BEIJING, Nov. 14, 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 third quarter ended September 30, 2011.
Third Quarter 2011 Financial Highlights
- Third quarter 2011 net revenue was US$37.5 million, an increase of 83.1% year-over-year from US$20.5 million in the corresponding period of 2010
- Third quarter 2011 gross margin was 57.5%, compared to 52.2% in the corresponding period of 2010
- Third quarter 2011 operating income was US$8.2 million, an increase of 50.0% from US$5.5 million in the corresponding period of 2010
- Third quarter 2011 net income was US$7.5 million, an increase of 52.9% from US$4.9 million in the corresponding period of 2010
- Third quarter 2011 non-GAAP net income was US$8.1 million, an increase of 26.7% from US$6.4 million in the corresponding period of 2010
"We experienced strong revenue and gross profit growth in the third quarter driven primarily by the success of newly released films and a solid contribution from our movie theater business," said Bona Founder, Chairman and Chief Executive Officer Yu Dong. "Our vertically-integrated business model with a focus on distribution has given us a healthy mix of revenue from film distribution, investment, production and exhibition. In the third quarter, our film Overheard II exceeded our box office expectations and is the second most successful domestic film so far this year based on box office receipts. We are pleased with the development of our movie theater business as we signed six new cinema projects in the third quarter. Currently, we have a total of 12 cinemas under construction and are on track to meet our expansion goal of operating 30 to 40 new theaters in prime locations across China by 2014."
Mr. Yu added, "Although still a small portion of our total revenues, we are witnessing encouraging demand trends in the areas of Internet and digital distribution and TV serials. Looking at our future distribution slate, we plan to release our highly-anticipated domestic blockbuster Flying Swords of Dragon Gate, starring Jet Li, in December, which we believe will be a strong revenue driver for our business."
Third Quarter 2011 Financial Results
Net Revenue
| 3Q11 | 3Q10 | Y-o-Y% | |
| Net Revenue (US$mm) | 37.5 | 20.5 | 83.1% |
The year-over-year net revenue increase in the third quarter 2011 was primarily due to several factors:
- Box office distribution revenue from newly released films, especially the success of Overheard II, which was released on August 18, 2011
- Healthy movie theater revenue as the movie theater business, which Bona first acquired in 2010 and then expanded with the acquisition of Bona Starlight in July 2011, continues to develop
- Revenue of US$2.7 million resulting from the sale of domestic broadcasting rights to online video service providers
Segment Net Revenue
| Distribution | Investment & Production | Movie Theater | Talent Agency | Intersegment Elimination | Consolidated | |
| Net Revenue from External Customers (US$mm) | 28.6 | 0.1 | 8.5 | 0.3 | -- | 37.5 |
| Intersegment Revenue (US$mm) | 0.6 | 14.9 | -- | -- | (15.5) | -- |
| Total Net Revenue (US$mm) | 29.2 | 15.0 | 8.5 | 0.3 | (15.5) | 37.5 |
Gross Profit and Gross Margin
| 3Q11 | 3Q10 | Y-o-Y% | |
| Gross Profit (US$mm) | 21.6 | 10.7 | 101.8% |
| Gross Margin | 57.5% | 52.2% | -- |
The year-over-year gross profit increase in the third quarter 2011 was primarily due to:
- Successful releases of new films, especially the nationwide success of Overheard II
- Stronger movie theater business revenue
Segment Profit[2] and Segment Margin
| Distribution | Investment & Production | Movie Theater | Talent Agency | Consolidated | |
| Segment Profit (US$mm) | 12.2 | 4.4 | 5.0 | 0.2 | 21.8 |
| As % of Total Segment Profit | 55.8% | 20.1% | 23.0% | 1.1% | 100% |
| Segment Margin | 41.7% | 29.1% | 58.6% | 74.5% | 58.0% |
Operating Income and Operating Margin
| 3Q11 | 3Q10 | Y-o-Y% | |
| Operating Expenses (US$mm) | 13.4 | 5.3 | 151.9% |
| Operating Income (US$mm) | 8.2 | 5.5 | 50.0% |
| Operating Margin | 21.9% | 26.7% | -- |
The year-over-year increase in operating expenses in the third quarter 2011 was primarily due to:
- An increase in sales and marketing expense for the promotion of the Company's newly released films
- An increase in general and administrative expense 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]
| 3Q11 | 3Q10 | |
| Net Income (US$mm) | 7.5 | 4.9 |
|
Net Income Attributable to Bona Film Group Limited per ADS (US$) |
0.13 | 0.09 |
| 3Q11 | 3Q10 | |
| Non-GAAP Net Income (US$mm) | 8.1 | 6.4 |
|
Non-GAAP Net Income Attributable to Bona Film Group Limited per ADS (US$) |
0.14 | 0.13 |
Excluding share-based compensation and changes in the fair value of derivatives, the Company's non-GAAP net income for the third quarter 2011 was US$8.1 million, an increase of 26.7% year-over-year from US$6.4 million in the corresponding period of 2010.
