Re-Invention - The Beer Store

Transcription

Re-Invention
Beer Store
Operational Report 2013
Beer Store Operational Report 2013
Table of Contents
President’s Message 2
Retail Strategy 3
Being Part of a Community
9
Giving Back10
Environmental Performance11
Health & Safety14
The Year in Beer Sales
15
Beer Tax Contributions20
Rate Sheet22
Financial Statements23
1
President’s
Message
Welcome to our 2013 Operational Report, a financial and business overview of our
company’s performance and innovative advances.
This was a year of dramatic change for us, a transformation not only in our brand
identity, our visual image and store design, but also in our culture.
After months of research and talking directly with customers, we found that our
customers were looking for newer, modernized and more tactile shopping experiences.
Combining our customers’ desires with our employees growing passion for beer
knowledge, we embarked on a renewed vision and exciting journey of reinvention.
Thanks to dedicated teamwork we renovated four pilot stores in the spring of 2013 and
continued with a further roll out of 13 more store renovations in the fall so that we could
ensure that a robust test was complete.
Five key elements of the reinvented experience included a new name, a new logo, a
new retail design, new service features and new technology. The name “Beer Store” with
the modern styled “B” in stylized foam eyebrow is a contemporary version of our brand
based on our past branding heritage combined with continued reinforcement of our core
business. The new identity is a visual invitation to customers to expect to see something
new whenever entering through our doorways. Please look through the pages of this
report to see the new reinvented Beer Store.
We added a sixth element to the experience and that has to do with culture change
supported by training. To make the new experience come to life it is important to have
our employees engaged with customers and trained as beer experts. Extensive product
knowledge and service training is part of our promise to customers - to be Champions
of Beer Love Every Day. I am proud of our training program which has been expanded
to hundreds of front line staff. We are seeing great results with positive feedback from
customers and market share gains in all the new-look stores.
There are a few important things that will remain unchanged. While we are going through
important “bricks and mortar”changes and cultural evolution, we still hold true to our
core values like, responsible sale, environmental leadership, operational excellence, and
most important of all; health and safety. As a responsible retailer of beer, our employees
have done a superb job checking for ID for anyone 25 or under. Not to be forgotten, we
also continue to stand behind our passionate commitment to the community with another
record year of donations for our annual Returns for Leukemia Bottle Drive – a feat only
achieved with the help of hundreds of volunteers donating much of their personal time.
As far as growing our business goes, 2013 was another record year for unprecedented
selection as the Beer Store repertoire reached over 100 brewers and 400 brands while
collecting over a billion dollars in revenue for important government programs.
This was the year of big changes for the Beer Store, and while change is not always
easy, we are successfully moving forward due to the dedication and determination of our
hard-working employees who rose to the challenge. The Beer Store is well positioned for
future growth opportunities in 2014 and beyond.
Thanks,
Ted
President’s Message
2
Retail Strategy
CUSTOMERS WANT CHANGE
Through extensive research, including interviews and on-site
intercepts, it is clearly apparent that customers are not only
passionate about their beer but they are also looking for more from
the Beer Store each time they visit a store or visit us on-line. The
traditional store with empties returns on one side and a stainless
steel counter to order beer on the other, where beer is pushed
along rollers from the back of the store, does not meet the needs
of an up and coming passionate beer lover of today. Modern
technology, growth in brands and types of beers coupled with the
desire to explore, try and experience new ways of shopping means
something had to change. The Beer Store recognized that their
future depends on being able to adapt and be relevant to the new
consumer of beer.
SEIZING THE OPPORTUNITY
In early 2013, the Beer Store introduced a retail renovation program involving an innovative interior design and new
approach to retailing. The Beer Store decided that status quo was not an option and it was imperative to take immediate
action to gain back customer loyalty and sales. The formula for success was to WIN…win by providing the right beer
for every occasion…win by having larger pack sizes at cheaper prices…win by expanding self serve opportunities...win
by continuing to be an environmental champion accepting all empty alcohol containers and related packaging…win by
being trained experts in beer.
Discriminating customers demand great service, great product selection, great prices, friendly and helpful employees,
all wrapped into an overall store experience that make them feel good about their visit to the Beer Store. The pathway to
success for the Beer Store is to create a memorable shopping experience with fully trained and knowledgeable staff that
customers will recommend to others.
3
Retail Strategy
A NEW BRAND IDENTITY
The foundation of change begins with a new brand identity. A new
name, a distinctive look and a unique personality that communicates
that a transformation has occurred. Whenever a brand change occurs,
the fundamental message and expectation of customers is that a new
experience in is the offering and the experience starts as soon as they
walk through the front doors. The new ‘Beer Store’ logo is clean, fresh
and contemporary with a colourful ‘B’ graphic signifying a glass of beer
with a head of foam on top. The background gray colour tone provides a
distinctive back-drop for the new identity.
BEING “CHAMPIONS OF BEER LOVE EVERY DAY”
The evolution of the brand includes a change in the overall employee mindset…a wholesale change in the company’s
culture. Attracting and retaining customers is a top priority and our employees need to be relevant and helpful at all
times. The new mantra ‘Being Champions of Beer Love Every Day’ speaks to this new attitude . It’s about confidence in
knowing our business, being passionate about it and consistently applying and sharing our knowledge and expertise in
everything we do.
A NEW RETAIL EXPERIENCE
There are two key ways the Beer Store will deliver on its new experiential mandate:
1. To continue building new self serve stores with separate empties rooms.
2. To renovate and refresh the exteriors and interiors of existing stores to the new Beer Store design.
The process of this retail transformation began in 2013 with the renovation of 17 stores and the opening of 3 new self
serve stores with plans to continue this development over the next few years.
Retail Strategy
4
THE INVITATION – MEET BEER
The new retail experience begins as customers stand in the parking lot or sidewalk. Customers immediately see a new
colour scheme, a new logo, illuminated Cold Beer signs and colourful ‘Meet Beer’ marketing messages. The ‘Meet Beer’
marketing message starts with posters displayed in the front windows and is carried through to the inside of the store.
This message speaks an open invitation for customers to become acquainted or re-acquainted with beer. To make beer
relevant to any occasion, like when serving with different foods, or when watching their favourite sporting activity or
perhaps participating in a special occasion with family or friends.
FIRST IMPRESSIONS ARE LASTING ONES
When entering the renovated store, customers are presented with a colourful interior set on background tones of gray
and orange. The décor includes striking highlights throughout with a mix of rural elements like, natural pine combined
with modern flare using stainless steel, coloured metal accents and illuminated posters and signs. The ambient music
sets the mood while fully trained staff approach customers and are ready and willing to help out and respond to
questions on beer and service.
5
Retail Strategy
NAVIGATION ZONES
New self serve stores have an empties return zone that is clearly separated from the shopping zone. The bright orange
wall graphic with the words ‘Empties Exchange’ reminds customers to prepare their empties for a deposit return. Special
wall graphics and marketing messages guide customers to sort their empties for faster service and more efficient
recycling.
