Calian Reports First Quarter Results: Respectable Results Amidst Uncertain Markets
(All amounts in this release are in Canadian Dollars)

OTTAWA, ONTARIO -- (Marketwire) -- 02/06/13 -- Calian Technologies Ltd. (TSX: CTY) today released unaudited results for the first quarter ended December 31, 2012. Revenues for the quarter were $57.9 million, a 2% increase from the $56.8 million reported in the same quarter of the previous year. Net earnings were $3.4 million or $0.45 per share basic and diluted, compared to $3.6 million or $0.47 per share basic and diluted in the same quarter of the previous year.

"I am pleased with the results posted during the first quarter. Consolidated year over year revenues continued to grow at single digit rates with SED showing a strong quarter from a revenue perspective despite a lower level of manufacturing activity than the prior year. Engineering projects remained at healthy levels, continuing the trend from last quarter. Our BTS division experienced a slight drop in revenues as constraints in federal government spending started to impact the division late in the calendar year." stated Ray Basler, President and CEO.

"Gross margin percentages were down during the quarter, primarily as a result of lower margins in the SED division. The lower level of manufacturing activity did not offer the associated economies of scale experienced in the prior year and accordingly resulted in reduced margins. The addition of Primacy's higher gross margins once again assisted the BTS division to achieve a slight improvement from those recorded in the same quarter of last year. While margins on our signed backlog are quite predictable, we expect to see continued pricing pressure on new contracts as competition remains strong" continued Basler.

"Despite a difficult business environment expected for the balance of the year we have, and will continue, to invest in business development resources to evolve our service lines and expand our markets for the longer term. Primacy continues to perform at levels which exceed our initial expectations and we have been successful in establishing our first Calian-operated clinic at a Loblaw location in the Maritimes, thereby furthering our knowledge and capabilities related to healthcare delivery" stated Basler.

While the company's first quarter performance was respectable in the current environment, we remain guarded in relation to our customer's spending patterns for the balance of the year. In particular, the continued roll out of the federal government's cost cutting initiatives along with the related increase in competitive pressures have negatively impacted short term expectations for both revenues and profitability. Ultimately, revenues realized will be dependent on the extent and timing of future contract awards as well as customer utilization of existing contracting vehicles. Based on currently available information and our assessment of the marketplace, we expect revenues for fiscal 2013 to be in the range of $230 million to $250 million and net earnings in the range of $1.70 to $1.95 per share.

About Calian

Calian employs over 2,400 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, operations and maintenance, IT services and training 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 augments customer workforces with flexible short and long-term placements of individuals and teams, provides access to critical recruiting capabilities and delivers outsourcing services for a variety of technical and professional functions. 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 CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
               As at December 31, 2012 and September 30, 2012
                       (Canadian dollars in thousands)

                                                 December 31,  September 30,
                                          NOTES          2012           2012
                                                ----------------------------
ASSETS

CURRENT ASSETS
  Cash                                               $ 31,363       $ 31,998
  Accounts receivable                                  33,336         40,928
  Work in process                                       7,585          9,446
  Prepaid expenses                            5         1,614          1,480
  Derivative assets                          10           230            234
                                                ----------------------------
  Total current assets                                 74,128         84,086

NON-CURRENT ASSETS
  Equipment                                             3,731          3,854
  Application software                                    587            615
  Acquired intangibles                                  4,216          4,352
  Goodwill                                             10,781         10,781
                                                ----------------------------
  Total non-current assets                             19,315         19,602
                                                ----------------------------

TOTAL ASSETS                                         $ 93,443      $ 103,688
                                                ----------------------------
                                                ----------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued liabilities           $ 14,638       $ 19,853
  Unearned contract revenue                             8,888         13,392
  Share repurchase obligation                 6         1,224          1,209
  Derivative liabilities                     10            22             26
                                                ----------------------------
  Total current liabilities                            24,772         34,480

NON-CURRENT LIABILITIES
  Deferred tax liabilities                                949          1,212
                                                ----------------------------
  Total non-current liabilities                           949          1,212
                                                ----------------------------

TOTAL LIABILITIES                                      25,721         35,692
                                                ----------------------------
                                                ----------------------------

