Charm Communications Inc. Announces Unaudited Fourth Quarter and Full Year 2013 Results

BEIJING, May 7, 2014 /PRNewswire-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, 2013.

Fourth Quarter 2013 Highlights

  • Turnover increased 25.7% year-over-year to $253.4 million in the fourth quarter of 2013
  • Revenues increased 31.9% year-over-year to $62.2 million in the fourth quarter of 2013
  • Revenues for Charm's advertising agency business increased 34.1% year-over-year to $16.8 million in the fourth quarter of 2013
  • Revenues for Charm's media investment management business increased 36.3% year-over-year to $43.7 million in the fourth quarter of 2013
  • Gross profit increased 55.0% year-over-year to $20.2 million in the fourth quarter of 2013
  • Net income was $2.3 million in the fourth quarter of 2013 compared to a net loss of $4.2 million in the fourth quarter of 2012
  • Non-GAAP net income, which excludes share-based compensation expenses, amortization of intangible assets and net change in fair value of consideration payable and call option, was $2.9 million in the fourth quarter of 2013 compared to a non-GAAP net loss of $3.8 million in the fourth quarter of 2012

Full Year 2013 Highlights

  • Turnover increased 7.6% year-over-year to $886.7 million in full year 2013
  • Revenues increased 11.1% year-over-year to $183.8 million in full year 2013
  • Revenues for Charm's advertising agency business increased 8.9% year-over-year to $50.4 million in full year 2013
  • Revenues for Charm's media investment management business increased 13.9% year-over-year to $128.4 million in full year 2013
  • Gross profit increased 20.4% year-over-year to $58.2 million in full year 2013
  • Net income was $1.4 million in full year 2013 compared to net loss of $2.5 million in full year 2012
  • Non-GAAP net income, which excludes share-based compensation expenses, amortization of intangible assets and net change in fair value of consideration payable and call option, was $5.1 million in full year 2013 compared to non-GAAP net loss of $0.5 million in full year 2012

"In the fourth quarter, we continued to reposition our overall business in the wake of significant changes in the industry and the continued growth of online media, although television-related advertising remains a significant part of our business," said Mr. He Dang, Charm's founder, chairman and chief executive officer. "We remain cautiously optimistic regarding 2014, as our underlying business showed improvement at the end of last year, and we have already started to restructure and eliminate a number of loss-making projects and non-performing teams, which we expect will lead to better results this year despite television advertising spending experiencing an historically slow rate of growth in the first quarter of 2014, according to our own independent industry research."

Fourth Quarter 2013 Results

Turnover (non-GAAP)

US$ mm

4Q13

4Q12

3Q13

Y-o-Y %

Q-o-Q%

Total turnover (non-GAAP)

$253.4

$201.6

$198.8

25.7%

27.4%

Advertising agency

$209.7

$169.6

$171.1

23.7%

22.6%

Media investment management

$43.7

$32.0

$27.7

36.3%

57.5%

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 25.7% 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 27.4% quarter-over-quarter increase in turnover was largely attributed to seasonal factors, as well as the increase in advertising spending on non-CCTV media platforms.

The 23.7% year-over-year and 22.6% quarter-over-quarter increase in the advertising agency business ("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 as a result of the increase in agency advertising spending on non-CCTV TV media platforms and the Internet.

The revenue extraction rate, which is defined as revenue divided by turnover, was 8.0% for the agency business, compared to 7.4% for the fourth quarter of 2012 and 6.6% for the third quarter of 2013. The year-over-year increase was mainly due to an increase in the CCTV rebate rate in year 2013 compared to year 2012. The quarter-over-quarter increase was largely due to higher media rebates as a result of successful negotiations by the Company and mainly for non-CCTV television media.

The 36.3% year-over-year increase in turnover (equivalent to GAAP revenue) for the media investment management business ("principal media business"), which operates under the Shangxing Media brand, was mainly due to increased selling prices paid by customers for media resources mainly from BTV Sports, Nanfang Satellite TV and Tianjin Satellite TV. The 57.5% quarter-over-quarter increase in turnover in the principal media business was mainly the result of strong demand from clients for such media resources due to seasonal factors.

