Logibec Groupe Informatique Ltd.
TSX : LGI

Logibec Groupe Informatique Ltd.

November 22, 2007 08:44 ET

Logibec Groupe Informatique Ltd. : Increase in Revenue and Earnings for 2007

MONTREAL, QUEBEC--(Marketwire - Nov. 22, 2007) - Logibec Groupe Informatique Ltd. (TSX:LGI) announced today the results of its fiscal year ended September 30, 2007. All monetary amounts are expressed in Canadian dollars.

HIGHLIGHTS

- Revenue for the fiscal year 2007 increased 11% to $45.3 million compared to $40.8 million for the previous year.

- Revenue for the fourth quarter increased 11% to $11.5 million compared to $10.5 million for the same period in the previous year.

- Recurring revenue increased 10% to stand at $36.7 million compared to $33.2 million in 2006.

- Operating income increased 15% to stand at $18.4 million compared to $15.9 million in 2006.

- Operating income for the fourth quarter increased 11% to stand at $4.7 million compared to $4.3 million for the same period in the previous year.

- Net earnings increased 33% to $7.5 million, or 0.85 per share, for the year ended September 30, 2007, compared to $5.6 million, or $0.63 per share, for the same period last year, after restatement.

- Acquisition by our subsidiary, MDI Technologies, Inc., of the business activities of Choice Systems Enterprise, Inc. and REPS Software, increasing the number of client facilities and communities using our software in the United States to 3,400.

- Acquisition on November 19, 2007, of the assets of Achieve Healthcare Technologies L.P., increasing the number of client facilities and communities using our software in the United States to approximately 6,000.

- Restatement of the 2006 consolidated financial statements so as to correct the understatement of the income tax expense, namely the recognition of additional income tax expense in the amount of $1.1 million.

OPERATING RESULTS

This press release compares the operating results for the fiscal year 2007 with those of the fiscal year 2006. The results of the fiscal year ended on September 30, 2007, include the results of REPS Software from May 14, 2007, and the acquired business activities of Choice Systems Enterprise, Inc. from March 15, 2007.

REVENUE



Geographical Revenue Breakdown

(in thousands of Canadian dollars)

2006 2007 Variation Growth
----------------------------- -----------------
----------------------------- -----------------
Canada 30,982 33,407 2,425 8%
United States 9,774 11,846 2,072 21%
----------------------------- -----------------
Consolidated
Revenue 40,756 45,253 4,497 11%
----------------------------- -----------------


In 2007, revenue reached a new high to stand at $45.3 million compared to $40.8 million in 2006, representing an 11% increase. Canadian activities generated $2.4 million of the total $4.5 million increase and American activities generated the remaining $2.1 million. Revenue by sector is presented as follows:

To view the Revenue by Segment chart, please visit the following link:

http://www.ccnmatthews.com/docs/LGI_chart_1122.pdf

For the fiscal year 2007, revenue from American activities represents 26% of consolidated revenue compared to 24% for the previous year. This progression stems from the Company's growth strategy that is aimed at creating significant market share for the Company in the elder care market in the United States.



Recurring Revenue

(in thousands of Canadian dollars)

2006 2007 Variance Growth
----------------------------- -----------------
----------------------------- -----------------
Canada 24,284 25,538 1,254 5%
United States 8,933 11,220 2,287 26%
----------------------------- -----------------
Consolidated
Revenue 33,217 36,758 3,541 11%
----------------------------- -----------------


Revenue from Canadian activities

In Canada, revenue increased $2.4 million, representing an increase of 8% compared to the previous year. Recurring revenue from the Canadian segment contributed $1.3 million to this increase, due mainly to the software rights of use for clinical administrative solutions, eClinibase and Med-Echo.

Non-recurring revenue increased by $1.2 million, or 17%, mainly due to special projects carried out in order to apply the new pay equity measures ordered by the Quebec government for civil servants and particularly for employees in health and social services facilities using the Company's payroll services.

