EMERGIS INC.
TSX : EME

February 21, 2007 23:05 ET

Emergis Reports Record Annual Earnings for 2006 and Increases 2007 Financial Targets

MONTREAL, QUEBEC--(CCNMatthews - Feb. 21, 2007) - Emergis Inc. (TSX:EME)



- Exceeded annual EBITDA and EPS financial targets
- EBITDA(1) before one-time items at $35.7 M for the year, up 37%
from $26.0 M in 2005
- EPS from continuing operations before one-time items at $0.19 for
the year ($(0.01) in 2005)
- Revenue at $170.0 M for the year ($46.2 M in Q4)
- Health revenue growth for the year of 24%
- Q4 results up significantly from Q4 2005 and Q3 2006.


Emergis Inc. (TSX:EME) today announced its unaudited financial results for the three months ended December 31, 2006 and its audited financial results for the twelve months ended December 31, 2006. All dollar figures in this release are expressed in Canadian dollars, unless otherwise indicated.

Emergis generated revenue of $170.0 million in 2006 compared to the target of approximately $172 million. EBITDA before one-time items came in at $35.7 million, above the high end of the target range of $30 million to $33 million. EPS from continuing operations before one-time items was $0.19 per fully diluted share, exceeding its target of at least $0.15.

"Emergis made great progress in 2006 from a strategic, operational and financial point of view, reporting record annual earnings from continuing operations before one-time items of $18.0 million or $0.19 per share," said Francois Cote, President and Chief Executive Officer of Emergis. "All of our Health operations grew and provided an increasing contribution to earnings, a trend we see continuing. The public health sector is proving to be a key growth market for us. Our traditional claims processing business is benefiting from our investments in new technology and the profitability of our pharmacy management systems operations has significantly improved."

"Our Finance operations increased their overall earnings contribution as a result of our continued cost containment efforts," Cote added. "We expect to see continued progress for the Company as a whole in 2007."

Net income from continuing operations before one-time items for the quarter was $6.0 million or $0.07 per share, double the $3.0 million or $0.03 per share in the fourth quarter of 2005. The increase was mainly due to the stronger EBITDA performance of the Company. The corresponding figure for the third quarter of 2006 was $5.1 million or $0.06 per share.

Including one-time items, net income from continuing operations in the fourth quarter was $9.7 million or $0.11 per share compared to $4.8 million or $0.05 per share in the prior year. The one-time items included in the current quarter's results consisted of the recognition of future income tax assets of $4.0 million relating to the amalgamation of certain subsidiaries, and a $0.3 million adjustment to a restructuring provision taken in 2004. In the fourth quarter of 2005, the Company recognized a $1.8 million tax recovery due to the reduction of a future income tax liability upon wind-up of a subsidiary.

Net income for the quarter was $9.7 million or $0.11 per share compared to $6.9 million or $0.07 per share in the fourth quarter of 2005, and to $5.2 million or $0.06 per share in the third quarter of 2006. Discontinued operations contributed $2.1 million or $0.02 per share to net income for the fourth quarter of 2005 and $0.1 million or $0.00 per share in the third quarter of 2006. There was no contribution from discontinued operations in the current quarter.

Note: The descriptions of the Company's financial performance compared to historical periods in this news release summarize those described in its 2006 Management's Discussion and Analysis, which has been posted on Emergis' corporate web site, along with this release and other financial information, and filed on SEDAR.



Financial highlights for the twelve months

Twelve-month periods ended December 31, 2006 and 2005,
in millions of Canadian dollars:

----------------------------------------------------------------
Revenue EBITDA (2)
----------------------------------------------------------------
----------------------------------------------------------------
2006 2005 2006 2005
----------------------------------------------------------------
----------------------------------------------------------------
Health 113.8 91.9 26.5 17.4
----------------------------------------------------------------
Finance 56.2 67.1 8.2 6.4
----------------------------------------------------------------
----------------------------------------------------------------
Core before one-time items 170.0 159.0 34.7 23.8
----------------------------------------------------------------
----------------------------------------------------------------
Non-core - - 1.0 2.2
----------------------------------------------------------------
----------------------------------------------------------------
Total before one-time items 170.0 159.0 35.7 26.0
----------------------------------------------------------------
----------------------------------------------------------------
Contract settlements - - - 2.4
----------------------------------------------------------------
Restructuring & other - - (0.3) -
----------------------------------------------------------------
----------------------------------------------------------------
Total 170.0 159.0 35.4 28.4
----------------------------------------------------------------
----------------------------------------------------------------


- Revenue at $170.0 million increased 7% from the prior year, while EBITDA excluding one-time items improved 37% from $26.0 million (16% of revenue) in 2005 to $35.7 million (21% of revenue) in 2006. Reported EBITDA increased 25% from $28.4 million (18% of revenue) to $35.4 million (21% of revenue).

