Charm Communications Inc. Announces Unaudited Fourth Quarter and Full Year 2011 Results Q4 revenues up 41.7% year over year

Q4 net income up 29.4% year over year

Q4 non-GAAP net income up 17.4% year over year

Full year 2011 revenues up 45.6% year over year

Full year 2011 net income up 24.8% year over year

Full year non-GAAP net income up 20.9% year over year

BEIJING, March 5th, 2012 /PRNewswire-Asia-FirstCall/ -- Charm Communications Inc. (NASDAQ: CHRM) ("Charm" or the "Company"), a leading advertising agency in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2011.

Fourth Quarter 2011 Highlights

  • Revenues in the fourth quarter of 2011 grew 41.7% year over year to $80.3 million
  • Revenues for Charm's advertising agency business grew 51.5% year over year to $11.7 million in the fourth quarter of 2011
  • Revenues for Charm's media investment management business grew 40.0% year over year to $65.6 million in the fourth quarter of 2011
  • Revenues for Charm's branding and identity services business grew 42.5% year over year to $3.0 million in the fourth quarter of 2011
  • Gross profit for the fourth quarter of 2011 grew 29.0% year over year to $28.5 million
  • Net income for the fourth quarter of 2011 grew 29.4% year over year to $15.7 million
  • Non-GAAP net income, which excludes share-based compensation expenses, amortization of intangible assets and impairment on investments, grew 17.4% year over year to $17.1 million in the fourth quarter of 2011
  • Basic net income per ADS for the fourth quarter of 2011 was $0.38, compared to $0.31 for the fourth quarter of 2010 and $0.32 for the third quarter of 2011
  • Cash flow from operations was positive for the fourth quarter of 2011, with cash and cash equivalents of $139.4 million as of December 31, 2011
  • In the fourth quarter of 2011, Charm added five new advertising client accounts to its agency business, bringing total agency accounts to 148 as of December 31, 2011
  • In the fourth quarter of 2011, Charm's principal media business had 303 advertisers, compared to 282 advertisers in the fourth quarter of 2010
  • Charm had 697 employees as of December 31, 2011, compared to 687 as of September 30, 2011

Full Year 2011 Highlights

  • Revenues in the full year 2011 grew 45.6% year over year to $280.1 million
  • Revenues for Charm's advertising agency business in the full year 2011 grew 38.4% year over year to $34.3 million
  • Revenues for Charm's media investment management business in the full year 2011 grew 46.9% year over year to $238.8 million
  • Revenues for Charm's branding and identity service business in the full year 2011 grew 40.3% year over year to $7.0 million
  • Gross profit for the full year 2011 grew 23.2% year over year to $84.5 million
  • Net income for the full year 2011 grew 24.8% year over year to $48.0 million
  • Non-GAAP net income, which excludes share-based compensation expenses, amortization of intangible assets and impairment on investments, for the full year 2011 grew 20.9% year over year to $51.7 million
  • Basic net income per ADS for the full year 2011 was $1.18, compared to $1.02 for the full year 2010

"2011 was a very successful year for Charm, as we were able to solidify our market-leading position in television advertising with our ninth straight year as China Central Television's (CCTV) number one agency. At the same time we were able to build up scale within the faster-growing digital space, which contributed 16% of our agency revenues for the full year." said Mr. He Dang, founder, chairman and chief executive officer of Charm.

"In 2012, we are excited by the long-term growth prospects of our agency business, in which we will be investing more aggressively in terms of talent and infrastructure, especially with respect to our digital business, which we see as our new growth driver. We also proactively modified the inventory mix of our media investment management business to address the weakening of the satellite TV market in the wake of new regulatory policies," concluded Mr. Dang.

Mr. Wei Zhou, Charm's chief financial officer, added, "We delivered an outstanding performance for full year 2011, achieving robust top-line and bottom-line growth. Although we expect to see a softer than usual advertising environment in the first quarter of this year, we remain confident in the long-term growth of China's advertising market, as well as in the sustainable and profitable growth at Charm."

