Corby Spirit and Wine announces quarterly dividend and reports fourth quarter and year end financial results

TORONTO, Aug. 27, 2014 /CNW/ - Corby Spirit and Wine Limited ("Corby" or the "Company") (TSX: CSW.A, CSW.B) today declared a dividend of $0.18 per share payable on September 30, 2014 on the Voting Class A Common Shares and Non-voting Class B Common Shares of the Company to shareholders of record as at the close of business on September 15, 2014. The Company also reported its financial results for the fourth quarter and year ended June 30, 2014.

Q4 Highlights (vs. Q4 Last Year)

2% increase in Case Goods revenue driven by shipments of JP Wiser's Canadian whisky to the US (product was launched in Q1).
Significant advertising and promotional ("A&P") investment focused on JP Wiser's in the US.
Corby implemented a cost reduction programme during the quarter designed to streamline and reduce administrative costs for the long-term. This programme resulted in severance and termination payments and involved the redesign of certain pension benefits.
Net earnings decreased 2 cents per share or $0.4M as our A&P investments and the impact of our cost reduction programme outweighed our top-line revenue growth.

Year End Highlights (vs. Last Year)

3.4% increase in revenue (+$4.6M) was driven by shipments into the US for the first quarter launch and distribution build-up of JP Wiser's Canadian whisky. Commissions were consistent with the prior year with the addition of our new Agency wine partner in Q4 last year. Revenue growth was partially offset as we cycle against non-repeat bulk whisky sales of $1.8M from Q1 last year.
Significant increase in advertising and promotional investment to support JP Wiser's in the US market.
Administrative expenses show the impact of a cost-reduction programme which resulted in severances and termination payments to certain employees; increasing administrative costs.
Net earnings decreased 7 cents per share or $2.0M as our A&P investment outweighed our top-line growth as we continue to create a strong platform for growth for JP Wiser's in the US.

"This year has been about investing behind our future growth drivers: taking share in our domestic market, creating a platform for growth in the US and ensuring that our organisation continues to be fit for purpose. Our results demonstrate strong progress on all these fronts." noted Patrick O'Driscoll, President and Chief Executive Officer of Corby.

For further details, please refer to Corby's management's discussion and analysis and annual consolidated financial statements and accompanying notes for the three- month period and year ended June 30, 2014, prepared in accordance with International Financial Reporting Standards.

About Corby
Corby Spirit and Wine Limited is a leading Canadian marketer of spirits and imported wines. Corby's portfolio of owned-brands includes some of the most renowned brands in Canada, including Wiser's® Canadian whisky, Lamb's® rum, Polar Ice® vodka and McGuinness® liqueurs. Through its affiliation with Pernod Ricard S.A., Corby also represents leading international brands such as ABSOLUT® vodka, Chivas Regal®, The Glenlivet® and Ballantine's® Scotch whiskies, Jameson® Irish whiskey, Beefeater® gin, Malibu® rum, Kahlúa® liqueur, Mumm® champagne, and Jacob's Creek®, Wyndham Estate®, Stoneleigh®, Campo Viejo®, Graffigna®, and Kenwood® wines.

This press release contains forward-looking statements, including statements concerning possible or assumed future results of Corby's operations. Forward-looking statements typically are preceded by, followed by or include the words "believes", "expects", "anticipates", "estimates", "intends", "plans" or similar expressions. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions and, as such, the Company's results could differ materially from those anticipated in these forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. All financial results are reported in Canadian dollars.

CORBY SPIRIT AND WINE LIMITED
Management's Discussion and Analysis
June 30, 2014

The following Management's Discussion and Analysis ("MD&A") dated August 27, 2014, should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended June 30, 2014, prepared in accordance with International Financial Reporting Standards ("IFRS").

This MD&A contains forward-looking statements, including statements concerning possible or assumed future results of operations of Corby Spirit and Wine Limited ("Corby" or the "Company"), including the statements made under the headings "Strategy and Outlook", "Liquidity and Capital Resources", "Recent Accounting Pronouncements" and "Risk and Risk Management." Forward-looking statements typically are preceded by, followed by or include the words "believes", "expects", "anticipates", "estimates", "intends", "plans" or similar expressions. Forward-looking statements are not guarantees of future performance. They involve risks and uncertainties, including, but not limited to: the impact of competition; business interruption; trademark infringement; consumer confidence and spending preferences; regulatory changes; general economic conditions; and the Company's ability to attract and retain qualified employees. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. These factors are not intended to represent a complete list of the factors that could affect the Company and other factors could also affect Corby's results. For more information, please see the "Risk and Risk Management" section of this MD&A.

This document has been reviewed by the Audit Committee of Corby's Board of Directors and contains certain information that is current as of August 27, 2014. Events occurring after that date could render the information contained herein inaccurate or misleading in a material respect. Corby will provide updates to material forward-looking statements, including in subsequent news releases and its interim management's discussion and analyses filed with regulatory authorities as required under applicable law. Additional information regarding Corby, including the Company's Annual Information Form, is available on SEDAR at www.sedar.com.

Unless otherwise indicated, all comparisons of results for the fourth quarter of fiscal 2014 (three months ended June 30, 2014) are against results for the fourth quarter of fiscal 2013 (three months ended June 30, 2013). All dollar amounts are in Canadian dollars unless otherwise stated.

Business Overview

Corby is a leading Canadian marketer of spirits and importer of wines. Corby's national leadership is sustained by a diverse brand portfolio that allows the Company to drive profitable organic growth with strong, consistent cash flows. Corby is a publicly traded company, with its shares listed on the Toronto Stock Exchange under the symbols "CSW.A" (Voting Class A Common Shares) and "CSW.B" (Non-Voting Class B Common Shares). Corby's Voting Class A Common Shares are majority-owned by Hiram Walker & Sons Limited ("HWSL") (a private company) located in Windsor, Ontario. HWSL is a wholly-owned subsidiary of international spirits and wine company Pernod Ricard S.A. ("PR") (a French public limited company), which is headquartered in Paris, France. Therefore, throughout the remainder of this MD&A, Corby refers to HWSL as its parent, and to PR as its ultimate parent. Affiliated companies are those that are also subsidiaries of PR.

The Company derives its revenues from the sale of its owned-brands ("Case Goods"), as well as earning commission income from the representation of selected non-owned brands in Canada ("Commissions"). The Company also supplements these primary sources of revenue with other ancillary activities incidental to its core business, such as logistics fees. Revenue from Corby's owned-brands predominantly consists of sales made to each of the provincial liquor boards ("LBs") in Canada, and also includes sales to international markets.

Corby's portfolio of owned-brands includes some of the most renowned brands in Canada, including Wiser's® Canadian whisky, Lamb's® rum, Polar Ice® vodka and McGuinness® liqueurs. Through its affiliation with PR, Corby also represents leading international brands such as ABSOLUT® vodka, Chivas Regal®, The Glenlivet® and Ballantine's® Scotch whiskies, Jameson® Irish whiskey, Beefeater® gin, Malibu® rum, Kahlúa® liqueur, Mumm® champagne, and Jacob's Creek®, Wyndham Estate®, Stoneleigh® and Graffigna® wines. In addition to representing PR's brands in Canada, Corby also provides representation for certain selected, unrelated third-party brands ("Agency brands") when they fit within the Company's strategic direction and, thus, complement Corby's existing brand portfolio.

The Company expanded its agency portfolio, particularly with regard to our strategic priority of wines, through an agreement (which began April 2013) with The Wine Group LLC ("The Wine Group"), providing Corby with the exclusive rights to represent The Wine Group brands in Canada until May 15, 2018. The agreement complements Corby's owned and represented brands and expands Corby offerings in the premium wine sector. Corby now represents all The Wine Group brands, including Cupcake Vineyards, Big House Wine Co., Concannon Vineyard, Grayfox Vineyards and Mogen David Wine Co.

Pursuant to a production agreement that expires in September 2016, PR produces Corby's owned-brands at HWSL's production facility in Windsor, Ontario. Under the production agreement, Corby manages PR's business interests in Canada, including HWSL's production facility, also until September 2016.

Corby sources more than 80% of its spirits production requirements from HWSL at its production facility in Windsor, Ontario. The Company's remaining production requirements have been outsourced to various third party vendors; including a bottling plant in Montreal, Quebec and a third-party manufacturer in the United Kingdom ("UK"). The UK site blends and bottles Lamb's rum products destined for sale in countries located outside North America.

In most provinces, Corby's route to market in Canada entails shipping its products to government-controlled LBs. The LBs then sell directly, or control the sale of, beverage alcohol products to end consumers. The exception to this model is Alberta, where the retail sector is privatized. In this province, Corby ships products to a bonded warehouse that is managed by a government-appointed service provider who is responsible for warehousing and distribution into the retail channel.

Corby's shipment patterns to the LBs will not always exactly match short-term consumer purchase patterns. However, given the importance of monitoring consumer consumption trends over the long term, the Company stays abreast of consumer purchase patterns in Canada through its member affiliation with the Association of Canadian Distillers ("ACD"), which tabulates and disseminates consumer purchase information it receives from the LBs to its industry members. Corby refers to this data throughout this MD&A as "retail sales", which are measured both in volume (measured in nine-litre-case equivalents) and in retail value (measured in Canadian dollars).

Corby's international business is concentrated in the United States ("US") and UK and the Company has a different route to market for each. For the US market, Corby manufactures the majority of its products in Canada and ships to its US distributor, Pernod Ricard USA, LLC ("PR USA"), an affiliated company. For the UK market, Corby utilizes a third party contract bottler and distribution company for the production and distribution of Lamb's rum. Distributors sell to various local wholesalers and retailers who in turn sell directly to the consumer.

Corby's operations are subject to seasonal fluctuations: sales are typically strong in the first and second quarters, while third-quarter sales usually decline after the end of the retail holiday season. Fourth-quarter sales typically increase again with the onset of warmer weather as consumers tend to increase their purchasing levels during the summer season.

Strategies and Outlook

Corby's business strategies are designed to maximize sustainable long-term value growth, and thus deliver solid profit while continuing to produce strong and consistent cash flows from operating activities. The Company's portfolio of owned and represented brands provides an excellent platform from which to achieve its current and long-term objectives.

Management believes that having a focused brand prioritization strategy will permit Corby to capture market share in the segments and markets that are expected to deliver the most growth in value over the long-term. Therefore, the Company's strategy is to focus its investments on, and leverage the long-term growth potential of, its key brands. As a result, Corby will continue to invest behind its brands to promote its premium offerings where it makes the most sense and drives the most value for shareholders.

Brand prioritization requires an evaluation of each brand's potential to deliver upon this strategy, and facilitates Corby's marketing and sales teams' focus and resource allocation. Over the long-term, management believes that effective execution of its strategy will result in value creation for shareholders. Past disposal transactions reflect this strategy by streamlining Corby's portfolio and eliminating brands with below average performance trends, thus focusing resources on key brands.

Pursuing new growth opportunities outside of Canada is also a key strategic priority. Our agreement with PR USA to represent certain of Corby's owned brands in the US supports our goal of expanding our Canadian whisky business into this market where we believe there is growth potential in both volume and margin.

Of primary importance to the successful implementation of our brand strategies is an effective route to market strategy. Corby is committed to investing in its trade marketing expertise and ensuring that its commercial resources are focused around the differing needs of its customers and the selling channels they inhabit. In all areas of the business, management believes setting clear strategies, optimizing organization structure and increasing efficiencies is key to Corby's overall success.

In addition, management is convinced that innovation is essential to seizing new profit and growth opportunities. Successful innovation can be delivered through a structured and efficient process as well as consistent investment in consumer insight and research and development ("R&D"). As far as R&D is concerned, the Company benefits from access to leading-edge practices at PR's North American hub, which is located in Windsor, Ontario.

Finally, the Company is a strong advocate of social responsibility, especially with respect to its sales and promotional activities. Corby will continue to promote the responsible consumption of its products in its activities. In 2013, Corby partnered with the Toronto Transit Commission to provide free transit on New Year's Eve for a three year period. The Company stresses its core values throughout its organization, including those of conviviality, straightforwardness, commitment, integrity and entrepreneurship.

Significant Events

Corby Distilleries Limited changes its name to Corby Spirit and Wine Limited
Effective November 7, 2013, Corby Distilleries Limited began operating under the name Corby Spirit and Wine Limited. The new name was approved at the Company's annual and special meeting held November 7^th, 2013, and reflecting the change, Corby now trades on the TSX under the symbols CSW.A and CSW.B. The new name coincided with completely redesigned corporate branding and logos. The new name and branding better reflect Corby's growing activities with a strong focus on product, service and marketing.

Corby Launches J.P. Wiser's Rye and J.P. Wiser's Spiced Canadian Whisky in the US Market
In July 2012, the Company reached a new agreement with PR USA to represent Corby brands in the United States for a five year period, giving Corby access to one of the strongest spirits distribution networks in the US market.

Since signing the agreement, Corby and PR USA have readied Corby's whisky portfolio for a national launch which began in the first quarter of this fiscal year. Specifically, Corby developed two new Wiser's brand extensions under the names J.P. Wiser's Rye and J.P. Wiser's Spiced Whisky. Given this is the first year of the launch, Corby invested heavily into the market. The launch has had a significant impact on our financial results and as such will be discussed throughout this MD&A.

Corby Continues its Exclusive Canadian Representation of the Iconic ABSOLUT Vodka Brand
On September 30, 2013, Corby paid $10.3 million to continue its exclusive rights to represent the ABSOLUT vodka brand in Canada for an eight-year period ending September 29, 2021. The previous representation period expired September 29, 2013. The terms of this agreement are further described in the "Related Party Transactions" section of this MD&A. The transaction was accounted for as an increase in Intangible Assets and the purchase price is being amortized, straight-line, over the eight-year term of the agreement. Amortization expense is recorded net of commission revenues. The payment was funded from the Company's deposits in cash management pools.

Three-Year Review of Selected Financial Information

The following table provides a summary of certain selected consolidated financial information for the Company. This information has been prepared in accordance with IFRS.



(in millions of Canadian dollars, except per share amounts)		2014		2013		2012 ⁽¹⁾

Revenue	$	137.3	$	132.7	$	146.7

Earnings from operations		33.5		37.0		58.8
- Earnings from operations per common share		1.18		1.30		2.07

Net earnings		25.0		27.0		46.0
- Basic earnings per share		0.88		0.95		1.62
- Diluted earnings per share		0.88		0.95		1.62

Net earnings adjusted excluding effect of disposal transaction ⁽²⁾		25.0		27.0		26.3
- Adjusted basic earnings per share (2)		0.88		0.95		0.92
- Adjusted diluted earnings per share (2)		0.88		0.95		0.92

Total assets		254.0		246.9		255.9
Total liabilities		44.8		45.5		47.6

Regular dividends paid per share		0.71		0.66		0.59
Special dividends paid per share		-		0.54		1.85
¹ Earnings from operations and net earnings presented for 2012 does not reflect the impact of the adoption of the amendments to IAS 19, Employee Benefits.
² Net earnings are adjusted in 2012 to remove the net after-tax gain from the sale of the Montreal plant and non-core brands of $17.7 million and the financial impact of the brands disposed and the contract bottling activities.

The past three years have seen significant changes for Corby. The overall Canadian spirits market in 2012 was growing at a robust rate of 3% while 2013 and 2014 experienced only modest levels of growth (approximately 1%) in each of those years. So while the Canadian market in general has been soft, Corby has taken actions to streamline its Canadian business allowing greater focus on its key brands, while preparing for growth via its flagship Wiser's Canadian whisky brand in the US market.

