Quarterly Net Revenue of US$20.7 Million, Up 23.9% Year-Over-Year
Quarterly Net Income of US$0.5 Million, Compared With a Loss in the Comparable 2011 Period
Non-GAAP Net Income of US$1.8 Million, Up 12.7% Year-Over-Year, Exceeding Guidance
BEIJING, Aug. 23, 2012 (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, 2012.
Second Quarter 2012 Financial Highlights
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Second quarter 2012 net revenues were US$20.7 million, an increase of 23.9% year-over-year from US$16.7 million in the second quarter of 2011.
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Second quarter 2012 gross profit was US$11.7 million, an increase of 48.7% year-over-year from US$7.9 million in the second quarter of 2011.
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Second quarter 2012 gross margin was 56.3%, compared to 46.9% in the second quarter of 2011.
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Second quarter 2012 net income attributable to Bona Film Group Limited was US$0.5 million, or US$0.01 per diluted ADS1, compared with a net loss attributable to Bona Film Group Limited of US$(0.9) million, or US$(0.02) per diluted ADS, in the second quarter of 2011.
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Second quarter 2012 non-GAAP net income2 was US$1.8 million, or US$0.03 per diluted ADS, an increase of 12.7% year-over-year, compared to non-GAAP net income of US$1.6 million, or US$0.03 per diluted ADS in the second quarter of 2011.
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Cash and cash equivalents, term deposits and restricted cash totaling US$29.1 million as of June 30, 2012.
- Cash outflow from operations totaled US$17.0 million, compared with US$6.4 million in the second quarter of 2011.
Business Updates and Recent Highlights
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Secured strategic investment from News Corporation following global media conglomerate's purchase of 19.9% equity stake from founder, Chairman and CEO, Mr. Yu Dong.
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Signed agreement with IMAX to bring first IMAX® theater to Tianjin.
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Distributed three films in the second quarter, including one imported film.
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Opened 14th movie theater in Dongguan, Guangdong Province, on June 20, 2012, increasing the Company's total number of screens to over 113 across the Company's 14 theaters.
- Won a record 10 awards at the 31st Hong Kong Film Awards, including Bona's third consecutive Best Picture award for critically acclaimed drama A Simple Life.
"We are pleased to report another quarter of double-digit year-over-year growth across all of our key operating metrics, with non-GAAP net income exceeding our projected range. During the second quarter, we furthered our strategy to diversify our revenue stream, growing revenues from our theater business by 100% year-over-year and 23.0% sequentially. By reducing the revenue concentration in our film distribution segment, we have made our business less susceptible to the timing of blockbuster releases," said Bona Founder, Chairman and CEO Yu Dong. "Our focus is to continue to cultivate our leading position as a film distributor while aggressively growing our complementary business segments. This balanced approach, coupled with a strong second-half release schedule that includes our highly anticipated film, The Last Tycoon, has us firmly on track to meet our full-year objectives.
Moreover, we are positioning the Company for even greater long-term success through expanded digital distribution of and the development of TV series based on films such as Flying Swords of Dragon Gate and Bodyguards and Assassins. Our television series, The King's Battles completed shooting in the second quarter and is on track to premiere in December, and we are confident that we can replicate the success of our film productions on the small screen.
"In addition to our operational accomplishments, News Corporation's strategic investment in our Company diversifies our ownership base and could help accelerate our longer-term global growth initiatives. We are uniquely positioned as one of China's leading private film companies with broad reach across the country's film industry value chain. The high quality international productions we bring to Chinese moviegoers and broad commercial appeal of our films to audiences throughout the world strengthen our brand equity as we continue to expand our vertically integrated business and work to achieve Bona's objectives, bringing the Company to the next level of success."
Second Quarter 2012 Financial Results
Net Revenues
| 2Q12 | 2Q11 | Y-o-Y% | |
| Net Revenues (US$mm) | 20.7 | 16.7 | 23.9% |
Net revenues for the second quarter of 2012 increased 23.9% year-over-year to US$20.7 million. The increase in net revenues was primarily due to growth in the Company's theater and exhibition business.
Net Revenues by Segment Operations
| Distribution |
Investment & Production |
Movie Theater |
Talent Agency |
Intersegment Elimination |
Consolidated | |
| Net Revenues from External Customers (US$mm) | 8.6 | 2.2 | 9.8 | 0.1 | -- | 20.7 |
| Intersegment Revenues (US$mm) | 0.1 | 3.6 | -- | -- | (3.7) | -- |
| Total Net Revenues (US$mm) | 8.7 | 5.8 | 9.8 | 0.1 | (3.7) | 20.7 |
Net revenues from distribution totaled US$8.7 million, representing a year-over-year increase of 12.7%. During the second quarter of 2012, Bona distributed three new films: Snowfall in Taipei and Seefood, and one imported film, The Three Musketeers. The Company expects to recognize the majority of box office revenue from Seefood in the third quarter, as this film was released at the end of June 2012.
