omniture

China New Media Reports Second Quarter Fiscal Year 2012 Financial Results

China New Media Corp.
2012-02-15 21:00 1219

DALIAN, China, February 15, 2012 /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 second quarter of fiscal year 2012 ended December 31, 2011.

Mr. James Wang, Chairman and Chief Executive Officer of China New Media, stated, "I am proud that our company continue to focus on our expansion strategy of adding more advertising platforms geographically, and maintaining and adding new customers in our new markets. During the second quarter of fiscal year 2012, we've been through a tougher macro economic environment. Advertisers in certain cyclical industries, such as real estate, significantly reduced their advertising budgets in the second half of 2011; however, we are still able to maintain relatively stable revenue levels compared with same period the prior year. Under the unfavorable economic conditions, we focused more on sales, marketing and promotion efforts, and provided more value-added services to attract new customers. For each new market we have 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, "In the second half of 2011, 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, and in November 2011, we finished the construction of mega 558 square-meter LED screen on top of the Golden Hotel in Shenyang, one of the city's landmark buildings. We are currently evaluating other potential advertising locations in Shenyang and other markets in order to continue broadening our presence."

Summary Financials for 2012 Fiscal Second Quarter Ended December 31, 2011:


Fiscal Second Quarter Financials (USD)

Three months ended December 31,

2011

2010

CHANGE

Revenue

$5,043,000

$5,047,000

-0.1%

Gross Profit

$2,762,000

$2,818,000

-2.0%

Gross Profit Margin

54.8%

55.8%

-1.8%

Net Income*

$658,000

$1.3 million

-47.6%

EPS**

$0.02

$0.05

-60%

* Attributable to China New Media Corp.

** Based on 27.6 million shares outstanding



Financial Results for the 2012 Fiscal Second Quarter Ended December 31, 2011

Revenue for the 2012 fiscal second quarter ended December 31, 2011 totaled $5,043,775 a slight decrease of 0.1% compared to $5,047,789 million for the same period in fiscal 2011. The decline in revenue was primarily attributable to a decrease in contracting demand from advertisers under unfavorable macro economic conditions, while the effect was minimized by the Company's diversified advertising platform strategy.

Revenue generated from the outdoor billboard advertising platform increased 49.2% compared with same quarter last year and accounted for 50.5% of total revenue during the 2012 fiscal second quarter. The billboard advertising platform has presented a significant growth opportunity at an attractive gross profit margin of 50.7% during the 2012 fiscal second 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.

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

Period ended December 31,

2011

2010

CHANGE

Street Fixture and Display Network

% of Sales

Gross Profit Margin %

$1.2 million

24.1%

61.9%

$1.7 million

33.6%

62.2%

-28.3%

City Transit System Display Network

% of Sales

Gross Profit Margin %

$0.8 million

14.9%

53.0%

$1.0 million

19.2%

46.2%

-22.3%

Outdoor Billboards

% of Sales

Gross Profit Margin %

$2.5 million

50.5%

50.7%

$1.7 million

33.8%

47.5%

+49.2%

City Navigator

% of Sales

Gross Profit Margin %

$0.4 million

7.7%

65.5%

$0.4 million

8.4%

65.1%

-8.8%

Other Services Income

% of Sales

Gross Profit Margin %

$0.14 million

2.8%

45.8%

$0.3 million

5.0%

26.9%

-44.5%

Total Sales

$5.0 million

$5.0 million

-0.1%



Cost of sales for the 2012 fiscal second quarter ended December 31, 2011 totaled $2.3 million or 45.2% of revenue, an increase of 2.3% compared to $2.2 million or 44.2% of revenue for the 2011 fiscal second quarter ended December 31, 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 second quarter ended December 31, 2011 totaled $2.76 million, a decrease of 2.0% compared to $2.8 million for the 2011 fiscal second quarter ended December 31, 2010. The decrease in gross profit was due to the slight decrease in revenue and the increase in cost of revenue during the three months ended December 31, 2011. Gross profit margin was 54.8% and 55.8% for the 2012 and 2011 fiscal second quarters ended December 31, 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.

