ADF Group Inc. announces the results of the three-month and six-month periods ended July 31, 2007



    
    -------------------------------------------------------------------------
    - The Corporation's earnings from continuing operations before unusual
      items recorded in the first semester in 2006, increased 100% for the
      first semester ended July 31, 2007, compared to the same period in
      2006.
    - The Corporation reduced its debt by 8.3 million dollars since the
      beginning of the current fiscal year.
    - The backlog doubled from a year ago to more than 108.0 million dollars
      at September 12, 2007.
    - The Corporation maintained a gross margin higher than the fixed
      objectives.
    -------------------------------------------------------------------------
    

    TERREBONNE, QC, Sept. 12 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the
"Corporation") (ticker symbol: DRX) announces the results of the three-month
and six-month periods ended July 31, 2007.
    The Corporation's revenues reached 13.8 million dollars during the second
quarter closed on July 31, 2007, compared to 14.5 million dollars for the
previous year. The revenues during the first semester ended July 31, 2007
reached 24.7 million dollars compared to 24.9 million dollars last year.
    For the second quarter ended July 31, 2007, earnings from continuing
operations before interest, taxes, depreciation and amortization (1)
("EBITDA") grew 35% from a year ago to 3.5 million dollars or 25.4% of sales,
compared to 2.6 million dollars or 18% of sales for the same period in 2006.
    For the first semester ended July 31, 2007, EBITDA rose 40% to
5.7 million dollars or 23.3% of sales, compared to 4.1 million dollars or
16.5% of sales for the same period in 2006.
    For the second quarter ended July 31, 2007, net income reached
2.2 million dollars ($0.07 basic and diluted per share) compared to
2.5 million dollars ($0.09 basic per share and $0.08 diluted per share) for
the comparable period in 2006. This 0.3 million dollar decrease results from
the change between the income from discontinued operations of 1.3 million
dollars recorded in the second quarter in 2006 and the increase of 1.0 million
dollars, representing $0.03 basic and diluted per share, in net income from
continuing operations for the quarter ended July 31, 2007 over the comparable
quarter in 2006.
    For the first semester ended July 31, 2007, net income reached
3.6 million dollars ($0.11 basic and diluted per share) compared to
5.2 million dollars ($0.19 basic and diluted per share) the previous year.
This decrease in net income is attributable to unusual items recorded during
the first semester in 2006. They are a 2.5 million dollar gain on forgiveness
of interest and an income from discontinued operations of 0.9 million dollars.
Excluding this gain on forgiveness of interest, the Corporation would have
posted a net income from continuing operations of 1.8 million dollars in the
first semester of 2006, compared to 3.6 million dollars for the first semester
ended July 31, 2007, representing a 100% increase.
    The backlog has more than doubled from a year ago to more than
108.0 million dollars at September 12, 2007, further to the award, on
September 6, 2007, of an additional contract of 24.9 million dollars for the
construction of other industrial buildings for Holcim's new cement plant in
the State of Missouri, U.S.A. This new purchase order is an addition to the
original contract awarded in May 2007. The contract's total value now stands
at 41.8 million dollars. Given the significant increase of the backlog, the
revenues will post a growth starting in the second half of the current fiscal
year. The Corporation is currently negotiating other contracts and is
confident the backlog will continue to grow in the near future.
    Jean Paschini, Chairman of the Board and Chief Executive Officer, adds
"we completed a good first semester with net earnings linked entirely to
operations, a gross margin higher than our objectives set in the beginning of
the year, working capital growth, further debt reduction and an increased
backlog comprised of profitable contracts".
    As per its debt reduction policy, the Corporation announces that it
further reduced its debt by 8.3 million dollars since the beginning of the
current fiscal year, due in part to the treasury issue of 3,300,000
Subordinate Voting Shares at $3.50 per share, closed in June 2007. This issue
generated gross proceeds of 11.5 million dollars. Further to this offering,
the number of outstanding Subordinated Voting Shares increased from 16,517,983
to 19,923,983.
    Besides the announcement in June 2007 of a 3.0 million dollars investment
at its Terrebonne fabrication plant to convert one of the plant's storage
areas into a 4,650 m2 (50,000 ft2) fabrication bay and the acquisition of new
equipment, including state-of-the-art semi-automated multi-purpose fabrication
equipment, a first in North America, other investments at the plant are
currently under consideration.

