Achieves Non-GAAP Net Income of US$2.4 Million, Exceeding First Quarter 2011 Guidance
Achieves Gross Margin of 48.6% in the First Quarter of 2011
BEIJING, May 5, 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 first quarter ended March 31, 2011.
First Quarter 2011 Financial Highlights
- First quarter 2011 net revenues were US$19.3 million, an increase of 146.7% year-over-year from US$7.8 million in the first quarter 2010
- First quarter 2011 gross margin was 48.6%, compared to 47.7% in the first quarter 2010
- First quarter 2011 operating income was US$2.7 million, an increase of 82.5% year-over-year from US$1.5 million in the first quarter 2010
- First quarter 2011 net income was US$2.3 million, an increase of US$6.4 million, compared to a net loss of US$4.1 million in the first quarter 2010
- First quarter 2011 non-GAAP net income was US$2.4 million, an increase of 76.7% year-over-year compared to US$1.4 million in the first quarter 2010
"We exceeded our guidance in the first quarter as we continued to leverage our vertically integrated film distribution business model to execute on our growth strategies," said Bona Founder, Chairman and CEO Yu Dong. "In the first quarter, we completed principal photography on three film projects and distributed four films, in-line with our goal of distributing 16 to 20 new and high-quality films by the end of the year. One of the advantages of our vertically integrated business is that we are able to generate revenues from a variety of different channels for any given film project. For example, in the first quarter, in-film product placement and film advertising played an important role in supplementing our film distribution revenues. Moreover, we are capitalizing on channels like Internet and digital distribution, and international distribution to increase our revenues and manage the risks of investments in film projects. Similarly, our movie theater business segment is experiencing stable growth and we are currently in discussion with potential acquisition targets to expand this segment and provide a strong network to complement our film distribution."
Mr. Yu added, "Our strong fundamentals and favorable macro trends like the rise in disposable income, the low penetration rate of cinemas in China and the growing demand for high-quality movies will help us grow our business and deliver value for our shareholders."
First Quarter 2011 Financial Results
The year-over-year increase in first quarter 2011 net revenues was primarily due to the increased revenue generated from the Company's film distribution and investment segments, namely greater advertising revenue and domestic non-theatrical distribution revenue from Bona's film projects. In addition, the movie theater business acquired in April 2010 contributed US$4.7 million to net revenues in the first quarter of 2011.
Segment Net Revenues
Gross Profit and Gross Margin
The year-over-year increase in first quarter 2011 gross profit was primarily due to the acquisition of the movie theater business in April 2010. Excluding the effect of the movie theater business acquisition, the Company's gross profit increased 71.1% year-over-year, mainly due to stronger revenues from the film distribution segment in the first quarter of 2011.
Segment Profit2 and Segment Margin
The higher-than-usual segment margin of the distribution business was primarily due to a larger reimbursement for print and advertising expenses for the film What Women Want. For the movie theater business, the increase in segment margin was mainly due to net revenue recognized from overdue coupons and membership cards in the first quarter of 2011.
Operating Income and Operating Margin
The year-over-year increase in operating expenses was primarily due to a US$3.2 million increase in general and administrative expenses, which was comprised of US$2.2 million in expenses related to the movie theater business and US$1.0 million in expenses related to increased headcount and professional service fees. In addition, there was a US$1.5 million increase in sales and marketing expenses, mainly due to print and advertising expenses related to the film What Women Want. The year-over-year decrease in operating margin in the first quarter of 2011 was primarily the result of a lower return from the film investment and production segment.
Net Income and Net Income Attributable to Bona Film Group Limited per ADS3
Excluding share-based compensation, the Company's non-GAAP net income for the first quarter 2011 was US$2.4 million.
Cash and Cash Flow
As of March 31, 2011, Bona had cash and cash equivalents and restricted cash totaling US$61.4 million. Operating cash flow for the first quarter of 2011 was a net outflow of approximately US$17.0 million, mainly attributable to production investment in certain films that are expected to be released in the second half of 2011.
Amount Due From Related Parties
As of March 31, 2011, the amount due from related parties is mainly coming from the interest-free intercompany loan provided to Bona Starlight Cineplex Management Co. Ltd., a development stage movie theater operator in the PRC whose principal shareholders include Mr. Dong Yu, and its subsidiaries.
Based on current market and operating conditions, the Company expects non-GAAP net income for the second quarter of 2011 to be in the range of US$1.3 million to US$1.5 million, and non-GAAP net income for the full year 2011 to be approximately US$20 million.
1 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, 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.
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.
First Quarter 2011 Conference Call Details
Bona management will hold its earnings conference call at 8:00 p.m. Eastern Time on Thursday, May 5, 2011 (8:00 a.m. Beijing/Hong Kong Time on Friday, May 6, 2011). Management will discuss first quarter results and highlights and answer questions from investors.
The dial-in numbers for the earnings conference call are as follows:
The password for the call is 61633041.
The live and archived webcast of the earnings conference call will be available on Bona's IR website at .
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 .
The Bona Film Group Limited logo is available at
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.
CONTACT: For investor and media inquiries please contact: In China: Ms. Crystal Wang Bona Film Group Limited Tel: +86-10-6551-0888 Email: firstname.lastname@example.org Mr. Derek Mitchell Ogilvy Financial, Beijing Tel: +86-10-8520-6284 Email: email@example.com In the U.S.: Ms. Jessica Barist Cohen Ogilvy Financial, New York Phone: +1-646-460-9989 Email: firstname.lastname@example.org