Mediagrif Interactive Technologies Inc. (TSX: MDF), a world-leading developer of e-business networks and provider of complete e-business solutions, today announced its financial results for the third quarter of fiscal year 2006 ended December 31, 2005.
Revenues for the third quarter of the current year amounted to $11.7 million, as compared to $11.8 million also in the same quarter of the previous year. While total revenues are slightly lower when compared to the same quarter last year, they actually increased by 4.0% when excluding the impact of foreign exchange variations, while the E-business Networks segment revenues grew by 4.8%, again when excluding the impact of foreign exchange variations. As such, Mediagrif's growth in revenues was again significantly affected by foreign exchange variations, and the exchange rate variations impacted third quarter revenues by approximately $0.5 million.
As for the year-to-date revenues, for the nine-month period ended December 31, 2005, they increased by 6.3% to $36.5 million, from $34.3 million for the same period last year, despite being negatively impacted foreign exchanges variations by approximately $1.7 million. Mediagrif now derives almost 93% of its revenues from recurring sources in its E-business network segment, following the reduced focus on Software & Services after the restructuring of last year.
Earnings from operations amounted to $3.1 million during the third quarter, as compared to $3.2 million for the previous year. While there were small increases in Sales & Marketing and Stock-based compensation expenses, there were lower General & Administrative expenses, which partially offset the above increases. Net earnings and earnings per share for the third quarter amounted to $2.3 million or $0.13 per share, as compared to $2.6 million or $0.14 per share for the corresponding quarter of the previous year.
The revenues of the third quarter ended December 31, 2005 show a 3.0% sequential increase in revenues, over the $11.4 million revenues of the second quarter of the current fiscal year, while the Company's net earnings show a 9.3% sequential increase over the same period. In recent months, Mediagrif has initiated increased efforts in sales and marketing, including the development of a corporate marketing team, as well as a number of international development initiatives, in China, Dubai and India, which should start having an impact on the Company's revenues over the coming quarters.
"We are satisfied with our year-to-date results, in light of the positive contribution of our acquisitions of last year and our sustained operating efficiency, despite a negative foreign exchange environment. We are also satisfied to report sequential growth, over this past quarter, in terms of revenues and E.P.S.", said Denis Gadbois, Chairman of the Board and CEO of Mediagrif Interactive Technologies. "We are still pursuing multiple initiatives to accelerate our growth going forward, and our recent announcements, including our international ventures, our increased investments in Sales & Marketing and the BidRadar acquisition, are very promising. These developments will benefit Mediagrif on the long run, and our outlook for the current year remains positive."
KEY OPERATING HIGHLIGHTS OF Q3 FY2006:
Mediagrif announced this past December the creation of a joint venture with the Dubai Metals and Commodities Centre to support the expansion in the Middle East, India, Asia and Africa of Polygon, its diamond and jewellery network. The creation of this joint venture represents total investments of US$12 million. Launched in 2002, the Dubai Metals and Commodities Centre (DMCC) is a strategic initiative of the Dubai government and free trade zone created to establish a commodity marketplace in Dubai. Through this joint venture to be called Polygon-DMCC, the parties will accelerate the development of electronic trading in the diamond and jewellery industry under the Polygon brand. The joint venture will leverage Polygon's technology and know-how as well as DMCC's infrastructure and client base in the targeted regions.
The membership base of our e-business networks and e-government networks amounted 54,100 as of December 31st, 2005, as compared to 49,775 as of September 30th, 2005 and 45,150 as of December 31st, 2004. Both on a sequential and year-over-year basis, the increase at The Broker Forum and Global Wine & Spirits was offset by a decrease at Power Source On-Line, while our other networks' membership was for the most part stable. All three e-government networks, namely MERX, BidNet and GovernmentBids, have seen their membership base increase, both on a sequential and year-over-year basis, with BidRadar's recent acquisition also contributing.
KEY FINANCIAL HIGHLIGHTS OF Q3 FY2006:
Revenues for the third quarter ended December 31, 2005 reached $11.7 million, as compared to $11.8 million in the corresponding quarter of last year. Before taking into consideration the impact of foreign exchange variations, total revenues increased by 4.0%, while revenues from the E-business Networks segment increased by 4.8%. More specifically, the Broker Forum, MERX and Carrus business units experienced solid growth, even with the impact of foreign exchange variations, while the revenues of Power Source On-Line decreased because of continued difficult market conditions and adjustments to its business model.
