Village Farms Income Fund Announces Fourth Quarter and Year End Results



    
    TRADING SYMBOL: The Toronto Stock Exchange:
                    Village Farms Income Fund - VFF.UN
    

    VANCOUVER, April 3 /CNW/ - Village Farms Income Fund (the "Fund")
(TSX: VFF.UN) announced its results for the fourth quarter and year ended
December 31, 2006.

    
    Highlights for the Year Ended December 31, 2006:

        -  Closed acquisition transaction which more than doubled the market
           share for the Fund;
        -  Received agency designation from the British Columbia Vegetable
           Marketing Commission and hired experience produce industry
           personnel, allowing the Fund to sell and market produce without a
           third party  marketer;
        -  Completed the organizational restructuring of the Canadian
           operation and the integration with the U.S. operation;
        -  Completed the consolidation of the purchasing functions for raw
           materials and input costs resulting in targeted cost synergies and
           product standardization;
        -  Opened Vancouver, British Columbia and Seattle, Washington
           distribution centers as part of the amalgamation of the sales,
           marketing and distribution functions for the Canadian operation
           into the U.S. operation;
        -  Ceased operation at the Pitt Meadows greenhouse location and
           commenced marketing of those 17 acres of land - bids have met
           expectations;
        -  Completed the construction and commenced operations of the applied
           research greenhouse facility located in Marfa, Texas.
    

    Michael DeGiglio, Chief Executive Officer of the Fund's operating
subsidiaries, said, "Village Farms posted growth in sales and EBITDA in the
fourth quarter of 2006, ending a year in which the Fund closed a very
significant acquisition. In the fourth quarter, we were able to achieve gains
in sales as a result of a good pricing environment and production volumes as
planned. By focusing on our strategic initiatives throughout the year, we have
strengthened our foundation for continued future growth".
    DeGiglio added, "We believe we are well positioned in our industry and we
have a clear view of our business fundamentals. Our near-term operating agenda
includes finalizing the integration of the Canadian and U.S. operations,
investing in our facilities in order to continue to increase production yields
and quality, continuing to achieve cost savings initiatives and further
deleveraging the Fund. We believe success with these initiatives will deliver
additional value for our unitholders over the long term. While 2006 was a year
of consistent financial performance, we think the opportunities in 2007 will
continue to allow us to deliver results consistent with our expectations."

    Presentation of Information

    The October 18, 2006 acquisition has been accounted for using the
purchase method of accounting, with Agro Power Development, Inc. ("APDI"), the
parent company of Village Farms, L.P. (the U.S. operation, "VFLP"), being the
acquirer. This operational summary is therefore presented as if APDI acquired
Hot House Growers Inc. (the Canadian operation, "HHGI", now carried on through
Village Farms Canada Limited Partnership ("VFCLP")) and accordingly included
in the financial statements are the full year results (for the period
January 1, 2006 - December 31, 2006) for the U.S. operation and eleven weeks
of results (from the period October 18, 2006 - December 31, 2006) for the
Canadian operation. Information is presented in thousands of Canadian dollars,
unless otherwise noted.

    Operational Summary for the Fourth Quarter:

    Revenue

    Revenue for the three month period ended December 31, 2006 increased
$9,593 or 40% to $33,844 from $24,251 for the three month period ended
January 1, 2006. The increase in revenue is due to the addition of
$7.3 million of revenues from VFCLP for the period October 18, 2006 to
December 31, 2006 and an increase of approximately 4 million pounds sold by
VFLP versus the prior year, primarily related to an increase in product sold
on behalf of VFLP's exclusive Mexican partners.

    Gross Profit

    Gross profit for the three month period ended December 31, 2006 increased
$2,850 or 64% to $7,330 from $4,480 for the three month period ended
January 1, 2006, primarily due to an 8% increase in average price for VFLP and
a decrease of 6% in cost of goods for VFLP product grown. The decrease in cost
of goods was primarily due to a decrease in natural gas prices.

    Selling, General and Administrative

    Selling, general and administrative expenses for the three month period
ended December 31, 2006 increased $1,182 or 55% to $3,324 from $2,142 for the
three month period ended January 1, 2006. The increase is due to the
additional selling, general and administrative expenses from VFCLP for the
period October 18, 2006 to December 31, 2006 as well as the addition of sales
and quality control personnel as a result of the elimination of the third
party sales and marketing relationship for the VFCLP grown product.

    Interest, Net

    Interest, net for the three month period ended December 31, 2006
increased $869 or 360% to $1,110 from $241 for the three month period ended
January 1, 2006. The increase is a result of the approximately $63.4 million
of additional debt balances incurred from October 18, 2006 due to the
acquisition of HHGI.

    Other Cost (Income)

    Other cost (income) for the three month period ended December 31, 2006
increased $1,904 to $1,698 from ($206) for the three month period ended
January 1, 2006. The increase was primarily due to a loss on foreign exchange
of $1,189.

    Net Income (Loss)

    Net income for the three month period ended December 31, 2006 decreased
$1,499 to ($109) from $1,390 for the three month period ended January 1, 2006.
The decrease was primarily due to an increase in net interest expense of 46%,
a loss on foreign exchange of $1,189 and amortization of intangible assets of
$328.

    EBITDA

    EDITDA for the three month period ended December 31, 2006 increased $473
or 8% to $4,060 from $3,587 for the three month period ended January 1, 2006,
primarily due to the increase in gross profit discussed above. See the EBITDA
calculation in "Reconciliation of Net Earnings to EBITDA" in the Fund's
Management's Discussion and Analysis for the year ended December 31, 2006.

