omniture

China New Media Reports First Quarter Fiscal Year 2012 Financial Results

China New Media Corp.
2011-11-15 22:53 1019

DALIAN, China, November 15, 2011 /PRNewswire-Asia/ -- China New Media Corp. (OTCBB: CMDI) (the "Company"), China's fast-growing advertising media company with current outdoor media network located in Dalian, Shenyang, Tianjin, Beijing and Shanghai, today announced its financial results for the first quarter of fiscal year 2012 ended September 30, 2011.

Mr. James Wang, Chairman and Chief Executive Officer of China New Media, stated, "Heading into our 2012 fiscal year we set out to accomplish several goals including increasing revenue through greater sales to existing and new customers and making strategic long term investments in our new markets, Beijing, Shanghai, Tianjin, and Shenyang. During the 2012 fiscal first quarter we steadily increased revenue year-over-year approximately 11% driven by a 25% increase in revenue of our outdoor billboard advertising platform which carried a high gross profit margin of 49%, which is much higher than the industry average. Year-over-year we also saw an 82% increase in revenue from our City Navigator platform which yielded 70% gross profit margins. In our new markets, especially Beijing and Shanghai, we increased our sales and marketing strategy for the long term value we expect to generate. For each new market we have now developed our own sales team to sell existing advertising platforms and develop new advertising platforms. The investment required to build greater future sales resulted in a slight decrease in overall gross profit margins and profitability during the quarter. However, we believe over the long term there will be greater leverage in this model and we strongly believe that it is the best plan of action for the value of the Company and our shareholders."

Mr. Wang continued, "Recently we made one of the most significant breakthroughs in our company history with the official launch of our 150 square-meter LED screen located between Terminals 1 and 2 at Beijing Capital International Airport. The launch of this platform and the coinciding $2.8 million advertising contract with Henan Dayou Energy is an excellent starting point to build the China New Media brand in Beijing. We are currently evaluating other potential advertising locations in Beijing and other markets in order to continue broadening our presence."

Summary Financials for 2012 Fiscal First Quarter Ended September 30, 2011:


Fiscal First Quarter Financials (USD)

Three months ended September 30,

2011

2010

CHANGE

Revenue

$4.6 million

$4.1 million

+10.7%

Gross Profit

$2.4 million

$2.4 million

+2.1%

Gross Profit Margin

53.4%

57.9%

-7.8%

Net Income*

$863,000

$1.1 million

-20.5%

EPS**

$0.03

$0.04

-25%

* Attributable to China New Media Corp.

** Based on 27.6 million shares outstanding



Financial Results for the 2012 Fiscal First Quarter Ended September 30, 2011

Revenue for the 2012 fiscal first quarter ended September 30, 2011 totaled $4.6 million, an increase of 10.7% compared to $4.1 million for the same period in fiscal 2011. The increase in revenue resulted from increased sales to existing and new customers based on the Company's expanded outdoor advertising network at more desirable locations for the various outdoor advertising platforms.

Revenue growth was driven by a 24.9% increase in the outdoor billboard advertising platform which accounted for 37.4% of total revenue during the 2012 fiscal first quarter. The billboard advertising platform has presented a significant growth opportunity at an attractive gross profit margin of 48.8% during the 2012 fiscal first quarter. The outdoor billboard platform is established in Dalian, Shenyang, Tianjin, Beijing and Shanghai and going forward the Company will continue to establish its presence in these markets. Revenue in Dalian, which accounted for 87.9% of total revenue, increased by 10.6% to $4 million for the 2012 fiscal first quarter as compared to $3.6 million for the same period the prior year.

City Navigator revenue increased 81.7% year-over-year. Occupancy of this platform has increased steadily with room for growth. Today, the Company owns and operates 52 City Navigator kiosks. Each kiosk has ten advertising spots available on a rolling basis and today is operating at approximately 60% capacity. Going forward the Company will focus on maximizing the occupancy rate for the available advertising space.

