OPERATIONAL HIGHLIGHTS
FOR THE YEARS ENDED MARCH 31
(in thousands of Canadian dollars, except per share amounts)
SALES AND EARNINGS
Net sales
EBITA
Adjusted earnings *
FINANCIAL POSITION
Working capital
Total assets
Shareholders' equity
PER SHARE
Net earnings per Class A Share - basic and diluted
DIVIDENDS
Class A Shares, non-voting
Class B Shares, voting
MARKET VALUE
Class A - HIGH
Class A - LOW
Class B - HIGH
Class B - LOW
ANALYTICAL INFORMATION
Return on average shareholders' equity
Return on average capital employed
Ratio of current assets to current liabilities
2015
$ 315,697
35,518
16,222
2014
$ 297,824
33,729
14,616
68,982
301,505
147,365
1.13
0.420
0.365
16.26
13.10
26.10
15.35
11.0%
11.5%
1.9:1
44,564
301,015
138,003
1.01
0.400
0.348
14.40
11.19
20.00
11.50
10.5%
10.8%
1.4:1
Adjusted earnings is defined as net earnings excluding restructuring costs, gains (losses) on derivative financial instruments, other
expenses (losses), and the related income tax effect.
2
| ANDREW PELLER LIMITED 2015
Overview
The Company is a leading producer and marketer of quality wines in Canada. With wineries in British Columbia,
Ontario, and Nova Scotia, the Company markets wines produced from grapes grown in Ontario’s Niagara Peninsula,
British Columbia’s Okanagan and Similkameen Valleys, and from vineyards around the world. The Company’s
award-winning premium and ultra-premium VQA brands include Peller Estates, Trius, Hillebrand, Thirty Bench,
Crush, Wayne Gretzky, Sandhill, Calona Vineyards Artist Series, and Red Rooster. Complementing these premium
brands are a number of popularly priced varietal brands including Peller Estates French Cross in Eastern Canada,
Peller Estates Proprietors Reserve in Western Canada, Copper Moon, XOXO, skinnygrape, Black Cellar, and
Verano. Hochtaler, Domaine D’Or, Schloss Laderheim, Royal, and Sommet are our key value priced brands. The
Company produces wine based liqueurs and cocktails under the brand Panama Jack and wine based spritzers under
the skinnygrape brand. The Company imports wines from major wine regions around the world to blend with
domestic wine to craft these popularly priced and value priced brands. With a focus on serving the needs of all wine
consumers, the Company produces and markets premium personal winemaking products through its wholly-owned
subsidiary, Global Vintners Inc. (“GVI”), the recognized leader in personal winemaking products. GVI distributes
products through over 170 Winexpert authorized retailers and more than 600 independent retailers across Canada,
the United States, the United Kingdom, New Zealand, Australia, and China. GVI’s award-winning premium and
ultra-premium winemaking brands include Selection, Vintners Reserve, Island Mist, KenRidge, Cheeky Monkey,
Ultimate Estate Reserve, Traditional Vintage, and Cellar Craft. The Company owns and operates over 100 well-
positioned independent retail locations in Ontario under The Wine Shop, Wine Country Vintners, and Wine Country
Merchants store names. The Company also owns Andrew Peller Import Agency and The Small Winemaker’s
Collection Inc. (“SWM”), importers and marketing agents for premium wines from around the world. The
Company’s products are sold predominantly in Canada with a focus on export sales for its icewine and personal
winemaking products.
CONTENTS
OPERATIONAL HIGHLIGHTS…………………….……………………….………………………..…2
REPORT TO SHAREHOLDERS………………………………………………………………………...4
THE YEAR’S TOP AWARDS – ONTARIO AND BC.………………………………….……………...8
MANAGEMENT’S DISCUSSION & ANALYSIS……………………………………………………..10
INDEPENDENT AUDITOR’S REPORT………………………………………………………….…....25
CONSOLIDATED FINANCIAL STATEMENTS…………………………………………………..….26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS………………………….…….....31
.
TEN-YEAR SUMMARY………………………………………………………………………….….…60
DIRECTORS & OFFICERS………………………………………………………………………….....62
SHAREHOLDER INFORMATION…………………………………….………………………………63
THE WINE SHOP RETAIL STORES…………………………………………………………………..64
EXCLUSIVE WINE OFFER FOR SHAREHOLDERS.……………………………….……………….66
ANDREW PELLER LIMITED 2015 |
3
Report to Shareholders
Fiscal 2015 was another year of strong performance for the Company highlighted by strong
organic growth, the launch of new products and entry into new wine-related markets, and key
awards, including Peller Estates being named 2014 Winery of the Year. With this strong
performance, and our positive outlook on our future, we were pleased to increase our
common share dividends by 7.1%, our seventh increase in ten years.
Strong Performance
Sales for the fiscal year ended March 31, 2015 rose 6.0% to $315.7 million, driven by strong organic growth across
the majority of our well-established trade channels, the introduction of new products such as Black Cellar wines and
the launch of Wayne Gretzky Estates wines into Western Canada, as well as our entry into new wine-related
categories, including skinnygrape spritzers and Panama Jack wine-based cocktails. Sales growth was particularly
strong through our network of retail outlets in Ontario, our export markets, our two wine import and marketing
agencies, and provincial liquor control boards across the country.
We were very pleased to see our gross margins strengthen steadily through fiscal 2015, the result of initiatives over
the last few years to enhance productivity and reduce costs. These investments have largely offset price competition
in certain of our markets and the impact of the weaker Canadian dollar on our international purchases.
As a result of this strong sales growth and continuing improvement in gross margins, our adjusted net earnings, not
including restructuring charges, unrealized losses and gains on derivative financial instruments, and other expenses
or income, rose 11.0% to $16.2 million. Net earnings for the year were $15.8 million or $1.13 per Class A Share, up
11.9% from $14.0 million or $1.01 per Class A Share in fiscal 2014.
In addition to this record operating performance, our balance sheet and financial position remained strong at year-
end with an increase in working capital to $69.0 million, a reduction in our overall debt position, and an increase in
shareholders’ equity to $147.4 million or $10.31 per common share. We also renegotiated our credit facilities during
the year to realize lower debt service costs and to better reflect our ongoing strategic direction.
4
| ANDREW PELLER LIMITED 2015
Increase in Common Share Dividends
With our record operating results, our strong financial position, and our positive outlook on the future, the Board of
Directors was pleased to announce a 7.1% increase in common share dividends in June. The annual amount of
dividends on Class A Shares was increased to $0.450 per share and on Class B Shares to $0.391 per share. This
increase in dividends was our seventh in the last ten years, and a further demonstration of our commitment to
enhancing shareholder value. The Company has consistently paid common share dividends since 1974.
Strong Brand Performance
All of our key brands performed well during the year as we continue to deliver the highest quality and value at all
price points. Our two largest brands, Peller Estates French Cross / Proprietors Reserve and Copper Moon, remained
the second and third largest wine brands in our markets, while the launch of our new Black Cellar varietal table
wines became one of our fastest growing new brands.
Our higher margin Vintners Quality Alliance (“VQA”) brand portfolio continues to perform well with our Peller
Estates Family Series, Wayne Gretzky Estates, and Red Rooster remaining among the top-selling brands in our
markets. Our premium Trius wines also saw increased sales during the year, supported by a new and updated label
design. In Western Canada, our Sandhill Winery successfully added three new VQA varietals to its brand portfolio,
while our ultra-premium VQA wines, sold primarily through our estate wineries in Ontario’s Niagara-on-the-Lake
and British Columbia’s Okanagan Valley, also showed solid increases in sales through the year.
Our initiatives to grow our export business generated solid gains in fiscal 2015. Our Andrew Peller icewine is now
sold in twenty countries and is listed at some of the world’s top restaurants, including Jean Georges and Per Se in
New York City, and Gordon Ramsay and Jamie Oliver in London, England. We also received a national listing with
one of the U.K.’s most recognized wine retailers, and new distribution arrangements in Hong Kong. In addition, our
wines continue to be served on board cruise ships such as Celebrity in the U.S. and P&O and Cunard in Europe,
inflight through Air Canada business class, as well as in Montreal’s Maple Leaf Lounge.
ANDREW PELLER LIMITED 2015 |
5
Significant Accomplishments
We were all very proud to have our Peller Estates Winery named “2014 Canadian Winery of the Year” at the 2014
WineAlign National Wine Awards held in Penticton, B.C. This was the 14th national competition judged by an
extensive panel of Canada’s most respected wine writers, wine critics, retail buyers, Master Sommeliers and Masters
of Wines reviewing 1,335 wines from 189 wineries across Canada. We are also proud to see our Red Rooster
Winery win “South Okanagan Winery of the Year” in June 2015, along with a Lieutenant Governor’s Award for
Excellence for its Red Rooster 2012 Reserve Syrah. These key awards are among the highest distinctions in the
Canadian wine industry, and a testament to our commitment to quality in all we do.
A number of other awards and honours were garnered during the year. Emma Garner, the winemaker at our Thirty
Bench Winery, was named the “Ontario Wine Industry’s Winemaker of the Year”, while our Western Canadian
Sandhill Winery was awarded the “Best White Wine Trophy” at the recent Los Angeles Wine Competition. Overall,
our VQA wines in Eastern Canada won a total of 92 medals in various domestic and international wine
competitions, while our VQA brands in Western Canada were awarded 177 medals at both Canadian and prestigious
international events.
Investing in our Future
In 2011 we established our strategic alliance with the Wayne Gretzky Estate Winery, and since then have seen
significant growth in their brands to where their wines are now among the top-ten best sellers across the country. To
support the popularity of these fine wines, we were pleased to announce in June 2015 that the new Wayne Gretzky
Estate Winery and Craft Distillery will be built in Niagara-on-the-Lake with a projected grand opening in the spring
of 2017.
Located on land adjacent to our Trius Winery, the new facility has been designed by award-winning architect Gren
Weis to integrate into the rural Ontario landscape with a modern vision and interpretation. The proposed 15,000
square foot facility will include a winery, a craft distillery, barrel aging cellars, tasting rooms, retail and hospitality
facilities, all surrounded by beautiful landscaping and vineyards. Sure to become a destination for wine lovers, the
new facility will add to the significant investments we have made in our Peller Estates, Trius, Thirty Bench, Sandhill
and Red Rooster estate wineries.
6
| ANDREW PELLER LIMITED 2015
An Exciting Future
The Canadian wine business remains strong and growing, driven by increased consumption by young consumers
who have adopted wine as their beverage of choice, the widely reported health benefits of moderate wine
consumption, and an aging population who favour the more sophisticated experience wine delivers. For the year
ended March 31, 2015 consumption of wine in our markets rose by approximately 3.0% following a 1.9% increase
in fiscal 2014, while Canadian-made wines experienced an increase in market share to 36.4% from 35.3% in fiscal
2014. The Company’s share of the total Canadian market was 13.8% in fiscal 2015, up from 13.4% in fiscal 2014.
To capitalize on these strong market fundamentals, and to maintain the steady and stable increases in our market
share, we will continue to execute the same value-enhancing strategies that have proved so successful throughout
our fifty-three year history.
Organic growth will come from further market share gains, the introduction of new products and packaging formats,
continuing success in our export markets, and a strong and stable consumer-made wine business. One of our greatest
strengths is our multi-faceted distribution network through licensed establishments, Provincial liquor boards, our
network of 101 retail locations in Ontario, and our estate wineries in Ontario’s Niagara Region and British
Columbia’s Okanagan Valley. Our wine clubs and direct-to-consumer programs continue to outperform the market,
and our import wine and spirits agencies are performing well across Canada.
Since 1995 we have successfully completed and integrated fourteen accretive acquisitions for a total investment of
approximately $113.8 million. All of these acquisitions have made a significant contribution to our growth and
performance, and going forward we will continue to prudently investigate additional accretive acquisition
opportunities that expand and complement our presence and brand profile within the Canadian wine market and
enhance value for our shareholders.
We continue to invest in our people and our business systems, our marketing initiatives, our production capabilities,
our vineyards, and our supply chain and distribution networks. We are confident these investments will contribute to
increased sales and profitability for years to come.
In closing, we face an exciting future, and we thank everyone at the Company for their dedication and commitment.
We also thank our suppliers and our customers, and our shareholders, for their support.
Joseph A. Peller
Chairman
John E. Peller
President and CEO
ANDREW PELLER LIMITED 2015 |
7
The Year’s Top Awards
Ontario VQA
In fiscal 2015, VQA brands in Eastern Canada received a total of
92 mEdAlS
Peller Estates
WinERy of thE yEAR
2014 National Wine Align Awards
The Canadian Winery of the Year Award is the highest
distinction a winery can receive in the Canadian wine industry.
With 1,335 wines being reviewed from 189 wineries across
Canada, this competition is judged by an extensive panel of the
most respected wine writers and critics, retail buyers, Master of
Sommelier and Masters of Wines in Canada.
Peller Estates
WinERy of thE yEAR
2014 Intervin Wine Awards
Peller Estates won a second Winery of the Year award in 2014 at
the Intervin Wine Awards run by Vines Magazine in Canada.
Key individual award winners in the
National Wine Align Awards were:
• Andrew Peller Signature Series
Sauvignon Blanc 2012
Platinum Award
• Peller Estates Private Reserve
Cabernet Sauvignon 2012
Gamay Noir 2012
Gold Medals
• Thirty Bench
Red 2012
Gold Medal
• Wayne Gretzky Estates
Riesling 2013
Gold Medal
In other competitions:
• Peller Estates Private Reserve
Gamay Noir 2012
Lieutenant Governor’s Award for
Excellence in Ontario wine
• trius
Red 2012
Numerous awards, including
Double Gold Medal at the
2014 All Canadian Wine
Championships
Of the numerous Icewine awards received
by the Company, top honours went to:
• Peller Estates
Oak-aged Icewine 2013
Grand Gold Medal in the Icewine du Monde
Competition; Grand Gold award in the
Decanter World Wine Awards in the UK
• Peller Estates
Riesling Icewine 2012
Best Dessert Wine at the JapanWine Challenge
• trius Showcase
Vidal Icewine 2012
Gold Outstanding Award at the
International Wine & Spirits Competition
• Wayne Gretzky Estates
Vidal Icewine 2012
Gold Medal at the
International Wine & Spirits Competition
The Year’s Top Awards
British Columbia VQA
In fiscal 2015, VQA brands in Western Canada received a total of
177 mEdAlS
In the 2015 Okanagan Spring Wine Festival, Sandhill
won four Best in Category/Double Gold Medals for:
• Sandhill White label
Merlot Vanessa Vineyards 2012
• Sandhill White label
Viognier 2014
• Sandhill Small lots
Malbec 2012
• Sandhill Small lots
Sangiovese 2012
Many medals were awarded to
Wayne Gretzky Okanagan, including:
• Wayne Gretzky okanagan
The Great Red 2011
Gold Medal at the LA International
Wine Competition; Gold Medal
at the 2014 LA International Wine
& Spirit Competition
• Wayne Gretzky okanagan
Pinot Grigio 2013
Gold Medal at the 2014 Pacific Rim
International Wine Competition
• Wayne Gretzky okanagan
Great White 2012
Gold Medal at the 2014 Alberta
Beverage Awards
Key medals were also won by:
• Red Rooster
Pinot Noir 2012
Gold Medal at the 2014 All Canadian
Wine Championship
• Calona Vineyards
Gewürztraminer 2012
Gold Medal at the 2014 Tasters Guild
International Wine Competition
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three months and year ended March 31, 2015
The following management’s discussion and analysis (‘MD&A’) provides a review of corporate developments,
results of operations, and financial position for the three months and year ended March 31, 2015 in comparison with
those for the three months and year ended March 31, 2014. This discussion is prepared as of June 17, 2015 and
should be read in conjunction with the audited consolidated financial statements for the years ended March 31, 2015
and 2014, and the accompanying notes contained therein. The financial years ending March 31, 2016, March 31,
2015, and March 31, 2014 are referred to as “fiscal 2016”, “fiscal 2015”, and “fiscal 2014”, respectively. All dollar
amounts are expressed in Canadian dollars unless otherwise indicated.
FORWARD-LOOKING INFORMATION
Certain statements in this Management’s Discussion & Analysis may contain “forward-looking statements” within
the meaning of applicable securities laws including the “safe harbour provisions” of the Securities Act (Ontario)
with respect to Andrew Peller Limited (‘APL’ or the ‘Company’) and its subsidiaries. Such statements include, but
are not limited to, statements about the growth of the business in light of the Company’s acquisitions; its launch of
new premium wines; sales trends in foreign markets; its supply of domestically grown grapes; and current economic
conditions. These statements are subject to certain risks, assumptions, and uncertainties that could cause actual
results to differ materially from those included in the forward-looking statements. The words “believe”, “plan”,
“intend”, “estimate”, “expect”, or “anticipate”, and similar expressions, as well as future or conditional verbs such as
“will”, “should”, “would”, “could”, and similar verbs often identify forward-looking statements. We have based
these forward-looking statements on our current views with respect to future events and financial performance.
With respect to forward-looking statements contained in this MD&A, the Company has made assumptions and
applied certain factors regarding, among other things: future grape, glass bottle, and wine prices; its ability to obtain
grapes, imported wine, glass, and its ability to obtain other raw materials; fluctuations in the U.S./Canadian dollar,
Euro/Canadian dollar, and Australian/Canadian dollar exchange rates; its ability to market products successfully to
its anticipated customers; the trade balance within the domestic Canadian wine market; market trends; reliance on
key personnel; protection of its intellectual property rights; the economic environment; the regulatory requirements
regarding producing, marketing, advertising, and labeling of its products; the regulation of liquor distribution and
retailing in Ontario; the application of federal and provincial environmental laws; and the impact of increasing
competition.
These forward-looking statements are also subject to the risks and uncertainties discussed in the “Risks and
Uncertainties” section and elsewhere in this MD&A and other risks detailed from time to time in the publicly filed
disclosure documents of the Company which are available at www.sedar.com. Forward-looking statements are not
guarantees of future performance and involve risks, uncertainties, and assumptions which could cause actual results
to differ materially from the conclusions, forecasts, or projections anticipated in these forward-looking statements.
