BURLINGTON, ON, May 13, 2013 /CNW/ - SIR Royalty Income Fund (TSX:
SRV.UN) (the "Fund") today reported its financial results for the
three-month period ended March 31, 2013 ("Q1 2013"). The Fund also
announced an 8.0% increase to cash distributions, raising its monthly
unitholder distributions from $0.088 per unit to $0.095 per unit,
representing an estimated annualized distribution of $1.140 per unit.
The increase will be effective for the Fund's monthly cash distribution
to be paid in June 2013.
All comparisons in the following summary of the Fund's Q1 2013 financial
results are to the corresponding period in the prior fiscal year.
Percentage calculations are based on the numbers in the financial
statements and may not correspond to rounded figures presented in this
release.
Q1 2013 Summary
-
Net earnings for the Fund were $1.5 million in Q1 2013, or $0.24 per
Fund unit, as compared to $1.4 million, or $0.26 per Fund unit, in Q1
2012;
-
Pooled Revenue increased 5.0% to $54.7 million in Q1 2013 from $52.1
million in Q1 2012;
-
Same Store Sales (SSS)(1) declined 2.2% for Royalty Pooled Restaurants;
-
Distributable cash(2) per Fund unit (basic and diluted) was $0.26 in Q1 2013, representing a
payout ratio(2) of 123.1%(3) for Q1 2013;
-
On January 11, 2013, a special cash distribution of $0.05 per unit was
paid to unitholders of record as at the close of business on December
31, 2012; this special cash distribution which was paid in Q1 2013
significantly affected the payout ratio for Q1 2013;
-
Effective January 1, 2013, four new Jack Astor's restaurants were added
to Royalty Pooled Restaurants and two permanently closed restaurants
were removed from Royalty Pooled Restaurants;
-
During Q1 2013, SIR Corp. ("SIR") opened a new Jack Astor's restaurant
in Kitchener, Ontario;
-
During Q1 2013, SIR completed renovations of the Loose Moose Tap & Grill
and one Jack Astor's restaurant;
-
On March 14, 2013, the Fund issued 895,000 Fund units in exchange for
Class A GP units of the SIR Royalty Limited Partnership (the
"Partnership") held by SIR. SIR sold these units generating gross
proceeds of approximately $11.0 million, which must be used to fund new
restaurant construction and existing restaurant renovations.
"We remain focused on enhancing the performance of our Concept and
Signature restaurant brands and driving growth of Pooled Revenue. In
the quarter, we added four new Jack Astor's restaurants to Royalty
Pooled Restaurants and completed renovations to the Loose Moose Tap &
Grill and one Jack Astor's restaurant. To date in 2013, we have opened
two new Jack Astor's in Ontario. The first quarter of 2013 was also the
first full quarter of operation for Reds Wine Tavern, and we are
pleased by our customers' favourable response to this core Signature
group brand," said Peter Fowler, President and CEO of SIR Corp.
"Supported by our continued efforts to enhance the performance of
Royalty Pooled Restaurants, we are pleased to announce an 8.0% increase to the Fund's monthly cash distributions, effective for the
distribution to be paid in June. On an estimated annualized basis, this
represents an increase from $1.056 per unit to $1.140 per unit. This
represents the Fund's fifth distribution increase since inception in
2004."
"Looking ahead, we will continue to focus on building value for Fund
unitholders through new restaurant openings and renovations, as market
conditions permit, and in maintaining a constant focus on innovation
and strengthening our restaurant brands," continued Mr. Fowler. "We
expect to open four additional restaurants in the remainder of 2013,
including a new Jack Astor's in Pickering, Ontario. The other three new
restaurants are planned for a large condominium development at Yonge
and Gerrard Streets in downtown Toronto."
Financial Results
($000s except restaurants and per Unit amounts) (unaudited)
|
|
Three-month period ended March 31, 2013
|
Three-month
period ended March 31, 2012
|
|
|
|
|
Royalty Pooled Restaurants
|
|
49
|
47
|
Pooled Revenue generated by SIR
|
|
54,699
|
52,076
|
|
|
|
|
Royalty income to Partnership -
6% of Pooled Revenue
|
|
3,282
|
3,125
|
Make-Whole Payment(4) |
|
-
|
62
|
Partnership other income
|
|
10
|
11
|
Partnership expenses
|
|
(28)
|
(12)
|
Partnership earnings
|
|
3,264
|
3,186
|
|
|
|
|
SIR Corp.'s interest
(Class A, B, and C GP Units)
|
|
(1,779)
|
(1,934)
|
|
|
|
|
Partnership income allocated to Fund
|
|
1,485
|
1,252
|
Interest income
|
|
750
|
750
|
|
|
|
|
Total income of the Fund
|
|
2,235
|
2,002
|
General & administrative
expenses
|
|
(112)
|
(86)
|
|
|
|
|
Net earnings before income taxes of the Fund
|
|
2,123
|
1,916
|
Income tax expense
|
|
(662)
|
(515)
|
|
|
|
|
Net earnings for the period
|
|
1,461
|
1,401
|
Earnings per Fund Unit
(basic and diluted)
|
|
$0.24
|
$0.26
|
Pooled Revenue increased 5.0% to $54.7 million in Q1 2013 from $52.1
million in Q1 2012. As at March 31, 2013, there were 49 restaurants
included in Royalty Pooled Restaurants.
