Quantcast
Last updated on April 18, 2014 at 21:21 EDT

Data Group Inc. Announces Third Quarter Results for 2012 and 2013 Dividend Policy

November 9, 2012

Highlights

Q3 2012

        --  Third quarter 2012 ("Q3") Revenues of $80.1 million, Q3 Gross
            Profit of $19.7 million, and Q3 Net Income of $0.3 million
        --  Q3 Dividends declared of $3.8 million or $0.163 per share
        --  Q3 Adjusted EBITDA of $5.8 million (See Table 2 and "Non-GAAP
            Measures" below)

YTD 2012

        --  Year to Date 2012 ("YTD") Revenues of $249.4 million, YTD Gross
            Profit of $64.0 million, and YTD Net Income of $4.5 million
        --  YTD Dividends declared of $11.5 million or $0.488 per share
        --  YTD Adjusted EBITDA of $19.6 million (See Table 2 and "Non-GAAP
            Measures" below)

BRAMPTON, ON, Nov. 9, 2012 /CNW/ - DATA Group Inc. (TSX: DGI) (“DATA Group”) announced its financial and
operating results for the third quarter ended September 30, 2012, which
includes the operating results of its subsidiaries DATA Group Ltd., The
Fulfillment Solutions Advantage Inc. (“FSA”) and FSA Datalytics Canada
Inc. (“Datalytics”).

“We are encouraged by the progress of our growth strategy in the third
quarter and the first nine months of 2012.  As we execute on our
strategic plan, we believe it is prudent to achieve an improved balance
between our dividend policy, debt reduction and our growth
initiatives.  We believe this is essential in order to achieve
sustainable growth, enterprise value appreciation and a consistent
dividend payout to our shareholders over the longer term.”, said
Michael Suksi, President and Chief Executive Officer.

After careful consideration, the Board of Directors has decided to
reduce DATA Group’s annual dividend from $0.6504 per share to $0.30 per
share effective January 1, 2013, and intends to begin paying dividends
on a quarterly basis commencing in 2013.  DATA Group intends to
continue to pay a dividend of $0.0542 per share for the months of
November and December 2012.  DATA Group believes the reduction in
dividends is prudent to support the company’s strategic plan, to reduce
debt to achieve a healthier and more sustainable balance sheet, to be
positioned to make strategic acquisitions, and to maintain a dividend
payout to DATA Group’s shareholders over the longer term.

OUTLOOK
DATA Group continues to expand its capabilities with new electronic
communications oriented solutions, in order to position the company for
sustainable, long term growth.  The company’s growth strategy is to
meet its client’s evolving requirements by bundling its new
e-communication services with its traditional print services into a
single, holistic communications management solution.  Clients will
enter into multi-year outsourcing contracts with DATA Group for this
bundled solution.  This set of services will be branded as Managed
Business Communications services. This also includes selectively
expanding into the United States with its existing clients who have
U.S. operations, as well as continuously reducing its costs.  DATA
Group believes this strategy provides it with substantial opportunities
to offset revenue declines in traditional print services due to
technological change and, in fact, grow through expanded market share
in its traditional business and from new revenue streams.  DATA Group
remains focused on the successful, ongoing execution of this plan in a
prudent, well managed fashion, balancing its investment in the growth
plan with its financial strategy.

During the third quarter of 2012, revenue continued to grow and DATA
Group won a number of new customer agreements in which its bundled
Managed Business Communications played a key role.  DATA Group recently
signed a letter of intent for one of the largest single source,
multi-year, customer agreements in its history.  This is an expansion
of a current agreement with a significant client, and includes document
management services of administrative documents as well as marketing
print and communications services in Canada and the U.S.  The new
agreement will take effect in the fourth quarter 2012 and has required
DATA Group to make modest investments in people and technology during
the third quarter of 2012.  DATA Group expects this agreement to
generate positive revenue and Adjusted EBITDA results in the future. 
Another significant new agreement for marketing print will begin in the
first quarter of 2013.  In addition, in the third quarter of 2012, DATA
Group generated $6.6 million in new business revenue.  In the first
nine months of 2012, DATA Group generated $17.8 million in new business
revenue, which is ahead of last year’s pace.

