South Valley WineryPresented by: Carol LucaGlenn HouserKyle GrossAndy Jackson

Mission Statement:South Valley Winery will work as a family business to establish profitable value added fruit products while facilitating the development of the fruit wine industry in Saskatchewan

IntroductionSouth Valley Winery will be located on the No. 1 highway near Balgonie, SK

South Valley Winery will produce fruit wine and operate as a Cottage winery as governed by the Saskatchewan Liquor and Gaming Authority (SLGA)

The Cottage Winery Policy was drafted in May 2001 by the SLGA to promote the development of tourism and agriculture resources in Saskatchewan

Cottage Winery Policy65% of fruit must come from Saskatchewan production - 25% of fruit must be grown by the operator on his/her own land or leased land

Winery must be situated on farm property and the operator must derive 50% of gross income or $20,000 annually from agricultural production

Must produce no less than 4,500L (500 cases) and no more than 45,000L (5,000 cases)

Can sell wine directly from premises, to commercial permit holders or to holders of special occasion permits

South Valley WineryRod and Jeanne Flaman operate South Valley Farms and have established fruit production

They will expand their farm to include South Valley Winery

Rod and Jeanne will supply all of the owners equity for the business

Rod and Jeannes son Nick will manage and operate the winery

Goals & Objectives of South Valley WineryCreate a significant value-added agricultural industryEstablish an image and name for the productBecome a member of The Fruit Wines of Canada, producing recognized quality fruit wine productsCreate a tourist attraction along one of Saskatchewans busiest highwaysMaximize production at 5,000 casesProvide at least 20% return on equity

Operations Plan

Process of WinemakingFruit Delivery in cratesFilter 3 XBottler

Winery Floor plan

OfficeRetail CounterFinishedInventory Cold StorageCrusher

BottlingAreaPrimary FermentationTankSecondary FermentationTanksPumpFilterShowroom60 ft

42 ftBasket Press

Capital Budget

Sheet1

Equipment Costs:

TypeCostDimensions/Quantity/Source

Primary Fermenter$3,500600 gal. - 1 - Dairyland Agro

Basket Press$1,000110 Litre - 1 - The Compleat Winemaker

Filter$5,60020 plates - Criveller Co. (Ont.)

Pump$1,00020 gpm - 1 - ??????????????????

Storage Tanks$4,8001000 Litre - 4 - Criveller Co. (Ont.)

Bottle Filler$8004 nozzle - 1 - The Compleat Winemaker

Bottle Corker$508 bottles/hour - 1 - Wine Kitz

Lab Equipment$500Hydrometer, thermometer, etc. - Fisher Scientific

$600pH meter and probe - 1 - Coal Parmer (Montreal)

$500SO2 detector - 1 - R + D Equipment California

Fruit Crusher$40033" x 22" x 14" - 1 - The Compleat Winemaker

Used Garden Tractor$5,00020 hp mower and rototiller - Private Deal

Pallet Jack$4292 ton capacity - Princess Auto

Office Equipment$3,000Desk, Computer, Filing System

Irrigation$700Drip Irrigation - Rainmaker Irrigation (Outlook)

$27,879

Working Capital:

Land$10,000

Building$63,000Goodon Industries

Sewage System$3,500Wigs Pumps and Waterworks

Natural gas installation$8,000Sask Energy

Electricity to site$25,000Sask Power

Town water installation$14,300Balgonie

Capital Budget SummaryLandscaping$3,500Lakeshore Garden Centre

Land$10,000$54,300

Buildings$63,000

Utility Installation$54,300

Equipment$44,879

Working Capital$41,986

Total Capital Required$214,165

Sheet2

1st year (1000 case production)

Direct Material Purchases

Fruit Purchased (lb)

Rhubarb$2,250.00

Raspberries$6,750.00

Saskatoon berries$6,750.00

Chokecherries$2,250.00

Sugar$1,152.00

Yeast$288.74

Acid Blend$456.62

Pectic Enzyme$365.94

Yeast Energizer$281.36Total Cost of Goods Manufactured

Campden$110.34Direct Materials$36,165.00

Clarifier$257.25Direct Labour Costs$23,589.53

Water$24.75Overhead Costs$16,925.80

Labels$3,000.00Total$76,680.33

Corks$3,540.00

Bottles$7,083.00

Shrink Wrap$1,200.00

Filters$405.00

Total$36,165.00TOTAL

Direct Labour Costs

Direct Labour wages$20,415.00

Direct Labor Compensation$3,174.53

Total$23,589.53

Management Salary$20,000.00

Manufacturing Overhead Costs

Natural Gas$1,250.00

Property Taxes$1,000.00

Depreciation$12,575.80

Electricity$1,440.00

Maintenance$300.00Total OverheadTotal

Freight and Pallet Charges$360.0016925.8$135,522.62$16,925.80$1,410.48

Total$16,925.80

83104.5325

Glenn Houser:1000 bottles where 96 bottles cost $680

Glenn Houser:10 cents each

Glenn Houser:295 for 1000 corks

Glenn Houser:25 cents per lable

Glenn Houser:includes cpp, ei, wc, hol pay

tst007:1280*3 for wages15000 for nick175 * 9

tst007:unit price 2.29/30 grams10mL clears 5 gallons

Sheet3

Production Equipment:Cash$5,000.00

Primary Fermenter6,500Accounts Receivables0.0

Basket Press1,000Inventories$38,922.00

Filter5,600Accounts Payables$3,064.00

Pump1,000Total Net Working Capital$46,986.00

Storage Tanks4,800

Bottle Filler800

Bottle Corker50

Hydrometer & Thermometer500

pH meter and probe600

SO2 detector500

Fruit Crusher400

Walk in Freezer14,000

Used Garden Tractor5,000

Pallet Jack429

Irrigation700

Office Equipment3,000

Total Equipment Costs44,879

Total Cost of Goods Manufactured

SV Base Case

South Valley Winery

Financial ProjectionsBase Case

Statement of Income and Retained Earnings

For the year ended March 312004200520062007200820092010201120122013

Sales Revenue:

Saskatoon Berry Wine14,58330,78466,39672,85496,902112,624143,045160,127189,781210,091

Raspberry Wine13,42628,34361,13167,07789,218103,693131,702147,429174,732193,432

Chokecherry Wine12,14225,63155,28160,65880,68093,771119,099133,321158,011174,922

Rhubarb Wine12,78426,98758,20663,86884,94998,732125,401140,375166,372184,177

Total52,935111,746241,015264,457351,749408,820519,248581,253688,896762,621

Liquor Tax ($0.53/L)(2,043)(4,207)(8,853)(9,477)(12,298)(13,945)(17,280)(18,871)(21,820)(23,566)

Cost of Goods Sold29,15666,411104,752113,732131,471152,523175,438195,668214,672237,210

Gross Margin23,77845,335136,263150,725220,278256,297343,809385,585474,224525,411

Expenses:

Start-up Training970000000000

Marketing19,23519,49524,35630,60235,20637,04639,13041,28843,52545,850

Marketing Salaries48,01178,32481,77283,16586,08288,11291,56893,80897,35099,901

Interest on Long Term Debt12,17911,70911,20410,66210,0809,4558,7848,0627,2886,456

Total Expenses80,395109,528117,332124,430131,368134,613139,482143,158148,163152,207

Income Before Taxes(56,617)(64,193)18,93126,29588,910121,684204,327242,427326,062373,204

Income Taxes00002,54823,26639,61851,74978,37893,388

Net Income(Loss)(56,617)(64,193)18,93126,29586,36298,418164,709190,678247,684279,816

Beg Retained Earnings0(56,617)(120,810)(101,879)(75,584)10,778109,196206,274258,933343,378

Net Income(Loss)(56,617)(64,193)18,93126,29586,36298,418164,709190,678247,684279,816

Dividends00000067,631138,019163,239215,661

End Retained Earnings(56,617)(120,810)(101,879)(75,584)10,778109,196206,274258,933343,378407,532

Dividend Policy$(62,979)$(11,978)$(68,536)$(59,354)$(56,819)$(5,302)$67,631$138,019$163,239$215,661

Balance Sheet

March 312004200520062007200820092010201120122013

Assets

Current Assets:

Cash66,2641,43211,59539,42194,498188,691261,722310,152366,030422,674

Accounts Receivable0000000000

Total Inventories38,92347,80455,93156,68478,19282,186100,467102,632122,600125,454

Total Current Assets105,18749,23567,52696,104172,690270,878362,188412,784488,630548,128

Capital Assets:

Plant and Equipment172,179172,179177,099177,099188,805188,805193,974193,974199,272199,272

Accumulated C.C.A.(8,104)(21,872)(32,924)(42,973)(52,868)(62,611)(71,551)(79,824)(87,550)(94,815)

Net Plant and Equipment164,075150,307144,175134,126135,937126,194122,422114,150111,722104,457

Total Assets269,262199,542211,701230,230308,627397,072484,611526,934600,352652,584

Liabilities

Current Liabilities:

Accounts Payable3,0644,3584,9105,0115,4954,5964,8034,9355,1505,302

Noncurrent Liabilities

Long Term Debt158,232151,412144,087136,220127,771118,696108,95098,48387,24175,168

Total Liabilities161,296155,769148,997141,231133,266123,293113,754103,41892,39280,470

Shareholders' Equity

Owner's Equity164,583164,583164,583164,583164,583164,583164,583164,583164,583164,583

Retained Earnings(56,617)(120,810)(101,879)(75,584)10,778109,196206,274258,933343,378407,532

Total Shareholder's Equity107,96643,77362,70488,999175,361273,779370,857423,516507,960572,115

Total Liabilities and269,262199,542211,701230,230308,627397,072484,611526,934600,352652,584

Shareholder's Equity

Statement of Cash Flow

For the year ended March 312004200520062007200820092010201120122013

Cash from (used in) Operating Activities:

Net Income(Loss)(56,617)(64,193)18,93126,29586,36298,418164,709190,678247,684279,816

Depreciation8,10413,76811,05210,0499,8959,7438,9418,2737,7267,265

Accounts Receivable0000000000

Inventory(38,923)(8,881)(8,127)(753)(21,508)(3,994)(18,280)(2,166)(19,967)(2,854)

Accounts Payable3,0641,294553101483(898)207132216151

Net Cash Flow from Operations(84,372)(58,012)22,40935,69275,232103,268155,576196,917235,658284,378

Cash from (used for) Financing Activities:

Owner's Equity164,583000000000

Long Term Debt158,232(6,820)(7,325)(7,867)(8,449)(9,074)(9,746)(10,467)(11,242)(12,074)

Dividends000000(67,631)(138,019)(163,239)(215,661)

Net Cash Flow from Financing322,815(6,820)(7,325)(7,867)(8,449)(9,074)(77,377)(148,486)(174,481)(227,735)

Cash from (used for) Investing Activities:

Buildings and Equipment(172,179)0(4,920)0(11,706)0(5,169)0(5,298)0

Net Cash Flow from Investing(172,179)0(4,920)0(11,706)0(5,169)0(5,298)0

Increase(decrease) in Cash$66,264$(64,832)$10,164$27,825$55,077$94,194$73,030$48,430$55,879$56,643

Cash beginning of year066,2641,43211,59539,42194,498188,691261,722310,152366,030

Cash end of year66,2641,43211,59539,42194,498188,691261,722310,152366,030422,674

Supporting Schedules

Schedule 1: Economic Forecast

2004200520062007200820092010201120122013

Long Term Debt RateInput7.4%7.4%7.4%7.4%7.4%7.4%7.4%7.4%7.4%7.4%

Rate of Inflation (expenses)Input2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Schedule 2: Revenues

2004200520062007200820092010201120122013

Growth in Selling Prices:

Saskatoon Berry WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Raspberry WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Chokecherry WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Rhubarb WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Quantity of Sales

Saskatoon Berry Wine1072214644976457319069891,1441,235

Raspberry Wine1072214644976457319069891,1441,235

Chokecherry Wine1072214644976457319069891,1441,235

Rhubarb Wine1072214644976457319069891,1441,235

Total Quantity4288821,8561,9872,5782,9233,6233,9564,5754,941

2004200520062007200820092010201120122013

Selling Prices (per case)

Saskatoon Berry WineInput136.20139.61143.10146.67150.34154.10157.95161.90165.95170.10

