updated 3/1/2011 5:17:05 PM ET 2011-03-01T22:17:05

BEIJING, March 1, 2011 (GLOBE NEWSWIRE) -- Bona Film Group Limited, ("Bona" or the "Company") (Nasdaq:BONA), the largest privately owned film distributor in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2010.

Fourth Quarter 2010 Financial Highlights

  • Fourth quarter 2010 net revenues were US$17.8 million, a decrease of 22.2% year-over-year from US$22.9 million in the fourth quarter 2009
  • Fourth quarter 2010 gross margin was 48.4%, compared to 47.5% in the fourth quarter 2009
  • Fourth quarter 2010 operating income was US$3.2 million, a decrease of 33.3% year-over-year from US$4.8 million in the fourth quarter 2009
  • Fourth quarter 2010 net income was US$3.1 million, a decrease of 21.5% year-over-year compared to US$4.0 million in the fourth quarter 2009
  • Fourth quarter 2010 non-GAAP net income1 was US$3.4 million, a decrease of 22.2% year-over-year compared to US$4.3 million in the fourth quarter 2009

Full Year 2010 Financial Highlights

  • Full year 2010 net revenues increased 37.6% year-over-year to US$52.8 million from US$38.4 million for the full year 2009
  • Full year 2010 gross margin was 49.8%, compared to 48.2% for the full year 2009
  • Full year 2010 operating income increased 65.3% year-over-year to US$9.2 million from US$5.6 million for the full year 2009
  • Full year 2010 net loss was US$4.2 million, compared to net income of US$5.5 million for the full year 2009
  • Full year 2010 non-GAAP net income increased 99.7% year-over-year to US$10.8 million from US$5.4 million for the full year 2009

"Our vertically integrated business model with a focus on film distribution positions us favorably to capitalize on the rapidly growing China movie box office," said Bona Founder, Chairman and CEO Yu Dong. "Following a solid year in 2009, we were able to grow our full year 2010 net revenues approximately 38 percent year-over-year and achieved a healthy full year 2010 gross margin of almost 50 percent. We foresee exciting opportunities in 2011, as we target to expand the number of high-quality film projects we invest in, produce and distribute. We will also enhance partnerships with local TV stations to distribute non-theatrical copyright sales abroad. Moreover, our movie theater business, which we acquired in April 2010, is achieving stable and consistent margins and we plan to grow this business prudently, which we believe will help strengthen our distribution network across the country. As consumption in China grows, demand for high-quality movies will continue to rise and we believe we have the experience and business fundamentals to grow our business and deliver long-term shareholder value."

Fourth Quarter 2010 Financial Results

Net Revenues

 
  4Q10 4Q09 Y-o-Y%
Net Revenues (US$mm) 17.8 22.9 (22.2%)

The year-over-year decrease in fourth quarter 2010 net revenues was primarily due to films distributed in the fourth quarter 2009 achieving a higher box office than films released in the fourth quarter 2010.

Segment Net Revenues

 
 

Distribution
Investment &

Production


Movie Theater


Talent  Agency
Intersegment

Elimination


Consolidated
Net Revenues from External Customers (US$mm) 11.5 1.1 4.9 0.3 -- 17.8
Intersegment Revenues (US$mm) 0.1 7.0 -- -- (7.1) --
Total Net Revenues (US$mm) 11.6 8.1 4.9 0.3 (7.1) 17.8

The Company acquired its movie theater business in April, 2010.

Gross Profit and Gross Margin

 
  4Q10 4Q09 Y-o-Y%
Gross Profit (US$mm) 8.6 10.9 (20.8%)
Gross Margin 48.4% 47.5% --

The year-over-year decrease in fourth quarter 2010 gross profit was primarily due to films distributed in the fourth quarter 2009 generating stronger revenues than films distributed in the fourth quarter 2010.

