POUR
EXTRAORDINARY
INTO EVERYDAY LIFE
2019 ANNUAL REPORT
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
2019
$ 381,796
52,875
29,408
2018
$ 363,897
52,860
29,303
97,305
467,019
234,751
0.51
0.205
0.178
18.63
11.64
18.84
11.62
15.2%
11.5%
1.98:1
104,417
457,780
220,246
0.71
0.180
0.157
19.04
10.60
18.80
10.80
15.2%
14.0%
2.1:1
*Adjusted earnings is defined as net earnings excluding restructuring costs, gains (losses) on derivative financial instruments, other expenses (income), non-recurring, non-
operating (gains) and losses and the related income tax effect.
CONTENTS
REPORT TO SHAREHOLDERS
THE YEAR’S TOP AWARDS
MANAGEMENT’S DISCUSSION & ANALYSIS
INDEPENDENT AUDITOR’S REPORT
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TEN-YEAR SUMMARY
DIRECTORS & OFFICERS
SHAREHOLDER INFORMATION
THE WINE SHOP RETAIL STORES
EXCLUSIVE WINE OFFER FOR SHAREHOLDERS
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5
7
21
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59
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65
Report to Shareholders
Another Strong Year
Fiscal 2019 was another strong year for the Company with solid sales growth, strong operating performance, and
significant investments in our sales and marketing activities that we are confident will generate continued sales growth
going forward.
Sales were up 4.9% for the year, driven by the acquisition of the three estates wineries in October 2017, as well as solid
performance across the majority of our trade channels and the introduction of new products through the year. Through the
second half of the year, sales were impacted by increased competition from new low-priced imported wines, primarily in
our Western Canadian markets, and a general softening in wine sales across the country. These factors resulted in sales in
the fourth quarter remaining flat with the prior year. Despite this, our share of the English Canada wine market remained
strong and stable at 10.2%, comparable with the prior year, a reflection of our strong product portfolio, our reputation for
delivering value, and the loyalty of our growing customer base.
We continue to benefit from the rationalization of our product lines, our increased focus on higher margin products, and
our cost control initiatives over the last few years to enhance efficiency and reduce costs. As a result, gross margin
improved again in fiscal 2019 to 41.6% of sales compared to 41.3% in the prior year. Gross margin in fiscal 2019
included a higher charge to cost of sales of $5.5 million compared to $3.0 million in the prior year to reflect sales of
inventory acquired with the three wineries purchased in October 2017.
The major impact on our earnings in fiscal 2019 was the increase in our selling and administrative expenses compared to
the prior year. We invested significantly during the year in building out our marketing team, extensive consumer research,
large innovation projects, and the creation of marketing campaigns for the launch of Peller Family Vineyards and No. 99
Rye Lager. Thus, while these higher costs impacted our results last year, we expect the benefits of these initiatives will be
seen in increased sales during fiscal 2020 and going forward.
With the increase in selling and administrative expenses, and the larger charge to cost of sales related to the acquisition
accounting, EBITA was $52.9 million in fiscal 2019, consistent with the prior year. Adjusted EBITA, which excludes
one-time acquisition-related charges, was $58.3 million, up from $57.2 million in fiscal 2018.
Net earnings in fiscal 2019 were $22.0 million or 51 cents per Class A Share, down from last year due to the increase in
selling and administrative expenses and the larger charge to cost of sales related to the acquisitions in 2017. Net earnings
in fiscal 2018 also included a $4.2 million one-time gain related to one of the acquisitions completed in October 2017.
However, adjusted net earnings, removing the one-time costs related to the acquisitions, unrealized gains and losses on
our derivative financial instruments, and non-recurring, non-operating gains and losses, were $29.4 million, up from
$29.3 million last year.
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| ANDREW PELLER LIMITED 2019
Another Dividend Increase
We were also pleased to announce another increase in our common share dividends, which is the seventh consecutive year
of dividend increases. Effective with the July payment, dividends will increase by 4.8% on an annualized basis to 21.5
cents for Class A shares and 18.7 cents for Class B shares. The Company has paid common share dividends consistently
since 1979, a reflection of our continuing strong financial performance, our confidence in the future, and our commitment
to enhancing shareholder value over the long term.
Significant Achievements
Fiscal 2019 was an incredibly busy year for everyone at the Company as a number of major achievements and projects
were completed that we are confident will lead to further growth and strong operating performance in the years ahead.
During the year we continued to integrate the acquisitions of Black Hills, Tinhorn Creek and Gray Monk completed in
October 2017. The integration of these three new wineries is now largely complete, and we are starting to see the
significant cost and operating synergies we expected when we closed the transactions. This was a major initiative and we
are very pleased with the results to date.
We also expanded and rebuilt our marketing team in fiscal 2019, adding new and experienced people that will help us
drive our more consumer-centric approach going forward. We are confident we have some of the best people in the
business on our team, and we look for their contributions to drive further growth going forward.
One of the fastest growing areas in the alcohol beverage market is the “ready-to-drink” segment, and our No Boats on
Sunday craft cider continues to see stellar growth remaining one of the fastest growing brands in this segment. We
recently introduced a new cranberry cider offering under the brand and we are taking steps to expand sales nationally for
this highly popular product.
Our Trius brand has long been a popular offering for the Company, but largely through our estate winery in Niagara. To
capitalize on the popularity of this high-quality brand, we recently introduced four new Trius listings at the LCBO in
Ontario and expect to see strong growth in this premium offering in the years ahead. Similarly, with the popularity of rosé
wines across the country, we are focused on expanding our rosé listings across a number of our brands in this high-growth
category.
At our retail wine shop locations in Ontario, we are launching a new, upscale and more experiential concept including a
new and novel tasting bar for our customers. This initiative has been implemented at three Greater Toronto Area
locations, and we encourage you to visit one of these new wine shops to see why we are so excited about this new
concept.
ANDREW PELLER LIMITED 2019 | 2
Our personal winemaking business, Global Vintners Inc., continues to perform well. In fiscal 2019, we announced that we
would be consolidating our western production facility in British Columbia into our Ontario operation, generating
significant future efficiencies and economies of scale. We also introduced new packaging and formats, including the
popular “bag-in-box” format, that we believe will drive growth.
Our largest projects coming out of fiscal 2019 were the re-launch of the Peller Family Vineyards brand in April, and our
entry into the craft beer segment with the introduction of our new Wayne Gretzky No. 99 Rye Lager.
The launch of Peller Family Vineyards has been a long time in the making. While our premium and ultra-premium Peller
Estates VQA wines continue to flourish, we knew the other more popular-priced wines in the portfolio deserved their own
marketing program. As a result, we amalgamated the two popular brands, Peller French Cross and Peller Proprietors
Reserve, into one megabrand, Peller Family Vineyards. Through fiscal 2019, we developed a new, unique and
differentiated program with innovative packaging and formats, as well as a high quality digital and television advertising
campaign running on major networks across Canada. The Company’s largest media campaigns in more than 25 years, it
celebrates life’s perfectly imperfect moments while positioning Peller Family Vineyards as a signature for quality,
approachable wine – as we say, Vinted for Real Life. The new ads are also being tied into our in-store retail program to
build awareness and sales.
The second major initiative was our entry into the growing craft beer segment with the launch of our new Wayne Gretzky
No. 99 Rye Lager, building on our success of delivering premium products born from cross-category innovation,
including our Gretzky Red Cask Whisky and Whisky Oak Aged Red wine. Uniquely brewed with rye grain, No. 99 Rye
Lager delivers the crisp, clean taste of a classic lager with an extra layer of depth, zest and freshness – there is nothing
else like it on the market. Now available in Ontario at LCBO stores, at Wayne Gretzky Estates in its new beer garden, as
well as in select Ontario restaurants, it will be sold more broadly across Ontario starting in September 2019.
In summary, fiscal 2019 was a very busy year for all of us at the Company as we invested in numerous projects and
innovations that we are confident will drive growth and financial performance going forward. The Company has built
strong and enduring brands and an enviable market presence through its more than 50-year history, and we look for this
track record to continue in the years ahead.
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| ANDREW PELLER LIMITED 2019
Looking back over the last five years, sales have grown 5.1% on a compound annual basis, strong growth for a consumer
products company, generating a 9.5% increase in EBITA and 10.3% increase in net earnings. Over this same five-year
period common share dividends have increased 54%. The main driver of this growth and success is the dedication and
commitment of our people. On behalf of the Board of Directors and all shareholders, we thank everyone at the Company
for their contribution, and we remain confident we will continue to generate strong performance and enhanced value for
our shareholders over the long term.
John E. Peller
Executive Chairman & CEO
Randy A. Powell
President
ANDREW PELLER LIMITED 2019 | 4
This Year’s TOP AWARDS
Peller Estates
(Niagara-on-the-Lake, ON)
Trius Winery
(Niagara-on-the-Lake, ON)
Wayne Gretzky Estates
(Niagara-on-the-Lake, ON)
International Wine Challenge – UK
Canadian Sweet Trophy – Gold Medal – 95 points
2015 APSS Riesling Icewine
Gold – 95 points – 2016 APSS Vidal Icewine
International Wine & Spirit Competition – UK
Gold Medal – 2015 AP Signature Series Riesling Icewine
Los Angeles International Wine Competition 2018
Best of Class – Gold Medal – 96 points – 2016 APSS Riesling Icewine
Best of Class – Gold Medal – 96 points – 2016 APSS Oak Aged Icewine
Gold Medal – 90 points – 2016 APSS Vidal Icewine
Indy International Wine Competition – Indiana, USA
Double Gold Medal – 2016 Family Series Riesling
Korea Wine Challenge
Trophy Icewine – Gold Medal – 2016 APSS Oak Aged Icewine
Gold Medal – 2016 APSS Vidal Icewine
Gold Medal – 2016 APSS Riesling Icewine
Intervin – Vines magazine – Canada
InterVin Ontario Winery of the Year
Fourth place, Winery of the Year (Canada)
Gold Medal - APSS Cabernet Franc 2015
Gold Medal - Private Reserve Gamay Noir 2016
Gold Medal - Ice Cuvée Rosé
Six Nations Wine Challenge – Australia
Gold Medal – 2016 Private Reserve Cabernet Franc
The Global Riesling Masters – UK
Masters – 2016 APSS Riesling Icewine
Gold Medal – 2016 APSS Riesling
WineAlign – National Wine Awards of Canada
Gold Medal - 2017 Private Reserve Sauvignon Blanc
Gold Medal - 2016 APSS Vidal Icewine
Gold Medal - 2016 APSS Oak Aged Icewine
Peller Estates
(Okanagan Valley, BC)
British Columbia Lieutenant Governor’s Wine Awards
Gold - 2017 Family Select Sauvignon Blanc
Gold - 2017 Family Select Chardonnay
Chardonnay du Monde – France
Gold Medal – 2015 Trius Showcase Chardonnay WF Oliveira Vineyard
San Francisco World Spirits Competition
Gold Medal - Wayne Gretzky Canadian Cream
Tasters Guild – Michigan, USA
Gold Medal – 2016 Cabernet Franc
Decanter World Wine Awards – UK
Platinum Medal – 97 points – Trius Brut Rosé
Gold Medal – 95 points – 2016 Showcase Vidal Icewine
Los Angeles International Wine Competition 2018
Gold Medal – 93 points – 2016 Showcase Vidal Icewine
Gold Medal – 92 points – 2016 Showcase Riesling Icewine
All Canadian Wine Championships
Gold Medal – 2016 Sauvignon Blanc
Ontario Wine Awards
Gold Medal – 2016 Showcase Riesling Ghost Creek Vineyard
Lieutenant Governor’s Award for Excellence in Ontario Wines
Winner – 2016 Trius Showcase Riesling Ghost Creek Vineyard
Indy International Wine Competition – Indiana, USA
Double Gold Medal – 2016 Sauvignon Blanc
Korea Wine Challenge
Gold Medal – 2016 Showcase Vidal Icewine
WineAlign – National Wine Awards of Canada
Gold Medal - Trius Brut
Gold Medal - Trius Brut Rosé
Gold Medal - 2016 Showcase Clean Slate Sauvignon Blanc
Gold Medal - 2016 Showcase Riesling Ghost Creek
Gold Medal - 2016 Showcase Chardonnay WF Watching Tree Vineyard
Gold Medal - 2014 Showcase RHS Merlot
Intervin – Vines magazine – Canada
Fifth place, Winery of the Year (Canada)
Gold Medal - Trius Brut Rosé
Gold Medal - Showcase Riesling Icewine 2016
Gold Medal - Showcase WF Chardonnay Watching Tree Vineyard 2016
Effervescents du Monde – Best Sparkling Wines in the World, France
Gold Medal – Trius Brut Rosé
Los Angeles International Spirits Competition
Gold Medal – 90 points – Red Cask Whisky
Gold Medal – 90 points – Ice Cask Whisky
Gold Medal – 90 points – Ninety Nine Proof Whisky
Gold Medal – 90 points – Canadian Cream Whisky
Gold Medal – 90 points – Vidal Artisanal Spirited Wine
Gold Medal – 90 points – Muscat Artisanal Spirited Wine
Decanter World Wine Awards – UK
Platinum Medal – 97 points – 2016 Vidal Icewine
Los Angeles International Wine Competition 2018
Best of Class – Gold Medal – 95 points – 2016 Riesling
Best of Class – Gold Medal – 92 points – 2016 Cabernet Franc Icewine
Gold Medal – 93 points – 2016 Vidal Icewine
All Canadian Wine Championships
Double Gold Medal – 2016 Cabernet Franc Icewine
Korea Wine Challenge
Gold Medal – 2016 Vidal Icewine
Intervin – Vines magazine – Canada
Gold Medal - Sauvignon Blanc Estate Series 2016
World Whisky Masters – Asia (Hong Kong)
Gold Medal – Ice Cask Whisky
Wayne Gretzky Estates
(Okanagan Valley, BC)
Tasters Guild USA
Gold Medal – 2016 Cabernet Sauvignon Syrah
Gold Medal – 2016 Merlot
Okanagan Spring Wine Festival – Best of Varietals
Best of Varietal – Gold – Best Red Blend – 2016 Cabernet Sauvignon Syrah
Gold Medal – 2015 Signature Series Cabernet Merlot
Gold Medal – 2015 Signature Series Shiraz
Los Angeles International Wine Competition
Gold Medal – 94 points – 2016 Signature Series Riesling
Gold Medal – 92 points – 2017 Pinot Grigio
Dan Berger’s International Wine Competition
Gold Medal – 2017 Pinot Grigio
WineAlign National Wine Awards of Canada
Gold Medal - 2016 Signature Riesling
Intervin International Wine Awards
Gold Medal - Signature Series Riesling 2016
British Columbia Lieutenant Governor’s Wine Awards
