Inspiring Better
Lives Every Day
2023 Annual Report
Land Acknowledgement
Jamieson Wellness gratefully acknowledges
that our workplace lies on the unceded
territories of the First Nation, Inuit and Métis
Nations. Our facilities and head office reside
in Toronto and Windsor, Canada, which are
traditionally the home of the Anishinabewaki,
Wendake-Nionwentsïo, Ho-de-no-sau-nee-
ga (Haudenosaunee), Mississauga and the
Mississaugas of the Credit First Nation.
Through our dispersed team, Jamieson
Wellness conducts its work on the traditional
territories of several Indigenous peoples across
the world. We respectfully honour all people,
cultures and traditions.
As part of our acknowledgement, we are
committed to amplifying Indigenous voices
and working in partnership with Indigenous
organizations, community members and
ambassadors on our purpose of Inspiring Better
Lives Every Day.
3
Forward-looking Information/ Non-IFRS and Other Financial Measures
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 28,
2024. 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, 2023 (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.
4
ANNUAL REPORT 2023 Letter from the CEO
Dear Shareholders,
Letter from the Chair of the Board
Dear Shareholders,
As we close the chapter on 2023, I am thrilled to share the remarkable journey we’ve undertaken together at Jamieson Wellness, a year
that exemplified agility, innovation, and an unwavering commitment to excellence. Our desire to improve the world’s health and wellness
has been our guiding star, and I am excited to present our achievements and aspirations.
On behalf of the Board of Directors, thank you for your confidence in Jamieson Wellness. As stewards of your investment,
we take our responsibilities seriously. As we celebrate another year of growth, we remain committed to delivering value to
you, our shareholders.
Navigating Uncharted Waters
The past year was a testament to the strength of our global growth strategy. Amidst global shifts and uncertainties, Jamieson Wellness
stood tall. Let me highlight some key milestones:
• Record-Breaking Revenue: Our consolidated revenue surged by an impressive 23.5 percent, reaching over $676 million. This
remarkable growth is a testament to the agility of our team, and its ability to meet the needs of our global consumer base with
innovative, high-quality products.
• Brand Power: Jamieson Brands led the charge, growing by 25.5 percent in 2023. Our commitment to excellence resonated with
consumers globally, reinforcing our position as a trusted name in health and wellness.
• Financial Strength: Our Adjusted EBITDA1 soared to over $138 million, a remarkable increase of $14 million, or nearly 12 percent.
Even as we invested heavily in our growth, most notably in China and the U.S., our adjusted diluted earnings per share2 remained
flat to the prior year at $1.55 per diluted share.
• Championing a Sustainable Future: In 2023 we finalized our annual ESG reporting strategy and released a new environmental
policy. As a leader in the health and wellness space, we are proud of these achievements, holding ourselves accountable for
sustainable growth, respecting our planet, and leading by example.
Globally Consistent, Locally Relevant
While our roots are deep in Canada, our global footprint continues to expand. In fact, in 2023, nearly 40 percent of our revenue was
derived from outside of Canada, more than double the percentage it was just three years ago. In 2023, we harnessed the power of our
global brands to drive growth around the world, from here at home.
In Canada, our century-long commitment to excellence has positioned us as the clear category leader. We owe this success to our
industry-leading team, and its ability to deliver consistent product innovation and strategic marketing and grow widespread distribution.
Jamieson is a household name, available coast-to-coast, meeting the evolving needs of Canadian consumers every day.
In the U.S., with the youtheory integration successfully behind us, we executed on multiple fronts throughout 2023 both digitally,
through e-commerce, and physically, on store shelves. Our innovation synergies continued to play out in the year, as evidenced by the
successful launches of several new innovations helping propel the growth of this global brand.
With the completion of our acquisition of our Chinese distributor’s assets, we established Jamieson’s Chinese headquarters in
Shanghai, China in 2023, with more than 45 team members. Through the implementation of our strategic partnership with DCP Capital,
and the firm’s local roots, knowledge, and network, we fueled the growth of our brand in the world’s largest VMS market.
From an International perspective, in 2023 we continued to grow share in the key markets where the Jamieson brand is available.
Despite macro uncertainties, our brand continues to connect with the global consumer, due largely to our reputation of quality and trust.
Looking Ahead
As we step into 2024, our vision for the future of Jamieson Wellness remains unwavering.
We will invest aggressively in the success of our brands, particularly in the U.S. and China. These investments will optimize our strategy
and maximize Jamieson’s long-term growth potential as a global brand – pushing us closer to reaching our goal of 1 billion dollars in
revenue.
With the recent introduction of our new company Purpose: Inspiring Better Lives Every Day, and our organizational values of Agility,
Accountability, Respect and Excellence, we will scale new heights in this new year. Guided by our values and the trust you, our
shareholders, place in us, our future is healthier than ever.
Over the last 2 years, we have made two major strategic moves in pursuit of long-term shareholder value. Our
investments in the U.S. and China opened massive growth potential for Jamieson in the two largest VMS markets in the
world. It is early days, but so far we are exceeding our growth targets in these markets, while concurrently growing share
in our domestic Canadian business.
Our commitment to all our stakeholders extends beyond financial performance. While revenue and profit growth remain
crucial, we recognize that sustainable growth encompasses a broader spectrum. As shareholders, you seek a deeper
understanding of our organization—a holistic view that transcends balance sheets. With this in mind, we conscientiously
assess and mitigate our environmental impact. Sustainability is not just a buzzword; it’s a core belief that shapes
our decisions. We also recognize that our influence extends beyond boardrooms, so we actively participate in our
communities, fostering positive change and contributing to societal wellbeing. And most importantly, we know that our
team members are our greatest asset, and we attract and retain top talent by providing a workplace grounded in our
values of Agility, Accountability, Respect and Excellence.
Thank you for being an integral part of our success, and thank you for your continued trust in the Jamieson team.
Sincerely,
Tim Penner
TIM PENNER
Chair of the Board
Thank you for being part of our journey.
With gratitude,
Mike Pilato
5
MIKE PILATO
Director, President & CEO
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 the Financials is net earnings. For more information, see the non-IFRS and other
financial measures disclaimer included on page 4 of this annual report.
2.
“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 4 of this annual report.
6
ANNUAL REPORT 2023
Heading towards
a new purpose.
At Jamieson Wellness, we’re focused on what brings people
together, and what unites us is our desire to live a healthy life.
Our physical, mental and social wellbeing is an essential element
of being human, and the pursuit of it is something we all have in
common, no matter where we live.
As our world evolves, how we see and think about the role of our
organization and the role of our brands has evolved, too. We’re a
purpose-driven company whose high-quality products are here
not only to fill immediate needs, but also to make a meaningful,
long-lasting impact on the lives of people around the globe.
As we enter 2024, we are proud to introduce our new
organizational purpose of
Inspiring
Better Lives
Every Day.
7
8
ANNUAL REPORT 2023 Inspiring Better Lives Every Day
represents our hope for a healthier,
brighter future. Where anyone can be
their best self. At every stage of life.
We strive toward this purpose through:
Our belief in continuous progress and
betterment through small, consistent
choices.
Our commitment to providing
high-quality, natural health products
that consumers can rely on for positive
transformation.
Our promise to stakeholders that
Jamieson Wellness will remain true to its
roots while evolving to meet changing
needs and attitudes.
Our pledge to keep innovating across
our suite of brands, as we strive to
improve the world’s health and wellness.
Every single day.
9
Our purpose is driven
by four values:
AGILITY
ACCOUNTABILITY
RESPECT
EXCELLENCE
We upheld our values in significant ways throughout 2023, which we
outline in the following pages. Our efforts have helped us deepen
our presence in two of the world’s leading vitamin, mineral and
supplement markets, the U.S. and China. We drove growth across
all our business units, and reached record levels of consumer
consumption in the fourth quarter. Simultaneously, we made progress
in our ESG initiatives, demonstrating our commitment to fostering a
healthy, sustainable future for people and our planet.
10
ANNUAL REPORT 2023 Agility means welcoming new ideas and
responding swiftly.
We view all business opportunities as a means to enhance our performance and
strive to address them with speed. We are always proactively aligning ourselves
with the evolving needs of our consumers and partners in our continuous
search for optimal solutions.
In 2023, we showed agility in the way we maintained consumer engagement
and growth momentum, despite the challenging market and macro
environmental impacts.
AGILITY
Growth in China
China is a key part of our growth strategy as the second-largest
and fastest-growing VMS market globally. In 2023, we took major
strides in this market by announcing a strategic partnership with
DCP Capital, purchasing our distributor’s assets, and investing in
growing out our local team.
2023 Highlights
Completed the purchase of assets from our
distribution partner in China, gaining full control of
the value chain and the ability to directly connect
with Chinese consumers
Formed a strategic partnership with DCP Capital, a
leading international private equity firm with a long-term
track record of success in Greater China and broader
Asian markets
This partnership allows for a deeper understanding of the
consumer landscape – and the ability to build on consumers’
affinity for Jamieson products and scale the business
effectively. DCP Capital made a significant capital investment
in exchange for a share in our Chinese operations.
Opened an office in Shanghai and continued to build our
local team, with over 45 cross-functional team members
The local team in China, supported by DCP Capital’s
expertise, is focused on category and distribution expansion,
e-commerce growth, and innovation.
11
Mike Pilato, President & CEO visits the Shanghai office in October, 2023
12
ANNUAL REPORT 2023 AGILITY
Leading in Canada
We continued to widen our lead in the Canadian market, gaining market
share in units and dollars. As national retailers more tightly managed their
inventory levels over the year, our consumer purchase power outpaced
our shipments, reflecting their continued prioritization of their health and
wellness, even in a challenging economic environment. Our Jamieson
Vitamins brand remains the mass leader in the Canadian marketplace,
and our specialty channel brands continue to support the evolving needs
of their target consumer.
In 2023, we also took a big step forward in
the development journey of the youtheory
brand in Canada, with innovative product
launches and expanded distribution
into new retailers.
All Channels Grew
Increase
in dollars
Increase
in units
13
14
ANNUAL REPORT 2023 AGILITY
International Expansion
In 2023, we further solidified our presence in existing markets
and entered new ones. We expanded shelf space and listings in
partnerships with our in-market distributors, driving growth in
consumer awareness and trial.
We expanded distribution into the pharmacy channel in Italy, and
into new geographies in Central Europe and South America.
We continued to grow in the club channel with new Jamieson
and youtheory product launches, most notably in the U.K., Japan,
Australia and Europe.
AGILITY
U.S. Integration and Expansion
2023 was a year of integration and expansion through
building out our presence in the U.S. with consumer-focused
products, elevating fun formats and reaching consumers
in new distribution channels, such as expanded food drug
mass, club and e-commerce platforms.
We leveraged best-in-class capabilities and found synergies
from our Canadian operations to further elevate the
youtheory brand.
50+
Markets
#1
Food Supplement
brand in Slovenia
First TV campaign in Italy
Successful Middle East and
European Summits throughout 2023
to engage partners
E-commerce
expansion
Increased
distribution
15
16
ANNUAL REPORT 2023 Accountability means doing what we say.
We take personal ownership for our work, its impact on others, and its
impact on the business, consistently empowering others to do the same.
In 2023, we held ourselves accountable for making strong progress across
our ESG commitments and goals to improve our impact.
ACCOUNTABILITY
Sustainability Efforts
Over the year, we implemented a new environmental
management system to track Scope 1 and 2
greenhouse gas emissions for our 2024 reporting. In the
first quarter, we launched a sustainable partner program
to help identify, measure and monitor sustainability
progress and risk within our supply chain.
We recognize that our entire value chain is embedded in
nature, not external to it. We understand that the wellness of
society and the planet depends on the resilience and health
of the ecosystem.
Through various initiatives and partnerships, we actively
promote biodiversity, including our partnership with veritree.
Along with other veritree partners, in 2023 we planted
60,000 kelp off the Pacific coast of British Columbia. These
towering underwater forests provide a habitat for thousands
of marine species and are excellent carbon sinks. As of 2023,
we have helped restore 6,480 square feet of ocean through
this project.
Our accountability commitments continued into 2024 with
the publishing of our first sustainability report and the
continuation of delivering this report on an annual basis. Read
the full 2023 Sustainability Impact Report here:
Download report here
17
18
ANNUAL REPORT 2023 Respect means doing things together,
authentically and inclusively.
We actively seek to include and understand diverse perspectives
and experiences.
In 2023, we demonstrated a new level of respect and tracked
further progress against our targets to expand diversity across our
teams and in leadership.
RESPECT
Embracing Diversity in
Our Workplace:
We achieved a 98% participation rate for our annual Inclusion and Equitable
Workplace Training for all Jamieson Wellness team members in Canada.
100% achievement in the Inclusive Leadership training for all
people leaders at Jamieson Wellness.
We ensured diverse candidate and interview slates for all external job postings for
manager and above roles. 58% women and 50% racialized people.
We launched our Sustainable Partner Program, implementing a system to monitor
and track sustainability, including human rights throughout our value chain.
RESPECT
Governance Initiatives
In July of 2023, we appointed François Vimard to our Board of Directors and named
him a member of our Audit Committee. His deep retail background and experience
shaping the Canadian grocery landscape will help us reach new heights as the
leading vitamin, mineral and supplement brand. He also brings important financial
and technological experience, which we believe will benefit our strategic plans as we
look to expedite our growth on the global stage.
“From my years of working closely with CPG partners
in the grocery channel, I am confident that I can
bring valuable insights to help Jamieson Wellness
continue to build its global growth story.”
– François Vimard
19
20
ANNUAL REPORT 2023 Excellence means pursuing the
highest standards.
We focus on delivering the very best in terms of our products, people
and planet because we take pride in our work, understanding its
profound significance on every level.
Our unfaltering track record of profitable growth is a reflection of the
enduring strength of our business, as consumers remain loyal to our
brands around the world and we continue to strive towards excellence.
+23.5%
revenue
$676.2M
+25.5%
revenue in
Jamieson Brands
$112.0M
+11.6%
adjusted EBITDA
$138.1M
$1.55
adjusted diluted
earnings per
share
21
EXCELLENCE
Re-investing: Our Vote of Confidence
In November of 2023, we announced a Normal Course Issuer Bid
(NCIB), approved by the Toronto Stock Exchange, to buy back up to
approximately 10% of our public float of shares as of October 30, 2023.
Our buyback of 970,200 shares in the year not only demonstrates our
belief in our long-term success, but it serves as an attractive investment
opportunity to return value to shareholders.
22
ANNUAL REPORT 2023 As we look to the future of Jamieson Wellness,
our focus will always be on improving the
world’s health and wellness by providing the
highest quality natural health products, led by
our new company purpose:
Inspiring
Better Lives
Every Day.
This is our commitment to who we are,
what we do, and how we’ll do it
better together.
Our future looks brighter and healthier
than ever.
AGILITY • ACCOUNTABILITY • RESPECT • EXCELLENCE
23
24
ANNUAL REPORT 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the three and twelve months ended December 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For the three and twelve months ended December 31, 2023
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 March 12, 2024. It should be read in conjunction with our audited
consolidated annual financial statements and accompanying notes for the year ended December 31, 2023.
Our audited consolidated annual financial statements and accompanying notes for the year ended December
31, 2023 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 2023” are to our fiscal quarter ended December
31, 2023 and all references to “Q4 2022” are to our fiscal quarter ended December 31, 2022. All references in this
MD&A to “YTD 2023” are to our year ended December 31, 2023 and to “YTD 2022” are to our year ended December
31, 2022.
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,
25
- 1 -
26
ANNUAL REPORT 2023
forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”,
“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
Jamieson Wellness is a growing global manufacturer, distributor, and marketer of high-quality natural health
products, with a leadership position in Canada. From our offices in Canada, the United States and China, and our
production facilities in Ontario and California, we combine deep consumer insights with extensive research,
development and manufacturing capabilities to deliver category-leading innovation and growth.
Established in 1922, our Jamieson brand is Canada’s #1 consumer health brand. Our youtheory brand,
acquired in 2022, is an established and growing lifestyle brand in the United States. Combined, these global brands
are available in approximately 50 countries worldwide. We also offer a variety of innovative vitamins, minerals and
supplements (“VMS”) as well as sports nutrition products to consumers in Canada with our Progressive, Smart
Solutions, Iron Vegan and Precision brands. All of our brands are collectively referred to as our “Jamieson Brands”
segment.
