Total Revenue Up 51%; Net Income up 47% on a Year-Over-Year Basis
VANCOUVER, June 9 /CNW/ - Gemcom Software International Inc. (TSX:GCM),
the largest global supplier of specialised mining productivity solutions,
today announced its financial results for the three-month period and year
ended March 31, 2008. All figures are quoted in Canadian dollars.
Fiscal 2008 Highlights:
- Total revenue increased 51% to $54.2 million in fiscal 2008 from
$35.8 million in 2007, approximately 30% of this is organic growth
after taking into consideration the Surpac Minex acquisition in
- EBITDA(1) increased 67% to $12.2 million in fiscal 2008 from
$7.3 million in 2007.
- Income from operations increased to $10.4 million, or 19% of revenue,
in fiscal 2008 from $5.4 million, or 15% of revenue, in 2007.
- Net income increased by 47% to $6.7 million, or 12% of revenue, from
$4.5 million, or 13% of revenue in 2007.
- Working capital increased 91% to $21.8 million at March 31, 2008
compared with $11.4 million at March 31, 2007.
"Gemcom continued to experience solid growth as each product, revenue
stream and geographic region contributed to the improvement in fiscal 2008,"
said Garth Albright, chief financial officer of Gemcom. "While part of the
increase on a year-over-year basis was attributable to the acquisition of
Surpac Minex, organic growth accounted for approximately 30% of the
improvement, suggesting our solutions continue to find traction in markets
worldwide. The relative strength of the Canadian dollar, coupled with weakness
in the U.S. currency versus other global currencies had a significant impact
on our results this year, as we posted a foreign exchange loss of more than
"Subsequent to year-end, and after an extensive review of both our
standalone vision and multiple strategic alternatives, we announced that we
have signed a definitive agreement to be acquired by a purchaser controlled by
a group of private investment firms," said Rick Moignard, president and CEO of
Gemcom. "While proud of our track record of revenue and earnings growth over
the last five years, we think that the mining industry must fundamentally
change its use of software within their operations in the coming five years.
We believe that this provides Gemcom with the opportunity to become the
industry standard for mine management software. Reaching this next level,
however, will require increased investment in our products and solutions in
the short term in anticipation of the longer term gain. The proposed
transaction not only represents a powerful endorsement of the business we have
built, but a chance for shareholders to realise value in their investment
today without the elevated risk and potential volatility associated with the
execution of our evolving long-term growth strategy."
Fourth Quarter 2008 Financial Review
Revenue for the three months ended March 31, 2008 was $15,074,083, as
compared with $12,026,562 in the same three months last year. This revenue
growth of $3,047,521, or 25%, comes in spite of the stronger Canadian dollar
in the fourth quarter. The Company would have recorded revenue growth of 32%
in the fourth quarter of this year as compared with Q4 of last year if the
exchange rates of the Canadian dollar relative to other world currencies had
remained at last year's levels. License revenue was $8,554,998 in the quarter;
Update Service and Technical Support ("USTS") revenue was $4,213,093;
professional fees revenue was $2,067,472 and other revenue was $238,520.
Revenue grew across each geographical region but the greatest increases were
observed in the Australia and Latin America regions at 62% and 44%
Research and development expenses for the fourth quarter of this year
were $1,871,311, compared with $2,349,156 in the same quarter of the prior
year, a decrease of $477,845, or 20%. The decrease is due to the Company
having recorded investment tax credits this quarter of $829,572. Exclusive of
these tax credits, research and development expenses as a percentage of
revenue were 18% in the fourth quarter of 2008, versus 20% in the fourth
quarter of 2007.
During the three months ended March 31, 2008, sales and marketing
expenses were $5,367,621 compared with $4,191,688 for the same three months
last year. This increase of $1,175,933, or 28%, is primarily due to higher
General and administration expenses were $1,304,208 for the three months
ended March 31, 2008 compared with $560,960 in the same period last year.
Higher depreciation expense and higher costs for personnel and professional
services accounted for this year-over-year change.
EBITDA for the fourth quarter of this year was $3,848,191, or basic and
fully diluted EBITDA per share of $0.07, compared with EBITDA of $2,411,832,
or basic and fully diluted EBITDA per share of $0.05 in Q4 of the prior year.
Net income for the fourth quarter of this year was $2,049,383, or basic
and fully diluted earnings per share of $0.04, compared with net earnings of
$1,954,541 or basic and fully diluted earnings per share of $0.04 in the same
quarter last year. The marginal increase in net income quarter over quarter
reflects higher expenses the Company recorded as a result of: higher personnel
costs, consistent with trends in the broader mining industry; costs resulting
from the expansion of the Company's professional services capabilities in
support of InSite implementations; and higher depreciation costs associated
with enhancing the Company's information technology infrastructure.
Fiscal 2008 Financial Review
On July 19, 2006 the Company completed its acquisition of Surpac Minex
Group Pty Ltd. ("Surpac Minex"). The financial results of Surpac Minex are
consolidated since the date of acquisition, and accordingly, the financial
results of the Company for the twelve month comparative period ended
March 31, 2007 include those of Surpac Minex from that date.
Gemcom reported revenue of $54,245,350 as compared to revenue of
$35,848,003 in the prior year. Taking into consideration that the acquisition
of Surpac Minex in the second quarter of fiscal 2007 accounted for almost
one-third of the year-over-year revenue increase, organic revenue growth was
30% in fiscal 2008 as compared with fiscal 2007. Revenue grew across each
geographical region but the greatest annual increases were observed in the
Asia Pacific and Australia regions at 91% and 82% respectively.
