SERVICE SECTOR / Computer Modeling Nine Month Report
COMPUTER MODELLING GROUP LTD. - REVENUES INCREASE 79% OVER LAST YEAR
CALGARY, Feb. 12 /CNW/ - Computer Modelling Group Ltd. (''CMG'')
announced today revenues for the nine months ended December 31 of $6,801,295.
The third quarter revenues of $2,353,511 are consistent with second quarter
revenues of $2,384,496.
The Company recorded a loss for the nine-month period of $1,236,518. The
third quarter loss was $299,526 compared to the second quarter loss of
$307,912.
The nine-month loss can be broken down into two basic categories: a
profit of $1,108,623 from existing business and an investment of $2,345,141 in
product research and development. The $1,108,623 profit from business
operations reflects a profit of $490,815 from the third quarter, consistent
with the $487,731 profit realized in the second quarter.
''We are pleased with our progress since becoming a publicly-traded
company in March'' said Frank Meyer, President and CEO. ''In these past nine
months we have realized strong revenue growth. The revenues to date of $6.8
million is an increase of 79 per cent from third quarter sales of $3.8 million
last year by the predecessor company. This signifies both an enthusiastic
market demand for our high tech products and the benefits our clients are
experiencing.''
The Company reported sales of software licenses in the third quarter
increased by 8 per cent to $1,375,144, compared to second quarter sales of
$1,277,508. Consulting and contract research revenues were $813,743, down
from second quarter sales of $1,049,688. The demand for consulting services
during the quarter exceeded the Company's staff levels. As a result, despite
signed contracts, the Company was not able to fully realize on this
opportunity. Demand is expected to remain strong throughout 1998.
Mr. Meyer credited the strong growth in CMG's revenue base to a growing
recognition of the world-class quality of both its software programs and the
Company's consulting group. Mr. Meyer said the combination of revenue growth,
led by an aggressive marketing program, and a strong focus on controlling
costs are fundamental to CMG achieving and maximizing its profitability.
CMG's commitment to research and development yielded further improvements
to its software programs in the third quarter with significant improvement to
the speed of its software applications. With CMG's annual release scheduled
for April 1998, client personnel will typically experience a twofold
improvement in the speed of CMG's reservoir software program Results on
Windows 95 or NT. In addition, the speed of the reservoir simulators run on
Windows NT has also been improved for the April 98 release. Users will
see a 20 to 30% shorter run time compared to the April 97 release. The
upgrades will improve the efficiency of the software thereby providing direct
savings to clients.
Computer Modelling Group Ltd. is a Calgary, Canada based company which
provides leading software applications and services for oil and gas reservoir
modelling and simulation. CMG's computer software programs are used by oil and
gas companies around the world to analyze reservoirs with 3D visualization and
animation, to improve the design and operation of reservoirs, and to realize
the full potential from hydrocarbon reserves.
The common shares of CMG are listed on the Toronto Stock Exchange and
trade under the symbol CPU.
Computer Modelling Group Ltd.
Consolidated Balance Sheet
As at December 31, 1997
(Unaudited)
Assets
Current assets:
Cash and term deposits $6,047,037
Accounts receivable 3,536,589
Prepaid expenses 298,164
----------------------------------------------------------------------
9,881,790
Fixed assets, at cost 2,044,671
less Accumulated depreciation (476,786)
----------------------------------------------------------------------
1,567,885
Deferred charges 1,553,397
----------------------------------------------------------------------
$13,003,072
----------------------------------------------------------------------
----------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $872,123
Current portion of deferred revenue 1,622,501
Current portion of obligations under capital leases 192,560
----------------------------------------------------------------------
2,687,184
Deferred revenue 725,981
Obligations under capital leases 180,846
Shareholders' Equity
Common shares 9,947,583
Non-voting shares 697,996
----------------------------------------------------------------------
10,645,579
Deficit (1,236,518)
----------------------------------------------------------------------
9,409,061
----------------------------------------------------------------------
$13,003,072
----------------------------------------------------------------------
----------------------------------------------------------------------
Computer Modelling Group Ltd.
Consolidated Statement of Operations and Deficit
(Unaudited)
December 31, 1997
--------------------------------
Three months Nine months
ended ended
--------------------------------
Revenue
Software license sales $1,375,144 $3,732,261
Consulting and contract research 813,743 2,763,106
Interest and other income 164,624 305,928
------------------------------------------------------------------------
2,353,511 6,801,295
------------------------------------------------------------------------
Cost of Sales
Marketing expenses 657,243 2,055,150
Direct consulting expenses 249,382 672,254
Third party contract costs 447,085 1,398,940
------------------------------------------------------------------------
1,353,710 4,126,344
------------------------------------------------------------------------
Gross Profit 999,801 2,674,951
General and administrative expenses 356,694 1,061,283
Interest expense on capital leases 7,156 24,351
Depreciation 95,481 227,789
Product research and development costs 790,341 2,345,141
------------------------------------------------------------------------
Loss before income and other taxes (249,871) (983,613)
Income and other taxes
Foreign withholding taxes 49,655 251,009
Other taxes 0 1,896
------------------------------------------------------------------------
49,655 252,905
------------------------------------------------------------------------
Loss for the period,
being deficit at end of period ($299,526) ($1,236,518)
------------------------------------------------------------------------
------------------------------------------------------------------------
Per Share
Weighted average number of shares
outstanding 8,571,430
Loss for the period
Basic ($0.04) ($0.14)
Fully diluted ($0.04) ($0.14)
Cash flow from operations
Basic ($0.12) $0.03
Fully diluted ($0.12) $0.03
Notes -
(i) Depreciation of $248,997 for the nine months ended December 31,
1997 is included in product research and development costs.
(ii) Revenue includes $5,224,689 of amounts billed in the nine months
ended December 31, 1997 to parties outside Canada.
Computer Modelling Group Ltd.
Consolidated Statement of Changes in Financial Position
(Unaudited)
December 31, 1997
--------------------------------
Three months Nine months
ended ended
--------------------------------
Cash provided by (used for):
Operations:
Loss for the period ($299,526) ($1,236,518)
Add (deduct):
Depreciation 166,202 476,786
Deferred revenue (866,210) 1,034,394
------------------------------------------------------------------------
Cash flow from operations (999,534) 274,662
Accounts receivable and accounts payable (406,016) (2,307,629)
Prepaid expenses 9,562 29,193
------------------------------------------------------------------------
(1,395,988) (2,003,774)
Financing:
Issue of common shares,
net of issue costs of $1,052,417 (1,327) 9,947,582
Deferred revenue 305,003 408,255
Repayment of obligations under
capital lease (62,269) (143,200)
------------------------------------------------------------------------
241,407 10,212,637
Investments:
Fixed asset additions (71,916) (608,430)
Deferred charges (498,086) (1,553,397)
------------------------------------------------------------------------
(570,002) (2,161,827)
------------------------------------------------------------------------
Increase (decrease) in cash position (1,724,583) 6,047,036
Cash position, beginning of period 7,771,620 1
------------------------------------------------------------------------
Cash position, end of period $6,047,037 $6,047,037
------------------------------------------------------------------------
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