1、A N N U A L R E P O R T OPERATIONAL HIGHLIGHTS FOR THE YEARS ENDED MARCH 31(in thousands of Canadian dollars,except per share amounts)2024 2023 Net sales 385,856 382,140 EBITA 50,309 38,012 FINANCIAL POSITION Working capital 171,666 186,318 Total assets 553,199 567,867 Shareholders equity 241,437 25
2、3,638 PER SHARE Net loss per Class A Share-basic and diluted(0.07)(0.08)Net loss per Class B Share-basic and diluted(0.06)(0.07)DIVIDENDS Class A Common Shares,non-voting Class B Common Shares,voting 0.246 0.246 0.214 0.214 MARKET VALUE Class A-HIGH 4.95 7.30 Class A-LOW 3.66 4.36 Class B-HIGH 6.64
3、9.75 Class B-LOW 4.12 5.90 ANALYTICAL INFORMATION Return on average shareholders equity(1.2%)(1.3%)Return on average capital employed 5.9%3.2%Ratio of current assets to current liabilities 3.92:1 4.11:1 1|ANDREW PELLER LIMITED 2024 Report to Shareholders I am pleased to update shareholders after pos
4、ting strong results in fiscal 2024 with our company well positioned for long-term growth and continued market leadership.As I assume the role of Chief Executive Officer,I would like to extend our gratitude to John for his leadership and dedication as he transitions to a strategic consulting role.Its
5、 been an extraordinary several years for the company and our industry.In navigating the pandemic,including the supply chain disruption and the interest rate and inflationary pressures that followed,Im proud to say that our company has been resilient and faced these challenges admirably.As a result,w
6、e are now seeing business performance return to historical levels,and we are moving forward as a stronger company with a stronger operating platform.It wasnt easy;this took a great deal of work and effort across the company,and I want to thank the entire team for their commitment and execution.With
7、our fiscal 2024 results,we started to see the fruits of this labour as we work toward a return to historical levels of revenue,margins and EBITA.Revenue increased$3.7 million or 1%to$385.9 million.This represented top-quartile performance in the wine industry and a solid result considering the softn
8、ess in consumer discretionary spending.The increase in revenue for the year was driven by growth across our key channels,including provincial liquor boards,restaurants and hospitality and our export channel.Revenue growth for 2024 was also supported by the Ontario VQA Support program.These gains wer
9、e partially offset by softness in our estate wineries,which reflects general consumer caution and,for our B.C.properties,the impact of a bad wildfire season.As previously disclosed,year-over-year revenue growth was also impacted by the repeal of the excise exemption.Overall,these results underscore
10、the value of our diversification in distribution channels,breadth of brands and products,and our ability to meet consumers at different price points.We have seen continued strength in our healthier-for-you Honest Lot brand,a zero-sugar offering across several varietals.Our entry into the owned impor
11、ts market under the Neon Coast,Vivo and Avenue brands has been very successful,and our domestic VQA sparkling offerings across our Gretzky,Peller and Trius brands have seen double-digit growth year over year.From a margin perspective,we reported gross margin of$150.6 million,up 6.1%from the prior ye
12、ar.Gross margin as a percentage of revenue was 39.0%,up from 37.1%in the prior year.Over the course of the past two years,we have talked about inflationary cost pressures in imported wine,glass bottles,packaging materials and international freight and shipping charges.In response to these margin pre
13、ssures,we implemented price increases and numerous production efficiency and cost savings programs.During fiscal 2024,these programs resulted in$9.3 million in cost savings.Overall,inflationary cost pressures have now stabilized,and we continue to sell through inventory that was built up at higher c
14、ost levels.As we look ahead,we are confident these cost savings measures and production efficiency programs will positively impact our margins in the long-term.Our 2024 results were also highlighted by meaningful growth in EBITA,which reached$50.3 million in 2024,compared to$38.0 million last year.W
15、ere confident that our cost savings and productivity work will continue to deliver strong EBITA results as we move forward.We continue to navigate other changes and challenges in our operating environment.Over the past year,there have been several important changes in Ontario with the governments pl
16、ans to expand the alcohol beverage marketplace and implement a suite of economic changes for local producers in the wine sector.These changes had a positive impact on our fiscal 2024 results,and we believe will provide a net economic benefit over time,supporting further growth in the Ontario market.
17、We continue to work closely with the government and other industry participants to help grow the wine industry and investment in the Niagara region.We have also been working closely with the B.C.government to manage through extensive crop damage that occurred across the Okanagan region because of re
18、cord cold temperatures in January 2024.With government support programs and policies to allow us to bring in replacement products with the same access to market as locally grown products,we are expecting to navigate this without any significant financial disruption.ANDREW PELLER LIMITED 2024|2 Looki
19、ng ahead,we enter fiscal 2025 with confidence.While were continuing to navigate some near-term challenges and softness in the broader market environment,we believe the business is well positioned to deliver above-category revenue performance,combined with further margin expansion and strong EBITA.Ov
20、er 64 years,we have been through many periods of economic softness and always emerged a stronger,more capable company.As global markets stabilize and inflationary pressures ease,we believe the business is well positioned to build on several core strengths,including award-winning brands across multip
21、le categories,broad distribution,and a high-value,integrated asset base.In closing,on behalf of the Board of Directors and all shareholders,I want to thank everyone at the Company for their extraordinary efforts and hard work.We also thank our customers and consumers for their loyalty and our shareh
22、olders for their continued support.Paul Dubkowski Chief Executive Officer#1 ON VQA Brand at the LCBO#7 National Cider Brand&steady growth*#2 BC VQA Brand*#1 Wine Brand at the LCBO Nationally*All in the top 10 wineries in OntarioOwned Imports portfolio:50%Net Revenue growth YTD vs F23CANADASLARGES
23、TPUBLICLY TRADEDWINE PRODUCER(TSX:ADW)59award-winning brands across wine,spirits,cider categories$385MTTM sales44 yrsof dividendsSources:*ACD data.LCBO data.WineAlign National Wine Awards of Canada$500Mhigh value assets10channels5,000+distribution pointsWorlds best Cabernet Franc in prestigious Deca
24、nter World Wine Awards in 2018Nota Bene-#1 Ultra Premium VQA red wineEstate wineries in OntarioEstate wineries in BC#1 visited winery in North America with over 350,000 visitors annually#1 BC Pinot Gris in Canada#2 visited winery in North AmericaBCs Only Urban WineryCanadas Most Highly Awarded red w
25、ineLeading Super Premium BrandNiagaras finest boutique hotelLieutenant Governors Award 201510 LEADING ESTATE WINERIES5|ANDREW PELLER LIMITED 2024 MANAGEMENTS DISCUSSION&ANALYSIS FOR THE THREE MONTHS AND YEAR ENDED MARCH 31,2024 The following managements discussion and analysis(“MD&A”)provides a revi
26、ew of corporate developments,results of operations,and financial position for the three months and year ended March 31,2024,in comparison with those for the three months and year ended March 31,2023,for Andrew Peller Limited(the“Company”or“APL”).This discussion is prepared as of June 18,2024 and sho
27、uld be read in conjunction with the audited consolidated financial statements and accompanying notes contained therein for the period ended March 31,2024 and 2023.Additional information relating to the Company,including the audited annual consolidated financial statements and Annual Information Form
28、 for the years ended March 31,2024,and March 31,2023,is available on www.sedarplus.ca.The financial years ending March 31,2024 and March 31,2023 are referred to as“fiscal 2024 and“fiscal 2023”respectively.All dollar amounts are expressed in Canadian dollars unless otherwise indicated.Forward-Looking
29、 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
30、about the growth of the business;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 ac
31、tual 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
32、-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:
33、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 in
34、ternational 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;
35、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 tim
36、e in the publicly filed disclosure documents of the Company which are available at www.sedarplus.ca.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
37、,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 Companys forward-looking statements are made only as of the date of this MD&A,and except as required by app
38、licable 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 wineri
39、es in British Columbia,Ontario,and Nova Scotia,the Company markets wines produced from grapes grown in Ontarios Niagara Peninsula,British Columbias Okanagan and Similkameen Valleys,and from vineyards around the world.The Companys award-winning premium and ultra-premium Vintners Quality Alliance(“VQA
40、”)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
