Mr. J. Murray Souter reports

DIAMOND ESTATES WINES AND SPIRITS INC. REPORTS FIRST QUARTER FISCAL 2015 RESULTS

Diamond Estates Wines & Spirits Inc. has released its results for the quarter ended June 30, 2014.

Sales for first quarter fiscal 2015 were $5,166,577 compared with $5,972,682 for the quarter ended June 30, 2013, representing a decline of 13.5 per cent. Gross margin for first quarter fiscal 2015 was 50.1 per cent compared with 46.8 per cent for first quarter fiscal 2014. Total operating expenses for first quarter 2015 were $2,222,708 versus $2,182,715 for first quarter fiscal 2014, a change of $39,993. Net loss and comprehensive loss for first quarter fiscal 2015 were $197,681 versus $338,774 in first quarter fiscal 2014, resulting in a loss per share of 0.3 cent in first quarter fiscal 2015 versus 2.3 cents for first quarter fiscal 2014.

The sales decline in the quarter was primarily due to fewer export shipments of Niagara wine. First quarter fiscal 2015 export sales were down 49.5 per cent from the prior year largely due to the disproportionate amount of the fiscal 2014 export revenue occurring in first quarter fiscal 2014. Shipments for fiscal 2015 are forecast to be spread more evenly throughout the year. The export decline masked strong growth in retail sales from the winery (up 21.6 per cent), licensee sales (up 8.5 per cent) and bulk wine (up 40 per cent). Sales to the LCBO and extra provincial channels were up 4.7 per cent from the prior year. Year-over-year sales decline in the imported wines and spirits business was 13.8 per cent due to the impact of lost revenue from brands no longer sold by the agency in fiscal 2015. The company has acquired several new brands that are expected to generate significant revenue in fiscal 2015, largely offsetting the losses. These brands include Montes wines from Chile (for Quebec), Vicente Gandia wines from Spain (for Alberta and British Columbia) and Blue Hour Tequila from Mexico (national).

"Diamond Estates has demonstrated significant progress against our business strategy in first quarter," stated J. Murray Souter, president and chief executive officer of Diamond Estates. "Our focus on profitability and cost management has resulted in improved margins and positive cash flow from operations. The acquisition of several new brands will catalyze growth in the imported wine and spirits business over the remainder of the year. Our winery division continues to grow organically in all sales channels. Expansion into the fast-growing international Canadian blends segment with the launch of Riders Valley and additional product offerings, including our award-winning East Dell Black Label series, are examples of our commitment to building profitable brands."

On Sept. 24, 2013, the company's shares commenced on the TSX Venture Exchange, as a result of the reverse takeover of Whiteknight Acquisitions II Inc., a listed capital pool company. Coincident with this transaction, the company also raised an additional $8,351,000 in equity and renegotiated its credit facilities to significantly reduce its bank indebtedness that created a platform for the future growth of its business.

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