Spinrite Income Fund

Spinrite Income Fund

September 29, 2005 10:15 ET

Spinrite Investor Day Outlines Strategic Direction And Prospects For Growth

LISTOWEL, ONTARIO--(CCNMatthews - Sept. 29, 2005) - Spinrite Income Fund (TSX:SNF.UN), at a meeting with investors and analysts today, senior management of Spinrite Income Fund outlined the Fund's strategic direction, and reviewed its prospects for growth in the steadily expanding $41 billion North American consumer craft and hobby market. The Fund reviewed key performance metrics since its initial public offering in February, 2005. The day-long event was hosted by Dario Margve, President and CEO, and Ryan Newell, CFO. Tours of the Fund's manufacturing facility and distribution centre were conducted by John Verwey, Vice President Manufacturing, and Frank Janssen, Operations Manager.

"Since we went public earlier this year, Spinrite has demonstrated its viability as an income fund based on strong quarterly financial performance, increased distributions to unitholders and a healthy financial condition," said Mr. Margve.

In September 2005, monthly distributions to unitholders were increased by 6% in recognition of financial strength and confidence in the Fund's future performance.

Mr. Margve explained that strong consumer appetite for knitted gifts, garments and accessories, has enabled Spinrite to become one of the leading producers and marketers of craft yarn in Canada, and one of the largest and fastest growing in the United States, with a 62% and 18% share of these markets, respectively. Approximately 70% of Spinrite's sales are to U.S. customers.

Spinrite sells its yarns through a variety of distribution channels throughout North America, including mass merchandisers, discount chains, independent specialty stores, catalogues and craft stores with well-known banners such as Michaels, Wal-Mart, Zellers, Mary Maxim and Lewiscraft. In addition, some grocery chains are tapping into the demand for craft yarn, said Mr. Margve.

"We are recognized as a leader in product innovation with an average of 10 to 12 new yarns introduced each year," he added. In 2005, Spinrite was recognized as Vendor of the Year by Michaels Stores, the largest craft chain in North America with more than 800 stores.

Spinrite supports its yarns with marketing initiatives directed at both new and existing consumers, advertising in leading consumer magazines such as Family Circle, Vogue and Lucky.

The Fund also maintains a high-profile with consumers via its popular website and participates in industry wide events such as the New York City Knit-Out.

Mr. Margve concluded his presentation by outlining the Fund's growth strategy:

- continue to increase market share in North America;

- improve margins by focusing on its value-added fancy yarns;

- further strengthen relationships with consumers;

- and review selective accretive acquisitions on an opportunistic basis.

In his financial review, Mr. Newell explained that over the past five years, revenues grew from $66.4 million to $140.9 million annually as a result of overall category growth, and significant market share gains in the U.S.

Spinrite's ability to successfully introduce new products, gain distribution with all retailers selling yarn, and increase shelf space within those stores, enabled the Fund to increase its U.S. market share by 65% over the past three years, he said.

EBITDA over the past five years increased to $37.5 million from $10.6 million and EBITDA margin grew substantially, to 26.6% from 16.0% in 2000. Spinrite accomplished this growth by focusing on higher-margin products, and lowering its production costs, said Mr. Newell.

In the past two quarters, the Fund reported sales of $78.2 million, up 38.7% over the prior year. This growth was powered by strong gains in value-added fancy yarns as well as classic yarns, up 59.1% and 31.2% respectively.

"These are solid results showing steady growth and a positive outlook," said Mr. Newell.

Spinrite is the largest marketer of craft yarn in Canada and one of the largest and fastest growing in the United States. Established in 1952, Spinrite researches, develops, manufactures and markets a broad variety of consumer craft yarns. The company also supports its market with patterns that provide customers with creative ideas for knitted products. Spinrite has approximately 600 employees at its fully integrated manufacturing and distribution centre in Listowel, Ontario.

Forward-Looking Statements

This press release may contain forward-looking statements relating to expected future events and financial and operating results of the Fund that involve risks and uncertainties. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed from time to time in the Fund's prospectus filed with the Canadian securities regulatory authorities. Due to the potential impact of these factors, the Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

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