Cash Store Financial releases Fourth Quarter and Year End Results; Record revenues, declares dividend on continued positive performance



    EDMONTON, Aug. 27 /CNW/ - The Cash Store Financial Services Inc. ("The
Cash Store" or the "Company") today announced fourth quarter and year end
results for the fiscal year ended June 30, 2008.

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

    -   Income from continuing operations up 60% to $3.2 million compared to
        $2.0 million in the fourth quarter last year.

    -   EBITA for the quarter is up 72% to $7.6 million from $4.4 million in
        the same quarter last year.

    -   Diluted earnings per share from continuing operations of $0.16,
        compared to $0.09 in the fourth quarter last year.

    -   Revenue from continuing operations up 10% to $34.5 million, compared
        to $31.5 million in the fourth quarter last year.

    -   Branch Operating Income up 29% to $11.7 million, compared to $9.1
        million in the fourth quarter last year.

    -   Same Branch Sales up 5% to $91,700 from $87,300 in the fourth
        quarter last year

    -   Retention payments down 23% to $4.2 million (3.1% of loans brokered)
        in the fourth quarter compared to $5.5 million (4.3% of loans
        brokered) in the fourth quarter last year.

    Year-end Highlights

    -   Income from continuing operations for fiscal 2008 was up 44% to
        $12.5 million, compared to $8.7 million in the prior year.

    -   EBITA for the year is up 38% to $26.3 million from $19.0 million last
        year.

    -   Diluted earnings per share from continuing operations were $0.62
        ($0.62 basic), compared to $0.42 ($0.42 basic) in fiscal 2007.

    -   Revenue from continuing operations up 6% to $130.8 million, compared
        to $123.6 million in the prior year.

    -   Branch operating income improved 14% to $39.8 million from
        $35 million for the previous year.

    -   Same Branch Sales improved 7% to $375,700 from $352,300 for the
        previous year.

    -   Retention payments dropped 14% to $20.1 million (3.9% of loans
        brokered) from $23.4 million (4.7 % of loans brokered) for the
        previous year.

    -   Payment of $3.6 million of dividends to shareholders compared to nil
        in fiscal 2007.

    -   Repurchase of 1,353,110 Common shares during fiscal 2008.

    -   384 branches in operation, up 26 from one year ago.
    

    Mr. Gordon Reykdal, Chairman and CEO commented, "Fiscal 2008 was a strong
year for Cash Store Financial, marked by a 44% increase in earnings for
continuing operations relative to the previous year, and a return to earnings
levels exceeding those experienced prior to the systems restructuring
initiated in the third quarter of fiscal 2007. Revenue of $34.5 million in the
fourth quarter for continuing operations represents a 10% increase relative to
the same period in fiscal 2007. This continued positive trending shows clearly
that the business is well positioned for solid financial performance in future
periods."
    Mr. Reykdal further commented, "Fiscal 2008 was also marked by the
successful spin-off in the third quarter of the furniture rental division into
a separate publicly-traded company listed on the TSX Venture Exchange, thus
enabling senior management to further concentrate attention on the Company's
core operations." Shareholders of record in Cash Store Financial at the time
of the transaction received an equivalent amount of shares in the new entity.
    Mr. Reykdal added, "Overall, fiscal 2008 was marked by a significant
increase in revenues and substantive expense reductions. Same branch sales
improved 7% to $375,700 from $352,300 for the previous year, while branch
operating income improved 14% to $39.8 million from $35 million the previous
year. Retention payments dropped 14% to $20.1 million (3.9% of loans brokered)
from $23.4 million (4.7% of loans brokered) for the previous year. Recent
positive developments in industry regulation should enable the Company to
further reduce the cost of loan related capital on a goforward basis."

    Shareholder Returns

    During the year the Company repurchased appropriately 1.35 million of its
common shares through a normal course issuers bid for an aggregate purchase
price of $6.0 million. This amounts to 7% of its outstanding shares.
    As of June 30, 2008, the Company has returned $9.5 million in cash to its
shareholders through the repurchase of shares and the payment of a regular
quarterly dividend since the beginning of fiscal 2008. The Company is
continuing the trend and has declared two dividends and will continue its
share repurchase program. The first dividend is a quarterly cash dividend of
$0.025 per common share and the second dividend is a special cash dividend of
$0.075 per common shares. Both are payable on October 2, 2008 to shareholders
of record on September 18, 2008.
    The number of common shares to be purchased during the period of the
normal course issuer bid (the Bid) from June 27, 2008 to June 26, 2009 will
not exceed 1,208,739 common shares, or approximately 8.9% of the public float
outstanding on June 18, 2008.

