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Press release from CNW Group

ADF GROUP INC. maintains its profitability and further improves its financial position

Wednesday, September 07, 2011

ADF GROUP INC. maintains its profitability and further improves its financial position07:00 EDT Wednesday, September 07, 2011FINANCIAL HIGHLIGHTS FOR THE SECOND QUARTER ENDED JULY 31, 2011All results are disclosed in accordance with the new International Financial Reporting Standards ("IFRS").Revenues amounted to $13.1 million, posting a slight increase over the same quarter of the 2011 fiscal year.ADF Group closed the quarter with net earnings comparable to those for the second quarter of the 2011 fiscal year, being $0.8 million or $0.02 per share (basic and diluted).The Corporation declares the payment of a second semi-annual dividend for the 2012 fiscal year.TERREBONNE, QC, Sept. 7, 2011 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) closed the second quarter of the 2012 fiscal year with revenues of $13.1 million, posting a slight increase over the same quarter of the 2011 fiscal year, despite an appreciation of approximately 7% in the Canadian dollar against the U.S. dollar between the two reporting periods. For the six-month period ended July 31, 2011, ADF Group recorded year-to-date revenues of $26.3 million, compared with $26.6 million the previous year.The second-quarter gross profit margin as a percentage of revenues was 24%, being the same level as in the corresponding quarter of the previous year, whereas the gross margin for the six-month period ended July 31, 2011 also stood at 24% compared with 26% a year earlier.ADF posted second-quarter net earnings of $0.8 million or $0.02 per share (basic and diluted), which compares to those for the second-quarter of the previous year. For the first six month period, net earnings amounted to $1.9 million or $0.06 per share (basic and diluted), compared with $2.8 million or $0.08 per share (basic and diluted) for the first half of the previous year. Besides the negative impact of currency fluctuations and a different revenue mix, this decline is attributable to the non-recurrence of certain favourable items recognized last year, the realization of lower exchange gains than the previous year and a higher tax rate.The Corporation's operating activities provided cash flows of $4.2 million in the second quarter and $9.3 million for the first six months ended July 31, 2011. As at July 31, 2011, the Corporation had working capital of $42.2 million, including short-term available liquidities (cash, cash equivalents and short-term investments) of $27.8 million. Therefore, available liquidities exceeded ADF Group's total debt by $20.7 million, placing the Corporation in a solid position to support its ongoing operations, pursue its development projects and remunerate its shareholders in accordance with the dividend payment policy implemented at the beginning of fiscal 2012.DividendThe Corporation announces today the payment of a second semi-annual dividend of $0.01 per subordinate and multiple voting shares, which will be paid on October 17, 2011 to shareholders of record as at September 22, 2011.OutlookAs at July 31, 2011, ADF Group's order backlog stood at $53 million, the execution schedule of which should extend until the end of the second quarter of the Corporation's 2013 fiscal year.Jean Paschini, Chairman of the Board and Chief Executive Officer indicated that "although current economic conditions are still a concern in the United States, the major mandates on which we are presently working as part of the restoration of the World Trade Center, in New York City, will provide a stream of profits for ADF Group over the next quarters".In the near term, in order to replenish its order backlog, the Corporation will be mostly focusing its development efforts on the Canadian market where the economic outlook is more favourable. The joint venture to set up a fabrication plant in Manitoba is proceeding as planned and the Corporation is confident that this facility will be operational in 2012. The Corporation also remains on the lookout for business opportunities in the public and industrial infrastructures segments in Eastern Canada, including in Quebec.About ADF Group Inc.ADF Group Inc. is a North American leader in the design and engineering of connections, fabrication and installation of complex steel structures, heavy steel built-ups, as well as miscellaneous and architectural metals for the non-residential construction industry. ADF is one of the few players in the industry capable of handling highly technically complex mega projects on fast-track schedules in the commercial, institutional, industrial and public sectors.Forward-Looking InformationThis press release contains forward-looking statements reflecting ADF objectives and expectations. These statements are identified by the use of verbs such as "expect" as well as by the use of future or conditional tenses. By their very nature these types of statements involve risks and uncertainty. Consequently, reality may differ from ADF's expectations.Transition to International Financial Reporting Standards (IFRS)All