DirectCash Income Fund announces results of operations for the six months ended June 30, 2008



    TSX: DCI.UN

    CALGARY, Aug. 11 /CNW/ - DirectCash Income Fund ("DirectCash" or the
"Fund") today announced consolidated financial results for the three and six
months ended June 30, 2008. The Fund's consolidated financial statements for
the three and six months ended June 30, 2008 and Management's Discussion &
Analysis, as well as additional information about the Fund are available on
SEDAR (www.sedar.com).

    
    Financial and Operational Highlights Q2-2008 vs. Q2-2007:

    -   Acquired $5.25 million of ATM assets, 711 ATM contracts at the end of
        June.
    -   8.8% increase in revenue
    -   4.8% increase in gross profits
    -   8.9% increase in EBITDA(1)
    -   5.8% increase in distributable cash flow(1)
    -   27 % increase is Debit transactions processed
    -   22% increase in Prepaid Cash Card activations
    -   29% increase in Prepaid Cash Card transactions
    

    Management's Commentary

    In the second quarter DirectCash announced the hiring of a new Chief
Financial Officer, Mr John E. Fauville. "We are pleased with the depth of
experience Mr. Fauville brings to DirectCash and look forward to his future
contributions at DirectCash" said Jeffrey Smith, DirectCash's President and
Chief Executive Officer.
    "In the second quarter of 2008 we have continued to demonstrate our
ability to continually generate consistent financial performance. On a year
over year basis, we have made improvements in both EBITDA and Distributable
Cash Flow" said Jeffrey Smith, DirectCash's President and Chief Executive
Officer. The primary drivers for the improvement over the prior year are
strong gross profit additions from our prepaid MasterCard business, and growth
in margins in each of our business segments on a quarter over quarter basis.
The ATM business which is the backbone of our Fund continues to generate
consistent performance.
    Our focus in the ATM business will be to continue to add sites both
organically and via acquisitions, and to maximize site profitability through
cost and quality control. We are also entering into new geographic markets,
including Mexico in 2008, whose market is at a similar stage of development as
Canada's was in 1997. As of August 1, 2008 we are pleased to report that we
have approximately 25 operational ATMs in Mexico. These ATMs are located in
resort facilities in Cabo San Lucas and Mazatlan.
    Our focus for the balance of 2008 is to continue our growth in a
sustainable manner via organic means and through additional accretive
acquisitions as opportunities arise. We will target cash distributions paid to
Unitholders of between 80% and 85% of distributable cash flow for 2008.
    Stable, contracted revenue streams, dominant market positions, and
continued growth will continue to provide consistent cash distributions to our
Unitholders.
    For purposes of comparison, we have provided the following operational
and financial data:

    
    -------------------------------------------------------------------------
                                 Three months ended       Six months ended
                                       June 30                 June 30
                                  2008        2007        2008        2007
    -------------------------------------------------------------------------
    Operational Highlights    (unaudited) (unaudited) (unaudited) (unaudited)
    Number of machines -
     end of period
      ATM terminals                6,435       5,549       6,435       5,549
      ATM terminals - active
       in past 30 days(1)          6,180       5,318       6,180       5,318
      Debit terminals              3,221       2,704       3,221       2,704
      Debit terminals - active
       in past 30 days(1)          3,074       2,630       3,074       2,630

    Number of transactions
     for the period
      ATM transactions         7,323,959   7,366,935  14,207,536  14,226,637
      Debit terminal
       transactions            2,448,875   1,923,476   4,489,256   3,230,788
      Prepaid cash card
       activations               637,505     523,831   1,298,963   1,085,390
      Prepaid cash card
       transactions            1,544,475   1,195,226   3,343,172   2,477,323
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) In addition to total ATM and Debit terminal counts, DirectCash has
        included statistics for sites that only recorded a transaction in the
        past calendar month in order to provide comparison to other industry
        players in the financial transaction processing business, who record
        sites as active in this manner. This has the impact of eliminating
        some seasonal sites or sites temporarily dormant for a number of
        reasons from the count, resulting in a net decrease in ATM and Debit
        terminal totals of 255 (2007 - 231) and 147 (2007 - 74) respectively.
    

