Charm Communications Inc. Announces Unaudited Fourth Quarter and Full Year 2012 Results

Charm Communications Inc. Announces Unaudited Fourth Quarter and Full Year 2012 Results

Full year 2012 agency business revenues up 34.9% year over year, digital revenues up 80% year over year

Full year 2012 agency business revenue extraction rate up to 6.5% from 5.4% in 2011

BEIJING, March 18, 2013 /PRNewswire-FirstCall/ -- Charm Communications Inc. (NASDAQ: CHRM) ("Charm" or the "Company"), a leading advertising agency in China, today announced its unaudited financial results for the fourth quarter ended December 31, 2012.

Fourth Quarter 2012 Highlights


-- Turnover declined 20.9% year over year to $201.6 million in the fourth
quarter of 2012
-- Revenues declined 41.3% year over year to $47.1 million in the fourth
quarter of 2012
-- Revenues for Charm's advertising agency business grew 6.5% year over
year to $12.5 million in the fourth quarter of 2012
-- Revenues for Charm's media investment management business declined 51.2%
year over year to $32.0 million in the fourth quarter of 2012
-- Gross profit declined 54.4% year over year to $13.0 million in the
fourth quarter of 2012
-- Net income declined 126.5% year over year to a net loss of $4.2 million
in the fourth quarter of 2012
-- Non-GAAP net income, which excludes share-based compensation expenses,
amortization of intangible assets and net change in fair value of
consideration payable and call option, declined 122.0% year over year to
a net loss of $3.8 million in the fourth quarter of 2012
Full Year 2012 Highlights


-- Turnover declined 5.8% year over year to $823.9 million in the full year
2012
-- Revenues declined 40.9% year over year to $165.5 million in the full
year 2012
-- Revenues for Charm's advertising agency business grew 34.9% year over
year to $46.2 million in the full year 2012
-- Revenues for Charm's media investment management business declined 52.8%
year over year to $112.8 million in the full year 2012
-- Gross profit declined 42.8% year over year to $48.4 million in the full
year 2012
-- Net income declined 105.2% year over year to a net loss of $2.5 million
in the full year 2012
-- Non-GAAP net income, which excludes share-based compensation expenses,
amortization of intangible assets and net change in fair value of
consideration payable and call option, declined 99.1% year over year to
a net loss of $0.5 million in the full year 2012
"2012 presented a more challenging operating environment than we encountered in previous years, particularly with respect to our principal media business, which was affected by regulatory changes in the satellite TV business as well as by soft overall demand in the marketplace," said Mr. He Dang, Charm's founder, chairman and chief executive officer. "At the same time, however, we made excellent progress with our agency business, which continued to outperform the market. Within that segment, our digital turnover grew 80% year over year and we expect our digital business to continue to grow rapidly as we consolidate Charm Interactive and Charm Click under the leadership of our vice president, Johnny Zhu. Although we do expect current market softness to continue in 2013, it will not hinder us in building Charm into a full-service, integrated advertising company."

Mr. Wei Zhou, Charm's chief financial officer, added, "We delivered on our revenue guidance due in large part to our strong agency business, and in terms of gross billings, we remain in a healthy market position. However, our media business margins did not ramp up as quickly as we had expected, primarily due to the satellite TV operating environment. Additionally, our net income was impacted by a bad debt provision. We will remain conservative with respect to our media business going forward but will continue to invest in key talent and assets to grow our overall business."

Fourth Quarter 2012 Results

Turnover (non-GAAP)



US$ mm 4Q12 4Q11 3Q12 Y-o-Y % Q-o-Q%
------ ---- ---- ---- ------ -----

Total turnover
(non-GAAP) $201.6 $254.8 $216.5 -20.9% -6.9%
-------------- ------ ------ ------ ----- ----

Advertising
agency $169.6 $189.2 $182.5 -10.4% -7.1%
----------- ------ ------ ------ ----- ----

Media investment
management $32.0 $65.6 $34.1 -51.2% -6.0%
---------------- ----- ----- ----- ----- ----

Branding and
identity
services N/A N/A N/A N/A N/A
------------ --- --- --- --- ---
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 20.9% year-over-year decrease in total turnover was mainly due to the decrease in the media investment business, which was a result of the Company dropping several media assets at the beginning of 2012 to modify its media inventory mix and to reduce risk following regulatory changes in the satellite TV market. The 6.9% quarter-over-quarter decrease in turnover was largely attributed to seasonal factors.

