DirectCash Income Fund announces results of operations for the three and six months ended June 30, 2007


    CALGARY, Aug. 13 /CNW/ - DirectCash Income Fund ("DirectCash" or the
"Fund") today announced consolidated financial results for the three and six
three months ended June 30, 2007. The Fund's audited consolidated financial
statements for the three and six months ended June 30, 2007 and Management's
Discussion & Analysis, as well as additional information about the Fund are
available on SEDAR (

    Management's Commentary

    "During the second quarter of 2007 we continued to demonstrate our
ability to generate consistent EBITDA(1) and Distributable Cash Flow(1) from
our operations" said Jeffrey Smith, DirectCash's President and Chief Executive
Officer. "During the quarter our ATM and debit terminal lines of business
showed strong year over year growth in gross profit contribution, and we are
pleased to have launched the first rollout of our Prepaid MasterCard to a
major customer during the quarter. We continue to focus our efforts on
sustainable growth across all lines of business via organic means and through
additional accretive acquisitions as opportunities arise, as well as
maintaining a competitive cost structure. We estimate that cash distributions
paid to Unitholders will be between 80% and 85% of distributable cash flow for
    We will continue to foster the high growth debit terminal business via
cross selling to existing customers, the pursuit of new merchant
relationships, and acquisitions where available.
    It is our belief that our diversified, stable and contracted revenue
stream will continue to provide excellent returns with reasonable growth
prospects for our Unitholders."

    Operational Achievements Q2-2007

    -   We added 211 ATMs to our network
    -   We added 171 debit terminals to our network
    -   The number of ATM transactions processed increased 2% over Q2-2006.
    -   The number of Debit transactions processed increased 76% over
    -   The number of prepaid cash card activations increased 12% over
    -   The number of prepaid cash card transactions processed increased 24%
        over Q2-2006.

    Financial Highlights Q2-2007

    -   Generated 7% higher distributable cash flow than Q2-2006
        ($5.2 million versus $4.9 million)
    -   Revenues increased 2% to 20.0 million from $19.7 million in 2006
    -   EBITDA increased 6% to $5.9 million from $5.6 million in 2006

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

                                Three months ended       Six months ended
                                     June 30                 June 30
                                 2007        2006        2007        2006
    Operational Highlights    (unaudited) (unaudited) (unaudited) (unaudited)
    Number of machines
     - end of period
      ATM terminals                5,549       4,970       5,549       4,970
      ATM terminals - active
       in past 30 days(2)          5,318          NA       5,318          NA
      Debit terminals              2,704       2,058       2,704       2,058
      Debit terminals - active
       in past 30 days(2)          2,630          NA       2,630          NA
    Number of transactions
     for the period
      ATM transactions         7,366,935   7,214,096  14,226,637  13,358,009
      Debit terminal
       transactions            1,923,476   1,090,054   3,230,788   1,967,793
      Prepaid cash card
       activations               523,831     468,207   1,085,390     896,846
      Prepaid cash card
       transactions            1,195,226     966,566   2,477,323   1,847,660

    (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 231 and 74 respectively. Seasonal and dormant site
        information is not available for the comparable prior year period.

    On a year over year basis, the number of ATMs under contract increased by
579, of which 127 were added via acquisition, and 452 were added via organic
means. The year over year increase in debit terminal count of 646 units is
primarily due to organic growth, although 189 debit terminals were added via
acquisition on March 30, 2007. The respective 12% and 24% growth in card
activations and card transactions for the quarter ended June 30, 2007 (YTD -
21% and 34% respectively) is a result of new customer relationships and growth
within existing relationships, and increased usage on a per card basis.

    Selected financial information
    (thousands of Canadian dollars,
     except per unit amounts)
                                Three months ended       Six months ended
                                     June 30                 June 30
                                 2007        2006        2007        2006
    Financial Highlights      (unaudited) (unaudited) (unaudited) (unaudited)
      Recurring services
       revenue                $   13,572  $   12,467  $   26,780  $   22,651
      Products revenue             6,317       7,180      12,680      12,323
      Interest income                181          79         294         139
    Total revenue             $   20,070  $   19,726  $   39,754  $   35,114

