Canada Dividend Investor: CDL.A - <span class="simulate_din_font">Corby Distilleries Announces Quarterly Dividend and Reports Second Quarter Financial Results</span> (CAD 0.15)

Company: Corby Distill
Stock Name: CDL.A
Amount: CAD 0.15
Announcement Date: 08/02/2012
Record Date: 27/02/2012

Dividend Detail:

TORONTO, Feb. 8, 2012 /CNW/ - Corby Distilleries Limited ("Corby" or the
"Company") (TSX:CDL.A, TSX:CDL.B) today reported its dividend and
financial results for the second quarter ended December 31, 2011. The
Corby Board of Directors today also declared a dividend of $0.15 per
share payable on March 15, 2012 on the Voting Class A Common Shares and
Non-voting Class B Common Shares of the Company to shareholders of
record as at the close of business on February 29, 2012. All financial
results are reported in Canadian dollars.

Two sale transactions had a substantial impact on the financial results
for the quarter. Specifically, the sale of the Montreal plant and
non-core brands on October 31, 2011 and the sale of the Seagram Coolers
brand on March 16, 2011 (hereafter the "Sale Transactions").
Accordingly, it was necessary to exclude their impact in order to
provide the following comparison on a like-for-like basis:

Second quarter shipments grew by 2%,

Revenue increased 3% and 4% for the three- and six-month periods, and

Net earnings increased 10% and 9% for the current three- and six-month
periods.

The growth in net earnings were the result of revenue growth offset by
continued increase in A&P investment, combined with the effect of bulk
inventory sales, earning higher interest on cash deposits and having
lower statutory rates of corporate income tax.

Without adjustment for the Sale Transactions, Corby's second quarter
revenue decreased 10% (or $4.6 million) when compared with the same
three-month period last year, while on a year-to-date comparison basis,
revenue decreased 2% (or $2.0 million).

Additionally, unadjusted net earnings for the current three- and
six-month periods were $27.1 million and $36.5 million (or $0.95 and
$1.28 per share), respectively, compared to $9.8 million and $19.0
million (or $0.34 and $0.67 per share) for the same periods last year.
Both the current three- and six-month periods were significantly
impacted by the recognition of a $17.7 million gain this quarter as a
result of the October 31, 2011 sale transaction.

"We are pleased to report a like-for-like net earnings increase while
continuing to significantly increase investment in advertising and
promotional support behind key brands, thus building a platform for
long-term growth. Corby is well-positioned for sustained growth through
continued investment in priority brands, specialization in our route to
market and a steady pipeline of new product innovations," noted Patrick
O'Driscoll, President and Chief Executive Officer of Corby.

For further details, please refer to Corby's management's discussion and
analysis and interim consolidated financial statements and accompanying
notes for the three- and six-month periods ended December 31, 2011,
prepared in accordance with International Financial Reporting
Standards.

About Corby

Corby's portfolio of owned-brands includes some of the most renowned
brands in Canada, including Wiser's Canadian whisky, Lamb's rum, Polar
Ice vodka and McGuinness liqueurs. Through its affiliation with Pernod
Ricard S.A., Corby also represents leading international brands such as
ABSOLUT vodka, Chivas Regal, The Glenlivet and Ballantine's Scotch
whiskies, Jameson Irish whiskey, Beefeater gin, Malibu rum, Kahla
liqueur, Mumm champagne, and Jacob's Creek, Wyndham Estate, Stoneleigh
and Graffigna wines.

The existing Voting Class A Common Shares and Non-voting Class B Common
Shares of the Company are traded on the Toronto Stock Exchange under
the symbols CDL.A and CDL.B, respectively.

This press release contains forward-looking statements, including
statements concerning possible or assumed future results of Corby's
operations. Forward-looking statements typically are preceded by,
followed by or include the words "believes", "expects", "anticipates",
"estimates", "intends", "plans" or similar expressions. Forward-looking
statements are not guarantees of future performance. They involve
risks, uncertainties and assumptions and, as such, the Company's
results could differ materially from those anticipated in these
forward-looking statements. Accordingly, readers should not place undue
reliance on forward-looking statements.

CORBY DISTILLERIES LIMITED

Management's Discussion and Analysis

December 31, 2011

The following Management's Discussion and Analysis ("MD&A") dated
February 8, 2012, should be read in conjunction with the unaudited
interim condensed consolidated financial statements and accompanying
notes as at and for the three and six month periods ended December 31,
2011, prepared in accordance with International Financial Reporting
Standards ("IFRS"). (See "Transition to International Financial
Reporting Standards" under "New Accounting Pronouncements" in this
MD&A). These unaudited interim condensed financial statements do not
contain all disclosures required by IFRS for annual financial
statements and, accordingly, should also be read in conjunction with
the most recently prepared annual consolidated financial statements for
the year ended June 30, 2011, which have been prepared in accordance
with Canadian generally accepted accounting principles ("Canadian
GAAP"), with consideration given to the IFRS transition disclosures and
the additional annual disclosures included in Note 13 to the interim
condensed consolidated financial statements as at and for the three
months ended September 30, 2011.

This MD&A contains forward-looking statements, including statements
concerning possible or assumed future results of operations of Corby
Distilleries Limited ("Corby" or the "Company"). Forward-looking
statements typically are preceded by, followed by or include the words
"believes", "expects", "anticipates", "estimates", "intends", "plans"
or similar expressions. Forward-looking statements are not guarantees
of future performance. They involve risks, uncertainties and
assumptions, including, but not limited to: the impact of competition;
business interruption; trademark infringement; consumer confidence and
spending preferences; regulatory changes; general economic conditions;
and the Company's ability to attract and retain qualified employees.
There can be no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking statements.
These factors are not intended to represent a complete list of the
factors that could affect the Company. Additional factors are noted
elsewhere in this MD&A.

This document has been reviewed by the Audit Committee of Corby's Board
of Directors and contains certain information that is current as of
February 8, 2012. Events occurring after that date could render the
information contained herein inaccurate or misleading in a material
respect. Corby will provide updates to material forward-looking
statements, including in subsequent news releases and its interim
management's discussion and analyses filed with regulatory authorities
as required under applicable law. Additional information regarding
Corby, including the Company's Annual Information Form, is available on
SEDAR at www.sedar.com.

The Company's fiscal year end is June 30. Unless otherwise indicated,
all comparisons of results for the second quarter of fiscal 2012 (three
months ended December 31, 2011) are against results for the second
quarter of fiscal 2011 (three months ended December 31, 2010). Results
for the three and six months ended December 31, 2010 have been restated
to conform to IFRS. All dollar amounts are in Canadian dollars unless
otherwise stated.

Business Overview

Corby is a leading Canadian marketer of spirits and importer of wines.
Corby's national leadership is sustained by a diverse brand portfolio
that allows the Company to drive profitable organic growth with strong,
consistent cash flows. Corby is a publicly traded company, with its
shares listed on the Toronto Stock Exchange under the symbols "CDL.A"
(Voting Class A Common Shares) and "CDL.B" (Non-Voting Class B Common
Shares). Corby's Voting Class A Common Shares are majority-owned by
Hiram Walker & Sons Limited ("HWSL") (a private company) located in
Windsor, Ontario. HWSL is a wholly-owned subsidiary of international
spirits and wine company Pernod Ricard S.A. ("PR") (a French public
limited company), which is headquartered in Paris, France. Therefore,
throughout the remainder of this MD&A, Corby refers to HWSL as its
parent, and to PR as its ultimate parent. Affiliated companies are
those that are also subsidiaries of PR.

The Company derives its revenues from the sale of its owned-brands
("Case Goods"), as well as earning commission income from the
representation of selected non-owned brands in Canada ("Commissions").
The Company also supplements these primary sources of revenue with
other ancillary activities incidental to the manufacture of case goods,
such as logistics fees and miscellaneous bulk spirit sales. Revenue
from Corby's owned-brands predominately consists of sales made to each
of the provincial liquor boards in Canada, and also includes sales to
international markets. As noted in the "Significant Events" section of
this MD&A, Corby sold its bottling facility on October 31, 2011. As a
result of this transition Corby will no longer derive revenues from
contract bottling services. All other activities will remain in place.

Corby's portfolio of owned-brands includes some of the most renowned
brands in Canada, including Wiser's Canadian whisky, Lamb's rum, Polar
Ice vodka and McGuinness liqueurs. Through its affiliation with PR,
Corby also represents leading international brands such as ABSOLUT
vodka, Chivas Regal, The Glenlivet and Ballantine's Scotch whiskies,
Jameson Irish whiskey, Beefeater gin, Malibu rum, Kahla liqueur, Mumm
champagne, and Jacob's Creek, Wyndham Estate, Stoneleigh and Graffigna
wines. In addition to representing PR's brands in Canada, Corby also
provides representation for certain selected, unrelated third-party
brands ("Agency brands") when they fit within the Company's strategic
direction and, thus, complement Corby's existing brand portfolio.

Pursuit to a production agreement that expires in September 2016, PR
produces Corby's owned-brands at HWSL's production facility in Windsor,
Ontario. Under the production agreement, Corby manages PR's business
interests in Canada, including HWSL's production facility, also until
September 2016.

The Company sources more than 80% of its spirits production requirements
from HWSL at its production facility in Windsor, Ontario. The Company's
remaining production requirements have been outsourced to third party
vendors. The formerly owned plant in Montreal continues to manufacture
most of the Corby products that were produced there prior to the sale.
The Company also utilizes a third-party manufacturer in the UK to
produce its Lamb's rum products destined for sale in countries located
outside North America. Corby's Lamb's rum products sold in North
America continue to be manufactured at HWSL's production facility.

In most provinces, Corby's route to market in Canada entails shipping
its products to government-controlled liquor boards ("LBs"). The LBs
then sell directly, or control the sale of, beverage alcohol products
to end consumers. The exception to this model is Alberta, where the
retail sector is privatized. In this province, Corby ships products to
a bonded warehouse that is managed by a government-appointed service
provider who is responsible for warehousing and distribution into the
retail channel.

Corby's shipment patterns to the LBs will not always exactly match
short-term consumer purchase patterns. However, given the importance of
monitoring consumer consumption trends over the long term, the Company
stays abreast of consumer purchase patterns in Canada through its
member affiliation with the Association of Canadian Distillers ("ACD"),
which tabulates and disseminates consumer purchase information it
receives from the LBs to its industry members. Corby refers to this
data throughout this MD&A as "retail sales", which are measured both in
volume (measured in nine-litre-case equivalents) and in retail value
(measured in Canadian dollars).

Corby's route to market for its international business primarily entails
direct shipment of its products to international distributors, located
mainly in the US and UK markets. International sales typically account
for less than 10% of Corby's total annual sales. Distributors sell to
various local wholesalers and retailers who in turn sell directly to
the consumer. Reliable consumer purchase data is not readily available
for these international markets and is, therefore, not discussed in
this MD&A.

Corby's operations are subject to seasonal fluctuations: sales are
typically strong in the first and second quarters, while third-quarter
sales usually decline after the end of the retail holiday season.
Fourth-quarter sales typically increase again with the onset of warmer
weather as consumers tend to increase their purchasing levels during
the summer season.

Strategies and Outlook

Corby's business strategies are designed to maximize sustainable
long-term value growth, and thus deliver solid profit while continuing
to produce strong and consistent cash flows from operating activities.
The Company's portfolio of owned and represented brands provides an
excellent platform from which to achieve its current and long-term
objectives moving forward.

Management believes that having a focused brand prioritization strategy
will permit it to capture market share in the segments and markets that
are expected to deliver the most growth in value over the long term.
Therefore, the Company's strategy is to focus its investments on, and
leverage the long-term growth potential of, its key brands. As a
result, Corby will continue to invest behind its brands to promote its
premium offerings where it makes the most sense and drives the most
value for shareholders.

