## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information) 

## 1. REPORTING ENTITY 

CCL Industries Inc. (the “Company”) is a public company, listed on the Toronto Stock Exchange, and is incorporated and domiciled in Canada. These consolidated financial statements of the Company as at and for the year ended December 31, 2011, comprise the Company and its subsidiaries and the Company’s interest in associates. The Company has manufacturing facilities around the world and is primarily involved in the manufacture of labels, containers and tubes. 

## 2. BASIS OF PREPARATION 

## (a) Statement of compliance 

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and its interpretations adopted by the International Accounting Standards Board (“IASB”). These are the Company’s first consolidated financial statements in accordance with IFRS and IFRS 1, First-time Adoption of International Financial Reporting Standards (“IFRS 1”) has been applied. 

An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the Company is provided in note 31. 

These consolidated financial statements were authorized for issue by the Company’s Board of Directors on February 23, 2012. 

## (b) Basis of measurement 

These consolidated financial statements have been prepared on the historical cost basis except for the following items in the statements of financial position: 

GLYPH<129> derivative financial instruments are measured at fair value 

GLYPH<129> financial instruments at fair value through profit or loss are measured at fair value 

GLYPH<129> liabilities for cash-settled share-based payment arrangements are measured at fair value 

GLYPH<129> assets related to the defined benefit plans are measured at fair value and liabilities related to the defined benefit plans are calculated by qualified actuaries using the projected unit credit method 

## (c) Functional and presentation currency 

These consolidated financial statements are presented in Canadian dollars, which is the Company’s functional currency. All financial information presented in Canadian dollars has been rounded to the nearest thousand, unless otherwise noted. 

## (d) Use of estimates 

The presentation of financial statements requires management to make estimates and assumptions that affect the reported amounts of sales and expenses during the year and of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. In particular, the amounts recorded for inventories, redundant assets, bad debts, derivatives, income taxes, restructuring, pension and other post-retirement benefits, contingencies and litigation, environmental matters, outstanding self-insured claims, depreciation and amortization of property, plant and equipment, and the valuation of goodwill are based on estimates. Actual results could differ from those estimates. 

## 3. SIGNIFICANT ACCOUNTING POLICIES 

The accounting policies set out below have been applied consistently to all comparative information presented in these consolidated financial statements and in preparing the opening IFRS statement of financial position at January 1, 2010, for the purposes of transition to IFRS, unless otherwise indicated. 

The accounting policies have been applied consistently by the Company’s subsidiaries. 

## (a) Basis of consolidation 

## (i) Business combinations 

## Acquisitions on or after January 1, 2010 

For acquisitions on or after January 1, 2010, the Company measures goodwill as the fair value of the consideration transferred including the recognized amount of any non-controlling interest in the acquiree, less the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a 

