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Press release from CNW Group

Imvescor Restaurant Group Inc reports second quarter results

Tuesday, June 12, 2012

Imvescor Restaurant Group Inc reports second quarter results18:33 EDT Tuesday, June 12, 2012MONCTON, NB, June 12, 2012 /CNW/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG) reported financial results today for the 13 and 26 weeks ended April 29, 2012.  The 2011 results are for the 13 and 26 weeks ended May 1, 2011.Sales ImprovementsSame store sales ("SSS") for the 13 and 26 weeks ended April 29, 2012 was positive 0.3% and positive 0.2% as compared to negative 2.0% and negative 2.6% in 2011, respectively.  The Company continues to implement a number of initiatives including significant menu engineering projects and refocused marketing efforts. 13 weeksendedApril 29, 201213 weeksendedMay 1, 201126 weeksendedApril 29, 201226 weeksendedMay 1, 2011Pizza Delight™(2.0%)(0.9%)(2.2%)(0.1%)Mikes™+1.3%(2.1%)+0.5%(2.2%)Scores™+2.8%(5.4%)+1.5%(5.8%)Baton Rouge™(1.7%)+0.8%+0.2%(2.6%)Total+0.3%(2.0%)+0.2%(2.6%)Second Quarter 2012 Financial and Operating ResultsThe following table provides selected financial information for the 13 and 26 weeks ended April 29, 2012, along with results for the comparative periods of the prior year, which are calculated for the 13 and 26 weeks ended May 1, 2011.(in thousands of dollars except per share items)13 weeksendedApril 29, 201213 weeksendedMay 1, 201126 weeksendedApril 29, 201226 weeksendedMay 1, 2011System sales$ 97,875$ 99,621$ 196,154$ 198,779Revenues  11,827  10,91623,05222,122Advertising and administrative expenses8,1767,82316,65716,668EBITDA (note 1)3,0902,8285,4054,923Finance costs (note 2)3,7111,5965,6823,272Net loss(1,177)(554)(1,174)(555)Adjusted net earnings (loss) (note 2)1,370(554)1,787(555)Note 1: EBITDA includes earnings before interest income, interest on long-term debt and convertible debentures, loss on derivative financial liability, depreciation and amortization, loss from discontinued operations and income taxes.Note 2: Finance costs include a non-cash loss on derivative financial liability for the 13 and 26 weeks ended April 29, 2012 of $2,547 thousand and $2,961 thousand respectively as compared to nil in 2011. This non-cash loss has been excluded in the calculation of adjusted net loss.IRG derives its revenues primarily from royalties based on system sales from each of its four brands: Pizza Delight™, Mikes™, Scores™ and Bâton Rouge™.  Total system sales for the 13 weeks ended April 29, 2012 were $97.9 million as compared to $99.6 million in 2011, a decrease of 1.8%.  Total system sales for the 26 weeks ended April 29, 2012 were $196.2 million as compared to $198.8 million in 2011, a decrease of 1.3%. The decrease is attributed to the restaurant closures in fiscal 2011.Revenues for the 13 and 26 weeks ended April 29, 2012 were $11.8 million and $23.1 million as compared to $10.9 million and $22.1 million in 2011, respectively.  The Company experienced decreases in franchise fees related to new restaurant openings and franchise renewals as well as decreases in retail revenues during the first quarter from frozen pizza sales resulting from the Company's authorized manufacturer's failure to deliver required volumes to the grocery stores. The Company continues to work with the manufacturer towards ensuring a consistent supply of its pizza retail products.  These decreases were offset by the increase in corporate restaurant sales, a result of operating two additional restaurants during the period.Finance costs include interest income, interest on long-term debt and convertible debentures and the non-cash loss on derivative financial liability related to the fair value of the warrants estimated at the end of the period.  Interest on long-term debt and convertible debentures decreased $429 thousand to $1.2 million and $548 thousand to $2.8 million for the 13 and 26 weeks ended April 29, 2012, respectively.  This decrease is related to the overall reduction of debt.  The loss on derivative financial liability for the 13 and 26 weeks ended April 29, 2012 was $2.5 million and $3.0 million respectively as compared to nil in 2011.Results from operating activities, or EBITDA, increased $262 thousand to $3.1 million for the 13 weeks ended April 29, 2012 and increased $482 thousand to $5.4 million for the 26 weeks ended April 29, 2012 as compared to 2011.  The overall increases are attributed to an increase in revenues.  Included in 2011 expenditures were reorganization costs totalling approximately $1.3 million related to staff termination costs and costs related to the exit of non-performing locations.  The decreases in restructuring expenditures in 2012 are partially offset by legal settlement costs and an increase in salary and benefit costs from having staff employed for the full period.Adjusted net earnings (loss) excludes the non-cash loss on derivative financial liability of $2.5 million and $3.0 million for the 13 and 26 weeks ended April 29, 2012, respectively.  Given the cashless exercise option in favor of the warrant holder, the warrants are required to be measured at fair value under International Financial Reporting Standards at each reporting period.  