Key actions taken in each of the following fiscal years:

In 2012, Corby re-focused its business away from the lower margin contract bottling and bulk whisky business by disposing of its Montreal production facility and various smaller non-strategic brands generating a significant one-time gain and cash infusion. Due to this cash position, Corby paid a special dividend of $0.54 per share being paid to shareholders in January 2013. While top line revenue has decreased since 2012, gross margins have improved and the Company was able to better focus its intellectual capital and financial resources behind its key brands.

In 2013, Corby forged a new five-year strategic distribution agreement with its affiliate, Pernod Ricard USA, LLC ("PR USA") allowing the Company to access an extensive national distribution network in addition to the benefits of being complimented by PR USA's premium brand portfolio. The Corby Board of Directors also revised the Company's dividend policy which has since resulted in a steady increase to the regular quarterly dividend rate (growing from $0.59 per share in 2012 to $0.71 per share in 2014, a compound annual growth rate of over 6%).

In 2014, the Company changed its name from Corby Distilleries Limited to Corby Spirit and Wine Limited to better reflect its strong focus on product, service and marketing. With the new name and clear focus, Corby leveraged its strategic relationship with PR USA and launched J.P. Wiser's Rye and J.P. Wiser's Spiced Canadian whisky in the US market. These two new brand extensions were based on Corby's highly successful Canadian flagship brand Wiser's Canadian whisky. The launch is mostly responsible for the top line revenue growth experienced in 2014 versus 2013 given the significant distribution fill required. While revenue grew, the advertising and promotional investment required to support the launch was substantial and as such reduced earnings levels when compared with 2013. In an effort to mitigate the earnings impact and ensure its cost base was right-sized for difficult market conditions in Canada, Corby underwent a cost reduction programme which resulted in severance and termination payments to certain employees. As well, the Company made amendments to certain of the Company's employee benefit pension plans which reduced early retirement provisions and included an increase in employee contribution levels.

Brand Performance Review

Corby's portfolio of owned-brands accounts for more than 80% of the Company's total annual revenue. Included in this portfolio are its key brands: Wiser's Canadian whisky, Lamb's rum, Polar Ice vodka and Corby's mixable liqueur brands. The sales performance of these key brands significantly impacts Corby's net earnings. Therefore, understanding each key brand is essential to understanding the Company's overall performance.

Shipment Volume and Shipment Value Performance

The following chart summarizes the performance of Corby's owned-brands (i.e., Case Goods) in terms of both shipment volume (as measured by shipments to customers in equivalent nine-litre cases) and shipment value (as measured by the change in gross sales revenue). The chart includes results for sales in both Canada and international markets. Specifically, the Wiser's, Lamb's and Polar Ice brands are also sold to international markets, particularly in the US and UK.



BRAND PERFORMANCE CHART - INCLUDES BOTH CANADIAN AND INTERNATIONAL SHIPMENTS


	Three Months Ended				Year Ended
			Shipment	Shipment			Shipment	Shipment
	Jun. 30,	Jun. 30,	% Volume	% Value	Jun. 30,	Jun. 30,	% Volume	% Value
Volumes (in 000's of 9L cases)	2014	2013	Change	Change	2014	2013	Change	Change

Brand
Wiser's Canadian whisky	200	200	0%	4%	861	809	6%	14%
Lamb's rum	131	134	(2%)	(1%)	522	543	(4%)	(3%)
Polar Ice vodka	92	94	(2%)	(3%)	381	385	(1%)	1%
Mixable liqueurs	41	42	(2%)	0%	183	178	3%	5%

Total Key Brands	464	470	(1%)	1%	1,947	1,915	2%	6%
All other Corby-owned brands	48	60	(20%)	(13%)	215	222	(3%)	8%

Total Corby brands	512	530	(3%)	0%	2,162	2,137	1%	6%

Overall, Corby owned-brands experienced growth in both shipment volume and shipment value on a year over year comparative basis. However, trends in Corby's domestic market (i.e., Canada - in which 86% of the Company's brands are sold) differ significantly from international markets as highlighted in the following chart:

Three Months Ended

Year Ended

Shipment

June 30,

June 30,

% Volume

% Value

June 30,

June 30,

% Volume

% Value

Volumes (in 000's of 9L cases)

2014

2013

Change

2014

2013

Change

Domestic

458

474

(3%)

(2%)

1,879

1,915

(2%)

International

(4%)

20%

283

222

27%

94%

Total Corby brands

512

530

(3%)

2,162

2,137

During fiscal year 2014, Corby's shipments benefited most significantly from the launch of JP Wiser's Canadian whisky brand into the US market. Internationally, shipment volume increased 27% over the prior year. International shipment value increased at an even higher rate, reflecting the more premium nature of this brand. However, domestic shipment volumes fell 2% on a year over year comparative basis. The Canadian spirit industry continues to experience soft market conditions, especially in key spirit categories (i.e., Canadian whisky, rum and vodka). Corby's shipment value performance continued to track ahead of volume as a result of our premiumization strategy, price increases and effective management of our promotional programming. Corby continues to gain market share in its key spirit categories (Canadian whisky and vodka). A more in-depth discussion of Corby's key brands in the Canadian market is provided in the "Summary of Corby's Key Brands" section of this MD&A.

During the fourth quarter ended June 30, 2014, Corby's domestic shipments pulled back after aggressive phasing of promotional activity in Western Canada during the third quarter (most significantly impacting Polar Ice vodka and Royal Reserve Canadian whisky). In international markets, Corby's key brands remained steady however the comparative period included a one-time shipment into Europe. Excluding this impact, key brands (JP Wiser's, and Lamb's rum) increased in shipment volumes when compared to the same quarter last year.

Retail Volume and Retail Value Performance

It is of critical importance to understand the performance of Corby's brands at the retail level in Canada. Analysis of performance at the retail level provides insight with regards to consumers' current purchase patterns and trends. Retail sales data, as provided by the ACD, is set out in the following chart and is discussed throughout this MD&A. It should be noted that the retail sales information presented does not include international retail sales of Corby-owned brands:



RETAIL SALES FOR THE CANADIAN MARKET ONLY⁽¹⁾


	Three Months Ended				Year Ended
			% Retail	% Retail			% Retail	% Retail
	June 30,	June 30,	Volume	Value	June 30,	June 30,	Volume	Value
Volumes (in 000's of 9L cases)	2014	2013	Change	Change	2014	2013	Change	Change

Brand
Wiser's Canadian whisky	161	164	(2%)	(1%)	717	725	(1%)	1%
Lamb's rum	89	95	(6%)	(5%)	413	427	(3%)	(2%)
Polar Ice vodka	78	81	(4%)	(2%)	355	356	0%	1%
Mixable liqueurs	37	39	(5%)	(4%)	172	176	(2%)	(1%)

Total Key Brands	365	379	(4%)	(2%)	1,657	1,684	(2%)	0%
All other Corby-owned brands	46	49	(7%)	(4%)	208	208	0%	2%

Total	411	428	(4%)	(2%)	1,865	1,892	(1%)	0%
⁽¹⁾ Refers to sales at the retail store level in Canada, as provided by the Association of Canadian Distillers.

The Canadian spirits industry continued to remain soft as industry retail sales volume declined 1% on an annual basis, while industry retail sales value increased 1% during the same twelve month period. As illustrated in the above chart, Corby's portfolio of owned brands has performed consistently with the total spirits market in retail volume and is consistent with the market performance for whisky, rum, vodka and liqueur categories (which were flat compared to the prior year). These categories make up over 80% of our portfolio and typically perform slightly below the Canadian Spirits industry as a whole. The following brand discussion provides a more detailed discussion of how each of Corby's key brands performed relative to their respective industry category.

Summary of Corby's Key Brands

Wiser's Canadian Whisky
Corby's flagship brand, Wiser's Canadian whisky, continued to outperform the Canadian whisky category and gained market share as its retail value grew 1% on a year-over-year comparison basis. The Canadian whisky category declined 2% in retail volume and 1% in retail value, when compared to last year. Corby continued its strong investment behind the brand, with a new version of its highly successful Welcome to the Wiserhood television commercial. In addition, Wiser's Spiced, launched last year in Canada in the new innovative spiced whisky category, and continued to be supported by the That's Spiced Up campaign.

Lamb's Rum
Lamb's rum, one of the top-selling rum families in Canada, experienced a 3% decline in retail volume and a 2% decline in retail value when compared to last year. The rum category in Canada decreased 2% in retail volume and was off only slightly on retail value when compared to the prior year. The rum category in Canada has been driven entirely by the spiced rum segment (+7% in retail volumes), while the dark and white rum segments are in decline (-4% and -7%, in retail volumes when compared to last year). Corby's Lamb's rum product line is heavily weighted in the dark and white segments, with its spiced rum product (i.e., Lamb's Black Sheep) continuing to build off of its small base.

Polar Ice Vodka
Polar Ice vodka is among the top three largest vodka brands in Canada. On an annual comparative basis, the brand's retail volumes remained steady and retail value increased 1%. These trends are consistent with the overall vodka category in Canada. During 2014 we continued to invest behind the brand with a label redesign, an exciting new digital marketing campaign, and the development of a new brand extension, Polar Ice 90° North, which began regional roll-out at the end of the quarter.

Mixable Liqueurs
Corby's portfolio of mixable liqueur brands consists of McGuinness liqueurs (which is Canada's largest mixable liqueur brand family) and Meaghers liqueurs. Retail volume and retail value for Corby's mixable liqueurs portfolio are relatively consistent with market trends (retail volume was -2% and retail value was -1%), as the category as a whole declined -2% for retail volume and showed a slight decline for retail value when compared to last year. The Company is in the process of moving production to the Corby managed HWSL production facility.

Other Corby-Owned Brands
Corby's other-owned brands grew in retail value by 2% as the group benefited from continued innovation, in particular, Pike Creek, Lot 40, Criollo® Chocolate Sea Salted Caramel and Criollo® Chocolate Raspberry Truffle. Lot 40 was recently named "Canadian Whisky of the Year" at the Canadian Whisky Awards. Additionally, the launch of the Criollo® range of luxury liqueurs was well received by key customers and consumers. Additionally Royal Reserve Canadian whisky benefited from up-weighted promotional activity in Western Canada (the largest brand in this grouping) during the third quarter of fiscal 2014.

Financial and Operating Results

The following table presents a summary of certain selected consolidated financial information of the Company for the year ended June 30, 2014 and 2013.



(in millions of Canadian dollars, except per share amounts)		2014		2013 ⁽¹⁾	$ Change		% Change

Revenue	$	137.3	$	132.7	$	4.6	3%

Cost of sales		(49.0)		(49.6)		0.6	(1%)
Marketing, sales and administration		(55.3)		(46.3)		(9.0)	19%
Other income		0.5		0.3		0.2	67%

Earnings from operations		33.5		37.1		(3.6)	(10%)

Financial income		1.7		1.7		-	0%
Financial expenses		(1.2)		(1.4)		0.2	(14%)
		0.5		0.3		0.2	67%

Earnings before income taxes		34.0		37.4		(3.4)	(9%)
Income taxes		(9.0)		(10.4)		1.4	(13%)

Net earnings	$	25.0	$	27.0	$	(2.0)	(7%)

Per common share
- Basic net earnings	$	0.88	$	0.95	$	(0.07)	(7%)
- Diluted net earnings	$	0.88	$	0.95	$	(0.07)	(7%)
¹ In preparing its comparative information, the Company has adjusted amounts reported previously in the consolidated financial statements as a result of the retrospective application of the amendments to IAS 19, Employee Benefits. Refer to Note 3 for details regarding adjusted amounts.

Overall Financial Results

Net earnings decreased $2.0 million or 7%, when compared to the prior year. Increased revenue (driven by the launch of JP Wiser's in the US) was more than offset by increased advertising and promotional investment behind our JP Wiser's brand in the US market. Also, in response to challenging Canadian market conditions, Corby implemented a cost reduction programme during the current year in an effort to reduce its cost base while protecting key strategic platforms and maintaining the ability to grow the business. Execution of this plan resulted in severance and termination payments to certain employees and a charge to net earnings of $1.0 million. In addition, effective January 1, 2014, the Company made amendments to certain of the Company's employee benefit pension plans which reduced certain early retirement provisions and included an increase in employee contribution levels.

Revenue

The following highlights the key components of the Company's revenue streams:



(in millions of Canadian dollars)		2014		2013	$ Change		% Change

Revenue streams:
Case goods	$	116.4	$	109.7	$	6.7	6%
Commissions		16.7		16.4		0.3	2%
Other services		4.2		6.6		(2.4)	(36%)

Revenue		137.3		132.7		4.6	3%

Case Goods revenue grew $6.7 million this year, or 6%, when compared to the prior year. Increased shipments to the US more than offset a 1% decline in net sales in Canada. Growth in the US has been mostly driven by the first quarter launch and distribution build-up of JP Wiser's, while the aforementioned reduction in shipment volumes to Canadian customers is mostly reflective of market conditions discussed previously.

Commissions were $16.7 million, an increase of 2% when compared to last year. The growth was driven by our new agency partner, The Wine Group, which more than offset the impacts of certain discontinued agency brands.

Other services represents ancillary revenue incidental to Corby's core business activities such as logistical fees and bulk whisky sales. The year-to-date decrease of $2.4 million in other services revenue is primarily due to the fact the Company ceased selling bulk whisky in this first quarter of fiscal 2013.

Cost of sales

Cost of sales was $49.0 million for the year, representing a decrease of 1%, or $0.6 million when compared to last year. Gross margin for the year was 59% versus 57% last year (note: commissions are not included in this calculation). The overall improved gross margin reflects superior margins of the US case goods business.

Marketing, sales and administration

On a year-to-date basis marketing, sales and administration expenses increased $9.0 million, or 19% over last year. As previously mentioned, Corby has made significant investments behind the launch of the JP Wiser's brands in the US market through increased advertising and promotional spend. In addition, the Company undertook a programme to streamline and reduce administrative type costs during the year which resulted in severance and termination payments to several employees. Furthermore, inflationary type cost increases were offset by cost savings realized on account of the aforementioned pension plan design changes.

Other income and expenses

Other income and expenses include such items as realized foreign exchange gains and losses, and gains on sale of property and equipment. The balances comprising this account are relatively consistent year over year.

Net financial income

Net financial income is comprised of interest earned on deposits in cash management pools, offset by interest costs associated with the Company's pension and post-retirement benefit plans. This balance is relatively consistent with prior year.

Income taxes

A reconciliation of the effective tax rate to the statutory rates for each period is presented below.



	2014	2013

Combined basic Federal and Provincial tax rates	27%	27%
Other	0%	1%

Effective tax rate	27%	28%

Liquidity and Capital Resources

Corby's sources of liquidity are its deposits in cash management pools of $108.0 million as at June 30, 2014, and its cash generated from operating activities. Corby's total contractual maturities are represented by its accounts payable and accrued liabilities, which totalled $26.8 million as at June 30, 2014, and are all due to be paid within one year. The Company does not have any liabilities under short- or long-term debt facilities.

The Company believes that its deposits in cash management pools, combined with its historically strong operational cash flows, provide for sufficient liquidity to fund its operations, investing activities and commitments for the foreseeable future. The Company's cash flows from operations are subject to fluctuation due to commodity, foreign exchange and interest rate risks. Please refer to the "Risks and Risk Management" section of this MD&A for further information.