Selling, general and administrative expenses consist primarily of sales personnel salaries, sales representative commissions, rent expenses and related administrative expenses totaling $1.5 million for the 2012 fiscal second quarter as compared to $926,000 for the 2011 fiscal second quarter. This increase was due to an increased sales effort from the Company to address the more competitive overall advertising market, and 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 December 31, 2011 was $620,000 as compared to $1.3 million for the three months ended December 31, 2010. The decrease was due to flat revenue compared to same period last year with an increase in cost of revenues and selling, general and administrative expenses. Basic and diluted earnings per share for the 2012 fiscal second quarter ended December 31, 2011 was $0.02 based on 27.6 million basic and diluted shares versus basic and diluted earnings per share of $0.05 and $0.04 for the 2011 fiscal second quarter ended December 31, 2010 based on 27.6 million basic and 28.0 million diluted shares outstanding.

Summary Financials for Six Months of Fiscal 2012 Ended December 31, 2011:

Fiscal 2012 Six-Month Results (USD) (unaudited)

Six months ended December 31,

2011

2010

CHANGE

Revenue

$9.6 million

$9.2 million

+4.8%

Gross Profit

$5.2 million

$5.2 million

-0.1%

Gross Profit Margin

54.1%

56.8%

-4.8%

Net Income*

$1.5 million

$2.3 million

-35.1%

EPS**

$0.06

$0.09

-33.3%

* Attributable to China New Media Corp.

** Based on 27.6 million shares outstanding



Financial Results for the Six Months FY 2012 Ended December 31, 2011

Revenue for the six months FY 2012 ended December 31, 2011 totaled $9.6 million, an increase of 4.8% compared to $9.2 million for the same period in fiscal 2011. Revenue continued the uptrend compared with same period the prior year even under unfavorable macro economic conditions. The Company spent more effort on sales, marketing and promotion in order to generate sales from existing and new customers, and continue focusing on expanding outdoor advertising network at more desirable locations for the various outdoor advertising platforms.

Fiscal 2012 Six Months Revenue Breakdown by Advertising Platform (USD)

Period ended December 31,

2011

2010

CHANGE

Street Fixture and Display Network

% of Sales

Gross Profit Margin %

$2.5million

25.9%

58.9%

$3.1 million

33.8%

62.0%

-19.7%

City Transit System Display Network

% of Sales

Gross Profit Margin %

$1.7 million

17.4%

55.9%

$1.8 million

19.8%

51.1%

-7.8%

Outdoor Billboards

% of Sales

Gross Profit Margin %

$4.3 million

44.3%

50.0%

$3.1 million

33.5%

57.5%

+38.4%

City Navigator

% of Sales

Gross Profit Margin %

$0.9 million

9.6%

68.0%

$0.7 million

7.8%

67.7%

+28.1%

Other Services Income

% of Sales

Gross Profit Margin %

$0.3 million

2.8%

18.6%

$0.5 million

5.0%

21.5%

-40.6%

Total Sales

$9.6 million

$9.2 million

+4.8%



Cost of sales for the six months ended December 31, 2011 totaled $4.4 million or 45.9% of revenue, an increase of 11.2% compared to $4.0 million or 43.2% of revenue for the six months ended December 31, 2010, mainly attributable to increased depreciation of advertising equipment, labor and raw material cost.

Gross profit for the six months ended December 31, 2011 totaled $5.2million, a decrease of 0.1% compared to $5.21 million for the same period the prior year. Gross profit margin was 54.1% and 56.8% for the six months ended December 31, 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.

Selling, general and administrative expenses totaled $2.5 million for the six months of fiscal 2012 as compared to $1.7 million for the same period in fiscal 2011. This increase was due to an increased sales effort from the Company to accommodate its geographic expansion of its media platforms and tougher macro economic conditions, higher maintenance, professional fees and other expenses related to the growth of the business.