The fair value is affected by a number of factors, including, without limitation, the Company's common share price and the volatility thereof.  Management believes this adjustment has no impact on the Company's operations and thus adjusted net earnings (loss) is more indicative of the Company's results from its normal business activities.Total long-term debt and convertible debentures at April 29, 2012 decreased to $42.2 million as compared to $62.3 million at October 30, 2011, a result of principal payments and the refinancing transactions related to the convertible debentures in December 2011. Debt repayment remains a priority of the Company.About Imvescor Restaurant Group Inc.Headquartered in Moncton, New Brunswick, Imvescor Restaurant Group Inc. 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.  Bâton Rouge® operates in Quebec, Ontario, and Nova Scotia in the casual dining segment.Cautionary Note Regarding Forward-Looking StatementsCertain information in this press release regarding the Company, including, but not limited to, the Company's business objectives, strategies and priorities, the generation of cash flows, the growth of the same store sales, and other statements that are not historical facts, are "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. Forward-looking statements can generally be identified by words such as "may", "should", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "outlook" and similar expressions. All such forward-looking statements are made pursuant to the "safe harbour" provisions of applicable securities laws. These statements are based on information currently available to the Company's management and on the current assumptions, intentions, plans, expectations and estimates of the management regarding the Company's future growth, results of operations, performance and opportunities as well as the economic environment in which it operates. Forward-looking statements involve known and unknown risks, uncertainties and other factors outside the Company's control. A number of factors could cause actual results of the Company to differ materially from the results discussed in the forward-looking statements, including, but not limited to: market conditions for financing; competitive conditions, whether related to new competitors or current competitors; change in the Company's or its competitors current pricing strategies; changes in demographic trends; changes in consumer preferences and discretionary spending patterns; changes in national and local business and economic conditions; risks associated with the closure of restaurants; costs associated with strategically exiting locations; the ability of the Company to pay dividends; the Company successfully offering new and innovative products and executing its strategies as planned; legislation and governmental regulation; changes in accounting policies, practices and standards; and the results of operations and financial condition of the Company and other factors referenced in the Company's continuous disclosure filings which are available on SEDAR at www.sedar.com. Although the forward-looking statements contained herein are based upon what the Company believes to be reasonable assumptions on the date of this press release, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. Certain assumptions underlying the forward-looking statements contained herein include assumptions related to the Company's ability to obtain financing on conditions favorable to the Company, future cash flows, market conditions, sales estimates, estimates relating to the Company's ability to settle and exit leases. Readers should not place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this press release and, accordingly, are subject to change after such date. Forward-looking statements are provided herein for the purpose of giving information about the Company's current strategic priorities, expectations and plans, allowing investors and others to get a better understanding of the Company's business outlook and operating environment. Readers are cautioned, however, that such information may not be appropriate for other purposes. The Company assumes no obligation to update such forward-looking statements to reflect new information, future events or otherwise, except as required by applicable securities laws. Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other special items or of any transactions that may be announced or that may occur after the date of this press release. The financial impact of these transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them. The Company therefore cannot describe the expected impact in a meaningful way or in the same way it presents known risks affecting the business. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.For further information: Denis RichardPresident & CEOImvescor Restaurant Group Inc. http://www.imvescor.ca 514-341-5544 For more information about our brands: Pizza Delight®:  http://www.pizzadelight.com Mikes®:  http://www.mikes.ca Scores®:  http://www.scores.ca Bâton Rouge®:  http://www.batonrougerestaurants.com