Depending on the store type, customers are drawn to the point of purchase by a visual eyebrow canopy lined with
natural pine with hanging orange pendant lights. The down-to-earth wood décor decorates the face of the counters in
this area differentiated from the empties counter which has a modern gray tone.
THE ‘BEER FRIDGE’
‘Cold’ and ‘Beer’ naturally go together. In newly renovated stores
customers are reminded of the chilled product waiting behind the doors
labeled appropriately as the ‘BEER FRIDGE’ zone.
AN IMPROVED SHOPPING EXPERIENCE
In many renovated stores, a double-sided central lobby fixture allows customers to either shop for single cans, search for
new products to the store, or browse through the some hats, glassware, openers and other beer related items.
The digital touch-screen tablets modernize the menu board of brands and packs sold in the store.
Retail Strategy
6
IMPORTANCE OF COMMUNITY
It is a privilege to be able to sell beer responsibly
and accept empty returns in communities across
Ontario. The Beer Store feels very much like a
resident and partner in protecting the well-being
of the communities in which it operates. To sell
beer responsibly in any Ontario community,
the Beer Store implements a strict ‘WE ID25’
program challenging customers to be of legal
age. The Beer Store recognizes the greatness
of every city, town and suburb it has a store in
and shows this with new exterior signs giving
recognition to the name of the community.
EMPLOYEE TRAINING IS KEY
To meet the demands of customers and to be relevant to the new retail environment, the Beer Store developed and
implemented a Quality Customer Service program that focuses on increasing the level of engagement with customers
through questioning and listening skills.
The training course covers extensive product knowledge of the 4 main ingredients of beer including how to properly
pour and taste product. Included in the classroom are food pairings to allow employees to gain additional knowledge so
they are experts in the field.
The goal is to have all retail employees trained and ready to deliver a great experience in all stores.
7
Retail Strategy
“The pathway
to success is
clear: create
a memorable
shopping
experience with
fully trained
employees
under a new
brand name.”
Retail Strategy
8
OUR COMMITMENT TO RESPONSIBLE SERVICE
At the Beer Store responsible service is implemented in a number of ways. First and foremost, the company maintains a
strict set of operational policies designed to ensure that minors or intoxicated individuals do not have access to alcohol.
RESPONSIBLE SALES POLICIES:
•
•
•
•
•
Request ID from anyone who appears to be 25 years old or under
Refuse service to anyone who appears to be intoxicated
Mandatory annual responsible service training for all sales staff
Mystery shop program to ensure compliance with policies
Store level responsible service results incorporated into store manager
performance reviews
Year
Challenge Type
Challenged
Refused
2012
Intoxicants
25,598
19,807
2012
Minors
3,513,748
47,523
2013
Intoxicants
20,770
16,270
2013
Minors
3,573,333
42,750
RESPONSIBLE SERVICES MESSAGING:
TBS incorporates responsible service messaging into many of its marketing initiatives to ensure that customers enjoy
beer responsibly.
•
•
•
In-store Posters
Media Advertising
Partnership with Arrive Alive
“Arrive Alive DRIVE SOBER remains grateful for The Beer Store’s ongoing support in the battle against impaired driving
in Ontario, and we are pleased for the chance to collaboratively educate the public on ways to prevent impaired driving.
Ontario’s roads are among the safest in all of North America; this accomplishment would not have been possible without
your constant support.”
- Arrive Alive
9
Giving Back
The Beer Store is dedicated to community involvement and fundraising activities for charitable groups and actively
participates in dozens of events, big and small, throughout many communities in Ontario.
The Annual Returns for Leukemia Bottle Drive brings together thousands of volunteers from 447 stores and 8
Distributions Centers, our Head Office as well as friends and family for a two day fundraising event. In addition to the
annual Bottle Drive, hundreds of employees have organized numerous other fundraising events around the Province.
There is Curling for a Cure, Bowling for Leukemia, Bikes N’ Beers, Waterfront Marathon and Light the Night Walk to name
a few. Together, the Leukemia and Lymphoma Society of Canada and the Beer Store in partnership with UFCW Local
12R24, the Union that represents our employees and 4,000 volunteers, we raised:
$1.7 million in 2013 and over $7.8 million the past 8 years!
RETURNS FOR LEUKEMIA
RETURNS FOR
LEUKEM A
•
Activities ranging from coin boxes in stores, assisting bottle drives, donating time to help others
DR VE
•
UFCW Local 12R24 – TBS Partnership
•
Province-wide Bottle Drive (May 25-26, 2013)
BOTTLE
OTHER TBS COMMUNITY AND CHARITABLE INITIATIVES
ARRIVE ALIVE,
DRIVE SOBER
ROGERS HOUSE
Roger’s House is the legacy that
was created in Roger Neilson’s
honour by the Ottawa Senators
Foundation in collaboration with
The Children’s Hospital of Eastern Ontario, the Ontario
Ministries of Health and Children and Youth Services.
The overwhelming contribution and support of the Ottawa
community made the dream of Roger’s House a reality.
Beer Store locations in the Eastern Ontario area raise
money each year to support the families of sick children/
youth.
The Beer Store is
committed to keeping the streets of Ontario safe and
free from impaired driving. Through their partnership
the Beer Store and Arrive Alive DRIVE SOBER provide
wleadership and programs to eliminate impaired driving
and enables people and communities to share resources
and information that will prevent injuries and save lives.
ROYAL CANADIAN LEGION (POPPIES)
TERRY FOX
The Foundation not only
raises money for research,
but it also continues to
share the story of Terry Fox. The Terry Fox Foundation
strives to maintain the heroic effort and integrity that Terry
embodied. The Beer Store supports the cause by donating
money from bottle drives and dollar donations within
certain regions of the province.
Giving Back
As a national organization,
The Royal Canadian Legion
operates programs and
services at all levels that aim to
help more than just Veterans. On a daily basis, members
provide their time and efforts to better the lives of many,
and to ensure Remembrance continues across Canada.
The Beer Store supports the annual poppy campaign at
locations across the province.
10
Environmental Performance
DEPOSIT RETURN: DRIVING THE GREEN ECONOMY
Combined, the Beer Store returns and ODRP programs represent the largest beverage container diversion system in
Canada. In 2012-2013, the Beer Store and ODRP deposit programs:
• Combined avoided 200,462 tonnes of GHG emissions – equivalent to taking over 41,700 cars and trucks off Ontario
roads.
• Combined, these programs avoided over 2,806,722 gigajoules of energy – equivalent to over $49 million of oil.
• Combined, these programs diverted 446,000 tonnes of material – equivalent to almost 50% of all materials collected
through the Blue Box program.
TABLE 1: TBS AND ODRP LANDFILL DIVERSION*
2012-2013
tBS Tonnes Diverted
Glass
Reuse
Aluminum
Recycling
Steel
Recycling
PET
Mixed
Plastic
Total
Diversion
249,615
15,042
35,196
8,389
253
-
934
309,429
-
35,173
75,125
924
-
1,031
-
112,253
249,615
50,215
110,321
9,313
253
1,031
934
421,682
ODRP Tonnes
Diverted
Total Tonnes Diverted
Clear Glass
Coloured
Bottle
Glass Bottle
Recycling
Recycling
*Note: Only includes diversion associated with beverage alcohol containers. Does not include secondary packaging
diversion.
