BRANCHEZ-VOUS! discloses its financial results for the third quarter of 2006
Montréal, October 30, 2006 -- BRANCHEZ-VOUS! inc. (TSX Venture Exchange : BZV) disclosed its interim financial results for the third quarter of 2006, ended September 30, 2006. Compared to the quarter ended September 30, 2005, revenues increased by 16 % and gross profit decreased by 8 %. The corporation registered a net loss of $97,178 for the quarter - mostly due to non cash expenses. Still, cash flows from operating activities remained positive at $23,004.For the nine months period ended September 30, 2006, BRANCHEZ-VOUS! registered net earnings of $ 67,132 and positive cash flows from operating activities of $ 148,556.
Table summarizing the main financial results
| Quarter ended Sept. 30, 2006 (“Q3 2006”) | Quarter ended Sept. 30, 2005 (“Q3 2005”) | Nine months ended Sept. 30, 2006 | Nine months ended Sept. 30, 2005 | |
| Revenues | $ 697,664 | $ 600,919 | $ 2,401,441 | $ 1,766,500 |
| Gross profit | $ 363,194 | $ 396,479 | $ 1,436,046 | $ 1,191,537 |
| Net earnings (net loss) | ($ 97,178) | $ 100,370 | $ 67,132 | $ 383,204 |
| Basic and diluted earnings (loss) per share | ($ 0.00) | $ 0.01 | $ 0.00 | $ 0.01 |
| Cash flows from operating activities | $ 23 004 | $ 56 417 | $ 148 556 | $ 242 387 |
The increase in sales and gross profit is due to the sustained growth of the "display ad" and "rich media" segments of the Internet advertising market.
The decrease in gross profit is due to an increase in cost of sales. Cost of sales corresponds to royalties paid by BRANCHEZ-VOUS! to publishers of the sites it represents. Over the long term, cost of sales tends to increase as a proportion of sales. In Q3 2006, cost of sales increased to 48% of revenues, compared to 34% in Q3 2005 and 39% in Q2 2006. In the foreseeable future, management expects cost of sales to remain high, but not to increase, as a percentage of revenues, at as rapid a pace as in the past few quarters.
The net loss of the third quarter 2006 is mainly due to $ 63,681 in non cash expenses and provisions for non cash expenses related to stock-based compensation for management, directors and an IR consultant. The decline in net earnings for Q3 2006 compared to Q3 2005, and the decrease in net earnings over the first nine months of 2006 compared to the same period of 2005, are mostly due to the decrease in gross profit and to an increase in other operating expenses - including salaries, marketing and content development expenses.
"Competition has intensified in the Quebec marketplace over the past few months and it puts pressure on our bottom line", says Patrick Pierra, CEO of BRANCHEZ-VOUS!. "Still, sales growth is robust and a significant part of our additional expenses are in non cash expenses. While such non cash expenses will continue to constrain our profit potential over the next quarters, the positive cash flow seen this quarter should continue in the future quarters and we expect to come back to positive net earnings no later than the second quarter of our fiscal year 2007. Our business model remains structurally profitable over the long term and can provide sustained growth. Also, our strong balance sheet - with $ 1 million in financial investments and no debt - remains a competitive advantage and a source of operating strength."
At a special shareholders' meeting held today by the Corporation, a majority of shareholders authorized (i) a change in the by-laws of the Corporation, in order to change the quorum for Board meetings from a fixed number of four board members to a simple majority of Board members, and (ii) the issuance of one million common shares, or approximately 3.4% of outstanding shares, to Mr. Goulet as a bonus for his past performance. These shares will be issued for a consideration of $1.00 and services rendered during the 2006 and 2007 financial years. They will be issued in two installments: a first installment of 500,000 shares at $ 0.30 per share, to be issued before the 2006 year end and which will be subject to a 12 month hold period, and a second installment of 500,000 shares to be issued in January 2008, which will be subject to a 6 month hold period. The $ 0.30 reference share price was the closing share price preceding the board of directors' decision.
About BRANCHEZ-VOUS! inc.
BRANCHEZ-VOUS! inc. is a leading Montreal-based Internet media company. It owns and operates BRANCHEZ-VOUS.com (www.branchez-vous.com), the largest independent portal in Quebec, which primarily targets an audience of active adult users working in and/or interested by technology; and it operates the BRANCHEZ-VOUS! Network, the largest French-language Internet advertising network, comprised of approximately 50 web sites - including the French version of Canada411, LesPAC.com and ten sites owned and operated by Astral Media. The BRANCHEZ-VOUS! Network reaches over 2.5 million French Canadians every month.
BRANCHEZ-VOUS! is listed on the TSX Venture exchange under the symbol BZV and has approximately 29.2 million shares outstanding. Additional information on the Corporation can be obtained on SEDAR (www.sedar.com) and at www.branchez-vous.com/inc/english
The TSX Venture exchange has neither approved nor disapproved the contents of this press release.
- 30 -
Contact:
Patrick Pierra
President and CEO
Phone: 514-842-3838 ext. 249
or
Nicholas Powell
Investor Relations Consultant
Phone: 514-904-0084
http://www.branchez-vous.com/contacts/
Send | Print this press release
