Calian Reports Fourth Quarter Results

OTTAWA, ONTARIO--(Marketwired - Nov. 12, 2014) - Calian Technologies Ltd. (TSX:CTY) today released unaudited results for the fourth quarter ended September 30, 2014.

The Company reported revenues for the quarter of $54.4 million, a 5% decrease from the $57.5 million reported in the same quarter of the previous year and for the year ended September 30, 2014, the Company reported revenues of $211.3 million compared to revenues of $232.0 million in the prior year.

Net profit for the fourth quarter was $2.6 million or $0.35 per share basic and diluted, compared to $3.0 million or $0.41 per share basic and diluted in the same quarter of the previous year. On a year-to-date basis, net profit was $10.6 million or $1.44 per share basic and diluted compared to net profit of $13.1 million or $1.73 per share basic and diluted in the previous year. Adjusted Net Profit⁽¹⁾ for the fourth quarter was $2.8 million or $0.38 per share basic and diluted, compared to $3.0 million or $0.41 per share basic and diluted in the same quarter of the previous year. On a year-to-date basis, adjusted net profit⁽¹⁾ was $10.7 million or $1.45 per share basic and diluted compared to net profit of $13.1 million or $1.73 per share basic and diluted in the previous year.

⁽¹⁾ See caution regarding non-GAAP measures at the end of this press release

"The results released today once again reflect continued contraction in government spending in both of our divisions. Program delays and activity rescheduling within DND and other government departments have resulted in reduced take-up on existing contract vehicles and postponed revenue realization on new ones. Once again, the areas most affected by military spending cuts were vehicle maintenance services and training services in our BTS division. In addition, the traditional holiday slowdown experienced in the fourth quarter was more profound. Fortunately the inclusion of revenues from our most recent acquisitions allowed the BTS division to eclipse last year's fourth quarter revenues. At SED, the project nature of the division resulted in a significant drop in systems engineering related revenues as certain large projects are winding down and newer ones are just in the design phase. On the positive side, we experienced an increase in contract manufacturing activity during the quarter and our ancillary communications products segment has continued to produce excellent results in terms of revenue growth and gross margin contribution. While the overall results for the year are obviously below that of the prior year, we are encouraged by the fact that both gross margin dollars and EBITDA⁽¹⁾ for this quarter are slightly above the levels achieved in the fourth quarter of last year. As always, we continually monitor our discretionary spending, not only to improve short-term operational results, but also to ensure that our investments are aligned with the achievement of long-term strategic objectives" stated Ray Basler, President and CEO.

"We are also very pleased with the performance of our recent acquisitions of Amtek Engineering Services Ltd. and DWP Solutions Inc. Both entities have met the expectations inherent in our investment decisions and we have every expectation that they will continue to do so" continued Basler. "The current realignment of our BTS division along service lines will not only ensure renewed focus on key business sectors, but also the appropriate level of attention to the integration of these latest acquisitions."

The company's performance in fiscal 2014 was below that of last year and is the direct result of constrained government spending and the related increase in competitive pressures. Management continues to expect that it could take some time to experience any significant rebound in certain market segments. As we enter fiscal 2015, the substantial contract wins and extensions achieved during the last year along with the book of business obtained from recent acquisitions, provide us with a solid backlog and accordingly, a higher level of revenue confidence. However, revenues ultimately realized will be dependent on the extent and timing of future contract awards as well as customer utilization of existing contracting vehicles. In addition, the requirement to categorize certain acquisition payments as compensation expense will negatively impact fiscal 2015 earnings by approximately $0.15 per share. Based on currently available information and our assessment of the marketplace, we expect revenues for fiscal 2015 to be in the range of $235 million to $ 265 million, net profit per share in the range of $1.35 to $1.65 per share and adjusted net profit⁽¹⁾ in the range of $1.50 to $1.80 per share.

Caution regarding non-GAAP measures:

This press release is based on reported earnings in accordance with IFRS. Reference to generally accepted accounting principles (GAAP) means IFRS, unless indicated otherwise. This press release is also based on non-GAAP financial measures including EBITDA, adjusted net profit and adjusted net profit per share. These non-GAAP measures are mainly derived from the interim consolidated financial statements, but do not have a standardized meaning prescribed by IFRS; therefore, others using these terms may calculate them differently. Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures, provides users of our financial reports with enhanced understanding of our results and related trends and increases transparency and clarity into the core results of our business. Refer to the MD&A for definitions of these metrics and reconciliations to the most comparable IFRS measures.

About Calian

Calian employs over 2,200 people with offices and projects that span Canada, U.S. and international markets. The company's capabilities include the provision of business and technology services to industry and government in the health, training, engineering, IT services and operations and maintenance domains as well as the design, manufacturing and maintenance of complex systems to the communications and defence sectors. Our goal is to be the best company to work for, buy from and invest in. The Business and Technology Services (BTS) Division is headquartered in Ottawa. This division delivers outsourcing services for a variety of technical and professional functions and provides health services to numerous domestic customers. Our strength lies in understanding clients' needs, recruiting highly qualified personnel who understand and meet those needs, and then effectively managing those personnel within our customers' framework. Calian's Systems Engineering Division (SED) plans, designs and implements complex communication systems for many of the world's space agencies and leading satellite manufacturers and operators. SED also provides contract manufacturing services for both private sector and military customers in North America.

For further information, please visit our website at www.calian.com, or contact us at ir@calian.com

DISCLAIMER

Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, and including currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by Calian with the Ontario Securities Commission. Calian disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them.

