2015 Canadian
Wine Producer of
the Year
2016 Annual Report
Joseph Andrew
Peller
1926 - 2016
Remembering Joe
Joe Peller was a man of traditional family values.
His love for family developed from the rigours of his early childhood. Toward the end of the
1920’s in Hungary, having experienced many of life’s most heart-rending trials, Joe’s Dad, Andy,
summoned the courage to immigrate in search of a new life for his young wife Lena, and his ailing
two year old son, Joe. Throughout his life, Joe was profoundly moved by his parents’ love for
each other and their efforts to give him a better life.
Growing up in Toronto, Joe was inspired by his father’s entrepreneurial spirit and he learned at a
young age that his destiny was not a matter of chance…but of choice. He was a dedicated student
with a passion for reading and natural science that inspired him to enroll at the University of
Toronto at the age of sixteen, where he graduated with a doctorate in medicine in 1948. The next
year, as a resident intern at the Royal Victoria Hospital in Montreal, Joe’s life changed forever
when he met Connie Martin, a nurse from Prince Edward Island. They were married in 1952 and
moved to Ancaster, Ontario, where they raised their six children, while Joe served as the Chief of
Medicine for Hamilton Civic Hospitals up until 1965.
In a dramatic turn, Joe decided he needed to leave medicine in 1966 to aid his father who was
struggling to keep our wine company afloat in Port Moody, B.C. The company grew and
prospered under Joe’s dedication and leadership. Today our company thrives as Andrew Peller
Limited. Joe’s deep affection and regard for the many people who worked with him at APL reflect
the company’s family culture and the many successes of all who have worked here.
Joe’s life pursuits were widely varied. He enjoyed sailing, golf, skiing, classical music, and opera.
Together, Joe and Connie travelled extensively. For over thirty years, they spent many winter
months in Captiva, Florida, hosting friends and family.
Joe believed that fulfillment in life was achieved through learning and helping others grow. His
legacy at APL was nurturing a culture of learning that has become the root strength of our
company. He was genuinely humble and inspired everyone with his open mind and open heart.
In the end, Joe’s dream to provide a better life for his family was certainly achieved. With Connie
at his side, he cherished holding family dinner parties at the farm in Guelph, and toasting
everyone’s bright future with a glass of wine in hand.
We have all been fortunate to be part of Joe’s family. He will be sadly missed and never forgotten.
2
| ANDREW PELLER LIMITED 2016
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
2016
$ 334,263
40,916
20,322
2015(1)
$ 315,697
35,184
15,425
71,665
308,309
157,736
1.38
0.450
0.391
30.50
15.42
34.00
19.95
12.6%
13.2%
1.9:1
68,982
301,519
147,375
1.09
0.420
0.365
16.26
13.10
26.10
15.35
10.6%
11.0%
1.9:1
* Adjusted earnings is defined as net earnings excluding restructuring costs, gains (losses) on derivative financial instruments, other
expenses (income), and the related income tax effect.
(1) Restated to reflect the adoption of amendments to IAS 16, Property, Plant and Equipment and IAS 41, Agriculture
ANDREW PELLER LIMITED 2016 | 3
Overview
Andrew Peller Limited 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, Thirty Bench,
Wayne Gretzky, Sandhill, Conviction, 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, Black Cellar, XOXO, and skinnygrape. 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., the
recognized leader in personal winemaking products. Global Vintners Inc. 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. Global Vintners Inc.’s award-winning premium and ultra-premium
winemaking brands include Selection, Vintners Reserve, Island Mist, KenRidge, Cheeky Monkey, Traditional
Vintage, and Cellar Craft. The Company owns and operates 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.; both of these wine agencies
are importers of premium wines from around the world and are marketing agents for these fine wines. 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…………………….……………………….………………………..…3
REPORT TO SHAREHOLDERS………………………………………………………………………...5
THE YEAR’S TOP AWARDS – ONTARIO AND BC.………………………………….……………...8
MANAGEMENT’S DISCUSSION & ANALYSIS……………………………………………………..10
INDEPENDENT AUDITOR’S REPORT………………………………………………………….…....24
CONSOLIDATED FINANCIAL STATEMENTS…………………………………………………..….25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS………………………….…….....30
.
TEN-YEAR SUMMARY………………………………………………………………………….….…60
DIRECTORS & OFFICERS…………………………………………………………………………......62
SHAREHOLDER INFORMATION…………………………………….………………………………63
THE WINE SHOP RETAIL STORES…………………………………………………………………..64
EXCLUSIVE WINE OFFER FOR SHAREHOLDERS.……………………………….……………….66
4
| ANDREW PELLER LIMITED 2016
Report to Shareholders
Fiscal 2016 was another year of strong growth and operating performance for your Company,
driven by a solid, broad-based increase in revenues across all of our well-established trade
channels and further strengthening in our gross margins and overall profitability.
Our growth over the last decade has been primarily organic, the result of continuing strength in
the Canadian wine market, and our ability to capitalize on these solid industry fundamentals
through proven marketing programs, the quality and reputation of our products, the
introduction of new wine brands, and our entry into new product categories. Our organic
revenue growth has averaged approximately 4.7% for the last five years, an exceptional track
record for a consumer products company.
Continuing Strong Performance
In fiscal 2016 sales rose 5.9% to $334.3 million, the result of strong performance across all of our targeted markets
including provincial liquor stores, our network of company-owned retail stores in Ontario, our export business, our
award-winning estate wineries, our focus on licensed restaurant and club sales, our two wine importing and
marketing agencies, and our personal winemaking business.
Complementing this sales growth, the positive impact of our cost control initiatives to improve productivity and raw
material savings resulted in another year of increased profitability with gross margin as a percentage of sales rising to
36.8% compared to 36.4% in the prior year.
As a result of our solid 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 31.7% to $20.3 million. Net earnings for the year were $19.2 million or $1.38 per Class A Share, up
26.1% from $15.2 million or $1.09 per Class A Share in fiscal 2015.
With our record growth in revenues and profitability, the Company’s balance sheet and financial position also
remained strong at year-end with an increase in working capital to $71.7 million, a reduction in our overall debt
position, and an increase in shareholders’ equity to $157.7 million or $11.11 per common share. We amended our
credit facilities during the year to realize lower debt service costs and to better align with our ongoing strategic
direction.
Increase in Common Share Dividends
With our record operating results, our strong financial position, and our highly positive outlook on the future, the
Board of Directors was pleased to announce a 9.0% increase in common share dividends in June 2016. The annual
amount of dividends on Class A Shares was increased to $0.490 per share and on Class B Shares to $0.426 per share.
This was our eighth increase in dividends in the last ten years, a further demonstration of our commitment to
enhancing shareholder value. The Company has consistently paid common share dividends since 1979.
ANDREW PELLER LIMITED 2016 | 5
Significant Accomplishments
We were very proud to have been recognized as the “Canadian Wine Producer of the Year” by the International Wine
and Spirit Competition (“IWSC”) in December 2015. Established in 1969, the IWSC was the first competition to
seek out the best wines, spirits and liqueurs from around the globe. Now one of the world’s foremost wine
competitions, the IWSC’s panel of carefully selected industry experts comprised of Masters of Wine, wine buyers,
sommeliers, qualified wine educators and respected wine journalists judges wines from more than 90 countries in a
rigorous seven-month process that includes a double-blind tasting as well as chemical and microbiological analysis.
An IWSC award is recognized internationally as a badge of excellence and quality, and is a testament to the quality
of our products and everything we have accomplished over the last few years.
In the spring of 2016 we broke ground to begin construction of the latest addition to our family of estate wineries, the
Wayne Gretzky Estate Winery and Distillery. Located on land adjacent to our Trius Winery in Niagara-on-the-Lake,
Ontario, the planned 15,000 square foot facility will include a winery, craft distillery, barrel aging cellars, tasting
rooms, retail and hospitality facilities, all surrounded by landscaping and vineyards. The Company established its
strategic alliance with the Wayne Gretzky Estate Winery in 2011, and our Niagara and Okanagan wine portfolio
continues to show great potential for growth. The extension of the Gretzky brand into Canadian whisky is a perfect
complement to its top-performing wines. The new winery and distillery is expected to open in the spring of 2017 and
will add to the significant investments we have made in our Peller Estates, Trius, Thirty Bench, Sandhill and Red
Rooster estate wineries.
A number of industry awards were received during the year. Our Vintners Quality Alliance (“VQA”) brands won a
total of 321 awards in fiscal 2016 including Thirty Bench being named Small Winery of the Year at the National
Wine Align Awards, the highest distinction in the Canadian wine industry. Thirty Bench winemaker Emma Garner
was also awarded 2015 Winemaker of the Year, while our Trius winery was named Best Ontario Winery of the Year
at the Ontario Wine awards. In Western Canada, our Sandhill brands led the industry with more than 65 awards,
while our Red Rooster portfolio performed exceptionally well with 60 awards for its current and new product
offerings.
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 in Eastern Canada and
Copper Moon in Western Canada remained the second and third largest wine brands in our markets with solid
increases in volume sales growth during the year.
Our higher margin VQA brand portfolio continues to perform well with our Peller Estates Family Series, Wayne
Gretzky Wines, and Red Rooster remaining among the top-selling brands in our markets. Our premium Trius wines
remained a solid performer, supported by strong media attention from an invitation to showcase its sparkling wine
and award-winning Trius Red at a celebrity pre-Oscar party in Hollywood in March 2016. In Western Canada, our
Sandhill Winery in Kelowna, B.C. celebrated its second year with solid increases in visitors to the winery and strong
6
| ANDREW PELLER LIMITED 2016
sales growth. 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 export business continues to flourish with our wines now sold in 24 countries. More than thirty Michelin Star
restaurants have chosen Peller Estates Icewine, including top renowned culinary establishments such as Gordon
Ramsay, Joël Robuchon and Hakkasan, while a number of the world’s finest retailers including Selfridges, Harrods
and Harvey Nichols in London, England stock our products. They are also served on Celebrity, P&O and Cunard
cruise ships, offered inflight on Air Canada business class flights, as well as in Montreal’s Maple Leaf Airport
Lounge.
An Exciting Future
The Canadian wine business remains strong and growing, driven by increased consumption by consumers who have
adopted wine as their beverage of choice, the widely reported health benefits of moderate wine consumption, and
those who favour the more sophisticated experience wine delivers. For the year ended March 31, 2016 consumption
of wine in our markets rose by approximately 3.0% following a 3.5% increase in fiscal 2015, while Canadian-made
wines experienced an increase in market share to 38.0% from 37.4% in fiscal 2015. The Company’s share of our
Canadian markets was 14.4% in fiscal 2016, up from 14.1% in fiscal 2015.
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 in the past.
Organic growth will continue to be driven by market share gains, the introduction of new products and packaging
formats, and continuing success in our well-developed trade channels. We also continue to prudently evaluate
accretive acquisition opportunities that expand and complement our presence within the Canadian wine market. Since
1995 we have successfully integrated fourteen acquisitions for a total investment of approximately $113.8 million,
and all have made a solid contribution to our growth and performance.
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 believe our growth and strong operating performance will continue, 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.
