Afton Food Group Ltd. Posts Record Fourth Quarter and Year End Results

AFF-TSE



Apr 02, 2001, 01:00 ET from Afton Food Group Ltd.

    BURLINGTON, ON, April 2 /PRNewswire/ -
 
     -------------------------------------------------------------------------
     3 Months Ended December 31, 2000
     (000s except per share amounts)
                                            Current     Last Year   % Increase
     -------------------------------------------------------------------------
         System Sales                       $46,649      $32,709          43%
         Revenue                              9,442        2,876         228%
         EBITDA                               2,620        1,192         120%
         Net Income                             727          470          55%
         Basic earnings per share ($)          0.10         0.06          67%
         EBITDA per share ($)                  0.34         0.16         113%
     -------------------------------------------------------------------------
 
 
     -------------------------------------------------------------------------
     12 Months Ended December 31, 2000
     (000s except per share amounts)
                                            Current     Last Year   % Increase
     -------------------------------------------------------------------------
         System Sales                      $168,165      $117,967          43%
         Revenue                             29,455         9,665         205%
         EBITDA                               7,808         4,949          58%
         Net Income                           2,145         1,945          10%
         Basic earnings per share ($)          0.28          0.26           8%
         EBITDA per share ($)                  1.00          0.67          49%
     -------------------------------------------------------------------------
 
     Afton Food Group Ltd. (TSE: AFF) today announced the Company's fourth
 quarter and year-end results. Strong gains in revenues and profitability were
 posted for the three and twelve month periods, ended December 31, 2000.
     With the acquisition of Robin's Donuts, the Company doubled its number of
 franchised locations and substantially increased system sales, revenues and
 earnings. "Afton had another solid year of growth. The Company is now
 positioned to aggressively implement the twinning of its 241 Pizza brand with
 its Robin's locations across the Country. To date, the Company has opened four
 twinned locations with very positive results. With the opening of additional
 twinned and stand-alone locations, along with its current cost cutting
 measures, the Company expects to further improve profitability" commented
 Robert Macdonald, President and Chief Executive Officer, Afton Food Group Ltd.
     "The Company expects to continue to grow organically with its existing
 brands and to complete additional strategic acquisitions. The Company has
 grown from a standing start six years ago into one of the top 10 Companies in
 the Quick Service Restaurant industry. As more investors become aware of the
 Company's exciting growth strategy, the Company believes this recognition will
 be reflected positively in its share price." commented Macdonald.
 
     About Afton Food Group
 
     Afton has more than 500 corporate and franchised locations operating or
 underdevelopment coast-to-coast in Canada, including locations in the United
 States and Saudi Arabia. Afton is one of the 10 largest Quick Service
 Restaurant Companies in Canada, whose brands include: 241 Pizza(R), Robin's
 Donuts(R), Ruffage(R), Donut Delite Cafe and Mrs. Powell's Bakery Eatery(R).
 These brands are expected to generate approximately $200 million in system
 sales and more than $30 million in revenue for Afton on an annualized basis.
     Full financial results attached.
 
 
 
     Management's Discussion and Analysis of Afton Food Group Ltd.'s Fourth
     Quarter Results:
 
     Results of Operations:
     ----------------------
     The Results of Operations increased significantly as a result of the
 acquisition of Robin's Foods Inc. System sales for the three months ended
 December 31, 2000, have increased to in excess of $46.6 million (in excess of
 $168.1 million for the twelve months of this year), which represents an
 increase of 43% over the fourth quarter of 1999 (43% increase for the twelve
 months of this year). Franchise revenue for the fourth quarter of 2000
 increased by 195% over the fourth quarter last year and has increased by 140%
 for the twelve months of this year over last year. Corporate store sales
 increased substantially during the current twelve months as a result of the
 number of corporate stores purchased as part of the acquisition of Robin's
 Foods. EBITDA rose by 120% and 58% to $2,619,923 and $7,807,633 respectively
 for the fourth quarter and for the twelve months of this year over last year.
 Earnings per share was $0.10 in the fourth quarter of 2000 compared to $0.06
 in 1999 and is $0.28 for the twelve months of this year, which has increased
 from $0.26 in 1999. The EBITDA per share rose from $0.16 to $0.34 for the
 fourth quarter and from $0.67 to $1.00 for the twelve months ended. The
 Company believes this is a better indicator of its continued corporate growth
 and profitability.
 
