Q4 revenues up 85.1% year-over-year, exceeding Company guidance Q4 net income up 58.8% year-over-year Q4 non-GAAP net income up 74.5% year-over-year, exceeding Company guidance Full year 2010 revenues up 81.4% year-over-year Full year 2010 net income up 152.1% year-over-year
BEIJING, Feb. 23, 2011 /PRNewswire-Asia-FirstCall/ -- Charm Communications Inc. ("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, 2010.
Fourth Quarter 2010 Highlights -- Revenues in the fourth quarter of 2010 grew 85.1% year-over-year and 17.1% quarter-over-quarter to $56.7 million -- Revenues for Charm's advertising agency business grew 53.3% year-over-year and 22.3% quarter-over-quarter to $7.8 million in the fourth quarter of 2010 -- Revenues for Charm's media investment management business grew 93.1% year-over-year and 14.3% quarter-over-quarter to $46.9 million in the fourth quarter of 2010 -- Revenues for Charm's branding and identity services business grew 59.4% year-over-year and 90.7% quarter-over-quarter to $2.1 million in the fourth quarter of 2010 -- Gross profit for the fourth quarter of 2010 grew 70.8% year-over-year and 17.4% quarter-over-quarter to $22.1 million -- Net income for the fourth quarter of 2010 grew 58.8% year-over-year and 9.5% quarter-over-quarter to $12.2 million -- Non-GAAP net income, which excludes share-based compensation expenses and impairment on investments, grew 74.5% year-over-year and 24.1% quarter-over-quarter to $14.5 million in the fourth quarter of 2010 -- Basic net income per ADS for the fourth quarter of 2010 was $0.31, compared to $0.18 for the fourth quarter of 2009 and $0.28 for the third quarter of 2010 -- Cash flow from operations was positive for the fourth quarter of 2010, with cash and cash equivalents of $123.3 million as of December 31, 2010 -- In the fourth quarter of 2010, Charm added 7 new advertising client accounts to its agency business, bringing total agency accounts for 2010 to 135 -- In the fourth quarter of 2010, Charm's principal media business had 266 advertisers, compared to 186 advertisers in the fourth quarter of 2009 -- Charm had 525 employees as of December 31, 2010, compared to 447 as of September 30, 2010 Full Year 2010 Highlights -- Revenues in the full year 2010 grew 81.4% year-over-year to $192.4 million -- Revenues for Charm's advertising agency business in the full year 2010 grew 61.9% year-over-year to $24.8 million -- Revenues for Charm's media investment management business in the full year 2010 grew 86.3% year-over-year to $162.6 million -- Revenues for Charm's branding and identity services business in the full year 2010 grew 44.3% year-over-year to $5.0 million -- Gross profit for the full year 2010 grew 102.5% year-over-year to $68.6 million -- Net income for the full year 2010 grew 152.1% year-over-year to $38.5 million -- Non-GAAP net income for the full year 2010, which excludes share-based compensation expenses and impairment on investments, grew 119.6% year-over-year to $42.8 million -- Basic net income per ADS for the full year 2010 was $1.02, compared to $0.14 for the full year 2009
"In our first fiscal year as a publicly listed company, we delivered record revenues and net income with each of our business units performing above expectations," said Mr. He Dang, founder, chairman and chief executive officer of Charm. "Throughout the year, advertising, especially TV advertising, remained the most valuable factor behind brand building in China. In the fourth quarter, we experienced particularly strong demand from traditional TV advertisers, which benefited our TV agency business and resulted in higher than expected sales from our media business. Our digital media agency business, Charm Interactive, also continued to grow with five new accounts in the fourth quarter, and total digital advertising spending in the fourth quarter was 2.5 times greater than the third quarter.
"In November, we succeeded in contracting more sales than any other agency at the annual CCTV auction, which is seen as a barometer for the advertising industry's growth prospects for the year to come. This underscores the confidence our clients have in their 2011 advertising budgets and reiterates their leadership positions within their respective fields."