    Gross profit - Recurring
     services and interest    $    8,478  $    8,081  $   16,669  $   14,799
      Gross profit margin          61.6%       64.4%       61.6%       64.9%
    Gross profit - products          735         587       1,320       1,170
      Gross profit margin          11.6%        8.2%       10.4%        9.5%
    Total gross profit        $    9,214  $    8,668  $   17,989  $   15,969
      Total gross
       profit margin               45.9%       43.9%       45.3%       45.5%

    Selling, general &
     administrative                2,856       2,411       5,791       4,493
    Long-term incentive plan         440         674         672       1,146
    Interest                         550         364       1,015         570

    EBITDA                    $    5,918  $    5,583  $   11,525  $   10,330
      EBITDA margin                29.5%       28.3%       29.0%       29.4%

    Net earnings              $      191  $      457  $      416  $      801
    Net earnings per unit     $     0.02  $     0.05  $     0.03  $     0.08

    Total assets at June 30   $  138,355  $  141,178  $  138,355  $  141,178
    Total debt at June 30     $   36,750  $   27,002  $   36,750  $   27,002
    Total debt net of
     cash at June 30          $   22,436  $   14,943  $   22,436  $   14,943

    Results of Operations for the three and six months ended June 30, 2007

    Revenue - Recurring Services

    Recurring services revenue relates to revenue earned from transaction
processing activities, including ATM, debit terminal and prepaid product
transactions. For the three and six months ended June 30, 2007 recurring
services revenue rose by $1.1 million (8.9%) and $4.1 million (18.2%)
respectively over the prior year. For the current quarter, approximately 84%
of the increase is attributable to ATM services, with the balance due to a
combination of debit terminal and prepaid product revenue growth. Year to
date, approximately 70% of the increase is attributable to the ATM business,
with the balance primarily made of increase in the prepaid products business.
The increase in ATM revenues is attributable to a combination of acquisitions
and organic growth with acquisitions accounting for 28% of the additional ATMs
in the network on a year over year basis.
    The year to date 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. The increase is primarily attributable to the first
quarter, which was a result of an increase in business from relatively newer
customer relationships as well as a substantial increase in the seasonal usage
of prepaid cash cards associated with tax refunds. During the second quarter,
increased transactions were offset by a decline in pre-authorized debit
revenues, resulting from a change in customer business practices, as well as a
shift in business and product mix.
    Debit terminal revenues rose by approximately 30% during the quarter, due
to the acquisition of debit terminals in the first quarter as well as strong
organic growth.
    There is historic seasonality of processing transaction volumes, with the
highest ATM transaction 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 the three months ended June 30, 2007
revenue from product sales declined $863 thousand, or 12.0% from the prior
year. The decline is due primarily to a drop in the sales of both hard cards
and virtual vouchers, with lower ATM sales also contributing to the decline.
ATM sales were lower than during the prior year due to lower costs, which was
largely passed on to customers, as well as an increased focus on the placement
of DirectCash ATMs versus selling ATMs to merchants. The hard card and virtual
voucher decline in revenues are due to a rationalization of customers to
higher margin accounts.
    On a year to date basis, revenues increased $357 thousand or 2.9% over
the prior year period. The year to date improvement is attributable to a full
six months of hard card sales as opposed to a partial period in the prior
year, as hard cards were not sold by DirectCash until March 1, 2006. Partially
offsetting the improved hard card sales were lower virtual voucher and ATM
sales for the reasons noted above.

    Gross Profitability - Recurring Services

    Gross profit from recurring service and interest revenues for the three
and six months ended June 30, 2007 was 4.9% and 12.6% respectively higher than
the prior year, due to acquisitions and strong organic growth, partially
tempered by higher costs of goods sold. This is reflected in the gross profit
margin of 61.6% (YTD - 61.6%) in the current period versus 64.4% (YTD - 64.9%)
in the prior year. The reasons for the shift in gross profit margins are
twofold: ATM gross profit margins are slightly below the prior year due to
higher costs associated with ATM maintenance and service, as well as the
impact of relatively lower gross profitability accounts acquired in the first
quarter of 2007; Prepaid products gross profit margins are 13% below the prior
year period, as a result of a product mix shift towards lower margin
transactions, including a shift in the business practices of a pre-authorized
debit customer, and; additional revenues added in the debit terminal business
via acquisition were at lower margins than existing DirectCash terminal

    Gross Profitability - Products

    Gross profit from product revenues for the three and six months ended
June 30, 2007 was 25.2% and 12.8% respectively higher than during the prior
year, as a result of improved gross profit margins. Gross profit margins from
product revenues for the three months ended June 30, 2007 were 11.6% versus
8.2% in the prior year. Lower virtual voucher sales, which are sold at very
low margins, are primarily responsible for the increase. On a year to date
basis, gross profit margins were 10.4% versus 9.5% in the prior year. A
greater percentage of total sales are lower margin hard card sales, which in
combination with lower sales of higher margin ATM products results in overall
higher gross profitability on a year to date basis.
    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.

