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| Name | Symbol | Market | Type |
|---|---|---|---|
| CI Canadian Banks Coverd Call Income Class ETF | TSX:CIC | Toronto | Exchange Traded Fund |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.02 | -0.18% | 10.85 | 10.78 | 10.90 | 10.87 | 10.82 | 10.865 | 4,094 | 21:00:01 |
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This news release contains forward-looking information that is based upon
assumptions and is subject to risks and uncertainties as indicated in the
cautionary note contained elsewhere in this news release.
Andrew Peller Limited (TSX:ADW.A)(TSX:ADW.B)(the "Company") announced today its
results for the three months ended June 30, 2010.
FIRST QUARTER HIGHLIGHTS:
-- Positive performance through majority of trade channels, including
estate wineries
-- Cost control initiatives result in improved profitability
-- Gross profit margin improves to 39.7%
-- Net earnings, before gains on financial instruments and other income,
increases 31.5%
-- Cash flow from operating activities increases to $2.6 million
-- Working capital increases to $33.3 million
Sales for the first quarter of fiscal 2011 were stable at $64.5 million compared
to $65.0 million in the prior year period. Ongoing initiatives to grow sales of
the Company's blended varietal table and premium wines through provincial liquor
boards, the introduction of new products, improved performance at the Company's
estate wineries, and the contribution from acquisitions were partially offset by
the negative impact of the global economic slowdown on export sales and personal
winemaking products. Sales in the first quarter of the prior fiscal year were
positively impacted by the increased sales in Ontario in June 2009 at the
province's LCBO locations in anticipation of a potential labour strike during
July 2009. In addition, sales were unusually higher in March 2010 as Provincial
Liquor Boards and other customers increased their purchases in anticipation of
the Easter Holiday period which occurred in early April; this sales increase in
March 2010 resulted in lower sales through the first month of the new fiscal
year compared to the comparable prior year period.
Gross profit as a percentage of sales improved to 39.7% for the three months
ended June 30, 2010 from 37.6% in the fourth quarter of fiscal 2010 and 36.6% in
the same period last year. The solid increase in gross margin during the first
quarter of fiscal 2010 was due to the decreased cost to the Company of
purchasing United States dollars and Euros and the Company's cost control
initiatives which served to reduce operating and packaging expenses for the
period. Management remains focused on efforts to enhance production efficiency
and productivity to further improve overall profitability.
"We are pleased with the performance generated through the majority of our trade
channels in the quarter, and specifically the return to steady growth at our
estate wineries resulting from the gradual recovery in the North American
economy," commented John Peller, President and CEO. "We are also pleased to see
further increases in our gross margins and profitability. Looking ahead, we are
confident our ongoing initiatives to enhance efficiency and productivity,
combined with improving trends for grape and wine costs, is expected to lead to
further growth in cash flow and earnings through the balance of the year."
Selling and administrative expenses increased in the first quarter of fiscal
2011, and as a percentage of sales were 26.1% compared to 24.4% in the same
period last year. The increase is primarily the result of higher sales and
marketing expenses in the current fiscal year compared with the prior year.
Interest expense in the first quarter of fiscal 2011 declined compared to last
year's first quarter due primarily to the reduction in debt from the proceeds of
sale of the Company's beer business and the sale of certain non-core vineyards
during the first quarter of fiscal 2011. The Company expects to benefit from
lower interest costs going forward.
The Company's other income of $0.3 million in the first quarter of 2011
primarily related to a gain on the sale of non-core vineyards. The Company also
recorded a gain on foreign exchange contracts of $1.0 million and incurred a
non-cash loss of $0.3 million, related to mark-to-market adjustments on an
interest rate swap. Under CICA accounting standards, financial instruments must
be reflected in the Company's financial statements at fair value each reporting
period. These instruments are considered to be effective economic hedges and
have enabled management to mitigate the volatility of changing costs and
interest rates during the year.
Net and comprehensive earnings were $4.0 million or $0.28 per Class A share in
the first quarter of fiscal 2011 compared to $3.3 million or $0.23 per Class A
share for the same period in fiscal 2010. Operating results for the Company's
beer business, which was sold on October 1, 2009, have been classified as a
discontinued operation in the prior year.
