Andrew Peller Limited
TSX : ADW.A
TSX : ADW.B

Andrew Peller Limited

June 08, 2007 15:34 ET

Andrew Peller Limited Announces Record Fourth Quarter and Year-End Fiscal 2007 Results

COMMON SHARE DIVIDENDS INCREASED FOR SECOND CONSECUTIVE YEAR

GRIMSBY, ONTARIO--(Marketwire - June 8, 2007) - Andrew Peller Limited (the "Company") (TSX:ADW.A)(TSX:ADW.B) announced today its results for the three months and year ended March 31, 2007.

2007 HIGHLIGHTS:

- Acquisitions and strong organic growth contribute to record annual sales

- Increased volumes of premium and ultra-premium brands drive solid increase in gross margin

- Continued strong growth in earnings and EBITA

- Common share dividends increased 19%

- Peller Estates named "Canadian Winery of the Year" at the International Wine and Spirit Competition in London, England

Record Operating Performance

For the fiscal year ended March 31, 2007 sales increased 7.8% to $228.2 million from $211.8 million in fiscal 2006. Sales for the fourth quarter of fiscal 2007 rose 4.1% to $50.4 million from $48.4 million in the same period last year. The increases are primarily due to the full year's contribution made by acquisitions completed in fiscal 2006, the introduction of new products during the year, and the Company's successful initiatives to grow sales of its premium and ultra-premium wines through all its trade channels.

"We were pleased to have generated record sales and earnings in 2007, the result of the successful execution of our value enhancing strategies," commented John Peller, President and CEO. "Looking ahead, we expect our growth will continue as we capitalize on strong industry fundamentals and our solid presence as one of Canada's leading producers of premium and ultra-premium wines."

Gross margin as a percentage of sales improved to 41.7% in fiscal 2007 and 41.4% in the fourth quarter compared to 40.4% and 36.6% respectively in the same periods last year as the increased sales of the Company's premium and ultra-premium wines offset the higher cost of domestic grapes and wines purchased on international markets. Selling and administrative expenses remained at 29.6% of sales in fiscal 2007 compared with the prior year.

As a result of the increased sales and improved gross margins, earnings before interest, taxes, amortization and unusual items (EBITA) increased 20.8% to $27.7 million in fiscal 2007 compared to $22.9 million in fiscal 2006. For the three months ended March 31, 2007 EBITA rose to $4.2 million compared to $1.7 million last year. The fourth quarter results for the prior year were impacted by accounting adjustments to value purchased inventory acquired from Cascadia Brands Inc. ('Cascadia') at fair market value. Excluding the impact of these adjustments in fiscal 2006, EBITA increased 8.8% for the year.

For the fiscal year ended March 31, 2007 net earnings rose 56.5% to $9.5 million or $0.65 per Class A share compared to $6.1 million or $0.42 per Class A share last year. Excluding the impact of the accounting adjustments referred to above and of unusual items for 2007 and 2006, net earnings increased by 7.3% for the year. Net income for the three months ended March 31, 2007 increased to $0.4 million or $0.02 per Class A share from a loss of $1.2 million or $0.08 per Class A share last year. During fiscal 2007 the Company incurred unusual charges of $0.2 million related to the closure of its Port Moody B.C. facility and integration into the Cascadia operations acquired in fiscal 2006 partially offset by a net recovery from the misappropriation of funds by a former non-executive employee. Charges related to the closure were $1.8 million in 2006. For the three months ended March 31, 2006 the Company incurred unusual charges to earnings of $1.0 million. There were no significant net unusual charges in the fourth quarter of 2007.

Common Share Dividend Increase

Effective June 30, 2007 the Company will increase its common share dividends. The dividend on Class A shares will be increased 19% on an annualized basis to $0.300 per share. The dividend on Class B shares will also be increased 19% on an annualized basis to $0.261 per share. This will be the second consecutive year that common share dividends will have been increased.

"Based on our record performance in fiscal 2007, and our highly positive outlook on the future, we were pleased to increase common share dividends for the second year in a row," Mr. Peller added.

