Alimentation Couche-Tard announces its results for its fourth quarter and fiscal year 2016 Français

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Jul 12, 2016, 08:32 ET

Quarter

Net earnings of $206.2 million ($0.36 per share on a diluted basis) for the fourth quarter of fiscal 2016 compared with $126.0 million ($0.22 per share on a diluted basis) for the fourth quarter of fiscal 2015. Excluding certain items for both comparable periods, net earnings for the quarter would have been approximately $221.0 million¹ ($0.39 per share on a diluted basis) compared with $138.0 million ($0.24 per share on a diluted basis) for the fourth quarter of fiscal 2015, an increase of 60.1%.
Same‑store merchandise revenues up 3.2% in the U.S., 2.2% in Europe and 2.2% in Canada.
Merchandise and service gross margin stood at 33.7% in the U.S., up 30bps, at 43.1% in Europe, up 100bps and at 32.9% in Canada, up 40bps.
Same‑store road transportation fuel volumes grew by 3.6% in the U.S. and by 1.1% in Europe while it decreased by 0.8% in Canada.
Road transportation fuel gross margin of US 16.78¢ per gallon in the U.S., of US 7.74¢ per liter in Europe and of CA 6.09¢ per liter in Canada. Margin in Europe is affected by the negative impact of foreign currency translation.
Acquisition of Topaz on February 1^st, 2016, the leading convenience and fuel retailer in Ireland with a network comprising 444 service stations, of which 158 are company-operated and 286 are operated by dealers.
Quarterly dividend increase nearly 15.0% to CA 7.75¢ supported by strong balance sheet and cash flows.
Subsequent to the end of the quarter, issuance of Euro denominated senior unsecured notes totalling €750.0 million with a coupon rate of 1.875% and maturing on May 6, 2026, reinforcing the balance sheet.
Subsequent to the end of the quarter, an agreement was reached to purchase from Sevenoil Est OÜ and its affiliates 23 company-operated sites located in Estonia, increasing the presence of the company to 77 sites.
Successful kick off of the new Circle K brand in the Southeastern region of the U.S. and in Sweden.

Fiscal Year 2016

Net earnings amounted to $1,193.7 million for fiscal 2016, up 28.4% over fiscal 2015.
For fiscal 2016, diluted net earnings per share were $2.10 compared with $1.63 for fiscal 2015, an increase of 28.8% while adjusted diluted net earnings per share were $2.09 compared with $1.79 for fiscal 2015, an increase of 16.8%.
Addition of 867 stores to our network through acquisitions and new openings.
Return on equity and return on capital employed were 27.0% and 18.5%, respectively, on a pro forma basis.

LAVAL, QC, July 12, 2016 /CNW Telbec/ - For its fourth quarter ended April 24, 2016, Alimentation Couche‑Tard Inc. (TSX: ATD.A ATD.B) announces net earnings of $206.2 million, representing $0.36 per share on a diluted basis. The results for the fourth quarter of fiscal 2016 were affected by a $7.7 million pre-tax accelerated depreciation and amortization expense in connection with the Corporation's global brand initiative, by a net pre-tax foreign exchange loss of $5.8 million and by a $3.2 million pre-tax charge on early termination of certain fuel supply contracts. The results for the fourth quarter of fiscal 2015 included pre‑tax restructuring and integration costs of $22.2 million mainly in connection with the acquisition of The Pantry, a net pre-tax foreign exchange gain of $3.5 million and a $0.6 million pre-tax loss on disposal of the aviation fuel business. Excluding these items as well as the acquisition costs from both comparable quarters' results, the diluted net earnings per share would have been $0.39 for the fourth quarter of fiscal 2016 compared with $0.24 for the fourth quarter of fiscal 2015, an increase of 62.5%. This increase is attributable to continued organic growth, to higher fuel margins in the U.S. as well as to the contribution from acquisitions. All financial information is in US dollars unless stated otherwise.

"Our performance in the fourth quarter was a fitting finale to another outstanding fiscal year - the eighth year in a row with record setting earnings," says Brian Hannasch, President & CEO. "This quarter we celebrated the expansion of our European network to Ireland and further strengthened our presence in Denmark. We have begun to see the landscape change in the United States as hundreds of signs bearing our global Circle K brand lit up our stores, welcoming our customers in the southeast and engaging our employees around the world. Meanwhile, amidst all the excitement our employees remained relentlessly focused on our customers, growing basket size and delivering nice same-store growth."

Mr. Hannasch continued, "We continue to grow - and we do not intend to slow down any time soon. We don't just look for strategic opportunities, but we also look at potential acquisitions to see if there is anything we can learn from them. Fiscal year 2017 will be a year of integrating and learning from Topaz in Ireland and Shell in Denmark. We also very much look forward to completing our acquisition of the Esso-branded Imperial Oil locations in Ontario and Québec, which should be finalized during the first half-year of fiscal 2017. As a united global brand, we will be stronger than all our individual brands combined. We will benefit even more from our scale, international presence and expertise, while focusing on our customers. This is the foundation we will build upon."

Claude Tessier, Chief Financial Officer says, "Couche-Tard's fourth quarter results drove adjusted earnings per share growth of 62.5 % and operating cash flow of $188.3 million. We returned $29.2 million to our investors during the quarter in dividends and we are on track to reach our target of $85 million in synergies from The Pantry integration."

Mr. Tessier continues, "Even amidst a high degree of acquisition activity, our financial position remains strong, with very comfortable leverage ratios. The issuance in May of €750 million of senior unsecured notes on the European bond market provides additional support for those operations and further enhances our financial flexibility. We will continue to ensure we are well positioned to take advantage of any opportunities that might present themselves in the future."

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¹ Please refer to section « Net earnings and adjusted net earnings » of this press release for additional information on this performance measure not defined by IFRS.

Fourth quarter and fiscal 2016 overview

We closed the fourth quarter of fiscal 2016 with net earnings of $206.2 million, compared with $126.0 million for the fourth quarter of the previous fiscal year. Diluted net earnings per share stood at $0.36, compared with $0.22 for the previous year.

Results for the fourth quarter of fiscal 2016 include a $7.7 million pre-tax accelerated depreciation and amortization expense in connection with our global brand initiative, a $5.8 million pre-tax net foreign exchange loss as well as a $3.2 million pre-tax charge on early termination of certain fuel supply contracts. Results for the fourth quarter of fiscal 2015 included restructuring and integration costs of $22.2 million pre-tax, a pre-tax net foreign exchange gain of $3.5 million as well as a $0.6 million pre-tax loss from the disposal of our aviation fuel business. Excluding these items as well as acquisition costs from both comparable periods, net earnings for the fourth quarter of fiscal 2016 would have been approximately $221.0 million ($0.39 per share on a diluted basis), compared with $138.0 million ($0.24 per share on a diluted basis) for the fourth quarter of fiscal 2015, an increase of $83.0 million or 60.1%. This increase is attributable to continued organic growth, to higher fuel margins in the U.S. as well as to the contribution from acquisitions.

Net earnings amounted to $1,193.7 million for fiscal 2016, up 28.4% over fiscal 2015. Diluted net earnings per share stood at $2.10, compared with $1.63 for the previous year.

Results for fiscal 2016 include a $27.2 million pre-tax curtailment gain on defined benefits pension plans obligation, a $22.9 million income tax expense stemming from an internal reorganisation, a $17.8 million pre-tax accelerated depreciation and amortization expense in connection with our global brand initiative, a $12.4 million pre-tax charge on early termination of certain fuel supply contracts, a $10.4 million pre-tax write-off charge in connection with our fuel rebranding project as well as a $5.0 million pre-tax net foreign exchange loss. Results for fiscal 2015 included a non-recurring tax expense of $41.8 million related to an internal reorganization, restructuring and integration pre-tax costs of $30.3 million in connection with the acquisition of The Pantry and restructuring activities in Europe, a net pre-tax foreign exchange loss of $22.7 million, a $11.0 million pre-tax loss from the disposal of our aviation fuel business, a curtailment gain on defined benefits pension plans obligation of $2.6 million pre-tax as well as a pre-tax negative goodwill of $1.2 million. Excluding these items as well as acquisition costs from both fiscal years, net earnings for fiscal 2016 would have been approximately $1,188.0 million ($2.09 per share on a diluted basis) compared with $1,018.0 million ($1.79 per share on a diluted basis) for fiscal 2015, an increase of $170.0 million, or 16.7%.

Significant items of the fourth quarter of fiscal 2016

In connection with The Pantry integration, we realized cost reductions of approximately $17.0 million and merchandises and services supply cost reductions of approximately $12.0 million for the fourth quarter.
Finalization of the review of our fuel branding, supply and distribution strategy for the Southeastern region of the United States which resulted in payments of $3.2 million for penalties for the early termination of existing fuel supply contracts during the fourth quarter.
In connection with our rebranding project, an incremental depreciation and amortization expense of $7.7 million was recorded to earnings of the fourth quarter.
Subsequent to the end of the quarter, issuance of Euro denominated senior unsecured notes totalling €750.0 million with a coupon date of 1.875% and maturing on May 6, 2026, reinforcing our balance sheet.

Changes in our network for the fourth quarter of fiscal 2016

On February 1, 2016, we acquired all outstanding shares of Topaz Energy Group Limited, Resource Property Investment Fund plc, and Esso Ireland Limited, collectively known as "Topaz" for a total cash consideration of €258.0 million or $280.9 million plus a contingent consideration of a maximum undiscounted amount of €15.0 million ($16.3 million) payable upon signature of two contracts. Topaz is the leading convenience and fuel retailer in Ireland with a network comprising 444 service stations. Of these service stations, 158 are operated by Topaz and 286 are operated by dealers.
On May 1, 2016, subsequent to the end of fiscal 2016, we completed the acquisition of all the shares of Dansk Fuel A/S, which represents A/S Dansk Shell's retail business, comprising 315 service stations, their commercial fuel business and their aviation fuel business. We will retain 131 sites, of which 74 are full-service stations, 49 are unmanned automated fuel stations and 8 are truck stops.
On May 26, 2016, subsequent to the end of the quarter, an agreement was reached to purchase from Sevenoil Est OÜ and its affiliates 23 company-operated sites located in Estonia of which 11 are full service fuel stations with convenience stores and 12 are unmanned automated fuel stations. This bring our presence in Estonia to 77 sites.

Summary of changes in our store network during the fourth quarter and fiscal 2016

The following table presents certain information regarding changes in our store network over the 12-week period ended April 24, 2016:

		12-week period ended April 24, 2016
Type of site		Company-operated	CODO	DODO	Franchised and other affiliated	Total
Number of sites, beginning of period		7,790	529	765	1,113	10,197
	Acquisitions	161	8	278	-	447
	Openings / constructions / additions	33	1	11	9	54
	Closures / disposals / withdrawals	(57)	(5)	(39)	(50)	(151)
	Store conversion	2	(3)	1	-	-
Number of sites, end of period		7,929	530	1,016	1,072	10,547
Number of automated fuel stations included in the period end figures		901	-	18	-	919

Summary analysis of consolidated results for the fourth quarter and fiscal 2016

The following table highlights certain information regarding our operations for the 12 and 52-week periods ended April 24, 2016 and April 26, 2015.


		12-week periods ended			52-week periods ended
(in millions of US dollars, unless otherwise stated)		April 24, 2016	April 26, 2015	Variation %	April 24, 2016	April 26, 2015	Variation %
Statement of Operations Data:
Merchandise and service revenues ⁽¹⁾:
	United States	1,700.5	1,423.6	19.5	7,366.5	5,311.0	38.7
	Europe	266.2	210.5	26.5	933.8	990.4	(5.7)
	Canada	370.1	382.5	(3.2)	1,771.6	1,974.4	(10.3)
	Total merchandise and service revenues	2,336.8	2,016.6	15.9	10,071.9	8,275.8	21.7
Road transportation fuel revenues:
	United States	3,134.1	3,252.8	(3.6)	15,864.1	14,599.0	8.7
	Europe	1,295.9	1,354.9	(4.4)	5,422.3	7,111.0	(23.7)
	Canada	385.7	456.8	(15.6)	2,019.8	2,571.9	(21.5)
	Total road transportation fuel revenues	4,815.7	5,064.5	(4.9)	23,306.2	24,281.9	(4.0)
Other revenues ⁽²⁾:
	United States	3.1	3.9	(20.5)	14.9	16.0	(6.9)
	Europe	241.4	200.4	20.5	751.1	1,955.7	(61.6)
	Canada	0.1	0.1	-	0.5	0.5	-
	Total other revenues	244.6	204.4	19.7	766.5	1,972.2	(61.1)
Total revenues		7,397.1	7,285.5	1.5	34,144.6	34,529.9	(1.1)
Merchandise and service gross profit ⁽¹⁾:
	United States	573.7	475.7	20.6	2,452.3	1,748.4	40.3
	Europe	114.8	88.7	29.4	397.0	408.2	(2.7)
	Canada	121.6	124.2	(2.1)	581.4	649.2	(10.4)
	Total merchandise and service gross profit	810.1	688.6	17.6	3,430.7	2,805.8	22.3
Road transportation fuel gross profit:
	United States	295.1	215.4	37.0	1,479.4	1,093.3	35.3
	Europe	205.0	173.5	18.2	811.5	870.9	(6.8)
	Canada	30.5	32.3	(5.6)	148.9	164.4	(9.4)
	Total road transportation fuel gross profit	530.6	421.2	26.0	2,439.8	2,128.6	14.6
Other revenues gross profit ⁽²⁾:
	United States	3.1	3.9	(20.5)	14.9	16.0	(6.9)
	Europe	47.4	57.5	(17.6)	195.6	317.1	(38.3)
	Canada	0.1	0.1	-	0.5	0.5	-
	Total other revenues gross profit	50.6	61.5	(17.7)	211.0	333.6	(36.8)
Total gross profit		1,391.3	1,171.3	18.8	6,081.5	5,268.0	15.4
Operating, selling, administrative and general expenses		934.5	830.4	12.5	3,835.1	3,378.4	13.5
Gain on disposal of lubricants business		-	-	-	(47.4)	-	100.0
Curtailment gain on defined benefits pension plans obligation		-	-	-	(27.2)	(2.6)	946.2
Restructuring and integration costs		-	22.2	(100.0)	-	30.3	(100.0)
Loss on disposal of aviation fuel business		-	0.6	(100.0)	-	11.0	(100.0)
Negative goodwill		-	(0.1)	(100.0)	-	(1.2)	(100.0)
Loss (gain) on disposal of property and equipment and other assets		0.6	3.4	82.4	18.8	(1.5)	(1,353.3)
Depreciation, amortization and impairment of property and equipment, intangible assets and other assets		162.0	132.1	22.6	632.4	533.9	18.4
Operating income		294.2	182.7	61.0	1,669.8	1,319.7	26.5
Net earnings		206.2	126.0	63.7	1,193.7	930.0	28.4
Other Operating Data:
Merchandise and service gross margin ⁽¹⁾:
	Consolidated	34.7%	34.1%	0.6%	34.1%	33.9%	0.2%
	United States	33.7%	33.4%	0.3%	33.3%	32.9%	0.4%
	Europe	43.1%	42.1%	1.0%	42.5%	41.2%	1.3%
	Canada	32.9%	32.5%	0.4%	32.8%	32.9%	(0.1%)
Growth of same-store merchandise revenues ^{(3) (4)}:
	United States	3.2%	5.2%		4.6%	3.9%
	Europe	2.2%	3.0%		2.8%	2.0%
	Canada	2.2%	3.8%		2.9%	3.4%
Road transportation fuel gross margin:
	United States (cents per gallon) ⁽⁴⁾	16.78	15.46	8.5	20.15	21.74	(7.3)
	Europe (cents per litre) ⁽⁵⁾	7.74	8.55	(9.5)	8.82	10.33	(14.6)
	Canada (CA cents per litre)⁽⁴⁾	6.09	6.18	(1.5)	6.41	6.35	0.9
Volume of road transportation fuel sold ⁽⁵⁾:
	United States (millions of gallons)	1,702.5	1,398.6	21.7	7,260.2	5,118.9	41.8
	Europe (millions of litres)	2,649.0	2,028.4	30.6	9,200.8	8,428.5	9.2
	Canada (millions of litres)	672.4	661.2	1.7	3,072.3	2,987.6	2.8
Growth of (decrease in) same-store road transportation fuel volume ⁽⁴⁾:
	United States	3.6%	6.4%		6.6%	3.4%
	Europe	1.1%	3.7%		2.6%	2.4%
	Canada	(0.8%)	1.5%		0.9%	(0.1%)
Per Share Data:
	Basic net earnings per share (dollars per share)	0.36	0.22	63.6	2.10	1.64	28.0
	Diluted net earnings per share (dollars per share)	0.36	0.22	63.6	2.10	1.63	28.8


		April 24, 2016	April 26, 2015	Variation $
Balance Sheet Data:
	Total assets	12,246.0	10,989.9	1,256.1
	Interest-bearing debt	2,857.0	3,068.3	(211.3)
	Shareholders' equity	5,043.6	3,889.1	1,154.5
Indebtedness Ratios:
	Net interest-bearing debt/total capitalization ⁽⁶⁾	0.31 : 1	0.39 : 1
	Net interest-bearing debt/Adjusted EBITDA ^{(7) (11)}	0.97 : 1	1.18 : 1
	Adjusted net interest-bearing debt/Adjusted EBITDAR ^{(8) (11)}	1.98 : 1	2.17 : 1
Returns:
	Return on equity ^{(9) (11)}	27.0%	24.9%
	Return on capital employed ^{(10) (11)}	18.5%	16.2%
(1)	Includes revenues derived from franchise fees, royalties, suppliers rebates on some purchases made by franchisees and licensees as well as wholesale merchandise.
(2)	Includes revenues from rental of assets, from sale of aviation and marine fuel, heating oil, kerosene, lubricants and chemicals.
(3)	Does not include services and other revenues (as described in footnote 1 and 2 above). Growth in Canada is calculated based on Canadian dollars. Growth in Europe is calculated based on Norwegian Krone. Includes results from The Pantry stores for the 12 and 52-week periods ended April 24, 2016.
(4)	For company-operated stores only. Includes results from The Pantry stores for the 12 and 52-week periods ended April 24, 2016.
(5)	Total road transportation fuel.
(6)	This ratio is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation: long‑term interest-bearing debt, net of cash and cash equivalents and temporary investments divided by the addition of shareholders' equity and long-term debt, net of cash and cash equivalents and temporary investments. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations.
(7)	This ratio is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation: long‑term interest-bearing debt, net of cash and cash equivalents and temporary investments divided by EBITDA (Earnings Before Interest, Tax, Depreciation, Amortization and Impairment) adjusted for specific items. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations.
(8)	This ratio is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation: long‑term interest-bearing debt plus the product of eight times rent expense, net of cash and cash equivalents and temporary investments divided by EBITDAR (Earnings Before Interest, Tax, Depreciation, Amortization, Impairment and Rent expense) adjusted for specific items. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations.
(9)	This ratio is presented for information purposes only and represents a measure of performance used especially in financial circles. It represents the following calculation: net earnings divided by average equity for the corresponding period. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations.
(10)	This ratio is presented for information purposes only and represents a measure of performance used especially in financial circles. It represents the following calculation: earnings before income taxes and interests divided by average capital employed for the corresponding period. Capital employed represents total assets less short-term liabilities not bearing interests. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations.
(11)	This ratio is presented on a pro forma basis. As of April 24, 2016, it includes Couche‑Tard's and Topaz's results for the 52‑week period ended April 24, 2016. As of April 26, 2015, it includes Couche‑Tard's results for fiscal year ended April 26, 2015 as well as The Pantry's results for the 52‑week period ended April 26, 2015. The Pantry's and Topaz's earnings and balance sheet figures have been adjusted to make their presentation in line with Couche‑Tard's policies. Given the timing of the acquisition of Topaz, we have not yet completed the fair value assessment of the assets acquired, the liabilities assumed and the goodwill for this transaction.

Revenues

Our revenues were $7.4 billion for the fourth quarter of fiscal 2016, up by $111.6 million, an increase of 1.5% compared with the corresponding quarter of fiscal 2015, mainly attributable to the contribution from acquisitions as well as to the continued growth in same-store merchandise revenues and road transportation fuel volumes in both North America and Europe. These items, which contributed to the increase in revenues, were partly offset by a lower road transportation fuel average selling price, by the negative net impact from the translation of revenues of our Canadian and European operations into US dollars and by the disposal of our lubricants business during the second quarter of fiscal 2016.