Mr. Dang continued, "The closing of the CCTV auction, along with the renewal of several key media contracts in the fourth quarter, has provided us with strong visibility for the full year 2011. We also won new media contracts during the quarter, including the exclusive right to operate digital media advertising on Beijing Gehua Cable's interactive HDTV platform, a rapidly growing new media space in which we hope to play a central role. As we move into 2011, we are confident Charm is well positioned to capitalize on its existing strengths in traditional advertising and strategic initiatives in internet and new media to maintain its leadership position in China's dynamic advertising market."
Mr. Wei Zhou, Charm's Chief Financial Officer, added, "We continued to capture higher market share in China's advertising market in 2010. Total customer advertising spending placed through or with Charm increased 70% from US$375 million in 2009 to US$637 million in 2010."
Mr. Zhou continued, "Looking ahead to 2011, we see above-market growth and increasing market share with first half investments in all three of our business units and the Vizeum China joint-venture, and expect to deliver progressively stronger results throughout the year. For Charm Advertising, we will invest in media buying infrastructure and advertising professionals to expand our coverage in non-CCTV media. For Shangxing Media, we will need a few quarters to ramp up the sales operations and build up the local sales team for the Hubei Provincial Economic TV channel, as we have just started our first year of operations there. Charm Interactive and Vizeum China will continue to make key hires to ensure they have the service capabilities to capture the growing demands from existing and new advertisers. We expect to continue making strategic investments in the future in order to build up our business and consistently deliver positive results to our shareholders."
Fourth Quarter 2010 Results Turnover (non-GAAP) US$ mm 4Q10 4Q09 3Q10 Y-o-Y % Q-o-Q% Total turnover (non-GAAP) $198.9 $118.1 $145.5 68.3% 36.7% Advertising agency $152.0 $93.9 $104.5 61.9% 45.5% Media investment management $46.9 $24.3 $41.0 93.1% 14.3% Branding and identity services - - - - - ------------------------------ --- --- --- --- ---
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 68.3% 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 36.7% quarter-over-quarter increase in turnover was largely because of strong CCTV placement demands from clients due to seasonal factors.
The 61.9% year-over-year increase in advertising agency business, or 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. The 45.5% quarter-over-quarter increase in turnover was mainly due to strong CCTV placement demands from clients as a result of seasonal factors in the fourth quarter. In the fourth quarter of 2010, Charm provided advertising agency services to 135 advertising client accounts, 7 of which were acquired in the fourth quarter of 2010. The revenue extraction rate, which is defined as revenue divided by turnover, for the agency business was 5.1%, compared to 5.4% for the fourth quarter of 2009 and 6.1% for the third quarter of 2010. The lower revenue extraction rate was mainly due to the fact that clients increased media placement on CCTV, which has a lower revenue extraction rate relative to non-CCTV media, in the fourth quarter of 2010. Charm expects the revenue extraction rate to increase as the Company expands its full service offerings across all media platforms under Charm Advertising and ramps up digital media offerings under Charm Interactive.
The 93.1% year-over-year increase in media investment management business, or principal media business which operates under the Shangxing Media brand, turnover (equivalent to GAAP revenue) was mainly due to the increase in satellite TV revenues as a result of price increases and the addition of exclusive CCTV programs. Compared with the third quarter of 2010, the 14.3% increase was mainly due to the seasonality of satellite TV revenues. For the fourth quarter of 2010, Charm had 266 advertisers for its principal media business, compared with 186 advertisers for the fourth quarter of 2009.
Revenues US$ mm 4Q10 4Q09 3Q10 Y-o-Y % Q-o-Q% Total revenues $56.7 $30.6 $48.4 85.1% 17.1% Advertising agency $7.8 $5.1 $6.3 53.3% 22.3% Media investment management $46.9 $24.3 $41.0 93.1% 14.3% Branding and identity services $2.1 $1.3 $1.1 59.4% 90.7% ------------------------------ ---- ---- ---- ---- ----
The increases in agency and principal media business revenues are consistent with the increases in turnover, while the increases in branding and identity services were primarily due to greater client demand for creative services as they increased their overall media spending in the fourth quarter of 2010.
Gross Profit US$ mm 4Q10 4Q09 3Q10 Y-o-Y % Q-o-Q% Cost of revenues $34.6 $17.7 $29.6 95.5% 16.9% Gross profit $22.1 $12.9 $18.8 70.8% 17.4% ------------ ----- ----- ----- ---- ----
Charm mainly attributes the year-over-year increase in cost of revenues to the addition of exclusive CCTV programs and an increase in satellite TV media costs. The sequential cost increase is mainly due to the revenue increase.
