CVTech Group Inc. publishes its 2006 annual financial results and its 2006 4th quarter results



    DRUMMONDVILLE, QC, March 29 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or
"the Company") (TSX: CVT), taking advantage of the positive impact of its
diversification and acquisition strategy, realized consolidated revenues of
$93,595,749 for the year ended December 31, 2006, compared to $23,431,707 in
2005, an increase of $70,164,042 or 300% compared to the previous period. The
Company has generated net earnings of $941,459 compared to a net loss of
$1,116,084 last year. Earnings before interest, taxes, depreciation and
amortization (EBITDA) amounted to $7,841,821 compared to $619,974 recorded a
year ago.
    The financial results for the fourth quarter ended December 31, 2006,
posted revenues of $32,353,601 compared to $6,874,518 in 2005, an increase of
370%. The net earnings for the last quarter totalled $472,744 compared to a
net loss of $296,378 in 2005.

    
    2006 Highlights

    - Acquisition of Thiro in December 2005 and AAB in September 2006 have
      significant contribution in:

      - The 300% increase of revenues
      - The 1165% increase in EBITDA

    - Signature of two (2) contracts totalling $21,000,000 of revenues for
      the installation of posts and anchors;

    - Signature of a $35,000,000 revenues contract for the GLR-Thiro s.e.n.c.
      consortium to construct a line of rigid steel pylons;

    - A $9,000,000 investment in the company by the Fonds de Solidarité des
      Travailleurs du Québec.

    OVERALL PERFORMANCE

    Since the transaction related to the acquisition of Thiro occurred on
December 28, 2005, the operating results of Thiro were consolidated as of
January 1, 2006. Therefore, the company's revenues and earnings for the year
ended December 31, 2006 increased considerably compared to the previous
period.
    The revenues for the year ended December 31, 2006 amounted $93,595,749
with earnings before income taxes of $2,120,084 compared with revenues of
$23,431,707 and a loss before income taxes of $1,271,197 for the same period
in 2005.

    RESULTS OF OPERATIONS

    Below is a summary of some of the Company's financial information items.

    Statements of earning
                                                      Year Ended December 31
    -------------------------------------------------------------------------
                                                           2006         2005
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                              $            $
    Revenues                                         93,595,749   23,431,707

    EBITDA                                            7,841,821      619,974

    Net earnings (net loss)                             941,459   (1,116,084)

    Basic and diluted net earnings (net loss),
     per Share                                             0.02        (0.03)

    Basic weighted average number of
     shares outstanding                              49,832,989   36,774,375

    Diluted weighted average number of
     shares outstanding                              52,004,447   36,774,375

    Shares outstanding as of December 31             50,681,927   48,724,907

    Shares to be issued                                       -      675,675
    -------------------------------------------------------------------------

    EBITDA

    Earnings before interest, taxes, depreciation and amortization (EBITDA) is
a measure that has no standardized meaning prescribed by Canadian generally
accepted accounting principles and is considered to be a non-GAAP measure.
Therefore, the measure may not be comparable to similar measures presented by
other issuers. This measure is described and presented in order to provide
additional information regarding the company's liquidity and ability to
generate funds to finance its operations.
    For the year ended December 31, 2006, the EBITDA amounted to $7,841,821
(8.4% of revenues) compared to $619,974 (2.6% of revenues) for the year ended
December 31, 2005.

    Reconciliation of the EBITDA to earnings (loss) before income taxes

                                                     Years Ended December 31
    -------------------------------------------------------------------------
                                                           2006         2005
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                              $            $
    EBITDA                                            7,841,821      619,974

    Depreciation and amortization                     4,166,180    1,328,099

    Financial expenses                                1,555,557      563,072
    -------------------------------------------------------------------------

    Earnings (loss) before income taxes               2,120,084   (1,271,197)
    -------------------------------------------------------------------------


    Balance Sheet Data

                                                           As at December 31
    -------------------------------------------------------------------------
                                                           2006         2005
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                              $            $
    Cash                                              1,500,943    1,686,462

    Total Assets                                     71,260,355   50,245,302

    Bank Loans                                        6,332,034    2,788,000

    Long-Term Liabilities                            23,195,069   15,571,716

    Shareholders' Equity                             23,080,954   20,708,129
    -------------------------------------------------------------------------

    Comparison between fiscal year ended December 31, 2006
    and fiscal year ended December 31, 2005

    Revenues

    The 300% increase in revenues in 2006 is attributed to the acquisition of
Thiro and AAB. For the year ended December 31, 2006 the Company shows revenues
of $93,595,749, which represents an increase of $70,164,042 over the previous
year.
    The table below shows revenues by sector of activity.