Because of these risks, uncertainties, and assumptions you should not place undue reliance on these forward-looking
statements. The Company’s forward-looking statements are made only as of the date of this MD&A, and except as
required by applicable law, Andrew Peller Limited undertakes no obligation to update or revise these forward-
looking statements to reflect new information, future events, or circumstances.
The Company’s stated mission is to build sales volumes of its blended, premium, and ultra-premium brands by
delivering to its customers and consumers the highest quality wines at the best possible value. To meet this goal the
Company invests in improvements in the quality of grapes and wines, its winemaking capabilities, sales and
marketing initiatives, and its quality management programs. Over the long term the Company believes premium
wine sales will continue to grow in Canada and these products generate higher prices and increased profitability
compared to lower-priced table wines.
10
| ANDREW PELLER LIMITED 2015
The Company is focused on initiatives to reduce costs and enhance its production efficiencies through an ongoing
review of its operations and continually reviews its cost structure with a view to enhancing profitability. The
Company continues to expand and strengthen its distribution through provincial liquor boards, the Ontario
independent retail locations under The Wine Shop, Wine Country Vintners, and Wine Country Merchants store
names, estate wineries, restaurants, and other licensed establishments. This distribution network is supported by
enhanced sales, marketing, and promotional programs. From time to time the Company also evaluates the potential
for acquisitions and partnerships, both in Canada and internationally, to further complement its product portfolio and
market presence.
Recent Events
On June 3, 2015 the Company’s Board of Directors announced a 7.1% increase in common share dividends for
shareholders of record on June 30, 2015 payable on July 10, 2015. The annual amount of dividends on Class A
Shares was increased to $0.450 per share from $0.420 per share and the dividends on Class B Shares was increased
to $0.391 per share from $0.365 per share.
During June 2014, Peller Estates was awarded the prestigious honour of “Canadian Winery of the Year” at the 2014
WineAlign National Wine Awards held in Penticton, British Columbia. This year marked the 14th national
competition judged by an extensive panel of the most respected wine writers, wine critics, retail buyers, Master
Sommeliers, and Masters of Wines in Canada. With 1,335 wines being reviewed from 189 wineries across Canada,
the “Canadian Winery of the Year” is the highest distinction awarded in the Canadian wine industry.
On June 4, 2014 the Company’s Board of Directors announced a 5% increase in common share dividends for
shareholders of record on June 30, 2014 payable on July 4, 2014. The annual amount of dividends on Class A
Shares was increased to $0.420 per share from $0.400 per share and the dividends on Class B Shares was increased
to $0.365 per share from $0.348 per share.
The Canadian Wine Market
The market for wine in Canada has continued to grow because of increased consumption by young consumers who
have more recently adopted wine as their beverage of choice, the widely reported health benefits of moderate wine
consumption, and a movement towards an increased consumption of wine made by an aging population who favour
the more sophisticated experience that wine offers.
For the year ended March 31, 2015 consumption of wine in Canada (excluding Quebec, where the Company does
not participate and excluding the refreshment wine category) rose by approximately 3.0% after increasing by 1.9%
in fiscal 2014. Imported wines accounted for 63.6% of total volume in fiscal 2015 down from 64.7% in fiscal 2014.
Canadian-made wines experienced an increase in market share from 35.3% in fiscal 2014 to 36.4% in fiscal 2015.
The Company’s share of the total Canadian market in fiscal 2015 was 13.8% compared to 13.4% in 2014.
The Vintners Quality Alliance (‘VQA’), established in 1989, has become recognized throughout the world as the
appellation system for Canadian wines that meet strict standards of excellence. The Company increased its share of
VQA wines by 0.4% in 2015 and by 1.5% in 2014.
Red table wines continued to grow in popularity with total Canadian volume sales rising 4.4% in fiscal 2015
compared to 2.4% in 2014. Volume sales of the Company’s red wine portfolio increased 8.2% in fiscal 2015 after
increasing by 10.3% in fiscal 2014. The increase was due to the strong performance of Wayne Gretzky wines and
the launch of Black Cellar. Volume sales of white table wines in Canada rose 4.7% in fiscal 2015 and 2.2% in 2014
while the Company’s sales of white table wines were up 5.8% in fiscal 2015 compared to 2.5% in fiscal 2014.
ANDREW PELLER LIMITED 2015 |
11
Results of Operations
For the year ended March 31,
(in $000, except per share amounts)
2015
2014
2013
Sales
$ 315,697
$ 297,824
$ 289,143
Gross margin
Gross margin (% of sales)
Selling and administrative expenses
115,203
107,982
109,743
36.5%
79,685
36.3%
74,253
38.0%
76,254
EBITA
35,518
33,729
33,489
Unrealized losses (gains) on derivative financial instruments
Other expenses (income)
Adjusted earnings
Net earnings
572
51
(750)
(1,295)
145
(544)
16,222
14,616
13,985
15,761
14,021
14,519
Earnings per share – basic and diluted - Class A
$1.13
$1.01
$1.04
Earnings per share – basic and diluted - Class B
$0.99
$0.88
$0.91
Dividend per share – Class A (annual)
Dividend per share – Class B (annual)
$0.420
$0.365
$0.400
$0.348
$0.360
$0.314
Sales for the year ended March 31, 2015 increased 6.0% compared to fiscal 2014, driven by strong organic growth
across all of the Company’s trade channels, the introduction of new products, and the Company’s entry into new
wine-based product categories, including skinnygrape spritzers and Panama Jack cocktails. The launch of Black
Cellar in fiscal 2014 also contributed to the strong sales growth in fiscal 2015. Sales growth was particularly strong
through provincial liquor control boards across the country, the Company’s export markets, its two wine import and
marketing agencies, and its network of retail outlets in Ontario.
The Company defines gross margin as gross profit excluding amortization. Gross margin as a percentage of sales
rose to 36.5% for the year ended March 31, 2015 from 36.3% in the prior year. Gross margin in fiscal 2015 has been
positively impacted by the Company’s continued success in implementing cost control initiatives to improve
productivity and raw material cost savings, partially offset by ongoing price competition in key markets and the
impact of the weaker Canadian dollar. Management is focused on efforts to enhance production efficiency and
productivity.
Selling and administrative expenses increased in fiscal 2015 due primarily to increased advertising and promotional
activities related to new product launches and other sales and marketing initiatives. As a percentage of sales, selling
and administrative expenses for the year ended March 31, 2015 were 25.2%, consistent with 24.9% last year. The
Company is focused on ensuring selling and administrative expenses are tightly controlled.
12
| ANDREW PELLER LIMITED 2015
Earnings before interest, amortization, restructuring costs, unrealized derivative gains, other expenses, and income
taxes (“EBITA”) were $35.5 million for the year ended March 31, 2015, up 5.3% compared to $33.7 million in
fiscal 2014. The increase in sales and gross margin in fiscal 2015 more than offset the increase in selling and
administrative expenses for the year.
Interest expense decreased in fiscal 2015 compared to the prior year due to lower interest rates charged on bank debt
and lower debt levels.
The Company recorded an unrealized non-cash loss in fiscal 2015 related to mark-to-market adjustments on an
interest rate swap and foreign exchange contracts aggregating approximately $0.6 million compared to a non-cash
gain of $0.8 million in the prior year. The Company has elected not to apply hedge accounting and accordingly the
change in fair value of these financial instruments is reflected in the Company’s statement of earnings each reporting
period. These instruments are considered to be effective economic hedges and have enabled management to mitigate
the volatility of changing costs and interest rates during the year.
Other expenses in fiscal 2015 related to a write-down of certain grapevines harmed by the extreme cold weather
experienced over the last winter season partially offset by income from the temporary expropriation of the
Company’s Port Moody property. In fiscal 2014 other expenses related primarily to non-recurring post-retirement
benefit costs collectively bargained with the BC union partially offset by income from the temporary expropriation
of the Port Moody property. The property is temporarily being used as a staging area for the construction of a rapid
transit project. Payments amounting to $2.0 million for the use of the property were received in advance and were
recorded as deferred income and are being recognized as other income over the five-year term of the expropriation
which began on July 1, 2012.
Adjusted earnings, defined as net earnings not including restructuring charges, unrealized losses and gains on
derivative financial instruments, and other expenses or income, rose 11.0% to $16.2 million for the year ended
March 31, 2015 compared to $14.6 million in the prior year.
Net earnings for the year ended March 31, 2015 were $15.8 million or $1.13 per Class A Share compared to $14.0
million or $1.01 per Class A Share in fiscal 2014.
The Company believes that sales will continue to grow moderately in fiscal 2016 due to the strong positioning of
key brands, the continued launch of new and innovative products in the Canadian wine market, and continued
growth in new wine-related markets. In fiscal 2016 the higher cost of U.S. dollar currency purchases is expected to
have a negative impact on gross margins which should be partially offset by successful cost control initiatives to
reduce distribution, operating and packaging expenses and further raw material cost savings.
The Company uses foreign exchange forward contracts to protect against changes in foreign currency rates and as at
March 31, 2015 had locked in $22.1 million in U.S. dollar contracts at rates averaging $1.23 Canadian, €3.5 million
in Euro contracts at rates averaging $1.42 Canadian, and $4.0 million in Australian dollar contracts at rates
averaging $0.95 Canadian. These contracts expire at various dates through December 31, 2015.
ANDREW PELLER LIMITED 2015 |
13
Quarterly Performance
The following table outlines key quarterly highlights.
(in $000, except per share amounts)
Q4 15
Q3 151
Q2 151
Q1 15
Q4 14
Q3 14
Q2 14
Q1 14
Sales
Gross margin
$68,791
$84,630
$82,759
$79,517
$66,026
$81,854
$77,226
$72,718
24,648
31,267
29,990
29,298
22,606
29,475
28,091
27,810
Gross margin (% of sales)
35.8%
36.9%
36.2%
36.8%
34.2%
36.0%
36.4%
38.2%
4,707
11,139
9,507
10,165
-
-
3,655
1,056
11,378
9,021
9,675
254
99
-
EBITA
Restructuring costs
Unrealized losses (gains) on financial
instruments
Other (income) expenses
Adjusted earnings (loss)
Net earnings (loss)
E.P.S. – Class A basic & diluted
E.P.S. – Class B basic & diluted
-
622
(139)
1,075
718
$0.05
$0.05
-
50
81
5,887
5,790
$0.41
$0.36
(1,225)
1,125
(231)
(33)
142
(97)
(39)
(578)
$(0.04)
5,042
4,104
$0.30
4,218
5,149
$0.37
$0.32
(252)
(22)
5,952
5,967
$0.43
$0.26
$(0.03)
$0.37
464
296
4,176
3,540
$0.25
$0.22
(731)
(32)
4,527
5,092
$0.37
$0.32
1. Certain expenses in the statement of earnings in the second and third quarter were reclassified from other expenses to selling and
administration to conform with the annual presentation.
The third quarter is historically the strongest in each fiscal year due to increased consumer purchasing of the
Company’s products during the holiday season.
Sales in the fourth quarter of fiscal 2015 increased 4.2% compared to the same quarter of fiscal 2014 due primarily
to strong organic growth across all of the Company’s trade channels and strong VQA sales in Western Canada. Sales
growth was particularly strong through the Company’s network of retail outlets in Ontario, its export markets, its
two wine import and marketing agencies, and provincial liquor control boards across the country. Gross margin for
the three months ended March 31, 2015 improved to 35.8% of sales from 34.2% in the prior year’s fourth quarter.
The increase was due primarily to the positive impact of the Company’s productivity improvement initiatives and
raw material cost savings partially offset by continued price competition in key markets and the impact of the
weaker Canadian dollar. Selling and administrative expenses increased in the fourth quarter of fiscal 2015 due to
increased advertising and promotional activities related to new product launches and other sales and marketing
initiatives. EBITA was $4.7 million for the three months ended March 31, 2015, up 28.8% from the $3.7 million for
the same quarter in fiscal 2014 as a result of the increase in sales and gross margins in fiscal 2015. Adjusted net
earnings were $1.1 million for the three months ended March 31, 2015 compared to $0.0 million in the same prior
year period.
14
| ANDREW PELLER LIMITED 2015
Liquidity and Capital Resources
As at
(in $000)
Current assets
Property, plant, and equipment
Biological assets
Intangibles
Goodwill
Total assets
Current liabilities
Long-term debt
Long-term derivative financial instruments
Post-employment benefit obligations
Deferred income
Deferred income tax
Shareholders’ equity
Total liabilities and shareholders’ equity
March 31,
2015
March 31,
2014
$
$
$
$
146,764 $
90,955
13,982
12,331
37,473
301,505 $
77,782 $
52,269
1,447
6,165
506
15,971
147,365
301,505 $
146,127
90,152
14,054
13,209
37,473
301,015
101,563
38,328
268
6,132
910
15,811
138,003
301,015
Inventory declined marginally at March 31, 2015 compared to March 31, 2014. Bulk wine declined as a result of a
smaller than usual domestic wine harvest in Ontario, while finished goods were higher at March 31, 2015 as a result
of the introduction of new products. Extreme cold weather experienced in Ontario resulted in a smaller domestic
grape crop for vintage 2014 in the province. Certain vintage 2014 varietals are in short supply but this is not
expected to have a material impact on the Company’s profitability during fiscal 2016 which is when the majority of
its vintage 2014 wines will be sold. The Company continues to generate benefits from improved information
technology systems introduced to monitor and control the Company’s supply chain. These systems include
improvements to the Company’s ability to manage supply shortages and excesses. Inventory is dependent on the
increased use of domestically grown grapes that are used in the sale of premium and ultra-premium wines that are
held for a longer period than imported wine. These grapes are typically aged for one to three years before they are
sold. The cost of domestically grown grapes is also significantly higher than wine purchased on international
markets.
Accounts receivable were higher at March 31, 2015 due to the increase in sales in fiscal 2015 which are
predominantly with provincial liquor boards and to a lesser extent licensed establishments and independent retailers
of consumer made wine kits. The Company had $13.5 million of accounts receivable with provincial liquor boards
at March 31, 2015, all of which is expected to be collectible. The balance represents amounts due from licensees,
export customers, and independent retailers of consumer made wine products. The amount of accounts receivable
that was 30 days past due was $0.8 million at March 31, 2015. Against these amounts an allowance for doubtful
accounts of $0.1 million has been provided which the Company has determined represents a reasonable estimate of
amounts that may not be collectible.
The changes in bank indebtedness, the current portion of long-term debt, and long-term debt at March 31, 2015
compared to March 31, 2014 were as a result of a refinancing completed on April 28, 2014 which is described
below. Overall bank debt declined to $89.0 million as at March 31, 2015 compared to $100.1 million at March 31,
2014 as a result of strong earnings and lower capital expenditures compared to the prior year.
ANDREW PELLER LIMITED 2015 |
15
The following table outlines the Company’s contractual obligations.
As at March 31, 2015
(in $000)
Total
<1 Year
2-3
years
4-5
years
>5 years
Long-term debt
Swap agreement and loan interest
Operating leases and royalties
Pension obligations
Foreign exchange contracts
Long-term raw materials and
packaging contracts
Total long-term obligations
$ 56,952
7,478
23,707
5,306
35,937
317,176
$ 4,194
2,255
4,862
987
35,937
74,636
$ 8,212
3,541
6,640
1,413
-
89,782
$ 44,546
1,682
3,602
858
-
53,656
$ -
-
8,603
2,048
-
99,102
$ 446,556
$ 122,871
$ 109,588
$ 104,344
$ 109,753
The ratio of debt to equity was 0.60:1 at March 31, 2015 compared to 0.73:1 at March 31, 2014. At March 31, 2015
the Company had unutilized debt capacity in the amount of $55.4 million on its operating loan facility.
On April 28, 2014 the Company completed a refinancing with its existing bank group by entering into a $165.0
million syndicated loan facility. The operating loan facility in the amount of $90.0 million matures on April 28,
2019 and bears interest at the one to nine-month Canadian Dealer Offered Rate (“CDOR”) plus a rate that is
dependent on leverage. The rate that is dependent on leverage for the period ended March 31, 2015 was 1.50%.
The term facility in the amount of $60.0 million matures on April 28, 2019. The Company also added a $15.0
million facility to fund future capital expenditures that also matures on April 28, 2019. The Company put in place an
interest rate swap that complements the current swap that effectively fixes the interest rate on the term facility at
4.68% through August 31, 2015 and at 3.66% for the period from September 1, 2015 to April 28, 2019. The loan
will be repayable in monthly principal payments of $0.333 million until it matures on April 28, 2019.
Management expects to generate sufficient cash flow from operations to meet its debt servicing, principal payment,
and working capital requirements over both the short and the long-term through increased profitability and strong
management of working capital and capital expenditures. The Company continually reviews all of its assets to
ensure appropriate returns on investment are being achieved and that they fit with the Company’s long-term
strategic objectives.
In fiscal 2015 the Company generated cash from operating activities, after changes in non-cash working capital
items, of $25.8 million compared to $25.0 million in the prior year. Higher earnings and lower inventory levels led
to an increase which was partially offset by an increase in accounts receivable due to the strong sales performance
and lower accounts payable.
Investing activities of $8.8 million were made in fiscal 2015 compared to $11.2 million in the prior year. Capital
expenditures in fiscal 2015 consisted of normal expenditures to sustain operations, the construction of a Sandhill
winery retail store in Kelowna, and the replanting of certain of the Company’s vineyards.
Working capital as at March 31, 2015 increased to $69.0 million compared to $44.6 million at March 31, 2014. The
conversion of $15.0 million of the outstanding amount of the Company’s operating facility into the term facility and
the lower amortization of term debt in the new credit agreement served to increase working capital. There was an
increase in accounts receivable due to the sales growth in fiscal 2015 and there were decreases in accounts payable,
bank indebtedness, and the current portion of long-term debt. Shareholders’ equity as at March 31, 2015 was $147.4
million or $10.31 per common share compared to $138.0 million or $9.65 per common share as at March 31, 2014.
The increase in shareholders’ equity is due to the net earnings in fiscal 2015, partially offset by the payment of
dividends.
16
| ANDREW PELLER LIMITED 2015
Common Shares Outstanding
The Company is authorized to issue an unlimited number of Class A and Class B Shares. Class A Shares are non-
voting and are entitled to a dividend in an amount equal to 115% of any dividend paid or declared on Class B
Shares. Class B Shares are voting and convertible into Class A Shares on a one-for-one basis.