Segment Profit2 and Segment Margin

 
  Distribution Investment &

Production


Movie Theater


Talent Agency


Consolidated
Segment Profit (US$mm) 4.3 1.4 2.7 0.3 8.7
As % of Total Segment Profit 49.6% 16.6% 30.9% 2.9% 100%
Segment Margin 36.9% 17.8% 54.3% 79.2% 48.7%

Operating Income and Operating Margin

 
  4Q10 4Q09 Y-o-Y%
Operating Expenses (US$mm) 5.4 6.1 (10.9%)
Operating Income (US$mm) 3.2 4.8 (33.3%)
Operating Margin 17.9% 20.9% --

Fourth quarter 2010 operating expenses decreased year-over-year mainly due to higher sales and marketing expenditures related to the distribution of films in the fourth quarter 2009, and also because of the decreased film participation expenses related to the syndication of film participation interests in Bodyguards and Assassins, which was released in the fourth quarter 2009. The lower operating margin in the fourth quarter 2010 was mainly due to the dilutive impact from the comparatively lower operating margin of the movie theater business, which was acquired in April 2010.

Net Income and Net Income Attributable to Bona Film Group Limited per ADS3

 
  4Q10 4Q09
Net Income (US$mm) 3.1 4.0
Net Income Attributable to Bona Film Group Limited per ADS (US$) 0.06 0.10
 
  4Q10 4Q09
Non-GAAP Net Income (US$mm) 3.4 4.3
Non-GAAP Net Income Attributable to Bona Film Group Limited per

ADS (US$)
 

0.06
 

0.11

Excluding share-based compensation and changes in fair value of derivatives and warrants, the Company's non-GAAP net income for the fourth quarter 2010 was US$3.4 million.

Cash and Cash Flow

As of December 31, 2010, Bona had cash and cash equivalents and restricted cash totaling US$84.2 million. Operating cash flow for the fourth quarter of 2010 was approximately negative US$24.7 million, mainly attributable to the spending on production investment of certain films which are expected to be released during the year 2011.

Full Year 2010 Financial Results

Net Revenues

 
  FY10 FY09 Y-o-Y%
Net Revenues (US$mm) 52.8 38.4 37.6%

The year-over-year increase in net revenues was mainly attributable to the acquisition of the Company's movie theater business in April 2010, which contributed net revenues of US$11.3 million.

Top Five Films in Terms of Revenue Contribution

 
Film Title Release Date
1. Bodyguards and Assassins December 18, 2009
2. Just Call Me Nobody December 3, 2010
3.Triple Tap July 2, 2010
4. Pleasant Goat and Big Big Wolf II January 29, 2010
5. Curse of the Deserted August 13, 2010

The top five films in 2010 contributed US$28.3 million or 53.5% of full year 2010 net revenues, whereas the contribution of the top five films in 2009 was 67.9%.

Segment Net Revenues

 
  Distribution Investment &

Production


Movie Theater


Talent Agency
Intersegment

Elimination


Consolidated
Net Revenues from External Customers (US$mm) 36.3 3.1 11.3 2.1 -- 52.8
Intersegment Revenues (US$mm) 0.3 17.2 -- -- (17.5) --
Total Net Revenues (US$mm) 36.6 20.3 11.3 2.1 (17.5) 52.8

Gross Profit and Gross Margin

 
  FY10 FY09 Y-o-Y%
Gross Profit (US$mm) 26.3 18.5 42.4%
Gross Margin 49.8% 48.2% --

The year-over-year increase in gross margin was primarily due to the acquisition of the Company's movie theater business in April 2010, which contributed US$6.0 million to gross profit.

Segment Profit and Segment Margin

 
  Distribution Investment &

Production


Movie Theater


Talent Agency


Consolidated
Segment Profit (US$mm) 14.4 4.2 6.0 1.0 25.6
As % of Total Segment Profit 56.2% 16.5% 23.5% 3.8% 100%
Segment Margin 39.4% 20.8% 53.1% 45.1% 48.5%

Operating Income and Operating Margin

 
  FY10 FY09 Y-o-Y%
Operating Expenses (US$mm) 17.2 12.9 33.2%
Operating Income (US$mm) 9.2 5.6 65.3%
Operating Margin  17.4% 14.5% --

The year-over-year increase in full year 2010 operating expenses was primarily attributable to expenses related to the movie theater business, which was acquired in April 2010.

