IBI announces enhanced 2010 first quarter earnings

    -   Revenue at $68.1 million; increase of $2.4 million + 3.7%;
    -   EBITDA at $9.0 million; decrease of $0.2 million - 2.7%;
    -   Distributable Cash of $6.3 million; decrease of $0.6 million - 9.4%
    -   Distributable Cash per unit of $0.3518 vs declared of $0.3999 -
        payout ratio of 113.4%

TORONTO, May 6 /CNW/ - IBI Income Fund (the "Fund") (TSX: IBG.UN) today announced its financial results for three months ended March 31, 2010.

The first quarter 2010 results demonstrated the firming of the operating results of IBI Group as compared to the fourth quarter 2009. The results of the first quarter of 2010 are based on 62 available working days compared with 63 workings for an average quarter and for the fourth quarter 2009. The one additional day would have resulted in approximately $1.0 million of additional revenue. The highlights are:

    -   Revenue at $68.1 million, was up $2.4 million over the first quarter
        of 2009, down $0.1 million compared with the fourth quarter 2009, but
        up $0.9 million based on normalizing for the average quarter of 63
        days when compared with the fourth quarter of 2009;

    -   EBITDA of $9.0 million was $0.2 million below first quarter of 2009,
        up $0.3 million over fourth quarter 2009, and up $1.3 million based
        on normalizing for the average quarter of 63 days when compared with
        the fourth quarter of 2009;

    -   Net earnings of $2.8 million was $0.4 million less than the first
        quarter 2009 but significantly improved over the fourth quarter 2009
        by $4.5 million;

    -   Distributable cash of $6.3 million was $0.6 million below first
        quarter 2009, up $1.8 million over fourth quarter 2009, and up $2.8
        million based on normalizing for the average quarter of 63 days when
        compared with the fourth quarter of 2009.

The basis of this firmer performance is discussed in paragraphs below.

Revenue Activity

Revenue for the first quarter exceeded that of the fourth quarter on an average daily basis, but overall was down $0.1 million as a result of one less working day for the quarter. As reported in the 2009 annual report, IBI Group had anticipated the firming of activity on the three major projects which did not materialise during the first quarter of 2010. On April 1, 2010, the Government of the Province of Quebec announced that the team led by SNC Lavalin was the successful bidder in the development of the McGill Medical Center, with the affiliated architectural firms of IBI Group being the lead building architects for this project. While this announcement did not contribute to the fee volume of IBI Group during the quarter, it does provide a further increase to the backlog for subsequent quarters.

Organic growth in the first quarter of 2010 declined by $5.4 million (8.1%) as compared with the first quarter of 2009, and declined by $0.7 million (1.1%) as compared to the fourth quarter 2009. When comparing the first quarter 2010 revenue with the fourth quarter 2009 based on normalizing for the average quarter of 63 days, there was actual organic growth for the first quarter of 2010 of approximately $0.3 million. This return to organic growth over the previous quarter is ahead of what was anticipated. With the increased pace of new assignments in the private sector, increased activity in public sector including the significant McGill University architectural assignment, IBI anticipates organic growth continuing through subsequent quarters of 2010.

Public sector work again exceeded 65% of the $68.1 million of revenue in the first quarter.

Strategic Program for the Growth

During the first quarter IBI Group completed the acquisition of MAAK Technologies Inc. This firm's expertise in water engineering and systems applications extends IBI Group's work in systems technology to the important area of water resources. It also broadens the IBI Group practice geographically with further strengthening in the Caribbean.

IBI Group continues to be committed to further growth in the USA. Discussions are under way with several USA based firms in connections with potential acquisitions. These acquisitions could add professional skills and strengthen IBI Group's presence in major centres of population in the six urban regions of the USA. IBI Group expects such acquisitions to be concluded during the ensuing three quarters of 2010. As IBI Group has noted previously, the firms being acquired may not achieve the levels of profitability of which they are capable within the current economic environment in the USA. While this may dampen EBITDA and distributable cash as a percentage of net fee revenue in the short term and is of concern to the IBI Group, the firm continues to believe this is a sound strategic investment program which will realise significant results within an improved economic environment, strengthened with the international reach of the IBI Group within the next few years.

IBI Group is also engaged in discussions with firms for acquisitions in international markets where IBI Group is currently active.

Finally, IBI Group is in discussion with firms in Canada to complement certain functional skills and improve overall strength in areas where IBI Group is currently practicing.


The IBI Group committed fee volume for the year 2010 represents in excess of nine months equivalent work. Backlog for Government and public institutional clients continues to be in excess of 65% of total backlog. Backlog continues to increase in building facility areas in health care, in education, in transportation terminals, transportation networks and systems technology. IBI Group is increasingly receiving new mandates in the design stage of new private sector projects, as well as some of these now moving into design development and working drawings as projects proceed to sales.

Major Projects

As noted above, the McGill University Centre has now been decided with the affiliated architectural firms of IBI Group being the lead building architect working in support of the Consortium led by SNC Lavalin. This significant project together with other work, including the revitalisation of the private sector across Canada, where IBI Group services the design of housing will lead to increased fee volumes in the ensuing quarter.

