Computer Modelling Group Ltd.
TSX : CMG

Computer Modelling Group Ltd.

May 22, 2009 08:00 ET

Computer Modelling Group Announces Record Year End Results

CALGARY, ALBERTA--(Marketwire - May 22, 2009) - Computer Modelling Group Ltd. ("CMG" or the "Company") (TSX:CMG) is pleased to report record financial results for the fiscal year ended March 31, 2009 which surpass all previous records.



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$thousands, unless otherwise noted
For the years ended March 31, 2008 2009 Change
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Annuity/maintenance software licenses $ 18,033 $ 25,947(i) 44%
Software license revenue 22,607 38,406(i) 70%
Total revenue 27,993 43,942(i) 57%
Gross profit 21,208 34,785(i) 64%
Earnings 7,600 16,616(i) 119%
Earnings per share - basic $ 0.45 $ 0.97(i) 116%
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(i) Record annual results


Management's Discussion and Analysis

The following discussion and analysis, presented as at May 21, 2009, is an extract of CMG's Management Discussion and Analysis ("MD&A") filed on SEDAR and presented in its 2009 annual report. This discussion and analysis reflects management's assessment of the financial and operating results of CMG and should be read in conjunction with the complete MD&A, the audited consolidated financial statements and related notes of the Company for the years ended March 31, 2009 and 2008. Additional information relating to CMG, including our Annual Information Form, can be found at www.sedar.com.

The financial data contained herein have been prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP") and, unless otherwise indicated, all amounts in this report are expressed in Canadian dollars.

Results of Operations - Annual

CMG achieved another record year with revenues and profits for its fiscal year ended March 31, 2009 exceeding all previous results. For the year ended March 31, 2009, CMG reported revenues of $43.9 million, up 57 percent over the prior year revenues of $28.0 million, and net earnings of $16.6 million ($0.97 per share), an increase of 118 percent over the $7.6 million ($0.45 per share) recorded for the year ended March 31, 2008.

Revenues

CMG's revenues are comprised of software license sales, which provide the majority of the Company's revenues, and consulting and contract research fees. CMG's revenues of $43.9 million for its 2009 fiscal year reflect an increase of $15.9 million, a 57 percent increase from the $28.0 million recorded in its 2008 fiscal year. This growth is due to increased software license sales in both the annuity/maintenance and perpetual revenue streams.

Software Licenses

CMG generated another record year in its software license sales, with $38.4 million in software license revenues recorded in the year ended March 31, 2009. This reflects a growth rate of 70 percent from prior year software license revenues of $22.6 million.

CMG's software license revenues can be categorized between annuity/maintenance software licensing, which is generally for a term of one year or less, and perpetual software licensing, whereby the customer purchases the then current version of the software and has the right to use that version in perpetuity. CMG has found that a large percentage of its customers who have acquired perpetual software licenses subsequently purchase maintenance licenses to ensure they have access to current versions of CMG software.

CMG's annuity/maintenance licensing for the year ended March 31, 2009 was $25.9 million, representing 68 percent of fiscal 2009 total software license revenues. This reflects an increase of 44 percent from the $18.0 million (80 percent of fiscal 2008 total software license revenues) in annuity/maintenance software license revenues generated last year.

Software license revenues under perpetual sales for the year ended March 31, 2009 were $12.5 million, up $7.9 million from the $4.6 million recorded in fiscal 2008. Software licensing under perpetual sales is a significant part of CMG's business but is more variable and unpredictable in nature as the purchase decision and its timing fluctuates with clients' needs and budgets. This unprecedented growth in the sales of perpetual licenses was twice the previous record.

The growth in CMG's software license revenues in fiscal 2009 compared to fiscal 2008 is equally attributable to the sales of perpetual and annuity/maintenance licenses to new customers and additional licenses and/or additional products sold to existing customers. The growing utilization by the oil and gas industry of enhanced recovery processes and production from unconventional sources of hydrocarbons have generated increased demand for CMG's advanced physics reservoir simulators. In addition, demand for CMG's parallel computing option to enable clients to run large highly complex models with reduced computational time has grown.

On a geographic basis, software license sales to CMG's two most sizeable markets, Canada and the United States, continued to demonstrate strong revenue growth of 77 percent and 37 percent respectively. The Company's software license revenue in the rest of the world increased by 80 percent as CMG continues to increase its market presence throughout the world.

CMG has historically maintained a significant percentage of repeat customers and expects that this will continue. At March 31, 2009, CMG has pre-sold $11.4 million (2008 - $8.6 million) of annuity/maintenance software license revenue, the majority of which relates to its next fiscal year ending March 31, 2010.

Consulting and Contract Research Revenues

CMG recorded consulting and contract research revenues of $5.5 million for the year ended March 31, 2009, up $0.1 million from the $5.4 million recorded for the same period last year.

CMG performs consulting and contract research activities on an ongoing basis but such activities are not considered to be a core part of our business and are primarily undertaken to increase our knowledge base and hence expand the technological abilities of our simulators in a funded manner, combined with servicing our customers' needs. In addition, these activities are undertaken to market the capabilities of our suite of software products with the ultimate objective to increase software license sales. Our experience is that consulting activities are variable in nature as both the timing and dollar magnitude of work are dependent on activities and budgets within client companies.

At March 31, 2009, CMG has recorded approximately $0.4 million (2008 - $0.2 million) of pre-sold revenue relating to consulting and contract research revenues.

Expenses

CMG realized a gross profit of $34.8 million (79 percent) for the year ended March 31, 2009, up $13.6 million from the $21.2 million (76 percent) recorded last year. This increase in gross profit resulted from growth in our software license revenues.

CMG's total expenses, excluding depreciation and income and other taxes, amounted to $20.7 million for the year ended March 31, 2009, up $4.8 million or 30 percent from the $15.9 million expended last year.

This increase in total expenses between the two years is primarily due to growth in CMG's staff base; performance-based compensation plans; and increased use of professional advisors in both the legal and taxation areas due to our growing international customer base. Offsetting these increased expenditures has been a reduction in our third party contract costs and greater benefits recorded in respect of the scientific research and experimental development investment tax credit program. The financial results for the year ended March 31, 2009 include $0.2 million in scientific research and experimental development investment tax credits pertaining to expenditures on our DRMS project for CMG's fiscal years ended March 31, 2007 and 2008.