    About ADF

    ADF Group Inc. is a North American leader in the design, engineering,
fabrication and selective installation in the non-residential construction
industry of complex steel superstructures, as well as in architectural metal
work. 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 Information

    This 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.

    --------------------------------------------------------
    (1) Reconciliation of the non-GAAP measures

    The financial information presented herein has been prepared in
accordance with the applicable Canadian generally accepted accounting
principles (GAAP). In order to measure its assets and operating efficiency,
the Corporation uses the earnings before interest, taxes, depreciation and
amortization (EBITDA) as a measure of performance. The EBITDA however is not a
measure of performance under GAAP and is thus unlikely comparable to the one
presented by other companies. The Corporation believes that some non-GAAP
financial measures, if presented in parallel to comparable GAAP financial
measures, are useful supplemental information to investors and other readers,
as they provide an indication of performance of the Corporation. The net
income, which is a measure of performance prescribed by GAAP is reconciled to
EBITDA in the table below.


    
    -------------------------------------------------------------------------
                                      Three (3) Months        Six (6) Months
    Periods ended July 31,             2007       2006       2007       2006
    (In thousands of dollars,   ---------------------------------------------
     except %) (Unaudited)                $          $          $          $

    Net income                        2,211      2,489      3,614      5,162
    -------------------------------------------------------------------------
    Income from discontinued
     operations                           -     (1,263)         -       (858)
    Income taxes                        209        (31)      (126)       (31)
    Unusual items - Gain on
     forgiveness of interest              -         48          -     (2,500)
    Financial charges                   431        627        924        840
    Amortization                        646        752      1,336      1,503
    -------------------------------------------------------------------------
    Earnings before interest,
     taxes, depreciation and
     amortization (EBITDA)            3,497      2,622      5,748      4,116
    -------------------------------------------------------------------------
    % of sales                         25.4%        18%      23.3%      16.5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Income and Comprehensive Income
    (In thousands of dollars, except for per-share amounts) (Unaudited)

    -------------------------------------------------------------------------
                                      Three (3) Months        Six (6) Months
    Periods Ended July 31,             2007       2006       2007       2006
                                ---------------------------------------------
                                          $          $          $          $

    Revenues                         13,767     14,522     24,686     24,989
    Cost of goods sold                8,486     10,752     15,475     18,456
    -------------------------------------------------------------------------
    Gross margin before exchange
     rate fluctuation                 5,281      3,770      9,211      6,533
    Loss on foreign exchange            597         53      1,036        118
    -------------------------------------------------------------------------
    Gross margin                      4,684      3,717      8,175      6,415
    Selling and administrative
     expenses                         1,187      1,095      2,427      2,299
    -------------------------------------------------------------------------
    Income from continuing
     operations before the
     undernoted items                 3,497      2,622      5,748      4,116

    Amortization
      Amortization of intangible
       assets                            88        202        212        404
      Amortization of property,
       plant and equipment              558        550      1,124      1,099
    -------------------------------------------------------------------------
                                        646        752      1,336      1,503
    -------------------------------------------------------------------------
    Income from continuing
     operations before financial
     charges, unusual items and
     income taxes                     2,851      1,870      4,412      2,613
    -------------------------------------------------------------------------
    Financial charges
      Interest on long-term debt        477        426        984        487
      Interest income                   (67)        (6)      (106)       (31)
      Other interest                     21        207         46        384
    -------------------------------------------------------------------------
                                        431        627        924        840
    -------------------------------------------------------------------------
    Income from continuing
     operations before unusual
     items and income taxes           2,420      1,243      3,488      1,773
    Unusual items - Gain on
     forgiveness of interest              -         48          -     (2,500)
    -------------------------------------------------------------------------
    Income from continuing
     operations, before
     income taxes                     2,420      1,195      3,488      4,273
    -------------------------------------------------------------------------
    Income taxes
      Current                            (1)       (31)        39        (31)
      Future                            210          -       (165)         -
    -------------------------------------------------------------------------
                                        209        (31)      (126)       (31)
    -------------------------------------------------------------------------
    Net income from continuing
     operations                       2,211      1,226      3,614      4,304
    Income from discontinued
     operations                           -      1,263          -        858
    -------------------------------------------------------------------------
    Net income and comprehensive
     income                           2,211      2,489      3,614      5,162
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic earnings per share
      From continuing operations       0.07       0.04       0.11       0.16
      From discontinued operations        -       0.05          -       0.03
    -------------------------------------------------------------------------
                                       0.07       0.09       0.11       0.19
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted earnings per share
      From continuing operations       0.07       0.04       0.11       0.16
      From discontinued operations        -       0.04          -       0.03
    -------------------------------------------------------------------------
                                       0.07       0.08       0.11       0.19
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average number of outstanding
     shares (In thousands)           32,405     28,049     31,646     27,415
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Deficit
    (In thousands of dollars) (Unaudited)
    -------------------------------------------------------------------------
                                      Three (3) Months        Six (6) Months
    Periods Ended July 31,             2007       2006       2007       2006
                                ---------------------------------------------
                                          $          $          $          $