As at September 30, 2007, the Canadian segment had $1.8 million in current deferred license and professional services revenue and $3.6 million in long-term deferred revenue. This revenue as well as the related costs will be recognized over the average term of the related agreements which is generally three years. As at the same date, this segment had current deferred revenue from annual rights of use and support in the amount of $11.9 million.

Revenue from American activities

For the fiscal year 2007, revenue from the American segment increased by $2.1 million or 21%. This increase is due mainly to the inclusion of Monette Information Systems Corporation's results during the whole fiscal year compared to a contribution of 192 days in 2006; it is also due to the inclusion of the business activities of Choice Systems beginning March 15, 2007 and the activities of REPS Software beginning May 14, 2007. The increase in revenue from the American segment is due to an increase of $2.3 million in recurring revenue, reflecting the importance of recurring revenue in the business model used in the United States.

As at September 30, 2007, the American segment had $2.5 million in current deferred license and professional services revenue and $2.3 million in non-current deferred revenue. This revenue as well as the related costs will be recognized over the average term of the related agreements which is on average five years.

OPERATING EXPENSES

Operating expenses, which are composed of service costs and selling and administrative expenses, increased 8%, representing 59% of revenue for the fiscal year 2007 compared to 61% for the fiscal year 2006.

Service costs. Service costs increased by $2.2 million, or 13%, and represent 41% of revenue whereas they represented 40% of revenue in 2006. An analysis of service costs is presented in the following table.




Service Costs Service Costs / Revenue
(in thousands of Canadian dollars)
2006 2007 Variation 2006 2007
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Canada 12,829 13,501 672 Canada 41% 40%
United States 3,439 4,962 1,523 United States 35% 42%
---------------------------------------------------------------------------
Consolidated
Service Costs 16,268 18,463 2,195 Consolidated 40% 41%
---------------------------------------------------------------------------


The increase in service costs is mainly attributable to an increase in the American segment resulting from the inclusion of Monette activities for a full year and REPS Software from May 15, 2006. Service costs for the Canadian segment went from $12.8 million in 2006 to $13.4 million in 2007. This increase is mainly a result of an increase in the cost of equipment intended for resale. However, service costs have decreased as a ratio of revenue. This ratio for the Canadian segment stands at 40% in 2007 compared to 41% in 2006. The improvement in this ratio is due to Management's ability to generate increased revenue despite having a stable workforce.

Selling and administrative expenses. Selling and administrative expenses for the fiscal year 2007 stood at $8.4 million compared to $8.5 million for the fiscal year 2006, representing a decrease of $0.1 million. Selling and administrative expenses stood at 18% of revenue for 2007 compared to 21% for 2006.

Operating income before depreciation and amortization, loss on disposition of fixed assets, income on temporary investments, financial expenses and income tax stood at $18.4 million for the fiscal year 2007, up 15% compared to the previous year and yielding a margin of 41% of revenue. This margin was 39% in 2006. The increase in operating income is due to the significant increase in revenue from the Canadian segment without there being a significant increase in operating expenses in this segment as well as due to improved profitability in the American segment.

AMORTIZATION OF FIXED ASSETS, INTANGIBLE ASSETS AND OTHER LONG-TERM ASSETS

Depreciation and amortization of fixed assets, intangible assets and other long-term assets for the year ended September 30, 2007 rose to $6.3 million, increasing by 4% from the $6.1 million for 2006.

The depreciation of fixed assets is similar to the amount recorded in 2006.

The depreciation of intangible assets and other long-term assets rose $0.2 million or 5% since this charge also includes the depreciation of the customer relationships and technologies acquired from Monette for the full year, Choice Systems from March 15, 2007, and REPS Software from May 14, 2007. Depreciation of Canadian intangible assets and other Canadian long-term assets decreased by approximately $0.1 million in 2007. This decrease is due primarily to a decrease in the depreciation of developed technology.