As a technology company, CMG's largest area of expenditure is its people. Approximately $15.7 million or 76 percent of the total expenses in the year ended March 31, 2009 relate to staff costs. This compares to $12.0 million or 75 percent of the total expenses in the comparative period last year. During the year ended March 31, 2009, our staff complement grew by 17 employees and CMG could potentially add a similar number by the end of fiscal 2010, depending upon prevailing business opportunities.

Investment in Research and Development

CMG maintains its belief that its strategy of growing long-term value for shareholders can only be achieved through continued investment in research and development. Along with its leadership position in the simulation of proven advanced recovery processes, CMG has positioned itself to play an important role in experimenting with new petroleum extraction processes and technology. CMG works closely with its customers to provide solutions to complex problems.

During the year ended March 31, 2009, CMG recorded an investment of $8.0 million (2008 - $6.4 million) in research and development, which includes its share of the research and development costs on the DRMS system development, all of which is expensed to earnings. CMG has recorded a reduction of $1.0 million (2008 - $0.3 million) in the year ended March 31, 2009 to its product research and development expenses for investment tax credits on scientific research and experimental development expenditures. The benefit of the scientific research and experimental development investment tax credits is utilized by CMG to reduce its Canadian federal income taxes otherwise payable.

Interest Income and Foreign Exchange

Interest income decreased to $0.6 million in the year ended March 31, 2009 from the $0.8 million recorded last year due to lower prevailing interest rates, despite investing larger cash balances.

CMG is impacted by the movement of the US dollar against the Canadian dollar as approximately 68 percent (2008 - 67 percent) of CMG's revenues for the year ended March 31, 2009 are denominated in US dollars, whereas only approximately 18 to 20 percent of CMG's total costs are denominated in US dollars.



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CDN$ to US$ At March 31 Yearly average
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2007 0.8674 0.8800

2008 0.9729 0.9652

2009 0.7935 0.8966
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Given the significant portion of our business that is conducted in US dollars, the weakening of the Canadian dollar against the US dollar in the later half of fiscal 2009 has positively impacted our financial results in both the valuation of our US dollar net working capital position and current period sales.

CMG recorded a foreign exchange gain of $1.2 million for the year ended March 31, 2009 compared to $0.4 million loss recorded last year.

Income and Other Taxes

CMG's effective tax rate for the year ended March 31, 2009 is reflected as 31.5 percent (2008 - 35.9 percent), whereas the prevailing Canadian statutory tax rate is now 29.38 percent. This is primarily due to a combination of the non-tax deductibility of stock-based compensation expense and the benefit of foreign withholding taxes only being realized as a tax deduction as opposed to a tax credit.

The benefit recorded in CMG's books on the federal scientific research and experimental development investment tax credit program impacts future income taxes. The investment tax credit earned in the current fiscal year is utilized by CMG to reduce federal income taxes otherwise payable for the current fiscal year and this benefit bears an inherent tax liability as the amount of the credit is included in the subsequent year's taxable income for both federal and provincial purposes. The inherent tax liability on these investment tax credits is reflected in the year the credit is earned as a current future income tax liability and then, in the following fiscal year, is transferred to income taxes payable.



Quarterly Performance

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Fiscal 2008 Fiscal 2009
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$ thousands, unless
otherwise stated Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Annuity/
maintenance
licenses 3,954 4,042 4,450 5,587(1) 5,618(2) 5,350 6,937(3) 8,042(4)
Perpetual
licenses 213 682 1,449 2,230 1,171 2,882 3,383 5,023
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Software
licenses 4,167 4,724 5,899 7,817 6,789 8,232 10,320 13,065
Consulting and
contract
research 1,387 1,376 1,441 1,181 1,479 1,353 1,340 1,364
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Revenues 5,554 6,100 7,340 8,998 8,268 9,585 11,660 14,429
Gross Profit 3,918 4,458 5,640 7,192 6,314 7,157 9,525 11,789
Gross Profit (%) 71 73 77 80 76 75 82 82
Earnings before
income and
other taxes 1,660 2,247 3,291 4,665 3,814 4,414 7,254 8,765
Income and other
taxes 622 804 1,180 1,657 1,187 1,446 2,350 2,648
Earnings for the
quarter 1,038 1,443 2,111 3,008 2,627 2,968 4,904 6,117
Cash dividends
declared and
paid 2,745 1,264 1,260 1,684 3,843 2,073 2,422 2,588
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Per share amounts
- $
Earnings per share
basic & diluted 0.06 0.09 0.13 0.18 0.15 0.17 0.28 0.35
Cash dividends
declared per
share 0.165 0.075 0.075 0.10 0.225 0.12 0.14 0.15

(1) Includes $0.8 million in revenue that pertains to usage of CMG's
products in prior quarters
(2) Includes $0.7 million in revenue that pertains to usage of CMG's
products in prior quarters
(3) Includes $0.7 million in revenue that pertains to usage of CMG's
products in prior quarters
(4) Includes $1.1 million in revenue that pertains to usage of CMG's
products in prior quarters


Results of Operations - Fourth Quarter

CMG reported revenues of $14.4 million and earnings of $6.1 million ($0.35 per share) for the three months ended March 31, 2009, up from revenues of $9.0 million and earnings of $3.0 million ($0.18 per share) for the comparable period last year.

Revenues

Software license revenues were $13.1 million in the three months ended March 31, 2009 compared to $7.8 million recorded in the fourth quarter of fiscal 2008. Growth in software license revenues comes as a result of both increased sales to existing customers and sales to new customers.

It should be noted that during the fourth quarter of fiscal 2009, CMG completed the negotiation of certain annuity/maintenance contracts and/or fulfilled revenue recognition requirements that included usage of CMG's products in prior quarters. As a result, CMG recognized $1.1 million in revenue in the fourth quarter of fiscal 2009 that pertained to usage of CMG's products in prior quarters. While these situations regularly occur, the dollar magnitude of the resolution of the contracts that impacted our fourth quarter of fiscal 2009 was significant to the quarterly comparatives of our annuity/maintenance revenue stream.

Consulting and contract research revenues were $1.4 million in the three months ended March 31, 2009 compared to $1.2 million recorded in the fourth quarter of fiscal 2008.

Expenses

CMG realized a gross profit of $11.8 million in the three months ended March 31, 2009, up $4.6 million from the $7.2 million recorded in the fourth quarter of fiscal 2008.

