POISED
FOR LONG-TERM GROWTH
2023 ANNUAL REPORT
01
POISED
FOR LONG-TERM GROWTH
Delivering consistent, profitable growth has been an integral part of the Rogers playbook for 135 years.
Over the past decades, we have steadily invested in our operations to maintain our position as the leading supplier of sugar in Canada.
On strategic occasions, we have gone beyond maintenance capital spending to fulfill a specific need in the marketplace. Given the
rapidly expanding food manufacturing industry in Ontario and Québec, and related demand for sugar, we have announced a major
capacity and logistics expansion project in Eastern Canada. This two-year initiative will increase the production capacity of our Montréal
refinery plant by 20%, or 100,000 metric tonnes. On the maple syrup side, we have invested in automation to reduce the cost of our
bottling operations and will pursue additional projects that enhance productivity. In short, Rogers is poised for long-term growth.
$1.1B
TOTAL REVENUES
$37.0M
CAPITAL EXPENDITURES
$110.9M
ADJUSTED EBITDA1
6.7%
DIVIDEND YIELD
ROGERS holds all of the common shares of Lantic
LANTIC also owns all of the common shares of The
Inc., which operates cane sugar refineries in Montréal,
Maple Treat Corporation (“TMTC”). TMTC operates
Québec and Vancouver, British Columbia, as well as the
plants in Granby, Dégelis and in St-Honoré-de-Shenley,
only Canadian sugar beet processing facility in Taber,
Québec and in Websterville, Vermont. TMTC’s products
Alberta. Lantic / Rogers’ products include granulated
include maple syrup and derived maple syrup products
(regular and organic), brown, icing, liquid, cubed sugars
and are sold mainly under retail private labels brands
and specialty syrups, as well as agave, organic coconut
and various house brands.
sugar, Nature’s Raw™ sugar, maple sugar and flakes and
other dry blends.
(1) See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
02
795,307
METRIC TONNES OF
SUGAR SOLD
738,413
METRIC TONNES OF
DOMESTIC SUGAR SOLD
SUGAR VOLUME
DOMESTIC SUGAR VOLUME
794,600
795,307
738,413
726,944
779,505
761,055
741,144
704,009
700,987
689,578
2019 2020 2021 2022 2023
2019 2020 2021 2022 2023
03
SUGAR VS. MAPLE SYRUP
REVENUES
19%
Maple Syrup
Products
81%
Sugar
57%
Industrial
SUGAR REVENUES
BY SEGMENT
7%
Export
24%
Liquid
12%
Consumer
REVENUES BY GEOGRAPHIC
DISTRIBUTION
3%
Europe
3%
Other
13%
U.S.
81%
Canada
04
DALLAS H. ROSS
Chairman
To my fellow shareholders,
At our annual meeting in February, we laid out five focus areas for 2023 covering safety, market trends, value
creation for shareholders, progress in Environmental, Social and Governance (ESG) and the advancement
of the company’s expansion and optimization plans to meet and benefit from future growth.
IN EACH CATEGORY WE DELIVERED, AND WE TAKE PRIDE IN SHARING THESE
ACCOMPLISHMENTS WITH YOU.
In 2023, we continued our focus on the well-being of our employees in each of our facilities. Going forward,
we will continue to act purposefully every day to keep our employees and our visitors safe at all times.
Fiscal 2023 was the second consecutive year of record results, outperforming our outstanding 2022 results
in each category of sugar volumes sold, consolidated revenues and adjusted EBITDA. The strength of our
Sugar segment continued to drive our strong financial results, contributing to approximately 90 per cent
of our adjusted EBITDA. As the expansion in global demand for sugar-containing products remains intact,
favourable pricing dynamics in Canada continue to make Rogers Sugar, the sugar supplier of choice for
Canada’s growing food manufacturing industry.
05
For the second year in a row, the strength of our Sugar segment more than offset the lingering challenges
in our Maple segment. While the whole maple industry is affected by the current slow-down of the global
economy, we were able to maintain our leading position as the world’s largest bottler of maple syrup.
We continue to see our Maple segment as an important sweetener alternative and remain committed to
growing this business in the coming years.
DURING THE YEAR, WE PAID A STABLE QUARTERLY DIVIDEND OF $0.09 PER SHARE,
OR $0.36 PER SHARE FOR THE YEAR. RETURNING VALUE TO OUR SHAREHOLDERS
PLAYS A SIGNIFICANT ROLE IN OUR STRATEGY FOR CAPITAL ALLOCATION.
Our consistent results and healthy long-term prospects make Rogers Sugar an attractive option for
investors seeking a stable dividend as well as future growth.
In July, the company published its third ESG report, showcasing the strides that we have made to reduce our
environmental footprint, promote transparency, and enhance our positive contribution to the communities
we serve. Our enhanced monitoring practices will provide a strong starting point against which to measure
our future progress.
In fiscal 2023, we formally announced the construction of our eastern capacity and logistics expansion
project after completing the related detailed design and planning activities. This project is expected to
increase the supply of sugar in Eastern Canada by approximately 100,000 metric tonnes and should be
completed in the first half of fiscal 2026. This initiative will position us to meet the needs of our customers in
Eastern Canada, while also allowing us to benefit from healthy demand growth for years to come. While it
is still early, we are pleased with the progress of this expansion project so far. We look forward to providing
you with updates as we move forward in 2024.
In the coming year, we expect the strength in demand and pricing to support stable organic growth for our
Sugar business, which will continue to be the main driver of our overall financial performance. In Maple,
we expect the financial performance to continue to benefit from the efficiency improvements made in fiscal
2023.
I would like to thank our employees for their exceptional contributions throughout the year. Importantly,
as we move forward, we appreciate and want to acknowledge the trust and ongoing support of our
shareholders. We look forward to taking this journey with you.
On behalf of the Board of Directors,
Dallas H. Ross
Chairman
06
OUR FACILITIES
6
7
4
5
3
8
1
2
Rogers
TMTC
1. Head Office and
Cane Refinery
Vancouver, BC
2. Beet Plant
Taber, AB
3. Distribution Centre
Toronto, ON
4. Administrative Office
and Cane Refinery
Montréal, QC
5. Bottling Plant, Eastern Sales
and Distribution
Granby, QC
6 Bottling Plant, Warehousing
and Shipping
Saint-Honoré-de-Shenley, QC
7. Bottling Plant, Warehousing
and Shipping
Dégelis, QC
8. Bottling Plant, Warehousing
and Shipping
Websterville, VT
07
MICHAEL WALTON
President and CEO
FISCAL 2023 WAS A YEAR OF RECORD FINANCIAL PERFORMANCE, SURPASSING
THE OUTSTANDING YEAR WE HAD IN 2022. STRONG FUNDAMENTALS FOR SUGAR
CONTINUE TO FORTIFY OUR CONFIDENCE IN THE LONG-TERM OUTLOOK FOR
THE BUSINESS AND UNDERPIN OUR CONSISTENT AND PROFITABLE GROWTH.
Overall, our business generated record consolidated revenue of $1.1 billion
in 2023 and record adjusted EBITDA of more than $110 million. Our strong
financial performance allowed us to pay $38 million in common share
dividends to our shareholders.
I am proud to say that we have achieved these great financial results while
maintaining our focus on providing a safe and healthy workplace for our
employees and our business partners throughout all our facilities. In 2023,
we continued to solidify our commitment to Environmental, Social and
Governance (ESG) initiatives. Our annual ESG report, published in July,
highlights several positive changes we have made in the past year aimed at
increasing our transparency and the sustainability of our business.
08
We have seen a consistent increase in the production of sugar-containing
products from our customers across the country in recent years. Domestic
demand for high quality and reliable sugar is growing steadily, and that is where
we are concentrating our efforts. A key part of our growth strategy is focused
on supporting the increasing demand from the domestic food transformation
industry, and the thousands of food manufacturing jobs in Canada it supports.
This demand growth supports our recent announcement of a substantial
investment to build new production capacity and to optimize our existing
facilities. The recently announced capacity expansion of our sugar refining
assets and related logistics infrastructure in Eastern Canada is directly
targeted at supporting the next wave of increased industrial sugar demand.
SUGAR
DURING FISCAL 2023 WE ACHIEVED RECORD SALES VOLUMES OF OVER 795,000
METRIC TONNES, THE COMPANY’S HIGHEST VOLUME TO DATE. THIS VOLUME
SUPPORTS THE DELIVERY OF OUR HIGHEST RECORD ADJUSTED EBITDA FOR OUR
MAIN BUSINESS SEGMENT OF OVER $98 MILLION.
The robust performance was anchored by industrial segment growth and
improved margin for sugar refining activities.
As expected, we experienced a decline in export volumes as we prioritized
the growing demand of the domestic market. Our export business remains
important to our overall strategy and our operating flexibility allows us to
export excess supply, when available.
The production out of our cane sugar refineries in Montréal and Vancouver was
very strong in 2023, as we focused our efforts on improving and optimizing our
refining process. The production volume from our Taber beet sugar refinery at
105,000 metric tonnes was slightly lower than anticipated due to unfavourable
weather conditions late in the growing season. Throughout the year, we made
use of our national network to meet any shortfall and ensure the domestic
market was adequately supported.
In the spring, we announced a two-year agreement with the Alberta Sugar
Beet Growers for the supply of sugar beets to our Taber sugar-refining plant,
covering the 2023 and 2024 crops. This agreement allows for the security of
supply to our clients and ensures a predictable and favourable environment for
the sugar beet industry.
09
MAPLE
In Maple, we made improvements to operations throughout the year that
helped mitigate an otherwise challenging business environment. Our adjusted
EBITDA for this business segment, at over $13 million, was lower than initially
anticipated due to the lingering inflationary pressures negatively impacting
the global demand for maple syrup. Despite the difficult business environment,
we delivered higher results than last year as we were able to maintain our
world-leading position in the market.
In the second half of the year, we implemented automation projects for the
operations of our two main bottling facilities in Granby and Degelis. These
targeted investments had an immediate impact on improving the performance
and efficiency of our production process. We intend to continue to invest
responsibly in our Maple business segment in the coming years as we see this
business as a key element of our long-term strategic goals.
PATH OF SUCCESS
WE UNDERSTAND AND VALUE OUR IMPORTANT ROLE IN CANADA’S FOOD SUPPLY
CHAIN, AS AN ESSENTIAL INGREDIENT SUPPLIER OF MANY OF THE PRODUCTS
PEOPLE ENJOY EVERY DAY.
Going forward, we are well positioned to meet the growing demand for sugar-
containing products by optimizing our Western operations and investing in
new production capacity, including our recently announced Eastern capacity
increase project. This project is expected to provide approximately 100,000
metric tonnes of additional quality refined sugar to the market beginning in
the first half of 2026.
I am very proud of the success we achieved in 2023, and I want to thank all
our employees, customers and shareholders for their support. I look forward
to the continued growth of both of our business segments and I am confident
we have laid a strong foundation and are well on the path to future success.
Sincerely,
Michael Walton
President and Chief Executive Officer
10
ESG HIGHLIGHTS
WE ARE PLEASED TO PRESENT AN OVERVIEW OF ROGERS’ THIRD ENVIRONMENTAL,
SOCIAL AND GOVERNANCE (ESG) REPORT, WHICH WAS PUBLISHED IN JULY 2023.
To drive our ESG program forward, we have created a formal ESG structure and onboarded a new
Director of Sustainability. This important step has led us to incorporate several changes within the
report, targeting increased transparency and responsibility.
As a food manufacturer with eight facilities across Canada and the US, we understand the impact our
operations and products have on the environment and communities where we are located. This is why
we have invested over $9 million since 2018 in projects that have improved our manufacturing process
energy efficiency and reduced associated carbon emissions.
We have also taken a significant step in meeting our target of 100% raw sugar supply being sourced
from producers who follow verified or certified sustainable agricultural practices through a multi-year
supply partnership with Raízen. This large exporter represents a source of certified non-genetically
modified organism (“non-GMO”) and certified Bonsucro raw sugar for our Eastern Canada operations.
We recognize the importance of our actions during the past year for measuring future performance as
we streamlined the process for gathering and reporting ESG data. However, this is just the first step as
we will use 2022 as a baseline to measure the success of future strategies and targets to reduce our
environmental impact, increase our social awareness and review our governance practices.
In summary, we made significant headway in 2022 that is presented in our third ESG report and we are
committed to continuing our process of improvement in the coming years.
11
To view the complete ESG Report, go to:
https://lanticrogers.com/media/financial-reports/2023/07/
rsi_esg_2023fy22_en_final.pdf
ENVIRONMENT(1)
4,186,409
TOTAL ENERGY USE (GJ)
258,981(2)
GHG EMISSIONS (TCO2E)
SOCIAL(1)
$231K
CHARITABLE DONATIONS
34%
PERCENTAGE OF WOMEN
IN MANAGEMENT
LEVEL ROLES
GOVERNANCE(1)
33%
WOMEN ON ROGERS’
BOARD
100%
MANAGERS’ INCENTIVE PAY
IS LINKED TO ONE OR MORE
ESG OBJECTIVES
(1) All figures based on the 2022 financial year.
(2) Total Scope 1 & Scope 2 emissions.
12
TABLE OF CONTENTS
OUR BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Net finance costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Maple. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
USE OF FINANCIAL DERIVATIVES FOR HEDGING. . . . . . . . . . . . . . . . . 16
Summary of Quarterly Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Financial condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Natural Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Foreign Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Contractual obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
BUSINESS HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Capital resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SELECTED FINANCIAL DATA AND HIGHLIGHTS . . . . . . . . . . . . . . . . . . 18
OUTSTANDING SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Adjusted results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ENVIRONMENT, SOCIAL, AND GOVERNANCE (“ESG”) . . . . . . . . . . . 4 1
SEGMENTED INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
RISK AND UNCERTAINTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
NON-GAAP MEASURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Maple. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
CRITICAL ACCOUNTING ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
OUTLOOK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
CHANGES IN ACCOUNTING PRINCIPLES
AND PRACTICES NOT YET ADOPTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Maple products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
CONSOLIDATED RESULTS AND SELECTED
FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Total revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1
DISCLOSURE CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . 55
INTERNAL CONTROL OVER FINANCIAL REPORTING . . . . . . . . . . . . . 56
CHANGES IN INTERNAL CONTROL
OVER FINANCIAL REPORTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Results from operating activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13
MANAGEMENT’S
DISCUSSION AND
ANALYSIS
CONSOLIDATED
FINANCIAL
STATEMENTS
FOR THE FISCAL YEARS ENDED
SEPTEMBER 30, 2023 AND OCTOBER 1, 2022
2023 Annual ReportManagement’s Discussion & Analysis 14
T his Management’s Discussion and Analysis (“MD&A”) of
Rogers Sugar Inc.’s (the “Company”, “Rogers”, “RSI” or “our”,
“we”, “us”) dated November 29, 2023 should be read in
conjunction with the audited consolidated financial statements and
Lantic’s sugar products are marketed under the “Lantic” trademark
in Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward
Island and Newfoundland (collectively, “Eastern Canada”), and the
“Rogers” trademark in British Columbia, Alberta, Saskatchewan and
related notes for the years ended September 30, 2023 and October 1,
Manitoba (collectively, “Western Canada”). These products include
2022. The Company’s MD&A and consolidated financial statements
granulated, icing, cube, yellow and brown sugars, liquid sugars
are prepared using a fiscal year which typically consists of 52 weeks,
and specialty syrups. Lantic also operates a distribution center in
however, every five to six years, a fiscal year consists of 53 weeks.
Toronto, Ontario.
The fiscal years ended September 30, 2023 and October 1, 2022
consist of 52 weeks.
TMTC operates bottling plants in Granby, Dégelis and St-Honoré-
de-Shenley, Québec and in Websterville, Vermont. TMTC’s products
All financial information contained in this MD&A and audited
include maple syrup and derived maple syrup products supplied
consolidated financial statements are prepared in accordance with
under retail private label brands in approximately 50 countries and
International Financial Reporting Standards (“IFRS”), as adopted by
are sold under various brand names.
the International Accounting Standards Board. All amounts are in
Canadian dollars unless otherwise noted, and the term “dollar”, as
Our business has two distinct segments - Sugar – which includes
well as the symbol “$”, designate Canadian dollars unless otherwise
refined sugar and by-products and Maple – which includes maple
indicated.
syrup and maple derived products.
Management is responsible for preparing the MD&A. Rogers’
audited consolidated financial statements and MD&A have been
SUGAR
approved by its Board of Directors upon the recommendation of its
Audit Committee prior to release.
FACILITIES
Additional information relating to Rogers, Lantic Inc. (“Lantic”)
Canada with cane refineries in Montréal, Québec and Vancouver,
(Rogers and Lantic together referred as the “Sugar segment”),
British Columbia, and a sugar beet factory in Taber, Alberta. Lantic
The Maple Treat Corporation (“TMTC”) and Highland Sugarworks
also operates a distribution center in Toronto, Ontario. The strategic
Inc. (“Highland”) (the latter two companies together referred to as
location of these facilities provides operating flexibility and the
“TMTC” or the “Maple segment”), including the annual information
ability to service all customers across the country efficiently and on
Lantic is the only sugar producer with operating facilities across
form, quarterly and annual reports, annual environmental, social
a timely basis.
and governance report, management proxy circular, short form
prospectus and various press releases are available on Rogers’
In the fourth quarter of fiscal 2023, the Board of Directors of Lantic
website at www.LanticRogers.com or on the Canadian Securities
approved the expansion of the production and logistic capacity
Administrators’ System for Electronic Document Analysis and
of its eastern sugar refining operations in Montréal and Toronto
Retrieval+ (“SEDAR+”) website at www.sedarplus.ca. Information
(the “Expansion Project”). This investment is expected to provide
contained in or otherwise accessible through our website does not
100,000 metric tonnes of incremental refined sugar capacity to the
form part of this MD&A and is not incorporated into the MD&A by
growing Canadian market, at an estimated construction cost of
reference.
OUR BUSINESS
approximately $200 million. The Expansion Project is made up of
three key components: (i) the expansion of refining capacity with
the addition of new sugar refining equipment at the Montréal plant;
(ii) the construction of a new bulk rail loading section in Montréal
to serve increased shipments to the Ontario market; and (iii) the
Rogers has a long history of providing high quality sugar products to
expansion of logistics and storage capacity in the Greater Toronto
the Canadian market and has been operating since 1888.
Area. We expect the incremental production and logistic capacity to
be in service in the first half of fiscal 2026.
Lantic, Rogers wholly owned subsidiary, operates cane sugar
refineries in Montréal, Québec and Vancouver, British Columbia, as
OUR PRODUCTS
well as the only Canadian sugar beet processing facility in Taber,
All Lantic operations supply high quality white sugar as well as a
Alberta.
broad portfolio of specialty products which are differentiated by
colour, granulation, packaging format and raw material source.
Rogers Sugar Inc.Management’s Discussion & Analysis 15
Sales are focused in four specific market segments: industrial,
In fiscal 2023, we concluded a new two-year agreement with the
consumer,
liquid and export products. The domestic market
Alberta Sugar Beet Growers (“Growers”) for the supply of sugar
represents over 90% of our company’s total volume.
beets to the Taber beet plant, for which the crop harvested in the fall
of 2023 will be the first year of the agreed contract.
In fiscal 2023, Lantic’s domestic refined sugar sales volume grew by
2% which is higher than previous years and aligned with the overall
PRICING
growth of the Canadian market.
The price of refined sugar deliveries from the Montréal and Vancouver
raw cane facilities is directly linked to the price of the Raw #11 (“Raw
The industrial granulated segment is the largest segment accounting
#11”) market traded on the Intercontinental Exchange (“ICE”). All
for 57% of all shipments. This segment is composed of a broad range
sugar transactions are economically hedged, thus eliminating the
of food processing companies that serve both the Canadian and
impact of volatility in world raw sugar prices. This applies to all
the American markets. In fiscal 2023, this segment sales volume
refined sugar sales made by these plants.
increased by 2% as compared to the previous year.
In the consumer segment, a wide variety of products is offered under
between US 17.36 cents and US 27.62 cents per pound and closed
the Lantic and Rogers brand names. This segment has remained
at US 26.48 cents per pound at the end of the fiscal year, which was
stable in fiscal 2023 and is representing approximately 12% of all
US 8.06 cents higher than the closing value at October 1, 2022. Price
In fiscal 2023, the price of Raw #11 traded on the ICE fluctuated
shipments.
variation during the year was more volatile than in fiscal 2022 when
Raw #11 prices fluctuated between US 17.20 cents and US 20.51 cents
The liquid segment is composed of core users whose process or
per pound. The average Raw #11 price in fiscal 2023 at US 22.48
products require liquid sucrose. Some customers in this segment
cents was higher than the fiscal 2022 average of US 18.89 cents.
group can substitute liquid sucrose with high fructose corn syrup
The higher average price of Raw #11 was mainly due to sustained
(“HFCS”). The purchasing patterns of substitutable users are largely
strong global sugar demand and the effect of a global sugar supply
influenced by the absolute price spread between HFCS and liquid
shortage in the market.
sugar. Increasingly, other considerations, such as ingredient labeling
may bear some influence on the purchasing decision. The liquid
segment sales increased by 1.5% this year and are representing
MAPLE
approximately 24% of all shipments in fiscal 2023.
FACILITIES
Lantic’s Taber plant is the only beet sugar factory in Canada and
TMTC operates three plants in Québec, namely, in Granby, Dégelis
is therefore the only producer of Canadian origin sugar. From this
and in St-Honoré-de-Shenley, and one in Websterville, Vermont.
facility, we service a mix of customers across Western Canada. We
also sell into other North American markets through various quotas
OUR PRODUCTS
assigned through trade agreements. As such, this plant is the sole
TMTC’s products are mainly comprised of the following: bottled
participant in an annual Canadian-specific quota of refined sugar to
maple syrup, bulk maple syrup and maple sugar and flakes.
the United States (“US”) of 19,900 metric tonnes of Canadian-origin
sugar.
Bottled maple syrup is packaged in a variety of ways and sizes,
including bottles, plastic jugs and the traditional cans. Bottled
By-products relating to beet processing and cane refining activities
maple syrup is available in all commercial grades and in organic and
are sold in the form of beet pulp, beet pellets, and molasses. Beet
non-organic varieties. TMTC’s bottled maple syrup is sold mainly
pellets are sold domestically and to export customers for livestock
under retail private label brands and under a variety house brand.
feed. The production of molasses is dependent on the volume of
sugar processed through the Taber, Montréal and Vancouver plants.
Bulk maple syrup is mainly sold in large containers, drums and totes
to foodservice retailers, food processors as well as other wholesalers.
OUR SUPPLY
The global supply of raw cane sugar is ample. Over the last several
OUR SUPPLY
years, Lantic has purchased most of its raw cane sugar from Central
The production of maple syrup takes place over a period of six to
and South America for its Montréal and Vancouver cane refineries.
eight weeks during the months of March and April of each year.
2023 Annual ReportManagement’s Discussion & Analysis 16
The biggest concentration of maple trees is located in the Provinces
PRICING
of Québec, New Brunswick, and Ontario, and in the US States of
Pursuant to a marketing agreement entered into annually between
Vermont, Maine and New Hampshire. Canada remains the largest
the PPAQ and the Conseil de l’industrie de l’érable (the Maple Industry
producer of maple syrup, with over 80% of the world’s production.
Council) (the “Marketing Agreement”), authorized buyers must pay
The Province of Québec alone represents 70% of the world’s
a minimum price to the PPAQ for any maple syrup purchased from
production. The US is the only other major producing country in the
the producers. The price is fixed on an annual basis and depends
world, representing approximately 20% of the global supply.
on the grade of the maple syrup. In addition, a premium is added
The maple syrup producers in Québec are represented by the
Marketing Agreement, authorized buyers must buy maple syrup
to the minimum price for any organic maple syrup. Pursuant to the
Producteurs et Productrices Acéricoles du Québec (“PPAQ”). The
from the PPAQ.
PPAQ generally regulates the buying and selling of bulk maple syrup.
The PPAQ represents approximately 13,300 producers and 8,000
individual businesses.
USE OF FINANCIAL DERIVATIVES FOR HEDGING
In Québec, nearly 90% of the total production of maple syrup
SUGAR
is sold through the PPAQ to the authorized buyers, leaving only
In order to protect against fluctuations in the world raw sugar market,
approximately 10% of the total production being sold directly by the
we follow a rigorous hedging program for all purchases of raw cane
producers to consumers or grocery stores.
sugar and sales of refined sugar.
The PPAQ manages a strategic maple syrup reserve in order to
The Raw #11 market is only traded on the ICE, which trades in US
mitigate production fluctuations caused by weather conditions and
dollars. Sugar futures can be traded forward for a period of three
prevent such fluctuations from causing maple syrup prices to spike
years against four specific terminals per year (March, May, July
or drop significantly. Each year, the PPAQ may organize a sale of a
and October). The terminal values are used to determine the price
portion of its accumulated reserve. This allows bottlers to respond to
settlement upon the receipt of a raw sugar vessel or the delivery of
supply shortages in the event of a poor harvest or unplanned growth
sugar to our customers. The ICE rules are strict and are governed
and demand.
by the New York Board of Trade. Any amount owed, due to the
movement of the commodity being traded, must be settled in cash
The PPAQ is responsible to manage policy with respect to production
the following day.
and marketing quotas for production volume allocated to each
maple syrup business in the Province of Québec. The main objective
For the purchasing of raw sugar, we enter into long-term supply
of the policy is to adjust the supply of maple syrup in response to
contracts with reputable raw sugar suppliers (the “Seller”). These
consumer demand, and more specifically, to stabilize selling prices
long-term agreements will, amongst other things, specify the
for producers and, ultimately, the buying price for consumers, foster
yearly volume to be purchased, the delivery period of each vessel,
investments in the maple industry and maintain a steady number of
the terminal against which the sugar will be priced, and the freight
maple-producing businesses in operation, regardless of their size.
rate to be charged for each delivery. The price of raw sugar will be
Outside of Québec, the maple syrup industry is generally organized
delivery period will correspond to the terminal against which the
determined later by the Seller, based upon the delivery period. The
through producer-based organizations or associations, which
sugar will be priced.
promote maple syrup in general and its industry and serve as the
official voice for maple syrup producers with the public.
Our process of selling refined sugar is also done under the Raw #11
market. When a sales contract is negotiated with a customer, the
TMTC has relationships with more than 1,400 maple syrup producers,
sales contract will determine the period of the contract, the expected
mainly in Québec and Vermont. Most of these producers sell 100%
delivery period against specific terminals and the refining margin
of their production to TMTC. Through our strong relationships with
and freight rate to be charged over and above the value of the sugar.
these producers, we have been able to develop a leading position in
The price of the sugar is not yet determined but needs to be fixed by
certified organic maple syrup.
the customer prior to delivery. The customer will make the decision
to fix the price of the sugar against the sugar terminal, as per the
anticipated delivery period.
Rogers Sugar Inc.Management’s Discussion & Analysis 17
We purchase sugar beets from the Growers, for our Taber sugar
• Consolidated adjusted net earnings
for
fiscal 2023 were
refining facility under a fixed price negotiated from time to time.
$44.5 million or $0.42 per share, as compared to $40.7 million or
NATURAL GAS
strong performance of our Sugar segment;
The Board of Directors of Lantic approved an energy hedging policy
to mitigate the overall price risks in the purchase of natural gas.
• Consolidated revenues for fiscal year 2023 amounted to $1.1 billion,
$0.39 per share for the same period in 2022, largely driven by the
We purchase between 3.5 million gigajoules and 4.0 million gigajoules
average raw sugar prices during the year, higher margin on sugar
of natural gas per year for use in our refining operations. To protect
refining related activities, and higher sugar sales volume at
an increase of 10% as compared to last year, due mainly to higher
against large and unforeseen fluctuations, we hedge forward our
795,307 metric tonnes;
estimated usage on a longer-term basis based on prevailing market
conditions.
• Consolidated adjusted EBITDA for the fourth quarter was
$28.6 million as compared to $29.0 million for the same period last
Our gas hedges are unwound in the months that the commodity is
year. The decrease in consolidated adjusted EBITDA for the fourth
used in the operations, at which time any gains or losses incurred
quarter was mainly due to lower adjusted EBITDA in the Sugar
are then recognized for the determination of gross margins and
segment, partially offset by higher adjusted EBITDA in the Maple
earnings.
segment;
FOREIGN EXCHANGE
• Adjusted EBITDA in the Sugar segment was $23.7 million for the
Raw sugar costs for all sales contracts are denominated in US
fourth quarter of fiscal 2023, a decrease of $2.5 million compared
dollars. We also buy natural gas in US dollars. In addition, sugar
to the same period last year, due largely to higher operating and
export sales and some Canadian sugar sales are denominated in US
distribution costs, partially offset by higher pricing;
dollars. In order to protect ourselves against the movement of the
Canadian dollar versus the US dollar, we, on a daily basis, reconcile
• Adjusted EBITDA in the Maple segment for the fourth quarter
all of our exposure to the US dollar and we hedge the net position
was higher than last year by $2.1 million largely driven by improved
against various forward months, estimated from the date of the
average selling prices and lower operating costs;
various transactions.
• Free cash flow for the trailing 12 months ended September 30,
Certain export sales of maple syrup are denominated in US
2023 was $45.8 million, a decrease of $1.0 million from the same
dollars, Euros, Australian dollars, and British pounds. In order to
period last year as a result of higher capital expenditures;
mitigate against the movement of the Canadian dollar versus these
currencies, we enter into foreign exchange hedging contracts. These
• In the fourth quarter of fiscal 2023, we distributed $0.09 per share
foreign exchange hedging contracts are unwound when the money
to our shareholders for a total amount of $9.5 million;
is received from the customer, at which time any gains or losses
incurred are then recognized for the determination of gross margins
• On August 14, 2023, RSI filed of a short-form base shelf prospectus
and earnings. Foreign exchange gains or losses on any unhedged
in connection with expected financing initiatives over the next two
sales contracts are recorded when realized.
years;
BUSINESS HIGHLIGHTS
• On August 11, 2023, the Board of Directors of Lantic approved
the Expansion Project. This investment is expected to provide
approximately 100,000 metric tonnes of incremental refined
sugar capacity to the growing Canadian market, at an estimated
• Consolidated adjusted EBITDA for the 2023 fiscal year was
construction cost of approximately $200 million. The financing
$110.9 million, up by 8.5% from the same period in 2022, mainly
plan for the Expansion Project will include funding from debt and
driven by the strong performance of the Sugar segment;
equity or equity like instruments sources, along with the Company’s
existing credit facilities and approved loans from Investissement
Quebec for up to $65 million. We expect the incremental production
and logistic capacity to be in service in the first half of fiscal 2026;
2023 Annual ReportManagement’s Discussion & Analysis
18
• On September 28, 2023, the unionized employee of the Vancouver
• On November 1, 2023, we amended our revolving credit facility,
sugar refinery, represented by the Public and Private Workers of
by extending the term to October 31, 2027, and by increasing the
Canada local 8 went on strike. As of the date of this MD&A, the
amount available for working capital and for the Expansion Project
strike is still ongoing. Management remains committed in reaching
by $75 million to $340 million; and
an agreement that is acceptable to both parties. Since the
beginning of the strike, the Vancouver sugar refinery, which
• On November 29, 2023, the Board of Directors declared a quarterly
represents approximately 17% of our production of refined sugar,
dividend of $0.09 per share, payable on or before February 1, 2024.
has been operating at approximately a third of its capacity, and
we have been using some of the production of our Taber facility to
support our customers in Western Canada;
SELECTED FINANCIAL DATA AND HIGHLIGHTS
(unaudited)
(In thousands of dollars, except volumes and per share information)
Sugar (metric tonnes)
Maple syrup (‘000 pounds)
Total revenues
Gross margin
Adjustment to cost of sale(2)
Adjusted gross margin(1)
Q4 2023
Q4 2022
YTD 2023
YTD 2022
$
$
$
$
215,500
214,672
795,307
794,600
10,363
9,838
43,871
47,063
308,036
267,406
1,104,713
1,006,134
41,192
28,472
165,726
130,805
999
(10,669)
10,395
(12,677)
40,193
39,141
155,331
143,482
Results from operating activities
22,815
(38,345)
94,963
Adjusted results from operating activities(1)
21,816
22,324
84,568
13,313
75,990
89,461
EBITDA(1)
Adjusted EBITDA(1)
Net earnings
per share (basic)
per share (diluted)
29,568
18,283
121,249
28,569
28,952
110,854
102,138
11,876
(45,502)
51,789
(16,568)
0.12
(0.44)
0.50
0.09
(0.44)
0.44
(0.16)
(0.16)
Adjusted net earnings(1)
11,283
12,161
44,494
40,659
Adjusted net earnings per share (basic)(1)
0.11
0.12
0.42
Trailing twelve months free cash flow(3)
45,765
46,751
45,765
Dividends per share
0.09
0.09
0.36
0.39
46,751
0.36
(1) See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
(2) See “Adjusted results” section.
(3) See “Free cash flow” section.
Rogers Sugar Inc.Management’s Discussion & Analysis
Revenues
($000s)
Sugar Maple
Adjusted EBITDA
($000s)
Sugar
Maple
19
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
Adjusted Net Earnings
($000s)
Free Cash Flow TTM
($000s)
Per
share
$0.16
$0.14
$0.12
$0.10
$0.08
$0.06
$0.04
$0.02
$0.00
60,000
50,000
40,000
30,000
20,000
10,000
0
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
Adj Net Earnings
Adj Net Earning per share (basic)
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
30,000
25,000
20,000
15,000
10,000
5,000
0
ADJUSTED RESULTS
In the normal course of business, we use derivative financial instruments consisting of sugar futures, foreign exchange forward contracts,
natural gas futures and interest rate swaps. We have designated our natural gas futures and our interest rate swap agreements entered into
in order to protect us against natural gas price and interest rate fluctuations as cash flow hedges. Derivative financial instruments pertaining
to sugar futures and foreign exchange forward contracts are marked-to-market at each reporting date and are charged to the consolidated
statement of earnings. The unrealized gains/losses related to natural gas futures and interest rate swaps that qualify under hedged accounting
are accounted for in other comprehensive income. The unrealized gain/losses related to interest rate swaps that do not qualify under
hedged accounting are accounted in the consolidated statement of earnings and comprehensive income. The amount recognized in other
comprehensive income is removed and included in net earnings under the same line item in the consolidated statement of earnings and
comprehensive income as the hedged item, in the same period that the hedged cash flows affect net earnings, reducing earnings volatility
related to the movements of the valuation of these derivatives hedging instruments.
