Toronto Stock Exchange: BPF.UN
HIGHLIGHTS
- Franchise Sales1 of $224.2
million for the Period, representing an increase of 25.5%
versus the same period one year ago.
- Same Restaurant Sales2 of 25.7% for the Period.
- Cash flows generated from operating activities of $9.2 million for the Period, representing an
increase of 38.6% versus the same period one year ago.
- Distributable Cash3 increased 53.0% for the Period,
and Distributable Cash per Unit4 increased 53.2% for the
Period.
- Payout Ratio5 of 91.6% for the Period and 94.5% on a
trailing 12-month basis. Cash balance at the end of the Period was
$6.0 million.
- On April 5, 2023, the Fund
increased its monthly distribution rate commencing with the
March 2023 distribution from
$0.102 to $0.107 per unit of the Fund ("Unit").
- On May 9, 2023, the trustees of
the Fund declared a distribution for the period of April 1, 2023 to April 30,
2023 of $0.107 per Unit, which
will be payable on May 31, 2023 to
unitholders of the Fund ("Unitholders") of record on
May 21, 2023.
VANCOUVER, BC, May 10, 2023
/CNW/ - Boston Pizza Royalties Income Fund (the "Fund") and
Boston Pizza International Inc. ("BPI") reported financial
results today for the first quarter period from January 1,
2023 to March 31, 2023 (the "Period"). A copy of
this press release, the condensed consolidated interim financial
statements and related management's discussion and analysis
("MD&A") of the Fund and BPI are available at
www.sedar.com and www.bpincomefund.com. The Fund will host a
conference call to discuss the results on May 10, 2023 at
8:30 am Pacific Time (11:30 am Eastern Time).
The call can be accessed by dialling 1-800-319-4610 or
604-638-5340. A replay will be available until June 10,
2023 by dialling 1-800-319-6413 or 604-638-9010 and entering the
access code: 9986 followed by the # sign. The replay will
also be available at www.bpincomefund.com. Capitalized terms
used in this press release that are not otherwise defined have the
meanings ascribed to them in the Fund's MD&A for the
Period.
COVID-19 impacted the business of the Fund, BPI and Boston Pizza
Canada Limited Partnership ("BP Canada LP"), and
the operation of Boston Pizza Restaurants significantly during
2020, 2021 and the first half of 2022. Since then, COVID-19
case counts improved, government restrictions related to COVID-19
were largely eliminated, and sales levels of Boston Pizza
Restaurants have returned to more normal levels when compared to
times prior to COVID-19.
"We are pleased to report strong sales results for the first
quarter of 2023, which exceeded our expectations and demonstrated
the resilience of our restaurant operations despite current
macroeconomic conditions and other challenges facing the restaurant
industry," said Jordan Holm,
President of BPI. "Our commitment to providing exceptional
guest experiences, along with innovative menu offerings, has led to
increased sales. As economic uncertainty and inflationary
pressures persist in 2023, we will work diligently to support our
franchisees and continue the positive sales momentum that was
achieved in 2022 and the start of 2023."
PERIOD RESULTS
SRS, a key driver of distribution growth for Unitholders,
was 25.7% for the Period compared to 39.1% reported in the first
quarter of 2022. SRS for the Period was principally due to
increases in restaurant guest traffic compared to the first quarter
of 2022, during which pandemic-related restrictions still existed,
and increased average guest cheque due to a combination of
increased menu pricing and larger per guest ordering levels.
Franchise Sales of Boston Pizza restaurants in the Royalty Pool
were $224.2 million for the
Period compared to $178.6 million for the same period one year
ago. The $45.6 million
increase in Franchise Sales for the Period was primarily due to
positive SRS.
The Fund's net and comprehensive income was $6.7 million for the Period compared to
$12.9 million for the first
quarter of 2022. The $6.2 million decrease in the Fund's net and
comprehensive income for the Period compared to the first quarter
of 2022 was primarily due to a $9.3 million increase in fair value loss,
partially offset by a $2.4 million increase in Royalty and
Distribution Income and a decrease in income tax expense of
$0.7 million.
