Computer Modelling Group Announces Third Quarter Results

NEWS RELEASE TRANSMITTED BY Marketwired 
FOR: Computer Modelling Group Ltd. 
TSX SYMBOL:  CMG 
FEBRUARY 12, 2014 
Computer Modelling Group Announces Third Quarter Results 
CALGARY, ALBERTA--(Marketwired - Feb. 12, 2014) - Computer Modelling Group Ltd.
(TSX:CMG) ("CMG" or the "Company") is very pleased to
report our third quarter results for the three and nine months ended December
31, 2013. 
/T/ 
THIRD QUARTER HIGHLIGHTS                                                    
For the three months ended December 31,                                     
($ thousands, except per share data)         2013    2012 $ change % change 
---------------------------------------------------------------------------- 
Annuity/maintenance software licenses      14,278  14,004      274        2%
Perpetual software licenses                 2,942   1,365    1,577      116%
Total revenue                              19,227  16,802    2,425       14%
Operating profit                            9,575   8,276    1,299       16%
Net income                                  7,205   6,119    1,086       18%
Earnings per share - basic                   0.19    0.16     0.03       19%
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands, except per share data)         2013    2012 $ change % change 
---------------------------------------------------------------------------- 
Annuity/maintenance software licenses      41,389  39,196    2,193        6%
Perpetual software licenses                 7,102   6,106      996       16%
Total revenue                              54,527  49,341    5,186       11%
Operating profit                           27,221  24,413    2,808       12%
Net income                                 19,894  17,569    2,325       13%
Earnings per share - basic                   0.52    0.47     0.05       11%
---------------------------------------------------------------------------- 
/T/ 
MANAGEMENT'S DISCUSSION AND ANALYSIS 
This Management's Discussion and Analysis ("MD&A") for
Computer Modelling Group Ltd. ("CMG," the "Company,"
"we" or "our"), presented as at February 11, 2014, should
be read in conjunction with the unaudited condensed consolidated financial
statements and related notes of the Company for the three and nine months ended
December 31, 2013 and the audited consolidated financial statements and
MD&A for the years ended March 31, 2013 and 2012 contained in the 2013
Annual Report for CMG. Additional information relating to CMG, including our
Annual Information Form, can be found at www.sedar.com. The financial data
contained herein have been prepared in accordance with International Financial
Reporting Standards ("IFRS") and, unless otherwise indicated, all
amounts in this report are expressed in Canadian dollars and rounded to the
nearest thousand. 
FORWARD-LOOKING INFORMATION 
Certain information included in this MD&A is forward-looking.
Forward-looking information includes statements that are not statements of
historical fact and which address activities, events or developments that the
Company expects or anticipates will or may occur in the future, including such
things as investment objectives and strategy, the development plans and status
of the Company's software development projects, the Company's
intentions, results of operations, levels of activity, future capital and other
expenditures (including the amount, nature and sources of funding thereof),
business prospects and opportunities, research and development timetable, and
future growth and performance. When used in this MD&A, statements to the
effect that the Company or its management "believes",
"expects", "expected", "plans", "may",
"will", "projects", "anticipates",
"estimates", "would", "could",
"should", "endeavours", "seeks",
"predicts" or "intends" or similar statements, including
"potential", "opportunity", "target" or other
variations thereof that are not statements of historical fact should be
construed as forward-looking information. These statements reflect
management's current beliefs with respect to future events and are based
on information currently available to management of the Company. The Company
believes that the expectations reflected in such forward-looking information
are reasonable, but no assurance can be given that these expectations will
prove to be correct and such forward-looking information should not be unduly
relied upon.  
With respect to forward-looking information contained in this MD&A, we have
made assumptions regarding, among other things: 
/T/ 
--  Future software license sales 
--  The continued financing by and participation of the Company's partners 
in the DRMS project and it being completed in a timely manner 
--  Ability to enter into additional software license agreements 
--  Ability to continue current research and new product development 
--  Ability to recruit and retain qualified staff  
/T/ 
Forward-looking information is not a guarantee of future performance and
involves a number of risks and uncertainties, only some of which are described
herein. Many factors could cause the Company's actual results, performance
or achievements, or future events or developments, to differ materially from
those expressed or implied by the forward-looking information including,
without limitation, the following factors which are described in the MD&A
of CMG's 2013 Annual Report under the heading "Business Risks": 
/T/ 
--  Economic conditions in the oil and gas industry 
--  Reliance on key clients 
--  Foreign exchange 
--  Economic and political risks in countries where the Company currently 
does or proposes to do business 
--  Increased competition 
--  Reliance on employees with specialized skills or knowledge 
--  Protection of proprietary rights  
/T/ 
Should one or more of these risks or uncertainties materialize, or should
assumptions underlying the forward-looking statements prove incorrect, actual
results, performance or achievement may vary materially from those expressed or
implied by the forward-looking information contained in this MD&A. These
factors should be carefully considered and readers are cautioned not to place
undue reliance on forward-looking information, which speaks only as of the date
of this MD&A. All subsequent forward-looking information attributable to
the Company herein is expressly qualified in its entirety by the cautionary
statements contained in or referred to herein. The Company does not undertake
any obligation to release publicly any revisions to forward-looking information
contained in this MD&A to reflect events or circumstances that occur after
the date of this MD&A or to reflect the occurrence of unanticipated events,
except as may be required under applicable securities laws. 
NON-IFRS FINANCIAL MEASURES 
This MD&A includes certain measures which have not been prepared in
accordance with IFRS such as "EBITDA", "direct employee
costs" and "other corporate costs." Since these measures do not
have a standard meaning prescribed by IFRS, they are unlikely to be comparable
to similar measures presented by other issuers. Management believes that these
indicators nevertheless provide useful measures in evaluating the
Company's performance.  
"Direct employee costs" include salaries, bonuses, stock-based
compensation, benefits, commission expenses, and professional development.
"Other corporate costs" include facility-related expenses, corporate
reporting, professional services, marketing and promotion, computer expenses,
travel, and other office-related expenses. Direct employee costs and other
corporate costs should not be considered an alternative to total operating
expenses as determined in accordance with IFRS. People-related costs represent
the Company's largest area of expenditure; hence, management considers
highlighting separately corporate and people-related costs to be important in
evaluating the quantitative impact of cost management of these two major
expenditure pools. See "Expenses" heading for a reconciliation of
direct employee costs and other corporate costs to total operating expenses.  
"EBITDA" refers to net income before adjusting for depreciation
expense, finance income, finance costs, and income and other taxes. EBITDA
should not be construed as an alternative to net income as determined by IFRS.
The Company believes that EBITDA is useful supplemental information as it
provides an indication of the results generated by the Company's main
business activities prior to consideration of how those activities are
amortized, financed or taxed. See "EBITDA" heading for a
reconciliation of EBITDA to net income. 
CORPORATE PROFILE 
CMG is a computer software technology company serving the oil and gas industry.
The Company is a leading supplier of advanced processes reservoir modelling
software with a blue chip client base of international oil companies and
technology centers in over 50 countries. The Company also provides professional
services consisting of highly specialized support, consulting, training, and
contract research activities. CMG has sales and technical support services
based in Calgary, Houston, London, Caracas, Dubai, Bogota and Kuala Lumpur.
CMG's Common Shares are listed on the Toronto Stock Exchange
("TSX") and trade under the symbol "CMG". 
/T/ 
QUARTERLY PERFORMANCE ($ thousands, unless otherwise stated)                 
Fiscal                                                  
2012(1)       Fiscal 2013(2)           Fiscal 2014(3)    
Q4     Q1     Q2     Q3     Q4     Q1     Q2     Q3
---------------------------------------------------------------------------- 
Annuity/maintenance                                                         
 licenses            12,497 13,179 12,012 14,004 15,359 13,958 13,153 14,278
Perpetual licenses    3,416  2,070  2,671  1,365  2,300  2,331  1,829  2,942
----------------------------------------------------------------------------
Software licenses    15,913 15,249 14,683 15,369 17,659 16,289 14,982 17,220
Professional                                                                
 services             1,302  1,216  1,390  1,433  1,620  1,827  2,202  2,007
----------------------------------------------------------------------------
Total revenue        17,215 16,465 16,073 16,802 19,279 18,116 17,184 19,227
Operating profit      9,193  8,105  8,032  8,276  9,877  9,350  8,296  9,575
Operating profit                                                            
 (%)                     53     49     50     49     51     52     48     50
EBITDA(4)             9,543  8,423  8,425  8,687 10,294  9,725  8,675  9,972
Profit before                                                               
 income and other                                                           
 taxes                9,104  8,577  7,703  8,556 10,314  9,999  8,133 10,249
Income and other                                                            
 taxes                2,484  2,487  2,342  2,437  3,061  2,918  2,525  3,044
Net income for the                                                          
 period               6,620  6,090  5,361  6,119  7,253  7,081  5,608  7,205
Cash dividends                                                              
 declared and paid    4,848  9,736  6,020  6,050  6,099  8,841  6,994  7,020
----------------------------------------------------------------------------
Per share amounts -                                                         
 ($/share)                                                                  
Earnings per share                                                          
 - basic               0.18   0.16   0.14   0.16   0.19   0.19   0.15   0.19
Earnings per share                                                          
 - diluted             0.17   0.16   0.14   0.16   0.19   0.18   0.14   0.18
Cash dividends                                                              
 declared and paid     0.13   0.26   0.16   0.16   0.16   0.23   0.18   0.18
----------------------------------------------------------------------------
(1)Q4 of fiscal 2012 includes $2.7 million in revenue that pertains to usage 
of CMG's products in prior quarters.                                     
(2)Q1, Q2, Q3 and Q4 of fiscal 2013 include $2.1 million, $0.2 million, $1.8 
million and $2.6 million, respectively, in revenue that pertains to usage 
of CMG's products in prior quarters.                                     
(3)Q1, Q2 and Q3 of fiscal 2014 include $1.2 million, $0.2 million and $0.9  
million, respectively, in revenue that pertains to usage of CMG's         
products in prior quarters.                                              
(4)EBITDA is defined as net income before adjusting for depreciation         
expense, finance income, finance costs, and income and other taxes. See   
"Non-IFRS Financial Measures".                                            
/T/ 
Highlights 
During the nine months ended December 31, 2013, as compared to the same period
of the prior fiscal year, CMG: 
/T/ 
--  Increased annuity/maintenance revenue by 6% 
--  Increased operating profit by 12% 
--  Increased spending on research and development by 18% 
--  Increased EBITDA by 11% 
--  Realized basic earnings per share of $0.52, representing a 11% increase  
Revenue                                                                      
For the three months ended December 31,                                     
($ thousands)                               2013    2012  $ change % change 
---------------------------------------------------------------------------- 
Software licenses                         17,220  15,369     1,851       12%
Professional services                      2,007   1,433       574       40%
----------------------------------------------------------------------------
Total revenue                             19,227  16,802     2,425       14%
---------------------------------------------------------------------------- 
Software license revenue - % of total                                       
 revenue                                      90%     91%                   
Professional services - % of total                                          
 revenue                                      10%      9%                   
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands)                               2013    2012  $ change % change 
---------------------------------------------------------------------------- 
Software licenses                         48,491  45,302     3,189        7%
Professional services                      6,036   4,039     1,997       49%
----------------------------------------------------------------------------
Total revenue                             54,527  49,341     5,186       11%
---------------------------------------------------------------------------- 
Software license revenue - % of total                                       
 revenue                                      89%     92%                   
Professional services - % of total                                          
 revenue                                      11%      8%                   
---------------------------------------------------------------------------- 
/T/ 
CMG's revenue is comprised of software license sales, which provide the
majority of the Company's revenue, and fees for professional services. 
