China Mass Media Reports Fourth Quarter and Full Year 2011 Unaudited Financial Results

China Mass Media Reports Fourth Quarter and Full Year 2011 Unaudited Financial Results

BEIJING, March 19, 2012 /PRNewswire-Asia-FirstCall/ -- China Mass Media Corp. ("China Mass Media" or the "Company") (NYSE: CMM), a television advertising company in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2011.

Fourth Quarter 2011 Highlights

-- Total net revenues were RMB52.2 million (US$8.3 million), a decrease of
31.1% from the fourth quarter 2010, and a decrease of 9.3% from the
third quarter 2011.
-- Operating income was RMB1.9 million (US$0.3 million), a decrease of
93.2% from the fourth quarter 2010 and a decrease of 88.6 % from the
third quarter 2011.
-- Net loss was RMB18.5 million (US$2.9 million), compared with net income
of RMB19.0 million in the fourth quarter 2010, and net income of RMB14.0
million in the third quarter 2011. The net loss was mainly attributable
to a withholding tax expense of RMB19.1 million (US$3.0 million)
incurred in conjunction with the special dividend of RMB364.0 million
(US$57.9 million) million declared in the fourth quarter 2011.
-- Net cash outflows from operating activities were RMB53.5 million (US$8.5
million), compared with RMB25.9 million net cash inflows in the fourth
quarter 2010 and RMB158.3 million net cash outflows in the third quarter
2011.
Fiscal Year 2011 Financial Highlights

-- Total net revenues were RMB212.3 million (US$33.7 million) in 2011, a
decrease of 12.8% from 2010.
-- Operating income was RMB46.3 million (US$7.4 million) in 2011, a
decrease of 26.5% from 2010.
-- Net income was RMB15.0 million (US$2.4 million) in 2011, a decrease of
62.3% from 2010.
-- Basic and diluted earnings per ADS were RMB5.94 (US$0.94), a decrease of
both 60.9% from RMB15.2 in 2010.
Mr. Shengcheng Wang, Chairman and Chief Executive Officer of China Mass Media, commented, "Revenue from the fourth quarter amounted to RMB52.2 million, which was in line with our previous estimate. The decline in revenue from the previous quarter was largely because we received a long-overdue payment of RMB14.7 million (US$2.3 million) in the third quarter from CCTV for special event services provided in 2008. Excluding the effects of the special event service fee, our total revenues would have increased RMB8.5 million (US$1.3million), or 18.3%, from the third quarter of 2011. During the quarter revenues from our advertising business declined by 31.1% compared with the fourth quarter of 2010 due to greater discounts offered to our clients in light of intense market competition and increasing media costs, although sales rates increased significantly from the same period in 2010.

"Our advertising production services have been stable. In the fourth quarter, we successfully produced a number of commercials for clients, including Baodi Group, Yunnanbaiyao, and Guangyuan Food, which helped drive the sequential revenue growth from advertising production services. Compared to the fourth quarter of 2010, advertising production services revenues decreased. This was largely due to the loss of revenue from the recently terminated 'Guang Er Gao Zhi' program and one-time production revenue from CCTV.

"In the fourth quarter of 2011, we saw a number of new developments in our new film and TV production business. The Company has completed the on-site filming stage of a TV drama, and enters into the off-site post-production stage. Currently we are in active discussions with a few major TV stations for the drama's distribution and aims for airing in the second half of 2012. We plan to invest in the production of an additional 1 or 2 TV dramas this year. Our production costs expensed in the fourth quarter of 2011 for this business were RMB6.6 million (US$1.1 million).

"On October 28, 2011, the Company declared a special cash dividend of US$0.07667 per ordinary share. Due to this special cash dividend distribution, the Company's reinvestment plan for the unremitted earnings was changed from 70% to zero and the Company recognized a withholding tax of RMB19.1 million (US$3.0 million), which resulted in a net loss of RMB18.5 million (US$2.9 million) in the fourth quarter. Excluding the effects of the withholding tax, we would have recorded net income of RMB0.6 million (US$0.1 million).

"In light of fierce competition from other CCTV agents in 2011, we offered more discounts to clients compared with previous years. Although the annual sales rate of media resources increased significantly from the previous year, we saw a decline in both revenues and profit. Our film and TV production business, which was still in its initial stages of development during the quarter, did not contribute to our revenues during the year.

