Groupworks Financial Corp.

Groupworks Financial Corp.

November 24, 2009 18:33 ET

Groupworks Announces Year End and Fourth Quarter Results as Well as Board Changes

TORONTO, ONTARIO--(Marketwire - Nov. 24, 2009) - Groupworks Financial Corp. (TSX VENTURE:GWC) ("Groupworks" or the "Company") announces its financial results for the year and fourth quarter ended August 31, 2009 along with certain changes at the Board of Directors resulting from Corporate Governance Committee recommendations in connection with Groupworks' strategic plan.

Year End and Fourth Quarter Results

Overall financial highlights for the year included revenue of $13.7 million, operating margin of $4.1 million, EBITDA of $1.1 million and net earnings of $462,680. This represented a 98% growth rate in revenue compared to the same period last year. The operating margin grew by 89% to $4.1 million and net income increased to $462,680 for the year ended August 31, 2009 in comparison to $148,982 that was recorded in the prior year, a growth rate of 311%.

Financial highlights for the fourth quarter included three month revenue of $5.2 million and an operating margin in the quarter of $1.9 million. EBITDA equaled $344,588 and net income was $150,340. Each of these metrics represented considerable growth over the same period last year. Revenue grew by 340%, the operating margin grew by 619%, EBITDA grew by 277% and net income, which was a loss in the same period last year, grew substantially by $229,513.

The Company had solid growth in revenue, operating margin and net income for the year and the quarter. While EBITDA for the quarter was $344,588, an increase of $220,603 over the same period last year, EBITDA for the year was $1.1 million; down slightly from $1.2 million the prior year resulting from approximately $1,083,000 in costs associated with two acquisitions, establishment of the Corporate Management Team and overall weakened economic conditions that lead to reduced consulting revenue from contingent projects and fees for recruiting engagements. Notwithstanding difficult economic conditions, the employee benefits business grew and the Company moved to net profitability for both the fourth quarter and for the year.

During the year, the Company paid down $1.5 million of long-term debt which had been used to finance acquisitions. As a result of its activities and acquisitions during the year, the Company's cash balances increased to $2.1 million from $654,732 the prior year providing additional cash to manage the affairs of the Company and strengthen Groupworks' financial position.

"Groupworks is experiencing solid growth and is on it way to delivering nationwide value-added advice and products to our clients and their employees. We have brought together a team with a demonstrated track record, reputation and expertise and are determined to build the best HR, employee benefits and pension consulting firm in Canada," said Laurie Goldberg, CEO. "Last year was highlighted by the closing of $14 million of acquired revenue, the formation of a highly experienced Corporate Management Team, a focus on organic growth, development of an acquisition funnel and successfully securing additional debt financing. We are looking forward to continued growth and believe that the growth and momentum of last year is indicative of our future results as we scale up."

The Company's detailed financial statements and accompanying Management Discussion and Analysis are available on

Corporate Board Changes

In connection with the Company's strategic planning process, the Corporate Governance Committee has recommended and the Board of Directors has approved the following board changes:

Laurie Goldberg, currently CEO of Groupworks, is taking on the additional responsibility as Chairman of the Board of Directors and Sean Cleary, Executive Chairman of Groupworks, is stepping off the board and taking on a full time role as Vice President, Corporate Development with a mandate to develop and execute corporate acquisitions and the strategic and capital markets plans of the Company. John Gallivan, President, is stepping off the board and will continue in his role as President of Groupworks and of Gallivan & Associates (a division of Groupworks), a role in which he will drive growth within the association business across the Groupworks organization. Michael Thomas, Senior Benefits Advisor, is also stepping off the board and continues in his leadership position at The Investment Guild (a division of Groupworks) as Senior Benefits Advisor. This change takes effect immediately.

The Board of Directors, with the exception of the Chairman & CEO, is now composed of only independent directors. The independent members of the board are: Scott Anderson, Gery Barry, Mark Monaghan and Robert Sillcox.

These changes have been made to take the Company to a higher level of compliance with corporate governance best practices and are a step toward the Company's plan to seek listing on more senior stock exchanges so as to enhance the value and liquidity of the Company's common shares and returns for its shareholders.

