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Press release from CNW Group

Data Group Inc. announces second quarter results for 2013

Thursday, August 08, 2013

Data Group Inc. announces second quarter results for 2013

07:45 EDT Thursday, August 08, 2013

Highlights

Q2 2013

  • Second quarter 2013 ("Q2") Revenues of $77.8 million, Q2 Gross Profit of $19.8 million and Q2 Net Loss of $3.7 million (includes a Q2 restructuring charge of $5.2 million)
  • Q2 Dividends declared of $1.8 million or $0.075 per share
  • Q2 Adjusted EBITDA of $5.8 million (See Table 2 and "Non-GAAP Measures" below)

YTD 2013

  • Year to Date 2013 ("YTD") Revenues of $160.7 million, YTD Gross Profit of $41.5 million and YTD Net Loss of $2.8 million (includes a YTD restructuring charge of $6.0 million)
  • YTD Dividends declared of $3.5 million or $0.15 per share
  • YTD Adjusted EBITDA of $13.1 million (See Table 2 and "Non-GAAP Measures" below)

BRAMPTON, ON, Aug. 8, 2013 /CNW/ -DATA Group Inc. (TSX: DGI) ("DATA Group") announced its financial and operating results for the second quarter ended June 30, 2013, which include the operating results of its subsidiaries DATA Group Ltd., DATA Group (US) Corp., The Fulfillment Solutions Advantage Inc. ("FSA") and FSA Datalytics Canada Inc. ("Datalytics").

DATA Group continues its profound transformation, as we focus on dramatic cost reduction, new revenue growth and aggressively reducing our debt.

  • Cost reduction; Our multi-year transformational cost reduction program is intended to reduce our annual costs by approximately $28.0 million by the end of 2015.  We succeeded in reducing our costs by $12.1 million, on an annualized basis, in the first half of 2013.  We have recorded $6.0 million in associated restructuring charges in the first half of 2013 as a result.
  • New revenue growth; We have launched new digital products and services to transform DATA Group into a Business Process Outsourcing provider and to offset declines in our legacy print business.  As a result, we have won several large new outsourcing contracts and have recorded approximately $5.0 million in new revenue from these categories in the first half of 2013.  We will be launching additional new products and services in the second half of 2013.
  • Debt reduction; We expect to accelerate the pace of debt reduction as our cost reduction initiatives gain momentum.  In the first half of 2013, we have reduced our debt by $2.5 million.

Our net loss in the second quarter and year-to-date is primarily due to restructuring expenses associated with our successful cost reduction initiatives.  Secondary reasons for our net loss are a reduction in revenues in our legacy business, investment in our growth strategy and a smaller deferred income tax recovery, all of which have been partially offset by our cost reductions.

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

Consolidated Statements of (Loss) Income Information
For the periods ended June 30, 2013 and 2012
(in thousands of Canadian dollars, except per share amounts,
unaudited)
Apr. 1 to
June 30,
2013
$
    Apr. 1 to
June 30,
2012 (1)
$
    Jan. 1 to
June 30,
2013
$
    Jan. 1 to
June 30,
2012 (1)
$
Revenues 77,822     82,608     160,685     169,256
Cost of revenues 58,066     61,549     119,191     124,970
Gross profit 19,756     21,059     41,494     44,286
                     
Selling, general and administrative expenses 15,315     16,300     31,001     33,224
Restructuring expenses 5,247     -     6,014     -
Corporate conversion costs -     -     -     84
Amortization of intangible assets 2,311     2,311     4,621     4,622
                     
(Loss) income before finance costs and income taxes (3,117)     2,448     (142)     6,356
                     
Finance costs                    
  Interest expense 1,635     1,667     3,273     3,344
  Interest income (6)     (5)     (8)     (14)
  Amortization of transaction costs 147     154     290     306
  1,776     1,816     3,555     3,636
                     
(Loss) income before income taxes (4,893)     632     (3,697)     2,720
                     
Income tax expense (recovery)                    
  Current 281     804     1,553     2,052
  Deferred (1,512)     (648)     (2,437)     (3,366)
  (1,231)     156     (884)     (1,314)
                     