CMG's total expenses, excluding depreciation and income and other taxes, amounted to $6.0 million for the fourth quarter ended March 31, 2009, up $1.6 million from the $4.4 million recorded in the fourth quarter of fiscal 2008. This increase in total expenses is primarily due to higher staff costs as a result of staff additions, variable compensation that is dependent on growth in CMG's revenue base and earnings and stock-based compensation expense.

Liquidity and Capital Resources

Operating Activities

CMG generated $21.6 million from operating activities in the year ended March 31, 2009, an increase of $11.5 million from the $10.1 million generated in the year ended March 31, 2008. The changes in CMG's non-cash working capital for the year ended March 31, 2009 are reflective of the growth in operations and the timing of customer purchases.

Financing Activities

During the year ended March 31, 2009, CMG employees and directors exercised options to purchase 468,726 Common Shares, which resulted in $1.7 million in cash proceeds.

Effective on the close of business on August 1, 2008, CMG's Common and Non-Voting Shares were split on a two-for-one basis. Accordingly, all comparative number of shares and per share amounts have been retroactively adjusted to reflect the two-for-one split.

In the year ended March 31, 2009, CMG paid $11.0 million in dividends, representing four quarterly dividends of $0.10, $0.12, $0.14 and $0.15 respectively per share and a special dividend of $0.125 per share. On May 21, 2009, CMG announced the payment of a quarterly dividend of $0.18 per share and a special dividend of $0.22 per share on CMG's Common and Non-Voting Shares. The dividend will be paid on June 15, 2009 to shareholders of record at the close of business on June 5, 2009.

On February 27, 2009, the Company announced a Normal Course Issuer Bid ("NCIB") commencing March 3, 2009 to purchase for cancellation up to 1,114,791 of its Common Shares. No shares have been purchased pursuant to this NCIB through March 31, 2009.

On February 26, 2008, the Company announced a NCIB commencing February 28, 2008 to purchase for cancellation up to 970,000 of its Common Shares. This NCIB ended on February 27, 2009 and a total of 75,120 shares were repurchased at market price for a total cost of $598,564.

On December 14, 2006, the Company announced a NCIB commencing December 20, 2006 to purchase for cancellation up to 670,000 of its Common Shares. This NCIB ended on December 19, 2007 and a total of 164,800 Common Shares were repurchased at market price for a total cost of $1,187,686.

Investing Activities

CMG's current needs for capital asset investment relate equally to computer equipment and office infrastructure costs. During fiscal 2009, CMG expended $0.6 million on property and equipment additions and has a capital budget of $2.2 million for fiscal 2010, all of which will be funded internally.

Liquidity and Capital Resources

At March 31, 2009, CMG has $34.7 million in cash, no debt and has access to a $1.0 million line of credit with its principal banker.

During the year ended March 31, 2009, 3,359,904 shares of CMG's public float were traded on the TSX Stock Exchange. CMG's share prices ranged from $5.71 to $11.75 per share and last traded on March 31, 2009 at $9.25 for a March 31, 2009 market capitalization of $159.7 million.

Commitments, Off Balance Sheet Items and Transactions with Related Parties

CMG committed approximately $10.6 million to the five year DRMS research and development project with its industry partners Shell and Petrobras, of which $4.8 million has been incurred from inception to March 31, 2009.

In conjunction with entering into this project, the Foundation agreed, subject to certain termination rights, to provide up to a maximum of $5.2 million in research grant funding to cover 50 percent of the Company's estimated share of project costs over the duration of the project. During the year ended March 31, 2009, CMG has reflected $1.0 million (2008 - $0.9 million) in research grants from the Foundation in revenue with respect to this project. From commencement of the project to March 31, 2009, these research grants aggregate to $2.4 million.

CMG plans to fund its share of the project costs associated with the development of the newest generation reservoir simulation software system from internal cash and funding from the Foundation.

CMG has very little in the way of other ongoing material contractual obligations other than for pre-sold revenues which are reflected as deferred revenue on its balance sheet. Contractual obligations for office leases are not considered to be significant and are estimated as follows: 2010 - $0.7 million; 2011 through 2014 - $0.1 million. CMG is currently in discussions regarding new office leases for its Canadian-based operations as the current leases expire during fiscal 2010.

Outlook

As the world's hydrocarbon production by conventional means declines, oil and gas companies must employ more complex and costly recovery methods, under increasingly strict regulations. Added to an environment of low commodity prices and credit constraints, it is more important than ever for petroleum producers to increase the cost-effectiveness and overall efficiency of their operations. CMG's products focus on advanced-process simulation and employ leading edge technologies to help these companies to get the most out of every dollar spent. Our loyal and diverse customer base (over 360 customers in 49 countries) further helps to provide stability to our software license revenues.

CMG is committed to continue to focus its resources on the development of simulation tools relevant to the challenges our customers face today and will face in the future. In turn, this helps position the Company to continue to grow and diversify its revenue base and to ultimately return value to our shareholders in the form of regular quarterly dividend payments and growth in share value.

Kenneth M. Dedeluk, President and Chief Executive Officer

May 21, 2009



COMPUTER MODELLING GROUP LTD.

Consolidated Balance Sheets

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March 31, 2009 March 31, 2008
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Assets
Current assets:
Cash $ 34,701,292 $ 23,479,430
Accounts receivable 11,352,448 7,908,072
Prepaid expenses 825,892 659,348
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46,879,632 32,046,850
Property and equipment (note 3) 1,112,103 1,252,544
Future income taxes (note 5) 52,340 39,763
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$ 48,044,075 $ 33,339,157
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 4,951,571 $ 3,032,638
Income taxes payable 3,438,733 1,391,921
Deferred revenue 11,796,342 8,839,214
Future income taxes (note 5) 197,272 87,982
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20,383,918 13,351,755
Shareholders' equity:
Share capital (note 6) 16,083,799 14,087,179
Contributed surplus (note 6) 1,245,485 744,405
Retained earnings 10,330,873 5,155,818
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27,660,157 19,987,402
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$ 48,044,075 $ 33,339,157
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Commitments (note 9)

See accompanying notes to consolidated financial statements.

COMPUTER MODELLING GROUP LTD.