- Health operations generated 24% more revenue than in 2005 mainly as a result of acquisitions and of organic growth in claims processing, pharmacy management systems and EHR license revenue, partly offset by the expiry of a claims transport contract in 2005.

- Health EBITDA increased from $17.4 million to $26.5 million due to organic growth in claims processing and pharmacy management systems, and to acquisitions. These impacts were reduced by an increase in the proportion of overhead expenses allocated to the Health segment relative to the Finance segment. The EBITDA margin for Health was 23% compared to 19% in 2005.

- Finance revenue decreased mainly due to the wind-down of the commercial operations of the Company's eInvoicing solution, the expiry of a transition services contract related to webdoxs, and lower professional services revenue related to Visa Commerce. These decreases were partly offset by higher revenue related to the licensing of the Company eInvoicing technology and professional services associated with cash management activities.

- Finance EBITDA excluding one-time items increased from $6.4 million in 2005 to $8.2 million mainly due to cost containment efforts and a decrease in the proportion of overhead expenses allocated to the Finance segment relative to the Health segment. This increase was partly offset by the loss of contribution resulting from the wind-down of the commercial operations of the Company's eInvoicing solution and from lower professional services related to Visa Commerce.

- Non-core operations, which included a distribution agreement with a telecommunications company for legacy products and other non-core and exited products, ceased as of June 30, 2004. However, the Company reversed tax provisions related to non-core activities which totaled $1.0 million in 2006 and $2.2 million in 2005.



Twelve-month periods ended December 31, 2006 and 2005,
in millions of Canadian dollars, except per share data:

----------------------------------------------------------------
Net income EPS
----------------------------------------------------------------
----------------------------------------------------------------
2006 2005 2006 2005
----------------------------------------------------------------
----------------------------------------------------------------
Continuing operations
before: 18.0 (1.0) 0.19 (0.01)
----------------------------------------------------------------
One-time items 3.7 4.2 0.04 0.04
----------------------------------------------------------------
----------------------------------------------------------------
Continuing operations 21.7 3.2 0.23 0.03
----------------------------------------------------------------
----------------------------------------------------------------
Discontinued operations 7.1 8.3 0.08 0.09
----------------------------------------------------------------
----------------------------------------------------------------
Total 28.8 11.5 0.31 0.12
----------------------------------------------------------------
----------------------------------------------------------------


- Net income from continuing operations before one-time items improved to $18.0 million or $0.19 per share compared to a loss of $(1.0) million or $(0.01) per share in 2005. This increase was mainly due to an improved operating performance, the absence in 2006 of a foreign exchange loss present in 2005, and lower depreciation. Net income from continuing operations was $21.7 million or $0.23 per share compared to $3.2 million or $0.03 per share in 2005.

- Discontinued operations contributed $7.1 million to 2006 net income mainly due to a price adjustment associated with the sale in 2004 of the Company's former U.S. Health operations that was received in the second quarter. In 2005, the $8.3 million contribution from discontinued operations related primarily to a gain on sale of its eLending U.S. operations.

- Net income at $28.8 million or $0.31 per share was nearly three times the $11.5 million or $0.12 per share reported in 2005.

- One-time items in 2006 included the recognition of future income tax assets and an adjustment to a restructuring provision taken in 2004. In 2005, they included contract settlements and the reduction of a future income tax liability upon wind-up of a subsidiary. One-time items do not include accruals or reversals of accruals made in the normal course of business.