Net income attributable to China New Media Corp. for the six months ended December 31, 2011 was $1.5 million, a decrease of 36.7%, as compared to $2.3 million for the same period ended December 31, 2010. Basic and diluted earnings per share for the six months ended December 31, 2011 was $0.05 based on 27.6 million basic and diluted shares versus basic and diluted earnings per share of $0.09 and $0.08 for the six months ended December 31, 2010 based on 27.6 million basic and 28.2 million diluted shares outstanding.

Liquidity and Capital Resources

As of December 31, 2011, China New Media had approximately $1.5 million in cash and cash equivalents. As of December 31, 2011, total current assets and total assets were $12.5 million and $39.4 million, respectively. During the same period, total current liabilities and total liabilities were $18.2 million and $18.2million respectively. Shareholder's equity totaled 21.2 million, or a fully diluted book value of $0.77 per share, as of December 31, 2011.

Conference Call Details:

Date:

Thursday, February 16, 2012

Time:

8:30 a.m. Eastern

U.S. Dial-In:

(877) 941-2068

International Dial-In:

(480) 629-9712

Live Webcast:

http://viavid.net/dce.aspx?sid=000093E5



It is recommended that participants dial in approximately 10 minutes prior to the start of the 9:00 a.m. Eastern call. A telephonic replay of the conference call may be accessed approximately two hours after the call through March 1, 2012. Please dial 877-870-5176 for U.S. and 858-384-5517 for international callers and entering the access code, 4515788.

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=000093E5.

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


CHINA NEW MEDIA CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN US DOLLARS)

(UNAUDITED)



As of
December 31



As of
June 30



2011



2011







ASSETS












Current assets






Cash and cash equivalents


$

1,537,099



$

1,808,880

Accounts receivable, net



6,881,971




5,395,698

Advance to suppliers



1,189,039




619,582

Prepaid expenses



96,226




189,759

Loans receivable



2,306,366




1,761,139

Other current assets



362,470




243,159

Deferred tax assets



102,107




129,443

Total current assets



12,475,278




10,147,660









Property, equipment and construction in progress, net,



20,567,370




18,867,352









Other assets








Security deposits



1,889,829




1,955,343

Equity investment



87,151




-

Billboards use right



4,425,484




4,766,060

Total other assets



6,402,464




6,721,403









Total Assets


$

39,445,112



$

35,736,415









LIABILITIES AND EQUITY
















Current liabilities








Short term loans


$

11,545,311



$

11,603,746

Current portion of long term loan



475,768




464,150

Accounts payable, accrued expenses and other payables



1,980,413




1,661,011

Deferred revenues



2,655,559




1,618,548

Taxes payable



1,252,650




1,055,620

Due to related parties



306,609




158,297

Total current liabilities



18,216,310




16,561,372









Total Liabilities



18,216,310




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



2,759




2,759

Additional paid-in-capital



6,820,820




6,820,820

Accumulated other comprehensive income



1,027,248




636,300

Retained earnings



12,207,197




10,724,103

Total stockholders' equity



20,058,124




18,184,082

Noncontrolling interest



1,170,678




990,961

Total equity



21,228,802




19,175,043









Total Liabilities and Equity


$

39,445,112



$

35,736,415





CHINA NEW MEDIA CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(IN US DOLLARS)

(UNAUDITED)














For the six months ended
December 31,


For the three months ended
December 31,



2011



2010


2011



2010


























Revenues


$

9,605,933



$

9,168,539


$

5,043,775



$

5,047,789



















Cost of revenue



(4,405,235)




(3,962,040)



(2,281,169)




(2,228,838)



















Gross profit



5,200,698




5,206,499



2,762,606




2,818,951



















Selling, general and administrative expenses



(2,459,023)




(1,691,586)



(1,532,733)




(926,447)



















Income from operations



2,741,675




3,514,913



1,229,873




1,892,504



















Other income (expenses):
















Interest income



2,891




3,031



1,198




1,529


Interest expense



(469,145)




(315,557)



(236,279)




(159,227)


Loss from equity investment



(7,901)




