Andrew Peller Limited Announces Strong Fiscal 2011 Results and 9% Increase in Common Share Dividends

GRIMSBY, ONTARIO--(Marketwire - June 8, 2011) -

This news release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained elsewhere in this news release.

Andrew Peller Limited (TSX:ADW.A)(TSX:ADW.B) (the "Company") announced today its results for the three months and fiscal year ended March 31, 2011 ("fiscal 2011").

• Common share dividend to increase 9% on annualized basis
• Company purchases and cancels 594,412 Class A Non-Voting Shares for approximately $5.2 million
• Sales up on solid growth through liquor boards and estate wineries
• Strong Canadian dollar and increased sales of high margin products generate improved profitability
• Gross profit margin improves to 39.1% of sales from 36.6% last year
• EBITA rises to $32.0 million from $27.4 million in prior year
• Cash flow from operating activities increases to $23.0 million from $17.6 million in fiscal 2010

"Our successful sales and marketing initiatives, combined with the increasing global recognition of the quality of our premium and ultra-premium wines, generated increased sales through the majority of our trade channels in fiscal 2011 and a solid improvement in profitability," commented John Peller, President and CEO. "Looking ahead, we are confident we will continue this trend of positive growth."

"We are very proud to be celebrating the Company's 50th Anniversary this year. Our growth and achievements over the last half-century are considerable, a testament to the hard work and dedication of all our people. We look forward to continued progress in the years ahead," Mr. Peller added.

For fiscal 2011, sales rose to $265.4 million, up from $263.2 million in fiscal 2010. Ongoing initiatives to grow sales of the Company's blended varietal table and premium wines through provincial liquor boards and the introduction of new products and improved performance at the Company's estate wineries were partially offset by a discriminatory levy introduced by the Province of Ontario on July 1, 2010 on sales of blended wines sold through the Company's retail stores. The annual impact on sales and EBITA of this levy amounts to approximately $3.0 million. Sales of personal winemaking products declined over the past year. Sales for the fourth quarter of fiscal 2011 were $56.9 million compared to $59.3 million in the prior year period. The decline is due primarily to the above-mentioned special levy in Ontario and the timing of sales in the key Easter selling season.

For fiscal 2011, gross profit rose to 39.1% of sales from 36.6% in the prior fiscal year, and to 38.9% of sales for the three months ended March 31, 2011 from 37.6% in the same period last year. The increase in gross profit in fiscal 2011 was due to the lower cost to the Company of purchasing United States dollars and Euros, increased sales volumes of higher margin products, and the Company's successful cost control initiatives which served to reduce operating and packaging expenses. Gross profit was negatively impacted by the above-mentioned special levy in the Province of Ontario. Management remains focused on efforts to enhance production efficiency and productivity to further improve overall profitability.

Selling and administrative expenses rose in the fourth quarter and year ended March 31, 2011 due primarily to increased sales and marketing expenses compared with the prior year. Management expects the level of sales and administrative expenses will increase slightly in fiscal 2012.

Interest expense in fiscal 2011 declined compared to last year due primarily to the reduction in debt from regularly scheduled long-term debt repayments, proceeds from the sale of certain non-core vineyards during the first quarter of fiscal 2011, and to lower interest rates on both short and long-term debt.

The Company incurred a non-cash gain in fiscal 2011 related to the mark-to-market adjustments on an interest rate swap and foreign exchange contracts aggregating approximately $0.1 million compared to a gain of $3.2 million in the prior year. The Company has elected not to apply hedge accounting and these financial instruments are reflected in the Company's financial statements at fair value each reporting period. These instruments are considered to be effective economic hedges and have enabled management to mitigate the volatility of changing costs and interest rates during the year.

Other expenses incurred in fiscal 2011 relate to a net $1.3 million write-down, after proceeds from an insurance claim, in the value of a BC vineyard where vines were damaged by an early and severe frost in the fall of 2009, as well as carrying costs in the amount of $0.2 million related to the Company's Port Moody facility which was closed effective December 31, 2005. These costs were partially offset by other income of $0.3 million related to a gain on the sale of a portion of an Okanagan vineyard. The damage to the BC vineyard was realized when the vines were not able to support the growth of grapes during hot weather that occurred during August 2010. Other expenses incurred in fiscal 2010 primarily related to impairment charges on certain investments made by the Company.