    Deficit, beginning of the
     period                        (106,962)  (116,036)  (108,365)  (118,709)
    Net income                        2,211      2,489      3,614      5,162
    Treasury issue expense,
     net of taxes of $292,000          (622)         -       (622)         -
    -------------------------------------------------------------------------
    Deficit, end of the period     (105,373)  (113,547)  (105,373)  (113,547)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Contributed Surplus
    (In thousands of dollars) (Unaudited)
    -------------------------------------------------------------------------
                                      Three (3) Months        Six (6) Months
    Periods Ended July 31,             2007       2006       2007       2006
                                ---------------------------------------------
                                          $          $          $          $
    Contributed surplus,
     beginning of the period          2,032      2,188      1,988        273
    Employee stock options               44         35         88         70
    Maturity of warrants                  -          -          -      1,880
    -------------------------------------------------------------------------
    Contributed surplus,
     end of the period                2,076      2,223      2,076      2,223
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Balance Sheets
    (In thousands of dollars)
    -------------------------------------------------------------------------
                                                              At          At
                                                         July 31, January 31,
                                                            2007        2007
                                                      (Unaudited)   (Audited)
                                                               $           $
                                                     ------------------------
    ASSETS
    Current assets
      Cash and cash equivalents                            5,025       6,016
      Accounts receivable                                 10,995       7,908
      Holdbacks on contracts                               2,614       3,519
      Work in progress                                       419       2,178
      Inventories                                          2,357       3,278
      Prepaid expenses                                     1,071         874
      Future income tax assets                             1,224       1,000
    -------------------------------------------------------------------------
                                                          23,705      24,773
    Holdbacks on long-term contracts                           -         880
    Property, plant and equipment                         30,560      30,521
    Intangible assets                                        539         382
    Other assets                                              23         168
    Future income tax assets                                 233           -
    -------------------------------------------------------------------------
                                                          55,060      56,724
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Bank indebtedness                                        -         263
      Accounts payable and accrued charges                 4,643       8,043
      Billing in excess of cost and recognized income
       on work in progress                                 3,730       8,154
      Income taxes                                           133         104
      Current portion of long-term debt                    2,608       2,606
    -------------------------------------------------------------------------
                                                          11,114      19,170

    Long-term debt                                        15,303      23,612
    -------------------------------------------------------------------------
                                                          26,417      42,782
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
      Capital stock                                      131,940     120,319
      Contributed surplus                                  2,076       1,988
      Deficit                                           (105,373)   (108,365)
    -------------------------------------------------------------------------
                                                          28,643      13,942
    -------------------------------------------------------------------------
                                                          55,060      56,724
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statement of Cash Flows
    (In thousands of dollars) (Unaudited)
    -------------------------------------------------------------------------
                                      Three (3) Months        Six (6) Months
    Periods Ended July 31,             2007       2006       2007       2006
                                ---------------------------------------------
                                          $          $          $          $

