TORONTO, Aug. 26, 2015 /CNW/ - Corby Spirit and Wine
Limited ("Corby" or the "Company") (TSX: CSW.A, CSW.B)
announced today that Corby has entered into an amending agreement
with Pernod Ricard S.A. ("Pernod Ricard") and certain affiliates
whereby Corby would provide more specialized marketing, advertising
and promotion services for the Pernod Ricard and affiliate brands
in exchange for an increase to the rate of commission payable by
such entities. Pernod Ricard indirectly owns in excess
of 50% of the issued and outstanding Voting Class A Common Shares
of Corby and is considered to be Corby's ultimate parent. Since the
agreement with Pernod Ricard and the affiliates constitute related
party transactions, they were approved by the Independent Committee
of the Corby Board of Directors following an extensive financial
and legal review.
George McCarthy, Corby's Chairman
of the Board of Directors, stated that "We are very pleased to
enter into the amending agreement allowing Corby to leverage its
existing resources and increase its returns on representing Pernod
Ricard's premium brands, delivering even more value to our
shareholders. We're confident that such specialized services
will benefit the entire Corby portfolio."
Corby also today declared a dividend of $0.19 per share payable on September 30, 2015 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 16, 2015. The Company also reported its
financial results for the fourth quarter and year ended
June 30, 2015.
Q4 Highlights (vs. Q4 Last Year)
Net earnings for the quarter ended June
30, 2015 totalled $7.3 million
(or $0.26 per share), representing an
increase of $0.4 million or 7%, when
compared with the same quarter last year. This includes the
non-repeat of severance and termination payments as a result of a
cost reduction programme recognized in the fourth quarter last
year. As well, advertising and promotion spend was lower, as
investment in the United States
phased evenly throughout the year cycled against initial brand
building investment in the prior period. Lower topline
revenue was impacted by phasing of shipments, affecting Lamb's Rum
in particular.
Year End Highlights (vs. Last Year)
Net earnings for the year ended June 30,
2015 decreased $4.6 million or
18%, when compared to last year. The decline is attributable
to lapping the non-repeat of inventory pipe-line build-up for
the United States' launch of
J.P. Wiser's Rye and J.P. Wiser's Spiced whiskies and related A&P
investment. Reduced commission income due to discontinued
representation of certain agency brands in December 2013 was offset by positive
contributions from the Pernod Ricard portfolio of brands in
Canada.
"While our actions to exploit long-term opportunities for
J.P. Wiser's in international
markets have affected our financial results over the last two
years, we will continue to pursue this strategic priority for
developing sustainable growth and profit streams outside the mature
Canadian spirits market." remarked Patrick
O'Driscoll, President and Chief Executive Officer of
Corby. He continued, "However, we remain committed to
maximizing returns from domestic operations. We go to market
with an optimized and specialized organizational structure, create
exciting new news with our innovation pipeline, including the
recently launched J.P. Wiser's
Hopped, and continue to explore opportunities to maximize
revenues."
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 and year
ended June 30, 2015, 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 J.P.
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,
2015
The following Management's Discussion and Analysis ("MD&A")
dated August 26, 2015, should be read
in conjunction with the audited consolidated financial statements
and accompanying notes for the year ended June 30, 2015, 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
"Strategies and Outlook", "Liquidity and Capital Resources",
"Recent Accounting Pronouncements" and "Risks 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 26, 2015. 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 2015 (three months ended June 30, 2015) are against results for the fourth
quarter of fiscal 2014 (three months ended June 30, 2014). 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 J.P. 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®, Campo
Viejo®, Graffigna® and Kenwood® 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, with the exclusive
right to represent The Wine Group LLC ("The Wine Group") brands in
Canada until May 2018 through an agreement (which began
April 2013). The agreement
complements Corby's owned and represented brands and expands Corby
offerings in the premium wine sector. Corby represents all The Wine
Group brands, including Cupcake Vineyards, Big House Wine Co.,
Concannon Vineyard, Grayfox
Vineyards, Mogen David Wine Co and Benziger.
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 90% 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 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 the Americas. During the year, the Company
effectively completed the process of moving production to the HWSL
production facility from the bottling facility of a third party in
Montreal, Quebec following the
expiry of the related bottling agreement on October 31, 2014.
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. See the "Related Party
Transactions" section of this MD&A for additional
details. The market in the US operates a three tier
distribution system which often requires a much longer and
larger inventory pipeline than in other markets, resulting in a
disconnect between quarterly shipment performance, as reported in
the financial statements and the true underlying performance of the
brands at retail level during the same quarter.
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 specialized to meet 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. During
the year, Corby continued a successful partnership with the Toronto
Transit Commission to provide free transit on New Year's Eve for a three year period which
began in 2013. The Company stresses its core values throughout its
organization, including those of conviviality, straightforwardness,
commitment, integrity and entrepreneurship.
Significant Events
Corby Increases Commission Rate under Pernod Ricard
Canadian Representation Agreements
On September 29, 2006, Corby completed a transaction
with PR which, amongst other things, provided the Company the
exclusive right to represent PR's brands in the Canadian market for
15 years. Commission revenue earned from the representation of PR's
brands in Canada is presented in
the consolidated statement of earnings as part of "Revenue". On
August 26, 2015, Corby entered into
an agreement with PR and certain affiliates amending the
September 29, 2006 Canadian
representation agreements, whereby Corby would provide more
specialized marketing, advertising and promotion services for the
PR and affiliate brands under the applicable agreements in exchange
for an increase to the rate of commission payable by such
entities.
Corby declares special dividend and increases regular
dividend amount
On November 5,
2014, the Corby Board of Directors declared a special
dividend of $0.62 per share payable
on January 9, 2015 on the Voting
Class A Common Shares and Non-voting Class B Common Shares of Corby
to shareholders of record as at the close of business on
December 12, 2014. The special
dividend payment resulted in a cash distribution of approximately
$17.7 million to shareholders and was
sourced from Corby's surplus cash position. The payment represented
cash that the Board considered to be in excess of its requirements
to fund future growth opportunities.
The Corby Board of Directors also announced an amendment to its
dividend policy. Subject to business conditions and opportunities
and appropriate adjustment for extraordinary events, regular
dividends will be paid quarterly, on the basis of an annual amount
equal to the greater of 85% of net earnings per share in the
preceding fiscal year ended June 30,
and $0.60 per share. Such dividend
policy represents a 5.6% increase in the Company's quarterly
dividend, from $0.18 per share to
$0.19 per share. Under the amended
policy, the Corby Board of Directors declared a regular dividend of
$0.19 per share payable on
December 12, 2014 on the Voting Class
A Common Shares and Non-voting Class B Common Shares of Corby to
shareholders of record as at the close of business on November 28, 2014.
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, 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 US 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 2014. 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
early stages of the launch, Corby continued to invest heavily in
the US market during the quarter. 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)
|
2015
|
2014(1)
|
2013(1)
|
|
|
|
|
Revenue
|
$
|
132.1
|
$
|
137.3
|
$
|
132.7
|
|
|
|
|
Earnings from
operations
|
27.2
|
33.5
|
37.0
|
|
- Earnings from
operations per common share
|
0.96
|
1.18
|
1.30
|
|
|
|
|
Net
earnings
|
20.4
|
25.0
|
27.0
|
|
- Basic earnings per
share
|
0.72
|
0.88
|
0.95
|
|
- Diluted earnings
per share
|
0.72
|
0.88
|
0.95
|
|
|
|
|
Total
assets
|
233.7
|
254.9
|
247.8
|
Total
liabilities
|
45.6
|
45.8
|
46.5
|
|
|
|
|
Regular dividends
paid per share
|
0.75
|
0.71
|
0.66
|
Special dividends
paid per share
|
0.62
|
-
|
0.54
|
|
|
|
|
1In
preparing its comparative information, the Company has adjusted
amounts reported previously in the consolidated balance
sheets as a result of the retrospective
application of the amendments to IAS 32, Financial Instruments -
Presentation.
|
Refer to Note 3 for
details regarding adjusted amounts.
|
The past three years have seen significant changes for Corby.
The overall Canadian spirits market has experienced an essentially
flat three year compound annual growth rate on retail volume.
During this time that 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 J.P. Wiser's
Canadian whisky brand in international markets such as the US.
Key actions taken in each of the past three fiscal years:
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.
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 appropriate 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.
In 2015, Corby continued its commitment to penetrating the US
market with a full year of investment behind the J.P. Wiser's
brands even as topline volumes were impacted by the 2014 inventory
pipe-line build-up. Expansion of J.P.
Wiser's into additional international markets was initiated
with shipments in the fourth quarter to Australia. Corby paid
a special dividend of $0.62 per share
in January 2015. The Corby Board of Directors again revised
the Company's dividend policy, contributing to the steady increase
in the regular quarterly dividend rate (growing from $0.59 per share in 2012 to $0.75 per share in 2015, a compound annual growth
rate of over 8%).
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: J.P. 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 net sales
revenue). The chart includes results for sales in both Canada and international markets.
Specifically, the J.P. 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
Change
|
|
Shipment
Change
|
|
Jun.
30,
|
Jun.
30,
|
Volume
|
Value
|
Jun.
30,
|
Jun.
