Diversified Royalty Corp. (TSX: DIV and DIV.DB) (the
“Corporation” or “DIV”) is pleased to announce its financial
results for the three months ended June 30, 2020 (“Q2 2020”) and
six months ended June 30, 2020.
Highlights
- Revenue of $6.3 million and
adjusted revenue of $7.5 million for Q2 2020.
- Completed closing of $9 million
senior credit facility on April 27, 2020, which was used to
partially refinance the acquisition of the trademarks and certain
other intellectual property rights (the “Oxford Rights”) utilized
by Oxford Learning Centres, Inc. (“Oxford”) in its franchised
supplemental education service business.
Second Quarter Results
In Q2 2020, DIV generated $6.3 million of
revenue compared to $7.5 million in the three months ended June 30,
2019 (“Q2 2019”). After taking into account the DIV royalty
entitlement related to DIV’s royalty arrangements with Nurse Next
Door Homecare Professional Services Inc. (“Nurse Next Door”), DIV’s
adjusted revenue was $7.5 million in Q2 2020 compared to $7.5
million in Q2 2019. Adjusted revenue for Q2 2020 was flat compared
to Q2 2019 due to a number of factors including: the impact of the
COVID-19 pandemic, which included negative same-store-sales-growth
(“SSSG”) at Mr. Lube Canada Limited Partnership (“Mr. Lube”), lower
royalty income from the AIR MILES® licenses, as well as royalty and
management fee waivers for Mr. Mikes Restaurants Corporation (“Mr.
Mikes”) and Sutton Group Realty Services Ltd. (“Sutton”), offset by
incremental revenues related to the Nurse Next Door royalty
transaction in November 2019 and the acquisition of the Oxford
Rights in February 2020.
For the six months ended June 30, 2020, DIV
generated $13.6 million of revenue compared to $14.0 million for
the six months ended June 30, 2019. After taking into account the
DIV royalty entitlement related to DIV’s royalty arrangements with
Nurse Next Door, DIV’s adjusted revenue was $16.0 million for
the six months ended June 30, 2020 and $14.0 million for the six
months ended June 30, 2019. The increase in adjusted revenue was
due to the incremental revenues related to the Nurse Next Door
royalty transaction in November 2019, the acquisition of the Oxford
Rights in February 2020 and the acquisition of the MRM Rights in
May 2019. The increase was partially offset by the impact of the
COVID-19 pandemic, as noted above.
Royalty Partner Business Updates
Mr. Lube: SSSG for the Mr. Lube
stores in the royalty pool was -12.5% in Q2 2020 and -10.0% for the
six months ended June 30, 2019. Mr. Lube’s SSSG was negatively
impacted by the COVID-19 pandemic, which resulted in a slow-down in
consumer activity across the country and recommendations from all
levels of government for people to work from home and self-isolate.
As certain provinces started easing the restrictions put in place
to fight the COVID-19 pandemic and Canadians started driving more,
Mr. Lube’s business has stabilized with June 2020 SSSG for the Mr.
Lube stores in the royalty pool up 0.4% (compared to SSSG of -27%
in April 2020 and -11% in May 2020). In July 2020, SSSG for the 135
Mr. Lube flagship locations (122 of which are in the Mr. Lube
Royalty Pool) was approximately 1.6% year-over-year.
AIR
MILES®: According to
Alliance Data Systems Inc.’s (“ADS”) news release dated July 23,
2020, the number of AIR MILES® reward miles issued decreased by 26%
in Q2 2020 and 12% for the six months ended June 30, 2020,
reflecting a decline in discretionary spending, including credit
card spend and delays in promotions by sponsors. In addition, ADS
announced that AIR MILES reward miles redeemed decreased by 42% in
Q2 2020 and 25% for the six months ended June 30, 2020, reflecting
the impact of the COVID-19 pandemic on travel-related categories,
partially offset by strength from merchandise redemptions.