Gold Medal - 2016 Merlot
Black Cellar
Tasters Guild – Michigan, USA
Gold Medal – Cabernet Sauvignon (ON)
Pacific Rim Wine Competition – USA
Gold Medal – Pinot Grigio (BC)
Tasters Guild USA
Gold Medal – Malbec Merlot (BC)
Gold Medal – Shiraz Cabernet (BC)
+550
AWARDS
NATIONALLY
2018 ONTARIO
WINERY OF THE YEAR
PELLER ESTATES
Sandhill Winery
(Okanagan Valley, BC)
Black Hills Estate Winery
(Okanagan Valley, BC)
Red Rooster Winery
(Okanagan Valley, BC)
Okanagan Spring Wine Festival – Best of Varietals
Best of Varietal – Gold – Best Other Single Red Varietal
– 2015 Small Lots Petit Verdot
Gold Medal – 2015 Small Lots THREE
Beverage Testing Institute – Rosé Challenge
Gold Medal – Best Buy – 90 points – 2017 Sandhill Rosé
Los Angeles International Wine Competition
Best of Class – Gold Medal – 96 points – 2016 Riesling Icewine
Gold Medal – 92 points – 2015 Small Lots Malbec
All Canadian Wine Championships
Gold Medal – 2017 Rosé
Gold Medal – 2015 Small Lots ONE Phantom Creek Vineyard
Gold Medal – 2015 Small Lots THREE Sandhill Estate Vineyard
Gold Medal – 2016 Small Lots Syrah Sandhill Estate Vineyard
WineAlign National Wine Awards of Canada
Gold Medal - 2017 Small Lots Viognier
Gold Medal - 2016 Small Lots Syrah
Intervin International Wine Awards
Runner-Up: Winery of the Year (Second place)
Gold Medal - Cabernet Franc Icewine 2017
Gold Medal - Small Lots Syrah Sandhill Estate Vineyard 2016
Gold Medal - Terroir Driven Rosé 2017
British Columbia Lieutenant Governor’s Wine Awards
Gold Medal - 2016 Terroir Driven Chardonnay
Six Nations Wine Challenge – Australia
Gold Medal – 2016 Small Lots Syrah Sandhill Estate Vineyard
Thirty Bench Wine Makers
(Beamsville, ON)
Decanter World Wine Awards – UK
Best in Show – Platinum – 97 points – 2015 Small Lot Cabernet Franc
Platinum – 97 points – 2015 Small Lot Riesling Steel Post Vineyard
Gold Medal – 95 points – Sparkling Riesling
International Wine & Spirit Competition – UK
Gold Medal – 2015 Small Lot Cabernet Franc
Los Angeles International Wine Competition 2018
Gold Medal – 93 points – 2016 Winemaker’s Blend Riesling
Ontario Wine Awards
Gold Medal – 2016 Winemakers Blend Chardonnay
WineAlign – National Wine Awards of Canada
Platinum Medal - 2016 Winemakers Blend Riesling
Gold Medal - 2015 SL Pinot Noir
Gold Medal - 2015 SL Cabernet Franc
Gold Medal - 2016 SL Riesling Steel Post
Intervin – Vines magazine – Canada
Gold Medal - Small Lot Wood Post Vineyard Riesling 2016
Six Nations Wine Challenge – Australia
Trophy – 2016 Winemaker’s Blend Riesling
Runner-up Double Gold – 2016 Small Lot Riesling Wood Post Vineyard
The Global Riesling Masters – UK
Gold Medal – 2016 Small Lot Riesling Wood Post Vineyard
Okanagan Life magazine, Best of BC Wine Awards
Gold Medal – 2016 Chardonnay
Okanagan Spring Wine Festival – Best of Varietals
Best of Varietal – Gold – Best Viognier – 2017 Rare Bird Series Viognier
All Canadian Wine Championships
Gold Medal – 2016 Chardonnay
Best of BC Wine Country Awards
Best Red Wine in BC – 2016 Black Hills Estate Nota Bene
British Columbia Lieutenant Governor’s Wine Awards
Platinum Medal - 2016 Syrah
Gold Medal - 2016 Cellar Hand Punch Down Red
Gold Medal - 2016 Chardonnay
Gray Monk Estate Winery
(Okanagan Valley, BC)
British Columbia Lieutenant Governor’s Wine Awards
Gold Medal - 2014 Odyssey Merlot
Gold Medal - 2014 Cabernet Merlot
Okanagan Spring Wine Festival – Best of Varietals
Best of Varietal – Gold – Best Merlot – 2014 Odyssey Merlot
Best of Varietal – Gold – Best Sparkling – 2016 Odyssey Rosé Brut
WineAlign National Wine Awards of Canada
Gold Medal - 2017 Chardonnay Unwooded
Gold Medal - 2016 Pinot Noir
Northwest Wine Summit
Gold Medal – Best Sparkling Wine – 2015 Odyssey White Brut
Gold Medal – 2016 Odyssey Rosé Brut
Gold Medal – 2014 Odyssey Merlot
Intervin International Wine Awards
Gold Medal - 2015 Odyssey Cabernet Sauvignon
Tinhorn Creek
(Okanagan Valley, BC)
Okanagan Spring Wine Festival – Best of Varietals
Best of Varietal – Gold – Best Cabernet Franc – 2015 Cabernet Franc
Gold Medal – 2016 Oldfield Reserve Chardonnay
Los Angeles International Wine Competition
Gold Medal – 91 points – 2014 Oldfield Reserve Cabernet Franc
All Canadian Wine Championships
Gold Medal – 2016 Chardonnay
Gold Medal – 2015 Oldfield Reserve Cabernet Franc
Great Northwest Invitational Wine Competition – USA
Gold Medal – 2017 Pinot Gris
Gold Medal – 2017 Oldfield Reserve 2Bench White
Los Angeles International Wine Competition
Gold Medal – 90 points – 2017 Riesling
Gold Medal – 92 points – 2017 Rare Bird Series Gewürztraminer
Gold Medal – 90 points – 2016 Riesling Icewine
Gold Medal – 90 points – 2015 Rare Bird Series Syrah
All Canadian Wine Championships
Gold Medal – 2015 Rare Bird Series Merlot
Gold Medal – 2015 Rare Bird Series Malbec
WineAlign National Wine Awards of Canada
Gold Medal - 2015 RBS Malbec
Gold Medal - 2016 RBS Pinot Noir
Gold Medal - 2017 RBS Viognier
Intervin International Wine Awards
Third place, Winery of the Year
Gold Medal - Riesling 2017
Gold Medal - Golden Egg 2015
British Columbia Lieutenant Governor’s Wine Awards
Gold Medal - 2015 Golden Egg
Gold Medal - 2015 Rare Bird Series Merlot
Conviction Wines
(British Columbia)
Finger Lake Int’l Wine Competition
Gold Medal – 2016 The Priest Pinot Noir
Tasters Guild USA
Double Gold – 2016 Dreamer & Schemers Rustic Red
Double Gold – 2016 The Industrialist Sovereign Opal
Gold Medal – 2016 Movers & Shakers White
Gold Medal – 2016 The Financier Pinot Grigio
Gold Medal – 2016 The Priest Pinot Noir
Okanagan Spring Wine Festival – Best of Varietals
Gold Medal – 2016 The Industrialist Sovereign Opal
Waltzing Matilda
Tasters Guild – Michigan, USA
Gold Medal – 2016 Shiraz Grenache
XOXO
Beverage Testing Institute – Flavoured Wine & Wine Cocktail
Challenge USA
Gold Medal – Best Buy – 90 Points – XOXO Red Sangria (ON)
Gold Medal – Best Buy – 90 Points – XOXO Pinot Grigio Sangria (ON)
Panama Jack’s
Jerry Mead’s New World International Wine Competition USA
Gold Medal – 95 points – PJ’s Original Cream
Finger Lakes International Wine Awards USA
Double Gold – PJ’s Original Cream
Tasters Guild USA
Gold – Pinot Grigio Chardonnay (BC)
Indy International Wine Competition
Gold Medal – Rosé (BC)
Gold Medal – Pinot Grigio Chardonnay (BC)
No Boats On Sunday
All Canadian Wine Championships
Double Gold Medal – Cranberry Rosé Cider 100% Nova Scotia
MANAGEMENT’S DISCUSSION & ANALYSIS
FOR THE THREE MONTHS AND YEAR ENDED MARCH 31, 2019
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, 2019 in comparison with those for the
three months and year ended March 31, 2018 for Andrew Peller Limited (the “Company” or “APL”). This discussion is
prepared as of June 12, 2019 and should be read in conjunction with the audited annual consolidated financial statements
and accompanying notes contained therein for the periods ended March 31, 2019 and 2018. Additional information
relating to the Company, including the audited annual consolidated financial statements, MD&A and Annual Information
Form for the years ended March 31, 2019 and March 31, 2018, is available on www.sedar.com. The financial years
ending March 31, 2018, March 31, 2019 and March 31, 2020 are referred to as “fiscal 2018”, “fiscal 2019” and “fiscal
2020” 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 APL 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 and craft beverage alcohol products; 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 and spirit
prices; its ability to obtain grapes, imported wine, glass, and other raw materials; fluctuations in foreign currency
exchange rates; its ability to market products successfully to its anticipated customers; the trade balance within the
domestic Canadian and international wine markets; market trends; reliance on key personnel; protection of its intellectual
property rights; the economic environment; the regulatory requirements regarding producing, marketing, advertising, and
labelling 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 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 Vintners’ Quality Alliance (“VQA”) brands include Peller Estates, Trius, Thirty
Bench, Wayne Gretzky, Sandhill, Red Rooster, Black Hills Estate, Tinhorn Creek, Gray Monk Estates, Raven Conspiracy
and Conviction. Complementing these premium brands are a number of popularly priced varietal brands including Peller
Family Vineyards (formerly, Peller Estates French Cross in Eastern Canada and Peller Estates Proprietors Reserve in
Western Canada), Copper Moon, Black Cellar and XOXO. Hochtaler, Domaine D’Or, Schloss Laderheim, Royal, and
Sommet are the Company’s key value priced brands. The Company imports wines from major wine regions around the
world to blend with domestic wine to craft these quality and value priced brands. The Company also produces craft
beverage alcohol products, including No Boats on Sunday ciders, Wayne Gretzky No. 99 Red Cask, No. 99 Ice Cask and
99 Proof Canadian Whiskies and No. 99 Canadian Whisky Cream products. The Company has also recently entered the
craft beer market with the launch of its No. 99 Rye Lager. With a focus on serving the needs of all wine consumers, the
7
| ANDREW PELLER LIMITED 2019
Company produces and markets premium personal winemaking products through its wholly-owned subsidiary, Global
Vintners Inc. (“GVI”), the recognized leader in personal winemaking products. GVI distributes products through over 170
Winexpert authorized retailers and more than 500 independent retailers across Canada, with additional distributors in the
United States, the United Kingdom, New Zealand, Australia, and China. GVI’s award-winning premium and ultra-
premium winemaking brands include Selection, Vintners Reserve, Island Mist, KenRidge, Cheeky Monkey, Traditional
Vintage, and Cellar Craft. The Company owns and operates 101 well-positioned independent retail locations in Ontario
under The Wine Shop, Wine Country Vintners, and Wine Country Merchants store names. The Company also operates
Andrew Peller Import Agency and The Small Winemaker’s Collection Inc., importers and marketing agents for premium
wines from around the world.
The Company’s vision is to Pour Extraordinary into Everyday Life. The Company believes it achieves this objective by
delivering to its customers and consumers the highest quality wines, spirits, refreshments, and experiences at the best
possible value. To meet this goal, the Company invests in improvements in the quality of grapes, wines, and spirits raw
materials, its winemaking and distillation capabilities, sales and marketing initiatives, tourism and hospitality experiences,
and its quality management programs.
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, Ontario independent retail locations and grocery outlets 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 12, 2019, the Company’s Board of Directors approved a 4.8% increase in common share dividends. The annual
dividend on Class A Shares was increased to $0.215 per share from $0.205 per share and the dividend on Class B Shares
was increased to $0.187 per share from $0.178 per share. The Company has consistently paid common share dividends
since 1979 and has increased dividends every year for the past seven years. APL currently designates all dividends paid as
“eligible dividends” for purposes of the Income Tax Act (Canada) unless indicated otherwise.
On April 26, 2019, the Company’s Wayne Gretzky Estates introduced its expansion into the craft beer market with its
new No. 99 Rye Lager. No. 99 Rye Lager has only four natural ingredients and is brewed locally in Ontario with Canadian
Winter rye grain. The craft beer is available for sale across Ontario in LCBO stores, Wayne Gretzky Estates as well as
select Ontario restaurants, and will be more broadly available across Ontario this fall.
On April 11, 2019, the Company announced the launch of the new Peller Family Vineyards brand supported by a
comprehensive media campaign including television, digital, social, public relations and in-store programs, positioning
Peller Family Vineyards as a signature for quality, approachable wine.
The Government of Ontario has announced its intention to modernize the rules for selling beverage alcohol in Ontario by
expanding retail distribution in the province. This could represent a significant change to the retail landscape in Ontario
with the goal of providing more convenience and choice to consumers. While there has not been a proposal by the
Government of Ontario regarding implementation, the Company is working closely with its industry partners to mitigate
the risks that this transition may have on its financial results.
On September 30, 2018, Canada, the United States of America and Mexico reached an agreement in principle to a revised
trade agreement to replace the North American Free Trade Agreement implemented in 1994. The new trade agreement
maintains the tariff-free market access from the original agreement and includes updates to address modern-day trade
challenges and opportunities. The Company does not expect a material change to the financial results or current
operations as a result of the new trade agreement.
ANDREW PELLER LIMITED 2019 | 8
Results of Operations
For the years ended March 31,
(in $000, except per share amounts)
Sales
Gross margin
Gross margin (% of sales)
Selling and administrative expenses
EBITA
Adjusted EBITA
Interest
Net unrealized (gain) loss 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
Adjusted earnings per share – basic and diluted – Class A
Adjusted earnings per share – basic and diluted – Class B
Dividend per share – Class A (annual)
Dividend per share – Class B (annual)
2019
2018
2017
$ 381,796
$ 363,897
$ 342,606
159,008
150,325
131,155
41.6%
106,133
52,875
58,287
6,872
1,679
1,063
29,408
21,958
$0.51
$0.44
$0.68
$0.59
$0.205
$0.178
41.3%
97,465
52,860
57,225
5,345
38.3%
86,018
45,137
46,246
3,078
(1,400)
(2,232)
(3,842)
29,303
30,117
$0.71
$0.62
$0.69
$0.60
$0.180
$0.156
120
25,608
26,350
$0.64
$0.55
$0.62
$0.54
$0.163
$0.142
Sales for the year ended March 31, 2019 were $381.8 million, up 4.9% from $363.9 million in the prior year. The increase
in sales is due primarily to the acquisition of three estate wineries in October 2017 as well as the introduction of new
products and solid performance across the majority of the Company’s well established trade channels. Sales during the
second half of fiscal 2019 were impacted by increased competition from new low-priced imported wines and market
softness primarily in Western Canada. Despite these factors, the Company’s share of the English Canada wine market
remained strong and stable at approximately 10.2%, which is comparable to fiscal 2018.
The Company defines gross margin as gross profit excluding amortization. Gross margin as a percentage of sales
improved to 41.6% for the year ended March 31, 2019 compared to 41.3% in the prior year. Gross margin in fiscal 2019
benefited from the rationalization of lower performing products, an increased focus on higher margin products, and the
positive impact of the Company’s cost control initiatives, partially offset by the softer markets in Western Canada and
increased competition from new low-priced imported wines. Management is continually focused on efforts to enhance
production efficiency and productivity and believes gross margin will continue to strengthen over the long term.