In addition to our Jamieson Brands segment, our trusted reputation and strong industry relationships, together
with our high-quality production capabilities and certifications attract opportunities for us to manufacture products for
select blue-chip consumer health companies and retailers worldwide. More than “white label” manufacturing, this
segment of the business is designed to support Jamieson Brands by allowing us to broaden customer relationships and
improve asset utilization while providing direct benefit to strategic branded initiatives. We refer to this part of the
business as our “Strategic Partners” segment.
VMS and sports nutrition are two large and growing segments of the global consumer health industry. Our
reputation for product quality and trust, leading market position and brands, focus on innovation and extensive
selection of products, make us the preferred partner for retailers.
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 Global Conflicts
The continued risk surrounding the Eastern Europe and Middle East conflicts may have an adverse impact
on our business, financial condition, and results of operations. We do not conduct direct business operations in regions
affected by these conflicts, however, we have a sales presence within the broader Eastern Europe and Middle East
regions. We currently do not have any measurable disruption to our supply of raw materials and ability to service our
customers in these regions.
Over the past year, international markets have experienced heightened inflation and fluctuations in consumer
sentiments. These challenges have notably affected our Jamieson International business operations (“Jamieson
International”), particularly in neighbouring Eastern European and Middle Eastern regions where we conduct
business. We continue to monitor the environment to respond rapidly to the evolving economic landscape and to
ensure the continued stability of our business.
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, youtheory, Progressive, Iron Vegan, Smart Solutions, and
Precision. Maintaining, enhancing and growing the reputation of our brands globally is critical to our continued
success. Failure to do so 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.
27
28
- 2 -
- 3 -
ANNUAL REPORT 2023
Customer Relationships
In our primary markets, we have longstanding and deeply entrenched customer relationships with 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 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
300 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
2023, 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.
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
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 may 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 net exposure to fluctuating U.S.-Canadian currency exchange rates with foreign
exchange hedging contracts. We may, from time to time, enter into additional foreign exchange hedging contracts in
respect of other foreign currencies. With respect to our Chinese operations, we are exposed to the Chinese Renminbi
(“RMB”) to Canadian currency exchange rates as certain sales in China are denominated in RMB.
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.
Distribution
Business Acquisitions
Our warehousing and distribution functions are operated under a third-party logistics model through various
facilities globally. We enter into agreements with the third-party logistics partner to provide warehousing and
distribution services for Jamieson Branded and Strategic Partners finished goods inventories. 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 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, inflation, 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
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, integration within our existing
structure, and realization of synergies, all of which present financial, managerial, and operational challenges. Failure
to successfully overcome these challenges may reduce our profitability.
On April 28, 2023, we completed the acquisition of the operating assets of our former distribution partner
in China for a total cash consideration of $25.8 million, before post-closing cash adjustments. The following table
provides a reconciliation of the net assets acquired at their fair value amounts:
Inventories
Customer relationships
Goodwill
Deferred tax liability
Total net assets acquired
Estimated fair value as
at April 28, 2023
$
13,697
8,900
4,867
(1,641)
25,823
The intangible assets acquired include customer relationships, which are amortized over approximately 15
years and expensed through the consolidated statements of operations and comprehensive income on a straight-line
basis over the estimated useful life.
The estimated goodwill represents the future economic benefit arising from other assets acquired in the
acquisition that are not individually identifiable and separately recognized. The estimated goodwill arising from the
acquisition of $4.9 million is attributable to expected future income and cash-flow projections and synergies we expect
to achieve in leveraging our platform. Certain intangible assets and goodwill are not expected to be deductible for tax
29
30
- 4 -
- 5 -
ANNUAL REPORT 2023
purposes.
Chinese Operations Strategic Partnership
On May 16, 2023, we completed our transaction with DCP Capital (“DCP”) with respect to our operations
in China. The transaction involved DCP’s contribution of $47.1 million (USD $35.0 million) in capital in exchange
for a 33% minority interest in Jamieson Health Products (Cayman Islands) Limited (“Jamieson-DCP Partnership”),
which in turn holds Jamieson Health Products (Shanghai) Co., Ltd., Jamieson Health Products (Hong Kong) Trading
Limited, and Jamieson Health Products (Hong Kong) Limited (together with Jamieson-DCP Partnership, “China
Operations”), less transaction costs of $2.7 million.
The strategic partnership with DCP is another significant step forward as we accelerate our growth plans in
the Chinese market. In conjunction with DCP’s $47.1 million investment in the Company’s China Operations on May
16, 2023, DCP also completed its subscription for 2,527,121 Series A Preference Shares of the Company (“Preferred
Shares”) and 2,527,121 warrants (“Warrants”) to purchase common shares of the Company for proceeds of $101.6
million (USD $75 million). The Preferred Shares carry a nominal annual dividend of $0.01 per share and are
redeemable at $101.6 million by DCP between May 15, 2025 and May 15, 2028, representing the second and fifth
anniversary from the completion of the transaction, respectively. The Warrants are exercisable by DCP beginning
May 15, 2025 and expire on May 15, 2028. The exercise price of the Warrants is $40.19 per share representing a 10%
premium to the 20-day volume weighted average common share price as of the signing of the subscription agreement
on February 23, 2023.
Refer to Note 5 of the Company’s audited consolidated annual financial statements for additional information
on the China Operations Strategic Partnership.
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) continued growth within our three key markets of Canada, the United States, and China led by product
innovations within existing and into adjacent categories, continued growth of existing products in existing categories,
and new distribution opportunities; (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
We are subject to the laws and regulations applicable to any business engaged in formulation, production and
distribution of consumer health products in the jurisdictions in which we operate. 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 and applicable site licenses,
certifications and import licenses for all of our manufacturing and distribution centres. Our products sold
internationally 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
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 26 in our audited consolidated annual financial
statements for the disclosure on disaggregated revenue.
31
32
- 6 -
- 7 -
ANNUAL REPORT 2023
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 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
financial measure that is disclosed in our financial statements is earnings from operations. We believe normalized
earnings from operations is a useful measure in assessing our operating results by excluding the effects of (i)
acquisition and divestiture related costs; (ii) IT system implementation costs; (iii) amortization of fair value
adjustments; (iv) acquisition related purchase consideration and post-closing adjustments; and (v) other non-operating
costs 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) accretion on preferred shares; (iv) depreciation of property, plant, and equipment; and (v) 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.
“Gross profit margin” is defined as gross profit divided by revenue. Gross profit margin is a supplementary
Adjusted EBITDA
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 the amortization of fair value adjustments on acquired inventories 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, consulting fees,
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 (i) acquisition and divestiture
related costs; (ii) IT system implementation costs; and (iii) other non-operating costs 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
“Adjusted EBITDA” is defined as EBITDA before: (i) share-based compensation; (ii) foreign exchange
gain/loss; (iii) acquisition and divestiture related costs; (iv) amortization of fair value adjustments; (v) IT system
implementation costs; (vi) acquisition related purchase consideration and post-closing adjustments; and (vii) 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) acquisition and divestiture related costs; (iv) IT system
implementation costs; (v) acquisition related purchase consideration and post-closing adjustments; (vi) amortization
of fair value adjustments; (vii) accretion on preferred shares; and (viii) other non-operating costs. 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.
33
34
- 8 -
- 9 -
ANNUAL REPORT 2023
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
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.
($ in 000's, except as otherwise noted)
Revenue
Cost of sales
Gross profit
Gross profit margin (1)
Selling, general and administrative expenses
Acquisition related adjustments
Share-based compensation
Earnings from operations
Operating margin (1)
Foreign exchange loss
Interest expense and other financing costs
Accretion on preferred shares
Earnings before income taxes
Provision for income taxes
Net earnings
Net earnings attributable to:
Shareholders
Non-controlling interests
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
2023
2022
Twelve months ended
December 31
2023
2022
220,365
141,338
79,027
35.9%
42,300
(7,863)
1,534
43,056
19.5%
1,676
4,885
1,965
34,530
10,530
24,000
24,407
(407)
24,000
28,615
46,516
50,628
23.0%
192,775
121,586
71,189
36.9%
32,768
-
1,317
37,104
19.2%
978
5,757
-
30,369
8,278
22,091
22,091
-
22,091
26,759
41,201
48,871
25.4%
676,172
442,613
233,559
34.5%
140,304
(7,863)
5,868
95,250
14.1%
1,962
22,784
4,833
65,671
19,631
46,040
47,882
(1,842)
46,040
66,084
113,611
138,063
547,369
349,031
198,338
36.2%
110,239
-
4,910
83,189
15.2%
269
12,417
-
70,503
17,695
52,808
52,808
-
52,808
65,149
100,168
123,761
20.4%
22.6%
42,062,117
42,766,299
41,683,753
42,817,044
41,960,516
42,650,501
40,998,065
42,116,350
Earnings per share attributable to common shareholders:
Basic, earnings per share
Diluted, earnings per share
Adjusted diluted, earnings per share (3)
0.57
0.56
0.67
0.53
0.52
0.62
1.10
1.08
1.55
1.29
1.25
1.55
(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 composition of such measure.
the Performance of our Business” for an explanation of
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
the composition of such measure.
Performance of our Business”
for an explanation of
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.
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,
2023
As at December 31,
2022
1,143,574
517,050
1,107,263
520,867
Results of Operations – three months ended December 31, 2023 and 2022
The following table provides a summary of our results for the three months ended December 31, 2023 and
December 31, 2022.
($ in 000's, except as otherwise noted)
Revenue
Cost of sales
Gross profit
Gross profit margin
Selling, general and administrative expenses
Acquisition related adjustments
Share-based compensation
Earnings from operations
Operating margin
Foreign exchange loss
Interest expense and other financing costs
Accretion on preferred shares
Earnings before income taxes
Provision for income taxes
Net earnings
Net earnings attributable to:
Shareholders
Non-controlling interests
Adjusted net earnings
EBITDA
Adjusted EBITDA
Adjusted EBITDA margin
Three months ended
December 31
2023
2022
$ Change
% Change
220,365
141,338
79,027
35.9%
42,300
(7,863)
1,534
43,056
19.5%
1,676
4,885
1,965
34,530
10,530
24,000
24,407
(407)
24,000
192,775
121,586
71,189
36.9%
32,768
-
1,317
37,104
19.2%
978
5,757
-
30,369
8,278
22,091
22,091
-
22,091
28,615
26,759
46,516
50,628
23.0%
41,201
48,871
25.4%
27,590
19,752
7,838
-
9,532
(7,863)
217
5,952
-
698
(872)
1,965
4,161
2,252
1,909
2,316
(407)
1,909
1,856
5,315
1,757
-
14.3%
16.2%
11.0%
(1.0%)
29.1%
(100.0%)
16.5%
16.0%
0.3%
71.4%
(15.1%)
100.0%
13.7%
27.2%
8.6%
10.5%
(100.0%)
8.6%
6.9%
12.9%
3.6%
(2.4%)
35
36
- 10 -
- 11 -
ANNUAL REPORT 2023
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, 2023 and December 31, 2022.
($ in 000's, except as otherwise noted)
Net earnings:
Add:
Provision for income taxes
Interest expense and other financing costs
Accretion on preferred shares
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
Acquisition and divestiture related costs (2)
Amortization of fair value adjustments (3)
IT system implementation (4)
Acquisition related purchase consideration and post-closing adjustments (5)
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 (6)
Tax effect of normalization adjustments
Adjusted net earnings
($ in 000's, except as otherwise noted)
Gross profit
Amortization of fair value adjustments (3)
Normalized gross profit (7)
Normalized gross profit margin (8)
Selling, general and administrative expenses
Acquisition and divestiture related costs (2)
IT system implementation (4)
Other
Normalized selling, general and administrative expenses (7)
Earnings from operations
Acquisition and divestiture related costs (2)
IT system implementation (4)
Amortization of fair value adjustments (3)
Acquisition related purchase consideration and post-closing adjustments (5)
Other
Normalized earnings from operations (7)
Normalized operating margin (8)
Three months ended
December 31
2023
2022
$ Change
% Change
24,000
22,091
10,530
4,885
1,965
3,589
1,547
46,516
1,534
1,676
2,846
2,621
3,274
(7,863)
24
50,628
(10,530)
(4,885)
(3,589)
(1,547)
(1,411)
(51)
28,615
8,278
5,757
-
3,579
1,496
41,201
1,317
978
3,165
793
1,417
-
-
48,871
(8,278)
(5,757)
(3,579)
(1,496)
(1,317)
(1,685)
26,759
1,909
2,252
(872)
1,965
10
51
5,315
217
698
(319)
1,828
1,857
(7,863)
24
1,757
(2,252)
872
(10)
(51)
(94)
1,634
1,856
8.6%
27.2%
(15.1%)
100.0%
0.3%
3.4%
12.9%
16.5%
71.4%
(10.1%)
230.5%
131.1%
(100.0%)
100.0%
3.6%
(27.2%)
15.1%
(0.3%)
(3.4%)
(7.1%)
97.0%
6.9%
Three months ended
December 31
2023
2022
$ Change
% Change
79,027
2,621
81,648
37.1%
42,300
(2,846)
(3,274)
(24)
36,156
43,056
2,846
3,274
2,621
(7,863)
24
43,958
19.9%
71,189
793
71,982
37.3%
32,768
(3,165)
(1,417)
-
28,186
37,104
3,165
1,417
793
-
-
42,479
22.0%
7,838
1,828
9,666
-
9,532
319
(1,857)
(24)
7,970
5,952
(319)
1,857
1,828
(7,863)
24
1,479
-
11.0%
230.5%
13.4%
(0.2%)
29.1%
10.1%
(131.1%)
(100.0%)
28.3%
16.0%
(10.1%)
131.1%
230.5%
(100.0%)
100.0%
3.5%
(2.1%)
(1)
(2)
(3)
(4)
The Company’s share-based compensation expense pertains to our long-term incentive plan (the “LTIP”)
(refer to “Share-based compensation”), with stock options, performance-based share units (“PSUs”), time-
based restricted share units (“RSUs”), and deferred share units (“DSUs”) expenses, along with associated
payroll taxes.
Current quarter expense mainly pertains to legal, consulting and integration costs associated with the
acquisition and integration of our former distributor partner in China on April 28, 2023, and the acquisition
of youtheory in the U.S. on July 19, 2022.
This cost represents the post-closing amortization of the fair value increase of acquired inventories related to
the April 28, 2023 transaction with our former distribution partner in China.
Current quarter expense mainly pertains to development costs associated with our IT system implementation
to augment our system infrastructure. Unlike other system improvement projects with costs capitalized, due
to its cloud-based nature, these system implementation costs are expensed accordingly.
(5)
To adjust for the fair value of purchase consideration accounted for as compensation on the 2022 youtheory
acquisition, net of post-acquisition working capital adjustments to reflect acquired liabilities.
(6) Costs pertaining to our LTIP, excluding PSUs granted to certain employees relating to business combinations.
(7)
(8)
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.
The following table provides selected financial information for the Jamieson Brands operating segment for
the three months ended December 31, 2023 and December 31, 2022.
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
Acquisition related adjustments
Share-based compensation
Earnings from operations
Operating margin
Normalized earnings from operations
Normalized operating margin
Adjusted EBITDA
Adjusted EBITDA margin
2023
2022
$ Change
% Change
181,007
155,996
25,011
73,082
40.4%
75,703
41.8%
40,751
34,631
(7,863)
1,534
38,660
21.4%
39,538
21.8%
45,404
25.1%
65,345
41.9%
66,138
42.4%
31,165
26,583
-
1,317
32,863
21.1%
38,238
24.5%
43,832
28.1%
7,737
-
9,565
-
9,586
8,048
16.0%
11.8%
(1.5%)
14.5%
(0.6%)
30.8%
30.3%
(7,863)
(100.0%)
217
5,797
-
1,300
-
1,572
-
16.5%
17.6%
0.3%
3.4%
(2.7%)
3.6%
(3.0%)
37
38
- 12 -
- 13 -
ANNUAL REPORT 2023
($ in 000's, except as otherwise noted)
For the three months ended December 31,
Gross profit
Amortization of fair value adjustments
Normalized gross profit
Normalized gross profit margin
Selling, general and administrative expenses
Acquisition and divestiture related costs
IT system implementation
Normalized selling, general and administrative expenses
Earnings from operations
Acquisition and divestiture related cost
IT system implementation
Amortization of fair value adjustments
Acquisition related purchase consideration and post-closing adjustments
Normalized earnings from operations
Normalized operating margin
2023
2022
$ Change
% Change
73,082
2,621
75,703
41.8%
40,751
(2,846)
(3,274)
34,631
38,660
2,846
3,274
2,621
(7,863)
39,538
21.8%
65,345
793
66,138
42.4%
31,165
(3,165)
(1,417)
26,583
32,863
3,165
1,417
793
-
38,238
24.5%
7,737
1,828
9,565
-
9,586
319
(1,857)
8,048
5,797
(319)
1,857
1,828
(7,863)
1,300
-
11.8%
230.5%
14.5%
(0.6%)
30.8%
10.1%
(131.1%)
30.3%
17.6%
(10.1%)
131.1%
230.5%
(100.0%)
3.4%
(2.7%)
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, 2023 and December 31, 2022.