Shares outstanding
Class A Shares
Class B Shares
Total
March 31, 2015 March 31, 2014 March 31, 2013
11,293,829
3,004,041
14,297,870
11,293,829
3,004,041
14,297,870
11,293,829
3,004,041
14,297,870
Strategic Outlook and Direction
Andrew Peller Limited is committed to a strategy of growth that focuses on the expansion of its core business as a
producer and marketer of quality wines and wine related products through concentrating on and developing leading
brands that meet the needs of our consumers and customers.
The market for wine in Canada continues to grow due to a movement toward the consumption of wine made by
young consumers who have adopted wine as their beverage of choice, an aging population that favours the more
sophisticated experience that wine offers, and the widely reported health benefits of moderate wine consumption.
The Company has recorded strong growth in sales through provincial liquor boards and export and agency trade
channels. The Company has focused its product development and sales and marketing initiatives at capitalizing on
the trend of increased wine consumption and expects to see continued sales growth. The Company will continue to
closely monitor its costs and will react quickly to changes to risks and opportunities in the marketplace.
The Company will continue to launch wine brands in the future and increase its use of differentiated package
formats. The Company will also expand product offerings outside the traditional table wine segment, into other
alcoholic beverages, where it is able to leverage its detailed knowledge of growth opportunities in the Canadian
market. The Company will also make packaging design changes that are more appealing to its target markets and
are consistent with its initiative to be more environmentally friendly. Increased focus will be made on coordination
between the Company’s business-to-consumer trade channels to provide customers with a more intimate awareness
of its broad product portfolio. New product launches and directed spending to support key brands through all of the
Company’s distribution channels will continue to receive increased marketing and sales support in fiscal 2016.
The Company expects to maximize the efficiency of its existing assets while also making additional investments in
capital expenditures to increase capacity, to support its ongoing commitment to producing the highest-quality wines,
and to improve productivity. Improvements to enhance the coordination throughout its supply chain have been
implemented recently and benefits have begun to accrue. Investments made over the past few years are expected to
continue to result in increased sales and improved profitability.
From time to time the Company evaluates investment opportunities, including acquisitions, which support its
strategic direction.
The Company plans to dedicate further resources towards rectifying unfair trade practices and taxes by continuing to
work closely with other members of the Canadian wine industry and the Canadian and provincial governments.
The Company anticipates it will generate increased sales in fiscal 2016 while gross margin dollars are expected to
remain stable. The higher costs of U.S. dollar currency purchases are expected to have a negative impact on gross
margin percentage in fiscal 2016 which is expected to be partially offset by further raw material cost savings and
production efficiencies.
ANDREW PELLER LIMITED 2015 |
17
The Company’s product portfolio covers the complete spectrum of price levels within the Canadian wine market.
While there may be an increase in purchases of ultra-premium wine, this is expected to be offset by a slight decrease
in sales of blended varietal wine. In addition, the Company will be accelerating its efforts to generate production
efficiencies and reduce overhead costs to enhance its overall profitability.
Risks and Uncertainties
The Company’s sales of wine are affected by general economic conditions such as changes in discretionary
consumer spending and consumer confidence, future economic conditions, tax laws, and the prices of its products.
A steep and sustained decline in economic growth may cause a lower demand for the Company’s products. Such
general economic conditions could impact the Company’s sales through the Company’s estate wineries and
restaurants, direct sales through licensed establishments, and export sales through duty free shops. APL believes that
these effects would likely be temporary and would not have a significant impact on financial performance.
The Canadian wine market continues to be the target of low-priced imported wines from regions and countries that
subsidize wine production and grape growing as well as providing sizeable export subsidies. Many of these
countries and regions prohibit or restrict the sale of imported wine in their own domestic markets. The Company,
along with other members of the Canadian wine industry, are working with the Canadian government to rectify
these unfair trade practices.
The Company operates in a highly competitive industry and the dollar amount and unit volume of sales could be
negatively impacted by its inability to maintain or increase prices, changes in geographic or product mix, a general
decline in beverage alcohol consumption, or the decision of retailers or consumers to purchase competitive products
instead of the Company’s products. Retailer and consumer purchasing decisions are influenced by, among other
things, the perceived absolute or relative overall value of the Company’s products including their quality or pricing
compared to competitive products. Unit volume and dollar sales could also be affected by purchasing, financing,
operational, advertising, or promotional decisions made by provincial agencies and retailers which could affect
supply of or consumer demand for, the Company’s products. APL could also experience higher than expected
selling and administrative expenses if it finds it necessary to increase the number of its personnel, advertising, or
promotional expenditures to maintain its competitive position.
APL expects to increase the sales of its premium wines in Canada principally through the sale of VQA wines, and as
a result, is dependent on the quality and supply of domestically grown premium quality grapes. If any of the
Company’s vineyards or the vineyards of our grape suppliers experience certain weather variations, natural
disasters, pestilence, other severe environmental problems, or other occurrences, APL may not be able to secure a
sufficient supply of grapes, a situation which could result in a decrease in production of certain products from those
regions and/or result in an increase in costs. In the past where there has been a significant reduction in domestically
sourced grapes, the Government of Ontario, in conjunction with the Ontario Grape Growers Marketing Board, have
agreed to temporarily increase the blending of imported wines which would enable the Company to continue to
supply products to the market. The inability to secure premium quality grapes could impair the ability of the
Company to supply certain wines to its customers. APL has developed programs to ensure it has access to a
consistent supply of premium quality grapes and wine. The price of grapes is determined through negotiations with
the Ontario Grape Growers Marketing Board in Ontario and with independent growers in British Columbia.
Foreign exchange risk exists on the purchases of bulk wine and concentrate that are primarily made in United States
dollars, Euros, and Australian dollars. The Company’s strategy is to hedge approximately 50% - 80% of its foreign
exchange requirements throughout the fiscal year and to regularly review its on-going requirements. APL has
entered into a series of foreign exchange contracts as a hedge against movements in U.S. dollar and Euro exchange
rates. The Company does not enter into foreign exchange contracts for trading or speculative purposes. These
contracts are reviewed periodically.
18
| ANDREW PELLER LIMITED 2015
During fiscal 2016, based on the Company’s forecasts for foreign currency purchases and the amount of foreign
exchange forward contracts outstanding at June 17, 2015, each one percent change in the value of the U.S. dollar
will have a $0.1 million impact on the Company’s net earnings. Each one percent change in the value of the Euro
will have a $0.1 million impact on the Company’s net earnings and a one percent change in the value of the
Australian dollar will have a $0.1 million impact on the Company’s net earnings.
The Company purchases glass, bag in box, tetra paks, and other components used in the bottling and packaging of
wine. The largest component in the packaging of wine is glass, of which there are few domestic or international
suppliers. There is currently only one commercial supplier of glass in Canada that is able to supply glass to APL’s
specifications. Any interruption in supply could have an adverse impact on the Company’s ability to supply its
markets. APL has taken steps to reduce its dependence on domestic suppliers through the development of
relationships with several international producers of glass and through carrying increased inventory of selected
bottles.
The Company operates in a highly regulated industry with requirements regarding the production, distribution,
marketing, advertising, and labelling of wine. These regulatory requirements may inhibit or restrict the Company’s
ability to maintain or increase strong consumer support for and recognition of its brands and may adversely affect
APL’s business strategies and results of operations. Privatization of liquor distribution and retailing has been
implemented in varying degrees across the country. The possibility of privatization in Ontario remains a risk to the
Company through its impact on the Company’s retail operations. The provincial government has stated that, should
it consider privatization, it would engage in a consultation process and would acknowledge the special role of
Ontario’s wine industry.
During fiscal 2015, the Government of Ontario set up a special government advisory panel to look at methods to
extract more value from its assets which includes the LCBO. Following this review, the Government announced that
it will issue licenses to sell beer in grocery stores. There were no significant decisions announced in respect of
changes to the distribution of wine in the Province of Ontario. However, there is a risk that significant changes may
be made in the future and these changes could have a significant impact on the Company. The impact of these
changes will remain uncertain until details are known and they are implemented.
The Province of British Columbia has recently announced that it will allow the sale of wine in grocery stores
amongst other changes in liquor policies. The impact of these changes will remain uncertain until details are known
and they are implemented.
The wine industry and the domestic and international market in which the Company operates are consolidating.
This has resulted in fewer, but larger, competitors who have increased their resources and scale. The increased
competition from these larger market participants may affect the Company’s pricing strategies and create margin
pressures resulting in potentially lower revenues. Competition also exerts pressure on existing customer
relationships which may affect APL’s ability to retain existing customers and increase the number of new customers.
The Company has worked to improve production efficiencies, selectively increase pricing to increase gross margin,
and implement a higher level of promotion and advertising activity to combat these initiatives. APL and other wine
industry participants also generally compete with other alcoholic beverages like beer and spirits for consumer
acceptance, loyalty, and shelf space. No assurance can be given that consumer demand for wine and premium wine
products will continue at current levels in the future.
ANDREW PELLER LIMITED 2015 |
19
Federal and provincial governments impose excise and other taxes on beverage alcohol products which have been
subject to change. Significant increases in excise and other taxes on beverage alcohol products could materially and
adversely affect the Company’s financial condition or results of operations. Federal and provincial governmental
agencies extensively regulate the beverage alcohol products industry concerning such matters as licensing, trade
practices, permitted and required labelling, advertising, and relations with consumers and retailers. Certain federal
and provincial regulations also require warning labels and signage. New or revised regulations, increased licensing
fees, requirements, or taxes could also have a material adverse effect on the Company’s financial condition or results
of operations.
The Company’s future operating results also depend on the ability of its officers and other key employees to
continue to implement and improve its operating and financial systems and manage the Company’s significant
relationships with its suppliers and customers. The Company is also dependent upon the performance of its key
senior management personnel. The Company’s success is linked to its ability to identify, hire, train, motivate,
promote, and retain highly qualified management. Competition for such employees is intense and there can be no
assurances that the Company will be able to retain current key employees or attract new key employees.
The Company has defined benefit pension plans. The expense and cash contributions related to these plans depend
on the discount rate used to measure the liability to pay future benefits and the market performance of the plan assets
set aside to pay these benefits. A pension committee reviews the performance of plan assets on a regular basis and
has a policy to hold diversified investments. Nevertheless, a decline in long-term interest rates or in asset values
could increase the Company’s costs related to funding the deficit in these plans.
The competitive nature of the wine industry internationally has resulted in the discounting of retail prices of wine in
key markets such as the United States and the United Kingdom. The Company does not believe that significant price
discounting will occur in Canada beyond current levels.
The Company considers its trademarks, particularly certain brand names and product packaging, advertising and
promotion design, and artwork to be of significant importance to its business and ascribes a significant value to these
intangible assets. APL relies on trademark laws and other arrangements to protect its proprietary rights. There can
be no assurance that the steps taken by APL to protect its intellectual property rights will preclude competitors from
developing confusingly similar brand names or promotional materials. The Company believes that its proprietary
rights do not infringe upon the proprietary rights of third parties, but there can be no assurance in this regard.
As an owner and lessor of property the Company is subject to various federal and provincial laws relating to
environmental matters. Such laws provide that the Company could be held liable for the cost of removal and
remediation of hazardous substances on its properties. The failure to remedy any situation that might arise could
lead to claims against the Company. A perceived failure to maintain high ethical, social, and environmental
standards could have an adverse effect on the Company’s reputation.
The success of the Company’s brands depends upon the positive image that consumers have of those brands.
Contamination of APL’s products, whether arising accidentally or through deliberate third-party action, or other
events that harm the integrity or consumer support for those brands could adversely affect their sales. Contaminants
in raw materials purchased from third parties and used in the production of the Company’s products or defects in the
fermentation process could lead to low product quality as well as illness among, or injury to, consumers of the
products and may result in reduced sales of the affected brand or all of the Company’s brands.
20
| ANDREW PELLER LIMITED 2015
Non-IFRS Measures
The Company utilizes EBITA (defined as earnings before interest, amortization, restructuring costs, unrealized
derivative gains and losses, other expenses (income), and income taxes) to measure its financial performance.
EBITA is not a recognized measure under IFRS; however, management believes that EBITA is a useful
supplemental measure to net earnings as it provides readers with an indication of earnings available for investment
prior to debt service, capital expenditures, and income taxes.
For the three months and year ended March 31,
Three Months
Year
(in $000)
Net earnings
Add: Interest
Provision for income taxes
Amortization of plant and equipment used in production
Amortization of equipment and intangibles used in selling and administration
Restructuring costs
Net unrealized losses (gains) on derivatives
Other expenses
EBITA
20151
2014
2015
2014
$ 718
$ (578)
$ 15,761
$ 14,021
1,125
1,552
72
1,316
993
-
622
(139)
(375)
1,379
949
1,056
(231)
(97)
4,847
5,736
5,116
3,435
-
572
51
5,386
5,223
4,979
3,316
1,409
(750)
145
$ 4,707
$ 3,655
$ 35,518
$ 33,729
1. Certain expenses in the statement of earnings in the second and third quarter were reclassified from other expenses to selling and
administration to conform with the annual presentation.
Readers are cautioned that EBITA should not be construed as an alternative to net earnings determined in
accordance with IFRS as an indicator of the Company’s performance or to cash flows from operating, investing, and
financing activities as a measure of liquidity and cash flows.
The Company also utilizes gross margin (defined as sales less cost of goods sold, excluding amortization) as
calculated below.
For the three months and year ended March 31,
Three Months
Year
(in $000)
Sales
Less: Cost of goods sold, excluding amortization
Gross margin
Gross margin (% of sales)
The Company calculates adjusted earnings as follows.
For the three months and year ended March 31,
(in $000)
Net earnings
Restructuring costs
Net unrealized losses (gains) on derivatives
Other (income) expenses
Income tax effect of the above
Adjusted earnings
2015
2014
2015
2014
$ 68,791
$ 66,026
$ 315,697
$ 297,824
44,143
43,420
200,494
189,842
$ 24,648
$ 22,606
$ 115,203
$ 107,982
35.8%
34.2%
36.5%
36.3%
Three Months
Year
20151
2014
2015
2014
$ 718
$ (578)
$ 15,761
$ 14,021
-
622
(139)
(126)
1,056
(231)
(97)
(189)
-
572
51
(162)
1,409
(750)
145
(209)
$ 1,075
$ (39)
$ 16,222
$ 14,616
1. Certain expenses in the statement of earnings in the second and third quarter were reclassified from other expenses to selling and
administration to conform with the annual presentation.
ANDREW PELLER LIMITED 2015 |
21
The Company’s method of calculating EBITA, gross margin, and adjusted earnings may differ from the methods
used by other companies and accordingly, may not be comparable to the corresponding measures used by other
companies.
Financial Statements and Accounting Policies
The Company’s consolidated financial statements have been prepared in accordance with IFRS, as issued by the
International Accounting Standards Board (“IASB”).
Critical Accounting Estimates
During the year management is required to make estimates and assumptions that are inherently uncertain. These
estimates can vary with respect to the level of judgment involved and ultimately the impact that these estimates may
have on the Company's financial statements. Estimates are deemed to be critical when a different estimate could
reasonably be used or where changes are reasonably likely to occur which would materially affect the Company’s
financial position or financial performance. The Company’s significant accounting policies are discussed in the
Notes to the March 31, 2015 Consolidated Financial Statements. Critical estimates inherent in these accounting
policies are set out below.
Inventory Valuation
Inventory is valued at the lower of cost and net realizable value. Cost is determined on an average cost basis. The
Company utilizes a weighted average cost calculation to determine the value of ending inventory (bulk wine and
finished goods). Average cost is determined separately for import wine and domestic wine and is calculated by
varietal and vintage year.
Grapes produced from vineyards controlled by the Company that are part of inventory are measured at their fair
value less costs to sell at the point of harvest.
The Company includes borrowing costs in the cost of certain wine inventory that requires a substantial period of
time to become ready for sale. Management has provided an allowance for slow moving and obsolete inventory
which is considered to be sufficient for potential losses.
Biological Assets
The Company measures biological assets, consisting of grape vines, at fair value less costs to sell. Agricultural
produce, consisting of grapes grown on vineyards controlled by the Company, is measured at fair value less costs to
sell at the point of harvest and becomes the basis for the cost of inventory after harvest.
Gains or losses arising from a change in fair value less costs to sell are included in the consolidated statement of
earnings in the period in which they arise.
Goodwill
The Company determines an impairment based on the ability to recover the balance of goodwill from expected
future discounted operating cash flows or the fair value of certain asset groups. This assessment requires making
estimates and assumptions about the future cash flows, growth rates, market conditions, and discount rates which are
inherently uncertain.
Intangible assets
Intangible assets primarily relate to customer contracts, brands, and customer based relationships that have been
acquired through acquisitions. Management believes that brands do not have a fixed or determinable life and
consequently brands are not amortized but are subject to annual impairment tests based on a comparison of the
carrying amount to the estimated fair market value of the brands. The amortization periods related to those
intangible assets with finite lives are based on the expected duration of the contracts and relationships acquired.
These intangible assets will be tested for impairment when events or circumstances arise that indicates an
impairment may exist.
22
| ANDREW PELLER LIMITED 2015
Fair value of financial instruments
Accounts receivable, accounts payable and accrued liabilities, and bank indebtedness are reflected in the
consolidated financial statements at carrying values which approximate fair value due to the short-term maturity of
these instruments.
Long-term debt has a floating interest rate and its carrying value, as reflected in the consolidated financial
statements, approximates fair value. Interest on long-term debt has been fixed through the use of an interest rate
swap.
The Company purchases wine and other inventory items throughout the year. These purchases are made in United
States dollars, Euros, and Australian dollars. The Company uses foreign exchange contracts as a hedge against
changes in currency values. The Company’s strategy is to hedge approximately 50% - 80% of its foreign exchange
requirements throughout the fiscal year. The Company does not enter into foreign exchange contracts for trading or
speculative purposes. Contracts are matched against forecasted purchases of inventory and other purchases in U.S.
dollars, Euros, and Australian dollars.
All financial instruments are initially recorded at fair value which includes the Company’s interest rate swap and
foreign exchange contracts. The Company has not designated any of its derivative financial instruments as hedges
and accordingly, changes to the fair value of these instruments are recorded through earnings each period as a net
unrealized gain or loss on derivative financial instruments.