    On a year over year basis, the number of ATMs under contract increased by
886. ATM transactions for the six month period ended June 30, 2008 were flat
compared to the prior year period. We believe ATM transactions have declined
in our network on a per unit basis due to new organic additions being brought
on at lower transaction levels, as more ATMs are added in the Canadian
marketplace without the corresponding growth in additional total transactions.
    The year over year increase in debit terminal count of 517 is entirely a
result of organic growth. The respective 27% and 39% growth in transactions
for the three and six months ended June 30, 2008 over the prior year period is
reflective of the higher numbers of devices deployed as well as higher per
average transactions in devices acquired in March of 2007, and newly deployed
devices.
    The respective 22% and 20% growth in cash card activations for the three
and six months ended June 30, 2008 is a result of new customer relationships
and growth within existing relationships. Activation and transaction figures
include both prepaid debit and prepaid credit card transactions. The prepaid
MasterCard program continues to find traction and displace some debit card
activations. The respective 29% and 35% increase in prepaid cash card
transactions for the three and six months ended June 30, 2008 is due to the
same reasons noted above for the increase in prepaid cash card activations as
well as an increase in transactions per card as prepaid products continue to
gain consumer acceptance and confidence.

    
    Selected financial information
    -------------------------------------------------------------------------
    (thousands of Canadian dollars,
     except per unit amounts)
                                 Three months ended       Six months ended
                                       June 30                 June 30
                                  2008        2007        2008        2007
    -------------------------------------------------------------------------
    Financial Highlights      (unaudited) (unaudited) (unaudited) (unaudited)

    Revenue
      Recurring services
       revenue                $   15,248  $   13,572  $   30,318  $   26,780
      Products revenue             6,413       6,317      13,184      12,680
      Interest income                166         181         334         294
    -------------------------------------------------------------------------
    Total revenue             $   21,827  $   20,070  $   43,836  $   39,754
    -------------------------------------------------------------------------

    Gross profit - Recurring
     services and interest    $    9,146  $    8,478  $   17,716  $   16,669
      Gross profit margin          59.3%       61.6%       57.8%       61.6%
    Gross profit - products          509         735       1,068       1,320
      Gross profit margin           7.9%       11.6%        8.1%       10.4%
    -------------------------------------------------------------------------
    Total gross profit        $    9,655  $    9,213  $   18,784  $   17,989
      Total gross profit
       margin                      44.2%       45.9%       42.9%       45.2%
    Selling, general &
     administrative                2,953       2,856       5,700       5,791
    Long-term incentive plan         255         440         515         672
    Interest                         465         550         988       1,015
    -------------------------------------------------------------------------

    EBITDA                    $    6,447  $    5,918  $   12,569  $   11,525
      EBITDA margin                29.5%       29.5%       28.7%       32.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings              $      707  $      191  $    1,120  $      416
    Net earnings per unit     $     0.06  $     0.02  $     0.09  $     0.03
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total assets at June 30   $  126,020  $  138,355  $  126,020  $  138,355
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total debt at June 30     $   38,400  $   36,750  $   38,400  $   36,750
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total debt net of
     cash at June 30          $   24,248  $   22,436  $   24,248  $   22,436
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Results of Operations for the three and six months ended June 30, 2008

    Revenue

    On an aggregate basis, revenues have increased by 10.3% for the six
months ended June 30, 2008, as compared to the prior year. Revenue by line of
business, which includes both recurring services and products revenue, is as
follows:

    
    -------------------------------------------------------------------------
                       Three months ended June 30   Six months ended June 30
    Revenue by LOB                %                            %
    (thousands):         2008   change     2007      2008   change     2007
    -------------------------------------------------------------------------
    (unaudited)