On the acquisition of the three wineries purchased in October 2017, the Company recorded an increase of $10.4 million to
inventory to represent the fair value of the goods acquired. This increase is being expensed over time to the consolidated
statement of earnings as finished goods are sold, thus reducing gross margin. During fiscal 2019 the Company’s gross
margin was reduced by $5.5 million due to this adjustment compared to $3.0 million in fiscal 2018.
9
| ANDREW PELLER LIMITED 2019
Selling and administrative expenses increased in fiscal 2019 compared to the prior year due to additional expenditures
related to compensation to build out the Company’s marketing team, extensive consumer research, large innovation
projects and the creation of marketing campaigns for the launch of Peller Family Vineyards and No. 99 Rye Lager in the
first quarter of fiscal 2020. Selling and administrative expenses also increased by approximately $1.2 million in fiscal
2019 due to the increase in minimum wage in Ontario.
Other income in fiscal 2018 includes a one-time gain of approximately $4.2 million related to one of the acquisitions
completed in October 2017.
Earnings before interest, amortization, net unrealized gains and losses on derivative financial instruments, other (income)
expenses, and income taxes (“EBITA”) were $52.9 million for the year ended March 31, 2019 which is consistent with
the prior year. EBITA in fiscal 2019 was impacted by the increase in selling and administrative expenses and the larger
reduction in margin due to the inventory fair value adjustment charged to cost of sales, partially offset by the increase in
sales and improved gross margin. Adjusted EBITA, which excludes from EBITA one-time acquisition related charges,
was $58.3 million for the year ended March 31, 2019 compared to $57.2 million in the prior year.
Interest expense increased in fiscal 2019 compared to the prior year due primarily to long-term debt incurred to complete
the three acquisitions in October 2017. Amortization expense has also increased due to the addition of the three acquired
wineries and operational improvements at the Company’s production facilities.
The Company recorded a net unrealized non-cash loss in fiscal 2019 of $1.7 million related to mark-to-market
adjustments on interest rate swaps and foreign exchange contracts compared to a gain of $1.4 million in fiscal 2018. 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.
Adjusted earnings, defined as net earnings not including net unrealized gains and losses on derivative financial
instruments, other (income) expenses, non-recurring, non-operating (gains) and losses, and the related income tax effect
were $29.4 million for the year ended March 31, 2019 compared to $29.3 million in the prior year. Net earnings for fiscal
2019 were $22.0 million or $0.51 per Class A Share compared to $30.1 million or $0.71 per Class A Share in the prior
year. Net earnings in the third quarter of fiscal 2018 included a one-time gain of approximately $4.2 million related to one
of the acquisitions completed in October 2017.
The Company believes that sales will grow over the long term due to strong positioning of key brands, the continued
launch of new and innovative products, and growth in the Canadian beverage alcohol market.
ANDREW PELLER LIMITED 2019 | 10
Quarterly Performance
The following table outlines key quarterly highlights.
(in $000, except per share amounts)
Q4 19
Q3 19
Q2 19
Q1 19
Q4 18
Q3 18
Q2 18
Q1 18
Sales
Gross margin
79,780
103,152
103,323
95,541
79,817
103,583
91,857
$88,640
31,310
42,133
44,284
41,281
32,811
43,217
38,693
35,604
Gross margin (% of sales)
39.2%
40.8%
42.9%
43.2%
41.1%
41.7%
42.1%
40.2%
EBITA
Interest
Adjusted EBITA
6,554
1,055
6,548
14,353
16,160
15,808
1,920
1,943
1,954
15,599
18,198
17,942
4,279
1,749
5,740
17,833
16,290
14,458
1,656
1,157
783
20,175
16,852
14,458
Net unrealized loss (gain) on financial
instruments
1,168
1,478
(749)
Other expenses (income)
669
27
92
Adjusted earnings (loss)
1,477
7,761
10,446
(218)
275
9,724
(833)
(216)
(285)
35
(4,092)
(904)
12,402
Net earnings (loss)
E.P.S. – Class A basic & diluted
E.P.S. – Class B basic & diluted
Adjusted E.P.S – Class A basic &
84
$0.00
$0.00
5,432
$0.13
$0.11
8,894
$0.21
$0.18
7,548
(1,691)
14,391
$0.18
$(0.04)
$0.15
$(0.03)
$0.33
$0.29
(66)
145
8,249
8,191
$0.20
$0.17
70
9,556
9,226
$0.22
$0.19
diluted
$0.03
$0.18
$0.24
$0.23
$(0.02)
$0.29
$0.23
$0.20
Adjusted E.P.S – Class B basic &
diluted
$0.03
$0.16
$0.21
$0.20
$(0.02)
$0.25
$0.20
$0.17
The third quarter of the Company’s fiscal year is historically the largest due to increased consumer purchasing of the
Company’s products during the holiday season.
Sales in the fourth quarter of fiscal 2019 were comparable to the fourth quarter of fiscal 2018, however, sales were
impacted by increased competition from new low-priced imported wines and market softness primarily in Western
Canada.
Gross margin for the three months ended March 31, 2019 was 39.2% of sales compared to 41.1% in the fourth quarter of
fiscal 2018. The decrease in gross margin in the fourth quarter of fiscal 2019 is primarily attributable to certain short-term
cost increases of bulk wine due to poor crops in international markets and the short-term competitive price discounts as
discussed above. These factors have been partially offset by the Company’s increased focus on higher margin products
and the positive impact of the Company’s cost control initiatives.
Selling and administrative expenses reduced significantly in the fourth quarter of fiscal 2019 compared to the prior year’s
fourth quarter due primarily to the Company’s ongoing focus on reducing costs and the realization of synergies on
acquisitions. Investments made during fiscal 2019 in sales and marketing are expected to result in increased sales, thus
reducing selling and administrative expenses as a percentage of revenues compared to fiscal 2019.
EBITA was $6.6 million for the three months ended March 31, 2019 compared to $4.3 million in the same quarter in
fiscal 2018. The increase is due primarily to the reduction in selling and administrative expenses in the fourth quarter of
fiscal 2019, partially offset by the reduced gross margin. The Company recorded a net unrealized non-cash loss of $1.2
million in the fourth quarter of fiscal 2019 related to mark-to-market adjustments on interest rate swaps and foreign
exchange contracts compared to a gain of $0.8 million in the fourth quarter of fiscal 2018.
11
| ANDREW PELLER LIMITED 2019
The Company generated Adjusted earnings for the three months ended March 31, 2019 not including one-time acquisition
related charges, of $1.5 million compared to an Adjusted loss of $0.9 million in the same prior year period. Net earnings
were $0.1 million or $0.00 per Class A share for the three months ended March 31, 2019 compared to a net loss of $1.7
million or a loss of $0.04 per Class A Share in the fourth quarter of fiscal 2018.
Liquidity and Capital Resources
As at
(in $000)
Current assets
Property, plant, and equipment
Intangibles
Goodwill
Derivative financial instruments
Total assets
Current liabilities
Long-term debt
Long-term derivative financial instruments
Post-employment benefit obligations
Deferred income tax
Shareholders’ equity
Total liabilities and shareholders’ equity
March 31, 2019
March 31, 2018
March 31, 2017
$ 196,700
199,749
16,932
53,638
-
$ 467,019
$ 99,395
106,879
1,008
4,657
20,329
234,751
$ 467,019
$ 198,014
188,191
17,733
53,638
204
$ 457,780
$ 93,597
116,257
-
5,140
22,540
220,246
$ 457,780
$ 160,567
118,838
10,600
37,473
-
$ 327,478
$ 81,742
46,678
642
5,279
15,820
177,317
$ 327,478
The change in current assets as at March 31, 2019 compared to March 31, 2018 reflects a decrease in accounts receivable
due to the timing of cash receipts from provincial liquor boards. Inventory is consistent with prior year as the decrease due
to the fair value adjustment for acquired inventory sold in fiscal 2019 has been offset by an increase in finished goods
inventory. Inventory is dependent on the increase 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 producing wine from domestically grown grapes is also significantly higher
than wine purchased on international markets.
Accounts receivable 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, 2019, 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 $1.6 million at March 31, 2019. Against these amounts an allowance
for doubtful accounts of $0.1 million has been provided which the Company has determined based on assumptions about
risk of default and expected loss rates.
Property, plant, and equipment increased at March 31, 2019 compared to the prior year due to operational investments at
the Company’s production facilities.
The change in current liabilities as at March 31, 2019 compared to March 31, 2018 is due to an increase in accounts
payable and accrued liabilities offset by lower bank indebtedness.
Overall bank debt decreased to $154.8 million at March 31, 2019 compared to $171.7 million at March 31, 2018. The
decrease is due to cash flows from operations in fiscal 2019, the positive impact of working capital management, and
regularly scheduled debt repayments. With the decrease in debt, the Company’s debt to equity ratio improved to 0.66:1 at
March 31, 2019 compared to 0.78:1 at March 31, 2018. At March 31, 2019, the Company had unutilized debt capacity in
the amount of $51.8 million on its operating facility and $102.8 million on its investment facility.
ANDREW PELLER LIMITED 2019 | 12
The following table outlines the Company’s contractual obligations as at March 31, 2019:
(in $000)
Long-term debt
Leases and royalties
Pension obligations
Grape and bulk wine purchase contracts
Packaging purchase contracts
Interest rate swap
Foreign exchange forwards
< 1
year
2 - 3
years
4 - 5
Years
> 5
years
Total
$ 9,741
5,360
331
69,362
31,299
116,093
2,519
14,102
$ 24,194
9,209
438
72,305
7,411
113,557
4,339
-
$ 83,503
6,844
181
62,951
-
153,479
904
-
-
15,659
89
130,992
-
146,740
-
-
$ 117,438
37,072
1,039
335,610
38,710
529,869
7,762
14,102
Total contractual obligations
$ 132,714
$ 117,896
$ 154,383
$ 146,740
$ 551,733
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.
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 long-term through increased profitability and strong management of
working capital and capital expenditures. The Company regularly 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, 2019, the Company generated cash from operating activities, after changes in non-cash
working capital items, of $49.0 million compared to $21.7 million in the prior year. Investing activities of $23.4 million in
the fiscal 2019 relate to capital expenditures to improve operations. In fiscal 2018, the Company invested
$77.4 million in the acquisition of three wineries.
Financing activities for the year ended March 31, 2019 of $25.7 million included scheduled repayments of long-term debt,
dividend payments and a decrease in bank indebtedness. Financing activities in fiscal 2018 reflect the acquisition of three
wineries in October 2017.
Working capital as at March 31, 2019 was $97.3 million compared to $104.4 million at March 31, 2018, reflecting the
decrease in accounts receivable and increase in current liabilities. Shareholders’ equity as at March 31, 2019 was
$234.8 million or $5.31 per common share compared to $220.2 million or $4.99 per common share as at March 31, 2018.
The increase in shareholders’ equity was due to the increase in net earnings through fiscal 2019, partially offset by the
payment of dividends.
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, 2019
March 31, 2018
March 31, 2017
35,988,148
8,198,994
44,187,142
35,471,185
8,702,095
44,173,280
33,581,487
9,012,123
42,593,610
During fiscal 2019, approximately 0.5 million Class B Shares were converted into Class A Shares on a one-for-one basis.
13
| ANDREW PELLER LIMITED 2019
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 consumers and customers. Over the long term the Company believes higher-priced
premium wine and spirits sales will continue to grow in Canada, generating higher margins and increased profitability
compared to its lower-priced products. The Company has also entered the spirits and craft beer categories, through its
strategic alliance with Wayne Gretzky, and has introduced sangrias and ciders through its own brand labels.
The market for wine in Canada continues to grow long term 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 reported health benefits of moderate wine consumption. 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 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 key brands through all of the Company’s distribution channels will continue to receive increased marketing
and sales support.
The Company expects to continue to invest in capital expenditures over the next five years to increase capacity, support
its ongoing commitment to producing the highest-quality wines and spirits, and improve productivity.
From time to time the Company evaluates investment opportunities, including acquisitions, which support its strategic
direction.
Risks and Uncertainties
The Company’s sales of wine and spirits are affected by general economic conditions such as changes in discretionary
consumer spending and consumer confidence, future economic conditions, changes to Inter-Provincial trade laws, 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, distillery and restaurants, direct sales through licensed establishments, and export sales through duty free shops.
The Company 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 incentives on 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 improve support for the
domestic industry.
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.
ANDREW PELLER LIMITED 2019 | 14
APL expects to increase sales 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. 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. Fluctuating foreign currencies may have a positive or negative impact on gross
margins, however, the Company believes the impact on gross margin will be largely offset by its continued ability to
leverage scale and successful cost control initiatives to reduce other cost of goods sold. 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. The Company does not enter into foreign exchange contracts for trading or speculative
purposes and contracts are reviewed periodically. As at March 31, 2019, the Company had locked in $5.0 million in U.S.
dollar contracts at rates ranging between $1.31 and $1.32 Canadian and $8.0 million in Australian dollar contracts at rates
ranging between $0.95 and $0.97 Canadian. These contracts expire at various dates through November 2019. Based on
the Company’s forecasts for foreign currency purchases and the amount of foreign exchange forward contracts
outstanding at March 31, 2019, each one percent change in the U.S. dollar would impact the Company’s net earnings by
an estimated $0.2 million. Each one percent change in the Euro and the Australian dollar exchange rates would not result
in 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
and spirits. The largest component in the packaging of wine and spirits is glass, of which there are few domestic or
international suppliers. There is currently only one commercial supplier of glass in Canada that is able to supply glass to
APL’s specifications. Any interruption in supply could have an adverse impact on the Company’s ability to supply its
markets. APL has taken steps to reduce its dependence on domestic suppliers through the development of relationships
with several international producers of glass and through carrying increased inventory of selected bottles.
The Company operates in a highly regulated industry with requirements regarding the production, distribution, marketing,
advertising, and labelling of wine and spirits. 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 recent regulatory changes relating to privatization in Ontario and sales through
grocery outlets remains a risk to the Company through its impact on the Company’s retail operations.
The wine industry and the domestic and international markets 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 remain competitive. APL and other wine industry participants also generally compete with
other alcoholic beverages like beer and spirits for consumer acceptance, loyalty, and shelf space. The legalization of
recreational cannabis may also have an impact on consumption of wine and other beverage alcohol products. 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.
15
| ANDREW PELLER LIMITED 2019
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 certain 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. The Company’s 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 the Company.
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.
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) and Adjusted EBITA (EBITA before non-
recurring expenses such as acquisition transaction and transition costs) to measure its financial performance. EBITA and
Adjusted EBITA are not recognized measures under IFRS; however, management believes that EBITA and Adjusted
EBITA are useful supplemental measures to net earnings as these measures provide readers with an indication of earnings
available for investment prior to debt service, capital expenditures, and income taxes, as well as provide an indication of
recurring earnings compared to prior periods.
ANDREW PELLER LIMITED 2019 | 16
The Company calculates EBITA and Adjusted EBITA as follows.