TABLE 2: TBS & ODRP AVOIDED GHG EMISSIONS AND AVOIDED ENERGY CONSUMPTION
2012-2013
Glass
Reuse
Clear Glass
Bottle
Recycling
Coloured
Glass Bottle
Recycling
Aluminum
Recycling
Steel
Recycling
PET
Total
Diversion
TOTAL Tonnes Diverted
249,615
20,215
110,321
9,313
253
1,031
420,748*
Avoided GHG Emissions
(MTC02E)
94,854
5,524
6,068
89,964
301
3,753
200,462
Avoided Energy
(Gigajoules)
1,697,382
84,361
120,250
813,584
3,190
87,955
2,806,722
*Note: This number does not include “mixed plastic”, so the number does not exactly match the diversion total in Table 1
above.
11
The combined avoided
GHG emissions between
the ODRP and Beer
Store deposit programs
totals 200,462 tonnes.
This is equivalent to
taking 41,700 cars and
trucks off Ontario roads.
41,700
Combined, these
programs avoided over
2,808,722 gigajoules of
energy - equivalent to
over $49 million of oil.
$49M
Combined, these
programs diverted
446,000 tonnes of
material - equivalent
to almost 50% of all
materials collected
through the Blue Box
program.
CARS & TRUCKS
OF
OIL
50%
OF THE
BLUE BOX
MATERIALS
12
The Beer Store packaging management system includes the collection of all beer containers sold by the Beer Store
via either retail or wholesale channels and the collection of all related packaging. This includes beer containers sold at
the LCBO retail outlets and agency stores throughout rural and northern Ontario, and beer containers sold in Ontario
bars and restaurants.
TABLE 3: TBS CONTAINER SALES AND RECOVERY BY CONTAINER TYPE (BEER)
Tables cover the period April 30, 2012 - April 28, 2013, except for cans which cover the period May 6, 2012 - May 4, 2013.
Container Type
tBS Sales
(units)
LCBO Sales
(units)
Return
(units)
System
Recovery
Rate
2012-2013
System
Recovery
Rate
2011-2012
All Glass Bottles (Refillable & NonRefillable)
1,064,669,974
141,087,954
1,179,967,701
97.9%
99.1%
Refillable Bottles: Industry Standard
Bottle (ISB) and Non-Standard
946,941,989
98,619,492
1,026,348,158
98.2%
99.1%
Non-Refillable Bottles
117,727,985
42,468,462
153,619,543
95.9%
99.5%
Metal Cans
451,339,283
204,800,336
538,408,313
82.1%
83.1%
Kegs
1,393,286
-
1,410,796
101.3%
100.9%
PET Bottles
39
-
0
0.0%
0.0%
TOTAL (By Units)
1,517,402,582
345,888,290
1,719,786,810
92.3%
94%
TABLE 4 – ODRP CONTAINERS: SALES & RECOVERY
April 30, 2012 – April 28, 2013, Except for cans which cover the period May 6, 2012 – May 4, 2013.
Sales in Units
Returns in Units
Recovery rate
Container Type
Small
Containers
Large
Containers
Small
Containers
Large
Containers
Small
Containers
2013
Small
Containers
2012
Large
Containers
2013
Large
Containers
2012
Combined
2013
Combined
2012
GLASS
76,176,118
190,332,780
56,324,655
168,689,888
74%
74%
89%
90%
84%
85%
PET
18,913,553
11,281,539
8,212,140
7,379,831
43%
44%
66%
63%
52%
51%
TETRA/BIB
159,617
7,820,764
79,902
2,327,981
50%
108%
30%
31%
30%
32%
SUBTOTAL
95,249,288
209,435,083
64,616,697
178,397,700
68%
68%
85%
86%
80%
81%
CANS*
72,563,490
59,542,613
82.1%
83%
GRAND
TOTAL
377,247,861
302,557,010
80.2%
80.7%
For a detailed report please see the Beer Store’s annual Stewardship Report at
http://www.thebeerstore.ca/tbs-environmental-report.html
13
Health & Safety
WE ARE CHAMPIONS OF HEALTH & SAFETY
Health & Safety are currently testing these
mechanical devices used for keg handling.
Beer Store management know that a healthy and safe
workforce is key to achieving success in both the retail and
logistics divisions of the company. They also know it’s key to
continued employee satisfaction. That is why the Beer Store
maintains an ongoing effort to ensure that employees feel safe
at work and that they arrive home each day as healthy as when
they left.
The company is making continuous improvements every year
driven by supportive dialogue to exchange concerns and learn
better ways of doing things and by ongoing experimentation
with new ideas and better techniques.
Magliner
The Power Mate
LOST TIME ACCIDENT FREQUENCY - ANNUAL IMPROVEMENT
Beer Store Total Company
10
5
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Healthy & Safety
14
I. PRODUCT SELECTION
The Beer Store has an open listing policy meaning that any Brewer around the world wanting to sell product in the
system can do so. The Beer Store stocks over 400 brands from 100 brewers from many different countries. In 2013, 69
new brands and 12 new brewers were introduced into the Beer Store system.
BEER STORE BREWER FACTS:
Ontario based brewers
27
28
22
23
10
10
Import Brewers
56
77
Brewing Countries of Origin
23
22
Brewers selling more than 200,000hl
5
4
Brewers selling between 75,000hl and 200,000hl
4
5
Brewers selling less than 75,000hl
84
95
Small Ontario Brewers
1
Out of Province Brewers
2
29
115
Import
Ontario
Out of Province
%
11
93
2012 Brewer Segments
32%
Total number of brewers
%
Import
%
60
2013
%
60
2012
Ontario
%
Out of Province
8
The Beer Store stocks a wide assortment of beer products from brewers both
large and small. Over 30% of the Beer Store brands are produced by Ontario
brewers and the remainder are produced outside of Ontario by both large and
small breweries from other provinces in Canada and around the world.
2013 Brewer Segments
1
Refers to Ontario brewers whose products are eligible for reduced Ontario beer tax rates or Ontario beer tax credits (i.e. annual production of less
than 150,000hl).
2
Out-of-province brewers refers to Canadian brewers whose majority of Beer Store sales volume is supplied from breweries located in provinces
other than Ontario.
15
II. SALES BY VALUE AND BEER PRICES
AVERAGE BEER STORE HOME CONSUMER SELLING PRICE PER LITRE INCLUDING SALES TAXES
(EXCLUDING DEPOSITS)3
$4.07 $4.10 $4.05 $4.01 $4.00 $3.95 $3.90 $3.91 $3.88 $3.88 $3.86 $3.85 $3.78 $3.80 $3.77 $3.88 $3.79 $3.75 $3.70 $3.65 $3.60 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Average home consumer selling price increased by $.06 per litre or by 1.5% in comparison to 2012.
