PEI Liquor Control Commission 2018 Annual Report

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PEI Liquor Control Commission

70 TH ANNUAL REPORT

For the Year Ended March 31 ST , 2018

Customers Served 2,659,841 Training Per FTE 17 Hours WSET Trained Employees 123

We provided a dividend of $41.39 million to the Province of PEI, a year over year increase of over $1.45 million.

In 2017-2018 PEI Liquor retail store staff checked 246,110 people suspected of being underage, intoxicated, or with no ID.

PEI products are on display & promoted in all PEI Liquor retail stores, on liquorpei.com , and on PEI Liquor social media platforms. Net sales of Island products were $3,956,030 - an increase of 19.67% .

P.E.I. Liquor Control Commission 3 Garfield Street, P.O. Box 967 Charlottetown, PE C1A 7M4

Corporate Vision The Prince Edward Island Liquor Control Commission will be recognized as a truly superior retailer in Prince Edward Island. We will achieve this through quality products, modern technology and increased services. We will be the provincial leader in relationships with our partners, customers and suppliers. We will always strive for the best possible value for our customers, staff and other stakeholders. Mission Statement The PEI Liquor Control Commission regulates the sale of beverage alcohol under the authority of the PEI Liquor Control Act. It manages the distribution of alcohol by: • operating in a socially responsible manner; • achieving the revenue goals of the Provincial Government; • providing suppliers with controlled access to the marketplace on a fair basis from modern, attractive venues; • encouraging responsibility and moderation in the consumption of beverage alcohol; and • providing its employees with equality of opportunity and increased training programs that assist in the individual’s personal development and in the commission’s overall customer service strategy.

Corporate Values • Moderation – We promote responsible use as a way of life.

• Quality Service – We take pride in the quality of our work. We strive for excellence in caring for our customers, suppliers and one another.

• Continuous Improvement – As a retailer, we welcome change. We are committed to continuous improvement to all of our services.

• Integrity and Fairness – We take responsibility and are fully accountable for our actions, decisions and behaviour. We meet our commitments and obligations to co-workers, customers and business partners. We are open, honest and fair. • Importance of People – We are committed to fostering a positive workplace that builds teamwork, mutual respect and encourages individual development.

• Focus on Results – We are committed to getting the job done and improving our productivity levels.

PEILCC 2017-2018 Annual Report

Table of Contents

Message from the Minister

Message from the Chairman

Message from the CEO

Corporate Governance

Mandate of Commission Board

Accountability to Government and Public

Appointment of Members of the Commission

Responsibilities of Commission Members

Audit Committee

Organizational Chart

Executive Summary

Sommaire

Operational Review

2017-2018 Year in Review

Financial Performance

Customer Service

Financial Results

Corporate Social Responsibility

Successful Partnerships

People & Culture

Challenges and Opportunities Ahead

Retail Liquor Outlets

Statistics

Retail Gross Receipts by Store

Summary of Profit and Expense Ratios – Two-Year Comparison

Our Spending... All Profits Stay Here

Sales Volumes (litres) by Category 29 Total Licenses and Special Permits – March 31, 2017 and March 31, 2018 30

Management’s Report

Appendix

Auditor’s Report and Audited Financial Statements

PEILCC 2017-2018 Annual Report

Message from the Minister

The Honourable Antoinette Perry Lieutenant Governor of Prince Edward Island PO Box 2000 Charlottetown, PE C1A 7N8

May It Please Your Honour:

Pursuant to the PEI Liquor Control Act and as Minister designate, it is my privilege to submit the 70 TH Annual Report of the Prince Edward Island Liquor Control Commission.

Respectfully submitted,

Heath MacDonald, Minister Department of Finance Minister Responsible for the PEI Liquor Control Commission

Message from the Chairman

The Honourable Heath MacDonald Minister of Finance Minister Responsible for the PEI Liquor Control Commission PO Box 2000 Charlottetown, PE C1A 7N8

Sir:

In compliance with Section 87(3) of the PEI Liquor Control Act, it is my honour to submit this 70 TH Annual Report of the Prince Edward Island Liquor Control Commission covering the fiscal year April 1, 2017 to March 31, 2018.

