DirectCash Income Fund announces results of operations for the three and six months ended June 30, 2009



    TSX: DCI.UN

    CALGARY, Aug. 13 /CNW/ - DirectCash Income Fund ("DirectCash" or the
"Fund") today announced consolidated financial results for the three and six
months ended June 30, 2009. The Fund's consolidated financial statements for
the three and six months ended June 30, 2009 and Management's Discussion &
Analysis, as well as additional information about the Fund are available on
SEDAR (www.sedar.com).

    
      Q2 2009 Financial and Operational Highlights compared to Q2 2008:
      -----------------------------------------------------------------

    -   Increased EBITDA 12% to $7.2 million
    -   Increased distributable cash flow 22% to $6.8 million
    -   Distributable cash flow payout ratio has been reduced to 64% from 78%
    -   Acquired $1.7 million of ATM assets; 92 contracts mid-June
    -   Increased the number of prepaid cash card transactions by 15%
    

    Management's Commentary

    "We are pleased with our results in 2009 and have continued to
demonstrate our ability to generate positive returns for our Unitholders. We
are excited about the continued growth in our prepaid products business. Our
initial results in Mexico have been favourable" said Jeffrey Smith,
DirectCash's President and Chief Executive Officer. The primary drivers for
the improvements over the prior year period are the contributions from Mexican
ATM operations, the year over year impact of the 2008 ATM acquisitions, and
the higher year over year activity in prepaid cash card activations and
transactions. The ATM business, which is the backbone of DirectCash's
business, continues to generate consistent performance while strong growth has
also been seen from DirectCash's prepaid products businesses.
    DirectCash will continue to focus on growth in a sustainable manner via
organic means and through additional accretive acquisitions as opportunities
arise. DirectCash's stable, contracted revenue stream, dominant market
positions, and continued growth will continue to provide consistent cash
distributions to DirectCash's Unitholders. In addition, DirectCash is
considering new geographic markets, such as the recently started Mexican
operation which is now adding to recurring services revenue growth and gross
profit margins.
    For purposes of comparison, DirectCash provides the following selected
operational and financial data:


    
    Operational Highlights
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                      June 30                   June 30
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
                           (unaudited)  (unaudited)  (unaudited)  (unaudited)

    Number of machines
     - end of period
      ATM terminals
       - active(1)              6,251        6,180        6,251        6,180
      Debit terminals
       - active(1)              3,071        3,074        3,071        3,074

    Number of transactions
     for the period
      ATM transactions      7,444,753    7,323,959   14,455,609   14,207,536
      Debit terminal
       transactions         2,635,568    2,448,875    4,906,447    4,489,256
      Prepaid cash card
       activations            742,304      637,505    1,558,902    1,298,963
      Prepaid cash card
       transactions         1,770,313    1,544,475    3,983,308    3,343,172
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) DirectCash has included statistics only for sites that recorded a
        transaction in the past calendar month.
    

    On a year over year basis, the number of DirectCash active ATMs increased
by 71. The net increase is a result of an acquisition made at the end of the
period and 40 additional ATMs placed in Mexico.
    The increase in ATM transactions reflects the impact of Mexican ATM
operations and the overall increase in the number of ATMs in operation during
the period.
    ATM revenues per transaction increased when compared to 2008 for the same
reasons.
    DirectCash continues to see the impact of a maturing ATM market in
Canada. Based on statistics provided by Interac, ATM transactions in the
Canadian industry as a whole continued their historical decline on a per ATM
basis (this results from a combination of a decrease in total transactions and
an increase in the number of ATMs that the total transactions are spread
among). On an industry wide basis, as more ATMs have been added to the
Canadian market place there has been no corresponding increase in overall
industry transactions.
    On a year over year basis, the number of DirectCash active debit
terminals has declined by 3. The year over year net decrease can be attributed
to the loss of one of DirectCash's major debit terminal customers in the first
quarter of 2009, which impacted 185 debit terminal sites. Given the impact on
the number of active debit terminal sites, the existing sites still posted
respectable increases in transactions for the three and six months ended June
30, 2009. DirectCash continues to pursue organic growth in this business
segment and to grow market share by providing retailers with unique products
and services to enhance the business viability of the debit terminal for the
retailer.
    The growth in prepaid card activations for the three and six months ended
June 30, 2009 is a result of new customer relationships and growth within
existing relationships. The MasterCard prepaid card program continues to find
traction and displace some Interac debit card activations.
    The increase in prepaid card transactions for the three and six months
ended June 30, 2009 is due to the same reasons noted above for the increase in
prepaid card activations, as well as an increase in transactions per card as
prepaid products continue to gain consumer acceptance and confidence.
Activation and transaction figures include both prepaid debit and prepaid
credit cards.
    The following table presents a summary of the DirectCash's selected
consolidated financial information for the three and six months ended June 30,
2009 and 2008:


    
    Financial Highlights
    -------------------------------------------------------------------------
                                Three Months Ended          Six Months Ended
                                      June 30                   June 30
    (thousands)                  2009         2008         2009         2008
    -------------------------------------------------------------------------
                           (unaudited)  (unaudited)  (unaudited)  (unaudited)

    Revenues
      Recurring
       services revenue   $    18,286  $    15,248  $    36,266  $    30,318
      Products revenue          5,617        6,413       11,206       13,184
      Interest income              16          166           69          334
    -------------------------------------------------------------------------
    Total revenue         $    23,919  $    21,827  $    47,541  $    43,836
    -------------------------------------------------------------------------

    Gross Profit
      Recurring services
       and interest       $    10,477  $     9,146  $    20,739  $    17,716
        Gross profit
         margin                 57.2%        59.3%        57.1%        57.8%
      Products                    443          509          799        1,068
        Gross profit
         margin                  7.9%         7.9%         7.1%         8.1%
    -------------------------------------------------------------------------
    Total gross profit    $    10,920  $     9,655  $    21,538  $    18,784
      Total gross profit
       margin                   45.7%        44.2%        45.3%        42.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Expense and other
     income:
      Selling,
       general and
       administrative           3,399        2,953        6,611        5,700
      Long-term
       incentive plan             343          255          648          515
      Interest                    224          465          524          988
      Foreign exchange
       translation
       (gain)/loss                (42)           -          (42)           -
      Depreciation
       of equipment               852          596        1,564        1,181
      Amortization of
       intangible assets        2,500        4,681        6,294        9,279
    -------------------------------------------------------------------------
                          $     7,276  $     8,950  $    15,599  $    17,663
    -------------------------------------------------------------------------
    Net earnings before
     income taxes         $     3,644  $       705  $     5,939  $     1,120
    -------------------------------------------------------------------------

      Income taxes                 79            -          179            -
    -------------------------------------------------------------------------
    Net earnings          $     3,565  $       705  $     5,760  $     1,120
      Net earnings
       per unit                  0.29         0.03         0.46         0.03
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Add back:
      Interest                    224          465          524          988
      Depreciation of
       equipment                  852          596        1,564        1,181
      Amortization of
       intangible assets        2,500        4,681        6,294        9,279
      Income taxes                 79            -          179            -
    -------------------------------------------------------------------------
    EBITDA                $     7,220  $     6,447  $    14,321  $    12,568
      EBITDA margin             30.2%        29.5%        30.1%        28.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total assets at
     June 30              $   118,522  $   126,020  $   118,522  $   126,020
    Total debt at
     June 30              $    39,435  $    38,400  $    39,435  $    38,400
    Total debt net of
     cash at June 30      $    18,222  $    24,248  $    18,222  $    24,248
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Revenue

    On an aggregate basis, revenues have increased by 8.5% for the six months
ended June 30, 2009, as compared to the prior year period.  Revenue by line of
business, which includes both recurring services and products revenue, is as
follows:


    Revenue by Line of Business
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                      June 30                   June 30
    (thousands)                  2009         2008         2009         2008
    -------------------------------------------------------------------------
                           (unaudited)  (unaudited)  (unaudited)  (unaudited)