Strengthened Financial Position
Working capital was $33.3 million as at June 30, 2010 compared to $30.0 million
at March 31, 2010 and $27.1 million at June 30, 2009. As at June 30, 2010, total
bank indebtedness and long-term debt decreased to $101.5 million compared to
$102.7 million at March 31, 2010 and $136.4 million at June 30, 2009. The
declines are due primarily to the reduction in bank indebtedness with the
proceeds from the sale of certain non-core vineyard properties during the first
quarter of fiscal 2011, proceeds from the sale of the Company's beer business
effective October 1, 2009, and increased cash flow from operating activities due
to higher net earnings and lower levels of working capital demands. On May 25,
2010 the Company sold approximately six acres of vineyard in the Okanagan
Valley. The proceeds of approximately $0.8 million were used to reduce bank
indebtedness.
With the decrease in bank debt, the Company's debt to equity ratio improved to
0.87:1 compared to 0.90:1 at the end of fiscal 2010 and 1.38:1 at the end of the
prior year's first quarter. Shareholders' equity at June 30, 2010 rose to $116.5
million or $7.82 per common share compared to $113.7 million or $7.63 per common
share at March 31, 2010 and $98.8 million or $6.63 per common share at June 30,
2009. The increase in shareholders' equity is due primarily to the net gain on
the sale of the Company's beer business and higher net earnings.
Province of Ontario Levy
As part of the introduction of its Harmonized Sales Tax ("HST") in July 2010,
the Province of Ontario introduced what the Company believes is a discriminatory
tax in the form of a special levy, effective July 1, 2010, on Cellared-In-Canada
("CIC") wines that are sold through private retail stores in the Province,
including the Company's retail network. CIC is wine that is made through the
blending of wine made from domestic grapes with wine purchased on international
markets. Imported and domestic wine sold through the LCBO will not be impacted
by this additional taxation. The Company believes this special levy will
negatively impact the Company's gross profit, as well as overall domestic grape
prices and purchases across the Province. The Company estimates that the cost of
the levy to the Company, on an annual basis, will amount to approximately $4.3
million or approximately $3.0 million through the balance of fiscal 2011.
"We believe this is an unfair and discriminatory levy, and we, along with other
industry participants, are in discussions with the Government to mitigate its
impact on the Ontario wine industry," Mr. Peller commented. "While the levy will
affect our earnings, we are confident continued growth through all of our trade
channels will help to reduce the impact and that we expect to see another year
of strong performance in fiscal 2011."
----------------------------------------------------------------------------
Financial Highlights (Unaudited)
(Complete consolidated financial statements to follow)
FOR THE PERIOD ENDED JUNE 30, Three Months
----------------------------------------------------------------------------
(in $000 except as otherwise stated) 2010 2009
----------------------------------------------------------------------------
Sales 64,466 64,950
Gross profit 25,624 23,797
--------------------------
--------------------------
Gross profit (% of sales) 39.7% 36.6%
--------------------------
Selling general and administrative expenses 16,842 15,849
Earnings before interest, taxes, amortization,
other income (loss) and unusual items 8,782 7,948
Unrealized gain on financial instruments and
other income 938 1,127
Net and comprehensive earnings from continuing
operations 4,040 3,338
Net and comprehensive loss from a discontinued
operation - (87)
--------------------------
Net and comprehensive earnings 4,040 3,251
--------------------------
Earnings per share from continuing operations
Class A $ 0.28 $ 0.23
Earnings per share from continuing operations
Class B $ 0.24 $ 0.20
Earnings per share - basic and diluted - Class A $ 0.28 $ 0.22
Earnings per share - basic and diluted - Class B $ 0.24 $ 0.19
Dividend per share - Class A (annual) $ 0.330 $ 0.330
Dividend per share - Class B (annual) $ 0.288 $ 0.288
--------------------------
Cash provided by (used in) operations (after
changes in non-cash working capital items) 2,623 (1,796)
--------------------------
Working capital 33,329 27,132
Shareholders' equity per share $ 7.82 $ 6.63
----------------------------------------------------------------------------
Andrew Peller Limited ('APL' or the 'Company') is a leading producer and
marketer of quality wines in Canada. With wineries in British Columbia, Ontario
and Nova Scotia, the Company markets wines produced from grapes grown in
Ontario's Niagara Peninsula, British Columbia's Okanagan and Similkameen Valleys
and from vineyards around the world. The Company's award-winning premium and
ultra-premium VQA brands include Peller Estates, Trius, Hillebrand, Thirty
Bench, Sandhill, Calona Vineyards Artist Series and Red Rooster. Complementing
these premium brands are a number of popularly priced varietal wine brands
including Peller Estates French Cross in the East, Peller Estates Proprietors
Reserve in the West, Copper Moon, XOXO and Croc Crossing. Hochtaler, Domaine
D'Or, Schloss Laderheim, Royal and Sommet are our key value priced wine blends.