The Fund's cash flows generated from operating activities was
$9.2 million compared to
$6.7 million in the first
quarter of 2022. The increase of $2.5 million was due to an increase of
Royalty and Distribution Income of $2.4 million and an increase in changes in
working capital of $0.6 million,
partially offset by an increase in income taxes paid of
$0.4 million.
The Fund generated Distributable Cash of $7.2 million for the Period compared to
$4.7 million for the first
quarter of 2022. The increase in Distributable Cash of
$2.5 million or 53.0% was
primarily due to an increase of cash flows generated from operating
activities of $2.5 million and
lower repayments of long-term debt of $0.5 million, partially offset by increased
BPI Class B Unit entitlement of $0.4 million and SIFT Tax on Units
adjustment of $0.2 million.
The Fund generated Distributable Cash per Unit of $0.334 for the Period compared to $0.218 per Unit for the first quarter of
2022. The increase in Distributable Cash per Unit of
$0.116 or 53.2% was primarily
attributable to the increase in Distributable Cash outlined
above.
The Fund's Payout Ratio for the Period was 91.6% compared to
116.8% in the first quarter of 2022. The decrease in the
Fund's Payout Ratio for the Period was due to Distributable Cash
increasing by $2.5 million or
53.0%, partially offset by distributions paid increasing by
$1.1 million or 20.0%.
Payout Ratio is calculated by dividing the amount of distributions
paid during the applicable period by the Distributable Cash for
that period. The Fund's Payout Ratio is typically higher in
the first and fourth quarters compared to the second and third
quarters since Boston Pizza restaurants generally experience higher
Franchise Sales levels during the summer months when restaurants
open their patios and benefit from increased tourist traffic.
On a trailing 12-month basis, the Fund's Payout Ratio was 94.5% as
at March 31, 2023.
DISTRIBUTIONS
During the Period, the Fund declared distributions on the Units
in the aggregate amount of $4.4 million or $0.204 per Unit. During the first
quarter of 2022, the Fund declared distributions on the Units in
the aggregate amount of $3.7 million or $0.170 per Unit. During the Period,
the Fund paid distributions on the Units in the aggregate amount of
$6.6 million or $0.306 per Unit. During the first
quarter of 2022, the Fund paid distributions on the Units in the
aggregate amount of $5.5 million
or $0.255 per Unit. The
amount of distributions declared during the Period increased by
$0.7 million or $0.034 per Unit due to the monthly
distribution rate increasing from $0.085 per Unit to $0.100 per Unit commencing with the
July 2022 distribution, and increasing again from $0.100 per Unit to $0.102 per Unit commencing with the
November 2022 distribution (collectively, the "2022
Distribution Increases"). Distributions paid during the Period
increased by $1.1 million or
$0.051 per Unit due to the 2022
Distribution Increases.
On April 5, 2023, the trustees of the Fund declared a
distribution for the period of March 1, 2023 to March 31,
2023 of $0.107 per Unit, which
was paid on April 28, 2023 to Unitholders of record on
April 21, 2023. This was an increase of $0.005 per Unit, or 4.9%, from the previous
monthly distribution rate of $0.102 per Unit. On an annualized
basis, this new monthly distribution rate equates to $1.284 per Unit compared to $1.224 per Unit for the previous monthly
distribution rate.
On May 9, 2023, the trustees of the Fund declared a
distribution for the period of April 1, 2023 to April 30,
2023 of $0.107 per Unit, which
will be payable on May 31, 2023 to Unitholders of record on
May 21, 2023. Including the April
2023 distribution, which will be paid on May 31, 2023,
the Fund will have paid out total distributions of $404.5 million or $25.16 per Unit which includes 244 monthly
distributions and two special distributions.
FINANCIAL SUMMARY
The tables below set out selected information from the Fund's
condensed consolidated interim financial statements together
with other data and should be read in conjunction with the
condensed consolidated interim financial statements and
MD&A of the Fund for the three month periods ended
March 31, 2023 and 2022.