Employee Future Benefits
The Company provides defined benefit pension plans and other post-employment benefit plans to certain of its
employees. The assumptions used to measure the accrued benefit obligations and benefit costs are: discount rate for
measuring expenses 4.4% (2014 – 4.2%), discount rate for measuring liability 3.6% (2014 – 4.4%) and rate of
compensation increase 3.0%. To measure the obligation for post-employment medical benefits, it was assumed that
the health care inflation rate would be 5%. All actuarial gains and losses are recognized immediately in other
comprehensive income (“OCI”). The corresponding change in shareholders’ equity is adjusted to retained earnings
for the period. The liability recorded represents the estimated deficit position of the plans.
Recently Adopted Accounting Pronouncements
In May 2013 the IASB issued IFRIC 21 – Levies. The interpretation clarifies that the obligating event that gives rise
to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy.
The Company was required to apply this interpretation retrospectively effective April 1, 2014. The standard did not
have a significant impact on the Company.
Recently Issued Accounting Pronouncements
During December 2014, the IASB issued amendments to IAS 1 – Presentation of Financial Statements which clarify
the concept of materiality as it applies to information disclosed in the financial statements. The amendments also
provide guidance on the presentation of subtotals, the structure of the notes to the financial statements, and the
disclosure of significant accounting policies. The Company is currently evaluating the potential impact of this
standard.
During July 2014, the IASB issued the complete version of IFRS 9 – Financial Instruments: Classification and
Measurement of Financial Assets and Financial Liabilities. IFRS 9 will replace IAS 39 – Financial Instruments:
Recognition and Measurement. In addition, IFRS 7 – Financial Instruments: Disclosures was amended to include
additional disclosure requirements upon transition to IFRS 9. The mandatory effective date of applying these
standards is for annual periods beginning on or after January 1, 2018. The standard uses a single approach to
determine whether a financial asset is measured at amortized cost or fair value. The approach is based on how an
entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the
financial assets. The new standard also requires a single impairment method to be used.
ANDREW PELLER LIMITED 2015 |
23
The standard requires that for financial liabilities measured at fair value, any changes in an entity’s own credit risk
are generally to be presented in other comprehensive income instead of net earnings. A new hedge accounting model
is included in the standard as well as increased disclosure requirements about risk management activities for entities
that apply hedge accounting. The Company is currently evaluating the potential impact of this standard.
During May 2014 the IASB issued amendments to IAS 16 – Property, Plant, and Equipment and IAS 41 –
Agriculture which requires bearer plants to be classified as property, plant, and equipment and accounted for under
IAS 16. The amended standards are effective for annual periods beginning on or after January 1, 2016. Early
application of this standard is permitted. The Company is currently evaluating the impact of these amended
standards. It is expected that grape vines controlled by the Company will be within the scope of IAS 16 – Property,
plant, and equipment after the adoption of these amended standards.
During May 2014, the IASB issued IFRS 15 – Revenue from contracts with customers which supersedes IAS 18 –
Revenue and IAS 11 – Construction Contracts. The standard details a revised model for the recognition of revenue
from contracts with customers. The standard is effective for first interim periods within annual periods beginning on
or after January 1, 2018. The Company is currently evaluating the potential impact of adopting this amended
standard.
Evaluation of Disclosure Controls and Procedures and Internal Control over Financial Reporting
To comply with National Instrument 52-109 (“NI 52-109”) the Company maintains documentation of the processes
and internal controls that are in place within the organization.
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information
required to be disclosed by the Company in reports filed with or submitted to various securities regulators are
recorded, processed, summarized, and reported within the time periods specified. This information is gathered and
reported to the Company’s management, including the President and Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”), on a timely basis so that decisions can be made regarding the Company’s disclosure to
the public.
The Company’s management, under the supervision of, and with the participation of the CEO and CFO, have
designed and maintained the Company’s disclosure controls and procedures as required in Canada by “National
Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings”.
Internal Controls over Financial Reporting
Internal controls over financial reporting are procedures designed to provide reasonable assurance that transactions
are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly
recorded and reported. A control system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance with respect to reliability of financial reporting and financial statement preparation.
Designing, establishing, and maintaining adequate internal controls over financial reporting are the responsibility of
management. Internal controls over financial reporting is a process designed by, or under the supervision of senior
management and effected by the Board of Directors to provide reasonable assurance regarding the reliability of
financial reporting and preparation of the Company’s financial statements in accordance with IFRS.
For the year ended March 31, 2015 there have been no material changes in the Company’s internal controls over
financial reporting or changes to disclosure controls and procedures that materially affected or were likely to affect,
the Company’s internal control systems.
As at June 17, 2015, the CEO and CFO of the Company have evaluated the effectiveness of the Company’s internal
controls over financial reporting. Based on these evaluations the CEO and CFO have concluded that the controls and
procedures were operating effectively.
24
| ANDREW PELLER LIMITED 2015
INDEPENDENT AUDITOR’S REPORT
June 17, 2015
To the Shareholders of Andrew Peller Limited
We have audited the accompanying consolidated financial statements of Andrew Peller Limited, which comprise the
consolidated balance sheets as at March 31, 2015 and March 31, 2014 and the consolidated statements of earnings,
comprehensive income, changes in equity and cash flows for the years ended March 31, 2015 and March 31, 2014,
and the related notes, which comprise a summary of significant accounting policies and other explanatory
information.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and
fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
Andrew Peller Limited as at March 31, 2015 and March 31, 2014 and its financial performance and its cash flows
for the years ended March 31, 2015 and March 31, 2014 in accordance with International Financial Reporting
Standards.
Chartered Professional Accountants, Licensed Public Accountants
ANDREW PELLER LIMITED 2015 |
25
Consolidated Balance Sheets
(in thousands of Canadian dollars)
For the years ended March 31, 2015 and March 31, 2014
Assets
Current assets
Accounts receivable (note 20)
Inventories (note 4)
Current portion of biological assets (note 6)
Prepaid expenses and other assets
Income taxes recoverable (note 14)
Property, plant and equipment (note 5)
Biological assets (note 6)
Intangible assets (note 7)
Goodwill (note 8)
Liabilities
Current liabilities
Bank indebtedness (note 9)
Accounts payable and accrued liabilities (note 10)
Dividends payable
Income taxes payable (note 14)
Current portion of derivative financial instruments (note 20)
Current portion of long-term debt (note 11)
Long-term debt (note 11)
Long-term derivative financial instruments (note 20)
Post-employment benefit obligations (note 12)
Deferred income (note 13)
Deferred income taxes (note 14)
Shareholders’ Equity
Capital stock (note 15)
Retained earnings
$
$
$
2015
2014
$
25,616
117,812
1,129
2,207
-
146,764
90,955
13,982
12,331
37,473
22,693
120,751
1,062
1,381
240
146,127
90,152
14,054
13,209
37,473
301,505
$
301,015
$
32,522
36,712
1,460
1,902
992
4,194
77,782
52,269
1,447
6,165
506
15,971
154,140
7,026
140,339
147,365
54,407
37,371
1,391
-
1,002
7,392
101,563
38,328
268
6,132
910
15,811
163,012
7,026
130,977
138,003
$
301,505
$
301,015
Director
Director
The accompanying notes are an integral part of these consolidated financial statements.
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| ANDREW PELLER LIMITED 2015
Consolidated Statements of Earnings
For the years ended March 31, 2015 and March 31, 2014
(in thousands of Canadian dollars, except per share amounts)
2015
2014
Sales
Cost of goods sold, excluding amortization (note 16)
Amortization of plant and equipment used in production
$
$
315,697
200,494
5,116
Gross profit
Selling and administration (note 16)
Amortization of equipment and intangible assets used in selling and
administration
Interest
Restructuring costs (note 16)
Operating earnings
Net unrealized loss (gain) on derivative financial instruments (note 20)
Other expenses (note 16)
Earnings before income taxes
Provision for income taxes (note 14)
Current
Deferred
Net earnings for the year
Net earnings per share (notes 2 and 17)
Basic and diluted
Class A shares
Class B shares
297,824
189,842
4,979
103,003
74,253
3,316
5,386
1,409
18,639
(750)
145
110,087
79,685
3,435
4,847
-
22,120
572
51
21,497
19,244
5,379
357
5,736
3,239
1,984
5,223
$
15,761
$
14,021
$
$
1.13
0.99
$
$
1.01
0.88
The accompanying notes are an integral part of these consolidated financial statements.
ANDREW PELLER LIMITED 2015 |
27
Consolidated Statements of Comprehensive Income
For the years ended March 31, 2015 and March 2014
(in thousands of Canadian dollars)
Net earnings for the year
Items that are never reclassified to net earnings
Net actuarial losses on post-employment benefit plans (note 12)
Deferred income taxes (note 14)
Other comprehensive loss for the year
2015
2014
$
15,761
$
14,021
(757)
197
(560)
(210)
54
(156)
Net comprehensive income for the year
$
15,201
$
13,865
The accompanying notes are an integral part of these consolidated financial statements.
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| ANDREW PELLER LIMITED 2015
Consolidated Statements of Changes in Equity
For the years ended March 31, 2015 and March 31, 2014
(in thousands of Canadian dollars)
Balance at April 1, 2013
Net earnings for the year
Net actuarial losses (net of $54 deferred tax
recovery) (note 12)
Net comprehensive income for the year
Dividends (Class A $0.400 per share, Class B
$0.348 per share)
Balance at March 31, 2014
Balance at April 1, 2014
Net earnings for the year
Net actuarial losses (net of $197 deferred tax
recovery) (note 12)
Net comprehensive income for the year
Dividends (Class A $0.420 per share, Class B
$0.365 per share)
Capital stock
Retained
earnings
Total
shareholders’
equity
$
7,026
$
122,675
$
129,701
-
-
-
-
14,021
14,021
(156)
(156)
13,865
13,865
(5,563)
(5,563)
$
$
7,026
7,026
$
$
130,977
130,977
$
$
15,761
138,003
138,003
15,761
-
-
-
-
(560)
(560)
15,201
15,201
(5,839)
(5,839)
Balance at March 31, 2015
$
7,026
$
140,339
$
147,365
The accompanying notes are an integral part of these consolidated financial statements.
ANDREW PELLER LIMITED 2015 |
29
Consolidated Statements of Cash Flows
For the years ended March 31, 2015 and March 31, 2014
(in thousands of Canadian dollars)
Cash provided by (used in)
Operating activities
Net earnings for the year
Adjustments for
Loss on disposal of property and equipment and intangible assets
Amortization of plant, equipment and intangible assets
Interest expense
Provision for income taxes (note 14)
Revaluation of biological assets - net of insurance recovery
Net unrealized loss (gain) on derivative financial instruments
(note 20)
Post-employment benefits
Deferred income
Interest paid
Income taxes paid
Change in non-cash working capital items related to operations (note 19)
Investing activities
Proceeds from disposal of property, plant and equipment
Purchase of property, equipment and vine biological assets
Purchase of intangible assets
Financing activities
Decrease in bank indebtedness
Issuance of long-term debt
Repayment of long-term debt
Deferred financing costs
Dividends paid
Cash - Beginning and end of year
2015
2014
$
15,761
$
14,021
95
8,551
4,847
5,736
352
572
(724)
(404)
(4,476)
(3,237)
27,073
(1,236)
25,837
10
(8,466)
(369)
154
8,295
5,386
5,223
67
(750)
(489)
(404)
(4,904)
(3,211)
23,388
1,630
25,018
18
(9,388)
(1,797)
(8,825)
(11,167)
(21,885)
15,020
(3,760)
(617)
(5,770)
(5,692)
4,086
(6,821)
-
(5,424)
(17,012)
(13,851)
$
-
$
-
The accompanying notes are an integral part of these consolidated financial statements.
30
| ANDREW PELLER LIMITED 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2015 and March 31, 2014
1 Nature of operations
Andrew Peller Limited (the Company) produces and markets wine and wine related products. The Company’s
products are produced and sold predominantly in Canada. The Company is incorporated under the Canada
Business Corporations Act and is domiciled in Canada. The address of its head office is 697 South Service
Road, Grimsby, Ontario, L3M 4E8.
2 Summary of significant accounting policies
Basis of presentation
These consolidated financial statements have been prepared in compliance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
These consolidated financial statements were approved by the Board of Directors for issue on June 17, 2015.
Basis of measurement
The consolidated financial statements have been prepared under the historical cost convention, except for
derivatives, which are measured at fair value and biological assets, which are measured at fair value less costs
to sell.
Basis of consolidation
These consolidated financial statements include the accounts of the Company and all subsidiary companies.
Subsidiaries are those entities the Company controls by having the power to govern their financial and
operating policies. Subsidiaries are fully consolidated from the date on which control is obtained by the
Company and are de-consolidated from the date control ceases. Intercompany transactions, balances, income
and expenses, and profits and losses are eliminated.
Revenue
The Company records a sale when: it has transferred the risks and rewards of ownership of the goods to the
buyer; the Company has no continuing managerial involvement over the goods; it is probable the consideration
will be received by the Company; and the amount of revenue and costs related to the transaction can be
measured reliably. For transactions with provincial liquor boards, licensee retail stores and wine kit retailers,
the Company’s terms are primarily “FOB shipping point.” Accordingly, sales are recorded when the product is
shipped from the Company’s distribution facility. Sales to consumers through retail stores, winery restaurants,
and estate wineries are recorded when the product is purchased.
Excise taxes collected on behalf of the federal government, licensing fees, and levies paid on wine sold through
the Company’s independent retail stores in Ontario, product returns, breakage, and discounts provided to
customers are deducted from gross revenue to arrive at sales.
ANDREW PELLER LIMITED 2015 |
31
Cost of goods sold
Cost of goods sold includes the cost of finished goods inventories sold during the year, inventory writedowns
and revaluations of agricultural produce to fair value less costs to sell at the point of harvest.
Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is determined on an average cost basis.
The Company utilizes a weighted average cost calculation to determine the value of ending inventory (bulk
wine and finished goods). Average cost is determined separately for import wine and domestic wine and is
calculated by varietal and vintage year.
Grapes produced from vineyards controlled by the Company that are part of inventories are measured at their
fair value less costs to sell at the point of harvest.
The Company includes borrowing costs in the cost of certain wine inventories that require a substantial period
of time to become ready for sale.
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated amortization. Cost includes borrowing costs
for assets that require a substantial period of time to become ready for use. Amortization of buildings, vineyard
infrastructure and machinery and equipment is calculated on the straight-line basis in amounts sufficient to
amortize the cost of buildings, vineyard infrastructure and machinery and equipment over their estimated useful
lives as follows:
Buildings
Vineyard infrastructure
Machinery and equipment
40 years
20 years
5 to 20 years
Vineyard infrastructure amortization commences in the year the vineyard yields a crop that approximates 50%
of expected annual production.
Biological assets
The Company measures biological assets, consisting of grape vines, at fair value less costs to sell. Agricultural
produce, consisting of grapes grown on vineyards controlled by the Company, is measured at fair value less
cost to sell at the point of harvest and becomes the basis for the cost of inventories after harvest.
Gains or losses arising from a change in fair value less costs to sell are included in the consolidated statement
of earnings in the period in which they arise.
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| ANDREW PELLER LIMITED 2015
Intangible assets
Intangible assets include brands, customer contracts, customer lists, contract co-packaging arrangements,
software and customer-based relationships. These intangible assets are recorded at their estimated fair value on
the date of acquisition or at cost for regular way purchases.
Amortization
method
Useful life
Remaining
useful life
Brands
Customers
Contract packaging
Software
Other
n/a
straight-line
straight-line
straight-line
straight-line
indefinite
10 - 20 years
10 years
5 years
5 years
indefinite
8 - 15 years
4 years
3 - 5 years
2 years
Brands have been assessed as having an indefinite life because the expected usage, period of control and other
factors do not limit the life of these assets. Intangible assets with an indefinite life are not amortized but are
tested for impairment at least annually or more frequently if events or circumstances indicate the asset might be
impaired. To test for impairment the Company primarily compares a cash generating unit’s (CGU) value in use,
determined based on expected future discounted cash flows, to its carrying value. If necessary, a CGU’s fair
value is also considered. An impairment charge is recorded to the extent the carrying value of a CGU exceeds
the greater of the CGU’s fair value and its value in use. Management has determined there was no new
impairment in intangible assets for the years ended March 31, 2015 and March 31, 2014.
Goodwill
Goodwill represents the cost of a business combination in excess of the fair values of the net tangible and
identifiable intangible assets acquired. Goodwill is not amortized but is tested for impairment on an annual
basis, or more frequently if circumstances indicate goodwill may be impaired. The Company assigns goodwill
combined with other assets to a CGU based on certain regions and product lines, which is the lowest level at
which the combined assets generate independent cash inflows. To test for impairment the Company primarily
compares a CGU’s value in use, determined based on expected future discounted cash flows, to its carrying
value. If necessary, a CGU’s fair value is also considered. An impairment charge is recorded to the extent the
carrying value of a CGU exceeds the greater of the CGU’s fair value and its value in use. An impairment loss in
respect of goodwill cannot be reversed. Management has determined there is no impairment in goodwill for the
years ended March 31, 2015 and March 31, 2014.
ANDREW PELLER LIMITED 2015 |
33
Post-employment benefits
The Company sponsors defined contribution pension plans, defined benefit pension plans, post-employment
medical benefits plans, and other post-employment benefit plans for certain employees. Contributions to the
defined contribution pension plans are recognized as an expense as services are rendered by employees. The
costs of the defined benefit plans, the post-employment medical benefit plans, and other post-employment
benefit plans are actuarially determined and include management’s best estimate of expected plan investment
performance, the interest rate on the plan obligation, salary escalation, expected retirement ages, and medical
cost escalation. The liability recognized in the consolidated balance sheets in respect of these plans is the
present value of the defined benefit obligation at the end of the reporting period as determined by the
Company’s actuary less the fair value of plan assets adjusted for the unamortized portion of negative past
service credits. The current service cost, amortization of past service credits, and the interest cost net of the
expected return on plan assets are recognized in earnings in the period they arise. Adjustments arising from
actuarially determined gains or losses are recognized in other comprehensive income in the period in which
they arise. The corresponding change in shareholders’ equity is adjusted to retained earnings for the year.
