The Keg Royalties Income Fund Announces First Quarter 2013 Financial Results
15 Mayo 2013 - 7:21PM
Marketwired Canada
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE U.S.
The Keg Royalties Income Fund (TSX:KEG.UN) (the "Fund") has reported its
financial results for the three months ended March 31, 2013.
The gross sales reported by the 102 Keg restaurants in the Royalty Pool were
$124,329,000 for the quarter, a decrease of $37,000 from the comparable quarter
of the prior year. The decline in Royalty Pool sales during the quarter was due
to the closure of three corporate restaurants in January 2013, one temporarily
for a substantial renovation and two permanently due to lease expiries.
Although not obligated to do so, Keg Restaurants Ltd. has elected to make
Make-whole payments on the temporarily closed restaurant due to the uncertainty
regarding its re-opening date. The two permanently closed restaurants, which are
subject to Make-whole payments, will remain in the Royalty Pool until December
31, 2013. At that time, the sales from these closed restaurants will be replaced
with the sales of the five new Keg restaurants opened since October 3, 2012.
The Keg's same store sales (sales of restaurants that operated during the entire
13-week period of both the current and prior years) increased by 0.3% in Canada
and by 3.3% in the United States. After translating the sales of the U.S.
restaurants into their Canadian dollar equivalent, consolidated same store sales
for the comparable 13-week periods increased 0.7%. The average exchange rate
moved from 1.002 in the first quarter of 2012 to 1.008 in the first quarter of
2013, slightly increasing the Canadian dollar equivalent of the U.S. restaurant
sales.
Royalty income increased by $74,000 or 1.5% from $4,992,000 in the three months
ended March 31, 2012 to $5,066,000 in the three months ended March 31, 2013,
because of the increase in the Make-whole payments, as discussed previously.
Distributable cash before SIFT tax increased by $14,000 from $4,080,000 (35.9
cents/Fund unit) to $4,094,000 (36.1 cent/Fund unit) for the quarter.
Distributable cash available to pay distributions to public unitholders
decreased slightly from $3,184,000 (28.0 cents/Fund unit) to $3,180,000 (28.0
cents/Fund unit) during the comparable quarter.
The Fund remains financially well positioned with surplus cash on hand of
$1,028,000 and a positive working capital balance of $2,196,000 as of March 31,
2013.
"The Keg continues to run great steakhouses and bars, and this has translated to
another solid quarter of positive results," said David Aisenstat, President and
CEO of Keg Restaurants Ltd. "We are excited for our continued success in 2013
and the continued positive results will ultimately improve distributable cash
for unitholders."
FINANCIAL HIGHLIGHTS
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($000's except per unit amounts) Jan. 1 Jan. 1
to Mar. 31, to Mar. 31,
2013 2012
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Restaurants in the Royalty Pool 102 102
Gross sales reported by restaurants in the Royalty
Pool $ 124,329 $ 124,366
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Royalty income (1) $ 5,066 $ 4,992
Interest income (2) 1,055 1,066
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Total income $ 6,121 $ 6,058
Administrative expenses (3) (100) (104)
Interest and financing expenses (4) (171) (173)
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Operating income $ 5,850 $ 5,781
Distributions to KRL (5) (2,058) (2,041)
Distributions declared to Fund unitholders (6) - -
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Profit (loss) before fair value adjustment and
taxes $ 3,792 $ 3,740
Fair value adjustment (7) (2,338) (5,571)
Taxes (8) (973) (947)
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Profit (loss) $ 481 $ (2,778)
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Distributable cash before SIFT tax (9) $ 4,094 $ 4,080
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Distributable cash (10) $ 3,180 $ 3,184
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--------------------------
Distributions paid to Fund unitholders $ 2,725 $ 2,725
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Payout Ratio (11) 85.7% 85.6%
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Per Fund unit information (12)
Profit (loss) before fair value adjustment and
taxes $ .334 $ .329
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Profit (loss) $ .042 $ (.245)
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Distributable cash before SIFT tax (9) $ .361 $ .359
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Distributable cash (10) $ .280 $ .280
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Distributions paid to Fund unitholders $ .240 $ .240
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SSSG (13)
Canada 0.3% 1.7%
United States 3.3% 1.2%
Consolidated 0.7% 1.8%
Restaurant Openings/Closings (14)
Opened -- --
Closed 3 --
Relocated -- --
Net Opened (Closed) (3) --
Notes:
(1) The Fund, indirectly through the Partnership, earns royalty income
equal to 4% of gross sales of Keg restaurants in the Royalty Pool.
(2) The Fund directly earns interest income on the $57.0 million Keg Loan,
with interest income accruing at 7.5% per annum, payable monthly.
(3) The Fund, indirectly through the Partnership, incurs administrative
expenses and interest on the operating line of credit, to the extent
utilized.
(4) The Fund, indirectly through the Trust, incurs interest expense on the
$14.0 million term loan and amortization of deferred financing
charges.
(5) Represents the distributions of the Partnership attributable to KRL
during the respective periods on the Exchangeable and Class C units
held by KRL. The Class A, entitled Class B and Class D Partnership
units are exchangeable into Fund units on a one-for-one basis
("Exchangeable units"). These distributions are presented as interest
expense in the financial statements.
