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Andrew Peller Limited — Audit Report / Information 2025
Jun 12, 2025
42887_rns_2025-06-11_048b4586-51ba-4a7c-98e0-a16c31916ab7.pdf
Audit Report / Information
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Andrew Peller Limited
Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars)
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Independent auditor's report
To the Shareholders of Andrew Peller Limited
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Andrew Peller Limited and its subsidiaries (together, the Company) as at March 31, 2025 and 2024, and its 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 Company's consolidated financial statements comprise:
- the consolidated balance sheets as at March 31, 2025 and 2024;
- the consolidated statements of earnings (loss) for the years then ended;
- the consolidated statements of comprehensive income (loss) for the years then ended;
- the consolidated statements of changes in equity for the years then ended;
- the consolidated statements of cash flow 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 under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2500, Toronto, Ontario, Canada M5J 0B2
T.: +1 416 863 1133, F.: +1 416 365 8215, Fax to mail: [email protected]
"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
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Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended March 31, 2025. 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 separate opinion on these matters.
| 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. | Our approach to addressing the matter included the following procedures, among others: |
| The total value of bulk wine and spirits inventories amounted to $77.4 million as at March 31, 2025. 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 vintage year. | • Tested the operating effectiveness of controls relating to management's 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. |
| 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 management's calculation of average costs. | • On a sample 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 during 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 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. |
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Other information
Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis, which we obtained prior to the date of this auditor's report and the information, other than the consolidated financial statements and our auditor's report thereon, included in the annual report, which is expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the information, other than the consolidated financial statements and our auditor's report thereon, included in the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
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will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other
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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 current period and are therefore the key audit matters. We describe these matters in our auditor's 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 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 auditor's report is Peter Dalziel.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Ontario
June 11, 2025
Andrew Peller Limited
Consolidated Balance Sheets
As at March 31, 2025 and 2024
(in thousands of Canadian dollars)
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Assets | ||
| Current assets | ||
| Accounts receivable (note 21) | 46,774 | 33,382 |
| Inventories (notes 4 and 17) | 170,170 | 192,469 |
| Biological assets (note 6) | 1,560 | 522 |
| Prepaid expenses and other assets | 5,281 | 3,650 |
| Current portion of derivative financial instruments (note 21) | 63 | 357 |
| 223,848 | 230,380 | |
| Property, plant and equipment (note 5) | 207,630 | 210,132 |
| Right-of-use assets (note 10) | 19,326 | 16,993 |
| Intangible assets (note 7) | 37,406 | 40,459 |
| Pension asset (note 12) | 1,592 | 1,597 |
| Goodwill (note 8) | 53,638 | 53,638 |
| 543,440 | 553,199 | |
| Liabilities | ||
| Current liabilities | ||
| Bank indebtedness (note 11) | 2,132 | 199 |
| Accounts payable and accrued liabilities (note 9) | 53,435 | 48,306 |
| Dividends payable | 2,602 | 2,603 |
| Lease obligations (note 10) | 4,190 | 5,370 |
| Current portion of derivative financial instruments (note 21) | 1,118 | - |
| Income taxes payable | 2,317 | 2,236 |
| 65,794 | 58,714 | |
| Long-term debt (note 11) | 180,294 | 208,294 |
| Long-term derivative financial instruments (note 21) | 1,426 | 998 |
| Lease obligations (note 10) | 16,560 | 12,649 |
| Post-employment benefit obligations (note 12) | 2,155 | 2,041 |
| Deferred income taxes (note 13) | 33,429 | 29,066 |
| 299,658 | 311,762 | |
| Shareholders' Equity | ||
| Capital stock (note 14) | 29,471 | 28,835 |
| Contributed surplus (note 15) | 8,443 | 6,567 |
| Retained earnings | 206,918 | 206,753 |
| Accumulated other comprehensive loss | (1,050) | (718) |
| 243,782 | 241,437 | |
| 543,440 | 553,199 |
Contingent liabilities and unrecognized contractual commitments (note 19)
Events after the reporting period (note 25)
Approved by
R. Bruce McDonald
Director
Chris Tsiofas
Director
The accompanying notes are an integral part of these consolidated financial statements.
Andrew Peller Limited
Consolidated Statements of Earnings (Loss)
For the years ended March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
| 2025 $ | 2024 $ | |
|---|---|---|
| Revenue (note 17) | 389,607 | 385,856 |
| Cost of goods sold, excluding amortization (notes 16 and 17) | 223,002 | 235,254 |
| Amortization of plant and equipment used in production | 11,034 | 10,332 |
| Gross profit | 155,571 | 140,270 |
| Selling and administration (notes 16 and 23) | 103,716 | 109,773 |
| Amortization of equipment, right-of-use and intangible assets used in selling and administration | 12,692 | 12,476 |
| Interest expense | 16,216 | 16,964 |
| Net unrealized loss on derivative financial instruments (note 21) | 1,840 | 641 |
| Loss on debt extinguishment and financing fees (note 11) | - | 2,172 |
| Other expenses, net (note 16) | 3,480 | 1,130 |
| 137,944 | 143,156 | |
| Earnings (loss) before income tax | 17,627 | (2,886) |
| Income tax expense (recovery) (note 13) | ||
| Current | 2,032 | 4,703 |
| Deferred | 4,480 | (4,737) |
| 6,512 | (34) | |
| Net earnings (loss) for the year | 11,115 | (2,852) |
| Net earnings (loss) per share (note 18) | ||
| Basic | ||
| Class A Common Shares | 0.26 | (0.07) |
| Class B Common Shares | 0.23 | (0.06) |
| Diluted | ||
| Class A Common Shares | 0.25 | (0.07) |
| Class B Common Shares | 0.22 | (0.06) |
The accompanying notes are an integral part of these consolidated financial statements.
Andrew Peller Limited
Consolidated Statements of Comprehensive Income (Loss)
For the years ended March 31, 2025 and 2024
(in thousands of Canadian dollars)
| | 2025
$ | 2024
$ |
| --- | --- | --- |
| Net earnings (loss) for the year | 11,115 | (2,852) |
| Items that are never reclassified to net earnings (loss) | | |
| Net actuarial (losses) gains on post-employment benefit plans
(note 12) | (449) | 411 |
| Deferred income tax recovery (expense) (note 13) | 117 | (108) |
| Other comprehensive (loss) income for the year | (332) | 303 |
| Net comprehensive income (loss) for the year | 10,783 | (2,549) |
The accompanying notes are an integral part of these consolidated financial statements.
Andrew Peller Limited
Consolidated Statements of Changes in Equity
For the years ended March 31, 2025 and 2024
(in thousands of Canadian dollars)
| Capital stock $ | Contributed surplus $ | Retained earnings $ | Accumulated other comprehensive loss $ | Total shareholders' equity $ | |
|---|---|---|---|---|---|
| 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 Shares $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 |
| Net comprehensive income (loss) for the year | - | - | 11,115 | (332) | 10,783 |
| Repurchase and cancellation of Class A non-voting shares (note 14) | (138) | - | (543) | - | (681) |
| Exercise of share awards and issuance of Class A non-voting Common Shares (notes 14 and 15) | 774 | (774) | - | - | - |
| Share-based compensation (note 15) | - | 2,650 | - | - | 2,650 |
| Dividends (Class A Common Shares $0.246 per share, Class B Common Shares $0.214 per share) | - | - | (10,407) | - | (10,407) |
| Balance at March 31, 2025 | 29,471 | 8,443 | 206,918 | (1,050) | 243,782 |
The accompanying notes are an integral part of these consolidated financial statements.
Andrew Peller Limited
Consolidated Statements of Cash Flows
For the years ended March 31, 2025 and 2024
(in thousands of Canadian dollars)
| | 2025
$ | 2024
$ |
| --- | --- | --- |
| Cash provided by (used in) | | |
| Operating activities | | |
| Net earnings (loss) for the year | 11,115 | (2,852) |
| Adjustments for non-cash items | | |
| Loss (gain) on disposal of property, plant and equipment and intangible assets | 2,503 | (473) |
| Amortization of plant, equipment, right-of-use assets and intangible assets | 23,726 | 22,808 |
| Impairment of intangible assets | 750 | - |
| Amortization of deferred financing fees | - | 4 |
| Interest expense | 16,216 | 16,960 |
| Income taxes | 6,512 | (34) |
| Loss on debt extinguishment and financing fees | - | 2,172 |
| Net unrealized loss on derivative financial instruments | 1,840 | 641 |
| Share-based compensation expense | 2,593 | 554 |
| Post-employment benefits | (349) | (209) |
| Curtailment gain on terminated other post-employment benefit plan | - | (207) |
| Interest paid | (15,146) | (14,927) |
| Wine Sector Support Program, net (note 17) | (920) | 1,306 |
| Income tax (paid) received | (1,951) | 1,837 |
| | 46,889 | 27,580 |
| Change in non-cash working capital items related to operations (note 20) | 13,295 | 10,535 |
| | 60,184 | 38,115 |
| Investing activities | | |
| Proceeds from sale of property, plant and equipment | 34 | 938 |
| Purchase of property, plant and equipment | (15,831) | (14,421) |
| Purchase of intangible assets | (1,795) | (1,352) |
| | (17,592) | (14,835) |
| Financing activities | | |
| Net increase (decrease) in bank indebtedness | 1,933 | (4,743) |
| Repayment of lease obligations | (5,436) | (4,935) |
| Drawings on long-term debt | 38,000 | 21,000 |
| Repayment of long-term debt | (66,000) | (23,043) |
| Financing fees paid | - | (1,177) |
| Repurchase and cancellation of class A non-voting shares | (681) | - |
| Dividends paid | (10,408) | (10,382) |
| | (42,592) | (23,280) |
| Change in cash during the year | - | - |
| Cash – Beginning of year | - | - |
| Cash – End of year | - | - |
The accompanying notes are an integral part of these consolidated financial statements.