Revenue summary for the quarter

Three-month periods ended December 31, 2006, September 30, 2006, and
December 31, 2005,
in millions of Canadian dollars:

-----------------------------------------------------------
Q4 2006 Q3 2006 Q4 2005
-----------------------------------------------------------
-----------------------------------------------------------
Health 34.1 29.2 24.7
-----------------------------------------------------------
Finance 12.1 14.1 15.0
-----------------------------------------------------------
-----------------------------------------------------------
Total revenue 46.2 43.3 39.7
-----------------------------------------------------------
-----------------------------------------------------------


- Revenue for the quarter was $46.2 million compared to $39.7 million in the fourth quarter of 2005 and compared to $43.3 million in the third quarter of 2006. In the year-over-year and sequential quarterly comparisons, growth in Health operations was offset by lower Finance revenue.

- Recurring revenue represented 82% of total revenue in the quarter compared to 92% in the fourth quarter last year and to 84% in the third quarter of 2006. The change from the historical quarters is mainly due to the acquisition of Dinmar, a portion of whose revenue is derived from consulting services which the Company classifies as "deployment and consulting" revenue rather than recurring revenue. It is expected that recurring revenue in the future will continue to represent a level more consistent with that of recent quarters.

- Health revenue increased 38% on a year-over-year basis due mainly to the acquisitions of Dinmar, whose performance exceeded expectations, and of FrontLine, and to organic growth in pharmacy management systems, claims processing and professional services revenue. These increases were partly offset by the expiry of a claims transport contract in 2005.

- On a sequential quarterly basis, the 17% increase in Health revenue was due mainly to Assure EHR license revenue associated with the Montreal region contract announced in December, seasonally higher revenue from claims processing and to organic growth in the Company's pharmacy management systems business.

- Compared to the fourth quarter of 2005, Finance revenue decreased due mainly to the expiry of a transition services contract related to the webdoxs consumer bill presentment service, to lower professional service revenue related to Visa Commerce activities and to the wind-down of the Company's eInvoicing operations, partly offset by higher license revenue related to its patented electronic invoicing technology.

- Finance revenue decreased from the third quarter of 2006 mainly due to seasonally lower revenue from the Company's lien registration solution and to the sale of this solution in December, the expiry of a contract in the cash management area and to lower revenue from professional services associated with the Visa Commerce initiative.



EBITDA summary for the quarter
Three-month periods ended December 31, 2006, September 30, 2006, and
December 31, 2005,
in millions of Canadian dollars:

----------------------------------------------------------------
Q4 2006 Q3 2006 Q4 2005
----------------------------------------------------------------
----------------------------------------------------------------
Health 9.7 7.2 4.6
----------------------------------------------------------------
Finance 1.1 1.7 1.7
----------------------------------------------------------------
----------------------------------------------------------------
Core 10.8 8.9 6.3
----------------------------------------------------------------
----------------------------------------------------------------
Non-core 0.2 0.3 2.2
----------------------------------------------------------------
----------------------------------------------------------------
EBITDA before: 11.0 9.2 8.5
----------------------------------------------------------------
----------------------------------------------------------------
Contract settlements - - -
----------------------------------------------------------------
Restructuring & other (0.3) - -
----------------------------------------------------------------
----------------------------------------------------------------
Total EBITDA 10.7 9.2 8.5
----------------------------------------------------------------
----------------------------------------------------------------


- EBITDA before one-time items was $11.0 million (24% of revenue), up 29% from $8.5 million (21%) generated in the fourth quarter of 2005, reflecting a higher contribution from Health and a lower contribution from Finance operations. Compared to the third quarter of 2006, EBITDA increased from $9.2 million, with an increased contribution from Health being partly offset by a decrease from Finance.

- The one-time item included in the current quarter's results is an adjustment of $0.3 million relating to a restructuring provision taken in the fourth quarter of 2004.

- Health EBITDA was $9.7 million (28% of Health revenue) compared to $4.6 million (19%) in the fourth quarter of 2005 and $7.2 million (25%) in the third quarter of 2006. Compared to 2005, the increase was due mainly to acquisitions and to organic growth in claims processing and pharmacy management systems. These increases were partly offset by an increase in the proportion of overhead expenses allocated to the Health segment relative to the Finance segment.

- In the sequential quarterly comparison, Health EBITDA increased due to license revenue related to the signing in December of an EHR contract for hospitals across the Montreal region and to a seasonally higher contribution from claims processing.