    ATM Business          $    10,606  $     9,346  $    20,691  $    18,388
    Prepaid products
     business                  12,887       12,044       25,991       24,616
    Debit terminal
     business                     426          437          859          832
    -------------------------------------------------------------------------
    Total Revenue         $    23,919  $    21,827  $    47,541  $    43,836
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Revenue by type
    -------------------------------------------------------------------------

    Recurring services    $    18,286  $    15,248  $    36,266  $    30,318
    Products                    5,617        6,413       11,206       13,184
    Interest                       16          166           69          334
    -------------------------------------------------------------------------
    Total Revenue         $    23,919  $    21,827  $    47,541  $    43,836
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Revenue - Recurring Services

    Recurring services revenue relates to revenue earned from transaction
processing activities, including DirectCash's ATM, debit terminal and prepaid
product lines of business.
    The increase of almost 20% over 2008 in recurring services revenue is
attributable to both the ATM and prepaid products line of businesses. The
increase in ATM recurring services revenue is related to the revenues
generated from Mexico and the year over year impact of the ATM acquisitions
made during 2008. The increase in prepaid products recurring services revenue
comes primarily from the MasterCard prepaid card product as customers show
greater acceptance and use of this product. The MasterCard prepaid card
program continues to find traction and displace some Interac debit card
activations. DirectCash's prepaid card merchant customers are also continuing
to expand their customer base through the growth of their retail locations.
    There is historic seasonality in processing transaction volumes, with the
highest ATM transaction activity in Canada 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. In Mexico, seasonality in the ATM
business is the opposite of what is seen from DirectCash's Canadian
operations. DirectCash 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 ATM machines, debit terminals and
related parts, as well as prepaid products, consisting of prepaid cards (debit
and credit), prepaid telephone cards, both physical ("hard cards") and
electronic ("virtual vouchers").
    For the three and six months ended June 30, 2009 revenue from product
sales were down $796 thousand and $2.0 million respectively compared to the
prior year. The primary reason for the lower revenues is due the decline in
the sales of telephone cards. DirectCash has seen a reduction in sales in
long-distance telephone and cellular cards in Alberta, where a number of
clients who are dependent upon the transient oil and gas work force which has
been reduced in recent months.
    ATM sales were up due to sales in Mexico, while debit terminals sales
were flat on a year over year comparison as the business model for this
component of the business continues to lean towards owning or renting machines
versus selling them.

    Interest Income

    Interest income declined significantly during the period on a year over
year basis as a result of the impact of lower interest rates that can be
realized on funds held in short term deposits.

    Gross Profits

    On an aggregate basis, gross profits have increased by 13.1% and 14.7%
respectively for the three and six months ended June 30, 2009, as compared to
the prior year. Gross profit by line of business, which includes both
recurring services and products revenue, is as follows:


    
    Gross profit by Line of Business
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
                                      June 30                   June 30
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
                           (unaudited)  (unaudited)  (unaudited)  (unaudited)

    ATM Business          $     6,275  $     5,773  $    12,351  $    11,159
      gross profit margin       59.2%        61.8%        59.7%        60.7%
    Prepaid products
     business                   4,338        3,577        8,561        7,094
      gross profit
       margin                   33.7%        29.7%        32.9%        28.8%
    Debit terminal
     business                     307          305          626          531
      gross profit margin       72.0%        69.7%        72.9%        63.9%
    -------------------------------------------------------------------------
    Total Gross Profit    $    10,920  $     9,655  $    21,538  $    18,784
      gross profit margin       45.7%        44.2%        45.3%        42.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Gross profit by type
    -------------------------------------------------------------------------

    Recurring services
     and interest         $    10,477  $     9,146  $    20,739  $    17,716
      gross profit margin       57.2%        59.3%        57.1%        57.8%
    Products                      443          509          799        1,068
      gross profit margin        7.9%         7.9%         7.1%         8.1%
    -------------------------------------------------------------------------
    Total Gross Profit    $    10,920  $     9,655  $    21,538  $    18,784
      gross profit margin       45.7%        44.2%        45.3%        42.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Gross Profitability - Recurring Services

    Total gross profits from recurring services revenue and interest income
for the three and six months ended June 30, 2009 increased by $1.3 million and
$3.0 million respectively over the prior year.
    The increase in gross profitability for recurring services can be
attributed to the following factors:
    
    (a) positive contribution from the Mexican ATM operations,
    (b) the impact of the ATM acquisitions made during 2008, and
    (c) the higher activity in prepaid card activations and transactions.

