HOSF 1277
Final Exam 30%
Prepared by: David Cleary
Prepared for: George Brown College
Course: HOSF 1277
HOSF 1277 Final Exam
Cara Foods
Instructions
In your previously created groups you are to analyze and interpret CARA Foods most recent annual report. A copy of the interim first quarter XXXXXXXXXXreport can be found on Blackboard in the Final Exam folder.
More specifically, as a group you are to evaluate and show how CARA is doing financially using financial ratios and other types of analysis. From this analysis you should present a decision as to whether or not you would invest in CARA Foods and why.
As a group, you are to submit a minimum 2-page report detailing your decision, using your analysis and evaluation as justification for that decision. Please note: your report should show the analytical calculations of your analysis in either the body of the report or in an appendix. Should you include the calculations in appendices you should reference them in the body of your report for easy reference.
Your report should be at least 2 pages and should be completed in times new roman, sized 12 font using headers with cover page. One submission per group is required and as such the cover page should contain the names of the group members.
Final Exam Ru
ic
Criteria
0-3 Below Standard
4-6 Approaches Standard
7-8 Meets Standard
9-10 Above Standard
The group demonstrates a knowledge and understanding of liquidity.
The group demonstrates a knowledge and understanding of leverage and solvency.
The group demonstrates a knowledge and understanding of profitability.
The group demonstrates a knowledge and understanding of qualitative concerns.
The group demonstrates a knowledge and understanding of efficiency.
The group presented a thorough examination of CARA Foods from a potential investors perspective.
The group proposed an investment decision supported by evidence.
Adheres to format requirements and contains no spelling or grammatical issues.
Totals
/80 points
Q1 Financials 2018 (IFRS) Apr 27.xlsx
Cara Operations Limited
Condensed Consolidated Interim Financial Statements (unaudited)
For the 13 weeks ended April 1, 2018 and March 26, 2017
Cara Operations Limited
Condensed Consolidated Interim Statements of Earnings and Comprehensive Income
For the 13 weeks ended April 1, 2018 and March 26, 2017
(in thousands of Canadian dollars, except where otherwise indicated)
(note 3)
Sales (note 6) $ 202,146 $ 156,963
Franchise revenues (note 7) 44,396 41,588
Total gross revenue $ 246,542 $ 198,551
Cost of inventories sold (84, XXXXXXXXXX,597)
Selling, general and administrative expenses (note XXXXXXXXXX, XXXXXXXXXX,087)
Impairment of assets (note XXXXXXXXXX,184)
Restructuring and other (note XXXXXXXXXX
Operating income $ 30,787 $ 30,708
Net interest expense and other financing charges (note 10) (3,317) (3,042)
Share of loss from investment in joint ventures XXXXXXXXXX)
Earnings before change in fair value and income taxes $ 27,072 $ 27,543
Change in fair value of exchangeable partnership units 2,256 -
Earnings before income taxes $ 29,328 $ 27,543
Income taxes (note 11)
Cu
ent (2,660) (3,171)
Defe
ed (expense) recovery (5,131) 19,472
Net earnings $ 21,537 $ 43,844
Net earnings attributable to
Shareholders of the Company $ 21,699 $ 43,986
Non-controlling interest XXXXXXXXXX)
$ 21,537 $ 43,844
Statement of comprehensive income
Net earnings $ 21,537 $ 43,844
Other comprehensive income 283 -
Total comprehensive income $ 21,820 $ 43,844