Brand prioritization requires an evaluation of each brand's potential to
deliver upon this strategy, and facilitates Corby's marketing and sales
teams' focus and resources allocation. Over the long term, management
believes that effective execution of its strategy will result in value
creation for shareholders. Recent brands sales (Seagram Coolers brands
in March 2011 and the sale of Montreal bottling facility, discussed
below) reflect this strategy by streamlining its portfolio and thus
refocusing resources on key brands.

In addition, management is convinced that innovation is key to seizing
new profit and growth opportunities. Successful innovation can be
delivered through a structured and efficient process as well as
consistent investment on consumer insight and research and development
("R&D"). As far as R&D is concerned, the Company benefits from access
to leading-edge practices at PR's North American hub, which is located
in Windsor, Ontario.

Finally, the Company is a strong advocate of social responsibility,
especially with respect to its sales and promotional activities. Corby
will continue to promote the responsible consumption of its products in
its activities. The Company stresses its core values throughout its
organization, including those of value creation, social responsibility,
tradition, substance over style, and character above all.

Significant Events

Corby sells its Montreal bottling facility and certain non-core brands

On October 31, 2011, the Company sold certain owned-brands as well as
the shares of its subsidiary, Corby Manufacturing Inc., the owner of
the manufacturing and bottling facility in Montral, Qubec, to Sazerac
Company, Inc. ("Sazerac") for an aggregate purchase price of $39.7
million, including the cost of inventory and other working capital
items associated with the brands and manufacturing facility sold and
other related adjustments.

The transaction involved the sale of 17 brands, including De Kuyper
Geneva gin, De Kuyper Peachtree schnapps, Red Tassel vodka and Silk
Tassel Canadian whisky, as well as the Montral-based manufacturing
facility where a significant portion of the brands are produced. As a
result of this transaction, Corby recognized a gain on closing of $17.7
million, net of taxes and transaction costs. The book value of the
assets disposed, including working capital items, was $17.8 million.

The agreement contains customary representations, warranties and
covenants. In addition, as part of the agreement, Corby agreed to
indemnify Sazerac in respect of a misrepresentation, breach of
covenant, pre-closing liabilities and certain environmental matters.
Based on current facts and circumstances, no material liability is
anticipated in respect of this indemnification, and no provision has
been made in the financial results for this contingency.

This transaction allows the Company to streamline its portfolio with a
more focused and targeted collection of brands, and to focus resources
on the long term growth of its core portfolio of premium spirits and
wines as part of its brand prioritization strategy. The bottling
facility in Montreal had been increasingly underutilized with
Corby-owned brand production in recent years, and thus increased the
Company's reliance on ancillary and low margin contract bottling
activities to fill this capacity. Corby will continue its relationship
with the facility and source the production of certain brands with the
new ownership.

In Corby's most recently completed annual financial statements for the
year ended June 30, 2011, the brands and manufacturing facility
disposed of contributed a combined $5.7 million to net earnings on
sales of $32.2 million. Therefore, the transaction will have a material
impact on Corby's future operating results. Direct comparisons to prior
periods will be less meaningful, and as such, the impacts of the
transaction will be explained throughout this MD&A, where applicable.

Corby secures new term for ABSOLUT representation rights

On November 9, 2011, Corby entered into an agreement with PR for a new
term for Corby's exclusive right to represent ABSOLUT vodka in Canada
from September 30, 2013 to September 29, 2021, which is consistent with
the term of Corby's Canadian representation for the other PR brands in
Corby's portfolio. Under the agreement, Corby will pay the present
value of $10 million to PR at the commencement of the new term for the
additional eight years of the new term. Since the agreement with PR is
a related party transaction, the agreement was approved by the
Independent Committee of the Corby Board of Directors following an
extensive review and with external financial and legal advice. Pursuant
to this agreement, Corby also agreed to continue with the mirror
netting arrangement with PR and its affiliates, under which Corby's
excess cash will continue to be deposited to cash management pools, as
further described in the "Related Party Transactions" section of this
MD&A.

ABSOLUT is the number one premium vodka brand worldwide with around 11
million nine litre cases sold in 2011 and is an iconic brand with an
image built around values of creativity, innovation and cultural
leadership. It is one of only four international spirits brands in the
world which sells more than 10 million cases a year and has an
especially attractive growth profile. ABSOLUT vodka complements Corby's
strategy, while further enhancing the Company's premium brands
portfolio. With ABSOLUT vodka in the Corby portfolio, Corby is the
number two player in the vodka category in Canada with a 22% volume
share - combining ABSOLUT with other key Corby vodka brands, such as
Polar Ice vodka.

Brand Performance Review

Corby's portfolio of owned-brands typically accounts for more than 80%
of the Company's annual revenues. Included in this portfolio are its
key brands: Wiser's Canadian whisky, Lamb's rum, Polar Ice vodka, and
Corby's mixable liqueur brands. The sales performance of these key
brands significantly impacts Corby's net earnings. Therefore,
understanding each key brand is essential to understanding the
Company's overall performance.

Shipment Volume and Shipment Value Performance

The following chart summarizes the performance of Corby's owned-brands
in terms of both shipment volume (as measured by shipments to customers
in equivalent nine-litre cases) and shipment value (as measured by the
change in sales revenue). The chart includes results for sales in both
Canada and international markets. Specifically, the Wiser's, Lamb's and
Polar Ice brands are also sold to international markets, particularly
in the US and UK. International sales typically account for less than
10% of Corby's total annual revenues.


BRAND PERFORMANCE CHART - INCLUDES BOTH CANADIAN AND INTERNATIONAL SHIPMENTS

		Three Months Ended				Six Months Ended
				Shipment	Shipment			Shipment	Shipment
		*Dec. 3***1,	Dec. 31,	% Volume	% Value	Dec. 31,	Dec. 31,	% Volume	% Value
Volumes (in 000's of 9L cases)		*2011*	2010	Change	Change	*2011*	2010	Change	Change

Brand
Wiser's Canadian whisky		230	225	2%	3%	426	426	0%	0%
Lamb's rum		172	180	(4%)	(4%)	320	322	(1%)	0%
Polar Ice vodka		113	91	24%	30%	207	179	16%	22%
Mixable liqueurs		56	58	(3%)	(3%)	103	102	1%	0%

Total Key Brands		571	554	3%	4%	1,056	1,029	3%	4%
All other Corby-owned brands		59	61	(3%)	(2%)	122	126	(3%)	(2%)

Total Corby brands		630	615	2%	4%	1,178	1,155	2%	3%

	Disposed brands	25	118	(79%)	(76%)	108	261	(59%)	(52%)

Total Corby brands including
disposed brands		655	733	(11%)	(5%)	1,286	1,416	(9%)	(5%)

As previously discussed in the "Strategies and Outlook" section of this
MD&A, the Company has implemented a brand prioritization strategy that
requires focused investments in key brands and in key markets, with the
long-term objective of maximizing value growth. This strategy is
designed to leverage the long-term growth potential of Corby's key
brands. Note that the chart above segregates "Disposed Brands" from the
other Corby-owned brands. Disposed Brands includes the volumes related
to Seagram Coolers (sold in the third quarter of fiscal 2011) and the
brands sold in the recent transaction described in the "Significant
Events" section of this MD&A to the extent that they were still owned
during the periods presented in the above chart.

The Canadian economy has shown indicators of improvement in recent
months. The overall spirits market in Canada showed a 2% growth in
retail volume and 4% growth in retail value when compared to the same
three month period of the prior year. This is consistent with the trend
for the six months ended December 31, 2011 which show retail volumes
and retail value growing at 2% and 3%, respectively, when compared to
the same six month period last year.

The performance of Corby's key brands reflects overall sales improvement
with shipment volume and value increases of 3% and 4%, respectively,
for both the quarter and year-to-date results when compared to the same
periods last year. In particular, strong growth from Polar Ice vodka in
Canada has helped drive Corby's performance for the period. While
Corby's flagship brand, Wiser's Canadian whisky, appears to have held
flat on a year-to-date basis, the brand enjoyed a strong shipment
quarter during the critical holiday season. In addition, retail
information confirms that the brand has once again outperformed the
Canadian whisky segment in Canada and thus continues to gain market
share.

Disposed Brands were mostly impacted by the fact the current quarter and
year-to-date periods do not include sales of the Seagram Coolers brand
as it is no longer owned by Corby, whereas the three and six month
comparative periods included twenty-nine thousand and eighty-six
thousand nine litre cases, respectively. The remaining brands (i.e.,
brands that were sold in the recent transaction described in the
"Significant Event" section of this MD&A) show activity up to and
including October 31, 2011, the date the brands were sold. Excluding
Seagram Coolers, up until the date of sale, the Disposed Brands were
showing a trend of decline of 4% over prior year performance.

Excluding Disposed Brands, shipments in Canada increased 4% for volumes
and value on a quarter over quarter comparison basis. Polar Ice vodka
leads sales growth for the quarter with increases in shipment volume of
27% as a result of successful new market strategies. This performance
builds on trends established in the first quarter of the year for the
brand, resulting in year to date domestic shipment volume increases of
19% for the six month period ended December 31, 2011.

Corby's international shipment volume decreased 1% on a year-to-date
basis, while the quarter showed a sharp decline of 9% largely
associated with shipment timing into these markets. Specifically, the
international business was driven by strong shipments of Wiser's into
the US and a modest increase of Lamb's into the UK market. Polar Ice
vodka shipments to the US declined year-to-date as it continues to
compete in a crowded US vodka market.

Retail Volume and Retail Value Performance

It is of critical importance to understand the performance of Corby's
brands at the retail level in Canada. Analysis of performance at the
retail level provides insight with regards to consumers' current
purchase patterns and trends. Retail sales data, as provided by the
ACD, is set out in the following chart and is discussed throughout this
MD&A. It should be noted that the retail sales information presented
does not include international retail sales of Corby-owned brands, as
this information is not readily available. International sales
typically account for less than 10% of Corby's total annual revenues.


RETAIL SALES FOR THE CANADIAN MARKET ONLY¹

	Three Months Ended				Six Months Ended
			% Retail	% Retail			% Retail	% Retail
	*Dec. 31,*	Dec. 31,	Volume	Value	*Dec. 31,***	Dec. 31,	Volume	Value
Volumes (in 000's of 9L cases)	2011	2010	Change	Change	2011	2010	Change	Change

Brand
Wiser's Canadian whisky	235	229	2%	3%	402	395	2%	2%
Lamb's rum	149	152	(2%)	(1%)	263	266	(1%)	0%
Polar Ice vodka	112	92	22%	19%	198	169	17%	16%
Mixable liqueurs	65	65	0%	0%	107	106	1%	1%
						-
Total Key Brands	561	538	4%	4%	970	936	4%	4%
All other Corby-owned brands	60	60	(1%)	0%	116	114	2%	2%

Total	621	598	4%	4%	1,086	1,050	3%	4%

¹ Refers to sales at the retail store level in Canada, as provided by the Association of Canadian Distillers.

In an effort to maintain focus on Corby's continuing business activities
and the Company's brand prioritization strategy, brands impacted by the
aforementioned sale transaction which closed on October 31, 2011, in
addition to Seagram Coolers (which was sold in Q3 last year), have been
excluded from the above chart.

Overall, the performance of Corby-owned brands exceeded trends seen in
the Canadian spirits industry as a whole with total retail volume
increases of 3% and retail value increases of 4% year to date. The
Canadian spirits industry saw volume and value growth of 2% and 3%,
respectively, during the same six month period.

The six-month growth trend currently experienced in the Canadian spirits
industry has been led by the vodka and rum categories (especially
spiced and dark rums). While the Company benefited by the growing vodka
segment, Corby's portfolio is heavily weighted in the Canadian whisky
and white rum categories; these categories are showing declines of -1%
and -3% in the marketplace over that same period. However, Corby's key
brand in the Canadian whisky segment, Wiser's, continued to outperform
and gain market share from its competitors. The Company's strategy to
significantly increase its investment levels behind key brands and in
key markets (especially Western Canada) is showing positive results.
Most notably Polar Ice vodka has gained significant momentum due to
increased advertising and promotional support and Wiser's has continued
to perform well compared to its category as a whole.

