For Immediate Release Toronto Stock Exchange: BPF.UN
BOSTON PIZZA ROYALTIES INCOME FUND ANNOUNCES
RECORD FRANCHISE SALES AND RECORD ROYALTY INCOME FOR THIRD QUARTER 2012
Trustees declare October distribution to unitholders of 9.8 cents per unit
Highlights
- Same
store sales growth of 1.0% for the Period and 3.7% YTD.
- Record
Franchise Sales[1]
from royalty pool restaurants and record royalty income of $186.1 million
and $7.4 million respectively, the highest levels posted in any quarter
since the inception of the Fund.
- Distributable
Cash[2] increased 5.5%
for the Period and 7.0% YTD versus the same periods in 2011.
- Payout
Ratio3 was 94.6% for the Period and 99.5% YTD.
· Net loss reported for the Period of $1.6
million and YTD of $2.3 million are due to non-cash accounting items of $5.9
million and $15.5 million, respectively, that do not affect the Fund’s business
operations or its ability to pay distributions to unitholders.
- The Fund announced a Normal Course Issuer Bid which
permits the repurchase for cancellation of up to 1,442,522 units.
VANCOUVER,
BC, November 9, 2012 - Boston Pizza Royalties Income Fund (the “Fund”) and Boston Pizza International
Inc. (“BPI”) each reported today
financial results for the period from July 1, 2012 to September 30, 2012 (the “Period”) and from January 1, 2012 to September
30, 2012 (“YTD”). A copy of this
press release, the consolidated interim financial statements for the Period and
related Management’s Discussion and Analysis of the Fund and BPI are available at www.sedar.com and www.bpincomefund.com. The Fund will host a conference call to discuss the
results on November 9, 2012 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern
Time). The call can be accessed by dialling 1-800-319-4610 or 604-638-5340. A
replay will be available until December 8, 2012 by dialling 1-800-319-6413 or
604-638-9010 and entering the pin code: 4452 followed by the # sign.
Same store sales growth (“SSSG”), a key driver of distribution
growth for unitholders of the Fund, was 1.0% for the Period and 3.7% YTD
compared to 6.1% and 4.5%, respectively, for the same periods in 2011. Franchise
Sales1, the basis upon which royalties are paid by Boston
Pizza International Inc. (“BPI”) to
the Fund, exclude revenue from the sale of liquor, beer, wine and tobacco and
approved national promotions and discounts. On a Franchise Sales1
basis, SSSG was 0.9% for the Period and 3.5% YTD compared to 5.6% and 4.6%,
respectively, for the same periods in 2011. The positive SSSG in the Period and
YTD was principally due to higher takeout and delivery sales resulting from
continued promotion of Boston Pizza’s online ordering system and higher chicken
wing sales resulting from the introduction of “All Meat Wings” earlier in 2012.
Franchise Sales1 of restaurants in the royalty pool were a record $186.1
million for the Period and a record $546.3 million YTD compared to $183.2
million and $521.9 million, respectively, in the same periods in 2011. The
increases in Franchise Sales1 for the Period and YTD are attributed
to the positive SSSG experienced in the Period and YTD and the addition of
three net new restaurants to the
Fund’s royalty pool on January 1, 2012.
“We
are very pleased with Boston Pizza’s record sales results for the third quarter
of 2012, particularly when compared against the already strong sales levels we
achieved one year ago,” said Mark Pacinda, President and CEO of BPI. “Also
during the Period, we reached significant milestones on several operating
initiatives including the opening of our first ever ‘fast casual’ format Boston
Pizza restaurant and the launch of our new national menu, which introduced 26
new items like Pulled Pork Pizza, The Meatball Grinder Sandwich and
Chipotle Chicken Club.”
The Fund’s net loss was $1.6 million for the
Period with a net loss of $2.3 million YTD compared to net income of $5.5
million and of $15.3 million, respectively, in the same periods in 2011. The
decreases in net income for the Period and YTD were driven mainly by changes in
the fair value adjustment on Class B units of Boston Pizza Royalties Limited
Partnership (the “Class B Unit liability”)
of $7.0 million and $18.1 million, respectively. 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
Cash2 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 Cash2 and Payout Ratio2 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 Cash2 and a
detailed discussion on the Fund’s Distributable Cash2 and Payout
Ratio3, please see the Fund’s Management’s Discussion and Analysis
for the Period.