For the nine-month period ended December 31st, 2005, total revenues grew by 6.3% to reach $36.5 million, as compared to $34.3 million in the corresponding period of last year. There was a revenue increase of $3.2 million from the contribution of recent acquisitions, namely Polygon, BidNet and 50% of B2B Vertical Markets, as well as BidRadar. Foreign exchange variations significantly impacted year-to-date revenues also, and partially offset the impact of acquisitions. There was a slight decrease in revenue from the Software and Services segment.
For the third quarter ended December 31st, 2005, operating expenses increased by 1.3% from $6.6 million to $6.7 million. While General & Administrative expenses decreased by $0.3 million or 11.7%, this was offset by a $0.2 million or 9.3% increase in Sales & Marketing expenses, mainly due to increased marketing efforts and resources. There was also a $0.1 million or 2.8% increase in Technology expenses, mostly related to amortization. The increase in operating expenses was also driven by an increase in Stock-based compensation.
For the nine-month period ended December 31st, 2005, operating expenses amounted to $20.5 million as compared to $21.9 million. General & Administrative and Sales & Marketing expenses increased respectively by $0.2 million or 2.3% and $0.3 million or 4.4%, mainly due to recent acquisitions. The increase in operating expenses was also driven by an increase in Stock-based compensation. However, Technology expenses decreased by $0.7 million or 10.5%, and there were restructuring charges of $0.9 million last year.
Earnings from operations during the quarter amounted to $3.1 million, as compared to $3.2 million in the corresponding quarter of last year. As for the nine-month period, earnings from operations increased to $10.2 million from $7.0 million. Quarterly and year-to-date E.P.S., for the current year, were $0.13 and $0.39 respectively, as compared to $0.14 and $0.29 for the same periods last year.
Cash, cash equivalents and short-term investments as of December 31, 2005 amounted to $57.7 million, or $3.16 per share. Free cash flow, defined as cash flow from operating activities less capital expenditures, amounted to $2.6 million during the third quarter, as compared to $1.2 million for the previous year, the variation mainly explained by the variation of earnings and non-cash operating working capital items.
On February 25th, 2005, the Company announced the launch of a normal course issuer bid whereby it is authorized to purchase for cancellation for the twelve-month period starting March 1, 2005 up to 919,884 common shares. During the third quarter, the Company purchased 173,500 common shares for cancellation at an average price of $10.33, for total consideration of $1.8 million, which brings the total number of common shares repurchased to date to 474,300.
ADDITIONAL INFORMATION:
Management's Discussion and Analysis of third quarter results, along with detailed financial results, can be accessed on the Corporation's web site at www.mediagrif.com.
This news release contains certain forward-looking statements that involve risks and uncertainties. The Company cautions that future results are subject to and should be considered in light of risks, uncertainties and other factors. All amounts are in Canadian dollars.
A live Webcast of Mediagrif's third quarter FY2006 financial results conference call can be heard at 11:00 a.m. EDT today at the following link: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1365980
Please note that the Webcast will be available until March 10, 2006 at the above link.
To participate to the conference call:
Local call-in number: (514) 868-2590
Toll-free call-in number: 1-866-540-8136
The conference call will also be available for listening until February 17, 2006 at the following number: 1-800-408-3053, access code 3158442(pound key).
About Mediagrif Interactive Technologies Inc.
Mediagrif Interactive Technologies Inc. (TSX: MDF) is a world-leading operator of e-business networks and provider of complete e-business solutions. Mediagrif's e-business networks allow buyers and sellers within specific industries to source, purchase or sell products and to exchange documents more efficiently using the Internet. Mediagrif operates 13 networks, including industry leaders The Broker Forum (www.brokerforum.com) Power Source On-Line (www.powersourceonline.com), Telecom Finders (www.telecomfinders.com), Global Wine & Spirits (www.globalwinespirits.com) and Polygon (www.polygon.net) in the jewelry industry. The company also owns MERX (www.merx.com), the exclusive provider of e-tendering services to the federal government of Canada, and is a leading provider of government bid aggregation services and e-procurement services in the U.S. Headquartered in Montreal, Mediagrif through its subsidiaries has various offices in Canada and the United States. For more information on Mediagrif please visit us at www.mediagrif.com or call 1 (877) 677-9088.
