 | ​ | ​ | — | ​ | ​ | 2,127 | ​ | ​ | 2,127
2027 | ​ | ​ | — | ​ | ​ | 2,127 | ​ | ​ | 2,127
2028 | ​ | ​ | — | ​ | ​ | 2,127 | ​ | ​ | 2,127
2029 | ​ | ​ | — | ​ | ​ | 2,127 | ​ | ​ | 2,127
2030 | ​ |  | — | ​ |  | 2,127 | ​ |  | 2,127
2031 | ​ |  | — | ​ |  | 2,127 | ​ |  | 2,127
2032 | ​ |  | — | ​ |  | 2,127 | ​ |  | 2,127
2033 | ​ |  | 37,320 | ​ | ​ | 2,127 | ​ | ​ | 39,447

​

​

Note 16. Shareholders’ Equity

Capital Stock

The authorized share capital of Scully is US$450,000 divided into 300,000,000 common shares of US$0.001 par value each and 150,000,000 preference shares divided into US$0.001 par value each.

Holders of common shares may receive dividends declared by the Company in accordance with the Company’s memorandum and articles of association, subject to any preferential dividend rights of any other classes or series of preference shares issued and outstanding. Holders of common shares are entitled to one vote per share at any general or special meeting of shareholders. The holders of common shares have the right on the winding up or dissolution of the Company to participate in the surplus assets of the Company in accordance with the provisions of the memorandum and articles of association of the Company, subject to the rights of any issued and outstanding preference shares.

The movements of total capital stock for the years ended December 31, 2024 and 2023 were as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Number |  | Capital Stock |  | Additional |  | Total
​ | ​ | of Shares | ​ | at Par Value | ​ | Paid-in Capital | ​ | Capital Stock
Balance, December 31, 2024 and 2023 |  | 14,899,530 | ​ | $ | 19 | ​ | $ | 313,070 | ​ | $ | 313,089

​

Treasury Stock

​

​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: |  | 2024 |  | 2023
Total number of common shares held as treasury stock | ​ | ​ | 77,279 | ​ | ​ | 77,279
Total carrying amount of treasury stock | ​ | $ | 2,643 | ​ | $ | 2,643

​

All of the Company’s treasury stock is held by the Company itself.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 17. Consolidated Statements of Operations Information

Revenue

The Group’s revenue comprised:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Royalty, goods and products and services | ​ | $ | 24,279 | ​ | $ | 43,330 | ​ | $ | 52,218
Interest | ​ |  | 3,210 | ​ |  | 3,717 | ​ |  | 3,712
Dividends | ​ | ​ | 166 | ​ | ​ | 146 | ​ | ​ | 268
Other, including medical and real estate sectors | ​ | ​ | 7,647 | ​ | ​ | 7,751 | ​ | ​ | 7,491
Revenue | ​ | $ | 35,302 | ​ | $ | 54,944 | ​ | $ | 63,689

​

The revenue of $24,279 from royalty, goods and products and services for the year ended December 31, 2024 comprised royalty revenue of $20,046, energy of $4,171 and fees of $62.

​

The revenue of $43,330 from royalty, goods and products and services for the year ended December 31, 2023 comprised royalty revenue of $35,234, energy of $6,931 and fees of $1,165.

The revenue of $52,218 from royalty, goods and products and services for the year ended December 31, 2022 comprised royalty revenue of $28,970, energy of $21,555 and fees of $1,693.

Costs and Expenses

The Group’s costs of sales and services comprised:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31: |  | 2024 |  | 2023 |  | 2022
Royalty, goods and products and services | ​ | $ | 8,532 | ​ | $ | 12,689 | ​ | $ | 23,677
Write-down (Reversal of write-down) of inventories | ​ | ​ | 19 | ​ | ​ | (27) | ​ | ​ | (21)
Net fair value loss (gain) on investment property | ​ | ​ | (2,005) | ​ | ​ | 59 | ​ | ​ | (96)
Gain on dispositions of subsidiaries, net | ​ | ​ | (3,646) | ​ | ​ | — | ​ | ​ | (264)
Gains on settlements and derecognition of liabilities | ​ | ​ | — | ​ | ​ | (1,313) | ​ | ​ | (69)
Change in fair value of loan payable measured at FVTPL | ​ | ​ | (1,197) | ​ | ​ | 360 | ​ | ​ | 141
Losses on securities, net | ​ | ​ | 218 | ​ | ​ | 2,794 | ​ | ​ | 2,436
Other, including medical and real estate sectors | ​ | ​ | 5,142 | ​ | ​ | 4,512 | ​ | ​ | 4,078
Total costs of sales and services | ​ | $ | 7,063 | ​ | $ | 19,074 | ​ | $ | 29,882

​

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 17. Consolidated Statements of Operations Information (continued)

The Group’s net gain from dispositions of subsidiaries comprised:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31: |  | 2024 |  | 2023 |  | 2022
Net liabilities in excess of considerations received |  | $ | (3,646) |  | $ | — |  | $ | (273)
Reclassification adjustment for the exchange differences upon dispositions of subsidiary | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 9
Gain on disposition of subsidiary, net (see Note 27) |  | $ | (3,646) |  | $ | — |  | $ | (264)

​

The Group included the following items in costs of sales and services:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Inventories as costs of goods sold (including depreciation expenses allocated to costs of goods sold) | ​ | $ | 73 | ​ | $ | 40 | ​ | $ | 80