The Fund's net earnings for Q1 2013 totaled $1.5 million, or $0.24 per
Fund Unit (basic and diluted), compared with $1.4 million, or $0.26 per
Fund Unit (basic and diluted) for Q1 2012.
Distributable cash(2) for Q1 2013 totaled $1.6 million or $0.26 per Fund Unit (basic and diluted), and distributions to
Unitholders totaled $1.9 million, representing a payout ratio(2) of 123.1% for the period. The payout ratio(2) was significantly affected by the special year-end distribution of
$0.05 per unit that was declared in December 2012, and paid on January
11, 2013. The Fund's payout ratio(2) is intended to average 100% per annum. The payout ratio(2) since the Fund's inception, up to and including Q1 2013, is 99.1%.
Distributable Cash(2)
The following table reconciles the relationship between cash provided by
(used in) operating activities and distributable cash(2):
|
|
|
(in thousands of dollars except per Unit amounts and payout ratio(2)) (unaudited)
|
Three-month period ended March 31, 2013
|
Three-month
period ended March 31, 2012
|
Cash provided by (used in) operating
activities
|
1,691
|
(717)
|
Add/(deduct):
Net change in non-cash working
capital items
|
(112)
|
(200)
|
|
|
|
Net change in income tax payable
|
(25)
|
2,175
|
|
|
|
Net change in distribution receivable
from the Partnership
|
10
|
154
|
Distributable cash(2) |
1,564
|
1,412
|
Cash distributed for the period
|
1,925(3) |
1,334
|
Surplus/(shortfall) of distributable cash(2) |
(361)
|
78
|
Payout ratio(2)
|
123.1%(3) |
94.4%
|
Distributable cash(2) per Fund Unit
(basic and diluted)
|
$0.26
|
$0.26
|
Same Store Sales (SSS)(1)
SSSG(1) for Royalty Pooled Restaurants
|
Three-month period ended March 31, 2013
|
Three-month
period ended March 31, 2012
|
|
|
|
Jack Astor's® |
(0.6%)
|
10.7%
|
Canyon Creek® |
(8.2%)
|
1.6%
|
Alice Fazooli's® |
(10.6%)
|
1.0%
|
Signature Restaurants
|
1.8%
|
(1.1%)
|
Overall SSSG(1) |
(2.2%)
|
7.5%
|
Overall SSS(1) in Q1 2013 were negatively affected due to one less day of sales as
compared to Q1 2012, which included one extra day of sales due to 2012
being a leap year, as well as exceptionally favourable weather in the
comparable period. Jack Astor's, which accounted for approximately 74%
of Pooled Revenue in Q1 2013, experienced a SSS(1) decline of 0.6% in Q1 2013, compared to a strong first quarter a year
ago. The Signature Restaurants generated Same Store Sales Growth (SSSG)(1) of 1.8% in Q1 2013. Canyon Creek and Alice Fazooli's reported declines
in SSS(1) of 8.2% and 10.6%, respectively, in Q1 2013. SIR's Management is
committed to maximizing the performance of all of its restaurants and
continues to review initiatives to enhance value at both of the Alice
Fazooli's and Canyon Creek concepts.
Corporate Developments
In Q1 2013, SIR completed a renovation of the Loose Moose Tap & Grill
and one Jack Astor's restaurant. There were no significant restaurant
renovations in Q1 2012.
On March 4, 2013, SIR opened a new Jack Astor's restaurant in Kitchener,
Ontario, which will be added to Royalty Pooled Restaurants on January
1, 2014.
In fiscal 2012, SIR opened three new Jack Astor's restaurants, one in
Toronto, Ontario, one in Laval, Quebec and one in Kingston Ontario.
These three restaurants, along with a Jack Astor's located in
Mississauga, Ontario that opened in Q4 2011, were added to Royalty
Pooled Restaurants on January 1, 2013.
