NEW YORK, Dec. 15 /PRNewswire-FirstCall/ -- Sun New Media, Inc. (BULLETIN BOARD: SNMDE) , a Chinese Internet based marketing, information and transactional services company linking businesses with businesses, today announced second quarter fiscal 2007 financial results.
Three Months Ended September 30, 2006
Revenue for the second quarter of fiscal 2007 was $6.2 million, with gross profit in the same period of $3.8 million and a gross profit margin of 61.3%. Operating income for the second quarter of fiscal 2007 was $4.4 million. Operating results include: general and administrative costs of $1.8 million; depreciation and amortization expense of $0.8 million, consulting and professional fee expenses of $0.5 million; stock-based compensation expense of $2.0 million and, a gain from repurchase of stock grant at no consideration of $5.8 million. Excluding the impact of the $5.8 million gain and $2.0 million stock-based compensation expense, on a pro-forma basis, operating profit would have been $0.6 million.
Sun New Media reported second quarter fiscal 2007 net profit of $4.1 million, or $0.04 per diluted share outstanding. On a pro-forma basis, excluding the impact of the gain of $5.8 million recognized on the repurchase of stock grant at no consideration and $2.0 million stock-based compensation expense, the company would have reported earnings of $0.3 million and earnings per diluted share of $0.00.
Six Months Ended September 30, 2006
Revenue for the first half year of fiscal 2007 was $15.0 million, with gross profit in the same period of $12.4 million and a gross profit margin of 82.7%. Operating income for the first six months of fiscal 2007 was $10.4 million. Operating results included: sales, general and administrative costs of $3.5 million, depreciation and amortization expense of $1.3 million; consulting and professional fee expenses of $1.0 million; stock-based compensation expense of $2.0 million and, a gain from repurchase of stock grant at no consideration of $5.8 million. Excluding the impact of the $5.8 million gain and $2.0 million stock-based compensation expense, on a pro-forma basis, operating profit would have been $6.6 million.
Sun New Media recognized other income of $10.9 million in the first half of fiscal 2007. This includes approximately $10.7 million, or $0.10 per diluted share, for the sale of certain b2c, non-core assets to Sun 3C Media Plc (formerly know as Sun TV Shop Plc), an AIM-listed company operating in the b2c space. Among the assets sold to Sun TV Shop by SNMD were an interest in a DMOC (Digital Mail Order Catalogs) business partnership and online digital publishing rights to various offline b2c publications.
Sun New Media reported net income for the six months ended September 30, 2006 of $18.3 million, or $0.20 per diluted share outstanding. Excluding the $10.7 million gain on asset sale, the impact of the $5.8 million gain recognized on the repurchase of stock grant at no consideration and $2.0 million stock-based compensation, expense, on a pro-forma basis, the company would have reported earnings of $3.8 million and earnings per diluted share of $0.06.
Dr. Bruno Wu, Chairman and Chief Executive Officer of Sun New Media, said "The last six months have represented the inception of executing the company's vision of building China's leading internet based marketing and transactional service based operations management company. During this time, we have made significant efforts in integrating the company's knowledge and experience and transforming our acquired businesses into those of Sun New Media's corporate family. Like all acquisitions, the integration of several acquired companies requires extensive time and effort to fine-tune the various entities. Admittedly there have been some unexpected changes in certain business conditions which impacted our anticipated operating results in the short term. Despite the many challenges faced during this time, we have many accomplishments, which I believe provide a foundation to build from."
Highlights:
-- Restructured the beverage distribution business: significantly reduced
the burden of inventory financing and added significant brand clients,
such as Moutai Qiantai, Ji Ling, Himalaya and others.
-- Completed the acquisition of our luxury garment distribution business.
-- Completed the acquisition of our electronic components marketing and
distribution business.
-- Restructured corporate overhead activities to substantially reduce
future costs.
-- Reduced outstanding share count by 14.9 million shares.
-- Initiated discussions which may result in further share count reduction
and divestiture of non-core assets.
Bruno continued, "With the completion of our acquisitions, the initiation of our new beverage platform and the alignment of our corporate overhead, I am very excited about the opportunity to build our company into a market leader with our expertise in on-line and off-line marketing, brand management and distribution."
Conference Call
Sun New Media Inc. management will hold a conference call on December 19, 2006 at 8:00 a.m. ET to discuss financial results. Listeners may access the call by dialing 1-800-289-0529 or 1-913-981-5523 for international callers. A live webcast will also be available through the Sun New Media Inc. company website at http://www.sunnewmedia.net/. A replay of the call will be available after 11:00 a.m. ET through December 26, 2006. Listeners may access the replay by dialing 1-888-203-1112 or 1-719-457-0820 for international callers. The replay pass code is 4026997.
