Lassonde annual report 2014 by Jessie Ceballos

growing Together

2014 Interim Report

annual repor t

LASSONDE industries inc.

2014 Interim Report

annual report

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PAGE SEQUENCE(FROM TABLE OF CONTENTS) | 2014 Lassonde Industries Inc. | Lassonde.com

WHAT’S INSIDE LASSONDE INDUSTRIES

Product of the year 2014 Oasis smoothie wins. Our leading brands and new products to the Oasis brand.

Specialty Products and Brands

Community and our supporting local projects to help promote healthy eating and helping provide children with books in the Start2Finish Program. Other donations and sponsorships.

Sponsorship and Donations

Our collective financial data and interim reports of the last year. Data from Canada and United States.

Financial Data

8 14 20

Financial highlights that are going further than ever before. Out performing any other company in Europe with our financial stability.

Advancements and Highlights

Letter to shareholders from Pierre â&#x20AC;&#x2018; Paul Lassonde. Companyâ&#x20AC;&#x2122;s sales and totals. Products and Eco-friendly production.

Our vision of sustainability

Letter to Shareholders

DEAR SHAREHOLDERS, As Chairman of the Board and Chief Executive Officer of Lassonde

The 2013 gain was essentially due to a foreign ex‑

Industries Inc., I am pleased to present the financial results for the first

change gain. Profit before income taxes totaled $7.7

quarter of fiscal 2013.

million for the first quarter of 2013, down $0.3 million

The Company’s sales totaled $240.6 million in the first quarter of 2013, up $7.2 million or 3.1% from $233.4 million in the same period of 2012. This increase was primarily driven by higher private label sales and higher sales volumes for national brands. The Company’s operating profit for the first quarter of 2013 stood at $13.8 million, up $0.5 million or 4.3% from operating profit of $13.3 million in the same quarter last year. This increase is mainly due to additional margins generated by sales growth. The Company’s financial expenses went from $4.5 million in the first quarter of 2012 to $6.4 million this quarter. This increase was mostly attributable to the change in fair value of retractable financial instruments. A $1.4 million decrease in value had been recognized in the first quarter of 2012 while a $0.7 million increase was recognized in this quarter, for a total change

from $8.0 million in the same quarter last year totaled

of $2.1 million. This increase was partly offset by a $0.5 million de‑

$2.2 million compared to a bank overdraft of $5.9

crease in interest expense.

million and bank indebtedness of $13.7 million at the

The 2014 Gain and Foreign Exchange

end of the first quarter of 2014.

“Other (gains) losses” went from a $0.8 million loss in the first quarter

In conclusion, I would like to highlight the efforts made

of 2012 to a $0.3 million gain in the first quarter of 2013. The 2012

by all employees to maintain our market position.

first-quarter loss was due to the combined impact of a $0.5 million loss

The Company could not stay on course and reach its

from a change in the fair value of interest rate swaps and a $0.3 million

financial and business objectives without their dedica‑

foreign exchange loss.

tion and innovative spirit.

PIERRE-PAUL LASSONDE Chairman of the Board

and Chief Executive Officer

LETTER TO SHAREHOLDERS FROM OUR CHAIRMAN | 2014 Lassonde Industries Inc. | Lassonde.com

OUR VISION OF SUSTAINABLE &

ECO-FRIENDLY PRODUCTION At Lassonde, we are deeply committed to sustainable development and apply Eco-friendly practices at every level. As we produce millions of

juice containers each year, the materials and manufacturing technology we choose have a definite impact on our environmental footprint.

PAGE SEQUENCE(FROM TABLE OF CONTENTS) | 2014 Lassonde Industries Inc. | Lassonde.com

Lassonde Advancements

OUR VISION

Change Starts Here

We have always aimed to find solutions to use fewer materials and pro‑ mote recycling. Initiatives across all sectors support our company-wide action plan and the results speak for themselves!

In order to reduce our consumption of a resource as precious as water, Lassonde reviewed its processes and equipment so that production requires less water and produces less wastewater. Over the past seven years, the amount of water used per liter of finished product has already been reduced by 28% in both our Québec plants.

