DirectCash Income Fund announces results of operations for the three months and year ended December 31, 2006



    TSX: DCI.UN

    CALGARY, March 26 /CNW/ - DirectCash Income Fund ("DirectCash" or the
"Fund") today announced consolidated financial results for the three months
and year ended December 31, 2006. The Fund's audited consolidated financial
statements for the year ended December 31, 2006 and Management's Discussion &
Analysis, as well as additional information about the Fund are available on
SEDAR (www.sedar.com).

    Management's Commentary

    "The fourth quarter and 2006 reflected strong financial performance for
DirectCash Income Fund. During the fourth quarter and full year respectively,
we significantly increased revenues, EBITDA(1) and Distributable Cash
Flow(1)," said Jeffrey Smith, DirectCash's President and Chief Executive
Officer. "For the fourth quarter and full year, EBITDA and distributable cash
flow increased by 36% and 31% respectively over 2005 levels. The improvements
resulted from a combination of continued organic growth across all lines of
business and acquisitions totalling $14.7 million over the course of the year.
The strong financial results allowed us to reward our unitholders with four
separate distribution increases during the year to $1.38 per unit annualized,
a 21% increase. The first and fourth quarters of each calendar year are
historically seasonal low points as reflected in our financial results for the
three months ended December 31, 2006, for which EBITDA and distributable cash
flows were 11% and 15% respectively lower than third quarter results.
    Our focus for the coming year is to continue our growth in a reasonable
and sustainable manner via organic means and through accretive acquisitions as
opportunities arise. Our expectation is that our growth rate for 2007 will be
modest relative to prior years, as our business continues to mature. We
estimate that cash distributions paid to Unitholders will be between 80% and
85% of distributable cash flow for 2007.
    Gains made in the ATM business will be consolidated with emphasis placed
on streamlining our operations while pursuing organic growth opportunities. We
believe we also have the sufficient credit availability and access to capital
to allow us to pursue high quality accretive acquisitions when they are
available.
    We will continue to emphasize the diversification of our Prepaid Products
line of business, both in terms of product offerings such as Prepaid
MasterCard and in terms of the number of customers we serve in order to
minimize reliance on key customers. We will continue to organically grow the
Debit Terminal business via cross selling to existing customers and through
the pursuit of new merchant relationships.
    It is our belief that DirectCash, due to its stable, contracted revenue
stream, dominant market positions, and continued growth opportunities will
continue to provide consistent cash distributions to its Unitholders."

    
    Significant Operational Achievements 2006

    -   We added 863 ATMs to our network representing a 20% increase over
        2005 numbers (4,312 as at December 31, 2006 to 5,175 as at
        December 31, 2005).
    -   The number of ATM transactions processed increased 16%.
    -   We completed acquisitions totalling $14.7 million in 2006 versus
        $6.3 million in 2005.
    -   The number of Debit transactions processed increased 45%.
    -   The number of prepaid cash card activations increased 13%.
    -   The number of prepaid cash card transactions processed increased 22%.
    -   We opened service center/sales offices in Edmonton and Saskatoon
        during the first quarter.
    -   Expanded Prepaid Products business to include the sale of "hard
        card" prepaid airtime products.

    Financial Highlights 2006

    -   Generated 31% higher distributable cash flow than 2005 ($20.2 million
        versus $15.5 million).
    -   Revenues increased 54% from $48.1 million in 2005 to $73.9 million.
    -   EBITDA increased 36% from $16.6 million in 2005 to $22.6 million.
    -   Acquired $14.7 million of ATM, Debit Terminal and Prepaid Product
        assets.
    -   Increased distributions four times to $1.38 per unit annualized from
        $1.14 per unit annualized (represents a 45% increase over December,
        2004 IPO initial distribution level of $0.95 per unit).

    Financial Highlights Q4 - 2006

    -   Generated 31% higher distributable cash flow than 2005 ($5.0 million
        versus $3.8 million).
    -   Revenues increased 45% from $13.1 million in 2005 to $18.9 million.
    -   EBITDA increased 36% from $4.2 million in 2005 to $5.8 million.

