2 0 2 1 A N N U A L R E P O R T
“As a global organization
and a leader in health and
wellness, we hold ourselves
accountable to our vision of
improving the world’s health
and wellness. We have clear
targets, clear commitments,
and clear plans for a healthy
and sustainable future.”
– M I K E P I L A T O , P R E S I D E N T & C E O
22
O V E R V I E W
As we celebrate our Jamieson brand’s 100th anniversary,
we are not only standing by our vision to improve the
world’s health and wellness. We’ve redefined what that
means for people, and for our planet.
This is a vision now widely shared – particularly amid
growing concerns surrounding the ongoing pandemic,
social equity and climate change.
How we propelled this vision in 2021:
P U T T I N G
P E O P L E F I R S T ,
A L W A Y S
M E E T I N G
C O N S U M E R
D E M A N D
E X P A N D I N G
W O R L D W I D E
I N C R E A S I N G
E S G P R O J E C T S
& C O M M I T M E N T S
Our efforts drove huge momentum across our brands,
categories and countries. At this rate, imagine what we
can achieve in the century to come.
This annual report contains “forward-looking information” within the meaning of applicable securities laws, which forward-looking information represents management’s expectations as at the
date hereof and is subject to change after such date. For a detailed discussion of forward-looking information, which applies in all respects to the forward-looking information contained herein,
please refer to the section entitled “Forward-Looking Information” in Jamieson Wellness’ annual information form dated March 29, 2022.
This annual report makes reference to certain financial measures, including non-IFRS financial measures that are historical. These measures are not recognized measures under IFRS, do not
have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. See “How we Assess the Performance of our
Business” of the Company’s management’s discussion and analysis of the results of operations and financial condition of the Company for the year ended December 31, 2021 (the “MD&A”)
for an explanation of the composition of each such measure and see “Selected Consolidated Financial Information” of the MD&A for a quantitative reconciliation of each non-IFRS financial
measure to its most directly comparable financial measure disclosed in our financial statements to which the measure relates, which disclosures are incorporated by reference herein.
3
F I N A N C I A L S
We reached $100 million in Adjusted EBITDA1
as we entered our 100th year.
Supported by an ever-growing base of health and wellness consumers, our
financial performance accelerated across all business segments in 2021.
We achieved outstanding growth, despite cost pressures associated with global
supply chain challenges, sustained safety measures and business continuity in
a COVID-19 environment.
+11.7%
+13.8%
$ 4 5 1 . 0 M
$ 1 0 0 . 1 M
+25.2%
$ 5 2 . 1 M
+15.2%
$ 5 5 . 2 M
+23.8%
$ 1 . 2 5
+13.8%
$ 1 . 3 2
R E V E N U E
A D J U S T E D
E B I T D A
N E T
E A R N I N G S
A D J U S T E D
N E T E A R N I N G S 2
D I L U T E D
E A R N I N G S
P E R S H A R E
A D J U S T E D
D I L U T E D
E A R N I N G S
P E R S H A R E 3
J A M I E S O N B R A N D S
Our Jamieson Brands segment experienced strong gross profit margins4,
led by volume driven efficiencies and cost recovery.
D O M E S T I C B U S I N E S S
Domestic branded sales increased as
consumer demand continually exceeds
pandemic baseline levels.
I N T E R N A T I O N A L B U S I N E S S
International branded business
remained our fastest growing segment,
led by growth in China.
S T R AT E G I C PA R T N E R S
Revenue in our Strategic Partners segment increased as
programs with new and existing customers continue to expand.
1. “Adjusted EBITDA” is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented
by other companies. Its most directly comparable financial measure that is disclosed in our financial statements is net earnings. For more information, see the non-IFRS and other financial
measures disclaimer included on page 3 of this annual report.
2. “Adjusted net earnings” is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures
presented by other companies. Its most directly comparable financial measure that is disclosed in our financial statements is net earnings. For more information, see the non-IFRS and other
financial measures disclaimer included on page 3 of this annual report.
3. “Adjusted diluted earnings per share” is a non-IFRS ratio that does not have a standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures
presented by other companies. A component of Adjusted diluted earnings per share is Adjusted net earnings. For more information, see the non-IFRS and other financial measures
disclaimer included on page 3 of this annual report.
4. “Gross profit margin” is a supplementary financial measure. For more information, see the non-IFRS and other financial measures disclaimer included on page 3 of this annual report.
4
T H E C E O ’ S L E T T E R
We are proud of
our success...
but we know we
are still in the
early days of
our potential.
Dear fellow shareholders:
As we celebrate the centennial of our Jamieson brand in 2022 it is a time to reflect, but
more importantly, to look to our future and continued leadership beyond this 100-year
milestone. As I consider the unique attributes that have driven this success story in
Canada and around the world, it strikes me that it will be these same attributes that fuel
our growth moving forward.
Our continued focus on operational excellence is evidenced by our 2021 revenue
growth of 12% and adjusted EBITDA growth of 14%, despite the continued pressures
of operating within the pandemic environment. Our resilient team, unwavering
commitment to quality, breadth of portfolio, and deep understanding of the category
helped us perfectly meet the growing global consumer demand for vitamins, minerals
and supplements, resulting in a 9% revenue increase in our Jamieson brands. We are
dedicated to our vision of improving the world’s health and wellness, and throughout
this pandemic we have delivered.
With 100 years of brand building, product innovation, and operational expertise behind
us, we are poised to build on global consumer health and wellness trends and face any
challenge that could be ahead of us. To drive our leadership beyond our 100 years,
we are strategically focused on ensuring we continue to meet consumer needs along
their entire health and wellness journey. We continue to nurture lifelong relationships
with our consumers from their entry point into the category and brand, right through
their evolving lifestyles and stages. Our growth strategy is clear as we focus our
efforts on three main pillars: continuing to grow our strong leadership position in our
home market, driving strong growth in China where our brand perfectly meets the top
purchase attributes of highly engaged health and wellness consumers, and continuing
to drive international growth in markets where our brand resonates strongly. While
successful execution in these three pillars alone will enable us to meet our targets
for growth, we also continue to consider expansion through acquisition, which would
allow us to accelerate our already powerful growth trajectory. We are proud of our
success here in Canada and our expansion to over 45 countries around the world, but
we know we are still in the early days of our potential and are dedicated to ensuring
we meet the growing global demand for high quality health and wellness products.
We are motivated by our future growth opportunities and remain committed to the
same discipline and diligence this company is built on to ensure we are driving strong
profitable growth well into the future.
I also want to touch on our significant efforts around ESG. We have set targets and
taken action to improve diversity, equity and inclusion at Jamieson Wellness and in
our communities, and made additions and improvements to our governance practices
for further transparency and accountability. We also committed to a 50% emissions
reduction by 2030, and to establishing a formal action plan to reach Net Zero by 2050.
Our targets and plans are aggressive, but achievable, and we welcome the challenge of
creating real and positive change.
On behalf of the entire management team, I would like to thank our team members,
customers, consumers and our shareholders for your continued support and
encouragement. We remain relentlessly focused on profitable growth, improving the
world’s health and wellness, and exceeding expectations as we drive our leadership
beyond 100.
MIKE PILATO
Director, President & CEO
5
T H E C H A I R M A N ’ S L E T T E R
Our commitment
to our core values
has endured the
test of time.
Dear fellow shareholders:
2021 was another outstanding year for Jamieson Wellness, reflecting
impressive execution against our strategic priorities across the entire
organization. The breadth of our success, including double-digit growth in
revenues and profits, underscored that 100 years since it was founded, the
power of the Jamieson brand is stronger than ever. Reaching the century
mark is a major milestone and I’m confident that the future is even brighter as
we further leverage our trusted brand across a global platform that positively
impacts the lives of millions of consumers every day.
Our commitment to our core values has endured the test of time and led to
substantial value creation for shareholders. In 2021, we furthered our efforts
around ESG principles and corporate responsibility, introducing specific
targets around diversity, equity and inclusion, and improving and expanding
our governance practices. Earlier this year, we also announced environmental
targets and projects, with the goal of becoming a Net Zero organization. By
aligning our business practices with the needs of all stakeholders, from team
members to the global communities where our consumers live and work, we
are staying true to our legacy and making the world a better, healthier place
for generations to come.
It’s been an honour and privilege to serve as Chair of the Board of Jamieson
Wellness for the past five years, helping to guide the company through a
period of tremendous growth and success. We’ve benefited from outstanding
management whose passion and energy for executing our shared vision
enabled us to exceed our initial expectations set at the time of our IPO. We
are extremely well positioned for the future, making now the appropriate time
for me to pass the torch to a new Chair. Accordingly, I’ve announced my
intention to retire from the Board, and Tim Penner, who has been on the Board
for the past three years, will be appointed to succeed me. He is a seasoned
Director with a tremendous background and proven track record helping
major CPG companies drive significant growth on a global scale.
I would like to thank the entire Jamieson team for their hard work and
dedication. I’m grateful to our Board of Directors and management team for
their leadership, delivering another outstanding year. We remain committed to
driving shareholder value while working to achieve our mission of becoming
the world’s most successful and trusted health and wellness company.
Sincerely,
DAVID WILLIAMS
Chairman of the Board, Jamieson Wellness Inc.
6
Fuelling a healthier
way of life.
T R E N D S
Consumers have adopted a long-term commitment
to using vitamins, minerals, and supplements in
nearly every global market.
Health and wellness continues to be a growing trend. COVID-19
accelerated its adoption, and a new consumer baseline has emerged.
Throughout 2021, we continued to adapt to meet rising consumer
needs and increased volumes.
H O W W E ’ R E M E E T I N G D E M A N D
Innovation across product
categories and evolving
consumer needs
Capital investment in
increased capacity and
manufacturing efficiencies
Expanded programs
with new and existing
customers
Diligent management of
supply chain risks and
transportation costs
8
I N N O V AT I O N
Driven by consumer insights and the latest science,
our innovation team introduced new products throughout
the year to meet our consumers’ evolving needs.
Nearly all of our new products fall into some of the top trending categories of the year,
including immunity, sleep, stress and energy. We’ve also geared our innovative efforts
towards ingredients (e.g., mushrooms and elderberry) and formats (e.g., gummies and
drink mixes) that are currently in high demand.
P R O D U C T S P O T L I G H T
9
I N T E R N AT I O N A L
With a growing presence in more than 45 countries
and regions, Jamieson Wellness is on track to becoming
a leading global health and wellness company.
In 2021, our key areas of expansion included Eastern Europe, the
Middle East and Southeast Asia – with China presenting the most
rapidly emerging opportunity.
Our partnership with our international club partner, Costco, continues
to grow. It has been a primary driver for market penetration, enabling
consumers to shop our products at Costcos in the UK, Iceland, Spain,
France, Australia, Taiwan and China.
E X PA N D I N G O U R P R E S E N C E
10
C H I N A
The Chinese vitamin market is growing at a rate that
far outpaces the global industry average. As Chinese
consumers increasingly embrace health and wellness
products, China has become our largest global market
and global revenue driver.
Throughout 2021, we continued our investment in marketing efforts to deepen
our understanding of the Chinese consumer. Results reinforced a strong
consumer preference for foreign brands, like Jamieson Vitamins, that are
known for quality and heritage.
We will continue to focus on the Chinese consumer, expanding our product
offerings according to their needs and making strategic investments to drive
further growth.
$20B
Value of the Chinese
vitamin market (USD)
11
O U R T H R E E - P R O N G E D G R O W T H S T R AT E G Y I N C H I N A
1
2
3
C R O S S - B O R D E R E C O M M E R C E
As the fastest growing segment of the Chinese market,
cross-border eCommerce is a high priority, particularly top
platforms such as T-mall, VIP.com, and JD.com.
D O M E S T I C M A R K E T
We have a leading regulatory position in this market,
allowing us to expand into China’s booming domestic
eCommerce and brick-and-mortar channels.
C L U B
Led by Costco, in 2021 we significantly
increased our marketing spend and execution
in the Chinese club channel.
175+
Branded SKUs
currently in distribution in
cross-border eCommerce
20+
Products in
distribution in
Costco Shanghai
12
How we operate
should reflect
who we are.
E N V I R O N M E N TA L
2021 marked a crucial time for companies
to commit to sustainability.
Over the year, we evaluated the environmental impacts of our own company
and are working to align our sustainability efforts with the United Nations
Sustainable Development Goals and the UN Paris Agreement.
O U R S C I E N C E - B A S E D TA R G E T S
Reduce emissions by 50%
across our facilities by 2030
Complete projects to
reduce emissions across
our value chain by 2030
Establish a formal action plan
to reach Net Zero by 2050
14
S O C I A L
Finding footing on our DE&I journey.
Since 2020, our fight against anti-Black racism has evolved into a full-blown
diversity, equity and inclusion strategy.
P R O G R E S S H I G H L I G H T S I N 2 0 2 1 *
$$
Incorporated certain diversity
goals into annual bonus
determinations at the director
level and above
Updated our supplier audit
questionnaire to include additional
environmental, ethical responsibility,
and DE&I requirements
88%
Conducted a series of
workplace equity training
workshops with an 88% team
member participation rate
84%
Conducted our first team member
demographic data, inclusion, values
and engagement survey, resulting in
an 84% participation rate
JWEL Parental Leave Policy revised
to include parental leave top-up
in response to feedback from
our team members and women’s
Employee Resource Group
*Full ESG update published in early 2022
15
G O V E R N A N C E
We are continually strengthening our adoption of
and commitment to corporate governance practices
that align with the health and wellness standards we
aspire to.
In 2021, we incorporated certain environmental, social and governance goals
into annual bonus determinations using established key performance indicators
aligned to the Company’s values and DE&I objectives. We made several additions
and updates to our disclosures, resulting in a 69% increase in our Globe and Mail
Board Games score over the prior year.
We also welcomed two new board members, including Tania M. Clarke and
Shanghai-based Mei Ye, ensuring more diverse representation in leadership roles.
“ Jamieson Wellness is a Canadian success story with
longevity and strong results. I look forward to continuing it.”
– TA N I A M . C L A R K E
“ I am excited for Jamieson’s potential in producing the safest,
highest-quality natural health products for China’s market.”
– M E I Y E
O U R B O A R D O F D I R E C T O R S
A S O F D E C E M B E R 2 0 2 1
2 0 2 5 TA R G E T S
44% Female
22% Racialized
Persons
30% Female*
25% Racialized
Persons**
* Reached and surpassed as of December 2021
** Target is for representation among board
members and senior management
16
O U R P L AT F O R M F O R V A L U E C R E AT I O N
As we look ahead into our next century of growth, we continue
to build on our key strengths, innovate towards consumer
needs and wishes, and push further into new and existing
areas of growth. All in our effort to enable a healthier world.
C O N S U M E R I N S I G H T S
A N D M E G AT R E N D S
D O M E S T I C
G R O W T H
I N T E R N A T I O N A L
E X P A N S I O N
G R O W T H
I N C H I N A
A C Q U I S I T I O N
O P P O R T U N I T I E S
O P E R A T I N G
L E V E R A G E
P E O P L E ,
C U LT U R E , VA L U E S
E S G
P R A C T I C E S
17
Here’s to 100 more years.
And countless gains.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the three and twelve months ended December 31, 2021
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For the three and twelve months ended December 31, 2021
The following management’s discussion and analysis of financial condition and results of operations
(“MD&A”) of Jamieson Wellness Inc. (together with its subsidiaries), referred to herein as “Jamieson”, the
“Company”, “we”, “us” or “our”, is dated as of February 23, 2022. It should be read in conjunction with our audited
consolidated annual financial statements and accompanying notes for the year ended December 31, 2021.
Our audited consolidated annual financial statements and accompanying notes for the year ended December
31, 2021 have been prepared in accordance with International Financial Reporting Standards (“IFRS”). These audited
consolidated annual financial statements include the accounts of our Company and other entities that we control and
are reported in Canadian dollars. All references in this MD&A to “Q4 2021” are to our fiscal quarter ended December
31, 2021 and to “Q4 2020” are to our fiscal quarter ended December 31, 2020. All references in this MD&A to “YTD
2021” are to our year ended December 31, 2021 and to “YTD 2020” are to our year ended December 31, 2020.
See “Forward-Looking Information” and “Risk Factors” for a discussion of the uncertainties, risks and
assumptions associated with these statements. Actual results may differ materially from those indicated or underlying
forward-looking information as a result of various factors, including those referred to under the heading “Risk Factors”
and elsewhere in this MD&A.
Non-IFRS and Other Financial Measures
This MD&A makes reference to certain financial measures, including non-IFRS financial measures that are
historical, non-IFRS measures that are forward-looking, non-GAAP ratios and supplementary financial measures.
Management uses these financial measures for purposes of comparison to prior periods and development of future
projections and earnings growth prospects. This information is also used by management to measure the profitability
of ongoing operations and in analyzing our business performance and trends. These measures are not recognized
measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other companies. Rather, these measures are provided as additional
information to complement those IFRS measures by providing further understanding of our results of operations from
management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of
our financial information reported under IFRS. We use the following non-IFRS financial measures: “EBITDA”,
“Adjusted EBITDA”, “Adjusted net earnings”, “normalized gross profit”, “normalized SG&A”, “normalized earnings
from operations”, “cash from operating activities before working capital considerations” and “net debt”, the following
non-IFRS ratios: “Adjusted EBITDA margin”, “Adjusted diluted earnings per share”, “normalized gross profit
margin”, “normalized operating margin”, and the following supplementary financial measures: “gross profit margin”,
“operating margin” and “USD denominated revenue”, to provide supplemental measures of our operating performance
and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial
measures. Management also uses non-IFRS and supplementary financial measures in order to prepare annual operating
budgets and to determine components of management compensation. See “How we Assess the Performance of our
Business” for an explanation of the composition of each such measure, as applicable, and see “Selected Consolidated
Financial Information” for a quantitative reconciliation of each non-IFRS financial measure to its most directly
comparable financial measure disclosed in our financial statements to which the measure relates.
Forward-Looking Information
Certain statements contained in this MD&A including, in particular, in the sections below entitled “Summary
of Factors Affecting our Performance”, “Liquidity and Capital Resources”, “Outlook” and “Risk Factors”, contain
forward-looking information within the meaning of applicable securities laws. Forward-looking information may
relate to our future outlook and anticipated events or results and may include information regarding our financial
position, business strategy, growth strategy, budgets, operations, financial results, taxes, dividend policy, plans,
intentions, beliefs, and objectives of our Company. Particularly, information regarding our expectations of future
results, performance, achievements, prospects or opportunities is forward-looking information. In some cases,
forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”,
- 20 -
“expects”, “does not expect”, “is expected”, “an opportunity exists”, “budget”, “scheduled”, “estimates”, “outlook”,
“forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “does not anticipate”, “believes”, or
variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”,
“will”, “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, intentions,
projections or other characterizations of future events or circumstances contain forward-looking information.
Statements containing forward-looking information are not historical facts but instead represent management’s
expectations, estimates and projections regarding future events or circumstances.
In addition, our assessments of, and targets for, annual revenue, Adjusted EBITDA, Adjusted diluted earnings
per share and certain other measures are considered forward-looking information. See “Outlook” for additional
information concerning our strategies, assumptions and market outlook in relation to these assessments.
The forward-looking information contained in this MD&A is based on management’s opinions, estimates
and assumptions in light of its experience and perception of historical trends, current conditions and expected future
developments, as well as other factors that we believe to be appropriate and reasonable in the circumstances. Despite
a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying
opinions, estimates and assumptions will prove to be correct. Certain assumptions in respect of the ability to pursue
further strategic acquisitions; our ability to source raw materials and other inputs from our suppliers; our ability to
continue to innovate product offerings that resonate with our target customer base; our ability to retain key
management and personnel; our ability to continue to expand our international presence and grow our brand
internationally; our ability to obtain and maintain existing financing on acceptable terms; currency exchange and
interest rates; the impact of competition; changes to trends in our industry or global economic factors; and changes to
laws, rules, regulations and global standards are material factors made in preparing the forward-looking information
and management’s expectations contained in this MD&A.
The forward-looking information contained in this MD&A represents management’s expectations as of the
date of this MD&A and is subject to change after such date. However, we disclaim any intention or obligation or
undertaking to update or revise any forward-looking information whether as a result of new information, future events
or otherwise, except as required under applicable securities laws in Canada.
Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that
management considered appropriate and reasonable as of the date such statements are made, and is subject to known
and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those expressed or implied by such forward-looking
information, including but not limited to those described below and referred to under the heading “Risk Factors” and
those discussed under the “Risk Factors” section of our most recent annual information form.
We caution that the list of risk factors and uncertainties is not exhaustive and other factors could also
adversely affect our results. Readers are urged to consider the risks, uncertainties and assumptions carefully in
evaluating the forward-looking information and are cautioned not to place undue reliance on such information.
Overview
Founded in 1922, Jamieson is Canada’s leading branded manufacturer, distributor and marketer of high-
quality natural health products. We offer consumers a comprehensive and innovative line of branded vitamins,
minerals and supplements (“VMS”) products and certain over-the-counter remedies through our Jamieson and Smart
Solutions by Lorna Vanderhaeghe brands as well as sports nutrition products through our Progressive, Precision and
Iron Vegan brands, all of which we refer to as our “Jamieson Brands” segment. In addition to our Jamieson Brands
segment, we also offer comprehensive manufacturing and product development services on a contract manufacturing
basis to select blue-chip consumer health companies and retailers worldwide, which we refer to as our “Strategic
Partners” segment.
VMS and sports nutrition are two large and growing segments of the consumer health industry. Jamieson is
Canada’s #1 overall consumer health brand by sales and Canada’s #1 brand in VMS by sales. Our trusted reputation
and success in Canada have allowed us to significantly grow the business internationally, with products being sold in
greater than 45 countries and regions worldwide.
- 21 -
Our trusted reputation, strong industry relationships and certifications and commitment to meeting the highest
standards of manufacturing, together with high quality production capabilities, attract opportunities for us to
manufacture products for select blue-chip consumer health companies and retailers worldwide. Combining deep
consumer insights with extensive research and development capabilities, we deliver category-leading innovation
and growth.
Our leading market position and brands, focus on quality and innovation and extensive selection of products,
make us the preferred partner for retailers in Canada.
Summary of Factors Affecting Our Performance
We believe our performance and future success depend on a number of factors that present significant
opportunities for us. These factors are also subject to a number of inherent risks and challenges, some of which are
discussed below and referred to under “Risk Factors”.
Impact of COVID-19
The COVID-19 pandemic continued to impact businesses globally throughout 2021 and there is a continuing
risk that the COVID-19 pandemic may impact the results of operations or financial condition. Any prolonged retail or
manufacturing closures could impact our ability to service our customers and consumers. An outbreak within our
operating facilities could result in absenteeism or a plant closure for an extended duration. Suppliers may experience
a business disruption which could impact the supply of raw materials or components required for production.