    ATM Business      $  9,346   -2.5%  $  9,590  $ 18,388   -0.4%  $ 18,460
    Prepaid
     products
     business           12,044   20.2%    10,024    24,616   20.3%    20,459
    Debit terminal
     business              437   -4.2%       456       832   -0.4%       835
    -------------------------------------------------------------------------
    Total Revenue     $ 21,827    8.8%  $ 20,070  $ 43,836   10.3%  $ 39,754
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Revenue by type
     (thousands)
    Recurring
     services         $ 15,248   12.3%  $ 13,572  $ 30,318   13.2%  $ 26,780
    Products             6,413    1.5%     6,317    13,184    4.0%    12,680
    Interest               166   -8.3%       181       334   13.6%       294
    -------------------------------------------------------------------------
    Total Revenue     $ 21,827    8.8%  $ 20,070  $ 43,836   10.3%  $ 39,754
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Revenue - Recurring Services

    Recurring services revenue relates to revenue earned from transaction
processing activities, including ATM, debit terminal and prepaid product
transactions. For the three and six months ended June 30, 2008 recurring
services revenue rose by $1.7 million (12.3%) and $3.5 million (13.2%)
respectively over the prior year.
    For the three and six months ended June 30, 2008, the increase in
recurring revenues was primarily attributable to the prepaid products line of
business. The increase in prepaid product recurring revenues is primarily
attributable to the introduction of the prepaid MasterCard product in the
latter part of 2007, which was partially offset by displaced debit card
revenues and lower pre authorized debit revenues resulting from the loss of a
large customer in mid-2007. ATM and Debit Terminal recurring revenues were
flat over prior year.
    There is historic seasonality of processing transaction volumes, with the
highest ATM transaction activity typically occurring in the second and third
quarters of the year. The first and fourth quarters are traditionally
DirectCash's weakest quarters in terms of processing transactions and gross
profitability. The Fund has eliminated the impact of seasonal fluctuations in
cash flows to Unitholders by equalizing monthly cash distributions. This
seasonality is considered when determining levels of available cash at the end
of each reporting period.

    Revenue - Products

    Product revenue includes sales of ATMs and related parts, debit terminals
and related parts, and prepaid products, which includes the sale of cash cards
(debit and credit) and prepaid telecommunications products, both physical
("hard cards") and electronic ("virtual vouchers"). For the six months ended
June 30, 2008 revenue from product sales was 4.0% higher than the prior year.
New sales from the introduction of the prepaid MasterCard Product and
additional sales of lower margin virtual voucher telecommunication products
were partially offset by lower ATM and debit terminal sales as the business
model continues to lean towards additional full placement and rental units
versus sales.

    Gross Profits

    On an aggregate basis, gross profits have increased by 4.8% and 4.4%
respectively for the three and six months ended June 30, 2008, as compared to
the prior year. Gross profit by line of business, which includes both
recurring services and products revenue, is as follows:

    
    -------------------------------------------------------------------------
                      Three months ended June 30   Six months ended June 30
    Gross profit by               %                            %
    LOB (thousands):     2008   change     2007      2008   change     2007
    -------------------------------------------------------------------------
    (unaudited)

