XSEL Announces Financial Results for the Second Quarter 2009
XSEL Announces Financial Results for the Second Quarter 2009
BEIJING, Aug. 12 /PRNewswire-Asia-FirstCall/ -- Xinhua Sports & Entertainment Limited (the "Company" or "XSEL") (NASDAQ:XSEL) , a leading sports and entertainment group in China, today announced its unaudited financial results for the second quarter ended June 30, 2009.
Second Quarter 2009 Highlights -- Net revenue was $38.8 million -- Adjusted EBITDA (non-GAAP) was $5.7 million -- Adjusted net income (non-GAAP) was $2.9 million -- Adjusted net income per ADS (non-GAAP) was $0.03 -- Net loss attributable to XSEL (GAAP) was $2.1 million -- Net loss per ADS (GAAP) was $0.04
Fredy Bush, XSEL's CEO said, "We warmly welcome Mr. Zheng Jingsheng as Chairman of the Board and an Independent Director. With Mr. Zheng's in-depth understanding of China's media sector and extensive experience as a senior executive at the Xinhua News Agency, he will contribute invaluable insight and guidance to XSEL's business. The separation of the Chairmanship and the office of the CEO further enhance the Company's corporate governance."
"This quarter saw solid growth despite a weak global economy with the implementation of our sports strategy. As we continue to execute, we are pleased to announce the addition of the extremely popular Ultimate Fighting Championship or UFC, to our Fight Weekend programming. Our internet platform, Koobee, recently secured the exclusive online rights to distribute the full 2009-2010 season of soccer's English Premier League through the intranet covering more than 30 million college students in China."
Second Quarter 2009 Financial Results Chart 1: Summary of financial results 3 months 3 months 3 months ended ended ended 09Q2 vs 09Q2 vs Jun 30, Jun 30, Mar 31, 08Q2 09Q1 In US$ millions 2009 2008 2009 Growth % Growth % Net revenue(1) 38.8 47.2 24.5 -18% 59% Adjusted EBITDA(2) 5.7 10.7 1.3 -47% 325% Net (loss) income attributable to XSEL (2.1) 0.8 (3.1) N/A 31% One-time items(3) (1.2) 0.6 -- N/A N/A Net (loss) income attributable to XSEL before one-time items (3.3) 1.4 (3.1) N/A -4% Adjusted net income(2) 2.9 7.6 0.7 -62% 323% (1) Due to the pending sale of Shanghai Hyperlink Market Research Co. Ltd ("Hyperlink"), the Company's research services business, in 2009, the results of operations were separately reported as "discontinued operations" and comparative numbers were reclassified accordingly. (2) Please refer to Chart 8 (Reconciliation of non-GAAP financial results) for details of calculation of adjusted EBITDA (non-GAAP) and adjusted net income (non-GAAP). (3) One-time items are those that we believe are not indicative of future performance. The one-time items of $1.2 million in the second quarter of 2009 represent the net amount of non-cash fair value adjustments on a long-term receivable and convertible loan. Net Revenue Net revenue for the second quarter of 2009 was $38.8 million, down 18% year-on-year from $47.2 million in the second quarter of 2008 or up 59% sequentially from $24.5 million in the first quarter of 2009.
Net Revenue by type and business group Chart 2: Net revenue by type and business group In US$ millions Broadcast Advertising Print Total Net revenue: Advertising services 4.3 16.6 0.3 21.2 Content production 0.2 -- -- 0.2 Advertising sales 14.5 -- 2.8 17.3 Publishing services -- -- 0.1 0.1 Total net revenue 19.0 16.6 3.2 38.8 Broadcast Group
Net revenue for the Broadcast Group for the second quarter of 2009 was $19.0 million, up 37% year-on-year from $14.0 million in the second quarter of 2008 or up 62% sequentially from $11.8 million in the first quarter of 2009.
Chart 3: Revenue breakdown of the Broadcast Group 3 months 3 months 3 months 3 months ended ended ended ended Jun 30, Jun 30, Growth Jun 30, Mar 31, Growth In US$ millions 2009 2008 % 2009 2009 % Broadcast: Television 11.3 6.5 75% 11.3 4.7 142% Radio 3.2 2.7 17% 3.2 2.6 21% Mobile 4.3 2.5 72% 4.3 3.6 21% Production 0.2 2.3 -91% 0.2 0.9 -76% Subtotal: 19.0 14.0 37% 19.0 11.8 62% Advertising Group
Net revenue for the Advertising Group for the second quarter of 2009 was $16.6 million, down 41% year-on-year from $28.2 million in the second quarter of 2008 or up 65% sequentially from $10.0 million in the first quarter of 2009. The year-on-year decrease was primarily due to divestments and the global economic downturn.