For the three months and years ended March 31,
(in $000)
Net earnings (loss)
Add: Interest
Provision for income taxes
Amortization of plant and equipment used in production
Amortization of equipment and intangibles used in selling and administration
Net unrealized loss (gain) on derivative financial instruments
Other expenses (income)
EBITA
Fair value adjustment for acquired inventory sold during the period
Acquisition transaction and transition costs
Adjusted EBITA
Three Months
Year
2019
2018
2019
2018
$ 84
$ (1,691)
$ 21,958
$ 30,117
1,055
234
2,091
1,253
1,168
669
1,749
1,411
1,782
1,826
(833)
35
6,872
8,533
7,749
5,021
1,679
1,063
5,345
10,937
6,891
4,812
(1,400)
(3,842)
$ 6,554
$ 4,279
$ 52,875
$ 52,860
305
(311)
1,098
363
5,483
(71)
2,972
1,393
$ 6,548
$ 5,740
$ 58,287
$ 57,225
Readers are cautioned that EBITA and Adjusted 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 years ended March 31,
(in $000)
Sales
Less: Cost of goods sold, excluding amortization
Gross margin
Gross margin (% of sales)
Three Months
2019
2018
Year
2019
2018
$ 79,780
$ 79,817
$ 381,796
$ 363,897
48,470
47,006
222,788
213,572
$ 31,310
$ 32,811
$ 159,008
$ 150,325
39.2%
41.1%
41.6%
41.3%
The Company calculates Adjusted earnings and Adjusted earnings per share as follows.
For the three months and years ended March 31,
(in $000)
Net earnings (loss)
Net unrealized loss (gain) on derivative financial instruments
Other expenses (income)
Fair value adjustment for acquired inventory sold during the period
Acquisition transaction and transition costs
Income tax effect of the above
Adjusted earnings (loss)
Adjusted earnings (loss) per share – Class A
Adjusted earnings (loss) per share – Class B
Three Months
Year
2019
2018
2019
2018
$ 84
$ (1,691)
$ 21,958
$ 30,117
1,168
669
305
(311)
(438)
(833)
35
1,098
363
124
1,679
1,063
5,483
(71)
(704)
(1,400)
(3,842)
2,972
1,393
63
$ 1,477
$ (904)
$ 29,408
$ 29,303
$0.03
$(0.02)
$0.03
$(0.02)
$0.68
$0.59
$0.69
$0.60
17
| ANDREW PELLER LIMITED 2019
The Company’s method of calculating EBITA, Adjusted EBITA, gross margin, Adjusted earnings, and Adjusted earnings
per share 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 Peller Family Enterprises Inc. (formerly, Jalger Limited), which owns 60.9% 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 Peller Family Enterprises Inc.
The compensation expense recorded for directors and members of the Executive Management Team of the Company is
shown below:
For the years ended March 31
(in $000)
Compensation and short-term benefits
Post-employment benefits
Stock based compensation expense
2019
2018
$ 4,336
295
1,097
$ 5,728
$ 3,848
296
1,422
$ 5,566
The compensation and short-term benefits expense consist 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
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:
Impairment of goodwill and indefinite life intangible assets
Testing goodwill for impairment at least annually involves estimating the recoverable amount of the cash generating units
(CGUs) to which goodwill is allocated. This requires making assumptions about future cash flows, growth rates and
discount rates. Testing indefinite life intangible assets for impairment at least annually involves estimating the fair value
using the relief of royalty method. This requires making assumptions about royalty rates, growth rates and discount rates.
These assumptions are inherently uncertain and as such, actual amounts may vary from these assumptions and cause
significant adjustments. Management has concluded that a 10% change in any key assumption in the impairment tests
would not result in an impairment of goodwill or indefinite life intangible assets as at March 31, 2019 and 2018.
Post-employment benefits
Measuring the liability for post-employment benefits requires assumptions for the discount rates, increases in
compensation, increases in medical costs and the 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.
ANDREW PELLER LIMITED 2019 | 18
Recently Adopted Accounting Policies
The IASB issued an amended IFRS 9, Financial Instruments - Classification and Measurement of Financial Assets and
Financial Liabilities. IFRS 9 replaces IAS 39, Financial Instruments - Recognition and Measurement. In addition, IFRS 7,
Financial Instruments - Disclosures is amended to include additional disclosure requirements on transition to IFRS 9. The
amendments were effective for annual periods beginning on or after January 1, 2018. The standard uses a single approach
based on how an entity manages its financial instruments to determine whether a financial asset is measured at amortized
cost or fair value and 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 (loss) 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 new requirements
were adopted effective April 1, 2018, using the modified retrospective method. The adoption of these amendments did not
have a significant impact on the consolidated financial statements.
The IASB issued IFRS 15, Revenue from Contracts with Customers, which supersedes IAS 18, Revenue, and IAS 11,
Construction Contracts. The Company adopted the requirements of IFRS 15 on April 1, 2018, using the modified
retrospective method as permitted by IFRS 15. The adoption of IFRS 15 did not result in any adjustments or in any
change in the recognition of revenues compared to prior periods and therefore, there was no adjustment to opening
retained earnings
Recently Issued Accounting Pronouncements
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 on adoption of IFRS 16, and material changes to the timing of recognition of
expenses associated with the lease arrangements. The Company expects to use the modified retrospective method on
adoption and currently expects to apply the practical expedients relating to recognition exemptions for short-term leases
and low-value items as described under IFRS 16. The Company is finalizing the impact of the amendment on the
consolidated financial statements and will adopt the new standard effective April 1, 2019.
IAS 19, Employee Benefits has been amended to modify the guidance in connection with defined benefit plans and
accounting for plan amendments, settlements, or curtailments. The Amendments are effective for annual periods
beginning on or after January 1, 2019. The Company has not yet assessed the impact of the amendments on the
consolidated financial statements.
IFRS 9, Financial Instruments has been amended to enable companies to measure at amortized cost some prepayable
financial assets with negative compensation. The amendment to IFRS 9 also clarifies how to account for the modification
of a financial liability. Most modifications of financial liabilities will result in immediate recognition of a gain or loss. The
amendment is effective for annual periods beginning on or after January 1, 2019. The Company has not yet assessed the
impact of the amendment on the consolidated financial statements.
IFRIC Interpretation 23, Uncertainty over Income Tax Treatments, has been issued to clarify how to apply the recognition
and measurement requirements in IAS 12, Income Taxes, when there is uncertainty over income tax treatments.
Application of the standard is mandatory for annual reporting periods beginning on or after January 1, 2019. The
Company has not yet assessed the impact of the amendment on the consolidated financial statements.
IAS 1, Presentation of Financial Statements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors
have been amended to use a consistent definition of materiality throughout all accounting standards, clarify the
explanation of the definition of material and incorporate some of the guidance in IAS 1 about immaterial information. The
amendments are effective for annual periods beginning on or after January 1, 2020. The Company has not yet assessed the
impact of the amendment on the consolidated financial statements.
19
| ANDREW PELLER LIMITED 2019
IFRS 3, Business Combinations has been amended to improve the definition of a business. The amendments will help
companies determine whether an acquisition made is of a business or a group of assets. To be considered a business, an
acquisition would have to include an input and a substantive process that together significantly contributions to the ability
to create outputs. The amendments are effective for annual periods beginning on or after January 1, 2020. The Company
has not yet assessed the impact of the amendment on the consolidated financial statements.
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 Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) on a timely basis so
that decisions can be made regarding the Company 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”. As at June 12, 2019, the CEO and CFO of the
Company have evaluated the effectiveness of the disclosure controls and procedures. Based on these evaluations, the CEO
and CFO have concluded that the controls and procedures were operating effectively.
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 maintain 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, 2019, 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 12, 2019, 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 2019 | 20
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Andrew Peller Limited
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of
Andrew Peller Limited and its subsidiaries (together, the Company) as at March 31, 2019 and 2018, and its financial performance and
its cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).
What we have audited
The Company’s consolidated financial statements comprise:
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the consolidated balance sheets as at March 31, 2019 and 2018;
the consolidated statements of earnings for the years then ended;
the consolidated statements of comprehensive income for the years then ended;
the consolidated statements of changes in equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
the notes to the consolidated financial statements, which include a summary of significant accounting policies.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.
Other information
Management is responsible for the other information. The other information comprises the Management’s Discussion and Analysis,
which we obtained prior to the date of this auditor’s report and the information, other than the consolidated financial statements and
our auditor’s report thereon, included in the annual report, which is expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express an
opinion or any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report
in this regard. When we read the information, other than the consolidated financial statements and our auditor’s report thereon,
included in the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter
to those charged with governance.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS,
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.
21
| ANDREW PELLER LIMITED 2019
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
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Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit 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 Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor’s report is John Donnelly.
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Ontario
June 12, 2019
ANDREW PELLER LIMITED 2019 | 22
Consolidated Balance Sheets
As at March 31, 2019 and 2018
(in thousands of Canadian dollars)
Assets
Current assets
Accounts receivable (note 20)
Inventories (note 4)
Biological assets (note 6)
Prepaid expenses and other assets
Derivative financial instruments (note 20)
Property, plant and equipment (note 5)
Intangible assets (note 7)
Goodwill (note 8)
Derivative financial instruments (note 20)
Liabilities
Current liabilities
Bank indebtedness (note 9)
Accounts payable and accrued liabilities (note 10)
Dividends payable
Income taxes payable
Derivative financial instruments (note 20)
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 taxes (note 13)
Shareholders’ Equity
Capital stock (note 14)
Contributed surplus (note 15)
Retained earnings
Accumulated other comprehensive loss
2019
$
2018
$
29,801
160,537
1,736
4,626
-
196,700
199,749
16,932
53,638
-
467,019
38,175
47,451
2,212
1,477
339
9,741
99,395
106,879
1,008
4,657
20,329
232,268
26,330
2,737
209,825
(4,141)
234,751
467,019
31,406
160,154
1,901
4,401
152
198,014
188,191
17,733
53,638
204
457,780
47,324
33,404
1,935
2,775
24
8,135
93,597
116,257
-
5,140
22,540
237,534
26,097
1,673
196,713
(4,237)
220,246
457,780
Director
Director
The accompanying notes are an integral part of these consolidated financial statements.
23
| ANDREW PELLER LIMITED 2019
Consolidated Statements of Earnings
For the years ended March 31, 2019 and March 31, 2018
(in thousands of Canadian dollars, except per share amounts)
Sales
Cost of goods sold, excluding amortization (note 16)
Amortization of plant and equipment used in production
Gross profit
Selling and administration (note 16)
Amortization of equipment and intangible assets used in selling and
administration
Interest
Net unrealized loss (gain) on derivative financial instruments (note 20)
Other expense (income) (note 16)
Earnings before income taxes
Provision for (recovery of) income taxes (note 13)
Current
Deferred
Net earnings for the year
Net earnings per share (note 17)
Basic and diluted
Class A shares
Class B shares
2019
$
381,796
222,788
7,749
151,259
106,133
5,021
6,872
1,679
1,063
30,491
10,778
(2,245)
8,533
21,958
0.51
0.44
2018
$
363,897
213,572
6,891
143,434
97,465
4,812
5,345
(1,400)
(3,842)
41,054
11,797
(860)
10,937
30,117
0.71
0.62
The accompanying notes are an integral part of these consolidated financial statements.
ANDREW PELLER LIMITED 2019 | 24
Consolidated Statements of Comprehensive Income
For the years ended March 31, 2019 and March 2018
(in thousands of Canadian dollars)
Net earnings for the year
Items that are never reclassified to net earnings
Net actuarial gains (losses) on post-employment benefit plans
(note 12)
Deferred income taxes (note 13)
Other comprehensive income (loss) for the year
2019
$
21,958
130
(34)
96
2018
$
30,117
(533)
139
(394)
Net comprehensive income for the year
22,054
29,723
The accompanying notes are an integral part of these consolidated financial statements.
25
| ANDREW PELLER LIMITED 2019
Consolidated Statements of Changes in Equity
For the years ended March 31, 2019 and March 31, 2018
(in thousands of Canadian dollars)
Capital
stock
$
Contributed
surplus
$
Retained
earnings
$
Accumulated
other
comprehensive
loss
$
Total
shareholders’
equity
$
Balance at April 1, 2017
6,967
-
174,193
(3,843)
177,317
Net comprehensive income for the
year
Issuance of Class A non-voting
shares
Share based compensation (note 15)
Dividends (Class A $0.180 per share,
Class B $0.156 per share)
-
-
30,117
(394)
29,723
19,130
-
-
1,673
-
-
-
-
(7,597)
-
-
-
19,130
1,673
(7,597)
Balance at March 31, 2018
26,097
1,673
196,713
(4,237)
220,246
Net comprehensive income for the
year
Issuance of Class A non-voting
shares (note 15)
Share based compensation (note 15)
Dividends (Class A $0.205 per share,
Class B $0.178 per share)
-
-
21,958
96
22,054
233
-
-
(162)
1,226
-
-
-
(8,846)
-
-
-
71
1,226
(8,846)
Balance at March 31, 2019
26,330
2,737
209,825
(4,141)
234,751
The accompanying notes are an integral part of these consolidated financial statements.
ANDREW PELLER LIMITED 2019 | 26
Consolidated Statements of Cash Flows
For the years ended March 31, 2019 and March 31, 2018
(in thousands of Canadian dollars)
Cash provided by (used in)
Operating activities
Net earnings for the year
Adjustments for non-cash items
Gain on acquisition of subsidiary
(Gain) loss on disposal of property, plant and equipment
Amortization of plant, equipment and intangible assets
Interest expense
Provision for income taxes
Net unrealized loss (gain) on derivative financial instruments
Share based compensation expense
Post-employment benefits
Interest paid
Income taxes paid
Change in non-cash working capital items related to operations (note 19)
Investing activities
Acquisition of subsidiaries, net of cash acquired
Proceeds from disposal of property, plant and equipment
Purchase of property, plant and equipment
Purchase of intangible assets
Financing activities
(Decrease) increase in bank indebtedness
Issuance of Class A non-voting shares
Drawings of long-term debt
Repayment of long-term debt
Deferred financing costs
Dividends paid
Cash – Beginning and end of year
2019
$
2018
$
21,958
30,117
-
(7)
12,770
6,872
8,533
1,679
1,226
(353)
(6,689)
(12,076)
33,913
15,131
(4,164)
181
11,703
5,345
10,937
(1,400)
1,673
(672)
(4,600)
(11,484)
37,636
(15,889)
49,044
21,747
-
18
(22,516)
(870)
(77,438)
-
(19,996)
(378)
(23,368)
(97,812)
(9,149)
71
-
(8,029)
-
(8,569)
10,642
-
79,000
(5,003)
(1,222)
(7,352)
(25,676)
76,065
-
-
Supplementary information
Property, plant and equipment and intangible assets acquired that were unpaid in
cash and included in accounts payable and accrued liabilities
536
384
The accompanying notes are an integral part of these consolidated financial statements.
27
| ANDREW PELLER LIMITED 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2019 and March 31, 2018
(in thousands of Canadian dollars, except per share amounts)
1 Nature of operations
Andrew Peller Limited (the Company) produces and markets wine, spirits and wine related products. The
Company’s products are produced and sold predominantly in Canada. The Company is incorporated under the
Canada Business Corporations Act and is domiciled in Canada. The address of its head office is 697 South Service
Road, Grimsby, Ontario, L3M 4E8.