DATA Group continued to invest in new, technology-oriented products and
services in the third quarter with two new capabilities.  Marketing
Campaign Management, a software-based service DATA Group is launching
in the fourth quarter, enhances the effectiveness of marketing
departments by creating collaborative, automated workflows between the
clients’ marketing staff, their agencies and fulfilment by DATA Group. 
This allows for faster and more effective marketing campaign planning,
creative design, execution and reporting on results. In the fourth
quarter, DATA Group is also launching Document Process Management
services.  Rather than just managing the supply of “blank” (or
uncompleted) documents which the DATA Group currently does, Document
Process Management will enable DATA Group to provide services
associated with completed documents, such as workflow consulting and
process automation, scanning and archiving of documents and related
data extraction.

The final element of DATA Group’s strategy is incremental cost savings. 
In the third quarter of 2012, DATA Group achieved approximately $1.2
million in cost saving efficiencies.  In the first nine months of 2012,
DATA Group generated approximately $3.3 million in cost savings. 
During the first three quarters of 2012, DATA Group also initiated new
projects that it believes will continue to generate cost savings in the
future.

DATA Group is moving to capitalize on market share and technology driven
revenue growth opportunities in order to offset declines due to a
reduction in traditional print demand.  The changes in DATA Group’s
dividend policy and debt reduction strategy will support this
transition.

Table 1 The following table sets out selected historical financial information
for the periods noted.


    Consolidated Financial
    Information

    For the periods ended
    September 30, 2012 and
    2011
    (in thousands of             July 1 to      July 1 to      Jan. 1 to      Jan. 1 to
    Canadian dollars, except     Sept. 30,      Sept. 30,      Sept. 30,      Sept. 30,
    per share/unit amounts,         2012           2011           2012           2011
    unaudited)                       $              $              $              $

    Revenues                         80,144         77,965        249,400        242,245

    Cost of revenues                 60,430         58,669        185,400        181,348

    Gross profit                     19,714         19,296         64,000         60,897

    Selling, general and
    administrative expenses          15,331         13,741         48,697         43,306

    Corporate conversion
    costs                                 -             23             84            437

    Amortization of
    identifiable intangible
    assets                            2,310          2,566          6,932          7,697

    Income before finance
    costs and income taxes            2,073          2,966          8,287          9,457

    Finance costs                                                                       

      Interest expense                1,468          1,432          4,418          4,176

      Interest income                   (1)           (21)           (15)           (66)

      Change in fair value
      of conversion options               -          (185)              -        (1,180)

      Amortization of
      transaction costs                 154            131            460            393

                                      1,621          1,357          4,863          3,323

    Income before income
    taxes                               452          1,609          3,424          6,134

    Income tax expense
    (recovery)                                                                          

      Current                           716            344          2,768          1,371

      Deferred                        (531)            270        (3,831)            608

                                        185            614        (1,063)          1,979

    Net income for the
    period                              267            995          4,487          4,155

    Net income attributable
    to
    shareholders/unitholders            298            995          4,546          4,155

    Basic and diluted income
    per share/unit                     0.01           0.04           0.19           0.18

    Number of common
    shares/units outstanding     23,490,592     23,490,592     23,490,592     23,490,592

    Consolidated Statements
    of Financial Position
    Information                    As at          As at
    (in thousands of             Sept. 30,      Sept. 30,
    Canadian dollars,               2012           2011
    unaudited)                       $              $                                   

    Current assets                   85,286         93,659                              

    Current liabilities              42,618         39,906                              

    Total assets                    273,653        280,919                              

    Total non-current
    liabilities                     124,282        122,223                              

    Shareholders' equity            106,620              -                              

    Non-controlling interest            133              -                              

    Total equity                    106,753              -                              

    Unitholders' equity                   -        118,790                              

Table 2     The following table provides a reconciliation of net income (loss) to
Adjusted EBITDA for the periods noted.  See “Non-GAAP Measures”.


    Adjusted EBITDA
    Reconciliation

    For the periods       July 1 to     July 1 to     Jan. 1 to   Jan. 1 to
    ended September       Sept. 30,     Sept. 30,     Sept. 30,   Sept. 30,
    30, 2012 and 2011       2012          2011          2012        2011
    (in thousands of          $             $             $           $
    Canadian dollars,
    unaudited)

    Net income for              267           995         4,487       4,155
    the period

    Interest expense          1,468         1,432         4,418       4,176

    Interest income             (1)          (21)          (15)        (66)

    Change in fair                -         (185)             -     (1,180)
    value of
    conversion
    options

    Amortization of             154           131           460         393
    transaction costs

    Depreciation of           1,450         1,348         4,320       4,182
    property, plant
    and equipment