Cash Flows



(in millions of Canadian dollars)		2014		2013		$ Change

Operating activities
Net earnings, adjusted for non-cash items	$	38.9	$	41.3	$	(2.4)
Net change in non-cash working capital		(0.4)		4.8		(5.2)
Net payments for interest and income taxes		(7.1)		(13.3)		6.2
		31.4		32.8		(1.4)

Investing activities
Additions to capital assets		(2.2)		(1.8)		(0.4)
Additions to intangible assets		(10.3)		-		(10.3)
Proceeds from disposition of capital assets		0.4		0.5		(0.1)
Proceeds from disposition of intangible asset		0.3		-		0.3
Deposits in cash management pools		-		2.0		(2.0)
		(11.8)		0.7		(12.5)

Financing activities
Proceeds from note receivable		0.6		0.6		-
Dividends paid		(20.2)		(34.1)		13.9
		(19.6)		(33.5)		13.9

Net change in cash	$	-	$	-	$	-

Operating activities

Net cash from operating activities was $31.4 million during the year compared to $32.8 million last year, representing a decrease of $1.4 million. The decrease is mostly attributable to lower net earnings and a decrease in the net change in non-cash working capital, which was significantly impacted by the timing of collections on accounts receivable and an increase in ending inventory balances. The increase in inventory is a result of both our investment in JP Wiser's for the US market and in preparation for the upcoming transition of the liqueurs production to the HWSL facility. The current year benefited from lower tax instalments.

Investing activities

On an annual basis, net cash used in investing activities was $11.8 million, compared to cash generated from investing activities of $0.7 million last year. The current year includes a payment of $10.3 million to PR for the exclusive right to represent the ABSOLUT vodka brand in Canada for an additional eight year term, as discussed in the "Related Party Transaction" section of this MD&A. The payment was made on September 30, 2013 and was funded through withdrawals from cash management pools.

Investing activities also reflect funds deposited in cash management pools. Cash management pools represent cash on deposit with The Bank of Nova Scotia via Corby's Mirror Netting Service Agreement with PR. Corby has daily access to these funds and earns a market rate of interest from PR on its deposits. Changes in cash management pools reflect amounts either deposited in or withdrawn from these bank accounts and are simply a function of Corby's cash requirements during the period of time being reported on. For more information related to these deposits, please refer to the "Related Party Transactions" section of this MD&A.

Financing activities

Cash used for financing activities was $19.6 million for the year and largely represents the payment of dividends to shareholders. The prior year includes a special dividend paid on January 10, 2013 of $0.54 per share, or $15.4 million. There was no special dividend paid in the current fiscal year. The payment of dividends is in accordance with the Company's previously disclosed dividend policy.

The following table summarizes dividends paid and payable by the Company over the last two fiscal years:

for	Declaration date	Record Date	Payment date	$ / Share
2014 - Q4	August 27, 2014	September 15, 2014	September 30, 2014	$ 0.18
2014 - Q3	May 7, 2014	May 30, 2014	June 13, 2014	0.18
2014 - Q2	February 5, 2014	February 28, 2014	March 14, 2014	0.18
2014 - Q1	November 6, 2014	November 29, 2013	December 13, 2013	0.18
2013 - Q4	August 28, 2013	September 13, 2013	September 30, 2013	0.17
2013 - Q3	May 9, 2013	May 31, 2013	June 14, 2013	0.17
2013 - Q2	February 6, 2013	February 28, 2013	March 15, 2013	0.17
2013 - special	November 7, 2012 (special dividend)	December 14, 2012	January 10, 2013	0.54
2013 - Q1	November 7, 2012	November 30, 2012	December 14, 2012	0.17
2012 - Q4	August 29, 2012	September 15, 2012	September 30, 2012	0.15

Outstanding Share Data

As at August 27, 2014, Corby had 24,274,320 Voting Class A Common Shares and 4,194,536 Non-Voting Class B Common Shares outstanding. The Company does not have a stock option plan, and therefore, there are no options outstanding.

Contractual Obligations

The following table presents a summary of the maturity periods of the Company's contractual obligations as at June 30, 2014:



	Payments		Payments		Payments		Payments		Obligations
	During		due in 2016		due in 2018		due after		with no fixed
	2015		and 2017		and 2019		2019		maturity			Total

Operating lease obligations	$	1.7	$	2.5	$	1.0	$	-	$	-	$	5.2
Employee future benefits		-		-		-		-		18.0		18.0

	$	1.7	$	2.5	$	1.0	$	-	$	18.0	$	23.2

Operating lease obligations represent future minimum payments under long-term operating leases for premises and office equipment as at June 30, 2014. Employee benefits represent the Company's unfunded pension and other post-retirement benefit plan obligations as at June 30, 2014. For further information regarding Corby's employee future benefit plans, please refer to Note 10 to the audited consolidated financial statements.

Related Party Transactions

Transactions with parent, ultimate parent, and affiliates

Corby engages in a significant number of transactions with its parent company, its ultimate parent and various affiliates. Specifically, Corby renders services to its parent company, its ultimate parent, and affiliates for the marketing and sale of beverage alcohol products in Canada. Furthermore, Corby outsources the large majority of its distilling, maturing, storing, blending, bottling and related production activities to its parent company. A significant portion of Corby's bookkeeping, recordkeeping services, data processing and other administrative services are also outsourced to its parent company. Transactions with the parent company, ultimate parent and affiliates are subject to Corby's related party transaction policy, which requires such transactions to undergo an extensive review and receive approval from an Independent Committee of the Board of Directors.

The companies operate under the terms of agreements that became effective on September 29, 2006. These agreements provide the Company with the exclusive right to represent PR's brands in the Canadian market for fifteen years, as well as providing for the continuing production of certain Corby brands by PR at its production facility in Windsor, Ontario, for ten years. Corby also manages PR's business interests in Canada, including the Windsor production facility. Certain officers of Corby have been appointed as directors and officers of PR's Canadian entities, as approved by Corby's Board of Directors.

In addition to the aforementioned agreements, Corby signed an agreement on September 26, 2008, with its ultimate parent to be the exclusive Canadian representative for the ABSOLUT vodka and Plymouth gin brands, for a five-year term expiring October 1, 2013 and was extended as noted below. These brands were acquired by PR subsequent to the original representation rights agreement dated September 29, 2006.

Further, on November 9, 2011, Corby entered into an agreement with a PR affiliate for a new term for Corby's exclusive right to represent ABSOLUT vodka in Canada from September 30, 2013 to September 29, 2021, which is consistent with the term of Corby's Canadian representation of the other PR brands in Corby's portfolio. On September 30, 2013, Corby paid the present value of $10 million, or $10.3 million, for the additional eight years of the new term pursuant to an agreement entered into between Corby and The Absolut Company, an affiliate of PR and owner of the Absolut brand, to satisfy the parties' obligations under the 2011 agreement. Since the agreement is a related party transaction, the agreement was approved by the Independent Committee of the Corby Board of Directors, in accordance with Corby's related party transaction policy, following an extensive review and with external financial and legal advice.

Pursuant to the November 9, 2011 agreement, Corby also agreed to continue with the mirror netting arrangement with PR and its affiliates, under which Corby's excess cash will continue to be deposited to cash management pools. The mirror netting arrangement with PR and its affiliates is further described below.

On July 1, 2012, the Company entered into a five year agreement with PR USA, an affiliated company, which provides PR USA the exclusive right to represent Wiser's Canadian whisky and Polar Ice vodka in the US. The agreement provides these key brands with access to PR USA's extensive national distribution network throughout the US and complements PR USA's premium brand portfolio. The agreement is effective for a five year period ending June 30, 2017. The agreement with PR USA is a related party transaction between Corby and PR USA, as such; the agreement was approved by the Independent Committee of the Board of Directors of Corby following an extensive review, in accordance with Corby's related party transaction policy.

Deposits in cash management pools

Corby participates in a cash pooling arrangement under a Mirror Netting Service Agreement, together with PR's other Canadian affiliates, the terms of which are administered by The Bank of Nova Scotia (effective July 17, 2014 this agreement is administered by Citibank N.A.). The Mirror Netting Service Agreement acts to aggregate each participant's net cash balance for purposes of having a centralized cash management function for all of PR's Canadian affiliates, including Corby. As a result of Corby's participation in this agreement, Corby's credit risk associated with its deposits in cash management pools is contingent upon PR's credit rating. PR's credit rating as at August 27, 2014, as published by Standard & Poor's and Moody's, was BBB- and Baa3, respectively. PR compensates Corby for the benefit it receives from having the Company participate in the Mirror Netting Service Agreement by paying interest to Corby based upon the 30-day Canadian Dealer Offered Rate ("CDOR") plus 0.40%. Corby accesses these funds on a daily basis and has the contractual right to withdraw these funds or terminate these cash management arrangements upon providing five days' written notice.

Results of Operations - Fourth Quarter of Fiscal 2014

The following table presents a summary of certain selected consolidated financial information for the Company for the three month periods ended June 30, 2014 and 2013:



	Three Months Ended

		June 30,		June 30,
(in millions of Canadian dollars, except per share amounts)		2014		2013 ⁽¹⁾	$ Change		% Change

Revenue	$	33.4	$	33.5	$	(0.1)	0%

Cost of sales		(10.8)		(12.4)		1.6	(13%)
Marketing, sales and administration		(13.4)		(11.0)		(2.4)	22%
Other income (expense)		0.0		0.1		(0.1)	(67%)

Earnings from operations		9.2		10.2		(1.0)	(10%)

Financial income		0.4		0.4		0.1	14%
Financial expenses		(0.3)		(0.5)		0.2	(44%)
		0.2		(0.1)		0.3	(218%)

Earnings before income taxes		9.4		10.1		(0.7)	(7%)
Income taxes		(2.5)		(2.8)		0.3	(11%)

Net earnings	$	6.9	$	7.3	$	(0.4)	(6%)

Per common share
- Basic net earnings	$	0.24	$	0.26	$	(0.02)	(8%)
- Diluted net earnings	$	0.24	$	0.26	$	(0.02)	(8%)
¹ In preparing its comparative information, the Company has adjusted amounts reported previously in the consolidated financial statements as a result of the retrospective application of the amendments to IAS 19, Employee Benefits. Refer to Note 3 for details regarding adjusted amounts.

Revenue

The following table highlights the various components of the Company's revenue streams for the quarter:



	Three Months Ended
		June 30,		June 30,
(in millions of Canadian dollars)		2014		2013	$ Change		% Change

Revenue streams:
Case goods	$	28.4	$	27.8	$	0.6	2%
Commissions		4.0		4.6		(0.6)	(13%)
Other services		0.9		1.1		(0.2)	(14%)

Revenue	$	33.4	$	33.5	$	(0.1)	0%

Total revenue was relatively consistent on a quarter over quarter comparison basis. Case Goods revenue increased $0.6 million during the quarter and was most significantly driven by our international business, specifically by shipments of JP Wiser's to the US market. Shipment volumes to Canadian markets decreased 3% this quarter when compared to the same quarter last year; however a reduction to promotional activities, which are recorded against revenue as required by IFRS, resulted in a 1% increase in domestic revenues. Commission decreased $0.6 million, or 13%, on a quarter-over-quarter comparative basis. The comparative period includes commission income from agency brands no longer represented by Corby.

Cost of Sales

Cost of goods sold was $10.8 million, or 13% lower than the same period last year. Gross margin was 63% this quarter compared to 57% for the same quarter last year (note: commissions are not included in this calculation). The increase in gross margin reflects a one-time adjustment for change in estimated contract bottling rates recorded in the current year quarter. If this adjustment is removed from the gross margin calculation, the current year quarter is 60%. In addition, higher margins are earned on JP Wiser's in the US market, and the current year quarter is favourably impacted by lower promotional activities (compared to the same quarter last year) as IFRS requires certain of these activities to be classified net of revenue.

Marketing, sales and administration

Marketing, sales and administration expenses increased $2.4 million, or 22% over the same quarter last year. As previously mentioned, Corby has made significant investments behind the launch of the JP Wiser's brands in the US market through increased advertising and promotional spend. As well, the quarter includes charges for severance and termination payments as a result of the Company's cost reduction programme.

Net earnings and earnings per share

Net earnings for the fourth quarter were $6.9 million, or $0.24 per share, which is a decrease of $0.4 million over the same quarter last year. As discussed previously improved gross margins were more than offset by increases to advertising and promotional spend and the impacts of the aforementioned severance charges.

Selected Quarterly Information

Summary of Quarterly Financial Results



(in millions of Canadian dollars,		Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
except per share amounts)		2014		2014		2014		2014		2013		2013		2013		2013

Revenue	$	33.4	$	28.6	$	38.5	$	36.7	$	33.5	$	25.7	$	37.7	$	35.9
Earnings from operations		9.2		4.1		10.2		9.9		10.0		5.4		12.0		9.5
Net earnings		6.9		3.1		7.5		7.5		7.3		3.9		8.9		6.9
Basic EPS		0.24		0.11		0.26		0.26		0.26		0.14		0.31		0.24
Diluted EPS		0.24		0.11		0.26		0.26		0.26		0.14		0.31		0.24

The above chart demonstrates the seasonality of Corby's business, as sales are typically strong in the first and second quarters, while third-quarter sales (January, February and March) usually decline after the end of the retail holiday season. Fourth quarter sales typically increase again with the onset of warmer weather, as consumers tend to increase their purchasing levels during the summer season. The launch of JP Wiser's Canadian whisky brand in the US is reflected in the 2014 results above, and most significantly impacted revenues in the first and second quarters as distribution channels were being filled.

Critical Accounting Estimates

The Company's consolidated financial statements are prepared in accordance with IFRS, which require management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and related disclosures as at the date of the consolidated financial statements. The Company bases its estimates, judgments and assumptions on historical experience, current trends and other factors that management believes to be important at the time the consolidated financial statements are prepared. The Company reviews its accounting policies and how they are applied on a regular basis. While the Company believes that the historical experience, current trends and other factors considered support the preparation of its consolidated financial statements in accordance with IFRS, actual results could differ from its estimates and such differences could be material.

The Company's significant accounting policies are discussed in Note 4 to the consolidated financial statements. The following accounting policies incorporate a higher degree of judgment and/or complexity and, accordingly, are considered to be critical accounting policies.

Goodwill and Indefinite-Lived Intangible Assets

The Company records as goodwill the excess amount of the purchase price of an acquired business over the fair value of the underlying net assets, including intangible assets, at the date of acquisition. Indefinite-lived intangible assets represent the value of trademarks and licences acquired. Goodwill and indefinite-lived intangible assets account for $15.1 million of the Company's total assets. These balances are evaluated annually for impairment. The process of evaluating these items for impairment involves the determination of fair value. Inherent in such fair value determinations are certain judgments and estimates including, but not limited to, projected future sales, earnings and capital investment; discount rates; and terminal growth rates. These judgments and estimates may change in the future due to uncertain competitive, market and general economic conditions, or as a result of changes in the business strategies and outlook of the Company.

An impairment loss would be recognized to the extent that the carrying value of the goodwill or trademarks and licences exceeds the implied fair value. Any impairment would result in a reduction in the carrying value of these items on the consolidated balance sheets of the Company and the recognition of a non-cash impairment charge in net earnings. Based on analyses performed, the Company has not identified any impairment.

Employee Future Benefits

The cost and accrued benefit plan obligations of the Company's defined benefit pension plans and its other post-retirement benefit plan are accrued based on actuarial valuations that are dependent upon assumptions determined by management. These assumptions include the discount rate, the rate of compensation increases, retirement ages, mortality rates and the expected inflation rate of health care costs. These assumptions are reviewed annually by the Company's management and its actuary. These assumptions may change in the future and may have a material impact on the accrued benefit obligations of the Company and the cost of these plans, which is reflected in the Company's consolidated statement of earnings. In addition, the actual rate of return on plan assets and changes in interest rates could result in changes in the Company's funding requirements for its defined benefit pension plans. See Note 10 to the consolidated financial statements for detailed information regarding the major assumptions utilized.