    Gross Profitability - Aggregate

    Total gross profits for the three and six months ended June 30, 2007 were
6.3% and 12.6% respectively higher than during the prior year. On an aggregate
basis, gross profitability for the three and six months ended June 30, 2007
was 45.9% and 45.2% respectively versus 43.9% and 45.5% in 2006. The strong
improvement during the second quarter is a result of the relatively higher
contribution of higher margin recurring service revenues compared as a portion
of overall sales, which was only partially offset by lower recurring sales
gross profitability.

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

    For the three and six months ended June 30, 2007 SG&A expenses increased
18.5% and 28.9% respectively over the prior year, which is a higher rate of
increase than the general growth of the business. Upwards salary and other
cost pressures, particularly in the highly inflationary Alberta marketplace
are primarily responsible for the cost increases over and above those
commensurate with DirectCash's overall growth. The year to date increase is
higher than the current quarter comparative increase, as the first quarter of
2007 also represented a full quarter of expenditures related to assets
acquired part way through the first quarter of 2006. As a percentage of gross
profits, SG&A increased during the three months ended June 30, 2007 to 31.0%
(YTD - 32.2%) from 27.8% (YTD - 28.1%) during the prior year.

    Long-term incentive plan

    Pursuant to the LTIP, DirectCash sets aside a pool of funds based upon
the amount by which the Fund's per Unit distributable cash flow exceed certain
defined threshold amounts. On September 14, 2006 the base threshold was raised
to $1.20 per unit per fiscal year from $0.95 per unit per fiscal year,
resulting in a reduction in LTIP expense for the three and six months ended
June 30, 2007 versus the same period during the prior year.
    For the three and six months ended June 30, 2007, total LTIP expense was
$439,616 (2006 - $674,020), and $672,105 respectively (2006 - $1,146,136). The
LTIP expense for the three and six months ended June 30, 2007 is net of
proceeds of $5,824 (2006 - nil) and $11,654 respectively (2006 - nil) from
unvested Units sold in the open market. No unvested Units were reallocated to
other participants. DirectCash calculates the current period LTIP expenditure
by annualizing the year to date financial results over the course of the year
and then pro-rating and accruing the resultant annualized LTIP expenditure in
the current period.


    For the three and six months ended June 30, 2007 EBITDA increased 6.0%
and 11.6% respectively over 2006 levels, which is relatively consistent with
the 6.3% and 12.6% respective increases in gross profits. As a percentage of
revenue EBITDA has improved to 29.5% during the second quarter, as compared to
28.3% during the prior year, primarily due to lower long term incentive plan
expenditures and a lower relative revenue contribution from low margin product
sales. Partially offsetting this improvement are SG&A expenditures, which have
grown more rapidly than revenues, and higher recurring service revenue costs
of goods sold. On a year to date basis, EBITDA as a percentage of revenue was
29.0% versus 29.4% during the prior year as a result of SG&A costs growing at
a relatively more rapid rate during the first quarter versus the second.

    Interest expense

    For the three and six months ended June 30, 2007 interest expense has
increased 51.2% and 78.0% respectively over 2006 levels due to increased usage
of our acquisition and revolving credit facilities (See "Liquidity and Capital
Resources"). The increase in our revolving credit facility usage is primarily
due to the increase in cash in circulation, resulting from a higher proportion
of DirectCash owned ATMs in our network. This is the result of placement
contracts purchased during the past year, as well as an increased emphasis
during 2006 on organic placement contracts, which often require the use of
DirectCash's 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 2006 and early 2007. The relatively higher year to date increase
relates to the acquisitions completed in the first quarter of 2007. All
DirectCash debt is currently on floating interest rates. A one percent change
in interest rates would result in an approximate $370 thousand change in
interest expense based upon current debt levels.

