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Press release from CNW Group


Wednesday, November 10, 2010

IBI ANNOUNCES 2010 THIRD QUARTER EARNINGS - THIRD SUCCESSIVE QUARTER OF IMPROVED PERFORMANCE:18:08 EST Wednesday, November 10, 2010Revenue at $76.8 million;EBITDA at $11.4 million; Distributable Cash of $7.5 million; Distributable Cash per unit of $0.4202; andPayout Ratio of 95.2%.TORONTO, Nov. 10 /CNW/ - IBI Income Fund (the "Fund") (TSX: IBG.UN) today announced its financial results for three and nine months ended September 30, 2010.The third quarter 2010 results further demonstrated the firming of the operating results of IBI Group over the past three quarters. The results of the third quarter of 2010 are based on 63 available working days which is consistent with an average quarter. The highlights are:Revenue at $76.8 million, was $7.0 million above the second quarter of 2010, up $8.7 million compared with the first quarter of 2010 and up $8.6 million compared with the fourth quarter of 2009;EBITDA1 of $11.4 million was $1.3 million above the second quarter of 2010, up $2.3 million compared with the first quarter of 2010 and up $2.7 million compared with the fourth quarter of 2009;EBITDA1 as a percentage of revenue increased for the third consecutive quarter, to 14.8%, up from 14.5% in the second quarter, 13.3% in the first quarter and 12.7% from the fourth quarter of 2009; andDistributable cash1 of $7.5 million was $0.2 million above the second quarter of 2010, up $1.3 million compared with the first quarter of 2010 and up $3.0 million compared with the fourth quarter of 2009.The basis of this performance is discussed in paragraphs below.Revenue ActivityRevenue for the third quarter exceeded that of the second quarter and was up $7.0 million. The revenue in the third quarter met expectations, which included the full quarter of revenue provided by Nightingale Architects (compared with only one month in the second quarter). There was $2.1 million (3%) of organic growth in the third quarter of 2010 as compared to the second quarter 2010. Public sector work continued to constitute the majority of IBI work and in this quarter again exceeded 67% of the $76.8 million of revenue.Commitment of new work for IBI Group continued to increase during the third quarter, replacing the $76.8 million of work completed during the quarter and adding the additional work for the future. Backlog for the next twelve months now continues as reported in the last quarter in excess of nine months at the greater pace that IBI Group is achieving for the second half of 2010. This backlog is based on a very wide range of substantial projects.Strategic Program of Growth During the second quarter, IBI Group completed the acquisition of Nightingale Architects Ltd. ("Nightingale"). Nightingale is a leading architectural practice, specialising in facilities for health care and for education and science. The practice has been in existence for over twenty years and has grown steadily to its current complement of 230 members operating in six offices in the UK, as well as an office in South Africa. Nightingale is a practice leader in social infrastructure in the UK, actively engaged in major building projects in that base of operation and other projects internationally including Eastern Europe, the Gulf, Australia and South Africa. The firm is an architect of choice of public agencies, as well as private development proponents/construction contractors for the delivery of health care facilities through private finance initiatives, public-private partnerships and design build. These major private companies, operating in the UK, are also similarly engaged in other world markets affording Nightingale the opportunity to provide architectural services for these clients for projects elsewhere. The integration of the executive team of Nightingale is a strategic advancement in relation to three basic objectives of IBI Group: building the world platform of IBI, becoming a leader in world scale projects in health care and other areas of social infrastructure, and strengthening the business of IBI. In fact, as we approach the end of the fifth month of working together, joint efforts and business development initiatives targeting professional work opportunities are underway.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 is engaged in discussions with other firms for acquisitions in international markets where IBI Group is currently active including China and India.