- Finance contributed $1.1 million to EBITDA before one-time items in the quarter (9% of Finance revenue) compared to $1.7 million (11%) in the fourth quarter of 2005 and to $1.7 million (12%) in the third quarter of 2006. In the year-over-year comparison, decreases in contributions from transition services related to the sale of the webdoxs consumer bill presentment solution and from professional services related to Visa Commerce activities offset positive impacts related to a decrease in the proportion of overhead expenses allocated to the Finance segment relative to the Health segment.

- In the sequential quarterly comparison, Finance EBITDA decreased mainly due to lower contributions from cash management and from professional services related to Visa Commerce.

- Non-core operations ceased as of June 30, 2004. However, in each of the quarters of 2006, the Company reversed tax provisions that were related to non-core activities.

Financial position at December 31

Cash on hand at quarter-end, including temporary investments, was $99.7 million, a level similar to the $100.3 million at September 30, 2006, reflecting mainly cash inflows from operating activities being offset by outflows associated with the cost of repurchases under a normal course issuer bid and with debt repayments.

Working capital from continuing operations at year end was $90.9 million compared to $109.3 million at the end of 2005. Investing activities generated a net outflow in 2006 of $(36.4) million related to the acquisition of businesses, the purchase of temporary investments and additions to fixed assets, partly offset by a net inflow of funds from the sale of businesses. Financing activities also generated a net outflow of funds, which totalled $(27.0) million related mainly to the repurchase of shares under normal course issuer bids, and to the repayment of debt. Long-term debt at the end of 2006 decreased to $3.1 million from $4.4 million at the end of 2005.

Increasing financial targets for 2007

The Company has increased its financial targets for 2007 as a result of its stronger than expected financial performance in the fourth quarter of 2006 and of stronger growth in its Health operations anticipated in 2007. Target ranges are now as follows: revenue from $189 million to $193 million, EBITDA from $39 million to $43 million, and for EPS from continuing operations of $0.26 to $0.30 per share. The target ranges assume that the Company will be able to maintain and renew contracts with existing customers, and enter into new contracts to generate its targeted revenue growth.

Operating highlights

Health

Progress in the Health sector in 2006

Growth in the Company's Health operations over the past year was evident in a number of areas:

- The number of health claims adjudicated grew by 14%. Claims transported grew by 21%, supported by the annualized impact of the acquisition of the Canadian network operations of NDCHealth in March 2005.

- The number of group insurance plan members holding Emergis pay-direct drug cards and the members' covered dependants increased by 8% to 8.0 million.

- The Company was successful in maintaining its core private insurance company clients and adding an important new one-La Capitale Insurance and Financial Services Inc.

- In the public sector, Emergis signed a contract with Newfoundland and Labrador for the implementation and maintenance of a DIS in the province. Development of the system is currently underway. The Company also signed a contract with the Government of Ontario to take over the management of the province's Health Network System (see details below).

- The acquisition of Dinmar Consulting added world-class technology, expertise and reach in the regional electronic health records market.

- In the workers' compensation area, the number of health care providers connected to the Emergis platform grew by 15% to 3,900.

- The number of pharmacies using Emergis pharmacy systems software grew by 9% to 2,900 as a result of the acquisition of FrontLine Solutions in May.

- Emergis renewed a number of drug and dental claims transport contracts in the fourth quarter (see details below).

EHR contract for Montreal region hospitals

In December, Emergis' electronic health record (EHR) system was licensed for deployment in hospitals across the Montreal region. The first phase in the new wave of deployment involves six hospitals. Already installed in the eight hospitals or institutes representing the McGill University Health Centre and Centre hospitalier de l'Universite de Montreal, the EHR system will help improve the quality of patient care in hospitals across the Montreal region. L'Agence de la sante et des services sociaux de Montreal is administering a single regional contract for the current and subsequent phases of this major, multi-million dollar project. An EHR system allows health care professionals to rapidly and securely consult a complete record of a patient's health history.

Ontario Drug Benefit program contract

Also in December, the Company signed an agreement with the Ontario Ministry of Health and Long-term Care to manage the ministry's Health Network System, which processes drug claims under the Ontario Drug Benefit (ODB) program. Under this five-year, multi-million dollar agreement, approximately 99 million ODB claims will be processed annually at Emergis' state-of-the-art data facilities in Ontario. The Health Network System is the largest, real-time online transaction processing system in the Ontario government. The winning of this contract is a major step forward in Emergis' strategy to become the provider of choice for the government health market. In addition to managing the Health Network System, Emergis will provide dedicated staff to support the system and, as requested by the Ministry, enhance the system to meet the changing needs of the ODB program.

