Magnotta Winery Corporation
TSX : MGN

Magnotta Winery Corporation

July 12, 2011 11:25 ET

Magnotta Winery Corporation Announces April 30, 2011 Quarterly Results

VAUGHAN, ONTARIO--(Marketwire - July 12, 2011) - Magnotta Winery Corporation (TSX:MGN), announces the release of its financial results for the first quarter ended April 30, 2011.

Net sales (sales retained by the Company after alcohol consumption taxes are paid) for the quarter ended April 30, 2011 decreased to $6,110,423 from $6,256,719 for the corresponding period of the prior year. Volume for the quarter increased by 1.1% from the corresponding period of the prior year. Net earnings decreased to $789,417 from $940,651 for the quarter. The decrease in net sales and net earnings is a direct result of the 10% Cellared in Canada (CIC) consumption tax introduced by the Ontario government on July 1, 2010. It is payable only on CIC wine product sold outside of the Liquor Control Board of Ontario (LCBO) in all Ontario winery retail stores.

Overall gross profit margin for the quarter ended April 30, 2011 decreased to 40.5% from 43.2% for the corresponding period of the prior year. The change in the gross profit margin is due to the Company experiencing increased cost pressures for raw inputs, as well as the impact of the new 10% Cellared in Canada (CIC) wine tax.

Selling, administration and other expenses were $856,452 for the three months ended April 30, 2011 compared to $865,420 for the corresponding period of the prior year. This has remained consistent relative to the prior period.

Total overall amortization of property, plant and equipment for the first quarter ended April 30, 2011 was $280,015 compared to $278,700 in the same period the prior year.

Finance costs for the three months ended April 30, 2011 increased slightly to $151,455 compared to $133,467 for the three month period ended April 30, 2010. The change is primarily due to a higher average Canadian prime rate during the period compared to the corresponding period of the previous year. Total debt including both long-term debt and bank indebtedness decreased by $234,580 from January 31, 2011.

Additional details and information are found in the Management Discussion and Analysis for the quarter ended April 30, 2011 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.

To view the Financial Statements, please visit the following link: http://media3.marketwire.com/docs/mgn512fs.pdf.

To view the Management Discussion and Analysis, please visit the following link: http://media3.marketwire.com/docs/mgn512mda2.pdf.

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