41、Vineyards,Copper Moon,Black Cellar and XOXO.Hochtaler,Domaine DOr,Schloss Laderheim,Royal,and Sommet are the Companys key value priced brands.The Company imports wines from major wine regions around the world to blend with domestic wine to craft these products.The Company also produces craft beverag
42、e alcohol products,including No Boats on Sunday ciders and seltzers,and various spirits and cream whisky products under the Wayne Gretzky No.99 brand.With a focus on serving the needs of all wine consumers,the Company produces and markets premium personal winemaking products through its wholly-owned
43、 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,ANDREW PELLER LIMITED 2024|6 the United
44、 Kingdom,New Zealand and Australia.GVIs award winning premium and ultra-premium winemaking brands include Winexpert,Vine Co.,Apres,Limited Edition,Passport Series,On the House,Wild Grapes,Island Mist and Niagara Mist.The Company owns and operates 101 well positioned independent retail locations in O
45、ntario under The Wine Shop,Wine Country Vintners,and Wine Country Merchants store names.The Company also operates Andrew Peller Import Agency and The Small Winemakers Collection Inc.,importers and marketing agents for premium wines from around the world.The Companys vision is to Pour Extraordinary i
46、nto Everyday Life.The Company achieves this objective by delivering to its customers and consumers the highest quality branded wines,spirits,refreshments,and experiences.To meet this goal,the Company invests in improvements in the quality of grapes,wines,and other raw materials,its winemaking and di
47、stillation capabilities,sales and marketing initiatives,tourism and hospitality experiences,and its quality management programs.The Company is focused on initiatives to drive production efficiencies and realize cost savings through a continual review of its operations and cost structure with a view
48、to improving profitability.The Company continues to expand and strengthen its distribution to all customers and consumers through its extensive distribution network,which is supported by enhanced sales,marketing,and promotional programs.From time to time the Company also evaluates the potential for
49、acquisitions and partnerships,both in Canada and internationally,to further complement its product portfolio and market presence.Recent Events On June 18,2024,the Companys Board of Directors approved a common share dividend of$0.0615 per Class A Share and$0.0535 per Class B Share,to be paid on July
50、12,2024.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 May 24,2024,the Province of Ontario provided an update to its December 2023 announceme
51、nt regarding the transition to a new retail marketplace for beverage alcohol in Ontario that focuses on improving the convenience and choice offered to Ontario consumers.The comprehensive set of policies includes initiatives around competitive pricing,transitional and time-limited support for local
52、beverage alcohol producers and expanded distribution.The Company is continuing to work with the provincial government and industry partners on licensing,wholesale pricing and taxes,mark-ups and fees with the goal of promoting a more competitive marketplace for Ontario-based producers and consumers.T
53、he announcement includes programs designed to support and grow the Ontario wine industry and as a result,the Company recorded$5.8 million within revenue in the fourth quarter of fiscal 2024 to reflect amounts receivable under the revised Ontario VQA Support Program for the fiscal 2024 year.On Februa
54、ry 9,2024,the Company entered into agreements with Peller Family Enterprises Inc.,the Companys controlling shareholder,and others to formalize the retirement and transition of John E.Peller as President and CEO as announced on November 9,2023.As part of the agreements,John E.Peller resigned as Chair
55、 of the Board of Directors and the following independent directors were appointed:Brian J.Bidulka,Daniel J.Cicerchi,Bruce McDonald,Chris Tsiofas and W.James Westlake.Bruce McDonald was appointed as Chair of the Board of Directors.The newly reconstituted Board of Directors has also formed a CEO Selec
56、tion Committee to continue the process with the Companys outside organizational consultants and a leading executive search firm to find a suitable successor for the CEO position.On November 9,2023,John Peller,President and Chief Executive Officer,announced his intention to retire within the next twe
57、lve months.In addition,the Companys independent directors,Perry Miele,Shauneen Bruder,Franois Vimard and David Mongeau,announced that they will be retiring effective immediately,to support a proactive refreshment of the Board.On July 25,2023,the City Council of Port Moody,B.C.gave 4th reading and ap
58、proval for the Companys five-acre development site,which will pave the way for a comprehensive mixed-use development project for the community.This site was the location of the Companys first winery,which was closed in 2006.The Company is evaluating its plans for the property and intends to monetize
59、 its investment in due course.7|ANDREW PELLER LIMITED 2024 Results of Operations For the three months and years ended March 31,(in$000,except per share amounts)Three months Year 2024 2023 2024 2023 Revenue$85,008$77,712$385,856$382,140 Gross margin(1)35,565 22,059 150,602 141,892 Gross margin(%of sa
60、les)41.8%28.4%39.0%37.1%Selling and administrative expenses(2)35,794 23,306 109,773 103,880 EBITA(1)9,251(1,247)50,309 38,012 Interest 3,992 2,663 16,964 16,565 Net unrealized loss(gain)on derivative financial instruments(1,003)-641(380)Loss on debt extinguishment and financing fees-2,172-Other expe
61、nses(income),net(16)3,030 1,130 3,547 Net loss(6,943)(10,009)(2,852)(3,352)Loss per share Class A basic$(0.17)$(0.24)$(0.07)$(0.08)Earnings(loss)per share Class B basic$(0.14)$(0.21)$(0.06)$(0.07)Dividend per share Class A(annual)$0.246$0.246 Dividend per share Class B(annual)$0.214$0.214(1)See“Non-
62、IFRS Measures”section of this MD&A(2)Selling and administrative expenses include$9.5 million relating to the CEO retirement and transition costs.These amounts are added back to calculate the Companys EBITA.Revenue for the three months ended March 31,2024 increased 9.4%compared to the prior years fou
63、rth quarter due primarily to the$5.8 million recognized as other revenue relating to the revised Ontario VQA Support Program as discussed above.Revenue for the year ended March 31,2024 increased 1.0%over the prior year.The majority of the Companys well established trade channels performed well durin
64、g the year,particularly provincial liquor stores,restaurants and hospitality locations,as well as sales in the export channel due to the improvement in international travel.This strong performance is offset by softness in sales from the estate wineries due to lower guest traffic and forest fires in
65、the west.In fiscal 2024 there was a$6.3 million reduction in sales resulting from the repeal of the federal excise duty.The Company has implemented price increases to partially offset the excise exemption repeal.Gross margin as a percentage of sales increased to 41.8%and 39.0%for the three months an
66、d year ended March 31,2024 respectively from 28.4%and 37.1%in the prior year.Gross margin in the fourth quarter and the fiscal year benefited from the inclusion of the Ontario VQA Support program as described above while continuing to be impacted by inflationary cost pressures in imported wine,glass
67、 bottles,packaging materials,and international freight and shipping charges.Management believes these inflationary cost pressures have stabilized.In response to these margin pressures,the Company has implemented price increases and is executing numerous production efficiency and cost savings program
68、s aimed at enhancing operating margins,such as renegotiating freight rates for raw materials and evaluating alternate sourcing for glass bottles and other components.During the 2024 fiscal year,these programs have resulted in$9.3 million of cost savings.As a percentage of sales,selling and administr
69、ative expenses rose to 42.1%and 28.4%for the three months and year ended March 31,2024,respectively,compared to 30.0%and 27.2%in the prior year.Selling and administrative expenses in the fourth quarter included$6.5 million relating to the retirement allowance and consulting agreements entered into a
70、s part of John Pellers retirement and transition and$3.0 million in legal and advisory fees incurred by certain shareholders in connection with these agreements.Earnings before interest,amortization,loss on debt extinguishment and financing fees,CEO retirement and transition costs,net unrealized gai
71、ns and losses on derivative financial instruments,other(income)expenses,and income taxes(“EBITA”)(see“Non-IFRS Measures”section of this MD&A)was$9.3 million in the fourth quarter of fiscal 2024,up from a loss of$1.2 million in the fourth quarter of fiscal 2023.EBITA increased to$50.3 million for the
72、 year ended March 31,2024 compared to$38.0 million in prior year period.ANDREW PELLER LIMITED 2024|8 Interest expense for the three months and year ended March 31,2024 has increased compared to prior year due to higher average debt levels in fiscal 2024 when compared to prior year.Management believe
73、s the new credit facility entered on June 13,2023 and corresponding interest rate swap will continue to contribute to reductions in the cost of borrowing going forward.The Company recorded a net unrealized non-cash loss in fiscal 2024 of$0.6 million related to mark-to-market adjustments on interest
74、rate swaps and foreign exchange contracts compared to a gain of$0.4 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 Companys consolidated statement of earnings each reporting p