The 10.4% year-over-year and 7.1% quarter-over-quarter decrease in the advertising agency business ("agency business") turnover was mainly due to the decrease in advertising spending from existing agency clients who had reallocated portions of their advertising budgets to the third quarter because of the 2012 Summer Olympics.

The revenue extraction rate, which is defined as revenue divided by turnover, was 7.4% for the agency business, compared to 6.2% for the fourth quarter of 2011 and 7.5% for the third quarter of 2012. The year-over-year increase was mainly due to increased advertising spending on non-CCTV media platforms, such as the Internet and satellite channels, all of which exhibited higher extraction rates relative to those associated with CCTV. The slight quarter-over-quarter decrease was due to Olympics-related spending in the third quarter. The Company 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 and Charm Click.

The 51.2% year-over-year decrease in turnover (equivalent to GAAP revenue) for the media investment management business ("principal media business"), which operates under the Shangxing Media brand, was mainly due to a slowdown in the broader economic environment and the dropping of several media assets at the beginning of 2012 following the aforementioned regulatory changes. The 6.0% quarter-over-quarter decrease in turnover in the principal media business was mainly because of weaker demand from advertisers in the fourth quarter.

Revenues



US$ mm 4Q12 4Q11 3Q12 Y-o-Y % Q-o-Q%
------ ---- ---- ---- ------ -----

Total revenues $47.1 $80.3 $48.8 -41.3% -3.5%
-------------- ----- ----- ----- ----- ----

Advertising agency $12.5 $11.7 $13.6 6.5% -8.3%
------------------ ----- ----- ----- --- ----

Media investment
management $32.0 $65.6 $34.1 -51.2% -6.0%
---------------- ----- ----- ----- ----- ----

Branding and
identity services $2.6 $3.0 $1.1 -13.5% 129.2%
------------------ ---- ---- ---- ----- -----
The changes in agency and principal media business revenues are consistent with the changes in turnover and the revenue extraction rate. The quarter-over-quarter increase in branding and identity services was primarily due to increased client demand for creative services in the fourth quarter of 2012, while the year-over-year decrease in branding and identity services was primarily due to an overall decrease in client demand for creative services.

Gross Profit



US$ mm 4Q12 4Q11 3Q12 Y-o-Y % Q-o-Q%
------ ---- ---- ---- ------ -----

Cost of revenues $34.1 $51.8 $34.5 -34.1% -1.0%
---------------- ----- ----- ----- ----- ----

Gross profit $13.0 $28.5 $14.4 -54.4% -9.5%
------------ ----- ----- ----- ----- ----

Gross margin 27.6% 35.5% 29.4%
------------ ---- ---- ----
Charm mainly attributes the year-over-year decrease in cost of revenues to the dropping of several media assets in order to modify the Company's media inventory mix following the aforementioned regulatory changes. The year-over-year decline in gross profit was due to a lower contribution from the principal media business. Cost of revenues was relatively flat quarter over quarter, while the Company's gross profit decreased 9.5% quarter over quarter as a result of lower revenues from the agency and media businesses.

Operating Profit (Loss)



US$ mm 4Q12 4Q11 3Q12 Y-o-Y % Q-o-Q%
------ ---- ---- ---- ------ -----

Total operating expenses $17.2 $13.0 $14.8 32.2% 16.0%
------------------------ ----- ----- ----- ---- ----

Selling and marketing $11.3 $9.6 $9.4 17.0% 19.9%
--------------------- ----- ---- ---- ---- ----

General and administrative $5.9 $3.4 $5.4 75.9% 9.2%
-------------------------- ---- ---- ---- ---- ---

Operating profit (loss) -$3.5 $15.5 -$0.2 -122.8% 1,738.9%
---------------------- ----- ----- ----- ------ -------
The 17.0% year-over-year increase and 19.9% quarter-over-quarter increase in selling and marketing expenses were primarily due to increased headcount, including executive hires within the Company's agency business.

The 75.9% year-over-year increase in general and administrative expenses was mainly attributed to a bad debt provision of $2.7 million in the fourth quarter of 2012.

