towona

Quick update from bod meeting of towona:

Archievement:
- moving from resource aquisition stage to revenue generation stage
- mkt leadship: 33 cities, 37k buses signed, 23k buses installed, 32k lcd installed.
- 1H rev: $11m, loss: 4.7m
- 07 projection: $38m, breakeven
- 10 cities archived operational cashflow positive
- strong local ad rev: over 5000 local advertisers, contract value raging from 1000 yuan to 100k. Selling price is 150-500 yuan per minute per day in a city.

Competition:

Huashi:
-less buses, less than 20k signed, 10k installed.
-but has leading position in beijing, zhenzhou, shenzhen and chengdu.
-high cost to secure resources, 9m rental fee for beijing
-more like ad agency role

Bus online:
- raised 30m recently
- 200-600 buses in each city
- extreme low pricing policy which harms the other two players

Towona Strategy and Challenges:
- secure resources in each city
- more cities to cashflow breakeven
- stable rev growth of local ads
- attract national brands
- kickoff ipo in 2008 (lead investor thinks there must be at least one on-bus media going public next year, towona has good opportunity to beat the others)

Also, board required the management to hire a financial manager to optimise the financial system and management by oct.

- Revenue

Q1 rev: 3.9m 33% of target loss: 3.4m

Q2 rev: 7.8m 43% of target loss: 1.3m

- Opex

Q1+Q2 opex: 15m (Rental: 5.2m, HR: 3.2m, sales: 5m, D&A: 1.2m)

06 opex: 9m (rental: 4m, HR: 2.7m, sales: 2m, D&A: 0.3m)

- Capex

Q1+Q2 capex: 5m

06 capex: 10m

- Analysis

Total fund raised: 45m (10m in 2006 and 35m in 2007)

Total loss: 10m

Capex: 15m

Cash: 11m

AR/other receivables: 9m

- Clients

In first half of 07, 63% advertising revenue is coming from local advertisers, of which 23% is from Xiamen alone, Large national brands accounts for 37%. Some of the large contracts are Haier (1.3m), Sanlu(800k), Hyudai(500k), Wuliangye (500k), Maotai(500k). Details will be provided as soon as obtained from the company.