Revenues

US$ mm

4Q13

4Q12

3Q13

Y-o-Y %

Q-o-Q%

Total revenues

$62.2

$47.1

$40.7

31.9%

52.9%

Advertising agency

$16.8

$12.5

$11.3

34.1%

48.7%

Media investment management

$43.7

$32.0

$27.7

36.3%

57.5%

Branding and identity services

$1.7

$2.6

$1.6

-33.6%

4.4%

The changes in agency and principal media business revenues are consistent with the changes in turnover, and with respect to the agency business revenues, consistent with the change in the extraction rate. The year-over-year decrease in branding and identity services was primarily due to an overall decrease in client demand for the Company's creative services.

Gross Profit

US$ mm

4Q13

4Q12

3Q13

Y-o-Y %

Q-o-Q%

Cost of revenues

$42.0

$34.1

$27.3

23.1%

53.8%

Gross profit

$20.2

$13.0

$13.4

55.0%

51.0%

Gross margin

32.4%

27.6%

32.8%



The year-over-year increase in cost of revenues was in line with the increase in total revenues over the same period. The quarter-over-quarter increase in cost of revenues was partially attributed to the higher media costs in Q4 related to CCTV programming. The increase in gross profit also reflected the increase in total revenue. The quarter-over-quarter increase in gross margin was attributed to higher gross margin from some media resources as a result of higher revenue in the fourth quarter, mainly from Tianjin Satellite TV and Nanfang Satellite TV, due to seasonal factors.

Operating Profit (Loss)

US$ mm

4Q13

4Q12

3Q13

Y-o-Y %

Q-o-Q%

Total operating expenses

$16.9

$17.2

$14.0

-1.6%

20.3%

Selling and marketing

$10.8

$11.3

$9.7

-4.5%

11.4%

General and administrative

$6.1

$5.9

$4.4

3.8%

40.1%

Operating profit (loss)

$3.5

-$3.5

-$0.5



The Company's selling and marketing expenses declined slightly compared to the year-ago period. The 11.4% quarter-over-quarter increase in selling and marketing expenses was primarily due to more marketing events and increased business travel related to selling activities in the fourth quarter. The Company's general and administrative expenses increased slightly compared to the year-ago period. The 40.1% quarter-over-quarter increase in general and administrative expenses was mainly attributed to an increase in bad debt provisions in the fourth quarter.

Net Income (Loss)

US$ mm

4Q13

4Q12

3Q13

Y-o-Y %

Q-o-Q%

Non-GAAP net income (loss)*

$2.9

-$3.8

$0.5

-176.0%

500.8%

Net income (loss)

$2.3

-$4.2

-$0.6

-155.5%

-462.4%

Basic net income (loss) per ADS (US$)

$0.06

-$0.13

-$0.03



Fully diluted net income (loss) per ADS

(US$)

$0.06

-$0.13

 

-$0.03



*The Company's non-GAAP net income (loss) excludes share-based compensation expenses, amortization of intangible assets and net change in fair value of consideration payable and call option.

Each American depositary share ("ADS") represents two common shares. The weighted average number of shares used to compute basic net loss per ADS for the fourth quarter of 2013 was 40,624,859. As of December 31, 2013, 40,700,564 ADSs were issued and outstanding.

Cash Flows and Cash Position

Net cash flow from operations for the fourth quarter of 2013was $27.6 million. As of December 31, 2013, the Company had cash and cash equivalents of $121.2 million, compared to 91.1 million at the end of the third quarter of 2013.

Customers

In the fourth quarter of 2013, Charm's agency business had 199 advertisers, compared to 195 advertisers in the third quarter of 2013 and 174 advertisers in the fourth quarter of 2012.

In the fourth quarter of 2013, Charm's principal media business had 229 advertisers, compared to 212 advertisers in the third quarter of 2013 and 203 advertisers in the fourth quarter of 2012.

Employee Headcount

As of December 31, 2013, the Company had 753 employees, compared to 749 employees as of September 30, 2013.

Full Year 2013 Results

Turnover

US$ mm

FY13

FY12

Y-o-Y %

Total turnover (non-GAAP)

$886.7

$823.9

7.6%

Advertising agency

$758.3

$711.1

6.6%

Media investment management

$128.4

$112.8

13.9%

Branding and identity services

N/A

N/A

N/A

Revenues

US$ mm

FY13

FY12

Y-o-Y %

Total revenues

$183.8

$165.5

11.1%

Advertising agency

$50.4

$46.2

8.9%

Media investment management

$128.4

$112.8

13.9%

Branding and identity services

$5.0

$6.5

-22.6%

Gross Profit

US$ mm

FY13

FY12

Y-o-Y %

Cost of revenues

$125.6

$117.1

7.2%

Gross profit

$58.2

$48.4

20.4%

Gross margin

31.7%

29.2%


Operating Profit (Loss)

