BEIJING, May 7, 2014 /PRNewswire-FirstCall/ -- Charm
Communications Inc. (NASDAQ: CHRM) ("Charm" or the "Company"), a
leading advertising agency in China, today announced its unaudited financial
results for the fourth quarter and full year ended December 31, 2013.
Fourth Quarter 2013 Highlights
- Turnover increased 25.7% year-over-year to
$253.4 million in the fourth quarter
of 2013
- Revenues increased 31.9% year-over-year to
$62.2 million in the fourth quarter
of 2013
- Revenues for Charm's advertising agency business
increased 34.1% year-over-year to $16.8 million in the fourth quarter of 2013
- Revenues for Charm's media investment management
business increased 36.3% year-over-year to $43.7 million in the fourth quarter of 2013
- Gross profit increased 55.0% year-over-year to
$20.2 million in the fourth quarter
of 2013
- Net income was $2.3
million in the fourth quarter of 2013 compared to a net loss
of $4.2 million in the fourth quarter
of 2012
- Non-GAAP net income, which excludes share-based
compensation expenses, amortization of intangible assets and net
change in fair value of consideration payable and call option, was
$2.9 million in the fourth quarter of
2013 compared to a non-GAAP net loss of $3.8
million in the fourth quarter of 2012
Full Year 2013 Highlights
- Turnover increased 7.6% year-over-year to $886.7 million in full year 2013
- Revenues increased 11.1% year-over-year to $183.8 million in full year 2013
- Revenues for Charm's advertising agency business
increased 8.9% year-over-year to $50.4
million in full year 2013
- Revenues for Charm's media investment management
business increased 13.9% year-over-year to $128.4 million in full year 2013
- Gross profit increased 20.4% year-over-year to
$58.2 million in full year 2013
- Net income was $1.4
million in full year 2013 compared to net loss of
$2.5 million in full year 2012
- Non-GAAP net income, which excludes share-based
compensation expenses, amortization of intangible assets and net
change in fair value of consideration payable and call option, was
$5.1 million in full year 2013
compared to non-GAAP net loss of $0.5
million in full year 2012
"In the fourth quarter, we continued to reposition our overall
business in the wake of significant changes in the industry and the
continued growth of online media, although television-related
advertising remains a significant part of our business," said Mr.
He Dang, Charm's founder, chairman and chief executive officer. "We
remain cautiously optimistic regarding 2014, as our underlying
business showed improvement at the end of last year, and we have
already started to restructure and eliminate a number of
loss-making projects and non-performing teams, which we expect will
lead to better results this year despite television advertising
spending experiencing an historically slow rate of growth in the
first quarter of 2014, according to our own independent industry
research."
Fourth Quarter 2013 Results
Turnover (non-GAAP)
US$ mm
|
4Q13
|
4Q12
|
3Q13
|
Y-o-Y %
|
Q-o-Q%
|
Total turnover
(non-GAAP)
|
$253.4
|
$201.6
|
$198.8
|
25.7%
|
27.4%
|
Advertising
agency
|
$209.7
|
$169.6
|
$171.1
|
23.7%
|
22.6%
|
Media investment
management
|
$43.7
|
$32.0
|
$27.7
|
36.3%
|
57.5%
|
Branding and identity
services
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
The Company uses turnover (non-GAAP), defined as total customer
advertising spending placed through or with Charm, to reflect the
scale of its business.
The 25.7% year-over-year increase in total turnover was mainly
due to the increase in the number of advertising clients and the
increase in advertising spending from existing clients. The 27.4%
quarter-over-quarter increase in turnover was largely attributed to
seasonal factors, as well as the increase in advertising spending
on non-CCTV media platforms.
The 23.7% year-over-year and 22.6% quarter-over-quarter increase
in the advertising agency business ("agency business") turnover was
mainly due to the increase in the number of new agency clients and
the increase in advertising spending from existing agency clients
as a result of the increase in agency advertising spending on
non-CCTV TV media platforms and the Internet.
The revenue extraction rate, which is defined as revenue divided
by turnover, was 8.0% for the agency business, compared to 7.4% for
the fourth quarter of 2012 and 6.6% for the third quarter of 2013.
The year-over-year increase was mainly due to an increase in the
CCTV rebate rate in year 2013 compared to year 2012. The
quarter-over-quarter increase was largely due to higher media
rebates as a result of successful negotiations by the Company and
mainly for non-CCTV television media.
The 36.3% year-over-year increase in turnover (equivalent to
GAAP revenue) for the media investment management business
("principal media business"), which operates under the Shangxing
Media brand, was mainly due to increased selling prices paid by
customers for media resources mainly from BTV Sports, Nanfang
Satellite TV and Tianjin Satellite TV. The 57.5%
quarter-over-quarter increase in turnover in the principal media
business was mainly the result of strong demand from clients for
such media resources due to seasonal factors.
