Premium Brands : Interim Condensed Consolidated Financial Statements, Second Quarter 2022

PREMIUM BRANDS HOLDINGS CORPORATION

Interim Condensed Consolidated Financial Statements

Second Quarter 2022

Thirteen and Twenty-Six Weeks Ended June 25, 2022 and June 26, 2021

(Unaudited)

Premium Brands Holdings Corporation

NOTICE OF NO AUDITOR REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Under National Instrument 51-102 "Continuous Disclosure Obligations", if an auditor has not performed a review of the interim financial statements, the financial statements must be accompanied by a notice indicating that they have not been reviewed by an auditor.

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared by and are the responsibility of the Company's management.

The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by CPA (Chartered Professional Accountants) Canada for a review of interim financial statements by an entity's auditor.

August 4, 2022

Premium Brands Holdings Corporation

Consolidated Balance Sheets

(in millions of Canadian dollars)

	Jun 25,	Dec 25,	Jun 26,
	2022	2021	2021
Current assets:
Cash and cash equivalents	13.8	16.5	24.2
Accounts receivable	617.5	521.7	453.3
Inventories	836.2	645.2	483.0
Prepaid expenses and other assets	29.9	28.6	25.5
	1,497.4	1,212.0	986.0
Capital assets	772.7	617.3	558.6
Right of use assets	471.6	464.5	433.8
Intangible assets	558.7	526.3	507.9
Goodwill	1,033.3	1,001.2	859.9
Investments in and advances to associates (note 8)	555.9	568.8	576.1
Other assets	21.8	18.8	15.6
	4,911.4	4,408.9	3,937.9
Current liabilities:
Cheques outstanding	19.1	18.7	21.9
Bank indebtedness	14.1	16.3	1.0
Dividends payable (note 6)	31.4	28.4	27.7
Accounts payable and accrued liabilities	448.9	445.5	403.3
Current portion of puttable interest in subsidiaries	26.4	27.1	27.8
Current portion of long-term debt (note 3)	4.3	4.6	7.1
Current portion of lease obligations	38.3	32.9	28.0
Current portion of provisions	9.6	7.7	11.2
	592.1	581.2	528.0
Long-term debt (note 3)	1,374.6	1,074.0	780.8
Lease obligations	484.5	477.4	449.3
Puttable interest in subsidiaries	11.4	-	-
Deferred revenue	2.8	2.8	3.7
Provisions	62.4	63.4	61.2
Deferred income taxes	114.9	105.2	92.3
	2,642.7	2,304.0	1,915.3
Convertible unsecured subordinated debentures (note 4)	475.8	331.0	452.1
Equity attributable to shareholders:
Retained earnings	58.6	35.6	3.6
Share capital (note 5)	1,712.4	1,713.3	1,563.6
Reserves	21.9	25.0	3.3
	1,792.9	1,773.9	1,570.5
	4,911.4	4,408.9	3,937.9

Subsequent events (note 12)

Approved by the Board of Directors

(signed) George Paleologou

Director

(signed) Johnny Ciampi

Director

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

Premium Brands Holdings Corporation

Consolidated Statements of Operations

(in millions of Canadian dollars except per share amounts)

	13 weeks	13 weeks	26 weeks	26 weeks
	ended	ended	ended	ended
	Jun 25,	Jun 26,	Jun 25,	Jun 26,
	2022	2021	2022	2021
Revenue	1,519.9	1,234.7	2,771.1	2,244.5
Cost of goods sold	1,242.8	1,001.7	2,267.2	1,818.1
Gross profit before depreciation, amortization and plant start-up	277.1	233.0	503.9	426.4
and restructuring costs
Interest income from investments in associates	(15.1)	(14.3)	(29.9)	(24.4)
Selling, general and administrative expenses	161.4	135.1	307.2	256.1
	130.8	112.2	226.6	194.7
Plant start-up and restructuring costs	1.8	0.5	5.3	1.0
Depreciation of capital assets	18.2	17.2	35.7	34.8
Amortization of intangible assets	7.7	6.8	15.2	13.4
Amortization of right of use assets	11.2	9.2	22.0	17.3
Accretion of lease obligations	5.5	5.0	10.8	8.8
Interest and other financing costs (note 7)	15.7	10.9	27.1	21.3
Change in fair value of option liabilities	-	24.3	-	24.3
Change in value of puttable interest in subsidiaries	-	0.5	-	0.5
Acquisition transaction costs	2.5	1.1	3.7	4.4
Accretion of provisions	1.7	1.8	4.5	3.6
Equity loss (earnings) in investments in associates	6.8	(1.1)	11.7	4.9
Fair value gains on investments in associates	(19.8)	-	(19.8)	-
Clearwater closing risk fee	-	-	-	(2.4)
Acquisition bargain purchase gain	-	-	-	(1.8)
Earnings before income taxes	79.5	36.0	110.4	64.6
Provision for income taxes (recovery)
Current	18.3	13.7	26.9	37.0
Deferred	(2.1)	(5.7)	(2.2)	(20.2)
	16.2	8.0	24.7	16.8
Earnings	63.3	28.0	85.7	47.8
Earnings per share:
Basic	1.42	0.65	1.92	1.10
Diluted	1.41	0.64	1.91	1.10
Weighted average shares outstanding (in millions):
Basic	44.6	43.4	44.6	43.4
Diluted	44.8	43.6	44.8	43.6

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

Premium Brands Holdings Corporation

Consolidated Statements of Comprehensive Earnings

(in millions of Canadian dollars)

	13 weeks	13 weeks	26 weeks	26 weeks
	ended	ended	ended	ended
	Jun 25,	Jun 26,	Jun 25,	Jun 26,
	2022	2021	2022	2021
Earnings	63.3	28.0	85.7	47.8
Items that may be realized to earnings (loss) in future periods:
Unrealized gain on interest rate swaps	0.7	0.8	1.9	1.5
Unrealized gain (loss) on foreign exchange currency contracts	(0.5)	1.0	(0.2)	0.4
Unrealized foreign exchange gain (loss) on investment in foreign operations	10.5	(7.4)	3.0	(12.4)
Other comprehensive earnings (loss)	10.7	(5.6)	4.7	(10.5)
Comprehensive earnings	74.0	22.4	90.4	37.3

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