SHAREHOLDERS' EQUITY
  Issued capital                              6        19,938         19,949
  Contributed surplus                                     174            164
  Retained earnings                                    47,689         47,186
  Accumulated other comprehensive income
   (loss)                                                 (79)           697
                                                ----------------------------

TOTAL SHAREHOLDERS' EQUITY                             67,722         67,996
                                                ----------------------------

                                                     $ 93,443      $ 103,688
                                                ----------------------------
                                                ----------------------------



                          CALIAN TECHNOLOGIES LTD.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PROFIT
        For the three-month periods ended December 31, 2012 and 2011
           (Canadian dollars in thousands, except per share data)

                                      Three months ended  Three months ended
                              NOTES    December 31, 2012   December 31, 2011
                                    ----------------------------------------
Revenues                                        $ 57,906            $ 56,813
Cost of revenues                                  46,999              45,902
                                    ----------------------------------------
Gross profit                                      10,907              10,911
Selling and marketing                              1,064                 968
General and administration                         4,564               4,338
Facilities                                           809                 811
                                    ----------------------------------------
Profit before interest income
 and income tax expense                            4,470               4,794
Interest income                   7                   91                  79
                                    ----------------------------------------
Profit before income tax
 expense                                           4,561               4,873
Income tax expense - current                       1,143               1,206
Income tax expense - deferred                         17                  76
                                    ----------------------------------------
Total income tax expense                           1,160               1,282
                                    ----------------------------------------
NET PROFIT FOR THE PERIOD                        $ 3,401             $ 3,591
                                    ----------------------------------------
                                    ----------------------------------------

EARNINGS PER SHARE:
  Basic                           8               $ 0.45              $ 0.47
                                    ----------------------------------------
                                    ----------------------------------------
  Diluted                         8               $ 0.45              $ 0.47
                                    ----------------------------------------
                                    ----------------------------------------




                          CALIAN TECHNOLOGIES LTD.
       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PROFIT AND OTHER
                            COMPREHENSIVE INCOME
        For the three-month periods ended December 31, 2012 and 2011
                       (Canadian dollars in thousands)

                                     Three months ended  Three months ended
                              NOTES   December 31, 2012   December 31, 2011
                                    ----------------------------------------
PROFIT FOR THE PERIOD                           $ 3,401             $ 3,591
Other comprehensive income,
 net of tax
Unrealized loss on translating
 financial statements of an
 investment in a foreign
 operation, net of tax of nil
 (2011 - nil)                                         -                 (29)
Change in deferred gain or
 loss on derivatives
 designated as cash flow
 hedges, net of tax of $286
 (2011 -$433)                                      (776)                782
                                    ----------------------------------------
Other comprehensive income
 (loss), net of tax                                (776)                753
                                    ----------------------------------------
TOTAL COMPREHENSIVE INCOME FOR
 THE PERIOD                                     $ 2,625             $ 4,344
                                    ----------------------------------------
                                    ----------------------------------------

                          CALIAN TECHNOLOGIES LTD.
      UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
            For the three-months ended December 31, 2012 and 2011
           (Canadian dollars in thousands, except per share data)

                                                   Foreign
                                                  currency    Cash
                                Contri-             trans-    flow
                        Issued    buted  Retained   lation hedging
                 Notes capital  surplus  earnings  reserve reserve    Total
Balance October
 1, 2012              $ 19,949 $    164 $  47,186 $      -$    697 $ 67,996
Total
 comprehensive
 income                      -        -     3,401        -    (776)   2,625
Dividends ($0.28
 per share)                  -        -    (2,136)       -       -   (2,136)
Issue of shares
 under stock
 option plan         6      99       (6)        -        -       -       93
Stock option plan
 compensation
 expense             6       -       16         -        -       -       16
Share repurchase     6    (110)       -      (748)       -       -     (858)
Share purchase
 agreement -
 reclassification    6       -        -       (14)       -       -      (14)

                      ------------------------------------------------------
Balance December
 31, 2012             $ 19,938 $    174 $  47,689 $      -$    (79)$ 67,722
                      ------------------------------------------------------
                      ------------------------------------------------------