Revenues
US$ mm
|
4Q13
|
4Q12
|
3Q13
|
Y-o-Y %
|
Q-o-Q%
|
Total
revenues
|
$62.2
|
$47.1
|
$40.7
|
31.9%
|
52.9%
|
Advertising
agency
|
$16.8
|
$12.5
|
$11.3
|
34.1%
|
48.7%
|
Media investment
management
|
$43.7
|
$32.0
|
$27.7
|
36.3%
|
57.5%
|
Branding and identity
services
|
$1.7
|
$2.6
|
$1.6
|
-33.6%
|
4.4%
|
The changes in agency and principal media business revenues are
consistent with the changes in turnover, and with respect to the
agency business revenues, consistent with the change in the
extraction rate. The year-over-year decrease in branding and
identity services was primarily due to an overall decrease in
client demand for the Company's creative services.
Gross Profit
US$ mm
|
4Q13
|
4Q12
|
3Q13
|
Y-o-Y %
|
Q-o-Q%
|
Cost of
revenues
|
$42.0
|
$34.1
|
$27.3
|
23.1%
|
53.8%
|
Gross
profit
|
$20.2
|
$13.0
|
$13.4
|
55.0%
|
51.0%
|
Gross
margin
|
32.4%
|
27.6%
|
32.8%
|
|
|
The year-over-year increase in cost of revenues was in line with
the increase in total revenues over the same period. The
quarter-over-quarter increase in cost of revenues was partially
attributed to the higher media costs in Q4 related to CCTV
programming. The increase in gross profit also reflected the
increase in total revenue. The quarter-over-quarter increase in
gross margin was attributed to higher gross margin from some media
resources as a result of higher revenue in the fourth quarter,
mainly from Tianjin Satellite TV and Nanfang Satellite TV, due to
seasonal factors.
Operating Profit (Loss)
US$ mm
|
4Q13
|
4Q12
|
3Q13
|
Y-o-Y %
|
Q-o-Q%
|
Total operating
expenses
|
$16.9
|
$17.2
|
$14.0
|
-1.6%
|
20.3%
|
Selling and
marketing
|
$10.8
|
$11.3
|
$9.7
|
-4.5%
|
11.4%
|
General and
administrative
|
$6.1
|
$5.9
|
$4.4
|
3.8%
|
40.1%
|
Operating profit
(loss)
|
$3.5
|
-$3.5
|
-$0.5
|
|
|
The Company's selling and marketing expenses declined slightly
compared to the year-ago period. The 11.4% quarter-over-quarter
increase in selling and marketing expenses was primarily due to
more marketing events and increased business travel related to
selling activities in the fourth quarter. The Company's general and
administrative expenses increased slightly compared to the year-ago
period. The 40.1% quarter-over-quarter increase in general and
administrative expenses was mainly attributed to an increase in bad
debt provisions in the fourth quarter.
Net Income (Loss)
US$ mm
|
4Q13
|
4Q12
|
3Q13
|
Y-o-Y %
|
Q-o-Q%
|
Non-GAAP net income
(loss)*
|
$2.9
|
-$3.8
|
$0.5
|
-176.0%
|
500.8%
|
Net income
(loss)
|
$2.3
|
-$4.2
|
-$0.6
|
-155.5%
|
-462.4%
|
Basic net income
(loss) per ADS (US$)
|
$0.06
|
-$0.13
|
-$0.03
|
|
|
Fully diluted net
income (loss) per ADS
(US$)
|
$0.06
|
-$0.13
|
-$0.03
|
|
|
*The Company's non-GAAP net income (loss) excludes share-based
compensation expenses, amortization of intangible assets and net
change in fair value of consideration payable and call option.
Each American depositary share ("ADS") represents two common
shares. The weighted average number of shares used to compute basic
net loss per ADS for the fourth quarter of 2013 was 40,624,859. As
of December 31, 2013, 40,700,564 ADSs
were issued and outstanding.
Cash Flows and Cash Position
Net cash flow from operations for the fourth quarter of 2013was
$27.6 million. As of December 31, 2013, the Company had cash and cash
equivalents of $121.2 million,
compared to 91.1 million at the end of the third quarter of
2013.
Customers
In the fourth quarter of 2013, Charm's agency business had 199
advertisers, compared to 195 advertisers in the third quarter of
2013 and 174 advertisers in the fourth quarter of 2012.
In the fourth quarter of 2013, Charm's principal media business
had 229 advertisers, compared to 212 advertisers in the third
quarter of 2013 and 203 advertisers in the fourth quarter of
2012.
Employee Headcount
As of December 31, 2013, the
Company had 753 employees, compared to 749 employees as of
September 30, 2013.
