Colabor Group Inc.
TSX : GCL

Colabor Group Inc.

February 24, 2010 16:43 ET

Groupe Colabor Inc.: Record Financial Results Despite the Recession

BOUCHERVILLE, QUEBEC--(Marketwire - Feb. 24, 2010) - Colabor Group Inc. (TSX:GCL) reports its results for its fiscal year ended December 31, 2009.

It should be recalled that on August 25, 2009, Colabor Income Fund (the "Fund") converted to a corporation through the acquisition of about $130M in tax losses for $5M paid to ConjuChem Biotechnologies Inc.

2009 Fiscal Year Highlights



- Sales up 3.17% to $1,183K

- EBITDA up 6.29% to $42,800K

- Net earnings rose $8,296K to $16,671K

- Debt/EBITDA ratio: 1.31:1.00 (banking syndicate's
requirement: less than 3.00:1.00)

- Interest coverage ratio: 6.83:1.00 (banking syndicate's
requirement: greater than 3.50:1.00)


If Colabor's conversion to a corporation had occurred on January 1, 2009, some of its results would have been:



- Earnings per share: basic:$1.10; diluted: $1.06

- Cash flows per share: basic:$1.81; diluted: $1.59

- Annual dividend: $1.08

- Payout ratio: basic: 98.2%; diluted: 101.9%

- Cash flow payout ratio: basic: 60%; diluted: 68%


Shareholders benefit from a total return of 43.1% in 2009



- Share price: as at January 1, 2009: $8.49; as at December 31, 2009:
$11.07; High:$11.25 (July 24); Low: $7.37 (January 8)

- Share price increase from January 1, 2009 to December 31, 2009: 30.4%

- Dividend (distribution) yield on share price as at January 1, 2009: 12.7%

- Total return: 43.1%


Results of Operations

The results of operations below should be read in conjunction with the Current Economic Situation section in Management's Discussion and Analysis and the following facts:



- The conversion to a corporation on August 25, 2009, impacted the
consolidated earnings;

- Results subsequent to the Bruce Edmeades acquisition are only included
since March 17, 2008 for the 2008 fiscal year, but are included since
January 1 for the 2009 year;

- Results subsequent to the Bertrand, distributeur en alimentation
acquisition are only included since April 28, 2008 for the 2008 fiscal
year, but are included since January 1 for the 2009 year;

- The 2009 fourth quarter includes 110 days compared to 116 days in 2008.
For comparison purposes, sales for the 2009 fourth quarter have been
adjusted based on the number of days in 2008, i.e. 116 (see 2009-12-31
adjusted column), to display the actual organic growth.


Consolidated Earnings (in thousands of dollars, except per share /
unit amounts)

2009-12-31 2008-12-31
(365 days) (366 days) Variance
$ $ $ %
---------------------------------------------------------------------------
Sales 1,182,481 100,00% 1,146,102 100.00% 36,379 3.17%
Earnings before
financial expenses,
amortization and
income taxes 42,800 3.62% 40,269 3.51% 2,531 6.29%
---------------------------------------------------------------------------
Financial expenses 6,265 0.53% 7,263 0.63% (998) -13.74%
Amortization of
property, plant
and equipment 3,864 0.33% 4,039 0.35% (175) -4.33%
Amortization of
intangible assets 9,450 0.80% 8,706 0.76% 744 8.55%
---------------------------------------------------------------------------
19,579 1.66% 20,008 1.74% (429) -2.14%
---------------------------------------------------------------------------
23,221 1.96% 20,261 1.77% 2,960 14.61%
Restructuring and
conversion to
corporation expenses 2,125 0.18% 2,125 N/A

Expenses related to
the loss of a customer 416 0.04% 416 N/A
---------------------------------------------------------------------------

Earnings before income
taxes and non-
controlling interest 20,680 1.75% 20,261 1.77% 419 2.07%

Income taxes:
Current (recoverable)(1,642) -0.14% 4,405 0.38% (6,047) -137.28%
Future 1,650 0.14% 863 0.08% 787 91.19%
---------------------------------------------------------------------------
8 0.00% 5,268 0.46% (5,260) -99.85%
---------------------------------------------------------------------------
Earnings before
non-controlling
interest 20,672 1.75% 14,993 1.31% 5,679 37.88%
Non-controlling
interest 4,001 0.34% 6,618 0.58% (2,617) -39.54%
---------------------------------------------------------------------------
Net earnings 16,671 1.41% 8,375 0.73% 8,296 99.06%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Basic earnings per
share / unit $1.03 $0.64
---------------------------------------------------------------------------
---------------------------------------------------------------------------