Consolidated Statements of Earnings and Retained Earnings

----------------------------------------------------------------------------
Years ended March 31, 2009 2008
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Revenue
Software licenses $ 38,406,245 $ 22,606,960
Consulting and contract research 5,535,276 5,385,902
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43,941,521 27,992,862
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Cost of Sales
Marketing expenses 7,142,764 4,897,216
Direct consulting expenses 1,834,075 1,605,822
Third-party contract costs 179,872 281,765
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9,156,711 6,784,803
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Gross Profit 34,784,810 21,208,059
General and administrative expenses 3,955,507 3,060,789
Depreciation and amortization 323,330 328,507
Product research and development costs (note 4) 7,975,130 6,433,275
Foreign exchange (gain)/loss (1,160,871) 363,180
Interest and other income (555,591) (840,362)
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Earnings before income and other taxes 24,247,305 11,862,670
Income and other taxes (note 5) 7,630,934 4,262,962
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Earnings for the Year 16,616,371 7,599,708
Retained earnings, beginning of year 5,155,818 5,524,107
Dividends paid (10,925,980) (6,952,215)
Common shares buy-back (note 6(c)) (515,336) (1,015,782)
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Retained earnings, end of year $ 10,330,873 $ 5,155,818
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Earnings Per Share
Basic (note 6(e)) $ 0.97 $ 0.45
Diluted (note 6(e)) $ 0.95 $ 0.44
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See accompanying notes to consolidated financial statements.

COMPUTER MODELLING GROUP LTD.

Consolidated Statements of Cash Flows

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Years ended March 31, 2009 2008
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Cash provided by (used for)

Operating
Earnings for the year $ 16,616,371 $ 7,599,708
Items not involving cash:
Depreciation and amortization 716,422 676,576
Future income taxes (note 5) 96,713 15,192
Stock-based compensation 841,731 520,533
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18,271,237 8,812,009
Changes in non-cash working capital:
Accounts receivable (3,444,376) (126,839)
Accounts payable and accrued liabilities 1,918,933 542,286
Income taxes payable 2,046,812 (229,126)
Prepaid expenses (166,544) (138,887)
Deferred revenue 2,957,128 1,254,486
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21,583,190 10,113,929
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Financing
Issue of common shares 1,739,197 1,368,061
Dividends paid (10,925,980) (6,952,215)
Common shares buy-back (note 6(c)) (598,564) (1,187,686)
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(9,785,347) (6,771,840)
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Investing
Property and equipment additions (575,981) (641,109)
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Increase in cash 11,221,862 2,700,980
Cash, beginning of year 23,479,430 20,778,450
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Cash, end of year $ 34,701,292 $ 23,479,430
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Supplemental disclosure of cash flow information (note 11).
See accompanying notes to consolidated financial statements.


Notes to Consolidated Financial Statements

Years ended March 31, 2009 and 2008

Computer Modelling Group Ltd. (the "Company") is a computer software technology and consulting firm engaged in the development and sale of reservoir simulation software. The Company's reservoir simulation software is proven and effective technology, which assists petroleum companies to extract a significantly increased amount of oil and gas from their reservoirs.

1. Significant Accounting Policies:

(a) Basis of Consolidation:

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP") and include the accounts of the Company and its subsidiaries, all 100 percent owned. All intercompany transactions have been eliminated.

(b) Revenue Recognition:

Revenue consists primarily of software license fees and consulting and contract research fees.

Software license revenue is comprised of annuity/maintenance license fees charged for the use of the Company's software products which is generally for a term of one year or less, and perpetual software licensing, whereby the customer purchases the then current version of the software and has the right to use that version in perpetuity. Software license revenue is recognized when persuasive evidence of an arrangement exists, the product has been delivered, the fee is fixed or determinable, and collection of the resulting receivable is probable. In cases where collectibility is not deemed probable, revenue is recognized upon receipt of cash, assuming all other criteria have been met.

Annuity/maintenance revenue is deferred and recognized on a straight-line basis over the life of the related license period, which is generally one year or less. License fees for perpetual licenses are recognized fully in revenue when all recognition conditions are satisfied.

Consulting and contract research revenues are recorded on a percentage-of-completion basis whereby revenues and costs are recorded in operations based on work completed.

(c) Property and Equipment:

Property and equipment are recorded at cost less accumulated depreciation.

Depreciation is provided using the following annual rates and methods that are expected to amortize the cost of the property and equipment over their estimated useful lives:



Computer equipment 33 1/3% straight-line
Furniture and equipment 20% straight-line
Leasehold improvements Straight-line over the lease term


(d) Product Research and Development Costs:

All costs of product research and development are expensed to operations as incurred as the impact of both technological changes and competition require the Company to continually enhance its products on an annual basis. Product research and development costs are recorded net of the related investment tax credits.

(e) Joint Research and Development Costs:

The Company participates in a joint project engaged in product research and development and accordingly records its proportionate share of costs incurred as product research and development costs.

(f) Foreign Currency:

The Company's subsidiaries are considered to be integrated operations. Accordingly, monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing at the balance sheet date while other consolidated balance sheet items are translated at historic rates.

Revenues and expenses are translated at the rate of exchange in effect on the transaction dates. Realized and unrealized foreign exchange gains and losses are included in operations in the period in which they occur.

(g) Income Taxes:

The Company provides for income taxes using the asset and liability method. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year and future income taxes are recognized for temporary differences between the tax and accounting bases of assets and liabilities and for the benefit of losses available to be carried forward for tax purposes that are more likely than not to be realized. Future income tax assets and liabilities are measured using the substantively enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or settled. Any change to the net future income tax assets and liabilities is included in operations in the period it occurs.

(h) Investment Tax Credits:

The Company receives federal and provincial investment tax credits in Canada on qualified scientific research and development expenditures ("SR&ED"). Investment tax credits are recorded as a deduction against related expenses or capital items provided that the reasonable assurance over collection of the tax credits exists.

(i) Earnings Per Share:

Basic earnings per share is computed by dividing earnings by the weighted average number of Common and Non-Voting Shares outstanding for the period. Diluted per share amounts reflect the potential dilution that could occur if securities or other contracts to issue Common Shares were exercised or converted to Common Shares. The treasury stock method is used to determine the dilutive effect of stock options. This method assumes that proceeds received from the exercise of in-the-money stock options are used to repurchase Common Shares at the average market price during the period.

(j) Stock-based Compensation Plan:

The Company has a stock-based compensation plan that is described in note 6(d). The fair value of stock options is expensed over the vesting period along with a credit to contributed surplus. When the stock options are exercised for stock, the recorded amount is transferred from contributed surplus to common share capital.

