Xentel DM Incorporated
TSX VENTURE : XDM

Xentel DM Incorporated

April 30, 2007 08:30 ET

Xentel Reports 2006 Year End Results

CALGARY, ALBERTA--(CCNMatthews - April 30, 2007) - Xentel DM Incorporated (TSX VENTURE:XDM) a North American specialty entertainment and relationship marketing company, today reported its financial results for the three and twelve months ended December 31, 2006.

The results for the fourth quarter 2006 were a net loss of $249 thousand compared to net earnings of $41 thousand for the fourth quarter 2005. Revenues amounted to $28,364 thousand compared to $29,899 thousand for the same period in 2005.

For the year ended December 31, 2006, net earnings were $160 thousand or $0.01 per diluted share compared with $1,536 thousand or $0.06 per diluted share for the year ended December 31, 2005. Revenues amounted to $113,643 thousand compared to $124,875 thousand for the same period in 2005.



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Three months ended December 31 2006 2005
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($ 000's, except per share amounts)
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Revenue $ 28,364 $ 29,899
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Gross margin 6,772 6,275
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Net earnings (loss) (249) 41
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EBITDA 1,205 (520)
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EPS, fully diluted $ (0.01) $ (0.00)
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EBITDA, per share, fully diluted $ 0.05 $ (0.02)
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Years ended December 31 2006 2005
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($ 000's, except per share amounts)
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Revenue $ 113,643 $ 124,875
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Gross margin 27,672 30,985
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Net earnings 160 1,536
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EBITDA 5,804 5,880
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EPS, fully diluted $ 0.01 $ 0.06
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EBITDA, per share, fully diluted $ 0.22 $ 0.24
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- EBITDA - Net Earnings before income taxes, interest, depreciation
and amortization. Since Gross Margin, EBITDA and diluted EBITDA per
share have no standardized GAAP meaning, the comparability of these
amounts to other enterprises may not be possible if the basis of
calculation of differs.
----------------------------------------------------------------------


Results for the fourth quarter 2005 and the fiscal year 2005 included a one time gain on adjustment on long term debt of $2,678 thousand.

EBITDA was $1,205 thousand for the three months ended December 31, 2006 and $5,804 thousand for the twelve months ended December 31, 2006. For the comparable periods in 2005 EBITDA amounted to negative $520 thousand and $5,880 thousand respectively.

Key operational activities affecting the 2006 results are as follows:

- Selective renewal of client contracts, resulting in reduced revenue for the year

- Termination of an unsuccessful offshore telemarketing program

- Continuing reductions of cost optimization of branch overhead and corporate administration costs.

David Winograd, President US operations, stated, "This past year, we successfully renegotiated selective contracts for the optimization of profitability. We continue to remodel our business to improve our event offerings and strengthen our business to business telemarketing efforts. We are seeing improvements in the metrics relating to the US operations."

Added Michael Platz, Chairman, "Management continues to review the operations and cost structure with a view to maximizing shareholder value. During the year, we terminated the offshore telemarketing program and significantly reduced our branch overhead and corporate administration costs as part of the on going rationalization of costs."

Xentel DM Incorporated is one of North America's leading relationship-marketing concerns and producers of cause related entertainment events. The Company's success is attributable to proprietary sales tools including technologically advanced teleservices and sophisticated customer databases. Xentel DM Incorporated has over 450 clients and 3,000 employees in over 30 offices across North America.

Certain statements in this press release may constitute "forward looking statements" and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any performance or achievement expressed or implied by such "forward looking statements".



Xentel DM Incorporated
Consolidated Balance Sheets
As at December 31 2006 2005
('000s)

Assets
Current assets

Cash and cash equivalents $ 795 $ 452
Accounts receivable, net of allowances 8,956 9,295
Inventory 628 461
Work in process 6,421 6,263
Prepaid expenses 1,106 497
Due from related party 1,514 -
Future income taxes 643 915
Other current assets - 203

-------- --------
20,063 18,086

Deferred financing costs, net of amortization 210 381
Due from related party - 1,512
Equipment 3,622 4,151
Future income taxes 2,843 3,655
Other intangible assets 3,207 4,915
Goodwill 1,180 1,178

