Boston Pizza Royalties Income Fund Announces Strong SSSG and Record Franchise Sales for Q4 and 2011
Trustees Announce January Distribution to Unitholders of 9.2 Cents per Unit
(firmenpresse) - VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 02/09/12 -- Boston Pizza Royalties Income Fund (the "Fund") (TSX: BPF.UN) and Boston Pizza International Inc. ("BPI") each reported today financial results for the period from October 1, 2011 to December 31, 2011 (the "Period") and from January 1, 2011 to December 31, 2011 (the "Year"). A copy of this press release, the annual consolidated financial statements for the Year and related Management's Discussion and Analysis of the Fund and BPI are available at and . The financial results below are reported in accordance with International Financial Reporting Standards ("IFRS") and as a result are not directly comparable to those figures contained within historical financial statements of the Fund that were prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). The Fund will host a conference call to discuss the results on February 9, 2012 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time). The call can be accessed by dialling 1-800-319-4610 or 604-638-5340. A replay will be available until March 8, 2012 by dialling 1-800-319-6413 or 604-638-9010 and entering the pin code: 4452 followed by the # sign.
Same store sales growth ("SSSG"), a key driver of distribution growth for unitholders of the Fund, was positive 6.4% for the Period and positive 4.9% for the Year, compared to positive 1.3% and negative 1.3%, respectively, for the same periods in 2010. Franchise sales, the basis upon which royalties are paid by the franchisees to BPI, exclude revenue from the sale of liquor, beer, wine and tobacco and approved national promotions and discounts. On a franchise sales basis, SSSG was positive 5.8% for the Period and positive 4.9% for the Year, compared to positive 2.6% and negative 0.7%, respectively, for the same periods in 2010. The increases in SSSG for the Period and the Year were principally due to higher takeout and delivery sales resulting from continued promotion of Boston Pizza's online ordering system and higher sales of the new chicken wing product that was launched in early 2011 through successful national television, radio and online ad campaigns. Other key sales initiatives in the Period included a "Festive Favourites" menu feature sheet in December, and the sale of Boston Pizza Gift Cards throughout the fourth quarter. Franchise sales of restaurants in the royalty pool were a record $177.5 million for the Period and a record $699.3 million for the Year compared to $166.2 million and $663.8 million, respectively, in the same periods in 2010. The increases in franchise sales for the Period and Year are largely attributed to positive SSSG.
"We are very pleased with the strong same store sales growth of 6.4% in the fourth quarter and 4.9% in 2011. This is a key metric with respect to distribution growth for Boston Pizza Royalties Income Fund and our steady top line growth has enabled the fund to increase monthly distributions to unitholders a total of 14 times since the initial public offering in 2002," said Mark Pacinda, President and CEO of BPI. "In addition, Boston Pizza International opened seven new full service locations in 2011 and posted record annual system-wide sales which exceeded $900 million from 343 locations, further expanding Boston Pizza's position as Canada's #1 casual dining brand."
The Fund's net income was $0.3 million for the Period and $15.6 million for the Year compared to a loss of $1.8 million and a loss of $0.2 million, respectively, in the same periods in 2010. The Fund's net income under IFRS contains many non-cash items that do not affect the Fund's operations or its ability to pay distributions to unitholders. As such, it is not in the Fund's view, the only or most meaningful measurement of the Fund's ability to pay distributions. Consequently, the Fund has provided the non-IFRS metrics of distributable cash and payout ratio (as set forth in the tables contained herein) to provide investors with more meaningful information about the Fund's ability to pay distributions. Readers are cautioned that distributable cash and payout ratio are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. For reconciliation between cash flow from operating activities (the most directly comparable IFRS measure) and distributable cash, please see the table below. For a detailed discussion on the Fund's distributable cash and payout ratio, please refer to the Management's Discussion and Analysis for the Period and the Year as filed on SEDAR and posted on the Fund's website at .
The Fund's distributable cash was $4.1 million or $0.281 per unit of the Fund ("Unit") for the Period and $16.1 million or $1.104 per Unit for the Year compared to $5.0 million or $0.345 per Unit and $20.5 million or $1.413 per Unit for the same periods, respectively, in 2010. The decreases in distributable cash and distributable cash per Unit for the Period and the Year are a result of the Fund becoming taxable under the specified investment flow through tax ("SIFT Tax") beginning on January 1, 2011. For comparative purposes, if the Fund was not liable to pay SIFT Tax in respect of the Period and Year, distributable cash for the Period and Year would have been $5.5 million or $0.377 per Unit and $21.6 million or $1.480 per Unit, respectively. As a result of the SIFT Tax, the Fund pays tax at a rate approximately equal to the rate applicable to income earned by a Canadian corporation, and is prevented from deducting trust distributions when calculating taxable income. The SIFT Tax rate was 26.5% in 2011 and is anticipated to be 25.0% for 2012. The Fund's liability to pay SIFT Tax reduces the amount available for distributions to unitholders. The SIFT Tax also recharacterizes such distributions as eligible dividends received from a Canadian corporation for individual tax purposes. Eligible dividend treatment for distributions to unitholders will generally be beneficial to Canadian resident investors holding their Units in taxable accounts compared to the previous characterization primarily as other income because of the potential for individuals to claim a dividend tax credit. Distributions for the Period and the Year were funded entirely by cash flow from operations. No debt was incurred at any point during the Period or the Year to fund distributions. The table below sets out the Fund's distributable cash and distributable cash per Unit for the Period and Year along with comparable figures for the same periods one year ago.
