Boston Pizza Royalties Income Fund Declares 9.5% Increase to Monthly Cash Distributions and Announces Second Quarter Results
Positive Same Store Sales Growth of 5.8% in Q2 Leads to Higher Monthly Distribution Amount
(firmenpresse) - VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 08/10/11 -- Boston Pizza Royalties Income Fund (TSX: BPF.UN) (the "Fund") and Boston Pizza International Inc. ("BPI") each reported today financial results for the period from April 1, 2011 to June 30, 2011 (the "Period") and from January 1, 2011 to June 30, 2011 ("YTD"). A copy of this press release and the consolidated interim financial statements of the Fund and BPI for the Period 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") before the adoption of IFRS. The Fund will host a conference call to discuss the results on August 10, 2011 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 September 10, 2011 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 yield growth for unitholders of the Fund, was positive 5.8% for the Period and positive 3.6% YTD, compared to negative 1.1% and negative 3.3%, respectively, in the same periods one year ago. On a franchise sales basis, SSSG for the Period was positive 5.8% and positive 4.0% YTD, compared to negative 1.8% and negative 3.0%, respectively, for the same periods one year ago. The increases in SSSG for the Period and YTD were principally due to higher take out and delivery sales resulting from a recent national marketing campaign which promoted the launch of Boston Pizza's online ordering system and a successful new chicken wing promotion that ran across Canada during April and May of 2011. Franchise sales of restaurants in the royalty pool were $175.6 million for the Period and $338.7 million YTD compared to $166.0 million and $326.4 million, respectively, in the same periods in 2010. The increases in Franchise sales for the Period and YTD are largely attributed to positive SSSG.
"During the second quarter, Boston Pizza continued to grow same store sales, open new locations and expand our position as Canada's #1 casual dining brand," said Mark Pacinda, President and CEO of BPI. "As a result of this strong operating performance, along with the accretive benefit from our previous unit buy back activities, the trustees have approved an increase to the level of monthly distributions to unitholders to 9.2 cents per unit from the previous level of 8.4 cents per unit beginning with the July distribution to be paid in August 2011. This increase of 9.5% is the largest single increase in the history of the Fund and marks the fourteenth time that the monthly distribution level has been increased since the Fund's initial public offering in 2002, a remarkable record of stability and growth over that time."
The Fund's distributable cash was $4.1 million or $0.280 per unit for the Period and $7.8 million or $0.538 per unit YTD compared to $5.2 million or $0.350 per unit and $10.1 million or $0.699 per unit for the same periods, respectively, one year ago. The decreases in distributable cash and distributable cash per unit 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 YTD, distributable cash for the Period and YTD would have been $5.5 million or $0.374 per unit and $10.4 million or $0.718 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 is 26.5% in 2011 and anticipated to be 25.0% for 2012 and beyond. 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 YTD were funded entirely by cash flow from operations. No debt was incurred at any point during the Period to fund distributions. The table below sets out the Fund's distributable cash and distributable cash per unit for the Period and YTD along with comparable figures for the same periods one year ago.
The Fund's payout ratio was 89.9% for the Period and 93.8% YTD compared to 98.0% and 99.6%, respectively, in the same periods one year ago. 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 continue to distribute all available cash in order to maximize returns to unitholders.
The Fund's net income was $6.9 million for the Period and $9.8 million YTD compared to $1.4 million and $5.1 million, respectively, in the same periods one year ago. 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 table below) 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 net income 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 as filed on SEDAR and posted on the Fund's website at .
The trustees of the Fund announced a cash distribution to unitholders of 9.2 cents per unit for July 2011. The distribution will be payable to unitholders of record at the close of business on August 21, 2011 and will be paid on August 31, 2011. The Fund periodically reviews distribution levels based on its policy of stable and sustainable distribution flow to unitholders.
Adoption of IFRS
The Fund adopted IFRS on January 1, 2011 and the financial results disclosed in this press release for 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 Boston Pizza Royalties Limited Partnership's (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 consolidated interim financial statements of the Fund for the period ended March 31, 2011, a copy of which was filed on SEDAR on May 10, 2011, and is available at and , for a full description of the Fund's financial results and the impact of IFRS on the Fund.
HIGHLIGHTS
The tables below sets out selected information from the consolidated interim financial statements of the Fund, which includes the accounts of the Partnership, together with other data and should be read in conjunction with the consolidated interim financial statements of the Fund for the three and six month periods ended June 30, 2011 and June 30, 2010. The financial results reported in the tables below are reported in accordance with IFRS, and as a result are not directly comparable to those figures contained within historical financial statements or Management's Discussion and Analysis of the Fund that were previously prepared in accordance with Canadian GAAP.
OUTLOOK
The Canadian Restaurant and Foodservices Association has forecast sales growth of 2.6% for the Canadian full-service restaurant sector in 2011. BPI's management believes that Boston Pizza is well positioned to outperform the growth rate of the full service restaurant sector by attracting a wide variety of guests into the restaurant, sports bar and take-out/delivery parts of each location and offering a compelling value proposition to our guests. 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 20 locations have already completed renovations in 2011 with more underway or planned for later in 2011. 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 five new Boston Pizza restaurants that have opened to date in 2011 and an additional two that are currently under construction and scheduled to open during the second half of 2011. 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.
For a complete list of the risks associated with forward-looking information, please refer to the complete forward looking information disclaimer 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
Boston Pizza International Inc.
Jordan Holm, Vice President of Investor Relations
604-303-6083
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Datum: 10.08.2011 - 12:30 Uhr
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