    For purposes of comparison, we have provided the following financial and
operational data:

    Financial and Operational Highlights

    Selected financial information
    -------------------------------------------------------------------------
    (thousands of Canadian    Three months ended           Years ended
     dollars, except per         December 31               December 31
     unit amounts)            2006         2005         2006         2005
    -------------------------------------------------------------------------
    Financial Highlights   (unaudited)  (unaudited)  (unaudited)  (unaudited)
    Revenue
      Recurring services
       revenue            $    12,611  $     9,849  $    47,855  $    35,299
      Products revenue          6,214        3,141       25,736       12,566
      Interest income              96           61          324          217
    -------------------------------------------------------------------------
    Total revenue         $    18,921  $    13,051  $    73,915  $    48,082
    -------------------------------------------------------------------------

    Gross profit -
     Recurring services
     and interest         $     8,002  $     6,313  $    31,038  $    23,303
      Gross profit margin       63.0%        63.7%        64.4%        65.6%
    Gross profit - products       474          213        2,329        1,157
      Gross profit margin        9.1%         6.8%         9.1%         9.2%
    -------------------------------------------------------------------------
    Total gross profit    $     8,476  $     6,526  $    33,367  $    24,460
      Total gross profit
       margin                   44.8%        50.0%        45.1%        50.9%

    Selling, general &
     administrative             2,403        1,910        9,318        6,893
    Long-term incentive plan      285          377        1,415          957
    -------------------------------------------------------------------------

    EBITDA                $     5,788  $     4,239  $    22,634  $    16,610
      EBITDA margin             30.6%        32.5%        30.6%        34.5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings          $       465  $       243  $     2,366  $     1,015
    Net earnings per unit $      0.05  $      0.02  $      0.24  $      0.10
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total assets at
     December 31          $   137,825  $   128,783  $   137,825  $   128,783
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total debt at
     December 31          $    28,329  $    10,299  $    28,329  $    10,299
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total debt net of
     cash at December 31  $    14,431  $     4,178  $    14,431  $     4,178
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                              Three months ended           Years ended
                                 December 31               December 31
                              2006         2005         2006         2005
    -------------------------------------------------------------------------
    Operational Highlights (unaudited)  (unaudited)  (unaudited)  (unaudited)
    Number of machines -
     end of period
      ATM terminals             5,175        4,312        5,175        4,312
      ATM terminals -
       active in past
       30 days(2)               4,914        4,312        4,914        4,312
      Debit terminals           2,256        1,696        2,256        1,696
      Debit terminals -
       active in past
       30 days(2)               2,177        1,696        2,177        1,696

    Number of transactions
     for the period
      ATM transactions      7,161,491    6,221,159   28,009,592   24,189,694
      Debit terminal
       transactions         1,224,090      856,702    4,371,463    3,004,675
      Prepaid cash card
       activations            470,390      444,669    1,839,887    1,627,706
      Prepaid cash card
       transactions         1,041,086      917,983    3,868,763    3,162,229
    -------------------------------------------------------------------------
    (2) 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 261 and 79 respectively. Seasonal and dormant site
        information is not available for the comparable prior year period.
    

    Year over year, the number of ATMs under contract increased by 863, of
which 507 were added via acquisition, and 356 were added via organic means.
The year over year increase in debit terminal count of 560 units is almost
entirely due to organic growth. The respective 13% and 22% growth in card
activations and card transactions is a result of new customer relationships
and growth within existing relationships as well as increased usage on a per
card basis.

    Results of Operations

    For the three months and year ended December 31, 2006 compared to the
    three months and year ended December 31, 2005

