China Mass Media Reports First Quarter 2012 Unaudited Financial Results
BEIJING, June 22, 2012 /PRNewswire-Asia-FirstCall/ -- China Mass Media Corp. ("China Mass Media" or the "Company") (CMMCY.PK), a television advertising company in China, today announced its unaudited financial results for the first quarter ended March 31, 2012.
First Quarter 2012 Highlights
- Total net revenues were RMB39.1 million (US$6.2million), a decrease of 23.2% from the first quarter 2011, and a decrease of 25.1% from the fourth quarter 2011.
- Operating loss was RMB12.0 million (US$1.9 million), compared with operating income of RMB13.1 million in the first quarter 2011 and operating income of RMB1.9 million in the fourth quarter 2011.
- Net loss was RMB11.5 million (US$1.8 million), compared with net income of RMB8.3 million in the first quarter 2011, and net loss of RMB18.5 million in the fourth quarter 2011.
- Net cash outflows from operating activities were RMB22.9 million (US$3.6 million), compared with RMB34.8 million net cash inflows in the first quarter 2011 and RMB55.0 million net cash outflows in the fourth quarter 2011.
Mr. Shengcheng Wang, Chairman and Chief Executive Officer of China Mass Media, commented, "This year, the media resources we are selling are the 'Periodic China News Package' on CCTV-4 and the 'All Day Classic Package' on CCTV-8. Due to the termination of our contracts for the 'Daytime Advertising Package' and 'Television Guides' in 2012, the Company's net revenue saw a significant decrease sequentially, both quarterly and yearly. The 'All Day Classic Package' on CCTV-8 contributed RMB8.3 million in net revenue, and RMB4.0 million in net loss after the deduction of costs.
"Our advertising production services were largely stable in the first quarter of 2012, as we successfully produced a number of commercials for clients, including JinShiyuan Wines, Fushida Electric Motorbike and Zhanshangmingzhu Furniture. Revenues from advertising production were flat compared with the previous quarter, but decreased compared with the first quarter of 2011. The decrease was largely due to the loss of revenue from the 'Guang Er Gao Zhi' program, which was terminated by CCTV.
"In the first quarter of 2012, the Company completed the on-site filming stage and post-production of a TV drama. Currently we are in active discussions with a few major TV stations for the distribution of the drama, and we aim to have it aired in the second half of 2012.
"Competition for CCTV's advertising sales remained fierce, however with persistent promotion over the past two years, our sales of the 'Periodic China News Package' achieved impressive results. The package's selling rate and revenues both significantly increased in the first quarter compared with the same period in 2011. On the other hand, the sales performance of our recently acquired resource, the 'All Day Classic Package' was fairly weak. For remainder of 2012, the Company intends to focus on the sales of the 'All Day Classic Package' on CCTV-8, to narrow the package's losses and help it become profitable."
First Quarter 2012 Financial Results
Revenues
Revenues from advertising agency services were RMB34.8 million (US$5.5 million) in the first quarter of 2012, a decrease of 25.6% from RMB46.7 million in the first quarter of 2011, and a decrease of 29.9% from RMB49.6 million in the fourth quarter of 2011. Despite the generally weak season for advertising in the first quarter of 2012, the sales performance of the Company's "Periodic China News Package" on CCTV-4 still achieved slight growth compared with the fourth quarter 2011, which is the traditional peak season. However, because our contracts with CCTV for the 'Daytime Advertising Package' and 'Television Guides' programs expired on December 31, 2011, and the performance of the newly acquired 'All Day Classic Package' program on CCTV-8 for 2012 was not as good as expected, our sales significantly decreased by 29.9% in the first quarter of 2012, compared with the fourth quarter of 2011.
Similarly, there was also a significant decrease in Company's sales in the first quarter 2012 compared with the first quarter of 2011 due to the expiration of the contacts for the 'Daytime Advertising Package' and 'Television Guides' programs.
Revenues from production and sponsorship services were RMB5.4 million (US$0.9 million) in the first quarter of 2012, a decrease of 24.6% from RMB7.2 million in the first quarter of 2011, and a decrease of 3.3% from RMB5.6 million in the fourth quarter of 2011. A number of new commercial advertisements were produced in the first quarter of 2012 for clients such as JinShiyuan Wines, Fushida Electric Motorbikes, and Zhanshangmingzhu Furniture. The decrease in revenues from advertising production compared with the first quarter of 2011 was mainly due to the termination of the 'Guang Er Gao Zhi' program, which amounted to RMB3.7 million in revenues in the first quarter of 2011.
