SIR Royalty Income Fund reports fiscal 2008 second quarter results



    BURLINGTON, ON, Aug. 14 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN)
("the Fund") today reported its financial results for the three and six-month
periods ended June 30, 2008.

    
    Q2 2008 Highlights:

    -   Pooled Revenue increased 10.9% to $45.4 million compared to
        $41.0 million in Q2 2007;
    -   6.8% same store sales growth ("SSSG")(1) for restaurants in the
        Royalty pool;
    -   Net earnings increased to $1.98 million or $0.37 per Fund unit
        compared to net earnings of $0.94 million or $0.18 per Fund Unit in
        Q2 2007;
    -   Distributable cash(2) for the period totaled $1.98 million and
        distributions paid to unitholders were $1.79 million, representing a
        payout ratio(2) of 90.6% for the quarter;
    -   SIR opened a new Jack Astor's(R) and a Canyon Creek(R) near Toronto's
        Pearson International Airport; and, a new Jack Astor's(R) at the
        corner of Yonge and Dundas Streets in downtown Toronto;
    -   Fund Trustees approved a 4.5% increase to unitholder distributions in
        May, resulting in a current estimated annualized distribution of
        $1.38 per trust unit.
    

    "We had a strong second quarter, with consolidated same store sales
growth of nearly seven percent and quarterly Pooled Revenue exceeding
$45 million for the first time. Our growth is being driven by both the new
Royalty Pooled restaurants and our long established locations, both in our
concept and signature groups. We believe this reflects the underlying strength
of our diverse portfolio of restaurant brands," said Peter Fowler, Chief
Executive Officer of SIR Corp. ("SIR") "Since the SIR Royalty Income Fund
completed its initial public offering late in 2004, we focused on investing in
our existing restaurants first, enhancing our brands through renovations, menu
alterations and other initiatives, and then we expanded, building on a
stronger foundation. Supported by our diverse and popular restaurant brands,
we are now reaping the rewards of our measured, customer-focused approach as
we grow our business."
    "We continue to elevate the profile of our flagship Jack Astor's brand
with new restaurant openings in high traffic downtown Toronto locations, such
as the corner of Yonge and Dundas Streets and more recently, with the
conversion of our former Brasserie Frisco(R) location in Toronto's
entertainment district into a Jack Astor's," added Mr. Fowler. "We expect to
open a new Jack Astor's at the intersection of Yonge and Bloor streets later
this year. Other future restaurant sites which have been announced include a
new Jack Astor's in Don Mills, Ontario and Boisbriand, Quebec, just north of
Montreal, a new Canyon Creek in Brampton, Ontario and two new locations at the
corner of Yonge and Gerrard Streets in downtown Toronto."

    Financial Results

    Revenue for the restaurants in the Royalty pool (or "Pooled Revenue") for
the three-month period ended June 30, 2008, increased 10.9% to $45.4 million
compared to Pooled Revenue of $41.0 million in the second quarter of 2007. The
increase in Pooled Revenue resulted primarily from same store sales growth
("SSSG")(1) from SIR's Concept and Signature Restaurant groups and the
addition of three new Jack Astor's restaurants to the Royalty Pool, effective
January 1, 2008.
    The Fund's net earnings for the first quarter of 2008 increased to
$1.98 million, or $0.37 per Fund Unit (basic and diluted), compared to net
earnings of $0.94 million or $0.18 per Fund Unit (basic and diluted) in the
second quarter of 2007.
    Distributable cash(2) for the first quarter of 2008 totaled
$1.98 million, or $0.37 per Fund Unit (basic and diluted), and distributions
paid to unitholders totaled $1.79 million, representing a payout ratio(2) of
90.6% for the period. Distributable cash(2) for the second quarter of 2007
totaled $1.79 million or $0.33 per Fund Unit (basic and diluted) and
distributions paid totaled $1.71 million, representing a payout ratio of 95.5%
for the period.
    Pooled Revenue for the six-month period ended June 30, 2008, increased
8.8% to $87.4 million, compared to Pooled Revenue of $80.4 million in the
first six months of 2007. The Fund's net earnings for the first six months of
2008 increased to $3.80 million, or $0.71 per Fund Unit (basic and diluted),
compared to $2.67 million, or $0.50 per Fund Unit (basic and diluted) in the
first six months of 2007. Distributable cash(2) for the six months ended
June 30, 2008 totaled $3.80 million, or $0.71 per Fund Unit (basic and
diluted), and distributions paid totaled $3.56 million, representing a payout
ratio of 93.9%.