​

The Group’s selling, general and administrative expenses comprised:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Compensation (wages and salaries) | ​ | $ | 6,293 | ​ | $ | 5,418 | ​ | $ | 4,443
Legal and professional | ​ |  | 6,091 | ​ |  | 7,242 | ​ | ​ | 6,983
Accounting | ​ | ​ | 1,765 | ​ | ​ | 1,646 | ​ | ​ | 885
Consulting and fees | ​ | ​ | 3,693 | ​ | ​ | 3,095 | ​ | ​ | 6,529
Depreciation and amortization | ​ | ​ | 858 | ​ | ​ | 932 | ​ | ​ | 784
Office | ​ | ​ | 1,065 | ​ | ​ | 804 | ​ | ​ | 748
Reimbursement of expenses (net of recovery) | ​ | ​ | 679 | ​ | ​ | 886 | ​ | ​ | 5,607
Other | ​ | ​ | 4,891 | ​ | ​ | 4,159 | * | ​ | 2,501
​ | ​ | $ | 25,335 | ​ | $ | 24,182 | ​ | $ | 28,480

* Including expenses of $542 relating to a planned acquisition which was terminated in 2023.

Additional information on the nature of costs and expenses

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31: |  | 2024 |  | 2023 |  | 2022
Depreciation, depletion and amortization | ​ | $ | 7,221 | ​ | $ | 7,929 | ​ | $ | 10,699
Employee benefits expenses* | ​ |  | 8,044 | ​ |  | 8,057 | ​ |  | 7,194
Expenses for defined contribution plans and similar plans | ​ | ​ | — | ​ | ​ | 227 | ​ | ​ | 278
Termination benefits | ​ | ​ | 1,424 | ​ | ​ | — | ​ | ​ | 394

* Employee benefits expenses do not include the directors’ fees of the Company. For directors’ fees, see Note 24.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 18. Share-Based Compensation

The 2017 Equity Incentive Plan, referred to as the “2017 Plan”, was adopted by the Company on July 14, 2017 and subsequently amended in April 2021.

The following table is a summary of the changes in stock options granted under the plans:

​

​ | ​ | ​ | ​ | ​
​ | ​ | 2017 Plan
​ | ​ | ​ | ​ | Weighted
​ | ​ | ​ | ​ | average
​ | ​ | ​ | ​ | exercise
​ | ​ | ​ | ​ | price
​ | ​ | Number | ​ | per share
​ |  | of options |  | (US$)
Outstanding as at January 1, 2022 | ​ | 2,001,822 | ​ | 10.31
Forfeited | ​ | (64,746) | ​ | 11.17
Exercise of stock options (weighted average share price at dates of exercises: US$8.49 per share) | ​ | (42,949) | ​ | 7.44
Outstanding as at December 31, 2022 | ​ | 1,894,127 | ​ | 10.34
Forfeited | ​ | (54,150) | ​ | 10.20
Outstanding as at December 31, 2023 | ​ | 1,839,977 | ​ | 10.35
Exercise of stock options (weighted average share price at dates of exercises: US$7.29 per share) | ​ | (13,077) | ​ | 7.44
Forfeited | ​ | (310,780) | ​ | 10.32
Outstanding as at December 31, 2024 | ​ | 1,516,120 | ​ | 10.44
As at December 31, 2024: | ​ | ​ | ​ | ​
Options exercisable | ​ | 1,516,120 | ​ | ​
Options available for granting in future periods | ​ | 643,335 | ​ | ​

​

The following table summarizes information about stock options outstanding and exercisable as at December 31, 2024:

​

​ | ​ | ​ | ​ | ​
​ | ​ | Options Outstanding and Exercisable
​ | ​ | ​ | ​ | Weighted average remaining
Exercise Price per Share (US$) | ​ | Number | ​ | contractual life (in years)
$7.44 | ​ | 296,541 | ​ | 2.92
$11.17 | ​ | 1,219,579 | ​ | 6.33
Total |  | 1,516,120 |  | 5.66

​

The following table summarizes the share-based compensation expenses recognized by the Group in its consolidated statements of operations:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Share-based compensation expenses arising from stock awards granted by the Company | ​ | $ | — | ​ | $ | — | ​ | $ | —

​

​

Note 19. Income Taxes

The components of income tax (expense) recovery comprised:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Current taxes | ​ | $ | 965 | ​ | $ | (3,467) | ​ | $ | (1,350)
Deferred taxes | ​ |  | 1,665 | ​ |  | 1,560 | ​ |  | 7,557
Resource property revenue taxes | ​ | ​ | (3,875) | ​ | ​ | (6,891) | ​ | ​ | (5,658)
​ | ​ | $ | (1,245) | ​ | $ | (8,798) | ​ | $ | 549

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 19. Income Taxes (continued)

A reconciliation of income (loss) before income taxes to the provision for income taxes in the consolidated statements of operations is as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
(Loss) Income before income taxes | ​ | $ | (19,023) | ​ | $ | 10,197 | ​ | $ | (23,956)
Computed recovery (expense) of income taxes | ​ | $ | — | ​ | $ | (4,355) | ​ | $ | 6,383
Decrease (increase) in income taxes resulting from: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Revisions to prior years | ​ | ​ | (2) | ​ | ​ | 986 | ​ | ​ | (1,064)
Resource property revenue taxes | ​ | ​ | (2,829) | ​ | ​ | (5,031) | ​ | ​ | (4,130)
Capital gains and losses on dispositions, net | ​ | ​ | 29 | ​ | ​ | (145) | ​ | ​ | (454)
Unrecognized losses in current year | ​ | ​ | (245) | ​ | ​ | (121) | ​ | ​ | (330)
Previously unrecognized deferred income tax assets, net | ​ | ​ | 1,049 | ​ | ​ | 2 | ​ | ​ | 927
Permanent differences | ​ | ​ | 252 | ​ | ​ | (306) | ​ | ​ | (1,063)
Other non-taxable income | ​ | ​ | 129 | ​ | ​ | 196 | ​ | ​ | 326
Other, net | ​ | ​ | 372 | ​ | ​ | (24) | ​ | ​ | (46)
Income tax (expense) recovery | ​ | $ | (1,245) | ​ | $ | (8,798) | ​ | $ | 549

​

The income tax was computed using the domestic rate in each individual jurisdiction. Scully has a zero tax rate under its tax jurisdiction.