Operating margin increase in the full year 2010 was mainly due to the success of Triple Tap, which was distributed in the way of minimum guarantee, allowing Bona to achieve higher margin, and moreover, the operating margin increase was also attributable to higher revenue contribution from the advertising business, which normally has very limited cost.

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

 
  FY10 FY09
Net Income (Loss) (US$mm) (4.2) 5.5
Net Income Attributable to Bona Film Group Limited per ADS (US$) (0.24) 0.14
 
  FY10 FY09
Non-GAAP Net Income (US$mm) 10.8 5.4
Non-GAAP Net Income Attributable to Bona Film Group Limited per ADS (US$) 0.26 0.13

The net loss for the full year 2010 was due to a change in fair value of the embedded derivatives associated with the Company's Series A and Series B preferred shares, amounting to US$14.5 million. Excluding share-based compensation and changes in fair value of derivatives and warrants, the Company's non-GAAP net income for full year 2010 was US$10.8 million, an increase of 99.7% year-over-year.

Business Outlook

Based on current market and operating conditions, the Company expects non-GAAP net income for the first quarter 2011 to be in the estimated range of US$1.8 million to US$2.2 million, and non-GAAP net income for the full year 2011 to be approximately US$20 million.

1As 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, changes in fair value of derivatives and changes in fair value of warrants. See "Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Measures" at the end of this press release.

2Segment 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.

Fourth Quarter 2010 Conference Call Details

Bona management will hold its earnings conference call at 8:00 p.m. Eastern Time on Tuesday, March 1, 2011 (9:00 a.m. Beijing/Hong Kong Time on Wednesday, March 2, 2011). Management will discuss fourth quarter and full year results and highlights and answer questions from investors.

The dial-in numbers for the earnings conference call are as follows:

U.S. Toll Free: 1-866-242-1388

China Toll Free: 800-870-0816 / 400-698-8166

Hong Kong Toll Free: 852-2759-8661

International: + 61-288-236-760

The password for the call is #44923109.

The live and archived webcast of the earnings conference call will be available on Bona's IR website at http://ir.bonafilm.cn .

About Bona Film Group Limited

Bona Film Group Limited (Nasdaq:BONA) is the largest privately owned 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 six 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. 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 expense, changes in fair value of derivatives and warrants. 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-month ended

December 31,
Year ended

December 31,
   2010  2009  2010  2009
         
Net revenue 17,834,818 22,913,633 52,819,786 38,372,551
Cost of revenue 9,201,171 12,019,205 26,501,853 19,888,461
Gross profit 8,633,647 10,894,428 26,317,933 18,484,090
         
Film participation expense (income) (43,121) 888,442 696,101 1,244,848
Sales and marketing 2,295,135 4,892,896 7,213,519 8,887,971
General and administrative 3,191,041 329,906 9,305,393 2,789,416
Total operating expenses 5,443,055 6,111,244 17,215,013 12,922,235
         
Government Subsidy -- -- 88,147 --
Operating income 3,190,592 4,783,184 9,191,067 5,561,855
         
Interest income 5,903 1,763 872,913 17,035
Interest expense (87,699) (42,333) (409,599) (42,333)
Other income (expense) 33,482 (110,565) 730,358 (120,469)
Changes in fair value of warrants -- -- -- 119,451
Changes in fair value of derivatives -- (303,000) (14,528,000) 90,000
Income (loss) before income tax provision, and equity in earnings (loss) of affiliated companies 3,142,278 4,329,049 (4,143,261) 5,625,539
         
Provision for income taxes (984) 285,383 91,053 338,647
Equity in earnings (loss) of affiliated companies 1,991 (37,597) 11,254 172,773
Net income (loss) 3,145,253 4,006,069 (4,223,060) 5,459,665
         