FINANCIAL EXPENSES

Financial expenses decreased by 17% and are mainly composed of interest charges on the Company's term loans, stand-by fees for the unused portion of these credit facilities and a loss on foreign exchange. The decrease is mainly due to a decrease in interest charges on the Canadian revolving reducing term loans following repayment of these loans, despite the additional charge of interest on the American revolving term loan.

INCOME TAXES

The Company provisioned income tax expense at a rate of 34.6% of its earnings before income taxes for the fiscal year 2007, that is, $4.0 million, compared to a provision of 38.2% for the previous year.

NET EARNINGS

Net earnings for the fiscal year ended September 30, 2007, increased by 33% to stand at $7.5 million or $0.85 per share ($0.84 on a diluted basis), compared to $5.6 million or $0.63 per share ($0.62 on a diluted basis) for the fiscal year 2006, after restatement.

The growth in net earnings is due to the contribution throughout the fiscal year 2007 of the acquired Monette operations, the contribution of Choice System's activities from March 15, 2007, the contribution of REPS Software from May 14, 2007, as well as the profitable growth of the Company's Canadian activities.

LIQUIDITY AND SOURCES OF FINANCING

OPERATING ACTIVITIES

For the year ended September 30, 2007, cash flow from operating activities stood at $12.3 million compared to $19.3 million for 2006. The significant decrease of $7.1 million is attributable to changes in non-cash working capital items, namely the payment of income tax during the fiscal year 2007.

INVESTING ACTIVITIES

The Company's main investing activities were the acquisitions of REPS Software and Choice Systems, capital expenditures and amounts capitalized as software development costs.

On March 15, 2007, the Company acquired the business activities of Choice Systems for cash consideration of $2.7 million and a promissory note of $0.2 million.

On May 14, 2007, the Company acquired all outstanding common shares of REPS Software for cash consideration of $6.7 million.

The Company invested $0.7 million in fixed assets during the fiscal year 2007 compared to an investment of $0.6 million in 2006. The investment in 2007 includes $0.3 million for the Canadian segment and $0.4 million for the American segment. The increase is mainly due to the purchase of equipment and to leasehold improvements following the relocation of Smithfield (VA) offices during the fiscal year 2007.

Furthermore, Logibec invested $2.3 million in intangible assets, $2.0 million of which was in the form of capitalized technology development costs. The Company maintains in effect its policy for the capitalization of technology development costs to ensure that only the software packages with the greatest potential for generating future revenues are capitalized.

FINANCING ACTIVITIES

The amounts redrawn by the Company on its Canadian revolving reducing term loans when operating cash flow was low totaled $7.7 million. This generally occurs during the second quarter since most of the Canadian recurring revenue is billed annually on April 1. During the fiscal year, the Company repaid in full all amounts redrawn under these facilities.

During 2007, MDI signed an agreement for a credit facility with an American financial institution for a rotating term loan of US$10.0 million to be used to finance the acquisitions of companies or assets in the American market. During the fiscal year 2007, US$1.3 million was borrowed to finance the acquisition of the assets of Choice Systems and US$6.0 million was borrowed to finance the acquisition of all the outstanding shares of REPS Software. These loans represent a total of $8.2 million, of which $0.8 million has been repaid.

Under a normal course issuer bid, the Company repurchased 205,600 common shares for cash consideration of $4.0 million. Management uses the issuer bid program to counter the dilutive effects of stock option exercises.

As of September 30, 2007, the Company had cash and cash equivalents of $7.0 million. Of the $8.4 million available in accordance with Canadian credit facilities as at September 30, 2007, $0.4 million was used for letters of guarantee. On this date, the Company had drawn $6.5 million pursuant to its American rotating term loan.

On November 19, 2007, the Company amended its Canadian credit facilities to increase the total availability to $24 million. On this date, the Company borrowed US$20 million to partially finance the acquisition of the assets and business activities of Achieve Healthcare Technologies, L.P.

Management believes that it is able to continue to grow the Company while remaining in compliance with the covenants of its credit facilities. The Company's current cash position and its ability to generate operating cash flow from its activities in Canada as well as in the United States provide Logibec with the cash required to integrate the recent acquisition of Achieve Healthcare. However, Management is working at setting up larger credit facilities in Canada to provide the Company with the flexibility required to continue its growth.