Summary of Corby's Key Brands

Wiser's Canadian Whisky

Corby's flagship brand, Wiser's Canadian whisky, experienced retail
volume growth of 2% and retail value growth of 3%, while the Canadian
whisky category as a whole declined 1% in retail value and remained
relatively flat for value compared to the same quarter last year. These
trends were consistent with year-to-date results. The brand has
continued to gain market share from both a retail volume and value
perspective, at the expense of its direct competitors in Canada. This
year, the Company continued to build upon the brand's popular and award
winning "Welcome to the Wiserhood" television campaign, as it launched
new versions of its popular television commercials.

Lamb's Rum

Lamb's rum, one of the top-selling rum families in Canada, saw its
retail volumes decrease 1% for the six month period ended December 31,
2011 versus the same period last year, while retail volumes for the rum
segment in Canada increased by 3%. The growth in the rum segment has
been entirely driven by the growth in spiced and dark rum categories,
while consumer consumption of white rum has been experiencing declines
(-3% on a six month comparison basis). The Lamb's rum family has a
significant amount of its volume weighted in white rum, and its
performance is reflective of the decline in the category. Compared to
the white rum category, Lamb's rum is performing slightly ahead of the
market. Corby continued to invest behind the brand this year as it
launched a new campaign entitled "Lamb's Nation", which is focused in
its key markets of Newfoundland and Labrador.

Polar Ice Vodka

Polar Ice vodka is among the top three largest vodka brands in Canada.
Continuing on trends seen in the first quarter, second quarter results
for Polar Ice vodka are impressive as the brand continued to vastly
outpace its category. On a three month comparison basis, the brand
increased retail volumes by 22% and value by 19%. Year-to-date, the
brand increased retail volumes by 17% and retail value by 16%, when
compared to the same six month period last year. The vodka category in
Canada experienced an increase in retail value of 5%, while retail
volumes increased 3% for the six month period.. Aggressive investment
in key markets, specifically BC and Alberta, supported with an outdoor
"Canada's Vodka" media campaign and strategic pricing were key reasons
that consumers re-engaged with the brand.

Mixable Liqueurs

Corby's portfolio of mixable liqueur brands consists of McGuinness
liqueurs (which is Canada's largest mixable liqueur brand family) and
Meaghers liqueurs. Retail value and volumes for Corby's mixable
liqueurs portfolio grew 1% during the six month period compared to the
same six months of the prior year, while the category as a whole
remained relatively flat. Quarterly trends show similar results, as the
Corby brands remained flat for volume while the category shows a slight
decline of 1% for the three month period. The liqueur segment is most
affected by changes in consumer spending, particularly as it relates to
consumption at licensed establishments, such as bars and restaurants.

Other Corby-Owned Brands

Royal Reserve, a Canadian whisky, the most significant brand in this
grouping and achieved growth of 2% in both retail volume and value
compared to the same six month period last year. On a quarterly basis
the brand sales were flat when compared to the same period last year.
The brand's performance exceeded its Canadian whisky category in Canada
on both a quarterly and year-to-date basis.

Financial and Operating Results

The following table presents a summary of certain selected consolidated
financial information of the Company for the three month periods ended
December 31, 2011 and 2010.


			Three Months Ended							Six Months Ended
(in millions of Canadian dollars,			Dec. 31,		Dec. 31,					Dec. 31,		Dec. 31,
except per share amounts)			2011		2010⁽¹⁾		$ Change	% Change		2011		2010⁽¹⁾		$ Change	% Change

Revenue		$	40.9	$	45.5	$	(4.6)	(10%)	$	85.1	$	87.1	$	(2.0)	(2%)

Cost of sales			(16.7)		(19.1)		2.4	(13%)		(36.1)		(36.8)		0.7	(2%)
Marketing, sales and administration			(12.5)		(12.9)		0.4	(3%)		(24.4)		(23.8)		(0.6)	3%
Gain on sale of plant and brands			22.0		-		22.0	N/A		21.6		-		21.6	N/A
Other income (expense)			(0.1)		0.2		(0.3)	(150%)		-		0.3		(0.3)	(100%)

Earnings from operations			33.6		13.7		19.9	145%		46.2		26.8		19.4	72%

Financial income			0.5		0.3		0.2	67%		0.9		0.5		0.4	80%
Financial expenses			(0.1)		(0.2)		0.1	(50%)		(0.3)		(0.5)		0.2	(40%)
Net financial income			0.4		0.1		0.3	300%		0.6		-		0.6	N/A

Earnings before income taxes			34.0		13.8		20.2	146%		46.8		26.8		20.0	75%
Income taxes			(6.9)		(4.0)		(2.9)	73%		(10.3)		(7.8)		(2.5)	32%

Net earnings		$	27.1	$	9.8	$	17.3	177%	$	36.5	$	19.0	$	17.5	92%

Per common share
	- Basic net earnings	$	0.95	$	0.34	$	0.61	179%	$	1.28	$	0.67	$	0.61	91%
	- Diluted net earnings	$	0.95	$	0.34	$	0.61	179%	$	1.28	$	0.67	$	0.61	91%

⁽¹⁾ In preparing the comparative information, the Company has adjusted amounts previously reported in financial statements prepared in accordance with Canadian GAAP. See Note 18 to the interim condensed consolidated financial statements for an explanation of the transition to IFRS.

Overall Financial Results

Results of the second quarter were substantially impacted by three
factors:

The gain on sale of the Company's manufacturing plant and certain
non-core brands on October 31, 2011. An after-tax gain on sale of $17.7
million was recognized in both the current and year-to-date financial
results. Please refer to the "Significant Event" of this MD&A for
further details regarding the sale transaction.

The reduction of earnings resulting from the aforementioned October 31,
2011 sale transaction, as from November 1, 2011 onward, Corby's results
will no longer include earnings associated with the brands and
manufacturing facility sold. However, the comparative periods will
include the financial results of those brands for the full period,
given the Company's ownership at that time.

The sale of the Company's formerly owned Seagram Coolers brand which
occurred on March 16, 2011. There are no earnings associated with this
brand in the current quarter and year-to-date period, however, the
comparative periods include the financial results of this brand given
the Company's ownership at that time.

In order to effectively assess Corby's current period results against
those of the comparative three and six-month periods, the impacts of
the aforementioned three factors have been removed from the discussion,
where noted.

As noted in the Financial and Operating Results chart, the Company's net
earnings increased $17.3 and $17.5 million for the three and six month
periods, respectively. After removing the impacts of the aforementioned
three factors, net earnings increased 10% and 9% for the quarter and
six month periods ending December 31, 2011, respectively, when compared
to the same periods in the prior year. Earnings per share increases
mirror these results on the same comparative basis.

These increases were primarily the result of having higher case good
sales (driven by Polar Ice vodka in Canada, and Wiser's Canadian whisky
internationally), increased bulk whisky sales activity, increased
interest income earned on cash deposits, and lastly, the impact of
having lower statutory corporate tax rates this period versus the same
periods last year. The aforementioned growth in earnings was partially
offset by increased advertising and promotional investment being spent
on the Company's key brands.

Revenue

Revenue declined 10% (or $4.6 million) when compared with the same
quarter last year and 2% (or $2.0 million) on a year to date
comparative basis. This decrease is the result of the revenues from
brands and activities no longer included in Corby's portfolio in the
current year due to the aforementioned sale transactions (i.e., sale of
the Montreal plant and certain non-core brands as of October 31, 2011,
and the sale of the Seagram Coolers brand in March 2011). These
disposed brands and activities accounted for a $5.6 million decrease in
revenues for the quarter and $4.5 million year to date.

The following highlights the key components of the Company's revenue
streams:


			Three Months Ended							Six Months Ended
			Dec. 31,		Dec. 31,					Dec. 31,		Dec. 31,
(in millions of Canadian dollars)			2011		2010		$ Change	% Change		2011		2010		$ Change	% Change

Revenue streams:
	Case goods (ex. disposed brands)	$	30.5	$	30.5	$	-	0%	$	58.6	$	57.7	$	0.9	2%
	Commissions		4.8		4.8		-	0%		9.4		9.1		0.3	3%
	Other services		2.5		1.5		1.0	67%		4.0		2.6		1.4	54%
Revenue, ex. disposed brands			37.8		36.8		1.0	3%		72.0		69.4		2.6	4%

Disposed brands			3.1		8.7		(5.6)	(64%)		13.1		17.7		(4.6)	(26%)

Revenue		$	40.9	$	45.5	$	(4.6)	(10%)	$	85.1	$	87.1	$	(2.0)	(2%)

Removing the impact of the aforementioned sale transactions (which is
denoted in the above chart as "Disposed brands"), revenue from the
remaining Corby brand portfolio and other business activities increased
3% for the quarter and 4% year to date when compared with the same
periods in the prior year.

For the quarter, the benefit of increased Case Goods shipment volumes
(+2%) was offset by the cost of certain promotional activities having
to be recorded net of revenue in accordance with accounting rules.
Therefore, the revenue increase this quarter is primarily attributable
to the sale of bulk whisky, which is the result of the Company
continuing to supply liquid to a former contract bottling customer.

The year to date revenue increase (excluding Disposed brands) was the
combined result of increased net Case Goods revenue (driven by a
shipment volume increase of 2%), increased Commission income being
derived from the representation of PR brands in Canada, and also a
significant increase coming from sales of bulk whisky to a former
contract bottling. The increase in net Case Goods revenue was driven by
new pricing strategies with certain key brands, notably Polar Ice
vodka. Case Goods revenue also benefited from the impact of general
price increases across most of Corby's brand portfolio in Canada. These
trends are a continuation of results seen earlier in this fiscal year.
The aforementioned bulk whisky sales are expected to continue past the
current fiscal year-end, and supply of the liquid has no impact upon
Corby's own supply requirements.

Cost of sales

Cost of sales was $16.7 million, representing a decrease of 13% compared
to the same three month period last year, and was mostly commensurate
with the decrease in revenue. Gross margin was 53.6% this quarter,
versus 53.0% for the same three month period last year. The increase in
gross margin is the result of the loss of revenues associated with the
sale of non-core brands and the Montreal plant which previously
generated the Company's contract bottling revenues. These non-core
brands and the contract bottling activities produce significantly lower
margin than Corby's existing portfolio.

Gross margin for the six month period was 52.3% versus 52.8%, showing a
slight decline this period versus last. The decline is the result of
having higher levels of lower margin contract bottling activities
leading up to the sale transaction which occurred on October 31, 2011.

Marketing, sales and administration

Marketing, sales and administration expenses were $12.5 million, as
compared to $12.9 million during the same quarter last year, reflecting
a 3% decrease. The decrease is primarily the result of both timing of
advertising and promotional activities (the first quarter saw a 9%
increase in advertising and promotional charges compared to the first
quarter of 2012) and to a lesser extent, a reduction was realized as a
result of the sale transactions.

On a year-to-date basis, marketing, sales and administration expenses
were $24.4 million, an increase of 3% or $0.6 million compared to the
same period last year. The increase reflects higher advertising and
promotional spending levels over the prior year in support of the
Company's continued commitment to invest and support its key brands
through various marketing and promotional activities. As well, sales
and administration expenses experienced inflationary type increases
typically expected on a year over year comparison basis and related
primarily to headcount and other related costs.

Other Income and Expenses

Other income and expenses include such items as realized foreign
exchange gains and losses, gains on sale of property plant and
equipment and amortization of actuarial gains and losses related to the
Company's pension and post retirement benefit plans. The balances
comprising this account were relatively consistent on both a three and
six month comparison basis.

Net Financial Income

Net financial income is comprised of interest earned on deposits in cash
management pools, offset by interest costs associated with the
Company's pension and other post-employment obligations. The increased
net financial income this quarter and year to date is primarily the
result of increased market interest rates applicable to the Company's
cash deposits in addition to having higher average amounts of cash on
deposit.