-------- --------
$ 31,125 $ 33,878
-------- --------
-------- --------

Liabilities
Current liabilities

Bank indebtedness $ 1,259 $ 1,309
Accounts payable and accrued liabilities 6,654 6,868
Income taxes payable 365 999
Current portion of long term liabilities 2,058 1,885
Future income taxes 1,016 835

-------- --------
11,352 11,896

Long term debt 1,542 3,337
Due to related party 2,729 2,416
Future income taxes 1,628 2,903
Deferred tenant inducement 389 -

-------- --------
17,640 20,552

Shareholders' equity

Share capital 9,280 9,291
Warrants 205 205
Contributed surplus 70 58
Cumulative translation adjustment (2,997) (2,995)
Retained earnings 6,927 6,767

-------- --------
13,485 13,326

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$ 31,125 $ 33,878
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Xentel DM Incorporated
Consolidated Statements of Operations and
Retained Earnings
For the years ended December 31 2006 2005
('000s, except per share amount)

Revenue $113,643 $124,875

Cost of revenue 85,971 93,890

-------- --------

Gross margin 27,672 30,985

-------- --------

Corporate expenses

Branch overhead and corporate administration 21,868 25,105
Interest expense 1,201 1,192
Amortization of equipment 1,894 2,307
Amortization of intangible assets 1,673 1,522

-------- --------
26,636 30,126

-------- --------

Earnings before undernoted items 1,036 859

Other items
Expenses relating to the 2003 privatization lawsuit (151) (182)
Gain on adjustment on long term debt - 2,678
Loss on disposal of other investments (191) -

-------- --------
Net earnings before income taxes 694 3,355

-------- --------

Income tax expense
Current income tax expense 802 1,050
Future income tax expense (recovery) (268) 769

-------- --------

534 1,819

-------- --------

Net earnings 160 1,536

Retained earnings, beginning of year 6,767 5,231

-------- --------
Retained earnings, end of year $ 6,927 $ 6,767
-------- --------
-------- --------

Basic and diluted net earnings per share $ 0.01 $ 0.06
-------- --------
-------- --------

Basic weighted average number of shares 26,203 24,936
-------- --------
-------- --------

Diluted weighted average number of shares 26,213 24,936
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Xentel DM Incorporated
Consolidated Statements of Contributed Surplus
For the years ended December 31 2006 2005
('000s)

Balance, beginning of year $ 58 $ -

Stock based compensation on vesting of options 15 64
Forfeited options on termination (3) (6)

-------- --------
Balance, end of year $ 70 $ 58

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Xentel DM Incorporated
Consolidated Statements of Cash Flows
For the years ended December 31 2006 2005
('000s)

Cash flows from (used in) operating activities

Net earnings for the period $ 160 $ 1,536

Non cash transactions reflected in net earnings
Amortization 3,567 3,829
Future income tax expense (recovery) (268) 769
Stock based compensation 15 58
Adjustment for non cash interest 475 715
Non cash effect of debt restructuring - (2,678)

-------- --------
3,949 4,229

-------- --------

Net change in non cash working capital items
Accounts receivable 347 (2,454)
Inventory and work in process (320) 398
Due to/from related parties - 10
Prepaid expenses (600) 144
Other current assets 203 (196)
Income taxes payable (377) 896
Accounts payable and accrued liabilities (224) (76)

-------- --------

Net change in non cash working capital items (971) (1,278)

-------- --------

2,978 2,951
Cash flows from (used in) financing activities

Bank indebtedness (35) (1,429)
Long term debt acquired - 1,535
Long term debt repaid (1,705) (2,383)
Issue of share capital - 563
Tenant inducement payment 500 -

-------- --------
(1,240) (1,714)

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Cash flow (used in) investing activities

Investment in equipment, excluding tenant
improvement below (877) (1,105)
Investment in tenant improvement (500) -

-------- --------
(1,377) (1,105)
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Effect of exchange rate fluctuations on cash
balances (18) 40

-------- --------

Net increase in cash and cash equivalents 343 172

Cash and cash equivalents, beginning of year 452 280

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Cash and cash equivalents, end of year $ 795 $ 452
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