Magnotta Winery Corporation
TSX : MGN

Magnotta Winery Corporation

June 13, 2007 11:32 ET

Magnotta Winery Corporation Announces April 30, 2007 Results

VAUGHAN, ONTARIO--(Marketwire - June 13, 2007) - Magnotta Winery Corporation (TSX:MGN), is pleased to announce the release of its financial results for the first quarter ended April 30, 2007.

Net sales for the quarter ended April 30, 2007 increased 3.7% to $5,949,046 from $5,738,027. Net earnings increased 2.2% to $843,295 from $824,840. The overall growth in net sales for the quarter resulted from greater volumes due to an expanded customer base, increased licensee sales to restaurateurs and more focused marketing campaigns. This steady and gradual increase in sales is consistent with management expectations.

Overall gross profit margin for the quarter ended April 30, 2007 decreased to 49.9% from 51.0% for the corresponding period of the prior year. The change in the gross profit margin is due to increased cost pressures for raw materials as well as higher Ontario grape prices and Ontario grape content as required by regulation in the first quarter of fiscal 2008 versus fiscal 2007. These cost pressures were mitigated somewhat by the strength of the Canadian dollar.

Selling, administration and other expenses were $1,012,436 for the three months ended April 30, 2007 compared to $999,225 for the corresponding period of the prior year. As a percentage of net sales, selling, administration and other expenses decreased to 17.0% for the quarter compared to 17.4% for the quarter of the previous year.

Amortization for the first quarter ended April 30, 2007 was $316,873 compared to $311,411 for the corresponding period of the prior year.

Interest expense for the three months ended April 30, 2007 remained relatively constant at $232,922 compared to $232,519 for the three month period ended April 30, 2006.

Earnings before interest, income taxes and amortization increased marginally by 1.4% to $1,955,090 from $1,928,770 at April 30, 2006.

Additional details and information are found in the Management Discussion and Analysis for April 30, 2007 as well as on www.sedar.com.

The common shares of Magnotta trade on the TSX under the symbol "MGN".

Readers are cautioned that some of the statements contained in this release may be forward-looking statements, such as expectations, estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition to exist or occur. Generally, these forward-looking statements can be identified by the use of terminology such as "outlook", "anticipate", "believe", "estimate", "expect", "intend", "should", and similar expressions. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ from those currently anticipated in such statements by reason of factors such as, but not limited to, changes in general economic and market conditions. Magnotta disclaims any intention or obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or results, or otherwise.



MAGNOTTA WINERY CORPORATION

Interim Consolidated Financial Statements - Unaudited

Three Months Ended April 30, 2007



MAGNOTTA WINERY CORPORATION

Notice To Reader of the Interim Consolidated Financial Statements

Three months ended April 30, 2007

The consolidated financial statements of Magnotta Winery Corporation and the accompanying interim consolidate balance sheet as at April 30, 2007 and the interim consolidated statement of earnings and retained earnings and cash flows for the three month period then ended are the responsibility of the Company's management. These consolidated financial statements have not been audited or reviewed on behalf of the shareholders by the independent external auditors of the Company, KPMG LLP.

The interim consolidated financial statements have been prepared by management and include the selection of appropriate accounting principles, judgments and estimates necessary to prepare these financial statements in accordance with Canadian generally accepted accounting principles.



MAGNOTTA WINERY CORPORATION
Consolidated Interim Balance Sheets

As at April 30, 2007, with comparative figures for
January 31, 2007 and April 30, 2006

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April 30 January 31 April 30
2007 2007 2006
(unaudited) (unaudited)
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Assets

Current assets:
Accounts receivable $ 1,467,725 $ 396,397 $ 1,149,610
Inventories 22,859,160 22,760,567 20,608,009
Prepaid expenses and deposits 427,754 280,142 449,719
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24,754,639 23,437,106 22,207,338

Capital assets 21,737,566 21,768,993 22,034,036
Winery licenses 251,516 251,516 251,516
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$ 46,743,721 $ 45,457,615 $ 44,492,890
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Liabilities and Shareholders'
Equity

Current liabilities:
Bank indebtedness $ 5,671,730 $ 5,400,368 $ 4,658,403
Accounts payable and accrued
liabilities 1,029,481 790,565 1,269,863
Income taxes payable 129,897 176,790 189,734
Current portion of long-term
debt 691,465 783,886 1,288,845
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7,522,573 7,151,609 7,406,845

Long-term debt 7,876,707 7,949,860 8,515,571
Future income taxes 1,111,404 966,404 1,191,017