The Fund’s Distributable Cash2
was $4.5 million or $0.311 per unit of the Fund (“Unit”) for the Period and $12.8 million or $0.881 per Unit YTD
compared to $4.3 million or $0.294 per Unit and $12.0 million or $0.823 per
Unit for the same periods, respectively, in 2011. This represents increases of 5.5%
for the Period and 7.0% YTD compared to the same periods, respectively, one
year ago. These increases were driven by higher royalty revenue partially
offset by changes in non-cash working capital. Distributions for the Period and
YTD were funded entirely by cash flow from operations. No debt was incurred at
any point during the Period or YTD to fund distributions.
The Fund’s Payout Ratio3
was 94.6% for the Period and 99.5% YTD compared to 93.7% and 94.7% in the same
periods, respectively, one year ago. The Fund’s Payout Ratio3 for
the Period and YTD 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 Ratio3. On a trailing 12-month basis, the Fund’s Payout
Ratio3 was 99.2% as at September 30, 2012. The Fund’s Payout Ratio3
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
Sales1 during the summer months when restaurants open their patios
and benefit from increased tourist traffic.
Higher Franchise Sales1 generally result in increases in Distributable
Cash2. 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 Sales1 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 Ratio3 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 Ratio3 is calculated from a formula which
includes Distributable Cash2, which is a non-IFRS measure, a
reconciliation of Payout Ratio3 to an IFRS measure is not
possible. For a reconciliation of Distributable Cash2 to its
closest IFRS measure, cash flows from operating activities, see the “Operating
Results – Distributable Cash / Payout Ratio” section in the Fund’s most recent
Management’s Discussion and Analysis.
On August 22, 2012, the Fund
announced that it had received Toronto Stock Exchange (“TSX”) approval of a Notice of Intention to Make a Normal Course
Issuer Bid through the facilities of the TSX from September 4, 2012 to no later
than August 31, 2013 (the “2012 NCIB”).
The 2012 NCIB permits the Fund to repurchase for cancellation up to 1,442,522
Units, being approximately 9.9% of the Fund’s issued and outstanding units (as
at August 17, 2012) and approximately 10.0% of its public float, then comprised
of 14,452,221 units. Unitholders may obtain, without charge, a copy of the
Notice of Intention to Make a Normal Course Issuer Bid that the Fund filed with
the TSX by contacting the Vice President of Investor Relations for the Fund. As
of November 8, 2012, the Fund had not purchased any Units under the 2012 NCIB.
The trustees of the Fund
announced a cash distribution to unitholders of 9.8 cents per Unit for October
2012. The distribution will be payable to unitholders of record at the close of
business on November 21, 2012 and will be paid on November 30, 2012. The Fund
periodically reviews distribution levels based on its policy of stable and
sustainable distribution flow to unitholders. Since the Fund’s initial public
offering in 2002, unitholders have received 15 distribution increases. The most
recent distribution increase of 6.5% was effective for the February
distribution payable in March and increased the monthly distribution amount
from 9.2 cents per Unit to 9.8 cents per Unit. Including the October 2012
distribution, which will be paid in November 2012, the Fund will have paid out
124 consecutive monthly distributions totalling $154.6 million or $12.58 per Unit.
FINANCIAL
SUMMARY
The tables below sets out selected information from
the consolidated interim financial statements of the Fund, which consolidates
the accounts of Boston Pizza Royalties Limited Partnership, together with other data and should be read
in conjunction with the interim consolidated financial statements of the
Fund.