Respectfully submitted,

Quentin Bevan, Chairman

PEILCC 2017-2018 Annual Report

Message from the CEO

Mr. Quentin Bevan, Chairman PEI Liquor Control Commission PO Box 967 Charlottetown, PE C1A 7M4

Dear Mr. Bevan:

I am pleased to report that the PEI Liquor Control Commission (PEILCC) has surpassed its previous year’s transfer to government for the 22 ND consecutive year. The PEILCC had returns to the Government of Prince Edward Island of over $41.39 million for the fiscal year ending March 31, 2018. Gross receipts increased by more than $6 million to over $114 million, making this past fiscal year a very successful one for the PEILCC. The PEILCC wishes to recognize the foresight, dedication, and determination of both our staff and Board of Commissioners for contributing to this success. I want to thank all PEILCC employees for their valuable contributions and hard work this year. Thank you also to the ongoing commitment and leadership of the Executive Management team and to the continued support of the PEILCC Board.

We have a great team at the PEILCC and we look forward to working together in the year ahead.

Yours truly,

Andrew MacMillan Chief Executive Officer

PEILCC 2017-2018 Annual Report

Corporate Governance Corporate governance describes the process and structure for overseeing the direction and management of a crown corporation so that it effectively fulfills its mandate. This involves both its public policy and commercial objectives. It defines who is responsible for what, and how to ensure accomplishment and accountability.

Liquor Control Commission Board

Standing: James Gormley, Legal Council, John Bell, Member, Lisa MacKinnon, Secretary, Robert Lord, Member, Bill MacLellan, Member, Seated: Pauline Wood, Vice Chair, Quentin Bevan, Chairman, Andrew MacMillan, Chief Executive Officer

PEILCC 2017-2018 Annual Report

Mandate of Commission Board

The mandate of the board is to supervise the business affairs of the commission. Its most important responsibilities are:

• ensuring that the PEILCC provides high-quality service to the public; • developing and approving the strategic plan and monitoring management’s success in meeting the strategic plan; • approving annual financial plans; • assessing and managing business risks and; • ensuring that the PEILCC performs its regulatory role in a fair and impartial manner. Accountability to Government and Public • the Annual Report, tabled in the Provincial Legislature and available for all Islanders to review, either in print or online at www.liquorpei.com; • annual audits of the PEILCC’s financial statements by the Auditor General; • public access to records under the Freedom of Information and Protection of Privacy Act; • publicly appointed commission members. Appointment of Members of the Commission The Lieutenant Governor in Council, through an order-in-council, appoints the members of the commission, establishes the honourariums and designates the chair and vice-chair. Responsibilities of Commission Members • acting honestly and in good faith in making decisions with a view to the best interests of the PEILCC and all its stakeholders; • overseeing the management of the business affairs of the PEILCC; • avoiding conflicts of interest; • having adequate knowledge of the PEILCC’s business, how it is organized and how it functions; • attending commission meetings and seeking professional advice where necessary; • providing guidance on policy development; • reviewing appeals of listing applications, review, evaluate, and approve strategic plans. Audit Committee The Audit Committee is elected annually and consists of three commission members in addition to the chairman and the CEO as ex-officio. The committee ensures the reliability and accuracy of the PEILCC’s financial statements, helps co-ordinate and improve internal control functions, and ensures the PEILCC adheres to sound corporate governance principles. The PEILCC is held accountable by the Government and people of PEI in a number of ways, including: Each commission member has individual responsibility for corporate governance including:

PEILCC 2017-2018 Annual Report

Organizational Chart

Hon. Heath MacDonald

Minister Responsible

Quentin Bevan

Chair

Bill MacLellan

Pauline Wood

Member

Vice Chair

Robert Lord

John Bell

Member

Andrew MacMillan

Lisa MacKinnon

Administrative Assistant

Chief Executive Officer

James C. MacLeod

Carl Adams

Director, Corporate Services

Chief Financial Officer

Shawn Alexander

David Stewart

Human Resources Manager (Acting)