We believe that our financial results are more representative of our business to management, investors, analysts, and any other interested
parties when financial results are adjusted by the gains/losses from financial derivative instruments that do not qualify for hedge accounting.
These adjusted financial results provide a more complete understanding of factors and trends affecting our business. This measurement is a
non-GAAP measurement. See “Non-GAAP measures” section.
2023 Annual ReportManagement’s Discussion & Analysis 20
We use the non-GAAP adjusted results of the operating company to measure and to evaluate the performance of the business through our
adjusted gross margin, adjusted gross margin percentage, adjusted gross margin rate, adjusted results from operating activities, adjusted
EBITDA, adjusted net earnings, adjusted net earnings per share and trailing twelve months free cash flow. These non-GAAP measures are
evaluated on a consolidated basis and at a segmented level, excluding adjusted gross margin percentage, adjusted gross margin rate, adjusted
net earnings per share and trailing twelve months free cash flow. In addition, we believe that these measures are important to our investors and
parties evaluating our performance and comparing such performance to past results. We also use adjusted gross margin, adjusted EBITDA,
adjusted results from operating activities, adjusted net earnings, adjusted net earnings per share and trailing twelve months free cash flow
when discussing results with the Board of Directors, analysts, investors, banks, and other interested parties. See “Non-GAAP measures”
section.
OUR RESULTS ARE ADJUSTED AS FOLLOWS:
Income (loss)
(In thousands of dollars)
Mark-to-market on:
Sugar futures contracts
Foreign exchange forward contracts
Total mark-to-market adjustment on derivatives
Cumulative timing differences
Total adjustment to costs of sales
Income (loss)
(In thousands of dollars)
Mark-to-market on:
Sugar futures contracts
Foreign exchange forward contracts
Total mark-to-market adjustment on derivatives
Q4 2023
Maple
Products
$
—
(727)
(727)
(64)
(791)
Sugar
$
3,444
(94)
3,350
(1,560)
1,790
YTD 2023
Maple
Products
$
—
(111)
(111)
Sugar
$
11,018
1,085
12,103
Cumulative timing differences
(3,728)
2,131
Total
$
3,444
(821)
2,623
(1,624)
999
Total
$
11,018
974
11,992
(1,597)
Q4 2022
Maple
Products
$
—
Sugar
$
(190)
(5,339)
(2,384)
(2,384)
Total
$
(190)
(7,723)
(7,913)
(5,529)
(3,037)
(8,566)
Sugar
$
1,325
(5,058)
(3,733)
(6,563)
281
(2,756)
(2,103)
(10,669)
YTD 2022
Maple
Products
$
—
(2,474)
(2,474)
93
Total
$
1,325
(7,532)
(6,207)
(6,470)
Total adjustment to costs of sales
8,375
2,020
10,395
(10,296)
(2,381)
(12,677)
Fluctuations in the mark-to-market adjustment on derivatives are due to the price movements in Raw #11 sugar and foreign exchange variations.
We recognize cumulative timing differences, as a result of mark-to-market gains or losses, only when sugar or maple product is sold to a
customer. The gains or losses on sugar and related foreign exchange paper transactions are largely offset by corresponding gains or losses
from the physical transactions, namely sale and purchase contracts with customers and suppliers.
The above-described adjustments are added to or deducted from the mark-to-market results to arrive at the total adjustment to cost of sales.
For the three and twelve months periods ended on September 30, 2023, the total cost of sales adjustment is a gain of $1.0 million and $10.4
million, respectively to be deducted from the consolidated results. For comparable periods last year, the total cost of sales adjustment is a loss
of $10.7 million and $12.7 million, respectively to be added to the consolidated results.
See the “Non-GAAP measures” section for more information on these adjustments.
Rogers Sugar Inc.Management’s Discussion & Analysis
21
SEGMENTED INFORMATION
Segmented Results
(In thousands of dollars)
Revenues
Gross margin
Administration and selling expenses
Distribution costs
Goodwill impairment
Q4 2023
Maple
Products
$
Sugar
$
Total
$
Sugar
$
Q4 2022
Maple
Products
$
Total
$
256,229
51,807
308,036
220,142
47,264
267,406
35,512
7,703
7,414
—
5,680
2,777
483
—
41,192
10,480
7,897
—
26,758
9,138
4,958
1,714
2,411
310
—
50,000
28,472
11,549
5,268
50,000
Results from operating activities
20,395
2,420
22,815
12,662
(51,007)
(38,345)
Adjustment to cost of sales(2)
Adjusted Gross margin(1)
Adjusted results from operating activities(1)(3)
EBITDA(1)
Adjusted EBITDA(1)
Additional information:
Additions to property, plant and equipment
and intangible assets, net of disposals
Increase in asset retirement obligation provision
included in property, plant and equipment
Additions to right-of-use assets
(1,790)
33,722
18,605
25,453
23,663
791
6,471
3,211
4,115
4,906
(999)
40,193
21,816
29,568
28,569
8,566
35,324
21,228
17,609
26,175
2,103
3,817
1,096
674
2,777
10,669
39,141
22,324
18,283
28,952
8,949
252
9,201
11,460
946
12,406
350
10,056
—
33
350
10,089
—
113
—
—
—
113
(1)
See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
(2) See “Adjusted results” section.
(3) Adjusted results exclude impact of goodwill impairment.
Segmented Results
(In thousands of dollars)
Revenues
Gross margin
Administration and selling expenses
Distribution costs
Goodwill impairment
YTD 2023
Maple
Products
$
Sugar
$
Total
$
Sugar
$
YTD 2022
Maple
Products
$
Total
$
893,482
211,231
1,104,713
792,200
213,934
1,006,134
144,397
33,250
24,637
—
21,329
10,979
1,897
—
165,726
44,229
26,534
—
115,872
35,733
19,681
—
14,933
10,050
2,028
50,000
Results from operating activities
86,510
8,453
94,963
60,458
(47,145)
Adjustment to cost of sales(2)
Adjusted Gross margin(1)
Adjusted results from operating activities(1)(3)
EBITDA(1)
Adjusted EBITDA(1)
Additional information:
Additions to property, plant and equipment
and intangible assets, net of disposals
(8,375)
(2,020)
(10,395)
136,022
19,309
155,331
78,135
106,021
97,646
6,433
84,568
15,228
13,208
121,249
110,854
10,296
126,168
70,754
79,838
90,134
2,381
17,314
5,236
9,623
12,004
102,138
36,151
951
37,102
22,642
1,364
24,006
Increase in asset retirement obligation provision
included in property, plant and equipment
350
Additions to right-of-use assets, net of disposals
11,667
—
78
350
11,745
100
8,842
—
—
100
8,842
(1)
See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
(2) See “Adjusted results” section.
(3) Adjusted results exclude impact of goodwill impairment.
130,805
45,783
21,709
50,000
13,313
12,677
143,482
75,990
89,461
2023 Annual ReportManagement’s Discussion & Analysis
22
SUGAR
REVENUES
(In thousands of dollars)
Q4 2023
Q4 2022
$
$
∆
$
YTD 2023
YTD 2022
$
$
∆
$
Revenues
256,229
220,142
36,087
893,482
792,200
101,282
In the fourth quarter of 2023, revenues increased by $36.1 million, compared to the same period last year. The variance was driven mainly by
higher average market-price for Raw #11, and improved average pricing for refining-related activities.
Sugar Volume Variance
(Metric tonnes)
Sugar Volumes
(Metric tonnes)
Q4 2022
214,672
-3,381
Q4 2023
215,500
4,118
-963
1,054
Industrial
Consumer
Liquid
Export
250,000
200,000
150,000
100,000
50,000
0
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
Overall, sugar volume increased slightly in the fourth quarter of 2023 compared to the same quarter last year, as a result of higher export and
liquid sales volumes, partially offset by lower volumes in our industrial and consumer categories.
• Industrial volume decreased by 3,381 metric tonnes compared to the same period last year, largely due to the impact of an unforeseen peak
in demand resulting from a temporary market disruption event that occurred in the second half of fiscal 2022.
• Consumer volume decreased by 963 metric tonnes compared to the same quarter last year, mainly due to timing of orders from customers.
• Liquid volume increased by 1,054 metric tonnes compared to the same period last year mainly due to stronger demand from existing
customers.
• Export volume increased by 4,118 metric tonnes compared to the same period last year, when in fiscal 2022, we focused our sales efforts on
serving the domestic industrial market, which was experiencing a temporary increase in demand.
In the 2023 fiscal year, revenues increased by $101.3 million compared to last year. The variance was driven mainly by higher average market-
price for Raw #11, higher sales volume, improved average pricing for refining-related activities, and higher by-product sales revenues.
The average prices for Raw #11 sugar increased by US 3.6 cents per pound to US 22.5 cents per pound for the 2023 fiscal year, when compared
to last year.
Rogers Sugar Inc.Management’s Discussion & Analysis
23
Sugar Volumes
(Metric tonnes)
Sugar Volume Variance
(Metric tonnes)
2,614
9,056
-10,834
FY 2022
794,600
-
FY 2023
795,307
800,000
750,000
700,000
650,000
600,000
Industrial
Consumer
Liquid
Export
2016
2017
2018
2019
2020
2021
2022
2023
During fiscal year 2023, sugar volume totaled 795,307 metric tonnes, an increase of 707 metric tonnes compared to last year.
• Industrial volume increased by 9,056 metric tonnes compared to last year as a result of the continued strong demand in the domestic
market.
• Consumer volume remained largely unchanged from last year.
• Liquid volume increased by 2,614 metric tonnes compared to last year as a result of higher demand from existing customers.
• Export volume decreased by 10,834 metric tonnes compared to last year, as we focussed our sales effort toward serving the domestic
industrial market.
GROSS MARGIN
(In thousands of dollars,
except per metric tonne information)
Q4 2023
Q4 2022
$
$
∆
$
YTD 2023
YTD 2022
$
$
∆
$
Gross margin
35,512
26,758
8,754
144,397
115,872
28,525
Total adjustment to cost of sales(2)
(1,790)
8,566
(10,356)
(8,375)
10,296
(18,671)
Adjusted gross margin(1)
33,722
35,324
(1,602)
136,022
126,168
Adjusted gross margin per metric tonne(1)
156.48
164.55
(8.07)
171.03
158.78
9,854
12.25
Included in Gross margin:
Depreciation of property, plant and equipment
and right-of-use assets
4,022
4,300
(278)
15,396
16,835
(1,439)
(1) See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
(2) See “Adjusted results” section.
Gross margin was $35.5 million and $144.4 million for the current quarter and the 2023 fiscal year, and included gains of $1.8 million and
$8.4 million respectively, for the mark-to-market of derivative financial instruments. For the same periods last year, gross margin was
$26.8 million and $115.9 million, respectively, with mark-to-market losses of $8.6 million and $10.3 million, respectively.
Adjusted gross margin was $33.7 million and $136.0 million for the current quarter and for the 2023 fiscal year, respectively, as compared to
$35.3 million and $126.2 million in the same periods of 2022.
2023 Annual ReportManagement’s Discussion & Analysis
24
Adjusted gross margin decreased by $1.6 million in the current quarter compared to the same quarter last year mainly due to higher operating
costs associated with unforeseen electrical maintenance at the Montréal plant and incremental costs associated with the importation of
refined white sugar to support customer demand. These unfavourable variances were partially offset by higher sugar sales margin from
improved average pricing on sugar refining-related activities.
On a per-unit basis, adjusted gross margin for the fourth quarter was $156 per metric tonne, as compared to $165 per metric tonne for the
same period last year.
For the 2023 fiscal year, adjusted gross margin increased by $9.9 million driven mainly by improved average pricing on sugar refining-related
activities, partially offset by higher production costs mainly driven by higher maintenance activities, market-based inflationary pressures on
operating costs and higher energy prices.
On a per-unit basis, for the fiscal 2023, adjusted gross margin amounted to $171 per metric tonne compared to $159 per metric tonne for the
same period last year. The favourable variance of $12 per metric tonne was mainly due to improved average pricing, partially offset by higher
production costs.
$ per
metric tonne
Adjusted Gross Margin
200
180
160
140
120
100
80
60
40
20
0
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Adj Gross Margin
Adj Gross Margin per metric tonne
$000s
50,000
40,000
30,000
20,000
10,000
0
Rogers Sugar Inc.Management’s Discussion & Analysis 25
OTHER EXPENSES
(In thousands of dollars,
except per metric tonne information)
Q4 2023
Q4 2022
$
Administration and selling expenses
7,703
Distribution costs
7,414
Included in Administration and selling expenses:
Depreciation of property, plant and equipment
$
9,138
4,958
∆
$
(1,435)
2,456
YTD 2023
YTD 2022
$
$
∆
$
33,250
35,733
(2,483)
24,637
19,681
4,956
and right-of-use assets
194
223
(29)
929
867
62
Included in Distribution costs:
Depreciation of right-of-use assets
842
424
418
3,186
1,679
1,507
In the fourth quarter of fiscal 2023, administration and selling expenses were lower by $1.4 million compared to the same quarter last year. The
variance was mainly due to lower cash-settled share-based compensation expenses driven by a decrease in the share price used to estimate
the related expense, partially offset by higher compensation costs and related employee benefits. Distribution costs increased by $2.5 million
compared to the same quarter last year, mainly due to an increase in logistical costs to support the strong demand in Eastern Canada and the
lower-than-expected production from our beet sugar facility in Taber in fiscal 2023.
For the year, administration and selling expenses were $2.5 million lower than the comparable period last year. The variance was mainly due to
lower cash-settled share-based compensation expenses driven by a decrease in the share price used to estimate the related expense, partially
offset by higher compensation costs and related employee benefits. Distribution costs increased by $5.0 million compared to the 2022 fiscal
year, mainly due to an increase in logistical costs to support the strong demand in Eastern Canada and the lower-than-expected production
from our beet sugar facility in Taber.
RESULTS FROM OPERATING ACTIVITIES AND ADJUSTD EBITDA
(In thousands of dollars)
Q4 2023
Q4 2022
$
$
∆
$
YTD 2023
YTD 2022
$
$
∆
$
Results from operating activities
20,395
12,662
7,733
86,510
60,458
26,052
Total adjustment to cost of sales(2)
(1,790)
8,566
(10,356)
(8,375)
10,296
(18,671)
Adjusted results from operating activities 1)
18,605
21,228
(2,623)
78,135
70,754
7,381
Depreciation of property, plant and equipment,
right-of-use assets, and amortization of
intangible assets
EBITDA(1)
Adjusted EBITDA(1)
5,058
25,453
4,947
17,609
111
19,511
19,380
131
7,844
106,021
79,838
26,183
23,663
26,175
(2,512)
97,646
90,134
7,512
(1) See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
(2) See “Adjusted results” section.
Results from operating activities for the fourth quarter and the 2023 fiscal year were $20.4 million and $86.5 million, respectively, an increase
of $7.7 million and $26.1 million respectively, as compared to same periods last year. These results include gains and losses from the mark-to-
market of derivative financial instruments.
2023 Annual ReportManagement’s Discussion & Analysis
26
Adjusted results from operating activities in the fourth quarter of fiscal 2023 were $2.6 million lower than the same period last year, mainly due
to lower adjusted gross margin and higher distribution costs, partially offset by lower administration and selling expenses. Adjusted results
from operating activities for the 2023 fiscal year were $7.4 million higher than the same period last year as higher adjusted gross margin and
lower administration and selling expenses were partially offset by higher distribution costs.
EBITDA for the fourth quarter and the 2023 fiscal year were $25.5 million and $106.0 million, respectively, an increase of $7.8 million and $26.2
million, respectively, as compared to same periods last year. These results include gains and losses from the mark-to-market of derivative
financial instruments.
Adjusted EBITDA for the fourth quarter decreased by $2.5 million compared to the same period last year, largely due to lower adjusted gross
margin and higher distribution costs, partially offset by lower administration and selling expenses. Adjusted EBITDA for the 2023 fiscal year
increased by $7.5 million largely due to higher adjusted gross margin and lower administration and selling expenses, partially offset by higher
distribution costs, as mentioned above.
MAPLE
REVENUES
(In thousands of dollars, except volumes)
Q4 2023
Q4 2022
Volumes (‘000 pounds)
Revenues
$
10,363
51,807
$
9,838
47,264
∆
$
525
4,543
YTD 2023
YTD 2022
$
$
∆
$
43,871
47,063
(3,192)
211,231
213,934
(2,703)
Revenues for the fourth quarter were $4.5 million higher than the same period last year due to improved average selling prices and an increase
in sales volume. For the 2023 fiscal year, revenues were $2.7 million lower than last fiscal year largely due to lower volume, partially offset by
higher average selling prices.
Total volume sold decreased by 3.2 million lbs or 6.8% in 2023 as compared to 2022. The decrease in volume was mainly attributable to lower
demand and unfavourable market dynamics impacting negatively the global demand for maple syrup.
Maple Volumes
(000s pounds)
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Adjusted Gross Margin
Adj. Gross
Margin %
14%
12%
10%
8%
6%
4%
2%
0%
$000
10,000
7,500
5,000
2,500
0
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
Adj Gross Margin
Adj Gross Margin percentage
Rogers Sugar Inc.Management’s Discussion & Analysis
GROSS MARGIN
(In thousands of dollars,
except adjusted gross margin rate information)
Q4 2023
Q4 2022
$
Gross margin
5,680
Total adjustment to cost of sales(1)(2)
791
Adjusted gross margin(1)
6,471
Adjusted gross margin percentage(1)
12.5%
Included in Gross margin:
Depreciation of property, plant and equipment
and right-of-use assets 818
$
1,714
2,103
3,817
8.1%
27
∆
$
3,966
(1,312)
2,654
4.4%
YTD 2023
YTD 2022
$
21,329
(2,020)
19,309
9.1%
$
14,933
2,381
17,314
8.1%
∆
$
6,396
(4,401)
1,995
1.0%
807
11
3,265
3,278
(13)
(1) See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
(2) See “Adjusted results” section.
Gross margin was $5.7 million and $21.3 million for the three months and the current fiscal year and includes a loss of $0.8 million and a gain
of $2.0 million respectively, for the mark-to-market of derivative financial instruments. For the same periods last year, gross margin was $1.7
million and $14.9 million, respectively, with a mark-to-market loss of $2.1 million and $2.4 million, respectively.
Adjusted gross margin for the fourth quarter of fiscal 2023 was higher by $2.7 million due to higher average selling prices, higher sales volume
and lower production costs from recent automation initiatives.
Adjusted gross margin for fiscal 2023 was $2.0 million higher than the prior year, due to higher average selling prices and lower operating
costs, partially offset by lower sales volume. Operating costs were slightly lower in 2023 as compared to 2022 as market-based inflationary
increases in costs were more than offset by savings related to automation initiatives implemented in the second half of 2023.
Adjusted gross margin percentage for the fourth quarter of 2023 was 12.5% as compared to 8.1% for the same quarter last year. The favourable
variance was mainly related to higher average pricing and lower operating costs from savings related to automation initiatives. Adjusted gross
margin percentage for fiscal year 2023 was 9.1% as compared to 8.1% for fiscal year 2022. The favourable variance was mainly related to higher
average pricing and lower operating costs.
OTHER EXPENSES
(In thousands of dollars)
Q4 2023
Q4 2022
Administration and selling expenses
Distribution costs
Goodwill impairment
$
2,777
483
$
2,411
310
∆
$
366
173
YTD 2023
YTD 2022
$
10,979
1,898
$
10,050
2,028
∆
$
929
(130)
—
50,000
(50,000)
—
50,000
(50,000)
Included in Administration and selling expenses:
Amortization of intangible assets
877
874
3
3,510
3,490
20
Administration and selling expenses for the last three months and for the twelve months ended in the current fiscal year were $0.4 million and
$0.9 million higher than the comparable periods last year. These variances were largely due to market-based cost increases for compensation-
related expenses and administrative business support costs.
Distribution costs for the fourth quarter were higher by $0.2 million compared to the same period last year, due to incremental logistics costs
from higher sales volume. Distribution costs for the 2023 fiscal year were lower by $0.1 million due to lower volume sold, partially offset by
market-based cost increases.
2023 Annual ReportManagement’s Discussion & Analysis
28
At the end of fiscal 2022, we performed our annual accounting impairment testing and concluded that the carrying value of the net assets
of our Maple business segment exceeded the recoverable amount by $50.0 million at that point in time. As a result, we recorded a non-cash
impairment charge to our goodwill balance of $50.0 million in the fourth quarter of fiscal 2022. This reduction in goodwill was mainly attributable
to the lower-than-expected financial results of the Maple business segment in 2022, caused by unfavourable market dynamics and significant
inflationary pressures.
We performed our annual accounting impairment testing on the Maple business segment at the end of fiscal 2023 and concluded that the
carrying value of the net assets was lower than the recoverable value of such assets. Accordingly, no impairment charge was recorded at the
end of fiscal year 2023.
RESULTS FROM OPERATING ACTIVITIES AND ADJUSTED EBITDA
(In thousands of dollars)
Q4 2023
Q4 2022
$
$
∆
$
YTD 2023
YTD 2022
$
$
∆
$
Results from operating activities
2,420
(51,007)
53,427
8,453
(47,145)
55,598
Total adjustment to cost of sales(1)
791
2,103
(1,312)
(2,020)
2,381
(4,401)
Goodwill impairment
—
50,000
(50,000)
—
50,000
(50,000)
Adjusted results from operating activities(1)(3)
3,211
Depreciation and amortization
1,695
EBITDA(1)
Adjusted EBITDA(1)
4,115
4,906
1,096
1,681
674
2,777
2,115
14
3,441
2,129
6,433
6,775
15,228
13,208
5,236
6,768
9,623
12,004
1,197
7
5,605
1,204
(1) See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
(2) See “Adjusted results” section.
(3) Adjusted results for operating activities exclude goodwill impairment.
Results from operating activities for the fourth quarter and the 2023 fiscal year were $2.4 million and $8.5 million respectively, compared to a
loss of $51.0 million and $47.1 million respectively, in the same periods last year. These results include gains and losses from the mark-to-market
of derivative financial instruments and the goodwill impairment recorded in the fourth quarter of 2022.
Adjusted results from operating activities for the current quarter were $2.1 million higher than the comparable period last year, due mainly to
higher adjusted gross margin, partially offset by higher distribution costs, administration and selling expenses.
Adjusted results from operating activities for the 2023 fiscal year were $1.2 million higher than the comparable period last year, due mainly to
higher adjusted gross margin, partially offset by higher administration and selling expenses, as explained above.
EBITDA for the fourth quarter and the 2023 fiscal year were $4.1 million and $15.2 million, respectively, an increase of $3.4 million and $5.6
million, respectively, as compared to same periods last year. These results include gains and losses from the mark-to-market of derivative
financial instruments.
Adjusted EBITDA for the current quarter of fiscal 2023 increased by $2.1 million, due to higher sales volume and increased adjusted gross
margin as explained above. Adjusted EBITDA for the 2023 fiscal year increased by $1.2 million, compared to the same period last year, largely
driven by higher adjusted gross margins, partially offset by higher administration and selling expenses, as explained above.
Rogers Sugar Inc.Management’s Discussion & Analysis
29
OUTLOOK
Following a solid performance in 2023, we expect to continue to deliver a strong, stable financial performance in 2024. The continued strength
in demand and pricing is expected to support stable organic growth for our Sugar business segment going forward. We expect our Maple
segment to modestly recover during 2024 as the unfavorable inflationary pressures encountered over the last two years begin to recede.
SUGAR
We expect the Sugar segment to perform well in fiscal 2024. Underlying North American demand remains strong across all customer segments
supported by favourable market dynamics. Improvements in pricing implemented over the last two years will continue to positively support
our financial results, allowing us to mitigate the current impact of inflationary pressures on costs. However, the current labour disruption at
our Vancouver refinery is expected to negatively impact our 2024 financial results, the extent of which is not yet known. The magnitude of
the impact will depend mainly on the length of the strike and the potential internal incremental costs associated with servicing our Western
customers impacted by the labour disruption.
Since the beginning of the strike, on September 28, 2023, the Vancouver sugar refinery, which represents approximately 17% of our production
of refined sugar, has been operating at approximately a third of its capacity, and we have been using some of the production of our Taber
facility to support our customers in Western Canada. As at the time of preparation of this MD&A, we remain committed in reaching an
agreement that is acceptable to both parties.
The initial volume expectation for fiscal year 2024 was set at 800,000 metric tonnes, representing an increase of 4,700 metric tonnes as
compared to fiscal year 2023. Considering the current labour situation at our Vancouver refinery, we expect our volumes will be lower in 2024
compared to 2023. The reduction in volume sold to customers will depend on the length of the labour disruption. We will continue to prioritize
domestic sales and focus on meeting our commitments to our customers. We will provide updates on the expected impact of the labour
disruption on sales volumes as the situation evolves.
The harvest period for our sugar beet facility in Taber was completed in early November and we have received the expected quantity of beets
from the growers. We are currently in the processing stage of the 2023 sugar beet campaign, with expected completion by the end of February.
Based on our early assessment, we anticipate the 2023 crop to deliver between 105,000 metric tonnes and 110,000 metric tonnes of beet sugar,
consistent with our expectations. The volume expectations align with the acreage contracted with the ASBG and the volume of sugar beets
received.
Production costs and maintenance programs for our three production facilities are expected to continue to be moderately impacted by the
current inflationary market-based pressures. We continue to focus on cost control initiatives throughout our operations.
Distribution costs are expected to be stable in 2024. These expenditures reflect the transfer of sugar produced between our facilities to serve
our customers, including some of the costs associated with meeting the growing market demand with imported refined white sugar from
Central America.
Administration and selling expenses are expected to increase in 2024 as compared to 2023, due mainly to market-based increases for
compensation expenditures and external services supporting our business.
We anticipate our financing costs to increase in fiscal 2024 due to higher working capital needs, mainly associated with the purchase of raw
sugar. We have been able to mitigate the impact of recent increases in interest rates and energy costs through our multi-year hedging strategy.
We expect our hedging strategy will continue to mitigate such exposure in fiscal 2024.
Spending on regular business capital projects is also expected to remain stable for fiscal 2024. We anticipate spending approximately
$25 million on various initiatives. This capital spending estimate excludes expenditures relating to our recently announced Expansion Project
in Eastern Canada, which are currently estimated to be at $70 million for fiscal 2024.
2023 Annual ReportManagement’s Discussion & Analysis 30
MAPLE
The Maple segment financial results were lower than anticipated for 2023. This was due mainly to lower volume and lingering inflationary
pressures on costs. Although we expect these financial and operating pressures to remain in the first part of fiscal 2024, we expect the Maple
business segment to continue to benefit from automation initiatives at its Granby and Dégelis plants. Such initiatives, combined with recently
negotiated price increases, are supporting the anticipated modest recovery of our Maple business segment in 2024. The expected sales
volume for 2024 is stable when compared to 2023 at approximately 43.5 million lbs. The sales volume expectations reflects the sector-wide
challenging market dynamics, impacting the global demand for maple syrup.
Capital investments have decreased significantly in recent years. The Maple segment is expected to spend between $1 million and $1.5 million
annually on capital projects. The main driver for the selected projects is to improve productivity and profitability through automation.
See “Forward-Looking Statements” section and “Risks and Uncertainties” section.
CONSOLIDATED RESULTS AND SELECTED FINANCIAL INFORMATION
(unaudited)
(In thousands of dollars, except volumes and per share information)
Sugar (metric tonnes)
Maple syrup (000 pounds)
Total revenues
Gross margin
Adjusted gross margin(1)
Results from operating activities
Adjusted results from operating activities(1)
EBITDA(1)
Adjusted EBITDA(1)
Net finance costs
Income tax expense
Net (loss) earnings
per share (basic)
per share (diluted)
Adjusted net earnings(1)
per share (basic)(1)
Dividends per share
Q4 2023
Q4 2022
YTD 2023
YTD 2022
$
$
$
$
215,500
214,672
795,307
794,600
10,363
9,838
43,871
47,063
308,036
267,406
1,104,713
1,006,134
41,192
40,193
22,815
21,816
29,568
28,569
6,687
4,252
28,472
39,141
(38,345)
22,324
18,283
28,952
5,057
2,099
11,876
(45,502)
0.12
0.09
11,283
0.11
0.09
(0.44)
(0.44)
12,161
0.12
0.09
165,726
155,331
94,963
84,568
121,249
110,854
24,577
18,597
51,789
0.50
0.44
130,805
143,482
13,313
75,990
89,461
102,138
17,567
12,314
(16,568)
(0.16)
(0.16)
44,494
40,659
0.42
0.36
0.39
0.36
(1) See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
Rogers Sugar Inc.Management’s Discussion & Analysis
31
TOTAL REVENUES
Revenues increased by $40.6 million and $98.6 million for the fourth quarter and for the 2023 fiscal year, respectively, compared to the same
periods last year. The increase in revenues was mainly attributable to higher prices paid for Raw #11 sugar and higher average pricing for
refining related activities in the Sugar segment, as well as higher pricing in the Maple segment.
GROSS MARGIN
Gross margin increased by $12.7 million and $34.9 million respectively for the current quarter and for fiscal 2023 compared to the same periods
last year. Excluding the mark-to-market of derivative financial instruments, adjusted gross margin for the current quarter and for the 2023 fiscal
year increased by $1.1 million and $11.8 million respectively, compared to the same period last year. These positive variances were mainly due
to higher adjusted gross margin in both the Sugar and Maple segments largely driven by improved selling price.
For the Sugar segment, the adjusted gross margin for the current quarter amounted to $156 per metric tonne, a decrease of $8 per metric
tonne compared to the same period last year. Adjusted gross margin per metric tonne for fiscal 2023 in the Sugar segment at $171 per metric
tonnes, was higher by $12 per metric tonne compared to last year, mainly due to improved average pricing, partially offset by higher production
costs. For the Maple segment, the adjusted gross margin percentage for the current quarter and the 2023 fiscal year were higher by 4.4% and
1.0% respectively, when compared to the same period last year, mainly driven by higher pricing and lower operating costs.
RESULTS FROM OPERATING ACTIVITIES
Results from operating activities for the current quarter were $22.8 million compared to a loss of $38.3 million in the same quarter last year,
representing an increase of $61.1 million. For fiscal 2023, results from operating activities were $95.0 million compared to $13.3 million last year,
representing an increase of $81.7 million. Adjusted results from operating activities for the current quarter amounted to $21.8 million compared
to $22.3 million in the same quarter last year, a decrease of $0.5 million. For fiscal 2023, adjusted results from operating activities were $84.6
million compared to $76.0 million, representing an increase of $8.6 million. The improvement of adjusted results from operating activities in
both periods was mainly driven by higher contribution from the Sugar segment during the 2023 fiscal year.
NET FINANCE COSTS
(In thousands of dollars)
Interest expense on convertible unsecured
subordinated debentures, including
accretion of $1,024 (2022 - $969)
Interest on revolving credit facility
Interest on senior guaranteed notes,
including accretion of $158 (2022- $116)
Amortization of deferred financing fees
Interest on Producteurs et Productrices
Acérioles du Québec supplier balance
Other interest expense
Interest accretion on discounted lease obligations
Net change in fair value of interest rate swaps
Q4 2023
Q4 2022
$
$
2,140
1,946
2,125
1,113
917
308
840
―
335
201
895
311
497
142
301
(328)
∆
$
15
833
22
(3)
343
(142)
34
529
YTD 2023
YTD 2022
$
$
∆
$
8,530
7,293
3,639
1,231
2,265
21
1,075
8,413
5,063
3,595
1,240
900
157
1,000
117
2,230
44
(9)
1,365
(136)
75
523
(2,801)
3,324
Net finance costs
6,687
5,056
1,630
24,577
17,567
7,010
For the fourth quarter of 2023 and fiscal 2023, net finance costs were higher by $1.6 million and $7.0 million respectively, compared to the same
periods last year, largely driven by the increase in interest expense on our revolving credit facility from higher average borrowing, the increase
in interest expense related to the purchase of maple syrup from PPAQ and the impact of market-based changes in fair value related to interest
rate swaps contracts.
2023 Annual ReportManagement’s Discussion & Analysis
32
TAXATION
(In thousands of dollars)
Current
Deferred
Income tax expense
Q4 2023
Q4 2022
$
$
3,606
1,595
646
504
4,252
2,099
∆
$
2,011
142
2,153
YTD 2023
YTD 2022
$
$
∆
$
14,676
14,275
401
3,921
(1,961)
5,882
18,597
12,314
6,283
The variations in current and deferred tax expense for the current quarter and the fiscal 2023 are consistent with the variation in earnings
before income taxes compared to the same periods last year, excluding the impact of the goodwill impairment charge recorded in the fourth
quarter of 2022.
Deferred income taxes reflect temporary differences, which result primarily from the difference between depreciation claimed for tax purposes
and depreciation amounts recognized for financial reporting purposes, losses carried forward, employee future benefits and derivative
financial instruments. Deferred income tax assets and liabilities are measured using the enacted or substantively enacted tax rates anticipated
to apply to income in the years in which temporary differences are expected to be realized or reversed. The effect of a change in income tax
rates on future income taxes is recognized in income in the period in which the change occurs.