30,
|
Volume
|
Value
|
(Volumes in 000's
of 9L cases)
|
2015
|
2014
|
%
|
%
|
2015
|
2014
|
%
|
%
|
|
|
|
|
|
|
|
|
|
Brand
|
|
|
|
|
|
|
|
|
J.P. Wiser's Canadian
whisky
|
195
|
200
|
(3%)
|
(2%)
|
806
|
861
|
(6%)
|
(9%)
|
Lamb's rum
|
109
|
131
|
(17%)
|
(17%)
|
503
|
522
|
(4%)
|
(1%)
|
Polar Ice
vodka
|
97
|
92
|
5%
|
0%
|
383
|
381
|
0%
|
2%
|
Mixable
liqueurs
|
42
|
41
|
3%
|
2%
|
174
|
183
|
(5%)
|
(5%)
|
|
|
|
|
|
|
|
|
|
Total Key
Brands
|
443
|
464
|
(5%)
|
(4%)
|
1,866
|
1,948
|
(4%)
|
(5%)
|
Other Corby-owned
brands
|
49
|
48
|
0%
|
0%
|
216
|
214
|
1%
|
3%
|
|
|
|
|
|
|
|
|
Total Corby
brands
|
492
|
512
|
(4%)
|
(4%)
|
2,082
|
2,162
|
(4%)
|
(4%)
|
Overall, volume and shipment value for Corby owned-brands is
lower on a year over year comparative basis. However, trends in
Corby's domestic market differ significantly from international
markets as highlighted in the following chart:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
2015
|
2014
|
Growth
|
Growth
|
2015
|
2014
|
Growth
|
Growth
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
450
|
458
|
(2%)
|
(3%)
|
1,858
|
1,878
|
(1%)
|
0%
|
International
|
|
|
42
|
54
|
(25%)
|
(13%)
|
223
|
284
|
(21%)
|
(31%)
|
Total Corby
brands
|
|
|
492
|
512
|
(4%)
|
(4%)
|
2,082
|
2,162
|
(4%)
|
(4%)
|
For the three months ended June 30,
2015, Corby's domestic shipment value declined 3% on a year
over year comparative basis largely attributable to the phasing of
shipments to the Atlantic provinces, impacting Lamb's Rum in
particular. Given this cyclical shipment impact,
we consider the trend for 12 months to be more reflective of the
underlying trend of our domestic business.
For the year ended June 30, 2015,
Corby's domestic shipment volume declined 1% while shipment value
was essentially flat. Shipment value performed ahead of
volume as a result of our premiumization strategy, price increases
and effective management of promotional programming. 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.
In international markets, lower shipments for the three months
ended June 30, 2015 are largely
attributable to Lamb's rum in the UK market due to a shift in
production timing at our third-party bottling facility. As
noted last quarter, this shift effectively moved volumes which
occurred in the fourth quarter last year into the third quarter
this year.
For the year ended June 30, 2015,
lower shipments in international markets reflect J.P. Wiser's Canadian whisky lapping a one-time
inventory pipe-line build-up in 2014 for the national launch of
J.P. Wiser's Rye and J.P. Wiser's Spiced whisky in the US that was
not repeated in the current year. The three tier distribution
system in the US requires us to fill the inventory pipeline well
before any retail promotions which did not commence until quarter
three of the last fiscal year.
Our entry into the US market has been successful from the
perspective of the number of distribution points gained.
We've adjusted our strategy to provide increased focus on a
smaller number of markets where the portfolio has performed well
and the greatest opportunities exist. Our focus shifted from
distribution gains to retail velocity driving activities. As a
result, we have not refilled the initial inventory pipeline to
non-priority markets.
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. While Corby's focus on the US business is increasing,
retail sales data in the US is prepared using limited sampling
techniques, which does not provide meaningful trend analysis on a
brand that has not yet reached sufficient scale to make such
disclosure meaningful. Corby will provide such data as and
when it is considered to offer meaningful analysis of brand
performance.
|
|
|
|
|
|
|
RETAIL SALES FOR
THE CANADIAN MARKET ONLY1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
|
|
|
%
Retail
|
%
Retail
|
|
|
|
%
Retail
|
%
Retail
|
|
|
|
Jun.
30,
|
Jun.
30,
|
Volume
|
Value
|
|
Jun.
30,
|
Jun.
30,
|
Volume
|
Value
|
(Volumes in 000's
of 9L cases)
|
|
2015
|
2014
|
Growth
|
Growth
|
|
2015
|
2014
|
Growth
|
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
Brand
|
|
|
|
|
|
|
|
|
|
|
|
J.P. Wiser's Canadian
whisky
|
160
|
161
|
(1%)
|
0%
|
|
724
|
717
|
1%
|
2%
|
Lamb's rum
|
|
|
85
|
89
|
(4%)
|
(4%)
|
|
393
|
413
|
(5%)
|
(4%)
|
Polar Ice
vodka
|
|
|
81
|
78
|
4%
|
4%
|
|
356
|
355
|
0%
|
2%
|
Mixable
liqueurs
|
|
|
37
|
38
|
(3%)
|
(2%)
|
|
171
|
177
|
(3%)
|
(2%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Key
Brands
|
|
|
363
|
366
|
(1%)
|
0%
|
|
1,643
|
1,662
|
(1%)
|
0%
|
Other Corby-owned
brands
|
45
|
46
|
(1%)
|
(1%)
|
|
199
|
208
|
(4%)
|
(2%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
408
|
412
|
(1%)
|
0%
|
|
1,842
|
1,869
|
(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 has maintained modest growth
posting 1% retail sales volume growth and 3% retail sales value
growth for both the three and twelve months ended June 30, 2015. These trends are supported
by double digit retail sales value growth in the Bourbon and Irish
whiskey categories.
As illustrated in the above chart, Corby's portfolio of owned
brands underperformed the spirits industry for the three and twelve
months ending June 30, 2015. The
following brand discussion provides a more detailed discussion of
how each of Corby's key brands performed relative to its respective
industry category.
Summary of Corby's Key Brands
J.P. Wiser's Canadian
Whisky
Corby's flagship brand, J.P.
Wiser's Canadian whisky, delivered topline growth marginally
ahead of the Canadian whisky category for the year ended
June 30, 2015. For the year,
J.P. Wiser's and the Canadian whisky
category grew retail volume 1% and retail value 2% on a year over
year comparison basis.
For the three months ended June 30,
2015, J.P. Wiser's Canadian
whisky retail value was essentially flat on a year-over-year
comparison basis. The Canadian whisky category grew 2% in retail
value, when compared to the same three month period last year
driven by aggressive competitor activity at retail.
Corby continued its strong investment behind the brand, with the
new Wiserfund campaign launched in October 2014. A new J.P. Wiser's Spiced extension, Torched Toffee
delivered more than 2,000 incremental 9L cases in Retail Volume as
a limited time offering in the second quarter of 2015. New
packaging highlighting more premium and quality cues were rolled
out to the Canadian market during the first half of fiscal
2015.
In July 2015, Corby began shipping
two innovative new variants of the J.P.
Wiser's family across Canada. The first J.P. Wiser's Hopped combines the best elements
of brewing and distilling for a full flavoured whisky delivering
the unique characteristics of hops with rich notes of roasted malt
and the spice of J.P. Wiser's
Rye. The second, J.P. Wiser's
Double Still Rye is a blend of two exceptional ryes – one distilled
from a copper pot, the other crafted in a copper column
still.
Lamb's Rum
Lamb's rum, one of the top-selling rum
families in Canada, was
significantly impacted by consumer trends, particularly in respect
of the dark and white rum segments which both declined 3% and 4%
respectively in retail volumes when compared to the same twelve
month period last year
For both the three-month period and year ended June 30, 2015, Lamb's declined 5% in retail
volume and a 4% decline in retail value when compared to same
periods last year, reflective of the overall decline in the dark
and white rum categories. Corby's Lamb's rum product line is
heavily weighted in the dark and white segments. Our strategy
is to defend our regional strongholds and to strongly promote the
entire range.
Polar Ice Vodka
Polar Ice vodka is among the top three
largest vodka brands in Canada.
Retail volume was essentially flat and retail value increased 2%
when compared to the same twelve month period last year. Positive
market share gains in Ontario and
Quebec have been impacted by
aggressive competitor activity in Western
Canada. Overall these trends are comparable with the
performance of the vodka category in Canada which grew retail volumes 1% and grew
retail value 2% when compared to the same twelve month period last
year. Advertising and promotion investment included a digital /
social media platform to drive support for the regional successful
introduction of a Polar Ice 90° North premium innovation which has
delivered 6,500 9L cases of retail volume for the year.
Polar Ice vodka retail volume and retail value grew 4% for the
three month period ended June 30,
2015 with strong performance across Ontario and Quebec. Strong investment
for retail activation in Western
Canada also supported topline growth.
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 lagged category trends with retail
volume declining 3% and retail value declining 2% for both the
three month and year ended June 30,
2015. The Liqueurs category, which is growing at 2% in retail
value, is being driven by new innovations and cream based offerings
with which McGuinness does not directly compete.
Our current strategy is to use alternative branded offerings
such as Criollo® rather than McGuinness to benefit from these
trends. For McGuinness and Meaghers, our focus is on strong
programing in the retail environment and ensuring that our flavour
offering is aligned to consumer trends.