Andrew Peller Limited
Consolidated Statements of Cash Flows ...continued
For the years ended March 31, 2025 and 2024
(in thousands of Canadian dollars)
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Supplementary information | ||
| Property, plant and equipment and intangibles acquired that were unpaid in cash and included in accounts payable and accrued liabilities | 76 | 142 |
| Proceeds from sale of property, plant and equipment that were not yet collected and included in accounts receivable | 1,936 | - |
The accompanying notes are an integral part of these consolidated financial statements.
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
1 Nature of operations
Andrew Peller Limited (the Company) produces and markets wine, spirits and wine related products. The Company's products are produced and sold predominantly in Canada. The Company is incorporated under the Canada Business Corporations Act and is domiciled in Canada. The address of its head office is 697 South Service Road, Grimsby, Ontario, L3M 4E8.
2 Summary of material accounting policies
Basis of presentation
These consolidated financial statements have been prepared in compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
These consolidated financial statements were approved by the Board of Directors for issuance on June 11, 2025.
Basis of measurement
The consolidated financial statements have been prepared under the historical cost convention, except for derivatives, which are measured at fair value, and biological assets, which are measured at fair value less costs to sell.
Basis of consolidation
These consolidated financial statements include the accounts of the Company and all subsidiary companies, including Canrim Packaging Limited, Global Vintners Inc., Riverbend Inn & Winery Inc., Sandhill Vineyards Ltd., Small Winemakers Collections Inc., 1488504 B.C LTD., and APL (Port Moody) Limited Partnership, all of which are wholly owned by Andrew Peller Limited. Subsidiaries are those entities the Company controls by having the power to govern their financial and operating policies. Subsidiaries are fully consolidated from the date on which control is obtained by the Company and are de-consolidated from the date control ceases. Intercompany transactions, balances, income and expenses and profits and losses are eliminated.
Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred by the Company is measured as the fair value of assets transferred and equity instruments issued at the date of completion of the acquisition. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at fair value at the acquisition date. The excess of the consideration transferred over the fair value of the net assets acquired is recorded as goodwill. If the consideration transferred is less than the net assets acquired, the difference is recognized directly in the consolidated statements of earnings (loss) as a gain on acquisition. Results of operations of a business acquired are included in the Company's consolidated financial statements from the date of the business acquisition. Acquisition costs incurred are expensed and included in selling and administrative expenses.
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Foreign currency translation
The consolidated financial statements are presented in Canadian dollars, which is the Company's functional currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in currencies other than the Company's functional currency are recognized in the consolidated statements of earnings (loss).
Revenue
Revenue is derived from the sale of goods and is recognized at a point in time when the performance obligation is fulfilled. For sales to consumers through retail stores, winery restaurants and estate wineries, the performance obligation is deemed fulfilled when the product is purchased. For sales transactions with provincial liquor boards, licensee retail stores and wine kit retailers, the Company's performance obligation is fulfilled when the product is shipped from the Company's distribution facilities.
Excise taxes collected on behalf of the federal government, licensing fees and levies paid on sales of wine, product returns, breakage, promotional and advertising allowances and discounts provided to customers are deducted from the selling price to determine the transaction price at which revenue is recognized. Expected product returns and breakage are estimated based on historical actuals as a percentage of sales.
Deferred revenue represents amounts paid by customers in advance of the purchase of products, which typically takes the form of pre-loaded gift cards. The amounts received are recorded as deferred revenue within accounts payable and accrued liabilities on the consolidated balance sheets. Once a gift card is redeemed to make a purchase, the liability is relieved and revenue is recognized.
The Company also enters into arrangements with third parties for the sale of products to customers. When the terms of the arrangement are such that the Company is acting as an agent of the third party, revenue is recognized in the amount of the commission to which the Company is entitled in exchange for arranging for the third party to provide its goods to customers.
Cost of goods sold
Cost of goods sold includes the cost of finished goods inventories sold during the year, inventory writedowns and revaluations of agricultural produce to fair value less costs to sell at the point of harvest.
Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is determined on an average cost basis. The Company utilizes a weighted average cost calculation to determine the value of ending inventory (bulk wine and spirits, packaging materials and supplies, and finished goods). Average cost is determined separately for import wine, domestic wine and spirits and is calculated by varietal and vintage year.
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
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 inventories that require a substantial period of time to become ready for sale.
Government support programs
Support programs from the government are recognized at the amount of cash received or to be received when there is reasonable assurance that the support will be received and the Company will comply with all conditions. Government support programs are recognized in the consolidated statements of earnings (loss) as a reduction of the expense that the support is intended to compensate or as other revenue if the support is intended to compensate for lost revenue or meets the broader definition of revenue and arises in the course of ordinary business.
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated amortization. Cost includes borrowing costs for assets that require a substantial period of time to become ready for use. Amortization of buildings, vines and vineyard infrastructure and machinery and equipment is calculated on the straight-line basis in amounts sufficient to amortize the cost of buildings, vines and vineyard infrastructure and machinery and equipment over their estimated useful lives as follows:
| Buildings | 40 years |
|---|---|
| Vines and vineyard infrastructure | 20 years |
| 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 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 transformation of agricultural produce.
At the point of harvest, the fair value of biological assets is determined by reference to local market prices for grapes of a similar quality and the same varietal. At this point, agricultural produce is measured at fair value less cost to sell, which becomes the basis for the cost of inventories after harvest.
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Gains or losses arising from a change in fair value less costs to sell are included in the consolidated statements of earnings (loss) in the period in which they arise.
Intangible assets
Intangible assets include brands, customer contracts and lists, software and customer-based relationships. These intangible assets are recorded at their estimated fair value on the date of acquisition or at cost for regular way purchases.
| Amortization method | Useful life | Remaining useful life | |
|---|---|---|---|
| Brands | n/a | indefinite | indefinite |
| Customer contracts and lists | straight-line | 10 – 20 years | 2 –3 years |
| Software | straight-line | 5 – 15 years | 5 – 15 years |
Certain of the Company's brands have been assessed as having an indefinite life because the expected usage, period of control and other factors do not limit the life of these assets. Intangible assets with an indefinite life are not amortized but are tested for impairment at least annually or more frequently if events or circumstances indicate the asset might be impaired. To test for impairment, the Company primarily compares the amount of royalty the Company would have had to pay in an arm's length licensing arrangement to secure access to the same rights to its carrying value. If necessary, the fair value is also considered. An impairment charge is recorded to the extent the carrying value exceeds the fair value.
Where the Company incurs costs to configure and customize cloud computing software, the costs incurred are capitalized and amortized over the useful life only if the expenditures meet the recognition criteria of International Accounting Standard (IAS) 38, Intangible Assets.
Goodwill
Goodwill represents the cost of a business combination in excess of the fair values of the net tangible and identifiable intangible assets acquired. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or circumstances indicate that the carrying value may be impaired. The Company assigns assets to cash generating units (CGUs) at the lowest level at which the combined assets generate independent cashflows – based on certain product and distribution channels. The Company allocates goodwill to CGUs based on the lowest level that goodwill is monitored for internal management purposes. 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 method using a discounted cash flow model. If necessary, a CGU's fair value is also considered. An impairment loss in respect of goodwill cannot be reversed.
(4)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Post-employment benefits
The Company sponsors defined contribution pension plans, defined benefit pension plans, post-employment medical benefit plans and other post-employment benefit plans for certain employees. Contributions to the defined contribution pension plans are recognized as an expense as services are rendered by employees. The costs of the defined benefit plans, the post-employment medical benefit plans and other post-employment benefit plans are actuarially determined and include management's best estimate of expected plan investment performance, the interest rate on the plan obligation, salary escalation, expected retirement ages and medical cost escalation. The asset or liability recognized in the consolidated balance sheets in respect of these plans is the present value of the defined benefit obligation at the end of the reporting period as determined by the Company's actuary less the fair value of plan assets adjusted for the unamortized portion of negative past service credits. The current service cost and the interest cost net of the expected return on plan assets are recognized in earnings (loss) in the period they arise. Adjustments arising from actuarially determined gains or losses are recognized in other comprehensive (loss) income in the period in which they arise. The corresponding change in shareholders' equity is adjusted to retained earnings for the year.
Financial instruments and hedge accounting
Financial assets and liabilities are initially recorded at fair value including, where permitted by IFRS 9, Financial Instruments, any directly attributable transaction costs. For those financial assets that are not subsequently held at fair value, the Company assesses whether there is evidence of impairment at each consolidated balance sheet date.
The Company classifies its financial assets and liabilities into the following categories: financial assets and liabilities at amortized cost and financial assets and liabilities at fair value through profit or loss.
Expected credit losses on financial assets carried at amortized cost are assessed on a forward-looking basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses 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 Company recognizes financial instruments when it becomes a party to the terms of the instrument and has elected to use "trade date" accounting for regular way purchases and sales of financial assets.
Embedded derivatives (elements of contracts whose cash flows move independently from the host contract similar to a stand-alone derivative) are required to be separated and measured at fair value if certain criteria are met. Management reviewed its contracts and determined the Company does not currently have any embedded derivatives in these contracts that require separate accounting and disclosure.
(5)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Leases
Leases 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 is charged to the consolidated statements of earnings (loss) over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
- Fixed payments, including in-substance fixed payments, less any lease incentives receivable;
- Variable lease payments that are based on an index or a rate;
- Amounts expected to be payable by the lessee under residual value guarantees;
- The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
- Payment of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Payments associated with variable lease payments not based on an index or a rate, short-term leases and leases of low value assets are recognized on a straight-line basis as an expense in the consolidated statements of earnings (loss).
Right-of-use assets are included in the consolidated balance sheets and are measured at cost comprising the following:
- The amount of the initial measurement of the lease liability;
- Any lease payments made at or before the commencement date, less any lease incentives received;
- Any initial direct costs; and
- Restoration costs.
The right-of-use assets are depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Amortization of right-of-use vineyard land, buildings and machinery and equipment is as follows:
Vineyard land
Buildings
Machinery and equipment
2 – 29 years
3 – 10 years
2 – 6 years
(6)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Impairment of non-financial assets
The Company reviews long-lived assets – consisting of property, plant, and equipment and right-of-use assets and definite life intangible assets for impairment when events or circumstances indicate an asset may be impaired. Assets are assigned to a CGU based on the lowest level at which they generate independent cash inflows. When there is an indication of impairment, an impairment charge is recorded to the extent the carrying value of a CGU exceeds the recoverable amount. The recoverable amount is the greater of the CGU's 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 reversal in circumstances that led to the impairment and if a CGU's recoverable amount increases to the extent that the related assets' carrying amounts are no larger than the amount that would have been determined, net of amortization, had no impairment loss been recorded.