Raspberry WineInput125.40128.54131.75135.04138.42141.88145.43149.06152.79156.61

Chokecherry WineInput113.40116.24119.14122.12125.17128.30131.51134.80138.17141.62

Rhubarb WineInput119.40122.39125.44128.58131.80135.09138.47141.93145.48149.11

Average Selling Price123.60126.69129.86133.10136.43139.84143.34146.92150.59154.36

Sales Revenue

Saskatoon Berry Wine14,58330,78466,39672,85496,902112,624143,045160,127189,781210,091

Raspberry Wine13,42628,34361,13167,07789,218103,693131,702147,429174,732193,432

Chokecherry Wine12,14225,63155,28160,65880,68093,771119,099133,321158,011174,922

Rhubarb Wine12,78426,98758,20663,86884,94998,732125,401140,375166,372184,177

Total52,935111,746241,015264,457351,749408,820519,248581,253688,896762,621

Schedule 3: Operating Expenses

Direct Material Purchases

Fruit Purchased (lb)

Rhubarb2,2502,3064,6134,7286,9197,0929,2259,45611,53111,820

Raspberries6,7506,91913,83814,18320,75621,27527,67528,36734,59435,459

Saskatoon berries6,7506,91913,83814,18320,75621,27527,67528,36734,59435,459

Chokecherries2,2502,3064,6134,7286,9197,0929,2259,45611,53111,820

Sugar (Kg)1,1521,1812,3622,4213,5423,6314,7234,8415,9046,052

Yeast (Package)2882965916068879091,1821,2121,4781,515

Acid Blend (g)4574689379601,3711,4051,8281,8732,2852,342

Pectic Enzyme (g)3643737467651,1191,1471,4931,5301,8661,912

Yeast Energizer (g)2812885775918658871,1531,1821,4421,478

Campden (tablet)110113226232339348452464565580

Clarifier (g)2572635275407908101,0531,0801,3171,349

Water252551527678101104127130

Labels3,0003,0756,1506,3049,2259,45612,30012,60815,37515,759

Corks3,5403,6297,2577,43810,88611,15814,51414,87718,14318,596

Bottles7,0807,25714,51414,87721,77122,31529,02829,75436,28537,192

Shrink Wrap1,2001,2302,4602,5223,6903,7824,9205,0436,1506,304

Filters4054158308511,2451,2771,6611,7022,0762,128

Total36,16037,06474,12775,980111,156113,935148,209151,914185,261189,892

Direct Labour Costs2004200520062007200820092010201120122013

Direct Labour Staff

Permanent LabourersInput1111111111

Part-time bottlingInput5555555555

Total Labour Staffing6666666666

Salary Workers

Permanent LabourerInput15000.0015375.0015759.3816153.3616557.1916971.1217395.4017830.2918276.0418732.94

Bottlers

WageInput8.008.208.418.628.839.059.289.519.759.99

Hours per workerInput45.0045.0090.0090.00135.00135.00180.00180.00225.00225.00

Total bottler wage1,8001,8453,7823,8775,9616,1108,3508,55910,96611,240

Total Direct Labour16,80017,22019,54220,03022,51823,08125,74526,38929,24229,973

Benefits for Salary Employees

Employment Insurance3.08%462474485498510523536549563577

Canada Pension Plan4.70%705723741759778798818838859880

Workers Compensation3.00%450461473485497509522535548562

Total Benefits for Salary Employees1,6171,6571,6991,7411,7851,8291,8751,9221,9702,019

Benefits for Bottlers

Employment Insurance3.08%5557116119184188257264338346

Canada Pension Plan4.70%8587178182280287392402515528

Holiday Pay5.80%104107219225346354484496636652

Workers Compensation3.00%5455113116179183250257329337

Total Benefits for Wage-Earning Employees2983066276439881,0131,3841,4191,8181,864

Total Direct Labour + Benefits18,71519,18321,86822,41425,29125,92329,00529,73033,03033,856

Variable Manufacturing Overhead Costs2004200520062007200820092010201120122013

Freight and Pallet ChargesInput3603697387561,1071,1351,4761,5131,8451,891

MaintenanceInput3003584665787439111,1341,3621,6461,937

Total Variable Overhead6607271,2041,3351,8502,0462,6102,8753,4913,829

Fixed Manufacturing Overhead Costs

Natural GasInput1,2501,2811,3131,3461,3801,4141,4501,4861,5231,561

InsuranceInput750769788808828849870892914937

Property TaxesInput1,0001,0251,0511,0771,1041,1311,1601,1891,2181,249

Capital Cost Allowance8,10413,76811,05210,0499,8959,7438,9418,2737,7267,265

ElectricityInput1,4401,4761,4761,4761,4761,4761,4761,4761,4761,476

Total Fixed Overhead12,54418,31915,68014,75514,68214,61313,89613,31512,85712,488

Total Manufacturing Overhead13,20419,04516,88516,09016,53216,65916,50616,19016,34916,316

Cost of Goods Manufactured2004200520062007200820092010201120122013

Direct Materials36,16037,06474,12775,980111,156113,935148,209151,914185,261189,892

Direct Labour Used18,71519,18321,86822,41425,29125,92329,00529,73033,03033,856

Manufacturing Overhead13,20419,04516,88516,09016,53216,65916,50616,19016,34916,316

Total Cost of Goods Manufactured68,07975,292112,879114,485152,979156,517193,719197,833234,639240,064

Schedule 4: Cost of Goods Sold

Beginning Inventory038,92347,80455,93156,68478,19282,186100,467102,632122,600

Cost of Goods Manufactured68,07975,292112,879114,485152,979156,517193,719197,833234,639240,064

Cost of Goods Available for Sale68,079114,215160,683170,416209,663234,709275,905298,300337,272362,664

Ending Inventory38,92347,80455,93156,68478,19282,186100,467102,632122,600125,454

Cost of Goods Sold29,15666,411104,752113,732131,471152,523175,438195,668214,672237,210

Production Output2004200520062007200820092010201120122013

Total CasesInput1,0001,0002,0002,0003,0003,0004,0004,0005,0005,000

Quanitity of Sales4288821,8561,9872,5782,9233,6233,9564,5754,941

Quantity of Inventory Remaining5726908348471,2691,3451,7231,7662,1922,251

Schedule 5: Expenses

Marketing Salary and Wages

Staffing2004200520062007200820092010201120122013

Seasonal (Students)Input2222222222

ManagerInput1111111111

MarketerInput0.5111111111

Total Manager/mrktng staff4444444444

Total Annual Salaries

ManagerInput20,00029,06729,79430,53931,30232,08532,88733,70934,55235,415

MarketerInput17,50036,13338,40738,76840,50741,40743,59544,64046,85648,135

Total Salaries37,50065,20068,20069,30771,80973,49276,48278,34881,40783,551

Hourly Workers

Seasonal Retail Students WageInput9.009.239.469.699.9310.1810.4410.7010.9711.24

Hours per Seasonal StudentInput350350350350350350350350350350

Total Season Wage6,3006,4586,6196,7846,9547,1287,3067,4897,6767,868

Benefits for Wage-Earning Employees

Employment Insurance3.08%194199204209214220225231236242

Canada Pension Plan4.70%296304311319327335343352361370

Holiday Pay5.80%365375384393403413424434445456

Workers Compensation1.00%63656668707173757779

Total benefits for Wage Marketers9199429659891,0141,0391,0651,0921,1191,147

Benefits for Manager/Marketer

Employment Insurance3.08%1,1552,0082,1012,1352,2122,2642,3562,4132,5072,573

Canada Pension Plan4.70%1,7633,0643,2053,2573,3753,4543,5953,6823,8263,927

Workers Compensation1.00%375652682693718735765783814836

Total Benefits for Salary Employees3,2935,7255,9886,0856,3056,4536,7156,8797,1487,336

Total Marketing Salaries, Wages and Benefits48,01178,32481,77283,16586,08288,11291,56893,80897,35099,901

2004200520062007200820092010201120122013

Marketing

Sample Wine CostsInput9601,0821,2201,3761,5511,7491,9722,2242,5072,827

Mileage for deliveries (cost)Input3,9604,0598,3218,52912,177

Vehicle (Lease)Input13,00014,00015,00016,00017,000

TelephoneInput250256263269276283290297305312

BillboardsInput1,5001,5381,5761,6151,6561,6971,7401,7831,8281,873

Radio AdsInput4,0004,1004,2034,3084,4154,5264,6394,7554,8744,995

BrochuresInput1,1971,3201,4551,6041,7691,9502,1502,3702,6132,881

Newspaper adsInput5,4435,5795,7195,8626,0086,1586,3126,4706,6326,798

Bridal ShowsInput250256263269276283290297305312

Trade ShowsInput500513525538552566580594609624

Travelling backdropInput500100103105108110113116119122

WebpageInput325333341350359368377386396406

Future Bus ToursInput5,4005,6735,9616,2626,5796,9127,262

PostersInput350359368377386396406416426437

Total Marketing Expense19,23519,49524,35630,60235,20637,04639,13041,28843,52545,850

Summary of Expenses

Start-up TrainingInput970

Marketing Salaries48,01178,32481,77283,16586,08288,11291,56893,80897,35099,901

Marketing Expenses19,23519,49524,35630,60235,20637,04639,13041,28843,52545,850

Interest on Long term Debt12,17911,70911,20410,66210,0809,4558,7848,0627,2886,456

Total Expenses80,395109,528117,332124,430131,368134,613139,482143,158148,163152,207

Unit Cost Analysis (per case)

Unit Cost of Fruit18.0018.4518.4518.9118.4518.9118.4518.9118.4518.91

Unit Cost of Ingredients2.933.013.013.083.003.073.003.073.003.07

Unit Cost of Packaging Materials15.2315.6115.6116.0015.6116.0015.6116.0015.6116.00

Total Unit Cost of Direct Materials36.1637.0637.0637.9937.0537.9837.0537.9837.0537.98

Unit Cost of Direct Labour18.7219.1810.9311.218.438.647.257.436.616.77

Unit Cost of Overhead13.2019.058.448.055.515.554.134.053.273.26

Total Unit Cost of Production68.0875.2956.4457.2450.9952.1748.4349.4646.9348.01

Unit Cost of Selling and Administration80.40109.5358.6762.2243.7944.8734.8735.7929.6330.44

Total Unit Cost of Selling148.47184.82115.11119.4694.7897.0483.3085.2576.5678.45

Average Unit Selling Price123.60126.69129.86133.10136.43139.84143.34146.92150.59154.36

Average Unit Margin(24.87)(58.13)14.7513.6541.6542.8060.0461.6774.0375.91

Schedule 6: Capital Budget

2004200520062007200820092010201120122013

LandInput10,000

Site Setup:

BuildingInput63,000

Sewage SystemInput3,500

Natural Gas InstallationInput8,000

Electricity InstallationInput25,000

Town Water InstallationInput14,300

LandscapingInput3,500

Production Equipment:

Primary FermenterInput6,5006,663

Basket PressInput1,000

FilterInput5,600

PumpInput1,000

Storage TanksInput4,8004,9205,0435,1695,298

Bottle FillerInput800

Bottle CorkerInput50

Lab EquipmentInput1,600

Fruit CrusherInput400

Walk in FreezerInput14,000

Used Garden TractorInput5,000

Pallet JackInput429

IrrigationInput700

Office EquipmentInput3,000

Total Capital Costs172,17904,920011,70605,16905,2980

Working Capital2004200520062007200820092010201120122013

Accounts Receivable0000000000

Raw Inventory000012,35112,65916,46816,87920,58521,099

Inventory in progress5,6396,3938,5848,66411,02411,26813,50713,76415,98116,331

Finished Inventory33,28341,41147,34748,02054,81758,25970,49271,98986,03488,024

Accounts Payable3,0644,3584,9105,0115,4954,5964,8034,9355,1505,302

Total41,98652,16160,84161,69583,68786,783105,270107,567127,750130,756

Average Days Inventory

Raw InventoryInput0000404040404040

Inventory in progressInput40404040404040404040

Finished InventoryInput176198151151129134131131132132

Total Days Inventory216238191191209214211211212212

Average Days PayablesInput30303030303030303030

Schedule 7: Financing Budget

Long Term DebtInput164,5830.00.00.00.00.00.00.00.00.0

Owner's EquityInput164,583

Total329,1650.00.00.00.00.00.00.00.00.0

Schedule 8: Long Term Debt

Interest Rate7.4%2004200520062007200820092010201120122013

Payment Period (Years)15

Beginning Balance0158,232151,412144,087136,220127,771118,696108,95098,48387,241

Addition164,583000000000

Interest12,17911,70911,20410,66210,0809,4558,7848,0627,2886,456

Debt Payment18,52918,52918,52918,52918,52918,52918,52918,52918,52918,529

Ending Balance158,232151,412144,087136,220127,771118,696108,95098,48387,24175,168