75、eriod.These instruments are considered to be effective economic hedges and are expected to mitigate the short-term volatility of changing foreign exchange and interest rates.The amendments to the Companys credit facility were determined to constitute an extinguishment of long-term debt and as a resu
76、lt,the company recorded a loss on extinguishment of$1.0 million and financing fees of$1.2 million in the first quarter of fiscal 2024 and were expensed immediately.Other expenses decreased in fiscal 2024 compared to the prior year due primarily to a one-time$2.8 million overhead restructuring initia
77、tive completed in the fourth quarter of the prior year.The Company incurred a net loss of$6.9 million(loss of$0.17 per Class A share)for the fourth quarter of fiscal 2024 compared to a net loss of$10.0 million(loss of$0.24 per Class A share)in the prior year and a net loss of$2.9 million($0.07 per C
78、lass A share)for the year ended March 31,2024 compared to a net loss of$3.4 million($0.08 per Class A Share)in the prior year.Quarterly Performance The following table outlines key quarterly highlights.(in$000,except per share amounts)Q4 24 Q3 24 Q2 24 Q1 24 Q4 23 Q3 23 Q2 23 Q1 23 Revenue 85,008 10
79、0,192 100,175 100,481 77,712 104,913 101,816 97,699 Gross margin(1)35,565 34,742 41,267 39,028 22,059 42,290 39,480 38,063 Gross margin(%of sales)41.8%34.7%41.2%38.8%28.4%40.3%38.8%39.0%EBITA(1)9,251 13,248 15,110 12,700(1,247)15,630 11,658 11,971 Interest 3,992 4,802 3,886 4,284 2,663 5,273 6,016 2
80、,613 Net unrealized loss(gain)loss on financial instruments (1,003)2,840 (1,827)631 -112 (492)Loss on debt extinguishment and financing fees -2,172 -Other expense(income),net(16)31(102)1,217 3,030(93)213 397 Net(loss)earnings(6,943)(369)5,391(931)(10,009)3,892(98)2,863 E.P.S.Class A basic$(0.17)$(0.
81、01)$0.13$(0.02)$(0.24)$0.09$(0.00)$0.07 E.P.S.Class B basic$(0.14)$(0.01)$0.11$(0.02)$(0.21)$0.08$(0.00)$0.06(1)See“Non-IFRS Measures”section of this MD&A The second and third quarters of the Companys fiscal year are historically the largest due to increased activity at the Companys estate propertie
82、s and increased consumer purchasing of the Companys products during the holiday season.9|ANDREW PELLER LIMITED 2024 Liquidity and Capital Resources As at (in$000)March 31,2024 March 31,2023 Current assets$230,380$246,168 Property,plant,and equipment 210,132 210,265 Right-of-use assets 16,993 13,612
83、Intangible assets 40,459 43,065 Pension asset 1,597 1,119 Goodwill 53,638 53,638 Total assets$553,199$567,867 Current liabilities$58,714$59,850 Long-term debt 208,294 208,089 Long-term derivative financial instruments 998-Lease obligations 12,649 10,205 Post-employment benefit obligations 2,041 2,39
84、0 Deferred income taxes 29,066 33,695 Shareholders equity 241,437 253,638 Total liabilities and shareholders equity$553,199$567,867 The decrease in current assets as at March 31,2024 compared to March 31,2023 is primarily due to a decrease in inventory.As at March 31,2024,the unamortized portion of
85、the WSSP grants recognized in inventory was$9.1 million compared to$7.8 million as at March 31,2023.Inventory has further decreased due to the timing of sales and production.Inventory is dependent on domestically grown grapes that are used in the sale of premium and ultra-premium wines that are held
86、 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 higher than wine purchased on international markets.Accounts receivable are predominantly with provincial liquor boards
87、 and,to a lesser extent,licensed establishments,and independent retailers of personal winemaking products.The Company had$14.3 million of accounts receivable with provincial liquor boards at March 31,2024.The remaining receivable balance represents amounts due from licensees,export customers,and ind
88、ependent retailers of personal winemaking products.Against these amounts,an expected credit loss of$0.3 million has been provided which the Company has determined based on a reasonable estimate of lifetime expected credit losses for trade receivables.The amount of accounts receivable that was 30 day
89、s past due was$1.9 million at March 31,2024.Long-lived assets at March 31,2024,which includes property,plant and equipment and right-of-use assets,increased compared to March 31,2023 due to additions in excess of amortization in fiscal 2024.Additions to property,plant and equipment related to invest
90、ments made in the Companys production facilities and vineyard management programs and additions to right-of-use assets related to extensions of the Companys warehouse facilities.Current liabilities were$58.7 million at March 31,2024 compared to$59.9 million at March 31,2023.The decrease is primarily
91、 due to reduced bank indebtedness offset by an increase in the current portion of lease obligations due to the lease extensions as explained above.Included in accounts payable and accrued liabilities is$6.5 million relating to the retirement allowance and consulting agreements entered into as part o
92、f John Pellers retirement and transition.Long-term debt increased to$208.3 million at March 31,2024 from$208.1 million at March 31,2023.The Companys debt to equity ratio was 0.86:1 at March 31,2024 compared to 0.82:1 at March 31,2023.At March 31,2024,the Company had unutilized debt capacity in the a
93、mount of$66.7 million on its credit facility and the applicable margin was 2.50%.Management expects to generate sufficient cash flow from operations to meet its debt servicing and working capital requirements over the short-term through strong management of working capital and prioritization of capi
94、tal expenditures.ANDREW PELLER LIMITED 2024|10 The Company regularly reviews all of its assets to ensure appropriate returns on investment are being achieved and that they fit with the Companys long-term strategic objectives.For the year ended March 31,2024,the Company generated cash from operating
95、activities,after changes in non-cash working capital items,of$38.1 million compared to$13.8 million in the prior year.The increase in cash from operating activities is due to an increase in changes in non-cash working capital items related to operations.Cash used in investing activities for the year
96、 ended March 31,2024 was$14.8 million compared to$20.3 million in the prior fiscal year due to decreased investment in property plant and equipment and intangibles.Cash used in financing activities for the year ended March 31,2024 of$23.3 million compared to$5.3 million provided in the prior fiscal
97、year.This decrease is mainly due to a decrease in bank indebtedness and lower drawings on long-term debt.Working capital at March 31,2024 was$171.7 million compared to$186.3 million at March 31,2023.Shareholders equity at March 31,2024 was$241.4 million or$5.56 per share compared to$253.6 million or
98、$5.87 per share at March 31,2023.The following table outlines the Companys contractual obligations as at March 31,2024: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 amo
99、unt 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 31,2024 March 31,2023 Class A Common Shares 35,243,647 35,040,656 Class B Common Shares 8,144,183 8,144,183 Total 43,387,8
100、30 43,184,839 Strategic Outlook and Direction APL 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
101、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 focused its product development and sales and marketing initiativ
102、es by capitalizing on alcohol consumption trends.The Company entered the spirits and craft beverage alcohol categories,through its strategic alliance with Wayne Gretzky,and has introduced ciders and seltzers through its own brand labels.The Company will continue to expand product offerings outside t
103、he traditional table wine segment into other alcoholic beverages where it is able to leverage its detailed knowledge of growth opportunities and operational advantages in the Canadian market.The Company will also make packaging design changes that are more appealing to its target markets and are con
104、sistent with its initiative to be more environmentally friendly.Increased focus will be given across all trade channels to enhance customer awareness of the Companys broad product portfolio.New product launches and key brands through all (in$000)5 Years Total Long-term debt-208,294-208,294 Leases 6,
105、045 8,511 3,279 5,775 23,610 Service and royalty agreements 2,810 3,230 1,100 11,550 18,690 Pension 274 480-754 Grape,bulk wine and whisky purchase contracts 77,033 94,852 90,078 251,479 513,442 Packaging purchase contracts 16,730 35,403-52,133 Interest rate swap 2,896 5,792 611-9,299 Foreign exchan
106、ge forwards 8,859-8,859 Total contractual obligations 114,647 148,268 303,362 268,804 835,081 11|ANDREW PELLER LIMITED 2024 of the Companys distribution channels will continue to receive increased marketing and sales support.The Company has been acquisitive historically and,from time to time,the Com
107、pany evaluates investment opportunities,including acquisitions,which support its strategic direction.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 new prod
108、uct categories,potential strategic acquisitions,as well as overall growth in the Canadian beverage alcohol market.The Company expects to continue to invest in capital expenditures to improve efficiencies,increase capacity,support its ongoing commitment to producing the highest-quality wines and spir
109、its,and improve productivity.Risks and Uncertainties The Companys 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-pro
110、vincial trade laws,tax laws,the prices of its products and health trends.The Company is experiencing uncertainty with respect to raw materials and import wine costs due to inflation,and freight surcharges and shipment delays associated with international conflicts.The Company is also monitoring the
