Mediagrif Reports Q3 FY2010 Financial Results

    
    - Revenues of $11.4 million compared to $12.2 million for the
      corresponding quarter of 2009

    - Earnings from operations of $2.5 million compared to a loss of
      $1.4 million for the corresponding quarter of 2009

    - Cash dividend of $0.10 per share paid in the third quarter for a total
      amount of $1.4 million
    

LONGUEUIL, QC, Feb. 9 /CNW Telbec/ - Mediagrif Interactive Technologies Inc. (TSX: MDF), a world-leading operator of e-commerce solutions, today announced its financial results for the third quarter ended December 31, 2009 . Unless indicated otherwise, all amounts are in Canadian dollars.

KEY HIGHLIGHTS:

Revenues from the third quarter of 2010 amounted to $11.4 million compared to $12.2 million for the corresponding quarter of 2009.

Earnings from operations for the third quarter of 2010 increased by $3.9 million to reach $2.5 million compared to a loss of $1.4 million for the corresponding quarter of 2009. This increase is explained by a decrease in total operating expenses to $6.2 million compared to $10.7 million for the corresponding quarter of 2009. This decrease is mainly due to lower salary expenses and to severance payments following last year's headcount reduction.

Other income (expenses) amounted to ( $0.5 million ) during the third quarter of 2010, compared to $1.4 million for the third quarter of 2009. This decrease is mainly due to a foreign exchange loss on our US dollar assets of $0.4 million for the third quarter of 2010, compared to a foreign exchange gain of $1.4 million for the corresponding quarter of 2009.

    
    RESULTS OF THE THIRD QUARTER AND FIRST NINE MONTHS OF THE FISCAL YEAR
    2010:
    

Revenues decreased by $0.8 million in the third quarter of 2010, compared to the third quarter of 2009, from $12.2 million to $11.4 million . For the first nine months of 2010, revenues decreased by $1.5 million , compared to the corresponding period of 2009, from $36.1 million to $34.6 million . Our business networks BidNet, GovernmentBids, MERX, Carrus, epipeline and Interactive Procurement Technologies ("IPT") operate in markets less affected by the economic conditions and are showing healthy organic growth. However, revenues from our networks The Broker Forum, Power Source On-Line, Market Velocity and Polygon are affected by the economic slowdown.

In original currencies, revenues decreased by $0.8 million during the third quarter of 2010 compared to the third quarter of 2009. Revenues earned in US dollars represent 59% of total revenues in the third quarter, compared to 64% in the third quarter of 2009. As a result, the variation of the Canadian dollar compared to the US dollar combined to our hedge coverage generated a nil impact during the third quarter of 2010. For the first nine months of 2010, in original currencies, revenues decreased by $2.3 million compared to the corresponding period of 2009. Revenues earned in US dollars represent 59% of total revenues in the first nine months of 2010, compared to 64% for the corresponding period of 2009. As a result, for the first nine months of 2010, the variation of the Canadian dollar compared to the US dollar combined to our hedge coverage generated a positive impact of $0.8 million .

Gross margin increased to 77% for the third quarter of 2010, compared to 76% for the third quarter of 2009. For the first nine months of 2010, gross margin increased to 78%, compared to 77% for the corresponding period of 2009. The increase is mainly due to lower cost of revenues following the headcount reduction and a better cost control.

Operating expenses for the third quarter of 2010 decreased to $6.2 million , compared to $10.7 million for the third quarter of 2009. For the first nine months of 2010, operating expenses decreased to $19.7 million , compared to $27.6 million for the corresponding period of 2009. The decrease in operating expenses is explained by the following items:

    
    - General and administrative expenses for the third quarter of 2010
      decreased to $2.0 million, compared to $4.7 million for the third
      quarter of 2009. For the first nine months of 2010, general and
      administrative expenses decreased to $6.9 million compared to
      $11.0 million for the corresponding period of 2009. This decrease is
      mainly due to severance payments of $1.6 million and the write-off of
      capitalized acquisition costs regarding an unrealized acquisition of
      $0.4 million during the third quarter of 2009 as well as general
      headcount reduction throughout the Company during the last quarter of
      2009;

