Lassonde Industries : Consolidated financial statement 2023

Consolidated

Financial

Statement Report

Lassonde Industries Inc.

Year Ended

December 31, 2023

Lassonde Industries Inc.

Table of Contents

Independent Auditor's Report	3
Consolidated Statements of Income	6
Consolidated Statements of Comprehensive Income	7
Consolidated Statements of Financial Position	8
Consolidated Statements of Shareholders' Equity	9
Consolidated Statements of Cash Flows	10
Notes to the Consolidated Financial Statements	11

2

Lassonde Industries Inc.

Independent Auditor's Report

To the Shareholders of Lassonde Industries Inc.

Opinion

We have audited the consolidated financial statements of Lassonde Industries Inc. (the "Corporation"), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of income, comprehensive income, shareholders'equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material accounting policy information (collectively referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Corporation as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards ("Canadian GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Corporation in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matter

A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. This matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.

Inventories - Evaluation of sufficiency of audit evidence over the existence of inventories -

Refer to Note 2.6 and Note 14 to the financial statements

Key Audit Matter Description

Inventories include production inventories that are comprised of raw materials and supplies, and finished goods. The balances are geographically dispersed across Canada and the United States and in many manufacturing operations and third-party locations (collectively "locations"). The processes to account for the existence of inventories rely on various perpetual inventory systems which include different information technology (IT) systems. To validate the accuracy of the inventory records, the Corporation performs a combination of annual physical inventory counts which take place before, at/or near year-end and of cyclical physical inventory counts throughout the year.

Given the importance of inventories to the Corporation's operations and the performance of audit procedures over a large number of geographically dispersed locations, evaluating the sufficiency of audit evidence over the existence of inventories required an increased extent of audit effort to determine the nature, extent and timing of the physical inventory count procedures to be performed.

3

Lassonde Industries Inc.

Independent Auditor's Report (continued)

How the Key Audit Matter Was Addressed in the Audit

Our audit procedures over the existence of inventories included the following, among others:

• Analyzed locations with inventories to determine where to attend the Corporation's physical inventory counts;
• Evaluated the effectiveness of certain internal controls over the Corporation's inventory cycle count process at select locations;
• For locations selected for physical inventory counts:
• • Physically observed management's count procedures over inventory and performed independent sample count procedures;
  • Investigated any variations from our independent sample count procedures and considered the impact in the context of the inventory balance as a whole;
  • For annual physical inventory counts which took place at a date other than year-end, tested inventories activity in the intervening period between the count date and the year-end date;
  • For a sample of third-party locations, sent confirmations, reviewed the reconciliation prepared by management and investigated any variances;
• Evaluated the overall sufficiency of audit evidence obtained over the existence of inventories.

Other Information

Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, 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.

In preparing the financial statements, management is responsible for assessing the Corporation's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Corporation's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

4

Lassonde Industries Inc.

Independent Auditor's Report (continued)

As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 Corporation's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Corporation to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is David Pain.

/ s / Deloitte LLP (1)

March 21, 2024

Montréal, Québec

__________________________________________________________________________________________________________

1. CPA auditor, public accountancy permit No. A129221

5

Lassonde Industries Inc.

Consolidated Statements of Income

(in thousands of Canadian dollars unless otherwise indicated) (audited)

		Years ended
	Note	Dec. 31, 2023	Dec. 31, 2022
		$	$
Sales	7	2,314,949	2,150,975
Cost of sales		1,727,231	1,627,628
Gross profit		587,718	523,347
Selling and administrative expenses		452,314	442,075
Operating profit		135,404	81,272
Share in the profit or (loss) of an associate		(2,884)	(914)
Financial expenses	9	16,755	10,390
Other (gains) losses	10	(5,742)	(634)
Profit before income taxes		121,507	70,602
Income tax expense	11	33,248	17,268
Profit		88,259	53,334
Attributable to:		87,531
Corporation's shareholders		53,938
Non-controlling interests	24	728	(604)
		88,259	53,334
Basic and diluted earnings per share (in $)		12.83	7.85
Weighted average number of shares outstanding (in thousands)	24	6,822	6,875
Additional information on income is presented in Note 8.

6

Lassonde Industries Inc.

Consolidated Statements of Comprehensive Income

(in thousands of Canadian dollars) (audited)

		Years ended
	Note	Dec. 31, 2023	Dec. 31, 2022
		$	$
Profit		88,259	53,334
Other comprehensive income
Items that will be reclassified subsequently to profit or loss:
Net change in the cash flow hedge of financial assets and liabilities		428
Gains (losses) on financial instruments designated as hedges		1,622
Reclassification of (gains) losses on financial instruments		(1,263)
designated as hedges		(606)
Income tax expense	11	213	(261)
		(622)	755
Exchange difference on translating foreign operations		(14,570)	38,924
		(15,192)	39,679
Items that will not be reclassified subsequently to profit or loss:
Net change in the cash flow hedge of non-financial assets:		(908)
Gains (losses) on financial instruments designated as hedges		11,485
Income tax expense	11	266	(3,002)
		(642)	8,483
Benefit cost of the defined benefit plans		(9,247)
Remeasurements of the net defined benefit asset or liability	26	15,001
Income tax expense	11	2,448	(3,959)
		(6,799)	11,042
		(7,441)	19,525
Total other comprehensive income (loss)		(22,633)	59,204
Comprehensive income		65,626	112,538
Attributable to:		66,234
Corporation's shareholders		109,114
Non-controlling interests	24	(608)	3,424
		65,626	112,538

7

Lassonde Industries Inc.

