Diamond Estates Wines & Spirits Inc. (“Diamond Estates” or “the Company”) (DWS-TSX Venture) today announced its fiscal results for the year ending March 31, 2015 (“FY2015”).
Sales for FY2015 were $25,730,896 versus $20,668,440 for the fiscal year ended March 31, 2014 (“FY2014”), a 24.5% increase. Gross Profit was up 26.4% to $12,356,340 in FY2015 from $9,777,682 in FY2014. EBITDA improved significantly to $1,581,232 in FY2015 from $654,479 in FY2014 aided by operating expenses that as a percent of revenue declined by 2.2%. The Company generated a net loss in FY2015 of $1,705,953 versus $4,075,413 a year ago. The net loss attributable to Diamond Estates’ shareholders was $1,503,920, a year over year improvement of $2,571,493. The loss in FY2015 included restructuring charges of $475,404 attributable to the business combination.
The sales increase primarily related to distribution rights acquired from the business combination with The Kirkwood Group to form Kirkwood Diamond Canada Partnership (“KDC”). The Kirkwood Group had a strong presence in Western Canada where the Company operates as both sales agent and distributor for our suppliers’ brands, which resulted in an increase in the distributorship (“buy/sell”) sales mix to 68.5% of agency revenues in FY2015 from 54.6% in FY2014. This affected overall gross profit margins as revenues in Eastern Canada are predominantly commission based (100% margin), however, it was more than offset by an improvement in the buy/sell gross margin of 2.4% in FY2015 versus FY2014. Sales in the winery division increased marginally by 1.4% or $197,298 in FY2015 from FY2014 as brand rationalization, lower promotional activity and price increases restrained volume but significantly improved profitability. Gross margin in the winery division improved 2.9% in FY2015 from FY2014.
Operating expenses increased $1,651,905 or 18.1% in FY2015 over FY2014, primarily as a result of the combination of the agency businesses. The integration and rebranding were largely complete by March 31, 2015 thereby eliminating redundant costs in future periods. Interest expense decreased by 12.8% or $204,393 in FY2015 over FY2014 as the Company reduced its borrowing base. Financing charges of $75,117 in FY2015 reflect the cost to set up a new facility for KDC and restructure the previous facility. The new facility reduced the margin limits on the revolving line of credit and transferred part of the revolver to term debt as the Company’s financial position and credit risk profile improved.
Non-operating related expenses were $754,918 in FY2015 compared to $1,307,932 in FY2014. This was comprised of $475,404 for restructuring charges related to the business combination, $193,235 in stock compensation expense and $86,279 in losses from the disposal of assets, primarily from the sale-leaseback of the De Sousa Estates Winery to Oakwest Corporation.
Fiscal 2015 was a transformative year for the Company” stated J. Murray Souter, President & CEO of Diamond Estates, “We completed our first acquisition, significantly enhancing our scale and competitive position as a national sales agent and we took important steps to improve margins and profitability of the winery division. The result is that Diamond Estates now has a strong platform to support growth as we focus on increasing distribution, brand building and future acquisitions.”
About Diamond Estates Wines and Spirits Inc.
Diamond Estates Wines and Spirits Inc. is a producer of high quality wines and a sales agent for over 120 beverage alcohol brands across Canada. The company operates two wineries in the Niagara region of Ontario producing VQA and blended wines under such well-known brand names as 20 Bees, EastDell Estates, Diamond Estates Cellars, Dois Amigos, Dan Aykroyd, Riders Valley, Benchmark and Seasons. Through its partnership, Kirkwood Diamond Canada, the Company is the sales agent for top selling international brands in all regions of the country as well as being a distributor in the western provinces. These recognizable brands include Fat Bastard wines from France, Fireball Whiskey Shooter from Canada, Hpnotiq Liqueur from France, Anciano wines from Spain, Francois Lurton wines from France and Argentina, Brick Brewing from Canada, Buffalo Trace Bourbon from USA, Flor de Cana rum from Nicaragua, Iceberg Vodka from Canada and many others. For further information on the company, please visit the company’s SEDAR profile at www.sedar.com.
Diamond Estates Wines & Spirits Inc. common shares trade on the TSX Venture Exchange (symbol DWS). For more information, please contact:
J. Murray Souter
President & CEO
Diamond Estates Wines and Spirits Inc.
jmurraysouter@diamondwines.com
905 641 1042 Ext 234
Alan Stratton
CFO
astratton@diamondwines.com
905-641-1042 Ext 225
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward Looking Statement
This press release contains forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results
“may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Diamond Estates Wines and Spirits Inc., the Kirkwood Group, or the proposed partnership’s (the “parties”) to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the ability of the parties to complete the transaction; the economy generally; consumer interest in the services and products of the joint venture; financing; competition; and anticipated and unanticipated costs. While the parties acknowledge that subsequent events and developments may cause its views to change, the parties specifically disclaim any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the views of either party as of any date subsequent to the date of this press release. Although the parties have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Closing of the transaction remains subject to the final approval of the TSX Venture Exchange.