     Financial Position
     ------------------
     The balance sheet has changed significantly as a result of the
 acquisition of Robin's Foods Inc. The legal, financing and other costs of the
 acquisition have been properly recorded as deferred financing charges on the
 balance sheet. The Company has a cash position of $1,233,952 as at December
 31, 2000. The Company's cash flow requirements from on-going operations will
 be provided through existing working capital, cash flow from operations, the
 sale of new stores and if required an unused line of credit.
     Effective April 1, 2000, the Company purchased 100% of the outstanding
 share capital of Robin's Foods Inc. The acquisition has been accounted for as
 a share purchase and the accompanying statements reflect the results of
 operations for the nine months from the date of purchase.
 
     The purchase price was allocated in the accounts based on the estimated
 fair value of the assets acquired less liabilities assumed as follows:
 
     Net current assets                                    $950,950
     Capital assets                                      $2,945,682
     Other assets                                          $389,388
     Franchise agreements and trademarks                $36,349,125
     Bank Indebtedness                                  $(2,805,380)
     Long term liabilities                              $(2,079,334)
     (x)Future Income taxes                            $(15,909,000)
     ---------------------------------------------------------------
     Total Purchase Price                               $19,841,431
     ---------------------------------------------------------------
 
     Purchase Price satisfied as follows:
     Issuance of common shares of Afton Food Group Ltd.   $(750,000)
     Payment of Cash                                   $(19,091,431)
     ---------------------------------------------------------------
     Total satisfied                                   $(19,841,431)
     ---------------------------------------------------------------
 
     The acquisition of Robin's Foods Inc. and the consolidation of the
 Company's debt was financed through a combination of $21.5 million senior debt
 facility from Rabobank Canada, a private placement of securities comprised of
 $2.6 million of special warrants and $5.2 million in special warrants, a
 $600,000 vendor take-back note and the issuance of $750,000 of common shares
 to the principals of Robin's. For further information on the acquisition of
 Robin's Foods, please refer to the press release dated March 1, 2000.
 
     Accounting Policy Change
     ------------------------
     Effective January 1, 2000, the Company adopted, retroactively by
 restating prior years, the new GAAP recommendations of the Canadian Institute
 of Chartered Accountants with respect to accounting for income taxes. The
 result was to increase opening retained earnings by $2,440,678 and decrease
 future tax liabilities by a similar amount.
     Under the new liability method, future tax assets and liabilities are
 determined based on reporting differences between the basis of assets and
 liabilities used for financial statements and income tax purposes. Such
 differences are then measured using substantially enacted tax rates and laws
 that will be in effect when these differences are expected to reverse. Prior
 to adoption of the new recommendations, income tax expense was determined
 using the deferral method of tax allocation.
 
     (x)The new policy also requires the Company to record the effect that the
     goodwill/franchise agreements, which arises from the purchase of Robin's
     Shares, which are non-deductible for tax purposes, will have on future
     income taxes. The effect was to increase franchise agreements and record
     future income taxes of $15,909,000, which, when and if exigible, would be
     charged against income at the rate of $99,500 per quarter.
 
     Detailed financial results are disclosed below and include the operations
 of Robin's Foods since its acquisition on March 31, 2000. Certain of the
 groupings for Cost of Sales and General and administration from prior quarters
 have been regrouped to conform with the year-end disclosure.
 
