Full Press Release Details
CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2021 and 2020
(Expressed in thousands of Canadian dollars)
Management s Responsibility for Financial Reporting
The preparation and presentation of the accompanying consolidated financial statements of Alcanna Inc. ( the Company ), which have been prepared in
accordance with International Financial Reporting Standards, are the responsibility of management and have been approved by the Board of Directors.
consolidated financial statements include certain amounts that are based on the best estimates and judgments of management and in their opinion present fairly, in all material respects, Alcanna Inc. s financial position, financial performance
and cash flows. The Company s accounting procedures and related systems of internal controls are designed to provide reasonable assurance that its assets are safeguarded and its financial information is reliable.
The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, the Company s external auditor. The external auditor is
responsible for examining the consolidated financial statements and expressing its opinion on the fairness of the financial statements in accordance with International Financial Reporting Standards. The auditor s report outlines the scope of
its audit examination and states its opinion.
The Board of Directors, through the Audit Committee, is responsible for overseeing management s
responsibility for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. The Audit Committee meets regularly with management and the external auditor to satisfy itself that each group is
discharging its responsibilities with respect to internal controls and financial reporting. The Audit Committee reports its findings to the Board of Directors for their consideration when approving the consolidated financial statements for issuance
to the shareholders. The external auditor has full and open access to the Audit Committee, with and without the presence of management. The Audit Committee also considers, for review by the Board of Directors and approval by the shareholders, the
engagement or re-appointment of the external auditor.
| Signed Zachary George | Signed Jim Keough | |||
| Zachary George | Jim Keough | |||
| Chief Executive Officer | Chief Financial Officer |
Report of Independent Auditors
To the Shareholder of Alcanna Inc.
We have audited the accompanying consolidated financial statements of Alcanna Inc. and its subsidiaries (the Company ), which comprise the
consolidated statements of financial position as of December 31, 2021 and 2020, and the related consolidated statements of changes in equity, profit and loss, comprehensive income and loss, and cash flows for the years then ended, including the
related notes (collectively referred to as the consolidated financial statements ).
In our opinion, the accompanying consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the financial performance and its cash flows for the years then ended in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America ( US GAAS ). Our responsibilities
under those standards are further described in the Auditors Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical
responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated 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
Company s ability to continue as a going concern for at least, but not limited to, 12-months from the end of the reporting period, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
PricewaterhouseCoopers LLP
Stantec Tower, 10220 103 Avenue NW, Suite 2200, Edmonton, Alberta, Canada T5J 0K4
T: +1 780 441 6700, F: +1 780 441 6776
PwC refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Auditors Responsibilities for the Audit of the Consolidated 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 auditors report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will
always detect a material misstatement when it exists. 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. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the
financial statements.
In performing an audit in accordance with US GAAS, we:
communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
| /s/PricewaterhouseCoopers LLP |
| Chartered Professional Accountants |
| Edmonton, Alberta, Canada |
| September 19, 2022 |
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
| Note | As at December 31, 2021 $ | As at December 31, 2020 $ | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash | 42,808 | 60,885 | ||||||||||
| Receivables | 27 | 1,517 | 3,260 | |||||||||
| Income taxes recoverable | 34 | 5,194 | ||||||||||
| Inventory | 6 | 95,794 | 88,542 | |||||||||
| Prepaid expenses and deposits | 4,311 | 5,436 | ||||||||||
| Assets held for sale | 5 | 35,935 | ||||||||||
| 144,464 | 199,252 | |||||||||||
| Deposits | 1,229 | 975 | ||||||||||
| Deferred tax assets | 15 | 7,699 | 17,637 | |||||||||
| Property and equipment | 7 | 86,021 | 74,074 | |||||||||
| Intangible assets | 8 | 5,374 | 6,328 | |||||||||
| Right-of-use assets | 9 | 175,937 | 174,451 | |||||||||
| Goodwill | 10 | 33,869 | 14,599 | |||||||||
| 454,593 | 487,316 | |||||||||||
| Liabilities | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable and accrued liabilities | 27 | 24,955 | 32,103 | |||||||||
| Redemption obligation | 11 | 1,128 | ||||||||||
| Current portion of lease liabilities | 9 | 18,101 | 15,703 | |||||||||
| Warrant liabilities | 17 | 81 | ||||||||||
| Liabilities directly associated with assets held for sale | 5 | 13,483 | ||||||||||
| 43,137 | 62,417 | |||||||||||
| Long-term debt | 12 | 75,883 | ||||||||||
| Lease liabilities | 9 | 217,536 | 219,301 | |||||||||
| 260,673 | 357,601 | |||||||||||
| Shareholders equity: | ||||||||||||
| Equity attributable to shareholders | 162,711 | 129,592 | ||||||||||
| Equity attributable to non-controlling interests | 4, 19 | 31,209 | 123 | |||||||||
| 193,920 | 129,715 | |||||||||||
| 454,593 | 487,316 | |||||||||||
| Subsequent events | 29 |
The accompanying notes are an integral part of the consolidated financial statements.