Total revenue increased by 14% for the three months ended December 31, 2013,
compared to the same period of the previous fiscal year, due to increases in
both software license revenue and professional services. 
Similarly, total revenue increased by 11% for the nine months ended December
31, 2013, compared to the same period of the previous fiscal year, as a result
of increases in both software license revenue and professional services.  
SOFTWARE LICENSE REVENUE  
Software license revenue is made up of annuity/maintenance license fees charged
for the use of the Company's software products which is generally for a
term of one year or less and perpetual software license sales, whereby the
customer purchases the current version of the software and has the right to use
that version in perpetuity. Annuity/maintenance license fees have historically
had a high renewal rate and, accordingly, provide a reliable revenue stream
while perpetual license sales are more variable and unpredictable in nature as
the purchase decision and its timing fluctuate with the customers' needs
and budgets. The majority of CMG's customers who have acquired perpetual
software licenses subsequently purchase our maintenance package to ensure
ongoing product support and access to current versions of CMG's software. 
/T/ 
For the three months ended December 31,                                     
($ thousands)                               2013    2012  $ change % change 
---------------------------------------------------------------------------- 
Annuity/maintenance licenses              14,278  14,004       274        2%
Perpetual licenses                         2,942   1,365     1,577      116%
----------------------------------------------------------------------------
Total software license revenue            17,220  15,369     1,851       12%
---------------------------------------------------------------------------- 
Annuity/maintenance as a % of total                                         
 software license revenue                     83%     91%                   
Perpetual as a % of total software                                          
 license revenue                              17%      9%                   
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands)                               2013    2012  $ change % change 
---------------------------------------------------------------------------- 
Annuity/maintenance licenses              41,389  39,196     2,193        6%
Perpetual licenses                         7,102   6,106       996       16%
----------------------------------------------------------------------------
Total software license revenue            48,491  45,302     3,189        7%
---------------------------------------------------------------------------- 
Annuity/maintenance as a % of total                                         
 software license revenue                     85%     87%                   
Perpetual as a % of total software                                          
 license revenue                              15%     13%                   
---------------------------------------------------------------------------- 
/T/ 
Total software license revenue grew by 12% in the three months ended December
31, 2013, compared to the same period of the previous fiscal year, mainly due
to an increase in perpetual license sales. Total software license revenue grew
by 7% in the nine months ended December 31, 2013, compared to the same period
of the previous fiscal year, due to increases in both the annuity/maintenance
and perpetual license sales.  
CMG's annuity/maintenance license revenue increased by 2% and 6% during
the three and nine months ended December 31, 2013, respectively, compared to
the same periods of the previous year. This increase was driven by annuity
sales to new and existing customers as well as an increase in maintenance
revenue tied to perpetual sales. In addition, annuity/maintenance license
revenue for the three and nine months ended December 31, 2013, compared to the
same periods of the previous year, was positively affected by the weakening of
the Canadian dollar. 
All of our regions, except South America, experienced growth in
annuity/maintenance revenue during the three and nine months ended December 31,
2013, compared to the same periods of the previous year, with the most
significant growth being generated from the US market. 
Our annuity/maintenance revenue is impacted by the revenue recognition from a
long-standing customer for which revenue recognition criteria are fulfilled
only at the time of the receipt of funds (see the discussion about revenue
earned in the current period that pertains to usage of products in prior
quarters above the "Quarterly Software License Revenue" graph). The
variability of the amounts of the payments received and the timing of such
payments may skew the comparison of the recorded annuity/maintenance revenue
amounts between periods. During the current quarter no payments have been
received or recorded for this arrangement. To provide a normalized comparison,
if we were to remove revenue from this particular customer from the third
quarter of the previous year, we will notice that the annuity/maintenance
revenue increased by 11%, instead of 2%, as compared to the same period of the
previous year. Similarly, if we were to remove revenue from this particular
customer from the year-to-date recorded revenue, we will notice that the
annuity/maintenance revenue increased by 12%, instead of 6%, as compared to the
same period of the previous year. Given our long-term relationship with this
customer, and their on-going use of our licenses, we expect to continue to
receive payments from them; however, the amount and timing are uncertain and
will continue to be recorded on a cash basis, which may introduce some
variability in our reported quarterly annuity/maintenance revenue results. 
Perpetual license sales increased by 116% for the three months ended December
31, 2013, compared to the same period of the previous fiscal year, due to
increases in the US, South America and Eastern Hemisphere. 
Perpetual license sales increased by 16% for the nine months ended December 31,
2013, compared to the same period of the previous fiscal year, due to growth in
perpetual sales generated by the US, South America and Eastern Hemisphere
offset by a decrease in Canada. 
Software licensing under perpetual sales is a significant part of CMG's
business, but may fluctuate significantly between periods due to the
uncertainty associated with the timing and the location where sales are
generated. For this reason, even though we expect to achieve a certain level of
aggregate perpetual sales on an annual basis, we expect to observe fluctuations
in the quarterly perpetual revenue amounts throughout the fiscal year.  
We can observe from the table below that the exchange rates between the US and
Canadian dollars during the three and nine months ended December 31, 2013,
compared to the same periods of the previous fiscal year, had a positive impact
on our reported license revenue. 
The following table summarizes the US dollar denominated revenue and the
weighted average exchange rate at which it was converted to Canadian dollars:  
/T/ 
For the three months ended December                                         
 31,                                                                        
($ thousands)                                 2013   2012 $ change % change 
---------------------------------------------------------------------------- 
US dollar annuity/maintenance license                                       
 sales                                 US$   9,460  8,785      675        8%
Weighted average conversion rate             1.022  1.001                   
----------------------------------------------------------------------------
Canadian dollar equivalent             CDN$  9,671  8,795      876       10%
---------------------------------------------------------------------------- 
US dollar perpetual license sales      US$   2,665    908    1,757      194%
Weighted average conversion rate             1.045  0.994                   
----------------------------------------------------------------------------
Canadian dollar equivalent             CDN$  2,786    903    1,883      209%
---------------------------------------------------------------------------- 
For the nine months ended December 31,        2013   2012 $ change % change 
($ thousands)                                                               
---------------------------------------------------------------------------- 
US dollar annuity/maintenance license                                       
 sales                                 US$  27,568 24,361    3,207       13%
Weighted average conversion rate             1.014  1.001                   
----------------------------------------------------------------------------
Canadian dollar equivalent             CDN$ 27,966 24,393    3,573       15%
---------------------------------------------------------------------------- 
US dollar perpetual license sales      US$   6,426  4,159    2,267       55%
Weighted average conversion rate             1.036  1.000                   
----------------------------------------------------------------------------
Canadian dollar equivalent             CDN$  6,655  4,160    2,495       60%
---------------------------------------------------------------------------- 
The following table quantifies the foreign exchange impact on our software  
license revenue:                                                             
For the three months ended                      Incremental  Foreign        
December 31, 2013                       Q3 2013     License Exchange Q3 2014
($ thousands)                           Balance      Growth   Impact Balance
---------------------------------------------------------------------------- 
Annuity/maintenance license sales        14,004          74      200  14,278
Perpetual license sales                   1,365       1,442      135   2,942
----------------------------------------------------------------------------
Total software license revenue           15,369       1,516      335  17,220
---------------------------------------------------------------------------- 
For the nine months ended                       Incremental  Foreign        
December 31, 2013                       Q3 2013     License Exchange Q3 2014
($ thousands)                           Balance      Growth   Impact Balance
---------------------------------------------------------------------------- 
Annuity/maintenance license sales        39,196       1,832      361  41,389
Perpetual license sales                   6,106         769      227   7,102
----------------------------------------------------------------------------
Total software license revenue           45,302       2,601      588  48,491
---------------------------------------------------------------------------- 
/T/ 
/T/ 
REVENUE BY GEOGRAPHIC SEGMENT                                                
For the three months ended December 31,                                     
($ thousands)                                2013   2012 $ change  % change 
----------------------------------------------------------------------------
Annuity/maintenance revenue                                                 
  Canada                                    6,013  5,490      523        10%
  United States                             3,421  2,818      603        21%
  South America                             1,513  2,435     (922)      -38%
  Eastern Hemisphere(1)                     3,331  3,261       70         2%
---------------------------------------------------------------------------- 
14,278 14,004      274         2%
----------------------------------------------------------------------------
Perpetual revenue                                                           
  Canada                                      156    227      (71)      -31%
  United States                               427      -      427       100%
  South America                               862     26      836      3215%
  Eastern Hemisphere                        1,497  1,112      385        35%
---------------------------------------------------------------------------- 
2,942  1,365    1,577       116%
----------------------------------------------------------------------------
Total software license revenue                                              
  Canada                                    6,169  5,717      452         8%
  United States                             3,848  2,818    1,030        37%
  South America                             2,375  2,461      (86)       -3%
  Eastern Hemisphere                        4,828  4,373      455        10%
---------------------------------------------------------------------------- 
17,220 15,369    1,851        12%
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands)                                2013   2012 $ change  % change 
----------------------------------------------------------------------------
Annuity/maintenance revenue                                                 
  Canada                                   16,895 15,902      993         6%
  United States                             9,542  7,759    1,783        23%
  South America                             5,411  6,770   (1,359)      -20%
  Eastern Hemisphere(1)                     9,541  8,765      776         9%
---------------------------------------------------------------------------- 
41,389 39,196    2,193         6%
----------------------------------------------------------------------------
Perpetual revenue                                                           
  Canada                                      447  1,541   (1,094)      -71%
  United States                               854    662      192        29%
  South America                             1,352    509      843       166%
  Eastern Hemisphere                        4,449  3,394    1,055        31%
---------------------------------------------------------------------------- 
7,102  6,106      996        16%
----------------------------------------------------------------------------
Total software license revenue                                              
  Canada                                   17,342 17,443     (101)       -1%
  United States                            10,396  8,421    1,975        23%
  South America                             6,763  7,279     (516)       -7%
  Eastern Hemisphere                       13,990 12,159    1,831        15%
---------------------------------------------------------------------------- 
48,491 45,302    3,189         7%
----------------------------------------------------------------------------
(1)Includes Europe, Africa, Asia and Australia.                              
/T/ 
During the three months ended December 31, 2013, on a geographic basis, total
software license sales increased across all regions with the exception of the
South American market which experienced an overall decrease of 3%, compared to
the same period of the previous fiscal year. 
During the nine months ended December 31, 2013, on a geographic basis, total
software license sales increased by 23% and 15% in the US and Eastern
Hemisphere, respectively, while Canada and South America experienced decreases
of 1% and 7%, respectively.  