For fiscal 2016, our revenues decreased by $385.3 million, down 1.1% compared with fiscal 2015, mainly attributable to a lower road transportation fuel average selling price, to the negative net impact from the translation of revenues of our Canadian and European operations into US dollars and to the disposal of our aviation fuel and lubricants businesses. These items, which contributed to the decrease in revenues, were partly offset by the strong contribution from acquisitions and by the growth in same-store merchandise revenues and road transportation fuel volumes in both North America and Europe.

More specifically, the growth in merchandise and service revenues for the fourth quarter of fiscal 2016 was $320.2 million. Excluding the negative net impact from the translation of our European and Canadian operations into US dollars, merchandise and service revenues increased by $342.3 million or 17.0%. This increase is attributable to the contribution from acquisitions which amounted to approximately $289.0 million as well as to organic growth. Same-store merchandise revenues increased by 3.2% in the United States, including The Pantry stores and by 2.2% in both Europe and Canada. Overall, our performance is attributable to our dynamic merchandising strategies, to our competitive offer and to our expanded fresh food assortment, which is attracting more customers into our stores.

For fiscal 2016, the growth in merchandise and service revenues was $1.8 billion. Excluding the net negative impact from the translation of our European and Canadian operations into US dollars, merchandise and service revenues increased by $2.2 billion or 26.3%. This increase is attributable to the contribution from acquisitions which amounted to approximately $1.9 billion, to the contribution of newly opened stores and to strong organic growth. Same-store merchandise revenues grew by 4.6% in the United States, including The Pantry stores, by 2.8% in Europe and by 2.9% in Canada.

Road transportation fuel revenues decreased by $248.8 million in the fourth quarter of fiscal 2016. Excluding the negative net impact from the translation of revenues of our Canadian and European operations into US dollars, road transportation fuel revenues decreased by $200.0 million or 3.9%. This decrease was attributable to the impact of a lower average road transportation fuel selling price, which had a negative impact of approximately $1.0 billion, partly offset by the contribution from acquisitions which amounted to approximately $637.0 million, by the contribution of our recently opened stores and by our organic growth. Same‑store road transportation fuel volumes increased by 3.6% in the United States, including The Pantry stores and by 1.1% in Europe due to - among other things – our micro-market strategies as well as to the growing contribution from premium fuels and "miles™" and "milesPLUS™", our proprietary fuel brands in Europe. In Canada, our same-store road transportation fuel volumes decreased by 0.8% due, in part, to the weakening economy in the western part of the country and to competitive pressures.

The following table shows the average selling price of road transportation fuel in our various markets, starting with the first quarter of the fiscal year ended April 26, 2015:

Quarter		1^st	2^nd	3^rd	4^th	Weighted average
52‑week period ended April 24, 2016
	United States (US dollars per gallon)	2.64	2.36	1.99	1.86	2.20
	Europe (US cents per litre)	72.16	66.12	57.04	51.59	60.92
	Canada (CA cents per litre)	103.17	97.79	88.41	82.28	92.86
52‑week period ended April 26, 2015
	United States (US dollars per gallon)	3.59	3.36	2.54	2.34	2.89
	Europe (US cents per litre)	101.53	95.18	73.99	66.51	83.53
	Canada (CA cents per litre)	121.64	117.00	96.27	93.63	106.59

It should be noted that the lower average road transportation fuel selling price has no direct negative impact on our fuel gross margin. In fact, a lower fuel selling price usually works in our favor as customers tend to travel more in this context – buying more fuel – while also leaving them with more cash for their discretionary spending.

For fiscal 2016, road transportation fuel revenues decreased by $975.7 million. Excluding the negative net impact from the translation of revenues of our Canadian and European operations into US dollars, road transportation fuel revenues increased by $398.8 million or 1.6%. This increase was attributable to the contribution from acquisitions which amounted to approximately $4.2 billion, to the contribution of our recently opened stores and to organic growth. Same-store road transportation fuel volumes increased by 6.6% in the United States, including The Pantry stores, by 2.6% in Europe and by 0.9% in Canada. These growth factors were partly offset by the impact of the lower average selling price of road transportation fuel, which resulted in a decrease in revenues of approximately $4.9 billion.

Other revenues increased by $40.2 million in the fourth quarter of fiscal 2016. This increase is mainly explained by the contribution from acquisitions, which amounted to approximately $132.0 million, partly offset by the disposal of our lubricants business, which had an impact of approximately $46.0 million as well as by negative net impact from the translation of revenues from our European operations into US dollars.

For fiscal 2016, other revenues decreased by $1.2 billion. This decrease is mainly explained by the disposal of our aviation fuel and lubricants businesses, which had an impact of approximately $954.0 million as well as by the negative net impact from the translation of revenues from our European operations into US dollars, partly offset by the contribution from acquisitions, which amounted to approximately $132.0 million.

Gross profit

In the fourth quarter of fiscal 2016, the consolidated merchandise and service gross profit was $810.1 million, an increase of $121.5 million compared with the corresponding quarter of fiscal 2015. Excluding the net negative impact from the translation of our European and Canadian operations into US dollars, consolidated merchandise and service gross profit increased by $128.5 million or 18.7%. This increase is attributable to the contribution from acquisitions, which amounted to approximately $98.0 million, and to organic growth. The gross margin increased by 0.3% in the United States to 33.7%, by 1.0% in Europe to 43.1% and by 0.4% in Canada to 32.9%. Overall, this performance reflects changes in the product mix and the improvements we brought to our supply terms, as well as our merchandising strategy in line with market competitiveness and the economic conditions within each market. In Europe, the growth in margin is attributable to the change in our product mix toward categories with higher margins, including car washes and fresh food.

During fiscal 2016, the consolidated merchandise and service gross profit was $3.4 billion, an increase of $624.9 million compared with the corresponding period of fiscal 2015. Excluding the net negative impact from the translation of our European and Canadian operations into US dollars, consolidated merchandise and service gross profit increased by $762.9 million or 27.2%. The gross margin increased by 0.4% in the United States and by 1.3% in Europe. In Canada, the gross margin was 32.8%, a slight decrease of 0.1%.

In the fourth quarter of fiscal 2016, the road transportation fuel gross margin was 16.78 ¢ per gallon in the United States, CA 6.09 ¢ per litre in Canada and 7.74 ¢ per litre in Europe. The decrease in Europe is attributable to the net impact of the translation of our European results into US dollars and to the impact of lower margins in Ireland compared with our margins in continental Europe. The road transportation fuel gross margin of our company-operated stores in the United States and the impact of expenses related to electronic payment modes for the last eight quarters, starting with the first quarter of the fiscal year ended April 26, 2015, were as follows:

(US cents per gallon)
Quarter		1^st	2^nd	3^rd	4^th	Weighted average
52‑week period ended April 24, 2016
	Before deduction of expenses related to electronic payment modes	18.34	25.66	19.90	16.78	20.15
	Expenses related to electronic payment modes	4.37	4.19	3.84	3.74	4.02
	After deduction of expenses related to electronic payment modes	13.97	21.47	16.06	13.04	16.13
52-week period ended April 26, 2015
	Before deduction of expenses related to electronic payment modes	23.08	24.17	24.93	15.46	21.75
	Expenses related to electronic payment modes	5.27	5.03	4.33	4.12	4.63
	After deduction of expenses related to electronic payment modes	17.81	19.14	20.60	11.34	17.12

As demonstrated by the table above, road transportation fuel margins in the United States can be volatile from one quarter to another but tend to normalize in the longer term. Margin volatility and expenses related to electronic payment modes are not as significant in Europe and Canada.

For fiscal 2016, the road transportation fuel gross margin was 20.15 ¢ per gallon in the United States, it was CA 6.41¢ per litre in Canada and it stood at 8.82 ¢ per litre in Europe. The decrease in Europe is entirely attributable to the impact of the translation of our European results into US dollars. In local currencies, the margin in Europe was similar to the margin of fiscal 2015.

Operating, selling, administrative and general expenses

For the fourth quarter and fiscal 2016, operating, selling, administrative and general expenses increased by 12.5% and 13.5%, respectively, compared with the corresponding periods of fiscal 2015 but increased by only 0.8% and 1.5% respectively, if we exclude certain items as demonstrated by the following table:

		12-week period ended April 24, 2016	52-week period ended April 24, 2016
Total variance as reported		12.5%	13.5%
Subtract:
	Increase from incremental expenses related to acquisitions	15.9%	20.8%
	Decrease from revision of estimates for provisions and other non-recurring expenses in 2015	(1.9%)	(0.7%)
	Decrease from the net impact of foreign exchange translation	(1.3%)	(6.1%)
	Decrease from divestment of the aviation fuel and lubricants businesses	(1.1%)	(2.2%)
	Decrease from lower electronic payment fees, excluding acquisitions	(0.5%)	(0.6%)
	Increase from charges on the termination of fuel supply agreements	0.4%	0.4%
	Increase from non-recurring integration costs and expenses in connection with our global brand initiatives	-	0.3%
	Acquisition costs recognized to earnings of fiscal 2016	0.3%	0.2%
	Acquisition costs recognized to earnings of fiscal 2015	(0.1%)	(0.1%)
Remaining variance		0.8%	1.5%

The remaining variance in expenses is mainly due to normal inflation, to the higher expenses needed to support our strong organic growth, to the higher average number of stores and to proportionally higher operational expenses in our recently built stores, as these stores generally have a larger footprint than the average of our existing network. We continue to favor a rigorous control of costs throughout our organization, while ensuring we maintain the quality of service we offer to our customers.

Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA) and adjusted EBITDA

During the fourth quarter of fiscal 2016, EBITDA increased by 45.0% compared with the same quarter last year, from $319.2 million to $462.7 million.

Excluding the specific items shown in the table below from EBITDA of the fourth quarter of fiscal 2016 and of the fourth quarter of fiscal 2015, the adjusted EBITDA for the fourth quarter of fiscal 2016 increased by $124.0 million or 36.3% compared with the corresponding period of the previous fiscal year. Net of acquisition costs recorded to earnings, acquisitions contributed approximately $29.0 million to adjusted EBITDA, while the variation in exchange rates had a negative net impact of approximately $5.0 million.

During fiscal 2016, EBITDA increased by 24.4% compared with last year, from $1.9 billion to $2.3 billion. Excluding the specific items shown in the table below from EBITDA for fiscal 2016 and fiscal 2015, adjusted EBITDA for fiscal 2016 increased by $376.0 million or 19.7% compared with the corresponding period of the previous fiscal year, reaching $2.3 billion. Net of acquisition costs recorded to earnings, acquisitions contributed approximately $257.0 million to adjusted EBITDA, while the variation in exchange rates had a negative net impact of approximately $138.0 million.

It should be noted that EBITDA and adjusted EBITDA are not performance measures defined by IFRS, but we, as well as investors and analysts, use these measures to evaluate our financial and operating performance. Note that our definition of these measures may differ from the one used by other public corporations:

		12-week periods ended		52-week periods ended
(in millions of US dollars)		April 24, 2016	April 26, 2015	April 24, 2016	April 26, 2015
Net earnings, as reported		206.2	126.0	1,193.7	930.0
Add:
	Income taxes	62.8	45.5	398.6	306.2
	Net financial expenses	31.7	15.6	107.5	105.4
	Depreciation, amortization and impairment of property and equipment, intangible assets and other assets	162.0	132.1	632.4	533.9
EBITDA		462.7	319.2	2,332.2	1,875.5
Remove:
	Charge on early termination of fuel supply agreements	(3.2)	-	(12.4)	-
	Net gain from the disposal of the lubricants business	-	-	47.4	-
	Curtailment gain on pension plan obligation	-	-	27.2	2.6
	Write-off expense on fuel rebranding	-	-	(10.4)	-
	Non-recurring integration costs and expenses in connection with our global brand initiatives	-	-	(8.6)	-
	Restructuring and integration costs	-	(22.2)	-	(30.3)
	Loss on disposal of the aviation fuel business	-	(0.6)	-	(11.0)
	Negative goodwill	-	0.1	-	1.2
Adjusted EBITDA		465.9	341.9	2,289.0	1,913.0

Depreciation, amortization and impairment of property and equipment, intangible assets and other assets

For the fourth quarter and fiscal 2016, depreciation, amortization and impairment expenses increased by $29.9 million and $98.5 million, respectively, mainly as a result of investments made through acquisitions, the replacement of equipment, the addition of new stores and the ongoing improvement of our network. The depreciation, amortization and impairment expense was also increased by the accelerated depreciation and amortization of certain assets in connection with our global rebranding project, which had an impact of $7.7 million for the fourth quarter and of $17.8 million for fiscal 2016 and by the acceleration of the depreciation and amortization of certain of The Pantry stores' assets which will need to be replaced or upgraded before the end of their current useful lives. Those items, which contributed to the increase in depreciation, amortization and impairment expenses, were partially offset by the net impact of the translation of our European and Canadian operations into US dollars.

Net financial expenses

The fourth quarter of fiscal 2016 shows net financial expenses of $31.7 million, an increase of $16.1 million compared with the fourth quarter of fiscal 2015. Excluding the net foreign exchange loss of $5.8 million and the net foreign exchange gain of $3.5 million recorded respectively in the fourth quarters of fiscal 2016 and fiscal 2015, net financial expenses increased by $6.8 million. This increase is mainly attributable to the rise in our long term debt in connection with the financing of The Pantry and Topaz acquisitions. The net foreign exchange loss of $5.8 million for the fourth quarter of fiscal 2016 is mainly due to the impact of foreign exchange variations on certain cash balances.

Fiscal 2016 shows net financial expenses of $107.5 million, an increase of $2.1 million compared with fiscal 2015. Excluding the net foreign exchange losses of $5.0 million and $22.7 million recorded respectively in fiscal 2016 and 2015, net financial expenses increased by $19.8 million. This increase is mainly attributable to reasons similar to those of the fourth quarter as well as to the assumption of The Pantry and Topaz finance leases obligations, partly offset by the reduction in our average debt balance following repayments made on our revolving and acquisition facilities during fiscal years 2015 and 2016. The net foreign exchange loss of $5.0 million for fiscal 2016 is mainly due to the impact of foreign exchange variations on certain cash balances.

Income taxes

The income tax rate for the fourth quarter of fiscal 2016 was 23.3% compared with an income tax rate of 26.5% for the fourth quarter of fiscal 2015.

For fiscal 2016, the income tax rate was 25.0%. The income tax rate was affected by the fact that the net gain from the disposal of the lubricants business is not taxable and was partly offset by the impact of an internal reorganization. Excluding those items, we estimate that the income tax rate for fiscal 2016 would have been approximately 24.5%.

Net earnings and adjusted net earnings

We closed the fourth quarter of fiscal 2016 with net earnings of $206.2 million, compared with $126.0 million for the fourth quarter of the previous fiscal year, an increase of $80.2 million or 63.7%. Diluted net earnings per share stood at $0.36, compared with $0.22 the previous year. The translation of revenues and expenses from our Canadian and European operations into US dollars had a negative net impact of approximately $1.0 million on net earnings of the fourth quarter of fiscal 2016.

Excluding the items shown in the table below from net earnings of the fourth quarter of fiscal 2016 and fiscal 2015, this quarter's net earnings would have been approximately $221.0 million, compared with $138.0 million for the comparable quarter of the previous year, an increase of $83.0 million or 60.1%. Adjusted diluted net earnings per share would have been approximately $0.39 for the fourth quarter of fiscal 2016, compared with $0.24 for the corresponding period of fiscal 2015, an increase of 62.5%.

For fiscal 2016, net earnings were $1,193.7 million, compared with $930.0 million for the comparable period of the previous fiscal year, an increase of $263.7 million or 28.4%. Diluted net earnings per share stood at $2.10 compared with $1.63 the previous year, an increase of 28.8%. The translation of revenues and expenses from our Canadian and European operations into US dollars had a negative net impact of approximately $72.0 million on net earnings of fiscal 2016.

Excluding the items shown in the table below from net earnings for fiscal 2016 and fiscal 2015, net earnings for fiscal 2016 would have been approximately $1,188.0 million, up $170.0 million or 16.7%, while adjusted diluted earnings per share would have been approximately $2.09 compared with $1.79 the previous year, an increase of 16.8%.

The table below reconciles adjusted net earnings to reported net earnings:

		12-week periods ended		52-week periods ended
(in millions of US dollars)		April 24, 2016	April 26, 2015	April 24, 2016	April 26, 2015
Net earnings, as reported		206.2	126.0	1,193.7	930.0
Remove:
	Impact of accelerated depreciation and amortization	(7.7)	-	(17.8)	-
	Net foreign exchange (loss) gain	(5.8)	3.5	(5.0)	(22.7)
	Charge on early termination of fuel supply agreements	(3.2)	-	(12.4)	-
	Acquisition costs	(2.7)	(1.2)	(6.2)	(2.7)
	Net gain from the disposal of the lubricants business	-	-	47.4	-
	Curtailment gain on pension plans obligation	-	-	27.2	2.6
	Tax expense stemming from an internal reorganisation	-	-	(22.9)	(41.8)
	Write-off expense on fuel rebranding	-	-	(10.4)	-
	Non-recurring integration costs and expenses in connection with our global brand initiatives	-	-	(8.6)	-
	Restructuring costs	-	(22.2)	-	(30.3)
	Loss on disposal of the aviation fuel business	-	(0.6)	-	(11.0)
	Negative goodwill	-	0.1	-	1.2
	Tax impact of the items above and rounding	4.6	8.4	14.4	16.7
Adjusted net earnings		221.0	138.0	1,188.0	1,018.0

It should be noted that adjusted net earnings is not a performance measure defined by IFRS, but we, as well as investors and analysts, use this measure to evaluate our financial and operating performance. Note that our definition of this measure may differ from the one used by other public corporations.

Dividends

During its July 12, 2016 meeting, the Corporation's Board of Directors (the "Board") approved an increase in the quarterly dividend of CA 1.00¢ per share to CA 7.75¢ per share, an increase of almost 15.0%.

During the same meeting, the Board declared a quarterly dividend of CA 7.75¢ per share for the fourth quarter of fiscal 2016 to shareholders on record as at July 21, 2016 and approved its payment for August 4, 2016. This is an eligible dividend within the meaning of the Income Tax Act of Canada.

During fiscal 2016, the Board declared total dividends of CA 26.75¢ per share.

Profile

Couche-Tard is the leader in the Canadian convenience store industry. In the United States, it is the largest independent convenience store operator in terms of number of company-operated stores. In Europe, Couche-Tard is a leader in convenience store and road transportation fuel retail in the Scandinavian and Baltic countries and in Ireland with a significant presence in Poland.

As of April 24, 2016, Couche-Tard's network comprised 7,888 convenience stores throughout North America, including 6,490 stores offering road transportation fuel. Its North‑American network consists of 15 business units, including 11 in the United States covering 41 states and four in Canada covering all ten provinces. About 80,000 people are employed throughout its network and at its service offices in North America.

In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through ten business units. As of April 24, 2016, it comprised 2,659 stores, the majority of which offer road transportation fuel and convenience products while the others are unmanned automated fuel stations. The Corporation also offers other products, including stationary energy, marine fuel and chemicals. Including employees at franchise stations carrying its brands, about 25,000 people work in its retail network, terminals and service offices across Europe.

In addition, almost 1,500 stores are operated by independent operators under the Circle K banner in 13 other countries or regions worldwide (China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Malaysia, Mexico, the Philippines, the United Arab Emirates and Vietnam). These bring Couche-Tard's total network to close to 12,000 sites.

The statements set forth in this press release, which describes Couche-Tard's objectives, projections, estimates, expectations or forecasts, may constitute forward‑looking statements within the meaning of securities legislation. Positive or negative verbs such as "believe", "could", "should", "intend", "expect", "estimate", "assume" and other related expressions are used to identify such statements. Couche-Tard would like to point out that, by their very nature, forward-looking statements involve risks and uncertainties such that its results, or the measures it adopts, could differ materially from those indicated or underlying these statements, or could have an impact on the degree of realization of a particular projection. Major factors that may lead to a material difference between Couche‑Tard's actual results and the projections or expectations set forth in the forward-looking statements include the effects of the integration of acquired businesses and the ability to achieve projected synergies, fluctuations in margins on motor fuel sales, competition in the convenience store and retail motor fuel industries, exchange rate variations, and such other risks as described in detail from time to time in the reports filed by Couche-Tard with securities authorities in Canada and the United States. Unless otherwise required by applicable securities laws, Couche-Tard disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking information in this release is based on information available as of the date of the release.