    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 months and year ended December 31, 2006 recurring
services revenue rose by $2.8 million (28.0%) and 12.6 million (35.6%)
respectively over the prior year. Of the increase in annual revenues
approximately 54% is attributable to ATM services, with the balance almost
entirely made up of fees related to the Prepaid Products line of business. The
increase in ATM revenues is attributable to a combination of acquisitions and
organic growth with acquisitions accounting for 59% of the additional ATMs in
the network on a year over year basis.
    The improvement in revenues related to prepaid product transactions is
split between card activation revenues and related transaction revenues due to
increases in cards activated and a higher corresponding number of related
transactions. While the overall year over year growth in activations and
related transactions remained strong, it has slowed from prior periods due to
a maturing of key customer relationships. Other products are increasingly
responsible for the overall growth of prepaid products recurring services
gross profits, such as the pre-authorized debit payment service, which
contributed an additional $1.3 million in revenues in 2006 over 2005.
    There is historic seasonality of processing transaction volumes, with the
highest activity typically occurring in the months of March, April, June, July
and August, and the lowest activity typically occurring in the months of
November, December, January and February. 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
and prepaid telecommunications products, both physical ("hard cards") and
electronic ("virtual vouchers"). For three months and year ended December 31,
2006 revenue from product sales rose 97.8% and 104.8% respectively over the
prior year. The increase in revenues is primarily due to the addition of hard
card sales on March 1, 2006, resulting from the acquisition of the assets of
Retail Results Corp., which had the effect of adding approximately
$1.0 million of revenues per month from the point of acquisition. In addition,
virtual voucher sales increased by approximately 34% on a year over year
basis, averaging approximately $900 thousand in sales per month in 2006. ATM
sales were lower than the prior year for both the quarter and year ended
December 31, 2006 due to lower costs which were largely passed on to
customers.

    Gross Profitability - Recurring Services
    Gross profit from recurring service revenues for the three months and
year ended December 31, 2006 was 26.8% and 33.0% respectively higher than the
prior year. This corresponds relatively closely to the 28.0% and 35.6%
respective increases in revenues noted earlier. The reason for the slightly
lower gross profit margin for the fourth quarter of 63.0% in 2006 versus 63.7%
in 2005 and for the 2006 full year of 64.4% versus 65.6% is primarily due to
integration expenditures related to the acquisitions undertaken in the first
quarter as well as the impact of relatively lower gross profitability
contracts included in the acquisitions.
    DirectCash changed its practice of how it classifies bank fees during the
fourth quarter of 2006. Previously, bank fees were classified as SG&A
expenses. They are now included as recurring services cost of goods sold. The
reason for the change was to recognize the charges as a direct expense related
to earning revenue, particularly as it relates to the relatively new
pre-authorized debit services and settlements costs across all lines of
business. Using the old methodology recurring services gross profitability in
2006 would have been 64.3% versus 64.9% in 2005 during the fourth quarter and
65.7% versus 66.6% for the full year.

    Gross Profitability - Products
    Gross profit from product revenues for the three months and year ended
December 31, 2006 was 122.5% and 101.3% higher than the prior year, which
corresponds fairly closely to the increase in revenues. The relatively higher
profitability in the fourth quarter stems from low margins experienced during
the prior year period. Gross profitability declined slightly on a year over
basis to 9.1% in 2006 versus 9.2% in 2005, but was markedly improved for the
fourth quarter when compared to the prior year.
    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.
    On an aggregate basis, gross profitability for the three months and year
ended December 31, 2006 was 44.8% and 45.1% respectively, versus respective
gross profitability of 50.0% and 50.9% in 2005. The reason for the decline is
an increased relative percentage of lower margin product revenues, resulting
from the addition of hard card product revenues and an increase in virtual
voucher revenues in 2006, versus higher margin recurring service revenues.

    Selling, General & Administrative expenses ("SG&A")
    For the three months and year ended December 31, 2006 SG&A expenses
increased 25.8% and 35.2% respectively over the prior year, which is roughly
commensurate with the general growth of the business and the opening of new
regional sales and distribution centres earlier this year. Over the course of
the past year we have added offices in Saskatoon and Edmonton, which in
combination with increased staff levels is primarily responsible for the
increases in SG&A costs. In addition, DirectCash has been impacted by upwards
salary and other cost pressures, particularly in Alberta. Despite these
pressures, as a percentage of gross profits, SG&A decreased marginally during
the quarter to 28.4% versus 29.3% in the prior year and for the year to 27.9%
from 28.2% in the prior year due to the fixed nature of many our SG&A
expenditures.