Non-GAAP Financial Measures
A reconciliation between GAAP and Non-GAAP results is shown immediately following the Unaudited Condensed Consolidated Statements of Cash Flows.
The Company believes that the presentation of the above Non-GAAP measures provides useful information to investors regarding certain additional financial and business trends relating to its financial condition and results of operations. The Company believes when U.S. GAAP results are viewed in conjunction with these Non-GAAP measures, investors are provided with a more meaningful understanding of the Company's ongoing operating performance. In addition, the Company's management uses these measures for reviewing the Company's financial results.
These measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, GAAP results. The Company has reconciled Non-GAAP financial measures included in this press release to the nearest GAAP measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these Non-GAAP financial measures to their most directly comparable GAAP financial measure.
About Sun New Media Inc.
Sun New Media is a leading Chinese multi-media powered marketing and channel management company. Sun New Media builds e-enabled distribution systems, transaction platforms and business communities in fast growing Chinese vertical markets, connecting buyers and sellers with a suite of turnkey digital media, e-commerce, and information management solutions. Companies leverage Sun New Media's web-based business media communities to access vital industrial intelligence and forge trading relationships with suppliers and buyers that promote cost efficiencies and increased distribution reach. Learn more at http://www.sunnewmedia.net/
This press release includes statements that may constitute "forward- looking" statements, usually containing the word "believe," "estimate," "project," "expect," "plan," "anticipate" or similar expressions. Forward- looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of Sun New Media's product and services in the marketplace, competitive factors and changes in regulatory environments. These and other risks relating to Sun New Media's business are set forth in Sun New Media's Annual Report on Form 10-KSB, and other reports filed by the Company from time to time with the Securities and Exchange Commission. By making these forward-looking statements, Sun New Media disclaims any obligation to update these statements for revisions or changes after the date of this release.
SUN NEW MEDIA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2006 and March 31, 2006
(Unaudited) (Audited)
September March 31,
30, 2006 2006
US$'000 US$'000
ASSETS
Current Assets
Cash and bank balances 3,610 1,374
Accounts receivables, net of provision for doubtful
debts $65,982 (Mar 31, 2006: $72,046) 10,515 416
Other receivables, prepayments and deposits 3,290 466
Inventories 845 85
Marketable securities 23,684 8,140
Amounts due from stockholders 426 292
Amounts due from related parties 662 893
Total current assets 43,032 11,666
Investment in affiliate 326 25
Goodwill and intangible assets 66,913 61,795
Plant and equipment 5,486 2,205
Clearing broker deposit - 37
Total Assets 115,757 75,728
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 1,862 987
Other payables and accruals 3,449 6,928
Amounts due to related parties 28 489
Factoring loan 176 233
Income taxes payable 184 -
Total current liabilities 5,699 8,637
Minority interest 444 (102)
Convertible notes - 2,816
Discount on warrants - (2,570)
Commitments and Contingencies (Note 14)
STOCKHOLDERS' EQUITY
Common stock; authorized 750,000,000 shares,
US$0.01 par value
Preference stock, authorized 250,000,000 shares,
US$0.01 par value
104,900,628/ 84,055,510 shares of common stock
issued and outstanding, US$0.01 par value 1,049 841
1,183,793/ 14,537,253 shares of common stock
reserved to be issued, US$0.01 par value 12 145
Additional paid in capital 105,059 79,439
Accumulated other comprehensive (loss) income:
Unrealized loss on marketable securities (1,253) -
Foreign currency translation adjustments (25) 2
Retained earnings/ (Deficit) 4,772 (13,480)
Total stockholders' equity 109,614 66,947
Total liabilities and stockholder's equity 115,757 75,728
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three months ended Six months ended
September 30, September 30,
2006 2005 2006 2005 (1)
US$'000 US$'000 US$'000 US$'000
Revenues 6,167 27 14,986 27
Costs of revenue 2,383 19 2,611 19
Gross Profit 3,784 8 12,375 8
Operating Expenses
General and administrative 1,808 17 3,385 17
Marketing and sales 75 - 110 -
Depreciation and
amortization 805 - 1,315 -
Stock-based compensation 1,965 - 1,965 -
Repurchase of stock grant * (5,775) - (5,775) -
Consulting and professional
fees 511 32 1,005 32
Finders' fee - 55 - 55
Total operating expenses (611) (104) 2,005 (104)
Operating income (loss) from
continuing operations 4,395 (96) 10,370 (96)
Loss from discontinued
operations - - (43) -
Interest expense (81) - (86) -
Amortization of discount on
notes - - (2,570) -
Interest income 2 - 25 -
Other income 32 - 10,903 -
Share of (losses)/ profits
from affiliate (55) - 301 -
Income (loss) before income
tax expense and minority 4,293 (96) 18,900 (96)
interests
Income tax expenses (171) - (183) -
Income (loss) after income
tax expense and before
minority interests 4,122 (96) 18,717 (96)
Minority interests - - (446) -
Income (loss) after income
tax expense and
minority interests 4,122 (96) 18,271 (96)
Other comprehensive loss -
Currency translation
adjustment (1) - (19) -
Net income (loss) 4,121 (96) 18,252 (96)
Basic net income (loss) per
share 0.04 (0.01) 0.18 (0.01)
Shares used in computing
basic income per share ('000) 104,170 15,398 102,922 15,398
Diluted net income (loss)
per share 0.04 (0.01) 0.20 (0.01)
Shares used in computing
diluted income per share
('000) 105,533 15,298 105,807 15,398
* During the three months ended September 30, 2006, there was a repurchase
of stock grant at no consideration which resulted in a gain of $5.8
million relating to 1.5 million performance shares that were granted and
accrued for during the fiscal period ended March 31, 2006.