Webcast on July 12, 2016 at 2:30 P.M. (EDT)

Couche‑Tard invites analysts known to the Corporation to send their two questions in advance to its management, before 11:00 A.M. (EDT) on July 12, 2016.

Financial analysts and investors who wish to listen to the webcast on Couche‑Tard's results which will take place online on July 12, 2016 at 2:30 P.M. (EDT) can do so by accessing the Corporation's website at http://corpo.couche‑tard.com/ and by clicking on the corporate presentations link of the investor relations section or by dialing 1-866-865-3087 or the local number 514-807-9895, followed by the access code 42099518#. For those who will not be able to listen to the live presentation, the recording of the webcast will be available on the Corporation's website for a period of 90 days.

Consolidated Statements of Earnings For the fiscal years ended April 24, 2016 and April 26, 2015 (in millions of US dollars (Note 2), except per share amounts)
		2016	2015
			(adjusted, Note 2)
		$	$
Revenues		34,144.6	34,529.9
Cost of sales		28,063.1	29,261.9
Gross profit		6,081.5	5,268.0

Operating, selling, administrative and general expenses (Note 8)		3,835.1	3,378.4
Gain on disposal of lubricants business (Note 5)		(47.4)	-
Curtailment gain on defined benefits pension plans obligation (Note 27)		(27.2)	(2.6)
Loss (gain) on disposal of property and equipment and other assets		18.8	(1.5)
Restructuring and integration costs (Note 23)		-	30.3
Loss on disposal of aviation fuel business (Note 5)		-	11.0
Negative goodwill (Note 4)		-	(1.2)
Depreciation, amortization and impairment of property and equipment, intangible assets and other assets		632.4	533.9
		4,411.7	3,948.3
Operating income		1,669.8	1,319.7

Share of earnings of joint ventures and associated companies accounted for using the equity method (Note 6)		30.0	21.9

Financial expenses		109.4	91.8
Financial revenues		(6.9)	(9.1)
Foreign exchange loss from currency conversion		5.0	22.7
Net financial expenses (Note 10)		107.5	105.4
Earnings before income taxes		1,592.3	1,236.2
Income taxes (Note 11)		398.6	306.2
Net earnings		1,193.7	930.0

Net earnings attributable to:
Shareholders of the Corporation		1,193.5	929.3
Non-controlling interest (Note 7)		0.2	0.7
Net earnings		1,193.7	930.0
Net earnings per share (Note 12)
	Basic	2.10	1.64
	Diluted	2.10	1.63

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated Statements of Comprehensive Income For the fiscal years ended April 24, 2016 and April 26, 2015 (in millions of US dollars (Note 2), except per share amounts)
				2016	2015
					(adjusted, Note 2)
				$	$
Net earnings				1,193.7	930.0
Other comprehensive income (loss)
	Items that may be reclassified subsequently to earnings
		Translation adjustments
			Changes in cumulative translation adjustments ⁽¹⁾	120.7	(803.4)
			Cumulative translation adjustments reclassified to earnings	-	1.9
			Change in fair value of cross-currency interest rate swaps designated as a hedge of the Corporation's net investment in certain of its foreign operations	(75.8)	(99.3)
			Net interest on cross-currency interest rate swaps designated as a hedge of the Corporation's net investment in certain of its foreign operations ⁽²⁾	(2.6)	-
		Cash flow hedges
			Change in fair value of financial instruments ⁽³⁾(Note 28)	5.7	16.4
			Gain realized on financial instruments transferred to earnings ⁽⁴⁾(Note 28)	(7.7)	(14.3)
		Available-for-sale investment
			Change in fair value of an available-for-sale investment⁽⁵⁾	(13.8)	-
	Items that will never be reclassified to earnings
		Net actuarial gain (loss) (Note 27) ⁽⁶⁾		18.9	(26.8)
Other comprehensive income (loss)				45.4	(925.5)
Comprehensive income				1,239.1	4.5

Comprehensive income attributable to:
	Shareholders of the Corporation			1,238.9	3.8
	Non-controlling interest			0.2	0.7
Comprehensive income				1,239.1	4.5

(1)	For the fiscal years ended April 24, 2016 and April 26, 2015, these amounts include losses of $89.0 and $13.3, respectively, arising from the translation of US dollar and Norwegian krone denominated long-term debts designated as foreign exchange hedges of the Corporation's net investments in its operations in the US and Norway, respectively and the translation of US dollar denominated long-term debt, in combination with cross currency interest rate swaps, designated a foreign exchange hedge of the Corporation's net investments in its operations in Denmark, the Baltics and Ireland (net of income taxes of $14.2 and $2.1, respectively).
(2)	For the fiscal year ended April 24, 2016, this amount is net of income taxes of $1.0.
(3)	For the fiscal years ended April 24, 2016 and April 26, 2015, these amounts are net of income taxes of $2.5 and $5.7, respectively.
(4)	For the fiscal years ended April 24, 2016 and April 26, 2015, these amounts are net of income taxes of $2.9 and $5.2, respectively.
(5)	For the fiscal year ended April 24, 2016, this amount is net of income taxes of $1.7.
(6)	For the fiscal years ended April 24, 2016 and April 26, 2015, these amounts are net of income taxes of $9.2 and $9.9, respectively.

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated Statements of Changes in Shareholders' Equity For the fiscal years ended April 24, 2016 and April 26, 2015 (in millions of US dollars (Note 2))
		2016
		Attributable to shareholders of the Corporation
		Capital stock	Contributed surplus	Retained earnings	Accumulated other comprehensive income (loss) (Note 26)	Total	Non-controlling interest	Total equity
		$	$	$	$	$	$	$
Balance, beginning of year (adjusted, Note 2)		697.2	10.7	3,919.8	(738.6)	3,889.1	13.9	3,903.0
Comprehensive income:
	Net earnings			1,193.5		1,193.5	0.2	1,193.7
	Other comprehensive income				45.4	45.4		45.4
Comprehensive income						1,238.9	0.2	1,239.1
Dividends declared				(104.1)		(104.1)	(0.7)	(104.8)
Nullification of redemption liability (Note 7)				13.0		13.0		13.0
Repurchase of non-controlling interest (Note 7)						-	(11.8)	(11.8)
Non-controlling interest transferred to contributed surplus (Note 7)			1.6			1.6	(1.6)	-
Stock option-basedcompensation expense (Note 25)			4.3			4.3		4.3
Initial fair value of stock options exercised		1.8	(1.8)			-		-
Cash received upon exercise of stock options		0.8				0.8		0.8
Balance, end of year		699.8	14.8	5,022.2	(693.2)	5,043.6	-	5,043.6

		2015 (adjusted, Note 2)
		Attributable to shareholders of the Corporation
		Capital stock	Contributed surplus	Retained earnings	Accumulated other comprehensive income (loss) (Note 26)	Total	Non-controlling interest	Total equity
		$	$	$	$	$	$	$
Balance, beginning of year		686.5	11.6	3,077.4	186.9	3,962.4	14.2	3,976.6
Comprehensive income:
	Net earnings			929.3		929.3	0.7	930.0
	Other comprehensive loss				(925.5)	(925.5)		(925.5)
Comprehensive income						3.8	0.7	4.5
Reduction of non-controlling interest						-	(0.6)	(0.6)
Dividends declared				(86.9)		(86.9)	(0.4)	(87.3)
Stock option-based compensation expense (Note 25)			6.0			6.0		6.0
Initial fair value of stock options exercised		6.9	(6.9)			-		-
Cash received upon exercise of stock options		3.8				3.8		3.8
Balance, end of year		697.2	10.7	3,919.8	(738.6)	3,889.1	13.9	3,903.0

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated Statements of Cash Flows For the fiscal years ended April 24, 2016 and April 26, 2015 (in millions of US dollars (Note 2))

		2016	2015
			(adjusted, Note 2)
		$	$
Operating activities
Net earnings		1,193.7	930.0
Adjustments to reconcile net earnings to net cash provided by operating activities
	Depreciation, amortization and impairment of property and equipment, intangible assets and other assets, net of amortization of deferred credits	605.0	458.0
	Gain on disposal of lubricants business (Note 5)	(47.4)	-
	Deferred income taxes	38.4	(72.5)
	Curtailment gain on defined benefits pension plans obligation (Note 27)	(27.2)	(2.6)
	Deferred credits	22.9	17.1
	Loss (gain) on disposal of property and equipment and other assets	18.8	(1.5)
	Share of earnings of joint ventures and associated companies accounted for using the equity method, net of dividends received (Note 6)	(11.3)	7.4
	Loss on disposal of aviation fuel business (Note 5)	-	11.0
	Negative goodwill (Note 4)	-	(1.2)
	Other	5.4	17.2
	Changes in non-cash working capital (Note 13)	89.6	351.6
Net cash provided by operating activities		1,887.9	1,714.5

Investing activities
Purchases of property and equipment, intangible assets and other assets		(905.7)	(634.5)
Business acquisitions (Note 4)		(437.3)	(929.4)
Proceeds from disposal of property and equipment and other assets		99.0	71.6
Proceeds from disposal of lubricants business (Note 5)		81.0	-
Deposit for business acquisition		(18.7)	-
Restricted cash		0.4	(1.1)
Proceeds from disposal of aviation fuel business (Note 5)		-	94.6
Net cash used in investing activities		(1,181.3)	(1,398.8)

Financing activities
Net (decrease) increase in term revolving unsecured operating credit D (Note 20)		(967.7)	1,043.7
Issuance of Canadian dollar denominated senior unsecured notes, net of financing costs (Note 20)		562.0	-
Repayment of debt assumed on business acquisition		(225.2)	(529.1)
Cash dividends paid		(104.1)	(86.9)
Issuance of NOK denominated senior unsecured notes, net of financing costs (Note 20)		78.0	-
Net decrease in other debt (Note 20)		(24.6)	(18.0)
Repurchase of non-controlling interest (Note 7)		(11.8)	-
Settlement of cross-currency interest rate swaps		(10.0)	-
Issuance of shares upon exercise of stock-options		0.8	3.8
Repayments under the unsecured non-revolving acquisition credit facility		-	(555.0)
Net cash used in financing activities		(702.6)	(141.5)
Effect of exchange rate fluctuations on cash and cash equivalents		19.6	(107.7)
Net increase in cash and cash equivalents		23.6	66.5
Cash, cash equivalents and bank overdraft, beginning of year		575.8	509.3
Cash and cash equivalents, end of year		599.4	575.8

Supplemental information:
	Interest paid	84.7	62.7
	Interest and dividends received	25.0	21.6
	Income taxes paid	351.0	279.1

Cash and cash equivalents components:
	Cash and demand deposits	597.3	553.7
	Liquid investments	2.1	22.1
		599.4	575.8

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated Balance Sheets As at April 24, 2016 and April 26, 2015 (in millions of US dollars (Note 2))

		2016	2015
			(adjusted, Note 2)
		$	$
Assets
Current assets
	Cash and cash equivalents	599.4	575.8
	Restricted cash	1.7	2.1
	Accounts receivable (Note 14)	1,416.2	1,265.3
	Inventories (Note 15)	816.7	827.6
	Prepaid expenses	67.9	61.0
	Income taxes receivable	32.9	10.5
		2,934.8	2,742.3
Property and equipment (Note 16)		6,404.8	5,600.1
Goodwill (Note 17)		1,851.0	1,629.2
Intangible assets (Note 17)		631.9	695.9
Other assets (Note 18)		342.0	221.4
Investment in joint ventures and associated companies (Note 6)		91.2	75.6
Deferred income taxes (Note 11)		48.2	63.9
		12,303.9	11,028.4

Liabilities
Current liabilities
	Accounts payable and accrued liabilities (Note 19)	2,516.7	2,272.7
	Provisions (Note 23)	106.1	138.9
	Income taxes payable	54.1	37.3
	Current portion of long-term debt (Note 20)	28.6	21.4
		2,705.5	2,470.3
Long-term debt (Note 20)		2,828.4	3,046.9
Provisions (Note 23)		475.0	413.5
Pension benefit liability (Note 27)		100.3	126.6
Other financial liabilities (Note 21)		221.8	161.6
Deferred credits and other liabilities (Note 22)		264.9	312.4
Deferred income taxes (Note 11)		664.4	594.1
		7,260.3	7,125.4

Equity
Capital stock (Note 24)		699.8	697.2
Contributed surplus		14.8	10.7
Retained earnings		5,022.2	3,919.8
Accumulated other comprehensive loss (Note 26)		(693.2)	(738.6)
Equity attributable to shareholders of the Corporation		5,043.6	3,889.1
Non-controlling interest		-	13.9
		5,043.6	3,903.0
		12,303.9	11,028.4

The accompanying notes are an integral part of the consolidated financial statements.

On behalf of the Board,
/s/ Brian Hannasch		/s/ Alain Bouchard
Brian Hannasch		Alain Bouchard
Director		Director

Notes to the Consolidated Financial Statements
For the fiscal years ended April 24, 2016 and April 26, 2015
(in millions of US dollars (Note 2), except share and stock option data)

1. GOVERNING STATUTES AND NATURE OF OPERATIONS

Alimentation Couche-Tard Inc. (the "Corporation") is governed by the Business Corporations Act (Quebec). The Corporation's head office is located in Laval, at 4204 Boulevard Industriel, Quebec, Canada.

As at April 24, 2016, the Corporation operates and licenses 10,547 convenience stores across North America, Ireland, Scandinavia (Norway, Sweden and Denmark), Poland, the Baltics (Estonia, Latvia and Lithuania), and Russia, of which 7,929 are company-operated, and generates income primarily from the sales of tobacco products, grocery items, beverages, fresh food offerings, including quick service restaurants, car wash services, other retail products and services, road transportation fuel, stationary energy, marine fuel and chemicals.

In addition, about 1,500 stores are operated by independent operators under the Circle K banner in 13 other countries or regions worldwide (China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Malaysia, Mexico, the Philippines, the United Arab Emirates and Vietnam) which brings the total network to approximately 12,000 stores worldwide.

2. BASIS OF PRESENTATION

Year-end date

The Corporation's year-end is the last Sunday of April of each year. The fiscal years ended April 24, 2016 and April 26, 2015 are referred to as 2016 and 2015.

Basis of presentation

The Corporation prepares its consolidated financial statements in accordance with Canadian generally accepted accounting principles as set out in Part I of the CPA Canada Handbook - Accounting, which incorporates International Financial Reporting Standards ("IFRS''), as issued by the International Accounting Standards Board ("IASB").

Reporting currency

The parent corporation's functional currency is the Canadian dollar. However, the Corporation uses the US dollar as its reporting currency to provide more relevant information considering its predominant operations in the US.

Approval of the financial statements

The Corporation's consolidated financial statements were approved on July 12, 2016 by the Board of Directors, which also approved their publication.

Comparative figures

The Corporation has made adjustments to the preliminary purchase price allocation for the acquisition of The Pantry Inc. As a result, changes were made to Depreciation, amortization and impairment of property and equipment, intangible assets and other assets in the Consolidated Statement of Earnings for the fiscal year ended April 26, 2015 which increased by $3.5. Consequently, Earnings before income taxes and Net earnings decreased by the same amount. The Consolidated Balance Sheet as at April 26, 2015 was also adjusted to consider these changes. See Note 4 for details on the adjustments made to the preliminary purchase price allocation for this acquisition.

The Corporation previously recorded certain lottery tickets on hand as inventory. As a result of a harmonization of its processes the Corporation now records all its lottery tickets on hand as other receivables. The consolidated balance sheet as at April 26, 2015 has been adjusted accordingly. Merchandise inventory was decreased by $32.0, other current accounts receivable were increased by $70.5 and accounts payable and accrued expenses were increased by $38.5. These adjustments had no impact on net changes in non-cash working capital in the consolidated statement of cash flows, on net assets in the consolidated balance sheet and on reported revenues and expenses in the consolidated statement of earnings.

3. ACCOUNTING POLICIES

Change in accounting policy

Presentation of financial statements

The Corporation adopted amendments to IAS 1, "Presentation of Financial Statements", that clarify materiality, aggregation and disaggregation of items presented in the balance sheet, statement of earnings and statement of comprehensive income as well as order of notes to financial statements. The adoption of these amendments by the Corporation did not have a material impact on its consolidated financial statements.

Change in accounting estimates

On September 22, 2015, the Corporation announced the creation of a new, global convenience brand, "Circle K^TM". In connection with this rebranding project which should span over the course of the next few years, the Corporation has accelerated the depreciation and amortization of certain existing assets. Consequently, an incremental depreciation and amortization expense of $17.8 was recorded to earnings of fiscal 2016. The Corporation expects incremental depreciation and amortization expense related to this change of approximately $23.0 to $26.0 for fiscal 2017 and of approximately $14.0 to $16.0 for fiscal 2018.

Use of estimates and judgments

The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, management reviews its estimates. These estimates are based on management's best knowledge of current events and actions that the Corporation may undertake in the future. Actual results could differ from those estimates. The most significant accounting judgments and estimates that the Corporation has made in the preparation of the consolidated financial statements are discussed along with the relevant accounting policies when applicable and relate primarily to the following topics: Vendor rebates, useful lives of tangible and intangible assets, income taxes, leases, employee future benefits, provisions, impairment and business combinations.

Principles of consolidation

The consolidated financial statements include the accounts of the Corporation and its subsidiaries, which are generally wholly owned. They also include the Corporation's share of earnings of joint ventures and associated companies accounted for using the equity method. All intercompany balances and transactions have been eliminated on consolidation.

Subsidiaries are entities over which the Corporation has control, where control is defined as the power to govern financial and operating policies. The Corporation generally has a direct or indirect shareholding of 100% of the voting rights in its subsidiaries. These criteria are reassessed regularly and subsidiaries are fully consolidated from the date control is transferred to the Corporation and deconsolidated from the date control ceases.

The Corporation holds contracts with franchisees and independent operators. These franchisees and independent operators manage their store and are responsible for merchandising and financing their inventory. Their financial statements are not included in the Corporation's consolidated financial statements.

Foreign currency translation

Functional currency

The functional currency is the currency of the primary economic environment in which an entity operates. The functional currency of the parent corporation and its Canadian operations is the Canadian dollar. The functional currency of foreign subsidiaries is generally their local currency, mainly the US dollar for US operations and various other European currencies for operations in Europe.

Foreign currency transactions

Transactions denominated in foreign currencies are translated into the relevant functional currency as follows: Monetary assets and liabilities are translated using the exchange rate in effect at the consolidated balance sheet date and revenues and expenses are translated using the average exchange rate on a 4-week period basis. Non-monetary assets and liabilities are translated using historical rates or using the rate on the date they were valued at fair value. Gains and losses arising from such translation, if any, are reflected in the consolidated statements of earnings except for assets and liabilities designated as part of hedging relationships.

Consolidation and foreign operations

The consolidated financial statements are consolidated in Canadian dollars using the following procedure: Assets and liabilities are translated into Canadian dollars using the exchange rate in effect at the consolidated balance sheet date. Revenues and expenses are translated using the average exchange rate on a 4-week period basis. Individual transactions with a significant impact on the consolidated statements of earnings are translated using the transaction date exchange rate.

Gains and losses arising from such translation are included in Accumulated other comprehensive income in Equity. The translation difference derived from each foreign subsidiary, associated company or joint venture is transferred to the consolidated statements of earnings as part of the gain or loss arising from the divestment or liquidation of such a foreign entity when there is a loss of control, joint control or significant influence, respectively.

Reporting currency

The Corporation has adopted the US dollar as its reporting currency. The Canadian dollar consolidated financial statements are translated into the reporting currency using the procedure described above. Capital stock, Contributed surplus and Retained earnings are translated using historical rates. Non-monetary assets at fair value are translated using the rate on the date on which their fair value was determined. Gains and losses arising from translation are included in Accumulated other comprehensive income in Equity.

Net earnings per share

Basic net earnings per share is calculated by dividing the net earnings available to Class A and Class B shareholders by the weighted average number of Class A and Class B shares outstanding during the year. Diluted net earnings per share is calculated using the average weighted number of shares outstanding plus the weighted average number of shares that would be issued upon the conversion of all potential dilutive stock options into common shares.

Revenue recognition

For its three major product categories, merchandise and services, road transportation fuel and other, the Corporation generally recognizes revenue at point of sale for convenience operations. Merchandise sales primarily comprise the sale of tobacco products, grocery items, candy and snacks, beverages, beer, wine and fresh food offerings, including quick service restaurants. Merchandise sales in Europe also include sale of merchandise and goods to certain independent operators and franchisees made from the Corporation's distribution center which are generally recognized on the passing of possession of the goods and when the transfer of the associated risk is made.