Fourth Quarter 2011 Results

Turnover (non-GAAP)

US$ mm

4Q11

4Q10

3Q11

Y-o-Y %

Q-o-Q%

Total turnover (non-GAAP)

$254.8

$198.9

$220.2

28.1%

15.7%

Advertising agency

$189.2

$152.0

$160.6

24.5%

17.8%

Media investment management

$65.6

$46.9

$59.6

40.0%

10.1%

Branding and identity services

N/A

N/A

N/A

N/A

N/A

The Company uses turnover (non-GAAP), defined as total customer advertising spending placed through or with Charm, to reflect the scale of its business.

The 28.1% year-over-year increase in total turnover was mainly due to the increase in the number of advertising clients and the increase in advertising spending from existing clients. The 15.7% quarter-over-quarter increase in turnover was largely attributed to the increase in agency advertising spending in the fourth quarter of 2011, which was mainly due to seasonal factors.

The 24.5% year-over-year increase in advertising agency business, or agency business, turnover was mainly due to the increase in the number of new agency clients and the increase in advertising spending from existing agency clients. The 17.8% quarter-over-quarter increase in turnover was mainly attributed to the increase in agency advertising spending on non-CCTV media platforms, especially on the internet in the fourth quarter of 2011. In the fourth quarter of 2011, Charm provided advertising agency services to 148 advertising client accounts, five of which were acquired in the fourth quarter of 2011.

The revenue extraction rate, which is defined as revenue divided by turnover, was 6.2% for the agency business, compared to 5.1% for the fourth quarter of 2010 and 5.8% for the third quarter of 2011. The quarter-over-quarter increase in the revenue extraction rate was mainly due to increased advertising spending on the internet, which has a higher extraction rate. For example, internet agency revenue in the fourth quarter of 2011 accounts for approximately 20% of the Company's total agency revenue compared with 5% in the fourth quarter of 2010. Charm expects the revenue extraction rate to increase as the Company expands its full service offerings across all media platforms under Charm Advertising and ramps up digital media offerings under Charm Interactive and Charm Click.

The 40.0% year-over-year turnover increase (equivalent to GAAP revenue) in the media investment management business, or principal media business, which operates under the Shangxing Media brand, was mainly due to the addition of Hubei Provincial Economic TV. Compared with the third quarter of 2011, the 10.1% quarter-over-quarter increase was mainly attributed to the strong demand from clients on Shanghai Dragon Satellite Channel due to seasonal factors. For the fourth quarter of 2011, Charm had 303 advertisers for its principal media business, compared with 282 advertisers for the fourth quarter of 2010.

Revenues

US$ mm

4Q11

4Q10

3Q11

Y-o-Y %

Q-o-Q%

Total revenues

$80.3

$56.7

$70.2

41.7%

14.4%

Advertising agency

$11.7

$7.8

$9.3

51.5%

26.8%

Media investment management

$65.6

$46.9

$59.6

40.0%

10.1%

Branding and identity services

$3.0

$2.1

$1.4

42.5%

117.4%

The increases in agency and principal media business revenues are consistent with the changes in turnover, while the quarter-to-quarter increases in branding and identity services were primarily due to more client demand for creative services in the fourth quarter of 2011.

Gross Profit

US$ mm

4Q11

4Q10

3Q11

Y-o-Y %

Q-o-Q%

Cost of revenues

$51.8

$34.6

$47.7

49.7%

8.6%

Gross profit

$28.5

$22.1

$22.5

29.0%

26.6%

Gross margin

35.5%

39.0%

32.1%

 

 

Charm mainly attributes the year-over-year increase in cost of revenues to the addition of Hubei Provincial Economic TV and an increase in TV media costs for the two satellite channels and three CCTV programs. The year-over-year gross margin decrease is mainly due to the addition of Beijing Gehua Cable TV Network and Hubei Provincial Economic TV, which commenced operations in 2011 and operates at a lower margin.

