A&W Revenue Royalties Income Fund reports record growth in 2015

A&W Revenue Royalties Income Fund (the Fund) and A&W Food Services of Canada Inc. (A&W Food Services) reported today results for the fourth quarter and year ended December 31, 2015. The Fund will hold a conference call to discuss the results on Friday, February 5, 2016 at 1:00 p.m. Pacific Time (4:00 p.m. Eastern Time). The call can be accessed by dialling toll-free 1-866-530-1553 or (416) 847-6330 Passcode 7946065. A replay will be available until February 14, 2016, by dialling toll-free 1-888-203-1112 or (647) 436-0148 Passcode 7946065.

The Fund enjoyed record growth in 2015, with same store sales growth of +7.6%, the highest same store sales growth since the inception of the Fund in 2002. This same store sales growth is particularly notable when added to last year's +6.3% same store sales growth, bringing the two year stacked same store sales growth to +13.9%. Same store sales growth for the quarter was +5.3% and is also impressive when added to the 7.9% same store sales growth for the same quarter of 2014.

Sales of restaurants in the Royalty Pool surpassed the $1 billion mark in 2015, an important milestone for the business. Annual royalty income for 2015 increased by 10.8% to $31,826,000 based on sales of $1,060,851,000. In the fourth quarter, sales and royalty income increased by 9.3% as compared to the same quarter of 2014. The increase in sales and royalty income was due to the strong same store sales growth and the increase in the number of restaurants in the Royalty Pool on January 5, 2015 from 790 to 814.

As a result of the strong performance of the Fund and the underlying A&W restaurants, the Fund increased monthly cash distributions twice in 2015, from 11.7¢ per unit to 12.1¢ beginning with the July 2015 distribution and then to 12.5¢ per unit beginning with the October 2015 distribution. The current monthly distribution rate of 12.5¢ per unit represents an annualized distribution rate of $1.50 per unit, an increase of 6.8% from the 2014 rate of $1.404 per unit. The Fund will continue to periodically review distribution levels and distribute available cash in order to maximize returns to unitholders and maintain uniformity of distributions.

"We are very pleased with A&W's continued strong sales growth in the fourth quarter resulting in a very strong year", said Paul Hollands, Chairman and CEO of A&W Food Services. "Our strategic initiatives aimed at growing market share in the quick service restaurant burger market continue to be extremely successful. Our relentless focus on bringing better ingredients to our guests is having a powerful impact."

A&W Food Services' better ingredients include beef raised without the use of hormones or steroids, eggs from hens fed only a vegetarian diet without animal by-products, chicken raised without the use of antibiotics, and organic and Fair Trade coffee. A&W Food Services' strategy also includes accelerating new restaurant growth, and 32 new restaurants were opened across Canada in 2015.

Distributable cash generated in the fourth quarter of 2015 to pay distributions to unitholders and dividends to Food Services was$7,762,000 compared to $7,067,000 in the fourth quarter of 2014. Distributable cash generated in 2015 was $23,189,000 compared to$20,813,000 in 2014.

Distributable cash generated per equivalent unit increased by 2.8¢ to 52.2¢ per unit in the fourth quarter of 2015 from 49.4¢ for the fourth quarter of 2014. Annual distributable cash generated per unit increased by 10.5¢ to $1.559 per unit for 2015 from $1.454 for 2014.

Four monthly distributions totalling 49.6¢ per unit were declared in the fourth quarter of 2015 compared to 46.8¢ per unit in the same quarter of 2014. Total distributions declared in 2015 were $1.440 per unit compared to $1.404 per unit in 2014, an increase of 2.6%. The annual payout ratio for 2015 improved to 92.4% from 96.6% for 2014.

The Fund's net income for the fourth quarter of 2015 was $7,706,000 compared to $5,844,000 for the fourth quarter of 2014. Annual net income was $21,319,000 for 2015 compared to $16,987,000 for the prior year. Net income in both years includes non-cash losses on interest rate swaps, amortization of deferred financing fees and deferred income taxes. These non-cash items have no impact on the Fund's ability to pay distributions to unitholders. Of more interest to unitholders is the distributable cash calculation which identifies the amount of actual cash available to pay distributions to unitholders and dividends to A&W Food Services. As noted above, distributable cash increased by 9.8% for the quarter to $7,762,000 and by 11.4% for the year to $23,189,000. The Fund has a cumulative surplus of distributable cash on hand of $4,148,000.