Net Income (Loss)



US$ mm 4Q12 4Q11 3Q12 Y-o-Y % Q-o-Q%
------ ---- ---- ---- ------ -----

Non-GAAP net
income (loss)* -$3.8 $17.1 $0.8 -122.0% -555.3%
--------------- ----- ----- ---- ------ ------

Net income
(loss) -$4.2 $15.7 $0.1 -126.5% -4,900.0%
---------- ----- ----- ---- ------ --------

Basic net
income (loss)
per ADS (US$) -$0.13 $0.38 -$0.01
-------------- ------ ----- ------

Fully diluted
net income
(loss) per ADS
(US$) -$0.13 $0.36 -$0.01
--------------- ------ ----- ------
*The Company's non-GAAP net income (loss) excludes share-based compensation expenses, amortization of intangible assets and net change in fair value of consideration payable and call option.

Each American depositary share ("ADS") represents two common shares. The weighted average number of shares used to compute basic net loss per ADS for the fourth quarter of 2012 was 38,269,369. As of December 31, 2012, 38,334,787 ADSs were issued and outstanding.

Cash Flows and Cash Position

Net cash flow from operations for the fourth quarter of 2012 was negative $1.1 million. As of December 31, 2012, the Company had cash and cash equivalents of $116.6 million, compared to $117.9 million at the end of the third quarter of 2012.

Customers

In the fourth quarter of 2012, Charm's agency business had 174 advertisers, compared to 167 advertisers in the third quarter of 2012 and 148 advertisers in the fourth quarter of 2011.

In the fourth quarter of 2012, Charm's principal media business had 203 advertisers, compared to 231 advertisers in the third quarter of 2012 and 297 advertisers in the fourth quarter of 2011.

Employee Headcount

As of December 31, 2012, the Company had 813 employees, compared to 842 employees as of September 30, 2012.

Full Year 2012 Results

Turnover



US$ mm FY12 FY11 Y-o-Y %
------ ---- ---- ------

Total turnover (non-GAAP) $823.9 $874.5 -5.8%
------------------------ ------ ------ ----

Advertising agency $711.1 $635.7 11.9%
------------------ ------ ------ ----

Media investment management $112.8 $238.8 -52.8%
--------------------------- ------ ------ -----

Branding and identity services NA NA NA
------------------------------ --- --- ---
Revenues



US$ mm FY12 FY11 Y-o-Y %
------ ---- ---- ------

Total revenues $165.5 $280.1 -40.9%
-------------- ------ ------ -----

Advertising agency $46.2 $34.3 34.9%
------------------ ----- ----- ----

Media investment management $112.8 $238.8 -52.8%
--------------------------- ------ ------ -----

Branding and identity services $6.5 $7.0 -7.7%
------------------------------ ---- ---- ----
Gross Profit



US$ mm FY12 FY11 Y-o-Y %
------ ---- ---- ------

Cost of revenues $117.1 $195.6 -40.1%
---------------- ------ ------ -----

Gross profit $48.4 $84.5 -42.8%
------------ ----- ----- -----

Gross margin 29.2% 30.2%
------------ ---- ----
Operating Profit (Loss)



US$ mm FY12 FY11 Y-o-Y %
------ ---- ---- ------

Total operating expenses $52.3 $36.8 41.9%
------------------------ ----- ----- ----

Selling and marketing $36.0 $27.1 32.8%
--------------------- ----- ----- ----

General and administrative $16.2 $9.7 67.3%
-------------------------- ----- ---- ----

Operating profit (loss) -$3.2 $47.7 -106.8%
---------------------- ----- ----- ------
Net Income (Loss)



US$ mm FY12 FY11 Y-o-Y %
------ ---- ---- ------

Non-GAAP Net income* $0.5 $51.7 -99.1%
------------------- ---- ----- -----

Net income (loss) -$2.5 $48.0 -105.2%
---------------- ----- ----- ------

Basic net income
(loss) per ADS (US$) -$0.12 $1.18
--------------------- ------ -----

Fully diluted net
income (loss) per ADS
(US$) -$0.12 $1.12
---------------------- ------ -----
*The Company's non-GAAP net income (loss) excludes share-based compensation expenses, amortization of intangible assets and net change in fair value of consideration payable and call option.

Each ADS represents two common shares. The weighted average number of shares used to compute basic net loss per ADS for the full year 2012 was 38,749,125.

Recent Business Developments

In February 2013, Mr. Johnny Honggang Zhu, the general manager of Charm Click, was promoted to vice president of Charm to lead Charm Click and assume a new role as head of Charm Interactive's business in northern China.

In the fourth quarter of 2012, Charm Advertising won the TV business for Brilliance Auto, a large-scale automotive manufacturer in China, and Jian Nan Chun, a leading maker of traditional Chinese wines.

