Royal Host Inc.
TSX : RYL
TSX : RYL.DB.B
TSX : RYL.DB.C
TSX : RYL.DB.D

Royal Host Inc.

April 05, 2012 16:01 ET

Royal Host Inc. Announces Refiling of 2011 Annual MD&A

HALIFAX, NOVA SCOTIA--(Marketwire - April 5, 2012) - Royal Host Inc. ("Royal Host" or the "Company") (TSX:RYL) (TSX:RYL.DB.B) (TSX:RYL.DB.C) (TSX:RYL.DB.D) today announced that the Company has filed on SEDAR an amended and restated Management Discussion and Analysis ("Amended and Restated MD&A") for the three months (the "Fourth Quarter") and year ended December 31, 2011 due to the discovery of errors in its calculation of annual funds from operations ("FFO"), annual adjusted funds from operations ("AFFO") and quarterly AFFO found in the MD&A previously filed on March 30, 2012 for the Fourth Quarter and year ended December 31, 2011 ("Filed MD&A"). These restatements do not impact the annual audited financial statements or the Annual Information Form for the year ended December 31, 2011, previously filed on March 30, 2012.

All amounts stated herein are in $000, unless otherwise indicated.

The following table illustrates the amendments made to the Filed MD&A:

Funds From Operations and Adjusted Year ended December 31, 2011 3 months ended December 31, 2011
Funds From Operations
Revised Previously filed Revised Previously filed
Net Income (Loss) (29 ) (29 ) 415 415
Add (deduct)
Depreciation and amortization 13,060 13,060 2,744 2,744
Impairment of property and equipment 2,748 2,748 2,748 2,748
Impairment of available-for-sale securities 1,470 1,470 906 906
Deferred income tax recovery (3,297 ) (3,111 ) (879 ) (879 )
Gain on disposition of properties (6,529 ) (6,529 ) (1,682 ) (1,682 )
Funds From Operations (FFO) 7,423 7,609 4,252 4,252
Less: Provision for capital replacement (3,514 ) (3,379 ) (772 ) (789 )
Adjusted Funds From Operations (AFFO) 3,909 4,230 3,480 3,463

The Company's calculation of its annual FFO of $7,609, as disclosed in the Filed MD&A, included an adjustment for both current and deferred income taxes in the amount of $3,111. The adjustment should have been limited to deferred income taxes of $3,297 which results in a restated annual FFO of $7,423.

The Company's calculation of its annual AFFO of $4,230, as disclosed in the Filed MD&A, included the overstatement of FFO by $186, as explained above, and a further overstatement related to the calculation of the Company's 4% provision for capital replacement. The correction to the calculation of the provision for capital replacement results in a provision of $3,514 rather than $3,379. The combination of these two items resulted in an overstatement of the Company's AFFO by $321. The correction of these overstatements results in a restated annual AFFO of $3,909.

The Company's calculation of its fourth quarter 2011 AFFO of $3,463, as disclosed in the Filed MD&A, was understated by $17 as the result of an incorrect calculation of the Company's 4% provision for capital replacement. The correction to the calculation results in a provision of $772 rather than $789. The correction of this understatement results in a restated Fourth Quarter AFFO of $3,480.

The Company has revised all references to annual FFO, annual AFFO, quarterly AFFO and related per share calculations in its Amended and Restated MD&A. The Amended and Restated MD&A replaces and supercedes the Filed MD&A for the Fourth Quarter and year ended December 31, 2011.

The Company also takes this opportunity to confirm its methodology in calculating its 4% provision for capital replacement. The Company adjusts its FFO by a 4% provision to arrive at its AFFO. The provision is calculated as 4% of hotel revenue in accordance with the Uniform System of Accounts for Hotels. The basis for this calculation was inconsistent in the disclosures made in the Company's 2011 interim MD&A documents.

ROYAL HOST INC.

Royal Host is a diversified hospitality company that delivers shareholder value through hotel ownership, investment and franchising. The Company's hotels, which contain 3,092 rooms, are located in five Provinces and Territories across Canada. Twenty-two of the Company's hotels operate under internationally recognized brands such as Travelodge®, Super 8®, Holiday Inn®, Hilton® and Country Inns & Suites®. Two of the Company's hotels are unbranded. In addition to its real estate holdings, the Company owns and operates the Travelodge Canada franchise business which is currently comprised of over 90 hotels across nine Provinces and Territories.

Royal Host's common shares and convertible debentures are traded on the Toronto Stock Exchange under the trading symbols "RYL", "RYL.DB.B", "RYL.DB.C" a nd "RYL.DB.D" respectively.

This press release may contain certain forward-looking statements relating, but not limited to, Royal Host's operations, anticipated financial performance, business prospects, and strategies. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", or similar words suggesting future outcomes. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by such forward-looking statements. Such factors include, but are not limited to, economic, competitive, and lodging industry conditions. Royal Host disclaims any responsibility to update any such forward-looking statements except as required by law.

This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.

Contact Information

  • Royal Host Inc.
    John A. Carnella
    President and Chief Executive Officer
    902.470.4550

    Royal Host Inc.
    Michael McFeters
    Chief Financial Officer
    902.470.4515