     Statement of Earnings (in Cdn $'s)
 
     For the period ended         3 Months Ended              Year End
      December 31               2000         1999         2000         1999
     -------------------------------------------------------------------------
     System Sales            46,649,367   32,709,695  168,165,845  117,967,750
     -------------------------------------------------------------------------
 
     Revenue                  9,441,800    2,875,768   29,454,625    9,664,503
     Cost of sales            5,310,280      552,669   16,201,601    1,959,104
     -------------------------------------------------------------------------
     Gross profit             4,131,520    2,323,099   13,253,024    7,705,399
 
     Foreign exchange            20,831       62,346      (91,903)     100,050
     General and
      administration          1,490,766    1,069,167    5,537,294    2,656,031
     -------------------------------------------------------------------------
                              1,511,597    1,131,513    5,445,391    2,756,081
 
     EBITDA                   2,619,923    1,191,586    7,807,633    4,949,318
 
     Interest                 1,121,800      226,960    2,526,773      852,348
     Amortization and
      depreciation              533,229      141,993    1,791,145      541,124
     -------------------------------------------------------------------------
                              1,655,029      368,953    4,317,918    1,393,472
     -------------------------------------------------------------------------
     Net income before
      taxes                     964,894      822,633    3,489,715    3,555,846
     Income taxes               237,945      353,000    1,345,200    1,611,000
     -------------------------------------------------------------------------
     Net earnings for
      the period                726,949      469,633    2,144,515    1,944,846
 
     Opening retained
      earnings                                          5,788,002    3,843,156
     -------------------------------------------------------------------------
     Ending retained earnings                           7,932,517    5,788,002
     -------------------------------------------------------------------------
 
     Basic earnings
      per share                10 cents      6 cents        $0.28     26 cents
     -------------------------------------------------------------------------
 
     -------------------------------------------------------------------------
     EBITDA per Share          34 cents     16 cents        $1.00     67 cents
     -------------------------------------------------------------------------
 
 
 
 
     Balance Sheet (in Cdn $'s)
 
     As at December 31
     -----------------
                                                       2000           1999
     -------------------------------------------------------------------------
     Assets:
     Cash and cash equivalents                      1,233,952       1,898,773
     Accounts receivable                            2,104,012         848,121
     Inventory                                        384,371          62,528
     Deferred franchise costs                       1,065,169         105,000
     Prepaid & other                                  467,562         584,913
     Income taxes recoverable                          65,702               -
     Loans and notes receivable, current portion    2,398,199       2,627,307
     -------------------------------------------------------------------------
     Total Current Assets                           7,718,967       6,126,642
     -------------------------------------------------------------------------
 
     Loans and notes receivable, long term portion    833,086               -
     Capital assets                                 1,827,703         566,615
     Franchise rights & trademarks                 50,450,903      15,394,928
     Other assets                                   2,069,807         295,700
     -------------------------------------------------------------------------
     Total Long Term Assets                        55,181,499      16,257,243
     -------------------------------------------------------------------------
 
     Total Assets                                  62,900,466      22,383,885
     -------------------------------------------------------------------------
 
     Liabilities:
     Accounts payable                               2,145,148         812,728
     Income taxes payable                                   -         127,329
     Unearned revenue                                 476,405         176,685
     Current portion future lease commitments         340,705               -
     Current portion-long term debt                 1,887,786       1,540,222
     -------------------------------------------------------------------------
     Total Current Liabilities                      4,850,044       2,656,964
     -------------------------------------------------------------------------
 
     Royalty funding                                  599,767       1,386,024
     Long term debt                                23,282,000       5,967,930
     Future lease commitments                         693,729               -
     Future income taxes                           15,300,844               -
     -------------------------------------------------------------------------
     Total Long Term Liabilities                   39,876,340       7,353,954
     -------------------------------------------------------------------------
 
     Shareholders' Equity:
     Share capital (Note 1)                         7,117,732       6,361,632
     Preferred shares (Note 2)                         55,833         223,333
     Special warrants (Note 3)                      3,068,000               -
     Retained earnings                              7,932,517       5,788,002
     -------------------------------------------------------------------------
     Total Shareholders' Equity                    18,174,082      12,372,967
     -------------------------------------------------------------------------
 
 
     Total Liabilities & Shareholders' Equity      62,900,466      22,383,885
     -------------------------------------------------------------------------
 
 
 
 
     Statement of Cash Flows (in Cdn $'s)
 