    Amortization of           2,310         2,566         6,932       7,697
    identifiable
    intangible assets

    Corporate                     -            23            84         437
    conversion costs

    Current income              716           344         2,768       1,371
    tax expense

    Deferred income           (531)           270       (3,831)         608
    tax (recovery)
    expense

    Adjusted EBITDA           5,833         6,903        19,623      21,773

RESULTS OF OPERATIONS

Revenues
For the quarter ended September 30, 2012, DATA Group recorded revenues
of $80.1 million, an increase of $2.2 million or 2.8% compared with the
same period in 2011.  The increase, before intersegment revenues, was
the result of a $2.8 million increase in the DATA East and West segment
and was offset by a $0.3 million decrease in the Multiple Pakfold
segment.  For the nine months ended September 30, 2012, DATA Group
recorded revenues of $249.4 million, an increase of $7.2 million or
3.0% compared with the same period in 2011.  The increase, before
intersegment revenues, was the result of a $8.6 million increase in the
DATA East and West segment and was offset by a $0.2 million decrease in
the Multiple Pakfold segment.

Cost of Revenues and Gross Profit
For the quarter ended September 30, 2012, cost of revenues increased to
$60.4 million from $58.7 million for the same period in 2011.  Gross
profit for the quarter ended September 30, 2012 was $19.7 million,
which represented an increase of $0.4 million or 2.2% from
$19.3 million for the same period in 2011.  The increase in gross
profit for the quarter ended September 30, 2012 was attributable to a
gross profit increase of $0.5 million in the DATA East and West segment
and was offset by a gross profit decrease of $0.1 million in the
Multiple Pakfold segment.  Gross profit as a percentage of revenues
decreased to 24.6% for the quarter ended September 30, 2012 compared to
24.7% for the same period in 2011.  For the nine months ended September
30, 2012, cost of revenues increased to $185.4 million from
$181.3 million for the same period in 2011.  Gross profit for the nine
months ended September 30, 2012 was $64.0 million, which represented an
increase of $3.1 million or 5.1% from $60.9 million for the same period
in 2011.  The increase in gross profit for the nine months ended
September 30, 2012 was attributable to a gross profit increase of $3.2
million in the DATA East and West segment and offset by a gross profit
decrease of $0.1 million in the Multiple Pakfold segment.  Gross profit
as a percentage of revenues increased to 25.7% for the nine months
ended September 30, 2012 compared to 25.1% for the same period in 2011.

Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses, including
administrative expenses of DATA Group Inc. but excluding amortization
of identifiable intangible assets, for the quarter ended September 30,
2012 increased $1.6 million to $15.3 million compared to $13.7 million
in the same period in 2011.  As a percentage of revenues, these costs
were 19.1% of revenues for the quarter ended September 30, 2012
compared to 17.6% of revenues for the same period in 2011.  For each of
the quarters ended September 30, 2012 and 2011, DATA Group incurred
$0.3 million and $0.2 million of severance expenses, respectively. 
SG&A expenses for the nine months ended September 30, 2012 increased
$5.4 million to $48.7 million compared to $43.3 million for the same
period of 2011.  The increases in SG&A expenses for the three and nine
month periods were attributable to the inclusion of FSA and Datalytics
in DATA Group’s results of operations and investments to launch new
products and services initiatives. As a percentage of revenues, these
costs were 19.5% of revenues for the nine months ended September 30,
2012 compared to 17.9% of revenues for the same period in 2011.  For
the nine months ended September 30, 2012 and 2011, DATA Group incurred
$0.7 million and $0.6 million of severance expenses, respectively. 
Severance costs for the three and nine months ended September 30, 2012
and 2011 were included in SG&A and were related to DATA Group’s
on-going productivity improvements and cost reduction initiatives.

Corporate Conversion Costs
During the nine month periods ended September 30, 2012 and 2011, DATA
Group incurred total professional fees of $0.1 million and
$0.4 million, respectively, related to the conversion of the Fund to a
corporation on January 1, 2012.