2
Summary of significant accounting policies
Basis of presentation
These consolidated financial statements have been prepared in compliance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
These consolidated financial statements were approved by the Board of Directors for issue on June 12, 2019.
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.
Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred by the
Company is measured as the fair value of assets transferred and equity instruments issued at the date of completion
of the acquisition. Identifiable assets acquired and liabilities assumed in a business combination are measured
initially at fair value at the acquisition date. The excess of the consideration transferred over the fair value of the net
assets acquired is recorded as goodwill. If the consideration transferred is less than the net assets acquired, the
difference is recognized directly in the consolidated statements of earnings as a gain on acquisition. Results of
operations of a business acquired are included in the Company’s consolidated financial statements from the date of
the business acquisition. Acquisition costs incurred are expensed and included in selling and administrative
expenses.
Foreign currency translation
The consolidated financial statements are presented in Canadian dollars, which is the Company’s functional
currency.
ANDREW PELLER LIMITED 2019 | 28
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.
Revenue
Revenue is derived from the sale of goods and is recognized at a point in time when the performance obligation is
fulfilled. For sales to consumers through retail stores winery restaurants, and estate wineries, the performance
obligation is deemed fulfilled when the product is purchased. For sales transactions with provincial liquor boards,
licensee retail stores and wine kit retailers, the Company’s performance obligation is fulfilled when the product is
shipped from the Company’s distribution facilities.
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, promotional and advertising allowances,
and discounts provided to customers are deducted from the selling price to determine the transaction price at which
revenue is recognized. Expected product returns and breakage are estimated based on historical actuals as a
percentage of sales.
Deferred revenue represents amounts paid by customers in advance of the purchase of products which typically takes
the form of pre-loaded gift cards. The amounts received are recorded as deferred revenue within accounts payable
and accrued liabilities on the consolidated balance sheets. Once a gift card is redeemed to make a purchase, the
liability is relieved and revenue is recognized.
The Company also enters into arrangements with third parties for the sale of products to customers. When the terms
of the arrangement are such that the Company is acting as an agent of the third party, revenue is recognized in the
amount of the commission to which the Company is entitled in exchange for arranging for the third party to provide
its goods to customers.
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.
29
| ANDREW PELLER LIMITED 2019
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
Land is carried at cost and is not amortized.
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.
Biological assets
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 comprise 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 year 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 – indefinite life
Brands – finite life
Customers
Contract packaging
Software
Amortization
method
n/a
straight-line
straight-line
straight-line
straight-line
Useful life
indefinite
2 years
10 – 20 years
10 years
5 years
Remaining
useful life
indefinite
2 years
3 – 15 years
none
3 – 5 years
Certain of the Company’s 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 the amount of royalty the
Company would have had to pay in an arm’s length licensing arrangement to secure access to the same rights to its
carrying value. If necessary, the fair value is also considered. An impairment charge is recorded to the extent the
carrying value exceeds the fair value. Management has determined there was no impairment in intangible assets for
the years ended March 31, 2019 and 2018.
ANDREW PELLER LIMITED 2019 | 30
During the year ended March 31, 2019, it was determined that certain of the Company’s brands, which were
previously recorded as indefinite life, have a finite life based on the remaining expected usage. Therefore,
amortization for these brands is being recorded on a straight-line basis over the remaining period of expected usage.
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 cash generating unit (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, 2019 and
2018.
Post-employment benefits
The Company sponsors defined contribution pension plans, defined benefit pension plans, post-employment medical
benefit plans, and other post-employment benefit plans for certain employees. Contributions to the defined
contribution pension plans are recognized as an expense as services are rendered by employees. The costs of the
defined benefit plans, the post-employment medical benefit plans and other post-employment benefit plans are
actuarially determined and include management’s best estimate of expected plan investment performance, the
interest rate on the plan obligation, salary escalation, expected retirement ages and medical cost escalation. The
liability recognized in the consolidated balance sheets in respect of these plans is the present value of the defined
benefit obligation at the end of the reporting period as determined by the Company’s actuary less the fair value of
plan assets adjusted for the unamortized portion of negative past service credits. The current service cost,
amortization of past service credits, and the interest cost net of the expected return on plan assets are recognized in
earnings in the period they arise. Adjustments arising from actuarially determined gains or losses are recognized in
other comprehensive income (loss) in the year in which they arise. The corresponding change in shareholders’ equity
is adjusted to retained earnings for the year.
Financial instruments and hedge accounting
For the year ended March 31, 2018, the Company recorded and classified its financial instruments under IAS 39,
Financial Instruments – Recognition and Measurement. 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.
31
| ANDREW PELLER LIMITED 2019
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.
Effective April 1, 2018, the Company adopted IFRS 9, Financial Instruments – Classification and Measurement of
Financial Assets and Financial Liabilities using the modified retrospective method. Under IFRS 9, financial assets
and liabilities are initially recorded at fair value including, where permitted by IFRS 9, any directly attributable
transaction costs. For those financial assets that are not subsequently held at fair value, the Company assesses
whether there is evidence of impairment at each balance sheet date.
The Company classifies its financial assets and liabilities into the following categories: financial assets and liabilities
at amortized cost and financial assets and liabilities at fair value through profit or loss. Upon adoption, accounts
receivables were reclassified from the loans and receivable category under IAS 39 to the amortized cost category
under IFRS 9. This reclassification did not have an impact on the consolidated financial statements. There were no
reclassifications of financial liabilities or financial assets and liabilities at fair value through profit or loss.
Expected credit losses on financial assets carried at amortized cost are assessed on a forward-looking basis. The
impairment methodology applied depends on whether there has been a significant increase in credit risk. The loss
allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Company
uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on past
history, existing market conditions as well as forward-looking estimates at the end of each reporting period.
Applying the expected credit risk model to accounts receivable did not have a significant impact on the consolidated
financial statements upon adoption of IFRS 9.
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.
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.
ANDREW PELLER LIMITED 2019 | 32
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 and spirits 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, substantially all of the Company’s sales are
made in Canada. As a result, management has concluded the Company operates in one geographic segment.
Income taxes
Current income tax is the expected amount of tax payable or recoverable on taxable income or loss during the year.
Current income tax may also include adjustments to taxes payable or recoverable in respect of previous years.
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 recorded in net earnings and other comprehensive income (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 comprises net earnings and other comprehensive income (loss). Other comprehensive
income (loss) represents the change in equity for a year 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 income (loss) in the
year incurred.
33
| ANDREW PELLER LIMITED 2019
Equity
The Company separately presents changes in equity related to capital stock, contributed surplus, retained earnings
and accumulated other comprehensive income (loss) in the consolidated statements of changes in equity.
Share based compensation
The Company grants stock options, performance share units (PSUs) and deferred share units (DSUs) to employees
and directors under its share based compensation plan. All share based compensation arrangements are equity-settled
in Class A non-voting common shares.
Equity-settled share based payments to employees are measured at the fair value of the equity instrument granted.
An option valuation model (Black-Scholes) is used to fair value stock options issued on the date of grant.
The grant date fair value of equity-settled share based awards is recognized as a compensation expense with a
corresponding increase in equity reserves over the related service period provided to the Company. The total amount
of expense recognized in profit or loss is determined by reference to the fair value of the options granted or share
awards, which factors in the number of options expected to vest. Equity-settled share based payment transactions are
not remeasured once the grant date fair value has been determined, except in cases where the share based payment is
linked to non-market performance conditions. Stock options vest in tranches (graded vesting) and accordingly, the
expense is recognized in vesting tranches. PSUs vest in full at the end of the third fiscal year after the date of grant
and accordingly, the expense is recognized evenly over the vesting period. DSUs vest immediately and accordingly,
the expense is recognized in full at the date of grant.
Compensation expense is recognized over the applicable vesting period by increasing contributed surplus based on
the number of awards expected to vest. At the end of each reporting period, the Company revises its estimates of the
number of awards that are expected to vest based on the non-market performance vesting conditions. The Company
recognizes the impact of the revision to original estimates, if any, in the consolidated statements of earnings, with a
corresponding adjustment to contributed surplus.
Recently adopted accounting pronouncements
The IASB issued an amended IFRS 9, Financial Instruments – Classification and Measurement of Financial Assets
and Financial Liabilities. IFRS 9 replaces IAS 39, Financial Instruments – Recognition and Measurement. In
addition, IFRS 7, Financial Instruments – Disclosures is amended to include additional disclosure requirements on
transition to IFRS 9. The amendments were effective for annual periods beginning on or after January 1, 2018. The
standard uses a single approach based on how an entity manages its financial instruments to determine whether a
financial asset is measured at amortized cost or fair value and 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 (loss) 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 new requirements were adopted effective April 1, 2018, using the modified
retrospective method. The adoption of these amendments did not have a significant impact on the consolidated
financial statements.
The IASB issued IFRS 15, Revenue from Contracts with Customers, which supersedes IAS 18, Revenue, and
IAS 11, Construction Contracts. The Company adopted the requirements of IFRS 15 on April 1, 2018, using the
modified retrospective method as permitted by IFRS 15. The adoption of IFRS 15 did not result in any adjustments
or in any change in the recognition of revenues compared to prior periods; therefore, there was no adjustment to
opening retained earnings.
ANDREW PELLER LIMITED 2019 | 34
Recently issued accounting pronouncements
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 on adoption of IFRS 16, and material changes to the
timing of recognition of expenses associated with the lease arrangements. The Company expects to use the modified
retrospective method on adoption and currently expects to apply the practical expedients relating to recognition
exemptions for short-term leases and low-value items as described under IFRS 16. The Company is finalizing the
impact of the amendment on the consolidated financial statements and will adopt the new standard effective April 1,
2019.
IAS 19, Employee Benefits, has been amended to modify the guidance in connection with defined benefit plans and
accounting for plan amendments, settlements, or curtailments. The Amendments are effective for annual periods
beginning on or after January 1, 2019. The Company has not yet assessed the impact of the amendments on the
consolidated financial statements.
IFRS 9, Financial Instruments, has been amended to enable companies to measure at amortized cost some
prepayable financial assets with negative compensation. The amendment to IFRS 9 also clarifies how to account for
the modification of a financial liability. Most modifications of financial liabilities will result in immediate
recognition of a gain or loss. The amendment is effective for annual periods beginning on or after January 1, 2019.
The Company has not yet assessed the impact of the amendment on the consolidated financial statements.
IFRIC Interpretation 23, Uncertainty over Income Tax Treatments, has been issued to clarify how to apply the
recognition and measurement requirements in IAS 12, Income Taxes, when there is uncertainty over income tax
treatments. Application of the standard is mandatory for annual reporting periods beginning on or after January 1,
2019. The Company has not yet assessed the impact of the amendment on the consolidated financial statements.
IAS 1, Presentation of Financial Statements, and IAS 8, Accounting Policies, Changes in Accounting Estimates and
Errors, have been amended to use a consistent definition of materiality throughout all accounting standards, clarify
the explanation of the definition of material and incorporate some of the guidance in IAS 1 about immaterial
information. The amendments are effective for annual periods beginning on or after January 1, 2020. The Company
has not yet assessed the impact of the amendment on the consolidated financial statements.
IFRS 3, Business Combinations, has been amended to improve the definition of a business. The amendments will
help companies determine whether an acquisition made is of a business or a group of assets. To be considered a
business, an acquisition would have to include an input and a substantive process that together significantly
contributions to the ability to create outputs. The amendments are effective for annual periods beginning on or after
January 1, 2020. The Company has not yet assessed the impact of the amendment on the consolidated financial
statements.
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:
35
| ANDREW PELLER LIMITED 2019
Impairment of goodwill and indefinite life intangible assets
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 and discount rates.
Testing indefinite life intangible assets for impairment at least annually involves estimating the fair value using the
relief of royalty method. This requires making assumptions about royalty rates, growth rates and discount rates.
These assumptions are inherently uncertain and as such, actual amounts may vary from these assumptions and cause
significant adjustments. Management has concluded that a 10% change in any key assumption in the impairment
tests would not result in an impairment of goodwill or indefinite life intangible assets as at March 31, 2019 and 2018.
Post-employment benefits
Measuring the liability for post-employment benefits requires assumptions for the discount rates, increases in
compensation, increases in medical costs and the 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 and spirits
Finished goods
Interest included in the cost of inventories
2019
$
10,172
83,979
66,386
2018
$
8,177
85,780
66,197
160,537
160,154
1,399
644
Inventory writedowns recognized as an expense amounted to $1,088 (2018 – $1,306).
The cost of inventories recognized as an expense and included in cost of goods sold, excluding amortization, was
$221,700 (2018 – $212,266).
ANDREW PELLER LIMITED 2019 | 36
5
Property, plant and equipment
At March 31, 2017
Cost
Accumulated amortization
Net carrying amount
Year ended March 31, 2018
Additions
Additions from acquisition
Disposals
Amortization
Closing net carrying amount
At March 31, 2018
Cost
Accumulated amortization
Net carrying amount
Year ended March 31, 2019
Additions
Disposals
Amortization
Vines,
vineyard
land and
infrastructure
$
Machinery
and
equipment
$
Buildings
$
Total
$
40,947
(9,398)
55,120
(19,293)
122,325
(75,679)
223,208
(104,370)
31,549
35,827
46,646
118,838
395
6,119
(72)
(1,814)
2,771
21,705
-
(1,838)
16,012
2,039
(109)
(6,843)
19,178
60,851
(181)
(10,495)
36,177
58,465
57,745
188,191
47,373
(11,196)
79,596
(21,131)
139,285
(81,540)
302,058
(113,867)
36,177
58,465
57,745
188,191
Land
$
4,816
-
4,816
-
30,988
-
-
35,804
35,804
-
35,804
-
(3)
-
674
-
(1,719)
9,189
-
(2,073)
12,823
(8)
(7,325)
22,686
(11)
(11,117)
Closing net carrying amount
35,801
35,132
65,581
63,235
199,749
At March 31, 2019
Cost
Accumulated amortization
Net carrying amount
35,801
-
35,801
48,047
(12,915)
88,785
(23,204)
151,289
(88,054)
323,922
(124,173)
35,132
65,581
63,235
199,749
Included in buildings and machinery and equipment are assets amounting to $1,465 (2018 – $1,562) that are under
development and are not being amortized.
Contractual commitments to purchase property, plant and equipment were $6,583 as at March 31, 2019 (2018 –
$12,272).
37
| ANDREW PELLER LIMITED 2019
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, 2019, the Company harvested grapes valued at $9,087 (2018 – $7,150).
