2008-07-24 16:00:00
VisionChina Media Announces Second Quarter 2008 Results and Raises Full-Year Guidance
Total Revenues in Second Quarter 2008 Grew 332.4% Year-Over-Year
Net Income in Second Quarter 2008 Grew 56.7% Quarter-Over-Quarter
BEIJING, July 24 /Xinhua-EMWNews/ -- VisionChina Media Inc. (the
"Company") (Nasdaq: VISN), one of China's largest out-of-home digital
television advertising networks on mass transportation systems, today
announced its financial results for the quarter ended June 30, 2008.
Second Quarter 2008 Highlights
-- Total revenues in the second quarter of 2008 grew 332.4%
year-over-year and 48.8% quarter-over-quarter to $20.3 million, out of
which advertising service revenues grew 405.4% year-over-year and 52.4%
quarter-over-quarter to $20.2 million.
-- Net income in the second quarter of 2008 was $8.5 million, an
increase of 56.7% from $5.4 million in the first quarter of 2008, and a
significant increase of 3,039.7% from $0.3 million in the second quarter of
2007.
-- Gross profit in the second quarter of 2008 was $11.9 million, an
increase of 64.5% from $7.2 million in the first quarter of 2008 and a
significant increase of 775.5% from $1.4 million in the second quarter of
2007.
-- Operating profit in the second quarter of 2008 was $7.8 million, an
increase of 71.1% from $4.5 million in the first quarter of 2008, and a
significant increase of 3,210.8% from $0.2 million in the second quarter of
2007.
-- Fully diluted net income per share in the second quarter of 2008 was
$0.12 (each of our ADSs represents one common share) compared to $0.08 for
the first quarter of 2008.
-- The Company had cash and cash equivalents of $124.2 million as of
June 30, 2008, a decrease of $9.6 million from $133.8 million as of March
31, 2008. The decrease is mainly due to deposits paid to secure exclusive
agency agreements in additional cities and deposits paid to acquire several
mobile television media planning agencies. As part of our ongoing growth
strategy, the Company has paid a total of $14.4 million in deposits for the
acquisitions of these television media planning agencies and the final
purchase considerations will be based on such agencies' operating results
over the next three years, as stipulated by the earned-out arrangements.
The purchase price allocation was preliminary as of June 30, 2008.
-- As of June 30, 2008, the Company had installed 60,160 digital
displays on buses, subways trains and subway platforms, compared with
48,719 at the end of the first quarter of 2008.
-- The number of cities covered by the Company's bus network increased
to 16 in the second quarter of 2008 to include Shenyang, the capital city
of Liaoning province. The number of cities covered by the Company's subway
network increased to three in the second quarter of 2008 to include digital
televisions on subway trains in Guangzhou as well as on the platforms that
service Guangzhou's subway systems.
-- Network capacity, which is measured by total broadcasting hours,
reached 29,523 hours in the second quarter of 2008, compared to 25,980
hours in the first quarter of 2008 and 15,536 in the second quarter of
2007.
-- On average, the Company sold 8.14 advertising minutes per
broadcasting hour in the second quarter of 2008, compared to 6.24
advertising minutes per broadcasting hour in the first quarter of 2008 and
6.59 advertising minutes per broadcasting hour in the second quarter of
2007. The Company lost a total of approximately 540 advertising hours,
equal to $2.6 million in lost revenue, in the weeks following the
earthquake in Sichuan province in China that occurred on May 12, 2008 due
to cancellation of all advertisements during a three day national mourning
period from May 19 though May 21, as well as broadcast and advertisement
disruption during the weeks following the earthquake. As the utilization of
the Company's network capacity was already relatively high in June 2008,
the ability to broadcast advertisements displaced by the earthquake was
limited.
-- Average advertising service revenues per broadcasting hour grew
34.0% quarter-over-quarter to $661 per broadcasting hour from $493 per
broadcasting hour in the first quarter of 2008, compared to $240 in the
second quarter of 2007, primarily as a result of the implementation of our
rate card increase on May 1, 2008.
Limin Li, VisionChina Media's chairman and chief executive officer,
commented, "We are pleased to announce a very successful quarter. Despite
the negative impact on our operations and sales over the few weeks
following the earthquake in Sichuan province in mid-May, we were able to
beat both our top- line and bottom-line guidance." Mr. Li continued, "I am
proud of all of our employees for their dedication and ability to achieve
extraordinary results in the face of such challenges."
"In the second quarter of 2008, we were able to continue expanding our
network coverage, following our carefully-structured growth plan," Mr. Li
reported. "We entered into an exclusive contract in Shenyang, Liaoning
province to operate on public buses and expanded our position in Guangzhou
to include subway trains as well as subway platforms. I am also extremely
pleased to announce that we recently expanded into Shanghai, covering the
platforms of two subway lines in the city's metro system. Our entrance into
Shanghai is a significant milestone as it marks VisionChina Media's
penetration into every Tier I city in China. Tier I cities, Beijing,
Guangzhou, Shanghai and Shenzhen, together account for over 60% of
advertising spending in China. We will continue to strengthen our position
and increase our penetration in these prosperous markets as we continue to
build up our sales and marketing teams to capture the fast-paced growth in
advertising spending in China."
Dina Liu, VisionChina Media's chief financial officer, added, "This was
another strong quarter for us. We saw impressive growth in our top and
bottom- lines and continued to increase sales even as we increased our
prices. I am confident in VisionChina's ability to weather any storm. Our
diverse base of customers from a broad range of nondiscretionary industries
increases the stability of our business. Entry into Shanghai, China's
largest advertising market, completes our mission to become a premier
national network with a strong and scalable business model."
Second Quarter 2008 Results
VisionChina Media's total revenues were $20.3 million in the second
quarter of 2008, an increase of 48.8% compared to $13.6 million in the
first quarter of 2008 and an increase of 332.4% compared to $4.7 million in
the second quarter of 2007.
Advertising service revenues were $20.2 million in the second quarter
of 2008, an increase of 52.4% compared to $13.2 million in the first
quarter of 2008 and an increase of 405.4% compared to $4.0 million in the
second quarter of 2007. Total broadcasting hours reached 29,523 in the
second quarter of 2008 compared to 25,980 in the first quarter of 2008.
Average advertising revenues per broadcasting hour were $661 in the second
quarter of 2008 compared to $493 in the first quarter of 2008. On average,
the Company sold 8.14 advertising minutes per broadcasting hour in the
second quarter of 2008 compared to 6.24 advertising minutes per
broadcasting hour in the first quarter of 2008. As of
June 30, 2008, 594 advertisers had purchased advertising time on the
Company's network either directly or through an advertising agent.
Media cost, the most significant component of advertising service cost
of revenues, was $6.2 million in the second quarter of 2008, representing
75.0% of total advertising service costs, compared to $4.7 million, or
77.3% of total advertising service costs, in the first quarter of 2008.
Gross profit in the second quarter of 2008 was $11.9 million, an
increase of 64.5% compared to $7.2 million in the first quarter of 2008 and
a significant increase of 775.5% compared to $1.4 million in the second
quarter of 2007. Advertising service gross margin was 59.1% in the second
quarter of 2008, compared to 54.3% in the first quarter of 2008. The
advertising equipment gross margin in the second quarter of 2008 was 13.0%,
compared to 17.3% in the first quarter of 2008.
Selling and marketing expenses were $3.0 million in the second quarter
of 2008, an increase of 84.4% compared to $1.6 million in the first quarter
of 2008, and an increase of 832.3% compared to $0.3 million in the second
quarter of 2007, primarily due to an increase in the sales and marketing
team which grew to 276 employees as of June 30, 2008, up from 208 employees
as of March 31, 2008. Selling and marketing expenses represented 14.8% of
the Company's advertising service revenues in the second quarter of 2008
compared to 12.2% in the first quarter of 2008.
General and administrative expenses were $1.0 million in the second
quarter of 2008, an increase of 21.3% compared to $0.8 million in the first
quarter of 2008, and an increase of 91.2% compared to $0.5 million in the
second quarter of 2007.
Losses from equity method investments amounted to $0.2 million in the
second quarter of 2008, compared to a $0.3 million loss in the first
quarter of 2008, and a $0.3 million loss in the second quarter of 2007.
Operating profit was $7.8 million in the second quarter of 2008, an
increase of 71.1% from $4.5 million in the first quarter of 2008, and a
significant increase of 3,210.8% from $0.2 million in the second quarter of
2007.
In the second quarter of 2008, the Company recorded a tax expense of
$0.03 million. The Company is a certified "Cultural Enterprise" and
therefore benefits from full tax exemption from 2005 through 2008. The
Company expects that it will be subject to an effective PRC tax rate of 15%
starting in 2009.
Net income was $8.5 million in the second quarter of 2008, an increase
of 56.7% from $5.4 million in the first quarter of 2008, and a significant
increase of 3,039.7% from $0.3 million in the second quarter of 2007. Fully
diluted net income per share for the second quarter of 2008 was $0.12. The
Company's second quarter net income, excluding share-based compensation
expenses (non-GAAP) was $8.9 million.
As of June 30, 2008, the Company had 60,160 digital television displays
in its network, compared to 48,719 as of March 31, 2008. The Company had
cash and cash equivalents of $124.2 million as of June 30, 2008. In the
second quarter of 2008, depreciation and amortization was $0.7 million and
capital expenditures were $1.4 million.
As of June 30, 2008, the Company had 437 employees, compared to 346
employees as of March 31, 2008, of which 276 employees are sales and
marketing personnel, compared to 208 as of March 31, 2008.
Other Recent Developments
VisionChina Media has entered into an exclusive contract, effective on
July 1, 2008, with Shanghai Shentong Metro Asset Operation and Management
Corporation, the asset management arm of Shanghai Metro, to act as the
exclusive advertising agent for two of Shanghai's subway lines. The
addition of Shanghai to VisionChina Media's network increases the Company's
coverage to 17 of China's economically prosperous cities. Shanghai is
ranked first among Chinese cities in terms of GDP and disposable income per
capita. Shanghai attracts a large portion of the total advertising spending
in China.
On July 1, 2008, the Company significantly increased the rate card for
all advertising time on screens in subway platforms for Shenzhen as well as
on the five large-size screens in Guangzhou subway platforms.
In May, VisionChina Media and CTR Market Research, the largest media
and market research company in China, agreed to jointly develop the first
media evaluation standard for China's mass transit mobile TV. China has
experienced rapid growth in the mass transit mobile TV market, but the
industry lacks a standardized and authoritative audience measurement index
which advertisers and media owners may use to judge the efficacy and value
of advertisements placed on mobile TV network on public transit systems.
The creation of third party evaluation standards will provide criteria to
compare mass transit mobile TV with traditional TV, which is expected to
help raise the status of the emergent mass transit mobile TV industry.
VisionChina Media has been categorized by the Beijing Olympic
Organizing Committee as a "Class B" medium. In an effort to ensure that
Olympic sponsors reap the full rewards of their sponsorship entitlements,
the Committee recently differentiated between which media platforms can
display advertisements from non-Olympic Sponsors in cities hosting Olympic
events during the 2008 Beijing Olympics. "Class A" media are only allowed
to display advertisements of official Olympic sponsors, whereas "Class B"
media are allowed to display advertisements from both Olympic sponsors and
non-Olympic sponsors which are not direct competitors of Olympic sponsors.
As a "Class B" medium, VisionChina Media's Beijing network is not
restricted to displaying advertisements of Olympic sponsor companies.
Business Outlook
The Company estimates its total revenues for the third quarter of 2008
will range from $34.0 million to $36.0 million, out of which advertising
service revenues is expected to be between $33.8 million to $35.8 million.
Third quarter 2008 net income excluding share-based compensation expenses
(non-GAAP) is expected to be between $15.0 million and $17.0 million.
The Company has increased its full-year estimates of results of
operations and expects that total revenues for full year 2008 will range
from $101.0 million to $105.0 million. Net income for full year 2008,
excluding share- based compensation expenses (non-GAAP), is expected to be
between $44.0 million to $48.0 million.
The Company bases these estimates on a foreign exchange rate of RMB
6.8591 per US$1.00.
Dial-in details for the earnings conference call are as follows:
US Toll Free: +1-866-713-8563
Hong Kong: +852-3002-1672
International: +1-617-597-5311
Passcode for all regions: VisionChina Earnings Call
A replay of the conference call may be accessed by phone at the
following numbers until July 31, 2008.
US Toll Free: +1-888-286-8010
International: +1-617-801-6888
Passcode: 30106904
Additionally, a live and archived webcast of this conference call will
be available on the Investor Relations section of VisionChina's website at
http://www.visionchina.cn .
About VisionChina Media, Inc.
VisionChina Media (Nasdaq: VISN) operates an out-of-home advertising
network on mass transportation systems, including buses and subways that
reach over 26 million viewers each day in China, according to CTR Market
Research. As of June 30, 2008, VisionChina's advertising network included
over 60,160 digital television displays on mass transportation systems in
16 of China's economically prosperous cities, including Beijing, Guangzhou
and Shenzhen. VisionChina Media has the ability to deliver real-time,
location-specific broadcasting, including news, stock quotes, weather and
traffic reports and other entertainment programming. For more information,
please visit http://www.visionchina.cn .
Use of Non-GAAP Financial Measures
In addition to VisionChina Media's consolidated financial results under
GAAP, the company also provides non-GAAP financial measures, including non-
GAAP net income, excluding non-cash share-based compensation. The company
believes that the non-GAAP financial measures provide investors with
another method for assessing VisionChina Media's operating results in a
manner that is focused on the performance of its ongoing operations.
Readers are cautioned not to view non-GAAP results on a stand-alone basis
or as a substitute for results under GAAP, or as being comparable to
results reported or forecasted by other companies. The company believes
that both management and investors benefit from referring to these non-GAAP
financial measures in assessing the performance of VisionChina Media's
liquidity and when planning and forecasting future periods.
Safe Harbor Statement
This press release contains forward-looking statements. These
statements constitute "forward-looking" statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, and as defined in 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 quotations from management in
this press release contain forward-looking statements. Such statements
involve certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements. Further
information regarding these and other risks is included in the Company's
filings with the U.S. Securities and Exchange Commission, including its
registration statement on Form F-1 and its annual report on Form 20-F. The
Company does not undertake any obligation to update any forward-looking
statement as a result of new information, future events or otherwise,
except as required under applicable law.
VISIONCHINA MEDIA INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Amounts in U.S. dollars ($), except number of shares and per share data)
June 30, March 31, December 31,
ASSETS 2008 2008 2007
(Unaudited) (Unaudited) (Note 1)
Current Assets:
Cash and cash equivalents 124,168,704 133,800,325 131,139,659
Accounts receivable, net 19,832,753 12,513,750 13,256,450
Amounts due from related parties 4,213,491 4,242,166 3,632,864
Prepaid expense and other current
assets 14,763,519 10,610,582 9,683,059
Deferred tax assets 279,285 304,950 332,386
Total current assets 163,257,752 161,471,773 158,044,418
Non-current Assets:
Fixed assets, net 9,771,198 8,677,599 7,709,204
Investments under equity method 6,684,371 6,710,352 6,714,853
Other investments 2,263,890 2,214,524 2,128,732
Long-term prepaid expenses 705,485 699,087 703,069
Long term prepayments and deposits 16,537,272 1,711,352 --
Intangible assets 10,568,461 -- --
Total non-current assets 46,530,677 20,012,914 17,255,858
TOTAL ASSETS 209,788,429 181,484,687 175,300,276
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable 3,771,974 3,837,967 4,236,695
Amounts due to related parties 410,242 267,175 327,532
Accrued expenses and other current
liabilities 5,848,321 3,576,757 6,054,552
Total current liabilities 10,030,537 7,681,899 10,618,779
Non-current Liabilities:
Contingent Consideration 8,677,700 -- --
Deferred tax liabilities 2,218,766 -- --
Total non-current liabilities 10,896,466 -- --
Total liabilities 20,927,003 7,681,899 10,618,779
Minority Interest 612,009 633,907 652,678
Shareholders' equity
Common shares 6,920 6,839 6,839
Additional paid-in capital 167,604,519 163,981,497 163,820,443
Accumulated profit/(deficit) 10,615,387 2,121,488 -3,300,654
Accumulated other comprehensive
income 10,022,591 7,059,057 3,502,191
Total shareholders' equity 188,249,417 173,168,881 164,028,819
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 209,788,429 181,484,687 175,300,276
Note 1: Information extracted from the audited financial statements
included in the 2007 Form 20-F of the Company filed on April 3,
2008.
VISIONCHINA MEDIA INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in USD thousand, except number of shares and per share data)
For three months ended
June 30, March 31, June 30,
2008 2008 2007
(Unaudited) (Unaudited) (Unaudited)
Revenues:
Advertising revenue 20,165 13,229 3,990
Equipment revenue 124 403 702
Total revenues 20,289 13,632 4,692
Cost of revenues
Advertising cost -8,257 -6,050 -2,757
Equipment cost -108 -333 -573
Total costs of revenues -8,365 -6,383 -3,330
Gross profit 11,924 7,249 1,362
Operating expenses:
Selling and marketing -2,987 -1,620 -320
General and
administrative -991 -817 -518
Total operating expenses -3,978 -2,437 -838
Loss from equity method
investees -173 -269 -289
Operating profit 7,773 4,543 235
Interest income 733 918 44
Other expenses -2 -17 -8
Net income before income
taxes 8,504 5,444 271
Income taxes -32 -41 --
Net income after income
taxes 8,472 5,403 271
Minority interest 22 19 --
Net income 8,494 5,422 271
Deemed dividend on
convertible redeemable
preferred shares -- -- -1,537
Net income(loss)
attributable to holders
of common shares 8,494 5,422 -1,266
Net income (loss) per
share:
Basic 0.12 0.08 -0.06
Diluted 0.12 0.08 0.01
Shares used in
computation of net
income (loss) per share:
Basic 68,888,659 68,387,019 22,000,000
Diluted 72,115,604 70,897,070 22,000,000
Share-based compensation
expenses during the
related periods included
in:
Cost of revenues -9 -11 -7
Selling and marketing
expenses -347 -136 -41
General and
administrative expenses -37 -18 -11
Selected Operating Data
2Q08 1Q08 2Q07
Total broadcasting hours 29,523 25,980 15,536
Advertising minutes per broadcasting
hour 8.14 6.24(1) 6.59
Total advertising minutes sold 240,317 162,115 102,382
Average advertising service revenue
per broadcasting hour (US$) 661 493(2) 240
Total digital television displays in
the network 60,160 48,719
Notes:
(1) Excluding the three new exclusive agency agreements that the company
entered into in the first quarter, advertising minutes per
broadcasting hour is 6.43
(2) Excluding the three new exclusive agency agreements that the company
entered into in the first quarter, advertising services revenues
should have been $543 per broadcasting hour
For investor and media inquiries, please contact:
In China:
Investor Relations Department, VisionChina Media, Inc.
Tel: +86-755-8831-8683
Email: [email protected]
Mrs. Helen Plummer
Ogilvy Financial, Beijing
Tel: +86-10-8520-3090
Email: [email protected]
In the United States:
Mr. Jeremy Bridgman
Ogilvy Financial, New York
Tel: +1-212-880-5363
Email: [email protected]
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