111、impact of communications regarding alcohol consumption and the associated health risks.The impact on the financial results of the Company will depend on managements continued ability to successfully mitigate against these risks.The Government of Ontario has announced its intention to modernize the r
112、ules 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.The Company is working closely with its industry partners to
113、manage any potential 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.
114、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 c
115、ompetitive 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 competitors pro
116、ducts.Retailer and consumer purchasing decisions are influenced by,among other things,the perceived absolute or relative overall value of the Companys products including their quality or pricing compared to competitive products.Unit volume and dollar sales could also be affected by purchasing,financ
117、ing,operational,advertising,or promotional decisions made by provincial agencies and retailers which could affect supply of or consumer demand for the Companys products.APL could also experience higher than expected selling and administrative expenses if it finds it necessary to increase the number
118、of its personnel,advertising,or promotional expenditures to maintain its competitive position.VQA wines are a key driver of APLs growth strategy,and as a result,the Company is dependent on the quality and supply of domestically grown premium quality grapes.If any of the Companys vineyards or the vin
119、eyards of our grape suppliers experience adverse weather variations,natural disasters,pestilence,or other severe environmental problems,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
120、 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.When environmental risks such as wildfires or extreme cold weather events occur,the Companys viticultural teams have internal processes to e
121、nsure the Companys vineyards are protected.This may include the use of technology and fire suppression activities.APL has also developed programs to maintain access to a consistent supply of premium quality grapes and wine.The price of grapes is determined through negotiations with the Ontario Grape
122、 Growers Marketing Board in Ontario and with independent growers in British Columbia.The Company is exposed to interest rate risk as a result of cash balances and floating rate debt.Of these risks,the Companys principal exposure is that increases in the floating interest rates on its debt,if unmitig
123、ated,could lead to decreases in cash flow and earnings.The Companys 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 ANDREW PELLER LIMITED 2024|12 expectations and
124、requirements of investors.To meet these objectives,the Companys 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.On June 30,2023,the Company entered into an interest rate swap
125、agreement with a notional amount of$65 million.Until June 13,2027,the interest rate is fixed at 4.46%.For the year ended March 31,2024,the Company recorded a net unrealized non-cash loss of$0.7 million related to mark-to-market adjustments on interest rate swaps.A 1%increase or decrease to the varia
126、ble interest rate would result in a$1.1 million change in net loss.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 m
127、argins(see“Non-IFRS Measures”section of this MD&A),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 Companys strategy is to hedge approximately 50%-
128、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 31,2024,the Company had forward curr
129、ency contracts to buy$6.0 million US at rates averaging$1.34 and$1.2 million AUD at rates averaging$0.89.The Company has no Euro forward currency contracts as at March 31,2024.A 1%increase or decrease to the exchange rate of the US dollar would impact the Companys net loss by$0.4 million.A 1%increas
130、e or decrease to the exchange rate of the Australian dollar or Euro would not have a material impact on the Companys net loss.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 dome
131、stic or international suppliers.There is currently only one commercial supplier of glass in Canada that is able to supply glass to APLs specifications.Any interruption in supply could have an adverse impact on the Companys ability to supply its markets.APL has taken steps to reduce its dependence on
132、 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,an
133、d labelling of wine and spirits.These regulatory requirements may inhibit or restrict the Companys ability to maintain or increase strong consumer support for and recognition of its brands and may adversely affect APLs business strategies and results of operations.Privatization of liquor distributio
134、n and retailing has been implemented in varying degrees across the country.The recent regulatory changes relating to privatization in Ontario and sales through grocery outlets remains a risk to the Company through its impact on the Companys retail operations.The wine industry and the domestic and in
135、ternational 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 Companys pricing strategies and create margin pressures.Co
136、mpetition also exerts pressure on existing customer relationships which may affect APLs 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(see“Non-IFRS Measures”
137、section of this MD&A)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
138、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
139、 materially and adversely affect the Companys 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 re
140、lations 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 Companys financial condition or results of opera
141、tions.The Company uses information technology and the internet,including online banking,to streamline business operations and to improve customer experience.The Companys information systems,and those of its third-party service providers,creditors,and vendors,are vulnerable to an increasing threat of
142、 continually evolving cybersecurity risks.These risks may take the form of malware,computer viruses,cyber threats,extortion,employee error,malfeasance,system errors or other types of risks,and may occur from inside or outside of the organization.Cybersecurity risk is increasingly difficult to identi
143、fy and quantify and cannot be fully mitigated because of the rapidly evolving nature of the threats,targets,and 13|ANDREW PELLER LIMITED 2024 consequences.Additionally,unauthorized parties may attempt to gain access to these systems or the Companys information through fraud or other means of deceivi
144、ng the Companys third-party service providers,employees,creditors or vendors.As the threat landscape is ever-changing,the Company must make continuous mitigation efforts.The Company employs third-party information technology services and continually monitors and improves its internal controls to pro
145、tect against known and emerging threats.However,there can be no assurance that the Companys ability to monitor for or mitigate cybersecurity risks will be fully effective,and it may fail to identify cybersecurity breaches or discover them in a timely manner.The Companys future operating results also
146、 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 Companys significant relationships with its suppliers and customers.The Company is also dependent upon the performance of its key senior management p
147、ersonnel.The Companys 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.Th
148、e 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 Companys Pension Committee
149、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 Companys costs related to funding the deficit in these plans.The competitive nature of the wine industry
150、 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
151、 along with its competitive pricing strategies will effectively mitigate the impact on 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 s
152、ignificant 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 name
153、s or promotional materials.The Company believes that its proprietary rights do not infringe upon the proprietary rights of third parties,but there can be no assurance in this regard.As an owner and lessee of property the Company is subject to various federal and provincial laws relating to environme
154、ntal 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
155、 environmental standards could have an adverse effect on the Companys reputation.The success of the Companys brands depends upon the positive image that consumers have of those brands.Contamination of APLs products,whether arising accidentally or through deliberate third-party action,or other events
156、 that harm the integrity or consumer support for those brands could adversely affect sales.Contaminants in raw materials purchased from third parties and used in the production of the Companys products or defects in the fermentation process could lead to low product quality as well as illness among,
157、or injury to,consumers of the products and may result in reduced sales of the affected brand or all of the Companys brands.Non-IFRS Measures The Company utilizes EBITA(defined as earnings before interest,amortization,loss on debt extinguishment and financing fees,CEO retirement and transition costs,
158、net unrealized gains and losses on derivative financial instruments,other(income)expenses,and income taxes)to measure its financial performance.EBITA is not a recognized measure under IFRS;however,management believes that EBITA is a useful supplemental measure to net earnings as it provides readers