    ATM Business      $  5,773   -3.7%  $  5,994  $ 11,159   -1.2%  $ 11,293
      gross profit
       margin            61.8%             62.5%     60.7%             61.2%
    Prepaid products
     business            3,577   23.1%     2,906     7,094   15.7%     6,129
      gross profit
       margin            29.7%             29.0%             28.8%     30.0%
    Debit terminal
     business              305   -2.6%       313       531   -6.2%       566
      gross profit
       margin            69.7%             68.7%     63.9%             67.8%
    -------------------------------------------------------------------------
    Total Gross
     Profit           $  9,655    4.8%  $  9,213  $ 18,784    4.4%  $ 17,988
      gross profit
       margin            44.2%             45.9%     42.9%             45.2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Gross profit by
     type (thousands)
    Recurring
     services and
     interest         $  9,146    7.9%  $  8,478  $ 17,716    6.3%  $ 16,669
      gross profit
       margin            59.3%             61.6%     57.8%             61.6%
    Products               509  -30.7%       735     1,068  -19.1%     1,320
      gross profit
       margin             7.9%             11.6%      8.1%             10.4%
    -------------------------------------------------------------------------
    Total gross
     profit           $  9,655    4.8%  $  9,213  $ 18,784    4.4%  $ 17,989
      gross profit
       margin            44.2%             45.9%     42.9%             51.2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Gross Profitability - Recurring Services

    Gross profit from recurring service and interest revenues for the three
and six months ended June 30, 2008 was 7.9% and 6.3% respectively higher than
the prior year, due to a combination of acquisitions and organic growth, which
was partially tempered by higher costs of goods sold and operating costs.
    The lower gross profit margins are primarily attributable to the prepaid
products line of business as a result of a product mix shift towards lower
margin transactions, although overall transaction levels and gross profits
continue to increase. Additional revenues added in the debit terminal business
via acquisition were also at lower margins than existing DirectCash terminal
accounts.

    Gross Profitability - Products

    Gross profit from product revenues for the three and six months ended
June 30, 2008 were below 2007 levels. On a year to date basis, gross profit
margins were 8.1% versus 10.4% in the prior year. The reduction in gross
profit margins is largely due to a shift in product revenues towards
additional low margin virtual voucher sales as noted earlier.
    DirectCash has a strategic focus of keeping ATM and debit terminal prices
as low as possible in order to maximize the number of machines placed in
customer locations. By maintaining relatively low margins on this business, we
believe we will maximize the number of long-term revenue generating processing
and recurring service contracts.

    Selling, General & Administrative expenses ("SG&A")

    For the three and six months ended June 30, 2008 SG&A expenses increased
by 3.3% and decreased by 1.6% respectively from the prior year. Improvement on
a year to date basis is primarily a result of lower salary costs resulting
from a review of costs, primarily at satellite offices, as well as lower
overall executive salary costs. Other improvements arose from a concentrated
effort on across the board cost reductions, which were partially offset by
additional costs associated with system security enhancements and a $90,000
increase in legal expenses due to litigation related to ATM site contracts. As
a percentage of gross profits, SG&A decreased during the three months ended
June 30, 2008 to 30.6% (YTD - 30.3%) from 31.0% (YTD - 32.2%) when compared to
the prior period.

    Long-term incentive plan ("LTIP")

    Pursuant to the LTIP, DirectCash sets aside a pool of funds based upon
the amount by which the Fund's per Unit distributable cash flow exceed certain
defined threshold amounts per below:

    
    -------------------------------------------------------------------------
    Percentage by which distributable   Maximum proportion of excess
    cash flow per Unit exceeds base     distributable cash available
    threshold(1)                        for LTIP payments
    ---------------------------------- --------------------------------------
    5% or less                         0%
    -------------------------------------------------------------------------
    greater than 5% and up to 10%      10% of any excess over 5%
    -------------------------------------------------------------------------
    greater than 10% and up to 20%     10% of any excess over 5% to 10%, plus
                                       20% of any excess over 10% to 20%
    -------------------------------------------------------------------------
    greater than 20%                   10% of any excess over 5% to 10%, plus
                                       20% of any excess over 10% to 20%,
                                       plus 30% of any excess over 20%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) $1.32 per Unit per fiscal year (2007 - $1.20 per Unit).
    