On March 14, 2013, the Fund issued 895,000 Fund units. The Fund units
were issued in exchange for Class A GP Units held by SIR. The Fund
units were subsequently sold by SIR resulting in gross proceeds of
approximately $11.0 million. The Fund then converted the Class A GP
Units into Class A LP Units of the Partnership, which are entitled to a
pro rata share of the residual income of the Partnership. As the
Fund's ownership in the Partnership has increased, the transaction did
not have a dilutive effect on the Fund unitholders. As at March 31,
2013, SIR retained a 24.4% interest in the Partnership.
Outlook
SIR Management will continue to monitor economic conditions and consumer
confidence and has advised the Fund that it is considering new store
growth where appropriate. Based on its assessment of these conditions,
the timing of restaurant construction and opening schedules will be
reviewed regularly by SIR Management and adjusted as necessary.
Over the remainder of 2013, SIR expects to open four more restaurants,
including one Jack Astor's, to be located in Pickering, Ontario. The
other three new restaurants are planned for one of the largest
condominium developments in Canada, located at Yonge and Gerrard
Streets in Toronto. SIR also expects to open one new Jack Astor's
restaurant in Ottawa, Ontario in 2014.
The Fund's unaudited consolidated Financial Statements and Management's
Discussion & Analysis ("MD&A"), and the SIR Royalty Limited
Partnership's Financial Statements, for the three-month period ended
March 31, 2013, will be filed on SEDAR today and will be available via
the SEDAR web site at www.sedar.com and SIR's website at www.sircorp.com tomorrow.
(1) Same store sales ("SSS") and same store sales growth ("SSSG") are
non-GAAP financial measures and do not have standardized meanings
prescribed by IFRS. However, the Fund believes that SSS and SSSG are
useful measures and provide investors with an indication of the change
in year-over-year sales. The Fund's method of calculating SSS and SSSG
may differ from those of other issuers and, accordingly, SSS and SSSG
may not be comparable to measures used by other issuers. SSS includes
revenue from all SIR Restaurants included in Pooled Revenue except for
those locations that were not open for the entire comparable periods in
fiscal 2013 and fiscal 2012.
(2) Distributable cash and payout ratio are non-GAAP financial measures
and do not have standardized meanings prescribed by IFRS. However, the
Fund believes that distributable cash and the payout ratio are useful
measures as they provide investors with an indication of cash available
for distribution. The Fund's method of calculating distributable cash
and the payout ratio may differ from that of other issuers and,
accordingly, distributable cash and the payout ratio may not be
comparable to measures used by other issuers. Investors are cautioned
that distributable cash and the payout ratio should not be construed as
an alternative to the statement of cash flows as a measure of liquidity
and cash flows of the Fund. The payout ratio is calculated as cash
distributed for the period as a percentage of the distributable cash
for the period. Distributable cash represents the amount of money
which the Fund expects to have available for distribution to
Unitholders of the Fund, and is calculated as cash provided by
operating activities of the Fund, adjusted for the net change in
non-cash working capital items including a reserve for income taxes
payable and the net change in the distribution receivable from the SIR
Royalty Limited Partnership. For a detailed explanation of how the
Fund's distributable cash is calculated, please refer to the Fund's
MD&A for the three-month period ended March 31, 2013, which can be
accessed via the SEDAR web site (www.sedar.com).
(3) Cash distributed to Unitholders for the three-month period ended
March 31, 2013 includes the special year-end distribution of $0.05 per
unit or $0.3 million that was declared in December 2012 and paid on
January 11, 2013. The payout ratio for the three-month period ended
March 31, 2013 was significantly affected by the special year-end
distribution.
(4) The Alice Fazooli's restaurant in Toronto and the Jack Astor's
restaurant in Kitchener, Ontario were closed on January 27, 2012 and
February 13, 2012, respectively. Under the terms of the License and
Royalty Agreement, SIR was required to pay a Make-Whole Payment for
these locations from their dates of closure until December 31, 2012.
About SIR Corp.
SIR is a privately held Canadian corporation that owns and operates a
portfolio of 53 restaurants in Canada. SIR's Concept brands include:
Jack Astor's Bar and Grill®, with 36 locations; Alice Fazooli's®, with
four locations; and Canyon Creek Chop House®, with eight locations. SIR
also operates one-of-a-kind "Signature" brands in downtown Toronto,
which comprise the upscale Reds® Wine Tavern, Far Niente®/FOUR®/Petit
Four®, and the Loose Moose Tap & Grill®. All trademarks related to the
Concept and Signature brands noted above are used by SIR under a
License and Royalty Agreement with SIR Royalty Limited Partnership in
consideration for a Royalty, payable by SIR to the Partnership, equal
to six percent of the revenue of the 49 restaurants currently included
in the Royalty pool. SIR also owns and operates two seasonal Signature
restaurants: Abbey's Bakehouse™ and Duke's Refresher™. These two
restaurants are not currently part of the Royalty pool. For more
information on SIR Corp. or the SIR Royalty Income Fund, please visit www.sircorp.com.
