Good morning all sites, and welcome to the AirMedia Group Inc Fourth Quarter and Fiscal Year 2014 Earnings Conference Call. For the duration of the presentation, all lines will be placed in a listen-only mode. [Operator Instructions] Now I would like to hand the call over to Mr. Raymond Huang, Senior Director of Investor Relations of the company. I will be standing by for the Q&A session. Thank you. You may begin.

Hello, everyone. Thank you for joining AirMedia's fourth quarter 2014 earnings conference call. Today Herman Man Guo, our Chairman and CEO, will present highlights for the fourth quarter 2014; and Richard Wu, our CFO, will provide details on our financial results. Following their prepared remarks, the management team will be available to take your questions. Before the management's presentations, please allow me to read you our Safe Harbor statement. During this conference call, representatives of the company will make certain forward-looking statements. These statements are based upon management's current views and expectations with respect to future events, and are not a guarantee of future performance. Furthermore, these statements are by their nature subject to a number of risks and uncertainties that could cause actual performance and results to differ materially from those discussed in the forward-looking statements. AirMedia does not undertake any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Please refer to AirMedia's filings with the SEC, including its Form 20-F for discussions of important factors that could affect future results. Our press release and this call include a discussion of unaudited GAAP financial information as well as some unaudited non-GAAP financial measures. Our press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. The press release is available on the Investor Relations section of AirMedia's website at www.ir.airmedia.net.cn. I will now turn the call over to our Chairman and CEO, Herman Man Guo.

Thank you, Raymond. Good morning and good evening everyone. We are excited that we made significant progress on turning around the Company. By January 13, 2015, we have divested two of our three major unprofitable product lines. TV-attached digital frames and airport digital TV screens have been negatively contributing the company's overall result for years. After the divestiture, our sales force can concentrate on promoting the remaining product lines which have higher profitability such as our mega-size LED screens and stand alone digital frames. It is helpful for the company to redeploy capital and management's focus to support business with higher return. The divestiture is expected to have an immediately positive effect on the Company's results of operation in the first quarter of 2015. As for another unprofitable product line, our gas station media network, we intend to perk up this product line by adopting new technology, such as iBeacon, which enables our LED screens to connect with car passengers. With the divestiture and the expected improvement of operation results of the gas station media network, we anticipate our current media business to become profitable and provide steady cash flow to support our business transformation. After the divestiture the reliability of our remaining profitable product line become even more important. We recently renewed our concession rights contract to continue to operate digital media in Shanghai Pudong International Airport and Hongqiao International Airport until February 2018. This is the second time we renew to the digital trends in two Shanghai airports which demonstrates our long term mutually beneficial relationship with Shanghai airport. So cooperation is expected to benefit both companies with this renewal. Some of the digital frames will be upgraded from 17 inch to 98 inch. We believe that upgrading into 98 inch digital frames will create a maximum material…

Thank you, Herman. And thank you everyone for joining our fourth quarter and fiscal year 2014 financial results. As Herman mentioned, the divestiture of our two unprofitable product lines are expected to significantly enhance our profitability. Based on our current estimate we expect a decrease in total revenues in 2015 due to the divestiture of the aforementioned two unprofitable lines to be less than 10% of our total revenues in 2014. The divestiture will benefit our bottom lines. We had total loss from operations to the US$10.4 million and US$30 million from TV- attached digital frames and airport digital TV screens in fiscal year 2013 and a fiscal year 2014. Our new business initiatives are still at the stage with need for further investments. As a result of these investments, our costs and operating expenses have been increasing in the past several quarters, which contributed to the increase in our net loss. However, these investments are necessary and crucial, as Wi-Fi business stands for a huge market and the future of the Company. Now let me go through the details of our fourth quarter financial results with you. Total revenue for the fourth quarter of 2014 was the US$67.5 million representing a year-over-year decrease of 14.1% from US$78.6 million in the same period a year ago and a quarter-over-quarter increase of 7.4% from US$62.9 million in the previous quarter. The year-over-year decrease was primarily due to decreases in revenues from most product lines. The quarter-over-quarter increase was primarily due to increases in revenues from most product lines other than digital TV screens on airplanes and traditional media in airports. Let's go through each product line. Revenues from digital frames in airports for the fourth quarter of 2014 decreased by 17.8% year-over-year and increased by 10.0% quarter-over-quarter to US$37.4 million. The…

[Operator Instructions] And your first question comes from the line of Jing Wei from BOCI. Please ask your question.

