Omnitech Consultant Group inc.
TSX VENTURE : GCO

Omnitech Consultant Group inc.

July 31, 2006 11:18 ET

GCO Announces its Results for the Fourth Quarter of 2006

QUEBEC CITY, QUEBEC--(CCNMatthews - July 31, 2006) - Following the recent announcement of the change of its financial year end from May 31 to August 31, Omnitech Consultant Group Inc. ("GCO") (TSX VENTURE:GCO) announces sales of $7,314,374 for the fourth quarter ended May 31, 2006, compared to sales of $5,276,990 for the same quarter of last year. This 39% growth in revenue is due to the acquisition of Groupe Cadec Inc. The gross profit margin of 73% or $5,360,510, is similar to last year's fourth quarter.

The net loss of the fourth quarter of 2006, which includes amortization and depreciation of intangible assets of $329,460 and one-time items of $4,027,526, amounts to $(4,346,065). The one-time charge includes asset write-offs for a value of $3,295,580 and reorganization fees of $731,946. The EBITDA before abandoned activities is $249,304, or 3.4% of operating revenues for the quarter, compared to (8.65) % for the same period of 2005.

Write-offs and reorganization

GCO has a history of very fast growth through acquisitions. The revenues of the company went from $3 millions in May 31, 2004 to $22 millions in May 31, 2006. GCO's management team considered that is was time to undertake a strategic appraisal of the last twelve months and prepare the company's next growth phase. As the result of this strategic appraisal, GCO will focus on high value added activities, which constitute GCO's core competence and competitive advantage, and implement extensive operational cost control measures, including personnel reduction and the discontinuation of less profitable activities. The Board of Directors and Mr. Claude Belley, GCO's CEO, asked from Mr. Philippe Collard, GCO's Chairman of the Board, to actively participate, until the end of 2006, in the definition and implementation of this reorganization plan.

During a meeting held on July 7(th), 2006, the Board of Directors of GCO decided to focus the company's activities on business optimization services, which constitute its core competence and present the highest level of profitability for the company. Consequently, activities not directly related to business optimization, including many of the acquisitions closed before GCO's listing on the markets, were written-off.

GCO will now regroup its activities under two divisions:



a. The Business Process Optimization (BPO) unit that focuses on
process reorganization to increase clients' value-added and
includes the activities of Toptech and Systrax.

b. The Process Controls and Optimization (PCO) unit whose business is
to integrate equipment, software and networks in order to control
them, optimize them, track their performance and transform
operational information into business intelligence and includes
the activities of Groupe Cadec and Isac.


The activities of the Supply Chain Optimization business unit have been incorporated in BPO. The Technological and Network Evolution business unit will soon be sold considering that an IT systems integration business requires the maintenance of inventory and is not a high value-added activity for GCO.

"During the last year, GCO has transformed itself. It was necessary for the Company to take a pause in order to stabilize its operations and undertake a strategic appraisal of its positioning. Within the next few months, a stronger, better prepared for its next growth phase GCO will emerge. The members of the Board and myself are satisfied with the actions that have been undertaken and are confident about the Company's future", declared Mr. Philippe Collard, GCO's Chairman of the Board.

Cost control measures

Considering GCO's fast pace of acquisition, especially during the past year, the company analysed its cost structure and decided, during its budgeting process, to implement operating cost reduction measures which include employee lay-offs during the summer time, a period of historically low level lf business.

In the course of the next six months, GCO will focus its efforts in reinforcing its operational structure, its short-term profitability and its financing strategy. No new acquisition is planned for the rest of year 2006. GCO becomes a general contractor in the delivery of performance to its clients able to find and implement the tools best adapted to meet their needs.

"The management team undertook important reorganization and strategic planning. The cost control measures, divestures and write-offs were necessary to allow GCO to become profitable again. We will now focus our efforts on two divisions where profit margins are the greatest", indicated Mr. Claude Belley, GCO's Chief Executive Officer.

About Omnitech Consultant Group Inc. ("GCO")

GCO is a Canadian leader in performance engineering. GCO offers solutions as a one-stop-shop in engineering, information technology and systems maintenance. GCO is capable of intervening in all aspects of industrial engineering and information technology, thus combining a major and distinctive niche compared with the competition. GCO integrates new technologies or optimizes existing systems by applying cutting-edge expertise currently used in the best practices.



OMNITECH CONSULTANT GROUP INC.
Consolidated Income Statement

------------------------------------------------------
------------------------------------------------------
Three-month periods Twelve-month periods
ended ended
May 31 May 31
------------------------------------------------------
------------------------------------------------------
2006 2005 2006 2005
(unaudited) (unaudited) (unaudited) (audited)
---------------------------------------------------------------------
---------------------------------------------------------------------
PRODUCTS AND
SERVICES $7,314,374 $5,276,990 $22,151,291 $12,077,384

COST OF
PRODUCTS
AND SERVICES 1,953,864 1,437,304 4,240,236 3,572,681
---------------------------------------------------------------------
---------------------------------------------------------------------
GROSS PROFIT 5,360,510 3,839,686 17,911,055 8,504,703
---------------------------------------------------------------------
---------------------------------------------------------------------

OPERATING COSTS

Sales and
administration
expenses 3,953,158 4,161,464 15,272,571 7,880,564
Research and
Development
expenses - net
of tax credits 1,174,664 572,312 1,736,664 661,756
Financing
expenses 365,613 50,823 909,627 205,852
Amortization
and
depreciation 329,460 450,108 1,472,554 609,943
Other revenues
Gain on
disposal
of assets - (27,100) - (95,216)
Share of net
income from an
entity subject
to significant
influence (16,616) (13,829) (8,173) (13,829)
---------------------------------------------------------------------
---------------------------------------------------------------------
5,806,279 5,193,778 19,383,243 9,249,070
---------------------------------------------------------------------
---------------------------------------------------------------------

(LOSS) INCOME
BEFORE
INCOME TAXES (445,769) (1,354,092) (1,472,188) (744,367)

Income Taxes (127,230) (396,420) (420,786) (207,052)
---------------------------------------------------------------------
---------------------------------------------------------------------

LOSS BEFORE
ABANDONNED
ACTIVITIES (318,539) (957,672) (1,051,402) (537,315)

ABANDONNED
ACTIVITIES
Loss on assets
writen-off
(note 8) 3,295,580 - 3,295,580 -
Reorganization
costs (note 8) 731,946 - 731,946 -
---------------------------------------------------------------------
---------------------------------------------------------------------
4,027,526 - 4,027,526 -

(NET LOSS) NET
INCOME $(4,346,065) $(957,672) $(5,078,928) $(537,315)
---------------------------------------------------------------------

(Net Loss) Net
income per
share
(note 6)
Basic
(57,779,375
shares -
weighted
average) (0.080) (0.030) (0.090) (0.010)
Diluted
(58,992,791
shares
- weighted
average) (0.080) (0.030) (0.090) (0.010)



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Contact Information

  • Omnitech Consultant Group
    Claude Belley, Chief Executive Officer
    (514) 378-7445
    or
    Omnitech Consultant Group
    Philippe R. Bertrand, Vice President
    (514) 378-7445
    philippe.bertrand@gco.ca
    www.gco.ca