In relation to Ontario inflation, Beer Store average home consumer selling prices over the last decade have
declined by 13.6%.
Average
Home PRICE
Consumer
PriceTO
Converted
to Case
AVERAGE BEER STORE
HOMETBS
CONSUMER
CONVERTED
CASE EQUIVALENT
Equivalent
$37.92
$40.00
$38.00
$36.00
$33.31
$34.00 $31.77
$32.00
$30.00
F2004F2005 2006 2007 2008 2009 2010 2011 2012 2013
Inflation
Average Price
3
Please note annual Beer Store home consumer prices from previous Operational Reports for the years F2004 to 2012 have been corrected. These
prices were slightly overstated in the 2012 Operational Report due to a methodological error.
16
Beer Store beer prices are also very competitive in relation to other Canadian jurisdictions. For 2013, the Beer Store
commissioned a study comparing Beer Store prices to those at Quebec grocers. The study conducted by Navigant
Economics represents the most comprehensive examination of Quebec beer prices ever published. It compiled data on
beer sales for the entire year from Quebec’s seven largest grocery chains4.
The report found that on average Ontario Beer Store consumers paid 1.9% less than beer consumers at Quebec grocery
stores, despite the fact that Ontario beer taxes are much higher than those in Quebec. In fact, Navigant calculated that
the Beer Store average price with taxes excluded was actually 18% less than Quebec’s average grocery price in 2013.
Low prices despite high taxes show that Ontario consumers are benefiting from the efficiencies of the Beer Store retail
system. A comparison of beer prices across Canada shows that Beer Store prices are significantly lower than provinces
with comparable tax rates.
AVERAGE BEER RETAIL SELLING PRICE PER LITRE 2013: SELECTED PROVINCES
$46.00
Per Case Equivalent Price
$44.00
$43.10
$43.62
$42.80
$41.82
$42.00
$40.76
$41.17
$39.77
$40.00
$38.38
$38.00
$36.00
$33.96
$34.00
$33.31
$32.00
$30.00
NFLD
4
PEI
NS
NB
QUE
ONT
MB
SK
AB
BC
Aron, Debra J, Ph.D. “The Price of Beer in Ontario and Quebec” Navigant Economics, May 2014 available at http://www.ontariobeerfacts.ca/studies
17
III. BEER STORE SALES BY CHANNEL
The Beer Store is both a retail and wholesale business. As the following chart indicates the Beer Store operates 447
stores (as of December 2013) in an Ontario beverage alcohol system that includes 1,378 outlets where beer can be
purchased.
ONTARIO RETAIL BEER OUTLETS
Beer Stores
2009
2010
2011
2012
2013
436
437
438
443
447
2
2
Beer Store Mobile Trailers
LCBO Stores
607
611
617
623
639
LCBO Agency Stores &
Beer Store Retail Partners
216
216
217
214
217
On-site Brewery Stores
39
39
43
45
73
TOTAL
1,298
1,303
1,315
1,327
1,378
Store numbers for LCBO Stores, on-site brewery stores and Agency and Beer Store Retail Partners for 2013 are provided
by the LCBO. Beer Store store numbers for all years are from Beer Store data as of December 31st for that year.
BEER STORE HOME CONSUMER VOLUME SALES
4.8
Hectolitre (millions)
4.7
4.6
4.5
4.4
4.3
4.2
4.1
4
2009
2010
2011
2012
2013
BEER STORE PERCENTAGE SALES BY CHANNEL
2009
2010
2011
2012
2013
Home Consumer
64.70%
64%
63.86%
63.97%
63.93%
Licensee
19.40%
18.80%
18.72%
18.45%
18.20%
LCBO
10.80%
12.00%
12.13%
12.26%
12.54%
Retail Partner/Agency
4.40%
4.60%
4.59%
4.61%
4.60%
Other
0.70%
0.70%
0.71%
0.72%
0.73%
18
BEER STORE WHOLESALE SALES
In addition to selling beer to the public through its retail stores, the Beer Store also distributes and sells beer to LCBO
stores, agency stores and Beer Store Retail Partner stores as well as 19,656 licensed bars and restaurants.
BEER STORE LICENSEE SALES
BEER STORE RETAIL PARTNER/AGENCY SALES
1,000,000
400,000
900,000
350,000
700,000
Hectolitres
Hectolitres
800,000
600,000
500,000
400,000
250,000
200,000
150,000
300,000
100,000
200,000
50,000
100,000
2009
2010
2011
Draught
2012
0
2013
Packaged
BEER STORE LCBO SALES
2009
2010
2011
2012
2013
Beer Store Wholesale Volume Sales Trends:
1,000,000
•
900,000
•
800,000
•
700,000
Hectolitres
300,000
•
600,000
500,000
•
•
400,000
300,000
Overall wholesale sales in 2013 decreased by
57,704 hl or 2.29%
Total licensee sales declined by 50,022 hl or
3.80%
Licensee packaged beer sales declined by
40,708 hl or 6.57%
Licensee draught beer sales declined by 9,314 hl or 1.34%
Sales to LCBO increased by 530 hl or 0.06%
Agency Store/Retail Partner sales decreased by
8,212 hl or 2.50%
200,000
100,000
0
2009
2010
2011
2012
2013
19
Beer Tax Contributions
TAX EXAMPLES BY PRICE POINT 2013 :
Retail Price
Federal Tax
Provincial Tax
Total Tax
24-Discount Bottles at Minimum Social
Reference Price
$27.55
13.7%
34.3%
48.0%
Average tBS Home Consumer Price (all
packages) Converted to Case Equivalent
$33.31
12.1%
31.9%
44.0%
24-Cans at Top 10 Brand Price
$37.90
11.4%
33.3%
44.8%
24-Bottles Premium Priced Import
$43.10
10.2%
28.9%
39.0%
24-Bottles Ontario Small Brewery
(Producing 15,000hl annually)
$43.40
6.3%
14.9%
21.2%
FEDERAL AND PROVINCIAL BEER TAX CONTRIBUTIONS 2013
$0.3122/litre
Federal Excise Tax
Provincial Basic Tax/LCBO Mark-up5
Ontario Beer Manufacturer
Ontario Microbrewers
Draught
$0.5810/litre
$0.2161/litre
Packaged
$0.7402/litre
$0.2403/litre
Volume Levy
$0.176/litre
Enviro Levy
$0.0893/container
HST
13%
Rates in effect for March 1st each year. Under the authority of the Alcohol and Gaming Regulation and Public Protection Act, 1996, basic beer tax
rates for draught and packaged beer are increased on March 1st each year by the annual average amount of Ontario CPI increase from the previous
three years.
