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Bona Reports First Quarter 2014 Financial Results

(May 29, 2014)

BEIJING, May 29, 2014 (GLOBE NEWSWIRE) -- Bona Film Group Limited (Nasdaq:BONA) ("Bona" or the "Company"), a leading film distributor and vertically integrated film company in China, today announced unaudited financial results for the first quarter ended March 31, 2014.



"We had a good start to 2014 with our strong financial results achieved in the first quarter, which continued to validate the strengths of our vertically integrated business model. During the first quarter, we achieved robust top and bottom-line growth with non-GAAP net income above the top-end of our guidance range by 33%. Our first quarter revenue was again fueled by steady growth in our distribution and movie theater business segments, with our Chinese New Year blockbuster The Man from Macau achieving over RMB520 million box office, making us well positioned to achieve another box office record in 2014," said Bona's founder, Chairman and CEO Mr. Yu Dong. "The growth of the Chinese film market in 2014 to-date continues to be exceptionally strong, with box office and movie attendance both growing at around 30% year-over-year in the first quarter. With the film investment fund in place and a good number of exciting projects in our pipeline, we aim to advance key strategic initiatives in all of our business segments in 2014."



First Quarter 2014 Financial Summary



  • First quarter 2014 net revenues were US$56.6 million, an increase of 30.7% compared with US$43.3 million in the first quarter of 2013.


  • First quarter 2014 gross profit was US$23.1 million, an increase of 56.2% compared with US$14.8 million in the first quarter of 2013.


  • First quarter 2014 gross margin was 40.8%, compared with 34.1% in the first quarter of 2013.


  • First quarter 2014 net income attributable to Bona Film Group Limited was US$1.4 million, or US$0.02 per basic and diluted ADS1, compared with net income attributable to Bona Film Group Limited of US$0.5 million, or US$0.01 per basic and diluted ADS, in the first quarter of 2013.


  • First quarter 2014 non-GAAP net income2 was US$2.0 million, compared with non-GAAP net income of US$1.2 million in the first quarter of 2013.


  • First quarter 2014 adjusted EBITDA, non-GAAP2, was US$4.2 million, compared with adjusted EBITDA, non-GAAP of US$3.1 million in the first quarter of 2013.


  • Cash and cash equivalents and restricted cash totaled US$90.1 million as of March 31, 2014.


  • Cash used in operating activities totaled US$23.0 million in the first quarter of 2014, compared with cash generated from operating activities of US$2.5 million in the first quarter of 2013.



First Quarter 2014 Business Updates and Recent Highlights





  • Distributed three new films theatrically in the first quarter – Horseplay, The Man from Macau, and The Mortal Instruments: City of Bones.


    • Released comedy Horseplay, directed by Lee Chi Ngai and starring Kelly Chen and Tony Leung, on March 21, 2014.


    • Released action comedy The Man from Macau, directed by Wong Jing and starring well-known actors Chow Yun-fat and Nicholas Tse, on January 31, 2014. The film is a nostalgic yet completely new interpretation of the popular God of Gamblers series from the early 1990's, and has generated over RMB520 million of domestic box office, making it the third highest grossing Chinese film to-date in 2014.


    • Released Hollywood import The Mortal Instruments: City of Bones, on January 3, 2014.




  • Films scheduled for the second quarter include:


    • Small-budget romance To Love Somebody, released on May 16, 2014. Directed by Francis Sung, the film stars an up-and-coming mainland Chinese cast including Tong Yao, Tong Lei and Lan Ching Lung.


    • Overheard 3, the latest installment in Bona's popular Overheard franchise and released on May 29, 2014. The film is co-directed by Alan Mak and Felix Chong, and features three of Hong Kong's most popular film stars - Sean Lau, Louis Koo and Daniel Wu, as well as internationally renowned mainland Chinese actress Zhou Xun. Inspired by true stories, Overheard 3 reveals the dark side of the real estate market in Hong Kong and has drawn significant public and media attention.




  • Signed contracts to invest in and/or distribute two high-profile projects, Duckweed and Bride Wars:


    • Duckweed represents the directorial debut by China's writer-celebrity Han Han. A prominent author, blogger, professional rally racer and now director, Han first made his name as a best-selling novelist in high school and since went on to become one of the most influential writers and thought leaders in contemporary China. Based on an original story Han wrote specifically for his directorial debut, Duckweed stars a young and prominent mainland Chinese cast including Feng Shaofeng, Berlin Chen, Joe Chan and Wallace Chung, and tells the story of three young men yearning for their ideals of life. Since the production began, over 40 million fans have followed Han as he updates news and photos of the film regularly on Weibo, China's popular microblog site. This highly anticipated title is tentatively slated for a late July release.


