Teranet Delivers Record Results and Double-Digit Growth, Increases Distributions 4%



    Strong third quarter results powered by solid activity and organic growth

    
    QUARTERLY SUMMARY:

    -   Distributable Cash(*) up 16% to $48.0 million or $0.31 per unit
    -   Record revenue of $71.2 million, an increase of 11.8%
    -   Adjusted EBITDA(*) up 13.5% to $53.3 million
    -   Other value-added services revenue grows 30.2%
    -   Payout ratio of 61%
    -   Announced 4% increase in distributions to $0.0650 per unit monthly
    

    TORONTO, Nov. 14 /CNW/ - Teranet Income Fund (TSX: TF.UN) today announced
its third quarter results for the period ended September 30, 2007.
    "Teranet achieved a banner third quarter, delivering double-digit
increases and record results in revenue, Adjusted EBITDA(*) and Distributable
Cash(*)," said Aris Kaplanis, President and Chief Executive Officer of Teranet
Inc. "We are growing our revenue base as we automate more properties into our
electronic system and through organic growth each quarter, and are
capitalizing on strong fundamentals and robust activity in the Ontario economy
and real estate market. In addition, we have made good progress leveraging our
technology and infrastructure, unparalleled experience and operational
excellence to grow our value-added services."
    Based on the strength of Teranet's year-to-date performance in 2007 and
the expectation of continuing momentum in 2008, the Board of Trustees has
approved a 4% increase in cash distributions to unitholders, to $0.0650 per
unit monthly ($0.78 annualized) from $0.0625 ($0.75 annualized). This increase
is payable December 17, 2007 to unitholders of record on November 30, 2007.
Management is confident that the continued focus on growing Distributable Cash
through organic growth and new initiatives will allow the Fund to
progressively reduce the payout ratio over the period 2007-2010 to take into
account future expected cash income taxes while sustaining distributions.
    The Fund began operations on June 16, 2006. Therefore, the results for
the Fund for the nine-month period ended September 30, 2007 are compared to
the combined operating results of Teranet Inc. for the period January 1 to
June 15, 2006, and the Fund for the period June 16 to September 30, 2006.
    Total revenue for the quarter was $71.2 million, a historical record for
Teranet, and an increase of 11.8% from $63.7 million in the same period in
2006. The growth is mainly attributable to a rise in real estate and
refinancing activity and an increase in the parcel base in the Electronic Land
Registration System (ELRS), in addition to higher revenue from other
value-added services. Revenue from other value-added services rose 30.2% to
$7.9 million, reflecting continued strong market adoption. For the nine-month
period, total revenue grew 4.8% to $190.4 million, including other value-added
services growth of 17.6%, or 26% excluding a one-time item.
    Teranet's automated parcel base grew 6.2% over the prior year to
5.1 million properties, representing 93.5% of the estimated provincial parcel
base, up from 4.8 million properties and 90.0% of the provincial parcel base a
year earlier. Registration volumes for the quarter were 580,980, an increase
of 10.8% from the third quarter of 2006, while search volumes grew by 7.1% to
approximately 677,477 transactions. For the nine-month period, registration
volumes rose 2.5% to 1,500,906, while search volumes rose 4.6% to 1,964,198.
    Total operating expenses before amortization, other income, interest
expense and income taxes for the third quarter of 2007 were $17.9 million.
This represents an increase of 7.1% from $16.7 million in the third quarter of
2006, primarily due to higher variable costs incurred as a result of the
increase in revenue. For the nine-month period, total operating expenses
decreased 15.6% to $50.5 million from $59.8 million in the prior year. The
decrease is primarily due to costs in the 2006 period incurred in connection
with the creation of the Fund as well as other expenditures, in addition to
cost reduction and containment initiatives in 2007.
    Adjusted EBITDA for the third quarter of 2007 rose 13.5% to
$53.3 million, compared to $46.9 million in the prior year, while the Adjusted
EBITDA margin percentage improved to 75% from 74%. Both improvements are
primarily the result of higher revenue. For the nine-month period, Adjusted
EBITDA was $139.9 million, an increase of 11.6% from $125.4 million in the
prior year, and margin percentages improved to 73% from 69%, primarily due to
higher revenue and lower expenses.
    Distributable Cash for the third quarter of 2007 grew 16.0% to
$48.0 million or $0.31 per unit, up from $41.4 million or $0.27 per unit in
the same quarter last year. Distributions declared were $29.1 million or $0.19
per unit, resulting in a payout ratio of 61% for the quarter. For the
nine-month period, Distributable Cash was $128.4 million or $0.83 per unit,
for a payout ratio of 68%.
    Teranet continues to make investments in its future with total capital
expenditures of $10.2 million, consisting of deferred ELRS implementation
costs of $8.0 million and maintenance capital expenditures of $2.2 million for
the third quarter. Maintenance capital expenditures increased by $2.0 million
compared to the prior year primarily due to timing of expenses, while deferred
ELRS implementation costs increased by $0.7 million primarily due to higher
compensation and related costs. For the nine-month period, total capital
expenditures were $26.3 million, consisting of $23.7 million in deferred ELRS
implementation costs and $2.6 million in maintenance capital expenditures.
    Teranet's cash position at September 30, 2007 was $214.8 million, of
which $96.4 million was restricted in nature.
    On September 24, 2007, Teranet was added to the S&P/TSX Composite Index
(the Index), which management believes will serve to increase Teranet's
visibility and liquidity for the benefit of Unitholders. In conjunction with
Teranet's addition to the Index, it has been added to the S&P/TSX Capped
Composite Index, the S&P/TSX Income Trust Index, the S&P/TSX Completion Index,
the S&P/TSX Small Cap Index and the Information Technology Global Industry
Classification Standard Index.