    Long-term incentive plan
    DirectCash has adopted a long-term incentive plan ("LTIP") as a benefit
plan to provide eligible participants with compensation opportunities that
will encourage ownership of Units, enhance DirectCash's ability to attract,
retain and motivate key personnel, and reward senior management for
significant performance that results in the Fund exceeding its per Unit
distributable cash flow targets. 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 exceeds certain defined threshold amounts, per below:

    
    -------------------------------------------------------------------------
    Percentage by which distributable    Maximum proportion of excess
     cash flow per Unit exceeds base      distributable cash flow
     threshold(3)                         available 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%
    -------------------------------------------------------------------------
    (3) $1.20 per Unit per fiscal year, representing an increase of $0.25
        per Unit from the initial target of $0.95 per Unit.
    

    A trustee purchases Units in the market with this pool of funds and holds
the Units until such time as ownership vests to each participant. Subject to
the discretion of the Compensation, Nominating and Corporate Governance
Committee, Units vest one-third at the time of purchase, with the remainder
vesting in equal instalments on the first and second purchase anniversary
dates. LTIP participants are entitled to receive Distributions on all Units
held for their account prior to the applicable vesting date. If a participant
leaves the employment of DirectCash, the unvested units are either sold in the
open market and the net proceeds are returned to DirectCash and applied
against the current year's expense, or are reallocated to the other
participants at the discretion of the Compensation, Nominating and Corporate
Governance Committee.
    For the year ended December 31, 2006, total LTIP expense was $1,414,526
(2005 - $957,529), comprised of $1,467,315 related to 2006 financial
performance, less net proceeds of $52,789 (2005 - nil) from unvested Units
sold in the open market. No unvested Units were reallocated to other
participants. On September 14, 2006, DirectCash raised the base threshold
distributable cash flow target to $1.20 per unit from $0.95 per unit, which
resulted in a reduction of $1,044,495 in LTIP expenditure for 2006. LTIP
expense is recorded quarterly based upon a pro-ration of the financial results
to that point in time over the balance of the year.
    Distributable cash flow for purposes of this calculation is equal to
consolidated funds flow from operations before changes in working capital,
after provision for maintenance capital.

    EBITDA
    For the three months and year ended December 31, 2006 EBITDA increased
36.5% and 36.3% respectively over 2005 levels, which is commensurate with
increases in overall gross profitability. The positive variance is due to a
combination of increases in gross profits resulting from increased transaction
volumes and product sales, which were partially offset by corresponding
increases in SG&A and lower gross profit margins. As a percentage of revenue,
EBITDA has declined for the quarter and full year to 30.6% in 2006 from 32.5%
and 34.5% respectively in 2005, primarily as a result of the addition of high
volume low margin telecommunication hard card products during the year.

    Interest expense
    Interest expense has risen for the three months and year ended
December 31, 2006 by 243.6% and 253.6% respectively on a year over year basis
due to increased usage of our acquisition and revolving credit facilities (See
"Liquidity and Capital Resources"). Average interest rates also rose
throughout 2005 and early 2006. The increase in our revolving credit facility
usage is primarily due to the increase in vault cash resulting from a higher
proportion of DirectCash owned ATMs in our network. This is the result of
placement contracts purchased during the year, as well as an increased
emphasis during 2006 on organic placement contracts which often require the
use of DirectCash cash versus ATMs sold to and loaded by merchants. The
increase in the use of our acquisition credit facility is the result of
acquisitions undertaken in 2005 and 2006. All DirectCash debt is currently on
floating interest rates. A one percent change in interest rates would result
in an approximate $280,000 change in interest expense based upon year end debt
levels.

    Net Earnings
    Net earnings before minority interest for the three months and years
ended December 31, 2006 were $579,629 and $2,957,605 respectively versus
$303,690 and $1,268,423 during the prior year. Minority interest represents
earnings attributable to holders of Class B Subordinated Partnership Units and
represented 20% of the outstanding units of the Fund on a diluted basis. The
disparity between net earnings and distributable cash flow (see "Distributable
cash flow") is primarily due to amortization of intangible assets of
$16,427,362 for the year ended (2005 - $13,838,973). ATM, debit terminal and
prepaid product site contracts are valued at approximately $49.9 million based
on future cash flows of the ATM, Debit Terminal and Prepaid Product contract
resulting from the majority of acquisition amounts (including IPO transaction)
being allocated to 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.