Net earnings (loss) per share
Basic net earnings (loss) per share has been calculated using the weighted average number of Class A and Class B Common Shares outstanding during the year. Diluted net earnings (loss) per share have been calculated by considering the impact of any potential ordinary shares that are dilutive on the two classes of shares when considered together.
Segmented information
The Company produces and markets wine, spirits and wine related products in Canada. Management has concluded that the chief operating decision maker allocates resources and assesses performance of the Company on a consolidated basis. Furthermore, based on the type of products sold and the fact that its customers are similar in nature, the Company operates in a single operating segment. In addition, substantially all of the Company's sales are made in Canada. As a result, management has concluded the Company operates in one geographic segment.
Income taxes
Current income tax is the expected amount of tax payable or recoverable on taxable income or loss during the year. Current income tax may also include adjustments to taxes payable or recoverable in respect of previous years.
The Company accounts for deferred income taxes based on temporary differences, which are the differences between the carrying amount of an asset or liability and its tax base. Deferred income taxes are provided for all temporary differences between the carrying amount and tax bases of assets and liabilities, except for those arising from the initial recognition of goodwill or for those arising from the initial recognition of an asset or liability in a transaction that is not a business combination and has no impact on earnings (loss) or taxable income or loss. Deferred income tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply to taxable income or loss in the years in which temporary differences are expected to be recovered or settled. The deferred income tax provision recorded in net earnings (loss) and other comprehensive (loss) income represents the change during the year in deferred income tax assets and deferred income tax liabilities.
(7)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Equity
The Company separately presents changes in equity related to capital stock, contributed surplus, retained earnings and accumulated other comprehensive loss in the consolidated statements of changes in equity.
Share-based compensation
The Company grants stock options, performance share units (PSUs), restricted share units (RSUs) and deferred share units (DSUs) to employees and directors under its share-based compensation plan. All share-based compensation arrangements are equity-settled in Class A non-voting Common Shares.
Equity-settled share-based payments to employees are measured at the fair value of the equity instrument granted. An option valuation model (Black-Scholes) is used to fair value stock options issued on the date of grant.
The grant date fair value of equity-settled share-based awards is recognized as compensation expense with a corresponding increase in equity reserves over the related service period provided to the Company. The total amount of expense recognized in earnings or loss is determined by reference to the fair value of the options granted or share awards, which factors in the number of options expected to vest. Equity-settled share-based payment transactions are not remeasured once the grant date fair value has been determined, except in cases where the share-based payment is linked to non-market performance conditions. Stock options vest in tranches (graded vesting) and, accordingly, the expense is recognized in vesting tranches. PSUs vest either in full at the end of the third fiscal year after the date of grant or in three tranches with one-third vesting at each fiscal year end following the date of grant and, accordingly, the expense is recognized over the vesting period. RSUs vest rateably over the restriction period and accordingly, the expense is recognized over the restriction period. DSUs vest immediately and, accordingly, the expense is recognized in full at the date of grant.
Compensation expense is recognized over the applicable vesting period by increasing contributed surplus based on the number of awards expected to vest. At the end of each reporting period, the Company revises its estimates of the number of awards that are expected to vest and be delivered based on the non-market performance vesting conditions. The Company recognizes the impact of the revision to original estimates, if any, in the consolidated statements of earnings (loss), with a corresponding adjustment to contributed surplus.
(8)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Recently adopted accounting pronouncements
IAS 1, Presentation of Financial Statements
This standard has been amended to clarify the classification 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 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 statements. These amendments are effective for annual reporting periods beginning on or after January 1, 2024, with early adoption permitted. The adoption of the amendment did not have a significant impact on the consolidated financial statements.
Recently issued accounting pronouncements
Amendments to IFRS 9 and IFRS 7, Amendments to the Classification and Measurement of Financial Instruments
In May 2024, amendments to IFRS 9 and IFRS 7 were issued to:
a) Clarify the date of recognition and derecognition of some financial assets and liabilities, with the exception of some financial liabilities settled through an electronic cash transfer system;
b) Clarify and add further guidance for assessing whether a financial asset meets the "solely payments of principal and interest" criterion;
c) Add new disclosures for certain instruments with contractual terms that can change cash flows (such as some instruments with features linked to the achievement of environment, social and governance (ESG) targets); and
d) Update the disclosures for equity instruments designated at fair value through other comprehensive (loss) income (FVOCI).
The amendments are effective for annual reporting periods beginning on or after January 1, 2026 with earlier adoption permitted. The Company has not yet assessed the impact of the new standard on the consolidated financial statements.
IFRS 18, Presentation and Disclosure in Financial Statements
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 (loss) where companies will be required to present separate categories 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 standard 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.
(9)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
3 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 as at the dates 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, they are recorded in the period in which they change. Specific areas of uncertainty include but are not limited to:
Impairment of goodwill and indefinite life intangible assets
Testing goodwill for impairment at least annually involves judgment in estimating the recoverable amount of the CGUs to which goodwill is allocated. This requires making assumptions about future cash flows, growth rates and discount rates. Testing indefinite life intangible assets for impairment at least annually involves estimating the fair value using the relief of royalty method. This requires making assumptions about royalty rates, growth rates and discount rates. These assumptions are inherently uncertain and as such, actual amounts may vary from these assumptions and cause significant adjustments. Refer to notes 7 and 8 for further information.
Post-employment benefits
Measuring the liability for post-employment benefits requires assumptions for the discount rates, increases in compensation, increases in medical costs and the timing of the payment of benefits. Actual amounts may vary from these assumptions and cause significant adjustments.
Leases
Critical accounting estimates were made in determining the lease term and incremental borrowing rate. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs, which affects this assessment and that is within the control of the lessee.
In determining the carrying amount of right-of-use assets and lease liabilities, the Company is required to estimate the incremental borrowing rate specific to each leased asset or portfolio of leased assets if the interest rate implicit in the lease is not readily determined. Management determines the incremental borrowing rate of each leased asset or portfolio of leased assets by using the Company's 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.
(10)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
4 Inventories
| | 2025
$ | 2024
$ |
| --- | --- | --- |
| Packaging materials and supplies | 17,528 | 23,713 |
| Bulk wine and spirits, net of wine sector support program (note 17) | 77,418 | 86,867 |
| Finished goods | 75,224 | 81,889 |
| | 170,170 | 192,469 |
| Interest included in the cost of inventories (2025 – 6.97%, 2024 – 8.02%) | 3,880 | 5,083 |
Inventory write-downs recognized as an expense amounted to $4,489 (2024 – $6,270).
The cost of inventories recognized as an expense and included in cost of goods sold, excluding amortization, was $228,264 (2024 – $228,984).
(11)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
5 Property, plant and equipment
| Land $ | Vines, vineyard land and infrastructure $ | Buildings $ | Machinery and equipment $ | Total $ | |
|---|---|---|---|---|---|
| At March 2023 | |||||
| Cost | 39,956 | 53,049 | 102,311 | 185,714 | 381,030 |
| Accumulated amortization | - | (21,958) | (32,937) | (115,870) | (170,765) |
| Net carrying amount | 39,956 | 31,091 | 69,374 | 69,844 | 210,265 |
| Year ended March 2024 | |||||
| Additions | 1,885 | 4,808 | 1,413 | 6,231 | 14,337 |
| Disposals | - | (722) | - | (21) | (743) |
| Amortization | - | (1,768) | (2,778) | (9,181) | (13,727) |
| Closing net carrying amount | 41,841 | 33,409 | 68,009 | 66,873 | 210,132 |
| At March 2024 | |||||
| Cost | 41,841 | 56,833 | 103,724 | 191,793 | 394,191 |
| Accumulated amortization | - | (23,424) | (35,715) | (124,920) | (184,059) |
| Net carrying amount | 41,841 | 33,409 | 68,009 | 66,873 | 210,132 |
| Year ended March 2025 | |||||
| Additions | 2,571 | 3,734 | 2,521 | 6,939 | 15,765 |
| Disposals | - | (4,414) | - | (59) | (4,473) |
| Amortization | - | (1,819) | (2,841) | (9,134) | (13,794) |
| Closing net carrying amount | 44,412 | 30,910 | 67,689 | 64,619 | 207,630 |
| At March 2025 | |||||
| Cost | 44,412 | 49,409 | 106,245 | 192,815 | 392,881 |
| Accumulated amortization | - | (18,499) | (38,556) | (128,196) | (185,251) |
| Net carrying amount | 44,412 | 30,910 | 67,689 | 64,619 | 207,630 |
Contractual commitments to purchase property, plant and equipment were $3,047 as at March 31, 2025 (2024 - $599).
(12)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
6 Biological assets
Biological assets consist of grapes prior to harvest that are controlled by the Company. The Company owns and leases land in Ontario and British Columbia to grow grapes in order to secure a supply of quality grapes for the making of wine.
During the year ended March 31, 2025, the Company harvested grapes valued at $2,718 (2024 – $6,129).
The changes in the carrying amount of biological assets are as follows:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Carrying amount – Beginning of year | 522 | 2,920 |
| Net increase in fair value less costs to sell due to biological transformation | 3,756 | 3,731 |
| Transferred to inventory on harvest | (2,718) | (6,129) |
| Biological assets | 1,560 | 522 |
The Company is exposed to financial risk because of the long period of time between the cash outflow required to plant grape vines, cultivate vineyards and harvest grapes and the cash inflow from selling wine and related products from the harvested grapes.
Substantially all of the grapes from owned and leased vineyards are used in the Company's winemaking processes. Owned and leased vineyards, in combination with supply contracts with grape growers, are used to secure a supply of domestic grapes. These strategies reduce the financial risks associated with changes in grape prices.