"The three-year contract between our company and CCTV for the 'Daytime Advertising Package' and 'Television Guide Package' expired on December 31, 2011. We were unsuccessful in the bidding for the 'Daytime Advertising Package' at the 2012 Non-Prime Time Advertising Resources Auction on November 22, 2011. In addition, CCTV decided to cancel the 'Television Guide Package' product in 2012. The public service announcement 'Guang Er Gao Zhi' program was also cancelled due to a program adjustment in July 2011. Losses of the above-mentioned contracts will bring new challenge for us in 2012. In 2012, we focus on the sales of the 'Periodic China News Package,' and the 'All Day Classic Package' on CCTV-8 and continue to find other sources of revenue through media purchases and other client services.

"We received a notice from the staff of NYSE Regulation, Inc. ("NYSE Regulation") confirming that NYSE Regulation has determined to commence proceedings to delist the Company's American Depository Shares (the "ADSs") from the New York Stock Exchange (the "NYSE") on the grounds that the Company has fallen below the NYSE's continued listing standard set forth in Section 802.01B of the NYSE Listed Company Manual, which requires the Company to maintain an average global market capitalization of not less than $15 million over a consecutive 30-trading day period.

The NYSE made public announcement of this decision on March 12, 2012. Trading in the Company's ADSs on the NYSE will be suspended prior to the market opening on Monday, March 19, 2012. The Company intends to facilitate the quotation of its ADSs on the over-the-counter bulletin board (OTCBB) market."

Fourth Quarter 2011 Financial Results

Revenues

Revenue from advertising agency services were RMB49.6 million (US$7.9 million) in the fourth quarter 2011, a decrease of 28.6% from RMB69.4 million in the same period in 2010, and an increase of 14.4% from RMB43.4 million in the third quarter 2011. We saw demand increase due to the National Day Holiday in October, as well as strong consumption towards the end of the year. The advertising market's traditional peak season began in the fourth quarter 2011. Revenues from the Company's 'Daytime Advertising Package' and 'Television Guide Package' increased compared with the previous quarter. The sales performance of the Company's "Periodic China News Package" on CCTV-4 continued to improve on the positive momentum, and all 60-second advertising time slots were sold out, helping to increase revenues by 14.4% from the third quarter 2011.

Due to continued fierce price competition, revenues from the Company's 'Daytime Advertising Package' and 'Television Guide Package' in the fourth quarter 2011 decreased compared with the same period in 2010. Meanwhile, the time slots available from the Company's 'Periodic China News Package' decreased from 90 seconds to 60 seconds in 2011, also led to the decrease in revenue.

Revenue from special event services were nil in the fourth quarter 2011. In the third quarter 2011, we received a long-overdue payment of RMB14.7 million (US$2.3 million) from CCTV for special event services provided in 2008, which contributed to RMB13.4 million (US$2.1 million) to our net revenue in the quarter.

Revenue from production and sponsorship services were RMB5.6 million (US$0.9 million) in the fourth quarter 2011, a decrease of 51.3% from RMB11.4 million in the fourth quarter 2010, and an increase of 68.9% from RMB3.3 million in the third quarter 2011. Compared with the previous quarter, the Company's efforts to improve production capabilities and proactively source new clients were successful in the fourth quarter 2011. The substantial rise in revenues compared with the third quarter 2011 resulted from a number of new commercial advertisements for clients such as the Baodi Group, Yunnanbaiyao, and Guangyuan Food. The decrease of revenues from advertising production compare with the fourth quarter of 2010 was mainly due to RMB3.5 million production revenue from CCTV in the fourth quarter 2010, which did not recur in the fourth quarter 2011. In addition, revenues from the terminated "Guang Er Gao Zhi" program amounted to RMB3.3 million in the fourth quarter 2010.

Operating costs and expenses

Cost of revenues was RMB38.4 million (US$6.1 million) in the fourth quarter 2011, an increase of 14.1% from RMB33.7 million in the fourth quarter 2010 and an increase of 42.4% from RMB27.0 million in the third quarter 2011. The significant sequential and year-over-year increase was mainly due to the production costs of the Company's recent TV drama, which is now in post-production stage. Excluding the production cost of the TV drama, the Company's cost of revenues was RMB31.8 million in the fourth quarter 2011, a decrease of 5.6% from the fourth quarter 2010 and an increase of 17.9% from the third quarter 2011. The decrease in cost of revenue from the four quarter 2010 was because time slots available on the Company's "Periodic China News Package" on CCTV-4 decreased from 90 seconds in 2010 to 60 seconds in 2011. The increase of cost of revenue compared with last quarter was mainly because more costs were incurred for commercial advertisements and public service announcements productions.