Chart 4: Revenue breakdown of the Advertising Group 3 months 3 months 3 months 3 months ended ended ended ended Jun 30, Jun 30, Growth Jun 30, Mar 31, Growth In US$ millions 2009 2008 % 2009 2009 % Advertising: Print/Online 7.6 12.2 -38% 7.6 2.1 266% Outdoor/Other(1) 2.2 8.1 -73% 2.2 1.6 33% BTL Marketing 6.8 7.9 -14% 6.8 6.3 8% Subtotal(2): 16.6 28.2 -41% 16.6 10.0 65% (1) On December 31, 2008, the Company divested its Hong Kong based outdoor advertising business, Convey, which contributed $5.9 million to net revenue in the second quarter of 2008. (2) Due to the pending sale of Hyperlink, the Company's research services business, in 2009, the historical results were reported as "discontinued operations" for all periods presented. Hyperlink contributed $1.6 million to net revenue for the Advertising Group in the second quarter of 2008. Print Group
Net revenue for the Print Group for the second quarter of 2009 was $3.2 million, down 36% year-on-year from $5.0 million in the second quarter of 2008 or up 20% sequentially from $2.7 million in the first quarter of 2009. The year-on-year decrease is primarily due to the global economic downturn.
Chart 5: Revenue breakdown of the Print Group 3 months 3 months 3 months 3 months ended ended ended ended Jun 30, Jun 30, Growth Jun 30, Mar 31, Growth In US$ millions 2009 2008 % 2009 2009 % Print: Newspaper 2.0 2.7 -26% 2.0 1.3 52% Magazines 1.2 2.3 -48% 1.2 1.4 -11% Subtotal: 3.2 5.0 -36% 3.2 2.7 20% Gross Profit
Gross profit for the second quarter of 2009 was $9.9 million, down 51% year-on-year from $20.3 million in the second quarter of 2008, or up 18% sequentially from $8.4 million in the first quarter of 2009. Adjusted gross profit (non-GAAP), defined as gross profit before amortization of intangible assets from acquisitions, for the second quarter of 2009 was $11.3 million, down 49% year-on-year from $22.1 million in the second quarter of 2008, or up 20% sequentially from $9.4 million in the first quarter of 2009. The year-on-year decrease of both gross profit and adjusted gross profit was a result of the factors previously described in the net revenues of our business groups. We provide the adjusted gross profit metric to break out the amortization of intangible assets from acquisitions charged within the cost of revenue. Chart 6 (Reconciliation for adjusted gross profit by business group) provides the breakdown of adjusted gross profit by business group. Due to the pending sale of Hyperlink, the Company's research services business, in 2009, the results of operations were separately reported as "discontinued operations" and comparative numbers were reclassified accordingly.
Chart 6: Reconciliation for adjusted gross profit by business group In US$ millions Advertising Broadcast Print Total Gross Profit 5.0 2.5 2.4 9.9 Amortization of intangible assets from acquisitions(1) -- 1.2 0.2 1.4 Adjusted gross profit 5.0 3.7 2.6 11.3 (1) Amortization of intangible assets from acquisitions includes intangible assets such as trademarks, license rights, exclusive advertising rights, licensing agreement, customer relationships and non-compete agreements. Operating Expenses
Operating expenses are comprised of selling and distribution expenses and general and administrative expenses. Operating expenses for the second quarter of 2009 were $9.1 million, down 44% year-on-year from $16.3 million in the second quarter of 2008, or down 14% sequentially from $10.7 million in the first quarter of 2009. The year-on-year decrease is primarily due to implementation of cost cutting initiatives, a reduction of provision for accounts receivable of $1.3 million in the second quarter of 2009, a decrease in selling and distribution expenses in line with decreased revenue and a decrease in share-based compensation expenses.
Selling and distribution expenses for the second quarter of 2009 were $3.5 million, down 36% year-on-year from $5.5 million in the second quarter of 2008, or up 8% sequentially from $3.3 million in the first quarter of 2009.