Full Year 2013 Results
Turnover
US$ mm
|
FY13
|
FY12
|
Y-o-Y %
|
Total turnover
(non-GAAP)
|
$886.7
|
$823.9
|
7.6%
|
Advertising
agency
|
$758.3
|
$711.1
|
6.6%
|
Media investment
management
|
$128.4
|
$112.8
|
13.9%
|
Branding and identity
services
|
N/A
|
N/A
|
N/A
|
Revenues
US$ mm
|
FY13
|
FY12
|
Y-o-Y %
|
Total
revenues
|
$183.8
|
$165.5
|
11.1%
|
Advertising
agency
|
$50.4
|
$46.2
|
8.9%
|
Media investment
management
|
$128.4
|
$112.8
|
13.9%
|
Branding and identity
services
|
$5.0
|
$6.5
|
-22.6%
|
Gross Profit
US$ mm
|
FY13
|
FY12
|
Y-o-Y %
|
Cost of
revenues
|
$125.6
|
$117.1
|
7.2%
|
Gross
profit
|
$58.2
|
$48.4
|
20.4%
|
Gross
margin
|
31.7%
|
29.2%
|
|
Operating Profit (Loss)
US$ mm
|
FY13
|
FY12
|
Y-o-Y %
|
Total operating
expenses
|
$56.0
|
$52.3
|
7.1%
|
Selling and
marketing
|
$38.2
|
$36.0
|
6.0%
|
General and
administrative
|
$17.7
|
$16.2
|
9.3%
|
Operating profit
(loss)
|
$2.6
|
-$3.2
|
-179.4%
|
Net Income (Loss)
US$ mm
|
FY13
|
FY12
|
Y-o-Y %
|
Non-GAAP Net
income*
|
$5.1
|
$0.5
|
979.8%
|
Net income
(loss)
|
$1.4
|
-$2.5
|
-156.6%
|
Basic net income
(loss) per ADS (US$)
|
$0.00
|
-$0.12
|
|
Fully diluted net
income (loss) per ADS (US$)
|
$0.00
|
-$0.12
|
|
*The Company's non-GAAP net income (loss) excludes share-based
compensation expenses, amortization of intangible assets and net
change in fair value of consideration payable and call option.
Each ADS represents two common shares. The weighted average
number of shares used to compute basic net loss per ADS for the
full year 2013 was 39,935,880.
Recent Business Developments
On May 6, 2014, Charm announced
that its Audit Committee had approved its decision to provide
financial results and earnings guidance on a biannual basis from
financial year 2014 onwards. As a foreign private issuer, the
Company is only required to submit its interim balance sheet and
income statement as of the end of its second quarter each year,
pursuant to Rule 5250(c)(2) of the NASDAQ Stock Market Rules.
On April 3, 2014, Charm announced
that Mr. Andrew Rickards, one of the
Company's independent directors and chair of its Audit Committee,
had informed the Company that he would not renew his Independent
Director Agreement at the conclusion of its term on April 9, 2014 due to other business commitments
and resigned from the board of directors effective April 9, 2014. Upon his resignation, Mr. Rickards
also ceased to be a member of each of the Company's Audit
Committee, Compensation Committee, Corporate Governance and
Nominating Committee, and the Special Committee that was
established to evaluate the Company's proposed going-private
transaction. The Company is in the process of identifying
replacement candidates for Mr. Rickards' roles as an independent
director and a member of the Audit Committee. Mr. Gang Chen, an
independent director, has been appointed to serve as a member of
the Compensation Committee and the Corporate Governance and
Nominating Committee.
On September 30, 2013, the Company
announced that its board of directors had received a preliminary
non-binding proposal letter dated September
30, 2013 from Mr. Dang, the chairman of the board of
directors (the "Founder"), Merry Circle Trading Limited, a
British Virgin Islands company
controlled by the Founder ("Merry
Circle"), Honour Idea Limited, a British Virgin Islands company owned by the
Founder ("Honour Idea" and,
collectively with Merry Circle, the
"Founder Shareholders"), and CMC Capital Partners HK Limited
(collectively, the "Consortium") to acquire all of the outstanding
shares of the Company not currently owned by the Founder
Shareholders in a "going private" transaction.
Negotiations between the Special Committee and the Consortium
with respect to the proposal are ongoing, and the Special Committee
continues to rigorously evaluate, with assistance and guidance from
its financial and legal advisors, the proposal, as well as other
strategic alternatives that may be available to the Company,
including without limitation pursuing a different transaction or
remaining as an independent, listed company.
Business Outlook
US$ mm
|
1H14E
|
Non-GAAP net
income*
|
1.6 ~ 2.1
|
*The Company's non-GAAP net income (loss) excludes share-based
compensation expenses, amortization of intangible assets and net
change in fair value of consideration payable and call option.
The Company bases these estimates on a foreign exchange rate of
RMB6.20 to US$1.00. This forecast reflects the Company's
current and preliminary view, which is subject to change.
Non-GAAP Financial Measures:
To supplement the unaudited condensed consolidated financial
information presented in accordance with Accounting Principles
Generally Accepted in the United
States ("GAAP"), the Company also provides the following
non-GAAP financial measures: "turnover," which is defined as total
customer advertising spending placed through or with Charm, and
"non-GAAP net income(loss)," which is defined as GAAP net
income(loss) excluding stock-based compensation expenses,
amortization of intangible assets and net change in fair value of
consideration payable and call option.
