Hello, and welcome to the Annual Meeting of Shareholders of Andrew Peller Limited. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, it will be deemed to consent to the recording, transfer, and use of same. During the meeting, we'll have a question and answer session. You can submit questions or comments at any time by clicking on the Q&A icon. It is now my pleasure to turn today's meeting over to John Peller, Chairman of Andrew Peller Limited. Mr. Peller, the floor is yours.
Thank you very much and good afternoon, everyone. I'd like to call this meeting to order and welcome you to the annual shareholders' meeting of Andrew Peller Limited. I wanna thank you for joining us virtually. Approximately 64% of our employees from Vancouver, BC, to Truro, Nova Scotia, are shareholders through our company assisted employee share purchase program. I've been a director since 1989, and I'll be standing for re-election as a director. With me today is Paul Dubkowski, our Chief Financial Officer and EVP of Information Technology, who will be joining me in providing you a review of company's financial performance over the past fiscal year, and he'll be assisting with the formal agenda of our meeting as well.
Paul joined APL on July eleventh and brings 20 years of finance, accounting, and IT experience leading organizations in hospitality and retail. Most recently, he has spent the last two years as a Senior Vice President at Indigo. We're happy to have him as part of our executive management team. I'd like to take the opportunity to thank Steve Attridge for his leadership over the past four years. He was instrumental in leading our ERP implementation, and he'll continue to lead APL's systems and process transformation. For the purposes of the meeting today, voting on all matters will be conducted by electronic ballot. To allow for sufficient time for voting, the voting polls are now open. I remind you that only registered shareholders and duly appointed proxy holders who have properly logged in with their control number or username will be able to vote.
We remind you that if you are a registered shareholder and you have already voted by proxy, you do not need to vote again. To vote, simply click on your choice for, against, or withhold as applicable. A confirmation message will appear to show you your vote once it's been received, and you can change your vote before the polls close. Simply change your selection. The votes you have submitted on each polling item at the time the polls close will be recorded and tallied by the scrutineers. Final voting results will be published in due course. Questions in respect of a motion during the formal portion of the meeting can be submitted by any registered shareholder or duly appointed proxy holder with a valid login using the instant messaging feature of the virtual interface.
Registered shareholders, duly appointed proxy holders, and guests are also able to submit questions during the meeting. Please indicate your name and confirm if you're a registered shareholder or a duly appointed proxy holder when asking a question. Due to timing, if we're not able to answer your question during the meeting, a representative of the company will be happy to reach out to you following the meeting with a response. I would now like to introduce those who will be nominated for directors for this current year. First is Shauneen Bruder of Oakville, Ontario. Shauneen previously served as an Executive Vice-President, Operations at the Royal Bank of Canada and is President of the Canadian Chamber of Commerce. She's been a director since 2018, and she will serve as the Chairperson of the Governance and HR Committee. Perry Miele of Burlington, Ontario.
Perry is a Chairman and Partner of Beringer Capital. He became a Director in 2010, and he will be serving as our independent lead chair. David Mongeau of Monte Carlo, Monaco. David is the Founder and Chair of the Abington Group and is standing for election to our board of directors for the first time. Dr. A. Angus Peller of Toronto, Ontario. Gus is a Senior Medical Consultant to RBC Insurance and has been a director at Andrew Peller Limited since 1991. Mr. Peller will serve as Vice Chair of the Board of Directors. François Vimard of Mississauga, Ontario. François is a CPA who has served Empire Company Limited, known more to you as Sobeys, in various capacities, including Interim President, Chief Executive Officer, as well as Chief Financial and Administrative Officer.
François has been a director since 2018, and he will serve as the chair of our Audit, Finance, and Risk Committee. I would now like to introduce our Senior Executive Management team. In addition to myself, as I mentioned, Steve Attridge will be the EVP of IT. Paul Dubkowski is CFO, Executive Vice President of Finance and Information Technology. Patrick O'Brien is the Chief Commercial Officer. Jim Cole is EVP, Business to Consumer, which is our winery retail system and the estate winery group. Sara Presutto is an Executive Vice President of People and Culture. Brendan Wall remains Executive Vice President, Operations. Stephen Barker is our Vice President, Integrated Supply Chain. Greg Berti is our Vice President, Global Markets, Industry Relations, and Business Development. Ramit Bordia is our Vice President, Integrated Customer Solutions.
Gavin Hawthorne is our Vice President, Sales & Marketing at our consumer wine division, GVI. Craig McDonald is our Vice President of Winemaking. Mark Torrance is our VP of Estate Wine Group Operations, and José Salgado is our Vice President, VQA and Direct to Consumer Division, as well as our legal counsel. With that, I would now like to call this meeting to order and continue with the formal agenda. The first item is the appointment of Secretary and Scrutineers. I'll serve as chairman of the meeting, and Paul Dubkowski will serve as secretary. With your approval, I appoint Computershare Investor Services as scrutineers. Notice of the meeting. Copies of this notice of this meeting have been distributed to shareholders in accordance with applicable law and prescribed procedures.
