Teranet Reports 2006 Year Results

HIGHLIGHTS:

- Strong Distributable Cash of $88.3 million or $0.57 per unit (for the period June 16, 2006 to December 31, 2006)

- Annual revenue of $239 million, up 6.2%

- Annual Adjusted EBITDA of $159.9 million, up 3.1%

- Continued expansion of automated parcel base

- Other value-added services revenue up 36%

"Teranet's annual results showed growth in revenue and earnings and strong distributable cash, driven by higher registration and search volumes, introduction of electronic registration to 16 new land registry offices, increased market adoption of our value-added services, and reduced debt costs. Our automation and conversion of Ontario land information is on schedule, providing a growing base of potential revenue that also historically benefits from organic growth," said Aris Kaplanis, President and Chief Executive Officer of Teranet Inc. "We are encouraged that the market fundamentals for Teranet, including low unemployment rates, low interest rates and net positive migration, remain positive."

The Fund began operations on June 16, 2006. Therefore, the operating results for the one-year period from January 1 to December 31, 2006, are the combined operating results of Teranet Inc. and the Fund.

Total revenue for the year ended December 31, 2006 was $239 million, an increase of 6.2% or $13.9 million from $225.1 million in the corresponding period of 2005. The increase is primarily due to higher registration and search volumes in all key registration areas: Purchase and Sales, Refinancing and Other. A 36% increase in other value-added services revenue also contributed to the overall revenue growth. Total revenue for the fourth quarter ended December 31, 2006 was $57.3 million compared to $58.7 million for the same period in 2005, a decrease of $1.4 million. The decrease is mainly attributed to a decline in Refinancing activity while Purchase and Sales and Other registration activity remained consistent quarter-over-quarter.

For the year, total operating expenses before amortization, other expenses, interest expense, income taxes and non-controlling interest were $82.6 million. Operating expenses of $195.3 million in the prior year included $125.3 million of long-term incentive plan obligations and transaction costs that were incurred for the twelve-month period ended December 31, 2005. For the fourth quarter, total operating expenses were $22.8 million. In the comparable period of 2005, operating expenses of $69.6 million included $50.3 million of long-term incentive plan obligations and transaction costs mentioned above. Excluding these obligations and transaction costs, operating expenses increased $9.1 million for the year and $3.4 million for the fourth quarter, primarily due to higher costs associated with being a public companyand other compensation related charges.

Adjusted EBITDA* for the year was $159.9 million, an increase of 3.1% from $155.1 million for the prior year. The increase in Adjusted EBITDA for the year is largely due to the revenue growth and was partially offset by new public company costs, higher capital taxes and other compensation charges. Adjusted EBITDA* for the fourth quarter was $34.5 million compared to $39.3 million for the fourth quarter of 2005, representing a decrease of $4.8 million primarily due to the reasons noted above for the annual results.

Distributable Cash for the period from June 16, 2006 to December 31, 2006 was $88.3 million or $0.5699 per unit and reflects the growth in revenue from adding new properties to the ELRS, favourable interest rates on the Company's new bonds and proceeds from a non-recurring sale of an investment of $6.3 million or $0.0406 per unit. Distributions declared for this period were $62.6 million or $0.4042 per unit. Distributable Cash for the fourth quarter was $29.6 million or $0.1909 per unit and includes year-end compensation related charges recorded in the quarter. Distributions declared for the quarter were $29.1 million or $0.1875 per unit.

For the year, the automated parcel base grew by 7.8% to 4.9 million properties, representing 90% of the estimated provincial parcel base. This is up from 4.5 million automated parcels at December 31, 2005, which represented 86% of the provincial parcel base.

Registration volumes increased 2.2% for the year, to 1,920,300 transactions and search volumes increased 5.8% to 2,461,000 transactions. Registration volumes for the fourth quarter were 455,700, a decrease of 8.7% while search volumes for the quarter grew by 2.3% to approximately 583,900 transactions.

Teranet continues to make investments in its future. For the year, total capital expenditures were $31 million, consisting of deferred ELRS implementation costs of $26.5 million and maintenance capital expenditures of $4.5 million. For the fourth quarter, total capital expenditures were $6.8 million, consisting of deferred ELRS implementation costs of $5.5 million and maintenance capital expenditures of $1.3 million.

Teranet Income Fund's cash position as at December 31, 2006, was $218.9 million of which $98.8 million was restricted in nature. -- www.cnxmarketlink.com