Sales and marketing expenses were RMB4.7 million (US$0.8 million) in the fourth quarter 2011, an increase of 14.6% from RMB4.1 million in the fourth quarter 2010 and a decrease of 29.7% from RMB6.7 million in the third quarter 2011. The increase compared with the fourth quarter 2010 was mainly due to the increase in salary and travel expense. The decrease compared with the third quarter 2011 was mainly because of a special bonus of RMB2.0 million to Mr. Wang, the our Chief Executive Officer, for his contribution to the Special Event Services recorded in the third quarter 2011. Excluding the impact of this payment, sales expenses were essentially flat compared with the previous quarter.

General and administrative expenses were RMB7.2 million (US$1.1 million) in the fourth quarter 2011, a decrease of 25.4% compared to the RMB9.6 million in the fourth quarter 2010, and an increase of 2.7% from RMB7.0 million in the third quarter 2011. The decrease compared with the fourth quarter 2010 was mainly because the Company incurred less professional service cost in the fourth quarter 2011.

Operating income, as a result of the foregoing factors, was RMB1.9 million (US$0.3 million) in the fourth quarter 2011, a decrease of 93.2% from RMB28.4 million in the fourth quarter 2010 and a decrease of 88.6% from RMB16.9 million in the third quarter 2011. The Company's operating margin was 37.5%, 29.3%, and 3.7% for the quarters ended December 31, 2010, September 30, 2011, and December 31, 2011, respectively.

Other expenses included an exchange loss of RMB0.7 million (US$0.1 million) in the fourth quarter 2011. As the Company converted its overseas US dollar deposits to Renminbi deposits at the end of the first quarter of 2011, as a result, the aforementioned exchange loss arising from the appreciation of the Renminbi against the US dollar decreased significantly compared with the exchange loss of RMB2.8 million in the fourth quarter 2010, and RMB0.8 million in the third quarter 2011 respectively.

Income tax expense was RMB22.6 million (US$3.6 million) in the fourth quarter 2011, an increase of 161.4% from RMB8.6 million in the fourth quarter 2010, and an increase of 221.7% from RMB7.0 million in the third quarter 2011. The significant increase in income tax expense was mainly due to the special dividend-related withholding tax in the fourth quarter 2011, which totaled RMB19.1 million. Excluding its impact, income tax expense would have been RMB3.5 million in the fourth quarter 2011.

Net loss was RMB18.5 million (US$2.9 million) in the fourth quarter 2011, compared with a net income of RMB19.0 million in the fourth quarter in 2010, and a net income of RMB14.0 million in the previous quarter.

Basic and diluted loss per ADS were both RMB7.41 (US$1.18) in the fourth quarter 2011, compared with basic and diluted earnings of RMB7.27 and RMB7.23, respectively, in the fourth quarter 2010, and RMB5.58 and RMB 5.58 in the third quarter 2011. Each ADS represents 300 ordinary shares.

Fiscal year 2011 Financial Results

Net revenue for the 2011 fiscal year was RMB212.3 million (US$33.7 million), representing a decrease of RMB31.1 million, or 12.8%, from RMB243.4 million in 2010. During fiscal year 2011 the Company's 'Daytime Advertising Package' and 'Television Guide Package' faced intense price competition. Time slots available on the Company's 'Periodic China News Package' on CCTV-4 decreased from 90 seconds in 2010 to 60 seconds in 2011. These two factors resulted in a significant decrease in advertising revenue, although the sales rate of all resources increased in various degrees compared with the year 2010.

Operating costs and expenses for the 2011 fiscal year was RMB166.1 million (US$26.4 million), representing a decrease of RMB14.4 million, or 8.0%, from RMB 180.5 million in 2010. The decrease was mainly due to time slots available on the Company's "Periodic China News Package" on CCTV-4 decreasing from 90 seconds in 2010 to 60 seconds in 2011, which was partially offset by an additional RMB6.6 million production cost of the Company's TV drama.

Operating income and operating margin, as a result of the foregoing factors, for the 2011 fiscal year was RMB46.3 million (US$7.4 million), a decrease of RMB16.7 million or 26.5% compared with RMB 62.9 million in 2010. Operating margin for the year 2011 and 2010 was 21.8% and25.9% respectively.

Net income for the 2011 fiscal year was RMB15.0 million (US$2.4 million), a decrease of RMB24.9 million or 62.3% from RMB 39.9 million in 2010. The significant decrease in net income was mainly due to a RMB19.1 million special dividend-related withholding tax in the fourth quarter 2011. Basic and diluted earnings per ADS were both RMB5.94 (US$0.94) in fiscal 2011, compared with RMB15.2 in fiscal 2010. Each ADS represents 300 ordinary shares.

