MONCTON, NB, Jan. 28 /CNW Telbec/ - Imvescor Restaurant Group Inc.
("IRG" or the "Company") (TSX: IRG), reported financial results today
for the 13 weeks ending October 31, 2010 (or "fourth quarter"), and for
the 53 weeks ending October 31, 2010 (or "fiscal year"). The 2009
results are the 17 weeks ("interim period") and 43 weeks ended October
25, 2009 respectively and are therefore not directly comparable.
The Board of Directors has approved a dividend of $0.075 per share
payable February 28, 2011 to shareholders of record on February 14,
2011. The dividend is an eligible dividend for income tax purposes.
Fourth Quarter Highlights
Total system sales increased by 0.1% for the fourth quarter compared to
the period last year and decreased by 1.8% for the fiscal year.
Same store sales declined by 2.0% in the fourth quarter and by 2.5% for
the fiscal year.
IRG lost $2.120 per share in the fourth quarter, due to a $22.9 million
non-cash impairment of goodwill and other intangible assets. Prior to
the non-cash impairment charge, earnings per share were $0.305 for the
fourth quarter and $0.493 for the fiscal year.
IRG repaid $0.9 million in long-term debt during the fourth quarter and
$3.4 million for the fiscal year.
Subsequent to the end of the fiscal year, the Company renewed the $15
million loan with GE Canada Equipment Financing G.P. ("GE") which was
due in December 2011.
During the preparation of the consolidated financial statements for the
53 weeks ending October 31, 2010, an overstatement of future income
taxes and goodwill related to the Plan of Arrangement was identified
for the 43 weeks and 17 weeks ending October 25, 2009. In addition the
tax treatment previously accorded to certain transactions between the
PDM Limited Partnership and the previous Fund had not been allocated
appropriately in calculating the purchase price allocation. This
restatement gives effect to the adjustment of goodwill and the future
income tax liability, as well as the effect on opening shareholders'
equity and on the provision for income taxes for the 43 weeks ended
October 25, 2009. The 2009 figures have been restated in the
consolidated financial statements for the 53 weeks ended October 31,
2010. This non-cash adjustment has no impact on net cash flow or cash
balances previously reported
"2010 has been a challenging year with difficult economic conditions,"
said William Lane, Interim Chief Executive Officer. "The Company will
continue to focus on increasing revenues and attracting new
franchisees, while new store openings and renovations are expected to
increase our system sales. The restaurant industry in Canada has
struggled in 2010 as reported by the Canadian Restaurant Foodservices
Association (CRFA). According to the CRFA most restaurants experienced
guest count declines in 2010 on top of the declines that had been
experienced in 2009. Our restaurants offer great value to Canadians and
remain well positioned to benefit as consumers disposable income and
confidence increases. We are very pleased that we were successful in
securing the $15 million loan renewal with GE which provides comfort
and short and long term benefits to all stakeholders."
Fourth Quarter 2010 Financial and Operating Results
(Please see "Information on Basis of Comparison" following the Outlook
section of this release)
For the 53 weeks ended October 31, 2010, the Company opened 1 Pizza
Delight, 2 Mikes, 4 Scores, 1 Baton Rouge and closed 1 Pizza Delight
and 3 Mikes while renovating 8 Pizza Delights and 8 Mikes. Subsequent
to October 31, 2010, 1 Pizza Delight, 1 Scores, and 1 Mikes were opened
while 1 Pizza Delight and 1 Mikes were closed.
The following table provides selected financial information for the 13
week and 53 week periods ending October 31, 2010, along with results
for the prior year, which were calculated for the 17 weeks and 43 weeks
ended October 25, 2009.
(in thousands of dollars except per
share / fund unit items)
Royalties, franchise fees and other related revenue
Gross profit on sales
Advertising and administrative expenses
Impairment of Imvescor rights and other assets
Impairment of goodwill
Basic earnings per share / fund unit
Diluted earnings per share / fund unit
IRG derives its revenues primarily from royalties based on system sales
from each of its four brands: Pizza Delight™, Mikes™, Scores™ and Baton
Total system sales for the 13 weeks ended October 31, 2010 were $101.4
million, as compared to $137.3 million for the interim 17 weeks in
2009. For the 53 week period ended October 31, 2010 total system sales
were $413.2 million as compared to $341.3 million for the 43 week
period ended October 25, 2009. Because of the change in the Company's
fiscal period-end in 2009, these are not directly comparable.