Hi, good morning, Herman, thank you for taking my question. I have two questions. Firstly regarding your Wi-Fi business. Could you please share with us the monetization model? And what expectations do you have on this Wi-Fi business in terms of like revenue and market share and number of airplane in 2015 or in longer term? And how much are you going to invest in your Wi-Fi business this year? Thank you. And I have a second question.

Okay, thank you for your question. That's a very good question. 2015 is a very crucial year for AirMedia, the year of transformation for AirMedia. We already obtained a leading position in the Wi-Fi services on high-speed trains in China. We've already signed with Guangzhou and Xinjiang Railway Bureau. So we have already have a very high margin share on the -- in terms of the trains we can operate our Wi-Fi services on high speed trains. And we are also like to sign with more ordinary trains to provide Wi-Fi services for ordinary trains, so we are now in talk with railway bureaus for the Wi-Fi service for ordinary trains. We thought that we will be main operator for the Wi-Fi services on trains in China. And for the Wi-Fi services on airplanes, we are also continued to discuss with the airlines for the Wi-Fi services. We will update you when we sign a contract. Talking about the business model for the Wi-Fi services on airplanes, the first revenue start will be the service fee that passengers need to pay certain fee to use the Wi-Fi services. And other than that we try to get the sponsor fees from the e-commerce companies when they provide the services on the airplanes to which we provide Wi-Fi. And other than that we try to tap advertising revenues and also an e-commerce on the internet part, internet part of the Wi-Fi services. For the Wi-Fi services on trains, there will also be internet, an internet part. For the internet part, passengers do not need to pay a fee to use the Wi-Fi services. So we will get revenues from the internet part which our internet part we will provide movies, games and more entertainment to the passengers. So there will be advertising, e-commerce venues for us from the internet part. And for the internet part, although passengers, even the passengers do not need to pay but we can still get revenues from the e-commerce companies when they provide services to us and we can also help e-commerce companies, or mobile internet companies to download, to promote their apps. So we will get revenues from the down--based on the numbers of applications we help them to download. Actually we have already signed with certain mobile companies for the application promotion. Talking about the investment on the Wi-Fi services, for the airplanes in flight Wi-Fi, the investment will be relatively large. And for the Wi-Fi services on trains, it is not that large. But we try to get the financing from the key companies, other internet giant. There are already some private equity companies approaching us. Does that answer your question?

Yes. Thank you. My second question is regarding your current advertising revenue. Could you please share with us the advertising revenue breakdown by sector? And the earlier change in ing each sector as well and how do you see the demand in advertising market this year? Thank you.

Okay. I will tell you the year-over-year change -- our breakdown then Herman will answer the question on the overall trend. The top three advertising category for us actually change the first category is still auto which decreased year-over-year by 6%, the second category is finance which decreased by 25% year-over-year and we see the third category actually change home appliances become our third largest category which increased by 89% year-over-year. And fourth category the consumer electronic decreased by 25%. And fifth is high end food and beverage decreased by 15%.

As you know the GDP growths have been slowed down and we see the pressure on the traditional advertising industry. But for us after the divestiture of the unprofitable product lines, the remaining products which are mega-size LED stand alone digital frames and traditional media, we expect to have year-over-year growth in 2015.

[Operator Instructions] Your next question comes from the line Wei Fan from CLSA. Please ask your question.

Hi, thank you. Thank you for taking my questions. Just first question regarding your divestiture right. After the divestiture, is it correct to assume that you will not have any digital TV screen throughout news going forward since starting in 2Q? And also I think your guidance for 1Q already reflect that decline right, and also are you still booking any cogs concession fees relating to those divested business segment? Thank you.

Yes. Let me answer your question. So legally speaking we have divested TV screen and TV-attached digital frames is sold, the team and related resources have been transferred to the new entity operating those businesses in which AirMedia has the minority share. However, some of those contracts that have not expired have a binding clause that prohibits us from transferring those concession rights to the new entity. So we -- and also through contractual regiment entrust them to be our operator of those two businesses, every month going forward there will be contacted, those related -- those two businesses coming expired and we will transfer those contract through direct contract between the airports and with those new entity operators. So we do anticipate that, yes, most of them will be gone within the next 12 to 24 months.

Okay. So you are saying within the next one to two years at most right, so assuming --

At most.

Yes. So we will see order scene clean that's right. And also does your current contract with those vendors or the services providers, does they require or kind of restrict you from outsourcing that or doing the entrusting to a third party vendor? I mean basically are you able to even before the contracts expire right, are you able to just negotiate with the other part of the contract and then do the transfer before the expiration?