(13)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
7 Intangible assets
| Brands $ | Customer contracts and lists $ | Software $ | Other $ | Total $ | |
|---|---|---|---|---|---|
| At March 31, 2023 | |||||
| Cost | 10,239 | 12,827 | 39,659 | 1,917 | 64,642 |
| Accumulated amortization and impairment | (200) | (10,564) | (8,997) | (1,816) | (21,577) |
| Net carrying amount | 10,039 | 2,263 | 30,662 | 101 | 43,065 |
| Year ended March 31, 2024 | |||||
| Additions | - | - | 1,352 | - | 1,352 |
| Amortization | - | (493) | (3,465) | - | (3,958) |
| Closing net carrying amount | 10,039 | 1,770 | 28,549 | 101 | 40,459 |
| At March 31, 2024 | |||||
| Cost | 10,239 | 12,827 | 41,011 | 1,917 | 65,994 |
| Accumulated amortization and impairment | (200) | (11,057) | (12,462) | (1,816) | (25,535) |
| Net carrying amount | 10,039 | 1,770 | 28,549 | 101 | 40,459 |
| Year ended March 31, 2025 | |||||
| Additions | - | - | 1,795 | - | 1,795 |
| Impairment | (750) | - | - | - | (750) |
| Amortization | - | (465) | (3,633) | - | (4,098) |
| Closing net carrying amount | 9,289 | 1,305 | 26,711 | 101 | 37,406 |
| At March 31, 2025 | |||||
| Cost | 10,239 | 12,827 | 42,806 | 1,917 | 67,789 |
| Accumulated amortization and impairment | (950) | (11,522) | (16,095) | (1,816) | (30,383) |
| Net carrying amount | 9,289 | 1,305 | 26,711 | 101 | 37,406 |
Contractual commitments to purchase software were $313 as at March 31, 2025 (2024 - $2,189).
The Company recorded an impairment loss of $750 (2024 - $nil) on intangible assets for the year ended March 31, 2025.
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
8 Goodwill
In order to test goodwill for impairment, the Company allocates the carrying value of goodwill to CGUs based on the lowest level that goodwill is monitored for internal management purposes. Due to the change in executive management during the fiscal year and consequently the change in the chief operating decision maker, the Company re-assessed its CGUs and operating segments. For the year ended March 31, 2025, the Company allocated goodwill to one CGU and operating segment.
The aggregate carrying amount of goodwill is allocated as follows:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Wine Products | 53,638 | - |
| Ontario and Eastern Canadian wine | - | 3,134 |
| Western Canadian wine | - | 26,695 |
| Personal winemaking products | - | 23,809 |
| 53,638 | 53,638 |
The Company determined the recoverable amount of the related CGU by estimating its value in use. The key assumptions used are:
| 2025 | 2024 | |
|---|---|---|
| Discount rate | 9.23% | 10.1% |
| Average revenue growth rate during the period of projected cash flows | 1.4% | 2.1% |
| Gross profit percentage | 42.2% | 41.1% |
| Terminal growth rate | 2.7% | 3.0% |
As at March 31, 2025, the Company's book value of net assets exceeded its market capitalization, which was an indication of impairment and triggered an overall impairment assessment. The Company uses past experience and current expectations about future performance in projecting cash flows, which are based on financial budgets projected over a period of five years. For the period after the initial projection, the Company projects cash flows using an assumed growth rate, which is based on expectations about long-term economic growth in Canada and any known industry specific factors that may influence long-term growth in the Canadian wine industry. The discount rate is estimated by referring to external sources of information about the cost of capital and the leverage of companies that operate in a similar industry to the Company and that are of similar size.
Changes in market conditions could result in changes in the carrying value of goodwill in the future. Sensitivity analysis was performed by changing the following key assumptions: discount rate, gross profit percentage, average revenue growth rate during the period of projected cash flows, and the terminal growth rate.
The Company determined the impact of what a reasonable change in each key assumption would be to the discounted cash flows. No reasonable changes in key assumptions would result in an impairment of the CGU. No impairment in goodwill for the years ended March 31, 2025 and 2024 was recognized as a result of the impairment test.
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
9 Accounts payable and accrued liabilities
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Trade payables | 26,151 | 22,615 |
| Accrued liabilities | 25,115 | 23,967 |
| Deferred revenue | 2,169 | 1,724 |
| 53,435 | 48,306 |
10 Right-of-use assets and lease obligations
| Vineyard land $ | Buildings $ | Machinery and equipment $ | Total $ | |
|---|---|---|---|---|
| Closing net carrying amount as at March 31, 2023 | 6,014 | 4,913 | 2,685 | 13,612 |
| Year ended March 31, 2024 | ||||
| Additions | 691 | 8,272 | 2,066 | 11,029 |
| Terminations | (556) | (1,597) | (372) | (2,525) |
| Amortization | (487) | (3,601) | (1,035) | (5,123) |
| Closing net carrying amount as at March 31, 2024 | 5,662 | 7,987 | 3,344 | 16,993 |
| Year ended March 31, 2025 | ||||
| Additions | - | 6,855 | 1,896 | 8,751 |
| Terminations | - | (287) | (297) | (584) |
| Amortization | (503) | (3,981) | (1,350) | (5,834) |
| Closing net carrying amount as at March 31, 2025 | 5,159 | 10,574 | 3,593 | 19,326 |
The lease obligations transactions during the year were as follows:
| Lease obligations | 2025 | 2024 |
|---|---|---|
| $ | $ | |
| Balance – Beginning of year | 18,019 | 14,728 |
| Additions | 8,751 | 11,029 |
| Terminations | (584) | (2,803) |
| Repayments | (6,597) | (5,812) |
| Interest | 1,161 | 877 |
| Balance – End of year | 20,750 | 18,019 |
| Less: Current portion of lease obligations | 4,190 | 5,370 |
| Lease obligations | 16,560 | 12,649 |
(16)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Expenses related to leases with variable consideration amounting to $1,171 (2024 – $995) and short-term leases and low value leases amounting to $1,631 (2024 – $1,508) were recorded within selling and administration expenses. The total cash outflows relating to leases during the year were $9,399 (2024 – $8,315).
Some property leases contain variable payment terms that are linked to sales generated from a store. For individual stores, up to 100% of lease payments are on the basis of variable payment terms. Variable lease payments are recognized in the consolidated statements of earnings (loss) in the period in which the condition that triggers those payments occurs. A 5% increase in sales across all stores with such variable lease contracts would not result in a material change to the total lease payments.
11 Bank indebtedness and Long-term debt
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Bank indebtedness | 2,132 | 199 |
| Long-term debt | 180,294 | 208,294 |
On June 13, 2023, the Company amended and restated its credit facility, which is now comprised of an asset backed revolving facility maturing on June 13, 2027. The overall facility size was reduced from $350,000 to $275,000, and the borrowing limit is based on certain percentages of the fair value of accounts receivable, inventory and real property. The facility is an interest-only facility with principal repayment due upon maturity, unless the borrowing limit is reduced below the amount borrowed, at which time, the excess amount borrowed must be repaid immediately. The facility is to be used to fund day-to-day operations, distributions, capital expenditures and acquisitions.
On June 30, 2023, the Company entered into an interest rate swap agreement with a notional amount of $65,000. Until June 13, 2027, the interest rate on this portion of the facility is fixed at 4.46%, plus the applicable margin. The interest rate on the balance of the facility had a variable interest rate of CDOR, plus the applicable margin. In response to the cessation of CDOR on June 28, 2024, and the benchmark being replaced by the Canadian Overnight Repo Rate Average ("CORRA"), the Company amended its credit facility and associated interest rate swap agreements on June 21, 2024 in which the interest rate on the balance of the facility has been updated to a variable interest rate of CORRA, plus the applicable margin. As at March 31, 2025 and 2024, the applicable margin was 2.50%.
Management performed an assessment, which included reviewing qualitative factors, and determined that these amendments constituted an extinguishment of long-term debt, which resulted in the derecognition of the carrying amount of the original credit facility and the recognition of the restated facility and fair market value in the fiscal year ended March 31, 2024. As a result, for the year ended March 31, 2024, the Company recorded a loss on extinguishment of $995 and financing fees of $1,177 were expensed immediately.
(17)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Interest expense of $13,745 (2024 - $15,299) was recorded in the consolidated statements of earnings (loss). As at March 31, 2025, $1,033 (2024 - $1,273) of unpaid interest related to the Company's bank indebtedness and long-term debt is recorded in accounts payable and accrued liabilities.
The Company and its subsidiaries have provided their assets as security for these loans. The amended credit facility is subject to a minimum fixed charge coverage ratio covenant when excess availability as a percentage of the facility limit is below 12.5%. As at March 31, 2025, the borrowing limit, which is calculated based on certain percentages of the fair value of accounts receivable, inventory, and real property was $248,552, which is less than the facility limit of $275,000. Excess availability as at March 31, 2025 was 25% and therefore the minimum fixed charge coverage ratio was not applicable at March 31, 2025.
As at March 31, 2025 and 2024, the Company was in compliance with the excess availability covenant.
The following table summarizes the change in the Company's long-term debt arising from financing activities for the year ended March 31, 2025:
| $ | |
|---|---|
| Balance – Beginning of year | 208,294 |
| Drawings | 38,000 |
| Repayments | (66,000) |
| Balance – End of year | 180,294 |
12 Post-employment benefits
Defined contribution plans
The total expenses for the defined contribution savings plans were $2,479 (2024 - $2,739).
Defined benefit plans
The Company has funded defined benefit pension plans. The Company also has an unfunded post-retirement medical benefits plan for certain employees and provides a monthly wine allowance to retired employees, which are collectively referred to as other post-employment benefits. In June 2023, as part of the new collective bargaining agreement, the Company's other post-employment benefit plan for retiring bonuses was terminated and there are no future funding requirements for the Company under this plan. In connection with this transaction, the Company recognized a curtailment gain of $207, which was recorded as part of the net benefit plan expense in the consolidated statement of loss for the year ended March 31, 2024.