Cash and Cash Equivalents

As of December 31, 2011, the Company had RMB111.7 million (US$17.7 million) in cash and cash equivalents, as compared to RMB544.4 million as of December 31, 2010. The decrease was primarily due to the payment of media fee of previous years to CCTV, and the payment of RMB198.5 million in special cash dividends in the fourth quarter 2011.

Business Outlook

The Company currently expects to generate total net revenues of between RMB32 million (US $5.1 million) and RMB37 million (US$5.9 million) for the first quarter 2012. The expected range of net revenues represents a potential decrease of 27.3% to 37.1% compared with the first quarter 2011 due to fewer media resources secured by the Company and the continued pricing competition. This forecast reflects the Company's current and preliminary estimate, which is subject to change.

Conference Call

China Mass Media will host a conference call and live webcast at 8:00 a.m. Eastern Daylight Time (EDT) on March 19, 2012 (8:00 pm Beijing Time on March 19, 2012) to discuss their results.

The dial-in details for the live conference call are as follows:

- U.S. Toll Free Number: 1 866 519 4004
- U.S. Toll Number: 1 718 354 1231
- HK. Toll Number: 852 2475 0994
- China Toll Free Number: 800 819 0121
400 620 8038
Passcode: CMM

A live webcast of the conference call will be available on the investor relations section of the Company's website at: http://www.chinammia.com.

A telephone replay of the call will be available 2 hours after the conclusion of the live conference call. The dial-in details for the replay are as follows:

- U.S. Toll Free Number: 1 866 214 5335
- International dial-in
number: +1 718 354 1232

Passcode: 5664 0847

Non-GAAP Disclosure

In addition to the unaudited consolidated financial information presented in accordance with US GAAP, management uses a non-GAAP measure of operating income and net income excluding non-cash share-based compensation. Company management believes excluding the share-based compensation expenses from non-GAAP financial measures is useful for the investors' understanding of overall current financial performance. Nevertheless, the limitation of using non-GAAP financial measures excluding share-based compensation expenses is that share-based compensation expenses have been and will continue to be a significant recurring expense in the Company's business. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of unaudited non-GAAP results of operations measures to the nearest comparable GAAP measures" set forth below, which shall be read in conjunction with the preceding financial information presented in accordance with US GAAP.

Safe Harbor Statement

This document contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements about the Company's plans, objectives, expectations, strategies, intentions, or other characterizations of future events or circumstances and are generally identified by the words "anticipates", "believes", "could", "estimates", "expects", "intends", "may", "plans", "seeks", "would", and similar expressions. A number of factors could cause the Company's actual results, performance, achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Securities and Exchange Commission filings of the Company. China Mass Media does not undertake any obligation to update any forward-looking statements, except as required under applicable law.

About China Mass Media Corp.

A television advertising company in China, the Company provides a full range of advertising services, including advertising agency services, creative production services, and other value added services. The Company currently offers approximately 16 minutes of advertising time slots per day on CCTV Channels 4 and 8. CCTV is the largest television network in China. The Company has produced over 400 advertisements and has won a number of prestigious awards in China and across the world, including the "Gold World Medal" at The New York Festivals® International Television & Film Awards. For more information, please visit http://www.chinammia.com.

For further information, contact:

China Mass Media Corp.

Julie Sun

Chief Financial Officer

6/F, Tower B, Corporate Square,

35 Finance Street Xicheng District

Beijing, 100033

P. R. China

Phone: +86 10 8809 1050

Email: juliesun@chinammia.com

Christensen

Tip Fleming

Phone: +852 2117 0861

Email: tfleming@christensenir.com

Teal Willingham

Phone: +86 131 2179 3446

Email: twillingham@christensenir.com

CHINA MASS MEDIA CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED,
-------------------
Dec 31, Sep 30, Dec 31, Dec 31,
2010 2011 2011 2011
---- ---- ---- ----
RMB RMB RMB US$

Revenues:
Advertising agency services 69,441,672 43,352,565 49,603,661 7,881,228
Special event services - 14,659,600 - -
Advertisement production and 11,445,226 3,301,713 5,575,014 885,781
sponsorship services

Total Revenues 80,886,898 61,313,878 55,178,675 8,767,009
Less: Business tax (5,102,111) (3,793,799) (2,981,068) (473,644)
---------- ---------- ---------- --------
75,784,787 57,520,079 52,197,607 8,293,365
Total net revenues