Operating Profit

US$ mm

4Q11

4Q10

3Q11

Y-o-Y %

Q-o-Q%

Total operating expenses

$13.0

$8.0

$9.3

63.0%

39.6%

Selling and marketing

$9.6

$5.5

$6.7

75.8%

44.1%

General and administrative

$3.4

$2.5

$2.6

34.8%

28.1%

Operating profit

$15.9

$14.1

$13.2

12.6%

20.6%

The 75.8% year-over-year increase in selling and marketing expenses compared with the fourth quarter of 2010 was primarily due to increased headcount at Charm Interactive and Charm Click. The 44.1% quarter-over-quarter increase in selling and marketing expenses compared with the third quarter of 2011 was primarily due to infrastructure investment to support Charm's long-term growth, such as the Company's office expansion. Selling and marketing expenses represented 12.0% of the Company's total revenues for the fourth quarter of 2011, compared to 9.7% for the fourth quarter of 2010 and 9.5% for the third quarter of 2011.

General and administrative expenses in the fourth quarter of 2011 grew 34.8% year over year and 28.1% quarter over quarter to $3.4 million. The increase is consistent with the Company's overall investment in senior talent and infrastructure.

Net Income

US$ mm

4Q11

4Q10

3Q11

Y-o-Y %

Q-o-Q%

Non-GAAP Net income*

$17.1

$14.5

$14.2

17.4%

20.5%

Net income

$15.7

$12.2

$13.2

29.4%

19.6%

Basic net income per ADS (US$)

$0.38

$0.31

$0.32

 

 

Fully diluted net income per ADS (US$)

$0.36

$0.29

$0.31

 

 

*The Company's non-GAAP net income excludes share-based compensation expenses, amortization of intangible assets and impairments on investments.

Each ADS represents two common shares. The weighted average shares used in computation of basic net income per ADS for the fourth quarter of 2011 is 39,075,906. As of December 31, 2011, 38,983,088 ADS were issued and outstanding.

Cash Flows and Cash Position

Cash flow from operations for the fourth quarter of 2011 was positive. As of December 31, 2011, the Company had cash and cash equivalents of $139.4 million, compared to $136.2 million at the end of the third quarter of 2011.

Employee Headcount

As of December 31, 2011, the Company had 697 employees, compared to 687 employees as of September 30, 2011.

Full Year 2011 Results

Turnover

US$ mm

FY11

FY10

Y-o-Y %

Total turnover (non-GAAP)

$874.5

$636.9

37.3%

Advertising agency

$635.7

$474.3

34.0%

Media investment management

$238.8

$162.6

46.9%

Branding and identity services

NA

NA

NA

Revenues

US$ mm

FY11

FY10

Y-o-Y %

Total revenues

$280.1

$192.4

45.6%

Advertising agency

$34.3

$24.8

38.4%

Media investment management

$238.8

$162.6

46.9%

Branding and identity services

$7.0

$5.0

40.3%

Gross Profit

US$ mm

FY11

FY10

Y-o-Y %

Cost of revenues

$195.6

$123.8

58.0%

Gross profit

$84.5

$68.6

23.2%

Gross margin

30.2%

35.7%

 

Operating Profit

US$ mm

FY11

FY10

Y-o-Y %

Total operating expenses

$36.8

$27.1

36.1%

Selling and marketing

$27.1

$20.3

33.5%

General and administrative

$9.7

$6.7

43.8%

Operating profit

$47.7

$41.5

14.8%

Net Income

US$ mm

FY11

FY10

Y-o-Y %

Non-GAAP Net income*

$51.7

$42.8

20.9%

Net income

$48.0

$38.5

24.8%

Basic net income per ADS (US$)

$1.18

$1.02

 

Fully diluted net income per ADS (US$)

$1.12

$0.98

 

*The Company's non-GAAP net income excludes share-based compensation expenses, amortization of intangible assets and impairments on investments.

Each ADS represents two common shares. The weighted average shares used in computation of basic net income per ADSs for the full year 2011 is 39,133,419.

Recent Business Developments

In November 2011, Charm secured the number-one position in terms of successful bidding volume at the CCTV Prime-time Auction, regarded as the most important annual event in China's advertising industry.

