The Keg Royalties Income Fund Announces Strong Quarterly Results
November 15th 2007
Vancouver, November 15, 2007 - The Keg Royalties Income Fund (the "Fund") has reported its financial results for the three and nine months ended September 30, 2007. Gross sales and same stores sales reported by Keg Restaurants Ltd. ("KRL"), royalty income, earnings, and distributable cash all increased from the comparable periods of the prior year.
As previously announced, total system sales reported by Keg Restaurants Ltd. increased by $9.4 million or 9.7% for the quarter, and by $32.5 million or 11.4% year to date. Royalty Pool sales increased by 12.5% to $103.0 million for the quarter and by 12.9% to $309.2 million year to date. The increase in gross sales reflects the net impact of the addition of net new sales to the Royalty Pool at the beginning of the year and an increase in same store sales.
KRL's same store sales (sales of restaurants that operated during the entire period of both the current and prior years) increased by 9.5% in Canada and by 1.9% in the United States for the 13-week period ended September 30, 2007, and by 9.1% in Canada and by 3.7% in the United States for the 39-week period ended September 30, 2007. After translating the sales of the U.S. restaurants into their Canadian dollar equivalent, consolidated same store sales increased by 7.2% for the 13-week period and by 7.8% for the 39-week period, despite the continuing negative effect of the exchange rate between Canadian and U.S. dollars.
Royalty income increased by $477,000 or 12.8% to $4,211,000 for the quarter and by $1,522,000 or 13.8% to $12,581,000 year to date, as a result of the increase in gross sales.
Earnings increased by 5.6% to 30.4 cents/Fund unit from 28.8 cents/Fund unit during the quarter and by 7.3% to 94.3 cents/Fund unit from 87.9 cents/Fund unit year to date. Distributable cash available to pay distributions to Fund unitholders increased by 8.6% to 32.8 cents/Fund unit from 30.2 cents/Fund unit for the quarter and by 9.4% to 96.7 cents/Fund unit from 88.4 cents/Fund unit year to date.
The Fund paid distributions of 30.3 cents/Fund unit during the quarter and 88.7 cents/Fund unit year to date.
The Fund is pleased to announce that it is again increasing its monthly cash distributions to Unitholders, marking the sixth distribution increase since the Fund's inception. The Fund regularly reviews distribution levels with the objective of providing consistent monthly distribution flow to Unitholders at the highest sustainable level. This distribution increase is primarily attributable to continued same store sales growth at KRL of 7.8% year to date.
The monthly distributions will increase 2.6% from $0.1009 per unit to $0.1035 per unit beginning with the December 2007 distribution. This equates to an annualized distribution in excess of $1.24 per unit, an increase of 15.0% since the Funds inception. The distribution of $0.1035 per unit for the period from November 1, 2007 to November 30, 2007 will be payable on December 31, 2007.
"The Keg continues to outpace the casual dining industry in Canada with 9.5% same store sales growth in the third quarter over the same period in 2006. Such significant year on year growth is testament to the strength of The Keg brand in Canada. We are also pleased with the continued growth in the United States, particularly given the general economic slowdown south of the border. With continued focus on running great steakhouses, The Keg has continued to grow market share," said David Aisenstat, President and CEO of KRL. "We are delighted to be able to translate these successes into higher distributions to the Fund's unitholders."
|
$000's except per unit amounts
|
July 1
to Sept 30 2007 |
July 1
to Sept 30 2006 |
Jan 1
to Sept 30 2007 |
Jan 1
to Sept 30 2006 |
|
Restaurants in the Royalty Pool
|
95
|
91
|
95
|
91
|
|
Gross Sales Reported by Restaurants in the Royalty Pool .....
|
$102, 994
|
$91,574
|
$309,216
|
$273,788
|
|
Royalty Income
|
$4,211
|
$3,734
|
$12,581
|
$11,059
|
|
Partnership Expenses
|
(97)
|
(94)
|
(292)
|
(351)
|
|
Partnership Earnings
|
4,114
|
3,640
|
12,289
|
10,708
|
|
KRL's Interest
|
(2,016)
|
(1,880)
|
(5,776)
|
(5,430)
|
|
Equity Income
|
2,098
|
1,760
|
6,513
|
5,278
|
|
Interest Income
|
1,090
|
1,081
|
3,226
|
3,207
|
|
Total Income
|
3,188
|
2,841
|
9,739
|
8,485
|
|
Interest and Financing Expense
|
(242)
|
(235)
|
(702)
|
(667)
|
|
Earnings Before Income Taxes
|
$2,946
|
$2,606
|
$9,037
|
$7,818
|
|
Net Earnings
|
$2,871
|
$2,606
|
$7,187
|
$7,818
|
|
Distributable Cash
|
$3,183
|
$2,735
|
$9,258
|
$7,874
|
|
Distributions Paid
|
$2,937
|
$2,563
|
$8,500
|
$7,481
|
|
Earnings before Income taxes per Fund Unit (1)
|
$.304
|
$.288
|
$.943
|
$.879
|
|
Earnings per Fund Unit(2)
|
$.296
|
$.288
|
$.943
|
$.879
|
|
Distributable Cash Per Fund Unit (1)
|
$.328
|
$.302
|
$.967
|
$.881
|
|
Distributions Paid Per Fund Unit
|
$.303
|
$.283
|
$.887
|
$.841
|
|
Payout Ratio
|
$92.3%
|
$93.7%
|
$98.1%
|
$95.0%
|
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(1) 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. (2) Net earnings for the three and nine months ended September 30, 2007 reflect the non-cash future tax expense of $75,000 and $1,775,000 respectively relating to the new tax legislation. |
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A copy of the complete financial results will be available at www.sedar.com or on the Fund's website at www.kegincomefund.com.
Vancouver-based Keg Restaurants Ltd. is the leading operator and franchisor of 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. Keg Restaurants Ltd. has been named one of the "50 Best Employers in Canada" for the past five years by the Globe and Mail's Report on Business Magazine.
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 press release.
For further information:
Karyn Byrne, Investor Relations Manager
Tel: (416) 646-4960, karynb@kegrestaurants.com
www.kegincomefund.com
For more information on our brand, visit www.kegsteakhouse.com