Operating costs and expenses
Cost of revenues was RMB42.4 million (US$6.7 million) in the first quarter of 2012, an increase of 56.7% from RMB27.1 million in the first quarter of 2011, and an increase of 10.6% from RMB 38.4 million in the fourth quarter of 2011.
The significant increase in cost of revenues compared with the first and fourth quarters of 2011 was mainly due to the media fee for the newly acquired "All Day Classic Package" program on CCTV-8, which totaled RMB12.3 million. Excluding the media fee of the 'All Day Classic Package ', cost of revenues increased by 2.4% compared with the first quarter of 2011, and decreased by 12.7% compared with the fourth quarter of 2011. The year-over-year increase was mainly due to the price increase in the media fee of the 'Periodic China News Package' on CCTV-4, while the sequential decrease resulted from the absence of RMB6.6 million in production costs from our TV drama, which had been included in the fourth quarter of 2011, and that was also partially offset by the price increase in the media fee of the 'Periodic China News Package'.
Sales and marketing expenses were RMB3.7 million (US$0.6 million) in the first quarter of 2012, a decrease of 16.9% from RMB4.4 million in the first quarter of 2011, and a decrease of 22.0% from RMB4.7 million in the fourth quarter of 2011. The year-over-year and sequential decrease was due to lower salary and travel expenses of sales team since there were fewer resources for sale after the expiration of the contracts for the 'Daytime Advertising Package' and 'Television Guides' programs.
General and administrative expenses were RMB5.0 million (US$0.8 million) in the first quarter of 2012, a decrease of 20.3% from RMB6.2 million in the first quarter of 2011 and a decrease of 30.7% from RMB7.2 million in the fourth quarter of 2011. The decrease was mainly due to lower professional service fees in the first quarter of 2012.
Operating loss, as a result of the foregoing factors, was RMB12.0 million (US$1.9 million) in the first quarter of 2012, compared with operating income of RMB13.1 million in the first quarter 2011, and operating income of RMB1.9 million in the fourth quarter 2011. The company's operating margin was 25.8%, 3.7% and -30.7% for the three months ended March 31, 2011, December 31, 2011 and March 31, 2012, respectively.
Income tax expense was zero due to the operating loss in the first quarter of 2012, compared with RMB4.9 million in the first quarter of 2011. Income tax expense was RMB22.6 million in the fourth quarter of 2011, which was due to the special dividend-related withholding tax.
Net loss was RMB 11.5 million (US$1.8 million) in the first quarter of 2012, compared with net income of RMB8.3 million in the first quarter of 2011, and net loss of RMB18.5 million in the fourth quarter of 2011.
Basic and diluted loss per ADS for the first quarter of 2012 were RMB4.61(US$0.73) and RMB4.54(US$0.72) respectively, compared with basic and diluted earnings per ADS of RMB3.2 for the first quarter of 2011, and basic and diluted loss per ADS of RMB7.41 for the fourth quarter of 2011.
Each ADS represents 300 ordinary shares.
Business Outlook
The Company currently expects to generate total net revenues between RMB43 million ($6.8 million) to RMB48 million ($7.6 million) for the second quarter of 2012, which represents a potential decrease of 7.2% to 16.8% compared with the second quarter of 2011 due to fewer media resources secured by the Company and the continued pricing competition, as well as the seasonal weakness in advertising demand in the market. This forecast reflects the Company's current and preliminary estimate, which is subject to change.
"Going Private" Proposal
On May 4, 2012, the company received a proposal letter from Mr. Shengcheng Wang, Chairman of the Board, proposing to acquire (i) ADSs of the Company held by the public investors for cash at not more than US$5.0 per ADS; and (ii) options issued under the 2008 Equity Incentive Scheme of the Company for cash at not more than US$0.0167 per option. The Company has formed a special committee of the Board of Directors to consider the proposal and any potential alternative transactions involving the Company.
Non-GAAP Disclosure
In addition to the unaudited consolidated financial information presented in accordance with US GAAP, management uses a non-GAAP measure of operating income and net income excluding non-cash share-based compensation. Company management believes excluding the share-based compensation expenses from non-GAAP financial measures is useful for the investors' understanding of overall current financial performance. Nevertheless, the limitation of using non-GAAP financial measures excluding share-based compensation expenses is that share-based compensation expenses have been and will continue to be a significant recurring expense in the Company's business. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of unaudited non-GAAP results of operations measures to the nearest comparable GAAP measures" set forth below, which shall be read in conjunction with the preceding financial information presented in accordance with US GAAP.