​

Note 20. (Loss) Earnings Per Share

(Loss) earnings per share data for the years ended December 31, 2024, 2023 and 2022 are summarized as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
Basic (loss) earnings attributable to holders of common shares | ​ | $ | (20,588) | ​ | $ | 1,391 | ​ | $ | (23,398)
Effect of dilutive securities: | ​ |  | — | ​ |  | — | ​ |  | —
Diluted (loss) earnings | ​ | $ | (20,588) | ​ | $ | 1,391 | ​ | $ | (23,398)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Number of Shares
​ |  | 2024 |  | 2023 |  | 2022
Weighted average number of common shares outstanding-basic | ​ | ​ | 14,822,251 | ​ | ​ | 14,822,251 | ​ | ​ | 14,811,118
Effect of dilutive securities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Options | ​ | ​ | — | ​ | ​ | 10 | ​ | ​ | —
Weighted average number of common shares outstanding-diluted | ​ | ​ | 14,822,251 | ​ | ​ | 14,822,261 | ​ | ​ | 14,811,118

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
Loss (earnings) per share - basic and diluted | ​ | $ | (1.39) | ​ | $ | 0.09 | ​ | $ | (1.58)

​

In 2024, 2023 and 2022, the Group’s potential ordinary shares comprised stock options outstanding.

As at December 31, 2024, 2023 and 2022, there were 1,516,120, 1,839,977, and 1,894,127 stock options outstanding, respectively, that could potentially dilute basic earnings per share in the future, but some or all of them were not included in the calculation of diluted earnings per share because they were antidilutive for the years ended December 31, 2024, 2023 and 2022.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 21. Dividends

On December 31, 2024, a dividend of $0.37 (US$0.26) per common share was declared in U.S. dollars to shareholders of record on January 24, 2025, and was paid on February 21, 2025.

During the year ended December 31, 2023, a dividend of $0.23 (US$0.17) per common share was declared in U.S. dollars on May 19, 2023 to shareholders of record on May 9, 2023.

During the year ended December 31, 2022, dividends of $1.13 were paid to shareholders.

​

Note 22. Commitments and Contingencies

Litigation

The Group is subject to routine litigation incidental to its business and is named from time to time as a defendant and is a plaintiff from time to time in various legal actions arising in connection with its activities, certain of which may include large claims for punitive damages. Further, due to the size, complexity and nature of the Group’s operations, various legal and tax matters are outstanding from time to time, including periodic audit by various tax authorities.

The Company, certain subsidiaries, and one of our officers have been named as defendants in a legal action relating to an alleged guarantee of the former parent of the Group. The Group believes that such claim is without merit and intends to defend such claim vigorously.As at December 31, 2024, the claim amounted to approximately $121 million (approximately €81 million), plus interest and costs.

If management’s current assessments are incorrect or if management is unable to resolve any of these matters favourably, there may be a material adverse impact on the Group’s financial performance, cash flows or results of operations.

Rights to Subscribe to Shares in Subsidiaries

During 2017, two subsidiaries of the Group entered into agreements with third-party employee incentive corporations whereby the latter were granted the rights to buy up to 10% of the share capital of the subsidiaries on a diluted basis at a price to be no less or more than the then existing net tangible asset value. The rights expire in 2027.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 23. Consolidated Statements of Cash Flows – Supplemental Disclosure

Interest paid and received, dividends received and income taxes paid are classified as operating activities. Dividends paid are classified as financing activities. Income taxes paid include the payments of advance tax prepayments and are net of tax cash refunds.

There are no circumstances in which cash held by an entity are not available for use by the Group other than amounts presented as restricted cash. See “Currency Risk” in Note 25.

Consolidated cash flows statement – reconciliation of liabilities arising from financing activities

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Bonds payable, opening balance | ​ | $ | 36,107 | ​ | $ | 35,538 | ​ | $ | 35,227
Cash flows | ​ |  | (777) | ​ |  | — | ​ |  | —
Non-cash changes: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Accretion | ​ |  | 473 | ​ |  | 156 | ​ |  | 140
Cumulative translation adjustments | ​ |  | 742 | ​ |  | 413 | ​ |  | 171
Bonds payable, ending balance (see Note 15) | ​ | $ | 36,545 | ​ | $ | 36,107 | ​ | $ | 35,538

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Lease liabilities, opening balance | ​ | $ | 314 | ​ | $ | 706 | ​ | $ | 767
Cash flows | ​ |  | (408) | ​ |  | (414) | ​ |  | (378)
Non-cash changes: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Additions | ​ | ​ | 313 | ​ | ​ | — | ​ | ​ | 295
Accretion | ​ |  | 28 | ​ |  | 20 | ​ |  | 28
Cumulative translation adjustments | ​ |  | 6 | ​ |  | 2 | ​ |  | (6)
Reclassification to asset held for sale | ​ | ​ | (253) | ​ | ​ | — | ​ | ​ | —
Lease liabilities, ending balance (see Note 14) | ​ | $ | — | ​ | $ | 314 | ​ | $ | 706

​

Non-cash transactions

Non-cash transactions during the year ended December 31, 2024: (i) the maturity of the bonds issued by a subsidiary were extended by seven years to 2033 and the interest rate was increased to 5.70% from 4.00%; (ii) various assets and liabilities associated were classified as held for sale (see Note 4); and (iii) a non-cash gain in connection with the deconsolidation of a subsidiary of $3,646 was realized in other costs of sales and services.