                                                  Foreign
                                                 currency     Cash
                               Contri-             trans-     flow
                       Issued    buted  Retained   lation  hedging
                Notes capital  surplus  earnings  reserve  reserve    Total
Balance October
 1, 2011             $ 19,018 $    219 $  43,345 $     22 $   (248)$ 62,356
Comprehensive
 income                     -        -     3,591      (29)     782    4,344
Dividends ($0.26
 per share)                 -        -    (1,992)       -        -   (1,992)
Issue of shares
 under stock
 option plan        6     183      (31)        -        -        -      152
Stock option
 plan
 compensation
 expense                    -       19         -        -        -       19
Share repurchase    6    (163)       -      (992)       -        -   (1,155)
Share purchase
 agreement -
 reclassificatio
 n                  6       -        -        31        -        -       31

                     -------------------------------------------------------
Balance December
 31, 2011            $ 19,038 $    207 $  43,983 $     (7)$    534 $ 63,755
                     -------------------------------------------------------
                     -------------------------------------------------------




                          CALIAN TECHNOLOGIES LTD.
         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
        For the three-month periods ended December 31, 2012 and 2011
                        (Canadian dollars in thousands)


                                     Three months ended  Three months ended
                              NOTES   December 31, 2012   December 31, 2011
                                    ----------------------------------------
CASH FLOWS FROM OPERATING
 ACTIVITIES
Profit for the period                           $ 3,401             $ 3,591
Items not affecting cash:
  Interest income                 8                 (91)                (79)
  Income tax expense                              1,160               1,282
  Employee stock purchase plan
   and option plan
   compensation expense                              33                  36
  Amortization                                      409                 276
                                    ----------------------------------------
                                                  4,912               5,106
Change in non-cash working
 capital
  Accounts receivable                             8,306              (2,346)
  Work in process                                 1,862                 773
  Prepaid expenses                                 (671)               (285)
  Accounts payable and accrued
   liabilities                                   (6,294)             (4,337)
  Unearned contract revenue                      (4,504)              3,412
                                    ----------------------------------------
                                                  3,611               2,323
  Interest received                                 100                  79
  Income tax paid                                (1,323)             (1,124)
                                    ----------------------------------------
                                                  2,388               1,278
                                    ----------------------------------------
CASH FLOWS USED IN FINANCING
 ACTIVITIES
  Issuance of common shares       6                  93                 152
  Dividends                                      (2,136)             (1,992)
  Repurchase of shares            6                (858)             (1,155)
                                    ----------------------------------------
                                                 (2,901)             (2,995)
                                    ----------------------------------------
CASH FLOWS USED IN INVESTING
 ACTIVITIES
  Equipment and application
   software expenditures                           (122)               (417)
                                    ----------------------------------------
                                                   (122)               (417)
                                    ----------------------------------------
FOREIGN CURRENCY ADJUSTMENT                           -                 (29)
NET CASH OUTFLOW                                   (635)             (2,163)
CASH, BEGINNING OF PERIOD                        31,998              30,742
                                    ----------------------------------------
CASH, END OF PERIOD                            $ 31,363            $ 28,579
                                    ----------------------------------------
                                    ----------------------------------------


                          CALIAN TECHNOLOGIES LTD.
     NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
        For the three-month periods ended December 31, 2012 and 2011
          (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 interim condensed consolidated financial statements are expressed in Canadian dollar 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 interim 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, 2012 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, 2012. These unaudited interim financial statements do not include all of the information required in annual financial statements.

These unaudited interim condensed consolidated financial statements for the three-month period ended December 31, 2012 were authorized for issuance by the Board of Directors on February 6, 2013.

2. FUTURE CHANGES IN ACCOUNTING POLICIES

IFRS 9 Financial instruments

IFRS 9 was issued in November 2009 introducing new requirements for the classification and measurement of financial assets. IFRS9 was further amended in October 2010 to include the requirements for the classification and measurement of financial liabilities and derecognition.

IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, 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 the financial assets. 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, 2015. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

IFRS 10 Consolidated financial statements

IFRS 10 establishes principles for the presentation of consolidated financial statements when an entity controls one or more other entities. IFRS 10 replaces IAS 27 - Consolidated and Separate Financial Statements and is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

IFRS 12 Disclosure of interests in other entities

IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off-balance sheet vehicles. The standard requires an entity to disclose information regarding the nature and risks associated with its interests in other entities and the effects of those interests on its financial position, financial performance and cash flows. IFRS 12 will be effective for the Company's fiscal years beginning on or after January 1, 2013, with earlier application permitted. The Company has not yet assessed the impact of the adoption of this standard on its consolidated financial statements.

IFRS 13 Fair value measurement

IFRS 13 is intended to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The standard will be effective for the Company's fiscal years beginning on or after January 1, 2013, with earlier application permitted. The Company has not yet assessed the impact of the adoption of this standard on its consolidated financial statements.

IAS 1Presentation of financial statements

In June 2011, the IASB amended IAS 1 - Presentation of financial statements. The principal change resulting from the amendments to IAS 1 is a requirement to group together items within other comprehensive income that may be reclassified to the statement of net earnings. The amendments also reaffirm existing requirements that items in other comprehensive income and net earnings should be presented as either a single statement or two consecutive statements. The amendment to IAS 1 will be effective for the Company's fiscal years beginning on or after January 1, 2013, with earlier application permitted. The Company does not expect any changes to its consolidated financial statement presentation from this amendment as the items within other comprehensive income that may be reclassified to the statement of comprehensive income are already grouped together.

IAS 1Presentation of financial statements (as part of the Annual Improvements to IFRS issued in May 2012)

In May 2012, the IASB amended IAS 1 - Presentation of financial statements. IAS1 requires an entity that changes accounting policies retrospectively or makes a retrospective restatement or reclassification to present a third statement of financial position as at the beginning of the preceding period. the amendments to IAS1 clarify that an entity is required to present a third statement of financial position only when the retrospective application, restatement or reclassification has a material effect on the information in the third statement of financial position and that related notes are not required to accompany the third statement of financial position. The amendment to IAS 1 will be effective for the Company's fiscal years beginning on or after January 1, 2013, with earlier application permitted. The Company does not expect any changes to its consolidated financial statement presentation from this amendment.

IAS 28 Investments in associates and joint ventures

IAS 28 was re-issued by the IASB in May 2011 in order to conform to changes as a result of the issuance of IFRS 10, IFRS11, and IFRS 12. IAS 28 continues to prescribe the accounting for investments in associates, but is now the only source of guidance describing the application of the equity method. The amended IAS 28 will be applied by all entities that are investors with joint control of, or significant influence over, an investee. The amended version of IAS 28 is effective for financial years beginning on or after January 1, 2013, with earlier application permitted. The Company is evaluating the impact of the amendments to IAS 28 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.

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. PREPAID EXPENSES


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                       December 31, 2012  September 30, 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Prepaid operating expenses                       $ 1,614             $ 1,480
Milestone advance to subcontractors                    -                   -
----------------------------------------------------------------------------
                                                 $ 1,614             $ 1,480
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6. ISSUED CAPITAL

Share repurchase

During the three months ended December 31, 2012 (2011), the Company acquired 41,870 (65,200) of its outstanding common shares at an average price of $20.51 ($17.71) per share for a total of $858 ($1,155) 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. A total of 500,000 common shares are authorized for issuance under the plan, of which 500,000 (345,000) are issued as at December 31, 2012 (2011). At December 31, 2012 there were 240,000 options outstanding, 113,000 of which are exercisable. No options were issued during the period.

Stock 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.

7. INTEREST INCOME

Interest income is comprised of the following amounts:


---------------------------------------------------------------------------
                                                         Three months ended
                                                                December 31
                                                       2012            2011
---------------------------------------------------------------------------
Interest earned on cash balances                      $ 100            $ 79
Accreted interest on contingent consideration            (9)              -
---------------------------------------------------------------------------
Interest income                                        $ 91            $ 79
---------------------------------------------------------------------------
---------------------------------------------------------------------------

8. EARNINGS PER SHARE

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


---------------------------------------------------------------------------
                                                         Three months ended
                                                                December 31
                                                        2012           2011
---------------------------------------------------------------------------
Weighted average number of shares - basic          7,634,555      7,644,366
Addition to reflect the dilutive effect of
 employee stock options                                3,014         12,538
---------------------------------------------------------------------------
Weighted average number of shares - diluted        7,637,569      7,656,904
---------------------------------------------------------------------------
---------------------------------------------------------------------------

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 December 31, 2012 (2011), 155,000 (95,000) options were excluded from the above computation.