John E. Peller
President and CEO
Randy A. Powell
Chairman
ANDREW PELLER LIMITED 2016 | 7
The Year’s Top Awards
Ontario VQA
In fiscal 2016, VQA brands in
Eastern Canada received a total of
142 MEDALS
Thirty Bench
2015 Small Winery of the Year
WineAlign Awards
Trius
2015 Ontario Winery of the Year
WineAlign Awards
Award winners in the Lieutenant
Governor’s Award for Excellence in
Ontario Wines included:
• 2013 Andrew Peller Signature Series
Sauvignon Blanc
• 2013 Peller Estates Private Reserve
Gamay Noir
• 2013 Thirty Bench Small Lot
Riesling “Wild Cask”
The Canadian Winery of the Year Award is the highest
distinction a winery can receive in the Canadian
wine industry. With 1,408 wines being reviewed from
205 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.
Other 2015 WineAlign Awards included:
PLATINUM AWARD
• 2013 Thirty Bench Small Lot
Riesling “Triangle Vineyard”
GOLD AWARDS
• Trius Showcase Sparkling
Blanc de Noir
• 2013 Trius Showcase Vidal Icewine
• 2013 Trius Showcase Outlier
Gewürztraminer
• 2012 Trius Showcase
Red Shale Cabernet Franc
• 2012 Andrew Peller Signature Series
Cabernet Franc
• 2013 Peller Estates Private Reserve
Cabernet Franc
• 2013 Thirty Bench Small Lot
Riesling “Wild Cask”
• 2013 Thirty Bench Small Lot
Gewürztraminer
• Emma Garner
2015 Winemaker of the Year
Ontario Wine Awards
• 2013 Andrew Peller
Signature Series
Sauvignon Blanc
2015 White Wine of the Year
Ontario Wine Awards
• Trius Brut won
Best Canadian Sparkling
at the Champaign &
Sparkling Wine World
Championship in
London, UK.
The Year’s Top Awards
British Columbia VQA
In fiscal 2016, VQA brands in Western Canada
received a total of
179 MEDALS
DOUBLE GOLD
• 2013 Red Rooster
Reserve Meritage
Best of BC Wine Awards
2016 by Okanagan Life
Gold awards from the
2016 Pacific Rim Wine Competition
included:
• 2015 Red Rooster Pinot Gris
• 2015 Sandhill Pinot Gris
• 2015 Sandhill Rosé
• 2012 Red Rooster
Reserve Merlot
2016 Lieutenant
Governor’s Award for
Excellence
DOUBLE GOLD
• 2015 Red Rooster
Red Blend
2016 Los Angeles
International Wine and
Spirits Competition
Other Gold awards from various
competitions included:
• 2014 Sandhill Gamay Noir
2016 All Canadian Wine
Championships
• 2014 Wayne Gretzky Okanagan
Signature Series Pinot Noir
2016 All Canadian Wine
Championships
• 2014 Conviction Pinot Grigio
2015 Grand Harvest Awards
• 2014 Conviction Sovereign Opal
2015 Grand Harvest Awards
• 2015 Peller Family Series
Pinot Blanc
2016 Okanagan Spring Wine Festival
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three months and year ended March 31, 2016
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, 2016 in comparison with
those for the three months and year ended March 31, 2015. This discussion is prepared as of June 15, 2016 and
should be read in conjunction with the audited annual consolidated financial statements and accompanying notes
contained therein for the years ended March 31, 2016 and 2015. Additional information relating to Andrew Peller
Limited, including the audited consolidated financial statements, MD&A and Annual Information Form for the years
ended March 31, 2016 and March 31, 2015, is available on www.sedar.com. The financial years ending March 31,
2017, March 31, 2016, March 31, 2015, and March 31, 2014 are referred to as “fiscal 2017”, “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 MD&A 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.
OVERVIEW
The Company’s 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. Furthermore, the Company’s product portfolio covers the complete
spectrum of price levels within the Canadian wine market. 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 2016
The Company is focused on initiatives to reduce costs and enhance its production efficiencies through a continual
review of its operations and 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 2, 2016 the Company’s Board of Directors approved a 9% increase in common share dividends for
shareholders of record on June 30, 2016 payable on July 8, 2016. The annual amount of dividends on Class A Shares
was increased to $0.490 per share from $0.450 per share and the dividends on Class B Shares was increased to
$0.426 per share from $0.391 per share. APL currently designates all dividends paid as “eligible dividends” for
purposes of the Income Tax Act (Canada), unless indicated otherwise.
In February 2016, the Government of Ontario’s Premier Advisory Council completed its review of the beverage
alcohol retailing and distribution system in Ontario. The recommendations will result in issuance of 150 new wine
licenses over the next ten years to allow for the sale of both imported and domestic wine in grocery stores. Initially,
70 licenses will be issued, 35 of which will allow for the sale of imported and domestic wine. The Company will
have immediate access to these stores as an extension to its current distribution channel of independent retail stores.
The remaining 35 licenses will carry only Ontario Vintners Quality Alliance (“VQA”) wine for an initial period of
three years, during which the Company will not have access to sell in these stores. After the three-year period, these
licenses will automatically permit the sale of all wine. The Company has also committed to move at least 14 of its
100 independent retail locations to inside the main aisles of the grocery store by May 2017. These stores will be co-
located next to beer and will also feature other Ontario VQA wines. The Company is not required to move its
remaining independent retail locations and wine licenses will not be granted to grocery stores where the Company
already has a winery retail store. This project is still in its early stages and at this point the Company doesn’t
anticipate material impact as the increase in sales due to being located in the stores is expected to compensate for
potential lost sales due to providing shelf space to other wineries and higher tax rates imposed on these locations.
On December 3, 2015 the Company announced that it had been awarded “Canadian Wine Producer of the Year” by
the International Wine and Spirit Competition (“IWSC”). Established in 1969, the IWSC was the first competition to
seek out the best wines, spirits and liqueurs from around the globe. Now one of the world’s foremost wine
competitions, the IWSC’s panel of carefully selected industry experts comprised of Masters of Wine, wine buyers,
sommeliers, qualified wine educators and respected wine journalists judges wines from more than 90 countries in a
rigorous seven-month process that includes a double-blind tasting as well as chemical and microbiological analysis.
An IWSC award is recognized internationally as a badge of excellence and quality.
On October 7, 2015 the Company announced that its GVI subsidiary had been recognized by Clean50 as one of its
Top 15 Projects for GVI’s innovative approach to environmental sustainability. Canada’s Clean50 annually
recognizes Canada’s leaders in sustainability for their contributions over the prior two years. The Clean50 Top15
Projects recognize those projects completed in the prior two years based on their innovation. The award-winning
project for GVI has identified opportunities to save significant amounts of water, electricity and natural gas while at
the same reducing the use of approximately 27 hectares of vineyards to produce the same quantity of finished
product.
On September 4, 2015 the Company announced that it had filed planning documents for the development of the new
Wayne Gretzky Estate Winery and Craft Distillery in Niagara-on-the-Lake, Ontario. Located on land adjacent to the
Company’s Trius Winery, the proposed 15,000 square foot facility will include a winery, craft distillery, barrel aging
cellars, tasting rooms, retail and hospitality facilities, all surrounded by landscaping and vineyards. The Company
established its strategic alliance with the Wayne Gretzky Estate Winery in 2011, and has generated significant growth
in their brands to where their wines are now among the top-ten best sellers across Canada. The new winery is
expected to open in the spring of 2017 and will add to the significant investments the Company has made in its Peller
Estates, Trius, Thirty Bench, Sandhill and Red Rooster estate wineries.
ANDREW PELLER LIMITED 2016 | 11
On April 1, 2015 the Company adopted International Accounting Standards Board (IASB) amendments to IAS 16 –
Property, Plant, and Equipment, and IAS 41 – Agriculture, which require bearer plants to be classified as property,
plant, and equipment and accounted for under IAS 16. The Company has determined that grape vines controlled by
the Company are within the scope of these amendments. While the amended standards are effective for annual
periods beginning on or after January 1, 2016, early application of these standards is permitted. The Company elected
to apply these amendments effective April 1, 2015. Comparative period information was re-stated beginning April 1,
2014 to reflect the adoption of these amendments.
In 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.
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, 2016 consumption of wine in Canada (excluding Quebec, where the Company does not
participate and excluding the refreshment wine category) rose by 3% after increasing by 3.5% in fiscal 2015.
Imported wines accounted for 61.1% of total volume in fiscal 2016 down from 61.7% in fiscal 2015. Canadian-made
wines experienced an increase in market share from 37.4% in fiscal 2015 to 38% in fiscal 2016. The Company’s
share of the total Canadian market in fiscal 2016 was 14.4% compared to 14.1% in 2015.
The 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 from 11.5% to 12.1%
for BC VQA wines and decreased from 12.1% to 11.8% for Ontario VQA wines due to the short crop in Ontario. The
Company carries tight inventory levels on VQA wines whereas other VQA wineries had excess stock that they could
sell during the short crop year and gain share relative to the Company.
Red table wines continued to grow in popularity with total Canadian volume sales rising 3.7% in fiscal 2016
compared to 4.4% in 2015. Volume sales of the Company’s red wine portfolio increased 5.3% in fiscal 2016 after
increasing by 8.2% in fiscal 2015. Continued strong growth in the red segment of the market relates to the growth of
the Company’s Black Cellar brand which is a red focused wine brand. Volume sales of white table wines in Canada
rose 3.7% in fiscal 2016 versus 4.7% in fiscal 2015 while the Company’s sales of white table wines were up 5.3% in
fiscal 2016 compared to 5.8% in fiscal 2015.
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| ANDREW PELLER LIMITED 2016
Results of Operations
For the year ended March 31,
(in $000, except per share amounts)
Sales
Gross margin
Gross margin (% of sales)
Selling and administrative expenses
EBITA
Net unrealized (loss) gain on derivative financial instruments
Other income (expenses)
Adjusted earnings
Net earnings
Earnings per share – basic and diluted - Class A
Earnings per share – basic and diluted - Class B
Dividend per share – Class A (annual)
Dividend per share – Class B (annual)
2016
2015 1
2014 1
$ 334,263
$ 315,697
$ 297,824
122,964
114,869
107,869
36.8%
82,048
40,916
(1,558)
40
20,322
19,199
$1.38
$1.20
$0.450
$0.391
36.4%
79,685
35,184
(572)
301
15,425
15,224
$1.09
$0.96
$0.420
$0.365
36.2%
74,253
33,616
750
(78)
13,982
13,437
$0.97
$0.84
$0.400
$0.348
1. Restated to reflect the early adoption of the amendments to IAS 16 and IAS 41.
Sales for the year ended March 31, 2016 increased 5.9% compared to fiscal 2015 due to strong organic growth as
well as the introduction of new products and categories. Sales growth was broad based across the majority of the
Company’s products and markets, including its two wine import and marketing agencies and its personal
winemaking business.