Safe Harbor Statement
This document contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements about the Company's plans, objectives, expectations, strategies, intentions, or other characterizations of future events or circumstances and are generally identified by the words "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "seeks," "would," and similar expressions. A number of factors could cause the Company's actual results, performance, achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Securities and Exchange Commission filings of the Company. China Mass Media does not undertake any obligation to update any forward-looking statements, except as required under applicable law.
About China Mass Media Corp.
As a television advertising company in China, the Company provides a full range of advertising services, including advertising agency services, creative production services, and other value added services. The Company currently offers approximately 16 minutes of advertising time slots per day on CCTV Channels 4 and 8. CCTV is the largest television network in China. The Company has produced over 400 advertisements and has won a number of prestigious awards in China and across the world, including the "Gold World Medal" at The New York Festivals® International Television & Film Awards. For more information, please visit http://www.chinammia.com.
For further information, contact:
China Mass Media Corp.
Julie Sun
Chief Financial Officer
6/F, Tower B, Corporate Square,
35 Finance Street Xicheng District
Beijing, 100033
P. R. China
Phone: +86 10 8809 1099
Email: [email protected]
Christensen
Tip Fleming
Phone: +852 2117 0861
Email: [email protected]
Teal Willingham
Phone: +86 131 2179 3446
Email: [email protected]
| CHINA MASS MEDIA CORP. |
|||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
| THREE MONTHS ENDED, |
|||||||
| Mar 31, 2011 |
Dec 31, 2011 |
Mar 31, 2012 |
Mar 31, 2012 |
||||
| RMB |
RMB |
RMB |
US$ |
||||
| Revenues: |
|||||||
| Advertising agency services |
46,699,856 |
49,603,661 |
34,750,072 |
5,518,074 |
|||
| Advertisement production and sponsorship services |
7,157,528 |
5,575,014 |
5,393,650 |
856,475 |
|||
| Total Revenue |
53,857,384 |
55,178,675 |
40,143,722 |
6,374,549 |
|||
| Less: Business tax |
(2,955,722) |
(2,981,068) |
(1,030,390) |
(163,619) |
|||
|
Total net revenues |
50,901,662 |
52,197,607 |
39,113,332 |
6,210,930 |
|||
| Operating costs and expenses: |
|||||||
| Cost of revenues |
(27,085,297) |
(38,385,539) |
(42,446,111) |
(6,740,153) |
|||
| Sales and marketing expenses |
(4,446,447) |
(4,736,501) |
(3,696,475) |
(586,975) |
|||
| General and administrative expenses |
(6,225,352) |
(7,152,691) |
(4,960,296) |
(787,661) |
|||
| Total operating costs and expenses |
(37,757,096) |
(50,274,731) |
(51,102,882) |
(8,114,789) |
|||
| Operating income |
13,144,566 |
1,922,876 |
(11,989,550) |
(1,903,859) |
|||
| Interest and investment income |
2,481,784 |
2,830,224 |
1,032,331 |
163,927 |
|||
| Other expense, net |
(2,443,265) |
(676,746) |
(582,425) |
(92,485) |
|||
| Income before tax |
13,183,085 |
4,076,354 |
(11,539,644) |
(1,832,417) |
|||
| Income tax expense |
(4,883,735) |
(22,591,640) |
- |
- |
|||
| Net income |
8,299,350 |
(18,515,286) |
(11,539,644) |
(1,832,417) |
|||
| Earnings per ordinary shares, basic |
0.0108 |
(0.0247) |
(0.0154) |
(0.0024) |
|||
| Earnings per ordinary share, diluted |
0.0107 |
(0.0247) |
(0.0151) |
(0.0024) |
|||
| Earnings per ADS, basic |
3.2 |
(7.41) |
(4.61) |
(0.73) |
|||
| Earnings per ADS, diluted |
3.2 |
(7.41) |
(4.54) |
(0.72) |
|||
| Shares used in calculating earnings per ordinary share, basic |
769,992,300 |
749,291,535 |
751,697,920 |
751,697,920 |
|||
| Shares used in calculating earnings per ordinary shares, diluted |
773,240,405 |
749,291,535 |
761,710,814 |
761,710,814 |
|||
| Shares used in calculating earnings per ADS, basic |
2,566,641 |
2,497,638 |
2,505,660 |
2,505,660 |
|||
| Shares used in calculating earnings per ADS, diluted |
2,577,468 |
2,497,638 |
2,539,036 |
2,539,036 |