The Canadian market (representing 36% of year-to-date total software revenue)
experienced growth in annuity/maintenance revenue during the three and nine
months ended December 31, 2013, compared to the same periods of the previous
fiscal year. These increases were supported by sales to both new and existing
customers. Perpetual sales were lower during the three and nine months ended
December 31, 2013, compared to the same periods of the previous year, due to
the fluctuations inherent in the perpetual revenue stream. Historically, the
Canadian market has been strong in generating recurring annuity/maintenance
revenue as evidenced by the quarterly year-over-year increases of 37%, 38%, and
10% recorded during Q3 2013, Q4 2013 and Q1 2014, respectively.
Annuity/maintenance was relatively flat in Q2 2014, compared to the same period
of the previous fiscal year; however, the double digit growth trend returned in
the third quarter of the current fiscal year with the recorded increase of 10%. 
The US market (representing 21% of year-to-date total software revenue)
experienced significant growth in annuity/maintenance license sales, in
comparison to other regions, during the three and nine months ended December
31, 2013, compared to the same periods of the previous fiscal year, driven by
sales to new and existing customers. Perpetual license sales increased during
the three and nine months ended December 31, 2013, compared to the same periods
of the previous year. We continue to experience successive increases in the
annuity/maintenance license sales in the US as evidenced by the quarterly
year-over-year increases of 32%, 20%, 32% and 16% recorded during Q3 2013, Q4
2013, Q1 2014, and Q2 2014 respectively. This double-digit growth trend has
continued into the third quarter of the current fiscal year with the recorded
increase of 21%.  
South America (representing 14% of year-to-date total software revenue)
experienced a decline of 38% and 20% in annuity/maintenance license sales
during the three and nine months ended December 31, 2013, respectively,
compared to the same periods of the previous fiscal year. These decreases were
caused by the variability of the amounts recorded from a customer for which
revenue is recognized only when cash is received (see the discussion about
revenue earned in the current period that pertains to usage of products in
prior quarters above the "Quarterly Software License Revenue" graph).
To provide a normalized comparison, if we were to remove revenue from this
particular customer from the third quarter of the previous year, we will notice
that the South America annuity/maintenance revenue increased by 20%, instead of
a decrease of 38%, as compared to the same period of the previous year.
Similarly, if we were to remove revenue from this particular customer from the
year-to-date recorded revenue, we will notice that the South America
annuity/maintenance revenue increased by 18%, instead of a decrease of 20%, as
compared to the same period of the previous year. The South American region
experienced increases in perpetual license sales during the three and nine
months ended December 31, 2013, compared to the same period of the previous
year.  
Eastern Hemisphere (representing 29% of the year-to-date total software
revenue) grew annuity/maintenance license sales by 2% and 9% during the three
and nine months ended December 31, 2013, respectively, compared to the same
periods of the previous fiscal year, due to sales to both new and existing
customers in the region. Compared to other regions, the Eastern Hemisphere
achieved the highest dollar value of growth in perpetual license revenue during
the nine months ended December 31, 2013, compared to the same period of the
previous year.  
Movements in perpetual sales across regions are indicative of the unpredictable
nature of the timing and location of perpetual license sales. Overall, our
recurring annuity/maintenance revenue base continues to experience growth. We
will continue to focus our efforts on increasing our license sales to both
existing and new customers, and we will endeavor to continue expanding our
market share globally.  
As footnoted in the Quarterly Performance table, in the normal course of
business, CMG may complete the negotiation of certain annuity/maintenance
contracts and/or fulfill revenue recognition requirements within a current
quarter that includes usage of CMG's products in prior quarters. This
situation particularly affects contracts negotiated with countries that face
increased economic and political risks leading to revenue recognition criteria
being satisfied only at the time of the receipt of cash. The dollar magnitude
of such contracts may be significant to the quarterly comparatives of our
annuity/maintenance revenue stream and, to provide a normalized comparison, we
specifically identify the revenue component where revenue recognition is
satisfied in the current period for products provided in previous quarters. 
To view a chart of the Quarterly Software License Revenue, please visit the
following link: http://media3.marketwire.com/docs/926056g.pdf  
/T/ 
DEFERRED REVENUE                                                             
($ thousands)                                 2013   2012 $ change % change 
----------------------------------------------------------------------------
Deferred revenue at:                                                        
March 31                                    25,289 21,693    3,596       17%
June 30                                     22,014 18,779    3,235       17%
September 30                                19,346 18,241    1,105        6%
December 31                                 18,069 15,510    2,559       16%
---------------------------------------------------------------------------- 
/T/ 
CMG's deferred revenue consists primarily of amounts for pre-sold
licenses. Our annuity/maintenance revenue is deferred and recognized on a
straight-line basis over the life of the related license period, which is
generally one year or less. Amounts are deferred for licenses that have been
provided and revenue recognition reflects the passage of time.  
The increase in deferred revenue year-over-year as at December 31, September
30, June 30 and March 31 is reflective of the growth in annuity/maintenance
license sales. The variation within the year is due to the timing of renewals
of annuity and maintenance contracts that are skewed to the beginning of the
calendar year which explains the decrease in deferred revenue balance at the
end of the first quarter, second quarter and third quarter (June 30, September
30 and December 31, respectively) compared to the fiscal year-end (March 31).
Deferred revenue at December 31, 2013 increased compared to the same period of
the prior fiscal year due to both the renewal of existing and signing of new
annuity and maintenance contracts in the quarter.  
PROFESSIONAL SERVICES REVENUE  
CMG recorded professional services revenue of $2.0 million for the three months
ended December 31, 2013, representing an increase of $0.6 million, compared to
the same period of the previous fiscal year, due to both an increase in project
activities by our clients and due to entering into a large consulting agreement
with one of our clients which, we expect, will continue to contribute to the
professional services revenue during the current fiscal year. Professional
services for the nine months ended December 31, 2013 amounted to $6.0 million,
representing an increase of $2.0 million, compared to the same period of the
previous fiscal year, which again resulted from entering into a large
consulting agreement with one of our clients in the current fiscal year. 
Professional services revenue consists of specialized consulting, training, and
contract research activities. CMG performs consulting and contract research
activities on an ongoing basis, but such activities are not considered to be a
core part of our business and are primarily undertaken to increase our
knowledge base and hence expand the technological abilities of our simulators
in a funded manner, combined with servicing our customers' needs. In
addition, these activities are undertaken to market the capabilities of our
suite of software products with the ultimate objective to increase software
license sales. Our experience is that consulting activities are variable in
nature as both the timing and dollar magnitude of work are dependent on
activities and budgets within client companies. 
/T/ 
Expenses                                                                     
For the three months ended December 31,                                     
($ thousands)                                 2013   2012 $ change % change 
---------------------------------------------------------------------------- 
Sales, marketing and professional services   4,119  3,778      341        9%
Research and development                     3,816  3,136      680       22%
General and administrative                   1,717  1,612      105        7%
----------------------------------------------------------------------------
Total operating expenses                     9,652  8,526    1,126       13%
---------------------------------------------------------------------------- 
Direct employee costs(1)                     7,599  6,716      883       13%
Other corporate costs                        2,053  1,810      243       13%
---------------------------------------------------------------------------- 
9,652  8,526    1,126       13%
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands)                                 2013   2012 $ change % change 
---------------------------------------------------------------------------- 
Sales, marketing and professional services  11,605 11,333      272        2%
Research and development                    10,706  9,061    1,645       18%
General and administrative                   4,995  4,534      461       10%
----------------------------------------------------------------------------
Total operating expenses                    27,306 24,928    2,378       10%
---------------------------------------------------------------------------- 
Direct employee costs(1)                    21,907 19,802    2,105       11%
Other corporate costs                        5,399  5,126      273        5%
---------------------------------------------------------------------------- 
27,306 24,928    2,378       10%
----------------------------------------------------------------------------
(1)Includes salaries, bonuses, stock-based compensation, benefits and        
commissions.                                                              
/T/ 
CMG's total operating expenses increased by 13% and 10% for the three and
nine months ended December 31, 2013, respectively, compared to the same periods
of the previous fiscal year, due to increases in both direct employee costs and
other corporate costs.  
DIRECT EMPLOYEE COSTS  
As a technology company, CMG's largest area of expenditure is for its
people. Approximately 80% of the total operating expenses in the nine months
ended December 31, 2013 related to staff costs, compared to 79% recorded in the
comparative period of last year. Staffing levels for the current fiscal year
grew in comparison to the previous fiscal year to support our continued growth.
At December 31, 2013, CMG's staff complement was 189 employees and
consultants, up from 166 employees as at December 31, 2012. Direct employee
costs increased during the three and nine months ended December 31, 2013,
compared to the same periods of the previous fiscal year, due to staff
additions, increased levels of compensation, and related benefits.  
OTHER CORPORATE COSTS  
Other corporate costs increased by 13% for the three months ended December 31,
2013, compared to the same period of the previous fiscal year, mainly due to
the decrease in the Federal research and experimental development
("SR&ED") input tax credit rate.  
Other corporate costs were comparable between the nine months ended December
31, 2013 and 2012 with only a slight increase of 5%, mainly due to increased
computing costs offset by the inclusion of the costs associated with CMG's
biennial technical symposium in the nine months ended December 31, 2012.  
/T/ 
RESEARCH AND DEVELOPMENT                                                     
For the three months ended December 31,                                     
($ thousands)                              2013     2012  $ change % change 
---------------------------------------------------------------------------- 
Research and development (gross)          4,125    3,586       539       15%
SR&ED credits                              (309)    (450)      141      -31%
----------------------------------------------------------------------------
Research and development                  3,816    3,136       680       22%
---------------------------------------------------------------------------- 
Research and development as a % of                                          
 total revenue                               20%      19%                   
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands)                              2013     2012  $ change % change 
---------------------------------------------------------------------------- 
Research and development (gross)         12,080   10,458     1,622       16%
SR&ED credits                            (1,374)  (1,397)       23       -2%
----------------------------------------------------------------------------
Research and development                 10,706    9,061     1,645       18%
---------------------------------------------------------------------------- 
Research and development as a % of                                          
 total revenue                               20%      18%                   
---------------------------------------------------------------------------- 
/T/ 
CMG maintains its belief that its strategy of growing long-term value for
shareholders can only be achieved through continued investment in research and
development. CMG works closely with its customers to provide solutions to
complex problems related to proven and new advanced recovery processes.  
The above research and development costs include CMG's share of joint
research and development costs associated with the DRMS project of $0.9 million
and $3.0 million for the three and nine months ended December 31, 2013,
respectively (2012 - $1.0 million and $2.8 million). See discussion under
"Commitments, Off Balance Sheet Items and Transactions with Related
Parties." 
The increases of 15% and 16% in our gross spending on research and development
for the three and nine months ended December 31, 2013, respectively, compared
to the same periods of the previous fiscal year, demonstrate our continued
commitment to advancement of our technology which is the focal part of our
business strategy. 
Research and development costs, net of research and experimental development
("SR&ED") credits, increased by 22% and 18% during the three and
nine months ended December 31, 2013, respectively, compared to the same periods
of the previous fiscal year, due to increased employee compensation costs and
costs associated with computing resources.  
We also had a decrease in SR&ED credits in the three and nine months ended
December 31, 2013, compared to the same period of the previous fiscal year,
driven by the decrease in the Federal SR&ED input tax credit rate from 20%
to 15% effective January 1, 2014 lowering our average rate for fiscal 2014.  