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

9. 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 quarter ended December 31, 2012.



Three months ended December 31, 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                        Business and
                               Systems    Technology
                             Engineering    Services  Corporate       Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenues                        $ 17,952    $ 39,954        $ -    $ 57,906
Profit before interest
 income and income tax
 expense                           2,835       2,201       (566)      4,470
Interest income (Note 7)                                                 91
Income tax expense                                                   (1,160)
----------------------------------------------------------------------------
Profit for the period                                               $ 3,401
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total assets other than cash
 and goodwill                   $ 16,099    $ 34,858      $ 342    $ 51,299
Goodwill                               -      10,781          -      10,781
Cash                                   -           -     31,363      31,363
----------------------------------------------------------------------------
Total assets                    $ 16,099    $ 45,639   $ 31,705    $ 93,443
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Equipment and intangible
 expenditures                       $ 78        $ 44        $ -       $ 122
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended December 31, 2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                        Business and
                               Systems    Technology
                             Engineering    Services  Corporate       Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenues                        $ 16,417    $ 40,396        $ -    $ 56,813
Profit before interest
 income and income tax
 expense                           2,898       2,522       (626)      4,794
Interest income (Note 7)                                                 79
Income tax expense                                                   (1,282)
----------------------------------------------------------------------------
Profit for the period                                               $ 3,591
----------------------------------------------------------------------------
----------------------------------------------------------------------------
As at September 30, 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total assets other than cash
 and goodwill                   $ 23,753    $ 36,277      $ 879    $ 60,909
Goodwill                               -      10,781          -      10,781
Cash                                   -           -     31,998      31,998
----------------------------------------------------------------------------
Total assets                    $ 23,753    $ 47,058   $ 32,877   $ 103,688
----------------------------------------------------------------------------
Equipment and intangible
 expenditures                      $ 529       $ 525        $ -     $ 1,054
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acquired intangibles                 $ -     $ 4,670        $ -     $ 4,670
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Acquired goodwill                    $ -     $ 1,263        $ -     $ 1,263
----------------------------------------------------------------------------
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10. 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 December 31, 2012, the Company had the following forward foreign exchange contracts:


----------------------------------------------------------------------------
                                                                 Fair Value
                                                   Equivalent   December 31,
Type        Notional Currency         Maturity   Cdn. Dollars           2012
----------------------------------------------------------------------------
SELL           1,000      USD   September 2015        $ 1,057           $ 62
SELL           1,000      USD   September 2016          1,057             62
SELL           1,000      USD   September 2017          1,057             62
BUY           22,642      USD    December 2012         22,523              4
SELL           4,876     EURO    December 2012          6,436             40
BUY               40      GPB    December 2012             64              -
----------------------------------------------------------------------------
Derivative
 assets                                                                $ 230
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
SELL          30,248      USD    December 2012       $ 30,089            $ 5
BUY            2,189     EURO    December 2012          2,889             17
----------------------------------------------------------------------------
Derivative
 liabilities                                                            $ 22
----------------------------------------------------------------------------
----------------------------------------------------------------------------

A 10% strengthening (weakening) of the Canadian dollar against the following currencies at December 31, 2012 would have increased (decreased) other comprehensive income (loss) as related to the forward foreign exchange contracts by the amounts shown below.


                                     December 31, 2012
          ---------------------------------------------
EURO                                             $ 353
USD                                               (459)
GBP                                                  6
          ---------------------------------------------
                                                $ (100)
          ---------------------------------------------
          ---------------------------------------------

11. CONTINGENCIES

In the normal course of business, the Company is party to 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.

12. ACQUISITION

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 earnings before interest, taxes, depreciation and amortization (EBITDA) for the years ending February 28, 2013 and 2014 respectively. Currently, Primacy is on target for achieving its first year earn-out target and with the growing number of clinics operated by Primacy, management believes that Primacy can achieve its earn-out target in the second period.