Preferred Solution Agreement with Infoway

Also in February 2007, Emergis concluded a Preferred Solution Agreement with Canada Health Infoway for its Assure EHR Drug Information System (DIS) solution. The three-year Canada-wide agreement includes competitive pricing and conditions designed to accelerate Infoway's program to support the implementation of interoperable EHR systems across the country by governments and publicly funded health care organizations. It recognizes that Emergis' DIS solution meets Infoway's criteria from a program investment perspective in terms of pricing and interoperability.

Renewal of claims transport contracts

The Company has successfully re-signed all clients acquired in the purchase of NDCHealth's Canadian claims transport business in 2005, and added three new clients in 2006. The full operational integration of the transport business was completed in the first quarter of 2006.

Finance

Progress in the Finance sector in 2006

Within the Company's Finance operations, growth was seen in the following areas:

- Assyst Real Estate transactions increased 28% to 0.2 million, bolstered by growth in market activity in Quebec. In October, Emergis signed the largest residential mortgage lender in the country with over 15% of the Canadian mortgage market to participate in the solution. Significant gains are expected in 2007 when the solution is rolled out across Canada as described below under "Remote Law."

- Credit and debit card authorization transactions (Assure Pay Credit Debit) increased 8% to 189.8 million.

- Cash management transactions increased 15% from 2005 to 154.3 million, including a 26% increase in Assure Pay Tax transactions to 1.9 million.

Remote Law

In November, Emergis signed an agreement with RemoteLaw Online Systems Corp. of Vancouver to integrate Emergis' Assyst Real Estate solution for completing mortgage transactions with RemoteLaw's web-based econveyance™ software. The three-year agreement targets Assyst Real Estate to be offered to all of RemoteLaw's econveyance users and the British Columbia law community by the spring of 2007. The contracts with RemoteLaw and with the major Canadian bank will allow the electronic processing and registration of residential mortgages in British Columbia, thereby fulfilling Emergis' strategy to begin the rollout of its mortgage processing solution across Canada.

Managed security services

During the quarter, the Company renewed a major security services contract with Bell Canada. Under the three-year multi-million dollar contract, Emergis provides managed security services to Bell in support of Bell's major government clients. The Company will continue to provide a broad range of technology solutions and facilities; specially trained, security-cleared personnel; and advanced change management processes. The Company believes that its security and other managed services are viewed by the broader corporate market as offering real value on their own, beyond the support they provide to its solutions for the Health and Finance sectors.

Visa Commerce

In December, the Company was informed that Visa will no longer pursue the business line that was served by Visa Commerce and, as a result, Visa will not extend its contract with Emergis for Visa Commerce beyond its current expiry date in June 2007.
Corporate highlights

Sale of motor vehicle lien registration solution

The Company sold its motor vehicle lien registration solution to a strategic buyer for $1.7 million and an additional $0.1 million, subject to certain conditions. Further consideration of up to $1.3 million may be received, contingent on the buyer renewing a customer contract. As part of the sale agreement, the Company will provide transition services to the buyer until mid-2007. Emergis' lien registration solution streamlined the process of securing financing and leasing transactions for automobiles, trucks, machinery and other personal property by offering a single entry point to each provincial registrar for lien registration. Emergis had come to believe that this solution would not meet the Company's growth and profitability targets.

Normal course issuer bid

During the quarter, the Company repurchased 1.4 million shares at an average market price of $5.22 per share for an aggregate cost of $7.2 million, including expenses, under a normal course issuer bid initiated on March 2, 2006 and ending in March 1, 2007. Total common shares outstanding at December 31, 2006 were 89.7 million. A further 0.1 million shares, repurchased just prior to year-end, were settled and cancelled in early January 2007. The maximum number of shares that can be purchased under the bid is 6.0 million, of which 4.4 million have been purchased and cancelled to date.