Royalties, advertising fees and related revenue for the fourth quarter
were $9.9 million and $39.4 million for the 53 weeks ended October 31,
2010 as compared to $1.6 million for both comparable periods in fiscal
2009. The significant increase in revenue is a result of the new
Same store sales ("SSS") were down 2.0% during the fourth quarter. SSS
at Pizza Delight were +0.9%; Mikes SSS were -1.2%; Scores SSS were
-8.2%; and Baton Rouge SSS grew +2.4% for the fourth quarter. For the
53 weeks ended October 31, 2010, SSS were down 2.5%. Even though the
decreases in 2010 are mainly attributed to the ongoing challenging
economic conditions, the Company remains focused on improving its
performance in 2011.
Net earnings for the Company for the fourth quarter ending October 31,
2010 were a loss of $20.0 million or $2.120 per fully diluted share.
The net loss included a $17.6 million non-cash impairment of goodwill
and a $5.3 million non-cash impairment of IRG's rights and other
assets. Net earnings before taxes and the non-cash impairment were
$2.1 million for the fourth quarter.
Total long-term debt at October 31, 2010 decreased to $43.7 million as
compared to $47.0 million at October 25, 2009, a result of principal
payments. Debt repayment remains a priority of the Company.
The Company has set the refinancing of the Convertible Debentures as a
priority for 2011 as a key step to conclude the long term financial
restructuring. The Convertible Debentures are due in December, 2011 and
if not refinanced would have a substantial dilution effect on IRG
CHANGES TO THE BOARD COMPOSITION
IRG also announced today that the Honorable Herb Breau and Mr. Gilles
Pépin have resigned as directors, effective today. The remaining
directors accepted the resignations and have filled the vacancies
created through the appointment of Mr. Pierre-Yves Julien, President &
CEO of Medavie Blue Cross and by Monique Imbeault, Executive Vice
President of General Financial Corporation Ltd. ("GFC"). Mr Julien will
serve as an independent director while Monique Imbeault will be a
non-independent director since GFC is an insider of IRG, being the
holder of approximately 28% of the issued and outstanding common shares
of IRG. Both Mr. Julien and Mrs. Imbeault will serve as directors until
the next annual general meeting of IRG.
"I would like to express our sincere gratitude to Mr. Breau and Mr Pépin
for their work on the Board this past year," said Gabriel Sacratini,
Chairman of the Board.
The Company believes that its restaurant brands provide quality food and
good value to consumers in the mid-scale category which helps maintain
sales as the general economic conditions continue to be a challenge.
The Company intends to continue its focus on growing existing restaurant
sales and expanding the number of franchised restaurants in Ontario,
Quebec, Atlantic Canada, and Alberta. This will be accomplished through
a combination of building design, menu enhancement, brand awareness and
regular renovations to modernize the existing restaurants.
Management expects same store sales growth from renovations to the Mikes
and Pizza Delight restaurants in its current markets while the new
concepts will provide a solid platform in the markets where the Company
plans to expand. Management plans on aggressively renovating its
existing restaurants to these new concepts over the next few years.
The Company will continue to seek opportunities to open new restaurants.
One Baton Rouge restaurant, four Scores restaurants, two Mikes
restaurants and one Pizza Delight restaurant were opened in the 2010
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® operates primarily in Atlantic Canada, where it
dominates the family/mid-scale segment. Mikes® and Scores® restaurants
operate primarily in Quebec in the family and casual dining segments
and the take-out and delivery segments. Baton Rouge® operates in the
Province of Quebec, Ontario, and Alberta in the casual dining segment.
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.
SOURCE IMVESCOR RESTAURANT GROUP
For further information:
|Mélanie Joly |
|William R. Lane, CMA|
Interim Chief Executive Officer and President,
Executive Vice-President & Chief Financial Officer
Imvescor Restaurant Group Inc.
For more information about our brands: