NOT FOR DISTRIBUTION IN THE UNITED STATES.
FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED
STATES SECURITIES LAW.
Alaris Royalty Corp. ("Alaris" or the "Corporation") (TSX:AD) is pleased to
announce its results for the three months and year ended December 31, 2013. The
Corporation continues to display year over year and quarter over quarter per
share growth in Partner revenue, Normalized EBITDA, net cash from operating
activities and dividends paid. The results are prepared under International
Financial Reporting Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB").
Full Year 2013 Highlights (compared to the prior year):
-- 92% increase in capital invested in 2013: $173(1) million invested into
four new Partners as well as follow-on investments into three existing
Partners
-- 61% increase in revenue from Partners(2) to $52.7 million
-- 69% increase in Normalized EBITDA(3) to $43.9 million
-- 66% increase in net cash from operating activities to $43.8 million
-- 46% increase in dividends paid to $35.7 million
-- 11% decrease in our full year actual payout ratio to 81% from 92%, while
also increasing our annualized dividend per share by 20%
-- Increased the permanent borrowing capacity on our revolving credit
facility to $75 million from $50 million to provide more flexibility
when funding transactions
Per Share Items:
-- 29% increase in revenue per share from Partner distributions to $1.97
-- 32% increase in Normalized EBITDA to $1.65
-- 30% increase in net cash from operating activities to $1.64
-- 20% increase in annualized dividends to $1.44
Q4 2013 Highlights (compared to the prior year same period):
-- 31% increase in revenue per share from Partners to $0.54
-- 41% increase in Normalized EBITDA per share to $0.48
-- 18% increase in dividends paid per share to $0.36
Financial Results
2013 was another year of significant accretive growth for the Corporation as
demonstrated in the table below. The results of the fourth quarter and the
fiscal year are summarized in four key performance metrics compared to the prior
year period on a per share basis. The Corporation used Normalized EBITDA rather
than EBITDA to display normalized operating results by backing out the impact of
a $15.5 million loss in the fourth quarter from the previously announced
receivership of SHS as well as the impact of a $13.1 million gain realized in
the second quarter on the reduction of its financial interests in LifeMark
Health Limited Partnership ("LifeMark").
Three months ending Dec 31 Year ending Dec 31
2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
Revenue from Partners per
share $0.54 $0.41 +30.8% $1.97 $1.53 +28.8%
Normalized EBITDA per
share $0.48 $0.34 +41.2% $1.65 $1.25 +32.0%
Net cash from operating
activities per share $0.51 $0.23 +121.7% $1.64 $1.26 +30.2%
Dividends per share $0.36 $0.305 +18.0% $1.36 $1.18 +15.3%
Weighted average basic
shares outstanding
(000's) 28,694 22,337 +28.4% 26,696 20,935 +27.5%
----------------------------------------------------------------------------
The Corporation deployed $173 million of capital in 2013 while continuing to
focus on its investment pillars of: (i) growing cash flow on a per share basis;
(ii) reducing volatility of cash flow; (iii) diversifying our revenue base; (iv)
increasing visibility of our cash flows and; (v) providing liquidity to
shareholders. Management believes that by applying these pillars, the
Corporation can provide a more secure and growing dividend to its shareholders.
Examples of the implementation of the pillars are:
Growth:
-- Contributed capital to four new partners in 2013: SHS(4), SCR Mining and
Tunneling, LP ("SCR"), Sequel Youth and Family Services, LLC ("Sequel")
and SM Group International, LP ("SMi").
-- Follow on investments into Agility Health LLC ("Agility"), Killick
Aerospace Limited Partnership ("Killick") and LMS Reinforcing Steel, LP
("LMS")(5).
-- Due to the increase in net cash from operating activities in 2013,
Alaris increased its monthly dividend twice to an annualized rate of
$1.44 per share, a total increase of 20%.
Reduce Volatility:
-- Negotiated collars on the maximum increase or decrease of the annual
distributions from SCR, Sequel & SMi.
-- Nine(6) out of the twelve current revenue streams from Partners are
dictated by a volatility reducing collar.
-- Negotiated a distribution reset for SCR which will be based on the
rolling averages of 2015/2014 financial performance vs the financial
performance of 2014/2013 and will not take place until January 1, 2016.
-- Estimated net organic growth in annual distributions from Partners of
+1.0% for 2014.
