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 (TSX: ADW.A)(TSX: ADW.B) (the "Company")
announced today its results for the three months and fiscal year
ended March 31, 2011 ("fiscal 2011").
FISCAL 2011 HIGHLIGHTS:
-- Common share dividend to increase 9% on annualized basis
-- Company purchases and cancels 594,412 Class A Non-Voting Shares for
approximately $5.2 million
-- Sales up on solid growth through liquor boards and estate wineries
-- Strong Canadian dollar and increased sales of high margin products
generate improved profitability
-- Gross profit margin improves to 39.1% of sales from 36.6% last year
-- EBITA rises to $32.0 million from $27.4 million in prior year
-- Cash flow from operating activities increases to $23.0 million from
$17.6 million in fiscal 2010
"Our successful sales and marketing initiatives, combined with
the increasing global recognition of the quality of our premium and
ultra-premium wines, generated increased sales through the majority
of our trade channels in fiscal 2011 and a solid improvement in
profitability," commented John Peller, President and CEO. "Looking
ahead, we are confident we will continue this trend of positive
growth."
"We are very proud to be celebrating the Company's 50th
Anniversary this year. Our growth and achievements over the last
half-century are considerable, a testament to the hard work and
dedication of all our people. We look forward to continued progress
in the years ahead," Mr. Peller added.
For fiscal 2011, sales rose to $265.4 million, up from $263.2
million in fiscal 2010. Ongoing initiatives to grow sales of the
Company's blended varietal table and premium wines through
provincial liquor boards and the introduction of new products and
improved performance at the Company's estate wineries were
partially offset by a discriminatory levy introduced by the
Province of Ontario on July 1, 2010 on sales of blended wines sold
through the Company's retail stores. The annual impact on sales and
EBITA of this levy amounts to approximately $3.0 million. Sales of
personal winemaking products declined over the past year. Sales for
the fourth quarter of fiscal 2011 were $56.9 million compared to
$59.3 million in the prior year period. The decline is due
primarily to the above-mentioned special levy in Ontario and the
timing of sales in the key Easter selling season.
For fiscal 2011, gross profit rose to 39.1% of sales from 36.6%
in the prior fiscal year, and to 38.9% of sales for the three
months ended March 31, 2011 from 37.6% in the same period last
year. The increase in gross profit in fiscal 2011 was due to the
lower cost to the Company of purchasing United States dollars and
Euros, increased sales volumes of higher margin products, and the
Company's successful cost control initiatives which served to
reduce operating and packaging expenses. Gross profit was
negatively impacted by the above-mentioned special levy in the
Province of Ontario. Management remains focused on efforts to
enhance production efficiency and productivity to further improve
overall profitability.
Selling and administrative expenses rose in the fourth quarter
and year ended March 31, 2011 due primarily to increased sales and
marketing expenses compared with the prior year. Management expects
the level of sales and administrative expenses will increase
slightly in fiscal 2012.
Interest expense in fiscal 2011 declined compared to last year
due primarily to the reduction in debt from regularly scheduled
long-term debt repayments, proceeds from the sale of certain
non-core vineyards during the first quarter of fiscal 2011, and to
lower interest rates on both short and long-term debt.
The Company incurred a non-cash gain in fiscal 2011 related to
the mark-to-market adjustments on an interest rate swap and foreign
exchange contracts aggregating approximately $0.1 million compared
to a gain of $3.2 million in the prior year. The Company has
elected not to apply hedge accounting and these financial
instruments are reflected in the Company's financial statements at
fair value each reporting period. These instruments are considered
to be effective economic hedges and have enabled management to
mitigate the volatility of changing costs and interest rates during
the year.
Other expenses incurred in fiscal 2011 relate to a net $1.3
million write-down, after proceeds from an insurance claim, in the
value of a BC vineyard where vines were damaged by an early and
severe frost in the fall of 2009, as well as carrying costs in the
amount of $0.2 million related to the Company's Port Moody facility
which was closed effective December 31, 2005. These costs were
partially offset by other income of $0.3 million related to a gain
on the sale of a portion of an Okanagan vineyard. The damage to the
BC vineyard was realized when the vines were not able to support
the growth of grapes during hot weather that occurred during August
2010. Other expenses incurred in fiscal 2010 primarily related to
impairment charges on certain investments made by the Company.