    • Bride Wars, a Bona–Fox cooperation, is expected to start principal photography in late June. Based on the successful 2009 Fox comedy with the same title, this new take on Bride Wars borrows the proven story structure but is tailored to the taste of today's young domestic Chinese audience. Directed by Tony Chan and starring Angelababy and Ni Ni, two of China's most popular young actresses today, the project combines Fox's international production experience and Bona's local market expertise to create a high-quality romantic comedy and is expected to become a big crowd-pleaser. This cooperation represents an important milestone for Bona and is tentatively scheduled for an early 2015 release.




  • Successfully received regulatory approvals and quotas to distribute two foreign films – Non-Stop and Pompeii, with a third film, 12 Years A Slave, currently going through regulatory approval process. All three films are currently under the final editing and translation process and are tentatively slated for the second and third quarters depending on their respective progress.


  • Additional major films undergoing post-production include The White Haired Witch, My Geeky Nerdy Buddies (formerly titled Daydream Believer), The Grandmasters 3D (North American edition), Insanity, The Dead End (formerly titled Sunspot), I Am Somebody and The Taking of Tiger Mountain.


  • Additional major films undergoing production and pre-production include The Sword Master, Secret Treasure (tentative name) and The Man from Macau 2.


  • In April 2014, Bona's The Grandmaster and Unbeatable together won a record-breaking 13 top awards at the 33rd Hong Kong Film Awards, including Best Film, Best Director and Best Actress, marking a ground-breaking achievement for any film company in this prestigious award's history.


  • Started the final construction and decoration phase for two new theater locations in Sanya and Ningbo Beilun. Eight additional new theater locations are about to enter the construction stage later this year, making us well positioned to open six to ten new theaters by the end of 2014.



First Quarter 2014 Financial Results



Net Revenues


















 

1Q14

1Q13

Y-o-Y%

Net Revenues (US$mm) 

56.6

43.3

30.7%


Net revenues for the first quarter of 2014 increased 30.7% year-over-year to US$56.6 million. The increase in net revenues was primarily attributable to an increase in revenues from the Company's movie theater and film distribution segments, due to the strong box office performance by the Company's film The Man from Macau.



Net Revenues by Segment Operations



















































 

Film

Investment 

Movie 

Talent

Intersegment

Consolidated

 

Distribution

& Production

Theater

Agency

Elimination

 

Net Revenues from External Customers (US$mm)

39.1

(0.2)

17.7

0.0

--

56.6

Intersegment Revenues (US$mm)

0.9

14.0

--

--

(14.9)

--

Total Net Revenues (US$mm)

40.0

13.8

17.7

0.0

(14.9)

56.6


Net revenues from film distribution totaled US$40.0 million. During the first quarter of 2014, Bona distributed three new films– Horseplay, The Man from Macau, and The Mortal Instruments: City of Bones.



Net revenues from film investment and production were US$13.8 million, mainly derived from Bona's investments in films released in the first quarter of 2014.



Net revenues from the movie theater segment increased to US$17.7 million. The increase was mainly due to the increase in the number of theaters and screens from the Company's expansion strategic efforts.



Gross Profit and Gross Margin
























 

1Q14

1Q13

Y-o-Y%

Gross Profit (US$mm)

23.1

14.8

56.2%

Gross Margin

40.8%

34.1%

--


For the first quarter of 2014, gross profit increased to US$23.1 million from US$14.8 million in the first quarter of 2013. The year-over-year increase in gross profit was primarily attributable to strong performance from the Company's film distribution segment and the expansion of movie theaters.



Segment Profit3 and Segment Margin














































 

Film 

Investment 

Movie 

Talent 

Consolidated

 

Distribution

& Production

Theater

Agency

 

Segment Profit (US$mm)

9.4

0.4

10.3

0.0

20.1

As % of Total Segment Profit

46.7%

2.1%

51.1%

0.1%

100.0%

Segment Margin

23.4%

3.1%

58.1%

100.0%

35.4%


Segment margin for the Company's film distribution segment slightly increased to 23.4% in the first quarter of 2014, compared with 23.1% in the first quarter of 2013.



Segment margin from the Company's investment and production business decreased to 3.1% in the first quarter of 2014, compared with a segment margin of 4.8% in the first quarter of 2013. The decrease in segment margin in this business was mainly due to the higher profit margin from the sale of the Company's TV series The King's Battle in the first quarter of 2013.



Segment margin from the Company's movie theater business slightly increased to 58.1% in the first quarter of 2014, compared with 57.2% in the first quarter of 2013.



Operating Income and Operating Margin






























 

1Q14

1Q13

Y-o-Y%

Operating Expenses (US$mm)

21.4

14.7

45.5%

Operating Income (US$mm)

3.6

0.7

444.2%

Operating Margin

6.3%

1.5%

--


Total operating expenses, including participation expenses, general and administrative expenses, and selling and marketing expenses, increased 45.5% to US$21.4 million from US$14.7 million in the first quarter of 2013. 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 first quarter of 2014, as well as an increase in general and administrative expenses due to the Company's expansion in the movie theater segment.