Diversification:
-- Continued diversification ensured that the failure of SHS did not impact
Alaris' monthly dividend and had a minimal impact on the Corporation's
payout ratio.
-- Alaris' single largest annualized revenue source is now only 17% and now
has only four annualized revenue streams accounting for more than 10% of
total revenue.
Visibility:
-- Revenues from the Corporation's twelve Partners for 2014 are largely
determined at this time and the Corporation expects to continue to have
predictable and relatively low general and administrative expenses in
2014.
Liquidity:
-- The Corporation's float increased throughout 2013 as a result of equity
offerings in January and July and average daily trading volumes continue
to provide adequate trading liquidity.
The Corporation's focus on these five pillars translated into revenues from
Partners for the year ended December 31, 2013 increasing 61% to $52.7 million
from $32.1 million in 2012. For the year ended December 31, 2013, the
Corporation recorded earnings of $29.8 million, EBITDA of $42.2 million and
Normalized EBITDA of $43.9 million, compared to earnings of $18.0 million, and
EBITDA of $25.9 million and Normalized EBITDA of $26.1 million in the prior
year. The increase in earnings and EBITDA can be attributed to the addition of
new Partners (SHS - March 2013, SCR - May 2013, Sequel - July 2013 and SMi - Nov
2013) and follow on contributions to Agility, Killick and LMS toward the end of
2013. Alaris recorded a $2.9 million loss in Q4 due to the one-time write down
of the entire $15.5 million value of the investment in SHS. Normalized EBITDA
increased in Q4, 2013 as the loss on SHS in Q4 was $2.5 million greater than the
$13.1 million gain on the reduction of Alaris' financial interest in LifeMark in
Q2, both items viewed by management as non-recurring items. For the year ended
December 31, 2013, net cash from operating activities was $43.7 million and
total dividends paid in the year were $35.6 million resulting in a full year
payout ratio for 2013 of approximately 81%.
"While the end of 2013 provided some significant challenges with the
receivership of SHS, it demonstrated the importance of diversification and the
strength of the Alaris business model as one of our businesses went to zero and
there was no impact on our dividend and only a modest increase in our payout
ratio. The rest of the year was highly successful as we were able to increase
our dividend twice in the year as we added new partners in established and
profitable businesses with high quality management teams; and contributed more
capital into current partners who have been performing well. We funded our
growth with successful bought deal financings in January and in July, and have a
balance sheet that has us well positioned for further successes in 2014" said
Steve King, CEO, Alaris Royalty Corp.
Reconciliation of Three months ending Dec Year ending
Earnings to EBITDA 31 Dec 31
(thousands) 2013 2012 2013 2012
----------------------------------------------------------------------------
Earnings/(loss) $ (2,856) $ 4,931 $ 29,823 $ 18,036
Adjustments to Earnings:
Amortization &
depreciation 27 27 106 108
Interest 433 335 1,677 1,033
Income tax expense 1,325 2,571 10,544 6,688
EBITDA $ (1,071) $ 7,864 $ 42,150 $ 25,865
Normalizing Adjustments:
Gain on reduction of
LifeMark interests - - (13,052) -
Impairment loss on SHS 15,512 - 15,512 -
Bad debt expense 575 - 575 -
Unrealized foreign
exchange loss/(gain) (1,358) (321) (1,258) 245
Normalized EBITDA $ 13,658 $ 7,543 $ 43,927 $ 26,110
----------------------------------------------------------------------------
Return to Shareholders
Alaris continued to display strong total returns to shareholders in 2013 with a
27% total return in 2013, the fifth consecutive year of double digit total
return to shareholders. These returns came by way of an increasing amount of
cash returned to shareholders through dividends paid (20% increase in the
annualized dividend in 2013) as well as share price appreciation. The increasing
return of cash dividends is only possible because of the increase in net cash
from operating activities per share, which the Corporation continues to realize
through both organic growth in revenue as well as from additional distributions
received from investments in new and existing Partners. Alaris has provided
shareholders with a total return over the last 5 years equal to 360%, or 36%
displayed as a compound annual growth rate ("CAGR"). The S&P TSX Composite Index
has displayed total returns over the same time period of 74%, a CAGR of 12%.