In a separate new release, the Company today announced its intention to initiate a third normal course issuer bid through the facilities of The Toronto Stock Exchange, subject to regulatory approval. Purchases made pursuant to this bid will not exceed 5.56 million common shares, representing approximately 10% of the public float of its common shares at February 21, 2007. The common shares acquired pursuant to the bid will be cancelled. All purchases under the bid will be made during the period from March 2, 2007 to February 29, 2008. Emergis believes that the purchase of its common shares represents an appropriate use of a portion of its available funds.

Conference call, webcast and supplemental financial information

The Company will hold a conference call and live webcast tomorrow at 8:30 a.m. ET to discuss its financial results for the fourth quarter and year 2006. To participate, interested parties can dial toll-free 1 866 898-9626, and in Toronto 416 340-2216. The fourth quarter and year 2006 financial results news release, unaudited fourth quarter financial statements, audited 2006 financial statement and notes, 2006 management's discussion and analysis and fourth quarter 2006 supplemental information package are posted on www.emergis.com
(http://www.emergis.com/newsroom/news/2007/feb21.aspx?lang=en).

An instant replay of the conference call will be available for two weeks starting at 10:30 a.m. today. To listen, interested participants should dial toll-free 1 800 408-3053, and from Toronto 416 695-5800. The access code is 3207793#. An archive version of the webcast will also be available starting at 10:30 a.m. tomorrow on www.emergis.com (http://www.emergis.com/Investors/events/feb22.aspx?lang=en).

About Emergis

Emergis is an IT leader in Canada that focuses on the health and financial services sectors. It develops and manages solutions that automate transactions and the secure exchange of information to increase the process efficiency and quality of service of its customers. Emergis has expertise in electronic health-related claims processing, health record systems, pharmacy management solutions, cash management and loan document processing and registration. In Canada, Emergis delivers solutions to the main insurance companies, top financial institutions, government agencies, hospitals, large corporations, real estate lawyers and notaries and 2,900 pharmacies. Its electronic health record solutions are also delivered in the U.S. and Australia. The Company's shares (TSX:EME) are included in the S&P/TSX Composite Index.

Certain information in this news release, in various filings with Canadian regulators, in reports to shareholders and in other communications, is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, among others, information with respect to the Company's objectives and the strategies to achieve those objectives, as well as information with respect to the Company's beliefs, plans, expectations, anticipations, estimates and intentions. The words "may", "could", "should", "would", "suspect", "outlook", "believe", "anticipate", "estimate", "expect", "intend", "plan", "target" and similar words and expressions are used to identify forward-looking information. The forward-looking information in this news release describes the Company's expectations as of February 21, 2007.

The results or events predicted in such forward-looking information may differ materially from actual results or events. Material factors which could cause actual results or events to differ materially from a conclusion, forecast or projection in such forward-looking information include, among others: general economic factors, adverse industry events, the adoption rate of the Company's solutions by customers and by related electronic trading communities, its ability to deliver development and implementation projects in a timely manner, the non-renewal of major contracts which expire in the near term, complexities and timing of signing large customer contracts, customers developing internally the capability to perform the services which the Company performs on their behalf, its response to its industry's rapid pace of change, the limited time to capitalize on market opportunities, competition, pricing pressures, fluctuations in its operating results, its ability to make and integrate acquisitions, failures or material changes in its strategic relationships, exposure under contract indemnities, defects in software or failures in the processing of transactions, security and privacy breaches, its ability to attract and retain key personnel, its ability to protect its intellectual property, intellectual property infringement claims, and industry and government regulation.

Emergis cautions that the foregoing list of material factors is not exhaustive. When relying on the Company's forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. In making the forward-looking information contained in this news release, the Company does not assume any significant acquisitions, dispositions or one-time items. It does assume, however, the renewal of certain customer contracts. Every year, Emergis has major customer contracts that it needs to renew. One of these represents slightly more than 10% of its annual revenue. In addition, the Company also assumes the signature of contracts in new markets in the public health sector. In this regard, Emergis is pursuing large opportunities that present a very long and complex sales cycle, which substantially affect the Company's forecasting abilities. The Company has made certain assumptions regarding the timing of the realization of these opportunities which it thinks is reasonable but which may not be achieved. Furthermore, the pursuit of these larger opportunities does not ensure a linear progression of the Company's revenue and earnings, since they may involve significant up-front fees followed by reduced ongoing payments. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not result in such forward-looking information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. For additional information with respect to certain of these and other factors, refer to the risks and uncertainties section of the Company's 2006 MD&A and to its 2005 Annual Information Form (risks and uncertainties) filed with Canadian regulators.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF EMERGIS AS OF FEBRUARY 21, 2007 AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. HOWEVER, EMERGIS EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.