According to ADS, LoyaltyOne is supporting collectors and sponsors
by pivoting the reward portfolio to reflect more non-travel
options. ADS also noted that the AIR MILES® business continues to
renew with sponsors, including a multi-year national renewal with
Shell Canada Products, as LoyaltyOne focuses on driving collector
engagement in key categories such as gasoline, grocery and liquor,
which are deemed essential services. Royalty income from the AIR
MILES licenses were down 22.4% in the three months and 8.4% in the
six months ended June 30, 2020 compared to the same prior
periods.
Nurse Next Door: Nurse Next
Door’s home health care services were considered an essential
service across all its markets where such determinations were made
by government authorities and all of Nurse Next Door’s franchisees
were open for business. Nurse Next Door management has noted that
system sales in North America were relatively flat for the three
months and six months ended June 30, 2020 compared to prior
year.
As previously disclosed, on February 14, 2020,
St. Joseph Health Personal Care Services, LLC (“St. Joseph”)
delivered notice of termination to Nurse Next Door, with the intent
of terminating its master license agreement, which covers 42 Nurse
Next Door franchise locations in California, effective August 14,
2020. Nurse Next Door has advised DIV that this termination will
occur on August 14, 2020 as originally contemplated and will result
in the payment of a termination fee of approximately US$1.1 million
by St. Joseph to Nurse Next Door, which is expected to be paid in
September. Nurse Next Door has advised DIV that Nurse Next Door
expects to have other opportunities to grow in California as a
result of this termination through to the sale of new franchises in
the territories currently covered by the master licence agreement,
following a 12-month restricted period post termination. These new
franchises, once sold, are expected to be subject to Nurse Next
Door’s standard franchise fees and other charges, which are higher
than the discounted rates paid by St. Joseph under the master
licence agreement, and are expected by Nurse Next Door to achieve
higher sales volumes than the St. Joseph’s franchises.
In Q2 2020, Nurse Next Door did not add any new
franchisees to its network, and received notices from 3 franchisees
of their purported termination of their respective franchise
agreements. In Q3 to date, Nurse Next Door entered into agreements
with 4 new franchisees (2 of which are operational) with at least 8
in the pipeline and received notices from 15 franchisees of their
purported termination of their respective franchise agreements.
These 18 franchisees seeking termination have ceased paying
franchise fees and have, in some cases, started competing
businesses. DIV understands that Nurse Next Door has not accepted
the purported terminations and is still determining its next
steps.
These 18 franchisees represented approximately
28% of Nurse Next Door’s 2019 recurring franchise revenues (being
Nurse Next Door’s revenues excluding initial franchise fees and
corporate store revenue). After adjusting for St. Joseph’s lost
revenue, these 18 franchisees represented approximately 31% of 2019
residual recurring franchise revenues. As a result, DIV
expects that the termination of the St. Joseph’s contract and the
purported terminations by the 18 franchisees noted above, may cause
Nurse Next Door to temporarily generate less than full royalty
coverage in the short term. However, as at June 30, 2020 Nurse Next
Door had $9.6 million of cash on its balance sheet, $8.6 million of
positive working capital and no debt. In addition, Nurse Next Door
will receive the termination payment of approximately US$1.1
million from St. Joseph in September 2020. According to Nurse Next
Door, its plan is to corporately run 3 of these franchises
immediately, which is expected by Nurse Next Door to generate
significantly higher net margins to Nurse Next Door. Nurse Next
Door has advised DIV that Nurse Next Door intends to re-sell the
franchises of the other 15 franchisees to new or existing
franchisees, generating incremental initial franchise fees in
addition to replacing the lost recurring franchise revenues. The
largest of these franchises (based on recurring franchise revenues)
being re-sold are in premium markets that Nurse Next Door is
confident will be operational before year-end. Furthermore, Nurse
Next Door expects that the incremental revenues from the 4 new
franchises and at least 8 in the pipeline will further enhance
Nurse Next Door’s profitability once operational. Accordingly, DIV
currently expects Nurse Next Door to continue to make its royalty
payments.
