BURLINGTON, ON, Nov. 22 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN) ("the Fund") today announced that SIR Corp. ("SIR"), the operating entity from which the Fund derives distribution income and interest income, has filed its financial results for the 16-week period ("fourth quarter") and the 52-week period ended August 26, 2007 ("fiscal 2007").
SIR has advised the Fund that revenue for the fourth quarter of fiscal 2007 increased 13.6% to $53.7 million compared to $47.2 million in revenue for the same period a year ago and increased 9.2% to $167.2 million for fiscal 2007 compared to $153.1 million for fiscal 2006. Increased revenue in the fourth quarter and fiscal 2007 resulted from same store sales growth(1) ("SSSG") and the increase in number of restaurants to 40 at the end of fiscal 2007 from 37 at the end of fiscal 2006.
As at August 26, 2007, the Concept Restaurants (Jack Astor's(R), Alice Fazooli's!(R) and Canyon Creek Chop House(R)) accounted for approximately 88.0% of Pooled Revenue and the Signature Restaurants (reds(R), Far Niente(R)/Soul of the Vine(R), Brasserie Frisco(R), Armadillo Texas Grill(R)/the Loose Moose Tap & Grill(R)) accounted for approximately 12.0%.
SIR's loss from continuing operations decreased 30.2% to $1.0 million in the fourth quarter of fiscal 2007, compared to $1.4 million in the comparable period in 2006. SIR's loss from continuing operations decreased 10.4% to $4.4 million for fiscal 2007 compared to $4.9 million for fiscal 2006.
SIR's cash provided by continuing operations increased by $1.5 million for the 16-week period ended August 26, 2007 as compared to the 16-week period ended August 27, 2006. Cash provided by continuing operations was $7.6 million for fiscal 2007, an increase of $1.6 million as compared to fiscal 2006. SIR used cash in continuing investing activities of $3.2 million and $11.1 million for the fourth quarter and fiscal 2007, respectively, primarily for the purchase of property and equipment related to new and renovated restaurants.
On August 9, 2007, SIR entered into a Credit Agreement with a Canadian Schedule 1 bank. The Credit Agreement is a seven-year facility for a maximum amount of $16.0 million and is intended primarily to facilitate construction of new restaurants by SIR. These new restaurants are expected to become part of the Royalty Pooled Restaurants over the next few years as they are completed. This is expected to benefit the Fund both as a result of geographic diversification and increased scale and because new restaurant growth is designed to be accretive to Fund unitholders. Copies of the Credit Agreement and the Interlender Agreement have been filed on SEDAR. With this financing in place, SIR believes that it has sufficient cash resources to fund its current working capital requirements and current commitments for estimated construction costs for new restaurants.
SIR has advised the Fund that same store sales(1) ("SSS") for the fourth quarter of 2007 increased 5.3% to $47.2 million compared to $44.9 million for the comparable period a year ago. For fiscal 2007, SSS(1) increased by 3.9% to $151.9 million compared to $146.3 million for fiscal 2006. SSSG(1) for the 16 and 52-week periods ended August 26, 2007 was primarily attributable to the strong performance of SIR's Concept Restaurants (Jack Astor's, Alice Fazooli's! and Canyon Creek).
16-week 52-week SSSG(1) period ended period ended August 26, August 26, 2007 2007 (unaudited) (unaudited) ------------------------------------------------------------------------- Jack Astor's 5.1% 3.0% Alice Fazooli's! 7.1% 5.9% Canyon Creek Chop House 5.5% 6.3% Signature Restaurants 4.0% 4.1% ------------------------------------------------------------------------- Overall SSSG 5.3% 3.9%
Subsequent to the end of fiscal 2007, a new Jack Astor's restaurant opened in Burlington, Ontario. The former Jack Astor's restaurant in Burlington was closed on September 29, 2007. Also subsequent to the end of fiscal 2007, SIR announced that Brasserie Frisco would be closed on December 22, 2007 and a new Jack Astor's is expected to open in the former Brasserie Frisco location in the first half of calendar year 2008. After evaluating a range of options, SIR determined that converting Brasserie Frisco into a new Jack Astor's is the best use of this prime downtown Toronto location.
The closed Jack Astor's Burlington location and Brasserie Frisco will both be treated as 2007 Closed Restaurants and are expected to be removed from the Royalty Pool effective January 1, 2008. SIR is required to pay a Make-Whole Payment for these closed restaurants from their date of closure to December 31, 2007.
SIR's fourth quarter and fiscal 2007 year-end filings, which include its 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 more than 40 restaurants in Canada. SIR's concept brands include: Jack Astor's Bar and Grill(R), with 24 locations; Alice Fazooli's!(R), with five locations; and Canyon Creek Chop House(R), with seven locations. SIR also operates one-of-a-kind "signature" brands in downtown Toronto, which comprise the upscale reds(R), Far Niente(R)/Soul of the Vine(R) & Petit Four(TM), Brasserie Frisco(R) and the Loose Moose Tap & Grill(R). All trademarks related to the concept and signature brands noted above are used by SIR under a license 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 38 restaurants currently included in 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 in this news release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this document, such statements are such words as "may", "will", "expect", "believe", "plan", "anticipate", "intend", "estimate" and other similar terminology. These statements reflect SIR Management's current expectations regarding future events and operating performance and speak only as of the date of this document. The Fund and SIR expressly disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any changes in events, conditions or circumstances on which any statement is based.
In formulating the forward-looking statements contained herein, management has assumed, among other things, 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 industry conditions, general levels of economic activity (including in downtown Toronto), regulations (including regarding employees, food safety, tobacco and alcohol), weather, taxes, foreign exchange rates and interest rates, that there will be no pandemics or other 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. For more information concerning the Fund's risks and uncertainties, please refer to the Fund's periodic interim filings and/or its March 30, 2007 Annual Information Form.
(1) Same store sales and same store sales growth exclude revenue from restaurants which are not included in the Royalty pool, and exclude revenue from restaurants opened or closed during the current or prior fiscal year and therefore not open for the full period in both years. Same store sales growth is the percentage increase in SSS over the prior comparable period. SSS and SSSG are non-GAAP measures that do not have standardized meanings prescribed by GAAP. 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.