In December 2011, Charm appointed Mr. Tony Yu, former chief technology officer of Zhaopin Limited, as the Company's chief technology officer. Through this newly-created position, Mr. Yu is expected to support the strategic development of Charm's digital initiatives and spearhead the building and upgrading of the Company's corporate information technology ("IT") infrastructure.

In December 2011, Charm terminated its exclusive agency agreement with Hubei Provincial Economic TV.

In December 2011, Charm signed a three-year exclusive agency agreement with Guangdong Southern Satellite Television Channel.

Charm won the following new accounts in the fourth quarter of 2011:

Charm Advertising won the overall television media business for Guizhou Xi Wine, China Guangdong Development Bank, Shandong Gold and Shanxi Travel and Tourism Bureau.

Charm Interactive won the full digital campaign for Huaxia Bank, Chcedo Cosmetics and Rongchang Pharmaceuticals.

Charm Click won the search engine marketing business for Standard Chartered Bank, Forever 21, DBS China and Midea Water Cooler.

Business Outlook

US$ mm

1Q12E

Total revenues

$37.0 to $38.5

Non-GAAP net income*

$1.50 to $2.00

*The Company's non-GAAP net income excludes share-based compensation expenses, amortization of intangible assets and impairments on investments.

The Company bases these estimates on a foreign exchange rate of RMB6.50 to US$1.00. This forecast reflects the Company's current and preliminary view, which is subject to change.

Non-GAAP Financial Measures:

To supplement the unaudited condensed consolidated financial information presented in accordance with Accounting Principles Generally Accepted in the United States of America ("GAAP"), the Company also provides the following non-GAAP financial measures: "turnover," which is defined as total customer advertising spending placed through or with Charm, and "non-GAAP net income," which is defined as GAAP net income excluding stock-based compensation expenses, amortization of intangible assets and impairment on investments.

The non-GAAP financial measures are provided to enhance investors' overall understanding of the Company's current and past financial performance in ongoing core operations as well as prospects for the future. These measures should be considered in addition to results prepared and presented in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Management uses both GAAP and non-GAAP information in evaluating and operating the Company's business internally, and therefore deems it important to provide all of this information to investors.

Caution on Use of Non-GAAP Measures

In addition to Charm's consolidated financial results prepared under US GAAP, the Company also provides non-GAAP financial measures, including "turnover" and "non-GAAP net income." The Company believes that the non-GAAP financial measures provide investors with another method for assessing its operating results in a manner that is focused on the performance of its ongoing operations.

Management believes investors will benefit from greater transparency in referring to these non-GAAP financial measures when assessing the Company's operating results, as well as when forecasting and analyzing future periods. However, management recognizes that:

  • these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company's GAAP financial measures;
  • these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company's GAAP financial measures;
  • these non-GAAP financial measures should not be considered to be superior to the Company's GAAP financial measures; and
  • these non-GAAP financial measures were not prepared in accordance with GAAP and investors should not assume that the non-GAAP financial measures presented in this earnings release were prepared under a comprehensive set of rules or principles.

Further, these non-GAAP financial measures may be unique to the Company, as they may be different from non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company's results to the results of other companies. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies.

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure or measures appears at the end of this press release.

Conference Call

Charm's management team will hold an earnings conference call at 8 a.m. U.S. Eastern Time (9 p.m. Beijing/Hong Kong Time) on Tuesday, March 6, 2012.

Dial-in details for the conference call are as follows:

U.S.:

+1-718-354-1231

International:

+65-6723-9381

United Kingdom:

+44-203-059-8139

Hong Kong:

+852-2475-0994

Passcode:

56680865

A replay of the call will be available from 11 a.m. March 6, 2012 until March 13, 2012 U.S. Eastern Time. Dial-in details for the replay are as follows:

International:

+61-2-8235-5000

Passcode:

56680865

Additionally, an archived webcast of this call will be available on the Investor Relations section of the Charm web site at http:/ir.charmgroup.cn.

