2020
A N N UA L R E P O R T
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
2020
$ 382,306
61,501
27,575
2019
$ 381,796
52,875
29,408
83,654
513,919
245,523
0.55
0.215
0.187
14.84
6.00
14.75
6.01
9.8%
10.7%
1.64:1
97,305
467,019
234,751
0.51
0.205
0.178
18.63
11.64
18.84
11.62
9.7%
11.5%
1.98:1
*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
1
4
8
23
25
30
64
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Report to Shareholders
We were pleased with our results in fiscal 2020 as the launch of new products and product categories, combined with our
emphasis on higher margin sales and operating cost controls, generated another year of increased earnings for our
shareholders. While the COVID-19 pandemic has impacted certain of our trade channels, we believe we will see
compensating sales through our largest customers, including provincial liquor stores, grocery stores and our retail outlets.
Overall, we have the experience and the financial resources to work through this challenging time.
While our annual sales were essentially the same as the prior fiscal year, strategies implemented over the last few years
are continuing to generate real benefits as gross margin and overall profitability increased again in fiscal 2020.
We experienced solid sales growth through the majority of our well-established bottled wine trade channels, including
provincial liquor outlets, grocery stores and our retail stores. This growth was partially offset by reduced sales in the
personal winemaking market, increased competition from subsidized lower priced imported wines, and lower duty-free
export sales due to trade and political disputes between Canada and China. Our share of the English Canada wine market
remained strong and stable, a reflection of our growing product portfolio, our reputation for delivering value, and the
loyalty of our expanding customer base.
We continue to benefit from the rationalization of our product lines, our increased focus on higher margin products, and
our programs to enhance efficiency and reduce costs. As a result, gross margin improved again in fiscal 2020 to 43.5% of
sales, up from 41.6% in the prior year. Gross margin in fiscal 2020 included a lower charge to cost of sales of $1.7 million
compared to $5.5 million in the prior year to reflect sales of inventory acquired with the three wineries purchased in
October 2017.
Our sales and administrative expenses were lower in fiscal 2020, due primarily to a $3.2 million reduction resulting from
the change in accounting for lease obligations adopted in April 2019. Partially offsetting this decrease were one-time costs
for consulting and professional fees related to our implementation of a new Enterprise Resource Planning system and an
increase in the allowance for doubtful accounts due to the potential impact of the COVID-19 pandemic on certain
customers. Selling and administrative expenses as a percentage of revenues improved to 27.4% from 27.8% in the prior
year.
With stronger gross margins, earnings before interest, taxes and amortization (“EBITA”) rose to $61.5 million for the
year, up from $52.9 million in fiscal 2019. Most importantly, our net earnings increased in fiscal 2020, rising to
$23.5 million or $0.55 per Class A Share, up from $22.0 million or $0.51 per share in fiscal 2019.
Over the last few years our primary goal has been to enhance shareholder value through strengthening and increasing our
product portfolio, driving production efficiencies and cost savings through innovation, and leveraging the vast experience
the Company has built over more than fifty years in business.
ANDREW PELLER LIMITED 2020 | 1
Over the past two years, we have successfully rationalized our product offering, removing poorly performing products
and non-strategic brands and emphasizing our higher margin premium and ultra-premium brands. We also added three
powerful new portfolios with the acquisition of Black Hills, Tinhorn Creek, and Gray Monk Cellars in late 2017 that have
significantly increased our presence in the British Columbia market.
The re-launch of the Peller Family Vineyards brand continues to flourish, driven by a new, unique and differentiated
marketing program, innovative packaging, as well as high quality digital and television advertising campaigns.
Our partnership with Wayne Gretzky continues to generate real benefits. Sales of the brand’s wines and craft whisky
continue to grow, and our introduction of the Wayne Gretzky Number 99 Premium Lager last year has been successful as
we expanded its presence across Canada. Introduced first in Ontario, we have added two new products to our craft beer
portfolio this year - 99 Session Ale and 99 Pale Ale - and will be supporting these launches with new national distribution
for all three beers across the country. We are very excited about this brand’s growth and success.
Our entry into the craft cider business with our No Boats on Sunday brand continues to be successful. Sales were up again
in fiscal 2020 as we launched new and innovative products under the brand, including dry rose cider, cider in cans and
ready-to-drink products, such as seltzers.
Our network of retail stores, The Wine Shop, continues to do very well across all formats, including our co-located
presence in grocery stores. The launch of a new, upscale look and tasting rooms has been strongly received, and the stores
provide us with an excellent venue in which to test new products and obtain real-time feedback from consumers.
In the current COVID-19 environment, we have experienced a significant increase in demand for direct-to-home sales.
We have enhanced our capability to support this growth by re-launching thewineshops.com and plan to implement a
number of new programs throughout the coming year. This will allow consumers to buy their favourite brands across our
full product offering, including wine, beer, spirits, cider, and ready-to-drink products, on-line and have them delivered
directly to their homes.
At the end of fiscal 2020, we completed the consolidation of our wine kit production facilities, closing our Port Coquitlam
facility and now operating out of one national facility in Ontario. We believe this initiative will result in a strengthened
and more efficient business with improved margins.
From an operational perspective, we continue to focus on driving production efficiencies throughout the organization and
ensuring we capture sustainable cost reductions. We are also modernizing our systems and processes, including a major
project to implement a new and state-of-the-art Enterprise Resource Planning system that began in early fiscal 2020. This
project will continue over the next year and will enable new growth potential and operational improvements when
completed. It will also be scalable for the long term.
2
| ANDREW PELLER LIMITED 2020
The final weeks of fiscal 2020 saw the onset of the COVID-19 pandemic. Fortunately, businesses selling beer, wine and
other alcohol products were deemed essential services, as well as those businesses that supply them. As a result, all of our
production facilities remained open, as did our retail locations and retail estate locations. New protocols related to
cleanliness and physical distancing were deployed at all locations and in late March 2020, we introduced a temporary
wage increase for front line staff to recognize their efforts during the COVID-19 pandemic. Consumption of alcohol
beverages remains stable in Canada, with consumer purchasing through alternative trade channels.
In response to COVID-19, we have implemented working practices to address potential impacts to our operations,
employees and customers and will take further measures, if required. These practices have been permanently established
to enhance the ability for us to respond in the future. We also continue to review all capital allocations during this period
to ensure we remain financially strong and stable in these challenging times.
Most importantly, we are confident we have the management experience and the financial resources to meet the
challenges presented by the pandemic and believe we will emerge stronger than ever as the pandemic eases.
We want to thank everyone at Andrew Peller Limited for their hard work, dedication, and significant contribution during
these challenging times. It is our decades of experience and our proven culture of innovation and performance that will
enable us to get through this pandemic. We also thank our customers and consumers for their loyalty. We remain
committed to Pour Extraordinary into Everyday Life by delivering the highest quality products at the best possible value.
This commitment has driven our growth and success for over fifty years and will continue to build value for our
shareholders in the years ahead.
John E. Peller
Executive Chairman, President & CEO
ANDREW PELLER LIMITED 2020 | 3
2019 TOP AWARDS
Peller Estates
(Niagara-on-the-Lake, ON)
International Wine Challenge – UK
Gold Medal – 95 points – 2017 APSS Riesling Icewine
Gold Medal – 95 points – 2016 APSS Cabernet Franc Icewine
Silver Medal – 90 points – 2017 APSS Series Vidal Icewine
Experience Rosé, California USA
Silver Medal – 2018 Peller Estates Private Reserve Rosé
International Wine & Spirit Competition – UK
Silver Medal – 94 points – 2017 APSS Riesling Icewine
Silver Medal – 91 points – 2017 APSS Oak Aged Vidal Blanc Icewine
Silver Medal – 90 points – 2017 APSS Vidal Blanc Icewine
Decanter World Wine Awards – UK
Gold Medal – 95 points – 2017 APSS Oak Aged Vidal Blanc Icewine
Silver Medal – 93 points – 2017 APSS Vidal Blanc Icewine
Silver Medal – 91 points – 2017 APSS Riesling Icewine
Silver Medal – 91 points – 2017 APSS Riesling
Beverage Testing Institute – Rosé Challenge
Gold Medal – 90 points (Exceptional) - 2018 Peller Private Reserve Rosé
Tasters Guild International Wine Judging – Michigan, USA
Double Gold Medal – 2017 Family Series Cabernet Merlot
Silver Medal – 2017 Family Series Riesling
Ontario Wine Awards
Gold Medal – White Wine of the Year – 2016 APSS Riesling
Silver Medal – 2018 Private Reserve Rosé
Silver Medal – 2017 APSS Riesling Icewine
Sommelier Wine Awards, UK
Gold Medal – Peller Estates Ice Cuvée Classic
All Canadian Wine Championships
Double Gold Medal – 2017 Private Reserve Cabernet Sauvignon
Gold Medal – 2016 APSS Cabernet Franc
Gold Medal – 2017 APSS Oak Aged Icewine
Silver Medal – 2017 Private Reserve Gamay Noir
Silver Medal – 2017 Private Reserve Cabernet Franc
Lieutenant Governor’s Award for Excellence in Ontario Wines
Winner – 2016 Peller Estates APSS Riesling
WineAlign – National Wine Awards of Canada
Gold Medal – 92 points - 2018 Private Reserve Sauvignon Blanc
Gold Medal – 91 points - 2017 APSS Riesling
Gold Medal – 91 points - 2017 APSS Riesling Icewine
Silver Medal – 90 points - 2016 APSS Cabernet Franc
Silver Medal – 90 points - 2017 Private Reserve Meritage
Silver Medal – 90 points - 2017 Private Reserve Cabernet Franc
Silver Medal – 90 points – 2017 APSS Vidal Icewine
Silver Medal – 89 points - 2017 Private Reserve Cabernet Sauvignon
Silver Medal – 89 points - 2017 APSS Oak Aged Icewine
InterVin International Wine Awards – Vines magazine – Canada
Silver Medal - Ice Cuvée Classic
Silver Medal - Ice Cuvée Rosé
Silver Medal – Best Value - 2018 Family Vineyards Riesling
Silver Medal - 2018 Private Reserve Sauvignon Blanc
Silver Medal - 2018 Private Reserve Rosé
Silver Medal - 2017 Private Reserve Cabernet Franc
Silver Medal - 2017 APSS Sauvignon Blanc
Silver Medal - 2016 APSS Merlot
Silver Medal - 2017 APSS Oak Aged Vidal Icewine
Beverage Testing Institute – World Value Wine Challenge – USA
PELLER FAMILY VINEYARDS
Silver Medal – Best Buy – 88 points – Pinot Grigio
Silver Medal – Best Buy – 88 points – Cabernet Merlot
Silver Medal – Best Buy – 86 points – Cabernet Sauvignon
Silver Medal – 85 points – Sauvignon Blanc
Silver Medal – 85 points – Shiraz
Los Angeles International Wine Competition
Gold Medal – 96 points – 2017 APSS Riesling Icewine
Gold Medal – 90 points – 2017 APSS Vidal Blanc Icewine
Gold Medal – 90 points – 2017 APSS Oak Aged Vidal Blanc Icewine
Gold Medal – 90 points – 2016 APSS Cabernet Franc Icewine
Harvest Challenge – California, USA
Double Gold Medal – Best of Class – 97 points
– 2018 Family Vineyards VQA Merlot
Double Gold Medal – 96 points – 2018 Family Vineyards VQA Riesling
Gold Medal – 92 points – 2018 Family Vineyards VQA Cabernet Merlot
Silver Medal – 2018 Family Vineyards VQA Sauvignon Blanc
Silver Medal – 2018 Family Vineyards VQA Chardonnay
Silver Medal – 2018 Family Vineyards VQA Baco Noir
Silver Medal – 2018 Family Vineyards VQA Cabernet Sauvignon
Silver Medal – 2018 Family Vineyards VQA Cabernet Franc
Raven Conspiracy, Niagara
Tasters Guild International Wine Judging – Michigan, USA
Gold Medal – 2016 Wicked White
Gold Medal – 2016 Deep Dark Red
No Boats On Sunday
All Canadian Wine Championships
Gold Medal – 100% Nova Scotia Cider
Canadian Cider Awards
Silver Medal – 100% Nova Scotia Cider
Pacific Rim Wine Competition - USA
Gold Medal – Cranberry Rosé Cider Nova Scotia
Silver Medal – 100% Nova Scotia Cider
Silver Medal – 100% Ontario Hopped Cider
Trius
(Niagara-on-the-Lake, ON)
International Wine Challenge – UK
Silver Medal – 91 points – 2017 Showcase Vidal Icewine
Silver Medal – 90 points – Brut Rosé
Experience Rosé, California USA
Silver Medal – 2018 Trius Rosé
International Wine & Spirit Competition – UK
Dessert Wine Trophy – 2017 Showcase Riesling Icewine
Gold Medal – 95 points – 2017 Showcase Riesling Icewine
Silver Medal – 91 points – 2016 Showcase Chardonnay Wild Ferment
Watching Tree Vineyard
Silver Medal – 91 points – 2017 Showcase Vidal Icewine
Silver Medal – 90 points – Brut
Silver Medal – 90 points – Brut Rosé
Silver Medal – 90 points – Showcase Blanc de Blancs
Decanter World Wine Awards – UK
Gold Medal – 95 points – Brut
Silver Medal – 92 points – 2017 Showcase Vidal Icewine
Silver Medal – 90 points – 2017 Showcase Riesling Icewine
Silver Medal – 90 points – Brut Rosé
Silver Medal – 90 points – Showcase Blanc de Blancs
Ontario Wine Awards
Gold Medal – Red Wine of the Year – 2016 Showcase Red Shale
Cabernet Franc Clark Farm Vineyard
Gold Medal – 2017 Showcase Clean Slate Sauvignon Blanc Wild Ferment
All Canadian Wine Championships
Gold Medal – Brut Rosé
Los Angeles International Wine Competition
Best of Class Gold Medal – 97 points – 2017 Showcase Riesling Icewine
Best of Class Gold Medal – 95 points – 2017 Showcase Vidal Icewine
Lieutenant Governor’s Award for Excellence in Ontario Wines
Winner – 2016 Trius Showcase Red Shale Cabernet Franc Clark Farm Vineyard
WineAlign – National Wine Awards of Canada
Platinum Medal – 94 points - 2017 Showcase Sauvignon Blanc Clean Slate
Wild Ferment
Silver Medal – 90 points - Showcase Blanc de Blancs
Silver Medal – 90 points - 2018 Rosé
Silver Medal – 90 points - 2017 Red
Silver Medal – 89 points - 2016 Grand Red
Silver Medal – 89 points – 2017 Showcase Vidal Icewine
InterVin International Wine Awards – Vines magazine – Canada
Silver Medal - Brut
Silver Medal - Brut Rosé
Silver Medal - 2017 Showcase Riesling Icewine
Silver Medal - 2017 Showcase Sauvignon Blanc Clean Slate Wild Ferment
Silver Medal - 2016 Showcase Cabernet Sauvignon East Block
Silver Medal - 2016 Grand Red
ONTARIO & N.S.