Director, Purchasing and Distribution

PEILCC 2017-2018 Annual Report

Executive Summary The Prince Edward Island Liquor Control Commission (PEILCC) is a crown corporation responsible for the administration of the Liquor Control Act and Regulations, along with the purchase, control and sale of all beverage alcohol in the province. A five-member Board of Commissioners is responsible for the commission’s activities. The chairperson reports to the minister responsible for the PEI Liquor Control Commission. The mandate under the Liquor Control Act has two primary components: regulatory and commercial. The regulatory function responsibilities include: • licensing and inspecting licensed premises and special permit events; • investigating and reporting on all licensee or special permit complaints and determining whether there were infractions of the Liquor Control Act; and • making recommendations to government on amendments to legislation. On the commercial side, the commission continues to be a major force in the provincial economy with gross receipts in excess of $114 million, making it one of the largest retail organizations in Prince Edward Island. In terms of monetary transfers to the Provincial Treasury, this past fiscal year saw $41.39 million returned to the Province, a year over year increase of over $1.45 million. The commission currently operates 17 corporate retail outlets, as well as a central warehouse and Licensee Distribution Centre located in Charlottetown. The Commission has contracted with private interests for the operation of a Liquor Agency store in eight locations: Cavendish, East Royalty, Eldon, Kinkora, Morell, Murray Harbour, Wellington, and Wood Islands.

A strategic plan is in place that guides the commission to success in meeting its performance and accountability goals.

The commission focuses on the following five key areas to measure performance:

1. Financial Performance; 2. Customer Service; 3. Financial Results; 4. Corporate Social Responsibility; and 5. People and Culture.

These areas serve as a blueprint for incorporating the Mission Statement into day- to-day activities and establishing strategic goals, the details of which are explained in further detail in this report.

PEILCC 2017-2018 Annual Report

Sommaire La Régie des alcools de l’Île-du-Prince-Édouard (R.A.Î.-P.-É.) est une société de la Couronne responsable de l’administration de la Liquor Control Act (loi sur les alcools) et de ses règlements, ainsi que de l’achat, du contrôle et de la vente de toutes les boissons alcooliques dans la province. Un conseil composé de cinq commissaires est responsable des activités de la Régie. La présidence fait rapport au ministre responsable de la Régie des alcools de l’Île-du-Prince-Édouard. Les responsabilités du volet de réglementation comprennent entre autres : • octroyer des licences et inspecter les débits de boisson et les événements rattachés aux permis spéciaux; • enquêter et faire rapport sur les plaintes concernant l’octroi de permis et les permis spéciaux ainsi que déterminer s’il y a eu infraction à la Liquor Control Act; • faire des recommandations au gouvernement sur la modification des lois. Du côté commercial, la Régie est un levier important de l’économie de la province, ses recettes brutes dépassant les 114 millions de dollars, ce qui en fait le plus important organisme de vente au détail de l’Île-du-Prince-Édouard. Sur le plan des transferts monétaires au Trésor provincial au cours de la dernière année financière, un total de 41,39 millions de dollars a été versé à la province, soit une augmentation de plus de 1,45 million de dollars par rapport à la même période l’an dernier. À l’heure actuelle, la Régie exploite dix-sept (17) points de vente au détail ainsi qu’un entrepôt central et un centre de distribution pour les détenteurs de permis situés à Charlottetown. La Régie a passé un contrat avec le secteur privé pour les activités d’un magasin de franchise à huit endroits : Cavendish, East Royalty, Eldon, Kinkora, Morell, Murray Harbour, Wellington et Wood Islands. Le mandat en vertu de la Liquor Control Act compte deux principaux volets – l’un, réglementaire et l’autre, commercial.

La Régie utilise un plan stratégique pour atteindre ses objectifs de performance et d’imputabilité.

Elle concentre ses efforts sur cinq domaines principaux afin de mesurer sa performance :

1. la performance financière; 2. le service à la clientèle; 3. le bilan financier; 4. la responsabilité sociale; 5. les gens et la culture.

Ces domaines servent de plan directeur à l’intégration de notre mission dans nos activités quotidiennes et à l’établissement d’objectifs stratégiques qui seront expliqués plus en détail plus loin dans ce rapport.

PEILCC 2017-2018 Annual Report

Operational Overview The Prince Edward Island Liquor Control Commission’s Strategic Plan continued to guide activities through fiscal 2017-2018. Progress on strategic objectives is supported by annual business plans that set priorities for actions to meet objectives and timelines for their completion. The following is an overview of the performance in each of the five strategic objectives: Goal 1 Financial Performance

Goal To maximize net income within the policy guidelines established by the provincial government. Objectives 1. Achieve or exceed planned monetary transfer to the Provincial Government.