CALIAN TECHNOLOGIES LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at September 30, 2014 and September 30, 2013
(Canadian dollars in thousands)
		NOTES		September 30, 2014			September 30, 2013
ASSETS
CURRENT ASSETS
	Cash			$	25,200		$	29,782
	Accounts receivable				39,249			37,903
	Work in process				12,590			9,764
	Prepaid expenses				1,700			1,442
	Derivative assets	8			191			89
	Total current assets				78,930			78,980
NON-CURRENT ASSETS
	Equipment				3,615			3,418
	Application software				518			585
	Acquired intangible assets	10			5,750			3,808
	Goodwill				12,037			10,781
	Total non-current assets				21,920			18,592
TOTAL ASSETS				$	100,850		$	97,572
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable and accrued liabilities			$	24,013		$	24,634
	Unearned contract revenue				5,141			4,059
	Share repurchase obligation	5			-			947
	Derivative liabilities	8			473			14
	Total current liabilities				29,627			29,654
NON-CURRENT LIABILITIES
	Deferred tax liabilities				1,672			1,121
	Total non-current liabilities				1,672			1,121
TOTAL LIABILITIES					31,299			30,775
SHAREHOLDERS' EQUITY
	Issued capital	5			20,161			19,746
	Contributed surplus				336			216
	Retained earnings				49,128			47,089
	Accumulated other comprehensive loss				(74	)		(254	)
TOTAL SHAREHOLDERS' EQUITY					69,551			66,797
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY				$	100,850		$	97,572
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

CALIAN TECHNOLOGIES LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET PROFIT
For the three and twelve-month periods ended September 30, 2014 and 2013
(Canadian dollars in thousands, except per share data)
		NOTES		Three months ended September 30, 2014			Three months ended September 30, 2013			Year ended September 30, 2014			Year ended September 30, 2013
Revenues				$	54,430		$	57,502		$	211,257		$	232,463
Cost of revenues					44,349			47,448			172,147			189,735
Gross profit					10,081			10,054			39,110			42,728
Selling and marketing					762			767			3,379			3,626
General and administration					3,874			3,809			16,141			16,650
Facilities					920			991			3,374			3,369
Depreciation					280			281			1,077			1,095
Amortization					378			136			924			544
Deemed compensation related to acquisitions		10			267			-			429			-
Bargain purchase gain		10			-			-			(330	)		-
Profit before interest income and income tax expense					3,600			4,070			14,116			17,444
Interest income					57			85			271			352
Profit before income tax expense					3,657			4,155			14,387			17,796
Income tax expense - current					1,234			939			4,085			4,499
Income tax expense - deferred					(152	)		192			(279	)		242
Total income tax expense					1,082			1,131			3,806			4,741
NET PROFIT FOR THE PERIOD				$	2,575		$	3,024		$	10,581		$	13,055
NET PROFIT PER SHARE:
	Basic	6		$	0.35		$	0.41		$	1.44		$	1.73
	Diluted	6		$	0.35		$	0.41		$	1.44		$	1.73
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

CALIAN TECHNOLOGIES LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three and twelve-month periods ended September 30, 2014 and 2013
(Canadian dollars in thousands)
		NOTES		Three months ended September 30, 2014			Three months ended September 30, 2013			Year ended September 30, 2014			Year ended September 30, 2013
PROFIT FOR THE PERIOD				$	2,575		$	3,024		$	10,581		$	13,055
Other comprehensive income, net of tax
	Change in deferred gain or loss on derivatives designated as cash flow hedges, net of tax of $253 and $65 (2013 - $54 and $346)				(697	)		150			180			(951	)
Other comprehensive income (loss), net of tax					(697	)		150			180			(951	)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD				$	1,878		$	3,174		$	10,761		$	12,104
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

CALIAN TECHNOLOGIES LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the years ended September 30, 2014 and 2013
(Canadian dollars in thousands, except per share data)
	Notes		Issued capital				Contributed surplus			Retained earnings			Cash flow hedging reserve			Total
Balance October 1, 2013			$	19,746			$	216		$	47,089		$	(254	)	$	66,797
Total comprehensive income				-				-			10,581			180			10,761
Dividends ($1.12 per share)				-				-			(8,263	)		-			(8,263	)
Issue of shares under the employee share purchase plan	5			465				-			-			-			465
Stock option plan compensation expense	5			-				120			-			-			120
Share repurchase	5			(174	)			-			(1,102	)		-			(1,276	)
Share purchase agreement - reclassification	5			124				-			823			-			947
Balance September 30, 2014			$	20,161			$	336		$	49,128		$	(74	)	$	69,551
	Notes		Issued capital				Contributed surplus			Retained earnings			Cash flow hedging reserve			Total
Balance October 1, 2012			$	19,949			$	164		$	47,186		$	697		$	67,996
Total comprehensive income				-				-			13,055			(951	)		12,104
Dividends ($1.12 per share)				-				-			(8,472	)		-			(8,472	)
Issue of shares under the employee share purchase plan	5			424				-			-			-			424
Issue of shares under stock option plan	5			99				(6	)		-			-			93
Stock option plan compensation expense	5			-				58			-			-			58
Share repurchase	5			(757	)			-			(4,844	)		-			(5,601	)
Share purchase agreement - reclassification	5			31				-			164			-			195
Balance September 30, 2013			$	19,746			$	216		$	47,089		$	(254	)	$	66,797
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

CALIAN TECHNOLOGIES LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended September 30, 2014 and 2013
(Canadian dollars in thousands)
		NOTES		Year ended September 30, 2014			Year ended September 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit for the period				$	10,581		$	13,055
Items not affecting cash:
	Interest income				(271	)		(352	)
	Income tax expense				3,806			4,741
	Employee stock purchase plan and option plan compensation expense				188			131
	Depreciation and amortization				2,001			1,639
	Deemed compensation related to acquisitions				429			-
	Bargain purchase gain				(330	)		-
					16,404			19,214
Change in non-cash working capital
	Accounts receivable				3,252			4,218
	Work in process				(2,826	)		(318	)
	Prepaid expenses				570			(639	)
	Accounts payable and accrued liabilities				(3,496	)		3,777
	Unearned contract revenue				1,083			(9,334	)
					14,987			16,918
	Interest received				287			380
	Income tax paid				(3,836	)		(4,765	)
					11,438			12,533
CASH FLOWS USED IN FINANCING ACTIVITIES
	Issuance of common shares	5			388			449
	Dividends				(8,263	)		(8,472	)
	Repurchase of shares	5			(1,276	)		(5,601	)
					(9,151	)		(13,624	)
CASH FLOWS USED IN INVESTING ACTIVITIES
	Equipment and application software expenditures				(1,188	)		(725	)
	Acquisitions	10			(5,681	)		(400	)
					(6,869	)		(1,125	)
NET CASH OUTFLOW					(4,582	)		(2,216	)
CASH, BEGINNING OF PERIOD					29,782			31,998
CASH, END OF PERIOD				$	25,200		$	29,782
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

CALIAN TECHNOLOGIES LTD.