|||
| Note: Effective on November 28, 2011, the Company changed the ratio of its ordinary shares to American Depositary Shares (ADSs) from 30:1 to 300:1. There is no change to China Mass Media's underlying ordinary shares. After November 28, 2011, all earnings per ADS for prior periods were retrospectively adjusted to reflect the new ADS ratio. |
|||||||
| CHINA MASS MEDIA CORP. |
||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
| Dec 31, 2011 |
Mar 31, 2012 |
Mar 31, 2012 |
||||
| RMB |
RMB |
US$ |
||||
| Assets |
||||||
| Current assets |
||||||
| Cash and cash equivalents |
111,712,682 |
43,070,722 |
6,839,337 |
|||
| Short-term investments |
193,705,911 |
75,293,027 |
11,956,019 |
|||
| Notes receivable |
600,000 |
650,000 |
103,215 |
|||
| Accounts receivable, net |
7,362,830 |
4,064,361 |
645,393 |
|||
| Prepaid expenses and other current assets |
93,655,505 |
85,493,704 |
13,575,816 |
|||
| Total current assets |
407,036,928 |
208,571,814 |
33,119,780 |
|||
| Non-current assets |
||||||
| Property and equipment, net |
57,215,642 |
56,012,243 |
8,894,362 |
|||
| Total non-current assets |
57,215,642 |
56,012,243 |
8,894,362 |
|||
| Total assets |
464,252,570 |
264,584,057 |
42,014,142 |
|||
| Liabilities and Shareholder's Equity |
||||||
| Current liabilities: |
||||||
| Accounts payable |
70,419,236 |
65,083,166 |
10,334,762 |
|||
| Customer advances |
28,066,802 |
19,370,134 |
3,075,845 |
|||
| Dividend payable |
164,589,438 |
- |
- |
|||
| Accrued expenses and other current liabilities |
24,343,641 |
16,781,965 |
2,664,862 |
|||
| Taxes payable |
15,874,490 |
15,069,888 |
2,392,995 |
|||
| Amount due to related parties |
10,883,700 |
8,883,699 |
1,410,671 |
|||
| Total current liabilities |
314,177,307 |
125,188,852 |
19,879,135 |
|||
| Total Liabilities |
314,177,307 |
125,188,852 |
19,879,135 |
|||
| Shareholders' equity |
||||||
| Ordinary shares ($0.001 par value; 3,000,000,000 shares authorized; 751,697,920 shares issued and outstanding as of December 31, 2011 and as of March 31, 2012) |
5,132,534 |
5,134,151 |
815,268 |
|||
| Additional paid-in capital |
104,896,262 |
105,548,360 |
16,760,359 |
|||
| Other comprehensive income |
13,900 |
219,771 |
34,898 |
|||
| Statutory reserves |
25,000,000 |
25,000,000 |
3,969,829 |
|||
| Retained earnings |
15,032,567 |
3,492,923 |
554,653 |
|||
| Total Shareholders' Equity |
150,075,263 |
139,395,205 |
22,135,007 |
|||
| Total Liabilities and Shareholder's Equity |
464,252,570 |
264,584,057 |
42,014,142 |
|||
| CHINA MASS MEDIA CORP. |
|||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
| THREE MONTHS ENDED |
|||||||
| Mar 31, |
Dec 31, |
Mar 31, |
Mar 31, 2012 |
||||
| RMB |
RMB |
RMB |
US$ |
||||
| Cash flows from operating activities: |
|||||||
| Net income |
8,299,351 |
(18,515,286) |
(11,539,644) |
(1,832,417) |
|||
| Adjustments to reconcile net income to net cash provided by operating activities |
|||||||
| Depreciation expense |
1,000,185 |
1,097,811 |
1,069,101 |
169,766 |
|||
| Investment income |
(2,102,411) |
(1,804,548) |
(195,458) |
(31,037) |
|||
| Exchange loss |
2,485,718 |
744,912 |
540,309 |
85,797 |
|||
| Share-based compensation |
361,253 |
264,409 |
652,098 |
103,549 |
|||
| Loss/(Gain) on disposal of property and equipment |
(46,406) |
- |
29,677 |
4,713 |
|||
| Changes in assets and liabilities: |
|||||||
| Notes receivable |
(2,733,405) |
860,000 |
(50,000) |
(7,940) |
|||
| Accounts receivable, net |
(4,101,852) |
(4,297,380) |
3,298,469 |
523,774 |
|||
| Prepaid expense and other current assets |
(6,298,388) |
7,335,950 |
7,394,768 |
1,174,239 |
|||
| Accounts payable |
44,151,860 |
(15,997,768) |
(5,336,070) |
(847,331) |
|||
| Customer advances |
16,524 |
(22,372,020) |
(8,696,668) |
(1,380,971) |
|||
| Accrued expenses and other current liabilities |
(2,902,731) |
1,123,991 |
(7,630,424) |
(1,211,659) |
|||
| Taxes payable |
(3,379,180) |
(3,412,805) |
(422,629) |
(67,111) |
|||
| Amount due to related parties |
- |
- |
(2,000,001) |
(317,587) |
|||
| Net cash provided by/(used in) operating activities |
