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Copi - Audited Results For The Fiscal Year To June 30, 2004
Release Date: 11/10/2004 17:00:10 Code(s): CAN
COPI - Audited results for the fiscal year to June 30, 2004
CANADIAN OVERSEAS PACKAGING INDUSTRIES LIMITED
(Incorporated under the laws of Canada)
Share Code: CAN
ISIN: CA13642P1018
EARNINGS ANNOUNCEMENT
Audited results for the fiscal year to June 30, 2004
(all funds expressed in thousands of Canadian dollars except for the common
share data)
CONSOLIDATED STATEMENT OF EARNINGS 2004 2003
C$ C$
Revenues
Sales 150,225 167,925
Investment income (18,229) 7,305
131,996 175,230
Expenses
Cost of sales 110,675 125,832
Selling and administrative expenses 37,874 37,945
Interest
Current 1,226 1,406
Long term 50 80
Foreign currency losses 518 3,511
150,343 168,774
Earnings (loss) from operations before income taxes
and minority interest (18,347) 6,456
Income Taxes (recovery)
Current 1,082 701
Future (1,533) 406
(451) 1,107
Earnings (loss) from operations before minority
interest (17,896) 5,349
Minority interest 449 414
Net earnings (loss) (17,447) 5,763
Basic earnings (loss) per common share (17,578,125
shares) (C$0.99) C$0.33
Based on Canadian generally accepted accounting principles, unrealized gains on
investments of $17.2M at June 30, 2004 are not reflected in these financial
results (2003:$9.3M loss).
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
(in thousands of Canadian dollars)
Capital Retained Appraisal Cumulative Total
Stock Earnings Increment Translation
Adjustments
(Restated)
C$ C$ C$ C$ C$
Balance, June 30,
2002 47,984 381,812 1,817 7,705 439,318
Realization of
appraisal increment 25 (25)
Effect of exchange
rate changes (310) (29,733) (30,043)
Net earnings 5,763 5,763
Dividend ($1.00 per
share) (17,578) (17,578)
Balance, June 30,
2003 47,984 370,022 1,482 (22,028) 397,460
Realization of
appraisal increment 25 (25)
Effect of exchange
rate changes (97) (1,432) (1,529)
Net loss (17,447) (17,447)
Dividend ($1.00 per
share) (17,578) (17,578)
Balance, June 30,
2004 47,984 335,022 1,360 (23,460) 360,906
2004 2003
C$ C$
(Restated)
CONSOLIDATED BALANCE SHEET
Assets
Current assets
Cash 14,594 13,739
Term deposits, at cost, 2% (3.2% in 2003), maturing
in July 2004 22,847 37,876
Accounts receivable 41,648 30,966
Inventories 11,665 12,372
90,754 94,953
Investments 273,683 298,997
Property, plant and equipment 41,163 40,307
405,600 434,257
Liabilities
Current liabilities
Bank indebtedness 17,536 10,487
Accounts payable and accrued liabilities 22,831 19,712
Income taxes payable 377 737
Current portion of long-term debt 261 251
41,005 31,187
Long-term debt 636 907
Future income taxes 2,930 4,350
Minority interest 123 353
44,694 36,797
Shareholders Equity
Capital stock 47,984 47,984
Retained earnings 335,022 370,022
Appraisal increment 1,360 1,482
Cumulative translation adjustments (23,460) (22,028)
360,906 397,460
405,600 434,257
2004 2003
C$ C$
CONSOLIDATED STATEMENT OF CASH FLOWS
Operating Activities
Net earnings (loss) (17,447) 5,763
Non-cash items 24,705 2,587
7,258 8,350
Changes in non-cash working capital items (7,216) 2,501
Cash flows from operating activities 42 10,851
Investing Activities
Purchase of marketable securities (131,464) (90,712)
Proceeds on sale of marketable securities 132,571 97,892
Purchase of property, plant and equipment (5,472) (13,401)
Proceeds on disposal of property, plant and
equipment 1,715 149
Cash flows from investing activities (2,650) (6,072)
Financing Activities
Bank indebtedness 7,049 (4,172)
Long-term debt 1,550
Repayment of long-term debt (245) (835)
Dividend paid (17,578) (17,578)
Cash flows from financing activities (10,774) (21,035)
Foreign exchange loss on cash and cash equivalents
held in
foreign currency (792) (1,524)
Net decrease in cash and cash equivalents (14,174) (17,780)
Cash and cash equivalents, beginning of year 51,615 69,395
Cash and cash equivalents, end of year 37,441 51,615
Cash and Cash Equivalents
Cash 14,594 13,739
Term deposits 22,847 37,876
37,441 51,615
The Directors have decided to forego a dividend in respect of the year ended
June 30, 2004 (2003: $1.00 per share).
In the year to June 30, 2004 there has been a change in accounting policy. The
Canadian Institute of Chartered Accountants issued Accounting Guideline 13,
`Hedging Relationship` (AcG-13) which has established new criteria for hedge
accounting with effect from July 1, 2003 and EIC Abstract 128 `Accounting for
trading, speculative or non-hedging derivative financial instruments`. As a
result of the adoption of these new rules, the derivative financial instruments
do not qualify as hedges under AcG-13 and EIC-128 requires that they be
accounted for at fair value. The derivative financial instruments result in an
increase in accounts receivable of $450, a decrease in investments of $2,749 and
an increase in net loss of $2,299 for the year ended June 30, 2004.