    Maintenance Capital Expenditures

    For the three months and year ended December 31, 2006 maintenance capital
expenditures were 21.3% and 35.7% higher than during the prior year,
commensurate with the overall growth in the business. Key expenditures during
the year included the expansion of our Calgary and Toronto offices net of
tenant inducements, vehicle fleet replacements and hardware and software
upgrades required to maintain our systems. Maintenance capital expenditures
are reasonably predictable with large lead times typically provided for
project completion. Due to costs associated with our Calgary lease renewal and
office expansion, maintenance capital expenditures were skewed upwards during
the fourth quarter of 2006, with 33.8% of the year's expenditures occurring in
this period. This project will be continued into early 2007.

    
    Distributable Cash Flow

    Distributable cash flow and distributable cash flow per unit is calculated
as follows:

    -------------------------------------------------------------------------
                              Three months ended           Years ended
                                 December 31               December 31
                              2006         2005         2006         2005
    -------------------------------------------------------------------------
                           (unaudited)  (unaudited)
    Per consolidated
     financial statements:
    Cash provided by
     (used in)
     operations:          $ 6,285,316  $ 4,560,856  $21,140,933  $15,192,619
    Add: changes in
     non-cash working
     capital                 (928,287)    (438,103)      45,990    1,007,553
    Less: maintenance
     capital expenditures    (337,124)    (277,854)    (998,483)    (735,660)
    -------------------------------------------------------------------------
    Distributable cash
     flow                 $ 5,019,905  $ 3,844,899  $20,188,440  $15,464,512
    Distributable cash
     flow per unit        $    0.4025  $    0.3083  $    1.6188  $    1.2400
    Distributions
     declared(1)          $ 4,302,695  $ 3,429,684  $15,901,263  $13,378,263
    Distributions
     declared per unit    $    0.3450  $    0.2750  $    1.2750  $    1.0727
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Payout ratio(1)             85.7%        89.2%        78.8%        86.5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) 2005 includes distribution related to 18 day period ended
        December 31, 2004 of $0.0459 per Unit, Exchangeable partnership unit,
        and Class B subordinated partnership unit.
    

    DirectCash's policy is to distribute all available cash from operations
after cash required for maintenance capital expenditures, working capital
reserves and other reserves as considered advisable by DirectCash's Board,
which reflects the difference between distributions declared and distributable
cash flow during the year. In accordance with this policy DirectCash raised
distributions four times during 2006. If the current annualized distribution
rate of $1.38 per unit had been paid for the entire year, the payout ratio for
the year ended December 31, 2006 would have been 85.2%. Since inception, the
Fund has distributed 80.7% of its distributable cash flow to holders of units,
exchangeable partnership units and Class B subordinated partnership units.