Non-cash transactions during the year ended December 31, 2023: (i) a liability of $818 owing to a former subsidiary was reversed and credited to profit or loss because it was determined not to be payable.

Non-cash transactions during the year ended December 31, 2022: (i) energy assets and liabilities were classified as held for sale (see Note 4).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 24. Related Party Transactions

In the normal course of operations, the Group enters into transactions with related parties, which include affiliates in which the Group has a significant equity interest (10% or more) or has the ability to influence their operating and financing policies through significant shareholding, representation on the board of directors, corporate charter and/or bylaws.

The Group had the following transactions with its related parties:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Fee income | ​ | $ | — | ​ | $ | 425 | ​ | $ | 1,191
Interest income | ​ | ​ | — | ​ | ​ | 79 | ​ | ​ | —
Other income | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 462
Dividends received | ​ | ​ | 109 | ​ | ​ | 89 | ​ | ​ | 198
Royalty expenses | ​ | ​ | (673) | ​ | ​ | (778) | ​ | ​ | (682)
Fee expenses | ​ | ​ | — | ​ | ​ | (41) | ​ | ​ | (2,198)
Reimbursements of expenses, primarily including employee benefits and lease and office expenses | ​ | ​ | (679) | ​ | ​ | (886) | ​ | ​ | (4,914)

​

From time to time the Company and its subsidiaries have entered into arrangements with a related company to assist in complying with various regulations and requirements. These arrangements are implemented at cost and no economic benefit is received or accrued by the related party. Under these arrangements, as at December 31, 2024, there were balances amounting to $22,394 included in other receivables, which does not include amounts held for sale.

In addition, pursuant to this arrangement, during the year ended December 31, 2024, 2023 and 2022, the Group reimbursed such company $679, $886, and $4,914, respectively, at cost for expenses, primarily consisting of employee benefits and lease and office expenses.

The Group had royalty expenses of $673, $778, and $682, respectively, in the year ended December 31, 2024, 2023 and 2022 that were paid to a company in which it holds a minority interest and that is a subsidiary of the operator of the underlying mine.

Key management personnel

The Group’s key management personnel comprise the members of its board of directors, President, Chief Executive Officer and Chief Financial Officer of the Company. The remuneration of key management personnel of the Group on an accrual basis was as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years ended December 31: |  | 2024 |  | 2023 |  | 2022
Short-term employee benefits* | ​ | $ | 1,974 | ​ | $ | 1,760 | ​ | $ | 1,817
Post-employment benefits | ​ | ​ | 160 | ​ | ​ | 148 | ​ | ​ | 142
Directors’ fees | ​ | ​ | 399 | ​ | ​ | 529 | ​ | ​ | 666
Total | ​ | $ | 2,533 | ​ | $ | 2,437 | ​ | $ | 2,625

*Net of salary and expenses.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 25. Financial Instruments

The fair values of the Group’s financial instruments as at December 31, 2024 and 2023, other than those with carrying amounts that approximate their fair values due to their short-term nature, are summarized as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31: | ​ | 2024 | ​ | 2023
​ | ​ | Carrying | ​ | Fair | ​ | Carrying | ​ | Fair
​ |  | Amount |  | Value |  | Amount |  | Value
Financial Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
FVTPL: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Equity securities | ​ | $ | — | ​ | $ | — | ​ | $ | 5,764 | ​ | $ | 5,764
Loan receivable | ​ | ​ | 1,183 | ​ | ​ | 1,183 | ​ | ​ | 1,159 | ​ | ​ | 1,159
Debt securities | ​ | ​ | 15,806 | ​ | ​ | 15,806 | ​ | ​ | — | ​ | ​ | —
FVTOCI: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Debt securities | ​ | ​ | 7,681 | ​ | ​ | 7,681 | ​ | ​ | 10,160 | ​ | ​ | 10,160
Amortized cost: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Long-term loan receivable | ​ | ​ | 7,436 | ​ | ​ | 7,436 | ​ | ​ | 8,619 | ​ | ​ | 8,619
Financial Liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financial liabilities measured at amortized cost: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Bonds payable | ​ | $ | 36,545 | ​ | $ | 38,626 | ​ | $ | 36,107 | ​ | $ | 36,163
FVTPL: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loan payable | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 7,610 | ​ | ​ | 7,610

​

Fair value of a financial instrument represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions regardless of whether that price is directly observable or estimated using a valuation technique. The price for a transaction which takes place under duress or the seller is forced to accept the price in the transaction might not represent the fair value of an asset or a liability. The best evidence of fair value is published price quotations in an active market. When the market for a financial asset or financial liability is not active, the Group establishes fair value by using a valuation technique. The valuation technique used maximizes the use of inputs observed in active markets, and minimizes the use of inputs generated by the Group. Internally generated inputs take into account factors that market participants would consider when pricing the financial instruments, such as liquidity and credit risks. Use of judgment is significantly involved in estimating fair value of financial instruments in inactive markets and actual results could materially differ from the estimates. To value longer-term transactions and transactions in less active markets for which pricing information is not generally available, unobservable inputs may be used.

