BONA FILM GROUP LTD (ADR)
August 27, 2015
"Our continued revenue growth in the second quarter of 2015 reflects the strength of our unique, vertically integrated business model," said Bona's founder, Chairman and CEO Mr. Yu Dong ("Mr. Yu"). "We distributed five films in the second quarter and achieved 58.5% year-over-year revenue growth overall, with 72.9% year-over-year growth in our film distribution segment, as the film
SPL2 had a strong box office performance. Revenue in our movie theater segment increased 50% year-over-year, benefitting from the opening of four state-of-the-art theaters in the first quarter of
2015, as well as from the ongoing rapid expansion of China's movie industry. I am very excited about our film slate for the second half of the year, which includes such highly anticipated productions as Bride Wars, The Treasure, The Dead End, and The Cinema That Never Dies, formerly titled The Phantom of Shanghai. Finally, we are seeing great progress in our cooperation initiatives with US film producers. I am pleased to report that the film we are developing in partnership with Tristar and Studio 8, Billy Lynn's Long Halftime Walk, successfully completed principal photography in July, has moved into the post-production phase, and is expected to be released in November 2016."
Second Quarter 2015 Financial Summary
- Second quarter 2015 net revenues were US$71.1 million, an increase of 58.5% from US$44.9 million in the second quarter of 2014.
- Second quarter 2015 gross profit was US$33.9 million, an increase of 44.4% from US$23.5 million in the second quarter of 2014.
- Second quarter 2015 gross margin was 47.7%, compared with 52.3% in the second quarter of 2014.
- Second quarter 2015 net loss attributable to Bona Film Group Limited was US$0.4 million, or US$(0.01) per basic and diluted ADS[1], compared with net income attributable to Bona Film Group
Limited of US$0.8 million, or US$0.01 per basic and diluted ADS, in the second quarter of 2014.
- Second quarter 2015 non-GAAP net income[2]was US$3.5 million, compared with non-GAAP net income of US$3.4 million in the second quarter of 2014.
- Second quarter 2015 adjusted EBITDA, non-GAAP2 was US$8.7 million, compared with adjusted EBITDA, non-GAAP of US$5.5 million in the second quarter of 2014.
- Cash and cash equivalents and restricted cash totaled US$158.9 million as of June 30, 2015.
- Cash provided by operating activities totaled US$51.2 million in the second quarter of 2015, compared with cash used in operating activities of US$32.8 million in the second quarter of 2014.
Distributed and/or invested in a total of five films in the second quarter of 2015 - Insanity and SPL2 were Bona's top performers in the second quarter, generating total box office receipts of
RMB619 million to date.
- Distributed Insanity on April 3, 2015. The film has generated RMB45 million in domestic box office receipts.
- Distributed SPL2 on June 18, 2015. The film has generated RMB560 million in domestic box office receipts.
Major films undergoing production in the second quarter of 2015 include The Cinema that Never Dies, formerly titled The Phantom of Shanghai, Sword Master and The Treasure.
- Movie theater business achieved record quarterly revenue of RMB29.1 million, a 50.0% increase compared with the same period last year.
- As of June 30, 2015, Bona owned and operated 30 theaters with 250 screens, including seven DMAX screens and two IMAX screens.
Net Revenues | ||
Net Revenues (US$mm) | 2Q15 2Q14 71.1 44.9 | Y-o-Y% 58.5% |
Net revenues for the second quarter of 2015 increased 58.5% year-over-year to US$71.1 million. The increase in net revenues was primarily attributable to an increase in net revenues from the film distribution segment and an increase in net revenues from the Company's movie theater segment. These increases are a result of the increase in the number of theaters and screens from our strategic expansion efforts in the theater segment and the maturation of theaters over time.
Net Revenues by Segment Operations
Film Film Investment Movie Talent Intersegment ConsolidatedNet Revenues from
Distribution & Production Theater Agency Elimination
External Customers (US$mm) Intersegment Revenues
(US$mm) Total Net Revenues (US$mm)
43.0 - 28.0 0.1 - 71.1
1.1 20.4 1.1 - (22.6) -
44.1 20.4 29.1 0.1 (22.6) 71.1
Net revenues from the film distribution segment totaled US44.1 million in the second quarter of 2015, an increase of 72.9% from US$25.5 million in the second quarter of 2014. During the second quarter of 2015, Bona distributed and/or invested in a total of five films, with SPL2 being well received by movie audiences.
Net revenues from the film investment and production segment were US$20.4 million in the second quarter of 2015, an increase of 33.3% from US$15.3 million in the second quarter of 2014. The increase was mainly derived from Bona's investments in films released in the second quarter of 2015, in particular the successful film SPL2.