Income taxes

The sale of the Montreal plant and the non-core brands resulted in a tax
impact of $3.9 million included in both the current three and six month
periods ended December 31, 2011. Partially offsetting the increased tax
as a result of the aforementioned sale transaction, were tax savings as
a result of previously announced reductions in statutory income tax
rates. Both the Canadian federal and Ontario provincial governments
enacted reductions to corporate taxation rates.

Liquidity and Capital Resources

Corby's sources of liquidity are its deposits in cash management pools
of $158.4 million as at December 31, 2011, and its cash generated from
operating activities. The Company does not have any liabilities under
short or long-term debt facilities.

Subsequent to December 31, 2011, Corby paid a special dividend of $52.7
million, or $1.85 per common share, as approved by the Board of
Directors on November 9, 2011. This dividend was paid on January 3,
2012 and sourced from the Company's deposits in cash management pools.

Cash flows


			Three Months Ended						Six Months Ended
			*Dec. 31,*		Dec. 31,		$		*Dec.* *31,*		Dec. 31,		$
(in millions of Canadian dollars)			2011		2010		Change		2011		2010		Change

Operating activities
	Net earnings, adjusted for non-cash items	$	10.6	$	14.2	$	(3.6)	$	25.3	$	28.9	$	(3.6)
	Net change in non-cash working capital		9.5		3.2		6.3		12.0		0.6		11.4
	Net payments for interest and income taxes		(2.0)		(2.1)		0.1		(5.2)		(5.8)		0.6
			18.1		15.3		2.8		32.1		23.7		8.4

Investing activities
	Additions to capital assets		(0.3)		(0.2)		(0.1)		(0.3)		(0.3)		-
	Net proceeds from sale of plant and brands		38.5		-		38.5		38.1		-		38.1
	Proceeds from disposition of capital assets		0.2		-		0.2		0.2		-		0.2
	Deposits in cash management pools		(52.2)		(11.1)		(41.1)		(61.8)		(15.4)		(46.4)
			(13.8)		(11.3)		(2.5)		(23.8)		(15.7)		(8.1)

Financing activities
	Dividends paid		(4.3)		(4.0)		(0.3)		(8.3)		(8.0)		(0.3)

Net change in cash		$	-	$	-	$	-	$	-	$	-	$	-

Operating activities

Net cash from operating activities was $18.1 million this quarter,
representing an increase of $2.8 million when compared with the same
quarter last year. The quarter-over-quarter change is mostly
attributable to the net change in non-cash working capital, which
generated $6.3 million of cash, and was driven mostly by higher
balances owing to affiliates and related parties and other accounts
payable and accrued liabilities.

On a year-to-date basis, net cash from operating activities was $32.1
million compared to $23.7 million from the same six month period of the
prior year. In addition to factors impacting the quarter, non-cash
changes in working capital have increased $11.4 million compared to the
prior year due to the reduction of accounts receivable and inventory
balances related to brands impacted in the aforementioned sale
transactions. In addition, the Company's relocation of production of
its Lamb's rum international business to the UK effectively reduced the
amount of bulk rum inventory levels this quarter when compared with the
same period last year.

Investing activities

Cash used in investing activities increased $2.5 million this quarter
when compared with the same quarter last year. On a year-to-date basis
the increase was $8.1 million. Investing activities have been
significantly impacted by the sale of the Montreal plant and non-core
brands, which generated $38.5 million for the quarter and $38.1 million
year-to-date in net proceeds. Offsetting this cash inflow was increased
deposits in cash management pools of $41.1 million during the quarter
and $46.4 million on a year-to-date comparison basis.

Deposits made to cash management pools represent cash on deposit with
The Bank of Nova Scotia via Corby's Mirror Netting Service Agreement
with PR. Corby has daily access to these funds and earns a market rate
of interest from PR on its deposits. For more information related to
these deposits, please refer to the "Related Party Transactions"
section of this MD&A.

Financing activities

Cash used for financing activities reflects regular dividends being paid
to shareholders and totalled $4.3 million, or $0.15 per share for the
quarter; this is an increase to dividends paid when compared to the
same quarter last year, which were paid at $0.14 per share and totalled
$4.0 million. For the six month period, dividends paid totalled $8.3
million versus $8.0 million for the same six month period in the prior
year. The amount of dividends paid increased from $0.14 per share to
$0.15 per share effective November 9, 2011. The payment of these
dividends is in accordance with the Company's stated dividend policy.

Outstanding Share Data

There has been no change in Corby's share data since June 30, 2011. As
at February 8, 2012, Corby had 24,274,320 Voting Class A Common Shares
and 4,194,536 Non-Voting Class B Common Shares outstanding. The Company
does not have a stock option plan, and therefore, there are no options
outstanding.

Related Party Transactions

Transactions with parent, ultimate parent, and affiliates

Corby engages in a significant number of transactions with its parent
company, its ultimate parent and various affiliates. Specifically,
Corby renders services to its parent company, its ultimate parent, and
affiliates for the marketing and sale of beverage alcohol products in
Canada. Furthermore, Corby sub-contracts the large majority of its
distilling, maturing, storing, blending, bottling and related
production activities to its parent company. A significant portion of
Corby's bookkeeping, recordkeeping services, data processing and other
administrative services is also outsourced to its parent company.

The companies operate under the terms of agreements that became
effective on September 29, 2006. These agreements provide the Company
with the exclusive right to represent PR's brands in the Canadian
market for 15 years, as well as providing for the continuing production
of certain Corby brands by PR at its production facility in Windsor,
Ontario, for 10 years. Corby also manages PR's business interests in
Canada, including the Windsor production facility. Certain officers of
Corby have been appointed as directors and officers of PR's Canadian
entities, as approved by Corby's Board of Directors.

In addition to the aforementioned agreements, Corby signed an agreement
on September 26, 2008, with its ultimate parent to be the exclusive
Canadian representative for the ABSOLUT vodka and Plymouth gin brands,
for a five-year term expiring October 1, 2013. These brands were
acquired by PR subsequent to the original representation rights
agreement dated September 29, 2006. As noted in the "Significant
Events" section of this MD&A, the Company entered into an agreement
with PR on November 9, 2011, for a new term for Corby's exclusive right
to represent ABSOLUT vodka in Canada from September 30, 2013 to
September 29, 2021, which is consistent with the term of Canadian
representation for the other PR brands in Corby's portfolio.

Deposits in cash management pools

Corby participates in a cash pooling arrangement under a Mirror Netting
Service Agreement, together with PR's other Canadian affiliates, the
terms of which are administered by The Bank of Nova Scotia. The Mirror
Netting Service Agreement acts to aggregate each participant's net cash
balance for purposes of having a centralized cash management function
for all of PR's Canadian affiliates, including Corby. As a result of
Corby's participation in this agreement, Corby's credit risk associated
with its deposits in cash management pools is contingent upon PR's
credit rating. PR's credit rating as at February 8, 2012, as published
by Standard & Poor's and Moody's, was BBB- and Baa3, respectively. PR
compensates Corby for the benefit it receives from having the Company
participate in the Mirror Netting Service Agreement by paying interest
to Corby based upon the 30-day LIBOR rate plus 0.40%.

Corby accesses these funds on a daily basis and has the contractual
right to withdraw these funds or terminate these cash management
arrangements upon providing five days' written notice.

Selected Quarterly Information

Summary of Quarterly Financial Results


(in millions of Canadian dollars,		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3
except per share amounts)		2012		2012		2011		2011		2011		2011		2010 ⁽¹⁾		2010 ⁽¹⁾

Revenue	$	40.9	$	44.2	$	40.0	$	32.4	$	45.5	$	41.6	$	42.0	$	32.2
Earnings from operations		33.6		12.6		9.4		4.3		13.7		13.1		9.4		6.8
Net earnings, excluding undernoted items ⁽²⁾		9.0		9.9		6.8		3.1		9.8		9.2		6.6		4.5
Net earnings		27.1		9.5		6.8		4.8		9.8		9.2		6.6		4.5
Basic EPS		0.95		0.33		0.24		0.11		0.34		0.32		0.23		0.16
Diluted EPS		0.95		0.33		0.24		0.11		0.34		0.32		0.23		0.16

⁽¹⁾ The selected information that is presented for quarterly periods in fiscal 2010 does not reflect the impact of the adoption of IFRS.
⁽²⁾ Net earnings have been adjusted for the net after-tax gain on the sale of plant and brands of $17.7 million in the current year and for the net after-tax loss on the sale of Seagram Coolers of $1.7 million in 2011

The above chart demonstrates the seasonality of Corby's business, as
sales are typically strong in the first and second quarters, while
third-quarter sales (January, February and March) usually decline after
the end of the retail holiday season. Fourth-quarter sales typically
increase again with the onset of warmer weather, as consumers tend to
increase their purchasing levels during the summer season.

Also highlighted in the chart is the effect the aforementioned sale
transactions (i.e., the sale of the Montreal plant and non-core brands
in Q2-2012, and the sale of the Seagram Coolers brand in Q3-2011) had
on the quarter. Specifically, on a quarter over quarter comparative
basis, revenues for Q2-2012 are lower by $5.6 million compared to
Q2-2011 due to these aforementioned changes to the Company's brand
portfolio. Removing the impact of the aforementioned sale transactions,
revenue from the remaining Corby brand portfolio and other business
activities increased 3% for the quarter when compared with the same
period in the prior year. In addition, the Company's net earnings were
impacted by the gain on the sale of the Montreal plant and non-core
brands in the amount of $18.1 million in the current quarter. The third
quarter of 2011 was impacted by a loss on the sale of the Seagram
Coolers brand in the amount of $1.7 million.

For further information regarding the sale of the Montreal plant and
non-core brands please refer to the interim condensed consolidated
financial statements for the period ending December 31, 2011. For
further information regarding the sale of the Seagram Coolers brand
please refer to the most recently completed annual report for the year
ended June 30, 2011.

New Accounting Pronouncements

Transition to International Financial Reporting Standards

The Company has adopted International Financial Reporting Standards
("IFRS") for its 2012 fiscal year as required by the Accounting
Standards Board of the Canadian Institute of Chartered Accountants. The
Company provided information on its transition to IFRS in its 2011
Annual MD&A. The assessments and impacts discussion in the 2011 Annual
MD&A remain largely unchanged.

The most significant impact of the transition to IFRS is the revaluation
of the Company's provision for pensions to conform to Corby's parent
company's measurement basis. Upon transition to IFRS, the Company's
opening July 1, 2010 retained earnings balance has been reduced by
$14.6 million, including the impact of taxes, due to the revaluation of
its pension obligations.

The Company has provided a detailed explanation of the impacts of this
transition in Note 16 of the Company's first quarter 2012 unaudited
condensed interim period financial statements ("Note 16"). Note 16
includes reconciliations of the Company's balance sheet and
shareholders' equity from Canadian GAAP to IFRS as at June 30, 2011 and
July 1, 2010 and its fiscal 2011 net earnings and comprehensive income
for the year ending June 30, 2011. Explanation of the individual
impacts of adopting IFRS identified in the reconciliations is also
provided, as are the Company's elections under IFRS 1 "First-time
Adoption of International Financial Reporting Standards". Note 16 to
the Company's second quarter 2012 unaudited condensed consolidated
financial statements includes reconciliations of the Company's balance
sheet and shareholders' equity from Canadian GAAP to IFRS as at
December 31, 2011 and its net earnings and comprehensive income for the
three and six months ended December 31, 2011.

Recent accounting pronouncements

A number of new standards, amendments to standards and interpretations
have been issued but are not yet effective for the financial year
ending June 30, 2012, and accordingly, have not been applied in
preparing the interim condensed consolidated financial statements for
the three and six month periods ending December 31, 2011:

(i)Financial Instruments

The IASB has issued a new standard, IFRS 9, "Financial Instruments"
("IFRS 9"), which will ultimately replace IAS 39, "Financial
Instruments: Recognition and Measurement" ("IAS 39"). The replacement
of IAS 39 is a multi-phase project with the objective of improving and
simplifying the reporting for financial instruments and the issuance of
IFRS 9 is part of the first phase. This standard becomes effective on
January 1, 2015. The Company is currently assessing the impact of this
new standard on its consolidated financial statements.