<<
MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Canadian dollars in Thousands) December 31, March 31,
2005 2005
(Unaudited) (Audited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ASSETS
Cash and cash equivalents 27,138 19,855
Short-term investments 30,514 31,738
Accounts receivable 4,294 4,151
Tax credits receivable 3,349 2,109
Income taxes receivable - 217
Prepaid expenses 508 689
-------------------------------------------------------------------------
65,803 58,759
Premises and equipment 2,345 2,365
Intangible assets 5,698 5,497
Acquired intangible assets 5,627 6,219
Goodwill 20,745 20,049
Long-term receivable 290 -
Future income taxes 2,342 1,966
-------------------------------------------------------------------------
102,850 94,855
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES
Accounts payable and accrued liabilities 4,148 4,852
Income taxes payable 2,904 -
Deferred revenue 6,559 7,658
Current portion of purchase price payable 590 502
Current portion of obligations
under capital leases 18 38
Current portion of deferred gain on licenses 675 -
Future income taxes 698 812
-------------------------------------------------------------------------
15,592 13,862
Long-term portion of purchase price payable 262 761
Obligations under capital leases 9 32
Deferred gain on licenses 1,323 -
-------------------------------------------------------------------------
17,186 14,655
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock (note 7) 60,927 60,481
Share purchase options 2,308 1,887
Retained earnings 22,639 18,042
Cumulative translation adjustment (210) (210)
-------------------------------------------------------------------------
85,664 80,200
-------------------------------------------------------------------------
102,850 94,855
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MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF RETAINED EARNINGS - UNAUDITED
FOR THE NINE MONTHS ENDED DECEMBER 31,
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Canadian dollars in Thousands) 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings - Beginning of period 18,042 11,630
Net earnings for the period 7,119 5,144
Premium on purchase of common shares
for cancellation (note 7 b i)) (2,522) (396)
-------------------------------------------------------------------------
Retained earnings - End of period 22,639 16,378
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MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Canadian dollars Three months ended Nine months ended
in Thousands, December 31, December 31,
except per share amounts) 2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Revenues 11,735 11,809 36,523 34,346
Cost of Revenues 1,904 2,010 5,856 5,488
-------------------------------------------------------------------------
Gross Margin 9,831 9,799 30,667 28,858
-------------------------------------------------------------------------
Operating expenses
General & Administrative 2,080 2,355 6,827 6,675
Sales & Marketing 2,084 1,907 6,066 5,810
Technology 1,936 1,883 6,017 6,723
Amortization of acquired
intangible assets 301 292 895 1,165
Stock-based compensation 324 203 677 589
Restructuring charges - - - 928
-------------------------------------------------------------------------
6,725 6,640 20,482 21,890
-------------------------------------------------------------------------
Earnings from operations 3,106 3,159 10,185 6,968
Other income,
net (note 3 b)) 284 210 155 428
Gain on disposal of
intangible asset and
investment (note 5) - 371 300 371
-------------------------------------------------------------------------
Earnings before
income taxes 3,390 3,740 10,640 7,767
Provision for
income taxes 1,103 1,174 3,521 2,623
-------------------------------------------------------------------------
Net earnings
for the period 2,287 2,566 7,119 5,144
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share
Net earnings
Basic 0.13 0.14 0.39 0.29
---------------------- -----------------------
---------------------- -----------------------
Diluted 0.12 0.14 0.38 0.27
---------------------- -----------------------
---------------------- -----------------------
Weighted average number
of shares outstanding
(note 7d))
Basic 18,138,937 18,042,448 18,081,067 18,011,087
---------------------- -----------------------
---------------------- -----------------------
Diluted 18,635,119 18,710,083 18,640,228 18,787,202
---------------------- -----------------------
---------------------- -----------------------
Number of shares
outstanding -
End of period
(note 7 b)) 17,986,167 18,052,333 17,986,167 18,052,333
---------------------- -----------------------
---------------------- -----------------------
MEDIAGRIF INTERACTIVE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Canadian dollars Three months ended Nine months ended
in Thousands) December 31, December 31,