The changes in the carrying amount of biological assets are as follows:
Carrying amount – Beginning of year
Acquisitions
Net increase in fair value less costs to sell due to biological
transformation
Transferred to inventory on harvest
Net gain (loss)
Biological assets
2019
$
1,901
-
8,922
(9,087)
(165)
1,736
2018
$
1,400
312
7,339
(7,150)
501
1,901
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 2019 | 38
7
Intangible assets
At March 31, 2017
Cost
Accumulated
amortization
and impairment
Net carrying
amount
Year ended
March 31,
2018
Additions
Additions from
acquisitions
Amortization
Closing net
carrying
amount
At March 31, 2018
Cost
Accumulated
amortization
and impairment
Net carrying
amount
Year ended
March 31,
2019
Additions
Transfer
Amortization
Closing net
carrying
amount
At March 31, 2019
Cost
Accumulated
amortization
and impairment
Net carrying
amount
Brands –
indefinite
life
$
Brands –
finite life
$
Customers
$
Contract
packaging
$
Software
$
Other
$
Total
$
4,175
(200)
3,975
-
6,439
-
10,414
10,614
(200)
10,414
-
-
-
-
-
-
-
-
-
-
11,147
1,100
2,966
1,917
21,305
(6,468)
(973)
(1,281)
(1,783)
(10,705)
4,679
127
1,685
134
10,600
-
1,680
(734)
-
-
(110)
384
-
(493)
-
-
(33)
384
8,119
(1,370)
5,625
17
1,576
101
17,733
12,827
1,100
3,350
1,917
29,808
(7,202)
(1,083)
(1,774)
(1,816)
(12,075)
5,625
17
1,576
101
17,733
-
(375)
-
-
375
(125)
-
-
(834)
-
-
(17)
852
-
(677)
-
-
-
852
-
(1,653)
10,039
250
4,791
-
1,751
101
16,932
10,239
375
12,827
1,100
4,202
1,917
30,660
(200)
(125)
(8,036)
(1,100)
(2,451)
(1,816)
(13,728)
10,039
250
4,791
-
1,751
101
16,932
39
| ANDREW PELLER LIMITED 2019
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
2019
$
3,134
26,695
23,809
53,638
2018
$
3,134
26,695
23,809
53,638
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
2019
2018
12%
5 years
4%
12%
5 years
3%
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 on 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
2019
2018
$
38,175
$
47,324
September 29,
2022
$90,000
CDOR + 1.90%
$51,825
September 29,
2022
$90,000
CDOR + 1.90%
$42,676
ANDREW PELLER LIMITED 2019 | 40
10 Accounts payable and accrued liabilities
Trade payables
Accrued liabilities
Deferred revenue – gift cards
11 Long-term debt
Revolving, amortizing loan – Investment facility
Other
Less: Financing costs
Less: Current portion of revolving, amortizing loan
Less: Current portion of other loan
2019
$
35,392
11,194
865
47,451
2019
$
117,226
212
117,438
818
116,620
9,635
106
106,879
2018
$
22,211
10,380
813
33,404
2018
$
125,255
212
125,467
1,075
124,392
8,029
106
116,257
The Company’s credit agreement matures on September 29, 2022 and has a total borrowing limit of $310,000,
separated into two facilities: a revolving, non-amortizing facility with a borrowing limit of $90,000 to be used for
day-to-day operations, distributions and capital expenditures and a revolving, amortizing investment facility with a
borrowing limit of $220,000 to be used for acquisitions or capital expenditures. Each draw on the investment facility
is subject to a new amortization schedule and required annual repayments increase over the term of the loan.
Monthly principal repayments of $803 are required on the revolving, amortizing facility until September 30, 2020.
Thereafter, monthly principal repayments will increase to $1,071. As at March 31, 2019 and 2018, the applicable
margin was 1.90%.
Financing costs of $1,222 were incurred to amend the debt facilities during the year ended March 31, 2018 and these
costs are being amortized over the term of the loan.
The Company has entered into interest rate swap agreements to fix the interest rate on the balance outstanding on the
investment facility. Until September 29, 2022, the interest rate is fixed at 2.25%, plus the applicable margin.
The Company and its subsidiaries have provided their assets as security for these loans.
Interest expense on long-term debt during the year was $4,828 (2018 – $3,227).
41
| ANDREW PELLER LIMITED 2019
12 Post-employment benefits
Defined contribution plans
The total expenses for the defined contribution savings plans were $1,888 (2018 – $1,630).
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 2019 | 42
Pension
benefits
$
Other post-
employment
benefits
$
22,527
702
787
987
(1,050)
23,953
24,933
494
872
(1,050)
50
601
25,900
1,947
-
-
-
115
(115)
-
2,734
74
96
(115)
(139)
60
2,710
2,710
Pension
benefits
$
Other post-
employment
benefits
$
494
85
579
51
709
12.9
74
96
170
79
107
11.9
2019
Total
$
22,527
702
787
1,102
(1,165)
23,953
27,667
568
968
(1,165)
(89)
661
28,610
4,657
2019
Total
$
568
181
749
130
816
12.8
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 loss (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 income
(loss)
Net actuarial gain
Expected contributions for the year ending March 31,
2020
Weighted average duration of the defined benefit
obligations in years
43
| ANDREW PELLER LIMITED 2019
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 from change in demographic
Loss (gain) from change in financial
assumptions
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 income
(loss)
Net actuarial (loss) gain
Expected contributions for the year ending March 31,
2019
Weighted average duration of the defined benefit
obligations in years
Pension
benefits
$
Other post-
employment
benefits
$
22,320
(650)
805
1,398
(1,346)
22,527
24,889
559
892
(1,346)
(566)
147
358
24,933
2,406
-
-
-
91
(91)
-
2,710
72
99
(91)
(33)
9
(32)
2,734
2,734
Pension
benefits
$
Other post-
employment
benefits
$
559
87
646
(589)
1,362
13.1
72
99
171
56
128
10.4
2018
Total
$
22,320
(650)
805
1,489
(1,437)
22,527
27,599
631
991
(1,437)
(599)
156
326
27,667
5,140
2018
Total
$
631
186
817
(533)
1,490
12.8
ANDREW PELLER LIMITED 2019 | 44
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
2019
2018
3.5%
3.3%
2.5%
5.0%
60 – 65 years
2.0%
MI-2017
3.6%
3.5%
2.5%
5.0%
60 – 65 years
2.0%
MI-2017
The following table outlines the impact of a reasonable change in significant assumptions assuming all other
assumptions are held constant. Changes in numerous assumptions may occur at the same time, which could increase
or decrease the impact. With respect to a 1% increase or decrease in the inflation rate, the analysis excludes any
impact this would have on the discount rate, medical cost trend rates and the rate of compensation increase.
Increase (decrease) in the post-employment
benefit obligations
1% increase in the discount rate
1% decrease in the discount rate
1% increase in the rate of
compensation increase
1% decrease in the rate of
compensation increase
1% increase in the inflation rate
1% decrease in the inflation rate
2019
Other post-
employment
benefits
$
(302)
341
5
(5)
-
-
Pension
Benefits
$
(3,014)
3,688
761
(687)
359
(325)
2018
Other post-
employment
benefits
$
(267)
301
5
(5)
-
-
Pension
benefits
$
(2,928)
3,583
667
(604)
360
(326)
At March 31, 2019, the accumulated actuarial losses, net of deferred taxes, recognized in other comprehensive
income (loss) were $4,141 (2018 – $4,237).
Plan assets
The plan assets consist of the following:
Mutual funds
Fixed income
Equity
$
17,565
6,388
23,953
2019
73%
27%
100%
$
16,177
6,350
22,527
2018
72%
28%
100%
45
| ANDREW PELLER LIMITED 2019
13
Income taxes
Provision for current income taxes
Change in temporary differences
Impact of change in tax rate
Other
Recovery of deferred income taxes
Total provision for income taxes
The Company’s income tax expense consists of the following:
Provision for income taxes at blended statutory rate of
26.18% (2018 – 26.05%)
Permanent differences and non-deductible items
Deferred tax liability required for purchased assets
Future tax rate differential
Future income tax rate changes
Other
The movement of the deferred income tax account is as follows:
At beginning of year
Deferred tax liability recognized on acquired assets
Recovery of deferred income taxes in net earnings
Provision for (recovery of) deferred income taxes in other
comprehensive income (loss)
At end of year
2019
$
10,778
(2,445)
200
-
(2,245)
8,533
2019
$
7,983
485
-
-
200
(135)
8,533
2019
$
22,540
-
(2,245)
34
20,329
2018
$
11,797
(714)
(1)
(145)
(860)
10,937
2018
$
10,696
(741)
228
185
(1)
570
10,937
2018
$
15,820
7,719
(860)
(139)
22,540
ANDREW PELLER LIMITED 2019 | 46
The significant temporary differences giving rise to the deferred income tax liability comprise the following:
Deferred income tax liability
Accelerated
tax
depreciatio
n
and
deductions
on
property,
plant and
equipment
$
12,654
1,826
1,884
16,364
1,459
17,823
Accelerate
d
tax
deductions
on
intangible
assets
$
1,912
2,054
Tax
deductions
on
inventory
$
-
3,891
(2,019)
(1,872)
Tax
deductions
on goodwill
$
Total
$
3,171
17,737
(52)
659
7,719
(1,348)
1,947
2,019
3,778
24,108
(1,481)
(1,503)
(66)
(1,591)
466
516
3,712
22,517
March 31, 2017
Deferred tax liability recognized on
acquisition of assets
Provision (recovery) in net
earnings
March 31, 2018
Provision (recovery) in net
earnings
March 31, 2019
Deferred income tax asset
March 31, 2017
Provision (recovery) in net earnings
Recovery in other comprehensive income (loss)
March 31, 2018
Provision (recovery) in net earnings
Provision in other comprehensive income (loss)
March 31, 2019
Fair value
change on
derivatives
Post-
employmen
t
benefits
$
(279)
366
-
87
(443)
-
(356)
$
(1,381)
175
(139)
(1,345)
81
34
(1,230)
Other
$
(257)
(53)
-
(310)
(292)
-
(602)
Total
$
(1,917)
488
(139)
(1,568)
(654)
34
(2,188)
The income tax effects relating to components of accumulated other comprehensive loss are as follows:
2019
Before
income
tax
amount
Deferred
tax
expense
Net of
income
tax
expense
Before
income
tax
amount
$
$
$
$
Deferred
tax
expense
$
2018
Net of
income
tax
expense
$
Accumulated actuarial
losses
5,595
1,454
4,141
5,725
1,488
4,237
47
| ANDREW PELLER LIMITED 2019
14 Capital stock
Authorized
Unlimited preference shares
Unlimited Class A shares, non-voting
Unlimited Class B shares, voting
Issued
Class A shares, non-voting
Class B shares, voting
Number
of shares
$
35,988,148
8,198,994
2019
Amount
$
Number
of shares
$
25,966
364
35,471,185
8,702,095
44,187,142
26,330
44,173,280
2018
Amount
$
25,711
386
26,097
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 the year ended March 31, 2019, 503,101 Class B shares were converted into Class A shares on a one-for-one
basis. The Company also issued 56 Class A shares upon the exercise of deferred share units as described in note 15,
Share based compensation, as the holders of deferred share units earn dividends in the form of additional units.
Annual dividends of $0.205 (2018 – $0.180) per Class A share and $0.178 (2018 – $0.156) per Class B share were
approved by the Board of Directors on June 6, 2018 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, 2019 and 2018,
there were no preference shares issued or outstanding.
Stock purchase plan
The Company’s full-time salaried and certain hourly employees 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. The Company is responsible for the
remainder of the cost and, during 2019, expensed $325 (2018 – $197) related to the employee program.
ANDREW PELLER LIMITED 2019 | 48
15 Share based compensation
On September 13, 2017, the Company established a new share based compensation plan comprised of stock options,
PSUs and DSUs. The impact of the share based compensation expense is summarized as follows:
436,467 stock options (2018 – 241,600) (a)
137,546 performance share units (2018 – 72,750) (b)
61,819 deferred share units (2018 – 69,559) (c)
2019
$
742
484
-
1,226
2018
$
259
146
1,268
1,673
The stock options, PSUs and DSUs are equity settled and as such, the expense associated with these instruments is
recorded as a share based compensation expense through the consolidated statements of earnings and comprehensive
income with a corresponding entry made to contributed surplus on the consolidated balance sheets.
The maximum number of shares that may be issued under all share based compensation arrangements implemented
by the Company, including the stock option plan, the PSU plan and the DSU plan, may not exceed 10% of the total
number of Class A non-voting common shares issued and outstanding from time to time. As at March 31, 2019, the
Company had 3,344,343 Class A non-voting common shares reserved for issuance under the share based
compensation arrangements.
a) Stock options
The Company has a stock option plan under which options to purchase Class A non-voting common shares may
be granted to officers and employees of the Company. Options granted under the plan have an exercise price of
not less than the volume weighted average trading price of the Class A non-voting common shares where they
are listed for the five trading days prior to the date of the grant. Options granted vest in tranches, equally over a
three-year period on each anniversary of the grant date, commencing on the first anniversary of the grant date.
The Company’s stock option transactions during the year were as follows:
Weighted
average
exercise
price per
share
11.74
17.09
(11.66)
(13.44)
14.25
11.75
Number of
options
241,600
205,600
(6,066)
(4,667)
436,467
73,897
Balance – March 31, 2018
Granted
Exercised
Forfeited
Exercisable
49
| ANDREW PELLER LIMITED 2019
For options granted during the year, the fair value was estimated on the grant date using the Black-Scholes fair
value option pricing model using the following weighted average assumptions:
Weighted average fair value per share option
Expected volatility (1)
Dividend yield
Risk-free interest rate
Weighted average expected life in years
2019
$5.52
28.61%
1.36%
2.00%
10
2018
$3.41
30.43%
1.75%
1.00%
10
(1) Expected volatility was determined using historical volatility.
Information relating to stock options outstanding and exercisable as at March 31, 2019 is as follows:
Share options outstanding
Share options exercisable
Range of
exercise
prices
Weighted
average
remaining
life
(in months)
Number
of share
options
Weighted
average
exercise
price
Weighted
average
remaining
life
(in months)
Number
of share
options
10.01 to 15.00
15.01 to 20.00
103 242,567
113 193,900
$
11.88
17.21
102
-
73,897
-
107 436,467
14.25
102
73,897
Weighted
average
exercise
price
$
11.75
-
11.75
b) PSU plan
The Company has established a PSU plan for employees and officers of the Company. PSUs represent the right
to receive Class A non-voting common shares settled by the issuance of treasury shares or shares purchased on
the open market. PSUs vest in full at the end of the third fiscal year after the grant date. The number of units
that will vest is determined based on the achievement of certain performance conditions (i.e., financial targets)
established by the Board of Directors and are adjusted by a factor that ranges from 0.5 to 2.0, depending on the
achievement of the targets established. Therefore, the number of units that will vest and are exchanged for Class
A non-voting common shares may be higher or lower than the number of units originally granted to a
participant.
The Company’s PSU transactions during the year were as follows:
Balance – March 31, 2018
Granted
Forfeited
Number of
units
Grant date
fair value
per unit
72,750
65,970
(1,174)
137,546
11.74
17.10
(13.46)
14.29
No PSUs granted under the share based compensation plan have vested or been exercised as at March 31, 2019.
ANDREW PELLER LIMITED 2019 | 50
c) DSU plan
The Company has established a DSU plan for employees, officers and Directors of the Company. DSUs
represent the right to receive Class A non-voting common shares settled by the issuance of treasury shares or
shares purchased on the open market. DSUs vest immediately, but are only exercisable when the participant’s
employment with the Company ceases, or when the participant is no longer a director of the Company.