    Net Earnings

    Net earnings before minority interest for the three and six months ended
June 30, 2007 were $190,767 and $416,413 respectively, versus $571,831 and
$1,001,156 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, which
is only relevant for the prior period since all Class B Subordinated
Partnership Units were converted to Exchangeable Partnership Units on
December 31, 2006. The disparity between net earnings and cash distributions
is primarily due to amortization of intangible assets of $4,561,901 during the
quarter (2006 - $4,201,089) and $8,897,006 (2006 - $7,950,157) on a year to
date basis.

    Standardized Distributable Cash Flow and Distributable Cash Flow(1)

                                          Three months ended
                                                June 30
                                           2007         2006
    Per consolidated financial
    Cash provided by operations:       $ 3,667,285  $ 6,627,588
    Productive capacity maintenance       (138,575)    (339,122)
    Standardized distributable
     cash flow                         $ 3,528,710  $ 6,288,466
    Per unit                           $    0.2829  $    0.5042
    Changes in non-cash
     working capital                     1,701,081   (1,408,176)
    Deferred rent expense                   (6,625)           -
    Distributable Cash Flow            $ 5,223,166  $ 4,880,290
    Per Unit                           $    0.4188  $    0.3913
    Distributions declared             $ 4,302,695  $ 3,866,189
    Distributions declared per unit    $    0.3450  $    0.3100

    Standardized Distributable
     Cash Flow Payout ratio                 121.9%        61.5%

    Distributable Cash Flow Payout Ratio     82.4%        79.2%

                                           Six months ended
                                                June 30
                                           2007         2006    Cumulative(1)
    Per consolidated financial
    Cash provided by operations:       $ 7,974,943  $ 9,426,241  $44,242,299
    Productive capacity maintenance       (533,975)    (470,855)  (2,275,593)
    Standardized distributable
     cash flow                         $ 7,440,968  $ 8,955,386  $41,966,706
    Per unit                           $    0.5966  $    0.7181  $    3.3650
    Changes in non-cash
     working capital                     2,535,333      334,076    4,292,229
    Deferred rent expense                  (13,250)           -      (13,250)
    Distributable Cash Flow            $ 9,963,051  $ 9,289,462  $46,245,685
    Per Unit                           $    0.7989  $    0.7449  $    3.7081
    Distributions declared             $ 8,605,390  $ 7,482,947  $37,884,916
    Distributions declared per unit    $    0.6900  $    0.6000  $    3.0377

    Standardized Distributable
     Cash Flow Payout ratio                 115.6%        83.6%        90.3%

    Distributable Cash Flow Payout Ratio     86.4%        80.6%        81.9%

    (1) Since the Fund's initial public offering in December, 2004.

    DirectCash's policy is to distribute all available cash from operations
after cash required to maintain productive capacity, working capital reserves
and other reserves as considered advisable by DirectCash's Board, which
reflects the difference between distributions declared and distributable cash
flow. The higher distributable cash flow payout ratio in 2007 versus 2006
reflects an increase in the annualized distribution rate of $1.38 per unit
during the first half of 2007 versus an average rate of $1.20 during the first
half of 2006. Due to seasonality considerations, first quarter payout ratios
are typically the highest, excluding future changes to distribution levels.
Since inception, the Fund has distributed 81.9% of its distributable cash flow
to holders of units, exchangeable partnership units and Class B subordinated
partnership units.
    Cash distributions and maintenance capital programs have been
historically funded via cash from operations, while increased to productive
capital maintenance have primarily been funded with debt. Over time,
additional borrowings and equity issues may be required to increase productive
    Neither standardized distributable cash flow nor distributable cash flow
can be assured. See Key Business Risks for a list of factors which could
negatively impact cash flows. The Fund intends to utilize its credit
facilities as part of its capital structure in order to fund future capital
growth, operating within the covenants of its credit facility, thus enhancing
distributable cash flow from operations.
    Since inception, 100% of the Fund's distributions declared are considered
a return on capital. There has been no return of capital to date. The
consolidated excess of the carrying value of the Fund's equipment and
intangible and other assets over their tax basis is approximately
$19.8 million.

    Non-Cash Working Capital

    The change in year to date 2007 non-cash working capital is as follows:

    As of:                                 June 30, December 31,
                                              2007         2006       Change
    Accounts receivable                $ 2,798,947  $ 2,788,505  $   (10,442)
    Loans receivable                       643,930      590,049      (53,881)
    Inventories                          4,581,198    3,975,700     (605,498)
    Prepaid expenses                     1,335,168      846,752     (488,416)
    Accounts payable and accrued
     liabilities                        (4,534,057)  (5,943,572)  (1,409,515)
                                         4,825,186    2,257,434   (2,567,752)
    Acquisitions and other                                            32,419
    Change in non-cash working capital                           $(2,535,333)

    Non-cash working capital is volatile between periods and is dependant
upon factors such as short term inventory requirements, the timing of bulk
inventory shipments, and the timing of accounts receivable collections and
payment of liabilities. In addition prepaid expenses can vary dependant upon
the requirement for deposits and the timing of prepaid interest on bankers
acceptances related to the acquisition credit facility. The year to date
increase in inventory relates to a periodic build up and is expected to
subside from these levels. The increase in prepaid expenditures is primarily a
result of a shift to the utilization of 180 day bankers acceptances related to
the majority of the acquisition credit facility. The reduction in accounts
payable is due primarily to the funding of the 2006 long term incentive plan
and timing of vendor payments.
    Since the Fund's inception in December, 2004 non-cash working capital has
grown by approximately $4.3 million for the reasons noted above as well as the
requirement for additional working capital as the Fund has grown its
operations. In addition, there were considerable accrued costs of going public
that were part of the Fund's initial working capital calculation, with the
subsequent payment resulting in an increase in non-cash working capital.
Fluctuations in the Fund's non-cash working capital requirements are funded
with DirectCash's revolving credit facility.

    Capital Expenditures

                        Three months ended June 30  Six months ended June 30
                                 2007         2006         2007         2006
    Per consolidated
    Acquisitions -
     net of cash          $         -  $    58,668  $ 5,253,383  $11,624,237
    Other capital
     expenditures             533,992      611,934    1,119,065    1,199,058
    Other intangible
     expenditures              91,204       21,717      428,582       71,987
                          $   625,196  $   692,319  $ 6,801,030  $12,895,282

    Split between
     growth and
    Growth capital        $   486,621  $   353,197  $ 6,267,055  $12,424,427
    Productive capital
     maintenance              138,575      339,122      533,975      470,855
                          $   625,196  $   692,319  $ 6,801,030  $12,895,282

    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. Full
year maintenance capital expenditures are reasonably predictable with large
lead times typically provided for project completion; however, inter-period
expenditures vary significantly depending upon project timing. Growth capital
expenditures vary widely between periods due to the volatility of acquisition

    Summary of Quarterly Results

    Summary of Quarterly Results
    (thousands of Canadian
    dollars, except                    2007                      2006
    per unit amounts)              Q2           Q1           Q4           Q3
      ATM business        $     9,589  $     8,870  $     8,633  $     8,991
      Prepaid products
       business                10,024       10,435        9,925       10,537
      Debit terminal
       business                   456          379          363          352
                          $    20,070  $    19,684  $    18,921  $    19,880
    Gross Profit
      ATM business        $     5,994  $     5,299  $     4,986  $     5,631
                                62.5%        59.7%        57.8%        62.6%
      Prepaid products
       business                 2,906        3,223        3,210        3,078
                                29.0%        30.9%        32.3%        29.2%
      Debit terminal
       business                   313          253          279          227
                                68.6%        66.8%        76.9%        64.5%
    Total Gross Profit    $     9,214  $     8,775  $     8,475  $     8,936
                                45.9%        44.6%        44.8%        44.9%

    EBITDA                $     5,918  $     5,607  $     5,788  $     6,516
      EBITDA margin             29.5%        28.5%        30.6%        32.8%

    Earnings before
     minority interest            191          226          580        1,377
    Minority interest               -            -         (115)        (275)
    Net earnings          $       191  $       226  $       465  $     1,101
    Net earnings per
     unit, basic and
     diluted              $      0.02  $      0.02  $      0.05  $      0.11

      Trust units         $     2,271  $     1,936  $     1,936  $     1,852
       partnership units        2,032        2,367        1,506        1,440
      Class B subordinated
       partnership units            -            -          860          824
                          $     4,303  $     4,303  $     4,303  $     4,116

     declared per unit,
     basic and diluted    $    0.3450  $    0.3450  $    0.3450  $    0.3300

    (thousands of Canadian
    dollars, except                    2006                      2005
    per unit amounts)              Q2           Q1           Q4           Q3
      ATM business        $     9,012  $     7,097  $     7,429  $     7,292
      Prepaid products
       business                10,311        7,939        5,331        5,551
      Debit terminal
       business                   403          352          291          315
                          $    19,726  $    15,388  $    13,051  $    13,158
    Gross Profit
      ATM business        $     5,394  $     4,370  $     4,281  $     4,545
                                59.9%        61.6%        57.6%        62.3%
      Prepaid products
       business                 3,011        2,730        2,112        2,251
                                29.2%        34.4%        39.6%        40.6%
      Debit terminal
       business                   250          201          133          168
                                62.0%        57.1%        45.7%        53.3%
    Total Gross Profit    $     8,655  $     7,301  $     6,526  $     6,964
                                43.9%        47.4%        50.0%        52.9%

    EBITDA                $     5,583  $     4,747  $     4,239  $     4,773
      EBITDA margin             28.3%        30.8%        32.5%        36.3%

    Earnings before
     minority interest            572          429          304          792
    Minority interest            (114)         (86)         (61)        (158)
    Net earnings          $       457  $       343  $       243  $       634
    Net earnings per
     unit, basic and
     diluted              $      0.05  $      0.03  $      0.02  $      0.06

      Trust units         $     1,740  $     1,628  $     1,543  $     1,488
       partnership units        1,353        1,266        1,200        1,156
      Class B subordinated
       partnership units          773          723          686          661
                          $     3,866  $     3,617  $     3,429  $     3,305

     declared per unit,
     basic and diluted    $    0.3100  $    0.2900  $    0.2750  $    0.2650

    Liquidity and Capital Resources

    Management believes that the funds generated from operations will be
sufficient to allow it to meet ongoing requirements for working capital,
maintenance capital expenditures including investments in technology capital,
interest expense, and cash distributions to Unitholders. DirectCash's actual
cash generated from operations will be dependent upon future financial
performance, which in turn will be subject to financial, tax, business and
other factors.

    As of June 30, 2007, DirectCash utilized approximately $37.8 million of a
total available credit facility of $58.0 million. A summary of DirectCash's
available credit at June 30, 2007 is as follows:

                                          Utilized        Limit    Available
    Revolving credit facility         $ 13,824,292 $ 18,000,000 $  4,175,708
    Acquisition credit facility         23,989,324   40,000,000   16,010,676
                                      $ 37,813,616 $ 58,000,000 $ 20,186,384

    Included in the revolving credit facility utilization is a $US
1.0 million (CDN$ 1.0634 million) letter of credit in favour of MasterCard
International paid on behalf of All Trans Credit Union Ltd., pertaining to
DirectCash's prepaid MasterCard program. The revolving credit facility is
demand in nature and is utilized for ATM cash machine loading, working capital
requirements and commercial letters of credit. The revolving credit facility
bears interest at the Bank's prime lending rate.
    For the three and six months ended June 30, 2007, DirectCash operated
well within its covenant limits and anticipates it will continue to do so in
the future. Breach of its covenants could result in the triggering of remedies
by DirectCash's lenders, which could ultimately result in the curtailing of
distribution payments.

    Additional Information

    Additional information about the Fund, including the Fund's Annual
Information Form and other public filings is available on SEDAR
( and on the Fund's website (

    (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 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. EBITDA specifically excludes depreciation,
amortization, income taxes and interest expense. The Fund's EBITDA may differ
from similar computations as reported by other issuers and, accordingly, may
not be comparable to EBITDA as reported by such issuers.

    Standardized distributable cash flow and standardized distributable cash
flow per unit

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

    Distributable cash flow and distributable cash flow per unit

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

    Productive capital maintenance expenditures

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

    Forward Looking Statements

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

    Additional information about the Fund is available on SEDAR
( or the Fund's website at

For further information:

For further information: Arie Prins, Chief Financial Officer, DirectCash
Management Inc., Manager of DirectCash Income Fund, Direct: (403) 387-2103,

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