Deferred income
Advance payments received for use of the Company’s assets are initially recorded in deferred income. The
income is recognized on a straight-line basis in net earnings over the period of use.
Financial instruments and hedge accounting
The Company classifies its financial instruments into the following categories: loans and receivables, liabilities
at amortized cost, available-for-sale investments, and financial assets and liabilities at fair value through profit
or loss.
The Company has chosen not to apply hedge accounting to any of its derivative financial instruments. As a
result of this policy choice, these hedging instruments are recorded initially and subsequently at fair value and
the change in the fair value is recorded directly in the consolidated statements of earnings.
The Company classifies accounts payable and accrued liabilities, dividends payable, bank indebtedness, and
long-term debt as liabilities at amortized cost. Accounts payable and accrued liabilities and dividends payable
are initially measured at the amount to be paid, which approximates fair value because of the short-term nature
of these liabilities. Subsequently, they are measured at amortized cost. Bank indebtedness and long-term debt
are measured initially at fair value, net of transaction costs incurred and subsequently at amortized costs using
the effective interest method.
Accounts receivable are classified as loans and receivables. Accounts receivable are primarily amounts due
from customers from the sale of goods or the rendering of services. The Company maintains an allowance for
doubtful accounts to record an estimate of credit losses. When no recovery of an amount owing is possible, the
account receivable is reduced directly.
34
| ANDREW PELLER LIMITED 2015
Transaction costs related to long-term debt are netted against the carrying value of the liability and are then
amortized over the expected life of the instrument using the effective interest method. The Company recognizes
financial instruments when it becomes a party to the terms of the instrument and has elected to use “trade date”
accounting for regular way purchases and sales of financial assets.
Embedded derivatives (elements of contracts whose cash flows move independently from the host contract
similar to a stand-alone derivative) are required to be separated and measured at fair values if certain criteria are
met. Management reviewed its contracts and determined the Company does not currently have any embedded
derivatives in these contracts that require separate accounting and disclosure.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases are charged to the consolidated statements
of earnings on a straight-line basis over the period the asset is used under the lease. Leases under which the
Company has substantially all the risks and rewards of ownership are classified as finance leases. Finance
leases are capitalized at the inception of the lease at the lower of the fair value of the leased property and the
present value of the minimum lease payments. Payments on finance leases are allocated to the liability and
expense so as to recognize a constant rate of interest on the remaining balance of the liability. Assets acquired
under finance leases are amortized over their useful lives.
Impairment of non-financial assets
The Company reviews long-lived assets and definite life intangible assets for impairment when events or
circumstances indicate an asset may be impaired. Assets are assigned to a CGU based on the lowest level at
which they generate independent cash inflows. When there is an indication of impairment, an impairment
charge is recorded to the extent the carrying value of a CGU exceeds the greater of the CGU’s fair value less
costs to sell and its value in use determined by discounting expected cash flows (recoverable amount). An
impairment loss is reversed if a CGU’s recoverable amount increases to the extent that the related assets’
carrying amounts are no larger than the amount that would have been determined, net of amortization, had no
impairment loss been recorded.
Net earnings per share
Basic net earnings per share have been calculated using the weighted average number of Class A and Class B
shares outstanding during the year. Diluted net earnings per share have been calculated by considering the
impact of any potential ordinary shares that are dilutive on the two classes of shares when considered together.
Dividends
Dividends on Class A and Class B shares are recognized in the period in which they are formally declared by
the Board of Directors.
ANDREW PELLER LIMITED 2015 |
35
Segmented information
The Company produces and markets wine products in Canada. A significant portion of the Company’s sales are
made to the liquor control boards in each province in which the Company transacts business. Management has
concluded that based on the type of products sold and the fact that its customers are similar in nature, the
Company operates in a single operating segment. In addition, a substantial portion of the Company’s sales are
made in Canada. As a result, management has concluded the Company operates in one geographic segment.
Income taxes
Current income tax is the expected amount of tax payable or recoverable on taxable income or loss during the
period. Current income tax may also include adjustments to taxes payable or recoverable in respect of previous
periods.
The Company accounts for deferred income taxes based on temporary differences, which are the differences
between the carrying amount of an asset or liability and its tax base. Deferred income taxes are provided for all
temporary differences between the carrying amount and tax bases of assets and liabilities, except for those
arising from the initial recognition of goodwill or for those arising from the initial recognition of an asset or
liability in a transaction that is not a business combination and has no impact on earnings or taxable income or
loss. Deferred income tax assets and liabilities are measured using the enacted or substantively enacted tax rates
expected to apply to taxable income in the years in which temporary differences are expected to be recovered or
settled. The deferred income tax provision (recovery) recorded in net earnings and other comprehensive income
represents the change during the year in deferred income tax assets and deferred income tax liabilities.
Contingencies
In the ordinary course of business activities, the Company may be contingently liable for litigation and claims.
Management believes adequate provisions have been recorded in the accounts where required. Although it is
not possible to accurately estimate the extent of potential claims, if any, management believes the ultimate
resolution of such contingencies would not have a material adverse effect on the financial position of the
Company.
Comprehensive income
Comprehensive income is comprised of net earnings and other comprehensive loss (OCI). OCI represents the
change in equity for a period that arises from transactions that are required to be or are elected to be recognized
outside of net earnings. The Company has chosen to record actuarial gains and losses on defined benefit
pension plans and other post-employment benefit plans in OCI in the period incurred.
Equity
The Company separately presents changes in equity related to capital stock and retained earnings in the
consolidated statements of changes in equity.
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| ANDREW PELLER LIMITED 2015
Recently adopted accounting pronouncements
In May 2013, the IASB issued IFRIC 21, Levies. The interpretation clarifies that the obligating event that gives
rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the
levy. The Company was required to apply this interpretation retrospectively effective April 1, 2014. The
standard did not have a significant impact on the Company.
Recently issued accounting pronouncements
During December 2014, the IASB issued amendments to IAS 1, Presentation of Financial Statements, which
clarify the concept of materiality as it applies to information disclosed in the financial statements. The
amendments also provide guidance on the presentation of subtotals, the structure of the notes to the financial
statements, and the disclosure of significant accounting policies. The Company is currently evaluating the
potential impact of this standard.
During July 2014, the IASB issued the complete version of IFRS 9, Financial Instruments - Classification and
Measurement of Financial Assets and Financial Liabilities. IFRS 9 will replace IAS 39, Financial Instruments:
Recognition and Measurement. In addition, IFRS 7, Financial Instruments - Disclosures, was amended to
include additional disclosure requirements on transition to IFRS 9. The mandatory effective date of applying
these standards is for annual periods beginning on or after January 1, 2018. The standard uses a single approach
to determine whether a financial asset is measured at amortized cost or fair value. The approach is based on
how an entity manages its financial instruments (its business model) and the contractual cash flow
characteristics of the financial assets. The new standard also requires a single impairment method to be used.
The standard requires that for financial liabilities measured at fair value, any changes in an entity’s own credit
risk are generally to be presented in other comprehensive income instead of net earnings. A new hedge
accounting model is included in the standard as well as increased disclosure requirements about risk
management activities for entities that apply hedge accounting. The Company is currently evaluating the
potential impact of this standard.
During May 2014, the IASB issued amendments to IAS 16, Property, Plant, and Equipment, and IAS 41,
Agriculture, which requires bearer plants to be classified as property, plant, and equipment and accounted for
under IAS 16. The amended standards are effective for annual periods beginning on or after January 1, 2016.
Early application of this standard is permitted. The Company is currently evaluating the impact of these
amended standards.
During May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers, which supersedes
IAS 18, Revenue, and IAS 11, Construction Contracts. The standard details a revised model for the recognition
of revenue from contracts with customers. The standard is effective for first interim periods within annual
periods beginning on or after January 1, 2018. The Company is currently evaluating the potential impact of
adopting this amended standard.
3 Critical accounting estimates and judgments
The preparation of consolidated financial statements in accordance with IFRS requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the
consolidated financial statements, the reported amounts of revenues and expenses during the reporting period
and the extent of and the reported amounts in disclosures. Actual results may vary from current estimates.
These estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the
period in which they change. Specific areas of uncertainty include but are not limited to:
ANDREW PELLER LIMITED 2015 |
37
Impairment of goodwill
Testing goodwill for impairment at least annually involves estimating the recoverable amount of the CGUs to
which goodwill is allocated. This requires making assumptions about future cash flows, growth rates, market
conditions and discount rates, which are inherently uncertain. Actual amounts may vary from these assumptions
and cause significant adjustments.
Post-employment benefits
Measuring the liability for post-employment benefits uses assumptions for the discount rates, increases in
compensation, increases in medical costs and timing of the payment of benefits. Actual amounts may vary from
these assumptions and cause significant adjustments.
Fair value of biological assets
Determining the fair value of grape vines involves making assumptions about how market participants assign
the value of a vineyard between vines, land and other assets. Changes in the fair value of vines may occur as a
result of changes in numerous factors, including, vine health, and expected future yields.
To estimate the fair value of controlled vines planted on leased land, discounted cash flows over the estimated
remaining life of vines or the remaining lease term, whichever is shorter, were used. The fair value of vines on
leased land reduces to $nil as the lease nears its expiration date. Assumptions used include the discount rate,
expected yields, grape price trends, and annual growing cost trends.
To estimate the fair value of vines in the middle and later stages of development, the estimated fair value of
mature vines was reduced by the net discounted cash outflows necessary to bring the vines to a fully developed
state.
Actual amounts may vary from these assumptions and cause significant adjustments.
Fair value of grapes at the point of harvest
Where possible, the fair value of grapes at the point of harvest is determined by reference to local market prices
for grapes of a similar quality and the same varietal. For grapes for which local market prices are not readily
available, the average price of similar grapes is used. Actual amounts may vary from these assumptions and
cause significant adjustments.
4
Inventories
Packaging materials and supplies
Bulk wine
Finished goods
Interest included in the cost of inventories
2015
8,726
63,777
45,309
117,812
1,191
$
$
$
2014
8,493
70,445
41,813
120,751
980
$
$
$
Inventory writedowns recognized as an expense amounted to $1,700 (2014 - $1,422).
The cost of inventories recognized as an expense and included in cost of goods sold, excluding amortization
was $198,794 (2014 - $188,420).
38
| ANDREW PELLER LIMITED 2015
5 Property, plant and equipment
At March 31, 2013
Cost
Accumulated amortization
Net carrying amount
Year ended March 31, 2014
Additions
Disposals
Amortization
Closing net carrying amount
At March 31, 2014
Cost
Accumulated amortization
Net carrying amount
Year ended March 31, 2015
Additions
Disposals
Amortization
Closing net carrying amount
At March 31, 2015
Cost
Accumulated amortization
Net carrying amount
$
$
$
$
$
$
Vineyard
land and
infrastructure
Buildings
Machinery
and
equipment
Total
$
25,521
(4,901)
$
42,914
(14,718)
$
94,981
(59,733)
$
168,193
(79,352)
20,620
28,196
35,248
88,841
132
-
(573)
119
-
(1,101)
8,397
(90)
(5,573)
8,648
(90)
(7,247)
Land
4,777
-
4,777
-
-
-
4,777
$
20,179
$
27,214
$
37,982
$
90,152
4,777
-
4,777
39
-
-
$
25,653
(5,474)
$
43,033
(15,819)
$
102,352
(64,370)
$
175,815
(85,663)
20,179
27,214
37,982
90,152
69
-
(573)
447
-
(1,116)
7,606
(105)
(5,564)
8,161
(105)
(7,253)
4,816
$
19,675
$
26,545
$
39,919
$
90,955
4,816
-
4,816
$
$
25,722
(6,047)
19,675
$
$
43,480
(16,935)
$
108,297
(68,378)
$
182,315
(91,360)
26,545
$
39,919
$
90,955
Included in machinery and equipment are assets amounting to $199 (2014 - $1,554) that are under development
and are not being amortized.
Contractual commitments to purchase property, plant and equipment were $477 as at March 31, 2015 (2014 -
$nil).
Included in machinery and equipment are assets with a net carrying amount of $184 (2014 - $220) that were
purchased under a finance lease.
ANDREW PELLER LIMITED 2015 |
39
6 Biological assets
Biological assets consist of grape vines and grapes prior to harvest that are controlled by the Company. The
Company owns and leases land in Ontario and British Columbia to grow grapes in order to secure a supply of
quality grapes for the making of wine.
During the year ended March 31, 2015, the Company harvested grapes valued at $5,374 (2014 - $5,885).
The changes in the carrying amount of biological assets are as follows:
Carrying amount - Beginning of year
$
15,116
$
14,343
2015
2014
Net increase in fair value less costs to sell due to biological
transformation
Transferred to inventory on harvest
Loss on revaluation of vines included in other expense
Net (loss) gain
Purchase of vines
Carrying amount - End of year
Current portion of biological assets
5,441
(5,374)
(352)
(285)
14,831
280
15,111
(1,129)
6,009
(5,885)
(67)
57
14,400
716
15,116
(1,062)
Biological assets
$
13,982
$
14,054
40
| ANDREW PELLER LIMITED 2015
The fair value measurements of the Company’s biological assets are classified in the hierarchy below according
to the significance of the inputs used in making the fair value measurements.
Quoted prices in
active markets for
identical assets
(Level 1)
Significant
observable inputs
other than
quoted prices
(Level 2)
Asset
Vines on owned property
Vines on leased property
$
$
Asset
Vines on owned property
Vines on leased property
Quoted prices in
active markets for
identical assets
(Level 1)
$
$
- $
-
- $
- $
-
- $
Significant
observable inputs
other than
quoted prices
(Level 2)
2015
Significant
unobservable
inputs
(Level 3)
- $
-
- $
- $
-
- $
7,708
6,274
13,982
2014
Significant
unobservable
inputs
(Level 3)
7,946
6,108
14,054
The fair value of vines on owned property is determined based on the estimated replacement cost to develop a
vine to a fully producing state. The weighted average replacement cost used was $21 per acre. This does not
include the cost of tangible assets such as trellises and posts or the cost of preparing the land, which are
included in property, plant and equipment.
The significant assumptions used to determine the fair value of vines planted on leased land are as follows:
Annual yield
Discount rate
Inflation rate
Annual vineyard operating costs
2015
2014
3 - 5 tonnes per acre
10 - 12%
2.0%
$7 to $8 per acre
3 - 5 tonnes per acre
10 - 12%
2.5%
$7 to $8 per acre
A 1% increase in the discount rate would lead to a decrease in the fair value less costs to sell of vines on leased
land of approximately $484. A 1% decrease in the discount rate would lead to a corresponding increase of
approximately $547.
ANDREW PELLER LIMITED 2015 |
41
The Company is exposed to financial risk because of the long period of time between the cash outflow required
to plant grape vines, cultivate vineyards, and harvest grapes and the cash inflow from selling wine and related
products from the harvested grapes.
Substantially all of the grapes from owned and leased vineyards are used in the Company’s winemaking
processes. Owned and leased vineyards, in combination with supply contracts with grape growers, are used to
secure a supply of domestic grapes. These strategies reduce the financial risks associated with changes in grape
prices.
7
Intangible assets
At March 31, 2013
Cost
Accumulated amortization and
impairment
Net carrying amount
Year ended March 31, 2014
Additions
Disposals
Amortization
Closing net carrying amount
At March 31, 2014
Cost
Accumulated amortization and
impairment
Net carrying amount
Year ended March 31, 2015
Additions
Amortization
Closing net carrying amount
At March 31, 2015
Cost
Accumulated amortization and
impairment
Net carrying amount
Brands -
indefinite
life
Customers
Contract
packaging
Software
Other
Total
$
4,175 $
11,147 $
1,100 $
81
$
1,898 $
18,401
(200)
3,975
-
-
-
(3,804)
7,343
-
-
(652)
(536)
564
-
-
(107)
-
(1,255)
(5,795)
81
643
12,606
1,632
-
(157)
100
(81)
(132)
1,732
(81)
(1,048)
3,975 $
6,691 $
457 $
1,556
$
530 $
13,209
4,175 $
11,147 $
1,100 $
1,713
$
1,917 $
20,052
(200)
3,975
-
-
(4,456)
6,691
-
(700)
(643)
457
-
(110)
(157)
(1,387)
(6,843)
1,556
530
13,209
420
(356)
-
(132)
420
(1,298)
3,975 $
5,991 $
347 $
1,620
$
398 $
12,331
4,175 $
11,147 $
1,100 $
2,133
$
1,917 $
20,472
(200)
(5,156)
(753)
(513)
(1,519)
(8,141)
3,975 $
5,991 $
347 $
1,620
$
398 $
12,331
$
$
$
$
$
42
| ANDREW PELLER LIMITED 2015
8 Goodwill
In order to test goodwill for impairment, the Company allocates the carrying value of goodwill to CGUs based
on the lowest level that goodwill is monitored for internal management purposes. The aggregate carrying
amount of goodwill allocated to each unit is as follows:
Ontario and eastern Canadian wine
Western Canadian wine
Personal winemaking products
2015
3,134
10,530
23,809
$
37,473
$
2014
3,134
10,530
23,809
37,473
$
$
The Company determined the recoverable amount of the related CGUs by estimating their value in use. Key
assumptions used are:
Pre-tax discount rate
Period of projected cash flows
Growth rate beyond period of projected cash flows
2015
12%
5 years
4%
2014
12%
5 years
4%
The Company uses past experience and current expectations about future performance in projecting cash flows,
which are based on financial budgets for five years. For the period after five years, the Company projects cash
flows using an assumed growth rate, which is based on expectations about long-term economic growth in
Canada and any known industry specific factors that may influence long-term growth in the Canadian wine
industry. The discount rate is estimated by referring to external sources of information about the cost of capital
and the leverage of companies that operate in a similar industry to the Company and that are of similar size.
The rate determined is then adjusted to a pre-tax basis.
9 Bank indebtedness
Significant terms of the Company’s operating loan facility are summarized below. The floating rates are stated
in relation to the one to six-month Canadian Dealer Offered Rate (CDOR).