Management Discussion and Analysis - December 31, 2012:

(Canadian dollars in thousands, except per share data)

RESULTS OF OPERATIONS

Revenues:

For the first quarter of 2013, revenues were $57,906 compared to $56,813 reported for the same period in 2012 representing a 2% increase from the prior year.

Systems Engineering's (SED) revenues were $17,952 in the quarter representing an 9% increase for the quarter from the $16,417 recorded last year. Manufacturing related revenues were down considerably relative to the surge in the first quarter of last year. Fortunately revenues generated from engineering projects more than compensated for the shortfall. Due to the project nature of its business, the SED division is susceptible to significant variation in volumes of activity from period to period.

Business and Technology Services (BTS) revenues were $39,954 in the quarter representing a 1% decrease from the $40,396 for the same period last year. The demand for services in some of the BTS market segments were affected by the government spending cuts while other segments continued to growth and record steady activity. Current year revenues were also impacted by the removal of the US division and the inclusion of Primacy Management.

Management expects that the marketplace for the remainder of the year will continue to be fragile and very competitive. The market conditions for SED are expected to be moderate and while new opportunities are expected, the related timing of project awards is always subject to change. Current BTS backlog will provide a solid level of activity on existing contracts and new opportunities are expected to arise. Cuts in federal government spending will continue to have an impact on future revenues in certain segments, however, the nature and extent of future spending constraints remain uncertain. The timing of future contract awards and customer demand will ultimately determine revenues for the year.

Gross margin:

Gross margin was 18.8% in the first quarter of 2013, compared to the 19.2% reported in the first quarter a year ago. The consolidated gross margin for the first quarter 2013 reflects a combination of lower margins in SED partially offset by the inclusion of Primacy to the mix. Margins on traditional service lines of the BTS division continue to experience downward pressure.

Gross margin in Systems Engineering was 23.4% this quarter compared to 26.1% in the first quarter of 2012. SED margins for the first quarter were lower due to the unusually high comparative resulting from economies of scale associated with a surge in manufacturing activity in the prior year. Margins experienced in the first quarter are indicative of expected future margins on projects

Gross margin in Business and Technology Services was 16.8% compared to the 16.4% reported in the first quarter of 2012. The increase in gross margin is generally due to the addition of Primacy Management which commands higher gross margins. The traditional BTS business continued to experience pressure on margins when bidding for new work as competition remains strong.

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 execution and aggressive negotiation of input costs in order to maximize margins. However, increasing competition is expected to keep 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 $6,437 or 11.1% of revenues in the first quarter of 2013 compared to $6,117 or 10.8% of revenues reported in the first quarter of 2012. The slight increase in costs as a percentage of revenues reflects the amortization of intangibles associated with the Primacy acquisition. Also, we have bolstered our investment in business development personnel as we strive to evolve our service lines and broaden our markets.

Interest income:

Interest income for the first quarter of 2013 was $91 compared to $79 in 2012. Interest income earned on cash balances was consistent with the prior year.

Income taxes:

The provision for income taxes for the first quarter of 2013 was $1,160 or 25.4% of earnings before tax compared to $1,282 in 2012 or 26.3% of earnings before tax. The effective tax rate for 2013, prior to considering the impact of non-taxable transactions, is expected to be approximately 26.5%.

Net earnings:

As a result of the foregoing, in the first quarter of 2013 the Company recorded net earnings of $3,401 or $0.45 per share basic and diluted, compared to $3,591 or $0.47 per share basic and diluted in the same quarter of the prior year.