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings
for the period 2,287 2,566 7,119 5,144
Adjustments for
Amortization of
premises and equipment 325 361 950 968
Amortization of
intangible assets 683 545 1,815 1,711
Amortization of acquired
intangible assets 301 292 895 1,165
Stock-based compensation 324 203 677 589
Amortization of gains on
transfers of software - - - (214)
Gain on disposal of
intangible asset and
investment (note 5) - (371) (300) (371)
Future income taxes (53) 948 (479) 56
Restructuring charges - (571) - 314
Unrealized foreign
exchange loss - - 5 -
Changes in non-cash
operating working
capital items (note 3 a)) 25 (1,674) (246) (763)
-------------------------------------------------------------------------
Cash flows from
operating activities 3,892 2,299 10,436 8,599
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Business acquisitions,
net of cash and cash
equivalents
acquired (note 4) (591) (783) (591) (19,281)
Acquisition of premises
and equipment and
intangible assets (1,253) (1,051) (2,946) (2,804)
Disposal of intangible
asset and
investment (note 5) - 371 300 371
Deferred gain on licenses 2,027 - 2,027 -
Short-term investments (7,981) 4,434 1,224 15,339
-------------------------------------------------------------------------
Cash flows from
investing activities (7,798) 2,971 14 (6,375)
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FINANCING ACTIVITIES
Issuance of common
shares (note 7) 570 126 1,424 864
Purchase of common shares
for cancellation (note 7) (1,792) - (3,757) (558)
Long-term receivable - - (290) -
Repayment of purchase
price payable (240) - (500) -
Repayment of obligations
under capital leases (10) - (44) (50)
-------------------------------------------------------------------------
Cash flows from
financing activities (1,472) 126 (3,167) 256
-------------------------------------------------------------------------
Net increase (decrease)
in cash and
cash equivalents (5,378) 5,396 7,283 2,480
-------------------------------------------------------------------------
Cash and cash equivalents
- Beginning of period 32,516 18,272 19,855 21,188
-------------------------------------------------------------------------
Cash and cash equivalents
- End of period 27,138 23,668 27,138 23,668
-------------------------------------------------------------------------
Short-term investments
- End of period 30,514 24,653 30,514 24,653
-------------------------------------------------------------------------
Cash and cash equivalents
and short-term investments
- End of period 57,652 48,321 57,652 48,321
-------------------------------------------------------------------------
-------------------------------------------------------------------------
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
December 31, 2005 and 2004
1) Accounting Policies
The consolidated interim financial statements have been prepared by the Company in accordance with Canadian generally accepted accounting principles ("GAAP") applicable to interim financial statements and follow the same accounting policies and methods of their application found in the audited financial statements for the year ended March 31, 2005 except for changes in accounting policy regarding acceleration of amortization described below. The interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report for fiscal year 2005.
a) Amortization of internally developed software and Web sites
The Company is currently in the process of partially upgrading and replacing some of its internally developed software and web sites, which will render certain components redundant or obsolete, when the upgrades and replacements will be fully implemented. The components of the previous versions which are in the process of being upgraded or replaced have therefore been subjected to accelerated amortization, and such accelerated amortization amounted to approximately $92,000 during the quarter and $184,000 during the nine-month period ended December 31, 2005.
2) Related party transactions
Details of related party transactions not otherwise disclosed in the financial statements are as follows:
(Canadian dollars in thousands)
-----------------------------------------------
-----------------------------------------------
Three months ended Nine months ended
December 31, December 31,
2005 2004 2005 2004
-----------------------------------------------
-----------------------------------------------
Revenues
Joint ventures 434 212 834 797
Significantly
influenced entity - - - 176
Accounts receivable
Joint ventures 57 57 57 57
Significantly
influenced entity - - - -
Balances and transaction with the joint ventures represent the amounts
corresponding to the joint venturers' interest therein. All related party
transactions occurred in the normal course of operations and have been
measured at the exchange amount, which represents the fair market value.