During the first half of fiscal 2015 the Company effectively
completed the process of moving mixable liqueur production to the
Corby managed HWSL production facility from the bottling facility
of a third party in Montreal,
Quebec.
Other Corby-Owned Brands
Innovation remains an
important pillar for delivering new profit and growth opportunities
to the Corby domestic business. Recent premium offerings in
Canadian whisky such as Pike Creek® and Lot No. 40® collectively
grew retail volume 52% and retail value 38% compared to the same
twelve month period last year.
Criollo® Chocolate Sea Salted Caramel and Criollo® Chocolate
Raspberry Truffle marked their one year anniversary in the Canadian
market in September 2014 and
continued to be well received by key customers and consumers with
retail volume growth of 21% and retail value growth of 33% for the
year ended June 30, 2015.
Royal Reserve® Canadian whisky retail volume declined -5% and
retail value declined -4% for the year ended June 30, 2015 when compared to the same period
last year. Our response to the declines has been to improve the
retail support of the brand in its regional strongholds.
Financial and Operating Results
The following table presents a summary of certain selected
consolidated financial information of the Company for the years
ended June 30, 2015 and 2014.
(in millions of
Canadian dollars, except per share amounts)
|
|
2015
|
|
2014
|
|
$
Change
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
132.1
|
|
$
137.3
|
|
$
(5.2)
|
|
(4%)
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
(49.1)
|
|
(49.0)
|
|
(0.1)
|
|
0%
|
Marketing, sales and
administration
|
|
(55.9)
|
|
(55.3)
|
|
(0.6)
|
|
1%
|
Other
income
|
|
0.1
|
|
0.5
|
|
(0.4)
|
|
(80%)
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
|
27.2
|
|
33.5
|
|
(6.3)
|
|
(19%)
|
|
|
|
|
|
|
|
|
|
Financial
income
|
|
1.6
|
|
1.7
|
|
(0.1)
|
|
(6%)
|
Financial
expenses
|
|
(1.1)
|
|
(1.2)
|
|
0.1
|
|
(8%)
|
|
|
0.5
|
|
0.5
|
|
-
|
|
0%
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
27.7
|
|
34.0
|
|
(6.3)
|
|
(18%)
|
Income
taxes
|
|
(7.3)
|
|
(9.0)
|
|
1.7
|
|
(19%)
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
20.4
|
|
$
25.0
|
|
$
(4.6)
|
|
(18%)
|
|
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
|
|
|
|
|
- Basic net
earnings
|
|
$
0.72
|
|
$
0.88
|
|
$
(0.16)
|
|
(18%)
|
|
- Diluted net
earnings
|
|
$
0.72
|
|
$
0.88
|
|
$
(0.16)
|
|
(18%)
|
Overall Financial Results
For the year, net earnings decreased $4.6
million or 18% when compared to the same twelve month period
last year. The decline is largely attributable to lapping the
J.P. Wiser's Rye and J.P. Wiser's
Spiced whisky launch in the US in the comparative period. In
addition to the non-repeat of inventory pipe-line build-up for the
US launch, advertising and promotional investment for these brands
has now ramped up to drive awareness and trial.
Reduced Commission income is attributable to discontinued
representation of certain Agency brands in December 2013. The
non-repeat of one-time, non-cash savings related to amendments to
the Company's employee defined benefit pension plans in the prior
year was offset by lower severance and termination payments related
to cost reduction programs.
Revenue
The following highlights the key components of the Company's
revenue streams:
(in millions of
Canadian dollars)
|
|
2015
|
|
2014
|
|
$
Change
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Revenue
streams:
|
|
|
|
|
|
|
|
|
|
Case goods
|
|
$
111.8
|
|
$
116.4
|
|
$
(4.6)
|
|
(4%)
|
|
Commissions
|
|
16.4
|
|
16.7
|
|
(0.3)
|
|
(2%)
|
|
Other
services
|
|
3.9
|
|
4.2
|
|
(0.3)
|
|
(7%)
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
132.1
|
|
137.3
|
|
(5.2)
|
|
(4%)
|
Case goods revenue declined $4.6
million for the year ended June 30,
2015 when compared to the same period last year. The
decline is attributable to the impact of the J.P. Wiser's inventory
pipe-line build-up in the US in the prior year.
Commissions decreased $0.3 million
or 2% when compared with last year. The reduction was primarily due
to the impact of the discontinuation of certain agency brands
($0.6 million) as of December 2013 which were included in the previous
year's results until such discontinuation. Referenced earlier in
the Significant Events section of this MD&A, Corby entered into
an agreement on September 30, 2013
for continued exclusive Canadian representation of the iconic
ABSOLUT vodka brand. The growth in Pernod Ricard brands, and
particularly ABSOLUT vodka, more than offset the increase in
amortization for the year ended June 30,
2015.
Other services represents ancillary revenue incidental to
Corby's core business activities such as logistical fees.
Cost of sales
Cost of sales was $49.1 million
for the year ended June 30, 2015,
essentially flat when compared to the same period last year. Gross
margin on case goods for the year was a creditable 58%, reduced
from 59% for the prior year, and reflects the lower mix of
(superior margin) case good sales to the US market due to the
inventory pipe-line build-up in the prior year that was not
repeated in the current year (note: commissions are not included in
this calculation).
Marketing, sales and administration
Marketing, sales and administration expenses increased 1% for
the year ended June 30, 2015. Corby
has now ramped up investment behind the J.P. Wiser's brands in the
US market through increased advertising and promotional spend.
Examples of A&P investment include sponsorship of ESPN fantasy
football and trips to the Super Bowl to support in-store programs.
The non-repeat of the one-time non-cash saving noted in the
above paragraph, was offset by lower severance and termination
payments related to cost reduction programs. Recurring
administrative costs remain relatively consistent with the prior
year reflecting our focus on introducing new systems and ways of
working that create the capacity to take on additional income
flows.
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 balance was most significantly impacted by foreign
exchange losses due to the weakening Canadian dollar compared to
the prior 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 the prior year.
Income taxes
A reconciliation of the effective tax rate to the statutory
rates for each period is presented below.
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Combined basic
Federal and Provincial tax rates
|
|
|
|
26.6%
|
|
|
26.6%
|
Other
|
|
|
|
(0.2%)
|
|
|
(0.1%)
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
|
26.4%
|
|
|
26.5%
|
Liquidity and Capital Resources
Corby's sources of liquidity are its deposits in cash management
pools of $94.1 million as at
June 30, 2015, and its cash generated
from operating activities. Corby's total contractual maturities are
represented by its accounts payable and accrued liabilities, which
totalled $25.5 million as at
June 30, 2015, 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)
|
|
2015
|
|
2014
|
|
$ Change
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
|
|
Net earnings,
adjusted for non-cash items
|
|
$
33.7
|
|
$
38.9
|
|
$
(5.2)
|
|
Net change in
non-cash working capital
|
|
(0.4)
|
|
(0.4)
|
|
-
|
|
Net payments for
interest and income taxes
|
|
(6.2)
|
|
(7.1)
|
|
0.9
|
|
|
27.1
|
|
31.4
|
|
(4.3)
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
|
Additions to capital
assets
|
|
(2.8)
|
|
(2.2)
|
|
(0.6)
|
|
Additions to
intangible assets
|
|
-
|
|
(10.3)
|
|
10.3
|
|
Proceeds from
disposition of capital assets
|
|
0.2
|
|
0.4
|
|
(0.2)
|
|
Proceeds from
disposition of intangible asset
|
|
-
|
|
0.3
|
|
(0.3)
|
|
Deposits in cash
management pools
|
|
13.9
|
|
-
|
|
13.9
|
|
|
11.3
|
|
(11.8)
|
|
23.1
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
|
Proceeds from note
receivable
|
|
0.6
|
|
0.6
|
|
-
|
|
Dividends
paid
|
|
(39.0)
|
|
(20.2)
|
|
(18.8)
|
|
|
(38.4)
|
|
(19.6)
|
|
(18.8)
|
|
|
|
|
|
|
|
Net change in
cash
|
|
$
-
|
|
$
-
|
|
$
-
|
Operating activities
For the 2015 year, net cash from operating activities was
$27.1 million, a reduction of
$4.3 million compared to last year
reflecting lower net earnings, slightly offset by lower tax
payments.
Investing activities
Cash inflows for investing activities was $11.3 million for the year ended June 30, 2015, compared to a use of cash of
$11.8 million last year.
The prior year period included 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 Citibank NA 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 $38.4 million this year, an increase of
$18.8 million over last year, and
reflects dividend payments paid to shareholders including a special
dividend of $17.7 million. There was
no special dividend paid in the prior year.
On November 5, 2014 the Company
announced that it had amended its dividend policy, whereby the
annual amount of dividend will now be based on the greater of 85%
of net earnings per share in the preceding fiscal year ended
June 30 and $0.60 per share, subject to business conditions
and opportunities and appropriate adjustment for extraordinary
events. Prior to this announcement the annual amount of dividends
was based on the greater of 75% of net earnings per share in the
preceding fiscal year ended June 30
and $0.60 per share.