The Company defines gross margin as gross profit excluding amortization. Gross margin as a percentage of sales
improved to 36.8% for the year March 31, 2016 compared to 36.4% in fiscal 2015. Gross margin in fiscal 2016
benefited from the positive impact of the Company’s cost control initiatives to improve productivity and raw material
cost savings, which offset the negative impact of the weak Canadian dollar compared to the prior year, as well as
lower discounting of selling prices in Ontario related to a short crop resulting from the prior two unusually cold
winters. In addition, the Company incurred a one-time $1.7 million charge to cost of sales mostly in the fourth
quarter due to quality issues in certain imported wines used to produce its International Canadian Blended (“ICB”)
value-priced wines. Management is focused on efforts to further enhance production efficiency and productivity.
Selling and administrative expenses in fiscal 2016 were higher than the prior year, however, as a percentage of sales,
selling and administrative expenses improved to 24.5% of revenues from 25.2% of revenues in the prior year. The
Company is focused on ensuring selling and administrative expenses are tightly controlled, however it expects selling
expenses will increase in fiscal 2017 to support the launch of additional new products and the new Wayne Gretzky
Estate Winery and Craft Distillery.
ANDREW PELLER LIMITED 2016 | 13
Earnings before interest, amortization, net unrealized gains and losses on derivative financial instruments, other
(income) expenses, and income taxes (“EBITA”) were $40.9 million for the year March 31, 2016, an increase of
16.3% compared to $35.2 million last year. The increase in EBITA is primarily the result of the higher sales and
improved gross margin in fiscal 2016.
Interest expense decreased for the year March 31, 2016 compared to the prior year due to lower interest rates charged
on bank debt and lower debt levels.
The Company recorded a net unrealized non-cash loss in fiscal 2016 and fiscal 2015 related to mark-to-market
adjustments on interest rate swaps and foreign exchange contracts. The increase in the net unrealized loss in fiscal
2016 is due to the improvement in the Canadian dollar at March 31, 2016, following sharp declines in value
throughout the latter half of the fiscal 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 consolidated statement of
earnings each reporting period. These instruments are considered to be effective economic hedges and have enabled
management to mitigate the short-term volatility of changing foreign exchange and interest rates.
Other income in fiscal 2016 and fiscal 2015 related primarily to income from the temporary expropriation of the
Company’s 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 net unrealized gains and losses on derivative financial
instruments, other (income) expenses and the related income tax effect, were $20.3 million for the year March 31,
2016 compared to $15.4 million in the prior year. Net earnings for the year ended March 31, 2016 were $19.2 million
or $1.38 per Class A Share compared to $15.2 million or $1.09 per Class A Share in fiscal 2015.
The Company believes that sales will continue to grow in fiscal 2017 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 2017 the higher average cost of U.S. dollar currency purchases may have a larger negative
impact on gross margins, although management believes this will be partially offset by the Company’s continued
ability to leverage scale and successful cost control initiatives to reduce distribution, operating and packaging
expenses and raw material cost savings.
The Company uses foreign exchange forward contracts to protect against changes in foreign currency rates and, as at
March 31, 2016, had locked in $19.5 million in U.S. dollar contracts at rates averaging $1.36 Canadian, €3.0 million
in Euro contracts at rates averaging $1.51 Canadian, and $4.1 million in Australian dollar contracts at rates averaging
$0.96 Canadian. These contracts expire at various dates through December 31, 2016.
Quarterly Performance
The following table outlines key quarterly highlights.
(in $000, except per share amounts)
Q4 16
Q3 16
Q2 16
Q1 16
Q4 151
Q3 151
Q2 151
Q1 151
Sales
Gross margin
$74,170
$91,775
$85,200
$83,118
$68,791
$84,630
$82,759
$79,517
25,160
33,277
32,716
31,811
24,576
31,152
29,990
29,151
Gross margin (% of sales)
33.9%
36.3%
38.4%
38.3%
35.7%
36.8%
36.2%
36.7%
EBITA
3,614
12,445
12,011
12,846
4,635
11,024
9,507
10,018
Net unrealized (loss) gain on financial
instruments
Other income (expenses)
Adjusted earnings
Net earnings (loss)
E.P.S. – Class A basic & diluted
(2,479)
(21)
191
(1,659)
$(0.12)
525
(68)
6,807
7,146
$0.51
711
68
6,447
7,023
$0.51
E.P.S. – Class B basic & diluted
1. Restated to reflect the early adoption of the amendments to IAS 16 and IAS 41.
$(0.11)
$0.44
$0.45
$0.42
14
| ANDREW PELLER LIMITED 2016
(315)
(622)
61
6,877
6,689
$0.48
115
886
510
$0.03
$0.03
(50)
72
5,666
5,682
$0.41
$0.36
1,225
(1,125)
71
4,079
5,038
$0.36
$0.32
43
4,794
3,994
$0.29
$0.25
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 2016 increased 7.8% compared to the same quarter of fiscal 2015 due primarily to
strong organic growth across most of the Company’s trade channels, including its network of retail outlets in Ontario,
its export markets, its two wine import and marketing agencies, provincial liquor control boards across the country,
and in its personal winemaking business. Gross margin for the three months ended March 31, 2016 was 33.9% of
sales, lower than 35.7% in the prior year’s fourth quarter. Gross margin in the fourth quarter of 2016 was impacted
by the one-time charge to cost of sales due to quality issues in certain imported wines used to produce its
International Canadian Blended (“ICB”) value-priced wines. Selling and administrative expenses increased in the
fourth quarter of fiscal 2016 due to the timing of marketing activities, support for recent new product launches, and
incentive programs related to the strong sales growth for the year. EBITA was $3.6 million for the three months
ended March 31, 2016, down from $4.6 million for the same quarter in fiscal 2015 due primarily to the one-time
charge to cost of sales and increase in selling and administrative expenses. The Company incurred adjusted earnings
for the three months ended March 31, 2016 of $0.2 million compared to adjusted earnings of $0.9 million in the same
prior year period. The Company incurred a net loss of $1.7 million or $0.12 per Class A share for the three months
ended March 31, 2016 compared to net earnings of $0.5 million or $0.03 per Class A Share in the fourth quarter of
fiscal 2015.
Liquidity and Capital Resources
As at
(in $000)
Current assets
Property, plant, and equipment
Intangibles
Goodwill
Total assets
March 31,
$
$
2016
150,867 $
108,929
11,040
37,473
308,309 $
$
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
1. Restated to reflect the early adoption of the amendments to IAS 16 and IAS 41.
79,202 $
48,202
1,529
5,947
102
15,591
157,736
308,309 $
$
March 31,
2015 1
146,764 $
104,951
12,331
37,473
301,519 $
77,782 $
52,269
1,447
6,165
506
15,975
147,375
301,519 $
March 31,
2014 1
146,127
104,945
13,209
37,473
301,754
101,563
38,328
268
6,132
910
16,003
138,550
301,754
Inventory increased at March 31, 2016 compared to March 31, 2015 due to a larger harvest compared to last year,
resulting in an increase in bulk wine, and an increase in finished goods as a result of the introduction of new
products. These increases have been partially offset by the one-time charge related to quality issues in certain
imported products used to produce the Company’s ICB value-priced wines which reduced inventories at year-end.
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, 2016 compared to March 31, 2015 due to the increase in sales during
fiscal 2016 which are predominantly with provincial liquor boards and to a lesser extent licensed establishments and
independent retailers of consumer made wine products. The Company had $14.9 million of accounts receivable with
provincial liquor boards at March 31, 2016, 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 $1.4 million at March 31, 2016, compared to $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.
ANDREW PELLER LIMITED 2016 | 15
Overall bank debt declined to $86.0 million as at March 31, 2016 compared to $89.0 million at March 31, 2015 as a
result of strong earnings and working capital management, and scheduled long-term debt repayments.
The following table outlines the Company’s contractual obligations:
As at March 31, 2016
(in $000)
Long-term debt
Leases and royalties
Pension obligations
Grape and bulk wine purchase
$
contracts
Bulk whiskey purchase
contracts
Interest rate swap
Foreign exchange forwards
< 1
year
4,106 $
5,001
841
102,955
624
113,527
1,722
35,011
2 - 3
years
8,212 $
5,793
1,034
85,648
605
101,292
3,027
-
4 - 5
years
40,440 $
3,113
734
> 5
years
-
7,991
1,463
Total
52,758
21,898
4,072
49,404
114,736
352,743
80
93,771
1,487
-
-
1,309
124,190
-
-
432,780
6,236
35,011
Total contractual obligations
$
150,260 $
104,319 $
95,258 $
124,190
474,027
The Company also has contractual commitments of $10.7 million to purchase property, plant and equipment and
expects to fund these commitments primarily through its cash flows from operations.
The ratio of debt to equity was 0.55:1 at March 31, 2016 compared to 0.60:1 at March 31, 2015. At March 31, 2016
the Company had unutilized debt capacity in the amount of $56.3 million on its operating loan facility.
On August 7, 2015, the Company amended its debt facilities to extend the maturity date to July 31, 2020 and reduce
the floating interest rate in relation to the one to six-month Canadian Dealer Offered Rate (CDOR) to CDOR plus an
applicable margin based on the Company’s leverage. For the year ended March 31, 2016, the applicable margin was
1.25%. The interest rate on the Company’s term loans remains fixed until July 31, 2020 as a result of interest rate
swaps.
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.
For the year ended March 31, 2016 the Company generated cash from operating activities, after changes in non-cash
working capital items, of $21.8 million compared to $25.8 million in the prior year. Higher earnings in fiscal 2016
were offset by an increase in inventory and accounts receivable.
Investing activities of $10.4 million were made in fiscal 2016 compared to $8.8 million in the prior year. Capital
expenditures in fiscal 2016 consisted of normal expenditures to sustain operations and the replanting of certain of the
Company’s vineyards, as well as certain costs incurred related to the development of the new Wayne Gretzky Estate
Winery and Craft Distillery. As at March 31, 2016, the Company had expended $3.1 million on this project.
Working capital as at March 31, 2016 increased to $71.7 million compared to $69.0 million at March 31, 2015.
Accounts receivable and inventory increased due to the sales growth and a larger harvest compared to fiscal 2015,
while bank indebtedness increased slightly. Shareholders’ equity as at March 31, 2016 was $157.7 million or $11.11
per common share compared to $147.4 million or $10.31 per common share as at March 31, 2015. The increase in
shareholders’ equity is due to the increase in net earnings partially offset by the payment of dividends and the
repurchase and cancellation of 100,000 Class A Shares.
16
| ANDREW PELLER LIMITED 2016
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, 2016
March 31, 2015
March 31, 2014
11,193,829
3,004,041
14,197,870
11,293,829
3,004,041
14,297,870
11,293,829
3,004,041
14,297,870
In February 2016, the Company repurchased and cancelled 100,000 Class A Shares from Jalger Limited, a related
party. The repurchase price was calculated by reference to the average closing market price of the Class A Shares for
a period of 20 business days preceding the repurchase date. The repurchase price of $2.3 million was first allocated to
capital stock based on the average per share carrying amount of the Class A Shares. The remaining amount was
allocated to retained earnings.
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 Company will also be entering the spirits category,
through its strategic alliance with Wayne Gretzky, and will introduce cider through its own brand labels.
The market for wine in Canada continues to grow due to a movement toward the consumption of wine 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 by 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 2017 and
fiscal 2018.