5
20
ONTARIO TAXES COLLECTED ON BEER SALES (2013)
Government Revenues Associated with Beer Store Beer Sales
2013
Provincial Commodity Taxes
$598.4 Million
Federal Excise Taxes
$188.9 Million
Goods and Services Tax (Federal Portion of HST)
$113.2 Million
Provincial Sales Tax (Provincial Portion of HST)
$181.1 Million
Total Government Beer Taxes Associated with tBS Sales
$1,081.6 Million
Other Government Beer Tax Revenues
(LCBO Sales, On-Site Beer Stores, Licensee Sales)
2013
Provincial Commodity Taxes
$205.4 Million
Federal Excise Taxes
$60.3 Million
Retail GST (Federal portion of HST)
$41.5 Million
Retail PST (Provincial portion of HST)
$63 Million
GST on Licensee Resale (Federal portion of HST)
$87.4 Million
PST on Licensee Resale (Provincial portion of HST)
$139.9 Million
Non-Beer Store Total
$597.5 Million
Total Ontario Beer Commodity and Sales Taxes
$1,679 Million
Provincial commodity taxes include revenues associated with the basic beer tax, volume levy and environmental levy
remitted by brewers to the Ministry of Finance and equivalent LCBO charges on beer. Estimates of tax revenues for Beer
Store and LCBO beer sales exclude sales to each other. LCBO volumes for calendar 2013 from Quarterly Reports. Tax
estimates do not include foregone government revenues associated with reduced small brewer tax rates and related
tax credits. The Ontario government does not publish any information related to aggregate spending related to these
programs.
21
Rate Sheet
SCHEDULE C
BRI RATE SHEET
EFFECTIVE APRIL 29, 2013
BASIC SERVICES
First
25,000 hl
Next
50,000 hl
Remaining
Volume
$46.70
$39.35
$52.05
$43.74
$53.10
$43.90
$0.50
$0.50
$0.50
Packaged
Draught
Accounts Receivable Recovery
LISTING ADMINISTRATION FEE
Base Fee +
Packaged
Draught
$2,848.93
$5,697.86
Per store, Per
SKU, First 233
stores
$227.92
$455.82
All other
stores
above 233
$53.56
per hl
per hl
per licensee
hl only
All “D”
Stores
$535.63
ELECTED SERVICES
TRANSFERS
Emergency
Regular
$26.28
$21.76
per hl
per hl
DELIVERY SERVICE TO LCBO
DELIVERY SERVICE TO RETAIL PARTNERS
$21.76
$21.76
per hl
per hl
$5.85
$2.60
per hl
per hl
EMPTY CONTAINER DISPOSAL
Bottles (Service fee currently under review)
Cans
OLD CODE DISPOSAL
T.B.D.
VOUCHER ADMINISTRATION
5%
EMPTY CONTAINER PURCHASE
This charge applies to all products sold through the
LCBO where the empty containers are redeemed by
BRI. The charge is based on LCBO supplied sales
data.
$7.30
NON-STANDARD CONTAINERS
Industry Standard Bottles, Kegs and Cans which do
not require sorting or special handling are exempt from
this charge
KEG REPAIR SURCHARGE
DIRECT DELIVERY KEG FEE
DRAUGHT BEER
Packaged
Draught
Non-Palletized Shipments
Return of Empty Containers
$0.0499
$1.43
$0.59
$4.49
T.B.D.
T.B.D.
of retail
value
per hl
per unit
per unit
per usage
per hl
NOTE: GST/HST OR EQUIVALENT WILL BE ADDED TO ALL FEES WHERE APPLICABLE
OTHER FEES
Other fees include (but are not limited to) Liability Insurance required by the government and special services which the Brewer may
engage BRI to perform from time to time. Deposits for the use of BRI pooled assets (e.g. kegs and pallets) will be levied as
appropriate. Deposits will be refunded as the assets are returned.
Rate Sheet
22
Brewers Retail Inc.
Financial Statements
December 31, 2013
(in thousands of Canadian dollars)
23
March 20, 2014
Independent Auditor’s Report
To the Shareholders of
Brewers Retail Inc.
We have audited the accompanying financial statements of Brewers Retail Inc., which comprise the
balance sheet as at December 31, 2013 and the statements of operations and deficit and cash flows for the
period from December 31, 2012 to December 31, 2013, and the related notes, which comprise a summary
of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with Canadian accounting standards for private enterprises, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with Canadian generally accepted auditing standards. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416 365 8215
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
24
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of
Brewers Retail Inc. as at December 31, 2013 and the results of its operations and its cash flows for the
period from December 31, 2012 to December 31, 2013 in accordance with Canadian accounting standards
for private enterprises.
Chartered Professional Accountants, Licensed Public Accountants
25
Brewers Retail Inc.
Balance Sheet
December 31,
2013
$
December 30,
2012
$
34,018
51,395
5,840
40,235
3,182
147,277
2,539
8,214
45,164
3,242
137,936
2,080
233,091
248,031
123,416
128,250
8,399
3,661
11,710
14,000
114,462
111,511
491,078
505,453
195,398
105,570
195,540
98,107
300,968
293,647
78,725
98,032
379,693
391,679
Capital stock (note 10)
200,367
200,382
Deficit
(88,982)
(86,608)
111,385
113,774
491,078
505,453
Assets
Current assets
Cash and cash equivalents (note 4)
Accounts receivable
Brewers (note 12)
Others (note 12)
Empties deposits
Inventories (note 5)
Prepaid expenses and deposits
Property and equipment (note 6)
Intangible assets (note 7)
Future income tax assets (note 13)
Pension benefit asset (note 8)
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Brewers (notes 9 and 12)
Other (note 9)
Accrued benefit liability (note 8)
Shareholders’ Equity
Commitments and contingencies (note 11)
Approved by the Board of Directors
__________________________________ Director _________________________________ Director
The accompanying notes are an integral part of these financial statements.
26
Brewers Retail Inc.
Statement of Operations and Deficit
Period from
December 31,
2012 to
December 31,
2013
$
Period from
January 2,
2012 to
December 30,
2012
$
298,983
87,320
301,705
83,615
386,303
385,320
349,027
6,214
18,326
359,138
6,416
18,248
373,567
383,802
12,736
1,518
2,290
(2,000)
10,446
3,518
Deficit - Beginning of period
(86,608)
(88,608)
Premium on redemption of shares (note 10)
(12,820)
(1,518)
Deficit - End of period
(88,982)
(86,608)
Revenue
Service charges (note 12)
Other
Expenses
Operating (note 12)
Administration
Amortization (notes 6 and 7)
Income before income taxes
Provision for (recovery of) future income taxes (note 13)
Net income for the period
27
Brewers Retail Inc.
Statement of Cash Flows
Period from
December 31,
2012 to
December 31,
2013
$
Period from
January 2,
2012 to
December 30,
2012
$
10,446
3,518
18,326
2,290
32,774
(19,307)
(5,811)
(35,725)
18,248
(2,000)
33,292
5,755
(5,528)
(23,273)
2,993
1,545
30,012
(5,723)
4,538
24,289
(17,369)
8,289
(17,066)
8,151
(9,080)
(8,915)
Redemption of shares
(12,835)
(1,520)
Increase (decrease) in cash and cash equivalents during the
period
(17,377)
13,854
Cash and cash equivalents - Beginning of period
51,395
37,541
Cash and cash equivalents - End of period
34,018
51,395
Cash provided by (used in)
Operating activities
Net income for the period
Add (deduct): Non-cash items
Amortization
Future income taxes
Defined benefit plan expenses (note 8)
Change in accrued benefit liability
Gain on disposal of property and equipment (note 6)
Defined benefit plan contributions (note 8)
Change in non-cash operating working capital balances (note 17)
Investing activities
Purchase of property and equipment (note 6)
Proceeds on sale of property and equipment (note 6)
Financing activities
28
Brewers Retail Inc.