Net revenues from film investment and production were US$5.8 million, mainly derived from Bona's investments in Snowfall in Taipei, released in the second quarter of 2012, and also from Flying Swords of Dragon Gate and A Simple Life, which were released in the fourth quarter of 2011 and first quarter of 2012, respectively.
Net revenues from the movie theater segment doubled to US$9.8 million, with the increase primarily attributable to expansion in the Company's theater and exhibition business. The Company owned and operated 14 theaters as of June 30, 2012, compared with 6 as of June 30, 2011.
Gross Profit and Gross Margin
| 2Q12 | 2Q11 | Y-o-Y% | |
| Gross Profit (US$mm) | 11.7 | 7.9 | 48.7% |
| Gross Margin | 56.3% | 46.9% | -- |
For the second quarter of 2012, gross profit increased 48.7% to US$11.7 million from US$7.9 million for the second quarter of 2011, with the increase primarily attributable to increased revenue contribution from Bona's higher margin movie theater segment, resulting from the growth in the Company's theater and exhibition business.
Segment Profit3 and Segment Margin
| Distribution |
Investment & Production |
Movie Theater |
Talent Agency |
Consolidated | |
| Segment Profit (US$mm) | 5.3 | 0.6 | 5.6 | 0.1 | 11.6 |
| As % of Total Segment Profit | 46.2% | 5.0% | 48.1 % | 0.7% | 100% |
| Segment Margin | 61.3% | 9.9% | 56.7% | 100% | 55.8% |
Segment margin for the distribution segment increased to 61.3% in the second quarter of 2012 from 42.2% in the second quarter of 2011, primarily as a result of the contribution from the imported film, The Three Musketeers, which carried a higher gross margin due to lower distribution costs.
Segment margin from the Company's investment & production business was 9.9% in the second quarter of 2012, compared with a segment margin of 12.2% in the second quarter of 2011. The fluctuation in segment margin of Bona's Investment & Production business was mainly due to the unpredictable economic performance of each film.
Operating Income and Operating Margin
| 2Q12 | 2Q11 | Y-o-Y% | |
| Operating Expenses (US$mm) | 11.6 | 9.5 | 22.5% |
| Operating Income (US$mm) | 0.7 | (1.6) | 144.9% |
| Operating Margin | 3.5% | (9.6)% | -- |
Total operating expenses, including participation expenses, general and administrative expenses, and sales and marketing expenses, increased 22.5% to US$11.6 million from US$9.5 million in the second quarter of 2011. The year-over-year increase in operating expenses was primarily due to:
- an increase in sales and marketing expenses for the promotion and advertising of the Company's distributed films including Snowfall in Taipei, Seefood and The Three Musketeers; and
- an increase in general and administrative expenses related to the expansion of the Company's movie theater business.
Second quarter 2012 operating margin improved to 3.5%, from (9.6)% in the second quarter 2011. The year-over-year increase in operating margin primarily resulted from growth in the Company's film distribution and theater exhibition businesses.
Net Income and Net Income Attributable to Bona Film Group Limited per ADS
| 2Q12 | 2Q11 | |
| Net Income (US$mm) | 0.5 | (0.9) |
| Net Income Attributable to Bona Film Group Limited per ADS (US$) | 0.01 | (0.02) |
| 2Q12 | 2Q11 | |
| Non-GAAP Net Income (US$mm) | 1.8 | 1.6 |
| Non-GAAP Net Income Attributable to Bona Film Group Limited per ADS (US$) | 0.03 | 0.03 |
Excluding share-based compensation expense, non-GAAP net income for the second quarter of 2012 was US$1.8 million, an increase of US$0.2 million, or 12.7%, over non-GAAP net income of US$1.6 million in the second quarter of 2011.
Cash and Cash Flow
As of June 30, 2012, Bona had cash and cash equivalents, term deposits and restricted cash totaling US$29.1 million, compared with US$30.2 million as of December 31, 2011. Operating cash flow for the second quarter of 2012 was a net outflow of approximately US$17.0 million, compared with US$6.4 million in the second quarter of 2011. The increase in cash outflow was mainly attributable to investment and production related to certain films that are expected to be released in 2012.
