Canada: Big Rock Brewery Income Trust Announces 2nd Quarter Results

Big Rock Brewery Income Trust reported on August 5, to Unitholders its unaudited consolidated financial results for the three and six month periods ended June 30, 2005. 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.

Financial Highlights for the three and six month periods ended June 30, 2005 compared with the same periods for 2004 are as follows:

Net income for the quarter ending June 30, 2005 was C$1,695,494 compared to C$2,213,802 for the three months ended June 30, 2004. The decrease is largely due to the reduction in net revenue caused by a changing sales mix year-over-year and a non-cash C$258,660 stock based compensation charge this quarter. Year-to-date net income is down by C$940,334 from C$3,637,253 last year to C$2,696,919 this year.

Net income per unit decreased to C$0.29 for the three months ended June 30, 2005 from C$0.38 for the three months ended June 30, 2004. Year-to-date net income per unit decreased to C$0.46 for the six months ended June 30, 2005 from $0.64 for the six months ended June 30, 2004.

Despite a very cool and very wet spring in Alberta, Big Rock's major market experienced 11% volume growth during the quarter ended June 30, 2005 compared to the same quarter last year. This was due primarily to an increase in private labels produced by Big Rock. Volume in British Columbia, Big Rock's second largest market, was down significantly from the same quarter last year due to inclement spring weather and the repositioning of Big Rock's value brands at higher price levels. Overall, sales volume was down by 1% (795 HL) from 57,050 HL for the three months ended June 30, 2004 to 56,256 HL for the three months ended June 30, 2005. Year-to-date volume year-over-year was down 3% from 101,114 HL to 98,081 HL.

For the three months ended June 30, 2005, net sales revenue decreased by C$744,542 from C$11,575,836 last year to C$10,831,294, a 6% decrease. The volume decrease together with a changing sales mix towards value and private label sales comprise this decrease. Net revenue per hectoliter decreased by C$10 resulting from the changing sales mix and competitive pricing. The industry wide growth of the value priced beer segment has been significant this year. Big Rock is well positioned to aggressively compete in this segment however average revenue per hectoliter will fall as the proportion of Big Rock's value priced brands grows. Year-to-date net revenue declined from $19,861,732 to C$18,779,834 a C$1,081,898 (5%) decrease.

Cost of sales decreased from C$4,070,676 for the three months last year to C$3,995,800 (2%) for the three months ending June 30, 2005. This is commensurate with the decrease in sales volume. Year-to-date cost of sales is down by C$111,529 (2%) from C$7,272,044 to C$7,160,515.

Gross profit for the quarter was down by C$669,666 from C$7,505,160 for the three months last year to $6,835,494 for three months this year due to the decrease in net sales and the proportional growth in sales of lower margin beers. Year-to-date gross profit is down C$970,369 from C$12,589,688 last year to C$11,619,319 this year.

Selling expenses for the three months ended June 30, 2005 increased to C$3,318,061 compared to C$3,271,972 for the three month period last year, a 1% increase. Selling expenses also include the cost of delivering beer. As lower margin beer sales grow, applicable promotional and selling expenses should decrease as value brand sales are primarily price driven. Management is scrutinizing and adjusting marketing and sales budgets accordingly. Selling expenses this quarter include a major new initiative promoting Grasshopper Wheat Ale as the "local import" in Alberta. This campaign includes billboard, print, and radio ads. Management will assess the results of the campaign as guidance for future promotional activity planning. Any benefit from this current marketing spend this will impact sales in the next quarter. Year-to-date selling expenses are down C$68,348 (1%) from C$5,661,761 last year to C$5,593,413 this year.

During the quarter ended June 30, 2005, general and administrative expenses increased to C$1,087,908 from C$997,239 for the three months ending June 30, 2004, a C$90,669 (9%) increase. C$137,880 of the C$258,660 stock based compensation expense was charged to general and administrative expenses this quarter. Year-to-date general and administrative expense is down by C$48,673 to C$1,900,505 from C$1,949,178 for the same period last year due to a reduction in insurance, training, and salary expense.

Amortization for the three months ended June 30, 2005 increased by C$58,359 (13%) to C$522,178 compared to C$463,819 for the same period last year due to the increase in capital assets. Year-to-date amortization increased by C$103,279 to $1,025,988 from C$922,709 last year resulting from asset additions including fermentation tanks, expansion of the fermentation cellar, a new can palletizer, a bottle labeler, and new kegs.

Income tax expense for the quarter of C$210,795 (three months ended June 30, 2004 - C$514,889) is comprised of C$106,546 in current income tax expense and C$104,249 in future income tax expense. Year-to-date income tax expense was C$401,436 compared to C$324,466 for the same period last year.

Big Rock is a regional producer and marketer of premium quality beers, headquartered in Calgary, Alberta, Canada. Big Rock's products are available in draught, bottles and cans. The Company also produces or distributes cider and cooler products. Big Rock products are marketed in seven provinces and three territories in Canada.

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