Groupworks Announces Strong First Quarter Results

TORONTO, ONTARIO--(Marketwire - Jan. 24, 2011) - Groupworks Financial Corp. (TSX VENTURE:GWC) -

For the first quarter:

Revenue grew by $338,553 compared to prior year Q1 results (7% growth)

EBITDA grew by $334,972 compared to prior year Q1 results (96% growth)

EBITDA Margin before Corporate Costs grew to 25% from 21% (comparative quarters)

EBITDA Per Share (Basic) of $0.02 for the Quarter (vs. $0.01 for the comparative quarter)

Summary Financial Results
	Three Months Ended November 30,
	2011	2010
Revenue	$ 5,234,901	$ 4,896,348
Operating Income Before Corporate Costs	$ 1,326,415	$ 1,035,874
Operating Income (EBITDA)	$ 683,529	$ 348,557
Net Income (Loss)	$ 230,297	$ (18,200)
EBITDA per share (Basic)	$ 0.02	$ 0.01

Groupworks Financial Corp. ("Groupworks" or the "Company") announces strong financial results for the first quarter ended November 30, 2010 which included growth in revenue to $5.2 million for the quarter and EBITDA which grew to $683,529 for the quarter ended November 30, 2010 substantially ahead of last year comparative results. These results illustrate quarterly revenue growth of 7% and quarterly growth in EBITDA of $334,972 or 96.1% for the first quarter on a year-over-year comparative basis.

"In the first quarter, we continued to demonstrate the excellent operating leverage inherent in our business model whereby a significant portion of our revenue growth resulted in a corresponding increase in EBITDA. This revenue growth is demonstrative of our success in expanding our service offerings to existing customers and in winning new business," said Laurie Goldberg, Chairman & CEO of Groupworks. "The introduction of our proprietary Shared Services structure has begun to fuel accelerated growth in the business. New clients and experienced industry professionals continue to choose Groupworks as we add value and differentiate our products and services across Canada."

Financial Results

Revenue for the first quarter ended November 30, 2010 was $5.2 million, up 6.9% from the $4.9 million in the comparative period of fiscal 2010. The increase in revenue for the first quarter ended November 30, 2010 is largely attributable to organic revenue growth which resulted from the addition of new clients from leads generated through the Company's proprietary inside sales system.

Quarterly EBITDA grew by $334,972 as a result of increased revenues and cost management initiatives related to the Company's on-going integration activities and the implementation of its shared services division.

While revenues for the quarter over quarter comparison grew by $338,553, operating costs increased by only $46,012 thereby causing Operating Income before Corporate Costs to increase over the period to $1.3 million compared to $1.0 million for the prior year, representing an increase in operating profits of 28.1%. Accordingly, EBITDA increased by 96.1% to $683,529 for the first quarter of fiscal 2011.

The increase in operating profits and EBITDA is representative of revenue growth in the underlying employee benefits business. Cost reduction efforts within the operations of the Company, shift in allocation of costs from operating entities to the Corporate Cost Center as further integration of services and supplies occurs and minor recoveries in fee revenue from Recruiting and HR Consulting services.

The Company had Net Income for the Quarter of $230,297 compared to a Net Loss of $18,200 in the same period of the prior year which equates to $0.006 and $(0.001) respectively on a basic per share basis.

Cash balances were $913,699 as at November 30, 2010, a decrease of $749,858 since August 31^st, 2010. The reduction in cash was in line with management's expectations and resulted from normal seasonal and cyclical cash impacts along with the repayment of $796,208 in long-term debt over the course of the first quarter.

The Financial Statements and Management Discussion and Analysis for the period ended November 30, 2010, along with additional information about the Company and all of its public filings are available at www.sedar.com and the highlights are summarized below:

Corporate Developments

Groupworks continued its positive momentum during the first quarter ended November 30, 2010 expanding its client base by signing on a number of new national brand and mid-sized clients.

Overall corporate objectives included; (i) shifting expenses from non-revenue generating activities to revenue generating activities with a view of boosting organic growth; (ii) promoting and recruiting leadership to execute our organic growth plans; (iii) building out three key revenue generating functions to enhance growth: Integrated Solutions, Group Retirement Solutions and Business Development with a view to enhance our value proposition for future recruiting, acquisitions and client retention.

Results from the implementation of the above strategic initiatives, momentum from past initiatives and the overall improvement in revenue growth can be seen in the Company's financial performance. Quarterly results are demonstrative of excellent operating leverage whereby increased revenue resulted in increased profitability.

Additional quarterly milestones included; (i) payment of the final balance of the vendor debt associated with the acquisition of Gallivan & Associates; (ii) completion of the HR restructuring resulting from the integration of People and the Company which was achieved at no incremental overhead cost to the Company; (iii) commencement of negotiations with some of our suppliers to leverage better pricing arrangements; (iv) commencement of negotiations with a tenant to sublease certain office space through to the end of the lease in 2015; and (v) rolling out of the Groupworks Shared Services organizational structure with a view to providing added value to our various service groups and operating brands and as a way to further integrate costs.

Annual Meeting

Groupworks will host its Annual Shareholders Meeting which shall include a presentation on its fourth quarter and year-end financial results on Wednesday, February 23, 2011 at 3:00 p.m. Central Time at the Fairmont Hotel, 2 Lombard Place, Winnipeg, Manitoba.

About Groupworks Financial Corp.

Groupworks Financial Corp. is a leading employee benefits and pension consulting firm in Canada. With a growing national footprint and offices across six provinces, Groupworks is bringing together the leading advisors in the industry, offering innovative and customized HR, benefit and pension solutions to its clients. Additional corporate information is available at www.groupworkscorp.com.

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 www.sedar.com). 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 Income before Corporate Costs means EBITDA plus expenses incurred at the corporate office. The difference between EBITDA and Operating Income before Corporate Costs is equal to Corporate 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 Income 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 Income 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.