    Gross profit margins on a year over year comparison remain strong.
    

    The ATM recurring services gross margins improved as a result of the
Mexican ATM operations and the impact of the 2008 Canadian acquisitions
resulting in more active machines and higher revenue per transaction.
    The increase in activation and transaction levels in the prepaid products
line of business resulted in the increase in contribution from the recurring
services business segment.

    Gross Profitability - Products

    Gross profit from product revenues for the three and six months ended
June 30, 2009 declined by $66 thousand and $269 thousand respectively from
2008.
    
    The decline can be explained primarily by:
    (a) lower margin contributions on the sales of ATMs and debit terminals
        as the business model continue to lean towards full ownership and
        rental of units;
    (b) lower margin contributions from the telephone cards as revenues
        declined on a year over year basis; and
    (c) higher inventory obsolescence write downs in the first two quarters
        of 2009 due to increased security requirements in our industry.
    

    DirectCash has a strategic focus of keeping ATM and debit terminal
purchase prices as low as possible for the DirectCash customer, in order to
maximize the number of machines that can be placed. DirectCash believes that
this strategy will result in additional long-term revenue generating services
contracts.

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

    For the three and six months ended June 30, 2009 SG&A expenses increased
by 15.1% and 16% respectively from the prior year.
    The increase is the result of higher salaries and benefits incurred from
Mexican operations, as well as the addition of some key staff members brought
on to assist in DirectCash's growth.
    As a percentage of gross profits, SG&A was 31.1% (YTD - 30.7%) during the
three months ended June 30, 2009 compared to 30.6% (YTD - 30.3%) for the same
period last year.

    Long-term incentive plan ("LTIP")

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


    
    -------------------------------------------------------------------------
    Percentage by which               Maximum proportion of excess
    distributable cash flow per       distributable cash available for LTIP
    Unit exceeds base threshold(1)    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) $1.51 per Unit per fiscal year (2008 - $1.44 per Unit).


    LTIP Expense
    -------------------------------------------------------------------------
                           Three months to June 30     Six months to June 30
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    LTIP expense              373,970      355,442      678,720      615,757
    Proceeds of units sold    (31,188)    (100,843)     (31,188)    (100,843)
    -------------------------------------------------------------------------
                          $   342,782  $   254,599  $   647,532  $   514,914
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    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.
    Unvested Units of those that are no longer employed are sold in the open
market and the proceeds credited to the LTIP expense.
    Subsequent to the quarter the board increased the base threshold from
$1.44 to $1.51, effective from January 1, 2009. This resulted in lowering the
LTIP expense estimate for the year by $292,400.

    Interest Expense

    For the six months ended June 30, 2009 interest expense has decreased
significantly. DirectCash is benefiting from the lower interest rate
environment as well as lower outstanding balance on DirectCash's credit
facility.
    All DirectCash debt is currently on floating interest rates. A one
percent change in interest rates would result in an approximate $185 thousand
change in interest expense for the period, based upon current debt levels.

    Net Earnings

    Net earnings for the three and six months ended June 30, 2009 were
significantly higher than prior year periods mainly due to amortization of
intangible assets being lower by $2.2 million for the second quarter and $3
million for the year to date.
    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
includes a right of first refusal to match a competitor's bona fide offer on
renewal Thus, while a contract acquired by DirectCash may have a fixed initial
term (which is the time period over which amortization of this intangible
asset occurs) DirectCash's experience is that DirectCash is usually able to
keep the applicable ATMs attached to the DirectCash network with no or little
capital expenditure. Also, any ATM added by organic growth (i.e. through the
DirectCash sales force) has a much lower capital cost that ATM locations added
through acquisition.

    EBITDA

    For the three and six months ended June 30, 2009, EBITDA increased
significantly over prior year levels, although slightly lower than the
increase in gross profits. This reflects the higher gross profit contributions
offset in part by the higher SG&A and LTIP costs. As a percentage of revenue,
EBITDA was slightly higher than both the prior year periods.