    OPERATING ACTIVITIES
    Net income from continuing
     operations                       2,211      1,226      3,614      4,304
      Adjustments for:
        Amortization of property,
         plant and equipment            558        550      1,124      1,099
        Amortization of intangible
         assets                          88        202        212        404
        Amortization of other
         assets                           3         10        143         27
        Gain on forgiveness of
         interest                         -         48          -     (2,500)
        Gain on disposal of
         property, plant and
         equipment                      (21)         -        (21)         -
        Non-cash exchange loss
         (gain)                           -          6          -         (1)
        Future income taxes             210          -       (165)         -
        Capitalized interest on
         the interest-free
         long-term debt                   5          -          7          -
        Royalty on the long-term
         debt                             -        104          -        104
        Stock option-based
         compensation                    44         35         88         70
    -------------------------------------------------------------------------
                                      3,098      2,181      5,002      3,507
    -------------------------------------------------------------------------
    Changes in non-cash operating
     working capital items from
     continuing operations
        Accounts receivable            (959)    (1,209)    (3,087)     2,233
        Short-term and long-term
         holdbacks on contracts       1,702       (631)     1,785     (1,312)
        Work in progress                (93)      (104)     1,759         15
        Inventories                     222         12        921      1,776
        Income taxes                     26         77         29        188
        Prepaid expenses               (477)      (419)      (197)       (43)
        Accounts payable and
         accrued charges               (602)     2,981     (3,400)     1,752
        Billing in excess of cost
         and recognized income
         on work in progress         (3,630)       858     (4,424)    (3,645)
    -------------------------------------------------------------------------
                                     (3,811)     1,565     (6,614)       964
    -------------------------------------------------------------------------
    Cash flows applied to
     operating activities of
     continuing operations             (713)     3,746     (1,612)     4,471
    Cash flows applied to
     operating activities of
     discontinued operations              -       (306)         -     (1,002)
    -------------------------------------------------------------------------
                                       (713)     3,440     (1,612)     3,469
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
      Acquisition of property,
       plant and equipment             (602)      (634)    (1,264)      (727)
      Acquisition of intangible
       assets                          (299)        (5)      (369)        (5)
      Disposal of property,
       plant and equipment               29          -         29          -
      Decrease in other assets            -         71          2         69
    -------------------------------------------------------------------------
    Cash flows applied to
     investing activities of
     continuing operations             (872)      (568)    (1,602)      (663)
    Cash flows applied to
     investing activities of
     discontinued operations              -      1,538          -      1,538
    -------------------------------------------------------------------------
                                       (872)       970     (1,602)       875
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
      Repayment of bank
       indebtedness                       -       (371)      (263)      (371)
      Repayment of credit facility        -     (2,800)         -     (2,900)
      Repayment of long-term debt    (8,105)        (9)    (8,710)       (40)
      Increase in long-term debt        219         72        489         72
      Subordinate Voting Share
       issue                         10,692          -     10,707          -
    -------------------------------------------------------------------------
    Cash flows applied to
     financing activities             2,806     (3,108)     2,223     (3,239)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net cash inflows (outflows)       1,221      1,302       (991)     1,105
    Cash and cash equivalents,
     at the beginning of the
     period                           3,804        (27)     6,016        170
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     at the end of the period         5,025      1,275      5,025      1,275
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flows
     information
      Income taxes paid on
       continuing operations              -          -         23          -
      Interest paid on continuing
       operations                       411        461        926        834
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Segmented Reporting

    The Corporation operates in the non-residential construction sector,
primarily in Canada and the United States. Its operations include the
connection design and engineering, fabrication and selective installation of
complex steel structures, heavy built-ups, as well as miscellaneous and
architectural metal works.
    During the six-month period ended July 31, 2007, 69% of the Corporation's
revenues was achieved with two clients, each of which accounted for more than
10% of revenues.

    -------------------------------------------------------------------------
                                                                Property,
                                                                plant and
                                        Revenues                equipment

                                                                          At
                     Threes (3) Months    Six (6) Months       At    January
    Periods ended                                         July 31,        31,
     July 31,            2007     2006     2007     2006     2007       2007
                                                                    (Audited)
                    -------------------------------------- ------------------
                            $        $        $        $        $          $
    Continuing
     operations
      Canada            1,621      387    2,640      724   30,397     30,331
      United States    12,146   12,331   22,046   21,828      163        190
      Trinidad              -    1,804        -    2,199        -          -
      Other countries       -        -        -      238        -          -
    ------------------------------------------------------ ------------------
                       13,767   14,522   24,686   24,989   30,560     30,521
    ------------------------------------------------------ ------------------
    ------------------------------------------------------ ------------------
    Discontinued
     operations
      Canada                -    1,630        -    2,748        -          -
      United States         -        -        -        -        -          -
      Trinidad              -        -        -        -        -          -
      Other countries       -        -        -        -        -          -
    ------------------------------------------------------ ------------------
                            -    1,630        -    2,748        -          -
    ------------------------------------------------------ ------------------
    ------------------------------------------------------ ------------------
    
    %SEDAR: 00011963EF




For further information:

For further information: Jean Paschini, Chairman of the Board and Chief
Executive Officer; Louis Potvin, Chief Financial Officer, (450) 965-1911,
1-800-263-7560, Web Site: www.adfgroup.com; Source: ADF Group Inc.


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