The Company imports wines from major wine regions around the world to blend with
domestic wine to craft these popularly priced and value priced wine brands. With
a focus on serving the needs of all wine consumers, the Company produces and
markets premium personal winemaking products through its wholly- owned
subsidiary, Global Vintners Inc., the recognized world leader in personal
winemaking products. Global Vintners distributes products through over 250
Winexpert and Wine Kitz authorized retailers and franchisees and more than 600
independent retailers across Canada, United States, United Kingdom, New Zealand
and Australia. Global Vintners award-winning premium and ultra-premium
winemaking brands include Selection, Vintners Reserve, Island Mist, Kenridge,
Cheeky Monkey, Ultimate Estate Reserve, Traditional Vintage and Artful
Winemaker. The Company owns and operates more than 100 well-positioned
independent retail locations in Ontario under the Vineyards Estate Wines, Aisle
43 and WineCountry Vintners store names. The Company also owns Grady Wine
Marketing Inc. based in Vancouver, and The Small Winemaker's Collection Inc.
based in Ontario; both of these wine agencies are importers of premium wines
from around the world and are marketing agents for these fine wines. The
Company's products are sold predominantly in Canada with a focus on export sales
for our icewine products.
Net earnings from continuing operations is defined as net earnings before the
net unrealized gain on financial instruments, other (income) expenses and net
earnings from a discontinued operation, all adjusted by income tax rates as
calculated below:
(in $000) Three Months
----------------------------------------------------------------------------
Period ended June 30, 2010 2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net and comprehensive earnings (loss) 4,040 3,251
----------------------------------------------------------------------------
Unrealized gain on financial instruments (646) (1,127)
----------------------------------------------------------------------------
Other income (292) -
----------------------------------------------------------------------------
Income tax effect on the above 279 360
----------------------------------------------------------------------------
Net loss from a discontinued operation - 87
----------------------------------------------------------------------------
Net earnings from continuing operations before other
expenses 3,381 2,571
----------------------------------------------------------------------------
The Company utilizes EBITA (defined as earnings before interest, amortization,
unrealized derivative gains, other (income) expense, income taxes and net loss
from a discontinued operation). EBITA is not a recognized measure under GAAP.
Management believes that EBITA is a useful supplemental measure to net earnings,
as it provides readers with an indication of cash available for investment prior
to debt service, capital expenditures and income taxes. Readers are cautioned
that EBITA should not be construed as an alternative to net earnings determined
in accordance with GAAP as an indicator of the Company's performance or to cash
flows from operating, investing and financing activities as a measure of
liquidity and cash flows. In addition, the Company's method of calculating EBITA
may differ from the methods used by other companies and, accordingly, may not be
comparable to measures used by other companies.
Andrew Peller Limited common shares trade on the Toronto Stock Exchange (symbols
ADW.A and ADW.B).
FORWARD-LOOKING INFORMATION
Certain statements in this news release may contain "forward-looking statements"
within the meaning of applicable securities laws, including the "safe harbour
provision" of the Securities Act (Ontario) with respect to Andrew Peller Limited
(the "Company") and its subsidiaries. Such statements include, but are not
limited to, statements about the growth of the business in light of the
Company's recent acquisitions; its launch of new premium wines; sales trends in
foreign markets; its supply of domestically grown grapes; and current economic
conditions. These statements are subject to certain risks, assumptions and
uncertainties that could cause actual results to differ materially from those
included in the forward-looking statements. The words "believe", "plan",
"intend", "estimate", "expect" or "anticipate" and similar expressions, as well
as future or conditional verbs such as "will", "should", "would" and "could"
often identify forward-looking statements. We have based these forward-looking
statements on our current views with respect to future events and financial
performance. With respect to forward-looking statements contained in this news
release, the Company has made assumptions and applied certain factors regarding,
among other things: future grape, glass bottle and wine prices; its ability to
obtain grapes, imported wine, glass and its ability to obtain other raw
materials; fluctuations in the U.S./Canadian dollar exchange rates; its ability
to market products successfully to its anticipated customers; the trade balance
within the domestic Canadian wine market; market trends; reliance on key
personnel; protection of its intellectual property rights; the economic
environment; the regulatory requirements regarding producing, marketing,
advertising and labelling its products; the regulation of liquor distribution
and retailing in Ontario; and the impact of increasing competition.