Adjusted EBITDA
For the quarter ended September 30, 2012, Adjusted EBITDA was
$5.8 million, or 7.3% of revenues.  Adjusted EBITDA for the quarter
ended September 30, 2012 decreased $1.1 million or 15.5% from the same
period in the prior year primarily due to the cost of DATA Group’s
investment it its growth strategy in 2012.  These costs included
selling, general and administration expense related to investments to
launch new products and services.  The Adjusted EBITDA margin for the
quarter, as a percentage of revenues, decreased from 8.9% of revenues
in 2011 to 7.3% of revenues in 2012.  Adjusted EBITDA for the nine
months ended September 30, 2012 was $19.6 million, or 7.9% of revenues.
Adjusted EBITDA for the nine months ended September 30, 2012 decreased
$2.1 million or 9.9% from the same period in the prior year and the
Adjusted EBITDA margin for the nine month period, as a percentage of
revenues, decreased from 9.0% of revenues in 2011 to 7.9% of revenues
in 2012.

Interest Expense and Finance Costs
Interest expense on long-term debt outstanding under DATA Group’s credit
facilities and DATA Group’s outstanding $45.0 million aggregate
principal amount of 6.00% Convertible Unsecured Subordinated Debentures
(the “6.00% Convertible Debentures”) was $1.5 million for the three
months ended September 30, 2012 compared to $1.4 million for the same
period in 2011, and was $4.4 million for the nine months ended
September 30, 2012 compared to $4.2 million for the same period in
2011.  The increase in interest expense during the three and nine
months ended September 30, 2012 was the result of higher outstanding
balances under DATA Group’s credit facilities and higher rates of
interest charged on those balances.

Finance costs for the three and nine months ended September 30, 2011
included recoveries of $0.2 million and $1.2 million, respectively,
related to the change in the fair value of the Fund’s conversion
options.  The conversion options were the conversion feature in each of
the Fund’s outstanding convertible debentures, which is measured at
fair value at each reporting date.  The Fund’s obligations under those
convertible debentures were assumed by the Corporation in connection
with the Arrangement.  As a result of the Fund’s conversion to a
corporation on January 1, 2012, those conversion option liabilities
were classified as equity on the financial statements of the
Corporation due to the change in the nature of the underlying security
to shares from units and are not re-measured at fair value at each
reporting date.

Income Taxes
DATA Group reported income before income taxes of $0.5 million, a
current income tax expense of $0.7 million and a deferred income tax
recovery of $0.5 million for the three months ended September 30, 2012
compared to income before income taxes of $1.6 million, current income
tax expense of $0.3 million and a deferred income tax expense of
$0.3 million for the three months ended September 30, 2011.  DATA Group
reported income before income taxes of $3.4 million, a current income
tax expense of $2.8 million and a deferred income tax recovery of $3.8
million for the nine months ended September 30, 2012 compared to income
before income taxes of $6.1 million, a current income tax expense of
$1.4 million and a deferred income tax expense of $0.6 million for the
nine months ended September 30, 2011.  The current tax expense for the
three and nine months ended September 30, 2012 were higher than the
same periods in 2011 due to the Fund’s conversion to a corporation,
which resulted in higher taxable income.  The deferred income tax
recovery was due to the conversion, a change in estimates of future
reversals of temporary differences and new temporary differences that
arose during the three and nine months ended September 30, 2012.  As a
result of the conversion, DATA Group re-measured its deferred tax
assets and liabilities at the corporate tax rates applicable to
corporations, which are lower than the top marginal tax rate for
individuals used by the Fund.  In addition, the Fund’s conversion
option liabilities were reclassified as equity on January 1, 2012 and
the associated deferred tax liability was reversed.  As a result of
these changes, DATA Group recorded a deferred income tax recovery
$2.0 million during the first quarter of 2012.

Net Income
Net income for the quarter ended September 30, 2012 was $0.3 million
compared to a net income of $1.0 million for the quarter ended
September 30, 2011.  The decrease in comparable profitability for the
quarter ended September 30, 2012 was due to higher SG&A expenses,
higher interest expense due to the acquisition of FSA and Datalytics, a
change in the accounting for the conversion options due to the
conversion to a corporation, and current income tax expense,
respectively.  The decrease in comparable profitability was partially
offset by the deferred income tax recovery due to the change in
estimate of future reversals of temporary differences and new temporary
differences that arose during the period, higher gross profit in the
third quarter of 2012 as a result of cost savings realized from DATA
Group’s ongoing productivity improvement and cost reduction
initiatives, and the acquisition of FSA and Datalytics, respectively.