(18)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Nature
The Company's defined benefit pension plans pay benefits based on a percentage of final average salary. There is one defined benefit pension plan in British Columbia with members who continue to accrue benefits. New employees are no longer entitled to accrue benefits under these defined benefit pension plans. There is one defined benefit pension plan in Ontario and no further benefits accrue to the members of this plan. All members of the defined benefit pension plan in Ontario have retired. The Company is responsible for administering these pension plans and determining investment policies. A committee of the Company's management is responsible for overseeing the Company's defined benefit pension plans and reports to a committee of the Company's Board of Directors.
Regulatory information
The defined benefit pension plans are governed by the Pension Benefits Standards Act in British Columbia and the Pension Benefits Act in Ontario. An appointed actuary prepares a valuation at least every three years for each of the plans. These valuations determine the Company's minimum contributions. The minimum contributions are primarily based on the normal going concern cost, the funding deficit amortized over 15 years, and the solvency deficit amortized over five years. The solvency deficit is calculated assuming the plan is wound up on the effective date of the valuation. Contributions could be reduced in certain instances via a funding holiday if requirements of the relevant regulations are met, which normally require the plan to have a surplus above certain threshold levels.
Risks
The defined benefit plans assets are invested in mutual funds. The investment mix for each plan is chosen with the objective that sufficient assets will be available to pay benefits as they come due and to achieve a reasonable return at an acceptable level of risk to stakeholders. The defined benefit plans subject the Company to market, interest rate, currency, price, credit, liquidity and longevity risks, which are typical of such plans. The most significant of these risks is that the expense and cash contributions related to these plans depend on the discount rate used to measure the liability to pay future benefits and the market performance of the plan's assets set aside to pay these benefits. A decline in long-term interest rates or in asset values could increase the Company's costs related to funding the deficit in these plans.
(19)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Amounts pertaining to defined benefit plans are as follows:
| Pension benefits $ | Other post-employment benefits $ | Total $ | |
|---|---|---|---|
| Plan assets | |||
| Fair value – Beginning of year | 21,006 | - | 21,006 |
| Return on plan assets excluding amounts in interest income | 414 | - | 414 |
| Interest income | 993 | - | 993 |
| Company’s contributions | 522 | 85 | 607 |
| Benefits paid | (1,182) | (85) | (1,267) |
| Fair value – End of year | 21,753 | - | 21,753 |
| Plan obligations | |||
| Accrued benefit obligations – Beginning of year | 19,775 | 1,675 | 21,450 |
| Total current service cost | 220 | 38 | 258 |
| Interest cost | 932 | 80 | 1,012 |
| Benefits paid | (1,182) | (85) | (1,267) |
| Remeasurements | |||
| Experience loss | 109 | - | 109 |
| Past service cost | 702 | 52 | 754 |
| Accrued benefit obligations – End of year | 20,556 | 1,760 | 22,316 |
| Post-employment benefit (asset) obligation | (1,197) | 1,760 | 563 |
| Benefit plan expense | |||
| Current service cost | 220 | 38 | 258 |
| Net interest (income) cost on defined benefit liability | (61) | 80 | 19 |
| Net benefit plan expense | 159 | 118 | 277 |
| Amount recognized in other comprehensive (loss) income | |||
| Net actuarial loss | (397) | (52) | (449) |
| Expected contributions for the year ending March 31, 2026 | 309 | 86 | 395 |
| Weighted average duration of the defined benefit obligations in years | 10.0 | 10.6 | 10.0 |
(20)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
| 2024 | |||
|---|---|---|---|
| Pension benefits $ | Other post-employment benefits $ | Total $ | |
| Plan assets | |||
| Fair value – Beginning of year | 20,611 | - | 20,611 |
| Return on plan assets excluding amounts in interest income | 96 | - | 96 |
| Interest income | 973 | - | 973 |
| Company's contributions | 515 | 88 | 603 |
| Benefits paid | (1,189) | (88) | (1,277) |
| Fair value – End of year | 21,006 | - | 21,006 |
| Plan obligations | |||
| Accrued benefit obligations – Beginning of year | 19,732 | 2,150 | 21,882 |
| Total current service cost | 210 | 56 | 266 |
| Interest cost | 928 | 98 | 1,026 |
| Benefits paid | (1,189) | (88) | (1,277) |
| Curtailment gain | - | (207) | (207) |
| Remeasurements | |||
| Experience gain | 94 | (409) | (315) |
| Gain from change in financial assumptions | - | 75 | 75 |
| Accrued benefit obligations – End of year | 19,775 | 1,675 | 21,450 |
| Post-employment benefit (asset) obligation | (1,231) | 1,675 | 444 |
| Benefit plan expense | |||
| Current service cost | 210 | 56 | 266 |
| Net interest (income) cost on defined benefit liability | (45) | 98 | 53 |
| Curtailment gain | - | (207) | (207) |
| Past service cost | - | 75 | 75 |
| Net benefit plan expense | 165 | 22 | 187 |
| Amount recognized in other comprehensive income | |||
| Net actuarial gain | 2 | 409 | 411 |
| Expected contributions for the year ending March 31, 2025 | 522 | 90 | 612 |
| Weighted average duration of the defined benefit obligations in years | 9.6 | 10.2 | 9.7 |
(21)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
The significant actuarial assumptions adopted in measuring the Company's accrued benefit obligations and benefits costs are as follows:
| 2025 | 2024 | |
|---|---|---|
| % | % | |
| Discount rate for expenses | 4.8 | 4.8 |
| Discount rate for obligations | 4.5 | 4.8 |
| Rate of compensation increase | 2.5 | 2.5 |
| Rate of medical cost increases | 5.0 | 5.0 |
| Retirement age | 60 – 65 years | 60 – 65 years |
| Inflation rate | 2.0 | 2.0 |
| Mortality tables | MI-2017 | MI-2017 |
The following table outlines the impact of a reasonable change in significant assumptions assuming all other assumptions are held constant. Changes in numerous assumptions may occur at the same time, which could increase or decrease the impact. With respect to a 1% increase or decrease in the inflation rate, the analysis excludes any impact this would have on the discount rate, medical cost trend rates and the rate of compensation increase.
| 2025 | 2024 | |||
|---|---|---|---|---|
| Pension benefits $ | Other post-employment benefits $ | Pension benefits $ | Other post-employment benefits $ | |
| Increase (decrease) in the post-employment benefit obligations | ||||
| 1% increase in the discount rate | (1,709) | (170) | (1,714) | (149) |
| 1% decrease in the discount rate | 2,403 | 202 | 2,101 | 195 |
| 1% increase in the rate of compensation increase | 440 | - | 173 | - |
| 1% decrease in the rate of compensation increase | (50) | - | (133) | - |
| 1% increase in the inflation rate | 224 | - | 224 | - |
| 1% decrease in the inflation rate | (207) | - | (207) | - |
As at March 31, 2025, the accumulated actuarial losses, net of deferred taxes, recognized in other comprehensive (loss) income were $1,050 (2024 - $718).
Plan assets
The plan assets consist of the following:
| 2025 | 2024 | |||
|---|---|---|---|---|
| $ | % | $ | % | |
| Mutual funds | ||||
| Fixed income | 15,541 | 71 | 14,952 | 71 |
| Equity | 6,212 | 29 | 6,054 | 29 |
| 21,753 | 100 | 21,006 | 100 |
(22)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
13 Income taxes
| | 2025
$ | 2024
$ |
| --- | --- | --- |
| Current income tax expense | 4,750 | 2,636 |
| Prior period current tax adjustment | (2,718) | 2,067 |
| Current income tax expense | 2,032 | 4,703 |
| Change in temporary differences | 1,734 | (2,605) |
| Prior period deferred tax adjustment | 2,769 | (2,131) |
| Impact of change in tax rate | (23) | (1) |
| Deferred income tax expense (recovery) | 4,480 | (4,737) |
| Total income tax expense (recovery) | 6,512 | (34) |
The Company's income tax expense (recovery) consists of the following:
| | 2025
$ | 2024
$ |
| --- | --- | --- |
| Income taxes at blended statutory rate of 26.39% (2024 – 26.41%) | 4,652 | (762) |
| Permanent differences and non-deductible items | 869 | 212 |
| Future income tax rate changes | (23) | (1) |
| Effect of temporary differences not recognized | 659 | 358 |
| Prior period current tax adjustment | (2,718) | 2,067 |
| Prior period deferred tax adjustment | 2,769 | (2,131) |
| Other | 304 | 223 |
| | 6,512 | (34) |
The movement of the deferred income tax account is as follows:
| | 2025
$ | 2024
$ |
| --- | --- | --- |
| Beginning of year | 29,066 | 33,695 |
| Deferred income taxes in net earnings (loss) | 4,480 | (4,737) |
| Deferred income taxes in other comprehensive (loss) income | (117) | 108 |
| End of year | 33,429 | 29,066 |
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
The significant temporary differences giving rise to the deferred income tax liability are comprised of the following:
Deferred income tax liability
| Accelerated tax depreciation and deductions on property, plant and equipment $ | Accelerated tax deductions on intangible assets $ | Tax deductions on goodwill $ | Other $ | Total $ | |
|---|---|---|---|---|---|
| March 31, 2023 | 23,548 | 14,608 | 740 | - | 38,896 |
| (Income) expense in net loss | 528 | (493) | 9 | - | 44 |
| March 31, 2024 | 24,076 | 14,115 | 749 | - | 38,940 |
| (Income) expense in net earnings | (394) | (433) | 8 | 928 | 109 |
| March 31, 2025 | 23,682 | 13,682 | 757 | 928 | 39,049 |
Deferred income tax asset
| Lease obligations $ | Post-employment benefits $ | Other $ | Total $ | |
|---|---|---|---|---|
| March 31, 2023 | (3,884) | (335) | (982) | (5,201) |
| (Income) expense in net loss | (865) | 111 | (4,027) | (4,781) |
| Expense in other comprehensive income | - | 108 | - | 108 |
| March 31, 2024 | (4,749) | (116) | (5,009) | (9,874) |
| (Income) expense in net earnings | (725) | 87 | 5,009 | 4,371 |
| Income in other comprehensive loss | - | (117) | - | (117) |
| March 31, 2025 | (5,474) | (146) | - | (5,620) |
The tax effects of temporary differences and loss carry forwards that give rise to significant portions of the deferred tax asset, which have not been recognized, are approximately as follows:
| 2025 $ | 2024 $ | |
|---|---|---|
| Property, plant and equipment | 2,924 | 1,556 |
| Restricted interest carryforward | 1,303 | - |
| Non-capital losses | 2,748 | 2,948 |
| 6,975 | 4,504 |
(24)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
The Company has the following non-capital losses available to reduce future years' federal and provincial taxable income, which have not been recognized and expire as follows:
| $ | |
|---|---|
| 2042 | 1,975 |
| 2043 | 773 |
| 2,748 |
The income tax effects relating to components of accumulated other comprehensive loss are as follows:
| 2025 | 2024 | |||||
|---|---|---|---|---|---|---|
| Before income tax amount $ | Deferred tax expense $ | Net of income tax expense $ | Before income tax amount $ | Deferred tax expense $ | Net of income tax expense $ | |
| Accumulated actuarial losses | 1,400 | 350 | 1,050 | 951 | 233 | 718 |
14 Capital stock
Authorized
- Unlimited preference shares
- Unlimited Class A Common Shares, non-voting
- Unlimited Class B Common Shares, voting
Issued
| 2025 | 2024 | |||
|---|---|---|---|---|
| Number of shares | Amount $ | Number of shares | Amount $ | |
| Class A Common Shares, non-voting | 35,311,492 | 29,112 | 35,243,647 | 28,471 |
| Class B Common Shares, voting | 8,036,183 | 359 | 8,144,183 | 364 |
| 43,347,675 | 29,471 | 43,387,830 | 28,835 |
All of the issued Class A and Class B Common Shares are fully paid and have no par value.
