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Last updated on April 16, 2014 at 12:50 EDT

Data Group Inc. announces full year and fourth quarter results for 2012

March 6, 2013

Highlights

Full Year 2012

        --  Revenues of $336.3 million, Gross Profit of $87.2 million, and
            Net Loss of $37.1 million (DUE TO A NON-CASH GOODWILL
            IMPAIRMENT CHARGE OF $44.0 MILLION)
        --  Full Year Dividends declared of $15.3 million or $0.65 per
            share
        --  Full Year Adjusted EBITDA of $28.7 million (See Table 2 and
            "Non-GAAP Measures" below)

Q4 2012

        --  Revenues of $86.9 million, Gross Profit of $23.2 million, and
            Net Loss of $41.6 million (DUE TO A NON-CASH GOODWILL
            IMPAIRMENT CHARGE OF $44.0 MILLION)
        --  Q4 Dividends declared of $3.8 million or $0.162 per share
        --  Q4 Adjusted EBITDA of $9.1 million (See Table 2 and "Non-GAAP
            Measures" below)

BRAMPTON, ON, March 6, 2013 /CNW/ – DATA Group Inc. (TSX: DGI) (“DATA
Group”) announced its financial and operating results for the fourth
quarter (“Q4″) and the year ended December 31, 2012, which include the
operating results of its subsidiaries DATA Group Ltd., The Fulfillment
Solutions Advantage Inc. (“FSA”) and FSA Datalytics Canada Inc.
(“Datalytics”).

“DATA Group made strong progress on our growth strategy in the fourth
quarter.  Our Q4 2012 Adjusted EBITDA was ahead of the fourth quarter
2011 by 5.1% as we signed significant new client agreements, launched
two important new products and initiated a new program to accelerate
our rate of cost saving reductions in 2013 and beyond.  We incurred a
net loss during the quarter and year to date due to a change in the
valuation of our goodwill in Q4.  This was a non-cash adjustment which
does not impact current or future cash flows and more closely aligns
our book value per share with our current market value per share” said
Michael Suksi, President and Chief Executive Officer.  “During the
fourth quarter, we announced a change in our dividend policy effective
January 1, 2013, which improves the allocation of our available cash
among dividends on our common shares, our debt reduction plans and
investment in our growth initiatives.  Consistent with that
announcement, in a separate press release issued this morning we
confirmed a quarterly dividend of $0.075 per share ($0.30 annualized)
payable on April 15, 2013 to holders of record on March 28, 2013.  As
evidence of the sustainability of our dividend, if we had paid the
$0.075 per share in Q4 of 2012, we would have had a 30.5% payout of
free cash flow. Based on our current business outlook, we expect to
continue with this dividend per share rate for the balance of 2013,
while also continuing to reduce our debt and invest in new revenue
generating activities.  We believe this strategy will position DATA
Group for sustainable profit growth, enterprise value appreciation and
a consistent dividend payout to our shareholders over the longer term.”

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.  DATA Group refers to this set of services as Managed
Business Communications Services. This growth strategy also includes
selectively expanding into the United States with its existing clients
who have U.S. operations and making acquisitions that accelerate our
expansion into new products and services.  DATA Group is also focused
on continuously reducing costs in its traditional business in order to
offset investment in its growth strategy and to improve profitability. 
DATA Group believes this strategy provides it with substantial
opportunities to offset revenue declines in traditional print services
due to technological change, resulting in revenue and profitability
growth 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 fourth quarter and throughout 2012, DATA Group made material
progress on this strategy.  Revenues and gross profit both grew during
the year.  Adjusted EBITDA for the year was down due to our investment
in our growth strategy but increased in the fourth quarter by 5.1%. 
The growth in revenues and gross profit was due to increased new
business wins and the acquisition of FSA and Datalytics late in 2011. 
DATA Group also won a number of new customer agreements that will take
material effect in 2013, in which its bundled Managed Business
Communications Services (“MBCS”) played a key role.  More specifically,
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 management and provision of administrative documents as well
as marketing print and communications services in Canada and the U.S. 
The new agreement took effect in December of 2012 and has required DATA
Group to make modest investments in people and technology throughout
the fourth quarter, including the establishment of operations in Niles,
Illinois.  Two additional significant new agreements, based on the MBCS
approach will begin in the first half of 2013.  Partially offsetting
this, DATA Group experienced some losses of business during the fourth
quarter due to technological change and competitive activity, which
will take effect in 2013.  DATA Group expects the net impact of these
wins and losses will be positive to revenues and Adjusted EBITDA in the
future.