3) Changes in non-cash working capital items and Other income
a) Changes in non-cash working capital items are as follows:
(Canadian dollars in thousands)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Nine months ended
December 31, December 31,
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Decrease (Increase) in
Accounts receivable 567 (590) (143) 1,385
Tax credits receivable (419) (321) (1,240) (618)
Prepaid expenses (37) (151) 181 (198)
Increase (Decrease) in
Accounts payable and
accrued liabilities (217) 620 (717) (2,011)
Income taxes payable 1,419 (373) 3,116 (121)
Deferred revenues (1,288) (859) (1,443) 800
-------------------------------------------------------------------------
25 (1,674) (246) (763)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
b) Other income consists of the following:
(Canadian dollars in thousands)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Nine months ended
December 31, December 31,
2005 2004 2005 2004
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Interest income 398 293 1,030 919
Financial expenses (103) (124) (331) (429)
Foreign exchange gain (loss) 55 78 (348) 74
Others (66) (37) (196) (136)
-------------------------------------------------------------------------
284 210 155 428
-------------------------------------------------------------------------
-------------------------------------------------------------------------
4) Business acquisitions
a) On October 12, 2005, the Company purchased the net assets of BidRadar, a US-based Federal government bid aggregation and publishing service owned by The Merlin Company. The amount paid by the Company was $US588,000 ($684,000). This acquisition resulted in goodwill totaling $538,000 based on the following allocation of the purchase prices to the identifiable consolidated net assets of the Company acquired:
Identifiable intangible assets
Customer base 243
Other items 60
-----
Total assets 303
Less:
Current liabilities 157
-----
Net identifiable assets acquired 146
Goodwill 538
-----
Purchase price 684
Less: Balance of purchase price 93
-----
Net cash paid 591
-----
-----
The activities of this acquisition are carried out through the E-business Network reportable segment.
b) During the quarter ended December 31, 2005, goodwill was increased by $158,000 following the finalization of working capital adjustment pursuant the acquisition of Polygon.
5) Gain on disposal of intangible asset and investment
On May 19, 2005, the Company announced the sale of two software applications of the Flow Systems business unit. One software application was sold under a licensing and royalty agreement, while the second application was sold outright for an amount of US$250,000 ($300,358). Since such application had no remaining value on the books of the Company, the sale resulted in a gain on disposal of intangible asset of a corresponding amount, which was recorded in the quarter ended September 30, 2005, when all conditions surrounding the sale were met satisfactorily.
On October 7, 2004, the Company finalized certain agreements with third parties whereby it sold its interest in 51% Viewtrack Technologies for a cash amount of approximately $390,000. As the Company had previously written-down to nil the value of its investment, this transaction led to a gain on sale of investment of approximately $371,000, net of related fees.
6) Segmented Information
The Company operates in the business-to-business (B2B) e-commerce industry and its principal business activities are carried out through two reportable segments:
i) E-business Networks: Represents the Company's e-business networks,
mainly Bidnet, Carrus Technologies, Global Wine & Spirits,
GovernmentBids.com, MERX, Medical Equipment Finders, Polygon, Power
Source On-Line, Telecom Finders, The Broker Forum, Truck Parts
Locator and Wine Traders Club, that operate networks and offer
e-business services to businesses in specific vertical industries.
Revenues from this segment are comprised mainly of membership and
transaction fees from the e-business networks.
ii) Software and Services: Represents the Company's business units that
provide e-business solutions to enterprises and to e-business
networks. Solutions include product information management solutions
and services, as well as e-business marketplace solutions. Revenues
from this segment consist of licenses, integration services,
maintenance and hosting services as well as gains on transfer of
software arising from the sale of software to joint ventures.
Corporate represents the corporate expenses of the Company that are not allocated to segments, mainly general and and administrative expenses and the corporate assets such as cash and cash equivalents and short-term investments.
The Company evaluates segments based on earnings from operations. Intersegment services are measured at the exchange value, which is the amount of consideration agreed upon by the segments. The accounting policies used within the segments are applied in the same manner as for the consolidated financial statements.