NET EARNINGS
Net earnings in the fourth quarter and for the fiscal 2023 were higher by $57.4 million and $68.4 million, respectively, compared to the same
periods last year. Excluding the goodwill impairment of $50.0 million recorded in the fourth quarter of fiscal 2022, net earnings in the fourth
quarter and for the fiscal 2023 were higher by $7.4 million and $18.4 million, respectively, compared to the same periods last year. These
variances were mainly attributable to non-cash variances in the mark-to-market of derivative financial instruments associated with sugar
futures contracts and foreign exchange forward contracts, higher adjusted results from operating activities, partially offset by higher net
finance costs and income tax expenses.
Adjusted net earnings in the fourth quarter were $0.9 million lower compared to the same period last year, mainly due to higher net finance
costs. Adjusted net earnings for the 2023 fiscal year were higher by $3.8 million compared to the same periods last year, largely attributable to
higher adjusted results from operating activities, partially offset by higher net finance costs.
Rogers Sugar Inc.Management’s Discussion & Analysis
33
SUMMARY OF QUARTERLY RESULTS
The following is a summary of selected financial information of the consolidated financial statements and non-GAAP measures of the Company
for the last eight quarters:
QUARTERS (2)
2023
2022
(In thousands of dollars, except for volume
and per share information)
Fourth
Third
Second
First
Fourth
Third
Second
First
$
$
$
$
$
$
$
$
Sugar volumes (MT)
215,500
191,411
195,547
192,849
214,672
203,315
196,570
180,043
Maple products volume
(‘000 pounds)
Total revenues
Gross margin
10,363
9,630
12,059
11,819
9,838
12,027
12,912
12,286
308,036
262,285
272,949
261,443
267,406
254,632
253,341
230,755
41,192
41,685
41,659
41,191
28,472
24,948
33,899
43,486
Adjusted gross margin(1)
40,193
34,912
38,233
41,993
39,141
32,654
35,887
35,800
Results from operations
22,815
24,008
21,856
26,284
(38,345)
8,822
15,499
27,337
Adjusted results from operations(1)
21,816
17,235
18,431
27,086
22,324
16,528
17,487
19,651
EBITDA(1)
Adjusted EBITDA(1)
Net (loss) earnings
Per share - basic
Per share - diluted
29,568
30,523
28,445
32,713
18,283
15,402
22,029
33,748
28,569
23,750
25,020
33,515
28,952
23,108
24,017
26,061
11,876
14,177
11,062
14,674
(45,502)
3,138
8,570
17,226
0.12
0.09
0.13
0.12
0.11
0.10
0.14
0.13
(0.44)
(0.44)
0.03
0.03
0.08
0.08
0.17
0.15
Adjusted net earnings(1)
11,283
8,749
9,115
15,347
12,161
8,419
9,122
10,957
Per share - basic
Per share - diluted
Sugar - Adjusted gross margin
rate per MT(1)
Maple - Adjusted gross margin
percentage(1)
0.11
0.10
0.08
0.08
0.09
0.09
0.15
0.31
0.12
0.11
0.08
0.08
0.09
0.09
0.11
0.10
156.48
159.31
174.62
195.29
164.55
138.68
159.11
174.25
12.5%
9.5%
7.2%
7.7%
8.1%
8.2%
8.0%
8.1%
(1) See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
(2) All quarters are 13 weeks.
Historically the first quarter (October to December) and the fourth quarter (July to September) of the fiscal year are the best quarters for the
sugar segment for adjusted gross margin, adjusted EBITDA, and adjusted net earnings due to the favourable sales product mix associated
with an increased proportion of consumer sales during these periods of the year. At the same time, the second quarter (January to March) and
the third quarter (April to June) historically have the lowest volumes as well as an unfavourable sales product mix, resulting in lower adjusted
gross margins, adjusted EBITDA, and adjusted net earnings. Over the last eight quarters, this trend was less correlated due to sustained strong
demand in the domestic market and sales that were delayed from the first quarters of both, 2023 and 2022.
Usually, there is minimal seasonality in the Maple products segment. However, over the last two years, we have experienced volatility in sales
volume partially attributable to the highly competitive market and the global volatility in economic conditions.
2023 Annual ReportManagement’s Discussion & Analysis
34
FINANCIAL CONDITION
(In thousands of dollars)
Total assets
Total liabilities
September 30,
2023
$
960,901
654,005
October 1,
2022
$
937,956
646,537
October 2,
2021
$
879,930
560,972
The increase in total assets of $22.9 million in the current fiscal year was mainly due to an increase in inventory of $20.6 million, an increase
in property, plant, and equipment of $19.2 million and incremental right-of-use assets of $7.0 million. These positives variances were partially
offset by a decrease in derivative financial instruments assets of $17.9 million, a decrease in intangible assets of $3.4 million and lower trade
and other receivables of $2.0 million.
Total liabilities for the current fiscal year increased by $7.5 million due mainly to an increase in outstanding balance under the revolving credit
facility of $32.0 million, higher lease obligations of $7.3 million and an increase in deferred tax liabilities of $3.3 million. These variances were
partially offset by a decrease in trade and other payables of $13.0 million, a reduction in the employee benefits liabilities of $15.6 million and a
decrease in derivative financial instruments liabilities of $6.6 million.
LIQUIDITY
Cash flow generated by Lantic is mainly paid to Rogers by way of interest on the subordinated notes of Lantic held by Rogers, after taking a
reasonable reserve for capital expenditures, debt reimbursement and working capital. The cash received by Rogers is used to pay administrative
expenses, interest on the convertible debentures, income taxes and dividends to its shareholders. Lantic had no restrictions on distribution of
cash arising from compliance with financial covenants for the year.
(In thousands of dollars)
FY 2023
FY 2022
Net cash flow from operating activities
Cash flow used in financing activities
Cash flow used in investing activities
Effect of changes in exchange rate on cash
Net decrease in cash
$
44,318
(8,886)
(35,398)
(139)
(105)
$
21,552
(13,554)
(23,730)
240
(15,492)
Cash flow from operating activities for the current year increased by $22.8 million compared to last year, due mainly to higher net earnings
adjusted for non-cash items of $11.4 million, a positive non-cash working capital variation of $8.2 million and lower income taxes paid of $6.7
million. These positive variances were partially offset by higher interest paid of $3.6 million.
Cash flow used in financing activities decreased by $4.7 million for the current year compared to last year due mainly to an increase in
borrowings from the revolving credit facility, partially offset by increase in payment of financing fees.
The cash flow used in investing activities increased by $11.7 million in the current year compared to last year due mainly to the capitalization of
$9.7 million in expenditures in connection with the planning and design stage of our planned Expansion Project in Eastern Canada.
Rogers Sugar Inc.Management’s Discussion & Analysis
In order to provide additional information, we believe it is appropriate to measure free cash flow that is generated by our operations. Free cash
flow is a non-GAAP measure and is defined as cash flow from operations excluding changes in non-cash working capital, mark-to-market and
derivative timing adjustments and financial instruments’ non-cash amounts, and including capital expenditures and intangible assets, net of
value-added capital expenditures, and the payment of lease obligations.
35
FREE CASH FLOW
(In thousands of dollars)
Cash flow from operations
Adjustments:
Changes in non-cash working capital
Mark-to-market and derivative timing adjustments
Payment of deferred financing fees
Financial instruments non-cash amount
Capital expenditures and intangible assets
Value added capital expenditures
Payment of lease obligations
Free cash flow(1)
Declared dividends
Trailing twelve months
2023
$
44,318
35,039
(9,871)
(1,308)
5,687
(35,398)
12,717
(5,419)
45,765
37,752
2022
$
21,552
43,195
9,876
(268)
(4,030)
(23,730)
5,306
(5,150)
46,751
37,500
(1) See “Non-GAAP Measures” section for definition and reconciliation to GAAP measures.
Free Cash Flow
($000s)
60,000
8,716
50,000
46,751
6,728
-4,596
-5,644
45,765
-4,526
-1,663
40,000
30,000
20,000
10,000
0
Trailing 2022
Income taxes
Interest and
deferred financing
fees
Adjusted
EBITDA
Other non-cash
variances including
share-based
compensation
accrual variance
Capital
spending
and capital
lease
Pension net of
contribution
Trailing 2023
2023 Annual ReportManagement’s Discussion & Analysis
36
Free cash flow for the trailing twelve months ending September 30, 2023 amounted to $45.8 million, representing a decrease of $1.0 million
compared to the same period last year. This decrease in free cash flow was mainly due to higher capital expenditures, intangible assets and
value-added capital expenditures of $4.3 million, the reduction of non-cash impact of $5.8 million related to the variance in the accrual for
cash-settled share-based compensation of senior managements, and the increase in payment of interest and deferred financing fees of
$4.6 million. This variance was partially offset by higher adjusted EBITDA of $8.7 million and the decrease in income taxes paid of $6.7 million.
Capital and intangible assets expenditures, net of value-added capital expenditures, increased by $4.3 million compared to last year’s rolling
twelve months due mainly to higher investment in production assets. Free cash flow is not reduced by value-added capital expenditures, as
these projects are not necessary for the operation of the plants but are undertaken because of the operational savings that are realized once
the projects are completed. The increase in the amount spent in value-added capital expenditures for 2023 as compared to the same period
in 2022, was mainly related to costs amounting to $9.7 million incurred in connection with the planning and design stage of our planned
Expansion Project in Eastern Canada.
The Board of Directors declared a quarterly dividend of $0.09 per common share every quarter, totalling $0.36 for the trailing twelve-month
periods.
Changes in non-cash operating working capital represent year-over-year movements in current assets, such as accounts receivable and
inventories, and current liabilities, such as accounts payable. Movements in these accounts are due mainly to timing in the collection of
receivables, receipts of raw sugar and payment of liabilities. Increases or decreases in such accounts are due to timing issues and therefore
do not constitute free cash flow. Such increases or decreases are financed from available cash or from our available credit facility. Increases or
decreases in bank indebtedness are also due to timing issues from the above and therefore do not constitute available free cash flow.
The combined impact of the mark-to-market and derivative timing adjustments and financial instruments non-cash amount of $4.2 million for
the current rolling twelve months does not represent cash items as these contracts will be settled when the physical transactions occur, which
is the reason for the adjustment to free cash flow.
CONTRACTUAL OBLIGATIONS
The following table identifies the outstanding contractual obligations of our company as at year-end, and the effects such obligations are
expected to have on liquidity and cash flow over the next several years:
(In thousands of dollars)
Revolving credit facility
Senior Guaranteed Notes
Interest on convertible debentures
Interest based on swaps
Interest on Senior Guaranteed Notes
Lease obligations
Purchase obligations
Sugar purchase obligations (‘000 MT)
Maple purchase obligations (‘000 pounds)
Total
$
158,000
100,000
11,700
3,370
26,466
38,731
92,062
430,329
901
4,700
58,000
100,000
Under
1 year
$
—
7,506
2,422
3,490
5,965
92,062
169,445
711
4,700
1 to 3 years
4 to 5 years
After 5 years
$
—
4,194
948
6,980
11,302
—
$
—
—
—
—
3,490
6,975
—
$
—
100,000
—
—
12,506
14,489
—
23,424
110,465
126,995
190
—
—
—
—
—
Rogers Sugar Inc.Management’s Discussion & Analysis
37
The Sixth and Seventh series debentures, which mature in December 2024 and June 2025, respectively, have been excluded from the above
table due to the holders’ conversion option and the Company’s option to satisfy the obligations at redemption or maturity in common shares.
Interest has been included in the above table to the date of maturity.
Lantic has a revolving credit facility to support its financial and operational needs. The revolving credit facility is syndicated with six Canadian
chartered banks and includes an accordion feature allowing for the borrowing of up to $400 million. This agreement has been amended
and extended from time to time. The revolving credit facility is subject to covenants and is secured by the assets of Lantic and TMTC. As of
September 30, 2023, the approved amount available for borrowing was $265 million, of which $158 million was drawn.
On November 1, 2023, Lantic amended its revolving credit facility, by extending its term to October 31, 2027, and by increasing the amount
available for borrowing for working capital and for the Expansion Project by $75 million to $340 million. In addition, in order to conform with the
IBOR reform, Lantic will borrow at prime rate, SOFR Rate or under Adjusted Term CORRA loan, plus 20 to 250 basis points, based on achieving
certain financial ratios.
On April 30, 2021, Lantic issued a private placement of $100 million in the form of senior guaranteed notes (the “Notes”) under a note purchase
agreement entered into with certain institutional investors. The Notes are guaranteed and rank pari-passu with our existing revolving credit
facility. The Notes mature on April 30, 2031. The interest of the Notes was set at 3.49% and the interest is payable semi-annually in arrears in
equal installments on April 30th and October 30th of each year, commencing on October 30, 2021. The proceeds received from the private
placement of the Notes were used to repay existing credit facility indebtedness.
As at September 30, 2023, Lantic was in compliance with all the covenants under its revolving credit facility and its private placement and a
total of $630.0 million have been pledged as security, compared to $590.6 million as at October 1, 2022 including trade receivables, inventories
and property, plant and equipment.
In order to fix the interest rate on a substantial portion of the expected drawdown of the revolving credit facility, we enter into interest rate
swap agreements. The following table provides the outstanding swap agreements as at September 30, 2023 as well as their respective value,
interest rate and time period:
Fiscal year contracted
(in thousands of dollars)
Fiscal 2019
Fiscal 2019
Fiscal 2020
Fiscal 2020
Fiscal 2020
Total outstanding value as at
September 30, 2023
Date
Total value
March 12, 2019 to June 28, 2024 – 2.08%
June 28, 2022 to June 28, 2024 – 2.17%
October 3, 2019 to June 28, 2024 – 1.68%
February 24, 2020 to June 28, 2025 – 1.60%
June 28, 2024 to June 28, 2025– 1.18%
$
20,000
80,000
20,000
20,000
80,000
220,000
2023 Annual ReportManagement’s Discussion & Analysis
38
Lease obligations relate mainly to the leasing of facilities and various mobile equipment for our Sugar and Maple products segment operations.
Purchase obligations represent all open purchase orders as at year-end along with an amount of approximately $50.4 million for sugar beets
that will be harvested and processed in fiscal 2024. However, it excludes any raw sugar priced against futures contracts. The purchase
obligation regarding the sugar beets represents our best estimate of the amount expected to be payable in fiscal 2024 as of the date of this
MD&A.
A significant portion of our sales are made under fixed-price, forward-sales contracts, which extend up to three years. Lantic also contracts
to purchase raw cane sugar substantially in advance of the time it delivers the refined sugar produced from the purchase. To mitigate our
exposure to future price changes, we manage the volume of refined sugar sales contracted for future delivery in relation to the volume of raw
cane sugar contracted for future delivery.
We use derivative instruments to manage exposures to changes in raw sugar prices, natural gas prices and foreign exchange. Our objective for
holding derivatives is to minimize risk using the most efficient methods to eliminate or reduce the impacts of these exposures.
To reduce price risk, our risk management policy is to manage the forward pricing of purchases of raw sugar in relation to its forward refined
sugar sales. We attempt to meet this objective by entering into futures contracts to reduce our exposure. Such financial instruments are used
to manage our exposure to variability in fair value attributable to the firm commitment purchase price of raw sugar.
We have hedged the majority of our exposure to raw sugar price risk movement through to March 2026.
As at September 30, 2023, we had a net short sugar position of 10,189 metric tonnes with a current net contract value of $12.8 million. This short
position is mainly related to hedging activities related to the sale of beet sugar and the offset of a larger volume of sugar priced from suppliers
than sugar priced with customers.
We use forward contracts and commodity swaps to help manage our natural gas costs. As at September 30, 2023, we had $56.8 million in
natural gas derivatives, with a current contract value of $61.2 million.
Our activities, which result in exposure to fluctuations in foreign exchange rates, consist of the purchasing of raw sugar, the selling of refined
sugar and maple products and the purchasing of natural gas. We manage this exposure by creating offsetting positions through the use of
financial instruments. These instruments include forward contracts, which are commitments to buy or sell at a future date and may be settled
in cash.
The credit risk associated with foreign exchange contracts arises from the possibility that counterparties to a foreign exchange contract in
which we have an unrealized gain, fail to perform according to the terms of the contract. The credit risk is much less than the notional principal
amount, being limited at any time to the change in foreign exchange rates attributable to the principal amount.
Forward foreign exchange contracts have maturities of less than three years and relate mostly to US dollar, and to a much smaller extent, to
Euro and Australian dollar. The counterparties to these contracts are major Canadian financial institutions. We do not anticipate any material
adverse effect on our financial position resulting from our involvement in these types of contracts, nor do we anticipate non-performance by
the counterparties.
As at September 30, 2023, we had a net short position of $89.7 million in foreign currency forward contracts with a current contract value of
$90.7 million, representing an unrealized loss of $1.0 million.
Rogers Sugar Inc.Management’s Discussion & Analysis 39
As part of our normal business practice, we also enter into multi-year supply agreements with raw sugar processors for raw cane sugar.
Contract terms will state the quantity and estimated delivery schedule of raw sugar. The price is determined at specified periods of time before
such raw sugar is delivered based upon the value of Raw #11 as traded on the ICE world raw sugar market. As at September 30, 2023, we had
commitments to purchase a total of 901,000 metric tonnes of raw sugar, of which approximately 228,136 metric tonnes had been priced, for a
total dollar commitment of $187.2 million.
TMTC has $4.1 million remaining to pay related to an agreement to purchase approximately 4.7 million pounds of maple syrup from the PPAQ.
We have no other off-balance sheet arrangements.
CAPITAL RESOURCES
As at September 30, 2023, Lantic had a total of $265.0 million of available working capital from its revolving credit facility, from which it can
borrow at prime rate, SOFR rate or under bankers’ acceptances, plus 20 to 250 basis points, based on achieving certain financial ratios. This
balance was increased to $340 million on November 1, 2023. As at September 30, 2023, a total of $630.0 million of assets have been pledged as
security for the revolving credit facility, compared to $590.6 million as at October 1, 2022; including trade receivables, inventories and property,
plant and equipment.
As at September 30, 2023, $158.0 million had been drawn from the working capital facility and $2.6 million in cash was also available.
The Taber beet operation requires seasonal working capital in the first half of the fiscal year, when inventory levels are high and a substantial
portion of the payments due to the Growers is made. TMTC also has seasonal working capital requirements. Although the syrup inventory is
received during the third quarter of the fiscal year, its payment terms with the PPAQ requires cash payment in the first half of the fiscal year.
We have sufficient cash and availability under our line of credit to meet such requirements.
Future commitments of approximately $18.8 million have been approved for completing capital expenditures presently in progress. In addition,
subsequent to year end, the Company entered into commitments related to the Expansion Project for a total value of $24.0 million.
We also have funding obligations related to our employee future benefit plans, which include defined benefit pension plans. As at September
30, 2023, our Montréal and Taber registered defined benefit pension plans were in a net asset position. The most recent actuarial valuation
of the pension plans for funding purposes was as of January 1, 2022, and the next required valuation will be as of December 31, 2024. We
monitor our pension plan assets closely and follow strict guidelines to ensure that pension fund investment portfolios are diversified in line
with industry best practices. Nonetheless, pension fund assets are not immune to market fluctuations and, as a result, we may be required
to make additional cash contributions in the future. In fiscal 2023, cash contributions to defined benefit pension and other plans amounted to
$4.3 million. In total, we expect to incur cash contributions of approximately $3.8 million for fiscal 2024 relating to employee defined benefit
pension plans. For more information regarding our employee benefits and related assets and liabilities, please refer to Note 20 of the audited
consolidated financial statements.
Cash requirements for working capital and other capital expenditures are expected to be paid from available cash resources and funds
generated from operations. The Expansion Project is expected to be financed using a combination of various financial instruments, including
the revolving credit facility, approved loans from Investissement Quebec for up to $65 millions, and other debt and/or equity instruments.
Management believes that the unused credit under the revolving facility along with the loans from Investissement Quebec related to the
Expansion Project are adequate to meet our expected cash requirements.
2023 Annual ReportManagement’s Discussion & Analysis 40
OUTSTANDING SECURITIES
A total of 105,096,120 shares were outstanding as at September 30, 2023 and November 29, 2023, respectively (104,372,045 as at
October 1, 2022).
During fiscal 2023, the total amount outstanding under the Sixth and Seventh series debentures were $57.4 million and $97.6 million
respectively. No conversion of debentures into common shares has been done during the current fiscal year or the last fiscal year.
We currently have a share option plan that was established in 2011 and amended in 2021. Under this plan, we have set aside 6,000,000
common shares to be granted to key personnel. As at September 30, 2023, a total of 3,789,786 options had been granted, of which
3,025,711 were outstanding, at exercise prices ranging between $4.28 per share and $6.51 per share. These share options are exercisable
to a maximum of twenty percent per year, starting after the first anniversary date of the granting of the options and will expire after a
term of ten years.
In fiscal 2018, a Performance Share Unit plan (“PSU”) was created. The following table provides the detail of the grants under the PSU:
Grant date
December 7, 2020
December 6, 2021
December 12, 2022
PSUs
Additional PSUs(1)
Total PSUs
Performance Cycle
491,412
386,709
310,964
98,920
42,563
14,476
590,332
429,272
325,440
2021-2023
2022-2024
2023-2025
(1) Additional PSUs refer to aggregate of PSUs that were allocated from the dividend earned during the quarters since inception.
During fiscal 2023, the grant related to fiscal 2020 was cash settled for an amount of $640,000. The grant related to fiscal 2021 will be cash
settled in December 2023, representing an expected payout of $3,908,000.
The PSUs were granted to executives and other key management employees and will vest at the end of the Performance Cycle based on the
achievement of total shareholder returns set by the Human Resources and Compensation Committee (“HRCC”) and the Board of Directors of
the Company. If the level of achievement of total shareholder returns is within the specified range, the value to be paid-out to each participant
will be equal to the result of: the number of PSUs granted to the participant which have vested, multiplied by the volume weighted average
closing price of the Common Shares on the Toronto Stock Exchange (the “TSX”) for the five trading days immediately preceding the day on
which the Company shall pay the value to the participant under the PSU Plan. If the level of achievement of total shareholder returns is below
the minimum threshold, the PSU will be forfeited without any payments made.
Rogers Sugar Inc.Management’s Discussion & Analysis 41
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
(“ESG”)
to awareness and adoption of new environmental standards.
The economic and reputational importance of energy and natural
resources in our business is managed with a continuous improvement
Rogers and its board of directors recognize the importance of
mindset, which includes the review of new available technologies
corporate governance
in effectively managing the business,
and business practices that minimize our environmental footprint
protecting employees and shareholders, and enhancing shareholder
and in parallel, when possible, strengthen our financial position. We
value. We believe that our corporate governance practices are in
have made significant commitments over the past years to leverage
compliance with applicable Canadian requirements for TSX-listed
new technologies and process improvements to recover waste
issuers. The Company is committed to monitoring governance
energy, improve energy efficiency and lower energy intensity.
developments to ensure its practices remain current and appropriate.
With respect to potential environmental remediation of our
The board of directors of the Rogers has appointed an environmental,
properties, which could occur in the event of a building demolition
social and governance committee (the “ESG Committee”)
or a sale, it is worth noting that the Vancouver and Montreal facilities
responsible for:
•
overseeing and assessing the functioning of the board of
directors of the Company and the committees thereof;
have a lengthy history of industrial use, and fill materials have
been used on the properties in the normal course of business. We
recorded provisions under asset retirement obligations for known
and quantifiable potential remediation activities in connection
•
developing,
recommending
to
the board of directors,
with these properties. No assurance can be given that material
implementing and assessing effective governance principles;
expenditures will not be required in excess of the current asset
•
overseeing and advising the board of directors on management
of the Company’s strategy, initiatives, risks, opportunities and
reporting in respect of material ESG matters;
•
as may be required, identifying candidates for director and
recommending to the board of directors of Rogers qualified
director candidates for election at the next annual meeting of
shareholders of the Company; and
retirement obligation provisions in connection with contamination
from such industrial use or fill materials.
Although we are not aware of any specific problems at the Toronto
distribution centre, the Taber plant and any of the TMTC properties,
no assurance can be given that expenditures will not be required to
deal with known or unknown contamination at the property or other
facilities or offices currently or formerly owned, used or controlled
•
reviewing and/or approving any other matter specifically
by Lantic.
delegated to it by the board of directors of Rogers and undertake
on behalf of the board of directors such other governance
Rogers is engaged socially and promotes core values aligned with
initiatives as may be necessary or desirable to enable the board
environmental stewardship, respect, diversity, equity and inclusion.
of directors to provide effective governance for the Company
We promote a workplace that focuses on workplace safety,
and contribute to the success of Rogers.
empowerment, leadership, accountability, and recognition. We
expect all suppliers, including contractors, agents, and consultants,
The ESG Committee is comprised of four members: Dean Bergmame
to adhere to the business ethics and behaviours described in our
(Chair), M. Dallas H. Ross, Gary M. Collins and Stephanie Wilkes,
code of conduct, and to comply with all applicable and relevant
all of whom are considered independent within the meaning of
labour, employment, health and safety, and environmental laws and
National Instrument 58-101 – Disclosure of Corporate Governance
regulations.
Practices of the Canadian Securities Administrators (“NI 58-101). Bill
Maslechko, who is on the Lantic board of directors and has extensive
The board of directors of Rogers has overall responsibility for
governance expertise, attends all meetings of the ESG Committee
monitoring, evaluating, and contributing to the strategic and
as guest, and is also considered independent within the meaning of
operational direction of the business. This includes establishing a
National Instrument 58-101 – Disclosure of Corporate Governance
governance framework to support the business and meet all the
Practices of the Canadian Securities Administrators (“NI 58-101”).
applicable regulatory and legal requirements. Since 2022, Rogers
has an ESG team within its management group to support the ESG
Our governance and business management systems are design
strategy.
to monitor compliance with relevant environmental regulatory
standards. We comply, in all material respects, with environmental
During the third quarter of 2023, we published our annual ESG
laws and regulations and we maintain an open dialogue with
report. The report can be accessed on SEDAR or on our website at
regulators and the different levels of government, with respect
www.Lanticrogers.com.
2023 Annual ReportManagement’s Discussion & Analysis
42
ESG REPORTS
associated Ethical and Sustainable Sourcing Supplier Code of
In July 2023, we published the 2022 ESG Report, the report which
Conduct to include governance and land rights aspects, and created
incorporates key performance indicators from the Agricultural
a robust distribution and tracking plan to monitor the updated
Products Sustainability Accounting Standard Board (“SASB”),
documents distribution to all suppliers across the sugar and maple
builds on the 2021 ESG Report and the 2020 ESG Report and includes
business segments.
more information around our sustainability program, including our
efforts to improve workplace safety and diversity.
Rogers is also committed to promoting responsible management
of its resources and the environment through addressing the
In its 2022 ESG Report, we present our ESG performance, priorities,
environmental risks associated with the impact of its operations and
and initiatives for the fiscal year 2022, which ended on October
its supply chain. We recognize that climate change, including the
1, 2022. The report covers the following topics: climate action,
impacts of global warming and extreme weather events, represents
operational waste, water management, packaging, health and safety,
a risk that could adversely affect both of our business segments.
diversity, equality and inclusion, human rights, employee wellbeing
Rogers is proud to have invested over $9 million since 2018 in projects
and development, food safety, community involvement, responsible
that have improved its manufacturing process energy efficiency and
sourcing, and governance.
reduced the associated carbon emissions, an investment strategy
that will continue in the coming years.
One of the key aspects of our ESG program is the implementation
of an occupational health and safety management system that
In previous years, Rogers has reported greenhouse gas (“GHG”)
aims to provide a safe work environment for all its employees
emissions associated only with fuel combustion. The results provided
and contractors. Rogers has a health and safety policy and
in the 2022 ESG Report form a more complete organizational
standards that are regularly reviewed and updated, and a team
GHG emission inventory, calculated based on the World Resource
that collaborates with local health care and safety professionals to
Institute’s Greenhouse Gas Protocol. In 2022, we expanded our
monitor and suggest improvements. Rogers also benchmarks itself
reported GHG emissions inventory to include all known Scope 1 and
against the Occupational Safety and Health Administration (OSHA)
Scope 2 emissions sources, along with a limited Scope 3 inventory.
standards and sets continuous improvement objectives to reduce
This more comprehensive accounting approach will allow us to
risk and achieve a culture of zero harm. Our efforts have resulted in a
develop future oriented carbon reduction strategies and measurable
significant reduction in our recordable injury frequency (“RIF”) and
targets going forward, using 2022 as its baseline.
lost time incident rate (“LTIR”) over the last five years, as well as zero
fatal accidents in fiscal 2022. In 2022, Rogers achieved a record low
In 2022, Rogers also conducted its first water risk assessment and
incidence rate across its operations, with a 47% reduction in RIF and
identified that eight of its nine facilities were located in areas of low
a 41% reduction in LTIR compared to 2021.
overall water risk, and one facility in an area of low-medium overall
water risk. Rogers strives to reduce water use through initiatives that
Another
important aspect of Rogers’ ESG program
is the
include water recycling and water conservation, and to monitor the
implementation of measures to further ensure the labour rights of
quality of water it discharges to protect the aquatic ecosystems in
its employees and its suppliers. We are a proud equal opportunity
which it operates. We have a published target to source 100% of raw
employer that ensures there is no discrimination of any type on
sugar from producers who follow certified or verified sustainable
hiring and that there is pay equity, regardless of gender, ethnicity or
agricultural practices by 2027, and in 2022, we took a significant step
any other factors not related to performance. We maintain policies
in meeting this target by entering into a multi-year supply partnership
and a Code of Business Conduct that outline its expectations and
with Raízen, a source of certified non-GMO and certified Bonsucro
guidelines on topics such as equality and diversity, harassment
sugar for our Eastern Canada operations. Rogers currently traces
and offensive behavior, freedom of association, and no child or
almost 100% of its sugar beets and maple syrup supply to the farms
forced labour. In 2019, Rogers released its Human Rights Policy,
where they are sourced in Canada and the US, and ensures that the
which applies to all its employees and reflects its commitment to
beets are grown using sustainable agriculture practices verified by
social responsibility and respect for human dignity. In 2022, Rogers
the Farm Sustainability Assessment (FSA) performance assessment
developed and released its Ethical and Sustainable Sourcing Policy
from the Sustainable Agriculture Initiative (SAI).
and the associated Ethical and Sustainable Sourcing Supplier
Code of Conduct, which encompass comprehensive criteria on
Rogers is committed to using sustainable packaging across both
anti-bribery and corruption, labour rights, fair and safe working
its sugar and maple segments, and to minimizing the impact of
conditions, and environmental compliance. In 2023, we expanded
its product packaging on the environment. We conducted an
the scope of our Ethical and Sustainable Sourcing Policy and the
assessment of the primary packaging components used in our
Rogers Sugar Inc.Management’s Discussion & Analysis 43
own brand retail packaging and found that approximately 93% of
Code is available on our website at www.lanticrogers.com or under
our branded retail packaging utilized plastic alternative materials
Rogers’ profile on SEDAR+ at www.sedarplus.ca.
and consisted of materials that generally have well developed
recycling systems and end-markets. Rogers recognizes that making
Our business and operations are substantially affected by many
its packaging more sustainable and recyclable will provide it with
factors and as such, are exposed to various risks and uncertainties.
a competitive advantage and place it in a strong position as more
We have outlined below the risks and uncertainties that we believe
Extended Producer Responsibility (EPR) regulations are released by
are currently material. There may also exist additional risks and
both Provincial/State and Federal Governments.
uncertainties that are not currently known to us or that are not
considered material at this time. Those risks could have a material
Lastly, we are proud to support the communities in which we operate
adverse effect on our business, operation, financial conditions, and
and to provide financial support to various local and international
results.
charitable organizations each year. Rogers has a Donation Policy
that guides its contributions to organizations active in the local
DEPENDENCE UPON LANTIC
community, including those supporting underprivileged families,
Rogers is entirely dependent upon the operations and assets
agricultural education, community welfare and employees in crisis.
of Lantic through its ownership of securities of this company.
We support our employees volunteering for causes that they support
Accordingly, interest payments to debenture holders and dividends
and provide them with a process to do so with the support of Rogers.
to shareholders are dependent upon the ability of Lantic and/or
In 2022, Rogers donated to various charities, including the Red
TMTC to pay its interest obligations under the subordinated notes
Cross, Le Chic-Resto-Pop, and the Taber Food Bank.
and to declare and pay dividends on or return capital in respect of the
common shares. The terms of Lantic’s bank and other indebtedness
Copies of the ESG Reports are available on the Corporation’s
restricts its ability to pay dividends and make other distributions on
website at www.lanticrogers.com or under the Corporation’s profile
its shares or make payments of principal or interest on subordinated
on SEDAR+ at www.sedarplus.ca.
debt, including debt which may be held, directly or indirectly, by
Rogers, in certain circumstances. In addition, Lantic may defer
payment of interest on the subordinated notes at any given time for
RISKS AND UNCERTAINTIES
a period of up to 18 months.
We are committed to proactive risk governance and oversight
NO ASSURANCE OF FUTURE PERFORMANCE
practices. The Board of Directors is responsible for reviewing and
Historic and current performance of the business of Rogers, Lantic
assessing material risks associated with the business. The governance
and TMTC may not be indicative of success in future periods. The
process ensures that we implement systems that effectively identify,
future performance of the business may be influenced by economic
manage, and monitor the principal risks associated with both of
downturns and other factors beyond the control of Rogers, Lantic
our business segments, to mitigate or reduce potential negative
and TMTC. As a result of these factors, the operations and financial
impacts. Management provides periodic updates to the Board
performance of Lantic and TMTC may be negatively affected, which
of Directors on the risks and the related mitigation strategies and
may materially adversely affect our performance, and financial
activities. Responsibility for risk management is shared across the
results and conditions.
organization and is an integral part of our management reporting
system.
