Sepp's Gourmet Foods Ltd.
TSX : SGO

Sepp's Gourmet Foods Ltd.

October 28, 2005 18:00 ET

Sepp's Fiscal Year 2005 Results

SURREY, BRITISH COLUMBIA--(CCNMatthews - Oct. 28, 2005) - Sepp's Gourmet Foods Ltd. (TSX:SGO) ("Sepp's" or the "Company") announces results for the fiscal year ending July 31, 2005. Detailed information is available by visiting the Company's site on the SEDAR website at www.sedar.com and reviewing the MD&A and Financial Statements.

Fiscal Year 2005

- Sales for the fiscal year 2005 were $21.7 million, down from the $38.8 million in the comparable period 2004 (see chart below). Sales were lower in 2005 due to the closure of the Company's distribution division in June 2005 and the resulting treatment of those operations as discontinued operations for financial reporting purposes.

- Operating earnings before interest, taxes, depreciation and amortization (Operating EBITDA) from the continuing operations were $1.0 million compared to ($77,000) in 2004. EBITDA is a non-GAAP measure and its calculation may not be consistent from company to company. Please see the MD&A for an explanation of the calculation. The loss for the year before discontinued operations was $61,000 compared to a loss of $3.1 million in the comparable period. The loss from discontinued operations was $856,000 compared to nil last year. The loss for the year after discontinued operations was $917,000 compared to $3.1 million last year.

- The Company had cash flow from operations of $567,000 in 2005, compared to $58,000 in 2004.

- Total senior interest bearing debt was reduced by $1.3 million in the twelve month period from $3.7 million at July 31, 2004 to $2.4 million at July 31, 2005. The Company had working capital of ($279,000) at July 31, 2005, down from $177,000 working capital position at July 31, 2004. The reduction was due to accruals set up for the discontinued operations totaling approximately $500,000 and to making deposits on new manufacturing equipment totaling $1.2 million. During the year the Company raised $2,000,000 through a private placement of subordinated convertible debentures. The proceeds of the private placement were for new equipment purchases and for working capital.

Mr. Tom Poole, President and CEO, stated: "During the year we sold off one division and closed another. Neither of these divisions fit with our long-term objective of having a strong presence in the batter and dough category. We believe these actions, coupled with an investment in added manufacturing capacity will return the Company to profitability."

Sepp's Gourmet Foods Ltd. is a producer and marketer of specialty prepared foods for the retail grocery and food service sectors in North and South America, and Southeast Asia. Sepp's is a publicly traded company traded on The TSX under the symbol SGO.

This release may contain forward-looking statements. Various factors could cause actual results to differ materially from those projected in forward-looking statements. Although the Company believes that the forward-looking statements contained herein are reasonable, it can give no assurance that the Company's expectations are correct. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.

Comparative figures for the fiscal year ended July 31, 2005 compared to the fiscal year ended July 31, 2004



----------------------------------------------------------
($000's) except per
share data July 2005 July 2004
----------------------------------------------------------
Sales 21,717 38,765
----------------------------------------------------------
Cost of Sales 18,497 35,118
----------------------------------------------------------
Gross Profit 3,220 3,647
----------------------------------------------------------
Expenses 3,589 7,443
----------------------------------------------------------
Operating EBITDA 1,024 (77)
----------------------------------------------------------
Earnings (Loss) before
discontinued operations (61) (3,118)
----------------------------------------------------------
Earnings (Loss) from
discontinued operations (856) -
----------------------------------------------------------
Net Earnings (Loss) (917) (3,118)
----------------------------------------------------------
Working Capital (279) 177
----------------------------------------------------------
Property Plant and
Equipment 5,126 5,729
----------------------------------------------------------
Total Assets 11,363 13,285
----------------------------------------------------------
Operating line 1,192 1,542
----------------------------------------------------------
Senior long-term debt 1,228 2,202
----------------------------------------------------------
Shareholder's Equity 3,765 3,841
----------------------------------------------------------
Cash flows from operating
activities 567 58
----------------------------------------------------------
Earnings per share (before
discontinued operations) ($0.00) ($0.22)
----------------------------------------------------------
Earnings per share (after
discontinued operations) ($0.06) ($0.22)
----------------------------------------------------------
Shares Outstanding (Basic
Weighted Average) 16,017,971 14,341,138
----------------------------------------------------------



The Toronto Stock Exchange has not reviewed nor has accepted the responsibility for the accuracy and adequacy of this news release.

Contact Information

  • Sepp's Gourmet Foods Ltd.
    Tom Poole
    President
    (604) 535-5457
    or
    Sepp's Gourmet Foods Ltd.
    Jim Pratt
    Chief Financial Officer
    (604) 574-2166
    www.seppsfoods.com