Class A Common Shares are non-voting and are entitled to a dividend in an amount equal to 115% of any dividend paid or declared on Class B Common Shares. Class B Common Shares are voting and convertible into Class A Common Shares on a one-for-one basis. During the year ended March 31, 2025, 108,000 Class B Common Shares were converted into Class A Common Shares.
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
As described in note 15, 118,351 Class A Common Shares were issued as a result of the exercise of share-based awards during the year ended March 31, 2025. In addition to the shares issued due to the exercise, the holders of DSUs, RSUs and PSUs earn dividends in the form of additional units and as a result, the Company issued an additional 9,894 Class A Common Shares.
On July 15, 2024, the Company announced its normal course issuer bid had been approved by the Toronto Stock Exchange. Under the issuer bid, the Company can purchase for cancellation up to 1,000,000 of its outstanding Class A non-voting common shares representing 2.8% of the Class A non-voting common shares outstanding at that time, over the ensuing twelve months.
The total number of Class A non-voting common shares repurchased for cancellation under the NCIB during the year ended March 31, 2025 amounted to 168,400 common shares, at a weighted average price of $4.04 per Class A non-voting common share, for a total cash consideration of $681. For the year ended March 31, 2025, the Company's share capital was reduced by $138 and the remaining $543 was accounted for as a decrease to retained earnings.
Annual dividends of $0.246 (2024 - $0.246) per Class A Common Share and $0.214 (2024 - $0.214) per Class B Common Share were approved by the Board of Directors on June 18, 2024 and are formally declared in each quarter.
The authorized share capital of the Company also consists of an unlimited number of preference shares, issuable in one or more series, of which 33,315 are designated as preference shares, Series A. As at March 31, 2025 and 2024, there were no preference shares issued or outstanding.
Stock purchase plan
The Company's full-time salaried and certain hourly employees participate in a Company sponsored stock purchase plan. Under the terms of the plan, employees can purchase a certain number of Class A Common Shares on an annual basis. Employees are required to pay 67% of the market price per Class A Common Shares. The Company is responsible for the remainder of the cost and, during 2025, expensed $225 (2024 - $244) related to the employee program.
15 Share-based compensation
The Company has a share-based compensation plan comprised of stock options, PSUs, RSUs and DSUs. The impact of the share-based compensation expense is summarized as follows:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| 1,634,833 stock options (2024 – 1,966,500) (a) | 135 | 322 |
| 490,383 performance share units (2024 – 462,114) (b) | 766 | (130) |
| 787,644 restricted share units (2024 – 246,038) (c) | 1,568 | 362 |
| 53,019 deferred share units (2024 – 29,559) (d) | 124 | - |
| 2,593 | 554 |
(26)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
The stock options, PSUs, RSUs and DSUs are equity settled and, as such, the expense associated with these instruments is recorded as a share-based compensation expense through the consolidated statements of earnings (loss) with a corresponding entry made to contributed surplus on the consolidated balance sheets.
The maximum number of shares that may be issued under all share-based compensation arrangements implemented by the Company, including the stock option plan, the PSU plan, the RSU plan and the DSU plan, may not exceed 10% of the total number of Class A non-voting Common Shares issued and outstanding from time to time. As at March 31, 2025, the Company had 4,857,470 Class A non-voting Common Shares reserved for issuance under the share-based compensation arrangements.
a) Stock options
The Company has a stock option plan under which options to purchase Class A non-voting Common Shares may be granted to officers and employees of the Company. Options granted under the plan have an exercise price of not less than the volume weighted average trading price of the Class A non-voting Common Shares where they are listed for the five trading days prior to the date of the grant. Options granted vest in tranches, equally over a three-year period on each anniversary of the grant date, commencing on the first anniversary of the grant date.
The Company's stock option transactions during the year were as follows:
| 2025 | 2024 | |||
|---|---|---|---|---|
| Number of options | Weighted average exercise price per share $ | Number of options | Weighted average exercise price per share $ | |
| Balance – Beginning of year | 1,966,500 | 8.31 | 1,641,335 | 9.95 |
| Granted | - | - | 543,100 | 4.40 |
| Forfeited | (331,667) | (6.65) | (217,935) | (10.93) |
| Balance – End of year | 1,634,833 | 8.65 | 1,966,500 | 8.31 |
| Exercisable | 1,289,131 | 9.76 | 1,109,564 | 10.80 |
No options were granted during the fiscal year ended March 31, 2025. For options granted during the year ended March 31, 2024, the fair value was estimated on the grant date using the Black-Scholes fair value option pricing model using the following weighted average assumptions:
2024
Weighted average fair value per share option $0.74
Expected volatility (1) 26.64%
Dividend yield 4.91%
Risk-free interest rate 3.38%
Weighted average expected life in years 10
(1) Expected volatility was determined using historical volatility.
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Information relating to stock options outstanding and exercisable as at March 31, 2025 is as follows:
| Share options outstanding | Share options exercisable | |||||
|---|---|---|---|---|---|---|
| Range of exercise prices | Weighted average remaining life (in months) | Number of share options | Weighted average exercise price $ | Weighted average remaining life (in months) | Number of share options | Weighted average exercise price $ |
| 0.01 to 5.00 | 107 | 425,200 | 4.40 | 107 | 141,734 | 4.40 |
| 5.01 to 10.00 | 76 | 785,333 | 8.10 | 74 | 723,097 | 8.31 |
| 10.01 to 15.00 | 43 | 326,000 | 13.06 | 43 | 326,000 | 13.06 |
| 15.01 to 20.00 | 41 | 98,300 | 17.21 | 41 | 98,300 | 17.21 |
| 75 | 1,634,833 | 8.65 | 68 | 1,289,131 | 9.76 |
b) PSU plan
The Company has established a PSU plan for employees and officers of the Company. PSUs represent the right to receive Class A non-voting Common Shares settled by the issuance of treasury shares or shares purchased on the open market. PSUs granted during the fiscal year ended March 31, 2025 vest in three tranches with one-third vesting at each fiscal year end following the grant date. PSUs granted in prior years, vest in full at the end of the third fiscal year after the grant date. The number of units that will vest is determined based on the achievement of certain performance conditions (i.e., financial targets) established by the Board of Directors and are adjusted by a factor, which ranges from 0.5 to 2.0, depending on the achievement of the targets established. Therefore, the number of units that will vest and are exchanged for Class A non-voting Common Shares may be higher or lower than the number of units originally granted to a participant.
The Company's PSU transactions during the year were as follows:
| 2025 | 2024 | |||
|---|---|---|---|---|
| Number of units | Grant date fair value per unit $ | Number of units | Grant date fair value per unit $ | |
| Balance – Beginning of year | 462,114 | 5.87 | 402,781 | 7.40 |
| Granted | 239,270 | 3.96 | 183,090 | 4.40 |
| Exercised | - | - | (46,555) | (9.31) |
| Forfeited | (211,001) | (7.06) | (77,202) | (8.30) |
| Balance – End of year | 490,383 | 4.42 | 462,114 | 5.87 |
| Exercisable | 188,383 | 4.78 | - | - |
(28)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Awards granted in September 2022 and the first tranche of awards granted in September 2024 vested March 31, 2025 and, based on the achievement of the performance conditions, 48,654 shares were forfeited and 188,383 shares will be delivered to participants.
c) RSU plan
The Company has established an RSU plan for employees and officers of the Company. RSUs represent the right to receive Class A non-voting Common Shares settled by the issuance of treasury shares or shares purchased on the open market. RSUs will vest ratably over the restriction period, as to one-third of the RSUs on each anniversary of the grant date, commencing on the first anniversary of the grant date.
The Company's RSU transactions during the year were as follows:
| 2025 | 2024 | |||
|---|---|---|---|---|
| Number of units | Grant date fair value per unit $ | Number of units | Grant date fair value per unit $ | |
| Balance – Beginning of year | 246,038 | 5.04 | 143,486 | 6.51 |
| Granted | 663,720 | 3.92 | 165,320 | 4.40 |
| Exercised | (96,111) | (5.50) | (48,921) | (6.77) |
| Forfeited | (26,003) | (5.06) | (13,847) | (6.52) |
| Balance – End of year | 787,644 | 4.04 | 246,038 | 5.04 |
d) DSU plan
The Company has established a DSU plan for employees, officers and directors of the Company. DSUs represent the right to receive Class A non-voting Common Shares settled by the issuance of treasury shares or shares purchased on the open market. DSUs vest immediately, but are only exercisable when the participant's employment with the Company ceases, or when the participant is no longer a director of the Company. DSUs may be offered to directors of the Company subsequent to the year in which fees are earned. As a result, the issuance of DSUs is reflected as an increase to contributed surplus in the year the offer is made, which may not correspond to when the expense is recognized.