Service revenues include the commission on sale of lottery tickets and issuance of money orders, fees from automatic teller machines, sales of calling cards and gift cards, fees for cashing cheques, sales of postage stamps and bus tickets and car wash revenues. These revenues are recognized at the time of the transaction. Service revenues also include franchise and licence fees, which are recognized in revenues over the period of the agreement to which the fees relate as well as royalties from franchisees and licensees, which are recognized periodically based on sales reported by franchise and licence operators.

In markets where refined oil products are purchased excluding excise duties, revenues from sales to customers are reported net of excise duties. In markets where refined oil products are purchased including excise duties, revenues and costs of goods sold are reported including these duties.

Other revenues include sale of stationary energy, marine fuel, aviation fuel, lubricants and chemicals which are generally recognized on the passing of possession of the goods and when the transfer of the associated risk is made. Other revenues also include rental income from operating leases, which is recognized on a straight-line basis, over the term of the lease.

Cost of sales and vendor rebates

Cost of sales mainly comprises the cost of finished goods, input materials and transportation costs when they are incurred to bring products to the point of sale. For the Corporation's own production, such as the production of lubricants, the cost of goods sold also includes direct labour costs, production overheads, and production facility operating costs.

The Corporation records cash received from vendors related to vendor rebates as a reduction in the price of the vendors' products and reflects them as a reduction of cost of sales and related inventory in its consolidated statements of earnings and consolidated balance sheets when it is probable that they will be received. The Corporation estimates the probability based on the consideration of a variety of factors, including quantities of items sold or purchased, market shares and other conditions specified in the contracts. The accuracy of the Corporation's estimates can be affected by many factors, some of which are beyond its control, including changes in economic conditions and consumer buying trends. Historically, the Corporation has not experienced significant differences in its estimates compared with actual results. Amounts received but not yet earned are presented in deferred credits.

Operating, selling, administrative and general expenses

The main items comprising Operating, selling, administrative and general expenses are labour, net occupancy costs, credit and debit card fees, overhead as well as transportation costs incurred to bring products to the final customer.

Cash and cash equivalents

Cash includes cash and demand deposits. Cash equivalents include highly liquid investments that can be readily converted into cash for a fixed amount and that mature less than three months from the date of acquisition.

Restricted cash

Restricted cash comprises escrow deposits for pending acquisitions.

Inventories

Inventories are valued at the lesser of cost and net realizable value. The cost of merchandise is generally valued based on the retail price less a normal margin. The cost of road transportation motor fuel inventory is generally determined according to the average cost method. The cost of lubricant products is determined according to the first-in, first-out method.

Income taxes

The income tax expense recorded to earnings is the sum of the deferred income taxes and current income taxes that are not recognized in Other comprehensive income or directly in Equity.

The Corporation uses the balance sheet liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the carrying amounts and tax bases of assets and liabilities using enacted or substantively enacted tax rates and laws, as appropriate, at the date of the consolidated financial statements for the years in which the temporary differences are expected to reverse. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, except where the Corporation is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Corporation intends to settle its current tax assets and liabilities on a net basis.

The Corporation is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Corporation recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

Property and equipment, depreciation, amortization and impairment

Property and equipment are stated at cost less accumulated depreciation and are depreciated over their estimated useful lives using the straight-line method based on the following periods:

Buildings and building components	3 to 40 years
Equipment	3 to 40 years
Buildings under finance leases	Lesser of the lease term or 40 years
Equipment under finance leases	Lease term

Building components include air conditioning and heating systems, plumbing and electrical fixtures. Equipment includes signage, fuel equipment and in-store equipment.

Leasehold improvements and property and equipment on leased properties are amortized and depreciated over the lesser of their useful lives and the term of the lease.

Property and equipment are tested for impairment should events or circumstances indicate that their book value may not be recoverable, as measured by comparing their net book value to their recoverable amount which corresponds to the higher of fair value less costs to sell and value in use of the asset or cash-generating unit ("CGU"). Should the carrying amount of property and equipment exceed their recoverable amount, an impairment loss in the amount of the excess would be recognized.

The Corporation performs an annual evaluation of residual values, estimated useful lives and depreciation methods used for property and equipment and any change resulting from this evaluation is applied prospectively by the Corporation.

Goodwill

Goodwill is the excess of the cost of an acquired business over the fair value of underlying net assets acquired from the business at the time of acquisition. Goodwill is not amortized. Rather it is tested for impairment annually during the Corporation's first quarter or more frequently should events or changes in circumstances indicate that it might be impaired or if necessary due to the timing of acquisitions. Should the carrying amount of a CGU's goodwill exceed its recoverable amount, an impairment loss would be recognized.

Intangible assets

Intangible assets mainly comprise trademarks, franchise agreements, customer relationships, motor fuel supply agreements, software, favorable leases and licenses. Licenses and trademarks that have indefinite lives since they do not expire, are recorded at cost, are not amortized and are tested for impairment annually during the first quarter, or more frequently should events or changes in circumstances indicate that they might be impaired or if necessary due to the timing of acquisitions. Motor fuel supply agreements, franchise agreements and trademarks with finite lives are recorded at cost and are amortized using the straight-line method over the term of the agreements they relate to. Favorable leases represent lease terms that are more favorable than those currently available in the marketplace and they are amortized using the straight-line method over the term of the lease. Customer relationships, software, and other intangible assets are amortized using the straight-line method over a period of 3 to 15 years.

Deferred charges

Deferred charges are mainly expenses incurred in connection with the analysis and signing of the Corporation's revolving unsecured operating credits and are amortized using the straight-line method over the period of the corresponding contract. Deferred charges also include expenses incurred in connection with the analysis and signing of operating leases which are deferred and amortized on a straight-line basis over the lease term.

Leases

Determining whether an arrangement contains a lease

At inception of an arrangement, the Corporation analyzes whether an arrangement is or contains a lease by assessing if:

fulfilment of the arrangement is dependent on the use of a specified asset or assets; and
the arrangement conveys a right to use the asset or assets.

The Corporation has assessed that some arrangements with franchisees contain embedded lease agreements and accordingly, accounts for a portion of those agreements as lease agreements.

The Corporation distinguishes between lease contracts and capacity contracts. Lease contracts provide the right to use a specific asset for a period of time. Capacity contracts confer the right to and the obligation to pay for availability of certain capacity volumes related primarily to transportation. Such capacity contracts that do not involve specified single assets or that do not involve substantially all the capacity of an undivided interest in a specific asset are not considered to qualify as leases for accounting purposes. Capacity payments are recognized in the consolidated statements of earnings in Operating, selling, administrative and general expenses.

Lease arrangements in which the Corporation is a lessee

The Corporation accounts for finance leases in instances where it has acquired substantially all the benefits and risks incidental to ownership of the leased property. In some cases, the characterization of a lease transaction is not always evident, and management uses judgment in determining whether the lease is a finance lease arrangement that transfers substantially all the risks and benefits incidental to ownership to the Corporation. Judgment is required on various aspects that include, but are not limited to, the fair value of the leased asset, the economic life of the leased asset, whether or not to include renewal options in the lease term and determining an appropriate discount rate to calculate the present value of the minimum lease payments. The Corporation's activities involve a considerable number of lease agreements, most of which are determined to be operational in nature. The cost of assets under finance leases represents the present value of minimum lease payments or the fair value of the leased property, whichever is lower, and is amortized on a straight-line basis over the term of the lease or useful life of the asset, whichever is shorter. Assets under finance leases are presented under Property and equipment in the consolidated balance sheets.

Leases that do not transfer substantially all the benefits and risks incidental to ownership of the property are accounted for as operating leases. When a lease contains a predetermined fixed escalation of the minimum rent, the Corporation recognizes the related rent expense on a straight-line basis over the term of the lease and, consequently, records the difference between the recognized rental expense and the amounts payable under the lease as deferred rent expense.

The Corporation also receives tenant allowances, which are amortized on a straight-line basis over the term of the lease or useful life of the asset, whichever is shorter.

Gains and losses resulting from sale and leaseback transactions are recorded in the consolidated statements of earnings at the transaction date except if:

the sale price is below fair value and the loss is compensated for by future lease payments below market price, in which case it shall be deferred and amortized in proportion to the lease payments over the period during which the asset is expected to be used; or
the sale price is above fair value, in which case the excess shall be deferred and amortized over the period during which the asset is expected to be used.

Lease arrangements in which the Corporation is a lessor

Leases in which the Corporation transfers substantially all the risks and rewards of ownership of an asset to a third party are classified as finance leases. The Corporation recognizes lease payments receivable in the consolidated balance sheets and presents them as accounts receivable. Lease payments received under finance leases are apportioned between financial revenues and reduction of the receivable.

Leases that do not transfer substantially all the benefits and risks incidental to ownership of the property to a third party are accounted for as operating leases. When a lease contains a predetermined fixed escalation of the minimum rent, the Corporation recognizes the related rent revenue on a straight-line basis over the term of the lease and, consequently, records the difference between the recognized rental revenue and the rent received under the lease as rent receivable.

Financing costs

Financing costs related to term loans and debt securities are included in the initial carrying amount of the corresponding debt and are amortized using the effective interest rate method that is based on the estimated cash flow over the expected life of the liability. Financing costs related to revolving loans are included in other assets and are amortized using the straight-line method over the expected life of the underlying agreement.

Stock-based compensation and other stock-based payments

Stock-based compensation costs are measured at the grant date of the award based on the fair value method.

The fair value of stock options is recognized over the vesting period of each respective vesting portion as compensation expense with a corresponding increase in contributed surplus. When stock options are exercised, the corresponding contributed surplus is transferred to capital stock.

The Phantom Stock Units ("PSU") compensation cost and the related liability are recorded on a straight-line basis over the corresponding vesting period based on the fair market value of Class B shares and the best estimate of the number of PSUs that will ultimately be paid. The recorded liability is adjusted periodically to reflect any variation in the fair market value of the Class B shares and revisions to the estimated number of PSUs that will ultimately be paid.

Employee future benefits

The Corporation accrues its obligations under employee pension plans and the related costs, net of plan assets. The Corporation has adopted the following accounting policies with respect to the defined benefit plans:

The accrued benefit obligations and the cost of pension benefits earned by active employees are actuarially determined using the projected unit credit method pro-rated on service and pension expense is recorded in earnings as the services are rendered by active employees. The calculations reflect management's best estimate of salary escalation and retirement ages of employees;
Plan assets are valued at fair value;
Actuarial gains and losses arise from increases or decreases in the present value of the defined benefit obligation because of changes in actuarial assumptions and experience adjustments. Actuarial gains and losses are recognized immediately in Other comprehensive income with no impact on net earnings;
Past service costs are recorded to earnings at the earlier of the following dates:
- When the plan amendment or curtailment occurs;
- When the Corporation recognizes related restructuring costs or termination benefits; and
Net interest on the defined benefit liability (asset) represents the net defined benefit liability (asset), multiplied by the discount rate and is recorded in financial expenses.

The pension cost recorded in net earnings for the defined contribution plans is equivalent to the contribution which the Corporation is required to pay in exchange for services provided by the employees.

The present value of pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. Any changes in these assumptions will impact the carrying amount of pension obligations. The Corporation determines the appropriate discount rate at the end of each fiscal year. This is the rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Corporation considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation.

Provisions

Provisions are recognized when the Corporation has a present obligation (legal or constructive) as a result of a past event, it is probable that the Corporation will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the consolidated balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

The present value of provisions depends on a number of factors that are assessed on a regular basis using a number of assumptions, including the discount rate, the expected cash flow to settle the obligation and the number of years until the realization of the provision. Any changes in these assumptions or in governmental regulations will impact the carrying amount of provisions. Where the actual cash flows are different from the amounts that were initially recorded, such differences will impact earnings in the period in which the payment is made. Historically, the Corporation has not experienced significant differences in its estimates compared with actual results.

Environmental costs

The Corporation provides for estimated future site remediation costs to meet government standards for known site contaminations when such costs can be reasonably estimated. Estimates of the anticipated future costs for remediation activities at such sites are based on the Corporation's prior experience with remediation sites and consideration of other factors such as the condition of the site contamination, the location of the sites and experience with contractors that perform the environmental assessments and remediation work. In order to determine the initial recorded liability, the present value of estimated future cash flows was calculated using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Asset retirement obligations

Asset retirement obligations primarily relate to estimated future costs to remove road transportation fuel storage tanks and are based on the Corporation's prior experience in removing these tanks, estimated tank useful life, lease terms for those tanks installed on leased properties, external estimates and governmental regulatory requirements. A discounted liability is recorded for the present value of an asset retirement obligation with a corresponding increase to the carrying value of the related long-lived asset at the time a storage tank is installed. To determine the initial recorded liability, the future estimated cash flows are discounted using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The amount added to property and equipment is amortized and an accretion expense is recognized in connection with the discounted liability over the remaining life of the tank or lease term for leased properties.

Following the initial recognition of the asset retirement obligation, the carrying amount of the liability is increased to reflect the passage of time and then adjusted for variations in the current market-based discount rate or the scheduled underlying cash flows required to settle the liability.

Obligations related to general liability and workers' compensation

In the US and Ireland, the Corporation is self-insured for certain losses related to general liability and workers' compensation. The expected ultimate cost for claims incurred as of the consolidated balance sheet date is discounted and is recognized as a liability. This cost is estimated based on analysis of the Corporation's historical data and actuarial estimates. In order to determine the initial recorded liability, the present value of estimated future cash flows is calculated using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Restructuring

Restructuring provisions are recognized only when a detailed formal plan for the restructuring exists and the plan has either commenced or the plan's main features have been announced to those affected by it. In order to determine the initial recorded liability, the present value of estimated future cash flows are calculated using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

A detailed formal plan usually includes:

identifying the concerned business or part of the business;
the principal locations affected;
details regarding the employees affected;
the restructuring's timing; and
the expenditures that will have to be undertaken.

Financial instruments recognition and measurement

The Corporation has made the following classifications for its financial assets and financial liabilities:

Financial assets and financial liabilities	Classification	Subsequent measurement ⁽¹⁾	Classification of gains and losses
Cash and cash equivalents	Loans and receivables	Amortized cost	Net earnings
Restricted cash	Loans and receivables	Amortized cost	Net earnings
Accounts receivable	Loans and receivables	Amortized cost	Net earnings
Investments	Available for sale financial assets	Fair value	Other comprehensive income subject to reclassification to net earnings
Derivative financial instruments	Financial assets at fair value through profit or loss	Fair value	Net earnings
Derivative financial instruments designated as hedges	Effective hedging instruments	Fair value	Other comprehensive income subject to reclassification to net earnings
Bank indebtedness and long-term debt	Other financial liabilities	Amortized cost	Net earnings
Accounts payable and accrued liabilities	Other financial liabilities	Amortized cost	Net earnings


(1)	Initial measurement of all financial assets and financial liabilities is at fair value.

Hedging and derivative financial instruments

Embedded total return swap

The Corporation uses an investment contract which includes an embedded total return swap to manage current and forecasted risks related to changes in the fair value of the PSUs granted by the Corporation. The embedded total return swap is recorded at fair value on the consolidated balance sheets under other assets.

The Corporation has documented and designated the embedded total return swap as a cash flow hedge of the anticipated cash settlement transaction related to the granted PSUs. The Corporation has determined that the embedded total return swap is an effective hedge at the time of the establishment of the hedge and for the duration of the embedded total return swap. The changes in the fair value of the total return swap are initially recorded in other comprehensive income and subsequently reclassified to consolidated net earnings in the same period that the change in the fair value of the PSUs affects consolidated net earnings. Should the hedged transaction no longer be expected to occur, any gains, losses, revenues or expenses associated with the hedging item that had previously been recognized in Other comprehensive income as a result of applying hedge accounting will be recognized in the reporting period's net earnings under Operating, selling, administrative and general expenses.

US dollar denominated long-term debt

The Corporation designates a portion of its US dollar denominated long-term debt as a foreign exchange hedge of its net investment in its operations in the US. The remaining portion, in combination with cross currency interest rates swaps is designated as a foreign exchange hedge of its net investment in its operations in Denmark, the Baltics and Ireland. Accordingly, the gains or losses arising from the translation of the US dollar denominated debt and changes in fair value of the associated cross-currency interest rate swaps that are determined to be an effective hedge are recognized in Other comprehensive income, counterbalancing gains and losses arising from translation of the Corporation's net investment in its operations in the US, Denmark, the Baltics and Ireland.

Norwegian krone denominated long-term debt

The Corporation designates its entire Norwegian krone denominated long-term debt as a foreign exchange hedge of its net investment in its Norwegian operations. Accordingly, the gains or losses arising from the translation of this debt that is determined to be an effective hedge are recognized in Other comprehensive income, counterbalancing gains and losses arising from translation of the Corporation's net investment in its Norwegian operations.

Cross-currency interest rate swaps

The Corporation uses cross-currency interest rate swaps to manage the currency fluctuation risk associated with forecasted cash disbursements in foreign currency. The Corporation designates these cross-currency interest rate swaps as a foreign exchange hedge of its net investment in its foreign operations. Accordingly, the portion of the gains or losses arising from the translation of the cross-currency interest rate swaps that are determined to be an effective hedge are recognized in Other comprehensive income, counterbalancing gains and losses arising from translation of the Corporation's net investment in its foreign operations.

Guarantees

A guarantee is defined as a contract or an indemnification agreement contingently requiring an entity to make payments to a third party based on future events. These payments are contingent on either changes in an underlying or other variables that are related to an asset, liability, or an equity security of the indemnified party or the failure of another entity to perform under an obligating agreement. It could also be an indirect guarantee of the indebtedness of another party. Guarantees are initially recognized at fair value and subsequently revaluated when the loss becomes probable.

Business combinations

Business combinations are accounted for using the purchase method. The cost of a business combination is measured as the aggregate of the fair values (at the date of acquisition) of assets given, liabilities incurred or assumed, and equity instruments issued by the Corporation in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3, "Business Combinations", are recognized at their fair values at the acquisition date. Direct acquisition costs are recorded to earnings when incurred.

Goodwill arising from business combinations is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. If, after reassessment, the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess ("Negative goodwill") is recognized immediately to earnings.

Determination of the fair value of the acquired assets and liabilities requires judgment and the use of assumptions that, if changed, may affect the consolidated statements of earnings and consolidated balance sheets.

For purchase price allocation and impairment testing purposes, goodwill and other intangible assets with indefinite useful lives are allocated to CGUs based on the lowest level at which management reviews the results which is not higher than the operating segment. The allocation is made to those CGUs which are expected to benefit from the business combination and in which the goodwill and intangible assets with indefinite useful lives arose.

Earnings from the businesses acquired are included in the consolidated statements of earnings from their respective dates of acquisition.

Recently issued accounting standards not yet implemented

Revenue from Contracts with Customers

In May 2014, the IASB issued IFRS 15, "Revenue from Contracts with Customers", to specify how and when to recognize revenue as well as requiring the provision of more informative and relevant disclosures. IFRS 15 supersedes IAS 18, "Revenue", IAS 11, "Construction Contracts", and other revenue-related interpretations. In September 2015, the IASB deferred the mandatory effective date of IFRS 15 to fiscal years beginning on or after January 1, 2018. Earlier application is permitted. The Corporation is currently evaluating the impact of this standard on its consolidated financial statements.

Classification and measurement of financial assets and financial liabilities

In July 2014, the IASB completed IFRS 9, "Financial Instruments" in its three-part project to replace IAS 39, "Financial Instruments: Recognition and Measurement" with a single approach to determine whether a financial asset is measured at amortized cost or fair value. The standard includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting. The standard is effective for fiscal years beginning on or after January 1, 2018 with earlier adoption permitted. The Corporation is currently evaluating the impact of this standard on its consolidated financial statements.

Leases

In January 2016, the IASB issued IFRS 16, "Leases", which will replace IAS 17, "Leases". The new standard will be effective for fiscal years beginning on or after January 1, 2019, with early adoption permitted provided the Corporation has adopted IFRS 15 Revenue from Contracts with Customers. The new standard requires lessees to recognize a lease liability reflecting future lease payments and a "right-of-use asset" for virtually all lease contracts, and record it on the balance sheet, except with respect to lease contracts that meet limited exception criteria. Given that the Corporation has significant contractual obligations in the form of operating leases (Note 29) under IAS 17, there will be a material increase to both assets and liabilities upon adoption of IFRS 16, and material changes to the timing of recognition and presentation of expenses associated with the lease arrangements. The Corporation is currently evaluating the impact of the standard on its consolidated financial statements.