The secretary has placed before the meeting copies of the notice of meeting, management proxy circular, and the form of proxy for this meeting, certifying that these documents were delivered to the shareholders. I received an interim report from the scrutineers at this meeting that there are 20 shareholders present or represented by proxy. In total, there are 65.2% of the outstanding Class B shares represented by proxy and in person. I've been advised that there's quorum present, and since required notice of the meeting has been given, I declare the meeting to be regularly called and properly constituted for the transaction of business. In view of the necessity of attending the various formal corporate matters at this meeting, as set forth on the agenda, the secretary has requested certain shareholders and proxy holders to propose and second various motions.
While this procedure will assist and speed up the handling of the formal matters, it should not discourage anyone from speaking in reference to any resolution after it has been proposed and seconded. I will now ask for a motion regarding approval of the minutes of the last meeting.
Be it resolved that the minutes of the annual shareholders meeting of September 8, 2021 be taken as read and confirmed.
Thank you, Paul. Do I have a seconder?
I second the motion.
Thank you, Richard. The next item is the election of directors to the board of directors for the ensuing year. In accordance with the company's articles, the number of directors to be elected at this meeting is fixed at six directors, and the following individuals have been nominated for election as directors to hold until the next annual meeting of shareholders or until their successors are elected. I now declare the meeting open to the nomination of directors.
Mr. Chairman, I nominate each of the following individuals as directors of the company. John E. Peller, Dr. A. Gus Peller, Shauneen Bruder, Perry Miele, David Mongeau, and François Vimard.
Since no further nominations were received by the company, I declare the nominations closed. Based on the preliminary results provided by the scrutineer, all nominees have received more votes for than against. As a result, I declare the individuals nominated to be duly elected directors of the company to hold office until the next annual election of directors or until their successors are duly elected or appointed. The next item of the business is the appointment of auditors for the ensuing year.
I move that PricewaterhouseCoopers LLP Chartered Professional Accountants be appointed auditors of the corporation to hold office until the next annual meeting or until their successors are duly appointed, and the board of directors be authorized to fix the remuneration of the auditors.
Do I have a seconder?
I second the motion, John.
Thank you, Richard. Based on the preliminary results provided by scrutineer, I declare that PricewaterhouseCoopers LLP are reappointed as auditors of the corporation until the next annual meeting of shareholders or until a successor is appointed. Now, turning to the financial statements and auditor's report, it's the last item of business. The secretary has placed a copy of the annual report before the meeting. Copies were made available to all shareholders. At this point, the polls are all closed. This concludes the formal portion of the agenda, and I move that we now close this meeting. Do I have a seconder?
I second the motion, John.
Thank you, Richard. I declare this formal part of our meeting closed.
We would now like to share an update on the past year's activities and provide an outlook for our future. Of course, the first slide you'll see is the legal disclaimer, reminding everyone that we make statements that contain forward-looking information, and we direct you to our securities filings for information about these assumptions, risks, and uncertainties. It's clear to all of us on a very positive note that although there are many external factors that are continuing to impact our industry, a light is emerging at the end of the tunnel. We have been dealing with a significant impact of an inflationary environment and a destabilized global supply chain. However, I really believe that management has handled all of these challenges very well. We've seen COVID as well change consumers' purchasing habits.
While there are, you know, some significant changes that will remain, the growth of e-commerce being one and a lot more at home entertaining than hospitality, restaurants are starting to return to their normal sales levels. On a very positive note, our estate wineries have been extremely busy over this last summer and exceeding previous record levels. Both foot traffic and reserve tastings and corporate and group hospitality is now doing very, very well. We're seeing the return of international and domestic travel. You know, airports are slowly getting up to the 50%-60% of capacity that they were pre-COVID. We are dealing with lots of disruptions and labor shortages, but on the whole, they're managing well. As the slide suggests, there is a light at the end of the tunnel.
Looking at the overall inflationary environment, you'll see that, you know, with the most recent acknowledgement of the CPI going up almost 8.1%, we haven't seen that rate of inflation since January 1983. For our company, our cost inflation is in fact around 30%, and it's been largely driven by three buckets. Transportation costs and fuel surcharges, significant increases in our packaging materials and wine costs, and significant disruption of deliveries, leading to significant out of stocks and, you know, relative challenge to managing our supply chain. We expect these pressures to remain for the rest of this year and continue into next year.
