BEIJING, China, Dec. 7 /PRNewswire-Asia-FirstCall/ -- China Mass
Media Corp. (NYSE:CMM), a leading media company in China, today
announced its unaudited financial results for the third quarter
ended September 30, 2009. Third Quarter 2009 Highlights(1) -- Total
net revenues were RMB 80.70 million ($ 11.82 million), an increase
of 10.4% from the third quarter 2008 and a sequential increase of
4.3% from the second quarter 2009. -- Operating income was RMB 3.66
million ($ 0.54 million), a decrease of 80.4% from RMB 18.62
million in the third quarter of 2008, and a sequential increase
compared with an operating loss of RMB 3.13 million in the second
quarter 2009. -- Net income was RMB 4.04 million ($ 0.59 million),
a decrease of 76.8% from the third quarter of 2008 and a sequential
increase of 988.1% from the second quarter of 2009. -- During the
third quarter 2009, cash flow used in operating activities was RMB
396.65 million ($58.11 million), cash flow used in investing
activities was RMB 49.49 million ($7.25 million), and there was no
cash flow from financing activities, so cash and cash equivalents
decreased by RMB 446.34 million ($65.39) million during the third
quarter. (1) The U.S. dollar (US$) amounts disclosed in this press
release are presented solely for the convenience of the reader. The
conversion of Renminbi (RMB) into US$ in this release is based on
the exchange rate set forth in the statistical release issued by
the Federal Reserve Board on September 30, 2009, which was
RMB6.8262 to US$1.00. The percentages stated are calculated based
on RMB. Mr. Shengcheng Wang, Chairman and Chief Executive Officer
of China Mass Media, said, "The third quarter was extremely busy
and full of changes. We embraced the 60th anniversary of the
People's Republic of China along with the resumption of higher
growth rates in our economy. We were very pleased to see robust
demand in the advertising market during the quarter, especially in
September. That strength has continued into the fourth quarter of
the year. The marketing adjustments we put in place have paid off.
Our "Day Time Advertising Package" on CCTV sold well, as did sales
of our advertising time slots on CCTV's "Television Guide" channel,
and on CCTV-4 programs, largely due to our winning a large number
of new clients. CCTV's prime time advertisement auction and bidding
session for 2010, which was held in November 2009, raised nearly
RMB 10.97 billion, an 18.5 percent increase from RMB 9.26 billion
in 2009. While we are confident in the economic outlook for 2010,
the intense bidding reflected China's rebounding economy and the
huge demand in the advertising market. Several of our clients
participated in and won ideal time slots through our services. CCTV
also initiated their open bidding process to sell advertising time
slots to advertising agency companies using a new wholesale
contracting system. We won the "Periodic China News Package" on
CCTV-4 at a reasonable price. Our media resources in 2010,
therefore, include our "Day Time Advertising Package," the
"Periodic China News Package," advertising time slots on CCTV's
"Television Guide," and public service announcement sponsorship
opportunities. Starting in 2009, CCTV initiated a series of reforms
to improve its advertising operations. As a part of the reform,
CCTV will bring their sales and marketing efforts in-house for the
Chinese New Year Gala program, for which we worked as the exclusive
advertising agent for several years. We will continue to provide
support to CCTV for this event, but we do not expect it to be a
significant source of revenue in 2010. We plan to continue to
further strengthen our production and client services. As brand
advisors for our various clients, we will expand our integrated
services to provide one-stop comprehensive solutions for our
clients. By leveraging our unique public service announcement
program and advertising platform on CCTV, we believe we can further
improve our production and public services advertising, which can
help our clients increase the awareness of public welfare and
social responsibilities from a unique angle. Right after the CCTV
auction, we started the pre-sales of our 2010 media resources to
win a large share of our clients' 2010 advertising budgets. We
expect to continue to grow through this kind of organic growth and
possibly through careful, logical, and financially prudent
acquisitions." Mr. Eric Cheung, Chief Financial Officer of China
Mass Media, added, "Effective implementation of our expanded
marketing strategy led to the strong sequential increase in
revenues from advertising agency services. We are beginning to see
strong demand for 2010, and expect to benefit from the strong
growth in China's expanding economy. We believe that our
strengthened sales force and market position will allow us to take
