BEIJING, April 30 /Xinhua-PRNewswire-FirstCall/ -- Xinhua Finance
Media ("XFMedia"; Nasdaq: XFML), China's leading diversified
financial and entertainment media company, today announced its
unaudited financial results for the first quarter ended March 31,
2007. First Quarter 2007 Highlights Net revenue for the first
quarter of 2007 increased by 133% or US$9.6 million to US$16.7
million from $7.1 million for the first quarter of 2006. EBITDA
(non-GAAP), defined as earnings before interest expense, taxes,
depreciation, amortization and non-cash share-based compensation
expenses, for the first quarter of 2007 increased by 553% or US$5.2
million to US $6.1 million from $0.9 million in the first quarter
of 2006. Net income for the first quarter of 2007 increased by
US$13.4 million to US$12.6 million from a net loss of US$0.8
million for the first quarter of 2006. Adjusted net income
(non-GAAP), defined as net income before non-cash share-based
compensation expenses, for the first quarter of 2007 increased by
US$14.8 million to US$14.0 million from a net loss of US$0.8
million for the first quarter of 2006. XFMedia continued to make
progress across each of its five business groups: -- For the
Broadcast Group, notable milestones included: -- Airing of the TV
reality game show, "Warrior", on Inner Mongolia Satellite
Television ("NMTV"); -- NMTV obtained regulatory approval to air
six new programs nationwide in the second quarter of 2007; --
Continued improvement in channel ratings; for example, one of the
Fortune China programs achieved record ratings in Beijing and
Shanghai; -- Improved ratings allowed the Broadcast Group to
achieve a yield of US$467 per prime time ad minute and a yield of
US$140 per non-prime time ad minute for advertising sold on NMTV.
-- For the Print Group, circulation of the Economic Observer
increased to 157,000 at the end of the first quarter of 2007
compared to a circulation of 134,000 at the end of the first
quarter of 2006. The Economic Observer newspaper sold a record 211
ad pages in the first quarter of 2007 at an average price of
US$9,700 per page compared to US$8,800 per page in the first
quarter of 2006. For magazines, total circulation of the three
magazines, Money Journal, Funds Observer, and China Venture,
reached 257,000 at the end of the first quarter of 2007, compared
to 92,000 at the end of the first quarter of 2006. -- The
Advertising Group showed growth across all three divisions. The
three divisions are: Television Resale, Print and Outdoor/Other. --
The Television Resale division became the exclusive advertising
agent for five new TV programs airing on CCTV-7, Beijing TV channel
1 and 2 and Tianjin Satellite. The Television Resale division
tripled its sellable TV ad minutes in addition to achieving a TV ad
minute yield of US$3,200 per minute as the ratings improve on the
new shows -- The Print division increased the number of advertising
contracts to 1,100 with an average price of US$4,500 per contract
in the first quarter of 2007. This is an increase of 300 contracts
with an average price increase of US$1,500. In the first quarter of
2006, the Print division had 800 contracts with an average price of
US$3,000 per contract. -- The Outdoor/Other division expanded with
an exclusive contract to sell advertising onto 2,000 new billboards
in Beijing. -- The Production Group won a bid to develop an
animated public service campaign featuring a firefighter mascot for
the Beijing Fire Department. The Production Group produced a
popular program "Blog Talk Show" aired on Guangdong Satellite TV,
which achieved a very high rating for its time slot. -- The
Research Group had approximately 110 contracts with an average
price of US$9,200 per contract for the first quarter of 2007
compared to 65 contracts at an average price of US$8,500 for the
first quarter of 2006. It also expanded an ongoing contract for
consumer tests with a global beverage company, extending from China
projects to new Asia-wide projects. "We are pleased to report
robust results that exceeded management forecasts for the first
quarter of 2007," said Ms Fredy Bush, XFMedia's Chief Executive
Officer. "We have made significant strides this quarter both
operationally and financially, including our successful listing on
NASDAQ on March 9, 2007." "The first quarter of 2007 was very
productive for XFMedia, with revenue comprising 15% of forecasted
total revenue for the year. Last year, the first quarter comprised
12% of full year revenue, in line with the seasonality associated
with the various markets that we do business in, as well as the
timing of the Chinese New Year holiday that historically impacts
China businesses in the first quarter each year. Our strong
performance despite these factors can be attributed to China's
strong economic growth, effective management throughout our
business units and the dedicated efforts of our talented staff."