Schedule 9: Capital Cost Allowance

2004200520062007200820092010201120122013

BuildingsInput Rate4%

Beginning Balance0111,524107,063102,78198,66994,72390,93487,29683,80480,452

Additions113,800000000000

Capital Cost Allowance2,2764,4614,2834,1113,9473,7893,6373,4923,3523,218

Ending Balance111,524107,063102,78198,66994,72390,93487,29683,80480,45277,234

EquipmentInput Rate20%

Beginning Balance037,69130,15328,55022,84028,80723,04623,08918,47119,545

Additions41,87904,920011,70605,16905,2980

Capital Cost Allowance4,1887,5386,5235,7105,7395,7615,1264,6184,2243,909

Ending Balance37,69130,15328,55022,84028,80723,04623,08918,47119,54515,636

Office EquipmentInput Rate100%

Beginning Balance01,50000000000

Additions3,000000000000

Capital Cost Allowance1,5001,50000000000

Ending Balance1,500000000000

LandscapingInput Rate8%

Beginning Balance03,3603,0912,8442,6162,4072,2152,0371,8741,724

Additions3,500000000000

Capital Cost Allowance140269247228209193177163150138

Ending Balance3,3603,0912,8442,6162,4072,2152,0371,8741,7241,586

Total CCA Expense8,10413,76811,05210,0499,8959,7438,9418,2737,7267,265

Schedule 10: Income Tax

2004200520062007200820092010201120122013

Income Before Taxes-56,617-64,19318,93126,29588,910121,684204,327242,427326,062373,204

Accumulated Loss Carryforward-56,617-120,810-120,810-101,879-75,58400000

Loss Carryforward Used00-18,931-26,295-75,58400000

Taxable Income000013,326121,684204,327242,427326,062373,204

Federal Tax @ 28%, 21%00003,73134,07156,90964,91082,47392,373

Federal Surtax @ 4%00001491,3632,2762,5963,2993,695

Small Bus Tax Credit @ 16%0000-2,132-19,469-32,000-32,000-32,000-32,000

Provincial Tax @ 6%, 10%00008007,30112,43316,24324,60629,320

Total Taxes00002,54823,26639,61851,74978,37893,388

Schedule 11: Ratio Analysis2004200520062007200820092010201120122013

Cash Conversion Cycle186208161161179184181181182182

Liquidity Ratios

Current Ratio34.3311.3013.7519.1831.4358.9375.4083.6594.87103.39

Activity and Operating Ratios

Total Asset Turnover0.200.561.141.151.141.031.071.101.151.17

Inventory Turnover0.671.281.861.691.641.671.731.741.731.89

Average Days Inventory$543$285$196$216$223$219$211$210$211$193

Operating Expenses

Direct Materials/Sales68.3%33.2%30.8%28.7%31.6%27.9%28.5%26.1%26.9%24.9%

Direct Labour/Sales35.4%17.2%9.1%8.5%7.2%6.3%5.6%5.1%4.8%4.4%

Overhead/Sales24.9%17.0%7.0%6.1%4.7%4.1%3.2%2.8%2.4%2.1%

Selling and Administration/Sales151.9%98.0%48.7%47.1%37.3%32.9%26.9%24.6%21.5%20.0%

Total Expenses280%165%96%90%81%71%64%59%56%51%

Leverage Ratios2004200520062007200820092010201120122013

Debt Ratio59.9%78.1%70.4%61.3%43.2%31.1%23.5%19.6%15.4%12.3%

Debt to Equity149.4%355.9%237.6%158.7%76.0%45.0%30.7%24.4%18.2%14.1%

Profitability Ratios

Gross Profit Margin44.9%40.6%56.5%57.0%62.6%62.7%66.2%66.3%68.8%68.9%

Net Profit Margin-107.0%-57.4%7.9%9.9%24.6%24.1%31.7%32.8%36.0%36.7%

Return on Total Assets-21.0%-32.2%8.9%11.4%28.0%24.8%34.0%36.2%41.3%42.9%

Return on Equity-52.4%-146.6%30.2%29.5%49.2%35.9%44.4%45.0%48.8%48.9%

Net Profit Margin *-107.0%-57.4%7.9%9.9%25.3%29.8%39.4%41.7%47.3%48.9%

Return on Total Assets *-21.0%-32.2%8.9%11.4%28.0%24.8%34.0%36.2%41.3%42.9%

Return on Equity *-52.4%-146.6%30.2%29.5%50.7%44.4%55.1%57.2%64.2%65.2%

* Using net income before tax

Schedule 12: Investment Analysis2004200520062007200820092010201120122013

Required Return on EquityInput20%

Present Value of Equity Investment

Equity Investment164,583000000000

Present Value of Equity Investment164,583000000000

Present Value of Equity Returns

Net Cash Flows to Equity66,264(64,832)10,16427,82555,07794,19473,03048,43055,87956,643

Dividends00000067,631138,019163,239215,661

Salvage Value000000000287,011

Total Net Cash Flow to Equity66,264(64,832)10,16427,82555,07794,194140,661186,449219,118559,315

Present Value of Net Cash Flows298,595

Total Cash Flows to Equity(164,583)66,264(64,832)10,16427,82555,07794,194140,661186,449219,118559,315

Net Present Value of Equity Investment134,012

Internal Rate of Return on Equity Investment30.4%

External Rate of Return on Equity Investment

Equity Investment$(164,583)

Dividends0.00.00.00.00.00.0$67,631$138,019$163,239$215,661

Salvage Value0.00.00.00.00.00.00.00.00.0$287,011

Total to Equity Investor$(164,583)0.00.00.00.00.00.0$67,631$138,019$163,239$502,672

External Rate of Return on Equity Investment19.9%

Page &P

Variable Costs

Cases Produced1000100020002000300030004000400050005000

Direct Material PurchasesUnit PriceQuanity/CasePrice/CaseY1Y2Y3Y4Y5Y6Y7Y8Y9Y10

Fruit Purchased (lb)

Rhubarb199$2,250.00$2,250.00$4,500.00$4,500.00$6,750.00$6,750.00$9,000.00$9,000.00$11,250.00$11,250.00

Raspberries3927$6,750.00$6,750.00$13,500.00$13,500.00$20,250.00$20,250.00$27,000.00$27,000.00$33,750.00$33,750.00

Saskatoon berries3927$6,750.00$6,750.00$13,500.00$13,500.00$20,250.00$20,250.00$27,000.00$27,000.00$33,750.00$33,750.00

Chokecherries199$2,250.00$2,250.00$4,500.00$4,500.00$6,750.00$6,750.00$9,000.00$9,000.00$11,250.00$11,250.00

Sugar (Kg)0.81.441.152$1,152.00$1,152.00$2,304.00$2,304.00$3,456.00$3,456.00$4,608.00$4,608.00$5,760.00$5,760.00

Yeast (Package)0.790.3650.28835$288.35$288.35$576.70$576.70$865.05$865.05$1,153.40$1,153.40$1,441.75$1,441.75

Acid Blend (g)0.015828.920.456936$456.94$456.94$913.87$913.87$1,370.81$1,370.81$1,827.74$1,827.74$2,284.68$2,284.68

Pectic Enzyme (g)0.0764.790.36404$364.04$364.04$728.08$728.08$1,092.12$1,092.12$1,456.16$1,456.16$1,820.20$1,820.20

Yeast Energizer (g)0.05185.430.281274$281.27$281.27$562.55$562.55$843.82$843.82$1,125.10$1,125.10$1,406.37$1,406.37

Campden (tablet)0.05182.130.110334$110.33$110.33$220.67$220.67$331.00$331.00$441.34$441.34$551.67$551.67

Clarifier (g)0.0763.380.25688$256.88$256.88$513.76$513.76$770.64$770.64$1,027.52$1,027.52$1,284.40$1,284.40

Water0.0247510.02475$24.75$24.75$49.50$49.50$74.25$74.25$99.00$99.00$123.75$123.75

Labels0.25123$3,000.00$3,000.00$6,000.00$6,000.00$9,000.00$9,000.00$12,000.00$12,000.00$15,000.00$15,000.00

Corks0.295123.54$3,540.00$3,540.00$7,080.00$7,080.00$10,620.00$10,620.00$14,160.00$14,160.00$17,700.00$17,700.00

Bottles0.59127.08$7,080.00$7,080.00$14,160.00$14,160.00$21,240.00$21,240.00$28,320.00$28,320.00$35,400.00$35,400.00

Shrink Wrap0.1121.2$1,200.00$1,200.00$2,400.00$2,400.00$3,600.00$3,600.00$4,800.00$4,800.00$6,000.00$6,000.00

Filters0.40510.405$405.00$405.00$810.00$810.00$1,215.00$1,215.00$1,620.00$1,620.00$2,025.00$2,025.00

Total$36,159.56$36,159.56$72,319.13$72,319.13$108,478.69$108,478.69$144,638.26$144,638.26$180,797.82$180,797.82

&A

Page &P

tst007:unit price 2.29/30 grams10mL clears 5 gallons

Glenn Houser:25 cents per lable

Glenn Houser:295 for 1000 corks

Glenn Houser:1000 bottles cost $680

Glenn Houser:10 cents each

Start up Captial Costs

DescriptionEstimatedSource

Cost ($)

Land10,000

Site Setup:

Building63,000Goodon Industries

Sewage System3,500Wigs Pumps and Waterworks

Natural Gas Installation8,000Sask Energy

Electricity Installation25,000Sask Power

Town Water Installation14,300Balgonie

Landscaping3,500Lakeshore Garden Centre (S'toon)

Total Cost127,300

Production Equipment:Capacity/Quantity/Source

Primary Fermenter6,500800 gal. - 1 - Dairyland Agro

Basket Press1,000110 Litre - 1 - The Compleat Winemaker

Filter5,60020 plates - Criveller Co. (Ont.)

Pump1,00020 gpm - 1 - The Compleat Winemaker

Storage Tanks4,8001000 Litre - 4 - Criveller Co. (Ont.)