About the Fund
The Fund is a limited purpose trust established to invest in Trade Marks, which through its interest in A&W Trade Marks Limited Partnership (the Partnership), owns the A&W trade-marks used in the A&W quick service restaurant business in Canada. The A&W trade-marks comprise some of the best-known brand names in the Canadian foodservice industry. In return for licensing A&W Food Services to use its trade-marks, Trade Marks (through the Partnership) receives royalties equal to 3% of the sales of A&W restaurants in the Royalty Pool. A&W is the second largest quick-service hamburger restaurant chain in Canada. Operating coast-to-coast, A&W restaurants feature famous trade-marked menu items such as The Burger Family®, Chubby Chicken® and A&W Root Beer®.

The Royalty Pool is adjusted annually to reflect sales from new A&W restaurants, net of the sales of any A&W restaurants that have permanently closed. Additional limited partnership units (LP units) are issued to A&W Food Services to reflect the annual adjustment. A&W Food Services' additional LP units are exchanged for additional shares of Trade Marks which are exchangeable for units of the Fund. A&W Food Services owns 21.0% of the common shares of Trade Marks, and therefore owns the equivalent of 21.0% of the units of the Fund on a fully-diluted basis.

Trade Marks' dividends to A&W Food Services and the Fund, and the Fund's distributions to unitholders are based on top-line revenues of the A&W restaurants in the Royalty Pool, less interest, general and administrative expenses and current income taxes of Trade Marks, and are thereby isolated from many of the factors that impact an operating business.

Certain statements in this press release may contain forward-looking information within the meaning of applicable securities laws inCanada (forward-looking information). The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. The forward-looking information is based on assumptions that management considered reasonable at the time it was prepared. The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by the forward-looking information. The factors which could cause results to differ from current expectations are described in the Fund's most recent Management Discussion and Analysis under the heading "Risks and Uncertainties" and the Fund's Annual Information Form under the heading "Risk Factors", available on SEDAR at www.sedar.com.


(dollars in thousands except per unit amounts)	16 week	16 week
	period ended	period ended	Year ended	Year ended
	Dec 31, 2015	Dec 31, 2014	Dec 31, 2015	Dec 31, 2014
Same store sales growth(1)	+5.3%	+7.9%	+7.6%	+6.3%
Number of restaurants in the Royalty Pool	814	790	814	790
Sales reported by the restaurants in the Royalty Pool	$348,116	$318,365	$1,060,851	$957,194
Royalty income	$10,444	$9,551	$31,826	$28,716
General and administrative expenses	117	337	558	779
Net third party interest expense	773	760	2,419	2,421
Current income taxes	1,792	1,387	5,660	4,703
Total distributable cash generated for distributions and dividends(2)	$7,762	$7,067	$23,189	$20,813
Distributable cash per equivalent unit (2015 – 14,870,367 units; 2014 – 14,319,708 units)(2)(3)	$0.522	$0.494	$1.559	$1.454
Distributions and dividends declared per equivalent unit	$0.496	$0.468	$1.440	$1.404
Net income(4)	$7,706	$5,844	$21,319	$16,987
Net income, excluding non-cash items(4)	$7,762	$7,067	$23,189	$20,813

(1)	Same store sales growth does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. This information is provided as it is a key driver of growth in the Fund.
(2)	Distributable cash does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. This information is provided as it identifies the amount of actual cash available to pay distributions to unitholders and dividends to Food Services.
(3)	The number of equivalent units and distributable cash per equivalent unit in 2015 includes the 181,101 LP units exchanged for 362,202 common shares of Trade Marks representing the final consideration paid in December 2015 for the January 5, 2015 adjustment to the Royalty Pool. The number of equivalent units and distributable cash per equivalent unit in 2014 includes the 210,490 LP units exchanged for 420,980 common shares of Trade Marks representing the final consideration paid in December 2014 for the January 5, 2014 adjustment to the Royalty Pool.
(4)	Net income in 2015 and 2014 includes non-cash losses on interest rate swaps, amortization of deferred financing fees and deferred income taxes. These non-cash items have no impact on the Fund's ability to pay distributions to unitholders. The Fund's net income excluding these non-cash items is presented for information purposes only.

A&W Revenue Royalties Income Fund

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