Limitations on transportation or border closures may result in shipment delays from our suppliers or to our customers.
The duration and impact of the COVID-19 pandemic remains unknown. This includes the rate and manner in which
vaccines are distributed, as well as vaccine efficacy against future COVID-19 variants and strains. We continue to
review our safety protocols to reflect new government or public health recommendations. We have not benefited from
nor applied for any government financial aid or relief relating to the COVID-19 pandemic.
Our Brands
Our iconic brands have been built around consumer trust through focus on product quality, purity and
potency. Our well-established brands include Jamieson, Smart Solutions by Lorna Vanderhaeghe, Progressive,
Precision and Iron Vegan. Maintaining, enhancing and growing our brand appeal in Canada and internationally is
critical to our continued success. Failure to maintain and enhance our brands in any of the targeted markets may
materially and adversely affect the business, results of operations or financial condition.
Product Innovation and Planning
We believe that product innovation is integral to our success and we continue to focus on innovation as a key
pillar of our growth. Our business is subject to changing consumer trends and preferences which is dependent, in part,
on continued consumer interest in our new products, line extensions and reformulations. The success of new product
offerings, enhancements, or reformulations depends upon a number of factors, including our ability to: (i) accurately
anticipate customer needs; (ii) develop new products, line extensions or reformulations that meet these needs;
(iii) successfully commercialize new products, line extensions and reformulations in a timely manner; (iv) price
products competitively; (v) manufacture and deliver products in sufficient volumes and in a timely manner;
(vi) differentiate product offerings from those of competitors; and (vii) maintain relationships with scientist employees
and consultants and members of our panel of consumer health industry experts, which we call the Jamieson Scientific
Advisory Board, in order to benefit from their expertise and innovations. We believe our pace of innovation and speed
to market with the introduction of new products provide us with a competitive advantage within the space we compete.
Customer Relationships
We have longstanding and deeply entrenched customer relationships with Canada’s top retailers across the
food, drug, mass (“FDM”), club, health food store, specialty and online retail channels. We sell products through our
knowledgeable retail partners and we are dependent on retail partners across all channels to display and present our
- 22 -
products to customers, in their brick-and-mortar stores and on their online e-commerce sites. Our partners service
customers by stocking and displaying our products, and, in certain health food and other specialty stores, explaining
product attributes and health benefits. Our relationships with these retail customers are important for consumer trust
in the brand and the advertising and educational programs we continue to deploy. Failure to maintain these
relationships with retail partners or financial difficulties experienced by these retail partners could adversely affect
our business.
Sourcing and Production
We have developed a strong, global supply chain based on long-standing relationships and have had
relationships with the majority of our suppliers for over ten years. We purchase our ingredients from approximately
250 high quality raw material ingredient and packaging suppliers worldwide and potential suppliers are subject to a
rigorous evaluation process by our quality assurance department. We are dependent on a stable and consistent supply
of materials and inputs, including ingredients and packaging products. Although materials and inputs are generally
available from multiple sources, certain materials and inputs are sourced from a restricted number of suppliers. In
2021, our top ten suppliers accounted for approximately 50% of our purchases. As is customary in the consumer health
industry, we do not have long-term written contracts with most suppliers and often enter into short to medium-term
contracts for raw materials at fixed prices to provide time to address price increases and mitigate margin erosion.
Distribution
Our warehousing and distribution functions are operated under a third-party logistics model through facilities
in Calgary, Alberta and Toronto, Ontario. We have entered into an agreement with the third-party logistics partner to
provide warehousing and distribution services for Jamieson Branded and Strategic Partners finished goods inventory
until 2025 with a renewal option. Our ability to satisfy our customers’ demands and achieve our cost objectives
depends on our ability to maintain key logistic and transport arrangements. Our distribution and supply chain could
be negatively affected by unforeseen disruptions due to fire, severe weather conditions, natural disasters, or other
catastrophic events, public health events, labour disagreements, or other shipping problems. The loss of or disruption
to these types of arrangements could interrupt product supply, which in turn could adversely affect the assortment and
product availability at the store level of our customers. If not effectively managed or remedied, these events could
negatively impact customer experience and adversely affect our operations or financial performance. By leveraging
the expertise of the third-party logistics provider, we are able to operate more efficiently and diversify risk from our
manufacturing facilities.
Consumer Trends
The Canadian consumer health industry is subject to shifts in consumer trends, preferences and spending.
Our revenue and operating results depend, in part, on our ability to respond to such changes in a timely manner. As a
result of our broad product scope and our strong innovation capabilities, we believe that we are well-positioned to
respond to these shifts in consumer trends, preferences and spending.
Our revenue is also impacted by consumer spending habits, including spending on our products, which are
affected by many factors that are beyond our control, including, but not limited to, prevailing economic conditions,
levels of employment, fuel prices, salaries and wages, the availability of consumer credit, and consumer perception of
economic conditions.
Competition
The market for VMS and sports nutrition products is highly competitive. Our direct competition consists of
publicly and privately-owned companies, which tend to be highly fragmented in terms of both geographic market
coverage and product categories. In many of our product categories, we compete not only with widely advertised
branded products, but also with private label products. Given our significant scale and broad product scope relative to
our competition, iconic brand status, strong innovation capabilities and high-quality manufacturing, we believe that
we are well-positioned to capitalize on favorable long-term trends in the VMS and sports nutrition segments. The
specialized knowledge, expertise, and certifications required for production of VMS and sports nutrition products, is
- 23 -
generally a significant barrier to entry for new competitors. Internationally, our competition varies by market and we
have a strategic approach to entering international markets, which includes evaluating certain factors in each market,
such as competitiveness, pricing dynamics, growth potential, regulatory environment and the propensity to be attracted
to foreign brands.
Foreign Exchange
We currently benefit from a natural currency hedge by purchasing certain materials and inputs in U.S. dollars
and selling our products internationally in U.S. dollars. With respect to sales in Canada, we are exposed to fluctuating
U.S.-Canadian currency exchange rates where the products sold contain materials and inputs purchased with
U.S. dollars. We manage our exposure to fluctuating U.S.-Canadian currency exchange rates with foreign exchange
hedging contracts. We do not have foreign exchange hedging contracts in place with respect to all currencies in which
we currently do business but may, from time to time, enter into additional foreign exchange hedging contracts in
respect of other foreign currencies.
Currency hedging entails a risk of illiquidity and, to the extent the applicable foreign currency depreciates or
appreciates against the Canadian dollar, the use of hedges could result in losses greater than if the hedging had not
been used. There can be no assurance that our hedging strategies, if any, will be effective in the future or that we will
be able to enter into foreign exchange hedging contracts on satisfactory terms.
Business Acquisitions
We leverage our relationships and network of industry participants and advisors to actively source and
identify acquisition opportunities. We continue to pursue strategic acquisitions that enable us to further broaden and
diversify product offerings and leverage current manufacturing and distribution facilities for new products. Any
acquisitions may involve large transactions or realignment of existing investments, and present financial, managerial
and operational challenges, which, if not successfully overcome, may reduce our profitability.
Implementation of Growth Strategies
We have a successful track record of growing revenues faster than the broader VMS segment and we believe
we have a strong domestic and international growth strategy in place aimed at continuing to exceed broader industry
growth rates. Our future success depends, in part, on management’s ability to implement our growth strategy,
including (i) product innovations within existing categories and growth into adjacent categories and continued growth
of existing products in existing categories; (ii) further penetration into international markets and new geographies; and
(iii) in support of our profitability targets, improvements in gross profit, earnings from operations and operating
margins. The ability to implement this growth strategy depends, among other things, on our ability to develop new
products and product line extensions that appeal to consumers, maintain and expand brand loyalty and brand
recognition, maintain and improve competitive position in the channels in which we compete and identify and
successfully enter and market products in new geographic markets, market segments and categories.
Regulation
In Canada and in the other jurisdictions in which we operate, we are subject to the laws and regulations
applicable to any business engaged in formulation, production and distribution of consumer health products. This
includes natural health product regulations, laws governing advertising, consumer protection regulations,
environmental laws, laws governing the operation of warehouse facilities and labour and employment laws. We hold
all required Health Canada site licenses, Canadian Food Inspection Agency certifications and import licenses for all
of our manufacturing and distribution centres. Our products sold outside of Canada are subject to tariffs, treaties and
various trade agreements as well as laws affecting the importation of consumer goods and we continuously monitor
changes in these laws, regulations, treaties and agreements.
There is currently no uniform regulation applicable to natural health products worldwide and there has been
an increasing movement in certain foreign markets to increase the regulation of natural health products. The adoption
of new laws, regulations or other constraints or changes in the interpretations of such requirements may result in
- 24 -
compliance costs or lead us to discontinue product sales and may have an adverse effect on the marketing of our
products, resulting in loss of sales. We believe that Canadian regulations are amongst the most stringent worldwide
and, as we currently operate in compliance with these high standards, increased regulation in foreign jurisdictions
makes us uniquely positioned to grow sales in such jurisdictions.
How We Assess the Performance of our Business
The key performance indicators below are used by management in evaluating the performance of our
Company and assessing our business. We refer to certain key performance indicators used by management and
typically used by our competitors in the Canadian consumer health industry, some of which are not recognized under
IFRS as identified below. See “Non-IFRS and Other Financial Measures” for more information on each non-IFRS
financial measure, non-IFRS ratio and supplementary measure. See “Selected Consolidated Financial Information”
for a quantitative reconciliation of each non-IFRS financial measure to its most directly comparable financial measure
disclosed in our financial statements to which the measure relates.
Revenue
The majority of our revenue is derived from the sale of Jamieson branded products to distributors, retail and
wholesale customers, as well as providing contract manufacturing services and the sale of product through our
Strategic Partners segment.
Revenue is recognized for the sale of Jamieson branded products and the manufacturing of products to our
strategic partners at the point in time when control of the asset is transferred to the customer, based on applicable
shipping terms. We generally have a right to payment at the time of delivery (which is the same time that we have
satisfied our performance obligations under the arrangement), as such, a receivable is recognized as the consideration
is unconditional and only the passage of time is required before payment is due.
A portion of our revenue is derived from contract manufacturing services provided to customers in our
Strategic Partners segment under a tolling arrangement where the customer supplies us with a raw material or
ingredient. Revenue is recognized net of the cost of the raw material or ingredient supplied by the customer.
Rights of return give rise to variable consideration. The variable consideration is estimated at contract
inception using the expected value method as this best predicts the amount of variable consideration to which we are
entitled. The variable consideration is constrained to the extent that it is highly probable that a significant reversal in
the amount of cumulative revenue recognized will not occur when any uncertainty is subsequently resolved. For
products that are expected to be returned, a refund liability is recognized as a reduction of revenue at the time the
control of the products purchased is transferred to the customers.
We may provide discounts and sales promotional incentives to our customers, which give rise to variable
consideration. The variable consideration is constrained to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognized will not occur when any uncertainty is subsequently resolved.
The application of the constraint on variable consideration increases the amount of revenue that will be deferred. We
apply the most likely amount method estimating discounts provided to customers using contracted rates and estimating
sales promotional incentives provided to customers based on historical spending patterns. Jamieson may also provide
other consideration to customers for customer-specific programs to promote the Company’s products. Consequently,
revenues are recognized net of these estimated program costs. All other estimated non-customer-specific promotional
costs and consideration are expensed as selling, general and administrative (“SG&A”) expenses.
In subsequent periods, we monitor the performance of customers against agreed-upon obligations related to
sales incentive programs and make any adjustments to both revenue and sales incentive accruals as required.
As required for the audited consolidated annual financial statements, we have disaggregated revenue
recognized from contracts with customers. Please refer to Note 22 in our audited consolidated annual financial
statements for the disclosure on disaggregated revenue.
- 25 -
USD Denominated Revenue
“USD denominated revenue” is defined as revenue in U.S. dollars, which excludes the impact of exchange
rate fluctuations. USD denominated revenue is a supplementary financial measure.
Gross Profit
“Gross profit” is defined as revenue less cost of sales. Cost of sales includes product-related costs, labour,
other operating costs such as rent, repair and maintenance, and amortization. Our cost of sales may include different
costs compared to other manufacturers and distributors in the Canadian consumer health industry. Management
believes that gross profit is a useful measure in assessing the Company’s underlying operating performance before
SG&A expenses and share-based compensation.
Gross Profit Margin
“Gross profit margin” is defined as gross profit divided by revenue. Gross profit margin is a supplementary
financial measure.
Normalized Gross Profit and Normalized Gross Profit Margin
“Normalized gross profit” is defined as gross profit adjusted for non-operating expenses. Normalized gross
profit is a non-IFRS financial measure and its most directly comparable financial measure that is disclosed in our
financial statements is gross profit. We believe normalized gross profit is a useful measure in assessing our operating
results by excluding the effects of expenses that are not reflective of our operating performance. “Normalized gross
profit margin” is defined as normalized gross profit divided by revenue. Normalized gross profit margin is a non-IFRS
ratio.
SG&A
Our SG&A expenses are predominantly comprised of wages, benefits, travel, marketing, accounting fees,
legal fees, non-customer-specific promotional costs and other expenses related to the corporate infrastructure required
to support our business. Our SG&A expenses also include regulatory, legal, accounting, insurance, termination
benefits and other expenses associated with being a public company.
Normalized SG&A
“Normalized SG&A” is defined as SG&A adjusted for non-operating expenses. Normalized SG&A is a non-
IFRS financial measure and its most directly comparable financial measure that is disclosed in our financial statements
is SG&A. We believe normalized SG&A is a useful measure as it excludes the effects of expenses that are not
reflective of our operating performance.
Earnings from Operations
“Earnings from operations” is defined as gross profit less SG&A expenses and share-based compensation.
Operating Margin
“Operating margin” is defined as earnings from operations divided by revenue. Operating margin is a
supplementary financial measure.
Normalized Earnings from Operations and Normalized Operating Margin
“Normalized earnings from operations” is defined as earnings from operations adjusted for non-operating
expenses. Normalized earnings from operations is a non-IFRS financial measure and its most directly comparable
financial measure that is disclosed in our financial statements is earnings from operations. We believe normalized
- 26 -
earnings from operations is a useful measure in assessing our operating results by excluding the effects of expenses
that are not reflective of our operating performance. “Normalized operating margin” is defined as normalized earnings
from operations divided by revenue. Normalized operating margin is a non-IFRS ratio.
EBITDA
“EBITDA” is defined as net earnings before: (i) provision for (recovery of) income taxes; (ii) interest expense
(income); (iii) depreciation of property, plant, and equipment; and (iv) amortization of intangible assets. EBITDA is
a non-IFRS financial measure and its most directly comparable financial measure that is disclosed in our financial
statements is net earnings. We believe that EBITDA is a useful measure to assess the performance and cash flow of
our Company.
Adjusted EBITDA
“Adjusted EBITDA” is defined as EBITDA before: (i) share-based compensation; (ii) foreign exchange
gain/loss; (iii) international market expansion; (iv) business integration; (v) COVID-19 related costs; and (vi) other
non-operating costs. Adjusted EBITDA is a non-IFRS financial measure and its most directly comparable financial
measure that is disclosed in our financial statements is net earnings. We believe Adjusted EBITDA is a useful measure
to assess the performance and cash flow of our Company as it provides more meaningful operating results by excluding
the effects of interest, taxes, depreciation and amortization costs, expenses we believe are not reflective of our
underlying business performance.
Adjusted EBITDA Margin
“Adjusted EBITDA margin” is defined as Adjusted EBITDA divided by revenue. Adjusted EBITDA Margin
is a non-IFRS ratio. We believe Adjusted EBITDA margin is a useful measure to assess the performance and cash
flow of our Company.
Adjusted Net Earnings
“Adjusted net earnings” is defined as consolidated net earnings adjusted for the impact of: (i) share-based
compensation; (ii) foreign exchange gain/loss; (iii) international market expansion; (iv) business integration; (v)
COVID-19 related costs; and (vi) other non-operating costs net of related tax effects. Adjusted net earnings is a non-
IFRS financial measure and its most directly comparable financial measure that is disclosed in our financial statements
is net earnings. We believe Adjusted net earnings is a useful measure to assess the performance of our Company as it
provides more meaningful operating results by excluding the effects of expenses that are not reflective of our
underlying business performance.
Adjusted Diluted Earnings per Share
“Adjusted diluted earnings per share” is defined as Adjusted net earnings divided by the total weighted
average number of outstanding diluted shares at the end of the most recently completed quarter for the relevant period.
Adjusted diluted earnings per share is a non-IFRS ratio. We believe Adjusted diluted earnings per share is a useful
measure to assess the performance of our Company.
Net Debt
“Net debt” is defined as long-term debt less cash. Net debt is a non-IFRS financial measure and its most
directly comparable financial measure that is disclosed in our financial statements is long-term debt. We believe net
debt is a useful measure in managing our capital structure and financing requirements.
Cash from Operating Activities Before Working Capital Considerations
“Cash from operating activities before working capital considerations” is defined as cash from operating
activities plus net change in non-cash working capital. Cash from operating activities before working capital
- 27 -
considerations is a non-IFRS financial measure and its most directly comparable financial measure that is disclosed
in our financial statements is cash flows from operating activities. We believe cash from operating activities before
working capital considerations is a useful measure in assessing cash flow from operations and liquidity.
Selected Consolidated Financial Information
The following table provides selected historical financial information and other data of the Company which
should be read in conjunction with our audited consolidated annual financial statements and related notes. A
quantitative reconciliation of net earnings to EBITDA, Adjusted EBITDA, and Adjusted net earnings can be found
below for the respective fiscal periods.
($ in 000's, except as otherwise noted)
Revenue
Cost of sales
Gross profit
Gross profit margin (1)
Selling, general and administrative expenses
Share-based compensation
Earnings from operations
Operating margin (1)
Foreign exchange loss (gain)
Other expenses
Interest expense and other financing costs
Earnings before income taxes
Provision for income taxes
Net earnings
Adjusted net earnings (2)
EBITDA (2)
Adjusted EBITDA (2)
Adjusted EBITDA margin (3)
Weighted average number of shares
Basic
Diluted
Three months ended
December 31
2021
2020
Twelve months ended
December 31
2021
2020
129,838
80,422
49,416
38.1%
19,521
1,021
28,874
22.2%
352
-
1,366
27,156
6,966
20,190
20,489
32,225
33,771
26.0%
120,369
77,855
42,514
35.3%
18,624
1,156
22,734
18.9%
632
19
1,409
20,674
5,269
15,405
17,614
25,417
29,383
24.4%
451,032
288,591
162,441
36.0%
80,739
5,672
76,030
16.9%
(92)
-
5,657
70,465
18,383
52,082
55,217
90,396
100,096
22.2%
403,661
258,905
144,756
35.9%
76,259
4,925
63,572
15.7%
460
22
6,042
57,048
15,450
41,598
47,948
75,299
87,985
21.8%
40,371,018
41,921,765
39,866,189
41,487,349
40,150,724
41,680,934
39,539,955
41,160,341
Earnings per share attributable to common shareholders:
Basic, earnings per share
Diluted, earnings per share
Adjusted diluted, earnings per share (3)
0.50
0.48
0.49
0.39
0.37
0.42
1.30
1.25
1.32
1.05
1.01
1.16
(1)
(2)
(3)
This is a supplementary financial measure and is used throughout this MD&A. See “Non-IFRS and Other
Financial Measures” for more information on each supplementary financial measure. See “How we Assess
the Performance of our Business” for an explanation of the composition of such measure.
This is a non-IFRS financial measure and is used throughout this MD&A. See “Non-IFRS and Other
Financial Measures” for more information on each non-IFRS financial measure. See “How we Assess the
Performance of our Business” for an explanation of the composition of such measure.
This is a non-IFRS ratio and is used throughout this MD&A. See “Non-IFRS and Other Financial Measures”
for more information on each non-IFRS ratio. See “How we Assess the Performance of our Business” for an
explanation of the composition of such ratio.
- 28 -
The following table provides selected consolidated financial position data for the periods indicated.
($ in 000's)
Selected Consolidated Financial Position Data:
Total assets
Total non-current liabilities
As at December 31,
2021
As at December 31,
2020
652,475
226,832
609,341
225,929
Results of Operations — three months ended December 31, 2021 and 2020
The following table provides a summary of our results for the three months ended December 31, 2021 and
December 31, 2020.
($ in 000's, except as otherwise noted)
Revenue
Cost of sales
Gross profit
Gross profit margin
Selling, general and administrative expenses
Share-based compensation
Earnings from operations
Operating margin
Foreign exchange loss
Other expenses
Interest expense and other financing costs
Earnings before income taxes
Provision for income taxes
Net earnings
Adjusted net earnings
EBITDA
Adjusted EBITDA
Adjusted EBITDA margin
Three months ended
December 31
2021
2020
$ Change
% Change
129,838
80,422
49,416
38.1%
19,521
1,021
28,874
22.2%
352
-
1,366
27,156
6,966
20,190
20,489
32,225
33,771
26.0%
120,369
77,855
42,514
35.3%
18,624
1,156
22,734
18.9%
632
19
1,409
20,674
5,269
15,405
17,614
25,417
29,383
24.4%
9,469
2,567
6,902
-
897
(135)
6,140
-
(280)
(19)
(43)
6,482
1,697
4,785
2,875
6,808
4,388
-
7.9%
3.3%
16.2%
2.8%
4.8%
(11.7%)
27.0%
3.3%
(44.3%)
(100.0%)
(3.1%)
31.4%
32.2%
31.1%
16.3%
26.8%
14.9%
1.6%
- 29 -
The following tables provide a quantitative reconciliation of net earnings to EBITDA, Adjusted EBITDA,
and Adjusted net earnings, as well as gross profit to normalized gross profit, SG&A to normalized SG&A, earnings
from operations to normalized earnings from operations, each of which are non-IFRS financial measures (see “Non-
IFRS and Other Financial Measures” and “How we Assess the Performance of our Business” for further information
on each non-IFRS financial measure), for the three months ended December 31, 2021 and December 31, 2020.