| | Q3 2012 | Q3 2011 | YTD 2012 | YTD 2011 |
| (in thousands of dollars – except restaurants,
SSSG, Payout Ratio3 and per Unit items) | | | | |
| System-wide Gross Sales[4] | 239,269 | 235,911 | 703,289 | 672,159 |
| Number of restaurants in Royalty Pool[5] | 341 | 336 | 341 | 336 |
| Franchise Sales1
reported by restaurants in the Royalty Pool | 186,084 | 183,163 | 546,258 | 521,864 |
| | | | | |
| Revenues | | | | |
| Royalty revenue – 4% of Franchise Sales1 | 7,443 | 7,327 | 21,850 | 20,875 |
| Interest income | 453 | 454 | 1,361 | 1,361 |
| Total revenues | 7,896 | 7,781 | 23,211 | 22,236 |
| | | | | |
| Expenses |
|
|
|
|
| Administrative expenses and interest on bank
debt | (616) | (449) | (1,605) | (1,462) |
| Interest expense on BPI on Class B Units
and Class C Units[6] | (1,628) | (1,447) | (4,317) | (3,772) |
| Fair value adjustment on Class B Unit
liability[7] | (5,890) | 1,148 | (15,500) | 2,577 |
| Fair value adjustment on interest rate swap | 67 | - | 67 | - |
| Subtotal | (8,067) | (748) | (21,355) | (2,657) |
| Current income tax expense | (1,350) | (1,449) | (4,002) | (4,078) |
| Deferred income tax expense | (60) | (100) | (150) | (220) |
| Total expenses | (9,477) | (2,297) | (25,507) | (6,955) |
| |
|
|
|
|
| Net Income (loss) |
|
|
|
|
| Net income (loss) | (1,581) | 5,484 | (2,292) | 15,281 |
| Basic earnings (loss) per Unit | (0.11) | 0.38 | (0.16) | 1.05 |
| Diluted earnings (loss) per Unit | (0.11) | 0.24 | (0.16) | 0.79 |
| |
|
|
|
|
| Distributable Cash2 / Distributions /
Payout Ratio3 |
|
|
|
|
| Cash flows from operating activities | 6,189 | 7,266 | 12,169 | 20,453 |
| Class C
distributions to BPI | (450) | (450) | (1,350) | (1,350) |
| BPI Class B
entitlement | (1,211) | (1,077) | (3,509) | (3,029) |
| SIFT tax on
Units[8] | - | (1,449) | 5,523 | (4,078) |
| Distributable
Cash2 | 4,528 | 4,290 | 12,833 | 11,996 |
| Distributions payable[9] | 4,284 | 4,021 | 12,764 | 11,365 |
| Payout Ratio3 | 94.6% | 93.7% | 99.5% | 94.7% |
| Distributable Cash per Unit2 | 0.311 | 0.294 | 0.881 | 0.823 |
| Distributions payable per Unit9 | 0.294 | 0.276 | 0.876 | 0.780 |
| | | | | |
| Other | | | | |
| Same store sales growth (SSSG) | 1.0% | 6.1% | 3.7% | 4.5% |
| Number of restaurants opened during the period | 1 | 0 | 3 | 5 |
| Number of restaurants closed during the period | 0 | 2 | 2 | 4 |
| | | Sep 30, 2012 | | Dec 31, 2011 |
| Total assets | | 264,391 | | 261,571 |
| Total liabilities | | 116,246 | | 99,794 |
| | Q3
2012 | Q2
2012 | Q1
2012 | Q4
2011 |
| (in thousands of dollars – except restaurants,
SSSG, Payout Ratio1 and per Unit items) | | | | |
| System-wide Gross Sales4 | 239,269 | 237,955 | 226,065 | 232,713 |
| Number of restaurants in Royalty Pool5 | 341 | 341 | 342 | 336 |
| Franchise Sales1
reported by restaurants in the Royalty Pool | 186,081 | 183,593 | 176,581 | 177,465 |
| | | | | |
| Revenues | | | | |
| Royalty revenue
– 4% of Franchise Sales1 | 7,443 | 7,344 | 7,063 | 7,098 |
| Interest income | 453 | 453 | 455 | 454 |
| Total revenues | 7,896 | 7,797 | 7,518 | 7,552 |
| | | | | |
| Expenses | | | | |
| Administrative
expenses and interest on bank debt | (616) | (512) | (477) | (432) |
| Interest
accrued to BPI on Class B Units and Class C Units6 | (1,628) | (1,628) | (1,061) | (2,042) |
| Fair value adjustment on Class B Unit
liability7 | 5,890 | 1,953 | (11,563) | (3,308) |
| Fair value adjustment on interest rate swap | 67 | - | - | - |
| Subtotal | (8,067) | (187) | (13,101) | (5,782) |
| Current income tax expense | (1,350) | (1,351) | (1,301) | (1,396) |