(Canadian dollars in thousands)
-----------------------------------------------
-----------------------------------------------
Three months ended Nine months ended
December 31, December 31,
2005 2004 2005 2004
-----------------------------------------------
-----------------------------------------------
Revenues
E-business Networks 11,109 11,101 33,860 31,551
Software and Services 2,234 2,877 7,580 8,698
Intersegment
eliminations -
Software and Services (1,608) (2,169) (4,917) (5,903)
---------- ---------- ---------- -----------
11,735 11,809 36,523 34,346
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Amortization of premises
and equipment, intangible
assets and acquired
intangible assets
E-business Networks 1,485 1,162 4,204 3,682
Software and Services 295 364 891 1,119
Corporate 52 58 158 163
Elimination (523) (386) (1,593) (1,120)
---------- ---------- ---------- -----------
1,309 1,198 3,660 3,844
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Earnings (loss) from
operations
E-business Networks 4,019 4,221 12,834 12,396
Software and Services (326) 148 (389) (2,135)
Corporate (1,014) (898) (3,169) (2,604)
Elimination 427 (312) 909 (689)
---------- ---------- ---------- -----------
3,106 3,159 10,185 6,968
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Acquisition of premises
and equipment and
intangible assets
E-business Networks 744 704 1,789 1,713
Software and Services 438 298 999 968
Corporate 71 49 158 123
---------- ---------- ---------- -----------
1,253 1,051 2,946 2,804
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Acquisition of acquired
intangible assets
E-business Networks 303 19 303 5,128
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Acquisition of goodwill
E-business Networks 696 253 696 15,773
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Segment assets
E-business Networks 44,815 41,057 44,815 41,057
Software and Services 8,486 8,319 8,486 8,319
Corporate 51,087 45,791 51,087 45,791
Eliminations (1,538) (2,040) (1,538) (2,040)
---------- ---------- ---------- -----------
102,850 93,127 102,850 93,127
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Geographical informations
The geographical information is as follows:
For the three-month period ended December 31,
2005 2004
-------------------------------------------------------------------------
Premises and Premises and
equipment, equipment,
intangible intangible
assets and assets and
Revenues goodwill Revenues goodwill
-------------------------------------------------------------------------
Canada 3,661 12,009 3,607 11,135
United States 4,986 22,406 5,657 23,280
Europe 1,043 - 1,183 -
Asia and other 2,045 - 1,362 -
-----------------------------------------------
11,735 34,415 11,809 34,415
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the nine-month period ended December 31,
2005 2004
-------------------------------------------------------------------------
Premises and Premises and
equipment, equipment,
intangible intangible
assets and assets and
Revenues goodwill Revenues goodwill
-------------------------------------------------------------------------
Canada 11,482 12,009 11,533 11,135
United States 16,282 22,406 15,122 23,280
Europe 3,401 - 3,724 -
Asia and other 5,358 - 3,967 -
-----------------------------------------------
36,523 34,415 34,346 34,415
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Revenues are attributed to geographic areas based on the location of the
sales organization, which largely reflects the location of the customers
to which sales are made.
7) Capital Stock
(Canadian dollars in Thousands, except per share amounts)
a) Authorized, unlimited as to number
Common shares
Preferred shares, non-voting, retractable and redeemable
b) The following table summarizes the common shares activity:
-----------------------------------------------
-----------------------------------------------
Nine months ended December 31,
2005 2004
Number Number
of shares $ of shares $
-----------------------------------------------
-----------------------------------------------
Balance before share
purchase financing
agreements -
Beginning of period 18,357 61,141 18,281 59,911
Purchased for
cancellation (note 7 b)i)) (375) (1,234) (50) (162)
Exercise of stock
options (note 7 b)ii)) 245 1,528 134 760
-----------------------------------------------
Balance before share
purchase financing
agreements - End of
period 18,227 61,435 18,365 60,509
Share purchase financing
agreements (note 7 b)iii)) (241) (508) (313) (660)
-----------------------------------------------
Balance - End of period 17,986 60,927 18,052 59,849
-----------------------------------------------
-----------------------------------------------
i) During the nine-month period ending December 31, 2005, the Company purchased 374,700 of its own shares for cancellation for a cash consideration totaling $3,756,951. Capital stock has been reduced by the average issue price per share before the buy-back of $3.30 totaling $1,234,701 and the remaining amounts have been recorded against the retained earnings.