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three and twelve-month periods ended September 30, 2014 and 2013

(Canadian dollars in thousands, except per share amounts)

(Unaudited)

1. BASIS OF PREPARATION

Calian Technologies Ltd. ("the Company"), incorporated under the Canada Business Corporations Act, and its wholly-owned subsidiaries provide technology services to industry and government. The address of its registered office and principal place of business is 340 Legget Drive, Ottawa, Ontario K2K 1Y6.

These unaudited interim condensed consolidated financial statements are expressed in Canadian dollars and have been prepared in accordance with International Accounting Standard ("IAS") 34 - Interim Financial Reporting, as issued by the International Accounting Standard Board ("IASB"). These unaudited interim condensed consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") and in accordance with the accounting policies the Company adopted in its annual consolidated financial statements for the year ended September 30, 2013 and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report for the year ended September 30, 2013. These unaudited interim condensed consolidated financial statements do not include all of the information required in annual financial statements.

Comparative amounts of depreciation and amortization expense as well as prepaid expenses and equipment have been reclassified in the Interim Condensed Consolidated Statement of Net Profit and Consolidated Statement of Financial Position, respectively, for the periods ended September 30, 2013, to conform to the current period presentation.

These unaudited interim condensed consolidated financial statements were authorized for issuance by the Board of Directors on November 12, 2014.

2. FUTURE CHANGES IN ACCOUNTING POLICIES

IFRS 15 Revenue from Contracts with Customers

In April 2014, the IASB released IFRS 15 - Revenue from Contracts with Customers. The Standard replaces IAS11 Construction Contracts and IAS18 Revenue, providing a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 is effective for annual periods beginning on or after January 1, 2017. The Company has not yet assessed the impact of the adoption of this standard on its consolidated financial statements.

IFRS 9 Financial instruments

IFRS 9 was issued by the International Accounting Standards Board ("IASB") in November 2009 and October 2010, was amended in 2013 and finalized in July 2014 and will replace IAS 39, Financial Instruments: Recognition and Measurement ("IAS 39").

IFRS 9 uses a single approach to determine whether a financial instrument is measured at fair value through profit or loss, fair value through other comprehensive income or amortized cost, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of those financial instruments. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. The Company has not yet assessed the impact of the adoption of this standard on its consolidated financial statements.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates:

The preparation of financial statements in conformity with IFRS requires the Company's management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from those estimates.

Purchase Price allocation

As described in Note 10, during the year ended September 30, 2014, the Company acquired Med-Team Clinic Inc., Amtek Engineering Ltd. and DWP Solutions Inc. As a result of these acquisitions, management was required to estimate the fair values of each identifiable asset and liability acquired through the acquisitions. Fair value of cash, accounts receivable, accounts payable and equipment were estimated to approximate their carrying values in the companies' records at the date of the transactions. The fair values of the intangible assets were valued using the excess earnings method under the income approach.

Contingent considerations

As described in Note 10 of these financial statements, the Company acquired several companies during the year. As a result of these acquisitions, management was required to estimate the fair value of the contingent considerations by assessing the likelihood of each business meeting the earn-out targets required for the contingent consideration to be paid.

There were no other significant changes in estimates or approaches to determining estimates in the periods presented.

4. SEASONALITY

The results of operations for the interim periods are not necessarily indicative of the results of operations for the full year. The Company's revenues and earnings have historically been subject to some quarterly seasonality due to the timing of vacation periods and statutory holidays.

5. ISSUED CAPITAL

Share repurchase

During the three months ended September 30, 2014 (2013), the Company acquired nil (86,100) of its outstanding common shares at an average price of nil ($18.60) per share for a total of nil ($1,602) including related expenses, through normal course issuer bids in place during the period. During the year ended September 30, 2014 (2013), the Company acquired 64,500 (282,670) of its outstanding common shares at an average price of $19.79 ($19.82) per share for a total of $1,276 ($5,601) including related expenses, through normal course issuer bids in place during the period. The excess of the purchase price over the stated capital of the shares was charged to retained earnings.

Stock options

The Company has an established stock option plan, which provides that the Board of Directors may grant stock options to eligible directors and employees. Under the plan, eligible directors and employees are granted the right to purchase shares of common stock at a price established by the Board of Directors on the date the options are granted but in no circumstances below fair market value of the shares at the date of grant. The plan provides for a 10% rolling maximum number of options available for grant. As at September 30, 2014 (2013), a total of 735,390 (739,633) common shares are reserved for issuance under the plan with 415,000 (240,000) options currently outstanding of which 290,600 (197,000) are exercisable. During the fourth quarter ended September 30, 2014 (2013), 175,000 (NIL) options were issued.

The weighted average fair value of options granted during the fourth quarter ended September 30, 2014 was $1.18 per option calculated using the Black-Scholes option pricing model. Where relevant, the expected life of the options was based on historical data for similar issuance and adjusted based on management's best estimate for the effects of non-transferability, exercises restrictions and behavioural considerations. Expected volatility is based on historical price volatility over the past 5 years. To allow for the effects of early exercise, it was assumed that options would be exercised on average 4.0 years after vesting.

The following assumptions were used to determine the fair value of the options granted in 2014:

	Grant date share price	$	19.70
	Exercise price	$	19.70
	Expected price volatility		17.4	%
	Expected option life		4.0 yrs
	Expected dividend yield		5.7	%
	Risk-free interest rate		1.4	%
	Forfeiture rate		0	%

Employee Share Purchase Plan

During the year ended September 30, 2014 (2013), the Company issued 22,075 (23,346) shares under the Company's Employee Share Purchase Plan at an average price of $17.54 ($15.22) for a total of $388 ($355).