(1) Information is presented for the period from June 6, 2005
(date of commencement of operations) to September 30, 2005.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six months ended
September 30,
2006 2005 (1)
US$'000 US$'000
Cash flows from operating activities
Net income (loss) for the period before income
taxes and minority interests 18,900 (96)
Adjustments to reconcile net income (loss) to net
cash used in operating activities; 1,315 -
Depreciation and amortization
Share of profits from affiliate (301) -
Gain on disposal of assets (10,743) -
Gain on disposal of subsidiary companies (74) -
Consultancy services 150 -
Stock-based compensation 1,965 -
Repurchase of stock grant * (5,775)
Finders' fee (1,600) 55
Amortization of discount on notes 2,570 -
Changes in operating assets and liabilities:
Accounts receivable (7,440) -
Other debtor, deposits and prepayments (2,347) -
Inventories (246) -
Amounts due from related parties 230 -
Amounts due from stockholders (134) (97)
Accounts payable 41 2
Other payables and accruals 1,560 38
Amounts due to related parties (461) -
Net cash used in operating activities (2,390) (98)
Cash flows from investing activities
Proceeds from sale of plant and equipment 467 -
Purchase of plant and equipment (2,128) -
Cash (used in) acquired in business combination,
net (1,850) 50
Disposal of subsidiary companies, net 23 -
Net cash used in investing activities (3,488) 50
Cash flows from financing activities
Issuance of common stock 9,079 250
Expenses incurred on issuance of common stocks (875) -
Repayment of factoring loans (57) -
Net cash provided by financing activities 8,147 250
Net effect of exchange rate changes on
consolidating subsidiaries (33) -
Net increase in cash and cash equivalents 2,236 202
Cash and cash equivalents, beginning of the period 1,374 -
Cash and cash equivalents, end of the period 3,610 202
* During the three months ended September 30, 2006, there was a repurchase
of stock grant at no consideration which resulted in a gain of $5.8
million relating to 1.5 million performance shares that were granted and
accrued for during the fiscal period ended March 31, 2006.
(1) Information is presented for the period from June 6, 2005 (date of
commencement of operations) to September 30, 2005.
PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three months ended Six months ended
September 30, September 30,
2006 2005 2006 2005 (1)
US$'000 US$'000 US$'000 US$'000
Operating income (loss) from
continuing operations 4,395 (96) 10,370 (96)
Add (less):
Stock-based compensation 1,965 - 1,965 -
Repurchase of stock grant (5,775) - (5,775) -
Pro-forma operating income
(loss) from continuing
operations 585 (96) 6,560 (96)
Net income (loss) 4,121 (96) 18,252 (96)
Add (less):
Stock-based compensation 1,965 - 1,965 -
Repurchase of stock grant (5,775) - (5,775) -
Other income - - (10,743) -
Pro-forma net income (loss) 311 (96) 3,699 (96)
Basic net income (loss) per
share 0.00 (0.01) 0.04 (0.01)
Shares used in computing basic
income per share ('000) 104,170 15,398 102,922 15,398
Diluted net income (loss) per
share 0.00 (0.01) 0.06 (0.01)
Shares used in computing
diluted income per share
('000) 105,533 15,298 105,807 15,398
(1) Information is presented for the period from June 6, 2005 (date of
commencement of operations) to September 30, 2005.
CONTACT
Tom Schuler, CFO of Sun New Media, Inc.,
(317) 379-8255
