Financial Statement Analysis of CCL Industries (2018) - Finance

This report provides a detailed analysis of CCL Industries' financial instruments, liabilities, provisions, and equity, based on its 2018 annual report. The analysis covers various aspects of the company's financial statements, including the types of financial instruments used, their presentation, and measurement under IFRS 9. It examines financial liabilities, provisions, and equity components like share capital, retained earnings, and dividends. The report also discusses the company's use of derivative financial instruments for hedging and provides insights into the reconciliation of equity information, including earnings, dividends, and other comprehensive income. References from financial accounting literature support the analysis. This assignment demonstrates an understanding of financial reporting principles and the application of accounting standards to a real-world business case.

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BUSINESS FINANCE
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1. The company, which has been selected for analysis, is CCL Industries, which is based out
of Toronto, Ontario and was founded in 1951. The company is listed on the Toronto
Stock Exchange and is one of the largest label makers in the world. The annual report
being considered for discussion is 2018. The company does uses the derivative financial
instruments to hedge the interest rate and foreign currency exposure. The company does
measures the derivative financial instruments at fair value and other than derivatives are
measured at fair value through profit or loss (Dichev, 2017). They are initially being
recognized at the fair value and subsequently measured at fair value or amortized cost
based on different classification. Some of the financial instruments include cash and cash
equivalents and trade and other receivables and investment in securities. They are
presented in financial statements in accordance with IFRS 9. It is presented in the balance
sheet on asset side as has been shown below in the form of derivative instruments – it can
be non-current or current depending on the period.
(Annual Report, CCL, 2018, pg-51)
2. In the given case, some of the financial liabilities, which have been reported by the
company, includes trade payables and long-term debt. The same is recorded at amortized
cost in the balance sheet of the company. The financial assets and liabilities are offset and
presented in the net amount in the financial statements when the company has the right to

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offset such amount and intends to settle on the net basis. The extract from the annual
report has been shown below:
(Annual Report, CCL, 2018, pg-95)
Some of the provisions reported by the company include provision for income tax,
provision for other expenses, provision for legal expenses and provision for long-term
liabilities. It is generally presented in the liabilities side depending on whether it is
current or non-current and is generally measured at carrying value (Goldmann, 2016).

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(Annual Report, CCL, 2018, pg-51)
3. The company has presented the equity details in the detailed manner in the “statement of
changes in the equity”. The equity includes share capital, contributed surplus, retained
earnings, accumulated comprehensive income (Bromwich & Scapens, 2016).
(Annual Report, CCL, 2018, pg-51)

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(Annual Report, CCL, 2018, pg-53)
Some of the other components which has been shown includes earnings during the year,
dividend declared, defined benefit plans, stock based compensation plans, stock options
expenses and stock option exercised and other comprehensive income (Alexander, 2016).
The company has given the reconciliation for the last 2 years in terms of opening balance,
addition and deletion and closing balance. The company has also paid dividend of CAD
92.2 m in 2018 (81.2 m in 2017). From the extract above, it can be inferred that the
company did not issue any shares during the year other than what were exercised as part
of the stock compensation plan (27.2 m in total in 2019). The company also made other
comprehensive income amounting to CAD 88.1 m in 2018 as against CAD 52 m in 2019.
Overall, the company has given proper and detailed disclosure on the equity information.
References
Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher Education, 71(4), 411-
431.
Bromwich, M., & Scapens, R. (2016). Management Accounting Research: 25 years on. Management
Accounting Research, 31(1), 1-9.
Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business
Research, 47(6), 617-632. doi:https://doi.org/10.1080/00014788.2017.1299620
Goldmann, K. (2016). Financial Liquidity and Profitability Management in Practice of Polish Business.
Financial Environment and Business Development, 4(3), 103-112.