Share repurchase obligation

The Company has an agreement with a third party which provides for automatic repurchases of the Company's shares without the Company having the ability to influence the purchases. The financial liability is determined as the present value of the maximum redemption amount at each of the reporting periods. The reclassification adjustment is made by reducing issued capital and retained earnings with an offsetting adjustment to the share repurchase obligation account. An income adjustment will result for any shares repurchased below the maximum amount per share. The amount of income recognized in the period is insignificant.

6. NET PROFIT PER SHARE

The diluted weighted average number of shares has been calculated as follows:

	Three months ended September 30		Year ended September 30
	2014	2013	2014	2013
Weighted average number of shares - basic	7,353,908	7,432,383	7,367,517	7,559,437
Addition to reflect the dilutive effect of employee stock options	-	-	-	3,532
Weighted average number of shares - diluted	7,353,908	7,432,383	7,367,517	7,562,969

Options that are anti-dilutive because the exercise price was greater than the average market price of the common shares are not included in the computation of diluted earnings per share. For the three-month period ended September 30, 2014 (2013), 330,000 (NIL) options were excluded from the above computation. For the twelve-month period ended September 30, 2014 (2013), 155,000 (NIL) options were excluded from the above computation.

Profit for the period is the measure of profit or loss used to calculate Net profit per share.

7. SEGMENTED INFORMATION

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, regarding how to allocate resources and assess performance. The Company's chief operating decision maker is the Chief Executive Officer. The Company operates in two reportable segments described below, defined by their primary type of service offering, namely Systems Engineering and Business and Technology Services.

• Systems Engineering involves planning, designing and implementing solutions that meet a customer's specific business and technical needs, primarily in the satellite communications sector.
• Business and Technology Services provides business and technology services to industry and government in the health, operations and maintenance, IT services and training.

The Company evaluates performance and allocates resources based on earnings before interest income and income taxes. The accounting policies of the segments are the same as those described in Note 2 - Summary of significant accounting policies to the financial statements for the year ended September 30, 2013.

Three months ended September 30, 2014	Systems Engineering		Business and Technology Services		Corporate			Total
Revenues	$	14,343	$	40,087	$	-		$	54,430
Profit before interest income and income tax expense		2,577		1,620		(597	)		3,600
Interest income									57
Income tax expense									(1,082	)
Net profit for the period								$	2,575
Three months ended September 30, 2013	Systems Engineering		Business and Technology Services		Corporate				Total
Revenues	$	19,473	$	38,029	$	-		$	57,502
Profit before interest income and income tax expense		2,316		2,221		(467	)		4,070
Interest income									85
Income tax expense									(1,131	)
Net profit for the period								$	3,024
Year ended September 30, 2014	Systems Engineering		Business and Technology Services		Corporate				Total
Revenues	$	55,413	$	155,844	$	-		$	211,257
Profit before interest income and income tax expense		9,451		6,833		(2,168	)		14,116
Interest income									271
Income tax expense									(3,806	)
Net profit for the period								$	10,581
Total assets other than cash and goodwill		23,048	$	40,463	$	102		$	63,613
Goodwill		-		12,037		-			12,037
Cash		-		-		25,200			25,200
Total assets	$	23,048	$	52,500	$	25,302		$	100,850
Equipment and intangible expenditures	$	978	$	210	$	-		$	1,188
Year ended September 30, 2013	Systems Engineering		Business and Technology Services		Corporate				Total
Revenues	$	70,434	$	162,029	$	-		$	232,463
Profit before interest income and income tax expense		10,578		9,015		(2,149	)		17,444
Interest income									352
Income tax expense									(4,741	)
Net profit for the period								$	13,055
Total assets other than cash and goodwill	$	19,909	$	37,001	$	99		$	57,009
Goodwill		-		10,781		-			10,781
Cash		-		-		29,782			29,782
Total assets	$	19,909	$	47,782	$	29,881		$	97,572
Equipment and intangible expenditures	$	412	$	323	$	-		$	725

8. HEDGING

Foreign currency risk related to contracts

The Company is exposed to foreign currency exchange fluctuations on its cash balance, accounts receivable, accounts payable and future cash flows related to contracts denominated in a foreign currency. Future cash flows will be realized over the life of the contracts. The Company utilizes derivative financial instruments, principally in the form of forward exchange contracts, in the management of its foreign currency exposures. The Company's objective is to manage and control exposures and secure the Company's profitability on existing contracts and therefore, the Company's policy is to hedge 100% of its foreign currency exposure. The Company does not utilize derivative financial instruments for trading or speculative purposes. The Company applies hedge accounting when appropriate documentation and effectiveness criteria are met.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives to specific firm contractually related commitments on projects.

The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. Hedge ineffectiveness has historically been insignificant.

The forward foreign exchange contracts primarily require the Company to purchase or sell certain foreign currencies with or for Canadian dollars at contractual rates. At September 30, 2014, the Company had the following forward foreign exchange contracts:

Type	Notional		Currency		Maturity	Equivalent Cdn. Dollars		Fair Value September 30, 2014
BUY	36,434		USD		October 2014		40,806	$	189
SELL	2,322		EURO		October 2014	$	3,285		1
BUY	78		GBP		October 2014		142		1
Derivative assets								$	191
SELL	54,764		USD		October 2014	$	61,336	$	286
SELL	1,000		USD		September 2015		1,120		62
SELL	1,000		USD		September 2016		1,120		62
SELL	1,000		USD		September 2017		1,120		62
SELL	51		GBP		October 2014		93		1
Derivative liabilities								$	473

A 10% strengthening of the Canadian dollar against the following currencies at September 30, 2014 would have decreased other comprehensive income as related to the forward foreign exchange contracts by the amounts shown below.

	September 30, 2014
USD	$	2,172
EURO		299
GBP		(4	)
	$	2,467

9. CONTINGENCIES

In the normal course of business, the Company is party to business and employee related claims. The potential outcomes related to existing matters faced by the Company are not determinable at this time. The Company intends to defend these actions, and management believes that the resolution of these matters will not have a material adverse effect on the Company's financial condition.

