Dominion Citrus Income Fund
TSX : DOM.UN

Dominion Citrus Income Fund

May 01, 2008 18:52 ET

Dominion Citrus Income Fund: First Quarter 2008 Report to Unitholders

Three months ended March 22, 2008 and March 24, 2007

TORONTO, ONTARIO--(Marketwire - May 1, 2008) - Dominion Citrus Income Fund ("Dominion", the "Fund") (TSX:DOM.UN) reports net earnings from continuing operations of $76,000 or $0.00 per unit for the three months ended March 22, 2008 compared to $954,000 or $0.05 per unit for the same period in 2007. The net earnings from discontinued operations for the same periods were a net loss of $103,000 versus a net profit of $54,000 in 2007.

On April 8, 2008, subsequent to the end of the quarter, the Fund announced the completion of the sale of certain assets of Delta Foods International ("Delta"), its maple syrup processing division. The sale realized proceeds of $400,000 for goodwill, $250,000 for equipment and $842,000 for inventories. The Fund retains the land and buildings and is renting these to the purchaser in the short term, and is responsible for collecting all receivables and paying all liabilities. The sale of assets and recovery of working capital, net of related costs, are not expected to result in a material gain or loss. The transaction divests a business which required a substantial investment in working capital and assets on which the Fund was not earning a sufficient return. The sale proceeds and reduction in working capital will provide sufficient funds to retire the $3,500,000 of convertible debentures due January 31, 2009 as well as providing funding to expand its fresh cut business. The results for Delta for the quarter have been presented as discontinued operations.

First quarter revenue and margins from continuing operations were negatively impacted by price deflation resulting from the Canadian dollar appreciation against its US counterpart year over year and lower prices for a number of commodities due to improved crops. These were compounded by the non-repeat of incremental offshore revenue opportunities achieved in 2007 due to some North American supply shortages. Margins were further impacted by fierce competition as industry participants struggled to offset the impact of deflationary pricing. Expenses declined but not at the rate required given the decline in revenue due to cost increases for items such as fuel and realty taxes.

The quarterly results are summarized below (all figures in $000's except per unit):



Three months ended
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Mar. 22 Mar. 24
2008 2007
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Revenue, continuing operations $22,840 $27,230
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Revenue, discontinued operations $2,800 $3,719
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Net earnings, continuing operations $76 $954
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Net earnings (loss), discontinued operations $(103) $54
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Fully diluted earnings per unit, continuing operations $0.00 $0.05
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Fully diluted earnings (loss) per unit, discontinued
operations ($0.00) $0.00
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EBITDA, continuing operations $188 $1,543
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EBITDA, discontinued operations $(120) $113
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Distributable cash, continuing operations $(619) $1,016
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Distributable cash, discontinued operations $(120) $110
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Fiscal 2008 Outlook

The highly competitive nature of the segments of the food industry in which the Fund participates will result in continuing volume and margin pressures. The year over year appreciation of the Canadian dollar as against the US dollar in 2007 combined with any further appreciation in 2008 will result in lower prices going forward, thereby unfavourably impacting the Fund's revenue and margins.

To address these challenges the Fund has: modified its operational organization structure to drive revenue increases and better meet customer needs; expanded product and process development; increased its supplier base; and will continue to make selective investments in its processing facilities.

About Dominion

The Fund is a publicly traded, unincorporated, open-ended limited purpose income trust. On January 1, 2006, all of the common shares of Dominion Citrus Limited ("DCL") were exchanged for trust units of the Fund. In December 2007, distributions to unitholders were suspended. The trust units are listed on the TSX under the symbol DOM.UN. The Series A preference shares of DCL continue to be listed on the TSX under the symbol DMN.PR.A.

Dominion is a diversified food company supplying fresh produce and premium juices to a wide variety of customers in retail, foodservice and food distribution businesses. The Fund provides procurement, processing, repacking, sorting, grading, warehousing and distribution services to its major domestic markets being Ontario and Quebec. The Fund also supplies products to customers in the United States. The website may be accessed at www.dominioncitrus.com.

Caution regarding Forward-Looking Statements

This release contains statements, which, to the extent that they are not a recitation of historical fact, may constitute "forward-looking statements". Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, objectives or performance, or our underlying assumptions. The words "estimate", "anticipate", "believe", "expect", "intend" or other similar expressions of future or conditional verbs such as "will", "should", "would" and "could" are intended to identify forward-looking statements. Persons reading this press release are cautioned that such statements are only expectations, and that our actual results or performance may be materially different.

Forward-looking information involves certain risks, assumptions, uncertainties and other factors which may cause actual future results to differ materially from those expressed or implied in any forward-looking statements.

Readers should not place undue reliance on these forward-looking statements when making decisions, and should consider the date onto which the statements were made. Except as required by applicable security law, management disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information

  • Investors:
    Dominion Citrus Income Fund
    E. A. Atkinson, VP Finance, CFO & Corporate Secretary
    (416) 242-8341
    or
    Media:
    Dominion Citrus Income Fund
    J. L. Lavergne, President & CEO
    (416) 242-8341
    Website: www.dominioncitrus.com