General and administrative expenses for the second quarter of 2009 were $5.6 million, down 48% year-on-year from $10.8 million in the second quarter of 2008, or down 24% sequentially from $7.4 million in the first quarter of 2009. Included in general and administration expenses for the second quarter of 2009 was $0.6 million of share-based compensation expenses.
Adjusted EBITDA (non-GAAP)
Adjusted EBITDA (non-GAAP), defined as net income (loss) attributable to XSEL before one time items, other income (expense), taxes, depreciation, amortization of intangible assets from acquisitions, net income (loss) attributable to non-controlling interests and share-based compensation expenses, for the second quarter of 2009 was $5.7 million, down 47% year-on-year from $10.7 million in the second quarter of 2008, or up 325% sequentially from $1.3 million in the first quarter of 2009. The year-on-year decrease is mainly due to divestments and the global economic downturn.
We provide the adjusted EBITDA metric because it allows management, investors and others to evaluate and compare our core operating results without the impact of certain non-cash items or one-time items that we believe are not indicative of future performance.
Chart 7: Adjusted EBITDA by business group In US millions Advertising Broadcast Print Total Adjusted EBITDA by business group 3.8 2.7 2.3 8.8 Less: net head office expenses -- -- -- (3.1) Adjusted EBITDA -- -- -- 5.7 Net Income (Loss) attributable to XSEL and Adjusted Net Income (non-GAAP)
Net loss attributable to XSEL for the second quarter of 2009 was $2.1 million, compared to net income $0.8 million in the second quarter of 2008 and net loss $3.1 million in the first quarter of 2009.
Adjusted net income (non-GAAP), defined as net income (loss) attributable to XSEL before one-time items, amortization of intangible assets from acquisitions, share-based compensation expenses and imputed interest, for the second quarter of 2009 was $2.9 million, down 62% year-on-year from $7.6 million in the second quarter of 2008, or up 323% sequentially from $0.7 million in the first quarter of 2009. The year-on-year decrease is mainly due to divestments and the global economic downturn.
We provide the adjusted net income metric because it allows management, investors and others to evaluate our net income without the impact of possible add backs, deductions, certain material non-cash items or one-time items that we believe are not indicative of future performance.
Other Corporate Developments
The Company appointed Mr. Zheng Jingsheng as the Company's new independent Director and Chairman of the Board and Mr. Harry Nam as an independent Director, while Mr. Larry Kramer and Mr. Zhao Li have stepped down from the Board. Mr. Zheng Jingsheng served as Vice President of the Xinhua News Agency from 1998 to 2008 and Deputy General Manager from 1995 to 1998. He commenced his XSEL chairmanship on July 31, 2009, succeeding Ms. Fredy Bush. Ms. Bush will continue to serve as CEO of the Company. Mr. Nam was also appointed as Chairman of the Nominating and Corporate Governance Committee and the Investment Committee.
In June 2009, XSEL secured the exclusive television rights to UFC in China. Under the agreement with US based CSI Entertainment Inc., XSEL has the exclusive television rights to UFC in China until the end of 2009 and is developing a long term partnership extending into radio, internet and mobile platforms.
The Company completed the acquisition of a company that has a long-term advertising agreement with a television station in the PRC. The transaction gives XSEL up to 15-years of exclusive rights to provide advertising services.
Due to repositioning of the business to sports and entertainment, the Company has sold or may sell other certain non-core segments of its business which may give rise to potential non-cash impairment charges on goodwill and intangible assets.
Conference Call Information
Following the earnings announcement, XSEL's senior management will host a conference call on August 12, 2009 at 8:00PM (New York) / August 13, 2009 at 8:00AM (Beijing) to review the results and discuss recent business activities.
Interested parties may dial into the conference call at: (US) +1 800 561 2693 or +1 617 614 3523 (UK) +44 207 365 8426 (Mainland China) + 86 10 800 130 0399 (Asia Pacific) +852 3002 1672 Passcode: 27002258
A telephone replay will be available two hours after the call for one week at:
(US Toll Free) +1 888 286 8010 (International) +1 617 801 6888 Passcode: 26146199
A real-time webcast and replay will be also available at: http://www.xsel.com/en/investor-relations/webcast/
For more information, please contact: Media Contact Ms. Joy Tsang, XSEL Tel: +86-10-8567-6050 Email: joy.tsang@xsel.com IR Contact Mr. Edward Liu, XSEL Tel: +86-10-8567-6061 Email: edward.liu@xsel.com Mr. Howard Gostfrand, American Capital Ventures Tel: +1-305-918-7000 Toll free: +1-877-918-0774 Email: info@amcapventures.com About XSEL
Xinhua Sports & Entertainment Limited ("XSEL;" NASDAQ: XSEL) is a leading sports and entertainment media company in China. Catering to a vast audience of young and upwardly mobile customers, XSEL is well-positioned in China with its unique content and access. Through its key international partnerships, XSEL is able to offer its target audience the content they demand -- premium sports and quality entertainment. Through its Chinese partnerships, XSEL is able to deliver this content across a broad range of platforms, including television, the internet, mobile phones and other multimedia assets in China. Along with its integrated advertising resources, XSEL offers a total solution empowering clients at every stage of the media, process linking advertisers with China's young and upwardly mobile demographic.