10. ACQUISITIONS

Primacy Management Inc. ("Primacy")

Under the contingent consideration arrangement, the Company is required to pay the former shareholders of Primacy an additional $400 and $600 if Primacy attains specified levels of earnings before interest, taxes, depreciation and amortization (EBITDA) for the years ended February 28, 2013 and 2014 respectively. During the period ended March 31, 2014 (2013), the Company paid $600 ($400) respectively related to the first and second year earn-out.

Med-Team Clinic Inc. ("Med-Team")

On December 31, 2013, the Company acquired all of the outstanding shares of Med-Team for consideration of $930 of which $661 was paid on the date of closing. A discounted amount of $269 is payable contingently. Under the contingent consideration arrangement, the Company is required to pay the former shareholders of Med-Team $300 if Med-Team attains specified levels of EBITDA for the years ended December 31, 2014 and 2015. The amount of $269 represents the estimated fair value of the Company's obligation at the acquisition date. Med-Team's principal business activity relates to the management of medical clinics. Med-Team was acquired so as to expand the Company's health service offerings. The acquisition is a business combination to which IFRS3 Business Combinations applies. Acquisition-related costs amounting to $37 have been excluded from the consideration and have been recognized as an expense in the year ended September 30, 2014, within the general and administration line item in the consolidated statement of net profit.

Amtek Engineering Services Ltd. ("Amtek")

Effective April 30, 2014, the Company acquired all of the outstanding shares of Amtek for a purchase price of up to $5,890. Of this amount $3,490 was paid on the date of closing, $600 was placed in escrow and $1,800 is payable contingently.

Under the contingent payment arrangement, the Company is required to pay the former shareholders of Amtek an additional $900 and $900 if Amtek attains specified levels of earnings before interest, taxes, depreciation and amortization (EBITDA) for the years ended April 30, 2015 and 2016 respectively. With the current levels of contracts signed by Amtek and its ability to maintain its market share, management believes that Amtek can achieve its earn-out target in both years. Amtek's principal business activity relates to the provision of engineering services mainly within the Federal Government. Amtek was acquired so as to expand the Company's training and support service offerings.

A portion of the amount placed in escrow and a portion of the contingent payment totaling $1,914 are subject to the retention of the principal shareholders for a period of two years. These amounts are deemed to represent deferred compensation payable to such shareholders and therefore are excluded from the total consideration of the purchase and will be expensed in the Company's consolidated statement of net profit as deemed compensation related to acquisitions on a straight-line basis over the retention period.

Acquisition-related costs amounting to $65 have been excluded from the consideration and have been recognized as an expense in the period ended September 30, 2014, within the general and administration line item in the consolidated statement of net profit.

DWP Solutions Inc. (DWP)

Effective June 30, 2014, the Company acquired all of the outstanding shares of DWP for a purchase price of up to $1,759. Of this amount $750 was paid on the date of closing, $225 was placed in escrow, $109 was paid during the fourth quarter of 2014 and $675 is payable contingently.

Under the contingent consideration arrangement, the Company is required to pay the former shareholders of DWP an additional $300 and $375 if DWP attains specified levels of earnings before interest, taxes, depreciation and amortization (EBITDA) for the years ended June 30, 2015 and 2016 respectively. With the current levels of contracts signed by DWP and the ability to grow in its selected market segment, management believes that DWP can achieve its earn-out target in both years. Therefore, the amount of $675 represents the estimated fair value of the Company's obligation at the acquisition date. DWP's principal business activity relates to the provision of IT cyber security professionals mainly within the Federal Government. DWP was acquired so as to expand the Company's IT service offerings.

The amount placed in escrow totaling $225 is subject to the retention of the principal shareholders for a period of two years. This amount is deemed to represent deferred compensation payable to such shareholders and therefore is excluded from the total consideration to the purchase and will be expensed in the Company's consolidated statement of net profit as deemed compensation related to acquisitions on a straight-line basis over the retention period.

Acquisition-related costs amounting to $50 have been excluded from the consideration and have been recognized as an expense in the period ended September 30, 2014, within the general and administration line item in the consolidated statement of net profit.

These acquisitions are business combination to which IFRS 3 Business Combination applies.

Consideration:	Med-Team			Amtek			DWP
Cash	$	661		$	3,490		$	859
Prepaid					600			225
Contingent consideration		269			486			675
Contingent payments		-			1,314			-
Total purchase price	$	930		$	5,890		$	1,759
Less: deemed compensation		-			1,914			225
Consideration to allocate	$	930		$	3,976		$	1,534

The following are the assets acquired and liabilities recognized at the date of the acquisitions:

Current assets:	Med-Team			Amtek			DWP
Cash	$	56		$	818		$	(120	)
Accounts receivable		171			3,274			1,345
Prepaid expenses		-			4			-
	$	227		$	4,096		$	1,225
Non-current assets:
Equipment	$	4		$	15		$	-
Intangible assets		381			1,719			765
	$	385		$	1,734		$	765
Current liabilities:
Accounts payable and accrued liabilities	$	(125	)	$	(1,068	)	$	(965	)
Deferred tax liability		(100	)		(456	)		(204	)
	$	(225	)	$	(1,524	)	$	(1,169	)
Net assets acquired	$	387		$	4,306		$	821
Goodwill arising on acquisitions:		Med-Team			Amtek			DWP
Total consideration allocated	$	930		$	3,976		$	1,534
Net assets acquired		(387	)		(4,306	)		(821	)
Bargain purchase gain		-			330			-
	$	543		$	-		$	713

Substantially all of the goodwill that arose on acquisitions relates to the value of the taxable temporary differences attributable to the acquired intangible assets. None of the goodwill arising on the acquisition is expected to be deductible for tax purposes. The bargain purchase gain on the Amtek acquisition relates to the fact that a significant portion of the purchase price was deemed to be compensation as described above. As a result, the identifiable tangible and intangible assets on acquisition were higher than the consideration allocated which resulted in a bargain purchase gain.

Net cash outflow during the current year related to the acquisitions:

	Primacy		Med-Team		Amtek		DWP
Consideration paid in cash	$	600	$	661	$	4,090	$	1,084
Less: cash balance acquired		-		56		818		(120	)
	$	600	$	605	$	3,272	$	1,204

Impact of the acquisitions on the consolidated results of the Company:

Had the business combinations been effected at October 1, 2013, the revenue and net profit of the Company for the year ended September 30, 2014 would have been higher by $13,578 and $750 respectively. Management considers these 'pro-forma' numbers to represent an approximate measure of the performance of the combined group for the year ended September 30, 2014 and provide a reference point for comparison in future periods.