The Company’s DSU transactions during the year were as follows:
Balance – March 31, 2018
Exercised
16 Nature of expenses
Number of
units
Grant date
fair value
per unit
69,559
(7,740)
61,819
18.25
(18.31)
18.26
The nature of 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:
Gain on acquisition
Ongoing maintenance costs related to Port Moody winery facility,
net of income (a)
Restructuring (b)
Other
2019
$
177,655
75,642
33,277
12,817
7,200
22,330
328,921
2019
$
-
625
727
(289)
1,063
2018
$
174,825
67,712
28,504
11,885
6,708
21,403
311,037
2018
$
(4,164)
471
-
(149)
(3,842)
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 $625 in
2019 (2018 – $572) and income amounting to $nil (2018 – $101) was recorded related to expropriation notices
received by the Company.
b) Restructuring costs of $727 (2018 – $nil) were recorded during the year ended March 31, 2019. These costs
relate to termination payments and benefits for restructuring of certain sales and production functions within the
Company’s retail and personal winemaking product division.
51
| ANDREW PELLER LIMITED 2019
17 Net earnings per share
Class A
$
Class B
$
2019
Total
$
Net earnings attributed for the year – basic and
diluted
18,326
3,632
21,958
Weighted average number of shares outstanding –
basic and diluted
35,979,473
8,200,864
Net earnings per share – basic and diluted
0.51
0.44
Class A
$
Class B
$
2018
Total
$
Net earnings attributed for the year – basic and
diluted
24,545
5,572
30,117
Weighted average number of shares outstanding –
basic and diluted
34,539,843
8,986,571
Net earnings per share – basic and diluted
0.71
0.62
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, 2019 under long-term non-cancellable leases are outlined
in note 20 along with its other contractual obligations.
In 2019, minimum lease payments of $6,212 (2018 – $6,249) were recognized as an expense.
ANDREW PELLER LIMITED 2019 | 52
19 Non-cash working capital items
The change in non-cash working capital items related to operations comprises 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
2019
$
1,605
(218)
(225)
13,969
15,131
2018
$
(3,031)
(7,615)
(1,105)
(4,138)
(15,889)
The classification and measurement of the financial assets and liabilities, as well as their carrying amounts and fair
values are as follows:
Assets/liabilities
Category
Measurement
Accounts receivable
Bank indebtedness
Accounts payable and
accrued liabilities
Dividends payable
Long-term debt
Financial assets
Financial liabilities
Amortized cost
Amortized cost
Financial liabilities
Financial liabilities
Financial liabilities
Interest rate swap liability
Derivatives
Foreign exchange forward
contracts asset
Derivatives
Assets/liabilities
Category
Measurement
Loans and receivables
Financial liabilities
Amortized cost
Amortized cost
Accounts receivable
Bank indebtedness
Accounts payable and
accrued liabilities
Dividends payable
Long-term debt
Financial liabilities
Financial liabilities
Financial liabilities
Amortized cost
Amortized cost
Amortized cost
Fair value
through profit or
loss
Fair value
through profit or
loss
Amortized cost
Amortized cost
Amortized cost
Fair value
through profit or
loss
Fair value
through profit or
loss
Interest rate swap asset
Derivatives
Foreign exchange forward
contracts asset
Derivatives
53
| ANDREW PELLER LIMITED 2019
2019 (IFRS 9)
Fair
value
$
29,801
38,175
47,451
2,212
116,620
Carrying
amount
$
29,801
38,175
47,451
2,212
116,620
1,351
1,351
4
4
2018 (IAS 39)
Carrying
amount
$
31,406
47,324
33,404
1,935
124,392
180
152
Fair
value
$
31,406
47,324
33,404
1,935
124,392
180
152
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 year 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 (gain) on derivative financial instruments comprises:
Unrealized loss (gain) on foreign exchange forward contracts
Unrealized loss (gain) on interest rate swaps
2019
$
148
1,531
1,679
2018
$
(160)
(1,240)
(1,400)
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.
Quoted prices in
active markets
for
identical assets
(Level 1)
$
Significant
observable
inputs
other than
quoted prices
(Level 2)
$
2019
Significant
unobservable
inputs
(Level 3)
$
Asset/liability
Interest rate swap liability
Foreign exchange forward contracts asset
-
-
1,351
4
-
-
ANDREW PELLER LIMITED 2019 | 54
Quoted prices in
active markets
for
identical assets
(Level 1)
$
Significant
observable
inputs
other than
quoted prices
(Level 2)
$
2018
Significant
unobservable
inputs
(Level 3)
$
Asset/liability
Interest rate swap asset
Foreign exchange forward contracts asset
-
-
180
152
-
-
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 September 2022 by entering into
interest rate swaps. The interest rate swaps are measured at fair value. An unrealized loss of $1,531 (2018 –
unrealized gain of $1,240) was recognized on the interest rate swaps, which are classified as a component of the net
unrealized loss (gain) on derivative financial instruments in the consolidated statements of earnings.
The Company’s short-term borrowings are funded using a floating interest rate and as such are sensitive to interest
rate movements. As at March 31, 2019, with other variables unchanged, a 100 basis point change in interest rates
would impact the Company’s net earnings by approximately $283 (2018 – $350), exclusive of the mark-to-market
adjustments on the interest rate swaps.
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 $14,869 (2018 – $16,509) of the total accounts receivable for which no allowance
has been provided. Of the remaining non-provincial liquor board balances, $1,618 (2018 – $1,483) was over thirty
days past due as at March 31, 2019. An allowance for doubtful accounts of $128 (2018 – $162) 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 $64,155 (2018 – $64,215) during the year ended
March 31, 2019. Sales to its second largest customer, a branch of a provincial government, were $45,091 (2018 –
$42,622) during the year.
55
| ANDREW PELLER LIMITED 2019
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
2019
$
14,869
10,991
1,188
1,263
609
1,009
(128)
29,801
2019
$
162
132
(166)
128
2018
$
16,509
11,110
913
1,553
786
697
(162)
31,406
2018
$
127
110
(75)
162
The Company incurs obligations to deliver cash or other financial assets on future dates. Liquidity risk inherently
arises from these obligations, which include requirements to repay debt, purchase grape inventory and make
operating lease payments.
The Company manages liquidity risk by maintaining adequate cash and cash equivalent balances and by
appropriately utilizing its operating line of credit. Company management continuously monitors and reviews both
actual and forecasted cash flows and matches the maturity profile of financial assets and financial liabilities.
Accounts payable 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, 2019.
Long-term debt
Leases and royalties
Pension obligations
Grape and bulk wine purchase
contracts
Packaging purchase contracts
Interest rate swap
Foreign exchange forwards
< 1
year
$
9,741
5,360
331
69,362
31,299
116,093
2,519
14,102
2 – 3
years
$
24,194
9,209
438
72,305
7,411
4 – 5
years
$
83,503
6,844
181
62,951
-
113,557
4,339
-
153,479
904
-
> 5
years
$
-
15,659
89
130,992
-
146,740
-
-
Total
$
117,438
37,072
1,039
335,610
38,710
529,869
7,762
14,102
Total contractual obligations
132,714
117,896
154,383
146,740
551,733
ANDREW PELLER LIMITED 2019 | 56
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.
The Company has entered into grape purchase contracts with certain suppliers to purchase their crops at the time of
harvest for prices set by the market. The amount of the commitment will change based on the total tonnes harvested
or the prices set by the market for specific grapes, and the amount included in the table above represents
management’s best estimate of the Company’s commitment over the periods noted.
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, 2019, the
Company has forward foreign currency contracts to buy US$4,950 at rates ranging between $1.31 and $1.32 and
AU$8,000 at rates ranging from $0.95 to $0.97. These contracts mature at various dates to November 2019. 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 $240 (2018
– $197), $86 (2018 – $68) or $45 (2018 – $111), respectively. The Company has elected to not use hedge accounting
and as a result, has recognized unrealized foreign exchange losses of $148 (2018 – unrealized foreign exchange
gains of $160) in the consolidated statements of earnings as a component of the net unrealized loss (gain) on
derivative financial instruments and has recorded the fair value of $4 (2018 – $152) in the current portion of
derivative financial instruments in the consolidated balance sheets.
21 Capital disclosures
The Company’s objective when managing capital is to safeguard the Company’s ability to continue 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 fund working capital, 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 EBITA, 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.
Compliance with these covenants is monitored by management on a quarterly basis. As at March 31, 2019 and 2018,
the Company was in compliance with these covenants.
57
| ANDREW PELLER LIMITED 2019
22 Related parties and management compensation
The Company is controlled by Peller Family Enterprises Inc. (formerly, Jalger Limited), which owns 60.9% (2018 –
57.4%) 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 Peller Family Enterprises Inc.
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
Share based compensation expense
2019
$
4,336
295
1,097
5,728
2018
$
3,848
296
1,422
5,566
The compensation and short-term benefits expense consist of amounts that will primarily be settled within twelve
months.
23 Segmented information
During the year, export sales were $12,227 (2018 – $12,247), primarily in the United States. The remainder of sales
occurred in Canada. All of the Company’s assets are located in Canada.
24 Events after the reporting period
On June 12, 2019, the Company’s Board of Directors approved a 4.8% increase in the annual dividend for holders of
its Class A and Class B shares, from $0.205 per Class A share and $0.178 per Class B share to $0.215 per Class A
share and $0.187 per Class B share. This increased dividend will be paid quarterly to shareholders. The first
quarterly dividend will be paid on July 5, 2019 to shareholders of record at the close of business on June 28, 2019.
ANDREW PELLER LIMITED 2019 | 58
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 (9)
Net earnings (loss) (9)
Basic & diluted Class A
Basic & diluted Class B
Dividends (9)
Class A Shares, non-voting
Class B Shares, voting
Number of shares outstanding
(in thousands of shares) (9)
Class A Shares, non-voting
Class B Shares, voting
Other information
Return on average
shareholders’ equity (7)
Return on average
capital employed (8)
2019
2018
2017
2016
2015
Restated (6)
$ 381,796
52,875
29408
$ 363,897
52,860
30,117
$ 342,606
45,137
26,350
$ 334,263
40,916
19,199
$ 315,697
35,184 (6)
15,224 (6)
97,305
467,019
234,751
104,417
457,780
220,246
78,825
327,478
177,317
71,665
308,309
157,736
68,982
301,519 (6)
147,375 (6)
0.51
0.44
0.205
0.178
35,988
8,199
44,187
0.71
0.62
0.180
0.156
35,471
8,702
44,173
0.64
0.55
0.163
0.142
33,581
9,012
42,593
0.46
0.40
0.150
0.130
33,581
9,012
42,593
9.7%
15.2%
15.7%
12.6%
11.5%
14.0%
14.1%
13.2%
0.36 (6)
0.32 (6)
0.140
0.122
33,882
9,012
42,894
10.6% (6)
11.0% (6)
(1) Excludes the after-tax impact of mark-to-market adjustments on an interest rate swap.
(2) Includes an after-tax gain of $11.9 million for the sale of Granville Island Brewing Company Ltd. and Mainland Beverage
Distribution Ltd.
Distribution Ltd.
(3) Excludes an after-tax gain of $11.9 million for the sale of Granville Island Brewing Company Ltd. and Mainland Beverage
(4) 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.
59
| ANDREW PELLER LIMITED 2019
2014
2013
Restated (5)
2012
2011
Restated (4)
2010
$ 297,824
33,729
14,021
$ 289,143
33,489 (5)
14,519 (5)
$ 276,883
32,651
13,001
$ 265,420
31,544 (4)
11,223 (4)
$ 263,151 (2)
27,354 (2)
21,661 (2)
44,564
301,015
138,003
41,670
296,519
129,701 (5)
34,869
285,552
120,552
27,643 (4)
267,996 (4)
114,297 (4)
29,357
263,716
113,665
0.34
0.29
0.133
0.116
33,882
9,012
42,894
10.5%
10.8%
0.35 (5)
0.30 (5)
0.120
0.105
33,882
9,012
42,894
11.6% (5)
11.1% (5)
0.31
0.27
0.120
0.105
33,882
9,012
42,894
11.1%
11.5%
0.26 (4)
0.22 (4)
0.110
0.096
33,882
9,012
42,894
9.8% (4)
11.6% (4)
0.50 (2)
0.43 (2)
0.110
0.096
35,664
9,012
44,676
6.8% (1,3)
9.1% (1,3)
(5) Restated to reflect the adoption of the amendments to IAS 19.
(6) Restated to reflect the adoption of the amendments to IAS 16 and IAS 41.
(7) Return on average shareholders' equity is calculated as net earnings divided by average shareholders’ equity.
(8) 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.
(9) Restated to reflect the three-for-one stock split completed in October of 2016.
ANDREW PELLER LIMITED 2019 | 60
Officers
JOHN E. PELLER
Executive Chairman & Chief Executive Officer
RANDY A. POWELL
President
STEVE ATTRIDGE
CFO and Executive Vice-President, IT
SHAWN B. MACLEOD
Executive Vice-President, Marketing
SARA E. PRESUTTO
Executive Vice-President, Human Resources
BRENDAN P. WALL
Executive Vice-President, Operations
GREGORY J. BERTI
Vice-President, Government Relations and Export
JAMES H. COLE
Vice-President, Retail and Estate Wine Group
GAVIN J. HAWTHORNE
Vice-President, Sales & Marketing GVI
CRAIG D. MCDONALD
Vice-President, Winemaking
DIRECTORS & OFFICERS
Directors
JOHN E. PELLER
Burlington, Ontario
Executive Chairman & CEO
Andrew Peller Limited
SHAUNEEN BRUDER
Toronto, Ontario
Executive Vice-President, Operations
Royal Bank of Canada
MARK W. COSENS
Burlington, Ontario
Managing Director
Kilbride Capital Partners
MICHELLE E. MALLETT DIEMANUELE
President & CEO
Trillium Health Partners
Toronto, Ontario
PERRY J. MIELE
Burlington, Ontario
Chairman and Partner
Beringer Capital
A. ANGUS PELLER M.D.
Toronto, Ontario
Senior Medical Consultant
Medcan Health Management Inc.
FRANCOIS VIMARD
Mississauga, Ontario
Corporate Director
Honorary Directors
JOHN F. PETCH, O.C.
Toronto, Ontario
BRIAN J. SHORT
Hamilton, Ontario
61
| ANDREW PELLER LIMITED 2019
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)
Registrar and Transfer Agent
COMPUTERSHARE INVESTOR SERVICES INC.
Internet:
Auditors
PRICEWATERHOUSECOOPERS LLP
Bankers
BANK OF MONTREAL
NATIONAL BANK
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:
Steve Attridge
Chief Financial Officer and Executive Vice President,
Information Technology at the Head Office address or
by email at: info@andrewpeller.com
2019 Annual Shareholders’ Meeting
The 2019 Annual Meeting of Shareholders’ will be
held at the Wayne Gretzky Estate Winery & Craft
Distillery, Niagara-on-the-Lake, Ontario
on Wednesday, September 11, 2019 at 3:00 p.m.