Net revenues from the movie theater segment were US$29.1 million in the second quarter of 2015, a 50.0% increase from US$19.4 million in the second quarter of 2014. The increase was mainly due to the increase in the number of theaters and screens from the Company's strategic expansion efforts, and the maturation of new theaters over time.
Gross Profit and Gross Margin
2Q15 2Q14 Y-o-Y% Gross Profit (US$mm) 33.9 23.5 44.4% Gross Margin 47.7% 52.3% -For the second quarter of 2015, gross profit increased 44.4% to US$33.9 million from US$23.5 million in the second quarter of 2014. The year-over-year increase in gross profit was primarily attributable to strong performance from the Company's film distribution segment.
Segment Profit[3]and Segment Margin
Film Film Movie Talent Distribution Investment & Production Theater Agency Consolidated
Segment Profit (US$mm) 13.8 (0.5) 16.8 0.1 29.1
As % of Total Segment
Profit 47.4% (1.7)% 57.7% 0.3% 100.0%
Segment Margin 31.3% (2.5)% 57.7% 100.0% 40.9%
Margin for the Company's film distribution segment was 31.3% in the second quarter of 2015, compared with 32.9% in the second quarter of 2014.
Margin for the Company's film investment and production segment was negative 2.5% in the second quarter of 2015, compared with a segment margin of 5.0% in the second quarter of 2014. The decrease in this segment's margin was mainly due to poor performance of certain films invested and released in the second quarter of 2015.
Margin for the Company's movie theater segment was 57.7% in the second quarter of 2015, compared with 59.2% in the second quarter of 2014.
Operating Income and Operating Margin
2Q15 2Q14 Y-o-Y% Operating Expenses (US$mm) 34.9 23.7 47.7% Operating Income (US$mm) 2.8 1.0 175.5%
Operating Margin 4.0% 2.3% -
Total operating expenses, including participation expenses, general and administrative expenses, and selling and marketing expenses, for the second quarter of 2015 increased 47.7% to US$34.9 million from US$23.7 million in the second quarter of 2014. The year-over-year increase in operating expenses was primarily due to an increase in film participation expenses and selling and marketing expenses for the promotion and advertising of the Company's distributed films in the second quarter of 2015, as well as an increase in general and administrative expenses due to the expansion of the movie theater segment and the increase in the share-based compensation expenses.
Operating income for the second quarter of 2015 increased 175.5% to US$2.8 million from US$1.0 million in the second quarter of 2014. Operating margin in the second quarter of 2015 was 4.0% compared with 2.3% in the second quarter of 2014. The year-over-year increase in operating margin was primarily due to the growth in the Company's film distribution and movie theater businesses.
Net Income and Net Income Attributable to Bona Film Group Limited per ADS
2Q15 2Q14 2Q15 2Q14
Net (Loss) Income Attributable to Bona Film Group Limited (US$mm) (0.4) 0.8 Non-GAAP Net Income (US$mm) 3.5 3.4
Net (Loss) Income Attributable to Bona Film Group Limited per Basic
Non-GAAP Net Income Attributable to Bona Film Group Limited per
and Diluted ADS (US$) (0.01) 0.01 Basic ADS (US$) 0.06 0.06
Non-GAAP Net Income Attributable to Bona Film Group Limited per
Diluted ADS (US$) 0.05 0.05
Excluding share-based compensation expenses of US$3.9 million and US$2.7 million for the second quarters of 2015 and 2014, respectively, non-GAAP net income for the second quarter of 2015 was US$3.5 million, compared with non-GAAP net income of US$3.4 million in the second quarter of 2014.
Adjusted EBITDA, non-GAAP (US$mm) 8.7 5.5
Adjusted EBITDA, non-GAAP in the second quarter of 2015 was US$8.7 million, compared with adjusted EBITDA, non-GAAP of US$5.5 million in the second quarter of 2014.
Cash and Cash Flow
As of June 30, 2015, Bona had cash and cash equivalents and restricted cash totaling US$158.9 million, compared with US$153.6 million as of December 31, 2014. Net cash provided by operating activities for the second quarter of 2015 was US$51.2 million, compared with net cash used in operating activities of US$32.8 million for the second quarter of 2014. The change in cash flow from operations was mainly attributable to the accelerated collection of the accounts receivables from film distribution.
Business Outlook
Based on current market and operating conditions, the Company expects non-GAAP net income for the third quarter of 2015 to be in the range of US$4.5 million to US$5 million. These estimates do not include any potential costs that may be incurred by the Company in connection with the preliminary proposal by Mr. Yu, Sequoia Capital China I LP and Fosun International Limited (collectively, the "Buyer Group") to acquire all of the Company's outstanding shares, which is further described below.