Bottle Filler8004 nozzle - 1 - The Compleat Winemaker

Bottle Corker50Single corker - 1 - Wine Kitz

Hydrometer & Thermometer5001 - Fisher Scientific

pH meter and probe6001 - Coal Parmer (Montreal)

5001 - R & D Equipment (California)

Fruit Crusher40033" x 22" x 14" - The Compleat Winemaker

Walk in Freezer14,0001 - 9'x9' - D & C Refrigeration (Saskatoon)

Used Garden Tractor5,00020 hp mower and rototiller - Private Deal

Pallet Jack4292 ton capacity - 1 - Princess Auto

Irrigation700Drip - Rainmaker Irrigation (Outlook)

Office Equipment3,000Desk, Computer, Filing System

Total Equipment Costs44,879

Total Working Capital41,986

Total Capital Costs214,165

Marketing Expenses

20042006200820102012

Marketing/Sales Labour

Manager$20,000$29,794$31,302$32,887$34,552

Marketer$17,500$38,407$40,507$43,595$46,856

Benefits$3,293$5,988$6,305$6,715$7,148

Total Salaries$40,793$74,188$78,114$83,197$88,555

Seasonal Retail Students Wage (hour)$9.00$9.46$9.93$10.44$10.97

Hours700700700700700

Benefits$919$965$1,014$1,065$1,119

Total Season Wage$7,219$7,584$7,968$8,371$8,795

Total Marketing/Sales Labour + Benefits$48,011$81,772$86,082$91,568$97,350

Production Labour

Permanent Labourer$15,000$15,759$16,557$17,395$18,276

Benefits for Salary Employees$1,617$1,699$1,785$1,875$1,970

Total Salaries$16,617$17,458$18,342$19,271$20,246

Part-Time Bottler Wage (hour)$8.00$8.41$8.83$9.28$9.75

Hours2254506759001125

Benefits for Wage-Earning Employees$298$627$988$1,384$1,818

Total bottler wage$2,098$4,409$6,949$9,734$12,784

Total Direct Labour + Benefits$18,715$21,868$25,291$29,005$33,030

Operating Expenses

Direct Material Purchases

Fruit Purchased (lb)

Rhubarb2,250Direct Materials$36,160

Raspberries6,750Direct Labour$18,715

Saskatoon berries6,750Manufacturing Overhead$13,204

Chokecherries2,250Total$68,079

Sugar (Kg)1,152

Yeast (Package)288

Acid Blend (g)457

Pectic Enzyme (g)364

Yeast Energizer (g)281

Campden (tablet)110

Clarifier (g)257

Water25

Labels3,000

Corks3,540

Bottles7,080

Shrink Wrap1,200

Filters405

36,160

Direct Labour and Benefits

Permanent Labourer15,000

Benefits for Salary Employees1,617

Bottler wage1,800

Benefits for bottlers298

Total Direct Labour + Benefits18,715

Manufacturing Overhead Costs

Variable

Freight and Pallet Charges360

Maintenance300

Total Variable Overhead660

Fixed

Natural Gas1,250

Insurance750

Property Taxes1,000

Capital Cost Allowance8,104

Electricity1,440

Total Fixed Overhead12,544

Total Manufacturing Overhead13,204

Cost of Goods Manufactured

Direct Materials36,160

Direct Labour Used18,715

Manufacturing Overhead13,204

Total Cost of Goods Manufactured68,079

revenue

Year

20042006200820102012

Quantity of Sales (cases)4281856257836234575

Sales Revenue

Saskatoon Berry Wine$14,583$66,396$96,902$143,045$189,781

Raspberry Wine$13,426$61,131$89,218$131,702$174,732

Chokecherry Wine$12,142$55,281$80,680$119,099$158,011

Rhubarb Wine$12,784$58,206$84,949$125,401$166,372

Total$52,935$241,015$351,749$519,248$688,896

Year20042006200820102012

Saskatoon Berry Wine$11.35$11.92$12.53$13.16$13.83

Raspberry Wine$10.45$10.98$11.53$12.12$12.73

Chokecherry Wine$9.45$9.93$10.43$10.96$11.51

Rhubarb Wine$9.95$10.45$10.98$11.54$12.12

20042006200820102012

Sample Wine Costs$960$1,220$1,551$1,972$2,507

Mileage for deliveries (cost)$3,960$8,321$12,177

Vehicle (Lease)$14,000$16,000

Telephone$250$263$276$290$305

Billboards$1,500$1,576$1,656$1,740$1,828

Radio Ads$4,000$4,203$4,415$4,639$4,874

Brochures$1,197$1,455$1,769$2,150$2,613

Newspaper ads$5,443$5,719$6,008$6,312$6,632

Bridal Shows$250$263$276$290$305

Trade Shows$500$525$552$580$609

Travelling backdrop$500$103$108$113$119

Webpage$325$341$359$377$396

Future Bus Tours$5,673$6,262$6,912

Posters$350$368$386$406$426

Total Marketing Expense$19,235$24,356$35,206$39,130$43,525

Breakeven

Graph 1

20042006200820102012

Accounting Breakeven Ave Selling Price$255.80$119.66$102.93$97.87$96.45

Economic 20% IRR Breakeven Selling Price105.06110.38115.97121.84128.01ANDY - you may want to redo the graphs and

Base Case Ave Selling Price123.60129.86136.43143.34150.59insert the IRR breakeven numbers with the charts

so you will only need 2 in total.

Graph 2

Accounting Breakeven Total Quanity Sold8861710194524732930

Economic 20% IRR Breakeven Quantity Sold3641578219130793888

Base Case Total Quantity Sold4281,8562,5783,6234,575

Breakeven

255.7981072616123.6105.06

119.6575082786129.85725110.38

102.9343696153136.4312732812115.97

97.8701819587143.3381064911121.84

96.4502925572150.5945981322128.01

Accounting Breakeven Ave Selling Price

Base Case Ave Selling Price

Economic 20% IRR Breakeven Selling Price

Year

Selling Price per Case

Sensitivity Analysis

886.339339223428.2734673089364

1710.21961845721856.00067846881578

1945.20372180862578.21193785422191

2473.44098705373622.53692091193079

2929.80450942144574.50901396243888

Accounting Breakeven Total Quanity Sold

Base Case Total Quantity Sold

Economic 20% IRR Breakeven Quantity Sold

Year

# of Cases Sold

VariableWorst CaseBase CaseBest Case

Quantity of Sales50%100%105%

Avg. Selling Price75%100%125%

Avg. Fruit Prices150%100%75%

Rate of GrowthABC

NOTE:

A - Start at 1000 cases increase by 250 cases/year

B - Start at 1000 cases and increase every 2 years by 1000 cases

C - Start at 1000 cases and increase constantly by 500 cases/year

VariableWorst CaseBase CaseBest Case

Quantity of Sales-13.7%30.4%33.4%

Avg. Selling Price12.7%30.4%44.9%

Avg. Fruit Prices25.0%30.4%33.1%

Rate of Growth18.7%30.4%34.8%

-0.1370.3040.334

0.1270.3040.449

0.250.3040.331

0.1870.3040.348

Quantity of Sales

Ave. Selling Price

Ave Fruit Prices

Rate of Growth

Worst Case

Base Case

Best Case

IRR

Human Resource Plan

Organizational Structure

Human ResourcesShareholders/Directors: Decide on winery objectives and production levels. Provide extra labour during bottling.

Manager: Over-seeing retail sales, wine production, book-keeping and marketing. Salary: $35,000 + bonus of 2.5% of gross margin. Marketer: Create a product image to increase demand for authentic Saskatchewan fruit wine. Attend various trade-shows, and promote the fruit wine industry in Saskatchewan. Salary: $35,000 + bonus of 2.5% of gross margin.

Human ResourcesPart-time retail sales- ($9.00 hourly wage) Two positions to look after wine retail sales and conducting tours and tasting, site maintenance.

Part-time bottling staff- ($8.00 hourly wage) Bottle preparation, labeling, corking and shrink-wrapping bottles for distribution.

Labour Costs

Sheet1

20042006200820102012

Total Marketing/Sales Labour + Benefits$48,011$78,048$86,481$97,295$108,816

Total Direct Labour + Benefits$18,715$21,868$25,291$29,005$33,030

Total Labour$66,726$99,916$111,772$126,300$141,846

Sheet2

Sheet3

Marketing Plan

Product/Service

Physical ProductSaskatchewan made Raspberry, Saskatoon, Rhubarb and Chokecherry wineWine made from local fruit productionQuality product: consistent and variety

The Rest of the PackageMemorable experience Free tasting, toursWashrooms, picnic areaPersonally sold from vintner to customerFree delivery for large orders

Current MarketCanada is commonly regarded as one of the worlds leading fruit wine producing countries Fruit wines are commercially produced by more than 53 licensed wineries in nine provinces (including Saskatchewan)

Established markets in B.C. and Eastern Canada Market high quality dry fruit wines, ice wines and ports; prices comparable to grape winesAlmost all wineries include tours, tasting and special events on location.

Current MarketThe Fruit Wine Association, formed in 2000 labels member wines with a Quality Assurance label similar to the Vintners Quality Assurance (VQA) labels currently in the grape wine market. Current consumption of all types of wine in Saskatchewan 4.9L per capita, national average 12.2LIncrease in sales of VQA wines and domestic ice wines in Saskatchewan show promising market

Canadian Wine Sales

Chart2

1769

1805

1863

1902

1950

2076

2251

2411

2638

2931

3136

Year

Sales ($ millions)

Sheet1

YearWine Sales

19911769

19921805

19931863

19941902

19951950

19962076IMAP://mail.usask.ca?fetch>UID>|INBOX>926&part=1.2

19972251

19982411

19992638

20002931

20013136

Sheet1

Year

Sales ($ millions)

Sheet2

Sheet3

MBD004A4EB7.bin

CompetitionAspen Grove Winery (White City) - Similar product and service goals

Liquor Board Store and off-saleGrape Wine ($8 - 20) / Wine Coolers ($6 - 12)

Wine-making ingredients ($35 - 75)

Other Tourist Attractions

Target MarketsAdventurousBoth males and females aged 35-64, minimum income $35,000+ Includes tourists and locals - Population around 80,000 in 25 mile radius. (including Regina and Moose Jaw)Special Event HoldersHolding special liquor permits for private functionsFuture Potential MarketsRestaurants, Export, SLGA stores

Pricing PolicyPar with the fruit wine Industry

Sheet1

Marketing Budget

Costs

Bus Tours16 bus tours (8 weeks, sat and sun)

Sample Wine Costs9608 cases

Delivery Truck3960mileage at .33 for 1000km/month

Billboards1500500 a billboard

Radio Ads4000$36 per time per ad (get bonus ads

Brochures11975000 brochures

Newspaper ads5443Leader Post, Western Producer

Bridal Shows250

Trade Shows500

Travelling backdrop500

Posters350

Total18660

Sheet2

5 year plan

Year12345

Sales quantity10002000300040005000

Sales Revenue$123,600.00$247,200.00$370,800.00$494,400.00$618,000.00

Sheet3

South Valley WineSale Price

Rhubarb Wine9.95

Saskatoon Berry Wine11.35

Raspberry Wine10.45

Chokecherry Wine9.45

$0.00

5.6400285417

5.6400285417

5.6400285417

Type of Wine

B.C Prices*

Eastern Prices*

Apple

$10.09

$ 9.95

Raspberry

$11.95

$ 11.95

Strawberry

$13.95

$ 11.95

Pear

$13.95

$ 12.95

PromotionAttend Trade Shows - Farm Progress Show Regina, Local fall fairs, Bridal Shows, Farmers marketBillboards, Posters, BrochuresRadio and Newspaper advertisementsWeb page Word of Mouth and personal advertising

From the Vintner's Home to Yours

PromotionWine tasting

Winery tours

Future Considerations:Casino bus toursExpand wine products to include sour cherry, black current, Port wine

Market Plan Budget

From the Vintner's Home to Yours

Sheet1

Year

20042006200820102012

Sample Wine Costs$960$1,220$1,551$1,972$2,507

Mileage for deliveries (cost)$3,960$8,321$12,177

Vehicle (Lease)$14,000$16,000

Telephone$250$263$276$290$305

Billboards$1,500$1,576$1,656$1,740$1,828

Radio Ads$4,000$4,203$4,415$4,639$4,874

Brochures$1,197$1,455$1,769$2,150$2,613

Newspaper ads$5,443$5,719$6,008$6,312$6,632

Bridal Shows$250$263$276$290$305

Trade Shows$500$525$552$580$609

Travelling backdrop$500$103$108$113$119

Webpage$325$341$359$377$396

Future Bus Tours$5,673$6,262$6,912

Posters$350$368$386$406$426

Total Marketing Expense$19,235$24,356$35,206$39,130$43,525

Sheet2

Sheet3

SWOT Analysis

StrengthsDirect distribution channel to customers from the vintners home to yoursWine available at the winery unique to SaskatchewanWeaknessesNeed a strong product imageLimited distributionOpportunitiesSell product to both tourist and special permit marketsExpand products and services (restaurant)Location- 1 highway, close to a major centreThreatsGovernment policyCompetition - must differentiate our product

Financial Plan

Financial PlanFinancial plan projected over 10 year period

Prices, wages, and expenses are increasing at an inflation rate of 2.5%

Long term debt borrowed from FCC at 7.4% and paid back over 15 year period

Financing Budget

SV Base Case

South Valley Winery

Financial ProjectionsBase Case

Statement of Income and Retained Earnings

For the year ended March 312004200520062007200820092010201120122013

Sales Revenue:

Saskatoon Berry Wine14,58330,78466,39672,85496,902112,624143,045160,127189,781210,091