Net income for the nine months ended September 30, 2012 was $4.5 million
compared to a net income of $4.2 million for the nine months ended
September 30, 2011.  The increase in comparable profitability for the
nine months ended September 30, 2012 was substantially due to higher
gross profit, the acquisition of FSA and Datalytics, and the deferred
income tax recovery due to the change in estimate of future reversals
of temporary differences, new temporary differences that arose during
the period and the conversion of the Fund to a corporation.  The
increase in comparable profitability during the first nine months of
2012 was partially offset by higher SG&A expenses, a large recovery
related to the change in the fair value of the conversion options in
the Fund’s outstanding convertible debentures in 2011, and a higher
current income tax expense as discussed above.

INVESTING ACTIVITIES

Capital expenditures for the quarter ended September 30, 2012 of $0.7
million related primarily to maintenance capital expenditures.  For the
nine months ended September 30, 2012, DATA Group incurred capital
expenditures of $1.6 million related primarily to maintenance capital
expenditures and $0.4 million related to the investment in identifiable
intangible assets consisting of software licences.  These capital
expenditures were financed by cash flow from operations and existing
cash resources.

FINANCING ACTIVITIES

At September 30, 2012, DATA Group had a bank overdraft of $2.0 million,
which consisted of financing provided by its suppliers in the form of
outstanding cheques of $4.1 million offset by cash and cash equivalents
of $2.1 million.  During the nine months ended September 30, 2012, DATA
Group repaid $2.5 million of its Revolving Bank Facility outstanding. 
For the three and nine months ended September 30, 2012, DATA Group paid
aggregate cash dividends of $3.8 million and $10.2 million,
respectively, to its shareholders.  For the nine months ended September
30, 2012, DATA Group paid aggregate cash distributions of $1.3 million
to holders of the common shares of DATA Group (formerly unitholders of
the Fund).

About DATA Group Inc.

DATA Group Inc. is a leading provider of document management and
marketing solutions.  We provide integrated web and print based
communications, information management and associated professional
services.  We differentiate ourselves and provide value to our
customers by focusing on innovative, high value solutions and on
exceptional performance at delivering on our promises and commitments. 
We have over 1,950 employees working from 34 locations across Canada to
accomplish this.

Additional information relating to DATA Group Inc. is available on www.datagroup.ca, and in the disclosure documents filed by DATA Group Inc. on the System
for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.

All financial information in this press release is presented in Canadian
dollars and in accordance with generally accepted accounting principles
(“GAAP”) measured under International Financial Reporting Standards
(“IFRS”), as issued by the International Accounting Standards Board
(“IASB”) for publicly accountable entities, unless otherwise noted. 
Financial figures presented prior to January 1, 2012 are those of The
DATA Group Income Fund, the predecessor to DATA Group Inc.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release constitute “forward-looking”
statements that involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance,
objectives or achievements of DATA Group, or industry results, to be
materially different from any future results, performance, objectives
or achievements expressed or implied by such forward-looking
statements.  When used in this press release, words such as “may”,
“would”, “could”, “will”, “expect”, “anticipate”, “estimate”,
“believe”, “intend”, “plan”, and other similar expressions are intended
to identify forward-looking statements.  These statements reflect DATA
Group’s current views regarding future events and operating
performance, are based on information currently available to DATA
Group, and speak only as of the date of this press release.  These
forward-looking statements involve a number of risks, uncertainties and
assumptions and should not be read as guarantees of future performance
or results, and will not necessarily be accurate indications of whether
or not such performance or results will be achieved.  Many factors
could cause the actual results, performance, objectives or achievements
of DATA Group to be materially different from any future results,
performance, objectives or achievements that may be expressed or
implied by such forward-looking statements.  The principal factors,
assumptions and risks that DATA Group made or took into account in the
preparation of these forward-looking statements include the risk that
DATA Group may not be successful in growing its business or in managing
its organic growth; DATA Group’s ability to develop and successfully
market new products and services; competition from competitors
supplying similar products and services; DATA Group’s ability to grow
its sales or even maintain historical levels of its sales of printed
business documents; the impact of economic conditions on DATA Group’s
businesses; risks associated with acquisitions by DATA Group; increases
in the costs of paper and other raw materials used by DATA Group and
DATA Group’s ability to maintain relationships with its customers.
Additional factors are discussed elsewhere in this press release and
under the heading “Risks and Uncertainties” in DATA Group’s
management’s discussion and analysis and in DATA Group’s other publicly
available disclosure documents, as filed by DATA Group on SEDAR (www.sedar.com).  Should one or more of these risks or uncertainties materialize, or
should assumptions underlying the forward-looking statements prove
incorrect, actual results may vary materially from those described in
this press release as intended, planned, anticipated, believed,
estimated or expected.  Unless required by applicable securities law,
DATA Group does not intend and does not assume any obligation to update
these forward-looking statements.