34,750,518 |
(54,972,734) |
(22,886,472) |
(3,634,215) |
|||
|
Cash flows from investing activities: |
|||||||
| Net proceeds from redemption / (purchase) of short-term investments |
(250,000,000) |
220,000,000 |
118,687,500 |
18,846,765 |
|||
| Purchase / (disposal) of property and equipment |
(1,752,423) |
(60,900) |
102,621 |
16,295 |
|||
| Proceeds from investment income |
2,218,027 |
1,804,548 |
195,458 |
31,037 |
|||
| Net cash provided by / (used in) investing activities |
(249,534,396) |
221,743,648 |
118,985,579 |
18,894,097 |
|||
|
Cash flows from financing activities: Dividend distribution |
- |
(198,414,044) |
(165,132,185) |
(26,221,863) |
|||
| Repurchase of ordinary shares to be cancelled |
(5,895,960) |
(919,799) |
- |
||||
| Net proceeds issuance of ordinary shares |
687,751 |
- |
388,675 |
61,719 |
|||
| Net cash used in financing activities |
(5,208,209) |
(199,333,843) |
(164,743,510) |
(26,160,144) |
|||
|
Effect of exchange rate changes on cash and cash equivalents |
(2,484,064) |
(1,049,586) |
2,443 |
388 |
|||
| Net increase / (decrease) in cash and cash equivalents |
(222,476,151) |
(33,612,515) |
(68,641,960) |
(10,899,874) |
|||
| Cash and cash equivalents at beginning of the period |
544,427,828 |
145,325,197 |
111,712,682 |
17,739,211 |
|||
| Cash and cash equivalents at end of the period |
321,951,677 |
111,712,682 |
43,070,722 |
6,839,337 |
|||
| CHINA MASS MEDIA CORP. |
||||||
| SELECTED OPERATING DATA |
||||||
| THREE MONTHS ENDED |
||||||
| Mar 31, 2011 |
Dec 31, 2011 |
Mar 31, 2012 |
||||
| Number of programs secured during the period |
35 |
3 |
2(1) |
|||
| Total advertising time obtained (seconds) |
2,552,220 |
224,400 |
90,300(2) |
|||
| Total advertising time sold (seconds) |
127,745 |
162,315 |
61,020(3) |
|||
| (1) The Company ceased to be the advertising agency of CCTV-E and CCTV-F from July 1, 2011. The number of programs secured and total advertising time obtained decreased accordingly, (2) Represents the total amount of time during regular television programs secured through the Company's contracts with CCTV-1, CCTV-2 and CCTV-4 in 2011, and CCTV-4 and CCTV-8 in 2012, (3) During the three-month periods ended March 31, 2011, the Company has sold 5,340 seconds of advertisements in CCTV-E and CCTV-F. No advertising time slots in CCTV-E and CCTV-F were sold during the period of December 31, 2011 and March, 2012. |
||||||
| RECONCILIATIONS OF UNAUDITED NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES (*) |
|||||||
| Three months ended March 31, 2011 |
Three months ended March 31, 2012 |
||||||
| GAAP Results |
Adjustment |
Non-GAAP Results |
GAAP Results |
Adjustment |
Non-GAAP Results |
||
| RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
||
| Operating income |
13,144,566 |
361,253 |
13,505,819 |
(11,989,550) |
652,098 |
(11,337,452) |
|
| Net income |
8,299,350 |
361,253 |
8,660,603 |
(11,539,644) |
652,098 |
(10,887,546) |
|
| (*)The adjustment is for share-based compensation expenses |
|||||||
Non-GAAP Disclosure
In addition to the unaudited consolidated financial information presented in accordance with US GAAP, management uses a non-GAAP measure of operating income and net income excluding non-cash share-based compensation. Company management believes excluding the share-based compensation expenses from non-GAAP financial measures is useful for the investors' understanding of overall current financial performance. Nevertheless, the limitation of using non-GAAP financial measures excluding share-based compensation expenses is that share-based compensation expenses have been and will continue to be a significant recurring expense in the Company's business.
The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of unaudited non-GAAP results of operations measures to the nearest comparable GAAP measures" set forth above, which shall be read in conjunction with the preceding financial information presented in accordance with US GAAP.
SOURCE China Mass Media Corp.
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