Raspberry Wine13,42628,34361,13167,07789,218103,693131,702147,429174,732193,432

Chokecherry Wine12,14225,63155,28160,65880,68093,771119,099133,321158,011174,922

Rhubarb Wine12,78426,98758,20663,86884,94998,732125,401140,375166,372184,177

Total52,935111,746241,015264,457351,749408,820519,248581,253688,896762,621

Liquor Tax ($0.53/L)(2,043)(4,207)(8,853)(9,477)(12,298)(13,945)(17,280)(18,871)(21,820)(23,566)

Cost of Goods Sold29,15666,411104,752113,732131,471152,523175,438195,668214,672237,210

Gross Margin23,77845,335136,263150,725220,278256,297343,809385,585474,224525,411

Expenses:

Start-up Training970000000000

Marketing19,23519,49524,35630,60235,20637,04639,13041,28843,52545,850

Marketing Salaries48,01178,32481,77283,16586,08288,11291,56893,80897,35099,901

Interest on Long Term Debt12,17911,70911,20410,66210,0809,4558,7848,0627,2886,456

Total Expenses80,395109,528117,332124,430131,368134,613139,482143,158148,163152,207

Income Before Taxes(56,617)(64,193)18,93126,29588,910121,684204,327242,427326,062373,204

Income Taxes00002,54823,26639,61851,74978,37893,388

Net Income(Loss)(56,617)(64,193)18,93126,29586,36298,418164,709190,678247,684279,816

Beg Retained Earnings0(56,617)(120,810)(101,879)(75,584)10,778109,196206,274258,933343,378

Net Income(Loss)(56,617)(64,193)18,93126,29586,36298,418164,709190,678247,684279,816

Dividends00000067,631138,019163,239215,661

End Retained Earnings(56,617)(120,810)(101,879)(75,584)10,778109,196206,274258,933343,378407,532

Dividend Policy$(62,979)$(11,978)$(68,536)$(59,354)$(56,819)$(5,302)$67,631$138,019$163,239$215,661

Balance Sheet

March 312004200520062007200820092010201120122013

Assets

Current Assets:

Cash66,2641,43211,59539,42194,498188,691261,722310,152366,030422,674

Accounts Receivable0000000000

Total Inventories38,92347,80455,93156,68478,19282,186100,467102,632122,600125,454

Total Current Assets105,18749,23567,52696,104172,690270,878362,188412,784488,630548,128

Capital Assets:

Plant and Equipment172,179172,179177,099177,099188,805188,805193,974193,974199,272199,272

Accumulated C.C.A.(8,104)(21,872)(32,924)(42,973)(52,868)(62,611)(71,551)(79,824)(87,550)(94,815)

Net Plant and Equipment164,075150,307144,175134,126135,937126,194122,422114,150111,722104,457

Total Assets269,262199,542211,701230,230308,627397,072484,611526,934600,352652,584

Liabilities

Current Liabilities:

Accounts Payable3,0644,3584,9105,0115,4954,5964,8034,9355,1505,302

Noncurrent Liabilities

Long Term Debt158,232151,412144,087136,220127,771118,696108,95098,48387,24175,168

Total Liabilities161,296155,769148,997141,231133,266123,293113,754103,41892,39280,470

Shareholders' Equity

Owner's Equity164,583164,583164,583164,583164,583164,583164,583164,583164,583164,583

Retained Earnings(56,617)(120,810)(101,879)(75,584)10,778109,196206,274258,933343,378407,532

Total Shareholder's Equity107,96643,77362,70488,999175,361273,779370,857423,516507,960572,115

Total Liabilities and269,262199,542211,701230,230308,627397,072484,611526,934600,352652,584

Shareholder's Equity

Statement of Cash Flow

For the year ended March 312004200520062007200820092010201120122013

Cash from (used in) Operating Activities:

Net Income(Loss)(56,617)(64,193)18,93126,29586,36298,418164,709190,678247,684279,816

Depreciation8,10413,76811,05210,0499,8959,7438,9418,2737,7267,265

Accounts Receivable0000000000

Inventory(38,923)(8,881)(8,127)(753)(21,508)(3,994)(18,280)(2,166)(19,967)(2,854)

Accounts Payable3,0641,294553101483(898)207132216151

Net Cash Flow from Operations(84,372)(58,012)22,40935,69275,232103,268155,576196,917235,658284,378

Cash from (used for) Financing Activities:

Owner's Equity164,583000000000

Long Term Debt158,232(6,820)(7,325)(7,867)(8,449)(9,074)(9,746)(10,467)(11,242)(12,074)

Dividends000000(67,631)(138,019)(163,239)(215,661)

Net Cash Flow from Financing322,815(6,820)(7,325)(7,867)(8,449)(9,074)(77,377)(148,486)(174,481)(227,735)

Cash from (used for) Investing Activities:

Buildings and Equipment(172,179)0(4,920)0(11,706)0(5,169)0(5,298)0

Net Cash Flow from Investing(172,179)0(4,920)0(11,706)0(5,169)0(5,298)0

Increase(decrease) in Cash$66,264$(64,832)$10,164$27,825$55,077$94,194$73,030$48,430$55,879$56,643

Cash beginning of year066,2641,43211,59539,42194,498188,691261,722310,152366,030

Cash end of year66,2641,43211,59539,42194,498188,691261,722310,152366,030422,674

Supporting Schedules

Schedule 1: Economic Forecast

2004200520062007200820092010201120122013

Long Term Debt RateInput7.4%7.4%7.4%7.4%7.4%7.4%7.4%7.4%7.4%7.4%

Rate of Inflation (expenses)Input2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Schedule 2: Revenues

2004200520062007200820092010201120122013

Growth in Selling Prices:

Saskatoon Berry WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Raspberry WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Chokecherry WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Rhubarb WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Quantity of Sales

Saskatoon Berry Wine1072214644976457319069891,1441,235

Raspberry Wine1072214644976457319069891,1441,235

Chokecherry Wine1072214644976457319069891,1441,235

Rhubarb Wine1072214644976457319069891,1441,235

Total Quantity4288821,8561,9872,5782,9233,6233,9564,5754,941

2004200520062007200820092010201120122013

Selling Prices (per case)

Saskatoon Berry WineInput136.20139.61143.10146.67150.34154.10157.95161.90165.95170.10

Raspberry WineInput125.40128.54131.75135.04138.42141.88145.43149.06152.79156.61

Chokecherry WineInput113.40116.24119.14122.12125.17128.30131.51134.80138.17141.62

Rhubarb WineInput119.40122.39125.44128.58131.80135.09138.47141.93145.48149.11

Average Selling Price123.60126.69129.86133.10136.43139.84143.34146.92150.59154.36

Sales Revenue

Saskatoon Berry Wine14,58330,78466,39672,85496,902112,624143,045160,127189,781210,091

Raspberry Wine13,42628,34361,13167,07789,218103,693131,702147,429174,732193,432

Chokecherry Wine12,14225,63155,28160,65880,68093,771119,099133,321158,011174,922

Rhubarb Wine12,78426,98758,20663,86884,94998,732125,401140,375166,372184,177

Total52,935111,746241,015264,457351,749408,820519,248581,253688,896762,621

Schedule 3: Operating Expenses

Direct Material Purchases

Fruit Purchased (lb)

Rhubarb2,2502,3064,6134,7286,9197,0929,2259,45611,53111,820

Raspberries6,7506,91913,83814,18320,75621,27527,67528,36734,59435,459

Saskatoon berries6,7506,91913,83814,18320,75621,27527,67528,36734,59435,459

Chokecherries2,2502,3064,6134,7286,9197,0929,2259,45611,53111,820

Sugar (Kg)1,1521,1812,3622,4213,5423,6314,7234,8415,9046,052

Yeast (Package)2882965916068879091,1821,2121,4781,515

Acid Blend (g)4574689379601,3711,4051,8281,8732,2852,342

Pectic Enzyme (g)3643737467651,1191,1471,4931,5301,8661,912

Yeast Energizer (g)2812885775918658871,1531,1821,4421,478

Campden (tablet)110113226232339348452464565580

Clarifier (g)2572635275407908101,0531,0801,3171,349

Water252551527678101104127130

Labels3,0003,0756,1506,3049,2259,45612,30012,60815,37515,759

Corks3,5403,6297,2577,43810,88611,15814,51414,87718,14318,596

Bottles7,0807,25714,51414,87721,77122,31529,02829,75436,28537,192

Shrink Wrap1,2001,2302,4602,5223,6903,7824,9205,0436,1506,304

Filters4054158308511,2451,2771,6611,7022,0762,128

Total36,16037,06474,12775,980111,156113,935148,209151,914185,261189,892

Direct Labour Costs2004200520062007200820092010201120122013

Direct Labour Staff

Permanent LabourersInput1111111111

Part-time bottlingInput5555555555

Total Labour Staffing6666666666

Salary Workers

Permanent LabourerInput15000.0015375.0015759.3816153.3616557.1916971.1217395.4017830.2918276.0418732.94

Bottlers

WageInput8.008.208.418.628.839.059.289.519.759.99

Hours per workerInput45.0045.0090.0090.00135.00135.00180.00180.00225.00225.00

Total bottler wage1,8001,8453,7823,8775,9616,1108,3508,55910,96611,240

Total Direct Labour16,80017,22019,54220,03022,51823,08125,74526,38929,24229,973

Benefits for Salary Employees

Employment Insurance3.08%462474485498510523536549563577

Canada Pension Plan4.70%705723741759778798818838859880

Workers Compensation3.00%450461473485497509522535548562

Total Benefits for Salary Employees1,6171,6571,6991,7411,7851,8291,8751,9221,9702,019

Benefits for Bottlers

Employment Insurance3.08%5557116119184188257264338346

Canada Pension Plan4.70%8587178182280287392402515528

Holiday Pay5.80%104107219225346354484496636652

Workers Compensation3.00%5455113116179183250257329337

Total Benefits for Wage-Earning Employees2983066276439881,0131,3841,4191,8181,864

Total Direct Labour + Benefits18,71519,18321,86822,41425,29125,92329,00529,73033,03033,856

Variable Manufacturing Overhead Costs2004200520062007200820092010201120122013

Freight and Pallet ChargesInput3603697387561,1071,1351,4761,5131,8451,891

MaintenanceInput3003584665787439111,1341,3621,6461,937

Total Variable Overhead6607271,2041,3351,8502,0462,6102,8753,4913,829

Fixed Manufacturing Overhead Costs

Natural GasInput1,2501,2811,3131,3461,3801,4141,4501,4861,5231,561

InsuranceInput750769788808828849870892914937

Property TaxesInput1,0001,0251,0511,0771,1041,1311,1601,1891,2181,249

Capital Cost Allowance8,10413,76811,05210,0499,8959,7438,9418,2737,7267,265

ElectricityInput1,4401,4761,4761,4761,4761,4761,4761,4761,4761,476

Total Fixed Overhead12,54418,31915,68014,75514,68214,61313,89613,31512,85712,488

Total Manufacturing Overhead13,20419,04516,88516,09016,53216,65916,50616,19016,34916,316

Cost of Goods Manufactured2004200520062007200820092010201120122013

Direct Materials36,16037,06474,12775,980111,156113,935148,209151,914185,261189,892

Direct Labour Used18,71519,18321,86822,41425,29125,92329,00529,73033,03033,856

Manufacturing Overhead13,20419,04516,88516,09016,53216,65916,50616,19016,34916,316

Total Cost of Goods Manufactured68,07975,292112,879114,485152,979156,517193,719197,833234,639240,064

Schedule 4: Cost of Goods Sold

Beginning Inventory038,92347,80455,93156,68478,19282,186100,467102,632122,600

Cost of Goods Manufactured68,07975,292112,879114,485152,979156,517193,719197,833234,639240,064

Cost of Goods Available for Sale68,079114,215160,683170,416209,663234,709275,905298,300337,272362,664

Ending Inventory38,92347,80455,93156,68478,19282,186100,467102,632122,600125,454

Cost of Goods Sold29,15666,411104,752113,732131,471152,523175,438195,668214,672237,210