Sutton: As disclosed in DIV’s
news release dated March 31, 2020, with the dramatic slow-down of
residential real estate activity due to the COVID-19 pandemic, DIV
waived 75% of Sutton’s April and May royalty and management fee
obligations (that were payable in May and June 2020, respectively).
The June 2020 royalty payment and management fees were not subject
to a waiver and were received in full. According to the Real Estate
Board of Greater Vancouver’s news release dated July 3, 2020, home
buyers and sellers have gradually become more active in each month
of the COVID-19 pandemic, and home sales and listing activity in
Metro Vancouver returned to more historically typical levels with
June sales volumes up 18% (compared to -39% in April and -44% in
May). According to the Toronto Regional Real Estate Board, sales
volumes were only down 1% in June (compared to -67% in April and
-54% in May). Vancouver and Toronto comprise two of Sutton’s
primary markets. DIV will continue to assess the impact of COVID-19
on Sutton’s business and liquidity to determine if any further
royalty relief is necessary.
Oxford: SSSG for Oxford
locations in the royalty pool on a constant currency basis was -41%
in Q2 2020 and -30% for the period from February 20, 2020 to June
30, 2020. SSSG was negatively impacted by the COVID-19 pandemic,
which resulted in the temporary suspension of in-person tutoring
services for all its locations. In mid-March, Oxford management
pivoted its business to provide online tutoring with over 95% of
its locations able to provide this service. Oxford sales are
improving with June 2020 SSSG on a constant currency basis of -33%
for the Oxford locations in the royalty pool (compared to SSSG of
-47% in April 2020 and -44% in May 2020). In early July, in
accordance with regional guidelines, certain Oxford locations have
started transitioning back to in-centre services at a reduced
capacity. Oxford is in the process of making the necessary changes
in their locations to ensure that every parent, student and staff
member will have the safest possible experience at their locations.
Currently, approximately 50% of Oxford’s 154 locations are open for
in-centre services at a reduced capacity.
Mr. Mikes: Currently, 43 of 45
Mr. Mikes restaurants have re-opened for in-restaurant or patio
dining. Overall SSSG for Mr. Mikes restaurants in the royalty pool,
including stores that were temporarily closed due to the COVID-19
pandemic, was -28% in June. SSSG for Mr. Mikes restaurants in the
Mr. Mikes royalty pool that have re-opened for in-restaurant and
patio dining was -19% in June 2020. Notwithstanding the partial
re-opening of such Mr. Mikes restaurants, DIV continues to expect
that Mr. Mikes will experience a slow recovery and constrained cash
flows. Accordingly, DIV has waived Mr. Mikes’ fixed royalty and
management fee payment for the period from February 24, 2020 to
July 12, 2020. DIV anticipates that Mr. Mikes may require royalty
relief for an extended period of time and is in discussions with
its lenders and Mr. Mikes in this regard.
Second Quarter Commentary
Sean Morrison, President and Chief Executive
Officer of DIV stated, “The COVID-19 pandemic had a significant
impact on the operations of our royalty partners. However, as
certain provinces have started easing restrictions put in place to
fight the COVID-19 pandemic, we are starting to see encouraging
trends in the performance of our royalty partners. The management
teams of our royalty partners continue to proactively support their
franchisees by means of negotiating rent deferrals and concessions,
arranging for improved payment terms with suppliers, or promoting
government sponsored initiatives.”
Mr. Morrison continued, “DIV will be working
closely with Nurse Next Door management to deal with the recent
franchisee departures. With its strong balance sheet, Nurse Next
Door has financial flexibility to continue paying its royalty while
working through this challenging time. We continue to be in regular
discussions with our royalty partners and, in consultation with the
Board, monitor developments with a focus on the long-term success
of DIV and its royalty partners.”
Distributable Cash and Dividends Declared
In Q2 2020, distributable cash was $4.9 million
($0.0405 per share), a decrease of $0.6 million (decrease of $0.010
per share) compared to Q2 2019. The decrease was primarily due to
lower adjusted revenue on account of the reasons discussed above,
higher interest expense and lower interest income.
For the six months ended June 30, 2020,
distributable cash was $10.4 million ($0.0889 per share), an
increase of $0.1 million (decrease of $0.0063 per share) compared
to the six months ended June 30, 2019. The increase in
distributable cash was due to higher adjusted revenue, largely
offset by higher interest expense, lower interest income and higher
current tax expense. The decrease in distributable cash per share
was primarily due to a higher weighted average number of common
shares outstanding for the six months ended June 30, 2020.
In Q2 2020, dividends declared exceeded
distributable cash by $1.1 million, and the Corporation’s payout
ratio was 123.4%. The shortfall in distributable cash was funded by
a $3.8 million GST refund related to the acquisition of the Nurse
Next Door trademarks.
For the six months ended June 30, 2020,
dividends declared exceeded distributable cash by $2.2 million, and
the Corporation’s payout ratio was 121.5%. However, the Company’s
dividend reinvestment plan (“DRIP”) was open for participation
during the three months ended March 31, 2020. As a portion of the
dividends declared during the first quarter of 2020 were settled
through a reinvestment in the Company’s shares for participants in
the DRIP, the payout ratio on a cash basis was 111.4%. The
shortfall in distributable cash was funded by a $3.8 million GST
refund related to the acquisition of the Nurse Next Door
trademarks.
As announced on March 31, 2020, given the
economic uncertainty facing DIV and its royalty partners as a
result of the COVID-19 pandemic, the Board of Directors of the
Corporation approved changing the monthly dividend from $0.01958
per share per month ($0.2350 per share on an annualized basis) to
$0.01667 per share per month ($0.20 per share on an annualized
basis) effective with the dividend declared in the month of April
2020. The Board of Directors believes the reduction of the monthly
dividend is a prudent measure to preserve capital and maintain
liquidity in the current market environment. In addition, starting
with the April 2020 monthly dividend, the Board approved the
temporary suspension of the DRIP until further notice as the Board
does not believe it is in the best interests of the Company or its
shareholders to issue shares at current prices.
Net Income (Loss)
Net income for Q2 2020 was $2.9 million,
compared to net income of $3.4 million in Q2 2019. Net income
decreased due to lower income from operations and higher interest
expense and finance costs, partially offset by the fair value
adjustment on financial instruments.
Net loss for the six months ended June 30, 2020
was $8.9 million, compared to net income of $5.9 million for the
prior period. The net loss for the six months ended June 30, 2020
was primarily due to a non-cash impairment related to the MRM
Rights. In connection with the COVID-19 pandemic, Mr. Mikes is
experiencing constrained cash flows and has advised DIV that they
will likely be unable to pay its fixed royalty payments to DIV. In
light of these developments, the Corporation recorded a non-cash
impairment of $19.8 million ($14.5 million net of tax) related to
the Mr. Mikes trademarks, which is discussed in more detail in the
notes to the Corporation’s consolidated financial statements for Q2
2020. The net loss for the six months ended June 30, 2020 was also
due to lower revenues and higher interest expense, which were
slightly offset by an increase in other finance income and a tax
recovery.
About Diversified Royalty Corp.
DIV is a multi-royalty corporation, engaged in
the business of acquiring top-line royalties from well-managed
multi-location businesses and franchisors in North America. DIV’s
objective is to acquire predictable, growing royalty streams from a
diverse group of multi-location businesses and franchisors.
DIV currently owns the Mr. Lube, AIR MILES®,
Sutton, Mr. Mikes, Nurse Next Door and Oxford Learning Centres
trademarks. Mr. Lube is the leading quick lube service business in
Canada, with locations across Canada. AIR MILES® is Canada’s
largest coalition loyalty program with approximately two-thirds of
Canadian households actively participating in the AIR MILES®
Program. Sutton is among the leading residential real estate
brokerage franchisor businesses in Canada. Mr. Mikes currently
operates casual steakhouse restaurants primarily in western
Canadian communities. Nurse Next Door is one of North America’s
fastest growing home care providers with locations across Canada
and the United States as well as in Australia. Oxford Learning
Centres is one of Canada’s leading franchised supplemental
education services in Canada and the United States.
