Achieves non-GAAP net income(1) of US$1.6 million, meeting second quarter 2011 guidance
Achieves gross margin of 46.9% in the second quarter of 2011
BEIJING, Aug. 4, 2011 (GLOBE NEWSWIRE) -- Bona Film Group Limited ("Bona" or the "Company") (Nasdaq:BONA), a leading film distributor and vertically integrated film company in China, today announced its unaudited financial results for the second quarter ended June 30, 2011.
Second Quarter 2011 Financial Highlights
- Second quarter 2011 net revenue was US$16.7 million, an increase of 150.1% year-over-year from US$6.7 million in the corresponding period of 2010
- Second quarter 2011 gross margin was 46.9%, compared to 48.8% in the corresponding period of 2010
- Second quarter 2011 operating loss was US$1.6 million, compared to an operating loss of US$1.0 million in the corresponding period of 2010
- Second quarter 2011 net loss was US$0.9 million, compared to a net loss of US$8.2 million in the corresponding period of 2010
- Second quarter 2011 non-GAAP net income was US$1.6 million, an increase of US$2.0 million year-over-year compared to a non-GAAP net loss of US$0.4 million in the corresponding period of 2010
"We continue to execute on our strategies by capitalizing on our distribution-centric and vertically-integrated business model as we position ourselves for a strong second half this year," said Bona Founder, Chairman and Chief Executive Officer Yu Dong. "China's film industry is experiencing excellent growth and the thrill of the movie-going experience is becoming increasingly popular among Chinese households. Recently, we announced the acquisition of our affiliated company Bona Starlight, which focuses on the operation of movie cinemas in China. The addition of Bona Starlight will strengthen our movie theater network, which has proven to be a stable source of revenue for us, while also taking our distribution network to the next level of sophistication."
Mr. Yu added, "We are on track to distribute between 16 and 20 films in 2011 as our film distribution schedule ramps up in the second half of 2011. We also see encouraging revenue trends like the growth of copyright sales from online video sites and revenue contribution from imported film distribution and investment in TV serials. "
Second Quarter 2011 Financial Results
| Net Revenue | |||
| 2Q11 | 2Q10 | Y-o-Y% | |
| Net Revenue (US$mm) | 16.7 | 6.7 | 150.1% |
The increase in net revenue from the second quarter of 2010 to the corresponding period in 2011 was primarily due to several factors:
- Box office distribution revenue from newly released films, especially the success of Treasure Inn, which was released on June 28, 2011
- Healthy movie theater revenue as the movie theater business, which Bona acquired in 2010, continues to mature
- Revenue of US$3.2 million resulting from the sale of a TV series investment
- Revenue of US$2.1 million resulting from domestic copyright sales to TV stations and online video service providers
| Segment Net Revenue | ||||||
| Distribution |
Investment & Production |
Movie Theater |
Talent Agency |
Intersegment Elimination |
Consolidated | |
| Net Revenue from External Customers (US$mm) | 7.7 | 3.5 | 4.9 | 0.6 | -- | 16.7 |
| Intersegment Revenue (US$mm) | 0.1 | 4.4 | -- | -- | (4.5) | -- |
| Total Net Revenue (US$mm) | 7.8 | 7.9 | 4.9 | 0.6 | (4.5) | 16.7 |
| Gross Profit and Gross Margin | |||
| 2Q11 | 2Q10 | Y-o-Y% | |
| Gross Profit (US$mm) | 7.9 | 3.3 | 140.3% |
| Gross Margin | 46.9% | 48.8% | -- |
The year-over-year gross profit increase in the second quarter 2011 gross profit was primarily due to:
- Stronger movie theater business revenue
- Successful sale of a TV series investment
| Segment Profit(2) and Segment Margin | |||||
| Distribution |
Investment & Production |
Movie Theater |
Talent Agency |
Consolidated | |
| Segment Profit (US$mm) | 3.2 | 1.0 | 2.9 | 0.6 | 7.7 |
| As % of Total Segment Profit | 42.2% | 12.6% | 37.1% | 8.1% | 100% |
| Segment Margin | 42.2% | 12.2% | 58.7% | 97.4% | 46.3% |