Income Taxes

In January 2016, the IASB issued amendments to IAS 12, "Income Taxes" regarding the recognition of deferred tax assets for unrealized losses, effective for annual periods beginning on or after January 1, 2017. The amendments clarify how to account for deferred tax assets related to debt instruments measured at fair value. The Corporation is currently evaluating the impact of these amendments on its consolidated financial statements.

Statement of Cash Flows

In January 2016, the IASB published amendments to IAS 7, "Statement of Cash Flows". The amendments are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity's financing activities. They are effective for annual periods beginning on or after January 1, 2017, with earlier application being permitted. The Corporation is currently evaluating the impact of the standard on its consolidated financial statements.

4. BUSINESS ACQUISITIONS

The Corporation has made the following business acquisitions:

2016

Acquisition of Topaz

On February 1, 2016, the Corporation acquired all outstanding shares of Topaz Energy Group Limited, Resource Property Investment Fund plc and Esso Ireland Limited, collectively known as "Topaz" for a total cash consideration of €258.0 or $280.9 plus a contingent consideration of a maximum undiscounted amount of €15.0 ($16.3) payable upon signature of two contracts. The fair value of the contingent consideration was estimated at €15.0 ($16.3) using the Corporation's knowledge of the negotiations' progress at the acquisition date and represents the Corporation's best estimate. Topaz is the leading convenience and fuel retailer in Ireland with a network comprising 444 service stations. Of these service stations, 158 are operated by Topaz and 286 by dealers. As a result of this transaction, the Corporation became owner of the land and buildings for 77 sites, lessor of the land and owner of the buildings for 24 sites and lessor of these same assets for the remaining sites. The agreement also encompasses a significant commercial fuel operation, with over 30 depots and two owned terminals.

Acquisition costs of $1.0 in connection with this acquisition are included in Operating, selling, administrative and general expenses. Given the size and timing of the transaction, the Corporation has not completed its fair value assessment of the assets acquired, the liabilities assumed and the goodwill for this transaction. Consequently, the fair value adjustments related to this acquisition are included in goodwill in the preliminary purchase price allocation. Our preliminary work has identified the following intangible assets which have not yet been valued in this preliminary allocation: customer relations, software, favorable leases and a trademark. This preliminary allocation is subject to adjustments to the fair value of the assets, liabilities and goodwill until the process is completed. The preliminary purchase price allocation based on available information as at the date of authorization of these consolidated financial statements is as follows:


		$
Assets
Current assets
	Cash and cash equivalents	28.4
	Accounts receivable	213.5
	Inventories	38.1
	Prepaid expenses	12.9
		292.9
Property and equipment		509.0
Identifiable intangible assets		5.1
Other assets		5.1
Deferred income taxes		2.2
		814.3
Liabilities
Current liabilities
	Accounts payable and accrued liabilities	237.7
	Provisions	2.4
	Current portion of long-term debt	231.3
		471.4
Long term debt		153.0
Provisions		19.5
Pension benefit liability		9.6
		653.5
Net identifiable assets		160.8
Acquisition goodwill		136.4
Consideration		297.2
Contingent consideration		16.3
Cash and cash equivalents acquired		28.4
Net cash flow for the acquisition		252.5

The Corporation expects that none of the goodwill related to this transaction will be deductible for tax purposes.

This acquisition was concluded in order to penetrate new markets and to increase economies of scale. Since the date of acquisition, revenues and net earnings from this acquisition amounted to $400.1 and $3.7, respectively. Pro-forma revenues and net earnings had the Corporation concluded this acquisition at the beginning of its fiscal year amount to $35,404.7 and $1,206.2, respectively.

Other acquisitions

On December 1, 2015, the Corporation acquired from Texas Star Investments and its affiliates, 18 company-operated stores, two quick service restaurants and a dealer fuel supply network located in the US state of Texas. The Corporation owns the land and buildings for 17 sites and leases these same assets for the remaining sites.
On September 24, 2015, the Corporation acquired from Kocolene Marketing LLC, 13 company‑operated stores in the US states of Indiana and Kentucky. The Corporation owns the land and buildings for 12 sites and leases the land and building for the remaining site.
On June 2, 2015, the Corporation acquired from Cinco J, Inc., Tiger Tote Food Stores, Inc., and their affiliates 21 company‑operated stores in the US states of Texas, Mississippi and Louisiana. The Corporation owns the land and buildings for 18 sites and leases the land and owns the buildings for the remaining three sites. As part of this agreement, the Corporation also acquired agreements for the supply of fuel to 141 stores operated by independent operators, five development properties and customer relations for 93 dealer sites.
During fiscal year 2016, the Corporation also acquired 19 other stores through distinct transactions. The Corporation owns the land and buildings for 15 sites and leases these same assets for the remaining four.

Acquisition costs of $5.2 in connection with these acquisitions and other unrealized or ongoing acquisitions are included in Operating, selling, administrative and general expenses.

These acquisitions were settled for a total cash consideration of $184.8. Since the Corporation has not yet completed its fair value assessment of the assets acquired, the liabilities assumed and goodwill for all transactions, the preliminary allocations of certain acquisitions are subject to adjustments to the fair value of the assets, liabilities and goodwill until the process is completed.

The purchase price allocations based on the estimated fair value on the date of acquisition and available information as at the date of publication of these consolidated financial statements are as follows:

		$
Tangible assets acquired
	Inventories	7.0
	Property and equipment	86.9
	Other assets	2.9
Total tangible assets		96.8
Liabilities assumed
	Provisions	1.2
	Deferred credits and other liabilities	4.9
Total liabilities		6.1
Net tangible assets acquired		90.7
Intangible assets		11.3
Goodwill		82.8
Total cash consideration paid		184.8

The Corporation expects that $10.5 of the goodwill related to these transactions will be deductible for tax purposes.

These acquisitions were concluded in order to expand the Corporation's market share, to penetrate new markets and to increase its economies of scale. These acquisitions generated goodwill mainly due to the strategic location of stores acquired. Since the date of acquisition, revenues and net earnings from these stores amounted to $322.9 and $6.8, respectively. Considering the nature of these acquisitions, the available financial information does not allow for the accurate disclosure of pro-forma revenues and net earnings had the Corporation concluded these acquisitions at the beginning of its fiscal year.

On March 8, 2016, the Corporation signed an agreement with Imperial Oil ("Imperial") to acquire certain of its Canadian retail assets located in the provinces of Ontario and Québec. The transaction comprises 279 of Imperial's Esso-branded fuel and convenience sites in Canada. Of these sites, 229 are located in Ontario - the majority of which in the Greater Toronto Area - and 50 sites are located in the Province of Québec, all of which are in the Greater Montréal Area or on the south shore of Montréal. The agreement also includes 13 land banks and two dealer sites, as well as a long-term supply agreement for Esso branded fuel. Imperial owns 238 sites and 41 are leased from third parties. The total transaction is priced at approximately CA$1.68 billion. Pending the customary regulatory approvals and closing conditions, the transaction is expected to close during the first half of fiscal 2017. The Corporation expects to finance this transaction using its available cash and existing credit facilities.

2015

Acquisition of The Pantry Inc. ("The Pantry")

On March 16, 2015, the Corporation acquired 100% of the outstanding shares of The Pantry through an all-cash transaction valued at $36.75 per share. At the acquisition date, The Pantry operated over 1,500 convenience stores in 13 US states, the majority of which dispensed road transportation fuel. As a result of this transaction, the Corporation became owner of the land and buildings for 409 sites, lessor of the land and owner of the buildings for 52 sites and lessor of these same assets for the remaining sites. This acquisition was settled for a total cash consideration of $850.7. Acquisition costs of $0.9 in connection with this acquisition are included in Operating, selling, administrative and general expenses.

The table below shows The Pantry's initial purchase price allocation as reported in the Corporation's 2015 annual consolidated financial statements and the changes made to adjust it to the final allocation based on available information as at the date of authorization of these consolidated financial statements.

		Initial allocation	Changes	Final allocation
		$	$	$
Assets
Current assets
	Cash and cash equivalents	93.8	-	93.8
	Accounts receivable	60.9	-	60.9
	Inventories	135.7	-	135.7
	Prepaid expenses	25.8	(3.3)	22.5
	Income taxes receivable	0.4	0.1	0.5
		316.6	(3.2)	313.4
Property and equipment		660.8	275.5	936.3
Identifiable intangible assets		11.8	74.1	85.9
Environmental costs receivable		65.7	-	65.7
Other assets		2.0	(0.8)	1.2
		1,056.9	345.6	1,402.5
Liabilities
Current liabilities
	Accounts payable and accrued liabilities	219.7	13.8	233.5
	Provisions	22.5	0.3	22.8
	Current portion of finance lease obligations	7.6	(0.4)	7.2
	Current portion of long-term debt	529.1	-	529.1
		778.9	13.7	792.6
Finance lease obligations		97.6	(5.7)	91.9
Provisions		116.2	(1.2)	115.0
Unfavorable leases		-	98.5	98.5
Other liabilities		16.4	0.4	16.8
Deferred income taxes		44.8	51.8	96.6
		1,053.9	157.5	1,211.4
Net identifiable assets		3.0	188.1	191.1
Acquisition goodwill		847.7	(188.1)	659.6
Consideration paid in cash		850.7	-	850.7
Cash and cash equivalents acquired		93.8	-	93.8
Net cash flow for the acquisition		756.9	-	756.9

Other acquisitions

On June 23, 2014, the Corporation acquired 13 company-operated stores and two non-operating stores in the US state of South Carolina from Garvin Oil Company. The Corporation owns the land and buildings for all sites.
On October 8, 2014, the Corporation acquired 55 stores in the US states of Illinois and Indiana from Tri Star Marketing Inc. Of these, 54 are company-operated and one is operated by an independent operator. The Corporation owns the land and buildings for 54 sites and leases the land and owns the building for the remaining site. Through this transaction, the Corporation also acquired three biodiesel blending facilities.
During fiscal year 2015, the Corporation also acquired 32 other stores through distinct transactions. The Corporation owns the land and buildings for 23 sites and leases these same assets for the remaining nine.

Acquisition costs of $1.8 in connection with these acquisitions and other unrealized acquisitions are included in Operating, selling, administrative and general expenses.

These acquisitions were settled for a total cash consideration of $172.5. Purchase price allocations based on the estimated fair value on the date of acquisition and available information as at the date of authorization of these consolidated financial statements is as follows:

		$
Tangible assets acquired
	Inventories	10.4
	Property and equipment	143.1
Total tangible assets		153.5
Liabilities assumed
	Accounts payable and accrued liabilities	2.0
	Provisions	1.2
	Deferred credits and other liabilities	5.0
Total liabilities		8.2
Net tangible assets acquired		145.3
Intangible assets		1.3
Goodwill		27.1
Negative goodwill recorded to earnings		(1.2)
Total cash consideration paid		172.5

Approximately $12.9 of the goodwill related to these transactions was deductible for tax purposes.

These acquisitions were concluded in order to expand the Corporation's market share, to penetrate new markets and to increase its economies of scale. These acquisitions generated goodwill mainly due to the strategic location of stores acquired and negative goodwill due to the difference between the acquisition price and the fair value of net assets acquired.

5. DISPOSAL OF BUSINESSES

Lubricants business

On October 1, 2015, the Corporation closed the disposal of its lubricants business to Fuchs Petrolub SE. The disposal was done through a share purchase agreement pursuant to which Fuchs Petrolub SE acquired 100% of issued and outstanding shares of Statoil Fuel & Retail Lubricants Sweden AB. Total proceeds from the disposal of the lubricants business were $81.0. The Corporation recognized a gain on disposal of $47.4 in relation to this transaction.

Aviation fuel business

On December 31, 2014, the Corporation closed the sale of its aviation fuel business through a share purchase agreement pursuant to which BP Global Investments Ltd. acquired 100% of all issued and outstanding shares of Statoil Fuel & Retail Aviation AS for total proceeds of $107.4 including an amount of $91.4 for intercompany debt assumed by the buyer and of which $12.3 was receivable as at April 26, 2015, amount which was received during fiscal year 2016. The Corporation recognized a loss on disposal of $11.0 and a curtailment gain on defined benefits pension plans obligation of $2.6 in relation to this sale transaction. The disposal also resulted in a $1.9 cumulated loss on translation adjustments being reclassified to earnings and included in the loss on disposal.

6. INVESTMENT IN JOINT VENTURES AND ASSOCIATED COMPANIES

	2016	2015
	$	$
Investment in joint ventures	89.6	73.9
Investment in associated companies	1.6	1.7
	91.2	75.6

The Corporation's investment in joint ventures and associated companies, none of which are individually significant to the Corporation, are recorded according to the equity method. The following amounts represent the Corporation's share of the joint ventures' and associated companies' net earnings and comprehensive income:


		2016	2015
		$	$
Joint ventures
	Net earnings and comprehensive income	29.8	21.9
Associated companies
	Net earnings and comprehensive income	0.2	-
		30.0	21.9

7. REPURCHASE OF NON-CONTROLLING INTEREST IN CIRCLE K ASIA S.À.R.L.

On July 24, 2015, the Corporation exercised its option to repurchase the non-controlling interest in Circle K Asia s.à.r.l. ("Circle K Asia") for a cash consideration of $11.8. The difference between the consideration paid and the value of the non-controlling interest as at July 24, 2015 was recorded to contributed surplus. As a result of this transaction, the Corporation's redemption liability was nullified and its reversal was recorded to retained earnings. The Corporation now owns 100% of Circle K Asia's operations.

8. SUPPLEMENTARY INFORMATION RELATING TO EXPENSES

	2016	2015 (adjusted, Note 2)
	$	$
Cost of sales	28,063.1	29,261.9
Selling expenses	3,721.1	3,242.6
Administrative expenses	578.7	512.5
Operating expenses	111.9	193.2
	32,474.8	33,210.2

The above expenses include rent expense of $378.5 ($323.6 in 2015), net of sub-leasing income of $24.1 ($23.1 in 2015).

		2016	2015
		$	$
Employee benefit charges
	Salaries	1,420.4	1,206.0
	Fringe benefits and other employer contributions	181.2	164.9
	Employee future benefits (Note 27)	96.8	82.3
	Termination benefits	5.4	18.4
	Stock-based compensation and other stock-based payments (Note 25)	10.9	13.8
	Curtailment gain on defined benefits pension plans obligation (Note 27)	(27.2)	(2.6)
		1,687.5	1,482.8

9. COMPENSATION OF KEY MANAGEMENT PERSONNEL

	2016	2015
	$	$
Salaries and other current benefits	9.6	9.2
Stock-based compensation and other stock-based payments	7.1	7.6
Employee future benefits (Note 27)	2.4	2.4
	19.0	19.2

Key management personnel comprise members of the Board of Directors and senior management.

10. NET FINANCIAL EXPENSES

			2016	2015
			$	$
Financial expenses
	Interest expense
		Interest on long-term debt	65.1	57.9
		Interest on finance lease obligations	18.1	6.1
		Net interest on defined benefit plans (Note 27)	2.8	3.4
		Change in fair value of derivative financial instrument	-	2.5
		Interest on bank overdrafts and bank loans	0.2	1.1
		Accretion of provisions (Note 23)	16.0	16.0
Other finance costs			7.2	4.8
			109.4	91.8

Financial revenues
	Interest on bank deposits		(2.6)	(3.1)
	Other financial revenues		(4.3)	(6.0)
			(6.9)	(9.1)
Foreign exchange loss			5.0	22.7
Net financial expenses			107.5	105.4

11. INCOME TAXES

	2016	2015
	$	$
Current income taxes	360.2	378.7
Deferred income taxes	38.4	(72.5)
	398.6	306.2

The principal items which resulted in differences between the Corporation's effective income tax rates and the combined statutory rates in Canada are detailed as follows:

	2016	2015
	%	%
Combined statutory income tax rate in Canada ^(a)	26.90	26.90
Impact of other jurisdictions' tax rates	(1.23)	(2.96)
Impact of tax rate changes	(0.04)	(0.02)
Other permanent differences	(0.59)	0.78
Effective income tax rate	25.04	24.70

^(a) The Corporation's combined statutory income tax rate in Canada includes the appropriate provincial income tax rates.

The components of deferred income tax assets and liabilities are as follows:

							2016
		Balance as at April 26, 2015 (adjusted, Note 2)	Recognized to earnings	Recognized directly to other comprehensive income or equity	Transfer from income taxes payable	Recognized through business acquisitions	Balance as at April 24, 2016
		$	$	$	$	$	$
Deferred income tax assets
	Property and equipment	(18.6)	35.7	0.1	-	-	17.2
	Expenses deductible during the following years	25.4	(6.7)	(0.5)	-	-	18.2
	Goodwill	(33.9)	27.2	-	-	-	(6.7)
	Deferred charges	8.0	2.5	(0.6)	-	-	9.9
	Tax attributes	54.3	(47.6)	4.6	-	3.5	14.8
	Asset retirement obligations	16.4	(11.9)	(0.3)	-	-	4.2
	Deferred credits	(3.9)	0.4	0.7	-	-	(2.8)
	Unrealized exchange gain	(4.7)	(2.9)	(3.7)	-	-	(11.3)
	Other	20.9	(19.3)	2.0	-	1.1	4.7
		63.9	(22.6)	2.3	-	4.6	48.2

Deferred income tax liabilities
	Property and equipment	641.4	5.4	12.3	-	1.2	660.3
	Goodwill	3.9	72.0	0.9	-	-	76.8
	Expenses deductible during the following years	(132.5)	12.3	(1.1)	-	-	(121.3)
	Intangible assets	121.2	(40.8)	-	-	-	80.4
	Asset retirement obligations	(44.1)	(12.0)	(1.0)	-	-	(57.1)
	Tax attributes	(54.0)	(3.6)	1.4	29.3	-	(26.9)
	Deferred charges	(8.4)	(2.4)	1.2	-	-	(9.6)
	Deferred credits	(1.3)	(11.9)	(0.2)	-	-	(13.4)
	Revenues taxable during the following years	61.7	10.1	6.1	-	-	77.9
	Unrealized exchange loss (gain)	1.5	0.5	(2.0)	-	-	-
	Other	4.7	(13.8)	6.4	-	-	(2.7)
		594.1	15.8	24.0	29.3	1.2	664.4

						2015
		Balance as at April 27, 2014	Recognized to earnings	Recognized directly to other comprehensive income or equity	Transfer from income taxes payable	Recognized through business acquisitions (adjusted, Note 2)	Balance as at April 26, 2015 (adjusted, Note 2)
		$	$	$	$	$	$
Deferred income tax assets
	Property and equipment	29.9	(48.5)	-	-	-	(18.6)
	Expenses deductible during the following years	19.3	5.0	1.1	-	-	25.4
	Goodwill	(9.3)	(24.6)	-	-	-	(33.9)
	Deferred charges	2.6	5.4	-	-	-	8.0
	Tax attributes	1.2	53.1	-	-	-	54.3
	Asset retirement obligations	3.7	12.7	-	-	-	16.4
	Deferred credits	(2.6)	(0.7)	(0.6)	-	-	(3.9)
	Unrealized exchange gain	8.5	(0.3)	(12.9)	-	-	(4.7)
	Other	(1.6)	22.5	-	-	-	20.9
		51.7	24.6	(12.4)	-	-	63.9

Deferred income tax liabilities
	Property and equipment	545.4	(29.5)	(48.2)	-	173.7	641.4
	Goodwill	117.9	(96.2)	(17.8)	-	-	3.9
	Expenses deductible during the following years	(97.8)	(2.2)	7.2	-	(39.7)	(132.5)
	Intangible assets	60.9	57.1	-	-	3.2	121.2
	Asset retirement obligations	(64.8)	10.6	10.5	-	(0.4)	(44.1)
	Tax attributes	(27.2)	(32.1)	14.4	32.1	(41.2)	(54.0)
	Deferred charges	(9.1)	(0.7)	0.4	-	1.0	(8.4)
	Deferred credits	(10.0)	8.9	(0.2)	-	-	(1.3)
	Revenues taxable during the following years	53.9	25.6	(17.8)	-	-	61.7
	Unrealized exchange loss (gain)	11.9	(11.1)	0.7	-	-	1.5
	Other	(15.3)	21.7	(1.7)	-	-	4.7
		565.8	(47.9)	(52.5)	32.1	96.6	594.1

The analysis of deferred tax assets and deferred tax liabilities is as follows:

		2016	2015 (adjusted, Note 2)
		$	$
Deferred tax assets:
	Deferred tax assets to be recovered in more than 12 months	44.9	54.9
	Deferred tax assets to be recovered within 12 months	3.3	9.0
		48.2	63.9

Deferred tax liabilities:
	Deferred tax liabilities to be settled in more than 12 months	726.9	633.3
	Deferred tax liabilities to be settled within 12 months	(62.5)	(39.2)
		664.4	594.1

Deferred income tax liabilities that would be payable on the retained earnings of certain subsidiaries have not been recognized because such amounts are not expected to materialize in the foreseeable future. Temporary differences related to these investments amounted to $962.9 ($552.7 in 2015).