CHANGES IN GENERAL ECONOMIC CONDITIONS
Changes in general economic conditions could have a material
We maintain policies and a Code of Business Conduct (the “Code”),
effect on the profitability of both of our business segments and on
applicable to all directors, officers, and employees, as well as
the assessment of the value of our assets, affecting our ability to
consultants and contractors. Such documents are reviewed at least
execute our business strategy. The current inflationary pressures are
annually by the Board of Directors. These policies and the Code aim
increasing operating costs and there is no assurance that we will be
to promote sound risk management throughout the organization,
able to recover the extent of such costs with timely commensurate
delegate appropriate authority among officers and set limits for
increases in price to our customers.
authorizations required to approve and execute certain business
transactions. The Code addresses specifically the measures put
The recent changes in general economic conditions and the
forward to prevent corruption, anti-competitive practices, and
potential for further worsening of the global economy could impact
unethical behaviors. It also includes clear directions to govern
the performance, and the financial results and conditions of Rogers.
relationships with customers, suppliers, and other stakeholders. The
2023 Annual ReportManagement’s Discussion & Analysis 44
GOVERNMENT REGULATIONS AND FOREIGN TRADE
SUPPLY OF RAW CANE SUGAR
POLICIES WITH REGARD TO THE SUGAR SEGMENT
There are approximately 180 million metric tonnes of sugar produced
In 1995, Revenue Canada made a determination that there was
worldwide. Of this, approximatively 55 million metric tonnes of sugar
dumping of refined sugar from the US, Denmark, Germany, the
are traded on the world market. Lantic, through its cane refining
United Kingdom (“UK”), the Netherlands and the Republic of Korea
plants, buys approximately 0.7 million metric tonnes of raw sugar
into Canada, and that subsidized refined sugar was being imported
per year. Even though worldwide raw sugar supply is much larger
into Canada from the European Union (“EU”). The Canadian
than Lantic’s yearly requirements, concentration of supply in certain
International Trade Tribunal (“CITT”) conducted an inquiry and ruled
countries like Brazil, combined with an increase in cane refining
that the dumping of refined sugar from the US, Denmark, Germany,
operations in certain countries, may create tightness in raw sugar
the UK, and the Netherlands, as well as the subsidizing of refined
availability at certain times of the year. To prevent any raw sugar
sugar from the EU, was threatening material injury to the Canadian
supply shortage, Lantic normally enters into long-term supply
sugar industry. The ruling resulted in the imposition of protective
contracts with reputable suppliers. For raw sugar supply not under
duties on these unfairly traded imports.
contract, significant premiums may be paid on the purchase of raw
sugar on a nearby basis, which may have a material impact on our
Under Canadian laws, these duties must be reviewed every five
performance, and financial results and conditions.
years. In August 2021, the CITT concluded its fifth review of the 1995
findings and issued its decision to continue the duties for another
SUPPLY AND QUALITY OF SUGAR BEETS IN ALBERTA
five-year period against (i) dumped sugar from the US, Denmark,
The availability of sugar beets to be processed in Taber, Alberta
Germany, the Netherlands, and the UK, and (ii) subsidized sugar
is dependent on a supply contract with the Growers, and on the
from the EU. The Canadian Sugar Institute (“CSI”) and its members,
Growers planting the necessary acreage every year. In the event that
including Lantic, participated fully in the review and submitted
sufficient acreage is not planted in a certain year, or that Lantic and
detailed evidence and witness testimony to the CITT. The CITT
the Growers cannot agree on a supply contract, sugar beets might
agreed that imports of dumped and subsidized sugar would likely
not be available for processing, thus requiring transfer of products
cause material injury to the Canadian industry if the duty protection
from Lantic’s cane refineries to the Prairie market, normally supplied
was removed.
by Taber. This would increase Lantic’s distribution costs and may
have a material impact on our performance, and financial results and
Following the CITT’s review, the Canadian Border Services Agency
conditions.
(“CBSA”) concluded a re-investigation in March 2022 to update the
levels of duty protection applicable to dumped sugar from the US,
Sugar beets, as is the case with most other crops, are affected by
Denmark, Germany, the Netherlands, and the UK and subsidized
weather conditions during the growing season. Additionally, weather
sugar from the EU. The CBSA determined that anti-dumping duties
conditions during the harvesting and processing season could affect
will continue to apply to imports of dumped sugar from the US,
Lantic’s total beet supply and sugar extraction from beets stored for
Denmark, Germany, the Netherlands and the UK and ruled that a
processing. A significant reduction in the quantity or quality of sugar
countervailing duty will continue to apply to imports of subsidized
beets harvested due to adverse weather conditions, disease or other
EU sugar.
factors could result in decreased production, with negative financial
consequences to Lantic.
The duties on imports of US, EU, and UK refined sugar are important
to Lantic and to the Canadian refined sugar industry in general
RAW #11 PRICE AND FOREIGN EXCHANGE RISK FOR
because they protect the market from the adverse effects of unfairly
SUGAR SEGMENT
traded imports from these sources. The government support and
The price of raw sugar cane purchased for the Montréal and
trade distorting attributes of the US and EU sugar regimes continue
Vancouver refineries is based on the Raw #11 sugar market traded on
to generate surplus refined sugar production and exports that
the ICE. The price of refined sugar sold to customers is also based on
threaten the Canadian sugar market.
the Raw #11 sugar market. All purchase of raw cane sugar and sales
of refined sugar are economically hedged with financial instruments
Although the recent ruling is for a period of five years, it could be
such as future contracts to mitigate risk, thus eliminating the impact
challenged by market participants for review if there is a material
of volatility in Raw #11 sugar price.
change in market conditions. If the duties were to be eliminated or
significantly reduced in the future, there could be a material financial
These purchases of raw cane sugar and sales of refined sugar
impact to Lantic and other members of the Canadian refined sugar
are denominated in US dollars and could potentially expose us to
industry.
fluctuation in the value of the Canadian dollar. Our strategy is to
Rogers Sugar Inc.Management’s Discussion & Analysis 45
hedge the foreign exchange exposure of these transactions using
COMPETITION IN THE SUGAR SEGMENT
available financial instruments, such as future contracts, to eliminate
For the Sugar segment, Lantic faces domestic competition from
the impact of volatility.
Redpath Sugar Ltd. and smaller regional operators and or distributors
of both foreign and domestic refined sugar, such as Sucro Sourcing
There can be no assurance that we will be able to continue to
LLC. Differences in proximity to various geographic areas within
mitigate efficiently this exposure to Raw #11 price and related foreign
Canada and elsewhere result in differences in freight and shipping
exchange risk in the future. If effective financial instruments were
costs, which in turn affect pricing and competitiveness in general.
not available to mitigate such exposures, there could be material
impacts on our performance, and financial results and conditions.
In addition to sugar, the overall sweetener market also includes corn-
based sweeteners, such as HFCS, an alternative liquid sweetener,
RECENTLY ANNOUNCED EASTERN CAPACITY
which can be substituted for liquid sugar in soft drinks and certain
EXPANSION PROJECT
other applications; and non-nutritive, high intensity sweeteners
The completion of the recently announced Expansion Project is
such as aspartame, sucralose and stevia. Differences in functional
subject to several conditions and risks, certain of which are outside
properties and prices have tended to define the use of these various
of the control of Lantic. The detailed engineering plan for the project
sweeteners. The substitution of other sweeteners for sugar has
has been completed and includes estimates as it relates to costs,
occurred in certain products in the past. We are not able to predict
construction period and incremental production capacity. The
the availability, development or potential use of these sweeteners
expected total cost of the project is estimated at approximately $200
and their possible impact on Lantic’s business.
million.
PRICE OF NATURAL GAS
Delays and cost overruns may occur in completing the construction
Natural gas represents an important cost in our refining operations.
of the Expansion Project. A number of factors that could cause such
Our three sugar refineries consume natural gas in their refining
delays or cost overruns include, without limitation, permitting delays,
process. The Taber beet factory production also includes agricultural
construction pricing escalation, changing engineering and design
processing and as a result, uses more energy in its operations than
requirements, the performance of contractors, labour disruptions,
the cane facilities in Vancouver and Montréal, principally from the
adverse weather conditions and the availability of financing. Even
need to heat the sliced sugar beets, to evaporate water from juices
when complete, the new installed capacity and other related assets
containing sugar, and to dry wet beet pulp. Our Maple segment
may not operate as planned due to design or manufacturing flaws,
bottling plants also use natural gas in their process although to a
which may not all be covered by warranty. Mechanical breakdown
lower extent.
could occur in equipment after the period of warranty has expired,
resulting in loss of production as well as the cost of repair.
Changes in the costs and sources of energy may affect the financial
results of Lantic’s operations. In addition, all natural gas purchased
In addition, in order to complete the project, Lantic might need to
is priced in US dollars. Therefore, fluctuations in the Canadian/
further amend existing credit facilities and potentially enter into
US dollar exchange rate will also impact the cost of energy. Lantic
additional financing agreements in order to finance the construction.
hedges a portion of its natural gas price exposure through the use of
Lantic’s ability to secure the overall financing for the project is related
natural gas contracts to lessen the impact of fluctuations in the price
to several factors, including market demand for refined sugar, the
of natural gas. Provincial application of some form of carbon tax has
final cost for the project and the borrowing conditions in the financial
been increasingly important across Canada and for some provinces
market.
with a carbon tax, rates have been increasing, which could increase
the overall energy costs for Lantic.
There can be no assurance that the Expansion Project will be
completed, or that it will be completed in the expected timeframe of
approximately two years, providing the expected incremental volume
at the expected cost. Failure by Lantic to complete the Expansion
Project under the expected conditions could have a material impact
on the performance, and financial results and conditions of Rogers.
2023 Annual ReportManagement’s Discussion & Analysis
46
REGULATORY REGIME GOVERNING THE PURCHASE AND
to half of year of production. The reserve fluctuates yearly based on
SALE OF MAPLE SYRUP IN QUÉBEC
the size of the crop. Each year, the PPAQ may organize a sale of a
Producers of maple syrup in Québec are required to operate within
portion of its accumulated reserve. There can be no assurance that
the framework provided for by the Marketing Act, which empowers
TMTC will have access to some of such reserve to offset decreases
the PPAQ to manage the production and marketing of Maple syrup
in production due to weather conditions or that such reserve will
in Québec. As part of its regulating and organizing functions, the
be sufficient to cover a gap in the production in any given year. Any
PPAQ is responsible for establishing and managing a governance
decrease in production or incapacity to purchase additional reserves
framework aimed at maintaining supply to the market and fair prices
from the PPAQ may affect TMTC’s supply of its sales of maple syrup
for all producers for bulk maple syrup sold in container of five litres
and other Maple products and, ultimately, its performance and
or more. This includes managing production surpluses and their
financial results.
storage to stabilize the pricing of maple syrup.
MAPLE SEGMENT RELYING SUBSTANTIALLY ON EXPORTS
Bulk maple syrup may be sold to the PPAQ or to authorized
The size of the global market for maple syrup is currently estimated
buyers accredited by the PPAQ. In Québec, nearly 90% of the total
at $1.4 billion, the US being by far the world’s largest importer,
production of maple syrup is sold to the PPAQ or the authorized
followed by Japan and Germany. Despite the increase of sales of
buyers, leaving only approximately 10% of the total production being
maple products that the Canadian market has experienced in recent
sold directly by the producers to consumers or grocery stores. TMTC
years, the industry largely relies on the international market. Over the
is an authorized buyer with the PPAQ. The authorized buyer status
last few years, New York, Vermont and Maine have increased their
is renewed on an annual basis. There is no certainty that TMTC will
production of maple syrup and have now become competitors of
be able to maintain its status as an authorized buyer with the PPAQ.
Québec, which however remains the largest producer and exporter
Failure by TMTC to remain an authorized buyer with the PPAQ would
of maple syrup in the world.
affect our capacity to supply our bottling facilities and therefore
would impact materially the performance, and financial results of
While we continue to develop our selling efforts outside of Canada,
the Maple segment.
including increasing our sales efforts in countries where the maple
syrup market is developing, we are facing high competition from
The PPAQ, in its capacity as bargaining and sales agent for the
other bottlers and distributers, including from other Canadian and
producers of maple syrup in Québec sets the minimum purchase
US companies, for our share of the international market.
price for Maple syrup for the authorized buyers. The PPAQ sets
price based on market intelligence, available supply and expected
Our Maple segment international operations are also subject to
demand. If the PPAQ increases the price of maple syrup significantly,
inherent risks, including change in the free flow of food products
there could be no assurance that TMTC will be able to recover
between countries, fluctuations in currency values, discriminatory
such increase from its customers and therefore this could impact
fiscal policies, unexpected changes in local regulations and laws and
materially the performance, and financial results of the Maple
the uncertainty of enforcement of remedies in foreign jurisdictions.
segment.
Such jurisdictions could impose tariffs, quotas, trade barriers and
other similar restrictions on our international sales and subsidize
Pursuant to the PPAQ rules and regulations, authorized buyers must
competing agricultural products.
commit to buying Maple syrup in barrels corresponding to their
anticipated sales volume. The anticipated volume must be realistic
All of these risks could result in increased costs or decreased
and in line with volumes purchased in previous years. The refusal
revenues, either of which could materially adversely affect the
from the PPAQ to accept our anticipated volume or failure by us to
performance and financial results of the Maple segment.
properly estimate the anticipated volume for a given year may affect
our ability to increase our production capacity and therefore this
COMPETITION IN THE MAPLE SEGMENT
could impact materially the performance, and financial results of the
Our Maple segment is the largest branded and private label maple
Maple segment.
syrup bottling and distributing company in the world. We have five
major competitors located in Canada and US and also compete
SUPPLY OF MAPLE SYRUP
against a multitude of US bottlers and distributing companies.
The PPAQ set up a strategic maple syrup reserve to mitigate
production fluctuations caused by weather conditions and prevent
A large majority of our Maple segment revenues are made under
such fluctuations from causing maple syrup prices to spike or drop
the private label line. We anticipate that for a foreseeable future,
significantly. The PPAQ objective is to have in reserve the equivalent
the relationship with our top private label customers will continue
Rogers Sugar Inc.Management’s Discussion & Analysis 47
to be key and will continue to have a material impact on our sales.
The security measures we have put in place cannot provide absolute
Although we consider the relationship with our top private label
security, and our information technology infrastructure may be
customers to be excellent, the loss of, or a decrease in the amount
vulnerable to cyberattacks in the future. The impacts of such attack
of business from, such customers, or any default in payment on their
may subject our operations to increased risks, as well as increased
part could significantly reduce our sales and negatively impact the
costs, and, depending on their ultimate magnitude, could materially
performance and, financial results of the Maple segment.
and adversely affect our operations, performance, and financial
results and conditions.
FOREIGN EXCHANGE EXPOSURE IN THE MAPLE SEGMENT
A significant portion of sales of maple syrup are exports and
EMPLOYEE RELATIONS WITH UNIONIZED EMPLOYEES
are denominated in US dollars, in Euros or in Australian dollars.
The majority of our operations are unionized, and agreements are
Fluctuations in the value of the Canadian dollar impacts the
currently in place in each unionized facility, with the exception of
profitability of these sales. In order to mitigate against the movement
our Vancouver sugar refinery. On September 28, 2023, the unionized
of the Canadian dollar versus the US dollar, Euro or Australian dollar,
employee of the Vancouver sugar refinery, represented by the Public
we enter into foreign exchange hedging contracts with certain
and Private Workers of Canada Local 8 went on strike. As of the
customers to mitigate the currency risk.
date of this MD&A, the strike is still on-going. This labour disruption
is expected to negatively impact our financial results for 2024, the
There is no assurance that we will be able to continue to mitigate
extent of which is not yet known, and will depend mainly on the
efficiently this exposure to foreign exchange risk in the future. If
length of the strike, and the potential internal incremental costs
effective financial instruments were not available to mitigate such
associated with servicing our western customers impacted by the
risk, there could be a material impact for the performance, and
labour disruption.
financial results of the Maple segment.
CYBERSECURITY
We face various security threats, including cybersecurity threats to
During fiscal 2023, we signed a new collective agreement with the
union at our Granby maple syrup bottling plant facility.
gain unauthorized access to sensitive information, to render data
We have contingency plans in place to mitigate the potential impact
or systems unusable, or otherwise affect our ability to operate.
of labour disruptions at our facilities. However, such potential
Our business operations are dependent on various information
disruptions in current and future years could restrict our ability to
technology systems. A cyber intrusion, such as, and not limited to,
service our customers in the affected regions, consequently affecting
unauthorized access, confidential information leak (or identity theft),
our performance and, financial results and conditions.
malicious software or other violations on systems that control our
production operations and financial management could severely
INTEREST RATE FLUCTUATIONS
disrupt or otherwise affect our business. Such attacks on our data
We use our revolving credit facility to finance our day-to-day
information systems and the inability to recover promptly could
operations and a portion of the Expansion Project. We face interest
impact individuals, business partners, our operation capabilities,
rate risks in respect to the floating rate nature of our revolving short
generate unexpected expenses impacting profitability, damage our
term credit facility. We are mitigating the risk of volatility in short
reputation and result in additional liabilities.
term interest rate by hedging a portion of our exposure using interest
We seek to manage cybersecurity risk by continuing to invest in
rate swap agreements will be available to mitigate such risk in the
rate swap agreements. There is no assurance that effective interest
appropriate information technology systems, infrastructure, and
future.
security, including disaster plans, reviewing our existing technologies,
processes and practices on a regular basis and ensuring employees
PANDEMICS, EPIDEMICS OR OTHER PUBLIC
understand and are aware of their role in protecting the integrity of
HEALTH EMERGENCIES
our technological security and information. We rely on third-party
Our business, results of operations, financial conditions, cash flows
products and services to assist us in protecting our information
and stock price can by adversely affected by pandemics, epidemics,
technology infrastructure and our proprietary and confidential
or other public health emergencies, such as the COVID-19 pandemic.
information. We seek to be proactive in the area of cybersecurity and
Such events could result in health or other government authorities
consequently anticipate that we will continue to incur expenses in
requiring the closure of offices or other businesses and could also
relation to these increasingly complex threats and risks.
result in a general economic decline, impacting economic activity
through disruption in supply and delivery chains.
2023 Annual ReportManagement’s Discussion & Analysis 48
FOOD SAFETY AND CONSUMER HEALTH
compliance expenditures. Violation of these regulations can result
Our Sugar and Maple business segments are subject to risks that
in fines or other penalties, which in certain circumstances can
affect the food industry in general, including risks posed by accidental
include clean-up costs. Consequently, no assurance can be given
contamination, product tampering, consumer product liability, and
that additional health, safety and environmental issues relating to
the potential costs and disruptions of a product recall. We actively
currently known and unknown matters will not require expenditures
manage these risks by maintaining strict and rigorous controls and
in the future, or result in fines, penalties or other consequences
processes in our manufacturing facilities and distribution systems.
material to our business and operations and potentially impacting
our performance, financial results and conditions.
Our facilities are subject to audit by federal health agencies in
Canada and similar institutions outside of Canada. We also perform
GLOBAL CLIMATE CHANGE
our own audits designed to ensure compliance with our internal
Global climate change, including the impacts of global warming
standards, which are generally at, or higher than, regulatory agency
and sudden change
in weather conditions causing extreme
standards in order to mitigate the risks related to food safety.
weather events, represents a risk that could adversely affect both
Consumers, public health officials and government officials are
as average temperatures are rising and extreme weather events are
of our business segments. This risk has increased in recent years
increasingly concerned about the public health consequences
more frequent.
of obesity, particularly among young people. In addition, some
researchers, health advocates and dietary guidelines are suggesting
The production of refined sugar for our Sugar segment is based
that consumption of sugar, in various forms, is a primary cause of
on the availability of raw cane sugar and sugar beets. Extreme
increased obesity rates and are encouraging consumers to reduce
weather events create a risk of damage for the annual crops of sugar
their consumption of sugar. Increasing public concern about obesity
cane and sugar beet. The size and quality of the crops are directly
and other health conditions; possible new or increased taxes on
impacted by weather conditions. The adverse effect of global climate
products containing sugar, such as sugar-sweetened beverages by
change could result in supply disruption and or significant increase
government entities to reduce consumption or to raise revenues; shift
in purchase price for our Sugar segment.
in consumer preferences from sugar to other types of sweeteners;
additional governmental regulations concerning the marketing,
The production of maple syrup takes place over a period of six to
labeling, packaging or sale of products and negative publicity may
eight weeks during the months of March and April of each year.
reduce demand for our products and each of the aforementioned
Maple syrup production is intimately tied to the weather as sap only
factors could materially adversely affect our performance, financial
flows when temperatures rise above freezing level during the day
results and conditions.
and drop below it during the night, such temperature difference
creating enough pressure to push sap out of the maple tree. Given
HEALTH, SAFETY AND ENVIRONMENTAL RISKS
the sensitivity to temperature in the process of harvesting maple
Our operations carry inherent risk of liability related to employee’s
sap, climate change and global warming may have a material impact
hOur operations carry inherent risk of liability related to employee
on such process as the maple syrup production season may become
health and safety and the environment, including the risk of
shorter. Reducing the production season for maple syrup may also
government-imposed orders to remedy unsafe conditions or address
have an impact on the level of production.
potential environmental issues. Compliance with current and future
health, safety and environmental laws remains material for our
These risks associated with global climate change could result in
business to operate efficiently. We have incurred and will continue
lower sales, increased costs and market disruptions, which could
to incur expenditures to comply with related federal, provincial, and
materially adversely affect our performance, and financial results
municipal regulations to manage our potential liability exposure.
and conditions.
We believe RSI and its subsidiaries are currently in compliance, in
all material respects, with health, safety and environmental laws
and regulations. This includes environmental regulations relating
to the treatment and disposal of wastewater and cooling water, air
emissions, contamination, and spills of substances. However, these
regulations have become progressively more stringent, and we
anticipate this trend will continue, potentially resulting in incremental
Rogers Sugar Inc.Management’s Discussion & Analysis
49
CARBON PRICING MECHANISMS
INCOME TAX MATTERS
The Company operates three facilities that are regulated under
The income of Rogers and its subsidiaries must be computed and
provincial carbon pollution pricing in Canada, our Montréal and
is taxed in accordance with Canadian and US tax laws, all of which
Vancouver refineries and our Taber sugar beet processing plant. We
may be changed in a manner that could adversely affect the ability
have completed a detailed risk assessment of the different provincial
to pay dividends in the future. There can be no assurance that
regulatory regimes to understand the level of risk and identify
taxation authorities will accept the tax positions adopted including
potential mitigation measures.
the determination of the amounts of taxable income, which could
materially adversely affect dividends.
Potential future changes to the current rules and regulations,
including increases to the current related taxation level could
The current corporate structure involves a significant amount of
materially adversely affect our performance, and financial results
inter-company or similar debt, generating substantial interest
and conditions.
WATER STRESS
expense, which impacts earnings and therefore income tax payable.
There can be no assurance that taxation authorities will not seek
to challenge the amount of interest expense deducted. If such
Our sugar refining operations and the farming activities of our
a challenge were to succeed against Lantic, it could materially
suppliers depend on the availability of usable water. To better
adversely affect the amount of cash transferred to Rogers for
understand this risk, we conduct water risk assessments periodically
dividend payment. Management believes that the interest expense
to prioritize actions and investments in our facilities, with the
inherent in the structure is supportable and reasonable considering
objective of optimizing the water consumption in our production
the terms of the debt owed by Lantic to Rogers.
process. We also engage with our suppliers relying on water for their
farming activities to monitor our potential exposure and to ensure
MANAGEMENT AND OPERATION OF LANTIC
a steady and sustainable supply of raw material for our production
The Board of Directors of Lantic is currently controlled by Lantic
facilities.
Capital, an affiliate of Belkorp Industries. As a result, holders of
shares have limited say in matters affecting the operations of
Potential future changes to the current rules and regulations
Lantic; if such holders disagree with the decisions of the Board of
regarding the use of water, including increases to the current cost of
Directors of Lantic, they have limited recourse. The control exercised
water supporting our production process could materially adversely
by Lantic Capital over the Board of Directors of Lantic may make it
affect our performance, and financial results and conditions.
more difficult for others to attempt to gain control of or influence the
activities of Lantic and Rogers.
ABILITY TO RETAIN OFFICERS AND KEY EMPLOYEES OR
TO ATTRACT NEW TALENT
The officers and other key employees of Rogers, Lantic and TMTC
play a significant role in our success. Our future performance and
growth depend to a significant extent on the abilities, experience,
and efforts of our management team. Our ability to retain our
management team or to attract suitable replacements should key
members of the management team leave is dependent on the
competitive nature of the employment market.
The loss of services from key members of the management team or a
limitation in their availability could adversely impact the performance,
financial results, and condition of Rogers. Further, such a loss could
be negatively perceived in the capital markets. Our success depends
largely upon our continuing ability to attract, develop, and retain
skilled employees to meet the needs of the business.
2023 Annual ReportManagement’s Discussion & Analysis 50
NON-GAAP MEASURES
• EBITDA is defined as earnings before interest, taxes, depreciation,
amortization and goodwill impairment.
In analyzing results, we supplement the use of financial measures
that are calculated and presented in accordance with IFRS with a
• Adjusted EBITDA is defined as adjusted results from operating
number of non-GAAP financial measures. A non-GAAP financial
activities adjusted to add back depreciation and amortization
measure is a numerical measure of a company’s performance,
expenses.
financial position or cash flow that excludes (includes) amounts or is
subject to adjustments that have the effect of excluding (including)
• Adjusted net earnings is defined as net earnings adjusted for the
amounts, that are included (excluded) in most directly comparable
adjustment to cost of sales, goodwill impairment and the income
measures calculated and presented in accordance with IFRS.
tax impact on these adjustments.
Non-GAAP financial measures are not standardized; therefore, it
may not be possible to compare these financial measures with the
• Adjusted gross margin rate per MT is defined as adjusted gross
non-GAAP financial measures of other companies having the same
margin of the Sugar segment divided by the sales volume of the
or similar businesses. We strongly encourage investors to review the
Sugar segment.
audited consolidated financial statements and publicly filed reports
in their entirety, and not to rely on any single financial measure.
• Adjusted gross margin percentage is defined as the adjusted gross
margin of the Maple segment divided by the revenues generated
We use these non-GAAP financial measures in addition to, and in
by the Maple segment.
conjunction with, results presented in accordance with IFRS. These
non-GAAP financial measures reflect an additional way of viewing
• Adjusted net earnings per share is defined as adjusted net earnings
aspects of the operations that, when viewed with the IFRS results
divided by the weighted average number of shares outstanding.
and the accompanying reconciliations to corresponding IFRS
financial measures, may provide a more complete understanding of
• Free cash flow is defined as cash flow from operations excluding
factors and trends affecting our business.
changes
in non-cash working capital, mark-to-market and
derivative timing adjustments, financial instruments non-cash
The following is a description of the non-GAAP measures we used
amount, goodwill impairment and includes deferred financing
in the MD&A:
charges, funds received from stock options exercised, capital
and intangible assets expenditures, net of value-added capital
• Adjusted gross margin is defined as gross margin adjusted for
expenditures, and payments of capital leases.
“the adjustment to cost of sales”, which comprises the mark-
to-market gains or losses on sugar futures and foreign exchange
forward contracts as shown in the notes to the consolidated
financial statements and the cumulative timing differences as a
result of mark-to-market gains or losses on sugar futures and
foreign exchange forward contracts.
• Adjusted results from operating activities are defined as results
from operating activities adjusted for the adjustment to cost of
sales and goodwill impairment.
Rogers Sugar Inc.Management’s Discussion & Analysis
51
In the MD&A, we discuss the non-GAAP financial measures, including the reasons why we believe these measures provide useful information
regarding the financial condition, results of operations, cash flows and financial position, as applicable. We also discuss, to the extent material,
the additional purposes, if any, for which these measures are used. These non-GAAP measures should not be considered in isolation, or
as a substitute for, analysis of our results as reported under GAAP. Reconciliations of non-GAAP financial measures to the most directly
comparable IFRS financial measures are as follows:
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO IFRS FINANCIAL MEASURES
Consolidated results
(In thousands of dollars)
Q4 2023
Maple
Products
$
Sugar
$
Total
$
Gross margin
35,512
5,680
41,192
Total adjustment to the cost of sales (1)
(1,790)
791
(999)
Adjusted gross margin
33,722
6,471
40,193
Q4 2022
Maple
Products
$
1,714
2,103
3,817
Sugar
$
26,758
8,566
35,324
Total
$
28,472
10,669
39,141
Results from operating activities
20,395
2,420
22,815
12,662
(51,007)
(38,345)
Total adjustment to the cost of sales(1)
Goodwill impairment
(1,790)
—
791
—
(999)
8,566
2,103
—
—
50,000
Adjusted results from operating activities
18,605
3,211
21,816
21,228
1,096
10,669
50,000
22,324
Results from operating activities
20,395
2,420
22,815
12,662
(1,007)
(38,345)
Depreciation of property, plant and equipment,
amortization of intangible assets
and right-of-use assets
5,058
1,695
6,753
4,947
1,681
6,628
Goodwill impairment
—
—
—
—
50,000
50,000
25,453
4,115
29,568
17,609
674
18,283
EBITDA(1)
EBITDA(1)
25,453
4,115
29,568
Total adjustment to the cost of sales(1)
(1,790)
791
(999)
Adjusted EBITDA
23,663
4,906
28,569
Net (loss) earnings
Total adjustment to the cost of sales(1)
Goodwill impairment
Net change in fair value in interest rate swaps(1)
Income taxes on above adjustments
Adjusted net earnings
Net (loss) earnings per share (basic)
Adjustment for the above
Adjusted net earnings per share (basic)
(1) See “Adjusted results” section.
11,876
(999)
—
201
205
11,283
0.12
(0.01)
0.11
17,609
8,566
26,175
674
2,103
2,777
18,283
10,669
28,952
(45,502)
10,669
50,000
(328)
(2,678)
12,161
(0.44)
0.56
0.12
2023 Annual ReportManagement’s Discussion & Analysis
52
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO IFRS FINANCIAL MEASURES (CONTINUED)
Consolidated results
(In thousands of dollars)
Fiscal 2023
Maple
Products
$
Sugar
$
Total
$
Gross margin
144,397
21,329
165,726
Total adjustment to the cost of sales(1)
(8,375)
(2,020)
(10,395)
Adjusted gross margin
136,022
19,309
155,331
Results from operating activities
86,510
8,453
94,963
Total adjustment to the cost of sales(1)
(8,375)
(2,020)
(10,395)
Sugar
$
115,872
10,296
126,168
60,458
10,296
Fiscal 2022
Maple
Products
$
Total
$
14,933
130,805
2,381
17,314
12,677
143,482
(47,145)
13,313
2,381
12,677
50,000
Goodwill impairment
—
—
—
—
50,000
Adjusted results from operating activities
78,135
6,433
84,568
70,754
5,236
75,990
Results from operating activities
86,510
8,453
94,963
60,458
(47,145)
13,313
Depreciation of property, plant and equipment,
amortization of intangible assets and
right-of-use assets
19,511
6,775
26,286
19,380
6,768
Goodwill impairment
—
—
—
—
50,000
106,021
15,228
121,249
79,838
9,623
26,148
50,000
89,461
EBITDA(1)
EBITDA(1)
106,021
15,228
121,249
Total adjustment to the cost of sales(1)
(8,375)
(2,020)
(10,395)
Adjusted EBITDA(1)
97,646
13,208
110,854
Net (loss) earnings
Total adjustment to the cost of sales(1)
Goodwill impairment
Net change in fair value in interest rate swaps(1)
Income taxes on above adjustments
Adjusted net earnings
Net (loss) earnings per share (basic)
Adjustment for the above
Adjusted net earnings per share (basic)
(1) See “Adjusted results” section.
51,789
(10,395)
—
523
2,577
44,494
0.50
(0.08)
0.42
79,838
10,296
90,134
9,623
2,381
89,461
12,677
12,004
102,138
(16,568)
12,677
50,000
(2,800)
(2,650)
40,659
(0.16)
0.55
0.39
Rogers Sugar Inc.Management’s Discussion & Analysis
53
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO IFRS FINANCIAL MEASURES (CONTINUED)
(In thousands of dollars, except for volumes
and per share informations)
QUARTERS(1)
For the fiscal year ended September 30, 2023
Gross margin
Total adjustment to the cost of sales(2)
Adjusted gross margin
Results from operating activities
Total adjustment to the cost of sales(2)
Goodwill impairment
Adjusted results from operating activities
Fourth
$
41,192
(999)
40,193
22,815
(999)
—
21,816
Third
$
41,685
(6,773)
34,912
24,008
(6,773)
—
17,235
2022
Second
$
41,658
(3,425)
38,233
21,856
(3,425)
—
First
$
41,191
802
41,993
26,284
802
—
Total
$
165,726
(10,395)
155,331
94,963
(10,395)
—
18,431
27,086
84,568
Results from operating activities
22,815
24,008
21,856
26,284
94,963
Depreciation of property, plant and equipment,
amortization of intangible assets and
right-of-use assets
Goodwill impairment
EBITDA
EBITDA
Total adjustment to the cost of sales(2)
Adjusted EBITDA
Net (loss) earnings
Total adjustment to the cost of sales(2)
Goodwill impairment
Net change in fair value in interest rate swaps(2)
Income taxes on above adjustments
Adjusted net earnings
(1) All quarters are 13 weeks.
(2) See “Adjusted results” section.