First Quarter 2007 Financial Results For the first quarter of 2007,
XFMedia achieved net revenue of US$16.7 million, which represents
year-on-year growth of 133% compared to US$7.1 million in the first
quarter of 2006. The following is a summary of net revenue relating
to each segment reconciled to amounts on the accompanying
consolidated financial statements for the first quarter of 2007:
Production Print Advert- Research Broadcast Total ising Net
revenues: Media production $779,715 $-- $-- $-- $-- $779,715
Advertising sales $-- $2,426,066 $-- $-- $2,080,660 $4,506,726
Advertising services $-- $759,509 $7,349,391 $966,059 $2,116,226
$11,191,185 Publishing services $-- $202,430 $-- $-- $-- $202,430
Total net revenues $779,715 $3,388,005 $7,349,391 $966,059
$4,196,886 $16,680,056 Broadcast Group Net revenue for the
Broadcast Group was US$4.2 million for the first quarter of 2007.
The Broadcast Group includes television and radio businesses. The
television business generated US$3.8 million net revenue for the
first quarter of 2007. The radio business Easy FM generated US$0.4
million net revenue for the first quarter of 2007. During the first
quarter of 2007, original programming was launched for the Shanghai
Easy FM channel. Advertising inventory sellout rates for the
Beijing and Shanghai radio stations increased to 20% and 10%
respectively in the first quarter of 2007 compared to 19% and 6% in
the first quarter of 2006. The blended yield per minute increased
to US$97 in the first quarter of 2007 from US$95 in the first
quarter of 2006. Advertising Group Net revenue for the Advertising
Group was US$7.3 million for the first quarter of 2007,
representing 57% year-on-year growth. The advertising business
consists of three divisions: Television Resale, Print and
Outdoor/Other. The Television Resale division generated US$1.0
million net revenue and achieved an average yield of US$3,200 per
minute for the first quarter of 2007. The Television Resale
division became the exclusive advertising agent for Beijing TV's
channel-2 programs 'Top Music' and 'Star Press', CCTV's channel 7
program 'Military News', Tianjin Satellite TV's program 'Eat 8
Street', Beijing TV's channel-1 program, 'Weather Report', and
renewed its contract with Shanghai Media Group's TV program 'New
Food Fashion'. The Print division generated US$4.8 million net
revenue for the first quarter of 2007. Print advertising agency
contracts increased to 1,100 with an average price of US$4,500 in
the first quarter of 2007 compared with 800 contracts and an
average price of US$3,000 for first quarter of 2006. The Print
division is the exclusive advertising agent for the real estate
section of Economic Observer and one of two exclusive advertising
agents for the real estate section of Sina.com. Outdoor/Other
division generated US$1.5 million net revenue for the first quarter
of 2007. The Outdoor/Other division substantially expanded its
businesses in Beijing with an exclusive agreement to sell
advertising onto 2,000 new billboards in Beijing promoting AIDS
Prevention. Print Group Net revenue for the Print Group was US$3.4
million for the first quarter of 2007. The Economic Observer
generated US$1.9 million net revenue for the first quarter of 2007,
and circulation of the Economic Observer increased to 157,000 at
the end of first quarter 2007 compared to end of first quarter 2006
circulation of 134,000. The newspaper sold 211 ad pages in the
first quarter of 2007 compared to 149 pages for the first quarter
of 2006. The average price per ad page increased to US$9,700 per
page in the first quarter of 2007 compared to US$8,800 per page in
the first quarter of 2006. The Money Journal group of magazines
generated US$1.5 million net revenue for the first quarter of 2007.