US$ mm

FY13

FY12

Y-o-Y %

Total operating expenses

$56.0

$52.3

7.1%

Selling and marketing

$38.2

$36.0

6.0%

General and administrative

$17.7

$16.2

9.3%

Operating profit (loss)

$2.6

-$3.2

-179.4%

Net Income (Loss)

US$ mm

FY13

FY12

Y-o-Y %

Non-GAAP Net income*

$5.1

$0.5

979.8%

Net income (loss)

$1.4

-$2.5

-156.6%

Basic net income (loss) per ADS (US$)

$0.00

-$0.12


Fully diluted net income (loss) per ADS (US$)

$0.00

-$0.12


*The Company's non-GAAP net income (loss) excludes share-based compensation expenses, amortization of intangible assets and net change in fair value of consideration payable and call option.

Each ADS represents two common shares. The weighted average number of shares used to compute basic net loss per ADS for the full year 2013 was 39,935,880.

Recent Business Developments

On May 6, 2014, Charm announced that its Audit Committee had approved its decision to provide financial results and earnings guidance on a biannual basis from financial year 2014 onwards. As a foreign private issuer, the Company is only required to submit its interim balance sheet and income statement as of the end of its second quarter each year, pursuant to Rule 5250(c)(2) of the NASDAQ Stock Market Rules.

On April 3, 2014, Charm announced that Mr. Andrew Rickards, one of the Company's independent directors and chair of its Audit Committee, had informed the Company that he would not renew his Independent Director Agreement at the conclusion of its term on April 9, 2014 due to other business commitments and resigned from the board of directors effective April 9, 2014. Upon his resignation, Mr. Rickards also ceased to be a member of each of the Company's Audit Committee, Compensation Committee, Corporate Governance and Nominating Committee, and the Special Committee that was established to evaluate the Company's proposed going-private transaction. The Company is in the process of identifying replacement candidates for Mr. Rickards' roles as an independent director and a member of the Audit Committee. Mr. Gang Chen, an independent director, has been appointed to serve as a member of the Compensation Committee and the Corporate Governance and Nominating Committee.

On September 30, 2013, the Company announced that its board of directors had received a preliminary non-binding proposal letter dated September 30, 2013 from Mr. Dang, the chairman of the board of directors (the "Founder"), Merry Circle Trading Limited, a British Virgin Islands company controlled by the Founder ("Merry Circle"), Honour Idea Limited, a British Virgin Islands company owned by the Founder ("Honour Idea" and, collectively with Merry Circle, the "Founder Shareholders"), and CMC Capital Partners HK Limited (collectively, the "Consortium") to acquire all of the outstanding shares of the Company not currently owned by the Founder Shareholders in a "going private" transaction.

Negotiations between the Special Committee and the Consortium with respect to the proposal are ongoing, and the Special Committee continues to rigorously evaluate, with assistance and guidance from its financial and legal advisors, the proposal, as well as other strategic alternatives that may be available to the Company, including without limitation pursuing a different transaction or remaining as an independent, listed company.

Business Outlook

US$ mm

1H14E

Non-GAAP net income*

1.6 ~ 2.1

*The Company's non-GAAP net income (loss) excludes share-based compensation expenses, amortization of intangible assets and net change in fair value of consideration payable and call option.

The Company bases these estimates on a foreign exchange rate of RMB6.20 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 ("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(loss)," which is defined as GAAP net income(loss) excluding stock-based compensation expenses, amortization of intangible assets and net change in fair value of consideration payable and call option.

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.

Cautions on Use of Non-GAAP Measures

In addition to Charm's consolidated financial results prepared under U.S. GAAP, the Company also provides non-GAAP financial measures, including "turnover" and "non-GAAP net income (loss)." 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 (8p.m. Beijing/Hong Kong Time) on Thursday, May 8, 2014.

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




U.S.:

+1-845-675-0437

International:

+65-6723-9381

Hong Kong:

+852-2475-0994

Passcode:

38893560

A replay of the call will be available from 11 a.m. May 8, 2014 until 11:59 p.m. May 15, 2014 U.S. Eastern Time. Dial-in details for the replay are as follows:

International:

+61-2-8199-0299

Passcode:

38893560

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:

Ms. Jenny Wang
IR Department
Charm Communications Inc.
Phone: +86-10-8556-2527
Email: ir@charmgroup.cn

In the United States:

Mr. Justin Knapp
Ogilvy Financial, U.S.
Phone: +1-616-551-9714
Email: chrm@ogilvy.com

 

Charm Communications Inc.