/T/ 
DEPRECIATION                                                                 
For the three months ended December 31,                                     
($ thousands)                                 2013  2012 $ change  % change 
---------------------------------------------------------------------------- 
Depreciation of property and equipment,                                     
 allocated to:                                                              
  Sales, marketing and professional services   102   124      (22)      -18%
  Research and development                     240   235        5         2%
  General and administrative                    55    52        3         6%
----------------------------------------------------------------------------
Total depreciation                             397   411      (14)       -3%
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands)                                 2013  2012 $ change  % change 
---------------------------------------------------------------------------- 
Depreciation of property and equipment,                                     
 allocated to:                                                              
  Sales, marketing and professional services   305   341      (36)      -11%
  Research and development                     692   641       51         8%
  General and administrative                   154   140       14        10%
----------------------------------------------------------------------------
Total depreciation                           1,151 1,122       29         3%
---------------------------------------------------------------------------- 
Depreciation in the three and nine months ended December 31, 2013 was       
relatively flat as compared to the same periods in the previous fiscal year. 
Finance Income                                                               
For the three months ended December 31,                                     
($ thousands)                                  2013  2012 $ change % change 
---------------------------------------------------------------------------- 
Interest income                                 160   133       27       20%
Net foreign exchange gain                       514   147      367      250%
----------------------------------------------------------------------------
Total finance income                            674   280      394      141%
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands)                                  2013  2012 $ change % change 
---------------------------------------------------------------------------- 
Interest income                                 479   409       70       17%
Net foreign exchange gain                       681    13      668     5138%
----------------------------------------------------------------------------
Total finance income                          1,160   422      738      175%
---------------------------------------------------------------------------- 
/T/ 
Interest income increased in the three and nine months ended December 31, 2013,
compared to the same periods of the prior fiscal year, mainly due to investing
larger cash balances. 
CMG is impacted by the movement of the US dollar against the Canadian dollar as
approximately 71% (2012 - 67%) of CMG's revenue for the nine months ended
December 31, 2013 is denominated in US dollars, whereas only approximately 25%
(2012 - 22%) of CMG's total costs are denominated in US dollars. 
/T/ 
At              At              At       Nine month
CDN$ to US$         June 30    September 30     December 31 trailing average
---------------------------------------------------------------------------- 
2011                 1.0370          0.9626          0.9833           1.0132
2012                 0.9813          1.0166          1.0051           0.9998
2013                 0.9513          0.9723          0.9402           0.9604
---------------------------------------------------------------------------- 
/T/ 
CMG recorded net foreign exchange gains of $0.5 million and $0.7 million for
the three and nine months ended December 31, 2013, respectively, compared to
net foreign exchange gains of $0.1 million and $0.01 million recorded in the
three and nine months ended December 31, 2012, respectively. These gains were a
result of a weakening in the Canadian dollar which contributed positively to
the valuation of our US-denominated working capital. 
Income and Other Taxes  
CMG's effective tax rate for the nine months ended December 31, 2013 is
reflected as 29.90% (2012 - 29.26%), whereas the prevailing Canadian statutory
tax rate is now 25.0%. This difference is primarily due to a combination of the
non-tax deductibility of stock-based compensation expense and the benefit of
foreign withholding taxes being realized only as a tax deduction as opposed to
a tax credit. 
The benefit recorded in CMG's books on the SR&ED investment tax credit
program impacts deferred income taxes. The investment tax credit earned in the
current fiscal year is utilized by CMG to reduce income taxes otherwise payable
for the current fiscal year and the federal portion of this benefit bears an
inherent tax liability as the amount of the credit is included in the
subsequent year's taxable income for both federal and provincial purposes.
The inherent tax liability on these investment tax credits is reflected in the
year the credit is earned as a non-current deferred tax liability and then, in
the following fiscal year, is transferred to income taxes payable. 
/T/ 
Operating Profit and Net Income                                              
For the three months ended                                                  
December 31,                                                                
($ thousands, except per share                                              
 amounts)                                 2013     2012  $ change  % change 
---------------------------------------------------------------------------- 
Total revenue                           19,227   16,802     2,425        14%
Operating expenses                      (9,652)  (8,526)   (1,126)       13%
---------------------------------------------------------------------------- 
Operating profit                         9,575    8,276     1,299        16% 
Operating profit as a % of total                                            
 revenue                                    50%      49%                    
---------------------------------------------------------------------------- 
Net income for the period                7,205    6,119     1,086        18% 
Net income for the period as a % of                                         
 total revenue                              37%      36%                    
---------------------------------------------------------------------------- 
Basic earnings per share ($/share)        0.19     0.16      0.03        19%
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands, except per share                                              
amounts)                                  2013     2012  $ change  % change 
---------------------------------------------------------------------------- 
Total revenue                           54,527   49,341     5,186        11%
Operating expenses                     (27,306) (24,928)   (2,378)       10%
---------------------------------------------------------------------------- 
Operating profit                        27,221   24,413     2,808        12% 
Operating profit as a % of total                                            
 revenue                                    50%      49%                    
---------------------------------------------------------------------------- 
Net income for the period               19,894   17,569     2,325        13% 
Net income for the period as a % of                                         
 total revenue                              36%      36%                    
---------------------------------------------------------------------------- 
Earnings per share ($/share)              0.52     0.47      0.05        11%
---------------------------------------------------------------------------- 
/T/ 
Operating profit as a percentage of total revenue for the three and nine months
ended December 31, 2013 was at 50% compared to 49% recorded in the same periods
of the previous fiscal year. While our total revenue grew by 14% and 11% for
the three and nine months ended December 31, 2013, respectively, as compared to
the same periods of the previous fiscal year, our operating expenses grew by
only 13% and 10%, respectively, having a positive impact on our operating
profit. Our high levels of operating profit as a percentage of revenue
demonstrate our commitment to continue to effectively manage our costs. 
Net income for the period as a percentage of revenue increased to 37% for the
three months ended December 31, 2013, compared to 36% for the same period of
the previous fiscal year. 
Net income for the period as a percentage of revenue was consistent at 36% for
the nine months ended December 31, 2013, compared to the same period of the
previous fiscal year. 
We have continued to maintain our profitability by focusing our efforts on
increasing license sales while, at the same time, effectively controlling our
operating costs. Managing these variables will continue to be imperative to our
future success. 
/T/ 
EBITDA                                                                       
For the three months ended December 31,                                     
($ thousands)                              2013    2012  $ change  % change 
---------------------------------------------------------------------------- 
Net income for the period                 7,205   6,119     1,086        18%
Add (deduct):                                                               
  Depreciation                              397     411       (14)       -3%
  Finance income                           (674)   (280)     (394)      141%
  Income and other taxes                  3,044   2,437       607        25%
----------------------------------------------------------------------------
EBITDA                                    9,972   8,687     1,285        15%
---------------------------------------------------------------------------- 
EBITDA as a % of total revenue               52%     52%                    
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands)                              2013    2012  $ change  % change 
---------------------------------------------------------------------------- 
Net income for the period                19,894  17,569     2,325        13%
Add (deduct):                                                               
  Depreciation                            1,151   1,122        29         3%
  Finance income                         (1,160)   (422)     (738)      175%
  Income and other taxes                  8,487   7,266     1,221        17%
----------------------------------------------------------------------------
EBITDA                                   28,372  25,535     2,837        11%
---------------------------------------------------------------------------- 
EBITDA as a % of total revenue               52%     52%                    
---------------------------------------------------------------------------- 
/T/ 
EBITDA increased by 15% and 11% for the three and nine months ended December
31, 2013, compared to the same periods of the previous fiscal year. This
increase provides further indication of our ability to keep growing our license
sales while effectively managing costs.  
EBITDA as a percent of total revenue for the three and nine months ended
December 31, 2013 remained consistent at 52% as compared to the same periods of
the previous fiscal year.  
/T/ 
Liquidity and Capital Resources                                              
For the three months ended December 31,                                     
($ thousands)                             2013     2012  $ change  % change 
---------------------------------------------------------------------------- 
Cash, beginning of period               63,745   50,694    13,051        26%
Cash flow from (used in):                                                   
  Operating activities                   6,724    6,720         4         0%
  Financing activities                  (5,545)  (4,777)     (768)       16%
  Investing activities                    (216)    (401)      185       -46%
----------------------------------------------------------------------------
Cash, end of period                     64,708   52,236    12,472        24%
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
($ thousands)                             2013     2012  $ change  % change 
---------------------------------------------------------------------------- 
Cash, beginning of period               59,419   55,374     4,045         7%
Cash flow from (used in):                                                   
  Operating activities                  19,464   16,918     2,546        15%
  Financing activities                 (13,706) (18,296)    4,590       -25%
  Investing activities                    (469)  (1,760)    1,291       -73%
----------------------------------------------------------------------------
Cash, end of period                     64,708   52,236    12,472        24%
---------------------------------------------------------------------------- 
/T/ 
OPERATING ACTIVITIES 
Cash flow generated from operating activities remained consistent in the three
months ended December 31, 2013, compared to the same period of last year. 
Cash flow generated from operating activities increased by $2.5 million in the
nine months ended December 31, 2013, compared to the same period of last year,
mainly due to the increase in net income for the period and the positive effect
on the timing difference of when income taxes are recorded and paid offset by
the timing difference of when sales are made and when the resulting receivables
are collected and the change in the deferred revenue balance. 
FINANCING ACTIVITIES 
Cash used in financing activities during the three months ended December 31,
2013 increased by $0.8 million, compared to the same period of the previous
fiscal year, as a result of paying larger dividends.  
During the nine months ended December 31, 2013, cash used in financing
activities decreased by $4.6 million, compared to the same period of the
previous fiscal year, due to receiving higher proceeds from the issuance of
Common Shares offset by paying larger dividends. In addition, in the first
quarter of the previous fiscal year, CMG spent $1.6 million on buying back
Common Shares. 
During the nine months ended December 31, 2013, CMG employees and directors
exercised options to purchase 884,000 Common Shares, which resulted in cash
proceeds of $9.1 million (2012 - 601,000 options exercised to purchase Common
Shares which resulted in cash proceeds of $5.1 million). 
In the nine months ended December 31, 2013, CMG paid $22.9 million in
dividends, representing the following quarterly dividends:  
/T/ 
($ per share)                                         Q1        Q2        Q3
---------------------------------------------------------------------------- 
Dividends declared and paid                         0.18      0.18      0.18
Special dividend declared and paid                  0.05         -         -
----------------------------------------------------------------------------
Total dividends declared and paid                   0.23      0.18      0.18
---------------------------------------------------------------------------- 
/T/ 
In the nine months December 31, 2012, CMG paid $21.8 million in dividends,
representing the following quarterly dividends: 
/T/ 
($ per share)                                         Q1        Q2        Q3
---------------------------------------------------------------------------- 
Dividends declared and paid                         0.16      0.16      0.16
Special dividend declared and paid                  0.10         -         -
----------------------------------------------------------------------------
Total dividends declared and paid                   0.26      0.16      0.16
---------------------------------------------------------------------------- 
/T/ 
On February 11, 2014 CMG announced the payment of a quarterly dividend of $0.19
per share on CMG's Common Shares. The dividend will be paid on March 14,
2014 to shareholders of record at the close of business on March 7, 2014.  