     For the twelve months ended December 31          2000           1999
     -------------------------------------------------------------------------
     Operating activities
     Net earnings for the period                    2,144,515       1,944,846
     Amortization and depreciation                  1,791,145         541,124
     Other                                           (792,000)              -
     Loss on sale and write-down of assets             86,864               -
     Future income taxes                              886,200       1,030,106
     Foreign exchange                                 (91,903)        100,051
     -------------------------------------------------------------------------
                                                    4,024,821       3,616,127
     Net change in non-cash working capital           (56,946)        349,163
     -------------------------------------------------------------------------
     Cash provided by operations                    3,967,875       3,965,290
     -------------------------------------------------------------------------
 
     Investing Activities
     Acquisition of Robin's Foods Inc.            (19,091,431)              -
     Acquisition of capital assets                   (131,500)       (138,491)
     Proceeds on sale of capital assets               499,258               -
     Acquisition of other assets                   (1,841,066)       (282,627)
     Loans and notes receivable                      (213,916)     (1,735,503)
     -------------------------------------------------------------------------
     Cash used in investing activities            (20,778,655)     (2,156,621)
     -------------------------------------------------------------------------
 
     Financing Activities
     Repayment of bank indebtedness                (2,805,380)              -
     Proceeds from new long term debt              27,035,597       7,500,000
     Repayment of long-term debt                  (10,099,884)     (7,022,345)
     Payment of future lease commitments             (326,111)              -
     Amortization of deferred royalty funding        (786,257)       (818,421)
     Issuance of common shares                          6,100               -
     Issuance of special warrants                   3,068,000               -
     Redemption of preferred shares                  (167,500)       (167,500)
     -------------------------------------------------------------------------
     Cash Provided by (used in)
      financing activities                         15,924,565        (508,266)
     -------------------------------------------------------------------------
 
     Effect of exchange rate changes on cash          221,394         (91,705)
     -------------------------------------------------------------------------
 
     Decrease in cash                                (664,821)      1,208,698
     Cash, beginning of year                        1,898,773         690,075
     -------------------------------------------------------------------------
     Cash, end of period                            1,233,952       1,898,773
     -------------------------------------------------------------------------
 
     Cash interest paid                             2,247,237         892,563
     Cash income taxes paid                           364,135         222,914
 
     Non-cash investing activities
     Purchase of Robin's with issuance
      of common shares                               (750,000)              -
 
     Non-cash financing activities
     Issuance of common shares for
      the purchase of Robin's                         750,000               -
 
 
 
 
 
     Notes to the Financial Statements:
 
     1) The Company is authorized to issue an unlimited number of common
        shares with no par value. As of December 31, 2000, 7,902,260 shares
        have been issued for total consideration of $7,111,633.
 
        The Company has 632,500 options issued to the Stock Option Plan for
        Directors, Officers and Employees all of which have been granted. The
        exercise price of these options range in price from $1.00 to $1.80. In
        addition, the Company issued 40,000 stock options at $1.83 to
        McCarvill Corporation that expire April 1, 2003. An additional 168,429
        options have been granted at an exercise price of $1.10 as part of the
        Robin's Financing, these options expire on April 1, 2002.
 
     2) The Company has 55,833 preferred shares outstanding with a value of
        $1.00 per share. These shares are being redeemed at the rate of
        $13,958 per month.
 
     3) The Company has 2,471,862 special warrants outstanding. Each special
        warrant entitles the holder to acquire one unit in the capital of the
        Company, for no additional consideration, consisting of one common
        share and one-third of one common share purchase warrant. Each whole
        purchase warrant will entitle the holder to purchase one common share
        at a price of $1.60 and will be exercisable until March 20, 2003 when
        they expire. The special warrants will result in the issue of
        2,471,862 common shares and 823,954 common share purchase warrants.
 
     4) The Company has a series of common share purchase warrants
        outstanding, which were issued in connection with the issue and sale
        of $5,200,000 of subordinated debentures. The common share purchase
        warrants entitle the holders to purchase $5,200,000 of common shares
        at a variable exercise price of between $1.50 per share and $3.00 per
        share based upon the Company's future financial performance and expire
        on March 20, 2005.
 
     5) Earnings per share are based on the weighted average number of common
        shares outstanding 7,785,749 (1999- 7,381,900) during the year.
 