The fair values of financial assets measured at FVTPL and FVTOCI are based on quoted market prices (Level 1 fair value hierarchy) or a valuation method with observable inputs (Level 2 fair value hierarchy). For investments in certain specialized debt securities, investment funds and a certain loan receivable, their fair values are based on quoted market prices (Level 1 fair value hierarchy) or a valuation model with inputs that are unobservable (Level 3 fair value hierarchy). Generally, the Group relies on legally protected information to arrive at their valuations and, as a result, is precluded from disclosing individual asset valuations publicly. The carrying amounts of cash and restricted cash, short-term receivables and account payables and accrued expenses, due to their short-term nature and normal trade credit terms, approximate their fair values.

The fair values of the bonds payable are based on the quoted market price from the Malta Stock Exchange at which the bonds are traded (Level 1 fair value hierarchy). The fair value of the loan payable is estimated using an appropriate valuation method. Inputs to the valuation technique are unobservable (Level 3 fair value hierarchy).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 25. Financial Instruments (continued)

The following tables present the Group’s financial instruments measured at fair value in the consolidated statements of financial position classified by level of the fair value hierarchy as at December 31, 2024 and 2023, respectively:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31, 2024 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
FVTPL: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Equity securities | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | —
Loan receivable | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 1,183 | ​ | ​ | 1,183
Debt securities | ​ | ​ | — | ​ | ​ | 15,806 | ​ | ​ | — | ​ | ​ | 15,806
FVTOCI: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Debt securities | ​ | ​ | 7,681 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 7,681
Total | ​ | $ | 7,681 | ​ | $ | 15,806 | ​ | $ | 1,183 | ​ | $ | 24,670
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financial Liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
FVTPL: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loan payable | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | —

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As at December 31, 2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
FVTPL: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Equity securities | ​ | $ | 2,798 | ​ | $ | 2,966 | ​ | $ | — | ​ | $ | 5,764
Loan receivable | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 1,159 | ​ | ​ | 1,159
FVTOCI: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Debt securities | ​ | ​ | 10,160 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 10,160
Total | ​ | $ | 12,958 | ​ | $ | 2,966 | ​ | $ | 1,159 | ​ | $ | 17,083
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financial Liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
FVTPL: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loan payable | ​ | $ | — | ​ | $ | — | ​ | $ | 7,610 | ​ | $ | 7,610

​

As at December 31, 2023, the Group held an investment in a privately held company which was measured at FVTPL. The fair value was determined using discounted cash flows at prevailing market rates of interest for similar instruments with observable inputs (Level 2 fair value hierarchy). This investment was reclassified as an equity method security in 2024.

As at December 31, 2024 and 2023, a subsidiary of the Group which is current classified as held for sale had a loan payable which is non-interest bearing, is without recourse to the Group and has no fixed repayment date. The loan payable was measured at FVTPL at its initial recognition, as permitted under IFRS, on a fair value basis in accordance with a documented investment strategy. The undiscounted contractual amount due out of surplus cash of the subsidiary is $60,535 (US$42,070) and is expected to be repaid in greater than 10 years. As at December 31, 2024, the difference between the carrying amount of the loan payable and the amount the Group would be contractually required to pay at maturity was $53,453. The fair value is determined using a discount rate for similar instruments with unobservable inputs (Level 3 fair value hierarchy), which included the sale price, demand for products, production and labour costs in the future periods. The actual repayment may be significantly different from both the carrying amount and the amount due at maturity. Sensitivity to changes in the discount rate is included under “Interest Rate Risk” in this Note 25.

​

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 25. Financial Instruments (continued)

Generally, management of the Group believes that current financial assets and financial liabilities, due to their short-term nature, do not pose significant financial risks. The Group uses various financial instruments to manage its exposure to various financial risks. The policies for controlling the risks associated with financial instruments include, but are not limited to, standardized company procedures and policies on matters such as hedging of risk exposure, avoidance of undue concentration of risk and requirements for collateral (including letters of credit and bank guarantees) to mitigate credit risk. The Group has risk managers and other personnel to perform checking functions and risk assessments so as to ensure that the Group’s procedures and policies are complied with.

Many of the Group’s strategies, including the use of derivative instruments and the types of derivative instruments selected by the Group, are based on historical trading patterns and correlations and the Group’s management’s expectations of future events. However, these strategies may not be fully effective in all market environments or against all types of risks. Unexpected market developments may affect the Group’s risk management strategies during the period, and unanticipated developments could impact the Group’s risk management strategies in the future. If any of the variety of instruments and strategies the Group utilizes is not effective, the Group may incur losses.

The Group does not trade in financial instruments, including derivative financial instruments, for speculative purposes.