    Effective January 1, 2008 to align management LTIP compensation with
Unitholders the base threshold was increased to $1.32 from $1.20, resulting in
an LTIP expense reduction for the three and six months ended June 30, 2008.
    For the three and six months ended June 30, 2008, total LTIP expense was
$254,599 (2007 - $439,616), and $514,914 respectively (2007 - $672,105). The
LTIP expense for the three and six months ended June 30, 2008 is net of
proceeds of $100,843 (2007 - $5,824) and $100,843 respectively (2007 -
$11,654) from unvested Units sold in the open market. Unvested Units are not
reallocated to other participants. DirectCash calculates the current period
LTIP expenditure by annualizing the year to date financial results over the
course of the year and then pro-rating and accruing the resultant annualized
LTIP expenditure in the current period. It is expected that the LTIP base
threshold will be periodically reviewed for appropriateness relative to the
market and compensation requirements.

    EBITDA

    For the three and six months ended June 30, 2008, EBITDA increased 8.9%
and 9.0% respectively over prior year levels, which is higher than the 4.4%
increase in gross profits, primarily due to lower incentive plan expenditures.
As a percentage of revenue, EBITDA was flat over prior year period at 29.5%
for three months ended June 30. On a year to date basis, EBITDA as a
percentage of revenue was slightly lower at 28.7% as compared to 29.0% during
the prior year period.

    Interest expense

    For the three and six months ended June 30, 2008 interest expense has
decreased 15.5% and 2.6% respectively due to decreased interest rates during
the second quarter over prior period (See "Liquidity and Capital Resources").
Use of our revolving credit facility was relatively flat compared to the prior
year, as higher vault cash requirements were offset by gains in undistributed
cash flows. The increase in the use of our acquisition credit facility is the
result of acquisitions undertaken in 2008 and early 2007. All DirectCash debt
is currently on floating interest rates. A one percent change in interest
rates would result in an approximate $404 thousand annual change in interest
expense based upon current debt levels.

    Net Earnings

    Net earnings for the three and six months ended June 30, 2008 were
$706,586 and $1,120,374 respectively, versus net earnings of $190,767 and
$416,413 during the prior year. The disparity between net earnings and cash
distributions is primarily due to amortization of intangible assets related to
ATM, debit terminal and prepaid product contracts. Typically, these contracts
include automatic renewals for a further minimum five-year period (new
contracts are six years) unless the customer terminates the contract within a
specified time period and include a right of first refusal to match a
competitor's bona fide offer on renewal, which Management believes could
result in the assets having a longer life than the period they are amortized
over.

    
    Standardized Distributable Cash Flow and Distributable Cash Flow per Unit
    -------------------------------------------------------------------------
                              Three months ended   Six months ended
    (thousands, except for         June 30             June 30       Cumula-
     per unit amounts)          2008      2007      2008      2007    tive(1)
    -------------------------------------------------------------------------
    Per consolidated
     financial
     statements:
    Net earnings/(loss)     $    706  $    191  $  1,120  $    416  $  5,063
    Add/(Deduct):
    Minority interest              -         -         -         -       838
    Depreciation of
     equipment                   596       616     1,181     1,197     6,483
    Amortization of
     intangible
     and other assets          4,681     4,562     9,279     8,897    58,421
    Changes in non-cash
     working capital             914    (1,702)      451    (2,535)   (2,062)
    -------------------------------------------------------------------------
    Cash provided by
     operations:            $  6,897  $  3,667  $ 12,031  $  7,975  $ 68,742
    Productive capacity
     maintenance                (452)     (139)     (840)     (534)   (3,569)
    -------------------------------------------------------------------------
    Standardized
     distributable
     cash flow              $  6,445  $  3,528  $ 11,191  $  7,441  $ 65,173
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Per unit                $ 0.5168  $ 0.2829  $ 0.8974  $ 0.5966  $ 5.2258
    Changes in non-cash
     working capital            (914)    1,702      (451)    2,535     2,062
    Deferred rent expense         (7)       (7)      (13)      (13)      (40)
    -------------------------------------------------------------------------
    Distributable Cash Flow $  5,524  $  5,223  $ 10,727  $  9,963  $ 67,195
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Per Unit                $ 0.4430  $ 0.4188  $ 0.8602  $ 0.7989  $ 5.3880
    Distributions declared  $  4,302  $  4,303  $  8,605  $  8,605  $ 55,095
    Distributions declared
     per unit               $ 0.3450  $ 0.3450  $ 0.6900  $ 0.6900  $ 4.4177
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Standardized
     Distributable Cash
     Flow Payout ratio         66.7%    122.0%     76.9%    115.6%     84.5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributable Cash
     Flow Payout Ratio         77.9%     82.4%     80.2%     86.4%     82.0%
    -------------------------------------------------------------------------
    (1) Since the Fund's initial public offering in December, 2004.
    