Notes to Financial Statements
December 31, 2013
1
Description of business
Brewers Retail Inc. (the company) is owned by three brewers: Molson Canada 2005, Labatt Brewing Company
Limited, and Sleeman Breweries Ltd. (collectively the Brewers or shareholders) and, pursuant to an operating
agreement, acts as a sales centre for the products of the Brewers in the Province of Ontario.
In 2013, the company changed its fiscal year-end to coincide with the calendar year. Accordingly, the fiscal 2013
ended December 31, 2013.
2
Summary of significant accounting policies and basis of presentation
The financial statements have been prepared in accordance with Canadian accounting standards for private
enterprises as issued by the Canadian Accounting Standards Board, and they have been applied within the
framework of the significant accounting policies summarized below.
Revenue recognition
Service charges revenue is primarily earned based on the volume of products distributed at rates determined
annually. The difference, if any, between service charges revenue and costs and expenses incurred is allocated
among the owner-breweries in accordance with the terms of the shareholders’ agreement and recorded as an
adjustment to service charges revenue.
Other revenues consist of empty containers fee, recycling fee, product sale, promotional revenue, and
dispensing services. The revenue is recorded at the point where the service has been performed or the products
have been delivered.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and highly liquid investments with a maturity of less than three
months from the date of acquisition. Short-term investments are recorded at cost plus accrued interest, which
approximates fair value.
Inventories
Inventories of beer are valued at cost, which equals the selling price. Related products inventory and dispensing
equipment are recorded at the lower of cost and net realizable value.
Empties deposits
Empties deposits represent the deposit value of empty containers collected and received.
29
(1)
Brewers Retail Inc.
December 31, 2013
Property and equipment
Property and equipment are recorded at cost less accumulated amortization and any impairment loss. The
company assesses property and equipment for recoverability whenever indicators of impairment exist. If the
carrying value of the asset exceeds the estimated net recoverable amount of the asset, then an impairment loss
is recognized to write the asset down to its fair value. Property and equipment are amortized over their
estimated useful lives on a straight-line basis as follows:
Buildings
Leasehold improvements
Machinery, equipment and operating system
Single aperture kegs
Pallets
40 years
over term of the leases
3 - 20 years
20 years
4 years
Intangible assets
Software is carried at cost less accumulated amortization and accumulated impairment losses. Acquired
computer software is capitalized on the basis of the costs incurred to acquire licences and install the specific
software.
Amortization is calculated on the cost of the asset less its residual value. Software is amortized on a straight-line
basis over periods ranging from three to seven years. The amortization method, useful lives and residual values
are reviewed annually.
The company assesses software for recoverability whenever indicators of impairment exist. If the carrying value
of the asset exceeds the estimated net recoverable amount of the asset, then an impairment loss is recognized to
write the asset down to its fair value.
Pension costs
Pension costs are determined using actuarial methods. Net periodic benefit cost is charged to income and
includes:
i)
the cost of pension benefits provided in exchange for employees’ services rendered during the year;
ii)
the interest cost of pension obligations;
iii) the expected long-term return on pension fund assets;
iv)
the amortization of prior service costs and amendments over the expected average remaining service life of
the employee group covered by the plans; and
v)
the amortization of cumulative net actuarial gains and losses in excess of 10% of the greater of the
beginning of year balances of the projected benefit obligation or market-related value of plan assets, over
the expected average remaining service life of the employee group covered by the plans.
30
(2)
Brewers Retail Inc.
December 31, 2013
The pension plans are funded through contributions determined in accordance with the projected unit credit
actuarial cost method.
Post-retirement benefits other than pensions
The company accrues the cost of post-retirement benefits other than pensions using actuarial methods. These
benefits, which are funded as they come due, include life insurance programs, medical and dental benefits. The
company amortizes the cumulative net actuarial gains and losses in excess of 10% of the projected benefit
obligation at the beginning of the year, over the expected average remaining service life of the employee group
covered by the plan.
Post-employment benefits other than pensions
The company provides long-term disability benefits to active employees. These benefits, which are funded as
they come due, include salary continuation while the employees are deemed not to be physically and mentally
fit to perform the essential duties of their normal occupation. The company recognizes net actuarial gain and
losses immediately in income in the year they arise.
Income taxes
Income tax expenses for the year comprise current and future income taxes. Income taxes are recognized in the
statement of operations. Levies other than income taxes, such as taxes on real estate, are included in
administrative expenses.

Current income taxes
Current income tax expense is based on the results of the period and is adjusted for items that are not
taxable or deductible. Current income taxes are calculated using income tax rates and laws that were
substantively enacted at the end of the reporting period. Management periodically evaluates positions
taken in the preparation and filing of income tax returns with respect to situations in which applicable
income tax regulations are subject to interpretation. Provisions are established, where appropriate, on the
basis of amounts expected to be paid to the tax authorities.

Future income taxes
Future income taxes are recognized, using the liability method, on temporary differences arising between
the income tax bases of assets and liabilities and their carrying amounts in the financial statements. Future
income taxes are determined using income tax rates and laws that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when the related future income tax asset is
realized or the future income tax liability is settled.
Future income tax assets are recognized only to the extent that it is probable that future taxable profit will
be available, against which the temporary differences can be utilized.
31
(3)
Brewers Retail Inc.
December 31, 2013
Future income tax assets and future income tax liabilities are offset when there is a legally enforceable
right to offset current income tax assets against current income tax liabilities and when the future income
tax assets and future income tax liabilities relate to income taxes levied by the same taxation authority and
when there is an intention to settle the balances on a net basis.
3
Critical accounting estimates and judgments
The preparation of these financial statements requires management to make estimates and judgments that
affect the reported and disclosed amounts of assets, liabilities, revenues and expenses in the financial
statements and accompanying notes. Management bases its estimates and judgments on historical experience
and on various other assumptions that it considers to be reasonable. The resulting accounting estimates will, by
definition, seldom equal the related actual results. Actual results could differ from those estimates under
different assumptions or conditions.
Impairment
The company reviews other non-financial assets when there is any indication that the asset might be impaired.
Employee future benefits
The present value of the retirement benefit obligation depends on a number of factors that are determined on
an actuarial basis using a number of assumptions. The assumptions used in determining the employee future
benefits expense include the discount rate. Any changes in these assumptions will impact the amount of the
employee future benefits obligation disclosed in the financial statements.
The company determines the appropriate discount rate at the end of each year. This is the interest rate that is
used to determine the present value of estimated future cash outflows expected to be required to settle the
employee future benefits obligation. In determining the appropriate discount rate, the company considers the
interest rates of high-quality corporate bonds that are denominated in Canadian dollars and have terms to
maturity approximating the terms of the related future benefit obligation.