(ii)Deferred Taxes - Recovery of Underlying Assets

The IASB has issued an amendment to IAS 12, "Income Taxes" ("IAS 12
amendment"), which introduces an exception to the general measurement
requirements of IAS 12 in respect of investment properties measured at
fair value. The IAS 12 amendment is effective for annual periods
beginning on or after January 1, 2012. The Company will apply the
amendment at the beginning of its 2013 financial year, beginning July
1, 2012. The Company is currently assessing the impact of the IAS 12
amendment on its consolidated financial statements.

(iii)Consolidated Financial Statements

In May 2011 the IASB issued IFRS 10, "Consolidated Financial Statements"
("IFRS 10"), IFRS 11, "Joint Ventures" ("IFRS 11"), and IFRS 12,
"Disclosure of Interest in Other Entities" ("IFRS 12"). In addition,
the IASB amended IAS 27, "Consolidated and Separate Financial
Statements" ("IAS27") and IAS 28, "Investments in Associates and Joint
Ventures" ("IAS 28"). The objective of IFRS 10 is to define the
principles of control and establish the basis of determining when and
how an entity should be included within a set of consolidated financial
statements. IFRS 11 establishes principles to determine the type of
joint arrangement and guidance for financial reporting activities
required by entities that have an interest in an arrangement that is
jointly controlled. IFRS 12 enables users of the financial statements
to evaluate the nature and risks associated with its interest in other
entities and the effects of those interests on its financial
performance.

IFRS 10, 11 and 12, and the amendments to IAS 27 and 28 are all
effective for annual periods beginning on or after January 1, 2013. The
Company is currently assessing the impact of these new standards on its
consolidated financial statements.

(iv)Fair Value Measurement

On May 12, 2011 the IASB issued IFRS 13, "Fair Value Measurement" ("IFRS
13") which defines fair value, provides guidance in a single IFRS
framework for measuring fair value and identifies the required
disclosures pertaining to fair value measurement. This standard is
effective for annual periods beginning on or after January 1, 2013. The
Company is currently assessing the impact of the new standard on its
consolidated financial statements.

(v)Employee Benefits

On June 16, 2011 the IASB revised IAS 19, "Employee Benefits" ("IAS
19"). The revisions include the elimination of the option to defer the
recognition of actuarial gains and losses, enhancing the guidance
around measurement of plan assets and defined benefit obligations,
streamlining the presentation of changes in assets and liabilities
arising from defined benefit plans and introduces enhanced disclosure
for defined benefit plans. The amendments are effective for annual
periods beginning on or after January 1, 2013. The Company is currently
assessing the impact of this amendment on its consolidated financial
statements.

(vi)Presentation of Financial Statements

On June 16, 2011 the IASB issued amendments to IAS 1, "Presentation of
Financial Statements." The amendments enhance the presentation of Other
Comprehensive Income ("OCI") in the financial statements. The
amendments are effective for annual periods beginning on or after July
1, 2012. The Company is currently assessing the impact of this
amendment on its consolidated financial statements.

Internal Controls Over Financial Reporting

The Company maintains a system of disclosure controls and procedures to
provide reasonable assurance that all material information relating to
the Company is gathered and reported to senior management on a timely
basis so that appropriate decisions can be made regarding public
disclosure.

In addition, the CEO and CFO have designed, or caused to be designed
under their supervision, internal controls over financial reporting to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with IFRS. Internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those
systems determined to be designed effectively can provide only
reasonable assurance with respect to financial reporting and financial
statement preparation.

There were no changes in internal control over financial reporting
during the Company's most recent interim period that have materially
affected, or are reasonably likely to materially affect, the Company's
internal controls over financial reporting.

Risks & Risk Management

The Company is exposed to a number of risks in the normal course of its
business that have the potential to affect its operating and financial
performance.

Industry and Regulatory

The beverage alcohol industry in Canada is subject to government policy,
extensive regulatory requirements and significant rates of taxation at
both the federal and provincial levels. As a result, changes in the
government policy, regulatory and/or taxation environments within the
beverage alcohol industry may affect Corby's business operations,
causing changes in market dynamics or changes in consumer consumption
patterns. In addition, the Company's provincial LB customers have the
ability to mandate changes that can lead to increased costs, as well as
other factors that may impact financial results.

The Company continuously monitors the potential risk associated with any
proposed changes to its government policy, regulatory and taxation
environments, and, as an industry leader, actively participates in
trade association discussions relating to new developments.

Consumer Consumption Patterns

Beverage alcohol companies are susceptible to risks relating to changes
in consumer consumption patterns. Consumer consumption patterns are
affected by many external influences, not the least of which is the
economic outlook and overall consumer confidence in the stability of
the economy as a whole. Corby offers a diverse portfolio of products
across all major spirits categories and at various price points, which
complements consumer desires and offers exciting innovation.

Distribution/Supply Chain Interruption

The Company is susceptible to risks relating to distributor and supply
chain interruptions. Distribution in Canada is largely accomplished
through the government-owned provincial LBs and, therefore, an
interruption (e.g., a labour strike) for any length of time may have a
significant impact on the Company's ability to sell its products in a
particular province and/or market.

Supply chain interruptions, including a manufacturing or inventory
disruption, could impact product quality and availability. The Company
adheres to a comprehensive suite of quality programs and proactively
manages production and supply chains to mitigate any potential risk to
consumer safety or Corby's reputation and profitability.

Environmental Compliance

Environmental liabilities may potentially arise when companies are in
the business of manufacturing products and, thus, required to handle
potentially hazardous materials. As Corby outsources the majority of
its production, including all of its storage and handling of maturing
alcohol, the risk of environmental liabilities has been reduced to an
acceptably low level. In addition, Corby's owned-production facility
follows strict industry guidelines for the proper use and/or disposal
of hazardous materials to further reduce environmental risks. Corby
currently has no significant recorded or unrecorded environmental
liabilities.

Industry Consolidation

In recent years, the global beverage alcohol industry has experienced a
significant amount of consolidation. Industry consolidation can have
varying degrees of impact and, in some cases, may even create
exceptional opportunities. Either way, management believes that the
Company is well positioned to deal with this or other changes to the
competitive landscape in Canada.

Competition

The Canadian beverage alcohol industry is extremely competitive.
Competitors may take actions to establish and sustain a competitive
advantage. They may also affect Corby's ability to attract and retain
high-quality employees. The Company's long heritage attests to Corby's
strong foundation and successful execution of its strategies. Being a
leading Canadian beverage alcohol company helps facilitate recruitment
efforts. Corby appreciates and invests in its employees to partner with
them in achieving corporate objectives and creating value.

Credit Risk

Credit risk arises from deposits in cash management pools held with PR
via Corby's participation in the Mirror Netting Service Agreement (as
previously described in the "Related Party Transactions" section of
this MD&A), as well as credit exposure to customers, including
outstanding accounts and note receivable. The maximum exposure to
credit risk is equal to the carrying value of the Company's financial
assets. The objective of managing counter-party credit risk is to
prevent losses in financial assets. The Company assesses the credit
quality of its counter-parties, taking into account their financial
position, past experience and other factors. As the large majority of
Corby's accounts receivable balances are collectable from
government-controlled LBs, management believes the Company's credit
risk relating to accounts receivable is at an acceptably low level. The
Company's note receivable is secured.

Exposure to Interest Rate Fluctuations

The Company does not have any short- or long-term debt facilities.
Interest rate risk exists, as Corby earns market rates of interest on
its deposits in cash management pools and also has a note receivable
that earns a fixed rate of interest. An active risk management program
does not exist, as management believes that changes in interest rates
would not have a material impact on Corby's financial position over the
long term.

Exposure to Commodity Price Fluctuations

Commodity risk exists, as the manufacture of Corby's products requires
the procurement of several known commodities, such as grains, sugar and
natural gas. The Company strives to partially mitigate this risk
through the use of longer-term procurement contracts where possible. In
addition, subject to competitive conditions, the Company may pass on
commodity price changes to consumers through pricing over the long
term.

Foreign Currency Exchange Risk

The Company has exposure to foreign currency risk, as it conducts
business in multiple foreign currencies; however, its exposure is
primarily limited to the US dollar ("USD") and UK pound sterling
("GBP"). Corby does not utilize derivative instruments to manage this
risk. Subject to competitive conditions, changes in foreign currency
rates may be passed on to consumers through pricing over the long term.

USD Exposure

The Company's demand for USD has traditionally outpaced its supply, due
to USD sourcing of production inputs exceeding that of the Company's
USD sales. Therefore, decreases in the value of the Canadian dollar
("CAD") relative to the USD will have an unfavourable impact on the
Company's earnings.

GBP Exposure

The Company's supply of GBP outpaces demand, as Corby's sales into the
UK market are denominated in GBP, while it has only an insignificant
amount of GBP purchases. Therefore, increases in the value of the CAD
relative to the GBP will have an unfavourable impact on the Company's
earnings. As a result of the Company's recent relocation of its Lamb's
international production from Canada to the UK, Corby's exposure to
fluctuations in GBP relative to the CAD will be reduced.

Third-Party Service Providers

HWSL, for which Corby manages on behalf of PR, provides more than 80% of
the Company's production requirements, among other services including
administration and information technology. However, the Company is
reliant upon certain third-party service providers in respect of
certain of its operations. It is possible that negative events
affecting these third-party service providers could, in turn,
negatively impact the Company. While the Company has no direct control
over how such third parties are managed, it has entered into
contractual arrangements to formalize these relationships. In order to
minimize operating risks, the Company actively monitors and manages its
relationships with its third-party service providers.

Brand Reputation and Trademark Protection

The Company promotes nationally branded, non-proprietary products as
well as proprietary products. Damage to the reputation of any of these
brands, or to the reputation of any supplier or manufacturer of these
brands, could negatively impact consumer opinion of the Company or the
related products, which could have an adverse impact on the financial
performance of the Company. The Company strives to mitigate such risks
by selecting only those products from suppliers that strategically
complement Corby's existing brand portfolio and by actively monitoring
brand advertising and promotion activities. The Company registers
trademarks, as applicable, while constantly watching for and responding
to competitive threats, as necessary.

Valuation of Goodwill and Intangible Assets

Goodwill and intangible assets account for a significant amount of the
Company's total assets. Goodwill and intangible assets are subject to
impairment tests that involve the determination of fair value. Inherent
in such fair value determinations are certain judgments and estimates
including, but not limited to, projected future sales, earnings and
capital investment; discount rates; and terminal growth rates. These
judgments and estimates may change in the future due to uncertain
competitive market and general economic conditions, or as the Company
makes changes in its business strategies. Given the current state of
the economy, certain of the aforementioned factors affecting the
determination of fair value may be impacted and, as a result, the
Company's financial results may be adversely affected.

The following chart summarizes Corby's goodwill and intangible assets
and details the amounts associated with each brand (or basket of
brands) and market:


			Carrying Values as at December 31, 2011

Associated Brand	Associated Market		Goodwill		Intangibles		Total

Various PR brands	Canada	$	-	$	44.2	$	44.2
Lamb's rum	United Kingdom⁽¹⁾		1.4		11.8		13.2
Corby domestic brands	Canada ⁽²⁾		1.9		-		1.9

		$	3.3	$	56.0	$	59.3

⁽¹⁾ The international business for Lamb's rum is primarily focused in the UK, however, the trademarks andlicences purchased, relate to all international markets outside of Canada, as Corby previously owned the Canadian rights.

⁽²⁾ Goodwill related to Corby domestic brands has been adjusted to reflect the impact of the sale of certain DeKuyper brands as discussed in the "Significant Events" section of this MD&A.