For the periods ended March 31
|
|
|
Q1 2023
|
Q1 2022
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
Number of restaurants
in Royalty Pool
|
|
|
377
|
383
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
|
|
224,201
|
178,602
|
|
|
|
|
|
Royalty
income6
|
|
|
8,968
|
7,144
|
Distribution
Income7
|
|
|
2,949
|
2,363
|
Total
revenue
|
|
|
11,917
|
9,507
|
Administrative
expenses
|
|
|
(391)
|
(338)
|
Interest expense on
debt and financing fees
|
|
|
(850)
|
(939)
|
Interest expense on
Class B Unit liability
|
|
|
(632)
|
(565)
|
Interest
income
|
|
|
68
|
5
|
Profit before fair
value (loss) gain and income taxes
|
|
|
10,112
|
7,670
|
Fair value (loss) gain
on investment in BP Canada LP
|
|
|
(218)
|
11,566
|
Fair value gain (loss)
on Class B Unit liability
|
|
|
97
|
(5,154)
|
Fair value (loss) gain
on Swaps
|
|
|
(892)
|
1,876
|
Current and deferred
income tax expense
|
|
|
(2,430)
|
(3,059)
|
Net and comprehensive
income
|
|
|
6,669
|
12,899
|
|
|
|
|
|
Basic earnings per
Unit
|
|
|
0.31
|
0.60
|
Diluted earnings per
Unit
|
|
|
0.24
|
0.60
|
|
|
|
|
|
Distributable Cash3 / Distributions / Payout
Ratio5
|
|
|
|
|
Cash flows generated
from operating activities
|
|
|
9,220
|
6,651
|
BPI Class B Unit
entitlement8
|
|
|
(1,038)
|
(664)
|
Interest paid on
long-term debt
|
|
|
(914)
|
(884)
|
Principal repayments
on long-term debt
|
|
|
-
|
(500)
|
Current income tax
expense
|
|
|
(2,390)
|
(1,769)
|
Current income tax
paid
|
|
|
2,311
|
1,864
|
Distributable
Cash3
|
|
|
7,189
|
4,698
|
Distributions
paid
|
|
|
6,585
|
5,488
|
Payout
Ratio5
|
|
|
91.6 %
|
116.8 %
|
Distributable Cash per
Unit4
|
|
|
0.334
|
0.218
|
Distributions paid per
Unit
|
|
|
0.306
|
0.255
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales2
|
|
|
25.7 %
|
39.1 %
|
Number of restaurants
opened
|
|
|
0
|
0
|
Number of restaurants
closed
|
|
|
1
|
2
|
|
|
|
|
|
Mar 31,
2023
|
Dec 31,
2022
|
Total assets
|
|
|
413,490
|
413,701
|
Total
liabilities
|
|
|
130,633
|
133,123
|
SUMMARY OF QUARTERLY RESULTS
|
Q1
2023
|
Q4
2022
|
Q3
2022
|
Q2 2022
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
377
|
383
|
383
|
383
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
224,201
|
227,163
|
229,848
|
219,384
|
|
|
|
|
|
Royalty
income
|
8,968
|
9,087
|
9,194
|
8,775
|
Distribution
Income
|
2,949
|
2,988
|
3,027
|
2,895
|
Total
revenue
|
11,917
|
12,075
|
12,221
|
11,670
|
Administrative
expenses
|
(391)
|
(369)
|
(334)
|
(349)
|
Interest expense on
debt and financing fees
|
(850)
|
(812)
|
(886)
|
(977)
|
Interest expense on
Class B Unit liability
|
(632)
|
(1,557)
|
(835)
|
(733)
|
Interest
income
|
68
|
61
|
31
|
10
|
Profit before fair
value (loss) gain and income taxes
|
10,112
|
9,398
|
10,197
|
9,621
|
Fair value (loss) gain
on investment in BP Canada LP
|
(218)
|
(1,146)
|
2,183
|
(14,622)
|
Fair value gain (loss)
on Class B Unit liability
|
97
|
510
|
(972)
|
6,515
|
Fair value (loss) gain
on Swaps
|
(892)
|
106
|
572
|
1,337
|
Current and deferred
income tax expense
|
(2,430)
|
(2,462)
|
(2,478)
|
(1,075)
|
Net and comprehensive
income
|
6,669
|
6,406
|
9,502
|
1,776
|
|
|
|
|
|
Basic earnings per
Unit
|
0.31
|
0.30
|
0.44
|
0.08
|
Diluted earnings (loss)
per Unit
|
0.24
|
0.26
|
0.41
|
(0.20)
|
|
|
|
|
|
Distributable Cash /
Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
9,220
|
8,919
|
9,667
|
9,118
|
BPI Class B Unit
entitlement
|
(1,038)
|
(1,044)
|
(1,083)
|
(888)
|
Interest paid on
long-term debt
|
(914)
|
(799)
|
(939)
|
(954)
|
Principal repayments
on long-term debt
|
-
|
-
|
-
|
(1,000)
|
Current income tax
expense
|
(2,390)
|
(2,422)
|
(2,438)
|
(2,285)
|
Current income tax
paid
|
2,311
|
2,585
|
2,270
|
2,185
|
Distributable
Cash
|
7,189
|
7,239
|
7,477
|
6,176
|
Distributions
paid
|
6,585
|
8,329
|
6,133
|
5,488
|
Payout Ratio
|
91.6 %
|
115.1 %
|
82.0 %
|
88.9 %
|