NON-GAAP MEASURES

This press release includes certain non-GAAP measures as supplementary
information. When used in this press release, EBITDA means earnings
before interest and finance costs, taxes, depreciation and
amortization.  Adjusted EBITDA for the three months ended September 30,
2012 means EBITDA adjusted with no adjustments.  Adjusted EBITDA for
the three months ended September 30, 2011 means EBITDA adjusted for
corporate conversion costs.  Adjusted EBITDA for the nine months ended
September 30, 2012 and 2011, respectively, means EBITDA adjusted for
corporate conversion costs.  DATA Group believes that, in addition to
net income (loss), EBITDA and Adjusted EBITDA are useful supplemental
measures in evaluating the performance of DATA Group and its
predecessors.  EBITDA and Adjusted EBITDA are not earnings measures
recognized by IFRS and do not have any standardized meanings prescribed
by IFRS.  Therefore, EBITDA and Adjusted EBITDA are unlikely to be
comparable to similar measures presented by other issuers.

Investors are cautioned that EBITDA and Adjusted EBITDA should not be
construed as an alternative to net income (loss) determined in
accordance with IFRS as an indicator of DATA Group’s performance.  For
a reconciliation of net income (loss) to Adjusted EBITDA, see Table 2
above.


    CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

    (in thousands of Canadian     September 30,       December 31, 2011
    dollars, unaudited)               2012                    $
                                        $

    Assets                                                      

    Current assets                                              

      Cash and cash                       -              4,046
      equivalents

      Trade receivables              40,068             43,647  

      Inventories                    40,554             40,786  

      Prepaid expenses and            4,664              4,691
      other current assets

                                     85,286             93,170  

    Non-current assets                                          

      Deferred income tax             1,903                887
      assets

      Property, plant and            21,414             24,149
      equipment

      Identifiable intangible        19,850             26,367
      assets

      Goodwill                      145,200            145,200  

                                    273,653            289,773  

    Liabilities                                                 

    Current liabilities                                         

      Bank overdraft                  2,045                  -  

      Trade payables                 30,296             32,466  

      Provisions                        248                163  

      Income taxes payable              784              1,933  

      Deferred revenue                7,972              9,039  

      Dividends/distributions         1,273              1,273
      payable

                                     42,618             44,874  

    Non-current liabilities                                     

      Revolving bank facility        57,711             60,123  

      Convertible debentures         42,161             42,229  

      Deferred income tax               734              5,686
      liabilities

      Other non-current               2,272              2,617
      liabilities

      Pension obligations            18,680             14,043  

      Other post-employment           2,724              2,525
      benefit plans

                                    166,900            172,097  

    Equity                                                      

    Shareholders' equity                                        

      Shares                        215,336                  -  

      Units                               -            215,336  

      Conversion options                516                  -  

      Deficit                     (109,232)           (97,973)  

                                    106,620            117,363  

    Non-controlling interest            133                313  

                                    106,753            117,676  

                                    273,653            289,773         


    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE LOSS

    (in thousands of          For the three months     For the three months
    Canadian dollars,         ended September 30,      ended September 30,
    except per share/unit             2012                     2011
    amounts, unaudited)                $                        $

    Revenues                   80,144                   77,965  

    Cost of revenues           60,430                   58,669  

    Gross profit               19,714                   19,296  

    Expenses                                                    

      Selling,
      commissions and
      expenses                  8,826                    8,163

      General and
      administration
      expenses excluding
      amortization of
      identifiable
      intangible assets         6,505                    5,578

      Corporate
      conversion costs              -                       23

      Amortization of
      identifiable
      intangible assets         2,310                    2,566

                               17,641                   16,330  

    Income before finance
    costs and income
    taxes                       2,073                    2,966

    Finance costs                                               

      Interest expense          1,468                    1,432  

      Interest income             (1)                     (21)  

      Change in fair
      value of conversion
      options                       -                    (185)

      Amortization of
      transaction costs           154                      131

                                1,621                    1,357  

    Income before income
    taxes                         452                    1,609

    Income tax expense
    (recovery)                                                

      Current                     716                      344  

      Deferred                  (531)                      270  

                                  185                      614  

    Net income for the
    period                        267                      995

