June 29, 2001

TORONTO, ONTARIO -

Second Quarter 2001 Report to Shareholders

Dominion Citrus Limited Announces Record FY 2001 2nd quarter eps of $0.05, a 133% improvement year over year, and declares a $0.02 per share dividend payable September 28, 2001.

2nd QUARTER HIGHLIGHTS

Net Earnings of $0.754 million or $0.05 Earnings Per Share (EPS), compared to $0.323 million or $0.02 EPS last year, a 133% year over year improvement.

Total Revenue of $32.740 million increased 33% over the similar period a year ago, while the Gross Margin rate improved by 60 basis points to 15.7%.

The Company generated $2.531 million in Cash from Operations in the 2nd quarter, a $3.827 million change from the $1.296 million used in corresponding quarter last year.

Cash on hand increased to $3.542 million at June 29, 2001, up from $1.120 million at March 23, 2001.

Subsequent to the quarter end, the company entered into a contract with Microforum Inc. to supply and implement a new financial, operations and management reporting system for the company, using Navision Software.

On July 30, 2001, The Board of Directors declared a $0.02 per share dividend, payable September 28, 2001, to shareholders of record on September 14, 2001.

SIX MONTHS HIGHLIGHTS

Net Earnings of $1.043 million or $0.06 EPS, compared to $0.605 million or $0.04 Earnings Per Share in FY 2000. This represents a 72% improvement in Net Earnings over FY 2000 six-month performance.

Excluding the 1st quarter Restructuring Charge, the Company earned $0.07 EPS versus $0.04 EPS last year, or a 93% year over year improvement.

Total Revenue of $55.502 million versus $47.010 million last year, is an 18% year over year increase, while the company's Gross Margins have improved from 15.5% in FY 2000 to 16.2% in the first six months of FY 2001.

TORONTO, July 30, 2001: Dominion Citrus Limited (TSE:DMN) announced record revenue and net earnings results for the second quarter and first six months of Fiscal 2001. Additionally, the Company also declared a dividend of $0.02 per share, payable on September 28, 2001, to shareholders of record at the close of business on September 14, 2001.

Revenue of $32.740 million was up 33% versus the 2nd quarter last year, while Net Earnings of $0.754 million, or $0.05 EPS, compares favourably to $0.323 million or $0.02 EPS in Fiscal 2000. This represents a 133% year over year improvement in net earnings.

On a Year to Date (YTD) basis, Revenues of $55.502 million are up $8.492 million or 18% compared to Fiscal 2000, while earnings per share of $0.06 exceed the $0.04 earned in the corresponding six months last year. Excluding the 1st quarter restructuring charge, the company earned $0.07 EPS for the first half of Fiscal 2001, versus $0.04 last year.

"I am very pleased with our operating performance in the first half of 2001," said Michael Blair, Dominion Citrus Limited Chairman and CEO. Our wholesale and processing operations had an excellent quarter, with four of five divisions exceeding the internal financial targets we set at the beginning of the year.

While the marketplace for all our businesses remains extremely competitive, we were successful in improving our consolidated YTD gross margin rate to 16.2% versus 15.5% in Fiscal 2000. The favourable customer response to our new international programs and the opportunity to supply a new major chain account helped drive case volume and generate the solid revenue performance.

Blair added, "As a result of the Company's strong financial results and cash position, The Board of Directors has authorized a $0.02 per share dividend payable to our shareholders on September 28, 2001. We fully expect the Company to deliver and build on the momentum it has gained since becoming TSE listed earlier this year, and believe that a dividend distribution is appropriate at this time."

Revenue

Dominion Citrus Limited's revenue for the quarter ended June 29, 2001 was $32.740 million, an increase of $8.205 million or 33.4% versus the same period a year ago. The increase in revenue resulted from strong case volume shipments and stronger commodity prices at the Ontario Food Terminal (OFT) division, where revenue increased $6.585 million. The introduction of a new chain store account and increases in offshore imports were largely responsible for the revenue increase within the OFT. All operating divisions experienced at least double-digit year over year revenue growth.

Gross Margins

Dominion Citrus Limited's consolidated Gross Margin for the quarter totaled $5.151 million or 15.7%. This compares favourably with the 15.1% Gross Margin Rate achieved during the 2nd quarter Fiscal 2000. The Gross Margin rate improvement was driven by improved pricing conditions on numerous commodities, increased sales of higher margin offshore imports and improved leverage on processing costs from higher volumes. All produce wholesaling & processing operations are seeing favourable Gross Margin $ and % improvements on a year to date basis.

The Apple Valley Juice Corporation continues to experience the negative effects of the higher raw apple costs resulting from the poor growing season in 2000. The increased cost of the product, coupled with very little pricing elasticity has resulted in Apple Valley's Gross Margin rate decline by 280 basis points year over year. The unfavourable apple cost situation in 2000 is not expected this fall, as the growing conditions so far this summer indicate a better apple crop yield.

Expenses

Total operating expenses of $4.029 million for the quarter represent 12.3% of revenue, a 1.0% improvement from last year. Warehouse & Delivery costs were $2.503 million for the quarter, or 7.6% of revenue. This compares favourably with an 8.2% rate in 2000. Selling expenses were 1.5% for the quarter, as compared to 2.0% in Fiscal 2000. The only area to experience a negative trend was General & Administrative costs driven by several corporate Finance staff changes and a larger incentive plan provision attributable to the strong earnings results to date.

Other Income (Expense)

Foreign exchange gains for the three months ended June 29, 2001 were $0.113 million and compares favourably to the $0.086 million generated for the same period last year.

Net Earnings

Net Earnings of $0.754 million or $0.05 eps is reported for the three months ended June 29, 2001. This represents a 133% improvement to the $0.323 million Net earnings or $0.02 eps reported for the 2nd quarter 2000. YTD, the company has earned $1.043 million or $0.06 eps versus $0.605 million or $0.04 eps. All business units, except the Apple Valley Juice Corporation, are exceeding last year's net earnings performance on both a quarter and YTD basis.

Liquidity and Capital Resources

Cash flow from operating activities was $4.074 million for the half year ended June 29, 2001, resulting from net earnings of $1.043 million, adjusted for non-cash items of $0.432 million. Improvements in the use of cash relating to operating assets and liabilities generated an additional $2.599 million in cash flow.

The generation of working capital cash was primarily the result of a $2.143 million decrease in the Accounts Receivable position from December 31, 2000. The days sales outstanding has improved from 34 days at Fiscal 2000 year end, to 30 days at June 29, 2001. This improvement is primarily the result of a more proactive approach in working with our major account customer base.

The company's cash position is solid, with $3.542 million in cash and cash equivalents on hand as at June 29, 2001.

Capital Expenditures

Capital expenditures of $0.101 million during the quarter were planned and in line with the company's annual capital appropriation program. The company is projecting capital expenditures of approximately $0.900 million for the year. Subsequent to the quarter end, the Country Fresh division was able to acquire two (2) packing & weighing systems from a competitor that fell into receivership. The division not only secured the equipment at favourable terms and conditions, but it is now in a strong position to secure a bagging contract with the former competitor's customers. The acquisition of this equipment will be managed within the planned Fiscal 2001 Capital Program.

Debt

Dominion Citrus' long-term debt as at June 29, 2001 totaled $2.411 million. The Company's short-term revolving bank lines of credit of $3.000 million were unused, and remain available to the Company.

Outlook

Management believes that the Company is putting the necessary programs and structure in place to diversify and broaden its customer base, geographic coverage, market penetration and product and service offerings. The new MIS will be critical to providing management with timely information to proactively manage our businesses, and accelerate our operating performance.

While the Company is not entirely sheltered from the difficult economic conditions in the United States, and to a lesser extent Canada, management is confident that the positive results provided in the first half of Fiscal 2001 should continue throughout the remainder of the year.

DOMINION CITRUS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3 MONTHS ENDED June 29, 2001

(Unaudited)

The consolidated interim financial statements should be read in conjunction with the company's most recent annual consolidated financial statements, as they do not conform in all respects with the requirements of Canadian GAAP as pertaining to audited annual financial statements. The interim statements follow the same accounting policies and procedures as the most recent audited statements; and while reviewed by the Audit Committee of the Board of Directors' for overall compliance, have not been subjected to the same degree of testing and verification as the audited annual financial statements.

Calendar Re-Alignment

In order to better align the corporate fiscal calendar quarter end dates with the traditional months of the year, an additional week was added to the FY 2001 2nd quarter. This quarter had 14 weeks of operating results, versus 13 weeks in FY 2000.

Download a PDF of the Second Quarter 2001 Report to Shareholders with Consolidated Statement of Earnings.