    2007 Outlook

    Management's outlook is positive. As the exclusive provider of electronic
land registrations and searches in Ontario, the Fund has strong market
stability. The base on which the Fund earns a substantial portion of its
revenue is expected to grow as the Company continues to automate properties in
Ontario, thereby increasing the automated parcel base. At the same time, the
Company expects to benefit from organic growth in the parcel base.
    Management estimates that approximately 30% to 40% of the Fund's revenue
is tied to real estate purchase and sales activity. The real estate market in
Ontario continues to be supported by strong fundamentals, including high
employment rates, historically low interest rates, solid consumer confidence
and net positive migration.
    In addition, the Company continues to focus on growing other value-added
services.
    Management anticipates maintenance capital expenditures to be
approximately $4.0 million or $0.03 per unit in 2007. Management estimates
that beyond 2007, annualized maintenance capital expenditures will not exceed
$5.0 million or $0.03 per unit.
    Management believes that the performance of the Fund is on track to meet
ongoing requirements for working capital and capital expenditures, and to
sustain monthly distributions to Unitholders. Management believes it will
achieve its objective of growing Distributable Cash for 2007.
    Teranet's management's discussion and analysis and consolidated financial
statements and accompanying notes are available on the company's web site at
www.teranet.ca or on www.sedar.com.

    
    Selected Financial Highlights
    (in thousands of dollars except Adjusted EBITDA margin percentages, per
    unit amounts, volume, parcel base data and payout ratio)

                   ----------------------------------------------------------
                         THREE-MONTH              NINE-MONTH      PERIOD FROM
                         PERIOD ENDED            PERIOD ENDED     JUNE 16 TO
                         SEPTEMBER 30            SEPTEMBER 30    SEPTEMBER 30
                         (UNAUDITED)             (UNAUDITED)      (UNAUDITED)
                   ----------------------------------------------------------
                      2007(1)     2006(2)     2007(1)     2006(3)     2006(2)
    -------------------------------------------------------------------------
    Revenue          $71,172     $63,654    $190,404    $181,672     $77,131
    -------------------------------------------------------------------------
    Operating
     expenses        $17,913     $16,729     $50,481     $59,816     $18,212
    -------------------------------------------------------------------------
    Adjusted EBITDA  $53,259     $46,925    $139,923    $125,380     $58,919
    -------------------------------------------------------------------------
    Adjusted EBITDA
     margin %            75%         74%         73%         69%         76%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Distributable
     Cash            $48,032     $41,405    $128,392                 $58,743
    -------------------------------------------------------------------------
    Distributable
     Cash per unit   $0.3099     $0.2672     $0.8284                 $0.3790
    -------------------------------------------------------------------------
    Distributions
     declared        $29,060     $29,060(4)  $87,179                 $33,586
    -------------------------------------------------------------------------
    Distributions
     declared per
     unit            $0.1875     $0.1875     $0.5625                 $0.2167
    -------------------------------------------------------------------------
    Payout ratio         61%         70%         68%                     57%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Volumes:
    -------------------------------------------------------------------------
    Registration
     volumes         580,980     524,486   1,500,906   1,464,603     632,099
    -------------------------------------------------------------------------
    Search volumes   677,477     632,759   1,964,198   1,877,074     746,315
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Parcel Base as
     at September 30:   2007        2006        2007        2006        2006
    -------------------------------------------------------------------------
    Teranet
     (Automated)   5,100,906   4,805,515   5,100,906   4,805,515   4,805,515
    -------------------------------------------------------------------------
    Automated %        93.5%       90.0%       93.5%       90.0%       90.0%
    -------------------------------------------------------------------------


    -----------------------------
    (1) These amounts are derived from the Fund's interim unaudited
        consolidated financial statements dated September 30, 2007.
    (2) These amounts are derived from the Fund's interim unaudited
        consolidated financial statements dated September 30, 2006 and
        certain comparative figures have been reclassified to conform to the
        current year's presentation. The distributions declared per unit for
        the period June 16, 2006 to June 30, 2006 were included with the
        distribution declared for July 2006 during the three-month period
        ended September 30, 2006.
    (3) These amounts include results for the Company for the period from
        January 1, 2006 to June 15, 2006 and results from the Fund for the
        period from June 16, 2006 to September 30, 2006. Results for all
        periods prior to June 16, 2006 are based on results as presented in
        internally prepared financial statements for the Company.
    (4) Excludes distributions declared during the three-month period ended
        September 20, 2006 for the period from June 16, 2006 to June 30,
        2006.
    