The circulation of Money Journal magazine increased to 118,000 by
the end of first quarter 2007 from 112,000 at the end of 2006. The
Money Journal averaged 28 paid pages per issue for the first
quarter of 2007 with an average price of US$5,900 per page. The
circulation of the new magazines Funds Observer and China Venture
increased to 88,000 and 51,000 by the end of first quarter 2007
respectively. Production Group The Production Group generated
US$0.8 million net revenue for the first quarter of 2007. The
Production Group commenced distribution of the drama series "Who
Will Be Your Witness?" for the first quarter of 2007. For the TV
branding and packaging business, the Production Group provided
services to CCTV-5, An Hui Satellite TV, Shanxi Satellite TV,
Jiangsu Satellite TV and Shanghai Media Group's TV Channel Young.
Research Group The Research Group generated US$1.0 million net
revenue for the first quarter of 2007. The Group had approximately
110 contracts with an average price of US$9,200 per contract for
the first quarter of 2007 compared to 65 contracts at an average
price of US$8,500 for the first quarter of 2006. The Research Group
was contracted by a major Chinese dairy producer to conduct product
taste testing in 20 cities across China. Cost of Revenues Cost of
revenues for the first quarter of 2007 increased by 157% or US$7.1
million to US$11.7 million from US$4.5 million for the first
quarter of 2006, due to an increase in media buying costs for the
advertising business and the inclusion in cost of revenues of
intangible asset amortization of US$2.6 million in the first
quarter of 2007 which was not part of cost of revenues in 2006.
Operating Expenses Total operating expenses for the quarter were
US$6.6 million, representing 39.4% of revenue, compared to US$2.6
million or 36.1% in the same period in 2006. Total operating
expenses were composed of selling and marketing expenses and
general and administrative expenses. Selling and marketing expenses
were US$1.6 million, an increase of 151% or US$1.0 million compared
to selling and marketing expense in the first quarter of 2006. The
increase was primarily attributable to increases in sales
commission. General and administrative expenses for the quarter
were US$5.0 million. This quarter's general and administrative
expenses included amortization of intangible assets of US$0.1
million and non-cash share-based compensation expense of US$1.4
million. EBITDA (non-GAAP) EBITDA (non-GAAP), defined as earnings
before interest expense, taxes, depreciation, amortization and
non-cash share-based compensation expenses, increased by 553% or
US$5.2 million for the quarter to US$6.1 million, 36.3% of total
revenues, compared to 13% in the same period of 2006. Net Income
and Adjusted Net Income (non-GAAP) Net income for the quarter was
US$12.6 million, compared to a net loss of US$800,000 in the same
period of 2006. Net income for the first quarter of 2007 included a
US$12.3 million gain from the reduction of deferred tax liabilities
due to a reduction of statutory corporate income tax rate which
will become effective on January 1, 2008 for all domestic companies
and foreign invested enterprises in the People's Republic of China.
