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Imvescor Restaurant Group Inc.

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Strategic Review Initiated and Senior Management Changes Announced

MONCTON, NB, Sept. 13 /CNW Telbec/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG), formerly PDM Royalties Income Fund ("PDM"), reported financial results today for the 13 weeks ending August 1, 2010 (or "third quarter"), and for the 40 weeks ending August 1, 2010 (or "year to date"). IRG has operated as a public company since October 10, 2009 and therefore the results for the periods ending August 1, 2010 are not directly comparable with the results for PDM in the same quarter and nine-month periods last year. The Company also announced a strategic review and changes to senior management.

Dividend Declared

The Board of Directors has approved a dividend of $0.075 per share payable November 30, 2010 to shareholders of record November 18, 2010. The dividend is an eligible dividend for income tax purposes.

Third Quarter Highlights

    - IRG earned $0.114 per share in the third quarter, being its best
      performance to date

    - IRG repaid $0.9 million in long-term debt during the third quarter, and
      $2.5 million for the year-to-date

    - Four new restaurants were opened and 4 locations renovated during the

    - Total system sales decreased by 1.2% for the quarter compared to the
      period last year

    - Same store sales declined by 2.6% in the third quarter

"These financial results must be seen in the context of a challenging economy and the change in the Company's structure from an income fund to a corporation," said Herb Breau, Chairman of the Board of Directors. "For our existing restaurants, we have an aggressive renovation plan that will allow us to continue to provide value and a great experience for our customers. We are making progress and continue each quarter to repay a portion of our long-term debt."

Third Quarter 2010 Financial and Operating Results

(Please see "Information on Basis of Comparison" following the Outlook section of this release)

Year to date, the Company opened 1 new Pizza Delight, 2 new Mikes, 4 new Scores, 1 new Baton Rouge and closed 1 Pizza Delight and 3 Mikes while renovating 8 Pizza Delights and 8 Mikes.

The following table provides selected financial information for the 13 week and 40 week periods ending August 1, 2010, along with results for the prior year, which were calculated for the three-month and nine-month period ended June 30, 2009.

    (in thousands of dollars       2010        2009        2010        2009
      except per share /      (13 weeks   (3 months   (40 weeks   (9 months
      fund unit items)            ended       ended       ended       ended
                               August 1,    June 30,   August 1     June 30,
                                   2010)       2009)       2010)       2009)

    System sales                105,091     101,857     311,711     304,907
    Royalties, franchise fees
     and other related revenue    9,945           -      29,964           -
    Gross profit on sales         1,265           -       4,151           -
    Operating and adminis-
     trative expenses             7,776          68      25,649         229
    Net earnings                  1,076     (32,632)      1,776     (28,277)
    Basic earnings per
     share / fund unit            0.114      (4.161)      0.188      (3.606)
    Diluted earnings per
     share / fund unit            0.114      (4.161)      0.188      (3.606)

IRG derives its revenues primarily from royalties based on system sales from each of its four brands: Pizza Delight(TM), Mikes(TM), Scores(TM) and Baton Rouge(TM).

Total system sales for the third quarter were $105.1 million, a 1.2% decrease over system sales for the comparable three months of the previous year. The year to date total system sales for 2010 were $311.7 million, a 2.3% decrease of system sales for the comparable nine months in 2009. This reduction in sales is primarily related to more difficult economic conditions compared to previous periods.

Royalties, advertising fees and other related revenue for the third quarter were $9.9 million and $30.0 million for the 40 weeks ended August 1, 2010. There is no meaningful comparison with the previous year. The change is a result of the new corporate structure.

Gross profit on sales was $1.3 million for the third quarter and $4.2 million for the 40 weeks ended August 1, 2010.

Same store sales ("SSS") were down 2.6% during the third quarter. SSS at Pizza Delight were -1.4%; Mikes SSS were -4.9%; Scores SSS were -8.6%; and Baton Rouge SSS grew +7.2% for the third quarter. The Company considers that even with the tough economic conditions that have been prevalent and challenging, this performance can be improved.

When calculating the SSS for the various periods it should be noted that the current quarter ended August 1, 2010 includes 13 weeks sales compared to the same 13 weeks in the previous year. Similarly the year to date figures includes 40 weeks sales compared to the same 40 weeks in the previous year. The above comparable periods may not cover the same dates as reflected in the financial statements as they are provided in an effort to give the reader more meaningful comparisons of actual performance.