    Conference Call & Webcast

    Teranet will hold a conference call and live audio webcast on Wednesday,
November 14, 2007 at 10 a.m. (ET) to discuss the Fund's financial results for
the period ended September 30, 2007.
    To participate in the teleconference, please dial 416-644-3418 or
1-800-732-9303. To access the live audio webcast, please visit Teranet's web
site at www.teranet.ca.
    The call will be archived on the web site as a webcast and a podcast. A
replay of the conference call will be available until end of day on Wednesday,
November 21, 2007. To access the replay, please dial 416-640-1917 or
1-877-289-8525 and enter the passcode 21250620 followed by the number sign.

    About Teranet Income Fund and Teranet

    Teranet Income Fund is an unincorporated, open-ended trust established
under the laws of Ontario by way of a declaration of trust. The Fund was
created to indirectly acquire all of the outstanding shares of Teranet Inc.
The units of the Fund trade on the Toronto Stock Exchange under the symbol
TF.UN.
    Teranet is a leading provider of integrated land-based information
products and services. Teranet operates in Ontario and provides access to the
Ontario Electronic Land Registration System ("ELRS") through its proprietary
Teraview(R) application. This product enables customers to conduct electronic
registrations as well as title and writ searches relating to real property.
Teranet has the exclusive right to access the data in and operate the ELRS and
the Writs of Execution database, and create and market value-added products
and services in connection with the ELRS and writs until March 31, 2017. These
licences extend on a non-exclusive basis in perpetuity for the ELRS and until
2047 for writs. Teranet has leveraged its core capabilities to create
electronic service offerings in complementary information and e-commerce
areas.

    (*) Non-GAAP Measures

    This discussion also makes reference to Adjusted EBITDA and Distributable
Cash to assist in assessing the Fund's financial performance. Adjusted EBITDA
and Distributable Cash, however, are not recognized earnings measures under
generally accepted accounting principles in Canada (GAAP) and do not have
standardized meanings prescribed by GAAP. Therefore, Adjusted EBITDA and
Distributable Cash may not be comparable to similar measures presented by
other issuers. References to Adjusted EBITDA are to earnings before interest,
income taxes, depreciation, amortization, other, non-controlling interest and
certain non-recurring items. References to Distributable Cash are to cash flow
from operating activities adjusted for items listed in the reconciliation
provided in the Management's Discussion and Analysis of Financial Condition
and Results of Operations. Distributable Cash is not intended to be
representative of cash flow or results of operations determined in accordance
with GAAP. As the Fund intends to pay in equal monthly distribution amounts on
an ongoing basis, management believes that Adjusted EBITDA and Distributable
Cash are important measures in evaluating its performance.

    Forward-Looking Statements

    This news release contains statements that, other than statements of
historical fact, may be forward-looking statements about the objectives,
financial condition and results of operations of the Fund. These statements
are forward-looking and reflect management's current views and are based on
certain assumptions and expectations as of November 13, 2007. Actual results
could be materially different from expectations if known or unknown risks
affect the business, or if estimates or assumptions turn out to be inaccurate.
No forward-looking statement is a guarantee of future results. Investors are
cautioned not to place undue reliance on such forward-looking statements.
Forward-looking statements do not take into account the effect that
transactions or non-recurring items announced or occurring after the
statements are made may have on the business. Teranet disclaims any intention
or obligation to update any forward-looking statement even if new information
becomes available, as a result of future events or for any other reason. These
statements are subject to a number of risks described in the Risks and
Uncertainties section of the MD&A, which is available at www.sedar.com. Risks
and Uncertainties may cause actual results to differ materially from those
contained in forward-looking statements.

    %SEDAR: 00023690E




For further information:

For further information: Bonnie Foster, Vice President Corporate
Communications, (416) 643-1095, bonnie.foster@teranet.ca; Tanis Robinson,
Manager, Investor Relations, (416) 643-1096, tanis.robinson@teranet.ca; 1
Adelaide Street East, Suite 600, Toronto, Ontario, M5C 2V9, Canada, Phone
(416) 360-8783, www.teranet.ca

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