Management Discussion and Analysis - September 30, 2014:

(Canadian dollars in thousands, except per share data)

This MD&A is the responsibility of management and has been reviewed and approved by the Board of Directors of the Company. This MD&A has been prepared in accordance with the requirements of the Canadian Securities Administrators. The Board of Directors is responsible for ensuring that we fulfill our responsibilities for financial reporting and is ultimately responsible for reviewing and approving the MD&A. The Board of Directors carries out this responsibility principally through its Audit Committee.

IFRS and non-GAAP measures:

This MD&A contains both IFRS and non-GAAP measures. Non-GAAP measures are defined and reconciled to the most comparable IFRS measure.

RESULTS OF OPERATIONS

Revenues:

For the fourth quarter of 2014, revenues were $54,430 compared to $57,502 reported for the same period in 2013 representing a 5% decrease from the prior year. For the year ended September 30, 2014 revenues were $211,257 compared to $232,463 for 2013, a decrease of 9%.

Systems Engineering's (SED) revenues were $14,343 in the quarter and $55,413 on a year-to-date basis representing a 26% and 21% decrease respectively when compared to the $19,473 and $70,434 recorded last year. As we near the completion phase on several large engineering projects, the mix of materials and subcontracts decreases. Accordingly, while engineering utilization remained very high, actual revenues generated from engineering projects were down from the same quarter last year. Manufacturing related revenues showed an increase relative to the fourth quarter last year representing the first quarterly year over year increase in this sector during the year. Consistent with the last number of quarters, we have experienced another strong showing in the area of ancillary product sales. Due to the project nature of its business, the SED division is susceptible to significant variation in volumes of activity from period to period. While we have experienced overall revenue retraction during the last year, we are encouraged by the increase in backlog achieved during the last few quarters.

Business and Technology Services (BTS) revenues were $40,087 in the quarter and $155,844 on a year-to-date basis representing an increase of 5% for the quarter and a decrease of 4% on a year-to-date basis from the $38,029 and $162,029 for the same period last year. For the fourth quarter of 2014, the division saw a decrease in government demand in most of its market segment, offset by the inclusion of sales from recent acquisitions. The demand for services in most of the BTS market segments during all of fiscal 2014 was affected by the government spending cuts. Compared to the prior year, we were most affected in our operations and maintenance group as DND wound down our existing vehicle maintenance contract at the beginning of this fiscal year and decided not to re-compete the work requirement. Our training contracts also felt the impact of budget constraints and our short term staffing group experienced revenue declines due to overall reduced demand as well as significant competitive pressures for available work. Our health group provided comparatively positive results with revenue gains in fiscal 2014.

Management expects that the marketplace for the near term will continue to be unsettled and very competitive. SED is expected to face a challenging environment in the manufacturing area at least for the near term. Also, the timing of new engineering opportunities is always subject to delay. Our backlog provides a reasonable level of revenue assurance on existing contracts and new opportunities continue to arise. However, continued cuts in federal government spending could have a prolonged effect on near term revenues. The nature and extent of future government spending constraints remain uncertain and therefore, future revenues ultimately will be determined by customer demand on existing contracts as well as the timing of future contract awards.

Gross margin

Gross margin was 18.5% in the fourth quarter of 2014, compared to the 17.3% reported in the fourth quarter a year ago. On a year-to-date basis the Company reported margins of 18.5% compared to 18.4% for the same period last year. The consolidated gross margin for the fourth quarter 2014 reflects the successful execution of projects tempered by general downward margin pressure being experienced in both of our divisions.

Gross margin in Systems Engineering was 28.8% this quarter compared to 20.3% in the same quarter of 2013 and was 27.8% for the year ended September 30, 2014 compared to 23.7% for the same period last year. The successful execution on projects nearing completion provided excellent margins for the quarter. Also, the higher concentration of labour provided higher margins than the prior year which had a significant component of materials and subcontracts that typically attract lower margins.

Gross margin in Business and Technology Services was 14.8% compared to the 16.1% reported in the fourth quarter of 2013. For the year ended September 30, 2014 gross margin was 15.2% compared to the 16.1% reported for the same period last year. The acquired Amtek and DWP businesses are characterized by lower gross margins but with correspondingly reduced costs of business development and delivery. Accordingly, the inclusion of such revenues has had a dilutive effect on reported margin percentages. The traditional BTS business which is concentrated with the federal government continued to experience margin pressure. Strong competition on new work will likely negate any significant near-term improvement.

Because of the significant difference in gross margin between each of the two divisions, the overall gross margin of the Company is dependent on the relative level of revenue generated from each division. Management will continue to focus on operational execution and diligent negotiation of supplier costs in order to maximize margins. However, increased competition is expected to maintain the pressure on margins in both divisions. The volatility of the Canadian dollar is always an influencing factor for margins on new work in the SED division when denominated in foreign currencies.

Operating expenses:

Selling and marketing, general and administration and facilities totalled $22,894 or 10.8% of revenues on a year-to-date basis compared to $23,645 or 10.2% of revenues reported in 2013. Through continued cost containment efforts, management was able to reduce its operating costs compared to fiscal 2013, even with the inclusion of the operating expenses of its recently acquired businesses. However, with the decrease in revenues, total operating expenses as a percentage of revenues increased slightly. Management will continue to challenge discretionary spending; however, prudent investments especially in marketing and business development are still required in order to continue the evolution of our service lines and broadening of our target markets.

EBITDA⁽¹⁾:

EBITDA⁽¹⁾ for the fourth quarter was $4,525 million compared to $4,487 in the same quarter of the previous year. On a year-to-date basis, EBITDA⁽¹⁾ was $16,216 compared to EBITDA of $19,083 in the previous year.

Depreciation:

Depreciation of $1,077 is in line with the $1,095 recorded in fiscal 2013.

