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