Friday, 2 November 2007 Newsletter to the shareholders in CAMO after Q3 2007 The CAMO group consists of two separate operational divisions. CAMO SOFTWARE (Development and sales of advanced multivariate statistical software worldwide) and CAMO IT SERVICES (IT Services in US, Europe and India). The newly acquired outsourcing company Proteans is part of IT Services. Note: Financial information in this document is preliminary and not audited. News on acquisitions The OPD (Outsourced product development) company Proteans that CAMO ASA acquired in July is now fully integrated and is performing well with a growth of over 100% compared with their 2006 numbers. CAMO was planning to do one more acquisition in India, focused on the local IT consulting We have been looking close on several companies but have decided not to acquire any of these companies after performing due diligence. Update on CAMO ASA financials and operations The CAMO group total consolidated revenue in Q3 2007 was 5 537 512 USD which is up 32% compared to Q3 2006. Year to Date (YTD) after Q3 was 15 554 620 USD which is up 35% compared to 2006. Note that these comparisons include Proteans actual numbers for both 2006 and 2007. Earnings per share (defined as EBITDA/share) were USD 0,015 for YTD 2007 and USD 0,00474 for Q3 2007. Employee head count worldwide is 440 at end of Q3 including Proteans. Consolidated earnings before depreciation and amortization (EBITDA) for Q3 reached 273 721 USD which is down from 313 251USD for Q3 last year. EBITDA YTD is 896 186 USD, up 12 % from 2006. The decrease in earnings is mainly due to increased G&A costs, which consist of investment in management and sales resources. A strategy is being implemented in the IT Services operation to provide a combined offer of outsourcing services together with onsite IT consulting in selected niches in USA immediately and Europe/Scandinavia to follow. We will focus less on the local Indian A CFO has been hired in the Oslo headquarter, named Janne Edman Martinsen, who comes from a position as group controller at publicly listed Otrum. Financials will be consolidated in Norway from now on and CAMO will go over to using IFRS accounting standards as part of the preparations for an IPO.
More information on the divisions within CAMO ASA CAMO IT SERVICES Division The CAMO IT SERVICES division is offering IT Outsourcing, Consulting and Recruiting Services to Companies in US, Europe and India and consists of two main parts: IT Consulting in USA and India called CAMO Tech and outsourced product development services in USA and Western Europe called Proteans. CAMO Tech: This group provides IT Consulting Services to Clients in USA and India. Q3 revenue in the Tech division was 3 573 960 USD which is up by 16% compared to 2006. YTD revenue was 10 272 568 USD which is up 15% compared to last year. Gross Margins were stable on 21% compared to 22% last year in Q3 and YTD 20% compared with 22% last year. Focus will be put on the US market to build IT Consulting services together with Proteans services where a lot of potential is seen on some selected niches in the IT consulting The CAMO Tech India team which have had problems to grow to a critical mass will be re-focusing on permanent IT staffing (recruiting services) and to become back office of CAMO Tech USA. We will start with recruitment and business development teams, and later have HR, Payroll and immigration support services. At the end of quarter this group had 135 Employees in USA and 35 employees in India. CAMO Proteans This group provides IT Outsourcing Services to Clients in USA and Europe. Customers are mainly ISV s (Independent Software Vendors) who typically move development of a product to Proteans where team size is normally 10-25 people/customer. Delivery is purely done from India. There are four development centres in India. Proteans is now financially an integrated part of the CAMO Group. Gross Margin was 745 650 USD or 53% in Q3 2007 and 1 595 002 USD or 45% in 2007 YTD, both up over 160% compared to 2006. At the end of quarter this group had 230 Employees in India. 7 new clients were won in Q3 and most existing clients renewed and increased their engagement with Proteans. 51 new highly qualified employees joined Proteans in Q3 2007. Proteans Marketing team and CAMO Tech USA team has started working together to build up practices in some selected technology areas, offering onsite consulting and offshore product development to the same clients. Increasing market focus in the UK and planning launch of OPD services in Scandinavian
CAMO SOFTWARE Division The CAMO Software division is offering state of the art multivariate data analysis (also called Chemometrics) software products and solutions, training and consulting to more than 3000 customers in more than 47 countries. Q3 revenue in the Software division was 560 858 USD which is up 29% compared to 2006. YTD revenue was 1 711 878 USD which is up 27%. The Software division had a slow summer, which is normal and good sales in September. The US and European markets grew almost as planned, but a weak quarter in the Asian region made the Software result lower than expected. The US Software team has added new sales resources, while the European and Asian sales teams are stable. A new product has been released, Quali-Sense, helping analyzing sensory data in for example taste panels. The Unscrambler product is becoming a family of one main product and five add-on/ complementary products in Q1. These products will be the basis of our solutions that will be released during 2008, the first in Q1. A major contract has been won helping implementing multivariate analysis for a large customer in the energy sector worth over 150 kusd. CAMO Software had 40 employees at the end of the quarter, in Oslo, New Jersey and Bangalore. Outlook The CAMO group sees a positive business climate on all the markets it is working on: Outsourcing of product development is becoming more and more popular IT consulting which is normally sensitive to downturns doesn t see any such trends in the USA The pipeline for Software sales is growing steadily worldwide. Therefore the CAMO group expects to continue growing both revenue and profit.
Financial Summary of Q3 2007 and of YTD 2007 (including Proteans pro-forma numbers) Financial summary 3Q 2007 All numbers in USD Q3 2007 Q3 2006 Revenues CAMO Tech 3 573 960 3 059 944 CAMO Software 560 858 436 126 Proteans 1 402 694 701 413 Total Revenue 5 537 512 4 197 483 Cost of goods CAMO Tech 2 806 534 2 379 629 CAMO Software 125 933 67 750 Proteans 657 044 419 714 Total COGS 3 589 511 2 867 094 Gross Margin CAMO Tech 767 426 680 315 CAMO Software 434 924 368 376 Proteans 745 650 281 699 Total Gross Margin 1 948 001 1 330 390 General and administrative costs 1 674 280 1 017 139 EBITDA 273 721 313 251 Financial summary of 2007 YTD after Q3 All numbers in USD YTD 2007 YTD 2006 Revenues CAMO Tech 10 272 568 8 913 591 CAMO Software 1 711 878 1 350 033 Proteans 3 570 174 1 217 749 Total Revenue 15 554 620 11 481 374 Cost of goods CAMO Tech 8 175 181 6 978 158 CAMO Software 340 435 239 854 Proteans 1 975 172 674 834 Total COGS 10 490 788 7 892 847 Gross Margin CAMO Tech 2 097 387 1 935 433 CAMO Software 1 371 443 1 110 179 Proteans 1 595 002 542 915 Total Gross Margin 5 063 832 3 588 527 General and administrative costs 4 167 646 2 790 586 EBITDA 896 186 797 941