The Keg Royalties Income Fund Announces Fourth Quarter and 2017 Results

Not for distribution to U.S. News wire services or dissemination in the U.S.

Vancouver – March 6, 2018 – The Keg Royalties Income Fund (the “Fund”) (TSX: KEG.UN) is pleased to announce its financial results for the fourth quarter and the year ended December 31, 2017. Royalty Pool sales, royalty income and distributable cash all increased from the prior year to reach new record levels.

The Royalty Pool sales reported by the 100 Keg restaurants in the Royalty Pool increased by $5,802,000 or 3.9% to $153,639,000 for the fourth quarter, and by $24,018,000 or 4.2% to $600,969,000 for the year. The increase in Royalty Pool sales during the quarter and year to date, reflect the sales of the new Keg restaurant added to the Royalty Pool on January 1, 2017, and same store sales increases of 4.8% for the quarter and 4.7% for the year.

The Keg’s same store sales (sales of restaurants that operated during the entire period of both the current and prior years) increased by 5.1% in Canada and by 6.5% in the United States for the 13-week period ended December 31, 2017. For the 52-week period ended December 31, 2017, same store sales increased by 5.1% in Canada and by 4.3% in the United States. After translating the sales of the U.S. restaurants into their Canadian dollar equivalent, consolidated same store sales increased by 4.8% for the 13-week period and by 4.7% for the 52-week period. The average exchange rate moved from 1.3356 to 1.2710 in the comparable 13-week period, and from 1.3250 to 1.2976 in the comparable 52-week period, significantly reducing the Canadian dollar equivalent of the U.S. restaurant sales.

Royalty income increased by $295,000 or 5.0% from $5,931,000 in the three months ended December 31, 2016 to $6,226,000 in the three months ended December 31, 2017. For the year ended December 31, 2017 royalty income increased by $1,193,000 or 5.2% from $23,101,000 to $24,294,000.

Distributable cash before SIFT tax decreased by $30,000 from $4,053,000 (35.7 cents/Fund unit) to $4,023,000 (35.4 cents/Fund unit) for the quarter and increased by $522,000 from $17,127,000 ($1.509/Fund unit) to $17,649,000 ($1.554/Fund unit) for the year. Distributable cash available to pay distributions to public unitholders decreased by $80,000 from $2,940,000 (25.9 cents/Fund unit) to $2,860,000 (25.2 cents/Fund unit) for the quarter and increased by $322,000 from $12,807,000 ($1.128/Fund unit) to $13,129,000 ($1.156/Fund unit) year to date.

The Fund remains financially well-positioned with cash on hand of $2,490,000 and a positive working capital balance of $2,726,000 as at December 31, 2017. The Fund’s payout ratio was 123.5% for the fourth quarter of 2017 and 98.3% for the year.

“We are very pleased with the financial performance of the Fund during 2017, particularly the increase in cash available for distribution to Fund unitholders,” said David Aisenstat, President and CEO of Keg Restaurants Ltd. “In addition, strong same store sales growth of 4.7% during 2017, helped drive annual Royalty Pool sales over $600,000,000.”

On February 22, 2018 Cara Operations Limited (“Cara”) and Keg Restaurants Ltd (“KRL”) announced the successful completion of their previously announced merger. The Trustees of the Fund would like to confirm that this merger does not in any way involve the operations or the units of the Fund. The Fund will remain in its current form and will continue to receive royalties from Keg restaurants based on the gross sales from Keg restaurants included in the Royalty Pool. There are no changes to the documents or the contractual relationship between the Fund and KRL and/or The Keg Rights Limited Partnership arising out of the completion of the Cara and KRL merger.

Cara and KRL have announced that The Keg restaurants will continue to be run under the leadership of Mr. Aisenstat following the merger and that the Trustees of the Fund will not change as part of the merger.

“The Fund will continue to look out for the unitholders’ interests in the same manner as it did prior to the completion of the transaction between The Keg and Cara,” said Kip Woodward, Chairman of the Fund’s Trustees. “We look forward to maintaining our long-standing relationship with The Keg, and to the continued growth in new store openings and top line, revenue sales growth.”