DATA Group launched two new technology-oriented services in the fourth
quarter of 2012.  Marketing Campaign Management, a software-based
service enhances the effectiveness of our client’s marketing
departments by creating collaborative, automated workflows between the
clients’ marketing staff, their agencies and fulfillment of the
campaign by DATA Group.  This results in faster and more effective
marketing campaign planning, creative design, execution and reporting
on results. DATA Group also launched Document Process Management
(“DPM”) services.  Rather than just managing the supply of “blank” (or
uncompleted) documents which the DATA Group currently does, DPM enables
DATA Group to provide services associated with completing and using
documents, such as workflow consulting and process automation, scanning
and archiving of documents and related data extraction.

In the fourth quarter of 2012, DATA Group achieved approximately $2.0
million in cost saving efficiencies.  In 2012, DATA Group generated
approximately $5.3 million in cost savings, which is similar to what we
have achieved in the previous two years.  DATA Group is now initiating
a new program that it believes will increase our rate of cost savings
in the future.

As previously announced, DATA Group made a change to its dividend policy
in November of 2012, which took effect in January of 2013.  Our
annualized dividend is now $0.30 per share and will be paid on a
quarterly basis.  In 2013, we expect to maintain a consistent common
share dividend through a 40%-60% payout of free cash flow.  We believe
this change is a prudent decision that will help us achieve sustainable
growth and value for our investors by enabling us to achieve an
improved balance between our dividend policy, our debt reduction goals
and investment in our growth initiatives.

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


    Consolidated Financial Information

    For the periods ended      Oct. 1 to  Oct. 1 to  Jan. 1 to  Jan. 1 to
    December 31, 2012 and 2011  Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31,
    (in thousands of Canadian     2012       2011       2012       2011
    dollars, except per            $          $          $          $
    share/unit amounts,
    unaudited)

    Revenues                       86,915     89,798    336,315    332,043

    Cost of revenues               63,743     67,285    249,143     248,633

    Gross profit                   23,172     22,513     87,172     83,410

    Selling, general and           15,528     15,474     64,225     58,780
    administrative expenses

    Gain on settlement of           (243)          -      (243)          -
    pension plan

    Impairment of goodwill         44,000          -     44,000          -

    Corporate conversion costs          -        148         84        585

    Acquisition costs                   -        410          -        410

    Amortization of intangible      2,310      2,578      9,242     10,275
    assets

    (Loss) income before         (38,423)      3,903   (30,136)     13,360
    finance costs and income
    taxes

    Finance costs                                                         

      Interest expense              1,464      1,486      5,882      5,662

      Interest income                   -        (8)       (15)       (74)

      Change in fair value of           -        442          -      (738)
      conversion options

      Amortization of                 157        133        617        526
      transaction costs

                                    1,621      2,053      6,484      5,376

    (Loss) income before         (40,044)      1,850   (36,620)      7,984
    income taxes

    Income tax expense
    (recovery)

      Current                       1,452        465      4,220      1,836

      Deferred                        119        157    (3,712)        765

                                    1,571        622        508      2,601

    Net (loss) income for the    (41,615)      1,228   (37,128)      5,383
    period

    Net (loss) income            (41,609)      1,265   (37,072)      5,420
    attributable to
    shareholders/unitholders

    Basic and diluted (loss)       (1.77)       0.05     (1.58)       0.23
    income per share/unit

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

    Consolidated Statements of   As at      As at
    Financial Position          Dec. 31,   Dec. 31,
    Information                   2012       2011
    (in thousands of Canadian      $          $
    dollars, unaudited)