(1) See definition of EBITDA at the bottom of page 2.

(2) EBITDA used in this news release does not have a meaning under Canadian Generally Accepted Accounting Principles and therefore may not be comparable to similar measures presented by other publicly traded companies. It is defined as net income from continuing operations before depreciation, amortization of intangible assets, interest, gains or losses on sale of assets, loss on foreign exchange, and income taxes. No reconciliation is provided in the interim consolidated statement of earnings. EBITDA is presented on a basis that is consistent from period to period and agrees, on a consolidated basis, with the amount disclosed as "Earnings before under-noted items" on the consolidated statements of earnings.



Consolidated Statements of Earnings

---------------------------------------------------------------------
For the For the
In millions of three month three month For the For the
Canadian period period year year
dollars, ended ended ended ended
except per December 31, December 31, December 31, December 31,
share data 2006 2005 2006 2005
---------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Revenue 46.2 39.7 170.0 159.0
Direct costs 7.6 6.4 28.3 28.1
---------------------------------------------------------------------
Gross margin 38.6 33.3 141.7 130.9
---------------------------------------------------------------------

Income from
contract settlements - - - 2.4

Expenses
Operations 10.1 8.8 40.7 40.1
Sales and marketing 5.6 4.2 19.5 17.8
Research and
development, net 6.1 6.6 25.5 26.6
General and
administrative 5.8 5.2 20.3 20.4
Restructuring and
other charges 0.3 - 0.3 -
---------------------------------------------------------------------
27.9 24.8 106.3 104.9
---------------------------------------------------------------------

Earnings before
under-noted items 10.7 8.5 35.4 28.4

Depreciation 2.0 2.2 8.1 11.4
Amortization of
intangible assets 2.6 2.6 10.4 10.6
Interest income (1.1) (0.8) (4.8) (3.5)
Interest on
long-term debt 0.2 0.3 0.9 1.4
(Gain) loss on sale
of assets (0.3) 0.8 (0.2) 0.7
Loss (gain) on
foreign exchange 0.3 (0.2) 0.4 4.7
---------------------------------------------------------------------

Income from
continuing operations
before income taxes 7.0 3.6 20.6 3.1

Income taxes (recovery)
Current 1.1 0.6 2.8 1.7
Future (3.8) (1.8) (3.9) (1.8)
---------------------------------------------------------------------
(2.7) (1.2) (1.1) (0.1)

Net income from
continuing operations 9.7 4.8 21.7 3.2

Net income from
discontinued
operations, net of
income taxes - 2.1 7.1 8.3
---------------------------------------------------------------------

Net income 9.7 6.9 28.8 11.5
---------------------------------------------------------------------
---------------------------------------------------------------------


Basic and diluted
net income per
share from
continuing
operations 0.11 0.05 0.23 0.03
Basic and diluted
net income per
share from
discontinued
operations - 0.02 0.08 0.09
Basic and diluted
net income per
share 0.11 0.07 0.31 0.12

Weighted-average
number of shares
outstanding used
in computing basic
net income per
share (in millions) 91.2 93.4 92.5 99.3

Weighted-average
number of shares
outstanding used
in computing
diluted net income
per share
(in millions) 92.2 93.5 93.5 99.3



Consolidated Statements of Deficit

---------------------------------------------------------------------
For the year For the year
ended ended
December 31, December 31,
In millions of Canadian dollars 2006 2005
---------------------------------------------------------------------
(audited) (audited)

Deficit, beginning of period (1,223.1) (1,234.6)
Net income 28.8 11.5
---------------------------------------------------------------------
Deficit, end of period (1,194.3) (1,223.1)
---------------------------------------------------------------------



Consolidated Balance Sheets

---------------------------------------------------------------------
As at As at
December 31, December 31,
In millions of Canadian dollars 2006 2005
---------------------------------------------------------------------
(audited) (audited)
Assets
Current
Cash and cash equivalents 30.2 77.1
Temporary investments 69.5 59.8
Accounts receivable 23.6 19.1
Future income taxes 1.4 0.2
Other current assets 10.7 7.5
---------------------------------------------------------------------
135.4 163.7