($ 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
Acquisition and divestiture related cost
Amortization of fair value adjustments
IT system implementation
Acquisition related purchase consideration and post-closing adjustments
Adjusted EBITDA
2023
38,660
2,785
1,547
1,534
2,846
2,621
3,274
(7,863)
45,404
2022
32,863
2,781
1,496
1,317
3,165
793
1,417
-
43,832
$ Change
5,797
4
51
217
(319)
1,828
1,857
(7,863)
1,572
% Change
17.6%
0.1%
3.4%
16.5%
(10.1%)
230.5%
131.1%
(100.0%)
3.6%
The following table provides selected financial information for the Strategic Partners operating segment for
the three months ended December 31, 2023 and December 31, 2022.
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
2023
2022
$ Change
% Change
39,358
5,945
15.1%
1,549
1,525
4,396
11.2%
4,420
11.2%
5,224
13.3%
36,779
5,844
15.9%
1,603
1,603
4,241
11.5%
4,241
11.5%
5,039
13.7%
2,579
101
-
(54)
(78)
155
-
179
-
185
-
7.0%
1.7%
(0.8%)
(3.4%)
(4.9%)
3.7%
(0.3%)
4.2%
(0.3%)
3.7%
(0.4%)
($ in 000's, except as otherwise noted)
For the three months ended December 31,
Selling, general and administrative expenses
Other
Normalized selling, general and administrative expenses
Earnings from operations
Other
Normalized earnings from operations
Normalized operating margin
2023
1,549
(24)
1,525
4,396
24
4,420
11.2%
2022
$ Change
% Change
1,603
-
1,603
4,241
-
4,241
11.5%
(54)
(24)
(78)
155
24
179
-
(3.4%)
(100.0%)
(4.9%)
3.7%
100.0%
4.2%
(0.3%)
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, 2023 and December 31, 2022.
($ in 000's, except as otherwise noted)
For the three months ended December 31,
Earnings from operations
Depreciation of property, plant, and equipment
Other
Adjusted EBITDA
Revenue
2023
4,396
804
24
5,224
2022
4,241
798
-
5,039
$ Change
155
6
24
185
% Change
3.7%
0.8%
100.0%
3.7%
Revenue increased by 14.3%, or $27.6 million, to $220.4 million in Q4 2023. This was driven by 16.0%
growth in Jamieson Brands revenue and 7.0% growth in Strategic Partners revenue compared with Q4 2022.
Revenue in the Jamieson Brands segment increased by $25.0 million, or 16.0%, to $181.0 million in Q4
2023. Canada revenue grew by 5.8% in Q4 2023, reflecting record consumption levels which outpaced record
shipments as retailers reduced inventory below typical levels previously observed. Youtheory revenue increased 8.7%
in Q4 2023 with growth across all channels driven by continued demand on existing products, successful innovations
launched throughout the year and distribution gains. Youtheory shipments were impacted by timing of orders which
were weighted in the third quarter of 2023. China shipments grew 151.1% in Q4 2023 on a reported basis, which
reflects the seasonal impact of direct sales to consumers under the owned-distribution model beginning in the second
quarter of 2023. On a pro forma and local currency basis, revenue grew 91.6% compared with Q4 2022, driven by
strong fourth quarter promotional plans and cross border e-commerce growth through successful investments in social
media platforms. Jamieson International grew 37.0% on a constant U.S. dollar basis, driven by growth in Europe
compared to the prior year, while the volatility in the Middle East impacted sales in the region.
Revenue in the Strategic Partners segment increased by $2.6 million, or 7.0%, to $39.4 million in Q4 2023,
reflecting timing of shipments and remaining orders on the close-out of a customer contract.
Gross profit
Gross profit increased by $7.8 million to $79.0 million in Q4 2023, while normalized gross profit increased
by $9.7 million mainly driven by higher revenues noted above. Gross profit margin decreased by 100 basis points to
35.9% in Q4 2023, due to the fair value amortization impact of acquisition-related inventories, while normalized gross
profit margin was fairly consistent with the prior year.
Gross profit in the Jamieson Brands segment increased by $7.7 million to $73.1 million in Q4 2023, while
normalized gross profit increased $9.6 million mainly driven by revenue growth. Gross profit margin decreased by
150 basis points to 40.4%, while normalized gross profit margin decreased by 60 basis points to 41.8% impacted by
category mix.
39
40
- 14 -
- 15 -
ANNUAL REPORT 2023
Gross profit in the Strategic Partners segment increased by $0.1 million to $5.9 million and gross profit
margin decreased by 80 basis points to 15.1% in Q4 2023, with production efficiencies and pricing being offset by
unfavourable customer mix.
Selling, general and administrative expenses
SG&A expenses of $42.3 million in Q4 2023 increased by $9.5 million, or 29.1%, compared to Q4 2022.
Excluding the impact of specified costs, SG&A expenses increased by $8.0 million or 28.3% in Q4 2023 reflecting
the impact of our transition to an owned-distribution model in China, which includes direct investments to grow our
brand. We continue to prioritize our global expansion initiatives with resources, marketing and infrastructure to
support our growth in the U.S. and China.
Accretion on preferred shares
Preferred shares issued on May 16, 2023 as part of the Jamieson-DCP Partnership accrete at approximately
9.6% to its redeemable value of $101.6 million at May 15, 2025. Accretion expense of $2.0 million was realized
during Q4 2023.
Provision for income taxes
Provision for income taxes was $10.5 million in Q4 2023 compared with $8.3 million in Q4 2022. Our Q4
2023 effective tax rate of 30.5% reflects the earnings mix in higher rate jurisdictions and non-deductible preferred
share accretion compared with a Q4 2022 effective tax rate of 27.3%.
Specified costs of $6.1 million in Q4 2023 are mainly comprised of IT system implementation costs of $3.3
Net earnings and adjusted net earnings
million and costs associated with our China expansion and youtheory acquisition of $2.8 million.
Acquisition related adjustments
In conjunction with the acquisition of youtheory on July 19, 2022, deferred consideration payable has been
accounted for as compensation expense under the provisions of IFRS 3, Business Combinations. A revaluation of the
deferred consideration resulted in a gain of $13.8 million, partially offset by $5.9 million in other post-acquisition
working capital adjustments reflected in accrued liabilities.
Share-based compensation
Share-based compensation increased by $0.2 million to $1.5 million in Q4 2023 reflecting wage inflation
and additional grants in the current year.
Earnings from operations and operating margin
Earnings from operations increased by $6.0 million driven by higher gross profit and acquisition related
adjustments, partially offset by investments in SG&A. Operating margin increased by 30 basis points to 19.5% in Q4
2023. Normalized earnings from operations increased by $1.5 million, or 3.5% in Q4 2023, and normalized operating
margin was 19.9% compared with 22.0% in Q4 2022.
Earnings from operations in the Jamieson Brands segment increased by $5.8 million and operating margin is
21.4%. Normalized earnings from operations increased by $1.3 million driven by higher revenue and gross profit.
Normalized operating margin decreased by 270 basis points to 21.8% in Q4 2023 due to lower gross profit margins
and higher SG&A as a percentage of revenue.
Earnings from operations in the Strategic Partners segment increased by $0.2 million due to higher gross
profit, and operating margin decreased 30 basis points compared with the prior year. Normalized operating margin
decreased by 30 basis points to 11.2% in Q4 2023 due to lower gross profit margin.
Foreign exchange loss
Foreign exchange loss of $1.7 million in Q4 2023 resulted from changes in currency exchange rates on our
foreign denominated accounts receivable and accounts payable at the end of the quarter. We experience fluctuations
from USD/CAD and RMB/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 decreased by $0.9 million to $4.9 million in Q4 2023 resulting
from lower average borrowings in the current period partially offset by higher interest rates.
Net earnings was $24.0 million, while adjusted net earnings was $28.6 million or $1.9 million higher than
Q4 2022, with higher normalized earnings from operations and lower interest expense in the current year.
Net loss attributable to non-controlling interests
Net loss attributable to non-controlling interests of $0.4 million represents DCP’s minority interest on our
net loss related to our China operations largely driven by the amortization of fair value adjustments of acquired
inventories offsetting higher revenue.
Depreciation
Depreciation expense of $3.6 million was relatively consistent with Q4 2022.
Amortization
Amortization expense of $1.5 million was relatively consistent with Q4 2022.
EBITDA and Adjusted EBITDA
EBITDA increased by $5.3 million to $46.5 million in Q4 2023, mainly driven by higher revenue, higher
gross profit and a gain on revaluation of the deferred consideration in conjunction with the youtheory acquisition.
Adjusted EBITDA increased by $1.8 million to $50.6 million, reflecting higher sales volumes and gross
profit. Adjusted EBITDA margin decreased by 240 basis points to 23.0% for the quarter as we prioritized certain
SG&A and marketing investment in the U.S. and China.
Adjusted EBITDA in the Jamieson Brands segment increased by $1.6 million to $45.4 million driven by
higher revenue and gross profit. Adjusted EBITDA margin decreased by 300 basis points to 25.1% due to lower gross
profit margin noted above and higher SG&A as a percentage of revenue.
Adjusted EBITDA in the Strategic Partners segment increased by $0.2 million, to $5.2 million while
Adjusted EBITDA margin decrease by 40 basis points to 13.3% due to lower gross profit margin noted above.
41
42
- 16 -
- 17 -
ANNUAL REPORT 2023
Results of Operations – twelve months ended December 31, 2023 and 2022
The following table provides a summary of our results for the twelve months ended December 31, 2023 and
December 31, 2022.
($ in 000's, except as otherwise noted)
Revenue
Cost of sales
Gross profit
Gross profit margin
Selling, general and administrative expenses
Acquisition related adjustments
Share-based compensation
Earnings from operations
Operating margin
Foreign exchange loss
Interest expense and other financing costs
Accretion on preferred shares
Earnings before income taxes
Provision for income taxes
Net earnings
Net earnings attributable to:
Shareholders
Non-controlling interests
Adjusted net earnings
EBITDA
Adjusted EBITDA
Adjusted EBITDA margin
Twelve months ended
December 31
2023
2022
$ Change
% Change
676,172
442,613
233,559
34.5%
140,304
(7,863)
5,868
95,250
14.1%
1,962
22,784
4,833
65,671
19,631
46,040
47,882
(1,842)
46,040
66,084
547,369
349,031
198,338
36.2%
110,239
-
4,910
83,189
15.2%
269
12,417
-
70,503
17,695
52,808
52,808
-
52,808
65,149
113,611
138,063
100,168
123,761
20.4%
22.6%
128,803
93,582
35,221
-
30,065
(7,863)
958
12,061
-
1,693
10,367
4,833
(4,832)
1,936
(6,768)
(4,926)
(1,842)
(6,768)
935
13,443
14,302
-
23.5%
26.8%
17.8%
(1.7%)
27.3%
(100.0%)
19.5%
14.5%
(1.1%)
629.4%
83.5%
100.0%
(6.9%)
10.9%
(12.8%)
(9.3%)
(100.0%)
(12.8%)
1.4%
13.4%
11.6%
(2.2%)
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 twelve months ended December 31, 2023 and December 31, 2022.
($ in 000's, except as otherwise noted)
Net earnings
Add:
Provision for income taxes
Interest expense and other financing costs
Accretion on preferred shares
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
Acquisition and divestiture related costs (2)
Amortization of fair value adjustments (3)
IT system implementation (4)
Acquisition related purchase consideration and post-closing adjustments (5)
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 (6)
Tax deduction from vesting of certain share-based awards (7)
Tax effect of normalization adjustments
Adjusted net earnings
Gross profit
Amortization of fair value adjustments (3)
Normalized gross profit
Normalized gross profit margin
Selling, general and administrative expenses
Acquisition and divestiture related cost (2)
IT system implementation (4)
Other
Normalized selling, general and administrative expenses
Earnings from operations
Acquisition and divestiture related costs (2)
Amortization of fair value adjustments (3)
IT system implementation (4)
Acquisition related purchase consideration and post-closing adjustments (5)
Other
Normalized earnings from operations
Normalized operating margin
Twelve months ended
December 31
2023
2022
$ Change
% Change
46,040
52,808
(6,768)
(12.8%)
19,631
22,784
4,833
14,410
5,913
113,611
5,868
1,962
8,385
8,440
7,743
(7,863)
(83)
138,063
(19,631)
(22,784)
(14,410)
(5,913)
(5,458)
(1,022)
(2,761)
66,084
17,695
12,417
-
12,153
5,095
100,168
4,910
269
12,919
793
4,527
-
175
123,761
(17,695)
(12,417)
(12,153)
(5,095)
(4,910)
(1,399)
(4,943)
65,149
1,936
10,367
4,833
2,257
818
13,443
958
1,693
(4,534)
7,647
3,216
(7,863)
(258)
14,302
(1,936)
(10,367)
(2,257)
(818)
(548)
377
2,182
935
10.9%
83.5%
100.0%
18.6%
16.1%
13.4%
19.5%
629.4%
(35.1%)
964.3%
71.0%
(100.0%)
(147.4%)
11.6%
(10.9%)
(83.5%)
(18.6%)
(16.1%)
(11.2%)
26.9%
44.1%
1.4%
Twelve months ended
December 31
2023
2022
$ Change
% Change
233,559
8,440
241,999
35.8%
140,304
(8,385)
(7,743)
83
124,259
95,250
8,385
8,440
7,743
(7,863)
(83)
111,872
16.5%
198,338
793
199,131
36.4%
110,239
(12,919)
(4,527)
(175)
92,618
83,189
12,919
793
4,527
-
175
101,603
18.6%
35,221
7,647
42,868
-
30,065
4,534
(3,216)
258
31,641
12,061
(4,534)
7,647
3,216
(7,863)
(258)
10,269
-
17.8%
964.3%
21.5%
(0.6%)
27.3%
35.1%
(71.0%)
147.4%
34.2%
14.5%
(35.1%)
964.3%
71.0%
(100.0%)
(147.4%)
10.1%
(2.1%)
43
44
- 18 -
- 19 -
ANNUAL REPORT 2023
(1)
(2)
(3)
(4)
The Company’s share-based compensation expense pertains to our LTIP (refer to “Share-based
compensation”), with stock options, PSUs, RSUs, and DSUs expenses, along with associated payroll taxes.
Current period expense mainly pertains to legal, consulting and integration costs associated with the
acquisition and integration of our former distributor partner in China on April 28, 2023, and acquisition of
youtheory in the U.S. on July 19, 2022.
This cost represents the post-closing amortization of the fair value increase of acquired inventories related to
the April 28, 2023 transaction with our former distribution partner in China.
Current period expense mainly pertains to development costs associated with our IT system implementation
to augment our system infrastructure. Unlike other system improvement projects with costs capitalized, due
to its cloud-based nature, these system implementation costs are expensed accordingly.
(5)
To adjust for the fair value of purchase consideration accounted for as compensation on the 2022 youtheory
acquisition, net of post-acquisition working capital adjustments to reflect acquired liabilities.
(6) Costs pertaining to our LTIP, excluding PSUs granted to certain employees relating to business combinations.
(7)
The vesting of share-based compensation provides a tax benefit during the period in which the awards are
settled.
The following table provides selected financial information for the Jamieson Brands operating segment for
the twelve months ended December 31, 2023 and December 31, 2022.