    Operational Summary for the Year:

    Revenue

    Revenue for the year ended December 31, 2006 increased $6,987 or 8% to
$95,937 from $88,950 for the year ended January 1, 2006. The increase in
revenue was due to the addition of $7.3 million of VFCLP revenues for the
period October 18, 2006 through December 31, 2006. VFLP revenues in US$
increased 6% but were flat as compared to the prior year as a result of the
exchange translation.

    Gross Profit

    Gross profit for the year ended December 31, 2006 increased $46 to
$16,355 from $16,309 for the year ended January 1, 2006. The increase of $46
is due to the additional revenue from VFCLP for the period October 18, 2006 to
December 31, 2006. Gross profit for VFLP increased US$867 for the year ended
December 31, 2006 as compared to the year ended January 1, 2006 but decreased
$29 as a result of the exchange translation.

    Selling, General and Administrative

    Selling, general and administrative expenses increased $1,405 or 17% to
$9,664 from $8,259 for the year January 1, 2006. The increase is due to the
additional selling, general and administrative expenses from VFCLP for the
period October 18, 2006 to December 31, 2006 as well as the addition of sales
and quality control personnel as a result of the elimination of the third
party sales and marketing relationship for the VFCLP grown product.

    Interest, Net

    Interest, net for the year ended December 31, 2006 increased $496 or 46%
to $1,567 from $1,071 for the year ended January 1, 2006. The increase is a
result of the approximately $63.4 million of additional debt balances incurred
from October 18, 2006 due to the acquisition of HHGI.

    Other Cost (Income)

    Other cost for the year ended December 31, 2006 increased $1,884 to
$1,680 from ($204) for the year ended January 1, 2006. The increase was
primarily due to a loss on foreign exchange of $1,189.

    Net Income

    Net income for the year ended December 31, 2006 decreased $3,299 or 73%
to $1,208 from $4,507 for the year ended January 1, 2006. The decrease was
primarily due to an increase in net interest expense of 46%, a loss on foreign
exchange of $1,189 and amortization of intangible assets of $328.

    EBITDA

    EDITDA for the year ended December 31, 2006 decreased $2,673 or 22% to
$9,751 from $12,424 for the year ended January 1, 2006 primarily due to a loss
on foreign exchange of $1,189 and an increase in selling, general and
administrative expenses of $1,405, as outlined above. See the EBITDA
calculation in "Reconciliation of Net Earnings to EBITDA" in the Fund's
Management's Discussion and Analysis for the year ended December 31, 2006.

    Financial Highlights

    Consolidated debt as of December 31, 2006 was $85 million, and the Fund
and its subsidiaries were in compliance with all bank covenants. For the 2007
year, consistent with its previously announced distribution policy, the Fund
intends to make distributions to Unitholders equal to 50% of the cash
otherwise available for distribution, and the remaining 50% of that cash will
be used to pay down debt.

    About Village Farms

    Village Farms is the largest producer, marketer and distributor of
premium-quality, greenhouse grown tomatoes, bell peppers and cucumbers in
North America. Village Farms operates sophisticated, highly intensive
agricultural greenhouse facilities in British Columbia, Texas and
Pennsylvania. It markets and distributes the premium product produced in these
facilities, as well as those produced under exclusive arrangements with other
greenhouse producers, predominantly in Mexico, under its Village Farms(R) and
Home Choice(R) brand names, primarily to retail supermarkets and dedicated
fresh food distribution companies. Village Farms markets and distributes
throughout the U.S., Canada and Mexico, and currently operates seven
distribution centres located across the U.S. and Canada.

    Restriction on Non-Resident Ownership

    The Declaration of Trust of the Fund contains provisions which prohibit
non-residents of Canada from owning more than 49.9% of the Units of the Fund
on a fully-diluted basis and give the Trustees of the Fund certain powers,
including the power to require non-residents to sell their Units if this
limitation is exceeded and the right to refuse to register transfers of units
to non-residents if such a situation is imminent. The Fund estimates that in
excess of 40% of its Units, on a fully-diluted basis, are held by
non-residents. Should non-residents acquire additional Units of the Fund, it
may be necessary for the Trustees to exercise their powers to require
non-resident Unitholders to sell their Units and/or to refuse Unit transfer to
non-residents. Accordingly, non-residents may determine that it is not
appropriate to acquire directly or indirectly Units of the Fund.

    Forward Looking Statements

    The statements contained in this news release that are forward-looking
are based on current expectations, and are subject to a number of
uncertainties and risks, and actual results may differ materially. These
uncertainties and risks include, but are not limited to: availability of
resource, competitive pressures and changes in market activity, risks
associated with U.S. and international sales and foreign exchange, and
regulatory requirements. Further information can be found in the disclosure
documents filed by the Fund with the Canadian securities regulatory
authorities, available at www.sedar.com.

    Non-GAAP Measures

    EBITDA and distributable cash are not recognized measures and do not have
standardized meanings under the Canadian generally accepted accounting
principles. Accordingly, these measures may not be comparable to similar
measures presented by other issuers. Please refer to the Fund's Management's
Discussion and Analysis for the year ended December 31, 2006, which is
available at www.sedar.com, for additional information concerning these
measures and a reconciliation of these measures to net earnings for the
periods presented.





For further information:

For further information: Kenneth S. Hollander, Executive Vice President
and Chief Financial Officer, Village Farms Canada Limited Partnership, (732)
676-3008

Organization Profile

VILLAGE FARMS INCOME FUND

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