About Charm

Charm Communications Inc. (NASDAQ: CHRM) is a leading advertising agency group in China that offers integrated advertising services with particular focus on television and the internet. Charm's integrated advertising services include full media planning and buying, as well as creative and branding services. Charm has built a full service digital advertising platform, which offers digital campaign capabilities across all key digital media, including search engines, display portals, online video sites and social networking services. Charm also secures advertising inventory and other advertising rights, such as sponsorships and branded content, from premium media networks and resells to clients as part of its integrated media offerings. Charm's clients include China's top domestic brands, as well as some major international brands, across a wide range of industries. Since 2003 Charm has been the top agency every year for China's leading television network, China Central Television ("CCTV"). For more information, please go to http://ir.charmgroup.cn .

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties. Further information regarding these and other risks is included in Charm's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.

For investor and media inquiries, please contact:

In China:
Mr. Kevin Sun
IR Department
Charm Communications Inc.
Phone: +86-10-8556-2666 ext. 2527
Email: ir@charmgroup.cn

In the U.S.:
Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Phone: +1-646-460-9989
Email: chrm@ogilvy.com

 

Charm Communications Inc.

Unaudited Condensed Consolidated Balance Sheets

(Amounts in thousands of U.S. dollars)

 

 

 

 

 

 

 

31-Dec-11

30-Sep-11

31-Dec-10

ASSETS

 

 

 

Current Assets

 

 

 

 

Cash and cash equivalents

139,406

136,172

123,320

 

Notes receivable

28,880

5,454

15,323

 

Prepaid expenses

106,393

72,277

63,680

 

Deposits

25,730

28,867

28,409

 

Accounts receivable

103,920

104,121

49,746

 

Amount due from related parties

3,494

6,439

2,485

 

Deferred tax assets

125

-

-

 

Other current assets

2,139

2,987

1,587

Total current assets

410,087

356,317

284,550

 

 

 

 

 

 

Fixed assets, net

4,344

2,096

2,082

 

Intangible assets, net

3,397

3,799

-

 

Investments under equity method

1,445

1,431

-

 

Goodwill

4,335

4,277

-

 

Other non-current assets

1,009

996

-

 

 

 

 

 

Total non-current assets

14,530

12,599

2,082

 

 

 

 

 

TOTAL ASSETS

424,617

368,916

286,632

 

 

 

 

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

 

 

 

 

Current Liabilities

 

 

 

 

Accounts payable (of which 687, 1,240 and 9,012, as of December 31,2011, September 30, 2011and December 31, 2010 of the consolidated VIE without recourse to the Company, respectively)

63,141

52,961

19,341

 

Amounts due to related parties (of which nil, 196 and nil as of December 31, 2011, September 30, 2011 and December 31, 2010 of the consolidated VIE without recourse to the Company, respectively)

4,460

6,917

4,701

 

Advances from customers (of which 12,028, 8,324 and 3,083 as of December 31, 2011, September 30, 2011 and December 31, 2010 of the consolidated VIE without recourse to the Company, respectively)

85,720

59,936

57,970

 

Accrued expenses and other current liabilities (of which 4,411, 7,009 and 14,843, as of December 31, 2011, September 30, 2011 and December 31, 2010 of the consolidated VIE without recourse to the Company, respectively)

22,876

16,978

18,516

 

Dividends payable (of which nil as of December 31,2011, September 30, 2011 and December 31, 2010 of the consolidated VIE without recourse to the Company, respectively)

-

-

5,829

 

Consideration payable (of which nil as of December 31,2011, September 30, 2011 and December 31, 2010 of the consolidated VIE without recourse to the Company, respectively)

2,813

4,344

-

Total current liabilities

179,010

141,136

106,357

 

 

 

 

 

 

Consideration payable (of which nil as of December 31, 2011, September 30, 2011  and December 31, 2010 of the consolidated VIE without recourse to the Company, respectively)

2,476

2,442

-

Total non-current liabilities

2,476

2,442

-

 

 

 

 

 

Total liabilities

181,486

143,578

106,357

 

 

 

 

 

Redeemable noncontrolling interest

 

4,723

4,533

-

 

 

 

 

 

Equity:

 

 

 

 

Charm Communications Inc.'s equity 

 

 

 

 

Ordinary shares

8

8

8

 

Additional paid-in capital 

116,637

117,517

115,288

 

Retained earnings

105,930

91,139

59,783

 

Accumulated other comprehensive income

13,384

10,446

4,319

Total Charm Communications Inc. shareholders' equity

235,959

219,110

179,398

Noncontrolling interest

 

2,449

1,695

877

Total equity

 

238,408

220,805

180,275

 

 

 

 

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING

 

 

 

INTEREST AND EQUITY 

424,617

368,916

286,632

 

 

 

 

 

 

Charm Communications Inc.