GOING FURTHER THEN EVER BEFORE

We are even outperforming the best companies

in Europe and across the globe. Furthermore, we continue to launch various projects and have set our sights on a new objective: 25% total reduction from 2012-2015. Going even further, we completed a thorough analysis of our water consumption, spe‑ cifically by looking at all applicable global standards and technologies, as well as installing water meters in several facilities throughout our company.

OUR VISION AND BRIEF OVERVIEW | 2014 Lassonde Industries Inc. | Lassonde.com

Cash returned to shareholders

1.1

2014 FINANCIAL HIGHLIGHTS

NET SALES

OPERATING PROFIT

(Million of dollars)

5 year CAGR

BILLION 4%

12,822

(Million of dollars)

11,776

1,750

1,766

1,868

2011

2012

2013

1,953

1,681

10,907 9,614 10,177

2010

2011

2012

2013

2014

2010

2014

Net sales increase again in 2014, the 9th

consecutive year of growth.

CASH FLOW

1,031 950

OPERATING PROFIT

(Of dollars)

957

5 year CAGR 7%

806

(Million of dollars)

1.20 1.01

1.06

1.14

2010

2011

2012

1.30

769

2010

2011

2012

2013

2014

2013

2014

Cash flow for 2014 was $1.1 billion before

Dividends per share have increased

the impact of our $300 million discretionary

over the past 4 years.

pension contribution, resulting in net cash flow of $806 million.

FINANCIAL HIGHLIGHTS FOR 2014 | 2014 Lassonde Industries Inc. | Lassonde.com

29%

Specialty Products

PAGE SEQUENCE(FROM TABLE OF CONTENTS) | 2014 Lassonde Industries Inc. | Lassonde.com

Product of the Year

OASIS SMOOTHIE VOTED 2014 It is with great pride that we learned that at the 2013 Product of the Year

Healthy eating is often a real challenge and we thrive

Gala in Toronto that our Oasis Smoothie in the Strawberry-Banana and

in finding nutritious solutions while at the same time

Tropical Mango flavors was chosen as 2013 Product of the Year in the

maintaining the great taste that characterizes our

fruit juice category. We are especially proud of this distinction because

products in offering a sensible and affordable choice

it is awarded by Canadian consumers. Thank you for your trust. We are

for the whole family, a choice that considerably

happy to see that all the passion and effort we invest in the development

reduces the preparation time usually required for

of new products enabled us to meet your high expectations.

this type of refreshment.

INNOVATION HAS ALWAYS BEEN AT THE HEART OF OUR CORPORATE DNA:

On behalf of the entire Lassonde team, thank you very

We know that tastes change all the time and we intend to continue to

much for your continued loyalty and your eagerness

develop new quality products in the most popular flavors, products

to try the products we develop for you. This recogniâ&#x20AC;&#x2018;

which are part of a healthy and varied diet. It is with this objective in mind

tion encourages us to continue in our efforts!

that we have worked to create a fruit juice smoothie and we are proud of its popularity with the consumers.

PRODUCT OF THE YEAR AND ABOUT OASIS SMOOTHIE | 2014 Lassonde Industries Inc. | Lassonde.com

Strawberries and rhubarb taste amazing together, and when you add 10 vitamins and minerals, you get a winning combination on all accounts!

2014 NEW FEATURED PRODUCT

No Sugar. 100% Juice!

A blend of enriched juices, new Oasis Health Break Strawberry and Rhubarb is an ideal beverage to quench your thirst. The sweetness of strawberries combined with the slight tartness of rhubarb will make everyone smile. In addition, itâ&#x20AC;&#x2122;s made with 100% juice and contains no added sugar or preservatives. No need to wait for summer to enjoy the exquisite combination of strawberries and rhubarb! In any season, Oasis Health Break Strawberry and Rhubarb is proof that you can be good to your body while enjoying yourself.

Beginning in February 2014, youâ&#x20AC;&#x2122;ll find this new product in the chilled juices section of your local grocery store.