Business Outlook
Based on current market and operating conditions, the Company expects non-GAAP net income for the third quarter of 2012 to be in the range of US$2.0 million to US$2.3 million.
Based on these expectations for the second half of 2012, the Company maintains its full year 2012 non-GAAP net income guidance of approximately US$22.0 million. The net income estimates are attributed to the Company's second half distribution schedule. Full year 2012 non-GAAP net income guidance assumes an effective tax rate of 20.0% for the year, as well as high upfront costs associated with the opening of 10 to 12 greenfield cinemas in 2012.
Mr. Yu added, "We achieved a great deal in the first half of 2012 and have set the stage for even greater success ahead. We have a solid pipeline of films that will take us into 2013 and will be enhancing our business in the fourth quarter with the launch of our television series, which we believe will provide another important growth engine for Bona. We have a strong foundation, a sound growth strategy and a team in place that is capable of executing. We are excited about what the future holds for Bona and the industry as a whole, and have tremendous confidence in our ability to meet our objectives of global expansion, business growth and the creation of shareholder value."
Second Quarter 2012 Conference Call Details
Bona management will hold the earnings conference call at 8:00 p.m. Eastern Time on Thursday, August 23, 2012 (8:00 a.m. Beijing/Hong Kong Time on Friday, August 24, 2012). Management will discuss results and highlights of the quarter and 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 17078799 |
A live and archived webcast of the earnings conference call will be available on Bona's Investor Relations 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 14 movie theaters and manages a range of talented and popular Chinese artists.
For more information about Bona, please visit http://www.bonafilm.cn.
To be added to Bona's email list to receive Company news, please send your request to bona@tpg-ir.com.
The Bona Film Group Limited logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8412
1"ADS" is American depositary share. Each two ADSs represent one ordinary share.
2As used in this press release, non-GAAP net income and non-GAAP net income attributable to Bona Film Group Limited per ADS exclude share-based compensation. See "Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures" at the end of this press release.
3Segment profit is gross profit less film participation expense by segments for the periods indicated.
Forward Looking Statements
This news release may contain certain "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. 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. 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 Statement of Operations | ||||
| (in U.S. dollars, except share data) | ||||
| Three months ended June 30, | Six months ended June 30, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Net revenue | 20,740,560 | 16,742,613 | 64,419,579 | 36,001,846 |
| Cost of revenue | 9,066,347 | 8,892,571 | 31,955,978 | 18,785,382 |
| Gross profit | 11,674,213 | 7,850,042 | 32,463,601 | 17,216,464 |
| Film participation expense | 96,491 | 106,528 | 694,853 | 243,889 |
| Sales and marketing | 2,168,475 | 1,749,704 | 10,236,429 | 4,493,643 |
| General and administrative | 9,310,355 | 7,596,093 | 18,244,484 | 11,560,094 |
| Total operating expenses | 11,575,321 | 9,452,325 | 29,175,766 | 16,297,626 |
| Government subsidies | 620,804 | -- | 620,804 | 220,559 |
| Operating income (loss) | 719,696 | (1,602,283) | 3,908,639 | 1,139,397 |
| Interest income | 125,140 | 89,286 | 199,447 | 105,009 |
| Interest expense | (29,942) | (103,072) | (195,692) | (242,063) |
| Exchange (loss) gain | (242,101) | 264,843 | (511,413) | 368,960 |
| Other income | 71,429 | 275,945 | 145,299 | 347,373 |
| Investment loss | (5,584) | -- | (5,584) | -- |
| Income (loss) before income tax provision, equity in earnings (loss) of affiliated companies, and net of income taxes | 638,638 | (1,075,281) | 3,540,696 | 1,718,676 |
| Provision (benefit) for income taxes | 127,728 | (209,680) | 708,140 | 335,142 |
