Revenue and Gross Profit Up 201% and 180% Respectively
HONG KONG, Sept. 18 /Xinhua-PRNewswire-FirstCall/ -- Financial Highlights: For the six months ended 30 June 2008 2007 RMB'000 RMB'000 Change Revenue 329,404 109,468 +201% Gross profit 135,785 48,419 +180% Profit attributable to equity holders of the Company (Excluding one-off items*) 46,026 15,660 +193% Profit attributable to equity holders of the Company 37,026 21,360 +73% Earnings per share (RMB) -- basic 0.11 N/A N/A Note:* listing expenses incurred in 2008 1H amounted to approximately RMB9,000,000 and one-off disposal gain arising in 2007 1H amounted to approximately RMB 5,700,000 -- Revenue surged by 3 times to RMB329 million -- Gross profit almost doubled to RMB136 million -- Profit attributable to equity holders of the Company amounted to RMB37 million, increased by 73% -- Excluding one-off items (2008 1H: listing expenses ; 2007 1H: disposal gain), profit attributable to equity holders of the Company would have increased by 193% -- Successfully listed on Main Board of SEHK on 12 June 2008 -- Out of the total music and music related revenue of the Group, the share of the revenue generated from UGC (User Generated Content) songs increased to 35% and is expected to further increase -- Continues to develop A8 Box to be 3G compatible and also support the most popular music phone platform Nokia S60
Leading integrated digital music company in China A8 Digital Music Holdings Limited ("A8 Digital Music" or the "Group") today announced its unaudited interim results for the six months ended 30 June 2008.
During the period under review, the Group made revenue amounting to RMB329.4 million (2007 interim: RMB109.5 million), representing a surge of 201% as compared with the same period last year. Gross profit amounted to RMB135.8 million (2007 interim: RMB48.4 million), representing a jump of 180% against the same period last year. Overall gross profit margin decreased slightly to 41% from approximately 44% in the same period last year. Such decrease was the result of the Group increasing the share of revenue to business alliances in the bid of expanding market share. Profit attributable to equity holders of the Company was RMB37.0 million (2007 interim: RMB21.4 million), representing an increase of 73% as compared with the same period last year. Excluding one-off listing expenses of RMB9.0 million in the first half of 2008 and an one-off disposal gain of RMB5.7 million during the first half of 2007, profit attributable to equity holders of the Company would have increased by 193% to approximately RMB46.0 million. Basic earnings per share were RMB0.11 (2007 interim: N/A). The Board of Directors did not recommend payment of interim dividend for the six months ended 30 June 2008.
Mr. Liu Xiaosong, Chairman and Chief Executive Director of A8 Digital Music, said, "2008 is a major milestone in the development of the Group. Apart from the successful listing of A8 Digital Music on Main Board of the Stock Exchange of Hong Kong, the Group also reported a substantial growth of its music business for the first half of 2008. Being a public company, A8 Digital Music is more transparent both financially and operationally. It has thus boosted the A8 brand not only in the domestic market, but also in overseas and capital markets, and paved the way for our future business expansion. Our UGC platform collected markedly higher volume of original music and supported increasing download demand also, thus fortified the leadership of the Group in the original music industry."
Revenue and net profit of the Group rocketed mainly because the mobile music market in China has been growing strongly. According to China Mobile's 2008 interim results, the ring back tone subscription increased substantially by 99.8% to 600 million times while the PRC mobile subscribers increased by 24.7% to 414.6 million. These results demonstrated a favorable outlook for the mobile music industry, hence providing a promising business growth for A8 Digital Music.
In addition, the Group has also been able to implement integrated promotional strategies riding on new media such as the Internet and mobile handsets as well as traditional platforms such as television and radio to extend the reach of original music to every aspect of daily life.
In the first half of 2008, the revenue generated from UGC songs made up approximately 35% of the total music and music related revenue of the Group, and is expected to climb to 45% for the full year of 2008. The most popular UGC song "Ji Mo Cai Shuo Ai" had been downloaded around 11.7 million times, which was nearly 50% more than the most downloaded song in 2007. In addition, the "2007 Annual Original Music Competition", an annual mega event organized by the Group, ended with big success in June. The event was very well received and attracted a record high of 4,000 entries. The Group has a series of plans to promote the 20 songs on the list of finalists on its UGC platform ( http://www.a8.com ).
In the second half of 2008, the Group will enhance the user interface of its UGC platform so as to improve user experience. It will also develop more advanced functions for A8 Box which is 3G compatible, including the Humming Song Recognition technology, music video and music related news support and expand A8 Box to support the most popular music phone platform Nokia S60. It will also launch the A8 Box PC version with auto synchronization and Symbian touch screen version. The Group targets to have three to five million new handsets embedded with A8 Box in the market in the second half of 2008.
Mr. Liu concluded, "Looking ahead, digital music (especially mobile music) craze will continue and grow into a phenomenon. While enjoying our strong and solid organic growth, we are also looking for potential merger and acquisition targets whom we can create synergies with. We are thrived to create additional profit growth drivers and in turn maximize the returns for shareholders."
A8 Digital Music Holdings Limited Combined Income Statement (Unaudited) For the six months ended 30 June 2008 2007 RMB'000 RMB'000 Revenue 329,404 109,468 Business tax (5,659) (3,168) Net revenue 323,745 106,300 Cost of services provided (187,960) (57,881) Gross profit 135,785 48,419 Other income and gains, net 1,697 11,537 Gain arising from disposal of an equity interest in a jointly-controlled entity -- 5,694 Selling and marketing expanses (61,832) (28,901) Administrative expenses (16,320) (10,103) Other expenses (11,773) (414) Finance costs (1,883) (2,588) Share of profits and losses of jointly-controlled entities -- 162 Profit before tax 45,674 23,806 Tax (7,713) (2,501) Profit for the period 37,961 21,305 Attributable to: -- Equity holders of the Company 37,026 21,360 -- Minority interests 935 (55) 37,961 21,305 Earnings per share attributable to equity holders of the Company -- Basic (RMB per share) 0.11 N/A -- Diluted (RMB per share) 0.11 N/A