(k) Financial Instruments:

Financial assets and financial liabilities "held-for-trading" are measured at fair value with changes in those fair values recognized in net earnings. Financial assets "available-for-sale" are measured at fair value, with changes in those fair values recognized in other comprehensive income. Financial assets "held-to-maturity," "loans and receivables" and "other financial liabilities" are measured at amortized cost.

(l) Use of Estimates and Assumptions:

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue, costs and expenses for the period. Actual results may differ from such estimates and the differences could be material.

2. Changes in Accounting Policies and Recent Accounting Pronouncements:

(a) Changes in accounting policies:

On April 1, 2008, the Company adopted the following Canadian Institute of Chartered Accountants ("CICA") Handbook Sections:

- "Capital Disclosures", Section 1535. The new standard requires the Company to disclose its objectives, policies and processes for managing its capital structure. Reference is made to note 7.

- "Financial Instruments - Presentation", Section 3863 and "Financial Instruments - Disclosures", Section 3862. These accounting standards replaced "Financial Instruments - Disclosure and Presentation", Section 3861. The disclosures required by Section 3862 provide additional information on the risks associated with our financial instruments and how we manage those risks. The standards on the presentation of financial instruments carries forward previous guidance unchanged. Section 3863 enhances financial statement users' understanding of the significance of financial instruments to an entity's financial position, performance and cash flows. Reference is made to note 8.

(b) Recent accounting pronouncements:

In January 2006, the CICA Accounting Standards Board ("AcSB") adopted a strategic plan for the direction of accounting standards in Canada. As part of that plan, the AcSB confirmed in February 2008 that International Financial Reporting Standards ("IFRS") will replace Canadian GAAP in 2011 for profit-oriented Canadian publicly accountable enterprises. As the Company will be required to report its results in accordance with IFRS starting in 2011, the Company is assessing the potential impacts of this changeover and developing its plan accordingly.

In January 2009, the AcSB issued "Consolidated Financial Statements ", Section 1601, which establishes standards for the preparation of consolidated financial statements. This standard is effective on or after the beginning of the first annual reporting period beginning on or after January 1, 2011, with earlier adoption permitted. The Company is assessing the impact of the adoption of this new section on the consolidated financial statements.



3. Property and Equipment:

----------------------------------------------------------------------------
Accumulated
March 31, 2009 Cost Depreciation Net Book Value
----------------------------------------------------------------------------
Computer equipment $ 2,487,946 $ 1,807,704 $ 680,242
Furniture and equipment 690,742 532,059 158,683
Leasehold improvements 1,122,177 848,999 273,178
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$ 4,300,865 $ 3,188,762 $ 1,112,103
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Accumulated
March 31, 2008 Cost Depreciation Net Book Value
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Computer equipment $ 2,210,966 $ 1,389,177 $ 821,789
Furniture and equipment 625,324 481,109 144,215
Leasehold improvements 972,553 686,013 286,540
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$ 3,808,843 $ 2,556,299 $ 1,252,544
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4. Product Research and Development Costs:

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Years ended March 31, 2009 2008
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Product research and development costs $ 8,586,208 $ 6,384,667
Depreciation 393,092 348,069
Scientific research and experimental
development investment tax credits (1,004,170) (299,461)
----------------------------------------------------------------------------
$ 7,975,130 $ 6,433,275
----------------------------------------------------------------------------
----------------------------------------------------------------------------

5. Income and Other Taxes:

The provision for income and other taxes reported differs from the amount
computed by applying the combined Canadian Federal and Provincial statutory
rate to the earnings before income and other taxes. The reasons for this
difference and the related tax effects are as follows:

----------------------------------------------------------------------------
Years ended March 31, 2009 2008
----------------------------------------------------------------------------
Statutory tax rate 29.38% 31.47%
----------------------------------------------------------------------------
Expected income tax $ 7,123,858 $ 3,733,182
Non-deductible costs 277,876 184,680
Change in valuation allowance (20,928) 236,553
Withholding taxes 229,905 70,661
Other 20,223 37,886
----------------------------------------------------------------------------
$ 7,630,934 $ 4,262,962
----------------------------------------------------------------------------

Represented by:
Current income taxes $ 7,206,504 $ 4,133,079
Future income taxes 96,713 15,192
Foreign withholding and other taxes 327,717 114,691
----------------------------------------------------------------------------
$ 7,630,934 $ 4,262,962
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The components of the Company's net future income tax liability are as
follows:

----------------------------------------------------------------------------
March 31, 2009 2008
----------------------------------------------------------------------------

Investment tax credits, net of future
tax liabilities $ 290,465 $ 458,995
Property and equipment 52,340 39,763
Benefit of operating losses in a
foreign subsidiary 195,398 216,326
----------------------------------------------------------------------------
$ 538,203 $ 715,084
Valuation allowance (683,135) (763,303)
----------------------------------------------------------------------------
Future income tax liability, net (144,932) (48,219)

Represented by:
Future income tax liability, current $ (197,272) $ (87,982)
Future income tax asset, long-term 52,340 39,763
----------------------------------------------------------------------------
Future income tax liability, net $ (144,932) $ (48,219)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The operating losses in the foreign subsidiary expire in fiscal 2010.

6. Share Capital:

(a) Authorized:
An unlimited number of Common Shares, an unlimited number of Non-Voting
Shares, and an unlimited number of Preferred Shares, issuable in series.

Effective August 1, 2008, the Common and Non-Voting Shares were split
on a two-for-one basis. Accordingly, the comparative number of shares
and per share amounts have been retroactively adjusted to reflect the
two-for-one split.

