Village Farms Income Fund Announces Second Quarter Results



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

    VANCOUVER, Aug. 15 /CNW/ - Village Farms Income Fund (the "Fund") (TSX:
VFF.UN) today announced its results for the second quarter ended June 30,
2007. All amounts are in U.S. dollars, unless otherwise stated.

    Highlights for the Second Quarter Ended June 30, 2007:

    -   Revenues increased $16.8 million, an increase of 105% versus 2006.
    -   Increase of $3.6 million in EBITDA versus the prior year.
    -   The Fund declared regular distributions of $0.01 per unit per month
        for the quarter.
    -   Completed the sale of the 18-acre site on which the Pitt Meadows
        greenhouse was previously located for CAD$7.45 million. All of the
        net proceeds were used to pay down senior debt.
    

    Michael DeGiglio, Chief Executive Officer of the Fund's operating
subsidiaries, stated, "We are pleased with the performance of the Fund during
the second quarter, increasing EBITDA $3.6 million over the second quarter of
2006. These results are evidence of the continuing successful integration
activities and indicative of the resulting improved market position that we
continue to gain."
    DeGiglio continued, "Internally, we continued to create value and
strengthened our balance sheet during the second quarter. We have reduced our
long-term debt approximately 10% since closing the Transaction. The efforts of
all Village Farms employees this quarter resulted in a solid performance. Year
to date, we have earned $4.6 million of distributable cash against declared
distributions of $2.2 million."

    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 second quarter of 2007 are the full quarter results
for both the US and Canadian operations. For the second 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 Second Quarter and Year to Date:

    Results of Operations for the Three Months Ended June 30, 2007 Compared
    to the Three Months Ended July 2, 2006

    Revenue

    Revenue for the three month period ended June 30, 2007 increased $16,849
or 105% to $32,883 from $16,034 for the three month period ended July 2, 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 of 1.9 million pounds produced by VFLP facilities, offset by a
decrease of $1.1 million of revenues from VFLP's Mexican marketing partners.

    Gross Profit

    Gross profit for the three month period ended June 30, 2007 increased
$3,694 to $1,435 from ($2,259) for the three month period ended July 2, 2006,
primarily due the increase in revenue discussed above. Gross profit margins
increased to 4% from (14%).

    Selling, General and Administrative

    Selling, general and administrative expenses for the three month period
ended June 30, 2007 increased $804 or 41% to $2,745 from $1,941 for the three
month period ended July 2, 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 June 30, 2007 increased
$1,394 to $1,545 from $151 for the three month period ended July 2, 2006. The
increase is a result of the approximately $55 million of additional debt
balances incurred as a result of the Transaction.

    Other Income

    Other income for the three month period ended June 30, 2007 increased
$234 to $236 from $2 for the three month period ended July 2, 2006. The
increase was primarily due to a gain on the cancellation of a capital lease.

    Net loss

    Net loss for the three month period ended June 30, 2007 decreased $759 or
29% to $1,884 from $2,634 for the three month period ended July 2, 2006. The
decrease was primarily due to an increase in gross profit of $3,694 offset by
interest, net of $1,394, a decrease in income tax recovery of $641 and an
increase in selling, general and administrative expenses of $804.

    EBITDA

    EDITDA for the three month period ended June 30, 2007 increased $3,599 to
$279 from ($3,320) for the three month period ended July 2, 2006, primarily
due to the increase in gross profit discussed above. See the EBITDA
calculation in "Reconciliation of Net Earnings to EBITDA."

    Results of Operations for the Six Months Ended June 30, 2007 Compared to
    the Six Months Ended July 2, 2006

    Revenue

    Revenue for the six month period ended June 30, 2007 increased $10,465 or
22% to $57,323 from $46,858 for the six month period ended July 2, 2006. The
increase is primarily due to revenues of $15 million from the VFCLP facilities
which are not included in the prior year results, offset by a decrease of
$5 million of revenues from VFLP's Mexican marketing partners.

    Gross Profit

    Gross profit for the six month period ended June 30, 2007 increased
$1,709 or 24% to $8,936 from $7,227 for the six month period ended July 2,
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 six month period
ended June 30, 2007 increased $1,785 or 48% to $5,483 from $3,698 for the six
month period ended July 2, 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 six month period ended June 30, 2007 increased
$2,807 to $3,149 from $342 for the six month period ended July 2, 2006. The
increase is a result of the approximately $54.8 million of additional debt
balances incurred as a result of the Transaction.

    Other Income

    Other income for the six month period ended June 30, 2007 increased $457
to $466 from $9 for the six month period ended July 2, 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.

    Net Income

    Net income for the six month period ended June 30, 2007 decreased $717 or
41% to $1,031 from $1,748 for the six month period ended July 2, 2006. The
decrease was primarily due to an increase in interest, net of $2,807, an
increase in selling, general and administrative expenses of $1,785, offset by
an increase in gross profit of $1,709 and a gain on foreign exchange of
$1,734.

    EBITDA

    EDITDA for the six month period ended June 30, 2007 increased $1,257 or
24% to $6,548 from $5,291 for the six month period ended July 2, 2006,
primarily due to the increase in gross profit discussed above. See the EBITDA
calculation in "Reconciliation of Net Earnings to EBITDA."

    Financial Highlights

    Consolidated debt as of June 30, 2007 was $65.4 million (which reflects
the $7.5 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 June 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.

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

    %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

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VILLAGE FARMS INCOME FUND

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