12. NET EARNINGS PER SHARE

The following table presents the information for the computation of basic and diluted net earnings per share:

	2016	2015 (adjusted, Note 2)
	$	$
Net earnings available to Class A and B shareholders	1,193.5	929.3

Weighted average number of shares (in thousands)	567,425	566,013
Dilutive effect of stock options (in thousands)	1,770	2,698
Weighted average number of diluted shares (in thousands)	569,195	568,711

Basic net earnings per share available for Class A and B shareholders	2.10	1.64

Diluted net earnings per share available for Class A and B shareholders	2.10	1.63

In calculating diluted net earnings per share for 2016, 203,713 stock options are excluded due to their antidilutive effect (651,274 excluded stock options in 2015).

For fiscal 2016, the Board declared total dividends of CA 26.75¢ per share (CA 19.0¢ per share in 2015).

13. SUPPLEMENTARY INFORMATION RELATING TO CHANGES IN NON-CASH WORKING CAPITAL

	2016	2015 (adjusted, Note 2)
	$	$
Accounts receivable	74.0	307.6
Inventories	24.7	36.3
Prepaid expenses	5.9	14.2
Accounts payable and accrued liabilities	(30.7)	(108.8)
Income taxes payable	15.7	102.3
	89.6	351.6

14. ACCOUNTS RECEIVABLE

	2016	2015 (adjusted, Note 2)
	$	$
Trade accounts receivable and vendor rebates receivable ^(a)	685.9	513.2
Credit and debit cards receivable ^(a)	586.3	600.3
Provision for doubtful accounts	(28.5)	(27.1)
Credit and debit cards receivable and trade accounts receivable and vendor rebates receivable - net	1,243.7	1,086.4

Other accounts receivable	172.5	178.9
	1,416.2	1,265.3

(a)	These amounts are presented net of an amount of $163.2 presented in reduction of Accounts payable and accrued expenses due to netting arrangements ($130.5 as at April 26, 2015).

The following details the aging of credit and debit cards receivable and trade accounts receivable and vendor rebates receivable that are not impaired:

		2016	2015
		$	$
	Not past due	1,080.3	1,012.3
	Past due 1-30 days	121.9	50.5
	Past due 31-60 days	11.6	12.4
	Past due 61-90 days	11.8	6.2
	Past due 91 days and over	18.1	5.0
		1,243.7	1,086.4

Movements in the provision for doubtful accounts are as follows:

		2016	2015
		$	$
	Balance, beginning of year	27.1	27.6
	Business acquisitions	5.3	0.4
	Provision for doubtful accounts, net of unused beginning balance	3.9	14.4
	Receivables written off during the year	(8.2)	(8.5)
	Effect of exchange rate variations	0.4	(6.8)
	Balance, end of year	28.5	27.1

15. INVENTORIES


	2016	2015 (adjusted, Note 2)
	$	$
Merchandise	543.9	524.0
Road transportation fuel	271.7	274.0
Lubricant products (Note 5)	-	26.9
Other products	1.1	2.7
	816.7	827.6

16. PROPERTY AND EQUIPMENT


	Land	Buildings and building components	Equipment	Leasehold improvements	Total
	$	$	$	$	$
Year ended April 24, 2016
Net book amount, beginning	1,585.8	1,805.0	1,978.0	231.3	5,600.1
Additions	116.8	190.4	562.8	39.1	909.1
Business acquisitions (Note 4)	266.9	218.2	110.8	-	595.9
Disposals	(49.6)	(28.0)	(73.0)	(1.5)	(152.1)
Depreciation and amortization expense	(1.4)	(162.4)	(343.7)	(53.8)	(561.3)
Impairment expense	(0.7)	(3.4)	(1.6)	-	(5.7)
Transfers	0.7	32.3	(32.4)	(0.6)	-
Effect of exchange rate variations	8.3	15.1	(2.6)	(2.0)	18.8
Net book amount, end^(a)	1,926.8	2,067.2	2,198.3	212.5	6,404.8

As at April 24, 2016
Cost	1,931.6	2,771.4	3,904.2	566.0	9,173.2
Accumulated depreciation, amortization and impairment	(4.8)	(704.2)	(1,705.9)	(353.5)	(2,768.4)
Net book amount^(a)	1,926.8	2,067.2	2,198.3	212.5	6,404.8
Portion related to finance leases	155.3	133.4	43.2	-	331.9

Year ended April 26, 2015 (adjusted, Note 2)
Net book amount, beginning	1,447.1	1,763.0	1,735.6	185.3	5,131.0
Additions	50.3	111.5	425.0	33.8	620.6
Business acquisitions (Note 4)	271.6	400.7	344.5	62.6	1,079.4
Disposals	(44.4)	(38.8)	(52.7)	(2.3)	(138.2)
Depreciation and amortization expense	(0.7)	(131.0)	(271.0)	(42.3)	(445.0)
Impairment expense	-	(2.1)	(0.8)	-	(2.9)
Transfers	5.8	(5.5)	0.2	(0.5)	-
Effect of exchange rate variations	(143.9)	(292.8)	(202.8)	(5.3)	(644.8)
Net book amount, end^(a)	1,585.8	1,805.0	1,978.0	231.3	5,600.1

As at April 26, 2015 (adjusted, Note 2)
Cost	1,591.4	2,317.5	3,398.5	550.5	7,857.9
Accumulated depreciation, amortization and impairment	(5.6)	(512.5)	(1,420.5)	(319.2)	(2,257.8)
Net book amount^(a)	1,585.8	1,805.0	1,978.0	231.3	5,600.1
Portion related to finance leases	23.3	119.0	38.9	-	181.2

(a)	The net book amount as at April 24, 2016 includes $404.8 related to construction in progress ($317.7 as at April 26, 2015).

17. GOODWILL AND INTANGIBLE ASSETS

Goodwill

		2016	2015 (adjusted, Note 2)
		$	$

	Net book amount, beginning of year	1,629.2	1,088.7
	Business acquisitions (Note 4)	219.2	686.7
	Disposal of aviation fuel business	-	(1.9)
	Disposal of lubricants business	(0.3)	-
	Effect of exchange rate variations	2.9	(144.3)
	Net book amount, end of year	1,851.0	1,629.2

Intangible assets
	Trademarks	Franchise agreements	Software^(a)	Customer relationships	Licences	Fuel supply agreements	Favorable leases	Other	Total
	$	$	$	$	$	$	$	$	$
Year ended April 24, 2016
Net book amount, beginning	349.3	72.2	174.0	5.8	24.5	6.5	60.8	2.8	695.9
Additions	-	-	25.7	-	-	-	-	-	25.7
Business acquisitions (Note 4)	-	-	4.4	0.6	0.2	8.7	-	2.5	16.4
Disposals	(8.5)	(0.3)	(2.7)	-	-	(0.3)	(3.0)	-	(14.8)
Rent, depreciation and amortization expense	(28.2)	(15.0)	(21.8)	(5.6)	-	(3.8)	(6.6)	(1.2)	(82.2)
Effect of exchange rate variations	0.7	(1.8)	(7.9)	(0.2)	-	-	0.1	-	(9.1)
Net book amount, end	313.3	55.1	171.7	0.6	24.7	11.1	51.3	4.1	631.9

As at April 24, 2016
Cost	382.5	112.5	252.1	94.9	24.7	58.7	60.0	7.6	993.0
Accumulated depreciation and amortization	(69.2)	(57.4)	(80.4)	(94.3)	-	(47.6)	(8.7)	(3.5)	(361.1)
Net book amount	313.3	55.1	171.7	0.6	24.7	11.1	51.3	4.1	631.9

Year ended April 26, 2015 (adjusted, Note 2)
Net book amount, beginning	411.4	110.1	201.9	54.1	24.5	10.3	8.6	2.6	823.5
Additions	-	-	26.6	-	-	-	-	-	26.6
Business acquisitions (Note 4)	16.3	3.0	7.4	-	-	3.4	55.7	1.4	87.2
Disposals	(5.3)	-	-	(3.2)	-	(0.2)	(0.8)	(0.1)	(9.6)
Rent, depreciation and amortization expense	(18.2)	(18.7)	(18.0)	(39.1)	-	(7.0)	(0.8)	(1.0)	(102.8)
Effect of exchange rate variations	(54.9)	(22.2)	(43.9)	(6.0)	-	-	(1.9)	(0.1)	(129.0)
Net book amount, end	349.3	72.2	174.0	5.8	24.5	6.5	60.8	2.8	695.9

As at April 26, 2015 (adjusted, Note 2)
Cost	392.5	114.6	233.7	97.8	24.5	57.7	63.0	6.5	990.3
Accumulated depreciation and amortization	(43.2)	(42.4)	(59.7)	(92.0)	-	(51.2)	(2.2)	(3.7)	(294.4)
Net book amount	349.3	72.2	174.0	5.8	24.5	6.5	60.8	2.8	695.9

(a)	The net book amount as at April 24, 2016 includes $28.5 related to software in progress ($22.7 as at April 26, 2015).

Goodwill and intangible assets with indefinite useful lives are allocated to CGUs based on the geographical location of the acquired stores. Allocation as at April 24, 2016 and April 26, 2015 is as follows:

	2016		2015
CGU	Intangible assets with indefinite useful lives	Goodwill	Intangible assets with indefinite useful lives	Goodwill (adjusted , Note 2)
			$	$
Canada	-	155.6	-	162.0
United States	179.2	1,138.6	179.2	1,058.8
Scandinavia	64.4	414.3	63.6	406.9
Central and Eastern Europe	25.8	1.6	26.2	1.5
Ireland	-	140.9	-	-
Lubricants (Note 5)	-	-	4.3	-
	269.4	1,851.0	273.3	1,629.2

The intangible assets with indefinite useful lives for the United States CGU are the Circle K trademark and licenses. The intangible asset with indefinite useful life for the Scandinavia, Central and Eastern Europe ("CEE") and Lubricants CGUs is the droplet logo. The Scandinavia CGU, includes the activities of Norway, Sweden and Denmark while the CEE CGU includes the activities of Poland, Latvia, Lithuania, Estonia and Russia. For the annual impairment test, the recoverable amount of the CGU has been determined based on fair value less costs to sell and the Corporation uses an approach based on earnings to determine this value. Under this method, the cash flows of the CGU for a three-year period were used. The key assumptions on which management has based its determination of fair value less costs to sell are the discount rate, the growth rate and the exchange rate. These assumptions primarily reflect past experience.

For the Scandinavia CGU, the main assumptions used are as follows:

	2016	2015
Discount rate before taxes	12.8%	12.8%
Growth rate	1.0%	1.0%

These assumptions represent management's best estimate given current market conditions and risks specific to each of these assets.

The recoverable amounts of the United States and Canada CGUs were determined on the basis of their fair value less costs to sell and the Corporation uses an approach based on EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) multiples of comparable corporations to determine these values.

18. OTHER ASSETS


	2016	2015 (adjusted, Note 2)
	$	$
Environmental costs receivable (Note 23)	76.8	81.4
Deposits	39.7	10.1
Pension benefit asset (Note 27)	41.2	17.8
Investment contract including an embedded total return swap (Note 28)	31.3	32.6
Deferred charges, net	4.2	5.3
Other	148.8	74.2
	342.0	221.4

19. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES


	2016	2015 (adjusted, Note 2)
	$	$
Accounts payable and accrued expenses ^(a)	1,474.1	1,387.3
Sales and excise taxes	662.5	545.3
Salaries and related benefits	188.2	197.8
Deferred credits	25.0	19.1
Other	166.9	123.2
	2,516.7	2,272.7

(a)

This amount is presented net of an amount of $121.3 from Credit and debit cards receivable and $41.9 from Trade accounts receivable and vendor rebates receivable due to netting arrangements ($110.5 and $20.0, respectively as at April 26, 2015).

20. LONG-TERM DEBT

	2016	2015 (adjusted, Note 2)
	$	$
Canadian dollar denominated senior unsecured notes ^(a)	1,573.2	1,064.2
US dollar denominated term revolving unsecured operating credit D, maturing in December 2019 ^(b)	841.2	1,837.2
Canadian dollar denominated term revolving unsecured operating credit D, maturing in December 2019 ^(b)	43.0	-
NOK denominated senior unsecured notes maturing on February 2026 ^(c)	81.8	-
NOK floating-rate bonds, 5.04%, maturing in February 2017	1.8	1.9
NOK fixed-rate bonds, 5.75%, maturing in February 2019	1.6	1.7
Note payable, secured by the assets of certain stores, 8.75%, repayable in monthly instalments, maturing in 2019	1.2	1.5
Obligations related to buildings and equipment under finance leases, with an average rate of 5.8%, payable on various dates until 2050	313.2	161.8
	2,857.0	3,068.3
Current portion of long-term debt	28.6	21.4
	2,828.4	3,046.9

(a) Canadian dollar denominated senior unsecured notes

On June 2, 2015, the Corporation issued Canadian dollar denominated senior unsecured notes totaling CA$ 700.0 ($564.2) (tranche 5). Interest is payable semi-annually on June 2 and December 2 of each year. The Corporation used the net proceeds from the issuance to repay a portion of its term revolving unsecured operating credit D.

As at April 24, 2016, the Corporation had Canadian dollar denominated senior unsecured notes totalling CA$2.0 billion, divided as follows:

	Principal amount	Maturity	Coupon rate	Effective rate as at April 24, 2016
Tranche 1 - November 1, 2012 issuance	CA$300.0	November 1, 2017	2.861%	2.9682%
Tranche 2 - November 1, 2012 issuance	CA$450.0	November 1, 2019	3.319%	3.4039%
Tranche 3 - November 1, 2012 issuance	CA$250.0	November 1, 2022	3.899%	3.9634%
Tranche 4 - August 21, 2013 issuance	CA$300.0	August 21, 2020	4.214%	4.3173%
Tranche 5 - June 2, 2015 issuance	CA$700.0	June 2, 2025	3.600%	3.6463%

Notes issued on November 1, 2012 and June 2, 2015 are subject to cross-currency interest rate swaps (Note 21).

(b) Term revolving unsecured operating credit D

As at April 24, 2016, the Corporation has a credit agreement consisting of a revolving unsecured facility. As at April 26, 2015, this facility had a maximum amount of $2,525.0 and its maturity was December 2018. The credit facility was available in the following forms:

A term revolving unsecured operating credit, available i) in Canadian dollars, ii) in US dollars, iii) in the form of Canadian dollar bankers' acceptances, with stamping fees and iv) in the form of standby letters of credit not exceeding $150.0 or the equivalent in Canadian dollars, with applicable fees. Depending on the form and the currency of the loan, the amounts borrowed bear interest at variable rates based on the Canadian prime rate, the bankers' acceptance rate, the US base rate or LIBOR plus a variable margin; and
An unsecured line of credit in the maximum amount of $50.0, available in Canadian or US dollars, bearing interest at variable rates based, depending on the form and currency of the loan, on the Canadian prime rate, the US prime rate or the US base rate plus a variable margin.

Standby fees, which vary based on a leverage ratio and on the utilization rate of the credit facility, apply to the unused portion of the credit facility. Stamping fees, standby letters of credit fees and the variable margin used to determine the interest rate applicable to borrowed amounts are determined according to a leverage ratio of the Corporation. Under the credit agreement, the Corporation must maintain certain financial ratios and respect certain restrictive provisions.

The following amendments have been made to this operating credit during fiscal year 2016:

On November 20, 2015, its maturity was extended to December 2019.
On January 25, 2016, the euro was added as an available currency under the facility. The amounts borrowed in euro bear interest at variable rates based on Euribor plus a variable margin.

No other terms were changed significantly.

As at April 24, 2016, the effective interest rate is 1.33% (1.04% as at April 26, 2015). As at April 24, 2016 and April 26, 2015, the available line of credit was unused and the Corporation was in compliance with the restrictive provisions and ratios imposed by the credit agreement.

(c) Norwegian krone denominated senior unsecured notes

On February 18, 2016, the Corporation issued Norwegian krone denominated senior unsecured notes totalling NOK 675.0 ($78.4) with a coupon rate of 3.85% and maturing on February 18, 2026. Interest is payable semi-annually on April 20 and October 20 of each year. The effective rate is 3.8928%. The net proceeds from the issuance were mainly used to repay a portion of the Corporation's term revolving unsecured operating credit D.

Term revolving unsecured operating credit E

As at April 24, 2016, the Corporation has a credit agreement consisting of a revolving unsecured facility of an initial maximum amount of $50.0 with an initial term of 50 months. The credit facility is available in the form of a revolving unsecured operating credit, available in US dollars. The amounts borrowed bear interest at variable rates based on the US base rate or the LIBOR rate plus a variable margin.

Standby fees, which vary based on a leverage ratio and on the utilization rate of the credit facility, apply to the unused portion of the credit facility. The variable margin used to determine the interest rate applicable to amounts borrowed is determined according to a leverage ratio of the Corporation. Under the credit agreement, the Corporation must maintain certain financial ratios and respect certain restrictive provisions.

As at April 24, 2016 and April 26, 2015, operating credit E was unused.

Term revolving unsecured operating credit F

As at April 24, 2016, as a result of the Topaz acquisition, the Corporation has a credit agreement consisting of a revolving unsecured facility of an initial maximum amount of €25.0 ($28.1) maturing on January 30, 2020. The credit facility is available in the form of a revolving unsecured operating credit, available in Euros. The amounts borrowed bear interest at variable rates based on the funding base rate or the Euribor rate plus a variable margin.

As at April 24, 2016, operating credit F was unused.

Bank overdraft facilities

The Corporation has access to bank overdraft facilities totalling approximately $254.4 ($202.7 as at April 26, 2015). As at April 24, 2016 and April 26, 2015, they were not used.

Letters of credit

As at April 24, 2016, the Corporation had outstanding letters of credit of $82.8 ($81.6 as at April 26, 2015) of which $27.7 ($56.3 as at April 26, 2015) reduced funds available under the Corporation's Term revolving unsecured operating credit D.

Obligations related to finance leases

Instalments on obligations related to finance leases for the next fiscal years are as follows:

	Obligations related to buildings and equipment under finance leases
	$
2017	52.2
2018	67.3
2019	41.3
2020	37.6
2021	34.4
2022 and thereafter	233.7
	466.5
Interest expense included in minimum lease payments	153.3
	313.2

21. CROSS-CURRENCY INTEREST RATE SWAPS

The Corporation has entered into cross-currency interest rate swap agreements, allowing it to synthetically convert a portion of its Canadian dollar and US dollar denominated debts into US dollars and euros, respectively.

Receive – Notional	Receive – Rate	Pay – Notional	Pay – Rate	Maturity	Fair value as at April 24, 2016 (Note 28)	Fair value as at April 26, 2015 (Note 28)
CA$1,700.0	From 2.8610% to 3.8990%	US$1,572.7	From 2.0340% to 3.8700%	From November 1, 2017 to June 2, 2025	$221.8	$161.6
US$584.0	1.2875%	€522.8	0.35%	April 29, 2016	$2.2	-
					$224.0	$161.6
Current other financial liabilities					$2.2	-
Long-term other financial liabilities					$221.8	$161.6

The Canadian dollar to US dollar cross-currency interest rate swap agreements are designated as a foreign exchange hedge of the Corporation's net investment in its operations in the US. The US dollar to euro cross-currency interest rate swap agreements, in combination with the US dollar denominated long-term debt, is designated as a foreign exchange hedge of the Corporation's net investment in its operations in Denmark, the Baltics and Ireland.