Shareholders' equity:
Share capital 6,961,617 6,961,617 6,961,617
Notes receivable for share
capital (465,000) (465,000) (465,000)
Other paid-in capital 210,000 210,000 210,000
Retained earnings 23,526,420 22,683,125 20,672,840
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30,233,037 29,389,742 27,379,457
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$ 46,743,721 $ 45,457,615 $ 44,492,890
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Segmented information on
identifiable capital assets
by geographic region
Canada $ 18,923,115 $ 18,949,551 $ 19,197,999
Chile 2,814,451 2,819,442 2,836,037
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$ 21,737,566 $ 21,768,993 $ 22,034,036
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On behalf of the Board:

Gabe Magnotta, Executive Chairman and Director

Rossana DiZio Magnotta, CEO/President and Director



MAGNOTTA WINERY CORPORATION
Consolidated Interim Statements of Earnings and Retained Earnings

Three months ended April 30, 2007 and April 30, 2006

-------------------------------------------------------------
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April 30 April 30
2007 2006
(unaudited) (unaudited)
-------------------------------------------------------------
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Net sales $ 5,949,046 $ 5,738,027

Cost of goods sold 2,981,520 2,810,032
-----------------------------

Gross profit 2,967,526 2,927,995

Expenses:
Selling, administration and
other 1,012,436 999,225
Amortization 316,873 311,411
Interest 96,761 86,952
Interest - long-term debt 136,161 145,567
--------------------------

1,562,231 1,543,155
--------------------------

Earnings before income taxes 1,405,295 1,384,840

Income taxes:
Current 417,000 416,500
Future 145,000 143,500
--------------------------
562,000 560,000
--------------------------

Net earnings for the period 843,295 824,840

Retained earnings, beginning
of period 22,683,125 19,848,000
--------------------------
Retained earnings, end of
period $ 23,526,420 $ 20,672,840
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Earnings per share :
Basic $ 0.06 $ 0.06
Diluted $ 0.06 $ 0.06
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Weighted average number of
common shares outstanding 13,932,005 13,718,180
Weighted average number of
diluted shares outstanding 13,932,005 13,932,005
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Segmented information on net
sales by geographic region
Canada $ 5,762,660 $ 5,466,894
Chile 57,599 143,649
Other 128,787 127,484
--------------------------
$ 5,949,046 $ 5,738,027
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MAGNOTTA WINERY CORPORATION
Consolidated Interim Statements of Cash Flow

Three months ended April 30, 2007 and April 30, 2006

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April 30 April 30
2007 2006
(unaudited) (unaudited)
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Cash flows from (used in):

Operating activities:
Net earnings $ 843,295 $ 824,840
Items not involving cash:
Amortization 316,873 311,411
Future income taxes 145,000 143,500
Unrealized foreign exchange gain (8,849) (39,763)
----------------------------
1,296,319 1,239,988

Changes in non-cash operating working
capital:
Accounts receivable (1,071,328) (801,941)
Inventories (98,593) (102,340)
Prepaid expenses and deposits (147,612) 222,242
Accounts payable and accrued liabilities 238,916 (19,951)
Income taxes payable (46,893) 58,980
----------------------------

170,809 596,978

Financing activities:
Decrease in long-term debt (156,725) (314,553)
Increase in share capital - 330,800
Increase (decrease) in bank indebtedness 271,362 (98,778)
----------------------------

114,637 (82,531)

Investing activities:
Purchases of capital assets (285,446) (514,447)
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Cash, end of period - -
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----------------------------

Supplemental cash flow information:
Cash paid for interest $ 219,618 $ 220,225
Cash paid for income taxes 463,893 357,520

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MAGNOTTA WINERY CORPORATION

Notes to Consolidated Interim Financial Statements - Unaudited

Three months ended April 30, 2007
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1 DESCRIPTION OF BUSINESS

The Company develops, grows, produces, imports, markets, distributes and retails wines, beer, spirits and "must" (juice for making wine) through its seven locations in Ontario. Products are also sold through representatives, an e-commerce site, in other Canadian provinces, and through export markets.

The Company experiences some seasonal variations in sales with sales typically being highest in the third and fourth quarters and lowest in the first quarter of the fiscal year.

2 SIGNIFICANT ACCOUNTING POLICIES

The disclosures contained in the unaudited interim consolidated financial statements do not include all the requirements of generally accepted accounting principles for annual financial statements, and accordingly, the unaudited interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended January 31, 2007.

The unaudited interim consolidated financial statements are based upon accounting principles consistent with those used and described in the annual consolidated financial statements for the year ended January 31, 2007.

3 NOTES RECEIVABLE INCLUDED IN SHARE CAPITAL

The five year notes receivable were received from two senior officers who were provided with the financing to exercise their options on 500,000 common shares of Magnotta at a price of $0.93 per share. These notes are secured by the acquired common shares, bear monthly interest at the rate charged to Magnotta on its operating line of credit, and provide for repayment of $116,250 in each of the years 2007, 2008, 2009 and 2010. These have been included as a component of shareholders' equity for presentation purposes.

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