financial information, including comparative figures pertaining to ADF Group's 2011 results, has been prepared in accordance with IFRS. In previous periods, the Corporation prepared its consolidated financial statements and interim financial statements in accordance with Canadian generally accepted accounting principles ("Previous GAAP"), in effect prior to February 1, 2011. Comparative figures presented pertaining to ADF's results have been restated to be in accordance with IFRS. A reconciliation of net income, gross margin and EBITDA reported under the previous GAAP and the IFRS is provided in the table below:   2011 Fiscal YearAnnualQ4Q3Q2Q112 monthsended2011.01.313 monthsended2011.01.313 monthsended2010.10.313 monthsended2010.07.313 monthsended2010.04.30(In thousands of CA$)$$$$$Net Income      Previous GAAP3,7431,0376308781,198  Impact of IFRS standards, after income taxes       -Exchange differences on translation of foreign operations1,623639308(70)746  -Share-based compensation514(28)3144  -Amortization of property, plant and equipment and intangible assets(26)(6)(7)(6)(7) 1,648637273(45)783 IFRS5,3911,6749038331,981Gross Margin      Previous GAAP17,0725,1463,4953,8504,581  Impact of IFRS standards :       -Reclassification of amortization of property, plant and equipment and intangible assets(2,936)(735)(739)(782)(680) IFRS14,1364,4112,7563,0683,901Gross Margin (as a % of revenues)      Previous GAAP31%34%26%30%34% IFRS26%29%20%24%29%EBITDA1      Previous GAAP10,8713,1222,0692,5253,155  Impact of IFRS standards :       -Share-based compensation514(28)3144 IFRS10,9223,1262,0412,5563,199Non-IFRS MeasuresEBITDA is not a performance measure recognized by IFRS standards, and is not likely to be comparable to similar measures presented by other issuers. Management, as well as investors, consider this to be useful information to assist them in assessing the Corporation's profitability and ability to generate funds to finance its operations.All amounts are in Canadian dollars, unless otherwise indicated.CONFERENCE CALL WITH INVESTORS TO DISCUSS ADF GROUP'S RESULTSFOR THE SECOND QUARTER ENDED JULY 31, 2011 September 7, 2011 at 10:00 a.m. (Montreal Time) To participate in the conference call, please dial 1-877-974-0445 a few minutes before the start of the call.For those unable to participate, a taped rebroadcast will be available from September 7, 2011 at 1:00 p.m.until midnight September 14, 2011, by dialing 1-877-289-8525; access code4466244#. The conference call (audio) will also be available at www.adfgroup.comMembers of the media are invited to listen in. CONSOLIDATED STATEMENTS OF INCOME(Unaudited)   3 Months6 Months     Periods Ended July 31,  2011201020112010(In thousands of CA$, except for per-share amounts)  $$$$Revenues13,11812,96726,34726,608Cost of goods sold9,9959,89920,11819,639Gross margin3,1233,0686,2296,969Selling and administrative expenses1,4471,4203,3392,898Financial revenues(113)(160)(208)(182)Finance charges59124119196Foreign exchange loss (gain)17172(738)(995) 1,4101,5562,5121,917Income before income tax expense1,7131,5123,7175,052Income tax expense9396791,8622,238Net income for the period7748331,8552,814Earnings per share     Basic and diluted per share0. number of outstanding shares (in thousands)32,78734,33532,78134,413Average number of outstanding diluted shares (in thousands)33,37634,98433,36535,165CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  (Unaudited)   3 Months6 Months       Periods Ended July 31,  2011201020112010(In thousands of CA$)  $$$$Net income for the period7748331,8552,814Other comprehensive income     Exchange differences on translation of foreign operations22976(1,266)(673)Comprehensive income for the period1,0039095892,141 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY(Unaudited)      Capital stockContributed surplus Accumulated other comprehensive incomeRetained incomeTotal(In thousands of CA$)$$$$$Balance, February 1, 201075,4363,65914413,34892,587Net income for the period———2,8142,814Other comprehensive income for the period——(673)—(673)Comprehensive income for the period——(673)2,8142,141Share-base compensation—113——113Options exercised257(93)——164Subordinate voting share redemption(4,224)1,438——(2,786)Balance, July 31, 201071,4695,117(529)16,16292,219       Capital stockContributed surplus Accumulated other comprehensive incomeRetained incomeTotal(In thousands of CA$)$$$$$Balance, February 1, 201170,0325,740(1,477)18,73993,034Net income for the period———1,8551,855Other comprehensive income for the period——(1,266)—(1,266)Comprehensive income for the period——(1,266)1,855589Share-base compensation—71——71Options exercised20(7)——13Dividends———(328)(328)Balance, July 31, 201170,0525,804(2,743)20,26693,379CONSOLIDATED STATEMENTS OF FINANCIAL POSITION(Unaudited)   AS AT July 31, 2011January 31, 2011(In thousands of CA$)$$ASSETS  Current assets   Cash and cash equivalents22,20318,677 Short-term investments5,5802,787 Accounts receivable14,05322,215 Holdbacks on contracts4,562167 Work in progress1,436403 Inventories3,7783,865 Prepaid expenses and other current assets1,298985 Derivative financial instruments201741 Total current assets53,11149,840Non-current assets   