Approved on behalf of the Board of Directors:
| Signed Bryan Pinney | Signed Zachary George | |||
| Bryan Pinney | Zachary George | |||
| Director | Director |
Consolidated Statements of Changes in Equity
(in thousands of Canadian dollars)
| Attributable to Shareholders of the Company | ||||||||||||||||||||||||||||||||
| Share capital (note 16) $ | Equity component of convertible debentures $ | Contributed surplus $ | Accumulated other comprehen- sive income $ | Deficit $ | Total $ | Non- controlling interest (note 19) $ | Total equity $ | |||||||||||||||||||||||||
| Opening balance January 1, 2020 | 384,181 | 3,006 | 188,829 | 13,846 | (515,839 | ) | 74,023 | 694 | 74,717 | |||||||||||||||||||||||
| Net earnings (loss) for the year | 68,268 | 68,268 | (127 | ) | 68,141 | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | 464 | 464 | 464 | |||||||||||||||||||||||||||||
| Comprehensive income (loss) for the period | 464 | 68,268 | 68,732 | (127 | ) | 68,605 | ||||||||||||||||||||||||||
| Transaction with non-controlling interests (note 4) | 13,000 | (12,654 | ) | 346 | (346 | ) | ||||||||||||||||||||||||||
| Share-based payments | 801 | 801 | 801 | |||||||||||||||||||||||||||||
| Dividends declared by subsidiaries | (98 | ) | (98 | ) | ||||||||||||||||||||||||||||
| Reclassification of accumulated translation differences on sale (note 5) | (14,310 | ) | (14,310 | ) | (14,310 | ) | ||||||||||||||||||||||||||
| Transactions with owners | 13,000 | (11,853 | ) | (14,310 | ) | (13,163 | ) | (444 | ) | (13,607 | ) | |||||||||||||||||||||
| Balance December 31, 2020 | 397,181 | 3,006 | 176,976 | (447,571 | ) | 129,592 | 123 | 129,715 | ||||||||||||||||||||||||
| Net earnings and comprehensive income (loss) for the year | 38,576 | 38,576 | (6,709 | ) | 31,867 | |||||||||||||||||||||||||||
| Business combination (note 4) | 200 | 200 | 22,750 | 22,950 | ||||||||||||||||||||||||||||
| Issuance of common shares by subsidiaries, net of share issuance costs (note 4) | 23,148 | 23,148 | 15,099 | 38,247 | ||||||||||||||||||||||||||||
| Share-based payments (note 22) | 1,771 | 1,771 | 1,771 | |||||||||||||||||||||||||||||
| Settlement of equity-based payments | 203 | (932 | ) | (729 | ) | (729 | ) | |||||||||||||||||||||||||
| Repurchase of common shares through substantial issuer bid, net of transaction costs (note 16) | (38,144 | ) | 7,772 | (30,372 | ) | (30,372 | ) | |||||||||||||||||||||||||
| Redemption of convertible unsecured subordinated debentures (note 12) | 25 | (3,006 | ) | 3,006 | 25 | 25 | ||||||||||||||||||||||||||
| Warrants transferred to contributed surplus (note 17) | 1,121 | 1,121 | 1,121 | |||||||||||||||||||||||||||||
| Repurchase of common shares through normal course issuer bid, net of transaction costs (note 16) | (948 | ) | 327 | (621 | ) | (621 | ) | |||||||||||||||||||||||||
| Dividends declared by subsidiaries | (54 | ) | (54 | ) | ||||||||||||||||||||||||||||
| Transactions with owners | (38,864 | ) | (3,006 | ) | 36,413 | (5,457 | ) | 37,795 | 32,338 | |||||||||||||||||||||||
| Balance December 31, 2021 | 358,317 | 213,389 | (408,995 | ) | 162,711 | 31,209 | 193,920 |
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Profit and Loss
Years Ended December
(in thousands of Canadian dollars, except for per share amounts)
| Note | 2021 $ | 2020 $ | ||||||||
| Sales | 726,272 | 680,291 | ||||||||
| Cost of sales | 567,985 | 522,234 | ||||||||
| Gross margin | 158,287 | 158,057 | ||||||||
| Selling and distribution expenses | 24 | 92,600 | 86,598 | |||||||
| Administrative expenses | 25 | 32,757 | 24,263 | |||||||
| Operating profit before depreciation, remeasurements and other costs | 32,930 | 47,196 | ||||||||
| Depreciation and amortization | 33,773 | 29,030 | ||||||||
| Impairment, lease remeasurements and other costs | 21 | 2,453 | (4,482 | ) | ||||||
| Operating (loss) profit | (3,296 | ) | 22,648 | |||||||
| Finance costs | 13 | 19,468 | 21,877 | |||||||
| Net loss on foreign exchange from financing activities | 77 | 163 | ||||||||
| Net (gain) loss on fair value adjustments | 14 | (105 | ) | 2,393 | ||||||
| Loss before income taxes | (22,736 | ) | (1,785 | ) | ||||||
| Income tax expense (recovery) | ||||||||||
| Current | 15 | 545 | (5,565 | ) | ||||||
