E-Malt.com News article: 4465

Canada: Big Rock Brewery Income Trust reported to Unitholders on March 17 its consolidated financial results for its year ended December 31, 2004. These results reflect the consolidated operations of the Trust, Big Rock Brewery Ltd. and its wholly owned subsidiaries Kamloops Brewery Ltd. and Whistler Brewing Company Ltd.

Net income for the year ended December 31, 2004 was $6,766,908 compared to $4,555,856 for the nine months ended December 31, 2003 and $5,094,964 for the year ended December 31, 2003, a 33% increase. Net income per unit increased to $1.17 for the year ended December 31, 2004 from $0.92 for the year ended December 31, 2003, a 27% increase. Cash distributions declared to Unitholders for the year ended December 31, 2004 were $5,671,544 or $0.98 per unit. The Trust declared total cash distributions of $0.70 per trust unit for the year ending December 31, 2003 amounting to $3,890,615 in total.

Big Rock's balance sheet continued to strengthen during the year ended December 31, 2004 as $3,367,247 of long term debt was eliminated and Unitholders' equity increased by $2,833,632 (11%) after deducting cash distributions of $5,671,544. At December 31, 2004 the Trust had cash of $2,093,695 and no bank indebtedness.

Sales volume in hectoliters for the year ended December 31, 2004 increased to 192,674 from 180,451 for the same period last year, a 7% increase.

Significant growth of our core brands in the B.C. market and the popularity of Jack Rabbit Lager in western Canadian markets have resulted in Big Rock significantly outperforming the industry which experienced no growth during the period.

For the year ended December 31, 2004, net sales revenue rose to $38,789,564 from $35,053,324 for the year ended December 31, 2003, an 11% increase resulting from an increase in sales volume and a beneficial increase in sale of premium beers vs value beers.

In September, the Alberta Gaming and Liquor Commission established a new transitional provision in policy whereby small brewers with an annual worldwide production of less than 400,000 HL are now assessed a markup rate of $0.40 per liter on the first 200,000 HL sold in Alberta and $0.98 per liter on the next 200,000 HL sold in Alberta up to and including 400,000 HL of worldwide production. Once a small brewer exceeds 400,000 HL the markup rate will be $0.98 per liter on all Alberta sales. The revision to this policy provides Big Rock with the ability to increase its volume up to 400,000 HL while maintaining the small brewer mark-up benefit on the first 200,000 HL of production. The potential for continued profitable growth of the Company's business is enhanced as a result of this policy revision.

Cost of sales increased from $12,845,096 last year to $13,696,549 for the year ending December 31, 2004. Cost of sales as a percentage of sales was 35% for the year which is consistent with last year.

Gross profit for the year was up 13% from $22,208,228 last year to $25,093,015 this year commensurate with the volume increase and favourable shifting sales mix.

Selling expenses for the year ended December 31, 2004 increased to $11,149,364 compared to $10,315,397 last year, an 8% increase. Increasingly competitive promotional programs require constant innovation by Big Rock marketing and sales staff to encourage the pull through of Big Rock products both on-premise and off-premise. Selling expenses also include the cost of delivering beer. Increasing common carrier charges and higher sales volumes in British Columbia have resulted in an increase in delivery expense this year.

During the year ended December 31, 2004, general and administrative expenses increased to $4,193,387 from $4,098,325 for the year ending December 31, 2003, a 2% increase.

Amortization increased from $1,754,151 to $1,926,195. Major capital additions during the year included canning line and bottling line upgrades as well as the purchase of additional fermentation tanks.

Income tax expense for the year of $928,858 (year ended December 31, 2003 - $438,910) is comprised of $433,799 in current income tax expense and $495,059 in future income tax expense.

In 2003, Big Rock changed its fiscal year end from March 31 to December 31. Presented below are financial statements as at and for the year ended December 31, 2004 with comparatives as at and for the nine months ended December 31, 2003.


20 March, 2005