Production Output2004200520062007200820092010201120122013

Total CasesInput1,0001,0002,0002,0003,0003,0004,0004,0005,0005,000

Quanitity of Sales4288821,8561,9872,5782,9233,6233,9564,5754,941

Quantity of Inventory Remaining5726908348471,2691,3451,7231,7662,1922,251

Schedule 5: Expenses

Marketing Salary and Wages

Staffing2004200520062007200820092010201120122013

Seasonal (Students)Input2222222222

ManagerInput1111111111

MarketerInput0.5111111111

Total Manager/mrktng staff4444444444

Total Annual Salaries

ManagerInput20,00029,06729,79430,53931,30232,08532,88733,70934,55235,415

MarketerInput17,50036,13338,40738,76840,50741,40743,59544,64046,85648,135

Total Salaries37,50065,20068,20069,30771,80973,49276,48278,34881,40783,551

Hourly Workers

Seasonal Retail Students WageInput9.009.239.469.699.9310.1810.4410.7010.9711.24

Hours per Seasonal StudentInput350350350350350350350350350350

Total Season Wage6,3006,4586,6196,7846,9547,1287,3067,4897,6767,868

Benefits for Wage-Earning Employees

Employment Insurance3.08%194199204209214220225231236242

Canada Pension Plan4.70%296304311319327335343352361370

Holiday Pay5.80%365375384393403413424434445456

Workers Compensation1.00%63656668707173757779

Total benefits for Wage Marketers9199429659891,0141,0391,0651,0921,1191,147

Benefits for Manager/Marketer

Employment Insurance3.08%1,1552,0082,1012,1352,2122,2642,3562,4132,5072,573

Canada Pension Plan4.70%1,7633,0643,2053,2573,3753,4543,5953,6823,8263,927

Workers Compensation1.00%375652682693718735765783814836

Total Benefits for Salary Employees3,2935,7255,9886,0856,3056,4536,7156,8797,1487,336

Total Marketing Salaries, Wages and Benefits48,01178,32481,77283,16586,08288,11291,56893,80897,35099,901

2004200520062007200820092010201120122013

Marketing

Sample Wine CostsInput9601,0821,2201,3761,5511,7491,9722,2242,5072,827

Mileage for deliveries (cost)Input3,9604,0598,3218,52912,177

Vehicle (Lease)Input13,00014,00015,00016,00017,000

TelephoneInput250256263269276283290297305312

BillboardsInput1,5001,5381,5761,6151,6561,6971,7401,7831,8281,873

Radio AdsInput4,0004,1004,2034,3084,4154,5264,6394,7554,8744,995

BrochuresInput1,1971,3201,4551,6041,7691,9502,1502,3702,6132,881

Newspaper adsInput5,4435,5795,7195,8626,0086,1586,3126,4706,6326,798

Bridal ShowsInput250256263269276283290297305312

Trade ShowsInput500513525538552566580594609624

Travelling backdropInput500100103105108110113116119122

WebpageInput325333341350359368377386396406

Future Bus ToursInput5,4005,6735,9616,2626,5796,9127,262

PostersInput350359368377386396406416426437

Total Marketing Expense19,23519,49524,35630,60235,20637,04639,13041,28843,52545,850

Summary of Expenses

Start-up TrainingInput970

Marketing Salaries48,01178,32481,77283,16586,08288,11291,56893,80897,35099,901

Marketing Expenses19,23519,49524,35630,60235,20637,04639,13041,28843,52545,850

Interest on Long term Debt12,17911,70911,20410,66210,0809,4558,7848,0627,2886,456

Total Expenses80,395109,528117,332124,430131,368134,613139,482143,158148,163152,207

Unit Cost Analysis (per case)

Unit Cost of Fruit18.0018.4518.4518.9118.4518.9118.4518.9118.4518.91

Unit Cost of Ingredients2.933.013.013.083.003.073.003.073.003.07

Unit Cost of Packaging Materials15.2315.6115.6116.0015.6116.0015.6116.0015.6116.00

Total Unit Cost of Direct Materials36.1637.0637.0637.9937.0537.9837.0537.9837.0537.98

Unit Cost of Direct Labour18.7219.1810.9311.218.438.647.257.436.616.77

Unit Cost of Overhead13.2019.058.448.055.515.554.134.053.273.26

Total Unit Cost of Production68.0875.2956.4457.2450.9952.1748.4349.4646.9348.01

Unit Cost of Selling and Administration80.40109.5358.6762.2243.7944.8734.8735.7929.6330.44

Total Unit Cost of Selling148.47184.82115.11119.4694.7897.0483.3085.2576.5678.45

Average Unit Selling Price123.60126.69129.86133.10136.43139.84143.34146.92150.59154.36

Average Unit Margin(24.87)(58.13)14.7513.6541.6542.8060.0461.6774.0375.91

Schedule 6: Capital Budget

2004200520062007200820092010201120122013

LandInput10,000

Site Setup:

BuildingInput63,000

Sewage SystemInput3,500

Natural Gas InstallationInput8,000

Electricity InstallationInput25,000

Town Water InstallationInput14,300

LandscapingInput3,500

Production Equipment:

Primary FermenterInput6,5006,663

Basket PressInput1,000

FilterInput5,600

PumpInput1,000

Storage TanksInput4,8004,9205,0435,1695,298

Bottle FillerInput800

Bottle CorkerInput50

Lab EquipmentInput1,600

Fruit CrusherInput400

Walk in FreezerInput14,000

Used Garden TractorInput5,000

Pallet JackInput429

IrrigationInput700

Office EquipmentInput3,000

Total Capital Costs172,17904,920011,70605,16905,2980

Working Capital2004200520062007200820092010201120122013

Accounts Receivable0000000000

Raw Inventory000012,35112,65916,46816,87920,58521,099

Inventory in progress5,6396,3938,5848,66411,02411,26813,50713,76415,98116,331

Finished Inventory33,28341,41147,34748,02054,81758,25970,49271,98986,03488,024

Accounts Payable3,0644,3584,9105,0115,4954,5964,8034,9355,1505,302

Total41,98652,16160,84161,69583,68786,783105,270107,567127,750130,756

Average Days Inventory

Raw InventoryInput0000404040404040

Inventory in progressInput40404040404040404040

Finished InventoryInput176198151151129134131131132132

Total Days Inventory216238191191209214211211212212

Average Days PayablesInput30303030303030303030

Schedule 7: Financing Budget

Long Term DebtInput164,5830.00.00.00.00.00.00.00.00.0

Owner's EquityInput164,583

Total329,1650.00.00.00.00.00.00.00.00.0

Schedule 8: Long Term Debt

Interest Rate7.4%2004200520062007200820092010201120122013

Payment Period (Years)15

Beginning Balance0158,232151,412144,087136,220127,771118,696108,95098,48387,241

Addition164,583000000000

Interest12,17911,70911,20410,66210,0809,4558,7848,0627,2886,456

Debt Payment18,52918,52918,52918,52918,52918,52918,52918,52918,52918,529

Ending Balance158,232151,412144,087136,220127,771118,696108,95098,48387,24175,168

Schedule 9: Capital Cost Allowance

2004200520062007200820092010201120122013

BuildingsInput Rate4%

Beginning Balance0111,524107,063102,78198,66994,72390,93487,29683,80480,452

Additions113,800000000000

Capital Cost Allowance2,2764,4614,2834,1113,9473,7893,6373,4923,3523,218

Ending Balance111,524107,063102,78198,66994,72390,93487,29683,80480,45277,234

EquipmentInput Rate20%

Beginning Balance037,69130,15328,55022,84028,80723,04623,08918,47119,545

Additions41,87904,920011,70605,16905,2980

Capital Cost Allowance4,1887,5386,5235,7105,7395,7615,1264,6184,2243,909

Ending Balance37,69130,15328,55022,84028,80723,04623,08918,47119,54515,636

Office EquipmentInput Rate100%

Beginning Balance01,50000000000

Additions3,000000000000

Capital Cost Allowance1,5001,50000000000

Ending Balance1,500000000000

LandscapingInput Rate8%

Beginning Balance03,3603,0912,8442,6162,4072,2152,0371,8741,724

Additions3,500000000000

Capital Cost Allowance140269247228209193177163150138

Ending Balance3,3603,0912,8442,6162,4072,2152,0371,8741,7241,586

Total CCA Expense8,10413,76811,05210,0499,8959,7438,9418,2737,7267,265

Schedule 10: Income Tax

2004200520062007200820092010201120122013

Income Before Taxes-56,617-64,19318,93126,29588,910121,684204,327242,427326,062373,204

Accumulated Loss Carryforward-56,617-120,810-120,810-101,879-75,58400000

Loss Carryforward Used00-18,931-26,295-75,58400000

Taxable Income000013,326121,684204,327242,427326,062373,204

Federal Tax @ 28%, 21%00003,73134,07156,90964,91082,47392,373

Federal Surtax @ 4%00001491,3632,2762,5963,2993,695

Small Bus Tax Credit @ 16%0000-2,132-19,469-32,000-32,000-32,000-32,000

Provincial Tax @ 6%, 10%00008007,30112,43316,24324,60629,320

Total Taxes00002,54823,26639,61851,74978,37893,388

Schedule 11: Ratio Analysis2004200520062007200820092010201120122013

Cash Conversion Cycle186208161161179184181181182182

Liquidity Ratios

Current Ratio34.3311.3013.7519.1831.4358.9375.4083.6594.87103.39

Activity and Operating Ratios

Total Asset Turnover0.200.561.141.151.141.031.071.101.151.17

Inventory Turnover0.671.281.861.691.641.671.731.741.731.89

Average Days Inventory$543$285$196$216$223$219$211$210$211$193

Operating Expenses

Direct Materials/Sales68.3%33.2%30.8%28.7%31.6%27.9%28.5%26.1%26.9%24.9%

Direct Labour/Sales35.4%17.2%9.1%8.5%7.2%6.3%5.6%5.1%4.8%4.4%

Overhead/Sales24.9%17.0%7.0%6.1%4.7%4.1%3.2%2.8%2.4%2.1%

Selling and Administration/Sales151.9%98.0%48.7%47.1%37.3%32.9%26.9%24.6%21.5%20.0%

Total Expenses280%165%96%90%81%71%64%59%56%51%

Leverage Ratios2004200520062007200820092010201120122013

Debt Ratio59.9%78.1%70.4%61.3%43.2%31.1%23.5%19.6%15.4%12.3%

Debt to Equity149.4%355.9%237.6%158.7%76.0%45.0%30.7%24.4%18.2%14.1%

Profitability Ratios

Gross Profit Margin44.9%40.6%56.5%57.0%62.6%62.7%66.2%66.3%68.8%68.9%

Net Profit Margin-107.0%-57.4%7.9%9.9%24.6%24.1%31.7%32.8%36.0%36.7%

Return on Total Assets-21.0%-32.2%8.9%11.4%28.0%24.8%34.0%36.2%41.3%42.9%

Return on Equity-52.4%-146.6%30.2%29.5%49.2%35.9%44.4%45.0%48.8%48.9%

Net Profit Margin *-107.0%-57.4%7.9%9.9%25.3%29.8%39.4%41.7%47.3%48.9%

Return on Total Assets *-21.0%-32.2%8.9%11.4%28.0%24.8%34.0%36.2%41.3%42.9%

Return on Equity *-52.4%-146.6%30.2%29.5%50.7%44.4%55.1%57.2%64.2%65.2%

* Using net income before tax

Schedule 12: Investment Analysis2004200520062007200820092010201120122013

Required Return on EquityInput20%

Present Value of Equity Investment

Equity Investment164,583000000000

Present Value of Equity Investment164,583000000000

Present Value of Equity Returns

Net Cash Flows to Equity66,264(64,832)10,16427,82555,07794,19473,03048,43055,87956,643

Dividends00000067,631138,019163,239215,661

Salvage Value000000000287,011

Total Net Cash Flow to Equity66,264(64,832)10,16427,82555,07794,194140,661186,449219,118559,315

Present Value of Net Cash Flows298,595

Total Cash Flows to Equity(164,583)66,264(64,832)10,16427,82555,07794,194140,661186,449219,118559,315

Net Present Value of Equity Investment134,012

Internal Rate of Return on Equity Investment30.4%

External Rate of Return on Equity Investment

Equity Investment$(164,583)

Dividends0.00.00.00.00.00.0$67,631$138,019$163,239$215,661

Salvage Value0.00.00.00.00.00.00.00.00.0$287,011

Total to Equity Investor$(164,583)0.00.00.00.00.00.0$67,631$138,019$163,239$502,672

