This news release contains forward-looking information that is based upon
assumptions and is subject to risks and uncertainties as indicated in the
cautionary note contained elsewhere in this news release.
Andrew Peller Limited (the "Company") (TSX:ADW.A)(TSX:ADW.B) announced today its
results for the three months ended June 30, 2008.
HIGHLIGHTS:
- Sales continue to increase due to solid growth in existing brands and the
introduction of new products
- Acquisition of premium consumer-made wine company to boost sales and earnings
- Purchase of remaining 50% of Rocky Ridge Vineyards Inc. to enhance premium
grape supply
- Common share dividends increased 10% effective June 30, 2008
Strong Operating Performance Continues
For the three months ended June 30, 2008 sales increased 4.3% to $59.6 million
from $57.1 million last year. The increase was due primarily to ongoing
initiatives to grow sales of the Company's premium and ultra-premium wines
through all trade channels and the introduction of new products over the last
twelve months.
Gross profit as a percentage of sales declined slightly to 41.8% for the three
months ended June 30, 2008 compared to 42.8% in the same period last year due to
an increase in packaging and wine costs experienced in the current year period.
Selling and administrative expenses increased marginally for the three months
ended June 30, 2008 to 29.8% of sales due primarily to costs associated with the
launch of new products over the last twelve months. This was the same percentage
of sales as last year.
Net and comprehensive earnings for the three months ended June 30, 2008 were
$2.7 million or $0.18 per Class A share compared to $2.9 million or $0.20 per
Class A share for the same period last year. Included in net and comprehensive
earnings in fiscal 2009 were other charges related to non-cash market-to-market
adjustments on interest rate swaps and foreign exchange contracts. Not including
the other losses and unusual items in each year net and comprehensive earnings
for the first quarter of fiscal 2009 increased 3.4% to $2.8 million compared to
the same period last year.
"We are pleased with our growth through the first quarter of the year, and
expect to generate another solid year of sales and earnings throughout the
balance of fiscal 2009," commented John Peller, President and CEO.
Strong Financial Position
The Company's balance sheet remained strong as at June 30, 2008. Working capital
was $40.1 million at the end of the first quarter of fiscal 2009 compared to
$26.6 million at March 31, 2008. Shareholders' equity at June 30, 2008 remained
relatively stable at $103.1 million or $6.92 per common share compared to $102.7
million or $6.90 per Class A share at March 31, 2008 and $97.5 million or $6.55
per Class A share at June 30, 2007.
Dividend Increase
As previously announced, common share dividends were increased by 10% for
shareholders of record on June 30, 2008. The annual dividend on Class A shares
was increased to $0.33 per share from $0.30 per share. The dividend on Class B
shares was increased to $0.288 per share from $0.261 per share.
Acquisitions to Enhance Performance
On June 13, 2008 the Company acquired the remaining 50% interest in Rocky Ridge
Vineyards Inc. located in the Similkameen Valley of British Columbia for cash
consideration of approximately $4.0 million. The purchase yields approximately
70 acres of premium vineyards and will be used to further enhance the Company's
supply of premium grapes for its VQA brands.
Effective June 30, 2008 the Company acquired 100% of the common shares of World
Vintners Inc. ("WVI"), a producer and seller of high quality consumer-made wine
kits. WVI's sales for its most recently-completed financial year ended July 31,
2007 were approximately $12.0 million. The acquisition brings to the Company a
dedicated network of 75 franchised wine-on-premise and retail outlets under the
Wine Kitz brand name. WVI also produces the popular Heron Bay brand sold through
independent wine-on-premise and retail outlets across Canada.
"The WVI acquisition significantly strengthens our presence as Canada's largest
producer and supplier of consumer-made wines, and we are confident it will
generate enhanced business opportunities as well as economies of scale and
synergies to increase our profitability," Mr. Peller concluded.
