Omnitech Consultant Group inc.
TSX VENTURE : GCO

Omnitech Consultant Group inc.

November 08, 2005 17:14 ET

GCO Announces its Results for First Quarter 2006

QUEBEC CITY, QUEBEC--(CCNMatthews - Nov. 8, 2005) - Omnitech Consultant Group Inc. ("GCO") (TSX VENTURE:GCO) today announced sales of $4,864,028 for the first quarter ended August 31, 2005, compared to sales of $1,553,112 for the first quarter of 2005.

The gross profit margin increased to 79%, or $3,839,550 compared to 53% or $822,498 in the first quarter of the previous year. This increase is due to higher growth in sales of services compared to growth in sales of equipment. Going forward, GCO intends to continue to focus on the sale of higher margin services.

During the first quarter, GCO completed the acquisition of the following companies:

Concerpro Inc.

This company is renowned for its analysis and strategic orientation activities, as well as for change management involving workers in medium-sized and large companies. During the past 15 years, Concerpro has accomplished numerous strategic interventions in industrial sectors.

Winpunch/Micro-Solution

These companies capitalize on their experience and their numerous achievements in the field of custom application development, technology integration, technical assistance and implementation of high-level equipment in order to offer their clients production-time management solutions.

The net loss in the first quarter of 2006 was $577,579 compared to a net profit of $89,721 for the corresponding period in 2005. Included in the results for this quarter is amortization of new intangible assets of $419,528.

In order to accelerate its return to profitability, in mid-September GCO embarked on an operating expense reduction plan. The operating expense reduction plan is expected to result in annual savings of approximately $2,500,000. The cost reduction program is based on the following initiatives:

Reduction in Professional Fees

In order to reduce its legal fees, the company has hired internal legal counsel and has also undertaken steps toward hiring a new Chief Financial Officer, who is expected to be named within the next few weeks. During the past 12 months, the company paid more than $720,000 in legal fees and more than $550,000 in accounting fees. The company estimates that the hiring of internal legal counsel and the appointment of a new Chief Financial Officer should result in savings of approximately $550,000. Expenses relating to other types of consultants have also been eliminated, which should allow GCO to save $290,000.

Business Unit Restructuring

The company has proceeded with a restructuring of its business units and its administrative department. The "technological evolution" business unit has concluded an agreement with a strategic partner for the sale of information technology hardware. The "human capital" business unit has delayed the development on a new platform of its HR software. The "logistic chain" business unit has ceased development of its ERP-Olympic software and is now marketing a new ERP-Phoenix. The savings generated by the restructuring of the "logistic chain" business unit are estimated at more than $175,000.

Office Consolidation

The company has also regrouped its offices in 3 regions, Montreal, Quebec City and Saguenay, and expects to save more than $65,000 on rent per year.

Salary Concessions

The Company has been able to secure salary concessions from management and employees that should result in total savings of almost $ 500,000 annually.

"We are proud of the growth in sales of services, which led to a significant improvement in gross margin and proves that our business strategy is working, despite the summer period which has historically always triggered weaker performance than the other quarters of the year. During this first quarter, we implemented several corrective measures in order to quickly return to profitability. We have also proceeded with the evaluation of all of our business units in order to maximize their yield," says Claude Belley, President and Chief Executive Officer of GCO.



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3-month periods
ended
August 31
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2005 2004
(unaudited) (unaudited)
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REVENUES $4,864,028 $1,553,112

COST OF PRODUCTS
AND SERVICES 1,024,478 730,614
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GROSS PROFIT 3,839,550 822,498
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OPERATING EXPENSES

Sales and administrative expenses 3,937,296 655,512
Research and development expenses - net
of investment tax credits 207,910 32,083
Financing expenses 64,237 51,638
Amortization 419,528 27,773
Other revenues
Gain on disposal of assets - (68,027)
Satellite company share of net profit 10,519 -
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4,639,490 698,979
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PROFIT (LOSS) BEFORE TAXES
ON PROFITS (799,940) 123,519

Taxes on profits (222,361) 33,798
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NET PROFIT (LOSS) ($577,579) $89,721
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Net profit (loss) per share basic
and diluted (Note 6)
Basic (52,352,858 shares weighted average) (0.01) 0.01
Diluted (53,566,274 shares weighted average) (0.01) 0.01


About Omnitech Consultant Group Inc. ("GCO")

GCO operates in the engineering, information technology and systems maintenance sectors. GCO is capable of intervening in all aspects of industrial engineering and information technology (IT), thus combining a major and distinctive niche in comparison with the competition. GCO integrates new technologies or optimizes existing systems by applying cutting-edge expertise currently used in the best practices of small and medium-sized businesses, including the expertise of large corporations.

TSX Venture Exchange Inc. assumes no responsibility regarding the relevance or accuracy of this press release.

Contact Information

  • Omnitech Consultant Group Inc.
    Claude Belley
    President
    (418) 626-9090
    or
    Omnitech Consultant Group Inc.
    Philippe R. Bertrand
    Vice President, Communications and Public Affairs
    (418) 626-9090
    philippe.bertrand@gco.ca
    or
    Paradox Public Relations
    Eric Leboeuf
    President
    (514) 341-0408