| Deferred | 15 | 4,779 | (5,931 | ) | ||||||
| 5,324 | (11,496 | ) | ||||||||
| Net (loss) earnings from continuing operations | (28,060 | ) | 9,711 | |||||||
| Net earnings from discontinued operations | 5 | 59,927 | 58,430 | |||||||
| Net earnings for the year | 31,867 | 68,141 | ||||||||
| Net earnings (loss) attributable to: | ||||||||||
| Equity shareholders | 38,576 | 68,268 | ||||||||
| Non-controlling interest | (6,709 | ) | (127 | ) | ||||||
| 31,867 | 68,141 | |||||||||
| Per share data attributable to equity shareholders | ||||||||||
| Basic (loss) earnings per share from continuing operations | 20 | (0.57 | ) | 0.25 | ||||||
| Diluted (loss) earnings per share from continuing operations | 20 | (0.57 | ) | 0.24 | ||||||
| Basic earnings per share | 20 | 1.02 | 1.72 | |||||||
| Diluted earnings per share | 20 | 1.02 | 1.69 |
The accompanying notes are an integral part of the consolidated financial statements.
Consolidated Statements of Comprehensive Income and Loss
Ended December 31, 2021 and 2020
(in thousands of Canadian dollars)
| Note | 2021 $ | 2020 $ | ||||||||||
| Net earnings for the year | 31,867 | 68,141 | ||||||||||
| Other comprehensive income | ||||||||||||
| Items that may be reclassified subsequently to net earnings: | ||||||||||||
| Discontinued operations: | ||||||||||||
| Currency translation difference on foreign subsidiaries | 5 | 464 | ||||||||||
| Comprehensive income for the year | 31,867 | 68,605 | ||||||||||
| Comprehensive income (loss) attributable to: | ||||||||||||
| Equity shareholders | 38,576 | 68,732 | ||||||||||
| Non-controlling interest | (6,709 | ) | (127 | ) | ||||||||
| 31,867 | 68,605 | |||||||||||
| Comprehensive income (loss) attributable to: | ||||||||||||
| Continuing operations | (28,060 | ) | 9,711 | |||||||||
| Discontinued operations | 5 | 59,927 | 58,894 | |||||||||
| 31,867 | 68,605 |
The accompanying notes are an integral part of the consolidated financial statements.
Consolidated Statements of Cash Flows
Years Ended December 30,
(in thousands of Canadian dollars)
| Note | 2021 $ | 2020 $ | ||||||||
| Cash provided by (used in) | ||||||||||
| Operating activities: | ||||||||||
| Net earnings for the year | 31,867 | 68,141 | ||||||||
| Adjustments to reconcile net earnings to net cash flows from operating activities: | ||||||||||
| Depreciation of property and equipment | 7 | 15,203 | 14,860 | |||||||
| Depreciation of right-of-use assets | 9 | 17,757 | 18,310 | |||||||
| Amortization of intangible assets | 8 | 813 | 494 | |||||||
| Amortization of financing charges | 13 | 86 | 259 | |||||||
| Gain on sale of discontinued operations before income tax and other adjustments | 5 | (62,453 | ) | (38,724 | ) | |||||
| Non-cash interest on convertible debentures | 13 | 1,656 | 1,498 | |||||||
| Non-cash acquisition related expense | 21 | 1,175 | ||||||||
| Lease remeasurement | 9 | (3,794 | ) | (6,660 | ) | |||||
| Provision (recovery on) for impairment of intangible assets, property and equipment and right-of-use assets, net | 21 | 5,072 | (2,878 | ) | ||||||
| Fair value adjustments | 14 | (105 | ) | 2,393 | ||||||
| Deferred income tax | 15 | 9,938 | (2,977 | ) | ||||||
| Reclassification of accumulated translation differences from other comprehensive income | 5 | (4,383 | ) | |||||||
| Equity-settled share-based payments | 1,042 | 801 | ||||||||
| Other | (713 | ) | ||||||||
| Cash provided by operating activities before changes in non-cash working capital | 18,257 | 50,421 | ||||||||
| Net change in non-cash working capital items | 26 | (11,875 | ) | (3,083 | ) | |||||
| 6,382 | 47,338 | |||||||||
| Investing activities: | ||||||||||
| Purchase of property and equipment | (23,435 | ) | (13,405 | ) | ||||||
| Purchase of intangible assets | (202 | ) | (337 | ) | ||||||
| Proceeds on sale of liquor stores | 2,157 | 2,304 | ||||||||
| Net cash proceeds received on sale of discontinued operations | 5 | 87,222 | 46,393 | |||||||
| Redemption obligation payment | 11 | (1,085 | ) | (823 | ) | |||||
| Business combination, cash acquired | 4 | 406 | ||||||||
| 65,063 | 34,132 | |||||||||
| Financing activities: | ||||||||||
| Principal portion of lease payments | 9 | (17,879 | ) | (21,017 | ) | |||||
| Proceeds from long-term debt | 21,376 | 51,702 | ||||||||