Operating costs and
expenses:
Cost of revenues (33,652,251) (26,953,073) (38,385,539) (6,098,849)
Sales and marketing expenses (4,131,716) (6,733,407) (4,736,501) (752,554)
General and administrative
expenses (9,588,120) (6,965,218) (7,152,691) (1,136,448)
---------- ---------- ---------- ----------
Total operating costs and
expenses (47,372,087) (40,651,698) (50,274,731) (7,987,851)
----------- ----------- ----------- ----------

Operating income 28,412,700 16,868,381 1,922,876 305,514

Interest and investment
income 1,646,857 4,970,052 2,830,224 449,677
Other expense, net (2,413,292) (799,574) (676,746) (107,524)
---------- -------- -------- --------

Income before tax 27,646,265 21,038,859 4,076,354 647,667
Income tax expense (8,641,741) (7,021,745) (22,591,640) (3,589,450)
---------- ---------- ----------- ----------
Net income 19,004,524 14,017,114 (18,515,286) (2,941,783)
========== ========== =========== ==========

Net income available to
ordinary 19,004,524 14,017,114 (18,515,286) (2,941,783)
shareholders

Earnings per ordinary share,
basic 0.024 0.0186 (0.0247) (0.0039)
===== ====== ======= =======
Earnings per ordinary share,
diluted 0.024 0.0186 (0.0247) (0.0039)
===== ====== ======= =======
Earnings per ADS, basic 7.27 5.580 (7.41) (1.18)
=====
Earnings per ADS, diluted 7.23 5.580 (7.41) (1.18)
=====

Shares used in calculating 784,690,106 753,541,727 749,291,535 749,291,535
earnings per ordinary share,
basic

Shares used in calculating 788,060,137 753,541,727 749,291,535 749,291,535
earnings per ordinary share,
diluted

Shares used in calculating 2,615,634 2,511,806 2,497,638 2,497,638
earnings per ADS,
basic(Note)

Shares used in calculating 2,626,867 2,511,806 2,497,638 2,497,638
earnings per ADS, diluted

Note: Effective on November 28,
2011, the Company changed the ratio
of its ordinary shares to American
Depositary Shares (ADSs) from 30:1
to 300:1. There is no change to
China Mass Media's underlying
ordinary shares. After November
28, 2011, all earnings per ADS for
prior periods were retrospectively
adjusted to reflect the new ADS
ratio.

CHINA MASS MEDIA CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED,
-----------
Dec 31, Dec 31, Dec 31, Dec 31,
2009 2010 2011 2011
---- ---- ---- ----
RMB RMB RMB US$

Revenues:
Advertising agency services 397,279,413 222,298,472 185,319,862 29,444,361
Special event services - - 14,659,600 2,329,176
Advertisement production and 30,304,634 34,151,752 25,474,606 4,047,507
sponsorship services

Total Revenue 427,584,047 256,450,224 225,454,068 35,821,044
Less: Business tax (16,021,579) (13,046,869) (13,136,872) (2,087,239)
----------- ----------- ----------- ----------
411,562,468 243,403,355 212,317,196 33,733,805
Total net revenues

Operating costs and expenses
Cost of revenues (270,239,024) (127,654,373) (116,883,445) (18,570,909)
Sales and marketing expenses (17,362,444) (16,993,454) (20,138,837) (3,199,739)
General and administrative
expenses (33,193,760) (35,832,156) (29,033,088) (4,612,893)
----------- ----------- ----------- ----------
Total operating costs and
expenses (320,795,228) (180,479,983) (166,055,370) (26,383,541)
------------ ------------ ------------ -----------

Operating income 90,767,240 62,923,372 46,261,826 7,350,264

Interest and investment
income 9,494,036 5,257,307 13,747,380 2,184,239
Other income/ (expense), net 532,325 (6,765,851) (4,686,542) (744,617)
------- ---------- ---------- --------

Income before tax 100,793,601 61,414,828 55,322,664 8,789,886

Income tax expense (14,327,931) (21,522,126) (40,290,097) (6,401,452)
----------- ----------- ----------- ----------

Net income 86,465,670 39,892,702 15,032,567 2,388,434
========== ========== ========== =========

Net income available to
ordinary 86,465,670 39,892,702 15,032,567 2,388,434
shareholders

Earnings per ordinary share,
basic and diluted 0.11 0.05 0.02 0.0031
==== ==== ==== ======
Earnings per ADS, basic 32.9 15.2 5.94 0.9444
====
Earnings per ADS, diluted 32.8 15.2 5.94 0.9434
====