($ in 000's, except as otherwise noted)
Net earnings
Add:
Provision for income taxes
Interest expense and other financing costs
Depreciation of property, plant, and equipment
Amortization of intangible assets
Earnings before interest, taxes, depreciation, and
amortization (EBITDA)
Share-based compensation (1)
Foreign exchange loss
Business integration (2)
COVID-19 related costs (3)
Other
Adjusted EBITDA
Provision for income taxes
Interest expense and other financing costs
Depreciation of property, plant, and equipment
Amortization of intangible assets
Share-based compensation (4)
Tax effect of normalization adjustments
Adjusted net earnings
($ in 000's, except as otherwise noted)
Gross profit
Business integration (2)
COVID-19 related costs (3)
Normalized gross profit (5)
Normalized gross profit margin (6)
Selling, general and administrative expenses
Business integration (2)
COVID-19 related costs (3)
Other
Normalized selling, general and administrative expenses (5)
Earnings from operations
Business integration (2)
COVID-19 related costs (3)
Other
Normalized earnings from operations (5)
Normalized operating margin (6)
Three months ended
December 31
2021
2020
$ Change
% Change
20,190
15,405
6,966
1,366
2,629
1,074
32,225
1,021
352
63
72
38
33,771
(6,966)
(1,366)
(2,629)
(1,074)
(1,108)
(139)
20,489
5,269
1,409
2,336
998
25,417
1,156
632
1,759
402
17
29,383
(5,269)
(1,409)
(2,336)
(998)
(1,012)
(745)
17,614
4,785
1,697
(43)
293
76
6,808
(135)
(280)
(1,696)
(330)
21
4,388
(1,697)
43
(293)
(76)
(96)
606
2,875
31.1%
32.2%
(3.1%)
12.5%
7.6%
26.8%
(11.7%)
(44.3%)
(96.4%)
(82.1%)
123.5%
14.9%
(32.2%)
3.1%
(12.5%)
(7.6%)
(9.5%)
81.3%
16.3%
Three months ended
December 31
2021
2020
$ Change
% Change
49,416
-
-
49,416
38.1%
19,521
(63)
(72)
(38)
19,348
28,874
63
72
38
29,047
22.4%
42,514
1,472
119
44,105
36.6%
18,624
(287)
(283)
-
18,054
22,734
1,759
402
-
24,895
20.7%
6,902
(1,472)
(119)
5,311
-
897
224
211
(38)
1,294
6,140
(1,696)
(330)
38
4,152
-
16.2%
(100.0%)
(100.0%)
12.0%
1.5%
4.8%
78.0%
74.6%
100.0%
7.2%
27.0%
(96.4%)
(82.1%)
100.0%
16.7%
1.7%
(1)
The Company’s share-based compensation expense pertains to our long-term incentive plan (the “LTIP”)
(refer to “Share-based compensation”), with performance-based share units (“PSUs”), time-based restricted
- 30 -
share units (“RSUs”), and deferred share units (“DSUs”) expenses, along with associated payroll taxes.
Please refer to Note 16 in our audited consolidated annual financial statements.
Current year expenses relate to system implementation costs. Prior year expenses pertained to start-up costs
of $1.5 million related to our transition to a third-party logistics model to make room for capacity expansion
at our Twin Oaks and Scarborough distribution facilities. Remaining expenses pertained to the integration of
our operations and supply chain activities, along with a pre-existing contractual obligation, associated with
the acquisition and subsequent integration of our acquired business, which terminated at the end of 2020.
We incurred costs related to COVID-19 which do not reflect the ongoing costs of operation. In the current
quarter, these costs are primarily associated with additional safety measures at our facilities, including the
use of rapid testing to detect and prevent the risk of COVID-19 spread in our manufacturing facilities. Q4
2020 included shift premiums to essential Jamieson hourly staff who maintained production during
government lockdowns, donation of vitamins and supplements to charitable organizations within Canada and
provided funding for a COVID-19 related research study.
Costs pertaining to our LTIP, net of $0.1 million in tax benefits realized on the vesting of certain share-based
awards (refer to “Share-based compensation”).
This is a non-IFRS financial measure and is used throughout this MD&A. See “Non-IFRS and Other
Financial Measures” for more information on each non-IFRS financial measure. See “How we Assess the
Performance of our Business” for an explanation of the composition of such measure.
This is a non-IFRS ratio and is used throughout this MD&A. See “Non-IFRS and Other Financial Measures”
for more information on each non-IFRS ratio. See “How we Assess the Performance of our Business” for an
explanation of the composition of such ratio.
(2)
(3)
(4)
(5)
(6)
The following table provides selected financial information for the Jamieson Brands operating segment for
the three months ended December 31, 2021 and December 31, 2020.
Jamieson Brands
($ in 000's, except as otherwise noted)
For the three months ended December 31,
Revenue
Gross profit
Gross profit margin
Normalized gross profit
Normalized gross profit margin
Selling, general and administrative expenses
Normalized selling, general and administrative expenses
Share-based compensation
Earnings from operations
Operating margin
Normalized earnings from operations
Normalized operating margin
Adjusted EBITDA
Adjusted EBITDA margin
(1)
2021
2020
$ Change
% Change
99,784
45,157
45.3%
45,157
45.3%
17,905
17,781
1,021
26,231
26.3%
26,355
26.4%
30,468
30.5%
89,733
38,566
43.0%
40,157
44.8%
16,906
16,369
1,156
20,504
22.9%
22,649
25.2%
26,642
29.7%
10,051
6,591
-
5,000
-
999
1,412
11.2%
17.1%
2.3%
12.5%
0.5%
5.9%
8.6%
(135)
(11.7%)
5,727
-
3,706
-
3,826
-
27.9%
3.4%
16.4%
1.2%
14.4%
0.8%
- 31 -
The following table provides a quantitative reconciliation for the Jamieson Brands operating segment from
earnings from operations to Adjusted EBITDA, which is a non-IFRS financial measure (see “Non-IFRS and Other
Financial Measures” and “How we Assess the Performance of our Business” for further information on each non-
IFRS financial measure), for the three months ended December 31, 2021 and December 31, 2020.
($ in 000's, except as otherwise noted)
For the three months ended December 31,
Earnings from operations
Depreciation of property, plant, and equipment
Amortization of intangible assets
Share-based compensation
Business integration
COVID-19 related costs
Other
Adjusted EBITDA
2021
26,231
2,018
1,074
1,021
63
61
-
30,468
2020
20,504
1,857
998
1,156
1,759
370
(2)
26,642
$ Change
5,727
161
76
(135)
(1,696)
(309)
2
3,826
% Change
27.9%
8.7%
7.6%
(11.7%)
(96.4%)
(83.5%)
100.0%
14.4%
The following table provides selected financial information for the Strategic Partners operating segment for
the three months ended December 31, 2021 and December 31, 2020.
Strategic Partners
($ in 000's, except as otherwise noted)
For the three months ended December 31,
Revenue
Gross profit
Gross profit margin
Selling, general and administrative expenses
Normalized selling, general and administrative expenses
Earnings from operations
Operating margin
Normalized earnings from operations
Normalized operating margin
Adjusted EBITDA
Adjusted EBITDA margin
2021
2020
$ Change
% Change
30,054
4,259
14.2%
1,616
1,567
2,643
8.8%
2,692
9.0%
3,303
11.0%
30,636
3,948
12.9%
1,718
1,685
2,230
7.3%
2,246
7.3%
2,741
8.9%
(582)
311
-
(102)
(118)
413
-
446
-
562
-
(1.9%)
7.9%
1.3%
(5.9%)
(7.0%)
18.5%
1.5%
19.8%
1.7%
20.5%
2.1%
The following table provides a quantitative reconciliation for the Strategic Partners operating segment from
earnings from operations to Adjusted EBITDA, which is a non-IFRS financial measure (see “Non-IFRS and Other
Financial Measures” and “How we Assess the Performance of our Business” for further information on each non-
IFRS financial measure), for the three months ended December 31, 2021 and December 31, 2020.
($ in 000's, except as otherwise noted)
For the three months ended December 31,
Earnings from operations
Depreciation of property, plant, and equipment
COVID-19 related costs
Other
Adjusted EBITDA
Revenue
2021
2,643
611
11
38
3,303
2020
2,230
479
32
-
2,741
$ Change
413
132
(21)
38
562
% Change
18.5%
27.6%
(65.6%)
100.0%
20.5%
Revenue increased by 7.9%, or $9.5 million, to $129.8 million in Q4 2021. This was driven by 11.2% growth
in Jamieson Brands revenue, partially offset by a 1.9% decline in Strategic Partners revenue compared with Q4 2020.
Revenue in the Jamieson Brands segment increased by $10.1 million, or 11.2%, to $99.8 million in Q4 2021
due to growth in domestic and international Jamieson Brands sales of $8.3 million and $1.8 million respectively. Our
- 32 -
domestic Jamieson Brands sales increased by 10.9% in Q4 2021, with strong point of purchase sales on an expanded
consumer base and inventory replenishments to support seasonal promotional activities. Our international USD
denominated revenue(1) grew by 14.1%, or 12.6% on a reported basis, led by continued growth in China, partially
offset by strong replenishments earlier in the year to other regions.
Revenue in the Strategic Partners segment decreased by $0.6 million, or 1.9%, to $30.1 million in Q4 2021
reflecting earlier shipments and 37.3% growth realized in the first three quarters to smooth out the timing of
production.
Gross profit
Gross profit increased by $6.9 million to $49.4 million in Q4 2021, including $1.6 million in Q4 2020
primarily relating to start-up costs in our transition to a third-party logistics model. Normalized gross profit increased
by $5.3 million from $44.1 million in the prior year mainly driven by revenue growth and improved operating
efficiencies. Normalized gross profit margin increased by 150 basis points from 36.6% to 38.1% in Q4 2021, reflecting
margin improvements in both our segments and the mix impact of proportionally higher sales in our Jamieson Brands
segment.
Gross profit in the Jamieson Brands segment increased by $6.6 million to $45.2 million in Q4 2021, including
$1.6 million in Q4 2020 in start-up costs primarily relating to our transition to a third-party logistics model.
Normalized gross profit in the Jamieson Brands segment increased by $5.0 million from $40.2 million in the prior
year mainly driven by revenue growth and improved operating efficiencies. Normalized gross profit margin increased
by 50 basis points from 44.8% to 45.3% in Q4 2021 due to volume driven efficiencies and cost recoveries, partially
offset by ongoing operating costs associated with our new third-party logistics model, elevated costs reflecting
ongoing global supply chain challenges, sustained safety measures and increased business continuity costs.
Gross profit in the Strategic Partners segment increased by $0.3 million to $4.3 million and gross profit
margin increased by 130 basis points from 12.9% to 14.2% in Q4 2021 mainly due to operational efficiencies.
Selling, general and administrative expenses
SG&A expenses increased by $0.9 million to $19.5 million in Q4 2021. Normalized for the impact of
specified costs, SG&A expenses increased by $1.3 million or 7.2% to $19.3 million in Q4 2021. Normalized SG&A
in the Jamieson Brands segment was $1.4 million higher than Q4 2020 due to additional resources to support our
strategic initiatives and marketing investments. Normalized SG&A in the Strategic Partners segment was relatively
consistent with a decrease of $0.1 million compared with Q4 2020.
Specified costs of $0.2 million in Q4 2021 are mainly comprised of safety measures implemented at our
facilities, including rapid testing programs at each of our manufacturing facilities, along with IT system
implementation costs. Specified costs of $0.6 million in Q4 2020 were related to COVID-19 wage premiums,
donations, and funding for a COVID-19 related research study.
Share-based compensation
Share-based compensation decreased by $0.1 million to $1.0 million in Q4 2021 reflecting the acceleration
of share-based compensation expense in relation to our CEO transition earlier in the year.
Earnings from operations and operating margin
Earnings from operations increased by $6.1 million as a result of higher revenue and gross profit. Operating
margin increased by 3.3% to 22.2% in Q4 2021 due to factors impacting gross profit margin discussed above and
lower fixed costs as a percentage of revenue. Normalized earnings from operations increased by $4.2 million, or 16.7%
(1) This is a supplementary financial measure and is used throughout this MD&A. See “Non-IFRS and Other Financial
Measures” for more information. See “How we Assess the Performance of our Business” for an explanation of the composition of
this measure.
- 33 -
in Q4 2021 and normalized operating margin was 22.4% compared with 20.7% in Q4 2020.
Earnings from operations in the Jamieson Brands segment increased by $5.7 million and operating margin
increased by 3.4% to 26.3% in Q4 2021 due to higher revenue on expanded margins, and lower fixed costs as a
percentage of revenues.
Earnings from operations in the Strategic Partners segment increased by $0.4 million and operating margin
increased by 1.5% to 8.8% in Q4 2021 due to expanded margins and lower fixed costs as a percentage of revenues.
Foreign exchange loss
Foreign exchange loss of $0.4 million in Q4 2021 was a result of changes in the USD/CAD exchange rate on
our USD denominated accounts receivable and accounts payable at the end of the quarter. We experience fluctuations
in the USD/CAD exchange rates between the date of transaction and when cash is realized.
Interest expense and other financing costs
Interest expense and other financing costs remained consistent at $1.4 million in Q4 2021.
Provision for income taxes
Provision for income taxes was $7.0 million in Q4 2021 compared with $5.3 million in Q4 2020. Our Q4
2021 effective tax rate of 25.7% and Q4 2020 effective tax rate of 25.5% includes the impact of non-deductible share-
based compensation expenses. The current period’s provision and tax rate includes a tax deduction of $0.1 million
from the vesting of certain share-based awards.
Depreciation
Depreciation expense increased by $0.3 million to $2.6 million in Q4 2021 due to increases in our capital
investments to increase capacity.
Amortization
Amortization expense increased by $0.1 million to $1.1 million in Q4 2021 driven by investments in website
development, system implementations, product patents and registrations.
EBITDA and Adjusted EBITDA
EBITDA increased by $6.8 million to $32.2 million in Q4 2021 primarily due to the factors discussed above.
Adjusted EBITDA increased by $4.4 million to $33.8 million driven by higher volumes and segment
margins. Adjusted EBITDA margin increased by 160 basis points to 26.0% for the quarter reflecting general margin
improvements, along with the mix impact of proportionally higher sales in our Jamieson Brands segment.
Adjusted EBITDA in the Jamieson Brands segment increased by $3.8 million to $30.5 million and Adjusted
EBITDA margin increased by 80 basis points to 30.5% driven by higher volumes on expanded margins, and lower
fixed costs as a percentage of revenues.
Adjusted EBITDA in the Strategic Partners segment increased by $0.6 million, to $3.3 million and Adjusted
EBITDA margin increased by 2.1% to 11.0% driven by higher volumes on expanded margins, and lower fixed costs
as a percentage of revenues.
- 34 -
Results of Operations — year ended December 31, 2021 and 2020
The following table provides a summary of our results for the year ended December 31, 2021 and December
31, 2020.
($ in 000's, except as otherwise noted)
Revenue
Cost of sales
Gross profit
Gross profit margin
Selling, general and administrative expenses
Share-based compensation
Earnings from operations
Operating margin
Foreign exchange (gain) loss
Other expenses
Interest expense and other financing costs
Earnings before income taxes
Provision for income taxes
Net earnings
Adjusted net earnings
EBITDA
Adjusted EBITDA
Adjusted EBITDA margin
Twelve months ended
December 31
2021
2020
$ Change
% Change
451,032
288,591
162,441
36.0%
80,739
5,672
76,030
16.9%
(92)
-
5,657
70,465
18,383
52,082
55,217
90,396
100,096
22.2%
403,661
258,905
144,756
35.9%
76,259
4,925
63,572
15.7%
460
22
6,042
57,048
15,450
41,598
47,948
75,299
87,985
21.8%
47,371
29,686
17,685
-
4,480
747
12,458
-
(552)
(22)
(385)
13,417
2,933
10,484
7,269
15,097
12,111
-
11.7%
11.5%
12.2%
0.1%
5.9%
15.2%
19.6%
1.2%
(120.0%)
(100.0%)
(6.4%)
23.5%
19.0%
25.2%
15.2%
20.0%
13.8%
0.4%
- 35 -
The following tables provide a quantitative reconciliation of net earnings to EBITDA, Adjusted EBITDA,
and Adjusted net earnings, as well as gross profit to normalized gross profit, SG&A to normalized SG&A, earnings
from operations to normalized earnings from operations, each of which are non-IFRS financial measures (see “Non-
IFRS and Other Financial Measures” and “How we Assess the Performance of our Business” for further information
on each non-IFRS financial measure), for the year ended December 31, 2021 and December 31, 2020.
($ in 000's, except as otherwise noted)
Net earnings
Add:
Provision for income taxes
Interest expense and other financing costs
Depreciation of property, plant, and equipment
Amortization of intangible assets
Earnings before interest, taxes, depreciation, and amortization
(EBITDA)
Share-based compensation (1)
Foreign exchange (gain) loss
International market expansion
Business integration (2)
COVID-19 related costs (3)
Other (4)
Adjusted EBITDA
Provision for income taxes
Interest expense and other financing costs
Depreciation of property, plant, and equipment
Amortization of intangible assets
Share-based compensation (5)
Other
Tax effect of normalization adjustments
Adjusted net earnings
Twelve months ended
December 31
2021
2020
$ Change
% Change
52,082
41,598
10,484
25.2%
18,383
5,657
10,006
4,268
90,396
5,672
(92)
-
1,852
2,409
(141)
100,096
(18,383)
(5,657)
(10,006)
(4,268)
(5,497)
-
(1,068)
55,217
15,450
6,042
8,260
3,949
75,299
4,925
460
13
2,202
5,064
22
87,985
(15,450)
(6,042)
(8,260)
(3,949)
(4,349)
97
(2,084)
47,948
2,933
(385)
1,746
319
15,097
747
(552)
(13)
(350)
(2,655)
(163)
12,111
(2,933)
385
(1,746)
(319)
(1,148)
(97)
1,016
7,269
19.0%
(6.4%)
21.1%
8.1%
20.0%
15.2%
(120.0%)
(100.0%)
(15.9%)
(52.4%)
(740.9%)
13.8%
(19.0%)
6.4%
(21.1%)
(8.1%)
(26.4%)
(100.0%)
48.8%
15.2%
- 36 -
($ in 000's, except as otherwise noted)
Gross profit
Business integration (2)
COVID-19 related costs (3)
Normalized gross profit
Normalized gross profit margin
Selling, general and administrative expenses
Business integration (2)
COVID-19 related costs (3)
International market expansion
Other (4)
Normalized selling, general and administrative expenses
Earnings from operations
Business integration (2)
COVID-19 related costs (3)
International market expansion
Share-based compensation (6)
Other (4)
Normalized earnings from operations
Normalized operating margin
Twelve months ended
December 31
2021
2020
$ Change
% Change
162,441
653
-
163,094
36.2%
80,739
(1,200)
(2,409)
-
141
77,271
76,030
1,853
2,409
-
914
(141)
81,065
18.0%
144,756
1,472
119
146,347
36.3%
76,259
(730)
(4,945)
(13)
-
70,571
63,572
2,202
5,064
13
-
-
70,851
17.6%
17,685
(819)
(119)
16,747
-
4,480
(470)
2,536
13
141
6,700
12,458
(349)
(2,655)
(13)
914
(141)
10,214
-
12.2%
(55.6%)
(100.0%)
11.4%
(0.1%)
5.9%
(64.4%)
51.3%
100.0%
100.0%
9.5%
19.6%
(15.8%)
(52.4%)
(100.0%)
100.0%
100.0%
14.4%
0.4%
(1)
(2)
(3)
(4)
(5)
(6)
The Company’s share-based compensation expense pertains to our LTIP, with PSUs, time-based RSUs, and
DSUs expenses, along with associated payroll taxes. This includes a one-time impact of $0.9 million in Q1
2021 relating to the acceleration of share-based compensation expense from future years in relation to our
CEO transition. Please refer to Note 16 in our audited consolidated annual financial statements.
Current year expense mostly relates to start-up costs to complete our transition to a third-party logistics model
to make room for capacity expansion at our Twin Oaks and Scarborough distribution facilities. Prior year
expenses included start-up costs of $1.5 million in the aforementioned third-party logistics transition.
Remaining expenses pertained to the integration of our operations and supply chain activities, along with a
pre-existing contractual obligation, associated with the acquisition and subsequent integration of our acquired
business, which terminated at the end of 2020.
We incurred costs related to COVID-19 which do not reflect the ongoing costs of operation. We provided
shift premiums to essential Jamieson hourly staff who maintained production during government lockdowns.
We have implemented additional safety measures at our facilities, including the use of rapid testing to detect
and prevent spread in our manufacturing facilities and a voluntary two-week closure of our Scarborough
facility to minimize the risk of COVID-19 spread in the second quarter of 2021. We have also donated
vitamins and supplements to charitable organizations.
Consists primarily of a litigation settlement we received.
Costs pertaining to our LTIP, excluding PSUs and RSUs granted to certain employees, and the acceleration
of $0.9 million of share-based compensation expense from future years in relation to our CEO transition, net
of $1.0 million in tax benefits realized on the vesting of certain share-based awards (refer to “Share-based
compensation”).
One-time impact of $0.9 million in Q1 2021 relating to the acceleration of share-based compensation expense
from future years in relation to our CEO transition. Please refer to Note 16 in our audited consolidated annual
financial statements.
- 37 -
The following table provides selected financial information for the Jamieson Brands operating segment for
the year ended December 31, 2021 and December 31, 2020.
Jamieson Brands
($ in 000's, except as otherwise noted)
For the twelve months ended December 31,
Revenue
Gross profit
Gross profit margin
Normalized gross profit
Normalized gross profit margin
Selling, general and administrative expenses
Normalized selling, general and administrative expenses
Share-based compensation
Earnings from operations
Operating margin
Normalized earnings from operations
Normalized operating margin
Adjusted EBITDA
Adjusted EBITDA margin
2021
2020
$ Change
% Change
343,245
148,371
43.2%
149,024
43.4%
74,056
70,854
5,672
68,643
20.0%
73,412
21.4%
90,301
26.3%
316,423
133,861
42.3%
135,452
42.8%
67,169
64,227
4,925
61,767
19.5%
66,300
21.0%
81,519
25.8%
26,822
14,510
-
13,572
-
6,887
6,627
747
6,876
-
7,112
-
8,782
-
8.5%
10.8%
0.9%
10.0%
0.6%
10.3%
10.3%
15.2%
11.1%
0.5%
10.7%
0.4%
10.8%
0.5%
The following table provides a quantitative reconciliation from earnings from operations to Adjusted
EBITDA, which is a non-IFRS financial measure (see “Non-IFRS and Other Financial Measures” and “How we
Assess the Performance of our Business” for further information on each non-IFRS financial measure) for the year
ended December 31, 2021 and December 31, 2020.
($ in 000's, except as otherwise noted)
For the twelve months ended December 31,
Earnings from operations
Depreciation of property, plant, and equipment
Amortization of intangible assets
Share-based compensation
International market expansion
Business integration
COVID-19 related costs
Other
Adjusted EBITDA
2021
68,643
7,864
4,268
5,672
-
1,782
1,990
82
90,301
2020
61,767
6,345
3,949
4,925
13
2,202
2,318
-
81,519
$ Change
6,876
1,519
319
747
(13)
(420)
(328)
82
8,782
% Change
11.1%
23.9%
8.1%
15.2%
(100.0%)
(19.1%)
(14.2%)
100.0%
10.8%
- 38 -
The following table provides selected financial information for the Strategic Partners operating segment for
the year ended December 31, 2021 and December 31, 2020.