Operating Profit US$ mm 4Q10 4Q09 3Q10 Y-o-Y % Q-o-Q% Total operating expenses $8.0 $5.1 $7.4 56.9% 7.5% Selling and marketing $5.5 $3.4 $5.8 63.3% (5.0%) General and administrative $2.5 $1.7 $1.6 44.4% 51.4% Operating profit $14.1 $7.9 $11.4 79.8% 23.8% ---------------- ----- ---- ----- ---- ----
The 63.3% increase in selling and marketing expenses compared with the fourth quarter of 2009 was primarily due to increased headcount at Charm Interactive. Selling and marketing expenses represented 9.7% of the Company's total revenues for the fourth quarter of 2010, compared to 11.0% for the fourth quarter of 2009 and 11.9% for the third quarter of 2010.
The 44.4% year-over-year increase in general and administrative expenses was mainly due to professional expenses incurred after the Company became a listed company. The 51.4% sequential increase was primarily due to more professional expenses incurred in the fourth quarter of 2010.
Net Income US$ mm 4Q10 4Q09 3Q10 Y-o-Y % Q-o-Q% Non-GAAP Net income $14.5 $8.3 $11.7 74.5% 24.1% Net income $12.2 $7.7 $11.1 58.8% 9.5% Basic net income per ADS (US$) $0.31 $0.18 $0.28 - - Fully diluted net income per ADS (US$) $0.29 $0.17 $0.27 - - ---------------------------- ----- ----- ----- --- ---
*The Company's non-GAAP net income excludes share-based compensation expenses and impairments on investments.
Each ADS represents two common shares. The weighted average shares used in computation of basic net income per ADS for the fourth quarter of 2010 is 39,123,692. As of December 31, 2010, 39,130,051 ADS were issued and outstanding.
Cash Flows and Cash Position
Cash flow from operations for the fourth quarter of 2010 was positive. As of December 31, 2010, the Company had cash and cash equivalents of $123.3 million compared to $116.4 million at the end of the third quarter of 2010.
Employee Headcount
As of December 31, 2010, the Company had 525 employees, compared to 447 employees as of September 30, 2010.
Full Year 2010 Results Turnover US$ mm FY10 FY09 Y-o-Y % Total turnover (non-GAAP) $636.9 $375.3 69.7% Advertising agency $474.3 $288.0 64.7% Media investment management $162.6 $87.3 86.3% Branding and identity services - - - ------------------------------ --- --- --- Revenues US$ mm FY10 FY09 Y-o-Y % Total revenues $192.4 $106.0 81.4% Advertising agency $24.8 $15.3 61.9% Media investment management $162.6 $87.3 86.3% Branding and identity services $5.0 $3.5 44.3% ------------------------------ ---- ---- ---- Gross Profit US$ mm FY10 FY09 Y-o-Y % Cost of revenues $123.8 $72.2 71.6% Gross profit $68.6 $33.9 102.5% ------------ ----- ----- ----- Operating Profit US$ mm FY10 FY09 Y-o-Y % Total operating expenses $27.1 $16.5 63.6% Selling and marketing $20.3 $11.0 85.0% General and administrative $6.7 $5.6 21.4% Operating profit $41.5 $17.3 139.5% ---------------- ----- ----- ----- Net Income US$ mm FY10 FY09 Y-o-Y % Non-GAAP Net income $42.8 $19.5 119.6% Net income $38.5 $15.3 152.1% Basic net income per ADS ($) $1.02 $0.14 - Fully diluted net income per ADS ($) $0.98 $0.13 - ---------------------------- ----- ----- ---
*The Company's non-GAAP net income excludes share-based compensation expenses and impairments on investments.
Each ADS represents two common shares. The weighted average shares used in computation of basic net income per ADS for the full year 2010 is 35,241,843.
Recent Business Developments
On November 8, 2010, Charm contracted more sales than any other participating agency at the annual CCTV 2011 Prime-time Auction, regarded as the most important annual event in China's advertising industry, for the 8th year in a row.
