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Press release from CNW Group


Monday, March 21, 2011

IBI ANNOUNCES 2010 ANNUAL EARNINGS - FOUR SUCCESSIVE QUARTERS OF IMPROVED PERFORMANCE:18:25 EDT Monday, March 21, 2011Revenue at $290.4 million;EBITDA at $42.7 million; Distributable Cash of $28.4 million; andDistributable Cash per unit of $1.5906.TORONTO, March 21 /CNW/ - IBI Group Inc. (the "Company") (TSX: IBG) today announced the annual results of IBI Income Fund (its predecessor) for the year ended December 31, 2010. IBI Income Fund and the Company completed IBI Income Fund's conversion from an income trust to a corporate structure on January 1, 2011.2010 was a year of strong improved performance in most parameters for IBI Group, despite the challenging market environment.  EBITDA and EBITDA as a percentage of Revenue improved each quarter throughout the year. The highlights are:Revenue at $290.4 million for the year ended December 31, 2010 was up $16.7 million compared with $273.7 million for the year ended December 31, 2009. Revenue for the fourth quarter of 2010 at $75.8 million, was up $7.6 million compared with the fourth quarter of 2009, up $7.7 million compared with the first quarter of 2010, up $6.0 million compared with the second quarter of 2010 and down $1.0 million compared the third quarter of 2010;EBITDA1 of $42.7 million for the year ended December 31, 2010 was up $1.0 million compared with $41.7 million for the year ended December 31, 2009.  EBITDA1 for the fourth quarter of 2010 of $12.2 million was up $3.5 million compared with the fourth quarter of 2009, up $3.2 million compared with the first quarter of 2010, up $2.1 million compared with the second quarter of 2010 and $0.8 million above the third quarter of 2010;EBITDA1 as a percentage of revenue for the year ended December 31, 2010 decreased to 14.7% from 15.2% for the year ended December 31, 2009.  On a quarterly basis, EBITDA1 as a percentage of revenue increased for the fourth consecutive quarter, to 16.1%, up from 12.7% in the fourth quarter of 2009, 13.3% from the first quarter of 2010, 14.5% in the second quarter and 14.8% in the third quarter;Distributable cash for the year ended December 31, 2010 of $28.4 million was down compared with distributable cash for the year ended December 31, 2009 of $30.3 million.  Distributable cash1 for the fourth quarter of 2010 of $7.3 million was up $2.7 million compared with the fourth quarter of 2009, up $1.0 million compared with the first quarter of 2010 down slightly compared with the second quarter of 2010 and $0.2 million below the third quarter of 2010; andThe combined amount of working capital tied up in accounts receivable, work in process and deferred revenue rose throughout the period of the recession increasing from the equivalent of 180 working days in the fourth quarter of 2009 up to 195 days in second quarter of 2010.  Significant progress has been made in reducing this working capital tied up with the reduction down to 178 days in third quarter of 2010 and now to 175 days as at December 31, 2010.The basis of this performance is discussed in paragraphs below.RevenueIBI Group achieved a fee volume of $290.4 million, an increase of $16.7 million (6.1%) over 2009.  Revenue from strategic growth through acquisitions/mergers was approximately $36.2 million of the increase for the year ended December 31, 2010, offset by a $7.7 million decline of organic revenue. Results were further impacted by the strengthening Canadian dollar in 2010 to the extent of an $11.8 million reduction in revenue.  The average exchange rate in 2010 for the Canadian dollar relative to the US dollar was US$0.96 compared with US$0.87 during 2009. Without the impact of the strengthening Canadian dollar, revenue for 2010 would have been $11.8 million higher at $302.2 million.Professional work for the Public sector, (Government Agencies and Public Institutions as direct or ultimate owners of projects) continued to constitute the majority of IBI Group's work and in this quarter again exceeded 67% of the $75.8 million of revenue.Commitment of new work for IBI Group continued to increase during the fourth quarter, replacing the $75.8 million of work completed during the quarter and adding additional work for the future.  Backlog for 2011 now continues to be in excess of nine months at the level of work that IBI Group has achieved for the second half of 2010. This backlog is based on a very wide range of substantial projects.Strategic Program of GrowthAt the end of the fourth quarter of 2010, IBI Group completed the acquisition and merger of CSM Engineering Ltd. ("CSM"), based in Fort McMurray, Alberta.  CSM has been leading the civil engineering practice in the development of land and infrastructure in Fort McMurray, for over a decade. The acquisition will allow IBI Group and CSM to jointly continue the practice of civil engineering for land development and infrastructure in Fort McMurray and Northern Alberta.  IBI Group believes that the professional engineering team of CSM integrated within the IBI Group will constitute an experienced and broadly based professional team to serve the continuing community and infrastructure needs in Fort McMurray, arising from the continuing developments of the oil sands. CSM and IBI Group have collaborated on projects previously, and are doing work in joint venture currently for mutual clients. This merging of the CSM professional engineering practise within IBI Group will facilitate a more comprehensive and effective service to clients. The merger with IBI Group will enable CSM to broaden and strengthen the talent and experience of CSM to undertake larger scale projects with more comprehensive services. It also opens broader horizons for the growth of the CSM professional team over the longer term within the IBI Group of Firms.During the second quarter of 2010, IBI Group completed the acquisition of Nightingale Architects Ltd ("Nightingale"). Nightingale is a leading architectural practice, specialising in facilities for health care and for education and science. The practice has been in existence for over twenty years and has grown steadily to its current complement of 230 members operating in six offices in the UK, as well as an office in South Africa.  