China New Media Reports Second Quarter Fiscal Year 2012 Financial Results

DALIAN, China, Feb. 15, 2012 /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 second quarter of fiscal year 2012 ended December 31, 2011.

Mr. James Wang, Chairman and Chief Executive Officer of China New Media, stated, "I am proud that our company continue to focus on our expansion strategy of adding more advertising platforms geographically, and maintaining and adding new customers in our new markets. During the second quarter of fiscal year 2012, we've been through a tougher macro economic environment. Advertisers in certain cyclical industries, such as real estate, significantly reduced their advertising budgets in the second half of 2011; however, we are still able to maintain relatively stable revenue levels compared with same period the prior year. Under the unfavorable economic conditions, we focused more on sales, marketing and promotion efforts, and provided more value-added services to attract new customers. For each new market we have 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, "In the second half of 2011, 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, and in November 2011, we finished the construction of mega 558 square-meter LED screen on top of the Golden Hotel in Shenyang, one of the city's landmark buildings. We are currently evaluating other potential advertising locations in Shenyang and other markets in order to continue broadening our presence."

Summary Financials for 2012 Fiscal Second Quarter Ended December 31, 2011:

Financial Results for the 2012 Fiscal Second Quarter Ended December 31, 2011

Revenue for the 2012 fiscal second quarter ended December 31, 2011 totaled $5,043,775 a slight decrease of 0.1% compared to $5,047,789 million for the same period in fiscal 2011. The decline in revenue was primarily attributable to a decrease in contracting demand from advertisers under unfavorable macro economic conditions, while the effect was minimized by the Company's diversified advertising platform strategy.

Revenue generated from the outdoor billboard advertising platform increased 49.2% compared with same quarter last year and accounted for 50.5% of total revenue during the 2012 fiscal second quarter. The billboard advertising platform has presented a significant growth opportunity at an attractive gross profit margin of 50.7% during the 2012 fiscal second 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.

Cost of sales for the 2012 fiscal second quarter ended December 31, 2011 totaled $2.3 million or 45.2% of revenue, an increase of 2.3% compared to $2.2 million or 44.2% of revenue for the 2011 fiscal second quarter ended December 31, 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 second quarter ended December 31, 2011 totaled $2.76 million, a decrease of 2.0% compared to $2.8 million for the 2011 fiscal second quarter ended December 31, 2010. The decrease in gross profit was due to the slight decrease in revenue and the increase in cost of revenue during the three months ended December 31, 2011. Gross profit margin was 54.8% and 55.8% for the 2012 and 2011 fiscal second quarters ended December 31, 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.

Selling, general and administrative expenses consist primarily of sales personnel salaries, sales representative commissions, rent expenses and related administrative expenses totaling $1.5 million for the 2012 fiscal second quarter as compared to $926,000 for the 2011 fiscal second quarter. This increase was due to an increased sales effort from the Company to address the more competitive overall advertising market, and 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 December 31, 2011 was $620,000 as compared to $1.3 million for the three months ended December 31, 2010. The decrease was due to flat revenue compared to same period last year with an increase in cost of revenues and selling, general and administrative expenses. Basic and diluted earnings per share for the 2012 fiscal second quarter ended December 31, 2011 was $0.02 based on 27.6 million basic and diluted shares versus basic and diluted earnings per share of $0.05 and $0.04 for the 2011 fiscal second quarter ended December 31, 2010 based on 27.6 million basic and 28.0 million diluted shares outstanding.

Summary Financials for Six Months of Fiscal 2012 Ended December 31, 2011:

Financial Results for the Six Months FY 2012 Ended December 31, 2011

Revenue for the six months FY 2012 ended December 31, 2011 totaled $9.6 million, an increase of 4.8% compared to $9.2 million for the same period in fiscal 2011. Revenue continued the uptrend compared with same period the prior year even under unfavorable macro economic conditions. The Company spent more effort on sales, marketing and promotion in order to generate sales from existing and new customers, and continue focusing on expanding outdoor advertising network at more desirable locations for the various outdoor advertising platforms.

Cost of sales for the six months ended December 31, 2011 totaled $4.4 million or 45.9% of revenue, an increase of 11.2% compared to $4.0 million or 43.2% of revenue for the six months ended December 31, 2010, mainly attributable to increased depreciation of advertising equipment, labor and raw material cost.

Gross profit for the six months ended December 31, 2011 totaled $5.2million, a decrease of 0.1% compared to $5.21 million for the same period the prior year. Gross profit margin was 54.1% and 56.8% for the six months ended December 31, 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.

Selling, general and administrative expenses totaled $2.5 million for the six months of fiscal 2012 as compared to $1.7 million for the same period in fiscal 2011. This increase was due to an increased sales effort from the Company to accommodate its geographic expansion of its media platforms and tougher macro economic conditions, higher maintenance, professional fees and other expenses related to the growth of the business.

Net income attributable to China New Media Corp. for the six months ended December 31, 2011 was $1.5 million, a decrease of 36.7%, as compared to $2.3 million for the same period ended December 31, 2010. Basic and diluted earnings per share for the six months ended December 31, 2011 was $0.05 based on 27.6 million basic and diluted shares versus basic and diluted earnings per share of $0.09 and $0.08 for the six months ended December 31, 2010 based on 27.6 million basic and 28.2 million diluted shares outstanding.

Liquidity and Capital Resources

As of December 31, 2011, China New Media had approximately $1.5 million in cash and cash equivalents. As of December 31, 2011, total current assets and total assets were $12.5 million and $39.4 million, respectively. During the same period, total current liabilities and total liabilities were $18.2 million and $18.2million respectively. Shareholder's equity totaled 21.2 million, or a fully diluted book value of $0.77 per share, as of December 31, 2011.

Conference Call Details:

It is recommended that participants dial in approximately 10 minutes prior to the start of the 9:00 a.m. Eastern call. A telephonic replay of the conference call may be accessed approximately two hours after the call through March 1, 2012. Please dial 877-870-5176 for U.S. and 858-384-5517 for international callers and entering the access code, 4515788.

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=000093E5.

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

SOURCE China New Media Corp.