Net (loss) income for the period (3,662)     476     (2,813)     4,034
                     
Net (loss) income attributable to common shareholders (3,652)     496     (2,799)     4,062
Basic and diluted (loss) earnings per share (0.16)     0.02     (0.12)     0.17
Number of common shares outstanding 23,490,592     23,490,592     23,490,592     23,490,592
                     
Consolidated Statements of Financial Position
Information
As at June 30, 2013 and December 31, 2012
(in thousands of Canadian dollars, unaudited)
As at
June 30,
2013
$
    As at
Dec. 31,
2012
$
           
Current assets 81,560     84,069            
Current liabilities 40,383     40,316            
                     
Total assets 216,803     224,629            
Total non-current liabilities 117,441     122,199            
                     
Shareholders' equity 58,857     61,978            
Non-controlling interest 122     136            
Total equity 58,979     62,114            

(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19
Employee Benefits.

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 June 30, 2013 and 2012
(in thousands of Canadian dollars, unaudited)
Apr. 1 to
June 30,
2013
$
Apr. 1 to
June 30,
2012 (1)
$
Jan. 1 to
June 30,
2013
$
Jan. 1 to
June 30,
2012 (1)
$
Net (loss) income for the period (3,662) 476 (2,813) 4,034
Interest expense 1,635 1,667 3,273 3,344
Interest income (6) (5) (8) (14)
Amortization of transaction costs 147 154 290 306
Depreciation of property, plant and equipment 1,323 1,447 2,651 2,870
Amortization of intangible assets 2,311 2,311 4,621 4,622
Restructuring expenses 5,247 - 6,014 -
Corporate conversion costs - - - 84
Current income tax expense 281 804 1,553 2,052
Deferred income tax recovery (1,512) (648) (2,437) (3,366)
Adjusted EBITDA 5,764 6,206 13,144 13,932

(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19
Employee Benefits.

RESULTS OF OPERATIONS

Revenues
For the quarter ended June 30, 2013, DATA Group recorded revenues of $77.8 million, a decrease of $4.8 million or 5.8% compared with the same period in 2012.  The decrease, before intersegment revenues, was the result of a $4.6 million decrease in the DATA East and West segment and a $0.2 million decrease in the Multiple Pakfold segment, respectively.  For the six months ended June 30, 2013, DATA Group recorded revenues of $160.7 million, a decrease of $8.6 million or 5.1% compared with the same period in 2012.  The decrease, before intersegment revenues, was the result of an $8.0 million decrease in the DATA East and West segment and a $0.6 million decrease in the Multiple Pakfold segment, respectively.

Cost of Revenues and Gross Profit
For the quarter ended June 30, 2013, cost of revenues decreased to $58.1 million from $61.5 million for the same period in 2012.  Gross profit for the quarter ended June 30, 2013 was $19.8 million, which represented a decrease of $1.3 million or 6.2% from $21.1 million for the same period in 2012.  The decrease in gross profit for the quarter ended June 30, 2013 was attributable to a gross profit decrease of $1.2 million in the DATA East and West segment and a gross profit decrease of $0.1 million in the Multiple Pakfold segment, respectively.  Gross profit as a percentage of revenues decreased to 25.4% for the quarter ended June 30, 2013 compared to 25.5% for the same period in 2012.  For the six months ended June 30, 2013, cost of revenues decreased to $119.2 million from $125.0 million for the same period in 2012.  Gross profit for the six months ended June 30, 2013 was $41.5 million, which represented a decrease of $2.8 million or 6.3% from $44.3 million for the same period in 2012.  The decrease in gross profit for the six months ended June 30, 2013 was attributable to a gross profit decrease of $2.6 million in the DATA East and West segment and a gross profit decrease of $0.2 million in the Multiple Pakfold segment, respectively.  Gross profit as a percentage of revenues decreased to 25.8% for the six months ended June 30, 2013 compared to 26.2% for the same period in 2012.

