The Fund's net income was $4.3 million for the Period and $2.0 million for the Year compared to net income of $0.3 million and of $15.6 million, respectively, in the same periods in 2011. The changes in net income for the Period and Year were mainly driven by the changes in fair value adjustments on the Class B units of Boston Pizza Royalties Limited Partnership (the "Class B Unit liability"). The Fund's net income under International Financial Reporting Standards ("IFRS") contains non-cash items, such as the fair value adjustment on the Class B Unit liability, that do not affect the Fund's business operations or its ability to pay distributions to unitholders. In the Fund's view, net income is not the only or most meaningful measurement of the Fund's ability to pay distributions. Consequently, the Fund has provided the non-IFRS metrics of Distributable Cash(2) and Payout Ratio(3) to provide investors with more meaningful information regarding the amount of cash that the Fund has generated to pay distributions. Readers are cautioned that Distributable Cash(2) and Payout Ratio(2) are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. For a reconciliation between cash flow from operating activities (the most directly comparable IFRS measure) and Distributable Cash(2) and a detailed discussion on the Fund's Distributable Cash(2) and Payout Ratio(3), please see the "Operating Results - Distributable Cash / Payout Ratio" section in the Fund's Management's Discussion and Analysis for the Period.
The Fund's Distributable Cash(2) was $4.5 million or $0.303 per unit of the Fund ("Unit") for the Period and $17.4 million or $1.184 per Unit for the Year compared to $4.1 million or $0.281 per Unit and $16.1 million or $1.104 per Unit for the same periods, respectively, in 2011. This represents increases of 10.9% for the Period and 8.0% for the Year compared to the same periods, respectively, one year ago. These increases were mainly driven by higher royalty revenue. Distributions for the Period and the Year were funded entirely by cash flow from operations. No debt was incurred at any point during the Period or the Year to fund distributions.
The Fund's Payout Ratio(3) was 98.7% for the Period and 99.3% for the Year compared to 98.3% and 95.7% in the same periods, respectively, one year ago. The Fund's Payout Ratio(3) for the Period and the Year increased compared to the same periods one year ago primarily due to the distribution increase beginning with the February 2012 distribution to unitholders. The Fund strives to provide unitholders with regular monthly distributions, and as a result, the Fund will generally experience seasonal fluctuations in its Payout Ratio(3). The Fund's Payout Ratio(3) is likely to be higher in the first and fourth quarters compared to the second and third quarters since Boston Pizza restaurants experience higher Franchise Sales(1) during the summer months when restaurants open their patios and benefit from increased tourist traffic. Higher Franchise Sales(1) generally result in increases in Distributable Cash(2). A key feature of the Fund is that it is a "top line" structure, in which BPI pays the Fund a royalty equal to 4% of Franchise Sales(1) from restaurants in the Fund's royalty pool. Accordingly, Fund unitholders are not directly exposed to changes in the operating costs or profitability of BPI or of individual Boston Pizza restaurants. Given this structure, and that the Fund has no current mandate to retain capital for other purposes, it is expected that the Fund will maintain a Payout Ratio(3) close to 100% over time as the trustees of the Fund continue to distribute all available cash in order to maximize returns to unitholders. As the Payout Ratio(3) is calculated from a formula which includes Distributable Cash(2), which is a non-IFRS measure, a reconciliation of Payout Ratio(3) to an IFRS measure is not possible. For a reconciliation of Distributable Cash(2) to its closest IFRS measure, cash flows from operating activities, see the "Operating Results - Distributable Cash / Payout Ratio" section in the Fund's Management's Discussion and Analysis for the Period.
Most Popular Stories
- 15 Myths That Could Ruin Your Hispanic Ad Campaign
- Bitcoin Clones Lurch Onto Financial Scene
- General Motors Names Mary Barra as First Female CEO
- AIG to Create 230 Jobs in Charlotte
- Clinton to Keynote Annual Simmons Leadership Conference
- How Bitcoin and Other Cryptocurrencies Work
- Californians Want to Legalize Marijuana
- Pacific Trade Pact Delay Hinders U.S. Pivot to Asia
- Budget Deal Sets Off Grumbles in Both Houses
- Russia Says Nyet to Canada North Pole Claim