Shares used in calculating
earnings 788,012,500 787,181,901 758,715,460 758,715,460
per ordinary share, basic

Shares used in calculating
earnings 789,860,806 788,662,085 759,516,363 759,516,363
per ordinary share, diluted

Shares used in calculating
earnings 2,626,708 2,623,940 2,529,052 2,529,052
per ADS, basic

Shares used in calculating
earnings 2,632,869 2,628,874 2,531,721 2,531,721
per ADS, diluted

CHINA MASS MEDIA CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

Dec 31, Dec 31, Dec 31,
2010 2011 2011
---- ---- ----
RMB RMB US$
Assets
Current assets
Cash and cash equivalents 544,427,828 111,712,682 17,749,358
Restricted cash 10,000,000 - -
Short-term investments 150,000,000 193,705,911 30,776,770
Notes receivable 5,892,690 600,000 95,330
Accounts receivable, net 991,024 7,362,830 1,169,836
Prepaid expenses and other current
assets 41,794,343 93,655,505 14,880.361
Total current assets 753,105,885 407,036,928 64,671,655
----------- ----------- ----------
Non-current assets
Property and equipment, net 58,602,500 57,215,642 9.090,650
Total non-current assets 58,602,500 57,215,642 9,090,650
---------- ---------- ---------
Total assets 811,708,385 464,252,570 73,762,305
=========== =========== ==========

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable 156,494,604 70,419,236 11,188,490
Customer advances 39,311,493 28,066,802 4,459,366
Dividend payables 164,589,438 26,150,628
Accrued expenses and other current
liabilities 24,804,884 24,343,641 3,867,815
Taxes payable 29,238,039 15,874,490 2,522,202
Amount due to related parties 53,237,048 10,883,700 1,729,246
Total current liabilities 303,086,068 314,177,307 49,917,747
----------- ----------- ----------
Total Liabilities 303,086,068 314,177,307 49,917,747
----------- ----------- ----------

Shareholders' equity
Ordinary shares ($0.001 par value; 5,381,321 5,132,534 815,478
3,000,000,000,000 shares authorized;
788,332,360 shares and 751,697,920
shares issued and outstanding as of
December 31, 2010 and December 31,
2011)
Additional paid-in capital 361,736,018 104,896,262 16,666,338
Other comprehensive income - 13,900 2,208
Statutory reserves 25,000,000 25,000,000 3,972,100
Retained earnings 126,034,102 15,032,567 2,388,434
Repurchased shares to be cancelled,
at cost, (9,529,124) - -
(13,860,000 ordinary shares as of
December 31, 2010
and Nil as of December 31, 2011)

Total Shareholders' Equity 508,622,317 150,075,263 23,844,558
----------- ----------- ----------

Total Liabilities and Shareholders'
Equity 811,708,385 464,252,570 73,762,305
=========== =========== ==========

CHINA MASS MEDIA CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED
------------------
Dec 31, Sep 30, Dec 31, Dec 31,
2010 2011 2011 2011
---- ---- ---- ----
RMB RMB RMB US$

Cash flows from
operating
activities:
Net income 19,004,524 14,017,114 (18,515,286) (2,941,783)
Adjustments to
reconcile net
income to net
cash provided by /
(used in)
operating
activities:
Depreciation
expense 998,519 1,072,696 1,097,811 174,425
Investment income (1,352,712) (3,824,844) (1,804,548) (286,714)
Exchange loss 2,828,718 785,798 744,912 118,355
Share-based
compensation 185,129 438,047 264,409 42,010
(Gain) /loss on
disposal of
property and
equipment (294,175) 14,143 - -
Changes in assets
and liabilities:
Notes receivable (5,892,690) 440,000 860,000 136,640
Accounts
receivable, net 3,616,518 5,215,435 (4,297,380) (682,785)
Prepaid expense and
other current
assets 10,821,091 (58,749,687) 8,783,747 1,395,597
Amount due from a
related party - - - -
Accounts payable 30,821,414 (104,450,980) (15,997,768) (2,541,789)
Customer advances 1,820,668 16,964,850 (22,372,020) (3,554,556)
Accrued expenses
and other current
liabilities 3,971,639 (32,056) 1,123,991 178,584
Taxes payable 6,490,390 4,166,500 (3,412,805) (542,240)
Amount due to
related parties (47,129,920) (34,371,353) - -
----------- ----------- --- ---
Net cash provided
by/ (used in)
operating
activities 25,889,113 (158,314,337) (53,524,937) (8,504,256)
---------- ------------ ----------- ----------