In the fourth quarter of 2012, Charm Advertising again secured the number one position in terms of successful bidding volume at the annual CCTV prime-time auction, which was held on November 18, 2012. The total value of auctioned and pre-sold advertising resources for CCTV hit an all time high of RMB15.88 billion, an increase of 11.4% compared to the previous year. Charm has held the position of top bidder for ten straight years.

Business Outlook



US$ mm 1Q13E
------ -----

Non-GAAP net loss* -$1.25 to -$0.75
----------------- ----------------
*The Company's non-GAAP net income (loss) excludes share-based compensation expenses, amortization of intangible assets and net change in fair value of consideration payable and call option.

The Company bases these estimates on a foreign exchange rate of RMB6.30 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 ("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 (loss)," which is defined as GAAP net income (loss) excluding stock-based compensation expenses, amortization of intangible assets and net change in fair value of consideration payable and call option.

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 U.S. GAAP, the Company also provides non-GAAP financial measures, including "turnover" and "non-GAAP net income (loss)." 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 (8 p.m. Beijing/Hong Kong Time) on Tuesday, March 19, 2013.

Dial-in details for the conference call are as follows:



U.S.: +1-718-354-1231

International: +65-6723-9381

United Kingdom: +44-20-3059-8139

Hong Kong: +852-2475-0994

Passcode: 22022244
A replay of the call will be available from 11 a.m. March 19, 2013 until March 26, 2013 U.S. Eastern Time. Dial-in details for the replay are as follows:



International: +61-2-8199-0299

Passcode: 22022244
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. (NASDAQ: CHRM) is a leading advertising agency group in China that offers integrated advertising services with particular focus on television and the internet. Charm's integrated advertising services include full media planning and buying, as well as creative and branding services. Charm has built a full service digital advertising platform, which offers digital campaign capabilities across all key digital media, including search engines, display portals, online video sites and social networking services. Charm also secures advertising inventory and other advertising rights, such as sponsorships and branded content, from premium media networks and resells to clients as part of its integrated media offerings. Charm's clients include China's top domestic brands, as well as some major international brands, across a wide range of industries. Since 2003 Charm has been the top agency every year for China's leading television network, China Central Television (CCTV). 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. Jenny Wang

IR Department

Charm Communications Inc.

Phone: +86-10-8556-2527

Email: ir@charmgroup.cn

In the United States:

Ms. Jessica Barist Cohen

Ogilvy Financial, New York

Phone: +1-646-460-9989

Email: chrm@ogilvy.com







Charm Communications Inc.
Unaudited Condensed Consolidated Balance Sheets

(Amounts in thousands of U.S. dollars)


31-Dec-12 30-Sep-12 31-Dec-11

ASSETS

Current Assets

Cash and cash equivalents 116,589 117,901 139,406

Notes receivable 6,993 13,084 28,880

Prepaid expenses 93,838 68,002 106,393

Deposits 24,723 24,085 25,730

Accounts receivable 89,964 115,314 103,920

Amount due from related parties 1,938 3,000 3,494

Deferred tax assets 191 125 125

Other current assets 4,021 4,838 2,139
----- ----- -----

Total current assets 338,257 346,349 410,087
------- ------- -------


Fixed assets, net 7,638 7,100 4,344

Intangible assets, net 2,375 2,616 3,397

Investments under equity method 2,133 1,491 1,445

Goodwill 4,379 4,341 4,335

Other investments 803

Other non-current assets 3,045 1,721 1,009


Total non-current assets 20,373 17,269 14,530
------ ------ ------


TOTAL ASSETS 358,630 363,618 424,617
======= ======= =======


LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

Current Liabilities

Accounts payable (of which 53, 648 and
687, as of December 31, 38,855 46,061 63,141
2012, September 30, 2012 and December
31,2011 of the
consolidated VIE without recourse to
the Company, respectively)

13,310 14,356 4,460
Amounts due to related parties (of
which 313, 310 and nil as of
December 31, 2012, September 30, 2012
and December 31,2011 of
the consolidated VIE without recourse
to the Company, respectively)

56,343 53,833 85,720
Advances from customers (of which
1,408, 1,666 and 12,028 as of
December 31, 2012, September 30, 2012
and December 31,2011 of
the consolidated VIE without recourse
to the Company, respectively)

18,912 14,548 22,876
Accrued expenses and other current
liabilities (of which 3,246,
3,473 and 4,411 as of December 31,
2012, September 30, 2012 and
December 31,2011 of the consolidated
VIE without recourse to the
Company, respectively)