(29)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
The Company's DSU transactions during the year were as follows:
| 2025 | 2024 | |||
|---|---|---|---|---|
| Number of units | Grant date fair value per unit $ | Number of units | Grant date fair value per unit $ | |
| Balance – Beginning of year | 29,559 | 12.82 | 71,529 | 12.03 |
| Issued | 45,700 | 3.96 | 45,800 | 4.13 |
| Exercised | (22,240) | (11.05) | (87,770) | (8.16) |
| Balance – End of year | 53,019 | 5.91 | 29,559 | 12.82 |
16 Nature of expenses
The nature of expenses included in selling and administration and cost of goods sold, excluding amortization, are as follows:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Raw materials and consumables | 187,878 | 189,381 |
| Employee compensation and benefits (note 23) | 90,244 | 93,333 |
| Advertising, promotion and distribution | 30,026 | 29,442 |
| Occupancy | 11,363 | 11,861 |
| Repairs and maintenance | 7,303 | 8,050 |
| Other external charges (note 23) | 23,855 | 27,869 |
| Government support programs (note 17) | (23,951) | (14,909) |
| 326,718 | 345,027 |
Other expenses, net are as follows:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Ongoing costs related to Port Moody winery facility, net of rental income (a) | (23) | (400) |
| Restructuring (b) | 2,701 | 805 |
| Winter Vine Damage (c) | 788 | - |
| Other | 14 | 725 |
| 3,480 | 1,130 |
a) During fiscal 2006, the Company closed its Port Moody winery facility and transferred production to its winery operations in Kelowna, British Columbia. The costs of maintaining this idle facility are recorded in other expenses, net and are offset by rental income earned.
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
b) Restructuring costs of $2,701 (2024 – $805) were recorded during the year ended March 31, 2025. These costs relate to severance and other restructuring costs of certain departments within the Company.
c) During the winter of 2024, British Columbia experienced an extreme weather event. The Company performed an assessment to identify the vines that were no longer viable. The carrying value of these vines, net of insurance proceeds receivable, was written of to other expenses, net.
17 Government programs
Wine Sector Support Program
In June 2022, Agriculture Canada announced the Wine Sector Support Program (WSSP) to provide non-repayable support to licensed Canadian wineries based on the production of bulk wine fermented in Canada from domestic and/or imported grapes.
During the year, the Company received $13,281 (2024 – $16,215) under this program, with the offset recorded as a reduction to the cost of inventory. In the Company's judgment, based on the provisions of the program, the support is intended to compensate for inventory production costs that the Company incurred to produce bulk wine, and will be recognized in the consolidated statements of earnings (loss) as a reduction in the cost of goods sold in the period the eligible wine is sold or is recognized as a reduction in the cost of inventory to the extent that the eligible wine is unsold and remains in inventory.
For the year ended March 31, 2025, $14,201 of the support has been recognized as a credit to cost of goods sold (2024 – $14,909) and $8,141 remains recorded as a reduction to the cost of inventory (2024 – $9,061) which will be released to cost of goods sold as the inventory is sold.
Ontario Grape Support Program
In May 2025, the government introduced the Ontario Grape Support Program (OGSP) to provide non-repayable support to eligible Ontario wineries for the production of Ontario non-VQA wine and International Domestic Blend wine. The intent of the program is to increase the percentage of Ontario grape content included in these products. Payments under the program are based on sales of these products to LCBO retail, grocery, convenience and on-site winery retails stores channels from the period of April 1, 2024 to March 31, 2025.
In the Company's judgement, as the intent of the program is to increase the percentage of Ontario grape content included in the production of Ontario non-VQA wine and International Domestic Blend wine, it is recognized in the consolidated statements of earnings (loss) as a reduction in the cost of goods sold in the period the eligible wine is sold. For the year ended March 31, 2025, $9,750 (2024 - $nil) has been recognized as a credit to cost of goods sold and is included in accounts receivable.
(31)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Vintners Quality Alliance (VQA) and other domestic support programs
Included within revenue is product revenue of $375,548 (2024 – $375,940) and other revenue associated with various provincial wine support programs of $14,059 (2024 – $9,916). The stated objectives of the programs are to provide support to help wineries invest in growing their VQA wine business and promote investment in growing the VQA and the domestic wine industry in Canada. Funds received under these programs are earned in the ordinary course of business and are estimated based on program documentation and the Company's determination of product eligibility. The amounts are subject to change as the programs are administered.
18 Net earnings (loss) per share
| 2025 | |||
|---|---|---|---|
| Class A $ | Class B $ | Total $ | |
| Net earnings attributed for the year – basic | 9,268 | 1,847 | 11,115 |
| Weighted average number of shares outstanding – basic | 35,269,238 | 8,081,454 | |
| Net earnings per share – basic | 0.26 | 0.23 | |
| 2025 | |||
| Class A $ | Class B $ | Total $ | |
| Net earnings attributed for the year – diluted | 9,343 | 1,772 | 11,115 |
| Weighted average number of shares outstanding – diluted | 37,043,826 | 8,081,454 | |
| Net earnings per share – diluted | 0.25 | 0.22 | |
| 2024 | |||
| Class A $ | Class B $ | Total $ | |
| Net loss attributed for the year – basic and diluted | (2,374) | (478) | (2,852) |
| Weighted average number of shares outstanding – basic and diluted | 35,137,593 | 8,144,183 | |
| Net loss per share – basic and diluted | (0.07) | (0.06) |
(32)
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
19 Contingent liabilities and unrecognized contractual commitments
The Company is subject to various claims by third parties arising out of the normal course and conduct of its business, including, but not limited to, labour and employment and regulatory and environmental claims. In addition, the Company is potentially subject to regular audits from federal and provincial tax authorities relating to income, commodity and capital taxes and as a result of these audits, may receive assessments and reassessments. Although such matters cannot be predicted with certainty, management currently considers the Company's exposure to such claims and litigation, to the extent not covered by the Company's insurance policies or otherwise provided for, not to be material to these consolidated financial statements.
20 Non-cash working capital items
The change in non-cash working capital items related to operations is comprised of the change in the following items:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Accounts receivable | (11,456) | (8,085) |
| Inventories and current portion of biological assets | 20,978 | 18,040 |
| Prepaid expenses and other assets | (1,631) | 843 |
| Accounts payable and accrued liabilities | 5,404 | (263) |
| 13,295 | 10,535 |
21 Financial instruments
Classification of financial instruments
The classification and measurement of the financial assets and liabilities, as well as their carrying amounts and fair values, are as follows:
| Assets/liabilities | Category | Measurement | 2025 | |
|---|---|---|---|---|
| Carrying amount $ | Fair value $ | |||
| Accounts receivable | Financial assets | Amortized cost | 46,774 | 46,774 |
| Bank indebtedness | Financial liabilities | Amortized cost | 2,132 | 2,132 |
| Accounts payable and accrued liabilities | Financial liabilities | Amortized cost | 53,435 | 53,435 |
| Dividends payable | Financial liabilities | Amortized cost | 2,602 | 2,602 |
| Long-term debt | Financial liabilities | Amortized cost | 180,294 | 180,294 |
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
| Assets/liabilities | Category | Measurement | Carrying amount $ | Fair value $ |
|---|---|---|---|---|
| Accounts receivable | Financial assets | Amortized cost | 33,382 | 33,382 |
| Bank indebtedness | Financial liabilities | Amortized cost | 199 | 199 |
| Accounts payable and accrued liabilities | Financial liabilities | Amortized cost | 48,306 | 48,306 |
| Dividends payable | Financial liabilities | Amortized cost | 2,603 | 2,603 |
| Long-term debt | Financial liabilities | Amortized cost | 208,294 | 208,294 |
The Company's interest rate swaps and foreign exchange contracts are derivatives and are recorded at fair value. As a result, unrealized gains and losses are included each period through earnings (loss), which reflect changes in fair value.
Fair value
The fair value of accounts receivable, accounts payable and accrued liabilities and dividends payable approximates their carrying value because of the short-term maturity of these instruments.
The fair value of bank indebtedness and long-term debt is equivalent to its carrying value because the variable interest rate is comparable to market rates. The fair value of the interest rate swaps used to fix the interest rate on long-term debt is included in the current and long-term derivative financial instruments in the consolidated balance sheets.
The fair value of foreign exchange forward contracts is determined based on the difference between the contract rate and the forward rate at the date of the valuation.
The fair value of the interest rate swaps is determined based on the difference between the fixed interest rate in the contract that will be paid by the Company and the forward curve of the floating interest rates that are expected to be paid by the counterparty. The fair values of foreign exchange forward contracts and the interest rate swaps are adjusted to reflect any changes in the Company's or the counterparty's credit risk.
Fair value estimates are made at a specific point in time, using available information about the instrument. These estimates are subjective in nature and often cannot be determined with precision.
The net unrealized loss on derivative financial instruments is comprised of:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Unrealized loss on interest rate swaps | 1,805 | 739 |
| Unrealized loss (gain) on foreign exchange forward contracts | 35 | (98) |
| 1,840 | 641 |
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Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
The fair value measurements of the Company's financial instruments are classified in the hierarchy below according to the significance of the inputs used in making the fair value measurements.
| 2025 | |||
|---|---|---|---|
| Asset/liability | Quoted prices in active markets for identical assets (Level 1) $ | Significant observable inputs other than quoted prices (Level 2) $ | Significant unobservable inputs (Level 3) $ |
| Interest rate swap liability | - | (2,544) | - |
| Foreign exchange forward contracts asset | - | 63 | - |
| 2024 | |||
| Asset/liability | Quoted prices in active markets for identical assets (Level 1) $ | Significant observable inputs other than quoted prices (Level 2) $ | Significant unobservable inputs (Level 3) $ |
| Interest rate swap liability | - | (739) | - |
| Foreign exchange forward contracts asset | - | 98 | - |
Objectives and policy relating to financial risk management
Interest rate risk
The Company is exposed to interest rate risk as a result of cash balances and floating rate debt. Of these risks, the Company's principal exposure is that increases in the floating interest rates on its debt, if unmitigated, could lead to decreases in cash flow and earnings. The Company's objective in managing interest rate risk is to achieve a balance between minimizing borrowing costs over the long-term, ensuring it meets borrowing covenants, and ensuring it meets other expectations and requirements of investors. To meet these objectives, the Company's policy is to effectively fix the rates on long-term debt to match the duration of investments in long-lived assets and to use floating rate funding for short-term borrowing.