    Distributions typically exceed net earnings as a result of non-cash
expenses, such as depreciation of equipment and amortization of intangible
assets. These non-cash expenses result in a reduction to net earnings, with no
impact on cash flow from operating activities. DirectCash's policy is to
distribute all available cash from operations after cash required to maintain
productive capacity, working capital reserves and other reserves as considered
advisable by DirectCash's Board, which reflects the difference between
distributions declared and distributable cash flow. The lower distributable
cash flow payout ratio in 2008 versus 2007 reflects higher distributable cash
flows in 2008 without a corresponding increase in cash distribution levels.
Since inception, the Fund has distributed 82.0% of its distributable cash flow
to holders of units, exchangeable partnership units and Class B subordinated
partnership units.
    Cash distributions and productive maintenance capital programs have been
historically funded via cash from operations, while growth capital
expenditures have primarily been funded with debt. Over time, additional
borrowings and equity issues may be required to increase productive capacity.
    Neither standardized distributable cash flow nor distributable cash flow
can be assured. See Key Business Risks for a list of factors which could
negatively impact cash flows. The Fund intends to utilize its credit
facilities as part of its capital structure in order to fund future capital
growth, operating within the covenants of its credit facility, thus enhancing
distributable cash flow from operations.
    Since inception, 100% of the Fund's distributions declared are considered
other income. The consolidated excess of the carrying value of the Fund's
equipment, intangible and other assets over their tax basis is approximately
$13.8 million.

    
    Capital Expenditures
    -------------------------------------------------------------------------
                                 Three months ended       Six months ended
                                       June 30                 June 30
                                  2008        2007        2008        2007
    -------------------------------------------------------------------------
    Per consolidated
     financial statements:
    Acquisitions              $    5,256  $        -  $    6,926  $    5,214
    Other capital
     expenditures                    631         534       1,062       1,119
    Other intangible
     expenditures                     64          91          94         429
    -------------------------------------------------------------------------
                              $    5,951  $      625  $    8,082  $    6,762
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Split between growth
     and maintenance:
    Growth capital                 5,499         486       7,242       6,228
    Productive capital
     maintenance                     452         139         840         534
    -------------------------------------------------------------------------
                              $    5,951  $      625  $    8,082  $    6,762
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Growth capital expenditures relate to acquisitions and other expenditures
that increase DirectCash's productive capacity, while productive capital
maintenance expenditures maintain productive capacity at existing levels.
Productive capital maintenance expenditures are reasonably predictable with
large lead times typically provided for project completion; however,
inter-period expenditures vary significantly depending upon project timing.
Growth capital expenditures vary widely between periods due to the volatility
of acquisition opportunities.

    Acquisition

    For the six months ended June 30, 2008, DirectCash has acquired certain
assets of a number of privately held corporations and individuals engaged in
ATM and debit terminal services for cash consideration of $6.8 million
(2007 - $5.3 million), subject to customary performance holdbacks and normal
course purchase adjustments. The allocation of the purchase price to
intangible and other assets is preliminary and subject to change. The
acquisitions resulted in 795 additional ATMs being added to the DirectCash ATM
network.

