Our Philosophy  Our Growth Strategy  6  2011 Annual Report  Alaris Royalty Corp. We intend to partner with additional proven performers that have attractive operating histories to add to  our revenue base. We look for private companies that have shown a history of growth and low cyclicality as  well as sustainable free cash flow and strong future opportunities. We do not invest in turn-around  situations or companies with a declining asset base. We also look for companies with experienced  management teams who have the intention to continue managing the business after partnering with Alaris  with no change of ownership following the transaction. This ensures such companies are still run by the  capable management and ownership teams that made them such a solid partnership opportunity for Alaris.  Companies with low leverage and capital expenditure requirements are also key criterion for us in  evaluating new opportunities.  Our strategy is to grow our Distributions by partnering with more private companies that have a track  record of high levels of free cash flow and consistent profitability. We typically target companies that are  family controlled, are typically a poor fit for traditional private equity, and that have owners that intend to  use the capital we provide for growth, generational transfers or partial liquidity. Our focus is primarily on  private companies in Canada and the US.  The result for our investors is a revenue stream that generally has low volatility and high predictability due  to the "top line" royalty nature of our distributions from our Private Company Partners. Visibility is also  created because of the twelve month pre-set payments we receive. Our structure gives us the ability to pay  out the vast majority of our revenues in the form of tax effective eligible dividends, thus providing our  investors with an attractive yet conservative yield.  In addition, our philosophy is to partner with our Private Company Partners for as long as required by the  Private Company Partner, and we do not force an exit strategy upon the owners at any time. A financing by  Alaris does not prevent the private company from undertaking a future sale of such company if desired,  provided that our prior consent is obtained.  At the same time, we derive diversified priority-cash returns from businesses that have displayed an ability to  be highly profitable in varying economic environments. By supporting management teams that remain fully  motivated by their ownership position to run their business profitably, our security holders are able to  receive stable monthly dividends based on distributions received by us from our Private Company Partners  that are set twelve months in advance.  Our structure allows us to monitor our Private Company Partners without needing to be involved in their  day-to-day business decisions. We believe business decisions are best made by the people who have built the  successful companies that we provide financing to. Through us, such private companies are able to access  ongoing capital, remain private and their owners are able to maintain control of their common voting  equity. 