Strategic Partners
($ in 000's, except as otherwise noted)
For the twelve months ended December 31,
Revenue
Gross profit
Gross profit margin
Selling, general and administrative expenses
Normalized selling, general and administrative expenses
Earnings from operations
Operating margin
Normalized earnings from operations
Normalized operating margin
Adjusted EBITDA
Adjusted EBITDA margin
2021
2020
$ Change
% Change
107,787
14,070
13.1%
6,683
6,417
7,387
6.9%
7,653
7.1%
9,795
9.1%
87,238
10,895
12.5%
9,090
6,344
1,805
2.1%
4,551
5.2%
6,466
7.4%
20,549
3,175
-
(2,407)
73
5,582
-
3,102
-
3,329
-
23.6%
29.1%
0.6%
(26.5%)
1.1%
309.3%
4.8%
68.2%
1.9%
51.5%
1.7%
The following table provides a quantitative reconciliation from earnings from operations to Adjusted
EBITDA, which is a non-IFRS financial measure (see “Non-IFRS and Other Financial Measures” and “How we
Assess the Performance of our Business” for further information on each non-IFRS financial measure) for the year
ended December 31, 2021 and December 31, 2020.
($ in 000's, except as otherwise noted)
For the twelve months ended December 31,
Earnings from operations
Depreciation of property, plant, and equipment
Business integration
COVID-19 related costs
Other
Adjusted EBITDA
Revenue
2021
7,387
2,142
70
419
(223)
9,795
2020
1,805
1,915
-
2,746
-
6,466
$ Change
5,582
227
70
(2,327)
(223)
3,329
% Change
309.3%
11.9%
100.0%
(84.7%)
100.0%
51.5%
Revenue increased 11.7%, or $47.4 million, to $451.0 million in YTD 2021. This was driven by 8.5% growth
in Jamieson Brands revenue and 23.6% growth in Strategic Partners revenue year-over-year.
Revenue in the Jamieson Brands segment increased by $26.8 million, or 8.5%, to $343.2 million in YTD
2021 due to strong growth in domestic and international Jamieson Brands sales of $20.0 million and $6.8 million
respectively. Our domestic Jamieson Brands sales increased by 7.5% over prior year, offsetting the initial COVID-19
panic buying period which began in Q1 2020 through strong point of purchase sales on an expanded consumer base
driving inventory replenishment, and pricing. Our international USD denominated revenue grew by 22.7% versus
prior year led by strong growth in China and the impact of non-immunity product order fulfillment in early 2021. On
a reported basis, our international business growth is 13.3% due to the strengthening of the Canadian dollar.
Revenue in the Strategic Partners segment increased $20.5 million, or 23.6%, to $107.8 million in YTD 2021
mainly due to increased demand and expanded programs with new and existing customers.
Gross profit
Gross profit increased by $17.7 million in YTD 2021, including $0.7 million in YTD 2021 and $1.6 million
in YTD 2020 primarily relating to start-up costs to complete our transition to a third-party logistics model. Normalized
gross profit increased by $16.7 million to $163.1 million in YTD 2021 mainly driven by revenue growth. Normalized
- 39 -
gross profit margin was 36.2% or 10 basis points lower than the prior year reflecting a higher proportion of Strategic
Partners segment sales, offsetting margin improvements in both our segments from volume driven efficiencies.
Gross profit in the Jamieson Brands segment increased by $14.5 million to $148.4 million in YTD 2021,
including $0.7 million in YTD 2021 and $1.6 million in YTD 2020 primarily relating to start-up costs to complete our
transition to a third-party logistics model. Normalized gross profit in the Jamieson Brands segment increased by $13.6
million to $149.0 million in YTD 2021 mainly driven by revenue growth and improved operating efficiencies.
Normalized gross profit margin was 43.4% or 60 basis points higher compared with YTD 2020 due to volume driven
efficiencies and cost recoveries, partially offset by sustained safety measures, increased business continuity costs and
collective bargaining renewal bonuses.
Gross profit in the Strategic Partners segment increased by $3.2 million to $14.1 million mainly driven by
higher volumes, and gross profit margin increased by 60 basis points to 13.1% in YTD 2021 as volume driven
efficiencies were partially offset by sustained safety measures and increased business continuity costs.
Selling, general and administrative expenses
SG&A expenses increased by $4.5 million, to $80.7 million in YTD 2021. Normalized for the impact of
specified costs, SG&A expenses increased by $6.7 million from $70.6 million in YTD 2020 to $77.3 million in YTD
2021. Normalized SG&A in the Jamieson Brands segment was $6.6 million higher due to additional resources to
support our strategic initiatives and higher variable compensation, including $0.9 million of additional domestic
marketing and $1.8 million of international investments primarily focused on promoting our brand presence in China.
Normalized SG&A in the Strategic Partners segment was relatively consistent at an increase of $0.1 million compared
with the same period in the prior year.
Specified costs of $3.4 million in YTD 2021 are mainly comprised of start-up costs to complete our transition
to a third-party logistics model, additional safety measures implemented at our facilities, including the voluntary two-
week closure of our Scarborough facility and the establishment of rapid antigen testing program at each of our
manufacturing facilities, COVID-19 wage premiums, and donations. Specified costs of $5.7 million in YTD 2020
were primarily related to COVID-19 wage premiums, donations, reserves taken in connection with an international
retail strategic partner customer who voluntarily entered into bankruptcy protection based on the impact of COVID-
19 store closures, along with a pre-existing contractual obligation on our acquired business which terminated at the
end of 2020.
Share-based compensation
Share-based compensation increased by $0.7 million to $5.7 million in YTD 2021 reflecting the accelerated
$0.9 million of share-based compensation expense from future years in relation to our CEO transition, partially offset
by lower payroll taxes based on the number of options exercised in the prior year.
Earnings from operations and operating margin
Earnings from operations increased by $12.5 million in YTD 2021 as a result of higher revenue and gross
profit. Operating margin increased by 120 basis points to 16.9% in YTD 2021 mainly due to lower fixed costs as a
percentage of revenues. Normalized earnings from operations increased by $10.2 million, or 14.4% in YTD 2021 and
normalized operating margin was 18.0% compared with 17.6% in YTD 2020.
Earnings from operations in the Jamieson Brands segment increased by $6.9 million and operating margin
increased 50 basis points to 20.0% in YTD 2021 mainly due to higher revenue on expanded margins, partially offset
by higher fixed costs, which includes our transition to a third-party logistics model and the acceleration of share-based
compensation expense.
Earnings from operations in the Strategic Partners segment increased by $5.6 million to $7.4 million and
operating margin increased by 4.8% to 6.9% in YTD 2021 primarily due to factors impacting gross profit margin
discussed above, along with lower fixed costs as a percentage of revenues.
- 40 -
Foreign exchange gain
Foreign exchange gain in YTD 2021 is due to fluctuations in USD/CAD exchange rates between the date of
the transaction and when cash is realized.
Interest expense and other financing costs
Interest expense and other financing costs decreased by $0.4 million to $5.7 million in YTD 2021 mainly
due to lower prevailing interest rates.
Provision for income taxes
Provision for income taxes was $18.4 million in YTD 2021 compared with $15.5 million in YTD 2020. The
current period’s provision and tax rate includes a tax deduction of $1.0 million from the vesting of certain share-based
awards. On a normalized basis, our 2021 effective tax rate of 27.5% is comparable to a prior year rate of 27.1%, both
of which includes the impact of non-deductible share-based compensation expenses.
Depreciation
Depreciation expense increased by $1.7 million to $10.0 million in YTD 2021 due to increases in our capital
investments to increase capacity, which includes depreciation on our right-of-use lease assets pertaining to our
transition to a third-party logistics model.
Amortization
Amortization expense increased by $0.3 million to $4.3 million in YTD 2021 driven by investments in
website development, system implementations, product patents and registrations.
EBITDA and Adjusted EBITDA
EBITDA increased by $15.1 million to $90.4 million in YTD 2021 primarily due to the factors discussed
above.
Adjusted EBITDA increased by $12.1 million to $100.1 million driven by higher volumes and segment
margins. Adjusted EBITDA margin increased by 40 basis points to 22.2% in YTD 2021 mainly due to margin
improvements, partially offset by the mix impact of proportionally higher sales in our Strategic Partners segment.
Adjusted EBITDA in the Jamieson Brands segment increased by $8.8 million to $90.3 million driven by
higher volumes. Adjusted EBITDA margin increased by 50 basis points to 26.3% in YTD 2021 due to factors
impacting operating margin discussed above.
Adjusted EBITDA in the Strategic Partners segment increased by $3.3 million, to $9.8 million and Adjusted
EBITDA margin increased by 170 basis points to 9.1% in YTD 2021 driven by higher volumes on expanded margins
and lower fixed costs as a percentage of revenues.
- 41 -
Summary of Consolidated Quarterly Results
The following is a summary of selected consolidated financial information for each of the eight most recently
completed quarters prepared in accordance with IFRS.
($ in 000's, except per share amounts)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
2021
2020
Revenue by segment
Jamieson Brands
Strategic Partners
Total revenue
99,784
30,054
129,838
85,175
27,193
112,368
82,391
28,165
110,556
75,895
22,375
98,270
89,733
30,636
120,369
82,604
22,961
105,565
74,292
18,912
93,204
69,794
14,729
84,523
Earnings from operations
28,874
20,593
16,043
10,520
22,734
17,804
10,675
12,359
Net earnings
Adjusted net earnings
EBITDA
20,190
20,489
14,284
11,472
14,051
12,041
6,136
8,636(1)
15,405
12,144
17,614
12,655
6,038
9,882
8,011
7,800
32,225
24,794
19,424
13,953
25,417
21,202
12,715
15,964
Adjusted EBITDA
33,771
25,456
22,327
18,542
29,383
22,933
18,983
16,687
Basic, earnings per share
Diluted, earnings per share
Adjusted diluted, earnings per share
0.50
0.48
0.49
0.35
0.34
0.34
0.29
0.28
0.29
0.15
0.15
0.21(1)
0.39
0.37
0.42
0.31
0.29
0.30
0.15
0.15
0.24
0.20
0.20
0.19
(1)
Q1 2021 Adjusted net earnings and Adjusted diluted earnings per share has been adjusted for $0.6 million of
share-based compensation expense in relation to our CEO transition.
Revenue
Jamieson Brands segment revenue for the last eight quarters were impacted by factors including the following:
accelerated demand for immunity and general health products as a result of the COVID-19 pandemic;
periodic price increases to recapture cost escalation;
the impact of innovation within our core VMS portfolio;
shipment fluctuations in our international markets;
the volume and timing of promotion and media;
the volume of inventory and timing of shipments to distributors and retailers;
seasonality;
severity of cold and flu season; and
foreign currency fluctuations.
•
•
•
•
•
•
•
•
•
Strategic Partners segment revenue for the last eight quarters were impacted by factors including the following:
•
•
•
•
•
•
available capacity when considering demand for Jamieson Brands products;
launch of new programs with existing or new customers, which include initial pipeline shipments;
availability of customer supplied materials;
innovation and geographic demand for high quality certified manufacturers;
periodic price increases to recapture cost escalation; and
foreign currency fluctuations.
Earnings from operations
Earnings from operations for the last eight quarters were also impacted by factors including the following:
•
•
•
revenue factors impacting price and volume noted above;
return on incremental promotion and marketing programs;
improvements in production efficiencies and higher economies of scale;
- 42 -
•
•
•
•
•
•
•
temporary increases to production costs driven by physical distancing initiatives, rapid antigen testing and
other safety measures established within our facilities to protect our employees as a result of the COVID-19
pandemic;
supply continuity costs including air freight and third-party manufacturing and packaging costs to meet
higher demand during the COVID-19 pandemic;
additional costs incurred in our transition to a third-party logistics model to make room for capacity
expansion at our Twin Oaks and Scarborough distribution facilities;
raw material costs in native currency;
timing of marketing spend and variable compensation;
accelerated recognition of share-based compensation expense in relation to our CEO transition; and
foreign currency fluctuations.
Selected Annual Information
The following selected annual information is shown for the three most recently completed financial years:
($ in 000's, except share and per share amounts)
2021
2020
2019
For the year ended
December 31
Revenue
Earnings from operations
Net earnings
Adjusted net earnings
EBITDA
Adjusted EBITDA
Basic, earnings per share
Diluted, earnings per share
Adjusted diluted, earnings per share
Selected consolidated financial position data:
Total assets
Total non-current liabilities
Dividends declared for the year:
Cash dividends per common share
451,032
76,030
52,082
55,217
90,396
100,096
1.30
1.25
1.32
652,475
226,832
403,661
344,980
63,572
41,598
47,948
75,299
87,985
1.05
1.01
1.16
55,449
31,657
38,111
62,592
75,909
0.82
0.80
0.96
609,341
225,929
561,775
229,265
0.55
0.47
0.38
Over the three-year period, revenue increased year-over-year driven by growth in the Jamieson Brands
segment through an expanded consumer base and international expansion, and growth in the Strategic Partners
segment through increased business with existing and new customers. Since 2020, significant growth was achieved
across both segments as consumers’ response to COVID-19 resulted in an expanded consumer base and the
acceleration of demand for immunity and general health supplements domestically and internationally.
Total assets have increased over the three-year period reflecting investments in working capital and property,
plant, and equipment designed to improve efficiency and expand capacity. In 2021, significant investments were made
to expand production capacity in response to growing demands driven by the COVID-19 pandemic, including right-
of-use lease assets pertaining to our transition to a third-party logistics model.
- 43 -
Liquidity and Capital Resources
Overview
Our principal uses of funds are for operating expenses, capital expenditures, finance costs, and debt service.
Management believes that cash generated from operations, together with amounts available under our Credit Facilities
(refer to “Credit Facilities”), will be sufficient to meet the Company’s future operating expenses, capital expenditures,
and future debt service costs.
Our primary liquidity and capital requirements are for capital expenditures, working capital and general
corporate needs. We have cash and availability under our Credit Facilities that we expect to utilize, along with cash
flow from operations, to provide capital to support the growth of our business (primarily through working capital and
capital expenditures), repay short-term obligations and for general corporate purposes. We believe that cash from
operations, together with our cash balance and our Credit Facilities will be sufficient to meet ongoing capital
expenditures, working capital requirements and other cash needs.
Our ability to fund future debt service costs, operating expenses, and capital expenditures will depend on our
future operating performance which will be affected by general economic, financial and other factors including factors
beyond our control (refer to “Risk Factors”). From time to time, management reviews acquisition opportunities and if
suitable opportunities arise, may make selected acquisitions to implement our business strategy. Historically, the
funding for any such acquisitions has come from cash flow from operating activities and additional debt.
Credit Facilities
As at December 31, 2021, the Company had $132.7 million in cash and available revolving and swingline
facilities and net debt of $142.4 million.
($ in 000's)
Long-term debt
Cash
Net debt (1)
As at December 31,
2021
As at December 31,
2020
149,125
(6,775)
142,350
149,058
(1,166)
147,892
(1)
This is a non-IFRS financial measure. See “Non-IFRS and Other Financial Measures” for more information
on each non-IFRS financial measure. See “How we Assess the Performance of our Business” for an
explanation of the composition of such measure.
On September 27, 2019, Jamieson Laboratories Ltd. (“JLL”), a wholly owned subsidiary of Jamieson,
amended and restated its credit agreement to add Jamieson Health Products USA Ltd. (collectively with JLL the
“Borrowers”) as a co-borrower and to provide a secured revolving facility of $275.0 million (including a $10.0 million
swingline facility) with the option to increase the revolving facility by $200.0 million (collectively, the “Credit
Facilities”). The Credit Facilities mature on September 27, 2024 with the outstanding principal repayable in full on
this date.
For the three and twelve months ended December 31, 2021, JLL made drawings of $4.2 million and $72.9
million, and debt repayments of $29.4 million and $72.8 million, respectively, applied against the Credit Facilities.
For the twelve months ended December 31, 2021, the weighted average interest rate on the Credit Facilities was 2.7%
(2020 - 3.1%).
The Credit Facilities are collateralized by security agreements and first charges over the assets including
property, plant and equipment and intellectual property of the Borrowers and certain other subsidiaries of JLL, subject
to permitted liens. Under the terms of the Credit Facilities, the Borrowers are subject to restrictive covenants and must
maintain an interest coverage ratio of not less than 3.00:1.00 and a leverage ratio not greater than 4.00:1.00. We are
in compliance with all covenants as at December 31, 2021.
- 44 -
Analysis of Cash Flows — three months ended December 31, 2021 and 2020
($ in 000's, except as otherwise noted)
Cash, beginning of period
Cash flows from (used in):
Operating activities
Investing activities
Financing activities
Cash, end of period
Cash flows from operating activities
Net Change in non-cash working capital
Cash from operating activities before working capital considerations
Cash Flows Generated from Operating Activities
Three months ended
December 31
2021
2020
$ Change
% Change
9,150
3,144
6,006
191.0%
34,309
(5,399)
(31,285)
6,775
34,309
(9,799)
24,510
18,744
(4,220)
(16,502)
1,166
18,744
3,464
22,208
15,565
(1,179)
(14,783)
5,609
15,565
(13,263)
2,302
83.0%
(27.9%)
(89.6%)
481.0%
83.0%
(382.9%)
10.4%
In Q4 2021, cash flows generated from operating activities totalled $34.3 million compared with
$18.7 million in Q4 2020. Cash from operating activities before working capital considerations of $24.5 million was
$2.3 million higher due to increased earnings in the current quarter. Cash invested in working capital decreased by
$13.3 million mainly driven by favourable timing on the collection of receivables and accelerated inventory purchases
realized in previous quarters.
Cash Flows Used in Investing Activities
Cash flows used in investing activities in Q4 2021 totalled $5.4 million compared with $4.2 million for the
same period in the prior year. Purchases of property, plant and equipment of $5.2 million was $1.1 million higher
reflecting our investments in additional manufacturing and packaging equipment required to expand production
capacity. Expenditures on intangible assets of $0.2 million was $0.1 million higher reflecting our investments in
website development, system implementations, product patents and registrations.
Cash Flows Used in Financing Activities
Cash flows used in financing activities in Q4 2021 totalled $31.3 million compared with $16.5 million for
the same period in the prior year. In Q4 2021, we made net repayments of $25.3 million on our Credit Facilities,
distributed $6.1 million of dividends to common shareholders, and made payments of lease liabilities of $0.8 million,
partially offset by proceeds of $0.8 million for the exercise of stock options and our employee share purchase plan
(“ESPP”). In Q4 2020, we made net repayments of $11.0 million on our Credit Facilities, distributed $5.0 million of
dividends to common shareholders, and made payments of lease liabilities of $0.8 million, partially offset by proceeds
of $0.3 million from the exercise of stock options and our ESPP.
- 45 -
Analysis of Cash Flows — for the year ended December 31, 2021 and 2020
($ in 000's, except as otherwise noted)
Cash, beginning of period
Cash flows from (used in):
Operating activities
Investing activities
Financing activities
Cash, end of period
Cash flows from operating activities
Net Change in non-cash working capital
Cash from operating activities before working capital considerations
Cash Flows Generated from Operating Activities
Twelve months ended
December 31
2021
2020
$ Change
% Change
1,166
198
968
488.9%
44,405
(22,284)
(16,512)
6,775
44,405
27,326
71,731
40,596
(13,169)
(26,459)
1,166
40,596
20,204
60,800
3,809
(9,115)
9,947
5,609
3,809
7,122
10,931
9.4%
(69.2%)
37.6%
481.0%
9.4%
35.3%
18.0%
In YTD 2021, cash flows generated from operating activities totalled $44.4 million compared with
$40.6 million in YTD 2020. Cash from operating activities before working capital considerations of $71.7 million was
$10.9 million higher primarily due to higher earnings. Cash invested in working capital increased by $7.1 million
mainly driven by continued acceleration of inventory purchases to ensure continuity of supply, as well as the timing
of payments and tax installments.
Cash Flows Used in Investing Activities
Cash flows used in investing activities in YTD 2021 totalled $22.3 million compared with $13.2 million for
the same period in the prior year. Purchases of property, plant and equipment of $21.5 million was $10.2 million
higher reflecting our investments in additional manufacturing and packaging equipment required to expand production
capacity. Expenditures on intangible assets of $0.8 million was $1.1 million lower due to prior year system related
improvements and investments in website development, product patent and registrations.
Cash Flows Used in Financing Activities
Cash flows used in financing activities in YTD 2021 totalled $16.5 million compared with $26.5 million for
the same period in the prior year. In YTD 2021, we distributed $22.1 million of dividends to common shareholders
and made payments of lease liabilities of $3.2 million, partially offset by net proceeds of $0.1 million from our Credit
Facilities and $8.7 million for the exercise of stock options and our ESPP. In YTD 2020, we made net repayments of
$15.7 million on our Credit Facilities, distributed $18.6 million of dividends to common shareholders, and made
payments of lease liabilities of $2.4 million, partially offset by proceeds of $10.3 million from the exercise of stock
options and our ESPP.
Contractual Obligations
The following table summarizes our significant undiscounted maturities of our contractual obligations and
commitments as at December 31, 2021.
($ in 000's)
Operating leases (1)
Trade and other payable
Revolving credit facility (2)
Total contractual obligations
2021
2022-2025
Thereafter
Total
$
$
$
$
4,174
74,533
-
78,707
18,949
-
149,125
168,074
14,481
-
-
14,481
37,604
74,533
149,125
261,262
$
$
$
$
(1)
We have entered into several operating leases for vehicles, production equipment, computer and
communications equipment, office equipment, and office and warehouse space. In 2021, the Company
- 46 -
entered into leases to increase warehouse and parking space at our Windsor facility. As of December 31,
2021, our total minimum lease payments payable in future years are $37.6 million.
(2)
The Credit Facilities provide for a secured revolving facility of $275.0 million (including a $10.0 million
swingline facility) with the option to increase the revolving facility by $200.0 million. The Credit Facilities
mature on September 27, 2024 with the outstanding principal repayable in full on this date.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future
material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures,
or capital resources.
Related Party Transactions
Balances and transactions between us and our subsidiaries, have been eliminated on consolidation.
Share-based compensation
The LTIP is an equity-based compensation plan providing for the issuance of securities under which grants
will be made. Under the LTIP, the board of directors of the Company, at its discretion, may grant share options,
restricted shares, RSUs, PSUs, DSUs, and stock appreciation rights. The awards are settled in common shares of the
Company (“Common Shares”) with a cash settlement alternative available to the Company. We also maintain the
ESPP for all eligible employees for the purchase of Common Shares.
Our share-based compensation expense, for the three and twelve months ended December 31, 2021 is $1.0
million and $5.7 million, respectively (2020 - $1.2 million and $4.9 million).
