The Keg Royalties Income Fund Announces Year End Results

Vancouver – February 21, 2017 – The Keg Royalties Income Fund (TSX: KEG.UN, the “Fund”) has reported record financial results for the quarter and year ended December 31, 2016.

The Royalty Pool sales reported by the 100 Keg restaurants in the Royalty Pool decreased by $6,691,000 or 4.3% to $147,837,000 during the quarter and increased by $2,903,000 or 0.5% to $576,951,000 for the year. The decrease in Royalty Pool sales was entirely due to the loss of an extra week of sales included in both the quarter and the 2015 fiscal year, which resulted from KRL’s floating year-end date which occurs approximately every five years.

After deducting the additional week of sales included in the fourth quarter of the prior year for comparative purposes, The Keg’s same store sales (sales of restaurants that operated during the comparable 13-week periods of both the current and prior years) increased by 0.2% in Canada and decreased by 2.0% in the United States. For the comparable 52-week periods, same store sales increased by 1.3% in Canada and by 0.7% in the United States. After translating the sales of the U.S. restaurants into their Canadian dollar equivalent, consolidated same store sales were essentially flat for the comparable 13-week period and increased by 1.5% for the comparable 52-week period. The average exchange rate moved from 1.3372 to 1.3356 in the comparable 13-week period, slightly decreasing the Canadian dollar equivalent of the U.S. restaurant sales, and from 1.2816 to 1.3250 in the comparable 52-week period, significantly increasing the Canadian dollar equivalent of the U.S. restaurant sales.

Royalty income decreased by $456,000 or 7.1% from $6,387,000 in the three months ended December 31, 2015 to $5,931,000 in the three months ended December 31, 2016. For the year ended December 31, 2016 royalty income decreased by $150,000 or 0.6% from $23,251,000 to $23,101,000. The loss of the extra week of sales included in the fourth quarter of the prior year negatively impacted royalty income by approximately $410,000 in both the comparable quarter and for the year.

Distributable cash before SIFT tax decreased by $230,000 from $4,283,000 (37.7 cents/Fund unit) to $4,053,000 (35.7 cents/Fund unit) for the quarter and increased by $446,000 from $16,681,000 ($1.469/Fund unit) to $17,127,000 ($1.509/Fund unit) for the year. Distributable cash available to pay distributions to public unitholders decreased by $122,000 from $3,062,000 (27.0 cents/Fund unit) to $2,940,000 (25.9 cents/Fund unit) for the quarter and increased by $511,000 from $12,296,000 ($1.083/Fund unit) to $12,807,000 ($1.128/Fund unit) for the year.

Distributions of $3,127,000 (27.5 cents/Fund unit) were paid to Fund unitholders during the fourth quarter of 2016, and a special distribution declared of $341,000 (3.0 cents/Fund unit), as compared with $2,946,000 (25.9 cents/Fund unit) paid during the fourth quarter of 2015 and a special distribution declared of $795,000 (7.0 cents/Fund unit). During 2016, distributions of $12,250,000 ($1.080/Fund unit) were paid to Fund unitholders (excluding the $341,000 special distribution declared in the fourth quarter of 2016) versus $11,365,000 ($1.001/Fund unit) during 2015 (excluding the $795,000 special distribution declared in the fourth quarter of 2015). The payout ratio was 118.0% for the fourth quarter of the current year and 98.3% for fiscal 2016.

The Fund remains financially well positioned with cash on hand of $1,990,000, and a positive working capital balance of $2,449,000 as at December 31, 2016.
“We are satisfied with the financial results of the Fund for the 2016 year” said David Aisenstat, President & CEO of Keg Restaurants Ltd. “Despite having one week less of sales included in this year’s financial results compared to last year and despite persistent challenges in the oil-producing provinces, we still managed to significantly increase cash available for distribution to the Fund’s unitholders.”

F I N A N C I A L  H I G H L I G H T S