The non-GAAP financial measures are provided to enhance
investors' overall understanding of the Company's current and past
financial performance in ongoing core operations as well as
prospects for the future. These measures should be considered in
addition to results prepared and presented in accordance with GAAP,
but should not be considered a substitute for, or superior to, GAAP
results. Management uses both GAAP and non-GAAP information in
evaluating and operating the Company's business internally and
therefore deems it important to provide all of this information to
investors.
Cautions on Use of Non-GAAP Measures
In addition to Charm's consolidated financial results prepared
under U.S. GAAP, the Company also provides non-GAAP financial
measures, including "turnover" and "non-GAAP net income (loss)."
The Company believes that the non-GAAP financial measures provide
investors with another method for assessing its operating results
in a manner that is focused on the performance of its ongoing
operations.
Management believes investors will benefit from greater
transparency in referring to these non-GAAP financial measures when
assessing the Company's operating results, as well as when
forecasting and analyzing future periods. However, management
recognizes that:
- these non-GAAP financial measures are limited in their
usefulness and should be considered only as a supplement to the
Company's GAAP financial measures;
- these non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, the Company's GAAP
financial measures;
- these non-GAAP financial measures should not be considered to
be superior to the Company's GAAP financial measures; and
- these non-GAAP financial measures were not prepared in
accordance with GAAP and investors should not assume that the
non-GAAP financial measures presented in this earnings release were
prepared under a comprehensive set of rules or principles.
Further, these non-GAAP financial measures may be unique to the
Company, as they may be different from non-GAAP financial measures
used by other companies. As such, this presentation of non-GAAP
financial measures may not enhance the comparability of the
Company's results to the results of other companies. 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.
A reconciliation of each non-GAAP financial measure to the most
directly comparable GAAP financial measure or measures appears at
the end of this press release.
Conference Call
Charm's management team will hold an earnings conference call at
8 a.m. U.S. Eastern Time
(8p.m. Beijing/Hong Kong Time) on Thursday, May 8, 2014.
Dial-in details for
the conference call are as follows:
|
|
|
|
U.S.:
|
+1-845-675-0437
|
International:
|
+65-6723-9381
|
Hong Kong:
|
+852-2475-0994
|
Passcode:
|
38893560
|
A replay of the call will be available from 11 a.m. May 8, 2014
until 11:59 p.m. May 15, 2014 U.S. Eastern Time. Dial-in details
for the replay are as follows:
International:
|
+61-2-8199-0299
|
Passcode:
|
38893560
|
Additionally, an archived webcast of this call will be available
on the Investor Relations section of the Charm web site at
http:/ir.charmgroup.cn.
About Charm
Charm Communications Inc. (NASDAQ: CHRM) is a leading
advertising agency group in China
that offers integrated advertising services with particular focus
on television and the internet. Charm's integrated advertising
services include full media planning and buying, as well as
creative and branding services. Charm has built a full service
digital advertising platform, which offers digital campaign
capabilities across all key digital media, including search
engines, display portals, online video sites and social networking
services. Charm also secures advertising inventory and other
advertising rights, such as sponsorships and branded content, from
premium media networks and resells to clients as part of its
integrated media offerings. Charm's clients include China's top domestic brands, as well as some
major international brands, across a wide range of industries.
Since 2003 Charm has been the top agency every year for
China's leading television
network, China Central Television (CCTV). For more information,
please go to http://ir.charmgroup.cn.
Safe Harbor Statement
This press release contains "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. All statements other than statements of historical fact
in this press release are forward-looking statements and involve
certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements.
These forward-looking statements are based on management's current
expectations, assumptions, estimates and projections about the
Company and the industry in which the Company operates, but involve
a number of unknown risks and uncertainties. Further information
regarding these and other risks is included in Charm's filings with
the U.S. Securities and Exchange Commission, including its
registration statement on Form F-1. The Company undertakes no
obligation to update forward-looking statements to reflect
subsequent occurring events or circumstances, or changes in its
expectations, except as may be required by law. Although the
Company believes that the expectations expressed in these
forward-looking statements are reasonable, it cannot assure you
that such expectations will turn out to be correct, and actual
results may differ materially from the anticipated results. You are
urged to consider these factors carefully in evaluating the
forward-looking statements contained herein and are cautioned not
to place undue reliance on such forward-looking statements, which
are qualified in their entirety by these cautionary statements.
For investor and media inquiries, please contact:
In China:
Ms. Jenny Wang
IR Department
Charm Communications Inc.
Phone: +86-10-8556-2527
Email: ir@charmgroup.cn
In the United
States:
Mr. Justin Knapp
Ogilvy Financial, U.S.