Therefore, economic factors (such as consumer consumption patterns)
specific to these brands and markets are primary drivers of the risk
associated with their respective goodwill and intangible assets
valuations.

Provision for pensions

The Company has certain obligations under its registered and
non-registered defined benefit pension plans and other post-retirement
benefit plan. There is no assurance that the Company's benefit plans
will be able to earn the assumed rate of return. New regulations and
market-driven changes may result in changes in the discount rates and
other variables, which would result in the Company being required to
make contributions in the future that differ significantly from
estimates. An extended period of depressed capital markets and low
interest rates could require the Company to make contributions to these
plans in excess of those currently contemplated, which, in turn, could
have an adverse impact on the financial performance of the Company.
Somewhat mitigating the impact of a potential market decline is the
fact that the Company monitors its pension plan assets closely and
follows strict guidelines to ensure that pension fund investment
portfolios are diversified in-line with industry best practices. For
further details related to Corby's defined benefit pension plans,
please refer to Note 21 of the interim condensed consolidated financial
statements for the quarter ended September 30, 2011 which includes
details of the provision for pensions under IFRS as at June 30, 2011.

CORBY DISTILLERIES LIMITED
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)
(in thousands of Canadian dollars)

			December 31,		December 31,		June 30,		July 1,
	Note		2011		2010⁽¹⁾		2011⁽¹⁾		2010⁽¹⁾


ASSETS
Deposits in cash management pools		$	158,427	$	90,062	$	96,636	$	74,685
Accounts receivable	5		30,271		30,770		31,005		28,340
Income and other taxes recoverable			-		-		-		1,070
Inventories			49,089		61,472		59,654		60,502
Prepaid expenses			806		627		1,731		1,551
Current portion of note receivable			600		-		600		-

Total current assets			239,193		182,931		189,626		166,148
Note receivable			1,800		-		1,800		-
Deferred income taxes			-		-		256		-
Property, plant and equipment			6,691		14,679		15,646		15,238
Goodwill			3,278		6,857		5,886		6,857
Intangible assets			56,037		68,306		58,302		70,571

Total assets		$	306,999	$	272,773	$	271,516	$	258,814


LIABILITIES
Accounts payable and accrued liabilities	6	$	25,135	$	20,720	$	19,492	$	18,285
Income and other taxes payable			2,774		932		115		-
Dividends payable	11		52,667		-		-		-

Total current liabilities			80,576		21,652		19,607		18,285
Provision for pensions			10,695		13,658		12,670		14,175
Deferred income taxes			884		131		-		41

Total liabiliites			92,155		35,441		32,277		32,501

Shareholders' equity
Share capital			14,304		14,304		14,304		14,304
Retained earnings			200,540		223,028		224,935		212,009

Total shareholders' equity			214,844		237,332		239,239		226,313

Total liabilities and shareholders' equity		$	306,999	$	272,773	$	271,516	$	258,814

⁽¹⁾ In preparing its comparative information, the Company has adjusted
amounts reported previously in financial statements prepared in
accordance with Canadian Generally Accepted Accounting Principles
("Canadian GAAP"). See Note 16 to the first interim condensed
consolidated financial statements for the three month periods ending
September 30, 2011 and 2010 for an explanation of the transition to
IFRS on the balance sheet at July 1, 2010 and Note 16 to these
condensed consolidated financial statements for an explanation of the
impact on the three and six month periods ending December 31, 2010.

The accompanying notes are an integral part of these interim condensed
consolidated financial statements.

CORBY DISTILLERIES LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)
(in thousands of Canadian dollars, except per share amounts)

				For the Three Months Ended				For the Six Months Ended

				December 31,		December 31,		December 31,		December 31,
		Note		2011		2010⁽¹⁾		2011		2010⁽¹⁾


Revenue		7,13	$	40,919	$	45,501	$	85,142	$	87,111

Cost of sales		8,13		(16,758)		(19,118)		(36,136)		(36,838)
Marketing, sales and administration		8,13		(12,521)		(12,911)		(24,442)		(23,825)
Gain on sale of plant and non-core brands		4, 16		21,936		-		21,532		-
Other income and expenses		9		(22)		262		71		341

Earnings from operations				33,554		13,734		46,167		26,789

Financial income		10		501		310		996		549
Financial expenses		10		(115)		(244)		(277)		(482)
Net financial income				386		66		719		67

Earnings before income taxes				33,940		13,800		46,886		26,856

Current income taxes				(5,585)		(4,020)		(9,218)		(7,775)
Deferred income taxes				(1,287)		6		(1,140)		(90)
Income taxes		14		(6,872)		(4,014)		(10,358)		(7,865)

Net earnings			$	27,068	$	9,786	$	36,528	$	18,991

Basic earnings per share			$	0.95	$	0.34	$	1.28	$	0.67
Diluted earnings per share			$	0.95	$	0.34	$	1.28	$	0.67

Weighted average common shares outstanding
	Basic			28,468,856		28,468,856		28,468,856		28,468,856
	Diluted			28,468,856		28,468,856		28,468,856		28,468,856

The accompanying notes are an integral part of these interim condensed
consolidated financial statements.

CORBY DISTILLERIES LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)
(in thousands of Canadian dollars)

		For the Three Months Ended				For the Six Months Ended

		December 31,		December 31,		December 31,		December 31,
		2011		2010⁽¹⁾		2011		2010⁽¹⁾

Net earnings	$	27,068	$	9,786	$	36,528	$	18,991

Other comprehensive income		-		-		-		-

Total comprehensive income	$	27,068	$	9,786	$	36,528	$	18,991

The accompanying notes are an integral part of these interim condensed
consolidated financial statements.

CORBY DISTILLERIES LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)
(in thousands of Canadian dollars)

	Note		Share Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total

Balance as at July 1, 2011 ⁽¹⁾		$	14,304	$	-	$	224,935	$	239,239
Net earnings			-		-		36,528		36,528
Other comprehensive income			-		-		-		-
Dividends	11		-		-		(60,923)		(60,923)

Balance as at December 31, 2011		$	14,304	$	-	$	200,540	$	214,844


Balance as at July 1, 2010 ⁽¹⁾		$	14,304	$	-	$	212,009	$	226,313
Net earnings			-		-		18,991		18,991
Other comprehensive income			-		-		-		-
Dividends			-		-		(7,972)		(7,972)

Balance as at December 31, 2010 ⁽¹⁾		$	14,304	$	-	$	223,028	$	237,332

The accompanying notes are an integral part of these interim condensed
consolidated financial statements.

CORBY DISTILLERIES LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)
(in thousands of Canadian dollars)

			For the Three Months Ended				For the Six Months Ended

			December 31,		December 31,		December 31,		December 31,
	Notes		2011		2010⁽¹⁾		2011		2010⁽¹⁾

Operating activities
Net earnings		$	27,068	$	9,786	$	36,528	$	18,991
Adjustments for:
Amortization and depreciation	8		1,423		1,567		2,991		3,133
Net financial income	10		(386)		(66)		(719)		(67)
Gain on sale of plant and non-core brands			(21,936)		-		(21,532)		-
(Gain) loss on disposal of property and equipment			(86)		(7)		(86)		4
Income tax expense			6,872		4,014		10,358		7,865
Provision for pensions			(2,383)		(1,047)		(2,231)		(999)
			10,572		14,247		25,309		28,927
Net change in non-cash working capital balances	12		9,458		3,163		12,014		585
Interest received			481		303		915		545
Income taxes paid			(2,411)		(2,399)		(6,140)		(6,395)

Net cash from operating activities			18,100		15,314		32,098		23,662

Investing activities
Additions to property, plant and equipment			(309)		(252)		(309)		(330)
Net proceeds from sale of plant and non-core brands			38,491		-		38,087		-
Proceeds from disposition of property and equipment			171		11		171		17
Deposits in cash management pools			(52,183)		(11,087)		(61,791)		(15,377)

Net cash used in investing activities			(13,830)		(11,328)		(23,842)		(15,690)

Financing activity
Dividends paid	11		(4,270)		(3,986)		(8,256)		(7,972)

Net cash used in financing activity			(4,270)		(3,986)		(8,256)		(7,972)

Net increase in cash			-		-		-		-
Cash, beginning of period			-		-		-		-

Cash, end of period		$	-	$	-	$	-	$	-

The accompanying notes are an integral part of these interim condensed
consolidated financial statements.

CORBY DISTILLERIES LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands of Canadian dollars, except per share amounts)

1. GENERAL INFORMATION

Corby Distilleries Limited ("Corby" or the "Company") is a leading
Canadian manufacturer and marketer of spirits and importer of wines.
The Company derives its revenues from the sale of its owned-brands in
Canada and other international markets, as well as earning commissions
from the representation of selected non-owned brands in the Canadian
marketplace. Revenues predominantly consist of sales made to each of
the provincial liquor boards in Canada.

Corby is controlled by Hiram Walker & Sons Limited ("HWSL"), which is a
wholly owned subsidiary of Pernod Ricard, S.A. ("PR"), a French public
limited company that owned 51.6% of the outstanding Voting Class A
Common Shares of Corby as at June 30, 2011.

Corby is a public company incorporated and domiciled in Canada, whose
shares are traded on the Toronto Stock Exchange. The Company's
registered address is 225 King Street West, Suite 1100, Toronto, ON M5V
3M2.

2. BASIS OF PREPARATION

Statement of compliance

These interim condensed consolidated financial statements have been
prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board
("IASB"). They have been prepared using the accounting policies the
Company expects to adopt in its consolidated financial statements as at
and for the financial year ending June 30, 2012 that were described in
Note 3 to the Company's first quarter interim condensed consolidated
financial statements as at and for the three months ended September 30,
2011 and 2010.

As these interim condensed consolidated financial statements are
prepared using International Financial Reporting Standards ("IFRS"),
certain disclosures that are required to be included in the annual
financial statements prepared in accordance with IFRS that were not
included in the Company's most recent annual financial statements
prepared in accordance with Canadian Generally Accepted Accounting
Principles ("Canadian GAAP"), were included in Note 3 to the Company's
first quarter interim condensed consolidated financial statements as at
and for the three months ended September 30, 2011 and 2010.

These interim condensed consolidated financial statements should be read
in conjunction with the Company's 2011 annual financial statements and
in consideration of the IFRS transitional disclosures included in Note
16 to these interim condensed consolidated financial statements and
Note 16 to the first quarter interim condensed consolidated financial
statements as at and for the three months ended September 30, 2011 2010
and the additional annual disclosures included in the Company's interim
condensed consolidated financial statements as at and for the three
months ended September 30, 2011 and 2010 (Notes 17 through 25).

These interim condensed consolidated financial statements were approved
by the Company's Board of Directors on February 8, 2012.

Functional and presentation currency

The Company's interim condensed consolidated financial statements are
presented in Canadian dollars, which is the Company's functional and
presentation currency.

Foreign currency translation

Transactions denominated in foreign currencies are translated into the
functional currency using the exchange rate applying at the transaction
date. Non-monetary assets and liabilities denominated in foreign
currencies are recognized at the historical exchange rate applicable at
the transaction date. Monetary assets and liabilities dominated in
foreign currencies are translated at the exchange rate applying at the
balance sheet date. Foreign currency differences related to operating
activities are recognized in earnings from operations for the period;
foreign currency differences related to financing activities are
recognized within net financial income.

Basis of Measurement

These interim condensed consolidated financial statements are prepared
in accordance with the historical cost model, except for certain
categories of assets and liabilities, which are measured in accordance
with the methods provided for by IFRS and as described in Note 3 of the
first quarter interim condensed consolidated financial statements for
the three months ended September 30, 2011 and 2010. Historical cost is
generally based on the fair value of the consideration given in
exchange for assets.

Seasonality

The interim condensed consolidated financial statements should not be
taken as indicative of the performance to be expected for the full year
due to the seasonal nature of the spirits business. Corby's operations
are subject to seasonal fluctuations as sales are typically strong in
the first and second quarters, while third-quarter sales usually
decline after the end of the retail holiday season. Fourth-quarter
sales typically increase again with the onset of warmer weather as
consumers tend to increase their purchasing levels during the summer
season.