Income and Other Taxes

The Company accounts for income taxes using the liability method of accounting. Under the liability method, deferred income tax assets and liabilities are determined based on differences between the carrying amounts of balance sheet items and their corresponding tax values. The determination of the income tax provision requires management to interpret regulatory requirements and to make certain judgments. While income, capital and commodity tax filings are subject to audits and reassessments, management believes that adequate provisions have been made for all income and other tax obligations. However, changes in the interpretations or judgments may result in an increase or decrease in the Company's income, capital or commodity tax provisions in the future. The amount of any such increase or decrease cannot be reasonably estimated.

New Accounting Pronouncements

New accounting standards

The following new and revised standards and interpretations were effective for Corby on July 1, 2013:

(i) Fair Value Measurement

The IASB issued a new standard, IFRS 13, "Fair Value Measurement" ("IFRS 13") which defines fair value, provides guidance in a single IFRS framework for measuring fair value and identifies the required disclosures pertaining to fair value measurement. IFRS 13 applies to all International Financial Reporting Standards that require or permit fair value measurements or disclosures. IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is effective for annual periods beginning on or after January 1, 2013, and must be applied prospectively. For Corby, this standard became effective July 1, 2013. The Company determined that the adoption of IFRS 13 had no impact on its results of operations and financial position. See Note 5 to the consolidated financial statements for additional information for assets and liabilities not measured at fair value, but for which fair value is disclosed.

(ii) Financial Instruments - Asset and Liability Offsetting

The IASB has issued amendments to IFRS 7, "Financial Instruments: Disclosures" ("IFRS 7 amendment") which clarify the requirements for offsetting financial instruments and require new disclosures on the effect of offsetting arrangements on an entity's financial position. The IFRS 7 amendment is effective for annual periods beginning on or after January 1, 2013 and must be applied retrospectively. For Corby, this amendment became effective July 1, 2013. The adoption of the IFRS 7 amendment did not have an impact on the Company's consolidated results of operations and financial position.

(iii) Consolidated Financial Statements

The IASB issued new standards, IFRS 10, "Consolidated Financial Statements" ("IFRS 10"), IFRS 11, "Joint Arrangements" ("IFRS 11"), and IFRS 12, "Disclosure of Interest in Other Entities" ("IFRS 12"). In addition, the IASB amended IAS 27, "Separate Financial Statements" ("IAS 27") and IAS 28, "Investments in Associates and Joint Ventures" ("IAS 28"). The objective of IFRS 10 is to define the principles of control and establish the basis of determining when and how an entity should be included within a set of consolidated financial statements. IFRS 11 establishes principles to determine the type of joint arrangement and guidance for financial reporting activities required by entities that have an interest in an arrangement that is jointly controlled. IFRS 12 enables users of the financial statements to evaluate the nature and risks associated with its interest in other entities and the effects of those interests on its financial performance.

IFRS 10, 11 and 12, and the amendments to IAS 27 and 28 are effective for annual periods beginning on or after January 1, 2013 and must be applied retrospectively. For Corby, this set of standards and amendments became effective July 1, 2013. The adoption of IFRS 10, 11, and 12 and the amendments to IAS 27 and 28 did not have an impact on the Company's results of operations, financial position and disclosures.

(iv) Employee Benefits

The IASB issued amendments to IAS 19, "Employee Benefits" ("IAS 19 (Amended 2011)"), which eliminate the option to defer the recognition of actuarial gains and losses through the "corridor" approach, replaces the expected return on plan assets calculation with a discount rate methodology in calculating pension expense for defined benefit plans, revises the presentation of changes in assets and liabilities arising from defined benefit plans and enhances the disclosures for defined benefit plans. IAS 19 (Amended 2011) is effective for annual periods beginning on or after January 1, 2013, and must be applied retrospectively.

As a result of adoption IAS 19 (Amended 2011), primarily the elimination of the "corridor" approach and the impact of the replacement of the expected return on plan assets with a discount rate methodology in calculating pension expense, the following are the impacts on the Company's net earnings and comprehensive income for the year ended June 30, 2013 and its financial position as at July 1, 2012 and June 30, 2013:

		Year Ended
		June 30,
Net earnings and total comprehensive income impacts		2013

Marketing, sales and administration	$	637
Other income		(41)
Earnings from operations		596

Financial expense		(910)
Earnings before income tax		(314)

Income tax		84
Net earnings		(230)

Other comprehensive income		256
Tax impact of other comprehensive income		(68)
Net comprehensive income		188

Total comprehensive income	$	(42)

Decrease in basic and diluted net earnings per common share	$	(0.01)
Basic and diluted net earnings per common share, as restated	$	0.95




		June 30,		July 1,
Balance sheet impacts		2013		2012

Other assets	$	569	$	702
Provision for pensions		(10,914)		(10,989)
Deferred income taxes		2,752		2,736
Retained earnings		230		-
Accumulated other comprehensive loss		7,363		7,551

Recent accounting pronouncements

A number of new standards, amendments to standards and interpretations have been issued but are not yet effective for the financial year ending June 30, 2014, and accordingly, have not been applied in preparing these consolidated financial statements:

(v) Financial Instruments - Asset and Liability Offsetting

The IASB has issued amendments to IAS 32, "Financial Instruments: Presentation" ("IAS 32"), which clarify the requirements which permit offsetting a financial asset and liability in the financial statements. The amendments to IAS 32 are effective for annual periods beginning on or after January 1, 2014 and must be applied retrospectively. For Corby, this amendment will become effective July 1, 2014. The Company does not expect the amendments to IAS 32 to have a significant impact on its consolidated financial statements.

(vi) Levies

The IFRS Interpretations Committee ("IFRIC") of the IASB has issued a new interpretation, "Levies" ("IFRIC 21"), which addresses the accounting for a liability to pay a levy to a government. IFRIC 21 applies to levy liabilities within the scope of IAS 37, "Provisions, Contingent Liabilities and Contingent Assets", and to levy liabilities when the timing and amount is certain. IFRIC 21 is effective for annual periods beginning on or after January 1, 2014 and must be applied retrospectively. For Corby, this interpretation will become effective July 1, 2014. The Company is assessing the impact on its consolidated financial statements.

(vii) Revenue

In May 2014, the IASB released IFRS 15, Revenue from contracts with customers, which supersedes IAS 11, Construction Contracts, IAS 18, Revenues, IFRIC 13, Customer Loyalty Programmes, IFRIC 15, Agreement for the Construction of Real Estate, IFRIC 18, Transfers of Assets from Customers and SIC-31, Revenue - Barter Transactions Involving Advertising Services. The core principle of IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements. IFRS 15 will be effective for Corby's fiscal year beginning on July 1, 2017, with earlier application permitted. The Company has not yet assessed the impact of the adoption of this standard on its consolidated financial statements.

(viii) Financial Instruments

The IASB has issued a new standard, IFRS 9, "Financial Instruments" ("IFRS 9"), which will ultimately replace IAS 39, "Financial Instruments: Recognition and Measurement" ("IAS 39"). The replacement of IAS 39 is a multi-phase project with the objective of improving and simplifying the reporting for financial instruments and the issuance of IFRS 9 is part of the first phase of this project. IFRS 9 uses a single approach to determine whether a financial asset or liability is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. For financial assets, the approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. IFRS 9 requires a single impairment method to be used, replacing multiple impairment methods in IAS 39. For financial liabilities measured at fair value, fair value changes due to changes in an entity's credit risk are presented in other comprehensive income. The IASB has tentatively decided to require implementation of this standard for annual periods beginning on or after January 1, 2018 and must be applied retrospectively. For Corby, this standard will become effective July 1, 2018. The Company is currently assessing the impact of the new standard on its consolidated financial statements.

Disclosure Controls and Procedures

The Company maintains a system of disclosure controls and procedures that has been designed to provide reasonable assurance that information required to be disclosed by the Company in its public filings is recorded, processed, summarized and reported within required time periods and includes controls and procedures designed to ensure that all relevant information is accumulated and communicated to senior management, including the Company's Chief Executive Officer ("CEO ") and Chief Financial Officer ("CFO"), to allow timely decisions regarding required disclosure.

Management, with the participation of the CEO and CFO, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in National Instrument 52-109) as at June 30, 2014, and has concluded that such disclosure controls and procedures are effective based upon such evaluation.

Internal Controls Over Financial Reporting

The Company maintains a system of disclosure controls and procedures to provide reasonable assurance that all material information relating to the Company is gathered and reported to senior management on a timely basis so that appropriate decisions can be made regarding public disclosure.

In addition, the CEO and CFO have designed, or caused to be designed under their supervision, internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be designed effectively can provide only reasonable assurance with respect to financial reporting and financial statement preparation.

Management, with the participation of the CEO and CFO, has evaluated the effectiveness of the Company's internal controls over financial reporting as at June 30, 2014, and has concluded that internal control over financial reporting is designed and operating effectively to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management's assessment was based on the framework established in Internal Control - Integrated Framework (1992), published by the Committee of Sponsoring Organizations of the Treadway Commission.

There were no changes in internal control over financial reporting during the Company's most recent interim period that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

Risks & Risk Management

The Company is exposed to a number of risks in the normal course of its business that have the potential to affect its operating and financial performance.

Industry and Regulatory
The beverage alcohol industry in Canada is subject to government policy, extensive regulatory requirements and significant rates of taxation at both the federal and provincial levels. As a result, changes in the government policy, regulatory and/or taxation environments within the beverage alcohol industry may affect Corby's business operations, causing changes in market dynamics or changes in consumer consumption patterns. In addition, the Company's provincial LB customers have the ability to mandate changes that can lead to increased costs, as well as other factors that may impact financial results.

The Company continuously monitors the potential risk associated with any proposed changes to its government policy, regulatory and taxation environments and, as an industry leader, actively participates in trade association discussions relating to new developments.

Consumer Consumption Patterns
Beverage alcohol companies are susceptible to risks relating to changes in consumer consumption patterns. Consumer consumption patterns are affected by many external influences, not the least of which is economic outlook and overall consumer confidence in the stability of the economy as a whole. Corby offers a diverse portfolio of products across all major spirits categories and at various price points, which complements consumer desires and offers exciting innovation.

Distribution/Supply Chain Interruption
The Company is susceptible to risks relating to distributor and supply chain interruptions. Distribution in Canada is largely accomplished through the government-owned provincial LBs and, therefore, an interruption (e.g., a labour strike) for any length of time may have a significant impact on the Company's ability to sell its products in a particular province and/or market.

Supply chain interruptions, including a manufacturing or inventory disruption, could impact product quality and availability. The Company adheres to a comprehensive suite of quality programmes and proactively manages production and supply chains to mitigate any potential risk to consumer safety or Corby's reputation and profitability.

Environmental Compliance
Environmental liabilities may potentially arise when companies are in the business of manufacturing products and, thus, required to handle potentially hazardous materials. As Corby outsources its production, including all of its storage and handling of maturing alcohol, the risk of environmental liabilities is considered minimal. Corby currently has no significant recorded or unrecorded environmental liabilities.

Industry Consolidation
The global beverage alcohol industry has continued to experience consolidation in 2014. Industry consolidation can have varying degrees of impact and, in some cases, may even create exceptional opportunities. Either way, management believes that the Company is well positioned to deal with this or other changes to the competitive landscape in Canada and other markets in which it carries on business.

Competition
The Canadian beverage alcohol industry is extremely competitive. Competitors may take actions to establish and sustain a competitive advantage through advertising and promotion and pricing strategies in an effort to maintain market share. Corby constantly monitors the market and adjusts its own strategies as appropriate. Competitors may also affect Corby's ability to attract and retain high-quality employees. The Company's long heritage attests to Corby's strong foundation and successful execution of its strategies. Its role as a leading Canadian beverage alcohol company helps facilitate recruitment efforts.

Credit Risk
Credit risk arises from deposits in cash management pools held with PR via Corby's participation in the Mirror Netting Service Agreement (as previously described in the "Related Party Transactions" section of this MD&A), as well as credit exposure to customers, including outstanding accounts and note receivable. The maximum exposure to credit risk is equal to the carrying value of the Company's financial assets. The objective of managing counter-party credit risk is to prevent losses in financial assets. The Company assesses the credit quality of its counter-parties, taking into account their financial position, past experience and other factors. As the large majority of Corby's accounts receivable balances are collectable from government-controlled LBs, management believes the Company's credit risk relating to accounts receivable is at an acceptably low level. The Company's note receivable is secured.

Exposure to Interest Rate Fluctuations
The Company does not have any short- or long-term debt facilities. Interest rate risk exists, as Corby earns market rates of interest on its deposits in cash management pools and also has a note receivable that earns a fixed rate of interest. An active risk management programme does not exist, as management believes that changes in interest rates would not have a material impact on Corby's financial position over the long term.

Exposure to Commodity Price Fluctuations
Commodity risk exists, as the manufacture of Corby's products requires the procurement of several known commodities, such as grains, sugar and natural gas. The Company strives to partially mitigate this risk through the use of longer-term procurement contracts where possible. In addition, subject to competitive conditions, the Company may pass on commodity price changes to consumers through pricing over the long term.

Foreign Currency Exchange Risk
The Company has exposure to foreign currency risk, as it conducts business in multiple foreign currencies; however, its exposure is primarily limited to the US dollar ("USD") and UK pound sterling ("GBP"). Corby does not utilize derivative instruments to manage this risk. Subject to competitive conditions, changes in foreign currency rates may be passed on to consumers through pricing over the long term.

USD Exposure
The Company's demand for USD has traditionally outpaced its supply, due to USD sourcing of production inputs exceeding that of the Company's USD sales. Therefore, decreases in the value of the Canadian dollar ("CAD") relative to the USD will have an unfavourable impact on the Company's earnings.

GBP Exposure
The Company's exposure to fluctuations in the value of the GBP relative to the CAD was reduced as both sales and cost of production are denominated in GBP. While Corby's exposure has been minimized, increases in the value of the CAD relative to the GBP will have an unfavourable impact on the Company's earnings.

Third-Party Service Providers
HWSL, which Corby manages on behalf of PR, provides more than 80% of the Company's production requirements, among other services including administration and information technology. However, the Company is reliant upon certain third-party service providers in respect of certain of its operations. It is possible that negative events affecting these third-party service providers could, in turn, negatively impact the Company. While the Company has no direct control over how such third parties are managed, it has entered into contractual arrangements to formalize these relationships. In order to minimize operating risks, the Company actively monitors and manages its relationships with its third-party service providers.

Brand Reputation and Trademark Protection
The Company promotes nationally branded, non-proprietary products as well as proprietary products. Damage to the reputation of any of these brands, or to the reputation of any supplier or manufacturer of these brands, could negatively impact consumer opinion of the Company or the related products, which could have an adverse impact on the financial performance of the Company. The Company strives to mitigate such risks by selecting only those products from suppliers that strategically complement Corby's existing brand portfolio and by actively monitoring brand advertising and promotion activities. The Company registers trademarks, as applicable, while constantly watching for and responding to competitive threats, as necessary.

Valuation of Goodwill and Intangible Assets
Goodwill and intangible assets account for a significant amount of the Company's total assets. Goodwill and intangible assets are subject to impairment tests that involve the determination of fair value. Inherent in such fair value determinations are certain judgments and estimates including, but not limited to, projected future sales, earnings and capital investment; discount rates; and terminal growth rates. These judgments and estimates may change in the future due to uncertain competitive market and general economic conditions, or as the Company makes changes in its business strategies. Given the current state of the economy, certain of the aforementioned factors affecting the determination of fair value may be impacted and, as a result, the Company's financial results may be adversely affected.