2009-12-31 2008-12-31
(110 days) (116 days)
(unaudited) (unaudited) Variance
$ $ $ %
---------------------------------------------------------------------------
Sales 364,973 100.00% 398,906 100.00% (33,933) -8.51%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Earnings before
financial
expenses,
amortization and
income taxes 15,073 4.13% 15,472 3.88% (399) -2.58%
---------------------------------------------------------------------------
Financial expenses 1,874 0.51% 2,399 0.60% (525) -21.88%
Amortization of
property, plant and
equipment 1,125 0.31% 1,543 0.39% (418) -27.09%
Amortization of
intangible assets 2,894 0.79% 3,613 0.91% (719) -19.90%
---------------------------------------------------------------------------
5,893 1.61% 7,555 1.90% (1,662) -22.00%
---------------------------------------------------------------------------
9,180 2.52% 7,917 1.98% 1,263 15.95%

Expenses related to
the loss of a customer 416 0.11% 416 N/A
---------------------------------------------------------------------------

Earnings before income
taxes and
non-controlling
interest 8,764 2.40% 7,917 1.98% 847 10.70%

Income taxes:
Current (recoverable)(1,844) -0.51% 1,862 0.47% (3,706) -199.03%
Future 1,606 0.44% (627) -0.16% 2,233 -356.14%
---------------------------------------------------------------------------
(238) -0.07% 1,235 0.31% (1,473) -119.27%
---------------------------------------------------------------------------
Earnings before
non-controlling
interest 9,002 2.47% 6,682 1.67% 2,320 34.72%
Non-controlling
interest 0.00% 2,356 0.59% (2,356) -100.00%
---------------------------------------------------------------------------
Net earnings 9,002 2.47% 4,326 1.08% 4,676 108.09%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Basic earnings per
share / unit $0.53 $0.33
---------------------------------------------------------------------------
---------------------------------------------------------------------------


Sales

2009-12-31
(365 day)
--------------------------------------------------------------
Comparable Sales attributable Total
sales to acquisitions sales
--------------------------------------------------------------
Wholesale Segment
Retail 140,171 140,171
Foodservice 371,921 371,921
--------------------------------------------------------------
512,092 512,092
Inter-segment
elimination (79,988) (17,108) (97,096)
--------------------------------------------------------------
432,104 (17,108) 414,996
Distribution Segment
Foodservice 678,882 88,603 767,485
--------------------------------------------------------------
1,110,986 71,495 1,182,481
--------------------------------------------------------------
--------------------------------------------------------------


Comparable sales
----------------------------------------------------------------
2008-12-31 Variance
(366 days) Variance (Total sales)
----------------------------------------------------------------
$ $ % $ %
-----------------------------------------------------------------
Wholesale Segment
Retail 138,763 1,408 1.0% 1,408 1.0%
Foodservice 346,452 25,469 7.4% 25,469 7.4%
----------------------------------------------------------------
485,215 26,877 5.5% 26,877 5.5%
Inter-segment
elimination (64,338) (15,650) N/A (32,758) N/A
----------------------------------------------------------------
420,877 11,227 2.7% (5,881) -1.4%
Distribution Segment
Foodservice 725,225 (46,343) -6.4% 42,260 5.8%
----------------------------------------------------------------
1,146,102 (35,116) -3.1% 36,379 3.2%
----------------------------------------------------------------

Sales (in thousands of dollars)
2009-12-31
(110 days)
(unaudited)
-------------------------------------------------------------------------
Sales
attributable
Comparable sales to acquisitions Total sales
-------------------------------------------------------------------------
$ $ $
Wholesale Segment
Retail 51,703 51,703
Foodservice 117,653 117,653
-------------------------------------------------------------------------
169,356 169,356
Inter-segment
elimination (30,901) (30,901)
-------------------------------------------------------------------------
138,455 138,455
Distribution Segment
Foodservice 226,518 226,518
-------------------------------------------------------------------------
364,973 364,973
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Comparable sales
--------------------------------------------------------------------------
2009-12-31 2008-12-31 Variance
(adjusted) (116 days) (Total
(unaudited) (unaudited) Variance sales)
--------------------------------------------------------------------------
$ $ $ % $ %
Wholesale Segment
Retail 54,523 52,594 1,929 3.7% (891) -1.7%
Foodservice 124,070 127,816 (3,746) -2.9% (10,163) -8.0%
--------------------------------------------------------------------------
178,594 180,410 (1,816) -1.0% (11,054) -6.1%
Inter-segment
elimination (32,587) (37,155) 4,568 N/A 6,254 N/A
--------------------------------------------------------------------------
146,007 143,255 2,752 1.9% (4,800) -3.4%
Distribution Segment
Foodservice 238,874 255,651 (16,777) -6.6% (29,133) -11.4%
--------------------------------------------------------------------------
384,881 398,906 (14,025) -3.5% (33,933) -8.5%
--------------------------------------------------------------------------
--------------------------------------------------------------------------