Bank indebtedness
Significant terms
Committed until
Borrowing limit
Interest rate
Unused amount
2015
$
32,522 $
2014
54,407
April 28, 2019
$90,000
CDOR + 1.50%
$55,400
September 16, 2015
$80,000
CDOR + 1.75%
$28,639
ANDREW PELLER LIMITED 2015 |
43
10 Accounts payable and accrued liabilities
Trade payables
Accrued liabilities
Restructuring provision
Deferred income (note 13)
11 Long-term debt
Term loan
Other
Finance lease obligation
Less: Financing costs
Less: Current portion
$
$
$
2015
26,248
9,976
84
404
$
36,712
$
$
2015
56,333
531
88
56,952
489
56,463
4,194
$
52,269
$
2014
28,664
7,802
501
404
37,371
2014
44,980
637
220
45,837
117
45,720
7,392
38,328
On April 28, 2014, the Company amended its debt facilities including the term loan. On May 14, 2014, the
Company entered into a new interest rate swap in order to fix the interest rate on the entire amount outstanding
on the term loan.
The significant terms of the term loans were as follows:
Maturity date
Monthly payment until maturity
Amount bearing fixed interest as a result of an interest rate swap
Amount bearing floating interest
Fixed interest rate until August 31, 2015
Fixed interest rate from September 1, 2015 to September 19, 2019
Floating interest rate
$
2015
April 28,
2019
333
56,333
-
4.68%
3.66%
n/a
2014
$
September 16,
2015
598
36,667
8,313
5.73%
n/a
CDOR + 1.75%
The Company also negotiated a $15,000 facility, which is committed until April 28, 2019 and can be drawn
down for the purpose of making capital expenditures.
The Company and its subsidiaries have provided their assets as security for this loan.
Interest expense on long-term debt during the year was $2,945 (2014 - $2,802).
44
| ANDREW PELLER LIMITED 2015
12 Post-employment benefits
Defined contribution plans
The total expenses for defined contribution savings plans were $1,388 (2014 - $1,291).
Defined benefit plans
The Company has funded defined benefit pension plans. The Company also has an unfunded post-retirement
medical benefits plan for certain employees and provides a monthly wine allowance to retired employees,
which are collectively referred to as other post-employment benefits.
Nature
The Company’s defined benefit pension plans pay benefits based on a percentage of final average salary. There
are two defined benefit pension plans in British Columbia with members who continue to accrue benefits. New
employees are no longer entitled to accrue benefits under these defined benefit pension plans. There is one
defined benefit pension plan in Ontario and no further benefits accrue to the members of this plan. All members
of the defined benefit pension plan in Ontario have retired. The Company is responsible for administering these
pension plans and determining investment policies. A committee of the Company’s Board of Directors is
responsible for overseeing the Company’s defined benefit pension plans.
Regulatory information
The defined benefit pension plans are governed by the Pension Benefits Standards Act in British Columbia and
the Pension Benefits Act in Ontario. An appointed actuary prepares a valuation at least every three years for
each of the plans. These valuations determine the Company’s minimum contributions. The minimum
contributions are primarily based on the normal going concern cost, the funding deficit amortized over 15
years, and the solvency deficit amortized over five years. The solvency deficit is calculated assuming the plan
is wound up on the effective date of the valuation. Contributions could be reduced in certain instances via a
funding holiday if requirements of the relevant regulations are met, which normally requires the plan to have a
surplus above certain threshold levels.
Risks
The defined benefit plan assets are invested in mutual funds. The investment mix for each plan is chosen with
the objective that sufficient assets will be available to pay benefits as they come due and to achieve a
reasonable return at an acceptable level of risk to stakeholders. The defined benefit plans subject the Company
to market, interest rate, currency, price, credit, liquidity and longevity risks, which are typical of such plans.
The most significant of these risks is that the expense and cash contributions related to these plans depend on
the discount rate used to measure the liability to pay future benefits and the market performance of the plan
assets set aside to pay these benefits. A decline in long-term interest rates or in asset values could increase the
Company’s costs related to funding the deficit in these plans.
ANDREW PELLER LIMITED 2015 |
45
Amounts pertaining to defined benefit plans are as follows:
Plan assets
Fair value - Beginning of year
Return on plan assets excluding amounts in
interest income
Interest income
Company’s contributions
Employees’ contributions
Benefits paid
Pension
benefits
Other post-
employment
benefits
$
19,010 $
- $
763
846
1,521
3
(1,113)
-
-
111
-
(111)
Fair value - End of year
$
21,030 $
- $
2015
Total
19,010
763
846
1,632
3
(1,224)
21,030
25,142
3
645
1,109
(1,224)
(79)
1,599
27,195
6,165
2015
Total
645
263
-
908
757
22,620 $
3
570
997
(1,113)
(79)
1,343
24,341 $
3,311 $
2,522 $
-
75
112
(111)
-
256
2,854 $
2,854 $
Pension
benefits
Other post-
employment
benefits
570 $
151
-
721 $
75 $
112
-
187 $
501 $
256 $
1,463 $
127 $
1,590
13.5
12.6
13.4
Plan obligations
Accrued benefit obligations - Beginning of year $
Employees’ contributions
Total current service cost
Interest cost
Benefits paid
Remeasurements
Experience gain
Loss from change in financial assumptions
Accrued benefit obligations - End of year
Post-employment benefit obligations
Benefit plan expense
Current service cost
Net interest cost on defined benefit liability
Past service cost recorded in other expenses
Net benefit plan expense
Amount recognized in other comprehensive income
Net actuarial loss
Expected contributions for the year ending
March 31, 2016
Weighted average duration of the defined benefit
obligations in years
$
$
$
$
$
$
46
| ANDREW PELLER LIMITED 2015
Plan assets
Fair value - Beginning of year
Return on plan assets excluding amounts in
interest income
Interest income
Company’s contributions
Employees’ contributions
Benefits paid
Pension
benefits
Other post-
employment
benefits
$
17,536 $
- $
216
747
1,660
3
(1,152)
-
90
-
(90)
Fair value - End of year
$
19,010 $
- $
Plan obligations
Accrued benefit obligations - Beginning of year $
Employees’ contributions
Total current service cost
Interest cost
Benefits paid
Past service cost
Remeasurements
Experience loss
Loss from change in demographic
assumptions
Gain from change in financial assumptions
Accrued benefit obligations - End of year
Post-employment benefit obligations
Benefit plan expense
Current service cost
Net interest cost on defined benefit liability
Past service cost recorded in other expenses
Net benefit plan expense
Amount recognized in other comprehensive income
Net actuarial loss
Expected contributions for the year ending
March 31, 2015
Weighted average duration of the defined benefit
obligations in years
$
$
$
$
$
$
21,862 $
3
586
919
(1,152)
-
50
923
(571)
22,620 $
3,610 $
2,085 $
-
74
102
(90)
326
-
83
(58)
2,522 $
2,522 $
Pension
benefits
Other post-
employment
benefits
586 $
172
-
758 $
74 $
102
326
502 $
2014
Total
17,536
216
747
1,750
3
(1,242)
19,010
23,947
3
660
1,021
(1,242)
326
50
1,006
(629)
25,142
6,132
2014
Total
660
274
326
1,260
187 $
23 $
210
1,597 $
95 $
1,692
13.1
11.8
13.0
ANDREW PELLER LIMITED 2015 |
47
The significant actuarial assumptions adopted in measuring the Company’s accrued benefit obligations and
benefits costs are as follows:
Discount rate for expenses
Discount rate for obligations
Rate of compensation increase
Rate of medical cost increases
Retirement age
Inflation rate
Mortality tables
2015
4.4%
3.6%
3.0%
5%
60 - 65 years
2.0%
CPM-B 2014
Private table
2014
4.2%
4.4%
4.0%
6% decreasing to
5% after 1 year
60 - 65 years
2.5%
CPM-B 2014
Private table
The following table outlines the impact of a reasonable change in significant assumptions assuming all other
assumptions are held constant. Changes in numerous assumptions may occur at the same time, which could
increase or decrease the impact. With respect to a 1% increase or decrease in the inflation rate, the analysis
excludes any impact this would have on the discount rate, medical cost trend rates and the rate of compensation
increase.
Increase (decrease) in the post-employment
benefit obligations
1% increase in the discount rate
1% decrease in the discount rate
1% increase in the rate of
compensation increase
1% decrease in the rate of
compensation increase
1% increase in the inflation rate
1% decrease in the inflation rate
2015
2014
Pension
benefits
Other post-
employment
benefits
Pension
benefits
Other post-
employment
benefits
$
(2,915) $
3,670
(275) $
444
(2,569) $
3,368
1,200
(1,048)
434
(393)
12
(11)
-
-
1,027
(868)
437
(396)
(269)
324
11
(10)
-
-
At March 31, 2015, the accumulated actuarial losses recognized in OCI were $4,726 (2014 - $3,969).
Plan assets
The plan assets consist of the following:
Mutual funds
Fixed income
Equity
$
$
15,192
5,838
21,030
2015
72%
28%
100%
$
$
13,723
5,287
19,010
2014
72%
28%
100%
48
| ANDREW PELLER LIMITED 2015
13 Deferred income
During the year ended March 31, 2013, the Company received an expropriation notice that its idle facility in
Port Moody, British Columbia will be used, on a temporary basis, while construction of a rapid transit project
takes place. Advance payments amounting to $2,021 were received for the temporary use of the property. The
amount received was initially recorded in deferred income and is being reported as other income over the five-
year term of the expropriation.
Deferred income
Less: Current portion
14 Income taxes
Current tax on earnings for the year
Adjustments in respect of prior years
Provision for current income taxes
Change in temporary differences
Impact of change in tax rate
Provision for deferred income taxes
$
$
$
2015
910
404
$
506
$
$
2015
5,425
(46)
5,379
383
(26)
357
Total provision for income taxes
$
5,736
$
The Company’s income tax expense consists of the following:
Provision for income taxes at blended statutory rate of
25.95% (2014 - 26.30%)
Permanent differences and non-deductible items
Future income tax rate changes
Other
2015
5,578
228
(26)
(44)
$
5,736
$
$
$
2014
1,314
404
910
2014
3,910
(671)
3,239
1,791
193
1,984
5,223
2014
5,062
385
193
(417)
5,223
The decrease in the blended statutory rate applicable to the Company is primarily a result of higher income
being taxed at the rates of lower tax jurisdictions.
ANDREW PELLER LIMITED 2015 |
49
The movement of the deferred income tax account is as follows:
At beginning of year
Provision for deferred income taxes in net earnings
Recovery of deferred income taxes in other comprehensive earnings
At end of year
2015
15,811
357
(197)
$
15,971
$
2014
13,881
1,984
(54)
15,811
$
$
The significant temporary differences giving rise to the deferred income tax liability are comprised of the
following:
Deferred income tax liability
Accelerated
tax
depreciation
and
deductions
on property,
plant and
equipment
Accelerated
tax
deductions
on intangible
assets
Tax
deductions
on
goodwill
Biological
assets
Total
$
$
8,030 $
877
8,907
562
9,469 $
3,069 $
263
3,332
(2)
3,330 $
2,474 $
314
2,788
(218)
2,959 $
153
16,532
1,607
3,112
(19)
18,139
323
2,570 $
3,093 $
18,462
March 31, 2013
Provision in net earnings
March 31, 2014
Provision in net earnings
March 31, 2015
Deferred income tax asset
Fair value
change on
derivative
s
Post-
employment
benefits
(1,652) $
104
(54)
(1,602)
189
(197)
Other
Total
(503) $
83
-
(420)
(6)
-
(2,651)
377
(54)
(2,328)
34
(197)
(1,610) $
(426) $
(2,491)
March 31, 2013
Provision in net earnings
Recovery in other comprehensive income
March 31, 2014
(Recovery) provision in net earnings
Recovery in other comprehensive income
March 31, 2015
$
$
(496) $
190
-
(306)
(149)
-
(455) $
50
| ANDREW PELLER LIMITED 2015
15 Capital stock
Authorized
Unlimited number of Class A shares, non-voting
Unlimited number of Class B shares, voting
Issued
Class A shares, non-voting
Class B shares, voting
2015
2014
Number
of shares
11,293,829
3,004,041
14,297,870
Amount
$
$
6,626
400
7,026
Number
of shares
Amount
11,293,829
3,004,041
$
14,297,870
$
6,626
400
7,026
All of the issued Class A and Class B shares are fully paid and have no par value.
Class A shares are non-voting and are entitled to a dividend in an amount equal to 115% of any dividend paid
or declared on Class B shares. Class B shares are voting and convertible into Class A shares on a one-for-one
basis.
Quarterly dividends of $0.1050 (previously $0.1000) per Class A share and $0.0913 (previously $0.0870) per
Class B share were approved by the Board of Directors on June 4, 2014 and are formally declared in each
quarter.
The authorized share capital of the Company also consists of an unlimited number of preference shares,
issuable in one or more series, of which 33,315 are designated as preference shares, Series A. As at March 31,
2015 and 2014, there were no preference shares issued or outstanding.
Stock purchase plan
The Company’s full-time salaried, certain hourly employees and directors participate in a Company-sponsored
stock purchase plan. Under the terms of the plan, employees can purchase a certain number of Class A shares
on an annual basis. Employees are required to pay 67% of the market price per Class A share. Directors can
purchase 750 Class A shares and are required to pay 50% of the cost. The Company is responsible for the
remainder of the cost and, during 2015, expensed $259 (2014 - $247) related to this program. Officers of the
Company also participate in an Equity Incentive Program, where Class A shares of the Company are purchased
on their behalf from the open market.
ANDREW PELLER LIMITED 2015 |
51
16 Nature of expenses
The nature of the expenses included in selling and administration and cost of goods sold, excluding
amortization are as follows:
Raw materials and consumables
Employee compensation and benefits
Advertising, promotion and distribution
Occupancy
Repairs and maintenance
Other external charges
$
2015
162,336
57,114
28,518
10,723
5,740
15,748
$
2014
152,493
53,983
27,052
10,471
5,732
14,364
$
280,179
$
264,095
Restructuring costs amounting to $nil (2014 - $1,409) were recorded during the year ended March 31, 2015.
The costs relate to termination payments and benefits for restructuring of the distribution, marketing, and
administration functions of the Company’s personal winemaking product division.
Other (income) expenses are as follows:
Revaluation of vines (a)
Ongoing maintenance costs related to Port Moody winery facility (b)
Income related to Port Moody Winery facility (c)
Past service costs (d)
2015
352
141
(442)
-
$
51
$
2014
67
156
(404)
326
145
$
$
a) Changes in the fair value less costs to sell of vines included in biological assets are included in the
revaluation of vine biological assets shown above.
b) During fiscal 2006, the Company closed its Port Moody winery facility and transferred production to its
winery operations in Kelowna, British Columbia. Effective July 1, 2012, the property was expropriated for
a five-year period. The cost of maintaining this idle facility and costs associated with its expropriation
amounted to $153 in 2015 (2014 - $156).
c)
Income amounting to $442 (2014 - $404) was recorded related to the Company’s idle Port Moody
property related to expropriation notices received by the Company.
d) The Company recorded $nil (2014 - $326) expense for past service costs as a result of changes to
retirement benefits in a new collective bargaining agreement.
52
| ANDREW PELLER LIMITED 2015
17 Net earnings per share
Class A
Class B
2015
Total
Net earnings attributed for the year - basic and
diluted
$
12,800
$
2,961
$
15,761
Weighted average number of shares outstanding
- basic and diluted
11,293,829
3,004,041
Net earnings per share - basic and diluted
$
1.13
$
0.99
Net earnings attributed for the year - basic and
diluted
Weighted average number of shares outstanding
- basic and diluted
Class A
Class B
2014
Total
$
11,388
$
2,633
$
14,021
11,293,829
3,004,041
Net earnings per share - basic and diluted
$
1.01
$
0.88
18 Commitments
In certain instances, the Company leases land for the purpose of operating vineyards. The terms of the land
leases are 30 and 32 years, which expire in 2036 and 2029, respectively. Under the terms of one land lease, the
Company has the option to agree in advance to purchase any grapes grown on the property at market value for
five or more years after the termination of the lease. The Company also has a right of first refusal to purchase
the land under both land leases. The terms of such a purchase would be negotiated based on market conditions
existing at the time of the purchase.
The Company leases various storage facilities, offices, and retail locations. The remaining terms of these leases
range between one and ten years. The Company also leases various equipment and vehicles with remaining
lease terms between one and five years. In many cases, the Company has renewal options for fair market rental
prices at the time of renewal.
ANDREW PELLER LIMITED 2015 |
53
The Company’s minimum lease payments as at March 31, 2015 under long-term non-cancellable leases are
outlined in note 20 along with its other contractual obligations.
In 2015, minimum lease payments of $4,799 (2014 - $4,742) were recognized as an expense.
19 Non-cash working capital items
The change in non-cash working capital items related to operations is comprised of the change in the following
items:
Accounts receivable
Inventories and current portion of biological assets
Prepaid expenses and other assets
Accounts payable and accrued liabilities
20 Financial instruments
Classification of financial instruments
2015
(2,923)
2,872
(229)
(956)
$
(1,236)
$
2014
2,791
(4,944)
(110)
3,893
1,630
$
$
The classification and measurement of the financial assets and liabilities, as well as their carrying amounts and
fair values are as follows:
Assets/liabilities
Category
Measurement
Accounts receivable
Bank indebtedness
Accounts payable and accrued
liabilities
Dividends payable
Long-term debt
Interest rate swap liability
Foreign exchange forward
contracts asset
Loans and
receivables Amortized cost $
Other liabilities Amortized cost
Other liabilities Amortized cost
Other liabilities Amortized cost
Other liabilities Amortized cost
Fair value
Derivatives
Derivatives
Fair value
Assets/liabilities
Category
Measurement
Accounts receivable
Bank indebtedness
Accounts payable and accrued
liabilities
Dividends payable
Long-term debt
Interest rate swap liability
Foreign exchange forward
contracts asset
Loans and
receivables Amortized cost $
Other liabilities Amortized cost
Other liabilities Amortized cost
Other liabilities Amortized cost
Other liabilities Amortized cost
Fair value
Derivatives
Derivatives
Fair value
54
| ANDREW PELLER LIMITED 2015
Carrying
amount
25,616 $
32,522
36,712
1,460
56,463
2,439
697
Carrying
amount
22,693 $
54,407
37,371
1,391
45,720
1,270
100
2015
Fair
value
25,616
32,522
36,712
1,460
56,463
2,439
697
2014
Fair
value
22,693
54,407
37,371
1,391
45,720
1,270
100
The Company’s interest rate swap and foreign exchange contracts are derivatives and are recorded at fair value.