ABOUT LOGIBEC

Logibec is among the ten largest Canadian companies specializing in the development, marketing, implementation and support of information systems for the health and social services sector. Logibec serves over 200 clients throughout Quebec and the rest of Canada. Through its wholly-owned subsidiary MDI Technologies, Inc., Logibec also serves approximately 6,000 senior living communities and long-term care facilities throughout the United States. These services are delivered by an experienced team of some 390 employees. The Company has its head office in Montreal as well as offices in Quebec City, Edmonton, St. Louis, Minneapolis, Tampa and Smithfield (VA).

This news release contains forward-looking statements reflecting Logibec Groupe Informatique Ltd. objectives, estimates and expectations. Such statements may be marked by the use of verbs such as "believe", "anticipate", "estimate" and "expect" as well as the use of the future or conditional tense. By their very nature, such statements involve risks and uncertainty. Actual results may differ significantly from the Company's forecasts or expectations.



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED STATEMENTS OF EARNINGS


Three months ended Twelve months ended
September 30 September 30
-------------------------------------------------------------------------
2007 2006 2007 2006
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ $ $ $
(As restated) (As restated)

Revenue 11,568,956 10,468,451 45,253,191 40,756,036
-------------------------------------------------------------------------

Operating expenses
Service costs 4,743,715 4,135,318 18,463,053 16,267,711
Selling and
administrative
expenses 2,105,890 2,068,651 8,371,391 8,540,231
-------------------------------------------------------------------------
6,849,605 6,203,969 26,834,444 24,807,942
-------------------------------------------------------------------------

Earnings before the
following items 4,719,351 4,264,482 18,418,747 15,948,094

Amortization of fixed
assets 274,792 255,681 1,066,457 1,076,845
Amortization of
intangible assets
and other long-term
assets 1,271,112 1,218,106 5,256,244 5,013,151
Loss on disposal of
fixed assets 9,196 - 134,843 36,080
Income on temporary
investments (70,948) (32,697) (165,619) (99,878)
Financial expenses 364,975 210,766 645,400 782,012
-------------------------------------------------------------------------
Earnings before income
taxes 2,870,224 2,612,626 11,481,422 9,139,884

Income taxes 1,174,000 998,023 3,976,000 3,492,000
-------------------------------------------------------------------------
Net earnings 1,696,224 1,614,603 7,505,422 5,647,884
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Net earnings per share
Basic 0.19 0.18 0.85 0.63
Diluted 0.19 0.18 0.84 0.62
-------------------------------------------------------------------------

Weighted average
number of common
shares outstanding
Basic 8,726,157 8,963,625 8,843,608 8,976,322
Diluted 8,803,297 9,018,411 8,913,483 9,049,909
-------------------------------------------------------------------------



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED BALANCE SHEETS


2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
$ $
(As restated)
Assets
Current assets
Cash and cash equivalents 6,974,398 3,098,433
Accounts receivable 4,820,699 4,252,261
Income tax credits receivable 1,565,451 2,025,471
Income taxes receivable 2,226 165,148
Future income taxes 1,746,757 388,000
Other current assets 1,526,715 1,391,897
-----------------------------------------------------------------------
16,636,246 11,321,210

Fixed assets 3,535,084 4,086,812
Goodwill 33,836,280 31,654,862
Intangible assets and other long-term assets 24,336,051 25,296,737
-----------------------------------------------------------------------
78,343,661 72,359,621
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Liabilities
Current liabilities
Accounts payable and accrued liabilities 4,907,036 5,668,776
Income taxes 2,424,369 4,943,774
Future income taxes 232,000 232,000
Current portion of long-term debt 1,066,406 4,236
-----------------------------------------------------------------------
8,629,811 10,848,786


Deferred revenue 14,428,909 11,307,157
-----------------------------------------------------------------------
23,058,720 22,155,943