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 spirits, 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 2017 while gross margin dollars are expected to
remain stable. The higher costs of U.S. dollar currency purchases may have a negative impact on gross margin
percentage in fiscal 2017 which is expected to be partially offset by raw material cost savings and production
efficiencies.
ANDREW PELLER LIMITED 2016 | 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, Euro and Australian dollar
exchange rates. The Company does not enter into foreign exchange contracts for trading or speculative purposes.
These contracts are reviewed periodically. Based on the Company’s forecasts for foreign currency purchases and the
amount of foreign exchange forward contracts outstanding at March 31, 2016, each one percent change in the value
of the U.S. dollar, Euro and Australian dollar will not have a material 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.
18
| ANDREW PELLER LIMITED 2016
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 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.
Federal and provincial governments impose excise, other taxes and mark-ups 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, taxes or mark-ups 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 some 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. Although significant price discounting may occur in
Canada beyond current levels, the Company believes that its product quality, advertising and promotional support
along with its competitive pricing strategies will effectively mitigate the impact of this to APL.
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 lessee 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.
ANDREW PELLER LIMITED 2016 | 19
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.
Non-IFRS Measures
The Company utilizes EBITA (defined as earnings before interest, amortization, net unrealized gains and losses on
derivative financial instruments, other (income) expenses, 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 (loss)
Add: Interest
Provision for (recovery of) income taxes
Amortization of plant and equipment used in production
Amortization of equipment and intangibles used in selling and
administration
Net unrealized loss on derivative financial instruments
Other (income) expenses
2016
20151
2016
20151
$ (1,659)
$ 510
$ 19,199
$ 15,224
786
(569)
1,544
1,012
2,479
21
1,125
-
1,500
993
622
(115)
3,575
6,916
6,069
3,639
1,558
(40)
4,847
5,548
5,859
3,435
572
(301)
EBITA
1. Restated to reflect the early adoption of the amendments to IAS 16 and IAS 41.
$ 3,614
$ 4,635
$ 40,916
$ 35,184
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,
(in $000)
Sales
Three months
Year
2016
20151
2016
20151
$ 74,170
$ 68,791
$ 334,263
$ 315,697
Less: Cost of goods sold, excluding amortization
49,010
44,215
211,299
200,828
Gross margin
$ 25,160
$ 24,576
$ 122,964
$ 114,869
Gross margin (% of sales)
1. Restated to reflect the early adoption of the amendments to IAS 16 and IAS 41.
33.9%
35.7%
36.8%
36.4%
20
| ANDREW PELLER LIMITED 2016
The Company calculates adjusted earnings as follows.
For the three months and year ended March 31,
(in $000)
Net earnings (loss)
Net unrealized loss on derivative financial instruments
Other (income) expenses
Income tax effect of the above
Adjusted earnings
Three months
Year
2016
20151
2016
20151
$ (1,659)
$ 510
$ 19,199
$ 15,224
2,479
21
(650)
$ 191
622
(115)
(131)
1,558
(40)
(395)
572
(301)
(70)
$ 886
$ 20,322
$ 15,425
1. Restated to reflect the early adoption of the amendments to IAS 16 and IAS 41.
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.
Transactions with related parties
The Company is controlled by Jalger Limited, which owns 66.5% of the Company’s Class B voting shares. No
individual has sole voting power or control in respect of the shares of the Company owned by Jalger Limited. In
February 2016, the Company repurchased and cancelled 100,000 Class A Shares from Jalger Limited, a related party.
This transaction was approved by the Company’s Board of Directors.
The compensation expense recorded for directors and members of the Executive Management Team of the Company
is shown below:
For the year ended March , 31
(in $000)
Compensation and short-term benefits
Post-employment benefits
Payments to a share purchase plan
2016
4,939
$
248
409
5,596
$
2015
5,017
246
258
5,521
$
$
The compensation and benefits expense consists of amounts that will primarily be settled within twelve months.
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 could materially affect the Company’s
financial position or financial performance. The Company’s significant accounting policies are discussed in the notes
to the consolidated financial statements for the years ended March 31, 2016 and March 31, 2015. Critical estimates
inherent in these accounting policies are set out below.
Impairment of goodwill
Testing goodwill for impairment at least annually involves estimating the recoverable amount of the cash generating
units 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. The Company has concluded that a 10% change in any key assumptions in the
goodwill impairment test would not result in an impairment of goodwill as at March 31, 2016 and March 31, 2015.
ANDREW PELLER LIMITED 2016 | 21
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 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.
Biological Assets
During fiscal 2015, the Company measured biological assets, consisting of grape vines, at fair value less costs to sell.
Gains or losses arising from a change in fair value less costs to sell were included in the consolidated statement of
earnings in the period in which they arose.
Due to the adoption of the amendments to IAS 16 – Property, Plant, and Equipment and IAS 41 – Agriculture during
fiscal 2016 explained below, grape vines have been restated and are now measured at cost and amortized over the
useful lives in accordance with IAS 16. Consequently, management has determined that the estimates used to
measure grape vines no longer result in critical accounting estimates.
Recently Adopted Accounting Pronouncements
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 controls bearer plants consisting of grape vines and has elected to apply these amendments effective
April 1, 2015, which is prior to the mandatory effective date. The earliest comparative period presented in the
financial statements after adopting the amended standards began on April 1, 2014. The Company has elected to
measure bearer plants using their fair value on that date as their deemed cost.
The following tables summarize the impact of adopting the amendments to IAS 16, Property, Plant, and Equipment
and IAS 41, Agriculture:
Impact on the consolidated statements of earnings and
comprehensive income
Net earnings for the year
Net earnings per share
Basic and diluted
Class A shares
Class B shares
For the
year ended
March 31,
2015 -
as reported
Impact of
IAS 16 and
IAS 41
changes
For the
year ended
March 31,
2015 -
as restated
15,761
(537)
15,224
1.13
0.99
(0.04)
(0.03)
1.09
0.96
Net comprehensive income for the year
15,201
(537)
14,664
Recently Issued Accounting Pronouncements
In 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. These amendments are effective for first interim periods within annual periods
beginning on or after January 1, 2016. The Company is currently evaluating the potential impact of this standard.
In 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.
22
| ANDREW PELLER LIMITED 2016
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 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.
In 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.
In January 2016, the IASB issued IFRS 16, Leases, which will replace IAS 17, Leases and related Interpretations.
The new standard will be effective for fiscal years beginning on or after January 1, 2019, with early adoption
permitted provided the Company has adopted IFRS 15, Revenue from Contracts with Customers. The new standard
requires lessees to recognize a lease liability reflecting future lease payments and a “right-of-use asset” for virtually
all lease contracts, and record it on the statement of financial position, except with respect to lease contracts that meet
limited exception criteria. Given that the Company has significant contractual obligations in the form of operating
leases under IAS 17, there will be a material increase to both assets and liabilities upon adoption of IFRS 16, and
material changes to the timing of recognition of expenses associated with the lease arrangements. The Company is
analyzing the new standard to determine its impact on the Company’s consolidated balance sheet and consolidated
statement of earnings.
Evaluation of Disclosure Controls and Procedures and Internal Control over Financial Reporting
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 disclosures 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 presentation.
Designing, establishing and maintaining adequate internal controls over financial reporting is 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, 2016, 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 15, 2016, 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.
ANDREW PELLER LIMITED 2016 | 23
INDEPENDENT AUDITOR’S REPORT
June 15, 2016
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, 2016, March 31, 2015 and April 1, 2014 and the consolidated statements
of earnings, comprehensive income, changes in equity and cash flows for the years ended March 31, 2016 and March
31, 2015, 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, 2016, March 31, 2015 and April 1, 2014 and its financial performance and its
cash flows for the years ended March 31, 2016 and March 31, 2015 in accordance with International Financial
Reporting Standards.
Emphasis of matter
Without modifying our opinion, we draw attention to note 24 to the consolidated financial statements, which
describes the early adoption of IAS 16 - Property, Plant and Equipment, and IAS 41, Agriculture, related to the
accounting for biological assets.
Chartered Professional Accountants, Licensed Public Accountants
24
| ANDREW PELLER LIMITED 2016
Consolidated Balance Sheets
(in thousands of Canadian dollars)
Assets
Current assets
Accounts receivable (note 20)
Inventories (note 4)
Biological assets (note 6)
Prepaid expenses and other assets
Income taxes recoverable (note 14)
Property, plant and equipment (note 5)
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
Accumulated other comprehensive loss
$
$
$
March 31,
2016
March 31,
2015
(note 24 -
as restated)
April 1,
2014
(note 24 -
as restated)
$
28,223
119,666
1,196
1,782
-
150,867
108,929
11,040
37,473
$
25,616
117,812
1,129
2,207
-
146,764
104,951
12,331
37,473
22,693
120,751
1,062
1,381
240
146,127
104,945
13,209
37,473
308,309
$
301,519
$
301,754
$
33,701
36,772
1,553
2,425
645
4,106
79,202
48,202
1,529
5,947
102
15,591
150,573
$
32,522
36,712
1,460
1,902
992
4,194
77,782
52,269
1,447
6,165
506
15,975
154,144
6,967
154,605
(3,836)
157,736
7,026
143,847
(3,498)
147,375
54,407
37,371
1,391
-
1,002
7,392
101,563
38,328
268
6,132
910
16,003
163,204
7,026
134,462
(2,938)
138,550
$
308,309
$
301,519
$
301,754
Director
Director
The accompanying notes are an integral part of these consolidated financial statements.
ANDREW PELLER LIMITED 2016 | 25
Consolidated Statements of Earnings
For the years ended March 31, 2016 and March 31, 2015
(in thousands of Canadian dollars, except per share amounts)
2016
2015
(note 24 -
as restated)
Sales
Cost of goods sold, excluding amortization (note 16)
Amortization of plant and equipment used in production
$
$
334,263
211,299
6,069
315,697
200,828
5,859
109,010
79,685
3,435
4,847
21,043
572
(301)
116,895
82,048
3,639
3,575
27,633
1,558
(40)
26,115
20,772
7,181
(265)
6,916
5,379
169
5,548
$
19,199
$
15,224
$
$
1.38
1.20
$
$
1.09
0.96
Gross profit
Selling and administration (note 16)
Amortization of equipment and intangible assets used in selling and
administration
Interest
Operating earnings
Net unrealized loss on derivative financial instruments (note 20)
Other income (note 16)
Earnings before income taxes
Provision for (recovery of) income taxes (note 14)
Current
Deferred
Net earnings for the year
Net earnings per share (note 17)
Basic and diluted
Class A shares
Class B shares
The accompanying notes are an integral part of these consolidated financial statements.
26
| ANDREW PELLER LIMITED 2016
Consolidated Statements of Comprehensive Income
For the years ended March 31, 2016 and March 2015
(in thousands of Canadian dollars)
2016
2015
(note 24 -
as restated)
Net earnings for the year
$
19,199
$
15,224
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
(457)
119
(338)
(757)
197
(560)
Net comprehensive income for the year
$
18,861
$
14,664
The accompanying notes are an integral part of these consolidated financial statements.