Nightingale is a practice leader in social infrastructure in the UK, actively engaged in major building projects in that base of operation and other projects internationally including Eastern Europe, the Gulf, Australia and South Africa.  The firm is an architect of choice of public agencies, as well as private development proponents/construction contractors for the delivery of health care facilities through private finance initiatives, public private partnerships and design build.  These major private companies, operating in the UK, are also similarly engaged in other world markets affording Nightingale the opportunity to provide architectural services for these clients for projects elsewhere.  The integration of the executive team of Nightingale is a strategic advancement in relation to three basic objectives of IBI Group: building the world platform of IBI Group, becoming a leader in world scale projects in health care and other areas of social infrastructure, and strengthening the business of IBI Group.  In fact, as we approach the end of the fifth month of working together, joint efforts and business development initiatives targeting professional work opportunities are under way.During the first quarter of 2010, IBI Group completed the acquisition of MAAK Technologies Inc. ("MAAK").  This firm's expertise in water engineering and systems applications extends IBI Group's work in systems technology to the important area of water resources.  It also broadens the IBI Group practice geographically with further strengthening in the Caribbean.Subsequent to the year end, the merger of the practice of Cardinal Hardy Architectes, ("CHA") with Beinhaker Architecte within the IBI Group of firms was concluded, in parallel, with the merger of the Company Groupe Cardinal Hardy Inc. ("GCHI")  directly within IBI Group. CHA is a full services architectural practice known for its outstanding design and technical work ranging from institutional projects in transportation, social infrastructure including building facilities in education and health, private development projects by leading developers in the Greater Montreal Region. The firm is also expert with an outstanding portfolio of work in urban design and landscape architecture.Also subsequent to the year end in March 2011, IBI Group concluded arrangements for the merger / acquisition of Bay Architects Inc, ("Bay") in Southeast Texas, based in Houston.  Bay is an architectural firm that specializes in educational facilities, (schools and community colleges), along with other areas of architectural practice in civic, other institutional, retail, office and industrial facilities. Bay will be a further strategic component of the growing international practice of the IBI Group in education.  Bay will also provide the strategic platform for IBI Group for growth in the large and prosperous State of Texas.IBI Group continues to be committed to growth in the USA.   Discussions are under way with a number of USA based firms in connection with potential acquisitions. These acquisitions could add further skills and strengthen IBI Group's presence in major centres of population in the six urban regions of the USA. IBI Group expects additional acquisitions to be concluded during 2011. As IBI Group has noted previously, the potential acquisitions are currently profitable. However, the firms being acquired may not be achieving the levels of profitability, under the current economic circumstances in the USA, that they have achieved in the past or levels that are equivalent to the performance of IBI Group. IBI Group continues to believe this is a sound investment program which will realize substantial results within the next few years, within an improved economic environment, strengthened by the synergy and global reach within IBI Group. In fact, IBI Group is currently experiencing an increase in demand for its services in the USA market.IBI Group is also engaged in discussions with other firms for strategic relationships and acquisitions in international markets where IBI Group is currently active including; China, India and Eastern Europe.Other Professional Progress Other progress in the professional work of IBI Group in 2010 included:Continuing work on a suite of tolling and traffic management projects in Greece which have withstood the financial challenges with respect to the relatively large debt of that country;Continued further work in the growing health care practice of IBI Group; which has very significantly increased opportunities arising from the Nightingale merger.  IBI Group and Nightingale are now engaged in healthcare projects in Canada, the UK, Eastern Europe, Australia, and on existing work with increased business development opportunities in these jurisdictions along with others including China and India.  