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
Acquisition related adjustments
Share-based compensation
Earnings from operations
Operating margin
Normalized earnings from operations
Normalized operating margin
Adjusted EBITDA
Adjusted EBITDA margin
2023
2022
$ Change
% Change
551,171
214,293
38.9%
222,733
40.4%
133,951
118,002
(7,863)
5,868
82,337
14.9%
98,863
17.9%
121,836
22.1%
439,147
184,039
41.9%
184,832
42.1%
103,996
86,423
-
4,910
75,133
17.1%
93,499
21.3%
113,088
25.8%
112,024
30,254
-
37,901
-
29,955
31,579
25.5%
16.4%
(3.0%)
20.5%
(1.7%)
28.8%
36.5%
(7,863)
(100.0%)
958
7,204
-
5,364
-
8,748
-
19.5%
9.6%
(2.2%)
5.7%
(3.4%)
7.7%
(3.7%)
($ in 000's, except as otherwise noted)
For the twelve months ended December 31,
Gross profit
Amortization of fair value adjustments
Normalized gross profit
Normalized gross profit margin
Selling, general and administrative expenses
Acquisition and divestiture related costs
IT system implementation
Other
Normalized selling, general and administrative expenses
Earnings from operations
Acquisition and divestiture related costs
IT system implementation
Amortization of fair value adjustments
Acquisition related purchase consideration and post-closing adjustments
Other
Normalized earnings from operations
Normalized operating margin
2023
2022
$ Change
% Change
214,293
8,440
222,733
40.4%
133,951
(8,385)
(7,743)
179
118,002
82,337
8,385
7,743
8,440
(7,863)
(179)
98,863
17.9%
184,039
793
184,832
42.1%
103,996
(12,919)
(4,527)
(127)
86,423
75,133
12,919
4,527
793
-
127
93,499
21.3%
30,254
7,647
37,901
-
29,955
4,534
(3,216)
306
31,579
7,204
(4,534)
3,216
7,647
(7,863)
(306)
5,364
-
16.4%
964.3%
20.5%
(1.7%)
28.8%
35.1%
(71.0%)
240.9%
36.5%
9.6%
(35.1%)
71.0%
964.3%
(100.0%)
(240.9%)
5.7%
(3.4%)
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 twelve months ended December 31, 2023 and December 31, 2022.
($ 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
Acquisition and divestiture related costs
Amortization of fair value adjustments
IT system implementation
Acquisition related purchase consideration and post-closing adjustments
Other
Adjusted EBITDA
2023
82,337
11,192
5,913
5,868
8,385
8,440
7,743
(7,863)
(179)
121,836
2022
75,133
9,583
5,095
4,910
12,919
793
4,527
-
128
113,088
$ Change
7,204
1,609
818
958
(4,534)
7,647
3,216
(7,863)
(307)
8,748
% Change
9.6%
16.8%
16.1%
19.5%
(35.1%)
964.3%
71.0%
(100.0%)
(239.8%)
7.7%
45
46
- 20 -
- 21 -
ANNUAL REPORT 2023
The following table provides selected financial information for the Strategic Partners operating segment for
the twelve months ended December 31, 2023 and December 31, 2022.
a reported basis and declined by 2.0% on a constant U.S. dollar basis, impacted by the current conflict in the Middle
East and slowdowns in post-COVID regulatory environments impacting planned growth in new and existing markets.
2023
2022
$ Change
% Change
Gross profit
Revenue in the Strategic Partners segment increased by $16.8 million, or 15.5%, to $125.0 million in YTD
2023 driven by customer growth and pricing.
Strategic Partners
($ 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
($ in 000's, except as otherwise noted)
For the twelve months ended December 31,
Selling, general and administrative expenses
Other
Normalized selling, general and administrative expenses
Earnings from operations
Other
Normalized earnings from operations
Normalized operating margin
125,001
108,222
19,266
15.4%
6,353
6,257
12,913
10.3%
13,009
10.4%
16,227
13.0%
2023
6,353
(96)
6,257
12,913
96
13,009
10.4%
14,299
13.2%
6,243
6,195
8,056
7.4%
8,104
7.5%
10,673
9.9%
16,779
4,967
-
110
62
4,857
-
4,905
-
5,554
-
15.5%
34.7%
2.2%
1.8%
1.0%
60.3%
2.9%
60.5%
2.9%
52.0%
3.1%
2022
$ Change
% Change
6,243
(48)
6,195
8,056
48
8,104
7.5%
110
(48)
62
4,857
48
4,905
-
1.8%
(100.0%)
1.0%
60.3%
100.0%
60.5%
2.9%
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 twelve months ended December 31, 2023 and December 31, 2022.
($ in 000's, except as otherwise noted)
For the twelve months ended December 31,
Earnings from operations
Depreciation of property, plant, and equipment
Other
Adjusted EBITDA
Revenue
2023
12,913
3,218
96
16,227
2022
8,056
2,570
47
10,673
$ Change
4,857
648
49
5,554
% Change
60.3%
25.2%
104.3%
52.0%
Revenue increased by 23.5%, or $128.8 million, to $676.2 million in YTD 2023. This was driven by 25.5%
growth in Jamieson Brands revenue and 15.5% growth in Strategic Partners revenue compared with YTD 2022.
Revenue in the Jamieson Brands segment increased by $112.0 million, or 25.5%, to $551.2 million in YTD
2023. Canada revenue increased by 1.5% in YTD 2023 with continued strength in consumer demand, partially offset
by a reduction in inventory levels by our customers and distributor partners in response to higher costs of capital.
Youtheory contributed $152.3 million, representing 123.4% growth on a reported basis, and 17.4% growth on a pro
forma basis driven by successful innovation in club, growth in existing channels, e-commerce, and continued
distribution gains. China contributed $51.3 million, representing 80.2% growth on a reported basis, reflecting the
transition to an owned-distribution model, continued consumer demand in cross border e-commerce and growth in
domestic retail. On a pro forma local currency basis, China grew 45.1%. Jamieson International increased by 1.6% on
Gross profit increased by $35.2 million to $233.6 million in YTD 2023, while normalized gross profit
increased $42.9 million mainly driven by higher revenue noted above. Gross profit margin decreased by 170 basis
points to 34.5% in YTD 2023, while normalized gross profit margin decreased by 60 basis points to 35.8% reflecting
a lower gross profit margin profile of youtheory revenue. In conjunction with our Chinese distributor acquisition, we
realized an accounting adjustment to increase our acquired inventory to its fair value, of which $8.4 million was
attributable to inventories sold YTD 2023 and included in gross profit.
Gross profit in the Jamieson Brands segment increased by $30.3 million to $214.3 million in YTD 2023,
while normalized gross profit increased by $37.9 million, mainly driven by higher revenue, including organic growth
and the acquisition of youtheory. Gross profit margin decreased by 300 basis points to 38.9%, while normalized gross
profit margin decreased by 170 basis points to 40.4%, reflecting the lower gross profit margin profile of youtheory,
along with category mix.
Gross profit in the Strategic Partners segment increased by $5.0 million to $19.3 million and gross profit
margin increased by 220 basis points to 15.4% in YTD 2023 mainly due to volume driven operating efficiencies, with
pricing offsetting higher input costs.
Selling, general and administrative expenses
SG&A expenses increased by $30.1 million to $140.3 million in YTD 2023. Excluding the impact of
specified costs and the addition of youtheory SG&A of $29.0 million, SG&A expenses increased by $13.8 million or
17.0% in YTD 2023 largely reflecting global expansion initiatives through resources, marketing and infrastructure to
support our growth in China.
Specified costs of $16.0 million in YTD 2023 are mainly comprised of acquisition and divestiture related
costs of $8.4 million and IT system development and implementation costs of $7.7 million.
Acquisition related adjustments
In conjunction with the acquisition of youtheory on July 19, 2022, deferred consideration payable has been
accounted for as compensation expense under the provisions of IFRS 3, Business Combinations. A revaluation of the
deferred consideration resulted in a gain of $13.8 million, partially offset by $5.9 million in other post-acquisition
working capital adjustments reflecting our acquired liabilities.
Share-based compensation
Share-based compensation increased by $1.0 million to $5.9 million in YTD 2023 reflecting wage inflation
and include grants to senior management in the acquired youtheory business compared to the prior year.
Earnings from operations and operating margin
Earnings from operations increased by $12.1 million driven by higher gross profit and acquisition related
adjustments, partially offset by investments in SG&A. Operating margin decreased by 110 basis points to 14.1% in
YTD 2023, reflecting the margin profile of youtheory and higher investments in SG&A. Normalized earnings from
operations increased by $10.3 million, or 10.1% in YTD 2023 and normalized operating margin was 16.5% compared
with 18.6% in YTD 2022.
47
48
- 22 -
- 23 -
ANNUAL REPORT 2023
Earnings from operations in the Jamieson Brands segment increased by $7.2 million and operating margin
decreased by 220 basis points to 14.9% in YTD 2023. Normalized operating margin decreased by 340 basis points to
17.9% in YTD 2023 due to the lower gross profit margin profile of youtheory and higher investments in SG&A.
Earnings from operations in the Strategic Partners segment increased by $4.9 million due to higher revenue
and gross profit. Operating margin increased by 290 basis points to 10.3% in YTD 2023 due to higher gross profit
margins and lower SG&A as a percentage of revenue.
Foreign exchange loss
Foreign exchange loss of $2.0 million in YTD 2023 resulted from changes in currency exchange rates on our
foreign denominated accounts receivable and accounts payable at the end of the period. We experience fluctuations
from USD/CAD and RMB/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 increased by $10.4 million to $22.8 million in YTD 2023 resulting
from higher average borrowings and higher prevailing interest rates.
Accretion on preferred shares
Preferred shares issued on May 16, 2023 as part of the Jamieson-DCP Partnership accrete at approximately
9.6% to its redeemable value of $101.6 million at May 15, 2025. Accretion expense of $4.8 million was realized
during YTD 2023.
Provision for income taxes
Provision for income taxes was $19.6 million in YTD 2023 compared with $17.7 million in YTD 2022. Our
YTD 2023 effective tax rate of 29.9% is higher than YTD 2022 of 25.1% mainly due to the earnings mix in higher
rate jurisdictions and the impact of non-deductible preferred share accretion of $4.8 million.
Net earnings and adjusted net earnings
Net earnings was $46.0 million, while adjusted net earnings was $66.1 million or $0.9 million higher than
YTD 2022, with higher normalized earnings from operations partially offset by higher interest expense.
Net loss attributable to non-controlling interests
Net loss attributable to non-controlling interests of $1.8 million represents DCP’s minority interest on our
net loss related to our China operations largely driven by the amortization of fair value adjustments of acquired
inventories offsetting higher revenue.
EBITDA and Adjusted EBITDA
EBITDA increased by $13.4 million to $113.6 million in YTD 2023 with higher revenue, gross profit and a
gain on revaluation of the deferred consideration in conjunction with the youtheory acquisition being offset by
investments in SG&A.
Adjusted EBITDA increased by $14.3 million to $138.1 million reflecting higher volumes, gross profit and
investments in SG&A. Adjusted EBITDA margin decreased by 220 basis points to 20.4% for YTD 2023 reflecting
lower Adjusted EBITDA margins in Jamieson Brands, partially offset by higher adjusted AEBITDA margins in
Strategic Partners.
Adjusted EBITDA in the Jamieson Brands segment increased by $8.7 million to $121.8 million driven by
higher revenue and gross profit, partially offset by investments in SG&A. Adjusted EBITDA margin decreased by
370 basis points to 22.1% due to category mix and higher SG&A investments to grow our international operations,
specifically in China and the U.S.
Adjusted EBITDA in the Strategic Partners segment increased by $5.6 million, to $16.2 million largely
driven by higher revenue and gross profit. Adjusted EBITDA margin increased by 310 basis points to 13.0% due to
volume driven operating efficiencies and lower SG&A costs as a percentage of revenue.
Summary of Consolidated Quarterly Results
The following is a summary of selected consolidated financial information for each of the eight most recently
completed quarters prepared in accordance with IFRS.
($ in 000's, except per share amounts)
Q4
Q3
2023
Q2
Q1
Q4
Q3
Q2
Q1
2022
Revenue by segment
Jamieson Brands
Strategic Partners
Total 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
Revenue
181,007
39,358
220,365
129,138
22,367
151,505
132,916
34,661
167,577
108,110
28,615
136,725
155,996
36,779
192,775
112,248
26,681
138,929
87,715
24,275
111,990
83,188
20,487
103,675
43,056
24,000
28,615
46,516
50,628
0.57
0.56
0.67
18,957
7,771
14,991
25,512
31,871
0.18
0.18
0.35
18,609
7,204
13,670
22,277
31,056
0.17
0.17
0.32
14,628
7,065
8,808
19,306
24,508
0.17
0.17
0.21
37,104
22,091
26,759
41,201
48,871
0.53
0.52
0.62
16,319
10,882
14,221
21,744
29,505
0.26
0.26
0.34
14,581
10,094
13,415
18,785
24,439
0.25
0.24
0.32
15,185
9,741
10,744
18,438
20,945
0.24
0.23
0.26
Depreciation
Jamieson Brands segment revenue for the last eight quarters were impacted by factors including the following:
Depreciation expense increased by $2.3 million to $14.4 million in YTD 2023 resulting from prior period
investments to increase capacity and higher depreciation from the acquisition impact of youtheory.
Amortization
Amortization expense increased by $0.8 million to $5.9 million in YTD 2023 due to the amortization of
acquired intangibles for youtheory in 2022 and acquired intangibles for China in 2023.
•
•
•
•
•
•
•
•
•
•
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 and timing of shipments of cold and flu season;
business combinations
foreign currency fluctuations; and
impact of global conflicts in Eastern Europe and the Middle Eastern regions
49
50
- 24 -
- 25 -
ANNUAL REPORT 2023
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;
the strategic exiting of programs with customers to drive operating efficiencies;
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;
increases to supply chain costs due to the impact of COVID-19 pandemic and other global geopolitical
factors;
raw material costs in native currency;
timing of marketing spend and variable compensation;
IT systems implementation costs;
costs incurred in business acquisitions, integration and divestitures;
revaluation of contingent consideration from the acquisition of youtheory; 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)
2023
2022
2021
For the year ended
December 31
Revenue by segment
Jamieson Brands
Strategic Partners
Total 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
551,171
125,001
676,172
95,250
46,040
66,084
113,611
138,063
1.10
1.08
1.55
439,147
108,222
547,369
83,189
52,808
65,149
100,168
123,761
1.29
1.25
1.55
1,143,574
517,050
1,107,263
520,867
343,245
107,787
451,032
76,030
52,082
55,217
90,396
100,096
1.30
1.25
1.32
652,475
226,832
0.72
0.64
0.55
Over the three-year period, revenue increased year-over-year driven by strong growth in the Jamieson Brands
segment through an expanded consumer base and international expansion in addition to revenues from acquired
operations in 2022 and 2023.
Total assets have increased over the three-year period reflecting acquired assets in 2022 and 2023, as well as
investments in working capital, 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.
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, 2023, the Company had $211.9 million in cash and available revolving and swingline
facilities and net debt of $288.1 million.
($ in 000's)
Long-term debt
Cash
Net debt (1)
As at December 31,
2023
As at December 31,
2022
325,000
(36,863)
288,137
400,000
(26,240)
373,760
(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 July 19, 2022, Jamieson Laboratories Ltd. (“JLL”) amended and restated its credit agreement to add
Nutrawise Health & Beauty LLC as a Borrower and to provide a secured revolving facility of $500.0 million, plus an
expanded accordion feature of up to $250.0 million (collectively, the “Credit Facilities”), with an extended maturity
to July 19, 2027.
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
51
52
- 26 -
- 27 -
ANNUAL REPORT 2023
maintain an interest coverage ratio of not less than 3.00:1.00 and a leverage ratio not greater than 4.50:1.00. We are
in compliance with all covenants as at the date of this MD&A.
For three and twelve months ended December 31, 2023, JLL made drawings of $57.1 million and $206.0
million, and debt repayments of $33.0 million and $281.0 million, respectively, applied against the Credit Facilities.
For the twelve months ended December 31, 2023, the weighted average interest rate on the Credit Facilities was 6.1%
(2022 – 3.7%). A portion of the Credit Facilities outstanding is fixed through an interest rate swap.
Analysis of Cash Flows — three months ended December 31, 2023 and 2022
($ 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
2023
2022
$ Change
% Change
23,260
7,316
15,944
217.9%
26,081
(2,549)
(9,929)
36,863
26,081
(5,713)
20,368
40,799
(2,692)
(19,183)
26,240
40,799
(11,741)
29,058
(14,718)
143
9,254
10,623
(14,718)
6,028
(8,690)
(36.1%)
5.3%
48.2%
40.5%
(36.1%)
51.3%
(29.9%)
In Q4 2023, cash flows generated from operating activities totalled $26.1 million compared with
$40.8 million in Q4 2022. Cash from operating activities before working capital considerations of $20.4 million was
$8.7 million lower mainly due to investments in marketing, IT infrastructure costs and acquisition related costs. Cash
generated in working capital decreased by $6.0 million impacted by the timing of vendor and income tax payments
made.