    Current assets                 84,069     93,170                      

    Current liabilities            40,316     44,874                      

    Total assets                  224,629    289,773                      

    Total non-current             122,199    127,223
    liabilities

    Shareholders' equity           61,978          -                      

    Unitholders' equity                 -    117,363                      

    Non-controlling interest          136        313                      

    Total equity                   62,114    117,676                      

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 ended December  Oct. 1 to Oct. 1 to Jan. 1 to Jan. 1 to
    31, 2012 and 2011               Dec. 31,  Dec. 31,  Dec. 31,  Dec. 31,
                                      2012      2011      2012      2011
    (in thousands of Canadian           $         $         $         $
    dollars, unaudited)

    Net (loss) income for the        (41,615)     1,228  (37,128)     5,383
    period

    Interest expense                    1,464     1,486     5,882     5,662

    Interest income                         -       (8)      (15)      (74)

    Change in fair value of                 -       442         -     (738)
    conversion options

    Amortization of transaction           157       133       617       526
    costs

    Depreciation of property, plant     1,407     1,570     5,727     5,752
    and equipment

    Amortization of intangible          2,310     2,578     9,242    10,275
    assets

    Gain on settlement of pension       (243)         -     (243)         -
    plan

    Impairment of goodwill             44,000         -    44,000         -

    Corporate conversion costs              -       148        84       585

    Acquisition costs                       -       410         -       410

    Current income tax expense          1,452       465     4,220     1,836

    Deferred income tax (recovery)        119       157   (3,712)       765
    expense

    Adjusted EBITDA                     9,051     8,609    28,674    30,382

RESULTS OF OPERATIONS

Revenues
For the quarter ended December 31, 2012, DATA Group recorded revenues of
$86.9 million, a decrease of $2.9 million or 3.2% compared with the
same period in 2011.  The net decrease, before intersegment revenues,
was the result of a $3.2 million decrease in the DATA East and West
segment and was offset by a $0.3 million increase in the Multiple
Pakfold segment.  The decrease in revenues in the DATA East and West
segment was due to declines in revenues from existing customers and
partially offset by revenue gains from new business wins.  During the
fourth quarter of 2012, the segment began operations and shipping from
its Niles, Illinois facility servicing a large financial institution. 
The increase in revenues in the Multiple Pakfold segment was
attributable to market share growth as a result of implementing a
targeted accounts program and an improvement in successful quoting
activity.  For the year ended December 31, 2012, DATA Group recorded
revenues of $336.3 million, an increase of $4.3 million or 1.3%
compared with the same period in 2011.  The increase, before
intersegment revenues, was the result of a $4.1 million increase in the
DATA East and West segment and a $0.1 million increase in the Multiple
Pakfold segment.  The increase in revenues in the DATA East and West
segment was due to the inclusion of the results of operations of FSA
and Datalytics for the full year and revenue gains from new business
wins.  The increase in revenues was partially offset by declines in
revenues from commercial printing in Western Canada, revenues from
business documents in Ontario were lower due to several large projects
for major customers in the prior year which did not repeat and declines
in revenues from existing customers due to technological changes.

Cost of Revenues and Gross Profit
For the quarter ended December 31, 2012, cost of revenues decreased to
$63.7 million from $67.3 million for the same period in 2011.  Gross
profit for the quarter ended December 31, 2012 was $23.2 million, which
represented an increase of $0.7 million or 2.9% from $22.5 million for
the same period in 2011.  The increase in gross profit for the quarter
ended December 31, 2012 was attributable to an increase in gross profit
of $0.5 million in the DATA East and West segment and of $0.1 million
in the Multiple Pakfold segment, respectively.  Gross profit as a
percentage of revenues increased to 26.7% for the quarter ended
December 31, 2012 compared to 25.1% for the same period in 2011.  For
the year ended December 31, 2012, cost of revenues increased to
$249.1 million from $248.6 million for the same period in 2011.  Gross
profit for the year ended December 31, 2012 was $87.2 million, which
represented an increase of $3.8 million or 4.5% from $83.4 million for
the same period in 2011.  The increase in gross profit for the year
ended December 31, 2012 was attributable to an increase in gross profit
of $3.7 million in the DATA East and West segment and of $0.1 million
in the Multiple Pakfold segment, respectively.  Gross profit as a
percentage of revenues increased to 25.9% for the year ended December
31, 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. (the “Corporation”) but
excluding amortization of intangible assets, for the quarter ended
December 31, 2012 remained unchanged at $15.5 million compared to the
same period in 2011.  As a percentage of revenues, these costs were
17.9% of revenues for the quarter ended December 31, 2012 compared to
17.2% of revenues for the same period in 2011.  For the quarter ended
December 31, 2011, DATA Group incurred $0.3 million of severance
expenses.  SG&A expenses for the year ended December 31, 2012 increased
$5.4 million to $64.2 million compared to $58.8 million for the same
period of 2011.  The increase in SG&A expenses for the year ended
December 31, 2012 was 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 19.1% of revenues for the year ended
December 31, 2012 compared to 17.7% of revenues for the same period in
2011.  For each of the years ended December 31, 2012 and 2011, DATA
Group incurred $0.7 million and $0.6 million of severance expenses,
respectively.  Those severance costs were included in SG&A and were
related productivity improvements and cost reduction initiatives.