Over the past 10 years, we have consistently raised our total annual dividend
and paid out a special dividend at the end of each fiscal year as determined by
our corporate performance. In recognition of the importance of a more regular
income stream to our shareholders, as reported in fiscal 2012 Management's
Discussion and Analysis, we decided to increase the relative proportion of
dividends paid quarterly and lower the amount paid as a special annual dividend
beginning in fiscal 2013. The above table demonstrates this increase in the
regular quarterly dividend which amounted to $0.18 per share in Q1, Q2 and Q3
of fiscal 2014 compared to $0.16 per share in Q1, Q2 and Q3 of fiscal 2013.  
Based on our expectation of solid profitability and cash-generating ability
driven by the predictability of our software revenue base and effective
management of costs, we are cautiously optimistic that the company is well
positioned for future growth which will enable us to continue to pay quarterly
dividends. 
On April 16, 2012, the Company announced a Normal Course Issuer Bid
("NCIB") commencing on April 18, 2012 to purchase for cancellation up
to 3,416,000 of its Common Shares. During the year ended March 31, 2013, a
total of 91,000 Common Shares were purchased at market price for a total cost
of $1,551,000. 
On April 29, 2013, the Company announced a NCIB commencing on May 1, 2013 to
purchase for cancellation up to 3,538,000 of its Common Shares. During the nine
months ended December 31, 2013, no Common Shares were purchased. 
INVESTING ACTIVITIES 
CMG's current needs for capital asset investment relate to computer
equipment and office infrastructure costs, all of which will be funded
internally. During the nine months ended December 31, 2013, CMG expended $0.5
million on property and equipment additions, primarily composed of computing
equipment. CMG has a capital budget of $1.8 million for fiscal 2014.  
LIQUIDITY AND CAPITAL RESOURCES 
At December 31, 2013, CMG has $64.7 million in cash, no debt, and has access to
just over $0.8 million under a line of credit with its principal banker. 
During the nine months ended December 31, 2013, 7,399,000 shares of CMG's
public float were traded on the TSX. As at December 31, 2013, CMG's market
capitalization based upon its December 31, 2013 closing price of $26.61 was
$1.0 billion. 
Commitments, Off Balance Sheet Items and Transactions with Related Parties  
The Company is the operator of the DRMS research and development project (the
"DRMS Project"), a collaborative effort with its partners Shell
International Exploration and Production BV ("Shell") and Petroleo
Brasileiro S.A. ("Petrobras"), to jointly develop the newest
generation of reservoir and production system simulation software. The project
has been underway since 2006 and, with the ongoing support of the participants,
it is expected to continue until ultimate delivery of the software. The
Company's share of costs associated with the project is estimated to be
$5.5 million ($2.6 million net of overhead recoveries) for fiscal 2014. CMG
plans to continue funding its share of the project costs associated with the
development of the newest generation reservoir simulation software system from
internally generated cash flows. 
CMG has very little in the way of other ongoing material contractual
obligations other than for pre-sold licenses which are reflected as deferred
revenue on its statement of financial position, and contractual obligations for
office leases which are estimated as follows: 2014 - $0.5 million; 2015 to 2016
- $2.0 million per year; and 2017 - $1.0 million. 
Business Risks and Critical Accounting Estimates 
These remain unchanged from the factors detailed in CMG's 2013 Annual
Report. 
Changes in Accounting Policies  
Except as disclosed below, the accounting policies, presentation and methods of
computation remain unchanged from those detailed in CMG's 2013 Annual
Report. The following new standards and interpretations have been adopted as
detailed below: 
/T/ 
--  IFRS 10 Consolidated Financial Statements 
Replaces the guidance in IAS 27 Consolidated and Separate Financial 
Statements and SIC-12 Consolidation - Special Purpose Entities, and 
provides a single model to be applied in the control analysis for all 
investees, including entities that currently are special purpose 
entities in the scope of SIC-12. The Company adopted IFRS 10 for the 
annual period beginning on April 1, 2013. The adoption of IFRS 10 did 
not have a material impact on the condensed consolidated interim 
financial statements. 
--  IFRS 11 Joint Arrangements 
Under IFRS 11, joint arrangements are classified as either joint 
operations or joint ventures. IFRS 11 replaces the guidance in IAS 31 
Interest in Joint Ventures, and essentially carves out of previous 
jointly controlled entities, those arrangements which although 
structured through a separate vehicle, such separation is ineffective 
and the parties to the arrangement have rights to the assets and 
obligations for the liabilities and are accounted for as joint 
operations in a fashion consistent with jointly controlled 
assets/operations under IAS 31. In addition, under IFRS 11, joint 
ventures must now use the equity method of accounting. The Company 
adopted IFRS 11 for the annual period beginning on April 1, 2013. The 
adoption of IFRS 11 did not have a material impact on the condensed 
consolidated interim financial statements. 
--  IFRS 12 Disclosure of Interests in Other Entities 
Contains the disclosure requirements for entities that have interests in 
subsidiaries, joint arrangements, associates and/or unconsolidated 
structured entities. The Company adopted IFRS 12 for the annual period 
beginning on April 1, 2013. The adoption of IFRS 12 did not have a 
material impact on the condensed consolidated interim financial 
statements. 
--  IFRS 13 Fair Value Measurement 
Replaces the fair value measurement guidance contained in individual 
IFRSs with a single source of fair value measurement guidance. It 
defines fair value as the price that would be received to sell an asset 
or paid to transfer a liability in an orderly transaction between market 
participants at the measurement date, i.e. an exit price. The standard 
also establishes a framework for measuring fair value and sets out 
disclosure requirements for fair value measurement to provide 
information that enables financial statement users to assess the methods 
and inputs used to develop fair value measurements and, for recurring 
fair value measurements that use significant unobservable inputs (Level 
3), the effect of the measurements on profit or loss or other. The 
Company adopted IFRS 13 prospectively for the interim and annual periods 
beginning on April 1, 2013. The adoption of IFRS 13 did not have a 
material impact on the condensed consolidated interim financial 
statements other than the inclusion of certain fair value disclosures 
which were previously applicable to annual financial statements only. 
--  Amendments to IAS 1 Presentation of Financial Statements 
Require an entity present separately the items of other comprehensive 
income that may be reclassified to profit or loss in the future from 
those that would never be reclassified to profit or loss. The Company 
adopted the amendments for the annual period beginning on April 1, 2013. 
As the amendments only required changes in the presentation of items in 
other comprehensive income, the new standard did not have a material 
impact on the condensed consolidated interim financial statements. 
--  Amendments to IFRS 7 Offsetting Financial Assets and Liabilities 
Contains new disclosure requirements for offset financial assets and 
liabilities and netting arrangements. The Company adopted the amendments 
for the interim and annual periods beginning on April 1, 2013. The 
amendments to IFRS 7 did not have a material impact on the condensed 
consolidated interim financial statements.  
/T/ 
Accounting Standards and Interpretations Issued But Not Yet Effective 
The following standards and interpretations have not been adopted by the
Company as they apply to future periods: 
/T/ 
Nature of impending                                
change in accounting      Impact on CMG's         
Standard/Interpretation   policy                    financial statements    
---------------------------------------------------------------------------- 
IFRS 9 Financial          IFRS 9 (2009) replaces    The mandatory effective 
Instruments               the guidance in IAS 39    date of IFRS 9 (2010),   
Financial Instruments:    which supersedes IFRS 9 
In November 2009 the IASB Recognition and           (2009), has been left   
issued IFRS 9 Financial   Measurement, on the       open by the IASB. Early 
Instruments (IFRS 9       classification and        adoption is permitted.  
(2009)), and in October   measurement of financial  The Company will        
2010 the IASB published   assets. The Standard      determine when to adopt 
amendments to IFRS 9      eliminates the existing   IFRS 9 (2010) when the  
(IFRS 9 (2010)). On July  IAS 39 categories of held IASB has determined the 
24, 2013 the IASB         to maturity, available-   mandatory effective date
tentatively decided to    for-sale and loans and    and finalised the       
defer the mandatory       receivable.               impairment and          
effective date of IFRS 9.                           classification and      
The mandatory effective   Financial assets will be  measurement             
date will be left open    classified into one of    requirements.           
pending the finalisation  two categories on initial                         
of the impairment and     recognition:              The Company does not    
classification and                                  expect IFRS 9 (2010) to 
measurement requirements. - financial assets        have a material impact   
measured at amortized     on the financial         
cost; or                  statements. The          
- financial assets        classification and       
measured at fair value.   measurement of the       
Company's financial      
Gains and losses on       assets and liabilities   
remeasurement of          is not expected to       
financial assets measured change under IFRS 9      
at fair value will be     (2010) because of the    
recognized in profit or   nature of the Company's  
loss, except that for an  operations and the types 
investment in an equity   of financial assets that 
instrument which is not   it holds.                
held-for-trading, IFRS 9                           
provides, on initial                               
recognition, an                                    
irrevocable election to                            
present all fair value                             
changes from the                                   
investment in other                                
comprehensive income                               
(OCI). The election is                             
available on an                                    
individual share-by-share                          
basis. Amounts presented                           
in OCI will not be                                 
reclassified to profit or                          
loss at a later date.                              
IFRS 9 (2010) added                                
guidance to IFRS 9 (2009)                          
on the classification and                          
measurement of financial                           
liabilities, and this                              
guidance is consistent                             
with the guidance in IAS                           
39 expect as described                             
below.                                             
Under IFRS 9 (2010), for                           
financial liabilities                              
measured at fair value                             
under the fair value                               
option, changes in fair                            
value attributable to                              
changes in credit risk                             
will be recognized in                              
OCI, with the remainder                            
of the change recognized                           
in profit or loss.                                 
However, if this                                   
requirement creates or                             
enlarges an accounting                             
mismatch in profit or                              
loss, the entire change                            
in fair value will be                              
recognized in profit or                            
loss. Amounts presented                            
in OCI will not be                                 
reclassified to profit or                          
loss at a later date.                              
IFRS 9 (2010) also                                 
requires derivative                                
liabilities that are                               
linked to and must be                              
settled by delivery of an                          
unquoted equity                                    
instrument to be measured                          
at fair value, whereas                             
such derivative                                    
liabilities are measured                           
at cost under IAS 39.                              
IFRS 9 (2010) also added                           
the requirements of IAS                            
39 for the derecognition                           
of financial assets and                            
liabilities to IFRS 9                              
without change.                                    
---------------------------------------------------------------------------- 
Amendments to IAS 32,     The amendments to IAS 32  The Company intends to  
Offsetting Financial      clarify that an entity    adopt the amendments to 
Assets and Liabilities    currently has a legally   IAS 32 in its financial  
enforceable right to set- statements for the      
In December 2011, the     off if that right is:     annual period beginning 
IASB published Offsetting                           April 1, 2014. The      
Financial Assets and      - not contingent on a     Company does not expect 
Financial Liabilities and future event; and         the amendments to have a
issued new presentation   - enforceable both in the material impact on the  
requirements in IAS 32    normal course of business financial statements.   
