Vancouver, May 8, 2006 – The Keg Royalties Income Fund (the “Fund”) today reported its first quarter financial results for the three months ended March 31, 2006. Gross sales and same stores sales reported by Keg Restaurants Ltd. (“KRL”), royalty income, earnings, and distributable cash all increased from the comparable quarter of the prior year.
As previously announced, gross sales reported by Keg restaurants in the Royalty Pool increased by $12.8 million or 15.7% to $94.0 million during the quarter. The increase in gross sales reflects the same store sales growth and the addition of net new sales to the Royalty Pool at the beginning of the year.
KRL’s same store sales increased by 9.4% in Canada and by 9.2% in the United States for the 13-week period ended April 2, 2006. After translating the sales of the U.S. restaurants into their Canadian dollar equivalent, consolidated same store sales increased by 8.1% for the comparable 13-week period, despite the continuing negative effect of the exchange rate between the Canadian and US dollars.
Royalty income increased by $508,000 or 15.7% to $3,761,000 for the quarter, as a result of the increase in gross sales.
The Fund generated earnings of $2,651,000 (30.9 cents/Fund unit) compared with $2,288,000 (28.1 cents/Fund unit) during the same quarter of the prior year, an increase of 10.0% on a per unit basis. Distributable cash available to pay distributions to Fund unitholders increased to $2,658,000 (31.0 cents/Fund unit) from $2,294,000 (28.1 cents/Fund unit) for the first quarter of the prior year, or 10.3% on a per unit basis. The Fund declared distributions of 18.4 cents/Fund unit during the first quarter of 2006 versus 18.0 cents/Fund unit during the first quarter of 2005.
“We are extremely pleased with the performance of the Fund, particularly the growth in royalty income and its contribution towards the growth in both earnings and distributable cash,” said David Aisenstat, President & CEO of Keg Restaurants Ltd.
A copy of the complete financial results will be available at www.sedar.com or on the Fund’s website at www.kegincomefund.com.
The Keg Royalties Income 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, 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 the steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States. For more information on Keg Restaurants Ltd. 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 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.
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 release.
For further information: Karyn Byrne, Investor Relations Manager, Tel: (416) 646-4960, firstname.lastname@example.org