2014 Outlook
Alaris' agreements with its Partners provide for estimated revenue to the
Corporation of approximately $63.2 million in 2014. For the first quarter of
2014, those same agreements with its Partners provides for estimated revenue to
the Corporation of approximately $15.6 million. On a per share basis, even with
the reduction of the SHS distribution to nil in December 2013, as well as the
temporary restructuring of the distribution from Labstat International, ULC
("Labstat") to a reduced fixed amount and the addition of a variable portion,
revenues in the first quarter of 2014 are expected to be the same as the fourth
quarter in 2013 at $0.54 per share and 22.7% higher than the revenue per share
numbers reported for the first quarter of 2013 ($0.44 per share). Annual general
and administrative expenses are currently estimated at $5.3 million annually and
include all public company costs. The senior debt facility was drawn to $44.5
million at December 31, 2013 and $50.5 million at March 10, 2014, leaving the
Corporation with approximately $27 million of net debt available. The annual
interest rate on that debt was approximately 6.0% at December 31, 2013 and
remains at that level today. Cash requirements after net income are expected to
be minimal, as current capital expenditures consist of office furniture and
computer equipment.
Alaris' unique capital structure continues to fill a niche in the private
capital markets. Therefore, Alaris continues to attract interest in its capital
from private businesses across North America and is confident it will contribute
capital to new, and existing Partners in 2014. As a conservative measure, Alaris
does not use any estimates for future revenue earned from the contribution of
capital into new or existing Partners in its guidance or budgeting process.
CRA Update
In January 2014, the Corporation received a proposal letter from the Canada
Revenue Agency (the "CRA") wherein the CRA advised that it intended to reassess
Alaris and deny the deduction of certain non-capital losses claimed by Alaris
for the taxation year ended July 14, 2009. The CRA has since followed up with
further communication and indicated that intends to reassess Alaris on the basis
that there occurred an acquisition of control in 2006 in connection with a
reorganization of the Corporation. The Corporation then received a notice of
reassessment (the "Notice of Reassessment") from the CRA in February 2014
pursuant to which the CRA did deny the deduction of the non-capital losses
claimed by Alaris for the taxation year ended July 14, 2009 and was challenging
that tax filing based on the acquisition of control rules of the Income Tax Act
(Canada).
Alaris intends to file a notice of objection to the Notice of Reassessment and
has 90 days from the date the Notice of Reassessment is mailed to do so. Alaris
is required to pay a deposit of 50% of the assessed tax liability (plus
interest) at that time. Alaris' total federal and provincial assessed tax
liability (as described in the Notice of Reassessment) is estimated to be $3.6
million and Alaris will be required to pay a deposit of approximately $1.8
million on that amount, with the remaining amount not payable until the dispute
with the CRA is resolved and only if the result is not in Alaris' favor. Alaris
has adequate capital available to it to pay the maximum amount of all tax
liabilities it could incur if it was reassessed on all of its tax filings to
date and if these reassessments were ultimately upheld through the tax
adjudication process.
In management's view, the CRA's reassessment of Alaris, and certain of its
recent reassessments of other Canadian companies, is part of a broader
initiative on the CRA's part to challenge companies with respect to the use of
tax assets. Alaris has received legal (tax) advice that Alaris should be
entitled to deduct the non-capital losses, and as such, Alaris is of the opinion
that its tax filings to date are correct and will withstand any reassessment by
the CRA. Alaris intends to vigorously defend its tax filing position. Alaris
anticipates that legal proceedings through the CRA and tax courts would take
considerable time to resolve. The Corporation firmly believes it will be
successful in defending its position and therefore, any deposits paid to the CRA
would be refunded, plus interest.
Labstat Additional Contribution Complete
The previously announced $6 million contribution to Labstat from Alaris, the
temporary restructuring of the distribution to Alaris as well as the revised
credit agreement between Labstat and its senior lenders closed on February 28th,
2014.The total capital Alaris has contributed to Labstat is now $47.2 million
and now carries a maximum annualized distribution of $6.7 million. The fixed
distribution to Alaris over the next 12 months will equal $3.4 million while the
variable cash sweep portion can take the distribution up to its maximum of $6.7
million over the next 12 months, provided certain financial covenants and
performance targets are met. Labstat's recent results continue to demonstrate
the strength and profitability of their current operations with upside for 2014
coming from any new contracts resulting from the anticipated implementation of
certain regulations in the United States under the Tobacco Control Act as well
as any new contracts the company enters in to throughout the year.
