Cash Store Financial releases First Quarter Results, achieves record earnings and declares increased dividend



    EDMONTON, Oct. 28 /CNW/ - The Cash Store Financial Services Inc. ("Cash
Store Financial") today announced first Quarter results for the period ended
September 30, 2008.

    First Quarter Highlights (table of results at end of release)

    
    -   Net income of $6.1 million, compared to $3.0 million for the same
        quarter last year.

    -   Diluted earnings per share of $0.31, compared to $0.15 for the same
        quarter last year.

    -   Branch operating income of $14.6 million, compared to $9.4 million
        for the same quarter last year.

    -   Same branch sales increased 10.8% to $99,600 from $89,900 for the
        same quarter last year.

    -   Retention payments of $4.3 million (2.9% of loan volume), compared to
        $5.8 million (4.4% of loan volume) for the same quarter last year.

    -   Working capital of $17.5 million, compared to $16.7 million at
        June 30, 2008.

    -   Cash increased to $20.3 million in the first quarter compared to
        $15.6 million at June 30, 2008.
    

    Mr. Gordon Reykdal, Chairman and CEO commented, "I am very pleased to
report that the first quarter of 2008 was the strongest in the company's
history in terms of both top-line revenue and bottom line earnings. We have
reached a new stage in our evolution as a company and are now benefiting from
a strong network of experienced managers who understand the operational
dynamics of the business and are committed to its success. Through improved
incentive packages for all retail-level associates and the increased hands-on
involvement of senior management in operations, we are well-poised for
continued strong performance through fiscal 2009."
    He further commented, "For several quarters now we have fuelled the
growth of our branch network through internal cash flow while, at the same
time, buying back shares and paying dividends. Throughout, we have maintained
strong working capital and cash positions. Given our expectations of continued
strong performance and our proven ability to sustain liquidity we will
increase our quarterly dividend to 6.5 cents per share. This will be paid on
November 27, 2008 to shareholders on record as of November 12, 2008."
    He added: "Key positive developments over the quarter on a year over year
comparative basis included a marked increase in same-branch-sales, improved
contributions to earnings from our ancillary products, a significant reduction
in retention payments, and improved overall earnings by branches. Over the
past several quarters, we have concentrated significantly on the training and
development of our associates. This effort has been rewarded through our
improved performance and management will continue to focus on these
operational areas in future periods."
    Mr. Reykdal also added, "Current liquidity restrictions in Canada's
capital markets have had no impact on the accessibility of funds for our
customers."

    Financial Results

    Revenue for the first quarter increased 16.1% to $37.4 million from
$32.2 million in the same quarter last year. The higher revenue reflects an
increase in both brokerage fees and other services.
    Same branch sales for the 344 locations open since the beginning of the
first quarter of fiscal 2008 increased by 10.8% compared to the same quarter
last year, with same branch sales averaging $99,600 in the first quarter
compared to $89,900 in the first quarter of the previous year. Management
believes that same branch sales increased through improved staff retention,
more effective bonus structures, communication of expectations at all levels
of the organization and action plans for our lowest performing branches.
    Revenue from other services (including fees from cheque cashing, money
transfer, payment protection, debit cards, term loans, revolving lines of
credit, collections and telephone re-connect services) increased to
$6.4 million in the first quarter, up from $4.9 million in the same quarter
last year. These improvements demonstrate the progress made against our
objective of diversifying our revenue stream and extracting value out of our
existing suite of products.
    At the end of the quarter the company had a cash position of
$20.3 million and a positive working capital of $17.5 million. During the
quarter, working capital has increased by $800,000 from $16.7 million at
June 30, 2008.
    Expenses for the first quarter totalled $22.6 million, an increase from
$20.0 million in the same quarter last year. The increase is primarily due to
the number of branches increasing by 30 and increased bonuses related to
higher profitability.
    Third-party lender retention payments for the first quarter totalled
$4.3 million (2.9% of loans brokered), compared to $5.8 million (4.4% of loans
brokered) in the same quarter last year. Improved collection protocols have
contributed to a continued reduction in retention payments in line with
management's expectations.
    Amortization of capital and intangible assets for the quarter totalled
$1.3 million, compared to $1.1 million in the first quarter last year. The
increase reflects the additional branches.

    Summary Financial Information

    
    -------------------------------------------------------------------------
    Thousands of dollars, except for per share
     amounts and branch figures                       Three Months Ended
    -------------------------------------------------------------------------
    Consolidated results                          September 30  September 30
                                                      2008          2007
    -------------------------------------------------------------------------
                                  No. of branches      391           361
    Revenue
      Brokerage                                   $     37,293  $     32,181
      Corporate                                            126            57
    -------------------------------------------------------------------------
                                                        37,419        32,238
    Branch expenses                                     18,538        17,034
    Retention payments                                   4,251         5,792
    -------------------------------------------------------------------------
    Branch operating income                             14,631         9,412
    -------------------------------------------------------------------------