Use of Estimates and Judgements

The preparation of the interim condensed consolidated financial
statements in conformity with IFRS requires management to make certain
judgements, estimates and assumptions that affect the application of
accounting policies, the reported amounts of assets and liabilities,
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 period. These estimates are made on
the assumption the Company will continue as a going concern and are
based on information available at the time of preparation. Estimates
may be revised where the circumstance on which they were based change
or where new information becomes available. Future outcomes can differ
from these estimates.

Judgement is commonly used in determining whether a balance or
transaction should be recognized in the consolidated financial
statements and estimates and assumptions are more commonly used in
determining the measurement of recognized transactions and balances.
However, judgement and estimates are often interrelated.

The Company has applied judgement in its determining the tax rates used
for measuring deferred taxes and identifying the indicators of
impairment for property, plant and equipment, goodwill and intangible
assets. In the absence of standards or interpretations applicable to a
specific transaction, management uses its judgement to define and apply
accounting policies that provide relevant and reliable information in
the context of the preparation of the financial statements.

Estimates are used when estimating the useful lives of property, plant
and equipment and intangible assets for the purpose of depreciation and
amortization, when accounting for or measuring items such as allowances
for uncollectible accounts receivable and inventory obsolescence,
assumptions underlying the actuarial determination of provision for
pensions, income and other taxes, provisions, certain fair value
measures including those related to the valuation of share-based
payments and financial instruments, and when testing goodwill,
intangible assets and other assets for impairment. Actual results may
differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which
the estimates are revised and in any future periods affected.

3. SIGNIFICANT ACCOUNTING POLICIES

Recent accounting pronouncements

A number of new standards, amendments to standards and interpretations
have been issued but are not yet effective for the financial year
ending June 30, 2012, and accordingly, have not been applied in
preparing these consolidated financial statements:

(i)Financial Instruments

The IASB has issued a new standard, IFRS 9, "Financial Instruments"
("IFRS 9"), which will ultimately replace IAS 39, "Financial
Instruments: Recognition and Measurement" ("IAS 39"). The replacement
of IAS 39 is a multi-phase project with the objective of improving and
simplifying the reporting for financial instruments and the issuance of
IFRS 9 is part of the first phase. This standard becomes effective on
January 1, 2015. The Company is currently assessing the impact of the
new standard on its results of operations, financial position and
disclosures.

(ii)Deferred Taxes - Recovery of Underlying Assets

(iii)Consolidated Financial Statements

(iv)Fair Value Measurement

(v)Employee Benefits

(vi)Presentation of Financial Statements

4. SALE OF PLANT AND NON-CORE BRANDS

On October 31, 2011, the Company completed a transaction to sell the
shares of the wholly-owned subsidiary that owned the manufacturing and
bottling facility located in Montreal, Quebec. The transaction resulted
in the sale of 17 brands, as well as the Montreal-based manufacturing
facility where a significant portion of the brands were produced, for a
total purchase price of $39,660; including the cost of inventory and
other working capital items associated with the brands and
manufacturing facility sold. For the six months ended December 31, 2011
the gain on sale was calculated as follows:

Proceeds, including inventory and other working capital items	$	39,660

Book value of assets sold, including inventory and other working capital items		(17,820)
Curtailment gain with respect to employee future benefit plans		2,168
Transaction costs		(2,476)

Gain on sale before income taxes		21,532
Income taxes		(3,855)

Net gain on sale	$	17,677

Transaction costs includes $404 of costs expensed during the first
quarter ended September 30, 2011, where at that time they were
classified as "Other income and expenses" given the transaction had not
yet closed.

5. ACCOUNTS RECEIVABLE


		December 31,		December 31,		June 30,		July 1,
		2011		2010		2011		2010

Trade receivables	$	20,707	$	24,262	$	21,398	$	22,144
Due from related parties		8,113		6,508		8,216		6,196
Other receivables		1,451		-		1,391		-

	$	30,271	$	30,770	$	31,005	$	28,340

Other receivables include amounts owing from Brick Brewing Co., Limited
for inventory transferred as part of the sale of the Seagram Coolers
brand, and also includes interest accrued on the secured promissory
note receivable also due from Brick Brewing Co., Limited. These amounts
are due and payable within the next 12 months. Further information
regarding the sale of the Seagram Coolers brand is provided in the
Company's most recently completed annual report for the year ended June
30, 2011.

6. ACCOUNTS PAYABLE AND ACCRUALS


		December 31,		December 31,		June 30,		July 1,
		2011		2010		2011		2010

Trade payables and accruals	$	18,285	$	15,641	$	13,375	$	12,554
Due to related parties		6,850		5,079		6,117		5,731

	$	25,135	$	20,720	$	19,492	$	18,285

7. REVENUES

The Company's revenue consists of the following streams:


		Three Months Ended				Six Months Ended

		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010

Case good sales	$	31,054	$	34,299	$	62,081	$	65,814
Commissions		4,782		4,797		9,465		9,073
Other services		5,083		6,405		13,596		12,224

	$	40,919	$	45,501	$	85,142	$	87,111

Commissions for the three and six month periods are shown net of the
long-term representation rights amortization of $1,133 and $2,265 (2010
- $1,133 and $2,265). Other services include revenues incidental to the
manufacture of case goods, such as contract bottling revenues,
logistics fees and miscellaneous bulk spirit sales.

8. EXPENSES BY NATURE

Earnings from operations include depreciation and amortization, as well
as personnel expenses as follows:


		Three Months Ended				Six Months Ended

		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010

Depreciation of property, plant and equipment	$	290	$	434	$	726	$	868
Amortization of intangible assets		1,133		1,133		2,265		2,265
Salary and payroll costs		4,719		5,163		10,863		10,791
(Recoveries) expenses related to pensions and benefits		(1,743)		(20)		(1,252)		422

	$	4,399	$	6,710	$	12,602	$	14,346

9. OTHER INCOME AND EXPENSES

The Company's other income (expense) consist of the following amounts:


		Three Months Ended				Six Months Ended

		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010

Foreign exchange gain (loss)	$	(48)	$	(190)	$	33	$	(84)
Gain (loss) on disposal of property and equipment		86		7		86		(4)
Amortization of actuarial gains (losses) under defined benefit plans		(60)		445		(48)		429

	$	(22)	$	262	$	71	$	341

10. NET FINANCIAL INCOME

The Company's financial income (expense) consists of the following
amounts:


		Three Months Ended				Six Months Ended

		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010

Interest income	$	501	$	310	$	996	$	556
Interest expense		(8)		(3)		(21)		(7)
Net financial impact of pensions		(107)		(241)		(256)		(482)

	$	386	$	66	$	719	$	67

11. DIVIDENDS

On November 9, 2011, the Company's Board of Directors declared a special
dividend of $1.85 per common share, to shareholders of record as at the
close of business on December 15, 2011, payable January 3, 2012.
Subsequent to the quarter-ended December 31, 2011, and in-line with the
terms of the dividend declaration just described, the Company paid the
full amount of the dividend of $52,667 on January 3, 2012. The payment
was sourced from the Company's deposits in cash management pools.

On February 8, 2012, subsequent to the quarter ended December 31, 2011,
the Board of Directors declared its regular quarterly dividend of $0.15
per common share, payable March 15, 2012, to shareholders of record as
at the close of business on February 29, 2012. This dividend is in
accordance with the Company's dividend policy.

12. NET CHANGE IN NON-CASH WORKING CAPITAL BALANCES


		Three Months Ended				Six Months Ended

		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010

Accounts receivable	$	(1,100)	$	(466)	$	734	$	(2,430)
Inventories		3,272		1,874		4,348		(970)
Prepaid expenses		801		253		925		924
Other taxes recoverable		(1,279)		(651)		(961)		622
Accounts payable and accrued liabilities		7,764		2,153		6,968		2,439

	$	9,458	$	3,163	$	12,014	$	585

13. RELATED PARTY TRANSACTIONS

Transactions with parent, ultimate parent, and affiliates

The majority of Corby's issued and outstanding voting Class A shares are
owned by HWSL. HWSL is a wholly-owned subsidiary of PR. Therefore, HWSL
is Corby's parent and PR is Corby's ultimate parent. Affiliated
companies are subsidiaries which are controlled by Corby's parent
and/or ultimate parent.

On November 9, 2011, the Company announced that it has entered into an
agreement with PR for a new term for Corby's exclusive right to
represent ABSOLUT vodka in Canada from September 30, 2013 to September
29, 2021, which is consistent with the term of Canadian representation
for the other PR brands in Corby's portfolio. Under the agreement,
Corby will pay the present value of $10 million to PR at the
commencement of the new term for the additional eight years of the new
term.

Transactions between Corby and its parent, ultimate parent and
affiliates during the period are as follows:


		Three Months Ended				Six Months Ended

			December 31,		December 31,		December 31,		December 31,
			2011		2010		2011		2010

Sales to related parties
	Commissions - parent, ultimate parent and affiliated companies	$	5,012	$	4,927	$	9,873	$	9,518
	Blending and bottling services - parent		33		80		217		137
	Products for resale at an export level - affiliated companies		119		81		248		201
	Bulk spirits - parent		37		-		150		-

		$	5,201	$	5,088	$	10,488	$	9,856

Cost of goods sold, purchased from related parties
	Distilling, blending, and production services - parent	$	4,652	$	4,694	$	9,073	$	10,432
	Bulk spirits - parent		148		337		700		1,008

		$	4,800	$	5,031	$	9,773	$	11,440

Administrative services purchased from related parties
	Marketing, selling and administraton services- parent	$	511	$	549	$	1,022	$	1,108

Outstanding balances with these related parties are priced on an arm's
length basis and are to be settled in cash within two months of the
reporting date. None of the balances are secured.

Deposits in cash management pools

Corby participates in a cash pooling arrangement under the Mirror
Netting Service Agreement together with PR's other Canadian affiliates,
the terms of which are administered by The Bank of Nova Scotia. The
Mirror Netting Services Agreement acts to aggregate each participant's
net cash balance for the purposes of having a centralized cash
management function for all of PR's Canadian affiliates, including
Corby.

As a result of Corby's participation in this agreement, Corby's credit
risk associated with its deposits in cash management pools is
contingent upon PR's credit rating. PR's credit rating as at February
8, 2012, as published by Standard & Poor's and Moody's, was BBB- and
Baa3, respectively. PR compensates Corby for the benefit it receives
from having the Company participate in the Mirror Netting Services
Agreement by paying interest to Corby based upon the 30-day LIBOR rate
plus 0.40%. During the three and six month periods ending December 31,
2011, Corby earned interest income of $463 and $850 from PR (2010 -
$308 and $549). Corby has the right to terminate its participation in
the Mirror Netting Services Agreement at any time, subject to five
days' written notice.

Corby has a number of defined benefit pension plans; for the three and
six month periods ending December 31, 2011, contributions to these
plans totaled $322 and $639, (2010 - $569 and $1094), respectively.

During the three month period ending December 31, 2011, Corby sold
machinery and equipment to its parent company for net proceeds of $168
(2010 - $nil).

14. INCOME TAXES

The effective tax rate for the three and six month period ended December
31, 2011 was substantially impacted by the effect of the October 31,
2011 sale transaction, whereby the Company sold its Montreal bottling
facility and certain non-core brands. Further details regarding the
aforementioned sale transaction, including the income tax impact,
please refer to Note 4 of these interim condensed consolidated
financial statements.

15. SEGMENT INFORMATION

Corby has two reportable segments: Case Goods and Commissions. Corby's
Case Goods segment derives its revenue from the production and
distribution of its owned beverage alcohol brands. Corby's portfolio of
owned-brands includes some of the most renowned and respected brands in
Canada, such as Wiser's Canadian whisky, Lamb's rum, Polar Ice vodka,
and McGuinness liqueurs.

