The Keg Royalties Income Fund announces second quarter 2004 results

Vancouver, August 16th, 2004 - The Keg Royalties Income Fund (the “Fund”) today reported its second quarter financial results for the three months ended June 30, 2004. Gross sales reported by Keg restaurants, royalty income, earnings and distributable cash all increased from the comparable quarter of the prior year. 

“Total system sales continue to grow and once again reached a new record level for the quarter,” said David Aisenstat, President & CEO of Keg Restaurants Ltd. “We are particularly pleased with the results in our core Canadian market, with both existing and newly opened restaurants performing very well.” Total system sales of Keg Restaurants Ltd. for the 13 weeks ended July 4, 2004 were $77,017,000 compared to $69,436,000 for the 13 weeks ended June 29, 2003, an increase of $7,581,000 or 10.9%. 

The Keg’s same store sales in its core Canadian market increased by 4.1% for the quarter. Same store sales in the United States declined by 3.0% for the quarter due primarily to the closure of lunch operations at three restaurants earlier in the year. Overall, same store sales for the Keg increased by 2.1% 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 U.S. sales into their Canadian dollar equivalent. 

The Fund generated earnings of $2,173,000 (26.7 cents/unit) compared with $2,010,000 (24.6 cents/unit) for the same quarter of the prior year, an increase of $163,000 or 8.1%. Distributable cash available to pay distributions to unitholders increased by $178,000 or 8.7% to $2,213,000 (27.2 cents/unit) from $2,035,000 (24.9 cent/unit) for the second 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. 

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 markets in the United States. In May 2002, Keg Restaurants Ltd. launched The Keg Royalties Income Fund on the Toronto Stock Exchange. This publicly traded trust (KEG.UN-TSX) receives a royalty of 4% of gross sales of all Keg restaurants in the royalty pool. 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. 

For further information: Karyn Byrne, Manager, Investor Relations, tel: (416) 646-4960, karynb@kegrestaurants.com