Already we're seeing things beginning to moderate, but we don't have a crystal ball as to how this exactly will play out other than we're confident that we'll return at some point, you know, to a more normal cost environment. You know, looking at the impact of COVID on both our revenue and earnings, I've consistently used the analogy of the three periods of a hockey game. You know, in the first period we actually had a revenue boost despite the fact we had significant business closures. In the first year of COVID, we posted record revenue and earnings.
In the second year of COVID, well, kind of consumer behaviors returned to more normal shopping patterns, we had significant extended closures of our estate wineries and restaurants, and it led to the, you know, about a 5% decline overall in our revenues and about a 25% to 30% reduction in our earnings. As, you know, cost inflation had already started to creep into our supply chain. Now in this third and final period, we're seeing the recovery and return to normal levels of our revenue this year. While the revenue is recovering, it's gonna take a while before our costs and margins are restored to their normal level. We have every confidence that we're going to see a return to pre-pandemic levels.
You know, as a result of the inflation and supply chain disruptions, we remain laser focused on our cost containment, our pricing strategies, and our cash flows. We've reduced our CapEx and cut back on some of our G&A, and we've launched several initiatives targeted at generating indirect savings. In addition to these short-term initiatives, we have significant long-term strategic projects that are focused on optimizing our packaging and glass consolidations. We're looking at a strategy to optimize our warehouse going forward in our outbound freight. We've implemented a significant new liquid management system to enable greater efficiency from a production standpoint and inventory management. With that, I'm happy to turn it over to Paul to talk about the financial results.
Thanks, John, and good afternoon, everyone. I am happy to provide an update on results for full year fiscal 2022 and Q1, fiscal year 2023. With respect to fiscal 2022, it was a challenging year with significant business and market obstacles. During the calendar months of April 2021 to March 2022, which represented the fiscal period, we were faced with headwinds with two overarching themes. The first of which was the ongoing evolution of COVID-19 and its impact on our top line business with closures, restrictions, and changing consumer patterns. Secondly, as the fiscal year progressed, there was a ramp up of inflationary pressures and supply chain challenges which hindered margins and overall profitability. While the day-to-day impact of COVID has stabilized, inflation and supply chain pressures remain and require continued focus and management as we move forward.
Moving to our key financial metrics, net revenue finished the year at CAD 373.9 million, a decline from the prior year of 4.9% or CAD 19.1 million. Our top line was influenced significantly by the evolution of COVID and the supply chain pressures. In particular, we experienced softer consumption year-over-year in some channels that benefited from consumer purchasing patterns at the onset of the pandemic in early fiscal year 2021. In addition, early in the year, government restrictions and closures negatively impacted trade channels such as restaurants, hospitality, and travel.
As we transitioned into Q2 and beyond, government restrictions had begun to be lifted, and that allowed us to realize partial recovery in channels such as estates, on-premise, and export, as there was a pent-up demand for travel and gatherings at this point. As we progressed to the end of the fiscal year, the business continued to recover as we finished Q4 with only a slight decline of 0.4% versus FY 2021. Gross margins finished the year at 37.2%, down 260 basis points versus FY 2021. The main drivers included a shift in sales mix between and within trade channels, which had different margin profiles. In the second half of the fiscal period, margins were impacted by higher inbound and outbound freight costs and inflationary pressures across the supply chain, including import wine and other key components.
While we have actively managed the impact and have seen the impact moderate, we are still facing these pressures today. With respect to EBITDA for the fiscal period, it landed at CAD 39.2 million, compared to CAD 63.0 million in the prior year, driven by lower sales, higher cost of sales due to the aforementioned inflationary and supply chain pressures, and higher selling and administration expenses as the business returned to normal operations. Net earnings for fiscal 2022 were CAD 12.5 million, compared to CAD 27.8 million in the prior year, with this decrease being driven by lower EBITDA, partially offset by the CAD 7.5 million gain on the sale of Port Coquitlam, BC property and related assets.
Moving to the next slide, in FY 2023 Q1 results, we've seen a continued recovery of the business despite the ongoing challenges presented by the inflationary environment and supply chain pressures. Building off our fiscal 2022 Q4 sales momentum, our net revenues for the first three months of fiscal 2023 delivered CAD 97.7 million, up 5.7% versus the prior year. Sales have increased in the majority of our well-established trade channels, with solid growth generated in markets closed for part of the prior year's first quarter due to pandemic restrictions. We were also able to implement price increases in all markets to partially offset inflationary pressures, which further supported our Q1 results. Gross margins for Q1 finished at 39%, down from 40.3% or down 130 basis points from the prior year.