Financial Instruments
We primarily use foreign currency forward contracts to manage our exposure to fluctuations with respect to
transactions in U.S. dollars pertaining to inventory purchases and our international sales. These agreements mature at
various dates and qualify for hedge accounting as cash flow hedges of future foreign currency transactions. The terms
of the foreign currency forward contracts match the terms of the expected highly probable forecast transactions. As a
result, there is no hedge ineffectiveness to be recognized in the consolidated statements of operations and
comprehensive income. As of December 31, 2021, $79.3 million of anticipated foreign currency denominated
purchases and $57.3 million of anticipated foreign currency denominated sales have been hedged with underlying
foreign exchange forward contracts settling at various dates in the 12 months following the end of the current quarter.
We also use interest rate swaps to manage our long-term interest rate exposure with respect to interest on our
Credit Facilities which is based on fluctuating CDOR. We have entered into an interest rate swap with an effective
date of October 1, 2020 to September 27, 2024 with a notional principal of $140.0 million and an annual amortization
of $10.0 million on the first business day of each year. The notional principal of the interest rate swap is $130.0 million
as at the end of this reporting period. The interest rate swap is a derivative measured at fair value and meets hedge
accounting requirements.
- 47 -
Outstanding Share Capital
As at January 1, 2021
Exercise of stock options
Employee stock purchase plan
As at December 31, 2021
As at January 1, 2020
Exercise of stock options
Employee stock purchase plan
As at December 31, 2020
Common Shares
#
39,872,912
517,277
16,751
40,406,940
Common Shares
#
38,989,942
867,301
15,669
39,872,912
$
255,795
11,862
557
268,214
$
243,224
12,122
449
255,795
As at December 31, 2021, the authorized share capital of the Company consisted of:
a) Unlimited number of Common Shares. The holders of Common Shares are entitled to receive dividends as
declared from time to time and are entitled to one vote per share at meetings of the Company; and
b) Unlimited number of Preference Shares, issuable in series.
Critical Accounting Estimates and Judgments
The preparation of consolidated financial statements in accordance with IFRS requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, revenue and expenses. Estimates and assumptions are continuously evaluated and are based on
management’s best judgments and experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Revisions to accounting estimates are recognized in the period in
which the estimates are revised and in any future periods affected. Actual results may differ from these estimates.
Significant judgments made by management in applying our accounting policies and key sources of
estimation of uncertainty were the same as those applied and described in Note 3 in the accompanying notes of our
Company’s audited consolidated annual financial statements for the year ended December 31, 2021. Items subject to
significant estimate uncertainty and critical judgments which have the most impact on the amounts recognized in the
audited consolidated annual financial statements are included both below and in the annual audited financial statement
notes.
Our significant accounting judgments, estimates and assumptions are affected as a result of the various
ongoing economic and social impacts of COVID-19 and variants of concern. There continues to be significant
uncertainty as to the likely effects of this outbreak which may, among other things, impact our employees, suppliers,
and customers. It is not possible to predict the impact COVID-19 will have on our financial position and our results
of operations in the future. We are monitoring the future impact of the pandemic on all aspects of our business.
Estimating variable consideration for returns, trade merchandise allowances and sales promotional incentives
We use historical customer return data to determine the expected return percentages. These percentages are
applied to determine the expected value of the variable consideration. Any significant changes in experience as
compared to historical return pattern will impact the expected return percentages we estimated.
We provide for estimated payments to customers based on various trade programs and sales promotional
incentives. We estimate the most likely amount payable to each customer for each trade and incentive program
separately using (i) the projected level of sales volume for the relevant period; (ii) customer rates for allowances,
discounts, and rebates; (iii) historical spending patterns; and (iv) sales lead time. These arrangements are complex and
- 48 -
there are a significant number of customers and products affected. Management has systems and processes in place to
estimate and value these obligations.
We update our expected return, trade merchandise allowances and sales promotional incentives on a quarterly
basis and the refund liability and trade and promotional accruals are adjusted accordingly. To the extent that payments
differ from estimates of the related liability, accounts payable and accrued liabilities, net earnings, and comprehensive
income will be affected in future periods.
Valuation of inventory
Management makes estimates of the future customer demand for products when establishing appropriate
provisions for inventory. In making these estimates, management considers the product life of inventory and the
profitability of recent sales of inventory. In many cases, products sold by us turn quickly and inventory on-hand values
are low, thus reducing the risk of inventory obsolescence. However, code or “best before” dates are very important in
the determination of realizable value of inventory. Management ensures that systems are in place to highlight and
properly value inventory that may be approaching code dates. To the extent that actual losses on inventory differ from
those estimated, inventory, net earnings, and comprehensive income will be affected in future periods.
Receivables and allowance for expected credit losses
We are exposed to credit risk with respect to amounts receivable from customers. Our allowance is
determined by historical experiences, and considers factors including, the aging of the balances, the customer’s credit
worthiness, updates based on the current economic conditions, expectation of bankruptcies, and the political and
economic volatility in the markets/location of our customers.
Long-lived assets valuation
We perform impairment testing annually for goodwill and indefinite-life intangible assets and when
circumstances indicate long-lived assets may be impaired. Management judgment is involved in determining if there
are circumstances indicating that testing for impairment is required, and in identifying cash-generating units (“CGUs”)
for the purpose of impairment testing. We assess impairment by comparing the recoverable amount of a long-lived
asset, CGU, or CGU group to its carrying value. The recoverable amount is defined as the higher of: (i) value in use;
or (ii) fair value less costs of disposal.
The determination of the recoverable amount involves significant estimates and assumptions. Fair value less
costs to sell is determined using market multiples. Value in use is determined using future cash inflows and outflows,
discount rates, growth rates and asset lives. These estimates and assumptions could affect our future results if the
current estimates of future performance and fair values change. These determinations will affect the amount of
amortization expense on definite-life intangible assets recognized in future periods.
Measurement of fair values
A number of our accounting policies and disclosures require the measurement of fair values, for both financial
and non-financial assets and liabilities. When the measurement of fair values cannot be determined based on quoted
prices in active markets, fair value is measured using valuation techniques and models. The inputs to these models are
taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in
establishing fair values. Changes in assumptions about the inputs to these models could affect the reported fair value
of our financial and non-financial assets and liabilities.
Tangible and intangible assets acquired through business combinations are initially recorded at their fair
values based on assumptions of management. These assumptions include estimating the cost of tangible assets and
future expected cash flows arising from intangible assets identified. Financial instruments acquired are determined
based on the amortized costs at the acquisition date that approximate their carrying values.
- 49 -
To the extent that these estimates differ from those realized, the measured asset or liability, net earnings,
and/or comprehensive income will be affected in future periods. Information about the valuation techniques and inputs
used in determining the fair value of various assets and liabilities are disclosed in Notes 7, 12, 15, 16 and 19 in the
accompanying notes of our audited consolidated annual financial statements for the year ended December 31, 2021.
Taxes
The calculation of current and deferred income taxes requires us to make estimates and assumptions and to
exercise judgment regarding the carrying values of assets and liabilities that are subject to accounting estimates
inherent in those balances, the interpretation of income tax legislation across various jurisdictions, expectations about
future operating results, the timing of reversal of temporary differences and possible audits of income tax filings by
the tax authorities.
Changes or differences in underlying estimates or assumptions may result in changes to the current or
deferred income tax balances on the consolidated statements of financial position, a charge or credit to income tax
expense in the consolidated statements of operations and comprehensive income and may result in cash payments or
receipts.
All income, capital and commodity tax filings are subject to audits and reassessments. Changes in
interpretations or judgments may result in a change in our income, capital or commodity tax provisions in the future.
The amount of such a change cannot be reasonably estimated.
Useful lives of property, plant and equipment and intangible assets with finite useful lives
We employ significant estimates to determine the estimated useful lives of property, plant and equipment
and intangible assets with finite useful lives, including assets arising from business combinations, considering industry
trends such as technological advancements, past experience, expected use and review of asset lives.
Components of an item of property, plant and equipment may have different useful lives. We make estimates
when determining depreciation methods, depreciation rates and asset useful lives, which requires taking into account
industry trends and company-specific factors. We review these decisions at least once each year or when circumstances
change. We will change depreciation methods, depreciation rates or asset useful lives if they are different from
previous estimates.
Significant Accounting Policies
Our audited consolidated annual financial statements were prepared using the same accounting policies as
described in Note 2 in the accompanying notes of our audited consolidated annual financial statements for the year
ended December 31, 2021.
Recently adopted accounting standards
No recent accounting standard changes have been identified as applicable for the three and twelve month
period ended December 31, 2021 and onwards.
Disclosure Controls and Procedures
The Chief Executive Officer and the Chief Financial Officer (the “Certifying Officers”), along with other
members of management, have designed, or caused to be designed under their supervision, disclosure controls and
procedures (“DC&P”) to provide reasonable assurance that (i) material information relating to the Company is made
known to them by others, particularly during the period in which the annual filings are being prepared; and (ii)
information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or
submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods
specified in securities legislation. The Certifying Officers have evaluated, or caused to be evaluated under their
supervision, the effectiveness of the Company’s DC&P as at December 31, 2021 and have concluded that the
Company's DC&P was effective as at December 31, 2021.
- 50 -
Internal Control over Financial Reporting
The Certifying Officers, along with other members of management, have designed, or caused to be designed
under their supervision, internal control over financial reporting (“ICFR”) to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes prepared in
accordance with IFRS. The Certifying Officers have used the Internal Control – Integrated Framework (2013 COSO
Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission to design the
Company’s ICFR. The Certifying Officers have evaluated, or caused to be evaluated under their supervision, the
effectiveness of the Company’s ICFR as at December 31, 2021 and have concluded that the Company's ICFR was
effective as at December 31, 2021.
There have been no changes in the Company’s ICFR during the three-month period ended December 31,
2021 which have materially affected, or are reasonably likely to materially affect, the Company’s ICFR.
Limitations of an Internal Control System
We believe that any DC&P or ICFR, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met and that all control issues, including instances
of fraud, if any, within the Company have been prevented or detected. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their
costs. The design of any system of control is also based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all future
conditions.
Outlook
In fiscal 2022, we expect revenue to grow between 5.0% and 9.0%, representing revenues of approximately
$474.0 to $491.0 million. We anticipate Adjusted EBITDA to range from $108.0 to $112.0 million and Adjusted
diluted earnings per share to range from $1.42 to $1.48.
Revenue in the Jamieson Brands segment is expected to increase between 6.0% to 10.0% compared with
fiscal 2021, driven by growth in the following categories:
• We expect domestic branded revenues to grow between 4.0% and 7.0%, reflecting strong consumer demand
on a higher post-pandemic baseline and the impact of retail replenishments throughout 2021. We expect
improved customer fill rates and strong on-shelf availability at retailers will enable us to effectively drive
volumes with a focus on innovation and promotional activities, leveraging our 100th year anniversary
marketing campaigns. We expect revenues in the first quarter of 2022 to increase by 4.0% to 6.0% compared
with the first quarter of 2021, reflecting timing of retail shipments at the end of fiscal 2021.
• We expect international revenue growth of approximately 20.0% in U.S. dollars. Our growth will be driven
by expansion across key regions in Asia, Europe and the Middle East, while continuing to drive accelerated
growth in China as we increase our local capabilities and brand investments in market. We expect revenues
in the first quarter of 2022 to grow by approximately 10.0% compared with the first quarter of 2021 reflecting
the prioritization of non-immunity orders in the prior year while we return to seasonal fulfillment levels in
the current year.
Revenue in the Strategic Partners segment is expected to increase by up to 5.0% compared with fiscal 2021,
reflecting pricing and volume changes of our customers’ products. First quarter 2022 revenues are expected to decline
by up to 10.0% compared with the first quarter of 2021, reflecting order timing and expanded programs with customers
in the prior year.
We expect to grow Adjusted EBITDA margins through operating efficiencies while recuperating the impact
of anticipated raw material increases. Our Jamieson Brands gross profit margins are expected to increase by
approximately 50 basis points through operating efficiencies and Strategic Partners gross profit margins are expected
to decline by approximately 50 basis points due to customer and program mix.
- 51 -
We expect to incur certain non-capital costs related to the enhancement of our IT systems to improve
operating efficiencies and augment our system infrastructure during fiscal 2022. These costs will impact net earnings
while our expected Adjusted net earnings and Adjusted diluted earnings per share for fiscal 2022 will reflect the adding
back of these expenses on a tax-effected basis.
The foregoing financial outlook is based on the following assumptions for fiscal 2022, amongst others:
• Normalized SG&A expenses will increase by approximately 5.0% to 8.0% (5.0% to 7.0% in the first quarter
of 2022 compared to the first quarter of 2021) from increased investments in international markets and our
long-term growth opportunities in China;
• Depreciation expense will be approximately $12.0 million reflecting the acceleration of our capacity
expansion investments (assuming approximately $15.0 to $20.0 million of capital additions as we continue
to build capacity at our facilities and invest in our IT infrastructure);
Share-based compensation costs of $5.0 to $5.5 million;
Interest expense of $5.0 to $5.5 million based on our estimated borrowing and prevailing rates;
Income tax rates of approximately 27.0% based on non-deductible stock-based compensation;
•
•
•
• A fully diluted share count of approximately 42.0 million shares; and
• Average annual exchange rate between the U.S. and Canadian dollar of U.S. $1.00 to 1.26.
The description of our financial outlook in this MD&A is based on management’s current views and
strategies, our assumptions and expectations concerning our growth opportunities and our assessment of the
opportunities for our business and the consumer health industry as a whole and the VMS and sports nutrition segments
of the consumer health industry. Our financial outlook has been calculated in accordance with our current accounting
policies and non-IFRS and other financial measures as defined in this MD&A. The description of our outlook is
forward-looking information for purposes of applicable securities laws in Canada and readers are therefore cautioned
that actual results may vary from those described above. Refer to “Summary of Factors Affecting Our Performance”,
“Forward-Looking Information” and “Risk Factors” for a reference to the risks and uncertainties that impact our
business and that could cause actual results to vary.
Current Share and Option Information
As of the date hereof, an aggregate of 40,442,600 Common Shares are issued and outstanding. As of the
date hereof, the Company had 2,544,796 options, 198,036 PSUs, 62 RSUs, and 15,563 DSUs outstanding.
Additional Information
Additional information relating to our Company, including our most recent annual report and annual
information form are available on SEDAR at www.sedar.com.
Risk Factors
We are exposed to a variety of financial risks in the normal course of operations including credit risk, market
risk and liquidity risk, each of which is discussed below. Management oversees the management of these risks. Our
financial instruments and policies for managing these risks are detailed below. Please see also the discussion of risks
associated with COVID-19 discussed above under the heading “Summary of Factors Affecting Our Performance” and
“Outlook”.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in
financial loss to us. We are exposed to credit risk from our customers (primarily related to trade accounts receivable)
in the normal course of business. We have adopted a policy of only dealing with creditworthy counterparties. To
mitigate this risk, we carry out regular credit evaluations and purchase credit insurance for international customers,
where appropriate, as a means of mitigating the risk of financial loss from defaults.
- 52 -
We are also exposed to counterparty credit risk inherent in our financing activities, trade receivable
insurance, foreign currency derivatives and interest rate derivatives. We have assessed these risks as minimal.
Market Risk
Market risk is comprised of foreign exchange risk, interest rate risk and commodity price risk.
Foreign Exchange Risk
Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. Our exposure to the risk of changes in foreign exchange
rates relates primarily from transactions in U.S. dollars such as a portion of trade accounts payable, trade accounts
receivable and cash. We use foreign exchange forward contracts to manage foreign exchange transaction exposure.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Our accounts receivable and accounts payable are non-interest bearing.
Our exposure to the risk of changes in market interest rates arises from long-term debt obligations issued at fixed
rates that create fair value interest rate risk and variable rate borrowings that create cash flow interest rate risk. We
manage our interest rate risk by entering into interest rate swaps, in which we agree to exchange, at specified
intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon
notional principal amount.
Commodity Price Risk
We are exposed to price risk related to purchases of certain commodities used as raw materials. We may
use fixed price contracts with suppliers to mitigate commodity price risk. Concentration in any one raw material is
not significant to us.
Liquidity Risk
Liquidity risk is the risk we will not be able to meet our financial obligations associated with financial
liabilities. We are exposed to this risk mainly in respect of our accounts payable and accrued liabilities, various
long-term debt agreements, obligations under our post-retirement benefits plan and lease liabilities.
We manage our liquidity risk through continuous monitoring of our forecast and actual cash flows and
through the management of our capital structure. We continually revise our available liquid resources as compared
to the timing of the payment of liabilities to manage our liquidity risk.
- 53 -
Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
Table of Contents
Independent auditor’s report ..................................................................................................................................... 56-59
Consolidated statements of financial position ............................................................................................................... 60
Consolidated statements of operations and comprehensive income ............................................................................... 61
Consolidated statements of changes in shareholders’ equity .......................................................................................... 62
Consolidated statements of cash flows ............................................................................................................................. 63
Notes to the consolidated financial statements .......................................................................................................... 64-96
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Jamieson Wellness Inc.
Opinion
We have audited the consolidated financial statements of Jamieson Wellness Inc. and its subsidiaries (the Group),
which comprise the consolidated statements of financial position as at December 31, 2021 and 2020, the consolidated
statements of operations and comprehensive income, consolidated statements of changes in shareholders’ equity and
consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at December 31, 2021 and 2020, and its consolidated financial
performance and its consolidated cash flows for the years then ended in accordance with International Financial
Reporting Standards (IFRSs).
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the consolidated 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 matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were 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 these matters. For the matter, our description of how our audit addressed the matter is provided in that
context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report, including in relation to this matter. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of the
consolidated financial statements. The results of our audit procedures, including the procedures performed to address
the matter below, provide the basis for our audit opinion on the accompanying consolidated financial statements.
- 56 -
INDEPENDENT AUDITOR’S REPORT (continued)
Sales promotional incentives
Key audit matter
How our audit addressed the key audit matter
As described in the Summary of Significant Accounting
Policies in Note 2 to the consolidated financial
statements, the Group provides certain customers with
discounts and sales promotional incentives, which
results in variable consideration and the Group having to
estimate expected levels of promotions that are typically
settled in a period after the sale being recorded. The
estimated costs of these discounts and customer-specific
sales promotional incentives are recorded as a reduction
to revenue at the time a product is sold to the customer.
The Group’s sales promotional incentives are complex,
and there are a significant number of customers and
products affected. The measurement of sales
promotional incentives involves the use of judgement
related to estimating future promotional spending based
on historical performance of promotions and
adjustments for current trends, among other inputs. The
timing difference between sales of goods by the Group
and the settlement of customer-specific sales
promotional incentives further increases the risk
associated with the measurement of revenues. Changes
in these estimates can have a significant impact on the
amount of revenue recognized.
• We considered the appropriateness of the Group’s
revenue recognition accounting policies, specifically
the recognition and classification criteria for
discounts and sales promotional incentives, by
reviewing the Group’s contractual and non-
contractual arrangements with its customers.
• Among other audit procedures, we tested the sales
promotional incentives accrued at the end of the
year by comparing program details with agreements
or other correspondence between the Group and its
customers, where applicable, taking customary trade
practices into consideration.
• We examined correspondence between the Group
and its customers, and historical end-consumer
spending patterns on similar promotions, to
evaluate the reasonableness of the estimated end-
consumer purchases forecasted by management
during the promotional period.
• We also analyzed retrospective reviews prepared by
management on its ability to estimate customer-
specific sales promotional incentives, which
compared actual spending to amounts accrued at
period end and analyzed trending of customer-
specific sales promotional incentives as a percentage
of revenue, to evaluate the accuracy and
completeness of amounts accrued by management
at year end.
• Additionally, we performed inquiry procedures
directly with sales representatives to evaluate the
completeness of incentive programs.
Other information
Management is responsible for the other information. The other information comprises:
• Management’s Discussion and Analysis
• The information, other than the consolidated financial statements and our auditor’s report thereon, in the
Annual Report
Our opinion on the consolidated 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 consolidated financial statements, our responsibility is to read the other
information, and in doing so, consider whether the other information is materially inconsistent with the consolidated
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, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If based on the work we
will perform on this other information, we conclude there is a material misstatement of other information, we are
required to report that fact to those charged with governance.
- 57 -
Responsibilities of management and those charged with governance for the consolidated financial
statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation
of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’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 Group or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated 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 generally accepted auditing standards 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 consolidated financial
statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated 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
Group’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 Group’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
consolidated 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 Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure, and content of the consolidated financial statements, including the
disclosures, and whether the consolidated 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 Group to express an opinion on the consolidated 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.
- 58 -
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 Paula J. Smith.
Toronto, Canada
February 23, 2022
- 59 -
Jamieson Wellness Inc.
Consolidated Statements of Financial Position
In thousands of Canadian dollars as at December 31,
Notes
2021
2020
6,775
104,186
119,006
2,149
5,029
237,145
96,977
122,975
192,676
2,702
652,475
74,533
2,896
3,317
2,876
83,622
149,125
3,544
53,291
20,872
310,454
268,214
14,786
58,998
23
342,021
652,475
1,166
97,951
102,645
-
2,389
204,151
83,796
122,975
196,158
2,261
609,341
73,084
6,580
8,231
3,115
91,010
149,058
3,538
51,479
21,854
316,939
255,795
12,986
29,023
(5,402)
292,402
609,341
Assets
Current assets
Cash
Accounts receivable
Inventories
Derivatives
Prepaid expenses and other current assets
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Deferred income tax
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Income taxes payable
Derivatives
Current portion of other long-term liabilities
Long-term liabilities
Long-term debt
Post-retirement benefits
Deferred income tax
Other long-term liabilities
Total liabilities
Shareholders' equity
Share capital
Contributed surplus
Retained earnings
4
5
19
6, 14
7
8
13
9
13
19
14
11
12
13
14
15
Accumulated other comprehensive income (loss)
Total shareholders' equity
Total liabilities and shareholders' equity
Commitments and contingencies
20
(see the accompanying notes to the consolidated financial statements)
Approved on behalf of the Board:
Steve Spooner
Director
David Williams
Director
- 60 -
Jamieson Wellness Inc.
Consolidated Statements of Operations and Comprehensive Income
In thousands of Canadian dollars, except share and per share amounts, for the years ended December 31,
Notes
2021
2020
Revenue
Cost of sales
Gross Profit
Selling, general and administrative expenses
Share-based compensation
Earnings from operations
Foreign exchange (gain) loss
Other expenses
Interest expense and other financing costs
Earnings before income taxes
Provision for income taxes
Net earnings
Other comprehensive income (loss)
Actuarial gain not to be reclassified subsequently to net
earnings
Income tax
Net of tax
Unrealized gain (loss) on amounts to be reclassified net of
realized gains on amounts reclassified to net earnings
Income tax
Net of tax
Total other comprehensive income (loss)
Comprehensive income
Earnings per share attributable to common shareholders
Basic, earnings per share
Diluted, earnings per share
Weighted average number of shares
Basic
Diluted
21
5
16
18
13
12
13
19
13
22
22
(see the accompanying notes to the consolidated financial statements)
451,032
288,591
162,441
80,739
5,672
76,030
(92)
-
5,657
70,465
18,383
52,082
233
(61)
172
7,063
(1,787)
5,276
5,448
57,530
1.30
1.25
403,661
258,905
144,756
76,259
4,925
63,572
460
22
6,042
57,048
15,450
41,598
785
(198)
587
(6,939)
1,756
(5,183)
(4,596)
37,002
1.05
1.01
40,150,724
41,680,934
39,539,955
41,160,341
- 61 -
Jamieson Wellness Inc.