 

SOURCE Afton Food Group Ltd.
    BURLINGTON, ON, April 2 /PRNewswire/ -
 
     -------------------------------------------------------------------------
     3 Months Ended December 31, 2000
     (000s except per share amounts)
                                            Current     Last Year   % Increase
     -------------------------------------------------------------------------
         System Sales                       $46,649      $32,709          43%
         Revenue                              9,442        2,876         228%
         EBITDA                               2,620        1,192         120%
         Net Income                             727          470          55%
         Basic earnings per share ($)          0.10         0.06          67%
         EBITDA per share ($)                  0.34         0.16         113%
     -------------------------------------------------------------------------
 
 
     -------------------------------------------------------------------------
     12 Months Ended December 31, 2000
     (000s except per share amounts)
                                            Current     Last Year   % Increase
     -------------------------------------------------------------------------
         System Sales                      $168,165      $117,967          43%
         Revenue                             29,455         9,665         205%
         EBITDA                               7,808         4,949          58%
         Net Income                           2,145         1,945          10%
         Basic earnings per share ($)          0.28          0.26           8%
         EBITDA per share ($)                  1.00          0.67          49%
     -------------------------------------------------------------------------
 
     Afton Food Group Ltd. (TSE: AFF) today announced the Company's fourth
 quarter and year-end results. Strong gains in revenues and profitability were
 posted for the three and twelve month periods, ended December 31, 2000.
     With the acquisition of Robin's Donuts, the Company doubled its number of
 franchised locations and substantially increased system sales, revenues and
 earnings. "Afton had another solid year of growth. The Company is now
 positioned to aggressively implement the twinning of its 241 Pizza brand with
 its Robin's locations across the Country. To date, the Company has opened four
 twinned locations with very positive results. With the opening of additional
 twinned and stand-alone locations, along with its current cost cutting
 measures, the Company expects to further improve profitability" commented
 Robert Macdonald, President and Chief Executive Officer, Afton Food Group Ltd.
     "The Company expects to continue to grow organically with its existing
 brands and to complete additional strategic acquisitions. The Company has
 grown from a standing start six years ago into one of the top 10 Companies in
 the Quick Service Restaurant industry. As more investors become aware of the
 Company's exciting growth strategy, the Company believes this recognition will
 be reflected positively in its share price." commented Macdonald.
 
     About Afton Food Group
 
     Afton has more than 500 corporate and franchised locations operating or
 underdevelopment coast-to-coast in Canada, including locations in the United
 States and Saudi Arabia. Afton is one of the 10 largest Quick Service
 Restaurant Companies in Canada, whose brands include: 241 Pizza(R), Robin's
 Donuts(R), Ruffage(R), Donut Delite Cafe and Mrs. Powell's Bakery Eatery(R).
 These brands are expected to generate approximately $200 million in system
 sales and more than $30 million in revenue for Afton on an annualized basis.
     Full financial results attached.
 
 
 
     Management's Discussion and Analysis of Afton Food Group Ltd.'s Fourth
     Quarter Results:
 
     Results of Operations:
     ----------------------
     The Results of Operations increased significantly as a result of the
 acquisition of Robin's Foods Inc. System sales for the three months ended
 December 31, 2000, have increased to in excess of $46.6 million (in excess of
 $168.1 million for the twelve months of this year), which represents an
 increase of 43% over the fourth quarter of 1999 (43% increase for the twelve
 months of this year). Franchise revenue for the fourth quarter of 2000
 increased by 195% over the fourth quarter last year and has increased by 140%
 for the twelve months of this year over last year. Corporate store sales
 increased substantially during the current twelve months as a result of the
 number of corporate stores purchased as part of the acquisition of Robin's
 Foods. EBITDA rose by 120% and 58% to $2,619,923 and $7,807,633 respectively
 for the fourth quarter and for the twelve months of this year over last year.
 Earnings per share was $0.10 in the fourth quarter of 2000 compared to $0.06
 in 1999 and is $0.28 for the twelve months of this year, which has increased
 from $0.26 in 1999. The EBITDA per share rose from $0.16 to $0.34 for the
 fourth quarter and from $0.67 to $1.00 for the twelve months ended. The
 Company believes this is a better indicator of its continued corporate growth
 and profitability.
 