Despite the serious recession in Canada, the Company has fared well in the past year, with a 3.2% growth in sales over 2008, taking into consideration growth in sales including sales from acquisitions and a year-over-year decrease of only 3.1% in comparable sales.

Wholesale Segment

The recession had a lesser impact on this Segment, which services primarily distributors in Quebec and the Atlantic provinces, as evidenced by organic growth of 2.7% for the fiscal year and 1.9% for the fourth quarter.

Readers should bear in mind, when reading the above tables, that the 1.4% decrease for the year and the 3.4% decrease in total sales for 2009 compared to 2008 is solely attributable to the elimination of inter-segment sales.

Retail

This sector continues to benefit from the major procurement agreements signed in 2008 by affiliated-wholesalers in this sector, with, among others, an integrated oil company, which contributed to organic growth of 1% for the year and 3.7% for the quarter.

Foodservice

Considering that inter-segment eliminations relate to foodservices, organic growth of comparable foodservices sales was 3.4% for the year and 1.1% for the quarter. This is a fairly good achievement, in light of the serious recession and the poor weather conditions in the summer of 2009.

Distribution Segment

The overall 3.1% decline in the Company's comparable sales is attributable to the Distribution Segment which posted a 6.4% decrease, primarily as a result of the Summit Division, whose activities are mainly in Ontario, the province that was likely the hardest hit by the recession, due to its manufacturing structure and where the restaurant segment, including fast food, cafeteria and independent restaurants was affected.

Additionally, as was the case for the Wholesale Segment, the poor weather conditions affected this Segment as well.

Lower sales are also attributable, to a lesser extent, to the Bertrand Division, which, in 2008, benefited from the 400th anniversary of the founding of Quebec City. In 2009, tourism activity was not as strong in this region.


Earnings Before Financial Expenses, Amortization, Significant Non-recurring Items and Income Taxes (EBITDA)

Gross profit

Gross profit is composed of the following items

- Wholesale Segment: Profit on gross warehouse sales only, which consists primarily of a profit margin on private brand-name products and profit on inventory held. No profit margin is recognized on direct sales. Income is attributed on such sales for purposes of rebates from suppliers only.

Distribution Segment: Product acquisition cost with a percentage mark-up that is market-driven or negotiated in current agreements.

- Rebates from suppliers

A significant portion of Colabor's gross profit is derived from rebates from suppliers. These rebates consist of: (i) agreements with suppliers relating principally to distribution agreements, central billing, truck load allowance and other incentives, (ii) rebates received from suppliers based on buying volumes, (iii) cash discounts on purchases based on terms of sale, and (iv) net advertising funds received in connection with promotional activities.

Selling, operating and administrative expenses

The main expenses consist of salaries and employee benefits, delivery costs for the Distribution Segment and occupancy costs relating to the Company's distribution centres.

The Company had to react promptly to address the decrease in comparable sales described above, particularly in the Distribution Segment.

The Company froze senior management salaries and took this opportunity to review its operating and administrative processes to eliminate operations with no added value for the enterprise.

It was therefore able to increase its EBITDA percentage from 3.51% for the 2008 year to 3.62% in 2009 and from 3.88% in the 2008 fourth quarter to 4.13% for the 2009 fourth quarter.

The increase is attributable to the following:

- Organic growth was maintained in the Wholesale Segment which generated superior agreements with suppliers.

- Summit purchases from certain suppliers are now billed under the Wholesale Segment, which increases the profitability of supplier agreements, as such agreements tend to be more significant when negotiated by the Wholesale Segment.

- Since the start of the year, each division has reviewed its operations, which has led to a significant reduction in certain types of expenses.

- The Bertrand acquisition, which made it possible to generate a number of purchasing synergies.