The following chart summarizes Corby's goodwill and intangible assets and details the amounts associated with each brand (or basket of brands) and market:



		Carrying Values as at June 30, 2014

Associated Brand	Associated Market		Goodwill	Intangibles			Total

Various PR brands	Canada	$	-	$	42.4	$	42.4
Lamb's rum	International ⁽¹⁾		1.4		11.8		13.2
Corby domestic brands	Canada		1.9		-		1.9

		$	3.3	$	54.2	$	57.5
⁽¹⁾ The international business for Lamb's rum is primarily focused in the UK, however, the trademarks and licenses purchased, relate to all international markets outside of Canada, as Corby previously owned the Canadian rights.

Therefore, economic factors (such as consumer consumption patterns) specific to these brands and markets are primary drivers of the risk associated with their respective goodwill and intangible assets valuations.

Employee Future Benefits
The Company has certain obligations under its registered and non-registered defined benefit pension plans and other post-retirement benefit plan. There is no assurance that the Company's benefit plans will be able to earn the assumed rate of return. New regulations and market-driven changes may result in changes in the discount rates and other variables, which would result in the Company being required to make contributions in the future that differ significantly from estimates. An extended period of depressed capital markets and low interest rates could require the Company to make contributions to these plans in excess of those currently contemplated, which, in turn, could have an adverse impact on the financial performance of the Company. Somewhat mitigating the impact of a potential market decline is the fact that the Company monitors its pension plan assets closely and follows strict guidelines to ensure that pension fund investment portfolios are diversified in-line with industry best practices. For further details related to Corby's defined benefit pension plans, please refer to Note 10 of the consolidated financial statements for the year ended June 30, 2014.

CORBY SPIRIT AND WINE LIMITED
CONSOLIDATED BALANCE SHEETS
(unaudited)

(in thousands of Canadian dollars)

			June 30,		June 30,		July 1
	Notes		2014		2013 ⁽¹⁾		2012 ⁽¹⁾

ASSETS
Deposits in cash management pools		$	108,029	$	108,043	$	110,113
Accounts receivable	7		23,249		23,642		28,611
Income and other taxes recoverable			980		1,055		-
Inventories	8		52,561		49,083		47,760
Prepaid expenses			256		533		555
Current portion of note receivable	9		600		600		600

Total current assets			185,675		182,956		187,639
Note receivable	9		-		600		1,200
Other assets	10		1,554		569		702
Deferred income taxes	11		658		1,699		1,753
Property and equipment	12		8,632		8,092		7,524
Goodwill	13		3,278		3,278		3,278
Intangible assets	14		54,163		49,665		53,771

Total assets		$	253,960	$	246,859	$	255,867


LIABILITIES
Accounts payable and accrued liabilities	16	$	26,774	$	24,185	$	22,400
Income and other taxes payable			-		-		3,656

Total current liabilities			26,774		24,185		26,056
Provision for employee benefits	10		18,045		21,363		21,539

Total liabilities			44,819		45,548		47,595

Shareholders' equity
Share capital	17		14,304		14,304		14,304
Accumulated other comprehensive loss	18		(4,303)		(7,363)		(7,551)
Retained earnings			199,140		194,370		201,519

Total shareholders' equity			209,141		201,311		208,272

Total liabilities and shareholders' equity		$	253,960	$	246,859	$	255,867


¹ In preparing its comparative information, the Company has adjusted amounts reported previously in the consolidated financial statements as a result of the retrospective application of the amendments to IAS 19, Employee Benefits. Refer to Note 3 for details regarding adjusted amounts.
The accompanying notes are an integral part of these consolidated financial statements.

CORBY SPIRIT AND WINE LIMITED
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)

(in thousands of Canadian dollars, except per share amounts)

			For the Three Months Ended				For the Year Ended

			Jun. 30		Jun. 30		Jun. 30		Jun. 30
	Notes		2014		2013 ⁽¹⁾		2014		2013 ⁽¹⁾

Revenue	19	$	33,366	$	33,464	$	137,279	$	132,743

Cost of sales			(10,761)		(12,370)		(48,973)		(49,643)
Marketing, sales and administration			(13,409)		(10,998)		(55,304)		(46,334)
Other income	20		46		139		458		277

Earnings from operations			9,242		10,235		33,460		37,043

Financial income	21		445		390		1,755		1,707
Financial expenses	21		(291)		(521)		(1,234)		(1,357)
			154		(131)		521		350

Earnings before income taxes			9,396		10,104		33,981		37,393

Current income taxes			(2,747)		(2,766)		(9,066)		(10,393)
Deferred income taxes			216		(71)		68		14
Income taxes	11		(2,531)		(2,837)		(8,998)		(10,379)

Net earnings		$	6,865	$	7,267	$	24,983	$	27,014

Basic earnings per share	22	$	0.24	$	0.26	$	0.88	$	0.95
Diluted earnings per share	22	$	0.24	$	0.26	$	0.88	$	0.95

Weighted average common shares outstanding
Basic			28,468,856		28,468,856		28,468,856		28,468,856
Diluted			28,468,856		28,468,856		28,468,856		28,468,856

¹In preparing its comparative information, the Company has adjusted amounts reported previously in the consolidated financial statements as a result of the retrospective application of the amendments to IAS 19, Employee Benefits. Refer to Note 3 for details regarding adjusted amounts.

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

CORBY SPIRIT AND WINE LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(in thousands of Canadian dollars)

For the Three Months Ended

For the Year Ended

Jun. 30

Jun. 30

Jun. 30

Jun. 30

Notes

2014

2013 ⁽¹⁾

2014

2013 ⁽¹⁾

Net earnings

6,865

7,267

24,983

27,014

Amounts that will not be subsequently reclassified to earnings:

Net actuarial gains

857

4,169

256

Income taxes

(227)

(17)

(1,109)

(68)

630

3,060

188

Total comprehensive income

7,495

$ 7,314

28,043

27,202

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)

(in thousands of Canadian dollars)

	Notes		Share Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total

Balance as at June 30, 2013⁽¹⁾		$	14,304	$	-	$	194,600	$	208,904
Restatement of Employee Benefits	3		-		(7,363)		(230)		(7,593)
Restated balance as at June 30, 2013			14,304		(7,363)		194,370		201,311
Total comprehensive income			-		3,060		24,983		28,043
Dividends			-		-		(20,213)		(20,213)

Balance as at June 30, 2014		$	14,304	$	(4,303)	$	199,140	$	209,141


Balance as at July 1, 2012⁽¹⁾		$	14,304	$	-	$	201,519	$	215,823
Restatement of Employee Benefits	3		-		(7,551)		-		(7,551)
Restated balance as at July 1, 2012			14,304		(7,551)		201,519		208,272
Total comprehensive income			-		188		27,014		27,202
Dividends			-		-		(34,163)		(34,163)

Balance as at June 30, 2013⁽¹⁾		$	14,304	$	(7,363)	$	194,370	$	201,311

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

CORBY SPIRIT AND WINE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)

(in thousands of Canadian dollars)

			For the Three Months Ended				For the Nine Months Ended

			Jun. 30		Jun. 30		Jun. 30		Jun. 30
	Notes		2014		2013 ⁽¹⁾		2014		2013 ⁽¹⁾

Operating activities
Net earnings		$	6,865	$	7,267	$	24,983	$	27,014
Adjustments for:
Amortization and depreciation	23		1,873		1,403		7,054		5,534
Net financial income	21		(154)		131		(521)		(350)
Gain on disposal of property and equipment			(53)		(81)		(196)		(224)
Income tax expense	11		2,531		2,837		8,998		10,379
Provision for employee benefits			(293)		(916)		(1,369)		(1,068)
			10,769		10,641		38,949		41,285
Net change in non-cash working capital balances	25		(55)		7,588		(380)		4,835
Interest received			437		373		1,767		1,642
Income taxes paid			(2,444)		(2,468)		(8,918)		(14,934)
Net cash from operating activities			8,707		16,134		31,418		32,828

Investing activities
Additions to property and equipment	12		(1,521)		(1,221)		(2,176)		(1,845)
Additions to intangible assets	14		-		-		(10,293)		-
Proceeds from disposition of property and equipment			83		201		385		510
Proceeds from disposition of intangible asset			265		-		265		-
Deposits in cash management pools			(2,409)		(10,274)		14		2,070
Net cash used in investing activities			(3,582)		(11,294)		(11,805)		735

Financing activities
Proceeds from note receivable	9		-		-		600		600
Dividends paid			(5,125)		(4,840)		(20,213)		(34,163)

Net cash used in financing activities			(5,125)		(4,840)		(19,613)		(33,563)

Net increase in cash			-		-		-		-
Cash, beginning of period			-		-		-		-
Cash, end of period		$	-	$	-	$	-	$	-

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

CORBY SPIRIT AND WINE LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share amounts)

1. GENERAL INFORMATION

Corby Spirit and Wine Limited ("Corby" or the "Company") is a leading Canadian marketer of spirits and importer of wines. The Company derives its revenues from the sale of its owned-brands in Canada and other international markets, as well as earning commissions from the representation of selected non-owned brands in the Canadian marketplace. Revenues predominantly consist of sales made to each of the provincial liquor boards in Canada. The Company also supplements these primary sources of revenue with other ancillary activities incidental to its core business, such as logistics fees.

Corby is controlled by Hiram Walker & Sons Limited ("HWSL"), which is a wholly owned subsidiary of Pernod Ricard, S.A. ("PR"), a French public limited company that controls 51.6% of the outstanding Voting Class A Common Shares of Corby as at June 30, 2014.

Corby is a public company incorporated and domiciled in Canada, whose shares are traded on the Toronto Stock Exchange. The Company's registered address is 225 King Street West, Suite 1100, Toronto, ON M5V 3M2.

Effective November 7, 2013, Corby changed its name and began operating as Corby Spirit and Wine Limited. Prior to this date, Corby operated as Corby Distilleries Limited. Reflecting the change Corby began trading on the TSX under the symbols CSW.A and CSW.B.

2. BASIS OF PREPARATION

Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and using the accounting policies described herein.

These consolidated financial statements were approved by the Company's Board of Directors on August 27, 2014.

Functional and presentation currency
The Company's consolidated financial statements are presented in Canadian dollars, which is the Company's functional and presentation currency.

Foreign currency translation
Transactions denominated in foreign currencies are translated into the functional currency using the exchange rate applying at the transaction date. Non-monetary assets and liabilities denominated in foreign currencies are recognized at the historical exchange rate applicable at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate applying at the balance sheet date. Foreign currency differences related to operating activities are recognized in earnings from operations for the period; foreign currency differences related to financing activities are recognized within net financial income.

Basis of Measurement
These consolidated financial statements are prepared in accordance with the historical cost model, except for certain categories of assets and liabilities, which are measured in accordance with other methods provided for by IFRS as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

Use of Estimates and Judgements
The preparation of the consolidated financial statements in conformity with IFRS requires management to make certain judgements, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates are made on the assumption the Company will continue as a going concern and are based on information available at the time of preparation. Estimates may be revised where the circumstance on which they were based change or where new information becomes available. Future outcomes can differ from these estimates.

Judgement is commonly used in determining whether a balance or transaction should be recognized in the consolidated financial statements and estimates and assumptions are more commonly used in determining the measurement of recognized transactions and balances. However, judgement and estimates are often interrelated.

The Company has applied judgement in determining the tax rates used for measuring deferred taxes and identifying the indicators of impairment for property and equipment, goodwill and intangible assets. In the absence of standards or interpretations applicable to a specific transaction, management uses its judgement to define and apply accounting policies that provide relevant and reliable information in the context of the preparation of the financial statements.

Estimates are used when estimating the useful lives of property and equipment and intangible assets for the purpose of depreciation and amortization, when accounting for or measuring items such as allowances for uncollectible accounts receivable and inventory obsolescence, assumptions underlying the actuarial determination of provision for pensions, income and other taxes, provisions, certain fair value measures including those related to the valuation of share-based payments and financial instruments, and when testing goodwill, intangible assets and other assets for impairment. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

3. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

The following new and revised standards and interpretations were effective for Corby on July 1, 2013:

(i) Fair Value Measurement

The IASB issued a new standard, IFRS 13, "Fair Value Measurement" ("IFRS 13") which provides a standard definition of fair value, sets out a framework for measuring fair value and provides for specific disclosures about fair value measurements. IFRS 13 applies to all IFRS that require or permit fair value measurements or disclosures. IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is effective for annual periods beginning on or after January 1, 2013, and must be applied prospectively. For Corby, this standard became effective July 1, 2013. The Company determined that the adoption of IFRS 13 had no impact on its results of operations and financial position. The adoption of IFRS 13 has resulted in additional disclosure in Note 5 to these consolidated financial statements.

(ii) Financial Instruments - Asset and Liability Offsetting

(iii) Consolidated Financial Statements

(iv) Employee Benefits

		Year Ended
		June 30,
Net earnings and total comprehensive income impacts		2013

Marketing, sales and administration	$	637
Other income		(41)
Earnings from operations		596

Financial expense		(910)
Earnings before income tax		(314)

Income tax		84
Net earnings		(230)

Other comprehensive income		256
Tax impact of other comprehensive income		(68)
Net comprehensive income		188

Total comprehensive income	$	(42)

Decrease in basic and diluted net earnings per common share	$	(0.01)
Basic and diluted net earnings per common share, as restated	$	0.95




		June 30,		July 1,
Balance sheet impacts		2013		2012

Other assets	$	569	$	702
Provision for pensions		(10,914)		(10,989)
Deferred income taxes		2,752		2,736
Retained earnings		230		-
Accumulated other comprehensive loss		7,363		7,551

	$	-	$	-

Certain additional information with respect to the net defined benefit expense and liability associated with the Company's pension and post-employment benefit plans, as restated for the impact of IAS 19 (Amended 2011), for the financial year ended June 30, 2013 has been included in Note 10 to these financial statements.

Recent accounting pronouncements

(i) Financial Instruments - Asset and Liability Offsetting

The IASB has issued amendments to IAS 32, "Financial Instruments: Presentation" ("IAS 32"), which provides further guidance on the requirements for offsetting a financial instruments. The amendments to IAS 32 are effective for annual periods beginning on or after January 1, 2014 and must be applied retrospectively. For Corby, this amendment will become effective July 1, 2014. The Company does not expect the amendments to IAS 32 to have a significant impact on its consolidated financial statements.

(ii) Levies

(iii) Revenue

(iv) Financial Instruments

4. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements.

Basis of Consolidation
Subsidiaries are entities controlled by the Company. Control exists where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the Company's consolidated financial statement from the date that the control commences until the date that control ceases.

Intra-company balances and transactions and any unrealized income and expenses arising from intra-company transactions are eliminated in preparing the consolidated financial statements.

Deposits in Cash Management Pools
Corby participates in a cash pooling arrangement under a Mirror Netting Services Agreement together with PR's other Canadian affiliates, the terms of which are administered by the Bank of Nova Scotia. The Mirror Netting Services Agreement acts to aggregate each participant's net cash balance for the purposes of having a centralized cash management function for all of PR's Canadian affiliates, including Corby.

Corby accesses these funds on a daily basis and has the contractual right to withdraw these funds or terminate these cash management arrangements upon providing five days' written notice.