The nature of the risks that the Group’s financial instruments are subject to as at December 31, 2024 is set out in the following table:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Risks
​ | ​ | ​ | ​ | ​ | ​ | Market risks
Financial instrument |  | Credit |  | Liquidity |  | Currency |  | Interest rate |  | Other price
Cash and restricted cash | ​ | X | ​ | ​ | ​ | X | ​ | X | ​ | ​
Equity securities | ​ | ​ | ​ | ​ | ​ | X | ​ | ​ | ​ | X
Debt securities | ​ | X | ​ | ​ | ​ | ​ | ​ | X | ​ | X
Receivables | ​ | X | ​ | ​ | ​ | X | ​ | X | ​ | ​
Account payables and accrued expenses | ​ | ​ | ​ | X | ​ | X | ​ | ​ | ​ | ​
Bonds payable | ​ | ​ | ​ | X | ​ | ​ | ​ | X | ​ | X
Loan payable | ​ | ​ | ​ | ​ | ​ | ​ | ​ | X | ​ | ​

​

A sensitivity analysis for each type of market risk to which the Group is exposed on its financial instruments at the end of the reporting period is provided, showing how profit or loss and equity would have been affected by changes in the relevant risk variable that were reasonably possible at that date. These ranges of parameters are estimated by management, which are based on the facts and circumstances available at the time estimates are made, and an assumption of stable socio-economic and geopolitical states. No unusual nor exceptional events, for example, natural disasters or human-made crises and calamities, are taken into consideration when the sensitivity analysis is prepared. Actual occurrence could differ from these assumptions and such differences could be material.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Financial instruments which potentially subject the Group to credit risk consist of cash and restricted cash, derivative financial instruments, debt securities, receivables and committed transactions (including loan commitments and financial guarantee contracts). The Group has deposited cash and entered into derivative financial instrument contracts with reputable financial institutions with high credit ratings and management believes the risk of loss from these counterparties to be remote.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 25. Financial Instruments (continued)

Most of the Group’s credit exposure is with counterparties in the merchant banking businesses and are subject to normal industry credit risk. The Group has receivables from various entities and credit risk from trade receivables is mitigated since they are credit insured, covered by letters of credit, bank guarantees and/or other credit enhancements. The Group routinely monitors credit risk exposure, including sector, geographic and corporate concentrations of credit and set and regularly review counterparties’ credit limits based on rating agency credit ratings and/or internal assessments of the customers and industry analysis. Management believes that these measures minimize the Group’s overall credit risk; however, there can be no assurance that these processes will protect the Group against all losses from non-performance.

The Group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses or 12-month expected credit losses (see Note 2B(vi)).

At each reporting date, the Group assesses whether the credit risk on a financial instrument that is measured at amortized cost or at FVTOCI has increased significantly since initial recognition. When making the assessment, the Group uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date.

Under IFRS 9, there is a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due; although, this rebuttable presumption is not an absolute indicator that lifetime expected credit losses should be recognized, but is presumed to be the latest point at which lifetime expected credit losses should be recognized even when using forward-looking information (including macroeconomic factors on a portfolio level).

The credit risk on a financial instrument is considered low if the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

Financial instruments are not considered to have low credit risk when they are regarded as having a low risk of loss simply because of the value of collateral and the financial instrument without that collateral would not be considered low credit risk. Financial instruments are also not considered to have low credit risk simply because they have a lower risk of default than the Group’s other financial instruments or relative to the credit risk of the jurisdiction within which the Group operates.

To determine whether a financial instrument has low credit risk, the Group may use its internal credit risk ratings or other methodologies that are consistent with a globally understood definition of low credit risk and that consider the risks and the type of financial instruments that are being assessed. Generally, an external rating of “investment grade” is an example of a financial instrument that may be considered as having low credit risk. Financial instruments are considered to have low credit risk from a market participant perspective taking into account all of the terms and conditions of the financial instrument.

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DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 25. Financial Instruments (continued)

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired include observable data about the following events: (a) significant financial difficulty of the issuer or the borrower; (b) a breach of contract, such as a default or past due event; (c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; (d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganization; (e) the disappearance of an active market for that financial asset because of financial difficulties; or (f) the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses. It may not be possible to identify a single discrete event; instead, the combined effect of several events may have caused financial assets to become credit-impaired.

The Group adopts the presumption in IFRS 9 as its accounting policy that default does not occur later than when a financial asset is 90 days past due, unless it has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The definition of default used for these purposes is applied consistently to all financial instruments unless information becomes available that demonstrates that another default definition is more appropriate for a particular financial instrument.

The average contractual credit period for trade receivables is 25-45 days and up to 180 days for certain sales.

The maximum credit risk exposure, not including amounts included in assets held for sale, as at December 31, 2024 is as follows:

​

​ | ​ | ​ | ​
Cash and restricted cash | ​ | $ | 19,246
Debt securities | ​ |  | 23,487
Trade and other receivables | ​ | ​ | 49,011
Amounts recognized in the consolidated statement of financial position | ​ | ​ | 91,744
Guarantees | ​ | ​ | —
Maximum credit risk exposure | ​ | $ | 91,744

​

See sub-heading of “Concentration risk” in this note on credit risk concentration.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Group requires liquidity specifically to fund capital requirements, satisfy financial obligations as they become due, and to operate its merchant banking business. The Group puts in place an actively managed production and capital expenditure budgeting process for major capital programs. The Group’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when they fall due, under normal and stress conditions, without incurring unacceptable losses. The Group maintains an adequate level of liquidity, with a portion of its assets held in cash. It is the Group’s policy to invest cash in bank deposits for a period of less than three months. The Group may also invest in cash deposits with an original maturity date of more than three months so as to earn higher interest income.

Generally, trade payables are due within 90 days and other payables and accrued expenses are due within one year. As at December 31, 2024, the Group had long-term bonds payable with interest payable annually and repayment of principal due in 2033. The timing of future payments is based on the Group’s historical payment patterns and management’s interpretation of contractual arrangements. The actual cash outflows might occur significantly earlier than indicated in the payment projection or be amounts significantly different from those indicated in the payment projection.