Distributable Cash per
Unit
|
0.334
|
0.336
|
0.347
|
0.287
|
Distributions paid per
Unit
|
0.306
|
0.387
|
0.285
|
0.255
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
25.7 %
|
24.5 %
|
8.4 %
|
64.9 %
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
1
|
3
|
1
|
0
|
SUMMARY OF QUARTERLY RESULTS (continued)
|
Q1 2022
|
Q4 2021
|
Q3 2021
|
Q2 2021
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
383
|
387
|
387
|
387
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
178,602
|
183,177
|
213,038
|
134,839
|
|
|
|
|
|
Royalty
income
|
7,144
|
7,327
|
8,522
|
5,393
|
Distribution
Income
|
2,363
|
2,423
|
2,815
|
1,797
|
Total
revenue
|
9,507
|
9,750
|
11,337
|
7,190
|
Administrative
expenses
|
(338)
|
(327)
|
(317)
|
(309)
|
Interest expense on
debt and financing fees
|
(939)
|
(939)
|
(1,000)
|
(999)
|
Interest expense on
Class B Unit liability
|
(565)
|
(1,037)
|
(450)
|
(605)
|
Interest
income
|
5
|
7
|
18
|
29
|
Profit before fair
value gain (loss) and income taxes
|
7,670
|
7,454
|
9,588
|
5,306
|
Fair value gain (loss)
on investment in BP Canada LP
|
11,566
|
11,294
|
(3,928)
|
6,274
|
Fair value (loss) gain
on Class B Unit liability
|
(5,154)
|
(5,032)
|
1,751
|
(2,796)
|
Fair value gain on
Swaps
|
1,876
|
730
|
262
|
193
|
Current and deferred
income tax expense
|
(3,059)
|
(1,804)
|
(2,230)
|
(1,235)
|
Net and comprehensive
income
|
12,899
|
12,642
|
5,443
|
7,742
|
|
|
|
|
|
Basic earnings per
Unit
|
0.60
|
0.59
|
0.25
|
0.36
|
Diluted earnings per
Unit
|
0.60
|
0.59
|
0.13
|
0.36
|
|
|
|
|
|
Distributable Cash /
Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
6,651
|
8,524
|
9,586
|
6,448
|
BPI Class B Unit
entitlement
|
(664)
|
(858)
|
(923)
|
(523)
|
Interest paid on
long-term debt
|
(884)
|
(892)
|
(991)
|
(929)
|
Principal repayments
on long-term debt
|
(500)
|
(679)
|
(1,036)
|
(1,036)
|
Current income tax
expense
|
(1,769)
|
(1,814)
|
(2,190)
|
(1,185)
|
Current income tax
paid
|
1,864
|
1,790
|
2,230
|
1,250
|
Distributable
Cash
|
4,698
|
6,071
|
6,676
|
4,025
|
Distributions
paid
|
5,488
|
5,488
|
4,196
|
4,197
|
Payout Ratio
|
116.8 %
|
90.4 %
|
62.9 %
|
104.3 %
|
Distributable Cash per
Unit
|
0.218
|
0.282
|
0.310
|
0.187
|
Distributions paid per
Unit
|
0.255
|
0.255
|
0.195
|
0.195
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
39.1 %
|
25.5 %
|
15.1 %
|
27.0 %
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
2
|
2
|
0
|
1
|
SHORT-TERM OUTLOOK
The two principal factors that affect SRS are changes in guest
traffic and changes in average guest cheque. BPI's and BP
Canada LP's strategies to drive higher guest traffic include
attracting a wide variety of guests into the restaurant, sports bar
and take-out and delivery parts of each location, offering a
compelling value proposition to guests and leveraging a larger
marketing budget versus the previous year along with a revised
calendar of national and local store promotions. Increased
average cheque levels are expected to be achieved through a
combination of culinary innovation and annual menu re-pricing.
The actions taken by BPI and BP Canada LP to strengthen its
business during COVID-19 have allowed BPI and BP Canada LP to be in
a good position to address any on-going COVID-19 related challenges
or other future challenges in the restaurant industry. The
easing and elimination of government-imposed restrictions in
Canada related to COVID-19 has
enabled Boston Pizza to continue to drive improved performance and
guest traffic. However, with supply chain challenges, rising
interest rates, increasing input costs and labour shortages
impacting most of the restaurant industry, BPI's management remains
cautious. The focus of BPI's management is to adapt the
business to mitigate these challenges and capitalize on the recent
sales momentum resulting from the elimination of COVID restrictions