Cash and Cash Flow
As of September 30, 2011, Bona had cash and cash equivalents, term deposits and restricted cash totaling US$22.1 million. Operating cash flow for the third quarter of 2011 was a net inflow of approximately US$4.7 million, mainly attributable to the collection of box office receipts generated from films released in the past two quarters.
Recent Developments
On October 31, 2011 Bona announced that the Company and Huayi Brothers Media Corporation ("Huayi") will acquire strategic stakes in China Lion Film Distribution ("China Lion"). Bona and Huayi will each acquire up to 20% of China Lion. The deal will add U.S. and Canadian distribution to the two companies' diverse public portfolios, and create a major distribution bridge between the United States and China.
Business Outlook
Based on current market and operating conditions, the Company estimates non-GAAP net income for the fourth quarter 2011 to be in the range of US$5.8 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.
Third Quarter 2011 Conference Call Details
Bona management will hold its earnings conference call at 8:00 p.m. Eastern Time on Monday, November 14, 2011 (9:00 a.m. Beijing/Hong Kong Time on Tuesday, November 15, 2011). Management will discuss results and highlights of the quarter as well as answer questions from investors.
The dial-in numbers for the earnings conference call are as follows:
U.S. Toll Free: +1-855-500-8701
Hong Kong Toll Free: 800-903-737
China, Domestic: 400-120-0654
International: +65-6723-9385
The conference ID # is 22141780
A 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 Greater China, Korea, Southeast Asia, the United States and Europe, invests and produces movies in a variety of genres, owns and operates eleven movie theaters and manages a range of talented and popular Chinese artists.
For more information about Bona, please visit http://www.bonafilm.cn.
The Bona Film Group Limited logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8412
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.
[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.
| Unaudited Condensed Consolidated Statements of Operations | ||||
| (In U.S. dollars, except share data) | ||||
| Three-month ended Sep 30, | Nine-month ended Sep 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| Net revenue | 37,509,904 | 20,482,158 | 73,511,750 | 34,984,968 |
| Cost of revenue | 15,938,833 | 9,791,784 | 34,724,215 | 17,300,682 |
| Gross profit | 21,571,071 | 10,690,374 | 38,787,535 | 17,684,286 |
| Film participation expense | (188,766) | 254,864 | 55,123 | 739,222 |
| Sales and marketing | 5,543,052 | 2,109,743 | 10,036,695 | 4,918,384 |
| General and administrative | 7,998,597 | 2,936,781 | 19,558,691 | 6,114,352 |
| Total operating expenses | 13,352,883 | 5,301,388 | 29,650,509 | 11,771,958 |
| Government Subsidy | -- | 88,147 | 220,559 | 88,147 |
| Operating income | 8,218,188 | 5,477,133 | 9,357,585 | 6,000,475 |
| Interest income | 73,368 | 864,096 | 178,377 | 867,010 |
| Interest expense | (52,334) | (115,956) | (294,397) | (321,900) |
| Exchange gain | 229,186 | 46,351 | 598,146 | 24,522 |
| Gain on extinguishment of liability | -- | -- | -- | 488,799 |
| Other income | 71,429 | 36,854 | 418,802 | 183,555 |
| Changes in fair value of derivatives | -- | (1,345,000) | -- | (14,528,000) |
| Income (loss) before income tax provision, | 8,539,837 | 4,963,478 | 10,258,513 | (7,285,539) |
| and equity in earnings of affiliated companies, net of income taxes | ||||
| Provision for income taxes | 1,077,455 | 62,735 | 1,412,597 | 92,037 |
| Income (loss) before equity in earnings of affiliated companies, net of income taxes | 7,462,382 | 4,900,743 | 8,845,916 | (7,377,576) |