| Repayments of long-term debt | (21,576 | ) | (62,545 | ) | ||||||
| Redemption of convertible unsecured subordinated debentures | 12 | (77,600 | ) | |||||||
| Shares repurchased and cancelled substantial issuer bid | 16 | (30,372 | ) | |||||||
| Shares repurchased and cancelled normal course issuer bid | 16 | (621 | ) | |||||||
| Dividends paid to non-controlling interest by subsidiaries | (54 | ) | (98 | ) | ||||||
| Issuance of common shares by subsidiaries, net of cash share issuance costs | 4 | 37,116 | ||||||||
| (89,610 | ) | (31,958 | ) | |||||||
| Foreign exchange loss on cash held in foreign currency | (404 | ) | ||||||||
| (Decrease) increase in cash | (18,165 | ) | 49,108 | |||||||
| Cash and restricted cash Beginning of year (i) | 60,973 | 11,865 | ||||||||
| Cash and restricted cash End of year (i) | 42,808 | 60,973 |
The accompanying notes are an integral part of the consolidated financial statements.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars except share data or unless otherwise specified)
Alcanna Inc. (the Company or Alcanna ) was incorporated under the Canada Business Corporations Act. The address of the
Company s registered office is 101, 17220 Stony Plain Road, Edmonton, Alberta. The Company s Common Shares trade on the Toronto Stock Exchange (the TSX ) under the symbol CLIQ .
The Company s principal activities are the retailing of wines, beers and spirits ( Liquor Operations ). As at December 31,
2021, the Company operated 170 (December 31, 2020 205) retail liquor stores, of which 169 (December 31, 2020 181) were in Alberta and one (December 31, 2020 24) in British Columbia. The Company also owns approximately 63% of
Nova Cannabis Inc. ( Nova )(TSX: NOVC), whose principal activities are the retailing of cannabis ( Cannabis Operations ). As at December 31, 2021, Nova operated 74 (December 31, 2020 34) retail cannabis stores, of
which 57 (December 31, 2020 33) were in Alberta, 16 (December 31, 2020 one) in Ontario, and one (December 31, 2020 nil) in Saskatchewan.
On October 7, 2021, Alcanna entered into an arrangement agreement, which was subsequently amended on January 6, 2022 with Sundial
Growers Inc. to complete a court-approved plan of arrangement under the Canada Business Corporations Act. Refer to note 29 for additional details.
On March 22, 2021, the Company closed the business combination agreement with YSS Corp. ( YSS ) that was executed on
January 18, 2021, and the following events took place:
For accounting purposes, the Nova Transaction constituted a reverse acquisition that involved a change of control of Nova Cannabis Inc.
(formerly YSS Corp.). Based on the guidance in IFRS 3, Business Combinations, it was determined that Nova Cannabis Inc. (formerly YSS Corp.) was the accounting acquiree and Alcanna was the accounting acquirer, as Alcanna, the sole partner of
ACS LP, controlled Nova upon completion of the Nova Transaction. Refer to note 4 for further information.
The common shares of Nova began trading on the TSX Venture Exchange in substitution of the common shares of YSS Corp. on March 24, 2021
under the trading symbol NOVC . On July 15, 2021, Nova Shares began trading on the TSX under the same trading symbol and were concurrently delisted from the TSX Venture Exchange.
During the year ended December 31, 2021, the Company completed a series of asset purchase agreements for the sale of the Company s
remaining convenience-format retail liquor stores in British Columbia. As a result of these events and the decision to sell, the Company has exited the convenience-format retail liquor store business in British Columbia and has classified the
results of the British Columbia Operations, defined in note 5, as discontinued operations.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars except share data or unless otherwise specified)
The consolidated financial statements (the financial statements ) were approved
and authorized for issuance by the Board of Directors on September 19, 2022.
These financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by
the International Accounting Standards Board ( IASB ).
The financial statements have been prepared under the historical cost convention, except for the derivative warranty liabilities, redemption