in the restaurant industry.
The trustees of the Fund will continue to closely monitor the
Fund's available cash balances given the volatile economic
outlook.
Forward Looking Information
Certain information in this press release constitutes
"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, Boston Pizza Royalties Limited
Partnership, Boston Pizza Holdings Limited Partnership, Boston
Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, BP Canada LP,
Boston Pizza Canada Holdings Inc., Boston Pizza Canada Holdings
Partnership, 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. All statements, other than statements of
historical facts, included in this press release that address
activities, events or developments that the Fund or its trustees
expect or anticipate will or may occur in the future, including
such things as, the continued impact of COVID-19 on the business of
the Fund, BPI and BP Canada LP and the operation of Boston Pizza
restaurants, Boston Pizza restaurants generally experiencing higher
Franchise Sales levels during the summer months when restaurants
open their patios and benefit from increased tourist traffic, BPI
and BP Canada LP's ability to implement strategies driving higher
guest traffic and increased average cheque levels, continued
improved performance and guest traffic due to the easing and
elimination of government-imposed COVID-19 restrictions in the
Canadian restaurant industry, the persistence of economic
uncertainty and inflationary pressures in 2023, and working
diligently to support franchisees and continuing positive sales
momentum, the trustees of the Fund continuing to closely monitor
the Fund's available cash balances given the volatile economic
outlook, and other such matters are forward-looking
information. When used in this press release, forward-looking
information may include words such as "anticipate", "estimate",
"may", "will", "expect", "believe", "plan", "should", "continue"
and other similar terminology. The material factors and
assumptions used to develop the forward-looking information
contained in this press release include the following: the Fund
maintaining the same distribution policy, expectations related to
future general economic conditions, expectations that the Fund's
Payout Ratio is typically higher in the first and fourth quarter;
Boston Pizza restaurants maintaining operational excellence, the
COVID-19 pandemic continuing to negatively impact the restaurant
industry, Franchise Sales, SRS and Distributable Cash; and that
COVID-19 and its negative impacts will eventually dissipate. Risks,
uncertainties and other factors that may cause actual results,
performance or achievements to be materially different from any
future results, performance or achievement expressed or implied by
the forward-looking information contained herein, relate to (among
others): competition, demographic trends, consumer preferences and
discretionary spending patterns, business and economic conditions,
legislation and regulation, reliance on operating revenues,
accounting policies and practices, the results of operations and
financial condition of BPI, BP Canada LP and the Fund, pandemics
and national health crises, in particular COVID-19, as well as
those factors discussed under the heading "Risks and Uncertainties"
in the most recent Annual Information Form of the Fund. 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, neither the Fund
nor BPI assumes any obligation to update previously disclosed
forward-looking information. For a complete list of the risks
associated with forward-looking information and the Fund's
business, please refer to the "Risks and Uncertainties" and "Note
Regarding Forward-Looking Information" sections included in the
most recent Annual Information Form of the Fund available at
www.sedar.com and www.bpincomefund.com.