The Company has effectively fixed its interest rate on $65,000 of its long-term debt until June 13, 2027 by entering into interest rate swaps. The interest rate swaps are measured at fair value. For the year ended March 31, 2025, the Company recorded a net unrealized non-cash loss of $1,805 (2024 - $739) related to mark-to-market adjustments on interest rate swaps, which are classified as a component of the net unrealized loss on derivative financial instruments in the consolidated statements of earnings (loss).
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Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
The remaining portion of the Company's borrowings are funded using a floating interest rate and as such, are sensitive to interest rate movements. As at March 31, 2025, with other variables unchanged, a 100 basis point change in interest rates would impact the Company's net earnings (loss) by approximately $869 (2024 - $1,062), exclusive of the mark-to-market adjustments on the interest rate swaps.
Credit risk
Credit risk arises from cash, derivative financial instruments and accounts receivable. The Company places its cash and cash equivalents with major Canadian financial institutions. Counterparties to derivative contracts are also major financial institutions.
Credit risk for trade receivables is monitored through established credit monitoring activities. Over 27% of the Company's accounts receivable balance relates to amounts owing from Canadian provincial liquor boards. Excluding accounts receivable from Canadian provincial liquor boards, the Company does not have a significant concentration of credit risk with any single counterparty or group of counterparties. Amounts owing from Canadian provincial liquor boards represent $13,068 (2024 - $14,311) of the total accounts receivable against which an expected credit loss of $154 (2024 - $46) has been provided. Of the remaining non-provincial liquor board balances, $1,077 (2024 - $1,924) was over thirty days past due as at March 31, 2025. An expected credit loss of $298 (2024 - $222) has been provided against these accounts receivable amounts, which the Company has determined represents a reasonable estimate of the lifetime expected credit losses for trade receivables.
Sales to its largest customer, a provincial Crown corporation, were $80,065 (2024 - $74,185) during the year ended March 31, 2025. No other customers accounted for over 10% of sales during the years ended March 31, 2025 and 2024.
An analysis of accounts receivable is as follows:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Liquor boards | 13,068 | 14,311 |
| Non-liquor boards | ||
| Current | 31,785 | 15,698 |
| Past due 0 – 30 days | 1,296 | 1,717 |
| Past due 31 – 60 days | 404 | 468 |
| Past due > 60 days | 673 | 1,456 |
| Expected credit loss | (452) | (268) |
| 46,774 | 33,382 |
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
The change in the expected credit loss was as follows:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Balance – Beginning of year | 268 | 229 |
| Provision for expected credit losses | 194 | 97 |
| Write offs | (10) | (58) |
| Balance – End of year | 452 | 268 |
Liquidity risk
The Company incurs obligations to deliver cash or other financial assets on future dates. Liquidity risk inherently arises from these obligations, which include requirements to repay debt, purchase grape inventory and make lease payments.
The Company manages liquidity risk by maintaining adequate cash and cash equivalent balances and by appropriately utilizing its operating line of credit. Company management continuously monitors and reviews both actual and forecasted cash flows and matches the maturity profile of financial assets and financial liabilities. Accounts payable and accrued liabilities are generally due within 30 days.
The following table outlines the Company's contractual undiscounted obligations. The Company analyzes contractual obligations for financial liabilities in conjunction with other commitments in managing liquidity risk. Contractual obligations include long-term debt, leases and service agreements as at March 31, 2025.
| < 1 year $ | 2 – 3 years $ | 4 – 5 years $ | > 5 years $ | Total $ | |
|---|---|---|---|---|---|
| Long-term debt | - | 180,294 | - | - | 180,294 |
| Leases | 7,896 | 9,506 | 3,457 | 5,349 | 26,208 |
| Service and royalty agreements | 6,175 | 1,723 | 1,100 | 10,450 | 19,448 |
| Pension | 140 | 105 | - | - | 245 |
| Grape and bulk wine purchase contracts | 59,013 | 36,321 | 11,289 | 14,021 | 120,644 |
| 73,224 | 227,949 | 15,846 | 29,820 | 346,839 | |
| Interest rate swap | 2,896 | 3,618 | - | - | 6,514 |
| Foreign exchange forwards | 15,209 | - | - | - | 15,209 |
| Total contractual obligations | 91,329 | 231,567 | 15,846 | 29,820 | 368,562 |
The Company's obligations under its interest rate swaps and foreign exchange forward contracts are stated above on a gross basis rather than net of the corresponding contractual benefits.
Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
The Company has entered into grape purchase contracts with certain suppliers to purchase their crops at the time of harvest for prices set by the market. The amount of the commitment will change based on the total tonnes harvested or the prices set by the market for specific grapes, and the amount included in the table above represents management's best estimate of the Company's commitment over the periods noted.
As of March 31, 2025, the Company has not experienced a direct or material financial impact due to tariffs. Management continues to assess the exposure as part of its risk management practices and will recognize and disclose any material developments in future periods as applicable.
- Foreign exchange risk
Certain of the Company's purchases are denominated in US dollars (US$), euro (EUR) or Australian dollars (AU$). Any increases or decreases to the foreign exchange rates could increase or decrease the Company's earnings. To mitigate the exposure to foreign exchange risk, the Company will enter into forward foreign currency contracts.
The Company's foreign exchange risk arises on the purchase of bulk wine and concentrate, which are priced in US dollars, euro and Australian dollars. As at March 31, 2025, the Company has forward foreign currency contracts to buy US$9,250 at rates averaging $1.43 and AU$2,200 at rates averaging $0.90. A 1% increase or decrease to the exchange rate of the US dollar, the euro or the Australian dollar would impact the Company's net earnings (loss) by approximately $306 (2024 - $357), $29 (2024 - $37) or $72 (2024 - $58), respectively. The Company has elected to not use hedge accounting and as a result, has recognized unrealized foreign exchange losses of $35 (2024 - unrealized foreign exchange gains of $98) in the consolidated statements of earnings (loss) as a component of the net unrealized loss on derivative financial instruments and has recorded the fair value of $63 (2024 - $98) in the current portion of derivative financial instruments in the consolidated balance sheets.
22 Capital disclosures
The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern, to provide an adequate return to shareholders and to meet external capital requirements on debt and credit facilities.
The Company's capital consists of cash, bank indebtedness, long-term debt and shareholders' equity. The primary uses of capital are to fund working capital, maintenance and growth-related capital expenditures, pay dividends and finance acquisitions. In order to meet the Company's objectives in managing capital, the Company prepares annual budgets of cash, earnings and capital expenditures that are updated during the year as necessary. The annual budget is approved by the Board of Directors.
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Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
As part of the debt agreement, the Company is subject to financial covenants, which consist of the following:
- Excess availability must exceed 12.5% of the lesser of the facility size or the borrowing limit, which is calculated based on certain percentages of the fair value of accounts receivable, inventory and real property; and
- At any time that the excess availability is below 12.5%, the Company must maintain a minimum fixed charge coverage ratio.
Compliance with these covenants is monitored by management on a quarterly basis.
23 Related parties and management compensation
Compensation of directors and executives
The compensation expense recorded for directors and members of the Executive Leadership Team of the Company is shown below:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Compensation and short-term benefits | 5,626 | 4,172 |
| Termination and retirement benefits | 549 | 4,480 |
| Post-employment benefits | 251 | 263 |
| Share-based compensation expense | 1,944 | 390 |
| 8,370 | 9,305 |
During fiscal 2024, the Company entered into agreements with its controlling shareholder, and others to formalize the retirement and transition of the former President and CEO. The Company also entered into a transition agreement with Peller Family Enterprises Inc. and the Peller family, which included provisions relating to the composition of the Board of Directors for a 24-month period.
The transition agreement also required 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 Peller Family Enterprises Inc., which owns 49.2% (2024 – 48.6%) and John E. Peller, who beneficially owns 24.8% (2024 – 24.5%) of the Company's Class B voting Common Shares. No individual has sole voting power or control in respect of the shares of the Company owned by Peller Family Enterprises Inc.
During the fiscal year ended March 31, 2024, the Company paid $3,000 in legal and advisory fees incurred by certain shareholders in connection with these agreements, which were recorded within other external charges as part of selling and administration expense in the consolidated statements of earning (loss).
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Andrew Peller Limited
Notes to the Consolidated Financial Statements
March 31, 2025 and 2024
(in thousands of Canadian dollars, except per share amounts)
Per the agreements entered into in the prior year, the Company agreed to pay $4,480 in a retirement allowance and $2,000 in consulting services to the former President and CEO, which were recorded in the consolidated statements of loss for the year ended March 31, 2024. These payments began in the current fiscal year once the successor was appointed on July 9, 2024 and were to be fully settled within a 24-month period. As of March 31, 2025, the entirety of the retiring allowance was paid and $1,000 of consulting fees is recorded in accounts payable and accrued liabilities as at March 31, 2025. In the current year, the Company recorded $480 of consulting fees as part of selling and administration in the consolidated statement of earnings (loss) related to services provided by the former President and CEO during the transition period.
The remaining compensation and short-term benefits expense consist of amounts that will primarily be settled within twelve months.
24 Entity wide disclosures
During the year, export sales were $10,727 (2024 – $12,148), primarily in the United States. The remainder of sales occurred in Canada. All of the Company's assets are located in Canada.
25 Events after the reporting period
On June 11, 2025, the Company's 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 11, 2025.
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