ANDREW PELLER LIMITED 2019 | 62
AJAX
SOBEYS
WITHIN GROCERY AISLE
955 WESTNEY ROAD S.
(905) 6831705
SOBEYS
260 KINGSTON ROAD W.
(905) 4286500
REAL CANADIAN SUPERSTORE
30 KINGSTON ROAD W.
(905) 4287829
ANCASTER
SOBEYS
WITHIN GROCERY AISLE
977 GOLF LINKS ROAD
(905) 6481465
FORTINOS
54 WILSON STREET
(905) 3040094
BARRIE
ZEHRS
11 BRYNE DRIVE
(705) 7258121
BARRIE ESSA CENTRE
555 ESSA ROAD UNIT#5
(705) 7971480
BOLTON
ZEHRS
487 QUEEN STREET S.
(905) 8574166
BRAMALEA
METRO
25 PEEL CENTRE DRIVE
(905) 7934246
BRAMPTON
FOOD BASICS
CENTENNIAL MALL
227 VODDEN STREET
(905) 4592386
SOBEYS
WITHIN GROCERY AISLE
930 NORTH PARK DRIVE
(905) 7939071
BROCKVILLE
REAL CANADIAN SUPERSTORE
1972 PARKEDALE AVE.
(613) 3428477
BURLINGTON
FORTINOS
WITHIN GROCERY AISLE
2025 GUELPH LINE
(905) 3363849
MARILU’S MARKET
4025 NEW STREET
(905) 6328580
SOBEYS
WITHIN GROCERY AISLE
1250 BRANT STREET
(905) 3198670
WALKERS PLACE
3505 UPPER MIDDLE ROAD
(905) 3369101
LAKESIDE SHOPPING VILLAGE
5353 LAKESHORE ROAD
(905) 6818282
CAMBRIDGE
ZEHRS
180 HOLIDAY INN DRIVE
(519) 6511145
ZEHRS
400 CONESTOGA BLVD.
(519) 6241103
NO FRILLS
980 FRANKLIN BLVD
(519) 6222552
COLLINGWOOD
LOBLAWS
12 HURONTARIO STREET
(705) 4462237
METRO
WITHIN GROCERY AISLE
640 FIRST STREET EXTENSION
(705) 4441730
EAST YORK
SOBEYS
1015 BROADVIEW AVE.
(416) 4677760
ETOBICOKE
LOBLAWS
WITHIN GROCERY AISLE
380 THE EAST MALL
(416) 6959567
FERGUS
ZEHRS
800 TOWER STREET S.
(519) 7877721
GEORGETOWN
REAL CANADIAN SUPERSTORE
WITHIN GROCERY AISLE
171 GUELPH STREET
(905) 8771815
GRIMSBY
REAL CANADIAN SUPERSTORE
361 SOUTH SERVICE ROAD
(905) 9459982
63
| ANDREW PELLER LIMITED 2019
GUELPH
ZEHRS
297 ERAMOSA ROAD
(519) 8247922
MILTON
LONGOS
1079 MAPLE AVE
(905) 6938850
ZEHRS HARTSLAND PLAZA
WITHIN GROCERY AISLE
160 KORTRIGHT ROAD, W.
(519) 8379293
MISSISSAUGA
SQUARE ONE
100 CITY CENTRE DRIVE
(905) 8967822
NO FRILLS
167 SILVERCREEK PARKWAY
(519) 8370540
SOUTH COMMON CENTRE
2150 BURNHAMTHORPE ROAD W.
(905) 8209958
HAMILTON
FORTINOS
50 DUNDURN STREET S.
(905) 5284003
NEWMARKET
METRO
1111 DAVIS DRIVE
(905) 8530401
FORTINOS EASTGATE MALL
WITHIN GROCERY AISLE
75 CENTENNIAL PARKWAY N.
(905) 5614504
REAL CANADIAN SUPERSTORE
WITHIN GROCERY AISLE
18120 YONGE STREET N.
(905) 8952412
FORTINOS
WITHIN GROCERY AISLE
1579 MAIN STREET W.
(905) 5228882
KESWICK
ZEHRS
24018 WOODBINE AVE.
(905) 4768544
KINGSTON
LOBLAWS
WITHIN GROCERY AISLE
1048 MIDLAND AVE.
(613) 3896139
KITCHENER
ZEHRS
750 OTTAWA STREET S.
(519) 7452183
LOBLAW SUPERSTORE
WITHIN GROCERY AISLE
39 875 HIGHLAND ROAD W.
(519) 7425844
LONDON
METRO ADELAIDE CENTRE
WITHIN GROCERY AISLE
1030 ADELAIDE STREET N.
(519) 6793717
METRO
WITHIN GROCERY AISLE
395 WELLINGTON STREET S.
(519) 6497180
LOBLAWS
3040 WONDERLAND ROAD S.
(519) 6682224
METRO
16640 YONGE STREET
(905) 8303448
UPPER CANADA MALL
17600 YONGE STREET
(905) 8536246
NIAGARA ON THE LAKE
THE OUTLET COLLECTION
300 TAYLOR ROAD
(905)7040550
WINE COUNTRY VINTNERS
27 QUEEN STREET
(905) 4681881
NORTH YORK
LOBLAW GREAT FOOD
3501 YONGE STREET
(416) 4817699
OAKVILLE
SOBEYS
511 MAPLE GROVE DRIVE
(905) 3383042
LONGOS
469 CORNWALL ROAD
(905) 3380880
SOBEYS ABBEY PLAZA
1500 UPPER MIDDLE ROAD W.
(905) 8472944
ORANGEVILLE
ZEHRS, HERITAGE MALL
50 4TH AVE.
(519) 9428752
TORONTO
1002 BAY STREET S.
(416) 9299706
METRO
656 EGLINTON AVE. E.
(416) 4850093
LOBLAWS
WITHIN GROCERY AISLE
50 MUSGRAVE STREET
(416) 6936336
LONGOS
93 LAIRD DRIVE
(416) 4241362
METRO
WITHIN GROCERY AISLE
100 LYNN WILLIAMS ST
(4165435228
UXBRIDGE
ZEHRS
WITHIN GROCERY AISLE
323 TORONTO STREET S.
(905) 8525008
WATERDOWN
WATERDOWN SHOPPING
CENTRE
255 DUNDAS STREET E.
(905) 6893420
LOBLAWS
WITHIN GROCERY AISLE
3671 DUNDAS STREET W.
(416) 7628635
WATERLOO
ZEHRS, BEECHWOOD PLAZA
450 ERB STREET W.
(519) 7475897
OSHAWA
METRO
285 TAUNTON ROAD E.
(905) 5716167
PICKERING
YOUR INDEPENDENT GROCER
1900 DIXIE ROAD
(905) 8316705
REAL CANADIAN SUPERSTORE
1385 HARMONY ROAD N.
(905) 4381800
NO FRILLS
1300 KING STREET E.
(905) 7283767
OTTAWA
SOUTHGATE SHOPPING CENTRE
2515 BANK STREET
(613) 5235837
SOBEYS
187 METCALFE STREET
(613) 5655062
METRO
WITHIN GROCERY AISLE
50 BEECHWOOD AVENUE
(613) 7464300
(Ottawa) GLOUCESTER
YOUR INDEPENDENT GROCER
671 RIVER ROAD
(613) 8223080
SCARBOROUGH
METRO
WITHIN GROCERY AISLDE
3221 EGLINTON AVE. E.
(416) 2672795
SIMCOE
SOBEYS
WITHIN GROCERY AISLE
470 NORFOLK STREET S.
(519) 4261033
ST. CATHARINES
FRESCHO
318 ONTARIO STREET
(905) 6858898
ZEHRS, PEN CENTRE
221 GLENDALE AVE.
(905) 6884767
ZEHRS, FAIRVIEW MALL
WITHIN GROCERY AISLE
285 GENEVA STREET
(905) 6467363
REAL CANADIAN SUPERSTORE
411 LOUTH STREET
(905) 6859779
GRANTHAM PLAZA
400 SCOTT STREET
(905) 9340981
(Ottawa) NEPEAN
LOBLAWS
59 ROBERTSON ROAD
(613) 8207219
LOBLAWS
1460 MERIVALE ROAD
(613) 7235507
(Ottawa) VANIER
LOBLAWS
WITHIN GROCERY AISLE
100 MCARTHUR ROAD
(613) 7499618
OWEN SOUND
ZEHRS
1150 SIXTEENTH STREET E.
(519) 3718664
PETERBOROUGH
REAL CANADIAN SUPERSTORE
769 BORDEN AVE.
(705) 7402513
QUEENS QUAY
228 QUEENS QUAY W.
(416) 5988880
SOBEYS
125 THE QUEENSWAY
(416) 2018221
YORKVILLE VILLAGE
87 AVENUE ROAD
(416) 9236336
ST. LAWRENCE WINE
MARKET
93 FRONT STREET E.
(416) 3641811
LAKESHORE SQUARE PLAZA
33 LAKESHORE ROAD
(905) 9375093
SOBEYS URBAN FRESH
22 FORT YORK BLVD.
(416) 6230793
ST. THOMAS
REAL CANADIAN SUPERSTORE
1063 TALBOT STREET
(519) 6336343
STITTSVILLE
YOUR INDEPENDENT
GROCER
WITHIN GROCERY AISLE
1251 MAIN STREET
(613) 8313837
LOBLAWS
650 DUPONT STREET
(416) 5338484
METRO
1230 QUEEN STREET
WEST
(416) 5339180
BLOOR WEST VILLAGE
2273 BLOOR STREET W.
(416) 7668654
ZEHRS
315 LINCOLN ROAD
(519) 7467226
WELLAND
ZEHRS
821 NIAGARA STREET
(905) 7149521
WHITBY
SOBEYS
1615 DUNDAS STREET E.
(905) 7284118
REAL CANADIAN
SUPERSTORE
WITHIN GROCERY AISLE
200 TAUNTON ROAD
(905)6687568
WHITBY TOWN SQUARE
3050 GARDEN STREET
(905) 4305314
WINDSOR
METRO
WITHIN GROCERY AISLE
3100 HOWARD AVENUE
(519) 9728346
WOODBRIDGE
LONGOS
9200 WESTON ROAD
(905) 3033055
ANDREW PELLER LIMITED 2019 | 64
Exclusive Wine Offer for Shareholders
We are pleased to offer exceptional VQA wines from our wineries in both the East & West.
These exclusive collections are available at a 15% Savings. As a Shareholder, we are also
offering complimentary delivery within Ontario & 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 for Peller Estates, Trius, Thirty
Bench Winery and Wayne Gretzky Winery & Distillery in the East and Sandhill Wines, Red
Rooster Winery, Black Hills Estate, Gray Monk Estate Winery & Tinhorn Creek in the West.
For more information on our programs, give us a call!
You can contact us at 1.866.440.4383 to place your order or email wineorders@peller.com. We
are available Monday to Friday, 9am to 7pm EST. Offer ends Friday, September 30th, 2019.
Ontario VQA Wine Collections:
Signature Series Ice Cuvee Rose
Family Vineyard Chardonnay
Private Reserve Gamay Noir
Signature Series Sauvignon Blanc
Signature Series Merlot
Late Harvest Vidal
Complimentary Delivery within Ontario - $25 Charge to
other select provinces
Trius Brut
Trius Divine White
Trius Rose
Trius Merlot
Trius Red
Showcase Late Harvest Vidal
Complimentary Delivery within Ontario - $25 Charge to
other select provinces
Gretzky Riesling
Gretzky Pinot Grigio
Gretzky Chardonnay
Gretzky Baco Noir
Estate Series Cabernet Merlot
Estate Series Shiraz Cabernet
Complimentary Delivery within Ontario - $25 Charge to
other select provinces
Winemakers Riesling
Small Lot Gewurztraminer
Small Lot Rose
Winemakers Red
Small Lot Pinot Noir
Small Lot Merlot
Complimentary Delivery within Ontario - $25 Charge to
other select provinces
6 bottle
Collection
$153.58
(Reg $180.50)
~
12 bottle
Collection
$307.18
(Reg $361.00)
6 bottle
Collection
$141.70
(Reg $141.70)
~
12 bottle
Collection
$283.40
(Reg $283.40)
6 bottle
Collection
$120.70
(Reg $130.70)
~
12 bottle
Collection
$241.40
(Reg $261.40)
6 bottle
Collection
$165.89
(Reg $194.95)
~
12 bottle
Collection
$389.90
(Reg $397.40)
Peller Family Vineyard Riesling
Peller Private Reserve Pinot Noir
Trius Sauvignon Blanc
Trius Cabernet Franc
Thirty Bench Winemakers Riesling
Wayne Gretzky Estate Series Shiraz
Cabernet
Complimentary Delivery within Ontario - $25 Charge to
other select provinces
British Columbia VQA Wine Collections:
Red Rooster Riesling
Red Rooster Rare Bird Series Viognier
Red Rooster Rare Bird Series Rose
Red Rooster Rare Bird Pinot Noir
Red Rooster Rare Bird Meritage
Red Rooster Golden Egg
Complimentary Delivery within British Columbia - $25 Charge
to other select provinces – Applicable to BC Taxes
Sandhill Pinot Gris
Sandhill Sauvignon Blanc
Sandhill Syrah
Sandhill Merlot
Sandhill Small Lot Viognier
Sandhill Small Lot One
Complimentary Delivery within British Columbia - $25
Charge to other select provinces – Applicable to BC Taxes
Gray Monk Odyssey Brut Rose
Gray Monk Estate Pinot Gris
Gray Monk Pinot Blanc
Gray Monk Siegerrebe
Gray Monk Cabernet Merlot
Gray Monk Odyssey Meritage
Complimentary Delivery within British Columbia - $25
Charge to other select provinces – Applicable to BC Taxes
6 bottle
Collection
$108.73
(Reg $127.70)
~
12 bottle
Collection
$217.45
(Reg $255.40)
6 bottle
Collection
$163.77
(Reg $192.57)
~
12 bottle
Collection
$327.55
(Reg $385.14)
6 bottle
Collection
$123.85
(Reg $145.60)
~
12 bottle
Collection
$247.70
(Reg $291.20)
6 bottle
Collection
$105.62
(Reg $124.15)
~
12 bottle
Collection
$211.24
(Reg $248.30)
Black Hills Nota Bene
Black Hills Syrah
Black Hills Pinot Noir
Black Hills Alias
Black Hills Viognier
Black Hills Rose
Complimentary Delivery within British Columbia - $25 Charge
to other select provinces – Applicable to BC Taxes
Tinhorn Creek Reserve 2Bench White
Tinhorn Creek Gewurztraminer
Tinhorn Creek Cabernet Franc
Tinhorn Creek Reserve Merlot
Tinhorn Creek Reserve Syrah
Tinhorn Creek The Creek
Complimentary Delivery within British Columbia - $25
Charge to other select provinces – Applicable to BC Taxes
6 bottle
Collection
$182.84
(Reg $215.00)
~
12 bottle
Collection
$365.68
(Reg $430.00)
6 bottle
Collection
$156.96
(Reg $184.55)
~
12 bottle
Collection
$313.92
(Reg $369.10)
Call us at 1.866.440.4383 to Order
or email wineorders@peller.com
We’re here Monday to Friday, 9am to 7pm EST
Offer Ends Friday, September 30th, 2019.
Delivery Information:
You can expect your order within 5-10 business days based on delivery location. Your
wines will be delivered in a sturdy corrugated box. Please ensure someone of legal
drinking age is available to sign at the time of delivery.
Please note:
Complimentary shipping applicable for deliveries within the same province each winery is
based out of. A $25 shipping and handling fee will apply to any parcel requested out of
province.