The trustees of the Fund have approved the contents of this news
release.
® Boston Pizza
Royalties Limited Partnership. All Boston Pizza registered Canadian
trademarks and unregistered Canadian trademarks containing the
words "Boston", "BP", and/or "Pizza" are trademarks owned by the
Boston Pizza Royalties Limited Partnership and licensed by the
Boston Pizza Royalties Limited Partnership to Boston Pizza
International Inc.
|
|
© Boston Pizza
International Inc. 2023.
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Notes – Non-GAAP, Specified Financial Measures and Other
Information
- "Franchise Sales" is the basis upon which Royalty and
Distribution Income are payable, and means the gross revenue: (i)
of the corporate Boston Pizza restaurants in Canada owned by BPI that are in the Royalty
Pool; and (ii) reported to BP Canada LP by franchised Boston Pizza
restaurants in Canada that are in
the Royalty Pool, without audit or other form of independent
assurance, and in the case of both (i) and (ii), after deducting
revenue from the sale of liquor, beer, wine and revenue from BP
Canada LP approved national promotions and discounts and excluding
applicable sales and similar taxes. Nevertheless, BP Canada LP
periodically conducts audits of the Franchise Sales reported to it
by its franchisees, and the Franchise Sales reported herein include
results from sales audits of earlier periods. Franchise Sales is
reported on a quarterly basis in the Fund's financial statements,
however, the financial statements do not report it on a monthly
basis. Therefore, when disclosed on a monthly basis herein,
this is a supplementary financial measure under National Instrument
52-112 Non-GAAP and Other Financial Measures Disclosure
("NI 52–112"). The Fund believes that Franchise
Sales for this month provides useful information to investors
regarding recent performance of Boston Pizza.
- "Same Restaurant Sales" or "SRS" is a
supplementary financial measure under NI 52-112 and therefore
may not be comparable to similar measures presented by other
issuers. Prior to the fourth quarter of 2021, the Fund
defined SRS as the change in gross revenues of Boston Pizza
restaurants in the Royalty Pool as compared to the gross revenues
for the same period in the previous year (where restaurants were
open for a minimum of 24 months). Commencing with the fourth
quarter of 2021, the Fund defines SRS as the change in Franchise
Sales of Boston Pizza restaurants in the Royalty Pool as compared
to the Franchise Sales for the same period in the previous year
(where restaurants were open for a minimum of 24 months). The
Fund believes that the current method of calculating SRS provides
Unitholders more meaningful information regarding the performance
of Boston Pizza restaurants since Royalty and Distribution Income
are payable to the Fund by BPI and BP Canada LP on
Franchise Sales and not gross revenues of Boston Pizza
restaurants. All historical SRS figures contained in this
press release have been restated to conform to the current method
of calculating SRS.