Phone: +1-616-551-9714
Email: chrm@ogilvy.com
Charm
Communications Inc.
|
Unaudited
Condensed Consolidated Balance Sheets
|
(Amounts in thousands
of U.S. dollars)
|
|
|
|
December 31
2013
|
September 30
2013
|
December 31
2012
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
121,228
|
91,146
|
116,589
|
|
Notes
receivable
|
5,940
|
6,726
|
6,993
|
|
Prepaid
expenses
|
57,168
|
64,737
|
93,838
|
|
Deposits
|
32,546
|
26,192
|
24,723
|
|
Accounts
receivable
|
117,307
|
105,106
|
89,964
|
|
Amount due from
related parties
|
3,480
|
783
|
1,938
|
|
Deferred tax
assets
|
1,034
|
195
|
191
|
|
Other current
assets
|
12,958
|
5,612
|
4,021
|
Total current
assets
|
351,661
|
300,497
|
338,257
|
|
|
|
|
|
|
Fixed assets,
net
|
7,841
|
9,297
|
7,638
|
|
Intangible assets,
net
|
1,519
|
1,731
|
2,375
|
|
Investments under
equity method
|
2,267
|
2,213
|
2,133
|
|
Goodwill
|
4,507
|
4,458
|
4,379
|
|
Cost method
investments
|
826
|
817
|
803
|
|
Other non-current
assets
|
2,608
|
2,657
|
3,045
|
|
|
|
|
|
Total non-current
assets
|
19,568
|
21,173
|
20,373
|
|
|
|
|
|
TOTAL
ASSETS
|
371,229
|
321,670
|
358,630
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts payable (of
which 55, 41 and 53, as of December 31,
2013, September 30, 2013, 2013 and December 31, 2012 of the
consolidated VIE without recourse to the Company,
respectively)
|
28,516
|
25,792
|
38,855
|
|
Amounts due to
related parties (of which nil, nil and 313 as of
December 31, 2013, September 30, 2013, 2013 and December
31, 2012 of the consolidated VIE without recourse to the
Company, respectively)
|
9,144
|
8,044
|
13,310
|
|
Advances from
customers (of which 1,167, 1,154, and 1,408 as
of December 31, 2013, September 30, 2013, 2013 and
December 31, 2012 of the consolidated VIE without recourse to
the Company, respectively)
|
85,818
|
52,024
|
56,343
|
|
Accrued expenses and
other current liabilities (of which 3,178,
3,135, and 3,246 as of December 31, 2013, September 30, 2013,
2013 and December 31, 2012 of the consolidated VIE
without recourse to the Company, respectively)
|
22,634
|
15,825
|
18,912
|
|
Consideration payable
(of which nil as of December 31, 2013,
September 30, 2013, 2013 and December 31, 2012 of the
consolidated VIE without recourse to the Company,
respectively)
|
950
|
1,600
|
2,507
|
|
Divdend payable (of
which nil as of December 31, 2013,
September 30, 2013, 2013 and December 31, 2012 of the
consolidated VIE without recourse to the Company,
respectively)
|
|
|
-
|
Total current
liabilities
|
147,062
|
103,285
|
129,927
|
|
|
|
|
|
|
Consideration payable
(of which nil as of December 31, 2013,
September 30, 2013, 2013 and December 31, 2012 of the
consolidated VIE without recourse to the Company,
respectively)
|
1,316
|
1,351
|
1,327
|
Total non-current
liabilities
|
1,316
|
1,351
|
1,327
|
|
|
|
|
|
Total
liabilities
|
148,378
|
104,636
|
131,254
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
5,733
|
6,004
|
5,434
|
|
|
|
|
|
Equity:
|
|
|
|
Charm Communications
Inc.'s equity
|
|
|
|
|
Ordinary
shares
|
8
|
8
|
8
|
|
Additional paid-in
capital
|
87,597
|
87,014
|
100,850
|
|
Retained
earnings
|
101,621
|
98,954
|
101,225
|
|
Accumulated other
comprehensive income
|
22,611
|
19,862
|
15,652
|
Total Charm
Communications Inc. shareholders' equity
|
211,837
|
205,838
|
217,735
|
Noncontrolling
interest
|
5,281
|
5,192
|
4,207
|
Total
equity
|
217,118
|
211,030
|
221,942
|
|
|
|
|
TOTAL LIABILITIES,
REDEEMABLE NONCONTROLLING
|
|
|
|
INTEREST AND
EQUITY
|
371,229
|
321,670
|
358,630
|
Charm
Communications Inc.
|
Condensed
Consolidated Statements of Operations
|
(Amounts in thousands
of U.S. dollars, except for number of shares and per share
data)
|
|
|
|
|
|
|
|
|
|
For the three months
ended,
|
|
|
|
Dec 31
2013
|
Dec 31
2012
|
Sep 30
2013
|
|
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
Media investment
management
|
|
43,684
|
32,042
|
27,740
|
|
Advertising
agency
|
|
16,781
|
12,512
|
11,284
|
|
Branding and identity
services
|
|
1,712
|
2,578
|
1,640
|
Total
revenues
|
|
62,177
|
47,132
|
40,664
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
Media investment
management
|
|
39,491
|
31,159
|
25,246
|
|
Advertising
agency
|
|
1,025
|
1,337
|
1,016
|
|
Branding and identity
services
|
|
1,498
|
1,624
|
1,049
|
Total cost of
revenues:
|
|
42,014
|
34,120
|
27,311
|
Gross
profit
|
|
20,163
|
13,012
|
13,353
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Selling and marketing
expenses
|
|
10,781
|
11,286
|
9,681
|
|
General and
administrative expenses
|
|
6,117
|
5,891
|
4,365
|
Total operating
expenses
|
|
16,898
|
17,177
|
14,046
|
|
Gain(Loss) from
equity method investees
|
|
30
|
307
|
189
|
|
Net change in fair
value of consideration payable and call option
|
236
|
309
|
-
|
Operating profit
(loss)
|
|
3,531
|
(3,549)
|
(504)
|
|
|
|
|
|
|
|
Interest
income
|
|
206
|
568
|
299
|
|
Other income
(loss)
|
|
(792)
|
|
|
|
|
|
|
|
|
Income before income
tax expense
|
|
2,945
|
(2,981)
|
(205)
|
|
Income tax
expense
|
|
629
|
1,195
|
434
|
Net income
(loss)
|
|
2,316
|
(4,176)
|
(639)
|
Net income
attributable to noncontrolling interest
|
|
(351)
|
884
|
598
|
Net income (loss)
attributable to Charm Communications Inc.