About SIR Royalty Income Fund
The Fund is a trust governed by the laws of the province of Ontario that
receives distribution income from its investment in the SIR Royalty
Limited Partnership and interest income from the SIR Loan. The Fund
intends to pay distributions to unitholders on a monthly basis.
Caution concerning forward-looking statements
Certain statements contained in this report, or incorporated herein by
reference, including the information set forth as to the future
financial or operating performance of the Fund or SIR, that are not
current or historical factual statements may constitute forward-looking
information within the meaning of applicable securities laws
("forward-looking statements"). Statements concerning the objectives,
goals, strategies, intentions, plans, beliefs, expectations and
estimates, and the business, operations, financial performance and
condition of the Fund, the SIR Holdings Trust (the "Trust"), the
Partnership, SIR, the SIR Restaurants or industry results, are
forward-looking statements. The words "may", "will", "would", "expect",
"believe", "plan", "anticipate", "intend", "estimate" and other similar
terminology and the negative of such expressions are intended to
identify forward-looking statements, although not all forward-looking
statements contain these identifying words. Forward-looking statements
involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of Fund, the
Trust, the Partnership, SIR, the SIR Restaurants or industry results,
to differ materially from the anticipated results, performance,
achievements or developments expressed or implied by such
forward-looking statements. These statements reflect Management's
current expectations, estimates and projections regarding future events
and operating performance and speak only as of the date of this
document. Readers should not place undue importance on forward-looking
statements and should not rely upon this information as of any other
date. Risks related to forward-looking statements include, among other
things, challenges presented by a number of factors, including:
competition; changes in demographic trends; changing consumer
preferences and discretionary spending patterns; changes in consumer
confidence; changes in national and local business and economic
conditions; changes in availability of credit; legal proceedings and
challenges to intellectual property rights; dependence of the Fund on
the financial condition of SIR; legislation and governmental
regulation; accounting policies and practices; and the results of
operations and financial condition of SIR. The foregoing list of
factors is not exhaustive. Many of these issues can affect the Fund's
or SIR's actual results and could cause their actual results to differ
materially from those expressed or implied in any forward-looking
statements made by, or on behalf of, the Fund or SIR. Given these
uncertainties, readers are cautioned that forward-looking statements
are not guarantees of future performance, and should not place undue
reliance on them. The Fund and SIR expressly disclaim any obligation or
undertaking to publicly release any updates or revisions to any forward
looking statements. Forward-looking statements are based on
Management's current plans, estimates, projections, beliefs and
opinions, and the Fund and SIR do not undertake any obligation to
update forward-looking statements should assumptions related to these
plans, estimates, projections, beliefs and opinions change, except as
expressly required by applicable securities laws.
In formulating the forward-looking statements contained herein,
Management has assumed that business and economic conditions affecting
SIR's restaurants and the Fund will continue substantially in the
ordinary course, including without limitation with respect to general
industry conditions, competition, general levels of economic activity
(including in downtown Toronto), regulations (including those regarding
employees, food safety, tobacco and alcohol), weather, taxes, foreign
exchange rates and interest rates, that there will be no pandemics or
other material outbreaks of disease or safety issues affecting humans
or animals or food products, and that there will be no unplanned
material changes in its facilities, equipment, customer and employee
relations, or credit arrangements. These assumptions, although
considered reasonable by Management at the time of preparation, may
prove to be incorrect. In particular, Management has assumed that the
tax effects on distributions will remain consistent with current
regulations or pronouncements, and also in estimating the revenue for
new restaurants, Management has assumed that they will operate
consistent with other similar SIR restaurants. For more information
concerning the Fund's risks and uncertainties, please refer to the
March 28, 2013 Annual Information Form, for the period ended December
31, 2012, which is available under the Fund's profile at www.sedar.com.
All of the forward-looking statements made in this report are qualified
by these cautionary statements and other cautionary statements or
factors contained herein, and there can be no assurance that the actual
results or developments will be realized or, even if substantially
realized, that they will have the expected consequences to, or effects
on, the Fund or SIR.
SOURCE: SIR Royalty Income Fund