Foreign Exchange Impacts
The declining value of the Canadian dollar ("CAD") relative to the U.S. dollar
("USD") is a net benefit to Alaris' future earnings on all U.S. revenue streams
which Alaris currently has partnership agreements with (currently approximately
USD$19 million of revenue from three Partners). Rates of the currency hedges in
place for 2014 and 2015 will provide for gains on current USD income as the
forward rates for 2014 and 2015 are at rates in excess of the spot rates of all
Alaris' USD revenue streams on either the date they were entered into or the
rate of exchange for 2013. Alaris has a conservative policy regarding its
foreign exchange exposure. The Corporation enters into forward contracts
covering approximately 100% of the USD income from a new U.S. Partner for the
first 12 months following an investment, while also locking in the exchange rate
for generally 70% to 80% of the anticipated second year of USD income. From that
point, Alaris then rolls over the contracts so that it constantly has 24 months
of forward contracts in place. This policy allows Alaris to smooth its CAD/USD
pairing fluctuations and also allows the Corporation to have a high
predictability of its foreign exchange adjusted CAD income.
MD&A and Financial Statements
The Consolidated Statement of Financial Position, Statement of Comprehensive
Income, and Statement of Cash Flows are attached to this news release. The
Corporation highly recommends that the Management Discussion and Analysis is
read in conjunction with this press release and the financial statements for
this period. Alaris' financial statements and MD&A will be available later today
on SEDAR at www.sedar.com and on our website at www.alarisroyalty.com in the
"Investor Briefcase" section immediately after these results are released by
Marketwired.
Conference Call Information
The Corporation will be hosting a conference call at 9:00am Mountain Standard
Time ("MST"), 11:00am Eastern Standard Time ("EST"), on Monday, March 10, 2014
(today) to discuss the results for the three and twelve months ended December
31, 2013.
Participants can access the conference call by telephone by dialing toll free
1-800-565-0813 or 1-416-340-8527. Alternatively, to listen to this event online,
please enter http://www.gowebcasting.com/5312 in your web browser and follow the
prompts given. Please connect to the call or log into the webcast at least 10
minutes prior to the beginning of the event.
For those unable to participate in the conference call at the scheduled time, it
will be archived for replay until the end of day March 17, 2014. You can access
the replay by dialing toll free 1-800-408-3053 or 1-905-694-9451 and entering
the passcode 9312643. The webcast will be archived for 90 days and is available
for replay by using the same link as above or by clicking on the link we'll have
stored under the "Investor Briefcase" on our website at www.alarisroyalty.com.
2014 Annual and Special Meeting of Shareholders
On May 8, 2014 the annual and special meeting of the common shareholders of
Alaris Royalty Corp. will take place at 3:00pm MST at the Hotel Le Germain at
899 Centre Street S.W, Calgary, Alberta, T2G 1B8. The holder of record date for
this meeting is April 3, 2014.
Corporate Presentation
An updated corporate presentation will be available on the Corporation's website
later today under the Investor Briefcase section at www.alarisroyalty.com
About the Corporation:
Alaris provides alternative financing to the Private Company Partners
("Partners") in exchange for royalties or distributions with the principal
objective of generating stable and predictable cash flows for dividend payments
to its shareholders. Royalties or distributions from the Private Company
Partners are structured as a percentage of a "top line" financial performance
measure such as gross margin and same-store sales and rank in priority to the
owners' common equity position.
Non-IFRS Measures
The terms EBITDA, Normalized EBITDA and Payout Ratio are financial measures used
in this news release that are not standard measures under International
Financial Reporting Standards ("IFRS"). The Corporation's method of calculating
EBITDA, Normalized EBITDA and Payout Ratio may differ from the methods used by
other issuers. Therefore, the Corporation's EBITDA, Normalized EBITDA and Payout
Ratio may not be comparable to similar measures presented by other issuers.
EBITDA refers to net earnings (loss) determined in accordance with IFRS, before
depreciation and amortization, net of gain or loss on disposal of capital
assets, interest expense and income tax expense. EBITDA is used by management
and many investors to determine the ability of an issuer to generate cash from
operations. Management believes EBITDA is a useful supplemental measure from
which to determine the Corporation's ability to generate cash available for debt
service, working capital, capital expenditures, income taxes and dividends. The
Corporation has provided a reconciliation of net income to EBITDA in this news
release.
Normalized EBITDA refers to EBITDA excluding items that are non-recurring in
nature, such as gains associated with the reduction of interest in one partner
and an impairment loss in another with which the Corporation has transacted.
"Normalized EBITDA" s calculated by adding back non-recurring charges to EBITDA.