Other key assumptions for the employee future benefits obligation are based on current market conditions.
Additional information is disclosed in note 8.
4
Included in cash and cash equivalents is $107 (December 30, 2012 - $107) that has been pledged as collateral
on letters of credit of up to $500. The company has a bank overdraft facility of up to $150, of which $nil
(December 30, 2012 - $nil) is outstanding. The company holds a one-year guaranteed investment certificate of
$900 that will mature in 2014.
32
(4)
Brewers Retail Inc.
December 31, 2013
5
Inventories
Beer
Related products
Dispensing equipment
Keg repair materials
6
December 31,
2013
$
December 30,
2012
$
144,896
499
1,854
28
135,520
367
2,016
33
147,277
137,936
Property and equipment
Land
Buildings
Construction-in-progress
Leasehold improvements
Machinery, equipment and operating
system
Single aperture kegs
Pallets
December 31,
2013
December 30,
2012
Cost
$
Accumulated
amortization
$
Net
$
Net
$
7,070
106,640
2,836
57,024
47,870
28,951
7,070
58,770
2,836
28,073
7,614
60,243
2,516
26,449
55,313
6,653
7,219
32,932
5,323
4,263
22,381
1,330
2,956
25,821
1,660
3,947
242,755
119,339
123,416
128,250
The company disposed of assets with a net carrying value of $2,478 (December 30, 2012 - $2,623) for net
proceeds of $8,289 (December 30, 2012 - $8,151) and recognized a gain on sale of $5,811 (December 30, 2012 $5,528). An amortization expense of $17,413 (December 30, 2012 - $17,380) has been charged in amortization
expense.
7
Intangible assets
Software
SAP - construction-in-process
December 31,
2013
December 30,
2012
Cost
$
Accumulated
amortization
$
Net
$
Net
$
2,901
7,279
1,781
-
1,120
7,279
2,033
1,628
10,180
1,781
8,399
3,661
An amortization expense of $913 (December 30, 2012 - $868) has been charged in amortization expense.
33
(5)
Brewers Retail Inc.
December 31, 2013
8
Employee future benefits
The company maintains various defined contribution, defined benefit pension plans providing pension and
other retirement and post-employment benefits for both salaried and hourly paid employees. Costs for
employee future benefits are accrued over the periods in which employees earn the benefits. The company also
maintains certain post-employment medical benefit plans. A summary of the balance sheets and statements of
operations is shown below.
December 31, 2013
Defined
benefits
pension
plans
$
Other
postemployment
$
December 30, 2012
Defined
benefits
pension
plans
$
Other
postemployment
$
Accrued benefit obligation
Balance - Beginning of year
Plan amendments
Current service costs
Past service costs
Interest cost
Settlement
Actuarial loss (gain)
Benefits payments
821,273
(1,943)
13,573
6,000
33,749
(89,241)
(34,332)
82,512
(29,519)
3,062
2,353
(1,138)
(6,595)
(4,797)
772,578
4,988
14,319
34,273
28,377
(33,262)
82,726
6,467
Balance - End of year
749,079
45,878
821,273
82,512
616,038
82,229
(33,711)
35,725
(4,797)
4,797
566,573
59,454
(33,262)
23,273
(3,798)
3,798
Fair value of plan assets
Balance - Beginning of year
Actual return on plan assets
Benefit payments
Employer contributions
Balance - End of year
700,281
-
616,038
3,458
(6,341)
(3,798)
-
Funded status - plan deficit
Unamortized actuarial loss (gain)
Unamortized past service costs
(48,798)
130,533
32,727
(45,878)
(8,459)
(24,388)
(205,235)
278,785
37,961
(82,512)
(12,274)
(3,246)
Accrued benefit asset (liability)
114,462
(78,725)
111,511
(98,032)
34
(6)
Brewers Retail Inc.
December 31, 2013
Other information about the company’s defined benefit plans and other benefit plans is as follows:
Pension benefit plans
Other benefit plans
December 31,
2013
December 30,
2012
32,774
33,292
(14,510)
9,555
35,725
33,711
23,273
33,262
4,797
4,797
3,798
3,798
$
Net expenses
Company’s contributions
made
Benefits paid
$
December 31,
2013
$
December 30,
2012
$
In 2013, the company offered eligible retired employees a voluntary buyout to permanently opt out of their
post-retirement health and life insurance coverage in exchange for a lump sum payment. The company settled
$1,138 of benefits for $897 in cash payout and incurred costs of $190 to administer the settlement.
The significant actuarial assumptions adopted in measuring the company’s accrued benefit obligations are as
follows:
Discount rate (Salary Plan)
Discount rate (Bargaining Plan)
Discount rate (LTD Plan)
Discount rate (PRB Plan)
Long-term rate of return on plan assets
Rate of compensation increase
December 31,
2013
%
December 30,
2012
%
4.80
5.00
3.80
4.90
7.00
2.00
4.20
4.20
3.30
4.20
7.00
2.00
For measurement purposes, a 7.0% annual rate of increase in the per capita cost of drugs and other medical
benefits was assumed for fiscal 2013 and 2012. The rate is assumed to decrease by 0.5% per year to a minimum
of 5%.
Plan assets comprise the following:
Equity instruments
Debt instruments
December 31,
2013
$
December 30,
2012
$
413,226
283,488
3,567
381,943
231,015
3,080
700,281
616,038
In the event that the discount rate used changed by o.5% from management’s estimates, the carrying (amount
of the present value of the obligation) would change by $4,028 (December 30, 2012 - $4,520).
35
(7)
Brewers Retail Inc.
December 31, 2013
9
Accounts payables and accrued liabilities
Owner brewers
Other brewers
Other payables and accrued liabilities
December 31,
2013
$
December 30,
2012
$
195,398
43,091
62,479
195,540
39,678
58,429
300,968
293,647
10 Capital stock
Authorized
197,700 first preference shares, eight dollars, Series A, redeemable at one hundred dollars each
10,000 Class A shares, non-voting
20,000 Class B shares, non-voting, redeemable at ten thousand dollars each, contingent on certain future
events
Unlimited Class C shares, non-voting, redeemable at one hundred dollars each, contingent on certain
future events
Unlimited Class D shares, non-voting, redeemable at one hundred dollars each, contingent on certain
future events
1,000 common shares
Issued and outstanding
December 31,
2013
December 30,
2012
100
200,000
84
83
100
100
200,000
91
91
100
200,367
200,382
$
10,000 Class A shares
20,000 (2012 - 20,000) Class B shares
604,312 (2012 - 610,145) Class C shares
903,716 (2012 - 913,086) Class D shares
1,000 common shares
$
49,247 (December 30, 2012 - 5,837) Class C shares were redeemed for $4,925 (December 30, 2012 - $583),
with a premium of $4,918 (December 30, 2012 - $582). 79,099 (December 30, 2012 - 9,370) Class D shares
were redeemed for $7,910 (December 30, 2012 - $937) with a premium of $7,902 (December 30, 2012 - $936).