(b) Issued:

----------------------------------------------------------------------------
Common Shares Non-Voting Shares Contributed
Number Consideration Number Consideration Surplus
----------------------------------------------------------------------------
Balance,
March 31,
2007 11,638,222 $ 12,254,620 4,919,550 $ 316,268 $ 544,006
Issued for
cash on
exercise of
stock options 472,940 1,368,061
Common Shares
buy-back (164,800) (171,904)
Converted into
Common Shares 970,516 62,392 (970,516) (62,392)
Stock-based
compensation:
Current period
expense 520,533
Stock options
exercised 320,134 (320,134)
----------------------------------------------------------------------------
Balance,
March 31,
2008 12,916,878 $ 13,833,303 3,949,034 $ 253,876 $ 744,405
Issued for
cash on
exercise of
stock
options 468,726 1,739,197
Common Shares
buy-back (75,120) (83,228)
Converted
into
Common
Shares 1,053,088 67,701 (1,053,088) (67,701)
Stock-based
compensation:
Current
period
expense 841,731
Stock options
exercised 340,651 (340,651)
----------------------------------------------------------------------------
Balance,
March 31,
2009 14,363,572 $ 15,897,624 2,895,946 $ 186,175 $1,245,485
----------------------------------------------------------------------------
----------------------------------------------------------------------------


The Non-Voting Shares are convertible into an equivalent number of Common Shares at any time at the option of the holder.

Subsequent to March 31, 2009, 6,750 stock options were exercised for cash proceeds of $44,895.

On May 18, 2006, the Board of Directors adopted a shareholder rights plan (the "Original Rights Plan"), whereby the Company will issue one right in respect of each share outstanding at the close of business on May 18, 2006 and for each additional share issued by the Company thereafter. The issuance of the rights is not dilutive and will not affect reported earnings per share until the rights separate from the underlying shares and become exercisable or until the exercise of the rights. The Original Rights Plan was approved by the Company's shareholders on July 13, 2006.

On May 21, 2009, the Board of Directors reviewed the Original Rights Plan and determined that it was in the best interest of the Corporation to continue to have a shareholder rights plan in place. The Corporation, therefore, adopted a new shareholder rights plan (the "Rights Plan") which is identical in all respects to the Original Rights Plan, with the exception of certain minor amendments which have been made to provide for renewal or approval of the Rights Plan every three years (rather than only one three-year period as was set out in the Original Rights Plan) and to update references to statutory provisions now out of date. Subject to the approval of the Toronto Stock Exchange, the Board will place the Rights Plan before Shareholders for approval at the Annual and Special Meeting of Shareholders to be held on July 9, 2009. If the Rights Plan is not approved, it will expire immediately following termination of the meeting.

(c) Common Shares Buy-back:

On December 14, 2006, the Company announced a Normal Course Issuer Bid ("NCIB") commencing December 20, 2006 to purchase for cancellation up to 670,000 of its Common Shares. This NCIB ended on December 19, 2007 and a total of 164,800 Common Shares were repurchased at market price for a total cost of $1,187,686.

On February 26, 2008, the Company announced a NCIB commencing February 28, 2008 to purchase for cancellation up to 970,000 of its Common Shares. This NCIB ended on February 27, 2009 and a total of 75,120 shares have been repurchased at market price for a total cost of $598,564.

On February 27, 2009, the Company announced a NCIB commencing March 3, 2009 to purchase for cancellation up to 1,114,791 of its Common Shares. No shares have been purchased pursuant to this NCIB through March 31, 2009.

(d) Stock-based Compensation Plan:

The Company adopted a rolling stock option plan as of July 13, 2005, which was reaffirmed by the Company's shareholders on July 10, 2008, which allows it to grant options to acquire Common Shares of up to 10 percent of the combined outstanding Common and Non-Voting Shares at the date of grant. Based upon this calculation, at March 31, 2009, the Company could grant up to 1,725,952 stock options. Pursuant to the stock option plan, the maximum term of an option granted cannot exceed five years from the date of grant. These outstanding stock options vest as to 50 percent after the first year anniversary, from date of grant, and then vest as to 25 percent of the total options granted after each of the second and third year anniversary dates.

As a result of the two-for-one stock split, the number of outstanding options was adjusted in accordance with existing plan provisions. All prior period number of options as well as weighted average exercise prices and fair values per option have been retroactively adjusted to reflect the two-for-one stock split.

The following table outlines changes in options as of March 31:



----------------------------------------------------------------------------
2009 2008
----------------------------------------------------------------------------
Weighted Weighted
Options Average Options Average
Granted Exercise Price Granted Exercise Price
----------------------------------------------------------------------------
Outstanding at
beginning of year 1,235,150 $ 4.95 1,265,590 $ 3.28

Granted 620,000 11.03 475,000 7.39

Exercised (468,726) 3.71 (472,940) 2.90

Forfeited (19,000) 7.38 (32,500) 5.57
----------------------------------------------------------------------------
Outstanding at
end of year 1,367,424 $ 8.10 1,235,150 $ 4.95
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Options exercisable
at end of year 371,424 $ 5.47 365,400 $ 3.26
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The range of exercise prices of options outstanding and exercisable at
March 31, 2009 is as follows:


Outstanding Exercisable
-----------------------------------------------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Exercise Contractual Exercise Exercise
Price Number of Life Price Number of Price
($/option) Options (Years) ($/option) Options ($/option)
----------------------------------------------------------------------------

2.10 - 3.50 70,324 1.2 3.26 70,324 3.26
3.51 - 5.62 270,600 2.4 3.76 116,600 3.76
5.63 - 6.90 8,000 4.6 6.90 - -
6.91 - 7.40 411,500 3.4 7.39 184,500 7.39
7.41 - 8.76 2,000 5.0 8.76 - -
8.77 - 11.26 605,000 4.4 11.10 - -
----------------------------------------------------------------------------
1,367,424 3.5 8.10 371,424 5.47
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The fair value of stock options granted was estimated using the
Black-Scholes option pricing model under the following assumptions:

----------------------------------------------------------------------------
Years ended March 31, 2009 2008 2007
----------------------------------------------------------------------------
Weighted-Average Fair Value
($/option) 0.98 to 2.01 1.15 to 1.77 0.46 to 1.21
Risk-Free Interest Rate (%) 1.5 to 3.1 3.2 to 4.25 4.1
Estimated Hold Period Prior
to Exercise (years) 2 to 5 2 to 5 2 to 5
Volatility in the Price of
Common Shares (%) 31 to 49 30 to 33 29 to 32
Dividends per Common Share ($/share) 0.53 to 0.73 0.30 to 0.40 0.24 to 0.26
----------------------------------------------------------------------------
----------------------------------------------------------------------------


The Company recognized a total stock-based compensation expense for the year
ended March 31, 2009 of $841,731 (2008 - $520,533).

