A8 Digital Music Announces a Record High Revenue and Profit of RMB706 Million and RMB80 Million in 2008, Increased by 147% and 45% Respectively

A8 Digital Music Announces a Record High Revenue and Profit of RMB706 Million and RMB80 Million in 2008, Increased by 147% and 45% Respectively

Gearing up for the advent of 3G mobile music in China

 HONG KONG, March 25 /PRNewswire-Asia/ --    Financial Highlights:                                              For the year ended 31 December    (RMB million)                               2008        2007      Growth    Revenue                                    706.1       286.0       +147%   Gross profit                               266.1       128.7       +107%   Profit attributable to equity    holders of the Company (Excluding    one-off and non-operating items*)          97.5        49.6        +97%   Profit attributable to equity    holders of the Company                     80.2        55.3        +45%   Earnings per share (RMB) -- basic           0.20         N/A         N/A                            -- diluted         0.19         N/A         N/A    Note: * One-off and non-operating items included listing expenses of           approximately RMB10.2 million and non-operating related share           option expenses of approximately RMB 7.1 million in 2008, and the           one-off disposal gain of approximately RMB5.7million in 2007.     

Leading integrated digital music company in China, A8 Digital Music Holdings Limited ("A8 Digital Music" or the "Group") (HKEx: 00800) today announced its audited annual results for the year ended 31 December 2008.

(Photo: http://www.prnasia.com/hkinfo/A8/090325/HK090301_E.htm )

During the review year, the Group had a record high revenue of RMB706.1 million with a year-on-year growth of 147% (2007: RMB286.0 million). Gross profit doubled to RMB266.1 million (2007: RMB128.7 million). Profit attributable to equity holders of the Company was RMB80.2 million (2007: RMB55.3 million). Excluding one-off listing expenses of RMB10.2 million and non-operating share option expenses of RMB7.1 million in 2008 and an one-off disposal gain of RMB5.7 million in 2007, profit attributable to equity holders of the Company for the year would have doubled to approximately RMB97.5 million. Basic earnings per share were RMB0.20 (2007: N/A). The Board of Directors did not recommend payment of final dividend for the year ended 31 December 2008.

The Group had a strong balance sheet with no debt and a cash balance of RMB315.6 million as at the end of 2008.

Mr. Liu Xiaosong, Chairman and Chief Executive Officer of A8 Digital Music, said, "We are pleased to report strong financial performance for 2008 in this first annual results of the Group since listing in June 2008 amid the global economic downturn. We achieved encouraging development in music contents, technical software upgrade, and marketing and distribution channels. With the 3G telecom operation licenses finally settled, we expect to see a significant surge in demand for more sophisticated music and music related services very soon. We are well prepared to seize business opportunities in the area backed by our innovative business model and effective marketing strategy, thereby achieve the ultimate goal of strengthening our leadership in the digital music industry in China."

Revenue of the Group rocketed thanks to the booming mobile music market in China and its effective execution of integrated marketing strategies on new media and traditional media. China Mobile mentioned in its 2008 annual results that ringback tone revenue and subscription increased by a tremendous 22% and 73% to RMB14.4 billion and 1.35 billion times respectively. It sets a promising future for the growth of A8 Digital Music's business under this favourable macro environment.

The overall gross profit margin of the Group for the year decreased to 38% from approximately 45% last year. The decrease was mainly attributable to the increase in share of revenue share with business alliances and the shift of weight of ringtones to ringback tones in the product mix which had a higher revenue share to mobile operators.

Last year, the "2008 Annual Original Music Competition", a major mega music event organized by the Group, was a big success attracting a record high of 4,000 entries. The most popular UGC song "Ji Mo Cai Shuo Ai" was downloaded over 18 million times, which was nearly three times more than the most downloaded song in 2007. The Group also made great efforts into promoting songs with potential in concerts it organized in the mainland China and Hong Kong. Original artists including singers of "Ji Mo Cai Shuo Ai" and "Qian Wan Bie Shuo" had performed in 20 concerts across China in 2008. The music revenue generated from UGC increased 270% to approximately RMB182.8 million.

A8 Digital Music's innovative UGC platform ( http://www.a8.com/ ) collects original independently produced songs, currently it owns a repertoire of more than 60,000 original works of music. To strengthen the song collection capability of the platform and the bonds among users, A8 Digital Music also cooperated with Hong Kong original song writers group like Green Coffee to diversify and strengthen its content base and the brand's international presence, a growth tactic it intends to continue in the future.

At its continuous effort, the 3G-compatible A8 Box of the Group has been empowered by the latest "shake control" technology. It enables the user to choose the next song by "shaking" the handset. The Group also expanded A8 Box to support the most popular music phone platform Nokia S60 5.0, a touch screen version. In 2008, approximately six million A8 Box-enabled handsets were launched. A8 Digital Music is currently in cooperation with over 90 chipset suppliers, design houses and handset manufactures. More personalized services and 3G compatible applications will be launched during this year.

Mr. Liu concluded, "Looking ahead, we expect the digital music (especially mobile music) craze to continue albeit the challenging global economy. Riding on our proven track record in digital music services and our unmatched strength in music content and technology, we are confident of tapping the opportunities presented by the restructured telecom sector and development of 3G in the PRC market to create new profit growth drivers, and in turn maximizing returns to shareholders."

