BURLINGTON, ON, Dec. 19, 2013 /CNW/ - SIR Royalty Income Fund (TSX:
SRV.UN) (the "Fund") today announced that SIR Corp. ("SIR"), the
operating entity from which the Fund earns equity income and interest
income, has filed its financial results for the 12-week period ended
November 17, 2013 ("Q1 FY2014").
SIR has advised the Fund that revenue from corporate restaurant
operations for Q1 FY2014 increased 11.3% to $56.1 million compared to
$50.4 million for the 12-week period ended November 18, 2012 ("Q1
FY2013"). Revenue growth was driven by Same Store Sales Growth(1) ("SSSG") and new restaurants.
Same Store Sales Growth(1)
("SSSG")
|
12-week period ended
November 17, 2013
(unaudited)
|
Jack Astor's®
|
0.5%
|
Canyon Creek®
|
(1.8%)
|
Alice Fazooli's®/Scaddabush Italian Kitchen & BarTM
|
(5.9%)
|
Signature Restaurants
|
22.1%
|
Overall SSSG(1)
|
1.2%
|
Same store sales(1) ("SSS") for Q1 FY2014 increased 1.2% to $50.0 million from $49.4
million in Q1 FY2013. Jack Astor's had SSSG(1) of 0.5% in Q1 FY2014. Canyon Creek and Alice Fazooli's®/Scaddabush
Italian Kitchen & BarTM ("Scaddabush") experienced SSS(1) declines in Q1 FY2014 of 1.8% and 5.9%, respectively. SIR has
initiated a program to evolve the Alice Fazooli's concept. In Q4
FY2013, SIR closed the Alice Fazooli's Square One location in
Mississauga, Ontario for a full renovation, and re-opened the
restaurant on July 23, 2013, as Scaddabush. Scaddabush offers guests a
new, refreshing take on Italian dining. The downtown Toronto Signature
Restaurants had SSSG(1) of 22.1% in Q1 FY2014. SSSG(1) for the Signature Restaurants was positively affected by the renovation
and repositioning of Reds® Wine Tavern and the Loose Moose® in the
first half of fiscal 2013, as well as the patio renovation and
extension at Reds® in Q3 FY2013. SIR's Management continues to focus
on enhancing value and maximizing performance at all of its
restaurants.
SIR's net loss and comprehensive loss for Q1 FY2014 was $11.7 million,
compared to a net loss and comprehensive loss of $2.0 million in Q1
FY2013. The unfavourable variance in net loss and comprehensive loss in
Q1 FY2014 was primarily attributable to the unfavourable change in the
amortized cost of Ordinary LP Units and Class A LP Units of the SIR
Royalty Limited Partnership (the "Partnership") of $11.1 million in Q1
FY2014. The change in the amortized cost is a non-cash transaction and
has no impact on cash flows. SIR's Adjusted Net Loss(2) for Q1 FY2014 totaled $0.6 million, compared to a loss of $1.4 million
in Q1 FY2013. The favourable variance in Adjusted Net Loss(2) was primarily the result of increased earnings from corporate
restaurant operations of $0.8 million and reduced interest (income) and
other expense (income) - net of $0.2 million, offset by increased
corporate costs of $0.2 million.
SIR Corporate Development
During Q1 FY2014, SIR opened Reds® Midtown Tavern at the site of the new
Aura condominium development in downtown Toronto. Subsequent to Q1
FY2014, SIR opened a Duke's Refresher™ & Bar which is also located at
the Aura condominium site. Four restaurants will be added to Royalty
Pooled Restaurants on January 1, 2014, consisting of two new Jack
Astor's restaurants opened during Q3 FY2013, one new Jack Astor's
restaurant opened during Q4 FY2013 and one new Signature restaurant,
Reds Midtown Tavern. During Q1 FY2014, three Jack Astor's restaurants
were renovated. Subsequent to Q1 FY2014, one Jack Astor's restaurant
was renovated.