     Financial Position
     ------------------
     The balance sheet has changed significantly as a result of the
 acquisition of Robin's Foods Inc. The legal, financing and other costs of the
 acquisition have been properly recorded as deferred financing charges on the
 balance sheet. The Company has a cash position of $1,233,952 as at December
 31, 2000. The Company's cash flow requirements from on-going operations will
 be provided through existing working capital, cash flow from operations, the
 sale of new stores and if required an unused line of credit.
     Effective April 1, 2000, the Company purchased 100% of the outstanding
 share capital of Robin's Foods Inc. The acquisition has been accounted for as
 a share purchase and the accompanying statements reflect the results of
 operations for the nine months from the date of purchase.
 
     The purchase price was allocated in the accounts based on the estimated
 fair value of the assets acquired less liabilities assumed as follows:
 
     Net current assets                                    $950,950
     Capital assets                                      $2,945,682
     Other assets                                          $389,388
     Franchise agreements and trademarks                $36,349,125
     Bank Indebtedness                                  $(2,805,380)
     Long term liabilities                              $(2,079,334)
     (x)Future Income taxes                            $(15,909,000)
     ---------------------------------------------------------------
     Total Purchase Price                               $19,841,431
     ---------------------------------------------------------------
 
     Purchase Price satisfied as follows:
     Issuance of common shares of Afton Food Group Ltd.   $(750,000)
     Payment of Cash                                   $(19,091,431)
     ---------------------------------------------------------------
     Total satisfied                                   $(19,841,431)
     ---------------------------------------------------------------
 
     The acquisition of Robin's Foods Inc. and the consolidation of the
 Company's debt was financed through a combination of $21.5 million senior debt
 facility from Rabobank Canada, a private placement of securities comprised of
 $2.6 million of special warrants and $5.2 million in special warrants, a
 $600,000 vendor take-back note and the issuance of $750,000 of common shares
 to the principals of Robin's. For further information on the acquisition of
 Robin's Foods, please refer to the press release dated March 1, 2000.
 
     Accounting Policy Change
     ------------------------
     Effective January 1, 2000, the Company adopted, retroactively by
 restating prior years, the new GAAP recommendations of the Canadian Institute
 of Chartered Accountants with respect to accounting for income taxes. The
 result was to increase opening retained earnings by $2,440,678 and decrease
 future tax liabilities by a similar amount.
     Under the new liability method, future tax assets and liabilities are
 determined based on reporting differences between the basis of assets and
 liabilities used for financial statements and income tax purposes. Such
 differences are then measured using substantially enacted tax rates and laws
 that will be in effect when these differences are expected to reverse. Prior
 to adoption of the new recommendations, income tax expense was determined
 using the deferral method of tax allocation.
 
     (x)The new policy also requires the Company to record the effect that the
     goodwill/franchise agreements, which arises from the purchase of Robin's
     Shares, which are non-deductible for tax purposes, will have on future
     income taxes. The effect was to increase franchise agreements and record
     future income taxes of $15,909,000, which, when and if exigible, would be
     charged against income at the rate of $99,500 per quarter.
 
     Detailed financial results are disclosed below and include the operations
 of Robin's Foods since its acquisition on March 31, 2000. Certain of the
 groupings for Cost of Sales and General and administration from prior quarters
 have been regrouped to conform with the year-end disclosure.
 