Cash flows from
investing
activities:
Net proceeds from
redemption /
(purchase)of
short-term
investments 140,000,000 182,317,254 220,000,000 34,954,480
Purchase of
property and
equipment - (707,707) (60,900) (9,676)
Proceeds from
disposal of
property and
equipment 245,812 783 - -
Decrease in
restricted cash (10,000,000) - - -
Proceeds from
investment income 1,027,233 3,824,844 1,804,548 286,714
--------- --------- --------- -------
Net cash provided
by investing
activities 131,273,045 185,435,174 221,743,648 35,231,518
----------- ----------- ----------- ----------

- - (198,548,602) (31,546,196)
Cash flows from
financing
activities:

Dividend
distribution
Repurchase of
ordinary shares to
be cancelled (9,529,124) (2,986,471) (919,799) (146,141)
Net cash used in
financing
activities (9,529,124) (2,986,471) (199,468,401) (31,692,337)
---------- ---------- ------------ -----------
(2,828,718) (785,797) (2,362,825) (375,415)
Effect of exchange
rate changes on
cash and cash
equivalents
Net increase /
(decrease) in cash
and cash
equivalents 144,804,316 23,348,569 (33,612,515) (5,340,490)
----------- ---------- ----------- ----------
Cash and cash
equivalents at
beginning of the
period 399,623,512 121,976,628 145,325,197 23,089,848
=========== =========== =========== ==========
Cash and cash
equivalents at end
of the period 544,427,828 145,325,197 111,712,682 17,749,358
=========== =========== =========== ==========

CHINA MASS MEDIA CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED
----------
Dec 31, Dec 31, Dec 31, Dec 31,
2009 2010 2011 2011
---- ---- ---- ----
RMB RMB RMB US$

Cash flows from
operating
activities:
Net income 86,465,670 39,892,702 15,032,567 2,388,434
Adjustments to
reconcile net income
to net
cash provided by /
(used in) operating
activities:
Depreciation expense 3,074,157 3,324,151 4,209,314 668,793
Investment income (5,994,921) (3,819,737) (10,038,680) (1,594,986)
Exchange loss 363,439 7,628,472 4,801,428 762,870
Share-based
compensation 2,139,736 1,478,226 1,691,285 268,718
Disposal of property
and equipment - (281,912) (39,622) (6,295)
Changes in assets and
liabilities:
Notes receivable (1,937,450) (3,955,240) 5,292,690 840,924
Accounts receivable,
net 13,991,625 (615,456) (6,371,806) (1,012,378)
Prepaid expense and
other current assets (29,448,793) 30,701,202 (61,148,092) (9,715,453)
Amount due from
related parties 1,000,000 - - -
Accounts payable (279,638,966) 106,048,144 (86,075,368) (13,675,999)
Customer advances (54,765,336) 18,654,346 (11,244,691) (1,786,601)
Accrued expenses and
other current
liabilities 4,010,959 7,028,835 491,127 78,032
Taxes payable (857,216) 3,279,672 (4,142,306) (658,146)
Amount due to related
parties (87,952,669) (47,500,000) (42,366,502) (6,731,359)
----------- ----------- ----------- ----------
Net cash provided by/
(used in) operating
activities (349,549,765) 161,863,405 (189,908,656) (30,173,446)
------------ ----------- ------------ -----------

Cash flows from
investing
activities:
Net proceeds from
redemption /
(purchase) of short-
term 420,000,000 (70,000,000) (44,151,997) (7,015,046)
investments with
terms of three
months or less
Purchase of property
and equipment (23,451,242) (32,807,388) (2,930,414) (465,596)
Proceeds from
disposal of property
and equipment - 301,300 147,579 23,448
Decrease/ (increase)
in restricted cash - (10,000,000) 10,000,000 1,588,840
Proceeds on sales of
investment 6,602,921 3,450,093 10,418,408 1,655,318,
--------- --------- ---------- ----------
Net cash provided by/
(used in) investing
activities 403,151,679 (109,055,995) (26,516,424) (4,213,036)
----------- ------------ ----------- ----------

Cash flows from
financing
activities:
Proceeds from the
issuance of ordinary
shares - - 687,751 109,273
Cash distributed in
connection with the
Reorganization (15,000,000) - - -
Dividends distributed (96,335,115) - (198,548,602) (31,546,196)
Repurchase ordinary
shares to be
cancelled (9,529,124) (12,476,159) (1,982,262)
---------- ----------- ----------
Net cash used in
financing activities (111,335,115) (9,529,124) (210,337,010) (33,419,185)
------------ ---------- ------------ -----------
(378,046) (7,628,472) (5,953,056) (945,845)
Effect of change rate
changes on cash and
cash equivalents