- "Distributable Cash" is a non-GAAP financial measure
under NI 52-112. Distributable Cash is not a
standardized financial measure under IFRS and may not be comparable
to similar financial measures disclosed by other issuers. The
Fund defines Distributable Cash to be, in respect of any particular
period, the Fund's cash flows generated from operating activities
for that period (being the most comparable financial measure in the
Fund's primary financial statements) minus (a) BPI's
entitlement in respect of its Class B Units in respect of the
period (see note 8 below), minus (b) interest paid on
long-term debt during the period, minus (c) principal
repayments on long-term debt that are contractually required to be
made during the period, minus (d) the current income tax
expense in respect of the period, plus (e) current income tax
paid during the period (the sum of (d) and (e) being "SIFT Tax
on Units"). Management believes that Distributable Cash
provides investors with useful information about the amount of cash
the Fund has generated and has available for distribution on the
Units in respect of any period. The tables in the "Financial
Highlights" section of this press release provide a reconciliation
from this non-GAAP financial measure to cash flows generated from
operating activities, which is the most directly comparable IFRS
measure. Current income tax expense in respect of any period
is prepared using reasonable and supportable assumptions (including
that the base rate of SIFT Tax will not increase throughout the
calendar year and that certain expenses of the Fund will continue
to be deductible for income tax purposes), all of which reflect the
Fund's planned courses of action given management's judgment about
the most probable set of economic conditions. There is a risk
that the federal government of Canada could increase the base rate
of SIFT Tax or that applicable taxation authorities could assess
the Fund on the basis that certain expenses of the Fund are not
deductible. Investors are cautioned that if either of these
possibilities occurs, then the actual results for this component of
Distributable Cash may vary, perhaps materially, from the amounts
used in the reconciliation.
- "Distributable Cash per Unit" is a non-GAAP ratio under
NI 52-112. Distributable Cash per Unit is not a
standardized financial measure under IFRS and may not be comparable
to similar financial measures disclosed by other issuers. The
Fund defines Distributable Cash per Unit for any period as the
Distributable Cash generated in that period divided by the weighted
average number of Units outstanding during that period.
Management believes that Distributable Cash per Unit provides
investors with useful information regarding the amount of cash per
Unit that the Fund has generated and has available for distribution
in respect of any period.
- "Payout Ratio" is a non-GAAP ratio under
NI 52-112. Payout Ratio is not a standardized financial
measure under IFRS and may not be comparable to similar financial
measures disclosed by other issuers. The Fund defines Payout
Ratio for any period as the aggregate distributions paid by the
Fund during that period divided by the Distributable Cash generated
in that period. Management believes that Payout Ratio
provides investors with useful information regarding the extent to
which the Fund distributes cash generated on Units.
- Boston Pizza Royalties Limited Partnership
("Royalties LP") licenses BPI the right to use various
Boston Pizza trademarks in return for BPI paying Boston Pizza
Royalties Limited Partnership a royalty equal to 4% of Franchise
Sales of Boston Pizza restaurants (the "Royalty") in the
Fund's royalty pool (the "Royalty Pool").
- "Distribution Income" is income received indirectly by
the Fund on Class 1 LP Units and Class 2 LP Units of BP
Canada LP. See the "Overview – Purpose of the Fund / Sources
of Revenue" section of the Fund's MD&A for the Period for more
details.
- "BPI Class B Unit entitlement" is a supplementary
financial measure under NI 52-112 and therefore may not be
comparable to similar measures presented by other issuers.
The BPI Class B Unit entitlement is the interest expense on
Class B Units in respect of a period plus management's
estimate of how much cash BPI would be entitled to receive pursuant
to the limited partnership agreement governing Royalties LP (a
copy of which is available on www.sedar.com) on its Class B
Units if Royalties LP fully distributed any residual cash
generated in respect of that period after the Fund pays interest on
long-term debt, principal repayments on long-term debt and SIFT Tax
on Units in respect of that period. Management believes that
the BPI Class B Unit entitlement is an important component in
calculating Distributable Cash since it represents the amount of
residual cash generated that BPI would be entitled to receive and
therefore would not be available for distribution to
Unitholders. Management prepares such estimate using
reasonable and supportable assumptions that reflect the Fund's
planned courses of action given management's judgment about the
most probable set of economic conditions.
SOURCE Boston Pizza Royalties Income Fund