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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