Cash Flows Used in Investing Activities
Cash flows used in investing activities in Q4 2023 totalled $2.5 million compared with $2.7 million in Q4
2022. Purchases of property, plant and equipment were relatively consistent compared with Q4 2022.
Cash Flows Used in Financing Activities
Cash flows used in financing activities in Q4 2023 totalled $9.9 million compared with $19.2 million used
in Q4 2022. In Q4 2023, we repurchased shares under the normal course issuer bid (“NCIB”) for $29.0 million,
distributed $8.0 million of dividends to common shareholders, and we made payments of $1.1 million on our lease
liabilities, partially offset by net proceeds of $24.0 million on our Credit Facilities and proceeds of $4.7 million from
the exercise of stock options and our employee share purchase plan (“ESPP”). In Q4 2022, we made net repayments
of $11.4 million on our Credit Facilities, distributed $7.1 million of dividends to common shareholders, and made
payments of lease liabilities of $1.1 million, partially offset by proceeds of $0.4 million for the exercise of stock
options and our ESPP.
Analysis of Cash Flows — twelve months ended December 31, 2023 and 2022
($ 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
2023
2022
$ Change
% Change
26,240
6,775
19,465
287.3%
31,713
(35,131)
14,041
36,863
31,713
32,126
63,839
50,589
(256,530)
225,406
26,240
50,589
27,012
77,601
(18,876)
221,399
(211,365)
10,623
(18,876)
5,114
(13,762)
(37.3%)
86.3%
(93.8%)
40.5%
(37.3%)
18.9%
(17.7%)
In YTD 2023, cash flows generated from operating activities totalled $31.7 million compared with $50.6
million in YTD 2022. Cash from operating activities before working capital considerations of $63.8 million was $13.8
million lower due to lower earnings in the period including acquisition and divestiture related costs. Cash invested in
working capital increased by $5.1 million mainly due to the timing of vendor and income tax payments made.
Cash Flows Used in Investing Activities
Cash flows used in investing activities in YTD 2023 totalled $35.1 million compared with $256.5 million in
YTD 2022, mainly driven by the acquisition of our Chinese distributor in the current year and the acquisition of
youtheory in the prior year. Purchases of property, plant and equipment was $5.1 million lower reflecting the
significant investments made to capacity expansion and equipment in YTD 2022.
Cash Flows Generated from Financing Activities
Cash flows generated from financing activities in YTD 2023 totalled $14.0 million compared with $225.4
million in YTD 2022. YTD 2023 was impacted by the issuance of redeemable preferred shares and warrants of $84.6
million and $14.7 million, respectively, net proceeds from DCP for their minority interest in the Jamieson-DCP
Partnership of $44.4 million, and proceeds of $9.1 million from the exercise of stock options and our ESPP. These
were partially offset by net repayments of $75.0 million on our Credit Facilities, $30.3 million of dividends to common
shareholders, $29.0 million repurchase of common shares, and payments of lease liabilities of $4.5 million. In YTD
2022, we had net proceeds of $250.9 million on our Credit Facilities and proceeds of $4.2 million from the exercise
of stock options and our ESPP, partially offset by the distribution of $26.3 million of dividends to common
shareholders, and payments of lease liabilities of $3.3 million.
53
54
- 28 -
- 29 -
ANNUAL REPORT 2023
Contractual Obligations
The following table summarizes our significant undiscounted maturities of our contractual obligations and
commitments as at December 31, 2023.
($ in 000's)
Operating leases (1)
Trade and other payable
Contingent consideration
Post retirement benefits
Revolving credit facility (2)
Total contractual obligations
2024
2025-2028
Thereafter
Total
$
5,622
135,520
$
18,049
-
$
5,260
-
$
28,931
135,520
2,778
-
143,920
$
19,845
1,078
325,000
363,972
$
-
-
-
5,260
$
22,623
1,078
325,000
513,152
$
1)
We have entered into several operating leases for vehicles, production equipment, computer and
communications equipment, office equipment, and office and warehouse space. In 2023, we assumed a new office
lease in Shanghai in support of our growing investment in China.
(2)
The Credit Facilities provide for a secured revolving facility of $500.0 million, with the option to increase
the revolving facility by $250.0 million. The Credit Facilities mature on July 19, 2027 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.
As at December 31, 2023, we have a $3.3 million holdback on the purchase price and contingent
consideration fair valued at $22.6 million payable to the former owners of youtheory.
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, 2023 is $1.5
million and $5.9 million, respectively (2022 - $1.3 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, 2023, $9.7 million of anticipated foreign currency denominated sales
have been hedged with underlying foreign exchange forward contracts settling at various dates in the three 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 $110.0 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.
Outstanding Share Capital
As at January 1, 2023
Exercise of stock options
Employee stock purchase plan
Repurchase of shares
As at December 31, 2023
As at January 1, 2022
Exercise of stock options
Employee stock purchase plan
Issuance of shares to acquire businesses
As at December 31, 2022
Common Shares
#
41,694,203
684,901
22,181
(849,800)
41,551,485
Common Shares
#
40,406,940
342,655
17,996
926,612
41,694,203
$
307,200
12,301
591
(7,499)
312,593
$
268,214
6,066
572
32,348
307,200
As at December 31, 2023 and 2022, 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.
Normal Course Issuer Bid
On November 3, 2023, the Toronto Stock Exchange (“TSX”) accepted our notice of intention to make a
NCIB. The NCIB permits us to repurchase for cancellation, at our discretion, up to 4,165,201 common shares of the
Company (“Common Shares”) in accordance with the NCIB procedures of the TSX. Under the NCIB, we are entitled
to repurchase up to 25,729 Common Shares through the TSX during each trading day (excluding any purchases made
pursuant to the block purchase exception in accordance with TSX rules).
The NCIB commenced on November 7, 2023 and remains in effect until the earlier of November 6, 2024 and
the date on which the Company has either acquired the maximum number of Common Shares permitted under the
NCIB or otherwise decided not to make any further repurchases. Purchases under the NCIB are made by means of
open market transactions through the facilities of the TSX and through alternative trading systems in Canada. The
price paid by us for any such repurchased Common Shares is the market price at the time of acquisition or such other
price as a securities regulatory authority may permit. All Common Shares repurchased under the NCIB will be
cancelled.
In connection with the NCIB, we also entered into an automatic share purchase plan (“ASPP”) with a
designated broker, to allow for purchases of our Common Shares during certain pre-determined black-out periods,
55
56
- 30 -
- 31 -
ANNUAL REPORT 2023
subject to certain parameters. The ASPP constitutes an “automatic securities purchase plan” under applicable
Canadian securities laws, has been approved by the TSX and was implemented effective December 14, 2023.
Critical Accounting Estimates and Judgments
During the year ended December 31, 2023, we purchased for cancellation 970,200 Common Shares under
our NCIB program for an aggregate consideration of $28.8 million at an average price per Common Share of
approximately $29.72. At December 31, 2023, we recorded an obligation in liabilities of $0.9 million for the
commitment to purchase Common Shares under the ASPP. For the year ended December 31, 2023, we also recorded
transaction costs of $0.2 million as a charge to retained earnings in connection with the NCIB. As at March 12,
2024, we had purchased 29,800 Common Shares under the ASPP at an average price per Common Share of $31.85.
We believe that, from time to time, the market price for the Common Shares may not reflect our strong
financial performance and growth prospects, and that in such circumstances, using the NCIB to repurchase Common
Shares is an attractive investment opportunity and a prudent way to return capital to our shareholders.
Preferred Shares
As at December 31, 2022
Issuance of preferred shares
Transaction costs
Accretion expense
As at December 31, 2023
Preferred Shares
$
-
86,603
(2,027)
4,833
89,409
In conjunction with DCP’s $47.1 million investment in our China Operations on May 16, 2023, DCP also
completed its subscription for 2,527,121 Series A Preference Shares and 2,527,121 warrants to purchase common
shares for proceeds of $101.6 million (USD $75.0 million). The Preferred Shares carry a nominal annual dividend of
$0.01 per share and are redeemable at $101.6 million by DCP between May 15, 2025 and May 15, 2028, representing
the second and fifth anniversary from the completion of the agreement.
At closing, the Preferred Shares were valued at $86.6 million, less transaction costs of $2.0 million. The
Preferred Shares accrete at approximately 9.6% for two years to its redeemable value of $101.6 million at May 15,
2025. The preferred shares accretion expense is $2.0 million and $4.8 million, respectively, for the three and twelve
months ended December 31, 2023.
Warrants
As at December 31, 2022
Issuance of warrants
Transaction costs
As at December 31, 2023
Warrants
#
-
2,527,121
-
2,527,121
$
-
14,962
(257)
14,705
The Warrants are exercisable by DCP beginning May 15, 2025 and expire on May 15, 2028. The exercise
price of the Warrants is $40.19 per share representing a 10% premium to the 20-day volume weighted average common
share price as of the signing of the subscription agreement on February 23, 2023.
At closing, the Warrants were fair valued at $15.0 million, less transaction costs of $0.3 million. The Warrants
are classified as equity in the consolidated statements of financial position.
The fair value of the Warrants was estimated using a Binomial tree model at the inception date. Key
assumptions include the risk free interest rate, volatility and the expected dividend yield.
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, 2023. 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.
Control of China Operations
The Jamieson-DCP Partnership (refer to “Chinese Operations Strategic Partnership”) is governed by a
board consisting of six members, including four from us and two from DCP, with certain reserved matters requiring
a vote of two-thirds of the directors present at the board meeting, including at least one DCP director. Management’s
judgment is involved when determining whether these reserved matters affect our current ability to direct the
relevant activities and whether we have the ability to use our power over this strategic partnership to affect the
amount of our returns. We have determined that we control the China Operations based on all facts and
circumstances assessed during the period. Therefore, the Jamieson-DCP Partnership is consolidated into our audited
consolidated annual financial statements. DCP’s 33% minority interest in the Jamieson-DCP Partnership is recorded
as non-controlling interest.
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
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.
57
58
- 32 -
- 33 -
ANNUAL REPORT 2023
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.
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.
We consider the earnings of certain non-Canadian subsidiaries to be indefinitely invested outside of Canada
on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs
and our specific plans for reinvestment of those subsidiary earnings. If we decide to repatriate the foreign earnings,
we would need to adjust our income tax provision in the period that we determine that the earnings will no longer be
indefinitely invested outside of Canada.
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.
Measurement of fair values
Summary of Accounting Policies
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.
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 9, 14, 17, 18, 20 and 23 in the
accompanying notes of our audited consolidated annual financial statements for the year ended December 31, 2023.
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.
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, 2023.
Recently adopted accounting standards
Amendments to IAS 1, Presentation of Financial Statements - Classification of Liabilities as Current or Non-Current
and Non-Current Liabilities with Covenants
Effective January 1, 2023, we adopted the amendments to IAS 1, issued in January 2020, which clarify the
requirements for classifying liabilities as current or non-current. The amendments clarify the classification of liabilities
as current or non-current based on rights that are in existence at the end of the reporting period and unaffected by
expectations about whether an entity will exercise its right to defer settlement of a liability. The amendments also
clarify the definition of "settlement" of a liability. On October 31, 2022, the IASB issued Non-Current Liabilities with
Covenants (further amendments to IAS 1). These amendments specify that covenants to be complied with after the
reporting date do not affect the classification of debt as current or non-current as of the reporting date. These
amendments are effective in the same period the entity adopts the January 2020 amendments which for the Company
is January 1, 2023.
The amendments had no material impact on the consolidated financial statements.
Amendments to IAS 8, Definition of Accounting Estimates
Effective January 1, 2023, we adopted the amendments to IAS 8 which introduce a definition of "Accounting
Estimates". The amendments clarify the distinction between changes in accounting estimates and accounting policies
as well as the correction of errors. Additionally, the IASB clarifies how entities use measurement techniques and
inputs to develop accounting estimates.
The amendments had no material impact on the consolidated financial statements.
59
60
- 34 -
- 35 -
ANNUAL REPORT 2023
Amendments to IAS 1 and IFRS Practice Statement 2
Limitations of an Internal Control System
Effective January 1, 2023, we adopted the amendments to IAS 1 and IFRS Practice Statement 2 Making
Materiality Judgements, in which it provides guidance and examples to help entities apply materiality judgements to
accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are
more useful by replacing the requirement for entities to disclose their "significant" accounting policies with a
requirement to disclose their "material" accounting policies. In addition, the IASB has provided guidance on how
entities apply the concept of materiality in making decisions about accounting policy disclosures.
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.
The amendments had no material impact on the consolidated financial statements.
Outlook
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, 2023 and have concluded that the
Company's DC&P was effective as at December 31, 2023.
In fiscal 2024 we are expecting another strong year of growth in our Jamieson Brands segment, partially
offset by a temporary decline in our Strategic Partners segment. We cycled off a Strategic Partners customer contract
in late fiscal 2023 and are working to fill this gap, leveraging our pipeline of high potential opportunities.
Jamieson Brands Segment:
Expected revenue range is $615.0 to $650.0 million (+12% to +18%)
•
Jamieson Canada revenue of +4.0% and +7.5%, including consumption growth, lower customer inventories and
pricing
• U.S. business (youtheory) revenue of +13% and +20%, building innovation and distribution on our strong 2023
Internal Control over Financial Reporting
•
The Certifying Officers, along with other members of management, have designed, or caused to be designed
under their supervision, internal control over financial reporting (“ICFR”) to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes prepared in
accordance with IFRS. The Certifying Officers have used the Internal Control – Integrated Framework (2013 COSO
Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission to design the
Company’s ICFR. The Certifying Officers have evaluated, or caused to be evaluated under their supervision, the
effectiveness of the Company’s ICFR as at December 31, 2023 and have concluded that the Company's ICFR was
effective as at December 31, 2023.
There have been no changes in the Company’s ICFR during the three-month period ended December 31,
2023 which have materially affected, or are reasonably likely to materially affect, the Company’s ICFR, subject to the
scope limitation described below.
Scope Limitation on Disclosure Controls and Procedures and Internal Control over Financial Reporting
As permitted by securities legislation, for the twelve months ended December 31, 2023, we have limited the
scope of our design of DC&P and ICFR to exclude controls, policies and procedures of the business of our former
distribution partner in China which we acquired as of April 28, 2023.
Included in our audited consolidated annual financial statements for three and twelve months ended
December 31, 2023 are the following amounts pertaining to the acquired business.
($ in 000's)
Selected Financial Position Data:
Total assets
Total liabilities
As at December 31,
2023
38,736
15,809
Twelve months ended
December 31, 2023 (1)
Selected Statements of Operations Data:
Revenue
39,553
(1) Results reflect the eight month period post acquisition as of April 28, 2023.
double digit growth momentum
Jamieson China revenue of +60% to +80%, building on our strong double digit 2023 growth and a strategic
decision to rapidly accelerate demand generating and brand building investment behind our exceptional recent
growth
Jamieson International revenue of +5% to +15%, including consumption and expansion to new markets
•
• Gross profit margin growth of 150 to 200 basis points driven by volume and segment mix
• Adjusted EBITDA of +5.5% to 8.5%, and margin range of 20.3% to 20.8%, primarily due to increased investment
in China and the U.S. to drive accelerated scale, and the impact of business unit mix
Jamieson Brands Mix Commentary:
Each business unit has its own margin structure with growth rates in each impacting the consolidated profit margin.
Our most mature base businesses of Canada and International with single digit revenue growth and a decade under
professional management, have the strongest margin structures and are stable/growing. Our U.S. business, acquired
in 2022, has strong yet slightly lower margins that are growing as we synergize and scale that business. Our fastest
growing China business under its new owned model as of April 2023 has positive, yet inherently lower margins than
the remainder of our branded business, as we invest and establish a margin baseline from which to grow as we scale
the business at an accelerated rate.
Strategic Partners Segment:
Expected revenue range is $100.0 to $113.0 million (-10% to -20%)
• Reflecting our transition out of a customer contract, partially offset as we onboard new opportunities. Typical
time lapse between ending a contract and starting a new one is 9-12 months.