Gain On Settlement of Pension Plan, Corporate Conversion Costs and Other
During the quarter ended December 31, 2012, DATA Group recorded a gain
of $0.2 million on the settlement of a pension plan related to the over
contribution to the benefit settlement upon finalizing the wind-up of a
pension plan.  During the quarter ended December 31, 2011, DATA Group
incurred total professional fees of $0.4 million related to the
acquisitions of FSA and Datalytics and $0.1 million related to the
conversion to a corporation on January 1, 2012, respectively.

During the year ended December 31, 2012, DATA Group incurred total
professional fees of $0.1 million related to the conversion of the Fund
to a corporation on January 1, 2012 and recorded a gain of $0.2 million
on the settlement of a pension plan related to the over contribution to
the benefit settlement upon finalizing the wind-up of a pension plan. 
During the year ended December 31, 2011, DATA Group incurred total
professional fees of $0.4 million related to the acquisitions of FSA
and Datalytics and $0.6 million related to the conversion to the
corporation on January 1, 2012, respectively.

Impairment of Goodwill
During the fourth quarter of 2012, DATA Group performed its annual
review for impairment of goodwill by comparing the fair value of each
of its reporting segments to the segment’s carrying value on DATA
Group’s books.  DATA Group determined the fair value of each cash
generating unit (“CGU”) by discounting expected future cash flows in
accordance with recognized valuation methods.  The process of
determining those fair values required DATA Group to make a number of
estimates and assumptions such as projected future revenues, costs of
revenues, operating margins, market conditions well into the future,
and discount rates.  As a result of that review and market indicators,
including the trading price of DATA Group’s common shares, DATA Group
concluded that, the fair value of its DATA East and West CGU was less
than its carrying value.  Accordingly, DATA Group recognized an
impairment of goodwill charge of $44.0 million related to the DATA East
and West CGU in 2012.

Adjusted EBITDA
For the quarter ended December 31, 2012, Adjusted EBITDA was
$9.1 million, or 10.4% of revenues.  Adjusted EBITDA for the quarter
ended December 31, 2012 increased $0.4 million or 5.1% from the same
period in the prior year and the Adjusted EBITDA margin for the
quarter, as a percentage of revenues, increased from 9.6% of revenues
in 2011 to 10.4% of revenues in 2012.  The increase was attributable to
realized costs savings from the on-going productivity improvement and
cost reduction initiatives and higher profit margins related to
revenues from FSA and new business wins in each of the DATA Group’s
reporting segments.  Adjusted EBITDA for the year ended December 31,
2012 was $28.7 million, or 8.5% of revenues. Adjusted EBITDA for the
year ended December 31, 2012 decreased $1.7 million or 5.6% from the
same period in the prior year and the Adjusted EBITDA margin for the
year ended December 31, 2012, as a percentage of revenues, decreased
from 9.2% of revenues in 2011 to 8.5% of revenues in 2012.  The
decrease was attributable to the cost of DATA Group’s investment in its
growth strategy in 2012.  These costs included SG&A expenses, were
related to investments to launch new products and services.

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 quarters
ended December 31, 2012 and 2011 respectively, and was $5.8 million for
the year ended December 31, 2012 compared to $5.7 million for the same
period in 2011.  The increase in interest expense during the year ended
December 31, 2012 was the result of higher outstanding balances under
DATA Group’s credit facilities and higher rates of interest charged on
those balances during 2012.