Corby's Commissions segment earns commission income from the
representation of non-owned beverage alcohol brands in Canada. Corby
represents leading international brands such as ABSOLUT vodka, Chivas
Regal, The Glenlivet and Ballantine's scotches, Jameson Irish whiskey,
Beefeater gin, Malibu rum, Kahla liqueur, Mumm champagne, and Jacob's
Creek and Wyndham Estate wines.

The Commissions segment's financial results are fully reported as
"Commissions" in Note 7 of these consolidated statements. Therefore, a
chart detailing operational results by segment has not been provided as
no additional meaningful information would result.

16. EXPLANATION OF TRANSITION TO IFRS

As stated in Note 2 to these condensed consolidated financial
statements, the Company adopted IFRS effective July 1, 2010. Prior to
the adoption of IFRS, the Company prepared its financial statements in
accordance with Canadian Generally Accepted Accounting Principles
("Canadian GAAP" or "previous GAAP"). The Company's financial
statements for the financial year ending June 30, 2012 will be the
first annual financial statements that comply with IFRS. Accordingly,
the Company will make an unreserved statement of compliance with IFRS
beginning with its 2012 annual financial statements.

The accounting policies set out in Note 3 to the Company's first quarter
interim condensed consolidated financial statements as at and for the
three month periods ending September 30, 2011 and 2010 have been
applied in preparing the interim condensed consolidated financial
statements for the three and six months ended December 31, 2011, the
comparative information presented in these financial statement for the
three and six months ended December 31, 2010 and in the preparation of
an opening IFRS balance sheet at July 1, 2010 (the Company's date of
transition). The Company will ultimately prepare its opening IFRS
statement of financial position and the financial statements for 2011
and 2012 by applying existing IFRS with an effective date of June 30,
2012. Accordingly, the opening IFRS statement of financial position and
the financial statements for 2011 and 2012 may differ from these
interim condensed consolidated financial statements.

The Company has provided a detailed explanation of the impacts of this
transition in Note 16 of the Company's first quarter interim condensed
consolidated financial statements as at and for the three months ended
September 30, 2011 and 2010 ("Note 16"). Note 16 includes
reconciliations of the Company's balance sheet and shareholders' equity
from previous Canadian GAAP as at July 1, 2010, June 30, 2011 and
September 30, 2010, and its fiscal 2011 net earnings and comprehensive
income for the year ended June 30, 2011 and the three months ended
September 30, 2010. Explanation of the individual impacts of adopting
IFRS identified in the reconciliations are also provided, as are the
Company's elections under IFRS 1 "First-time Adoption of International
Financial Reporting Standards." Accordingly, these disclosures have not
been repeated within these financial statements.

An explanation of how the transition from previous GAAP to IFRS has
affected the Company's financial position and financial performances as
at December 31, 2010 and for the three and six months ended December
31, 2010 is set out in the following tables and the notes that
accompany the tables.

The adoption of IFRS has had no impact on the net cash flows of the
Company. The changes made to the statements of financial position,
statements of earnings, statements of comprehensive income and
statements of equity have resulted in reclassifications of various
amounts on the statements of cash flows, however, as there has been no
change to net cash flows, no reconciliations have been presented.

Reconciliation of Consolidated Statement of Earnings for the three months ended December 31, 2010

(in thousands of Canadian dollars, except per share amounts)

	Note		Previous GAAP		Presentation adjustments from previous GAAP to IFRS		Employee benefits		IFRS

Revenue	b)	$	45,218	$	283	$	-	$	45,501

Cost of sales	b)		(19,513)		395		-		(19,118)
Marketing, sales and administration	a); b)		(12,406)		(1,112)		607		(12,911)
Amortization and depreciation	b)		(434)		434		-		-
Other income (expense)	a); b)		-		(183)		445		262

Earnings from operations			12,865		(183)		1,052		13,734

Financial income	b)		-		310				310
Financial expense	a); b)		-		(3)		(241)		(244)
Interest income	b)		307		(307)				-
Interest expense	b)		-		-		-		-
Foreign exchange loss	b)		(190)		190		-		-
Loss on disposal of property, plant and equipment	b)		7		(7)		-		-
Net financial income			124		183		(241)		66

Earnings before income taxes			12,989		-		811		13,800

Current income taxes			(4,020)		-		-		(4,020)
Deferred income taxes			213		-		(207)		6
Income taxes			(3,807)		-		(207)		(4,014)

Net earnings		$	9,182	$	-	$	604	$	9,786

Basic earnings per share		$	0.32					$	0.34
Diluted earnings per share		$	0.32					$	0.34

Reconciliation of Consolidated Comprehensive Income for the three months ended December 31, 2010
(in thousands of Canadian dollars)

		Previous GAAP		Effect of transition to IFRS		IFRS

NET EARNINGS	$	9,182	$	604	$	9,786
OTHER COMPREHENSIVE INCOME		-		-		-

COMPREHENSIVE INCOME	$	9,182	$	604	$	9,786

Reconciliation of Consolidated Statement of Earnings for the six months ended December 31, 2010
(in thousands of Canadian dollars, except per share amounts)

	Note		Previous GAAP		Presentation adjustments from previous GAAP to IFRS		Employee benefits		IFRS

Revenue	b)	$	86,711	$	400	$	-	$	87,111

Cost of sales	b)		(37,398)		560		-		(36,838)
Marketing, sales and administration	a); b)		(23,137)		(1,828)		1,140		(23,825)
Amortization and depreciation	b)		(868)		868		-		-
Other income (expense)	a); b)		-		(88)		429		341

Earnings from operations			25,308		(88)		1,569		26,789

Financial income	b)		-		549		-		549
Financial expenses	a); b)		-		-		(482)		(482)
Interest income	a); b)		549		(549)		-		-
Foreign exchange loss	a); b)		(84)		84		-		-
Loss on disposal of property, plant and equipment	b)		(4)		4		-		-
Net financial income			461		88		(482)		67

Earnings before income taxes			25,769		-		1,087		26,856

Current income taxes			(7,775)		-		-		(7,775)
Deferred income taxes			187		-		(277)		(90)
Income taxes			(7,588)		-		(277)		(7,865)

Net earnings		$	18,181	$	-	$	810	$	18,991

Basic earnings per share		$	0.64					$	0.67
Diluted earnings per share		$	0.64					$	0.67

Reconciliation of Consolidated Comprehensive Income for the six months ended Decemer 31, 2010
(in thousands of Canadian dollars)

	Previous GAAP	Effect of transition to IFRS	IFRS

NET EARNINGS	$ 18,181	$ 810	$ 18,991
OTHER COMPREHENSIVE INCOME	-	-	-

COMPREHENSIVE INCOME	$ 18,181	$ 810	$ 18,991

Reconciliation of Consolidated Balance Sheet as at December 31, 2010

(in thousands of Canadian dollars)

	Notes		Previous GAAP		Presentation adjustments from previous GAAP to IFRS		Employee benefits		IFRS

ASSETS
Deposits in cash management pools		$	90,062	$	-	$	-	$	90,062
Accounts receivable			30,770		-		-		30,770
Income and other taxes recoverable			-						-
Inventories			61,472		-		-		61,472
Prepaid expenses			627		-		-		627
Deferred income taxes	b)		206		(206)		-		-

Total current assets			183,137		(206)		-		182,931
Property, plant and equipment			14,679		-		-		14,679
Provision for pensions	a)		12,053		-		(12,053)		-
Goodwill			6,857		-		-		6,857
Intangible assets			68,306		-		-		68,306

Total assets		$	285,032	$	(206)	$	(12,053)	$	272,773


LIABILITIES
Accounts payable and accrued liabilities		$	20,720	$	-	$	-	$	20,720
Income and other taxes payable			932		-		-		932

Total current liabilities			21,652		-		-		21,652
Provision for pensions	a)		7,079		-		6,579		13,658
Deferred income taxes	a); b)		5,130		(206)		(4,793)		131

Total liabilities			33,861		(206)		1,786		35,441

Shareholders' equity
Share capital			14,304		-		-		14,304
Retained earnings	a)		236,867		-		(13,839)		223,028

Total shareholders' equity			251,171		-		(13,839)		237,332

Total liabilities and shareholders' equity		$	285,032	$	(206)	$	(12,053)	$	272,773

Reconciliation of Consolidated Shareholders' Equity as at December 31, 2010
(in thousands of Canadian dollars)

	Note	Previous GAAP	Effect of transition to IFRS	IFRS

Share capital		$ 14,304	$ -	$ 14,304
Accumulated other comprehensive income		-	-	-
Retained earnings	a)	236,867	(13,839)	223,028

Total shareholders' equity		$ 251,171	$ (13,839)	$ 237,332

Notes to Reconciliations

(a) Financial Impacts of Adopting IFRS

Employee benefits

The Company has elected under IFRS 1 - First-time Adoption of International Financial Reporting Standards ("IFRS 1") to measure its assets and liabilities in its financial
statements at the carrying amounts that would be included in the
parent's consolidated financial statements, if no adjustments were made
for consolidation procedures and the effect of the business combination
in which the parent acquired the subsidiary. As a result, the Company
will revalue the provision for pensions to the carrying amounts
recorded by the parent company.

Deferred income tax assets and liabilities have been re-measured for the
IFRS transition adjustments related to employee future benefits, as
described above.

The following is the impact of electing under IFRS 1 to measure its
provision for pensions and the associated impact to deferred tax
liabilities based on the parent company's carrying values on the
Company's net earnings and other comprehensive income for the three and
six months ended December 31, 2010 and the Company's financial position
as at December 31, 2010.

	3 months ended	6 months ended
	Dec. 31	Dec. 31
Net earnings impact	2010	2010

Marketing, sales and administration	$ 607	$ 1,140
Other income	445	429
Earnings from operations	1,052	1,569

Financial expense	(241)	(482)
Earnings before income taxes	811	1,087

Income tax expense	(207)	(277)

Increase in net earnings	$ 604	$ 810


		as at
		Dec. 31
Balance sheet impact		2010

Provision for pensions		$ (18,632)
Deferred tax liabilities		4,793

Decrease in retained earnings		$ (13,839)

(b) Presentation Impacts of Adopting IFRS

Certain presentation differences between Canadian GAAP and IFRS have no
impact on reported earnings or shareholder's equity. Certain assets and
liabilities have been reclassified into another line item under IFRS at
the date of transition. Certain line items are described differently
(renamed) under IFRS compared to Canadian GAAP, although the asset and
liability amounts included in these items are unaffected. The following
summarizes these changes:

"Deferred taxes" was previously described as future income taxes under
Canadian GAAP. As well, under IFRS, deferred tax assets and liabilities
may not be presented as current. The Company has reclassified deferred
taxes into non-current assets and liabilities based on the net asset
and liability positions of the entities that have generated the
balances.

"Air miles" under previous GAAP Air Miles were deemed to be a sales
discount and reflected on the statement of profit and loss as a
reduction in Net Revenues. IFRIC 13 - Customer Loyalty Programmes ("IFRIC 13"), requires the value of Air Miles to be presented at gross
fair value in revenues, with an offsetting cost reflected in Marketing,
sales and administration expenses.

"Functional presentation" these IFRS financial statements have been
presented by function. As a result certain expenses, such as
depreciation expense, interest income and foreign exchange gains and
losses, have been reclassified by function. Depreciation of property,
plant and equipment is reported in costs of goods sold and in
marketing, sales and administrative expenses. Foreign exchange gains
and losses are included in earnings from operations as they relate to
operating assets and liabilities. Interest earned on deposits in cash
management pools is recorded in net financial income.

For further information:

CORBY DISTILLERIES LIMITED
John Leburn, Vice-President and Chief Financial Officer
Tel.: 416-479-2400
investors@corby.ca
www.Corby.ca

Canada Dividend Investor

Wednesday, February 8, 2012

CDL.A - <span class="simulate_din_font">Corby Distilleries Announces Quarterly Dividend and Reports Second Quarter Financial Results</span> (CAD 0.15)

No comments:

Post a Comment