- Profitability of the Cambridge distribution centre, operated by Summit and acquired from Bruce Edmeades, operated at a loss in 2008.

Restructuring and Conversion to a Corporation Expenses

As described under the General section in Management's Discussion and Analysis, the Fund converted to a corporation on August 25, 2009. A number of expenses were incurred for this transaction, in particular, legal and accounting fees and the cost of registering on financial markets. Additional expenses were incurred to streamline the organization's overall legal structure, in particular, elimination of Colabor Income Fund and Colabor Operating Trust and the transformation of Bertrand Food Distributor Inc. into a division.

The Company's management recorded these expenses in accordance with EIC-170, Conversion of an Unincorporated Entity to an Incorporated Entity, published by the Canadian Institute of Chartered Accountants.

Expenses Related to the Loss of a Customer

As mentioned in the 2009 third quarter MD&A and described under the Subsequent Event section of Management's Discussion and Analysis, in early February 2010, the Company lost an important distribution agreement served by the Summit division.

While management has already initiated measures to replace this contract, it has also undertaken an operational reorganization to counter the impact of this situation on its earnings. The reorganization includes cost-cutting measures, particularly in the area of labour costs.
The Company has recognized a $416,000 non-recurring expenses in its fourth quarter earnings in this respect.

Income Taxes

The acquisition of the assets of Summit Food Service Distributors Inc. by the Fund was finalized and carried out on January 8, 2007. Since this transaction was considered an "undue expansion" by the Department of Finance in its ruling rendered at the end of 2007, the Fund became taxed immediately in 2007 instead of in 2011.

As explained under the General section, on August 25, 2009, the Fund became a corporation as a result of a Plan of Arrangement with Biotechnologies ConjuChem Inc., and acquired approximately $130M in tax losses for $5M.

Since the start of the year, the Company had recorded income taxes, however, subsequent to the above transaction, it recognized a current and future income taxes recovery to immediately benefit from the loss-carryforwards acquired in the ConjuChem transaction during the third quarter.

During the fourth quarter, the Company continued to use the tax losses to reduce current income taxes and recover some prior years' taxes.

For future income taxes, the Company uses the liability method to account for its income taxes. Under this method, income tax assets and liabilities are determined according to differences between the carrying amounts and tax bases of assets and liabilities. They are measured by applying enacted or substantively enacted tax rates and laws at the date of the financial statements for the years in which the temporary differences are expected to reverse.

Another future income tax item is attributable to the amortization of the ConjuChem purchase price, $5,000,000, calculated proportionally to the utilization of the future income tax asset.

Non-controlling Interest

Additionally, in connection with the conversion to a corporation described in the General section of Management's Discussion and Analysis, unitholders who had a non-controlling interest in the Fund converted their exchangeable Colabor LP units into shares of the Company and the Company therefore recorded the carrying amount of the non-controlling interest in capital stock.

An amount of $4,001,000 has been recognized as a non-controlling interest for activities preceding the conversion.

No additional expenses will be recognized in earnings thereafter.

Basic and Diluted Earnings per Share; Basic and Diluted Cash Flows per Share; Payout Ratio;

It is difficult for investors to assess these ratios for the year ended December 31, 2009 because, for part of the year, the Company operated as an income fund (January 1 to August 24) which included a non-controlling interest that was eliminated upon conversion to a corporation and, upon conversion current income taxes became nil through the acquisition of ConjuChem's tax losses.

In order to provide investors with some insight into the calculation of earnings per share, basic and diluted cash flows per share and the basic and dilute payout ratio, it was assumed that the Company was a corporation as of January 1, 2009, which eliminated the non-controlling interest, current income taxes and the non-recurring items.



EPS and cash flows per share

Diluted Diluted cash
EPS EPS Cash flows flows
-------------------------------------------------------------------------
$000 $000 $000 $000

Net earnings 16,671 16,671 16,671 16,671
Non-controlling
interest 4,001 4,001 4,001 4,001
Future income taxes 1,650 1,650
Current income taxes (1,642) (1,642) (1,642) (1,642)
Expenses related to
the loss of a customer 416 416 416 416
Restructuring and
conversion to
corporation expenses 2,125 2,125 2,125 2,125
Amortization of
intangible assets 9,450 9,450
Amortization of
property, plant
and equipment 3,864 3,864
Amortization of
deferred
financing expenses 121 121
Compensation cost
from long-term
incentive plan 514 514
Amortization of
debenture
transaction costs 1,000 1,000 1,000
Interest reduction
if the debentures
were converted
to shares 3,434 3,434
Acquisition of
property, plant
and equipment (2,670) (2,670)
-------------------------------------------------------------------------