ANDREW PELLER LIMITED 2016 | 27
Consolidated Statements of Changes in Equity
For the years ended March 31, 2016 and March 31, 2015
(in thousands of Canadian dollars)
Balance at April 1, 2014 - as
reported
Impact of IAS 16 and IAS 41
amendments (note 24)
Balance at April 1, 2014 - as
restated
Net earnings for the year (note 24 -
as restated)
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)
Balance at March 31, 2015
Balance at April 1, 2015
Net earnings for the year
Net actuarial losses (net of $119
deferred tax recovery)
(note 12)
Net comprehensive income for the
year
Issue price of repurchased shares
(note 15)
Excess of repurchase price over
average per share issue price
(note 15)
Dividends (Class A $0.450 per share,
Class B $0.391 per share)
Capital stock
Retained
earnings
Accumulated
other
comprehensive
loss
Total
shareholders’
equity
$
7,026
$
133,915
$
(2,938)
$
138,003
-
547
-
547
7,026
134,462
(2,938)
138,550
-
-
-
-
15,224
-
15,224
-
(560)
(560)
15,224
(560)
14,664
(5,839)
-
(5,839)
$
$
7,026
7,026
$
$
143,847
143,847
$
$
(3,498)
(3,498)
$
$
19,199
-
147,375
147,375
19,199
-
-
-
-
(338)
(338)
19,199
(338)
18,861
(59)
-
-
-
(2,195)
(6,246)
-
-
-
(59)
(2,195)
(6,246)
Balance at March 31, 2016
$
6,967
$
154,605
$
(3,836)
$
157,736
The accompanying notes are an integral part of these consolidated financial statements.
28
| ANDREW PELLER LIMITED 2016
Consolidated Statements of Cash Flows
For the years ended March 31, 2016 and March 31, 2015
(in thousands of Canadian dollars)
Cash provided by (used in)
Operating activities
Net earnings for the year
Adjustments for
Loss on disposal of property, plant and equipment
Amortization of plant, equipment and intangible assets
Interest expense
Provision for income taxes
Net unrealized loss on derivative financial instruments
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, plant and equipment
Purchase of intangible assets
Financing activities
Increase (decrease) in bank indebtedness
Issuance of long-term debt
Repayment of long-term debt
Deferred financing costs
Dividends paid
Repurchase of Class A shares (note 15)
Cash - Beginning and end of year
2016
2015
(note 24 -
as restated)
$
19,199
$
15,224
397
9,708
3,575
6,916
1,558
(675)
(404)
(3,524)
(6,658)
30,092
(8,299)
429
9,294
4,847
5,548
572
(724)
(404)
(4,476)
(3,237)
27,073
(1,236)
21,793
25,837
20
(10,401)
-
(10,381)
1,179
-
(4,088)
(96)
(6,153)
(2,254)
10
(8,466)
(369)
(8,825)
(21,885)
15,020
(3,760)
(617)
(5,770)
-
(11,412)
(17,012)
$
-
$
-
Supplementary information
Property, plant and equipment acquired that was unpaid in cash and included in
accounts payable and accrued liabilities
2,458
47
The accompanying notes are an integral part of these consolidated financial statements.
ANDREW PELLER LIMITED 2016 | 29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2016 and March 31, 2015
(in thousands of Canadian dollars, except per share amounts)
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).
The Company has adopted amendments to IAS 16, Property, Plant and Equipment (IAS 16), and IAS 41,
Agriculture (IAS 41), effective April 1, 2015 and accordingly has updated the significant accounting policies
with respect to property, plant and equipment and biological assets. Refer to note 24 for a summary of the
impact of adopting the amendments to IAS 16 and IAS 41 on the consolidated financial statements
These consolidated financial statements were approved by the Board of Directors for issue on June 15, 2016.
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.
Foreign currency translation
The financial statements are presented in Canadian dollars, which is the Company’s functional currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign
currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in currencies other than the Company’s functional currency are recognized in the consolidated
statements of earnings.
30
| ANDREW PELLER LIMITED 2016
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 facilities. 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.
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, vines and
vineyard infrastructure and machinery and equipment is calculated on the straight-line basis in amounts
sufficient to amortize the cost of buildings, vines and vineyard infrastructure and machinery and equipment over
their estimated useful lives as follows:
Buildings
Vines and vineyard infrastructure
Machinery and equipment
40 years
20 years
5 to 20 years
Vines and vineyard infrastructure amortization commences in the year the vineyard yields a crop that
approximates 50% of expected annual production.
ANDREW PELLER LIMITED 2016 | 31
Biological assets
At March 31, 2016, the Company measures biological assets, consisting of grapes grown on vineyards
controlled by the Company, at cost, which approximates fair value as there has been minimal biological
transformation since the initial cost incurred. The initial costs incurred are comprised of direct expenditures
required to enable the biological transformation of agricultural produce.
At the point of harvest, the fair value of biological assets is determined by reference to local market prices for
grapes of a similar quality and the same varietal. At this point, agricultural produce is measured at fair value less
cost to sell, which 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 statements
of earnings in the period in which they arise.
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.
Brands
Customers
Contract packaging
Software
Other
Amortization
method
n/a
straight-line
straight-line
straight-line
straight-line
Useful life
indefinite
10 - 20 years
10 years
5 years
5 years
Remaining
useful life
indefinite
4 - 9 years
3 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 impairment
in intangible assets for the years ended March 31, 2016 and March 31, 2015.
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, 2016 and March 31, 2015.
32
| ANDREW PELLER LIMITED 2016
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 loss 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, and financial assets and liabilities at fair value through profit or loss.
The Company has chosen to not apply hedge accounting to any of its derivative financial instruments. As a
result of this policy choice, these derivative 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 cost 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.
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 value 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.
ANDREW PELLER LIMITED 2016 | 33
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 dispose 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.
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 the chief operating decision maker allocates resources and assesses performance of the Company
on a consolidated basis. Furthermore, 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.
34
| ANDREW PELLER LIMITED 2016
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 loss
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. Other comprehensive loss
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 other comprehensive loss in the period
incurred.
Equity
The Company separately presents changes in equity related to capital stock, retained earnings and accumulated
other comprehensive loss in the consolidated statements of changes in equity.
Recently adopted accounting pronouncements
In May 2014, the IASB issued amendments to IAS 16 and IAS 41, which require 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 controls bearer plants consisting of grape vines and has elected to apply these amendments
effective April 1, 2015, which is prior to the mandatory effective date. The earliest comparative period
presented in the consolidated financial statements after adopting the amended standards began on April 1, 2014.
The Company has elected to measure bearer plants using their fair value on that date as their deemed cost in
accordance with the transitional provisions. Refer to note 24 for details.
ANDREW PELLER LIMITED 2016 | 35
Recently issued accounting pronouncements
In December 2014, the IASB issued amendments to IAS 1, Presentation of Financial Statements, which clarify
the concept of materiality as it applies to information disclose 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. These amendments are effective for first interim periods within
annual periods beginning on or after January 1, 2016. The Company is currently evaluating the potential impact
of this standard.
In 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.
In 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.
In January 2016, the IASB issued IFRS 16, Leases, which will replace IAS 17, Leases and Related
Interpretations. The new standard will be effective for fiscal years beginning on or after January 1, 2019, with
early adoption permitted provided the Company has adopted IFRS 15, Revenue from Contracts with Customers.
The new standard requires lessees to recognize a lease liability reflecting future lease payments and a “right-of-
use asset” for virtually all lease contracts, and record it on the statement of financial position, except with
respect to lease contracts that meet limited exception criteria. Given that the Company has significant
contractual obligations in the form of operating leases (note 20) under IAS 17, there will be a material increase
to both assets and liabilities on adoption of IFRS 16, and material changes to the timing of recognition of
expenses associated with the lease arrangements. The Company is analyzing the new standard to determine its
impact on the Company’s consolidated balance sheets and consolidated statements of earnings.
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 dates of the
consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods
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:
36
| ANDREW PELLER LIMITED 2016
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. Management has concluded that a 10% change in any key assumption in the
goodwill impairment test would not result in an impairment of goodwill as at March 31, 2016 and March 31,
2015.
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 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 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
2016
9,307
64,697
45,662
119,666
635
$
$
$
2015
8,726
63,777
45,309
117,812
1,191
$
$
$
Inventory writedowns recognized as an expense amounted to $3,286 (2015 - $1,700).
The cost of inventories recognized as an expense and included in cost of goods sold, excluding amortization,
was $208,013 (2015 - $198,794).
ANDREW PELLER LIMITED 2016 | 37
5
Property, plant and equipment
Vines,
vineyard
land and
infrastructure
(note 24 -
as restated)
Buildings
Machinery and
equipment
Total
40,446 $
(5,474)
43,033 $
(15,793)
101,688 $
(63,732)
189,944
(84,999)
34,972
27,240
37,956
104,945
349
(334)
(1,316)
447
-
(1,116)
7,606
(105)
(5,564)
8,441
(439)
(7,996)
Land
4,777 $
-
4,777
39
-
-
4,816 $
33,671 $
26,571 $
39,893 $
104,951
4,816 $
-
4,816
40,461 $
(6,790)
43,480 $
(16,909)
107,632 $
(67,739)
196,389
(91,438)
33,671
26,571
39,893
104,951
-
-
-
359
(377)
(1,348)
1,882
(3)
(1,173)
10,571
(37)
(5,896)
12,812
(417)
(8,417)
4,816 $
32,305 $
27,277 $
44,531 $
108,929
4,816 $
-
4,816 $
40,374 $
(8,069)
45,343 $
(18,066)
116,585 $
(72,054)
207,118
(98,189)
32,305 $
27,277 $
44,531 $
108,929
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
Year ended March 31, 2016
Additions
Disposals
Amortization
Closing net carrying amount
At March 31, 2016
Cost
Accumulated amortization
Net carrying amount
$
$
$
$
$
$
Included in machinery and equipment are assets amounting to $4,507 (2015 - $199) that are under development
and are not being amortized.
Contractual commitments to purchase property, plant and equipment were $10,687 as at March 31, 2016 (2015 -
$477).
Included in machinery and equipment are assets with a net carrying amount of $124 (2015 - $184) that were
purchased under a finance lease.
38
| ANDREW PELLER LIMITED 2016
6 Biological assets
Biological assets consist of 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, 2016, the Company harvested grapes valued at $6,479 (2015 - $5,374).
The changes in the carrying amount of biological assets are as follows:
2016
2015
(note 24 -
as restated)
Carrying amount - Beginning of year
$
1,129
$
1,062
Net increase in fair value less costs to sell due to biological
transformation
Transferred to inventory on harvest
Net gain
Biological assets
6,546
(6,479)
67
5,441
(5,374)
67
$
1,196
$
1,129
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.