| Operating Income and Operating Margin | |||
| 2Q11 | 2Q10 | Y-o-Y% | |
| Operating Expenses (US$mm) | 9.5 | 4.2 | 122.6% |
| Operating Loss (US$mm) | (1.6) | (1.0) | 63.7% |
| Operating Margin | (9.6%) | (14.6%) | -- |
The year-over-year increase in operating expenses in the second quarter of 2011 was primarily due to:
- An increase in share-based compensation expense of US$2.4 million related to the issuance of share options granted to the Chief Executive Officer, two independent directors and a creative talent
- An increase in operating expenses resulting from the expansion of Bona's business, especially to the expansion of the movie theater business
- An increase in professional fees associated with being a US publicly listed company
| Net Income and Net Income Attributable to Bona Film Group Limited per ADS(3) | ||
| 2Q11 | 2Q10 | |
| Net Loss (US$mm) | (0.9) | (8.2) |
| Net Loss Attributable to Bona Film Group Limited per ADS (US$) | (0.02) | (0.36) |
| 2Q11 | 2Q10 | |
| Non-GAAP Net Income (Loss) (US$mm) | 1.6 | (0.4) |
| Non-GAAP Net Income (Loss) Attributable to Bona Film Group Limited per ADS (US$) | 0.03 | (0.04) |
Excluding share-based compensation and changes in fair value of derivatives, the Company's non-GAAP net income for the second quarter 2011 was US$1.6 million, an increase of US$2.0 million year-over-year compared to a non-GAAP net loss of US$0.4 million in the corresponding period of 2010.
Cash and Cash Flow
As of June 30, 2011, Bona had cash and cash equivalents, term deposits and restricted cash totaling US$42.6 million. Operating cash flow for the second quarter of 2011 was a net outflow of approximately US$6.4 million, mainly attributable to post production in certain films that are expected to be released in the fourth quarter of 2011.
Recent Developments
On June 9, 2011, Bona announced that Mr. Dong Yu, Bona's founder, chairman and chief executive officer has established a share repurchase plan whereby he intends to use his personal funds to purchase up to US$2.0 million worth of the Company's ADSs in open market transactions during the three month period commenced June 9, 2011. Mr. Yu intends to give the purchased ADSs to high-performing Bona employees and other creative talents.
On July 5, 2011, Bona announced that it has acquired 100% of the equity interest in Beijing Bona Starlight Cineplex Management Co., Ltd. ("Bona Starlight"), an affiliated company of Bona Film Group that focuses primarily on the operation of movie cinemas in China.
Business Outlook
Based on current market and operating conditions, the Company estimates non-GAAP net income for the third quarter 2011 to be in the range of US$5.7 million to US$6.2 million, and non-GAAP net income for the full year 2011 to be approximately US$18.0 million after consolidating the results of operation of Bona Starlight since July 2011.
Second Quarter 2011 Conference Call Details
Bona management will hold its earnings conference call at 8:00 p.m. Eastern Time on Thursday, August 4, 2011 (8:00 a.m. Beijing/Hong Kong Time on Friday, August 5, 2011). Management will discuss second quarter results and highlights and answer questions from investors.
The dial-in numbers for the earnings conference call are as follows:
U.S. Toll Free: +1-866-405-2350
Hong Kong Toll Free: 800-965-084
China: +86-800-870-0811/+86-400-120-0712
International: +65-6723-9388
The password for the call is 84427227.
The live and archived webcast of the earnings conference call will be available on Bona's IR website at http://ir.bonafilm.cn/events.cfm.
About Bona Film Group Limited
Bona Film Group Limited (NASDAQ: BONA) is a leading film distributor in China, with an integrated business model encompassing film distribution, film production, film exhibition and talent representation. Bona distributes films to Europe, Greater China, Korea, Southeast Asia and the United States, invests and produces movies in a variety of genres, owns and operates ten movie theaters and manages a range of talented and popular Chinese artists.