Consolidated Statements of Changes in Shareholders’ Equity
In thousands of Canadian dollars
Notes
Share capital
Contributed
surplus
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Total
Shareholders'
equity
As at January 1, 2020
Net earnings for the year
Exercise of stock options and ESPP
Common share dividend ($0.47 per share)
Other comprehensive loss
Currency translation adjustment
Share-based compensation
As at December 31, 2020
Net earnings for the year
Exercise of stock options and ESPP
Common share dividend ($0.55 per share)
Other comprehensive income
Currency translation adjustment
Share-based compensation
As at December 31, 2021
15
16
15
16
243,224
-
12,571
-
-
-
-
255,795
-
12,419
-
-
-
-
268,214
(see the accompanying notes to the consolidated financial statements)
10,727
-
(2,315)
-
-
-
4,574
12,986
-
(3,684)
8
-
-
5,476
14,786
6,061
41,598
-
(18,636)
-
-
-
29,023
52,082
-
(22,107)
-
-
-
58,998
(844)
-
-
-
(4,596)
38
-
(5,402)
-
-
-
5,448
(23)
-
23
259,168
41,598
10,256
(18,636)
(4,596)
38
4,574
292,402
52,082
8,735
(22,099)
5,448
(23)
5,476
342,021
- 62 -
Jamieson Wellness Inc.
Consolidated Statements of Cash Flows
In thousands of Canadian dollars, for the years ended December 31,
Cash provided by (used in)
Notes
6
8
16
6
8
11
11
14
15
Operating activities
Net earnings
Items not affecting cash
Depreciation of property, plant and
equipment and right-of-use assets
Amortization of intangible assets
Deferred income taxes
Share-based compensation
Others
Net change in non-cash working capital
Investing activities
Additions to property, plant and equipment, net
Acquisition of intangible assets
Financing activities
Proceeds from credit facilities
Repayment of credit facilities
Payment of lease liabilities
Dividends to Common Shareholders
Exercise of stock options and ESPP
Increase in cash
Cash - Beginning of the year
Cash - End of the year
Supplemental disclosure
Amount of income taxes paid
Amount of interest paid
(see the accompanying notes to the consolidated financial statements)
2021
52,082
10,006
4,268
(477)
5,476
376
(27,326)
44,405
(21,498)
(786)
(22,284)
72,886
(72,819)
(3,207)
(22,107)
8,735
(16,512)
5,609
1,166
6,775
22,591
5,302
2020
41,598
8,260
3,949
1,941
4,574
478
(20,204)
40,596
(11,251)
(1,918)
(13,169)
60,292
(76,003)
(2,368)
(18,636)
10,256
(26,459)
968
198
1,166
9,296
4,503
- 63 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
1.
Company overview
1.1 Description of the business and consolidated financial statements
Jamieson Wellness Inc. (“Jamieson” or the “Company”) is a Canadian public company with common shares
(“Common Shares”) listed on the Toronto Stock Exchange under the stock symbol “JWEL”.
The consolidated financial statements of Jamieson and its subsidiaries for the year ended December 31, 2021
were authorized for issue by the Board of Directors of the Company on February 23, 2022. Jamieson is a
company continued under the Business Corporations Act (Ontario) and resident in Canada. Jamieson’s
registered office is located at 66 Wellington Street West, Suite 5300, TD Bank Tower, Toronto, ON, M5K 1E6.
The Company has manufacturing facilities located in Windsor, Ontario and in Toronto, Ontario and is
principally engaged in the manufacturing, development, distribution, sales and marketing of branded and
customer branded health products for humans including vitamins, herbal and mineral nutritional supplements.
1.2 Subsidiaries
The table below provides a summary of the Company's subsidiaries. Unless otherwise stated, the subsidiaries as
listed below have share capital consisting solely of common shares, which are held directly or indirectly by the
Company.
As at December 31,
Entity
Jamieson Laboratories Ltd.
International Nutrient Technologies Limited
Body Plus Nutritional Products Inc.
Jamieson Health Products (Shanghai) Co., Ltd.
Jamieson Health Products Australia Pty Ltd.
Jamieson Health Products UK Ltd.
Jamieson Health Products USA Ltd.
Jamieson Health Products Netherlands B.V.
2021
%
100
100
100
100
100
100
100
100
2020
%
100
100
100
100
100
100
100
-
Principal Place of
Operations
Functional
Currency
Canada
Canada
Canada
China
Australia
Canadian dollar
Canadian dollar
Canadian dollar
Chinese yuan
Australian dollar
United Kingdom United States dollar
United States of America United States dollar
Netherlands United States dollar
2. Summary of significant accounting policies
2.1 Basis of preparation and statement of compliance
The consolidated financial statements of the Company have been prepared in accordance with International
Financial Reporting Standards (“IFRS”).
The consolidated financial statements have been prepared on a historical cost basis, except for certain derivative
financial instruments and liabilities associated with the post-retirement benefit plan that have been measured at
fair value. The consolidated financial statements are presented in Canadian dollars and all values are rounded to
the nearest thousand ($000), except share and per share amounts and when otherwise indicated.
2.2 Basis of consolidation
Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. Specifically, the
Company controls an investee if, and only if, the Company has:
• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the
investee);
- 64 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
• Exposure, or rights, to variable returns from its involvement with the investee; and
• The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption
and when the Company has less than a majority of the voting or similar rights of an investee, the Company
considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
• The contractual arrangement(s) with the other vote holders of the investee;
• Rights arising from other contractual arrangements; and
• The Company’s voting rights and potential voting rights.
The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company
obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated financial statements from the date the Company gains control until the date the Company ceases to
control the subsidiary.
Transactions and balances between the Company and its consolidated entities have been eliminated on
consolidation.
2.3 Summary of significant accounting policies
The following are the significant accounting policies applied by the Company in preparing its consolidated
financial statements:
2.3.1 Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as
the aggregate of the consideration transferred, which is measured at the acquisition date fair value and the
amount of any non-controlling interest in the acquiree. Acquisition-related costs are expensed as incurred and
included in the consolidated statements of operations and comprehensive income.
When the Company acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition
date. All contingent consideration (except that which is classified as equity) is subsequently re-measured to fair
value at each reporting period end, with the changes in fair value recognized in profit or loss. Contingent
consideration that is classified as equity is not re-measured, and subsequent settlement is accounted for within
equity.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the
amount recognized for non-controlling interests) and any previous interest held, over the net identifiable assets
acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate
consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired
and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at
the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognized in net income.
- 65 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each
of the Company’s cash-generating units (“CGUs”) (or group of CGUs) that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a CGU (or group of CGUs) and part of the operation within that unit is
disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the
operation when determining the gain or loss on disposal of the operation. Goodwill disposed in these
circumstances is measured based on the relative fair values of the disposed operation and the portion of the CGU
retained.
2.3.2 Current versus non-current classification
The Company presents assets and liabilities in the consolidated statements of financial position based on
current/non-current classification.
An asset is current when it is:
• Expected to be realized or intended to be sold or consumed in the normal operating cycle;
• Held primarily for the purpose of trading;
• Expected to be realized within twelve months after the reporting period; or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in the normal operating cycle;
• It is held primarily for the purpose of trading;
• It is due to be settled within twelve months after the reporting period; or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.
All other liabilities are classified as non-current.
Deferred income tax assets and liabilities are classified as non-current assets and liabilities.
2.3.3 Fair value measurement
The Company measures financial instruments, such as derivatives, at fair value at each consolidated statements
of financial position date. Fair value related disclosures for financial instruments and non-financial assets that
are measured at fair value or where fair values are disclosed are summarized in the following notes:
• Accounting policy disclosures (Note 2.3.3)
• Disclosures for valuation methods, significant estimates and assumptions (Notes 3 and 7)
• Quantitative disclosures of fair value measurement hierarchy (Note 19)
• Financial instruments (including those carried at amortized cost) (Notes 11 and 19)
- 66 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
Fair value 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. The fair value measurement is based on the
presumption that the transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability; or
• In the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of instruments that are quoted in active markets is determined using the quoted prices. The
Company uses valuation techniques to establish the fair value of instruments where prices quoted in active
markets are not available. Therefore, where possible, parameter inputs to the valuation techniques are based on
observable data derived from prices of relevant instruments traded in an active market. These valuation
techniques involve some level of management estimation and judgment, the degree of which will depend on the
price transparency for the instrument or market and the instrument’s complexity.
The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy
prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value
measurement based on the lowest level input significant to the fair value measurement in its entirety.
The three levels of the fair value hierarchy are defined as follows:
Level 1 - Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.
Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets
and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not
active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Significant unobservable inputs which are supported by little or no market activity.
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value.
For assets and liabilities that are recognized in the consolidated financial statements on a recurring basis, the
Company determines whether transfers have occurred between levels in the hierarchy by reassessing
categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the
end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as
explained above.
2.3.4 Revenue recognition
The majority of the Company’s revenue is derived from the sale of Jamieson branded products to distributors,
retail and wholesale customers, referred to as the Company’s “Jamieson Brands” segment, as well as providing
contract manufacturing services and the sale of products to strategic partners, referred to as the Company’s
“Strategic Partners” segment.
Revenue is recognized for the sale of Jamieson branded products and the manufacturing of products to its
strategic partners at the point in time when control of the asset is transferred to the customer based on shipping
terms. The Company generally has a right to payment at the time of delivery (which is the same time that the
Company has satisfied its performance obligations under the arrangement), as such a receivable is recognized as
the consideration is unconditional and only the passage of time is required before payment is due.
- 67 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
A portion of the Company’s revenues derived from contract manufacturing services provided to customers in its
Strategic Partners segment is under a tolling arrangement where the customer supplies the Company with a raw
material or ingredient. Revenue is recognized net of the cost of the raw material or ingredient supplied by the
customer.
Rights of return give rise to variable consideration. The variable consideration is estimated at contract inception
using the expected value method as this best predicts the amount of variable consideration to which the
Company is entitled. The variable consideration is constrained to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur when any uncertainty is
subsequently resolved. For products that are expected to be returned, a refund liability is recognized as a
reduction of revenue at the time the control of the products purchased is transferred to the customers.
Jamieson may provide discounts and sales promotional incentives to its customers, which give rise to variable
consideration. The variable consideration is constrained to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognized will not occur when any uncertainty is subsequently
resolved. The application of the constraint on variable consideration increases the amount of revenue that will be
deferred. Jamieson applies the most likely amount method estimating discounts provided to customers using
contracted rates and estimating sales promotional incentives provided to customers based on historical spending
patterns. Jamieson may also provide other consideration to customers for customer-specific programs to
promote the Company’s products. Consequently, revenues are recognized net of these estimated program costs.
All other estimated non-customer-specific promotional costs and consideration are expensed as selling, general
and administrative expenses.
In subsequent periods, the Company monitors the performance of customers against agreed-upon obligations
related to sales incentive programs and makes any adjustments to both revenue and sales incentive accruals as
required.
2.3.5 Foreign currencies
The Company’s consolidated financial statements are presented in Canadian dollars. For each entity, the
Company determines the functional currency, and items included in the financial statements of each entity are
measured using that functional currency (refer to Note 1.2).
Transactions and balances
Transactions in foreign currencies are initially recorded by the entities at their respective functional currency
spot rate at the date the transaction first qualifies for recognition.
• Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency
spot rate of exchange in effect at the reporting date.
• Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates as at the dates of the initial transactions.
• Revenue and expense items are translated using the average exchange rate during the year.
Differences arising on settlement or translation of monetary items are recognized in profit or loss.
On consolidation, the assets and liabilities of foreign operations are translated into the reporting currency at the
reporting currency spot rate of exchange in effect at the reporting date and their statement of operations are
translated using the average exchange rate during the year. Exchange differences arising on translation for
consolidation are recognized in other comprehensive income (“OCI”). On disposal of a foreign operation, the
component of OCI relating to that particular foreign operation is reclassified to profit or loss.
- 68 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
2.3.6 Taxes
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted at the reporting date in the countries where the Company
operates and generates taxable income.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the
consolidated statements of operations and comprehensive income. Management periodically evaluates positions
taken in the tax returns with respect to situations in which applicable tax regulations are subject to
interpretation, and it establishes provisions where appropriate.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred income taxes are not recognized where:
• The deferred income tax liability arises from the initial recognition of goodwill;
• The deferred income tax asset or liability arises on the initial recognition of an asset or liability in an acquisition
that is not a business combination and, at the time of the acquisition, affects neither the accounting profit nor
taxable profit or loss; and
• For temporary differences relating to investments in subsidiaries to the extent that the Company can control
the timing of the temporary difference and it is probable that they will not reverse in the foreseeable future.
Deferred income tax assets are recognized for unused loss carry forwards and deductible temporary differences
to the extent that it is probable that taxable profit will be available against which they can be utilized. At each
reporting period, previously unrecognized deferred income tax assets are reassessed to determine whether it has
become probable that future taxable profit will allow the deferred income tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Current and deferred income taxes relating to items recognized directly in OCI or equity are also recognized
directly in OCI or equity, respectively.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at
that date, are recognized subsequently if new information about facts and circumstances arise. The adjustment is
either treated as an adjustment to goodwill (as long as it does not exceed goodwill) if it is incurred during the
measurement period or recognized in net income.
Sales tax
Revenues, expenses and assets are recognized net of the amount of sales tax, except:
• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority,
in which case, the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense
item, as applicable; and
- 69 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
• Receivables and payables are stated with the amount of sales tax included. The net amount of sales tax
recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
consolidated statements of financial position.
2.3.7 Property, plant and equipment
Property, plant and equipment, with the exception of land, is recorded at cost less accumulated depreciation and
any net accumulated impairment losses. Land is carried at cost and not depreciated. Construction-in-process
assets are capitalized during construction and depreciation commences when the asset is available for use.
Repair and maintenance costs are recognized in profit or loss as incurred unless the recognition criteria are
satisfied and it substantially changes the useful life of an asset.
Depreciation is calculated on a straight-line basis, after taking into account residual values, over the following
expected useful lives of the assets:
Land
Buildings
Machinery and equipment
Furniture and fixtures
Computer equipment and software
Tools and dies
Not depreciated
20-30 years
3-20 years
4-5 years
3 years
1 year
When parts of an item of property and equipment have different useful lives, those components are accounted
for as components of property and equipment. Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the
consolidated statements of operations and comprehensive income when the asset is derecognized.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed
periodically.
2.3.8 Intangible assets
Intangible assets are primarily established as a result of business combinations and measured on initial
recognition at fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at
cost less accumulated amortization and any accumulated impairment losses.
Upon recognition of an intangible asset, the Company determines if the asset has a definite or indefinite life. In
making this determination, the Company considers the expected use, expiry of agreements, the nature of the
asset, and whether the value of the asset decreases over time.
Intangible assets with finite lives are amortized over their useful economic lives and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortization period and the
amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset are accounted for by changing the amortization period, as appropriate, and are
treated as changes in accounting estimates. The amortization expense on intangible assets is recognized in the
consolidated statements of operations and comprehensive income on a straight-line basis over their estimated
useful lives as follows:
Customer relationships
Registrations, licenses, and other
25-30 years
3-10 years
- 70 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
The Company expects its trade names to generate economic benefit in perpetuity, and accordingly, has assigned
the trade names as indefinite-life intangible assets.
Indefinite-life intangibles including trade names are tested for impairment annually at December 31 and
otherwise as required if events occur that indicate that the net carrying value may not be recoverable.
2.3.9 Financial instruments — initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Classification and measurement
All financial assets and liabilities are recognized initially at fair value plus, in the case of financial instruments
not at fair value through profit or loss (“FVTPL”), transaction costs.
Debt financial instruments are subsequently measured at FVTPL, fair value through other comprehensive
income (“FVOCI”), or amortized cost using the effective interest rate method. The Company determines the
classification of its financial assets based on the Company’s business model for managing the financial assets and
whether the instruments’ contractual cash flows represent solely payments of principal and interest on the
principal amount outstanding. The Company’s derivatives not designated as a hedging instrument in a qualifying
hedge relationship are subsequently measured at FVTPL. Equity instruments within the scope of IFRS 9,
“Financial Instruments” (“IFRS 9”), if any, are subsequently measured at FVTPL or elected irrevocably to be
classified at FVOCI at initial recognition.
Financial liabilities are subsequently measured at amortized cost using the effective interest method or at
FVTPL. Financial liabilities are subsequently measured as FVTPL when the financial liability is: (i) contingent
consideration of an acquirer in a business combination; (ii) held for trading; or (iii) it is designated as FVTPL if
eligible. Other financial liabilities are subsequently measured at amortized cost using the effective interest
method.
For financial liabilities that are designated as FVTPL, the amount of change in the fair value of the financial
liability that is attributable to changes in the Company’s own credit risk of that liability is recognized in OCI
unless the recognition of the effects of changes in the liability’s credit risk in OCI would create or enlarge an
accounting mismatch in the consolidated statements of operations and comprehensive income. The remaining
amount of change in the fair value of liability is recognized in the consolidated statements of operations and
comprehensive income. Changes in fair value of a financial liability attributable to the Company’s own credit
risk that are recognized in OCI are not subsequently reclassified to the consolidated statements of operations
and comprehensive income; instead, they are transferred to retained earnings, upon derecognition of the
financial liability.
The Company has made the following financial instrument classifications:
Financial Instrument
Cash
Accounts receivable
Accounts payable and accrued liabilities
Long-term debt
Derivatives not designated as hedging instruments
Derivatives designated as hedging instruments
IFRS 9 Measurement
Amortized cost
Amortized cost
Amortized cost
Amortized cost
FVTPL
Fair value (hedge accounting)
- 71 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
Impairment
IFRS 9 requires a forward-looking Expected Credit Loss (“ECL”) model. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows that the Company
expects to receive.
For accounts receivable, Jamieson applies the simplified approach and has determined the allowance based on
lifetime ECLs at each reporting date. The Company has established a provision that is based on the Company’s
historical credit loss experience, adjusted for forward-looking factors specific to the customers and the economic
environment. There was no transitional adjustment as a result of adopting the new impairment requirements.
Derecognition
A financial asset is derecognized when the rights to receive cash flows from the asset have expired, or the
Company has transferred its rights to receive cash flows from the asset and either (a) the Company has
transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognized in the consolidated statements of operations and comprehensive income.
2.3.10 Derivative financial instruments and hedge accounting
The Company uses derivative financial instruments (primarily forward contracts and swaps) to manage exposure
to fluctuations in foreign currency exchange rates and interest rates. Derivative financial instruments are initially
recognized at fair value on the date the derivative contract is executed and are subsequently remeasured at fair
value each reporting period end.
At the inception of a hedging relationship, the Company designates and formally documents the relationship
between the hedging instrument and the hedged item, the risk management objective, and its strategy for
undertaking the hedge. The documentation identifies the specific asset, liability, or anticipated cash flows being
hedged, the risk that is being hedged, the type of hedging instrument used, and how effectiveness will be
assessed.
The Company also formally assesses, both at inception and at each reporting date thereafter, whether or not the
derivatives that are used in hedging transactions are highly effective in offsetting the changes attributable to the
hedged risks in the fair values or cash flows of the hedged items. If a hedge relationship becomes ineffective, it no
longer qualifies for hedge accounting and any subsequent change in the fair value of the hedging instrument is
recognized in net income.
The Company uses hedge accounting for highly probable forecasted transactions (cash flow hedges). When hedge
accounting is appropriate, the hedging relationship is designated as a cash flow hedge. In a cash flow hedge, the
change in fair value of the hedging instrument is recorded, to the extent it is effective, in other comprehensive
income. If a hedged forecast transaction subsequently results in the recognition of a non-financial asset, the
Company removes that amount from the cash flow hedge reserve and includes it directly in the initial cost of the
inventory.
- 72 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in
other comprehensive income is immediately recognized in the consolidated statements of operations and
comprehensive income.
2.3.11 Inventories
Inventories are valued at the lower of cost and net realizable value. Raw material costs are accounted for using
purchase cost on a first-in, first-out basis. Finished goods and work in progress costs are accounted for using cost
of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs to sell. A provision for obsolescence is calculated based on historical
experience and expiration.
2.3.12 Impairment of non-financial assets
Disclosures relating to impairment of non-financial assets are summarized in the following notes:
• Accounting policy disclosures (Note 2.3.12)
• Disclosures for significant assumptions (Note 3)
• Property, plant and equipment (Note 6)
• Goodwill and intangible assets (Notes 7 and 8)
The Company performs impairment testing annually for goodwill and indefinite-life intangible assets and, when
circumstances indicate that there may be impairment, for other long-lived assets. Management judgment is
involved in determining if there are circumstances indicating that testing for impairment is required, and in
identifying CGUs for the purpose of impairment testing.
The Company assesses impairment by comparing the recoverable amount of a long-lived asset, CGU or CGU
group to its carrying value. The recoverable amount is defined as the higher of: (i) value in use; or (ii) fair value
less cost to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset. In determining fair value less costs to sell, a market multiple approach is used. These calculations are
corroborated by other available fair value indicators.
The determination of the recoverable amount involves significant estimates and assumptions, including those
with respect to valuation multiples, future cash inflows and outflows, discount rates, and asset lives. These
estimates and assumptions could affect the Company’s future results if the current estimates of future
performance and fair values were to change. These determinations will affect the amount of amortization
expense on definite-life intangible assets recognized in future periods.
Where the carrying amount of an asset or CGU (or group of CGUs) exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount. Impairment losses, if any, of continuing
operations are recognized in the consolidated statements of operations and comprehensive income in those
expense categories consistent with the function of the impaired asset.
A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to
determine the asset’s or CGU’s recoverable amount since the last impairment loss was recognized. The reversal is
limited so that the carrying amount of the asset or group of assets does not exceed their recoverable amount, nor
exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognized for the assets in prior years. Such reversal is recognized in the consolidated statements of operations
and comprehensive income. Impairment losses relating to goodwill cannot be reversed in future periods.
- 73 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
2.3.13 Cash
Cash in the consolidated statements of financial position is comprised of cash balances that are subject to an
insignificant risk of changes in value.
2.3.14 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When discounting is used, the subsequent increase in
the provision due to the passage of time is recognized as a finance cost.
