Liquor Barn Income Fund reports 2006 financial results

    EDMONTON, March 15 /CNW/ - Liquor Barn Income Fund (the "Fund")
(TSX: LBN.UN), a leading operator of private retail liquor stores in Western
Canada, today reported its financial results for the period from April 3, 2006
to December 31, 2006. The Fund commenced business operations on May 17, 2006.
All figures are reported in Canadian dollars.

    2006 Summary & Highlights

    -   Revenue of $98.0 million
    -   Gross margin of 19.4%
    -   Net earnings of $1.8 million, or $0.23 per Unit
    -   Distributable cash of $5.4 million
    -   Acquired seven stores in Alberta and one in British Columbia
    -   Subsequent to year end, acquired two stores on Vancouver Island
    -   Launched Rockart, private label wine

    "We are pleased with our performance throughout 2006, as we successfully
delivered on the objectives we set at the time of our initial public
offering," said Dr John Mather, President and CEO, Liquor Barn GP Inc. "We
grew our store count, via acquisitions, from 58 at the time of our IPO, to
66 at year end. We integrated virtually all the non Liquor Barn stores onto
our centralized management system, driving sequential margin improvements as a
result of the benefits and efficiencies gained through centralized purchasing
and inventory management. In addition, in November, we launched a private
label wine called Rockart, further improving margin performance in the fourth
    Mather continued, "We believe we are well positioned to continue to
capitalize on the consolidation trends within the liquor retail business in
Western Canada. Moving into 2007, as evidenced by our recent acquisition of
two stores in B.C., we remain committed to increasing unitholder value through
acquisitive growth, in addition to maximizing the synergies resulting from
operating a larger number of stores from a centralized platform."

    2006 Financial Review

    The Fund was formed as a result of multiple acquisitions and was not a
continuation of any one predecessor business. As such, comparative results for
the Fund are not presented. However, where appropriate, comparisons have been
made to the combined financial information as presented in the Fund's
prospectus of May 5, 2006.
    Revenue for 2006 was $98.0 million, which reflects strong sales as a
result of favourable weather during the summer, as well as continued economic
and population growth in Alberta. Revenue for Q4 2006 was $41.6 million.
    For 2006, gross margin was $19.0 million or 19.4% of revenue. Gross
margin includes a fair value adjustment for inventory in the amount of
$1.0 million, which is a non-cash expense. Without this adjustment, the gross
margin for the period was 20.4%. The increase in gross margin was driven by
various factors. The Fund continued to realize the benefits of centralized
purchasing, inventory management and other efficiencies associated with a
higher store count. In addition, during the fourth quarter, price increases
were implemented, and Liquor Barn stores began selling private label wines,
which offer better margins. For Q4 2006, gross margin was $8.3 million, 19.9%
of revenue, and 20.9% of revenue when excluding the inventory fair value
    EBITDA(1) for 2006 was $6.1 million and for the three months ended
December 31, 2006 was $2.4 million.
    Earnings from operations were $3.0 million in 2006, and $1.1 million for
the three months ended December 31, 2006. Net earnings were $1.8 million for
2006 and $0.55 million for Q4 2006.
    During 2006, the Fund generated distributable cash of $5.4 million, or
$0.54 per weighted average Unit. The Fund declared distributions of $4.8
million, or $0.48 per weighted average Unit during the same period. During Q4
2006, the Fund generated distributable cash of $2.1 million, or $0.21 per
weighted average Unit. The Fund declared distributions of $1.9 million, or
$0.19 per weighted average Unit during the same period. Management expects
subsequent monthly distributions to be approximately $0.07 per Unit,
representing an annual distribution per Unit of approximately $0.78.
    The table below summarizes the distributable cash of the Fund for 2006
and the three months ended December 31, 2006. The Fund views distributable
cash as an operating performance measure. The Fund's purchases of property and
equipment required to maintain its existing stores are minimal, and the Fund
distributes a significant portion of its earnings on an annual basis, once
adjusted for non-cash items. The Fund uses cash provided by operating
activities as the starting point for calculating distributable cash.