Financial Highlights (unaudited - complete consolidated financial statements to
follow)
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Period Ended June 30, Three Months
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(in $,000 except per share amounts) 2008 2007
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Sales 59,618 57,140
EBITA 7,184 7,431
Earnings before other income and unusual items 3,972 4,106
Other income (loss) and unusual items (219) 314
Net and comprehensive earnings 2,653 2,914
Net earnings per share
(Basic per Class A share) $ 0.18 $ 0.20
Cash from operations
(after changes in non-cash working capital items) 1,444 (1,901)
Working capital 40,088 23,578
Shareholders' equity per share $ 6.92 $ 6.55
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Andrew Peller Limited is a leading producer and marketer of quality wines in
Canada. With wineries in British Columbia, Ontario and Nova Scotia, the Company
markets wines produced from grapes grown in Ontario's Niagara Peninsula, British
Columbia's Okanagan and Similkameen Valleys and vineyards around the world. The
Company's award-winning premium and ultra-premium brands include Peller Estates,
Trius, Hillebrand, Thirty Bench, Croc Crossing, XOXO, Sandhill, Copper Moon,
Calona Vineyards Artist Series and Red Rooster VQA wines. Complementing these
premium brands are a number of popular priced products including Hochtaler,
Domaine D'Or, Schloss Laderheim, Royal and Sommet. The Company also markets
craft beer under the Granville Island brand. With a focus on serving the needs
of all wine consumers, the Company produces and markets consumer-made wine kit
products through Winexpert, Vineco International Products and Wine Kitz. Their
broad range of high quality brands includes Selection, Vintners Reserve, World
Vineyard, KenRidge, California Connoisseur, Island Mist, Niagara Mist and Heron
Bay. In addition, the Company owns and operates Vineyards Estate Wines, Aisle 43
and WineCountry Vintners, independent wine retailers in Ontario with more than
100 well-positioned retail locations. Andrew Peller Limited common shares trade
on the Toronto Stock Exchange (symbols ADW.A and ADW.B).
The Company utilizes EBITA (defined as earnings before interest, incomes taxes,
depreciation, amortization, other income (losses) and unusual items). EBITA is
not a recognized measure under GAAP. Management believes that EBITA is a useful
supplemental measure to net earnings, as it provides readers with an indication
of cash available for investment prior to debt service, capital expenditures and
income taxes. Readers are cautioned that EBITA should not be construed as an
alternative to net earnings determined in accordance with GAAP as an indicator
of the Company's performance or to cash flows from operating, investing and
financing activities as a measure of liquidity and cash flows. In addition, the
Company's method of calculating EBITA may differ from the methods used by other
companies and, accordingly, may not be comparable to measures used by other
companies.
FORWARD-LOOKING INFORMATION
Certain statements in this news release may contain "forward-looking statements"
within the meaning of applicable securities laws, including the "safe harbour
provision" of the Securities Act (Ontario) with respect to Andrew Peller Limited
( the "Company") and its subsidiaries. Such statements include, but are not
limited to, statements about the growth of the business in light of the
Company's recent acquisitions; its launch of new premium wines; sales trends in
foreign markets; its supply of domestically grown grapes; and current economic
conditions. These statements are subject to certain risks, assumptions and
uncertainties that could cause actual results to differ materially from those
included in the forward-looking statements. The words "believe", "plan",
"intend", "estimate", "expect" or "anticipate" and similar expressions, as well
as future or conditional verbs such as "will", "should", "would" and "could"
often identify forward-looking statements. We have based these forward-looking
statements on our current views with respect to future events and financial
performance. With respect to forward-looking statements contained in this news
release, the Company has made assumptions and applied certain factors regarding,
among other things: future grape, glass bottle and wine prices; its ability to
obtain grapes, imported wine, glass and its ability to obtain other raw
materials; fluctuations in the U.S./Canadian dollar exchange rates; its ability
to market products successfully to its anticipated customers; the trade balance
within the domestic Canadian wine market; market trends; reliance on key
personnel; protection of its intellectual property rights; the economic
environment; the regulatory requirements regarding producing, marketing,
advertising and labelling its products; the regulation of liquor distribution
and retailing in Ontario; and the impact of increasing competition.
These forward-looking statements are also subject to the risks and uncertainties
discussed in this news release, in the "Risk Factors" section and elsewhere in
the Company's MD&A and other risks detailed from time to time in the publicly
filed disclosure documents of Andrew Peller Limited which are available at
www.sedar.com. Forward-looking statements are not guarantees of future
performance and involve risks, uncertainties and assumptions which could cause
actual results to differ materially from those conclusions, forecasts or
projections anticipated in these forward-looking statements. Because of these
risks, uncertainties and assumptions, you should not place undue reliance on
these forward-looking statements. The Company's forward-looking statements are
made only as of the date of this news release, and except as required by
applicable law, the Company undertakes no obligation to update or revise these
forward-looking statements to reflect new information, future events or
circumstances or otherwise.