    - Sales and marketing expenses for the third quarter of 2010 decreased to
      $2.1 million, compared to $3.2 million for the third quarter of 2009.
      For the first nine months of 2010, sales and marketing expenses
      decreased to $6.6 million compared to $8.4 million for the
      corresponding period of 2009 mainly due to the general headcount
      reduction throughout the Company and lower representation fees and bad
      debt expenses;

    - Technology expenses for the third quarter of 2010 decreased to
      $1.8 million compared to $2.1 million for the third quarter of 2009.
      For the first nine months of 2010, technology expenses decreased to
      $5.5 million compared to $6.5 million for the corresponding period of
      2009. This decrease is mainly due to lower salaries expenses and a
      decrease of the amortization expenses offset by lower capitalization of
      research and development expenses;

    - The amortization of acquired intangible assets for the third quarter of
      2010 decreased from $0.4 million to $0.2 million, compared to the third
      quarter of 2009. For the first nine months of 2010, the amortization of
      acquired intangible assets decreased from $1.3 million to $0.5 million,
      compared to the corresponding period of 2009 due to the impairment done
      on March 31, 2009.
    

As a result, earnings from operations reached $2.5 million during the third quarter of 2010, compared to a loss of $1.4 million for the third quarter of 2009. For the first nine months of 2010, earnings from operations reached $7.2 million , compared to $42,000 for the corresponding period of 2009.

The basic earnings per share amounted to $0.08 during the third quarter of 2010, compared to $0.18 for the third quarter of 2009. The weighted average number of common shares outstanding for the third quarters of 2010 and 2009 was 13.9 million and 14.2 million respectively. For the first nine months of 2010, the basic earnings per share amounted to $0.12 , compared to $0.26 for the corresponding period of 2009. The weighted average number of common shares outstanding for the first nine months of 2010 and 2009 was 13.9 million and 14.4 million respectively. The earnings per share variations are due to the elements explained above.

As of December 31, 2009 , our cash and cash equivalents amounted to $29.6 million , an increase compared to $27.7 million as of March 31, 2009 and December 31, 2008 . Free cash flow, defined as cash flows from operating activities less the acquisition of premises and equipment and intangible assets and less dividends paid, was $0.9 million during the third quarter of 2010, compared to $2.9 million for the third quarter of 2009. This decrease is mainly due to the dividend paid for a total amount of $1.4 million . For the first nine months of 2010, free cash flow remained stable at $1.7 million , compared to the corresponding period of 2009 due to lower capital expenditure offset by the dividend paid.

On March 3, 2009 , the Company announced the renewal of a normal course issuer bid whereby it is authorized to purchase for cancellation, for the twelve-month period starting March 5, 2009 , up to 700,865 common shares. As of December 31, 2009 , 82,376 common shares were purchased for cancellation.

About Mediagrif Interactive Technologies Inc.

Mediagrif Interactive Technologies Inc. (TSX: MDF) is a world-leading operator of e-commerce solutions. Mediagrif's e-business networks allow buyers and sellers within specific industries to source, purchase or sell products and to exchange documents more efficiently using the Internet. Mediagrif operates 15 networks, including industry leaders The Broker Forum, Power Source On-Line, Telecom Finders, Global Wine & Spirits and Polygon. Mediagrif also owns MERX, the exclusive provider of e-publishing services to the Government of Canada , and is a leading provider of government bid aggregation services and e-procurement services in the U.S. Headquartered in Longueuil, Mediagrif has several offices in North America and Asia. For more information, please visit us at www.mediagrif.com or call 1 877 677-9088.

This press release contains certain forward-looking statements with respect to the Company. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by these forward-looking statements. We consider the assumptions on which these forward-looking statements are based to be reasonable, but caution the reader that these assumptions regarding future events, many of which are beyond our control, may ultimately prove to be incorrect since they are subject to risks and uncertainties that affect us. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities legislation. All amounts are in Canadian dollars.

Unaudited interim financial statements, accompanying notes and MD&A are available on www.mediagrif.com and have been filed with SEDAR.

For further information: Claude Roy, Chief Executive Officer, Mediagrif Interactive Technologies Inc., [phone] ext. 2004, Toll Free: 1-877-677-9088 ext. 2004, [email protected]; Suzanne Mercier, Chief Financial Officer, Mediagrif Interactive Technologies Inc., [phone] ext. 2135, Toll Free: 1-877-677-9088 ext. 2135, [email protected]