The Bona Film Group Limited logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8412
For more information about Bona, please visit http://www.bonafilm.cn.
Forward Looking Statements
This news 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 the Company's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1 and its annual report on Form 20-F. 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.
Non-GAAP Financial Measures
To supplement Bona's consolidated financial results presented in accordance with GAAP, Bona uses the following measures defined as non-GAAP financial measures by the SEC: non-GAAP net income and non-GAAP net income attributable to Bona Film Group Limited per ADS, which exclude share-based compensation expenses, and changes in fair value of derivatives. The presentation of these non-GAAP financial measures is not intended to be considered in isolation, as a substitute for, or to be superior to the financial information prepared and presented in accordance with GAAP. In addition, Bona's definition of non-GAAP net income may be different from the definitions used by other companies, and therefore comparability may be limited.
Bona believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain expenses and expenditures that may not be indicative of its operating performance. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance and when planning and forecasting future periods. The table appears at the end of this press release has more details on the reconciliations between GAAP financial measures that are comparable to non-GAAP financial measures.
| Unaudited Condensed Consolidated Statements of Operations | ||||
| (In U.S. dollars, except share data) | ||||
| Three-months ended June 30, | Six-months ended June 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| Net revenue | 16,742,613 | 6,695,006 | 36,001,846 | 14,502,810 |
| Cost of revenue | 8,892,571 | 3,428,217 | 18,785,382 | 7,508,898 |
| Gross profit | 7,850,042 | 3,266,789 | 17,216,464 | 6,993,912 |
| Film participation expense | 106,528 | 310,518 | 243,889 | 484,358 |
| Sales and marketing | 1,749,704 | 1,546,214 | 4,493,643 | 2,808,641 |
| General and administrative | 7,596,093 | 2,388,835 | 11,560,094 | 3,177,571 |
| Total operating expenses | 9,452,325 | 4,245,567 | 16,297,626 | 6,470,570 |
| Government Subsidy | -- | -- | 220,559 | -- |
| Operating income(loss) | (1,602,283) | (978,778) | 1,139,397 | 523,342 |
| Interest income | 89,286 | 741 | 105,009 | 2,914 |
| Interest expense | (103,072) | (83,170) | (242,063) | (205,944) |
| Exchange gain (loss) | 264,843 | (14,273) | 368,960 | (21,829) |
| Gain on extinguishment of liability | -- | 488,799 | -- | 488,799 |
| Other income | 275,945 | 86,563 | 347,373 | 146,701 |
| Changes in fair value of derivatives | -- | (7,777,000) | -- | (13,183,000) |
|
Income (loss) before income tax provision, and equity in earnings of affiliated companies |
(1,075,281) | (8,277,118) | 1,718,676 | (12,249,017) |
| Provision for income taxes | (209,680) | (65,090) | 335,142 | 29,302 |
| Equity in earnings(loss) of affiliated companies | (28,691) | 3,653 | (26,339) | 6,088 |
| Net income (loss) | (894,292) | (8,208,375) | 1,357,195 | (12,272,231) |
|
Less: Net income (loss) attributable to the noncontrolling interests |
(12,284) | 28,949 | 28,655 | 13,746 |
|
Net income (loss) attributable to Bona Film Group Limited |
(882,008) | (8,237,324) | 1,328,540 | (12,285,977) |
| Net income (loss) attributable to Bona Film Group Limited per ADS | ||||
| Basic | (0.02) | (0.36) | 0.02 | (0.66) |