Selling, General and Administrative Expenses and Restructuring Expenses
Selling, general and administrative ("SG&A") expenses, excluding amortization of intangible assets, for the quarter ended June 30, 2013 decreased $1.0 million to $15.3 million compared to $16.3 million in the same period in 2012.  As a percentage of revenues, these costs were 19.7% of revenues for the quarter ended June 30, 2013 compared to 19.7% of revenues for the same period in 2012.  For the quarter ended June 30, 2012, DATA Group incurred $0.3 million of severance expenses. Severance costs for the three months ended June 30, 2012 were included in SG&A and were related to DATA Group's on-going productivity improvements and cost reduction initiatives.  SG&A expenses for the six months ended June 30, 2013 decreased $2.2 million to $31.0 million compared to $33.2 million for the same period of 2012.  As a percentage of revenues, these costs were 19.3% of revenues for the six months ended June 30, 2013 compared to 19.6% of revenues for the same period in 2012.  The decrease in SG&A expenses for the three and six months ended June 30, 2013 was attributable to realizing the benefit of cost saving initiatives implemented in 2012. For the three and six months ended June 30, 2013, DATA Group incurred restructuring expenses related to headcount reductions and lease exit charges of $5.2 million and $6.0 million, respectively, as part of its 2013 restructuring initiatives.  The restructuring initiatives included closing facilities in Brockville, Ontario and Anjou, Québec and transferring the operations of FSA from Markham, Ontario to DATA Group's existing facility in Mississauga, Ontario.

Corporate Conversion Costs
During the six months ended June 30, 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.

Adjusted EBITDA
For the quarter ended June 30, 2013, Adjusted EBITDA was $5.8 million, or 7.4% of revenues.  Adjusted EBITDA for the quarter ended June 30, 2013 decreased $0.4 million or 7.1% from the same period in the prior year due to the continued investment in DATA Group's growth strategy and a decline in revenues, and was partially offset by cost savings realized as a result of its restructuring initiatives.  These costs included SG&A expense related to investments to launch new products and services.  The Adjusted EBITDA margin for the quarter, as a percentage of revenues, decreased from 7.5% of revenues in 2012 to 7.4% of revenues in 2013.  Adjusted EBITDA for the six months ended June 30, 2013 was $13.1 million, or 8.2% of revenues. Adjusted EBITDA for the six months ended June 30, 2013 decreased $0.8 million or 5.7% from the same period in the prior year and the Adjusted EBITDA margin for the six month period, as a percentage of revenues, remained unchanged at 8.2% of revenues in 2013 and in the same period in 2012.

Interest Expense and Finance Costs
Interest expense on long-term debt outstanding under DATA Group's credit facilities, DATA Group's outstanding $45.0 million aggregate principal amount of 6.00% Convertible Unsecured Subordinated Debentures (the "6.00% Convertible Debentures") and DATA Group's employee benefit plans was $1.6 million for the three months ended June 30, 2013 compared to $1.7 million for the same period in 2012, and was $3.3 million for the six months ended June 30, 2013 compared to $3.3 million for the same period in 2012.  The decrease in interest expense during the three months ended June 30, 2013 was the result of lower outstanding balances under DATA Group's credit facilities.

Income Taxes
DATA Group reported a loss before income taxes of $4.9 million, a current income tax expense of $0.3 million and a deferred income tax recovery of $1.5 million for the three months ended June 30, 2013 compared to income before income taxes of $0.6 million, current income tax expense of $0.8 million and a deferred income tax recovery of $0.6 million for the three months ended June 30, 2012.  DATA Group reported a loss before income taxes of $3.7 million, a current income tax expense of $1.6 million and a deferred income tax recovery of $2.4 million for the six months ended June 30, 2013 compared to income before income taxes of $2.7 million, a current income tax expense of $2.1 million and a deferred income tax recovery of $3.4 million for the six months ended June 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 (Loss) Income
Net loss for the quarter ended June 30, 2013 was $3.7 million compared to a net income of $0.5 million for the quarter ended June 30, 2012.  The decrease in comparable profitability for the quarter ended June 30, 2013 was due to lower gross profit as a result of lower revenues and restructuring expenses.  The decrease in comparable profitability was partially offset by lower SG&A expense, lower current income tax expense and a larger deferred income tax recovery.