|
|
2,667
|
(5,060)
|
(1,237)
|
|
|
|
|
|
shareholders per
ADS:
|
|
|
|
|
Basic
|
|
0.07
|
(0.13)
|
0.03
|
Diluted
|
|
0.07
|
(0.13)
|
0.03
|
Shares used in
computation of net income(loss) per ADS:
|
|
|
|
|
Basic
|
|
40,624,859
|
38,269,369
|
40,445,764
|
Diluted
|
|
40,830,961
|
38,269,369
|
40,445,764
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
Share-based
compensation expenses during the period included in:
|
|
|
|
|
Cost of
revenues
|
|
-
|
-
|
-
|
Selling and marketing
expenses
|
|
389
|
318
|
436
|
General and
administrative expenses
|
|
155
|
150
|
451
|
Total
|
|
544
|
468
|
887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended,
|
|
|
|
December 31
2013
|
December 31
2012
|
September 30
2013
|
|
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|
|
|
|
|
Net income
(loss)
|
|
2,316
|
(4,176)
|
(639)
|
Other comprehensive
income (loss):
|
|
|
|
|
Change in cumulative
foreign exchange translation adjustment
|
|
3,002
|
1,957
|
936
|
Comprehensive income
(loss)
|
|
5,318
|
(2,219)
|
297
|
|
|
|
|
|
|
Less: Comprehensive
income attributable to non-controlling interest
|
(171)
|
(590)
|
(605)
|
Less: Comprehensive
income attributable to redeemable non-controlling
interest
|
270
|
(297)
|
(192)
|
|
|
|
|
|
|
Comprehensive income
(loss) attributable to Charm Communications Inc.
|
5,417
|
(3,106)
|
(500)
|
Charm
Communications Inc.
|
Condensed
Consolidated Statements of Operations
|
(Amounts in thousands
of U.S. dollars, except for number of shares and per share
data)
|
|
|
|
|
|
|
|
|
For the twelve months
ended,
|
|
|
|
December 31, 2013
|
December 31, 2012
|
|
|
|
(Unaudited)
|
(Audited)
|
|
|
|
|
|
Revenues:
|
|
|
|
|
Media investment
management
|
|
128,436
|
112,786
|
|
Advertising
agency
|
|
50,356
|
46,234
|
|
Branding and identity
services
|
|
5,011
|
6,478
|
Total
revenues
|
|
183,803
|
165,498
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
Media investment
management
|
|
117,578
|
107,976
|
|
Advertising
agency
|
|
4,243
|
4,864
|
|
Branding and identity
services
|
|
3,765
|
4,303
|
Total cost of
revenues:
|
|
125,586
|
117,143
|
Gross
profit
|
|
58,217
|
48,355
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling and marketing
expenses
|
|
38,204
|
36,026
|
|
General and
administrative expenses
|
|
17,748
|
16,234
|
Total operating
expenses
|
|
55,952
|
52,260
|
|
Gain(Loss) from
equity method investees
|
|
75
|
350
|
|
Gain from change in
fair value of consideration payable
|
|
236
|
309
|
Operating profit
(loss)
|
|
2,576
|
(3,246)
|
|
|
|
|
|
|
Interest
income
|
|
1,026
|
2,255
|
|
Other
expense
|
|
792
|
13
|
|
|
|
|
|
Income (loss) before
income tax expense
|
|
2,810
|
(1,004)
|
|
Income tax
expense
|
|
1,409
|
1,472
|
Net income
(loss)
|
|
1,401
|
(2,476)
|
Net income
attributable to noncontrolling interest
|
|
1,005
|
2,229
|
Net income (loss)
attributable to Charm Communications Inc.