Management deems non-recurring charges to be unusual and/or infrequent charges
that the Corporation incurs outside of its common day-to-day operations. For the
three and twelve months ended December 31, 2013, the gain on the reduction of
financial interests in LifeMark as well as the loss on the SHS contribution are
considered by management to be non-recurring charges. Adding back these
non-recurring charges allows management to assess EBITDA from ongoing
operations.
Payout Ratio: The term "payout ratio" is a financial measure used in this news
release that is not a standard measure under International Financial Reporting
Standards. Actual Payout ratio means Alaris' total dividends paid over the
fiscal twelve months ended 2013 and 2012 divided by its net cash from operating
activities over that same period. Annualized Payout Ratio means Alaris' total
annualized dividend per share expected to be paid over the next twelve months
divided by the estimated net cash from operating activities per share Alaris
expects to generate over the same twelve month period (after giving effect to
the impact of all information disclosed today).
The terms EBITDA, Normalized EBITDA and Payout Ratio should only be used in
conjunction with the Corporation's annual audited and quarterly reviewed
financial statements, excerpts of which are available below, while complete
versions are available on SEDAR at www.sedar.com.
Definitions:
Compound Annual Growth Rate (CAGR) is the year-over-year growth rate of an
investment over a specified period of time. The compound annual growth rate is
calculated by taking the nth root of the total percentage growth rate, where n
is the number of years in the period being considered
Total Return refers to the return a shareholder would realize on reinvesting
dividends for shares in a security as well as from the share price appreciation
over the holding period used for the calculation. The total return earned over
the holding period is calculated by assuming a reinvestment of all realized
dividends into the security annually on the last day of the period that has a
valid price. Because of the difference in dividend reinvestment for daily and
non-daily periods, the total return can be different given the same start and
end date.
Forward-Looking Statements
This news release contains forward-looking statements under applicable
securities laws. Statements other than statements of historical fact contained
in this news release are forward-looking statements, including, without
limitation, management's expectations, intentions and beliefs concerning the
growth, results of operations, performance of the Corporation and the Private
Company Partners, the, the future financial position or results of the
Corporation, business strategy, and plans and objectives of or involving the
Corporation or the Private Company Partners. Many of these statements can be
identified by looking for words such as "believe", "expects", "will", "intends",
"projects", "anticipates", "estimates", "continues" or similar words or the
negative thereof. In particular, this news release contains forward-looking
statements regarding the anticipated financial and operating performance of the
Private Company Partners in 2014, the revenues to be received by Alaris in 2014
(aggregate and on a per share basis), its general and administrative expenses in
2014, the cash requirements of the Corporation in 2014, the CRA proceedings
(including the expected timing and financial impact thereof), Annualized Payout
Ratio, net growth in distributions from Partners, Alaris' ability to attract new
private businesses to invest in, and Alaris' foreign exchange hedging policies
and the impact thereof. To the extent that any forward-looking statements herein
constitute a financial outlook, including without limitation, estimated revenues
(aggregate and on a per share basis) and expenses, Annualized Payout Ratio, and
net growth in distributions from Partners, they were approved by management as
of the date hereof and have been included to assist readers in understanding
management's current expectations regarding Alaris' financial performance and
are subject to the same risks and assumptions disclosed herein.
By their nature, forward-looking statements require Alaris to make assumptions
and are subject to inherent risks and uncertainties. Assumptions about the
performance of the Canadian and U.S. economies in 2014 and how that will affect
Alaris' business and that of its Partners are material factors considered by
Alaris management when setting the outlook for Alaris. Key assumptions include,
but are not limited to, assumptions that the Canadian and U.S. economies will
grow moderately in 2014, that interest rates will not rise in a material way
over the next 12 to 24 months, that the Partners will continue to make
distributions to Alaris as and when required, that the businesses of Alaris'
Partners will not change in a material way, that the Corporation will experience
net positive resets to its annual royalties and distributions from its Partners
in 2014, more private companies will require access to alternative sources of
capital, and that Alaris will have the ability to raise required equity and/or
debt financing on acceptable terms. Management of Alaris has also assumed that
capital markets will remain stable and that the Canadian dollar will remain in a
range of approximately plus or minus 5% of par relative to the U.S. dollar. In
determining expectations for economic growth, management of Alaris primarily
considers historical economic data provided by the Canadian and U.S. governments
and their agencies.
There can be no assurance that the assumptions, plans, intentions or
expectations upon which these forward-looking statements are based will occur.