These forward-looking statements are also subject to the risks and uncertainties
discussed in this news release, in the "Risk Factors" section and elsewhere in
the Company's MD&A and other risks detailed from time to time in the publicly
filed disclosure documents of Andrew Peller Limited which are available at
www.sedar.com. Forward-looking statements are not guarantees of future
performance and involve risks, uncertainties and assumptions which could cause
actual results to differ materially from those conclusions, forecasts or
projections anticipated in these forward-looking statements. Because of these
risks, uncertainties and assumptions, you should not place undue reliance on
these forward-looking statements. The Company's forward-looking statements are
made only as of the date of this news release, and except as required by
applicable law, the Company undertakes no obligation to update or revise these
forward-looking statements to reflect new information, future events or
circumstances or otherwise.
ANDREW PELLER LIMITED
CONSOLIDATED BALANCE SHEETS
These financial statements have not been reviewed by our auditors
June 30 March 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2010 2010
$ $
----------------------------------------------------------------------------
Assets
Current Assets
Accounts receivable 23,887 22,902
Inventories 86,282 89,693
Prepaid expenses and other assets 3,095 2,429
Income taxes recoverable 365 1,327
Discontinued operation - -
--------------------
113,629 116,351
Property, plant and equipment 94,438 95,728
Goodwill 37,473 37,473
Intangibles and other assets 14,003 14,164
Discontinued operation - long-term assets - -
--------------------
259,543 263,716
--------------------
--------------------
Liabilities
Current Liabilities
Bank indebtedness 49,654 48,877
Accounts payable and accrued liabilities 22,450 28,229
Dividends payable 1,197 1,197
Current derivative financial instruments 1,666 1,922
Current portion of long-term debt 5,333 6,158
Discontinued operation - -
--------------------
80,300 86,383
Long-term debt 46,485 47,633
Long-term derivative financial instruments 1,878 1,667
Employee future benefits 4,376 4,530
Future income taxes 9,996 9,838
Discontinued operation - long-term liabilities - -
--------------------
143,035 150,051
--------------------
Shareholders' Equity
Capital Stock 7,375 7,375
Retained Earnings 109,133 106,290
--------------------
116,508 113,665
--------------------
259,543 263,716
--------------------
--------------------
The accompanying notes are an integral part of these interim consolidated
financial statements
ANDREW PELLER LIMITED
Consolidated Statements of Earnings, Comprehensive Earnings and Retained
Earnings
For the three months ended June 30, 2010 and 2009
These financial statements have not been reviewed by our auditors
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2010 2009
$ $
----------------------------------------------------------------------------
Sales 64,466 64,950
Cost of goods sold, excluding amortization 38,842 41,153
----------------------
Gross profit 25,624 23,797
Selling and administration 16,842 15,849
----------------------
Earnings before interest and amortization 8,782 7,948
Interest 1,942 2,183
Amortization of plant, equipment and intangible assets 2,027 1,993
----------------------
Earnings before other items 4,813 3,772
Unrealized gains on derivative financial instruments (646) (1,127)
Other income (Note 4) (292) -
----------------------
Earnings before income taxes 5,751 4,899
----------------------
Provision for income taxes
Current 1,553 1,082
Future 158 479
----------------------
1,711 1,561
----------------------
Net and comprehensive earnings for the period from
continuing operations 4,040 3,338
Net and comprehensive loss for the period from a
discontinued operation (Note 3) - (87)
----------------------
Net and comprehensive earnings for the period 4,040 3,251
Retained earnings- Beginning of period 106,290 89,416
Dividends:
Class A and Class B (1,197) (1,197)
----------------------
Retained earnings - End of period 109,133 91,470
----------------------
----------------------
Net earnings per share from continuing operations
Basic and diluted
Class A shares 0.28 0.23
----------------------
----------------------
Class B shares 0.24 0.20
----------------------
----------------------
Net earnings (loss) per share from discontinued
operation
Basic and diluted
Class A shares 0.00 (0.01)
----------------------
----------------------
Class B shares 0.00 (0.01)
----------------------
----------------------
Net earnings per share
Basic and diluted
Class A shares 0.28 0.22
----------------------
----------------------
Class B shares 0.24 0.19
----------------------
----------------------
The accompanying notes are an integral part of these interim consolidated
financial statements
ANDREW PELLER LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ending June 30, 2010 and 2009
These financial statements have not been reviewed by our auditors
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2010 2009
$ $