Headquartered in Beijing, the Company employs more than 1,350 people and has offices and affiliates in major cities throughout China including Beijing, Shanghai, Guangzhou, Shenzhen and Hong Kong. The Company's American Depository Shares are listed on the NASDAQ Global Market (NASDAQ:XSEL) . For more information, please visit http://www.xsel.com/ .
Safe Harbor
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of 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 other similar statements. Among other things, the quotations from management in this announcement, as well as XSEL's strategic and operational plans, contain forward-looking statements. XSEL may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about XSEL's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our growth strategies; our future business development, results of operations and financial condition; our ability to attract and retain customers; competition in the Chinese advertising and media markets; changes in our revenues and certain cost or expense items as a percentage of our revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to copyright and other intellectual property rights; the expected growth of the Chinese advertising and media market and Chinese governmental policies relating to advertising and media. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. XSEL does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Non-GAAP Financial Measures
To supplement XSEL's consolidated financial results under U.S. GAAP, XSEL also provides the following non-GAAP financial measures: "adjusted gross profit" defined as gross profit excluding amortization of intangible assets from acquisitions; "adjusted EBITDA" defined as net income (loss) attributable to XSEL before one time items, other income (expense), taxes, depreciation, amortization of intangible assets from acquisitions, net income (loss) attributable to non-controlling interests and share-based compensation expenses; and "adjusted net income" defined as net income (loss) attributable to XSEL before one-time items, amortization of intangible assets from acquisitions, share-based compensation expenses and imputed interest. XSEL believes that these non-GAAP financial measures provide investors with another method for assessing XSEL's underlying operational and financial performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial results under U.S. GAAP. For more information on these non-GAAP financial measures, please refer to Chart 8 (Reconciliation of non-GAAP financial results) of this release.
XSEL believes these non-GAAP financial measures are useful to management and investors in assessing the performance of the Company and assist management in its financial and operational decision making. A limitation of using non-GAAP measures which exclude share-based compensation expenses is that share-based compensation expenses have been and will continue to be a significant recurring expense in our business. A limitation of using non-GAAP adjusted gross profit, adjusted EBITDA and adjusted net income is that they do not include all items that impact our net income for the period. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables provide additional details on the reconciliation between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
The following is a reconciliation of our non-GAAP financial results: Chart 8: Reconciliation of non-GAAP financial results 3 months 3 months 3 months ended ended ended Jun30, Jun 30, Mar 31, In US millions 2009 2008 2009 Net (loss) income attributable to XSEL (2.1) 0.8 (3.1) One-time items(1) -- 0.7 -- Amortization of intangible assets from acquisitions 2.2 3.4 1.7 Share-based compensation expenses 0.6 1.8 0.9 Depreciation 0.6 0.6 0.5 Other expenses 4.0 1.1 1.2 Provision for income taxes 0.3 1.9 0.4 Net income (loss) attributable to non-controlling interests 0.1 0.4 (0.3) Adjusted EBITDA 5.7 10.7 1.3 Net (loss) income attributable to XSEL (2.1) 0.8 (3.1) One-time items(1) (1.2) 0.6 -- Amortization of intangible assets from acquisitions 2.2 3.4 1.7 Share-based compensation expenses 0.6 1.8 0.9 Imputed interest(2) 3.4 1.0 1.2 Adjusted net income 2.9 7.6 0.7 (1) One-time items are those that we believe are not indicative of future performance. The one-time items of $1.2 million in the second quarter of 2009 represent the net amount of non-cash fair value adjustments on a long-term receivable and convertible loan. (2) Imputed interest for the second quarter of 2009 is related to intangible assets from long-term contracts and convertible loan.