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DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 25. Financial Instruments (continued)

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group operates internationally and is exposed to risks from changes in foreign currency exchange rates, particularly the Euro and U.S. dollar. Currency risk arises principally from future trading transactions, and recognized assets and liabilities. In order to reduce the Group’s exposure to foreign currency risk on material contracts (including intercompany loans) denominated in foreign currencies (other than the functional currencies of the Group companies), the Group may use foreign currency forward contracts and options to protect its financial positions. As at December 31, 2024 and 2023, the Group did not have any foreign currency derivative financial instruments (foreign currency forward contracts and options) outstanding.

The Group holds cash balances in renminbi (“RMB”) in the People’s Republic of China (“PRC”). The PRC imposes controls on the convertibility of RMB, the official currency of the PRC, into foreign currencies. The value of RMB is subject to changes in the central government policies and to international economic and political developments affecting supply and demand in the PRC foreign exchange trading system market. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (the “PBOC”).

The Group does not have any material exposure to highly inflationary foreign currencies.

Sensitivity analysis:

At December 31, 2024, if the U.S. dollar had weakened 10% against the Group companies’ functional currencies with all other variables held constant, net income for the year ended December 31, 2024 would have increased by $219. Conversely, if the U.S. dollar had strengthened 10% against the Group companies’ functional currencies with all other variables held constant, net income for the year ended December 31, 2024 would have decreased by $219. The reason for such change is mainly due to certain U.S. dollar denominated financial instrument liabilities (net of assets) held by entities whose functional currencies were not the U.S. dollar. There would have been no material impact arising from financial instruments on other comprehensive income in either case.

At December 31, 2024, if the Euro had weakened 10% against the Group companies’ functional currencies with all other variables held constant, net income for the year ended December 31, 2024 would have increased by $3,166. Conversely, if the Euro had strengthened 10% against the Group companies’ functional currencies with all other variables held constant, net income for the year ended December 31, 2024 would have decreased by $3,166. The reason for such change is mainly due to certain Euro denominated financial instrument liabilities (net of assets) owed by entities whose functional currencies were not the Euro. There would have been no impact arising from financial instruments on other comprehensive income in either case.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 25. Financial Instruments (continued)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Short-term financial assets and financial liabilities are generally not exposed to significant interest rate risk because of their short-term nature. As at December 31, 2024, the Group had long-term bonds payable measured at amortized cost which bear a fixed interest rate.

Sensitivity analysis:

At December 31, 2024, if benchmark interest rates (such as IBORs or prime rates) at that date had been 100 basis points (1.00%) per annum lower with all other variables held constant, net income for the year ended December 31, 2024 would have decreased by $776. Conversely, if the benchmark interest rate had been 100 basis points per annum higher with all other variables held constant, net income for the year ended December 31, 2024 would have increased by $678. The reason for such change is mainly due to the loan payable measured at FVTPL. There would have been no impact arising from financial instruments on the Group’s other comprehensive income in either case.

Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market. The Group’s other price risk includes equity price risk whereby the Group’s investments in equities of other entities that are classified as held for trading are subject to market price fluctuations.

Sensitivity analysis:

At December 31, 2024, if equity prices in general had weakened 10% with all other variables held constant, net income for the year ended December 31, 2024 would have decreased by $274. Conversely, if equity prices in general had strengthened 10% with all other variables held constant, net income for the year ended December 31, 2024 would have increased by $274. There would have been no impact on other comprehensive income in either case.

Concentration risk

Management determines the concentration risk threshold amount as any single financial asset (or liability) exceeding 10% of total financial assets (or liabilities) in the Group’s consolidated statement of financial position.

In the PRC, foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the PBOC. Remittances in currencies other than RMB by the Group in the PRC must be processed through the PBOC or other PRC foreign exchange regulatory bodies and require certain supporting documentation in order to effect the remittance. If such foreign exchange control system prevents the Group from obtaining sufficient foreign currencies to satisfy its currency demands, the Group may not be able to pay dividends in foreign currencies and the Group’s ability to fund its business activities that are conducted in foreign currencies could be adversely affected.

As at December 31, 2024, royalty receivables due from a customer in the Royalty segment (see Note 8) represented 19% of total financial receivables, and receivables due from an affiliate (see Note 8) represented 46% of total financial receivables.

Except as disclosed in the preceding paragraph, at December 31, 2024, there were no customer, company or entity holding financial assets or liabilities exceeding the threshold amounts.

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DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 25. Financial Instruments (continued)

Additional disclosure

In addition to information disclosed elsewhere in these consolidated financial statements, the Group had significant items of income, expense, and gains and losses resulting from financial assets and financial liabilities which were included in profit or loss for the years ended December 31, 2024, 2023 and 2022 as follows:

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
Interest income on financial assets not at FVTPL | ​ | $ | 3,047 | ​ | $ | 3,499 | ​ | $ | 3,512
Interest income on financial assets classified at FVTPL | ​ | ​ | 163 | ​ | ​ | 218 | ​ | ​ | 200
Total interest income | ​ | $ | 3,210 | ​ | $ | 3,717 | ​ | $ | 3,712
Interest expense on financial liabilities not at FVTPL | ​ | $ | 2,493 | ​ | $ | 1,640 | ​ | $ | 1,564
Interest expense on financial liabilities classified at FVTPL | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Total interest expense | ​ | $ | 2,493 | ​ | $ | 1,640 | ​ | $ | 1,564
Dividend income on financial assets at FVTPL | ​ | $ | 166 | ​ | $ | 146 | ​ | $ | 268
Dividend income on financial assets classified not at FVTPL | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Net loss on financial assets at FVTPL | ​ | ​ | (568) | ​ | ​ | (2,803) | ​ | ​ | (2,436)
Loss on loan payable at FVTPL | ​ | ​ | 1,197 | ​ | ​ | (360) | ​ | ​ | (141)

