Village Farms Income Fund Announces Third Quarter Results



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

    VANCOUVER, Nov. 14 /CNW/ - Village Farms Income Fund (the "Fund") (TSX:
VFF.UN) today announced its results for the third quarter ended September 30,
2007. All amounts are in U.S. dollars, unless otherwise stated.

    
    Highlights for the Third Quarter Ended September 30, 2007:

    -   Secured contract for the sale of the 19-acre greenhouse in
        Abbotsford, BC for CAD$3.2 million. All of the net proceeds will be
        used to pay down senior debt. The sale is expected to close in the
        fourth quarter of 2007 at which time the Fund will recognize an
        approximate $1.5 million gain on the sale.
    -   Successfully renegotiated an interest rate reduction of 75 basis
        points with our Canadian lender. This applies to approximately 75% of
        the Fund's total debt.
    -   Secured a five-year fixed price natural gas purchase contract for
        approximately 75% of the US operations' needs.
    -   Significant progress achieved in GATES, our applied research
        greenhouse.
    -   The Fund declared regular distributions of CAD$0.01 per unit per
        month for the quarter.
    

    Michael DeGiglio, Chief Executive Officer of the Fund's operating
subsidiaries, stated, "Although we are disappointed in our year-to-date
EBITDA, we realize that this is primarily a result of factors which are out of
our control. First, we were negatively impacted by lower than forecasted
production volumes, primarily due to historically low light levels experience
in both Texas and BC. Second, due to an oversupply situation, pepper and
cucumber pricing was poor. In 2008, however, we will no longer produce peppers
and cucumbers but will continue to supply our customers through additional
exclusive marketing partners in Canada and Mexico". DeGiglio added, "We have
executed well on factors within our control, such as eliminating certain
controllable risks in our business, strengthening our market position, debt
reduction, managing foreign exchange and energy costs, and executing on the
Village Farms/Hot House transaction synergies since October 2006.
    DeGiglio continued, "Given the Canadian dollar's significant appreciation
against the US dollar since January 1, 2007 combined with our built in foreign
currency hedge, since we report and primarily operate in US dollars, we
believe that the revenues and margins of many of our Canadian competitors will
be unfavourably impacted. This will give the Fund another competitive
advantage in 2008. On the one year anniversary of the closing of the Village
Farms/Hot House transaction, I am confident in the foundation that we have
built for the coming year and beyond."
    DeGiglio concluded, "The successful integration activities during the
past year has proven that the Village Farms team clearly remains the best in
the industry."

    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, now carried on through Village
Farms Canada Limited Partnership ("VFCLP") and accordingly included in the
financial statements for third quarter of 2007 are the full quarter results
for both the US and Canadian operations. For the third quarter of 2006, only
the results from the US operation are included. Information is presented in
thousands of US dollars, unless otherwise noted.

    Operational Summary for the Third Quarter and Year to Date:

    Results of Operations for the Three Months Ended September 30, 2007
Compared to the Three Months Ended October 1, 2006

    Revenue

    Revenue for the three month period ended September 30, 2007 increased
$16,658 or 213% to $24,473 from $7,815 for the three month period ended
October 1, 2006. The increase is primarily due to the addition of revenues of
$15 million from the VFCLP facilities which are not included in the prior year
results and an increase in revenue of $3.3 million by VFLP facilities, offset
by a decrease of $1.9 million of revenues from the termination of one of
VFLP's marketing partners.

    Gross Profit

    Gross profit for the three month period ended September 30, 2007
decreased $961 to ($252) from $709 for the three month period ended October 1,
2006, primarily due to a decrease in average pricing versus last year as a
result of an increase in pounds in the summer months which are historically at
lower prices. Gross profit margins decreased to (1%) from 9%.

    Selling, General and Administrative

    Selling, general and administrative expenses for the three month period
ended September 30, 2007 increased $356 or 19% to $2,240 from $1,884 for the
three month period ended October 1, 2006. The increase is due to the inclusion
of general and administrative expenses for VFCLP and the Fund, as well as the
addition of sales, logistics and quality control personnel as a result of the
expanded sales and marketing responsibilities due to the elimination of the
third party sales and marketing relationship for the VFCLP-grown product.
These expenses are not included in the prior year period results.