Less: Net income (loss) attributable to the noncontrolling interests (24,031) 127,269 (131,686) (168,429)
Net income (loss) attributable to Bona Film Group Limited 3,169,284 3,878,800 (4,091,374) 5,628,094
         
Non-GAAP Net income (loss) 3,365,910 4,327,191 10,752,285 5,383,116
         
Net income (loss) attributable to Bona Film Group Limited per ADS        
Basic 0.06 0.10 (0.24) 0.14
Diluted 0.06 0.10 (0.24) 0.13
         
Weighted average shares used in calculating net income (loss) per ordinary share        
Basic 17,105,650 7,811,658 12,758,575 8,453,842
Diluted 17,363,898 7,811,658 12,758,575 8,518,402
 
Unaudited Condensed Consolidated Balance Sheets
(In U.S. dollars, except share data)
     
  December 31, December 31,
  2010 2009
     
Cash 84,247,984 7,418,213
Accounts receivable, net of allowance for doubtful accounts 15,225,792 19,491,100
Prepaid expenses and other current assets 15,659,415 7,025,552
Amount due from related parties 2,815,147 --
Current deferred tax assets 7,885 5,492
Inventory 96,639 --
Total current assets 118,052,862 33,940,357
     
Distribution rights 2,265,601 5,550,394
Production costs 64,815,878 19,528,560
Prepaid film costs 484,848 468,645
Property and equipment, net 14,498,304 341,736
Acquired intangible assets 2,293,744 --
Amounts due from related parties -- 6,570,122
Non-current deferred tax assets 6,732 2,105
Cost method investment 30,303 28,565
Investment in equity affiliates 231,854 563,050
Goodwill 28,536,410 34,880
Total assets 231,216,536 67,028,414
     
Accounts payable 9,533,672 8,902,182
Accrued expenses and other current liabilities 19,577,066 10,385,841
Amounts due to related parties 1,587,121 1,037,801
Income tax payable 377,019 1,051,137
Bank borrowing 22,012,560 6,590,317
Other borrowing 1,445,150 6,089,373
Current film participation liabilities 10,209,351 8,337,483
Total current liabilities 64,741,939 42,394,134
     
Derivatives -- 2,903,000
Non-current film participation liabilities 6,306,818 1,562,304
Deferred tax liability 95,613 --
Total liabilities 71,144,370 46,859,438
     
Series A convertible redeemable preferred shares -- 9,727,866
Series B convertible redeemable preferred shares -- 9,074,270
     
Ordinary shares 14,675 3,906
Additional paid-in capital 165,975,336 4,103,847
Statutory reserves 1,975,715 1,748,455
Accumulated deficit (12,030,124) (5,561,344)
Accumulated other comprehensive income 2,034,154 474,915
Total Bona Film Group Limited's equity 157,969,756 769,779
     
Noncontrolling interests 2,102,410 597,061
Total equity 160,072,166 1,366,840
     
Total liabilities, Series A & B convertibleredeemable preferred shares, and equity 231,216,536 67,028,414

 

Reconciliation of Non-GAAP Measures
     
  Three-month ended

December 31,
Year ended

December 31,
   2010  2009  2010  2009
         
Net income (loss) 3,145,253 4,006,069 (4,223,060) 5,459,665
         
Share-based compensation 220,657 18,122 447,345 132,902
Changes in fair value of derivatives -- 303,000 14,528,000 (90,000)
Changes in fair value of warrants -- -- -- (119,451)
         
Non-GAAP Net income (loss) 3,365,910 4,327,191 10,752,285 5,383,116
CONTACT: For investor and media inquiries please contact:
         
         In China:
         
         Ms. Crystal Wang
         Bona Film Group Limited
         Tel: +86-10-6551-0888
         Email: wangting@bonafilm.cn
         
         Mr. Derek Mitchell
         Ogilvy Financial, Beijing
         Tel: +86-10-8520-6284
         Email: bona@ogilvy.com
         
         In the U.S.:
         
         Ms. Jessica Barist Cohen
         Ogilvy Financial, New York
         Phone: +1-646-460-9989
         Email: bona@ogilvy.com

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