| Deferred income tax expense | (60) | (70) | (20) | (70) |
| Total expenses | (9,477) | (1,608) | (14,422) | (7,248) |
| | | | | |
| Net Income (loss) | | | | |
| Net income (loss) | (1,581) | 6,189 | (6,904) | 304 |
| Basic earnings (loss) per Unit | (0.11) | 0.42 | (0.47) | 0.02 |
| Diluted earnings (loss) per Unit | (0.11) | 0.24 | (0.47) | 0.02 |
| | | | | |
| Distributable Cash2 / Distributions /
Payout Ratio3 | | | | |
| Cash flows from operating activities | 6,189 | 5,903 | 77 | 7,037 |
| Class C
distributions to BPI | (450) | (450) | (450) | (450) |
| BPI Class B
entitlement | (1,211) | (1,178) | (1,154) | (1,099) |
| SIFT tax on
Units8 | - | (1) | 5,524 | (1,396) |
| Distributable
cash2 | 4,528 | 4,274 | 3,997 | 4,092 |
| Distributions payable9 | 4,284 | 4,284 | 4,196 | 4,021 |
| Payout Ratio3 | 94.6% | 100.2% | 105.0% | 98.3% |
| Distributable cash per Unit2 | 0.311 | 0.293 | 0.274 | 0.281 |
| Distributions payable per Unit9 | 0.294 | 0.294 | 0.288 | 0.276 |
| | Q3
2011 | Q2
2011 | Q1
2011 | Q4
2010 |
| (in thousands of dollars – except restaurants,
SSSG, payout ratio and per Unit items) | | | |
|
| System-wide Gross Sales4 | 235,911 | 228,766 | 207,482 | 215,303 |
| Number of restaurants in Royalty Pool5 | 336 | 338 | 339 | 334 |
| Franchise Sales1
reported by restaurants in the Royalty Pool | 183,163 | 175,568 | 163,133 | 166,181 |
| | | | | |
| Revenues | | | | |
| Royalty revenue
– 4% of Franchise Sales | 7,327 | 7,023 | 6,525 | 6,647 |
| Interest income | 454 | 455 | 452 | 452 |
| Total revenues | 7,781 | 7,478 | 6,977 | 7,099 |
| | | | | |
| Expenses | | | | |
| Administrative
expenses and interest on bank debt | (449) | (511) | (502) | (687) |
| Interest accrued to holders of Units[10] | - | - | - | (3,352) |
| Interest
accrued to BPI on Class B Units and Class C Units6 | (1,447) | (1,388) | (937) | (1,852) |
| Fair value adjustment on Class B Unit
liability7 | 1,148 | 2,707 | (1,278) | (2,916) |
| Subtotal | (748) | 808 | (2,717) | (8,807) |
| Current income tax expense | (1,449) | (1,366) | (1,263) | - |
| Deferred income tax expense | (100) | (70) | (50) | (80) |
| Total expenses | (2,297) | (628) | (4,030) | (8,887) |
| | | | | |
| Net Income (loss) | |
| | |
| Net income (loss) | 5,484 | 6,850 | 2,947 | (1,788) |
| Basic earnings (loss) per Unit | 0.38 | 0.47 | 0.20 | (0.12) |
| Diluted earnings (loss) per Unit | 0.24 | 0.23 | 0.20 | (0.12) |
| | | | | |
| Distributable Cash2 / Distributions /
Payout Ratio3 | | | | |
| Cash flows from operating activities | 7,266 | 6,922 | 6,265 | 6,425 |
| Class C
distributions to BPI | (450) | (450) | (450) | (450) |
| BPI Class B
entitlement | (1,077) | (1,023) | (952) | (948) |
| SIFT tax on
Units8 | (1,449) | (1,366) | (1,263) | - |
| Distributable
cash2 | 4,290 | 4,083 | 3,600 | 5,027 |
| Interest accrued10 / distributions
payable9 | 4,021 | 3,672 | 3,672 | 5,027 |
| Payout Ratio3 | 93.7% | 89.9% | 102.0% | 100.0% |
| Distributable cash per Unit2 | 0.294 | 0.280 | 0.247 | 0.345 |
| Interest10 / distributions payable
per Unit9 | 0.276 | 0.252 | 0.252 | 0.345 |
OUTLOOK
The Canadian Restaurant and Foodservices
Association has forecast overall sales growth of 4.1% for the Canadian full-service
restaurant sector in 2012. BPI’s management believes that Boston Pizza is well
positioned to continue outperforming this overall growth rate by attracting a
wide variety of guests into the restaurant, sports bar and take-out/delivery
parts of each location, offering a compelling value proposition to our guests
and continuing to open new Boston Pizza locations across Canada.