    Other comprehensive
    (loss) income                                             

      Actuarial losses on
      post-employment
      benefit obligations     (3,568)                  (2,007)

      Taxes
      post-employment
      adjustment above            935                        -

                              (2,633)                  (2,007)  

    Comprehensive loss
    for the period            (2,366)                  (1,012)

    ATTRIBUTABLE TO                                             

    SHAREHOLDERS' or
    UNITHOLDERS'                                              

        Net income                298                      995  

        Other
        comprehensive
        loss                  (2,633)                  (2,007)

      Comprehensive loss
      for the period          (2,335)                  (1,012)

    NON-CONTROLLING
    INTEREST                                                  

        Net loss                 (31)                        -  

        Other
        comprehensive
        income (loss)               -                        -

      Comprehensive loss
      for the period             (31)                        -

    Basic income per
    share/unit                   0.01                     0.04

    Diluted income per
    share/unit                   0.01                     0.04             


    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

    (in thousands of            For the nine months     For the nine months
    Canadian dollars,           ended September 30,     ended September 30,
    except per share/unit              2012                    2011
    amounts, unaudited)                  $                       $

    Revenues                    249,400                 242,245  

    Cost of revenues            185,400                 181,348  

    Gross profit                 64,000                  60,897  

    Expenses                                                     

      Selling, commissions
      and expenses               27,985                  25,679

      General and
      administration
      expenses excluding
      amortization
      of identifiable
      intangible assets          20,712                  17,627

      Corporate conversion
      costs                          84                     437

      Amortization of
      identifiable
      intangible assets           6,932                   7,697

                                 55,713                  51,440  

    Income before finance
    costs and income taxes        8,287                   9,457

    Finance costs                                                

      Interest expense            4,418                   4,176  

      Interest income              (15)                    (66)  

      Change in fair value
      of conversion options           -                 (1,180)

      Amortization of
      transaction costs             460                     393

                                  4,863                   3,323  

    Income before income
    taxes                         3,424                   6,134

    Income tax expense
    (recovery)                                                 

      Current                     2,768                   1,371  

      Deferred                  (3,831)                     608  

                                (1,063)                   1,979  

    Net income for the
    period                        4,487                   4,155

    Other comprehensive
    (loss) income                                              

      Deferred income tax
      recovery on
      conversion to a
      corporation                   406                       -

      Actuarial losses on
      post-employment
      benefit obligations       (6,604)                 (2,007)

      Taxes post-employment
      adjustment above            1,731                       -

                                (4,467)                 (2,007)  

    Comprehensive income
    for the period                   20                   2,148

    ATTRIBUTABLE TO                                              

    SHAREHOLDERS' or
    UNITHOLDERS'                                               

        Net income                4,546                   4,155  

        Other comprehensive
        loss                    (4,467)                 (2,007)

      Comprehensive income
      for the period                 79                   2,148

    NON-CONTROLLING
    INTERESTS                                                  

        Net loss                   (59)                       -  

        Other comprehensive
        income (loss)                 -                       -

      Comprehensive loss
      for the period               (59)                       -

    Basic income per
    share/unit                     0.19                    0.18

    Diluted income per
    share/unit                     0.19                    0.18            


    CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

                                             Attributable to Shareholders'                                     

    (in thousands
    of Canadian                                                          Total
    dollars,                                Conversion               Shareholders'   Non-controlling      Total
    unaudited)        Shares       Units     options      Deficit       Equity          interest         Equity

                          $           $           $            $              $                $            $

    Balance as at
    December 31,
    2010                    -     215,336            -    (87,234)         128,102                 -    128,102

    Net income for
    the period              -           -            -       4,155           4,155                 -      4,155

    Other
    comprehensive
    loss for the
    period                  -           -            -     (2,007)         (2,007)                 -    (2,007)

    Total
    comprehensive
    income for the
    period                  -           -            -       2,148           2,148                 -      2,148

    Distributions
    declared                -           -            -    (11,460)        (11,460)                 -   (11,460)

    Balance as at
    September 30,
    2011                    -     215,336            -    (96,546)         118,790                 -    118,790

    Balance as at
    December 31,
    2011                    -     215,336            -    (97,973)         117,363               313    117,676

    Effect of
    conversion to a
    corporation       215,336   (215,336)          516           -             516                 -        516

                      215,336           -          516    (97,973)         117,879               313    118,192

    Net income
    (loss) for the
    period                  -           -            -       4,546           4,546              (59)      4,487