Net income (loss) and adjusted net income per ADS are shown in Chart 9 (Net income (loss) and adjusted net income per ADS):
Chart 9: Net income (loss) and adjusted net income per ADS(1) 3 months 3 months 3 months ended ended ended Jun 30, Jun 30, Mar 31, In US dollars 2009 2008 2009 Net income (loss) per ADS - basic from continuing operations $(0.04) $0.00 $(0.05) Net income (loss) per ADS - basic from discontinued operations $0.00 $0.00 $0.00 Net income (loss) per ADS - basic $(0.04) $0.00 $(0.05) Net income (loss) per ADS - diluted from continuing operations $(0.04) $0.00 $(0.05) Net income (loss) per ADS - diluted from discontinued operations $0.00 $0.00 $0.00 Net income (loss) per ADS - diluted $(0.04) $0.00 $(0.05) Weighted average number of
ADS - - basic 76.0million 67.5million 75.5million
Weighted average number of ADS - diluted 76.0million 73.5million 75.5million Adjusted net income per ADS - basic from continuing operations $0.03 $0.10 $0.00 Adjusted net income per ADS - basic from discontinued operations $0.00 $0.00 $0.00 Adjusted net income per ADS - basic $0.03 $0.10 $0.00 Adjusted net income per ADS - diluted from continuing operations $0.03 $0.10 $0.00 Adjusted net income per ADS - diluted from discontinued operations $0.00 $0.00 $0.00 Adjusted net income per ADS - diluted $0.03 $0.10 $0.00 Weighted average number of ADS - - basic 76.0million 67.5million 75.5million Weighted average number of ADS - diluted 76.0million 73.5million 75.5million (1) For computation of the net income (loss) per ADS and adjusted net income per ADS, the amount attributable to holders of common shares should be used. Accordingly, dividends on Series B redeemable convertible preference shares of $0.6 million were taken into account for the first and second quarter of 2009, and the second quarter of 2008. Condensed Consolidated Balance Sheet (In U.S. dollars) Jun 30, 2009 Mar 31, 2009 Dec 31, 2008 Unaudited Unaudited As adjusted (Note 1) (Note 1) (Note 1) Assets Current assets: Cash and cash equivalents 32,329,314 59,274,949 54,088,842 Short term deposit 29,054 1,453,398 2,940,051 Restricted cash (Note 2) 37,920,000 37,610,000 37,510,000 Accounts receivable, net of allowance for doubtful debts (Note 3) 35,422,320 33,575,134 44,762,902 Prepaid program expenses 4,874,817 3,140,071 2,324,253 Consideration receivable from disposal of subsidiaries (Note 4) 45,640,000 43,754,392 36,970,590 Other current assets 28,092,141 24,349,090 14,902,170 Assets held for sale (Note 5) 7,846,238 8,575,780 -- Total current assets 192,153,884 211,732,814 193,498,808 Content production cost, net 13,685,624 -- -- Property and equipment, net 6,043,153 6,297,263 6,590,790 Intangible assets, net (Note 6) 284,488,653 197,727,546 200,528,583 Goodwill (Note 7) 68,827,539 42,688,899 46,992,724 Investment 13,508,239 13,508,239 13,508,239 Deposits for investments (Note 8) 14,536,860 24,382,361 14,174,566 Consideration receivable from disposal of subsidiaries (Note 4) 26,249,648 28,285,035 28,285,035 Other long-term assets 9,726,480 6,686,206 4,671,591 Total assets 629,220,080 531,308,363 508,250,336 Liabilities, mezzanine equity and total equity Current liabilities: Bank borrowings (Note 9) 42,705,865 42,486,592 36,374,198 Other current liabilities 90,757,246 63,529,480 69,900,342 Liabilities held for sale (Note 5) 1,129,607 1,893,487 -- Total current liabilities 134,592,718 107,909,559 106,274,540 Deferred tax liabilities 35,509,083 31,559,100 31,679,491 Long-term liabilities, non-current portion 190,829,286 121,164,687 101,505,496 Total liabilities 360,931,087 260,633,346 239,459,527 Mezzanine equity: Series B redeemable convertible preferred shares 31,845,591 31,205,591 30,605,591 Shareholders' equity: Class A common shares 109,416 109,388 104,302 Additional paid-in capital 485,416,625 486,691,163 481,318,345 Accumulated deficits (259,533,013) (256,743,071)(252,968,439) Accumulated other comprehensive income 6,610,529 7,135,231 7,165,833 Total shareholders' equity 232,603,557 237,192,711 235,620,041 Non-controlling interests 3,839,845 2,276,715 2,565,177 Total equity 236,443,402 239,469,426 238,185,218 Total liabilities, mezzanine equity and total equity 629,220,080 531,308,363 508,250,336 Condensed Consolidated Statement of Operations 3 months 3 months 3 months ended ended ended (In U.S. Dollars) Jun 30, 2009 Jun 30, 2008 Mar 31, 2009 Unaudited Unaudited Unaudited As adjusted (Note 