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Letter to the Editor

Boyd Group Income Fund Reports Q2 Results

In the second quarter revenue increased 14 percent to $47.0 million compared to $41.3 million in Q2 2004. Sales growth was primarily attributable to new revenue from the acquisitions of: the remaining 50 percent interest in 1st Choice Mobile Auto Glass Dealers Inc.; two repair centers in Atlanta; a repair center in Abbotsford, B.C.; and, the Globe Amerada Glass Network, as well as the commencement of operations of six new repair facilities in the greater Chicago area in the second half of 2004 and first half of 2005.

Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the second quarter of 2005 totalled $2.6 million, or 5.5 percent of sales, compared to EBITDA of $2.6 million, or 6.2 percent of sales, in the second quarter of 2004. The decrease in EBITDA as a percentage of sales in the second quarter of 2005 resulted from lower operating margins in new start-up repair centers in the U.S. during the quarter.

Net earnings for the second quarter of 2005 totalled $140,411 or $0.01 per fully diluted unit compared to net earnings of $884,044 or $0.10 per fully diluted unit in the second quarter of 2004. Decreased net earnings in the second quarter of 2005 resulted primarily from higher operating costs associated with the initial opening of new repair centres, higher amortization costs associated with definite life intangible assets recognized as part of certain acquisitions, no recognition of the benefit of income tax loss carry forward amounts, and the impact of no further allocations of the company's operating losses to Boyd Group Holdings Inc.

Distributable cash generated for the second quarter of 2005 totalled $1.34 million, while distributions paid to unitholders and dividends paid to non-controlling shareholders totalled $2.62 million for the period.

For the six months ended June 30, 2005 revenue increased 15 percent to $94.7 million compared to revenue of $82.5 million in the same period a year ago. EBITDA for the six months ended June 30, 2005 totalled $6.2 million, or 6.5 percent of sales, compared to EBITDA of $6.2 million, or 7.5 percent of sales, in the corresponding period a year ago. Net income for the six months ended June 30, 2005 totalled $1.5 million or $0.17 per fully diluted unit compared to net income of $2.4 million or $0.32 per fully diluted unit in the same period a year ago.

Distributable cash generated for the six months ended June 30, 2005 totalled $3.8 million, while distributions paid to unitholders and dividends paid to non-controlling shareholders totalled $5.3 million for the period.

On a segmented basis, sales in Canada in the second quarter of 2005 increased 13 percent to $14.9 million compared to $13.2 million in the second quarter of 2004. Approximately half of the 2005 second quarter sales growth in Canada, or $0.8 million, resulted from new sales from the acquisitions of the remaining 50 percent interest in 1st Choice Mobile Auto Glass Dealers Inc. in August, 2004, and a repair center in Abbotsford, B.C. in January, 2005. Same store sales in Canada increased $0.9 million or 6.9 percent for the second quarter of 2005, compared to the same period a year ago.

U.S. sales in the second quarter of 2005 increased 14 percent to $32.0 million compared to $28.1 million in the second quarter a year ago. U.S. sales growth in the second quarter of 2005 was primarily attributable to $5.4 million in new sales from the Globe Amerada Glass Network, Illinois-area collision repair center start-ups, and the acquisition of two repair facilities in Atlanta. Same store sales in the U.S. declined $1.5 million or 5.3 percent when compared to the second quarter in 2004.

Translation of U.S. dollar revenues at a weaker U.S. dollar exchange rate, relative to the Canadian dollar, during the second quarter of 2005 accounted for a $2.5 million decline in same store sales when compared to the prior year period. Excluding the impact of foreign currency translation, the acquisition of Globe Amerada Glass Network, the new Gerber Collision & Glass start-ups and Atlanta acquisitions, U.S. same store sales increased by $1.0 million or 3.4 percent compared to the second quarter a year ago.

As at June 30, 2005, the Fund had bank indebtedness of $2.7 million, compared to $0.6 million in cash and cash equivalents as at December 31, 2004. The Fund had total debt outstanding at June 30, 2005 of $43.3 million.

The presentation of convertible debentures was restated to reflect the change in accounting policy implemented in the first quarter of 2005. Total debt increased by $5.3 million, while net debt (net of cash and cash equivalents) increased by $5.9 million, primarily due to the financing of the Globe Amerada Glass Network and Abbotsford acquisitions as well as new trading partner funding received in 2005 for start-up locations initiated in 2004 and 2005.

The Boyd Group Inc. is the largest operator of collision repair facilities in Canada and among the largest in North America. The company operates locations in the four western Canadian provinces principally under the trade names Boyd Autobody & Glass and Service Collision Repair, as well as in six U.S. states principally under the trade name Gerber Collision & Glass. The Boyd Group Inc. is estimated to generate approximately $40 billion in revenue annually.

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