In November 2010, through its principal media business unit Shangxing Media, Charm successfully renewed its exclusive advertising agency agreements with Shanghai Dragon Television and three CCTV programs for the full year 2011.
In November 2010, through its principal media business unit Shangxing Media, Charm signed an exclusive advertising agency agreement with Hubei Provincial Economic TV, one of the top three terrestrial channels in terms of both coverage and ratings in Hubei province.
In December 2010, Charm announced that it had signed an exclusive advertising agency agreement with Beijing Gehua Cable TV Network Co., Ltd., a leading digital cable TV operator in China's largest HDTV market, to operate digital media advertising on its interactive HDTV platform.
In the fourth quarter of 2010, Charm won several new accounts including Shandong Lovol Heavy Industries, Tianjin Pharmaceutical Group, and Moonbasa.com.
Business Outlook US$ mm 1Q11E Total Revenues $58.0 to $59.5 Non-GAAP Net income $8.25 to $8.75 ------------------- --------------
*The Company's non-GAAP net income excludes share-based compensation expenses and impairments on investments.
The Company bases these estimates on a foreign exchange rate of RMB6.60 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 of America ("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," which is defined as GAAP net income excluding stock-based compensation expenses and impairment on investments.
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 US GAAP, the Company also provides non-GAAP financial measures, including "turnover" and "non-GAAP net income." 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 (9 p.m. Beijing/Hong Kong Time) on Thursday, February 24, 2011.
Dial-in details for the conference call are as follows: U.S. / International: +1-617-213-8049 United Kingdom: +44-207-365-8426 Hong Kong: +852-3002-1672 Passcode: 74766088
A replay of the call will be available from 11 a.m. February 24, 2011 until 11 a.m. March 10, 2011 U.S. Eastern Time. Dial-in details for the replay are as follows:
International: +1-617-801-6888 Passcode: 89011687
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. is a leading advertising agency in China. Charm operates its business under three brands: Charm Advertising, Charm Interactive, and Shangxing Media. Under the Charm Advertising and Charm Interactive brands, Charm offers integrated advertising agency services from planning and managing advertising campaigns to creating and placing advertisements. Under the Shangxing Media brand, Charm has established a portfolio of television advertising media resources through its exclusive arrangements with premium national television channels, which include not only advertising time but also opportunities for placing branded content. Charm's clients include well-recognized brand names in China across many industries, as well as emerging domestic leading brands. In January 2010, Charm formed a joint venture with international 4A advertising group Aegis Media, its strategic investor, to operate its brand "Vizeum" in China. In October 2010, Charm also entered into agreement to establish a joint venture with Wasu Digital Group to operate all advertising-related businesses across Wasu's IPTV, 3G mobile TV and broadband TV network platforms. 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. Cindy Wang IR Department Charm Communications Inc. Phone: +86-10-6581-3885 Email: ir@charmgroup.cn In the U.S.: Ms. Jessica Barist Cohen Ogilvy Financial, New York Phone: +1-646-460-9989 Email: chrm@ogilvy.com Charm Communications Inc. Condensed Consolidated Balance Sheets (Amounts in thousands of U.S. dollars) 31-Dec-10 30-Sep-10 31-Dec-09 (Unaudited) (Unaudited) (Audited) ASSETS Current Assets Cash and cash equivalents 123,320 116,424 54,737 Notes receivable 15,323 4,263 2,878 Prepaid expenses 63,680 52,317 31,670 Deposits 28,409 20,883 19,637 Accounts receivable 49,746 46,556 29,798 Amount due from related party 2,485 3,131 - Other current assets 1,587 1,112 570 ----- ----- --- Total current assets 284,550 244,686 139,290 ------- ------- ------- Fixed assets, net 2,082 2,019 1,441 Investments