    Regional expenses                                    1,721         1,734
    Corporate expenses                                   3,404         2,241
    Other amortization                                     214           164
    Income from continuing operations before
     income taxes                                        9,292         5,273
    Income from continuing operations                    6,056         3,418
    Loss from discontinued operations                        -          (390)
    EBITA                                               10,928         6,585
    -------------------------------------------------------------------------
    Net income                                    $      6,056  $      3,028
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of shares
     outstanding - basic                                19,434        20,699
    Basic earnings per share
      Income from continuing operations           $       0.31  $       0.17
      Loss from discontinued operations                      -         (0.02)
      Net income                                          0.31          0.15
    Diluted earnings per share
      Income from continuing operations                   0.31          0.17
      Loss from discontinued operations                      -         (0.02)
      Net income                                  $       0.31  $       0.15
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Consolidated Balance Sheet Information
    Working capital                               $     17,504  $      9,310
    Total assets                                        82,926        89,595
    Total long-term liabilities                          2,148         1,836
    Total liabilities                                   10,855        12,386
    Shareholders' equity                          $     72,073  $     77,209
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    About The Cash Store Financial Services Inc.

    Cash Store Financial is the only payday advance broker in Canada publicly
listed for trading on the Toronto Stock Exchange (TSX:CSF). Cash Store
Financial operates more than 390 branches across Canada under two banners: The
Cash Store and Instaloans.
    The Cash Store and Instaloans act as brokers to facilitate payday advance
services to income-earning consumers who may not be able to obtain them from
traditional banks. Cash Store Financial also provides a private-label debit
card, The Freedom Card, and other ancillary products.
    Cast Store Financial employs more than 1,500 associates and is
headquartered in Edmonton, Alberta.

    This News Release contains "forward-looking information" within the
meaning of applicable Canadian and United States securities legislation.
Forward-looking information includes, but is not limited to, information with
respect to our objectives, strategies, operations and financial results,
competition as well initiatives to grow revenue or reduce retention payments.
Generally, forward-looking information can be identified by the use of
forward-looking terminology such as "plans", "expects", or "does not expect",
"is expected", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "does not anticipate", or "believes" or variations of such
words and phrases or state that certain actions, events or results "may",
"could", "would", "might", or "will be taken", "occur", or "be achieved". In
particular this News Release contains forward-looking statements in connection
with the Cash Store Financials goals and strategic priorities, introduction of
products, share repurchase initiatives and branch openings. Forward-looking
information is subject to known and unknown risks, uncertainties and other
factors that may cause the actual results, level of activity, performance or
achievements of Cash Store Financial, to be materially different from those
expressed or implied by such forward-looking information, including, but not
limited to, changes in economic and political conditions, legislative or
regulatory developments, technological developments, third-party arrangements,
competition, litigation, risks associated with but not limited to, market
conditions, and other factors described in our Annual Information Form ("AIF")
dated August 27, 2008 under the heading "Risk Factors". All material
assumptions used in making forward-looking statements are based on
management's knowledge of current business conditions and expectations of
future business conditions and trends, including our knowledge of the current
credit, interest rate and liquidity conditions affecting us and the Canadian
economy. Although we believes the assumptions used to make such statements are
reasonable at this time and have attempted to identify in our continuous
disclosure documents important factors that could cause actual results to
differ materially from those contained in forward-looking statements, there
may be other factors that cause results not to be as anticipated, estimated or
intended. Certain material factors or assumptions are applied by us in making
forward-looking statements, include without limitation, factors and
assumptions regarding our continued ability to fund our payday loan business,
rates of customer defaults, relationships with, and payments to, third party
lenders, demand for our products, as well as our operating cost structure and
current consumer protection regulations. There can be no assurance that such
information will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such information.
Accordingly, readers should not place undue reliance on forward-looking
information. We do not undertake to update any forward-looking information,
except in accordance with applicable securities laws.

    "EBITA" is earnings before interest, income taxes, stock-based
compensation, amortization of capital and intangible assets. EBITA is not a
recognized measure under Canadian generally accepted accounting principles
("GAAP"). The Company believes that EBITA is a useful supplemental measure to
income (loss), as it provides investors with an indication of cash earnings
prior to debt service, capital expenditures, income taxes and certain non-cash
items. Investors should be cautioned, however, that EBITA should not be
construed as an alternative to net income (loss) determined in accordance with
GAAP as an indicator of the Company's performance or to cash flows from
operating, investing and financing activities as a measure of liquidity and
cash flows. The Company's method of calculating EBITA may differ from the
methods by which other companies calculate EBITA and, accordingly, the EBITA
used herein may not be comparable to measures used by other companies. EBITA
can be reconciled to the sum of income before income taxes and interest,
stock-based compensation, amortization of capital assets and intangible
assets.





For further information:

For further information: Gordon J. Reykdal, Chairman and Chief Executive
Officer, Cash Store Financial, (780) 408-5114 or Michael J.L. Thompson, Senior
Vice President and Corporate Secretary, Cash Store Financial, (780) 408-5595

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The Cash Store Financial Services Inc.

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