Net increase /
(decrease) in cash
and cash equivalents (58,111,247) 35,649,814 (432,715,146) (68,751,512)
Cash and cash
equivalents at
beginning of the
year 566,889,261 508,778,014 544,427,828 86,500,870
----------- ----------- ----------- ----------
Cash and cash
equivalents at end
of the year 508,778,014 544,427,828 111,712,682 17,749,358
=========== =========== =========== ==========

CHINA MASS MEDIA CORP.

SELECTED OPERATING DATA

THREE MONTHS ENDED
------------------
Dec 31, Sep 30, Dec 31,
2010 2011 2011

Number of programs
secured during the
period 35 3 3(1)
Total advertising time
obtained (seconds) 2,676,240 224,400 224,220((2))
Total advertising time
sold (seconds) 212,040 104,310 162,315((3))

(1) The Company ceased to be the advertising agency of CCTV-E and CCTV-F from July 1, 2011. The number of programs secured
and total advertising time obtained decreased accordingly.

(2) Represents the total amount of time during regular television programs secured through the Company's contracts with CCTV-
1, CCTV-2 and CCTV-4 for the period ended December 31, 2011.

(3) During the three-month periods ended December 31, 2010, the Company has sold 39,120 seconds of advertisements in CCTV-
E and CCTV-F. No advertising time slots in CCTV-E and CCTV-F were sold during the period of September 30, 2011 and
December 31, 2011.

YEAR ENDED
----------
Dec 31, Dec 31, Dec 31,
2009 2010 2011

Number of programs
secured during the
period 41 35 3(4)
Total advertising time
obtained (seconds) 11,660,760 10,515,960 5,581,470(5)
Total advertising time
sold (seconds) 2,127,473 578,275 542,700(6)

(4) The Company ceased to be the advertising agency of CCTV-E and CCTV-F from July 1, 2011. The number of programs secured
and total advertising time obtained decreased from 35 to 3 accordingly.

(5) Represents the total amount of time during regular television programs secured through the Company's contracts with CCTV,
including 889,950 seconds from CCTV-1, CCTV-2 and CCTV-4 and 4,691,520 seconds from CCTV-E and CCTV-F.

(6) During the year ended December 31, 2009, December 31, 2010 and December 31, 2011, the company has sold 1,038,840 seconds,
73,860 and 32,800 seconds of advertisements in CCTV-E and CCTV-F.

RECONCILIATIONS OF UNAUDITED NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES (*)

Three months ended December 31,
2010 Three months ended December 31, 2011
-------------------------------- ------------------------------------
GAAP Result Adjustment NON-GAAP Result GAAP Result Adjustment NON-GAAP Result
RMB RMB RMB RMB RMB RMB

Operating
income 28,412,700 185,129 28,597,829 1,922,876 264,409 2,187,285

Net income 19,004,524 185,129 19,189,653 (18,515,286) 264,409 (18,250,877)

Year ended December 31, 2010 Year ended December 31, 2011
---------------------------- ----------------------------
GAAP Result Adjustment NON-GAAP Result GAAP Result Adjustment NON-GAAP Result
RMB RMB RMB RMB RMB RMB

Operating
income 62,923,372 1,478,227 64,401,599 46,261,826 1,691,285 47,953,111

Net income 39,892,702 1,478,227 41,370,929 15,032,567 1,691,285 16,723,852

(*)The adjustment is for share-
based compensation expenses.
Non-GAAP Disclosure

In addition to the unaudited consolidated financial information presented in accordance with US GAAP, management uses a non-GAAP measure of operating income and net income excluding non-cash share-based compensation. Company management believes excluding the share-based compensation expenses from non-GAAP financial measures is useful for the investors' understanding of overall current financial performance. Nevertheless, the limitation of using non-GAAP financial measures excluding share-based compensation expenses is that share-based compensation expenses have been and will continue to be a significant recurring expense in the Company's business.

The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of unaudited non-GAAP results of operations measures to the nearest comparable GAAP measures" set forth above, which shall be read in conjunction with the preceding financial information presented in accordance with US GAAP.

SOURCE China Mass Media Corp.

China Mass Media Corp.

Web Site: http://www.chinammia.com

-------
Profile: intent