The audited financial results have been prepared using accounting policies
consistent with those of the annual financial statements for the year ended June
30, 2003 except that the method of translating the foreign currency of the
investment in a company subject to significant influence was modified which
resulted in the increase (decrease) in the figures in the balance sheet and
statement of changes in shareholders` equity as follows: investments ($15,906)
in 2004 (($13,321) in 2003), cumulative translation adjustments, beginning of
year ($13,321) in 2004 ($13,745 in 2003) and effect of exchange rate changes
($2,585) in 2004 (($27,066) in 2003) and conform with Canadian generally
accepted accounting principles. Under International Accounting Standards it was
determined that the investment company in which the Corporation has an
investment subject to significant influence should have been considered a
special purpose entity under IAS and consequently should have been consolidated
by the Corporation. In addition, the investments held by the investment company
should have been considered financial assets held for trading and recorded at
fair value with all unrealized holding gains and losses included in the
statement of earnings in the period in which they arose.
As a result, the figures under IAS have been retroactively adjusted to record
the increase (decrease) in the following:
2004 2003
C$ C$
Accounts receivable 395 465
Due from brokers 207,278 267,116
Derivative financial instruments 1,267 1,290
Investments (16,300) (71,653)
192,640 197,218
Accounts payable and accrued liabilities 34,980 34,638
Derivative financial instruments 516 2,914
Securities sold not purchased 143,680 166,622
179,176 204,174
Shareholders` equity, increase (decrease)
Cumulative translation adjustments 1,692 1,720
Retained earnings, beginning of year (8,676) 2,161
Net earnings - unrealized gains (losses) on
marketable securities 20,448 (10,837)
Retained earnings, end of year 11,772 (8,676)
Total shareholders` equity 13,464 (6,956)
Total liabilities and shareholders` equity 192,640 197,218
Earnings (loss) per common share C$1.16 (C$0.61)
Had the Corporation followed IAS, certain items on the consolidated balance
sheet and statement of changes in shareholders` equity would have increased
(decreased) as follows:
Consolidated balance sheet and statement of changes in shareholders` equity
2004 2003
C$ C$
Restated
Accounts receivable (a) 395 465
Due from brokers (a) 207,278 267,116
Derivative financial instruments (a) 1,267 1,290
Investments (a)(b) (12,852) (72,717)
Total assets 196,088 196,154
Accounts payable and accrued liabilities (a) 34,980 34,638
Derivative financial instruments (a) 516 2,914
Securities sold not purchased (a) 143,680 166,622
Total liabilities 179,176 204,174
Shareholders` equity, increase (decrease)
Cumulative translation adjustments (a) 1,692 1,720
Retained earnings, beginning of year (9,740) 5,744
Net earnings 24,960 (15,484)
Retained earnings, end of year 15,220 (9,740)
Total shareholders` equity 16,912 (8,020)
Total liabilities and shareholders` equity 196,088 196,154
In addition, the net earnings and earnings per common
share under IAS are as follows:
Consolidated statement of earnings
Net earnings (loss) according to Canadian GAAP (17,447) 5,763
Unrealized gains (losses) on marketable securities (a) 26,520 (17,044)
Unrealized change in fair value of derivative
financial instruments (b) (1,560) 1,560
Net earnings (loss) under IAS 7,513 (9,721)
Earnings (loss) per common share per IAS C$0.43 (C$0.55)
(a) Under Canadian GAAP, investments, excluding the investment company in which
the Corporation has an investment subject to significant influence, should be
recorded at cost, less any decrease in value other than a temporary decline.
Under IAS, the investment company is considered a special purpose entity and is
consolidated with the Corporation and the investments held by the investment
company and the marketable securities are classified as trading and are recorded
at fair value. All unrealized holding gains or losses are included in the
statement of earnings in the period in which they arise.
(b) Also, under Canadian GAAP, to June 30, 2003, foreign exchange contracts were
recorded at cost. Under IAS, these derivative financial instruments are
initially recorded at cost and are subsequently re-measured at their fair value.
The changes in the fair value of the derivative financial instruments used by
the Corporation are recognized immediately in the statement of earnings because
they do not qualify for hedge accounting.
The headline earnings (loss) per common share (excluding gain on sales of fixed
assets) is ($1.07) ($0.32 for 2003).
The Annual Report and Accounts for the fiscal year ended June 30, 2004 together
with the Notice of the Forty Third Annual Meeting, will be mailed to
shareholders on October 29, 2004. The Forty Third Annual Meeting of Shareholders
will be held on November 30, 2004. Full details will be circulated with the
Notice of the Meeting.
October 11, 2004 By Order of the Board
Suite 1500, One Brunswick Square, Germain Street, D .M. Eramian
St. John, New Brunswick, Canada E2L 4H8 Company Secretary