ANDREW PELLER LIMITED 2016 | 39
7
Intangible assets
Brands -
indefinite
life
Customers
Contract
packaging
Software
Other
Total
At March 31, 2014
Cost
Accumulated amortization and
impairment
$
4,175 $
11,147 $
1,100 $
1,713
$
1,917
$
20,052
(200)
(4,456)
(643)
(157)
(1,387)
(6,843)
Net carrying amount
3,975
6,691
457
1,556
530
13,209
Year ended March 31, 2015
Additions
Amortization
-
-
-
(700)
-
(110)
420
(356)
-
(132)
420
(1,298)
Closing net carrying amount $
3,975 $
5,991 $
347 $
1,620 $
398
$
12,331
At March 31, 2015
Cost
Accumulated amortization and
impairment
$
4,175 $
11,147 $
1,100 $
2,133
$
1,917
$
20,472
(200)
(5,156)
(753)
(513)
(1,519)
(8,141)
Net carrying amount
3,975
5,991
347
1,620
398
12,331
Year ended March 31, 2016
Additions
Amortization
-
-
-
(665)
-
(110)
-
(384)
-
(132)
-
(1,291)
Closing net carrying amount $
3,975 $
5,326 $
237 $
1,236
$
266
$
11,040
At March 31, 2016
Cost
Accumulated amortization and
$
impairment
4,175 $
11,147 $
1,100 $
2,133
$
1,917
$
20,472
(200)
(5,821)
(863)
(897)
(1,651)
(9,432)
Net carrying amount
$
3,975 $
5,326 $
237 $
1,236
$
266
$
11,040
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
2016
3,134
10,530
23,809
$
37,473
$
2015
3,134
10,530
23,809
37,473
$
$
40
| ANDREW PELLER LIMITED 2016
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
2016
11%
5 years
4%
2015
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
10 Accounts payable and accrued liabilities
Trade payables
Accrued liabilities
Deferred revenue
Foreign exchange forward contracts liability (note 20)
Restructuring provision
Deferred income (note 13)
2016
$
33,701
$
2015
32,522
July 31,
2020
$90,000
CDOR + 1.25%
$56,299
April 28,
2019
$90,000
CDOR + 1.50%
$55,400
$
$
2016
25,201
9,703
338
1,126
-
404
$
36,772
$
2015
26,248
9,657
319
-
84
404
36,712
ANDREW PELLER LIMITED 2016 | 41
11 Long-term debt
Term loan
Other
Finance lease obligation
Less: Financing costs
Less: Current portion
$
$
2016
52,333
425
-
52,758
450
52,308
4,106
$
48,202
$
2015
56,333
531
88
56,952
489
56,463
4,194
52,269
On April 28, 2014, the Company amended its debt facilities including the term loan. The terms of the debt
facilities require monthly principal repayments until maturity of $333. Interest is based on the one to six-month
CDOR rates plus an applicable margin based on the Company’s leverage. On August 7, 2015, the Company
amended its debt facilities to extend the maturity date from April 28, 2019 to July 31, 2020 and reduce the
applicable margin based on the Company’s leverage, as defined by the amended credit agreement. As at March
31, 2016, the applicable margin was 1.25% (2015 - $1.50%).
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 at 2.16%, plus applicable margin from September 1, 2015 to
April 26, 2019. The Company’s previous interest rate swap that fixed the interest rate on the term loan at 3.18%,
plus applicable margin matured on August 31, 2015.
On December 2, 2015, the Company entered into a new interest rate swap with an effective date of April 30,
2019 and a termination date of July 31, 2020 to fix the interest rate on the term loan at 1.65%, plus applicable
margin.
The Company also has a $15,000 term facility, which is available until July 31, 2020 and can be drawn on for
the purpose of making capital expenditures. No amounts were drawn on this facility at March 31, 2016.
The Company and its subsidiaries have provided their assets as security for this loan.
Interest expense on long-term debt during the year was $2,297 (2015 - $2,945).
12 Post-employment benefits
Defined contribution plans
The total expenses for the defined contribution savings plans were $1,432 (2015 - $1,388).
42
| ANDREW PELLER LIMITED 2016
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’s 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’s 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 2016 | 43
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
Benefits paid
Fair value - End of year
Plan obligations
Accrued benefit obligations - Beginning of year
Total current service cost
Interest cost
Benefits paid
Remeasurements
Experience gain
Loss (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
Net benefit plan expense
Amount recognized in other comprehensive loss
Net actuarial (loss) gain
$
$
$
$
$
$
$
Pension
benefits
Other post-
employment
benefits
2016
Total
$
21,030 $
- $
21,030
(1,044)
761
1,471
(1,252)
-
-
111
(111)
(1,044)
761
1,582
(1,363)
20,966 $
- $
20,966
24,341 $
600
875
(1,252)
(496)
16
2,854 $
89
104
(111)
-
(107)
27,195
689
979
(1,363)
(496)
(91)
24,084 $
2,829 $
26,913
3,118 $
2,829 $
5,947
Pension
benefits
Other post-
employment
benefits
600 $
114
714 $
(564) $
89 $
104
193 $
107 $
122 $
2016
Total
689
218
907
(457)
1,565
Expected contributions for the year ending March 31, 2017 $
1,443 $
Weighted average duration of the defined benefit
obligations in years
12.8
12.2
12.7
44
| ANDREW PELLER LIMITED 2016
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
Fair value - End of year
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
Net benefit plan expense
Amount recognized in other comprehensive loss
Net actuarial loss
$
$
$
$
$
$
$
Pension
benefits
Other post-
employment
benefits
2015
Total
$
19,010 $
- $
19,010
763
846
1,521
3
(1,113)
-
-
111
-
(111)
763
846
1,632
3
(1,224)
21,030 $
- $
21,030
22,620 $
3
570
997
(1,113)
(79)
1,343
2,522 $
-
75
112
(111)
-
256
25,142
3
645
1,109
(1,224)
(79)
1,599
24,341 $
2,854 $
27,195
3,311 $
2,854 $
6,165
Pension
benefits
Other post-
employment
benefits
570 $
151
721 $
75 $
112
187 $
(501) $
(256) $
2015
Total
645
263
908
(757)
1,590
Expected contributions for the year ending March 31, 2016 $
1,463 $
127 $
Weighted average duration of the defined benefit
obligations in years
13.5
12.6
13.4
ANDREW PELLER LIMITED 2016 | 45
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
2016
2015
3.6%
3.8%
2.5%
5%
60 - 65 years
2.0%
CPM-B 2014
Private table
4.4%
3.6%
3.0%
5%
60 - 65 years
2.0%
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.
2016
Pension
benefits
Other post-
employment
benefits
Pension
benefits
2015
Other post-
employment
benefits
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
$
(2,721) $
3,440
(277) $
414
(2,915) $
3,670
832
(717)
372
(335)
12
(11)
-
-
1,200
(1,048)
434
(393)
(275)
444
12
(11)
-
-
At March 31, 2016, the accumulated actuarial losses recognized in other comprehensive loss were $5,183
(2015 - $4,726).
Plan assets
The plan assets consist of the following:
Mutual funds
Fixed income
Equity
$
$
15,127
5,839
20,966
72%
28
$
100%
$
15,192
5,838
21,030
2016
2015
72%
28
100%
46
| ANDREW PELLER LIMITED 2016
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 (recovery of) deferred income taxes
$
$
$
2016
506
404
102
$
$
2015
910
404
506
2016
2015
(note 24 -
as restated)
7,210
(29)
$
7,181
(243)
(22)
(265)
5,425
(46)
5,379
195
(26)
169
Total provision for income taxes
$
6,916
$
5,548
The Company’s income tax expense consists of the following:
Provision for income taxes at blended statutory rate of 25.90% (2015
- 25.95%)
Permanent differences and non-deductible items
Future income tax rate changes
Other
2016
2015
(note 24 -
as restated)
$
$
$
6,764
222
(22)
(48)
5,390
228
(26)
(44)
6,916
$
5,548
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 2016 | 47
The movement of the deferred income tax account is as follows:
At beginning of year
Provision for (recovery of) deferred income taxes in net earnings
Recovery of deferred income taxes in other comprehensive loss
At end of year
2016
2015
(note 24 -
as restated)
$
$
$
15,975
(265)
(119)
16,003
169
(197)
15,591
$
15,975
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
March 31, 2014 (note 24 - as restated)
(Recovery) provision in net earnings
$
12,431 $
372
March 31, 2015 (note 24 - as restated)
(Recovery) provision in net earnings
12,803
(122)
2,788 $
(218)
2,570
(283)
3,112 $
(19)
3,093
78
Total
18,331
135
18,466
(327)
March 31, 2016
$
12,681 $
2,287 $
3,171 $
18,139
Deferred income tax asset
March 31, 2014 (note 24 - as restated)
(Recovery) provision in net earnings
Recovery in other comprehensive loss
March 31, 2015 (note 24 - as restated)
(Recovery) provision in net earnings
Recovery in other comprehensive loss
Fair value
change on
derivatives
Post-
employment
benefits
$
(306) $
(149)
-
(455)
(407)
-
(1,602) $
189
(197)
(1,610)
175
(119)
Other
Total
(420) $
(6)
-
(426)
294
-
(2,328)
34
(197)
(2,491)
62
(119)
March 31, 2016
$
(862) $
(1,554) $
(132) $
(2,548)
48
| ANDREW PELLER LIMITED 2016
15 Capital stock
Authorized
Unlimited Class A shares, non-voting
Unlimited Class B shares, voting
Issued
Class A shares, non-voting
Class B shares, voting
Number
of shares
11,193,829
3,004,041
$
14,197,870
$
2016
Amount
6,567
400
6,967
Number
of shares
11,293,829
3,004,041
$
14,297,870
$
2015
Amount
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.
During 2016, the Company repurchased and cancelled 100,000 Class A non-voting shares from Jalger Limited,
a related party. This transaction was approved by the Company’s Board of Directors. The repurchase price was
calculated by reference to the average closing market price of the Class A shares for a period of 20 business
days preceding the repurchase date. The repurchase price was first allocated to capital stock based on the
average per share carrying amount of the Class A shares. The remaining amount was allocated to retained
earnings. A summary of the transaction in Class A shares is as follows:
Shares outstanding at the beginning of the year
Repurchase
Excess of repurchase price over average per share issue price
Number
of shares
$
11,293,829
(100,000)
-
Amount
6,626
(2,254)
2,195
11,193,829
$
6,567
Quarterly dividends of $0.1125 (previously $0.1050) per Class A share and $0.0978 (previously $0.0913) per
Class B share were approved by the Board of Directors on June 3, 2015 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, 2016 and
March 31, 2015, there were no preference shares issued or outstanding.
ANDREW PELLER LIMITED 2016 | 49
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 2016, expensed $227 (2015 - $259) related to the employee program and $43
(2015 - $35) relating to the directors 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. During
2016, the Company expensed $366 (2015 - $223) under this incentive program.
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
Other (income) expenses are as follows:
Ongoing maintenance costs related to Port Moody winery facility (a)
Income related to Port Moody winery facility (b)
$
$
2016
171,168
58,548
28,013
10,913
6,575
18,130
2015
162,670
57,114
28,518
10,723
5,740
15,748
$
293,347
$
280,513
2016
364
(404)
$
(40)
$
2015
141
(442)
(301)
$
$
a) 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 $364 in 2016 (2015 - $153).
b)
Income amounting to $404 (2015 - $442) was recorded related to the Company’s idle Port Moody property
related to expropriation notices received by the Company.