2. Achieve or exceed net income targets. 3. Increase traffic through liquor stores.

Actual 2016-2017

Target 2017-2018

Actual 2017-2018

% of Target 2017-2018

Target 2018-2019

Gross Receipts $108,007,179 $109,800,000 $114,030,030

103.9% $115,000,000

Gross Profit

$33,391,435 $34,100,000 $34,583,582

101.4% $34,800,000

Operating Expenses

$15,098,631 $15,603,500 $16,001,267

102.5% $16,165,400

Net Income

$20,792,045 $21,005,100

$21,377,733

101.8% $21,189,600

Monetary Transfers*

$39,943,962 $40,505,100 $41,385,656

102.2% $41,189,600

* Inclusive of Net Income and health tax transfers to government

The PEI Liquor Control Commission delivered both an increased net profit and an increased transfer to the provincial government in fiscal 2017-2018.

Gross receipts were $114,030,030 for the fiscal year ended March 31, 2018, an increase of $6,022,851 over the previous year. This increase came as a result of new sales and marketing initiatives. Net transfers for the year totaled $41,385,656. This year’s performance resulted in a $1,441,694 increase in the PEILCC’s contribution to the province over the previous year.

PEILCC 2017-2018 Annual Report

Performance Highlights

Figure A Sources of Gross Receipts

3% 3%

24%

Spirits

Wine

Coolers

Merchandising

Fiscal Year 2018

Other

26%

Beer

44%

Figure B Application of Gross Receipts

1% 13%

Payments to Province

14%

Administrative Expenses

Federal Taxes

Purchase of Capital Assets

Fiscal Year 2018

Suppliers

34%

38%

The commission spent approximately $44.07 million on alcohol from both national and international sources. Gross margins increased slightly due to one-time only marketing promotions.

PEILCC 2017-2018 Annual Report

Goal 2 Customer Service

Goal To understand the needs of our customers so that we can provide quality products and services that are delivered by knowledgeable, courteous employees in attractive and accessible facilities. Objectives 1. Enhance the shopping experience for PEILCC wholesale and retail customers. 2. Provide enhanced customer services. 3. Improve product portfolio.

Actual 2016-2017

Target 2017-2018

Actual 2017-2018

% of 2017-2018 Target

Target 2018-2019

Customers served Average customer transaction value

2,615,240

2,600,000

2,659,841

102.3%

2,660,000

$41.30

$42.23

$42.87

101.5%

$43.23

Actual 2016-2017

Target 2017-2018

Actual 2017-2018

% of 2017-2018 Target

Target 2018-2019

Litres

Beer

8,191,412

8,480,000

8,645,712

102.0%

8,400,000

Draught

976,256

911,500

1,095,320

120.2%

1,015,000

Spirits

789,453

836,900

786,427

94.0%

789,500

Wine (including BYO)

1,612,419

1,538,000

1,711,026

111.3%

1,670,000

Refreshments

516,166

440,000

562,304

127.8%

536,000

Total

12,085,706

12,206,400

12,800,789

104.9% 12,410,500

Performance Highlights

Packaged beer has decreased by 454,300 litres over the previous year. Draught beer has shown an increase of 119,064 litres over last year driven primarily by the craft beer segment. This is consistent with both national and international trends. The Refreshment category continues to be popular with volumes increasing by 46,138 litres over last year. The Spirit category has decreased by 3,026 litres from the previous year. Sales continue to trend toward more premium products which is evidenced by the increase in the value of the average customer transaction.

PEILCC 2017-2018 Annual Report

The Wine category continued to display strong performance again in 2017-2018 selling a total of 1,711,026 litres, an increase of over 98,607 litres from the previous year. New offerings continued to drive growth in both sales and volume in this category. The availability of one time offerings throughout the year has also been popular with customers. The PEILCC continues to expand the Vines concept to include many PEILCC retail outlets displaying these products as a portion of each location’s shelf set. A number of vendor supported themed campaigns ran throughout the course of the year including themes such as Island Style which helped to promote Local food and drink pairings with recipes. Merchandising across the corporate retail network permitted products to be featured in a like fashion and provides consistency across all locations. Local producers continue to benefit from exposure of having their products featured on ‘Buy PEI’ displays as well as on the shelves with products of their respective category. The Eastlink Centre served as the venue for the 23 RD Prince Edward Island Liquor Control Commission’s Festival of Wines. The private firm that was the successful bidder two years ago to manage the planning and execution of the festival has turned the Festival into one of the must attend events of the year. The PEILCC continues to operate the pop-up retail boutique featuring the wines of the festival. This event featured more than 250 wines, many of which are now included among the PEILCC’s general listings. The 2017 festival included California as its feature region. Wines from this state were promoted throughout the PEILCC retail network leading up to the festival as well as on site during the event. The feature region concept continues to provide profile not only to the region but also to the Festival of Wines as a whole. The Commission also participated in other events during the year including the PEI Spirit Festival and the PEI Beer Festival. Both of which helped generate interest across each of the beer, spirits and wine categories.