Earnings before interest, taxes, amortization and gains on the
above mentioned derivative financial instruments ("EBITA") were
$32.0 million and $4.0 million for the year and three months ended
March 31, 2011 respectively compared to $27.4 million and $4.1
million in the respective prior year periods.
Net and comprehensive earnings from continuing operations,
excluding gains on derivative financial instruments and other
expenses for the year ended March 31, 2011, were $11.5 million
compared to $8.4 million for the prior year. Net and comprehensive
earnings were $11.0 million or $0.76 per Class A share in fiscal
2011 compared to $21.7 million or $1.49 per Class A share in fiscal
2010. The results for fiscal 2010 included an after-tax gain of
approximately $11.9 million related to the sale of the Company's
beer business.
Strong Financial Position
On March 10, 2011 the Company announced that it had filed a
Notice of Intention to make a normal course issuer bid to purchase
for cancellation up to a maximum of 594,412 of its Class A
Non-Voting Shares ("Class A Shares") through the facilities of the
Toronto Stock Exchange representing 5% of the Company's issued and
outstanding Class A shares. The normal course issuer bid was to
remain in effect until the earlier of March 13, 2012 or the date on
which the Company has purchased the maximum number of Class A
shares permitted. As of March 31, 2011, the Company had acquired
594,412 Class A common Shares for total consideration of
approximately $5.2 million, or an average price of $8.75 per Class
A Share.
Working capital as at March 31, 2011 was $28.3 million compared
to $29.4 million at March 31, 2010. The decline at March 31, 2011
was due primarily to the use of funds for the Company's normal
course issuer bid, higher levels of capital spending, and cash flow
from operating activities used to reduce bank indebtedness.
The Company's debt to equity ratio declined to 0.84:1 at March
31, 2011 compared to 0.90:1 at the end of fiscal 2010.
Shareholders' equity as at March 31, 2011 rose to $114.7 million or
$8.02 per common share compared to $113.7 million or $7.63 per
common share as at March 31, 2010. The increase in shareholders'
equity is primarily due to higher net earnings from continuing
operations, partially offset by the decrease in Capital Stock
arising from the cancellation of 594,412 Class A Shares resulting
from the Company's normal course issuer bid.
During fiscal 2011, the Company generated cash flow from
operating activities, after changes in non-cash working capital
items, of $23.0 million compared to $17.6 million in the prior
year. Cash flow from operating activities increased primarily due
to stronger earnings performance.
Common Share Dividend Increase
As a result of the Company's continued strong performance, the
Board of Directors is pleased to announce today a 9% increase in
common share dividends for shareholders of record on June 30, 2011
payable on July 8, 2011. The annual dividend on Class A shares will
be increased to $0.360 per share from $0.330 per share and the
Class B shares increased to $.0314 per share from $0.288 per
share.
"We are very pleased to be implementing our fourth increase in
commons share dividends over the last six years," Mr. Peller
commented. "With our record performance this year, and our positive
outlook for the future, we are proud to be enhancing value for our
shareholders."