DIV expects to increase cash flow per share by
making accretive royalty purchases and through the growth of
purchased royalties. DIV expects to pay a predictable and stable
dividend to shareholders and increase the dividend as cash flow per
share increases allow.
Forward-Looking Statements
Certain statements contained in this news
release may constitute “forward-looking information” within the
meaning of applicable securities laws that involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking information. The use
of any of the words “anticipate”, “continue”, “estimate”, “expect”,
“intend”, “may”, “will”, ”project”, “should”, “believe”,
“confident”, “plan” and “intends” and similar expressions are
intended to identify forward-looking information, although not all
forward-looking information contains these identifying words.
Specifically, forward-looking information in this news release
includes, but is not limited to, statements made in relation to:
LoyaltyOne is supporting collectors and sponsors by pivoting the
reward portfolio to reflect more non-travel options; the AIR MILES®
business continues to renew with sponsors, including a multi-year
national renewal with Shell Canada Products, as LoyaltyOne focuses
on driving collector engagement in key categories such as gasoline,
grocery and liquor; Oxford locations have started transitioning
back to in-centre services at a reduced capacity; DIV will continue
to assess the impact of COVID-19 on Sutton’s business and liquidity
to determine if any further royalty relief is necessary; Oxford is
in the process of making the necessary changes in their locations
to ensure that every parent, student and staff member will have the
safest possible experience at their locations; DIV anticipating
that Mr. Mikes may require royalty relief for an extended period of
time and continuing its discussions with its lenders and Mr. Mikes
in this regard; the expectation that Mr. Mikes will experience a
slow recovery and constrained cash flow; Mr. Mikes is experiencing
constrained cash flow and has advised DIV that they will likely be
unable to pay its fixed royalty payments to DIV; the termination of
the master licence agreement by St. Joseph and the timing thereof
and payment of the termination fee by St. Joseph to Nurse Next Door
and the details thereof; Nurse Next Door’s expectation that it will
have other opportunities to grow in California as a result of the
termination of the master licence agreement, including the
opportunity to sell new franchises in the territories currently
covered by the master licence agreement, following a 12-month
restricted period post termination; Nurse Next Door’s expectation
that these new franchises, once sold, will be subject to Nurse Next
Door’s standard franchise fees and other charges, which are higher
than the discounted rates paid by St. Joseph under the master
licence agreement and will achieve higher sales volumes than the
St. Joseph’s franchises; Nurse Next Door having at least 8 new
franchise agreements in its pipeline; Nurse Next Door determining
its next steps with respect to the 18 franchisees that have
purported to terminate their respective franchise agreements; DIV’s
expectation that the termination of the St. Joseph’s contract and
the purported terminations by the 18 franchisees noted above, may
cause Nurse Next Door to temporarily generate less than full
royalty coverage in the short term; Nurse Next Door’s plan to
corporately run 3 of these previously franchised locations
immediately, which is expected by Nurse Next Door to generate
significantly higher net margins to Nurse Next Door; Nurse Next
Door’s intention to re-sell the franchises of the other 15
franchisees to new or existing franchisees, generating incremental
initial franchise fees in addition to replacing the lost recurring
franchise revenues; Nurse Next Door being confident that the
largest of these franchises (based on recurring franchise
revenues), which are being re-sold are in premium markets, will be
operational before year-end; Nurse Next Door’s expectation that the
incremental revenues from the 4 new franchises and at least 8 in
its the pipeline will further enhance Nurse Next Door’s
profitability once operational; DIV’s expectation that Nurse Next
Door will continue to make its royalty payments; DIV’s intention to
work closely with Nurse Next Door management to deal with the
recent franchisee departures; the management teams of DIV’s royalty
partners continue to proactively support their franchisees by means
of negotiating rent deferrals and concessions, arranging for
improved payment terms with suppliers, or promoting government
sponsored initiatives; DIV continues to be in regular discussions
with its royalty partners and, in consultation with the Board,
monitor developments with a focus on the long-term success of DIV
and its royalty partners; and DIV’s intention to pay monthly
dividends to shareholders; and DIV’s corporate objectives. These
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events, performance, or
achievements of DIV to differ materially from those anticipated or
implied by such forward-looking information and financial outlook.