1) (Note 1) (Note 1) Net revenues: Advertising services 21,166,243 25,221,780 14,242,940 Content production 207,980 2,888,164 878,214 Advertising sales 17,300,285 19,006,987 9,254,766 Publishing services 133,522 108,924 99,112 Total net revenues 38,808,030 47,225,855 24,475,032 Cost of revenues: Advertising services 15,261,154 17,988,473 10,026,073 Content production 249,872 1,060,419 332,172 Advertising sales 13,204,429 7,644,880 5,513,330 Publishing services 221,450 254,844 202,596 Total cost of revenues 28,936,905 26,948,616 16,074,171 Operating expenses: Selling and distribution 3,538,980 5,495,696 3,272,562 General and administrative (Note 3) 5,609,771 10,816,544 7,414,066 Total operating expenses 9,148,751 16,312,240 10,686,628 Other operating income 1,515,604 7,220 412,148 Operating income (loss) from continuing operations 2,237,978 3,972,219 (1,873,619) Other expenses (Note 10) 3,984,469 1,138,945 1,188,780 (Loss) income from continuing operations before provision for income taxes (1,746,491) 2,833,274 (3,062,399) Provision for income taxes 298,022 1,874,756 383,662 Net (loss) income before non-controlling interests from continuing operations (2,044,513) 958,518 (3,446,061) Discontinued operations (Note 5): Income from discontinued operations 58,566 289,702 31,728 Provision for income taxes 28,961 114,341 22,224 Discontinued operations, net of taxes 29,605 175,361 9,504 Net (loss) income (2,014,908) 1,133,879 (3,436,557) Net income (loss) attributable to non-controlling interests 135,029 370,913 (301,920) Net (loss) income attributable to XSEL (2,149,937) 762,966 (3,134,637) Dividend declared on Series B redeemable convertible preferred shares 640,000 600,000 640,000 Net (loss) income attributable to holders of common shares (2,789,937) 162,966 (3,774,637) Net income (loss) per share: Basic and diluted from continuing operations - Common shares (0.02) 0.00 (0.03) Basic and diluted from discontinued operations - Common shares 0.00 0.00 0.00 Basic and diluted - Common shares (0.02) 0.00 (0.03) Basic and diluted from continuing operations - American Depositary Shares (0.04) 0.00 (0.05) Basic and diluted from discontinued operations - American Depositary Shares 0.00 0.00 0.00 Basic and diluted - American Depositary Shares (0.04) 0.00 (0.05) Condensed Consolidated Statement of Cash Flow 3 months ended 3 months ended 3 months ended (In U.S. Dollars) Jun 30, 2009 Jun 30, 2008 Mar 31, 2009 Unaudited Unaudited Unaudited Net cash provided by operating activities 625,814 7,603,264 2,205,338 Net cash used in investing activities (20,805,254) (19,234,247) (19,823,410) Net cash (used in) provided by financing activities (7,715,920) (1,506,267) 25,656,044 Effect of exchange rate changes 42,705 666,271 (64,102) Net (decrease) increase in cash and cash equivalents (27,852,655) (12,470,979) 7,973,870 Cash and cash equivalents, as at beginning of the period 59,274,949 69,544,776 54,088,842 Less: Cash and cash equivalents at end of period from discontinued operations 907,020 -- (2,787,763) Cash and cash equivalents, as at end of the period 32,329,314 57,073,797 59,274,949 Notes to Financial Information 1) Condensed consolidated financial information
Effective from January 1, 2009, the Company adopted Statement of Financial Accounting Standards No. 160, "Non-controlling Interest in Consolidated Financial Statements -- An amendment of Accounting Research Bulletin No. 51" ("SFAS No. 160"), which changed the accounting for and the reporting of minority interest, now referred to as non-controlling interests, in our condensed consolidated financial information. The adoption of SFAS No. 160 resulted in the reclassification of amounts previously attributable to minority interest to a separate component of shareholders' equity titled "Non-controlling Interests" in the accompanying condensed consolidated balance sheet. Additionally, net loss attributable to non-controlling interests was shown separately from net loss in the accompanying condensed consolidated statement of operations. Prior period financial information has been reclassified to conform to the current period presentation as required by SFAS No. 160. In addition, due to the pending sale of Hyperlink, the Company's research services business, in 2009, the historical results were reported as "discontinued operations" for all periods presented in the accompanying condensed consolidated statement of operations.