Yes. The majority, I would say majority of the contracts doesn't bind us or doesn't stop us from negotiating -- for a party to be our sub contractor or operator, yes, that's what most of the existing transfer has been a rent so basically yes.

Okay. So you are trying to right to terminate those things and make them fully transferred as early as possible, right?

Yes.

Okay. And also just theoretically I think I see your comments that you are working with your current existing advertiser customers right on those divested business segment and asking them to accordingly allocate, reallocate their budgets accordingly to your remaining business segments, right. And then this is the one thing you are doing right now and on the other hand you are working with a kind of partner or joint venture right to divest that business, is there any kind of conflict of interests just from your partners' perspective, why are they willing to take your business, that your divested business and at the same time knowing that you are persuading your customers to reallocate their budget to your remaining business, I was just curious.

Right. Let me take initial answer on this one and if Herman wants to -- he may has further comment. So basically those two divested product lines have been acting as a kind of stimulus as give away in advertising time previous contract, and most of our LED and the stand-alone digital frame contract we previously tend to give some free time of these two product lines. So according to US GAAP those give away time has to be allocated as part of this revenue calculation. So the two generate revenues as a result. However, the advertisers' real interest is in bigger one, bigger media format which are more eye catching for attracting your attention. Going forward, given that these two our product lines are divested, we have mobilized our sales force to focus on the existing larger screen format media resource sale and try to minimize okay the give away time of those divestiture product line, however, in case of the divested what happened in the previous largest group business is we some advertise require purchase of airport media which we don't have, we purchased from third party and bundle them as part of this fulfillment commitment in the field contract, they work through the same regiment of beating with purchase some of these divested or outsourced advertising time from those two advertise and we do internal transfer pricing if needed but gradually were to ask that our sales force to focus on our remaining product lines.

Okay, okay, got it. So during the transition time the sales people will have little bit kind of confusion to me right one time you work on your many business but at the same time they still need to kind of favor your business for those JV partners right during the time.

Right. Yes, in a sense it did have -- did have it may be confusing for them but we asked that they minimize the giving away time of those two media format which are no longer our composed balance.

Got it, got it, okay, thank you. Yes and last question regarding the lift on your property right. You are talking about the remaining business will have positive year-over-year growth in terms of revenue. I was just wondering if you can help us understand so why you are not booking any business -- revenues from those two divested business segment right. Are you still booking the concession in the cost of line and also related these agencies those kinds of things and also depreciation. Thank you.

Yes. That's a good question. Depreciation is to go forward because for the TV product line, the net book value is very minimal so it is still with us and we will continue -- it will continue to incur some depreciation but amount is very small. For the TV attached digital frames, we have sold the assets to new entity and so it is no longer our book and no longer generates depreciation. In terms of the revenue of these remaining business lines, like Herman pointed out we maintain growth order book for those product line in revenue. In the meanwhile in terms of the revenue to be booked from those two divested product lines, given what I said in a transitional period where we have to do these all the sourcing type of sub con regiment so according to the US GAAP we will have to incur additional revenue from those other source the regiment, is from those two product lines but it is no longer a typical TV or digital frames revenue as previous but yes we do continue to incur service revenue or sub contract revenue from those two product lines but it was a decreasing trend going forward because their contracts expired, they will be gone from us and going directly with airport and those two entities, and accordingly as the other revenue, the service revenue incurred, so we do were required to incur positive services as well because some of those contracts are still with us even we've already -- also serve the operations of those line, so we kind of guarantee concession fee plus higher transfer price as required by tax rule and also the opening expense servicing will be count to those product line, yes, but if those two businesses really pushed growth very well, we are kind of lose up trend by kind of protected downward side.

Okay, got it, that's all my questions, thank you so much.

Go ahead Raymond. Raymond you want to add on --

To the concession fees as Richard mentioned because we are in the transition period, so we still need to pull concession fees for additional TV and TV-attached digital frames. Some of that have been transferred to the new entities but we still need to book on the majority of the concession fees. And for the agency fees because we thought the more revenue will be made by the two new entities, so for the revenue sold by them we don't need to incur the agencies. But actually although that impacts on revenue side but for the bottom line because we are now a majority of shareholder-- minority of shareholders so we -- the loss definitely decrease a lot compared with previously. So it is very helpful for our bottom line. Hello?

[Operator Instructions] There are no further questions at this time. I'd like to hand the call back to you presenters for closing remarks. Please proceed.

Thank you for attending our call. We hope to talk you with next time. Thank you.