Revenue from license sales increased to $29,044,300 for fiscal 2008, an
increase of $9,823,244 as compared to last year. Higher Surpac license revenue
accounted for the majority of the increase, followed by higher Minex and GEMS
license sales. USTS maintenance revenue for fiscal 2008 was $16,182,570
compared with $10,259,906 last year. Professional fee revenue for fiscal 2008
was $7,996,120 compared with $5,317,063 last year. The increase resulted
primarily from professional services related to the InSite implementations.
Other revenue was $1,022,360, as compared to $1,049,978 last year.
Research and development expenses for fiscal 2008 were $8,820,922
compared with $7,581,599 in the prior year, an increase of $1,239,323, or 16%.
This increase is due to the bringing together of the two research and
development teams upon the acquisition of Surpac Minex in the second quarter
of fiscal 2007. This team grew again in the latter half of the last fiscal
year when Gemcom introduced its product management group. Currently, Gemcom's
product development and product management team is comprised of 96 employees
located in Canada, Australia and India. Research and development expenses,
exclusive of investment tax credits relating to 2005 and 2006 of $1,544,446
recorded during fiscal 2008, were 19% of revenue. In fiscal 2007, research and
development expenses, exclusive of deferred development costs of $255,850,
were 22% of revenue.
Sales and marketing costs during fiscal 2008 were $19,032,991 compared
with $12,700,282 in fiscal 2007. This increase of $6,332,709, or 50%, is
primarily due to personnel costs on the expansion of Gemcom's regional
business units upon the acquisition of Surpac Minex in July 2006 and the
addition of 70 employees in sales, support and services at that time.
EBITDA for fiscal 2008 was $12,157,583 or basic and fully diluted EBITDA
per share of $0.23 and $0.22, respectively, compared with EBITDA of
$7,285,814, or basic and fully diluted EBITDA per share of $0.17 last year.
Gemcom's net earnings for fiscal 2008 were $6,668,581, an increase of
$2,130,763, or 47%, compared with net earnings of $4,537,818 last year. Basic
and diluted earnings per share were $0.13 and $0.12, respectively, this fiscal
year, compared with basic and diluted earnings per share of $0.10 last year.
(1) EBITDA, defined as earnings, before interest, taxes, depreciation and
amortisation, does not have any standardised meaning prescribed by GAAP.
However, management believes it is a useful supplemental measure of
Complete financial statements can be found on the SEDAR website
(www.sedar.com), or on the Company's website
Gemcom will host a conference call to discuss these financial results on
Tuesday, June 10, 2008 at 9:00 a.m. E.D.T (6:00 a.m. P.D.T.). To access the
conference call by telephone, dial +1 416-644-3414 or 1-800-732-9303. Please
connect approximately 10 minutes prior to the beginning of the call to ensure
participation. The conference call will be archived for replay until Tuesday,
June 17, 2008 at midnight E.D.T. To access the archived conference call, dial
+1 416-640-1917 or 1-877-289-8525 and enter the reservation number 21273923
followed by the number sign. A live audio webcast of the conference call will
be available at www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2310000.
Please connect at least 15 minutes prior to the conference call to ensure
adequate time for any software download that may be required to join the
webcast. The webcast will be archived at the above web sites for 90 days.
When mining companies seek to increase mine productivity, they turn to
Gemcom for technology and services. The Company is home to world-renowned
mining solutions like GEMS, Surpac, Minex, Whittle, and InSite and to industry
thought-leaders who are pushing the boundaries of what's possible in mining.
Established in 1985, Gemcom has a global reach delivering comprehensive
solutions in all major mining centres in more than 90 countries. Every major
mining company, including BHP Billiton, Codelco, De Beers, Newmont and Vale,
is a Gemcom client. Through a combination of organic growth and strategic
acquisitions, the Company has become the largest global supplier of
specialised mining productivity solutions. Gemcom is listed on the TSX under
the ticker "GCM." For more information, visit www.gemcomsoftware.com.
This press release contains forward-looking statements concerning the
future performance of Gemcom's business, its operations, and its financial
performance and condition. These forward-looking statements are based on
management's current expectations and judgment. The Company cautions readers
that all forward-looking information is inherently uncertain and actual
results may differ materially from the assumptions, estimates, or expectations
reflected or contained in the forward-looking information, and that actual
future performance will be affected by a number of factors, including but not
limited to economic conditions, technological change, and changes in
competitive factors, many of which are beyond the Company's control. Risks and
uncertainties that could affect Gemcom's business are discussed more
extensively in the MD&A section of the Company's most recent annual report and
annual information form, which are available on the Company's website or on
SEDAR at www.sedar.com. Future events and results may vary significantly from
what management currently foresees. These forward-looking statements are made
as of the date of this release and management assumes no obligation to update
or revise these statements to reflect new events or circumstances.
Gemcom, the Gemcom logo and combinations thereof, are trademarks of
Gemcom Software International Inc. GEMS, Surpac, Minex, Whittle,
MineSched, PCBC and Gemcom InSite are either registered trademarks or
trademarks of Gemcom Software International Inc.
For further information:
For further information: Investor Communications, Garth Albright, Chief
Financial Officer, (604) 684-6550, firstname.lastname@example.org; Nick Hurst,
Vice President, The Equicom Group, (403) 538-4845, email@example.com;
Corporate Communications, Mark Bese, Marketing Communications Manager, (604)
684-6550 ext. 4481, firstname.lastname@example.org