    Other
    comprehensive
    loss for the
    period                  -           -            -     (4,467)         (4,467)                 -    (4,467)

    Total
    comprehensive
    income (loss)
    for the period          -           -            -          79              79              (59)         20

    Acquisition of
    non-controlling
    interest                -           -            -         121             121             (121)          -

    Dividends
    declared                -           -            -    (11,459)        (11,459)                 -   (11,459)

    Balance as at
    September 30,
    2012              215,336           -          516   (109,232)         106,620               133    106,753


    CONSOLIDATED STATEMENTS OF CASH FLOWS

    (in thousands of          For the three months     For the three months
    Canadian dollars,         ended September 30,      ended September 30,
    unaudited)                        2012                     2011
                                       $                        $

    Cash provided by
    (used in)                                                 

    Operating activities                                        

    Net income for the
    period                        267                      995

    Adjustments to net
    income                                                    

      Depreciation of
      property, plant and
      equipment                 1,450                    1,348

      Amortization of
      identifiable
      intangible assets         2,310                    2,566

      Pension expense             108                      124  

      Loss on disposal of
      property, plant and
      equipment                    16                        -

      Change in
      provisions                   56                     (29)

      Change in fair
      value of conversion
      options                       -                    (185)

      Amortization of
      transaction costs           154                      131

      Accretion of
      convertible
      debentures                   75                       75

      Other non-current
      liabilities               (124)                     (67)

      Other
      post-employment
      benefit plans                67                       31

      Income tax expense          185                      614  

                                4,564                    5,603  

    Changes in working
    capital                     (322)                      880

    Contributions made to
    pension plans               (746)                    (702)

    Income taxes paid           (663)                        -  

                                2,833                    5,781  

    Investing activities                                        

    Purchase of property,
    plant and equipment         (653)                    (453)

    Proceeds on disposal
    of property, plant
    and equipment                   5                        -

                                (648)                    (453)  

    Financing activities                                        

    Bank overdraft              1,635                        -  

    Dividends or
    distributions paid        (3,820)                  (3,820)

                              (2,185)                  (3,820)  

    Increase in cash and
    cash equivalents
    during the period               -                    1,508

    Cash and cash
    equivalents -
    beginning of period             -                    5,269

    Cash and cash
    equivalents - end of
    period                          -                    6,777             


    CONSOLIDATED STATEMENTS OF CASH FLOWS

    (in thousands of            For the nine months     For the nine months
    Canadian dollars,           ended September 30,     ended September 30,
    unaudited)                         2012                    2011
                                         $                       $

    Cash provided by (used
    in)                                                         

    Operating activities                                          

    Net income for the
    period                         4,487                   4,155

    Adjustments to net
    income                                                      

      Depreciation of
      property, plant and
      equipment                    4,320                   4,182

      Amortization of
      identifiable
      intangible assets            6,932                   7,697

      Pension expense                324                     371  

      Loss on disposal of
      property, plant and
      equipment                       15                      35

      Change in provisions            85                   (156)  

      Change in fair value
      of conversion options            -                 (1,180)

      Amortization of
      transaction costs              460                     393

      Accretion of
      convertible
      debentures                     224                     223

      Other non-current
      liabilities                  (345)                   (198)

      Other post-employment
      benefit plans                  199                     111

      Income tax (recovery)
      expense                    (1,063)                   1,979

                                  15,638                  17,612  

    Changes in working
    capital                          601                 (3,882)

    Contributions made to
    pension plans                (2,291)                 (2,154)

    Income taxes paid            (3,917)                       -  

                                  10,031                  11,576  

    Investing activities                                          

    Purchase of property,
    plant and equipment          (1,612)                 (1,326)

    Purchase of
    identifiable intangible
    assets                         (415)                       -

    Proceeds on disposal of
    property, plant and
    equipment                         12                       -

                                 (2,015)                 (1,326)  

    Financing activities                                          

    Bank overdraft                 2,045                       -  

    Financing costs                (148)                     (9)  

    Repayment of revolving
    bank facility                (2,500)                       -

    Dividends or
    distributions paid          (11,459)                (11,459)

                                (12,062)                (11,468)  

    Decrease in cash and
    cash equivalents during
    the period                   (4,046)                 (1,218)

    Cash and cash
    equivalents - beginning
    of period                      4,046                   7,995

    Cash and cash
    equivalents - end of
    period                             -                   6,777           

 

 

SOURCE DATA Group Inc.


Source: PR Newswire