The two principal factors that affect SSSG
are changes in customer traffic and changes in average guest cheque. BPI’s strategies
to drive higher guest traffic include a larger marketing budget versus the
previous year along with a revised calendar of national and local store
promotions. Increased average cheque levels are expected to be achieved through
a combination of culinary innovation and annual menu re-pricing. BPI
management recognizes that Franchise Sales1 results during the last three
months of 2011 were comparatively stronger than those posted in the first nine
months of 2011 and that results from the remainder of 2012 will be compared
against those stronger sales levels. In addition, BPI’s franchise agreement requires that each Boston Pizza
restaurant undergo a complete store renovation every seven years and 30
locations have already completed renovations in 2012 with more underway or
planned for later this year. Restaurants typically close for two to three weeks
to complete the renovation and experience an incremental sales increase in the
year following the re-opening.
Boston Pizza remains well positioned for
future expansion as evidenced by the four new Boston Pizza restaurants that have
opened to date in 2012, with three more new locations under construction that
are scheduled to open later in the year. BPI’s management believe that Boston
Pizza will continue to strengthen its position as the number one casual dining
brand in Canada by pursuing further restaurant development opportunities across
the country.
Certain information in this
press release may constitute “forward-looking information” that involves known
and unknown risks, uncertainties, future expectations and other factors which
may cause the actual results, performance or achievements of the Fund, Boston
Pizza Holdings Trust, the Partnership, Boston Pizza Holdings Limited
Partnership, Boston Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, Boston
Pizza restaurants, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking information. When used
in this press release, forward-looking information may include words such as
“anticipate”, “estimate”, “may”, “will”, “expect”, “believe”, “plan” and other
similar terminology. This information reflects current expectations regarding
future events and operating performance and speaks only as of the date of this
press release. Except as required by law, the Fund and BPI assume no obligation
to update previously disclosed forward-looking information.
For a complete list of the risks associated
with forward-looking information and our business, please refer to the “Risks
and Uncertainties” and “Note Regarding Forward-Looking Information” sections
included in the Fund’s most recent Management’s Discussion and Analysis for the
Period available at www.sedar.com and www.bpincomefund.com.
The trustees of the Fund have approved
the contents of this press release.
FOR FURTHER INFORMATION PLEASE CONTACT:
Boston Pizza Royalties Income Fund
Jordan Holm - Vice President of Investor Relations
Tel: 604-303-6083
investorrelations(at)bostonpizza.com
www.bpincomefund.com
® Boston Pizza Royalties Limited Partnership. All Boston Pizza registered Canadian trade-marks and unregistered Canadian trade-marks containing the words "Boston", "BP", and/or "Pizza" are trade-marks owned by the Boston Pizza Royalties Limited Partnership and licensed by the Boston Pizza Royalties Limited Partnership to Boston Pizza International Inc.
© Boston Pizza International Inc. 2012
[1] Franchise sales is the basis on which the royalty is
payable; it means the revenues of Boston Pizza restaurants in respect of which
the royalty is payable (“Franchise Sales”).