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net earnings (loss) for the year 4,040 3,338
Items not affecting cash:
(Gain) on disposal of property and equipment (340) -
Amortization of plant, equipment and intangible
assets 2,027 1,993
Employee future benefits (154) (267)
Net unrealized (gain) on derivative financial
instruments (646) (1,127)
Future income taxes 158 479
Amortization of deferred financing costs 185 12
--------------------------
5,270 4,428
Changes in non-cash working capital items related
to operations (Note 5): (2,647) (6,224)
--------------------------
2,623 (1,796)
--------------------------
Investing activities
Acquisition of businesses (825) (825)
Net proceeds from disposal of property and
equipment 766 -
Purchase of property and equipment (811) (1,368)
--------------------------
(870) (2,193)
--------------------------
Financing activities
Increase in bank indebtedness 777 8,619
Repayment of long-term debt (1,333) (1,333)
Dividends paid (1,197) (1,197)
--------------------------
(1,753) 6,089
--------------------------
Cash provided from continuing operations - 2,100
Cash (used in) discontinued operation - (2,100)
--------------------------
Cash at beginning and end of period - -
--------------------------
Supplemental disclosure of cash flow information
Cash paid during the period from continuing
operations for
Interest 1,869 1,896
Income taxes 590 135
Cash paid during the period from discontinued
operation for
Income taxes - 202
Cash paid during the period for
Interest 1,869 1,896
Income taxes 590 337
The accompanying notes are an integral part of these interim consolidated
financial statements
Notes to the Interim Consolidated Financial Statements
June 30, 2010 and 2009
(in thousands of dollars)
UNAUDITED
1. Summary of Significant Accounting Policies
The interim consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in Canada. The note disclosure for
these interim consolidated financial statements only presents material changes
to the disclosure found in the Company's audited consolidated financial
statements for the years ended March 31, 2010 and 2009. These interim
consolidated financial statements should be read in conjunction with those
consolidated financial statements and follow the same accounting policies as the
audited consolidated financial statements. In the opinion of management, the
accompanying unaudited interim consolidated financial statements contain all
adjustments necessary to present fairly, in all material respects the financial
position of the Company as at June 30, 2010 and for the three-month period then
ended.
2. Seasonality
The third quarter of each year is historically the strongest in terms of sales,
gross profit and net earnings due to increased consumer purchasing of the
Company's products during the holiday season.
3. Discontinued operations
During fiscal 2010, the Company entered into an agreement to dispose of its
ownership interests in Granville Island Brewing Company Ltd. and Mainland
Beverage Distribution Ltd. (collectively referred to as "GIBCO") effective
October 1, 2009.
Financial information relating to the discontinued operation is as follows:
Condensed statement of net earnings from discontinued operation
For the three
months ended
June 30
2009
$
----------------------------------------------------------------------------
Sales 5,213
Cost of goods sold 2,705
--------------
Gross profit 2,508
Selling and administration 2,529
Amortization 106
--------------
Earnings before income taxes (127)
Recovery of income taxes 40
--------------
Net earnings from discontinued operations (87)
--------------
Included in cost of goods sold is $2,055 for the three months ended June 30,
2009 for costs relating to manufacturing services provided by a related company.
The costs incurred by the Company for these activities are not expected to
continue upon completion of the eventual disposition.
Condensed statement of cash flows from discontinued operation
For the three
months ended
June 30
2009
$
----------------------------------------------------------------------------
Cash used in operating activities (2,100)
Cash provided by (used in) investing activities -
Cash provided by (used in) financing activities -
--------------
(2,100)
--------------
--------------
4. Other (income) expenses
Included in other (income) expenses is a gain in the amount of $340 pre-tax
related to the sale of a portion of a vineyard on May 25, 2010. The net proceeds
from the sale were $766.
5. Changes in non-cash working capital items
The change in non-cash working capital items is comprised of the change in the
following items:
For the Three Months
Ended June 30,
2010 2009
----------------------
$ $
Accounts receivable (985) (921)
Inventories 3,411 2,502
Prepaid expenses and other assets (65) (854)
Accounts payable and accrued liabilities (5,970) (7,898)
Income taxes recoverable 962 947
----------------------
(2,647) (6,224)
----------------------
----------------------
6. Comparative Figures
Certain of the prior year balances have been restated to conform with the
current year's presentation.
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