2) Restricted cash
Restricted cash was US dollar cash deposits pledged for the RMB loan facilities granted by banks for RMB working capital purposes.
3) Accounts receivables, net of allowance for doubtful debts and debtors turnover
Debtors turnover for the first and second quarter of 2009 were 144 days and 81 days respectively. Our business groups generally grant 90 days to 180 days as the average credit period to major customers, which is in line with the industry practices in the PRC. The Company recorded a recovery of doubtful debts of $2.4 million in general and administrative expenses for the second quarter of 2009 and wrote back the allowance for doubtful debts accordingly.
4) Consideration receivable from disposal of subsidiaries
On June 30, 2009, the Company recorded current and non-current consideration receivable from disposal of subsidiaries of $45.6 million and $26.2 million respectively. This represented the consideration receivable for the disposal of our 85% shareholding of Convey in December 2008.
5) Assets and liabilities held for sale and discontinued operations
On June 30, 2009, the Company recorded assets and liabilities held for sale of $7.8 million and $1.1 million respectively. Due to the pending sale of Hyperlink, the Company's research services business, in 2009, the results of operations were separately reported as "discontinued operations" and its assets and liabilities have been reclassified as "assets and liabilities held for sale."
6) Intangible assets
The carrying value of intangible assets on June 30, 2009 was $284.5 million. This mainly represented the carrying value of the long-term advertising agreements for the Broadcast and Print groups. The carrying value of the intangible assets were composed of a $185.9 million advertising license agreement for our TV business, a $73.5 million exclusive advertising agreement for our newspaper business and $25.1 million other intangible assets. In April 2009, XSEL completed the acquisition of a company that has a long-term advertising agreement with a television station in the PRC. The carrying value of the related intangible assets as of June 30, 2009 was $89.6 million.
7) Goodwill
On June 30, 2009, the carrying value of goodwill was $68.8 million. In April 2009, the Company completed the acquisition of a company that has a long-term advertising agreement with a television station in the PRC. The carrying value of the related goodwill as of June 30, 2009 was $11.8 million.
8) Deposits for investments
The Company has paid a deposit of $10 million and an advance of $4.5 million to provide advertising services to the pay channels in the PRC. These amounts are refundable unless certain closing conditions are met. On June 30, 2009, there were uncertainties as to whether certain closing conditions can be met.
9) Bank borrowings
In October 2007, the Company purchased from UBS Financial Services, Inc. a $25.0 million principal protected note issued by Lehman Brothers Holdings Inc., which matured in January 2009. In August 2008, the Company borrowed $14.0 million from UBS AG using the principal protected note as collateral (the ''Loan''). On September 15, 2008, Lehman Brothers filed for bankruptcy, and, after the Company refused to post additional collateral for the Loan, on September 25, 2008, UBS AG filed a demand for arbitration with the American Arbitration Association against the Company seeking repayment of the Loan. On October 28, 2008, the Company filed its defense to the demand as well as a cross claim against UBS Financial Services, Inc. for an amount in excess of $25.0 million. At December 31, 2008, the Company has taken full provision of $25.0 million against the principal protected note. The Company is currently in arbitration and will defend itself vigorously in its position.
10) Other expenses
Other income (expense) includes net interest income (expense) and net other income (expense).
Source: Xinhua Sports & Entertainment Limited
CONTACT: Media Contact Ms. Joy Tsang, XSEL +86-10-8567-6050 or
joy.tsang@xsel.com; IR Contact: Mr. Edward Liu, XSEL at +86-10-8567-6061 or
edward.liu@xsel.com; Mr. Howard Gostfrand, American Capital Ventures at
+1-305-918-7000, Toll free: +1-877-918-0774 or info@amcapventures.com
Web site: http://www.xsel.com/
http://www.xsel.com/en/investor-relations/webcast
Profile: International Entertainment
posted by EntertainmentNews @ 3:04 PM
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