2.3.15 Post-retirement benefits
The Company’s post-retirement benefit plan (refer to Note 12) is unfunded and available to all Canadian hourly
union personnel. The plan provides prescription and vision benefits to eligible employees upon attainment of
age 65 with at least 15 years of service.
Post-retirement benefit costs for the plan are actuarially determined using the projected unit credit method pro-
rated on service and management’s best estimate of the appropriate discount rate, health care costs, inflation,
mortality and other decrements. The accrued benefit obligation is based on the present value of future benefits
based on the last actuarial valuation completed as of December 31, 2021.
Current and past years’ service costs, interest income or expenses and gains and losses on curtailments are
recognized in the consolidated statements of operations and comprehensive income as they occur and at the date
of a plan amendment or curtailment.
Re-measurements, comprising actuarial gains and losses, are recognized immediately in the consolidated
statements of financial position with a corresponding debit or credit to OCI in the period in which they occur.
Re-measurements are not reclassified to net income in subsequent periods.
2.3.16 Share-based compensation
The Company has an equity-based compensation plan providing for the issuance of securities under which the
grants will be made by the Company. Under the long-term incentive plan (the “LTIP”), the Board of Directors of
the Company, at its discretion may grant share options, restricted shares, restricted share units in the form of
time-based restricted share units ("RSUs") or performance-based share units (“PSUs”), deferred share units
(“DSUs”), and stock appreciation rights. The awards are settled in Common Shares with a cash settlement
alternative available to the Company.
Share-based compensation costs are accounted for on a fair value basis, as measured at the grant date, which is
generally the date at which both the Company and employee have a mutual understanding of the terms of the
award.
The compensation expense is based on the estimated number of awards that will eventually vest and adjustments
for forfeitures are made as they occur.
Upon exercise of options and settlement of RSUs, PSUs, and DSUs, the amount recognized in contributed
surplus for the award plus the cash received upon exercise is recognized as an increase in share capital.
- 74 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
Options are granted with an exercise price equal to or greater than their fair value, as determined by the closing
price on the TSX immediately preceding the grant date of the shares into which they may be converted. Options
granted to directors of the Company fully vest on the one-year anniversary from the grant date. Options granted
to persons other than directors of the Company vest at a rate of 25% or 33% per year on each anniversary date
from the beginning of the vesting period. Options expire no later than the 10th anniversary of the beginning of
the vesting period or upon termination of employment.
The fair value of the share options is estimated using the Black-Scholes option-pricing model. Several
assumptions are used in the underlying calculation of fair values of the Company’s share options using the Black-
Scholes option-pricing model, including the market value at grant date, expected life of the option, stock-price
volatility, forfeiture rates, and risk-free interest rates.
PSUs, RSUs, and DSUs granted represent the right to receive one Common Share for each PSU, RSU, or DSU.
Prior to 2021, PSUs granted vest on the third anniversary of the grant date if the weighted average price of the
Common Shares on the TSX for the 90-day period immediately preceding the third anniversary of the grant
date, measured over the three year term of the PSUs, increases 6% or more annually (using a compound annual
growth rate) over the weighted average price of the Common Shares on the TSX for the 90 day period
immediately preceding the grant date. PSUs granted in 2021 vest on the third anniversary of the grant date
based on the Company’s total shareholder return (“TSR”) compared to a principal peer group.
The Company has determined that the above specified performance condition represents a market condition.
Accordingly, the Company recognizes the compensation cost over the vesting period, irrespective of whether the
market condition is satisfied, provided that service conditions are satisfied.
The fair value of PSUs is estimated at grant date using the Monte Carlo simulation. Prior to 2021, several inputs
and assumptions are used in the underlying calculation of fair values of the Company’s PSUs, including the
market value of a Common Share at grant date, expected dividend and stock-price volatility. For PSUs granted
in 2021, the model simulates the TSR and compares it against the principal peer group. It takes into account the
share price volatility of the Company relative to that of its peer group so as to predict the share performance.
RSUs granted to directors of the Company fully vest on the one-year anniversary from the grant date. RSUs
granted to persons other than directors of the Company vest at a rate of 33% per year on each anniversary date
from the beginning of the vesting period. The fair value of RSUs is measured at grant date based on the market
value of a Common Share at grant date.
DSUs fully vest on the one-year anniversary from the grant date and are exercised upon termination of
employment. The fair value of DSUs is measured at grant date based on the market value of a Common Share at
grant date.
Employee share purchase plan
The Company maintains an employee share purchase plan (“ESPP”) for all eligible employees. Employees can
contribute any amount of their eligible earnings subject to an annual cap of 10% of aggregate base salary and
commissions to the ESPP. Share purchases occur 14 days following the end of the Company’s fiscal quarter (the
“Purchase Date”), or the first business day thereafter if any Purchase Date is not a business day. Eligible
employees are able to purchase Common Shares at 90 percent of the volume weighted average closing price on
the TSX on the five trading days immediately preceding the Purchase Date.
Employees pay for their share purchases through payroll deductions at a rate equal to any whole percentage
from 1 percent to 10 percent.
Contributions to the ESPP are recorded as share capital at each Purchase Date.
- 75 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
A maximum of 10% of the issued Common Shares outstanding are reserved for issuance under the LTIP, the
ESPP and the Company’s legacy option plan combined.
2.3.17 Leases
The Company assesses at contract inception whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
The Company has applied judgment to determine the lease term for some lease contracts that include renewal
options. The assessment of whether the Company is reasonably certain to exercise such options impacts the
lease term, which affects the amount of lease liabilities and right-of-use assets recognized.
The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to
use the underlying assets during the lease term for all leases.
Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives received. The recognized right-of-use assets are
depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use
assets are subject to impairment.
The Company’s right-of-use assets are included in property, plant, and equipment.
Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments (including in-
substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index
or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the
lease commencement date if the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the
assessment to purchase the underlying asset.
The Company’s lease liabilities are included in other long-term liabilities.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and
do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases
of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-
value assets are expensed on a straight-line basis over the lease term.
- 76 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
3. Significant accounting judgments, estimates and assumptions
The preparation of the Company’s consolidated financial statements requires management to make judgments,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that require a material adjustment to the carrying amount of assets or
liabilities affected in future periods.
The Company’s significant accounting judgments, estimates and assumptions are affected as a result of the
various ongoing economic and social impacts of COVID-19 and variants of concern. There continues to be
significant uncertainty as to the likely effects of this outbreak which may, among other things, impact its
employees, suppliers, and customers. It is not possible to predict the impact COVID-19 will have on the
Company, its financial position, and the results of operations in the future. The Company is monitoring the
future impact of the pandemic on all aspects of its business.
Judgments
The Company has identified the following judgments, apart from estimates, that management made in the
process of applying the Company’s accounting policies, and that have the most significant effect on the amounts
recognized in the consolidated financial statements.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are described below. The Company based its assumptions and estimates on
parameters available when the consolidated financial statements were prepared. Existing circumstances and
assumptions about future developments, however, may change due to market changes or circumstances arising
beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Estimating variable consideration for returns, trade merchandise allowances and sales promotional incentives
The Company uses historical customer return data to determine the expected return percentages. These
percentages are applied to determine the expected value of the variable consideration. Any significant changes in
experience as compared to historical return pattern will impact the expected return percentages estimated by the
Company.
The Company provides for estimated payments to customers based on various trade programs and sales
promotional incentives. The Company estimates the most likely amount payable to each customer for each trade
and incentive program separately using (i) the projected level of sales volume for the relevant period; (ii)
customer rates for allowances, discounts, and rebates; (iii) historical spending patterns; and (iv) sales lead time.
These arrangements are complex and there are a significant number of customers and products affected.
Management has systems and processes in place to estimate and value these obligations.
The Company updates its expected return, trade merchandise allowances and sales promotional incentives on a
quarterly basis and the refund liability and trade and promotional accruals are adjusted accordingly. To the
extent that payments differ from estimates of the related liability, accounts payable and accrued liabilities, net
income, and comprehensive income will be affected in future periods.
- 77 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
Valuation of inventory
Management makes estimates of the future customer demand for products when establishing appropriate
provisions for inventory. In making these estimates, management considers the product life of inventory and the
profitability of recent sales of inventory. In many cases, products sold by the Company turn quickly and
inventory on-hand values are low, thus reducing the risk of inventory obsolescence. However, code or “best
before” dates are very important in the determination of realizable value of inventory. Management ensures that
systems are in place to highlight and properly value inventory that may be approaching code dates. To the extent
that actual losses on inventory differ from those estimated, inventory, net income, and comprehensive income
will be affected in future periods.
Receivables and allowance for expected credit losses
The Company is exposed to credit risk with respect to amounts receivable from customers. The Company’s
allowance is determined by historical experiences, and considers factors including, the aging of the balances, the
customer’s credit worthiness, and updates based on the current economic conditions, expectation of
bankruptcies, and the political and economic volatility in the markets/location of customers.
Long-lived assets valuation
The Company performs impairment testing annually for goodwill and indefinite-life intangible assets and when
circumstances indicate long-lived assets may be impaired. Management judgment is involved in determining if
there are circumstances indicating that testing for impairment is required, and in identifying CGUs for the
purpose of impairment testing. The Company assesses impairment by comparing the recoverable amount of a
long-lived asset, CGU, or CGU group to its carrying value. The recoverable amount is defined as the higher of: (i)
value in use; or (ii) fair value less costs of disposal.
The determination of the recoverable amount involves significant estimates and assumptions. Fair value less
costs to sell is determined using market multiples. Value in use is determined using future cash inflows and
outflows, discount rates, growth rates and asset lives. These estimates and assumptions could affect the
Company’s future results if the current estimates of future performance and fair values change. These
determinations will affect the amount of amortization expense on definite-life intangible assets recognized in
future periods.
Measurement of fair values
A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities. When the measurement of fair values cannot be determined
based on quoted prices in active markets, fair value is measured using valuation techniques and models. The
inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree
of judgment is required in establishing fair values. Changes in assumptions about the inputs to these models
could affect the reported fair value of the Company’s financial and non-financial assets and liabilities.
Tangible and intangible assets acquired through business combinations are initially recorded at their fair values
based on assumptions of management. These assumptions include estimating the cost of tangible assets and
future expected cash flows arising from intangible assets identified. Financial instruments acquired are
determined based on the amortized costs at the acquisition date that approximate their carrying values.
To the extent that these estimates differ from those realized, the measured asset or liability, net income, and/or
comprehensive income will be affected in future periods. Information about the valuation techniques and inputs
used in determining the fair value of various assets and liabilities are disclosed in Notes 7, 12, 15, 16 and 19.
Taxes
The calculation of current and deferred income taxes requires the Company to make estimates and assumptions
and to exercise judgment regarding the carrying values of assets and liabilities that are subject to accounting
estimates inherent in those balances, the interpretation of income tax legislation across various jurisdictions,
- 78 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
expectations about future operating results, the timing of reversal of temporary differences and possible audits of
income tax filings by the tax authorities.
Changes or differences in underlying estimates or assumptions may result in changes to the current or deferred
income tax balances on the consolidated statements of financial position, a charge or credit to income tax
expense in the consolidated statements of operations and comprehensive income and may result in cash
payments or receipts.
All income, capital and commodity tax filings are subject to audits and reassessments. Changes in interpretations
or judgments may result in a change in the Company's income, capital or commodity tax provisions in the future.
The amount of such a change cannot be reasonably estimated.
Useful lives of property, plant and equipment and intangible assets with finite useful lives
The Company employs significant estimates to determine the estimated useful lives of property, plant and
equipment and intangible assets with finite useful lives, including assets arising from business combinations,
considering industry trends such as technological advancements, past experience, expected use and review of
asset lives.
Components of an item of property, plant and equipment may have different useful lives. The Company makes
estimates when determining depreciation methods, depreciation rates and asset useful lives, which requires
taking into account industry trends and company-specific factors. The Company reviews these decisions at least
once each year or when circumstances change. The Company will change depreciation methods, depreciation
rates or asset useful lives if they are different from previous estimates.
4.
Accounts Receivable
As at December 31,
Trade
Other miscellaneous receivables
Allowance for expected credit losses
2021
$
103,623
666
(103)
104,186
2020
$
96,647
1,407
(103)
97,951
The Company maintains an allowance for expected credit losses that represents its estimate of uncollectible
amounts based on the Company’s historical credit loss experience, adjusted for forward-looking factors specific
to the customers and the economic environment.
For the year ended December 31, 2021, the Company has written off $nil (2020 - $1,796) of receivables from a
strategic partner customer whose retail business was impacted by COVID-19.
The aging of receivables is as follows:
As at December 31,
Current
Aged 1-30 days past due
Aged 31-60 days past due
Aged > 60 days past due
Allowance for expected credit losses
- 79 -
2021
$
92,778
7,731
1,889
1,891
(103)
104,186
2020
$
81,097
14,406
913
1,638
(103)
97,951
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
5.
Inventories
As at December 31,
Raw material and packaging
Bulk product and work in process
Packaged finished goods
Inventory provision
Inventories expensed during the year
2021
$
46,750
21,897
53,204
(2,845)
119,006
261,129
2020
$
52,565
18,269
34,605
(2,794)
102,645
240,156
An inventory provision is estimated by management based on historical sales, inventory aging and expiry, and
expected future sales and is included in cost of sales. Subsequent changes to the provision are recorded in cost of
sales in the consolidated statements of operations and comprehensive income.
For the year ended December 31, 2021, inventory write-downs of $4,843 were expensed through cost of sales
(2020 - $1,801 net of recoveries).
6.
Property, plant and equipment
Cost
At Janurary 1, 2020
Additions
Disposals
At December 31, 2020
Additions
Disposals
At December 31, 2021
Accumulated Depreciation
At Janurary 1, 2020
Depreciation for the year
Disposals
At December 31, 2020
Depreciation for the year
Disposals
At December 31, 2021
Net book value
At December 31, 2021
At December 31, 2020
Land
$
Buildings
$
2,497
-
-
2,497
-
-
2,497
-
-
-
-
-
-
-
24,420
1,333
(5)
25,748
2,525
-
28,273
6,410
869
(2)
7,277
941
-
8,218
Machinery
and
equipment
$
44,841
8,959
(132)
53,668
18,369
(290)
71,747
17,201
3,913
(101)
21,013
4,683
(152)
25,544
Right-of-use
Assets
(Note 14)
$
12,925
15,939
(30)
28,834
1,841
(230)
30,445
2,006
2,588
(24)
4,570
3,448
(216)
7,802
Other
$
9,627
959
(6)
10,580
604
-
11,184
3,787
890
(6)
4,671
934
-
5,605
Total
$
94,310
27,190
(173)
121,327
23,339
(520)
144,146
29,404
8,260
(133)
37,531
10,006
(368)
47,169
2,497
2,497
20,055
18,471
46,203
32,655
22,643
24,264
5,579
5,909
96,977
83,796
Other is comprised of furniture and fixtures, computer equipment, and leasehold improvements.
7.
Goodwill
Goodwill acquired through business combinations is allocated to the Jamieson Brands operating segment for the
purpose of impairment testing, which is expected to benefit from the synergies of the business combination in
which the goodwill arose.
- 80 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
The estimated recoverable amount was determined by the Company as the fair value less costs of disposal of the
Jamieson Brands operating segment by using the capitalized adjusted EBITDA approach, based on a multiple
range of 13x - 15x (2020 - 13.5x - 15.5x ) whereby the Company referenced comparable companies in determining
adjusted EBITDA multiples. Comparable companies were determined by reference to size and operation in
similar industries.
The impairment analysis is not sensitive to reasonable possible changes to the multiple.
There have been no impairment losses recognized against goodwill for the years ended December 31, 2021 and
2020.
8.
Intangible assets
Cost
At January 1, 2020
Additions
At December 31, 2020
Additions
At December 31, 2021
Accumulated amortization
At January 1, 2020
Amortization charge for the year
At December 31, 2020
Amortization charge for the year
At December 31, 2021
Net book value
At December 31, 2021
At December 31, 2020
Customer
relationships
$
Trademarks
$
Registrations,
licenses, and
other
$
101,585
-
101,585
-
101,585
19,532
3,419
22,951
3,419
26,370
115,124
33
115,157
-
115,157
-
-
-
-
-
1,345
1,885
3,230
786
4,016
333
530
863
849
1,712
Total
$
218,054
1,918
219,972
786
220,758
19,865
3,949
23,814
4,268
28,082
75,215
78,634
115,157
115,157
2,304
2,367
192,676
196,158
The carrying amount of indefinite-life intangible assets is comprised of trademarks, of which $68,000 is
allocated to the domestic and international sales CGU and $47,157 is allocated to the specialty brands sales CGU
(comprised of previous acquisitions of Body Plus Nutritional Products Inc., Sonoma Nutraceuticals Inc., and
Lorna Vanderhaeghe Health Solutions Inc.).
The estimated recoverable amount for the domestic and international sales CGU was determined by the
Company as the fair value less costs of disposal of the CGU by using the capitalized adjusted EBITDA approach,
based on a multiple range of 13x - 15x (2020 - 13.5x - 15.5x ), whereby the Company referenced comparable
companies in determining adjusted EBITDA multiples. Comparable companies were determined by reference to
size and operation in similar industries. The estimated recoverable amount for the specialty brands sales CGU
was determined by the Company as the value in use of the CGU by using the discounted cash flow approach. The
Company’s estimates include projected future sales and earnings, capital investments consistent with strategic
plans and discount rates consistent with external industry information reflecting the risk associated with the
specific cash flows.
Other indefinite-life intangible assets are comprised of patents, registrations, definite-life trademarks, system
implementation, and website development costs. No impairment losses were recognized against intangible assets
during the years ended December 31, 2021 and 2020.
- 81 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
9.
Accounts payable and accrued liabilities
As at December 31,
Trade payables and accrued liabilities
Trade and promotional accruals
Refund liabilities
Salaries, commissions and bonuses
Termination benefits
Accrued interest - current
10. Related party transactions
2021
$
30,271
27,647
4,198
12,143
194
80
74,533
2020
$
38,618
19,916
3,950
10,350
104
146
73,084
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and are not disclosed in this note.
Share-based compensation
The Company offers its employees a share-based compensation plan. Please refer to Note 16 for details of the
share-based compensation awards.
Compensation of key management personnel of the Company
Key management personnel are those persons having authority and responsibility for planning, directing, and
controlling the activities of the Company and/or its subsidiaries, directly or indirectly, including any non-executive
director of the Company.
Remuneration of key management personnel including C-suite executives of the Company is comprised of the
following expenses:
For the years ended December 31,
Short-term employee benefits
Share-based compensation
Total remuneration
2021
$
5,929
3,993
9,922
2020
$
5,187
2,947
8,134
The amounts disclosed in the table are the amounts recognized as an expense during the reporting period related
to key management personnel. In the current year, it includes $1,498 of share-based compensation expense in
relation to the Company’s CEO transition.
11.
Long-term debt
On September 27, 2019, Jamieson Laboratories Ltd. (“JLL”) amended and restated its credit agreement to add
Jamieson Health Products USA Ltd. (collectively with JLL the “Borrowers”) as a co-borrower and to provide a
secured revolving facility of $275,000 (including a $10,000 swingline facility) with the option to increase the
revolving facility by $200,000 (collectively, the “Credit Facilities”). The Credit Facilities mature on September
27, 2024 with the outstanding principal repayable in full on this date.
- 82 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
The table below illustrates the drawings and repayments applied against the Credit Facilities.
For the years ended December 31,
Credit Facilities
Drawings
Repayments
2021
$
72,886
(72,819)
67
2020
$
60,292
(76,003)
(15,711)
For the year ended December 31, 2021, the weighted average interest rate on the Credit Facilities was 2.7%
(2020 - 3.1%).
The Credit Facilities are collateralized by security agreements and first charges over the assets including
property, plant and equipment and intellectual property of the Borrowers and its certain other subsidiaries of
JLL, subject to permitted liens.
Under the terms of the Credit Facilities, the Borrowers are subject to restrictive covenants and must maintain an
interest coverage ratio of not less than 3.00:1.00 and a leverage ratio not greater than 4.00:1.00.
The Borrowers are in compliance with all covenants as of December 31, 2021 and 2020.
12.
Post-retirement benefits
The Company maintains an unfunded post-retirement benefit plan that provides health and vision care coverage
to retirees at age 65 with 15 or more years of service. The Company uses actuarial reports prepared by
independent actuaries to measure its accrued obligation for funding and accounting purposes.
Changes in the present value of the post-retirement benefit plan are as follows:
As at December 31,
Balance, beginning of the year
Benefits paid
Actuarial gain
Interest costs
Current service costs
Balance, end of the year
2021
$
3,538
(9)
(233)
(34)
282
3,544
2020
$
3,923
(28)
(785)
127
301
3,538
The following significant economic assumptions were employed to determine the accrued benefit obligation:
As at December 31,
Benefit obligations
Discount rate - expense for the year
Discount rate - year-end obligation
Drug trend rate
2021
%
2.75
3.00
4.50
2020
%
3.25
2.75
4.50
- 83 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
Impact of an increase/decrease in the health care trend of 1%:
As at December 31,
1% Increase
1% Decrease
1% Increase
1% Decrease
1% Increase
1% Decrease
Accrued benefit obligation
Service cost
Interest cost
2021
2020
1,103
1,064
(803)
(775)
97
104
(68)
(72)
33
29
(24)
(21)
The sensitivity analyses above have been determined based on a method that extrapolates the impact on the
post-retirement benefit obligation as a result of reasonable changes in key assumptions occurring at the end of
the reporting period. The sensitivity analyses are based on a change in a significant assumption, keeping all other
assumptions constant. The sensitivity analysis may not be representative of an actual change in the post-
retirement benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one
another. The same method has been applied for the sensitivity analysis as used to calculate the recognized post-
retirement liability.
The following payments are expected contributions to the post-retirement benefit plan in future years:
As at December 31,
Within one year
Between 2 and 5 years
Between 5 and 10 years
Total expected payments
2021
$
25
166
395
586
2020
$
21
136
354
511
As of January 30, 2022, the Company will transition its current employer-sponsored group RRSP plan for certain
production hourly employees to participation in The Colleges of Applied Arts and Technology Pension Plan (the
“CAAT Plan”). The CAAT Plan is a multi-employer, jointly sponsored defined benefit pension plan which is
financed by contributions from participating members and participating employers, and by investment earnings.
The Company’s participation in the CAAT Plan will be accounted for as a defined contribution pension plan, where
the Company’s contributions are expensed as incurred. The Company does not bare any performance risk on plan
investments and are not required to fund the plan beyond the required annual contributions.
13.