DIV believes that the expectations reflected in the forward-looking
information and financial outlook included in this news release are
reasonable but no assurance can be given that these expectations
will prove to be correct. In particular, risks and uncertainties
include: Mr. Mikes may not make its fixed royalty payments to DIV,
in whole or in part; LoyaltyOne may not be successful in continuing
to renew sponsor contracts, and such contracts, if renewed, may be
renewed on less advantageous terms than existing contracts; the
rate of sales of new franchises by Nurse Next Door may be slow to
recover, and new franchises in its pipeline may not complete; the
impact of the termination by St. Joseph of the master licence
agreement on Nurse Next Door’s business could be greater than
expected; Nurse Next Door may not be successful in selling new
franchises in the territories currently covered by the St. Joseph
master licence agreement or those territories covered by the
franchisees that have recently purported to terminate their
franchise agreements, or may be delayed in completing such sales or
may not complete such sales on terms currently contemplated; Nurse
Next Door may not realize the expected financial benefits of
re-selling franchises in such locations or from operating any of
such locations corporately; Nurse Next Door may not reach a
satisfactory resolution in respect of the 18 franchisees that have
purported to terminate their respective franchise agreements and
may not recover any costs it incurs in pursuing legal action
against the such franchisees, which may be significant; certain of
such franchisees may operate competing businesses to the detriment
of other Nurse Next Door locations and Nurse Next Door; as a result
of the termination by St. Joseph of the master licence agreement
and the termination of the franchise agreements by certain other
franchisors, Nurse Next Door may experience constrained cash flows
and could potentially request some form of royalty relief from DIV
in the future, or fail to make all or a portion of its royalty
payments and/or draw on its credit facilities in order to fund its
royalty payments to DIV; the termination by St. Joseph of the
master licence agreement and the termination of the franchise
agreements by certain other franchisors may, in future periods,
result in a reduction in the fair value of DIV’s investment in NND
LP recorded on DIV’s consolidated statement of financial position,
resulting in a non-cash loss in the period where any such reduction
is recorded; DIV’s royalty partners may request further royalty
relief; COVID-19 may have a more significant negative impact on DIV
and its royalty partners than currently expected and the businesses
of DIV’s royalty partners may not fully recover post COVID-19;
current improvement trends being experienced by certain of DIV’s
royalty partners may not continue and may regress; recently
re-opened royalty partner locations may be required to temporarily
close in the future; royalty partner locations that are temporarily
closed may not reopen; franchisee support provided by DIV’s royalty
partners to their respective franchisees may be reduced or
terminated at any time, which may negatively impact the franchisees
and the royalties payable to DIV; DIV may not be able to make
monthly dividend payments to the holders of its common shares;
dividends are not guaranteed and may be further reduced, suspended
or terminated; or DIV may not achieve any of its corporate
objectives. Given these uncertainties, readers are cautioned that
forward-looking information and financial outlook included in this
news release are not guarantees of future performance, and such
forward-looking information and financial outlook should not be
unduly relied upon. More information about the risks and
uncertainties affecting DIV’s business and the businesses of its
royalty partners can be found in the “Risk Factors” section of its
Annual Information Form dated March 18, 2020 and in DIV’s most
recently filed management’s discussion and analysis, copies of
which are available under DIV’s profile on SEDAR at
www.sedar.com.