Inventories
Inventories are measured at the lower of cost (acquisition cost and cost of production, including indirect production overheads) and net realizable value. Net realizable value is the selling price less the estimated cost of completion and sale of the inventories. Most inventories are valued using the average cost method. The cost of long-cycle inventories is calculated using a single method which includes distilling and ageing maturing costs but excludes finance costs. These inventories are classified in current assets, although a substantial part remains in inventory for more than one year before being sold in order to undergo the ageing maturing process used for certain spirits.

Property and equipment
Property and equipment are recognized at acquisition cost and broken down by component. Cost includes expenditures that are directly attributable to the acquisition of the asset.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets. Useful life and depreciation methods are reviewed at each reporting date. Items of property and equipment are written down when impaired.

The range of depreciable lives for the major categories of property and equipment are as follows:

Leasehold improvements

5 to 10 years

Machinery and equipment

3 to 12 years

Casks

12 years

Other capital assets

3 to 20 years

Depreciation of property and equipment is recognized within earnings from operations. The Company commences recognition of depreciation in earnings when the item of property and equipment is ready for its intended use.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized net, within earnings from operations.

Fully-depreciated items of property and equipment that are still in use continue to be recognized in the cost and accumulated depreciation.

The cost of replacing part of an item of property and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of repairs and maintenance of property and equipment are recognized in earnings from operations as incurred.

Leases
The Company leases certain premises and equipment. Terms vary in length and typically permit renewal for additional periods. These leases are classified as operating leases under which minimum rent, including scheduled escalations, is expensed on a straight-line basis over the term of the lease.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Company currently has no finance leases.

Goodwill
Goodwill arising in a business combination is recognized as an asset at the date that control is acquired. For acquisitions on or after July 1, 2010, goodwill is measured as the excess of the sum of the fair value of the consideration transferred over the fair value of the identifiable assets acquired less the fair value of the liabilities assumed. Goodwill is tested for impairment at least annually and whenever there is an indication that the asset may be impaired.

As part of its transition to IFRS, the Company elected to apply IFRS 3 - Business Combinations ("IFRS 3"), only to those business combinations that occurred on or after July 1, 2010. In respect of acquisitions prior to July 1, 2010, goodwill represents the amount recognized under previous Canadian GAAP.

Goodwill is measured at cost less any accumulated impairment losses.

Intangible Assets
Intangible assets include the following:

(i) Long-term Representation Rights

Long-term representation rights represent the cost of the Company's exclusive right to represent PR's brands in Canada. These representation rights are carried at cost, less accumulated amortization. Amortization is provided for on a straight-line basis, over the term of theire respective agreements. Representation rights are scheduled to expire on September 30, 2021. Amortization is recognized as a reduction to commission revenue earned from the representation of PR brands.

(ii) Trademarks and licences

Trademarks and licences represent the value of trademarks and licences of businesses acquired and are measured at cost on initial recognition. These intangible assets are deemed to have an indefinite life and are, therefore, not amortized. Trademarks and licences are tested for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the assets might be impaired.

(iii) Non-refundable upfront fees

Non-refundable upfront fees are carried at cost, less accumulated amortization. Amortization is provided for on a straight-line basis over the term of the associated agreement and recognized within revenue.

Impairment

(i) Financial Assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have occurred that have had a negative effect on the estimated future cash flows of that asset.

Objective evidence that a financial asset is impaired includes, but is not limited to, default or delinquency by a debtor, restructuring of an amount due to the Company on terms the Company would not consider otherwise, indicators the debtor will enter bankruptcy, or adverse changes in the status of the debtor's economic conditions.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows, discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognized in net earnings.

An impairment loss is reversed if the reversal can be objectively related to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost, the reversal is recognized in earnings.

(ii) Non-financial assets

The carrying amount of the Company's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indications exist, the asset's recoverable amount is estimated.

Intangible assets and property and equipment are subject to impairment tests whenever there is an indication that the value of the asset has been impaired and at least once a year for non-current assets with indefinite useful lives (goodwill and trademarks and licences).

Assets subject to impairment tests are included in Cash-Generating Units ("CGUs"), corresponding to linked groups of assets, which generate identifiable cash flows. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. When the recoverable amount of a CGU is less than its carrying amount, an impairment loss is recognized within earnings from operations. The recoverable amount of the CGU is the higher of its fair value less costs to sell and its value in use.

In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. Projected cash flows are discounted to present based on annual budgets and multi-year strategies, extrapolated into subsequent years based on the medium and long-term trends for each market and brand. The calculation includes a terminal value derived by capitalizing the cash flows generated in the last forecasted year. Assumptions applied to sales and advertising spending are determined by management based on previous results and long-term development trends in the markets concerned. The present values of discounted cash flows are sensitive to these assumptions as well as to consumer trends and economic factors.

Fair value is based either on the sale price, net of selling costs, obtained under normal market conditions or earnings multiples observed in recent transactions concerning similar assets.

Impairment losses are recognized in the statement of earnings. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. With respect to other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indicators that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the carrying amount of the assets does not exceed the carrying amount that would have been determined, net of depreciation and amortization, if no impairment loss had been recognized.

Provisions
Provisions are recognized when there is a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and that obligation can be measured reliably. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risk specific to the liability. Provisions are reviewed on a regular basis and adjusted to reflect management's best current estimates. Due to the judgmental nature of these items, future settlements may differ from amounts recognized. Provisions notably include: provisions for employee benefits (Note 10) and provisions for uncertain tax positions (Note 11).

Employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. The Company recognizes a liability and an expense for short-term benefits such as bonuses if the Company has a present legal obligation or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be reasonably estimated.

The Company maintains registered defined benefit pension plans under which benefits are available to certain employee groups. The Company makes supplementary retirement benefits available to certain employees under a non-registered defined benefit pension plan. The Company also provides a defined contribution plan.

(i) Defined Benefit Plans

For defined benefit plans, the cost of providing benefits is determined using the projected unit credit method. The measurement is made at each balance sheet date and the personnel data concerning employees is revised at least every three years. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognized in other compreshensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.

Defined benefit costs are categorized as follows:

Service costs (including current service costs, past service cost and gains and losses on curtailments and settlements)
Net interest expense or income
Remeasurement

Service costs are presented in marketing, sales and administration in the consolidated statement of earnings. Curtailment gains and losses are accounted for as past service costs. Net interest cost is included in net financial income and expenses.

The provision for employee benefits recognized in the balance sheet represents the actual deficit or surplus in the Company's defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

(ii) Defined contribution plans

Contributions are recognized as expenses when the employees have rendered services. As the Company is not committed beyond the amount of such contributions, no provision is recognized in respect of defined contribution plans.

(iii) Termination benefits

A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.

Income Taxes
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net earnings except to the extent that it relates to items recognized either in other comprehensive income or directly in equity, in which case it is recognized in other comprehensive income or in equity, respectively.

Current income tax expense comprises the tax payable on the taxable income for the current financial year using tax rates enacted or substantively enacted at the reporting date, and any adjustment to income taxes payable in respect of previous years.

Deferred tax is recognized on temporary differences between the tax and book value of assets and liabilities in the consolidated balance sheet and is measured using the balance sheet approach. Deferred tax is measured at the tax rates that are expected to apply to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset the recognized amounts and the Company intends to settle on a net basis or to realize the asset and settle the liability simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable earnings will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that all or part of the related tax benefit will be realized.

In determining the amount of current and deferred tax the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

Revenue Recognition
Revenue is comprised of case good sales, commissions and revenues from ancillary activities and is measured at the fair value of the consideration received or to be received, after deducting trade discounts, volume rebates and sales-related taxes and duties. Sales are recognized when the significant risks and rewards of ownership have been transferred, generally at the date of transfer of ownership title.

(i) Costs of services rendered in connection with sales

In accordance with IAS 18 - Revenue ("IAS 18"), certain costs of services rendered in connection with sales, such as advertising programmes in conjunction with distributors, listing costs for new products, and promotional activities at point of sale, are deducted directly from sales if there is no separately identifiable service whose fair value can be reliably measured.

(ii) Commissions

When the Company acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognized is the net amount of commissions earned by the Company. Commissions are reported net of amortization of long-term representation rights and non-refundable upfront fees. The long-term representation rights represent the Company's exclusive right to represent PR's brands in Canada and are being amortized on a straight-line basis over the 15-year term of the agreement.

(iii) Interest

Interest income is recognized on an accrual basis using the effective interest method. Primarily interest income is earned on deposits in cash management pools.

Stock-Based Compensation Plans
The Company utilizes a Restricted Share Units Plan as its long-term incentive plan. Through this plan, restricted share units ("RSUs") will be granted to certain officers and employees at a grant price equal to the market closing price of the Company's Voting Class A Common Shares on the last day prior to grant. RSUs vest at the end of a three-year term, subject to the achievement of pre-determined corporate performance targets. The related compensation expense is recognized over this period.

Unvested RSUs will attract dividend-equivalent units whenever dividends are paid on the Voting Class A Common Shares of the Company and will be immediately reinvested into additional RSUs, which will vest and become payable at the end of the three-year vesting period, subject to the same performance conditions as the original RSU award. On the date of vesting, the holder will be entitled to the cash value of the number of RSUs granted, plus any RSUs received from reinvested dividend-equivalents. RSUs do not entitle participants to acquire any rights or entitlements as a shareholder of the Company.

Earnings per Common Share
The Company presents basic and diluted earnings per share ("EPS") amounts for its common shares. Basic EPS is calculated by dividing the net earnings attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated by adjusting the net income attributable to shareholders and the weighted average number of shares outstanding for the effect of potentially dilutive shares. There are no potentially dilutive shares as at June 30, 2014.

Classification of Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial instruments are classified into one of the following categories: fair value through profit or loss, held-to-maturity investments, loans and receivables, available-for-sale financial assets, or other financial liabilities. The classification determines the accounting treatment of the instrument. The classification is determined by the Company when the financial instrument is initially recorded, based on the underlying purpose of the instrument.

Corby's financial assets and liabilities are classified and measured as follows:

Financial Asset/Liability

Category

Measurement

Deposits in cash management pools

Loans and receivables

Amortized cost

Accounts receivable and note receivable

Loans and receivables

Amortized cost

Accounts payable and accrued liabilities

Loans and receivables

Amortized cost

Financial instruments measured at amortized cost are initially recognized at fair value plus any directly attributable transaction costs and then, subsequently, at amortized cost using the effective interest method, less any impairment losses, with gains and losses recognized in earnings in the period in which the gain or loss occurs.

All financial assets are recognized and derecognized on the trade date. A financial asset is derecognized when the contractual rights to the cash flows from the asset expired or when the Company transferred the financial asset to another party without retaining control or substantially all the risks and rewards of ownership of the asset. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability.

A financial liability is derecognized when its contractual obligations are discharged, cancelled or expire.

Transaction costs are added to the initial fair value of financial assets and liabilities when those financial assets and liabilities are not measured at fair value subsequent to initial measurement. Transaction costs are amortized to net earnings, in finance expense, using the effective interest method.

Segmented Reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other operations. Segment operating results are reviewed regularly by the Company's CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

5. FINANCIAL INSTRUMENTS

Corby's financial instruments consist of its deposits in cash management pools, accounts and note receivable and accounts payable and accrued liabilities balances.

Financial Risk Management Objectives and Policies
In the normal course of business, the Company is exposed to financial risks that have the potential to negatively impact its financial performance. The Company does not use derivative financial instruments to manage these risks, as management believes that the risks arising from the Company's financial instruments are already at an acceptably low level. These risks are discussed in more detail below.

Credit Risk
Credit risk arises from cash held with PR via Corby's participation in the Mirror Netting Services Agreement (further described in Note 27), as well as credit exposure to customers, including outstanding accounts and note receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets.

The objective of managing counter-party credit risk is to prevent losses in financial assets. The Company assesses the credit quality of its counter-parties, taking into account their financial position, past experience and other factors.

Management believes that the Company's credit risk relating to accounts receivable is at an acceptably low level. Over 85% of Corby's trade receivable balances are collectable from government-controlled liquor boards. The remaining trade receivable balances relate to agency and sales generated from export sales. Receivables that are neither past due nor impaired are considered credit of high quality. At June 30, 2014 no trade receivable balances were considered impaired.

With respect to Corby's deposits in PR's cash management pools, the Company monitors PR's credit rating in the normal course of business and has the right to terminate its participation in the Mirror Netting Services Agreement at any time, subject to five days' written notice. The Company's note receivable is secured as described in Note 9.

Liquidity Risk
Corby's sources of liquidity are its deposits in cash management pools of $108,029 and its cash generated by operating activities. Corby's total contractual maturities are represented by its accounts payable and accrued liabilities balances which totaled $26,774 as at June 30, 2014, and are all due to be paid within one year. The Company believes that its deposits in cash management pools, combined with its historically strong and consistent operational cash flows, are more than sufficient to fund its operations, investing activities and commitments for the foreseeable future.

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. The Company does not have any short- or long-term debt facilities. Interest rate risk exists as Corby earns market rates of interest on its deposits in cash management pools and also has a note receivable earning a fixed rate of interest.

As the note receivable earns interest at a fixed rate, there is no cash flow exposure associated with this instrument. However, the fair value of the note receivable will fluctuate with changes in market interest rates.

An active risk management program does not exist, as management believes that changes in interest rates would not have a material impact on Corby's financial position over the long term.

Foreign Currency Risk
The Company has exposure to foreign currency risk as it conducts business in multiple foreign currencies; however, its exposure is primarily limited to the US dollar ("USD") and UK pound Sterling ("GBP"). Corby does not utilize derivative instruments to manage this risk. Subject to competitive conditions, changes in foreign currency rates may be passed on to consumers through pricing over the long-term.

GBP Exposure
The Company's supply of GBP outpaces demand, as Corby's sales into the UK market are denominated in GBP, while having only certain production inputs denominated in GBP. Therefore, increases in the value of the CAD relative to the GBP will have an unfavourable impact on the Company's earnings.

Commodity Risk
Commodity risk exists, as the manufacture of Corby's products requires the procurement of several known commodities such as grains, sugar and natural gas. The Company strives to partially mitigate this risk through the use of longer-term procurement contracts where possible. In addition, subject to competitive conditions, the Company may pass on commodity price changes to consumers via pricing.

Fair Value of Financial Instruments
The Company uses a fair value hierarchy in order to classify the fair value measurements and disclosures related to the Company's financial assets and financial liabilities.

The fair value hierarchy has the following levels:

Level 1 - Quoted market prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and
Level 3 - Unobservable inputs such as inputs for the asset or liability that are not based on observable market data.

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

The Company has no financial instruments carried at fair value on its balance sheet. For financial assets and liabilities that are valued at other than fair value on its balance sheets (i.e., deposits in cash management pools, accounts receivable, accounts payable and accrued liabilities), fair value approximates their carrying value at each balance sheet date due to their short-term maturities. Fair value is determined using Level 2 inputs.

The carrying value of the note receivable approximates fair value based on the present value of future cash flows, based on estimated market rates for instruments of similar terms and conditions. Fair value is determined using Level 2 inputs.

6. CAPITAL MANAGEMENT

The Company's objectives when managing capital are:

To ensure sufficient capital exists to allow management the flexibility to execute its strategic plans; and
To ensure shareholders receive a reasonable return on their investment in the form of quarterly dividends.

Management includes the following items in its definition of capital:

		June 30,		June 30,		July 1,
		2014		2013		2012

Share capital	$	14,304	$	14,304	$	14,304
Accumulated other comprehensive loss		(4,303)		(7,363)		(7,551)
Retained earnings		199,140		194,370		201,519

Net capital under management	$	209,141	$	201,311	$	208,272

The Company is not subject to any externally imposed capital requirements.

