China New Media Announces Fiscal 2011 Year End Financial Results

DALIAN, China, September 29, 2011 /PRNewswire-Asia/ -- China New Media Corp. (OTCBB: CMDI) (the "Company"), China's fast-growing advertising media company with current outdoor media network located in Dalian, Shenyang, Tianjin, Beijing and Shanghai, today announced its financial results for the fiscal year ended June 30, 2011.

Financial Highlights for the Year Ended June 30, 2011

• Revenue increased 47% year-over-year to $20.6 million
• Gross profit increased 42% to $11.6 million; gross margin was 56.4%
• Net income increased 16% to $5 million or $0.18 EPS

Operational Highlights for the Fiscal Year Ended June 30, 2011

• Entered two new markets, Shanghai and Beijing, adding to existing market presence of Dalian, Shenyang and Tianjin.
• Outdoor advertising billboards operated totaled 4 mega-screen LED billboards, 13 billboards, 1 indoor LED screen as of June 30, 2011.
• Reached agreement with Shenyang Golden Hotel for acquisition of the operating rights of a billboard located at the key business district on Qingnian Street in Shenyang City for a period of three years. The 500 square meter or 5,382 square foot LED billboard is expected to generate RMB 5 million or $760,000 in annual revenue.
• Began construction of a 400 square meter or 4,305 square foot billboard in the Development Zone of Dalian City which is expected to generate approximately RMB 1.2 million or $188,000 in annual revenue.
• Reached agreement with Casio Group to design, build and maintain an outdoor creative media display with total value of the contract of RMB 4 million or $626,000 in revenue over two years beginning in June 2011.

Mr. James Wang, Chairman and Chief Executive Officer of China New Media, stated, "During our 2011 fiscal year we achieved several milestones which resulted in progress made from an operational and financial point of view. Our overall revenue grew 47% year-over-year based on an increase in each of our outdoor advertising platforms primarily driven by an increase of 163% from our outdoor billboards. Outdoor billboards accounted for 33% of total revenue in our 2011 fiscal year. Going forward we have several projects in pipeline that we expect will contribute to continued performance growth of this platform in the 2012 fiscal year. Recently we have also explored other advertising avenues for clients such as the creative outdoor display with Casio and making a strategic investment in Le Tian Net, the third largest online platform in Dalian."

Mr. Wang, continued, "We successfully entered two new markets during the 2011 fiscal year, as well as continued to build a diversified customer base. Today we have operations in Dalian, where we are headquartered, Shenyang, Tianjin, and added an operational presence in Beijing and Shanghai during the year. The establishment of our operations and brand in each new city is an important component in our growth strategy. As we enter a new city, we organize a dedicated sales team for that market to generate new client leads, sell through our other advertising platforms to existing clients, and service customer accounts. As we have added new markets and new unique platforms we have grown our customer base year-over-year, which includes well known and established corporations from around the world, and we have seen our existing customers continue to come back to us for their outdoor advertising needs. As we continue to build our presence in these new markets we expect to continue garnering the interest of new customers and enhance our relationships with existing customers."

Financial Results for the Year Ended June 30, 2011

Revenue for the year ended June 30, 2011 totaled $20.6 million, an increase of 47% compared to $14 million for the same period in 2010. Revenue growth was driven by a 163% increase in the outdoor billboard advertising platform which accounted for 33% of total revenue during the 2011 fiscal year. The billboard advertising platform has presented a significant growth opportunity with attractive profit margins which were 56.1% for the 2011 fiscal year. The outdoor billboard platform is established in Dalian, Shenyang, Tianjin, Beijing and Shanghai and going forward the Company will continue to establish their presence in these markets. Revenue in Dalian, which accounted for 92% of total revenue, increased by 40% to $18.8 million for the 2011 fiscal year as compare to $13.5 million for the 2010 fiscal year.

Street fixture and display networks revenue, generated from Dalian and Shenyang market, increased 21% year-over-year, city transit system display networks 56% and city navigator 5%, both are generated solely from Dalian market. Geographically for the 2011 fiscal year, revenue in Dalian, Shanghai, Shenyang, Tianjin and Beijing accounted for 91.5%, 4.3%, 3%, 1% and less than 1% of total revenue. These results compare to 96.3%, 0%, less than 1% and 0% for the 2010 fiscal year.

China New Media has experienced sustainable business growth in recent years. From June 30, 2010 to June 30, 2011, the number of bus shelters and taxi stops increased from 764 to 790. For the same period, the number of buses that carry mobile advertisements increased from 335 to 336 and specifically the number of mobile displays through Dalian metro-trains increased from 28 to 32. As of June 30, 2011, China New Media has installed 52 "City Navigator" units across the Dalian urban area, 3 mega-screen (126 square meters to 400 square meters or 1,356 square feet to 4,306 square feet) LED screens and 8 metal billboards in Dalian, 1 mega-screen (88 square meters or 947 square feet) LED screen in the business district in Shenyang, 1 indoor LED screen (22 square meters or 237 square feet) in Tianjin Railway Station and 5 outdoor billboards in Shanghai.