    
    Summary of Quarterly Results
    -------------------------------------------------------------------------
    (thousands of Canadian                 2006
      dollars, except
      per unit amounts)    Q4         Q3         Q2         Q1       Total
    -------------------------------------------------------------------------
    Revenues
      ATM business     $   8,633  $   8,991  $   9,012  $   7,097  $  33,733
      Prepaid products
       business            9,910     10,579     10,328      7,954     38,771
      Debit terminal
       business              378        310        386        337      1,411
    -------------------------------------------------------------------------
                       $  18,921  $  19,880  $  19,726  $  15,388  $  73,915
    Gross Profit
      ATM business     $   4,986  $   5,631  $   5,394  $   4,370  $  20,381
                           57.8%      62.6%      59.9%      61.6%      60.4%
      Prepaid products
       business            3,210      3,078      3,011      2,730  $  12,029
                           32.4%      29.1%      29.2%      34.3%      31.0%
      Debit terminal
       business              279        227        250        201  $     957
                           59.5%      59.5%      60.5%      59.6%      67.8%
    -------------------------------------------------------------------------
    Total Gross Profit $   8,475  $   8,936  $   8,655  $   7,301  $  33,367
                           44.8%      44.9%      43.9%      47.4%      45.1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EBITDA             $   5,788  $   6,516  $   5,583  $   4,747  $  22,634
      EBITDA margin        30.6%      32.8%      28.3%      30.8%      30.6%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings before
     minority interest       580      1,377        572        429      2,958
    Minority interest       (115)      (275)      (114)       (86)      (592)
    -------------------------------------------------------------------------
    Net earnings       $     465  $   1,101  $     457  $     343  $   2,366
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings per
     unit, basic and
     diluted           $    0.05  $    0.11  $    0.05  $    0.03  $    0.24
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Maintenance capital
     expenditures      $     337  $     191  $     339  $     131  $     998
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributable cash
     flow              $   5,020  $   5,879  $   4,880  $   4,409  $  20,188
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Distributable cash
     flow per unit,
     basic and
     diluted           $  0.4025  $  0.4714  $  0.3913  $  0.3535  $  1.6188
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributions
     declared
      Trust units      $   1,936  $   1,852  $   1,740  $   1,628  $   7,156
      Exchangeable
       partnership
       units               1,506      1,440      1,353      1,266      5,565
      Class B
       subordinated
       partnership
       units                 860        824        773        723      3,180
    -------------------------------------------------------------------------
                       $   4,302  $   4,116  $   3,866  $   3,617  $  15,901
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributions
     declared per
     unit, basic
     and diluted       $  0.3450  $  0.3300  $  0.3100  $  0.2900  $  1.2750
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    (thousands of Canadian                 2005
      dollars, except
      per unit amounts)    Q4         Q3         Q2         Q1       Total
    -------------------------------------------------------------------------
    Revenues
      ATM business     $   7,429  $   7,292  $   7,092  $   6,032  $  27,845
      Prepaid products
       business            5,331      5,551      4,616      3,701     19,199
      Debit terminal
       business              291        315        249        183      1,038
    -------------------------------------------------------------------------
                       $  13,051  $  13,158  $  11,957  $   9,916  $  48,082
    Gross Profit
      ATM business     $   4,281  $   4,545  $   4,025  $   3,441  $  16,292
                           57.6%      62.3%      56.8%      57.0%      58.5%
      Prepaid products
       business            2,112      2,251      1,890      1,389      7,642
                           39.6%      40.6%      40.9%      37.5%      39.8%
      Debit terminal
       business              133        168        133         92        526
                           45.7%      53.3%      53.4%      50.3%      50.7%
    -------------------------------------------------------------------------
    Total Gross
     Profit            $   6,526  $   6,964  $   6,048  $   4,922  $  24,460
                           50.0%      52.9%      50.6%      49.6%      50.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EBITDA             $   4,239  $   4,773  $   4,070  $   3,528  $  16,610
      EBITDA margin        32.5%      36.3%      34.0%      35.6%      34.5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss)
     before minority
     interest                304        792        227        (54)     1,269
    Minority interest        (61)      (158)       (45)        10       (254)
    -------------------------------------------------------------------------
    Net earnings
     (loss)            $     243  $     634  $     182  $     (44) $   1,015
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings
     (loss) per unit,
     basic and
     diluted           $    0.02  $    0.06  $    0.02  $       -  $    0.10
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Maintenance capital
     expenditures      $     278  $     220  $     148  $      90  $     736
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributable
     cash flow         $   3,845  $   4,423  $   3,819  $   3,378  $  15,465
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Distributable cash
     flow per unit,
     basic and
     diluted           $  0.3083  $  0.3546  $  0.3062  $  0.2709  $  1.2400
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributions
     declared
      Trust units      $   1,543  $   1,488  $   1,398  $   1,591  $   6,020
      Exchangeable
       partnership
       units               1,200      1,156      1,088      1,238      4,682
      Class B
       subordinated
       partnership
       units                 686        661        622        707      2,676
    -------------------------------------------------------------------------
                       $   3,429  $   3,305  $   3,108  $   3,536  $  13,378
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributions
     declared per unit,
     basic and
     diluted           $  0.2750  $  0.2650  $  0.2492  $  0.2835  $  1.0727
    -------------------------------------------------------------------------
    2005 includes distribution related to 18 day period ended December 31,
    2004 of $0.0459 per Unit, Exchangeable partnership unit, and Class B
    subordinated partnership unit.
    