Income taxes
The major components of income tax expense for the years ended December 31 are as follows:
Years ended December 31,
Current income tax expense
Deferred income tax expense
Provision for income taxes
2021
$
18,844
(461)
18,383
2020
$
13,508
1,942
15,450
- 84 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
Reconciliation of effective tax rate
Income tax expense varies from the amount that would be computed by applying the combined federal and
provincial statutory income tax rates as a result of the following:
As at December 31,
Income tax expense at combined statutory rate of 25.3% (2020 -
25.2%)
Non-deductible expenses
Share-based compensation
Other and deductible temporary differences not benefited
Income tax recognized in other comprehensive income
As at December 31,
Derivative instruments
Post-retirement benefit plan
Deferred income tax assets and liabilities
2021
$
17,817
38
428
100
18,383
2021
$
(1,787)
(61)
(1,848)
2020
$
14,380
91
1,074
(95)
15,450
2020
$
1,756
(198)
1,558
Deferred income tax assets and liabilities arise on the timing differences between accounting and tax treatment
of goodwill and intangible assets, property plant and equipment, post-retirement employee benefit obligations,
deferred financing fees, and non-capital losses carried forward.
Deferred income tax assets and liabilities are comprised of the following:
As at December 31,
Non-capital losses carried forward
Deferred financing fees
Post retirement
Property, plant and equipment
Goodwill and intangible assets
Other
Total deferred income tax liabilities
Classified in the consolidated financial statements as:
Deferred income tax assets
Deferred income tax liabilities
Net deferred income tax liabilities
2021
$
4,532
137
900
(11,124)
(45,736)
702
(50,589)
2,702
(53,291)
(50,589)
2020
$
1,923
1,179
896
(9,270)
(46,316)
2,370
(49,218)
2,261
(51,479)
(49,218)
The Company has Canadian and foreign based non-capital loss carry forwards as at December 31, 2021 of $17,230
(2020 - $7,382) on a pre-tax basis. The Canadian non-capital loss expires in 2038-2041. The foreign non-capital
loss expires from 2023 to indefinitely.
- 85 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
14.
Leases
The Company has lease contracts for various items of property, plant, vehicles and other equipment used in its
operations. Leases of property and plant generally have lease terms between 3 and 10 years, while motor
vehicles and other equipment generally have lease terms between 2 and 5 years.
Set out below are the carrying amounts of right-of-use assets and lease liabilities recognized and the movements
during the period:
As at January 1, 2020
Additions
Disposals
Depreciation Expense
Interest Expense
Prepaid Adjustment
Payments
As at December 31, 2020
Additions
Disposals
Depreciation Expense
Interest Expense
Prepaid Adjustment
Payments
As at December 31, 2021
Property and
Plant
$
10,018
15,939
(6)
(2,300)
-
-
-
23,651
1,228
-
(3,217)
-
-
-
21,662
Right-of-use assets
Vehicles
$
168
-
-
(113)
-
-
-
55
-
(14)
(27)
-
-
-
14
Other
Equipment
$
733
-
-
(175)
-
-
-
558
613
-
(204)
-
-
-
967
Total
$
10,919
15,939
(6)
(2,588)
-
-
-
24,264
1,841
(14)
(3,448)
-
-
-
22,643
Lease
liabilities
$
11,356
15,939
(7)
-
686
42
(3,047)
24,969
1,841
(14)
-
927
145
(4,120)
23,748
The following table shows the maturity profile of the Company’s financial liabilities based on contractual
undiscounted payments as at December 31, 2021:
As at December 31,
Within one year
After one year but not more than five years
More than five years
2021
$
3,801
15,843
13,019
32,663
2020
$
4,005
12,210
13,571
29,786
The future cash outflows relating to leases that have not yet commenced are disclosed in Note 20.
- 86 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
15.
Share capital and redeemable preferred shares
As at January 1, 2021
Exercise of stock options
Employee stock purchase plan
As at December 31, 2021
As at January 1, 2020
Exercise of stock options
Employee stock purchase plan
As at December 31, 2020
Common Shares
#
39,872,912
517,277
16,751
40,406,940
Common Shares
#
38,989,942
867,301
15,669
39,872,912
$
255,795
11,862
557
268,214
$
243,224
12,122
449
255,795
As at December 31, 2021 and 2020, the authorized share capital consisted of:
a) Unlimited number of Common Shares. The holders of Common Shares are entitled to receive dividends as
declared from time to time, and are entitled to one vote per share at meetings of the Company.
b) Unlimited number of Preference Shares, issuable in series.
16.
Share-based compensation
Outstanding options held to purchase Common Shares have the following expiry dates and exercise prices:
2021 Outstanding Options
2021 Exercisable Options
Range of Exercise
Prices
$0.00-$20.00
$20.01-$30.00
>$30.01
Number of
Options
Outstanding
853,247
1,268,393
455,198
Weighted
Average
Remaining
Contractual Life
(Years)
Weighted
Average
Exercise
Price/Share
Number of
Exercisable
Options
Weighted
Average
Exercise
Price/Share
4.75
4.64
5.29
12.32
23.56
34.52
853,247
666,865
-
12.32
23.33
-
The following is a summary of the Company’s share option plan activity for the years ended December 31:
2021
2020
Number of
Shares
Weighted
Average
Exercise
Price/Share
Number of
Shares
Weighted
Average Exercise
Price/Share
Outstanding, beginning of year
Granted
Exercised
Forfeited
Outstanding, end of year
Exercisable, end of year
2,546,553
461,566
(412,571)
(18,710)
2,576,838
1,520,112
- 87 -
19.19
34.52
19.82
27.45
21.77
17.15
2,919,776
515,862
(858,301)
(30,784)
2,546,553
1,274,953
15.79
25.75
11.40
22.75
19.19
15.52
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
The following is a summary of the Company’s PSU, RSU, and DSU activity for the years ended December 31:
Outstanding awards, beginning of year
Granted
Exercised
Forfeited
Outstanding awards, end of period
Awards exercisable, end of period
Outstanding awards, beginning of year
Granted
Exercised
Outstanding awards, end of period
Awards exercisable, end of period
PSUs
(number of
shares)
2021
RSUs
(number of
shares)
DSUs
(number of
shares)
256,894
39,909
(95,706)
(3,061)
198,036
-
9,000
62
(9,000)
-
62
-
-
17,016
-
(1,453)
15,563
-
2020
PSUs (number
of shares)
RSUs (number
of shares)
187,903
68,991
-
256,894
-
18,000
-
(9,000)
9,000
-
The inputs used in measuring the fair value of equity-based compensation granted during the years ended
December 31 are shown in the tables below.
2021
Type of compensation
Weighted average share price at the
measurement date
Weighted average fair value at the grant
date
Expected volatility (i)
Risk-free interest rate (ii)
Expected life (in years) (iii)
Expected dividend yield
Pricing Model
Options
PSUs
DSUs
RSUs
$
34.52
$
34.47
$
34.46
$
40.93
$
7.35
29%-30%
0.7%-0.9%
4.0-5.5
1.4%-1.5%
Black-Scholes
$
39.00
n/a
0.9%
3.0
n/a
Monte Carlo
$
34.46
n/a
n/a
n/a
n/a
Market Value
$
40.93
n/a
n/a
n/a
n/a
Market Value
(i)
(ii)
(iii)
Estimated by considering historical share price volatility. The expected volatility reflects the assumption
that the historical volatility over a period similar to the life of the options is indicative of future trends,
which may not necessarily be the actual outcome.
Based on Government of Canada Bonds.
Based on historical data and current expectations and is not necessarily indicative of exercise patterns
that may occur.
- 88 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
2020
Type of compensation
Weighted average share price at the measurement date
Weighted average fair value at the grant date
Expected volatility (i)
Risk-free interest rate (ii)
Expected life (in years) (iii)
Expected dividend yield
Pricing Model
$
$
Options
25.75
5.25
27.0%
1.6%
4.0-5.5
1.6%
Black-Scholes
$
$
PSUs
25.75
20.00
22%-32%
2.0%
3.0
1.6%
Monte Carlo
(i)
(ii)
(iii)
Estimated by considering comparable industry share price volatility. The expected volatility reflects the
assumption that the historical volatility over a period similar to the life of the options is indicative of
future trends, which may not necessarily be the actual outcome.
Based on Government of Canada Bonds.
Based on historical data and current expectations and is not necessarily indicative of exercise patterns
that may occur.
The Company’s share-based compensation expense for the year ended December 31, 2021 is $5,672 (2020 -
$4,925), of which $5,476 (2020 - $4,574) is classified as contributed surplus in the Company’s consolidated
financial statements and $196 (2020 - $351) is related to employment taxes paid on exercise of options. In the
second quarter of the current year, the Company accelerated $1,498 of share-based compensation expense in
relation to the Company’s CEO transition.
17.
Employee benefits expense
The Company recognized employee benefit expenses included in cost of sales and selling, general and
administrative expenses on the consolidated statements of operations and other comprehensive income as
follows:
For the year ended December 31,
Salaries, wages and bonus
Other employee benefits
Post-retirement benefits (Note 12)
2021
$
77,482
15,622
248
93,352
2020
$
67,310
13,602
428
81,340
Additionally, the Company recognized termination benefits for the year ended December 31, 2021 of $1,124 (2020
- $350) related to reorganization. The costs related to both years are mainly comprised of severance costs and
salary continuances.
18.
Interest expense and other financing costs
As at December 31,
Interest on debt and borrowings
Interest on lease liabilities (Note 14)
2021
$
4,730
927
5,657
2020
$
5,356
686
6,042
- 89 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
19.
Financial instruments and risk management activities
Financial instruments
The Company’s financial assets and liabilities have been classified in Note 2.
Fair value measurement
Foreign exchange forward contracts measured at FVOCI are designated as hedging instruments in cash flow
hedges for forecast purchases and sales in U.S. dollars and have been classified as Level 2 in the fair value
hierarchy. Interest rate swaps measured at FVOCI are designated as hedging instruments in cash flow hedges
and have been classified as Level 2 in the fair value hierarchy. Derivatives not designated in a formal hedging
relationship are classified as FVTPL and classified as Level 2 in the fair value hierarchy. Net gains and losses on
financial instruments held for trading consist of realized and unrealized gains and losses on derivatives that
were de-designated or were otherwise not in a formal hedging relationship.
The Company is holding the following foreign exchange forward contracts:
Less than 1
month
1 to 3
months
3 to 6
months
Maturity
6 to 9
months
9 to 12
months
Beyond 12
months
Total
As at December 31, 2021
Purchases
Notional Amount ($USD)
Average forward rate (USD/CAD)
Sales
5,000
1.34
10,000
1.34
15,000
1.34
15,000
1.30
15,000
1.30
Notional Amount ($USD)
Average forward rate (USD/CAD)
1,000
1.28
8,000
1.28
11,000
1.27
9,000
1.28
16,000
1.28
-
-
-
-
60,000
45,000
As at December 31, 2020
Purchases
Notional Amount ($USD)
Average forward rate (USD/CAD)
5,000
1.35
10,000
1.35
15,000
1.35
12,000
1.34
15,000
1.35
60,000
1.32
117,000
The fair values and notional amounts of derivative financial instruments shown below are as at December 31:
As at December 31,
Foreign currency forward contract designated as
hedging instruments (forecast purchases)
Foreign currency forward contract designated as
hedging instruments (forecast sales)
Interest rate swaps designated as hedging
instruments
2021
2020
Notional Notional
Amount
Amount
$USD
$CAD
Fair Value
Asset Liability
$
$
Notional
Amount
$CAD
Notional
Amount
$USD
Fair Value
Asset
$
Liability
$
-
-
60,000
-
(3,317)
(45,000)
264
-
-
-
117,000
-
130,000
130,000
-
15,000
1,885
2,149
-
(3,317)
140,000
140,000
-
117,000
-
-
-
-
(6,811)
-
(1,420)
(8,231)
On June 5, 2020, the Company entered into an interest rate swap with an effective date of October 1, 2020 to
September 27, 2024 with a notional principal of $140,000 and an annual amortization of $10,000 on the first
business day of each year. The notional principal of the interest rate swap is $130,000 as at the end of this
reporting period. The interest rate swap is a derivative measured at fair value and meets hedge accounting
requirements.
The terms of the foreign currency forward contracts and interest rate swaps match the terms of the expected
highly probable forecast transactions. As a result, there is no hedge ineffectiveness to be recognized in the
consolidated statements of operations and comprehensive income.
- 90 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
Potential sources of hedge ineffectiveness are:
• Differences in the timing of the cash flows of the hedged items and the hedging instruments;
• The counterparty’s credit risk differently impacting the fair value movements of the hedging instruments and
hedged items; and
• Changes to the forecasted amount of cash flows of hedged items and hedging instruments.
The carrying values of financial assets and liabilities measured at amortized cost (excluding long-term debt)
approximate their fair values due to their short-term nature.
The carrying value of long-term debt as at December 31, 2021 and December 31, 2020 approximates their fair
value. The fair value of the Company’s long-term debt was estimated based on discounted future cash flows
using current rates for similar financial instruments subject to similar risks and maturities. The fair value of
long-term debt is considered a Level 2 fair value measurement.
There were no transfers between levels during 2021 and 2020.
Financial instrument risk management objectives and policies
The Company is exposed to credit risk, market risk and liquidity risk. The Company’s senior management
oversees the management of these risks. The Company’s financial instruments and policies for managing these
risks are detailed below.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial
loss to the Company. The Company is exposed to credit risk from its customers (primarily related to trade
accounts receivable) in the normal course of business. The Company has adopted a policy of only dealing with
creditworthy counterparties. To mitigate this risk, the Company carries out regular credit evaluations and
purchases credit insurance for international customers, where appropriate, as a means of mitigating the risk of
financial loss from defaults.
The Company is also exposed to counterparty credit risk inherent in its financing activities, trade receivable
insurance, foreign currency derivatives and interest rate derivatives. The Company has assessed these risks as
minimal.
Market risk
Foreign exchange risk
Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign
exchange rates relates primarily from transactions in U.S. dollars such as a portion of trade accounts payable,
trade accounts receivable and cash.
The Company uses foreign exchange forward contracts to manage foreign exchange transaction exposure. As of
December 31, 2021, $79,317 (2020 - $156,124 ) of anticipated foreign currency denominated purchases have
been hedged and $57,275 (December 31, 2020 - $nil) of anticipated foreign currency denominated sales have
been hedged with underlying foreign exchange forward contracts settling at various dates in the 12 months
proceeding the consolidated statements of financial position date.
- 91 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
The following table demonstrates the sensitivity to a reasonably possible change in the U.S. dollar exchange rate,
with all other variables held constant, of the Company’s net income before income taxes (due to changes in the
fair value of monetary assets and liabilities including non-designated foreign currency derivatives) and the
Company’s pre-tax OCI (due to changes in the fair value of foreign exchange forward contracts designated as
cash flow hedges).
As at December 31,
2021
2020
Change in U.S.$
FX rate
%
Effect on
earnings (loss)
before tax
$
Effect on pre-tax
OCI
$
5
5
1,602
881
750
5,850
The Company’s exposure to foreign currency changes for all other currencies is not material.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Company’s accounts receivable and accounts payable are non-
interest bearing. The Company’s exposure to the risk of changes in market interest rates arises from long-term
debt obligations issued at fixed rates that create fair value interest rate risk and variable rate borrowings that
create cash flow interest rate risk .
The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and
borrowings. To further reduce the long-term interest rate exposure and gain predictability over future cash
flows, the Company uses interest rate swaps, in which it agrees to exchange, at specified intervals, the difference
between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal
amount.
With all other variables held constant, the sensitivity to a reasonably possible change in interest rates on floating
rate borrowings of the Company would have the following impact to net earnings before taxes:
As at December 31,
2021
2020
Increase/decrease
in basis points
+/-
Effect on earnings
(loss) before tax
$
100
100
417
318
Changes in market interest rates cause the fair value of long-term debt with fixed interest rates to fluctuate but
do not affect net earnings, as the Company’s debt is carried at amortized cost and the carrying value does not
change as interest rates change.
Commodity price risk
The Company is exposed to price risk related to purchases of certain commodities used as raw materials. The
Company may use fixed price contracts with suppliers to mitigate commodity price risk. Concentration in any
one raw material is not significant to the Company.
- 92 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
Liquidity risk
Liquidity risk is the risk the Company will not be able to meet its financial obligations associated with financial
liabilities. The Company is exposed to this risk mainly in respect of its accounts payable and accrued liabilities,
various long-term debt agreements, obligations under its post-retirement benefits plan and lease commitments.
The Company manages its liquidity risk through continuous monitoring of its forecast and actual cash flows and
through the management of its capital structure. The Company continually revises its available liquid resources
as compared to the timing of the payment of liabilities to manage its liquidity risk.
As at December 31, 2021, the Company had $132,652 in cash and available revolving and swingline facilities.
The contractual undiscounted principal cash flows payable in respect of financial liabilities as at the
consolidated statements of financial position date were as follows:
As at December 31,
Amounts payable in more than 12 months
Amounts payable in less than 12 months
Impact of COVID-19
2021
$
181,531
78,334
259,865
2020
$
178,377
77,089
255,466
The COVID-19 pandemic continued to impact businesses globally throughout 2021 and there is a continuing risk
that the COVID-19 pandemic may impact the results of operations or financial condition. Any prolonged retail or
manufacturing closures could impact the Company’s ability to service its customers and consumers. An outbreak
within the Company’s operating facilities could result in absenteeism or a plant closure for an extended duration.
Suppliers may experience a business disruption which could impact the supply of raw materials or components
required for production. Limitations on transportation or border closures may result in shipment delays from the
Company’s suppliers or to its customers. The duration and impact of the COVID-19 pandemic remains unknown.
This includes the rate and manner in which vaccines are distributed, as well as vaccine efficacy against future
COVID-19 variants and strains. The Company continues to review its safety protocols to reflect new government
or public health recommendations. The Company has not benefited from nor applied for any government
financial aid or relief relating to the COVID-19 pandemic.
Capital
The Company’s objective is to maintain a cost-effective capital structure that supports its long-term growth
strategy, supports the business and maximizes shareholder value. The Company typically uses leverage in its
capital structure to reduce the cost of capital. The Company’s goal is to maintain its primary credit ratios and
leverage at levels that are designed to provide continued access to investment-grade credit pricing and terms.
The Company measures its credit profile using a number of metrics, some of which are non-IFRS measures,
primarily cash, less long-term debt and bank indebtedness (“net cash (debt)”) to earnings before interest,
income taxes, depreciation, amortization, restructuring and other related costs, and interest coverage.
Additionally, the Company maintains a cash flow reserve to service obligations as they come due.
In addition to Credit Facilities and equity, the Company uses leases as additional sources of financing.
There have been no material changes to the Company’s risk management activities since inception of the
Company’s operations.
The Company is subject to capital requirements under the credit facility agreement, as described in Note 11.
- 93 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
20. Commitments and contingencies
Lease commitments
The Company has lease contracts that have not yet commenced as at December 31, 2021. The future lease
payments for these non-cancellable lease contracts are as follows:
As at December 31,
Within one year
After one year but not more than five years
More than five years
2021
$
373
3,106
1,462
4,941
2020
$
-
2,673
2,268
4,941
Future lease payments exclude operating costs, taxes, and utilities. Prior year has been adjusted accordingly.
General contingencies
In addition, various claims and potential claims arising in the normal course of operation are pending against
JLL. It is the opinion of management that these claims or potential claims are without merit and the amount of
potential liability, if any, is not determinable. Management believes the final determination of these claims or
potential claims will not materially affect the financial position or results of the Company.
21.
Segment information
The Company has two reportable operating segments with all material operations carried out in Canada:
• The Jamieson Brands segment’s principal activity is the manufacturing, distribution and marketing of branded
natural health products including vitamins, minerals and supplements; and
• The Strategic Partners segment’s principal activity is providing contract manufacturing services to consumer
health companies and retailers worldwide.
The Company’s chief operating decision maker evaluates segment performance on the basis of earnings from
operations, as reported to internal management, on a periodic basis.
Inter-segment revenues and expenses are eliminated upon consolidation and relate mainly to sales from the
Strategic Partners segment to the Jamieson Brands segment.
- 94 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
Revenue
Earnings from operations
Foreign exchange gain
Interest expense and other financing costs
Provision for income taxes
Net earnings
Revenue
Earnings from operations
Foreign exchange loss
Other expenses
Interest expense and other financing costs
Provision for income taxes
Net earnings
Jamieson Brands
$
343,245
68,643
Jamieson Brands
$
316,423
61,767
Strategic Partners
$
107,787
7,387
For the year ended December 31, 2021
Total
$
451,032
76,030
(92)
5,657
18,383
52,082
Strategic Partners
$
87,238
1,805
For the year ended December 31, 2020
Total
$
403,661
63,572
460
22
6,042
15,450
41,598
Share-based compensation is allocated to the Jamieson Brands operating segment.
Geographic information
For the years ended December 31, 2021 and 2020, no customer outside of Canada represented a significant
portion of total sales.
Information about major customers
The following table provides the proportion of revenue attributed to each significant customer:
For the years ended December 31,
Customer 1
Customer 2
Customer 3
2021
16.6%
13.3%
13.2%
43.1%
2020
7.5%
14.3%
12.4%
34.2%
The revenue concentration noted mirrors the consolidated nature of the retail grocery landscape in Canada.
Revenue from significant customers primarily affect the Jamieson Brands segment. It is management’s opinion
that the loss of any customer, significant or otherwise, would not impact the Company’s viability. No other sales
were made to any one customer that represented more than 10% of total sales.
- 95 -
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2021 and 2020
22. Revenue from contracts with customers
The following table sets forth the disaggregation of the Company’s revenue from contracts with customers in the
Jamieson Brands operating segment:
For the years ended December 31,
Domestic sales
International sales
Total revenue from contracts with customers
2021
$
284,902
58,343
343,245
2020
$
264,915
51,508
316,423
International sales are primarily denominated in U.S. dollars and subject to fluctuations in foreign exchange (see
Note 19 – Financial instruments and risk management activities) on the conversion to Canadian dollars.
23. Earnings per share
Basic earnings per share amounts are calculated by dividing the net earnings attributable to common
shareholders of the Company by the weighted average number of shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net earnings attributable to common
shareholders of the Company by the weighted average number of shares outstanding during the year, adjusted
for the effects of potentially dilutive share options, PSUs, RSUs and DSUs.
The following table sets forth the calculation of basic and diluted earnings per share:
Year ended December 31,
Basic
Continuing operations
Diluted
Continuing operations
2021
2020
Net earnings
available to common
shareholders
Weighted
average number
of shares
EPS $
Net earnings
available to common
shareholders
Weighted
average number of
shares
EPS $
52,082
40,150,724
1.30
41,598
39,539,955
1.05
52,082
41,680,934
1.25
41,598
41,160,341
1.01
- 96 -
833.223.2666
info@jamiesonwellness.com
THIS REPORT DATED MARCH 29, 2022
1 ADELAIDE STREET EAST SUITE 2200, TORONTO, ONTARIO M5C 2V9
jamiesonwellness.com