Forward-looking statements are subject to risks, uncertainties and assumptions
and should not be read as guarantees or assurances of future performance. The
actual results of the Corporation and the Partners could materially differ from
those anticipated in the forward-looking statements contained herein as a result
of certain risk factors, including, but not limited to, the following: general
economic conditions and changes in the financial markets; risks associated with
the Partners and their respective businesses; a change in the ability of the
Partners to continue to pay Alaris' preferred distributions; a material change
in the operations of a Partner or the industries in which they operate; a
failure to obtain required regulatory approvals on a timely basis or at all;
changes in legislation and regulations and the interpretations thereof;
litigation risk associated with the CRA's reassessment and the Corporation's
challenge thereof; and material adjustments to the unaudited internal financial
reports provided to Alaris by the Partners In addition, the information set
forth under the heading "Risk Factors" in the Corporation's Annual Information
Form dated March 13, 2013 and the Corporation's management discussion and
analysis dated, March 10, 2014 for the year-ended December 31, 2013 (complete
copies of which can be found on SEDAR at www.sedar.com or on the Corporation's
website at www.alarisroyalty.com) identify additional factors that could affect
the operating results and performance of the Corporation and may cause the
actual results of the Corporation to differ materially from those anticipated in
forward-looking statements. Accordingly, readers are cautioned not to place
undue reliance on any forward-looking information contained in this news
release. Statements containing forward-looking information reflect management's
current beliefs and assumptions based on information in its possession on the
date of this news release. Although management believes that the expectations
represented in such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct.
Alaris Royalty Corp.
Consolidated statement of financial position
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December 31 December 31
2013 2012
Assets
Cash and cash equivalents $ 8,998,342 $ 3,638,255
Prepayments 125,543 182,811
Trade and other receivables 955,831 899,529
Foreign exchange contracts - 18,113
Promissory note receivable 8,500,000 2,500,000
------------------------------------------
Current Assets 18,579,716 7,238,708
------------------------------------------
Promissory note receivable 6,915,000 1,250,000
Equipment 59,825 59,881
Intangible assets 6,479,265 6,570,201
Preferred LP and LLC Units 433,988,295 298,226,402
Investment tax credit receivable 10,922,393 10,922,393
Deferred income taxes 3,785,015 8,673,125
------------------------------------------
Non-current assets 462,149,793 325,702,002
------------------------------------------
Total Assets $ 480,729,509 $ 332,940,710
------------------------------------------
Liabilities
Accounts payable and accrued
liabilities $ 1,361,588 $ 1,805,561
Dividends payable 3,443,243 2,345,347
Foreign exchange contracts 633,801 -
Income taxes payable 1,031,701 40,585
------------------------------------------
Current Liabilities 6,470,333 4,191,493
Loans and borrowings 44,500,000 50,000,000
------------------------------------------
Non-current liabilities 44,500,000 50,000,000
------------------------------------------
Total Liabilities $ 50,970,333 $ 54,191,493
------------------------------------------
Equity
Share capital 413,237,576 252,016,172
Equity reserve 5,688,079 2,930,483
Fair value reserve (4,883,951) 2,336,689
Translation reserve 1,201,883 (265,220)
Retained earnings 14,515,589 21,731,093
------------------------------------------
Total Equity $ 429,759,176 $ 278,749,217
------------------------------------------
------------------------------------------
Total Liabilities and Equity $ 480,729,509 $ 332,940,710
----------------------------------------------------------------------------
Alaris Royalty Corp.