Amortization of intangibles:

As a result of the completion of three business acquisitions during fiscal 2014, amortization of intangibles increased to $924 compared to $544 in fiscal 2013. When taking into consideration a full year amortization on the acquisitions completed in fiscal 2014, amortization of intangible is estimated at $1,457 for fiscal 2015.

Deemed compensation related to acquisition and Bargain purchase gain:

These unusual items result from a portion of the purchase price related to the Amtek and DWP acquisitions being deemed as deferred compensation payable to certain shareholders under IFRS and therefore are excluded from the total consideration of the purchase. The amounts totaling $2,139 will be expensed in the Company's consolidated statement of net profit on a straight-line basis over two years, being the retention period required under the agreements. In addition, as a result of excluding a significant portion of the purchase price in the Amtek acquisition, the identifiable tangible and intangible assets on acquisition were higher than the consideration allocated which resulted in a bargain purchase gain. For the year ended September 30, 2014 $429 was expensed as deemed compensation and $330 was recognized as bargain purchase gain. For fiscal 2015, the amount of deemed compensation is expected to be $1,070.

Income taxes:

The provision for income taxes on a year-to-date basis was $3,806 or 26.5% of earnings before tax compared to $4,741 in 2013 or 26.6% of earnings before tax. The effective tax rate for 2015, prior to considering the impact of non-taxable transactions and adjustments to reflect actual tax provision as filed, is expected to be approximately 26.5%.

Net profit:

As a result of the foregoing, in the fourth quarter of 2014 the Company recorded net profit of $2,575 or $0.35 per share basic and diluted, compared to $3,024 or $0.41 per share basic and diluted in the same quarter of the prior year. For the year ended September 30, 2014, the Company reported net profit of $10,581 or $1.44 per share basic and diluted compared to $13,055 or $1.73 per share basic and diluted in the same period of the prior year. Adjusted net profit⁽¹⁾ for the fourth quarter was $2,842 million or $0.38 per share basic and diluted, compared to $3,024 or $0.41 per share basic and diluted in the same quarter of the previous year. On a year-to-date basis, adjusted net profit⁽¹⁾ was $10,680 or $1.45 per share basic and diluted compared to adjusted net profit⁽¹⁾ of $13,055 or $1.73 per share basic and diluted in the previous year.

⁽¹⁾ See reconciliation regarding non-GAAP measures below

Reconciliation of non-GAAP measures to most comparable IFRS measures:

Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures, provides users of the Company's financial reports with enhanced understanding of the Company's results and related trends and increases transparency and clarity into the core results of the business. EBITDA, adjusted net profit and adjusted net profit per share exclude items that do not reflect, in our opinion, the Company's core performance and helps users of our MD&A to better analyze our results, enabling comparability of our results from one period to another.

These non-GAAP measures are mainly derived from the interim consolidated financial statements, but do not have a standardized meaning prescribed by IFRS; therefore, others using these terms may calculate them differently. The exclusion of certain items from non-GAAP performance measures does not imply that these are necessarily non-recurring. From time to time, we may exclude additional items if we believe doing so would result in a more transparent and comparable disclosure. Other entities may define the above measures differently than we do. In those cases, it may be difficult to use similarly named non-GAAP measures of other entities to compare performance of those entities to the Company's performance.

Reconciliation of adjusted net profit	Fourth Quarter 2014			Fourth Quarter 2013			Year ended September 30 2014				Year ended September 30 2013
NET PROFIT	$	2,575		$	3,024		$	10,581			$	13,055
Deemed compensation related to acquisition		267			-			429				-
Bargain purchase gain		-			-			(330	)			-
Adjusted net profit	$	2,842		$	3,024		$	10,680			$	13,055
Reconciliation of EBITDA	Fourth Quarter 2014			Fourth Quarter 2013			Year ended September 30 2014				Year ended September 30 2013
Profit before interest income and income tax expense	$	3,600		$	4,070		$	14,116			$	17,444
Depreciation		280			281			1,077				1,095
Amortization		378			136			924				544
Deemed compensation related to acquisition		267			-			429				-
Bargain purchase gain		-			-			(330	)			-
Adjusted net profit	$	4,525		$	4,487		$	16,216			$	19,083

BACKLOG

The Company's backlog at September 30, 2014 was $523 million with terms extended to fiscal 2018. This compares to $450 million reported at September 30, 2013. Contracted Backlog represents maximum potential revenues remaining to be earned on signed contracts, whereas Option Renewals represent customers' options to further extend existing contracts under similar terms and conditions.

Most fee for service contracts provide the customer with the ability to adjust the timing and level of effort throughout the contract life and as such the amount actually realized could be materially different from the original contract value. The following table represents management's best estimate of the backlog realization for 2015, 2016 and beyond based on management's current visibility into customers' existing requirements. Management's estimate of the realizable portion (current utilization rates and known customer requirements) is less than the total value of signed contracts and related options by approximately $145 million. The Company's policy is to reduce the reported contractual backlog once it receives confirmation from the customer that indicates the utilization of the full contract value may not materialize.

(dollars in millions)	Fiscal 2015		Fiscal 2016		Beyond 2016			Estimated realizable portion of Backlog			Excess over estimated realizable portion		TOTAL
Contracted Backlog	$	179	$	114	$	18		$	311		$	133	$	444
Option Renewals		11		20		36			67			12		79
TOTAL	$	190	$	134	$	54		$	378		$	145	$	523
Business and Technology Services	$	147	$	115	$	36		$	298		$	145	$	443
Systems Engineering		43		19		18			80			-		80
TOTAL	$	190	$	134	$	54		$	378		$	145	$	523

FINANCIAL CONDITION AND CASHFLOWS

Operating activities:

Cash inflows from operating activities for the year ended September 30, 2014 were $11,438 compared to cash inflows of $12,533 in 2013. This year's decrease is the result of lower cash earnings offset slightly by working capital fluctuations associated with the ebbs and flows of the business. The market for the Systems Engineering Division is characterized by contracts with billings tied to milestones achieved, which often results in significant working capital requirements. Conversely, given the nature of this business, it is sometimes possible to negotiate advance payments on contracts. Such advance payments give rise to unearned revenue that will be realized as revenue over the course of the contract. As at September 30, 2014, the Company's total unearned revenue amounted to $5,141. This compares to $4,059 at September 30, 2013, with the increase primarily attributable to advance billings for work to be performed in a future period.