Holdbacks on contracts—3,562 Property, plant and equipment45,93546,871 Intangible assets2,5862,601 Other non-current assets2,8502,852 Deferred income tax assets4,7716,960Total assets109,253112,686LIABILITIES  Current liabilities   Accounts payable and other current liabilities6,1385,365 Income tax liabilities194159 Deferred revenues2,0224,994 Derivative financial instruments13645 Current portion of long-term debt2,4002,513 Total current liabilities10,89013,076Non-current liabilities   Long-term debt4,6826,151 Deferred income tax liabilities302425Total liabilities15,87419,652SHAREHOLDERS' EQUITY   Retained income20,26618,739 Accumulated other comprehensive income(2,743)(1,477) 17,52317,262 Capital stock70,05270,032 Contributed surplus5,8045,740 Total shareholders' equity93,37993,034Total liabilities and shareholders' equity109,253112,686   CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) 3 Months6 Months       Periods Ended July 31,  2011201020112010(In thousands of CA$)  $$$$OPERATING ACTIVITIES     Net income7748331,8552,814 Non-cash items:      Amortization of property, plant and equipment7628271,5541,519  Amortization of intangible assets8981178165  Gain on disposal of property, plant and equipment―――(52)  Unrealized gain on derivative financial instruments857701631322  Non-cash exchange (gain) loss(41)117(230)(343)  Share-based compensation125771113  Income tax expense9396791,8622,238  Financial revenues(113)(160)(208)(182)  Finance charges59124119196 Net income adjusted for non-cash items3,3383,2595,8326,790 Changes in non-cash working capital items670(3,474)3,631(6,575) Income tax expense received (paid)194―(174)(191)Cash flows from (used in) operating activities4,202(215)9,28924INVESTING ACTIVITIES     (Acquisition) disposal of short-term investments(23)4,065(2,928)3,934 Acquisition of property, plant and equipment(609)(504)(638)(2,153) Acquisition of intangible assets(75)(80)(163)(200) Reduction in other non-current assets―114 Interest received13364210158Cash flows from (used in) investing activities(574)3,546(3,518)1,743FINANCING ACTIVITIES     Issuance of long-term debt―――4,370 Repayment of long-term debt(619)(656)(1,219)(1,067) Issuance of subordinate voting shares13213164 Redemption of subordinate voting shares―(2,636)―(2,786) Dividends paid(328)―(328)― Interest paid on the interest rate swap(8)―(17)― Interest paid(49)(60)(102)(121)Cash flows from (used in) financing activities(991)(3,350)(1,653)560Impact of fluctuations in foreign exchange rate on cash17277(592)(137)Net increase in cash and cash equivalents2,809583,5262,190Cash and cash equivalents, beginning of period19,3947,90218,6775,770Cash and cash equivalents, end of period22,2037,96022,2037,960     The following table sets out in detail the components of the "Changes in non-cash working capital items": 3 Months6 Months       Periods ended July 31,  2011201020112010(In thousands of CA$)  $$$$ Accounts receivable  8,102(6,047)7,353(11,098) Holdbacks on contracts  (1,036)(299)(1,031)1,174 Income tax  140(81)128334 Work in progress  (910)887(1,076)675 Inventories  145(191)87(586) Prepaid expenses and other current assets  (589)111(316)(475) Accounts payable and other current liabilities  1,0341301,2671,852 Deferred revenues  (6,216)2,016(2,781)1,549Changes in non-cash working capital items  670(3,474)3,631(6,575)       Financing and investing activities without impact on cash were nil as at July 31, 2011, and $139,000 as at July 31, 2010, relating to the disposal of property, plant and equipment given in exchange for new ones.For the purpose of the Consolidated Statements of Cash Flows, cash and cash equivalents are disclosed as follows:     As at July 31, 2011January 31, 2011(In thousands of CA$)$ $ Cash22,203 15,918 Cash equivalents - term deposits― 2,759  22,203 18,677      Segmented InformationThe Corporation operates in the non-residential construction sector, primarily in the United States and Canada. Its operations include the connections design and engineering, fabrication and installation of complex steel structures, heavy steel built-ups, as well as miscellaneous and architectural metalwork. 3 Months6 Months       Periods ended July 31,  2011201020112010(In thousands of CA$)  $$$$Revenues     Canada250123475563 United States12,86812,84425,87226,045 13,11812,96726,34726,608   As atJuly 31, 2011January 31, 2011(In thousands of CA$)$$Property, Plant and Equipment   Canada45,29746,767 United States638104 45,93546,871All intangible assets and investment tax credits included under "Other non-current assets" at, January 31, 2011 and July 31, 2011, originated from Canada.During the six-month period ended July 31, 2011, one client accounted for 94% of the Corporation's revenues (one client accounted for 90% of the revenues during the six-month period ended July 31, 2010), and therefore accounted for more than 10% of revenues. For further information: Source:  ADF Group Inc. Contact: Jean Paschini, Chairman of the Board of Directors and Chief Executive OfficerJean-François Boursier, CA, Chief Financial Officer Telephone:   Web Site:   (450) 965-1911 / 1 (800) 263-7560 Medias:  Caroline Couillard Morin Public Relations (514) 289-8688, ext. 233