• Gross profit margin decline of 200 and 250 basis points due to lower sales and reduced manufacturing efficiency
• Adjusted EBITDA margins expected to decline -300 basis points
Consolidated:
Guidance reflects temporary factors impacting our earnings, including the decline in Strategic Partners volumes,
reduced manufacturing efficiency from planned lower production volumes to right size inventory, and strategic
investment choices in our Jamieson Brands growth pillars noted above.
61
62
- 36 -
- 37 -
ANNUAL REPORT 2023
Share-based compensation costs of approximately $7.0 million
• Revenue to range between $720.0 to $760.0 million (+6.5% to +12.5% growth)
• Gross Profit margins growth of between +200 and +250 basis points
• Normalized SG&A including marketing expenses is expected to increase 20% to 35%
•
• Adjusted EBITDA to range from $138.0 to $144.0 million (up to +4.5% growth)
• Adjusted EBITDA margin decline of -120 and -170 basis points
• Adjusted diluted earnings per share to range from $1.55 to $1.65 (up to +6.5% growth)
• A fully diluted share count of approximately 42.5 million shares
• We expect to incur approximately $8.0 million in certain non-capital costs related to the enhancement of our IT
systems and between $3.0 to $4.0 million in costs associated with the temporary closure of our Windsor
manufacturing facility
• We expect to generate between $85.0 and $95.0 million in cash from operations before working capital, IT
systems enhancements and other certain non-operating costs
In fiscal 2025, our long-term earnings trajectory is expected to return to low double-digit growth with Adjusted
EBITDA of between $155.0 and $165.0 million. We expect profitability in 2025 to be driven by Jamieson Brands
revenue growth of 10% to 15%, including resolution of the following items impacting our fiscal 2024 expectations:
• Higher revenue and manufacturing efficiency from balanced consumption, shipments and production levels from
stabilizing finished good, customer and distributor inventories
• Realized manufacturing efficiency within our soft gel operations with a return to previous Strategic Partners
•
volumes
Following the step change investment in brand building activities, in 2025 we expect to limit investment in
headcount, infrastructure and marketing to a rate consistent with Jamieson Brands revenue growth.
In the first quarter of 2024, we expect revenue to range between $118.0 to $128.0 million (-14% to -7%):
• Revenue in the Jamieson Brands segment is expected to increase by up to 6% to approximately $106.0 to $114.0
million
• Revenue in the Strategic Partners segment is expected to decline between 50% and 60%
• We anticipate Adjusted EBITDA to range from $13.0 to $16.0 million. Our guidance reflects investments to drive
brand awareness and growth in the U.S. and China, the temporary closure of our Windsor tablet manufacturing
facility impacting shipment timing in Canada, International and Strategic Partners, and temporary manufacturing
inefficiencies based on lower internal and customer inventories.
appropriate, as a means of mitigating the risk of financial loss from defaults.
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. Our purchases of certain materials and inputs in U.S. dollars are partially offset by international sales in U.S.
dollars. 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.
Current Share and Option Information
Liquidity Risk
As of the date hereof, an aggregate of 41,434,460 Common Shares and 2,527,121 preferred shares are issued
and outstanding. As of the date hereof, the Company had 2,527,121 warrants, 2,441,631 options, 198,915 PSUs,
57,964 RSUs, and 42,346 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.
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
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.
63
64
- 38 -
- 39 -
ANNUAL REPORT 2023
Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
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, 2023 and 2022, 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 material accounting policy information.
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, 2023 and 2022, and its consolidated financial
performance and its consolidated cash flows for the years then ended in accordance with International Financial
Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. 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 the audit of the
consolidated financial statements of the current period. These matters were addressed in the context of the audit of the
consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a
separate opinion on these matters. For the matter below, 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.
65
- 1 -
66
ANNUAL REPORT 2023
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 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 amount of revenues 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.
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 IFRS, 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.
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
67
- 2 -
- 3 -
68
ANNUAL REPORT 2023
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
March 12, 2024
69
- 4 -
Jamieson Wellness Inc.
Consolidated Statements of Financial Position
In thousands of Canadian dollars as at December 31,
Notes
2023
2022
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
Current portion of other long-term liabilities
Long-term liabilities
Long-term debt
Post-retirement benefits
Deferred income tax
Redeemable preferred shares
Other long-term liabilities
Total liabilities
Equity
Share capital
Warrants
Contributed surplus
Retained earnings
Accumulated other comprehensive income
Total shareholders' equity
Non-controlling interests
Total equity
Total liabilities and equity
6
7
23
8, 16
9
10
15
11
15
4, 16
13
14
15
17
4, 16
18
19
36,863
164,499
182,456
3,707
5,335
392,860
106,903
274,411
366,521
2,879
26,240
160,798
154,488
6,580
4,298
352,404
111,709
272,916
367,205
3,029
1,143,574
1,107,263
135,520
2,263
7,546
145,329
325,000
1,078
60,532
89,409
41,031
662,379
312,593
14,705
19,089
80,654
11,892
438,933
42,262
481,195
1,143,574
142,566
7,387
4,852
154,805
400,000
929
58,007
-
61,931
675,672
307,200
-
17,115
85,483
21,793
431,591
-
431,591
1,107,263
(see the accompanying notes to the consolidated financial statements)
Approved on behalf of the Board:
Tania Clarke
Director
Tim Penner
Director
- 5 -
70
ANNUAL REPORT 2023
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,
Jamieson Wellness Inc.
Consolidated Statements of Changes in Shareholders’ Equity
In thousands of Canadian dollars
Notes
Share capital
Warrants
Contributed
surplus
Retained
earnings
Accumulated other
comprehensive
income (loss)
Total
Shareholders'
equity
Non-controlling
interests
Total equity
As at January 1, 2022
Net earnings for the year
Issuance of treasury shares
Issuance of shares to acquire businesses
Common share dividend ($0.64 per share)
Other comprehensive income
Unrealized foreign currency gain on translation of
foreign operations
Share-based compensation
As at December 31, 2022
Net earnings for the year
Issuance of treasury shares
Issuance of warrants
Minority interest in subsidiary
Common share dividend ($0.72 per share)
Repurchase of common shares
Other comprehensive income
Unrealized foreign currency gain on translation of
foreign operations
Share-based compensation
As at December 31, 2023
18
4
20
18
5, 19
5
18
20
(see the accompanying notes to the consolidated financial statements)
268,214
-
6,638
32,348
-
-
-
-
307,200
-
12,892
-
-
-
(7,499)
-
-
-
312,593
-
-
-
-
-
-
-
-
-
-
-
14,705
-
-
-
-
-
-
14,705
14,786
-
(2,445)
-
18
-
-
4,756
17,115
-
(3,749)
-
-
72
-
-
-
5,651
19,089
58,998
52,808
-
-
(26,323)
-
-
-
85,483
47,882
-
-
-
(30,257)
(22,454)
-
-
-
80,654
23
-
-
-
-
7,982
13,788
-
21,793
-
-
-
-
-
-
(2,174)
(7,727)
-
11,892
342,021
52,808
4,193
32,348
(26,305)
7,982
13,788
4,756
431,591
47,882
9,143
14,705
-
(30,185)
(29,953)
(2,174)
(7,727)
5,651
438,933
-
-
-
-
-
-
-
-
-
(1,842)
-
-
44,414
-
-
-
(310)
-
42,262
342,021
52,808
4,193
32,348
(26,305)
7,982
13,788
4,756
431,591
46,040
9,143
14,705
44,414
(30,185)
(29,953)
(2,174)
(8,037)
5,651
481,195
Revenue
Cost of sales
Gross Profit
Selling, general and administrative expenses
Acquisition related adjustments
Share-based compensation
Earnings from operations
Foreign exchange loss
Accretion on preferred shares
Interest expense and other financing costs
Earnings before income taxes
Provision for income taxes
Net earnings
Other comprehensive income
Actuarial (loss) gain not to be reclassified subsequently to net
earnings
Income tax recovery (expense)
Net of tax
Unrealized (loss) gain on amounts that may be reclassified to net
earnings on cash flow hedges
Income tax recovery (expense)
Net of tax
Unrealized (loss) gain on amounts that may be reclassified to net
earnings on translation of foreign operations
Total other comprehensive (loss) income
Comprehensive income
Net earnings (loss) attributable to:
Shareholders
Non-controlling interests
Comprehensive income (loss) attributable to:
Shareholders
Non-controlling interests
Earnings per share attributable to common shareholders:
Basic, earnings per share
Diluted, earnings per share
Weighted average number of shares:
Basic
Diluted
(see the accompanying notes to the consolidated financial statements)
Notes
25, 26
7
4
20
17
22
15
14
15
23
15
28
28
2023
2022
676,172
442,613
233,559
140,304
(7,863)
5,868
95,250
1,962
4,833
22,784
65,671
19,631
46,040
(38)
8
(30)
(2,873)
729
(2,144)
(8,037)
(10,211)
35,829
47,882
(1,842)
46,040
37,981
(2,152)
35,829
1.10
1.08
547,369
349,031
198,338
110,239
-
4,910
83,189
269
-
12,417
70,503
17,695
52,808
2,954
(753)
2,201
7,748
(1,967)
5,781
13,788
21,770
74,578
52,808
-
52,808
74,578
-
74,578
1.29
1.25
41,960,516
42,650,501
40,998,065
42,116,350
71
- 6 -
- 7 -
72
ANNUAL REPORT 2023
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
8
10
17
20
4
27
4
8
10
13
13
16
5, 17
5, 19
5
18
18
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
Accretion on redeemable preferred shares
Share-based compensation
Revaluation of contingent consideration
Others
Net change in non-cash working capital
Investing activities
Acquisition of business
Additions to property, plant and equipment, net
Acquisition of intangible assets
Financing activities
Proceeds from credit facilities
Repayment to credit facilities
Payment of lease liabilities
Issuance of redeemable preferred shares, net
Issuance of warrants, net
Proceeds from minority interest in subsidiary
Exercise of stock options and ESPP
Dividends to common shareholders
Repurchase of common shares
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)
2023
46,040
14,410
5,913
1,763
4,833
5,651
(13,759)
(1,012)
(32,126)
31,713
(25,823)
(8,835)
(473)
(35,131)
206,019
(281,019)
(4,536)
84,576
14,705
44,414
9,143
(30,257)
(29,004)
14,041
10,623
26,240
36,863
22,910
23,353
2022
52,808
12,153
5,095
1,669
-
4,756
-
1,120
(27,012)
50,589
(241,960)
(13,933)
(637)
(256,530)
339,387
(88,512)
(3,339)
-
-
-
4,193
(26,323)
-
225,406
19,465
6,775
26,240
11,551
12,378
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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, 2023
were authorized for issue by the Board of Directors of the Company on March 12, 2024. 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, Toronto, Ontario, and Irvine, California
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 Australia Pty Ltd.
Nutrawise UK Ltd.
Jamieson Health Products UK Ltd.
Jamieson Health Products USA Ltd.
Nutrawise Health & Beauty LLC
Jamieson Health Products Netherlands B.V.
Nutrawise Japan GK
Jamieson Health Products (Cayman Islands) Limited
Jamieson Health Products (Hong Kong) Limited
Jamieson Health Products (Shanghai) Co., Ltd.
Jamieson Health Products (Hong Kong) Trading
Limited
2023
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
66.7
66.7
66.7
66.7
2022
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Principal Place of
Operations
Functional Currency
Canada
Canada
Canada
Australia
United Kingdom
United Kingdom
United States of America
United States of America
Netherlands
Japan
Cayman Islands
China
China
China
Canadian dollar
Canadian dollar
Canadian dollar
Australian dollar
British pound sterling
United States dollar
United States dollar
United States dollar
United States dollar
Japanese yen
United States dollar
United States dollar
Chinese yuan
United States dollar
2. Summary of 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. Certain
supplementary information in U.S. dollars is rounded to the nearest thousand where applicable.
73
- 8 -
- 9 -
74
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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);
• 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 profit or
loss, and each component of OCI are attributed to the equity holders of the Company and to the non-controlling
interest, even if this results in the non-controlling interests having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with
the Company’s accounting policies.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction.
If the Company loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities,
non-controlling interest and other components of equity, while any resultant gain or loss is recognized in profit
or loss.
2.3 Summary of accounting policies
The following are the 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.
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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.
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.
75
76
- 10 -
- 11 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
All other liabilities are classified as non-current.
2.3.4 Revenue recognition
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 4)
• Quantitative disclosures of fair value measurement hierarchy (Note 23)
• Financial instruments (including those carried at amortized cost) (Notes 13 and 23)
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.
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.
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.
77
78
- 12 -
- 13 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
• 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.
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
• 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
3-10 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.
79
80
- 14 -
- 15 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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
15-30 years
3-10 years
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.
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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
Lease liabilities
Contingent consideration
IFRS 9 Measurement
Amortized cost
Amortized cost
Amortized cost
Amortized cost
FVTPL
Fair value (hedge accounting)
Amortized cost
FVTPL
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
81
82
- 16 -
- 17 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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.
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 8)
• Goodwill and intangible assets (Notes 9 and 10)
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.
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 14) 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, 2023.
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.
As of January 30, 2022, the Company transitioned 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 is accounted for as a defined contribution pension plan, where
the Company’s contributions are expensed as incurred. The Company does not bear any performance risk on
83
84
- 18 -
- 19 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
plan investments and is not required to fund the plan beyond the required annual contributions. Any pension
surplus or deficit is a joint responsibility of the members and employers and may affect future contribution rates;
the deficit or surplus is determined by the Plan’s actuarial valuation.
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.
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.
PSUs 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. For PSUs, 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. 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.
A maximum of 8.7% of the issued Common Shares outstanding are reserved for issuance under the LTIP and the
Company’s legacy option plan combined.
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.
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
85
86
- 20 -
- 21 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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.
2.3.18 Adoption of Amended IFRS Pronouncements
Amendments to IAS 1, Presentation of Financial Statements - Classification of Liabilities as Current or Non-
Current and Non-Current Liabilities with Covenants
Effective January 1, 2023, the Company adopted the amendments to IAS 1, issued in January 2020, which clarify
the requirements for classifying liabilities as current or non-current. The amendments clarify the classification of
liabilities as current or non-current based on rights that are in existence at the end of the reporting period and
unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability. The
amendments also clarify the definition of "settlement" of a liability. On October 31, 2022, the IASB issued Non-
Current Liabilities with Covenants (further amendments to IAS 1). These amendments specify that covenants to
be complied with after the reporting date do not affect the classification of debt as current or non-current as of
the reporting date. These amendments are effective in the same period the entity adopts the January 2020
amendments which for the Company is January 1, 2023.
The amendments had no material impact on the consolidated financial statements.
Amendments to IAS 8, Definition of Accounting Estimates
Effective January 1, 2023, the Company adopted the amendments to IAS 8 which introduce a definition of
"Accounting Estimates". The amendments clarify the distinction between changes in accounting estimates and
accounting policies as well as the correction of errors. Additionally, the IASB clarifies how entities use
measurement techniques and inputs to develop accounting estimates.
The amendments had no material impact on the consolidated financial statements.
Amendments to IAS 1 and IFRS Practice Statement 2
Effective January 1, 2023, the Company adopted the amendments to IAS 1 and IFRS Practice Statement 2
Making Materiality Judgements, in which it provides guidance and examples to help entities apply materiality
judgements to accounting policy disclosures. The amendments aim to help entities provide accounting policy
disclosures that are more useful by replacing the requirement for entities to disclose their "significant"
accounting policies with a requirement to disclose their "material" accounting policies. In addition, the IASB has
provided guidance on how entities apply the concept of materiality in making decisions about accounting policy
disclosures.
The amendments had no material impact on the consolidated financial statements.
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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.
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.
Control of China Operations
On May 16, 2023, the Company completed its strategic partnership with DCP Capital (“DCP”) in respect of the
Company’s operations in China. The transaction involved DCP’s contribution of $47,096 (USD $35,000) in
capital in exchange for a 33% minority interest in Jamieson Health Products (Cayman Islands) Limited
(“Jamieson-DCP Partnership”), which in turn holds Jamieson Health Products (Shanghai) Co., Ltd., Jamieson
Health Products (Hong Kong) Trading Limited, and Jamieson Health Products (Hong Kong) Limited (together
with Jamieson-DCP Partnership, “China Operations”), less transaction costs of $2,682.