Finance costs for the quarter and year ended December 31, 2011 included
a charge of $0.4 million and a recovery $0.7 million, respectively,
related to the change in the fair value of The DATA Group Income Fund’s
(the “Fund”) conversion options.  The conversion options were the
conversion feature in each of the Fund’s outstanding convertible
debentures, which was measured at fair value at each reporting date. 
The Fund’s obligations under those convertible debentures were assumed
by the Corporation in connection with a plan of 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 no longer
re-measured at fair value at each reporting date.

Income Taxes
DATA Group reported a loss before income taxes of $40.0 million, a
current income tax expense of $1.5 million and a deferred income tax
expense of $0. 1 million for the quarter ended December 31, 2012
compared to income before income taxes of $1.9 million, a current
income tax expense of $0.5 million and a deferred income tax expense of
$0.2 million for the quarter ended December 31, 2011.  DATA Group
reported a loss before income taxes of $36.6 million, a current income
tax expense of $4.2 million and a deferred income tax recovery of $3.7
million for the year ended December 31, 2012 compared to income before
income taxes of $8.0 million, a current income tax expense of $1.8
million and a deferred income tax expense of $0.8 million for the year
ended December 31, 2011.  The current tax expense for the quarter and
year ended December 31, 2012 were higher than the same periods in 2011
due to the Fund’s conversion to a corporation, which resulted in higher
taxable income for the quarter and year ended December 31, 2012,
respectively. The deferred income tax expense was due to a change in
estimates of future reversals of temporary differences and new
temporary differences that arose during the quarter ended December 31,
2012.  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 year ended December 31,
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 asset was reversed.  As a result
of these changes, DATA Group recorded a deferred income tax recovery
$1.4 million during the first quarter of 2012.

Net (Loss) Income
Net loss for the quarter ended December 31, 2012 was $41.6 million
compared to a net income of $1.2 million for the quarter ended December
31, 2011.  The decrease in comparable profitability for the quarter
ended December 31, 2012 was substantially due to a goodwill impairment
charge and higher current income tax expense.  The decrease in
profitability was partially offset by higher gross profit in 2012, a
gain on the settlement of a pension plan, lower corporate conversion
costs and acquisition costs that did not re-occur in 2012.

Net loss for the year ended December 31, 2012 was $37.1 million compared
to a net income of $5.4 million for the year ended December 31, 2011. 
The decrease in comparable profitability for the year ended December
31, 2012 was substantially due to a goodwill impairment charge, 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.  The decrease in comparable profitability was
partially offset by higher gross profit, the acquisition of FSA and
Datalytics, a gain on the settlement of a pension plan, acquisition
costs during 2011 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.

INVESTING ACTIVITIES

Capital expenditures for the quarter ended December 31, 2012 of $0.4
million related primarily to maintenance capital expenditures.  For the
year ended December 31, 2012, DATA Group incurred capital expenditures
of $2.0 million related primarily to maintenance capital expenditures
and an investment in intangible assets of $0.4 million related to the
software licences.  These capital expenditures were financed by cash
flow from operations and existing cash resources.

FINANCING ACTIVITIES

At December 31, 2012, DATA Group had a bank overdraft of $1.2 million,
which consisted of outstanding cheques of $2.5 million offset by cash
and cash equivalents of $1.3 million.  During the year ended December
31, 2012, DATA Group repaid $2.5 million of its Revolving Bank Facility
outstanding.  For the quarter and year ended December 31, 2012, DATA
Group paid aggregate cash dividends of $3.8 million and $14.0 million,
respectively, to its shareholders.  For the year ended December 31,
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 managed business communications services company
specializing in customized document management and marketing
solutions.  DATA Group develops, manufactures, markets and supports
integrated web and print-based communications, information management
and direct marketing products and services that help its customers
reduce costs, increase revenues, maintain brand consistency and
simplify their business process.  DATA Group’s expertise and resources
enable it to address any document requirement of its customers, from a
simple mail-out to an enterprise-wide document management or direct
marketing initiative.  We have over 1,800 employees working from 35
locations across Canada and the United Sates 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 December 31,
2012 means EBITDA adjusted for a gain on the settlement of a pension
plan and a goodwill impairment charge.  Adjusted EBITDA for the three
months ended December 31, 2011 means EBITDA adjusted for acquisition
and corporate conversion costs.  Adjusted EBITDA for the year ended
December 31, 2012 means EBITDA adjusted for corporate conversion costs,
a gain on the settlement of a pension plan and a goodwill impairment
charge.  Adjusted EBITDA for the year ended December 31, 2011 means
EBITDA adjusted for acquisition and 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 neither EBITDA nor Adjusted EBITDA should
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        December 31, 2012   December 31, 2011
    dollars, unaudited)                      $                   $

