MONCTON, NB, Aug. 14 /CNW/ - PDM ROYALTIES INCOME FUND (the "Fund")
reported today its financial results for the quarter ended June 30, 2007 and
also announced that Pizza Delight Corporation Ltd. (PDC) reported its
financial results for the same period.
For the quarter and year to date, PDC and the Fund are achieving record
levels of sales, revenues, and earnings. Since inception of the Fund the same
store sales growth has been positive in every quarter except Q2, 2006. 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 enhance our presence in
Total revenues during the period were $3.6 million compared to
$2.6 million for 2006. Basic earnings per Fund unit before income taxes for
the period were $0.394 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 in January 1, 2007.
PDC achieved same store sales growth (SSSG) of 2.7% for the second
quarter of 2007 (2006 = -0.7%). Scores was the strongest division for the
quarter with SSSG of 11.8% (2006 = 0.1%) with Pizza Delight at 5.2% (2006 =
0.7%), Mikes -2.5% (2006 = -1.7%), and Baton Rouge was 1.0%.
For the first six months on 2007 PDC achieved same store sales growth
(SSSG) of 1.9% (2006 = 0.9%). Scores lead the group with SSSG of 11.3% (2006 =
4.8%) with Pizza Delight at 3.4% (2006 = 2.7%), Mikes -3.2% (2006 = -2.0%),
and Baton Rouge was 0.6%.
System sales for the 261 restaurants (2006 = 251) included in the royalty
pool increased to $93.5 million compared to $70.3 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 $2,150,000 during the quarter.
Future income tax expense is a non-cash item that does not affect cash flow.
In 2006, PDC 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 results to date have been better than expected and
have exceeded the target. 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 September, 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 PDC 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 PDC to continue opening new restaurants
while prototypes are being completed. PDC has opened seven Scores, one Pizza
Delight, and one Mikes restaurants to date in 2007 and expects to open an
additional three Scores, three Baton Rouge, and one Mikes restaurants this
year. PDC has also renovated four Pizza Delight and two Mikes locations and
expects to renovate an additional four restaurants in 2007.
The addition of Ron Magruder, a 36 year veteran of the restaurant
industry, as the President and Chief Executive Officer of PDC adds substantial
depth, knowledge and resources at the senior executive level. During the past
few months Ron has gained a solid knowledge of PDC 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.
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 PDC 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.
PDC 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.
For further information:
For further information: William Lane, CMA, Chief Financial Officer, PDM
Royalties Income Fund, (506) 853-0990, firstname.lastname@example.org; Or visit:
www.pdmfund.ca, www.pizzadelight.ca, www.mikes.ca, www.scores.ca, or