(6) Represents the distributions declared on the publicly traded Fund
units during the period. The distributions declared to the Fund's
public unitholders since January 1, 2011 have been recorded as
distributions and charged to unitholder's equity whereas the distribu
tions declared prior to December 31, 2010 were expensed as interest.
(7) Fair value adjustment is the non-cash increase or decrease in the
market value of the Exchangeable units held by KRL during the
respective period. Exchangeable units are classified as a financial
liability under IFRS. The Fund is required to determine the fair value
of that liability at the end of each reporting period and adjust for
any increase or decrease, taking into consideration the sale of any
Exchangeable units during the same period.
(8) Taxes for the quarter ended March 31, 2013, include SIFT tax expense
of $914,000 (quarter ended March 31, 2012 - $896,000) and non-cash
deferred taxes of $59,000 (quarter ended March 31, 2012 - $51,000).
The obligation to pay SIFT tax came into effect on January 1, 2011.
(9) Distributable cash before SIFT tax is defined as the periodic cash
flows from operating activities as reported in the IFRS consolidated
financial statements, including the effects of changes in non-cash
working capital, plus SIFT tax paid (including current year
instalments), less interest and financing fees paid on the term loan,
less the Partnership distributions attributable to KRL through its
ownership of Exchangeable units. Distributable cash before SIFT tax is
a non-IFRS financial measure that does not have a standardized meaning
prescribed by IFRS, and therefore may not be comparable to similar
measures presented by other issuers.
(10) Distributable cash is the amount of cash available for distribution to
the Fund's public unitholders and is calculated as distributable cash
before SIFT tax, less current year SIFT tax expense. Distributable
cash is a non-IFRS financial measure that does not have a standardized
meaning prescribed by IFRS, and therefore may not be comparable to
similar measures presented by other issuers. However, the Fund
believes that distributable cash, both before and after SIFT tax,
provides useful information regarding the amount of cash available for
distribution to the Fund's public unitholders.
(11) Payout ratio is computed as the ratio of aggregate cash distributions
paid during the period (numerator) to the aggregate distributable cash
of the period (denominator).
(12) All per unit amounts are calculated based on the weighted average
number of Fund units outstanding, which are those units held by public
unitholders during the respective period. The weighted average number
of Fund units outstanding for the three months ended March 31, 2013
was 11,353,500 (three months ended March 31, 2012 - 11,353,500).
(13) Same Store Sales Growth ("SSSG") is the overall increase or decrease
in gross sales from Keg restaurants (that operated during the entire
period of both the current and the prior year) as compared to gross
sales for the same period of the prior year. SSSG is not an IFRS
financial measure and does not have a standardized meaning prescribed
by IFRS and therefore may not be comparable to similar measures
presented by other issuers. However, the Fund believes that SSSG
provides useful information regarding the increase or decrease in
gross sales for comparable restaurants.
(14) The number of restaurants added to the Royalty Pool each year may
differ from the number of restaurant openings and closings reported by
KRL on an annual basis, as the periods for which they are reported
differ slightly.
(15) The interim financial results for all periods presented herein have
not been audited.
The Fund (TSX:KEG.UN) is a limited purpose, open-ended trust established under
the laws of the Province of Ontario that, through The Keg Rights Limited
Partnership, owns certain trademarks and other related intellectual property
used by Keg Restaurants Ltd. ("KRL"). In exchange for use of those trademarks,
Keg Restaurants Ltd pays the Fund a royalty of 4% of gross sales of Keg
restaurants included in the royalty pool.
Vancouver-based KRL is the leading operator and franchisor of the steakhouse
restaurants in Canada and has a substantial presence in select regional markets
in the United States. KRL continues to operate The Keg restaurant system and
expand that system through the addition of both corporate and franchised Keg
steakhouses. KRL has been named one of the "50 Best Employers in Canada" for the
past eleven years by Aon Hewitt. For more information on our brand, visit
www.kegsteakhouse.com.
This press release may contain certain "forward looking" statements reflecting
The Keg Royalties Income Fund's current expectations in the casual dining
segment of the restaurant food industry. Investors are cautioned that all
forward looking statements involve risks and uncertainties, including those
relating to the Keg's ability to continue to realize historical same store sales
growth, changes in market and existing competition, new competitive
developments, and potential downturns in economic conditions generally.
Additional information on these and other potential factors that could affect
the Fund's financial results are detailed in documents filed from time to time
with the provincial securities commissions in Canada.
This press release shall not constitute an offer to sell or the solicitation of
an offer to buy, which may be made only by means of the prospectus, nor shall
there be any sale of the Fund units in any state, province or other jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any state, province
or jurisdiction. The Keg Royalties Income Fund units have not been, and will not
be registered under the U.S. Securities Act of 1933, as amended and may not be
offered or sold in the United States absent registration or an application for
exemption from the registration requirement under U.S. securities laws.
The Trustees of the Fund have approved the contents of this press release.
FOR FURTHER INFORMATION PLEASE CONTACT:
The Keg Royalties Income Fund
Karyn Byrne
(416) 646-4960
karynb@kegrestaurants.com
www.kegincomefund.com
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