Net earnings per share attributable to the Common
Shareholders of the Company (note 22) (in dollars)
Basic earnings per share $ 0.36 $ 0.73
Diluted earnings per share $ 0.35 $ 0.71
April 1,
2018
March 26,
2017
See accompanying notes to the unaudited condensed consolidated interim financial statements. Page | 1
Cara Operations Limited
Condensed Consolidated Interim Statements of Total Equity
For the 13 weeks ended April 1, 2018 and March 26, 2017
(in thousands of Canadian dollars, except where otherwise indicated)
Balance at December 31, XXXXXXXXXX,572 $ 690,968 $ 11,957 $ - $ (5,326) $ (90,179) $ 607,420
Net earnings XXXXXXXXXX,699 21,699
Other comprehensive income XXXXXXXXXX
The Keg merger (note XXXXXXXXXX,728) 1,793 (35, XXXXXXXXXX,052)
Dividends XXXXXXXXXX,660) (6,660)
Share re-purchase (note XXXXXXXXXX XXXXXXXXXX)
Issuance of common stock (note 21) 3,801 94, XXXXXXXXXX,728
Stock options exercised (note XXXXXXXXXX XXXXXXXXXX
Stock-based compensation (note XXXXXXXXXX525
3,791 94, XXXXXXXXXX,728) 2,076 (20, XXXXXXXXXX,993)
Balance at April 1, XXXXXXXXXX,363 $ 785,215 $ 12,447 $ (216,728) $ (3,250) $ (110,257) $ 467,427
Balance at December 25, XXXXXXXXXX,982 $ 723,724 $ 9,764 $ - $ (3,790) $ (175,756) $ 553,942
Net earnings and comprehensive income XXXXXXXXXX,986 43,986
Dividends XXXXXXXXXX,099) (6,099)
Stock options exercised XXXXXXXXXX119
Stock-based compensation (note XXXXXXXXXX545
XXXXXXXXXX,887 38,551
Balance at March 26, XXXXXXXXXX,996 $ 723,870 $ 10,282 $ - $ (3,790) $ (137,869) $ 592,493
Attributable to the Common Shareholders of the Company
Attributable to the Common Shareholders of the Company
Total equity
Total equity
# of shares
(in thousands)
Share capital
(note 21)
Contributed
surplus Deficit
# of shares
(in thousands)
Share capital
(note 21)
Contributed
surplus Deficit
Accumulated othe
comprehensive loss
Accumulated othe
comprehensive loss
Merge
eserve
Merge
eserve
See accompanying notes to the unaudited condensed consolidated interim financial statements. Page | 2
Cara Operations Limited
Condensed Consolidated Interim Balance Sheets
As at April 1, 2018, December 31, 2017 and March 26, 2017
(in thousands of Canadian dollars) As at As at As at
April 1,
2018
December 31,
2017
March 26,
2017
Assets
Cu
ent Assets
Cash $ 47,420 $ 41,971 $ 13,880
Accounts receivable (note 25) 72,002 60,991 65,749
Inventories (note 12) 34,472 26,321 27,015
Assets held for sale - - 2,998
Cu
ent taxes receivable - - 54
Prepaid expenses and other assets 15,272 8,573 5,429
Total Cu
ent Assets $ 169,166 $ 137,856 $ 115,125
Long-term receivables (note 13) 40,660 40,033 40,826
Property, plant and equipment (note XXXXXXXXXX,919 336,210 325,429
Investment in the Keg Limited Partnership (note XXXXXXXXXX,750 - -
Brands and other assets (note XXXXXXXXXX,102 614,968 592,720
Goodwill (note XXXXXXXXXX,111 191,111 190,204
Defe
ed tax asset (note 11) 39,709 23,361 37,894
Total Assets $ 1,609,417 $ 1,343,539 $ 1,302,198
Liabilities
Cu
ent Liabilities
Accounts payable and accrued liabilities $ 119,031 $ 86,131 $ 100,045
Provisions (note 17) 6,332 6,959 6,621
Gift card liability 106,905 57,495 35,803
Income taxes payable 2,304 4,107 5,607
Cu
ent portion of long-term debt (note 18) 6,916 2,916 2,527
Total Cu
ent Liabilities $ 241,488 $ 157,608 $ 150,603
Long-term debt (note XXXXXXXXXX,879 401,700 379,280
Note payable to The Keg Royalties Income Fund (note 26) 57,000 - -
Provisions (note 17) 8,157 8,171 9,534
Other long-term liabilities (note 19) 92,434 67,842 67,838