The reason this one time gain was taken in this quarter, instead of
in 2008, is that the deferred tax liabilities were historically
accrued at the higher rate, and this gain offsets the historical
accrual. Adjusted net income (non-GAAP), defined as net profit
before non-cash share-based compensation expenses, for the quarter
was US$14.0 million, compared to a net loss of US$800,000 for the
same period of 2006. Outlook for 2007 XFMedia forecasts total
revenue for 2007 to be US$110 million, and its total revenues for
second quarter of 2007 to be in the range of US$22 million to US$24
million. This forecast reflects XFMedia's current and preliminary
view, which is subject to change. Conference Call Information
Following the earnings announcement, Xinhua Finance Media's senior
management will host a conference call on April 30, 2007 at 8:00 am
(New York) / 8:00 pm (Shanghai) to review the results and discuss
recent business activity. Interested parties may dial into the
conference call at (US) +1 480 629 9562/ (UK) +44 20 8515 2303 /
(Asia Pacific) +10800 440 0091. A telephone replay will be
available shortly after the call for two weeks at (US) +1 303 590
3030/ (UK) +44 207 154 2833, Passcode: 3725288 and (Asia Pacific)
+852 2287 4304, Passcode: 090110. The conference call will be
webcast live and available for replay on the investor relations
page of its website http://www.xinhuafinancemedia.com/ . About
Xinhua Finance Media Limited Xinhua Finance Media ("XFMedia";
Nasdaq: XFML) is China's leading diversified financial and
entertainment media company targeting high net worth individuals
nationwide. The company reaches its target audience via TV, radio,
newspapers, magazines and other distribution channels. Through its
five synergistic business groups, Advertising, Broadcast, Print,
Production and Research, XFMedia offers a total solution empowering
clients at every stage of the media process and keeping people
connected and entertained. Headquartered in Beijing, the company
has offices and affiliates in major cities of China including
Beijing, Shanghai, Guangzhou, Shenzhen and Hong Kong. For more
information, please visit http://www.xinhuafinancemedia.com/ .
Xinhua Finance Media is a subsidiary of Xinhua Finance Limited
("XFL"; TSE Mothers: 9399), China's premier financial information
and media service provider. XFL owns 36.9% of the equity and 85.4%
of the voting rights of XFMedia through its holding of class B
common shares, which have ten votes per share. The investing
public, the company's China partners, executives and staff own
class A common shares in the company with one vote per share. The
dual-class common share structure was created to accommodate the
regulatory landscape of China's media sector. Safe Harbor This
announcement contains forward-looking statements. These statements
are made under the "safe harbor" provisions of 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. Among other things, the outlook
for second quarter and full year 2007 and quotations from
management in this announcement, as well as XFMedia's strategic and
operational plans, contain forward-looking statements. XFMedia may
also make written or oral forward-looking statements in its
periodic reports to the U.S. Securities and Exchange Commission in
its annual report to shareholders, in press releases and other
written materials and in oral statements made by its officers,
directors or employees to third parties. Statements that are not
historical facts, including statements about XFMedia's beliefs and
expectations, are forward-looking statements. Forward-looking
statements involve inherent risks and uncertainties. A number of
factors could cause actual results to differ materially from those
contained in any forward- looking statement, including but not
limited to the following: our growth strategies; our future
business development, results of operations and financial
condition; our ability to attract and retain customers; competition
in the Chinese advertising market; changes in our revenues and
certain cost or expense items as a percentage of our revenues; the
outcome of ongoing, or any future, litigation or arbitration,
including those relating to copyright and other intellectual
property rights; the expected growth of the Chinese advertising and
media market; and Chinese governmental policies relating to
advertising and media. Further information regarding these and
other risks is included in our registration statement on Form F-1,
as amended, filed with the Securities and Exchange Commission.
XFMedia does not undertake any obligation to update any
forward-looking statement, except as required under applicable law.
Non-GAAP Financial Measures To supplement XFMedia's consolidated
financial results presented in accordance with U.S. GAAP, XFMedia
uses the following measures defined as non- GAAP financial measures
by the SEC: EBITDA, net income excluding non-cash share-based
compensation expenses. The presentation of these 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 U.S. GAAP. For more information on these non-GAAP
financial measures, please see the table captioned "Reconciliations
of GAAP and non-GAAP results" set forth at the end of this release.
XFMedia believes that these non-GAAP financial measures provide
meaningful supplemental information regarding its performance and
liquidity by excluding share-based expenses that may not be
indicative of its operating performance from a cash perspective.
XFMedia believes that both management and investors benefit from
referring to these non-GAAP financial measures in assessing its
performance and when planning and forecasting future periods.
XFMedia computes its non-GAAP financial measures using the same
consistent method from quarter to quarter. XFMedia believes these
non-GAAP financial measures are useful to investors in allowing for
greater transparency with respect to supplemental information used
by management in its financial and operational decision making. A
limitation of using non-GAAP net profit excluding non-cash share-
based compensation expenses is that non-cash share-based
compensation expenses have been and will continue to be a
significant recurring expense in our business. A limitation of
using non-GAAP EBITDA is that it does not include all items that
impact our net income for the period. Management compensates for
these limitations by providing specific information regarding the
GAAP amounts excluded from each non-GAAP measure. The accompanying
tables have more details on the reconciliations between GAAP
financial measures that are most directly comparable to non-GAAP
financial measures. Reconciliations of non-GAAP results of
operations measures to the nearest comparable GAAP measures (in USD
thousands, unaudited) Three months ended Three months ended March
31, 2006 March 31, 2007 Non- Non- GAAP GAAP GAAP Adjustment GAAP
Result Adjustment Result Result Result Operating Profit (*) 40 887
927 724 5,334 6,058 Netincome (**) (806) -- (806) 0 1,443 14,033
(*) The adjustments are for non-cash share-based compensation
expenses, interest income, and amortization for intangible assets.
(**) The adjustments are for non-cash share-based compensation
expenses. Xinhua Finance Media Limited Unaudited Consolidated
Statements of Operations Period ended Period ended March 31, March
31, 2006 2007 (in U.S. Dollars) Unaudited Unaudited Net revenues:
Advertising services 6,484,513 11,191,185 Content production
293,803 779,715 Advertising sales 125,769 4,506,726 Publishing
services 241,446 202,430 Total net revenues 7,145,531 16,680,056
Cost of revenues: Advertising services 3,830,088 9,444,329 Content
production 163,113 266,850 Advertising sales 319,391 1,788,455
Publishing services 216,490 150,924 Total cost of revenues
4,529,082 11,650,558 Operating expenses: Selling and distribution
630,097 1,579,456 General and administrative 1,945,986 4,988,225
Total operating expenses 2,576,083 6,567,681 Other operating income
-- 2,261,788 Income from operations 40,366 723,605 Other income
(expense): Interest expense (168,246) (1,210,939) Interest income
76,544 456,834 Other, net 133,130 37,738 Income before provision
for income taxes and minority Interest 81,794 7,238 Provision for
income taxes 275,497 (12,915,380) Net income before minority
interest (193,703) 12,922,618 Minority interest 612,570 332,884 Net
income (806,273) 12,589,734 Dividend on redeemable convertible
preferred shares 293,333 1,338,333 Net income (loss) attributable
to holders of common shares (1,099,606) 11,251,401 Net income
(loss) per share: Basic - Class A common share -- 0.138 Basic -
Class B common share -0.026 0.138 Diluted - Class A common share --
0.131 Diluted - Class B common share -0.026 0.131 More Information:
Media Contacts China Xinhua Finance Media Ms Joy Tsang, Tel:
+86-21-6113-5999 Email: United States Richard Lewis Communications,
Inc. Mr Gregory Q. Tiberend, Tel: +1-212-827-0020 Email: IR
Contacts China Xinhua Finance Media Ms Jennifer Chan Lyman Tel:
+86-21-6113-5960 Email: United States Taylor Rafferty Ms Jessica
McCormick Tel: +1-212-889-4350 Email: DATASOURCE: Xinhua Finance
Media CONTACT: China, Ms. Joy Tsang of Xinhua Finance Media,
+86-21-6113-5999, or ; or United States, Mr. Gregory Q. Tiberend of
Richard Lewis Communications, Inc., +1-212-827-0020, or , for
Xinhua Finance Media; IR Contacts, Ms Jennifer Chan Lyman in China,
+86-21-6113-5960, ; Ms Jessica McCormick in US, +1-212-889-4350,
Web Site: http://www.xinhuafinancemedia.com/
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