Wayne Gretzky Estates
(Niagara-on-the-Lake, ON)
Canadian Whisky Awards – Victoria, BC
Gold Medal – No.99 Ninety Nine Proof Whisky
Silver Medal – No.99 Red Cask Whisky
Silver Medal – No.99 Ice Cask Whisky
San Francisco World Spirits Competition
Double Gold Medal - No. 99 Ninety Nine Proof Small Batch Whisky
Silver Medal – No. 99 Red Cask Premium Crafted Whisky
Silver Medal – No. 99 Ice Cask Premium Crafted Whisky
Silver Medal – No. 99 Muscat Artisanal Spirited Wine
International Wine Challenge – UK
Gold Medal – 96 points (Trophy Best Cdn. Icewine) – 2017 No.99 Vidal Icewine
Silver Medal – 93 points – 2017 No.99 Cabernet Franc Icewine
International Wine & Spirit Competition – UK
Silver Medal – 93 points – 2017 Vidal Blanc Icewine
Silver Medal – 90 points – 2017 Cabernet Franc Icewine
Decanter World Wine Awards – UK
Silver Medal – 91 points – 2017 Vidal Blanc Icewine
Silver Medal – 90 points – 2017 Cabernet Franc Icewine
Los Angeles International Wine Competition
Best of Class Gold Medal – 95 points – 2017 Vidal Icewine
Best of Class Gold Medal – 93 points – 2017 Cabernet Franc Icewine
InterVin International Wine Awards – Vines magazine – Canada
Silver Medal - 2016 Estate Series Cabernet Merlot
Silver Medal - 2018 Vidal Icewine
VIVO
Beverage Testing Institute – World Wine Championships 2019
Silver Medal – 85 points – Vivo Reserva Cabernet Sauvignon Blend No.23
(Nova Scotia)
Waltzing Matilda
Pacific Rim Wine Competition - USA
Silver Medal – 2017 Shiraz Grenache
Beverage Testing Institute – Australia and New Zealand Championships
Silver Medal – 87 points – 2017 Waltzing Matilda Shiraz Grenache
XOXO
Beverage Testing Institute, Chicago USA,
Flavoured Wine & Wine Cocktails
Silver Medal – 89 points – Best Buy – XOXO Pinot Grigio Sangria
Thirty Bench Wine Makers
(Beamsville, ON)
International Wine Challenge – UK
Gold Medal – 95 points – 2016 Small Lot Riesling Wood Post Vineyard
Silver Medal – 92 points – 2016 Winemaker’s Blend Riesling
International Wine & Spirit Competition – UK
Silver Medal – 93 points – 2016 Small Lot Riesling Wood Post Vineyard
Silver Medal – 93 points – 2016 Small Lot Riesling Wild Cask
Silver Medal – 92 points – 2016 Small Lot Chardonnay
Silver Medal – 91 points – 2016 Winemaker’s Blend Riesling
Silver Medal – 91 points – 2016 Small Lot Riesling Steel Post Vineyard
Silver Medal – 90 points – 2016 Small Lot Cabernet Franc
Decanter World Wine Awards – UK
Gold Medal – 96 points – 2016 Small Lot Riesling Wild Cask
Gold Medal – 95 points – 2016 Small Lot Riesling Steel Post Vineyard
Silver Medal – 92 points – 2016 Small Lot Riesling Wood Post Vineyard
Silver Medal – 91 points – 2017 Winemaker’s Blend Riesling
Silver Medal – 90 points – 2016 Winemaker’s Blend Riesling
Silver Medal – 90 points – Sparkling Riesling
Ontario Wine Awards
Silver Medal – 2017 Small Lot Gewürztraminer
All Canadian Wine Championships
Gold Medal – 2017 Winemaker’s Blend Red
Silver Medal – 2017 Winemaker’s Blend Riesling
WineAlign – National Wine Awards of Canada
Gold Medal – 92 points - 2017 Small Lot Riesling Triangle
Gold Medal – 91 points - 2017 Small Lot Gewürztraminer
Gold Medal – 91 points - 2017 Small Lot Riesling Steel Post
Silver Medal – 90 points - 2016 Small Lot Riesling Wild Cask
Silver Medal – 90 points - Sparkling Riesling
Silver Medal – 89 points – 2016 Small Lot Riesling Wood Post
Silver Medal – 89 points - 2017 Small Lot Riesling Wild Cask
Silver Medal – 89 points – 2016 Small Lot Merlot
Six Nations Wine Challenge – Australia
Trophy – 2017 Winemakers Blend Riesling
InterVin International Wine Awards – Vines magazine – Canada
Gold Medal - Sparkling Riesling
Gold Medal - 2017 Small Lot Riesling Triangle
Gold Medal - 2016 Small Lot Cabernet Franc
Silver Medal - 2016 Winemaker’s Blend Red
Silver Medal - 2016 Small Lot Riesling Steel Post
Silver Medal - 2016 Small Lot Cabernet Sauvignon
Silver Medal - 2016 Benchmark Red
Silver Medal - 2018 Small Lot Rosé
InterVin International Wine Awards
Vines magazine – Canada
2019 ONTARIO
WINERY OF
THE YEAR
THIRTY BENCH WINE MAKERS
+620
AWARDS NATIONALLY
2019 TOP AWARDS
Black Hills Estate Winery
(Okanagan Valley, BC)
Chardonnay du Monde, France
Silver Medal – 2016 Black Hills Chardonnay
Cascadia Wine Competition, Washington USA
Gold – 2017 Alibi
Gold – 2017 Chardonnay
Silver – 2016 Roussanne
Silver – 2016 Syrah
International Wine & Spirit Competition UK
Silver Medal – 91 points – 2016 Syrah
Silver Medal – 90 points – 2017 Addendum
Decanter World Wine Awards UK
Silver Medal – 90 points – 2017 Alibi
Okanagan Spring Wine Festival – Best of Varietals
Gold Medal – 2017 Chardonnay
Gold Medal – 2016 Syrah
All Canadian Wine Championships
Gold Medal – 2017 Viognier
Silver Medal – 2016 Ipso Facto
WineAlign National Wine Awards of Canada
Gold Medal – 92 points - 2017 Addendum
Gold Medal – 91 points - 2017 Roussanne
Silver Medal – 89 points – 2017 Carmenere
Sip NorthWest Magazine, Best of the Northwest
Double Gold Medal – 2017 Chardonnay
Gold Medal – 2017 Alias
Six Nations Wine Challenge – Australia
Gold Medal – 2017 Black Hills Estate Winery Syrah
British Columbia Lieutenant Governor’s Wine Awards
Platinum – 2017 Roussanne
Silver Medal – 2017 Syrah
Silver Medal – 2018 Alibi
San Francisco International Wine Competition
Silver Medal – 2018 Alibi
Silver Medal – 2018 Rose
Silver Medal – 2017 Syrah
Silver Medal – 2017 Ipso Facto
Silver Medal – 2018 Cellar Hand Punch Down Red
Gray Monk Estate Winery
(Okanagan Valley, BC)
Pacific Rim Wine Competition – USA
Gold Medal – 2018 Chardonnay Unwooded
Silver Medal – 2017 Pinot Noir
Experience Rosé, California USA
Silver Medal – 2018 Gray Monk Latitude 50 Rosé
Okanagan Spring Wine Festival – Best of Varietals
Silver Medal – 2018 Chardonnay Unwooded
Silver Medal – 2017 Pinot Gris
Silver Medal – 2018 Latitude 50 White
Tasters Guild International Wine Judging, USA
Double Gold Medal – 2018 Latitude 50 White
Gold Medal – 2018 Latitude 50 Rosé
Gold Medal – 2015 Cabernet Merlot
Gold Medal – 2018 Riesling
Silver Medal – 2018 Chardonnay Unwooded
Silver Medal – 2017 Pinot Gris
All Canadian Wine Championships
Double Gold Medal – 2018 Chardonnay Unwooded
Los Angeles International Wine Competition
Silver Medal – 2018 Chardonnay Unwooded
Silver Medal – 2017 Pinot Gris
Silver Medal – 2017 Pinot Noir
Silver Medal – 2018 Latitude 50 Rosé
Silver Medal – 2018 Latitude 50 White
WineAlign National Wine Awards of Canada
Silver Medal – 89 points - 2018 Latitude 50 White
Silver Medal – 89 points - 2017 Merlot
Sip NorthWest Magazine, Best of the Northwest
Double Gold Medal – 2017 Gewürztraminer
British Columbia Lieutenant Governor’s Wine Awards
Gold Medal – 2018 Rosé
Gold Medal – 2015 Odyssey Traditional Brut
Silver Medal – 2018 Latitude 50 Rosé
Silver Medal – 2017 Pinot Noir
Silver Medal – 2016 Odyssey Meritage
Silver Medal – 2017 Odyssey Rosé Brut
Beverage Testing Institute – World Value Wine Challenge – USA
Gold Medal – Best Buy – 90 points – Exceptional – 2018 Latitude 50 White
Silver Medal – 85 points – Highly Recommended – 2018 Latitude 50 Rosé
Great Northwest Invitational Wine Competition (Oregon USA)
Silver Medal – 2017 Syrah
Silver Medal – 2018 Viognier
Intervin - Vines Magazine – Canada
Gold Medal - 2018 Pinot Gris
Silver Medal - 2018 Chardonnay Unwooded
Conviction Wines
(British Columbia)
Okanagan Spring Wine Festival – Best of Varietals
Silver Medal – 2016 The Priest Pinot Noir
Tasters Guild International Wine Judging, USA
Silver Medal – 2018 The Industrialist Sovereign Opal
Los Angeles International Wine Competition
Best of Class Gold Medal – 95 points
– 2017 The Industrialist Sovereign Opal
Silver Medal – 2017 The Financier Pinot Grigio
Beverage Testing Institute – World Value Wine Challenge – USA
Silver Medal – Best Buy – 87 points – Highly Recommended
– 2018 The Industrialist Sovereign Opal
Intervin - Vines Magazine – Canada
Silver Medal – Best Value - 2018 The Industrialist Sovereign Opal
Great Northwest Invitational Wine Competition (Oregon USA)
Best Sparkling Wine – Gold Medal – 2017 Odyssey White Brut
Gold Medal – 2018 Pinot Gris
Silver Medal – 2017 Merlot
Silver Medal – 2017 Pinot Auxerrois
Silver Medal – 2017 Gewürztraminer
Harvest Challenge (California, USA)
Double Gold Medal – Best of Class – 96 points
– Best of British Columbia – 2018 Siegerrebe
Double Gold Medal – 95 points – 2018 Kerner
Double Gold Medal – 95 points – 2018 Pinot Blanc
Gold Medal – 93 points – 2017 Ehrenfelser
Gold Medal – 90 points – 2018 Reflection Muscat
Silver Medal – 2018 Chardonnay Unwooded
Silver Medal – 2018 Riesling
Silver Medal – 2017 Merlot
Silver Medal – 2018 Latitude 50 Red
Red Rooster
(Okanagan Valley, BC)
Cascadia Wine Competition, Washington USA
Silver – 2017 Riesling
Silver – 2017 Pinot Gris
Silver – 2016 Rare Bird Series Meritage
Pacific Rim Wine Competition – USA
Silver Medal – 2016 Rare Bird Series Meritage
International Wine & Spirit Competition UK
Silver Medal – 90 points – 2017 Riesling
Silver Medal – 90 points – 2017 Rare Bird Series Viognier
Silver Medal – 90 points – 2016 Rare Bird Series Malbec
Silver Medal – 90 points – 2016 Rare Bird Series Merlot
Okanagan Spring Wine Festival – Best of Varietals
Gold Medal – 2017 Rare Bird Series Pinot Noir
Silver Medal – 2018 Pinot Gris
Silver Medal – 2018 Rare Bird Series Viognier
Silver Medal – 2016 Rare Bird Series Meritage
All Canadian Wine Championships
Gold Medal – 2018 Pinot Gris
Los Angeles International Wine Competition
Best of Class Gold Medal – 96 points – 2018 Riesling
Gold Medal – 95 points – 2017 Riesling Icewine
Gold Medal – 90 points – 2016 Rare Bird Series Meritage
Silver Medal – 2018 Rare Bird Series Pinot Gris
Silver Medal – 2016 Rare Bird Series Syrah
WineAlign National Wine Awards of Canada
Gold Medal – 91 points - 2016 Golden Egg
Silver Medal – 89 points - 2018 Pinot Gris
Silver Medal – 89 points - 2018 Riesling
Sip NorthWest Magazine, Best of the Northwest
Double Gold Medal – 2016 Golden Egg
Gold Medal – 2018 Rare Bird Series Gewürztraminer
Silver Medal – 2018 Gewürztraminer
British Columbia Lieutenant Governor’s Wine Awards
Gold Medal – 2018 Riesling
Gold Medal – 2017 Rare Bird Series Pinot Noir
Silver Medal – 2017 Rare Bird Series Malbec
Silver Medal – 2018 Rare Bird Series Viognier
Intervin - Vines Magazine – Canada
Silver Medal - 2017 Pinot Noir
Silver Medal - 2016 Rare Bird Series Meritage
San Francisco International Wine Competition
Gold Medal – 90 points – 2017 Rare Bird Series Malbec
Silver Medal – 2016 Rare Bird Series Meritage
Great Northwest Invitational Wine Competition (Oregon USA)
Silver Medal – 2017 Pinot Blanc
Silver Medal – 2016 Rare Bird Series Merlot
Silver Medal – 2016 Golden Egg
Copper Moon, B.C.