Defe
ed gain on sale of The Keg Rights 135,478 - -
Defe
ed tax liability (note 11) 97,554 100,798 102,450
Total Liabilities $ 1,141,990 $ 736,119 $ 709,705
Shareholders' Equity
Common share capital (note 21) $ 785,215 $ 690,968 $ 723,870
Contributed surplus 12,447 11,957 10,282
Merger reserve (note XXXXXXXXXX,728) - -
Accumulated other comprehensive loss (3,250) (5,326) (3,790)
Deficit (110, XXXXXXXXXX, XXXXXXXXXX,869)
Total Shareholders' Equity $ 467,427 $ 607,420 $ 592,493
Total Liabilities and Equity $ 1,609,417 $ 1,343,539 $ 1,302,198
Commitments, contingencies and guarantees (note 24)
Subsequent events (note 28)
See accompanying notes to the unaudited condensed consolidated interim financial statements. Page | 3
Cara Operations Limited
Condensed Consolidated Interim Statements of Cash Flows
For the 13 weeks ended April 1, 2018 and March 26, 2017
(in thousands of Canadian dollars)
Cash from (used in)
Operating Activities
Net earnings $ 21,537 $ 43,844
Depreciation and amortization 14,595 11,522
Net gain on disposal of property, plant and equipment XXXXXXXXXX)
Loss (gain) on early buyout/cancellation of equipment rental contracts XXXXXXXXXX)
Impairment of assets 578 1,184
Net interest expense and other financing charges (note 10) 3,317 3,042
Stock based compensation XXXXXXXXXX
Income taxes (paid) received (4,463) 2,300
Change in assets held for sale - (2,998)
Change in restructuring provision XXXXXXXXXX)
Change in defe
ed tax (note 11) 5,076 (19,472)
Change in franchise onerous contract provision (note XXXXXXXXXX)
Change in fair value of Exchangable Keg Partnership units (2,256) -
Other non-cash items 1,841 (1,934)
Net change in non-cash operating working capital (note XXXXXXXXXX,388) (8,558)
Cash flows (used in) from operating activities XXXXXXXXXX,434
Investing Activities
Common control transaction, net of cash assumed (note XXXXXXXXXX,753) 1,521
Purchase of property, plant and equipment (6, XXXXXXXXXX,224)
Proceeds on disposal of property, plant and equipment 32 527
Proceeds on early buyout of equipment rental contracts 50 100
Share of loss from investment in joint ventures XXXXXXXXXX
Additions to other assets XXXXXXXXXX)
Change in long-term receivables XXXXXXXXXX
Cash flows used in investing activities (78,866) (7,641)
Financing Activities
Issuance of long-term credit facility, net of financing costs (note XXXXXXXXXX,000 -
Repayment of long-term credit facility (note XXXXXXXXXX, XXXXXXXXXX,000)
Issuance of subordinated voting common shares (note XXXXXXXXXX
Share re-purchase (note XXXXXXXXXX) -
Change in finance leases (note XXXXXXXXXX
Interest paid (2,450) (2,308)
Cash flows from (used in) financing activities 85,294 (33,677)
Change in cash during the period 5,601 (12,884)
Foreign cu
ency translation adjustment (152) -
Cash - Beginning of period 41,971 26,764
Cash - End of period $ 47,420 $ 13,880
April 1,
2018
March 26,
2017
See accompanying notes to the unaudited condensed consolidated interim financial statements. Page | 4
Cara Operations Limited
Notes to the Condensed Consolidated Interim Financial Statements
For the 13 weeks ended April 1, 2018 and March 26, 2017
Page | 5
1 Nature and description of the reporting entity
Cara Operations Limited is a Canadian Company incorporated under the Ontario Business Corporations Act and
is a Canadian full service restaurant operator and franchisor.
The Company’s subordinate voting shares are listed on the Toronto Stock Exchange under the stock symbol