Adjusted net
earnings 21,571 26,005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash flow 35,500 38,934
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Shares outstanding,
end of year 19,659,632 19,659,632 19,659,632 19,659,632
Adjustment to take
account of
debenture
conversion 4,785,854 4,785,854
-------------------------------------------------------------------------
Number of shares
for calculation
purposes 19,659,632 24,445,486 19,659,632 24,445,486
-------------------------------------------------------------------------
-------------------------------------------------------------------------

EPS/cash flow
per share $1.10 $1.06 $1.81 $1.59
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Annual dividend $1.08 $1.08 $1.08 $1.08
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Dividend to EPS/
cash flow per share
ratio 98.2% 101.9% 60% 68%
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Consolidated Balance Sheets
(in thousands of dollars)
2009-12-31 2008-12-31
-------------------------------------------------------------------------
ASSETS $ $
Current assets
Accounts receivable 75,438 80,804
Income taxes receivable 685
Inventory 71,909 73,233
Prepaid expenses 1,500 1,664
Future income taxes 8,540
-------------------------------------------------------------------------
158,072 155,701
Deferred financing expenses 158 279
Share investment in Colabor Investments
Inc., at cost 6,159 6,159
Property, plant and equipment 13,835 15,029
Intangible assets 133,869 143,319
Goodwill 72,317 69,574
Future income taxes 1,802
-------------------------------------------------------------------------
386,212 390,061
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank overdraft 17,126 7,714
Accounts payable and accrued liabilities 65,762 85,945
Income taxes payable 1,855
Balance of purchase price payable,
bearing interest of 4.5% 3,750 3,750
Balance of purchase price payable 6,331 6,353
Dividends payable 7,453
Distributions payable to unitholders 1,307
Distributions payable to holders of
exchangeable Colabor LP units 456
Sales rebates payable 13,808 15,166
Deferred revenue 961 1,115
Deferred credit 7,290
Instalments on long-term debt 636 707
-------------------------------------------------------------------------
123,117 124,368
Bank loan 49,335 47,501
Balance of purchase price payable, bearing
interest of 4.5% 3,750
Long-term debt 307 942
Debentures 46,711 45,725
Accrued benefit liability for employee benefits 787 772
Deferred credit 19,875
Future income taxes 17,414
Non-controlling interest 29,713
-------------------------------------------------------------------------
240,132 270,185
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY/UNITHOLDERS' EQUITY
Capital stock/unitholders' capital account 143,018 135,323
Option to convert debentures 2,314 2,315
Contributed surplus 447 349
Shares / units held for the long-term
incentive plan (1,248) (875)
Retained earnings (deficit) 1,549 (17,236)
-------------------------------------------------------------------------
146,080 119,876
-------------------------------------------------------------------------
386,212 390,061
-------------------------------------------------------------------------
-------------------------------------------------------------------------



Cash Flow
Consolidated Cash Flows
(in thousands of dollars)