Unaudited Condensed Consolidated Balance Sheets

(Amounts in thousands of U.S. dollars)




December 31
 2013

September 30
 2013

December 31
 2012

ASSETS




Current Assets





Cash and cash equivalents

121,228

91,146

116,589


Notes receivable

5,940

6,726

6,993


Prepaid expenses

57,168

64,737

93,838


Deposits

32,546

26,192

24,723


Accounts receivable

117,307

105,106

89,964


Amount due from related parties

3,480

783

1,938


Deferred tax assets

1,034

195

191


Other current assets

12,958

5,612

4,021

Total current assets

351,661

300,497

338,257







Fixed assets, net

7,841

9,297

7,638


Intangible assets, net

1,519

1,731

2,375


Investments under equity method

2,267

2,213

2,133


Goodwill

4,507

4,458

4,379


Cost method investments

826

817

803


Other non-current assets

2,608

2,657

3,045






Total non-current assets

19,568

21,173

20,373






TOTAL ASSETS

371,229

321,670

358,630






LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY



Current Liabilities





Accounts payable (of which 55, 41 and 53, as of December 31,
2013, September 30, 2013, 2013 and December 31, 2012 of the
consolidated VIE without recourse to the Company, respectively)

28,516

25,792

38,855


Amounts due to related parties (of which nil, nil and 313 as of
December 31, 2013, September 30, 2013, 2013 and December
31, 2012 of the consolidated VIE without recourse to the
Company, respectively)

9,144

8,044

13,310


Advances from customers (of which 1,167, 1,154, and 1,408 as
of December 31, 2013, September 30, 2013, 2013 and
December 31, 2012 of the consolidated VIE without recourse to
the Company, respectively)

85,818

52,024

56,343


Accrued expenses and other current liabilities (of which 3,178,
3,135, and 3,246 as of December 31, 2013, September 30, 2013,
2013 and December 31, 2012 of the consolidated VIE
without recourse to the Company, respectively)

22,634

15,825

18,912


Consideration payable (of which nil as of December 31, 2013,
September 30, 2013, 2013 and December 31, 2012 of the
consolidated VIE without recourse to the Company, respectively)

950

1,600

2,507


Divdend payable (of which nil as of December 31, 2013,
September 30, 2013, 2013 and December 31, 2012 of the
consolidated VIE without recourse to the Company, respectively)



-

Total current liabilities

147,062

103,285

129,927







Consideration payable (of which nil as of December 31, 2013,
September 30, 2013, 2013 and December 31, 2012 of the
consolidated VIE without recourse to the Company, respectively)

1,316

1,351

1,327

Total non-current liabilities

1,316

1,351

1,327






Total liabilities

148,378

104,636

131,254






Redeemable noncontrolling interest

5,733

6,004

5,434






Equity:




Charm Communications Inc.'s equity 





Ordinary shares

8

8

8


Additional paid-in capital 

87,597

87,014

100,850


Retained earnings

101,621

98,954

101,225


Accumulated other comprehensive income

22,611

19,862

15,652

Total Charm Communications Inc. shareholders' equity

211,837

205,838

217,735

Noncontrolling interest

5,281

5,192

4,207

Total equity

217,118

211,030

221,942





TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING




INTEREST AND EQUITY 

371,229

321,670

358,630

 

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,




Dec 31
 2013

Dec 31
 2012

Sep 30
 2013




(Unaudited)

(Unaudited)

(Unaudited)







Revenues:






Media investment management


43,684

32,042

27,740


Advertising agency


16,781

12,512

11,284


Branding and identity services


1,712

2,578

1,640

Total revenues


62,177

47,132

40,664







Cost of revenues:






Media investment management


39,491

31,159

25,246


Advertising agency


1,025

1,337

1,016


Branding and identity services


1,498

1,624

1,049

Total cost of revenues:


42,014

34,120

27,311

Gross profit


20,163

13,012

13,353







Operating expenses:






Selling and marketing expenses


10,781

11,286

9,681


General and administrative expenses


6,117

5,891

4,365

Total operating expenses


16,898

17,177

14,046


Gain(Loss) from equity method investees


30

307

189


Net change in fair value of consideration payable and call option

236

309

-

Operating profit (loss)


3,531

(3,549)

(504)








Interest income


206

568

299


Other income (loss)


(792)









Income before income tax expense


2,945

(2,981)

(205)


Income tax expense


629

1,195

434

Net income (loss)


2,316

(4,176)

(639)

Net income attributable to noncontrolling interest


(351)

884

598

Net income (loss) attributable to Charm Communications Inc.