22. DEFERRED CREDITS AND OTHER LIABILITIES

	2016	2015 (adjusted, Note 2)
	$	$
Deferred rent expense	66.0	64.0
Deferred branding credits	25.0	32.9
Deferred credits	12.1	21.9
Unfavorable leases	78.9	100.2
Other liabilities	82.9	93.4
	264.9	312.4

23. PROVISIONS

The reconciliation of the Corporation's main provisions is as follows:

	Asset retirement obligations (a)	Provision for environmental costs (b)	Restructuring provision (c)	Provision for workers' compensation (d)	Provision for general liability (d)	Other provisions	Total
	$	$	$	$	$	$	$
2016

Balance, beginning of year	266.0	170.5	23.9	43.3	30.0	18.7	552.4
Business acquisitions (Note 4)	18.6	1.6	-	0.8	1.0	1.1	23.1
Liabilities incurred	2.4	29.5	6.0	22.7	23.3	17.9	101.8
Liabilities settled	(6.5)	(29.2)	(17.2)	(22.5)	(18.8)	(14.1)	(108.3)
Accretion expense	14.7	0.9	-	0.3	0.1	-	16.0
Reversal of provisions	(2.4)	(3.5)	(0.5)	-	(2.6)	(2.9)	(11.9)
Change in estimates	20.8	(10.2)	-	(4.8)	(1.7)	-	4.1
Effect of exchange rate variations	2.2	(0.6)	(0.3)	-	-	2.6	3.9
Balance, end of year	315.8	159.0	11.9	39.8	31.3	23.3	581.1
Current portion	42.3	28.2	6.6	17.6	10.4	1.0	106.1
Long-term portion	273.5	130.8	5.3	22.2	20.9	22.3	475.0

2015 (adjusted, Note 2)

Balance, beginning of year	283.2	110.7	30.6	28.6	17.6	22.2	492.9
Business acquisitions (Note 4)	38.4	75.3	-	14.3	11.0	-	139.0
Liabilities incurred	0.6	24.1	13.5	16.7	15.3	0.6	70.8
Liabilities settled	(3.9)	(28.3)	(14.0)	(16.1)	(13.3)	(2.7)	(78.3)
Accretion expense	14.6	0.9	-	0.4	0.1	-	16.0
Reversal of provisions	(3.2)	(2.8)	-	-	-	-	(6.0)
Change in estimates	(18.3)	2.3	-	(0.6)	(0.7)	-	(17.3)
Effect of exchange rate variations	(45.4)	(11.7)	(6.2)	-	-	(1.4)	(64.7)
Balance, end of year	266.0	170.5	23.9	43.3	30.0	18.7	552.4
Current portion	42.4	29.8	19.4	17.2	13.9	16.2	138.9
Long-term portion	223.6	140.7	4.5	26.1	16.1	2.5	413.5

(a)	The total undiscounted amount of estimated cash flows to settle the asset retirement obligations is approximately $604.9 and is expected to be incurred over the next 40 years. Should changes occur in estimated future removal costs, tank useful lives, lease terms or governmental regulatory requirements, revisions to the liability could be made.
(b)	Environmental costs should be disbursed over the next 20 years.
(c)	Restructuring costs should be settled over the next two years.
(d)	Workers' compensation and general liability indemnities should be disbursed over the next five years.

Environmental costs

The Corporation is subject to Canadian, US and European legislation governing the storage, handling and sale of road transportation fuel and other petroleum-based products. The Corporation considers that it is compliant with all important aspects of current environmental legislation.

The Corporation has an ongoing training program for its employees on environmental issues and performs preventative site testing and site restoration in cooperation with regulatory authorities. The Corporation also examines its motor fuel equipment annually.

In each of the US states in which the Corporation operates, with the exception of Iowa, Florida, Texas, West Virginia and Maryland, there is a state fund to cover the cost of certain environmental remediation activities after the applicable trust fund deductible is met, which varies by state. These state funds provide insurance for motor fuel facilities operations to cover some of the costs of cleaning up certain environmental contamination caused by the use of road transportation fuel equipment. Road transportation fuel storage tank registration fees and/or a motor fuel tax in each of the states finance the trust funds. The Corporation pays annual registration fees and remits sales taxes to applicable states. Insurance coverage differs from state to state.

In order to provide for the above-mentioned environmental costs, the Corporation has recorded a $159.0 provision for environmental costs as at April 24, 2016 ($170.5 as at April 26, 2015). Furthermore, the Corporation has recorded an amount of $81.6 for environmental costs receivable from trust funds as at April 24, 2016 ($85.3 as at April 26, 2015), of which $4.8 ($3.9 as at April 26, 2015) is included in Accounts receivable and the remainder is included in Other assets.

24. CAPITAL STOCK

Authorized

Unlimited number of shares without par value

First and second preferred shares issuable in series, non-voting, ranking prior to other classes of shares with respect to dividends and payment of capital upon dissolution. The Board of Directors is authorized to determine the designation, rights, privileges, conditions and restrictions relating to each series of shares prior to their issuance.
Class A multiple voting and participating shares, ten votes per share except for certain situations which provide for only one vote per share, convertible into Class B subordinate voting shares on a share-for-share basis at the holder's option. Under the articles of amendment, no new Class A multiple voting shares may be issued.
Class B subordinate voting and participating shares, convertible automatically into Class A multiple voting shares on a share-for-share basis upon the occurrence of certain events.

The order of priority for the payment of dividends is as follows:

First preferred shares;
Second preferred shares; and
Class B subordinate voting shares and Class A multiple voting shares, ranking pari passu.

Issued and fully paid

The changes in number of outstanding shares are as follows:

	2016	2015
Class A multiple voting shares
Balance, beginning of year	148,101,840	148,101,840
Conversion into Class B shares	(335,300)	-
Balance, end of year	147,766,540	148,101,840

Class B subordinate voting shares
Balance, beginning of year	419,262,255	417,646,072
Issued as part of a previous acquisition	54	2,376
Stock options exercised	225,962	1,613,807
Issued on conversion of Class A shares	335,300	-
Balance, end of year	419,823,571	419,262,255

25. STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS

Stock option plan

The Corporation has a stock option plan (the "Plan") under which it has authorized the grant of up to 50,676,000 stock options for the purchase of its Class B subordinate voting shares.

Stock options have up to a 10-year term, vest 20.0% on the date of the grant and cumulatively thereafter on each anniversary date of the grant and are exercisable at the designated market price on the date of grant. The grant price of each stock option shall not be set below the weighted average closing price for a board lot of the Class B shares on the Toronto Stock Exchange for the five days preceding the grant. Each stock option is exercisable into one Class B share of the Corporation at the price specified in the terms of the stock option. To allow option holders to proceed with a cashless exercise of their options, the Plan allows them to elect to receive a number of subordinate shares equivalent to the difference between the total number of subordinate shares underlying the options exercised and the number of subordinate shares required to settle the exercise of the options.

The table below presents the status of the Corporation's stock option plan as at April 24, 2016 and April 26, 2015 and the changes therein during the years then ended:

		2016		2015
	Number of stock options	Weighted average exercise price	Number of stock options	Weighted average exercise price
		CA$		CA$
Outstanding, beginning of year	2,517,911	14.80	3,578,805	6.83
Granted	208,138	57.78	669,415	34.36
Exercised	(240,273)	7.95	(1,730,309)	5.88
Cancelled	(11,571)	32.44	-	-
Outstanding, end of year	2,474,205	19.00	2,517,911	14.80
Exercisable stock options, end of year	1,893,316	12.47	1,940,379	9.38

For options exercised in fiscal 2016, the weighted average share price at the date of exercise was CA$57.99 (CA$47.88 in 2015).

The following table presents information on the stock options outstanding and exercisable as at April 24, 2016:


	Options outstanding			Options exercisable
Range of exercise prices	Number of stock options outstanding as at April 24, 2016	Weighted average remaining contractual life (years)	Weighted average exercise price		Number of stock options exercisable as at April 24, 2016	Weighted average exercise price
CA$			CA$			CA$
4 – 5	169,010	2.43	4.60		169,010	4.60
5 – 6	526,660	3.21	5.99		526,660	5.99
6 – 9	808,291	0.76	8.53		808,291	8.53
9 – 16	105,000	6.26	15.87		84,000	15.87
16 – 35	661,531	8.42	34.39		264,612	34.39
36 – 59	203,713	9.45	57.79		40,743	57.79
	2,474,205				1,893,316

The fair value of stock options granted is estimated at the grant date using the Black-Scholes option pricing model on the basis of the following weighted average assumptions for the stock options granted during the year:

	2016	2015
Expected dividends (per share)	CA$0.24	CA$0.18
Expected volatility	29.30%	29.03%
Risk-free interest rate	1.26%	1.68%
Expected life	8 years	8 years

The weighted average fair value of stock options granted was CA$18.80 in 2016 (CA$11.55 in 2015).

For 2016, compensation cost charged to the consolidated statements of earnings amounts to $3.1 ($3.0 in 2015).

Deferred share unit plan

The Corporation has a deferred share unit ("DSU") plan for the benefit of its external directors which allows them, at their option, to receive all or a portion of their annual compensation and directors' fee in the form of DSUs. A DSU is a notional unit, equivalent in value to the Corporation's Class B share. Upon leaving the Board of Directors, participants are entitled to receive the payment of their cumulated DSUs either a) in the form of cash based on the price of the Corporation's Class B shares as traded on the open market on the date of payment, or b) in Class B shares bought by the Corporation on the open market on behalf of the participant.

The DSU expense and the related liability are recorded at the grant date. The liability is adjusted periodically to reflect any variation in the market value of the Class B shares. As at April 24, 2016, the Corporation has a total of 261,566 DSUs outstanding (240,961 as at April 26, 2015) and an obligation of $11.3 ($9.6 as at April 26, 2015) is recorded in deferred credits and other liabilities. The obligation is subject to an embedded total return swap (Note 28). The compensation cost amounts to $2.0 in 2016 ($4.3 in 2015).

Phantom stock units

The Corporation has a phantom stock units ("PSU") plan allowing the Board of Directors, through its Human Resources and Corporate Governance Committee, to grant PSUs to the officers and selected key employees of the Corporation (the "Participants"). A PSU is a notional unit whose value is based on the weighted average reported closing price for a board lot of the Corporation's Class B subordinated voting share (the "Class B share") on the Toronto Stock Exchange for the five trading days immediately preceding the grant date. The PSU provides the Participant with the opportunity to earn a cash award. Each PSU initially granted vests no later than one day prior to the third anniversary of the grant date subject, namely, to the achievement of performance objectives of the Corporation, based on external and internal benchmarks, over a three-year performance period. PSUs are not dilutive since they are payable solely in cash.

The table below presents the status of the Corporation's PSU plan as at April 24, 2016 and April 26, 2015 and the changes therein during the years then ended in number of units:

	2016	2015

Outstanding, beginning of year	1,212,632	1,251,537
Granted	225,489	334,278
Paid	(575,632)	(273,819)
Cancelled	(96,888)	(99,364)
Outstanding, end of year	765,601	1,212,632

As at April 24, 2016, an obligation of $10.2 is recorded in Accounts payable and accrued liabilities ($21.9 as at April 26, 2015) and $10.2 is recorded in Deferred credits and other liabilities ($9.5 as at April 26, 2015). The obligation is subject to an embedded total return swap (Note 28). For 2016, the compensation cost amounts to $5.8 ($6.5 for 2015).

26. ACCUMULATED OTHER COMPREHENSIVE INCOME

As at April 24, 2016

Attributable to shareholders of the Corporation

Items that may be reclassified to earnings

Will never be reclassified to earnings

Cumulative translation adjustments

Net investment hedge

Net interest on net investment hedge

Available-for-sale investment

Cash flow hedge

Cumulative net actuarial loss

Accumulated other comprehensive loss

Balance, before income taxes

(434.1)

(237.4)

2.5

(15.5)

4.6

(15.4)

(695.3)

Less: Income taxes

0.3

0.7

(1.7)

1.1

(2.5)

(2.1)

Balance, net of income taxes

(434.1)

(237.7)

1.8

(13.8)

3.5

(12.9)

(693.2)

As at April 26, 2015
	Attributable to shareholders of the Corporation
	Items that may be reclassified to earnings				Will never be reclassified to earnings
	Cumulative translation adjustments	Net investment hedge	Net interest on net investment hedge	Cash flow hedge	Cumulative net actuarial loss	Accumulated other comprehensive loss
	$	$	$	$	$	$
Balance, before income taxes	(554.8)	(161.6)	6.1	7.0	(43.5)	(746.8)
Less: Income taxes	-	0.3	1.7	1.5	(11.7)	(8.2)
Balance, net of income taxes	(554.8)	(161.9)	4.4	5.5	(31.8)	(738.6)

27. EMPLOYEE FUTURE BENEFITS

The Corporation has a number of funded and unfunded defined benefit and defined contribution plans that provide retirement benefits to certain employees.

Defined benefit plans

The Corporation measures its accrued defined benefit obligation and the fair value of plan assets for accounting purposes on the last Sunday of April of each year.

The Corporation has defined benefit plans in Canada, the United States, Norway, Sweden and Ireland. Those plans provide benefits based on average earnings at retirement, or based on the years with the highest salaries and the number of years of service. The most recent actuarial valuation of the pension plans for funding purposes was as at December 31, 2015, and the next required valuation will be as at December 31, 2016.

Some plans include benefits adjustments in line with the consumer price index, whereas most of them do not provide such adjustments. The majority of the benefit payments are from trustee-administered funds; however, there are also a number of unfunded plans where the Corporation meets the benefit payment obligation as it falls due. Plan assets held in trusts are governed by local regulations and practice in each country, as is the nature of the relationship between the Corporation and the trustees and their composition. Responsibility for governance of the plans, investment decisions and contribution schedules lies jointly with the plan committees and the Corporation.

During fiscal year 2016, the Corporation announced to employees its decision to convert certain of its existing defined benefits pension plans into defined contributions plans. In connection with the termination of the defined benefits plans, a pre-tax curtailment gain of $27.2 was recorded to earnings with a corresponding offset to the defined benefits pension plans obligation.

During May 2016, subsequent to the end of fiscal 2016, the Corporation also announced to its employees in Canada and in the United States its decision to convert, going forward, most of its existing defined benefits pension plans to defined contributions plans. The Corporation does not expect that this decision will have a significant impact on its consolidated financial statements.

Information about the Corporation's defined benefit plans, in aggregate, is as follows:

	2016	2015
	$	$
Present value of accrued defined benefit obligation
Balance, beginning of year	412.6	452.7
Business acquisition	9.5	-
Current service cost	9.8	15.8
Interest cost	8.1	14.9
Benefits paid	(18.1)	(23.0)
Settlement payments from plan assets	(118.5)	-
Loss from change in demographic assumptions	-	0.4
Loss (gain) from change in financial assumptions	(33.5)	93.0
Experience gains	(3.2)	(23.0)
Curtailment gain	(27.2)	(2.6)
Disposal of business	(5.0)	(8.1)
Effect of exchange rate fluctuations	(10.9)	(107.5)
Balance, end of year	223.6	412.6

Plans' assets
Fair value, beginning of year	303.8	362.9
Settlement payments from plan assets	(118.5)	-
Premiums transferred	(6.3)	-
Interest income	5.3	11.5
Return on assets (excluding amounts included in interest income)	(8.6)	33.7
Employer contributions	3.0	10.3
Benefits paid	(9.5)	(19.8)
Administrative expenses	(0.1)	(0.1)
Disposal of business	(2.6)	(6.6)
Effect of exchange rate fluctuations	(2.0)	(88.1)
Fair value, end of year	164.5	303.8

Reconciliation of the funded status of the benefit plans to the amount recorded in the consolidated financial statements:

	2016	2015
	$	$
Present value of defined benefit obligation for funded pension plans	(132.5)	(311.3)
Fair value of plans' assets	164.5	303.8
Net funded status of funded plans – net (deficit) surplus	32.0	(7.5)
Present value of defined benefit obligation for unfunded pension plans	(91.1)	(101.3)
Net accrued pension benefit liability	(59.1)	(108.8)

The pension benefit asset of $41.2 ($17.8 as at April 26, 2015) is included in Other assets and the pension benefit liability of $100.3 ($126.6 as at April 26, 2015) is presented separately in the consolidated balance sheets.

The defined benefit obligation and plan assets are composed by country as follows:

		Canada	United States	Norway	Sweden	Ireland	Total
2016		$	$	$	$	$	$
	Present value of defined benefit obligation	(58.5)	(13.1)	(45.6)	(96.9)	(9.5)	(223.6)
	Fair value of plans' assets	22.3	-	7.2	135.0	-	164.5
	Funded status of plan – (deficit) surplus	(36.2)	(13.1)	(38.4)	38.1	(9.5)	(59.1)

2015
	Present value of defined benefit obligation	(61.6)	(10.7)	(218.8)	(121.5)	-	(412.6)
	Fair value of plans' assets	23.7	-	145.6	134.5	-	303.8
	Funded status of plan – (deficit) surplus	(37.9)	(10.7)	(73.2)	13.0	-	(108.8)

As at the measurement date, plans' assets consist of:

		2016				2015
		Quoted	Unquoted	Total		Quoted	Unquoted	Total
		$	$	$	%	$	$	$	%
Cash and cash equivalents		0.3	-	0.3	0.2	-	-	-	-
Equity securities		77.6	0.2	77.8	47.3	92.9	4.4	97.3	32.0
Debt instruments
	Government	68.7	-	68.7	41.8	82.5	-	82.5	27.2
	Corporate	8.5	-	8.5	5.2	53.3	46.3	99.6	32.8
Real estate		-	1.1	1.1	0.7	-	16.6	16.6	5.5
Other assets		7.8	0.3	8.1	4.8	5.9	1.9	7.8	2.5
Total		162.9	1.6	164.5	100.0	234.6	69.2	303.8	100.0

The Corporation's pension benefit expense for the fiscal year is determined as follows:

	2016	2015
	$	$
Current service cost, net of employee contributions	9.8	15.8
Administrative expenses	0.1	0.1
Pension expense for the year	9.9	15.9
Net interest expense	2.8	3.4
Curtailment gain	(27.2)	(2.6)
Amount recognized in earnings for the year	(14.5)	16.7

The pension expense for the year is included in Operating, selling, administrative and general expenses in the consolidated statements of earnings. The curtailment gain is presented separately in the consolidated statements of earnings while the net interest expense is included in Financial expenses.

The amount recognized in Other comprehensive income for the fiscal year is determined as follows:

	2016	2015
	$	$
Loss from change in demographic assumptions	-	0.4
(Gain) loss from change in financial assumptions	(33.5)	93.0
Experience gains	(3.2)	(23.0)
Return on assets (excluding amounts included in interest income)	8.6	(33.7)
Amount recognized in Other comprehensive income	(28.1)	36.7

The Corporation expects to make a contribution of $2.5 to the defined benefit plans during the next financial year.

The significant weighted average actuarial assumptions which management considers the most likely to determine the accrued benefit obligations and the pension expense are the following:

	2016					2015
	Canada	United States	Norway	Sweden	Ireland	Canada	United States	Norway	Sweden
	%	%	%	%	%	%	%	%	%
Discount rate	3.90	3.90	2.25	3.50	1.40	3.75	3.75	2.50	2.00
Rate of compensation increase	3.70	4.00	2.50	2.75	-	3.70	4.00	2.75	2.75
Rate of benefit increase	2.00	2.00	0.10	1.75	1.10	2.00	2.00	0.55	1.50
Rate of social security base amount increase (G-amount)	-	-	2.25	2.75	-	-	-	2.50	2.75

The Corporation uses mortality tables provided by regulatory authorities and actuarial associations in each country. The G-amount is the expected increase of pensions paid from the state. In some European countries, the Corporation is responsible for the difference between what the pensioners receive from the state and the entitled pension based on their salary at the time of retirement.

The weighted average duration of the defined benefit obligation of the Corporation is 20 years.

The sensitivity of the defined benefit obligation to changes in the weighted principal actuarial assumptions is as follows:

	Change in assumption	Increase in assumption	Decrease in assumption

Discount rate	0.50%	Decrease by 9.7%	Increase by 10.9%
Rate of compensation increase	0.50%	Increase by 2.1%	Decrease by 1.7%
Rate of benefit increase	0.50%	Increase by 8.4%	Decrease by 8.3%
Increase of life expectancy	1 year	Increase by 3.8%	-

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, because changes in some of the assumptions may be correlated. When calculating the above sensitivity analyses, the same method has been applied as when calculating the pension liability recognized in the consolidated balance sheets.

Through its defined benefit pension plans, the Corporation is exposed to the following risks:

Asset returns: The value of the plans' defined benefit obligations is calculated using a discount rate set with reference to corporate bond yields. If plan assets underperform this yield, this will create a deficit. All of the capitalized plans hold a significant proportion of equities, which are expected to outperform corporate bonds in the long term. Furthermore, the Corporation actively monitors the performance of the assets to ensure the expected return. To mitigate the risks of assets underperforming, investment policies require a diversified portfolio that spreads risk across different types of instruments.