advantage of the growth in advertising demand." Third Quarter 2009
Financial Results Revenues from Advertising Agency Services were
RMB 79.83 million ($ 11.7 million) in the third quarter of 2009, an
increase of 13.0% from RMB 70.66 million in the third quarter of
2008, and a sequential increase of 29.1% from RMB 61.84 million in
the second quarter of 2009. In the third quarter 2009, advertising
agency services revenues increased 13.0% from the third quarter of
2008, primarily due to securing new advertisers and producing
higher revenues from advertisements on "Day Time Advertising
Package" and on "Television Guide." In August 2008, the "Day Time
Advertising Package" and "Television Guide" programs were suspended
for 16 days due to live broadcasting of the Olympic Games by CCTV,
which led to a decline in revenues generated from these two
programs in the third quarter 2008. Comparing sequentially with the
second quarter 2009, advertising agency services revenues increased
29.1% in the third quarter 2009 due to securing more clients'
advertising expenditures and producing higher revenues from
advertisements on "Day Time Advertising Package," on "Television
Guide," on "First News" and on CCTV-4 programs. With higher growth
rates resuming in the Chinese economy and the coming traditional
peak advertising seasons in China for September and October, many
advertisers were willing to increase their budgets to improve the
market awareness of their products. Through our enlarged sales
team, the company has been able to secure more customers across
various industry sectors, including household appliances, consumer
goods, and pharmaceutical products. Revenues from special events
services: There were no special events in the third quarter 2009 or
in the third quarter 2008, so no revenues occurred in those
quarters. The RMB 14.60 million ($ 2.14 million) in special events
services revenues in the second quarter 2009 related to revenues
that were recognized from assisting CCTV to sell and market
advertisements during the Beijing Olympic Games in 2008. Revenues
from production and sponsorship services were RMB 2.83 million ($
0.41 million) in the third quarter of 2009, a decrease of 45.3%
from RMB 5.18 million in the third quarter of 2008, primarily due
to lower revenues from public service announcements sponsorship
services. Sequentially, revenues from production and sponsorship
services in the third quarter 2009 decreased 1.7% from RMB 2.88
million in the second quarter of 2009. Operating costs and expenses
Cost of revenues was RMB 65.12 million ($ 9.54 million) in the
third quarter 2009, an increase of 36.4% from RMB 47.73 million in
the third quarter 2008, primarily due to higher media resource
underwriting costs for CCTV-4. The cost of revenues sequentially
increased 1.2% from RMB 64.38 million in the second quarter 2009.
Sales and marketing expenses were RMB 3.90 million ($ 0.57 million)
in the third quarter of 2009, an increase of 96.1% from RMB 1.99
million in the third quarter of 2008, due primarily to increased
salaries and other compensation for additional sales employees.
Sales and marketing expenses decreased sequentially by 25.6% from
RMB 5.24 million ($ 0.77 million) in the second quarter 2009,
mainly due to the absence in the third quarter 2009 of a
distribution of commission and bonus related to the special event
revenue recorded in the second quarter 2009. General and
administrative expenses were RMB 8.02 million ($ 1.17 million) in
the third quarter of 2009, an increase of 69.2% from RMB 4.74
million in the third quarter of 2008, mainly due to additional
expenses incurred as a U.S. publicly listed company, including
legal and independent auditors' fees and the cost of compliance
with the Sarbanes-Oxley Act of 2002, and higher salaries. General
and administrative expenses decreased sequentially 26.3% in the
third quarter 2009 from RMB 10.89 million in the second quarter
2009 mainly due to a decrease in the provision for bad debt from
RMB 3.5 million to RMB 0.4 million. Operating income, as a result
of the foregoing factors, was RMB 3.66 million ($ 0.54 million) in
the third quarter 2009, down 80.4% compared with operating income
of RMB 18.62 million in the third quarter of 2008. Operating income
sequentially increased to RMB 3.66 million in the third quarter
2009 from an operating loss of RMB 3.13 million in the second
quarter of 2009. The operating margin was 4.53% in the third
quarter 2009, a negative 4.05% in the second quarter 2009, and
25.48% in the third quarter 2008. Net income was RMB 4.04 million
($ 0.60 million) in the third quarter 2009, a decrease of 76.8%
from RMB 17.41 million in the third quarter 2008 and an sequential
increase of 988.1% from RMB 0.37 million in the second quarter
2009. Net profit margin was 5.01% in the third quarter 2009, 0.48%
in the second quarter 2009, and 23.83% in the third quarter 2008.