A number of PEILCC retail employees have taken advanced training in the WSET program, providing them with an additional level of expertise which is beneficial when helping customers with product options. This training combined with other initiatives led by the Commission’s Category Managers, have contributed to the development of all categories and the growth of overall sales.

PEILCC 2017-2018 Annual Report

Goal 3 Financial Results

Goal To maximize net income within the policy guidelines established by the provincial government.

Objectives

1. Optimize return to government. 2. Grow revenue through effective planning and execution. 3. Continuously improve operational effectiveness and efficiency.

Performance Highlights

Audited 2017-2018

Target 2017-2018

% of Target

The commission set inventory turnover goals at the beginning of the fiscal year as part of its strategic plan. These turnover ratios were based on the year ended March 31, 2017 to measure inventory efficiencies. The commission has been better able to manage the days in inventory and the warehouse level in order to meet the needs of our customers. Store inventory turns are up slightly from last year which can be attributed to the increase in the number of products held in store inventory and necessary to fulfill customer demands. An improved store ordering process continues to keep store inventories in check and ensured better distribution and availability of inventory across the retail network. In addition, the central warehouse has been reconfigured to optimize space and manage warehouse efficiency.

Gross Receipts

$114,030,030 $109,800,000 103.9%

Gross Profit

$34,583,582 $34,100,100 101.4%

Revenue Per Litre

$8.91

$8.69

102.5%

Spirits

$38.13

$37.88

100.7%

Beer

$5.63

$5.68

99.2%

Wine

$16.73

$16.06

104.2%

Wine Coolers

$7.09

$7.15

104.2%

Spirit Coolers

$7.01

$7.47

93.9%

Draught

$2.46

$3.94

62.4%

Net Income

$21,377,733 $21,005,100 101.8%

Operating Expenses as a % of Gross Receipts

14.03% 14.21% 98.7%

Shrinkage as a % of Gross Receipts

-0.03%

0.01% 300.0%

Return to Government*

$41,385,656 $40,505,100 102.2%

Inventory Turnover**

Warehouse

68.9

82.0

84.0%

Stores

31.1

34.0

91.5%

* Inclusive of Net Income and health tax transfers to government ** Measured in days

PEILCC 2017-2018 Annual Report

Goal 4 Corporate Social Responsibility

Goal In partnership with community groups and suppliers, the PEILCC will strive to raise public and staff awareness of the responsible use of beverage alcohol. Objectives 1. Enhance our reputation as a socially responsible corporate citizen. 2. Build corporate social responsibility into all areas of our business. 3. Regulate the consumption of beverage alcohol throughout the province in a fair and responsible fashion.

Actual 2017-2018

Target 2017-2018

% of Target

Number of ID Checks as a % of transactions

9.1%

10%

91.0%

Funds raised for charities and foundations

$96,723

$70,000

138.2%

Internal Social Responsibility Score

76.8%

70%

109.7%

Licensee Compliance Rate

97.5%

95%

102.6%

Number of Inspections Conducted

3,767

3,000

125.6%

% of Sanctions without Adjudication

100%

90%

111.1%

Performance Highlights

support for MADD Canada’s campaign 911, and expanded the in-store retail ice program in a number of corporate retail outlets which also benefits the work of MADD Canada. The commission continued to participate on a number of committees promoting responsible use including the Ad Hoc Working Group on Impaired Driving Prevention, and the Canadian Liquor Jurisdictions Social Responsibility Committee. The seventh year of an at-cash campaign benefiting the PEI Region of the Canadian Red Cross, was successful in generating over $50,000 to continue the support of community programs and relief to Islanders in the time of need. The PEILCC also completed the 3RD year of a five-year agreement with the Island Nature Trust (INT) with $20,000 collected through this supplier supported campaign. A portion of sales from a variety of products, were donated to the INT.