| Equity in earnings (loss) of affiliated companies, net of income taxes | -- | (28,691) | 5,604 | (26,339) |
| Net income (loss) | 510,910 | (894,292) | 2,838,160 | 1,357,195 |
| Less: Net (income) loss attributable to the non-controlling interests | (1,924) | (12,284) | 56,181 | 28,655 |
| Net income (loss) attributable to Bona Film Group Limited | 512,834 | (882,008) | 2,781,979 | 1,328,540 |
| Net income (loss) attributable to Bona Film Group Limited per ADS | ||||
| Basic | 0.01 | (0.02) | 0.05 | 0.02 |
| Diluted | 0.01 | (0.02) | 0.05 | 0.02 |
| Weighted average shares used in calculating net income per ordinary share | ||||
| Basic | 29,464,788 | 29,349,587 | 29,431,686 | 29,349,534 |
| Diluted | 30,144,055 | 29,349,587 | 30,026,996 | 29,922,284 |
| Unaudited Condensed Statement of Consolidated Comprehensive Income | ||||
| (in U.S. dollars) | ||||
| Three months ended June 30, | Six months ended June 30, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Net income (loss) | 510,910 | (894,292) | 2,838,160 | 1,357,195 |
| Other comprehensive income (loss), net of tax | ||||
| Foreign currency translation adjustments | (828,771) | 743,162 | (877,981) | 1,174,412 |
| Comprehensive income (loss) | (317,861) | (151,130) | 1,960,179 | 2,531,607 |
| Less: comprehensive (income) loss attribute to the non- controlling interests | (14,074) | (8,144) | 43,363 | 35,173 |
| Comprehensive income (loss) attributable to Bona Film Group Ltd. | (303,787) | (142,986) | 1,916,816 | 2,496,434 |
| Unaudited Condensed Consolidated Balance Sheets | ||
| (in U.S. dollars, except share data) | ||
| June 30, | December 31, | |
| 2012 | 2011 | |
| Cash and cash equivalents | 17,867,678 | 20,107,349 |
| Term deposits | 6,167,777 | 6,038,107 |
| Restricted cash | 5,074,126 | 4,066,162 |
| Accounts receivable, net of allowance for doubtful accounts | 22,589,713 | 41,642,787 |
| Prepaid expenses and other current assets | 24,802,212 | 27,335,348 |
| Amount due from related parties | 473,695 | 1,183,083 |
| Current deferred tax assets | 15,588 | 15,697 |
| Inventory | 225,298 | 228,412 |
| Total current assets | 77,216,087 | 100,616,945 |
| Distribution rights | 2,875,228 | 3,663,966 |
| Production costs | 89,418,722 | 69,844,822 |
| Prepaid film costs | 7,127,584 | 6,340,770 |
| Property and equipment, net | 43,729,145 | 40,208,447 |
| Acquired intangible assets | 3,533,963 | 3,993,152 |
| Non-current deferred tax assets | 277,790 | 320,670 |
| Long-term investments | 1,294,444 | 150,670 |
| Goodwill | 48,160,624 | 48,612,487 |
| Total assets | 273,633,587 | 273,751,929 |
| Accounts payable | 21,644,459 | 27,807,118 |
| Accrued expenses and other current liabilities | 31,222,162 | 27,239,987 |
| Amounts due to related parties | 3,178,116 | 3,027,872 |
| Income taxes payable | 1,028,062 | 795,229 |
| Bank borrowing | 5,064,521 | 12,561,806 |
| Other borrowing | 5,016,161 | 1,831,658 |
| Current film participation liabilities | 16,856,097 | 16,224,219 |
| Total current liabilities | 84,009,578 | 89,487,889 |
| Deferred income | 957,892 | 1,056,676 |
| Deferred tax liability | 299,419 | 413,219 |
| Total liabilities | 85,266,889 | 90,957,784 |
| Ordinary shares (par value of US$0.0005 per share, 85,000,000 shares authorized, 30,402,346 and 29,389,089 shares issued and outstanding as of December 31, 2011 and 30,402,346 and 29,504,266 shares issued and outstanding as of June 30, 2012.) | 14,752 | 14,695 |
| Additional paid-in capital | 172,358,134 | 169,519,847 |
| Statutory reserves | 2,044,870 | 2,044,870 |
| Accumulated profit | 5,114,781 | 2,332,802 |
| Accumulated other comprehensive income | 4,571,142 | 5,436,305 |
| Total Bona Film Group Limited's equity | 184,103,679 | 179,348,519 |
| Non-controlling interests | 4,263,019 | 3,445,626 |
| Total equity | 188,366,698 | 182,794,145 |
| Total liabilities and equity | 273,633,587 | 273,751,929 |
| Unaudited Reconciliation of Non-GAAP Measures | ||||
| (in U.S. dollars) | ||||
| Three months ended June 30, | Six months ended June 30, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Net income (loss) | 510,910 | (894,292) | 2,838,160 | 1,357,195 |
| Share-based compensation | 1,239,116 | 2,447,301 | 2,164,291 | 2,599,171 |
| Non-GAAP net income | 1,750,026 | 1,553,009 | 5,002,451 | 3,956,366 |