BACKLOG

The Company's backlog at December 31, 2012 was $535 million with terms extending to fiscal 2018. This compares to $553 million reported at September 30, 2012. 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 2013, 2014 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 $137 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                                   Estimated Excess over
 millions)                                   realizable   estimated
                      Fiscal  Fiscal  Beyond portion of  realizable
                        2013    2014    2014    Backlog     portion    TOTAL
                    --------------------------------------------------------
Contracted Backlog     $ 133    $ 88    $ 13      $ 234        $ 65    $ 299
Option Renewals            4      47     113        164          72      236
----------------------------------------------------------------------------
TOTAL                  $ 137   $ 135   $ 126      $ 398       $ 137    $ 535
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Business and
 Technology Services   $ 102   $ 109   $ 115      $ 326       $ 137    $ 463
Systems Engineering       35      26      11         72           -       72
----------------------------------------------------------------------------
TOTAL                  $ 137   $ 135   $ 126      $ 398       $ 137    $ 535
----------------------------------------------------------------------------
----------------------------------------------------------------------------

FINANCIAL CONDITION AND CASHFLOWS

Operating activities:

Cash inflows from operating activities for the period ending December 31, 2012 were $2,388 compared to $1,278 in 2012. This year's increase is mainly the result of working capital fluctuations in line with the ebbs and flows of the business and a decrease in unearned revenues in the first quarter of 2013 of $4,504 compared to an increase of $3,412 in 2012. 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 December 31, 2012, the Company's total unearned revenue amounted to $8,888. This compares to $13,392 at September 30, 2012, with the decrease primarily attributable to performance of work which was billed in advance in a prior period.

Financing activities:

During the period ending December 31, 2012, the Company paid a quarterly dividend of $0.28 per share compared to 2012 when the Company paid $0.26 per share. The Company intends to continue with its quarterly dividend policy for the foreseeable future.

During the period ending December 31, 2012, the Company repurchased 41,870 common shares through its normal course issuer bid at an average price of $20.51 compared to the previous year when the Company repurchased 65,200 shares at an average price of $17.71.

Capital resources:

At December 31, 2012 the Company had a short-term credit facility of $25,000 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


                                         Q1/13     Q4/12     Q3/12     Q2/12

Revenues                              $ 57,906  $ 58,137  $ 59,343  $ 61,635
Net earnings                           $ 3,401   $ 3,364   $ 3,484   $ 3,669

Net earnings per share
  Basic                                 $ 0.45    $ 0.44    $ 0.45    $ 0.48
  Diluted                               $ 0.45    $ 0.44    $ 0.45    $ 0.48

                                         Q1/12     Q4/11     Q3/11     Q2/11

Revenues                              $ 56,813  $ 55,429  $ 58,529  $ 59,433
Net earnings                           $ 3,591   $ 3,338   $ 3,451   $ 3,254

Net earnings per share
  Basic                                 $ 0.47    $ 0.43    $ 0.45    $ 0.42
  Diluted                               $ 0.47    $ 0.43    $ 0.45    $ 0.42

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 believes 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 markets.

The Systems Engineering Division has been working within a stable satellite sector and the division is expecting new opportunities to arise as systems adopting the latest technologies will be required by customers to maintain and improve their service offerings. Custom manufacturing activity levels will continue to be directly dependent upon SED's customers' requirements and some volatility in orders is anticipated. The continued volatility of the Canadian dollar could impact the Systems Engineering Division's competitiveness when bidding against foreign competition 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 had a negative impact on traditional BTS revenue sources in the first quarter and it is anticipated that the continued roll out of these initiatives will 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 increase the availability of new opportunities. The acquisition of Primacy Management has bolstered the division's performance and it is expected that Primacy will continue to meet the financial targets established as part of the acquisition.

GUIDANCE

While the company's first quarter performance was respectable in the current environment, we remain guarded in relation to our customer's spending patterns for the balance of the year. In particular, the continued roll out of the federal government's cost cutting initiatives along with the related increase in competitive pressures have negatively impacted short term expectations for both revenues and profitability. Ultimately, revenues realized will be dependent on the extent and timing of future contract awards as well as customer utilization of existing contracting vehicles. Based on currently available information and our assessment of the marketplace, we expect revenues for fiscal 2013 to be in the range of $230 million to $250 million and net earnings in the range of $1.70 to $1.95 per share.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

During the most recent interim quarter ending December 31, 2012, 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 2012, and with the Management Discussion and Analysis in the 2011 annual report, including the section on risks and opportunities.

Contacts:
Ray Basler
President and Chief Executive Officer
306-931-3425

Jacqueline Gauthier
Chief Financial Officer
613-599-8600
ir@calian.com
www.calian.com

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