    Interest, Net

    Interest, net for the three month period ended September 30, 2007
increased $1,198 to $1,355 from $157 for the three month period ended October
1, 2006. The increase is a result of the approximately $55 million of
additional debt balances incurred as a result of the October 2006 transaction.

    Other Income

    Other income for the three month period ended September 30, 2007
increased $364 to $385 from $21 for the three month period ended October 1,
2006. The increase was primarily due to a return of a prior year insurance
premium as a result of lower than forecasted claim volume.

    Net loss

    Net loss for the three month period ended September 30, 2007 increased
$2,727 to $3,404 from $677 for the three month period ended October 1, 2006.
The increase was primarily due to a decrease in gross profit of $961, an
increase in interest, net of $1,198, an increase in income tax recovery of
$341 and an increase in selling, general and administrative expenses of $356.

    EBITDA

    EBITDA for the three month period ended September 30, 2007 decreased $443
to ($731) from ($288) for the three month period ended October 1, 2006,
primarily due to the decrease in gross profit discussed above. See the EBITDA
calculation in the Fund's MD&A under "Reconciliation of Net Earnings to
EBITDA", available at www.sedar.com, for additional information.

    Results of Operations for the Nine Months Ended September 30, 2007 
Compared to the Nine Months Ended October 1, 2006

    Revenue

    Revenue for the nine month period ended September 30, 2007 increased
$27,123 or 50% to $81,796 from $54,673 for the nine month period ended
October 1, 2006. The increase is primarily due to revenues of $30 million from
the VFCLP facilities which are not included in the prior year results, offset
by a decrease of $7.5 million of revenues from VFLP's Mexican marketing
partners.

    Gross Profit

    Gross profit for the nine month period ended September 30, 2007 increased
$748 to $8,684 from $7,936 for the nine month period ended October 1, 2006,
primarily due to the increase in revenue discussed above. Gross profit margins
remained constant.

    Selling, General and Administrative

    Selling, general and administrative expenses for the nine month period
ended September 30, 2007 increased $2,141 or 38% to $7,723 from $5,582 for the
nine month period ended October 1, 2006. The increase is due to the inclusion
of general and administrative expenses for VFCLP and the Fund, as well as the
addition of sales, logistics and quality control personnel as a result of the
expanded sales and marketing responsibilities due to the elimination of the
third party sales and marketing relationship, for the VFCLP-grown product.
These expenses are not included in the prior year period results.

    Interest, Net

    Interest, net for the nine month period ended September 30, 2007
increased $4,005 to $4,504 from $499 for the nine month period ended October
1, 2006. The increase is a result of the approximately $55 million of
additional debt balances incurred as a result of the October 2006 transaction.

    Other Income

    Other income for the nine month period ended September 30, 2007 increased
$821 to $851 from $30 for the nine month period ended October 1, 2006. The
increase was primarily due to the receipt of a $184 dividend from the US
senior lender who is an agricultural cooperative bank owned by its borrowers
and a gain on the cancellation of a capital lease, a gain on cancellation of a
capital lease and a return of insurance premiums.

    Net Income

    Net income for the nine month period ended September 30, 2007 decreased
$3,444 o ($2,373) from $1,071 for the nine month period ended October 1, 2006.
The decrease was primarily due to an increase in interest, net of $4,004, an
increase in selling, general and administrative expenses of $2,141, offset by
an increase in gross profit of $478 and a gain on foreign exchange of $1,815.

    EBITDA

    EBITDA for the nine month period ended September 30, 2007 increased $738
or 15% to $5,741 from $5,003 for the nine month period ended October 1, 2006,
primarily due to the increase in other income discussed above. See the EBITDA
calculation in the Fund's MD&A under "Reconciliation of Net Earnings to
EBITDA", available at www.sedar.com, for additional information.

    Financial Highlights

    Consolidated debt as of September 30, 2007 was $65 million (which
reflects the $8 million of principal payments since closing the Transaction),
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)
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 United States 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 September 30, 2007, 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.

    %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; Please visit our web site at www.villagefarms.com

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VILLAGE FARMS INCOME FUND

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