    

                                       3-month   3-month   6-month   6-month
    Financial Highlights                period    period    period    period
    ($000s except restaurants and       ended     ended     ended     ended
     per unit amounts)                 June 30,  June 30,  June 30,  June 30,
    (unaudited)                          2008      2007      2008      2007

    Restaurants in the Royalty pool         39        38        39        38
    Pooled Revenue generated by SIR     45,424    40,956    87,448    80,407
                                      ---------------------------------------
                                      ---------------------------------------

    Royalty income to Partnership
     - 6% of Pooled Revenue              2,725     2,457     5,247     4,824
    Partnership other income                15        14        32        28
    Partnership expenses                   (24)      (22)      (68)      (61)
                                      ---------------------------------------
    Partnership earnings                 2,716     2,449     5,211     4,791
    SIR's interest (Class A, B, and
     C GP Units)                        (1,360)   (1,238)   (2,668)   (2,458)
                                      ---------------------------------------
    Partnership income allocated
     to Fund                             1,356     1,211     2,543     2,333
    Interest income                        750       750     1,500     1,500
                                      ---------------------------------------
    Total income of the Fund             2,106     1,961     4,043     3,833
    General & administrative expenses     (124)     (167)     (248)     (309)
                                      ---------------------------------------
    Net earnings before income taxes
     of the Fund                         1,982     1,794     3,795     3,524
    Future income taxes                      -      (853)        -      (853)
                                      ---------------------------------------
    Net earnings of the Fund             1,982       941     3,795     2,671
                                      ---------------------------------------
                                      ---------------------------------------

    Earnings per Fund unit (basic and
     fully diluted)                       0.37      0.18      0.71      0.50
    Distributable cash(2) per Fund
     unit (basic and fully diluted)       0.37      0.33      0.71      0.66


    Same Store Sales(1)

    For the three and six-month periods ended June 30, 2008, SIR reported to
the Fund consolidated SSSG(1) for restaurants in the Royalty pool of 6.8% and
4.3%, respectively, versus the corresponding periods in 2007.


                                     3-month period        6-month period
    SSSG(1) for Restaurants in     ended June 30, 2008   ended June 30, 2008
     the Royalty pool                  (unaudited)           (unaudited)
    -------------------------------------------------------------------------
    Jack Astor's(R)                        6.6%                  4.3%
    Canyon Creek Chop House(R)             6.2%                  3.2%
    Alice Fazooli's!(R)                    8.1%                  4.7%
    Signature Restaurants                  7.6%                  5.8%
    -------------------------------------------------------------------------
    Overall SSSG(1)                        6.8%                  4.3%
    

    SIR Corporate Developments

    Three new Jack Astor's restaurants were added to the Royalty Pooled
Restaurants from which the Fund earns distribution income, effective
January 1, 2008. Effective January 1, 2008, Brasserie Frisco and a Jack
Astor's that was closed during 2007 were removed from the Royalty Pooled
Restaurants as New Closed Restaurants.
    During the first quarter of 2008, SIR opened FOUR(TM), a new healthy
upscale restaurant with each dish having less than 650 calories. The opening
of FOUR marks the completion of the renovations that were conducted to the
former Soul of the Vine in the fourth quarter of 2007 in order to introduce
the innovative bakery concept, Petit Four(TM).
    During the second quarter ended June 30, 2008, SIR opened a new Jack
Astor's and a new Canyon Creek restaurant near Toronto's Pearson International
Airport and a new Jack Astor's at the corner of Yonge and Dundas Streets in
downtown Toronto. Subsequent to the end of the second quarter, on July 7,
2008, a new Jack Astor's was opened in the former Brasserie Frisco location in
Toronto's downtown entertainment district. These four restaurants are expected
to be added to the Royalty Pool effective January 1, 2009 as New Additional
Restaurants.
    SIR has secured the following additional development sites for new Jack
Astor's restaurants with expected 2008 openings: i) a "lifestyle mall" in Don
Mills, Ontario and ii) the corner of Yonge and Bloor Streets in downtown
Toronto. The Don Mills location is expected to open on or before November 1,
2008 and is expected to be added to the Royalty Pool as a New Additional
Restaurant effective January 1, 2009. The Jack Astor's location at Yonge and
Bloor is not scheduled to open until after November 1, 2008 and therefore is
expected to be added to the Royalty Pool as a New Additional Restaurant
effective January 1, 2010. SIR has also secured new development sites for a
Jack Astor's restaurant in Boisbriand, Quebec and a Canyon Creek restaurant in
Brampton, Ontario, with expected opening dates sometime in 2009; and two new
restaurant sites at the corner of Yonge and Gerrard Streets in downtown
Toronto, with expected opening dates sometime in 2011.
    The Fund's 2008 second quarter Financial Statements and Management's
Discussion & Analysis ("MD&A"), and the Partnership's Financial Statements,
for the three and six-month periods ended June 30, 2008 will be filed on SEDAR
today and will be available via the SEDAR web site at www.sedar.com tomorrow.
The Fund's 2008 second quarter Financial Statements and MD&A are also
available via SIR's website at www.sircorp.com.