Operating income for the first quarter of 2014 increased 444.2% year-over-year to US$3.6 million from US$0.7 million in the first quarter of 2013. First quarter 2014 operating margin was 6.3% compared to 1.5% in the first quarter of 2013. The year-over-year increase in operating margin was primarily due to the strong performance of The Man From Macau.



Net Income and Net Income Attributable to Bona Film Group Limited per ADS









































 

1Q14

1Q13

Net Income Attributable to Bona Film Group Limited (US$mm)

1.4

0.5

Net Income Attributable to Bona Film Group Limited per Basic and Diluted ADS (US$)

0.02

0.01

 

 

 

 

1Q14

1Q13

Non-GAAP Net Income (US$mm)

2.0

1.2

Non-GAAP Net Income Attributable to Bona Film Group Limited per Basic and Diluted ADS (US$) 

0.04

0.03


Excluding share-based compensation expense of US$0.9 million and US$1.0 million for the first quarters of 2014 and 2013, respectively, non-GAAP net income for the first quarter of 2014 was US$2.0 million, compared with non-GAAP net income of US$1.2 million in the first quarter of 2013.
















 

1Q14

1Q13

Adjusted EBITDA, non-GAAP (US$mm)

4.2

3.1


Adjusted EBITDA, non-GAAP, in the first quarter of 2014 was US$4.2 million, compared with adjusted EBITDA, non-GAAP of US$3.1 million in the first quarter of 2013.



Cash and Cash Flow



As of March 31, 2014, Bona had cash and cash equivalents and restricted cash totaling US$90.1 million, compared with US$63.4 million as of December 31, 2013. Net cash used in operating activities for the first quarter of 2014 was approximately US$23.0 million, compared with net cash generated from operating activities of US$2.5 million for the first quarter of 2013. The change in cash flow from operations was mainly attributable to the increase in investment in films scheduled for release in 2014.



Business Outlook



Based on current market and operating conditions, the Company expects non-GAAP net income for the second quarter of 2014 to be in the range of US$2.5 million to US$3.0 million.



"I believe that Bona is poised to leverage its leading industry position, rich production resources, integrated business model and support from resourceful shareholders to thrive as a new-age film company. With the film fund in place, we've made a series of high-profile investments with great box office potential, including The Taking of Tiger Mountain, The White Haired Witch and I Am Somebody. Moreover, our recent announcements on such highly anticipated projects as Duckweed, Bride Wars and My Geeky Nerdy Buddies exemplify the Company's readiness to quickly adjust to the changing market environment and our dedication to capture today's young audience. Given the strong film slate, I am confident that we will continue the strong box office growth rate of 2013 and hit a new record in 2014," concluded Mr. Yu.



Board Member Resignation



The Company also announced that Dr. Jack Q. Gao, Senior Vice President of News Corporation has resigned from the Company's Board, effective May 16, 2014.



"I would like to thank Dr. Gao for his important contributions to Bona, both strategically and operationally. We greatly valued his support and advice, and look forward to the continued close working relationship with 21st Century Fox," said Mr. Yu.



First Quarter 2014 Conference Call Details



Bona management will hold the earnings conference call at 8:00 p.m. Eastern Time on Thursday, May 29, 2014 (8:00 a.m. Beijing/Hong Kong Time on Friday, May 30, 2014). 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 44157084.


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.



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 twenty-two 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



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, 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. 



1 "ADS" is American depositary share. Each two ADSs represent one ordinary share.



2 As 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 expenses. Adjusted EBITDA, non-GAAP, excludes share-based compensation expenses, interest, taxes and non-cash depreciation and amortization charges. See "Non- GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures" at the end of this press release.



3 Segment profit is gross profit less film participation expenses and add equity in earnings of equity method investments by segment for the periods indicated.





































































































































































































































BONA FILM GROUP LIMITED

Unaudited Condensed Consolidated Statement of Operations

(in thousands of U.S. dollars, except share data)

 

 

 

 

Three-months ended March 31

 

2014

2013

 

 

 

Net revenue

56,603

43,313

Cost of revenue

33,508

28,525

Gross profit

23,095

14,788

 

 

 

Film participation expenses

4,530

165

Selling and marketing expenses

4,260

2,608

General and administrative expenses

12,656

11,968

Total operating expenses

21,446

14,741

 

 

 

Government subsidies

438

612

Equity in earnings of equity method investments

1,499

 --

Operating income

3,586

659

 

 

 

Interest income from bank deposit

243

(32)

Interest expenses

(327)

(403)

Exchange loss

(1,822)

(53)

Other income

71

71

Income before income tax

1,751

242

 

