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## OVERVIEW 

The Corporation earns its revenues by providing capital to private businesses (individually, a “Private Company Partner” and collectively the “Partners”). The Corporation’s revenue consists of royalties and preferred distributions (“Distributions”) received in regular monthly payments that are contractually agreed to between the Corporation and each Private Company Partner. These payments are set for twelve months at a time and adjusted annually based on the audited performance of each Private Company Partner’s gross revenue, gross margin, same store sales, or other similar “top-line” performance measure. The Corporation has limited general and administrative expenses with only ten employees. 

## RESULTS OF OPERATIONS 

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012 

<img src='content_image/151178.jpg'>

2013 was another year of significant accretive growth for the Corporation as demonstrated in the table above. 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 Services Management, LP (“SHS”), 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”). 

 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%. 

## Reducing Volatility: 

 Negotiated collars on the maximum increase or decrease of the annual distributions from SCR, Sequel & SMi. 

 Nine 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. 