NEW FEATURED PRODUCT | 2014 Lassonde Industries Inc. | Lassonde.com

Our Leading Brands

At Lassonde, our vast array of brands offers a multitude of quality products that already have an established reputation. We are proud that they are part of your everyday life.

OUR LEADING BRANDS FROM LASSONDE | 2014 Lassonde Industries Inc. | Lassonde.com

National Brands

Stock Exchange (TSX). The Company has four principal

sales and consist of sales to restaurants, hotels, hospitals,

operating subsidiaries: A. Lassonde Inc., Clement Pappas and

schools and wholesalers serving these institutions.

Company Inc., Lassonde Specialties Inc., and Arista Wines Inc. It is active in two market segments: the retail segment and the food service segment. Retail sales account for approximately 85% of total annual

Healthy Products

The products we market are part of a healthy diet. Indeed, we firmly believe that adopting a healthy lifestyle contributes directly to the well-being of families and athletes of all levels, which is

sales and consist of sales to food retailers and wholesalers

part of the values we seek to share through all our activities,

such as supermarket chains, independent grocers, superâ&#x20AC;&#x2018;

including our donation and sponsorship policy.

stores, warehouse clubs, and major pharmacy chains. Food service sales account for approximately 15% of total annual

NATIONAL LASSONDE BRANDS | 2014 Lassonde Industries Inc. | Lassonde.com

Sponsorship

Donation

PAGE SEQUENCE(FROM TABLE OF CONTENTS) | 2014 Lassonde Industries Inc. | Lassonde.com

SUSTAINABLE DEVELOPMENT

PAGE SEQUENCE(FROM TABLE OF CONTENTS) | 2014 Lassonde Industries Inc. | Lassonde.com

the 6th annual Run4Change

Community Support

START2FINISH PROGRAM For the second consecutive year, Lassonde is proud to support the Start2Finish Running & Reading Club, a national initiative focusing on reading and physical activity to break the cycle of child poverty by supporting less fortunate children.

Sustainable Development

We support projects and initiatives that help to protect and enhance the environment within a perspective of sustainable development. We promote awareness-raising projects and

Currently implemented in 26 schools, the Reading & Running

activities based on scientific knowledge, motivating citizens to

Club offers a simple and motivating 32-week program. Every

become more responsible for the environment and to increase

week, children build their physical fitness and endurance

their environmentally appropriate actions. We support projects

by means of running and other activities. They also receive

with themes that involve positive concrete action for the environâ&#x20AC;&#x2018;

individual remedial help in reading and writing and are given

ment (e.g., tree planting, preservation of rivers and mountains,

balanced, energy-filled snacks that include Lassonde juices.

and recycling campaigns).

The program culminates in the annual 5 km Running & Readâ&#x20AC;&#x2018; ing Challenge for which we also provide juices.

COMMUNITY SUPPORT PROGRAMS | 2014 Lassonde Industries Inc. | Lassonde.com

Donations and Sponsorships

COMMUNITY For several years now, Lassonde has associated itself with community life at the local, regional, and provincial levels, and even occasionally at a national level. In order to be a responsible and active partner in the various communities where its products are available, Lassonde provides support in the form of either monetary contributions or products, and this for various organizations, events, or initiatives in several sectors—com‑ munity, social, cultural, educational, sports, environmental, humanitarian, or socio-economic. Sectors and areas that we support

Health

Start2Finish

We support several hospital foundations, and we support medical research in various sectors, homes for the sick, foundations that support medical causes (e.g., Health partners, Foundation Docteur Maurice-Ber‑ trand, and university research centers).

Education

Lassonde associates itself with projects involving local, regional, provincial, and even national ed‑ ucational institutions (e.g., elementary schools, secondary schools, adult education, CEGEPs, universities, childcare centers, vocational schools),

Sports

while taking into consideration the applicant’s geo‑

We promote physical activity, especially team sports that promote

graphical proximity so as to determine the extent

self-development. For several years, we have been involved in many ma‑

of the Company’s involvement.

jor sports events such as the Montreal OASIS Marathon and Half-Mara‑ thon, the Jeux du Québec, and the Grand Défi Pierre Lavoie.