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
|
2015 - Q4
|
|
August 26,
2015
|
|
September 16,
2015
|
|
September 30,
2015
|
|
$ 0.19
|
2015 - Q3
|
|
May 6,
2015
|
|
May 29,
2015
|
|
June 12,
2015
|
|
0.19
|
2015 - Q2
|
|
February 4,
2015
|
|
February 27,
2015
|
|
March 13,
2015
|
|
0.19
|
2015 -
special
|
|
November 5, 2014
(special dividend)
|
|
December 12,
2014
|
|
January 9,
2015
|
|
0.62
|
2015 - Q1
|
|
November 5,
2014
|
|
November 28,
2014
|
|
December 12,
2014
|
|
0.19
|
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
|
Outstanding Share Data
As at August 26, 2015, 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, 2015:
|
|
Payments
|
|
Payments
|
|
Payments
|
|
Payments
|
|
Obligations
|
|
|
|
|
During
|
|
due in
2017
|
|
due in
2019
|
|
due after
|
|
with no
fixed
|
|
|
|
|
2016
|
|
and 2018
|
|
and 2020
|
|
2020
|
|
maturity
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease
obligations
|
|
$
1.6
|
|
$
2.3
|
|
$
1.5
|
|
$
3.4
|
|
$
-
|
|
$
8.8
|
Employee future
benefits
|
|
-
|
|
-
|
|
-
|
|
-
|
|
20.0
|
|
20.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
1.6
|
|
$
2.3
|
|
$
1.5
|
|
$
3.4
|
|
$
20.0
|
|
$
28.8
|
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. On
August 26, 2015, Corby entered into
an agreement with PR and certain affiliates amending the
September 29, 2006 Canadian
representation agreements, whereby Corby would provide more
specialized marketing, advertising and promotion services for the
PR and affiliate brands under the applicable agreements in exchange
for an increase to the rate of commission payable by such
entities.
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. 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.
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 Aktiebolag, 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.
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
J.P. 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 Citibank N.A.
effective July 17, 2014. 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 26, 2015, 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 2015
The following table presents a summary of certain selected
consolidated financial information for the Company for the three
month periods ended June 30, 2015 and
2014:
|
|
Three Months
Ended
|
|
|
|
|
|
|
June
30,
|
June 30,
|
|
|
|
|
(in millions of
Canadian dollars, except per share amounts)
|
|
2015
|
2014
|
|
$
Change
|
|
%
Change
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
32.5
|
$
33.4
|
|
$
(0.9)
|
|
(3%)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
(11.7)
|
(10.8)
|
|
(0.9)
|
|
9%
|
Marketing, sales and
administration
|
|
(11.0)
|
(13.4)
|
|
2.4
|
|
(18%)
|
Other income
(expense)
|
|
0.0
|
0.0
|
|
(0.0)
|
|
(41%)
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
|
9.8
|
9.2
|
|
0.6
|
|
6%
|
|
|
|
|
|
|
|
|
Financial
income
|
|
0.3
|
0.4
|
|
(0.1)
|
|
(30%)
|
Financial
expenses
|
|
(0.3)
|
(0.3)
|
|
0.0
|
|
(8%)
|
|
|
0.0
|
0.2
|
|
(0.1)
|
|
(71%)
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
9.8
|
9.4
|
|
0.4
|
|
4%
|
Income
taxes
|
|
(2.5)
|
(2.5)
|
|
0.0
|
|
(1%)
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
7.3
|
$
6.9
|
|
$
0.4
|
|
7%
|
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
|
|
|
|
- Basic net
earnings
|
|
$
0.26
|
$
0.24
|
|
$
0.02
|
|
8%
|
|
- Diluted net
earnings
|
|
$
0.26
|
$
0.24
|
|
$
0.02
|
|
8%
|
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)
|
|
2015
|
2014
|
|
$
Change
|
|
%
Change
|
|
|
|
|
|
|
|
|
Revenue
streams:
|
|
|
|
|
|
|
|
|
Case goods
|
|
$
27.3
|
$
28.4
|
|
$
(1.1)
|
|
(4%)
|
|
Commissions
|
|
4.3
|
4.0
|
|
0.3
|
|
8%
|
|
Other
services
|
|
0.9
|
0.9
|
|
0.0
|
|
2%
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
32.5
|
$
33.4
|
|
$
(0.9)
|
|
(3%)
|
Total revenue declined $0.9
million on a quarter over quarter comparison basis. Case
Goods revenue decreased $1.1 million
during the quarter largely attributable to the phasing of shipments
for Lamb's Rum. In Canada,
shipment phasing to the Atlantic provinces, impacted Lamb's Rum in
particular. Further, Lamb's Rum was impacted in the UK market
due to a shift in production timing at our third-party bottling
facility. As noted last quarter, this shift effectively moved
volumes which occurred in fourth quarter last year into third
quarter this year. Commissions increased $0.3 million or 8%, on a quarter-over-quarter
comparative basis driven by the Pernod Ricard portfolio of
brands.
Cost of Sales
Cost of goods sold was $11.7
million, $0.9 million or 9%
higher than the same period last year. Gross margin on case goods
was 59% this quarter compared to 63% for the same quarter last year
(note: commissions are not included in this calculation). The
decrease in gross margin reflects a one-time adjustment for a
change in estimated third party contract bottling rates recorded in
the prior year quarter. If this adjustment is removed from the
prior year gross margin calculation, gross margin would be
comparable year-over-year at 60%.
Marketing, sales and administration
Marketing, sales and administration expenses decreased
$2.4 million, or 18% over the same
quarter last year. This includes the non-repeat of charges for
severance and termination payments as a result of the Company's
cost reduction programme recognized in the fourth quarter last
year. As well, advertising and promotion expense for
J.P. Wiser's in the US was lower as
we cycled against initial brand building investment in the same
quarter last year.
Net earnings and earnings per share
Net earnings for the fourth quarter were $7.3 million, or $0.26 per share, which is an increase of
$0.4 million over the same quarter
last year. As discussed previously lower gross margins were more
than offset by lower advertising and promotional spend and the
non-repeat 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)
|
2015
|
2015
|
2015
|
2015
|
2014
|
2014
|
2014
|
2014
|
|
|
|
|
|
|
|
|
|
Revenue
|
$ 32.5
|
$ 26.8
|
$ 38.0
|
$ 34.8
|
$ 33.4
|
$ 28.6
|
$ 38.5
|
$ 36.7
|
Earnings from
operations
|
9.8
|
3.1
|
7.7
|
6.6
|
9.2
|
4.1
|
10.2
|
9.9
|
Net
earnings
|
7.3
|
2.4
|
5.8
|
4.9
|
6.9
|
3.1
|
7.5
|
7.5
|
Basic EPS
|
0.26
|
0.08
|
0.20
|
0.17
|
0.24
|
0.11
|
0.26
|
0.26
|
Diluted
EPS
|
0.26
|
0.08
|
0.20
|
0.17
|
0.24
|
0.11
|
0.26
|
0.26
|
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 overall decline experienced in 2015
compared to 2014 is largely attributable to lapping the J.P.
Wiser's Rye and J.P. Wiser's Spiced
whisky launch in the US in 2014. In addition to the
non-repeat of inventory pipe-line build-up for the US launch,
advertising and promotional investment for these brands ramped up
in 2015 to drive awareness and trial.
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 9 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,
2014:
(i)
Financial Instruments – Asset and Liability Offsetting
The IASB has issued amendments to IAS 32, "Financial
Instruments: Presentation" ("IAS 32"), which provide further
guidance on the requirements for offsetting of 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 was effective July 1, 2014.
The implementation of IAS 32 amendments resulted in a
reclassification of assets and liabilities related to other taxes
to accounts receivable and accounts payable balances. The
implementation of these amendments had the following impacts as at
June 30, 2014 and June 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
June 30,
|
Balance sheet
impacts
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
|
$
1,569
|
|
$
1,483
|
Income taxes
recoverable
|
|
|
|
(634)
|
|
(562)
|
Accounts payable and
accrued liabilities
|
|
|
|
(935)
|
|
(921)
|
|
|
|
|
$
-
|
|
$
-
|
The implementation of these amendments did not impact equity,
net earnings or cash flows in the current and comparative
periods.
(ii)
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 was effective
July 1, 2014. The implementation of
IFRIC 21 did not have an impact on the Company's consolidated
results of operations and financial position.
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, 2015,
and accordingly, have not been applied in preparing these interim
condensed consolidated financial statements:
(i)
Revenue
In May 2014, the IASB released
IFRS 15, "Revenue from contracts with customers" ("IFRS 15"), 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, 2018, with earlier application permitted.
The Company has not yet assessed the impact of the adoption of this
standard on its financial statements and disclosures.
(ii)
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.
This standard is effective 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 financial
statements and disclosures.
(iii)
Disclosure initiative
In December 2014, the IASB issued
Disclosure Initiative Amendments to IAS 1 as part of the IASB's
Disclosure Initiative. These amendments encourage entities to apply
professional judgement regarding disclosure and presentation in
their financial statements. These amendments are effective for
annual periods beginning on or after January
1, 2016. Earlier application is permitted. For Corby, these
amendments will become effective July 1,
2016. The Company is assessing the potential impact of these
amendments.
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, 2015, 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,
2015, 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 (2013), 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. As the Company becomes more
reliant on international product sales in the US, UK and other
countries exposure to changes in the laws and regulations in those
countries could also adversely affect the operations, financial
performance or reputation of the Company.
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. Corby continues to identify and offer new innovations
in order to address consumer desires.
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. International sales are
subject to the variations in distribution systems within each
country where the products are sold.
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
In recent years, the
global beverage alcohol industry has continued to experience
consolidation. 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 and international
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
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.
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. 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 90% 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.
Information Technology
The Company uses
technology supplied by third parties, both related and non-related,
to support operations and invests in information technology to
improve route to market, reporting, analysis, and marketing
initiatives. Issues with availability, reliability and
security of systems and technology could adversely impact the
Company's ability to compete resulting in corruption or loss of
data, regulatory related issues, litigation or brand reputation
damage. With the fast paced changing nature of the technology
environment including digital marketing the Company works with our
third parties to maintain policies, processes and procedures to
help secure and protect these information systems as well as
consumer, corporate and employee data.
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 table 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, 2015
|
|
|
|
|
|
|
|
|
|
|
|
Associated
Brand
|
|
|
Associated
Market
|
|
|
Goodwill
|
|
Intangibles
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Various PR
brands
|
|
|
Canada
|
|
|
$
-
|
|
$
36.5
|
|
$
36.5
|
Lamb's rum
|
|
|
United
Kingdom(1)
|
|
|
1.4
|
|
11.8
|
|
13.2
|
Corby domestic
brands
|
|
|
Canada
|
|
|
1.9
|
|
-
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
3.3
|
|
$
48.3
|
|
$
51.6
|
(1)
|
The international
business for Lamb's rum is primarily focused in the UK, however,
the trademarks and licences 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 9 of the consolidated
financial statements for the year ended June
30, 2015.
CORBY SPIRIT AND
WINE LIMITED
|
|
|
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
As at June 30,
2015, 2014 and 2013
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
(in thousands of
Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
June 30,
|
|
June 30,
|
|
|
Notes
|
|
2015
|
|
2014(1)
|
|
2013(1)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Deposits in cash
management pools
|
|
|
|
$
94,100
|
|
$ 108,029
|
|
$ 108,043
|
Accounts
receivable
|
|
7
|
|
24,763
|
|
24,818
|
|
25,125
|
Income taxes
recoverable
|
|
|
|
1,257
|
|
346
|
|
493
|
Inventories
|
|
8
|
|
50,858
|
|
52,561
|
|
49,083
|
Prepaid
expenses
|
|
|
|
226
|
|
256
|
|
533
|
Current portion of
note receivable
|
|
|
|
-
|
|
600
|
|
600
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
|
171,204
|
|
186,610
|
|
183,877
|
Note
receivable
|
|
|
|
-
|
|
-
|
|
600
|
Other
assets
|
|
9
|
|
-
|
|
1,554
|
|
569
|
Deferred income
taxes
|
|
10
|
|
1,165
|
|
658
|
|
1,699
|
Property and
equipment
|
|
11
|
|
9,784
|
|
8,632
|
|
8,092
|
Goodwill
|
|
12
|
|
3,278
|
|
3,278
|
|
3,278
|
Intangible
assets
|
|
13
|
|
48,281
|
|
54,163
|
|
49,665
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
|
$
233,712
|
|
$ 254,895
|
|
$ 247,780
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
15
|
|
$
25,540
|
|
$
27,709
|
|
$
25,106
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
|
25,540
|
|
27,709
|
|
25,106
|
Provision for
employee benefits
|
|
9
|
|
20,048
|
|
18,045
|
|
21,363
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
|
45,588
|
|
45,754
|
|
46,469
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
|
|
Share
capital
|
|
16
|
|
14,304
|
|
14,304
|
|
14,304
|
Accumulated other
comprehensive loss
|
|
17
|
|
(6,733)
|
|
(4,303)
|
|
(7,363)
|
Retained
earnings
|
|
|
|
180,553
|
|
199,140
|
|
194,370
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity
|
|
|
|
188,124
|
|
209,141
|
|
201,311
|
|
|
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
|
|
|
$
233,712
|
|
$ 254,895
|
|
$ 247,780
|
1 In
preparing its comparative information, the Company has adjusted
amounts reported previously in the consolidated
balance sheets as a
result of the retrospective application of the amendments to IAS
32, Financial Instruments - Presentation.
|
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
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
18
|
|
$
32,473
|
|
$
33,366
|
|
$
132,066
|
|
$ 137,279
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
(11,680)
|
|
(10,761)
|
|
(49,037)
|
|
(48,973)
|
Marketing, sales and
administration
|
|
|
|
(11,006)
|
|
(13,409)
|
|
(55,865)
|
|
(55,304)
|
Other
income
|
|
19
|
|
27
|
|
46
|
|
75
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
|
|
|
9,814
|
|
9,242
|
|
27,239
|
|
33,460
|
|
|
|
|
|
|
|
|
|
|
|
Financial
income
|
|
20
|
|
303
|
|
445
|
|
1,606
|
|
1,755
|
Financial
expenses
|
|
20
|
|
(259)
|
|
(291)
|
|
(1,107)
|
|
(1,234)
|
|
|
|
|
44
|
|
154
|
|
499
|
|
521
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
|
|
9,858
|
|
9,396
|
|
27,738
|
|
33,981
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income
taxes
|
|
|
|
(2,225)
|
|
(2,747)
|
|
(6,952)
|
|
(9,066)
|
Deferred income
taxes
|
|
|
|
(291)
|
|
216
|
|
(371)
|
|
68
|
Income
taxes
|
|
10
|
|
(2,516)
|
|
(2,531)
|
|
(7,323)
|
|
(8,998)
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
$
7,342
|
|
$
6,865
|
|
$
20,415
|
|
$
24,983
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
21
|
|
$
0.26
|
|
$
0.24
|
|
$
0.72
|
|
$
0.88
|
Diluted earnings
per share
|
|
21
|
|
$
0.26
|
|
$
0.24
|
|
$
0.72
|
|
$
0.88
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
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
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
$
7,342
|
|
$
6,865
|
|
$
20,415
|
|
$
24,983
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
Amounts that will not
be subsequently reclassified to earnings:
|
|
|
|
|
|
|
|
|
|
Net actuarial
gains
|
|
9
|
|
(3,266)
|
|
857
|
|
(3,308)
|
|
4,169
|
|
Income
taxes
|
|
|
|
864
|
|
(227)
|
|
878
|
|
(1,109)
|
|
|
|
|
(2,402)
|
|
630
|
|
(2,430)
|
|
3,060
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income
|
|
|
$
4,940
|
|
$
7,495
|
|
$
17,985
|
|
$
28,043
|
|
|
|
|
|
|
|
|
|
|
|
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, 2014
|
|
|
|
$
14,304
|
|
$
(4,303)
|
|
$ 199,140
|
|
$ 209,141
|
Total comprehensive
income
|
|
|
|
-
|
|
(2,430)
|
|
20,415
|
|
17,985
|
Dividends
|
|
|
|
-
|
|
-
|
|
(39,002)
|
|
(39,002)
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at June
30, 2015
|
|
|
|
$
14,304
|
|
$
(6,733)
|
|
$
180,553
|
|
$
188,124
|
|
|
|
|
|
|
|
|
|
|
|
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
|
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 Year
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jun.
30
|
|
Jun. 30
|
|
Jun.
30
|
|
Jun. 30
|
|
|
Notes
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
$
7,342
|
|
$
6,865
|
|
$
20,415
|
|
$
24,983
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
Amortization and
depreciation
|
|
22
|
|
1,861
|
|
1,873
|
|
7,445
|
|
7,054
|
Net financial
income
|
|
20
|
|
(44)
|
|
(154)
|
|
(499)
|
|
(521)
|
Gain on disposal of
property and equipment
|
|
|
|
(16)
|
|
(53)
|
|
(116)
|
|
(196)
|
Income tax
expense
|
|
10
|
|
2,516
|
|
2,531
|
|
7,323
|
|
8,998
|
Provision for
employee benefits
|
|
|
|
(577)
|
|
(293)
|
|
(858)
|
|
(1,369)
|
|
|
|
|
|
11,082
|
|
10,769
|
|
33,710
|
|
38,949
|
Net change in
non-cash working capital balances
|
|
24
|
|
3,169
|
|
(55)
|
|
(381)
|
|
(380)
|
Interest
received
|
|
|
|
310
|
|
437
|
|
1,606
|
|
1,767
|
Income taxes
paid
|
|
|
|
(2,128)
|
|
(2,444)
|
|
(7,863)
|
|
(8,918)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from
operating activities
|
|
|
|
12,433
|
|
8,707
|
|
27,072
|
|
31,418
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
|
|
|
|
Additions to property
and equipment
|
|
11
|
|
(1,098)
|
|
(1,521)
|
|
(2,799)
|
|
(2,176)
|
Additions to
intangible assets
|
|
|
|
-
|
|
-
|
|
-
|
|
(10,293)
|
Proceeds from
disposition of property and equipment
|
|
|
|
29
|
|
83
|
|
200
|
|
385
|
Proceeds from
disposition of intangible asset
|
|
|
|
-
|
|
265
|
|
-
|
|
265
|
Deposits in cash
management pools
|
|
|
|
(5,955)
|
|
(2,409)
|
|
13,929
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
|
|
|
(7,024)
|
|
(3,582)
|
|
11,330
|
|
(11,805)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from note
receivable
|
|
|
|
-
|
|
-
|
|
600
|
|
600
|
Dividends
paid
|
|
|
|
(5,409)
|
|
(5,125)
|
|
(39,002)
|
|
(20,213)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
financing activities
|
|
|
|
(5,409)
|
|
(5,125)
|
|
(38,402)
|
|
(19,613)
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2015.