The Jamieson-DCP Partnership is governed by a board consisting of six members, including four from the
Company and two from DCP, with certain reserved matters requiring a vote of two-thirds of the directors present
at the board meeting, including at least one DCP director. Management’s judgment is involved when determining
whether these reserved matters affect the Company’s current ability to direct the relevant activities and whether
the Company has the ability to use its power over this strategic partnership to affect the amount of the
Company’s returns. The Company has determined that it controls the China Operations based on all facts and
circumstances assessed during the period. Therefore, the Jamieson-DCP Partnership is consolidated into the
Company’s Financial Statements. DCP’s 33% minority interest in the Jamieson-DCP Partnership is recorded as
non-controlling interest.
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.
87
88
- 22 -
- 23 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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.
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 9, 10, 14, 17, 19, 20 and
23.
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,
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.
The Company considers the earnings of certain non-Canadian subsidiaries to be indefinitely invested outside of
Canada on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic
cash needs and the Company’s specific plans for reinvestment of those subsidiary earnings. If the Company
decides to repatriate the foreign earnings, the Company would need to adjust its income tax provision in the
period it determined that the earnings will no longer be indefinitely invested outside of Canada.
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.
Business Combinations
4.1 Acquisition of former distribution partner in China
On April 28, 2023, the Company completed its acquisition of the operating assets from its former distribution
partner in China for a total cash consideration of $25,823, before post-closing cash adjustments. The acquisition
allows the Company to directly operate its sales, marketing and distribution activities in China, and marks a step
forward in the Company’s brand expansion plans in China.
89
90
- 24 -
- 25 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
The following table provides a reconciliation of measurement period adjustments to the purchase price allocation
of the net assets acquired at their fair value amounts:
The following table represents the purchase price allocation of the net assets acquired at their fair value
amounts:
Inventories
Customer relationships
Goodwill
Deferred tax liability
Total net assets acquired
Estimated fair value as
at April 28,2023
$
13,697
8,900
4,867
(1,641)
25,823
The intangible assets acquired include customer relationships, which are amortized over approximately 15 years
and expensed through the consolidated statements of operations and comprehensive income on a straight-line
basis over the estimated useful life.
The estimated goodwill represents the future economic benefit arising from other assets acquired in the
acquisition that are not individually identifiable and separately recognized. The estimated goodwill arising from
the acquisition of $4,867 is attributable to expected future income and cash-flow projections and synergies the
Company expects to achieve in leveraging its platform. Certain intangible assets and goodwill are not expected to
be deductible for tax purposes.
4.2 Acquisition of Nutrawise Health & Beauty Corporation
On July 19, 2022, Jamieson Health Products USA Ltd. (“Jamieson USA”) acquired Nutrawise Health & Beauty
Corporation (“Nutrawise” or “youtheory”), and Nutrawise became a wholly owned subsidiary of Jamieson USA.
In connection with the transaction, Nutrawise Health & Beauty Corporation converted from a California
corporation to a California limited liability company (LLC). Consideration for the acquisition totalled $309,889
before post-closing cash adjustments, plus acquisition costs of $8,051 which were recognized within selling,
general and administrative expenses in the audited consolidated statements of operations and comprehensive
income for the year ended December 31, 2022. The purchase price was funded with cash of $241,960 (refer to
Note 13), share consideration of $32,348 and acquisition-related contingent consideration of $35,581 for a total
of $309,889. Pursuant to the purchase agreement, the former owners are entitled to additional payments up to
USD $190,000 subject to meeting specific earnings before interest expense, income taxes, depreciation and
amortization (EBITDA) targets up to 2025.
Nutrawise is an innovator, manufacturer and marketer of premium supplements under the youtheory brand in
the United States and other international markets. The Company expects that this strategic milestone will create
a platform for the Company to expand in the U.S., which hosts the world’s largest vitamin, mineral and
supplements market, and leverage the broad Jamieson portfolio under the youtheory brand.
Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable and accrued liabilities
Property, plant and equipment, net
Goodwill
Intangible assets
Other long term liabilities
Total net assets acquired
Final fair value as at
July 19, 2022
$
5,264
20,119
1,663
(35,285)
8,143
143,356
171,054
(4,425)
309,889
The intangible assets acquired include customer relationships and trademarks in the amounts of $31,100 and
$139,954, respectively. The customer relationships are amortized over 20-25 years and expensed through the
consolidated statements of operations and comprehensive income on a straight-line basis over the estimated
useful life. The Company expects its trademarks to generate economic benefit in perpetuity, and accordingly, has
assigned the trademarks as an indefinite life intangible asset.
The estimated goodwill represents the future economic benefit arising from other assets acquired in the
acquisition that are not individually identifiable and separately recognized. The estimated goodwill arising from
the acquisition of $143,356 is attributable to expected future income and cash-flow projections and synergies the
Company expects to achieve in combining the acquisition into its operations while leveraging its platform in the
United States. Estimated goodwill is expected to be deductible for tax purposes.
Indefinite life intangibles including goodwill and trademarks are tested for impairment annually as at December
31 and otherwise as required if events occur that indicate that the net carrying value may not be recoverable.
4.2.1 Acquisition related adjustments
As at December 31, 2023, the contingent consideration with respect to the Nutrawise acquisition was revalued to
$22,623. Accordingly, $13,759 was recorded in acquisition related adjustments in the consolidated statements of
operations and comprehensive income, net of post-acquisition working capital adjustments of $5,896 to reflect
acquired liabilities. The contingent consideration was classified as $2,778 in the current portion of other long-
term liabilities and $19,845 in other long-term liabilities in the Company’s consolidated statements of financial
position. As at December 31, 2022, the contingent consideration was classified as $542 in the current portion of
other long-term liabilities and $36,693 in other long-term liabilities in the Annual Financial Statements.
The fair value of contingent consideration is estimated using a Monte-Carlo simulation model. The simulation is
revaluated at the end of each reporting period and any changes in fair value are recognized in the consolidated
statements of operations and comprehensive income. The fair value for the contingent consideration is an
estimate requiring judgment and subject to fluctuations in key assumptions, including EBITDA forecasts until
2025, weighted average cost of capital of 12.5%, risk-free-rate of 4.1%, volatility of 40.0%, and earn-out payment
discount rate of 7.2%.
91
92
- 26 -
- 27 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
5.
China Operations Strategic Partnership
On May 16, 2023, the Company completed its strategic partnership with DCP in respect of the Company’s
operations in China. The transaction involved DCP’s contribution of $47,096 (USD $35,000) in capital in
exchange for a 33% minority interest in Jamieson Health Products (Cayman Islands) Limited, which in turn
holds Jamieson Health Products (Shanghai) Co., Ltd., Jamieson Health Products (Hong Kong) Trading Limited,
and Jamieson Health Products (Hong Kong) Limited, less transaction costs of $2,682.
The Jamieson-DCP Partnership is subject to an exit mechanism for DCP and various termination clauses. Exit
mechanisms may include a sale to Jamieson or third party, a public offering or a mutually agreed upon
termination of the agreement. Between the fourth and fifth anniversary of the Jamieson-DCP Partnership
agreement (which period is subject to delay in specified circumstances), the Company has the right, but not the
obligation, to repurchase DCP’s 33% minority interest at a pre-determined multiple of net revenues of the China
Operations (less net debt). If the Company does not execute its right to repurchase the 33% minority interest by
the fifth anniversary of the Jamieson-DCP Partnership agreement, a USD $10,000 charge is due to DCP. DCP
also has the right to negotiate and execute an exit event including the potential sale of the entire Jamieson-DCP
Partnership to a third party. The Company has a right of first refusal should DCP propose a sale of its shares in
the Jamieson-DCP Partnership.
The Company’s right to purchase DCP’s 33% minority interest in the Jamieson-DCP Partnership at a pre-
determined multiple of net revenues represents a call option whose value will be driven by the difference, if any,
between the fair value of DCP’s interest in the China Operations compared to the pre-determined net revenue
multiple calculation. The Company will assess the fair value of the call option at each reporting period and has
determined the fair values to be $nil at inception and as at December 31, 2023.
The Company has determined that the USD $10,000 potential charge for not executing its right to repurchase
the 33% minority interest is not a present obligation for the Company, therefore not recognized in the Financial
Statements.
In conjunction with DCP’s $47,096 investment in the Company’s China Operations on May 16, 2023, DCP also
completed its subscription for certain preferred shares and warrants of the Company. Please refer to Note 17 for
details of the preferred shares and Note 19 for details of the warrants.
6.
Accounts receivable
As at December 31,
Trade
Other miscellaneous receivables
Allowance for expected credit losses
2023
$
163,917
701
(119)
164,499
2022
$
156,591
4,326
(119)
160,798
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.
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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
7.
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
2023
$
135,607
20,969
3,075
4,967
(119)
164,499
2023
$
92,026
21,384
73,781
(4,735)
182,456
398,204
2022
$
138,137
18,257
3,372
1,151
(119)
160,798
2022
$
65,953
23,979
68,114
(3,558)
154,488
319,529
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, 2023, inventory write-downs of $5,243 were expensed through cost of sales
(2022 - $5,529).
93
94
- 28 -
- 29 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
8.
Property, plant and equipment
10.
Intangible assets
Cost
At January 1, 2022
Assets acquired through business combinations
Additions
Disposals
Foreign currency translation
At December 31, 2022
Additions
Disposals
Foreign currency translation
At December 31, 2023
Accumulated Depreciation
At January 1, 2022
Depreciation for the year
Disposals
Foreign currency translation
At December 31, 2022
Depreciation for the year
Disposals
Foreign currency translation
At December 31, 2023
Net book value
At December 31, 2023
At December 31, 2022
Land
$
Buildings
$
Machinery and
equipment
$
Right-of-use
assets
(Note 16)
$
2,497
-
-
-
-
2,497
-
-
-
2,497
-
-
-
-
-
-
-
-
-
28,273
-
949
-
-
29,222
827
-
-
30,049
8,218
1,008
-
-
9,226
1,054
-
-
10,280
71,747
1,401
12,162
(353)
462
85,419
6,937
(58)
(281)
92,017
25,544
6,090
(269)
370
31,735
7,236
(52)
(223)
38,696
30,445
4,425
4,504
-
205
39,579
1,016
(40)
(124)
40,431
7,802
3,954
-
8
11,764
4,875
(40)
(23)
16,576
Other
$
11,184
2,317
822
-
226
14,549
1,071
-
(135)
15,485
5,605
1,101
-
126
6,832
1,245
-
(53)
8,024
Total
$
144,146
8,143
18,437
(353)
893
171,266
9,851
(98)
(540)
180,479
47,169
12,153
(269)
504
59,557
14,410
(92)
(299)
73,576
2,497
2,497
19,769
19,996
53,321
53,684
23,855
27,815
7,461
7,717
106,903
111,709
Other is comprised of furniture and fixtures, computer equipment, and leasehold improvements.
9.
Goodwill
Balance, beginning of the year
Assets acquired through business combinations (Note 4)
Foreign currency translation
Balance, end of year
2023
$
272,916
4,867
(3,372)
274,411
2022
$
122,975
143,356
6,585
272,916
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.
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 (2022 - 13x - 15x) 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, 2023 and
2022.
Customer
relationships
$
Trademarks
$
Registrations,
licenses, and other
$
Cost
At January 1, 2022
Assets acquired through business combinations
Additions
Foreign currency translation
At December 31, 2022
Assets acquired through business combinations (Note
4)
Additions
Foreign currency translation
At December 31, 2023
Accumulated amortization
At January 1, 2022
Amortization charge for the year
Foreign currency translation
At December 31, 2022
Amortization charge for the year
Foreign currency translation
At December 31, 2023
Net book value
At December 31, 2023
At December 31, 2022
101,585
31,100
-
1,445
134,130
8,900
-
(877)
142,153
26,370
4,218
13
30,601
4,912
(40)
35,473
115,157
139,954
-
6,501
261,612
-
-
(3,307)
258,305
-
-
-
-
-
-
-
106,680
103,529
258,305
261,612
4,016
-
637
-
4,653
-
473
-
5,126
1,712
877
-
2,589
1,001
-
3,590
1,536
2,064
Total
$
220,758
171,054
637
7,946
400,395
8,900
473
(4,184)
405,584
28,082
5,095
13
33,190
5,913
(40)
39,063
366,521
367,205
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, $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.) and $143,148 is allocated to the youtheory sales CGU.
The estimated recoverable amount for the domestic and international sales, specialty brands, youtheory sales,
and China CGUs were 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 (2022 - 13x - 15x), 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 analyses are not sensitive to reasonable possible changes to the multiple.
Other 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, 2023 and 2022.
11.
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
2023
$
76,460
46,758
5,178
6,775
-
349
135,520
2022
$
74,584
54,183
3,106
10,394
18
281
142,566
96
95
- 30 -
- 31 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
12. Related party transactions
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.
Transactions with former owners of acquired businesses
As at December 31, 2023, the Company has a $3.3 million (2022 - $3.4 million) holdback on the purchase price
and contingent consideration fair valued at $22.6 million (2022 - $37.2 million) payable to the former owners of
youtheory.
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
For the year ended December 31, 2023, the weighted average interest rate on the Credit Facilities was 6.1%
(2022 – 3.7%). A portion of the Credit Facilities outstanding is fixed through the interest rate swap (Refer to
Note 23). As at December 31, 2023, the interest rate on the Credit Facilities was 6.7% (2022 – 5.9%).
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 4.50:1.00.
Share-based compensation
The Borrowers are in compliance with all covenants as of December 31, 2023 and 2022.
The Company offers its employees a share-based compensation plan. Please refer to Note 20 for details of the
share-based compensation awards.
14.
Post-retirement benefits
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
2023
$
3,986
3,460
7,446
2022
$
4,793
2,868
7,661
The amounts disclosed in the table are the amounts recognized as an expense during the reporting period related
to key management personnel.
13.
Long-term debt
On July 19, 2022, Jamieson Laboratories Ltd. (“JLL”) amended and restated its credit agreement to add
Nutrawise Health & Beauty LLC as a Borrower and to provide a secured revolving facility of $500,000, plus an
expanded accordion feature of up to $250,000 (collectively, the “Credit Facilities”), with an extended maturity to
July 19, 2027.
The table below illustrates the drawings and repayments applied against the Credit Facilities.
For the years ended December 31,
Credit Facilities
Drawings
Repayments
2023
$
206,019
(281,019)
(75,000)
2022
$
339,387
(88,512)
250,875
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
2023
$
929
(23)
38
46
88
1,078
2022
$
3,544
(25)
(2,954)
106
258
929
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
2023
%
5.00
4.75
4.50
2022
%
3.00
5.00
4.50
Impact of an increase/decrease in the health care trend of 1%:
As at December 31,
2023
2022
Accrued benefit obligation
1% Increase
1% Decrease
Service cost
Interest cost
1% Increase
1% Decrease
1% Increase
1% Decrease
181
145
(148)
(119)
22
20
(17)
(16)
10
7
(8)
(6)
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
97
98
- 32 -
- 33 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
another. The same method has been applied for the sensitivity analysis as used to calculate the recognized post-
retirement liability.
Reconciliation of effective tax rate
The following payments are expected contributions to the post-retirement benefit plan over the next ten years:
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,
Within one year
Between 2 and 5 years
Between 5 and 10 years
Total
2023
$
29
177
342
548
2022
$
23
153
317
493
As of January 30, 2022, the Company transitioned its current employer-sponsored group RRSP plan for certain
production hourly employees to participation in The CAAT Plan.
The Company’s contributions to the CAAT Plan during the year amounted to $1,358, in accordance with the
agreed upon contribution schedule:
Contribution Schedule
January 29, 2023 to February 3, 2024
February 4, 2024 to February 1, 2025
February 2, 2025 to January 31, 2026
February 1, 2026 to January 30, 2027
On and after January 31, 2027
Participating Member
Contributions based
on “Annual Earnings”
Employer
Contributions
based on “Annual
Earnings”
Additional Employer
Contributions based on
"Annual Earnings"
2.0%
2.5%
3.0%
3.5%
5.0%
6.0%
6.0%
6.0%
6.0%
6.0%
0.0%
0.5%
1.0%
1.5%
0.0%
The Company does not bear any performance risk on plan investments and is not required to fund the plan
beyond the required annual contributions. Any pension surplus or deficit is a joint responsibility of the members
and employers and may affect future contribution rates; the deficit or surplus is determined by the Plan’s
actuarial valuation. Based on the most recent actuarial valuation as at January 1, 2023, the CAAT Plan has a
surplus of $4,713.
15.