    Discontinued Operations

    On November 28, 2007, the Company's shareholders approved a plan to
spin-off the Company's rental operations and certain of its assets and
liabilities to InstaRent Inc., whose common shares were, upon the completion
of the "spinoff" transaction, owned by the shareholders of the Company.
InstaRent Inc. is publicly traded on the TSX Venture stock exchange under the
symbol "IRR".
    This spinoff transaction was completed pursuant to a plan of arrangement
on March 31, 2008 and accordingly, the Company ceased to consolidate those
assets and liabilities of the rental division transferred to InstaRent Inc.
and have presented the results of its operations and its cash flows for the
year ended June 30, 2008 and 2007 as discontinued operations.
    The net loss from discontinued operations during the year was
$1.7 million, which includes $678,000 of costs related to the spinoff
transaction, compared to a net loss of $2.8 million during fiscal 2007. The
decrease in the net loss was due to improved branch operating income compared
to the prior year.

    Fourth Quarter Financial Results

    Net income from continuing operations for the fourth quarter of fiscal
2008 increased to $3.2 million, compared to $2.0 million for the same quarter
last year due to increased revenue, decreased expenses and lower retention
payments partially offset by a higher effective tax rate. Diluted earnings per
share for continuing operations for the fourth quarter were $0.16, compared to
$0.09 per share for the same quarter last year.

    Fiscal 2008 Financial Results

    Net income from continuing operations for the year ended June 30, 2008
was $12.5 million, compared to $8.7 million in the prior year. The higher
earnings resulted in diluted earnings per share from continuing operations
increasing to $0.62, compared to $0.41, for the year ended June 30, 2007.
    The Company's EBITA (income from continuing operations before interest,
income taxes, stockbased compensation, and amortization of capital and
intangible assets) for the year ended June 30, 2008 was $26.3 million,
compared to $19.0 million for the year ended June 30, 2007. The Company's
improved revenue and EBITA numbers are due to increased revenues partially
offset by higher expenses primarily due to opening 26 new branches, and the
Company has, starting January 2007, increased its infrastructure
substantially, including the addition of a centralized cheque cashing
department and collections department, and increased capacity in both the
internal audit and training departments.

    
    The higher fiscal 2008 earnings reflect the following:
    -   Increased branchlevel operating results due to improved revenues,
        growing same branch sales, and decreased retention payments;

    -   targeted expenditures on infrastructure enhancements to increase
        revenue generation, including: a new cheque cashing department, a new
        centralized collections department, increased capacity in the
        internal audit and training departments; and, increased capacity for
        regional and divisional management; and,

    -   decreased expenditures on stockbased compensation.
    

    Branch revenues have improved by 6%, while same branch sales have
increased 5% compared to the same period last year.
    Product and revenue diversification initiatives continue to generate
positive results. Fees from other services (including fees from cheque
cashing, money transfer, payment protection, debit cards, prepaid credit
cards, collections and telephone reconnect services) increased to
$21.7 million for the year ended June 30, 2008, compared to $19.8 million for
the year ended June 30, 2007. A customer loyalty program is currently being
tested in some markets. For future periods, the Company is planning to
introduce alternative loan products.
    The Company is well-positioned to fund future growth initiatives and
working capital requirements with a cash position of $15.6 million and a
positive working capital of $16.7 million as at June 30, 2008. For the year
ended June 30, 2008, working capital has increased by $7.3 million from
$9.4 million at June 30, 2007.