Fixed assets 18.8 21.4
Intangible assets 21.8 22.3
Goodwill 88.9 55.8
Future income taxes 3.9 -
Other long-term assets 11.2 8.1
---------------------------------------------------------------------
280.0 271.3
---------------------------------------------------------------------


Liabilities
Current
Accounts payable and accrued liabilities 37.2 47.9
Deferred revenue 2.7 1.0
Deferred credits 0.4 0.4
Current portion of long-term debt 4.2 5.1
---------------------------------------------------------------------
44.5 54.4

Deferred credits and other 13.6 6.5
Future income taxes - 0.2
Long-term debt 3.1 4.4
---------------------------------------------------------------------
61.2 65.5
---------------------------------------------------------------------

Shareholders' equity
Capital stock 6.1 0.1
Contributed surplus 1,408.4 1,430.2
Deferred stock-based compensation (1.0) (0.8)
Deficit (1,194.3) (1,223.1)
Foreign currency translation adjustment (0.4) (0.6)
---------------------------------------------------------------------
218.8 205.8
---------------------------------------------------------------------
280.0 271.3
---------------------------------------------------------------------



Consolidated Statements of Cash Flows

---------------------------------------------------------------------
For the For the
three month three month For the For the
period period year year
In millions ended ended ended ended
of Canadian December 31, December 31, December 31, December 31,
dollars 2006 2005 2006 2005
---------------------------------------------------------------------
(unaudited) (unaudited) (audited) (audited)

Operating
activities
Net income from
continuing
operations 9.7 4.8 21.7 3.2
Depreciation and
amortization 4.6 4.8 18.5 22.0
(Gain) loss on
sale of assets (0.3) 0.8 (0.2) 0.7
Future income
taxes recovery (3.8) (1.8) (3.9) (1.8)
Non-cash foreign
exchange loss - - - 4.6
Non-cash portion
of restructuring
and other charges - (0.8) - (0.8)
Non-cash stock-based
compensation 0.1 0.3 1.3 1.4
Deferred stock-based
compensation - - (1.4) (0.3)
Other (3.2) 0.1 (5.9) 2.2
Changes in working
capital 3.4 0.2 (13.6) (48.8)
---------------------------------------------------------------------
Cash flows from
(used in) operating
activities 10.5 8.4 16.5 (17.6)
---------------------------------------------------------------------

Investing activities
Additions to fixed
and intangible assets (2.2) (2.1) (5.6) (10.2)
Temporary investments (34.9) (59.8) (9.7) (59.8)
Acquisitions (1.9) - (30.6) (16.9)
Cash from businesses
acquired 0.1 - 1.0 0.1
Proceeds on sale of
businesses, net of
disposal costs 1.1 1.8 8.5 25.2
---------------------------------------------------------------------
Cash flows used in
investing activities (37.8) (60.1) (36.4) (61.6)
---------------------------------------------------------------------

Financing activities
Repayment of
long-term debt (1.2) (1.9) (4.9) (7.9)
Repurchase and
issuance of common
shares (7.2) - (22.1) (35.8)
---------------------------------------------------------------------
Cash flows used in
financing activities (8.4) (1.9) (27.0) (43.7)
---------------------------------------------------------------------

Foreign exchange gain
(loss) on cash held
in foreign currencies 0.2 - - (0.9)

Cash flows used in
continuing
operations (35.5) (53.6) (46.9) (123.8)

Cash flows used in
discontinued
operations - - - (3.9)

Cash and cash
equivalents
Decrease (35.5) (53.6) (46.9) (127.7)
Balance, beginning
of period 65.7 130.7 77.1 204.8
---------------------------------------------------------------------
Balance, end of
period 30.2 77.1 30.2 77.1
---------------------------------------------------------------------

Supplemental
disclosure of cash
flow information
Interest paid 0.2 0.3 0.9 1.4
Income taxes paid 0.1 0.2 1.2 1.4


Non-cash investing
and financing
activities
Additions to fixed
and intangible
assets financed 1.4 0.3 2.8 1.4
Common shares issued
related to
acquisitions 0.1 - 3.1 -

Contact Information

  • Emergis inc.
    John Gutpell
    450-928-6856