Canada: Big Rock Brewery Income Trust announces 3rd quarter results

Big Rock Brewery Income Trust reported to Unitholders on November 10 its unaudited consolidated financial results for the three and nine month periods ended September 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 nine month periods ended September 30, 2005 compared with the same periods for 2004 are as follows:

Net income for the quarter ending September 30, 2005 increased by 19% to $2,224,067 compared to $1,861,971 for the three months ended September 30, 2004. This $362,096 increase is largely due to increased sales volume. Year-to-date net income is down by $578,238 (11%) from $5,499,224 last year to $4,921,986 this year due to the growth of lower margin value brands and a non-cash stock based compensation charge of $258,660 booked in the second quarter.

Net income per unit increased to $0.37 for the three months ended September 30, 2005 from $0.32 for the three months ended September 30, 2004. Year-to-date net income per unit decreased to $0.83 for the nine months ended September 30, 2005 from $0.95 for the nine months ended September 30, 2004.

Cash distributions to unitholders for the three months ended September 30, 2005 were $1,963,447 or $0.33 per unit. This represents 62% of cash generated from operating activities. During the same quarter last year the Trust declared total cash distributions of $0.25 per trust unit amounting to $1,455,367 in total. Year-to-date Big Rock has distributed 87% ($5,611,155) of cash provided by operating activities of $6,414,135.

Big Rock's sales force achieved an all-time quarterly sales record as summer product volume increased by 30% to 62,740 HL for the three months ended September 30, 2005 from 48,128 HL for the same period last year. The majority of the volume increase is attributable to new business in value and private label brands however Big Rock's proprietary premium brand volume was up by 4% quarter over quarter. Year-to-date volumes are up 8% to 160,820 HL from 149,242 HL.

For the three months ended September 30, 2005, net sales revenue increased by $1,657,556 from $10,118,479 last year to $11,776,035, a 16% increase. Consistent with trends reported by other brewers, Big Rock continued to experience a shifting sales mix as value brands grew at a faster rate than premium proprietary brands. This has resulted in lower revenue per hl. Year-to-date net sales revenue decreased by $11 per HL from $201 to $190. Big Rock continues to be well positioned to aggressively compete in all market segments as the brewery can add significant capacity at a relatively low cost. Year-to-date net revenue increased to $30,555,869 from $29,890,211 a $575,658 (2%) increase.

Commensurate with the large volume increase, cost of sales increased by $974,494 (28%) to $4,428,841 for the three months ended September 30, 2005 from $3,454,347 last year. Year-to-date cost of sales is up by $862,965 (8%) to $11,589,356 for the nine months ended September 30, 2005 from $10,726,391 for the same period last year. Big Rock's sale of canned beer has been increasing as a proportion of packaged beer sales. This is positive as the production costs of canned beer are lower than bottled beer due to Big Rock's highly automated can line. This has resulted in a relatively consistent cost of sales per hl even though many other input costs have been increasing.

Gross profit for the quarter rose 10% to $7,347,194 this quarter from $6,664,132 for the same three months last year. Year-to-date gross profit is down $287,307 (1%) from $19,253,820 last year to $18,966,513 this year. The quarterly increase is largely due to volume increase while the year-to-date decrease is primarily due to the changing sales mix resulting from the growing popularity of lower margin brands.

Selling expenses for the three months ended September 30, 2005 increased to $3,416,764 compared to $2,833,481 for the three month period last year, a 20% increase. Year-to-date selling expenses are up $514,935 (6%) from $8,495,242 last year to $9,010,177 this year. Increased expenditures on the summer Grasshopper campaign which featured billboards and radio advertising accounted for the majority of this increase. This campaign yielded positive growth for the brand during the quarter.

During the quarter ended September 30, 2005, general and administrative expenses decreased to $888,850 from $973,044 for the three months ending September 30, 2004, a $84,194 (9%) decrease. Year-to-date general and administrative expense was down by $132,867 (5%) to $2,789,355 from $2,922,222 for the same period last year.

Income tax expense for the quarter of $288,680 (three months ended September 30, 2004 - $503,908) is comprised of $232,248 in current income tax expense and $56,432 in future income tax expense. Year-to-date income tax expense was $690,116 compared to $828,374 for the nine months last year.

Big Rock's balance sheet remains strong. The Trust continued to operate using internally generated cash flow during the quarter and has not had to assume any long-term debt. Subsequent to quarter-end Big Rock further strengthened its cash position with the monetization of the Kamloops brewery assets. As previously announced, on October 12, 2005, subsequent to quarter-end, Big Rock sold its Kamloops brewery and related assets to a British Columbia based arm's length private investor group for cash proceeds of $4,970,000. The book value of the Kamloops assets sold was $4,547,000. After selling expenses and professional fees totalling $240,000 and income tax arising from the transaction of approximately $144,000 the sale will not have a material effect on fourth quarter earnings

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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