PDM Royalties Income Fund announces 3rd Quarter Results



    MONCTON, NB, Nov. 14 /CNW/ - PDM ROYALTIES INCOME FUND (the "Fund")
reported today its financial results for the quarter ended September 30, 2007
and also announced that Imvescor Inc. (Imvescor) reported its financial
results for the same period.
    For the quarter and year to date, Imvescor and the Fund are achieving
record levels of sales, revenues, and earnings. With the exception of Q2,
2006, same store sales growth has been positive in every quarter since the
inception of the Fund. The Scores brand will have grown from a sales base in
2005 of $67 million to over $100 million in 2007. Also of significance is that
the opening of the new Baton Rouge restaurants in Ontario in 2007 will further
increase our presence in Ontario.
    The Fund continues to generate strong cash flows above that required to
make its monthly distributions to its unitholders and the interest payments to
the holders of the convertible debentures. Brian Flemming, chairman of the
Trustees states "The Fund is in a very good financial position and the Board
of Trustees is evaluating, on an ongoing basis, the best use for the excess
cash. We realize the tax changes are coming and we want to make long term
strategic uses of our capital".
    Total revenues during the period were $3.8 million compared to
$2.9 million for 2006. Basic earnings per Fund unit before income taxes for
the period were $0.458 per basic unit outstanding compared to actual
distributions paid of $0.360 per unit. The revenue increase was generated by
the acquisition of the Baton Rouge restaurants and the addition of new
restaurants vended on January 1, 2007.
    For the quarter same store sales growth (SSSG) of 1.8% (2006 = 1.2%).
Pizza Delight was the strongest division with SSSG of 4.7% (2006 = 4.4%),
Scores at 4.2% (2006 = 5.0%), Mikes at -1.0% (2006 = -2.5%), and Baton Rouge
was 1.7%.
    For the first nine months of 2007 Imvercor achieved SSSG of 2.0%
(2006 = 1.0%). Scores lead the group with SSSG of 8.9% (2006 = 4.8%), Pizza
Delight at 4.1% (2006 = 3.3%), Mikes at -2.4% (2006 = -2.2%), and Baton Rouge
was 0.9%.
    System sales for the 261 restaurants (2006 = 251) included in the royalty
pool increased to $95.6 million compared to $73.6 million for 2006. The growth
reflects the addition of the Baton Rouge restaurants and the new restaurants
added to the royalty pool on January 1, 2007.
    On June 12, 2007, the Canadian federal government's legislation to tax
publicly traded income trusts passed third reading in the House of Commons and
thus the associated income tax became substantively enacted for accounting
purposes. The legislation imposes a tax of 31.5% on distributions from
Canadian public income trusts. The new tax is not expected to apply to the
Fund until January 1, 2011 as a transition period applies to publicly traded
trusts that existed prior to November 1, 2006. Historically, the Fund has been
exempt from recognizing future income tax assets and liabilities associated
with temporary differences arising in the Fund and its equity accounted
investment, the PDM Royalties Limited Partnership. As a result of the
substantive enactment of the new tax legislation, the Fund was required to
give accounting recognition to these new rules and recognized a future income
tax expense and corresponding liability of $1,955,000. Future income tax
expense is a non-cash item that does not affect cash flow.
    In 2006, Imvescor completed significant brand research and evaluation of
its Pizza Delight and Mikes brands to better understand its positioning in the
market place. Based on the research, the Pizza Delight brand completed its
design process for a new concept and opened its prototype restaurant in April
2007. The modified concept is an enhancement to its already well received
décor while providing several new products and styles of service in a very
inviting atmosphere. Sales increases to date have been in excess of 20% and
generated strong franchisee support leading to a franchisee completing the
second renovated location in late October, 2007 with sales results also being
exceptionally strong. Mikes is in the final stages of design of its new
concept that is intended to focus the brand towards its core Italian
offerings. Mikes opened a test location in June and expects to open the
prototype in December, 2007.
    Management expects significant SSSG from renovations to these new
concepts in its current markets while the new format will provide a solid
platform in the new markets where Imvescor plans to expand. The prototyping
and testing of these new concepts will be completed in 2007 with a roll out of
a renovation plan for existing restaurants to commence in 2008.
    Having multiple brands enables Imvescor to continue opening new
restaurants while prototypes are being completed. Imvescor has opened eight
Scores, three Baton Rouge, one Pizza Delight, and one Mikes restaurants to
date in 2007 and expects to open an additional one Scores and one Mikes
restaurants this year. Imvesocr has also renovated seven Pizza Delight, four
Mikes, and two Scores locations and expects to renovate an additional two
restaurants before year end 2007.
    The addition of Ron Magruder, a 36 year veteran of the restaurant
industry, as the President and Chief Executive Officer of Imvescor adds
substantial depth, knowledge and resources at the senior executive level.
During the past few months Ron has gained a solid knowledge of Imvescor and
its brands and is providing positive guidance in the expansion into new
markets as well as providing increased direction and focus for each brand.

    
    Financial Highlights

    -------------------------------------------------------------------------
    (in thousands except restaurants        Q3        Q3       YTD       YTD
     and per unit items)                  2007      2006      2007      2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Number of restaurants in the
     Royalty Pool                          261       251       261       251
    -------------------------------------------------------------------------
    Royalty pool sales                  95,609    73,591   278,246   211,146
    -------------------------------------------------------------------------
    Royalty income of the Partnership    4,636     3,319    13,627     9,538
    -------------------------------------------------------------------------
    Earnings for the Fund before
     income taxes                        3,167     2,501     8,865     7,772
    -------------------------------------------------------------------------
    Basic Earnings before income
     taxes per Fund unit                $0.431    $0.398     1.216     1.102
    -------------------------------------------------------------------------
    Fully diluted earnings before
     income taxes per Fund unit         $0.387    $0.398     0.923     1.102
    -------------------------------------------------------------------------
    Distributions declared per
     Fund unit                          $0.360    $0.360     1.080     1.080
    -------------------------------------------------------------------------
    

    Complete financial statements are available at www.sedar.com

    The Fund is a limited purpose open-ended trust established under the laws
of Ontario. The Fund will make monthly distributions of its available cash to
holders of units. The Fund indirectly owns the trade marks and intellectual
property for the Pizza Delight, Mikes, Scores, and Baton Rouge brands and has
licensed them to Imvescor in consideration for a royalty equal to 4% of system
sales for Pizza Delight and Mikes restaurants and a royalty rate of 6% for
Scores and Baton Rouge restaurants.
    Imvescor is a privately owned corporation, headquartered in Moncton, New
Brunswick. It operates franchised and corporate restaurants under the brand
names Pizza Delight(R), Mikes(R), Scores(R), and Baton Rouge(R) restaurants.
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 and
Ontario in the casual dining segment.
    %SEDAR: 00018600E




For further information:

For further information: PDM Royalties Income Fund: William Lane, CMA,
Chief Financial Officer, (506) 853-0990, blane@imvescor.ca; Or visit:
www.pdmfund.ca, www.pizzadelight.ca, www.mikes.ca, www.scores.ca, or
www.batonrougerestaurants.com

Organization Profile

PDM ROYALTIES INCOME FUND

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890