Other Professional Progress

Other progress in the professional work of IBI Group in the first quarter of 2010 included:

    -   Continuing work on a large suite of tolling and traffic management
        projects in Greece which, notwithstanding the financial challenges
        regarding the relatively large debt of that country are all under

    -   Continued further work in the growing health care practice of IBI
        Group; which, along with the award of the McGill University Centre
        project, will increase IBI Group's experience and expertise in health
        care, enabling it to more effectively pursue additional projects in
        the United States and international markets;

    -   Further continuing growth of the IBI Group practice in China;

    -   Further progress in the growth of the practice in India with
        additional new private sector assignments.

Investor Conference Call

The Fund will hold a conference call on Friday, May 7, 2010 at 8:30 a.m. Eastern Standard Time (EST). To participate in the conference call, please dial in before 8:30 a.m. EST to 800 950-3502 for local and toll-free North American access, or 1 212 231 2901 for international access

An audio replay of the call will be available for 14 days, by dialling 416-626-4100 for local and international access, or 1 800 558-5253 for toll-free North American access, passcode 21466867 followed by the number sign on your telephone keypad.

    Selected Consolidated Financial Information and Reconciliation of Non-
    GAAP Measures

                                                  Three months  Three months
                                                   ended March   ended March
                                                      31, 2010      31, 2009

    in thousands of dollars except
     for per Unit amounts

    Revenue                                           $ 68,075      $ 65,664
    Expenses                                            59,050        56,393
    Earnings before income taxes, interest and
     amortization (EBITDA)                               9,025         9,271

    Interest                                             2,231         1,183

    Income taxes                                           131           468
    Amortisation of property and equipment and
     intangible assets                                   2,709         3,040
    Amortization of deferred credit - leases               (12)          (28)

    Net earnings before non-controlling interest      $  3,966      $  4,608
    Basic and diluted net earnings per Unit           $ 0.2228      $ 0.2824
    Distributable Cash

    Cash flow used in operating activities            $ (4,940)     $ (1,378)
    Less: Capital expenditures                            (460)         (470)
    Standardized Distributable Cash                   $ (5,400)     $ (1,848)

    Add (deduct):
      Change in non-cash operating working capital      11,438         8,516
      Current income tax expense                           350           950
      Income taxes paid                                   (123)         (703)
    Distributable Cash                                $  6,265      $  6,915

    Weighted average basic and diluted
    Distributable Cash per Unit(1)                    $ 0.3518      $ 0.4237
    Aggregate distributions declared                  $  7,104      $  6,526
    Basic and diluted aggregate distributions
     declared per Unit(1)                             $ 0.3999      $ 0.3999

    (1) Distributable Cash per Unit amounts are calculated by including both
        the Class A partnership units and the Class B partnership units in
        the denominator.

Definition of EBITDA, Distributable Cash and Non-GAAP Measures

Distributable Cash does not have a standardized meaning prescribed by GAAP, but is a measure generally used by Canadian open-ended income funds as an indicator of financial performance. The Fund defines Distributable Cash as cash flow from operating activities before change in non-cash working capital and income taxes and after capital expenditures and income taxes paid. A reconciliation of Distributable Cash to cash flow from operating activities has been provided under the heading "Selected Consolidated Financial Information and Reconciliation of Non-GAAP Measures".

The Fund's method of calculating distributable cash may differ from similar computations as reported by other similar entities and, accordingly, may not be comparable to distributable cash as reported by such entities. The Fund believes that its distributable cash is a useful supplemental measure that may assist prospective investors in assessing the return on their investment in Units.

References to "EBITDA" are to earnings before interest, income taxes, depreciation and amortization. Management of the Fund believes that in addition to net earnings, EBITDA is a useful supplemental measure as it provides readers with an indication of cash available for distribution prior to debt service, capital expenditures and income taxes. Readers should be cautioned, however, that EBITDA should not be construed as an alternative to net earnings determined in accordance with GAAP as an indicator of the Fund's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. EBITDA is not a recognized measure under GAAP and does not have a standardized meaning prescribed by GAAP, and the Fund's method of calculating EBITDA may differ from other issuers. Accordingly, EBITDA may not be comparable to similar measures used by other issuers. A reconciliation of net earnings with EBITDA has been provided under the heading "Selected Consolidated Financial Information and Reconciliation of Non-GAAP Measures"

Discussion in this press release of net earnings before non-controlling interest, EBITDA and distributable cash include the impact of foreign exchange gain (loss) as the Fund believes this provides useful information for readers to assess the performance of the Fund.

IBI is a group of companies providing professional services and is affiliated with IBI Group Architects.

%SEDAR: 00021044E


For further information: For further information: Allan J. Kamerman, IBI Income Fund, 230 Richmond Street West, 5th Floor, Toronto, ON, M5V 1V6, Tel: (416) 596-1930

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