The PEI Liquor Control Commission continues to promote the responsible use of alcohol. The commission strives to provide products that are socially responsible and incorporates responsible messaging into product promotions. Ongoing responsible use initiatives include: Challenge and Refusal, and ID Training for PEILCC retail and liquor agency staff, Check 30 ID Program, HOST booklet and various responsible use messages during graduation, long weekends, Christmas and New Year’s celebrations. Responsible Use messages were promoted throughout the year using local media as well as Social Media. The Prince Edward Island Liquor Control Commission continued its support of MADD Canada’s Multi-media School Assembly Program during the 2017-18 school year, with eighteen presentations of the English language version #thepact and three of the French language version, which took place in high schools across the Island. The commission provided ongoing

PEILCC 2017-2018 Annual Report

A partnership between the PEI Liquor and Atlantic Canadian universities, Keep It Social is all about helping students make responsible decisions when it comes to alcohol. Led by students and guided by the PEI Liquor, Keep It Social is a long-term initiative designed to address and reduce high-risk consumption. Now in its third year, Keep It Social is tackling the false perceptions many students have about how much alcohol their peers consume. As well as getting the message out on campuses, keepitsocial.ca offers students tips and advice on how to make the right decisions when they’re planning a night out.

In 2018, UPEI and Holland College appointed several student-athletes as Keep It Social ambassadors who will lead spreading the message about high-risk alcohol consumption among UPEI students. Also, in partnership with PEILCC, Coach Atlantic, KKP, and UPEI designed a bus wrap that will put focus on the campaign while student-athletes travel throughout the Maritime Provinces to their “away” games.

PEILCC 2017-2018 Annual Report

The Heart and Stroke Foundation’s Paper Hearts campaign took place for the sixth year in 2018 and was successful in raising over $30,894. The Foundation uses these funds to continue the advancement of research, promotion of healthy living and advocacy. The Canadian Cancer Society and the PEILCC partnered again in 2018 for a very successful fundraiser. Pin sales from local liquor stores showed an increase over last year collecting $17,416 with the support of generous Islanders. The PEILCC actively assists various groups and causes through coin box collections in all corporate retail outlets. Groups receiving from this activity during this fiscal year included Cerebral Palsy Association of PEI, Crohn’s and Colitis Foundation of Canada, MADD Canada, ALS Society, Maritime Greyhound,

Crime Stoppers, Autism Society PEI, Keeping Cats Homed Inc., and the Canadian Diabetes Association.

PEILCC 2017-2018 Annual Report

During the fiscal year, the commission continued its commitment to social responsibility in the areas of alcohol service and community support. The PEILCC partnered with a number of outside agencies in shared activities including:

• Participation as an active member of the Canadian Association of Liquor Jurisdictions (CALJ) Social Responsibility Committee.

• Affiliation with the Culinary Institute of Canada, to provide the mandatory server program, It’s Our Business, an awareness program for staff of licensed premises.

• Raising monies for ALS Society of PEI, Canadian Diabetes Association, Easter Seals Society of PEI, IWK Health Centre Foundation, Parkinson Society of Canada, Prince County Hospital Foundation and the QEH Foundation through staff dress-down days and other staff events raising over $6,000.

• Generating over $1,800 in support of the Hospice Palliative Care Association of PEI through proceeds from the silent auction, held during the 22nd annual Festival of Wines.

Optimal compliance to the Liquor Control Act, Regulations and Policies is a primary objective of the commission. Retail staff are required to check and verify the age of customers and refuse minors or intoxicated persons. In 2017-2018, commission store staff checked 246,110 people suspected of being underage, intoxicated or with no ID and refused service to 3,331. Liquor inspectors performed 3,257 compliance inspections and 2,650 ID checks in licensed premises.

After evaluating all stores in relation to established criteria, the staff of the Montague store was awarded the Annual CEO’s Award of Merit for Loss Prevention for fiscal 2017-2018.

In September 2017 the Check 30 program was refreshed across all corporate retail agency outlets. Initially introduced in January 2016, Check 30 replaced Check 25 which had launched in August 2006.