| Equity in earnings of affiliated companies, net of income taxes | 36,879 | 3,175 | 10,540 | 9,263 |
| Net income (loss) | 7,499,261 | 4,903,918 | 8,856,456 | (7,368,313) |
| Less: Net income (loss) attributable | 31,797 | (121,401) | 60,452 | (107,655) |
| to the noncontrolling interests | ||||
| Net income (loss) attributable | 7,467,464 | 5,025,319 | 8,796,004 | (7,260,658) |
| to Bona Film Group Limited | ||||
| Net income (loss) attributable to Bona Film Group Limited per ADS | ||||
| Basic | 0.13 | 0.09 | 0.15 | (0.38) |
| Diluted | 0.13 | 0.09 | 0.15 | (0.38) |
| Weighted average shares used in calculating net income per ordinary share | ||||
| Basic | 29,352,631 | 13,939,048 | 29,350,578 | 11,555,326 |
| Diluted | 29,727,131 | 14,000,220 | 29,869,009 | 11,555,326 |
| Unaudited Condensed Consolidated Balance Sheets | ||
| (In U.S. dollars, except share data) | ||
| Dec 31, | Sep 30, | |
| 2010 | 2011 | |
| Cash and cash equivalents | 84,247,984 | 11,855,114 |
| Term deposits | -- | 5,999,975 |
| Restricted cash | -- | 4,246,291 |
| Accounts receivable, net of allowance for doubtful accounts | 15,225,792 | 32,597,611 |
| Prepaid expenses and other current assets | 15,659,415 | 27,133,610 |
| Amount due from related parties | 2,815,147 | 1,170,437 |
| Current deferred tax assets | 7,885 | 8,028 |
| Inventory | 96,639 | 258,188 |
| Total current assets | 118,052,862 | 83,269,254 |
| Distribution rights | 2,265,601 | 1,746,058 |
| Production costs | 64,815,878 | 90,834,799 |
| Prepaid film costs | 484,848 | 6,326,352 |
| Property and equipment, net | 14,498,304 | 37,821,471 |
| Acquired intangible assets | 2,293,744 | 4,306,491 |
| Non-current deferred tax assets | 6,732 | 345,301 |
| Cost method investment | 30,303 | 31,358 |
| Investment in equity affiliates | 231,854 | 109,102 |
| Goodwill | 28,536,410 | 47,154,357 |
| Total assets | 231,216,536 | 271,944,543 |
| Accounts payable | 9,533,672 | 19,424,420 |
| Accrued expenses and other current liabilities | 19,577,066 | 41,618,910 |
| Amounts due to related parties | 1,587,121 | 2,784,843 |
| Income taxes payable | 377,019 | 1,764,477 |
| Bank borrowing | 22,012,560 | 9,474,718 |
| Other borrowing | 1,445,150 | 174,831 |
| Current film participation liabilities | 10,209,351 | 15,918,423 |
| Total current liabilities | 64,741,939 | 91,160,622 |
| Bank borrowing | -- | 4,713,226 |
| Deferred income | -- | 1,128,104 |
| Non-current film participation liabilities | 6,306,818 | -- |
| Deferred tax liability | 95,613 | 486,516 |
| Total liabilities | 71,144,370 | 97,488,468 |
|
Ordinary shares (par value of US$0.0005 per share, 85,000,000 shares authorized, 29,349,481 and 30,402,346 shares issued and outstanding as at December 31, 2010 and September 30, 2011) |
14,675 | 14,681 |
| Additional paid-in capital | 165,975,336 | 168,898,161 |
| Statutory reserves | 1,975,715 | 1,975,715 |
| Accumulated deficit | (12,030,124) | (3,234,120) |
| Accumulated other comprehensive income | 2,034,154 | 4,269,830 |
| Total Bona Film Group Limited's equity | 157,969,756 | 171,924,267 |
| Noncontrolling interests | 2,102,410 | 2,531,808 |
| Total equity | 160,072,166 | 174,456,075 |
| Total liabilities and equity | 231,216,536 | 271,944,543 |
| Reconciliation of Non-GAAP Measures | ||||
| Three-month ended Sep 30, | Nine-month ended Sep 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| Net income (loss) | 7,499,261 | 4,903,918 | 8,856,456 | (7,368,313) |
| Share-based compensation | 606,583 | 147,398 | 3,205,755 | 226,688 |
| Changes in fair value of derivatives | -- | 1,345,000 | -- | 14,528,000 |
| Non-GAAP Net income | 8,105,844 | 6,396,316 | 12,062,211 | 7,386,375 |