Liquidity and Capital Resources
As at November 17, 2013, SIR had cash and cash equivalents of $6.7
million compared to $7.7 million as at August 25, 2013 (SIR's fiscal
2013 year-end). Cash provided by operations for Q1 FY2014 totaled $0.07
million, compared to $0.03 million in Q1 FY2013. Investing activities
used cash of $0.2 million in Q1 FY2014, compared to cash used in
investing activities of $3.5 million in Q1 FY2013. Cash used in
investing activities in Q1 FY2014 includes the net cash proceeds
received from restricted funds of $3.0 million related to the
conversion of Class A GP Units to Fund units and their subsequent
sale. The majority of capital expenditures in the period relate to
construction costs incurred for the new Reds Midtown Tavern opened
during Q1 FY2014 and the new Duke's Refresher & Bar that opened
subsequent to Q1 FY2014. SIR also incurred renovation costs for three
Jack Astor's restaurants during Q1 FY2014 and one subsequent to Q1
FY2014.
Outlook
SIR currently has four commitments to lease properties. On one of these
properties, SIR opened Reds Midtown Tavern in Q1 FY2014 and a new
Duke's Refresher & Bar subsequent to Q1 FY2014. One other restaurant
is expected to open on this same property in fiscal 2014. SIR plans to
build three new Jack Astor's restaurants on the other three leased
properties over the remainder of fiscal 2014 and later in fiscal 2015.
One of the new restaurants planned will be a Jack Astor's restaurant in
St. John's, Newfoundland, a new market for SIR.
The Canadian Restaurant and Foodservice Association estimates that total
sales in the full-service category will grow by an average of 4.4% over
the next four years. SIR will continue to focus on sustaining and
growing existing restaurant sales and profits, and strategically
expanding its restaurant portfolio. SIR will carefully monitor economic
conditions and manage its growth and capital expenditures accordingly.
SIR's Q1 FY2014 interim filings, which include its unaudited
consolidated financial statements and management's discussion &
analysis, can be accessed via the Fund's profile on the SEDAR web site
at www.sedar.com under "Other".
About SIR Corp.
SIR is a privately held Canadian corporation that owns and operates a
portfolio of 56 restaurants in Canada. SIR's Concept brands include:
Jack Astor's Bar and Grill®, with 37 locations; Alice Fazooli's®
together with Scaddabush Italian Kitchen & Bar™, for a total of 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, Reds® Midtown Tavern, Far
Niente®/FOUR®/Petit Four®, The Loose Moose® and Duke's Refresher™ &
Bar. All trademarks related to the Concept and Signature brands noted
above are used by SIR under a License and Royalty Agreement with the
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 Bake House™ and Duke's
Refresher™, which 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 Partnership and
interest income from the SIR Loan. The Fund intends to pay
distributions to unitholders on a monthly basis.
(1) Same store sales ("SSS") includes revenue from all SIR restaurants
except for those restaurants that were not open for the entire
comparable period. Same store sales growth ("SSSG") is the percentage
increase in SSS over the prior comparable period. SSS and SSSG are
non-GAAP financial measures and do not have standardized meanings
prescribed by International Financial Reporting Standards (IFRS).
However, SIR believes that SSS and SSSG are useful measures and provide
investors with an indication of the change in year-over-year sales.
SIR'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 does not include the seasonal Duke's
Refresher or Abbey's Bake House located in Muskoka, Ontario. SSS for
Alice Fazooli's includes three Alice Fazooli's restaurants and one
Scaddabush Italian Kitchen & Bar restaurant, representing the Square
One location in Mississauga, Ontario, which was renovated and re-opened
as Scaddabush on July 23, 2013.
(2) Adjusted Net Earnings (Loss) consist of net earnings (loss) and
comprehensive income (loss) excluding the change in amortized cost of
Ordinary LP Units and Class A LP Units of the Partnership. Adjusted
Net Earnings (Loss) is a financial measure that does not have a
standardized meaning prescribed by IFRS. However, SIR believes that
Adjusted Net Earnings (Loss) is a useful estimate of the core business'
contribution to cash flow from operations and uses this measure as a
supplemental measure of SIR's performance.
Adjusted Net Earnings for Q1 FY2014 is calculated as net loss and
comprehensive loss for the period of $11.7 million plus the change in
amortized cost of Ordinary LP Units and Class A LP Units of the
Partnership of $11.1 million. Adjusted Net Earnings for Q1 FY2013 is
calculated as net loss and comprehensive loss for the period of $2.0
million plus the change in amortized cost of Ordinary LP Units and
Class A LP Units of the Partnership of $0.6 million.
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