We are operating in a highly inflationary environment where raw materials such as imported wine, glass bottles, and other packaging have increased substantially. International freight and fuel and shipping charges have moderated but also remain high. In response to these margin pressures, we have taken price increases, as mentioned previously, while also executing production efficiency and cost-saving programs, as John mentioned, to help manage the current cost environment. EBITDA of CAD 12 million was delivered for the quarter, compared to CAD 11.9 million a year ago, as our revenue recovered and was offset by higher costs in this environment. Lastly, net earnings landed at CAD 2.9 million compared to CAD 3.3 million in the prior year. The small decrease versus the prior year was mainly driven by higher interest expenses due to higher interest rates and debt levels.
Thank you, and I'll now pass it back to John.
Thank you, Paul. Now we'll have a quick look at our five-year strategic plans and why we think our future is indeed gonna be very bright. We start with a perspective on some of the key enablers, you know, the strengths that support our business model that will help us achieve our organizational goals. We'll look at our sales and marketing leadership and our diversified asset portfolio, our supply chain and enterprise technology capabilities. Also note that we are doubling down on our commitment to environmental, social, and governance initiatives to ensure we follow industry and global best practices. We spend a lot of time presenting and talking to shareholders about our sales and marketing leadership.
You know, we have an outstanding family of brands across multiple categories, and we are positioned to play and win in every space. As you know, we have long held a great position in value and premium wine. We've invested heavily in ultra-premium and estate products. Our consumer-made wine kit division continues to be an industry leader. Now we've added an addition to that, a growing spirits portfolio and various refreshment and cider products that are all doing very, very well. With all these great brands, many of which we've nurtured over the last 25, 30, and 40 years, we have a trade and retail network that we service that's totally comprehensive. You know, our own retail stores. We have a significantly growing e-commerce and wine club platform.
We call on an expansive network of restaurants, and we have a major presence in provincial liquor stores and grocery stores as well, and we have a significant export and duty-free travel industry. On our balance sheet, you know, we have very high-value protected and productive assets. You know, we have more than 1,100 acres of owned and leased property in the Niagara Peninsula, in the Okanagan Valley. You know, we have four estate wineries in Ontario, five estate wineries in British Columbia, and we've recently purchased the Riverbend Inn.
We have a very significant network of production assets in Kelowna, Grimsby, and Truro, which we've invested somewhat close to CAD 25 million a year over the last five years in our facilities and our equipment. Overall, it is a very formidable asset base, and it's a real strength of our company. We've highlighted many times that we're digitally transforming every aspect of our business and investing in our people so that our knowledge and capability will provide us advantages as we go forward. Most recently, we've updated and invested in a new Oracle ERP, our liquid management system. We have a demand supply operations new system going in, and we invest heavily in Salesforce marketing and service cloud. Certainly we've focused on our commitment to ESG, you know, environmental initiatives, social initiatives, and our overall governance practices.
You know, all of our Ontario wineries are now sustainably wine making, Ontario certified, and all our wines from our 2022 vintage will be certified as sustainably produced. We're in the process of completing those same accreditations for the Okanagan wineries as well. Importantly, we have invested heavily in our communications with our employees and our team members, and our approach to a flexible workplace that's meeting our individual employees' needs and the needs of their families. We've spent a lot of time focused on mental health and paramedical benefits throughout this last two years in our own employee assistance program. We have a new wellbeing day off for all employees that they can use however they see fit. Certainly, you know, we are strong believers in being leaders in our communities.
We invest in all the communities we work and live in across Canada, in the arts, in health, charities. We were an official sponsor this year of the Canadian Paralympic Team, and we give employees time off to support their efforts to get engaged in the communities in which they live. You can see in our final slide the factors that we believe will drive growth for us going forward. You know, our fundamental investment in ultra premium and estate brands. Our growth in premium brands included. This is a new Italian product that we are now bottling here in Canada and selling in Western Canada. It just got launched. We'll continue to grow in new segments. You can see in the middle, we've just launched our Gretzky 99 vodka. It's selling extremely well out of our estate so far.
The other products in the Tetra Pak is Weekender. It's an RTD, and it's available in Tetra Pak in four-liter boxes. It's off to a very, very good start. We're gonna invest in our, certainly our broad retail network and estates, and we'll continue to evaluate mergers and acquisitions as we go forward. At this moment, I'm just gonna pause to see if there are any questions to be answered. Don and Paul, there are currently no questions on the line. Thank you very much. I'd like to thank all the employees and shareholders for their unwavering support over the last few years as we've dealt with the significant challenges that COVID has presented us. I wanna thank our management team for the great leadership they're providing our company.
I wanna thank you today, all of you, for joining us. You know, we have quarterly conference calls to stay in constant communication with everybody, and many shareholders take the opportunity to call us at any time they have a question. Both Paul and I are happy to speak with anybody anytime they have a question. With that, thanks again for attending, and I now declare this meeting is terminated.