A brief descriptive biography of each member of the Board of Directors and the Corporate Management Team is as follows:

Mr. Laurie Goldberg, Chairman & Chief Executive Officer. Since 2005, until its merger with Groupworks in 2009, he was President & CEO of People Corporation. Prior to that he held the position of Office of the President and Chief Operating Officer of Assante Corporation from 1998 to 2003 and prior thereto was a Managing Partner with Arthur Andersen (now Deloitte in Canada). Mr. Goldberg has served on a number of non-profit, private and public company boards. Mr. Goldberg graduated with a Bachelor of Commerce (Honours) Degree from the University of Manitoba and is a Chartered Accountant.

Mr. Gery Barry is President & CEO of Barry-Global Strategic Services, a firm offering expertise in health insurance and health care quality management. He most recently served as Chief Strategy Officer of Aetna, Inc. (NYSE: AET) a leading U.S. based provider of health care, dental, pharmacy, group life, and disability insurance, and employee benefits. Prior to Aetna, Mr. Barry was President and Chief Executive Officer of Blue Cross and Blue Shield of Louisiana. Prior thereto, Mr. Barry was President and Chief Executive Officer of Liberty Health (formerly Ontario Blue Cross). Mr. Barry currently serves on the Louisiana HealthCare Quality Forum Board of Directors, chairing the Quality Measurement Committee; and is a member of the Board of Trustees of CML Healthcare Inc. (TSX: CLC.UN). Mr. Barry holds a Bachelor of Science (Honors Mathematics) from the University of Notre Dame, and a Masters Degree (Applied Mathematics) from Rutgers University. He is a Fellow of the Society of Actuaries and a member of the American Academy of Actuaries.

Mr. Scott Anderson is the principal of The Catalyst Company since 1998, a management and consulting business that facilitates the financing and success of Canadian emerging growth companies. Mr. Anderson has extensive board experience on both public and private boards. Mr. Anderson was formerly President and COO of Rider Travel Group, an industry leader specializing in corporate travel services. He joined Rider Travel in 1987 as the CFO having held a similar position at Vickers & Benson Advertising. Prior to that, Mr. Anderson was an auditor at Arthur Anderson in Toronto. Mr. Anderson holds a B. Comm. from the University of Toronto and is a Chartered Accountant.

Mr. Mark Monaghan is an independent board member and business consultant with significant capital markets and business development experience in Canada and internationally. He is the former President of Quest Securities Corporation., a wholly owned subsidiary of Quest Capital Corp., merchant banking firm, where his primary responsibilities concern equity transaction origination and execution. Mr. Monaghan has many years of investment banking and corporate development experience with Canadian investment banking firms and public companies. Mr. Monaghan holds a B.A. in economics from Queen's University and a B.Comm. from the University of Windsor.

Mr. Robert Sillcox is widely recognized as the former Senior Vice President and Chief Investment Officer of OMERS, Mr. Sillcox has significant investment experience gained from both the buy/sell and management areas of the investment, banking, insurance and pension industries. Mr. Sillcox has also served as Chairman of both the Pension Investment Association of Canada (PIAC) and the Pension Investment Committee (Canada) of the Financial Executives International (FEI), as a member of the President's Investment Advisory Committee of the University of Toronto, and as a member of the Advisory Committee of State Street Global Advisors Canada. He currently sits as an independent Board Member of Glenmount International and HelpCaster Technologies and is a Trustee of Ridley College (St. Catherines, ON). Mr. Sillcox is a graduate of Williams College (BA), Williamstown, Massachusetts.

Corporate Management Team

Mr. Brevan Canning, Vice President Finance. Until this recent appointment, he has served as Vice President Finance of People Corporation. Before People Corporation, Mr. Canning held Corporate Development roles at both CanWest Global Communications and, prior to that, at Band-X Ltd., both of which provided him significant international accounting experience. Mr. Canning is a graduate of the University of Cape Town with a Bachelor of Business Science degree and a graduate from Oxford Brookes University with a Bachelor of Science Degree and is Certified General Accountant.

Ms. Bonnie Chwartacki, Executive Vice President. Until this recent appointment, she was Vice President of People Corporation. Prior to that, Ms. Chwartacki was a Partner with Connor, Clark & Lunn, Capital Markets Inc. In addition, she held a senior sales leadership position with AIC Ltd. as Vice President of Sales, Western Canada, and was Regional Sales Manager for both Great West Life and UNUM Canada (now RBC Insurance). Ms. Chwartacki has served on the Executive Board for the Life Underwriters Association for both the Winnipeg and Calgary Chapters and holds a Bachelor of Commerce (Honours) Degree from the University of Manitoba.

