VOXCOM Income Fund
TSX : VOX.UN

VOXCOM Income Fund

August 11, 2005 07:00 ET

VOXCOM Income Fund Announces Initial Financial Results For Fiscal 2005

EDMONTON, ALBERTA--(CCNMatthews - Aug. 11, 2005) - VOXCOM Income Fund (TSX:VOX.UN)

Focus On Recurring Monthly Revenues Drives Solid Results

Highlights for this initial period:

- Total revenue up 23.7% to $4.2 million

- Gross profit increased 25.8% to $3.1 million

- Normalized EBITDA up 32.7% to $2.2 million

- Paid initial distribution of $1.047 million, payout ratio of 96%

- Acquired 1,000 accounts in Alberta from Stealth Alarm System Inc.

VOXCOM Income Fund (TSX:VOX.UN) (the "Fund") today announced its operating results and financial performance for the initial 42-day period since the Fund's acquisition of VOXCOM Incorporated ("VOXCOM"), being the period of May 20 to June 30, 2005.

"We're pleased that VOXCOM's operating results for the initial period show stability and ongoing revenue growth," said Brad Sparrow, President and CEO. "VOXCOM has a solid track record in a competitive residential and commercial security market, is consistently generating new customers, and strategically managing the costs to service them. Our ability to leverage our infrastructure as we add customers will help us in our efforts to grow EBITDA and distributable cash."

The Fund was established on May 20, 2005 and indirectly acquired all of the securities of VOXCOM. Accordingly, the Fund's initial period of operation ended June 30, 2005 constituted a 42-day period. Comparative results for a 42-day period ended June 30, 2004 are presented below. The following discussion also refers to the three-month period ended June 30, 2005, which comprises the results of the active operations of the Fund for the 42 days from May 20, 2005 through June 30, 2005, and VOXCOM Incorporated's results of operations from April 1, 2005 through May 19, 2005. These "combined" second quarter operating results are compared to the three-month period ended June 30, 2004.

For the initial period of May 20, 2005 to June 30, 2005 compared to the same period last year:

- Total revenue increased by $0.8 million to $4.2 million, an increase of 23.7%. As the Fund's sales efforts remain focused on high margin recurring monthly revenue (RMR), the proportion of monitoring and service revenue to total revenue has increased to 97.7% for the 42-day period ended June 30, 2005, as compared to 97.4% for the same period last year.

- Gross profit increased by 25.8% to $3.1 million and represents 74.4% of total revenue. The increased gross profit is attributable to the Fund's ability to leverage its operating costs over the increase in total revenue arising from the increased total number of subscribers.

- Sales and marketing expenses and general and administration expenses were consistent with the prior period, as the Fund continues to leverage its existing infrastructure over a larger number of customers.

- Adjusted earnings from operations before interest, taxes, depreciation and amortization ("Normalized EBITDA")(1) increased by $0.6 million, or 32.7%, to $2.2 million for the period. Normalized EBITDA now represents 53.4% of total revenue, a margin improvement of 3.6% over the same period last year. The increased Normalized EBITDA margin reflects the Fund's increased profits received from the increased volume of higher margin monitoring and value-added service revenue.

- Net earnings for the period were $0.6 million or $0.0774 per unit.



Interim Statement of Distributable Cash(1)

---------------------------------------------------------------------
(Expressed in thousands of Canadian Dollars except per unit amounts)
(Unaudited)
For the Period
May 20-June 30, 2005
---------------------------------------------------------------------
Net earnings for the period $ 634
Financing expenses 284
Income taxes 7
Amortization 1,313
---------
EBITDA 2,238
Amortization of leasehold inducement (12)
---------
Normalized EBITDA 2,226
Customer retention costs (842)
Interest expense (274)
Income taxes (7)
Maintenance capital expenditures (13)
---------
Cash available for distribution $ 1,090
---------
---------
Distributions declared $ 1,047
---------
---------

Net Income per unit $0.0774

Distributable cash per unit $0.1331
Distributions declared per unit $0.1279
Distributions declared/distributable cash 96.1%
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(1) While neither EBITDA nor Normalized EBITDA are earnings measures
recognized by GAAP, Management believes that in addition to net
income or loss, they are useful indicators of cash available for
distribution prior to debt service, capital expenditures and taxes.

