IBI Group announces fourth-quarter and year-end earnings

TORONTO – IBI Group Inc. has announced financial results for the three months and year ended December 31, 2013. The Company reported the following operating results: Cash flows from operating activities for the three months ended December 31, 2013 of $15.0 million and $9.5 million for the year ended December 31, 2013 Revenue for the...

Date

March 28, 2014

TORONTO – IBI Group Inc. has announced financial results for the three months and year ended December 31, 2013.

The Company reported the following operating results:

  • Cash flows from operating activities for the three months ended December 31, 2013 of $15.0 million and $9.5 million for the year ended December 31, 2013
  • Revenue for the three months ended December 31, 2013 of $77.8 million and revenue for the year ended December 31, 2013 of $288.0 million
  • EBITDA for the three months ended December 31, 2013 of $2.4 million and EBITDA for the year ended December 31, 2013 of $(32.6) million
  • Net loss for the three months ended December 31, 2013 of $100.9 million and net loss for the year ended December 31, 2013 of $223.5 million

Results for the year ended December 31, 2013 were impacted by the following

Adjustment Items:

  • Writedown of unbilled work in process (WIP) of $35.0 million
  • Writedown of accounts receivable of $12.9 million
  • Writedown of goodwill and intangible assets of $180.5 million

During the year, the Company undertook a comprehensive review of WIP and accounts receivable balances. Changes to the factors that management used to assess its project balances included age, client, geographic location, time since last activity, and status of negotiation. Estimates related to the recoverability of the projects were reassessed under new management, and unbilled WIP and accounts receivable were identified as unlikely to be billed and collected.

As result of that review, the Company provided for $35.0 million of unbilled WIP and $12.9 million of accounts receivable to recognize the uncertainty of converting these balances to cash. The Company will continue to pursue amounts for collection. Management is committed to reviewing estimates on an ongoing basis to assess the carrying value of WIP and accounts receivable.

The Company has a business plan it is managing that will result in a return to profitability and cash generation.

Throughout the year, the Company reviewed and reduced the carrying value of goodwill and intangible assets by $180.5 million. Management concluded that a write-down of goodwill and intangible assets was warranted given the decline in the Company’s share price and market capitalization and the performance of businesses acquired by the Company compared to their purchase prices. The impairment is a non-cash charge that does not impact the Company’s day-to-day liquidity, cash flow or the calculation of EBITDA under its senior credit facility covenants.

Excluding the Adjustment Items, the Company reported:

  • Adjusted revenue for the year ended December 31, 2013 of $323.0 million.
  • Adjusted EBITDA for the year ended December 31, 2013 of $15.3 million.
  • Adjusted net loss for the year ended December 31, 2013 of $8.3 million.

“2013 was a challenging financial year for the Company. The significant write-downs we undertook and our operating performance in 2013 was unacceptable,” said Scott Stewart, Chief Executive Officer, IBI Group. “But the changes we implemented from the Recovery Program have already significantly reduced our operating costs and improved our collections. We look forward to continued improvements in this area in 2014. A key area of focus for the management team in 2014, is to ensure that we are diligently competing for new business in all of the markets we operate in.”

Full news release

2013 Annual Financial Statements

2013 Management Discussion and Analysis

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