First National AlarmCap Income Fund
TSX : FNA.UN

First National AlarmCap Income Fund

March 30, 2010 16:43 ET

First National AlarmCap Income Fund Presents Its 2009 Year End Results

EDMONTON, ALBERTA--(Marketwire - March 30, 2010) - First National Alarmcap Income Fund (TSX:FNA.UN)

Mr. Fred Fong, President and Chief Executive Officer of First National AlarmCap GP Inc. ("AlarmCap"), reports that the Fund has released its consolidated financial statements for the year ended December 31, 2009 and the related management's discussion and analysis of financial position and results of operations ("MD&A").

Total revenues for the year were $29.1million compared to $29.6 million in 2008, a decrease of 1.7%. Mr. Fong stated: "During 2009, the Fund experienced a softening in demand in the commercial sector and higher residential customer attrition than anticipated." As a result, the Fund saw a decline in customers from 95,630 in 2008 to 92,250 at the end of 2009. EBITDA for the year was $13.8 million compared to $13.9 million in 2008. It should be noted that these financial results reflect the adoption of a new accounting policy for goodwill and subscriber accounts effective January 1, 2009. This accounting change has been applied retrospectively and the 2008 figures have been restated to conform to the current year's presentation.

For the three months ended December 31, 2009, the Fund realized EBITDA of $3.4 million compared to $2.7 million from the fourth quarter of 2008. The Fund will continue to implement its business plan of improving customer service while implementing strategies to stabilize and grow the subscriber base through existing and new sales channels and to improve operating income. 

As previously announced in a press release dated January 7, 2010, the Fund completed an internal reorganization of the entities controlled by it at the end of 2009. As a result of this internal reorganization, the limited partner of the partnership is now Microtec Enterprises Inc. (Quebec), a limited company. Income from the limited partnership will now flow to Microtec Enterprises Inc. (Quebec) which has non-capital losses totalling approximately $14 million. These losses can be applied to reduce taxable income of the limited partner in future years starting with fiscal 2010. Distributions to taxable Canadian unitholders starting in calendar 2010 will now be in the form of eligible taxable dividends that will qualify for a dividend tax credit, resulting in higher after tax proceeds compared to the previous distributions. Furthermore, distributions to unitholders in the foreseeable future may be in excess of taxable dividends and as such could be considered as a return of capital. 

For 2009, the Fund paid cash distributions to unitholders of $0.23 per unit which reflects the resumption of distributions which had been previously suspended since June 2007 due to the breach of a bank lending covenant. The suspension of the distribution allowed the Fund to strengthen its balance sheet and to achieve compliance with the lending covenant. The Fund remains prudent in its distributions as it continues to strengthen its balance sheet, executes its business plan and positions itself for renewal of its credit agreements. Distributions were increased from $0.02 per unit per month to $0.025 per unit per month at the end of the year. Going forward, the Trustees will continue to monitor all relevant factors affecting the amount of future distributions. 

Cash on hand at the end of the year was $11.0 million as compared to $7.4 million at December 31, 2008. This improvement in cash is largely the result of cash generated from our portfolio of monitored accounts. This improvement in cash is after the payment of $1.5 million of distributions to unitholders during the year. Mr. Fong stated: "We are pleased with the ability of the Fund to generate cash despite difficult economic conditions and a competitive security alarm industry." 

In the fourth quarter, the Fund completed its annual goodwill impairment test. The testing noted the challenging economic environment and declines in our subscriber base. As a result of its testing, the Fund determined that the fair value for goodwill was lower than its carrying amount. Due to this change in circumstances, the Fund concluded that the carrying amount of goodwill was impaired and a charge of $10.2 million was taken. After accounting for this non-cash charge, the Fund reported a loss of $5.5 million for the year.

The Fund is an unincorporated, open-ended, limited purpose trust and its Class A trust units are listed on the Toronto Stock Exchange under the ticker symbol "FNA.UN". The Fund was established to acquire substantially all of the assets and shares of Microtec Enterprises Inc. (Microtec) and substantially all of the assets of Securex Master Partnership Agreement. The Microtec division, based in Quebec, is one of the largest full-service security alarm monitoring operations in Canada.

A copy of the consolidated financial statements for the year ended December 31, 2009, related MD&A, and additional information concerning the Fund is available on SEDAR at www.sedar.com or at www.alarmcap.ca.

Cautionary statement regarding forward-looking information and statements

Certain statements contained in this news release, which relate to matters that are not historical facts, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information and statements in this news release include but are not limited to: confidence that its alarm monitoring business will remain in demand and that the Fund has the capacity and ability to execute its business plan. These statements are based on certain assumptions and analysis made by the Fund in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to the Fund's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Fund's expectations. Such risks and uncertainties include, but are not limited to: fluctuations in the demand for monitoring and installation of security systems, general economic, market or business conditions; changes in laws or regulations, including taxation and environmental; the lack of availability of qualified personnel or management; and other unforeseen conditions which could impact the use of services supplied by the Fund. See also the Fund's Annual Information Form dated March 26, 2010, available on the Fund's website (www.alarmcap.ca) and on SEDAR at www.sedar.com for a comprehensive set of risk factors related to the Fund. Consequently, all of the forward-looking information and statements made in this report are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Fund will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Fund or its business or operations. Except as may be required by law, the Fund assumes no obligation to update publicly any such forward-looking information and statements, whether as a result of new information, future events or otherwise.

Contact Information