(e) Earnings Per Share:

The following table summarizes the earnings and weighted average number of
Common and Non-Voting Shares used in calculating basic and diluted earnings
per share:

----------------------------------------------------------------------------
Years ended March 31, 2009
----------------------------------------------------------------------------
Weighted
Average
Shares Earnings
Earnings Outstanding Per Share
----------------------------------------------------------------------------
Basic $ 16,616,371 17,172,234 $ 0.97
Dilutive effect of stock options 230,589
----------------------------------------------------------------------------
Diluted $ 16,616,371 17,402,823 $ 0.95
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Years ended March 31, 2008
----------------------------------------------------------------------------
Weighted
Average
Shares Earnings
Earnings Outstanding Per Share
----------------------------------------------------------------------------
Basic $ 7,599,708 16,745,468 $ 0.45
Dilutive effect of stock options 404,038
----------------------------------------------------------------------------
Diluted $ 7,599,708 17,149,506 $ 0.44
----------------------------------------------------------------------------
----------------------------------------------------------------------------


During the year ended March 31, 2009, 607,000 (2008 - 230,500) options were excluded from the computation of the weighted-average number of diluted shares outstanding because their exercise price was greater than the average market price of the common shares during the period.

7. Capital Management:

The Company's objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth combined with strategic acquisitions and to maximize the return to its shareholders. The capital structure of the Company consists of cash, credit facilities and shareholders' equity. The Company does not have any externally imposed capital requirements and does not presently utilize any quantitative measures to monitor its capital.

The Company's policy is to pay quarterly dividends based on the Company's overall financial performance and cash flow generation. In addition, since May 2005, the Company declared a special dividend after review of the completion of the immediately prior fiscal year results. Decisions on dividend payments are made on a quarterly basis by the Board of Directors. There can be no assurance as to the amount or payment of such dividends in the future.

Since November 2002, the Company embarked on a series of normal course issuer bids to buy back its shares. The latest normal course issuer bid is effective from March 3, 2009 to March 2, 2010. Reference is made to note 6(c).

The Company makes adjustments to its capital structure in light of general economic conditions and the Company's working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from its Board of Directors, may pay dividends, buy back shares or undertake other activities as deemed appropriate under the specific circumstances. The Board of Directors reviews and approves any material transactions not in the ordinary course of business.

There were no changes in the Company's approach to capital management during the year.



8. Financial Instruments:

(i) Classification of financial instruments

----------------------------------------------------------------------------
Classification Measurement
----------------------------------------------------------------------------
Cash Held for trading Fair value
Accounts receivable Loans and receivables Amortized cost
Accounts payable and accrued
liabilities Other financial liabilities Amortized cost
----------------------------------------------------------------------------


(ii) Fair values of financial instruments

The carrying values of cash, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

(a) Overview:

The Company is exposed to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth. The main objectives of the Company's risk management process are to ensure that risks are properly identified and that the capital base is adequate in relation to those risks. The principal financial risks to which the Company is exposed are described below:

(b) Credit Risk:

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligation and arises principally from the Company's cash and accounts receivable. The amounts reported in the balance sheet for accounts receivable are net of allowances for bad debts, estimated by the Company's management based on prior experience and their assessment of the current economic environment.

The Company's accounts receivable consist primarily of balances from customers operating in the oil and gas industry, both domestically and internationally as the Company sells its products and services in 49 countries worldwide. Some of these countries have greater economic and political risk than experienced in North America and as a result there may be greater risk associated with sales in those jurisdictions. The Company manages this risk by invoicing for the full license term in advance for the majority of software license sales and by invoicing as frequently as the contract allows for consulting and contract research services on a percentage-of-completion basis. In cases where collectibility is not deemed probable, revenue is recognized upon receipt of cash, assuming all other criteria have been met. Historically the Company has not experienced any significant losses related to individual customers or groups of customers in any particular geographic area; therefore, no allowance for doubtful accounts has been established at March 31, 2009.

As at March 31, 2009, the Company has a concentration of credit risk with seven domestic and international customers who represent 64 percent of accounts receivable and $679,000 of accounts receivable are over 90 days. The Company assesses the credit worthiness of its customers on an ongoing basis and it regularly monitors the amount and age of balances outstanding. Accordingly, the Company views the credit risks on these amounts as normal for the industry.

The Company minimizes the credit risk of cash by depositing only with a reputable financial institution in highly liquid interest-bearing cash accounts.

The maximum credit exposure is represented by the carrying amount of cash and accounts receivable.

(c) Market Risk:

Market risk is the risk that changes in market prices of the Company's foreign exchange rates and interest rates will affect the Company's income or the value of its financial instruments.

The Company operates internationally and primarily prices its products in either the Canadian or US dollar. This gives rise to exposure to market risks from changes in the foreign exchange rates between the Canadian and US dollar. Approximately 68 percent of the Company's revenues for the year ended March 31, 2009 were denominated in US dollars and at March 31, 2009, the Company had approximately $7.8 million of its working capital denominated in US dollars. The Company currently does not use derivative instruments to hedge its exposure to those risks but as approximately 18 to 20 percent of the Company's total costs are also denominated in US dollars they provide a partial economic hedge against the fluctuation in this currency exchange. In addition, the Company monitors levels of foreign currency held by converting excess US dollars into Canadian dollars at spot rates.

The Canadian operations are exposed to currency risk on US denominated financial assets and liabilities with fluctuations in the rate recognized as foreign exchange gains or losses in the Consolidated Statement of Earnings. It is estimated that a one cent change in the US dollar would result in a net change of approximately $44,000 on net earnings for the year ended March 31, 2009. A weaker US dollar with respect to the Canadian dollar will result in a negative impact while the reverse would result from a stronger US dollar.

The Company has significant cash balances and no interest-bearing debt. The Company's current policy is to invest excess cash in interest-bearing deposits and/or guaranteed investment certificates issued by its principal banker. The Company is exposed to interest cash flow risk from changes in interest rates on its cash balances. Based on the March 31, 2009 cash balance, each one percent change in the interest rate on the Company's cash balance would change net earnings by approximately $245,000.

(d) Liquidity risk:

Liquidity risk is the risk that the Company is not able to meet its financial obligations as they fall due or can do so only at excessive cost. The Company manages liquidity risk through the management of its capital structure as outlined in note 7. The Company's growth is financed through a combination of the cash flows from operations and its cash balances on hand. Given the Company's available liquid resources as compared to the timing of the payments of its liabilities, management assesses the Company's liquidity risk to be low. The Company monitors its expenditures by preparing annual budgets which are updated periodically. At March 31, 2009 the Company has significant cash balances in excess of its obligations and a $1 million line of credit (note 10) available for its use.