Condensed Consolidated Statements of Operations

(Amounts in thousands of U.S. dollars, except for number of shares and per share data)

 

 

 

 

 

 

 

 

 

For the three months ended,

 

 

 

December 31, 2011

December 31, 2010

September 30, 2011

 

 

 

(Unaudited)

(Unaudited)

(Unaudited)

 

 

 

 

 

 

Revenues:

 

 

 

 

 

Media investment management

 

65,618

46,872

59,605

 

Advertising agency

 

11,745

7,750

9,262

 

Branding and identity services

 

2,979

2,090

1,370

Total revenues

 

80,342

56,712

70,237

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

Media investment management

 

48,861

32,445

45,998

 

Advertising agency

 

1,207

918

998

 

Branding and identity services

 

1,739

1,233

693

Total cost of revenues:

 

51,807

34,596

47,689

Gross profit

 

28,535

22,116

22,548

 

 

 

 

 

 

Operating expenses:

 

12.0%

9.7%

9.5%

 

Selling and marketing expenses

 

9,643

5,484

6,693

 

General and administrative expenses

 

3,350

2,486

2,615

Total operating expenses

 

12,993

7,970

9,308

 

Gain(Loss) from equity method investees

 

-5

 

-37

Operating profit

 

15,537

14,146

13,203

 

 

 

 

 

 

 

Interest income

 

663

442

637

 

Impairment on investments

 

 

-1,810

 

 

 

 

 

 

 

Income before income tax expense

 

16,200

12,778

13,840

 

Income tax expense

 

465

617

685

Net income

 

15,735

12,161

13,155

Net income attributable to noncontrolling interest

 

944

193

472

Net income attributable to Charm Communications Inc.

 

14,791

11,968

12,683

 

 

 

 

 

Net income(loss) attributable to Charm Communications Inc. shareholders per ADS:

 

 

 

 

Basic

 

0.38

0.31

0.32

Diluted

 

0.36

0.29

0.31

Shares used in computation of net income(loss)  per ADS:

 

 

 

 

Basic

 

39,075,906

39,123,692

39,162,169

Diluted

 

40,976,069

40,776,523

41,165,262

 

 

 

 

 

 

Notes:

 

 

 

 

 

(1) Share-based compensation expenses during the period included in:

 

 

 

 

Cost of revenues

 

1

1

1

Selling and marketing expenses

 

571

348

536

General and administrative expenses

 

303

210

256

Total

 

 

875

559

793

 

 

 

 

 

 

 

Charm Communications Inc.

Condensed Consolidated Statements of Operations

(Amounts in thousands of U.S. dollars, except for number of shares and per share data)

 

 

 

 

 

 

 

 

For the twelve months ended,

 

 

 

December 31, 2011

December 31, 2010

 

 

 

(Unaudited)

(Unaudited)

 

 

 

 

 

Revenues:

 

 

 

 

Media investment management

 

238,837

162,623

 

Advertising agency

 

34,285

24,776

 

Branding and identity services

 

7,016

5,002

Total revenues

 

280,138

192,401

 

 

 

 

 

Cost of revenues:

 

 

 

 

Media investment management

 

187,878

118,224

 

Advertising agency

 

3,737

2,867

 

Branding and identity services

 

4,015

2,715

Total cost of revenues:

 

195,630

123,806

Gross profit

 

84,508

68,595

 

 

 

 

 

Operating expenses:

 

9.7%

10.6%

 

Selling and marketing expenses

 

27,119

20,314

 

General and administrative expenses

 

9,704

6,748

Total operating expenses

 

36,823

27,062

 

Gain(Loss) from equity method investees

 

2

 

Operating profit

 

47,687

41,533

 

 

 

 

 

 

Interest income

 

2,497

1,255

 

Impairment on investments

 

-

-1,810

 

Interest expenses

 

-

-488

 

 

 

 

 

Income before income tax expense

 

50,184

40,490

 

Income tax expense

 

2,158

1,998

Net income

 

48,026

38,492

Net income attributable to noncontrolling interest

 

1,879

525

Net income attributable to Charm Communications Inc.

