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
--------------------
--------------------
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
--------------------
Shareholders' Equity
Capital stock 7,375 7,375
Retained earnings 95,694 95,305
--------------------
103,069 102,680
--------------------
276,818 259,744
--------------------
--------------------
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) $ $
----------------------------------------------------------------------------
Sales 59,618 57,140
Cost of goods sold, excluding amortization 34,682 32,674
------------------
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
------------------
Earnings before other items 3,972 4,106
Other (loss) income (161) 369
Unusual items (58) (55)
------------------
Earnings before income taxes 3,753 4,420
------------------
Provision for income taxes
Current 1,095 1,316
Future 5 190
------------------
1,100 1,506
------------------
Net and comprehensive earnings for the
period 2,653 2,914
------------------
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)
------------------
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
------------------
------------------
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
------------------
4,618 4,646
Changes in non-cash working capital
items related to operations -3,174 -6,547
------------------
1,444 -1,901
------------------
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)
------------------
-17,454 -3,816
------------------
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
Contacts: Andrew Peller Limited Mr. Peter Patchet CFO and EVP
Human Resources (905) 643-4131 Ext. 2210 Email:
peter.patchet@andrewpeller.com
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