"While the Chinese film industry is expected to maintain strong growth throughout 2015, I believe Bona can outpace the industry by executing on our integrated business model. Our upcoming film slate, new top quality theaters, industry leading marketing technology, and exciting international initiatives provide a foundation for sustained success. We will continue to invest for growth, as we build Bona into a leading international entertainment company," concluded Mr. Yu.
The Company received a preliminary non-binding proposal letter, dated June 12, 2015, from the Buyer Group, to acquire all of the Company's outstanding shares at $13.70 per ADS, or approximately $27.40 per ordinary share. The board of directors of the Company has formed a committee of independent directors to review and evaluate this proposal. The Company cautions shareholders and others considering trading its securities that neither the board of directors nor the independent committee has made any decision with respect to the Company's response to the proposal by the Buyer Group. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this proposal or any other transaction, except as required under applicable law.
Second quarter 2015 Conference Call Details
Bona management will hold the earnings conference call at 8:00 p.m. Eastern Time on Wednesday, August 26, 2015 (8:00 a.m. Beijing/Hong Kong Time on Thursday, August 27, 2015). 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: 800-906-606
China, Domestic: 400-120-0654
International: +65-6713-5440
The conference ID # is 17058125.
A live and archived webcast of the earnings conference call will be available on the IR Calendar page of the Bona investor relations website at http://ir.bonafilm.cn/events.cfm.
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 thirty 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=15750
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.
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, non-GAAP net income attributable to Bona Film Group Limited per ADS, which exclude share-based compensation expenses, and adjusted EBITDA, non-GAAP, which excludes share- based compensation expenses, interest, taxes, and non-cash depreciation and amortization charges. 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 and a supplemental liquidity measure which is useful for understanding and evaluating the Company's capacity for servicing its debt, and otherwise meeting its cash needs. Adjusted EBITDA, non-GAAP excludes depreciation and amortization, so it does not reflect any cash requirements for the replacement of the assets, which will often have to be replaced in the future. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance and liquidity, 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.
In China: In the U.S.:
Peng Li
Bona Film Group Limited Investor Relations
Tel: +86-10-5631-0700-398 Don Markley
Email: ir@bonafilm.cn
-2050
-ir.com
Tel: (212) 481
2015 | 2014 | 2015 | 2014 | ||
Net revenues | 71,08 | 44,85 | 188,63 | 101,46 | |
Cost of revenues | 37,19 | 21,39 | 109,73 | 54,90 | |
Gross profit | 33,89 | 23,46 | 78,90 | 46,56 | |
Film participation expenses | 7,03 | 3,34 | 15,07 | 7,87 | |
Selling and marketing expenses | 7,87 | 4,41 | 24,25 | 8,67 | |
General and administrative expenses | 20,02 | 15,90 | 39,12 | 28,55 | |
Total operating expenses | 34,94 | 23,65 | 78,45 | 45,10 | |
Government subsidies | 1,61 | 49 | 2,28 | 93 | |
Equity in earnings of equity method investments, net of tax | 2,26 | 72 | 4,32 | 2,21 | |
Operating income | 2,82 | 1,02 | 7,05 | 4,61 | |
Interest income | 42 | 34 | 95 | 58 | |
Interest expenses | (1,22 | (39 | (2,47 | (71 | |
Exchange gain (loss) | 6 | 29 | 12 | (1,52 | |
Other income | 7 | 7 | 14 | 14 | |
Interest income from loan to producer series | of TV | 3 | - | 6 | - |
Investment income Gain on deconsolidation of a | subsidiary | - - | 6 - | - 2 | 6 - |
Income before income tax | 2,19 | 1,40 | 5,885 | 3,15 | |
Provision for income taxes | 2,61 | 71 | 4,65 | 1,32 | |
Net (loss) income | (42 | 69 | 1,23 | 1,83 | |
Less: Net (loss) attributable to the noncontrolling interests | (5 | (6 | (25 | (28 |
Net (loss) income attributable
to Bona Film Group Limited (37 75 1,48 2,11
Net (loss) income attributable to Bona Film Group Limited per ADS Basic | (0.0 | 0.0 | 0.0 | 0.0 |
Diluted | (0.0 | 0.0 | 0.02 | 0.0 |
Weighted average shares used in calculating net (loss) income per ordinary share Basic | 30,844,26 | 30,372,664 | 30,684,41 | 30,296,54 |
Diluted | 30,844,26 | 31,638,734 | 33,112,55 | 31,119,02 |
Net (loss) income (42 69 1,23 1,83
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments (2 30 13 (2,78
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