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
Foreign currency translation
Provision for income taxes
2023
$
17,755
1,876
-
19,631
2022
$
16,048
1,669
(22)
17,695
As at December 31,
Income tax expense at combined statutory rate of 26.5% (2022 -
25.4%)
Non-deductible expenses
Preferred share accretion
Share-based compensation
Other and deductible temporary differences not benefited
Foreign currency translation
Income tax recognized in other comprehensive income
As at December 31,
Derivative instruments
Post-retirement benefit plan
Deferred income tax assets and liabilities
2023
$
17,431
85
1,281
376
458
-
19,631
2023
$
729
8
737
2022
$
17,944
61
-
(470)
182
(22)
17,695
2022
$
(1,967)
(753)
(2,720)
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
Reserves
Interest Limitation
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
2023
$
7,934
265
275
(15,364)
(55,261)
1,420
2,692
386
(57,653)
2,879
(60,532)
(57,653)
2022
$
5,806
465
236
(15,646)
(46,362)
539
863
(879)
(54,978)
3,029
(58,007)
(54,978)
The Company has Canadian and foreign based non-capital loss carry forwards as at December 31, 2023 of
$30,016 (2022 - $24,207) on a pre-tax basis. The Canadian non-capital loss expires in 2038-2043. The foreign
99
100
- 34 -
- 35 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
non-capital loss expires from 2024 to indefinitely.
16.
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, 2022
Additions
Assets acquired through business combinations
Depreciation expense
Interest expense
Foreign currency and other adjustments
Payments
As at December 31, 2022
Additions
Depreciation expense
Interest expense
Foreign currency and other adjustments
Payments
As at December 31, 2023
Property and
Plant
$
21,662
4,459
4,425
(3,767)
-
197
-
26,976
768
(4,702)
-
(101)
-
22,941
Right-of-use assets
Vehicles
$
14
(6)
8
(8)
-
-
-
-
-
-
-
-
-
-
Other
Equipment
$
967
45
-
(181)
-
-
-
831
248
(165)
-
-
-
914
Total
$
22,643
4,504
4,425
(3,954)
-
197
-
27,815
1,016
(4,875)
-
(101)
-
23,855
Lease
liabilities
$
23,748
4,442
4,425
-
991
272
(4,330)
29,548
1,032
-
1,010
(90)
(5,546)
25,954
The following table shows the maturity profile of the Company’s financial liabilities based on contractual
undiscounted payments as at December 31, 2023:
As at December 31,
Within one year
After one year but not more than five years
More than five years
17.
Preferred shares
As at December 31, 2022
Issuance of preferred shares
Transaction costs
Accretion expense
As at December 31, 2023
2023
$
5,622
18,049
5,260
28,931
2022
$
5,286
18,965
9,047
33,298
Preferred shares
$
-
86,603
(2,027)
4,833
89,409
In conjunction with DCP’s $47,096 investment in the Company’s China Operations on May 16, 2023, DCP also
completed its subscription for 2,527,121 Series A Preference Shares of the Company (“Preferred Shares”) and
2,527,121 warrants (“Warrants”) (refer to Note 19) to purchase common shares of the Company for proceeds of
$101,565 (US$75,000). The Preferred Shares carry a nominal annual dividend of $0.01 per share and are
redeemable at $101,565 by DCP between May 15, 2025 and May 15, 2028, representing the second and fifth
anniversary from the completion of the agreement.
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
At closing, the Preferred Shares were fair valued at $86,603, less transaction costs of $2,027, and classified as
liability in the consolidated statements of financial position. The Company estimated the fair value of the
Preferred Shares by fair valuing the warrants first and assigned the residual value to the Preferred Shares. The
Preferred Shares accrete at approximately 9.6% for two years to its redeemable value of $101,565 as at May 15,
2025. The Preferred Shares accretion expense is $4,833 for the year ended December 31, 2023.
18. Common shares
As at January 1, 2023
Exercise of stock options
Employee stock purchase plan
Repurchase of shares
As at December 31, 2023
As at January 1, 2022
Exercise of stock options
Employee stock purchase plan
Issuance of shares to acquire businesses
As at December 31, 2022
Common Shares
#
41,694,203
684,901
22,181
(849,800)
41,551,485
Common Shares
#
40,406,940
342,655
17,996
926,612
41,694,203
$
307,200
12,301
591
(7,499)
312,593
$
268,214
6,066
572
32,348
307,200
As at December 31, 2023 and 2022, 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.
Normal Course Issuer Bid
On November 3, 2023, the Toronto Stock Exchange (“TSX”) accepted the Company’s notice of intention to make
a normal course issuer bid (“NCIB”). The NCIB permits Jamieson to repurchase for cancellation, at its
discretion, up to 4,165,201 common shares of the Company (“Common Shares”) in accordance with the NCIB
procedures of the TSX. Under the NCIB, Jamieson is entitled to repurchase up to 25,729 Common Shares
through the TSX during each trading day (excluding any purchases made pursuant to the block purchase
exception in accordance with TSX rules).
The NCIB commenced on November 7, 2023 and remains in effect until the earlier of November 6, 2024 and the
date on which the Company has either acquired the maximum number of Common Shares permitted under the
NCIB or otherwise decided not to make any further repurchases. Purchases under the NCIB are made by means
of open market transactions through the facilities of the TSX and through alternative trading systems in Canada.
The price paid by the Company for any such repurchased Common Shares is the market price at the time of
acquisition or such other price as a securities regulatory authority may permit. All Common Shares repurchased
under the NCIB will be cancelled.
In connection with the NCIB, the Company also entered into an automatic share purchase plan (“ASPP”) with a
designated broker, to allow for purchases of its Common Shares during certain pre-determined black-out
periods, subject to certain parameters. The ASPP constitutes an “automatic securities purchase plan” under
applicable Canadian securities laws, has been approved by the TSX and was implemented effective December 14,
2023.
101
102
- 36 -
- 37 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
During the year ended December 31, 2023, Jamieson purchased for cancellation 970,200 Common Shares under
its NCIB program for an aggregate consideration of $28,831 at an average price per Common Share of
approximately $29.72. At December 31, 2023, Jamieson recorded an obligation in liabilities of $949 for the
commitment to purchase Common Shares under the ASPP. For the year ended December 31, 2023, the Company
also recorded transaction costs of $173 as a charge to retained earnings in connection with the NCIB.
19. Warrants
As at December 31, 2022
Issuance of warrants
Transaction costs
As at December 31, 2023
Warrants
#
-
2,527,121
-
2,527,121
$
-
14,962
(257)
14,705
The Warrants are exercisable by DCP beginning May 15, 2025 and expire on May 15, 2028. The exercise price of
the Warrants is $40.19 per share representing a 10% premium to the 20-day volume weighted average common
share price as of the signing of the subscription agreement on February 23, 2023.
At closing, the Warrants were fair valued at $14,962, less transaction costs of $257, and classified as equity in the
consolidated statements of financial position.
The fair value of the Warrants was estimated using a Binomial tree model at the inception date. Key assumptions
include the risk-free interest rate of 3.5%, volatility of 30.0%, and the expected dividend yield of 2.4%.
20. Share-based compensation
Outstanding options held to purchase Common Shares have the following expiry dates and exercise prices:
Range of Exercise
Prices
$0.00-$20.00
$20.01-$30.00
>$30.01
Number of
Options
Outstanding
494,178
911,739
1,063,956
2023 Outstanding Options
2023 Exercisable Options
Weighted Average
Remaining
Contractual Life
(Years)
Weighted
Average
Exercise
Price/Share
Number of
Exercisable
Options
Weighted
Average
Exercise
Price/Share
3.26
2.72
4.03
13.41
23.64
33.50
494,178
903,999
360,113
13.41
23.61
33.96
The following is a summary of the Company’s share option plan activity for the years ended December 31:
2023
2022
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
103
2,821,276
242,211
(559,523)
(34,091)
2,469,873
1,758,290
- 38 -
23.29
32.48
15.41
33.24
25.84
22.86
2,576,838
416,679
(156,705)
(15,536)
2,821,276
1,946,322
21.77
32.85
23.13
29.78
23.29
19.25
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 year
Awards exercisable, end of year
Outstanding awards, beginning of year
Granted
Exercised
Forfeited
Outstanding awards, end of year
Awards exercisable, end of year
2023
PSUs (number of
shares)
RSUs (number of
shares)
DSUs (number of
shares)
158,857
109,105
(67,937)
(1,110)
198,915
-
838
59,713
(843)
(1,744)
57,964
-
2022
23,865
23,549
(3,879)
(1,189)
42,346
21,339
PSUs (number of
shares)
RSUs (number of
shares)
DSUs (number of
shares)
198,036
52,229
(91,408)
-
158,857
-
62
776
-
-
838
-
15,563
12,742
(4,440)
-
23,865
-
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.
2023
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
$
32.48
$
33.75
$
32.48
$
32.60
$
7.52
$
39.83
$
32.48
$
32.60
29.0%
3.5%
4-5.5
2.1%-2.8%
n/a
4.3%
3.0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Black-Scholes
Monte Carlo
Market Value
Market Value
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
2022
PSUs
DSUS
RSUs
$
32.85
$
33.06
$
32.85
$
32.85
$
7.18
30.0%
1.8%
4.0
1.8%
Black-Scholes
$
37.05
n/a
2.1%
3.0
n/a
Monte Carlo
$
32.85
n/a
n/a
n/a
n/a
Market Value
$
32.85
n/a
n/a
n/a
n/a
Market Value
(i)
(ii)
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.
- 39 -
104
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
(iii)
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, 2023 is $5,868 (2022 -
$4,910), of which $5,651 (2022 - $4,756) is classified as contributed surplus in the Company’s consolidated
financial statements and $217 (2022 - $154) is related to employment taxes paid on exercise of options.
21.
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 14)
2023
$
93,065
21,224
134
114,423
2022
$
84,271
18,085
364
102,720
Additionally, the Company recognized termination benefits for the year ended December 31, 2023 of $741 (2022
- $592) related to reorganization. The costs related to both years are mainly comprised of severance costs and
salary continuances.
22.
Interest expense and other financing costs
As at December 31,
Interest on debt and borrowings
Interest on lease liabilities (Note 16)
2023
$
21,774
1,010
22,784
2022
$
11,426
991
12,417
23. 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 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 sales)
Interest rate swaps designated as hedging
instruments
Notional
Amount
$CAD
2023
Notional
Amount
$USD
Fair Value
Asset
$
Liability
$
Notional
Amount
$CAD
Notional
Amount
$USD
Fair Value
Asset
$
Liability
$
2022
-
(7,000)
412
110,000
110,000
-
(7,000)
3,295
3,707
-
-
-
-
120,000
120,000
-
-
-
-
6,580
6,580
-
-
-
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 $110,000 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.
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 the Preferred Shares and long-term debt as at December 31, 2023 and December 31, 2022
approximates their fair value. The fair value of the Company’s Preferred Shares and 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 values of the Preferred Shares and long-term debt have been classified as
Level 2 in the fair value hierarchy.
The call option entered into as part of the China Operations (refer to Note 5) has been valued using the
discounted cash flow approach and a methodology that incorporates similar recent market transactions and
market multiples of comparable peer companies. 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.
The fair values of the contingent consideration related to the Nutrawise acquisition (refer to Note 4) and the call
option entered into as part of the China Operations (refer to Note 5) have been classified as Level 3 in the fair
value hierarchy.
There were no transfers between levels during 2023 and 2022.
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.
105
106
- 40 -
- 41 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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. Revenue from our China operations are primarily in Chinese yuan.
The Company uses foreign exchange forward contracts to manage foreign exchange transaction exposure in U.S.
dollars. As of December 31, 2023, $9,655 (December 31, 2022 - $nil) of anticipated U.S. dollar denominated
sales have been hedged with underlying foreign exchange forward contracts.
The following table demonstrates the sensitivity to a reasonably possible change in the U.S. dollar exchange rate,
with all other variables held constant, of the Company’s net income before income taxes (due to changes in the
fair value of monetary assets and liabilities including non-designated foreign currency derivatives) and the
Company’s pre-tax OCI (due to changes in the fair value of foreign exchange forward contracts designated as
cash flow hedges).
As at December 31,
2023
2022
Change in U.S.$ FX
rate
%
Effect on earnings
(loss) before tax
$
Effect on pre-tax OCI
$
5
5
4,439
4,694
350
-
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.
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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,
2023
2022
Increase/decrease
in basis points
+/-
Effect on earnings
(loss) before tax
$
100
100
2,576
1,559
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.
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, 2023, the Company had $211,863 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 global conflict
2023
$
369,232
143,920
513,152
2022
$
465,634
148,394
614,028
The continued risk surrounding the Eastern Europe and Middle East conflicts may have an adverse impact
on the Company’s business, financial condition, and results of operations. The Company does not conduct
direct business operations in regions affected by these conflicts, however, the Company has a sales
presence within the broader Eastern Europe and Middle East regions. At current, the Company has not had
any measurable disruption to its supply of raw materials and ability to service its customers.
Over the past year, international markets have experienced heightened inflation and fluctuations in
consumer sentiments. These challenges have notably affected the Company’s international business
operations, particularly in neighbouring Eastern European and Middle Eastern regions where the
Company conducts business. The Company continues to monitor the environment to respond rapidly to
the evolving economic landscape and to ensure the continued stability of its business.
107
108
- 42 -
- 43 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
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, Preferred Shares 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 its Credit Facilities, as described in Note 13.
24. Commitments and contingencies
Lease commitments
The Company does not have any lease contracts that have not yet commenced as at December 31, 2023.
General contingencies
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.
25.
Segment information
The Company has two reportable operating segments with all material operations carried out in Canada and the
United States:
• 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.
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
Revenue
Earnings from operations
Foreign exchange loss
Accretion on preferred shares
Interest expense and other financing costs
Provision for income taxes
Net earnings
Revenue
Earnings from operations
Foreign exchange loss
Interest expense and other financing costs
Provision for income taxes
Net earnings
Jamieson Brands
$
551,171
82,337
Jamieson Brands
$
439,147
75,133
Strategic Partners
$
125,001
12,913
For the year ended December 31, 2023
Total
$
676,172
95,250
1,962
4,833
22,784
19,631
46,040
Strategic Partners
$
108,222
8,056
For the year ended December 31, 2022
Total
$
547,369
83,189
269
12,417
17,695
52,808
Share-based compensation is allocated to the Jamieson Brands operating segment.
Geographic information
The following table provides the proportion of revenue based on the location of the customer.
For the years ended December 31,
Canada
USA
China
Other
Information about major customers
2023
55.1%
30.2%
7.8%
6.9%
100.0%
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
Customer 4
2023
14.6%
13.1%
10.7%
9.1%
47.5%
2022
68.9%
18.3%
5.2%
7.6%
100.0%
2022
8.9%
13.2%
16.0%
10.8%
48.9%
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.
109
110
- 44 -
- 45 -
ANNUAL REPORT 2023
Jamieson Wellness Inc.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
26. 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 operations
China operations
International operations
U.S. operations
Total revenue from contracts with customers
2023
$
314,121
51,296
33,499
152,255
551,171
2022
$
309,554
28,465
32,971
68,157
439,147
Revenue from international operations and U.S. operations are primarily denominated in U.S. dollars. Revenue
from China operations are primarily denominated in Chinese yuan. Both are subject to fluctuations in foreign
exchange (see Note 23 - Financial instruments and risk management activities) on the conversion to Canadian
dollars.
27. Net change in non-cash working capital
For the years ended December 31,
Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable and accrued liabilities
Taxes
Net change in non-cash working capital
28. Earnings per share
2023
$
(3,701)
(14,271)
(1,035)
(7,995)
(5,124)
(32,126)
2022
$
(51,347)
(15,363)
2,460
32,747
4,491
(27,012)
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, DSUs and warrants.
The following table sets forth the calculation of basic and diluted earnings per share:
Year ended December 31,
Basic
Continuing operations
Diluted
Continuing operations
2023
2022
Net earnings
available to common
shareholders
Weighted
average number of
shares
EPS $
Net earnings
available to common
shareholders
Weighted
average number of shares
EPS $
46,040
46,040
41,960,516
1.10
42,650,501
1.08
52,808
52,808
40,998,065
1.29
42,116,350
1.25
111
- 46 -
112
ANNUAL REPORT 2023
833-223-2666
info@jamiesonwellness.com
REPORT DATED AT MARCH 28, 2024
1 Adelaide Street East
Suite 2200
Toronto, Ontario M5C 2V9
jamiesonwellness.com