Cost of sales for the year ended June 30, 2011 totaled $9 million or 43.6% of revenue, an increase of 54% compared to $5.8 million or 42% of revenue for the year ended June 30, 2010. The increase in cost of revenue was primarily attributable to increased depreciation of advertising equipment, labor and raw material cost.

Gross profit for the year ended June 30, 2011 totaled $11.6 million, an increase of 42% compared to $8.2 million for the year ended June 30, 2010. The increase in gross profit was in line with revenue growth as the Company secured more advertising contracts during the period. Gross profit margin was 56.4% and 58.4% for the year ended June 30, 2011 and 2010, respectively. The slight decrease in gross profit margin during the 2011 fiscal year as compared to the 2010 fiscal year was mainly due to the increased maintenance cost of advertising equipment, and the increase of labor and raw material cost during the fiscal year ended June 30, 2011. Specifically, the decrease in outdoor billboard margins was due to the increased amount of new constructions and the lead time needed to build advertising clients.

City Navigator margins increased from 47.4% for the fiscal 2010 year to 67% for the fiscal 2011 year. Occupancy of this platform has increased steadily year over year with room for growth. Today, the Company owns and operates 52 City Navigator kiosks. Each kiosk has ten advertising spots available on a rolling basis and today is operating at approximately 60% capacity. Going forward the Company will focus on maximizing the occupancy rate for the available advertising space.

Selling, general and administrative expenses totaled $4.0 million and $1.9 million for the years ended June 30, 2011 and 2010, respectively, which primarily consist of salaries of sales personnel, commissions for sales representatives, rent expenses and related administrative expenses. The increase was due to an increased sales effort which is in line with the increase in revenue, higher maintenance and professional fees, and other expenses related to the growth of the business.

Net income attributable to China New Media Corp. for the year ended June 30, 2011 totaled $4.9 million, an increase of 16% as compared to $4.2 million for the year ended June 30, 2010. Basic and diluted earnings per share for the year ended June 30, 2011 were $0.18 and $0.17 based on 27.6 million basic and 28.2 million diluted shares versus basic and diluted earnings per share of $0.16 and $0.15 for the year ended June 30, 2010 based on 27 million basic and 28.1 million diluted shares outstanding.

Liquidity and Capital Resources

As of June 30, 2011, China New Media had approximately $1.8 million in cash and cash equivalents or $0.07 per share. As of June 30, 2011, total current assets and total assets were $10.1 million and $35.7 million, respectively. During the same period, total current liabilities and total liabilities were $16.6 million, respectively. Shareholder's equity increased 41.2% to $19.2 million for the year ended June 30, 2011, compared to $13.6 million for the year ended June 30, 2010.

It is recommended that participants dial in approximately 10 minutes prior to the start of the 9:00 a.m. Eastern call. A telephonic replay of the conference call may be accessed approximately two hours after the call through October 13, 2011. Please dial 877-870-5176 for U.S. and 858-384-5517 for international callers and entering the access code, 4476396.

There will also be a simultaneous live webcast of the conference call which can be accessed through the following audio feed link and archived recording of the conference call available by clicking on the following link, http://viavid.net/dce.aspx?sid=00008D85.

About China New Media Corp.

Founded in September 2000, Dalian Vastitude Media Group Co., Ltd., now known as China New Media Corp., is headquartered in Dalian, the commercial center of Northeastern China. The company owns and operates the city's largest outdoor media network encompassing over 600 bus shelters furnished with billboards and displays; 130 taxi stops with displays; and 13 large-size billboards, including 3 large-size LED displays at major traffic conjunctions. The company also furnishes more than 400 buses with advertising posters and 28 metro-trains throughout Dalian Metro Lines. China New Media provides comprehensive adverting services from art design to ad publishing, from daily maintenance to technical upgrading. Launched in Dalian in 2009, China New Media's proprietary LED multimedia display network, City Navigator®, is one of the country's first web-based outdoor advertising networks. For more information, please visit www.gywj.cn.

Forward-Looking Statements

This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements", including statements regarding the Company's ability to meet its obligations under its various contracts; the timeliness of payments and other economic benefits the Company expects to receive under such contracts; and the Company's ability to maintain its customer relationships and to maintain its ability to pursue its commercial objectives. In addition, the Company's operations are conducted in the PRC and, accordingly, are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe such as risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website at http://www.sec.gov. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

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