Gemcom Software International Inc.
TSX : GCM

Gemcom Software International Inc.

November 14, 2006 20:17 ET

Gemcom's Q2 Net Income Increases 147%

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 14, 2006) - Gemcom Software International Inc. (TSX:GCM), a leading provider of mining software and services, today announced the Company's unaudited financial results for its second quarter ended September 30, 2006.

Gemcom's second quarter results for fiscal 2007 mark the Company's first reporting period following its acquisition of Surpac Minex Group Pty Ltd ("Surpac Minex"). The financial results of Surpac Minex are consolidated from the date of the acquisition, July 19, 2006.

"We're delighted with this result," said Rick Moignard, Gemcom's President and CEO. "In addition to new revenues from software and services sales from the Surpac and Minex components of our business, the 147% increase in the Company's net income reflects the continued success of our sales and marketing strategies. Profitable growth, a strong balance sheet and cash-on-hand position has enabled us to execute a build, buy, OEM and partner approach to expanding our technology and services capabilities to meet the needs of the mining industry."

Total revenue for the second quarter was $8.1 million, compared to $4.1 million for the same period in the prior fiscal year. Net income for the second quarter of 2007 was $0.8 million or basic and diluted net earnings of $0.02 per share, compared to net income of $0.3 million or $0.02 per share in the same quarter last year.

"The successful integration of the combined sales teams has resulted in a near doubling of revenue over the same quarter last year, despite including Surpac Minex sales only from July 19th to September 30th," commented Garth Albright, Gemcom's CFO. "During this quarter accounting systems were aligned, corporate and regulatory reporting locked down and the costs incurred to bring this about have been kept in check which has permitted Gemcom to increase its income from operations to $1.1 million for the quarter."

The Quarter in Review:

- Revenue increased by 98% to $8.1 million as compared to the prior year's comparable quarter.

- Income from operations increased by more than 78% to $1.1 million vs. $0.6 million in the same quarter of the prior year.

- EBITDA for the six months ended September 30, 2006 totaled $2.1 million, or $0.06 per share on a basic and diluted basis. EBITDA for the quarter totaled $1.6 million, or $0.03 per share on basic and diluted basis.

- Cash and cash equivalents increased in the quarter by 20% to $7.7 million at September 30, 2006 from $6.4 million at June 30, 2006 and by 40% as compared to March 31, 2006 cash balance of $5.5 million.

- Working capital increased by 14% to $6.7 million from $5.9 million at June 30, 2006.

"The integration of Surpac Minex with Gemcom has gone very smoothly," commented Moignard, Gemcom's President and CEO. "We have successfully brought our operations together around the world, from our regional business units to development groups. The change management plan we put in place has permitted our sales and support teams to remain focused on the needs of our clients, which has resulted in revenue growth."

In addition to aligning its newly combined operations, Gemcom was able to realize several of the key objectives of the acquisition of Surpac Minex, including: cross-sales of platforms like Whittle; sales into new markets for the company, such as oil sands and coal; and growth of its business in rapidly developing markets like China and Russia.

Gemcom expects to release new versions of its In-Site mine performance management platform and its industry-leading strategic mine planning software, Whittle, by the end of the year.

About Gemcom

Gemcom is home to world-renowned mining applications like GEMS, Surpac, Minex, Whittle, Maximiser and Gemcom In-Site™, and to industry thought-leaders, who are pushing the boundaries of what's possible in mining.

Established in 1985, Gemcom has a global reach, delivering services and support in all major mining centres in more than 90 countries. Every major mining company, including BHP Billiton, Codelco, CVRD, De Beers and Newmont, is a Gemcom client. In July 2006, Gemcom acquired Surpac Minex Group Pty Ltd., a provider of mining software with complementary clients, channels to market, development teams and products. Upon this acquisition, the Company became the largest supplier of technical mining software.

More information about Gemcom is available on the Company's website, www.gemcomsoftware.com.

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