                     Fiscal years ended as at December 31
    -------------------------------------------------------------------------
                            2006                2005               Change
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                         $       %           $       %           $        %
    CVT and
     related
     products   21,134,438   22.6%  23,431,707  100.0%  (2,297,269)    -9.8%
    Electrical  72,461,311   77.4%           -      -   72,461,311        -
    -------------------------------------------------------------------------
    Total       93,595,749  100.0%  23,431,707  100.0%  70,164,042    299.4%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The decrease in revenues in the CVT and related products sector for the
year ended December 31, 2006, is mainly attributable to the loss of orders
from Bombardier Recreational Products Inc., which offset the following: Our
penetration into the utility vehicle market, increased revenues in the all
terrain vehicle market and sales for CVTech AAB, acquired in September 2006.
The utility vehicle and all terrain market caused our revenues in the US to
rise to nearly 150% as opposed to the previous fiscal year. Approximately 75%
of revenues for the CVT and related products sector are denominated in foreign
currencies; consequently, the Canadian dollar's rise had a negative impact on
the results of operations for the year ended December 31, 2006.
    Revenues in the electrical sector are cyclical and depend mainly on
planning by its main customers. As well, the natural disasters that normally
occur from August to November of each year may positively impact revenues for
the last two quarters. The financial statements for the year ended December
31, 2006, include approximately $6,500,000 in revenues from natural disasters
compared to approximately $17,400,000 the previous year. Despite the low
percentage of revenues from natural disasters in 2006, revenues increased
approximately 22% compared to the previous year. This increase in revenues is
mainly the result of posts installation and power transport contracts carried
out in 2006. Revenues from posts installation for the year ended December 31,
2006, represent approximately $7,600,000 compared to revenues of approximately
$260,000 posted for the previous year.

    Selected Quarterly Financial Information

    The quarterly financial information is derived from the unaudited
financial statements of CVTech.

    -------------------------------------------------------------------------
    Year Ended            1st quarter  2nd quarter  3rd quarter  4th quarter
    December 31, 2006               $            $            $            $
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenues               17,303,454   21,712,669   22,226,025   32,353,601
    -------------------------------------------------------------------------
    Earnings (loss)
     before income taxes      563,786       (2,444)     418,675    1,140,067
    -------------------------------------------------------------------------
    Net earnings
     (net loss)               314,291      (46,975)     201,399      472,744
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Year Ended            1st quarter  2nd quarter  3rd quarter  4th quarter
    December 31, 2005               $            $            $            $
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenues                4,120,382    5,181,579    7,255,228    6,874,518
    -------------------------------------------------------------------------
    Earnings (loss)
     before income taxes     (385,489)    (560,536)      26,895     (352,067)
    -------------------------------------------------------------------------
    Net earnings (loss)      (283,389)    (547,389)      11,072     (296,378)
    -------------------------------------------------------------------------

    Fourth Quarter of 2006

    The Company shows net earnings of $472,744 for the fourth quarter of 2006
compared to a net loss of $296,378 for the fourth quarter of 2005. Thiro's
contribution to the net earnings for the fourth quarter of 2006 is
approximately $475,063. The CVT sector posted a net loss of $2,319 for the
fourth quarter of 2006 compared to a net loss of $296,378 for the
corresponding quarter in 2005. The positive change is explained mainly by the
contribution of CVTech-AAB, acquired in September 2006.

    Strategic objectives for Fiscal 2007

    We should see no major changes in 2007. Essentially, the Company will keep
its same game plan and try to build on recent acquisitions. The main items on
the Company's program are:

    - Maximize profitability

      Thanks to our expertise, CVTech will continue to focus on innovation to
      offset the strong Canadian dollar and continue to recruit new
      customers, especially in the US, as we did in 2006, both in the CVT
      sector and the electrical sector.