Strong Financial Position

The Company's balance sheet remained strong as at March 31, 2007. Working capital was $25.3 million at the end of the fiscal year compared to $26.8 million at March 31, 2006. Inventories increased to more normal levels as at March 31, 2007 following reduced levels at the end of the prior year resulting from a short grape crop in Ontario during 2006. Shareholders' equity at March 31, 2007 rose to $95.5 million or $6.41 per Class A share from $89.6 million or $6.02 per Class A share as at March 31, 2006.

Prestigious International Awards

In fiscal 2007, the Company was honoured with a number of prestigious awards at domestic and international wine competitions including having Peller Estates being recognized as Canadian Winery of the Year at the International Wine and Spirit Competition in London, England. Peller Estates received approximately 200 medals during the year, while Hillebrand Estates and Trius were awarded approximately 85 medals. Among the most prominent of the awards were gold medals presented to Andrew Peller Signature Series Chardonnay Sur Lie 2004 and Cabernet Franc Unfiltered 2004 at the Austria International Wine Challenge, Peller Estates Private Reserve Dry Riesling 2005 at the California Grand Harvest Awards, Private Reserve Chardonnay 2004 at the Ontario Wines Awards and Private Reserve Trinity Icewine 2005 at the British Columbia Icewine Festival. At the All Canadian Wine Championships Trius Red 2005 and Peller Estate Private Reserve Pinot Grigio won double gold, Red Rooster Pinot Blanc 2005 won double gold/best in category while Trius Grand Red 2002 won a gold medal. Sandhill Pinot Blanc 2006 won double gold/best in category at the Okanagan Wine Festival.

"We were very pleased to have Peller Estates honoured as Canadian Winery of the Year for 2006. This prestigious award is a testament to the quality of our wines and the tradition of excellence instilled by my grandfather when he founded this great company more than forty years ago," Mr. Peller concluded.



Financial Highlights (complete statements follow)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Period Ended March 31, Three Months Twelve Months
---------------------------------------------------------------------------
(in $,000 except per share amounts) 2007 2006 2007 2006
---------------------------------------------------------------------------

Sales 50,419 48,435 228,192 211,775
EBITA 4,249 1,650 27,665 22,902
Earnings before unusual items 569 (1,584) 14,325 11,119
Unusual items (7) 970 206 1,960
Net earnings 398 (1,226) 9,472 6,054
Net earnings per share
(Basic per Class A share) $ 0.02 ($ 0.08) $ 0.65 $ 0.42
Cash from operations
(after changes in non-cash working
capital items) 6,856 7,185 4,545 18,984
Working capital 25,316 26,756
Shareholders' equity per share $ 6.41 $ 6.02
---------------------------------------------------------------------------
---------------------------------------------------------------------------


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 Estates, 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. With the acquisition of Cascadia Brands Inc., 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 Inc. and Vineco International Products Inc. In addition, the Company owns and operates Vineyards Estate Wines 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 and unusual items) and EBUI (defined as earnings before income taxes and unusual items) to measure its financial performance. EBITA and EBUI are not recognized measures under GAAP. Management believes that EBITA and EBUI are useful supplemental measures 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 and EBUI should not be construed as alternatives 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 and EBUI 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

As at March 31, 2007 and 2006
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(in thousands of dollars, except per share amounts) 2007 2006
$ $
---------------------------------------------------------------------------

Assets

Current Assets

Accounts receivable 21,365 18,444
Inventories 82,990 70,528
Prepaid expenses 2,983 2,447
Income taxes recoverable 319 911
-------------------------
107,657 92,330
Property, plant and equipment 87,143 85,597
Goodwill 36,171 35,862

Other assets 7,985 8,298
-------------------------
238,956 222,087
-------------------------
-------------------------

Liabilities

Current Liabilities

Bank indebtedness 51,449 37,295
Accounts payable and accrued liabilities 24,069 21,613
Dividends payable 917 778
Current portion of long - term debt 5,906 5,888
-------------------------
82,341 65,574

Long-term debt 44,423 50,328
Employee future benefits 4,007 4,224
Future income taxes 12,663 12,381
-------------------------
143,434 132,507
-------------------------