Work continues on the McGill University Health Centre and Women's College Hospital in Toronto (both confirmed in 2010);Further increase in the private sector assignments for building design, particularly in the residential sector across Canada;Continued growth of the IBI practice in China;Further progress in the development of the practice in India with various new private sector assignments;Further strengthening of activity in the Saudi Arabia Kingdom and Emirates;The opening of IBI offices in Eastern Europe; andThe establishment of the IBI presence in Texas.The scope of these efforts is validation of IBI Group's integrated operating model of providing comprehensive professional services to clients in Canada, the USA and abroad.Investor Conference CallThe Company will hold a conference call on Tuesday, March 22, 2011 at 8:30 a.m. Eastern Standard Time (EST).  To participate in the conference call, please dial in before 8:30 a.m. EST to 800-676-3536 for local and toll-free North American access, or 1 416-981-9074 for international access.An audio replay of the call will be available for 14 days, by dialing 416-626-4100 for local and international access or 1 800-558-5253 for toll-free North American access, pass code 21513151 followed by the number sign on your telephone keypad.Selected Consolidated Financial Information and Reconciliation of Non-GAAP Measures Three monthsendedDecember 31,2010Three monthsendedDecember 31,2009Year endedDecember 31,2010Year endedDecember 31,2009in thousands of dollars except for per Unit amountsUnauditedUnaudited  Revenue$   75,763$   68,194$  290,398$  273,673Expenses         63,594        59,501       247,745     231,982Earnings before income taxes, interest and amortization (EBITDA)12,1698,693      42,653      41,691Interest          2,995          2,605          10,488          7,139Income taxes(1,159)621,2083,412Amortisation of property and equipment and intangible assets          2,623          3,001          11,125         12,669Impairment of goodwill and intangibles-3,039-3,039Purchase price adjustment-2,346-2,346Net earnings before non-controlling interest    $    7,710  $   (2,360)  $    19,832  $    13,086Basic and diluted net earnings per Unit     $  0.4299   $ (0.1329)  $    1.1098   $    0.7568Distributable Cash    Cash flow used in operating activities$    9,060$   (6,070)$    13,812$   (6,606)Less: Capital expenditures         (431)         (526)  (2,271)  (1,804)Standardized Distributable Cash$    8,629$   (6,596)$    11,541$   (8,410)Add (deduct):     Change in non-cash operating working capital      (211)        12,938    14,659    37,141 Current income tax expense(377)(780)3,2714,017 Income taxes paid         (744)            (986)        (1,040)        (2,495)Distributable Cash   $    7,297$    4,576$    28,431$    30,253Weighted average basic and diluted Distributable Cash per Unit (1)    $  0.4068   $  0.2576  $    1.5906   $    1.7726Aggregate distributions declared    $    7,172$    7,105  $    28,595$    27,558Basic and diluted aggregate distributions declared per Unit (1)   $  0.3999   $  0.3999  $    1.5997   $    1.5997(1)     Distributable Cash per Unit amounts are calculated by including both the Class A partnership units and the Class B partnership units in the denominator.Definition of EBITDA, Distributable Cash and Non-GAAP Measures Distributable Cash does not have a standardized meaning prescribed by GAAP, but is a measure generally used by Canadian open-ended income funds as an indicator of financial performance. The Company defines Distributable Cash as cash flow from operating activities before change in non-cash working capital and income taxes and after capital expenditures and income taxes paid.  A reconciliation of Distributable Cash to cash flow from operating activities has been provided under the heading "Selected Consolidated Financial Information and Reconciliation of Non-GAAP Measures".The Company's method of calculating distributable cash may differ from similar computations as reported by other similar entities and, accordingly, may not be comparable to distributable cash as reported by such entities. The Company believes that its distributable cash is a useful supplemental measure that may assist prospective investors in assessing the return on their investment in Units. The distributable cash balance for 2009 does not include a reclassification adjustment that was made for a purchase price adjustment.References to "EBITDA" are to earnings before interest, income taxes, depreciation and amortization. Management of the Company believes that in addition to net earnings, EBITDA is a useful supplemental measure as it provides readers with an indication of cash available for distribution prior to debt service, capital expenditures and income taxes. Readers should be cautioned, however, that EBITDA should not be construed as an alternative to net earnings determined in accordance with GAAP as an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. EBITDA is not a recognized measure under GAAP and does not have a standardized meaning prescribed by GAAP, and the Company's method of calculating EBITDA may differ from other issuers. Accordingly, EBITDA may not be comparable to similar measures used by other issuers. A reconciliation of net earnings with EBITDA has been provided under the heading "Selected Consolidated Financial Information and Reconciliation of Non-GAAP Measures"Discussion in this press release of net earnings before non-controlling interest, EBITDA and distributable cash include the impact of foreign exchange gain (loss) as the Company believes this provides useful information for readers to assess the performance of the Company.(1)     See "Definition of EBITDA, Distributable Cash and Non-GAAP Measures"     For further information: Philip H. Beinhaker IBI Group Inc. 230 Richmond Street West, 5th Floor Toronto, ON M5V 1V6 Tel: 416-596-1930