in non-marketable equity securities - 1,868 1,869 --- ----- ----- Total non-current assets 2,082 3,887 3,310 ----- ----- ----- TOTAL ASSETS 286,632 248,573 142,600 ======= ======= ======= LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED SHARES AND EQUITY Current Liabilities Accounts payable (of which 9,012, 7,197 and 1,358 as of December 31, 2010, September 30, 2010 and December 31, 2009 belonging to the consolidated VIE without recourse to the Company, respectively) 19,341 16,130 1,401 Amounts due to related parties (of which nil, 1,742 and 3 as of December 31, 2010, September 30, 2010 and December 31, 2009 belonging to the consolidated VIE without recourse to the Company, respectively) 4,701 5,675 41 Advances from customers (of which 3,083, 38,888 and 30,400 as of December 31, 2010, September 30, 2010 and December 31, 2009 belonging to the consolidated VIE without recourse to the Company, respectively) 57,970 40,742 30,564 Accrued expenses and other current liabilities (of which 14,843, 12,265 and 9,075 as of December 31, 2010, September 30, 2010 and December 31, 2009 belonging to the consolidated VIE without recourse to the Company, respectively) 18,516 14,575 9,805 Dividends payable (of which 5,829, 5,751 and 20,086 as of December 31, 2010, September 30, 2010 and December 31, 2009 belonging to the consolidated VIE without recourse to the Company, respectively) 5,829 5,751 20,086 ----- ----- ------ Total current liabilities 106,357 82,873 61,897 ------- ------ ------ Total liabilities 106,357 82,873 61,897 ------- ------ ------ Series A convertible redeemable preferred shares 59,576 Equity: Charm Communications Inc.'s equity Ordinary shares 8 8 5 Additional paid-in capital 115,288 114,831 -1,974 Retained earnings 59,783 47,815 23,031 Accumulated other comprehensive income 4,319 2,362 65 ----- ----- --- Total Charm Communications Inc. shareholders' equity 179,398 165,016 21,127 ------- ------- ------ Noncontrolling interest 877 684 - Total equity 180,275 165,700 21,127 TOTAL LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED SHARES, REDEEMABLE ORDINARY SHARES AND EQUITY 286,632 248,573 142,600 ======= ======= ======= 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, --------------------------- December December September 31, 2010 31, 2009 30, 2010 (Unaudited) (Unaudited) (Unaudited) Revenues: Media investment management 46,872 24,277 40,994 Advertising agency 7,750 5,054 6,335 Branding and identity services 2,090 1,311 1,096 ----- ----- ----- Total revenues 56,712 30,642 48,425 ------ ------ ------ Cost of revenues: Media investment management 32,445 16,515 28,231 Advertising agency 918 651 694 Branding and identity services 1,233 529 661 ----- --- --- Total cost of revenues: 34,596 17,695 29,586 ------ ------ ------ Gross profit 22,116 12,947 18,839 ------ ------ ------ Operating expenses: Selling and marketing expenses 5,484 3,358 5,773 General and administrative expenses 2,486 1,722 1,642 ----- ----- ----- Total operating expenses 7,970 5,080 7,415 ----- ----- ----- Operating profit 14,146 7,867 11,424 ------ ----- ------ Interest income 442 150 371 Impairment on investments -1,810 Interest expenses -110 Other income Income before income tax expense 12,778 8,017 11,685 Income tax expense 617 359 584 --- --- --- Net income 12,161 7,658 11,101 ------ ----- ------ Net income attributable to noncontrolling interest 193 200 Net income attributable to Charm Communications Inc. 11,968 7,658 10,901 ------ ----- ------ Accretion of Series A convertible redeemable preferred shares - 2,211 - Net income(loss) attributable to ordinary shareholders 11,968 5,447 10,901 ====== ===== ====== Net income(loss) attributable to Charm Communications Inc. shareholders per ADS: Basic 0.31 0.18 0.28 Diluted 0.29 0.17 0.27 Shares used in computation of net income(loss) per ADS: Basic 39,123,692 25,000,000 39,122,662 Diluted 40,776,523 26,315,863 40,517,732 (1) Share-based compensation expenses during the period included in: Cost of revenues 1 14 2 Selling and marketing expenses 348 447 385 General and administrative expenses 210 209 220 --- --- --- Total 559 670 607 --- --- --- 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, December 