As a result, unrealized gains and losses are included each period through earnings, which reflect changes in fair
value.
Fair value
The fair value of accounts receivable, accounts payable and accrued liabilities and dividends payable
approximates their carrying value because of the short-term maturity of these instruments.
The fair value of long-term debt is equivalent to its carrying value because the variable interest rate is
comparable to market rates. The fair value of the interest rate swap used to fix this interest rate is included in
the current and long-term derivative financial instruments in the consolidated balance sheets.
The fair value of foreign exchange forward contracts is determined based on the difference between the
contract rate and the forward rate at the date of the valuation.
The fair value of the interest rate swap is determined based on the difference between the fixed interest rate in
the contract that will be paid by the Company and the forward curve of the floating interest rates that are
expected to be paid by the counterparty. The fair value of foreign exchange forward contracts and the interest
rate swap are adjusted to reflect any changes in the Company’s or the counterparty’s credit risk.
Fair value estimates are made at a specific point in time, using available information about the instrument.
These estimates are subjective in nature and often cannot be determined with precision.
The net unrealized (losses) gains on derivative financial instruments are comprised of:
Unrealized gains (losses) on foreign exchange forward contracts
Unrealized (losses) gains on the interest rate swap
2015
597
(1,169)
$
(572)
$
$
$
2014
(302)
1,052
750
ANDREW PELLER LIMITED 2015 |
55
The fair value measurements of the Company’s financial instruments are classified in the hierarchy below
according to the significance of the inputs used in making the fair value measurements.
Asset/liability
Quoted prices in
active markets
for
identical assets
(Level 1)
Significant
observable
inputs
other than
quoted prices
(Level 2)
Interest rate swap liability
Foreign exchange forward contracts asset
$
- $
-
2,439 $
697
Asset/liability
Quoted prices in
active markets
for
identical assets
(Level 1)
Significant
observable
inputs
other than
quoted prices
(Level 2)
Interest rate swap liability
Foreign exchange forward contracts asset
$
- $
-
1,270 $
100
Objectives and policy relating to financial risk management
Interest rate risk
2015
Significant
unobservable
inputs
(Level 3)
2014
Significant
unobservable
inputs
(Level 3)
-
-
-
-
The Company is exposed to interest rate risk as a result of cash balances, floating rate debt, and an
interest rate swap. Of these risks, the Company’s principal exposure is that increases in the floating
interest rates on its debt, if unmitigated, could lead to decreases in cash flow and earnings. The
Company’s objective in managing interest rate risk is to achieve a balance between minimizing
borrowing costs over the long term, ensuring that it meets borrowing covenants, and ensuring that it
meets other expectations and requirements of investors. To meet these objectives, the Company’s
policy is to effectively fix the rates on long-term debt to match the duration of investments in long-
lived assets and to use floating rate funding for short-term borrowing.
The Company has effectively fixed its interest rate on its long-term debt until April 2019 by entering
into interest rate swaps. The interest rate swaps are measured at fair value. An unrealized loss of
$1,169 (2014 - $1,052 gain) was recognized on the interest rate swaps, which is classified as net
unrealized loss (gain) on derivative financial instruments in the consolidated statements of earnings.
The Company’s short-term borrowings are funded using a floating interest rate and as such are
sensitive to interest rate movements. As at March 31, 2015, with other variables unchanged, a 1%
change in interest rates would impact the Company’s net earnings by approximately $237 (2014 -
$460), exclusive of the mark-to-market adjustments on the interest rate swaps.
56
| ANDREW PELLER LIMITED 2015
Credit risk
Credit risk arises from cash and cash equivalents, derivative financial instruments and accounts
receivable. The Company places its cash and cash equivalents with major Canadian financial
institutions. Counterparties to derivative contracts are also major financial institutions.
Credit risk for trade receivables is monitored through established credit monitoring activities. Over
50% of the Company’s accounts receivable balance relates to amounts owing from Canadian
provincial liquor boards. Excluding accounts receivable from Canadian provincial liquor boards, the
Company does not have a significant concentration of credit risk with any single counterparty or
group of counterparties. Amounts owing from Canadian provincial liquor boards represent $13,504
(2014 - $12,515) of the total accounts receivable for which no allowance has been provided. Of the
remaining non-provincial liquor board balances, $755 (2014 - $688) was over thirty days past due as
at March 31, 2015. An allowance for doubtful accounts of $99 (2014 - $102) has been provided
against these accounts receivable amounts, which the Company has determined to represent a
reasonable estimate of amounts that may be uncollectible.
Sales to its largest customer, a provincial Crown corporation, were $49,068 (2014 - $46,410) during
the year ended March 31, 2015. Sales to its second largest customer, a branch of a provincial
government, were $34,387 (2014 - $33,204) during the year.
An analysis of accounts receivable is as follows:
Liquor boards
Non-liquor boards
Current
Past due 0 - 30 days, due on delivery accounts
Past due 0 - 30 days
Past due 31 - 60 days
Past due > 60 days
Allowance for doubtful accounts
2015
$
13,504
$
9,380
620
1,456
249
506
(99)
2014
12,515
8,355
402
835
278
410
(102)
$
25,616
$
22,693
The change in the allowance for doubtful accounts was as follows:
Balance - Beginning of year
Provision for current year
Bad debts
Balance - End of year
2015
102
54
(57)
$
99
$
2014
142
68
(108)
102
$
$
ANDREW PELLER LIMITED 2015 |
57
Liquidity risk
The Company incurs obligations to deliver cash or other financial assets on future dates. Liquidity risk
inherently arises from these obligations, which include requirements to repay debt, purchase grape inventory
and make operating lease payments.
The Company manages liquidity risk by maintaining adequate cash and cash equivalent balances and by
appropriately utilizing its operating line of credit. Company management continuously monitors and reviews
both actual and forecasted cash flows and matches the maturity profile of financial assets and financial
liabilities. Accounts payable are generally due within 30 days.
The following table outlines the Company’s contractual undiscounted obligations. The Company analyzes
contractual obligations for financial liabilities in conjunction with other commitments in managing liquidity
risk. Contractual obligations include long-term debt, the expected payments under a swap agreement that fixes
the Company’s interest rate on long-term debt, operating leases and commitments on short-term forward
foreign exchange contracts used to mitigate the currency risk on US dollar purchases as at March 31, 2015:
Long-term debt
Leases and royalties
Pension obligations
Grape and bulk wine purchase
contracts
Interest rate swap
Foreign exchange forwards
Total
< 1
year
2 - 3
years
4 - 5
years
> 5
years
$
56,952 $
23,707
5,306
4,194 $
4,862
987
8,212 $
6,640
1,413
44,546 $
3,602
858
-
8,603
2,048
317,176
74,636
89,782
53,656
99,102
403,141
7,478
35,937
84,679
2,255
35,937
106,047
3,541
-
102,662
1,682
-
109,753
-
-
Total contractual obligations
$
446,556 $
122,871 $
109,588 $ 104,344 $ 109,753
The Company’s obligations under its interest rate swap and foreign exchange forward contracts are stated
above on a gross basis rather than net of the corresponding contractual benefits.
Foreign exchange risk
Certain of the Company’s purchases are denominated in US dollars, euro or Australian dollars. Any increases
or decreases to the foreign exchange rates could increase or decrease the Company’s earnings. To mitigate the
exposure to foreign exchange risk, the Company has entered into forward foreign currency contracts.
The Company’s foreign exchange risk arises on the purchase of bulk wine and concentrate, which are made in
US dollars and euro. The Company’s strategy is to hedge approximately 50% to 80% of its annual foreign
exchange requirements prior to or during the beginning of each fiscal quarter. As at March 31, 2015, the
Company has forward foreign currency contracts to buy US$22,100 at rates ranging between $1.13 and $1.25,
EUR3,500 at rates ranging between $1.38 and $1.44 and AU$4,000 at rates ranging between $0.94 and $0.97.
These contracts mature at various dates to December 2015. After considering the offsetting impact of these
forward contracts, a 1% increase or decrease to the exchange rate of the US dollar, the euro or the Australian
dollar would impact the Company’s net earnings by approximately $108 (2014 - $41), $16 (2014 - $133) or
$69 (2014 - $64), respectively. The Company has elected to not use hedge accounting and as a result, has
recognized $597 (2014 - $302 losses) of unrealized foreign exchange gains in the consolidated statements of
earnings as a component of net unrealized gains on derivative financial instruments and has recorded the fair
value of $697 in prepaid expenses and other assets in the consolidated balance sheets (2014 - $100).
58
| ANDREW PELLER LIMITED 2015
21 Capital disclosures
The Company’s objective when managing capital is to safeguard the Company’s ability as a going concern, to
provide an adequate return to shareholders and to meet external capital requirements on debt and credit
facilities.
The Company’s capital consists of cash, bank indebtedness, long-term debt and shareholders’ equity. The
primary uses of capital are to make increases to non-cash working capital, fund maintenance and growth related
capital expenditures, pay dividends and finance acquisitions. In order to meet the Company’s objectives in
managing capital, the Company prepares annual budgets of cash, earnings and capital expenditures that are
updated during the year as necessary. The annual budget is approved by the Board of Directors.
As part of the existing debt agreement, the Company is subject to financial covenants, which consist of the
following:
funded debt to a rolling twelve-month EBITDA, which is defined as consolidated earnings before interest,
amortization and taxes excluding unusual and non-recurring items that are agreed to by the Company and
the lender; and
fixed charge coverage ratio.
Unfunded capital expenditures are limited to $15,000 on an annual basis. The unspent portion may be carried
over to the next fiscal year.
Compliance with these covenants and the capital expenditure limit is monitored by management on a quarterly
basis.
22 Related parties and management compensation
The Company is controlled by Jalger Limited, which owns 66.5% of the Company’s Class B voting shares. The
ultimate controlling party of the Company is Dr. Joseph A. Peller.
Compensation of directors and executives
The compensation expense recorded for directors and members of the Executive Management Team of the
Company is shown below:
Compensation and benefits
Payments to a share purchase plan
2015
5,263
258
5,521
$
$
2014
4,145
160
4,305
$
$
The compensation and benefits expense consists of amounts that will primarily be settled within twelve months.
23 Segmented information
During the year, export sales were $13,853 (2014 - $11,881), primarily in the United States. The
remainder of sales occurred in Canada. All of the Company’s assets are located in Canada.
ANDREW PELLER LIMITED 2015 |
59
TEN-YEAR SUMMARY
(in thousands of Canadian dollars,
except per share amounts)
Sales and earnings
Net sales
EBITA
Net earnings (loss)
Financial position
Working capital
Total assets
Shareholders’ equity
Per share
Net earnings (loss) (2)
Basic & diluted Class A
Basic & diluted Class B
Dividends (2)
Class A Shares, non-voting
Class B Shares, voting
Number of shares outstanding
(in thousands of shares) (2)
Class A Shares, non-voting
Class B Shares, voting
Other information
Return on average
shareholders’ equity (9)
Return on average
capital employed (10)
2015
2014
2013
2012
Restated (8)
$ 315,697
35,518
15,761
$ 297,824
33,729
14,021
$ 289,143
33,489 (8)
14,519 (8)
$ 276,883
32,651
13,001
68,982
301,505
147,365
44,564
301,015
138,003
41,670
296,519
129,701 (8)
34,869
285,552
120,552
1.13
0.99
0.420
0.365
11,294
3,004
14,298
11.07%
11.5%
1.01
0.88
0.400
0.348
11,294
3,004
14,298
10.5%
10.8%
1.04 (8)
0.91(8)
0.360
0.314
11,294
3,004
14,298
11.6%(8)
11.1%
0.93
0.81
0.360
0.314
11,294
3,004
14,298
11.1%
11.5%
(1) Includes costs related to the integration of Cascadia Brands Inc. and other items of $2.0 million.
(2) After giving effect to a 3:1 split of Class A and Class B Shares that occurred on October 31, 2006.
(3) Excludes the net impact of discontinued operations.
(4) Excludes the after-tax impact of mark-to-market adjustments on an interest rate swap.
(5) Includes an after-tax gain of $11.9 million for the sale of Granville Island Brewing Company Ltd. and Mainland Beverage
Distribution Ltd.
60
| ANDREW PELLER LIMITED 2015
2011
Restated (7)
2010
2009
Restated (3)
2008
Restated (3)
2007
2006
$ 265,420
31,544 (7)
11,223 (7)
$ 263,151 (5)
27,354 (5)
21,661 (5)
$ 251,136(3)
23,359(3)
(125)
$ 228,056(3)
28,109(3)
11,381
$ 228,192
27,665
9,472
$ 211,775
22,902
6,054 (1)
27,643 (7)
267,996 (7)
114,297 (7)
29,357
263,716
113,665
29,203
293,507
96,791
25,413
259,744
102,680
25,316
238,956
95,522
26,756
222,087
89,580
0.78 (7)
0.67 (7)
0.330
0.288
11,294
3,004
14,298
1.49 (5)
1.30 (5)
0.330
0.288
11,888
3,004
14,892
9.8% (7)
6.8% (4,6)
11.6% (7)
9.1% (6)
($0.01)
($0.01)
0.330
0.288
11,888
3,004
14,892
6.0% (4)
7.9% (4)
0.78
0.68
0.300
0.261
11,888
3,004
14,892
11.5%
10.7%
0.65
0.57
0.253
0.220
11,888
3,004
14,892
10.2%
10.3%
0.42 (1)
0.36 (1)
0.215
0.187
11,888
3,004
14,892
6.9%
9.7%
(6) Excludes an after-tax gain of $11.9 million for the sale of Granville Island Brewing Company Ltd. and Mainland Beverage
Distribution Ltd.
(7) March 31, 2012 and subsequent periods have been prepared in accordance with International Financial Reporting Standards
("IFRS"). The March 31, 2011 period was restated in accordance with IFRS. Amounts for March 31, 2010 and prior have
not been prepared in accordance with IFRS. They have been presented in accordance with Canadian GAAP prior to
IFRS transition and may not be comparable to subsequent periods.
(8) Restated to reflect the adoption of the amendments to IAS 19.
(9) Return on average shareholders' equity is calculated as net earnings divided by average shareholders’ equity.
(10) To determine return on average capital employed, return is calculated as EBITA less amortization. Capital employed is
calculated as total assets less non-interest bearing liabilities. For 2008 and prior periods certain non-interest-bearing debt was
included in capital employed and may not be comparable to subsequent periods.
ANDREW PELLER LIMITED 2015 |
61
Honorary Directors
C. WILLIAM DANIEL, O.C.
Toronto, Ontario
WILLIAM J. WALSH, M.D.
Hamilton, Ontario
Officers
JOHN E. PELLER
President and Chief Executive Officer
ANTHONY M. BRISTOW
Chief Operating Officer
BRIAN D. ATHAIDE
Chief Financial Officer and
Executive Vice-President
Human Resources & Information Technology
BRENDAN P. WALL
Executive Vice-President, Operations
SHARI A. NILES
Executive Vice-President, Marketing
GREGORY J. BERTI
Vice-President, Government Relations and Export
JAMES H. COLE
Vice-President, Retail and Estate Wine Group
COLIN M. CAMPBELL
Vice-President, Sales, Western Canada
ERIN L. ROONEY
Vice-President, Sales, Eastern Canada and Agency
DIRECTORS & OFFICERS
Directors
MARK W. COSENS
Burlington, Ontario
Managing Director
Kilbride Capital Partners
LORI C. COVERT
Halifax, Nova Scotia
Corporate Director
RICHARD D. HOSSACK, PhD
Toronto, Ontario
President
Hossack and Associates Limited
PERRY J. MIELE
Burlington, Ontario
Chairman and Partner
Beringer Capital
A. ANGUS PELLER M.D.
Toronto, Ontario
Senior Medical Consultant
Medcan Health Management Inc.
JOHN E. PELLER
Burlington, Ontario
President and CEO
Andrew Peller Limited
JOSEPH A. PELLER
Rockwood, Ontario
Chairman of the Board
Andrew Peller Limited
RANDY A. POWELL
Vancouver, British Columbia
President and CEO
Armstrong Group
JOHN F. PETCH, Q.C. LLD
Toronto, Ontario
Vice Chairman
Andrew Peller Limited
BRIAN J. SHORT
Ancaster, Ontario
Corporate Director
62
| ANDREW PELLER LIMITED 2015
SHAREHOLDER INFORMATION
Head Office
ANDREW PELLER LIMITED
697 South Service Road
Grimsby, Ontario L3M 4E8
Tel: (905) 643-4131
Fax: (905) 643-4944
Stock Exchange
TORONTO
Symbols: ADW.A/ADW.B
Shareholder Inquiries
Computershare
Inc. operates
Investor Services
services for inquiries regarding changes of address,
stock transfers, registered shareholdings, dividends
and lost certificates.
Phone:
Fax:
1-800-564-6253 toll free North America
(International 514-982-7555)
1-866-249-7775 toll free North America
(International 416-263-9524)
Rgistrar and Transfer Agent
COMPUTERSHARE INVESTOR SERVICES INC.
Internet:
Auditors
PRICEWATERHOUSECOOPERS LLP
Bankers
BANK OF MONTREAL
ROYAL BANK OF CANADA
TORONTO DOMINION BANK
RABOBANK
In Memory of Ralph
Macdonald Logan
April 21, 1928 to
April 6, 2015
In 1966, Ralph moved the family to Halifax,
where he joined Andrés Wines Ltd. He was
the Vice President – Atlantic Canada at our
Truro winery, served on the Board of
Directors of Andrés Wines and Honourary
Director of Andrew Peller Limited. He was
instrumental in the growth of the company
and will be fondly remembered by all those
who knew him.
www.computershare.com
The Investors section offers enrolment
for self-service account management for
registered shareholders through Investor
Centre.