2,667

(5,060)

(1,237)






shareholders per ADS:





Basic


0.07

(0.13)

0.03

Diluted


0.07

(0.13)

0.03

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





Basic


40,624,859

38,269,369

40,445,764

Diluted


40,830,961

38,269,369

40,445,764







Notes:





Share-based compensation expenses during the period included in:





Cost of revenues


-

-

-

Selling and marketing expenses


389

318

436

General and administrative expenses


155

150

451

Total


544

468

887
















For the three months ended,




December 31
 2013

December 31
 2012

September 30
 2013




(Unaudited)

(Unaudited)

(Unaudited)







Net income (loss)


2,316

(4,176)

(639)

Other comprehensive income (loss):





Change in cumulative foreign exchange translation adjustment


3,002

1,957

936

Comprehensive income (loss)


5,318

(2,219)

297







Less: Comprehensive income attributable to non-controlling interest

(171)

(590)

(605)

Less: Comprehensive income attributable to redeemable non-controlling interest

270

(297)

(192)







Comprehensive income (loss) attributable to Charm Communications Inc.

5,417

(3,106)

(500)

 

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, 2013

December 31, 2012




(Unaudited)

(Audited)






Revenues:





Media investment management


128,436

112,786


Advertising agency


50,356

46,234


Branding and identity services


5,011

6,478

Total revenues


183,803

165,498






Cost of revenues:





Media investment management


117,578

107,976


Advertising agency


4,243

4,864


Branding and identity services


3,765

4,303

Total cost of revenues:


125,586

117,143

Gross profit


58,217

48,355






Operating expenses:





Selling and marketing expenses


38,204

36,026


General and administrative expenses


17,748

16,234

Total operating expenses


55,952

52,260


Gain(Loss) from equity method investees


75

350


Gain from change in fair value of consideration payable


236

309

Operating profit (loss)


2,576

(3,246)







Interest income


1,026

2,255


Other expense


792

13






Income (loss) before income tax expense


2,810

(1,004)


Income tax expense


1,409

1,472

Net income (loss)


1,401

(2,476)

Net income attributable to noncontrolling interest


1,005

2,229

Net income (loss) attributable to Charm Communications Inc.


396

(4,705)





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




Basic


0.01

(0.12)

Diluted


0.01

(0.12)

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




Basic


39,935,880

38,749,125

Diluted


40,319,753

38,749,125






Notes:





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




Cost of revenues


-

1

Selling and marketing expenses


1,905

1,506

General and administrative expenses


1,086

707

Total



2,991

2,214



















For the twelve months ended,




December 31, 2013

December 31, 2012




(Unaudited)

(Audited)






Net income (loss)


1,401

(2,476)

Other comprehensive income (loss):




Change in cumulative foreign exchange translation adjustment


7,212

2,268

Comprehensive income (loss)


8,613

(208)






Less: Comprehensive income attributable to non-controlling interest


(959)

(1,758)

Less: Comprehensive income attributable to redeemable non-controlling interest


(299)

(711)






Comprehensive income (loss) attributable to Charm Communications Inc.


7,355

(2,677)

 

Reconciliation from Net income (loss) to Non-GAAP net income (loss):

(Amounts in thousands of U.S. dollars)



For the three months ended,



December 31
 2013

December 31
 2012

September 30
 2013







Net income (loss)

2,316

(4,176)

(639)







Add back share-based compensation expenses

 during the related periods

544

468

887







Add back amortization on intangible assets

230

261

227







Deduct gain from change in fair value of consideration payable

(236)

(309)

0







Non-GAAP net income  (loss)

2,854

(3,756)

475













For the twelve months ended,




December 31,
2013

December 31,
2012








Net income (loss)

1,401

(2,476)








Add back share-based compensation expenses

 during the related periods

2,992

2,214









Add back amortization on intangible assets

910

1,041








Deduct gain from change in fair value of consideration payable

(236)

(309)








Non-GAAP net income

5,067

470


 