      The Company is also active in Asia where it recruits customers since
      its subsidiary CVTech Castmaster India PVT. Ltd. will begin operations
      around the end of March 2008. Its improvement programs will also
      continue.

    - Product Development

      R&D will continue to be what sets CVTech apart from its competitors and
      its tool of choice to recruit new customers. As such, by year-end, the
      Company should be able to introduce its new generation of
      electronically managed CVTs. Both for CVT and the markets it services,
      this new electronic CVT will be an improvement and a major step forward
      compared to existing products in terms of consumption, performance and
      driving pleasure. It can be used in cars and in high-power recreational
      or utility vehicle.

    - Expand its range of services and/or its geographical scope

      - CVT Sector

        In addition to continuing its penetration of the US market and
        finalizing its implementation in India on the manufacturing and
        commercial fronts, this sector is presently looking into the
        possibility of providing other components to its customers, for
        example gear boxes. This would allow the Company to strengthen its
        commercial ties with its customers and also give it the possibility
        of providing products with improved performance since CVTech would be
        in charge of and have more control over the entire product. The
        Company could make acquisitions along these lines in the short or
        medium term.

        Within a few months, the Company should be able to introduce its
        development plan in the manufacturing crankshaft and cylinder sector,
        which was AAB's main sector. This plan will show how the development
        of these products and of its distribution network will be done in
        America and Europe, and possibly in Asia.

      - Electrical Sector

        No change in this sector as opposed to last year. The strategy here
        is to expand existing services in an effort to increase CVTech's
        presence in various types of projects. As a result, the Company will
        target and analyze potential acquisitions in Canada and the US,
        acquisitions that will give it the resources and the expertise needed
        to service these markets in the near future.
    

    OVERVIEW OF SOCIETY

    CVTech is a management company with the following wholly-owned
subsidiaries: CVTech-IBC inc., CVTech R&D inc., CVTech-AB inc. (previously
CVTech Distribution inc.) and Thiro Ltd. ("Thiro"). The Company also holds 74%
of the Indian company CVTech Castmaster India PVT Ltd. CVTech owns the land
and buildings in which it operates.
    CVTech-IBC inc. manufactures continuously variable transmissions ("CVT")
for major manufacturers of recreational and utility vehicles, as well as
mini-cars. CVTech-IBC inc. also has a subsidiary in France from which it
services its European clientele. CVTech R&D inc. designs CVT systems for the
CVTech-IBC inc. customers. It main source of income comes from royalties paid
by CVTech-IBC inc. on the sale of products developed by CVTech R&D inc.
    On October 17, 2006, CVTech Distribution inc. changed its name to
CVTech-AAB inc., and on December 31, 2006, Atelier Adrien Bernard inc.
("AAB"), acquired in September 2006, placed all its assets in CVTech-AAB inc.
In addition to selling CVT (and/or parts) for the secondary market, CVTech
AAB inc. specializes in the remanufacturing of crankshaft, cylinder and
industrial engines, plating cylinder and the sales of motor parts. CVTech-AAB
inc. is part of the CVT sector and therefore appears in the transmission and
related product sector in the Financial Statements under the Note on Segment
Information.
    Thiro is a general contracting firm specializing in the construction and
maintenance of electrical power houses and substations as well as transmission
and distribution lines. J.J.L. Déboisement provides vegetation control
services on rights-of-way for electrical transmission and distribution lines.
inc. Thiro USA mainly carries out the above-listed Thiro activities, namely
the construction and maintenance of electrical transmission and distribution
lines.

    FORWARDING LOOKING STATEMENTS

    This document may include forward looking statements that reflect the
current expectations of the Company's Management as regards future events.
These forward looking statements are based on a number of factors and carry
risks and uncertainties. Actual results may be different from what was
expected. Management does not assume any responsibility for updating or
revising these forward looking statements if/when new information is available
or future events happen.
    For more information on CVTech, please consult the SEDAR database: 
www.sedar.com and the Corporate Web site: www.groupecvtech.com.




For further information:

For further information: André Laramée, MBA, President and CEO, CVTech
Group Inc., (819) 477-3232; Mario Trahan, CMA, Chief Financial Officer, CVTech
Group Inc., (819) 477-3232

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