    (1)The Fund defines EBITDA as income before interest expense, income
    tax, depreciation, amortization and other items.

                                                                     3 month
                                                        May 17,       period
                                                       2006 to         ended
                                                        Dec 31,       Dec 31,
                                                          2006          2006
                                                   ------------  ------------
    Cash provided by operating activities            2,362,889       632,307
    Interest expense                                   711,465       421,669
    Net change in non-cash working capital items(1)  3,032,536     1,381,974

    Interest paid                                     (526,939)     (311,047)
    Purchase of non-growth property & equipment(2)    (164,742)      (40,969)
                                                   ------------  ------------
                                                   ------------  ------------

    Distributable cash(3)                            5,415,209     2,083,934
                                                   ------------  ------------
                                                   ------------  ------------

    Weighted average Units outstanding               9,973,785     9,998,745
                                                   ------------  ------------
                                                   ------------  ------------

    Distributable cash per weighted average Unit(4)       0.54          0.21
    Distributions declared per unit                       0.48          0.19
    Basic and diluted earnings per Unit                   0.23          0.07

    At December 31, 2006, the Fund had cash on hand of $1.3 million.


    During 2006, the Fund acquired a total of seven stores in Alberta: two in
Medicine Hat, two in Red Deer, two in rural Alberta and one in Grande Prairie,
as well as one in Burnaby, British Columbia. Subsequent to year end, the Fund
acquired two stores on Vancouver Island. The Fund expects the new stores to be
accretive to distributable cash within the first year of operations. As of
March 15 2007, the Fund operates 68 stores, compared with 58 following its IPO
in May 2006, an increase of 17%. Over the next three to five years, the Fund
expects to double the number of retail liquor stores it owns and operates.

    British Columbia Increase in Licensee Retail Store Purchase Discount Rate

    In November, the British Columbia Liquor Distribution Branch announced
that the license retail store wholesale purchase discount rate was to increase
from 13% to 16%, as at January 28, 2007. Of the Fund's 68 stores, nine are in
British Columbia. As such, the Fund expects the increase in the purchase
discount rate to enhance overall operational flexibility and increase gross
profits, better positioning the Fund to invest in organic and acquisitive
growth initiatives.

    The complete Management's Discussion and Analysis for the period from
April 3, 2006 to December 31, 2006 will be available at and

    Notice of Conference Call and Webcast

    Liquor Barn Income Fund will host a conference call on Thursday, March
15, 2007 at 10:00 a.m. Eastern Daylight Time. To access the conference call by
telephone, dial 416-644-3421 or 1-800-814-4862. Please connect approximately
fifteen minutes prior to the beginning of the call to ensure participation.
The conference call will be archived for replay until Thursday, March 22,
2007. To access the archived conference call, dial 416-640-1917 or
1-877-289-8525 and enter reference number 21222194 followed by the number
sign. A live audio webcast of the call will be available at
and Please connect to the website at least 15 minutes prior
to the conference call to ensure adequate time for any software download that
may be necessary. The webcast will be archived for 90 days.

    About Liquor Barn Income Fund

    Liquor Barn Income Fund is a publicly traded Canadian Income Fund that
owns a 61.4% interest in Liquor Barn Limited Partnership ("Liquor Barn").
Liquor Barn, which currently operates 59 liquor stores in Alberta and nine in
British Columbia, is a leading operator of private liquor stores in Western
Canada by number of stores. The Fund's Units trade on the Toronto Stock
Exchange under the symbol LBN.UN. Additional information about Liquor Barn
Income Fund is available at or

    Forward-looking Statements

    This news release contains forward-looking statements. These statements
relate to future events or future performance and reflect the expectation of
the Fund regarding its growth, results of operations, performance and business
prospects, and opportunities and trends affecting the retail liquor industry.
Such forward-looking statements reflect current beliefs of management and are
based on information currently available. Prospective investors can identify
many of these statements by looking for words such as "believe", "expects",
"will", "intends", "projects", "anticipates", "estimates", "continues" or
similar words or the negative of these or other comparable terminology. A
number of factors could cause actual events or results to differ materially
from the events or results discussed in such forward-looking statements. In
evaluating these statements, prospective investors should specifically
consider various factors, including the risks outlined under "Risk Factors" in
the Fund's prospectus and other regulatory filings, which may cause actual
events or results to differ materially from those contained in any
forward-looking statement. Although management believes that the expectations
represented in such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. Any forward-looking
statements included in this news release are made as of the date of this news
release and the Fund assumes no obligation to update or revise them to reflect
new events or circumstances.

