Village Farms Income Fund Announces Fourth Quarter and Year End Results



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

    VANCOUVER, March 28 /CNW/ - Village Farms Income Fund (the "Fund") (TSX:
VFF.UN) announced its results for the fourth quarter and year ended
December 31, 2007.

    2007 Operating Results Summary:

    -   Consolidated sales of US$114 million;
    -   EBITDA of US$14.4 million (fourth quarter EBITDA of US$8.7 million);
    -   Net income of US$2.4 million;
    -   Working capital of US$7.9 million.

    Highlights for the Year Ended December 31, 2007:

    -   Reduced consolidated long-term debt to US$61 million from
        US$73 million, primarily due to the sale of two greenhouse operations
        which were sold as part of our strategic plan;
    -   Renegotiated an interest rate reduction of 75 basis points with our
        Canadian lender. Recently entered into interest rate swap agreements
        for terms up to five years at fixed rates ranging from 5.2% - 5.7%
        for US$43.3 million of debt which protects the Fund against interest
        rate volatility by paying a fixed rate of interest on certain of its
        floating rate obligations;
    -   Changed functional and reporting currency to the US dollar to more
        accurately represent the currency of the economic environment in
        which we operate and to reduce foreign exchange risk;
    -   Entered into five year fixed price contracts for 75% of the US
        operation's natural gas needs, thereby eliminating the
        unpredictability of this input cost;
    -   Our existing sales, marketing and logistics team successfully sold
        and delivered 35% more product than during fiscal 2006 which
        demonstrates the scalability of our organization;
    -   In its first year, GATES, our applied research greenhouse facility,
        achieved production yields which are amongst the highest in the
        world;
    -   Invested US$4.2 million in cost-effective capital improvements and
        technological upgrades for our greenhouses and logistics
        infrastructure;
    -   Declared distributions to unitholders totaling CAD$0.12 per unit for
        the 2007 fiscal year.
    

    Michael DeGiglio, Chief Executive Officer of the Fund's operating
subsidiaries, stated, "The 2007 year ends on a positive note for the Fund with
strong results in the fourth quarter. We are very pleased with the execution
of our business strategy and believe that we are well positioned for growth as
a result of these efforts. Although we encountered historically low light
levels in 2007, I believe we have accomplished what we set out to do at the
start of the year."
    DeGiglio added, "As we move through the first quarter of fiscal 2008, we
continue to drive strong financial results. Looking ahead for the remainder of
2008, I am confident that our competitive advantages will continue to improve
across key facets of our business, including product and technology
innovations, marketing and fulfillment and financial strength."

    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")). Accordingly, included in
the financial statements are the full year results (for the period January 1,
2007 - December 31, 2007) for the U.S. and Canadian operations, and for 2006,
full year results (for the period from January 1, 2006 to December 31, 2006)
and eleven weeks of results (from the period October 18, 2006 - December 31,
2006) for the Canadian operation. Information is presented in thousands of
United States dollars, unless otherwise noted.

    Operational Summary for the Fourth Quarter:

    Revenue

    Revenue for the three month period ended December 31, 2007 increased
$2,031 or 7% to $31,959 from $29,928 for the three month period ended
December 31, 2006. The increase in revenue is due to the addition of
$1.3 million of revenues from VFCLP for the three month period ended
December 31, 2007 versus the same period in 2006 and an increase in the
selling prices for VFLP grown products versus the prior year, offset by a
decrease in revenues related to product sold on behalf of exclusive partners.

    Gross Profit

    Gross profit for the three month period ended December 31, 2007 increased
$3,055 or 47% to $9,542 from $6,487 for the three month period ended
December 31, 2006, primarily due an increase in revenue of $2,031 as discussed
above and a decrease of $1,024 in cost of goods related to the decrease in
product sold on behalf of exclusive partners.

    Selling, General and Administrative

    Selling, general and administrative expenses for the three month period
ended December 31, 2007 increased $416 or 14% to $3,356 from $2,940 for the
three month period ended December 31, 2006. The increase is due to the
additional selling, general and administrative expenses from VFCLP as the
prior year only included the period from October 18, 2006 to December 31,
2006.

    Interest, Net

    Interest, net for the three month period ended December 31, 2007
increased $228 or 26% to $1,110 from $882 for the three month period ended
December 31, 2006. The increase is due to the additional debt balances from
VFCLP as the prior year only included the period from October 18, 2006 to
December 31, 2006.

    Other (Income) Cost

    Other income for the three month period ended December 31, 2007 increased
$1,551 to ($39) from $1,512 for the three month period ended December 31,
2006. The decrease was primarily due to the $1,303 gain on the sale of the
Abbotsford, British Columbia greenhouse facility.

    Net Income (loss)

    Net income for the three month period ended December 31, 2007 increased
$4,875 to $4,779 from ($96) for the three month period ended December 31,
2006. The increase was primarily due to an increase in gross profit and a
decrease in other cost (income), partially offset by an increase in interest
expense.