36
(8)
Brewers Retail Inc.
December 31, 2013
11 Commitments and contingencies
The company has commitments under operating leases for properties, vehicles, cars and equipment that
require future minimum annual payments as follows:
$
2014
2015
2016
2017
2018
Thereafter
29,697
24,668
18,073
14,230
10,825
36,335
133,828
The company is a defendant in litigation arising in the normal course of business. The company believes that
the ultimate resolution of these matters will not materially affect the company’s financial condition or income.
12 Related party transactions and balances
The company carried out the following transactions in accordance with the terms of the shareholders’
agreement during the period and had balances at the end of the period with these entities as follows:
December 31,
December 30,
222,322
4,300
4,257
442
195,398
227,113
4,214
6,541
5,471
195,540
2013
$
Service charges revenue
Operating costs charged to Brewers’ Distributor Ltd.
Accounts receivable - Brewers
Accounts receivable - other - Brewers’ Distributor Ltd.
Accounts payable and accrued liabilities - Brewers
2012
$
Brewers’ Distributor Ltd. is an affiliated company controlled by the shareholders. The above transactions were
in the normal course of operations and were recorded at the exchange value, which represents the amount of
consideration established and agreed to by the related parties.
In addition to these amounts, the company has transactions in the normal course of business with a number of
other breweries owned or controlled by the Brewers. These amounts are included in accounts receivable others, accounts payable - others and service charges and other revenue.
37
(9)
Brewers Retail Inc.
December 31, 2013
13 Income taxes
The analysis of deferred income tax assets is as follows:
Deferred income tax assets
To be recovered after more than 12 months
To be recovered within 12 months
December 31,
2013
$
December 30,
2012
$
7,710
4,000
10,625
3,375
11,710
14,000
December 31,
2013
$
December 30,
2012
$
The movement in the deferred income tax balances is as follows:
As at January 1
(Credited) charged to the statement of operations
14,000
(2,290)
12,000
2,000
As at December 31
11,710
14,000
December 31,
2013
$
December 30,
2012
$
-
-
Income tax (recovery) expense
Deferred income taxes
Origination and reversal of temporary differences
2,290
(2,000)
2,290
(2,000)
The current income taxes on the company’s profit before income taxes differ from the theoretical amount that
would arise using the weighted average income tax rate applicable to income as follows:
Income taxes calculated at domestic rates applicable to
income
Income tax effects of
Permanent difference
Temporary difference
Utilization of previously unrecognized income tax losses
December 31,
2013
$
December 30,
2012
$
3,399
378
(643)
(1,701)
(1,055)
-
(666)
2,401
(2,113)
-
The weighted average applicable income tax rate was 26.5% (December 30, 2012 - 25.0%).
38
(10)
Brewers Retail Inc.
December 31, 2013
14 Government remittances
Government remittances consist of amounts (such as property taxes, sales taxes, payroll withholding taxes and
LCBO remittances) required to be paid to the government authorities and are recognized when the amounts
come due. In respect to government remittances, $36,880 (December 30, 2012 - $38,967) is included in
accounts payable and accrued liabilities.
15 Financial instruments
Financial assets and liabilities are recognized when the company becomes a party to the contractual provisions
of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have
expired or have been transferred and the Company has transferred substantially all risks and rewards of
ownership. Financial liabilities are derecognized when the obligation specified in the contract is discharged,
cancelled or expires.
The company’s financial assets and liabilities are classified into the following categories:

cash and cash equivalents as held-for-trading, which are measured at fair value;

accounts receivable are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. The company’s accounts receivable comprise trade receivables and are
included in current assets due to their short-term nature. Accounts receivables are initially
recognized at the amount expected to be received, less, when material, a discount to reduce the
account receivables and notes receivable to fair value. Subsequently, accounts receivable are
measured at amortized cost using the effective interest method less a provision for doubtful accounts;
and

payable and accrued liabilities as other financial liabilities, which are measured at amortized cost.
Financial liabilities are initially recognized at the amount required to be paid, less, when material, a
discount to reduce the payables to fair value. Subsequently, financial liabilities are measured at
amortized cost using the effective interest method. These are classified as current liabilities if
payment is due within 12 months.
Credit risk
In the normal course of business, the company is exposed to credit risk from its accounts receivable from
customers. The carrying values of accounts receivable are net of applicable revenue provisions and allowances
for doubtful accounts. Allowances for doubtful accounts are estimated based on past experience, specific risks
associated with the customer and other relevant information.
Interest rate risk
Interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The company does not hold any significant interest bearing assets.
39
(11)
Brewers Retail Inc.
December 31, 2013
Foreign currency risk
The company is exposed to currency risks as a result of exchange rate fluctuations and the volatility of these
rates. In the normal course of business, the company has financial assets and liabilities that are denominated in
US dollars. The company transacts in US dollars for income and expense transactions and carries US dollars in
the bank account for this purpose. The risk in this area is assessed by the company to be insignificant.
Liquidity risk
Liquidity risk is the risk the company will not be able to meet its financial obligations as they fall due. The
exposure to liquidity risk is dependent on the collection of accounts receivable. The company manages its
liquidity risk by monitoring its operating requirements. The company prepares budgets and forecasts to
monitor this risk. There has been no change to this risk exposure since 2012.
Price risk
Price risk is that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices (other than those arising from interest rate risk or currency risk), whether those changes are
caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar
financial instruments traded in the market. The company does not hold any instruments that could have the
exposure to cash flow interest rate risk.
16 Capital management
The company’s capital consists of share capital and deficit. The company’s objectives in managing capital are to
ensure adequate operating funds are available to maintain its business activities and to provide a cost-effective
operation to its shareholders. Additionally, the company aims to ensure sufficient liquidity to support its stores,
execute its business plans and enable the internal financing of capital projects.
The company’s primary uses of capital are to finance non-cash working capital along with capital expenditures
for new store additions, existing store renovation projects, information technology software and hardware
purchases and equipment purchases. The company currently funds these requirements out of its internally
generated cash flows.
The company is not subject to any externally imposed capital requirements. There has been no change with
respect to the overall capital risk management strategy during the period.
40
(12)
Brewers Retail Inc.
December 31, 2013
17 Change in non-cash operating working capital balances
December 31,
2013
$
Decrease (increase) in accounts receivable
Brewers
Others
Empties deposits
Change in inventories
Change in prepaid expenses and deposits
Change in accounts payable and accrued liabilities
Change in accounts payable and accrued liabilities in relation to
purchase of property, plant and equipment and intangible
assets
December 30,
2012
$
2,374
4,929
60
(9,341)
(459)
7,321
(636)
(1,374)
(248)
1,629
284
(3,348)
(3,339)
(2,030)
1,545
(5,723)
18 Comparative figures
Certain comparative figures have been reclassified to conform to the financial statement presentation adopted
in the current year.
41
(13)

Re-Invention - The Beer Store

Transcription

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