159、with an indication of earnings available for investment prior to debt service,capital expenditures,and income taxes,as well as providing an indication of recurring earnings compared to prior periods.ANDREW PELLER LIMITED 2024|14 The Company calculates EBITA as follows.For the three months and year e
160、nded March 31,Three Months Year(in$000)2024 2023 2024 2023 Net loss$(6,943)$(10,009)$(2,852)$(3,352)Add:Interest 3,992 2,663 16,964 16,565 Income taxes(2,154)(2,614)(34)(888)Amortization of plant and equipment used in production 2,629 2,509 10,332 9,790 Amortization of equipment and intangibles used
161、 in selling and administration 3,266 3,174 12,476 12,730 Net unrealized loss(gain)on derivative financial instruments (1,003)-641 (380)Loss on debt extinguishment and financing fees-2,172-CEO retirement and transition costs 9,480-9,480-Other expenses(income),net(16)3,030 1,130 3,547 EBITA$9,251$(1,2
162、47)$50,309$38,012 Readers are cautioned that EBITA should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Companys performance or to cash flows from operating,investing,and financing activities as a measure of liquidity and cash flows.The
163、Company utilizes gross margin(defined as sales less cost of goods sold,excluding amortization)as calculated below.For the three months and year ended March 31,Three Months Year(in$000)2024 2023 2024 2023 Sales$85,008$77,712$385,856$382,140 Less:Cost of goods sold,excluding amortization 49,443 55,653
164、 235,254 240,248 Gross margin$35,565$22,059$150,602$141,892 Gross margin(%of sales)41.8%28.4%39.0%37.1%The Companys method of calculating EBITA and gross margin may differ from the methods used by other companies and accordingly,may not be comparable to the corresponding measures used by other compa
165、nies.Transactions with Related Parties During fiscal 2024,the Company entered into agreements with its controlling shareholder,and others to formalize the retirement and transition of the President and CEO.The Company has also entered into a transition agreement with Peller Family Enterprises Inc.an
166、d the Peller family,which includes provisions relating to the composition of the Board of Directors for a 24-month period.The transition agreement also requires Peller Family Enterprises Inc.and John E.Peller to vote in alignment for a period of 24 months.As such,the Company is jointly controlled by
167、 Peller Family Enterprises Inc.,which owns 48.6%of the Companys Class B voting shares and John E.Peller,who beneficially owns 24.5%of the Companys 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 C
168、ompany paid$3.0 million in legal and advisory fees incurred by certain shareholders in connection with these agreements.The Company has agreed to pay$4.5 million in a retirement allowance to the President and CEO,and$2.0 million in consulting services to the President and CEO.These payments will beg
169、in once the successor is appointed and will be fully settled within a 24-month period.15|ANDREW PELLER LIMITED 2024 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)2024 2023 Compensation an
170、d short-term benefits$4,172$4,266 Termination benefits(1)4,480 1,032 Post-employment benefits 263 339 Stock based compensation expense 390 1,081$9,305$6,718(1)Includes$4.5 million in retirement allowance payable to the President and CEO The compensation and short-term benefits expense,excluding the
171、retirement allowance payable to the President and CEO,consist of amounts that will primarily be settled within twelve months.Financial Statements and Accounting Policies The Companys consolidated financial statements have been prepared in accordance with IFRS,as issued by the International Accountin
172、g Standards Board(“IFRS Accounting Standards”).Critical Accounting Estimates The preparation of consolidated financial statements in accordance with IFRS Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates
173、 of the consolidated financial statements,the reported amounts of revenue 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,t
174、hey are recorded in the period in which they change.Specific areas of uncertainty include but are not limited to:Impairment of goodwill and indefinite life intangible assets Testing goodwill for impairment at least annually involves judgment in estimating the recoverable amount of the CGUs to which
175、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 royal
176、ty 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,i
177、ncreases 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.Leases Critical accounting estimates were made in determining the lease term and incremental borrowing rate.In determining th
178、e 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 ext
179、ended(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 require
180、d 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 Companys
181、specific risk portfolio,the security,term and value of the underlying leased asset and the economic environment in which the leased asset operates.The incremental borrowing rates are subject to change mainly due to macroeconomic changes in the environment.ANDREW PELLER LIMITED 2024|16 Recently adopt
182、ed accounting pronouncements IAS 1,Material Accounting Policies This standard has been amended to require companies to disclose their material accounting policy information,instead of significant accounting policies.The amendments are effective for annual reporting periods beginning on or after Janu
183、ary 1,2023,with early application permitted.The adoption of the amendment did not have a significant impact on the consolidated financial statements.IAS 8,Changes in Estimates This standard has been amended to help entities distinguish changes in accounting estimates from changes in accounting polic
184、ies.The amendments are effective for annual periods beginning on or after January 1,2023,and changes in accounting policies and changes in accounting estimates that occur on or after the start of that period.Earlier application is permitted.The adoption of the amendment did not have a significant im
185、pact on the consolidated financial statements.IAS 12,Income Taxes This standard has been amended to require companies to recognize deferred tax on transactions that,on initial recognition,give rise to equal amounts of taxable and deductible temporary differences.The amendments are effective for annu
186、al reporting periods beginning on or after January 1,2023.The adoption of the amendment did not have a significant impact on the consolidated financial statements.Recently issued accounting pronouncements IAS 1,Presentation of Financial Statements This standard has been amended to clarify the classi
187、fication of liabilities as current or non-current depending on the rights that exist at the end of the reporting period.Classification is unaffected by the expectations of the entity or events after the reporting date.The amendment also clarifies the meaning of settlement of a liability.The standard
188、 has also been amended to specify that covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date.Instead,the amendments require a company to disclose information about these covenants in the notes to the financial
189、statements.These amendments are effective for annual reporting periods beginning on or after January 1,2024,with early adoption permitted.The Company has not yet assessed the impact of the amendment on the consolidated financial statements.IFRS 18,Presentation and Disclosure in Financial Statements
190、In April 2024,IFRS 18 was issued to achieve comparability of the financial performance of similar entities.The standard,which replaces IAS 1,impacts the presentation of primary financial statements and notes,including the statement of earnings where companies will be required to present separate cat
191、egories of income and expense for operating,investing,and financing activities with prescribed subtotals for each new category.The standard will also require management-defined performance measures to be explained and included in a separate note within the consolidated financial statements.The stand
192、ard is effective for annual reporting periods beginning on or after January 1,2027,including interim financial statements,and requires retrospective application.The Company has not yet assessed the impact of the new standard on the consolidated financial statements.Evaluation of Disclosure Controls
193、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,processe
194、d,summarized and reported within the time periods specified.This information is gathered and reported to the Companys management,including the Chief Executive Officer(“CEO”)and Chief Financial Officer(“CFO”)on a timely basis so that decisions can be made regarding the Companys disclosures to the pub
195、lic.The Companys management,under the supervision of,and with the participation of,the CEO and CFO,have designed and maintained the Companys disclosure controls and procedures as required in Canada by“National Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings”.As at
196、 June 18,2024,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.17|ANDREW PELLER LIMITED 2024 Internal Controls over Financial
197、 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
198、designed and operated,can provide only reasonable,not absolute,assurance with respect to reliability of financial reporting and financial statement preparation.Designing,establishing,and maintaining adequate internal controls over financial reporting is the responsibility of management.Internal cont
199、rols 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 Companys financial statements in accordance with IFRS.Fo