6,753
—
6,515
—
6,589
—
6,429
26,286
—
—
29,568
30,523
28,445
32,713
121,249
29,568
(999)
28,569
11,876
(999)
—
201
205
11,283
30,523
(6,773)
23,750
14,177
(6,773)
—
(203)
1,548
8,749
28,445
(3,425)
25,020
11,062
(3,425)
—
479
999
9,115
32,713
802
33,515
14,674
802
—
46
(175)
121,249
(10,395)
110,854
51,789
(10,395)
—
523
2,577
15,347
44,494
2023 Annual ReportManagement’s Discussion & Analysis
54
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO IFRS FINANCIAL MEASURES (CONTINUED)
(In thousands of dollars, except for volumes
and per share informations)
QUARTERS(1)
For the fiscal year ended October 1, 2022
Gross margin
Total adjustment to the cost of sales(2)
Adjusted gross margin
Results from operating activities
Total adjustment to the cost of sales(2)
Goodwill impairment
Adjusted results from operating activities
Fourth
$
28,472
10,669
39,141
(38,345)
10,669
50,000
22,324
Third
$
24,948
7,706
32,654
8,822
7,706
—
16,528
2022
Second
$
33,899
1,988
35,887
15,499
1,988
—
17,487
First
$
43,486
(7,686)
35,800
27,337
(7,686)
—
19,651
Total
$
130,805
12,677
143,482
13,313
12,677
50,000
75,990
Results from operating activities
(38,345)
8,822
15,499
27,337
13,313
Depreciation of property, plant and equipment,
amortization of intangible assets and
right-of-use assets
Goodwill impairment
EBITDA
EBITDA
Total adjustment to the cost of sales(2)
Adjusted EBITDA
Net (loss) earnings
Total adjustment to the cost of sales(2)
Goodwill impairment
Net change in fair value in interest rate swaps(2)
Income taxes on above adjustments
Adjusted net earnings
(1) All quarters are 13 weeks.
(2) See “Adjusted results” section.
6,628
50,000
18,283
18,283
10,669
28,952
(45,502)
10,669
50,000
(328)
(2,678)
12,161
6,580
—
15,402
15,402
7,706
23,108
3,138
7,706
—
(632)
(1,793)
8,419
6,530
—
22,029
22,029
1,988
24,017
8,570
1,988
—
(1,246)
(190)
9,122
6,410
—
33,747
33,747
(7,686)
26,061
17,226
(7,686)
—
(594)
2,011
10,957
26,148
50,000
89,461
89,461
12,677
102,138
(16,568)
12,677
50,000
(2,800)
(2,650)
40,659
Rogers Sugar Inc.Management’s Discussion & Analysis
55
CRITICAL ACCOUNTING ESTIMATES
CONTROLS AND PROCEDURES
The preparation of our audited consolidated financial statements in
In compliance with
the provisions of Canadian Securities
conformity with IFRS requires us to make estimates and judgements
Administrators’ Regulation 52-109, we have filed certificates signed
that affect the reported amounts of assets and liabilities, net
by the President and Chief Executive Officer (“CEO”) and by the
revenues and expenses, and the related disclosures. Such estimates
Vice-President Finance and Chief Financial Officer (“CFO”), in that,
include the valuation of goodwill and intangible assets. These
among other things, report on:
estimates and assumptions are based on management’s best
estimates and judgments. Management evaluates its estimates
• their responsibility for establishing and maintaining disclosure
and assumptions on an ongoing basis using historical experience,
controls and procedures and internal control over financial
knowledge of economics and market factors, and various other
reporting for RSI; and
assumptions that management believe to be reasonable under the
circumstances. We adjust such estimates and assumptions when
• the design and effectiveness of disclosure controls and procedures
facts and circumstances dictate. Our actual results could differ from
and the design and effectiveness of internal controls over financial
these estimates. Changes in those estimates and assumptions are
reporting.
recognized in the period in which the estimates are revised. Refer to
note 2 (d) to the audited consolidated financial statements for more
detail.
DISCLOSURE CONTROLS AND PROCEDURES
CHANGES IN ACCOUNTING PRINCIPLES AND
PRACTICES NOT YET ADOPTED
The CEO and the CFO, have designed the disclosure controls and
procedures (“DC&P”), or have caused them to be designed under
their supervision, in order to provide reasonable assurance that:
A number of new standards and amendments to standards and
• material information relating to the Company is made known to
interpretations are not yet effective for the year ended September
the CEO and CFO by others, particularly during the period in
30, 2023 and have not been applied in preparing these consolidated
which the interim and annual filings are being prepared; and
financial statements. New standards and amendments to standards
and interpretations that are currently under review include:
• information required to be disclosed by the Company in its annual
• Definition of Accounting Estimates (Amendments to IAS 8)
under securities legislation is recorded, processed, summarized
• Disclosure initiative – Accounting Policies (Amendments to IAS 1
and reported within the time periods specified in securities
filings, interim filings or other reports filed or submitted by it
and IFRS Practice Statement 2)
legislation.
• Classification of Liabilities as Current or Non-current (Amendments
to IAS 1)
As at September 30, 2023, an evaluation was carried out, under the
• Deferred tax related to assets and liabilities arising from a single
supervision of the CEO and the CFO, of the design and operating
transaction (Amendments to IAS 12)
effectiveness of the Company’s DC&P. Based on this evaluation,
• Lease liability in a sale and leaseback (Amendments to IFRS 16
the CEO and the CFO concluded that the Company’s DC&P
Leases)
were appropriately designed and were operating effectively as at
• Supplier finance arrangements (Amendments to IAS 7 and IFRS 7)
September 30, 2023.
We do not intend to adopt the Amendments in our consolidated
financial statements before the annual period beginning on October
1, 2023 and we do not expect the amendments to have a material
impact on the consolidated financial statements.
2023 Annual ReportManagement’s Discussion & Analysis
56
INTERNAL CONTROL OVER FINANCIAL REPORTING
this is not an exhaustive list, we caution investors that statements
concerning the following subjects are, or are likely to be, forward-
The CEO and CFO have also designed internal controls over
looking statements:
financial reporting (“ICFR”), or have caused them to be designed
under their supervision, in order to provide reasonable assurance
• demand for refined sugar and maple syrup;
regarding the reliability of financial reporting and the preparation of
• our recently announced Expansion Project;
financial statements for external purposes in accordance with IFRS
• future prices of raw sugar;
using the framework established in “Internal Control – Integrated
• expected inflationary pressures on costs;
Framework (COSO 2013 Framework) published by the Committee
• natural gas costs;
of Sponsoring Organizations of the Treadway Commission (COSO)”.
• beet production forecasts;
As at September 30, 2023, an evaluation was carried out, under the
• growth of the maple syrup industry and the refined sugar industry;
supervision of the CEO and the CFO, of the design and operating
• the status of labour contracts and negotiations, including the
effectiveness of Rogers’ ICFR. Based on that evaluation, they have
impact of the current labour disruption in Vancouver;
concluded that the design and operation of the Company’s internal
• the level of future dividends; and
controls over financial reporting were effective as at September 30,
• the status of government regulations and investigations
2023.
Forward-looking statements are based on estimates and
In designing and evaluating such controls, it should be recognized
assumptions made by us in light of our experience and perception
that, due to inherent limitations, any controls, no matter how well
of historical trends, current conditions and expected
future
designed and operated, can provide only reasonable assurance of
developments, as well as other factors that we believe are
achieving the desired control objectives and may not prevent or
appropriate and reasonable in the circumstances, but there can be
detect misstatements. Projections of any evaluations of effectiveness
no assurance that such estimates and assumptions will prove to be
to future periods are subject to the risk that controls may become
correct. Forward-looking statements involve known and unknown
inadequate because of changes in conditions, or that the degree
risks, uncertainties and other factors that may cause actual results
of compliance with the policies or procedures may deteriorate.
or events to differ materially from those anticipated in such forward-
Additionally, management is obliged to use judgement in evaluating
looking statements. Actual performance or results could differ
controls and procedures.
CHANGES IN INTERNAL CONTROL OVER
FINANCIAL REPORTING
materially from those reflected in the forward-looking statements,
historical results or current expectations. Readers should also refer
to the section “Risks and Uncertainties” in this MD&A for additional
information on risk factors and other events that are not within our
control. These risks are also referred to in our Annual Information
Form in the “Risk Factors” section.
There were no changes in the Company’s internal controls over
financial reporting during the year that have materially affected, or
Although we believe that the expectations and assumptions on
are reasonably likely to materially affect, the Company’s internal
which forward-looking information is based are reasonable under the
control over financial reporting.
FORWARD-LOOKING STATEMENTS
current circumstances, readers are cautioned not to rely unduly on
this forward-looking information as no assurance can be given that
it will prove to be correct. Forward-looking information contained
herein is made as at the date of this MD&A and we do not undertake
any obligation to update or revise any forward-looking information,
This report contains statements or information that are or may be
whether a result of events or circumstances occurring after the date
“forward-looking statements” or “forward-looking
information”
hereof, unless so required by law.
within the meaning of applicable Canadian securities laws. Forward-
looking statements may include, without limitation, statements and
information which reflect our current expectations with respect to
future events and performance. Wherever used, the words “may,”
“will,” “should,” “anticipate,” “intend,” “assume,” “expect,” “plan,”
“believe,” “estimate,” and similar expressions and the negative of
such expressions, identify forward-looking statements. Although
Rogers Sugar Inc.Management’s Discussion & Analysis
RESPONSIBILITY FOR FINANCIAL REPORTING
57
The accompanying consolidated financial statements of Rogers Sugar Inc. and all the information in this annual report pertaining to the
Corporation are the responsibility of the Administrator and have been approved by the Board of Directors.
The consolidated financial statements have been prepared by the Administrator in accordance with International Financial Reporting
Standards by applying the detailed accounting policies set out in the notes to the financial statements. The Administrator is of the opinion that
the consolidated financial statements were prepared based on reasonable and material criteria and using justifiable and reasonable estimates.
The Administrator has prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent with
the financial statements of the Corporation.
The Administrator maintains systems of internal accounting and administrative controls of high quality, consistent with reasonable cost.
Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and that the
Corporation’s assets are appropriately accounted for and adequately safeguarded.
The Board of Directors is responsible for ensuring that the Administrator fulfills its responsibilities for financial reporting and is ultimately
responsible for reviewing and approving the financial statements of the Corporation. The Board carries out this responsibility through its Audit
Committee.
The Audit Committee is appointed by the Board and all of its members are outside and unrelated directors. The committee meets with the
Administrator, as well as external auditors, to discuss internal controls over the financial reporting process, auditing matters and financial
reporting issues, to satisfy itself that each party is properly discharging its responsibilities and to review the annual report, the financial
statements and the external auditor's report. The committee reports its findings to the Board for consideration when approving the financial
statements for issuance to the Shareholders. The committee also considers, for review by the Board and approval by the Shareholders, the
engagement or re-appointment of the external auditors.
The consolidated financial statements of the Corporation have been audited by KPMG LLP, the external auditors, in accordance with Canadian
generally accepted auditing standards on behalf of the Shareholders. KPMG LLP has full and free access to the Audit Committee.
Michael Walton,
Jean-Sébastien Couillard,
President and Chief Executive Officer
Vice President Finance, Chief Financial Officer and Corporate Secretary
Lantic Inc., Administrator
Lantic Inc., Administrator
November 30, 2023
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
58
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Rogers Sugar Inc.
OPINION
We have audited the consolidated financial statements of Rogers Sugar Inc. (the "Entity"), which comprise:
• the consolidated statements of financial position as at September 30, 2023 and October 1, 2022
• the consolidated statements of earnings (loss) and comprehensive income for the years then ended
• the consolidated statements of changes in shareholders’ equity for the years then ended
• the consolidated statements of cash flows for the years then ended
• and notes to the consolidated financial statements, including a summary of significant accounting policies
(Hereinafter referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity
as at September 30, 2023 and October 1, 2022, and its consolidated financial performance and its consolidated cash flows for the years then
ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
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 Financial Statements" section of our auditor's report.
We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in
Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for
the year ended September 30, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matter described below to be the key audit matter to be communicated in our auditor’s report.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
59
Goodwill and brand names impairment assessment for the Maple products cash-generating unit
DESCRIPTION OF THE MATTER
As discussed in Notes 3(i) and 15 to the financial statements, the Entity performs impairment testing annually for goodwill and brand names
and when circumstances indicate that there may be an impairment. The Entity assesses impairment by comparing the carrying amount of the
cash-generating unit ("CGU") to its recoverable amount. The recoverable amount is based on the higher of the value in use and fair value less
costs to sell. Value in use is based on estimates of discounted future cash flows expected to be recovered from the CGU through its use. Fair
value less costs to sell is the estimated amount obtainable from the sale of the CGU in an arm’s-length transaction between knowledgeable,
willing parties, less the costs of disposal. The Entity determined that the fair value less costs to sell exceeded the carrying amount of the
CGU. The Entity’s significant assumption in determining the fair value less costs to sell relates to the range of earning multiples. The goodwill
balance as of September 30, 2023 is $233.0 million, of which $3.1 million relates to the Maple products CGU. The brand names balance as at
September 30, 2023 is $5.9 million and relates to the Maple products CGU.
WHY THE MATTER IS A KEY AUDIT MATTER
We identified the evaluation of the goodwill and brand names impairment assessment for the Maple products CGU as a key audit matter.
This matter represented an area of higher risk of misstatement given the magnitude of goodwill and indefinite life brand names and the high
degree of estimation uncertainty in assessing the assumptions used to determine the recoverable amounts. Significant auditor judgement
and the involvement of professionals with specialized skills and knowledge was required to evaluate the evidence for the Entity’s significant
assumptions.
Minor changes to these assumptions could have a significant effect on the recoverable amount of the CGU and result in impairment charges.
HOW THE MATTER WAS ADDRESSED IN THE AUDIT
The following are the primary procedures we performed to address this key audit matter.
We involved valuation professionals with specialized skills and knowledge, who assisted in developing an independent expectation of the fair
value less costs to sell for the Maple product CGU. The procedures performed included the following:
• Developed a range of earnings before interest, tax, depreciation and amortization ("EBITDA") multiples using available market information
from third party sources and observed in recent comparable transactions;
• Developed a range of an estimated EBITDA amount based on quantitative and qualitative considerations;
• Developed a range of recoverable amounts by multiplying the EBITDA multiples by an estimated EBITDA amount; and
• Compared the independently developed range of recoverable amounts to the recoverable amount determined by the Entity.
OTHER INFORMATION
Management is responsible for the other information. Other information comprises:
• the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.
• the information, other than the financial statements and the auditor’s report thereon, included in a document likely to be entitled "Glossy
Annual Report".
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance
conclusion thereon.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
60
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and
remain alert for indications that the other information appears to be materially misstated.
We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions
as at the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material
misstatement of this other information, we are required to report that fact in the auditor’s report.
We have nothing to report in this regard.
The information, other than the financial statements and the auditor’s report thereon, included in a document likely to be entitled "Glossy
Annual Report" is expected to be made available to us after the date of this auditor’s report. If, based on the work we will perform on this other
information, we conclude that there is a material misstatement of this other information, we are required to report that fact to those charged
with governance.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards
as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Entity’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 Entity or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity’s financial reporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian 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 the 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 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 Entity's internal control.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc. 61
• 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 Entity's ability to continue as
a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity to cease to continue as
a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
• 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.
• Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity
to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
• Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the
audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our auditor’s 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 auditor’s report is Aaron Fima.
Montréal, Canada
November 29, 2023
* CPA auditor, public accountancy permit No. A125211
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
62
Consolidated Statements of Earnings (Loss) and Comprehensive Income
(In thousands of dollars except per share amounts)
Consolidated statements of earnings (loss)
Revenues (note 32)
Cost of sales
Gross margin
Administration and selling expenses
Distribution expenses
Goodwill impairment (note 15)
Results from operating activities
Net finance costs (note 5)
Earnings (loss) before income taxes
Income tax expense (recovery) (note 6):
Current
Deferred
Net earnings (loss)
Net earnings (loss) per share (note 27):
Basic
Diluted
Fiscal years ended
September 30,
2023
$
1,104,713
938,987
165,726
44,229
26,534
—
70,763
94,963
24,577
70,386
14,676
3,921
18,597
51,789
0.50
0.44
Consolidated statements of comprehensive income
Net earnings (loss)
Other comprehensive income:
Items that are or may be reclassified subsequently to net earnings (loss):
Cash flow hedges (note 9)
Income tax on cash flow hedges (note 6)
Foreign currency translation differences
Items that will not be reclassified to net earnings (loss):
Defined benefit actuarial gains (note 20)
Income tax on defined benefit actuarial gains (note 6)
Other comprehensive income (loss)
Comprehensive income
The accompanying notes are an integral part of these consolidated financial statements.
Fiscal years ended
September 30,
2023
$
51,789
(16,994)
4,362
(456)
(13,088)
14,530
(3,708)
10,822
(2,266)
49,523
October 1,
2022
$
1,006,134
875,329
130,805
45,783
21,709
50,000
117,492
13,313
17,567
(4,254)
14,275
(1,961)
12,314
(16,568)
(0.16)
(0.16)
October 1,
2022
$
(16,568)
17,323
(4,447)
1,784
14,660
11,332
(2,909)
8,423
23,083
6,515
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
Consolidated Statements of Financial Position
(In thousands of dollars)
63
September 30,
2023
$
October 1,
2022
$
46
118,252
2,280
267,268
8,912
5,019
401,777
267,185
29,973
20,890
783
7,286
233,007
559,124
960,901
58,000
164,404
1,415
4,364
1,140
229,323
100,000
2,898
287
―
26,086
151,711
98,212
45,488
424,682
654,005
107,210
300,968
5,085
(146,635)
40,268
306,896
151
120,207
3,096
246,706
8,868
11,582
390,610
247,969
22,932
24,264
564
18,610
233,007
547,346
937,956
26,000
177,435
1,503
3,991
7,643
216,572
100,000
18,529
1,333
76
19,198
149,699
98,901
42,229
429,965
646,537
103,550
300,922
5,085
(160,672)
42,534
291,419
960,901
937,956
ASSETS
Current assets:
Cash
Trade and other receivables (note 7)
Income taxes receivable
Inventories (note 8)
Prepaid expenses
Derivative financial instruments (note 9)
Total current assets
Non-current assets:
Property, plant and equipment (note 10)
Right-of-use assets (note 11)
Intangible assets (notes 12 and 15)
Other assets (note 13)
Derivative financial instruments (note 9)
Goodwill (note 15)
Total non-current assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Revolving credit facility (note 16)
Trade and other payables (note 17)
Provisions (note 18)
Lease obligations (note 19)
Derivative financial instruments (note 9)
Total current liabilities
Non-current liabilities:
Revolving credit facility (note 16)
Employee benefits (note 20)
Provisions (note 18)
Derivative financial instruments (note 9)
Lease obligations (note 19)
Convertible unsecured subordinated debentures (note 21)
Senior guaranteed notes (note 22)
Deferred tax liabilities (note 14)
Total non-current liabilities
Total liabilities
Shareholders’ equity:
Share capital (note 23)
Contributed surplus
Equity portion of convertible unsecured subordinated debentures (note 21)
Deficit
Accumulated other comprehensive income (loss)
Total shareholders’ equity
Commitments (notes 19 and 25)
Contingencies (note 26)
Total liabilities and shareholders’ equity
The accompanying notes are an integral part of these consolidated financial statements.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
64
Consolidated Statements of Changes in Shareholders’ Equity
(In thousands of dollars except number of shares)
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(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
66
Consolidated Statements of Cash Flows
(In thousands of dollars)
Cash flows from operating activities:
Net earnings (loss)
Adjustments for:
Depreciation of property, plant and equipment and right-of-use assets (note 4)
Amortization of intangible assets (note 4)
Changes in fair value of derivative financial instruments included in cost of sales
Income tax expense (note 6)
Pension contributions
Pension expense
Net finance costs (note 5)
Loss on disposal of property, plant and equipment and right-of-use assets
(notes 10 and 11)
Share-based compensation - equity settled (note 24)
Share-based compensation - cash settled (note 24)
Goodwill impairment (note 15)
Changes in:
Trade and other receivables
Inventories
Prepaid expenses
Trade and other payables
Provisions (note 18)
Cash generated from operating activities:
Interest paid
Income taxes paid
Net cash flows from operating activities
Cash flows used in financing activities:
Dividends paid
Increase in revolving credit facility (note 16)
Payment of lease obligations (note 19)
Issuance of shares (note 23)
Payment of financing fees
Net cash flows used in financing activities
Cash flows used in investing activities:
Additions to property, plant and equipment, net of proceeds on disposal
Additions to intangible assets (note 12)
Net cash flows used in investing activities
Effect of changes in exchange rate on cash
Net decrease in cash
Cash, beginning of year
Cash, end of year
Supplemental cash flow information (note 28).
The accompanying notes are an integral part of these consolidated financial statements.
For the fiscal years ended
September 30,
2023
$
October 1,
2022
$
51,789
22,480
3,806
(6,210)
18,597
(11,085)
9,984
24,577
139
178
3
—
114,258
1,879
(20,778)
(44)
(14,612)
(1,484)
(35,039)
79,219
(21,049)
(13,852)
44,318
(37,687)
32,000
(5,419)
3,528
(1,308)
(8,886)
(34,966)
(432)
(35,398)
(139)
(105)
151
46
(16,568)
22,283
3,865
6,831
12,314
(10,363)
10,925
17,567
44
143
5,779
50,000
102,820
(23,709)
(65,811)
(4,292)
51,707
(1,090)
(43,195)
59,625
(17,493)
(20,580)
21,552
(37,439)
26,000
(5,150)
3,303
(268)
(13,554)
(23,635)
(95)
(23,730)
240
(15,492)
15,643
151
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
67
1. REPORTING ENTITY
Rogers Sugar Inc. ("Rogers" or the "Company") is a company domiciled in Canada, incorporated under the Canada Business Corporations
Act. The head office of Rogers is located at 123 Rogers Street, Vancouver, British Columbia, V6B 3V2. The consolidated financial statements
of Rogers as at September 30, 2023 and October 1, 2022 comprise Rogers and the directly and indirectly controlled subsidiaries, Lantic
Inc. ("Lantic") and The Maple Treat Corporation ("TMTC"), (together referred to as the "Company"). The principal business activities of the
Company are the refining, packaging and marketing of sugar, and the packaging, marketing and distribution of maple products.
The Company’s fiscal year ends on the Saturday closest to the end of September. All references to 2023 and 2022 represent the years
ended September 30, 2023 and October 1, 2022.
2. BASIS OF PREPARATION
(A) STATEMENT OF COMPLIANCE:
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB").
These consolidated financial statements were authorized for issue by the Board of Directors on November 29, 2023.
(B) BASIS OF MEASUREMENT:
These consolidated financial statements have been prepared on the historical cost basis except for the following material items in
the consolidated statements of financial position:
(i) derivative financial instruments are measured at fair value;
(ii) equity-settled share-based compensation, cash-settled share appreciation rights and cash-settled performance share units are
measured at fair value;
(iii) the defined benefit liability is recognized as the net total of the present value of the defined benefit obligation less the total of
the fair value of the plan assets and the unrecognized past service costs;
(iv) assets acquired and liabilities assumed in business combinations are measured at fair value at acquisition date, less any
subsequent impairment, if applicable; and
(v)
lease obligations which are measured at the present value of minimum lease liabilities in accordance with IFRS 16 Leases.
(C) FUNCTIONAL AND PRESENTATION CURRENCY:
These consolidated financial statements are presented in Canadian dollars, since it is the Company’s functional currency. All financial
information presented in Canadian dollars has been rounded to the nearest thousands, except as noted and per share amounts.
(D) USE OF ESTIMATES AND JUDGEMENTS:
The preparation of these consolidated financial statements, in conformity with IFRS, requires management to make judgements,
estimates and assumptions about future events that affect the application of accounting policies and the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported
amounts of revenues and expenses during the reporting years.
The following is a summary of areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the consolidated financial statements:
Goodwill and unamortizable intangibles impairment:
The Company makes a number of estimates when calculating the recoverable amount of a cash-generating unit containing goodwill
and unamortizable intangibles using discounted future cash flows or other valuation methods.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
68
3. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF CONSOLIDATION:
Subsidiaries:
The consolidated financial statements include Rogers and the subsidiary it controls, Lantic and its subsidiaries, TMTC and Highland
Sugarworks Inc. (the latter two companies together referred to as "TMTC").
Control exists where the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date control commences until the date that control ceases. The accounting policies of subsidiaries are
aligned with the policies adopted by the Company.
The Company owns 100% of the common shares of Lantic. Lantic Capital Inc., a wholly-owned subsidiary of Belkorp Industries Inc.,
owns the two outstanding Class C shares of Lantic. These Class C shares are non-voting, have no rights to return or risk of loss and
are redeemable for a nominal value of one dollar each. The Class C shares entitle the holder to elect five of the seven directors of
Lantic but have no other voting rights at any meetings of Lantic’s shareholders except as may be required by law.
Notwithstanding Lantic Capital Inc.’s ability to elect five of the seven directors of Lantic, Lantic Capital Inc. receives no benefits or
exposure to losses from its ownership of the Class C shares. As the Class C shares are non-dividend paying and redeemable for a
nominal value of one dollar, there is no participation in future dividends or changes in value of Lantic resulting from the ownership of
the Class C shares. There is also no management fee or other form of consideration attributable to the Class C shares. The
determination of control involves judgement. Based on all the facts and available information, management has concluded that
Rogers has control of Lantic.
Inter-company balances and transactions, and any unrealized income and expenses arising from inter-company transactions, are
eliminated in preparing the consolidated financial statements.
(B) FOREIGN CURRENCY TRANSACTIONS:
Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at
the exchange rate in effect at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at
fair value are translated at the rate prevailing at the date that the fair value was determined. Foreign denominated non-monetary
assets and liabilities that are measured at the historical costs are translated at the rate prevailing at the transaction date. Revenues
and expenses denominated in foreign currencies are translated into the functional currency at the rate in effect on the dates they
occur. Gains or losses resulting from these translations are recorded in net earnings (loss) of the period.
(C) FOREIGN OPERATIONS:
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on business combinations, are
translated to Canadian dollars at exchange rates at the reporting date. The income and expenses of foreign operations are translated
to Canadian dollars at the average exchange rate in effect during the reporting period.
Foreign currency differences are recognized in other comprehensive income (loss) in the accumulated foreign currency translation
differences account. When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint
control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as
part of the gain or loss on disposal. If the Company disposes of part of its interest in a subsidiary but retains control, then the relevant
proportion of the cumulative amount is reattributed to non-controlling interest. When the Company disposes of only part of an
associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is
reclassified to income or loss.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
69
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(D) CASH:
Cash includes cash on hand, bank balances and bank overdraft when the latter forms an integral part of the Company’s cash
management.
(E)
INVENTORIES:
Inventories are valued at the lower of cost and net realizable value. The cost of inventories is determined on a first-in, first-out basis
and includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing
them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and
selling expenses.
(F) PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, with the exception of land, are recorded at cost less accumulated depreciation and any accumulated
impairment losses. Land is carried at cost and is not depreciated.
Cost includes expenditures that are directly attributable to the acquisition of the asset less any government grants received for
capital expenditures. The cost of assets includes the cost of materials and direct labour, any other costs directly attributable to
bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring
the site on which they are located, and borrowing costs on qualifying assets. Purchased software that is integral to the functionality
of the related equipment is capitalized as part of that equipment. When significant parts of an item of property, plant and equipment
have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Construction-in-progress assets are capitalized during construction and depreciation commences when the asset is available for
use.
The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably.
The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment
are recognized in profit or loss as incurred.
Gains and losses on disposal of items of property, plant and equipment are determined by comparing the proceeds from disposal
with the carrying amount of the property, plant and equipment and are recognized in cost of sales for assets used in production and
in administration and selling expenses for all other assets.
Depreciation related to assets used in production is recorded in cost of sales while the depreciation of all other assets is recorded
in administration and selling expenses. Depreciation is calculated on a straight-line basis, after taking into account residual values,
over the estimated useful lives of each component of an item of property, plant and equipment, since this most closely reflects the
expected pattern of consumption of the future economic benefits embodied in the asset. Significant components of individual assets
are assessed and, if a component has a useful life that is different from the remainder of that asset, then that component is depreciated
separately.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
70
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(F) PROPERTY, PLANT AND EQUIPMENT: (CONTINUED)
The estimated useful lives are as follows:
Barrels
Buildings
Furniture and fixtures
Machinery and equipment
6 years
20 to 60 years
3 to 10 years
5 to 40 years
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and depreciation is adjusted on a
prospective basis, if necessary.
(G) INTANGIBLE ASSETS:
(i) Goodwill:
Goodwill is measured at the acquisition date as the fair value of the consideration transferred less the fair value of the net
identifiable assets of the acquired company or business activities. Goodwill is not amortized and is carried at cost less
accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired.
(ii) Other intangible assets:
Intangible assets that are acquired by the Company and have finite useful lives are initially measured at cost. Following initial
recognition, intangible assets are measured at cost less accumulated amortization and accumulated impairment losses.
Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset
to which it relates. All other expenditures are recognized in profit or loss as incurred. Amortization is calculated over the cost
of the asset, less its residual value. Amortization is recognized in administrative expenses on a straight-line basis over the
estimated useful lives of the intangible assets from the date that they are available for use, since this most closely reflects the
expected pattern of consumption of the future economic benefits embodied in the asset. Amortization of intangible assets not
in service begins when they are ready for their intended use.
The estimated useful lives are as follows:
Software
Customer relationships
Other
5 to 15 years
10 years
10 years
Brand names are not amortized as they are considered to have an indefinite life and are tested for impairment annually or more
frequently if events or changes in circumstances indicate that the asset might be impaired.
For intangible assets with finite life, useful lives and residual values are reviewed at each financial year-end and amortization is
adjusted on a prospective basis, if necessary.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
71
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(H) LEASES:
The Company recognizes a right-of-use asset and a lease liability based on the present value of future lease payments when the
leased asset is available for use by the Company. The lease payments include fixed and in-substance fixed payments and variable
lease payments that depend on an index or rate, less any lease incentives receivable. The lease payments are discounted using the
interest rate implicit in the lease or the lessee’s incremental borrowing rate. The Company uses their incremental borrowing rate for
its present value calculations. Lease payments are discounted over the lease term, which includes the fixed term and renewal
options that the Company is reasonably certain to exercise. Lease payments are allocated between the lease liability and a finance
cost, which is recognized in finance costs over the lease term in the consolidated statement of earnings.
Lease payments for assets that are exempt through the short-term exemption and variable payments not based on an index or rate
are recognized in administration and selling expenses or distribution expenses as incurred.
Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment losses, and adjusted for
any re-measurement of lease liabilities. Cost is calculated as the initial measurement of the lease liability plus any initial direct costs
and any lease payments made at or before the commencement date. Right-of-use assets are depreciated on a straight-line basis
over the shorter of the lease term or the useful life.
(I)
IMPAIRMENT:
The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable
amount is estimated. For goodwill, and intangible assets that have indefinite useful lives, the recoverable amount is estimated yearly
at the same time, at year-end, and whenever there is an indication that the asset might be impaired.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of
assets (the "cash-generating unit", or "CGU").
The Company’s corporate assets do not generate cash inflows. If there is an indication that a corporate asset may be impaired, then
the recoverable amount is determined for the CGU to which the corporate asset belongs.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. An impairment loss
is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are
recognized in profit or loss. Impairment losses recognized in respect of a CGU are allocated first to reduce the carrying amount of
any goodwill allocated to the CGU, and then to reduce the carrying amount of the other assets in the CGU.
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 or group of assets. Fair value
less costs to sell (the “FVLCS”) is the estimated amount obtainable from the sale of the CGU in an arm’s-length transaction between
knowledgeable, willing parties, less the costs of disposal. In assessing the fair value less cost to sell, the market approach is used
which incorporates comparable transaction multiples applied to adjusted EBITDA less an estimate of the cost to sell to derive a
range of the FVLCS.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior years are
assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortization, if no impairment loss had been recognized.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
72
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(J) EMPLOYEE BENEFITS:
(i) Pension benefit plans:
The Company provides post-employment benefits through defined benefit and defined contribution plans. The Company
also sponsors Supplemental Executive Retirement Plans ("SERP"), which are neither registered nor pre-funded. Finally, the
Company sponsors defined benefit life insurance, disability plans and medical benefits for some retirees and employees.
Defined contribution plans
The Company’s obligations for contributions to employee defined contribution pension plans are recognized as employee
benefit expense in profit or loss in the years during which services are rendered by employees.
Defined benefit plans
The Company maintains some contributory defined benefit plans that provide for pensions to employees based on years of
service and the employee’s compensation. The Company’s net obligation in respect of defined benefit plans is calculated
separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior years,
discounting that amount and deducting the fair value of any plan assets. The discount rate is the yield at the reporting date on AA
credit-rated bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in
the same currency in which the benefits are expected to be paid.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method.
When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic
benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the
present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets
(excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other
comprehensive income (loss). The Company determines the net interest expense (income) on the net defined benefit liability
(asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual
period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset)
during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined
benefit plans are recognized in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service
or the gain or loss on curtailment is recognized immediately in profit or loss. Costs related to plan settlements are recorded at the
time the Company is committed to a settlement as a separate constructive obligation. Subsequent to the Company being
committed to a settlement, the plan liability is measured at the expected settlement amount using settlement interest rates.
(ii) Short-term employee benefits:
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service
is provided. A liability is recognized for the amount expected to be paid under cash incentive if the Company has a present legal
or constructive obligation to pay the amount as a result of past service provided by the employee, and the obligation can be
estimated reliably.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
73
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(J) EMPLOYEE BENEFITS (CONTINUED):
(iii) Share-based compensation:
The Company has a Share Option Plan. Share-based payment awards are measured at fair value at the grant date, which is
recognized as a personnel expense, with a corresponding increase in contributed surplus over the vesting period, which is
normally five years. The amount recognized as an expense is adjusted to reflect the number of awards for which the related
service conditions are expected to be met. Any consideration paid by employees on exercise of share options is credited to share
capital.
(iv) Employee share purchase plan:
The Company has an Employee Share Purchase Plan that is an equity-settled share-based payment with employees; the
measurement is based on the grant-date fair value of the equity instrument granted. As such, the expense is recognized when
the employee purchases the shares.
