IBI Income Fund
TSX : IBG.UN

IBI Income Fund

November 07, 2005 19:26 ET

IBI Income Fund Announces Results For Third Quarter 2005

TORONTO, ONTARIO--(CCNMatthews - Nov. 7, 2005) - IBI Income Fund (TSX:IBG.UN) -

Financial Highlights

- 27.5% increase in revenue for the quarter ended September 30, 2005 compared to the prior year period and 30.9% year to date.

- 84.0% increase in earnings before income taxes, interest and amortization compared with the prior year period and 60.7% year to date.

- Distributable cash for the quarter ended September 30, 2005 was 29.80 cents per unit, which was 6.0% higher than declared distributions and 4.4% higher for the year to date than the amount anticipated in the Funds prospectus.

- Completed the acquisition of the architectural firms, Hancock Bruckner Eng & Wright, now integrated within the architectural firm IBI-HB, architects-British Columbia and Grey-Noble & Grey-Noble, now integrated within IBI Group architects - Ontario. These acquisitions together added over 55 professional staff and are expected to be immediately accretive to the Fund's distributable cash by approximately 9%.

IBI Income Fund (the "Fund") (TSX:IBG.UN) today announced its financial results for the quarter ended September 30, 2005 and the nine months ended September 30, 2005. The comparative period ended September 30, 2004 reported the results of only one month of operations. In order to enhance the usefulness, certain financial and operating results of the Fund for the quarter ended September 30, 2005 and the nine months ended September 30, 2005 are compared below to the unaudited results of IBI Group Management Partnership, the entity which carried the business now carried on by IBI Income Fund through IBI Group, for the two months ended August 31, 2004 and the eight months ended August 31, 2005, respectively, prepared on a pro forma basis reflecting the new financial structure of the Fund, combined with the results of the Fund for the month ended September 30, 2004. Such information is for reference purposes only and is not intended to represent a comprehensive comparison of the consolidated financial results.

Revenue for the quarter ended September 30, 2005 was up $5.4 million (27.5%) compared with the quarter ended September 30, 2004. Year to date, revenue is up $17.0 million (30.9%) compared with the same period in 2004. The increase over the prior year periods is the result of both organic growth and strategic growth through acquisitions. Revenue from the acquired businesses accounted for $3.8 million of the increase in the quarter and $14.3 million of the increase for the year to date. Revenue, excluding revenue from the acquired businesses, was $1.6 million or 8.0% higher than the prior year quarter and $2.7 million or 5.0% higher than the prior year to date.

Net earnings of the Fund for the quarter were $2.3 million or $0.2242 per Unit (on a fully diluted basis) compared with $1.5 million for the quarter ended September 30, 2004. Year to date, net earnings were $4.9 million or $0.4881 per Unit (on a fully diluted basis) compared with $5.5 million for the same period in 2004.

Distributable Cash - During the quarter ended September 30, 2005, the Fund generated $3.0 million of distributable cash as compared with the amount anticipated in the Fund's prospectus for the quarter of $2.8 million. On a per Unit basis, distributable cash was $0.2980 for the quarter, compared with $0.2812 anticipated in the Fund's prospectus. This represents a 6.0% increase in distributable cash over what was anticipated in the Fund's prospectus and an actual payout ratio of 94.3% for the quarter. Year to date, the Fund has generated $8.9 million in distributable cash compared with $8.5 million in actual distributions declared and paid. This represents a payout ratio for the year to date of 95.7%.

Liquidity and Capital Resources - During the quarter ended September 30, 2005, bank indebtedness increased by $1.4 million. This was the result of the growth in current assets. Current assets increased $4.8 million for the quarter to $48.1 million. This increase was primarily the result of the additional assets of the acquired firms, which contributed $3.0 million of additional current assets. Capital expenditures during the quarter were $0.3 million.

Working capital levels have now stabilised and the Fund believes that it will be able to continue to finance distributions to Unitholders through the cash generated through operations.

Performance Highlights - Major achievements for the quarter include:

- generating distributable cash of 29.80 cents per Unit, which was 5.9% higher than declared distributions, which were in accordance with the amounts anticipated in the Fund's prospectus;

- achieving revenue growth of 27.5% over the prior year period, of which 8.0% was attributable to organic growth and 19.5% was attributable to strategic acquisitions; and

- achieving an 84.0% increase in earnings before income tax, interest and amortization over the prior year period.

Selected Consolidated Financial Information and Reconciliation of Non-GAAP Measures



Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
30, 2005 30, 2004(1) 30, 2005 30, 2004(1)
in thousands except Unaudited Pro Forma Unaudited Pro Forma
for per unit Unaudited Unaudited

Revenues $ 24,943 $ 19,564 $ 72,121 $ 55,096
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Earnings before income
taxes, interest and
amortization 3,714 2,018 10,942 6,808
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Net earnings before
non-controlling
interest $ 2,254 $ 1,484 $ 4,906 $ 5,472
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Basic and diluted net
earnings per Unit $ 0.2242 $ 0.4880
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Distributable Cash
Cash flow from operating
activities $ 4,180 $ 7,017
Add (deduct):
Change in non-cash
operating working
capital (895) 2,863
Capital expenditures (329) (1,084)
Income taxes 186 426
Income taxes paid (147) (364)
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Distributable cash $ 2,995 $ 8,858
---------------------------------------------------------------------
Basic and diluted
distributable
cash per Unit (2) $ 0.2980 $ 0.8813
---------------------------------------------------------------------
Aggregate distributions
declared $ 2,827 $ 8,481
---------------------------------------------------------------------
Basic and diluted aggregate
distributions declared
per Unit (2) $ 0.2812 $ 0.8437
---------------------------------------------------------------------


(1) The results of operations of IBI Group Management Partnership for the two months ended August 31, 2004 and the eight months ended August 31, 2004 have been adjusted on a pro forma basis to reflect the Fund's current structure and combined with the actual results of the Fund for the month ended September 30, 2004 to arrive at the results presented for the three months ended September 30, 2004 and the nine months ended September 30, 2004, respectively.

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

Non-GAAP Measures - Distributable Cash

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.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, such statements use such words as "may", "will", "expect", "believe", "anticipate", "project", "plan" and other similar terminology. The risks and uncertainties are detailed from time to time in reports filed by the Fund with the securities regulatory authorities in all of the provinces and territories of Canada to which recipients of this press release are referred for additional information concerning the Fund, its prospects and the risks and uncertainties relating to the Fund and its prospects. New risk factors may arise from time to time and it is not possible for management to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance and achievements of the Fund to be materially different form those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

The forward-looking information contained in this press release is current only as of the date of the press release. There should not be an expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future event or otherwise.

Contact Information

  • IBI Income Fund
    Allan J. Kamerman
    (416) 596-1930
    (416) 596-0644 (FAX)
    230 Richmond Street West, 5th Floor, Toronto, ON M5V 1V6