|
|
396
|
(4,705)
|
|
|
|
|
Net income(loss)
attributable to Charm Communications Inc. shareholders per
ADS:
|
|
|
|
Basic
|
|
0.01
|
(0.12)
|
Diluted
|
|
0.01
|
(0.12)
|
Shares used in
computation of net income(loss) per ADS:
|
|
|
|
Basic
|
|
39,935,880
|
38,749,125
|
Diluted
|
|
40,319,753
|
38,749,125
|
|
|
|
|
|
Notes:
|
|
|
|
|
(1) Share-based
compensation expenses during the period included in:
|
|
|
|
Cost of
revenues
|
|
-
|
1
|
Selling and marketing
expenses
|
|
1,905
|
1,506
|
General and
administrative expenses
|
|
1,086
|
707
|
Total
|
|
|
2,991
|
2,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the twelve months
ended,
|
|
|
|
December 31,
2013
|
December 31,
2012
|
|
|
|
(Unaudited)
|
(Audited)
|
|
|
|
|
|
Net income
(loss)
|
|
1,401
|
(2,476)
|
Other comprehensive
income (loss):
|
|
|
|
Change in cumulative
foreign exchange translation adjustment
|
|
7,212
|
2,268
|
Comprehensive income
(loss)
|
|
8,613
|
(208)
|
|
|
|
|
|
Less: Comprehensive
income attributable to non-controlling interest
|
|
(959)
|
(1,758)
|
Less: Comprehensive
income attributable to redeemable non-controlling
interest
|
|
(299)
|
(711)
|
|
|
|
|
|
Comprehensive income
(loss) attributable to Charm Communications Inc.
|
|
7,355
|
(2,677)
|
Reconciliation
from Net income (loss) to Non-GAAP net income
(loss):
|
(Amounts in thousands
of U.S. dollars)
|
|
|
For the three
months ended,
|
|
|
December 31
2013
|
December 31
2012
|
September 30
2013
|
|
|
|
|
|
|
Net income
(loss)
|
2,316
|
(4,176)
|
(639)
|
|
|
|
|
|
|
Add back share-based
compensation expenses
during the
related periods
|
544
|
468
|
887
|
|
|
|
|
|
|
Add back amortization
on intangible assets
|
230
|
261
|
227
|
|
|
|
|
|
|
Deduct gain from
change in fair value of consideration payable
|
(236)
|
(309)
|
0
|
|
|
|
|
|
|
Non-GAAP net
income (loss)
|
2,854
|
(3,756)
|
475
|
|
|
|
|
|
|
|
|
|
|
|
|
For the twelve
months ended,
|
|
|
|
December 31,
2013
|
December 31,
2012
|
|
|
|
|
|
|
|
Net income
(loss)
|
1,401
|
(2,476)
|
|
|
|
|
|
|
|
Add back share-based
compensation expenses
during the
related periods
|
2,992
|
2,214
|
|
|
|
|
|
|
|
|
Add back amortization
on intangible assets
|
910
|
1,041
|
|
|
|
|
|
|
|
Deduct gain from
change in fair value of consideration payable
|
(236)
|
(309)
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
5,067
|
470
|
|
Reconciliation
from Turnover (non-GAAP) to USGAAP Revenues:
|
(Amounts in thousands
of U.S. dollars)
|
|
|
For the three
months ended,
|
|
|
December 31
2013
|
December 31
2012
|
September 30
2013
|
|
Turnover
(non-GAAP):
|
|
|
|
|
Media investment
management
|
43,684
|
32,042
|
27,740
|
|
Advertising
agency
|
209,693
|
169,570
|
171,071
|
|
Branding and identity
services
|
N/A
|
N/A
|
N/A
|
|
Total
turnover
|
253,377
|
201,612
|
198,811
|
|
|
|
|
|
|
Extracted
rate:
|
|
|
|
|
Media investment
management
|
100.0%
|
100.0%
|
100.0%
|
|
Advertising
agency
|
8.0%
|
7.4%
|
6.6%
|
|
Branding and identity
services
|
N/A
|
N/A
|
N/A
|
|
|
|
|
|
|
USGAAP
Revenue:
|
|
|
|
|
Media investment
management
|
43,684
|
32,042
|
27,740
|
|
Advertising
agency
|
16,781
|
12,512
|
11,284
|
|
Branding and identity
services
|
1,712
|
2,578
|
1,640
|
|
Total
revenue
|
62,177
|
47,132
|
40,664
|
|
|
|
|
|
|
|
For the twelve
months ended,
|
|
|
|
December 31,
2013
|
December 31,
2012
|
|
|
|
|
|
|
|
Turnover
(non-GAAP):
|
|
|
|
|
Media investment
management
|
128,436
|
112,786
|
|
|
Advertising
agency
|
758,246
|
711,093
|
|
|
Branding and identity
services
|
N/A
|
N/A
|
|
|
Total
turnover
|
886,682
|
823,879
|
|
|
|
|
|
|
|
Extracted
rate:
|
|
|
|
|
Media investment
management
|
100.0%
|
100.0%
|
|
|
Advertising
agency
|
6.6%
|
6.5%
|
|
|
Branding and identity
services
|
N/A
|
N/A
|
|
|
|
|
|
|
|
USGAAP
Revenue:
|
|
|
|
|
Media investment
management
|
128,436
|
112,786
|
|
|
Advertising
agency
|
50,356
|
46,234
|
|
|
Branding and identity
services
|
5,011
|
6,478
|
|
|
Total
revenue
|
183,803
|
165,498
|
|
Charm
Communications Inc.
