Andres Wines Ltd.
TSX : ADW.B
TSX : ADW.NV.A

Andres Wines Ltd.

August 10, 2005 15:32 ET

Andres Wines Announces First Quarter Results

GRIMSBY, ONTARIO--(CCNMatthews - Aug. 10, 2004) -

Acquisitions of Premium Wineries to Enhance Growth Profile

Andres Wines Ltd. ("Andres") (TSX:ADW.NV.A)(TSX:ADW.B) announced today its results for the three months ended June 30, 2005. Sales for the first quarter of fiscal 2006 rose 16.3% to $46.8 million from $40.3 million last year. The increase is due primarily to the Company's successful initiatives to grow sales of its premium and ultra-premium wines and the contribution of Cascadia Brands and Thirty Bench Winery, both acquired in May 2005. The sales increase resulted in an 8.2% rise in net income to $2.0 million or $0.42 per Class A share from $1.9 million or $0.39 per Class A share last year.

"The acquisitions of Cascadia Brands and Thirty Bench Winery have enhanced our presence in the Canadian wine industry and will result in solid contributions to our growth in the coming quarters," commented John Peller, President and Chief Executive Officer.

Cascadia is one of Canada's largest producers of premium brand wines, craft beer and spirits with production facilities in Kelowna and Vancouver, British Columbia. The purchase significantly enhances the Company's presence in the strong Western Canadian market, and provides the Company with opportunities to capture production and overhead synergies in its B.C. operations. Thirty Bench is an ultra-premium wine producer located in the heart of the Beamsville Bench in Ontario's Niagara wine producing region. The acquisition of the winery, its brands, and 70 acres of vineyards provides Andres a solid presence in one of Canada's most sought after viticulture areas, and adds to the Company's premium estate wineries in near-by Niagara-on-the-Lake.

Earnings before interest, taxes and amortization (EBITA) for the three months ended June 30, 2005 increased 19.8% to $5.7 million from $4.7 million last year, primarily due to the higher sales. Selling and administration expenses rose in the current period due to the acquisitions. As a percentage of sales, selling and administrative expenses improved to 29.6% in the quarter from 30.9% last year.

The changes to the Company's balance sheet compared to the end of fiscal 2005 are primarily due to the acquisitions completed in the first quarter of fiscal 2006. Working capital was $39.9 million at June 30, 2005 compared to $29.8 million at March 31, 2005. The increase in bank indebtedness and long-term debt at the end of the first quarter of fiscal 2006 compared to the prior year-end was due to the two acquisitions completed in the period. Shareholders' equity at June 30, 2005 rose to $88.4 million or $17.84 per share from $87.2 million or $17.59 per share as at March 31, 2005.

Cash from operating activities, after changes in non-cash working capital items, was $2.2 million compared to $2.8 million in the first quarter of fiscal 2005. The change is due principally to a decrease in accounts payable due to the timing of payments on purchases of bulk wine.

Andres continues to pay an annual dividend of $0.644 per Class A share and $0.560 per Class B share.

"We were pleased with our results in the first quarter, and anticipate a strong performance through the balance of the year," commented John Peller, President and Chief Executive Officer.



Financial Highlights (complete statements follow)

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Three Months
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Period Ended June 30, 2005 2004
(in $,000 except per share amounts)
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Sales 46,831 40,256
EBITA 5,679 4,741
Net Earnings 2,012 1,859
Net Earnings per Share (Basic per Class A share) $0.42 $0.39
Cash from Operations (after changes in non-cash
working capital items) 2,230 2,768
Working Capital 39,877 30,856
Shareholders' Equity per Share $17.84 $16.71
Weighted Average Shares Outstanding 4,956,074 4,931,395
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Andres Wines Ltd. 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 Valley and vineyards around the world. The Company's award-winning premium and ultra-premium brands include Peller Estates, Trius, Hillebrand Estates, Thirty Bench and Sandhill, Copper Moon and Calona Vineyards Artist Series VQA wines. Complementing these premium brands are a number of popular priced products including Hochtaler, Domaine D'Or, Schloss Laderheim, Royal and Sommet. With the acquisition of Cascadia Brands Inc, the Company also markets craft beer under the Granville Island brand and spirits under International Potters Distillers. With a focus on serving the needs of all wine consumers, the Company produces and markets consumer-made wine kit products through Winexpert Inc. and Vineco International. In addition, the Company owns and operates Vineyards Estate Wines and WineCountry Vintners, an independent wine retailer in Ontario with more than 100 well-positioned retail locations. Andres common shares trade on the Toronto Stock Exchange (symbols ADW.NV.A and ADW.B).

The Company utilizes EBITA (defined as earnings before interest, incomes taxes, depreciation and amortization) to measure its financial performance. EBITA is not a recognized measure under GAAP. Management believes that EBITA is a supplemental measure to net earnings (loss), 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 (loss) 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.




ANDRES WINES LTD.
CONSOLIDATED BALANCE SHEETS
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Unaudited Audited
June 30, 2005 March 31, 2005
$ $
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Assets
Current Assets

Accounts receivable 19,829 14,132
Inventories 78,751 62,045
Prepaid expenses 2,981 2,531
Income taxes recoverable - 693
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101,561 79,401
Property, plant and equipment 78,896 55,897
Goodwill 30,657 23,759
Intangibles and other assets 14,239 3,762
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225,353 162,819
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Liabilities
Current Liabilities

Bank indebtedness 32,328 31,756
Accounts payable and accrued liabilities 22,533 14,795
Dividends payable 777 777
Income taxes payable 796 -
Current portion of long - term debt 5,250 2,250
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61,684 49,578

Long-term debt 63,750 17,313
Future income taxes 11,516 8,760
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136,950 75,651
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Shareholders' Equity

Capital Stock 7,244 7,244
Retained Earnings 81,159 79,924
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88,403 87,168
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225,353 162,819
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ANDRES WINES LTD.
Consolidated Statements of Earnings and Retained Earnings
For the three months ended June 30, 2005 and 2004
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These financial statements have not been 2005 2004
reviewed by our auditors (UNAUDITED) $ $
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Sales 46,831 40,256
Cost of goods sold 27,296 23,072
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Gross profit 19,535 17,184
Selling and administration 13,856 12,443
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Earnings before interest and amortization 5,679 4,741
Interest 864 505
Amortization 1,569 1,272
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Earnings before income taxes 3,246 2,964
Provision for income taxes
Current 1,166 1,047
Future 68 58
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1,234 1,105
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Net earnings for the period 2,012 1,859

Retained earnings- Beginning of period 79,924 74,494
Dividends:
Class A and Class B 777 777
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Retained earnings- End of period 81,159 75,576
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Net earnings per share
Basic and Diluted
Class A shares 0.42 0.39
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Class B shares 0.36 0.34
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