Transmit Entertainment Turns Around to Profit in 1H FY18/19 Revenue More Than Doubled to HK$395.3 Million

Further Diversifies Business Portfolio Excellent Artiste and Screenwriting Teams Contribute to Successful Production of Copyright Projects

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HONG
KONG, CHINA - Media
OutReach - 27 February 2019 – Transmit
Entertainment Limited (“Transmit Entertainment” or the “Company”, together
with its subsidiaries, the “Group”; stock code: 1326) today announced its
unaudited interim results for the six months ended 31 December 2018 (the
“Review Period”).

 

During the Review Period, the
Group recorded outstanding results, with revenue up by 211.8% to HK$395.3
million when compared with the last corresponding period. Attributable to the
profit contributed by Khorgas Houhai Culture Media Company Limited (“Houhai
Culture”) as well as the revenue growth generated from the production and
distribution of the film “L Storm” (L??), the Group turned around to
profit with total comprehensive income attributable to owners of the Company
amounting to approximately HK$46.5 million. Gross profit was approximately
HK$174.6 million, representing an increase of 125.7% and gross profit margin
was approximately 44.2%. As at 31 December 2018, the Group was in a sound
financial position with bank balances and cash and pledged bank deposits of
approximately HK$113.4 million.

 

Business Review

Film and TV Series Production and Distribution

During the Review Period, film
and TV series production and distribution business remained the core business
of the Group with reported revenue of approximately HK$268.5 million,
representing a significant increase of approximately 743.3% compared with the
last corresponding period. The Group released two films during the Review
Period, namely “L Storm” (L??) and “Lucid Dreams” (???????). In August 2018, the Group completed
the acquisition of Houhai Culture and consolidated its accounts for the first
time. Houhai Culture recorded revenue from the broadcast of the variety show
“Give Me Five Season II” (????????) and the copyright and adaptation
of the manga “Hikaru no Go” (??), thereby contributed to the
overall performance of the Group.

 

Film Exhibition

Film exhibition was another key
revenue driver for the Group. During the Review Period, the Group operated five
cinemas at different strategic locations in Hong Kong, including Mong Kok, Chai
Wan, Causeway Bay and Tsuen Wan. Benefiting from the five cinemas in full
operation, the film exhibition business segment recorded revenue amounted to
approximately HK$119.7 million, a significant increase of 30.8% compared with the
corresponding period of last year.

 

Given the unproven profitability and
uncertain financial contributions and prospects of the Group’s cinema in ”Vivo
City” (???) in Shanghai, Mainland China, the
Group completed disposal of the business in July 2018. The net proceeds of HK$17.7
million from the disposal will be used to further invest in other business
segments as part of the resource reallocation of the Group.

 

Others

During the Review Period, the post-production,
advertising, marketing and publication businesses of the Group recorded a total
revenue of approximately HK$7.0 million, representing a significant increase of
approximately 106.5% against the last corresponding period. The Group will
continue to maintain the smaller operation of this business segment and timely review
its overall business structure and strategies to ensure a synergy effect is
created on the Group’s businesses.

 

Prospects

In 2019, the Group has stepped up
effort to develop its artiste and scriptwriters resources and formal contracts have
been signed with various artiste agencies and two famous scriptwriters, namely
Shu Huan (??) and Su Biao (??). In particular, various artiste
agencies together with top artistes, including Yang Yang (??), Song Qian (??), Wu Chun (??), Meng Ziyi (???), Liu Yichang (???), Li Yitong (???), Zhao Lusi (???), Li Zefeng (???) and Ling Meishi (???) have joined the Group.
Meanwhile, agencies of Kan Qingzi (???), Zhao Da (??), Shi Shi (??), Zhang Xiaoqian (???), Wang Yi (??), Oscar Jiang (???), Re Yina (???), Wu Yue (??), Chen Jiaxin (???), Ma Mengjia (???), Liang Siyu (???), Xu Kexin (???), You Lixi (???), Dai Yu Dan (???) and Wang Jingyi (???) will also sign contracts with
the Group. The all-round artiste and scriptwriting teams will provide the
greatest support to the Group in producing high quality TV series and
contribute to its rich pipeline of copyright projects in the future.

 

Transmit Entertainment is committed
to producing quality films and television productions for audience. Regarding the
film and TV series production and distribution, a number of copyright projects
of the Group are in pre-production stage, including “Hikaru no Go” (??), “Romance of the Youth” (??????), “Redemption on the Blade” (??????), “Tribes and Empires: Mrs. Hu
Zhu” (???????) and “Persuader” (????????). Moreover, the Group has reached
agreements with some owners of popular copyrights and will develop and produce copyrighted
series of works including “Unnatural” (?????), “Love Destiny” (????), “Imperial Harem” (??????), “Next To The Last Girlfriend” (????????), “Turn Red into Green” (????), “Nine Knights in Beijing” (????), “Hear” (?????????) and “Romance in the City” (????), etc. As for variety shows, the
Group intends to broadcast “I Love You, Me Too” (???????), a proprietary brand-new romance
detective reality show, on the online platform iQIYI and to continue to launch
the third season of “Give Me Five” (?????), a proprietary variety brand
with two seasons broadcasted, while a new gaming variety show “National Game
Carnivals” (???????) is now being developed.

 

Ms Zhao Wenzhu, President and Executive Director of Transmit
Entertainment, said, “We are pleased to achieve
such satisfactory results and turned around to profit in the first half of the
fiscal year, proving that we are taking our business in the right direction. We
will continue to explore all kinds of opportunities including for cooperation
across the entire film, television and media industry, chain in the country, capitalizing
on the Group’s outstanding film production capabilities, with the aim of
strengthening the Group’s income base. Going forward, leveraging the
partnerships forged with famous artistes and their agencies, the Group will
gradually expand its artiste agency business, continue to identify high-quality
artistes and simultaneously launch co-branding partnerships, Internet and
Pan-entertainment products and poverty alleviation and charitable products. The
Group will work hard on diversifying its operation, enhancing its profitability
and generating satisfactory returns for shareholders.“

About Transmit Entertainment Limited (stock code?1326)

Transmit Entertainment is a media and entertainment company with a diverse portfolio. The Group principally engages in film and TV series production and distribution and licensing of film rights, film exhibition and other businesses. The Group mainly produces Chinese films, variety shows and TV series in both Mainland China and Hong Kong. It also operates five Hong Kong based cinemas and one post-production company. Its subsidiary Houhai Culture has a professional film and television production team particularly adept in producing variety shows and television drama series, from screenwriting, shooting, post-production to distribution and marketing. It also owns copyrights to a large number of television drama series and has been closely cooperating with top-tier broadcast networks and online streaming platforms.