Canada: Big Rock Brewery Income trust announces 4th quarter and year-end results

Big Rock Brewery Income Trust is reported on March 23 to Unitholders its consolidated financial results for the three months and year ended December 31st, 2005. These results reflect the consolidated operations of the Trust, Big Rock Brewery Ltd. and its wholly owned subsidiary Pine Creek Brewing Company Ltd.

Financial Highlights for the three months ended December 31, 2005 are as follows:

During the 4th quarter ended December 31, 2005 net sales increased by $1,197,958 (14%) to $10,007,311 from $8,809,353 in the same quarter last year. The improvement resulted from a 25% increase in sales volume during the quarter compared to the same quarter last year.

Net income for the 4th quarter ended December 31, 2005 increased by $431,206 (34%) to $1,698,890 from $1,267,684 in the same quarter last year. The increase is comprised of a $502,464 increase in gross profit, a $260,721 decrease in general and administrative expense, specifically salaries and professional fees, offset by a $336,436 increase in income tax expense.

Net income per unit for the three months ended December 31, 2005 was $0.29 up 32% from $0.22 in the same quarter last year.

Financial Highlights for the year ended December 31, 2005 are as follows:

Net income for the year ending December 31, 2005 was $6,619,876 compared to $6,766,908 for the year ended December 31, 2004, a 2% decrease caused largely by an increase this year in corporate income taxes.

Net income per unit decreased to $1.12 for the year ended December 31, 2005 from $1.17 for the year ended December 31, 2004. Units outstanding increased by 138,900 to 5,998,324 during the year.

Cash distributions declared to unitholders during the year ended December 31, 2005 were $1.29 per unit compared to $0.98 per unit during 2004, an increase of $0.31 per unit.

Cash flow per unit, defined as cash provided by operating activities divided by the weighted average units outstanding during the period, was $1.52

Cash distributed to unitholders during 2005 was $7,581,394 which represents 84% of $9,021,553 cash provided by operating activities.

Big Rock's sales force achieved a product sales volume increase of 12% to 215,166 hectoliters (HL) for the year ended December 31, 2005 from 192,674 HL in 2004. This volume increase is attributable primarily to new business in value and private label brands.

For the year ended December 31, 2005, net sales revenue rose 5% to $40,563,180 from $38,789,564 in 2004. Year-over-year net revenue per hectoliter decreased by $12 reflecting the increase in sales of lower margin value and private label brands.

During the year, the Canadian beer industry continued to experience significant growth in the popularity of value priced beers. While Big Rock has been able to maintain its volumes in the premium beer segment year-over-year, the increase in Big Rock's value beer brand sales has been impressive. Big Rock is very well positioned to compete aggressively in the value segment in Alberta. The brewery is among the most modern and efficient in North America and was designed/built with scalability to cost-effectively meet increases in production demands.

Cost of sales increased from $13,696,549 last year to $15,255,008 for the year ending December 31, 2005 due to the increase in production volumes. Cost of sales was consistent year-over-year at $71 per HL. Gross profit for the year was up $215,157 (1%) to $25,308,172 from $25,093,015 last year commensurate with the volume increase and shifting sales mix to lower priced value beers.

Selling expenses for the year ended December 31, 2005 increased by 5% to $11,669,731 compared to $11,149,364 last year. Selling cost, which includes delivery, decreased by $4 per HL year-over year reflecting the increase in sales of value and private label brands.

Income before income tax for the year was $7,746,912 (2004 - $7,695,766).

Income tax expense for the year of $1,127,036 (2004 - $928,858) is comprised of $461,000 in current income tax expense and $666,036 in future income tax expense. The income trust structure shelters $5,586,894 of net income by shifting the tax burden to the unitholders and reducing the effective income tax rate from 34.70% to 14.55%. As Big Rock's income exceeds this sheltered amount the excess becomes taxable at a corporate rate of 34.55%. Thus current income tax payable for 2005 has increased by $237,539 to $489,679 (2004 - $252,140).

Big Rock is very healthy financially with $5,722,465 in cash and cash equivalents at year-end (December 31, 2004 - $2,093,695) and no long-term debt or bank indebtedness. After paying out cash distributions of $7,581,394 during 2005 (2004 - $5,421,453) the Trust continues to enjoy good liquidity with a current ratio of 3.3:1 (2004 - 2.5:1).

On October 12, 2005, Big Rock sold all of the assets used in connection with the brewery located in Kamloops, British Columbia (the "Kamloops Brewery") to a British Columbia based arm's length private investor group. Land, building, brewery equipment and intellectual property/goodwill with a net book value of $3,476,239 and inventory with a book value of $1,219,541 were sold for net cash proceeds of $4,724,209 after deducting legal and other costs related to the sale in the amount of $242,246. The gain on sale of Kamloops Brewery was $28,429.

The net book value of capital assets decreased by $1,282,222 during the year ended December 31, 2005 to $28,615,246 (2004 - $29,897,468). The decrease was caused by the sale of the Kamloops Brewery and amortization offset by capital additions. Major capital additions included upgrades to the packaging lines at a cost of $1,049,000 and expanding fermenting capacity at a cost of $1,224,000. The brewery has the capacity to brew, ferment, and package up to 400,000 hl of beer annually depending on the lager/ale mix.

Goodwill of $727,218 at December 31, 2004 was related to the Kamloops Brewery and therefore no longer exists.

Cash provided by operating activities decreased by $3,545,167 (28%) to $9,021,553 for the year ended December 31, 2005 from $12,566,720 in the year ended December 31, 2004. The decrease arose primarily from the receipt last year of $2,195,000 in income taxes recoverable.

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 two territories in Canada.

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