Fiscal 2012 First Quarter Revenue Breakdown by Advertising Platform (USD)

Year ended September 30,

2011

2010

CHANGE

Street Fixture and Display Network

% of Sales

Gross Profit Margin %

$1.3 million

27.9%

55.9%

$1.4 million

34%

61.8%

-9.2%

City Transit System Display Network

% of Sales

Gross Profit Margin %

$0.92 million

20.2%

58.2%

$0.85 million

20.5%

56.7%

+8.8%

Outdoor Billboards

% of Sales

Gross Profit Margin %

$1.7 million

37.4%

48.8%

$1.4 million

33.1%

58.1%

+24.9%

City Navigator

% of Sales

Gross Profit Margin %

$0.53 million

11.7%

69.9%

$0.29 million

7.1%

71.5%

+81.7%

Other Services Income

% of Sales

Gross Profit Margin %

$0.13 million

2.9%

-

$0.21 million

5%

14.7%

-3.6%

Total Sales

$4.6 million

$4.1 million

+10.7%



Cost of sales for the 2012 fiscal first quarter ended September 30, 2011 totaled $2.1 million or 46.6% of revenue, an increase of 22.6% compared to $1.7 million or 42% of revenue for the 2011 fiscal first quarter ended September 30, 2010. The increase in cost of revenue was primarily attributable to increased depreciation of advertising equipment, labor and raw material cost.

Gross profit for the 2012 fiscal first quarter ended September 30, 2011 totaled $2.4 million, an increase of 2.1% compared to $2.4 million for the 2011 fiscal first quarter ended September 30, 2010. The increase in gross profit was in line with revenue growth as the Company secured more advertising contracts during the period. Gross profit margin was 53.4% and 57.9% for the 2012 and 2011 fiscal first quarters ended September 30, 2011 and 2010, respectively. The decrease in gross profit margin was mainly due to the increased maintenance cost of advertising equipment, and the increase of labor and raw material cost. Specifically, the decrease in outdoor billboard margins was due to the increased amount of new constructions and the lead time needed to build advertising clients.

Selling, general and administrative expenses consist primarily of sales personnel salaries, sales representative commissions, rent expenses and related administrative expenses totaling $926,000 for the 2012 fiscal first quarter as compared to $765,000 for the 2011 fiscal first quarter. This increase was due to an increased sales effort from the Company to accommodate its geographic expansion of its media platforms, higher maintenance, professional fees and other expenses related to the growth of the business.

Net income attributable to China New Media Corp. for the three months ended September 30, 2011 was $863,000 as compared to $1.1 million for the three months ended September 30, 2010. The decrease was due to the increase in cost of revenues and selling, general and administrative expenses. Basic and diluted earnings per share for the 2012 fiscal first quarter ended September 30, 2011 was $0.03 based on 27.6 million basic and diluted shares versus basic and diluted earnings per share of $0.04 for the 2011 fiscal first quarter ended September 30, 2010 based on 27.6 million basic and 29.3 million diluted shares outstanding.

Liquidity and Capital Resources

As of September 30, 2011, China New Media had approximately $685,000 in cash and cash equivalents. As of June 30, 2011, total current assets and total assets were $10 million and $37.1 million, respectively. During the same period, total current liabilities and total liabilities were $16.9 million and $16.9 million respectively. Shareholder's equity totaled 19.2 million, or a fully diluted book value of $0.70 per share, as of September 30, 2011.

Conference Call Details:

Date:

Wednesday, November 16, 2011

Time:

8:30 a.m. Eastern

U.S. Dial-In:

(877) 941-4774

International Dial-In:

(480) 629-9760

Live Webcast:

http://viavid.net/dce.aspx?sid=000090A0



It is recommended that participants dial in approximately 10 minutes prior to the start of the 8:30 a.m. Eastern call. There will also be a simultaneous live webcast of the conference call which can be accessed through the following audio feed link and archived recording of the conference call available by clicking on the following link, http://viavid.net/dce.aspx?sid=000090A0.

About China New Media Corp.

Founded in September 2000, Dalian Vastitude Media Group Co., Ltd., now known as China New Media Corp., is headquartered in Dalian, the commercial center of Northeastern China. The company owns and operates the city's largest outdoor media network encompassing over 600 bus shelters furnished with billboards and displays; 130 taxi stops with displays; and 13 large-size billboards, including 3 large-size LED displays at major traffic conjunctions. The company also furnishes more than 400 buses with advertising posters and 28 metro-trains throughout Dalian Metro Lines. China New Media provides comprehensive adverting services from art design to ad publishing, from daily maintenance to technical upgrading. Launched in Dalian in 2009, China New Media's proprietary LED multimedia display network, City Navigator®, is one of the country's first web-based outdoor advertising networks. For more information, please visit www.gywj.cn.