31, 2010 2009 (Unaudited) (Audited) Revenues: Media investment management 162,623 87,275 Advertising agency 24,776 15,301 Branding and identity services 5,002 3,466 ----- ----- Total revenues 192,401 106,042 ------- ------- Cost of revenues: Media investment management 118,224 68,538 Advertising agency 2,867 2,057 Branding and identity services 2,715 1,568 ----- ----- Total cost of revenues: 123,806 72,163 ------- ------ Gross profit 68,595 33,879 ------ ------ Operating expenses: Selling and marketing expenses 20,314 10,979 General and administrative expenses 6,748 5,560 ----- ----- Total operating expenses 27,062 16,539 ------ ------ Operating profit 41,533 17,340 ------ ------ Interest income 1,255 575 Impairment on investments -1,810 -1,940 Interest expenses -488 Other income 44 --- Income before income tax expense 40,490 16,019 Income tax expense 1,998 752 ----- --- Net income 38,492 15,267 ------ ------ Net income attributable to noncontrolling interest 525 - Net income attributable to Charm Communications Inc. 37,967 15,267 ------ ------ Accretion of Series A convertible redeemable preferred shares 1,215 7,800 Net income(loss) attributable to ordinary shareholders 36,752 7,467 ====== ===== Net income(loss) attributable to Charm Communications Inc. shareholders per ADS: Basic 1.02 0.14 Diluted 0.98 0.13 Shares used in computation of net income(loss) per ADS: Basic 35,241,843 25,000,000 Diluted 36,737,951 26,005,674 (1) Share-based compensation expenses during the period included in: Cost of revenues 7 17 Selling and marketing expenses 1,468 1,481 General and administrative expenses 1,024 786 Total 2,499 2,284 ----- ----- Reconciliation from Net income to Non-GAAP net income: (Amounts in thousands of U.S. dollars) For the three months ended, -------------------- December December September 31, 2010 31, 2009 30, 2010 Net income 12,161 7,658 11,101 Add back share-based compensation expenses during the related periods 559 670 607 Add back impairment on investments 1,810 - - Non-GAAP net income 14,530 8,328 11,708 ------ ----- ------ Reconciliation from Net income to Non-GAAP net income: (Amounts in thousands of U.S. dollars) For the twelve months ended, --------------------- December December 31, 2010 31, 2009 Net income 38,492 15,267 Add back share-based compensation expenses during the related periods 2,499 2,284 Add back impairment on investments 1,810 1,940 Non-GAAP net income 42,801 19,491 ------ ------ Reconciliation from Turnover (non-GAAP) to USGAAP Revenues: (Amounts in thousands of U.S. dollars) For the three months ended, -------------------- September December December 30, 31, 2010 31, 2009 2010 Turnover (non-GAAP): Media investment management 46,872 24,277 40,994 Advertising agency 151,984 93,853 104,466 Branding and identity services N/A N/A N/A Total turnover 198,856 118,130 145,460 ------- ------- ------- Extracted rate: Media investment management 100.0% 100.0% 100.0% Advertising agency 5.1% 5.4% 6.1% Branding and identity services N/A N/A N/A USGAAP Revenue: Media investment management 46,872 24,277 40,994 Advertising agency 7,750 5,054 6,335 Branding and identity services 2,090 1,311 1,096 Total revenue 56,712 30,642 48,425 ------ ------ ------ Reconciliation from Turnover (non-GAAP) to USGAAP Revenues: (Amounts in thousands of U.S. dollars) For the twelve months ended, --------------------- December December 31, 31, 2010 2009 Turnover (non-GAAP): Media investment management 162,623 87,275 Advertising agency 474,312 287,983 Branding and identity services N/A N/A Total turnover 636,935 375,258 ------- ------- Extracted rate: Media investment management 100.0% 100.0% Advertising agency 5.2% 5.3% Branding and identity services N/A N/A USGAAP Revenue: Media investment management 162,623 87,275 Advertising agency 24,776 15,301 Branding and identity services 5,002 3,466 Total revenue 192,401 106,042 ------- -------
Charm Communications Inc.
CONTACT: in China, Ms. Cindy Wang, IR Department of Charm Communications
Inc., +86-10-6581-3885, ir@charmgroup.cn; or in the U.S., Ms. Jessica Barist
Cohen, Ogilvy Financial, New York, +1-646-460-9989, chrm@ogilvy.com
Web Site: http://ir.charmgroup.cn/