    
    Summary Financial Information

    -------------------------------------------------------------------------
    Thousands of dollars,
    except for per share
    amounts and branch               Three Months Ended       Year Ended
    figures                                June 30              June 30
    -------------------------------------------------------------------------
                                       2008      2007      2008       2007
                                   ------------------------------------------
    Consoldiated results
                     No of branches     384       358       384        358
    Revenue
      Brokerage                     $ 34,490  $ 31,451  $ 130,567  $ 123,498
      Corporate                           52        15        232         64
                                   ------------------------------------------
                                      34,542    31,467    130,799    123,562
    Branch Expenses                   18,635    16,903     70,853     65,184
    Retention payments                 4,229     5,501     20,111     23,418
                                   ------------------------------------------
    Branch operating income           11,678     9,063     39,835     34,960
                                   ------------------------------------------

    Regional expenses                  1,985     1,819      7,440      5,969
    Corporate expenses                 3,523     4,001     11,181     14,754
    Other amortization                   244       222        821        807
    Income from continuing
     operations before
     income taxes                      5,925     3,021     20,392     13,430
    Income from continuing
     operations                        3,210     2,013     12,522      8,670
    Loss from discontinued
     operations                            -      (422)    (1,716)    (2,788)
    EBITA(*)                           7,613     4,429     26,271     19,020
    Net income                         3,210     1,591     10,806      5,882
    Weighted average number
     of shares outstanding
     - basic                          19,652    20,699     20,124     20,596
     - diluted                        19,733    20,805     20,242     20,707
    Basic earings per share
      Income from continuing
       operations                   $   0.16  $   0.09  $    0.62  $    0.42
      Loss from discontinued
       operations                   $      -  $  (0.02) $   (0.08) $   (0.13)
      Net income                    $  0. 16  $  0. 07  $    0.54  $    0.29
    Diluted earnings per share
      Income from continuing
       operations                   $   0.16  $   0.09  $    0.62  $    0.42
      Loss from discontinued
       operations                   $      -  $  (0.02) $  (0 .09) $   (0.14)
      Net income                    $   0.16  $   0.07  $    0.53  $    0.28
    -------------------------------------------------------------------------
    Consolidated Balance
     Sheet Information
    Working capital                 $ 16,740  $  9,408  $  16,740  $   9,408
    Total assets                      81,252    91,932     81,252     91,932
    Total long-term liabilities        1,800     1,857      1,800      1,857
    Total liabilities                 10,049    14,287     10,049     14,287
    Shareholders' equity            $ 71,202  $ 77,645  $  71,202  $  77,645
    -------------------------------------------------------------------------
    (*) EBITA - earnings from continuing operations before interest, income
        taxes, stock-based compensation, amortization of capital and
        intangible assets
    

    This press release should be read in conjunction with the consolidated
financial statements of The Cash Store Financial Services Inc. for the years
ended June 30, 2008 and 2007.

    About The Cash Store Financial Services Inc. (formerly Rentcash Inc.)

    Cash Store Financial is the only payday advance broker in Canada publicly
traded 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.
    Cash Store Financial employs more than 1,600 associates and is
headquartered in Edmonton, Alberta.

    This News Release contains forward-looking statements within the meaning
of applicable Canadian securities legislation, including but not limited to,
statements about the Company's objectives and strategies, financial result,
expectations and outlook, whether for the Company's businesses or the Canadian
economy. Generally, forward-looking statements can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not expect",
"is expected", "budget", "scheduled", "planned", "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". Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level of
activity, closing of transactions, performance or achievements of the Company
to be materially different from those expressed or implied by such
forward-looking statements, including but not limited to risks related to
capital markets and additional funding requirements, fluctuating interest
rates and general economic conditions, legislative and regulatory
developments, the nature of the Company's customers and rates of default,
competition and loss of a material relationship as well as those factors
discussed in the Company's documents filed on SEDAR (www.sedar.com).
    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 management's
knowledge of the current market within which the Company operates and other
factors affecting the Company's' products and the Canadian economy. Although
the Company believes the assumptions used to make such statements are
reasonable at this time and has attempted to identify in its 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 the Company
in making forward-looking statements, including without limitation, factors
and assumptions regarding acceptance of its products in the marketplace,
consumer purchasing trends, existing relationships as well as its operating
cost structure and current legislation and orders regulating its business.
There can be no assurance that such statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. The Company does not undertake to
update any forward-looking statements that are contained herein, except in
accordance with applicable securities laws. Further information on the Company
is available at www.sedar.com.
    "EBITA" is earnings before interest, income taxes, stockbased
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 noncash
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 Companys performance or to cash flows from
operating, investing and financing activities as a measure of liquidity and
cash flows. The Companys 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,
stockbased compensation, amortization of capital assets and intangible assets.

    %SEDAR: 00017423E




For further information:

For further information: Gordon J. Reykdal, Chairman and Chief Executive
Officer, Cash Store Financial, (780) 408-5118; 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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