 

 

Provision for income taxes

613

48

Net income

1,138

194

 

 

 

Less: Net loss attributable

 

 

to the noncontrolling interests

(222)

(354)

 

 

 

Net income attributable

 

 

to Bona Film Group Limited

1,360

548

 

 

 

Net income attributable to Bona Film Group

 

 

Limited per ADS

 

 

Basic

0.02

0.01

Diluted

0.02

0.01

 

 

 

Weighted average shares used in calculating net

 

 

income per ordinary share

 

 

Basic

30,219,574

29,742,503

Diluted

31,119,736

30,288,605

 

 

 

 

 

 














































































BONA FILM GROUP LIMITED

Unaudited Condensed Statement of Consolidated Comprehensive Income

(in thousands of U.S. dollars)

 

 

 

 

Three-months ended March 31

 

2014

2013

 

 

 

Net income

1,138

194

Other comprehensive (loss) income, net of tax of nil

 

 

Foreign currency translation adjustments

(3,086)

316

Comprehensive (loss) income

(1,948)

510

Less: comprehensive loss attributable to the noncontrolling

 

 

interests

(228)

(351)

Comprehensive (loss) income attributable to Bona Film Group Limited

(1,720)

861

 

 

 

 

 

 









































































































































































































































































































































BONA FILM GROUP LIMITED

Unaudited Condensed Consolidated Balance Sheets

(in thousands of U.S. dollars)

 

 

 

 

March 31,

December 31,

 

2014

2013

 

 

 

Cash and cash equivalents

49,670

32,684

Restricted cash

40,435

30,728

Accounts receivable, net of allowance for doubtful 

 

 

 accounts

60,626

39,409

Prepaid expenses and other current assets

17,743

17,326

Amount due from related parties

315

510

Current deferred tax assets

732

973

Inventories

316

313

Total current assets

169,837

121,943

 

 

 

Distribution rights

9,399

6,554

Production costs

158,984

142,245

Prepaid film costs

4,404

4,406

Property and equipment, net

60,867

63,679

Acquired intangible assets, net

2,346

2,452

Non-current deferred tax assets

482

510

Cost method investments

1,477

1,479

Equity method investments

26,241

26,278

Goodwill

49,218

50,540

Long-term prepaid expenses

22

 --

Total assets

483,277

420,086

 

 

 

Accounts payable

34,002

24,540

Accrued expenses and other current liabilities

37,017

32,635

Amounts due to related parties

5,161

5,886

Income tax payable

5,186

6,460

Bank borrowings

84,728

60,704

Other borrowings

2,404

4,126

Current film participation financing liabilities with 

 

 

 unrelated parties

7,268

7,117

Current film participation financing liabilities with 

 

 

 related party

50,557

36,705

Total current liabilities

226,323

178,173

 

 

 

Bank borrowings

20,000

20,000

Deferred income

1,268

1,359

Non-current film participation financing liabilities with 

 

 

 related party

31,610

17,675

Non-current deferred tax liabilities

 --

23

Total liabilities

279,201

217,230

 

 

 

Bona Film Group Limited's ordinary shares (par value of 

 

 

 US$0.0005 per share, 85,000,000 shares authorized, 

 

 

 31,402,346 and 30,368,555 shares issued and 

 

 

 outstanding as of March 31, 2014 and 31,402,346 and

 

 

 30,160,235 shares issued and outstanding as of 

 

 

 December 31, 2013.)

15

15

Additional paid-in capital

185,146

182,782

Statutory reserves

3,534

3,534

Accumulated profit

6,576

5,216

Accumulated other comprehensive income

6,434

9,513

Total Bona Film Group Limited's equity

201,705

201,060

 

 

 

Noncontrolling interests

2,371

1,796

Total equity

204,076

202,856

 

 

 

Total liabilities and equity

483,277

420,086

 

 

 

 

 

 







































































































BONA FILM GROUP LIMITED

Unaudited Reconciliation of Non-GAAP Measures

(in thousands of U.S. dollars)

 

 

 

 

Three-months ended March 31

 

2014

2013

 

 

 

Net income

1,138

194

 

 

 

Adjustment for share-based

 

 

compensation

886

1,037

 

 

 

Adjusted net income (non-GAAP)

2,024

1,231

 

 

 

Adjustment for interest

84

435

Adjustment for taxes

613

48

Adjustment for depreciation &

 

 

amortization

1,434

1,394

 

 

 

Adjusted EBITDA (non-GAAP)

4,155

3,108

 

 

 

CONTACT: In China:
Peng Li
Bona Film Group Limited
Tel: +86-10-5631-0700-398
Email: ir@bonafilm.cn

In the U.S.:
The Piacente Group, Inc.
Investor Relations
Don Markley
Tel: (212) 481-2050
Email: bona@tpg-ir.com



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