Beverage Testing Institute – World Value Wine Challenge - USA
Silver Medal – Best Buy – 87 points – Highly Recommended – Malbec
No Boats On Sunday
Pacific Rim Wine Competition - USA
Silver Medal – 100% BC Cider
BRITISH COLUMBIA
Peller Estates
(Okanagan Valley, BC)
Okanagan Spring Wine Festival – Best of Varietals
Gold Medal – 2017 Family Select Chardonnay
Tasters Guild International Wine Judging, USA
Double Gold Medal – 2017 Family Select Merlot
Gold Medal – 2017 Family Select Cabernet Merlot
Silver Medal – 2018 Family Vineyards Sauvignon Blanc
WineAlign National Wine Awards of Canada
Silver Medal – 89 points - 2018 Family Vineyards VQA Sauvignon Blanc
Intervin – Vines Magazine - Canada
Silver Medal – Best Value - 2018 Family Vineyards VQA Sauvignon Blanc
Harvest Challenge – California, USA
Gold Medal – 92 points – 2018 Family Vineyards VQA Select Sauvignon Blanc
Silver Medal – 2018 Family Vineyards VQA Select Chardonnay
Silver Medal – 2017 Family Select VQA Merlot
Silver Medal – 2017 Family Select VQA Cabernet Merlot
Sandhill
(Okanagan Valley, BC)
Cascadia Wine Competition, Washington USA
Silver – 2017 Pinot Gris Terroir Driven Wine
Silver – 2016 ONE Small Lots Program
Silver – 2016 TWO Small Lots Program
Silver – 2016 Sangiovese Small Lots Program
Pacific Rim Wine Competition – USA
Silver Medal – 2016 Syrah Terroir Driven Wine
Experience Rosé, California USA
Silver Medal – 2018 Rosé Terroir Driven Wine
International Wine & Spirit Competition UK
Silver Medal – 93 points – 2016 Syrah Small Lots Program
Silver Medal – 93 points – 2017 Riesling Icewine
Silver Medal – 91 points – 2017 Cabernet Franc Icewine
Decanter World Wine Awards UK
Silver Medal – 90 points – 2016 ONE Small Lots Program
Silver Medal – 90 points – 2016 Syrah Small Lots Program
Okanagan Spring Wine Festival – Best of Varietals
Gold Medal – 2018 Rosé Terroir Driven Wine
Gold Medal – 2016 TWO Small Lots Program
Silver Medal – 2016 Cabernet Merlot Terroir Driven Wine
Silver Medal – 2016 Syrah Terroir Driven Wine
Los Angeles International Wine Competition
Gold Medal – 94 points – 2017 Riesling Icewine
Gold Medal – 93 points – 2016 Sangiovese Small Lots Program
Gold Medal – 90 points – 2017 Cabernet Franc Icewine
Gold Medal – 90 points – 2017 Pinot Blanc Terroir Driven Wine
Silver Medal – 2016 Cabernet Franc Terroir Driven Wine
Silver Medal – 2016 ONE Small Lots Program
Silver Medal – 2016 TWO Small Lots Program
Silver Medal – 2016 THREE Small Lots Program
WineAlign National Wine Awards of Canada
Gold Medal – 91 points - 2016 ONE Small Lots Program
Silver Medal – 89 points – 2018 Pinot Gris Terroir Driven Wine
Silver Medal – 89 points - 2017 Syrah Terroir Driven Wine
Alberta Beverage Awards – Culinaire magazine
Best in Class – 2018 Rosé Terroir Driven Wine
Sip NorthWest Magazine, Best of the Northwest
Double Gold Medal – 2017 Syrah Terroir Driven Wines
Double Gold Medal – 2016 Sangiovese Small Lots Program
British Columbia Lieutenant Governor’s Wine Awards
Platinum – 2018 Riesling Icewine
Gold Medal – 2017 Syrah Small Lots Program
Gold Medal – 2016 ONE Small Lots Program
Silver Medal – 2018 Pinot Gris Terroir Driven Wine
Silver Medal – 2016 Sangiovese Small Lots Program
Intervin - Vines Magazine – Canada
Silver Medal – 2016 Cabernet Franc Terroir Driven Wine
Silver Medal - 2018 Rosé Terroir Driven Wine
Silver Medal - 2016 TWO Small Lots Program
Silver Medal - 2016 THREE Small Lots Program
Silver Medal - 2016 Barbera Small Lots Program
Silver Medal - 2016 Sangiovese Small Lots Program
Silver Medal - 2017 Syrah Small Lots Program
Silver Medal - 2018 Viognier Small Lots Program
San Francisco International Wine Competition
Gold Medal – 92 points – 2017 Syrah Terroir Driven Wine
Gold Medal – 92 points – 2017 Syrah Small Lots Program
Silver Medal – 2016 ONE Small Lots Program
Silver Medal – 2016 TWO Small Lots Program
Silver Medal – 2016 THREE Small Lots Program
Silver Medal – 2016 Barbera Small Lots Program
Great Northwest Invitational Wine Competition (Oregon USA)
Silver Medal – 2017 Syrah Terroir Driven Wine
Wayne Gretzky Estates
(Okanagan Valley, BC)
Okanagan Spring Wine Festival – Best of Varietals
Silver Medal – 2017 Chardonnay
Silver Medal – 2017 Merlot
Silver Medal – 2016 The Great White
Tasters Guild International Wine Judging, USA
Gold Medal – 2017 Chardonnay
Silver Medal – Cabernet Franc Syrah Cabernet Sauvignon
Silver Medal – 2017 Pinot Grigio
All Canadian Wine Championships
Silver Medal – 2017 Pinot Grigio
British Columbia Lieutenant Governor’s Wine Awards
Platinum – 2016 Signature Series Shiraz
Gold Medal – 2016 Signature Series Riesling
Silver Medal – 2018 Cabernet Franc Syrah
Silver Medal – 2018 The Great Red
Harvest Challenge – California, USA
Gold Medal – 91 points – 2018 Chardonnay
Silver Medal – 2017 The Great Red
Silver Medal – 2018 Whisky Oak Aged Chardonnay
Silver Medal – 2018 Whisky Oak Aged Red
Alberta Beverage Awards – Culinaire Magazine
Top Value – 2017 Pinot Grigio
Tinhorn Creek
(Okanagan Valley, BC)
Chardonnay du Monde, France
Silver Medal – 2016 Tinhorn Creek Oldfield Reserve Chardonnay
Cascadia Wine Competition, Washington USA
Gold – 2018 Pinot Gris
Gold – 2017 Oldfield Reserve 2Bench White
Silver – 2017 Gewurztraminer
Silver – 2017 Chardonnay
Silver – 2016 Merlot
Silver – 2015 Oldfield Reserve Merlot
International Wine & Spirit Competition UK
Silver Medal – 90 points – 2016 Cabernet Franc
Silver Medal – 90 points – 2015 The Creek
Decanter World Wine Awards UK
Silver Medal – 91 points – 2016 Cabernet Franc
Okanagan Spring Wine Festival – Best of Varietals
Silver Medal – 2017 Chardonnay
Silver Medal – 2017 Oldfield Reserve 2Bench White
Silver Medal – 2015 Oldfield Reserve Merlot
All Canadian Wine Championships
Double Gold Medal – 2017 Oldfield Reserve 2Bench White
Gold Medal – 2016 Merlot
Silver Medal – 2017 Pinot Noir
WineAlign National Wine Awards of Canada
Gold Medal – 92 points - 2015 Oldfield Reserve Syrah
Sip NorthWest Magazine, Best of the Northwest
Gold Medal – 2016 Oldfield Reserve Cabernet Franc
British Columbia Lieutenant Governor’s Wine Awards
Silver Medal – 2017 Cabernet Franc
Silver Medal – 2017 Chardonnay
Intervin - Vines Magazine – Canada
Gold Medal – 2016 Oldfield Reserve Cabernet Franc
Gold Medal – 2015 Oldfield Reserve Merlot
Silver Medal – 2018 Pinot Gris
Silver Medal – 2017 Oldfield Reserve Roussanne
San Francisco International Wine Competition
Gold Medal – 89 points – 2016 Oldfield Reserve Cabernet Franc
Silver Medal – 2017 Cabernet Franc
Great Northwest Invitational Wine Competition (Oregon USA)
Gold Medal – 2017 Chardonnay
Silver Medal – 2015 The Creek
Silver Medal – 2018 Pinot Gris
Wine Press Northwest Platinum Best of the
Best Competition Washington USA
Platinum – 2018 Pinot Gris
Platinum – 2016 Oldfield Reserve Cabernet Franc
Double Gold – 2015 Oldfield Reserve Syrah
Double Gold – 2017 Oldfield Reserve 2Bench White
Gold – 2016 Merlot
Raven Conspiracy, Okanagan
Tasters Guild International Wine Judging, USA
Silver Medal – 2016 Smooth Bright White
Silver Medal – 2016 Deep Dark Red
Stone Road Vineyards
Harvest Challenge (California, USA)
Gold Medal – 93 points – 2018 Smooth White
Silver Medal – 2018 Smooth Red
MANAGEMENT’S DISCUSSION & ANALYSIS
FOR THE THREE MONTHS AND YEAR ENDED MARCH 31, 2020
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, 2020 in comparison with those for the
three months and year ended March 31, 2019 for Andrew Peller Limited (the “Company” or “APL”). This discussion is
prepared as of June 10, 2020 and should be read in conjunction with the audited consolidated financial statements and
accompanying notes contained therein for the years ended March 31, 2020 and 2019. 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, 2020 and March 31, 2019, is available on www.sedar.com. The financial years ending March
31, 2019 and March 31, 2020 are referred to as “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 and craft beverage alcohol products 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 Winery, Tinhorn Creek
Vineyards, Gray Monk Estate Winery, Raven Conspiracy and Conviction. Complementing these premium brands are a
number of popularly priced varietal brands including Peller Family Vineyards, 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, 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 No. 99 Premium Lager, No. 99
Pale Ale and No. 99 Session Ale. With a focus on serving the needs of all wine consumers, the Company produces and
8
| ANDREW PELLER LIMITED 2020
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 200 authorized retailers and
more than 400 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
Winexpert, Vine Co., Apres, LE, Passport Series, On the House, Wild Grapes, DIY My Wine Co., Island Mist and
Niagara Mist. 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 branded wines, spirits, refreshments, beer and experiences at
the best possible value. To meet this goal, the Company invests in improvements in the quality of grapes, wines, and other
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 March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic.
Management continues to closely monitor and assess developments regarding the pandemic, including industry, market
and internal factors, as well as regulations enacted by governments across Canada. Businesses selling beer, wine and other
alcohol products have been deemed essential services, as well as those businesses that supply them. As a result, all of the
Company’s production facilities remain open, as do the Company’s retail locations and retail estate locations. New
protocols related to cleanliness and social distancing have been deployed at all locations. In late March 2020, the
Company introduced a temporary wage increase for front line staff to recognize their efforts during the COVID-19
pandemic. Management believes its export, estate property hospitality and personal winemaking sales will be affected by
the pandemic. However, consumption of alcohol beverages remains stable in Canada with consumers purchasing products
through alternative trade channels available during the pandemic, benefiting the Company’s sales through provincial
liquor stores and its other retail channels. The Company has enhanced its capabilities to support increased demand for
direct-to-home purchases. In response to COVID-19, the Company has implemented working practices to address
potential impacts to its operations, employees and customers and will take further measures, if required. These practices
have been permanently established to enhance the ability for the Company to respond in the future. The outbreak may
also have an effect on the future collectability of certain receivables, recoverability of property plant and equipment,
goodwill and intangible assets, as well as the fair value of derivatives. At present, the Company has not identified any
material continuity-risks specifically associated with COVID-19. The Company believes it has the management
experience and the financial resources and flexibility to meet the liquidity needs presented by the pandemic. The
Company continues to review all capital allocations to ensure it remains financially stable and well capitalized going
forward.
On June 10, 2020, the Company’s Board of Directors approved a common share dividend with no increase to preserve
capital as a result of COVID-19. The annual dividend on Class A Shares is $0.215 per share and the dividend on Class B
Shares is $0.187 will be paid quarterly to shareholders. The Company has consistently paid common share dividends
since 1979. APL currently designates all dividends paid as “eligible dividends” for purposes of the Income Tax Act
(Canada) unless indicated otherwise.
On July 29, 2019 the City of Port Moody, British Columbia approved by-law amendments to permit the future
development of lands owned by the Company that had held its first winery operations since 1961. Production was moved
from the property to its Kelowna, B.C. facility in January 2006 Since that time the Company has engaged with the
community and the City of Port Moody to produce a plan to transform the 217,000 square foot site into a mixed-use
community.
ANDREW PELLER LIMITED 2020 | 9
Results of Operations
For the year ended March 31,
(in $000, except per share amounts)
Sales
Gross margin
Gross margin (% of sales)
Selling and administrative expenses
EBITA
Adjusted EBITA
Interest
Net unrealized loss (gain) on derivative financial instruments
Other expenses (income)
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)
2020
2019
2018
$ 382,306
$ 381,796
$ 363,897
166,250
159,008
150,325
43.5%
41.6%
104,749
106,133
61,501
63,233
8,107
1,406
1,769
27,575
23,494
$0.55
$0.48
$0.64
$0.56
$0.215
$0.187
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
(1,400)
(3,842)
29,303
30,117
$0.71
$0.62
$0.69
$0.60
$0.180
$0.156
Sales for the year ended March 31, 2020 were $382.3 million, up from $381.8 million in the prior year. The Company
experienced solid sales growth through the majority of its well-established bottled wine trade channels due to the
introduction of new products and new product categories, and new and innovative sales and marketing programs. This
growth was partially offset by reduced sales in the personal winemaking market, increased competition from subsidized
lower priced imported wines, and lower duty-free export sales due to trade and political disputes between Canada and
China.
The Company defines gross margin as gross profit excluding amortization. Gross margin as a percentage of sales
strengthened to 43.5% for the year ended March 31, 2020 compared to 41.6% in the prior year. Gross margin is benefiting
from an increased focus on higher margin products and the positive impact of the Company’s cost control initiatives.
Management is continually focused on enhancing production efficiency and productivity and believes gross margin will
remain strong for the foreseeable future.
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. For fiscal 2020 the Company’s gross margin
was reduced by $1.7 million due to this adjustment compared to $5.5 million in the prior year.
10
| ANDREW PELLER LIMITED 2020
Selling and administrative expenses were lower in fiscal 2020 compared to the prior year. Included in fiscal 2020 is the
reduction of lease expenses of $3.2 million due to the accounting treatment for lease obligations in accordance with IFRS
16, adopted on April 1, 2019 (see IFRS, Leases below). Partially offsetting these reductions are expenditures related to the
Company’s implementation of a new Enterprise Resource Planning (ERP) solution, and an increase in the allowance for
doubtful accounts due to the potential impact of the COVID-19 pandemic on certain customers. As a percentage of sales,
selling and administrative expenses improved to 27.4% in fiscal 2020 compared to 27.8% in the prior year.
Earnings before interest, amortization, net unrealized gains and losses on derivative financial instruments, other (income)
expenses, and income taxes (“EBITA”) were $61.5 million for the year ended March 31, 2020, up from $52.9 million in
the prior year. EBITA strengthened due primarily to the improved gross margin and the lower selling and administrative
costs in fiscal 2020. Adjusted EBITA, which excludes from EBITA one-time acquisition related charges, was $63.2
million for the year ended March 31, 2020 compared to $58.3 million in the prior year.
Interest and amortization expense increased in fiscal 2020 compared to the prior year due primarily to the lease
obligations as mentioned above. Other expenses in fiscal 2020 include $1.7 million in restructuring costs.
The Company recorded a net unrealized non-cash loss in fiscal 2020 of $1.4 million related to mark-to-market
adjustments on interest rate swaps and foreign exchange contracts compared to $1.7 million in the prior year. The
Company has elected not to apply hedge accounting and accordingly the change in fair value of these financial
instruments is reflected in the Company’s 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.
Net earnings for fiscal 2020 were $23.5 million or $0.55 per Class A Share compared to $22.0 million or $0.51 per Class
A Share in the prior year. 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 $27.6 million for the year ended March 31, 2020 compared to $29.4 million in the prior year.
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 in both its core wine business and in the new product categories, as well as overall
growth in the Canadian beverage alcohol market.
ANDREW PELLER LIMITED 2020 | 11
Quarterly Performance
The following table outlines key quarterly highlights.
(in $000, except per share amounts)
Q4 20
Q3 20
Q2 20
Q1 20
Q4 19
Q3 19
Q2 19
Q1 19
Sales
Gross margin
82,118
101,597
103,375
95,216
79,780
103,152
103,323
95,541
35,550
41,968
46,311
42,421
31,310
42,133
44,284
41,281
Gross margin (% of sales)
43.3%
41.3%
44.8%
44.6%
39.2%
40.8%
42.9%
43.2%
EBITA
Interest
Adjusted EBITA
9,668
1,839
9,924
16,148
17,335
18,350
1,818
2,222
2,228
16,427
17,957
18,925
6,554
1,055
6,548
14,353
16,160
15,808
1,920
1,943
1,954
15,599
18,198
17,942
Net unrealized loss (gain) on financial
instruments
Other expenses (income)
Adjusted earnings
Net earnings (loss)
E.P.S. – Class A basic & diluted
E.P.S. – Class B basic & diluted
Adjusted E.P.S – Class A basic &
1,984
634
1,196
(996)
$(0.02)
$(0.02)
(646)
(57)
7,815
8,056
$0.19
$0.16
(497)
1,106
8,716
7,643
$0.18
$0.15
565
86
9,848
8,791
$0.20
$0.18
1,168
1,478
(749)
669
27
92
1,477
7,761
10,446
84
$0.00
$0.00
5,432
$0.13
$0.11
8,894
$0.21
$0.18
(218)
275
9,724
7,548
$0.18
$0.15
diluted
$0.03
$0.18
$0.20
$0.23
$0.03
$0.18
$0.24
$0.23
Adjusted E.P.S – Class B basic &
diluted
$0.03
$0.15
$0.17
$0.20
$0.03
$0.16
$0.21
$0.20
The second and third quarters of the Company’s fiscal year are historically the largest due to increased activity at the
Company's estate properties and increased consumer purchasing of the Company’s products during the holiday season.
Sales in the fourth quarter of fiscal 2020 were $82.1 million, up from $79.8 million in the prior year’s fourth quarter. The
Company experienced solid sales growth through the majority of its well-established bottled wine trade channels due to
the introduction of new products and new product categories, and new and innovative sales and marketing programs. This
growth was partially offset by reduced sales in the personal winemaking market, increased competition from subsidized
lower priced imported wines, and lower duty-free export sales due to trade and political disputes between Canada and
China.
Gross margin for the three months ended March 31, 2020 strengthened to 43.3% of sales compared to 39.2% in the fourth
quarter of fiscal 2019. Gross margin in fiscal 2020 is benefiting from an increased focus on higher margin products, and
the positive impact of the Company’s cost control initiatives.
