Russell Breweries Inc.
TSX VENTURE : RB

Russell Breweries Inc.

October 30, 2009 12:11 ET

Russell Breweries Inc. Announces 4th Quarter and Annual Results for 2009

Company Experiences 40% Growth and 28% Reduction in Net Loss

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 30, 2009) - Russell Breweries Inc. (TSX VENTURE:RB), releases its financial results for the fourth quarter and year ended June 30, 2009.

"Taking into account the extremely challenging conditions in a deteriorating economy over the past twelve months, financial results for fiscal 2009 ("F2009") continued to be positive," said Brian Harris, Chief Executive Officer. "The Company continued to grow significantly and the bottom line performance has improved."

Significant Fourth Quarter Events

Gross Sales for Q4 2009F were basically flat vs. the same period last year reflecting a much tighter market for the Company's premium beer brands in total as the economy continued to contract. Net Sales for Q4 2009F were $1,462,736 down $11,064 or 0.75% compared to $1,473,800 for the three months ended June 30, 2008 (Q4 2008F).

The gross margin for Q4 2009F was down $148,426 or 19.52% to $612,003 compared to $760,429 for Q4 2008F. Overall gross margin percentage declined by 9.76% to 41.84% in Q4 2009F from 51.60% in Q4 2008F, as a result of the mix of lower margin products and higher raw material, freight costs and keg amortization in Russell Brewing Company.

Selling, general and administration expense for Q4 2009F decreased $620,460 or 44.19% to $783,575 compared to $1,404,035 for Q4 2008F. The significant decreases were, stock based compensation decrease of $453,948 to $nil from $453,948, consulting fees decrease of $52,567 to $44,633 from $97,200, bank charges decrease of $35,154 to $14,731 from $49,885, freight and administrative labour decrease of $45,715 to $202,491 from $248,206, management fees decrease of $24,934 to $37,135 from $62,069, investor relations decrease of $18,372 to $3,171 from $21,543, and refundable container recovery increase of $144,211 to $144,211 from $nil, which were offset by professional fee increase of $53,078 to $109,696 from $56,618.

Net loss decreased $698,255 or 60.02% to $465,190 for Q4 2009F or $0.02 per share compared to the net loss of $1,163,445 or $0.03 for Q4 2008F.

Annual Financial Highlights

Net Sales for 2009F YTD were $5,574,021 up $1,606,560 or 40.49% compared to $3,967,461, for the year ended June 30, 2008 (2008F YTD) a significant improvement given the economic climate. The sales increase is partially a result of the impact of the Company's Fort Garry subsidiary ("Fort Garry") with net sales contribution of $3,318,625 (2008F YTD: $2,101,892, Fort Garry is only included from October 23, 2007) and additionally increased sales volume in the Company's British Columbia operating subsidiary Russell Brewing Company Ltd, from both new accounts and increased throughput from existing accounts compared to 2008F YTD of 77.89% ($3,318,625 in 2009F YTD vs $1,865,569 in 2008F YTD).

The gross margin for 2009F YTD improved $321,580 or 13.78% to $2,655,350 compared to $2,333,770 for 2008F YTD. Overall gross margin percentage declined by 11.18% to 47.64% in 2009F YTD from 58.82% in 2008F YTD, as a result of the mix of lower margin products and higher raw material, freight costs and keg amortization in Russell Brewing Company.

Selling, general and administration expense for 2009F YTD decreased $621,436 or 14.94% to $3,539,284 compared to $4,160,720 for 2008F YTD. The significant decreases were, stock based compensation decrease of $734,748 to $nil from $734,748, consulting fees decrease of $80,641 to $47,483 from $128,124, investor relations decrease of $66,270 to $7,121 from $73,391, and refundable container recovery increase of $144,211 to $144,211 from $nil, which were offset by freight and administrative labour increase of $136,575 to $940,612 from $804,037, management fees increase of $69,758 to $271,313 from $201,555, professional fee increase of $35,236 to $300,468 from $265,232, rent and utilities increase of $73,436 to $399,977 from $326,541, and office expense increase of $27,617 to $112,524 from $84,907.

Net loss decreased $854,049 or 28.17% to $2,177,289 for 2009F YTD or $0.08 per share compared to the net loss of $3,031,338 or $0.12 for 2008F.

Fiscal 2010 Outlook

"The Company is now well positioned with a balanced product portfolio to continue to grow without significant capital expenditures even if we are faced with a flat economy over the next 12 months," said Brian Harris, Chief Executive Officer.

Additional Information

For further details the Company's complete MD&A and financial statements for the year ended June 30, 2009 will be available on the investor section of the Russell website at www.russellbeer.com. Additional information relating to the Company, including its Annual Information Form is or will be available there and on SEDAR at www.sedar.com.

About Russell Breweries Inc.

One of BC's fastest growing companies, Russell Breweries Inc produces premium beers in Western Canada in breweries located in BC and Manitoba. All products are held to the highest quality standards, brewed without any preservatives, ensuring that the passion that goes into crafting the beers comes through in the taste. Russell Breweries Inc. is a public company trading on the TSX Venture Exchange under the symbol "RB".

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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