50
| ANDREW PELLER LIMITED 2016
17 Net earnings per share
Class A
Class B
2016
Total
Net earnings attributed for the year - basic and
diluted
$
15,590
$
3,609
$
19,199
Weighted average number of shares outstanding
- basic and diluted
11,283,692
3,004,041
Net earnings per share - basic and diluted
$
1.38
$
1.20
Class A
Class B
2015
Total
Net earnings attributed for the year - basic and
diluted
$
12,364
$
2,860
$
15,224
Weighted average number of shares outstanding
- basic and diluted
11,293,829
3,004,041
Net earnings per share - basic and diluted
$
1.09
$
0.96
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 fair 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.
The Company’s minimum lease payments as at March 31, 2016 under long-term non-cancellable leases are
outlined in note 20 along with its other contractual obligations.
In 2016, minimum lease payments of $5,149 (2015 - $4,799) were recognized as an expense.
ANDREW PELLER LIMITED 2016 | 51
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
2016
(2,607)
(1,921)
(272)
(3,499)
$
(8,299)
$
2015
(2,923)
2,872
(229)
(956)
(1,236)
$
$
The classification and measurement of the financial assets and liabilities, as well as their carrying amounts and
fair values are as follows:
35,646
1,553
52,308
2,174
1,126
Carrying
amount
Assets/liabilities
Category
Measurement
Carrying
amount
Loans and
receivables Amortized cost $
Other liabilities Amortized cost
28,223 $
33,701
Accounts receivable
Bank indebtedness
Accounts payable and accrued
liabilities
Dividends payable
Long-term debt
Interest rate swap liability
Foreign exchange forward
contracts liability
Other liabilities Amortized cost
Other liabilities Amortized cost
Other liabilities Amortized cost
Derivatives
Fair value
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
Derivatives
Fair value
Derivatives
Fair value
25,616 $
32,522
36,712
1,460
56,463
2,439
697
52
| ANDREW PELLER LIMITED 2016
2016
Fair
value
28,223
33,701
35,646
1,553
52,308
2,174
1,126
2015
Fair
value
25,616
32,522
36,712
1,460
56,463
2,439
697
The Company’s interest rate swaps 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 bank indebtedness and 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 swaps used to fix the interest rate
on long-term debt 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 swaps 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 swaps 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 loss on derivative financial instruments is comprised of:
Unrealized (losses) gains on foreign exchange forward contracts
Unrealized gains (losses) on the interest rate swaps
2016
(1,823)
265
$
(1,558)
$
2015
597
(1,169)
(572)
$
$
ANDREW PELLER LIMITED 2016 | 53
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 liability
$
- $
-
2,174 $
1,126
Asset/liability
Quoted prices in
active markets
for
identical assets
(Level 1)
Significant
observable
inputs
other than
quoted prices
(Level 2)
2016
Significant
unobservable
inputs
(Level 3)
-
-
2015
Significant
unobservable
inputs
(Level 3)
Interest rate swap liability
Foreign exchange forward contracts asset
$
- $
-
2,439 $
697
-
-
Objectives and policy relating to financial risk management
Interest rate risk
The Company is exposed to interest rate risk as a result of cash balances, floating rate debt, and interest rate
swaps. 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 it
meets borrowing covenants, and ensuring 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 July 2020 by entering into interest
rate swaps. The interest rate swaps are measured at fair value. An unrealized gain of $265 (2015 – unrealized
loss of $1,169) was recognized on the interest rate swaps, which is classified as a component of the net
unrealized loss 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, 2016, with other variables unchanged, a 100 basis point change in
interest rates would impact the Company’s net earnings by approximately $249 (2015 - $237), exclusive of the
mark-to-market adjustments on the interest rate swaps.
54
| ANDREW PELLER LIMITED 2016
Credit risk
Credit risk arises from cash, 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 $14,896 (2015 - $13,504) of the total accounts receivable for which
no allowance has been provided. Of the remaining non-provincial liquor board balances, $1,413 (2015 - $755)
was over thirty days past due as at March 31, 2016. An allowance for doubtful accounts of $124 (2015 - $99)
has been provided against these accounts receivable amounts, which the Company has determined represents a
reasonable estimate of amounts that may be uncollectible.
Sales to its largest customer, a provincial Crown corporation, were $56,340 (2015 - $49,068) during the year
ended March 31, 2016. Sales to its second largest customer, a branch of a provincial government, were $41,770
(2015 - $34,387) 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
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
Liquidity risk
2016
2015
$
14,896
$
13,504
10,114
603
1,321
605
808
(124)
9,380
620
1,456
249
506
(99)
$
28,223
$
25,616
2016
2015
$
$
$
99
89
(64)
124
$
102
54
(57)
99
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.
ANDREW PELLER LIMITED 2016 | 55
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 and accrued liabilities 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 swap agreements that fix 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 purchases denominated in foreign currencies as at
March 31, 2016:
Long-term debt
Leases and royalties
Pension obligations
Grape and bulk wine purchase
contracts
Bulk whiskey purchase contracts
< 1
year
2 - 3
years
4 - 5
years
> 5
years
$
4,106 $
5,001
841
8,212 $
5,793
1,034
40,440 $
3,113
734
- $
7,991
1,463
Total
52,758
21,898
4,072
102,955
624
85,648
605
49,404
80
114,736
-
352,743
1,309
Interest rate swap
Foreign exchange forwards
113,527
1,722
35,011
101,292
3,027
-
93,771
1,487
-
124,190
-
-
432,780
6,236
35,011
Total contractual obligations
$ 150,260 $ 104,319 $
95,258 $ 124,190 $ 474,027
The Company’s obligations under its interest rate swaps 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 (US$), euro (EUR) or Australian dollars
(AU$). 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 priced in
US dollars, euro and Australian dollars. 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,
2016, the Company has forward foreign currency contracts to buy US$19,525 at rates ranging between $1.31
and $1.38, EUR3,020 at rates ranging between $1.48 and $1.55 and AU$4,115 at rates ranging between $0.92
and $0.98. These contracts mature at various dates to December 2016. 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 $87 (2015 - $108), $23 (2015 -
$16) or $109 (2015 - $69), respectively. The Company has elected to not use hedge accounting and as a result,
has recognized unrealized foreign exchange losses of $1,823 (2015 – unrealized foreign exchange gains of
$597) in the consolidated statements of earnings as a component of the net unrealized loss on derivative
financial instruments and has recorded the fair value of $1,126 in accounts payable and accrued liabilities (2015
- $697 recorded in prepaid expenses and other assets) in the consolidated balance sheets.
56
| ANDREW PELLER LIMITED 2016
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, with the exception of 2017, where
unfunded capital expenditures are limited to $17,000. 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. As at March 31, 2016 and March 31, 2015, the Company was in compliance with these covenants and the
capital expenditure limit.
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. No
individual has sole voting power or control in respect of the shares of the Company owned by Jalger Limited.
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 short-term benefits
Post-employment benefits
Payments to a share purchase plan
2016
4,939
248
409
$
5,596
$
2015
5,017
246
258
5,521
$
$
The compensation and benefits expense consists of amounts that will primarily be settled within twelve months.
ANDREW PELLER LIMITED 2016 | 57
23 Segmented information
During the year, export sales were $13,873 (2015 - $13,853), primarily in the United States. The remainder of
sales occurred in Canada. All of the Company’s assets are located in Canada.
24 Amendments to IAS 16 and IAS 41
The following tables summarize the impact of adopting the amendments to IAS 16, Property, Plant, and
Equipment, and IAS 41, Agriculture:
Impact on the
consolidated
balance sheets
Property, plant and
equipment
Biological assets
Total assets
March 31,
2015 - as
reported
Impact of
IAS 16
and
IAS 41
changes
March 31,
2015 - as
restated
April 1,
2014 - as
reported
Impact of
IAS 16
and IAS
41
changes
April 1,
2014 - as
restated
(1) $
(1)
90,955 $
13,982
301,505
13,996 $
(13,982)
14
104,951
-
301,519
(1) $
(1)
90,152 $
14,054
301,015
(14,054)
739
14,793 $
Deferred income taxes
Total liabilities
(2)
Retained earnings
Total shareholders’
equity
15,971
154,140
143,837
147,365
4
4
10
10
15,975
154,144
(2)
15,811
163,012
143,847
133,915
147,375
138,003
192
192
547
547
104,945
-
301,754
16,003
163,204
134,462
138,550
For the
year ended
March 31,
2015 -
as reported
Impact of
IAS 16 and
IAS 41
changes
For the
year ended
March 31,
2015 -
as restated
200,494 $
5,116
110,087
22,120
51
21,497
334 $
743
(1,077)
(1,077)
(352)
(725)
357
15,761
1.13
0.99
15,201
(188)
(537)
(0.04)
(0.03)
(537)
200,828
5,859
109,010
21,043
(301)
20,772
169
15,224
1.09
0.96
14,664
Impact on the consolidated statements of earnings
and comprehensive income
Cost of goods sold, excluding amortization
Amortization of plant and equipment used in production (1)
Gross profit
Operating earnings
Other expenses (income)
Earnings before income taxes
(1)
(1) $
Provision for income taxes - deferred
(2)
Net earnings for the year
Net earnings per share
Basic and diluted
Class A shares
Class B shares
Net comprehensive income for the year
58
| ANDREW PELLER LIMITED 2016
Impact on the consolidated statements of cash flows (3)
For the
year ended
March 31,
2015 -
as reported
Impact of
IAS 16 and
IAS 41
changes
For the
year ended
March 31,
2015 -
as restated
Net earnings for the year
Loss on disposal of property, plant and equipment
Amortization of plant, equipment and intangible assets
Provision for income taxes
Revaluation of biological assets
Cash flow from operating activities
$
15,761 $
95
8,551
5,736
352
25,837
(537) $
334
743
(188)
(352)
-
15,224
429
9,294
5,548
-
25,837
1) Under the amended standards, grape vines are within the scope of property, plant, and equipment rather than
biological assets. The Company elected to measure the grape vines at fair value at April 1, 2014 and to use
this measurement basis as the deemed cost when applying IAS 16 after this date. In applying IAS 16, the
Company amortizes grape vines on owned property over a 20-year period and over the remaining lease
period for grape vines controlled by the Company that were planted on leased property. Vine disposals and
writedowns were measured using this revised measurement basis and are recorded in cost of goods sold.
Prior to adoption of the amended standards, the grape vines were measured at fair value less cost to sell at
each reporting period and revaluation adjustments were recorded in other income in the consolidated
statements of earnings.
2) Deferred income taxes were adjusted to reflect the income tax effect of the adjustment described in 1.
3) Certain items within operating activities in the consolidated statements of cash flows have been reclassified
as a result of adopting the IAS 16 and IAS 41 amendments as illustrated above. Other than presentation,
there was no impact on the consolidated statements of cash flows as a result of the adoption of the
amendments to IAS 16 and IAS 41.
25 Events after the reporting period
On June 2, 2016, the Company’s Board of Directors approved a 9% increase of the quarterly dividend for
holders of its Class A and Class B shares, from $0.1125 per Class A share and $0.0978 per Class B share to
$0.1225 per Class A share and $0.1065 per Class B share. This increased quarterly dividend will be paid on July
8, 2016 to shareholders of record at the close of business on June 30, 2016.