External Rate of Return on Equity Investment19.9%

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Variable Costs

Cases Produced1000100020002000300030004000400050005000

Direct Material PurchasesUnit PriceQuanity/CasePrice/CaseY1Y2Y3Y4Y5Y6Y7Y8Y9Y10

Fruit Purchased (lb)

Rhubarb199$2,250.00$2,250.00$4,500.00$4,500.00$6,750.00$6,750.00$9,000.00$9,000.00$11,250.00$11,250.00

Raspberries3927$6,750.00$6,750.00$13,500.00$13,500.00$20,250.00$20,250.00$27,000.00$27,000.00$33,750.00$33,750.00

Saskatoon berries3927$6,750.00$6,750.00$13,500.00$13,500.00$20,250.00$20,250.00$27,000.00$27,000.00$33,750.00$33,750.00

Chokecherries199$2,250.00$2,250.00$4,500.00$4,500.00$6,750.00$6,750.00$9,000.00$9,000.00$11,250.00$11,250.00

Sugar (Kg)0.81.441.152$1,152.00$1,152.00$2,304.00$2,304.00$3,456.00$3,456.00$4,608.00$4,608.00$5,760.00$5,760.00

Yeast (Package)0.790.3650.28835$288.35$288.35$576.70$576.70$865.05$865.05$1,153.40$1,153.40$1,441.75$1,441.75

Acid Blend (g)0.015828.920.456936$456.94$456.94$913.87$913.87$1,370.81$1,370.81$1,827.74$1,827.74$2,284.68$2,284.68

Pectic Enzyme (g)0.0764.790.36404$364.04$364.04$728.08$728.08$1,092.12$1,092.12$1,456.16$1,456.16$1,820.20$1,820.20

Yeast Energizer (g)0.05185.430.281274$281.27$281.27$562.55$562.55$843.82$843.82$1,125.10$1,125.10$1,406.37$1,406.37

Campden (tablet)0.05182.130.110334$110.33$110.33$220.67$220.67$331.00$331.00$441.34$441.34$551.67$551.67

Clarifier (g)0.0763.380.25688$256.88$256.88$513.76$513.76$770.64$770.64$1,027.52$1,027.52$1,284.40$1,284.40

Water0.0247510.02475$24.75$24.75$49.50$49.50$74.25$74.25$99.00$99.00$123.75$123.75

Labels0.25123$3,000.00$3,000.00$6,000.00$6,000.00$9,000.00$9,000.00$12,000.00$12,000.00$15,000.00$15,000.00

Corks0.295123.54$3,540.00$3,540.00$7,080.00$7,080.00$10,620.00$10,620.00$14,160.00$14,160.00$17,700.00$17,700.00

Bottles0.59127.08$7,080.00$7,080.00$14,160.00$14,160.00$21,240.00$21,240.00$28,320.00$28,320.00$35,400.00$35,400.00

Shrink Wrap0.1121.2$1,200.00$1,200.00$2,400.00$2,400.00$3,600.00$3,600.00$4,800.00$4,800.00$6,000.00$6,000.00

Filters0.40510.405$405.00$405.00$810.00$810.00$1,215.00$1,215.00$1,620.00$1,620.00$2,025.00$2,025.00

Total$36,159.56$36,159.56$72,319.13$72,319.13$108,478.69$108,478.69$144,638.26$144,638.26$180,797.82$180,797.82

&A

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tst007:unit price 2.29/30 grams10mL clears 5 gallons

Glenn Houser:25 cents per lable

Glenn Houser:295 for 1000 corks

Glenn Houser:1000 bottles cost $680

Glenn Houser:10 cents each

Start up Captial Costs

DescriptionEstimatedSource

Cost ($)

Land10,000

Site Setup:

Building63,000Goodon Industries

Sewage System3,500Wigs Pumps and Waterworks

Natural Gas Installation8,000Sask Energy

Electricity Installation25,000Sask Power

Town Water Installation14,300Balgonie

Landscaping3,500Lakeshore Garden Centre (S'toon)

Total Cost127,300

Production Equipment:Capacity/Quantity/Source

Primary Fermenter6,500800 gal. - 1 - Dairyland Agro

Basket Press1,000110 Litre - 1 - The Compleat Winemaker

Filter5,60020 plates - Criveller Co. (Ont.)

Pump1,00020 gpm - 1 - The Compleat Winemaker

Storage Tanks4,8001000 Litre - 4 - Criveller Co. (Ont.)

Bottle Filler8004 nozzle - 1 - The Compleat Winemaker

Bottle Corker50Single corker - 1 - Wine Kitz

Hydrometer & Thermometer5001 - Fisher Scientific

pH meter and probe6001 - Coal Parmer (Montreal)

SO2 detector5001 - R & D Equipment (California)

Fruit Crusher40033" x 22" x 14" - The Compleat Winemaker

Walk in Freezer14,0001 - 9'x9' - D & C Refrigeration (Saskatoon)

Used Garden Tractor5,00020 hp mower and rototiller - Private Deal

Pallet Jack4292 ton capacity - 1 - Princess Auto

Irrigation700Drip - Rainmaker Irrigation (Outlook)

Office Equipment3,000Desk, Computer, Filing System

Total Equipment Costs44,879

Total Working Capital42,089

Total Capital Costs214,268

Marketing Expenses

20042006200820102012

Marketing/Sales Labour

Manager$20,000$29,794$31,302$32,887$34,552

Marketer$17,500$38,407$40,507$43,595$46,856

Benefits$3,293$5,988$6,305$6,715$7,148

Total Salaries$40,793$74,188$78,114$83,197$88,555

Seasonal Retail Students Wage (hour)$9.00$9.46$9.93$10.44$10.97

Hours700700700700700

Benefits$919$965$1,014$1,065$1,119

Total Season Wage$7,219$7,584$7,968$8,371$8,795

Total Marketing/Sales Labour + Benefits$48,011$81,772$86,082$91,568$97,350

Production Labour

Permanent Labourer$15,000$15,759$16,557$17,395$18,276

Benefits for Salary Employees$1,617$1,699$1,785$1,875$1,970

Total Salaries$16,617$17,458$18,342$19,271$20,246

Part-Time Bottler Wage (hour)$8.00$8.41$8.83$9.28$9.75

Hours2254506759001125

Benefits for Wage-Earning Employees$298$627$988$1,384$1,818

Total bottler wage$2,098$4,409$6,949$9,734$12,784

Total Direct Labour + Benefits$18,715$21,868$25,291$29,005$33,030

Operating Expenses

Direct Material Purchases

Fruit Purchased (lb)

Rhubarb2,250

Raspberries6,750

Saskatoon berries6,750

Chokecherries2,250

Sugar (Kg)1,152

Yeast (Package)288

Acid Blend (g)457

Pectic Enzyme (g)364

Yeast Energizer (g)281

Campden (tablet)110

Clarifier (g)257

Water25

Labels3,000

Corks3,540

Bottles7,080

Shrink Wrap1,200

Filters405

Total Direct Materials36,160

Direct Labour and Benefits

Permanent Labourer15,000

Benefits for Salary Employees1,617

Bottler wage1,800

Benefits for bottlers298

Total Direct Labour + Benefits18,715

Manufacturing Overhead Costs

Variable

Freight and Pallet Charges360

Maintenance300

Total Variable Overhead660

Fixed

Natural Gas1,250

Insurance750

Property Taxes1,000

Capital Cost Allowance8,104

Electricity1,440

Total Fixed Overhead12,544

Total Manufacturing Overhead13,204

Cost of Goods Manufactured

Direct Materials36,160

Direct Labour Used18,715

Manufacturing Overhead13,204

Total Cost of Goods Manufactured68,079

revenue

Year

20042006200820102012

Quantity of Sales (cases)4281856257836234575

Sales Revenue

Saskatoon Berry Wine$14,583$66,396$96,902$143,045$189,781

Raspberry Wine$13,426$61,131$89,218$131,702$174,732

Chokecherry Wine$12,142$55,281$80,680$119,099$158,011

Rhubarb Wine$12,784$58,206$84,949$125,401$166,372

Total$52,935$241,015$351,749$519,248$688,896

Year20042006200820102012

Saskatoon Berry Wine$11.35$11.92$12.53$13.16$13.83

Raspberry Wine$10.45$10.98$11.53$12.12$12.73

Chokecherry Wine$9.45$9.93$10.43$10.96$11.51

Rhubarb Wine$9.95$10.45$10.98$11.54$12.12

20042006200820102012

Sample Wine Costs$960$1,220$1,551$1,972$2,507

Mileage for deliveries (cost)$3,960$8,321$12,177

Vehicle (Lease)$14,000$16,000

Telephone$250$263$276$290$305

Billboards$1,500$1,576$1,656$1,740$1,828

Radio Ads$4,000$4,203$4,415$4,639$4,874

Brochures$1,197$1,455$1,769$2,150$2,613

Newspaper ads$5,443$5,719$6,008$6,312$6,632

Bridal Shows$250$263$276$290$305

Trade Shows$500$525$552$580$609

Travelling backdrop$500$103$108$113$119

Webpage$325$341$359$377$396

Future Bus Tours$5,673$6,262$6,912

Posters$350$368$386$406$426

Total Marketing Expense$19,235$24,356$35,206$39,130$43,525

Breakeven

Graph 1

20042006200820102012

Accounting Breakeven Ave Selling Price$255.80$119.66$102.93$97.87$96.45

Economic 20% IRR Breakeven Selling Price105.06110.38115.97121.84128.01ANDY - you may want to redo the graphs and

Base Case Ave Selling Price123.60129.86136.43143.34150.59insert the IRR breakeven numbers with the charts

so you will only need 2 in total.

Graph 2

Accounting Breakeven Total Quanity Sold8861710194524732930

Economic 20% IRR Breakeven Quantity Sold3641578219130793888

Base Case Total Quantity Sold4281,8562,5783,6234,575

Breakeven

000

000

000

000

000

Accounting Breakeven Ave Selling Price

Base Case Ave Selling Price

Economic 20% IRR Breakeven Selling Price

Year

Selling Price per Case

Sensitivity Analysis

000

000

000

000

000

Accounting Breakeven Total Quanity Sold

Base Case Total Quantity Sold

Economic 20% IRR Breakeven Quantity Sold

Year

# of Cases Sold

Breakeven Analysis

VariableWorst CaseBase CaseBest Case

Quantity of Sales50%100%105%

Avg. Selling Price75%100%125%

Avg. Fruit Prices150%100%75%

Rate of GrowthABC

NOTE:

A - Start at 1000 cases increase by 250 cases/year

B - Start at 1000 cases and increase every 2 years by 1000 cases

C - Start at 1000 cases and increase constantly by 500 cases/year

VariableWorst CaseBase CaseBest CaseLong Term Debt$164,583

Quantity of Sales-13.7%30.4%33.4%Owner's Equity$164,583

Avg. Selling Price12.7%30.4%44.9%Total Financing$329,165

Avg. Fruit Prices25.0%30.4%33.1%

Rate of Growth18.7%30.4%34.8%

000

000

000

000

Quantity of Sales

Ave. Selling Price

Ave Fruit Prices

Rate of Growth

Worst Case

Base Case

Best Case

IRR

Sensitivity of IRR

DividendsDividend policycash on hand minus working capital multiplied by 1.15Dividends paid

SV Base Case

South Valley Winery

Financial ProjectionsBase Case

Statement of Income and Retained Earnings

For the year ended March 312004200520062007200820092010201120122013

Sales Revenue:

Saskatoon Berry Wine14,58330,78466,39672,85496,902112,624143,045160,127189,781210,091

Raspberry Wine13,42628,34361,13167,07789,218103,693131,702147,429174,732193,432

Chokecherry Wine12,14225,63155,28160,65880,68093,771119,099133,321158,011174,922

Rhubarb Wine12,78426,98758,20663,86884,94998,732125,401140,375166,372184,177

Total52,935111,746241,015264,457351,749408,820519,248581,253688,896762,621

Liquor Tax ($0.53/L)(2,043)(4,207)(8,853)(9,477)(12,298)(13,945)(17,280)(18,871)(21,820)(23,566)

