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Advanced Process Control for the Refining and Petrochemical Industry

Matrikon reports third quarter results, on track to achieve projected growth

 

THIRD QUARTER 2003 SUMMARY

·         Revenue growth of 23% to $11.66 million over Q3 2002
(year-to-date 24% growth)

·         License revenue growth of 23% to $2.33 million
(year-to-date 75% growth)

·         Service revenue grew by 23% to $9.34 million
(year-to-date 14% growth)

·         EPS $0.02, down from $0.03 (year-to-date EPS $0.07 vs. $0.06)

·         Net income decline of 32% to $0.38 million (year-to-date growth of 26%)

·         Australian operations posted a profit in the quarter, and are at break-even for year

·         Continuing strength of the Canadian dollar negatively impacted third quarter results

·         Improved cash position with line of credit paid in full

·         Strong momentum indicates strong growth potential for product suites

 

Edmonton, AB -July 17, 2003 - Matrikon Inc. (TSX: MTK), a leading industrial IT solutions provider, today reported consolidated financial results for the third quarter ended May 31, 2003.

Third quarter revenue grew by 23% to $11.66 million from $9.47 million in the same period in fiscal 2002. Third quarter net income declined by 32% to $0.38 million or $0.02 per share from $0.56 million or $0.03 per share in the prior year. Matrikon operates internationally with approximately 65% of business conducted in foreign currencies, predominantly US dollars. Accordingly, third quarter results are affected by year-over-year exchange rate fluctuations of various currencies relative to the Canadian dollar. Excluding the currency fluctuations, the third quarter of 2003 was a record earnings quarter for the company.

"We executed according to plan in the quarter and are exactly on target barring the impact of currency fluctuations," said Nizar J. Somji, Matrikon's president and chief executive officer. "We are especially excited about the strong momentum we have built for our products and solutions."

"We are pleased with our revenue and earnings growth this year," stated Shafin Kanji, Matrikon's chief financial officer. "Were it not for the weaker US dollar relative to the Canadian dollar, we would have had our third consecutive quarter of record earnings. Our diversification strategy continues to help ensure that the company is not dependent on any one region or industry."

Outlook for $0.11 EPS and 20-40% revenue growth maintained

Matrikon remains dedicated to sustainable, long-term growth. In the first nine months of fiscal 2003, the company has been successful at winning projects of increasing size and value and has seen increasing acceptance of its proprietary products with several corporate license agreements. Management believes that Matrikon is well positioned to continue its revenue and income growth and meet its revenue and earnings targets for fiscal year 2003. With the impact of the stronger Canadian dollar in the second and third quarters, management now believes that it will achieve the lower end of the original targets of revenue growth of 20% to 40% and earnings per share of $0.11 to $0.15.

Quarter Highlights: international expansion, new product releases, global contracts, normal course issuer bid and awards

 

  • The BOC Group, the worldwide industrial gases, vacuum technologies and distribution services company, extended their commitment to Matrikon software and professional services with a global software agreement to create a global standard for operational excellence spanning more than 1100 plants worldwide.
  • Central Alberta Midstream, one of the largest gas processing companies in Alberta, awarded Matrikon a 5-year contract for SCADANet, a gas production data solution. The contract covers up to 1000 wells. SCADANet is an ASP (application service provider) model product. Matrikon collects and stores the data, manages all the IT infrastructure requirements and delivers the information required and the tools to use it effectively via a secure Internet connection.
  • Matrikon instituted a normal course issuer bid to purchase up to 5% of its current issued and outstanding common shares. No shares have been repurchased to date.
  • BHP Billiton's Queensland Nickel facility signed a AUD $1.93 million contract with Matrikon's Australian division for a complete control system solution for a boiler upgrade and power station common services. This project, in combination with several other recent contract wins and a growing backlog, provides a solid base for the results of the Australian division to continue to improve.
  • Matrikon's distributor in Korea (UIT) sold ProcessDoctor to LG-Caltex, one of the largest oil refining, marketing and petrochemical companies in Asia. In addition to this sale, UIT held a workshop in conjunction with Matrikon that attracted 40 potential clients.
  • AmerenUE, Missouri's largest electric utility company, extended its strategic alliance with Matrikon for professional information technology software and services for another year. Under the agreement, Matrikon is the preferred vendor for plant technology products and services.
  • Subsequent to the quarter, a new release of Matrikon's flagship product, ProcessNet was announced and a new vertical application for planning and scheduling in the plastics injection molding industry was introduced.
§         During the quarter, Matrikon was honored to receive two awards: the Profit magazine 100 fastest growing companies in Canada (5th year) and the Hot Company designation (4th year) from one of the industry's leading publications, Start magazine.

MD&A and Financial Statements

The complete Management's Discussion and Analysis and Financial Statements can be found on Matrikon's website at www.matrikon.com/investors or by contacting Nicole Sayler at 1-877-628-7456 extension 4010

Conference Call Thursday, July 17 at 2:00 pm Eastern

Matrikon President and CEO Nizar J. Somji and CFO Shafin U. Kanji will hold a conference call to discuss third quarter results on Thursday, July 17 at 2:00 pm Eastern (12:00 pm Mountain). To participate live, call 416-640-4127 in the Toronto area and 1-800-814-4861 for all other areas.

A replay will be available until midnight on Thursday, July 24. To access the playback service, please dial 416-640-1917 in Toronto or 1-877-289-8525 elsewhere, reservation number 21007178#.

The conference call will also be web cast at http://www.newswire.ca/webcast/viewEventCNW.html?eventID=578160


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