200、r the year ended March 31,2024,there have been no material changes in the Companys internal controls over financial reporting or changes to disclosure controls and procedures that materially affected or were likely to affect,the Companys internal control systems.As at June 18,2024,the CEO and CFO of
201、 the Company have evaluated the effectiveness of the Companys internal controls over financial reporting.Based on these evaluations,the CEO and CFO have concluded that the controls and procedures were operating effectively.FINANCIAL STATEMENTSAND NOTES19|ANDREW PELLER LIMITED 2024 Independent audito
202、rs 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 31,2024 and 2023,and its
203、financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board(IFRS Accounting Standards).What we have audited The Companys consolidated financial statements comprise:the conso
204、lidated balance sheets as at March 31,2024 and 2023;the consolidated statements of loss for the years then ended;the consolidated statements of comprehensive loss for the years then ended;the consolidated statements of changes in equity for the years then ended;the consolidated statements of cash fl
205、ows for the years then ended;and the notes to the consolidated financial statements,comprising material accounting policy information and other explanatory information.Basis for opinion We conducted our audit in accordance with Canadian generally accepted auditing standards.Our responsibilities unde
206、r those standards are further described in the Auditors 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 o
207、f 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.Key audit matters Key audit matters are those matters that,in our pro
208、fessional judgment,were of most significance in our audit of the consolidated financial statements for the year ended March 31,2024.These matters were addressed in the context of our audit of the consolidated financial statements as a whole,and in forming our opinion thereon,and we do not provide a
209、separate opinion on these matters.ANDREW PELLER LIMITED 2024|20 Key audit matter How our audit addressed the key audit matter Costing of bulk wine and spirits inventories Refer to note 2 Summary of material accounting policies and note 4 Inventories to the consolidated financial statements.The total
210、 value of bulk wine and spirits inventories amounted to$86.9 million as at March 31,2024.The Company carries bulk wine and spirits inventories on an average cost basis.The weighted average costs are determined separately for import bulk wine,domestic bulk wine and spirits for each varietal and vinta
211、ge year.We considered this a key audit matter due to the magnitude of the bulk wine and spirits inventories balance and the high degree of audit effort in performing procedures related to evaluating managements calculation of average costs.Our approach to addressing the matter involved the following
212、 procedures,amongst others:Tested the operating effectiveness of controls relating to managements bulk wine and spirits inventories costing process,including controls over the review of the inputs in the calculation of average costing and approval of bulk wine and spirit inventories costs.On a sampl
213、e basis of bulk wine and spirits inventory items,tested the underlying inputs in the calculation of weighted average cost against supporting third party support,evidence of payment and the allocation of internal overhead costs.Performed a reconciliation of total domestic bulk wine purchases made dur
214、ing the year to the carrying value of domestic bulk wine inventory and performed testing over any significant reconciling items.On a sample basis of inventory items,tested the mathematical accuracy of the weighted average cost calculation.Attended and performed inventory test counts for a sample of
215、locations or obtained third party confirmations at certain locations to test the existence and accuracy of the quantity of bulk wine and spirits inventories as an input to the weighted average costs calculations.Goodwill impairment assessment for the Western Canadian wine and Personal winemaking pro
216、ducts cash generating units(CGUs)Refer to note 2 Summary of material accounting policies,note 3 Critical accounting estimates and note 8 Goodwill to the consolidated financial statements.The Company had goodwill of$53.6 million as at March 31,2024,of which$26.7 million and$23.8 million related to th
217、e Western Canadian wine and personal winemaking products CGUs,respectively.Management performs an impairment test on an annual basis,or more frequently if events or circumstances indicate that the carrying value may be impaired.An impairment loss is recognized if the carrying amount of a CGU to whic
218、h the goodwill relates exceeds its recoverable amount.The recoverable amounts of the Western Canadian wine and personal winemaking products CGUs were based on a value in use method using discounted cash flow models.Key assumptions used by management in the discounted cash flow model for the Western
219、Canadian wine CGU included the average revenue growth rate during the period of projected cash flows,gross profit percentage,selling and administration margin,terminal growth rate,continuation of government assistance,capital expenditures and the discount rate.Key assumptions used by management in t
220、he discounted cash flow model for the personal Our approach to addressing the matter included the following procedures,among others:Tested how management determined the recoverable amounts of the Western Canadian wine and personal winemaking products CGUs,which included the following:Tested the appr
221、opriateness of the method used and the mathematical accuracy of the discounted cash flow models.Tested the underlying data used in the discounted cash flow models.Evaluated the reasonableness of the average revenue growth rates during the period of projected cash flows,gross profit percentages,selli
222、ng and administration margins,capital expenditures and continuation of government assistance,applied by management in the discounted cash flow models by considering the budget,managements strategic plans approved by the Board of Directors,current and past performance of the CGUs,or available third p
223、arty published industry and economic data,as applicable.Professionals with specialized skill and knowledge in the field of valuation assisted in testing the appropriateness of the method and reasonableness of 21|ANDREW PELLER LIMITED 2024 winemaking products CGU included the average revenue growth r
224、ate during the period of projected cash flows,gross profit percentage,selling and administration margin,terminal growth rate and the discount rate.No impairment was recognized as a result of the 2024 impairment test.We considered this a key audit matter due to the judgment by management in determini
225、ng the recoverable amounts of the Western Canadian wine and personal winemaking products CGUs,including key assumptions.This has resulted in a high degree of subjectivity and audit effort in performing procedures to test the key assumptions.Professionals with specialized skill and knowledge in the f
226、ield of valuation assisted in performing our procedures.the discount rates and terminal growth rates.Tested the disclosures made in the consolidated financial statements,including the sensitivity of the key assumptions used by management.Other information Management is responsible for the other info
227、rmation.The other information comprises the Managements Discussion and Analysis,which we obtained prior to the date of this auditors report and the information,other than the consolidated financial statements and our auditors report thereon,included in the annual report,which is expected to be made
228、available to us after that date.Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of the consolidated financial statements,our responsibility is to read the other infor
229、mation 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
230、that we obtained prior to the date of this auditors 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 au
231、ditors 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 Manag
232、ement is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards,and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from m
233、aterial misstatement,whether due to fraud or error.In preparing the consolidated financial statements,management is responsible for assessing the Companys ability to continue as a going concern,disclosing,as applicable,matters related to going concern and using the going concern basis of accounting
234、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 Companys financial reporting process.Auditors responsibilities for the audit of the consolidated financial st
235、atements 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 auditors report that includes our opinion.Reasonable assurance is a high level of assurance,but
236、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
237、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 ANDREW PELLER LIMITED 2024|22 and maintain professional skeptici
238、sm 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
239、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
240、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 Companys internal control.Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates an
241、d related disclosures made by management.Conclude on the appropriateness of managements 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 Companys ability
242、to continue as a going concern.If we conclude that a material uncertainty exists,we are required to draw attention in our auditors 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 a
243、udit evidence obtained up to the date of our auditors 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 co