    Liquidity and Capital Resources

    Management believes that the funds generated from operations will be
sufficient to allow it to meet ongoing requirements for working capital,
maintenance capital expenditures including investments in technology capital,
interest expense, and cash distributions to Unitholders. DirectCash's actual
cash generated from operations will be dependent upon future financial
performance, which in turn will be subject to financial, tax, business and
other factors.
    As of June 30, 2008, DirectCash utilized approximately $40.4 million of a
total available credit facility of $60.0 million. A summary of DirectCash's
available credit at June 30, 2008 is as follows:

    
    -------------------------------------------------------------------------
    (thousands)                     Utilized         Limit        Available
    -------------------------------------------------------------------------
    Revolving credit facility     $      9,600   $     20,000   $     10,400
    Acquisition credit facility         30,800         40,000          9,200
    -------------------------------------------------------------------------
                                  $     40,400   $     60,000   $     19,600
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Included in the revolving credit facility utilization are two
$US 1.0 million (CDN$ 1,018,600 each) letters of credit, both in favour of
MasterCard International. Both letters of credit are pertaining to
DirectCash's prepaid MasterCard program. The revolving credit facility is
demand in nature and is utilized for ATM cash machine loading, working capital
requirements and commercial letters of credit. The revolving credit facility
bears interest at the Bank's prime lending rate.
    The acquisition credit facility is utilized to facilitate acquisitions
and to fund equipment in new locations. The facility is demand in nature and
bears interest at the Bank's prime lending rate or at banker's acceptance
rates plus 1.4%. Notwithstanding the demand nature of the facility, there are
no scheduled principal repayments. Depending upon interest rates and future
capital requirements, all or a portion of the acquisition credit facility
could be repaid via a public offering of DirectCash securities.
    For the six months ended June 30, 2008, DirectCash operated well within
its covenant limits and anticipates it will continue to do so in the future.
Breach of its covenants could result in the triggering of remedies by
DirectCash's lenders, which could ultimately result in the curtailing of
distribution payments.

    Additional Information

    Additional information about the Fund, including the Fund's Annual
Information Form and other public filings is available on SEDAR
(www.sedar.com) and on the Fund's website (www.directcash.net).

    (1) Non-GAAP measures
    ---------------------
    There are a number of financial calculations that are not defined
performance measurements under Canadian generally accepted accounting
principles ("GAAP") but which Management believes are useful and accepted
performance measurements utilized by the investing public in assessing the
overall financial performance of Income Trusts.

    EBITDA

    EBITDA represents gross profits less selling, general and administrative
expenses ("SG&A) and long-term incentive plan expenses, and is not a defined
performance measure under GAAP. Management believes that EBITDA is a useful
supplementary disclosure commonly used by the investing community to assess
and compare cash flows between entities. EBITDA specifically excludes
depreciation, amortization, income taxes and interest expense. The Fund's
EBITDA may differ from similar computations as reported by other issuers and,
accordingly, may not be comparable to EBITDA as reported by such issuers.

    Standardized distributable cash flow and standardized distributable cash
    flow per unit

    On July 6, 2007, the Canadian Securities Administrators ("CSA") published
revised National Policy Statement 41-201 Income Trusts and Other Direct
Offerings that includes guidance around distributable cash flow measures and
their related disclosure. In accordance with the interpretive release issued
by the Canadian Institute of Chartered Accountants ("CICA"), we have
calculated a distributable cash flow measure called Standardized Distributable
Cash Flow and have included it as an additional disclosure. Standardized
Distributable Cash Flow is calculated as cash flow from operations including
the effect of changes in non-cash working capital less total capital
expenditures required to preserve productive capacity, and restrictions on
distributions resulting from compliance covenants and minority interests. Due
to normal course changes of non-cash working capital between periods,
Standardized Distributable Cash Flow has the potential to be volatile between
periods compared to the Fund's existing measure of Distributable Cash Flow,
which is calculated as cash flow from operations excluding the impact of
non- cash working capital changes less productive capital maintenance
requirements (See discussion below). In order to reconcile the two measures,
we have calculated Standardized Distributable Cash Flow and reconciled it to
Distributable Cash Flow.