9. Commitments:

(a) Research Commitments:

(i) On May 1, 2006, the Company entered into a two phased joint research and development agreement (the "Agreement"). Phase 1 of this project was completed in fiscal 2007 and work is ongoing on Phase 2. It is estimated that the second phase will take 5 years and that the Company's annual expenditures will approximate $2 million for its portion of the aggregate project costs.

During Phase 2, the Agreement provides the participants with withdrawal rights upon the payment of a withdrawal fee to the other participants of an amount equal to one year of the withdrawing party's share of budgeted project costs. In addition to the withdrawal fee, the withdrawing party may be liable for (i) 100 percent of resizing costs if the project is scaled back or (ii) a proportionate share of wind down costs should the other participants decide to terminate the project as a result of the withdrawal of the participant.

In conjunction with entering into this project, CMG Reservoir Simulation Foundation (the "Foundation"), the sole holder of the Company's Non-Voting Shares, agreed, subject to certain termination rights, to provide up to a maximum of $5.2 million in research grant funding to cover 50 percent of the Company's estimated share of costs over the duration of the project. For the year ended March 31, 2009, the Company has reflected $1,036,821 (2008 - $904,349) in research grants from the Foundation in revenue with respect to this project. To March 31, 2009 these research grants aggregate to $2,401,797 since commencement of the project.

(ii) Pursuant to a research and development agreement entered into on January 30, 2001, the Foundation provided specified research grants to the Company through the term of the agreement, which ended with the payment of the final grant in January 2008. During the Company's fiscal year ended March 31, 2008, it received $125,000 in cash each quarter which is reflected in consulting and contract research revenues.

(b) Lease Commitments:

The Company has operating lease commitments relating to its office premises with the minimum annual lease rental payments over the next five years as follows:



----------------------------------------------------------------------------
($)
----------------------------------------------------------------------------
2010 682,000
2011 103,000
2012 102,000
2013 104,000
2014 106,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------


10. Line Of Credit:

The Company has arranged for a $1.0 million line of credit with its principal banker, which can be drawn down by way of a demand operating credit facility and/or letters of credit. As at March 31, 2009, $Nil (2008 - US $8,850) had been drawn on this line of credit for performance bonds.



11. Supplemental Cash Flow Information:

----------------------------------------------------------------------------
Years Ended March 31, 2009 2008
----------------------------------------------------------------------------
Interest received $ 585,997 $ 856,070
Income taxes paid $ 4,153,084 $ 4,062,752
----------------------------------------------------------------------------
----------------------------------------------------------------------------


12. Segmented Information:

Operating Segments
----------------------------------------------------------------------------
Contract
Year ended Software Research and
March 31, 2009 Licenses Consulting Corporate Total
----------------------------------------------------------------------------
Revenue $38,406,245 $ 3,216,120 $ 2,319,156 $ 43,941,521
----------------------------------------------------------------------------
Gross profit 31,426,771 1,038,883 2,319,156 34,784,810
----------------------------------------------------------------------------
General and
administrative
expenses 3,955,507 3,955,507
Depreciation
and
amortization 100,363 79,489 143,478 323,330
Product
research and
development
costs 7,975,130 7,975,130
Interest and
other income
and foreign
exchange (1,716,462) (1,716,462)
Income and
other taxes 321,753 4,979 7,304,202 7,630,934
----------------------------------------------------------------------------
Earnings (loss)
for the
year $31,004,655 $ 954,415 $(15,342,699) $ 16,616,371
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Assets $10,058,925 $ 1,370,227 $ 36,614,923 $ 48,044,075
----------------------------------------------------------------------------
Capital
Expenditures $ 210,040 $ 80,762 $ 285,179 $ 575,981
----------------------------------------------------------------------------

Operating Segments
----------------------------------------------------------------------------
Contract
Year ended Software Research and
March 31, 2008 Licenses Consulting Corporate Total
----------------------------------------------------------------------------
Revenue $22,606,960 $ 2,771,421 $ 2,614,481 $ 27,992,862
----------------------------------------------------------------------------
Gross profit 17,839,173 754,405 2,614,481 21,208,059
----------------------------------------------------------------------------
General and
administrative
expenses 3,060,789 3,060,789
Depreciation
and
amortization 88,448 72,992 167,067 328,507
Product
research and
development
costs 6,433,275 6,433,275
Interest and
other income
and foreign
exchange (477,182) (477,182)
Income and
other taxes 100,265 10,568 4,152,129 4,262,962
----------------------------------------------------------------------------
Earnings (loss)
for the
year $17,650,460 $ 670,845 $(10,721,597) $ 7,599,708
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Assets $ 6,854,148 $ 1,121,297 $ 25,363,712 $ 33,339,157
----------------------------------------------------------------------------
Capital
Expenditures $ 89,369 $ 116,945 $ 434,795 $ 641,109
----------------------------------------------------------------------------

Geographic Segments
----------------------------------------------------------------------------
Years ended March 31, 2009 2008
----------------------------------------------------------------------------
Property and Property and
Revenue Equipment Revenue Equipment
----------------------------------------------------------------------------
Canada $ 15,228,993 $ 896,105 $ 10,294,261 $ 1,168,598
United States 6,586 271 160,816 4 885,979 27,535
Other Foreign 22,126 257 55,182 12 812,622 56,411
----------------------------------------------------------------------------
$ 43,941,521 $ 1,112,103 $ 27,992,862 $ 1,252,544
----------------------------------------------------------------------------
----------------------------------------------------------------------------


In the year ended March 31, 2009, the Company derived 11.9 percent (2008 - 14.7 percent) of its revenue from one customer.

Corporate Information

Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG, recognized by oil and gas companies worldwide as a leading developer of reservoir modelling software, has sales and technical support services based in Calgary, Houston, London, Caracas and Dubai. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in 49 countries. The Company's shares are listed on the Toronto Stock Exchange under the trading symbol "CMG."

Forward Looking Statements: The reader should be aware that historical results are not necessarily indicative of future performance. Certain statements in this press release may constitute forward-looking statements, which can generally be identified as such because of the context of the statements including words such as the Company believes, anticipates, expects, plans, estimates or words of a similar nature. The forward-looking statements are based on current expectations and are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results.

Contact Information