244、nsolidated 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 consoli
245、dated 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
246、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 an
247、d other matters that may reasonably be thought to bear on our independence,and where applicable,related safeguards.From the matters communicated with those charged with governance,we determine those matters that were of most significance in the audit of the consolidated financial statements of the c
248、urrent period and are therefore the key audit matters.We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when,in extremely rare circumstances,we determine that a matter should not be communicated in our report because the adverse
249、 consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.The engagement partner on the audit resulting in this independent auditors report is Peter Dalziel.Chartered Professional Accountants,Licensed Public Accountants Toronto,Ontario June
250、 18,2024 23|ANDREW PELLER LIMITED 2024 Consolidated Balance Sheets As at March 31,2024 and 2023(in thousands of Canadian dollars)2024$2023$Assets Current assets Accounts receivable(note 21)33,382 25,297 Inventories(notes 4 and 17)192,469 209,154 Biological assets(note 6)522 2,920 Prepaid expenses an
251、d other assets 3,650 4,493 Income taxes receivable -4,304 Current portion of derivative financial instruments(note 21)357 -230,380 246,168 Property,plant and equipment(note 5)210,132 210,265 Right-of-use assets(note 10)16,993 13,612 Intangible assets(note 7)40,459 43,065 Pension asset(note 12)1,597
252、1,119 Goodwill(note 8)53,638 53,638 553,199 567,867 Liabilities Current liabilities Bank indebtedness(note 11)199 4,942 Accounts payable and accrued liabilities(note 9)48,306 47,794 Dividends payable 2,603 2,591 Lease obligations(note 10)5,370 4,523 Income taxes payable 2,236 -58,714 59,850 Long-ter
253、m debt(note 11)208,294 208,089 Long-term derivative financial instruments(note 21)998 -Lease obligations(note 10)12,649 10,205 Post-employment benefit obligations(note 12)2,041 2,390 Deferred income taxes(note 13)29,066 33,695 311,762 314,229 Shareholders Equity Capital stock(note 14)28,835 28,033 C
254、ontributed surplus(note 15)6,567 6,627 Retained earnings 206,753 219,999 Accumulated other comprehensive loss (718)(1,021)241,437 253,638 553,199 567,867 Contingent liabilities and unrecognized contractual commitments(note 19)Events after the reporting period(note 25)R.Bruce McDonald Chris Tsiofas D
255、irector Director The accompanying notes are an integral part of these consolidated financial statements.ANDREW PELLER LIMITED 2024|24 Consolidated Statements of Loss For the years ended March 31,2024 and 2023(in thousands of Canadian dollars,except per share amounts)2024$2023$Revenue(note 17)385,856
256、 382,140 Cost of goods sold,excluding amortization(notes 16 and 17)235,254 240,248 Amortization of plant and equipment used in production 10,332 9,790 Gross profit 140,270 132,102 Selling and administration(notes 16 and 23)109,773 103,880 Amortization of equipment,right-of-use and intangible assets
257、used in selling and administration 12,476 12,730 Interest 16,964 16,565 Net unrealized loss(gain)on derivative financial instruments(note 21)641 (380)Loss on debt extinguishment and financing fees(note 11)2,172 -Other expense,net(note 16)1,130 3,547 143,156 136,342 Loss before income tax (2,886)(4,2
258、40)Income tax expense(recovery)(note 13)Current 4,703 (2,037)Deferred (4,737)1,149 (34)(888)Net loss for the year (2,852)(3,352)Net loss per share(note 18)Basic and diluted Class A Common Shares (0.07)(0.08)Class B Common Shares (0.06)(0.07)The accompanying notes are an integral part of these consol
259、idated financial statements.25|ANDREW PELLER LIMITED 2024 Consolidated Statements of Comprehensive Loss For the years ended March 31,2024 and 2023(in thousands of Canadian dollars)2024$2023$Net loss for the year (2,852)(3,352)Items that are never reclassified to net loss Net actuarial gains on post-
260、employment benefit plans(note 12)411 454 Deferred income taxes(note 13)(108)(120)Other comprehensive income for the year 303 334 Net comprehensive loss for the year (2,549)(3,018)The accompanying notes are an integral part of these consolidated financial statements.ANDREW PELLER LIMITED 2024|26 Cons
261、olidated Statements of Changes in Equity For the years ended March 31,2024 and 2023(in thousands of Canadian dollars)Capital stock$Contributed surplus$Retained earnings$Accumulated other comprehensive loss$Total shareholders equity$Balance at March 31,2022 27,290 5,756 233,710 (1,355)265,401 Net com
262、prehensive(loss)income for the year -(3,352)334 (3,018)Exercise of share awards and issuance of Class A non-voting Common Shares(notes 14 and 15)743 (743)-Share-based compensation(note 15)-1,614 -1,614 Dividends(Class A Common Shares$0.246 per share,Class B Common Shares$0.214 per share)-(10,359)-(1
263、0,359)Balance at March 31,2023 28,033 6,627 219,999 (1,021)253,638 Net comprehensive(loss)income for the year -(2,852)303 (2,549)Exercise of share awards and issuance of Class A non-voting Common Shares(notes 14 and 15)802 (802)-Share-based compensation(note 15)-742 -742 Dividends(Class A Common Sha
264、res$0.246 per share,Class B Common Shares$0.214 per share)-(10,394)-(10,394)Balance at March 31,2024 28,835 6,567 206,753 (718)241,437 The accompanying notes are an integral part of these consolidated financial statements.27|ANDREW PELLER LIMITED 2024 Consolidated Statements of Cash Flows For the ye
265、ars ended March 31,2024 and 2023(in thousands of Canadian dollars)2024$2023$Cash provided by(used in)Operating activities Net loss for the year (2,852)(3,352)Adjustments for non-cash items Gain on disposal of property,plant and equipment and intangible assets (473)(1)Amortization of plant,equipment,
266、right-of-use assets and intangible assets 22,808 22,520 Amortization of deferred financing fees 4 27 Interest expense 16,960 16,538 Income taxes (34)(888)Loss on debt extinguishment and financing fees 2,172 -Net unrealized loss(gain)on derivative financial instruments 641 (380)Share-based compensati
267、on expense 554 1,483 Post-employment benefits (209)120 Curtailment gain on terminated other post-employment benefit plan (207)-Interest paid (14,927)(15,873)Wine Sector Support Program grant,net(note 17)1,306 7,755 Income tax received 1,837 293 27,580 28,242 Change in non-cash working capital items
268、related to operations(note 20)10,535 (14,488)38,115 13,754 Investing activities Proceeds from sale of property,plant and equipment 938 -Purchase of property,plant and equipment (14,421)(17,301)Purchase of intangible assets (1,352)(3,033)(14,835)(20,334)Financing activities Net(decrease)increase in b
269、ank indebtedness (4,743)4,942 Repayment of lease obligations (4,935)(4,304)Drawings on long-term debt 21,000 54,000 Repayment of long-term debt (23,043)(39,000)Financing fees paid (1,177)-Dividends paid (10,382)(10,355)(23,280)5,283 Decrease in cash during the year -(1,297)Cash Beginning of year -1,
270、297 Cash End of year -Supplementary information Property,plant and equipment and intangibles acquired that were unpaid in cash and included in accounts payable and accrued liabilities 142 226 The accompanying notes are an integral part of these consolidated financial statements.ANDREW PELLER LIMITED
271、 2024|28 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS March 31,2024 and 2023(in thousands of Canadian dollars,except per share amounts)1 Nature of operations Andrew Peller Limited(the Company)produces and markets wine,spirits and wine related products.The Companys products are produced and sold pr
272、edominantly in Canada.The Company is incorporated under the Canada Business Corporations Act and is domiciled in Canada.The address of its head office is 697 South Service Road,Grimsby,Ontario,L3M 4E8.2 Summary of material accounting policies Basis of presentation These consolidated financial statem
273、ents have been prepared in compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board(IFRS Accounting Standards).These consolidated financial statements were approved by the Board of Directors for issuance on June 18,2024.Basis of measuremen
274、t 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
275、 accounts of the Company and all subsidiary companies,including Canrim Packaging Limited,Global Vintners Inc.,Riverbend Inn&Winery Inc.,Sandhill Vineyards Ltd.and Small Winemakers Collections Inc.,all of which are wholly owned by Andrew Peller Limited.Subsidiaries are those entities the Company cont
276、rols 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 a
277、re eliminated.Business combinations Business combinations are accounted for using the acquisition method.The consideration transferred by the Company is measured as the fair value of assets transferred and equity instruments issued at the date of completion of the acquisition.Identifiable assets acq
278、uired 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 acquire
279、d,the difference is recognized directly in the consolidated statements of loss as a gain on acquisition.Results of operations of a business acquired are included in the Companys consolidated financial statements from the date of the business acquisition.Acquisition costs incurred are expensed and in
280、cluded in selling and administrative expenses.Foreign currency translation The consolidated financial statements are presented in Canadian dollars,which is the Companys functional currency.Foreign currency transactions are translated into the functional currency using the exchange rates prevailing a
281、t 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 Companys functional currency are recognized
