Gemcom Announces Third Quarter Fiscal 2008 Results



    Total Revenue Up 18%; Income From Operations Up 35% Over Q3 In The Prior
    Year

    VANCOUVER, Feb. 11 /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 ended
December 31, 2007. All figures are quoted in Canadian dollars.

    
    Q3 Fiscal 2008 Highlights:

    Financial
    -   Total revenue increased 18% to $13.5 million in Q3 2008 from
        $11.4 million in Q3 2007. Revenue for the nine-month period was
        $37.7 million, up 64%, compared with $23.3 million in the prior
        fiscal year;
    -   Income from operations increased 35% to $2.5 million in Q3 2008 from
        $1.8 million in Q3 2007;
    -   EBITDA(1) increased 10% to $3.1 million in Q3 2008 from $2.8 million
        in Q3 2007. EBITDA for the nine-month period was $8.3 million, or 21%
        of revenue;
    -   Income from operations increased to $2.5 million, or 19% of revenue,
        from $1.9 million, or 16% of revenue, in Q3 2007;
    -   A foreign exchange loss of $0.2 million in Q3 of 2008 that occurred
        due to the rise in the Canadian dollar, compared to a foreign
        exchange gain of $0.2 million in Q3 of 2007;
    -   Despite this foreign exchange impact, net income increased by 12% to
        $1.7 million, or 13% of revenue, from $1.5 million, or 13% of revenue
        in Q3 2007;
    -   Working capital increased 56% to $17.8 million on December 31, 2007
        as compared with $11.4 million on March 31, 2007.

    Operational
    -   The Company released a new, automated Underground Design module for
        Gemcom Surpac(TM), offering auditability and repeatability of designs
        and integration with Gemcom MineSched(TM) production scheduling;
    -   Subsequent to quarter end, Gemcom announced that Companhia Vale do
        Rio Doce (Vale, ex CVRD) had extended its long-term relationship with
        Gemcom by signing a newly expanded multi-year corporate agreement;
        and
    -   Subsequent to quarter end, the Company also announced that Macmahon
        Holdings Limited (ASX:MAH), an Australian owned contracting and
        related services group operating in the civil construction and mining
        sectors in Australia, New Zealand and Indonesia, would implement
        Gemcom InSite(TM) as part of Macmahon's strategic focus to upgrade
        its information technology infrastructure.
    

    "The third quarter saw Gemcom produce balanced, international growth as
virtually all of our geographic regions reported improvements in revenue and
net income," said Rick Moignard, president and CEO of Gemcom. "The recent
agreements with Vale and Macmahon reinforces our commitment to global growth
and demonstrates our ability to meet the diverse needs of large multinational
companies by streamlining access to our products at the regional and even mine
level as part of a larger total solutions framework."
    "Organic revenue growth in the third quarter was solid, despite the
effect of the stronger Canadian dollar, which reduced our comparative year
over year revenue by nearly half a million dollars and had a concurrent impact
on growth rates," said Garth Albright, CFO of Gemcom. "The growth in year over
year revenue was the result of significantly higher professional fees and USTS
maintenance revenue as well as increased license sales. Regional operating,
sales and marketing costs increased as the Company continued to invest in
additional staff to support rising sales and in preparation for future growth.
This was partially offset by a reduction in research and development expenses
as we recorded investment tax credits worth nearly $450,000 in the quarter."

    Third Quarter 2008 Financial Review

    On July 19, 2006 the Company completed its acquisition of Surpac Minex
Group Pty Ltd. ("Surpac Minex"). Accordingly, the third quarter of fiscal 2007
(ended December 31, 2006), used for comparison in the following financial
review included a full quarter contribution from Surpac Minex. The second
quarter of fiscal 2007 (ended September 30, 2006), used for comparison in the
Company's second quarter fiscal 2008 release, reflected only a partial
contribution from Surpac Minex, covering the period between July 20, 2006 and
September 30, 2006.
    Revenue for the three months ended December 31, 2007 was $13,518,372, as
compared with $11,416,586 in the same three months in the prior year. Revenue
grew $2,101,786, or 18%, despite the impact of the stronger Canadian dollar in
the third quarter of this year. Higher Surpac and Minex license sales resulted
in a 7% increase in license sales, while professional fees grew by 43% based
on higher InSite implementation fees and Update Service & Technical Support
(USTS) maintenance revenue increased by 40%. License revenue was $6,603,163 in
Q3 of this year as compared with $6,194,643 in Q3 of last year. USTS revenue
in Q3 was $4,362,487, professional fees revenue was $2,265,560 and other
revenue was $287,162.
    Research and development expenses for the third quarter of this year were
$2,167,877, as compared with $2,491,167 in Q3 of the prior year, a decrease of
$323,290, or 13%. The decrease is due to the Company recording Scientific
Research and Experimental Development (SR&ED) investment tax credits this
quarter of $443,715. Exclusive of these tax credits and the development costs
deferred in Q3 of last year of $69,871, research and development expenses as a
percentage of revenue were 19% in Q3 2008, versus 22% in Q3 2007.
    During the three months ended December 31, 2007, total expenses rose 13%,
to $8,219,489 as compared with $7,280,136 for the same three months last year.
This increase includes higher sales and marketing expenses, reflecting higher
personnel costs relating to increased global sales activity, the addition of
regional offices and office consolidation.
    EBITDA(1) increased to $3,070,222 for the three months ended December 31,
2007 compared with $2,794,772 for the same three month period in 2007, an
increase of $275,450, or 10%.
    Net income for the third quarter of this year was $1,712,583, or basic
and fully diluted earnings per share of $0.03. This represents a 12% increase
over earnings of $1,534,419, or basic and fully diluted earnings per share of
$0.03 in the same quarter last year. The total number of shares issued and
outstanding at December 31, 2007 was 53,452,020.

    (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 operational performance.

    Complete financial statements can be found on the SEDAR website
(www.sedar.com), or on the Company's website
(www.gemcomsoftware.com/investor_relations).

    Conference Call

    Gemcom will host a conference call to discuss these financial results on
Tuesday, February 12, 2008 at 9:00 a.m. E.S.T (6:00 a.m. P.S.T.) To access the
conference call by telephone, dial +1 416-644-3417 or 1-800-732-6179. 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,
February 19, 2008 at midnight. To access the archived conference call, dial +1
416-640-1917 or 1-877-289-8525 and enter the reservation number 21262650
followed by the number sign. A live audio webcast of the conference call will
be available at www.gemcomsoftware.com and www.newswire.ca. 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.

    About Gemcom

    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, galbright@gemcomsoftware.com; Nick Hurst,
Vice President, The Equicom Group, (403) 538-4845, nhurst@equicomgroup.com;
Corporate Communications, Mark Bese, Marketing Communications Manager, (604)
684-6550 ext. 4481, mbese@gemcomsoftware.com

Organization Profile

GEMCOM SOFTWARE INTERNATIONAL INC.

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