2014

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: juliesun@chinammia.com

Christensen
Tip Fleming
Phone: +852 2117 0861
Email: tfleming@christensenir.com

Teal Willingham
Phone: +86 131 2179 3446
Email: twillingham@christensenir.com


 

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,
2011


Dec 31,
2011


Mar 31,
2012


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.



RELATED LINKS
http://www.chinammia.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.