Results for the third quarter ended October 31, 2011

FINANCIAL HIGHLIGHTS:

All results are disclosed in accordance with International Financial Reporting Standards ("IFRS").

TERREBONNE, QC, Dec. 8, 2011 /CNW Telbec/ - ADF GROUP INC. ("ADF" or the "Corporation") (TSX: DRX) closed the third quarter of the 2012 fiscal year with revenues of $11.2 million, compared with $13.7 million for the same quarter last year. Besides the weak economy, this decline is attributable for the most part to a different mix of revenues billed, notably in terms of fabrication hours and the supply of raw material and other.

The gross profit margin as a percentage of revenues declined from 20% in the third quarter of fiscal 2011 to 15% in the third quarter of fiscal 2012. This decline is explained by the start of fabrication on new lower-margin contracts consistent with its action plan implemented at the beginning of the current fiscal year, the short-term objective of which being to increase the order backlog. To a certain extent, the gross margin was also affected by the recognition of a portion of the costs associated with contractual changes and adjustments in connection with mandates in progress, whereas the related revenues should be recognized at a later date. The revenues and profits derives from these contractual changes should be recognized in the coming months.

For the third quarter ended October 31, 2011, the Corporation posted net earnings of $0.4 million or $0.01 per share (basic and diluted), compared with $0.9 million or $0.03 per share (basic and diluted) for the third quarter of the previous year.

For the nine-month period ended October 31, 2011, ADF Group recorded year-to-date revenues of $37.6 million, compared with $40.3 million for the same period of fiscal 2011. Additionally to the reasons previously outlined, this decline is also attributable to the 5% increase in the Canadian dollar in relation to the U.S. dollars between the two reporting periods. However, the gross margin only slightly decreased, from 24% of revenues to 21% of revenues.

For the nine-month period, net earnings totalled $2.3 million or $0.07 per share (basic and diluted), compared with $3.7 million or $0.11 per share (basic and diluted) for the same period last year. In addition to the factors listed above, this decline is partly attributable to the non-recurrence of certain favourable items recognized a year ago, and the realization of lower foreign exchange gains than last year.

The Corporation's operating activities provided cash flows of $7.9 million during the first nine months of the current fiscal year, compared with $6.6 million for the same period last year. Cash flows from operating activities contributed to further strengthen the financial health of the Corporation which, as of October 31, 2011, had working capital of $43.2 million, including short-term available liquidities (cash, cash equivalents and short-term investments) of $25.4 million. Therefore, available liquidities exceeded ADF Group's total debt by $18.6 million.

Major Events Since October 31, 2011

Over the last few weeks, ADF Group and the various parties involved in the World Trade Center ("WTC") projects, in New York, U.S.A., have reached an agreement to expedite the contractual changes review process and the collection of debts. The Corporation had previously availed itself of measures available under the different contracts.

In addition, the Corporation is announcing the postponement of its development project in Western Canada after ADF's minimum requirements were refused by the both provincial and municipal bodies. It must be noted that ADF Group Inc. was actively negotiating for the past 18 months with the Province of Manitoba and the City of Winnipeg to purchase an industrial lot in order to build a new fabrication plant of 9,290 m² (100,000 ft²). This acquisition was conditional to the conclusion of a due diligence, including notably an environmental remediation, satisfactory to ADF Group Inc. and its partner. Consistent with its responsible management, the Corporation decided to end these negotiations and analyze other options to increase its coverage of the Western Canada markets.

Outlook

As at October 31, 2011, ADF Group's order backlog stood at $49 million, the execution schedule of which should extend until the third quarter of the Corporation's 2013 fiscal year.

"In response to a particularly challenging economic environment in our targeted markets, especially in the United States, we are maintaining our focus on preserving the Corporation's operating profitability and the soundness of its balance sheet. Our large-scale contracts currently in progress in connection with the reconstruction of the WTC site in New York City (U.S.A.) will remain a source of profitability for ADF Group in the coming months," indicated Jean Paschini, Chairman of the Board and Chief Executive Officer.

In the short-term, the Corporation is especially banking on the Canadian market, where the economic outlook is brighter, to build its order backlog,

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 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.

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:

Non-IFRS Measures

EBITDA 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.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)

Segmented Information

The 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.

All intangible assets and investment tax credits included under "Other non-current assets" at, January 31, 2011 and October 31, 2011, originated from Canada.

During the nine-month period ended October 31, 2011, one client accounted for 89% of the Corporation's revenues (one client accounted for 89% of the revenues during the nine-month period ended October 31, 2010), and therefore accounted for more than 10% of revenues.