China New Media Reports First Quarter Fiscal Year 2012 Financial Results

DALIAN, China, Nov. 15, 2011 /PRNewswire-Asia/ -- China New Media Corp. (OTCBB: CMDI) (the "Company"), China's fast-growing advertising media company with current outdoor media network located in Dalian, Shenyang, Tianjin, Beijing and Shanghai, today announced its financial results for the first quarter of fiscal year 2012 ended September 30, 2011.

Mr. James Wang, Chairman and Chief Executive Officer of China New Media, stated, "Heading into our 2012 fiscal year we set out to accomplish several goals including increasing revenue through greater sales to existing and new customers and making strategic long term investments in our new markets, Beijing, Shanghai, Tianjin, and Shenyang. During the 2012 fiscal first quarter we steadily increased revenue year-over-year approximately 11% driven by a 25% increase in revenue of our outdoor billboard advertising platform which carried a high gross profit margin of 49%, which is much higher than the industry average. Year-over-year we also saw an 82% increase in revenue from our City Navigator platform which yielded 70% gross profit margins. In our new markets, especially Beijing and Shanghai, we increased our sales and marketing strategy for the long term value we expect to generate. For each new market we have now developed our own sales team to sell existing advertising platforms and develop new advertising platforms. The investment required to build greater future sales resulted in a slight decrease in overall gross profit margins and profitability during the quarter. However, we believe over the long term there will be greater leverage in this model and we strongly believe that it is the best plan of action for the value of the Company and our shareholders."

Mr. Wang continued, "Recently we made one of the most significant breakthroughs in our company history with the official launch of our 150 square-meter LED screen located between Terminals 1 and 2 at Beijing Capital International Airport. The launch of this platform and the coinciding $2.8 million advertising contract with Henan Dayou Energy is an excellent starting point to build the China New Media brand in Beijing. We are currently evaluating other potential advertising locations in Beijing and other markets in order to continue broadening our presence."

Summary Financials for 2012 Fiscal First Quarter Ended September 30, 2011:

Financial Results for the 2012 Fiscal First Quarter Ended September 30, 2011

Revenue for the 2012 fiscal first quarter ended September 30, 2011 totaled $4.6 million, an increase of 10.7% compared to $4.1 million for the same period in fiscal 2011. The increase in revenue resulted from increased sales to existing and new customers based on the Company's expanded outdoor advertising network at more desirable locations for the various outdoor advertising platforms.

Revenue growth was driven by a 24.9% increase in the outdoor billboard advertising platform which accounted for 37.4% of total revenue during the 2012 fiscal first quarter. The billboard advertising platform has presented a significant growth opportunity at an attractive gross profit margin of 48.8% during the 2012 fiscal first quarter. The outdoor billboard platform is established in Dalian, Shenyang, Tianjin, Beijing and Shanghai and going forward the Company will continue to establish its presence in these markets. Revenue in Dalian, which accounted for 87.9% of total revenue, increased by 10.6% to $4 million for the 2012 fiscal first quarter as compared to $3.6 million for the same period the prior year.

City Navigator revenue increased 81.7% year-over-year. Occupancy of this platform has increased steadily with room for growth. Today, the Company owns and operates 52 City Navigator kiosks. Each kiosk has ten advertising spots available on a rolling basis and today is operating at approximately 60% capacity. Going forward the Company will focus on maximizing the occupancy rate for the available advertising space.

Cost of sales for the 2012 fiscal first quarter ended September 30, 2011 totaled $2.1 million or 46.6% of revenue, an increase of 22.6% compared to $1.7 million or 42% of revenue for the 2011 fiscal first quarter ended September 30, 2010. The increase in cost of revenue was primarily attributable to increased depreciation of advertising equipment, labor and raw material cost.

Gross profit for the 2012 fiscal first quarter ended September 30, 2011 totaled $2.4 million, an increase of 2.1% compared to $2.4 million for the 2011 fiscal first quarter ended September 30, 2010. The increase in gross profit was in line with revenue growth as the Company secured more advertising contracts during the period. Gross profit margin was 53.4% and 57.9% for the 2012 and 2011 fiscal first quarters ended September 30, 2011 and 2010, respectively. The decrease in gross profit margin was mainly due to the increased maintenance cost of advertising equipment, and the increase of labor and raw material cost. Specifically, the decrease in outdoor billboard margins was due to the increased amount of new constructions and the lead time needed to build advertising clients.

Selling, general and administrative expenses consist primarily of sales personnel salaries, sales representative commissions, rent expenses and related administrative expenses totaling $926,000 for the 2012 fiscal first quarter as compared to $765,000 for the 2011 fiscal first quarter. This increase was due to an increased sales effort from the Company to accommodate its geographic expansion of its media platforms, higher maintenance, professional fees and other expenses related to the growth of the business.

Net income attributable to China New Media Corp. for the three months ended September 30, 2011 was $863,000 as compared to $1.1 million for the three months ended September 30, 2010. The decrease was due to the increase in cost of revenues and selling, general and administrative expenses. Basic and diluted earnings per share for the 2012 fiscal first quarter ended September 30, 2011 was $0.03 based on 27.6 million basic and diluted shares versus basic and diluted earnings per share of $0.04 for the 2011 fiscal first quarter ended September 30, 2010 based on 27.6 million basic and 29.3 million diluted shares outstanding.

Liquidity and Capital Resources

As of September 30, 2011, China New Media had approximately $685,000 in cash and cash equivalents. As of June 30, 2011, total current assets and total assets were $10 million and $37.1 million, respectively. During the same period, total current liabilities and total liabilities were $16.9 million and $16.9 million respectively. Shareholder's equity totaled 19.2 million, or a fully diluted book value of $0.70 per share, as of September 30, 2011.

Conference Call Details:

It is recommended that participants dial in approximately 10 minutes prior to the start of the 8:30 a.m. Eastern call. There will also be a simultaneous live webcast of the conference call which can be accessed through the following audio feed link and archived recording of the conference call available by clicking on the following link, http://viavid.net/dce.aspx?sid=000090A0.

About China New Media Corp.

Founded in September 2000, Dalian Vastitude Media Group Co., Ltd., now known as China New Media Corp., is headquartered in Dalian, the commercial center of Northeastern China. The company owns and operates the city's largest outdoor media network encompassing over 600 bus shelters furnished with billboards and displays; 130 taxi stops with displays; and 13 large-size billboards, including 3 large-size LED displays at major traffic conjunctions. The company also furnishes more than 400 buses with advertising posters and 28 metro-trains throughout Dalian Metro Lines. China New Media provides comprehensive adverting services from art design to ad publishing, from daily maintenance to technical upgrading. Launched in Dalian in 2009, China New Media's proprietary LED multimedia display network, City Navigator®, is one of the country's first web-based outdoor advertising networks. For more information, please visit www.gywj.cn.

Forward-Looking Statements

This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements", including statements regarding the Company's ability to meet its obligations under its various contracts; the timeliness of payments and other economic benefits the Company expects to receive under such contracts; and the Company's ability to maintain its customer relationships and to maintain its ability to pursue its commercial objectives. In addition, the Company's operations are conducted in the PRC and, accordingly, are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe such as risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website at http://www.sec.gov. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Company Contact:

Rita Jiang
Executive Vice President of Finance
646-691-5047
[email protected]
www.gywj.cn

Investor Contact:

Alliance Advisors, LLC
Alan Sheinwald, President & Founder
(914) 669-0222
[email protected]

www.AllianceAdvisors.net

SOURCE China New Media Corp.