Earnings before interest, taxes, amortization and gains on the above mentioned derivative financial instruments ("EBITA") were $32.0 million and $4.0 million for the year and three months ended March 31, 2011 respectively compared to $27.4 million and $4.1 million in the respective prior year periods.

Net and comprehensive earnings from continuing operations, excluding gains on derivative financial instruments and other expenses for the year ended March 31, 2011, were $11.5 million compared to $8.4 million for the prior year. Net and comprehensive earnings were $11.0 million or $0.76 per Class A share in fiscal 2011 compared to $21.7 million or $1.49 per Class A share in fiscal 2010. The results for fiscal 2010 included an after-tax gain of approximately $11.9 million related to the sale of the Company's beer business.

Strong Financial Position

On March 10, 2011 the Company announced that it had filed a Notice of Intention to make a normal course issuer bid to purchase for cancellation up to a maximum of 594,412 of its Class A Non-Voting Shares ("Class A Shares") through the facilities of the Toronto Stock Exchange representing 5% of the Company's issued and outstanding Class A shares. The normal course issuer bid was to remain in effect until the earlier of March 13, 2012 or the date on which the Company has purchased the maximum number of Class A shares permitted. As of March 31, 2011, the Company had acquired 594,412 Class A common Shares for total consideration of approximately $5.2 million, or an average price of $8.75 per Class A Share.

Working capital as at March 31, 2011 was $28.3 million compared to $29.4 million at March 31, 2010. The decline at March 31, 2011 was due primarily to the use of funds for the Company's normal course issuer bid, higher levels of capital spending, and cash flow from operating activities used to reduce bank indebtedness.

The Company's debt to equity ratio declined to 0.84:1 at March 31, 2011 compared to 0.90:1 at the end of fiscal 2010. Shareholders' equity as at March 31, 2011 rose to $114.7 million or $8.02 per common share compared to $113.7 million or $7.63 per common share as at March 31, 2010. The increase in shareholders' equity is primarily due to higher net earnings from continuing operations, partially offset by the decrease in Capital Stock arising from the cancellation of 594,412 Class A Shares resulting from the Company's normal course issuer bid.

During fiscal 2011, the Company generated cash flow from operating activities, after changes in non-cash working capital items, of $23.0 million compared to $17.6 million in the prior year. Cash flow from operating activities increased primarily due to stronger earnings performance.

Common Share Dividend Increase

As a result of the Company's continued strong performance, the Board of Directors is pleased to announce today a 9% increase in common share dividends for shareholders of record on June 30, 2011 payable on July 8, 2011. The annual dividend on Class A shares will be increased to $0.360 per share from $0.330 per share and the Class B shares increased to $.0314 per share from $0.288 per share.

"We are very pleased to be implementing our fourth increase in commons share dividends over the last six years," Mr. Peller commented. "With our record performance this year, and our positive outlook for the future, we are proud to be enhancing value for our shareholders."

Conference Call

A conference call hosted by the Company will be held Thursday June 9, 2011 at 10:00 a.m. (ET). The call-in numbers for participants are local /international (416) 340-2216 or North American Toll-Free at (866) 226-1792. Please connect with the conference call at least five minutes before the start time. An audio replay of the call will be available after the live call by dialing (416) 695-5800 or (800) 408-3053 and entering access code 4802885#