ANDREW PELLER LIMITED 2016 | 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)
Basic & diluted Class A
Basic & diluted Class B
Dividends
Class A Shares, non-voting
Class B Shares, voting
Number of shares outstanding
(in thousands of shares)
Class A Shares, non-voting
Class B Shares, voting
Other information
Return on average
shareholders’ equity (8)
Return on average
capital employed (9)
2016
2015
Restated (7)
2014
2013
Restated (6)
334,263
40,916
19,199
71,665
308,309
157,736
1.38
1.20
0.450
0.391
11,194
3,004
14,198
12.6%
13.2%
$ 315,697
35,184 (7)
15,224 (7)
$ 297,824
33,729
14,021
$ 289,143
33,489 (6)
14,519 (6)
68,982
301,519 (7)
147,375 (7)
44,564
301,015
138,003
41,670
296,519
129,701 (6)
1.09 (7)
0.96 (7)
0.420
0.365
11,294
3,004
14,298
10.6% (7)
11.0% (7)
1.01
0.88
0.400
0.348
11,294
3,004
14,298
10.5%
10.8%
1.04 (6)
0.91(6)
0.360
0.314
11,294
3,004
14,298
11.6%(6)
11.1%(6)
(1) Excludes the net impact of discontinued operations.
(2) Excludes the after-tax impact of mark-to-market adjustments on an interest rate swap.
(3) Includes an after-tax gain of $11.9 million for the sale of Granville Island Brewing Company Ltd. and Mainland
(4) Excludes an after-tax gain of $11.9 million for the sale of Granville Island Brewing Company Ltd. and Mainland
Beverage Distribution Ltd.
Beverage Distribution Ltd.
60
| ANDREW PELLER LIMITED 2016
2012
2011
Restated (5)
2010
2009
Restated (1)
2008
Restated (1)
2007
$ 276,883
32,651
13,001
$ 265,420
31,544 (5)
11,223 (5)
$ 263,151 (3)
27,354 (3)
21,661 (3)
$ 251,136(1)
23,359(1)
(125)
$ 228,056(1)
28,109(1)
11,381
$ 228,192
27,665
9,472
34,869
285,552
120,552
27,643 (5)
267,996 (5)
114,297 (5)
29,357
263,716
113,665
29,203
293,507
96,791
25,413
259,744
102,680
25,316
238,956
95,522
0.93
0.81
0.360
0.314
11,294
3,004
14,298
11.1%
11.5%
0.78 (5)
0.67 (5)
0.330
0.288
1.49 (3)
1.30 (3)
0.330
0.288
11,294
3,004
14,298
11,888
3,004
14,892
9.8% (5)
6.8% (2,4)
11.6% (5)
9.1% (2,4)
($0.01)
($0.01)
0.330
0.288
11,888
3,004
14,892
6.0% (2)
7.9% (2)
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%
(5) 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.
(6) Restated to reflect the adoption of the amendments to IAS 19.
(7) Restated to reflect the adoption of the amendments to IAS 16 and IAS 41.
(8) Return on average shareholders' equity is calculated as net earnings divided by average shareholders’ equity.
(9) 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 2016 | 61
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
Corporate Director
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
RANDY A. POWELL
Oakville, Ontario
Chair: Andrew Peller Limited
Founding Partner
Southpier Capital
JOHN F. PETCH, Q.C. LLD
Toronto, Ontario
Vice Chairman
Andrew Peller Limited
BRIAN J. SHORT
Ancaster, Ontario
Corporate Director
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
COLIN M. CAMPBELL
Vice-President, Sales, Western Canada
JAMES H. COLE
Vice-President, Retail and Estate Wine Group
GAVIN J. HAWTHORNE
Vice-President, Sales & Marketing GVI
CRAIG D. MCDONALD
Vice-President, Winemaking
ERIN L. ROONEY
Vice-President, Sales, Eastern Canada and Agency
62
| ANDREW PELLER LIMITED 2016
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
RABOBANK
ROYAL BANK OF CANADA
TORONTO DOMINION BANK
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
2016 Annual and Special Shareholders’
Meeting
The 2016 Annual and Special Meeting of
Shareholders’ will be held at:
Peller Estates
Niagara-on-the-Lake, Ontario
on Friday, September 9, 2016 at 11:00 a.m.
ANDREW PELLER LIMITED 2016 | 63
AJAX
955 WESTNEY ROAD S.
L1S 3K7 (905) 683-1705
#102 WITHIN: SOBEYS
260 KINGSTON ROAD W.
L1T 4E4 (905) 428-6500
#165 WITHIN: SOBEYS
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
54 WILSON STREET
L9G 3T8 (905) 304-0094
#213 WITHIN: FORTINOS
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
BURLINGTON
2025 GUELPH LINE
L7P 4M8 (905) 336-3849
#112 WITHIN: FORTINO'S
GEORGETOWN
171 GUELPH STREET
L7G 4A1 (905) 877-1815
#179 WITHIN: RCSS
4025 NEW STREET
L7L 1S7 (905) 632-8580
#114 WITHIN: MARILU'S
MARKET
1250 BRANT STREET
L7P 1X8 (905) 319-8670
#131 WITHIN: SOBEYS
3505 UPPER MIDDLE ROAD
L7M 4C6 (905) 336-9101
#312 WITHIN: WALKERS PLACE
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
980 FRANKLIN BLVD
N1R 8R3 (519) 622-2552
#212 WITHIN: NO FRILLS
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
GRIMSBY
361 SOUTH SERVICE ROAD
L3M 4E8 (905) 945-9982
#181 WITHIN: RCSS
GUELPH
297 ERAMOSA ROAD
NIH 1G7 (519) 824-7922
#88 WITHIN: ZEHRS
160 KORTRIGHT ROAD, W.
N1G 4W2 (519) 837-9293
#105 WITHIN: ZEHRS
167 SILVERCREEK PARKWAY
N1H 3T2 (519) 837-0540
#197 WITHIN: NO FRILLS
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
1030 ADELAIDE STREET N.
N5Y 2M9 (519) 679-3717
#62 WITHIN: METRO
395 WELLINGTON STREET
N6C 4P9 (519) 649-7180
#94 WITHIN: METRO
3040 WONDERLAND STREET
N6L 1A6 (519) 668-2224
#161 WITHIN: LOBLAWS
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
27 QUEEN STREET
L0S 1J0 (905) 468-1881
#204 WITHIN:
WINE COUNTRY VINTNERS
64
| ANDREW PELLER LIMITED 2016
(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
1460 MERIVALE ROAD
K2E 5P2 (613) 723-5507
#351 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
OWEN SOUND
1150 SIXTEENTH STREET E.
N4K 1Z3 (519) 371-8664
#140 WITHIN: ZEHRS
PETERBOROUGH
769 BORDEN AVE.
K9J 0B6 (705) 740-2513
#190 WITHIN: RCSS
PICKERING
1900 DIXIE ROAD
L1V 6M4 (905) 831-6705
#210 WITHIN: YIG
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
NORTH YORK
3501 YONGE STREET
M4N 2N5 (416) 481-7699
#123 WITHIN: LOBLAW
GREAT FOOD
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
1500 UPPER MIDDLE ROAD W.
L6M 3G3 (905) 847-2944
#120 WITHIN: SOBEYS
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
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
OTTAWA
2515 BANK STREET
K1V 8R9 (613) 523-5837
#343 WITHIN: SOUTHGATE
187 METCALFE STREET
K2P 1P5 (613) 565-5062
#211 WITHIN: SOBEYS
ST. CATHARINES
318 ONTARIO STREET
L2R 5L8 (905) 685-8898
#43 WITHIN: FRESCHCO
221 GLENDALE AVE.
L2T 2K9 (905) 688-4767
#117 WITHIN: ZEHRS
285 GENEVA STREET
L2N 2G1 (905) 646-7363
#137 WITHIN: ZEHRS
411 LOUTH STREET
L2S 4A2 (905) 685-9779
#172 WITHIN: RCSS
400 SCOTT STREET
L2M 3W4 (905) 934-0981
#201 WITHIN: GRANTHAM
PLAZA
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
87 AVENUE ROAD
M5R 3R9 (416) 923-6336
#176 WITHIN: HAZELTON
LANES
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
650 DUPONT STREET
M6G 4B1 (416) 533-8484
#208 WITHIN: LOBLAWS
2273 BLOOR STREET W.
M6S 1N9 (416) 766-8654
#309 WITHIN: BLOOR
WEST VILLAGE
UXBRIDGE
323 TORONTO STREET S.
L9P 1N2 (905) 852-5008
#133 WITHIN: ZEHRS
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
ANDREW PELLER LIMITED 2016 | 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 30, 2016.
Ontario VQA Wine Collections
Collections #1- 4 can be delivered to Ontario, British Columbia, Manitoba, Saskatchewan and Nova Scotia. Free
delivery within Ontario and a special delivery charge of only $25 to other provinces. Ontario Collection prices
include $0.10 bottle deposit.
Collection #1: Best of VQA Niagara Collection
Peller Estates Family Series Riesling
Peller Estates Private Reserve Pinot Noir
Trius Sauvignon Blanc
Trius Cabernet Franc
Thirty Bench Winemaker’s Riesling
Wayne Gretzky Estates Shiraz Cabernet
6 Bottle Collection - $96.03 (reg. $112.50)
12 Bottle Collection - $192.06 (reg. $225.50)
Collection #2: Peller Estates Collection
Peller Estates Signature Series Ice Cuvée Rosé
Peller Estates Family Series Chardonnay
Peller Estates Private Reserve Gamay Noir
Peller Estates Signature Series Sauvignon Blanc
Peller Estates Signature Series Merlot
Peller Estates Private Reserve Late Harvest Vidal (375 ml)
6 Bottle Collection - $142.39 (reg. $167.30)
12 Bottle Collection - $284.78 (reg. $334.60)
Collection #3: Trius Collection
Trius Brut
Trius Divine White
Trius Merlot
Trius Gamay Noir
Trius Red
6 Bottle Collection - $108.82 (reg. $127.80)
12 Bottle Collection - $217.64 (reg. $255.60)
66
| ANDREW PELLER LIMITED 2016
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’ Shiraz Cabernet
6 Bottle Collection - $91.73 (reg. $107.70)
12 Bottle Collection - $183.46 (reg. $215.40)
British Columbia VQA Wine Collections
Collections #5-7 can be delivered to British Columbia, Manitoba, Saskatchewan and Nova Scotia. Free
delivery within British Columbia and a special delivery charge of only $25 to other provinces. Prices for BC
Collections do not include $0.10 bottle deposit and applicable taxes.
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 Chardonnay
Wayne Gretzky Founders Merlot
6 Bottle Collection - $82.88 (reg. $97.50)
12 Bottle Collection - $166.37 (reg. $239.26)
Collection #6: Red Rooster Collection
Red Rooster Riesling
Red Rooster Chardonnay
Red Rooster Pinot Blanc
Red Rooster Pinot Noir
Red Rooster Reserve Merlot
Red Rooster Reserve Meritage
6 Bottle Collection - $91.82 (reg. $108.00)
12 Bottle Collection - $184.24 (reg. $216.00)
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)
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 2016 | 67
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| ANDREW PELLER LIMITED 2016