Basic and diluted earnings per ADS for the third quarter of 2009
was RMB 0.17 ($ 0.02) per ADS, compared with RMB 0.81 per ADS in
the third quarter 2008. The basic and diluted earnings per ADS in
second quarter 2009 was RMB 0.02 per ADS. Each ADS represents 30
ordinary shares of the company. Cash and cash equivalents As of
September 30, 2009, the Company had cash and cash equivalents of
RMB 680.6 million ($99.7 million) compared with RMB 1,126.9 million
at June 30, 2009. The decrease in cash and cash equivalents was
mainly due to cash used in operating activities and the purchase of
certain investment products issued by state-owned banks classified
as short-term investments. Financial Outlook The Company currently
expects to generate total net revenues of RMB 95 million to RMB 105
million for the fourth quarter of 2009. The range results in a
potential increase of 22.6% to 35.5% as compared with the fourth
quarter of 2008 and a potential sequential increase of 17.7% to
30.1% compared with the third quarter of 2009. This forecast
reflects the company's current and preliminary view, which is
subject to change. Conference Call China Mass Media will host a
conference call and live webcast at 8:00 a.m. Eastern Time (EST)
(9:00 p.m., Beijing/Hong Kong time) on Monday, Dec 7, 2009, to
discuss the third quarter 2009 results and answer questions. The
dial-in details for the live conference call are as follows: U.S.
toll free number: +1 866 730 5768 China toll free number (Telecom):
+10 800 152 1490 China toll free number (Unicom): +10 800 130 0399
Hong Kong toll free number: +800 96 3844 Passcode: CMM A live
webcast of the conference call will be available on the investor
relations section of the Company's website at:
http://www.chinammia.com/ . A telephone replay of the call will be
available after the conclusion of the conference call. The dial-in
details for the replay are as follows: U.S. toll free number: +1
888 286 8010 International dial-in number: +1 617 801 6888
Passcode: 36387039 Safe Harbor Statement This news release includes
statements that may constitute forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Act of 1934 as amended, and
the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. The forward-looking statements,
which are based on certain assumptions and future plans,
strategies, and expectations of the Company, are generally
identified by the use of words such as believe, expect, intend,
anticipate, estimate, or project or similar words. The fourth
quarter and year 2009 outlook contains forward-looking statements,
based on management's current plans, estimates, and expectations,
are not a guarantee of future performance. The forward-looking
statements involve risks and uncertainties. A number of factors
could cause actual results to differ materially from forward-
looking statements. Additional information concerning these factors
is contained in the Securities and Exchange Commission filings of
the company at http://www.sec.gov/. China Mass Media does not
undertake any obligation to update any forward-looking statements,
except as required by law. About China Mass Media Corp. As a
leading television advertising company in China, the Company
provides a full range of advertising services, including
advertising agency services, creative production services, public
service announcement sponsorship services, and other value added
services. The Company currently offers more than 500 minutes of
advertising time slots on CCTV Channels 1, 2, 4, E and F. CCTV is
the largest television network in China. Since 2003, the Company
has produced more than 300 advertisements and has won a number of
prestigious awards in China. China Mass Media's website is located
at http://www.chinammia.com/ . For further information, please
contact: China Mass Media Corp. Julie Sun Vice President of