Consolidated statement of comprehensive income
For the years ended December 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
------------------------------------------
2013 2012
------------------------------------------
Revenues
Royalties and distributions $ 51,576,277 $ 32,089,405
Interest and other 1,130,727 20,259
Gain on reduction of LifeMark
interest 13,052,160 -
Impairment loss on SHS (15,512,013) -
Unrealized loss on foreign
exchange contracts (651,915) (3,750)
------------------------------------------
Total Revenue 49,595,236 32,105,914
------------------------------------------
Salaries and benefits 2,679,570 1,796,174
Corporate and office 1,371,188 971,072
Legal and accounting fees 919,791 1,330,689
Non-cash stock-based compensation 3,808,518 1,901,683
Bad debts 575,000 -
Depreciation and amortization 106,283 107,633
------------------------------------------
Subtotal 9,460,350 6,107,251
------------------------------------------
Earnings from operations 40,134,886 25,998,663
Finance costs 1,677,102 1,033,392
Unrealized foreign exchange
loss/(gain) (1,909,530) 241,794
------------------------------------------
Earnings before taxes 40,367,314 24,723,477
Deferred income tax expense 8,257,300 5,978,701
Current income tax expense 2,286,517 709,173
------------------------------------------
Total income tax expense 10,543,817 6,687,874
------------------------------------------
Earnings 29,823,497 18,035,603
------------------------------------------
Other comprehensive income
Net change in fair value of
Preferred LP units 4,800,000 50,000
Tax impact of change in fair
value (600,000) (6,250)
Realized gain/(loss) on reduction
of partnership interest (13,052,160) -
Tax impact of realized gain 1,631,519 -
Foreign currency translation
differences 1,467,103 (140,273)
------------------------------------------
Other comprehensive income for
the year, net of income tax (5,753,537) (96,523)
------------------------------------------
Total comprehensive income for
the year $ 24,069,960 $ 17,939,080
------------------------------------------
Earnings per share
Basic earnings per share $ 1.12 $ 0.86
------------------------------------------
Fully diluted earnings per share $ 1.09 $ 0.84
------------------------------------------
Weighted average shares
outstanding
Basic 26,695,896 20,934,899
------------------------------------------
Fully Diluted 27,408,071 21,475,993
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Alaris Royalty Corp.
Consolidated statement of cash flows
For the years ended December 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2013 2012
------------------------------------------
Cash flows from operating
activities
Earnings from the year $ 29,823,497 $ 18,035,603
Adjustments for:
Finance costs 1,677,102 1,033,392
Deferred income tax expense 8,257,300 5,978,701
Depreciation and amortization 106,282 107,633
Bad debts expense 575,000 -
Gain on reduction of interest in (13,052,160) -
LifeMark
Impairment loss on SHS 15,512,013 -
Unrealized loss on foreign 651,915 3,750
exchange forward contract
Unrealized foreign exchange (1,909,530) 241,794
(gain)/loss
Non-cash stock-based compensation 3,808,518 1,901,683
------------------------------------------
45,449,937 27,302,556
Change in:
-trade and other receivables (631,302) 26,037
-prepayments 57,268 (63,303)
-trade and other payables 547,143 231,851
------------------------------------------
Cash generated from operating 45,423,046 27,497,141
activities
Finance costs (1,677,102) (1,033,392)
------------------------------------------
Net cash from operating 43,745,944 26,463,749
activities $ $
------------------------------------------
Cash flows from investing
activities
Acquisition of equipment (15,290) (9,835)
Acquisition of Preferred LP Units (173,282,648) (91,141,585)
Proceeds from reduction of 30,000,000 -
LifeMark interest
------------------------------------------
Net cash used in investing (143,297,938) (91,151,420)
activities $ $
------------------------------------------
Cash flows from financing
activities
New share capital, net of share 155,685,585 46,286,377
issue costs
Proceeds from exercise of options 2,332,603 607,500
Repayment of debt (168,000,000) (49,000,000)
Proceeds from debt 162,500,000 92,500,000
Promissory notes issued (11,665,000) (1,250,000)
Dividends paid (35,648,317) (24,464,678)
Payments in lieu of dividends on (292,790) (241,738)
RSUs
------------------------------------------
Net cash used in financing 104,912,081 64,437,461
activities $ $
------------------------------------------
Net increase/(decrease) in cash 5,360,087 (250,210)
and cash equivalents
Cash and cash equivalents, 3,638,255 3,888,465
Beginning of year
------------------------------------------
Cash and cash equivalents, End of 8,998,342 3,638,255
year $ $
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Reflects Alaris' total cost of investments and includes a $15.5 million cost
base on the SHS Services Management LP ("SHS") contribution.
(2) Includes revenue from Partner distributions as well as interest earned on
promissory notes.
(3) This is a non-IFRS measure. See definition under Non-IFRS Measures section.
(4) SHS went into receivership on December 13, 2013 and is no longer included in
Alaris' guidance.
(5) Converted a $3 million promissory note into additional preferred shares in
LMS in December 2013.
(6) Includes the automatic 4% escalator on LifeMark's distribution each July 1st.
FOR FURTHER INFORMATION PLEASE CONTACT:
Alaris Royalty Corp.
Curtis Krawetz
Vice President, Investor Relations
403-221-7305
www.alarisroyalty.com
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