The Company's dividend policy stipulates that, barring any unanticipated developments, regular dividends will be paid quarterly, on the basis of an annual amount equal to the greater of 75% of net earnings per share in the preceding fiscal year ended June 30, and $0.60 per share.

The Company is meeting all of its objectives and stated policies with respect to its management of capital.

7. ACCOUNTS RECEIVABLE

		June 30,		June 30,		July 1,
		2014		2013		2012

Trade receivables	$	16,343	$	16,491	$	19,759
Due from related parties		6,906		7,151		8,852

	$	23,249	$	23,642	$	28,611

8. INVENTORIES

		June 30,		June 30,		July 1,
		2014		2013		2012

Raw materials	$	2,058	$	2,132	$	1,597
Work-in-progress		41,081		39,669		40,703
Finished goods		9,422		7,282		5,460

	$	52,561	$	49,083	$	47,760

The cost of inventory recognized as an expense and included in cost of goods sold during the year ended June 30, 2014 was $39,597 (2013 - $40,060). During the current and prior year, there were no significant write-downs of inventory as a result of net realizable value being lower than cost, and no inventory write-downs recognized in previous years were reversed.

9. NOTE RECEIVABLE

		June 30,		June 30,		July 1,
		2014		2013		2012

Note receivable	$	600	$	1,200	$	1,800
Less: current portion		600		600		600

	$	-	$	600	$	1,200

As part of the Company's sale of the Seagram Coolers brand on March 15, 2011, the purchase price was satisfied in part by a promissory note secured by specific property and issued by the purchaser in favour of Corby for $2,400, which is to be paid in equal annual instalments of $600 plus interest of 5% per annum. The final payment is due January 31, 2015.

10. PROVISION FOR EMPLOYEE BENEFITS

The Company provides pension benefits to its employees through defined contribution pension plan and defined benefit pension plans. Employees hired after July 1, 2010 are no longer offered enrolment into the Company's defined benefit pension plans. Instead, the Company provides these employees a defined contribution pension plan. To become eligible to join the defined contribution pension plan, most employees must first accrue one year of service. For the year ended June 30, 2014, the Company recognized contributions of $241 as expense (2013 - $147) with respect to the defined contribution pension plan.

The Company has two defined benefit pension plans for executives and salaried employees (the "registered pension plans"), two supplementary executive retirement plans for retired and current senior executives of the Company (the "non-registered pension plans"), and a post-retirement benefit plan ("other benefit plan") covering retiree life insurance, health care and dental care. Benefits under these plans are based on years of service and compensation levels.

Effective January 1, 2014, the Company made plan design changes to certain of its defined benefit pension plans which increased required member contributions and reduced early retirement provisions for plan members. The provision for employee benefits reflects these plan design changes and also the adoption of the new 2014 Canadian Pensioners Mortality tables which were recently issued by the Canadian Institute of Actuaries. These changes resulted in a one-time plan amendment gain of $969 recorded in marketing, sales and administration expenses and a pre-tax gain of $2,847 recorded in other comprehensive income during the year ended June 30, 2014.

The registered pension plans are registered under the Pension Benefits Act (Ontario) (the "Act") with regulatory oversight by the Financial Services Commission of Ontario. The latest valuations completed for these plans are dated December 31, 2013. The next required valuations must be completed with an effective date no later than December 31, 2016. The Act requires funding valuations for the registered pension plans to be performed at least once every three years and plan deficits must be funded over a period of up to five years. The registered pension plans are funded through a combination of employee and employer contributions.

The Company is under no obligation to make any funding in respect to the benefits accruing under the non-registered pension plans. However, the Company has adopted a funding policy to make periodic contributions to the non-registered pension plans to provide security for the benefits accrued by the members. Such funding policy may be reviewed and amended at any time by the Company.

The post-retirement benefit plan is unfunded.

As at June 30, 2014, the average duration of the defined benefit obligation for the registered and non-registered pension plans and the post retirement benefit plan is 13.3 years.

Company contributions to the registered and non-registered pension plans are expected to be $1,711 for the fiscal year ended June 30, 2015.

The Company maintains a Canadian Pension Committee, which provides oversight of the Company's pension benefit policies, investment policies and plan administration. The Company uses the service of third parties to provide investment management services such as managing the pension plan assets in accordance with the established investment policies.

The Company is subject to certain risks as a result of the existence of its registered and non-registered pension plans and its post-retirement benefit plan. These risks include actuarial risks such as investment risk, interest rate risk as this impacts the discount rate, longevity risk and compensation risk.

The present value of the defined benefit obligation is calculated using a discount rate. If the return on plan assets is below this rate, a plan's surplus is reduced or a plan deficit occurs. The Company mitigates this investment risk by establishing an investment policy to be followed by the registered pension plans' investment managers and providing oversight to the Canadian Pension Committee. The Company's investment policy requires the registered pension plans' assets be invested in a diversified portfolio that does not concentrate investment in any one security or bond.

An increase in interest rates will increase the discount rate, which will subsequently decrease the present value of the defined benefit obligation. An increase in longevity and compensation will increase the present value of the defined benefit obligation. Longevity risk is impacted by mortality assumptions, which are based on the 2014 Private / Public Sector Canadian Pensioners Mortality tables as prepared by the Canadian Institute of Actuaries.

The significant actuarial assumptions are as follows:

2014

2013

Registered

Non-registered

Other

Registered

Non-registered

Other

Pension

Benefit

Pension

Benefit

Plans

Plan

Plans

Plan

Accrued benefit obligation, end of year

Discount rate

4.4%

4.1%

Compensation increase

3.0-3.5%

3.5%

N/A

3.0 - 3.5%

3.5%

N/A

Inflation

2.0%

2.0%

Benefit expense, for the year

Discount rate

4.1%

4.2%

Compensation increase

3.0-3.5%

3.5%

N/A

3.0 - 3.5%

3.5%

N/A

Inflation

2.0%

2.0%

The discount rate has been set based on current market rates at the end of the Company's financial year, assuming a rate of return comparable to high quality fixed income securities of equivalent currency and term that approximate the terms of the pension plan liabilities. A 25 basis points ("bp") increase in the assumed discount rate would decrease the amount of the Company's provision for pensions and pension expense in respect of its registered and non-registered defined benefit plans by $2,195 and $95, respectively. Conversely, a 25bp decrease in the assumed discount rate would increase the amount of the Company's provision for pensions and pension expense in respect of its registered and non-registered defined benefit plans by $2,292 and $105, respectively. The method used to determined the impact of the discount rate changes is consistent with the method used to determine the amounts recognized in the financial statements.

The medical cost trend rate used was 6.1% for 2014 (2013 - 6.1%), with 4.6% being the ultimate trend rate for 2026 and years thereafter. The dental cost trend rate used was 5.0% for 2014 (2013 - 5.0%). Assumed health care cost trend rates have a significant effect on the amounts reported for other benefit plans. A 1% increase in the assumed medical cost trend rate would increase the amount of the Company's provision for pensions and pension expense by $1,390 and $95, respectively. Conversely, a 1% decrease in the medical cost trend rate would decrease the amount of the Company's provision for pensions and pension expense by $1,109 and $126, respectively. The method used to determine the impact of compensation rate changes is consistent with the method used to determine the amounts recognized in the financial statements.

A summary of the Company's defined benefit obligation and plan assets is as follows:

		June 30,		June 30,		June 30,
		2014		2013		2012
Present value of defined benefit obligation of unfunded plans	$	(10,157)	$	(10,000)	$	(10,477)
Present value of defined benefit obligation of partially funded plans		(10,699)		(10,257)		(9,658)
Present value of defined benefit obligation of fully funded plans		(44,138)		(44,390)		(44,172)
Total present value of defined benefit obligation		(64,994)		(64,647)		(64,307)
Fair value of plan assets		48,503		43,853		43,470
Net defined benefit liability		(16,491)		(20,794)		(20,837)
- included in pension obligation		(18,045)		(21,363)		(21,539)
- included in other assets		1,554		569		702

Information about the Company's pension and other benefit plans for the year ended June 30, 2014 is as follows:

2014

Registered

Non-registered

Other

Pension

Benefit

Plans

Plan

Total

Fair value of plan assets

Fair value of plan assets, beginning of year

33,364

10,489

43,853

Interest income

1,480

227

1,707

Actuarial gains

3,541

1,280

4,821

Company contributions

989

400

1,389

Plan participants' contributions

181

Benefits paid

(2,792)

(403)

(3,195)

Administrative costs

(213)

(40)

(253)

Fair value of plan assets, end of year

36,550

11,953

48,503

Present value of defined benefit obligation

Defined benefit obligation, beginning of year

44,390

10,257

10,000

64,647

Current service cost

1,035

276

253

1,564

Interest cost

1,877

414

398

2,689

Past service cost, including curtailments

(969)

Plan participants' contributions

181

Actuarial (gains) losses:

Experience (gains) and losses

(496)

200

(50)

(346)

Gains due to financial assumption changes

(1,849)

(480)

(729)

(3,058)

Losses due to demographic assumption changes

2,761

484

812

4,057

Benefits paid

(2,792)

(452)

(527)

(3,771)

Present value of the defined benefit obligations, end of year

44,138

10,699

10,157

64,994

Net defined benefit liability

7,588

(1,254)

10,157

16,491

Net defined benefit assets (liabilities) are presented on the consolidated balance sheet as follows as at June 30, 2014:

Pension obligation

(7,588)

(300)

(10,157)

(18,045)

Other assets

1,554

The actual return on plan assets for the financial year ended June 30, 2014 was $6,528, which was composed of interest income and actuarial gains and losses included in the reconciliation of the fair value of plan assets above.

Information about the Company's pension and other benefit plans for the year ended June 30, 2013 is as follows:


										2013
				Registered		Non-registered		Other
				Pension		Pension		Benefit
				Plans		Plans		Plan		Total

Fair value of plan assets
Fair value of plan assets, beginning of year			$	33,481	$	9,989	$	-	$	43,470
	Interest income			1,368		216		-		1,584
	Actuarial gains			641		262		-		903
	Company contributions			1,229		400		-		1,629
	Plan participants' contributions			154		-		-		154
	Benefits paid			(3,284)		(338)		-		(3,622)
	Administrative costs			(225)		(40)		-		(265)

Fair value of plan assets, end of year			$	33,364	$	10,489	$	-	$	43,853

Present value of defined benefit obligation
Defined benefit obligation, beginning of year			$	44,172	$	9,658	$	10,477	$	64,307
	Current service cost			1,320		281		262		1,863
	Interest cost			1,786		393		421		2,600
	Past service cost			-		-		(638)		(638)
	Plan participants' contributions			154		-		-		154
	Actuarial (gains) losses:
		Experience (gains) and losses		(76)		234		26		184
		Losses due to financial assumption changes		318		78		68		464
	Benefits paid			(3,284)		(387)		(616)		(4,287)

Present value of the defined benefit obligations, end of year			$	44,390	$	10,257	$	10,000	$	64,647

Net defined benefit liability			$	11,026	$	(232)	$	10,000	$	20,794

Net defined benefit assets (liabilities) are presented on the consolidated balance sheet as follows as at June 30, 2013:


Pension obligation	$	(11,026)	$	(337)	$	(10,000)	$	(21,363)
Other assets	$	-	$	569	$	-	$	569

The actual return on plan assets for the financial year ended June 30, 2013 was $2,487, which was composed of interest income and actuarial gains and losses included in the reconciliation of the fair value of plan assets above.

Amounts recognized in comprehensive income in respect to the defined benefit plans are as follows:


		2014		2013

Net defined benefit pension expense recognized in Total Comprehensive Income
Current service costs	$	1,564	$	1,863
Interest costs		1,234		1,281
Past service costs		(969)		(638)

Net expense recognized in Net Earnings		1,829		2,506

Net actuarial gains recognized in Other Comprehensive Income		(4,169)		(256)

Total net (gain) expense recognized in Total Comprehensive Income	$	(2,340)	$	2,250

The assets of the registered pension plans consist of cash, contributions receivable and investments held in the Hiram Walker & Corby Canadian Pooled Fund Trust. As at June 30, 2014, the fair value of the Trust's assets totaled $331,340. The Company's registered pension plans comprise approximately 10% of the total Trust assets. The fair value of assets held on behalf of the Company's registered pension plans are categorized in the fair value hierarchy as at June 30, 2014 as follows:


Cash and Canadian Equities - level 1	$	8,590
Bond funds - level 2		13,051
Foreign equities and Foreign Equity funds - level 2		10,014
Infrastructure and real estate funds - level 3		4,895

	$	36,550

The assets of the non-registered pension plan consist of cash, investments and refundable taxes on account with Canada Revenue Agency. The investments held by the non-registered pension plan are invested in a limited number of pooled funds. The assets, based on market values at June 30, 2014, are as follows:


Canadian equity pooled funds	$	2,343
Foreign equity pooled funds		4,306
Refund tax on account with Canada Revenue Agency		5,304

	$	11,953

The fair values of the investments held by the non-registered plan as at June 30, 2014 are categorized as Level 2 in the fair value hierarchy.

11. INCOME TAXES



		2014		2013
Current income tax expense
Current period	$	9,264	$	10,034
Adjustments with respect to prior period tax estimates		(198)		359

	$	9,066	$	10,393

Deferred income tax expense
Origination and reversal of temporary differences	$	(111)	$	(154)
Change in tax rate		(6)		8
Impact of disposal transactions		-		-
Adjustments with respect to prior period tax estimates		49		132

	$	(68)	$	(14)

Total income tax expense	$	8,998	$	10,379

There are no capital loss carry-forwards available for tax purposes.

The Company's effective tax rates are comprised of the following items:


		2014			2013

Net earnings for the financial year	$	24,983		$	27,014
Total income tax expense		8,998			10,379
Earnings before income tax expense	$	33,981		$	37,393

Income tax using the combined Federal and Provincial
statutory tax rates	$	9,050	26.6%	$	9,927	26.6%

Non-deductible expenses		122	0.4%		170	0.5%
Net capital gains		-	0.0%		-	0.0%
Adjustments with respect to prior period tax estimates		(149)	(0.4%)		491	1.3%
Other		(25)	(0.1%)		(209)	(0.6%)

Effective income tax rate	$	8,998	26.5%	$	10,379	27.7%

Deferred tax assets (liabilities) are broken down by nature as follows:


		June 30,		Recognized in						June 30,
		2013		Earnings		OCI		Equity		2014
Provision for pensions	$	5,722	$	(60)	$	(1,109)	$	-	$	4,553
Property, plant and equipment		(1,343)		(53)		-		-		(1,396)
Inventory		(451)		90		-		-		(361)
Intangibles		(2,617)		(1)		-		-		(2,618)
Other		388		92		-		-		480

	$	1,699	$	68	$	(1,109)	$	-	$	658


		July 1,		Recognized in						June 30,
		2012		Earnings		OCI		Equity		2013
Provision for pensions	$	5,750	$	40	$	(68)	$	-	$	5,722
Property, plant and equipment		(1,064)		(279)		-		-		(1,343)
Inventory		(539)		88		-		-		(451)
Intangibles		(2,607)		(10)		-		-		(2,617)
Other		213		175		-		-		388

	$	1,753	$	14	$	(68)	$	-	$	1,699

Income tax receivable includes a provision for uncertain tax risks in the amount of $786 at June 30, 2014 and 2013.