Net earnings for the Company for the third quarter ending August 1, 2010 were $1.08 million or $0.114 per fully diluted share compared to a loss of $32.6 million or $4.161 per fund unit for the same period last year. The basis for comparison with 2009 is not directly comparable.

Total long-term debt at August 1, 2010 declined to $44.6 million from $47.0 million at October 25, 2009. The decrease is the result of principal repayments net of the amortization of financing charges.


The Company believes that three of its four restaurant brands are well positioned in the market as the general economic conditions continue to be a challenge. It is management's belief that as disposable income changes, consumers adapt and trade down to more value-driven dining occasions which Pizza Delight, Mikes and Scores offer. Baton Rouge has a higher average check adding an extra challenge in this economy. Management has taken steps such as maintaining a high level of customer service plus introducing some new and modified products at lower prices.

Management expects same store sales growth from renovations to the Mikes and Pizza Delight restaurants in its current markets while the new concept will provide a solid platform in the new markets where the Company plans to expand. Year to date the Company renovated eight Pizza Delights and eight Mikes. Management plans on aggressively renovating its existing restaurants to these new concepts in the next three fiscal years. The Company will continue to open new restaurants with plans to open ten in fiscal year 2010.

Strategic Review and Changes to Senior Management

IRG also announced today that the Board of Directors and Management of IRG are engaged in a strategic operational and financial review process. Capital Canada Limited has been engaged to act as a financial advisor on a strategic financial review. The Board of Directors of IRG, through its committees, has been working with management and the Company's external advisors and is actively supervising the strategic review process.

IRG further announced today that Ron Magruder will step aside as President and Chief Executive Officer of the Company, effective immediately.

The IRG Board of Directors has initiated a process to identify a new chief executive officer. In the meantime, William Lane, Executive Vice-President and CFO has been appointed acting chief executive officer of the Company. Mr. Magruder will continue with IRG in an advisory capacity to provide strategic counsel to the Board of Directors.

"We would like to thank Ron Magruder for his contribution to IRG these past few years" said Mr. Breau. "He led Management during a period of financial uncertainty and a restructuring of IRG."

Information on Basis of Comparison

Under the Plan of Arrangement approved by unitholders on September 4, 2009, PDM Royalty Income Fund acquired (by way of merger) the privately held Imvescor Inc. and other private entities. The surviving entity, named Investor Restaurant Group, is now a corporation rather than an income trust. It began operations on October 10, 2009.

The new corporation, Imvescor Restaurant Group, is a publicly traded company and is therefore required to compare its financial results with its predecessor, PDM Royalty Income Fund. However, PDM had a completely different legal and operating structure from IRG today. As an income trust, PDM was structured to receive and distribute royalties. It had virtually none of the overhead expenses that are typical of an operating company like IRG. As an operating company, the financial results of IRG are therefore not directly comparable with those of PDM and the presentation of results as required for proper disclosure does not in this case provide the normal comparisons that would enable readers to easily understand the year-over-year business activities.

This situation will endure until IRG has cycled a full fiscal year. Normal year-over-year comparisons will begin in the first quarter of 2011, at which time there will be a historical basis of comparison. IRG continues to focus on key elements of its business, which include system sales, same store sales, number of restaurants, cash flow, debt repayment, and earnings per share.

About Imvescor Restaurant Group

Headquartered in Moncton, New Brunswick, Imvescor Restaurant Group owns franchised and corporate stores throughout Canada, under four brands: Pizza Delight(R) operates primarily in Atlantic Canada, where it dominates the family/mid-scale segment. Mikes(R) and Scores(R) restaurants operate primarily in Quebec in the family and casual dining segments and the take-out and delivery segments. Baton Rouge(R) operates in the Province of Quebec, Ontario, and Alberta in the casual dining segment.

Forward-Looking Statements

Certain information regarding Imvescor Restaurant Group contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary substantially from what the Company currently foresees. The Company assumes no obligation to update such forward-looking statements, except as required by applicable securities laws. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.

%SEDAR: 00029036EF

Paul de la Plante, 514 843-2332; William R. Lane, CMA, Acting Chief Executive Officer, Executive Vice-President & Chief Financial Officer, Imvescor Restaurant Group, 506-853-0990, http://www.imvescor.ca; For more information about our brands: Mikes(R): http://www.mikes.ca; Pizza Delight(R): http://www.pizzadelight.com; Bâton Rouge(R): http://www.batonrougerestaurants.com; Scores(R): http://www.scores.ca

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