    Assets                                                                

    Current assets                                                        

      Cash and cash equivalents                      -               4,046

      Trade receivables                         41,580              43,647

      Inventories                               38,085              40,786

      Prepaid expenses and other                 4,404               4,691
      current assets

                                                84,069              93,170

    Non-current assets                                                    

      Deferred income tax assets                 1,534                 887

      Property, plant and                       20,420              24,149
      equipment

      Intangible assets                         17,540              26,367

      Goodwill                                 101,066             145,200

                                               224,629             289,773

    Liabilities                                                           

    Current liabilities                                                   

      Bank overdraft                             1,161                   -

      Trade payables                            28,289              32,280

      Provisions                                   308                 349

      Income taxes payable                       1,699               1,933

      Deferred revenue                           7,586               9,039

      Dividends/distributions                    1,273               1,273
      payable

                                                40,316              44,874

    Non-current liabilities                                               

      Provisions                                   867               1,069

      Revolving bank facility                   57,553              60,123

      Convertible debentures                    42,311              42,229

      Deferred income tax                          766               5,686
      liabilities

      Other non-current                          1,137               1,548
      liabilities

      Pension obligations                       16,839              14,043

      Other post-employment                      2,726               2,525
      benefit plans

                                               162,515             172,097

    Equity                                                                

    Shareholders' equity                                                  

      Shares                                   215,336                   -

      Units                                          -             215,336

      Conversion options                           516                   -

      Foreign currency translation                   1                   -
      reserve

      Deficit                                (153,875)            (97,973)

                                                61,978             117,363

    Non-controlling interest                       136                 313

                                                62,114             117,676

                                               224,629             289,773


    CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS)
    INCOME

    (in thousands of Canadian     For the three months For the three months
    dollars, except per            ended December 31,   ended December 31,
    share/unit amounts,                   2012                 2011
    unaudited)

                                                $                    $

    Revenues                                    86,915               89,798

    Cost of revenues                            63,743               67,285

    Gross profit                                23,172               22,513

    Expenses                                                               

      Selling, commissions and                   9,332                9,182
      expenses

      General and administration
      expenses excluding
      amortization of intangible
      assets                                     6,196                6,292

      Gain on settlement of                      (243)                    -
      pension plan

      Impairment of goodwill                    44,000                    -

      Acquisition costs                              -                  410

      Corporate conversion costs                     -                  148

      Amortization of intangible                 2,310                2,578
      assets

                                                61,595               18,610

    (Loss) income before finance              (38,423)                3,903
    costs and income taxes

    Finance costs                                                          

       Interest expense                          1,464                1,486

       Interest income                               -                  (8)

       Change in fair value of                       -                  442
      conversion options

       Amortization of                             157                  133
      transaction costs

                                                 1,621                2,053

    (Loss) income before income               (40,044)                1,850
    taxes

    Income tax expense (recovery)                                          

       Current                                   1,452                  465

       Deferred                                    119                  157

                                                 1,571                  622

    Net (loss) income for the                 (41,615)                1,228
    period

    Other comprehensive income                                             

      Actuarial gains on                         1,076                2,039
      post-employment benefit
      obligations

      Taxes related to                           (282)                (913)
      post-employment adjustment
      above

      Foreign currency                               1                    -
      translation

                                                   795                1,126

    Comprehensive (loss) income               (40,820)                2,354
    for the period

    ATTRIBUTABLE TO                                                        

    SHAREHOLDERS' or UNITHOLDERS'                                          