Long-term deferred revenue 6,072,968 5,823,432
Long-term debt 5,277,742 4,581
Future income taxes 6,910,000 7,714,100
-----------------------------------------------------------------------
41,319,430 35,698,056
-----------------------------------------------------------------------
Commitments and contingencies
Shareholders' equity
Share capital 27,780,598 28,435,149
Contributed surplus 474,368 415,072

Retained earnings 15,268,966 11,133,490
Accumulated other comprehensive loss (6,499,701) (3,322,146)
-----------------------------------------------------------------------
8,769,265 7,811,344
-----------------------------------------------------------------------
37,024,231 36,661,565
-----------------------------------------------------------------------
78,343,661 72,359,621
-----------------------------------------------------------------------
-----------------------------------------------------------------------



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS


Three months ended Twelve months ended
September 30 September 30
--------------------------------------------------------------------------
2007 2006 2007 2006
--------------------------------------------------------------------------
--------------------------------------------------------------------------
$ $ $ $
(As restated) (As restated)
Operating activities
Net earnings 1,696,224 1,033,908 7,505,422 5,647,884
Adjustments for:
Amortization of fixed
assets 274,792 255,681 1,066,457 1,076,845
Amortization of
intangible assets
and other long-term
assets 1,271,112 1,218,106 5,256,244 5,013,151
Amortization of
deferred
financing costs 112,752 136,966 112,752 136,966
Stock-based
compensation - 29,648 59,296 237,184
Loss on disposal of
fixed assets 9,196 - 134,843 36,080
Future income taxes (1,970,388) (1,672,703) (1,970,388) (1,672,703)
--------------------------------------------------------------------------
1,393,688 1,001,606 12,164,626 10,475,407

Changes in non-cash
operating working
capital items (993,672) 5,156,556 128,307 8,868,595
--------------------------------------------------------------------------
400,016 6,158,162 12,292,933 19,344,002
--------------------------------------------------------------------------

Investing activities
Business acquisition,
net of cash
and cash-equivalents
acquired (43,943) (614,738) (9,025,785) (3,223,835)
Proceeds from disposal
of fixed assets 23,742 (326) 49,729 32,000
Acquisition of fixed
assets (158,584) (160,754) (728,308) (588,326)
Increase in intangible
assets and other
long-term assets,
net of investment tax
credits (660,075) (676,384) (2,074,931) (2,093,982)
--------------------------------------------------------------------------
(838,860) (1,452,202) (11,779,295) (5,874,143)
--------------------------------------------------------------------------

Financing activities
Increase in long-term
debt (125,212) - 15,898,480 3,100,000
Repayment of long-term
debt (296,442) (2,467,746) (8,556,781) (15,447,550)
Redemption of shares (2,013) (978,663) (4,024,498) (2,329,698)
Credit facilities
financing costs (216,654) - (216,654) -
Issuance of shares - - - 1,001,000
--------------------------------------------------------------------------
(640,321) (3,446,409) 3,100,547 (13,676,248)
--------------------------------------------------------------------------

Effect of exchange
rate changes on
cash denominated in
foreign currency 315,781 (43,223) 261,780 112,983

Increase (decrease) in
cash and cash
equivalents (763,384) 1,216,328 3,875,965 (93,406)
Cash and cash
equivalents,
beginning of year 7,737,782 1,882,105 3,098,433 3,191,839
--------------------------------------------------------------------------
Cash and cash
equivalents,
end of year 6,974,398 3,098,433 6,974,398 3,098,433
--------------------------------------------------------------------------
--------------------------------------------------------------------------


The TSX Venture accepts no responsibility for the truth or accuracy of this press release.

Contact Information

  • Logibec Groupe Informatique Ltd.
    Claude Roy
    President and Chief Executive Officer
    514-766-0134
    or
    Logibec Groupe Informatique Ltd.
    Marc P. Brunet
    Chief Financial Officer
    514-762-3833
    www.logibec.com