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. IBI Group continues to be committed to further growth in the USA. Discussions are under way with a number of 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 first half of 2011. As IBI Group has noted previously, the firms being acquired are profitable. However, such firms may not be achieving, under the current economic environment in the USA, the higher levels of profitability as they have in the past and levels that are equivalent to the performance of IBI Group. IBI Group continues to believe this is a sound strategic investment program which will realise significant results over the next few years, within an improved economic environment, strengthened by the synergy and global reach within IBI Group. IBI Group is experiencing a strengthening in the USA market for the services that IBI Group provides.Other Professional Progress Other progress in the professional work of IBI Group in the third quarter of 2010 included:Continuing work on a suite of tolling and traffic management projects in Greece, which have withstood the financial challenges with respect to the relatively large debt of that country;Continued further work in the growing health care practice of IBI Group, which has very significantly increased opportunities arising from the Nightingale merger. IBI Group and Nightingale are now engaged in healthcare projects in Canada, the UK, Eastern Europe, Australia, and on existing work with increased business development opportunities in these jurisdictions along with others including China and India. Work continues on the McGill University Health Centre and Women's College Hospital in Toronto;Further continuing organic growth of the IBI Group practice in China;Further progress in the growth of the practice in India with additional new private sector assignments;Strengthening of activity in the Middle East; andThe opening of offices in Eastern Europe.Dividend PolicyAs previously announced, following conversion of the Fund from an income trust structure to a corporation, IBI will continue to be a relatively high distributor of cash earned. It is proposed that dividends to be paid by IBI Group Inc. on its common shares (which, upon the conversion becoming effective, will be received by unitholders of IBI Income Fund in exchange for their Fund units), will be in an amount based on the pre-conversion distribution of $1.60 per Fund unit on an annual basis before tax, less the amount required to be withheld by IBI Group Inc. for tax. Accordingly IBI Group Inc. expects to pay monthly dividends on the common shares for the first quarter of 2011 of $0.0916 per share ($1.10 per share on an annual basis), with the dividend for the month of January 2011 payable on February 28, 2011 to shareholders of record on January 29, 2011. Policy on dividend amounts will be reviewed on a quarterly basis.Investor Conference CallThe Fund will hold a conference call on Thursday, November 11, 2010 at 8:30 a.m. Eastern Standard Time (EST). To participate in the conference call, please dial in before 8:30 a.m. EST to 800 745-8951 for local and toll-free North American access, or 1 212 231 2900 for international access.An audio replay of the call will be available for 14 days, by dialling 416-626-4100 for local and international access, or 1 800 558-5253 for toll-free North American access, passcode 21483214 followed by the number sign on your telephone keypad.Selected Consolidated Financial Information and Reconciliation of Non-GAAP Measures Three monthsendedSeptember 30, 2010Three monthsendedSeptember 30, 2009Nine monthsendedSeptember 30, 2010Nine monthsendedSeptember 30, 2009in thousands of dollars except for per Unit amounts    Revenue$   76,770$     68,783$   214,635$ 205,479Expenses         65,398       57,006      184,151    172,481Earnings before income taxes, interest and amortization (EBITDA)      11,372        11,777      30,484      32,998Interest          2,817        1,900          7,493        4,534Income taxes1,2301,1662,367      3,350Amortization of property and equipment and intangible assets           2,887           3,580          8,540         9,752Amortization of deferred credit - leases(13)(28)      (38)(84)Net earnings before non-controlling interest  $      4,451  $       5,159  $     12,122$  15,446Basic and diluted net earnings per Unit   $  0.2484   $  0.2918   $ 0.6745$  0.9122Distributable Cash    Cash flow used in operating activities$  3,376$    1,361$    4,752$    (536)Less: Capital expenditures  (515)  (395)  (1,840)  (1,278)Standardized Distributable Cash$     2,861$     966$     2,912$   (1,814)Add (deduct):     Change in non-cash operating working capital  3,209  6,891  14,870  24,203 Current income tax expense2,0891,6253,6484,797 Income taxes paid       (632)        (868)(296)        (1,509)Distributable Cash $     7,527$     8,614$     21,134$     25,677Weighted average basic and diluted Distributable Cash per Unit(1)$      0.4202$      0.4872$      1.1835$      1.5150Aggregate distributions declared$        7,132$        7,074$      21,423$      20,453Basic and diluted aggregate distributions declared per Unit(1)$      0.3999$      0.3999$      1.1997$      1.1997(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.(1) See "Definition of EBITDA, Distributable Cash and Non-GAAP Measures".%SEDAR: 00021044EFor further information: Allan J. Kamerman IBI Income Fund 230 Richmond Street West, 5th Floor Toronto, ON M5V 1V6 Tel: 416-596-1930