Financial Instruments:    and in the event of                               
Presentation.             default, insolvency or                             
bankruptcy of the entity                          
The effective date for    and all counterparties.                           
the amendments to IAS 32                                                    
is annual periods         The amendments to IAS 32                          
beginning on or after     also clarify when a                               
January 1, 2014. These    settlement mechanism                              
amendments are to be      provides for net                                  
applied retrospectively.  settlement or gross                                
settlement that is                                 
equivalent to net                                  
settlement.                                        
---------------------------------------------------------------------------- 
Amendments to IAS 36,     The amendments to IAS 36  The Company intends to  
Impairment of Assets      clarify IASB's original   adopt the amendments to  
intention to require:     IAS 36 in its financial 
In May 2013, the IASB                               statements for the      
published Recoverable     - the disclosure of the   annual period beginning 
Amount Disclosures for    recoverable amount of     April 1, 2014. The      
Non-Financial Assets      impaired assets; and      Company does not expect 
detailing narrow scope    - additional disclosures  the amendments to have a
amendments to IAS 36      about the measurement of  material impact on the  
Impairment of Assets.     the recoverable amount of financial statements.    
impaired assets when the                          
The effective date for    recoverable amount is                             
the amendments to IAS 36  based on fair value less                          
is annual periods         costs of disposal,                                
beginning on or after     including the discount                            
January 1, 2014. These    rate when a present value                         
amendments are to be      technique is used to                              
applied retrospectively   measure the recoverable                           
and earlier adoption is   amount.                                           
permitted for periods                                                       
when IFRS 13 is applied.                                                     
---------------------------------------------------------------------------- 
/T/ 
Outstanding Share Data  
The following table represents the number of Common Shares and options
outstanding:  
/T/ 
As at February 11, 2014                                                     
(thousands)                                                                 
----------------------------------------------------------------------------
Common Shares                                                         39,030
Options                                                                3,093
---------------------------------------------------------------------------- 
/T/ 
On July 13, 2005, CMG adopted a rolling stock option plan which allows the
Company to grant options to its employees and directors to acquire Common
Shares of up to 10% of the outstanding Common Shares at the date of grant.
Based upon this calculation, at February 11, 2014, CMG could grant up to
3,903,000 stock options. 
Disclosure Controls and Procedures and Internal Control over Financial
Reporting 
Management is responsible for establishing and maintaining disclosure controls
and procedures ("DC&P") and internal control over financial
reporting ("ICFR") as defined under National Instrument 52-109. These
controls and procedures were reviewed and the effectiveness of their design and
operation was evaluated in fiscal 2013 in accordance with the COSO control
framework. The evaluation confirmed the effectiveness of DC&P and ICFR at
March 31, 2013. During our fiscal year 2014, we continue to monitor and review
our controls and procedures. 
During the nine months ended December 31, 2013, there have been no significant
changes to the Company's ICFR that have materially affected, or are
reasonably likely to materially affect, the company's ICFR. 
Outlook 
Our annuity/maintenance revenue stream continued to grow during the first nine
months of fiscal 2014 with a recorded increase of 6%, compared to the same
period of the previous fiscal year, with the most significant growth coming
from the US at 23%. Over 80% of our software license revenue is derived from
our annuity and maintenance contracts, and with a strong renewal rate, we
expect to see continued growth in this revenue base. We continue to experience
increased license usage by our existing large clients as well as adding new
accounts.  
Our geographical diversification allows us to take advantage of opportunities
internationally, and we will continue to extend our reach globally and focus
our efforts on sustaining high renewal rates as well as increasing the number
of licenses sold to both existing and new customers. 
Although professional services are not the primary source of our revenue, we
were able to grow this business by $2.0 million in the first nine months of
fiscal 2014 as compared to the same period of the prior fiscal year. 
Our profit margin continued to hold strong, demonstrating our continuous
commitment to effectively manage our corporate costs. For the nine months ended
December 31, 2013, our EBITDA represented 52% of our total revenue, remaining
consistent with the same period of the previous fiscal year.  
CMG continues to focus its resources on the development, enhancement and
deployment of simulation software tools relevant to the challenges and
opportunities facing its diverse customer base. We strive to invest 20% of our
top line towards continuous improvement of our product features as well as
development of new capabilities in order to maintain our technological
distinction and take advantage of new opportunities. We will continue fostering
value-based, long-term relationships with our clients while helping them solve
problems associated with hydrocarbon recovery, with an emphasis on the advanced
recovery processes, which are increasing in complexity and where our products
continue to gain increasing importance. With the growth in unconventional
hydrocarbon and enhanced oil recovery ("EOR") projects around the
globe, we are seeing an increase in the use of reservoir simulation software by
reservoir engineers. This growth in simulation use has been reflected in the
number and types of projects being simulated and the amount of simulation done
on each project. More recently, the North American market is seeing an
increased opportunity in shale gas and liquids which use complex recovery
processes that necessitate the use of simulation. 
One of the instrumental parts of our success includes training programs which
we offer to our customers to enable them to become more efficient and effective
users of our software. We continue to see strong class attendance across all
the regions. 
CMG's joint project to develop the newest generation of dynamic reservoir
modelling systems ("DRMS Project") continued to progress during the
third quarter of the current fiscal year. The most recent beta version of the
software was released at the beginning of calendar 2013, and the limited
commercial release of the software was expected to be delivered to our partner
companies, for the purposes of testing it on selected assets, by the end of
calendar 2013. The upcoming release achieved its target of successfully
simulating a complex integrated asset model; however, an unanticipated
additional complexity in the model has delayed the software release to our
partners to the fourth quarter of fiscal 2014. CMG and its partners remain
committed to funding the ongoing development and to the future success of the
project. 
The excellent reputation behind our Company and its product suite offering will
continue to enable us to grow and sustain a healthy market share while
generating solid software license revenue. With our strong working capital
position, we are well positioned to continue to invest in all aspects of our
business in order to continue to grow and diversify our revenue base and to
ultimately return value to our shareholders in the form of regular quarterly
dividend payments and growth in share value.  
Kenneth M. Dedeluk, President and Chief Executive Officer 
February 11, 2014  
/T/ 
COMPUTER MODELLING GROUP LTD.                                               
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION                      
UNAUDITED (thousands of Canadian $)      December 31, 2013    March 31, 2013
---------------------------------------------------------------------------- 
Assets                                                                      
Current assets:                                                             
  Cash                                              64,708            59,419
  Trade and other receivables                       15,446            19,141
  Prepaid expenses                                   1,417             1,216
  Prepaid income taxes (note 7)                        122               341
---------------------------------------------------------------------------- 
81,693            80,117
Property and equipment                               2,622             3,304
----------------------------------------------------------------------------
Total assets                                        84,315            83,421
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
Liabilities and Shareholders' Equity                                        
Current liabilities:                                                        
  Trade payables and accrued liabilities             5,311             6,047
  Income taxes payable (note 7)                        866               296
  Deferred revenue                                  18,069            25,289
---------------------------------------------------------------------------- 
24,246            31,632
Deferred tax liability (note 7)                        228               379
----------------------------------------------------------------------------
Total liabilities                                   24,474            32,011
---------------------------------------------------------------------------- 
Shareholders' equity:                                                       
  Share capital                                     51,251            40,498
  Contributed surplus                                5,312             4,673
  Retained earnings                                  3,278             6,239
----------------------------------------------------------------------------
Total shareholders' equity                          59,841            51,410
----------------------------------------------------------------------------
Total liabilities and shareholders'                                         
 equity                                             84,315            83,421
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
See accompanying notes to condensed consolidated financial statements.       
COMPUTER MODELLING GROUP LTD.                                               
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME     
Three months ended  Nine months ended 
December 31        December 31   
UNAUDITED (thousands of Canadian $                                          
 except per share amounts)                  2013      2012     2013     2012
---------------------------------------------------------------------------- 
Revenue (note 4)                          19,227    16,802   54,527   49,341
---------------------------------------------------------------------------- 
Operating expenses                                                          
  Sales, marketing and professional                                          
services                                4,119     3,778   11,605   11,333
  Research and development (note 5)        3,816     3,136   10,706    9,061
  General and administrative               1,717     1,612    4,995    4,534
---------------------------------------------------------------------------- 
9,652     8,526   27,306   24,928
----------------------------------------------------------------------------
Operating profit                           9,575     8,276   27,221   24,413 
Finance income (note 6)                      674       280    1,160      422
----------------------------------------------------------------------------
Profit before income and other taxes      10,249     8,556   28,381   24,835
Income and other taxes (note 7)            3,044     2,437    8,487    7,266
---------------------------------------------------------------------------- 
Net and total comprehensive income         7,205     6,119   19,894   17,569
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
Earnings Per Share                                                          
Basic (note 8(e))                           0.19      0.16     0.52     0.47
Diluted (note 8(e))                         0.18      0.16     0.50     0.45
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
See accompanying notes to condensed consolidated financial statements.       
COMPUTER MODELLING GROUP LTD.                                               
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY                       
UNAUDITED (thousands of              Common  Contributed  Retained    Total 
 Canadian $)                  Share Capital      Surplus  Earnings   Equity 
---------------------------------------------------------------------------- 
Balance, April 1, 2012               31,751        3,535    10,793   46,079 
Total comprehensive income                                                  
 for the period                           -            -    17,569   17,569 
Dividends paid                            -            -   (21,806) (21,806)
Shares issued for cash on                                                   
 exercise of stock options                                                  
 (note 8(b))                          5,061            -         -    5,061 
Common shares buy-back (notes                                               
 8(b) & (c))                            (80)           -    (1,471)  (1,551)
Stock-based compensation:                                                   
  Current period expense                  -        1,888         -    1,888 
  Stock options exercised                                                    
(note 8(b))                          973         (973)        -        - 
----------------------------------------------------------------------------
Balance, December 31, 2012           37,705        4,450     5,085   47,240 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
Balance, April 1, 2013               40,498        4,673     6,239   51,410 
Total comprehensive income                                                  
 for the period                           -            -    19,894   19,894 
Dividends paid                            -            -   (22,855) (22,855)
Shares issued for cash on                                                   
 exercise of stock options                                                  
 (note 8(b))                          9,149            -         -    9,149 
Stock-based compensation:                                                   
  Current period expense                  -        2,243         -    2,243 
  Stock options exercised                                                    
(note 8(b))                        1,604       (1,604)        -        - 
----------------------------------------------------------------------------
Balance, December 31, 2013           51,251        5,312     3,278   59,841 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
See accompanying notes to condensed consolidated financial statements.       