The term “revenue” refers to the gross revenue: (i) of the corporate
Boston Pizza restaurants in Canada owned by BPI; and (ii) reported to BPI
by franchised Boston Pizza restaurants in Canada, without audit or other form
of independent assurance, and in the case of both (i) and (ii), after deducting
revenue from the sale of liquor, beer, wine and tobacco and revenue from BPI
approved national promotions and discounts and excluding applicable sales and
similar taxes. Nevertheless, BPI periodically conducts audits of the Franchise
Sales reported to it by its franchisees, and the Franchise Sales reported
herein include results from sales audits of earlier periods.
[2] Distributable
Cash is a non-IFRS financial measure that does not have a standardized meaning
prescribed by IFRS and therefore may not be comparable to similar measures
presented by other issuers. This
non-IFRS financial measure provides useful information to investors regarding
the amount of cash the Fund has generated for distribution on the Units. Investors are cautioned that this should not
be construed as an alternative net income measure of profitability. The preceding tables provide a reconciliation from this non-IFRS
financial measure to cash flows from operating activities, which is the most
directly comparable IFRS measure.
[3] Payout
Ratio is calculated by dividing the interest / distributions payable by
the Fund in respect of the applicable period by the Distributable Cash
generated in that period. Payout Ratio
is a non-IFRS financial measure that does not have a standardized meaning
prescribed by IFRS and therefore may not be comparable to similar measures
presented by other issuers. This non-IFRS
financial measure provides investors with useful information regarding the
extent to which the Fund distributes cash on the Units. Investors are cautioned that this should not
be construed as an alternative net income measure of profitability.
[4] System-wide
gross sales means the gross revenue: (i) of the corporate Boston Pizza restaurants
in Canada owned by BPI; and (ii) reported to BPI by franchised Boston
Pizza restaurants
in Canada, without audit or other form of independent assurance, and in the case
of both (i) and (ii), including revenue from the sale of liquor, beer, wine and
tobacco and revenue from BPI approved national promotions and discounts and
excluding applicable sales and similar taxes (“System-wide Gross Sales”).
[5] Number
of restaurants in the Royalty Pool
excludes restaurants that permanently closed during the applicable
period.
[6] The
Class B general partner units of the Partnership (the “Class B Units”) and the
Class C general partner units of the Partnership (the “Class C Units”) are classified as
financial liabilities under IFRS, and as such, amounts paid by the Partnership
to BPI in respect of the Class B Units and Class C Units are
classified as interest expense and not distributions.
[7] The
Fund is required under IFRS to fair value the Class B Unit liability at the end
of each period and adjust for any increase or decrease in the fair value of
that liability as compared to the fair value of that liability at the end of
the immediately preceding period. This
adjustment has no impact on the Fund’s Distributable Cash.
[8] Specified
Investment Flow through tax (“SIFT Tax”)
on Units is the SIFT Tax expense for the respective period (as a negative
number) plus the amount of SIFT Tax paid in the respective period.
[9] Under
the declaration of trust governing the Fund, the Fund pays distributions on the
Units in respect of any particular calendar month not later than the last
business day of the immediately subsequent month. Accordingly, distributions on the Units in
respect of the calendar month of January are paid no later than the last
business day of February, distributions on the Units in respect of the calendar
month of February are paid no later than the last business day of March and so
forth. Consequently, distributions
payable by the Fund on the Units in respect of the Period were the July 2012
distribution (which was paid on August 31, 2012), the August 2012
distribution (which was paid on September 28, 2012) and the September 2012
distribution (which was paid on October 31, 2012). Similarly, the distributions payable by the
Fund on the Units in respect of any other period are the distributions paid in
the immediately subsequent month of each month comprising such other period.
[10] Units
are classified as a financial liability under IFRS in respect of the period
from January 1, 2010 through December 6, 2010, and as a result the
amounts paid by the Fund to Unitholders
in respect of that period are classified as interest expense of the Fund
and not distributions. From and after
December 7, 2010, amounts paid by the Fund to Unitholders are classified
as distributions of the Fund, as the Units are classified as equity
from and after December 7, 2010.