Vancouver, May 17, 2005 - The Keg Royalties Income Fund (the “Fund”) has released its first quarter report for the three months ended March 31, 2005. Gross sales and same store sales reported by Keg Restaurants, royalty income, earnings and distributable cash all increased from the same period of the prior year.
As previously announced, total system sales of Keg Restaurants Ltd. for the 13 weeks ended April 3, 2005 were $86.9 million compared to $79.8 million for the 13 weeks ended April 4, 2004, an increase of $7.1 million or 8.9%.
The Keg’s same store sales in its core Canadian market increased by 3.2% and The Keg’s U.S. restaurants experienced sales growth of 5.5% for the comparable 13-week period. Total consolidated same store sales for The Keg increased by 1.8% for the quarter, in spite of the continuing negative effect of the exchange rate between the Canadian and U.S. dollars on the translation of the U.S. sales into their Canadian dollar equivalent.
The Fund generated earnings of $2,288,000 (28.1 cents/Fund unit) compared with $2,257,000 (27.7 cents/Fund unit) for the same quarter of the prior year, an increase of $31,000 or 1.4%. Distributable cash available to pay distributions to unitholders increased by $8,000 to $2,294,000 (28.1 cents/Fund unit), from $2,286,000 (28.0 cents/Fund unit) for the first quarter of the prior year. The Fund continues to generate distributions to unitholders in the expected amount of 9 cents per unit per month, or $1.08 per unit on an annual basis.
“We are extremely pleased with our continued performance on all levels,” said David Aisenstat, Keg President & CEO.”
During the quarter, the Fund was obliged to adopt a new guideline of the Canadian Institute of Chartered Accountants referred to as "AcG-15", Consolidation of Variable Interest Entities, which became applicable on January 1, 2005. As a result, the Fund no longer consolidates the results of its subsidiary, The Keg Rights Limited Partnership (the "Partnership"), but instead accounts for its investment in the Partnership on an equity basis. Keg Restaurants Ltd., the operating company which pays the royalty to the Partnership, must now consolidate the Partnership based on this same guideline. This change in accounting policy in no way affects the contractual obligations nor the cash flows between the various entities and therefore, earnings and distributable cash attributable to the Fund's public unitholders are not impacted.
A copy of the complete financial results are available at www.sedar.com or on the Fund’s website 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” by the Globe and Mail's Report on Business Magazine for the past three years.
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 my 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, email@example.com