COMPUTER MODELLING GROUP LTD.                                             
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                            
Three months ended Nine months ended  
December 31        December 31    
UNAUDITED (thousands of Canadian $)      2013      2012     2013     2012 
-------------------------------------------------------------------------- 
Cash flows from operating activities                                      
  Net income                            7,205     6,119   19,894   17,569 
Adjustments for:                                                          
  Depreciation                            397       411    1,151    1,122 
  Income and other taxes (note 7)       3,044     2,437    8,487    7,266 
  Stock-based compensation (note                                           
8(d))                                  940       656    2,243    1,888 
  Interest income (note 6)               (160)     (133)    (479)    (409)
-------------------------------------------------------------------------- 
11,426     9,490   31,296   27,436 
Changes in non-cash working capital:                                      
  Trade and other receivables          (2,256)    1,775    3,698    4,855 
  Trade payables and accrued                                               
liabilities                          1,428       660     (736)    (549)
  Prepaid expenses                       (259)      179     (201)     188 
  Deferred revenue                     (1,277)   (2,731)  (7,220)  (6,183)
--------------------------------------------------------------------------
Cash generated from operating                                             
 activities                             9,062     9,373   26,837   25,747 
  Interest received                       160       132      476      412 
  Income taxes paid                    (2,498)   (2,785)  (7,849)  (9,241)
--------------------------------------------------------------------------
Net cash from operating activities      6,724     6,720   19,464   16,918 
-------------------------------------------------------------------------- 
Cash flows from financing activities                                      
Proceeds from issue of common shares    1,475     1,273    9,149    5,061 
Dividends paid                         (7,020)   (6,050) (22,855) (21,806)
Common shares buy-back (note 8(c))          -         -        -   (1,551)
--------------------------------------------------------------------------
Net cash used in financing                                                
 activities                            (5,545)   (4,777) (13,706) (18,296)
-------------------------------------------------------------------------- 
Cash flows used in investing                                              
 activities                                                               
Property and equipment additions         (216)     (401)    (469)  (1,760)
--------------------------------------------------------------------------
Increase (decrease) in cash               963     1,542    5,289   (3,138)
Cash, beginning of period              63,745    50,694   59,419   55,374 
--------------------------------------------------------------------------
Cash, end of period                    64,708    52,236   64,708   52,236 
--------------------------------------------------------------------------
-------------------------------------------------------------------------- 
See accompanying notes to condensed consolidated financial statements.       
/T/ 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
For the three and nine months ended December 31, 2013 and 2012 (unaudited). 
1. Reporting Entity:  
Computer Modelling Group Ltd. ("CMG") is a company domiciled in
Alberta, Canada and is incorporated pursuant to the Alberta Business
Corporations Act, with its Common Shares listed on the Toronto Stock Exchange
under the symbol "CMG". The address of CMG's registered office
is Suite 200, 1824 Crowchild Trail N.W., Calgary, Alberta, Canada, T2M 3Y7. The
condensed consolidated financial statements as at and for the three and nine
months ended December 31, 2013 comprise CMG and its subsidiaries (together
referred to as the "Company"). The Company is a computer software
technology company engaged in the development and licensing of reservoir
simulation software. The Company also provides professional services consisting
of highly specialized support, consulting, training, and contract research
activities.  
2. Basis of Preparation:  
(a) STATEMENT OF COMPLIANCE:  
These condensed consolidated financial statements have been prepared in
accordance with International Accounting Standard ("IAS") 34, Interim
Financial Reporting. Accordingly, the condensed consolidated financial
statements do not include all of the information required for full annual
financial statements, and should be read in conjunction with the Company's
most recent annual consolidated financial statements as at and for the year
ended March 31, 2013 which have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as issued by the International
Accounting Standards Board ("IASB"), and using the accounting
policies disclosed in note 3 of the Company's annual consolidated
financial statements as at and for the year ended March 31, 2013. 
These unaudited condensed consolidated financial statements as at and for the
three and nine months ended December 31, 2013 were authorized for issuance by
the Board of Directors on February 11, 2014. 
(b) BASIS OF MEASUREMENT:  
The condensed consolidated financial statements have been prepared on the
historical cost basis, which is based on the fair value of the consideration at
the time of the transaction. 
(c) FUNCTIONAL AND PRESENTATION CURRENCY:  
The condensed consolidated financial statements are presented in Canadian
dollars, which is the functional currency of CMG and its subsidiaries. All
financial information presented in Canadian dollars has been rounded to the
nearest thousand.  
(d) USE OF ESTIMATES, JUDGMENTS AND ASSUMPTIONS:  
The preparation of financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the
application of accounting policies, the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue, costs and
expenses for the period. Estimates and underlying assumptions are based on
historical experience and other assumptions that are considered reasonable in
the circumstances and are reviewed on an on-going basis. Actual results may
differ from such estimates and it is possible that the differences could be
material. Revisions to accounting estimates are recognized in the period in
which the estimates are revised and in any future periods affected. In
preparing these condensed consolidated financial statements, the significant
judgments made by management in applying the Company's accounting policies
and the key sources of estimation uncertainty are the same as those applied in
the annual IFRS consolidated financial statements for the year ended March 31,
2013. 
3. Significant Accounting Policies:  
The condensed consolidated financial statements should be read in conjunction
with the Company's annual financial statements for the year ended March
31, 2013 prepared in accordance with IFRS applicable to those annual
consolidated financial statements. Except as disclosed below, the same
accounting policies, presentation and methods of computation have been followed
in these condensed consolidated financial statements as were applied in the
Company's consolidated financial statements for the year ended March 31,
2013.  
NEW STANDARDS AND INTERPRETATIONS ADOPTED: 
The Company has adopted the following new standards and amendments to
standards, with a date of initial application of April 1, 2013: 
/T/ 
--  IFRS 10 Consolidated Financial Statements 
Replaces the guidance in IAS 27 Consolidated and Separate Financial 
Statements and SIC-12 Consolidation - Special Purpose Entities, and 
provides a single model to be applied in the control analysis for all 
investees, including entities that currently are special purpose 
entities in the scope of SIC-12. The adoption of IFRS 10 did not have a 
material impact on the condensed consolidated interim financial 
statements. 
--  IFRS 11 Joint Arrangements 
Under IFRS 11, joint arrangements are classified as either joint 
operations or joint ventures. IFRS 11 replaces the guidance in IAS 31 
Interest in Joint Ventures, and essentially carves out of previous 
jointly controlled entities, those arrangements which although 
structured through a separate vehicle, such separation is ineffective 
and the parties to the arrangement have rights to the assets and 
obligations for the liabilities and are accounted for as joint 
operations in a fashion consistent with jointly controlled 
assets/operations under IAS 31. In addition, under IFRS 11, joint 
ventures must now use the equity method of accounting. The adoption of 
IFRS 11 did not have a material impact on the condensed consolidated 
interim financial statements. 
--  IFRS 12 Disclosure of Interests in Other Entities 
Contains the disclosure requirements for entities that have interests in 
subsidiaries, joint arrangements, associates and/or unconsolidated 
structured entities. The adoption of IFRS 12 did not have a material 
impact on the condensed consolidated interim financial statements. 
--  IFRS 13 Fair Value Measurement 
Replaces the fair value measurement guidance contained in individual 
IFRSs with a single source of fair value measurement guidance. It 
defines fair value as the price that would be received to sell an asset 
or paid to transfer a liability in an orderly transaction between market 
participants at the measurement date, i.e. an exit price. The standard 
also establishes a framework for measuring fair value and sets out 
disclosure requirements for fair value measurement to provide 
information that enables financial statement users to assess the methods 
and inputs used to develop fair value measurements and, for recurring 
fair value measurements that use significant unobservable inputs (Level 
3), the effect of the measurements on profit or loss or other. Due to 
the nature of the Company's financial assets and liabilities, the 
adoption of IFRS 13 did not have a material impact on the condensed 
consolidated interim financial statements. It only resulted in the 
inclusion of certain fair value disclosures which were previously 
applicable to annual financial statements only (refer to note 9). 
--  Amendments to IAS 1 Presentation of Financial Statements 
Requires an entity to present separately the items of other 
comprehensive income that may be reclassified to profit or loss in the 
future from those that would never be reclassified to profit or loss. As 
the amendments only required changes in the presentation of items in 
other comprehensive income, the new standard did not have a material 
impact on the condensed consolidated interim financial statements. 
--  Amendments to IFRS 7 Offsetting Financial Assets and Liabilities 
Contains new disclosure requirements for offset financial assets and 
liabilities and netting arrangements. The amendments to IFRS 7 did not 
have a material impact on the condensed consolidated interim financial 
statements.  
4. Revenue:                                                                  
For the three months ended December 31,                                     
(thousands of $)                                          2013         2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Software licenses                                       17,220       15,369 
Professional services                                    2,007        1,433 
---------------------------------------------------------------------------- 
19,227       16,802 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
(thousands of $)                                          2013         2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Software licenses                                       48,491       45,302 
Professional services                                    6,036        4,039 
---------------------------------------------------------------------------- 
54,527       49,341 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
5. Research and Development Costs:                                           
For the three months ended December 31,                                     
(thousands of $)                                          2013         2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Research and development                                 4,125        3,586 
Scientific research and experimental development                            
 ("SR&ED") investment tax credits                         (309)        (450)
---------------------------------------------------------------------------- 
3,816        3,136 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
(thousands of $)                                          2013         2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Research and development                                12,080       10,458 
Scientific research and experimental development                            
 ("SR&ED") investment tax credits                       (1,374)      (1,397)
---------------------------------------------------------------------------- 
10,706        9,061 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
6. Finance Income and Finance Costs:                                         
For the three months ended December 31,                                     
(thousands of $)                                          2013         2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest income                                            160          133 
Net foreign exchange gain                                  514          147 
----------------------------------------------------------------------------
Finance income                                             674          280 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
For the nine months ended December 31,                                      
(thousands of $)                                          2013         2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest income                                            479          409 
Net foreign exchange gain                                  681           13 
----------------------------------------------------------------------------
Finance income                                           1,160          422 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
7. Income and Other Taxes:  
The major components of income tax expense are as follows: 
/T/ 
For the nine months ended December 31,                                      
(thousands of $)                                          2013         2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Current year income taxes                                7,727        6,655 
Adjustment for prior year                                    6           67 
----------------------------------------------------------------------------
Current income taxes                                     7,733        6,722 
Deferred tax expense (recovery)                           (151)         (61)
Foreign withholding and other taxes                        905          605 
---------------------------------------------------------------------------- 
8,487        7,266 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
The provision for income and other taxes reported differs from the amount
computed by applying the combined Canadian Federal and Provincial statutory
rate to the profit before income and other taxes.  
The reasons for this difference and the related tax effects are as follows: 
/T/ 
For the nine months ended December 31,                                      
(thousands of $, unless otherwise stated)                 2013         2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Combined statutory tax rate                              25.00%       25.00%
----------------------------------------------------------------------------
Expected income tax                                      7,095        6,209 
Non-deductible costs                                       582          494 
Effect of tax rates in foreign jurisdictions               129           17 
Withholding taxes                                          678          454 
Adjustment for prior year                                    6           67 
Other                                                       (3)          25 
---------------------------------------------------------------------------- 
8,487        7,266 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
The components of the Company's deferred tax liability are as follows: 
/T/ 
(thousands of $)                        December 31, 2013    March 31, 2013 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Tax liability on SR&ED investment tax                                       
 credits                                             (244)             (362)
Tax asset (liability) on property and                                       
 equipment                                             16               (17)
----------------------------------------------------------------------------
Deferred tax liability                               (228)             (379)
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
All movement in deferred tax assets and liabilities is recognized through net
income of the respective period. 
Prepaid income taxes and current income taxes payable have not been offset as
the amounts relate to income taxes levied by different tax authorities to
different taxable entities. 