Consolidated Statements of Financial Position

(in thousands of Canadian dollars) (audited)

		As at	As at
	Note	Dec. 31, 2023	Dec. 31, 2022
		$	$
Assets
Current		19,842
Cash and cash equivalents		2,678
Accounts receivable	13	188,321	173,654
Income tax recoverable		4,206	12,206
Inventories	14	386,619	414,043
Derivative instruments		173	7,417
Other current assets	15	37,479	28,765
		636,640	638,763
Derivative instruments		74	279
Investment in an associate		-	7,439
Property, plant and equipment	17	500,821	399,969
Intangible assets	18	184,560	198,394
Net defined benefit asset	26	21,957	30,855
Other non-current assets		757	854
Goodwill	19	320,895	328,162
		1,665,704	1,604,715
Liabilities
Current		4,030
Bank overdraft		4,388
Accounts payable and accrued liabilities	20	330,412	307,037
Income tax payable		7,066	-
Derivative instruments		6,425	673
Other current liabilities	21	5,716	5,632
Current portion of long-term debt	22	18,525	100,821
		372,174	418,551
Long-term debt	22	191,995	148,574
Long-term incentive plan liabilities		5,323	1,442
Pension plan liabilities	26	830	523
Deferred tax liabilities	11	99,480	98,058
		669,802	667,148
Shareholders' equity		922,570
Equity attributable to the Corporation's shareholders		877,166
Non-controlling interests		73,332	60,401
		995,902	937,567
		1,665,704	1,604,715

Approved by the Board of Directors
Pierre-Paul Lassonde	Chantal Bélanger
Director	Director

8

Lassonde Industries Inc.

Consolidated Statements of Shareholders' Equity

(in thousands of Canadian dollars) (audited)

	Equity attributable to the Corporation's shareholders
			Accumulated		Non-	Total
		Contributed	other	Retained	controlling	shareholders'
	Share capital	surplus	reserves i)	earnings	interests	equity
	$	$	$	$	$	$
Balance as at December 31, 2022	46,660	1,360	94,102	735,044	60,401	937,567
Profit	-	-	-	87,531	728	88,259
Other comprehensive income (loss)	-	-	(14,498)	(6,799)	(1,336)	(22,633)
Transfer to non-financial assets ii)	-	-	(5,827)	-	(227)	(6,054)
Dividends	-	-	-	(15,003)	-	(15,003)
Business combination iii)	-	-	-	-	13,766	13,766
Balance as at December 31, 2023	46,660	1,360	73,777	800,773	73,332	995,902
Balance as at December 31, 2021	48,136	1,375	55,760	703,144	57,092	865,507
Profit	-	-	-	53,938	(604)	53,334
Other comprehensive income (loss)	-	-	44,134	11,042	4,028	59,204
Transfer to non-financial assets ii)	-	-	(5,792)	-	(115)	(5,907)
Dividends	-	-	-	(20,496)	-	(20,496)
Repurchase of Class A shares	(1,476)	(15)	-	(12,584)	-	(14,075)
Balance as at December 31, 2022	46,660	1,360	94,102	735,044	60,401	937,567

1. Includes the hedging reserve and the foreign currency translation reserve.
2. Transfer of cash flow hedge (gains) losses to non-financial assets.
3. Non-controllinginterest recognized as part of a business combination.

Additional information on shareholders' equity is presented in Note 24.

9

Lassonde Industries Inc.

Consolidated Statements of Cash Flows

(in thousands of Canadian dollars) (audited)

		Years ended
	Note	Dec. 31, 2023	Dec. 31, 2022
		$	$
Operating activities		88,259
Profit		53,334
Adjustments for:		33,248
Income tax expense	11	17,268
Net interest expense	9	15,987	9,466
Depreciation of property, plant and equipment and amortization of		63,267
intangible assets	8	59,513
(Gains) losses on capital assets		(1,107)	76
Change in the fair value of financial instruments		(149)	133
Cost of the long-term incentive plan, net of payments		2,504	2,311
Cost of pension plans recognized in profit or loss, net of contributions		(42)	7,246
Share in the (profit) or loss of an associate		2,884	914
Unrealized foreign exchange (gains) losses		(994)	4,580
Gain on business combination	6	(1,905)	-
Other		49	159
		202,001	155,000
Change in non-cash operating working capital items	25	46,694	(88,077)
Net income tax paid		(10,598)	(31 909)
Net interest paid		(15,163)	(8 901)
Settlements of derivative instruments		1,923	(2,114)
		224,857	23,999
Financing activities		(67,789)
Change in revolving operating credit, net of transaction costs		152,814
Repayment of long-term debt		(8,877)	(90,593)
Dividends paid on Class A shares		(6,747)	(9,313)
Dividends paid on Class B shares		(8,256)	(11,183)
Repurchase of Class A shares	24	-	(14,075)
		(91,669)	27,650
Investing activities		(9,000)
Consideration paid on a business combination, net of acquired cash on hand	6	-
Net acquisition of property, plant and equipment		(95,881)	(41,165)
Acquisition of intangible assets		(10,511)	(6,133)
Acquisition of other non-current assets		-	(749)
		(115,392)	(48,047)
Change in cash and cash equivalents		17,796	3,602
Cash and cash equivalents at beginning		(1,710)	(4,723)
Effect of exchange rate changes on cash and cash equivalents		(274)	(589)
Cash and cash equivalents at end	25	15,812	(1,710)

Additional cash flow information is presented in Note 25.

10