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 26,
2015.
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,
2014:
(i)
Financial Instruments – Asset and Liability Offsetting
The IASB has issued amendments to IAS 32, "Financial
Instruments: Presentation" ("IAS 32"), which provide further
guidance on the requirements for offsetting of 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 was effective July 1, 2014.
The implementation of IAS 32 amendments resulted in a
reclassification of assets and liabilities related to other taxes
to accounts receivable and accounts payable balances. The
implementation of these amendments had the following impacts as at
June 30, 2014 and June 30, 2013:
|
|
|
|
|
|
June 30,
|
June 30,
|
Balance sheet
impacts
|
|
|
|
|
2014
|
2013
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
|
|
$
1,569
|
$
1,483
|
Income and other
taxes recoverable
|
|
|
|
(634)
|
(562)
|
Accounts payable and
accrued liabilities
|
|
|
|
(935)
|
(921)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
-
|
$
-
|
The implementation of these amendments did not impact equity,
net earnings or cash flows in the current and comparative
periods.
(i)
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 was effective
July 1, 2014. The implementation of
IFRIC 21 did not have an impact on the Company's consolidated
results of operations and financial position.
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, 2015,
and accordingly, have not been applied in preparing these interim
condensed consolidated financial statements:
(i)
Revenue
In May 2014, the IASB released
IFRS 15, "Revenue from contracts with customers" ("IFRS 15"), 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, 2018, with earlier application permitted.
The Company has not yet assessed the impact of the adoption of this
standard on its financial statements and disclosures.
(ii)
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.
This standard is effective 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
financial statements and disclosures.
(iii)
Disclosure initiative
In December 2014, the IASB issued
Disclosure Initiative Amendments to IAS 1 as part of the IASB's
Disclosure Initiative. These amendments encourage entities to apply
professional judgement regarding disclosure and presentation in
their financial statements. These amendments are effective for
annual periods beginning on or after January
1, 2016. Earlier application is permitted. For Corby, these
amendments will become effective July 1,
2016. The Company is assessing the potential impact of these
amendments.
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 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.
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 their 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
9) and provisions for uncertain tax positions (Note 10).
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 comprehensive 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 term of their respective
agreements.
(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, 2015.
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
|
|
|
|
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 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
26), as well as credit exposure to customers, including outstanding
accounts 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,
2015 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.
Liquidity Risk
Corby's sources of liquidity are its
deposits in cash management pools of $94,100 and its cash generated by operating
activities. Corby's total contractual maturities are represented by
its accounts payable and accrued liabilities balances which totaled
$25,540 as at June 30, 2015, 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.
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.
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 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.
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,
|
|
June 30,
|
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
|
$
14,304
|
|
$ 14,304
|
|
$ 14,304
|
Accumulated other
comprehensive loss
|
|
|
|
(6,733)
|
|
(4,303)
|
|
(7,363)
|
Retained
earnings
|
|
|
|
180,553
|
|
199,140
|
|
194,370
|
|
|
|
|
|
|
|
|
|
Net capital under
management
|
|
|
|
$
188,124
|
|
$ 209,141
|
|
$ 201,311
|
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
85% 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,
|
|
June 30,
|
|
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
|
|
|
$
14,401
|
|
$ 16,343
|
|
$ 16,491
|
Due from related
parties
|
|
|
|
8,721
|
|
$
6,906
|
|
$
7,151
|
Other
|
|
|
|
1,641
|
|
1,569
|
|
1,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
24,763
|
|
$ 24,818
|
|
$ 25,125
|
8. INVENTORIES
|
|
|
|
|
June
30,
|
|
June 30,
|
|
June 30,
|
|
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Raw
materials
|
|
|
|
$
2,113
|
|
$
2,058
|
|
$
2,132
|
Work-in-progress
|
|
|
|
42,426
|
|
41,081
|
|
39,669
|
Finished
goods
|
|
|
|
6,319
|
|
9,422
|
|
7,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
50,858
|
|
$ 52,561
|
|
$ 49,083
|
The cost of inventory recognized as an expense and included in
cost of goods sold during the year ended June 30, 2015 was $39,510 (2014 – $39,597). 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. 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, 2015, the Company recognized
contributions of $305 as expense
(2014 - $241) 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 2014 Canadian Pensioners Mortality tables which
were 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, 2015, the average
duration of the defined benefit obligation for the registered and
non-registered pension plans and the post retirement benefit plan
is 13.6 years.
Company contributions to the registered and non-registered
pension plans are expected to be $2,406 for the fiscal year ended June 30, 2016.
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:
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
2014
|
|
|
|
Registered
|
|
Non-registered
|
|
Other
|
|
Registered
|
|
Non-registered
|
|
Other
|
|
|
|
Pension
|
|
Pension
|
|
Benefit
|
|
Pension
|
|
Pension
|
|
Benefit
|
|
|
|
Plans
|
|
Plans
|
|
Plan
|
|
Plans
|
|
Plans
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued benefit
obligation, end of year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
rate
|
|
|
3.9%
|
|
3.9%
|
|
3.9%
|
|
4.4%
|
|
4.4%
|
|
4.4%
|
Compensation
increase
|
|
|
3.0-3.5%
|
|
3.5%
|
|
N/A
|
|
3.0-3.5%
|
|
3.5%
|
|
N/A
|
Inflation
|
|
|
2.0%
|
|
2.0%
|
|
2.0%
|
|
2.0%
|
|
2.0%
|
|
2.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit expense,
for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
rate
|
|
|
4.4%
|
|
4.4%
|
|
4.4%
|
|
4.1%
|
|
4.1%
|
|
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%
|
|
2.0%
|
|
2.0%
|
|
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 50 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 $4,398 and $169,
respectively. Conversely, a 50bp 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 $4,710 and $195,
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 5.9% for 2015 (2014 –
6.1%), with 4.7% being the ultimate trend rate for 2026 and years
thereafter. The dental cost trend rate used was 5.0% for 2015 (2014
– 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 $1,179 and $91, 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
$956 and $71, 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,
|
|
|
2015
|
|
2014
|
|
2013
|
Present value of
defined benefit obligation of unfunded plans
|
|
$
(10,438)
|
|
$ (10,157)
|
|
$ (10,000)
|
Present value of
defined benefit obligation of partially funded plans
|
|
(10,019)
|
|
(10,699)
|
|
(10,257)
|
Present value of
defined benefit obligation of fully funded plans
|
|
(45,650)
|
|
(44,138)
|
|
(44,390)
|
Total present value
of defined benefit obligation
|
|
(66,107)
|
|
(64,994)
|
|
(64,647)
|
Fair value of plan
assets
|
|
46,059
|
|
48,503
|
|
43,853
|
Net defined benefit
liability
|
|
(20,048)
|
|
(16,491)
|
|
(20,794)
|
- included in
pension obligation
|
|
(20,048)
|
|
(18,045)
|
|
(21,363)
|
- included in
other assets
|
|
-
|
|
1,554
|
|
569
|
Information about the Company's pension and other benefit plans
for the year ended June 30, 2015 is
as follows:
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
Registered
|
|
Non-registered
|
|
Other
|
|
|
|
|
|
|
Pension
|
|
Pension
|
|
Benefit
|
|
|
|
|
|
|
Plans
|
|
Plans
|
|
Plan
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan
assets
|
|
|
|
|
|
|
|
|
|
Fair value of plan
assets, beginning of year
|
|
|
$
36,550
|
|
$
11,953
|
|
$
-
|
|
$
48,503
|
|
Interest
income
|
|
|
1,586
|
|
259
|
|
-
|
|
1,845
|
|
Actuarial
gains
|
|
|
1,534
|
|
62
|
|
-
|
|
1,596
|
|
Company
contributions
|
|
|
1,271
|
|
306
|
|
-
|
|
1,577
|
|
Plan participants'
contributions
|
|
|
181
|
|
-
|
|
-
|
|
181
|
|
Benefits
paid
|
|
|
(4,654)
|
|
(2,749)
|
|
-
|
|
(7,403)
|
|
Administrative
costs
|
|
|
(200)
|
|
(40)
|
|
-
|
|
(240)
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan
assets, end of year
|
|
|
$
36,268
|
|
$
9,791
|
|
$
-
|
|
$
46,059
|
|
|
|
|
|
|
|
|
|
|
|
Present value of
defined benefit obligation
|
|
|
|
|
|
|
|
|
|
Defined benefit
obligation, beginning of year
|
|
|
$
44,138
|
|
$
10,699
|
|
$ 10,157
|
|
$
64,994
|
|
Current service
cost
|
|
|
697
|
|
330
|
|
173
|
|
1,200
|
|
Interest
cost
|
|
|
1,884
|
|
412
|
|
416
|
|
2,712
|
|
Plan participants'
contributions
|
|
|
181
|
|
-
|
|
-
|
|
181
|
|
Actuarial (gains)
losses:
|
|
|
|
|
|
|
|
|
|
|
|
Experience (gains)
and losses
|
|
|
(1)
|
|
637
|
|
(708)
|
|
(72)
|
|
|
Losses due to
financial assumption changes
|
|
|
3,405
|
|
686
|
|
697
|
|
4,788
|
|
|
Losses due to
demographic assumption changes
|
|
|
-
|
|
-
|
|
188
|
|
188
|
|
Benefits
paid
|
|
|
(4,654)
|
|
(2,745)
|
|
(485)
|
|
(7,884)
|
|
|
|
|
|
|
|
|
|
|
|
Present value of the
defined benefit obligations, end of year
|
|
|
$
45,650
|
|
$
10,019
|
|
$ 10,438
|
|
$
66,107
|
|
|
|
|
|
|
|
|
|
|
|
Net defined benefit
liability
|
|
|
$
9,382
|
|
$
228
|
|
$ 10,438
|
|
$
20,048
|
The actual return on plan assets for the financial year ended
June 30, 2015 was $3,441, 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, 2014 is
as follows:
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
Registered
|
|
Non-registered
|
|
Other
|
|
|
|
|
|
|
Pension
|
|
Pension
|
|
Benefit
|
|
|
|
|
|
|
Plans
|
|
Plans
|
|
Plan
|
|
Total
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets
|
|
|
|
|
|
|
|
|
Fair value of plan
assets, beginning of year
|
|
|
$ 33,364
|
|
$ 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
|
|
-
|
|
-
|
|
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
|
|
|
(969)
|
|
-
|
|
-
|
|
(969)
|
|
Plan participants'
contributions
|
|
|
181
|
|
-
|
|
-
|
|
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
|
|
$
-
|
|
$
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.