Selling and administrative expenses increased in the fourth quarter of fiscal 2020 compared to the prior year’s fourth
quarter due to the increase in the allowance for doubtful accounts for potential impact of the COVID-19 pandemic on
certain customers, partially offset by the reduction of lease expenses.
EBITA was $9.7 million for the three months ended March 31, 2020 compared to $6.5 million in the same quarter in
fiscal 2019. The increase is due primarily to the higher sales and gross margin. The Company recorded a net unrealized
non-cash loss of $2.0 million in the fourth quarter of fiscal 2020 related to mark-to-market adjustments on interest rate
swaps and foreign exchange contracts compared to $1.2 million in the fourth quarter of fiscal 2019.
The Company incurred a net loss of $1.0 million or $(0.02) per Class A share for the three months ended March 31, 2020
compared to net profit of $0.8 million or $0.00 per Class A Share in the fourth quarter of fiscal 2019. The Company
generated adjusted earnings for the three months ended March 31, 2020 of $1.2 million compared with $1.5 million the
same period in the prior year.
12
| ANDREW PELLER LIMITED 2020
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
Lease obligations
Post-employment benefit obligations
Deferred income tax
Shareholders’ equity
Total liabilities and shareholders’ equity
March 31, 2020 March 31, 2019 March 31, 2018
$ 214,114
221,100
25,067
53,638
-
$ 513,919
$ 130,460
95,515
1,932
14,802
3,649
22,038
245,523
$ 513,919
$ 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
The change in current assets as at March 31, 2020 compared to March 31, 2019 reflects an increase in accounts receivable
due to higher sales in the fourth quarter of fiscal 2020 and an increase in inventory due to seasonal factors and the
harvesting of grapes. Inventory is dependent on 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 wines 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. Included in current assets for the year ended March 31, 2020 was $1.3 million
reflecting the carrying value of the Company’s production facility in Port Coquitlam British Columbia which is being held
for sale.
Accounts receivable are predominantly with provincial liquor boards and, to a lesser extent, licensed establishments and
independent retailers of personal winemaking products. The Company had $20.8 million of accounts receivable with
provincial liquor boards at March 31, 2020, all of which is expected to be collectible. The balance represents amounts due
from licensees, export customers, and independent retailers of personal winemaking products. The amount of accounts
receivable that was 30 days past due was $1.5 million at March 31, 2020. Against these amounts an allowance for
doubtful accounts of $0.9 million has been provided which the Company has determined based on assumptions about risk
of default and expected loss rates. The allowance for doubtful accounts was increased in March 2020 due to the potential
impact of the COVID-19 pandemic on certain customers.
Property, plant and equipment increased at March 31, 2020 due to the requirement to record all lease obligations on the
Balance Sheet, as discussed above and operational investments in the Company’s facilities.
Intangibles increased at March 31, 2020 compared to the prior year-end due to the investment in a new Enterprise
Resource Planning (ERP) solution.
The change in current liabilities as at March 31, 2020 compared to March 31, 2019 reflects an increase in accounts
payable due to timing of invoices and payments, an increase in bank indebtedness, and the change in accounting treatment
for lease obligations.
Overall bank debt increased to $165.2 million at March 31, 2020 from $154.8 million at March 31, 2019. The increase is
due to cash flows from operations in fiscal 2020 offset by regularly scheduled debt repayments. With the increase in debt,
the Company’s debt to equity ratio was 0.67:1 at March 31, 2020 compared to 0.66:1 at March 31, 2019. At March 31,
2020, the Company had unutilized debt capacity in the amount of $24.2 million on its operating facility and $112.4
million on its investment facility. A reduction in EBITA, could result in the breach of a covenant relative to its impact on
the trailing twelve months results used in calculating covenant compliance. The company is actively managing its
administrative costs, inventory, bank indebtedness and long-term debt balances in order to comply with lenders
covenants.
ANDREW PELLER LIMITED 2020 | 13
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 continued profitability and strong management of
working capital and prioritization of capital expenditures. The Company continues to monitor its capital allocations in
order to preserve capital during the current COVID-19 pandemic. 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, 2020, the Company generated cash from operating activities, after changes in non-cash
working capital items, of $31.5 million compared to $49.0 million in the prior year. Investing activities of $23.3 million in
fiscal 2020 relate primarily to capital expenditures to improve operations and to implement the new ERP system.
Financing activities for the year ended March 31, 2020 of $8.2 million include $6.2 million for the repurchase of class A
shares under its Normal Course Issuer Bid (see Common Shares Outstanding below), scheduled repayments of long-term
debt, dividend payments, the principal repayment of lease obligations, and an increase in bank indebtedness.
Working capital as at March 31, 2020 was $83.7 million compared to $97.3 million at March 31, 2019. Shareholders’
equity as at March 31, 2020 was $245.5 million or $5.63 per common share compared to $234.8 million or $5.31 per
common share as at March 31, 2019. The increase in shareholders’ equity was due to the net earnings in fiscal 2020,
partially offset by the payment of dividends.
The following table outlines the Company’s contractual obligations as at March 31, 2020:
(in $000)
Long-term debt
Leases and royalties
Service agreements
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
$ 11,615
4,957
483
221
62,816
31,299
111,391
2,309
10,070
$ 96,082
8,737
3,958
379
78,433
21,472
209,061
2,934
-
$ -
5,645
1,496
40
58,647
2,271
68,099
$ -
16,961
-
69
98,491
-
115,521
Total
$ 107,697
36,300
5,937
709
298,387
55,042
504,072
-
-
-
-
5,243
10,070
Total contractual obligations
$ 123,770
$ 211,995
$ 68,099
$ 115,521
$ 519,385
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.
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
March 31, 2020
March 31, 2019 March 31, 2018
Class A Shares
Class B Shares
Total
35,403,767
8,191,883
43,595,650
35,988,148
8,198,994
44,187,142
35,471,185
8,702,095
44,173,280
On November 8, 2019, the Company announced that it filed with the Toronto Stock Exchange (“TSX”), and the TSX has
accepted, a notice of intention to make a Normal Course Issuer Bid (“NCIB”) permitting the Company to purchase for
cancellation up to 1,799,733 of its outstanding class A non-voting shares (“Class A Shares”) over a 12-month period,
representing 5% of the 35,994,667 Class A Shares outstanding as of the close of trading on November 7, 2019.
14
| ANDREW PELLER LIMITED 2020
The total number of common shares repurchased for cancellation under the NCIB during the year ended March 31, 2020
amounted to 597,900 common shares, at a weighted average price of $10.44 per common share, for a total cash
consideration of $6.3 million. For the year ended March 31, 2020, the Company’s share capital was reduced by $0.5
million and the remaining $5.8 million was accounted for as a decrease in retained earnings. In order to preserve capital
during the COVID-19 pandemic, the Company has suspended purchases on its NCIB.
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 Company has focused its product development and sales and marketing initiatives by capitalizing on alcohol
consumption trends and expects to see continued sales growth. The Company will continue to closely monitor its costs
and will react quickly to changes to risks and opportunities in the marketplace.
The Company will continue to 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 improve efficiencies,
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 craft beverage alcohol products are affected by general economic conditions and social
trends such as changes in discretionary consumer spending and consumer confidence, future economic conditions,
changes to inter-provincial trade laws, tax laws, the prices of its products and health trends. The duration and impact of
the COVID-19 outbreak is unknown at this time. The impact of the outbreak on the financial results of the Company will
depend on future developments, including the duration and spread of the outbreak and its impact on the overall economy
and related advisories and restrictions. It is not possible to reliably estimate the length and severity of these developments
and conclusively quantify the impact on the financial results and condition of the Company in future periods. If the
overall economy is impacted for an extended period, the financial results of the Company may be materially adversely
affected. Such general economic conditions could impact the Company’s sales through duty-free export, restaurant, estate
property and personal winemaking channels. The Company’s suppliers may not have the materials, capacity or capability
to supply components according to its schedule and specifications if the outbreak continues. This could delay the release
or delivery of the Company’s products or require management to make unexpected changes to such products which may
materially affect the business, operating results and future compliance with the Company’s financial covenants.
The outbreak may also have an effect on the future collectability of certain receivables, recoverability of property plant
and equipment, goodwill and intangible assets, as well as fair value of derivatives. As the duration and impact of the
COVID-19 outbreak or the efficacy of the Government and Bank of Canada interventions is not known at this time, it is
not possible to reliably estimate the length and severity of these developments or quantify the impact this pandemic may
have on the financial results and condition of the Company in future periods. In response to COVID-19, the Company has
implemented working practices to address potential impacts to its operations, employees and customers and will take
further measures in the future, if required. At present, the Company has not identified any material continuity-risks
specifically associated with COVID-19.
ANDREW PELLER LIMITED 2020 | 15
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.
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.
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, 2020, the Company had locked in $7.7 million in U.S.
dollar contracts at rates ranging between $1.30 and $1.31 Canadian. These contracts expire at various dates through
September 2020. Based on the Company’s forecasts for foreign currency purchases and the amount of foreign exchange
forward contracts outstanding at March 31, 2020, 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 for bottling and packaging. The largest
component of packaging 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
16
| ANDREW PELLER LIMITED 2020
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 for consumer acceptance, loyalty, and shelf space. No assurance can be given that consumer
demand for wine and premium wine products will continue at current levels in the future.
Federal and provincial governments impose excise, other taxes, and mark-ups on beverage alcohol products which have
been subject to change. Significant increases in excise and other taxes on beverage alcohol products could materially and
adversely affect the Company’s financial condition or results of operations. Federal and provincial governmental agencies
extensively regulate the beverage alcohol products industry concerning such matters as licensing, trade practices,
permitted and required labelling, advertising, and relations with consumers and retailers. Certain federal and provincial
regulations also require warning labels and signage. New or revised regulations, increased licensing fees, requirements,
taxes, or mark-ups could also have a material adverse effect on the Company’s financial condition or results of operations.
The Company’s future operating results also depend on the ability of its officers and other key employees to continue to
implement and improve its operating and financial systems and manage the Company’s significant relationships with its
suppliers and customers. The Company is also dependent upon the performance of its key senior management personnel.
The Company’s success is linked to its ability to identify, hire, train, motivate, promote, and retain highly qualified
management. Competition for such employees is intense and there can be no assurances that the Company will be able to
retain current key employees or attract new key employees.
The Company has 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 fourth 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 fourth-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 fourth parties and used in the production of the Company’s products or defects in the
ANDREW PELLER LIMITED 2020 | 17
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.
The Company calculates EBITA and Adjusted EBITA as follows:
For the three months and years ended March 31,
Three Months
Year
(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 on derivative financial instruments
Other expenses
EBITA
Professional fees and COGS adjustments - acquisitions (FMV)
Acquisition transaction and transition costs
Adjusted EBITA
2020
2019
2020
2019
$ (996)
$ 84
$ 23,494
$ 21,958
1,839
621
2,882
2,704
1,984
634
1,055
234
2,091
1,253
1,168
669
8,107
8,971
10,057
7,697
1,406
1,769
6,872
8,533
7,749
5,021
1,679
1,063
$ 9,668
$ 6,554
$ 61,501
$ 52,875
256
-
305
(311)
1,732
-
5,483
(71)
$ 9,924
$ 6,548
$ 63,233
$ 58,287
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
Three Months
2020
$ 82,118
2019
2020
$ 79,780 $ 382,306
Year
2019
$ 381,796
Less: Cost of goods sold, excluding amortization
46,568
48,470
216,056
222,788
Gross margin
Gross margin (% of sales)
$ 35,550
$ 31,310 $ 166,250
$ 159,008
43.3%
39.2%
43.5%
41.6%
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| ANDREW PELLER LIMITED 2020
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 on derivative financial instruments
Other expenses
Fair value adjustment for acquired inventory sold during the period
Acquisition transaction and transition costs
Income tax effect of the above
Adjusted earnings
Adjusted earnings per share – Class A
Adjusted earnings per share – Class B
Three Months
Year
2020
2019
2020
2019
$ (996)
1,984
634
256
-
(682)
$ 84
$ 23,494
$ 21,958
1,168
669
305
(311)
(438)
1,406
1,769
1,732
-
(826)
1,679
1,063
5,483
(71)
(704)
$ 1,196
$ 1,477
$ 27,575
$ 29,408
$0.03
$0.03
$0.03
$0.03
$0.64
$0.56
$0.68
$0.59
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 61.0% 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
2020
2019
$ 4,374
266
1,613
$ 6,253
$ 4,336
295
1,097
$ 5,728
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:
ANDREW PELLER LIMITED 2020 | 19
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.
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.
Leases
Critical accounting estimates were made in determining the lease term and incremental borrowing rate. In determining the
lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension
option, or not exercise a termination option. Extension options (or periods after termination options) are only included in
the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a
significant event or a significant change in circumstances occurs which affects this assessment and that is within the
control of the lessee.
In determining the carrying amount of right-of-use assets and lease liabilities, the Company is required to estimate the
incremental borrowing rate specific to each leased asset or portfolio of leased assets if the interest rate implicit in the lease
is not readily determined. Management determines the incremental borrowing rate of each leased asset or portfolio of
leased assets by using the companies specific risk portfolio, the security, term and value of the underlying leased asset,
and the economic environment in which the leased asset operates in. The incremental borrowing rates are subject to
change mainly due to macroeconomic changes in the environment.
Recently adopted accounting pronouncements
IFRS 16, Leases
The IASB issued IFRS 16, Leases, which replaces IAS 17, Leases and Related Interpretations. On April 1, 2019, the
Company adopted the new accounting standard using the modified retrospective method and therefore, comparative
figures have not been restated, as permitted under the specific transitional provisions in the standard. Under this method,
the standard is applied retrospectively with the cumulative effect of initially applying the standard recognized in operating
retained earnings at April 1, 2019.
In applying IFRS 16 for the first time, the Company has used the following practical expedients permitted by the
standard:
• The use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
• Reliance on previous assessment on whether leases are onerous;
• The accounting for operating leases with a remaining lease term of less than 12 months as at April 1, 2019 as
short term leases;
• The exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial
application; and
• The use of hindsight in determining the lease term where the contract contains options to extend or terminate
the lease.
The Company has also elected not to reassess whether a contract is, or contains, a lease at the date of initial application.
Instead, for contracts entered into before the transition date, the Company relied on its assessment made applying IAS 17
and IFRIC 4, Determining whether an Arrangement Contains a Lease.
20
| ANDREW PELLER LIMITED 2020
The Company leases various vineyards, retail stores, offices, warehouses, equipment and vehicles. Lease terms are
negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not
impose any covenants.
Where the Company is a lessee, IFRS 16 resulted in recognition of most of its leases that were considered operating leases
under IAS 17. This resulted in recognition of a right-of-use asset and a lease liability for the present value of the
remaining future lease payments, discounted using the incremental borrowing rate at the date of initial application. The
weighted average lessee’s incremental borrowing rate applied to the lease liabilities on April 1, 2019 was 5.01%.
Depreciation expense on the right-of-use asset and interest expense on the lease liability replaced the previously
recognized operating lease expense. The impact of adopting this standard on the consolidated statement of cash flow is to
present the principle repayment on lease obligations in financing activities under IFRS 16, whereas previously payments
for operating leases were presented in operating activities.
The adoption of this standard resulted in the recognition of right-of-use assets, in property, plant and equipment and lease
liabilities amounting to $17,658 as of April 1, 2019.
The expense related to leases with variable consideration, short term leases and low value leases amounted to $2,354 for
year ended March 31, 2020. The total cash outflows relating to leases during the year were $6,213.
Some property leases contain variable payment terms that are linked to sales generated from a store. For individual stores,
up to 100% of lease payments are on the basis of variable payment terms. Variable lease payments are recognized in the
consolidated statement of earnings in the period in which the condition that triggers those payments occurs. A 5%
increase in sales across all stores with such variable lease contracts would not result in a material change to the total lease
payments.