Andrew Peller Limited ('APL' or the 'Company') is a leading producer and marketer of quality wines in Canada. With wineries in British Columbia, Ontario and Nova Scotia, the Company markets wines produced from grapes grown in Ontario's Niagara Peninsula, British Columbia's Okanagan and Similkameen Valleys and from vineyards around the world. The Company's award-winning premium and ultra-premium VQA brands include Peller Estates, Trius, Hillebrand, Thirty Bench, Crush, Sandhill, Calona Vineyards Artist Series and Red Rooster. Complementing these premium brands are a number of popularly priced varietal wine brands including Peller Estates French Cross in the East, Peller Estates Proprietors Reserve in the West, Copper Moon, XOXO and Croc Crossing. Hochtaler, Domaine D'Or, Schloss Laderheim, Royal and Sommet are our key value priced wine blends. The Company imports wines from major wine regions around the world to blend with domestic wine to craft these popularly priced and value priced wine brands. With a focus on serving the needs of all wine consumers, the Company produces and markets premium personal winemaking products through its wholly-owned subsidiary, Global Vintners Inc., the recognized world leader in personal winemaking products. Global Vintners distributes products through over 250 Winexpert and Wine Kitz authorized retailers and franchisees and more than 600 independent retailers across Canada, United States, United Kingdom, New Zealand and Australia. Global Vintners award-winning premium and ultra-premium winemaking brands include Selection, Vintners Reserve, Island Mist, Kenridge, Cheeky Monkey, Ultimate Estate Reserve, Traditional Vintage and Artful Winemaker. The Company owns and operates more than 100 well-positioned independent retail locations in Ontario under the Vineyards Estate Wines, Aisle 43 and WineCountry Vintners store names. The Company also owns Grady Wine Marketing Inc. based in Vancouver, and The Small Winemaker's Collection Inc. based in Ontario; both of these wine agencies are importers of premium wines from around the world and are marketing agents for these fine wines. The Company's products are sold predominantly in Canada with a focus on export sales for our icewine products.

Net earnings from continuing operations before other expenses is defined as net earnings before the net unrealized gain on financial instruments, other expenses and net earnings from a discontinued operation, all adjusted by income tax rates as calculated below:

The Company utilizes EBITA (defined as earnings before interest, amortization, unrealized derivative (gain) loss, other expenses, income taxes and net earnings from a discontinued operation). EBITA is not a recognized measure under GAAP. Management believes that EBITA is a useful supplemental measure to net earnings, as it provides readers with an indication of cash available for investment prior to debt service, capital expenditures and income taxes. Readers are cautioned that EBITA should not be construed as an alternative to net earnings determined in accordance with GAAP as an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. In addition, the Company's method of calculating EBITA may differ from the methods used by other companies and, accordingly, may not be comparable to measures used by other companies.

Andrew Peller Limited common shares trade on the Toronto Stock Exchange (symbols ADW.A and ADW.B).

FORWARD-LOOKING INFORMATION

Certain statements in this news release may contain "forward-looking statements" within the meaning of applicable securities laws, including the "safe harbour provision" of the Securities Act (Ontario) with respect to Andrew Peller Limited ( the "Company") and its subsidiaries. Such statements include, but are not limited to, statements about the growth of the business in light of the Company's recent acquisitions; its launch of new premium wines; sales trends in foreign markets; its supply of domestically grown grapes; and current economic conditions. These statements are subject to certain risks, assumptions and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. The words "believe", "plan", "intend", "estimate", "expect" or "anticipate" and similar expressions, as well as future or conditional verbs such as "will", "should", "would" and "could" often identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. With respect to forward-looking statements contained in this news release, the Company has made assumptions and applied certain factors regarding, among other things: future grape, glass bottle and wine prices; its ability to obtain grapes, imported wine, glass and its ability to obtain other raw materials; fluctuations in the U.S./Canadian dollar exchange rates; its ability to market products successfully to its anticipated customers; the trade balance within the domestic Canadian wine market; market trends; reliance on key personnel; protection of its intellectual property rights; the economic environment; the regulatory requirements regarding producing, marketing, advertising and labelling its products; the regulation of liquor distribution and retailing in Ontario; and the impact of increasing competition.

These forward-looking statements are also subject to the risks and uncertainties discussed in this news release, in the "Risk Factors" section and elsewhere in the Company's MD&A and other risks detailed from time to time in the publicly filed disclosure documents of Andrew Peller Limited which are available at www.sedar.com. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which could cause actual results to differ materially from those conclusions, forecasts or projections anticipated in these forward-looking statements. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. The Company's forward-looking statements are made only as of the date of this news release, and except as required by applicable law, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new information, future events or circumstances or otherwise.