Recreational activities Community and Social Initiatives

We support popular recreational events and activities that contribute to collective wellbeing and to the

We support various organizations offering primary needs services (food,

development of harmonious relations; and we encour‑

lodging, etc.) that help people to help themselves, providing follow-up on

age the involvement of our personnel (e.g., tourna‑

the clientele with which the Company’s personnel is involved or follow-up

ments, youth clubs, and recreational associations).

that allows for involvement (e.g., Tel-Jeunes, charity organizations, hospi‑ tal fundraising, groups for the elderly, causes).

COMMUNITY DONATIONS | 2014 Lassonde Industries Inc. | Lassonde.com

Culture

We promote the creativity and development of artists and oth‑ er creators and support the initiatives of organizers of cultural

2014 Donations go to Heart and Stroke Foundation

and artistic events (e.g., exhibits, choirs, theatre companies,

Canadian Cancer Society

and popular festivals).

Canadian Diabetes Association Multiple Sclerosis Society of Canada The Lung Association

Workplace fundraising campaign

Health is at the core of our activities, and Lassonde has made

Muscular Dystrophy Canada Alzheimer Society of Canada Crohn’s and Colitis Foundation of Canada

it a priority to promote this valuable asset in our business practices and within the organization.Knowing the value that employees also place on health, in 2011, Lassonde introduced an annual donation program for the benefit of Health part‑ ners-Quebec, a division of the pan-Canadian Health partners fund. The mission of Health partners-Quebec is to raise funds in the workplace for a group of renowned Quebec charitable healthcare organizations.Every year during its annual cam‑ paign, all Lassonde employees have the opportunity to make a donation by means of deductions at source. What is more, Lassonde matches every dollar donated.

COMMUNITY DONATIONS | 2014 Lassonde Industries Inc. | Lassonde.com

Financial

Statement

PAGE SEQUENCE(FROM TABLE OF CONTENTS) | 2014 Lassonde Industries Inc. | Lassonde.com

Financial Progress Sales totaled

QUARTERLY FINANCIAL INFORMATION

240.6

Consolidated Income Data

MILLION

(In thousands of dollars)

First quarters ended

March 30, 2013

March 31, 2012

(Restated) (1)

Sales $ 240,578 Cost of sales

178,347

Selling and administrative expenses Operating profit

$233,406 175,552

48,401

44,594

226,748

220,146

13,830

13,260

Financial expenses

6,358

4,450

Other (gains) losses

(250)

815

Profit before income taxes

7,722

7,995

Income tax expense

1,853

2,034

Profit

5,869

5,961

5,851

5,678

Attributable to: Company’s shareholders Non-controlling interest Basic and diluted earnings per share (in $)

283

$ 0.84

$ 0.81

6,988

Weighted average number of shares Outstanding (in thousands)

(1) Figures restated following the adop‑ tion, on January 1, 2013, of the amended version of IAS 19.

In the First Quarter of 2013

Sales totaled $240.6 million, up $7.2 million (3.1%) from sales of $233.4 million in the first quarter of 2012. This increase is mainly due to the combined impact of the following items: (i) a $3.5 million increase in sales of private label products; (ii) a $2.5 million in‑ crease resulting from higher sales volumes of the Company’s national brands; (iii) price increases that had a $1.0 million favorable impact on sales of national brands; (iv) a $0.7 million favorable foreign exchange impact; (v) a different sales mix that contributed to a $0.4 million increase in sales; and (vi) an increase in slotting fees that had an unfavorable impact of $0.9 million.