    Liquor Barn Income Fund
    Consolidated Balance Sheet
    As at December 31, 2006



    Current assets
    Cash                                                             567,040
    Accounts receivable                                              923,745
    Inventory                                                     19,752,247
    Prepaid expenses and deposits                                    576,505

    Other assets                                                     747,561
    Property and equipment                                        12,199,615
    Intangible assets                                              2,190,064
    Goodwill                                                      83,455,450



    Current liabilities
    Accounts payable and accrued liabilities                       3,558,828
    Due to Vendors                                                 3,420,216
    Distributions payable to unitholders                             517,837
    Distributions payable to non-controlling interest                384,247

    Long-term debt                                                24,169,898
    Non-controlling interest                                      17,866,717



    Unitholders' Equity
    Fund Units                                                    72,507,248
    Contributed surplus                                               17,600
    Deficit                                                       (2,030,364)



    On behalf of the Trustees and Board:

    Robert King (signed)                    Harold Irwin (signed)
    Robert King                             Harold Irwin

    Liquor Barn Income Fund
    Consolidated Statement of Earnings and Deficit
    For the period from April 3, 2006 to December 31, 2006

                                                               April 3, 2006
                                                                 December 31,

    Sales                                                         98,037,681

    Cost of sales                                                 79,004,473

    Gross margin                                                  19,033,208

    Salaries and benefits                                          6,792,845
    General and administration                                     3,950,041
    Rent                                                           3,203,483
    Amortization of property and equipment                         1,699,269
    Amortization of intangible assets                                424,536


    Earnings from operations                                       2,963,034

    Interest expense                                                 711,465

    Earnings before non-controlling interest                       2,251,569

    Non-controlling interest                                        (447,659)

    Net earnings for the period                                    1,803,910

    Distributions declared                                        (3,834,274)

    Deficit - End of period                                       (2,030,364)

    Basic and diluted earnings per Unit                                 0.23

    Liquor Barn Income Fund
    Consolidated Statement of Cash Flows
    For the period from April 3, 2006 to December 31, 2006

                                                               April 3, 2006
                                                                 December 31,

    Cash provided by (used in)

    Operating activities
    Net earnings for the period                                    1,803,910
    Items not affecting cash
      Amortization                                                 2,123,805
      Unit compensation                                               17,600
      Amortization of inventory fair value adjustment              1,002,451
      Non-controlling interest                                       447,659


    Net change in non-cash working capital items                  (3,032,536)


    Financing activities
    Net proceeds from the issuance of Units                       49,082,345
    Net proceeds from the exercise of the over-allotment option    2,662,353
    Redemption of Liquor Barn LP Exchangeable LP Units            (2,662,353)
    Increase in long-term debt                                    24,169,898
    Distributions paid to unitholders                             (3,316,437)
    Distributions paid to non-controlling interest                  (566,061)


    Investing activities
    Business acquisitions                                        (70,169,743)
    Cash acquired on acquisitions                                    209,293
    Purchase of property and equipment                            (1,205,144)


    Cash - End of period                                             567,040

    Supplementary information
    Interest paid                                                    526,939

    Interest received                                                      -

    %SEDAR: 00023526E

For further information:

For further information: Dr. John Mather, Chief Executive Officer,
Liquor Barn GP Inc., (780) 462-0190 ext 315; J. Leslie Wright, Chief Financial
Officer, Liquor Barn GP Inc., (780) 462-0190 ext 310

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