     Statement of Earnings (in Cdn $'s)
 
     For the period ended         3 Months Ended              Year End
      December 31               2000         1999         2000         1999
     -------------------------------------------------------------------------
     System Sales            46,649,367   32,709,695  168,165,845  117,967,750
     -------------------------------------------------------------------------
 
     Revenue                  9,441,800    2,875,768   29,454,625    9,664,503
     Cost of sales            5,310,280      552,669   16,201,601    1,959,104
     -------------------------------------------------------------------------
     Gross profit             4,131,520    2,323,099   13,253,024    7,705,399
 
     Foreign exchange            20,831       62,346      (91,903)     100,050
     General and
      administration          1,490,766    1,069,167    5,537,294    2,656,031
     -------------------------------------------------------------------------
                              1,511,597    1,131,513    5,445,391    2,756,081
 
     EBITDA                   2,619,923    1,191,586    7,807,633    4,949,318
 
     Interest                 1,121,800      226,960    2,526,773      852,348
     Amortization and
      depreciation              533,229      141,993    1,791,145      541,124
     -------------------------------------------------------------------------
                              1,655,029      368,953    4,317,918    1,393,472
     -------------------------------------------------------------------------
     Net income before
      taxes                     964,894      822,633    3,489,715    3,555,846
     Income taxes               237,945      353,000    1,345,200    1,611,000
     -------------------------------------------------------------------------
     Net earnings for
      the period                726,949      469,633    2,144,515    1,944,846
 
     Opening retained
      earnings                                          5,788,002    3,843,156
     -------------------------------------------------------------------------
     Ending retained earnings                           7,932,517    5,788,002
     -------------------------------------------------------------------------
 
     Basic earnings
      per share                10 cents      6 cents        $0.28     26 cents
     -------------------------------------------------------------------------
 
     -------------------------------------------------------------------------
     EBITDA per Share          34 cents     16 cents        $1.00     67 cents
     -------------------------------------------------------------------------
 
 
 
 
     Balance Sheet (in Cdn $'s)
 
     As at December 31
     -----------------
                                                       2000           1999
     -------------------------------------------------------------------------
     Assets:
     Cash and cash equivalents                      1,233,952       1,898,773
     Accounts receivable                            2,104,012         848,121
     Inventory                                        384,371          62,528
     Deferred franchise costs                       1,065,169         105,000
     Prepaid & other                                  467,562         584,913
     Income taxes recoverable                          65,702               -
     Loans and notes receivable, current portion    2,398,199       2,627,307
     -------------------------------------------------------------------------
     Total Current Assets                           7,718,967       6,126,642
     -------------------------------------------------------------------------
 
     Loans and notes receivable, long term portion    833,086               -
     Capital assets                                 1,827,703         566,615
     Franchise rights & trademarks                 50,450,903      15,394,928
     Other assets                                   2,069,807         295,700
     -------------------------------------------------------------------------
     Total Long Term Assets                        55,181,499      16,257,243
     -------------------------------------------------------------------------
 
     Total Assets                                  62,900,466      22,383,885
     -------------------------------------------------------------------------
 
     Liabilities:
     Accounts payable                               2,145,148         812,728
     Income taxes payable                                   -         127,329
     Unearned revenue                                 476,405         176,685
     Current portion future lease commitments         340,705               -
     Current portion-long term debt                 1,887,786       1,540,222
     -------------------------------------------------------------------------
     Total Current Liabilities                      4,850,044       2,656,964
     -------------------------------------------------------------------------
 
     Royalty funding                                  599,767       1,386,024
     Long term debt                                23,282,000       5,967,930
     Future lease commitments                         693,729               -
     Future income taxes                           15,300,844               -
     -------------------------------------------------------------------------
     Total Long Term Liabilities                   39,876,340       7,353,954
     -------------------------------------------------------------------------
 
     Shareholders' Equity:
     Share capital (Note 1)                         7,117,732       6,361,632
     Preferred shares (Note 2)                         55,833         223,333
     Special warrants (Note 3)                      3,068,000               -
     Retained earnings                              7,932,517       5,788,002
     -------------------------------------------------------------------------
     Total Shareholders' Equity                    18,174,082      12,372,967
     -------------------------------------------------------------------------
 
 
     Total Liabilities & Shareholders' Equity      62,900,466      22,383,885
     -------------------------------------------------------------------------
 
 
 
 
     Statement of Cash Flows (in Cdn $'s)
 