FINANCIAL INFORMATION | 2014 Lassonde Industries Inc. | Lassonde.com

FINANCIAL PROGRESS Five Year Strategic Plan

Were Our Funds Come From Corporations and foundations

21%

Individual donors

37%

Government grants and fees

28%

Special events

Agency shares maintenance fees

How We Use Our Resources Management and general

93 %

Fundraising

Donations

Where our Food Come From Our Farmers

47%

Organic Farms

37%

Donated

Purchased

15%

Were Our Food Goes Donated Other Preschools Health food stores Pantries

3% 13% 5% 4% 75%

FINANCIAL INFORMATION | 2014 Lassonde Industries Inc. | Lassonde.com

Financial Statements

STATEMENTS OF FINANCIAL POSITION (In thousands of Canadian dollars) (Unaudited)

As at

Notes

March 30, 2013 $

As at Dec. 31, 2012 $

Assets Current Cash and cash equivalents Accounts receivable Income tax recoverable Inventories Investment Other current assets Derivative instruments

2,199

22,186

104,516

103,792

5,555

3,396

159,168

162,065

2,079

8 8,038

6,876

3,119

1,039

284,674

301,433

222

â&#x20AC;&#x201C;

Property, plant and equipment

239,765

238,894

Other intangible assets

130,000

129,940

5,737

4,082

654

697

Goodwill

127,510

124,982

788,562

800,028

109,005

133,575

Derivative instruments

Net defined benefit asset Other long-term assets

Liabilities Current Accounts payable and accrued liabilities Income tax payable

â&#x20AC;&#x201C;

166

Other current liabilities

923

583

Derivative instruments

1,638

Current portion of long-term debt

2,966

8,264

12,750

119,830

150,040

STATEMENTS OF FINANCIAL POSITION | 2014 Lassonde Industries Inc. | Lassonde.com

QUARTERLY FINANCIAL INFORMATION Consolidated Income Data (In thousands of dollars)

As at

Notes

March 30, 2013 $

Derivative instruments

1,518

Net defined benefit liability Long-term debt Deferred tax liabilities Other long-term liabilities

As at Dec. 31, 2012 $

1,563

514

598

289,944

282,456

20,618

19,015

39,746

38,151

472,170

491,823

298,694

290,891

Shareholdersâ&#x20AC;&#x2122; equity Capital, reserves and retained earnings attributable to the Companyâ&#x20AC;&#x2122;s shareholders Non-controlling interest

17,698

17,314

316,392

308,205

788,562

800,028

Approved by the Board

Director

QUARTERLY FINANCIAL INFORMATION | 2014 Lassonde Industries Inc. | Lassonde.com

Other (Gains) Losses

STATEMENTS OF CASH FLOWS

(In thousands of Canadian dollars) (Unaudited)

Notes

As at

March 30, 2013

Dec. 31, 2012

(Restated, Note 15)

Operating activities Profit

5,869

5,961

Adjustments for: 6

1,853

2,034

Interest income and expense

Income tax expense

5,309

5,910

Depreciation and amortization

7,808

7,866

Amortization of unearned discounts

(38)

Change in fair value of financial instruments

942

(1,052)

Change in net defined benefit asset/liability

(2,540)

(4,793)

Other gains -

(3)

Unrealized foreign exchange losses

106

19,241

16,029

Change in non-cash operating working capital items

(22,230)

10,038

Taxes received -

Taxes paid

(3,198)

Interest received

(3,771)

Interest paid

(4,763)

Settlements of derivative financial instruments

(532)

(11,424)

17,367

45 (4,975)

Financing activities Change in bank indebtedness

(1,990)

Change in long-term debt related to the operating line of credit

4,235

(1,642) (1,408)

Repayment of long-term debt

(6,087)

Dividends paid on Class A shares

(1,003)

(970)

Dividends paid on Class B shares

(1,163)

(1,126)

(4,018)

(7,136)

STATEMENTS OF CASH FLOW | 2014 Lassonde Industries Inc. | Lassonde.com

INTERIM FINANCIAL STATEMENT

(Tabular amounts are in thousands of Canadian dolâ&#x20AC;&#x2018; lars unless otherwise indicated) (Unaudited) First quarters ended

March 30, 2013

March 31, 2012 $

Interest on long-term debt

4,850

5,329

Amortization of non-cash financial expenses

532

573

Interest and other bank expenses

109

172

at fair value through profit or loss

947

(1,568)

6,438

4,506

Financial revenues

(80)

(56)