IAS 19, Employee Benefits
The IASB issued an amended IAS 19, Employee Benefits 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 adoption of these amendments did not have a material impact on the
consolidated financial statements.
IAS 9, Financial Instruments
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 adoption of these amendments did
not have a material impact on the consolidated financial statements.
IFRIC Interpretation 23, Uncertainty over Income Tax Treatments
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
adoption of these amendments did not have a material impact on the consolidated financial statements.
Recently issued accounting pronouncements
IAS 1, Presentation of Financial Statements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors
These standards 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
This standard 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
ANDREW PELLER LIMITED 2020 | 21
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.
IAS 1, Presentation of Financial Statements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors
This standard has been amended to clarify the classification of liabilities as current or non-current. The amendments are
effective for annual periods beginning on or after January 1, 2022. 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 10, 2020, 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, 2020, 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 10, 2020, 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.
22
| ANDREW PELLER LIMITED 2020
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, 2020 and 2019, 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:
the consolidated balance sheets as at March 31, 2020 and 2019;
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.
ANDREW PELLER LIMITED 2020 | 23
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:
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 10, 2020
24
| ANDREW PELLER LIMITED 2020
Consolidated Balance Sheets
As at March 31, 2020 and 2019
(in thousands of Canadian dollars)
Assets
Current assets
Accounts receivable (note 20)
Inventories (note 4)
Biological assets (note 6)
Prepaid expenses and other assets
Income taxes receivable
Derivative financial instruments (note 20)
Assets held for sale (note 5)
Property, plant and equipment (notes 2 and 5)
Intangible assets (note 7)
Goodwill (note 8)
Liabilities
Current liabilities
Bank indebtedness (note 9)
Accounts payable and accrued liabilities (note 10)
Dividends payable
Income taxes payable
Lease obligation (note 2)
Derivative financial instruments (note 20)
Long-term debt (note 11)
Long-term debt (note 11)
Long-term derivative financial instruments (note 20)
Lease obligations (note 2)
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
2020
$
2019
$
34,096
170,779
1,951
3,998
1,232
783
1,275
214,114
221,100
25,067
53,638
513,919
58,114
53,821
2,288
-
3,018
1,604
11,615
130,460
95,515
1,932
14,802
3,649
22,038
268,396
26,014
4,834
218,263
(3,588)
245,523
513,919 `
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
Contingent liabilities and unrecognized contractual commitments (note 18)
Events after the reporting period (note 24)
Director
Director
The accompanying notes are an integral part of these consolidated financial statements.
ANDREW PELLER LIMITED 2020 | 25
2020
$
382,306
216,056
10,057
156,193
104,749
7,697
8,107
1,406
1,769
123,728
32,465
7,456
1,515
8,971
23,494
0.55
0.48
2019
$
381,796
222,788
7,749
151,259
106,133
5,021
6,872
1,679
1,063
120,768
30,491
10,778
(2,245)
8,533
21,958
0.51
0.44
Consolidated Statements of Earnings
For the years ended March 31, 2020 and March 31, 2019
(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 on derivative financial instruments (note 20)
Other expense (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
The accompanying notes are an integral part of these consolidated financial statements.
26
| ANDREW PELLER LIMITED 2020
Consolidated Statements of Comprehensive Income
For the years ended March 31, 2020 and March 2019
(in thousands of Canadian dollars)
Net earnings for the year
Items that are never reclassified to net earnings
Net actuarial gains on post-employment benefit plans
(note 12)
Deferred income taxes (note 13)
Other comprehensive income for the year
2020
$
23,494
822
(214)
608
2019
$
21,958
130
(34)
96
Net comprehensive income for the year
24,102
22,054
The accompanying notes are an integral part of these consolidated financial statements.
ANDREW PELLER LIMITED 2020 | 27
Consolidated Statements of Changes in Equity
For the years ended March 31, 2020 and March 31, 2019
(in thousands of Canadian dollars)
Contributed
surplus
$
Retained
earnings
$
Accumulated
other
comprehensive
loss
$
Total
shareholders’
equity
$
1,673
196,713
(4,237)
220,246
-
21,958
(162)
1,226
-
-
-
(8,846)
96
-
-
-
22,054
71
1,226
(8,846)
Capital
stock
$
26,097
-
233
-
-
Balance at April 1, 2018
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)
Balance at March 31, 2019
26,330
2,737
209,825
(4,141)
234,751
Net comprehensive income for the
year
Exercise of DSUs and issuance of
Class A non-voting shares
(notes 14 and 15)
Cancellation of post-retirement
benefit arrangement (note 12)
Repurchase and cancellation of
Class A non-voting shares
(note 14)
Share-based compensation
(note 15)
Dividends (Class A $0.215 per
share, Class B $0.187 per
share)
-
115
-
(431)
-
-
-
23,494
608
24,102
(115)
75
-
-
-
(5,810)
2,137
-
-
(9,246)
-
(55)
-
-
-
-
20
(6,241)
2,137
(9,246)
Balance at March 31, 2020
26,014
4,834
218,263
(3,588)
245,523
The accompanying notes are an integral part of these consolidated financial statements.
28
| ANDREW PELLER LIMITED 2020
Consolidated Statements of Cash Flows
For the years ended March 31, 2020 and March 31, 2019
(in thousands of Canadian dollars)
Cash provided by (used in)
Operating activities
Net earnings for the year
Adjustments for non-cash items
Loss (gain) on disposal of property, plant and equipment and intangible
assets
Amortization of plant, equipment and intangible assets
Amortization of deferred financing fees
Interest expense
Provision for income taxes
Net unrealized loss 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
Proceeds from disposal of property, plant and equipment
Purchase of property, plant and equipment
Purchase of intangible assets
Financing activities
Increase (decrease) in bank indebtedness
Issuance of Class A non-voting shares
Principle payments on lease obligations
Repurchase of Class A shares
Repayment of long-term debt
Dividends paid
Cash – Beginning and end of year
Supplementary information
Property, plant and equipment acquired that were unpaid in cash and included in
accounts payable and accrued liabilities
Intangible assets acquired that were unpaid in cash and included in accounts
payable and accrued liabilities
2020
$
2019
$
23,494
21,958
729
17,754
251
7,856
8,971
1,406
1,876
(186)
(8,208)
(10,165)
43,778
(12,235)
31,543
-
(17,699)
(5,609)
(7)
12,770
257
6,615
8,533
1,679
1,226
(353)
(6,689)
(12,076)
33,913
15,131
49,044
18
(22,516)
(870)
(23,308)
(23,368)
19,939
-
(3,022)
(6,241)
(9,741)
(9,170)
(9,149)
71
-
-
(8,029)
(8,569)
(8,235)
(25,676)
-
-
1,360
4,270
536
-
The accompanying notes are an integral part of these consolidated financial statements.
ANDREW PELLER LIMITED 2020 | 29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020 and March 31, 2019
(in thousands of Canadian dollars, except per share amounts)
1 Nature of operations
Andrew Peller Limited (the Company) produces and markets wine, spirits, craft beer 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.
In March 2020, the World Health Organization characterized the outbreak of the novel strain of coronavirus,
specifically identified as COVID-19, as a global pandemic. This has resulted in the governments enacting emergency
measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-
imposed quarantine periods and social distancing, have caused material disruption to business, resulting in a global
economic slowdown. Equity markets have experienced significant volatility and weakness and the governments and
central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic
conditions. While the Company is deemed an essential service, there is significant uncertainty as to the likely effects
this outbreak will have on the business, which may, among other things, negatively impact customers and their
demand for the Company’s products, its supply chain, lease agreements as well as covenants and banking
agreements.
The outbreak may also have an effect on the future collectibility of certain receivables, recoverability of property,
plant and equipment, goodwill and intangible assets, as well as fair value of derivatives. As the duration and impact
of the COVID-19 outbreak or the efficacy of the government and Bank of Canada interventions are not known at this
time, it is not possible to reliably estimate the length and severity of these developments or quantify the impact this
pandemic may have on the financial results and condition of the Company in future periods. In response to COVID-
19, the Company has implemented working practices to address potential impacts to its operations, employees and
customers and will take further measures in the future, if required.
2
Summary of significant accounting policies
Basis of presentation
These consolidated financial statements have been prepared in compliance with International Financial Reporting
Standards as issued by the International Accounting Standards Board (IFRS).
These consolidated financial statements were approved by the Board of Directors for issue on June 10, 2020.
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.
30
| ANDREW PELLER LIMITED 2020
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.
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 condensed 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.
ANDREW PELLER LIMITED 2020 | 31
Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is determined on an average cost basis. The
Company utilizes a weighted average cost calculation to determine the value of ending inventory (bulk wine and
finished goods). Average cost is determined separately for import wine and domestic wine and is calculated by
varietal and vintage year.
Grapes produced from vineyards controlled by the Company that are part of inventories are measured at their fair
value less costs to sell at the point of harvest.
The Company includes borrowing costs in the cost of certain wine inventories that require a substantial period of
time to become ready for sale.
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated amortization. Cost includes borrowing costs for
assets that require a substantial period of time to become ready for use. Amortization of buildings, vines and
vineyard infrastructure and machinery and equipment is calculated on the straight-line basis in amounts sufficient to
amortize the cost of buildings, vines and vineyard infrastructure and machinery and equipment over their estimated
useful lives as follows:
Buildings
Vines and vineyard infrastructure
Machinery and equipment
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 are comprised of direct expenditures required to enable the biological
transformation of agricultural produce.
At the point of harvest, the fair value of biological assets is determined by reference to local market prices for grapes
of a similar quality and the same varietal. At this point, agricultural produce is measured at fair value less cost to sell,
which becomes the basis for the cost of inventories after harvest.
Gains or losses arising from a change in fair value less costs to sell are included in the consolidated statements of
earnings in the period in which they arise.
32
| ANDREW PELLER LIMITED 2020
Intangible assets
Intangible assets include brands, customer contracts and 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
Customer contracts and lists
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
none
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, 2020 and 2019.
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, 2020 and
2019.
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
ANDREW PELLER LIMITED 2020 | 33
other comprehensive income (loss) in the period in which they arise. The corresponding change in shareholders’
equity is adjusted to retained earnings for the year.
Financial instruments and hedge accounting
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 consolidated 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.
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 judgement 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.
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
For the year ended March 31, 2019, the Company classified leases in which a significant portion of the risks and
rewards of ownership are retained by the lessor 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.
Effective April 1, 2019, the Company adopted IFRS 16, Leases using modified retrospective method. Leases are
recognized as a right-of-use asset within property, plant and equipment and a corresponding lease liability at the date
at which the leased asset is available for use by the Company. Each lease payment is allocated between the
repayment of the principle portion of lease liability and the interest portion. The interest expense is charged to the
consolidated statement of earnings over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
•
•
•
•
•
Fixed payments, including in-substance fixed payments, less any lease incentives receivable;
Variable lease payments that are based on an index or a rate;
Amounts expected to be payable by the lessee under residual value guarantees;
The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
Payment of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
34
| ANDREW PELLER LIMITED 2020
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the
lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Payments associated with variable lease payments not based on an index or a rate, short-term leases and leases of
low value assets are recognized on a straight-line basis as an expense in the consolidated statement of earnings.
Right-of-use assets are measured at cost comprising the following:
•
•
•
•
The amount of the initial measurement of the lease liability;
Any lease payments made at or before the commencement date, less any lease incentives received;
Any initial direct costs; and
Restoration costs.
The right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-line
basis. Right-of-use assets are subject to impairment. Amortization of right-of-use vineyard land, buildings and
machinery and equipment is as follows:
Vineyard land
Buildings
Machinery and equipment
Impairment of non-financial assets
2 – 29 years
3 – 10 years
2 – 6 years
The Company reviews long-lived assets and definite life intangible assets for impairment when events or
circumstances indicate an asset may be impaired. Assets are assigned to a CGU based on the lowest level at which
they generate independent cash inflows. When there is an indication of impairment, an impairment charge is
recorded to the extent the carrying value of a CGU exceeds the greater of the CGU’s fair value less costs to dispose
and its value in use, determined by discounting expected cash flows (recoverable amount). An impairment loss is
reversed if a CGU’s recoverable amount increases to the extent that the related assets’ carrying amounts are no larger
than the amount that would have been determined, net of amortization, had no impairment loss been recorded.
Net earnings per share
Basic net earnings per share have been calculated using the weighted average number of Class A and Class B shares
outstanding during the year. Diluted net earnings per share have been calculated by considering the impact of any
potential ordinary shares that are dilutive on the two classes of shares when considered together.
Dividends
Dividends on Class A and Class B shares are recognized in the period in which they are formally declared by the
Board of Directors.
Segmented information
The Company produces and markets wine 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.
ANDREW PELLER LIMITED 2020 | 35
Income taxes
Current income tax is the expected amount of tax payable or recoverable on taxable income or loss during the period.
Current income tax may also include adjustments to taxes payable or recoverable in respect of previous periods.
The Company accounts for deferred income taxes based on temporary differences, which are the differences between
the carrying amount of an asset or liability and its tax base. Deferred income taxes are provided for all temporary
differences between the carrying amount and tax bases of assets and liabilities, except for those arising from the
initial recognition of goodwill or for those arising from the initial recognition of an asset or liability in a transaction
that is not a business combination and has no impact on earnings or taxable income or loss. Deferred income tax
assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply to taxable
income in the years in which temporary differences are expected to be recovered or settled. The deferred income tax
provision 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 is comprised of net earnings and other comprehensive income (loss). Other comprehensive
income (loss) represents the change in equity for a period that arises from transactions that are required to be or are
elected to be recognized outside of net earnings. The Company has chosen to record actuarial gains and losses on
defined benefit pension plans and other post-employment benefit plans in other comprehensive income (loss) in the
period incurred.
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 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.
36
| ANDREW PELLER LIMITED 2020
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
IFRS 16, Leases
The International Accounting Standards Board issued IFRS 16, Leases which replaces International Accounting
Standard (IAS) 17, Leases and Related Interpretations. On April 1, 2019, the Company adopted the new accounting
standard using the modified retrospective method, and therefore comparative figures have not been restated, as
permitted under the specific transitional provisions in the standard. Under this method, the standard is applied
retrospectively with the cumulative effect of initially applying the standard recognized in operating retained earnings
at April 1, 2019.
In applying IFRS 16 for the first time, the Company has used the following practical expedients permitted by the
standard:
•
•
•
•
•
The use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
Reliance on previous assessment on whether leases are onerous;
The accounting for operating leases with a remaining lease term of less than 12 months as at April 1,
2019 as short-term leases;
The exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial
application; and
The use of hindsight in determining the lease term where the contract contains options to extend or
terminate the lease.
The Company has also elected not to reassess whether a contract is, or contains, a lease at the date of initial
application. Instead, for contracts entered into before the transition date, the Company relied on its assessment made
applying IAS 17 and IFRIC 4, Determining whether an Arrangement Contains a Lease.
The Company leases various vineyards, retail stores, offices, warehouses, equipment and vehicles. Lease terms are
negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements
do not impose any covenants.
Where the Company is a lessee, IFRS 16 resulted in recognition of most of its leases that were considered operating
leases under IAS 17. This resulted in recognition of a right-of-use asset and a lease liability for the present value of
the remaining future lease payments, discounted using the incremental borrowing rate at the date of initial
application. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on April 1,
2019 was 5.01%.
Depreciation expense on the right-of-use asset and interest expense on the lease liability replaced the previously
recognized operating lease expense. The impact of adopting this standard on the consolidated statement of cash
flows is to present the principle repayment on lease obligations in financing activities under IFRS 16, whereas
previously payments for operating leases were presented in operating activities.