    EBITDA

    EDITDA for the three month period ended December 31, 2007 increased
$5,080 to $8,660 from $3,580 for the three month period ended December 31,
2006, primarily due to the increase in gross profit and a decrease in other
cost (income) 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, 2007.

    Operational Summary for the Year:

    Revenue

    Revenue for the year ended December 31, 2007 increased $29,154 or 34% to
$113,755 from $84,601 for the year ended December 31, 2006. The increase in
revenue is primarily due to the additional revenues from VFCLP as the prior
year only included the period from October 18, 2006 to December 31, 2006.

    Gross Profit

    Gross profit for the year ended December 31, 2007 increased $3,803 or 26%
to $18,226 from $14,423 for the year ended December 31, 2006. The increase in
gross profit is primarily due to the additional revenues from VFCLP as the
prior year only included the period from October 18, 2006 to December 31,
2006.

    Selling, General and Administrative

    Selling, general and administrative expenses for the year ended
December 31, 2007 increased $2,557 or 30% to $11,079 from $8,522 for the year
December 31, 2006. The increase in selling, general and administrative
expenses is primarily due to the additional revenues from VFCLP as the prior
year only included the period from 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, 2007 increased $4,232 to
$5,614 from $1,382 for the year ended December 31, 2006. The increase is due
to the additional debt balances from VFCLP as the prior year only included the
period from October 18, 2006 to December 31, 2006.

    Other (Income) Cost

    Other income for the year ended December 31, 2007 increased $3,150 to
($1,667) from $1,483 for the year ended December 31, 2006. The increase was
primarily due to a gain on foreign exchange of $987, a $1,303 gain on the sale
of the Abbotsford, British Columbia greenhouse facility and other income of
$771, offset by the amortization of intangible assets of $1,394.

    Net Income

    Net income for the year ended December 31, 2007 increased $1,342 to
$2,407 from $1,065 for the year ended December 31, 2006. The increase was
primarily due to an increase in gross profit, a gain on the sale of an asset
offset by increased interest expense and amortization of intangible assets.

    EBITDA

    EDITDA for the year ended December 31, 2007 increased $5,803 or 67% to
$14,402 from $8,599 for the year ended December 31, 2006 primarily due to the
additional revenues from VFCLP as the prior year only included the period
October 18, 2006 to December 31, 2006. 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, 2007.

    Distributions to Unitholders

    The Fund's policy is to distribute annually to Unitholders available cash
provided by operations after cash required for capital expenditures, working
capital reserves, growth capital reserves and other reserves considered
advisable by the Trustees of the Fund. The policy allows the Fund to make
stable monthly distributions to its Unitholders based on the Fund's estimate
of distributable cash for the year. The Fund pays cash distributions on the
last business day of each month to Unitholders of record on the last business
day of the previous month.

    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. This premium product as well as product produced under
exclusive arrangements with other greenhouse producers is grown in
sophisticated, highly intensive agricultural greenhouse facilities located in
British Columbia, Texas and Pennsylvania and is marketed and distributed under
its Village Farms(R) brand name, primarily to retail supermarkets and
dedicated fresh food distribution companies. Village Farms markets and
distributes throughout the United States, Canada, Mexico and Japan, and
currently operates seven distribution centres located across the Unites States
and Canada. Village Farms has always implemented a sustainable agriculture
policy which integrates three main goals - environmental health, economic
profitability and social and economic equality.

    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

    This press release contains certain "forward looking statements". These
statements relate to future events or future performance and reflect our
expectations regarding our growth, results of operations, performance,
business prospects, opportunities or industry performance and trends. These
forward looking statements reflect our current internal projections,
expectations or beliefs and are based on information currently available to
us. In some cases, forward looking statements can be identified by terminology
such as "may", "will", "should", "expect", "plan", "anticipate", "believe",
"estimate", "predict" , "potential", "continue" or the negative of these terms
or other comparable terminology. A number of factors could cause actual events
or results to differ materially from the results discussed in the forward
looking statements. In evaluating these statements, you should specifically
consider various factors, including, but not limited to, such risks and
uncertainties as availability of resource, competitive pressures and changes
in market activity, risks associated with U.S. and international sales and
foreign exchange, regulatory requirements and all of the other "Risk Factors"
set out in the Fund's current annual information form and management's
discussion and analysis for the fiscal year ended December 31, 2007, which are
available electronically at www.sedar.com. Actual results may differ
materially from any forward looking statement. Although we believe that the
forward looking statements contained in this press release are based upon
reasonable assumptions, you cannot be assured that actual results will be
consistent with these forward looking statements. These forward looking
statements are made as of the date of this press release, and other than as
specifically required by applicable law, we assume no obligation to update or
revise them to reflect new events or circumstances.

    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, 2007, which is
available at www.sedar.com, for additional information concerning these
measures and a reconciliation of these measures to net earnings and operating
cash flows, respectively, for the periods presented.

    %SEDAR: 00020068E




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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