ANDREW PELLER LIMITED
CONSOLIDATED BALANCE SHEETS (Unaudited)
These interim consolidated financial statements have not
been reviewed by our auditors June 30 March 31
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2008 2008
(expressed in thousands of Canadian dollars) $ $
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Assets
Current Assets
Accounts receivable 24,212 23,072
Inventories 93,333 93,817
Prepaid expenses and other assets 4,663 4,242
Income taxes recoverable 2,180 823
--------------------
124,388 121,954
Property, plant and equipment 100,474 94,480
Goodwill 44,499 36,171
Other assets 7,457 7,139
--------------------
276,818 259,744
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Liabilities
Current Liabilities
Bank indebtedness 47,164 57,722
Accounts payable and accrued liabilities 29,755 29,705
Dividends payable 1,197 1,088
Current portion of long-term debt 6,184 6,830
--------------------
84,300 95,345
Long-term debt 75,205 46,946
Employee future benefits 3,118 3,167
Future income taxes 11,126 11,606
--------------------
173,749 157,064
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Shareholders' Equity
Capital stock 7,375 7,375
Retained earnings 95,694 95,305
--------------------
103,069 102,680
--------------------
276,818 259,744
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The accompanying notes are an integral part of these interim consolidated
financial statements
ANDREW PELLER LIMITED
Consolidated Statements of Earnings, Comprehensive Earnings
and Retained Earnings
For the three months ended June 30, 2008 and 2007
(Unaudited)
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These interim consolidated financial statements
have not been reviewed by our auditors 2008 2007
(expressed in thousands of Canadian dollars) $ $
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Sales 59,618 57,140
Cost of goods sold, excluding amortization 34,682 32,674
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Gross profit 24,936 24,466
Selling and administration 17,752 17,035
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Earnings before interest and amortization 7,184 7,431
Interest 1,402 1,425
Amortization 1,810 1,900
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Earnings before other items 3,972 4,106
Other (loss) income (161) 369
Unusual items (58) (55)
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Earnings before income taxes 3,753 4,420
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Provision for income taxes
Current 1,095 1,316
Future 5 190
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1,100 1,506
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Net and comprehensive earnings for the
period 2,653 2,914
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Retained earnings- Beginning of period 95,305 88,147
Impact of adopting accounting
pronouncements on April 1, 2007 - 128
Impact of adopting accounting
pronouncement on April 1, 2008 (1,067) -
------------------
Retained earnings- Beginning of period
as restated 94,238 88,275
------------------
Dividends:
Class A and Class B (1,197) (1,088)
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Retained earnings - End of period 95,694 90,101
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Net earnings per share
Basic and diluted
Class A shares 0.18 0.20
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Class B shares 0.16 0.17
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The accompanying notes are an integral part of these interim consolidated
financial statements
ANDREW PELLER LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ending June 30, 2008 and 2007 (Unaudited)
These interim consolidated financial statements have not been reviewed
by our auditors
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(expressed in thousands of Canadian dollars)
2008 2007
$ $
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Cash provided by (used in)
Operating activities
Net earnings for the period 2,653 2,914
Items not affecting cash:
Amortization of plant, equipment and intangibles 1,810 1,900
Employee future benefits -49 -25
Net unrealized loss (gain) on foreign
exchange contracts and interest rate swaps 161 -369
Future income taxes 5 190
Amortization of deferred financing costs 38 36
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4,618 4,646
Changes in non-cash working capital
items related to operations -3,174 -6,547
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1,444 -1,901
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Investing activities
Acquisition of World Vintners Inc. -10,940 -
Acquisition of Rocky Ridge Vineyards Inc. -4,016 -
Purchase of property and equipment -2,498 (3,816)
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-17,454 -3,816
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Financing activities
Increase in deferred financing costs (214) -
(Decrease) increase in bank indebtedness -10,558 8,109
Increase in long-term debt 29,036 -
Repayment of long-term debt -1,166 -1,475
Dividends paid -1,088 -917
------------------
16,010 5,717
------------------
Cash at beginning and end of period - -
------------------
------------------
Supplemental disclosure of cash flow information
Cash paid during the period for
Interest 1,062 1,315
Income taxes 827 1,059
The accompanying notes are an integral part of these interim consolidated
financial statements
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