Golden Harvest Announces Solid Interim Financial Performance

Golden Harvest Announces Solid Interim Financial Performance

Net profit surged to HK$73 million; operating profit margin improved five-fold Well on track to deliver higher profitability

HONG KONG, March 20 /PRNewswire-Asia/ -- Golden Harvest Entertainment (Holdings) Limited ("Golden Harvest" or "the Group"; HKEx: 1132), a leading cinema operator and film distributor in Asia, today announced its unaudited interim results for the six months ended 31 December 2008.

   Financial Highlights:                                         For the six months ended      Change                                                     31 December        (%)   (HKS$'000)                                 2008          2007   Turnover                                397,925       247,600       +60%   Gross profit                            214,082       129,137       +66%   Profit from operations                   17,867         1,993      +796%   Profit before taxation                   79,166         6,714    +1,079%   Profit/(loss) from discontinued    operation                                1,198          (417)       N/A   Profit attributable to equity            73,370         3,050    +2,306%    holders of   the Company   Basic earnings per share (HK cents)  40.53cents    2.40 cents    +1,589%    GP margin (%)                            53.79%        52.15%  +1.64(pt)   EBT margin (%)                           19.89%         2.71% +17.18(pt)   NP margin (%)                            18.46%         1.26% +17.20(pt)      Improved operations  

For the six months ended 31 December 2008, the Group recorded turnover of HK$398 million, representing an increase of 60% from the corresponding period in 2007. Profit attributable to shareholders grew substantially to HK$73 million from HK$3 million in 2007. The satisfactory result was attributed to a gain on disposal and, more importantly, a significant improvement of the Group's operating profit margin.

Operational profit increased over eight times to HK$18 million, on the back of a five-fold improvement in operating profit margin to 4.5% in 2008 (2007: 0.8%). Net profit excluding discontinued operation and the HK$62 million gain from the disposal of the Group's cinema circuit in Malaysia increased to HK$10 million from HK$3 million in 2007.

All of the Group's operations in Hong Kong, Mainland China, Taiwan and Singapore contributed stronger profits during the period, despite the challenge of a severe global economic downturn brought about by the sub-prime credit crisis in the United States. The Board of Directors does not recommend the payment of any interim dividend.

"Golden Harvest is well on target to deliver higher profitability," said Mr. Wu Kebo, Group Chairman. "We are highly focused on improving our cost structure and operational efficiency, which are fundamental to our future growth and profitability."

Cash on hand increased to HK$350 million by HK$84 million. The Group is essentially operated debt-free since it had fully repaid all of its bank borrowings and all outstanding convertible notes were converted into shares during the period.

Business highlights

During the period, the Group attracted over 10 million theatre guests and box office income improved 5.4% on a full and aggregated basis to approximately HK$491 million. All of the cinema operations in Hong Kong, Mainland China (Shenzhen), Taiwan and Singapore reported growth in box office income.

The Group's cinemas in Hong Kong achieved encouraging results for the period with theatre takings grew more than 5% to close to HK$80 million, and maintained a market share of more than 13%. Apart from strong Hollywood line- up, the Group has also introduced 3D stereoscopic equipment at different cinema sites to deliver more engaging experience to the audience.

The Group's 7-screen cinema located at MIXC Mall City Crossing in Shenzhen achieved a close to 11% growth of theatre takings to RMB27 million. Golden Harvest successfully achieved a market share of 20%, despite the intensified competition in the city brought about by an increased supply of new cinemas over the past two years. In 2008, the Group's Shenzhen multiplex, three years in a row, ranked the second highest box-office cinema in China, with admissions grew by almost 10%.

Taiwan's cinema market has not seen much growth over the past five years. Capitalizing on its market-leading position, the Group's cinema operation managed to grow about 2% to secure TWD853 million theatre takings during the period. Theatre takings of the Group's cinema circuit in Singapore also improved by 2% to S$33 million for the period, commanding a market share of 43%.

During the period, the Group distributed nine non-Chinese language films in Hong Kong, including blockbusters Journey to the Centre of the Earth, Detroit Metal City and Suspect X. The total box office of non-Chinese films distributed by the Group sharply increased to HK$68 million, representing about 14% share of the market. Golden Harvest also distributed three small- scale Chinese language films in the same period.

Future plans

In 2009, Golden Harvest will continue to strengthen and grow its cinema and distribution networks in markets with higher potential and better returns. More focus will be placed on opportunities in the Mainland China market, given the continued opening of its film market and growing influence of Chinese language films in the international film industry.

The Group will open more screens in Shenzhen and other major cities including Beijing, Hangzhou, Suzhou and Wuxi this year. In addition, the Group is actively looking into expanding its distribution business in Mainland China.

About Golden Harvest Entertainment

A household brand in the Chinese film industry, Golden Harvest is one of Asia's most influential film and entertainment companies. Listed on the Hong Kong Stock Exchange since 1994, Golden Harvest currently operates 22 multiplexes with 181 screens across Hong Kong, Mainland China, Taiwan and Singapore, commanding a substantial share of the movie theatre market in the Asian region. The company is also the distributor of countless successful Chinese-language movies as well as non-Chinese language films.

                      -- Financial Table to Follow --      Consolidated Income Statement   For the six months ended 31 December, 2008                                                Six months ended 31 December                                                       2008          2007                                                    HK$'000       HK$'000                                                 (Unaudited) (Unaudited)*   Continuing operations   Turnover                                         397,925       247,600   Cost of sales                                   (183,843)     (118,463)    Gross profit                                     214,082       129,137   Other income                                      18,523        33,267   Selling and distribution costs                  (182,852)     (121,602)   General and administrative expenses              (26,639)      (32,066)   Other operating expenses                          (5,247)       (6,743)    Profit from operations                            17,867         1,993   Finance costs                                       (553)       (6,218)   Share of profits losses of associates                 --        10,939   Gain on disposal of interest in a    jointly controlled entity                        61,852            --    Profit before taxation                            79,166         6,714   Income tax                                        (6,898)       (3,161)    Profit for the period from continuing    operations                                       72,268         3,553    Discontinued operation   Profit/ (loss) for the period from    discontinued operation                            1,198          (417)    Total profit for the period                       73,466         3,136    Attributable to:   Equity holders of the Company                     73,370         3,050   Minority interests                                    96            86                                                      73,466         3,136    Dividends attributable to equity holders    of the Company                                   18,327            --    Earnings/ (loss) per share    Basic   -- Continuing operations                     39.87 cents    2.73 cents   -- Discontinued operation                     0.66 cents  (0.33) cents                                                40.53 cents    2.40 cents    Diluted   -- Continuing operations                     39.47 cents    2.72 cents   -- Discontinued operation                     0.65 cents  (0.33) cents                                                40.12 cents    2.39 cents    * The consolidated income statement for the six months ended 31 December     2007 has been reclassified to conform with the current period's     presentation for the discontinued operation.      For further information, please contact:     Hill and Knowlton Asia Ltd.    KW Lam    Tel:   +852-2894-6218 / +852-6303-3481    Email: kw.lam@hillandknowlton.com.hk     Crystal Yip    Tel:   +852-2894-6211 / +852-9720-6445    Email: crystal.yip@hillandknowlton.com.hk  

Source: Golden Harvest Entertainment

CONTACT: KW Lam, +852-2894-6218 or +852-6303-3481,
kw.lam@hillandknowlton.com.hk; Crystal Yip, +852-2894-6211 or +852-9720-6445,
crystal.yip@hillandknowlton.com.hk

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Profile: International Entertainment