Mr. Sean Cleary, Vice President, Corporate Development. Mr. Cleary has held a number of senior executive, finance and corporate development roles including, Managing Director of Rathlin Capital, Senior Vice-President of Quest Securities (now Quest Capital), Chief Financial Officer of Caratax, a public flow-through share fund and President of PanGeo Pharma (now Pendopharm). Mr. Cleary also has significant corporate finance experience with Deacon Capital (now Dundee Securities) and JP Colin Securities. Mr. Sean Cleary holds an MBA degree from the Richard Ivey School of Business and a Bachelor of Arts (History) from the University of Western Ontario.

Mr. John Gallivan, President. Prior to joining the executive team at Groupworks, Mr. Gallivan served as President of Gallivan & Associates, a wholly-owned subsidiary of Groupworks Financial Corp. During his 25 years in the industry he has practiced in both the estate planning and employee benefit areas and is a Life member of Million Dollar Roundtable. For the past 12 years he has pioneered a number of buying group strategies to provide health and dental benefits for post-secondary students at universities, colleges and technical institutes across Canada.

Mr. Laurie Goldberg, Chairman & Chief Executive Officer. Since 2005, until its merger with Groupworks in 2009, he was President & CEO of People Corporation. Prior to that he held the position of Office of the President and Chief Operating Officer of Assante Corporation from 1998 to 2003 and prior thereto was a Managing Partner with Arthur Andersen (now Deloitte in Canada). Mr. Goldberg has served on a number of non-profit, private and public company boards. Mr. Goldberg graduated with a Bachelor of Commerce (Honours) Degree from the University of Manitoba and is a Chartered Accountant.

About Groupworks Financial Corp.

Groupworks Financial Corp. is a leading employee benefits and pension consulting firm in Canada. With a growing national footprint of ten offices in six provinces, Groupworks is bringing together the leading advisors in the industry, offering innovative and customized HR, benefit and pension solutions to its clients.

Forward-Looking Information

This news release contains "forward-looking information" within the meaning of applicable securities laws, such as information concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Use of words such as "may", "will", "expect", "believe", or other words of similar effect may indicate forward-looking information including the completion of the transaction, the impact of that transaction on our earnings and cash flow, and the anticipated benefits of the transaction. This information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in our publicly filed documents (which are available on SEDAR at Those risks and uncertainties include: our ability to maintain profitability and manage growth; strong competition from other advisors and changes in the current legislation could result in significant competition from the banking industry; failure of information systems and technology; dependence on key clients; seasonality of revenues and the resulting possible impairment on working capital; reliance on key professionals; additional financing may be required and may not be available under terms favourable to us; there can be no assurance that any suitable future acquisition will be available to us or that, if available, the terms of the acquisition will be favourable to us; and a change in general economic conditions. Many of these risks and uncertainties can affect our actual results and could cause our actual results to differ materially from those expressed or implied in any forward-looking information made by us or on our behalf. Given these risks and uncertainties, investors should not place undue reliance on forward looking information as a prediction of actual results. All forward-looking information in this news release is qualified by these cautionary statements. This information is made as of the date of this news release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward looking information, whether as a result of new information, future events or otherwise. Additionally, we undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its financial or operating results or its securities.

Non GAAP Financial Measures

EBITDA, which is defined as earnings (loss) before interest, taxes, dividends, depreciation and amortization, is not a financial measure recognized by Canadian generally accepted accounting principles ("GAAP") and does not have a standardized meaning prescribed by GAAP. Operating margin means EBITDA plus expenses incurred at the corporate head office. The difference between EBITDA and operating margin are Head Office costs which include expenses related to acquisitions. Analysis of these differences enables understanding of the operating leverage inherent in the financial results of an acquisitive company. Operating leverage is a term used to describe the quantum of acquired EBITDA that falls to EBITDA of a company following an acquisition and is useful to the understanding of the resulting incremental overheads and synergies. The Company believes that these Non-GAAP financial measures provide meaningful information on the Company's performance and operating results. Readers are cautioned that EBITDA or the Company's calculation of the operating margin do not have standardized meanings as prescribed by GAAP and may not be comparable to similar measures presented by other companies. Further, readers are cautioned that EBITDA or operating margin should not replace Net income or loss or cash flows from operating, investing and financing activities (as determined in accordance with GAAP), as an indicator of the Company's performance.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

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