The adoption of this standard resulted in the recognition of right-of-use assets in property, plant and equipment and
lease liabilities amounting to $17,658 as of April 1, 2019. The difference between the undiscounted operating lease
commitments of the Company as of March 31, 2019 and the discounted lease obligation of the Company as of April
1, 2019 is as follows:
ANDREW PELLER LIMITED 2020 | 37
Operating lease and royalty commitments disclosed as at March 31, 2019
Less: Royalties
Less: Leases with variable consideration
Less: Short-term leases
Less: Low value leases
Undiscounted lease liability
Discounted using the lessee’s incremental borrowing rate
Lease liability recognized as at April 1, 2019
2019
$
37,072
(9,615)
(4,181)
(62)
(189)
23,025
17,658
17,658
Leases are included as follows in the consolidated balance sheet as at March 31, 2020:
At April 1, 2019
Additions
Disposal
Amortization
Closing net carrying amount
Vineyard
land
$
7,176
-
-
(517)
6,659
Buildings
$
9,009
3,103
(116)
(2,327)
9,669
Machinery
and
equipment
$
1,473
198
-
(448)
1,223
Total
$
17,658
3,301
(116)
(3,292)
17,551
The lease obligation transactions during the year were as follows:
Lease obligation
As at April 1, 2019
Additions
Disposal
Repayments
Interest
As at March 31, 2020
Less: Current portion of lease obligation
Lease obligation
2020
$
17,658
3,301
(117)
(3,859)
837
17,820
3,018
14,802
The expense related to leases with variable consideration, short-term leases and low value leases amounted to $2,354
for year ended March 31, 2020 and was recorded within selling and administration expenses. The total cash outflows
relating to leases during the year were $6,213.
Some property leases contain variable payment terms that are linked to sales generated from a store. For individual
stores, up to 100% of lease payments are on the basis of variable payment terms. Variable lease payments are
recognized in the consolidated statement of earnings in the period in which the condition that triggers those
payments occurs. A 5% increase in sales across all stores with such variable lease contracts would not result in a
material change to the total lease payments.
38
| ANDREW PELLER LIMITED 2020
IAS 19, Employee Benefits
The International Accounting Standards Board issued an amended IAS 19, Employee Benefits, 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 adoption of these
amendments did not have a material impact on the consolidated financial statements.
IFRS 9, Financial Instruments
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 adoption of these amendments did not have a material impact on the consolidated financial statements.
IFRIC Interpretation 23, Uncertainty over Income Tax Treatments
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 adoption of these amendments did not have a material impact on the consolidated financial statements.
Recently issued accounting pronouncements
IAS 1, Presentation of Financial Statements, and IAS 8, Accounting Policies, Changes in Accounting Estimates and
Errors
These standards 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
This standard 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.
IAS 1, Presentation of Financial Statements, and IAS 8, Accounting Policies, Changes in Accounting Estimates and
Errors
This standard has been amended to clarify the classification of liabilities as current or non-current. The amendments
are effective for annual periods beginning on or after January 1, 2022. 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:
ANDREW PELLER LIMITED 2020 | 39
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. Refer to note 8 for further information.
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.
Leases
Critical accounting estimates were made in determining the lease term and incremental borrowing rate. In
determining the lease term, management considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not exercise a termination option. Extension options (or periods after termination
options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The
assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this
assessment and that is within the control of the lessee.
In determining the carrying amount of right-of-use assets and lease liabilities, the Company is required to estimate
the incremental borrowing rate specific to each leased asset or portfolio of leased assets if the interest rate implicit in
the lease is not readily determined. Management determines the incremental borrowing rate of each leased asset or
portfolio of leased assets by using the companies specific risk portfolio, the security, term and value of the
underlying leased asset, and the economic environment in which the leased asset operates in. The incremental
borrowing rates are subject to change mainly due to macroeconomic changes in the environment.
4
Inventories
Packaging materials and supplies
Bulk wine and spirits
Finished goods
Interest included in the cost of inventories
2020
$
11,513
88,921
70,345
2019
$
10,172
83,979
66,386
170,779
160,537
1,697
1,399
Inventory writedowns recognized as an expense amounted to $2,033 (2019 – $1,088).
40
| ANDREW PELLER LIMITED 2020
The cost of inventories recognized as an expense and included in cost of goods sold, excluding amortization, was
$214,023 (2019 – $221,700).
5
Property, plant and equipment
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
$
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
$
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
Year ended March 31, 2020
Right-of-use assets capitalized on
adoption of IFRS 16 (note 2)
Additions
Assets held for sale
Disposals
Amortization
35,801
-
35,801
-
-
(275)
-
-
48,047
(12,915)
88,785
(23,204)
151,289
(88,054)
323,922
(124,173)
35,132
65,581
63,235
199,749
7,176
956
-
-
(3,895)
9,009
11,083
(1,000)
(116)
(4,759)
1,473
9,785
-
(515)
(7,571)
17,658
21,824
(1,275)
(631)
(16,225)
Closing net carrying amount
35,526
39,369
79,798
66,407
221,100
At March 31, 2020
Cost
Accumulated amortization
Net carrying amount
35,526
-
35,526
56,179
(16,810)
107,161
(27,363)
156,823
(90,416)
355,689
(134,589)
39,369
79,798
66,407
221,100
Included in buildings and machinery and equipment are assets amounting to $8,678 (2019 – $1,465) that are under
development and are not being amortized.
Contractual commitments to purchase property, plant and equipment were $1,235 as at March 31, 2020
(2019 – $6,583).
During the year, the Company has listed for sale plant assets in Port Coquitlam, British Columbia, as a result of the
consolidation of production assets. The assets listed for sale have a net book value of $1,275 and the Company
intends to close the transaction during the fiscal year ending March 31, 2021.
ANDREW PELLER LIMITED 2020 | 41
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, 2020, the Company harvested grapes valued at $9,402 (2019 – $9,087).
The changes in the carrying amount of biological assets are as follows:
Carrying amount – Beginning of year
Net increase in fair value less costs to sell due to biological
transformation
Transferred to inventory on harvest
Net gain (loss)
Biological assets
2020
$
1,736
9,617
(9,402)
215
1,951
2019
$
1,901
8,922
(9,087)
(165)
1,736
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.
42
| ANDREW PELLER LIMITED 2020
7
Intangible assets
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
Year ended March
31, 2020
Additions
Disposal
Amortization
Closing net
carrying
amount
At March 31, 2020
Cost
Accumulated
amortization
and impairment
Net carrying
amount
Brands –
indefinite
life
$
Brands –
finite life
$
Customer
contracts
and lists
$
Contract
packaging
$
Software
$
Other
$
Total
$
10,614
(200)
10,414
-
-
-
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
10,239
250
375
4,791
-
1,751
101
16,932
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
-
-
-
-
-
(250)
-
-
(820)
10,039
-
3,971
-
-
-
-
-
1,751
101
16,932
9,879
(215)
(459)
-
-
-
9,879
(215)
(1,529)
10,956
101
25,067
10,239
375
12,827
1,100
13,832
1,917
40,290
(200)
(375)
(8,856)
(1,100)
(2,876)
(1,816)
(15,223)
10,039
-
3,971
-
10,956
101
25,067
Included in software are assets amounting to $9,351 (2019 – $nil) that are under development and are not being
amortized.
Contractual commitments to purchase software were $3,805 as at March 31, 2020 (2019 – $nil).
ANDREW PELLER LIMITED 2020 | 43
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
2020
$
3,134
26,695
23,809
53,638
2019
$
3,134
26,695
23,809
53,638
The Company determined the recoverable amount of the related CGUs by estimating their value in use. The
weighted average key assumptions used are:
Discount rate
Period of projected cash flows
Gross profit percentage, excluding amortization
Growth rate beyond period of projected cash flows
2020
9.1%
5 years
44.0%
3.3%
2019
8.4%
5 years
40.0%
4.0%
The Company uses past experience and current expectations about future performance in projecting cash flows,
including the impact of COVID-19, 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 recoverable amount of each CGU is sensitive to changes in market conditions and could result in changes in the
carrying value of goodwill in the future. Sensitivity analysis was performed for each CGU by changing the following
key assumptions: discount rate, gross profit percentage and the growth rate beyond the period of projected cash
flows. To determine the impact on the recoverable amounts, the discount rates were increased by 8.8% – 11.7% (a
100 basis point increase), the gross profit percentages were decreased by 2.0% – 3.0% (a 100 basis point decrease)
and the growth rates beyond the period of projected cash flows were decreased by 20.0% – 29.4% (a 100 basis point
decrease). Each key assumption was changed independently while holding all other assumptions constant. These
sensitivities help to determine the theoretical impairment losses that would be recorded.
An increase of the discount rate of 11.7%, a decrease in the gross profit percentage of 2.0% or a decrease in the
growth rate beyond the period of projected cash flows of 21.0% would not result in an impairment of the Ontario and
Eastern Canadian wine CGU. An increase of the discount rate of 11.3% would result in an impairment of the
Western Canadian wine CGU in the amount of $2,046. A decrease of 2.6% in the gross profit percentage or a
decrease in the growth rate beyond the period of projected cash flows of 29.4% would not result in an impairment of
the Western Canadian wine CGU. An increase of the discount rate of 8.8%, a decrease in the gross profit percentage
of 3.0% or a decrease in the growth rate beyond the period of projected cash flows of 20% would not result in an
impairment of the personal winemaking products CGU. As each key assumption was changed independently, the
results of the sensitivity analyses do not contemplate management’s ability to mitigate against any adverse effects
that may arise in the future.
44
| ANDREW PELLER LIMITED 2020
To cause an impairment of the Ontario and Eastern Canadian wine CGU, the discount rate would need to increase by
21.9% (188 basis points), the gross margin percentage would need to decrease by 4.5% (225 basis points) or the
growth rate beyond the period of projected cash flows would need to decrease by 47.2% (225 basis points). To cause
an impairment of the Western Canadian wine CGU, the discount rate would need to increase by 10.5% (93 basis
points), the gross margin percentage would need to decrease by 4.8% (183 basis points) or the growth rate beyond
the period of projected cash flows would need to decrease by 33.5% (114 basis points). To cause an impairment of
the personal winemaking products CGU, the discount rate would need to increase by 14.1% (160 basis points), the
gross margin percentage would need to decrease by 5.8% (195 basis points) and the growth rate beyond the period of
projected cash flows would need to decrease by 63.0% (315 basis points).
9 Bank indebtedness
Significant terms of the Company’s operating loan facility are summarized below. The floating rates are stated in
relation to the one to six-month Canadian Dealer Offered Rate (CDOR).
Bank indebtedness
Significant terms
Committed until
Borrowing limit
Interest rate
Unused amount
10 Accounts payable and accrued liabilities
Trade payables
Accrued liabilities
Deferred revenue – gift cards
2020
$
58,114
2019
$
38,175
September 29,
2022
$90,000
CDOR + 1.90%
$31,886
September 29,
2022
$90,000
CDOR + 1.90%
$51,825
2020
$
34,250
18,608
963
53,821
2019
$
35,392
11,194
865
47,451
ANDREW PELLER LIMITED 2020 | 45
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
2020
$
107,591
106
107,697
567
107,130
11,509
106
95,515
2019
$
117,226
212
117,438
818
116,620
9,635
106
106,879
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 29, 2020.
Thereafter, monthly principal repayments will increase to $1,071. As at March 31, 2020 and 2019, the applicable
margin was 1.90%.
Financing costs of $1,222 were incurred to amend the debt facilities during the year ended March 31, 2019 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 $4,695 (2019 – $4,828).
12 Post-employment benefits
Defined contribution plans
The total expenses for the defined contribution savings plans were $2,028 (2019 – $1,888).
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. On June 1, 2019, the Company ratified a new collective
bargaining agreement with its unionized employees. Under this agreement, one of the post-retirement benefit
agreements was cancelled with no further amounts payable to employees. As a result, the balance of this post-
employment benefit obligation of $107 was recorded as a credit against current service cost and the accumulated
actuarial gain of $75 was released to contributed surplus during the fiscal year ended March 31, 2020.
46
| ANDREW PELLER LIMITED 2020
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 2020 | 47
Pension
benefits
$
Other post-
employment
benefits
$
23,953
(1,075)
784
776
(1,164)
23,274
25,900
529
853
(1,164)
-
123
(1,555)
24,686
1,412
-
-
-
95
(95)
-
2,710
(37)
87
(95)
37
(339)
(126)
2,237
2,237
Pension
benefits
$
Other post-
employment
benefits
$
529
69
-
598
357
488
12.1
(37)
87
37
87
465
85
11.3
2020
Total
$
23,953
(1,075)
784
871
(1,259)
23,274
28,610
492
940
(1,259)
37
(216)
(1,681)
26,923
3,649
2020
Total
$
492
156
37
685
822
573
12.1
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
Past service cost
Remeasurements
Experience loss (gain)
Gain from change in financial assumptions
Accrued benefit obligations – End of year
Post-employment benefit obligations
Benefit plan expense
Current service cost
Net interest cost on defined benefit liability
Past service cost
Net benefit plan expense
Amount recognized in other comprehensive income
Net actuarial gain
Expected contributions for the year ending March 31,
2021
Weighted average duration of the defined benefit
obligations in years
48
| ANDREW PELLER LIMITED 2020
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 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
Net actuarial gain
Expected contributions for the year ending March 31,
2020
Weighted average duration of the defined benefit
obligations in years
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
ANDREW PELLER LIMITED 2020 | 49
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
2020
2019
3.3%
3.8%
2.5%
5.0%
60 – 65 years
2.0%
MI-2017
3.5%
3.3%
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
2020
Other post-
employment
benefits
$
2019
Other post-
employment
benefits
$
Pension
benefits
$
(238)
269
(3,014)
3,688
-
-
-
-
761
(687)
359
(325)
(302)
341
5
(5)
-
-
Pension
benefits
$
(2,705)
3,279
742
(671)
74
(73)
At March 31, 2020, the accumulated actuarial losses, net of deferred taxes, recognized in other comprehensive
income (loss) were $3,588 (2019 – $4,141).
Plan assets
The plan assets consist of the following:
Mutual funds
Fixed income
Equity
$
17,107
6,167
23,274
2020
74%
26%
100%
$
17,565
6,388
23,953
2019
73%
27%
100%
50
| ANDREW PELLER LIMITED 2020
13
Income taxes
Provision for current income taxes
Change in temporary differences
Impact of change in tax rate
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
25.81% (2019 – 26.18%)
Permanent differences and non-deductible items
Future income tax rate changes
Other
The movement of the deferred income tax account is as follows:
At beginning of year
Provision for (recovery of) deferred income taxes in net earnings
Provision for deferred income taxes in other comprehensive
income
Deferred tax liability reversed for cancelled post retirement benefit
arrangement
At end of year
2020
$
7,456
1,875
(360)
1,515
8,971
2020
$
8,378
648
(360)
305
8,971
2020
$
20,329
1,515
214
(20)
2019
$
10,778
(2,445)
200
(2,245)
8,533
2019
$
7,983
485
200
(135)
8,533
2019
$
22,540
(2,245)
34
-
22,038
20,329
ANDREW PELLER LIMITED 2020 | 51
The significant temporary differences giving rise to the deferred income tax liability are comprised of the following:
Deferred income tax liability
Accelerated
tax
depreciation
and
deductions
on property,
plant and
equipment
$
16,364
1,459
17,823
4,096
21,919
Accelerated
tax
deductions
on
intangible
assets
$
1,947
(1,481)
466
(45)
421
March 31, 2018
Provision (recovery) in net earnings
March 31, 2019
Provision (recovery) in net earnings
March 31, 2020
Deferred income tax asset
Tax
deductions
on
inventory
Tax
deductions
on goodwill
$
2,019
(1,503)
516
(436)
80
$
3,778
(66)
3,712
(2,854)
Total
$
24,108
(1,591)
22,517
761
858
23,278
Fair value
change on
derivatives
Post-
employment
benefits
March 31, 2018
Provision (recovery) in net earnings
Provision in other comprehensive income
March 31, 2019
Provision in net earnings
Provision in other comprehensive income
Deferred tax liability reversed for cancelled post
retirement benefit arrangement
March 31, 2020
Net deferred income tax liability
$
87
(443)
-
(356)
356
-
-
-
$
(1,345)
81
34
(1,230)
92
214
Other
$
(310)
(292)
-
(602)
306
-
(20)
-
(944)
(296)
(1,240)
Total
$
(1,568)
(654)
34
(2,188)
754
214
(20)
22,038
2019
Net of
income
tax
expense
$
The income tax effects relating to components of accumulated other comprehensive loss are as follows:
2020
Before
income
tax
amount
Deferred
tax
expense
Net of
income
tax
expense
Before
income
tax
amount
$
$
$
$
Deferred
tax
expense
$
Accumulated actuarial
losses
4,848
1,260
3,588
5,595
1,454
4,141
52
| ANDREW PELLER LIMITED 2020
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
$
35,403,767
8,191,883
43,595,650
2020
Amount
$
25,650
364
Number
of shares
$
35,988,148
8,198,994
26,014
44,187,142
2019
Amount
$
25,966
364
26,330
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, 2020, 7,111 Class B shares were converted into Class A shares on a one-for-one
basis.