Amounts recognized in comprehensive income in respect to the
defined benefit plans are as follows:
|
|
2015
|
|
2014
|
|
|
|
|
|
Net defined
benefit pension expense recognized in Total Comprehensive
Income
|
|
|
|
|
Current service
costs
|
|
$ 1,200
|
|
$
1,564
|
Interest
costs
|
|
1,107
|
|
1,234
|
Past service
costs
|
|
-
|
|
(969)
|
|
|
|
|
|
Net expense
recognized in Net Earnings
|
|
2,307
|
|
1,829
|
|
|
|
|
|
Net actuarial losses
(gains) recognized in Other Comprehensive Income
|
|
3,308
|
|
(4,169)
|
|
|
|
|
|
|
Total net expense
(gain) recognized in Total Comprehensive Income
|
|
$ 5,615
|
|
$
(2,340)
|
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, 2015, the fair value of the Trust's
assets totaled $330,898. The
Company's registered pension plans comprise approximately 11% 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, 2015
as follows:
Cash and Canadian
Equities - level 1
|
|
|
|
$
7,922
|
Bond funds - level
2
|
|
|
|
|
|
12,747
|
Foreign equities and
Foreign Equity funds - level 2
|
|
|
10,021
|
Infrastructure and
real estate funds - level 3
|
|
|
|
5,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
36,268
|
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, 2015, are
as follows:
Canadian equity
pooled funds
|
|
|
|
|
$
1,617
|
Foreign equity pooled
funds
|
|
|
|
|
2,863
|
Refundable tax on
account with Canada Revenue Agency
|
|
|
|
5,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
9,791
|
The fair values of the investments held by the non-registered
plan as at June 30, 2015 are
categorized as Level 2 in the fair value hierarchy.
10. INCOME TAXES
|
|
|
|
|
|
2015
|
|
2014
|
Current income tax
expense
|
|
|
|
|
|
|
Current
period
|
|
|
|
|
$
7,176
|
|
$
9,264
|
Adjustments with
respect to prior period tax estimates
|
|
|
(224)
|
|
(198)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
6,952
|
|
$
9,066
|
|
|
|
|
|
|
|
|
|
Deferred income
tax expense
|
|
|
|
|
|
|
Origination and
reversal of temporary differences
|
|
|
$
278
|
|
$
(111)
|
Change in tax
rate
|
|
|
|
|
(6)
|
|
(6)
|
Adjustments with
respect to prior period tax estimates
|
|
|
99
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
371
|
|
$
(68)
|
|
|
|
|
|
|
|
|
|
Total income tax
expense
|
|
|
|
$
7,323
|
|
$
8,998
|
There are no capital loss carry-forwards available for tax
purposes.
The Company's effective tax rates are comprised of the following
items:
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net earnings for the
financial year
|
|
$
20,415
|
|
|
|
$ 24,983
|
|
|
Total income tax
expense
|
|
7,323
|
|
|
|
8,998
|
|
|
Earnings before
income tax expense
|
|
$
27,738
|
|
|
|
$ 33,981
|
|
|
|
|
|
|
|
|
|
|
|
Income tax using the combined Federal and
Provincial
statutory tax
rates
|
|
$
7,382
|
|
26.6%
|
|
$
9,050
|
|
26.6%
|
|
|
|
|
|
|
|
|
|
Non-deductible
expenses
|
|
106
|
|
0.4%
|
|
122
|
|
0.4%
|
Adjustments with
respect to prior period tax estimates
|
|
(125)
|
|
(0.5%)
|
|
(149)
|
|
(0.4%)
|
Other
|
|
(40)
|
|
(0.1%)
|
|
(25)
|
|
(0.1%)
|
|
|
|
|
|
|
|
|
|
Effective income tax
rate
|
|
$
7,323
|
|
26.4%
|
|
$
8,998
|
|
26.5%
|
Deferred tax assets (liabilities) are broken down by nature as
follows:
|
|
June
30,
|
|
Recognized
in
|
|
June
30,
|
|
|
2014
|
|
Earnings
|
|
OCI
|
|
Equity
|
|
2015
|
Provision for
pensions
|
|
$
4,553
|
|
$
94
|
|
$
878
|
|
$
-
|
|
$
5,525
|
Property, plant and
equipment
|
|
(1,396)
|
|
(280)
|
|
-
|
|
-
|
|
(1,676)
|
Inventory
|
|
(361)
|
|
88
|
|
-
|
|
-
|
|
(273)
|
Intangibles
|
|
(2,618)
|
|
(24)
|
|
-
|
|
-
|
|
(2,642)
|
Other
|
|
480
|
|
(249)
|
|
-
|
|
-
|
|
231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
658
|
|
$
(371)
|
|
$
878
|
|
$
-
|
|
$
1,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
Income tax recoverable includes a provision for uncertain tax
risks in the amount of $786 at
June 30, 2015 and 2014
11. PROPERTY AND EQUIPMENT
|
|
June
30,
|
|
|
|
|
|
|
|
June
30,
|
|
|
2014
|
|
Additions
|
|
Depreciation
|
|
Disposals
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold
improvements
|
|
$
1,002
|
|
$
-
|
|
$
-
|
|
$
-
|
|
1,002
|
Machinery and
equipment
|
|
5,872
|
|
466
|
|
-
|
|
(15)
|
|
6,323
|
Casks
|
|
7,455
|
|
1,744
|
|
-
|
|
(131)
|
|
9,068
|
Other
|
|
942
|
|
589
|
|
-
|
|
-
|
|
1,531
|
Gross
value
|
|
15,271
|
|
2,799
|
|
-
|
|
(146)
|
|
17,924
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold
improvements
|
|
(532)
|
|
-
|
|
(114)
|
|
-
|
|
(646)
|
Machinery and
equipment
|
|
(2,889)
|
|
-
|
|
(611)
|
|
12
|
|
(3,488)
|
Casks
|
|
(2,921)
|
|
-
|
|
(654)
|
|
50
|
|
(3,525)
|
Other
|
|
(297)
|
|
-
|
|
(184)
|
|
-
|
|
(481)
|
Accum.
depreciation
|
|
(6,639)
|
|
-
|
|
(1,563)
|
|
62
|
|
(8,140)
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
$
8,632
|
|
$
2,799
|
|
$
(1,563)
|
|
$
(84)
|
|
$
9,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
12. GOODWILL
Changes in the carrying amount of goodwill are as
follows
|
|
|
|
|
|
June
30,
|
|
June 30,
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
year
|
|
|
|
|
$
3,278
|
|
$
3,278
|
Changes in
goodwill
|
|
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Balance, end of
year
|
|
|
|
|
$
3,278
|
|
$
3,278
|
There have been no impairment losses recognized with respect to
goodwill during 2015 (2014 -$nil).
13. INTANGIBLE ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movements in the
Year
|
|
|
|
|
Opening
|
|
|
|
|
|
|
|
|
|
Ending
|
|
|
Book
Value
|
|
Additions
|
|
Amortization
|
|
Impairments
|
|
Disposals
|
|
Book
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
representation rights
|
|
$
41,972
|
|
$
-
|
|
$
(5,780)
|
|
$
-
|
|
$
-
|
|
$
36,192
|
Trademarks and
licenses
|
|
11,801
|
|
-
|
|
-
|
|
-
|
|
-
|
|
$
11,801
|
Non-refundable
upfront fees
|
|
390
|
|
-
|
|
(102)
|
|
-
|
|
-
|
|
$
288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
54,163
|
|
$
-
|
|
$
(5,882)
|
|
$
-
|
|
$
-
|
|
$
48,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
14. 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, 2015, along with the data
and assumptions applied to the Cash Generating Units ("CGUs") of
the Case Goods Segment are as follows:
|
|
|
|
|
Carrying
|
|
|
|
|
|
|
|
Carrying
|
|
Value
|
|
|
|
Terminal
|
|
|
|
Value
|
|
Trademarks
|
|
Discount
|
|
Growth
|
|
|
|
Goodwill
|
|
&
Licences
|
|
Rate
|
|
Rate
|
|
|
|
|
|
|
|
|
|
|
Case Goods
Segment
|
|
|
$
3,278
|
|
$ 11,801
|
|
8.3% to
11.3%
|
|
2.0% to
2.5%
|
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,
2015, 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.
15. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
|
|
June
30,
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
Trade payables and
accruals
|
|
|
|
$
17,950
|
|
$ 17,724
|
|
$ 17,715
|
Due to related
parties
|
|
|
|
6,386
|
|
9,050
|
|
6,470
|
Other
|
|
|
|
1,204
|
|
935
|
|
921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
25,540
|
|
$ 27,709
|
|
$ 25,106
|
16. SHARE CAPITAL
|
|
|
June
30,
|
|
June 30,
|
|
June 30,
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Number of shares
authorized:
|
|
|
|
|
|
|
|
|
Voting Class A Common
Shares - no par value
|
|
|
Unlimited
|
|
Unlimited
|
|
Unlimited
|
|
Non-voting Class B
Common Shares - no par value
|
|
|
Unlimited
|
|
Unlimited
|
|
Unlimited
|
|
|
|
|
|
|
|
|
Number of shares
issued and fully paid:
|
|
|
|
|
|
|
|
|
Voting Class A Common
Shares
|
|
|
24,274,320
|
|
24,274,320
|
|
24,274,320
|
|
Non-voting Class B
Common Shares
|
|
|
4,194,536
|
|
4,194,536
|
|
4,194,536
|
|
|
|
|
|
|
|
|
|
|
|
28,468,856
|
|
28,468,856
|
|
28,468,856
|
|
|
|
|
|
|
|
|
Stated
value
|
|
|
$
14,304
|
|
$ 14,304
|
|
$ 14,304
|
17. ACCUMULATED OTHER COMPREHENSIVE LOSS
|
|
|
June
30,
|
|
June 30,
|
|
June 30,
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Actuarial losses on
pension obligations
|
|
|
$
9,254
|
|
$
5,946
|
|
$ 10,115
|
|
less: income taxes
|
|
|
(2,521)
|
|
(1,643)
|
|
(2,752)
|
|
|
|
|
|
|
|
|
Accumulated other
comprehensive loss
|
|
|
$
6,733
|
|
$
4,303
|
|
$
7,363
|
18. REVENUE
The Company's revenue consists of the following streams:
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Case good
sales
|
|
|
|
|
$
111,733
|
|
$ 116,372
|
Commissions (net of
amortization)
|
|
|
|
16,442
|
|
16,735
|
Other
services
|
|
|
|
|
3,891
|
|
4,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
132,066
|
|
$ 137,279
|
Commissions for the year are shown net of amortization of
long-term representation rights and non-refundable upfront fees of
$5,882 (2014 - $5,606). Other services include revenues
incidental to the manufacture of case goods, such as logistics fees
and miscellaneous bulk spirit sales.
19. OTHER INCOME
The Company's other income consists of the following
amounts:
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Foreign exchange
(loss) gain
|
|
|
|
|
$
(91)
|
|
$
263
|
Gain on disposal of
property and equipment
|
|
|
|
116
|
|
195
|
Other
|
|
|
|
|
50
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
75
|
|
$
458
|
20. NET FINANCIAL INCOME AND EXPENSE
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
|
|
$
1,606
|
|
$
1,755
|
Net financial impact
of pensions
|
|
|
|
(1,107)
|
|
(1,234)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
499
|
|
$
521
|
21. EARNINGS PER SHARE
The following table sets forth the numerator and denominator
utilized in the computation of basic and diluted earnings per
share:
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
$
20,415
|
|
$ 24,983
|
Denominator:
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
28,468,856
|
|
28,468,856
|
22. EXPENSES BY NATURE
Earnings from operations include depreciation and amortization,
as well as personnel expenses as follows:
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Depreciation of
property and equipment
|
|
|
|
$
1,563
|
|
$
1,448
|
Amortization of
intangible assets
|
|
|
|
5,882
|
|
5,606
|
Salary and payroll
costs
|
|
|
|
|
22,546
|
|
22,595
|
Expenses related to
pensions and benefits
|
|
|
|
1,200
|
|
595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
31,191
|
|
$ 30,244
|
23. RESTRICTED SHARE UNITS PLAN
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
Weighted
|
|
|
|
Weighted
|
|
|
|
Restricted
|
|
Average
|
|
Restricted
|
|
Average
|
|
|
|
Share
|
|
Grant
Date
|
|
Share
|
|
Grant
Date
|
|
|
|
Units
|
|
Fair
Value
|
|
Units
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
Non-vested, beginning
of year
|
|
|
73,780
|
|
$
17.58
|
|
85,138
|
|
$
16.05
|
|
Granted
|
|
|
16,008
|
|
20.78
|
|
16,889
|
|
21.05
|
|
Reinvested dividend
equivalent units
|
|
|
3,633
|
|
22.58
|
|
2,907
|
|
20.13
|
|
Vested
|
|
|
(31,267)
|
|
15.98
|
|
(31,154)
|
|
(15.51)
|
|
|
|
|
|
|
|
|
|
|
Non-vested, end of
year
|
|
|
62,154
|
|
$
19.49
|
|
73,780
|
|
$
17.58
|
Compensation expense related to this plan for the year ended
June 30,2015, was $450 (2015 - $613).
24. NET CHANGE IN NON-CASH WORKING CAPITAL BALANCES
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
|
|
$
55
|
|
$
295
|
Inventories
|
|
|
|
|
1,703
|
|
(3,478)
|
Prepaid
expenses
|
|
|
|
|
30
|
|
277
|
Accounts payable and
accrued liabilities
|
|
|
|
(2,169)
|
|
2,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
(381)
|
|
$
(380)
|
25. DIVIDENDS
On August 26, 2015 subsequent to
the year ended June 30, 2015, the
Board of Directors declared its regular quarterly dividend of
$0.19 per common share, to be paid on
September 30, 2015, to shareholders
of record as at the close of business on September 16, 2015. This dividend is in
accordance with the Company's dividend policy.
26. 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 Aktiebolag, 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
J. P. Wiser's Canadian whisky and
Polar Ice vodka in the US. Previously, J.
P. 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:
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Sales to related
parties
|
|
|
|
|
|
|
|
Commissions - parent,
ultimate parent and affiliated companies
|
|
$
19,602
|
|
$ 18,897
|
Products for resale
at an export level - affiliated companies
|
|
6,126
|
|
10,979
|
Bulk spirits -
parent
|
|
|
|
|
-
|
|
6
|
|
|
|
|
|
|
$
25,728
|
|
$ 29,882
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold, purchased from related parties
|
|
|
|
|
|
Distilling, blending,
and production services - parent
|
|
|
$
20,351
|
|
$ 22,130
|
|
|
|
|
|
|
|
|
|
Administrative
services purchased from related parties
|
|
|
|
|
Marketing, selling
and administraton services - parent
|
|
|
$
2,500
|
|
$
2,400
|
Marketing, selling
and administraton services - affiliate
|
|
|
7,724
|
|
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,
2015, Corby sold casks to its parent company for net
proceeds of $171 (2014 - $383).
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 $790 (2014 - $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 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 26, 2015, 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,
2015, Corby earned interest income of $1,610 from PR (2014 – $1,712). 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:
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Wages, salaries and
short term employee benefits
|
|
|
$
3,482
|
|
$
3,052
|
Other long term
benefits
|
|
|
|
|
632
|
|
632
|
Share-based payment
transactions
|
|
|
|
191
|
|
356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
4,305
|
|
$
4,040
|
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.
27. 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 J. P. 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 18 of the consolidated financial
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:
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
United
States
|
|
United
|
|
Rest
of
|
|
|
|
|
|
Canada
|
|
of America
|
|
Kingdom
|
|
World
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ 121,511
|
|
$
5,297
|
|
$
4,349
|
|
$
909
|
|
$
132,066
|
Capital assets and
goodwill
|
|
11,652
|
|
-
|
|
1,410
|
|
-
|
|
13,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
In 2015, revenue to three major customers accounted for 35%, 17%
and 14%, respectively (2014 – 34%, 17% and 13%). These major
customers are located in Canada
and revenues are derived from the Case Goods segment.
28. COMMITMENTS
Future minimum payments under operating leases for premises and
equipment for the next five years and thereafter are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
$
1,642
|
2017
|
|
|
|
|
|
|
1,319
|
2018
|
|
|
|
|
|
|
1,010
|
2019
|
|
|
|
|
|
|
809
|
2020
|
|
|
|
|
|
|
690
|
Thereafter
|
|
|
|
|
|
3,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
8,895
|
Total lease payments recognized as an expense during the year
total $2,079 (2014 - $2,402).
The Company has commitments of $381 (2014 - $284)
as at June 30, 2015 for the
acquisition of capital assets.
SOURCE Corby Spirit and Wine Limited