Net loss for the six months ended June 30, 2013 was $2.8 million compared to a net income of $4.0 million for the six months ended June 30, 2012.  The decrease in comparable profitability for the six months ended June 30, 2013 was substantially due to lower gross profit as result of lower revenues, restructuring expenses and a larger deferred income tax recovery in 2012.  The decrease in comparable profitability during the first half of 2013 was partially offset by lower SG&A expenses and current income tax expense as discussed above.

INVESTING ACTIVITIES
Capital expenditures for the three months ended June 30, 2013 of $0.3 million related primarily to maintenance capital expenditures.  For the six months ended June 30, 2013, DATA Group incurred capital expenditures of $0.8 million related primarily to maintenance capital expenditures.  These capital expenditures were financed by cash flow from operations.

FINANCING ACTIVITIES
During the three and six months ended June 30, 2013, DATA Group repaid $0.5 million and $2.5 million, respectively, of its Revolving Bank Facility outstanding.  For the three and six months ended June 30, 2013, DATA Group paid aggregate cash dividends of $1.8 million and $3.0 million, respectively, on its common shares.

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 processes.  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 approximately 1,800 employees working from 35 locations across Canada and the United States 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 invest in, 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 and six months ended June 30, 2013 means EBITDA adjusted for restructuring expenses.  Adjusted EBITDA for the three and six months ended June 30, 2012 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 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 dollars, unaudited)   June 30, 2013
$
  December 31, 2012
$
Assets        
Current assets        
  Trade receivables   36,326   41,580
  Inventories   39,905   38,085
  Prepaid expenses and other current assets   4,695   4,404
  Income taxes receivable   634   -
    81,560   84,069
         
Non-current assets        
  Deferred income tax assets   2,788   1,534
  Property, plant and equipment   18,470   20,420
  Intangible assets   12,919   17,540
  Goodwill   101,066   101,066
         
    216,803   224,629
Liabilities        
Current liabilities        
  Bank overdraft   354   1,161
  Trade payables   26,662   28,289
  Provisions   2,513   308
  Income taxes payable   -   1,699
  Deferred revenue   9,092   7,586
  Dividends payable   1,762   1,273
    40,383   40,316
         
Non-current liabilities        
  Provisions   3,639   867
  Revolving bank facility   55,181   57,553
  Convertible debentures   42,608   42,311
  Deferred income tax liabilities   720   766
  Other non-current liabilities   1,039   1,137
  Pension obligations   11,433   16,839
  Other post-employment benefit plans   2,821   2,726
    157,824   162,515
Equity        
Shareholders' equity        
  Shares   215,336   215,336
  Conversion options   516   516
  Accumulated other comprehensive income   3   1
  Deficit   (156,998)   (153,875)
    58,857   61,978
         
Non-controlling interest   122   136
    58,979   62,114
         
    216,803   224,629



CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(in thousands of Canadian dollars, except per share amounts,
unaudited)
  For the three
months ended
June 30, 2013
  For the three
months ended
June 30, 2012 (1)
    $   $
Revenues   77,822   82,608
         
Cost of revenues   58,066   61,549
         
Gross profit   19,756   21,059
         
Expenses        
  Selling, commissions and expenses   9,073   9,373
  General and administration expenses excluding amortization      
    of intangible assets   6,242   6,927
  Restructuring expenses   5,247   -
  Amortization of intangible assets   2,311   2,311
    22,873   18,611
         
(Loss) income before finance costs and income taxes   (3,117)   2,448
         
Finance costs        
  Interest expense   1,635   1,667
  Interest income   (6)   (5)
  Amortization of transaction costs   147   154
    1,776   1,816
         
(Loss) income before income taxes   (4,893)   632
         
Income tax expense (recovery)        
  Current   281   804
  Deferred   (1,512)   (648)
    (1,231)   156
         
Net (loss) income for the period   (3,662)   476
         
         
Net (loss) income attributable to:        
  Common shareholders   (3,652)   496
  Non-controlling interest   (10)   (20)
    (3,662)   476
         
Basic (loss) earnings per share   (0.16)   0.02
         
Diluted (loss) earnings per share   (0.16)   0.02

(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19
Employee Benefits.


CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(in thousands of Canadian dollars, except per share amounts,
unaudited)
  For the six
months ended
June 30, 2013
  For the six
months ended
June 30, 2012 (1)
    $   $
Revenues   160,685   169,256
         
Cost of revenues   119,191   124,970
         
Gross profit   41,494   44,286
         
Expenses        
  Selling, commissions and expenses   18,441   19,159
  General and administration expenses excluding amortization      
    of intangible assets   12,560   14,065
  Restructuring expenses   6,014   -
  Corporate conversion costs   -   84
  Amortization of intangible assets   4,621   4,622
    41,636   37,930
         
(Loss) income before finance costs and income taxes   (142)   6,356
         
Finance costs        
  Interest expense   3,273   3,344
  Interest income   (8)   (14)
  Amortization of transaction costs   290   306
    3,555   3,636
         
(Loss) income before income taxes   (3,697)   2,720
         
Income tax expense (recovery)        
  Current   1,553   2,052
  Deferred   (2,437)   (3,366)
    (884)   (1,314)
         
Net (loss) income for the period   (2,813)   4,034
         
         
Net (loss) income attributable to:        
  Common shareholders   (2,799)   4,062
  Non-controlling interest   (14)   (28)
    (2,813)   4,034
         
Basic (loss) earnings per share   (0.12)   0.17
         
Diluted (loss) earnings per share   (0.12)   0.17

(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19
Employee Benefits.



CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands of Canadian dollars, unaudited)   For the three
months ended
June 30, 2013
  For the three
months ended
June 30, 2012 (1)
    $   $
         
Net (loss) income for the period   (3,662)   476
         
         
Other comprehensive income (loss):        
         
Items that may be reclassified subsequently to net (loss) income        
       Foreign currency translation   1   -
    1   -
         
Items that will not be reclassified to net (loss) income        
       Actuarial gains (losses) on post-employment benefit obligations   3,005   (2,188)
       Taxes related to post-employment adjustment above   (788)   578
    2,217   (1,610)
         
Other comprehensive income (loss) for the period, net of tax   2,218   (1,610)
         
Comprehensive loss for the period   (1,444)   (1,134)
         
         
Comprehensive loss attributable to:        
       Common shareholders   (1,434)   (1,114)
       Non-controlling interest   (10)   (20)
         
    (1,444)   (1,134)

(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19
Employee Benefits.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands of Canadian dollars, unaudited)   For the six
months ended
June 30, 2013
  For the six
months ended
June 30, 2012 (1)
    $   $
         
Net (loss) income for the period   (2,813)   4,034
         
         
Other comprehensive income (loss):        
         
Items that may be reclassified subsequently to net (loss) income        
  Foreign currency translation   2   -
    2   -
         
Items that will not be reclassified to net (loss) income        
  Deferred income tax recovery on conversion to a corporation   -   406
  Actuarial gains (losses) on post-employment benefit obligations   4,337   (2,784)
  Taxes related to post-employment adjustment above   (1,137)   730
    3,200   (1,648)
         
Other comprehensive income (loss) for the period, net of tax   3,202   (1,648)
         
Comprehensive income for the period   389   2,386
         
         
Comprehensive income (loss) attributable to:        
  Common shareholders   403   2,414
  Non-controlling interest   (14)   (28)
         
    389   2,386
         

(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19
Employee Benefits.



CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of Canadian dollars, unaudited) Attributable to Shareholders'    
  Shares Units Conversion
options
Accumulated
other
comprehensive
income
Deficit Total
Shareholders'
Equity
Non-
controlling
interest
Total
Equity
  $ $ $ $ $ $ $ $
                 
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 (1) - - - - 4,062 4,062 (28) 4,034
Other comprehensive loss for the period (1) - - - - (1,648) (1,648) - (1,648)
Total comprehensive income (loss) for the period - - - - 2,414 2,414 (28) 2,386
                 
Acquisition of non-controlling interest - - - - 121 121 (121) -
Dividends declared - - - - (7,640) (7,640) - (7,640)
        -        
Balance as at June 30, 2012 215,336 - 516 - (103,078) 112,774 164 112,938
                 
                 
Balance as at December 31, 2012 215,336 - 516 1 (153,875) 61,978 136 62,114
                 
Net loss for the period - - - - (2,799) (2,799) (14) (2,813)
Other comprehensive income for the period - - - 2 3,200 3,202 - 3,202
Total comprehensive income (loss) for the period - - - 2 401 403 (14) 389
                 
Dividends declared - - - - (3,524) (3,524) - (3,524)
                 
Balance as at June 30, 2013 215,336 - 516 3 (156,998) 58,857 122 58,979

(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19 Employee Benefits.




CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars, unaudited)   For the three
months ended
June 30, 2013
  For the three
months ended
June 30, 2012 (1)
    $   $
Cash provided by (used in)        
Operating activities        
Net (loss) income for the period   (3,662)   476
Adjustments to net (loss) income        
  Depreciation of property, plant and equipment   1,323   1,447
  Amortization of intangible assets   2,311   2,311
  Pension expense   236   234
  Loss (gain) on disposal of property, plant and equipment   65   (2)
  Provisions   5,247   291
  Amortization of transaction costs   147   154
  Accretion of convertible debentures   74   75
  Other non-current liabilities   (95)   (76)
  Other post-employment benefit plans, net   45   65
  Income tax (recovery) expense   (1,231)   156
    4,460   5,131
Changes in working capital   882   2,635
Contributions made to pension plans   (782)   (770)
Provisions paid   (716)   (289)
Income taxes paid   (1,073)   (1,350)
    2,771   5,357
Investing activities        
Purchase of property, plant and equipment   (343)   (667)
Proceeds on disposal of property, plant and equipment   75   7
    (268)   (660)
Financing activities        
Repayment of revolving bank facility   (500)   (1,500)
Finance costs   (11)   (10)
Finance lease payments   (3)   -
Dividends or distributions paid   (1,762)   (3,820)
    (2,276)   (5,330)
         
Increase (decrease) in (bank overdraft) cash and cash equivalents      
  during the period   227   (633)
(Bank overdraft) cash and cash equivalents - beginning of period   (583)   223
Effects of foreign exchange on cash balances   2   -
Bank overdraft - end of period   (354)   (410)

(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19
Employee Benefits.



CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars, unaudited)   For the six
months ended
June 30, 2013
  For the six
months ended
June 30, 2012 (1)
    $   $
Cash provided by (used in)        
Operating activities        
Net (loss) income for the period   (2,813)   4,034
Adjustments to net (loss) income        
  Depreciation of property, plant and equipment   2,651   2,870
  Amortization of intangible assets   4,621   4,622
  Pension expense   472   468
  Loss (gain) on disposal of property, plant and equipment   122   (1)
  Provisions   6,014   436
  Amortization of transaction costs   290   306
  Accretion of convertible debentures   147   149
  Other non-current liabilities   (175)   (123)
  Other post-employment benefit plans, net   95   132
  Income tax recovery   (884)   (1,314)
    10,540   11,579
Changes in working capital   2,982   916
Contributions made to pension plans   (1,541)   (1,545)
Provisions paid   (1,037)   (498)
Income taxes paid   (3,886)   (3,254)
    7,058   7,198
Investing activities        
Purchase of property, plant and equipment   (807)   (959)
Purchase of intangible assets   -   (415)
Proceeds on disposal of property, plant and equipment   101   7
    (706)   (1,367)
Financing activities        
Repayment of revolving bank facility   (2,500)   (2,500)
Finance costs   (12)   (148)
Finance lease payments   (3)   -
Dividends or distributions paid   (3,035)   (7,639)
    (5,550)   (10,287)
         
Increase (decrease) in (bank overdraft) cash and cash equivalents      
  during the period   802   (4,456)
(Bank overdraft) cash and cash equivalents - beginning of period   (1,161)   4,046
Effects of foreign exchange on cash balances   5   -
Bank overdraft - end of period   (354)   (410)

(1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19
Employee Benefits.
   


SOURCE: DATA Group Inc.

For further information:

Mr. Michael Suksi
President and Chief Executive Officer
DATA Group Inc.
Tel: (905) 791-3151

Mr. Paul O'Shea
Chief Financial Officer
DATA Group Inc.
Tel: (905) 791-3151

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