On November 8, 2019, the Company announced its normal course issuer bid (NCIB) to repurchase for cancellation
up to 1,799,733 Class A non-voting common shares, representing 5% of Class A non-voting common shares issued
and outstanding as at the close of markets on November 7, 2019, during the 12-month period from November 12,
2019 to November 12, 2020. The total number of Class A non-voting common shares repurchased for cancellation
under the NCIB during the fiscal year ended March 31, 2020 amounted to 597,900 common shares, at a weighted
average price of $10.44 per Class A non-voting common share, for total cash consideration of $6,241. The
Company’s share capital was reduced by $431 and the remaining $5,810 was accounted for as a decrease to retained
earnings.
The Company also issued 88 Class A shares on 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 $0.215 (2019 – $0.205) per Class A share and $0.187 (2019 – $0.178) per Class B share were
approved by the Board of Directors on June 12, 2019 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, 2020 and 2019,
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 2020, expensed $258 (2019 – $325) related to the employee program.
ANDREW PELLER LIMITED 2020 | 53
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:
765,200 stock options (2019 – 436,467) (a)
219,876 performance share units (2019 – 137,546) (b)
72,459 deferred share units (2019 – 61,819) (c)
2020
$
1,028
848
-
1,876
2019
$
742
484
-
1,226
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, 2020, the
Company had 3,338,023 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
14.25
14.14
(14.45)
14.19
13.18
Number of
options
436,467
354,800
(26,067)
765,200
211,788
Balance – March 31, 2019
Granted
Forfeited
Exercisable
54
| ANDREW PELLER LIMITED 2020
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
2020
$3.97
23.34%
1.34%
2.25%
10
2019
$5.52
28.61%
1.36%
2.00%
10
(1) Expected volatility was determined using historical volatility.
Information relating to stock options outstanding and exercisable as at March 31, 2020 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
104 581,700
101 183,500
$
13.24
17.21
90 150,629
61,159
101
11.81
17.21
Weighted
average
exercise
price
$
b) PSU plan
104 765,200
14.19
93 211,788
13.18
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, which 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, 2019
Granted
Forfeited
Exercisable
Number of
units
Grant date
fair value
per unit
137,546
87,980
(5,650)
219,876
44,444
14.29
14.14
(14.45)
14.20
11.74
Awards granted September 21, 2017 and November 13, 2017 vested March 31, 2020 and, based on the
achievement of the performance condition, 44,444 shares vested.
ANDREW PELLER LIMITED 2020 | 55
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, 2019
Issued
Exercised
16 Nature of expenses
Number of
units
Grant date
fair value
per unit
61,819
16,960
(6,320)
72,459
18.26
13.75
(18.22)
17.19
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:
Ongoing maintenance costs related to Port Moody winery facility,
net of income (a)
Restructuring (b)
Other
2020
$
172,430
77,379
28,169
10,048
8,302
24,477
320,805
2020
$
421
1,703
(355)
1,769
2019
$
177,655
75,642
33,277
12,817
7,200
22,330
328,921
2019
$
625
727
(289)
1,063
a) During fiscal 2006, the Company closed its Port Moody winery facility and transferred production to its winery
operations in Kelowna, British Columbia. The costs of maintaining this idle facility are recorded in other
expenses (income).
b) Restructuring costs of $1,703 (2019 – $727) were recorded during the year ended March 31, 2020. These costs
relate to restructuring of certain production facilities within the Company’s personal winemaking product
division and a one-time early retirement incentive program resulting from recent plant operations succession
planning.
56
| ANDREW PELLER LIMITED 2020
17 Net earnings per share
Class A
$
Class B
$
2020
Total
$
Net earnings attributed for the year – basic and
diluted
19,597
3,897
23,494
Weighted average number of shares outstanding –
basic and diluted
35,835,372
8,195,401
Net earnings per share – basic and diluted
0.55
0.48
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
18 Commitments
The Company is subject to various claims by third parties arising out of the normal course and conduct of its
business, including, but not limited to, labour and employment, regulatory and environmental claims. In addition, the
Company is potentially subject to regular audits from federal and provincial tax authorities relating to income,
commodity and capital taxes and as a result of these audits, may receive assessments and reassessments. Although
such matters cannot be predicted with certainty, management currently considers the Company’s exposure to such
claims and litigation, to the extent not covered by the Company’s insurance policies or otherwise provided for, not to
be material to these consolidated financial statements.
19 Non-cash working capital items
The change in non-cash working capital items related to operations is comprised of the change in the following
items:
Accounts receivable
Inventories and current portion of biological assets
Prepaid expenses and other assets
Accounts payable and accrued liabilities
2020
$
(4,015)
(10,457)
628
1,609
(12,235)
2019
$
1,605
(218)
(225)
13,969
15,131
ANDREW PELLER LIMITED 2020 | 57
20 Financial instruments
Classification of financial instruments
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
Financial assets
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
Interest rate swap liability
Foreign exchange forward
contracts asset
Derivatives
Derivatives
Amortized cost
Amortized cost
Amortized cost
Fair value through
profit or loss
Fair value through
profit or loss
Assets/liabilities
Category
Measurement
Accounts receivable
Bank indebtedness
Accounts payable and
accrued liabilities
Dividends payable
Long-term debt
Loans and
receivables
Financial liabilities
Financial liabilities
Financial liabilities
Financial liabilities
Interest rate swap liability
Foreign exchange forward
contracts asset
Derivatives
Derivatives
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Fair value through
profit or loss
Fair value through
profit or loss
Carrying
amount
$
34,096
58,114
53,821
2,288
107,130
3,536
783
Carrying
amount
$
29,801
38,175
47,451
2,212
116,620
1,351
4
2020
Fair
value
$
34,096
58,114
53,821
2,288
107,697
3,536
783
2019
Fair
value
$
29,801
38,175
47,451
2,212
117,438
1,351
4
The Company’s interest rate swaps and foreign exchange contracts are derivatives and are recorded at fair value. As
a result, unrealized gains and losses are included each period through earnings, which reflect changes in fair value.
Fair value
The fair value of accounts receivable, accounts payable and accrued liabilities and dividends payable approximates
their carrying value because of the short-term maturity of these instruments.
The fair value of bank indebtedness and long-term debt is equivalent to its carrying value because the variable
interest rate is comparable to market rates. The fair value of the interest rate swaps used to fix the interest rate on
long-term debt is included in the current and long-term derivative financial instruments in the consolidated balance
sheets.
The fair value of foreign exchange forward contracts is determined based on the difference between the contract rate
and the forward rate at the date of the valuation.
The fair value of the interest rate swaps is determined based on the difference between the fixed interest rate in the
contract that will be paid by the Company and the forward curve of the floating interest rates that are expected to be
58
| ANDREW PELLER LIMITED 2020
paid by the counterparty. The fair value of foreign exchange forward contracts and the interest rate swaps are
adjusted to reflect any changes in the Company’s or the counterparty’s credit risk.
Fair value estimates are made at a specific point in time, using available information about the instrument. These
estimates are subjective in nature and often cannot be determined with precision.
The net unrealized loss on derivative financial instruments is comprised of:
Unrealized (gain) loss on foreign exchange forward contracts
Unrealized loss on interest rate swaps
2020
$
(779)
2,185
1,406
2019
$
148
1,531
1,679
The fair value measurements of the Company’s financial instruments are classified in the hierarchy below according
to the significance of the inputs used in making the fair value measurements.
Asset/liability
Quoted prices in
active markets
for
identical assets
(Level 1)
$
Significant
observable
inputs
other than
quoted prices
(Level 2)
$
Interest rate swap liability
Foreign exchange forward contracts asset
-
-
3,536
783
Asset/liability
Quoted prices in
active markets
for
identical assets
(Level 1)
$
Significant
observable
inputs
other than
quoted prices
(Level 2)
$
2020
Significant
unobservable
inputs
(Level 3)
$
-
-
2019
Significant
unobservable
inputs
(Level 3)
$
Interest rate swap asset
Foreign exchange forward contracts asset
-
-
1,351
4
-
-
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.
ANDREW PELLER LIMITED 2020 | 59
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 $2,185 (2019 –$1,531) was recognized on the interest rate swaps, which are classified as a
component of the net unrealized loss on derivative financial instruments in the consolidated statements of earnings.
The Company’s short-term borrowings are funded using a floating interest rate and as such are sensitive to interest
rate movements. As at March 31, 2020, with other variables unchanged, a 100 basis point change in interest rates
would impact the Company’s net earnings by approximately $430 (2019 – $283), 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 65% 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 $20,807 (2019 – $14,869) of the total accounts receivable for which no allowance
has been provided. Of the remaining non-provincial liquor board balances, $1,512 (2019 – $1,618) was over thirty
days past due as at March 31, 2020. An allowance for doubtful accounts of $875 (2019 – $128) 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 $69,181 (2019 – $64,155) during the year ended
March 31, 2020. Sales to its second largest customer, a branch of a provincial government, were $41,553 (2019 –
$45,091) during the year.
An analysis of accounts receivable is as follows:
Liquor boards
Non-liquor boards
Current
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
60
| ANDREW PELLER LIMITED 2020
2020
$
20,807
10,872
1,798
206
1,288
(875)
34,096
2020
$
128
795
(48)
875
2019
$
14,869
10,991
2,451
609
1,009
(128)
29,801
2019
$
162
132
(166)
128
Liquidity risk
The Company incurs obligations to deliver cash or other financial assets on future dates. Liquidity risk inherently
arises from these obligations, which include requirements to repay debt, purchase grape inventory and make 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, leases, service agreements 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, 2020.
Long-term debt
Leases and royalties
Service agreements
Pension obligations
Grape and bulk wine purchase
contracts
Packaging purchase contracts
< 1
year
$
11,615
4,957
483
221
62,816
31,299
2 – 3
years
$
96,082
8,737
3,958
379
78,433
21,472
4 – 5
years
$
-
5,645
1,496
40
58,647
2,271
> 5
years
$
-
16,961
-
69
98,491
-
Total
$
107,697
36,300
5,937
709
298,387
55,042
111,391
209,061
68,099
115,521
504,072
Interest rate swap
Foreign exchange forwards
2,309
10,070
2,934
-
-
-
-
-
5,243
10,070
123,770
211,995
68,099
115,521
519,385
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.
Although the Company expects sales to return to pre-COVID 19 levels once the outbreak has been contained, there
is uncertainty as to the length and extent of the current outbreak. Beyond that, as a result of the measures being taken
that are designed to contain the spread of the virus, the Company’s suppliers may not have the materials, capacity or
capability to supply components according to its schedule and specifications if the outbreak continues. This could
delay the release or delivery of the Company’s products or require management to make unexpected changes to such
products, which may materially affect the business, operating results and future compliance with the Company’s
financial covenants.
ANDREW PELLER LIMITED 2020 | 61
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, 2020, the
Company has forward foreign currency contracts to buy US$7,713 at rates ranging between $1.30 and $1.31. These
contracts mature at various dates to September 2020. 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 $234 (2019 – $240), $50 (2019 – $86) or $39 (2019 – $45),
respectively. The Company has elected to not use hedge accounting and as a result, has recognized unrealized
foreign exchange gains of $779 (2019 – unrealized foreign exchange losses of $148) 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 $783 (2019 – $4) 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, 2020 and
March 31, 2019, the Company was in compliance with these covenants.
Management projects future operations and compliance with the financial covenants included in the Company’s
credit agreement as disclosed in notes 9 and 11. Assumptions are necessary to project these cash flows and covenant
calculations specifically related to EBITA, as well as anticipated debt levels. For example, a reduction in EBITA
could result in the breach of a covenant relative to its impact on the trailing 12-month results used in calculating
covenant compliance. The Company is actively managing its administrative costs, inventory, bank indebtedness and
long-term debt balances accordingly in order to comply with lender’s covenants.
62
| ANDREW PELLER LIMITED 2020
22 Related parties and management compensation
The Company is controlled by Peller Family Enterprises Inc., which owns 61.0% (2019 – 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.
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
2020
$
4,374
266
1,613
6,253
2019
$
4,336
295
1,097
5,728
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 $12,871 (2019 – $12,227), 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 10, 2020, the Company’s Board of Directors approved the annual dividend for holders of its Class A and
Class B shares in the amount of $0.215 per Class A share and $0.187 per Class B share to be paid quarterly to
shareholders, subject to management’s review of projected cash flows and compliance with financial covenants as a
result of the duration and impact of COVID-19.
ANDREW PELLER LIMITED 2020 | 63
TEN-YEAR SUMMARY
(in thousands of Canadian dollars,
except per share amounts)
Sales and earnings
Net sales
EBITA
Net earnings
Financial position
Working capital
Total assets
Shareholders’ equity
Per share (3)
Net earnings (3)
Basic & diluted Class A
Basic & diluted Class B
Dividends (3)
Class A Shares, non-voting
Class B Shares, voting
Number of shares outstanding
(in thousands of shares) (3)
Class A Shares, non-voting
Class B Shares, voting
Other information
Return on average
shareholders’ equity (1)
Return on average
capital employed (2)
2020
2019
2018
2017
2016
$ 382,306
61,501
23,494
$ 381,796
52,875
21,958
$ 363,897
52,860
30,117
$ 342,606
45,137
26,350
$ 334,263
40,916
19,199
83,654
513,919
245,523
97,305
467,019
234,751
104,417
457,780
220,246
78,825
327,478
177,317
71,665
308,309
157,736
0.55
0.48
0.215
0.187
35,404
8,192
43,596
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
9.8%
9.7%
15.2%
15.7%
12.6%
10.7%
11.5%
14.0%
14.1%
13.2%
(1) Return on average shareholders' equity is calculated as net earnings divided by average shareholders’ equity.
(2) 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.
(3) Restated to reflect the three-for-one stock split completed in October of 2016.
64
| ANDREW PELLER LIMITED 2020
2015
Restated (6)
$ 315,697
35,184 (6)
15,224 (6)
68,982
301,519 (6)
147,375 (6)
2014
$ 297,824
33,729
14,021
44,564
301,015
138,003
2013
Restated (5)
$ 289,143
33,489 (5)
14,519 (5)
41,670
296,519
129,701 (5)
2012
2011
Restated (4)
$ 276,883
32,651
13,001
$ 265,420
31,544 (4)
11,223 (4)
34,869
285,552
120,552
27,643 (4)
267,996 (4)
114,297 (4)
0.36 (6)
0.32 (6)
0.140
0.122
33,882
9,012
42,894
10.6% (6)
11.0% (6)
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)
(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.
(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.