-



(7,901)




-


Other income



-




117,537



-




52,249


Other expenses



(21,248)




(15,424)



(1,358)




(15,288)






















Total Other income (expenses)



(495,403)




(210,413)



(244,340)




(120,737)



















Income before income taxes



2,246,272




3,304,500



985,533




1,771,767



















Income tax provision (benefit)
















-


Current



566,435




898,516



194,000




494,958


-


Deferred



43,795




(23,204)



60,851




(15,042)




Total income tax provision (benefit)



610,230




875,312



254,851




479,916



















Net income



1,636,042




2,429,188



730,682




1,291,851




















Less: net income attribute to the noncontrolling interest



152,947




86,570



110,505




34,374



















Net income attributable to China New Media Corp.


$

1,483,095



$

2,342,618


$

620,177



$

1,257,477



















Other comprehensive income
















Foreign currency translation adjustments



390,948




255,027



202,767




149,608



















Comprehensive income



1,874,043




2,597,645



822,944




1,407,085




















Less: comprehensive income attribute to the noncontrolling interest



26,769




25,588



14,267




12,975



















Comprehensive income attributable to China New Media Corp.


$

1,847,274



$

2,572,057


$

808,677



$

1,394,110



















Earnings per share
















Basic


$

0.05



$

0.09


$

0.02



$

0.05


Diluted


$

0.05



$

0.08


$

0.02



$

0.04

Weighted average number of common shares
















Basic



27,550,701




27,550,701



27,550,701




27,550,701


Diluted



27,550,701




28,196,904



27,550,701




27,997,977





CHINA NEW MEDIA CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN US DOLLARS)

(UNAUDITED)










For the six months ended
December 31,




2011



2010









CASH FLOWS FROM OPERATING ACTIVITIES:







Net income


$

1,636,042



$

2,429,188


Adjustments to reconcile net income to net cash









provided by operating activities:









Depreciation and amortization



1,981,591




1,245,238


Amortization of stock based compensation expense



15,975




-


Loss from equity investment



7,901




-


Allowance for doubtul accounts



69,091




1,258


Changes in operating assets and liabilities









Accounts receivable



(1,403,172)




(1,097,194)


Other current assets



(121,137)




(1,658,136)


Advance to employee



49,771




59,688


Security deposit



113,009




17,872


Deferred tax assets



30,189




(23,204)


Advance to suppliers



(546,925)




969,766


Accounts payable, accrued expenses and other payables



140,316




1,060,860


Advances from customers



96,810




-


Deferred revenues



983,863




974,767


Taxes payable



168,444




421,508











Net cash provided by operating activities



3,221,768




4,401,611











CASH FLOWS FROM INVESTING ACTIVITIES:









Loans receivable



(494,790)




-


Advance payment for investment



-




1,906,665


Equity investment



(93,948)




-


Acquisition of billboards use right



(488,526)




(3,275,235)


Acquisition of property and equipment



(2,251,187)




(4,396,546)











Net cash used in investing activities



(3,328,451)




(5,765,116)











CASH FLOWS FROM FINANCING ACTIVITIES:









Net proceeds from capital contributions



-




476,666


Net proceeds from short-term bank loans



751,580




1,042,707


Repaymenof short-term bank loans



(1,096,054)




-


Repayment of related party loans



138,813




(320,236)


Repayments of long-term bank loans



-




(297,916)











Net cash provided by (used in) financing activities



(205,661)




901,221











EFFECT OF EXCHANGE RATE CHANGE ON









CASH AND CASH EQUIVALENTS



40,563




32,573











NET DECREASE IN CASH AND CASH EQUIVALENTS



(271,781)




(429,711)











CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD



1,808,880




1,672,017











CASH AND CASH EQUIVALENTS, END OF PERIOD


$

1,537,099



$

1,242,306











SUPPLEMENTAL CASH FLOW DISCLOSURE









Income taxes paid


$

378,193



$

692,274


Interest paid


$

466,144



$

156,330





Source: China New Media Corp.
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