Corporate Development Tel: +86-10-8809 1050 Email: or Christensen
Hong Kong: Roger Hu Tel: +852-2117-0861 Email: United States: Linda
Bergkamp Tel: +1-480-614-3004l Email: CHINA MASS MEDIA CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE
MONTHS ENDED, September 30, June 30, September 30, September 30,
2008 2009 2009 2009 RMB RMB RMB US$ Revenues: Advertising agency
services 70,661,244 61,838,249 79,826,310 11,694,107 Special events
services -- 14,600,000 -- -- Advertisement production and
sponsorship services 5,179,717 2,879,443 2,831,067 414,735 Total
revenues 75,840,961 79,317,692 82,657,377 12,108,842 Less: Business
tax (2,763,372) (1,942,304) (1,959,112) (286,999) Total net
revenues 73,077,589 77,375,388 80,698,265 11,821,843 Operating
costs and expenses: Cost of revenues (47,733,904) (64,383,133)
(65,123,775) (9,540,268) Sales and marketing expenses (1,987,275)
(5,237,281) (3,897,454) (570,955) General and administrative
expenses (4,738,804) (10,887,394) (8,020,381) (1,174,941) Total
operating costs and expenses (54,459,983) (80,507,808) (77,041,610)
(11,286,164) Operating income/ (loss) 18,617,606 (3,132,420)
3,656,655 535,679 Interest and investment income 3,671,955
3,345,142 1,647,683 241,376 Other income/ (expense), net
(1,799,274) 228,942 (189,169) (27,712) Income before tax 20,490,287
441,664 5,115,169 749,343 Income tax expense (3,076,395) (70,401)
(1,075,459) (157,549) Net income 17,413,892 371,263 4,039,710
591,794 Net income allocated to participating preferred shares
(1,160,674) -- -- -- Net income available to ordinary shareholders
16,253,218 371,263 4,039,710 591,795 Earnings per ordinary share,
basic and diluted 0.03 0.001 0.006 0.001 Earnings per ADS, basic
and diluted 0.81 0.02 0.17 0.02 Shares used in calculating earnings
per ordinary share, basic and diluted 600,732,337 716,375,000
716,375,000 716,375,000 Shares used in calculating earnings per
ADS, basic and diluted 20,024,411 23,879,167 23,879,167 23,879,167
CHINA MASS MEDIA CORP. UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS December 31, September 30, September 30, 2008 2009 2009 RMB
RMB US$ Assets Current assets: Cash and cash equivalents
566,889,261 680,597,686 99,703,742 Short-term investments
500,000,000 80,000,000 11,719,551 Notes receivable -- 2,392,460
350,482 Accounts receivable, net of allowance for doubtful accounts
of RMB 4,319,808 and RMB 8,303,818 as of December 31, 2008 and
September 30, 2009 14,367,193 720,677 105,575 Prepaid expenses and
other current assets 68,301,523 46,567,929 6,821,940 Deposit paid
to a related party 1,000,000 1,000,000 146,494 Total current assets
1,150,557,977 811,278,752 118,847,784 Non-current assets: Property
and equipment, net 57,261,208 55,615,411 8,147,347 Total
non-current assets 57,261,208 55,615,411 8,147,347 Total Assets
1,207,819,185 866,894,163 126,995,131 Liabilities and Shareholder's
Equity Current liabilities: Accounts payable 330,085,426
171,542,903 25,130,073 Customer advances 75,422,483 59,728,244
8,749,853 Dividend payable 96,335,115 -- -- Accrued expenses and
other current liabilities 13,765,090 15,755,521 2,308,095 Taxes
payable 51,958,677 29,894,592 4,379,390 Amount due to related
parties 252,209,794 135,432,975 19,840,171 Total current
liabilities 819,776,585 412,354,235 60,407,582 Total Liabilities
819,776,585 412,354,235 60,407,582 Commitments and Contingencies
Shareholders' equity: Ordinary shares ($0.001 par value;
900,000,000,000 shares authorized; 716,375,000 issued and
outstanding as of December 31, 2008 and June 30, 2009) 4,893,500
4,893,500 716,870 Additional paid-in capital 330,214,330
332,686,444 48,736,697 Statutory reserves 25,000,000 25,000,000
3,662,360 Retained earnings 27,934,770 91,959,984 13,471,622 Total
Shareholders' Equity 388,042,600 454,539,928 66,587,549 Total
Liabilities and Shareholder's Equity 1,207,819,185 866,894,163
