Management Discussion & Analysis MANAGEMENT DISCUSSION AND ANALYSIS This management’s discussion and analysis (“ MD&A ”) should be read in conjunction with the audited  financial statements for the years ended December 31, 2011 and December 31, 2010 for Alaris Royalty  Corp., (“ Alaris ” or the “ Corporation "). The financial statements of the Corporation have been prepared in  accordance with International Financial Reporting Standards (“ IFRS ”) and are recorded in Canadian  dollars. (See “Transition to International Reporting Standards” under “New Accounting Pronouncements”  in this Management’s Discussion and analysis). Certain dollar amounts in the MD&A have been rounded  to the nearest thousands of dollars.  This MD&A contains forward-looking statements that are not historical in nature and involve risks and  uncertainties. Forward-looking statements are not guarantees as to the Corporation’s future results since  there are inherent difficulties in predicting future results. Accordingly, actual results could differ materially  from those expressed or implied in the forward-looking statements. See "Forward Looking Statements" for a  discussion of the risks, uncertainties and assumptions relating to those statements. Some of the factors that  could cause results or events to differ from current expectations include, but are not limited to, the factors  described under "Risks and Uncertainty". This MD&A also refers to certain non-IFRS measures, including  EBITDA and Available Working Capital, to assist in assessing the Corporation’s financial performance.  The terms EBITDA and Available Working Capital (the “ Non-IFRS Measures ”) are financial measures  used in this MD&A that are not standard measures under IFRS. The Corporation’s method of calculating  the Non-IFRS Measures may differ from the methods used by other issuers. Therefore, the Corporation’s  Non-IFRS measures may not be comparable to similar measures presented by other issuers. See “Results of  Operations” for a reconciliation of EBITDA to earnings and “Liquidity” for a reconciliation of Available  Working Capital to working capital. EBITDA  refers to earnings 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. Normalized EBITDA  refers to EBITDA excluding items that are non-recurring in nature. Items include  expenses incurred in connection with the reduction of interests in two of the private businesses the  Corporation has transacted with. The Corporation has provided a reconciliation of net income to EBITDA and Normalized EBITDA and  working capital to Available Working Capital in this MD&A. These Non-IFRS measures should only be  used in conjunction with the Corporation’s annual audited statements, excerpts of which are available  below, while complete versions are available on SEDAR at www.sedar.com.  52  2011 Annual Report  Alaris Royalty Corp.