During the nine-month period ending December 31, 2004, the Company purchased 49,600 of its own shares for cancellation for a cash consideration totaling $558,385. Capital stock has been reduced by the average issue price per share before the buy-back of $3.24 totaling $161,890 and the remaining amounts have been recorded against the retained earnings.
ii) During the nine-month period ending December 31, 2005, 245,600 stock options were exercised to purchase 245,600 common shares for a cash consideration of $1,271,921 or $5.18 per share.
The balance of $256,199 credited to capital stock represents the stock- based compensation recorded for these options.
During the nine-month period ending December 31, 2004, 134,950 stock options were exercised to purchase 134,950 common shares for a cash consideration of $760,342 or $5.63 per share.
iii) As at December 31, 2005, the Company had a receivable from its employees of $507,459 (2004 - $659,787) related to share purchase loans to them under this plan. At the end of the quarter, there were 240,528 shares (2004 - 312,862) in respect to employee loans for which the market value was $2,585,676 (2004 - $3,363,267). The related shares are considered to be issued as the loan is repaid by the holder and the decrease in the loans has therefore been presented as an issuance of shares in the consolidated statement of cash flows, of $152,328 for the nine months ended December 31, 2005 (2004 - $103,833), in addition to the exercise price of stock options.
c) Stock option plan
The Company maintains a stock option plan as described in note 11 d) to the consolidated financial statement in the 2005 Annual Report.
On September 15th, 2005, the Company granted 362,000 stock options to its employees and directors at an exercise price of $11.15. The estimated fair value of the stock options issued under this grant amounts to $1,208,924, and will be expensed over their vesting periods which do not exceed three years.
The fair value of all stock options granted to employees and directors, and outstanding as of the date hereof, was estimated using the Black-Scholes option pricing model with the following assumptions:
as of as of
December 31, 2005 March 31, 2005
-----------------------------------------------
-----------------------------------------------
Risk-free interest rate: 3.3% to 4.1% 3.4% to 3.7%
Expected life of options: 3.1 to 5 years 3.1 to 5 years
Volatility: 40.3% to 51.5% 41.2% to 45.5%
Dividend rate: 0% 0%
d) Weighted average number of shares outstanding
The following table outlines the weighted average number of shares used in the calculations of the basic and diluted net earnings per share:
-----------------------------------------------
-----------------------------------------------
Three months ended Nine months ended
December 31, December 31,
2005 2004 2005 2004
-----------------------------------------------
-----------------------------------------------
Basic weighted average
number of shares
outstanding 18,139 18,042 18,081 18,011
Dilutive effect of
stock options 305 426 335 511
Dilutive effect of share
purchase financing
agreements 191 242 224 265
-----------------------------------------------
Diluted weighted average
number of shares
outstanding 18,635 18,710 18,640 18,787
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8) Comparative figures
Certain figures for fiscal 2005 have been reclassified in order to comply with the basis of presentation adopted in the current year.
9) Subsequent events
a) The sale of selected Flow Systems applications, announced on May 19, 2005, had provisions for certain payments to the Company, on closing and at future dates, as well as future royalty payments on the resale of certain of those applications. In addition, under certain conditions, future royalty payments could be accelerated and paid to Mediagrif, at its option, as a lump sum equal to 75% of the maximum royalties payable under the agreement. After the end of the third quarter of the current fiscal year, those conditions were met and, as such, the Company received approximately US$1.6M (approximately CA$1.8M) in royalties.
b) On February 1st, 2006, the Company announced it has taken a 50% equity stake in Centerac DMCC, a company that owns e-business technology and operates www.yarnsandfibers.com, a B2B network in the global textile industry, to support its expansion in India, the Middle East and Asia. Total investments will represent approximately US$1.0 million.
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%SEDAR: 00014324EF
For further information: Mediagrif Interactive Technologies Inc.: Claude Thibault, Chief Financial Officer, (450) 677-8797, ext. 2050, cthibault@mediagrif.com; Kathy Roberge, Director, Communications, (450) 677-8797, ext. 3014, kroberge@mediagrif.com