(v) Cash-settled Performance Share Units:
The Company has a Performance Share Units plan ("PSU") entitling certain senior personnel and executives to a cash payment.
A liability is recognized in payables for the services acquired and is recorded at fair value based on the share price of the
Company’s Common Shares with a corresponding expense recognized in administration and selling expenses. The amount
recognized as an expense is adjusted to reflect the number of units for which the related service and performance conditions
are expected to be met, such that the amount ultimately recognized as an expense is based on the units of awards that do meet
the related service and non-market performance conditions at the vesting date.
At the end of each reporting period until the liability is settled, the fair value of the liability is re-measured, with any changes in
fair value recognized in the consolidated statement of earnings. The fair value of the employee benefits expense of the PSUs is
measured using the Monte Carlo pricing model.
(vi) Termination benefits:
Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and
when the Company recognizes costs for a restructuring. If benefits are not expected to be fully settled within 12 months of the
end of the reporting period, they are discounted.
(K) PROVISIONS:
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance costs.
(i) Asset retirement obligation:
The Company recognizes the estimated liability for future costs to be incurred in the remediation of site restoration in regards
to asbestos removal and disposal of such asbestos to a landfill for hazardous waste, and for oil, chemical and other hazardous
materials, only when a present legal or constructive obligation has been determined and that such obligation can be estimated
reliably. Upon initial recognition of the obligation, the corresponding costs are added to the carrying amount of the related items
of property, plant and equipment and amortized as an expense over the economic life of the asset, or earlier if a specific plan of
removal exists. This obligation is reduced every year by payments incurred during the year in relation to these items. The
obligation might be increased by any required remediation to the owned assets that would be required through enacted
legislation.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
74
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(K) PROVISIONS: (CONTINUED)
(ii) Contingent liability:
A contingent liability is a possible obligation that arises from past events and of which the existence will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events not within the control of the Company, or a present
obligation that arises from past events (and therefore exists), but is not recognized because it is not probable that a transfer or
use of assets, provision of services, or any other transfer of economic benefits will be required to settle the obligation, or the
amount of the obligation cannot be estimated reliably.
(L) FINANCIAL INSTRUMENTS:
(i)
IFRS 9, Financial Instruments:
The Company initially recognizes trade receivables when they are originated and other financial instruments on the trade date
at which the Company becomes a party to the contractual provisions of the instrument. Financial instruments are initially
measured at fair value except for trade receivables without a financing component which are initially measured at the transaction
price. In the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition or issue of the financial asset or financial liability are added to or deducted from the fair value.
(ii) Financial assets:
Financial assets are classified into the following categories:
a.
Financial assets measured at amortized cost:
A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment
loss, if:
•
•
the asset is held within a business model whose objectives is to hold assets in order to collect contractual cash flows; and
the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principals
and/or interest.
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers
the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and
rewards of ownership of the financial asset are transferred.
The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost.
The Company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred,
adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are
likely to be greater or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its
carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest
rate. Losses are recognized in income or loss and reflected in an allowance account against trade and other receivables.
b. Financial assets measured at fair value through profit or loss:
These assets are measured at fair value through profit or loss and changes therein, including any interest are recognized in
profit or loss. The Company currently has no significant financial assets measured at fair value, except for derivative financial
instruments.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
75
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(L) FINANCIAL INSTRUMENTS (CONTINUED):
(iii) Financial liabilities:
Financial liabilities are classified into the following categories:
a.
Financial liabilities measured at amortized cost:
Financial liability subsequently measured at amortized cost, is accounted for using the effective interest method.
b. Financial liabilities measured at fair value through profit or loss:
Financial liabilities at fair value through profit or loss are initially recognized at fair value and are re-measured at each reporting
date with any changes therein recognized in net earnings (loss). The Company currently has no significant financial liabilities
measured at fair value except for derivative financial instruments.
The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expired.
Financial assets and liabilities are offset and the net amount is presented in the consolidated statements of financial position
when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize
the asset and settle the liability simultaneously.
(iv) Fair values of financial instruments:
Financial assets and liabilities measured at fair value use a fair value hierarchy to prioritize the inputs used in measuring fair
value as follows:
Level 1 – valuation based on observable inputs such as quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2 – valuation techniques based on inputs that are other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (prices) or indirectly (derived from prices); and
Level 3 – valuation techniques with observable market inputs (involves assumptions and estimates by management of how
market participants would price the asset or liability).
a. Cash:
Cash includes cash on hand, bank balances and bank overdraft when the latter forms an integral part of the Company’s cash
management.
b. Derivative financial instruments:
The Company uses derivative financial instruments to manage its exposure to changes in raw sugar, foreign exchange, and
natural gas prices. In addition, the Company entered into interest rate swap contracts to fix a portion of the Company’s exposure
to floating interest rate debt on its short-term borrowings. The Company’s objective for holding derivatives is to minimize risk
using the most efficient methods to eliminate or reduce the impacts of these exposures.
Fair value estimates are made as of a specific point in time, using available information about the financial instruments. These
estimates are subjective in nature and may not be determined with precision.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
76
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(L) FINANCIAL INSTRUMENTS (CONTINUED):
(iv) Fair values of financial instruments (continued):
b. Derivative financial instruments: (continued)
The fair value of derivative instruments is the estimated amount that the Company would receive or pay to terminate the
instruments at the reporting date. The fair values have been determined by reference to prices available from the markets
on which the instruments trade, subject to credit adjustments as applicable. The fair values of the sugar future contracts and
options are measured using Level 1 inputs, using published quoted values for these commodities. The fair values for the natural
gas futures contracts, foreign exchange forward contracts and interest rate swap contracts are measured using Level 2 inputs.
The fair values for these derivative assets or liabilities are estimated using industry standard valuation models.
Where applicable, these models project future cash flows and discount the future amounts to a present value using market-
based observable inputs including interest rate curves, credit spreads, natural gas prices, foreign exchange rates, and forward
and spot prices for currencies.
The fair values of all derivative instruments approximate their carrying value and are recorded as separate line items on the
consolidated statements of financial position.
The Company’s natural gas futures and a portion of interest rate swap agreements were designated as cash flow hedges and
qualified for hedge accounting.
For sugar futures contracts, the amounts are netted with the variation margins paid or received to/from brokers at the end of
the reporting period.
c. Compound financial instruments:
The Company’s convertible unsecured subordinated debentures are accounted for as compound financial instruments. The
liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not
have an equity conversion option. The equity component is recognized initially as the difference between the fair value of the
compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction
costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost
using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent
to initial recognition. Interest, dividends, gains and losses relating to the financial liability are recognized in profit or loss.
d. Financing charges:
Financing charges, which reflect the cost to obtain new financing, are offset against the debt for which they were incurred and
recognized in finance costs using the effective interest method. Financing charges for the revolving credit facility are recorded
with other assets.
e. Share capital:
Common shares
Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares are recognized
as a deduction from equity, net of any tax effects. Dividends to the equity holders are recorded in equity.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
77
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(L) FINANCIAL INSTRUMENTS (CONTINUED):
(v) Cash flow hedges:
When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular
risk associated with a recognized asset or liability or a highly probable forecasted transaction that could affect net earnings
(loss), the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and
presented in accumulated other comprehensive income as part of equity.
The amount recognized in other comprehensive income is removed and included in net earnings under the same line item in
the consolidated statements of earnings and comprehensive income as the hedged item, in the same period that the hedged
cash flows affect net earnings (loss).
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, or exercised, the
hedge accounting is discontinued prospectively.
If the forecasted transaction is no longer expected to occur, then the balance in accumulated other comprehensive income
(loss) is recognized immediately in net earnings (loss).
When the hedged item is a non-financial asset, the amount recognized in other comprehensive income is transferred to net
earnings (loss) in the same period that the hedged item affects net earnings (loss).
The Company has designated as cash flow hedges its natural gas futures and a portion of its interest rate swap agreements
entered into in order to protect itself against natural gas price and interest rate fluctuations.
(M) REVENUE RECOGNITION:
The Company derives revenue from the sale of finished goods, which include sugar and maple products. The Company recognizes
revenue when all performance obligations have been met which is generally at a point in time when it transfers control of the finished
goods to a customer, which occurs upon shipment of the finished goods from the Company’s facilities or upon delivery of the
finished goods to the customer’s premises. Some arrangements for the sale of finished goods provide for customer price discounts
and/or volume rebates based on aggregate sales over a specified period, which gives rise to variable consideration. At the time of
sale, estimates are made for items giving rise to variable consideration based on the terms of the sales program or arrangement.
The estimate is based on historical experience, current trends, and other known factors. Sales are recorded net of customer discounts,
rebates, and exclude sales taxes.
(N) FINANCE INCOME AND FINANCE COSTS:
Finance income comprises interest income on funds invested and finance costs comprise interest expense on borrowings. Changes
in the fair value of interest rate swaps are recorded initially in other comprehensive income since inception of the cash flow hedge
and transferred to finance income and finance costs in the same period that the hedged cash flows affect net earnings (loss). Net
change in fair value of interest rate swap that do not meet hedge accounting is recognized in net finance costs. Interest expense is
recorded using the effective interest method.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
78
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(O) INCOME TAXES:
Income tax expense comprises current and deferred taxes. Current tax and deferred tax are recognized in profit or loss except to the
extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income (loss).
Current tax is the expected tax payable or recoverable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to taxes payable in respect of previous years.
Deferred taxes are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred taxes are not recognized for the following temporary
differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the
extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred taxes are not recognized for taxable
temporary differences arising on the initial recognition of goodwill. Deferred taxes are measured at the tax rates that are expected
to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the
reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but
they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which they can be utilized. In addition, the effect on deferred tax assets
or liabilities of a change in tax rates is recognized in profit or loss in the period in which the enactment or substantive enactment
takes place, except to the extent that it relates to an item recognized either in other comprehensive income (loss) or directly in equity
in the current or in a previous period. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is
no longer probable that the related tax benefit will be realized.
(P) EARNINGS PER SHARE:
The Company presents basic and diluted earnings (loss) per share ("EPS") data for its common shares. Basic EPS is calculated by
dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares
outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number
of common shares outstanding, for the effects of all dilutive potential common shares from the conversion of the convertible
debentures and in-the-money stock options.
(Q) NEW STANDARDS AND INTERPRETATIONS ADOPTED:
The Company adopted the following standards and interpretations in its consolidated financial statements for the annual period
beginning on October 2, 2022.
•
Annual Improvements to IFRS Standards 2018-2020
• Onerous Contracts – Cost of fulfilling a contract (Amendments to IAS 37)
•
Reference to the Conceptual Framework (Amendments to IFRS 3)
The adoption of the amendments did not have an impact on the consolidated financial statements.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
79
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(R) NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED:
A number of new standards and amendments to standards and interpretations are not yet effective for the year ending September 30,
2023 and have not been applied in preparing these consolidated financial statements. New standards and amendments to standards
and interpretations that are currently under review include:
•
•
•
•
•
•
Definition of Accounting Estimates (Amendments to IAS 8)
Disclosure initiative – Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12)
Lease liability in a sale and leaseback (Amendments to IFRS 16 Leases)
Supplier finance arrangements (Amendments to IAS 7 and IFRS 7)
The Company does not intend to adopt the Amendments in its consolidated financial statements before the annual period beginning
on October 1, 2023. The Company does not expect the amendments to have a material impact on the consolidated financial
statements.
4. DEPRECIATION AND AMORTIZATION EXPENSES
Depreciation and amortization expenses were charged to the consolidated statements of earnings (loss) and comprehensive income as
follows:
Depreciation of property, plant and equipment:
Cost of sales
Administration and selling expenses
Depreciation of right-of-use assets:
Cost of sales
Administration and selling expenses
Amortization of intangible assets:
Administration and selling expenses
Total depreciation and amortization expenses
For the fiscal years ended
September 30,
2023
$
October 1,
2022
$
17,161
633
17,794
1,500
3,186
4,686
3,806
26,286
17,276
492
17,768
2,836
1,679
4,515
3,865
26,148
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
80
5. NET FINANCE COSTS
Recognized in net earnings (loss):
Interest expense on convertible unsecured subordinated debentures,
including accretion of $1,024 (2022 - $969) (note 21)
Interest on revolving credit facility
Interest on senior guaranteed notes, including accretion of $158 (2022- $116)
Amortization of deferred financing fees
Interest on Producteurs et Productrices Acéricoles du Québec supplier balance
Other interest expense
Interest accretion on discounted lease obligations
Net change in fair value of interest rate swap (note 9)
Net finance costs
6.
INCOME TAX EXPENSE (RECOVERY)
Current tax expense:
Current period
Adjustments for prior year periods
Current tax expense
Deferred tax expense (recovery):
Recognition and reversal of temporary differences
Adjustments for prior year periods
Deferred tax expense (recovery)
Total income tax expense
For the fiscal years ended
September 30,
2023
$
8,530
7,293
3,639
1,231
2,265
21
1,075
523
24,577
October 1,
2022
$
8,413
5,063
3,595
1,240
900
157
1,000
(2,801)
17,567
For the fiscal years ended
September 30,
2023
$
October 1,
2022
$
15,024
(348)
14,676
3,564
357
3.921
18,597
15,263
(988)
14,275
(2,774)
813
(1,961)
12,314
Income tax recognized in other comprehensive income (loss):
September 30, 2023
October 1, 2022
For the fiscal years ended
Before tax
Tax effect
Net of tax
Before tax
Tax effect
Net of tax
Cash flow hedges
(16,994)
4,362
(12,632)
Defined benefit actuarial gains
14,530
(3,708)
10,822
$
$
$
$
17,323
11,332
$
(4,447)
(2,909)
$
12,876
8,423
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
6.
INCOME TAX EXPENSE (RECOVERY) (CONTINUED)
Reconciliation of effective tax rate:
The provision for income taxes differs from the amount computed by applying the Canadian federal and provincial tax rates to earnings
(loss) before provision for income taxes. The reasons for the difference and the related tax effects are as follows:
81
Earnings (loss) before income taxes
Income taxes using the Company’s
statutory tax rate
Changes due to the following items:
Effect of differences in tax rates in other
jurisdictions
Non-deductible impairment of goodwill
Non-deductible expenses (income)
Adjustments for prior year periods
7.
TRADE AND OTHER RECEIVABLES
Trade receivables
Less expected credit loss
Other receivables
Initial margin deposits with commodity brokers
September 30, 2023
October 1, 2022
For the fiscal years ended
%
—
27.00
(0.77)
—
0.18
0.01
26.42
$
70,386
19,004
(540)
—
124
9
18,597
%
—
27.00
0.93
(317.36)
(4.18)
4.12
(289.49)
$
(4,254)
(1,149)
(40)
13,500
178
(175)
12,314
September 30,
2023
October 1,
2022
$
109,353
(598)
108,755
7,953
1,544
118,252
$
110,758
(567)
110,191
8,277
1,739
120,207
The Company grants credit to its customers in the ordinary course of business.
Management believes that the Company’s exposure to credit risk and impairment losses related to trade and other receivables is limited
due to the following reasons:
•
•
There is a broad base of customers with dispersion across different market segments.
Bad debt write-offs to total revenue have been less than 0.1% for each of the last five years (averaging less than $0.2 million per year).
Write-offs for fiscal 2023 were $0.1 million (October 1, 2022 - $0.1 million). All bad debt write-offs are charged to administration and
selling expenses.
•
Less than 1% of trade receivables are outstanding for more than 90 days (October 1, 2022 - less than 2%), while over 90% are current
(less than 30 days) as at September 30, 2023 (October 1, 2022 - 84%).
Through general security agreements with its lenders, trade and other receivables have been granted as continuing collateral security for
all present and future indebtedness to the current lenders.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
82
8.
INVENTORIES
Raw materials
Work in progress
Finished goods
Packaging and operating supplies
Spare parts and other
September 30,
2023
October 1,
2022
$
172,444
10,511
47,770
230,725
17,733
18,810
267,268
$
166,125
10,000
38,146
214,271
15,795
16,640
246,706
Costs of sales expensed during the year were all inventorial items, except for fixed costs incurred in Taber, Alberta, after the beet slicing
campaign, and mark-to-market adjustments of derivative financial instruments.
As at September 30, 2023, inventories recognized as cost of sales amounted to $949.4 million (October 1, 2022 - $862.7 million).
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
83
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(A) CLASSIFICATION AND FAIR VALUES:
The following table shows the carrying amount and fair values of financial assets and financial liabilities, including their level in the fair
value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the
carrying amount is a reasonable approximation of fair value (which is the case for cash, trade and other receivables, bank overdraft,
revolving credit facility and trade and other payables).
September 30, 2023
Carrying Amount
Fair Value
Fair value
- hedging
Fair value
through
instruments profit or loss
Amortized
cost
$
$
$
Fair value
hierarchy
level
Amount
$
$
Total
$
Financial assets measured at fair value
Sugar futures contracts
Foreign exchange forward contracts
Natural gas futures contracts used for
hedging
Interest rate swaps used for hedging
Other interest rate swaps
—
—
4,445
5,606
331
69
—
—
—
1,854
10,051
2.254
—
—
—
—
—
—
331
69
Level 1
Level 2
4,445
Level 2
5,606
Level 2
1,854
Level 2
12,305
331
69
4,445
5,606
1,854
Financial assets not measured at fair value
Cash
Trade and other receivables
—
—
—
—
—
—
46
118,252
118,298
46
118,252
118,298
Financial liabilities measured at fair value
Natural gas futures contracts used for hedging
(28)
Foreign exchange forward contracts
Financial liabilities not measured at fair value
Revolving credit facility
Trade and other payables
Senior guaranteed notes
Convertible unsecured subordinated
debentures
—
(28)
—
—
—
—
—
—
(1,112)
(1,112)
—
—
—
(28)
Level 2
(1,112)
Level 2
(28)
(1,112)
(1,140)
—
—
—
—
—
(158,000)
(158,000)
(164,404)
(164,404)
(98,212)
(98,212)
Level 2
(81,800)
(151,711)
(151,7 11)
Level 1
(150,700)
(572,327)
(572,327)
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
84
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(A) CLASSIFICATION AND FAIR VALUES: (CONTINUED)
October 1, 2022
Financial assets measured at fair value
Sugar futures contracts
Foreign exchange forward contracts
Natural gas futures contracts used for
hedging
Interest rate swaps used for hedging
Other interest rate swaps
Carrying Amount
Fair Value
Fair value
- hedging
instruments
Fair value
through
profit or loss
Amortized
cost
$
$
$
—
—
21,634
5,383
561
237
—
—
—
2,377
27,017
3,175
—
—
—
—
—
—
Fair value
hierarchy
level
$
Amount
$
Level 1
Level 2
561
237
Total
$
561
237
21,634
Level 2
21,634
5,383
Level 2
2,377
Level 2
5,383
2,377
30,192
Financial assets not measured at fair value
Cash
Trade and other receivables
Financial liabilities measured at fair value
Foreign exchange forward contracts
Financial liabilities not measured at fair value
Revolving credit facility
Trade and other payables
Senior guaranteed notes
Convertible unsecured subordinated
debentures
—
—
—
—
—
—
—
—
—
—
—
—
—
151
151
120,207
120,207
120,358
120,358
(7,719)
(7,719)
—
—
(7,719)
Level 2
(7,719)
(7,719)
—
—
—
—
—
(126,000)
(126,000)
(177,435)
(177,435)
(98,901)
(98,901)
Level 2
(85,200)
(149,699)
(149,699)
Level 1
(152,100)
(552,035)
(552,035)
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
85
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(B) DERIVATIVES AND HEDGING:
As at September 30, 2023 and October 1, 2022, the Company’s financial derivatives carrying values were as follows:
Financial Assets
Financial Liabilities
Current
Non-current
Current
Non-current
September 30, 2023
September 30, 2023
Derivative financial instruments measured
at fair value through profit or loss:
Sugar futures contracts
Foreign exchange forward contracts
Interest rate swap
Derivative financial instruments designated
as effective cash flow hedging instruments:
Natural gas futures contracts
Interest rate swaps
$
331
—
1,373
—
3,315
5,019
$
—
69
481
4,445
2,291
7,286
$
—
1,112
—
28
—
1,140
$
—
—
—
—
—
—
Financial Assets
Financial Liabilities
Current
Non-current
Current
Non-current
October 1, 2022
October 1, 2022
Derivative financial instruments measured
at fair value through profit or loss:
Sugar futures contracts
Foreign exchange forward contracts
Interest rate swap
Derivative financial instruments designated
as effective cash flow hedging instruments:
Natural gas futures contracts
Interest rate swaps
$
561
—
965
7,858
2,198
11,582
$
—
237
1,412
13,776
3,185
18,610
$
—
7,643
—
—
—
7,643
$
—
76
—
—
—
76
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
86
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(B) DERIVATIVES AND HEDGING: (CONTINUED)
For the fiscal years ended
Charged to cost of sales
Unrealized gain (loss)
Charged to finance
income (costs)
Other comprehensive
income
September 30,
2023
October 1, September 30,
2023
2022
October 1, September 30,
2023
2022
October 1,
2022
$
$
11,018
974
—
1,325
(7,532)
—
$
—
—
$
—
—
(523)
2,801
$
—
—
—
$
—
—
—
—
—
—
—
—
—
—
—
(17,217)
223
11,992
(6,207)
(523)
2,801
(16,994)
10,132
7,191
17,323
Derivative financial instruments
measured at fair value through
profit or loss:
Sugar futures contracts
Foreign exchange forward contracts
Interest rate swap
Derivative financial instruments
designated as effective cash flow
hedging instruments:
Natural gas futures contracts
Interest rate swap
The following table summarizes the Company’s hedging components of accumulated other comprehensive income (loss) ("AOCI") as at
September 30, 2023 and October 1, 2022:
September 30, 2023
October 1, 2022
Natural gas
futures
contracts
Interest
rate
swap
$
22,344
(6,247)
16,097
(17,217)
4,419
3,299
$
4,574
(555)
4,019
223
(57)
4,185
Natural gas
futures
contracts
$
12,212
(3,646)
8,566
10,132
(2,601)
16,097
Total
$
26,918
(6,802)
20,116
(16,994)
4,362
7,484
Interest
rate
swap
$
(2,617)
1,291
(1,326)
7,191
(1,846)
4,019
Total
$
9,595
(2,355)
7,240
17,323
(4,447)
20,116
Opening AOCI
Income taxes
Opening AOCI – net of income taxes
Change in fair value of derivatives
designated as cash flow hedges
Income taxes
Ending AOCI – net of income taxes
For the fiscal year ended September 30, 2023, the derivatives designated as cash flow hedges were considered to be fully effective and
no ineffectiveness has been recognized in net earnings (loss).
Approximately $2.4 million of net gains presented in accumulated other comprehensive income (loss) are expected to be reclassified to
net earnings (loss) within the next twelve months.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
87
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(C) COMMODITY PRICE RISK:
Commodity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
commodity prices.
There are two types of commodity contracts, which are entered into by the Company:
(i) Sugar:
In order to protect itself against fluctuations of the world raw sugar market, the Company follows a rigorous hedging program for all
purchases of raw cane sugar and sales of refined sugar. Anytime raw sugar is priced by a sugar supplier, a corresponding sugar futures
contract is sold for the same quantity, period and underlying value. Anytime refined sugar is priced by a customer, the corresponding
volume of raw sugar is purchased for the same quantity, period and underlying value. The Company’s policy is to cover all raw cane
purchases and refined sugar sales as they are priced by the Company’s suppliers and customers. On a daily basis, the Company
monitors all net sugar futures contract positions against the physical priced purchases and sales commitments to ensure that
appropriate hedge positions are in place.
For the Company’s beet operation, the Board of Directors approved an economic pre-hedge, using sugar futures contracts, of some
of the beet sugar sales that will occur in the future, provided there is a contract in place with the Alberta Sugar Beet Growers to grow
sugar beets.
The Board of Directors also approved a trading book up to a maximum of 15,000 metric tonnes of sugar derivative contracts.
The Company's raw sugar futures contracts as well as the fair value of these contracts relating to purchases or sales of raw sugar as
at September 30, 2023 and October 1, 2022 are as follows:
September 30, 2023
October 1, 2022
Original
futures
contractual
amount
Current
contractual
amount
Fair value
gain/(loss)
Original
futures
contractual
amount
Current
contractual
amount
Fair value
gain/(loss)
(US$)
(US$)
(US$)
(US$)
(US$)
(US$)
103,167
119,965
8,102
166
9,950
186
16,798
1,848
20
113,148
45,243
4,195
111,435
130,101
18,666
162,586
110,436
44,277
4,046
158,759
(2,712)
(966)
(149)
(3,827)
(128,088)
(139,517)
(11,429)
(139,108)
(132,030)
7,078
―
―
―
―
―
―
(28,224)
(28,157)
(56)
(54)
(128,088)
(139,517)
(11,429)
(167,388)
(160,241)
Purchases
0 - 12 months
12 - 24 months
Over 24 months
Sales
0 - 12 months
12 - 24 months
Over 24 months
Net position
(16,653)
(9,416)
7,237
(4,802)
(1,482)
Foreign exchange rate at the end
of the period
Net value (CA$)
Margin call (receipt) payment
at year-end
Net asset (liability) (CA$)
1.3560
9,814
(9,483)
331
67
2
7,147
3,320
1.3814
4,586
(4,025)
561
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
88
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(C) COMMODITY PRICE RISK: (CONTINUED)
(i) Sugar: (continued)
All sugar futures contracts are traded through a large exchange clearing house on the New York Intercontinental Exchange.
Regulation of the US futures industry is primarily self-regulation, with the role of the Federal Commodity Futures Trading Commission
being principally an oversight role to determine that self-regulation is continuous and effective.
The exchange clearing house used is one of the world’s largest capitalized financial institutions with excellent long-term credit
ratings. Daily cash settlements are mandatory (margin calls) for resulting gains and/or losses from futures trading for each customer’s
account. Due to the above, the Company does not anticipate a credit risk from the raw sugar futures derivative instruments.
As at September 30, 2023 and October 1, 2022, the Company had the following sugar futures contracts:
September 30, 2023
Contractual
average value
per M.T.
Total
contractual
amount
Volume
October 1, 2022
Contractual
average value
per M.T.
Total
contractual
amount
Volume
M.T.
(US$)
(US$)
M.T.
(US$)
(US$)
Purchases
Sales
Beet pre-hedge
235,421
552.63
130,101
422,122
(235,726)
567.94
(133,878)
(424,307)
(9,884)
570.47
(10,189)
n/a
(5,639)
(9,416)
—
(2,185)
376.10
377.65
—
n/a
Foreign exchange rate at the end
of the period
Total contractual amount (CA$)
1.3560
(12,767)
158,759
(160,241)
—
(1,482)
1.3814
(2,047)
If, on September 30, 2023, the raw sugar value would have increased by US$0.05 per pound (being approximately US$110.0 per
metric tonne), and all other variables remained constant, the impact on net earnings (loss) would have been a decrease of
approximately $1.1 million (calculated only on the point-in-time exposure on September 30, 2023) (October 1, 2022 - decrease in net
earnings (loss) of $0.2 million for US$0.05 per pound increase). If the raw sugar value would have decreased by US$0.02 per pound
(being approximately US$44.00 per metric tonne), and all other variables remained constant, the impact on net earnings (loss) would
have been an increase of approximately $0.4 million (October 1, 2022 - increase in net earnings (loss) of $0.1 million for US$0.02
decrease).
Except for the beet pre-hedge, management believes that the above is not representative, as the Company has physical raw sugar
purchases and refined sugar selling contracts that would offset most gains or losses realized from such decrease or increase in
the commodity value, when such contracts are liquidated. For the beet pre-hedge, if, on September 30, 2023, the raw sugar value
would have increased by US$0.05 per pound (being approximately US$110.00 per metric tonne), and all other variables remained
constant, the impact on net earnings (loss) would have been a decrease of approximately $1.1 million (calculated only on the point-
in-time exposure on September 30, 2023). If the raw sugar value would have decreased by US$0.02 per pound (being approximately
US$44.00 per metric tonne), and all other variables remained constant, the impact on net earnings (loss) would have been an
increase of approximately $0.4 million. The Company had no beet pre-hedge contracts as at October 1, 2022.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
89
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(C) COMMODITY PRICE RISK: (CONTINUED)
(ii) Natural gas:
In order to mitigate the overall price risks in the purchase of natural gas for use in the manufacturing operations, the Board approved
the use of natural gas futures contracts. Natural gas futures contracts cannot be entered into for speculative reasons. The Company
monitors its positions and the credit ratings of its counterparties and does not anticipate losses due to counterparty’s non-performance.
The Company’s natural gas contracts as well as the fair value of these contracts relating to purchases of natural gas are as follows:
September 30, 2023
October 1, 2022
Contracts
Original
Current
futures
(10,000 contractual contractual
amount
amount
MM BTU)
Fair
value
gain/
(loss)
Contracts
(10,000
MM BTU)
Original
future
contractual
amount
Current
contractual
amount
Fair
value
gain/
(loss)
Purchases
Less than 1 year
1 to 2 years
2 to 3 years
3 years and over
Foreign exchange
rate at the end
of period
Net asset (liability)
(CA$)
(US$)
(US$)
(US$)
(US$)
(US$)
(US$)
7,848
5,828
6,966
21,234
41,876
1,300
7,827
7,697
(21)
1,869
9,343
2,377
20,266
(968)
9,445
4,788
4,673
6,167
15,134
5,689
7,964
8,188
3,176
3,515
9,448
3,281
45,133
3,257
974
25,073
40,734
15,661
1.3560
4,417
1.3814
21,634
The forecasted purchases of natural gas, the hedged items, are used for calculating the hedge ineffectiveness. No ineffectiveness
was recognized in net earnings (loss) as the change in value of the hedging instrument for calculating ineffectiveness was the same
or smaller as the change in value of the hedged items used for calculating the ineffectiveness.
If, on September 30, 2023, the natural gas market price would have increased by US$1.00, and all other variables remained constant,
other comprehensive income (loss) would have increased by $13.0 million (October 1, 2022 – increase in other comprehensive
income (loss) of $10.1 million) as a result of the change in fair value of our natural gas futures. If the natural gas value would have
decreased by US$1.00, and all other variables remained constant, would have an equal but opposite effect on other comprehensive
income (loss).
Management believes that this impact for natural gas is not representative as this variance will mostly offset when the actual natural
gas is purchased and used. At such time, a gain or loss on the liquidation of the natural gas contracts would mostly offset the same
increase or decrease in the actual physical transaction.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
90
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(D) CURRENCY RISK:
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the
foreign exchange rate. The Company’s significant cash flow exposure to foreign currency is due mainly to the following:
•
•
•
•
•
•
•
sales in US dollars for both the sugar and maple products segments;
purchases of imported refined white sugar;
purchases of natural gas;
sales of by-products;
Taber refined sugar and by-products sales;
ocean freight; and
purchases of property, plant and equipment for both the sugar and maple products segments.
The Company mitigates its exposure to foreign currency by entering into forward exchange contracts.
The credit risk associated with foreign exchange contracts arises from the possibility that a counterparty to a foreign exchange
contract, in which the Company has an unrealized gain, fails to perform according to the terms of the contract. The credit risk is much
less than the notional principal amount, being limited at any time to the change in foreign exchange rates attributable to the principal
amount.
Forward foreign exchange contracts have maturities of less than four years and relate mostly to US currency, and from time to time,
Euro, Sterling pound and Australian dollar currencies. The counterparties to these contracts are major Canadian financial institutions.
The Company does not anticipate any material adverse effect on its financial position resulting from its involvement in these types
of contracts, nor does it anticipate non-performance by the counterparties.
The Company’s foreign currency forward contracts relating to the purchase of raw sugar, the sale of refined sugar, the purchase of
natural gas and purchases of property, plant and equipment for the sugar segment are detailed below. In addition, for the maple
products segment, the Company hedges its exposure to fluctuations in foreign currency related to its anticipated cash flows from
sales to specific US customers, using a foreign exchange forward contract.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
91
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(D) CURRENCY RISK: (CONTINUED)
The Company’s foreign exchange contracts as at September 30, 2023 and October 1, 2022 are as follows:
September 30, 2023
Original
contract
value
(US/EUR/GBR/AUD$)
89,510
7,402
615
97,527
(107,470)
(4,710)
(60)
(112,240)
(14,713)
Original
contract
value
(CA$)
119,999
9,844
837
130,680
(143,600)
(6,284)
(79)
(149,963)
(19,283)
Current
contract
value
(CA$)
121,214
9,987
832
132,033
(145,568)
(6,356)
(81)
(152,005)
(19,972)
Fair
value
gain/(loss)
(CA$)
1,215
143
(5)
1,353
(1,968)
(72)
(2)
(2,042)
(689)
2,100
2,821
2,846
25
(44,468)
(2,919)
(47,387)
(45,287)
185
74
259
(4,131)
(229)
(4,360)
(4,101)
(59,859)
(3,935)
(63,794)
(60,973)
275
111
386
(5,930)
(343)
(6,273)
(5,887)
(60,201)
(3,951)
(64,152)
(61,306)
267
108
375
(5,942)
(334)
(6,276)
(5,901)
(342)
(16)
(358)
(333)
(8)
(3)
(11)
(12)
9
(3)
(14)
SUGAR
Purchases U.S. dollars
Less than 1 year
1 to 2 years
2 to 3 years
Sales U.S. dollars
Less than 1 year
1 to 2 years
2 to 3 years
Total U.S. dollars - Sugar
MAPLE PRODUCTS
Purchases U.S. dollars
Less than 1 year
Sales U.S. dollars
Less than 1 year
1 to 2 years
Total U.S. dollars - Maple
MAPLE PRODUCTS
Purchases EUR
Less than 1 year
1 to 2 years
MAPLE PRODUCTS
Sales EUR
Less than 1 year
1 to 2 years
Total EUR - Maple
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
92
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(D) CURRENCY RISK: (CONTINUED)
September 30, 2023
Original
contract
value
(US/EUR/GBR/AUD$)
Original
contract
value
(CA$)
Current
contract
value
(CA$)
Fair
value
gain/(loss)
(CA$)
(3,250)
(3,250)
(2,849)
(2,849)
(2,844)
(2,844)
(416)
(416)
(694)
(694)
(687)
(687)
5
5
7
7
MAPLE PRODUCTS
Sales AUD
Less than 1 year
Total AUD - Maple
MAPLE PRODUCTS
Sales GBR
Less than 1 year
Total GBR - Maple
Total Foreign Exchange
(67,767)
(89,686)
(90,710)
(1,024)
In addition, the Company holds 1,000 US dollars options to exercise foreign exchange contracts in fiscal 2024 at US/Can. Exchange
rate of 1.50. The fair value of these options is a loss of $19 (2022 – no options outstanding).