Shareholders' Equity

Capital Stock 7,375 7,375
Retained Earnings 88,147 82,205
-------------------------
95,522 89,580
-------------------------

238,956 222,087
-------------------------
-------------------------



ANDREW PELLER LIMITED
Consolidated Statements of Earnings and Retained Earnings
(in thousands of dollars, except per share amounts)

For the Three For the Twelve
Months Ended Months Ended
March 31 March 31
2007 2006 2007 2006
$ $ $ $
----------------------------------------------------- -------------------
Sales 50,419 48,435 228,192 211,775
Cost of goods sold, excluding
amortization 29,525 30,730 133,084 126,191
------- --------- --------- ---------
Gross profit 20,894 17,705 95,108 85,584
Selling and administration 16,645 16,055 67,443 62,682
------- --------- --------- ---------

Earnings before interest and
amortization 4,249 1,650 27,665 22,902
Interest 1,362 1,193 5,355 4,468
Amortization of plant, equipment
and intangible assets 2,318 2,041 7,985 7,315
------- --------- --------- ---------
Earnings before other items 569 (1,584) 14,325 11,119

Unusual items (7) 970 206 1,960
------- --------- --------- ---------
Earnings before income taxes 576 (2,554) 14,119 9,159
------- --------- --------- ---------

Provision for income taxes
Current 101 (1,393) 4,365 2,955
Future 77 65 282 150
------- --------- --------- ---------
178 (1,328) 4,647 3,105
------- --------- --------- ---------

Net earnings for the period 398 (1,226) 9,472 6,054

Retained earnings- Beginning of
period 88,666 84,209 82,205 79,260

Dividends:
Class A and Class B 917 778 3,530 3,109
------- --------- --------- ---------
Retained earnings- End of period 88,147 82,205 88,147 82,205
------- --------- --------- ---------
------- --------- --------- ---------

Net earnings per share
Basic and diluted
Class A shares 0.02 (0.08) 0.65 0.42
------- --------- --------- ---------
------- --------- --------- ---------
Class B shares 0.03 (0.08) 0.57 0.36
------- --------- --------- ---------
------- --------- --------- ---------



ANDREW PELLER LIMITED
Consolidated Statements of Cash Flows
(in thousands of dollars, except For the Three For the Twelve
per share amounts) Months Ended Months Ended
March 31 March 31
2007 2006 2007 2006
$ $ $ $
----------------------------------------------------- -------------------
Cash provided by (used in)
Operating activities
Net earnings for the period 398 (1,226) 9,472 6,054

Items not affecting cash:

Gain on disposal of property and
equipment (248) (200) (248) (200)
Amortization of plant, equipment
and intangible assets 2,318 2,041 7,985 7,315

Employee future benefits 62 108 (217) (42)
Future income taxes 77 65 282 150

Amortization of deferred financing
costs 35 43 142 121
-------- --------- --------- -------
2,642 831 17,416 13,398

Change in non-cash working capital
items related to operations 4,214 6,354 (12,871) 5,586
-------- --------- --------- -------
6,856 7,185 4,545 18,984
-------- --------- --------- -------

Investing activities

Cash proceeds from sale of
spirits division - 240 - 6,022

Proceeds from disposal of property
and equipment 297 330 297 330

Purchase of property and equipment (4,096) (4,000) (9,333) (7,521)

Acquisition of businesses - (608) (309) (44,333)
-------- --------- --------- -------

(3,799) (4,038) (9,345) (45,502)
-------- --------- --------- -------

Financing activities

Increase in deferred financing costs - (153) (76) (477)

Increase in other assets - (44) - (44)

Issue of Class A shares - 131 - 131

Increase in bank indebtedness (653) 8,812 14,154 5,539

Increase in long-term debt - 325 - 56,325

Repayment of long-term debt (1,487) (11,441) (5,887) (31,848)

Dividends paid (917) (777) (3,391) (3,108)
-------- --------- --------- -------

(3,057) (3,147) 4,800 26,518
-------- --------- --------- -------

Cash at beginning and end of period - - - -
-------- --------- --------- -------
-------- --------- --------- -------

Contact Information