        Net (loss) income                     (41,609)                1,265

        Other comprehensive                        795                1,126
        income (loss)

      Comprehensive income (loss)             (40,814)                2,391
      for the period

    NON-CONTROLLING INTEREST                                               

        Net loss                                   (6)                 (37)

        Other comprehensive                          -                    -
        income (loss)

      Comprehensive loss for the                   (6)                 (37)
      period

    Basic (loss) income per                     (1.77)                 0.05
    share/unit

    Diluted (loss) income per                   (1.77)                 0.05
    share/unit


    CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS)
    INCOME

    (in thousands of Canadian         For the year ended For the year ended
    dollars, except per share/unit    December 31, 2012  December 31, 2011
    amounts, unaudited)

                                                  $                  $

    Revenues                                     336,315            332,043

    Cost of revenues                             249,143            248,633

    Gross profit                                  87,172             83,410

    Expenses                                                               

      Selling, commissions and                    37,317             34,861
      expenses

      General and administration
      expenses excluding amortization
           of intangible assets                   26,908             23,919

      Gain on settlement of pension                (243)                  -
      plan

      Impairment of goodwill                      44,000                  -

      Corporate conversion costs                      84                585

      Acquisition costs                                -                410

      Amortization of intangible                   9,242             10,275
      assets

                                                 117,308             70,050

    (Loss) income before finance                (30,136)             13,360
    costs and income taxes

    Finance costs                                                          

      Interest expense                             5,882              5,662

      Interest income                               (15)               (74)

      Change in fair value of                          -              (738)
      conversion options

      Amortization of transaction                    617                526
      costs

                                                   6,484              5,376

    (Loss) income before income taxes           (36,620)              7,984

    Income tax expense (recovery)                                          

      Current                                      4,220              1,836

      Deferred                                   (3,712)                765

                                                     508              2,601

    Net (loss) income for the year              (37,128)              5,383

    Other comprehensive (loss) income                                      

      Deferred income tax recovery on                406                  -
      conversion to a corporation

      Actuarial losses on                        (5,528)            (1,597)
      post-employment benefit
      obligations

      Taxes related to                             1,449                716
      post-employment adjustment
      above

      Foreign currency translation                     1                  -

                                                 (3,672)              (881)

    Comprehensive (loss) income for             (40,800)              4,502
    the year

    ATTRIBUTABLE TO                                                        

    SHAREHOLDERS' or UNITHOLDERS'                                          

        Net (loss) income                       (37,072)              5,420

        Other comprehensive loss                 (3,672)              (881)

      Comprehensive (loss) income for           (40,744)              4,539
      the year

    NON-CONTROLLING INTERESTS                                              

        Net loss                                    (56)               (37)

        Other comprehensive income                     -                  -
        (loss)

      Comprehensive loss for the year               (56)               (37)

    Basic (loss) income per                       (1.58)               0.23
    share/unit

    Diluted (loss) income per                     (1.58)               0.23
    share/unit


    CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

                                              Attributable to Shareholders'                              

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

                        $         $         $           $          $            $           $         $

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

    Net income            -         -          -           -     5,420         5,420        (37)    5,383
    (loss) for the
    year

    Other                 -         -          -           -     (881)         (881)           -    (881)
    comprehensive
    loss for the
    year

    Total                 -         -          -           -     4,539         4,539        (37)    4,502
    comprehensive
    income (loss)
    for the year

    Acquisition of        -         -          -           -         -             -         350      350
    business

    Distributions         -         -          -           -  (15,278)      (15,278)           - (15,278)
    declared

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

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

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

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

    Net loss for          -         -          -           -  (37,072)      (37,072)        (56) (37,128)
    the year

    Other                 -         -          -           1   (3,673)       (3,672)           -  (3,672)
    comprehensive
    (loss) income
    for the year

    Total                 -         -          -           1  (40,745)      (40,744)        (56) (40,800)
    comprehensive
    (loss) income
    for the year

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

    Dividends             -         -          -           -  (15,278)      (15,278)           - (15,278)
    declared

    Balance as at   215,336         -        516           1 (153,875)        61,978         136   62,114
    December 31,
    2012