Conference Call
A conference call hosted by the Company will be held Thursday
June 9, 2011 at 10:00 a.m. (ET). The call-in numbers for
participants are local /international (416) 340-2216 or North
American Toll-Free at (866) 226-1792. Please connect with the
conference call at least five minutes before the start time. An
audio replay of the call will be available after the live call by
dialing (416) 695-5800 or (800) 408-3053 and entering access code
4802885#
Financial Highlights (Unaudited)
(Complete consolidated financial statements to follow)
----------------------------------------------------------------------------
(in $000 except as otherwise
stated) Three Months Year
----------------------------------------------------------------------------
For the Period Ended March 31, 2011 2010 2011 2010
----------------------------------------------------------------------------
Sales 56,940 59,295 265,420 263,151
Gross profit 22,165 22,281 103,662 96,324
-------------------------------------------
Gross profit (% of sales) 38.9% 37.6% 39.1% 36.6%
-------------------------------------------
Selling general and
administrative expenses 18,196 18,152 71,703 68,970
Earnings before interest, taxes,
amortization, unrealized loss
(gain) and
other expenses 3,969 4,129 31,959 27,354
Unrealized gain on derivative
financial instruments (291) (781) (117) (3,224)
Other expenses (155) 380 921 1,627
Net and comprehensive earnings
from continuing operations 339 838 10,989 9,526
Net and comprehensive earnings
from a discontinued operation - (200) - 12,135
-------------------------------------------
Net and comprehensive earnings 339 638 10,989 21,661
-------------------------------------------
Earnings per share from
continuing operations - Class A $ 0.03 $ 0.06 $ 0.76 $ 0.66
Earnings per share - basic and
diluted - Class A $ 0.03 $ 0.04 $ 0.76 $ 1.49
Dividend per share - Class A
(annual) $ 0.330 $ 0.330 $ 0.330 $ 0.330
Dividend per share - Class B
(annual) $ 0.288 $ 0.288 $ 0.288 $ 0.288
-------------------------------------------
Class A Common Shares
outstanding (000 shares) 11,294 11,888 11,294 11,888
-------------------------------------------
Cash provided by operations
(after changes in non-cash
working capital items) 12,181 10,411 23,019 17,615
-------------------------------------------
Working capital 28,277 29,357
Shareholders' equity per share $ 8.02 $ 7.63
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Andrew Peller Limited ('APL' or the 'Company') 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 from
vineyards around the world. The Company's award-winning premium and
ultra-premium VQA brands include Peller Estates, Trius, Hillebrand,
Thirty Bench, Crush, Sandhill, Calona Vineyards Artist Series and
Red Rooster. Complementing these premium brands are a number of
popularly priced varietal wine brands including Peller Estates
French Cross in the East, Peller Estates Proprietors Reserve in the
West, Copper Moon, XOXO and Croc Crossing. Hochtaler, Domaine D'Or,
Schloss Laderheim, Royal and Sommet are our key value priced wine
blends. The Company imports wines from major wine regions around
the world to blend with domestic wine to craft these popularly
priced and value priced wine brands. With a focus on serving the
needs of all wine consumers, the Company produces and markets
premium personal winemaking products through its wholly-owned
subsidiary, Global Vintners Inc., the recognized world leader in
personal winemaking products. Global Vintners distributes products
through over 250 Winexpert and Wine Kitz authorized retailers and
franchisees and more than 600 independent retailers across Canada,
United States, United Kingdom, New Zealand and Australia. Global
Vintners award-winning premium and ultra-premium winemaking brands
include Selection, Vintners Reserve, Island Mist, Kenridge, Cheeky
Monkey, Ultimate Estate Reserve, Traditional Vintage and Artful
Winemaker. The Company owns and operates more than 100
well-positioned independent retail locations in Ontario under the
Vineyards Estate Wines, Aisle 43 and WineCountry Vintners store
names. The Company also owns Grady Wine Marketing Inc. based in
Vancouver, and The Small Winemaker's Collection Inc. based in
Ontario; both of these wine agencies are importers of premium wines
from around the world and are marketing agents for these fine
wines. The Company's products are sold predominantly in Canada with
a focus on export sales for our icewine products.