Changes in bond yields: A decrease in corporate bond yields will increase plan defined benefit obligations. However, this same decrease will increase existing bond values held by the various plans.

Change in demographic assumptions: A change in demographic assumptions (rate of salary increase or pension increase, change in mortality table) will increase or decrease the obligation.

For funded plans, the individual plans have investment policy objectives to have investment average duration in line with the average expected life of the obligation and scheduled benefit payments. The Corporation and the trustees actively monitor the duration and the expected yield of the investments to ensure they match the expected cash outflows arising from the pension benefit payments. Also, as presented above, to mitigate the risks, the investments are well diversified. The Corporation does not use derivatives to offset its risk and has not changed the processes from the previous fiscal year.

In Europe, it is the Corporation's responsibility to make or not make contributions to the defined benefit plans. The Corporation contributes to these plans except when they are overcapitalized. For funded plans that are running a deficit, the Corporation makes payments based on the actuaries' recommendations and existing regulations. The Corporation is committed to making special payments in the coming years to eliminate the deficit. These contributions have no significant impact on the Corporation's cash flows. The Corporation does not have a funded plan in the United States.

Defined contribution plans

The Corporation's total pension expense under its defined contribution plans and mandatory governmental plans for 2016 is $85.4 ($66.4 in 2015).

Deferred compensation plan – United States operations

The Corporation sponsors a deferred compensation plan that allows certain employees in its US operations to defer up to 25.0% of their base salary and 100.0% of their cash bonuses for any given year. Interest accrued on the deferral and amounts due to the participants are generally payable on retirement, except in certain limited circumstances. Obligations under this plan amount to $28.5 as at April 24, 2016 ($26.6 as at April 26, 2015) and are included in Deferred credits and other liabilities.

28. FINANCIAL INSTRUMENTS AND CAPITAL RISK MANAGEMENT

Financial risk management objectives and policies

The Corporation's activities expose it to a variety of financial risks: foreign currency risk, interest rate risk, credit risk, liquidity risk and price risk. The Corporation uses forward contracts to hedge certain risk exposures, primarily foreign currency and price risk as well as a cross-currency interest rate swap to hedge its foreign currency risk related to its net investments in its operations in the US, Denmark, the Baltics and Ireland.

Foreign currency risk

A large portion of the Corporation's consolidated revenues and expenses are received or denominated in the functional currency of the business units operating in the markets in which it does business. Accordingly, the Corporation's sensitivity to variations in foreign exchange rates is economically limited.

The Corporation is exposed to foreign currency risk with respect to its long-term debt denominated in US dollars, its Norwegian krone denominated senior unsecured notes and the cross-currency interest rate swaps, all of which are designated as net investment hedges. As at April 24, 2016, with all other variables held constant, a hypothetical variation of 5.0% of the US dollar and Norwegian krone against the Canadian dollar would have had a net impact of $103.7 on Other comprehensive income. Given the Corporation has adopted the US dollar as its reporting currency, part of these impacts are compensated by the translation of the Canadian dollar consolidated financial statements into US dollars.

Interest rate risk

The Corporation's fixed rate long-term debt is exposed to a risk of change in fair value due to changes in interest rates. As at April 24, 2016, the Corporation did not hold any derivative instruments to mitigate this risk.

The Corporation is exposed to a risk of change in cash flows due to changes in interest rates on its variable rate long-term debt. As at April 24, 2016, the Corporation did not hold any derivative instruments to mitigate this risk. The Corporation analyzes its cash flow exposure on an ongoing basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Corporation calculates the impact on net earnings of a defined interest rate shift. Based on variable rate long-term debt balances as at April 24, 2016, the annual impact on net earnings of a 1.0% shift in interest rates would have been $6.5 ($13.4 based on balances as at April 26, 2015).

Credit risk

The Corporation is exposed to credit risk with respect to Cash and cash equivalents, Trade accounts receivable and vendor rebates receivable, Credit and debit cards receivable, the investment contract including an embedded total return swap and the cross-currency interest rate swaps when their fair value is favourable to the Corporation.

Key elements of the Corporation's credit risk management approach include credit risk policies, credit mandates, an internal credit rating process, credit risk mitigation tools and continuous monitoring and management of credit exposures. Prior to entering into transactions with new counterparties, the Corporation's credit policy requires counterparties to be formally identified, approved, and assigned internal credit ratings as well as exposure limits. Once established, counterparties are reassessed according to policy and monitored continuously. Counterparty risk assessments are based on a quantitative and qualitative analysis of recent financial statements, when available, and other relevant business information. In addition, the Corporation evaluates any past payment performance, the counterparties' size and business diversification, and the inherent industry risk. The internal credit ratings reflect the Corporation's assessment of the counterparties' credit risk. The Corporation has maximum credit exposures for individual counterparties. The Corporation monitors outstanding balances and individual exposures against limits on a regular basis.

Credit risk related to Trade accounts receivable and vendor rebates receivable related to convenience stores' operations is limited considering the nature of the Corporation's activities and its counterparties. As at April 24, 2016, no single creditor accounted for over 10.0% of total Trade accounts receivable and vendor rebates receivable and the related maximum credit risk exposure corresponds to their carrying amount.

The Corporation mitigates the credit risk related to Cash and cash equivalents and Credit and debit cards receivable by dealing with major financial institutions that have very low or minimal credit risk. As at April 24, 2016, the maximum credit risk exposure related to Cash and cash equivalents and Credit and debit cards receivable corresponds to their carrying amount in addition to the credit risk exposure related to the Statoil/MasterCard credit cards as described below.

In some European markets, customers can settle their purchases by the use of a combined Statoil/MasterCard credit card. The Corporation has entered into agreements whereby the risks and rewards related to the credit cards, such as fee income, administration expenses and bad debt, are shared between the Corporation and external banks. Outstanding balances are charged to the customer monthly. The Corporation's exposure as at April 24, 2016 relates to receivables of $182.7, of which $85.3 was interest-bearing. These receivables are not recognized in the Corporation's consolidated balance sheets. For fiscal 2016, the expensed losses were not significant. In light of accurate credit assessments and continuous monitoring of outstanding balances, the Corporation believes that the credits do not represent any significant risk. The income and risks related to these arrangements with the banks are reported, settled and accounted for on a monthly basis.

The Corporation is exposed to credit risk arising from the financial instrument containing an embedded total return swap and from the cross-currency interest rate swaps when these swaps are favourable to the Corporation. In accordance with its risk management policy, to reduce this risk, the Corporation has entered into these swaps with major financial institutions with a very low credit risk.

Liquidity risk

Liquidity risk is the risk that the Corporation will encounter difficulties in meeting its obligations associated with financial liabilities and lease commitments. The Corporation is exposed to this risk mainly through its Long-term debt, Accounts payable and accrued expenses and lease agreements. The Corporation's liquidities are provided mainly by cash flows from operating activities and borrowings available under its revolving credit facilities.

On an ongoing basis, the Corporation monitors rolling forecasts of its liquidity reserve on the basis of expected cash flows taking into account operating needs, the tax situation and capital requirements and it ensures that it has sufficient flexibility under its available liquidity resources to meet its obligations.

The contractual maturities of financial liabilities and their related interest as at April 24, 2016 are as follows:


		Carrying amount	Contractual cash flows	Less than one year	Between one and two years	Between two and five years	More than five years
		$	$	$	$	$	$
Non-derivative financial liabilities ⁽¹⁾
	Accounts payable and accrued liabilities ⁽²⁾	1,827.0	1,827.0	1,827.0	-	-	-
	Canadian dollar denominated senior unsecured notes	1,573.2	2,019.9	71.1	307.9	758.3	882.6
	NOK denominated senior unsecured notes	81.8	113.4	3.2	3.2	9.6	97.4
	US dollar denominated term revolving unsecured operating credit D	841.2	880.6	11.0	11.0	858.6	-
	Canadian dollar denominated term revolving unsecured operating credit D	43.0	45.9	0.8	0.8	44.3	-
	NOK fixed-rate bonds	1.6	1.9	0.1	0.1	1.7	-
	NOK floating-rate bonds	1.8	1.9	1.9	-	-	-
	Other long-term debt	314.4	468.6	52.7	67.7	113.9	234.3
Cross-currency interest rate swaps to pay		-	331.2	49.3	49.1	116.7	116.1
Cross-currency interest rate swaps to receive		-	(304.1)	(46.8)	(46.1)	(106.3)	(104.9)
		4,684.0	5,386.3	1,970.3	393.7	1,796.8	1,225.5

(1)	Based on spot rates, as at April 24, 2016, for balances in Canadian dollars, in Norwegian kroner, in euros and balances bearing interest at variable rates.
(2)	Excludes deferred credits as well as statutory accounts payable and accrued liabilities such as sales taxes, excise taxes and property taxes.

Price risk

The Corporation's sales of refined oil products, which include road transportation fuel, stationary energy and lubricants, constitute a material share of its gross profit. As a result, its business, financial position, results of operation and cash flows are affected by changes in the commodity prices of such products. The Corporation seeks to pass on any changes in purchase prices to its customers by adjusting sales prices to reflect changes in refined oil products prices. The time lag between a change in refined oil product prices and a change of prices of fuel sold by the Corporation can impact the gross profit on sales of these products. As at April 24, 2016, the Corporation did not hold any derivative instruments to mitigate this risk.

The Corporation's obligations related to its PSU plan and DSU plan create a form of price risk as the recorded amounts of the related liabilities fluctuate in part with the fair value of the Corporation's Class B shares. To mitigate this risk, the Corporation has entered into a financial arrangement with an investment grade financial institution which includes an embedded total return swap with an underlying representing Class B shares recorded at fair market value on the consolidated balance sheets under Other assets. The financial arrangement is adjusted as needed to reflect new awards, adjustments and/or settlements of PSUs and DSUs. As at April 24, 2016, the impact on net earnings or shareholders' equity of a 5.0% shift of the value of the contract would not have been significant.

Fair value

The fair value of Trade accounts receivable and vendor rebates receivable, Credit and debit cards receivable and Accounts payable and accrued liabilities is comparable to their carrying amount given their short maturity. The fair value of Obligations related to buildings and equipment under finance leases is comparable to its carrying amount given that implicit interest rates are generally consistent with equivalent market interest rates for similar obligations. The carrying value of the term revolving unsecured operating credit D approximates its fair value given that its credit spread is similar to the credit spread the Corporation would obtain under similar conditions at the reporting date.

Fair value hierarchy

Fair value measurements are categorized in accordance with the following levels:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included in Level 1 but that are observable for the asset or liability, either directly or indirectly; and
Level 3: inputs for the asset or liability that are not based on observable market data.

The estimated fair value of each class of financial instrument, the methods and assumptions that were used to determine it and their fair value hierarchy are as follows:

Financial instruments at fair value on the consolidated balance sheets:

The fair value of the investment contract including an embedded total return swap, which is mainly based on the fair market value of the Corporation's Class B shares, is $45.3 as at April 24, 2016 ($54.7 as at April 26, 2015) (Level 2); and
The fair value of the cross-currency interest rate swaps, which is determined based on market rates obtained from the Corporation's financial institutions for similar financial instruments, is $224.0 as at April 24, 2016 ($161.6 as at April 26, 2015) (Level 2). They are presented as Other financial liabilities on the consolidated balance sheets.

Financial instruments not at fair value on the consolidated balance sheets:

The fair value of the Canadian dollar denominated senior unsecured notes, which is based on observable market data, is $1,636.5 as at April 24, 2016 ($1,128.8 as at April 26, 2015); and
The fair value of the Norwegian kroner denominated senior unsecured notes, which is based on observable market data, is $82.6 as at April 24, 2016.

Capital risk management

The Corporation's objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce its cost of capital. The Corporation's capital comprises total Shareholders' equity and net interest-bearing debt. Net interest-bearing debt refers to Long-term debt and its current portion, net of Cash and cash equivalents and temporary investments, if any.

In order to maintain or adjust its capital structure, the Corporation may issue new shares, redeem its shares, sell assets to reduce debt or adjust the amount of dividends paid to shareholders (Notes 20 and 24).

In its capital structure, the Corporation considers its stock option, PSU and DSU plans (Note 25). From time to time, the Corporation uses share repurchase programs to achieve its capital management objectives.

The Corporation monitors capital on the basis of the net interest-bearing debt to total capitalization ratio and also monitors its credit ratings as determined by third parties. As at the consolidated balance sheets date, the net interest-bearing debt to total capitalization ratio was as follows:

	2016	2015 (adjusted, Note 2)
	$	$
Current portion of long-term debt	28.6	21.4
Long-term debt	2,828.4	3,046.9
Less: Cash and cash equivalents	599.4	575.8
Net interest-bearing debt	2,257.6	2,492.5

Shareholders' equity	5,043.6	3,889.1
Net interest-bearing debt	2,257.6	2,492.5
Total capitalization	7,301.2	6,381.6

Net interest-bearing debt to total capitalization ratio	30.9%	39.1%

Under its term revolving unsecured operating credits, the Corporation must meet the following ratios on a consolidated basis:

A leverage ratio, which is the ratio of total Long-term debt less Cash and cash equivalents to EBITDA for the four most recent quarters. EBITDA is a non-IFRS measure; and
An interest coverage ratio, which is the ratio of EBITDA for the four most recent quarters to the total interest paid in the same periods. EBITDA is a non-IFRS measure.

The Corporation monitors these ratios regularly and was in compliance with these covenants as at April 24, 2016 and April 26, 2015.

The Corporation is not subject to any other significant externally imposed capital requirements.

29. CONTRACTUAL OBLIGATIONS

Minimum lease payments

As at April 24, 2016, the Corporation has entered into operating lease agreements which call for aggregate minimum lease payments of $2,823.0 for the rental of commercial space, equipment and warehouses. Several of these leases contain renewal options and certain sites are subleased to third parties. The minimum lease payments for the next fiscal years are as follows:



	$
Less than one year	391.2
One to five years	1,284.0
More than five years	1,147.8

As at April 24, 2016, the total amount of future minimum sublease payments expected to be received under sublease agreements related to these operating leases is $50.5.

Purchase commitments

The Corporation has entered into various product purchase agreements which require it to purchase minimum amounts or quantities of merchandise and road transportation fuel annually. The Corporation has generally exceeded such minimum requirements in the past and expects to continue doing so for the foreseeable future. Failure to satisfy the minimum purchase requirements could result in termination of the contracts, change in pricing of the products, payments to the applicable providers of a predetermined percentage of the commitments and repayments of a portion of rebates received.

30. CONTINGENCIES AND GUARANTEES

Contingencies

Various claims and legal proceedings have been initiated against the Corporation in the normal course of its operations and through acquisitions. Although the outcome of such matters is not predictable, the Corporation has no reason to believe that the outcome of any such current matter could reasonably be expected to have a materially adverse impact on the Corporation's financial position, results of operations or its ability to carry on any of its business activities.

Guarantees

The Corporation assigned a number of lease agreements for premises to third parties. Under some of these agreements, the Corporation retains ultimate responsibility to the landlord for payment of amounts under the lease agreements should the sublessees fail to pay. As at April 24, 2016, the total future lease payments under such agreements are approximately $1.6 and the fair value of the guarantee is not significant. Historically, the Corporation has not made any significant payments in connection with these indemnification provisions.

Also, in Europe, the Corporation has issued guarantees to third parties and on behalf of third parties for maximum undiscounted future payments totalling $14.3. These guarantees mainly relate to commitments under financial guarantees for car rental agreements and on behalf of retailers in Sweden. Guarantees on behalf of retailers in Sweden comprise items such as guarantees towards retailers' car washes and store inventory, in addition to guarantees towards suppliers of electricity and heating. The carrying amount and fair value of the guarantee commitments recognized in the consolidated balance sheet as at April 24, 2016 were not significant.

31. SEGMENTED INFORMATION

The Corporation operates convenience stores in the United States, Europe and Canada. It essentially operates in one reportable segment, the sale of goods for immediate consumption, road transportation fuel and other products mainly through corporate stores and franchise operations. The Corporation operates its convenience store and road transportation fuel retailing chain under several banners, including Circle K, Couche-Tard, Mac's, Kangaroo Express, Statoil, Ingo, Topaz and Re.Store. Revenues from external customers fall mainly into three categories: merchandise and services, road transportation fuel and other.

Information on the principal revenue classes as well as geographic information is as follows:

	2016				2015 (adjusted, Note 2)
	US	Europe	Canada	Total	US	Europe	Canada	Total
	$	$	$	$	$	$	$	$
External customer revenues ^(a)
Merchandise and services	7,366.5	933.8	1,771.6	10,071.9	5,311.0	990.4	1,974.4	8,275.8
Road transportation fuel	15,864.1	5,422.3	2,019.8	23,306.2	14,599.0	7,111.0	2,571.9	24,281.9
Other	14.9	751.1	0.5	766.5	16.0	1,955.7	0.5	1,972.2
	23,245.5	7,107.2	3,791.9	34,144.6	19,926.0	10,057.1	4,546.8	34,529.9

Gross profit
Merchandise and services	2,452.3	397.0	581.4	3,430.7	1,748.4	408.2	649.2	2,805.8
Road transportation fuel	1,479.4	811.5	148.9	2,439.8	1,093.3	870.9	164.4	2,128.6
Other	14.9	195.6	0.5	211.0	16.0	317.1	0.5	333.6
	3,946.6	1,404.1	730.8	6,081.5	2,857.7	1,596.2	814.1	5,268.0

Total long-term assets ^(b)	5,171.8	3,499.0	577.6	9,248.4	4,841.6	2,773.6	556.6	8,171.8

(a)	Geographic areas are determined according to where the Corporation generates operating income (where the sale takes place) and according to the location of the long-term assets.
(b)	Excluding financial instruments, deferred tax assets and post-employment benefit assets.

32. SUBSEQUENT EVENTS

Acquisitions

On May 26, 2016, the Corporation signed an agreement to purchase from Sevenoil Est OÜ and its affiliates 23 company-operated sites located in Estonia of which 11 are full service fuel stations with convenience stores and 12 are unmanned automated fuel stations. Under the agreement, the Corporation would own the land and building for all sites. The transaction is anticipated to close in the second quarter of fiscal year 2017 and is subject to the standard regulatory approvals and closing conditions.

On May 1, 2016, the Corporation completed the acquisition of all the shares of Dansk Fuel A/S, which represents A/S Dansk Shell's retail business, comprising 315 service stations, their commercial fuel business and their aviation fuel business. The Corporation will retain 131 sites, of which 90 are owned and 41 are leased from third parties. Of these 131 sites, 74 are full-service stations, 49 are unmanned automated fuel stations and eight are truck stops. Following the completion of this transaction, the Corporation's network in Denmark now includes a total of 483 stores of which 286 are company-operated, 153 are company-owned and dealer-operated and 44 are dealer-owned and dealer-operated. Included therein are 211 automated sites. The Corporation financed this transaction with its available cash and existing credit facilities.

As per the requirements of the European commission, the Corporation will divest a mix of both its current sites and Shell-branded stations, including the Shell/7-Eleven network and Shell's dealer-owned network. In addition, it will divest A/S Dansk Shell's commercial and aviation fuels businesses. The Corporation signed an agreement for the sale of the divested assets with DCC Holding A/S, a subsidiary of DCC plc. Pending the customary regulatory approvals, this transaction is expected to close during the second half of fiscal 2017. Until approval and completion of this transaction, Couche-Tard and the divested businesses will continue to operate separately. A trustee has been appointed to manage and operate Dansk Fuel A/S during this interim period. Couche-Tard will not have control over the relevant activities, consequently, the shares of Dansk Fuel will be accounted for as an investment in an associated company during this period.

Dividends

During its July 12, 2016 meeting, the Corporation's Board of Directors declared a dividend of CA7.75¢ per share to shareholders on record as at July 21, 2016 and approved its payment for August 4, 2016.

Issuance of euro denominated senior unsecured notes

On May 6, 2016, the Corporation proceeded with the issuance of euro denominated senior unsecured notes totaling €750.0 with a coupon rate of 1.875% and maturing on May 6, 2026. Interest is payable annually on May 6 of each year. The net proceeds from the issuance were mainly used to repay a portion of the Corporation's term revolving unsecured operating credit facility.

SOURCE Alimentation Couche-Tard Inc.

Investor Relations: Claude Tessier, Chief Financial Officer, Tel: (450) 662-6632, ext. 4407, [email protected]; Media Relations: Karen Romer, Director Global Communications, Tel: (514) 603-4505 / +47 950 74 950, [email protected]

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