282、 in the consolidated statements of loss.29|ANDREW PELLER LIMITED 2024 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 performanc
283、e obligation is deemed fulfilled when the product is purchased.For sales transactions with provincial liquor boards,licensee retail stores and wine kit retailers,the Companys performance obligation is fulfilled when the product is shipped from the Companys distribution facilities.Excise taxes collec
284、ted on behalf of the federal government,licensing fees and levies paid on wine sold through the Companys 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 trans
285、action 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.Th
286、e amounts received are recorded as deferred revenue within accounts payable and accrued liabilities on the consolidated balance sheets.Once a gift card is redeemed to make a purchase,the liability is relieved and revenue is recognized.The Company also enters into arrangements with third parties for
287、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 customer
288、s.Cost of goods sold Cost of goods sold includes the cost of finished goods inventories sold during the year,inventory writedowns and revaluations of agricultural produce to fair value less costs to sell at the point of harvest.Inventories Inventories are valued at the lower of cost and net realizab
289、le 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 spirits,packaging materials and supplies,and finished goods).Average cost is determined separately for import wine,domestic wine and
290、spirits 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 and spirit invento
291、ries that require a substantial period of time to become ready for sale.Government grants Grants from the government are recognized at the amount of cash received or to be received when there is reasonable assurance that the grant will be received and the Company will comply with all conditions.Gove
292、rnment grants are recognized in the consolidated statements of loss as a reduction of the expense that the grant is intended to compensate or as other revenue if the grant is intended to compensate for lost revenue or meets the broader definition of revenue and arises in the course of ordinary busin
293、ess.ANDREW PELLER LIMITED 2024|30 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 infras
294、tructure 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 40 years Vines and vineyard infrastructure 20 yea
295、rs Machinery and equipment 5 to 20 years Land and vineyard land is carried at cost and is not amortized.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
296、 assets,consisting of grapes grown on vineyards controlled by the Company,at fair value,which approximates cost as there has been minimal biological transformation since the initial costs incurred.The initial costs incurred are comprised of direct expenditures required to enable the biological trans
297、formation 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
298、 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 loss in the period in which they arise.Intangible assets Intangible assets include brands,customer contracts and lists,software and custome
299、r-based relationships.These intangible assets are recorded at their estimated fair value on the date of acquisition or at cost for regular way purchases.Amortization method Useful life Remaining useful life Brands n/a indefinite indefinite Customer contracts and lists straight-line 10 20 years 1 13
300、years Software straight-line 5 15 years 1 13 years Certain of the Companys 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 t
301、ested 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 arms length licensing arrangement to secure access to the same
302、 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.Where the Company incurs costs to configure and customize cloud computing software,the costs incurred are capitalized and amortized ov
303、er the useful life only if the expenditures meet the recognition criteria of International Accounting Standard(IAS)38,Intangible Assets.31|ANDREW PELLER LIMITED 2024 Goodwill Goodwill represents the cost of a business combination in excess of the fair values of the net tangible and identifiable inta
304、ngible assets acquired.Goodwill is not amortized but is tested for impairment on an annual basis,or more frequently if events or circumstances indicate that the carrying value may be impaired.The Company assigns goodwill combined with other assets to a cash generating unit(CGU)based on certain regio
305、ns and product lines,which is the lowest level at which the combined assets generate independent cash inflows.An impairment loss is recognized if the carrying amount of a CGU to which the goodwill relates exceeds its recoverable amount.The recoverable amount of a CGU is based on a value in use metho
306、d using a discounted cash flow model.If necessary,a CGUs fair value is also considered.An impairment loss in respect of goodwill cannot be reversed.Post-employment benefits The Company sponsors defined contribution pension plans,defined benefit pension plans,post-employment medical benefit plans and
307、 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 pla
308、ns are actuarially determined and include managements best estimate of expected plan investment performance,the interest rate on the plan obligation,salary escalation,expected retirement ages and medical cost escalation.The asset or liability recognized in the consolidated balance sheets in respect
309、of these plans is the present value of the defined benefit obligation at the end of the reporting period as determined by the Companys actuary less the fair value of plan assets adjusted for the unamortized portion of negative past service credits.The current service cost and the interest cost net o
310、f the expected return on plan assets are recognized in loss in the period they arise.Adjustments arising from actuarially determined gains or losses are recognized in other comprehensive income in the period in which they arise.The corresponding change in shareholders equity is adjusted to retained
311、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,Financial Instruments(IFRS 9),any directly attributable transaction costs.For those financial assets that are not subsequently he
312、ld 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 f
313、air 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
314、on assumptions about risk of default and expected loss rates.The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation,based on past history,existing market conditions as well as forward-looking estimates at the end of each reporting period.The Comp
315、any 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 simil
316、ar 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 L
317、eases are recognized as a right-of-use asset 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 principal portion of lease liability and the interest portion.The interest expense i
318、s charged to the consolidated statements of loss over the ANDREW PELLER LIMITED 2024|32 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 b
319、asis.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 valu
320、e 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.The lease payments are discounted using the interest rate implicit in the l
321、ease.If that rate cannot be determined,the lessees 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 variab
322、le 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 statements of loss.Right-of-use assets are included in the consolidated balance sheets and are measured at cost comprising the
323、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 assets useful life and t
324、he 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 2 29 years Buildings 3 10 years Machinery and equipment 2 6 years Impairment of non-financial assets The C
325、ompany 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 impai
326、rment charge is recorded to the extent the carrying value of a CGU exceeds the recoverable amount.The recoverable amount is the greater of the CGUs fair value less costs to dispose and its value in use,determined by discounting expected cash flows.An impairment loss is reversed if there is a reversa
327、l in circumstances that led to the impairment and if a CGUs 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 loss per share Basic net loss per
328、 share has been calculated using the weighted average number of Class A and Class B Common Shares outstanding during the year.Diluted net loss per share has been calculated by considering the impact of any potential ordinary shares that are dilutive on the two classes of shares when considered toget
329、her.33|ANDREW PELLER LIMITED 2024 Segmented information The Company produces and markets wine,spirits and wine related products in Canada.A significant portion of the Companys sales are made to the liquor control boards in each province in which the Company transacts business.Management has conclude
330、d 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,substantia
331、lly all of the Companys sales are made in Canada.As a result,management has concluded the Company operates in one geographic segment.Income taxes Current income tax is the expected amount of tax payable or recoverable on taxable income or loss during the period.Current income tax may also include ad
332、justments 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
333、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 loss or taxable income or loss.Deferred income tax assets and liabilities are measured using the enacted o
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