Net earnings from continuing operations before other expenses is
defined as net earnings before the net unrealized gain on financial
instruments, other expenses and net earnings from a discontinued
operation, all adjusted by income tax rates as calculated
below:
(in $000) Three Months Year
----------------------------------------------------------------------------
Period ended March 31, 2011 2010 2011 2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net and comprehensive earnings 339 638 10,989 21,661
----------------------------------------------------------------------------
Unrealized gain on financial
instruments (291) (781) (117) (3,224)
----------------------------------------------------------------------------
Other expenses (155) 380 921 1,627
----------------------------------------------------------------------------
Income tax effect on the above 138 120 (249) 479
----------------------------------------------------------------------------
Net (earnings) loss from a discontinued
operation - 200 - (12,135)
----------------------------------------------------------------------------
Net earnings from continuing operations
before other expenses 31 557 11,544 8,408
----------------------------------------------------------------------------
The Company utilizes EBITA (defined as earnings before interest,
amortization, unrealized derivative (gain) loss, other expenses,
income taxes and net earnings from a discontinued operation). 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.
Andrew Peller Limited common shares trade on the Toronto Stock
Exchange (symbols ADW.A and ADW.B).
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
As at March 31, 2011 and 2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2011 2010
$ $
----------------------------------------------------------------------------
Assets
Current Assets
Accounts receivable 23,390 22,902
Inventories 96,085 89,693
Prepaid expenses and other assets 818 1,818
Income taxes recoverable - 1,327
-------------------
120,293 115,740
Property, plant and equipment 94,154 95,728
Intangibles and other assets 14,170 14,775
Goodwill 38,073 37,473
-------------------
266,690 263,716
-------------------
-------------------
Liabilities
Current Liabilities
Bank indebtedness 48,758 48,877
Accounts payable and accrued liabilities 33,883 28,229
Dividends payable 1,148 1,197
Income taxes payable 1,000 -
Current portion of derivative financial instruments 1,894 1,922
Current portion of long-term debt 5,333 6,158
-------------------
92,016 86,383
Long-term debt 42,720 47,633
Long-term derivative financial instruments 1,578 1,667
Employee future benefits 3,803 4,530
Future income taxes 11,906 9,838
-------------------
152,023 150,051
-------------------
Shareholders' Equity
Capital Stock 7,026 7,375
Retained Earnings 107,641 106,290
-------------------
114,667 113,665
-------------------
266,690 263,716
-------------------
-------------------
The accompanying notes are an integral part of these consolidated financial
statements
ANDREW PELLER LIMITED
Consolidated Statements of Earnings, Comprehensive Earnings and Retained
Earnings
For the Three For the Twelve
Months Ended Months Ended
March 31 March 31
2011 2010 2011 2010
$ $ $ $
-------------------------------------------------------- -------------------
Sales 56,940 59,295 265,420 263,151
Cost of goods sold, excluding
amortization 34,775 37,014 161,758 166,827
--------- --------- --------- ---------
Gross profit 22,165 22,281 103,662 96,324
Selling and administration 18,196 18,152 71,703 68,970
--------- --------- --------- ---------
Earnings before interest and
amortization 3,969 4,129 31,959 27,354
Interest 1,241 1,926 6,673 7,873
Amortization of plant, equipment and
intangible assets 2,098 1,817 8,202 7,991
--------- --------- --------- ---------
Earnings before other items 630 386 17,084 11,490
Net unrealized gains on derivative
financial instruments (291) (781) (117) (3,224)
Other expenses (155) 380 921 1,627
--------- --------- --------- ---------
Earnings before income taxes 1,076 787 16,280 13,087
--------- --------- --------- ---------
Provision for (recovery of) income
taxes
Current (1,748) 172 3,223 3,503
Future 2,485 (223) 2,068 58
--------- --------- --------- ---------
737 (51) 5,291 3,561
--------- --------- --------- ---------
Net and comprehensive earnings for
the year from continuing operations 339 838 10,989 9,526