2,507 2,817 2,813
Consideration payable (of which nil as
of December 31, 2012,
September 30, 2012 and December 31,2011
of the consolidated VIE
without recourse to the Company,
respectively)
---

Total current liabilities 129,927 131,615 179,010
------- ------- -------


Consideration payable (of which nil as
of December 31, 2012, 1,327 2,479 2,476
September 30, 2012 and December 31,
2011 of the consolidated VIE
without recourse to the Company,
respectively)
---

Total non-current liabilities 1,327 2,479 2,476
----- ----- -----


Total liabilities 131,254 134,094 181,486
------- ------- -------


Redeemable noncontrolling
interest 5,434 5,137 4,723


Equity:

Charm Communications Inc.'s equity

Ordinary shares 8 8 8

Additional paid-in capital 100,850 100,782 116,637

Retained earnings 101,225 106,285 105,930

Accumulated other comprehensive income 15,652 13,695 13,384
------ ------ ------

Total Charm Communications
Inc. shareholders' equity 217,735 220,770 235,959
------- ------- -------

Noncontrolling interest 4,207 3,617 2,449
----- ----- -----

Total equity 221,942 224,387 238,408
------- ------- -------


TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING

INTEREST AND EQUITY 358,630 363,618 424,617
======= ======= =======






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 31 December 31 September 30
2012 2011 2012

(Unaudited) (Unaudited) (Unaudited)


Revenues:

Media investment management 32,042 65,618 34,073

Advertising agency 12,512 11,745 13,646

Branding and identity services 2,578 2,979 1,125
----- -----

Total revenues 47,132 80,342 48,844
------ ------ ------


Cost of revenues:

Media investment management 31,159 48,861 32,301

Advertising agency 1,337 1,207 1,371

Branding and identity services 1,624 1,739 796
----- ---

Total cost of revenues: 34,120 51,807 34,468
------ ------ ------

Gross profit 13,012 28,535 14,376
------ ------ ------


Operating expenses:

Selling and marketing expenses 11,286 9,643 9,413

General and administrative expenses 5,891 3,350 5,393

Total operating expenses 17,177 12,993 14,806
------ ------ ------

Gain(Loss) from equity method investees 307 (5) 237

Net change in fair value of consideration payable and call option 309 - -
--- ---

Operating profit (loss) (3,549) 15,537 (193)
------ ------ ----


Interest income 568 663 472


Income before income tax expense (2,981) 16,200 279

Income tax expense 1,195 465 192
--- ---

Net income (loss) (4,176) 15,735 87
------ ------ ---

Net income attributable to noncontrolling interest 884 944 597

Net income (loss) attributable to Charm Communications Inc. (5,060) 14,791 (510)
------ ------ ----


Net income(loss) attributable to Charm Communications Inc. shareholders per ADS:

Basic (0.13) 0.38 (0.01)

Diluted (0.13) 0.36 (0.01)

Shares used in computation of net income(loss) per ADS:

Basic 38,269,369 39,075,906 38,765,702

Diluted 38,269,369 40,976,069 38,765,702


Notes:

Share-based compensation expenses during the period included in:

Cost of revenues - 1 -

Selling and marketing expenses 318 571 323

General and administrative expenses 150 303 156
--- --- ---

Total 468 875 479
--- --- ---



For the three months ended,
---------------------------

December 31 December 31 September 30
2012 2011 2012

(Unaudited) (Unaudited) (Unaudited)


Net income (loss) (4,176) 15,735 87

Other comprehensive income (loss):

Change in cumulative foreign exchange translation adjustment 1,957 2,938 2,404
----- ----- -----

Comprehensive income (loss) (2,219) 18,673 2,491
------ ------ -----


Less: Comprehensive income attributable to non-controlling interest (590) (754) (688)

Less: Comprehensive income attributable to redeemable non-controlling interest (297) (190) (146)
---- ---- ----


Comprehensive income (loss) attributable to Charm Communications Inc. (3,106) 17,729 1,657
------ ------ -----






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, 2012 December 31, 2011
----------------- -----------------

(Unaudited) (Audited)


Revenues:

Media investment management 112,786 238,837

Advertising agency 46,234 34,285

Branding and identity services 6,478 7,016
-----

Total revenues 165,498 280,138
------- -------


Cost of revenues:

Media investment management 107,976 187,878

Advertising agency 4,864 3,737

Branding and identity services 4,303 4,015
-----

Total cost of revenues: 117,143 195,630
------- -------

Gross profit 48,355 84,508
------ ------


Operating expenses:

Selling and marketing expenses 36,026 27,119

General and administrative expenses 16,234 9,704

Total operating expenses 52,260 36,823
------ ------

Gain(Loss) from equity method investees 350 2

Net change in fair value of consideration payable and call option 309


Operating profit (loss) (3,246) 47,687
------ ------


Interest income 2,255 2,497

Other expense 13 -
---


Income (loss) before income tax expense (1,004) 50,184

Income tax expense 1,472 2,158
-----

Net income (loss) (2,476) 48,026
------ ------

Net income attributable to noncontrolling interest 2,229 1,879

Net income (loss) attributable to Charm Communications Inc. (4,705) 46,147
------ ------


Net income(loss) attributable to Charm Communications Inc. shareholders per ADS:

Basic (0.12) 1.18

Diluted (0.12) 1.12

Shares used in computation of net income(loss) per ADS:

Basic 38,749,125 39,133,419

Diluted 38,749,125 41,056,882


Notes:

(1) Share-based compensation expenses during the period included in:

Cost of revenues 1 4

Selling and marketing expenses 1,506 1,979

General and administrative expenses 707 1,086
--- -----

Total 2,214 3,069
----- -----




For the twelve months ended,
----------------------------

December 31, 2012 December 31, 2011

(Unaudited) (Audited)


Net income (loss) (2,476) 48,026

Other comprehensive income (loss):

Change in cumulative foreign exchange translation adjustment 2,268 9,065
----- -----

Comprehensive income (loss) (208) 57,091
---- ------


Less: Comprehensive income attributable to non-controlling interest (1,758) (1,572)

Less: Comprehensive income attributable to redeemable non-controlling interest (711) (4,723)
---- ------


Comprehensive income (loss) attributable to Charm Communications Inc. (2,677) 50,796
------ ------






Reconciliation from Net income (loss) to Non-GAAP net income (loss):
(Amounts in thousands of U.S. dollars)

For the three months ended,
---------------------------

December 31 December 31 September 30
2012 2011 2012


Net income (loss) (4,176) 15,735 87


Add back share-based compensation expenses

during the related periods 468 875 479


Add back amortization on intangible assets 261 443 259


Deduct net change in fair value of consideration payable and call option (309)
----


Non-GAAP net income (loss) (3,756) 17,053 825
------ ------ ---



For the twelve months ended,
----------------------------

December 31, 2012 December 31, 2011


Net income (loss) (2,476) 48,026


Add back share-based compensation expenses

during the related periods 2,214 3,069


Add back amortization on intangible assets 1,041 650


Deduct net change in fair value of consideration payable and call option (309)
----


Non-GAAP net income 470 51,745
--- ------



Reconciliation from Turnover (non-GAAP) to USGAAP Revenues:
(Amounts in thousands of U.S. dollars)


For the three months ended,
---------------------------

December 31 December 31 September 30
2012 2011 2012

Turnover (non-GAAP):

Media investment management 32,042 65,618 34,073

Advertising agency 169,570 189,178 182,457

Branding and identity services N/A N/A N/A
--- --- ---

Total turnover 201,612 254,796 216,530
------- ------- -------


Extracted rate:

Media investment management 100.0% 100.0% 100.0%

Advertising agency 7.4% 6.2% 7.5%

Branding and identity services N/A N/A N/A


USGAAP Revenue:

Media investment management 32,042 65,618 34,073

Advertising agency 12,512 11,745 13,646

Branding and identity services 2,578 2,979 1,125
----- ----- -----

Total revenue 47,132 80,342 48,844
------ ------ ------


For the twelve months ended,
----------------------------

December 31, December 31,
2012 2011


Turnover (non-GAAP):

Media investment management 112,786 238,837

Advertising agency 711,093 635,654

Branding and identity services N/A N/A
--- ---

Total turnover 823,879 874,491
------- -------


Extracted rate:

Media investment management 100.0% 100.0%

Advertising agency 6.5% 5.4%

Branding and identity services N/A N/A


USGAAP Revenue:

Media investment management 112,786 238,837

Advertising agency 46,234 34,285

Branding and identity services 6,478 7,016
----- -----

Total revenue 165,498 280,138
------- -------






SOURCE Charm Communications Inc.

Charm Communications Inc.

Web Site: http://ir.charmgroup.cn


-------
Profile: intent