126,995,131 CHINA MASS MEDIA CORP. UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS THREE MONTHS ENDED September 30, June 30,
September 30, September 30, 2008 2009 2009 2009 RMB RMB RMB US$
Cash flows from operating activities: Net income 17,413,892 371,263
4,039,710 591,795 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation expense 245,232
757,596 766,329 112,263 Investment income (2,018,356) (2,408,306)
(956,768) (140,161) Exchange (gain)/loss 1,796,769 161,392 202,609
29,681 Share-based compensation 855,239 1,085,726 443,108 64,913
Changes in assets and liabilities: Notes receivable 5,741,441
250,000 (2,392,460) (350,482) Accounts receivable (32,023)
22,373,853 3,763,062 551,267 Prepaid expense and other current
assets 129,514 (1,021,315) (887,194) (129,969) Deposit paid to a
related party -- (391,664) 391,664 57,377 Accounts payable
5,042,095 5,693,360 (303,994,566) (44,533,498) Customer advances
3,443,327 (3,946,321) 29,770,913 4,361,272 Accrued expenses and
other current liabilities (1,638,245) 3,807,441 (3,656,772)
(533,525) Taxes payable 3,220,834 (13,701,311) (366,530) (53,695)
Amount due to related parties 51,689,579 (26,535,415) (123,772,918)
(18,132,038) Net cash provided by/ (used in) operating activities
85,889,298 (13,503,701) (396,649,813) (58,106,972) Cash flows from
investing activities: Redemption/ (purchase) of short-term
investments -- 70,000,000 (50,000,000) (7,324,719) Purchase of
property and equipment (125,598) (158,508) (415,185) (60,822)
Proceeds from investment income 4,205,575 2,487,704 923,891 135,345
Net cash provided by/ (used in) investing activities 4,079,977
72,329,196 (49,491,294) (7,250,196) Cash flows from financing
activities: Proceeds from issuance of ordinary shares and preferred
shares 290,431,451 -- -- -- Distribution made to shareholder in
connection with the reorganization -- (15,000,000) -- -- Net cash
provided by/ (used) in financing activities 290,431,451
(15,000,000) -- -- Effect of foreign currency exchange (1,796,769)
(161,389) (202,609) (29,681) Net increase in cash and cash
equivalents 378,603,957 43,664,106 (446,343,716) (65,386,850) Cash
and cash equivalents at beginning of the period 213,286,232
1,083,277,296 1,126,941,402 165,090,592 Cash and cash equivalents
at end of the period 591,890,189 1,126,941,402 680,597,686
99,703,742 CHINA MASS MEDIA CORP. SELECTED OPERATING DATA THREE
MONTHS ENDED September 30, June 30, September 30, 2008 2009 2009
Number of programs secured during the period 40 41 41 Total
advertising time obtained (seconds) 2,843,520 2,909,160
2,938,860(1) Total advertising time sold (seconds) 238,917 389,786
264,660(2) (1) Represents the total amount of time during regular
television programs secured through our contracts with CCTV,
including 554,220 seconds from CCTV-1, CCTV-2 and CCTV-4 and
2,384,640 seconds from CCTV-E and CCTV-F. (2) During the
three-month periods ended September 30, 2008, June 30, 2009 and
September 30, 2009, the company has sold nil, 167,760 seconds and
27,840 seconds of advertisements in CCTV-E and CCTV-F.
RECONCILIATIONS OF UNAUDITED NON-GAAP RESULTS OF OPERATIONS
MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES (*) Three months
ended Three months ended September 30, 2008 September 30, 2009 GAAP
Non-GAAP GAAP Non-GAAP Result Adjustment Result Result Adjustment
Result RMB RMB RMB RMB RMB RMB Operating income 18,617,606 855,239
19,472,845 3,656,655 443,108 4,099,763 Net income 17,413,892
855,239 18,269,131 4,039,710 443,108 4,482,818 (*) 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. DATASOURCE: China
Mass Media Corp. CONTACT: China Mass Media Corp., Julie Sun,
+86-10-8809-1050, Vice President of Corporate Development, ;
Christensen, Hong Kong: Roger Hu, +852-2117-0861, or ; United
States: Linda Bergkamp, +1-480-614-3004, or Web site:
http://www.chinammia.com/
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