    
    Capital Expenditures
    -------------------------------------------------------------------------

                                Three months ended          Six months ended
                                      June 30                   June 30
    -------------------------------------------------------------------------
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    Per consolidated
     financial statements:
    Acquisitions          $     1,700  $     5,256  $     1,700  $     6,926
    Other capital
     expenditures                 538          631        1,591        1,062
    Other intangible
     expenditures                  25           64          524           94
    -------------------------------------------------------------------------
                          $     2,263  $     5,951  $     3,815  $     8,082
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Split between growth
     and maintenance:
    Growth capital        $     2,117  $     5,499  $     3,308  $     7,242
    Productive capital
     maintenance                  146          452          507          840
    -------------------------------------------------------------------------
                          $     2,263  $     5,951  $     3,815  $     8,082
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    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 expected to trend
slightly higher in 2009 due to increased security infrastructure expenditure
requirements. Growth capital expenditures can vary widely between reporting
periods due to the intermittent nature and varying size of acquisitions.

    Acquisition

    On June 15, 2009, DirectCash acquired certain assets of a privately held
corporation engaged in ATM services for cash consideration of $1.7 million,
subject to a customary performance holdback and normal course purchase
adjustments.
    The majority of the assets acquired consist of contracts to operate and
place ATM machines at certain locations. These contracts are valued based on
the remaining term of each agreement and the expected net cash flow from that
agreement. This value is allocated to intangible assets and amortized in
accordance with our policy.
    Acquisitions are funded from DirectCash's credit facilities. The
acquisition was accounted for by the purchase method and the results of
operations have been included in the Fund's consolidated statement of earnings
from the acquisition dates.
    The following allocations (among the asset classes) of the purchase price
from the acquisition are preliminary and subject to changes pending receipt of
final information.


    
    -------------------------------------------------------------------------
                                                                        2009
    -------------------------------------------------------------------------
    Assets acquired:
      Intangible assets                                          $ 1,652,500
      Equipment                                                       47,490
      Inventory                                                           10
    -------------------------------------------------------------------------
    Total consideration                                            1,700,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    For the year ended December 31, 2008, DirectCash acquired certain assets
of a number of privately held corporations and individuals engaged in ATM and
debit terminal services for total cash consideration of $6.85 million, subject
to customary performance holdbacks and normal course purchase adjustments.
    The acquisitions were funded from DirectCash's credit facilities. The
acquisitions were accounted for by the purchase method and the results of
operations have been included in DirectCash's consolidated statement of
earnings from the acquisition dates.
    The fair values of the assets acquired are as follows:


    
    -------------------------------------------------------------------------
                                                                        2008
    -------------------------------------------------------------------------
    Assets acquired:
      Intangible assets                                          $ 6,879,222
      Equipment                                                      360,060
      Working capital                                               (389,282)
    -------------------------------------------------------------------------
    Total consideration                                            6,850,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Liquidity and Capital Resources

    DirectCash believes that the funds generated from operations will be
sufficient to allow DirectCash 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, 2009, DirectCash utilized approximately $39.4 million of a
total available credit facility of $60.0 million. A summary of DirectCash's
available credit at June 30, 2009 is as follows:


    
    -------------------------------------------------------------------------
    (thousands)                           Utilized        Limit    Available
    -------------------------------------------------------------------------

    Revolving credit facility          $     6,935  $    20,000  $    13,065
    Acquisition credit facility             32,500       40,000        7,500
    -------------------------------------------------------------------------
                                       $    39,435  $    60,000  $    20,565
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    The revolving credit facility is demand in nature and is utilized for ATM
cash loading, working capital requirements and commercial letters of credit.
In addition a US$ 1.0 million (CDN$ 1.16 million) letter of credit in favour
of MasterCard International was issued under the revolving credit facility.
The letter of credit pertains to DirectCash's MasterCard prepaid card program.
The revolving credit facility bears interest at the bank's prime lending rate.
    During the period DirectCash's Lender increased our lending rate due to
current global market conditions on both facilities to Prime plus 1%. This
increase will be phased in over the following four quarters in equal
increments, starting July 1, 2009.
    The acquisition credit facility is utilized to facilitate acquisitions
and to fund business growth opportunities as required in new locations. The
acquisition credit facility is demand in nature and bears interest at the
bank's prime lending rate or at banker's acceptance rates plus 1.4% per annum.
Notwithstanding the demand nature of the facility, there are no scheduled
principal repayments.
    Directcash is subject to the following primary lending covenants:


    
    -------------------------------------------------------------------------
                                     June 30, 2009                     Limit
    -------------------------------------------------------------------------
    Funded Debt to Recurring
     Quarterly Revenue                       2.1:1            less than 10:1
    Fixed Charge Cover Ratio                18.7:1          greater than 4:1
    Senior Debt to EBITDA                    1.3:1             less than 2:1
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    For the six months ended June 30, 2009, DirectCash operated within
DirectCash's loan covenant limits and anticipates that DirectCash will
continue to do so in the future. Breach of DirectCash's bank loan 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 DirectCash, including DirectCash's Annual
Information Form and other public filings is available on SEDAR
(www.sedar.com) and on DirectCash's website (www.directcash.net).

    Non-GAAP Measures

    There are a number of financial calculations that are not defined
performance measurements under GAAP but which DirectCash believes are useful
and accepted performance measurements utilized by the investing public in
assessing the overall financial performance of income trusts.

    Earnings before interest, taxes, depreciation and amortization ("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. DirectCash 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. DirectCash'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. The
most directly comparable GAAP measure is Net Earnings. A reconciliation
between EBITDA and Net Earnings is disclosed in the "Financial Highlights"
schedule later on.

    
    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 concerning distributable cash flow measures
and their related disclosure. In accordance with the interpretive release
issued by the Canadian Institute of Chartered Accountants ("CICA"), DirectCash
has calculated a distributable cash flow measure called Standardized
Distributable Cash Flow and has 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. 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 DirectCash'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,
DirectCash has 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. DirectCash 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). DirectCash'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 DirectCash. DirectCash'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, debt repayments and any reasonable reserves
established. DirectCash 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.
    As of July 15, 2009, monthly distributions has historically been paid 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 capital maintenance expenditures

    DirectCash differentiates capital expenditures between growth and
productive capital maintenance ("Maintenance Capital"). There is no such
distinction under GAAP. However, DirectCash 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 DirectCash's existing productive capacity, while growth
capital is expended to increase DirectCash's 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. DirectCash'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

    This MD&A contains certain forward-looking statements relating to future
events. Forward-looking statements are subject to numerous risks and
uncertainties, certain of which are beyond DirectCash's ability to control,
including the impact to DirectCash's business, general economic conditions,
consumer spending, borrowing trends and regulatory changes to name a few.
Certain statements that contain words such as "could", "believe", "expects",
"expected", "will", "intends", "projects", "anticipates", "estimates",
"continues" or similar words relating to matters that are not historical facts
constitute "forward-looking information" within the meaning of applicable
Canadian securities legislation. In particular, forward-looking information
and statements contained in this MD&A include statements related to
DirectCash's projected growth in Canada and Mexico in the ATM business,
projected growth in the Prepaid and debit terminal business, accretive
acquisitions on a go forward basis, expansion of DirectCash's merchant base
through new and innovative products, entry into new geographic markets,
ability to continue to acquire long-term recurring services contracts and
expected increase in capital expenditures due to regulatory mandated security
upgrade changes are all statements that have been stated or referred to
throughout this MD&A. Readers are cautioned that actual results may vary from
the forward-looking information provided.
    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: The officer who may be contacted for further
information is: Hendrik J. Lombard, C.F.O., DirectCash Management Inc.,
Manager of DirectCash Income Fund, Bay No.6, 1420 - 28th Street N.E., Calgary,
Alberta, T2A 7W6, Direct Telephone: (403) 387-2103, Fax: (403) 451-3003,
E-mail: hlombard@directcash.net

Organization Profile

DIRECTCASH INCOME FUND

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