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

(Amounts in thousands of U.S. dollars)



For the three months ended,



December 31
 2013

December 31
 2012

September 30
 2013


Turnover (non-GAAP): 





Media investment management

43,684

32,042

27,740


Advertising agency

209,693

169,570

171,071


Branding and identity services

 N/A 

 N/A 

 N/A 


Total turnover

253,377

201,612

198,811







Extracted rate:





Media investment management

100.0%

100.0%

100.0%


Advertising agency

8.0%

7.4%

6.6%


Branding and identity services

 N/A 

 N/A 

 N/A 







USGAAP Revenue:





Media investment management

43,684

32,042

27,740


Advertising agency

16,781

12,512

11,284


Branding and identity services

1,712

2,578

1,640


Total revenue

62,177

47,132

40,664








For the twelve months ended,




December 31,
2013

December 31,
2012








Turnover (non-GAAP): 





Media investment management

128,436

112,786



Advertising agency

758,246

711,093



Branding and identity services

 N/A 

 N/A 



Total turnover

886,682

823,879








Extracted rate:





Media investment management

100.0%

100.0%



Advertising agency

6.6%

6.5%



Branding and identity services

 N/A 

 N/A 








USGAAP Revenue:





Media investment management

128,436

112,786



Advertising agency

50,356

46,234



Branding and identity services

5,011

6,478



Total revenue

183,803

165,498


 

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,





Dec 31
 2013

Sep 30
 2013

June 30
 2013

March 31
 2013

Year
2013




(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)









Revenues:








Media investment management


43,684

27,740

29,556

27,456

128,436


Advertising agency


16,781

11,284

12,178

10,113

50,356


Branding and identity services


1,712

1,640

1,117

542

5,011

Total revenues


62,177

40,664

42,851

38,111

183,803









Cost of revenues:








Media investment management


39,491

25,246

25,720

27,121

117,578


Advertising agency


1,025

1,016

1,197

1,005

4,243


Branding and identity services


1,498

1,049

845

373

3,765

Total cost of revenues:


42,014

27,311

27,762

28,499

125,586

Gross profit


20,163

13,353

15,089

9,612

58,217









Operating expenses:








Selling and marketing expenses


10,781

9,681

9,026

8,716

38,204


General and administrative expenses


6,117

4,365

4,462

2,804

17,748

Total operating expenses


16,898

14,046

13,488

11,520

55,952


Gain(Loss) from equity method investees


30

189

101

(245)

75


Gain from change in consideration payable


236

-



236

Operating profit


3,531

(504)

1,702

(2,153)

2,576










Interest income


206

299

85

436

1,026


Other expense


(792)




792









Income before income tax expense


2,945

(205)

1,787

(1,717)

2,810


Income tax expense


629

434

604

(258)

1,409

Net income


2,316

(639)

1,183

(1,459)

1,401

Net income attributable to noncontrolling interest


(351)

598

468

290

1,005

Net income attributable to Charm Communications Inc.


2,667

(1,237)

715

(1,749)

396








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







Basic


0.07

0.03

0.02

(0.05)

0.01

Diluted


0.07

0.03

0.02

(0.05)

0.01

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







Basic


40,624,859

40,445,764

40,211,181

38,479,967

39,935,880

Diluted


40,830,961

40,445,764

40,329,981

38,479,967

40,319,753









Notes:







Share-based compensation expenses during the period included in:







Cost of revenues


-

-

-

-

-

Selling and marketing expenses


389

436

756

325

1,905

General and administrative expenses


155

451

350

130

1,086

Total


544

887

1,106

455

2,991




















For the three months ended,





Dec 31
 2013

Sep 30
 2013

Jun 30
 2013

Mar 31
 2013

Year
2013




(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)









Net income


2,316

(639)

1,183

(1,459)

1,401

Other comprehensive income:







Change in cumulative foreign exchange translation adjustment


3,002

936

2,608

666

7,212

Comprehensive income 


5,318

297

3,791

(793)

8,613









Less: Comprehensive income attributable to non-controlling interest


(171)

(605)

(278)

(102)

(959)

Less: Comprehensive income attributable to redeemable non-controlling interest


270

(192)

(190)

(188)

(299)









Comprehensive income attributable to Charm Communications Inc.


5,417

(500)

3,323

(1,083)

7,355

 

SOURCE Charm Communications Inc.



RELATED LINKS
http://ir.charmgroup.cn

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