Condensed Consolidated Statements of Operations
(Amounts in thousands of U.S. dollars, except for number of shares
and per share data)
|
|
|
|
|
|
|
For the three
months ended,
|
|
|
|
|
Dec 31
2013
|
Sep 30
2013
|
June 30
2013
|
March 31
2013
|
Year
2013
|
|
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Media investment
management
|
|
43,684
|
27,740
|
29,556
|
27,456
|
128,436
|
|
Advertising
agency
|
|
16,781
|
11,284
|
12,178
|
10,113
|
50,356
|
|
Branding and identity
services
|
|
1,712
|
1,640
|
1,117
|
542
|
5,011
|
Total
revenues
|
|
62,177
|
40,664
|
42,851
|
38,111
|
183,803
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
Media investment
management
|
|
39,491
|
25,246
|
25,720
|
27,121
|
117,578
|
|
Advertising
agency
|
|
1,025
|
1,016
|
1,197
|
1,005
|
4,243
|
|
Branding and identity
services
|
|
1,498
|
1,049
|
845
|
373
|
3,765
|
Total cost of
revenues:
|
|
42,014
|
27,311
|
27,762
|
28,499
|
125,586
|
Gross
profit
|
|
20,163
|
13,353
|
15,089
|
9,612
|
58,217
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
10,781
|
9,681
|
9,026
|
8,716
|
38,204
|
|
General and
administrative expenses
|
|
6,117
|
4,365
|
4,462
|
2,804
|
17,748
|
Total operating
expenses
|
|
16,898
|
14,046
|
13,488
|
11,520
|
55,952
|
|
Gain(Loss) from
equity method investees
|
|
30
|
189
|
101
|
(245)
|
75
|
|
Gain from change in
consideration payable
|
|
236
|
-
|
|
|
236
|
Operating
profit
|
|
3,531
|
(504)
|
1,702
|
(2,153)
|
2,576
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
206
|
299
|
85
|
436
|
1,026
|
|
Other
expense
|
|
(792)
|
|
|
|
792
|
|
|
|
|
|
|
|
|
Income before income
tax expense
|
|
2,945
|
(205)
|
1,787
|
(1,717)
|
2,810
|
|
Income tax
expense
|
|
629
|
434
|
604
|
(258)
|
1,409
|
Net income
|
|
2,316
|
(639)
|
1,183
|
(1,459)
|
1,401
|
Net income
attributable to noncontrolling interest
|
|
(351)
|
598
|
468
|
290
|
1,005
|
Net income
attributable to Charm Communications Inc.
|
|
2,667
|
(1,237)
|
715
|
(1,749)
|
396
|
|
|
|
|
|
|
|
Net income(loss)
attributable to Charm Communications Inc. shareholders per
ADS:
|
|
|
|
|
|
|
Basic
|
|
0.07
|
0.03
|
0.02
|
(0.05)
|
0.01
|
Diluted
|
|
0.07
|
0.03
|
0.02
|
(0.05)
|
0.01
|
Shares used in
computation of net income(loss) per ADS:
|
|
|
|
|
|
|
Basic
|
|
40,624,859
|
40,445,764
|
40,211,181
|
38,479,967
|
39,935,880
|
Diluted
|
|
40,830,961
|
40,445,764
|
40,329,981
|
38,479,967
|
40,319,753
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
Share-based
compensation expenses during the period included in:
|
|
|
|
|
|
|
Cost of
revenues
|
|
-
|
-
|
-
|
-
|
-
|
Selling and marketing
expenses
|
|
389
|
436
|
756
|
325
|
1,905
|
General and
administrative expenses
|
|
155
|
451
|
350
|
130
|
1,086
|
Total
|
|
544
|
887
|
1,106
|
455
|
2,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended,
|
|
|
|
|
Dec 31
2013
|
Sep 30
2013
|
Jun 30
2013
|
Mar 31
2013
|
Year
2013
|
|
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Net income
|
|
2,316
|
(639)
|
1,183
|
(1,459)
|
1,401
|
Other comprehensive
income:
|
|
|
|
|
|
|
Change in cumulative
foreign exchange translation adjustment
|
|
3,002
|
936
|
2,608
|
666
|
7,212
|
Comprehensive
income
|
|
5,318
|
297
|
3,791
|
(793)
|
8,613
|
|
|
|
|
|
|
|
|
Less: Comprehensive
income attributable to non-controlling interest
|
|
(171)
|
(605)
|
(278)
|
(102)
|
(959)
|
Less: Comprehensive
income attributable to redeemable non-controlling
interest
|
|
270
|
(192)
|
(190)
|
(188)
|
(299)
|
|
|
|
|
|
|
|
|
Comprehensive income
attributable to Charm Communications Inc.
|
|
5,417
|
(500)
|
3,323
|
(1,083)
|
7,355
|
SOURCE Charm Communications Inc.