    CONSOLIDATED STATEMENTS OF CASH FLOWS

    (in thousands of Canadian           For the three       For the three
    dollars, unaudited)                 months ended        months ended
                                      December 31, 2012   December 31, 2011

                                                  $                   $

    Cash provided by (used in)                                             

    Operating activities                                                   

    Net (loss) income for the                  (41,615)               1,228
    period

    Adjustments to net (loss)
    income

      Depreciation of property,                   1,407               1,570
      plant and equipment

      Amortization of intangible                  2,310               2,578
      assets

      Pension expense and gain on                 (159)                  42
      settlement of pension plan

      Gain on disposal of property,                 (9)                (31)
      plant and equipment

      Change in provisions                        (191)               (188)

      Impairment of goodwill                     44,000                   -

      Change in fair value of                         -                 442
      conversion options

      Amortization of transaction                   157                 133
      costs

      Accretion of convertible                       75                  75
      debentures

      Other non-current liabilities               (215)                (27)

      Other post-employment benefit               (136)               (113)
      plans, net

      Income tax expense                          1,571                 622

                                                  7,195               6,331

    Changes in working capital                    (843)               3,141

    Contributions made to pension                 (468)               (897)
    plans, net

    Income taxes paid                             (537)                (13)

                                                  5,347               8,562

    Investing activities                                                   

    Purchase of property, plant and               (416)               (841)
    equipment

    Proceeds on disposal of                          12                  53
    property, plant and equipment

    Acquisition of businesses, net                    -            (12,181)
    of cash acquired of $58

                                                  (404)            (12,969)

    Financing activities                                                   

    Proceeds from revolving bank                      -               5,500
    facility

    Finance costs                                 (240)                 (5)

    Dividends or distributions paid             (3,819)             (3,819)

                                                (4,059)               1,676

    Increase (decrease) in (bank
    overdraft) cash and cash                        884             (2,731)
    equivalents during the period

    (Bank overdraft) cash and cash              (2,045)               6,777
    equivalents - beginning of
    period

    (Bank overdraft) cash and cash              (1,161)               4,046
    equivalents - end of period


    CONSOLIDATED STATEMENTS OF CASH FLOWS

    (in thousands of Canadian       For the year ended   For the year ended
    dollars, unaudited)              December 31, 2012    December 31, 2011

                                                $                    $

    Cash provided by (used in)                                             

    Operating activities                                                   

    Net (loss) income for the                 (37,128)                5,383
    year

    Adjustments to net (loss)
    income

      Depreciation of property,                  5,727                5,752
      plant and equipment

      Amortization of intangible                 9,242               10,275
      assets

      Pension expense and gain on                  165                  413
      settlement of pension plan

      Loss on disposal of                            6                    4
      property, plant and
      equipment

      Impairment of goodwill                    44,000                    -

      Change in provisions                       (243)                (561)

      Change in fair value of                        -                (738)
      conversion options

      Amortization of transaction                  617                  526
      costs

      Accretion of convertible                     299                  298
      debentures

      Other non-current                          (411)                 (87)
      liabilities

      Other post-employment                         63                  (2)
      benefit plans, net

      Income tax expense                           508                2,601

                                                22,845               23,864

    Changes in working capital                   (254)                (662)

    Contributions made to pension              (2,759)              (3,051)
    plans, net

    Income taxes paid                          (4,454)                 (13)

                                                15,378               20,138

    Investing activities                                                   

    Purchase of property, plant                (2,028)              (2,167)
    and equipment

    Purchase of intangible assets                (415)                    -

    Proceeds on disposal of                         24                   53
    property, plant and equipment

    Acquisition of businesses,                       -             (12,181)
    net of cash acquired of $58

                                               (2,419)             (14,295)

    Financing activities                                                   

    (Repayment of) proceeds from               (2,500)                5,500
    revolving bank facility

    Financing costs                              (388)                 (14)

    Dividends or distributions                (15,278)             (15,278)
    paid

                                              (18,166)              (9,792)

    Decrease in cash and cash                  (5,207)              (3,949)
    equivalents during the year

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

    (Bank overdraft) cash and                  (1,161)                4,046
    cash equivalents - end of
    year

 

 

 

SOURCE DATA Group Inc.


Source: PR Newswire