The Fund's payout ratio (amount distributed divided by distributable cash) was 98.3% for the Period and 95.7% for the Year compared to 100.0% and 98.1%, respectively, in the same periods one year ago. The Fund's payout ratio for the Period and for the Year decreased compared to the same periods one year ago primarily due to the impact of positive SSSG partially offset by the distribution increase beginning with the July 2011 distribution to unitholders. A key feature of the Fund is that it is a "top line" structure, in which BPI pays the Fund a royalty equal to 4% of franchise sales from restaurants in the Fund's royalty pool. Accordingly, Fund unitholders are not directly exposed to changes in the operating costs or profitability of BPI or of individual Boston Pizza restaurants. Given this structure, and that the Fund has no current mandate to retain capital for other purposes, it is expected that the Fund will maintain a payout ratio close to 100% over time as the trustees of the Fund continue to distribute all available cash in order to maximize returns to unitholders.
The trustees of the Fund announced a cash distribution to unitholders of 9.2 cents per Unit for January 2012. The distribution will be payable to unitholders of record at the close of business on February 21, 2012 and will be paid on February 29, 2012. The Fund periodically reviews distribution levels based on its policy of stable and sustainable distribution flow to unitholders.
HIGHLIGHTS
The tables below sets out selected information from the annual consolidated financial statements of the Fund, which consolidates the accounts of the Boston Pizza Royalties Limited Partnership's (the "Partnership"), together with other data and should be read in conjunction with the annual consolidated financial statements of the Fund.
Adoption of IFRS:
The Fund adopted IFRS on January 1, 2011 and the financial results disclosed in this press release for all periods commencing on or after January 1, 2010 have all been prepared in accordance with IFRS. Readers are advised that the Fund's transition to reporting its financial results in accordance with IFRS from Canadian GAAP, including consolidating the Partnership accounts with the Fund, has had no impact, nor is it expected to have any future impact, on the operations of the Fund's business, the amount of cash that is available to distribute to unitholders or the contractual obligations between the Fund, the Partnership, BPI or any third parties. However, it has impacted the presentation of certain key financial metrics of the Fund and BPI. The comparative financial results contained in this press release for periods in 2010 have been restated to conform to IFRS. Readers are cautioned that they should refer to the annual consolidated financial statements of the Fund for a full description of the impact of IFRS on the Fund's financial results, copies of which are available at and .
OUTLOOK
The Canadian Restaurant and Foodservices Association has forecast sales growth of 3.0% for the Canadian full-service restaurant sector in 2012. BPI's management believes that Boston Pizza is well positioned to continue outperforming this growth rate by attracting a wide variety of guests into the restaurant, sports bar and take-out/delivery parts of each location, offering a compelling value proposition to our guests and continuing to open new Boston Pizza locations across Canada.
The two principal factors that affect SSSG are changes in customer traffic and changes in average guest cheque. BPI's strategies to drive higher guest traffic include a larger marketing budget versus the previous year along with a revised calendar of national and local store promotions. Increased average cheque levels will be achieved through a combination of menu design and annual re-pricing. In addition, BPI's franchise agreement requires that each Boston Pizza restaurant undergo a complete store renovation every seven years and four locations have already completed renovations in 2012 with many more underway or planned for later this year. Restaurants typically close for two to three weeks to complete the renovation and experience an incremental sales increase in the year following the re-opening.
Boston Pizza remains well positioned for future expansion as evidenced by the seven new Boston Pizza restaurants that opened in 2011. Another new Boston Pizza restaurant has opened to date in 2012 and one more is currently under construction and scheduled to open in March 2012. BPI's management believe that Boston Pizza will continue to strengthen its position as the number one casual dining brand in Canada by pursuing further restaurant development opportunities across the country.
Certain information in this press release may constitute "forward-looking information" that involves known and unknown risks, uncertainties, future expectations and other factors which may cause the actual results, performance or achievements of the Fund, Boston Pizza Holdings Trust, the Partnership, Boston Pizza Holdings Limited Partnership, Boston Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, Boston Pizza restaurants, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. When used in this press release, forward-looking information may include words such as "anticipate", "estimate", "may", "will", "expect", "believe", "plan" and other similar terminology. This information reflects current expectations regarding future events and operating performance and speaks only as of the date of this press release. Except as required by law, the Fund and BPI assume no obligation to update previously disclosed forward-looking information.
For a complete list of the risks associated with forward-looking information and our business, please refer to the "Risks and Uncertainties" and "Note Regarding Forward-Looking Information" sections included in the Fund's most recent Management's Discussion and Analysis for the Period available at and . The trustees of the Fund have approved the contents of this press release.
Contacts:
Boston Pizza Royalties Income Fund
Jordan Holm
Vice President of Investor Relations
604-303-6083
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Datum: 09.02.2012 - 16:00 Uhr
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