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(D) CURRENCY RISK: (CONTINUED)
93
Original
contract
value
(US$/EUR/AUD$)
75,969
12,882
2,720
91,571
(147,127)
(9,009)
(440)
(156,576)
(65,005)
October 1, 2022
Original
contract
value
(CA$)
98,821
16,718
3,552
119,091
(191,697)
(11,511)
(553)
(203,761)
(84,670)
Current
contract
value
(CA$)
104,840
17,632
3,707
126,179
(203,043)
(12,336)
(598)
(215,977)
(89,798)
Fair
value
gain/(loss)
(CA$)
6,019
914
155
7,088
(11,346)
(825)
(45)
(12,216)
(5,128)
500
688
691
3
(34,788)
(549)
—
(35,337)
(34,837)
(2,457)
(1,019)
(3,476)
(3,102)
(3,102)
(45,801)
(709)
—
(46,510)
(45,822)
(3,304)
(1,381)
(4,685)
(2,750)
(2,750)
(48,017)
(756)
—
(48,773)
(48,082)
(3,371)
(1,410)
(4,781)
(2,748)
(2,748)
(2,216)
(47)
—
(2,263)
(2,260)
(67)
(29)
(96)
2
2
SUGAR
Purchases U.S. dollars
Less than 1 year
1 to 2 years
2 to 3 years
Sales U.S. dollars
Less than 1 year
1 to 2 years
2 to 3 years
Total U.S. dollars - Sugar
MAPLE PRODUCTS
Purchases U.S. dollars
Less than 1 year
Sales U.S. dollars
Less than 1 year
1 to 2 years
2 to 3 years
Total U.S. dollars - Maple
MAPLE PRODUCTS
Sales EUR
Less than 1 year
1 to 2 years
Total EUR - Maple
MAPLE PRODUCTS
Sales AUD
Less than 1 year
Total AUD - Maple
Total Foreign Exchange
(106,420)
(137,927)
(145,409)
(7,482)
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
94
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(D) CURRENCY RISK: (CONTINUED)
The Company had the following significant foreign currency exposures at year-end:
Financial instruments measured at amortized cost:
Cash
Trade and other receivables, including initial margin deposits
Trade and other payables
Financial instruments at cash flow hedging instruments or
at fair value through profit or loss:
Net current contractual amount of raw sugar futures contracts
Natural gas contracts
Total exposure from above
Forward exchange contracts
Gross exposure
Sugar purchases priced not received
Committed future sales in US dollars
Ocean freight
Other
Net exposure
September 30,
2023
(US$)
October 1,
2022
(US$)
604
27,478
(7,136)
20,946
9,416
(41,876)
(32,460)
(11,514)
(60,000)
(71,514)
(143,006)
181,232
(500)
―
5,602
29,991
(9,883)
25,710
1,482
(25,074)
(23,592)
2,118
(99,842)
(97,724)
(162,315)
236,570
(289)
67
(33,788)
(23,691)
As at September 30, 2023, the US/Can. Exchange rate was $1.3560 (October 1, 2022 - $1.3814).
Based on the above gross exposure at year-end, and assuming that all other variables remain constant, in particular the price of raw
sugar and natural gas, a $0.05 increase in the Canadian dollar would result in an increase in net earnings (loss) of $2.6 million,
(October 1, 2022 – increase in net earnings (loss) of $3.6 million) while a $0.05 decrease would have an equal but opposite effect on
net earnings (loss).
Management believes that the impact on the gross exposure is not representative as it needs to be adjusted for transactions, which
are not recorded on the consolidated statements of financial position as at year-end but were committed during the fiscal year, and
will be accounted for as the physical transactions occur.
The net exposure is due mainly to the Company’s policy not to hedge its foreign exchange exposure on natural gas futures contracts
with maturities exceeding 12 months. The impact of a $0.05 increase in the Canadian dollar would result in an increase in net
earnings (loss) by $1.2 million in 2023 (October 1, 2022 – increase in net earnings (loss) of $0.9 million) while a decrease would have
an equal but opposite effect on net earnings (loss).
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
95
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(D) CURRENCY RISK: (CONTINUED)
Sugar futures sales contracts represent, in large part, contracts entered into when sugar is priced to a customer. As both the raw
sugar component of futures sales contracts and the sugar purchases priced not received are in US dollars, there is no need to hedge
the currency of the raw sugar component, hence the adjustment for sugar purchases priced not received. It also includes the Taber
sales of refined sugar in US dollars. As all beet sugar is paid in Canadian dollars, Taber sales contracts in US dollars need to be
financially hedged for currency exposure.
Some sales are transacted in US dollars. For these sales, the raw sugar value is not hedged, as the corresponding futures contract
is also in US dollars. Only the US dollar refined sugar margin and ocean freight contribution are hedged for the currency exposure.
Ocean freight for raw sugar is denominated in US dollars and therefore forward exchange contracts are used to cover the foreign
exchange exposure.
(E)
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. In order to fix the interest rate on a substantial portion of the expected drawdown of the revolving credit facility,
the Company enters into interest rate swap agreements. The outstanding swap agreements by maturity are as follows:
Fiscal year contracted
Date
Fiscal 2019
Fiscal 2019
Fiscal 2020
Fiscal 2020
Fiscal 2020
March 12, 2019 to June 28, 2024 - 2.08%
June 28, 2022 to June 28, 2024 - 2.17%
October 3, 2019 to June 28, 2024 - 1.68%
February 24, 2020 to June 28, 2025 - 1.60%
June 28, 2024 to June 28, 2025 - 1.18%
Total value
$
20,000
80,000
20,000
20,000
80,000
The counterparties to these swap agreements are major Canadian financial institutions. The Company does not anticipate any
material adverse effect on its financial position resulting from its involvement in these types of swap agreements, nor does it
anticipate non-performance by the counterparties.
As at September 30, 2023, the Company has a short-term cash borrowing of $58.0 million (October 1, 2022 - $26.0 million) and a
long-term cash borrowing of $198.2 million (October 1, 2022 - $198.9 million). The Company has $98.2 million in senior guaranteed
notes bearing fixed interest rate and therefore may be exposed to fair value variance (October 1, 2022 - $98.9 million). Remaining
borrowing is normally entered into a 30 - or 90-day bankers’ acceptance for an amount varying between $110.0 million to $195.0 million
of the borrowings and will borrow either under prime rate loans or shorter term bankers’ acceptances.
To mitigate the risk in future cash flows due to interest rate fluctuations, the Company enters into interest rate swap agreements
from time to time. All other borrowings over and above the aggregate notional amount of the swap agreements are therefore exposed
to interest rate fluctuations, to the exception of the senior guaranteed notes that bear fixed interest rate.
For the fiscal year ended September 30, 2023, if interest rates had been 50 basis points higher, considering all borrowings not
covered by the interest rate swap agreements designated for hedge accounting, net earnings (loss) would have been $0.3 million
lower (October 1, 2022 - $0.1 million lower net earnings (loss)) while a decrease would have an equal but opposite effect on net
earnings (loss).
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
96
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(E)
INTEREST RATE RISK: (CONTINUED)
(i)
Interest rate benchmark reform:
London Interbank Offered Rate (“LIBOR”)
Effective June 30, 2023, the remaining USD LIBOR 1-month, 3-month, 6-month and 12-month tenors have either ceased, or
ceased being representative. The LIBOR administrator will continue to publish the 1-month, 3-month and 6-month tenors under an
unrepresentative synthetic methodology until September 30, 2024.
Canadian Dollar Offered Rate (“CDOR”)
The Company currently holds interest rate swaps that have floating legs to CAD CDOR. On June 28, 2024, the remaining CAD CDOR
1-month, 2-month and 3-month tenors will either cease or no longer be representative. The Company’s CAD CDOR swaps and cash
flow hedging relationships extend the anticipated cessation date of CDOR.
The recommended alternative reference rates for LIBOR and CDOR are the Secured Overnight Financing Rate (SOFR) and Canadian
Overnight Repo Rate Average (CORRA), respectively.
The Company has evaluated the extent to which its cash flow relationships are subject to uncertainty driven by the IBOR reform. The
Company’s hedged items and hedging instruments continue to be indexed to CDOR. The benchmark rates are quoted each day and
the CDOR cash flows are exchanged with counterparties as usual.
(F) CREDIT RISK:
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligation. The Company believes it has limited credit risk other than those explained in Note 7, Trade and other
receivables and Note 9, Financial instruments.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
97
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(G) LIQUIDITY RISK:
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The following are the contractual
maturities of financial liabilities, including estimated interest payments:
Non-derivative financial liabilities:
Revolving credit facility
Trade and other payables
Senior guaranteed notes
Derivative financial instruments
measured at fair value through
profit or loss:
Sugar futures contracts (1)
September 30, 2023
Carrying Contractual
cash flows
amount
0 to 12
months
12 to 24
months
$
$
158,000
164,404
98,212
158,000
164,404
100,000
$
—
164,404
—
420,616
422,404
164,404
$
—
—
—
—
(331)
(12,768)
(26,512)
13,492
Forward exchange contracts (net) (1)
1,043
(89,686)
(89,837)
Interest on swap agreements
(1,854)
812
572
(607)
240
After 24
months
$
158,000
—
100,000
258,000
252
758
—
Derivative financial instruments
designated as effective cash flow
hedging instruments:
Natural gas contracts (1)
Interest on swap agreements
(1) Based on notional amounts as presented above.
(4,417)
(5,606)
(11,165)
61,200
2,558
10,614
1,850
(37,884)
(103,313)
409,451
384,520
61,091
10,437
708
24,270
24,270
40,149
—
41,159
299,159
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
98
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
(G) LIQUIDITY RISK: (CONTINUED)
October 1, 2022
Carrying
amount
Contractual
cash flows
0 to 12
months
12 to 24
months
$
$
126,000
177,435
98,901
126,000
177,435
100,000
$
—
177,435
—
402,336
403,435
177,435
$
—
—
—
—
After 24
months
$
126,000
—
100,000
226,000
(561)
7,482
(2,377)
(2,047)
(29,831)
22,268
(137,927)
(144,043)
1,549
737
3,117
572
5,516
2,999
240
(21,634)
(5,383)
56,270
4,719
20,906
2,152
(22,473)
(77,436)
(150,079)
379,863
325,999
27,356
11,001
1,850
38,808
38,808
24,363
717
33,835
259,835
Non-derivative financial liabilities:
Revolving credit facility
Trade and other payables
Senior guaranteed notes
Derivative financial instruments
measured at fair value through
profit or loss:
Sugar futures contracts (1)
Forward exchange contracts (net) (1)
Interest on swap agreements
Derivative financial instruments
designated as effective cash flow
hedging instruments:
Natural gas contracts (1)
Interest on swap agreements
(1) Based on notional amounts as presented above.
The convertible unsecured subordinated debentures of $151.7 million (October 1, 2022 - $149.7 million) have been excluded from the
above due to the Company’s option to satisfy the obligations at redemption or maturity in shares.
The Company borrows under its revolving credit facility (see Note 16, Revolving credit facility). It is the Company’s intention to keep
a debt level under its revolving credit facility ranging between $140.0 million and $265.0 million. All other non-derivative financial
liabilities are expected to be financed through the collection of trade and other receivables and cash flows generated from operations.
The eastern expansion project is expected to be financed using a combination of various financial instruments, including the revolving
credit facility, loans from Investissement Quebec for up to $65 millions, and other debt and/or equity instruments.
Derivative financial instruments for raw sugar, natural gas and forward exchange contracts are expected to be financed from the
working capital of the Company.
As at September 30, 2023, the Company had an unused available line of credit of $107.0 million (October 1, 2022 - $74.0 million), a
cash balance of $0.1 million (October 1, 2022 - $0.2 million). On November 1, 2023, the Company increased its revolving credit facility
by $75.0 million to $340 million.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
99
10. PROPERTY, PLANT AND EQUIPMENT
Cost or deemed cost
Balance at
October 2, 2021
Additions
Transfers
Disposals
Effects of movements
in exchange rate
Balance at
October 1, 2022
Additions
Transfers
Disposals
Effects of movements
in exchange rate
Balance at
September 30, 2023
Accumulated depreciation
Balance at
October 2, 2021
Depreciation for the year
Disposals
Effect of movements in
exchange rate
Balance at
October 1, 2022
Depreciation
Disposals
Balance at
September 30, 2023
Net carrying amounts
At October 1, 2022
At September 30, 2023
Land Buildings
Machinery
and
equipment
$
$
$
Furniture
and Construction
in progress
fixtures
$
$
Barrels
$
Total
$
18,089
84,351
348,388
—
—
—
—
61
1,617
—
4
288
11,824
(117)
3
2,797
153
—
—
2
8,145
27,537
489,307
151
721
—
4
23,402
24,055
(14,162)
—
—
—
(117)
13
18,089
86,033
360,386
2,952
9,021
36,777
513,258
—
—
—
—
6
11,137
—
(1)
230
31,097
(1,614)
(8)
—
—
—
—
(30)
1,230
—
(1)
37,210
37,416
(43,464)
—
—
—
(1,614)
(10)
18,089
97,175
390,091
2,952
10,220
30,523
549,050
—
—
—
—
—
—
—
—
30,589
209,777
2,431
—
—
14,165
(73)
—
1,767
366
—
—
5,461
806
—
—
—
—
—
—
247,594
17,768
(73)
—
33,020
223,869
2,133
6,267
—
265,289
3,216
—
13,308
(1,218)
285
—
985
—
—
—
17,794
(1,218)
36,236
235,959
2,418
7,252
—
281,865
18,089
18,089
53,013
60,939
136,517
154,132
819
534
2,754
2,968
36,777
247,969
30,523
267,185
There were no impairment losses during fiscal 2023 and 2022.
Any grants received are offset against property, plant and equipment additions. During the year, an amount of $0.7 million was recorded
(October 1, 2022 - $Nil).
All property, plant and equipment have been pledged as security for the revolving credit facility (see Note 16, Revolving credit facility).
The Company has capitalized costs of $11.2 million in fiscal 2023, associated with the expansion of the production and logistic facility
of its eastern sugar refining operations in Montreal and Toronto. Included in this amount are capitalized borrowing costs of $0.4 million,
calculated using a capitalization rate of 6.3%. These costs are included in construction in progress.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
100
11. RIGHT-OF-USE ASSETS
Cost:
Balance at October 2, 2021
Additions
Disposals
Effect of movements in exchange rate
Balance at October 1, 2022
Additions
Disposals
Effect of movements in exchange rate
Balance at September 30, 2023
Accumulated depreciation:
Balance at October 2, 2021
Depreciation
Disposals
Balance at October 1, 2022
Depreciation
Disposals
Balance at September 30, 2023
Net carrying amounts:
At October 1, 2022
At September 30, 2023
Land
$
Buildings
$
Machinery and
equipment
$
40
—
—
—
40
—
—
—
40
—
—
—
—
—
—
—
40
40
18,914
7,861
—
68
26,843
5,555
(1,629)
(16)
30,753
6,211
3,327
—
9,538
3,253
(1,281)
11,510
17,305
19,243
7,952
981
(243)
11
8,701
6,538
—
(2)
15,237
2,169
1,188
(243)
3,114
1,433
—
4,547
5,587
10,690
Total
$
26,906
8,842
(243)
79
35,584
12,093
(1,629)
(18)
46,030
8,380
4,515
(243)
12,652
4,686
(1,281)
16,057
22,932
29,973
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
101
Customer
Software relationships
$
$
Brand
names(1)
$
Other
$
4,413
95
4,508
432
4,940
2,942
414
3,356
335
3,691
34,513
—
34,513
—
34,513
14,101
3,422
17,523
3,442
20,965
5,857
—
5,857
—
5,857
—
—
—
—
—
1,152
1,249
16,990
13,548
5,857
5,857
574
—
574
—
574
280
29
309
29
338
265
236
Total
$
45,357
95
45,452
432
45,884
17,323
3,865
21,188
3,806
24,994
24,264
20,890
12.
INTANGIBLE ASSETS
Cost
Balance at October 2, 2021
Additions
Balance at October 1, 2022
Additions
Balance at September 30, 2023
Accumulated amortization
Balance at October 2, 2021
Amortization for the year
Balance at October 1, 2022
Amortization for the year
Balance at September 30, 2023
Net carrying amounts
At October 1, 2022
At September 30, 2023
(1)
Indefinite life.
13. OTHER ASSETS
Deferred financing charges represent the fees and costs related to the revolving credit facility agreement (see Note 16, Revolving credit
facility). These fees are amortized over the life of the revolving credit facility, which matures on November 23, 2026.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
102
14. DEFERRED TAX LIABILITIES
The deferred tax liabilities comprise the following temporary differences:
Net assets (liabilities):
Property, plant and equipment
Right-of-use assets
Intangibles
Employee benefits
Lease obligations
Derivative financial instruments
Losses carried forward
Goodwill
Provisions
Deferred financing charges
Other
September 30,
2023
$
October 1,
2022
$
(41,618)
(7,737)
(5,566)
739
7,857
(5,307)
7,832
(2,934)
434
(640)
1,452
(37,289)
(5,977)
(6,488)
4,757
6,039
(6,803)
5,283
(2,863)
728
(857)
1,241
(45,488)
(42,229)
As at September 30, 2023, no deferred tax liability was recognized for temporary differences arising from investments in subsidiaries
because the Company controls the decisions affecting the realization of such liabilities and it is probable that the temporary differences
will not reverse in the foreseeable future.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
14. DEFERRED TAX LIABILITIES (CONTINUED)
The movement in temporary differences during the current years is as follows:
103
Property, plant and equipment
Right-of-use assets
Intangibles
Employee benefits
Lease obligations
Derivative financial instruments
Losses carried forward
Goodwill
Provisions
Deferred financing charges
Other
Property, plant and equipment
Right-of-use assets
Intangibles
Employee benefits
Lease obligations
Derivative financial instruments
Losses carried forward
Goodwill
Provisions
Deferred financing charges
Other
Balance
October 1,
2022
Recognized
in profit
(loss)
Recognized
in other
comprehensive
income (loss)
Balance
September 30,
2023
$
(37,289)
(5,977)
(6,488)
4,757
6,039
(6,803)
5,283
(2,863)
728
(857)
1,241
(42,229)
Balance
October 2,
2021
$
(35,926)
(4,855)
(7,705)
6,847
4,840
(3,834)
6,918
(2,729)
982
(874)
(464)
(36,800)
$
(4,330)
(1,766)
923
(310)
1,823
(2,866)
2,549
(79)
(294)
217
212
(3,921)
$
1
6
(1)
(3,708)
(5)
4,362
—
8
—
—
(1)
662
$
(41,618)
(7,737)
(5,566)
739
7,857
(5,307)
7,832
(2,934)
434
(640)
1,452
(45,488)
Recognized
in profit
(loss)
Recognized
in other
comprehensive
income (loss)
Balance
October 1,
2022
$
(1,358)
(1,096)
1,208
819
1,175
1,478
(1,635)
(95)
(254)
17
1,702
1,961
$
(5)
(26)
9
(2,909)
24
(4,447)
—
(39)
—
—
3
$
(37,289)
(5,977)
(6,488)
4,757
6,039
(6,803)
5,283
(2,863)
728
(857)
1,241
(7,390)
(42,229)
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
104
15. GOODWILL AND INDEFINITE LIFE INTANGIBLE ASSETS
RECOVERABILITY OF CASH GENERATING UNITS (“CGU”):
For the purpose of impairment testing, goodwill and intangibles with indefinite useful life are allocated to the Company’s operating
segments, which represent the lowest level within the Company at which the goodwill and intangibles are monitored for internal
management purposes, as follows:
Sugar:
Goodwill
Maple products:
Goodwill
Brand names
September 30,
2023
$
October 1,
2022
$
229,952
229,952
3,055
5,857
238,864
3,055
5,857
238,864
In assessing whether goodwill and indefinite life intangible assets are impaired, the carrying amount of the segments (including goodwill
and indefinite life intangible assets) are compared to their recoverable amount. The recoverable amounts of segments are based on the
higher of the value in use and fair value less costs of disposal.
(A) SUGAR SEGMENT:
The Company performed the annual impairment review for goodwill as at September 30, 2023, and the estimated recoverable
amounts exceeded the carrying amounts of the segments and, as a result, there was no impairment identified.
The recoverable amount was based on the value in use. The key assumptions used in the estimation of the recoverable amount are
set out below. The key assumptions represent management's assessment of future trends in the relevant industries and have been
based on historical data from both external and internal sources.
Pre-tax discount rate
Terminal growth rate
Budgeted EBITDA growth rate (average of next 5 years)
2023
%
12.1
2.6
3.2
2022
%
10.7
2.3
2.0
The discount rate was a pre-tax measure estimated based on historical industry weighted-average cost of capital adjusted for
impacts on risk and taxes.
The cash flow projections included specific estimates for five years and a terminal growth rate thereafter. The terminal growth rate
was based on management's best estimate of the long-term compound annual EBITDA growth rate.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
105
15. GOODWILL AND INDEFINITE LIFE INTANGIBLE ASSETS (CONTINUED)
(A) SUGAR SEGMENT (CONTINUED):
Budgeted EBITDA was estimated taking into account past experience, adjusted to factor revenue growth for the first year based on
budgeted sales volumes, and the following years taking into account the average growth levels experienced over the past 5 years
and the estimated sales volumes excluding the expansion project and price growth for the next five years. It was assumed that the
sales price would increase in line with forecasted inflation over the next five years.
Management has identified the two key assumptions that could cause the carrying amount to exceed the recoverable amount. The
following table shows the amount by which these two assumptions would need to change individually for the estimated recoverable
amount to be equal to the carrying amount.
Pre-tax discount rate
Budgeted EBITDA growth rate
(B) MAPLE SEGMENT:
2023
2022
% Basis point
% Basis point
3.4
(4.4)
2.9
(2.3)
The Company performed the annual impairment review for goodwill and indefinite life intangible assets as at September 30, 2023,
and determinated the estimated recoverable amounts using the higher of the value in use and fair value less costs to sell (the
“FVLCS”).
The FVLCS is the amount obtainable from the sale of the cash generating unit in an arm’s-length transaction between knowledgeable,
willing parties, less the costs of disposal. The fair value hierarchy used to measure the FVLCS is level 3. Management has estimated
this amount by using the market approach which incorporated comparable and transaction multiples which were applied to adjusted
EBITDA of fiscal 2023 and budgeted EBITDA for fiscal 2024 to derive a range of the FVLCS. The key assumption was the multiple
selected based on comparable companies in the same sector as the Maple CGU. Other assumptions include a size discount, the cost
to dispose and a control premium. The estimated multiple ranged from 7.4x to 17.5x adjusted EBITDA.
The Company determined that the FVLCS exceeded the carrying amount. A reasonable change in any of the key assumptions would
result in an impairment.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
106
16. REVOLVING CREDIT FACILITY
The Company has a total of $265.0 million of available working capital under the revolving credit facility, which matures on November 23,
2026, from which it can borrow at prime rate, SOFR rate or under bankers’ acceptances, plus 20 to 250 basis points, based on achieving
certain financial ratios.
Certain assets of the Company, including trade receivables, inventories and property, plant and equipment, have been pledged as security
for the revolving credit facility. As at September 30, 2023, a total of $630.0 million of assets are pledged as security (October 1, 2022 -
$590.6 million). The Company must comply with certain financial covenants related to the revolving credit facility on a quarterly basis. The
Company was in compliance with the financial covenants at year end.
The following amounts were outstanding under the revolving credit facility as at:
Current
Non-current
September 30,
2023
$
58,000
100,000
158,000
October 1,
2022
$
26,000
100,000
126,000
The carrying value of the revolving credit facility approximates fair value. The valuation model considers the present value of expected
payments, discounted using a risk-adjusted discount rate.
On November 1, 2023, Lantic amended its revolving credit facility, by extending its term to October 31, 2027, and by increasing the amount
available for borrowing for working capital and for the eastern expansion by $75 million to $340 million. In addition, in order to conform
with the IBOR reform, Lantic will borrow at prime rate, SOFR Rate or under Adjusted Term CORRA loan (which is Term CORRA plus an
adjustment varying between 29.547 to 32.138 basis points), plus 20 to 250 basis points, based on achieving certain financial ratios.
17. TRADE AND OTHER PAYABLES
Trade payables
Other non-trade payables
Personnel-related liabilities
Dividends payable to shareholders
September 30,
2023
October 1,
2022
$
125,873
4,081
24,991
9,459
164,404
$
142,236
3,603
22,203
9,393
177,435
Considering that Maple products syrup is harvested once a year, the Producteurs et Productrices Acericoles du Québec ("PPAQ") offers
to authorized purchasers the possibility to pay their purchases throughout the year, and before the end of February. The outstanding
balance of $71.8 million as at September 30, 2023 (October 1, 2022 - $78.2 million) is included in trade payables, bears interest at 5.5% and
is paid in five monthly installments (October, November, December, January and February).
During the year, approximately 90% of the maple syrup purchases were made through the PPAQ process.
Personnel-related liabilities represent the Company’s obligation to its current and former employees that are expected to be settled within
one year from the reporting period as salary and accrued vacation.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
18. PROVISIONS
Opening balance
Additions
Provisions used during the period
Closing balance
Presented as:
Current
Non-current
107
September 30,
2023
October 1,
2022
$
2,836
350
(1,484)
1,702
1,415
287
1,702
$
3,825
100
(1,089)
2,836
1,503
1,333
2,836
Provisions are comprised of asset retirement obligations, which represent the future cost the Company estimated to incur for the removal
of asbestos in the operating facilities and for oil, chemical and other hazardous materials for which the Company has been able to identify
the costs.
The estimate of the total liability for future asset retirement obligations is subject to change, based on amendments to laws and regulations
and as new information concerning the Company’s operations becomes available. Future changes, if any, to the estimated total liability
as a result of amended requirements, laws, regulations and operating assumptions would be recognized prospectively as a change in
estimate, when applicable.
19. LEASE OBLIGATIONS
The Company’s leases are primarily for warehouses, operating properties, railcars and production equipment.
The following table presents lease obligations recorded in the consolidated statements of financial position:
Current
Non-current
September 30,
2023
$
4,364
26,086
October 1,
2022
$
3,991
19,198
The following table summarizes the reconciliation of the lease obligations for the periods ended:
Opening balance
Additions
Disposal
Payment of lease obligations
Interest accretion
Other
Closing balance
September 30,
2023
October 1,
2022
$
23,189
12,093
(498)
(5,419)
1,075
10
30,450
$
18,492
8,842
―
(5,150)
1,000
5
23,189
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
108
19. LEASE OBLIGATIONS (CONTINUED)
Certain leases contain extension or termination options exercisable by the Company before the end of the non-cancellable contract
period. The Company has applied judgement to determine the lease term for the contracts with renewal and termination options and has
included renewal and termination options in the measurement of lease obligations when it is reasonably certain to exercise the options.
The Company reassesses whether it is reasonably certain to exercise the options if there is a significant event or a significant change in
circumstances which impacts the original assessments made.
Expenses relating to short-term leases, and for leases of low-value assets were not significant for the period ended September 30, 2023
and for October 1, 2022.
The total cash outflow for leases (including interest) for the period ended September 30, 2023 was $5.4 million (October 1, 2022-$5.2 million),
which was included as part of cash outflows from financing activities.
The lease obligations are payable as follows:
September 30, 2023
October 1, 2022
Future
minimum
lease
payments
$
5,965
18,277
14,489
38,731
Present
value of
minimum
lease
payments
$
4,364
13,994
12,092
30,450
Future
minimum
lease
payments
$
4,969
14,113
8,845
27,927
Interest
$
1,601
4,283
2,397
8,281
Present
value of
minimum
lease
payments
$
3,991
11,861
7,337
23,189
Interest
$
978
2,252
1,508
4,738
Less than one year
Between one and five years
More than five years
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
20. EMPLOYEE BENEFITS
The Company sponsors defined benefit pension plans for its employees ("Pension benefit plans"), as well as health care benefits, medical
plans and life insurance coverage ("Other benefit plans").
The following table presents a reconciliation of the pension obligations, the plan assets and the funded status of the benefit plans:
109
Fair value of plan assets:
Pension benefit plans
Defined benefit obligation:
Pension benefit plans
Other benefit plans
Funded status:
Pension benefit plans
Other benefit plans
Experience adjustment arising on plan liabilities
Experience adjustment arising on plan assets
September 30,
2023
$
October 1,
2022
$
115,940
105,868
108,413
10,425
118,838
7,527
(10,425)
(2,898)
(7,406)
7,292
112,550
11,847
124,397
(6,682)
(11,847)
(18,529)
(28,127)
(16,901)
The Company has determined that, in accordance with the terms and conditions of the defined benefit pension plans, and in accordance
with statutory requirements (such as minimum funding requirements) of the plans of the respective jurisdictions, the present value of
refunds or reductions in the future contributions is not lower than the balance of the total fair value of the plan assets less the total present
value of the obligations. As such, no decrease in the defined benefit liability is necessary as at September 30, 2023 and October 1, 2022.
The Company measures its accrued benefit obligations and the fair value of plan assets for accounting purposes at year-end. The most
recent actuarial valuation of the pension plans for funding purposes was as of January 1, 2022, the next required valuation will be as of
December 31, 2024.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
110
20. EMPLOYEE BENEFITS (CONTINUED)
The asset allocation of the major categories in the plan was as follows:
Equity instruments
Government bonds
Cash and short-term securities
September 30, 2023
October 1, 2022
%
61.5
34.7
3.8
100.0
$
71,303
40,231
4,406
115,940
%
58.4
38.7
2.9
100.0
$
61,827
40,971
3,070
105,868
The pension committee prepares the documentation relating to the management of asset allocation, reviews the investment policy and
recommends it to the Board of Directors for approval in the event of material changes to the policy. Semi-annually monitoring of the asset
allocation of the pension benefit plans allows the pension committee to ensure that the limits of asset allocation of the pension benefit
plans are respected.
Based on historical data, contributions to the defined benefit pension plans in fiscal 2024 are expected to be approximately $3.8 million.
The pension plan exposes the Company to the following risks:
(i)
Investment risk:
The defined benefit obligation is calculated using a discount rate. If the fund returns are lower than the discount rate, a deficit is
created.
(ii)
Interest rate risk:
Variation in bond rates will affect the value of the defined benefit obligation.
(iii) Inflation risk:
The defined benefit obligation is calculated assuming a certain level of inflation. An actual inflation higher than expected will have
the effect of increasing the value of the defined benefit obligation.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
111
20. EMPLOYEE BENEFITS (CONTINUED)
The movement in the pension and other benefit plans is as follows:
For the fiscal years ended
September 30, 2023
Pension
benefit
plans
$
Other
benefit
plans
$
Total
$
Pension
benefit
plans
$
October 1, 2022
Other
benefit
plans
$
Total
$
112,550
11,847
124,397
135,729
15,005
150,734
1,853
5,680
1,021
(5,795)
185
573
—
—
2,038
6,253
1,021
2,989
4,633
998
(5,795)
(6,067)
311
507
—
—
3,300
5,140
998
(6,067)
(970)
(700)
(1,670)
(841)
(740)
(1,581)
Movement in the present value of
the defined benefit obligation:
Defined benefit obligation,
beginning of the year
Current service cost
Interest cost
Employee contributions
Benefit payments from plan
Benefit payments
from employer
Actuarial (gains) losses arising from
changes in demographic assumptions
—
(681)
(681)
—
(671)
(671)
Actuarial (gains) losses arising from
changes in financial assumptions
Actuarial (gains) losses arising
from member experience
Defined benefit obligation,
end of year
Movement in the fair value
of plan assets:
Fair value of plan assets,
beginning of the year
Interest income
Return on plan assets
(excluding interest income)
Employer contributions
Employee contributions
Benefit payments from plan
Benefit payments from employer
Plan expenses
Fair value of plan assets,
end of year
(6,170)
(707)
(6,877)
(25,937)
(2,758)
(28,695)
244
(92)
152
1,046
193
1,239
108,413
10,425
118,838
112,550
11,847
124,397
105,868
5,441
7,292
3,607
1,021
(5,795)
(970)
(524)
115,940
—
—
—
700
—
—
(700)
—
—
105,868
121,435
5,441
4,100
7,292
4,307
1,021
(5,795)
(1,670)
(524)
(16,901)
3,534
998
(6,067)
(841)
(390)
115,940
105,868
—
—
—
740
—
—
(740)
—
—
121,435
4,100
(16,901)
4,274
998
(6,067)
(1,581)
(390)
105,868
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
112
20. EMPLOYEE BENEFITS (CONTINUED)
The net defined benefit obligation can be allocated to the plans’ participants as follows:
September 30, 2023
October 1, 2022
Pension
benefit plans
Other
benefit plans
Pension
benefit plans
Other
benefit plans
Active plan participants
Retired plan members
Deferred plan participants
%
40.0
55.4
4.6
100.0
%
28.4
71.6
—
100.0
%
42.3
54.1
3.6
100.0
The Company’s defined benefit pension expense was as follows:
For the fiscal years ended
September 30, 2023
October 1, 2022
Pension
benefit
plans
$
Other
benefit
plans
$
Pension
benefit
plans
$
Other
benefit
plans
$
Total
$
Pension costs recognized in
net earnings (loss):
Current service cost
1,853
185
2,038
2,989
Expenses related to the
pension benefit plans
Net interest cost
Re-measurements of other
long-term benefits
Pension expense
Recognized in:
Cost of sales
Administration and
selling expenses
524
239
(19)
2,597
—
573
(149)
609
524
812
(168)
3,206
390
430
16
3,825
2,047
530
2,577
3,351
550
2,597
79
609
629
3,206
474
3,825
311
—
507
90
908
616
292
908
%
36.1
63.9
—
100.0
Total
$
3,300
390
937
106
4,733
3,967
766
4,733
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
113
20. EMPLOYEE BENEFITS (CONTINUED)
The following table presents the change in the actuarial gains and losses recognized in other comprehensive income (loss):
For the fiscal years ended
September 30, 2023
October 1, 2022
Pension
benefit
plans
$
Other
benefit
plans
$
Pension
benefit
plans
$
Other
benefit
plans
$
Total
$
Total
$
Cumulative amount in comprehensive
income (loss) at the beginning of the year
(15,767)
(12,819)
(28,586)
Recognized during the year
(13,199)
(1,331)
(14,530)
(7,761)
(8,006)
(9,493)
(3,326)
(17,254)
(11,332)
Cumulative amount in comprehensive
income (loss) at the end of the year
Recognized during the year,
net of tax
(28,966)
(14,150)
(43,116)
(15,767)
(12,819)
(28,586)
(9,831)
(991)
(10,822)
(5,951)
(2,472)
(8,423)
Principal actuarial assumptions used were as follows:
For the fiscal years ended
September 30, 2023
October 1, 2022
Pension
benefit
plans
%
5.65
3.00
5.10
3.00
Other
benefit
plans
%
5.65
3.00
5.10
3.50
Pension
benefit
plans
%
5.10
3.00
3.50
3.00
Other
benefit
plans
%
5.10
3.50
3.50
3.00
Company’s defined benefit obligation:
Discount rate
Rate of compensation increase
Net benefit plan expense:
Discount rate
Rate of compensation increase
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
114
20. EMPLOYEE BENEFITS (CONTINUED)
Assumptions regarding future mortality are based on published statistics and mortality tables. The current longevities underlying the
value of the liabilities in the defined benefit plans are as follows:
Longevity at age 65 for current pensioners:
Males
Females
Longevity at age 65 for members aged 45:
Males
Females
September 30,
2023
October 1,
2022
22.3
24.9
23.8
26.2
22.2
24.9
23.7
26.2
The assumed health care cost trend rate as at September 30, 2023 was 5.47% (October 1, 2022 - 5.56%), decreasing uniformly to 4.00%
in 2040 (October 1, 2022 - 4.00% in 2040) and remaining at that level thereafter.