 

46,147

37,967

 

 

 

 

Net income(loss) attributable to Charm Communications Inc. shareholders per ADS:

 

 

 

Basic

 

1.18

1.02

Diluted

 

1.12

0.98

Shares used in computation of net income(loss)  per ADS:

 

 

 

Basic

 

39,133,419

35,241,843

Diluted

 

41,056,882

36,737,951

 

 

 

 

 

Notes:

 

 

 

 

(1) Share-based compensation expenses during the period included in:

 

 

 

Cost of revenues

 

4

7

Selling and marketing expenses

 

1,979

1,468

General and administrative expenses

 

1,086

1,024

Total

 

 

3,069

2,499

 

 

 

 

 

 

Charm Communications Inc.

Reconciliation from Net income to Non-GAAP net income:

(Amounts in thousands of U.S. dollars)

 

 

 

For the three months ended,

 

December 31, 2011

December 31, 2010

September 30, 2011

 

 

 

 

Net income

15,735

12,161

13,155

 

 

 

 

Add back share-based compensation expenses

 

 

 

 during the related periods

875

559

793

 

 

 

 

Add back amortization on intangible assets

443

-

207

 

 

 

 

Add back impairment on investments

-

1,810

-

 

 

 

 

Non-GAAP net income

17,053

14,530

14,155

 

 

 

 

 

 

 

 

 

For the twelve months ended,

 

 

December 31, 2011

December 31, 2010

 

 

 

 

 

Net income

48,026

38,492

 

 

 

 

 

Add back share-based compensation expenses

 

 

 

 during the related periods

3,069

2,499

 

 

 

 

 

Add back amortization on intangible assets

650

-

 

 

 

 

 

Add back impairment on investments

-

1,810

 

 

 

 

 

Non-GAAP net income

51,745

42,801

 

 

Charm Communications Inc.

Reconciliation from Turnover (non-GAAP) to USGAAP Revenues:

(Amounts in thousands of U.S. dollars)

 

 

 

For the three months ended,

 

December 31, 2011

December 31, 2010

September 30, 2011

Turnover (non-GAAP): 

 

 

 

Media investment management

65,618

46,872

59,605

Advertising agency

189,178

151,984

160,627

Branding and identity services

 N/A 

 N/A 

 N/A 

Total turnover

254,796

198,856

220,232

 

 

 

 

Extracted rate:

 

 

 

Media investment management

100.0%

100.0%

100.0%

Advertising agency

6.2%

5.1%

5.8%

Branding and identity services

 N/A 

 N/A 

 N/A 

 

 

 

 

USGAAP Revenue:

 

 

 

Media investment management

65,618

46,872

59,605

Advertising agency

11,745

7,750

9,262

Branding and identity services

2,979

2,090

1,370

Total revenue

80,342

56,712

70,237

 

 

 

 

 

 

 

 

 

For the twelve months ended,

 

 

December 31, 2011

December 31, 2010

 

Turnover (non-GAAP): 

 

 

 

Media investment management

238,837

162,623

 

Advertising agency

635,654

474,312

 

Branding and identity services

 N/A 

 N/A 

 

Total turnover

874,491

636,935

 

 

 

 

 

Extracted rate:

 

 

 

Media investment management

100.0%

100.0%

 

Advertising agency

5.4%

5.2%

 

Branding and identity services

 N/A 

 N/A 

 

 

 

 

 

USGAAP Revenue:

 

 

 

Media investment management

238,837

162,623

 

Advertising agency

34,285

24,776

 

Branding and identity services

7,016

5,002

 

Total revenue

280,138

192,401

 

SOURCE Charm Communications Inc.



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