ANDREW PELLER LIMITED 2020 | 65
DIRECTORS & OFFICERS
Directors
Officers
JOHN E. PELLER
Executive Chairman, President & CEO
STEVE ATTRIDGE
CFO and Executive Vice-President, IT
SHAWN B. MACLEOD
Executive Vice-President, Marketing
PATRICK R. O’BRIEN
Executive Vice-President, Sales
SARA E. PRESUTTO
Executive Vice-President, People & Culture
BRENDAN P. WALL
Executive Vice-President, Operations
GREGORY J. BERTI
Vice-President, Global Markets, Industry Relations &
Business Development
JAMES H. COLE
Vice-President, Estate Wineries and Retail Division
GAVIN J. HAWTHORNE
Vice-President, Sales & Marketing GVI
CRAIG D. MCDONALD
Vice-President, Winemaking
JOHN E. PELLER
Burlington, Ontario
Executive Chairman, President & CEO
Andrew Peller Limited
SHAUNEEN BRUDER
Toronto, Ontario
Corporate Director
MARK W. COSENS
Burlington, Ontario
Managing Director
Kilbride Capital Partners
MICHELLE E. MALLETT DIEMANUELE
Toronto, Ontario
President & CEO
Trillium Health Partners
PERRY J. MIELE
Burlington, Ontario
Chairman and Partner
Beringer Capital
A. ANGUS PELLER M.D.
Toronto, Ontario
Senior Medical Consultant
RBC Insurance
FRANCOIS VIMARD
Mississauga, Ontario
Corporate Director
Honorary Directors
RICHARD D. HOSSACK
Toronto, Ontario
JOHN F. PETCH, O.C.
Toronto, Ontario
BRIAN J. SHORT
Hamilton, Ontario
66
| ANDREW PELLER LIMITED 2020
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
Registrar and Transfer Agent
COMPUTERSHARE INVESTOR SERVICES INC.
Auditors
PRICEWATERHOUSECOOPERS LLP
Bankers
BANK OF MONTREAL
NATIONAL BANK
RABOBANK
ROYAL BANK OF CANADA
TORONTO DOMINION BANK
Shareholder Inquiries
Computershare Investor Services Inc. operates services
inquiries regarding changes of address, stock
for
transfers, registered shareholdings, dividends and lost
certificates.
Phone: 1-800-564-6253 toll free North America
(International 514-982-7555)
Fax:
1-866-249-7775 toll free North America
(International 416-263-9524)
Internet: 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
2020 Annual Shareholders’ Meeting
The 2020 Annual Meeting of Shareholders’ will be held
virtually on Tuesday, September 8, 2020 at 2:00 p.m.
ANDREW PELLER LIMITED 2020 | 67
AJAX
SOBEYS
WITHIN GROCERY AISLE
955 WESTNEY ROAD S.
(905) 683-1705
SOBEYS
260 KINGSTON ROAD W.
(905) 428-6500
REAL CANADIAN SUPERSTORE
30 KINGSTON ROAD W.
(905) 428-7829
ANCASTER
SOBEYS
WITHIN GROCERY AISLE
977 GOLF LINKS ROAD
(905) 648-1465
FORTINOS
54 WILSON STREET
(905) 304-0094
BARRIE
ZEHRS
11 BRYNE DRIVE
(705) 725-8121
BARRIE ESSA CENTRE
555 ESSA ROAD UNIT#5
(705) 797-1480
BOLTON
ZEHRS
487 QUEEN STREET S.
(905) 857-4166
BRAMALEA
METRO
25 PEEL CENTRE DRIVE
(905) 793-4246
BRAMPTON
FOOD BASICS
CENTENNIAL MALL
227 VODDEN STREET
(905) 459-2386
SOBEYS
WITHIN GROCERY AISLE
930 NORTH PARK DRIVE
(905) 793-9071
BROCKVILLE
REAL CANADIAN SUPERSTORE
1972 PARKEDALE AVE.
(613) 342-8477
BURLINGTON
FORTINOS
WITHIN GROCERY AISLE
2025 GUELPH LINE
(905) 336-3849
MARILU’S MARKET
4025 NEW STREET
(905) 632-8580
SOBEYS
WITHIN GROCERY AISLE
1250 BRANT STREET
(905) 319-8670
WALKERS PLACE
3505 UPPER MIDDLE ROAD
(905) 336-9101
LAKESIDE SHOPPING VILLAGE
5353 LAKESHORE ROAD
(905) 681-8282
CAMBRIDGE
ZEHRS
180 HOLIDAY INN DRIVE
(519) 651-1145
ZEHRS
400 CONESTOGA BLVD.
(519) 624-1103
NO FRILLS
980 FRANKLIN BLVD
(519) 622-2552
COLLINGWOOD
LOBLAWS
12 HURONTARIO STREET
(705) 446-2237
METRO
WITHIN GROCERY AISLE
640 FIRST STREET EXTENSION
(705) 444-1730
EAST YORK
SOBEYS
1015 BROADVIEW AVE.
(416) 467-7760
ETOBICOKE
LOBLAWS
WITHIN GROCERY AISLE
380 THE EAST MALL
(416) 695-9567
FERGUS
ZEHRS
800 TOWER STREET S.
(519) 787-7721
GEORGETOWN
REAL CANADIAN SUPERSTORE
WITHIN GROCERY AISLE
171 GUELPH STREET
(905) 877-1815
GRIMSBY
REAL CANADIAN SUPERSTORE
361 SOUTH SERVICE ROAD
(905) 945-9982
68
| ANDREW PELLER LIMITED 2020
GUELPH
ZEHRS
297 ERAMOSA ROAD
(519) 824-7922
MILTON
LONGOS
1079 MAPLE AVE
(905) 693-8850
ZEHRS HARTSLAND PLAZA
WITHIN GROCERY AISLE
160 KORTRIGHT ROAD, W.
(519) 837-9293
MISSISSAUGA
SQUARE ONE
100 CITY CENTRE DRIVE
(905) 896-7822
NO FRILLS
167 SILVERCREEK PARKWAY
(519) 837-0540
SOUTH COMMON CENTRE
2150 BURNHAMTHORPE ROAD W.
(905) 820-9958
HAMILTON
FORTINOS
50 DUNDURN STREET S.
(905) 528-4003
NEWMARKET
METRO
1111 DAVIS DRIVE
(905) 853-0401
FORTINOS EASTGATE MALL
WITHIN GROCERY AISLE
75 CENTENNIAL PARKWAY N.
(905) 561-4504
REAL CANADIAN SUPERSTORE
WITHIN GROCERY AISLE
18120 YONGE STREET N.
(905) 895-2412
FORTINOS
WITHIN GROCERY AISLE
1579 MAIN STREET W.
(905) 522-8882
KESWICK
ZEHRS
24018 WOODBINE AVE.
(905) 476-8544
KINGSTON
LOBLAWS
WITHIN GROCERY AISLE
1048 MIDLAND AVE.
(613) 389-6139
KITCHENER
ZEHRS
750 OTTAWA STREET S.
(519) 745-2183
LOBLAW SUPERSTORE
WITHIN GROCERY AISLE
39 - 875 HIGHLAND ROAD W.
(519) 742-5844
LONDON
METRO ADELAIDE CENTRE
WITHIN GROCERY AISLE
1030 ADELAIDE STREET N.
(519) 679-3717
METRO
WITHIN GROCERY AISLE
395 WELLINGTON STREET S.
(519) 649-7180
LOBLAWS
3040 WONDERLAND ROAD S.
(519) 668-2224
METRO
16640 YONGE STREET
(905) 830-3448
UPPER CANADA MALL
17600 YONGE STREET
(905) 853-6246
NIAGARA ON THE LAKE
THE OUTLET COLLECTION
300 TAYLOR ROAD
(905) 704-0550
WINE COUNTRY VINTNERS
27 QUEEN STREET
(905) 468-1881
NORTH YORK
LOBLAW GREAT FOOD
3501 YONGE STREET
(416) 481-7699
OAKVILLE
SOBEYS
511 MAPLE GROVE DRIVE
(905) 338-3042
LONGOS
469 CORNWALL ROAD
(905) 338-0880
SOBEYS ABBEY PLAZA
1500 UPPER MIDDLE ROAD W.
(905) 847-2944
ORANGEVILLE
ZEHRS, HERITAGE MALL
50 - 4TH AVE.
(519) 942-8752
OSHAWA
METRO
285 TAUNTON ROAD E.
(905) 571-6167
PICKERING
YOUR INDEPENDENT GROCER
1900 DIXIE ROAD
(905) 831-6705
REAL CANADIAN SUPERSTORE
1385 HARMONY ROAD N.
(905) 438-1800
NO FRILLS
1300 KING STREET E.
(905) 728-3767
OTTAWA
SOUTHGATE SHOPPING CENTRE
2515 BANK STREET
(613) 523-5837
FARM BOY
187 METCALFE STREET
(613) 565-5062
METRO
WITHIN GROCERY AISLE
50 BEECHWOOD AVENUE
(613) 746-4300
(Ottawa) GLOUCESTER
YOUR INDEPENDENT GROCER
671 RIVER ROAD
(613) 822-3080
SCARBOROUGH
METRO
WITHIN GROCERY AISLDE
3221 EGLINTON AVE. E.
(416) 267-2795
SIMCOE
SOBEYS
WITHIN GROCERY AISLE
470 NORFOLK STREET S.
(519) 426-1033
ST. CATHARINES
FRESCHO
318 ONTARIO STREET
(905) 685-8898
ZEHRS, PEN CENTRE
221 GLENDALE AVE.
(905) 688-4767
ZEHRS, FAIRVIEW MALL
WITHIN GROCERY AISLE
285 GENEVA STREET
(905) 646-7363
(Ottawa) NEPEAN
LOBLAWS
59 ROBERTSON ROAD
(613) 820-7219
LOBLAWS
1460 MERIVALE ROAD
(613) 723-5507
(Ottawa) VANIER
LOBLAWS
WITHIN GROCERY AISLE
100 MCARTHUR ROAD
(613) 749-9618
OWEN SOUND
ZEHRS
1150 SIXTEENTH STREET E.
(519) 371-8664
PETERBOROUGH
LOBLAWS
769 BORDEN AVE.
(705) 740-2513
REAL CANADIAN SUPERSTORE
411 LOUTH STREET
(905) 685-9779
GRANTHAM PLAZA
400 SCOTT STREET
(905) 934-0981
LAKESHORE SQUARE PLAZA
33 LAKESHORE ROAD
(905) 937-5093
ST. THOMAS
REAL CANADIAN SUPERSTORE
1063 TALBOT STREET
(519) 633-6343
STITTSVILLE
YOUR INDEPENDENT
GROCER
WITHIN GROCERY AISLE
1251 MAIN STREET
(613) 831-3837
TORONTO
1002 BAY STREET S.
(416) 929-9706
METRO
656 EGLINTON AVE. E.
(416) 485-0093
LOBLAWS
WITHIN GROCERY AISLE
50 MUSGRAVE STREET
(416) 693-6336
LONGOS
93 LAIRD DRIVE
(416) 424-1362
METRO
WITHIN GROCERY AISLE
100 LYNN WILLIAMS ST
(416) 543-5228
UXBRIDGE
ZEHRS
WITHIN GROCERY AISLE
323 TORONTO STREET S.
(905) 852-5008
WATERDOWN
WATERDOWN SHOPPING
CENTRE
255 DUNDAS STREET E.
(905) 689-3420
LOBLAWS
WITHIN GROCERY AISLE
3671 DUNDAS STREET W.
(416) 762-8635
WATERLOO
ZEHRS, BEECHWOOD PLAZA
450 ERB STREET W.
(519) 747-5897
QUEENS QUAY
228 QUEENS QUAY W.
(416) 598-8880
SOBEYS
125 THE QUEENSWAY
(416) 201-8221
YORKVILLE VILLAGE
87 AVENUE ROAD
(416) 923-6336
ST. LAWRENCE MARKET
93 FRONT STREET E.
(416) 364-1811
SOBEYS URBAN FRESH
22 FORT YORK BLVD.
(416) 623-0793
LOBLAWS
650 DUPONT STREET
(416) 533-8484
METRO
1230 QUEEN STREET
WEST
(416) 533-9180
BLOOR WEST VILLAGE
2273 BLOOR STREET W.
(416) 766-8654
ZEHRS
315 LINCOLN ROAD
(519) 746-7226
WELLAND
ZEHRS
821 NIAGARA STREET
(905) 714-9521
WHITBY
SOBEYS
1615 DUNDAS STREET E.
(416) 728-4118
REAL CANADIAN
SUPERSTORE
WITHIN GROCERY AISLE
200 TAUNTON ROAD
(905)668-7568
WHITBY TOWN SQUARE
3050 GARDEN STREET
(905) 430-5314
WINDSOR
METRO
WITHIN GROCERY AISLE
3100 HOWARD AVENUE
(519) 972-8346
WOODBRIDGE
LONGOS
9200 WESTON ROAD
(905) 303-3055
ANDREW PELLER LIMITED 2020 | 69
Exclusive 2020 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.
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 Winery, Gray Monk Estate Winery & Tinhorn Creek in the West. For more information on our
programs, give us a call!
To place your order, you can choose one of the following options. Call us at 1.866.440.4383, email
wineorders@peller.com or for eastern collections visit https://www.thewineshops.com/shareholderON and
for western collections visit https://www.thewineshops.com/shareholderBC
We are available Monday to Friday, 9am to 7pm and Saturday & Sundays 9am to 5pm. Offer ends
Wednesday, September 30th, 2020.
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
Trius Brut
Trius Divine White
Trius Pinot Grigio
Trius Merlot
Trius Red
Showcase Late Harvest Vidal
Gretzky Riesling
Gretzky Pinot Grigio
Gretzky Chardonnay
Gretzky Baco Noir
Estate Series Cabernet Merlot
Estate Series Shiraz Cabernet
Winemakers Riesling
Small Lot Gewurztraminer
Small Lot Rose
Winemakers Red
Small Lot Cabernet Sauvignon
Small Lot Merlot
6 bottle
Collection
$153.59
(Reg $180.50)
~
12 bottle
Collection
$307.18
(Reg $361.00)
6 bottle
Collection
$118.91
(Reg $139.70)
~
12 bottle
Collection
$237.82
(Reg $279.40)
6 bottle
Collection
$102.78
(Reg $120.70)
~
12 bottle
Collection
$205.55
(Reg $241.40)
6 bottle
Collection
$177.15
(Reg $208.20)
~
12 bottle
Collection
$354.40
(Reg $416.40)
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
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
*Prices shown do not include applicable BC Taxes
Sandhill Pinot Gris
Sandhill Sauvignon Blanc
Sandhill Syrah
Sandhill Merlot
Sandhill Small Lot Viognier
Sandhill Small Lot One
*Prices shown do not include applicable 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
*Prices shown do not include applicable 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
$111.49
(Reg $131.06)
~
12 bottle
Collection
$222.98
(Reg $262.12)
Black Hills Nota Bene
Black Hills Syrah
Black Hills Addendum
Black Hills Alibi
Black Hills Chardonnay
Black Hills Rose
*Prices shown do not include applicable BC Taxes
Tinhorn Creek Vineyards Chardonnay
Tinhorn Creek Vineyards
Gewurztraminer
Tinhorn Creek Vineyards Cabernet Franc
Tinhorn Creek Vineyards Reserve Merlot
Tinhorn Creek Vineyards Reserve Syrah
Tinhorn Creek Vineyards The Creek
*Prices shown do not include applicable BC Taxes
6 bottle
Collection
$195.59
(Reg $230.00)
~
12 bottle
Collection
$391.18
(Reg $460.00)
6 bottle
Collection
$156.11
(Reg $183.55)
~
12 bottle
Collection
$312.22
(Reg $367.10)
Call us at 1.866.440.4383 to Order
or email wineorders@peller.com. Want to purchase online, visit
https://www.thewineshops.com/shareholderON for our eastern collections or visit
https://www.thewineshops.com/shareholderBC for our western collections.
We’re here Monday to Friday, 9am to 7pm
and Saturday & Sunday, 9am to 5pm EST
~
Offer Ends Wednesday, September 30th, 2020.
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.