The Fund met cash distribution targets for the period May 20, 2005
to June 30, 2005. Distributable cash for the 42-day initial period
was $1.09 million, resulting in a single distribution in the amount
of $1.047 million.


Combined Operating Results for the Three Months ended June 30, 2005
and June 30, 2004

Combined
operating VOXCOM
results Incorporated
VOXCOM Three Three
The Fund Incorporated months months
May 20- April 1- ended ended
June 30, May 19, June 30, June 30,
2005 2005 2005 2004
-------------------------------------------------
(in thousands of dollars)
Revenue
Monitoring and
Service Revenue $4,076 $4,690 $8,766 $7,063
Installation Revenue $96 $110 $206 $184
Total Revenue $4,172 $4,80 $8,972 $7,247
Gross Profit $3,103 $3,549 $6,652 $5,276
Gross Profit - % of
total revenue 74.1% 72.8%
RMR - end of period $2,791 $2,247
Operating Expenses
Sales and Marketing $135 $147 $282 $212
Sales and Marketing
- % of total revenue 3.2% 2.9%
General and
Administration $730 $1,642 $2,372 $1,491
General and
Administration - %
of total revenue 26.4% 20.6%
Stock-Based
Compensation -- $452 $452 $116
Amortization $1,313 $1,614 $2,927 $2,400
EBITDA
Normalized EBITDA $2,226 $1,743 $3,969 $3,573
Normalized EBITDA -
% of total revenue 44.2% 49.3%
Other Expenses
Financing Expenses $284 $1,868 $2,152 $1,490
Taxes $7 $8 $15 $10
Net Earnings/(Loss)
Net Earnings/(Loss) $634 ($2,182) ($1,548) ($443)


For the combined period from April 1, 2005 to June 30, 2005 compared to the same period last year:

- Total revenue increased by $1.7 million to $9.0 million, an increase of 23.8%. As the Fund's sales efforts remain focused on high margin RMR, the proportion of monitoring and service revenue to total revenue has increased to 97.7% for the three months ended June 30, 2005, as compared to 97.5% for the same period last year.

- Gross profit increased by 26.1% to $6.7 million and represents 74.1% of total revenue. The higher gross profit is attributable to the rise in total revenue resulting from the increased number of subscribers.

- Sales and marketing expenses for the three months ended June 30, 2005 increased $0.1 million over the same period last year, and represents 3.2% of total revenue for the combined period. These costs reflect the Fund's focus on its National Marketing Partner program and Authorized Dealer Network.

- Normalized EBITDA increased by $0.4 million, or 11.1% to $4.0 million for the combined period. Normalized EBITDA now represents 44.2% of total revenue, as compared to 49.35 in the same period last year. Without one-time general and administrative costs incurred in the combined period, normalized EBITDA would have been $4.8 million, approximately 53.2% of total revenue.

Outlook

On June 21, 2005, the Fund announced that it had purchased approximately 1,000 additional customer accounts in Alberta from Stealth Alarm System Inc. ("Stealth"). As these accounts were purchased at the end of the reporting period, the purchase had minimal impact on the Fund's financial results or distributable cash for the period. It is expected that this and other strategic acquisitions will further grow VOXCOM's share of key markets across Canada.

"The full positive impact of this recent Stealth account purchase on the Fund's revenues, EBITDA and distributable cash will be seen in the next quarter. With our scalable business model, we can continue to increase our customer base, both internally and through acquisitions, without incurring any substantial additional fixed operating costs," said Mr. Sparrow.

"We look forward to reporting our progress to the market as our experienced management team continues to execute our business plan," he added.

This document may contain "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Additional information relating to the Fund, including all public filings, is available at on SEDAR (www.sedar.com) and at www.voxcomincomefund.com.

About VOXCOM Income Fund

VOXCOM Income Fund holds all the issued and outstanding common shares of VOXCOM Incorporated ("VOXCOM"). VOXCOM is a national leader of security alarm installation and monitoring services in Canada, serving more than 104,000 residential and commercial customers. VOXCOM provides monitoring services for security alarm systems and LifeCall emergency response systems to all provinces from its head office and call centre in Edmonton, and has branch offices in major centres across the country. VOXCOM also maintains extensive marketing partnerships and a network of Authorized Dealers throughout Canada. Information about VOXCOM Incorporated can be found at www.voxcom.com.

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