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Note 26. Fair Value Disclosure for Non-financial Assets

The following tables present non-financial assets which are measured at or based on fair value in the consolidated statements of financial position, classified by level of the fair value hierarchy:

Assets measured at fair value on a recurring basis as at December 31, 2024:

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Level 1 |  | Level 2 |  | Level 3
Investment property | ​ | $ | — | ​ | $ | — | ​ | $ | 47,661

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Assets measured at fair value on a recurring basis as at December 31, 2023:

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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Level 1 |  | Level 2 |  | Level 3
Investment property | ​ | $ | — | ​ | $ | — | ​ | $ | 31,540

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The fair values of investment property are measured using an income approach which includes the following inputs: land value, realized basic rents, operating costs, discount rates and damages and defects (level 3 fair value hierarchy). The valuation approach was consistent for both 2024 and 2023, though in 2024 Real Estate for Sale was reclassified to Investment Property. Both the 2024 and 2023 valuations were performed by an independent external valuator who is an authorized expert for the valuation of developed and undeveloped land in Germany and holds recognized and relevant professional qualifications and has recent experience in the location and category of the investment property being valued.

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SCULLY ROYALTY LTD.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 and 2022

(Canadian Dollars in Thousands)

Note 27. Significant Subsidiaries

A subsidiary is an entity that is controlled by Scully. The following table shows the Company’s direct and indirect significant subsidiaries as at December 31, 2024. The table excludes subsidiaries which only hold intercompany assets and liabilities and do not have an active business as well as subsidiaries whose results and net assets did not materially impact the consolidated results and net assets of the Group.

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​ | ​ | ​ | ​ | ​
​ |  | Country of |  | Proportion of
Subsidiaries | ​ | Incorporation | ​ | Interest
​ | ​ | ​ | ​ | ​
Merkanti Holding plc. |  | Malta |  | 99.96%
1178936 B.C. Ltd. |  | Canada |  | 100%

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As at December 31, 2024, the Group controlled entities in which the Group held more than 50% of the voting rights and did not control any entities in which the Group held 50% or less of the voting rights. The Group’s proportional voting interests in the subsidiaries are identical to its proportional beneficial interests except as described above.

As at December 31, 2024, none of the non-controlling interests are material to the Group. As at December 31, 2024, there were no significant restrictions (statutory, contractual and regulatory restrictions, including protective rights of non-controlling interests) on Scully’s ability to access or use the assets and settle the liabilities of the Group except for amounts presented as restricted cash. See “Currency Risk” in Note 25.

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Note 28. Subsequent Events

There have been no events subsequent to the reporting date that require adjustment to or disclosure in these financial statements.

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Note 29. Approval of Consolidated Financial Statements

These consolidated financial statements were approved by the Board of Directors and authorized for issue on April 30, 2025.

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ITEM 19:EXHIBITS

Exhibits Required by Form 20-F

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​ | ​ | ​
Exhibit Number |  | Description
1.1 |  | Amended and Restated Memorandum and Articles of Association adopted on July 12, 2017. Incorporated by reference from our Form 6-K dated July 14, 2017.
1.2 |  | Extract of Amendments to the Amended and Restated Articles of Association adopted on May 31, 2019. Incorporated by reference from our Form 6-K dated June 21, 2019.
2.1 |  | Description of Common Shares. Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31, 2019 dated May 11, 2020.
4.1 |  | Amended and Restated 2017 Equity Incentive Plan. Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31, 2021.
4.2 |  | Amended and Restated Arrangement Agreement dated June 7, 2017 among MFC Bancorp Ltd., MFC Bancorp Ltd. and MFC 2017 II Ltd. Incorporated by reference from our Form 6-K dated June 14, 2017.
8.1 |  | List of significant subsidiaries of Scully Royalty Ltd. as at December 31, 2024.
11.1 |  | Code of Business Conduct and Ethics and Insider Trading Policy dated December 18, 2021.
12.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2 | ​ | Certification of Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
23.1 |  | Consent of AOGB CPA Limited, independent registered public accounting firm.
23.2 | ​ | Consent of Smythe LLP, independent registered public accounting firm.
97.1 | ​ | Policy relating to recovery of erroneously awarded compensation, as required by applicable listing standards adopted pursuant to 17 CFR240.10d-1-Scully Royalty Ltd.-Clawback Policy. Incorporated by reference to Exhibit 97.1 of our Annual Report on Form 20-F for the year ended December 31, 2023 (File No. 001-04192) dated April 29, 2024.
101.INS |  | XBRL Instance Document.
101.SCH |  | XBRL Taxonomy Extension Schema Document.
101.CAL |  | XBRL Taxonomy Extension Calculation Document.
101.DEF |  | XBRL Taxonomy Extension Definition Document.
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document.
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document.

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SIGNATURES

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The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

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Date: April 30, 2025

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​ |
​ | SCULLY ROYALTY LTD.
​ | ​
​ | /s/ Samuel Morrow
​ | Samuel Morrow
​ | President, Chief Executive Officer
​ | & Chief Financial Officer

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