Financing activities:

During the year ended September 30, 2014 (2013), the Company paid quarterly dividends of $1.12 ($1.12) per share. The Company intends to continue with its quarterly dividend policy for the foreseeable future.

During the year ended September 30, 2014, the Company repurchased 64,500 common shares through its normal course issuer bid at an average price of $19.79 compared to the previous year when the Company repurchased 282,670 shares at an average price of $19.82.

Investing activities:

During the year ended September 30, 2014 (2013), the Company paid $5,681 (400) for various acquisitions as described in these financial statements.

Capital resources:

At September 30, 2014 the Company had a short-term credit facility of $10,000 with a Canadian chartered bank that bears interest at prime and is secured by assets of the Company. An amount of $612 was used to issue a letter of credit to meet customer contractual requirements. Management believes that Calian has sufficient cash resources to continue to finance its working capital requirements and pay a quarterly dividend.

ADOPTION OF NEW ACCOUNTING RULES AND IMPACT ON FINANCIAL RESULTS

The Company did not adopt any new accounting policies this quarter.

SELECTED QUARTERLY FINANCIAL DATA

		Q4/14		Q3/14		Q2/14		Q1/14		Q4/13		Q3/13		Q2/13		Q1/13
REVENUES		$	54,430	$	53,839	$	51,186	$	51,802	$	57,502	$	58,123	$	58,932	$	57,906
EBITDA(1)		$	4,525	$	4,117	$	3,508	$	4,066	$	4,487	$	4,762	$	4,955	$	4,879
Net profit		$	2,575	$	2,866	$	2,364	$	2,776	$	3,024	$	3,276	$	3,354	$	3,401
Adjusted net profit(1)		$	2,842	$	2,698	$	2,364	$	2,776	$	3,024	$	3,276	$	3,354	$	3,401
Net profit per share
	Basic	$	0.35	$	0.39	$	0.32	$	0.38	$	0.41	$	0.43	$	0.44	$	0.45
	Diluted	$	0.35	$	0.39	$	0.32	$	0.38	$	0.41	$	0.43	$	0.44	$	0.45
Adjusted net profit per share(1)
	Basic	$	0.39	$	0.37	$	0.32	$	0.38	$	0.41	$	0.43	$	0.44	$	0.45
	Diluted	$	0.39	$	0.37	$	0.32	$	0.38	$	0.41	$	0.43	$	0.44	$	0.45

SEASONALITY

The Company's operations are subject to some quarterly seasonality due to the timing of vacation periods and statutory holidays. Typically the Company's first and last quarter will be negatively impacted as a result of the Christmas season and summer vacation period. During these periods, the Company can only invoice for work performed and is also required to pay for statutory holidays. This results in reduced levels of revenues and in a drop in gross margins. This seasonality may not be apparent in the overall results of the Company depending on the impact of the realized sales mix of its various projects.

OUTLOOK

Management continues to believe that the Company is well positioned for sustained growth in the long term. The Company operates in markets that will continue to require the services that the Company offers. To further assure itself of a stable source of revenues, the Company will continue to focus on increasing the percentage of its revenues derived from recurring business while pursuing new business in adjacent and non-government markets. The recent strengthening of the company's backlog provides an added degree of confidence for the realization of future revenues.

The Systems Engineering Division has been working within a sustainable satellite sector and the division is expecting new opportunities to arise as systems adopting the latest technologies will be required by customers wishing to maintain and improve their service offerings. Custom manufacturing activity levels will continue to be directly dependent upon SED's customers' requirements. Continuing volatility in orders is anticipated as both government and commercial customers continue to re-examine their traditional spending patterns. Recent delays, deferrals and cancellations of DND capital procurements are creating intense competition for available work. Changes in the relative value of the Canadian dollar will impact the Systems Engineering Division's competitiveness on projects denominated in foreign currencies.

The Business and Technology Services Division's services are adaptable to many different markets. Currently, its strength lies in providing program management and delivery services to the Department of National Defence. Management believes that in the long term, this department and many others within the federal government will continue to require more support services from private enterprises to supplement their current workforce. However, current cost cutting initiatives in the federal government have already had a negative impact on traditional BTS revenue sources and it is anticipated that the continued roll out of these initiatives could further impact demand, at least in the short term. Management believes that the types of service the division offers will continue to be attractive to government agencies in the long term and the division continues to assess how it can address new markets and seek new opportunities outside of the Federal Government. Recent acquisitions have bolstered the division's performance and it is expected that overall, the acquired companies will continue to meet and exceed the financial targets established as part of the acquisitions.

GUIDANCE

The company's performance in fiscal 2014 was below that of last year and is the direct result of constrained government spending and the related increase in competitive pressures. Management continues to expect that it could take some time to experience any significant rebound in certain market segments. As we enter fiscal 2015, the substantial contract wins and extensions achieved during the last year along with the book of business obtained from recent acquisitions, provide us with a solid backlog and accordingly, a higher level of revenue confidence. However, revenues ultimately realized will be dependent on the extent and timing of future contract awards as well as customer utilization of existing contracting vehicles. In addition, the requirement to categorize certain acquisition payments as compensation expense will negatively impact fiscal 2015 earnings by approximately $0.15 per share. Based on currently available information and our assessment of the marketplace, we expect revenues for fiscal 2015 to be in the range of $235 million to $ 265 million, net profit per share in the range of $1.35 to $1.65 per share and adjusted net profit⁽¹⁾ in the range of $1.50 to $1.80 per share.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

During the most recent interim quarter ended September 30, 2014, there have been no changes in the design of the Company's internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

FORWARD-LOOKING STATEMENT

Certain information included in this management discussion and analysis is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by the Company with the Ontario Securities Commission. Calian disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them.

The foregoing discussion and analysis should be read in conjunction with the financial statements for the fourth quarter of 2014, and with the Management Discussion and Analysis in the 2013 annual report, including the section on risks and opportunities.