Net and comprehensive earnings for
the year from a discontinued
operation - (200) - 12,135
--------- --------- --------- ---------
Net and comprehensive earnings for
the year 339 638 10,989 21,661
Retained earnings- Beginning of year 113,349 106,848 106,290 89,416
Purchase and cancellation of Class A
shares (4,900) - (4,900) -
Dividends:
Class A and Class B (1,147) (1,196) (4,738) (4,787)
--------- --------- --------- ---------
Retained earnings - End of year 107,641 106,290 107,641 106,290
--------- --------- --------- ---------
--------- --------- --------- ---------
Net earnings per share from
continuing operations
Basic and diluted
Class A shares 0.03 0.06 0.76 0.66
--------- --------- --------- ---------
--------- --------- --------- ---------
Class B shares 0.02 0.05 0.66 0.57
--------- --------- --------- ---------
--------- --------- --------- ---------
Net earnings (loss) per share from
discontinued operation
Basic and diluted
Class A shares 0.00 (0.02) 0.00 0.83
--------- --------- --------- ---------
--------- --------- --------- ---------
Class B shares 0.00 (0.01) 0.00 0.73
--------- --------- --------- ---------
--------- --------- --------- ---------
Net earnings per share
Basic and diluted
Class A shares 0.03 0.04 0.76 1.49
--------- --------- --------- ---------
--------- --------- --------- ---------
Class B shares 0.02 0.04 0.66 1.30
--------- --------- --------- ---------
--------- --------- --------- ---------
The accompanying notes are an integral part of these consolidated financial
statements
ANDREW PELLER LIMITED
Consolidated Statements of Cash Flows
For the three months ended March 31, 2011 and 2010
For the three For the twelve
months ended months ended
March 31 March 31
2011 2010 2011 2010
$ $ $ $
---------------------------------------------- ------------------- ---------
Cash provided by (used in)
Operating activities
Net earnings for the period 339 838 10,989 9,526
Items not affecting cash:
Loss on disposal of property,
plant and equipment 187 175 865 175
Amortization of plant, equipment
and intangible assets 2,098 1,817 8,202 7,991
Employee future benefits (189) (300) (727) (866)
Net unrealized gains on derivative
financial instruments (291) (781) (117) (3,224)
Future income taxes 2,485 (223) 2,068 58
Amortization of deferred financing
costs 16 294 420 371
Write-off of deferred financing
costs - 267 - 267
Impairment charges - 0 - 1,247
--------- --------- --------- ---------
4,645 2,087 21,700 15,545
Changes in non-cash working capital
items related to operations 7,536 8,324 1,319 2,070
--------- --------- --------- ---------
12,181 10,411 23,019 17,615
--------- --------- --------- ---------
Investing activities
Purchase of other assets (101) (165) (101) (165)
Proceeds from disposal of property,
plant and equipment 722 34 1,488 34
Purchase of property, plant and
equipment (3,424) (613) (8,093) (5,047)
Acquisition of businesses - - (825) (825)
--------- --------- --------- ---------
(2,803) (744) (7,531) (6,003)
--------- --------- --------- ---------
Financing activities
Repurchase of Class A shares (5,249) - (5,249) -
Increase in deferred financing costs - (68) - (979)
Decrease in bank indebtedness (1,600) (7,726) (119) (3,315)
Payment to partially unwind a
derivative financial instrument - - - (1,600)
Repayment of long-term debt (1,333) (1,333) (5,333) (22,750)
Dividends paid (1,196) (1,196) (4,787) (4,787)
--------- --------- --------- ---------
(9,378) (10,323) (15,488) (33,431)
--------- --------- --------- ---------
Cash used in continuing operations - (656) - (21,819)
Cash provided from discontinued
operation - 656 - 21,819
--------- --------- --------- ---------
Cash at beginning and end of year - - - -
--------- --------- --------- ---------
--------- --------- --------- ---------
Supplemental disclosure of cash flow
information
Cash paid (received) during the year
from continuing operations for
Interest 1,175 1,747 6,601 7,819
Income taxes (2,009) 3,557 896 38
Cash paid (received) during the year
from discontinued operation for
Income taxes - (155) - 602
Cash paid (received) during the year
for
Interest 1,175 1,747 6,601 7,819
Income taxes (2,009) 3,402 896 640
The accompanying notes are an integral part of these consolidated financial
statements
Contacts: Andrew Peller Limited Mr. Peter Patchet CFO and EVP
Human Resources (905) 643-4131 Ext. 2210
peter.patchet@andrewpeller.com
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