     For the twelve months ended December 31          2000           1999
     -------------------------------------------------------------------------
     Operating activities
     Net earnings for the period                    2,144,515       1,944,846
     Amortization and depreciation                  1,791,145         541,124
     Other                                           (792,000)              -
     Loss on sale and write-down of assets             86,864               -
     Future income taxes                              886,200       1,030,106
     Foreign exchange                                 (91,903)        100,051
     -------------------------------------------------------------------------
                                                    4,024,821       3,616,127
     Net change in non-cash working capital           (56,946)        349,163
     -------------------------------------------------------------------------
     Cash provided by operations                    3,967,875       3,965,290
     -------------------------------------------------------------------------
 
     Investing Activities
     Acquisition of Robin's Foods Inc.            (19,091,431)              -
     Acquisition of capital assets                   (131,500)       (138,491)
     Proceeds on sale of capital assets               499,258               -
     Acquisition of other assets                   (1,841,066)       (282,627)
     Loans and notes receivable                      (213,916)     (1,735,503)
     -------------------------------------------------------------------------
     Cash used in investing activities            (20,778,655)     (2,156,621)
     -------------------------------------------------------------------------
 
     Financing Activities
     Repayment of bank indebtedness                (2,805,380)              -
     Proceeds from new long term debt              27,035,597       7,500,000
     Repayment of long-term debt                  (10,099,884)     (7,022,345)
     Payment of future lease commitments             (326,111)              -
     Amortization of deferred royalty funding        (786,257)       (818,421)
     Issuance of common shares                          6,100               -
     Issuance of special warrants                   3,068,000               -
     Redemption of preferred shares                  (167,500)       (167,500)
     -------------------------------------------------------------------------
     Cash Provided by (used in)
      financing activities                         15,924,565        (508,266)
     -------------------------------------------------------------------------
 
     Effect of exchange rate changes on cash          221,394         (91,705)
     -------------------------------------------------------------------------
 
     Decrease in cash                                (664,821)      1,208,698
     Cash, beginning of year                        1,898,773         690,075
     -------------------------------------------------------------------------
     Cash, end of period                            1,233,952       1,898,773
     -------------------------------------------------------------------------
 
     Cash interest paid                             2,247,237         892,563
     Cash income taxes paid                           364,135         222,914
 
     Non-cash investing activities
     Purchase of Robin's with issuance
      of common shares                               (750,000)              -
 
     Non-cash financing activities
     Issuance of common shares for
      the purchase of Robin's                         750,000               -
 
 
 
 
 
     Notes to the Financial Statements:
 
     1) The Company is authorized to issue an unlimited number of common
        shares with no par value. As of December 31, 2000, 7,902,260 shares
        have been issued for total consideration of $7,111,633.
 
        The Company has 632,500 options issued to the Stock Option Plan for
        Directors, Officers and Employees all of which have been granted. The
        exercise price of these options range in price from $1.00 to $1.80. In
        addition, the Company issued 40,000 stock options at $1.83 to
        McCarvill Corporation that expire April 1, 2003. An additional 168,429
        options have been granted at an exercise price of $1.10 as part of the
        Robin's Financing, these options expire on April 1, 2002.
 
     2) The Company has 55,833 preferred shares outstanding with a value of
        $1.00 per share. These shares are being redeemed at the rate of
        $13,958 per month.
 
     3) The Company has 2,471,862 special warrants outstanding. Each special
        warrant entitles the holder to acquire one unit in the capital of the
        Company, for no additional consideration, consisting of one common
        share and one-third of one common share purchase warrant. Each whole
        purchase warrant will entitle the holder to purchase one common share
        at a price of $1.60 and will be exercisable until March 20, 2003 when
        they expire. The special warrants will result in the issue of
        2,471,862 common shares and 823,954 common share purchase warrants.
 
     4) The Company has a series of common share purchase warrants
        outstanding, which were issued in connection with the issue and sale
        of $5,200,000 of subordinated debentures. The common share purchase
        warrants entitle the holders to purchase $5,200,000 of common shares
        at a variable exercise price of between $1.50 per share and $3.00 per
        share based upon the Company's future financial performance and expire
        on March 20, 2005.
 
     5) Earnings per share are based on the weighted average number of common
        shares outstanding 7,785,749 (1999- 7,381,900) during the year.
 
 SOURCE Afton Food Group Ltd.