In formulating the forward-looking information
contained herein, management has assumed that DIV will generate
sufficient cash flows from its royalties to service its debt and
pay dividends to shareholders; lenders will provide any necessary
waivers required in order to allow DIV to continue to pay
dividends; lenders will provide any necessary covenant waivers to
DIV and its royalty partners; the impacts of COVID-19 on DIV and
its royalty partners will be consistent with DIV’s expectations and
the expectations of management of each of its royalty partners,
both in extent and duration; DIV and its royalty partners will be
able to reasonably manage the impacts of the COVID-19 pandemic and
related government regulations on their respective businesses; the
impact of the termination by St. Joseph of its master licence
agreement on Nurse Next Door’s business will be consistent with
DIV’s current expectations; Nurse Next Door will be successful in
selling new franchises in the territories covered by the St. Joseph
master licence agreement and those territories covered by the
franchisees that have purported to terminate their franchise
agreements, which sales will be completed in accordance with Nurse
Next Door’s currently estimated timing, and such locations will
achieve Nurse Next Door’s financial targets and have a positive
financial impact on Nurse Next Door; and Nurse Next Door will
continue to make its royalty payments to DIV in full and will not
request royalty relief in relation to such events. These
assumptions, although considered reasonable by management at the
time of preparation, may prove to be incorrect.
All of the forward-looking information in this
news release is qualified by these cautionary statements and other
cautionary statements or factors contained herein, and there can be
no assurance that the actual results or developments will be
realized or, even if substantially realized, that it will have the
expected consequences to, or effects on, DIV. The forward-looking
information in this news release is made as of the date of this
news release and DIV assumes no obligation to publicly update or
revise such information to reflect new events or circumstances,
except as may be required by applicable law.
DIV notes that the financial results reported in
this news release for the three and six months ended June 30, 2020
are consistent with the preliminary results for such period
reported in DIV’s news release dated July 23, 2020.
Non-IFRS Financial Measures
Management believes that disclosing certain
non-IFRS financial measures provides readers with important
information regarding the Corporation’s financial performance and
its ability to pay dividends and the performance of DIV’s royalty
partners. By considering these measures in combination with the
most closely comparable IFRS measure, management believes that
investors are provided with additional and more useful information
about the Corporation and its royalty partners than investors would
have if they simply considered IFRS measures alone. The non-IFRS
financial measures do not have standardized meanings prescribed by
IFRS and therefore are unlikely to be comparable to similar
measures presented by other issuers. Investors are cautioned that
non-IFRS measures should not be construed as a substitute or an
alternative to cash flows from operating activities as determined
in accordance with IFRS.
“Adjusted revenue”, “DIV royalty entitlement”,
“distributable cash”, “same store sales growth”, and “payout ratio”
are used as non-IFRS measures in this news release. For further
details, see the “Description of Non-IFRS and Additional IFRS
Measures” in the Corporation’s management’s discussion and analysis
for the three and six months ended June 30, 2020, a copy of each of
which is available on SEDAR at www.sedar.com.
Third Party Information
This news release includes information obtained
from third party company filings and reports and other publicly
available sources. Although DIV believes these sources to be
generally reliable, such information cannot be verified with
complete certainty. Accordingly, the accuracy and completeness of
this information is not guaranteed. DIV has not independently
verified any of the information from third party sources referred
to in this news release nor ascertained the underlying assumptions
relied upon by such sources.
THE TORONTO STOCK EXCHANGE HAS NOT
REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE
ACCURACY OF THIS RELEASE.
Additional Information
The information in this news release should be
read in conjunction with DIV’s audited consolidated financial
statements and management’s discussion and analysis (“MD&A”)
for the three and six months ended June 30, 2020, which are
available on SEDAR at www.sedar.com.
Additional information relating to the
Corporation and other public filings, is available on SEDAR at
www.sedar.com.
Contact:Sean Morrison, President and Chief
Executive OfficerDiversified Royalty Corp. (604) 235-3146
Greg Gutmanis, Chief Financial Officer and VP
Acquisitions Diversified Royalty Corp. (604) 235-3146
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