    2008 Second Quarter Conference Call & Web Cast

    SIR Management will host a conference call on August 15 at 10:00 am (EST)
to review the financial results. The call will be hosted by Peter Fowler, CEO,
and Jeff Good, Chief Financial Officer. The call will be audio-cast live and
archived for 90 days at www.newswire.ca or www.sircorp.com. A taped replay of
the conference call will also be available until Friday, August 22, 2008 at
midnight by calling 1-877-289-8525 or 416-640-1917, reference number 21278225
followed by the number sign.

    
    (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.
    SSSG 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, the Fund believes that SSS and SSSG are
    useful measures and provide investors with an indication of the change in
    year-over-year sales. the Fund'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.

    (2) Distributable cash and payout ratio are non-GAAP financial measures
    and do not have a standardized meaning prescribed by GAAP. However, the
    Fund believes that distributable cash and the payout ratio are useful
    measures as they provide investors with an indication of cash available
    for distribution. The Fund's method of calculating distributable cash and
    the payout ratio may differ from that of other issuers and, accordingly,
    distributable cash and the payout ratio may not be comparable to measures
    used by other issuers. Investors are cautioned that distributable cash
    and the payout ratio should not be construed as an alternative to the
    statement of cash flows as a measure of liquidity and cash flows of the
    Fund. The payout ratio is calculated as cash distributed for the period
    as a percentage of the distributable cash for the period. For a detailed
    explanation of how the Fund's distributable cash is calculated, please
    refer to the Fund's MD&A for the three and six-month periods ended
    June 30, 2008, which can be accessed via the SEDAR web site
    (www.sedar.com) or via SIR Corp.'s web site at www.sircorp.com.
    

    About SIR Corp.

    SIR is a privately held Canadian corporation that owns and operates a
portfolio of 43 restaurants in Canada. SIR's concept brands include: Jack
Astor's Bar and Grill(R), with 27 locations; Alice Fazooli's!(R), with five
locations; and Canyon Creek Chop House(R), with eight locations. SIR also
operates one-of-a-kind "signature" brands in downtown Toronto, which comprise
the upscale reds(R), Far Niente(R)/FOUR(TM) & Petit Four(TM), 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 39 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
    ---------------------------------------------
    

    Statements in this release, including the information set forth as to the
future financial or operating performance of the Fund or SIR, that are not
current or historical factual statements may constitute "forward-looking"
information within the meaning of securities laws. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Fund,
the Trust, the Partnership, SIR, the SIR Restaurants, or industry results, 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 may include, among other language, such words as
"may", "will", "expect", "believe", "plan", "anticipate", "intend", "estimate"
and other similar terminology. These statements reflect Management's current
expectations, estimates and projections regarding future events and operating
performance and speak only as of the date of this document. Readers should not
place undue importance on forward-looking statements and should not rely upon
this information as of any other date. These forward-looking statements
involve a number of risks and uncertainties. The following are some of the
factors that could cause actual results to differ materially from those
expressed in or underlying such forward-looking statements: competition;
changes in demographic trends; changing consumer preferences and discretionary
spending patterns; changes in national and local business and economic
conditions; legal proceedings and challenges to intellectual property rights;
dependence of the Fund on the financial condition of SIR; legislation and
governmental regulation; accounting policies and practices; and the results of
operations and financial condition of SIR. The foregoing list of factors is
not exhaustive. Many of these issues can affect the Fund's or SIR's actual
results and could cause their actual results to differ materially from those
expressed or implied in any forward-looking statements made by, or on behalf
of, the Fund or SIR. Readers are cautioned that forward-looking statements are
not guarantees of future performance, and should not place undue reliance on
them. 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, estimates and
projections with regard thereto or any changes in events, conditions or
circumstances on which any statement is based, except as expressly required by
law.
    In formulating the forward-looking statements contained herein,
Management has assumed 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 those regarding employees, food safety, tobacco and alcohol),
weather, taxes, foreign exchange rates and interest rates, that there will be
no pandemics or other material 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. These assumptions, although considered
reasonable by Management at the time of preparation, may prove to be
incorrect. In particular, in estimating the revenues for the three new Jack
Astor's restaurants, Management has assumed that they will operate consistent
with other Jack Astor's restaurants. For more information concerning the
Fund's risks and uncertainties, please refer to the October 2004 final
prospectus, and/or its March 31, 2008 Annual Information Form, all of which
are available under the Fund's profile at www.sedar.com.

    %SEDAR: 00020914E




For further information:

For further information: Jeff Good, Chief Financial Officer, SIR Corp.,
5360 South Service Road, Suite 200, Burlington, Ontario, Canada, L7L 5L1, Tel:
(905) 681-2997; Bruce Wigle, Investor Relations, Tel: (416) 815-0700 ext. 228,
Email: bwigle@equicomgroup.com


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