Mail:
Computershare Investor Services
100 University Avenue, 9th Floor
Toronto, Ontario M5J 2Y1
Investor Relations
For additional information regarding the Company’s
activities, please contact:
BRIAN D. ATHAIDE
Chief Financial Officer and Executive Vice President,
Human Resources & Information Technology at the
Head Office address or by email at:
brian.athaide@andrewpeller.com
2015 Annual Shareholders’ Meeting
The 2015 Annual Meeting of Shareholders’ will be
held at:
Trius Winery
Niagara-on-the-Lake, Ontario
on Wednesday, September 16, 2015 at 3:00 p.m.
ANDREW PELLER LIMITED 2015 |
63
AJAX
955 WESTNEY ROAD S.
L1S 3K7 (905) 683-1705
#102 WITHIN: SOBEYS
4025 NEW STREET
L7L 1S7 (905) 632-8580
#114 WITHIN: MARILU'S
MARKET
GUELPH
297 ERAMOSA ROAD
NIH 1G7 (519) 824-7922
#88 WITHIN: ZEHRS
3040 WONDERLAND STREET
N6L 1A6 (519) 668-2224
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260 KINGSTON ROAD W.
L1T 4E4 (905) 428-6500
#165 WITHIN: SOBEYS
1250 BRANT STREET
L7P 1X8 (905) 319-8670
#131 WITHIN: SOBEYS
160 KORTRIGHT ROAD, W.
N1G 4W2 (519) 837-9293
#105 WITHIN: ZEHRS
3505 UPPER MIDDLE ROAD
L7M 4C6 (905) 336-9101
#312 WITHIN: WALKERS PLACE
167 SILVERCREEK PARKWAY
N1H 3T2 (519) 837-0540
#197 WITHIN: NO FRILLS
30 KINGSTON ROAD W.
L1T 4K8 (905) 428-7829
#170 WITHIN: RCSS
ANCASTER
977 GOLF LINKS ROAD
L9G 3T9 (905) 648-1465
#124 WITHIN: SOBEYS
BARRIE
201 CUNDLES ROAD E.
L4M 4S5 (705) 739-1553
#109 WITHIN: ZEHRS
11 BRYNE DRIVE
L4N 8V8 (705) 725-8121
#139 WITHIN: ZEHRS
BOLTON
487 QUEEN STREET S.
L7E 2B4 (905) 857-4166
#145 WITHIN: ZEHRS
BRAMALEA
25 PEEL CENTRE DRIVE
L6T 3R5 (905) 793-4246
#28 WITHIN: METRO
BRAMPTON
227 VODDEN STREET
L6V 1N3 (905) 459-2386
#35 WITHIN: FOOD BASICS
930 NORTH PARK DRIVE
L6S 3Y5 (905) 793-9071
#52 WITHIN: SOBEYS
10970 AIRPORT ROAD
L6R 0E1 (905) 793-9531
#191 WITHIN: SOBEYS
BROCKVILLE
1972 PARKEDALE AVE.
K6V 7N4 (613) 342-8477
#184 WITHIN: RCSS
5353 LAKESHORE ROAD
L7L 1C8 (905) 681-8282
#329 WITHIN: LAKESIDE
VILLAGE
CAMBRIDGE
180 HOLIDAY INN DRIVE
N3C 3Z4 (519) 651-1145
#86 WITHIN: ZEHRS
400 CONESTOGA BLVD.
N1R 7L7 (519) 624-1103
#151 WITHIN: ZEHRS
COLLINGWOOD
12 HURONTARIO STREET
L9Y 2L6 (705) 446-2237
#113 WITHIN; LOBLAW GREAT
FOOD
640 FIRST STREET EXTENSION
L9Y 4Y7 (705) 444-1730
#153 WITHIN: METRO
EAST YORK
1015 BROADVIEW AVE.
M4K 2S2 (416) 467-7760
#99 WITHIN: SOBEYS
ETOBICOKE
380 THE EAST MALL
M9B 6L5 (416) 695-9567
#152 WITHIN: LOBLAW
GREAT FOOD
FERGUS
800 TOWER STREET S.
N1M 2R3 (519) 787-7721
#149 WITHIN: ZEHRS
GEORGETOWN
171 GUELPH STREET
L7G 4A1 (905) 877-1815
#179 WITHIN: RCSS
HAMILTON
50 DUNDURN STREET S.
L8P 4J9 (905) 528-4003
#76 WITHIN: FORTINO'S
75 CENTENNIAL PARKWAY N.
L8E 2P2 (905) 561-4504
#79 WITHIN: FORTINO'S
1579 MAIN STREET W.
L8S 1E6 (905) 522-8882
#175 WITHIN: FORTINOS
KESWICK
24018 WOODBINE AVE.
L4P 3E9 (905) 476-8544
#134 WITHIN: ZEHRS
KINGSTON
1048 MIDLAND AVE.
K7M 7H4 (613) 389-6139
#122 WITHIN: LOBLAWS
KITCHENER
750 OTTAWA STREET S.
N2E 1B6 (519) 745-2183
#164 WITHIN: ZEHRS
39 - 875 HIGHLAND ROAD W.
N2N 2Y2 (519) 742-5844
#324 WITHIN: HIGHLAND
HILLS MALL
LONDON
1244 COMMISSIONERS ROAD
N6K 1C7 (519) 657-7517
#54 WITHIN: METRO
1030 ADELAIDE STREET N.
N5Y 2M9 (519) 679-3717
#62 WITHIN: METRO
395 WELLINGTON STREET
N6C 4P9 (519) 649-7180
#94 WITHIN: METRO
BURLINGTON
2025 GUELPH LINE
L7P 4M8 (905) 336-3849
#112 WITHIN: FORTINO'S
GRIMSBY
361 SOUTH SERVICE ROAD
L3M 4E8 (905) 945-9982
#181 WITHIN: RCSS
64
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MILTON
1079 MAPLE AVE
L9T 0A5 (905) 693-8850
#199 WITHIN: LONGOS
MISSISSAUGA
4099 ERIN MILLS PKWY.
L5L 3P9 (905) 607-6246
#148 WITHIN: MICHAEL-
ANGELO'S
5602 - 10th LINE W.
L5M 7L9 (905) 858-0123
#166 WITHIN: SOBEYS
228 LAKESHORE ROAD W.
L5H 1G6 (905) 271-8686
#207 WITHIN: CREDIT LANDING
SHOPPING CENTRE
2150 BURNHAMTHORPE ROAD W.
L5L 3A2 (905) 820-9958
#332 WITHIN: SOUTH COMMON
CENTRE
NEWMARKET
1111 DAVIS DRIVE
L3Y 8X2 (905) 853-0401
#127 WITHIN: METRO
18200 YONGE STREET N.
L3Y 4V8 (905) 895-2412
#138 WITHIN: RCSS
16640 YONGE STREET
L3X 1V6 (905) 830-3448
#159 WITHIN: METRO
NIAGARA ON THE LAKE
300 TAYLOR ROAD
L0S 1J0 (905)704-0550
#203 WITHIN: NIAGARA
OUTLET COLLECTION
NIAGARA ON THE LAKE
27 QUEEN STREET
L0S 1J0 (905) 468-1881
#204 WITHIN:
WINE COUNTRY VINTNERS
NORTH YORK
3501 YONGE STREET
M4N 2N5 (416) 481-7699
#123 WITHIN: LOBLAW
GREAT FOOD
1460 MERIVALE ROAD
K2E 5P2 (613) 723-5507
#351 WITHIN: LOBLAWS
411 LOUTH STREET
L2S 4A2 (905) 685-9779
#172 WITHIN: RCSS
65-O DUPONT STREET
M6G 4B1 (416) 533-8484
#208 WITHIN: LOBLAWS
400 SCOTT STREET
L2M 3W4 (905) 934-0981
#201 WITHIN: GRANTHAM
PLAZA
2273 BLOOR STREET W.
M6S 1N9 (416) 766-8654
#309 WITHIN: BLOOR
WEST VILLAGE
1500 UPPER MIDDLE ROAD W.
L6M 3G3 (905) 847-2944
#120 WITHIN: SOBEYS
OWEN SOUND
1150 SIXTEENTH STREET E.
N4K 1Z3 (519) 371-8664
#140 WITHIN: ZEHRS
NORTH YORK
3090 BATHURST STREET
M6A 2A1 (416) 256-0462
#150 WITHIN: METRO
OAKVILLE
511 MAPLE GROVE DRIVE
L6J 4W3 (905) 338-3042
#63 WITHIN: SOBEYS
469 CORNWALL ROAD
L6J 4A7 (905) 338-0880
#202 WITHIN: LONGO’S
ORANGEVILLE
50 - 4TH AVE.
L9W 4P1 (519) 942-8752
#90 WITHIN: ZEHRS
OSHAWA
285 TAUNTON ROAD E.
L1G 3V2 (905) 571-6167
#78 WITHIN: METRO
1385 HARMONY ROAD N.
L1H 7K5 (905) 438-1800
#178 WITHIN: RCSS
OTTAWA
1300 KING STREET E. Unit #32
L1H 8J4 (905) 438-0478
#180 WITHIN: KINGSWAY
PLAZA
1300 KING STREET E.
L1H 8J4 (905) 728-3767
#350 WITHIN: NO FRILLS
2515 BANK STREET
K1V 8R9 (613) 523-5837
#343 WITHIN: SOUTHGATE
(Ottawa) GLOUCESTER
671 RIVER ROAD
K1V 2G2 (613) 822-3080
#186 WITHIN: YIG
(Ottawa) NEPEAN
59 ROBERTSON ROAD
K2H 5Y9 (613) 820-7219
#129 WITHIN: LOBLAWS
(Ottawa) STITTSVILLE
1251 MAIN STREET
K2S 2E5 (613) 831-3837
#188 WITHIN: YIG
(Ottawa) VANIER
100 MCARTHUR ROAD
K1L 6P9 (613) 749-9618
#347 WITHIN: LOBLAWS
PETERBOROUGH
769 BORDEN AVE.
K9J 0B6 (705) 740-2513
#190 WITHIN: RCSS
PICKERING
1900 DIXIE ROAD
L1V 6M4 (905) 831-6705
#210 WITHIN: YIG
RICHMOND HILL
11700 YONGE STREET
L4E 3N6 (905) 770-2314
#187 WITHIN: SOBEYS
SCARBOROUGH
3221 EGLINTON AVE. E.
M1J 2H7 (416) 267-2795
#128 WITHIN: METRO
SIMCOE
470 NORFOLK STREET S.
N3Y 2W8 (519) 426-1033
#110 WITHIN: SOBEYS
600 ONTARIO STREET
L2N 7H8 (905) 934-7430
#322 WITHIN: PORT PLAZA
ST. THOMAS
1063 TALBOT STREET
N5R 2S6 (519) 633-6343
#111 WITHIN: RCSS
TORONTO
656 EGLINTON AVE. E.
M4P 1P1 (416) 485-0093
#143 WITHIN: METRO
50 MUSGRAVE STREET
M4E 3W2 (416) 693-6336
#156 WITHIN: LOBLAWS
93 LAIRD DRIVE
M4G 3T7 (416) 424-1362
#200 WITHIN: LONGO’S
3671 DUNDAS STREET W.
M6S 2T3 (416) 762-8635
#147 WITHIN: LOBLAWS
228 QUEENS QUAY W.
M5J 1B5 (416) 598-8880
#167 WITHIN: QUEENS
QUAY
125 THE QUEENSWAY
M8Y1H6 (416) 201-8221
#171 WITHIN: SOBEYS
ST. CATHARINES
318 ONTARIO STREET
L2R 5L8 (905) 685-8898
#43 WITHIN: PRICE CHOPPER
87 AVENUE ROAD
M5R 3R9 (416) 923-6336
#176 WITHIN: HAZELTON
LANES
221 GLENDALE AVE.
L2T 2K9 (905) 688-4767
#117 WITHIN: ZEHRS
285 GENEVA STREET
L2N 2G1 (905) 646-7363
#137 WITHIN: ZEHRS
93 FRONT STREET E.
M5E 1C4 (416) 364-1811
#189 WITHIN: WINE
COUNTRY MERCHANTS
22 FORT YORK BLVD.
M5V 3Z2 (416) 623-0793
#192 WITHIN: SOBEYS
UXBRIDGE
323 TORONTO STREET S.
L9P 1N2 (905) 852-5008
#133 WITHIN: ZEHRS
VAUGHAN
9200 BATHURST STREET
L6A 1S2 (905) 707-6118
#169 WITHIN: SOBEYS
WATERLOO
450 ERB STREET W.
N2T 1H4 (519) 747-5897
#40 WITHIN: ZEHRS
315 LINCOLN ROAD
N2J 4H7 (519) 746-7226
#162 WITHIN: ZEHRS
WELLAND
821 NIAGARA STREET
L3C 1M4 (905) 714-9521
#144 WITHIN: ZEHRS
WHITBY
1615 DUNDAS STREET E.
L1N 2L1 (905) 728-4118
#177 WITHIN: SOBEYS
3050 GARDEN STREET
L1R 2G7 (905) 430-5314
#205 WITHIN: WHITBY
TOWN SQUARE
817 DUNDAS WEST UNIT B
L1N 2N6 (905) 430-4698
#209 WITHIN: WHITBY
WEST SIDE PLAZA
200 TAUNTON ROAD
L1R 3H8 (905) 668-7568
#317 WITHIN: RCSS
WOODBRIDGE
9200 WESTON ROAD
L4H 2P8 (905) 303-3055
#206 WITHIN: LONGO’S
ANDREW PELLER LIMITED 2015 |
65
Exclusive Wine Offer for Shareholders
We are pleased to offer exceptional VQA wines from our wineries in Niagara and the Okanagan Valley. These exclusive
Collections are available at a 15% savings. As a Shareholder, we are also offering you complimentary delivery within
Ontario and British Columbia.
Delivered right to your door, these Collections give you the opportunity to enjoy a variety of wines from Andrew Peller
Limited’s award-winning wineries. Stock up for get-togethers and surprise the wine lovers in your life with a delicious bottle
(or two).
Don’t forget, our wine club memberships are also available! Peller Estates, Trius and Thirty Bench No.30 memberships are
available in Ontario, Sandhill and Red Rooster memberships are available in British Columbia. Please call us for more
information.
You can call us at 1.866.440.4383 to place your order or email wineorders@peller.com. We are available Monday to Friday, 9 am
- 7 pm EST. Offer ends Friday, September 25, 2015.
Ontario VQA Wine Collections
Collections #1- 4 can be delivered to Ontario, British Columbia, Manitoba, and Nova Scotia. Free delivery within
Ontario and a special delivery charge of only $25 to other provinces.
Collection #1: Best of VQA Niagara Collection
Peller Estates Family Series Riesling
Peller Estates Private Reserve Cabernet Franc
Trius Sauvignon Blanc
Trius Cabernet Franc
Thirty Bench Winemaker’s Riesling
Wayne Gretzky Estates No.99 Cabernet Merlot
6 Bottle Collection - $91.74 (reg. $107.70)
12 Bottle Collection - $183.48 (reg. $215.40)
Collection #2: Peller Estates Collection
Peller Estates Signature Series Ice Cuvée
Peller Estates Family Series Chardonnay
Peller Estates Private Reserve Gamay Noir
Peller Estates Signature Series Chardonnay ‘Sur Lie’
Peller Estates Signature Series Merlot
Peller Estates Private Reserve Late Harvest Vidal (375 ml)
6 Bottle Collection - $138.77 (reg. $163.05)
12 Bottle Collection - $277.54 (reg. $326.10)
Collection #3: Trius Collection
Trius Brut
Trius Sauvignon Blanc Trius Divine White Trius Merlot
Trius Cabernet Franc
Trius Red
6 Bottle Collection - $98.53 (reg. $115.70)
12 Bottle Collection - $197.06 (reg. $231.40)
Collection #4: Wayne Gretzky Estates No.99 Collection
Wayne Gretzky Estates No.99 Riesling
Wayne Gretzky Estates No.99 Pinot Grigio
Wayne Gretzky Estates No.99 Chardonnay
Wayne Gretzky Estates No.99 Merlot
Wayne Gretzky Estates ‘Estate Series’ Cabernet Merlot
Wayne Gretzky Estates ‘Estate Series’ Pinot Noir
6 Bottle Collection - $91.38 (reg. $108.70)
12 Bottle Collection - $182.76 (reg. $217.40)
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| ANDREW PELLER LIMITED 2015
British Columbia VQA Wine Collections
Collections #5-8 can be delivered to British Columbia, Manitoba, and Nova Scotia. Free delivery within British Columbia and a
special delivery charge of only $25 to other provinces.
Collection #5: Best of VQA Okanagan Collection
Peller Estates Family Series Pinot Gris
Peller Estates Family Series Cabernet Merlot
Sandhill Chardonnay
Sandhill Small Lots Sangiovese
Sandhill Small Lots Viognier
Wayne Gretzky Estates Okanagan Cabernet Syrah
6 Bottle Collection - $100.34 (reg. $119.63)
12 Bottle Collection - $203.73 (reg. $239.26)
Collection #6: Red Rooster Collection
Red Rooster Riesling
Red Rooster Chardonnay
Red Rooster Reserve Pinot Gris Red Rooster Cabernet Merlot
Red Rooster Reserve Pinot Noir Red Rooster Reserve Meritage
6 Bottle Collection - $106.67 (reg. $125.38)
12 Bottle Collection - $213.53 (reg. $250.76)
Collection #7: Sandhill Collection
Sandhill Pinot Gris
Sandhill Sauvignon Blanc
Sandhill Gamay Noir Sandhill Cabernet Franc
Sandhill Small Lots Single Block Chardonnay
Sandhill Small Lots Two
6 Bottle Collection - $121.59 (reg. $142.91)
12 Bottle Collection - $243.36 (reg. $285.82)
Collection #8: Red Rooster Big Reds Collection
Red Rooster Reserve Merlot
Red Rooster Reserve Syrah
Red Rooster Golden Egg
3 Bottle Collection - $93.95 (reg. $110.43)
6 Bottle Collection - $187.90 (reg. $220.86)
Delivery Information:
You can expect your order within 5-10 business days based on delivery location. Wine will be delivered in
a sturdy corrugated box. Please ensure someone of legal drinking age is available to sign for the package.
Prices include bottle deposit.
ANDREW PELLER LIMITED 2015 |
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