12. PROPERTY AND EQUIPMENT


		June 30,								June 30,
		2013		Additions		Depreciation		Disposals		2014

Leasehold improvements	$	1,002	$	-	$	-	$	-	$	1,002
Machinery and equipment		5,397		860		-		(385)		5,872
Casks		6,708		1,056		-		(309)		7,455
Other		682		260		-		-		942
Gross value		13,789		2,176		-		(694)		15,271

Leasehold improvements		(415)		-		(117)		-		(532)
Machinery and equipment		(2,588)		-		(685)		384		(2,889)
Casks		(2,514)		-		(529)		122		(2,921)
Other		(180)		-		(117)		-		(297)
Accum. depreciation		(5,697)		-		(1,448)		506		(6,639)

Property, plant and equipment	$	8,092	$	2,176	$	(1,448)	$	(188)	$	8,632


		July 1,								June 30,
		2012		Additions		Depreciation		Disposals		2013

Leasehold improvements		896		106		-		-		1,002
Machinery and equipment		4,596		825		-		(24)		5,397
Casks		6,699		432		-		(423)		6,708
Other		200		482		-		-		682
Gross value		12,391		1,845		-		(447)		13,789

Leasehold improvements		(324)		-		(91)		-		(415)
Machinery and equipment		(2,233)		-		(366)		11		(2,588)
Casks		(2,161)		-		(505)		152		(2,514)
Other		(149)		-		(31)		-		(180)
Accum. depreciation		(4,867)		-		(993)		163		(5,697)

Property, plant and equipment	$	7,524	$	1,845	$	(993)	$	(284)	$	8,092

13. GOODWILL

Changes in the carrying amount of goodwill are as follows:


		June 30,		June 30,
		2014		2013

Balance, beginning of year	$	3,278	$	3,278
Decreases in goodwill		-		-

Balance, end of year	$	3,278	$	3,278

There have been no impairment losses recognized with respect to goodwill during 2014 (2013 -$nil).

14. INTANGIBLE ASSETS

On September 30, 2013, Corby entered into an agreement to continue its exclusive rights to represent the ABSOLUT vodka brand in Canada for an additional eight year period ending September 29, 2021 in consideration of a payment of $10,293. The terms of this agreement are further described in Note 28 - "Related Party Transactions". The transaction was accounted for as an increase to Intangible Assets and the payment is being amortized, straight-line, over the eight-year term of the agreement beginning on October 1, 2013:


												2014

				Movements in the Year
		Opening										Ending
		Book Value		Additions		Amortization		Impairments		Disposals		Book Value

Long-term representation rights	$	37,439	$	10,293	$	(5,495)	$	-	$	(265)	$	41,972
Trademarks and licenses		11,801		-		-		-		-		11,801
Non-refundable upfront fees		425		76		(111)		-		-		390

	$	49,665	$	10,369	$	(5,606)	$	-	$	(265)	$	54,163

												2013

				Movements in the Year
		Opening										Ending
		Book Value		Additions		Amortization		Impairments		Disposals		Book Value

Long-term representation rights	$	41,970	$	-	$	(4,531)	$	-	$	-	$	37,439
Trademarks and licenses		11,801		-		-		-		-		11,801
Non-refundable upfront fees		-		435		(10)		-		-		425

	$	53,771	$	435	$	(4,541)	$	-	$	-	$	49,665

15. IMPAIRMENT

The Company tests goodwill and indefinite-lived intangibles (trademarks and licences) for impairment on an annual basis. The carrying value of goodwill and indefinite-lived intangibles at June 30, 2014, along with the data and assumptions applied to the Cash Generating Units ("CGUs") of the Case Goods Segment are as follows:

Carrying

Value

Terminal

Value

Trademarks

Discount

Growth

Goodwill

& Licences

Rate

Case Goods Segment

3,278

11,801

8.6% to 11.6%

2% to 3%

The Company's commissions segment has no goodwill or indefinite lived intangibles.

For purposes of impairment testing, goodwill and intangibles with an indefinite life (trademarks and licences) were allocated to the group of CGUs which represent the lowest level within the group at which the goodwill is monitored for internal management purposes.

During the financial year ended June 30, 2014, the Company performed impairment testing on goodwill and indefinite-lived intangible assets in accordance with its accounting policy and identified no impairment.

The discount rate used for these calculations is a pre-tax rate which corresponds to the weighted average cost of capital. Different discount rates were used to allow for risks specific to certain markets or geographical areas in calculating cash flows. Assumptions made in terms of future changes in sales and of terminal values are reasonable and in accordance with market data available for each of the CGUs. Additional impairment tests are applied where events or specific circumstances suggest that a potential impairment exists.

A 50 basis points ("bp") increase in the discount rates would result in no impairment to goodwill or the indefinite-lived intangibles. A 50bp decrease in the terminal growth rate would result in no impairment to goodwill or indefinite-lived intangibles.

16. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES


		June 30,		June 30,		July 1,
		2014		2013		2012

Trade payables and accruals	$	17,724	$	17,715	$	16,584
Due to related parties		9,050		6,470		5,816

	$	26,774	$	24,185	$	22,400

17. SHARE CAPITAL

June 30,

June 30,

July 1,

2014

2013

2012

Number of shares authorized:

Voting Class A Common Shares - no par value

Unlimited

Unlimited

Non-voting Class B Common Shares - no par value

Unlimited

Unlimited

Number of shares issued and fully paid:

Voting Class A Common Shares

24,274,320

24,274,320

Non-voting Class B Common Shares

4,194,536

4,194,536

28,468,856

28,468,856

Stated value

14,304

14,304

18. ACCUMULATED OTHER COMPREHENSIVE LOSS


			June 30,		June 30,		July 1,
			2014		2013		2012

Actuarial losses on pension obligations		$	5,946	$	10,115	$	10,287
	less: income taxes		(1,643)		(2,752)		(2,736)

Accumulated other comprehensive loss		$	4,303	$	7,363	$	7,551

19. REVENUE

The Company's revenue consists of the following streams:


		2014		2013

Case good sales	$	116,372	$	109,656
Commissions (net of amortization)		16,735		16,439
Other services		4,172		6,648

	$	137,279	$	132,743

Commissions for the year are shown net of amortization of long-term representation rights and non-refundable upfront fees of $5,606 (2013 - $4,541). Other services include revenues incidental to the manufacture of case goods, such as logistics fees and miscellaneous bulk spirit sales.

20. OTHER INCOME

The Company's other income consists of the following amounts:


		2014		2013

Foreign exchange gain	$	263	$	53
Gain on disposal of property and equipment		195		224

	$	458	$	277

21. NET FINANCIAL INCOME AND EXPENSE

The Company's financial income (expense) consists of the following amounts:


		2014		2013

Interest income	$	1,755	$	1,707
Interest expense		-		(76)
Net financial impact of pensions		(1,234)		(1,281)

	$	521	$	350

22. EARNINGS PER SHARE

The following table sets forth the numerator and denominator utilized in the computation of basic and diluted earnings per share:


			2014		2013

Numerator:
	Net earnings	$	24,983	$	27,014
Denominator:
	Weighted average shares outstanding		28,468,856		28,468,856

23. EXPENSES BY NATURE

Earnings from operations include depreciation and amortization, as well as personnel expenses as follows:


		2014		2013

Depreciation of property and equipment	$	1,448	$	993
Amortization of intangible assets		5,606		4,541
Salary and payroll costs		22,595		20,408
Expenses related to pensions and benefits		595		1,225

	$	30,244	$	27,167

24. RESTRICTED SHARE UNITS PLAN

2014

2013

Weighted

Restricted

Average

Restricted

Average

Grant Date

Units

Fair Value

Units

Fair Value

Non-vested, beginning of year

85,138

16.05

55,758

15.42

Granted

16,889

21.05

24,088

16.95

Reinvested dividend equivalent units

2,907

20.13

5,292

18.55

Vested

(31,154)

(15.51)

Non-vested, end of year

73,780

17.58

85,138

16.05

Compensation expense related to this plan for the year ended June 30,2014, was $613 (2013 - $691).

25. NET CHANGE IN NON-CASH WORKING CAPITAL BALANCES



		2014		2013

Accounts receivable	$	381	$	4,969
Inventories		(3,478)		(1,323)
Prepaid expenses		277		22
Income tax and other taxes recoverable / payable		(73)		(170)
Accounts payable and accrued liabilities		2,513		1,337

	$	(380)	$	4,835

26. DIVIDENDS

On August 27, 2014 subsequent to the year ended June 30, 2014, the Board of Directors declared its regular quarterly dividend of $0.18 per common share, to be paid on September 30, 2014, to shareholders of record as at the close of business on September 15, 2014. This dividend is in accordance with the Company's dividend policy.

27. RELATED PARTY TRANSACTIONS

Transactions with parent, ultimate parent, and affiliates
The majority of Corby's issued and outstanding voting Class A shares are owned by HWSL. HWSL is a wholly-owned subsidiary of PR. Therefore, HWSL is Corby's parent and PR is Corby's ultimate parent. Affiliated companies are subsidiaries which are controlled by Corby's parent and/or ultimate parent.

The companies operate under the terms of agreements that became effective on September 29, 2006. These agreements provide the Company with the exclusive right to represent PR's brands in the Canadian market for 15 years, as well as providing for the continuing production of certain Corby brands by PR at its production facility in Windsor, Ontario, for 10 years. Corby also manages PR's business interests in Canada, including the Windsor production facility. Certain officers of Corby have been appointed as directors and officers of PR's Canadian entities, as approved by Corby's Board of Directors.

In addition to the aforementioned agreements, Corby signed an agreement on September 26, 2008, with its ultimate parent to be the exclusive Canadian representative for the ABSOLUT vodka and Plymouth gin brands, for a five-year term which expired October 1, 2013 and was extended as noted below. These brands were acquired by PR subsequent to the original representation rights agreement dated September 29, 2006.

On November 9, 2011, Corby entered into an agreement with a PR affiliate for a new term for Corby's exclusive right to represent ABSOLUT vodka in Canada from September 30, 2013 to September 29, 2021, which is consistent with the term of Corby's Canadian representation of the other PR brands in Corby's portfolio. On September 30, 2013, Corby paid the present value of $10 million, or $10.3 million, for the additional eight years of the new term pursuant to an agreement entered into between Corby and The Absolut Company, an affiliate of PR and owner of the Absolut brand, to satisfy the parties' obligations under the 2011 agreement.

Effective as of July 1, 2012, the Company entered into a five year agreement with Pernod Ricard USA, LLC ("PR USA"), an affiliated company, which provides PR USA the exclusive rights to represent Wiser's Canadian whisky and Polar Ice vodka in the US. Previously, Wiser's Canadian whisky and Polar Ice vodka were represented by an unrelated third party in this market. The agreement is effective for a five year period ending June 30, 2017.

Transactions between Corby and its parent, ultimate parent and affiliates during the period are as follows:


		2014		2013

Sales to related parties
Commissions - parent, ultimate parent and affiliated companies	$	18,897	$	18,006
Products for resale at an export level - affiliated companies		10,979		3,171
Bulk spirits - parent		6		23

	$	29,882	$	21,200

Cost of goods sold, purchased from related parties
Distilling, blending, and production services - parent	$	22,130	$	20,310

Administrative services purchased from related parties
Marketing, selling and administraton services - parent	$	2,400	$	2,044
Marketing, selling and administraton services - affiliate	$	5,025	$	-

Balances outstanding with related parties are due within 60 days, are to be settled in cash and are unsecured.

During the year ended June 30, 2014, Corby sold casks to its parent company for net proceeds of $383 (2013 - $480).

During the year ended June 30, 2014, Corby entered into a transaction with its parent whereby Corby exchanged certain vintages and varieties of bulk whisky inventory with a fair value of $1,086 for differing vintages and varieties of bulk whisky with an equivalent fair value in an effort to balance each companies' future inventory requirements. The exchange was not a culmination of the earnings process and as such did not impact Corby's net earnings nor its financial position.

Deposits in cash management pools
Corby participates in a cash pooling arrangement under the Mirror Netting Service Agreement together with PR's other Canadian affiliates, the terms of which are administered by The Bank of Nova Scotia (effective July 17, 2014 this agreement is administered by Citibank N.A.). The Mirror Netting Services Agreement acts to aggregate each participant's net cash balance for the purposes of having a centralized cash management function for all of PR's Canadian affiliates, including Corby.

As a result of Corby's participation in this agreement, Corby's credit risk associated with its deposits in cash management pools is contingent upon PR's credit rating. PR's credit rating as at August 27, 2014, as published by Standard & Poor's and Moody's, was BBB- and Baa3, respectively. PR compensates Corby for the benefit it receives from having the Company participate in the Mirror Netting Services Agreement by paying interest to Corby based upon the 30-day CDOR rate plus 0.40%. During the year ended June 30, 2014, Corby earned interest income of $1,712 from PR (2013 - $1,630). Corby has the right to terminate its participation in the Mirror Netting Services Agreement at any time, subject to five days' written notice.

Key management personnel
Key management personnel are those individuals having authority and responsibility for planning, directing and controlling the activities of the Company, including members of the Company's Board of Directors. The Company considers key management to be the members of the Board of Directors and the Senior Management Team (which includes the CEO, CFO, and Vice Presidents).

Certain key management personnel also participate in the company's RSU plan.

Key management personnel compensation is comprised of:


		2014		2013

Wages, salaries and short term employee benefits	$	3,052	$	3,643
Other long term benefits		632		467
Share-based payment transactions		356		382

	$	4,040	$	4,492

Certain members of the board and key management personnel are provided benefits and or salary and wages through the parent company or the ultimate parent company in addition to the amounts reported above.

28. SEGMENT INFORMATION

Corby has two reportable segments: Case Goods and Commissions. Corby's Case Goods segment derives its revenue from the production and distribution of its owned beverage alcohol brands. Corby's portfolio of owned-brands includes some of the most renowned and respected brands in Canada, such as Wiser's Canadian whisky, Lamb's rum, Polar Ice vodka, and McGuinness liqueurs.

Corby's Commissions segment earns commission income from the representation of non-owned beverage alcohol brands in Canada. Corby represents leading international brands such as ABSOLUT vodka, Chivas Regal, The Glenlivet and Ballantine's scotches, Jameson Irish whiskey, Beefeater gin, Malibu rum, Kahlúa liqueur, Mumm champagne, and Jacob's Creek and Wyndham Estate wines.

The Commissions segment's financial results are fully reported as "Commissions" in Note 19 of consolidated statements. Therefore, a table detailing operational results by segment has not been provided as no additional meaningful information would result.

Geographic information regarding the Company is as follows:


										2014
				United States		United		Rest of
		Canada		of America		Kingdom		World		Total

Revenue	$	122,002	$	11,107	$	4,140	$	30	$	137,279
Capital assets and goodwill		10,500		-		1,410		-		11,910

										2013
				United States		United		Rest of
		Canada		of America		Kingdom		World		Total

Revenue	$	124,880	$	3,328	$	3,793	$	742	$	132,743
Capital assets and goodwill		9,960		-		1,410		-		11,370

In 2014, revenue to three major customers accounted for 34%, 17% and 13%, respectively (2013 - 34%, 18% and 15%). These major customers are located in Canada and revenues are derived from the Case Goods segment.

29. COMMITMENTS

Future minimum payments under operating leases for premises and equipment for the next five years and thereafter are as follows:



2015	$	1,663
2016		1,375
2017		1,111
2018		794
2019		167
Thereafter		-

	$	5,110

Total lease payments recognized as an expense during the year total $2,402 (2013 - $2,274).

The Company has commitments of $284 (2013 - $132) as at June 30, 2014 for the acquisition of capital assets.

SOURCE Corby Spirit and Wine Limited

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