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China Broadband Announces Second Quarter 2008 Financial Results

Aug 25, 2008

 

China Broadband, Inc. ("China Broadband" or "The Company") (OTCBB: CBBD) announced its unaudited financial results for the second quarter of 2008 which ended June 30, 2008.

The Company, through its indirect subsidiary in the People's Republic of China ("PRC" or "China"), Jinan Zhong Kuan Dian Guang Information Co. Ltd. ("Jinan Broadband"), is a provider of cable and wireless broadband services in the Jinan region of China, and, as of June 2008, operates a China-based publisher of digital and analog television program guides, newspapers and entertainment magazines in the Shandong Province of China.

Second Quarter of 2008 Results (Unaudited):

Revenue for the second quarter of 2008 was $1.05 million as compared to $0.7 million for the same period last year, an increase of $0.3 million or 47%. The increase is primarily due to the increased number of paying subscribers during the second quarter of 2008 of 59,000, as compared to the 45,000 paying subscribers during the second quarter of 2007. Revenues were derived from internet and cable services provided to China-based internet and cable modem customers.

"We are pleased to see continued growth in our broadband business," stated Marc Urbach, President of China Broadband, Inc. "We expect robust revenues as we increase our subscriber base, integrate our media assets, and acquire licenses to operate our cable broadband business in other regions."

Gross profit for the second quarter of 2008 was $0.5 million, as compared to $0.3 million for the same period last year, an increase of approximately $0.2 million or 60%. Gross margin for the second quarter of 2008 was 48.4%, as compared to 44.2% for the same period last year. Operating expenses for the second quarter of 2008 were $1.2 million, compared to $1.0 million for the same period last year. The increase in expenses came primarily from $0.6 million in depreciation on the property, plant and equipment at the Company's Jinan broadband subsidiary, in addition to costs associated with expanding the organization to accommodate future growth, including salaries and personnel costs of approximately $0.18 million and professional fees of $0.16 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the three months ended June 30, 2008 was $30,539.

Net income for the second quarter of 2008 was $0.7 million or $0.01 per diluted share, compared to a net loss of $0.5 million or $0.01 per share, in the second quarter of 2007 based on 60.6 million and 49.7 million diluted shares, respectively.

Six Months Results

Revenue for the six months ended June 30, 2008 was $2.05 million as compared to $0.7 million for the same period last year. Gross profit for the six months ended June 30, 2008 was $1.2 million, as compared to $0.3 million for the same period last year. Gross margin for the six months ended June 30, 2008 was 56.4%, as compared to 44.2% for the same period last year. Operating expenses for the six months ended June 30, 2008 were $2.6 million, compared to $1.3 million for the same period last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the six months ended June 30, 2008 was $43,248.

Net income for the six months ended June 30, 2008 was $58,867 or $0.00 per diluted share, compared to a net loss of $0.85 million or $0.02 per share for the same period last year, based on 63.1 million and 42.9 million diluted shares, respectively.

Liquidity and Capital Resources:

As of June 30, 2008 the Company had $4.0 million of cash on hand and working capital of $0.9 million and $6.4 million in current liabilities.

The preceding financial results do not include revenues from the recently acquired Shandong Radio & Broadcasting Newspaper Group (the "Shandong Group").

Mr. Urbach continued, "We intend to increase sales and advertising revenues by expanding the number of subscribers we service, as we grow our most recent investment, Shandong Radio & Broadcasting Newspaper Group." Mr. Urbach concluded, "Our increased marketing efforts throughout the Jinan region will drive profitability and increase shareholder value."

About China Broadband

China Broadband is an emerging cable broadband provider in the Jinan region of the People's PRC and through its recently acquired joint venture, Shandong Group, owns and operates a China-based publisher of digital and analog television program guides, newspapers and entertainment magazines in the Shandong Province of China. The Company's flagship operation is Jinan Jia He Broadband, also known as Jinan Broadband, the fifth largest broadband operator in China and the second largest broadband service provider in Shandong's capital city of Jinan. A spin-off of Jinan Jia He Digital TV Co. Ltd., Jinan Jia He Broadband has a close equity bond with Jinan Cable Network, the cable monopoly in Jinan with 1.3 million cable TV subscribers.