PEILCC 2017-2018 Annual Report

Goal 5 People & Culture

Goal Build a customer-focused, high-performance work environment that results in greater employee involvement, development, innovation and creativity. Objectives 1. Always recruit, retain, and develop the best people. 2. Foster a culture of performance, communication, and engagement. 3. Rigorously establish and promote a healthy, safe, and respectful workplace.

Actual 2016-2017

Target 2017-2018

Actual 2017-2018

Target 2018-2019

Target %

Training Hours per Employee - FTE

13.96

10.0

17.29

172.9

12.00

EMPLOYEE EXCELLENCE Plan

93.68%

90.0%

89.56%

99.51%

95%

Employee Engagement Index

79.52%

80.0%

76.6%

95.75%

80%

Employee Engagement Response Rate

94.09%

75.0%

78%

104%

75%

Employee Wellness Rate

98.23%

98.0%

98.83%

100.83%

99%

Lost-Time Frequency

6.05

8.00

2.84

291.69%

8.00

Performance Highlights

The PEILCC continued to re-invest in its employees training and development by providing them with a range of developmental opportunities over fiscal 2018. The PEILCC surpassed its fiscal 2018 goal and provided over 17 hours of training time per employee FTE. This increase above target was in part due to increased opportunities with Wine and Spirit Education Trust (WSET) partnership development which resulted in more training availability in this area. The PEILCC has continued usage of the internal training and development fund to complement efforts made in performance management. These funds are allocated to developmental opportunities that assist employees in achieving their personal career objectives, while simultaneously bridging individual performance gaps that collectively lead to increased levels of organizational success. From an employee engagement perspective, the PEILCC hit over 95% of the target goal in its overall employee engagement score in fiscal 2018. Success in this regard continues to be attributed to the diligence of PEILCC leadership in the administration of the

PEILCC 2017-2018 Annual Report

EMPLOYEE EXCELLENCE program which was piloted in fiscal 2017, and rolled out across the entire organization in fiscal 2018. Employee engagement will continue to be a top priority for the PEILCC, as the benefits of engaged employees have tremendous impacts on business outcomes, not least of which is a workforce that is satisfied and excited to be part of the PEILCC family. The PEILCC has had continued success in fostering high levels of workplace wellness and safety over fiscal 2018. In addition to efforts in employee engagement and the provision of OH&S training, new disability management initiatives and decreases in workplace accidents leading to lost time. A healthy workforce is extremely important to the PEILCC, particularly given the physically demanding work involved in many operational processes. Continued effort in this regard will be an ongoing priority moving forward.

Opportunities and Challenges Ahead:

The PEILCC HR and Payroll division continued to implement the three-Year Strategic People & Culture Plan that was developed the previous year.

The objective of this plan, as is such in the traditional HR Planning context, is to foster an engaged workforce that is aligned with the strategic objectives of the organization. Through the effective implementation of this Three-Year Strategic People & Culture Plan, the PEILCC has the opportunity to enhance its ability to accomplish these goals.

PEILCC 2017-2018 Annual Report

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Where can people find your products?

Can people do tours of the distillery year-round?

People can find Myriad View Distillery products in all PEI Liquor stores across Prince Edward Island. The product is strictly sold in Prince Edward Island liquor stores. You must visit the distillery to pick up 57% proof rum, brandy, dandelion shine, and pastis.

Not all year, they do tours of the distillery from May until October 1st.

What is your favorite product?

Ken says his favourite product would be their shine. He grew up enjoying shine at parties and didn’t want the PEI tradition to end. No one does shine like PEI.

Read more in PEI Liquor’s Celebrate E-Flyer . Subscribe to receive our E-Flyer via email and stay up to date with our latest products, recipes, food pairings and promotions.

PEILCC 2017-2018 Annual Report

Challenges and Opportunities Ahead The Prince Edward Island Liquor Control Commission continues to identify opportunities and challenges, as well as to meet the expectations of an increasingly diverse and discerning customer base. Store renovations and a new merchandising strategy have improved the way in which products are displayed as well as the customer experience. On-going investment and planning is required to meet customers’ needs and keep standards moving forward. In addition, continued investment in human resources and financial resources are also necessary to fulfill its strategic plan.