| Diluted | (0.02) | (0.36) | 0.02 | (0.66) |
| Weighted average shares used in calculating net income per ordinary share | ||||
| Basic | 29,349,587 | 12,217,283 | 29,349,534 | 10,026,640 |
| Diluted | 29,349,587 | 12,217,283 | 29,922,284 | 10,026,640 |
| Unaudited Condensed Consolidated Balance Sheets | ||
| (In U.S. dollars, except share data) | ||
| December 31, | June 30, | |
| 2010 | 2011 | |
| Cash and cash equivalents | 84,247,984 | 12,554,789 |
| Term deposits | -- | 25,999,975 |
| Restricted cash | -- | 4,092,221 |
| Accounts receivable, net of allowance for doubtful accounts | 15,225,792 | 17,173,047 |
| Prepaid expenses and other current assets | 15,659,415 | 24,478,736 |
| Amount due from related parties | 2,815,147 | 11,104,190 |
| Current deferred tax assets | 7,885 | 7,972 |
| Inventory | 96,639 | 105,367 |
| Total current assets | 118,052,862 | 95,516,297 |
| Distribution rights | 2,265,601 | 1,677,109 |
| Production costs | 64,815,878 | 92,244,600 |
| Prepaid film costs | 484,848 | 5,011,952 |
| Property and equipment, net | 14,498,304 | 15,676,487 |
| Acquired intangible assets | 2,293,744 | 2,138,156 |
| Non-current deferred tax assets | 6,732 | 366,675 |
| Cost method investment | 30,303 | 30,943 |
| Investment in equity affiliates | 231,854 | 117,469 |
| Goodwill | 28,536,410 | 29,138,322 |
| Total assets | 231,216,536 | 241,918,010 |
| Accounts payable | 9,533,672 | 9,505,522 |
| Accrued expenses and other current liabilities | 19,577,066 | 30,211,377 |
| Amounts due to related parties | 1,587,121 | 1,240,927 |
| Income taxes payable | 377,019 | 659,326 |
| Bank borrowing | 22,012,560 | 18,696,948 |
| Other borrowing | 1,445,150 | 172,519 |
| Current film participation liabilities | 10,209,351 | 15,313,057 |
| Total current liabilities | 64,741,939 | 75,799,676 |
| Deferred income | -- | 1,199,533 |
| Non-current film participation liabilities | 6,306,818 | -- |
| Deferred tax liability | 95,613 | 56,716 |
| Total liabilities | 71,144,370 | 77,055,925 |
| Ordinary shares (par value of US$0.0005 per share, 85,000,000 shares authorized, 30,402,346 and 29,349,481 shares issued and outstanding as at June 30, 2011 and December 31, 2010) | 14,675 | 14,676 |
| Additional paid-in capital | 165,975,336 | 168,233,647 |
| Statutory reserves | 1,975,715 | 1,975,715 |
| Accumulated deficit | (12,030,124) | (10,701,584) |
| Accumulated other comprehensive income | 2,034,154 | 3,202,048 |
| Total Bona Film Group Limited's equity | 157,969,756 | 162,724,502 |
| Noncontrolling interests | 2,102,410 | 2,137,583 |
| Total equity | 160,072,166 | 164,862,085 |
| Total liabilities and equity | 231,216,536 | 241,918,010 |
| Reconciliation of Non-GAAP Measures | ||||
|
Three-months ended June 30, |
Six-months ended June 30, |
|||
| 2011 | 2010 | 2011 | 2010 | |
| Net income (loss) | (894,292) | (8,208,375) | 1,357,195 | (12,272,231) |
| Share-based compensation | 2,447,301 | 61,167 | 2,599,171 | 79,290 |
| Changes in fair value of derivatives | -- | 7,777,000 | -- | 13,183,000 |
| Non-GAAP Net income (loss) | 1,553,009 | (370,208) | 3,956,366 | 990,059 |
(1) As used in this press release, non-GAAP net income (loss) and non-GAAP net income (loss) attributable to Bona Film Group Limited per ADS exclude share-based compensation expenses and changes in fair value of derivatives. See "Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures" at the end of this press release.
(2) Segment profit is gross profit less film participation expense by segments for the periods indicated.
(3) "ADS" is American depositary share. Each two ADSs represent one ordinary share.