Cost of Goods Sold29,15666,411104,752113,732131,471152,523175,438195,668214,672237,210

Gross Margin23,77845,335136,263150,725220,278256,297343,809385,585474,224525,411

Expenses:

Start-up Training970000000000

Marketing19,23519,49524,35630,60235,20637,04639,13041,28843,52545,850

Marketing Salaries48,01178,32481,77283,16586,08288,11291,56893,80897,35099,901

Interest on Long Term Debt12,17911,70911,20410,66210,0809,4558,7848,0627,2886,456

Total Expenses80,395109,528117,332124,430131,368134,613139,482143,158148,163152,207

Income Before Taxes(56,617)(64,193)18,93126,29588,910121,684204,327242,427326,062373,204

Income Taxes00002,54823,26639,61851,74978,37893,388

Net Income(Loss)(56,617)(64,193)18,93126,29586,36298,418164,709190,678247,684279,816

Beg Retained Earnings0(56,617)(120,810)(101,879)(75,584)10,778109,196206,274258,933343,378

Net Income(Loss)(56,617)(64,193)18,93126,29586,36298,418164,709190,678247,684279,816

Dividends00000067,631138,019163,239215,661

End Retained Earnings(56,617)(120,810)(101,879)(75,584)10,778109,196206,274258,933343,378407,532

Dividend Policy$(62,979)$(11,978)$(68,536)$(59,354)$(56,819)$(5,302)$67,631$138,019$163,239$215,661

Balance Sheet

March 312004200520062007200820092010201120122013

Assets

Current Assets:

Cash66,2641,43211,59539,42194,498188,691261,722310,152366,030422,674

Accounts Receivable0000000000

Total Inventories38,92347,80455,93156,68478,19282,186100,467102,632122,600125,454

Total Current Assets105,18749,23567,52696,104172,690270,878362,188412,784488,630548,128

Capital Assets:

Plant and Equipment172,179172,179177,099177,099188,805188,805193,974193,974199,272199,272

Accumulated C.C.A.(8,104)(21,872)(32,924)(42,973)(52,868)(62,611)(71,551)(79,824)(87,550)(94,815)

Net Plant and Equipment164,075150,307144,175134,126135,937126,194122,422114,150111,722104,457

Total Assets269,262199,542211,701230,230308,627397,072484,611526,934600,352652,584

Liabilities

Current Liabilities:

Accounts Payable3,0644,3584,9105,0115,4954,5964,8034,9355,1505,302

Noncurrent Liabilities

Long Term Debt158,232151,412144,087136,220127,771118,696108,95098,48387,24175,168

Total Liabilities161,296155,769148,997141,231133,266123,293113,754103,41892,39280,470

Shareholders' Equity

Owner's Equity164,583164,583164,583164,583164,583164,583164,583164,583164,583164,583

Retained Earnings(56,617)(120,810)(101,879)(75,584)10,778109,196206,274258,933343,378407,532

Total Shareholder's Equity107,96643,77362,70488,999175,361273,779370,857423,516507,960572,115

Total Liabilities and269,262199,542211,701230,230308,627397,072484,611526,934600,352652,584

Shareholder's Equity

Statement of Cash Flow

For the year ended March 312004200520062007200820092010201120122013

Cash from (used in) Operating Activities:

Net Income(Loss)(56,617)(64,193)18,93126,29586,36298,418164,709190,678247,684279,816

Depreciation8,10413,76811,05210,0499,8959,7438,9418,2737,7267,265

Accounts Receivable0000000000

Inventory(38,923)(8,881)(8,127)(753)(21,508)(3,994)(18,280)(2,166)(19,967)(2,854)

Accounts Payable3,0641,294553101483(898)207132216151

Net Cash Flow from Operations(84,372)(58,012)22,40935,69275,232103,268155,576196,917235,658284,378

Cash from (used for) Financing Activities:

Owner's Equity164,583000000000

Long Term Debt158,232(6,820)(7,325)(7,867)(8,449)(9,074)(9,746)(10,467)(11,242)(12,074)

Dividends000000(67,631)(138,019)(163,239)(215,661)

Net Cash Flow from Financing322,815(6,820)(7,325)(7,867)(8,449)(9,074)(77,377)(148,486)(174,481)(227,735)

Cash from (used for) Investing Activities:

Buildings and Equipment(172,179)0(4,920)0(11,706)0(5,169)0(5,298)0

Net Cash Flow from Investing(172,179)0(4,920)0(11,706)0(5,169)0(5,298)0

Increase(decrease) in Cash$66,264$(64,832)$10,164$27,825$55,077$94,194$73,030$48,430$55,879$56,643

Cash beginning of year066,2641,43211,59539,42194,498188,691261,722310,152366,030

Cash end of year66,2641,43211,59539,42194,498188,691261,722310,152366,030422,674

Supporting Schedules

Schedule 1: Economic Forecast

2004200520062007200820092010201120122013

Long Term Debt RateInput7.4%7.4%7.4%7.4%7.4%7.4%7.4%7.4%7.4%7.4%

Rate of Inflation (expenses)Input2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Schedule 2: Revenues

2004200520062007200820092010201120122013

Growth in Selling Prices:

Saskatoon Berry WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Raspberry WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Chokecherry WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Rhubarb WineInput2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%2.5%

Quantity of Sales

Saskatoon Berry Wine1072214644976457319069891,1441,235

Raspberry Wine1072214644976457319069891,1441,235

Chokecherry Wine1072214644976457319069891,1441,235

Rhubarb Wine1072214644976457319069891,1441,235

Total Quantity4288821,8561,9872,5782,9233,6233,9564,5754,941

2004200520062007200820092010201120122013

Selling Prices (per case)

Saskatoon Berry WineInput136.20139.61143.10146.67150.34154.10157.95161.90165.95170.10

Raspberry WineInput125.40128.54131.75135.04138.42141.88145.43149.06152.79156.61

Chokecherry WineInput113.40116.24119.14122.12125.17128.30131.51134.80138.17141.62

Rhubarb WineInput119.40122.39125.44128.58131.80135.09138.47141.93145.48149.11

Average Selling Price123.60126.69129.86133.10136.43139.84143.34146.92150.59154.36

Sales Revenue

Saskatoon Berry Wine14,58330,78466,39672,85496,902112,624143,045160,127189,781210,091

Raspberry Wine13,42628,34361,13167,07789,218103,693131,702147,429174,732193,432

Chokecherry Wine12,14225,63155,28160,65880,68093,771119,099133,321158,011174,922

Rhubarb Wine12,78426,98758,20663,86884,94998,732125,401140,375166,372184,177

Total52,935111,746241,015264,457351,749408,820519,248581,253688,896762,621

Schedule 3: Operating Expenses

Direct Material Purchases

Fruit Purchased (lb)

Rhubarb2,2502,3064,6134,7286,9197,0929,2259,45611,53111,820

Raspberries6,7506,91913,83814,18320,75621,27527,67528,36734,59435,459

Saskatoon berries6,7506,91913,83814,18320,75621,27527,67528,36734,59435,459

Chokecherries2,2502,3064,6134,7286,9197,0929,2259,45611,53111,820

Sugar (Kg)1,1521,1812,3622,4213,5423,6314,7234,8415,9046,052

Yeast (Package)2882965916068879091,1821,2121,4781,515

Acid Blend (g)4574689379601,3711,4051,8281,8732,2852,342

Pectic Enzyme (g)3643737467651,1191,1471,4931,5301,8661,912

Yeast Energizer (g)2812885775918658871,1531,1821,4421,478

Campden (tablet)110113226232339348452464565580

Clarifier (g)2572635275407908101,0531,0801,3171,349

Water252551527678101104127130

Labels3,0003,0756,1506,3049,2259,45612,30012,60815,37515,759

Corks3,5403,6297,2577,43810,88611,15814,51414,87718,14318,596

Bottles7,0807,25714,51414,87721,77122,31529,02829,75436,28537,192

Shrink Wrap1,2001,2302,4602,5223,6903,7824,9205,0436,1506,304

Filters4054158308511,2451,2771,6611,7022,0762,128

Total36,16037,06474,12775,980111,156113,935148,209151,914185,261189,892

Direct Labour Costs2004200520062007200820092010201120122013

Direct Labour Staff

Permanent LabourersInput1111111111

Part-time bottlingInput5555555555

Total Labour Staffing6666666666

Salary Workers

Permanent LabourerInput15000.0015375.0015759.3816153.3616557.1916971.1217395.4017830.2918276.0418732.94

Bottlers

WageInput8.008.208.418.628.839.059.289.519.759.99

Hours per workerInput45.0045.0090.0090.00135.00135.00180.00180.00225.00225.00

Total bottler wage1,8001,8453,7823,8775,9616,1108,3508,55910,96611,240

Total Direct Labour16,80017,22019,54220,03022,51823,08125,74526,38929,24229,973

Benefits for Salary Employees

Employment Insurance3.08%462474485498510523536549563577

Canada Pension Plan4.70%705723741759778798818838859880

Workers Compensation3.00%450461473485497509522535548562

Total Benefits for Salary Employees1,6171,6571,6991,7411,7851,8291,8751,9221,9702,019

Benefits for Bottlers

Employment Insurance3.08%5557116119184188257264338346

Canada Pension Plan4.70%8587178182280287392402515528

Holiday Pay5.80%104107219225346354484496636652

Workers Compensation3.00%5455113116179183250257329337

Total Benefits for Wage-Earning Employees2983066276439881,0131,3841,4191,8181,864

Total Direct Labour + Benefits18,71519,18321,86822,41425,29125,92329,00529,73033,03033,856

Variable Manufacturing Overhead Costs2004200520062007200820092010201120122013

Freight and Pallet ChargesInput3603697387561,1071,1351,4761,5131,8451,891

MaintenanceInput3003584665787439111,1341,3621,6461,937

Total Variable Overhead6607271,2041,3351,8502,0462,6102,8753,4913,829

Fixed Manufacturing Overhead Costs

Natural GasInput1,2501,2811,3131,3461,3801,4141,4501,4861,5231,561

InsuranceInput750769788808828849870892914937

Property TaxesInput1,0001,0251,0511,0771,1041,1311,1601,1891,2181,249

Capital Cost Allowance8,10413,76811,05210,0499,8959,7438,9418,2737,7267,265

ElectricityInput1,4401,4761,4761,4761,4761,4761,4761,4761,4761,476

Total Fixed Overhead12,54418,31915,68014,75514,68214,61313,89613,31512,85712,488

Total Manufacturing Overhead13,20419,04516,88516,09016,53216,65916,50616,19016,34916,316

Cost of Goods Manufactured2004200520062007200820092010201120122013

Direct Materials36,16037,06474,12775,980111,156113,935148,209151,914185,261189,892

Direct Labour Used18,71519,18321,86822,41425,29125,92329,00529,73033,03033,856

Manufacturing Overhead13,20419,04516,88516,09016,53216,65916,50616,19016,34916,316

Total Cost of Goods Manufactured68,07975,292112,879114,485152,979156,517193,719197,833234,639240,064

Schedule 4: Cost of Goods Sold

Beginning Inventory038,92347,80455,93156,68478,19282,186100,467102,632122,600

Cost of Goods Manufactured68,07975,292112,879114,485152,979156,517193,719197,833234,639240,064

Cost of Goods Available for Sale68,079114,215160,683170,416209,663234,709275,905298,300337,272362,664

Ending Inventory38,92347,80455,93156,68478,19282,186100,467102,632122,600125,454

Cost of Goods Sold29,15666,411104,752113,732131,471152,523175,438195,668214,672237,210

Production Output2004200520062007200820092010201120122013

Total CasesInput1,0001,0002,0002,0003,0003,0004,0004,0005,0005,000

Quanitity of Sales4288821,8561,9872,5782,9233,6233,9564,5754,941

Quantity of Inventory Remaining5726908348471,2691,3451,7231,7662,1922,251

Schedule 5: Expenses

Marketing Salary and Wages

Staffing2004200520062007200820092010201120122013

Seasonal (Students)Input2222222222

ManagerInput1111111111

MarketerInput0.5111111111

Total Manager/mrktng staff4444444444

Total Annual Salaries

ManagerInput20,00029,06729,79430,53931,30232,08532,88733,70934,55235,415

MarketerInput17,50036,1