    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 December 31, 2006 DirectCash utilized approximately $29.5 million
of a total available credit facility of $46.0 million. A summary of
DirectCash's available credit at December 31, 2006 is as follows:

    
    -------------------------------------------------------------------------
                                         Utilized       Limit     Available
    -------------------------------------------------------------------------

    Revolving credit facility          $10,292,832  $16,000,000  $ 5,707,168
    Acquisition credit facility         19,201,824   30,000,000   10,798,176
    -------------------------------------------------------------------------
                                       $29,494,656  $46,000,000  $16,505,344
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Included in the revolving credit facility utilization is a
$US 1.0 million (CDN$ 1.1653 million) letter of credit in favour of MasterCard
International 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 facility was increased by $5.0 million during the first quarter of
2006 from $11.0 million to $16.0 million under similar terms. Subsequent to
year end, the facility was increased by an additional $2.0 million to
$18.0 million. 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 was increased to
$30.0 million during the first quarter of 2006 from $15.0 million under
similar terms. Subsequent to year end, the facility was increased by an
additional $10.0 million to $40.0 million. 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.
    DirectCash has operated well within its covenant limits during 2006 and
anticipates it will continue to do so in the future.
    DirectCash's working capital position improved during the year. Excluding
the acquisition credit facility working capital was approximately $5.0 million
versus $1.9 million at the end of 2005.

    Proposed Federal Tax Changes

    On October 31, 2006, the Minister of Finance announced its proposal to
amend the Income Tax Act (Canada) to apply a Distribution Tax on distributions
from publicly-traded income trusts. Under the proposal, existing income trusts
will be subject to the new measures commencing in their 2011 taxation year,
following a four-year grace period. A short legislative summary of the
proposal passed first reading in Parliament on November 7, 2006.
    As of March 22, 2007 there was no enacted legislation to implement the
proposed amendments. If the proposed legislation is implemented, the Fund
would be required to recognize, on a prospective basis, future income taxes on
temporary differences not currently recognized in the Fund (i.e. deferred tax
recognition on the balance sheet). In addition, the change in legislation may
negatively impact the carrying value of the Fund's goodwill, and negatively
impact the valuation of the Fund's Units.

    Recent Events

    Acquisition
    On February 23, 2007 DirectCash indirectly acquired the ATM and debit
terminal assets of Selectech Inc. ("Selectech") operating out of Winnipeg,
Manitoba for cash consideration of approximately $3.2 million subject to
normal course purchase adjustments. Selectech is an ATM and debit terminal
distributor of DirectCash which operated 399 ATMs and 15 debit terminals under
the DirectCash banner. DirectCash took over the leased premises of Selectech
and will operate the Winnipeg location as a DirectCash regional service
centre.

    Credit Facility
    Subsequent to year-end, DirectCash increased its credit facility by
$12.0 million under terms that are substantially unchanged. In particular, the
acquisition credit facility was increased from $30.0 million to $40.0 million
and the revolving credit facility was increased from $16.0 million to
$18.0 million.

    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 SG&A and is not a defined
performance measure under GAAP. EBITDA specifically excludes depreciation,
amortization, income taxes and interest. 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.

    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 maintenance capital expenditures (See discussion
below). 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 funds earned from operations to Unitholders,
less amounts estimated to be required for expenses, maintenance capital, cash
redemptions or repurchases of Units, any 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.
Distributions are funded from cash flows generated by the operation of the
business.

    Maintenance Capital expenditures
    DirectCash differentiates capital expenditures between growth and
maintenance. 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 infrastructure and existing
cash flows, while growth capital is expended to add additional sources of
revenue not currently in existence. Software and hardware upgrades to existing
infrastructure, ATM and debit terminal equipment upgrades necessary to meet
changing regulatory requirements, contract renewal incentives and fleet
vehicle purchases and upgrades are some examples of maintenance capital
expenditures. Examples of growth capital expenditures include the acquisition
of 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 maintenance capital expenditure is not a
defined performance measure under GAAP. The Fund's computation of 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: Arie Prins, Chief Financial Officer, DirectCash
Management Inc., Manager of DirectCash Income Fund, Direct: (403) 387-2103,
e-mail: arie@directcash.net

Organization Profile

DIRECTCASH INCOME FUND

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