    Distributable cash flow and distributable cash flow per unit

    Distributable cash flow and distributable cash flow per unit are non-GAAP
measures generally used by Canadian open-ended income funds as an indicator of
financial performance. Readers are cautioned that distributable cash flow is
not a defined performance measure under GAAP, and that distributable cash flow
cannot be assured. The Fund calculates distributable cash flow as equal to the
consolidated funds flow from operations before changes in non-cash working
capital, after provision for productive capital maintenance capital
expenditures (See discussion below) and amortization of deferred rent expense.
The Fund's distributable cash flow and distributable cash flow per unit may
differ from similar computations as reported by other issuers and,
accordingly, may not be comparable to distributable cash flow and
distributable cash flow per unit as reported by such issuers.
    Unitholders receive cash distributions sourced from distributions made by
DirectCash LP indirectly to the Fund. The Fund's policy is to distribute, to
the maximum extent possible, the cash earned from operations to Unitholders,
less amounts estimated to be required for expenses, productive capital
maintenance, cash redemptions or repurchases of Units, any current tax
liability, or other obligations and any reasonable reserves established. The
Fund makes monthly cash distributions to Unitholders on the last business day
of each month to Unitholders of record on the last business day of the
preceding month. Currently distributions are set at $0.115 per Unit per month
($1.38 per Unit annualized). Distributions are funded from cash flows
generated by the operation of the business.

    Productive maintenance capital expenditures

    DirectCash differentiates capital expenditures between growth and
productive capital maintenance ("maintenance capital"). There is no such
distinction under GAAP, however Management believes it is important to
differentiate between them as maintenance capital expenditures represent a
discretionary adjustment to distributable cash flow while growth capital does
not. Maintenance capital expenditures are defined as expenditures required to
service and maintain our existing productive capacity, while growth capital is
expended to increase our productive capacity by adding additional sources of
revenue not currently in existence. Current measures of productive capacity
that DirectCash utilizes include ATMs and debit terminals under contract (see
"Operational Highlights"). Software and hardware upgrades to existing
infrastructure, ATM and debit terminal equipment upgrades necessary to meet
changing regulatory requirements, contract extension incentives, and fleet
vehicle purchases and upgrades are some examples of maintenance capital
expenditures. Examples of growth capital expenditures include the acquisition
of a competitor's assets, the cost of an ATM in a new location, or technology
costs related to new sources of revenue.
    Readers are cautioned that productive capital maintenance expenditure is
not a defined performance measure under GAAP. The Fund's computation of
productive maintenance capital expenditure may differ from similar
computations as reported by other issuers and, accordingly, may not be
comparable to maintenance capital expenditures as reported by such issuers.

    Forward Looking Statements

    Except for the historical and present factual information, certain
statements contained herein are forward-looking. Such forward-looking
statements are not guarantees of future performance and involve a number of
known and unknown risks and uncertainties which may cause the actual results
of the Fund in future periods to differ materially from any projections
expressed or implied by such forward-looking statements and therefore should
not be relied upon. Any forward-looking statements are made as of the date
hereof and the Fund does not undertake any obligation to publicly update or
revise such statements to reflect new information, subsequent events or
otherwise, except as required pursuant to applicable securities laws.
    Additional information about the Fund is available on SEDAR
(www.sedar.com) or the Fund's website at www.directcash.net.





For further information:

For further information: Jeffrey J. Smith, President and CEO, DirectCash
Management Inc., Manager of DirectCash Income Fund, Direct: (403) 387-2101,
e-mail: jeff@directcash.net; John Fauville, Chief Financial Officer,
DirectCash Management Inc., Manager of DirectCash Income Fund, Direct: (403)
387-2103, e-mail: jfauville@directcash.net

Organization Profile

DIRECTCASH INCOME FUND

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