Capital planning is required to provide for future needs. The commission has set its monetary transfer goal to over $42.0 million for the 2018-2019 fiscal year to help continue investments in our province.

A disciplined category management approach, working in co-ordination with the supply chain, has provided a more efficient system to get products from the commission’s international supply chain onto its store shelves. The PEILCC continues to investigate new opportunities for products and their distribution to meet the ever-evolving customer demands.

The commission’s commitment to social responsibility presents ongoing opportunities to communicate and reinforce the message of responsible use and public safety to a wide range of audiences.

Underlying all of these challenges and opportunities is the vision of excellence in management. Being prepared to capitalize on new opportunities in the marketplace and continuing to integrate and streamline operations is key. The PEILCC is confident that it is building an organization which is internally more efficient and will continue to be publicly accountable.

PEILCC 2017-2018 Annual Report

Prince Edward Island Liquor Control Commission

Retail Liquor Outlets

Corporate Retail Outlets

Liquor Agency Stores

Alberton

Cavendish

Borden-Carleton

East Royalty

Cardigan

Eldon

Charlottetown - Minna Jane Drive

Kinkora

Charlottetown - Queen Street

Morell

Charlottetown - University Avenue

Murray Harbour

Cornwall

Wood Islands

Kensington

Wellington

Montague North Rustico O’Leary Souris Stratford

Summerside - Granville Street Summerside - Waterfront Mall Tignish Tyne Valley

PEILCC 2017-2018 Annual Report

Statistics Retail Gross Receipts by Store

Year Ended March 31, 2018

Year Ended March 31, 2017

Year Ended March 31, 2016

Retail Store

Gross Sales

Alberton

$1,986,853

$1,817,694

$1,718,586

Gateway

$2,249,928

$2,084,138

$1,949,355

O'Leary

$2,079,069

$2,079,567

$2,001,768

Summerside - Granville

$8,872,691

$8,448,902

$8,260,602

Summerside - Waterfront

$4,690,551

$4,384,985

$4,514,644

Tignish

$3,033,307

$2,862,010

$2,936,396

Kensington

$3,702,602

$3,468,300

$3,338,298

Wellington

$ 786,233

$1,357,384

$1,342,232

Tyne Valley

$1,298,988

$1,210,424

$1,232,915

Charlottetown - Queen Street

$4,119,492

$3,917,053

$3,759,111

Charlottetown - University Avenue

$16,022,712

$15,545,070

$15,021,476

N. Rustico

$3,552,099

$3,245,429

$3,119,377

Charlottetown - Minna Jane Drive

$13,459,098

$13,110,271

$12,710,806

Licensee

$19,434,309

$17,888,896

$17,413,524

Cornwall

$5,932,856

$5,644,252

$5,439,318

Stratford

$9,342,808

$8,676,642

$8,907,701

Cardigan

$1,851,096

$2,104,732

$2,081,235

Souris

$3,324,804

$3,175,940

$2,956,208

Montague

$6,540,273

$5,353,215

$5,210,290

Other

$1,750,261

$1,632,275

$1,428,619

Total

$114,030,030

$108,007,179

$105,342,461

PEI product is on display and promoted in all LCC retail stores, on the new LCC website and through our social media channels, net sales of Island products was $3,956,030, an increase of 19.67%.

PEILCC 2017-2018 Annual Report

Statistics Summary of Profit and Expense Ratios Two-year Comparison

(in 000s)

2018

2017

Gross Receipts

$114,030

$108,007

Gross Profit

$34,584

$33,391

Net Income

$21,378

$20,792

General and Administrative Expenses

$16,001

$15,099

Gross Profit as a Percentage of Gross Receipts

30.33%

30.92%

Net Profit as a Percentage of Gross Receipts

18.75%

19.25%

General and Administrative Expenses as a Percentage of Gross Receipts

14.03%

13.98%

Our Spending... All Profits Stay Here

Operating Costs:

Salaries and Benefits:

5,857

10,144

114,030

Total Sales:

41,386

44,067

36%

39%

Returned to PEI:

Cost of Product:

12,576

11%

HST & Other:

PEILCC 2017-2018 Annual Report

Sales Volumes... (litres) by Category

Fiscal Year 2018 T O T A L : 1 2 , 8 0 0 , 7 8 9

Beer 9,741,032

Spirits 786,427

Wine 1,711,026

Coolers 562,304