8. Share Capital:  
(a) AUTHORIZED:  
An unlimited number of Common Shares, an unlimited number of Non-Voting Shares,
and an unlimited number of Preferred Shares, issuable in series. 
(b) ISSUED:  
/T/ 
(thousands of shares)                                         Common Shares 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, April 1, 2012                                               37,307 
Issued for cash on exercise of stock options                            601 
Common shares buy-back                                                  (91)
----------------------------------------------------------------------------
Balance, December 31, 2012                                           37,817 
---------------------------------------------------------------------------- 
Balance, April 1, 2013                                               38,129 
Issued for cash on exercise of stock options                            884 
----------------------------------------------------------------------------
Balance, December 31, 2013                                           39,013 
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
Subsequent to December 31, 2013, 17,000 stock options were exercised for cash
proceeds of $206,000.  
On May 23, 2012, the Board of Directors considered the merits of renewing the
Company's shareholder rights plan on or before the third-year anniversary
of shareholder approval of the plan and determined that it was in the best
interest of the Company to continue to have a shareholder rights plan in place.
Upon careful review, the Board of Directors agreed to approve an amended and
restated rights plan (the "Amended and Restated Rights Plan") between
the Company and Valiant Trust Company, which is similar in all respects to the
existing shareholder rights plan, with the exception of certain minor
amendments. The Amended and Restated Rights Plan was approved by the
Company's shareholders on July 12, 2012.  
(c) COMMON SHARES BUY-BACK:  
On April 16, 2012, the Company announced a Normal Course Issuer Bid
("NCIB") commencing on April 18, 2012 to purchase for cancellation up
to 3,416,000 of its Common Shares. During the year ended March 31, 2013, a
total of 91,000 Common Shares were purchased at market price for a total cost
of $1,551,000. 
On April 29, 2013, the Company announced a NCIB commencing on May 1, 2013 to
purchase for cancellation up to 3,538,000 of its Common Shares. During the nine
months ended December 31, 2013, no Common Shares were purchased. 
(d) STOCK-BASED COMPENSATION PLAN:  
The Company adopted a rolling stock option plan as of July 13, 2005, which was
reaffirmed by the Company's shareholders on July 7, 2011, which allows it
to grant options to acquire Common Shares of up to 10% of the outstanding
Common Shares at the date of grant. Based upon this calculation, at December
31, 2013, the Company could grant up to 3,901,000 stock options. Pursuant to
the stock option plan, the maximum term of an option granted cannot exceed five
years from the date of grant. The outstanding stock options vest as to 50%
after the first year anniversary, from date of grant, and then vest as to 25%
of the total options granted after each of the second and third year
anniversary dates.  
The following table outlines changes in stock options:  
/T/ 
(thousands except per      For the nine months ended    For the year ended  
 share amounts)                December 31, 2013          March 31, 2013    
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
Weighted 
Weighted               Average 
Average              Exercise 
Options Exercise Price  Options        Price 
Granted      ($/share)   Granted   ($/share)
----------------------------------------------------------------------------
Outstanding at beginning                                                    
 of period                        2,938          13.13     2,903        9.85
Granted                           1,154          24.41     1,006       18.19
Exercised                          (885)         10.34      (913)       8.15
Forfeited/cancelled                 (87)         16.34       (58)      15.09
----------------------------------------------------------------------------
Outstanding at end of                                                       
 period                           3,120          18.00     2,938       13.13
----------------------------------------------------------------------------
Options exercisable at                                                      
 end of period                    1,271          13.01     1,207        9.75
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
The range of exercise prices of stock options outstanding and exercisable at
December 31, 2013 is as follows: 
/T/ 
Outstanding                    Exercisable      
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
Weighted    Weighted                Weighted 
Average     Average                 Average 
Number of    Remaining    Exercise   Number of    Exercise
Exercise Price      Options  Contractual       Price     Options       Price
 ($/option)     (thousands) Life (years)  ($/option) (thousands)  ($/option)
----------------------------------------------------------------------------
7.80 - 9.07             490          1.4        8.80         490        8.80
9.08 - 13.43            641          2.6       13.39         407       13.38
13.44 - 18.18           836          3.6       18.13         372       18.12
18.19 - 26.19         1,153          4.6       24.39           2       20.00
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3,120          3.4       18.00       1,271       13.01
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/T/ 
The fair value of stock options granted was estimated using the Black-Scholes
option pricing model under the following assumptions: 
/T/ 
For the nine months ended For the year ended 
December 31, 2013     March 31, 2013
----------------------------------------------------------------------------
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Fair value at grant date                                                    
 ($/option)                                  3.06 to 4.33       2.45 to 3.83
Share price at grant date                                                   
 ($/share)                                 24.40 to 26.19     17.90 to 21.75
Risk-free interest rate (%)                  1.21 to 1.64       1.13 to 1.33
Estimated hold period prior to                                              
 exercise (years)                                  2 to 4             2 to 4
Volatility in the price of                                                  
 common shares (%)                               26 to 28           27 to 36
Dividend yield per common share                                             
 (%)                                         2.96 to 3.21       3.39 to 4.12
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/T/ 
The Company recognized total stock-based compensation expense for the three and
nine months ended December 31, 2013 of $940,000 and $2,243,000 respectively
(three and nine months ended December 31, 2012 - $656,000 and $1,888,000
respectively).  
(e) EARNINGS PER SHARE:  
The following table summarizes the earnings and weighted average number of
Common Shares used in calculating basic and diluted earnings per share: 
/T/ 
For the three months                                                        
 ended December 31,                                                         
(thousands except per                                                       
 share amounts)                          2013                           2012
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Weighted                       Weighted           
Average Earnings               Average  Earnings 
Earnings      Shares Per Share Earnings      Shares Per Share 
($) Outstanding ($/share)      ($) Outstanding ($/share)
----------------------------------------------------------------------------
Basic             7,205      38,939      0.19    6,119      37,754      0.16
Dilutive                                                                    
 effect of                                                                  
 stock options                  921                          1,103          
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Diluted           7,205      39,860      0.18    6,119      38,857      0.16
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For the nine months                                                         
ended December 31,                                                          
(thousands except per                                                       
share amounts)                           2013                           2012
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
Weighted                       Weighted           
Average Earnings               Average  Earnings 
Earnings      Shares Per Share Earnings      Shares Per Share 
($) Outstanding ($/share)      ($) Outstanding ($/share)
----------------------------------------------------------------------------
Basic            19,894      38,616      0.52   17,569      37,538      0.47
Dilutive                                                                    
 effect of                                                                  
 stock options                  975                          1,127          
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Diluted          19,894      39,591      0.50   17,569      38,665      0.45
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
During the three and nine months ended December 31, 2013, 40,000 and Nil
options, respectively (three and nine months ended December 31, 2012 - 31,000,
and 118,000 respectively), were excluded from the computation of the
weighted-average number of diluted shares outstanding because their effect was
not dilutive. 
9. Financial Instruments:  
(i) Classification of financial instruments  
/T/ 
Classification    Measurement
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash                                         Held for trading     Fair value
Trade and other receivables             Loans and receivables Amortized cost
Trade payables and accrued                    Other financial Amortized cost
 liabilities                                      liabilities               
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
/T/ 
(ii) Fair values of financial instruments  
The carrying values of cash, trade and other receivables, trade payables and
accrued liabilities approximate their fair values due to the short-term nature
of these instruments. 
10. Commitments:  
(a) RESEARCH COMMITMENTS:  
The Company is the operator of the DRMS research and development project (the
"DRMS project"), a collaborative effort with its partners Shell
International Exploration and Production BV ("Shell") and Petroleo
Brasileiro S.A. ("Petrobras"), to jointly develop the newest
generation of reservoir and production system simulation software. The project
has been underway since 2006 and, with the ongoing support of the participants,
it is expected to continue until ultimate delivery of the software. The
Company's share of costs associated with the project is estimated to be
$5.5 million ($2.6 million net of overhead recoveries) for fiscal 2014. 
(b) LEASE COMMITMENTS:  
The Company has operating lease commitments relating to its office premises
with minimum annual lease payments as follows:  
/T/ 
Nine months ended December 31,                                              
(thousands of $)                                    2013                2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Less than one year                                   518                 499
Between one and five years                         5,170               7,089
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5,688               7,588
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/T/ 
11. Line Of Credit:  
The Company has arranged for a $1.0 million line of credit with its principal
banker, which can be drawn down by way of a demand operating credit facility or
may be used to support letters of credit. As at December 31, 2013, US $165,000
(March 31, 2013 - US $165,000) had been reserved on this line of credit for the
letter of credit supporting a performance bond. 
12. Segmented Information:  
The Company is organized into one operating segment represented by the
development and licensing of reservoir simulation software. The Company
provides professional services, consisting of support, training, consulting and
contract research activities, to promote the use and development of its
software; however, these activities are not evaluated as a separate business
segment.  
Revenues and property and equipment of the Company arise in the following
geographic regions: 
/T/ 
(thousands of $)                 Revenue            Property and equipment  
----------------------------------------------------------------------------
---------------------------------------------------------------------------- 
For the nine months ended                            
December 31,            As at December 31,     
2013          2012         2013         2012
---------------------------------------------------------------------------- 
Canada                        19,610        19,243        2,423        3,323
United States                 11,155         8,736           54           49
South America                  9,411         8,345           83           51
Eastern Hemisphere(1)         14,351        13,017           62           44
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54,527        49,341        2,622        3,467
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(1)Includes Europe, Africa, Asia and Australia.                              
/T/ 
In the nine months ended December 31, 2013 and 2012, no customer represented
10% or more of total revenue. 
13. Joint Operation:  
The Company is the operator of a joint software development project, the DRMS
project, which gives the Company exclusive rights to commercialize the jointly
developed software while the other partners will have unlimited software access
for their internal use. Accordingly, the Company records its proportionate
share of costs incurred on the project (37.04%) as research and development
costs within the condensed consolidated statements of operations and
comprehensive income. 
For the three and nine months ended December 31, 2013, CMG included $1.3
million and $3.5 million, respectively (2012 - $1.0 million and $2.8 million,
respectively) of costs in its condensed consolidated statements of operations
and comprehensive income related to this joint project.  
Additionally, the Company is entitled to charge the project for various
services provided as operator, which were recorded in revenue as professional
services and amounted to $0.6 million and $1.8 million during the three and
nine months ended December 31, 2013 (2012 - $0.4 million and $1.3 million,
respectively). 
14. Subsequent Events:  
On February 11, 2014, the Board of Directors declared a quarterly cash dividend
of $0.19 per share on its Common Shares, payable on March 14, 2014, to all
shareholders of record at the close of business on March 7, 2014.  
-30-
FOR FURTHER INFORMATION PLEASE CONTACT: 
Computer Modelling Group Ltd.
Kenneth M. Dedeluk
President & CEO
(403) 531-1300
ken.dedeluk@cmgl.ca
or
Computer Modelling Group Ltd.
Sandra Balic
Vice President, Finance & CFO
(403) 531-1300
(403) 289-8502
sandra.balic@cmgl.ca 
INDUSTRY:  Computers and Software - Software, Energy and Utilities - Equipment 
SUBJECT:  ERN 
-0-
-0- Feb/12/2014 12:00 GMT
 
 
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