2009-12-31 2008-12-31 2009-12-31 2008-12-31
(110 days) (116 days) (365 days) (366 days)
(unaudited) (unaudited)
-------------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net earnings 9,002 4,326 16,671 8,375
Non-cash items
Amortization of property,
plant and equipment 1,125 1,543 3,864 4,039
Amortization of intangible
assets 2,894 3,613 9,450 8,706
Amortization of deferred
financing expenses 37 38 121 110
Non-controlling interest 2,356 4,001 6,618
Future income taxes 1,606 (627) 1,650 863
Compensation cost from
long-term incentive plan 163 126 514 384
Amortization of
transaction costs
related to debentures 301 286 1,000 910
-------------------------------------------------------------------------
15,128 11,661 37,271 30,005
-------------------------------------------------------------------------
Changes in operating
assets and liabilities
Accounts receivable 19,205 18,928 5,366 (1,825)
Income taxes receivable (685) 518 (685)
Inventory (6,541) (9,844) 1,324 (8,492)
Prepaid expenses 817 2,127 164 20
Accounts payable and
accrued liabilities (12,555) (2,885) (20,183) 14,532
Income taxes payable (1,413) 783 (1,855) 178
Sales rebates payable 3,186 5,007 (1,358) 1,713
Deferred revenue (508) (786) (154) 656
Accrued benefit
liability for
employee benefits 15 20 15 20
-------------------------------------------------------------------------
1,521 13,868 (17,366) 6,802
-------------------------------------------------------------------------
Cash flows from operating
activities 16,649 25,529 19,905 36,807
INVESTING ACTIVITIES
Transaction with ConjuChem (5,000)
Business acquisitions 1,242 (69,182)
Payment of balances of
purchase price (6,515)
Property, plant and
equipment (1,468) (1,462) (2,670) (2,340)
-------------------------------------------------------------------------
Cash flows from investing
activities (1,468) (220) (14,185) (71,522)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Bank loan (26,757) (17,239) 1,834 21,352
Financing expenses (225)
Distributions paid to
unitholders (1,011) (5,228) (11,467) (14,011)
Distributions paid on
exchangeable Colabor
LP units (353) (1,825) (4,004) (5,476)
Repayment of long-term
debt (230) (373) (706) (779)
Purchase of units held
by the Fund for
long-term incentive plan (789) (575)
Issue of trust units 38,022
Unit issue expenses (384) (1,534)
-------------------------------------------------------------------------
Cash flows from financing
activities (28,351) (25,049) (15,132) 36,774
-------------------------------------------------------------------------
Net change in bank overdraft (13,170) 260 (9,412) 2,059
Bank overdraft, beginning
of year (3,956) (7,974) (7,714) (9,773)
-------------------------------------------------------------------------
Bank overdraft, end of year (17,126) (7,714) (17,126) (7,714)
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Credit Facilities

The Company has entered into a three-year agreement with a banking syndicate for operating credit facilities for an authorized amount of $100M secured by a first ranking hypothec on the Company's assets.

Under the terms of the credit agreement, the Fund is required to maintain (i) a prescribed ratio of total debt (excluding the debentures) to EBITDA less than 3.00:1.00 and (ii) a prescribed ratio of EBITDA to interest expenses greater than 3.50:1.00.

Based on the banking syndicate's method of calculation, the debt/EBITDA ratio is 1.31:1.00 and the interest coverage ratio is 6.83:1.00 times.

During the year, the operating credit increased $1.8M to $49.3M. Cash in the amount of $5M was used to pay ConjuChem on the conversion to a corporation and $6.5M to repay balances of sale price.

Distributions/Dividends

On September 15, 2009, the Fund made a final distribution to unitholders of record on August 31 on a prorata basis for the number of days in the period of August 1 to August 24 calculated on the previous monthly distribution of $0.0897 per unit.

Following its conversion to a corporation, Colabor will now make quarterly dividend payments. The first dividend was paid on January 15, 2010 to shareholders of record on December 31, 2009 and amounted to $7,452,966. The dividend was calculated on an annual basis of $1.08 per share for the period of August 25, the conversion date, to December 31, 2009. This amount is included as a dividend payable in the December 31, 2009 balance sheet. Thereafter, a quarterly dividend of $0.27 will be paid, which is equivalent to an annual dividend of $1.08.

In management's opinion, cash flows from operating activities and the funds from operating credits are sufficient to support planned capital expenditures, working capital requirements, quarterly dividends of $0.27 per share and will comply with the banking syndicate's ratio requirements.

Additional Information

The Company's MD&A and financial statements will also be available on SEDAR (at www.sedar.com) following publication of this News Release. Additional information about Colabor Income Fund may also be found on SEDAR as well as on the Company' Internet site at www.colaborincomefund.com (currently under reconstruction).

About Colabor

Colabor is a wholesaler and distributor of food and non-food products serving the retail (grocery stores, convenience stores, etc.) and food-service (cafeterias, restaurants, hotels, restaurant chains, etc.) markets.

Caution

This News Release may contain forward-looking statements reflecting the opinions or present expectations of Colabor Group Inc. concerning their performance as well as their respective business activities and future events. These statements are subject to a number of risks, uncertainties and assumptions. Actual results or events may differ.

Contact Information

  • Colabor Group Inc.
    Gilles C. Lachance
    President and Chief Executive Officer
    450-449-0026 ext. 265
    450-449-6180 (FAX)
    glachance@colabor.com
    or
    Colabor Group Inc.
    Michel Loignon, CA
    Vice-President & Chief Financial Officer
    450-449-0026 ext. 235
    450-449-6180 (FAX)
    mloignon@colabor.com