About A8 Digital Music Holdings Limited

A8 Digital Music is a leading integrated digital music company that sells music content through mobile phones, sourced from its highly successful interactive UGC platformwww.a8.com, as well as from international and domestic record labels, and promote through traditional and new media such as internet and wireless network. Led by a team of experienced top executives with foresight and vision, the Group is able to capitalise on its integrated marketing and sales multi-channel network to acquire insights into consumer preferences in different regions and thus customise its marketing strategies.

                         -- Tables to Follow --      Appendix I    Revenue Breakdown                              For the year ended 31 December                                    2008                   2007    Growth                      (RMB mil)       %        (RMB mil)     %        %   Ringtone               86.9       12%          72.2      25%      +20%   Ringback tone         273.0       39%          89.5      32%     +205%   IVR music             119.4       17%          20.8       7%     +474%   Other    music-related         16.0        2%          15.0       5%       +7%   Non music-related     210.8       30%          88.5      31%     +138%   Total                 706.1      100%         286.0     100%     +147%      Appendix II    Strong Balance Sheet -- No Debt                                             As at 31 December                                               2008                    2007   Cash                                RMB315.6 mil            RMB131.3 mil   Total Assets                        RMB479.3 mil            RMB291.2 mil   Net Assets                          RMB365.8 mil            RMB181.5 mil   Account Receivable Turnover              52 days                 82 days      Appendix III                        Consolidated Income Statement    (Audited)                             For the year ended 31 December                                                  2008                 2007                                               RMB'000              RMB'000    Revenue                                     706,079              285,964   Business tax                                (14,196)              (7,860)   Net revenue                                 691,883              278,104   Cost of services provided                  (425,806)            (149,375)   Gross profit                                266,077              128,729   Other income and gains, net                   7,624               20,180   Gain arising from disposal of an    equity interest in a    jointly-controlled entity                       --                5,694   Selling and marketing expanses             (115,281)             (67,073)   Administrative expenses                     (44,180)             (21,715)   Other expenses                              (17,257)                 (70)   Finance costs                                (2,015)              (4,913)   Share of profits and losses of    jointly-controlled entities                     --                 (347)   Profit before tax                            94,968               60,485   Tax                                         (14,168)              (5,248)   Profit for the period                        80,800               55,237    Attributable to:   -- Equity holders of the Company             80,170               55,274   -- Minority interests                           630                  (37)                                                80,800               55,237    Dividend                                        Nil                  N/A    Earnings per share attributable to    equity holders of the Company    -- Basic (RMB per share)                      0.20                  N/A    -- Diluted (RMB per share)                    0.19                  N/A      Appendix IV                          Consolidated Balance Sheet    (Audited)                                     As at 31 December                                                   2008                2007                                                RMB'000             RMB'000   Non Current Assets   Property, plant and equipment                  6,328               6,832   Prepaid land lease payments                   28,583                  --   Intangible assets                                703                 360   Deferred tax assets                            4,899                  --   Total non-current assets                      40,513               7,192    Current Assets   Accounts receivable                          101,657              64,809   Accounts due from related parties                 --              59,708   Prepayments, deposits and other    receivables                                  19,572              21,552   Equity investments at fair value    through profit or loss                        1,949               5,711   Tax recoverable                                   --                 900   Cash and cash equivalents                    315,643             131,315   Total current assets                         438,821             283,995    Current Liabilities   Accounts payable                              58,617              18,049   Other payables and accruals                   39,121              18,753   Amount due to a related party                     --               3,558   Tax payable                                   10,997                  --   Deferred income                                4,000                  --   Total Current liabilities                    112,735              40,360    Net Current Assets                           326,086             243,635    Total Assets less Current    Liabilities                                 366,599             250,827   Non Current Liabilities   Deferred tax liabilities                         813                 813   Convertible redeemable preferred    shares                                           --              68,510   Total non-current liabilities                    813              69,323   Net assets                                   365,786             181,504    Equity   Equity attributable to equity    holders of the Company   Issued capital                                 3,944                 512   Reserves                                     361,192             180,972                                                365,136             181,484   Minority interests                               650                  20   Total equity                                 365,786             181,504    For press enquiries:     Strategic Financial Relations (China) Limited     Ms. Esther Lau    Tel:   +852-2864-4845    Email: esther.lau@sprg.com.hk     Mr. Marcus Keung    Tel:   +852-2114-4967    Email: marcus.keung@sprg.com.hk     Ms. Janice Au    Tel:   +852-2864-4874    Email: janice.au@sprg.com.hk     Ms. Annie Choi    Tel:   +852-2864-4837    Email: annie.choi@sprg.com.hk  

Source: A8 Digital Music Holdings Limited

CONTACT: Ms. Esther Lau, +852-2864-4845, esther.lau@sprg.com.hk ; Mr.
Marcus Keung, +852-2114-4967, marcus.keung@sprg.com.hk ; Ms. Janice Au, +852-
2864-4874, janice.au@sprg.com.hk ; Ms. Annie Choi, +852-2864-4837,
annie.choi@sprg.com.hk , all of Strategic Financial Relations (China) Limited
for A8 Digital Music Holdings Limited

Web site: http://www.a8.com/

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Profile: International Entertainment