Forward-Looking Statements

This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements", including statements regarding the Company's ability to meet its obligations under its various contracts; the timeliness of payments and other economic benefits the Company expects to receive under such contracts; and the Company's ability to maintain its customer relationships and to maintain its ability to pursue its commercial objectives. In addition, the Company's operations are conducted in the PRC and, accordingly, are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe such as risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website at http://www.sec.gov. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Company Contact:

Rita Jiang
Executive Vice President of Finance
646-691-5047
Rita.jiang@gmail.com
www.gywj.cn

Investor Contact:

Alliance Advisors, LLC
Alan Sheinwald, President & Founder
(914) 669-0222
ASheinwald@AllianceAdvisors.net

www.AllianceAdvisors.net

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN US DOLLARS)

(UNAUDITED)









As of

September 30


As of

June 30



2011


2011






ASSETS










Current assets





Cash and cash equivalents


$

684,633


$

1,808,880

Restricted cash



46,990



-

Accounts receivable, net



6,489,715



5,395,698

Advance to suppliers



499,567



619,582

Prepaid expensees



143,530



189,759

Loan receivables



1,722,982



1,761,139

Other current assets



275,180



243,159

Deferred tax assets



148,191



129,443

Total current assets



10,010,788



10,147,660








Property, equipment and construction in progress, net,



20,196,382



18,776,998








Other assets







Security deposits



1,940,623



1,955,343

Intangible asset, net



86,201



90,354

Billboards use right



4,903,742



4,766,060

Total other assets



6,930,566



6,811,757








Total Assets


$

37,137,736


$

35,736,415








LIABILITIES AND EQUITY














Current liabilities







Short term loans


$

10,933,104


$

11,603,746

Current portion of long term loan



469,904



464,150

Accounts payable, accrued expenses and other payables



1,949,989



1,661,011

Deferred revenues



2,116,978



1,618,548

Taxes payable



1,185,398



1,055,620

Due to related parties



201,277



158,297

Total current liabilities



16,856,650



16,561,372








Total Liabilities



16,856,650



16,561,372








Commitments and contingencies














Equity







Series A Preferred Stock, $0.0001 par value, 20,000,000 shares authorized,

1,000,000 shares issued and outstanding



100



100

Common stock, $0.0001 Par value; 80,000,000 shares authorized;







27,590,701 shares issued and outstanding







as of September 30, 2011 and June 30, 2011, respectively



2,759



2,759

Additional paid-in-capital



6,820,820



6,820,820

Accumulated other comprehensive income



824,481



636,300

Retained earnings



11,587,021



10,724,103

Total stockholders' equity



19,235,181



18,184,082

Noncontrolling interest



1,045,905



990,961

Total equity



20,281,086



19,175,043








Total Liabilities and Equity


$

37,137,736


$

35,736,415




CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(IN US DOLLARS)

(UNAUDITED)







For the three months ended

September 30,



2011


2010











Revenues


$

4,562,159


$

4,120,750








Cost of revenue



(2,124,066)



(1,733,202)








Gross profit



2,438,093



2,387,548








Selling, general and administrative expenses



(926,290)



(765,138)








Income from operations



1,511,803



1,622,410








Other income (expenses):







Interest income



1,693



1,502

Interest expense



(232,866)



(156,330)

Other income



-



65,288

Other expenses



(19,890)



(136)








Total Other income (expenses)



(251,063)



(89,676)








Income before income taxes



1,260,740



1,532,734








Income tax provision (benefit)







- Current



372,436



403,558

- Deferred



(17,056)



(8,162)

Total income tax provision (benefit)



355,380



395,396








Net income



905,360



1,137,338








Less: net income attribute to the noncontrolling interest



42,442



52,196








Net income attributable to China New Media Corp.


$

862,918


$

1,085,142








Other comprehensive income







Foreign currency translation adjustments



188,181



105,418








Comprehensive income



1,051,099



1,190,560








Less: comprehensive income attribute to the noncontrolling interest



12,501



12,613








Comprehensive income attributable to China New Media Corp.



1,038,598



1,177,947








Earnings per share







Basic


$

0.03


$

0.04

Diluted


$

0.03


$

0.04

Weighted average number of common shares







Basic



27,550,701



27,550,701

Diluted



27,550,701



29,274,676




Source: China New Media Corp.
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