6,358

4,450

Change in Fair Value of Financial Instruments Designated as financial liabilities

Note 5. Other (Gains) Losses First quarters ended

March 30, 2013

March 31, 2012 $

Exchange (gains) losses

(245)

302

Change in fair value of derivative financial

(5)

516

Instruments held for trading Other gains -

(250)

(3) 815

These processing activities generally have a favorable impact on the Companyâ&#x20AC;&#x2122;s profit in the last quarter of the year with respect to the accounting treatment of production overhead. More specifically, since the Company carries out, among other activities, maintenance on the equipment used to process apples and can corn-on-the-cob during the first three quarters of the fiscal year, certain production overheads are recognized in profit or loss for these periods.

INTERIM FINANCIAL STATEMENT | 2014 Lassonde Industries Inc. | Lassonde.com

Instruments

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts are in thousands of Canadian dollars unless otherwise indicated) (Unaudited)

13.1 Sales by Geographic Segment

First quarters ended

March 30, 2013

March 31, 2012

Canada

131,967

128,508

United States

107,260

104,000

Other

1,351

898

240,578

233,406

13.2 Certain Non-Current Assets and Goodwill As at March 30, 2013

Canada

Property, plant and equipment Other intangible assets Goodwill

United States

Total

152,473

87,292

239,765

8,211

121,789

130,000

5,776

121,734

127,510

166,460

330,815

497,275

As at December 31, 2012

Canada

United States

85,386

238,894

Property, plant and equipment

153,508

Total

Other intangible assets

8,571

121,369

129,940

Goodwill

5,776

119,206

124,982

167,855

325,961

493,816

The Companyâ&#x20AC;&#x2122;s annual consolidated financial statements for the year ended December 31, 2013 were prepared in compliance with International Financial Reporting Standards (IFRS).

CONDENSED CONSOLIDATED FINANCIAL STATEMENT | 2014 Lassonde Industries Inc. | Lassonde.com

FINANCIAL INSTRUMENTS

The classification, carrying value and fair value of financial instruments are as follows:

As at March 30, 2013

Level 1

Level 2

Level 3

Financial assets Derivative financial instruments designated as hedges

Total $

3,341

Held for trading -

2,537

619

Financial liabilities

Derivative financial instruments: Designated as hedges

Participating loans -

5,728

Retractable financial instruments

33,751

3,156

39,479

42,635

5,728

As at December 31, 2012

Level 1

Level 2

Level 3

Financial assets

Derivative financial instruments designated as hedges

1,039

Held for trading - Designated as hedges

Total $

1,039

3,013

1,516

Financial liabilities

Derivative financial instruments: -

Participating loans -

Retractable financial instruments

4,529

5,507

32,346

37,853

42,382

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is established based on market information available at the date of the consolidated statement of financial position.

FINANCIAL INSTRUMENTS | 2014 Lassonde Industries Inc. | Lassonde.com

56%

43%

CANADA

UNITED STATES

SALES BY GEOGRAPHIC SEGMENT (Tabular amounts are in thousands of Canadian dollars

Sales totaled

unless otherwise indicated) (unaudited)

240.6

Approximately

MILLION

56% of the Company’s sales are in Canada, 43% in the United States and 1%

in other countries.

First quarters ended

Canada United States

March 30, 2014

131,967

$ $

107,260

March 31, 2013 $

128,508

104,000

Company’s sales are geographically broken down as follows: The Company is involved in apple and cranberry processing and cans corn-on-the-cob. These processing activities take place mainly from August to Novem‑ ber. Processing the harvested crops increases inventory levels during the last quarter of the year.

SALES BY GEOGRAPHIC SEGMENT | 2014 Lassonde Industries Inc. | Lassonde.com

Any statement contained in this report that does not constitute a historical fact may be deemed a forward-looking statement. Verbs such as "believe," "foresee," "estimate" and other similar expressions, in addition to the negative forms of these terms or any variaâ&#x20AC;&#x2018; tions thereof, appearing in this report generalâ&#x20AC;&#x2018; ly indicate forward-looking statements.

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