The Keg Royalties Income Fund Announces 2003 Results

VANCOUVER, Feb 17 /CNW/ - The Keg Royalties Income Fund (the "Fund") (TSX: KEG.UN) announced today its year-end financial results for the year ended December 31, 2003. During this period, the Fund earned $11,248,000 of royalty income based on system sales of $280,317,000 from the 81 Keg restaurants included in the royalty pool. Net earnings of the Fund were $8,683,000, resulting in earnings per Fund unit of $1.06. Cash available for distribution to unitholders during the year amounted to $8,769,000 or $1.08 per Fund unit. Distributions of $8,806,000 or $1.08 per Fund unit have been declared and paid relative to the year. The difference between the Fund’s income and distributions is due to the presence of non-cash items in the Fund’s operating expenses. 

The Fund also announced that 29.08% of distributions made in 2003 will be considered a return of capital for income tax purposes and will therefore be tax deferred for unitholders. 

The Fund is a limited purpose, open-ended trust established under the laws of the Province of Ontario to acquire indirectly through The Keg Rights Limited Partnership certain trademarks, and other related intellectual property used by Keg Restaurants Ltd. ("KRL") in both the operation and franchise of its Keg restaurants in Canada and the United States. The trademarks are licensed to KRL for 99 years for which KRL pays the Fund a royalty of 4% of gross sales of Keg restaurants included in the royalty pool. 

Vancouver-based Keg Restaurants Ltd. is the leading operator and franchisor of steakhouse restaurants in Canada and has a substantial presence in certain regional markets in the United States. KRL continues to operate the Keg restaurant system and to expand that system through the addition of both corporate and franchised Keg steakhouses in Canada and the United States. Keg Restaurants Ltd. was named Restaurant Company of the Year by Foodservice and Hospitality Magazine, and one of the 50 Best Employers in Canada by the Globe and Mail’s Report on Business Magazine. 

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 such 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 requirements under U.S. securities laws. 

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 changes in market and competition, 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.