The following table outlines the key assumptions for the fiscal year ended September 30, 2023 and the sensitivity of a percentage change
in each of these assumptions on the defined benefit plan obligations and the net defined benefit plan costs.
The sensitivity analysis provided in the table is hypothetical and should be used with caution. The sensitivities of each key assumption
have been calculated independently of any changes in other key assumptions. Actual experience may result in changes in a number of
key assumptions simultaneously. Changes in one factor may result in changes in another, which could amplify or reduce the impact of
such assumptions.
(Decrease) increase in Company’s defined benefit obligation:
Discount rate
Impact of increase of 1%
Impact of decrease of 1%
Rate of compensation increase
Impact of increase of 0.5%
Impact of decrease of 0.5%
Mortality
99% of expected rate
For the fiscal year ended September 30, 2023
Pension
benefit
plans
$
(10,506)
13,496
714
(661)
207
Other
benefit
plans
$
(1,098)
1,363
2
(3)
29
Total
$
(11,604)
14,859
716
(664)
236
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point
change in assumed health care cost trend would have the following effects:
Effect on the defined benefit obligations
Increase
Decrease
$
1,127
$
(925)
As at September 30, 2023, the weighted average duration of the defined benefit obligation amounts to 11.5 years (October 1, 2022
- 11.9 years).
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
21. CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES
The outstanding convertible debentures are as follows:
Non-current
Sixth series (i)
Seventh series (ii)
Total face value
Less net deferred financing fees
Less equity component (i), (ii)
Accumulated accretion expense
115
September 30,
October 1,
2023
$
57,425
97,575
155,000
(1,547)
(6,930)
5,188
2022
$
57,425
97,575
155,000
(2,535)
(6,930)
4,164
Total carrying value ― non-current
151,711
149,699
(i) Sixth series:
On July 28, 2017, the Company issued $57.5 million Sixth series, 5.00% convertible unsecured subordinated debentures ("Sixth series
debentures"), maturing on December 31, 2024, with interest payable semi-annually in arrears on June 30 and December 31 of each
year. The debentures may be converted at the option of the holder at any time prior to maturity, at a conversion price of $8.26 per
share.
The debentures are redeemable at a price equal to the principal amount thereof plus accrued unpaid interest.
On redemption or at maturity, the Company will repay the indebtedness of the convertible debentures by paying an amount equal to
the principal amount of the outstanding convertible debentures, together with accrued and unpaid interest thereon.
The Company may, at its option, elect to satisfy its obligation to repay the principal amount of the convertible debentures, which are
to be redeemed or which have matured, by issuing shares to the holders of the convertible debentures. The number of shares to be
issued will be determined by dividing the indebtedness related to the convertible debenture by 95% of the then current market price
on the day preceding the date fixed for redemption or the maturity date, as the case may be.
The Company allocated $2.6 million of the Sixth series debentures into an equity component (net of tax an amount of $2.0 million).
During the year, the Company recorded $0.4 million (October 1, 2022 - $0.4 million) in finance costs for the accretion of the Sixth
series debentures.
The Company incurred underwriting fees and issuance costs of $2.7 million, which are netted against the convertible debenture
liability.
The fair value of the Sixth series convertible unsecured subordinated debentures is measured based on Level 1 of the three-tier
fair value hierarchy and was based upon market quotes for the identical instruments. The fair value as at September 30, 2023 was
approximately $56.3 million (October 1, 2022 - $56.9 million).
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
116
21. CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES (CONTINUED)
(ii) Seventh series:
On March 28, 2018, and on April 3, 2020, the Company issued $85.0 million and $12.8 million for a total of $97.8 million, Seventh series,
4.75% convertible unsecured subordinated debentures (“Seventh series debentures”), maturing on June 30, 2025, with interest
payable semi-annually in arrears on June 30 and December 31 of each year. The debentures may be converted at the option of the
holder at any time prior to maturity at a conversion price of $8.85 per share.
The debentures are redeemable at a price equal to the principal amount thereof plus accrued unpaid interest.
On redemption or on the maturity date, the Company will repay the indebtedness of the convertible debentures by paying an amount
equal to the principal amount of the outstanding debentures, together with accrued and unpaid interest thereon.
The Company may, at its option, elect to satisfy its obligation to repay the principal amount of the convertible debentures, which are
to be redeemed or which have matured, by issuing shares to the holders of the convertible debentures. The number of shares to be
issued will be determined by dividing the indebtedness related to the convertible debenture by 95% of the then current market price
on the day preceding the date fixed for redemption or the maturity date, as the case may be.
The Company allocated $4.3 million ($3.1 million net of tax) of the Seventh series debentures into an equity component. During
the year, the Company recorded $0.6 million (October 1, 2022 - $0.6 million) in finance costs for the accretion of the Seventh series
debentures.
The Company incurred underwriting fees and issuance costs of $4.5 million, which are netted against the convertible debenture
liability.
The fair value of the Seventh series convertible unsecured subordinated debentures is measured based on Level 1 of the three-
tier fair value hierarchy and was based upon market quotes for the identical instruments. The fair value as at September 30, 2023 was
approximately $94.4 million (October 1, 2022 - $95.2 million).
22. SENIOR GUARANTEED NOTES
In 2021, the Company issued a private placement of $100 million in the form of senior guaranteed notes (“Notes”) under a note purchase
agreement entered into with certain institutional investors. The Notes are guaranteed and rank pari passu with the existing revolving
credit facility. The Notes are due on April 30, 2031, bear interest at 3.49%, and interest is payable semi-annually in arrears in equal
installments on April 30th and October 30th of each year and represent interest accrued from and including the date of issue of the Notes.
The Notes are classified and measured at amortized cost, using the effective interest method. The valuation model considers the present
value of expected payments, discounted using a risk-adjusted discount rate. The fair value as at September 30, 2023 was approximately
$81.8 million (October 1, 2022 - $85.2 million). The Company must comply with certain financial covenants related to these Notes on a
quarterly basis. The Company was in compliance with the financial covenants at year end.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
117
23. SHARE CAPITAL AND OTHER COMPONENTS OF EQUITY
As of September 30, 2023, a total of 105,096,120 common shares (October 1, 2022 - 104,372,045) were outstanding.
During the year, 724,075 stock options have been exercised for proceeds of $3.5 million and reversal of previously recognized share-based
compensation recorded in contributed surplus of $0.1 million (note 24) (685,122 stock options were exercised for net proceeds of $3.3
million and reversal of previously recognized share-based compensation recorded in contributed surplus of $0.1 million for fiscal 2022).
The Company declared a quarterly dividend of $0.09 per share for fiscal years 2023 and 2022.
The following dividends were declared by the Company:
Dividends
For the fiscal years ended
September 30,
2023
$
37,752
October 1,
2022
$
37,500
On November 29, 2023, the Board of Directors declared a quarterly dividend of $0.09 per share, payable on or before February 1, 2024.
Contributed surplus:
The contributed surplus account is used to record amounts arising on the issue of equity-settled share-based payment awards (see Note
24, Share-based compensation).
Capital management:
The Company's objectives when managing capital are:
•
•
•
•
•
To ensure proper capital investment is done in the manufacturing infrastructure to provide stability and competitiveness of the
operations;
To have stability in the dividends paid to shareholders;
To have appropriate cash reserves on hand to protect the level of dividends made to shareholders; and meet its operations needs to
manage the business;
To maintain an appropriate debt level so that there is no financial constraint on the use of capital, and;
To have an appropriate line of credit, considering its leverage ratio.
The Company typically invests in its operations approximately $25.0 million yearly in capital expenditures. On an exceptional basis, the
Company may invest more than $25.0 million when special capital requirements arise. Management believes that these investments,
combined with approximately $45.0 to $50.0 million spent on average annually on maintenance expenses, allow for the stability of the
manufacturing operations and improve its cost competitiveness through new technology or process procedures.
The Board of Directors aims to ensure proper cash reserves are in place to maintain the current dividend level. Dividends to shareholders
will only be approved after the Directors have carefully assessed a variety of factors that include the overall competitive landscape, volume
and selling margin sustainability, the operating performance and capital requirements of the manufacturing plants and the sustainability
of any increase.
The Company has a $265.0 million revolving credit facility in addition to $100 million senior guaranteed notes that have been issued
in 2021. The Company estimates to use between $140.0 million and $265.0 million of its revolving credit facility to finance its normal
operations during the year.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
118
23. SHARE CAPITAL AND OTHER COMPONENTS OF EQUITY (CONTINUED)
Capital management: (Continued)
The Company monitors, on a quarterly basis, the ratio of total debt to earnings before interest, income taxes, depreciation and amortization,
adjusted for the impact of all derivative financial instruments ("adjusted EBITDA") of the operating company. Through required lenders’
covenants, the debt ratio must be kept below 3.75:1. At year-end, the operating company’s debt ratio was 2.52:1 for fiscal 2023 and 2.29:1
for fiscal 2022.
The Board of Directors of the Company has approved an expansion of the production and logistic capacity of its eastern sugar refining
capacity. The project is expected to provide incremental capacity of 100,000 metric tonnes of refined white sugar, at an estimated cost of
$200 million. The Company is expected to finance the construction of this project using a combination of debt and equity instruments. In
connection with this project the Company has increased its revolving credit facility by $75 million to $340 million on November 1, 2023,
and has negotiated some temporarily reliefs to the covenants associated with such facility during the construction period estimated to be
completed in the first half of fiscal 2026.
The Company does not use equity ratios to manage its capital requirements.
24. SHARE-BASED COMPENSATION
(A) EQUITY-SETTLED SHARE-BASED COMPENSATION:
The Company has reserved and set aside for issuance an aggregate of 6,000,000 common shares (October 1, 2022 – 6,000,000
common shares) at a price equal to the average market price of transactions during the last five trading days prior to the grant date.
Options are exercisable to a maximum of twenty percent of the optioned shares per year, starting after the first anniversary date of
the granting of the options and will expire after a term of ten years. Upon termination, resignation, retirement, death or long-term
disability, all share options granted under the Share Option Plan not vested shall be forfeited.
On December 12, 2022, a total of 666,347 share options were granted at a price of $5.85 per common share to certain executives.
The measurement date fair values were measured based on the Black-Scholes option pricing model. Expected volatility is estimated
by considering historic average share price volatility. The inputs used in the measurement of the fair values of the share-based
payment plans granted for fiscal 2023 are the following:
Total fair value of options
Share price
Exercise price
Expected volatility (weighted average volatility)
Option life (expected weighted average life)
Expected dividends
Weighted average risk-free interest rate (based on government bonds)
$233,000
$5.83
$5.85
14.926% to 16.208%
4 to 6 years
6.17%
2.930% to 3.339%
On December 6, 2021, a total of 802,564 share options were granted at a price of $5.85 per common share to certain executives.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
119
24. SHARE-BASED COMPENSATION (CONTINUED)
(A) EQUITY-SETTLED SHARE-BASED COMPENSATION: (CONTINUED)
The measurement date fair values were measured based on the Black-Scholes option pricing model. Expected volatility is estimated
by considering historic average share price volatility. The inputs used in the measurement of the fair values of the share-based
payment plans granted for fiscal 2022 are the following:
Total fair value of options
Share price
Exercise price
Expected volatility (weighted average volatility)
Option life (expected weighted average life)
Expected dividends
Weighted average risk-free interest rate (based on government bonds)
$227,000
$5.94
$5.85
15.057% to 16.877%
4 to 6 years
6.06%
1.323% to 1.415%
Total share-based compensation expense is amortized over the service period and included in administration and selling expenses
with an offsetting credit to contributed surplus. An expense of $178,000 was recorded for the fiscal year ended September 30, 2023
(October 1, 2022 - $143,000).
The following table summarizes information about the share option plan as of September 30, 2023:
Exercise
price
per
option
Outstanding
number of
options at
October 1,
2022
Options
granted
during
the
period
$4.28
$4.59
$4.68
$5.58
$5.85
$5.85
$6.23
$6.51
200,000
263,200
496,448
375,905
—
—
—
—
—
666,347
802,564
625,322
360,000
—
—
—
Options
exercised
during
the
period
(36,000)
(263,200)
(233,036)
(175,172)
—
(16,667)
Options Outstanding
number of
forfeited
options at
during
the September 30,
2023
period
Weighted
average
remaining
life
Number of
options
exercisable
—
—
—
—
—
—
164,000
—
263,412
200,733
666,347
785,897
6.47
—
6.17
5.18
9.20
8.18
4.18
3.18
n/a
64,000
—
38,012
111,298
—
143,846
585,322
360,000
1,302,478
3,123,439
666,347
(724,075)
(40,000)
3,025,7 1 1
—
—
(40,000)
585,322
—
360,000
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
120
24. SHARE-BASED COMPENSATION (CONTINUED)
(A) EQUITY-SETTLED SHARE-BASED COMPENSATION: (CONTINUED)
The following table summarizes information about the Share Option Plan as of October 1, 2022:
Exercise
price
per
option
Outstanding
number of
options at
October 2,
2021
Options
granted
during
the
period
$4.28
$4.59
$4.68
$5.58
$5.61
$5.85
$6.23
$6.51
200,000
730,000
563,500
447,1 75
80,000
—
—
—
—
—
—
802,564
705,322
360,000
—
—
Options
exercised
during
the
period
—
(466,800)
(67,052)
(71,270)
(80,000)
—
—
—
Options
forfeited
during
the
period
Outstanding
number of
options at
October 1,
2022
Weighted
average
remaining
life
Number of
options
exercisable
—
—
—
—
—
—
200,000
263,200
496,448
375,905
—
802,564
(80,000)
625,322
—
360,000
7.47
2.64
7.17
6.17
—
9.18
5.18
4.18
n/a
50,000
263,200
158,348
197,035
—
—
500,258
360,000
1,528,841
3,085,997
802,564
(685,122)
(80,000)
3,123,439
Options outstanding held by key management personnel amounted to 2,325,487 options as at September 30, 2023 and 2,883,439
options as at October 1, 2022 (see Note 29, Key management personnel).
(B) CASH-SETTLED SHARE-BASED COMPENSATION-PERFORMANCE SHARE UNITS ("PSU"):
The value to be paid-out to each participant will be equal to the result of: the number of PSUs granted to the participant which have
vested, multiplied by the volume weighted average closing price of the Common Shares on the Toronto Stock Exchange (the “TSX”)
for the five trading days immediately preceding the day on which the Company shall pay the value to the participant under the PSU
plan, and such date will in no event occur after December 31 of the third calendar year following the calendar year in which the PSUs
are granted.
The Board of Directors of the Company has the discretion to determine that all or a portion of the PSUs granted to a participant for
which the vesting conditions have not been achieved shall vest to such participant.
Fiscal 2023 grant:
On December 12, 2022, a total of 310,964 PSUs were granted to executives of the Company at a price of $5.85 per units. In addition,
an aggregate of 14,476 PSUs at a weighted-average share price of $5.89 were allocated as a result of the dividend paid since
inception, as the participants also receive dividend equivalents paid in the form of PSUs. As at September 30, 2023, an aggregate
of 325,440 PSUs were outstanding in relation with this grant. These PSUs will vest at the end of the 2023-2025 performance cycle
based on the achievement of total shareholder returns, as set by the Board of Directors. Following the end of a performance cycle,
the Board of Directors will determine, concurrently with the release of the Company’s financial results for the fiscal year ended at the
end of the performance cycle, whether the vesting conditions for the PSUs granted to a participant relating to such performance
cycle have been achieved. Depending on the achievement of the vesting conditions, between 0% and 200% of the PSUs will become
vested. The Board of Directors of the Company has the discretion to determine that all or a portion of the PSUs granted to a
participant, for which the vesting conditions have not been achieved, shall vest to such participant.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
24. SHARE-BASED COMPENSATION (CONTINUED)
(B) CASH-SETTLED SHARE-BASED COMPENSATION-PERFORMANCE SHARE UNITS ("PSU"): (CONTINUED)
121
Fiscal 2023 grant: (continued)
The fair values of the PSUs were established using a Monte Carlo simulation model. The fair value as at grant date was $980,000 and
$260,000 as at September 30, 2023. An expense of $100,000 related to this specific grant was recorded for the year ended
September 30, 2023 in administration and selling expenses. The liabilities arising from these PSUs as at September 30, 2023 were
$100,000.
On December 12, 2022, the Board of Directors established a new PSU program for specific members of the management team
of the Company, excluding executives. In connection with this new program, 95,283 PSUs were granted to specific members of the
management team at a price of $5.85 per units. Under the approved program, these PSUs vest in equal tranches over a three-year
period (one-third per year) based on certain performance measures, and are payable in cash three years after the grant date.
On September 30, 2023, none of the PSUs granted under this new program had vested. The value of the payout is determined by
multiplying the number of PSUs expected to vest at the payout date by the volume weighted average closing price of the Common
Shares on the TSX for the five trading days immediately preceding the day on which the Company shall pay the value to the
participant under the new PSU plan, and such date will in no event occur after December 31 of the third calendar year following the
calendar year in which the PSUs are granted.
The fair value of the PSUs under this new plan is recognized over the vesting period and is adjusted based of the applicable terms
for the performance-based components. An expense of $207,000 was recorded for year ended September 30, 2023 in administration
and selling expenses. The liabilities arising from the PSUs as at September 30, 2023 were $207,000.
Fiscal 2022 grant:
On December 6, 2021, a total of 386,709 PSUs were granted to executives of the Company. In addition, an aggregate of 42,563 PSUs
at a weighted-average share price of $5.99 were allocated as a result of the dividend paid during the quarters since inception, as the
participants also receive dividend equivalents paid in the form of PSUs. As at September 30, 2023, an aggregate of 429,272 PSUs
was outstanding. These PSUs will vest at the end of the 2022-2024 performance cycle.
The fair values were established using the Monte Carlo model. The fair value as at grant date was $1,493,000 and $1,361,000 as at
September 30, 2023 (October 1, 2022 - $2,683,000). A gain of $318,000 was recorded for the year ended September 30, 2023
(October 1, 2022 – expense of $1,359,000) in administration and selling expenses. The liabilities arising from the PSUs as at
September 30, 2023 were $1,041,000 (October 1, 2022 - $1,359,000).
Fiscal 2021 grant:
On December 7, 2020, a total of 491,412 PSUs were granted to executives of the Company. In addition, an aggregate of 98,920 PSUs
at a weighted-average share price of $5.85 were allocated as a result of the dividend paid during the quarters since inception, as the
participants also receive dividend equivalents paid in the form of PSUs. As at September 30, 2023, an aggregate of 590,332 PSUs
was outstanding. These PSUs will vest at the end of the 2021-2023 performance cycle.
The fair values were established using the Monte Carlo model. The fair value as at grant date was $664,000 and $3,908,000 as at
September 30, 2023 (October 1, 2022 - $4,863,000). An expense of $29,000 was recorded for the year ended September 30, 2023
(October 1, 2022 – expense of $3,762,000) in administration and selling expenses. The liabilities arising from the PSUs as at
September 30, 2023 were $3,849,000 (October 1, 2022 - $3,820,000).
Fiscal 2020 grant:
During fiscal 2023, the grant related to fiscal 2020 was cash settled for an amount of $640,000, and a gain of $15,000 was recorded
for the year ended September 30, 2023 (October 1, 2022 – expense of $648,000) in administration and selling expenses.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
122
25. COMMITMENTS
As at September 30, 2023, the Company had commitments to purchase a total of 901,000 metric tonnes of raw cane sugar up to fiscal
2025 (October 1, 2022 - 585,000 up to fiscal 2024), of which 228,136 metric tonnes had been priced (October 1, 2022 - 374,479), for a total
dollar commitment of $187.2 million (October 1, 2022 - $224.2 million). In addition, the Company has a commitment of approximately $50.4
million (October 1, 2022 - $43.5 million) for sugar beets to be harvested and processed in fiscal 2024.
TMTC has $4.1 million (October 1, 2022 - $2.4 million) remaining to pay related to an agreement to purchase approximately $16.1 million
(4.7 million pounds) (October 1, 2022 - $2.4 million; 1.2 million pounds) of maple syrup from the PPAQ in fiscal 2023. In order to secure bulk
syrup purchases, the Company issued an insurance bond for an amount of $15.6 million in favor of the PPAQ (October 1, 2022 – insurance
bond in the amount of $17.4 million). The insurance bond expires on March 1, 2024.
During the fiscal year ended September 30, 2023, the Company entered into capital commitments to complete its capital projects for a
total value of $19.9 million (October 1, 2022 - $13.6 million) to be incurred in fiscal 2024. In addition, subsequent to year end, the Company
entered into commitments related to the expansion project for a total value of $24.0 million.
26. CONTINGENCIES
The Company, in the normal course of business, becomes involved from time to time in litigation and claims. While the final outcome with
respect to claims and legal proceedings pending as at September 30, 2023 cannot be predicted with certainty, management believes that
no provision was required and that the financial impact, if any, from claims related to normal business activities will not be material.
27. EARNINGS PER SHARE
Reconciliation between basic and diluted earnings (loss) per share is as follows:
Basic earnings (loss) per share:
Net earnings (loss)
For the fiscal years ended
September 30,
2023
$
October 1,
2022
$
51,789
(16,568)
Weighted average number of shares outstanding
104,561,422
103,904,615
Basic earnings (loss) per share
Diluted earnings (loss) per share:
Net earnings (loss)
Plus impact of convertible unsecured subordinated debentures and share options
Weighted average number of shares outstanding:
Basic weighted average number of shares outstanding
Plus impact of convertible unsecured subordinated debentures and share options
0.50
51,789
6,314
58,103
(0.16)
(16,568)
—
(16,568)
104,561,422
28,795,036
133,356,458
103,904,615
—
103,904,615
Diluted earnings (loss) per share
0.44
(0.16)
As at October 1, 2022, the share options, the Sixth series debentures and the Seventh series debentures representing 18,243,788 common
shares, were excluded from the calculation of diluted earnings (loss) per share as they were deemed anti-dilutive. There are no exclusions
for the calculation of diluted earnings (loss) per share for the period ending September 30, 2023.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
123
28. SUPPLEMENTARY CASH FLOW INFORMATION
September 30,
2023
$
October 1,
2022
$
October 2,
2021
$
Non-cash transactions:
Additions of property, plant and equipment and intangible assets
included in trade and other payables
Increase in asset retirement obligation provision included in
property, plant and equipment
Additions to right-of-use assets
3,951
350
12,093
1,958
100
8,842
1,638
3,231
2,724
29. KEY MANAGEMENT PERSONNEL
The Board of Directors as well as the executive team, which include the President and all the Vice-Presidents, are deemed to be key
management personnel of the Company. The following is the compensation expense for key management personnel:
Salaries and short-term benefits
Attendance fees for members of the Board of Directors
Post-employment benefits
Share-based compensation (note 24)
30. PERSONNEL EXPENSES
Wages, salaries and employee benefits
Expenses related to defined benefit plans (note 20)
Expenses related to defined contributions plans
Share-based compensation (note 24)
For the fiscal years ended
September 30,
2023
October 1,
2022
$
5,612
1,188
143
181
7,124
$
4,431
1,076
152
5,922
11,581
For the fiscal years ended
September 30,
2023
$
118,595
3,206
6,778
181
128,760
October 1,
2022
$
107,850
4,733
6,192
5,922
124,697
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
124
30. PERSONNEL EXPENSES (CONTINUED)
The personnel expenses were charged to the consolidated statements of earnings (loss) and comprehensive income or capitalized in the
consolidated statements of financial position as follows:
Cost of sales
Administration and selling expenses
Distribution expenses
Property, plant and equipment
For the fiscal years ended
September 30,
2023
October 1,
2022
$
98,610
27,606
2,14 4
128,360
400
128,760
$
94,380
28,040
1,984
124,404
293
124,697
31. RELATED PARTIES
Lantic has outstanding redeemable Class B special shares of $44.5 million that are retractable and can be settled at Lantic’s option by
delivery of a note receivable from Belkorp Industries Inc., having the same value. The note receivable bears no interest and has no fixed
terms of repayment. The Class B special shares are entitled to vote, but on a pro rata basis at a meeting of shareholders of Lantic. Under
the terms of a voting trust agreement between Belkorp Industries Inc. and Rogers, Rogers is entitled to vote the Class B special shares
so long as they remain outstanding. Due to the fact that Lantic has the intent and the legal right to settle the note receivable with the
redeemable Class B special shares, these amounts have been offset and, therefore, are not presented on the consolidated statements of
financial position.
Belkorp Industries Inc. also controls, through Lantic Capital, the two Lantic Class C shares issued and outstanding. The Class C shares
entitle Lantic Capital to elect five of the seven directors of Lantic, but have no other voting rights at any meetings of shareholders of
Lantic, except as may be required by law.
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
125
32. SEGMENTED INFORMATION
The Company has two operating and reportable segments, sugar and maple products. The principal business activity of the sugar
segment is the refining, packaging and marketing of sugar products. The Maple products segment processes pure maple syrup and
related maple products. The reportable segments are managed independently as they require different technology and capital resources.
Performance is measured based on the segments’ gross margins and results from operating activities. These measures are included in the
internal management reports that are reviewed by the Company’s President and CEO, and management believes that such information
is the most relevant in the evaluation of the results of the segments.
Transactions between reportable segments are interest receivable (payable), which are eliminated upon consolidation.
Revenues
Cost of sales
Gross margin
Depreciation and amortization
Results from operating activities
Additions to property, plant and equipment
and intangible assets, net of disposals
Increase in asset retirement obligation provision
included in property, plant and equipment
Additions to right-of-use assets
Sugar
$
893,482
749,085
144,397
19,511
88,915
36,151
350
11,667
For the fiscal year ended September 30, 2023
Maple
products
Corporate and
eliminations
$
211,231
189,902
21,329
6,775
8,453
951
—
78
$
—
—
—
—
(2,405)
—
—
—
Total assets
Total liabilities
For the fiscal year ended September 30, 2023
Sugar
$
925,990
(1,014,984)
Maple
products
$
199,866
(147,478)
Corporate and
eliminations
$
(164,955)
508,457
Total
$
1,104,713
938,987
165,726
26,286
94,963
37,102
350
11,745
Total
$
960,901
(654,005)
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report
126
32. SEGMENTED INFORMATION (CONTINUED)
Revenues
Cost of sales
Gross margin
Depreciation and amortization
Results from operating activities
Additions to property, plant and equipment
and intangible assets, net of disposals
Increase in asset retirement obligation provision
included in property, plant and equipment
Additions to right-of-use assets
Total assets
Total liabilities
Sugar
$
792,200
676,328
115,872
19,380
62,344
22,642
100
8,842
Sugar
$
871,332
(972,962)
For the fiscal year ended October 1, 2022
Maple
products
$
213,934
199,001
14,933
6,768
(47,145)
1,364
—
—
Corporate and
eliminations
$
—
—
—
—
(1,886)
—
—
—
For the fiscal year ended October 1, 2022
Maple
products
$
232,402
(179,598)
Corporate and
eliminations
$
(165,778)
506,023
Total
$
1,006,134
875,329
130,805
26,148
13,313
24,006
100
8,842
Total
$
937,956
(646,537)
Revenues were derived from customers in the following geographic areas:
Canada
United States
Europe
Other
Substantially all of the non-current assets are located in Canada.
For the fiscal years ended
September 30,
2023
$
893,043
146,989
36,746
27,935
October 1,
2022
$
783,132
151,536
34,185
37,281
1,104,713
1,006,134
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc.
127
ROGERS SUGAR INC.
Corporate Information
DIRECTORS
M. Dallas H. Ross, (1) (3)
Chairman and General Partner
Kinetic Capital Limited Partnership
Dean Bergmame, (2) (3)
Director
Gary Collins, (2) (3)
Director
Daniel Lafrance, (1) (2)
Director
Shelley Potts,
Director
Stephanie Wilkes, (3)
Director
(1) Nominees to Board of Directors of Lantic Inc.
(2) Audit Committee Members
(3) Environmental, Social and Governance Committee Members
LEGAL COUNSEL
Davies, Ward, Phillips & Vineberg
Montreal, Quebec
TRADING SYMBOL
RSI
STOCK EXCHANGE LISTING
The Toronto Stock Exchange
ANNUAL MEETING
The annual meeting of Shareholders
will be held virtually February 7, 2024
at 1:00pm PST
ADMINISTRATIVE OFFICE
4026 Notre-Dame Street East
Montreal, Quebec
H1W 2K3
Tel: (514) 527-8686
Fax: (514) 527-8406
REGISTRAR & TRANSFER AGENT
Computershare Investor Services Inc.
Toronto, Ontario
AUDITORS
KPMG LLP
Montreal, Quebec
INVESTOR RELATIONS
Jean-Sébastien Couillard
Toll-free: 844 913-4350
Tel (local): 514 940-4350
Email: investors@lantic.ca
WEBSITE
lanticrogers.com
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial Statements2023 Annual Report MAPLE FACILITIES
1150, rue Arthur-Danis
Granby, Québec
J2J 0T3
Tel: 450 777-4464
331 rue Principale,
Saint-Honoré-de-Shenley, Québec
G0M 1V0
Tel: 418 485-7777
21 rue Industrielle,
Dégelis, Québec
G5T 2J8
Tel: 418 853-6265
PO Box 58, Websterville
Vermont, 05678, USA
Tel: 802 479-1747
Designed and written by
MBC Capital Markets Advisors
Printed in Canada
128
OPERATING COMPANIES
Corporate Information — Management
Rod Kirwan,
Vice President,
Sales and Marketing
Louis Turenne,
Vice President & General Manager,
The Maple Treat Corporation
AUDITORS
KPMG LLP
Montreal, Quebec
MANAGEMENT OFFICE
4026 Notre-Dame Street East
Montreal, Quebec
H1W 2K3
Tel: 514 527-8686
SUGAR FACILITIES
123 Rogers Street,
Vancouver, British Columbia
V6B 3N2
Tel: 604 253-1131
5405 – 64th Street
Taber, Alberta
T1G 2C4
Tel: 403 223-3535
198 New Toronto Street
Toronto, Ontario
M8V 2E8
Tel: 416 252-9435
4026 Notre-Dame Street East
Montreal, Quebec
H1W 2K3
Tel: 514 527-8686
DIRECTORS
M. Dallas H. Ross, (1)
Chairman and General Partner
Kinetic Capital Limited Partnership
Gary Collins, (2)
Director
Michael Heskin, (2)
Vice President Finance and CFO
Belkorp Industries Inc.
Donald G. Jewell,
Managing Partner
RIO Industrial
Daniel Lafrance, (1) (2)
Director
William Maslechko,
Partner
Burnet, Duckworth & Palmer LLP
Michael Walton,
President and Chief Executive Officer
Lantic Inc.
(1) Rogers Sugar Inc. Nominees
(2) Audit Committee Members
OFFICERS
Michael Walton,
President and Chief Executive Officer
Jean-Sébastien Couillard,
Vice President Finance,
Chief Financial Officer
and Corporate Secretary
Patrick Dionne,
Vice President, Operations Services, Supply
Chain & Sustainability
Adam James
Vice President, Sugar Manufacturing
Jean-François Khalil,
Vice President,
Human Resources
(In thousands of dollars except as noted and per share amounts)Notes to Consolidated Financial StatementsRogers Sugar Inc. R
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