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Bona Film Group Limited (NASDAQ:BONA)

Q1 2014 Results Earnings Conference Call

May 29, 2014 8:00 p.m. ET

Executives

Brandi Piacente - IR, The Piacente Group

Yu Dong - Founder, Chairman and CEO

Amy Xu - Chief Financial Officer

Analysts

Doug Creutz – Cowen

Stanley Huang - China Galaxy Securities

Na You - ICBC International

Yang Zhao – CICC

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Bona Film Group First Quarter Earnings Conference Call. (Operator Instructions) I must advise you that this conference is being recorded today, Friday, 30th May 2014.

I would now like to hand the conference over to your first speaker today, Ms Brandi Piacente. Thank you. Please go ahead.

Brandi Piacente

Thank you and hello, everyone, and welcome to Bona Film Group’s Limited First Quarter 2014 Earnings Conference Call. The company distributed its earnings press release earlier today, and you could find a copy on Bona's website at ir.bonafilm.cn.

On our call today are Bona's Founder, Chairman and CEO Yu Dong, and CFO Amy Xu. Our COO Jeffrey Chan is on a plane right now from Europe and unable to join us, but I will also read his prepared remarks that he prepared for us as well. After the company's prepared remarks, management will be available to answer your questions.

But before we begin, please note that the discussions today will contain forward-looking statements made under the safe harbour provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may differ materially from the views expressed today. Further information regarding these risks and other – these factors and other uncertainties are included in the company's Annual Report on Form 20-F for the fiscal year ended 31st December 2013 and in other documents filed with the US Securities and Exchange Commission. Bona does not assume any obligation to update any forward-looking statements except as required under applicable law.

As a reminder, the conference is being recorded. In addition, an audio webcast of this conference will be available on Bona's Investor Relations website. And now I will read the prepared remarks on behalf of Bona’s Founder, Chairman and CEO, Mr Yu Dong.

Good day everyone and thank you for joining our 2014 First Quarter Earnings Conference Call. I am pleased to report that Bona delivered solid results in the operating quarter of the year. We generated revenue of US$56.6 million in the first quarter of 2014, representing a year-over-year growth of 31%, with non-GAAP adjusted net income of US$2 million, representing a year-over-year growth of 64%. With the Film Fund in place and fully operating, we are starting to see tremendous – the tremendous value and results it brings with the impressive box office performance of our films since earlier this year.

Now let’s turn to our film distribution business. As of May 2014, total domestic box office receipts surpassed RMB10 billion, almost one month earlier when reaching the same number last year. During the first quarter, Bona distributed three films theatrically, including The Mortal Instruments – City of Bones, The Man from Macau and Horseplay. Today and together, they generated total box office receipts – as of 31st March 2014, total box office receipts of RMB606 million, accounting for 10% of total domestic box office receipts in the first quarter 2014 and 47% of the total box office receipts Bona generated in 2013.

In particular, The Man from Macau maintained stable high cinema attendance for 20 days following its release, generating average daily box office receipts of approximately RMB20 million with strong momentum outlasting other films released in the same season. To date, The Man from Macau has taken in RMB520 million at the domestic box office receipts, equalling one-fourth of China’s total box office receipts during the 2014 Chinese New Year season, and speaking to our strong capability in the film selection and distribution.

Given the strong performance of The Man from Macau, we are now in the preparation to start principal photography of The Man from Macau 2 and expect a 2015 Chinese New Year release. In addition, we successfully received quotas and regulatory approvals for two foreign films in the first quarter, including North American blockbuster Non-Stop, and the 3D action-packed saga Pompeii. We also received domestic distribution rights for Hollywood import 12 Years a Slave, which was the winner of the Best Picture Award at the 86th annual Academy Awards. All three films are currently under the final editing and translation process and are tentatively slated for the second and third quarters, depending on their respective progress.

Turning to our theatre business, we have made significant progress in developing an online ticket sale system to strengthen ticket sales business through New Media Platforms. In addition, we are actively involved in offering online seat booking services by working with over ten ticket booking websites. And at the same time, we have introduced a new ticket purchase and seat selection function on WeChat. We have also successfully introduced our own free-to-download smartphone app on both Android and iOS systems.

Ticket sales from online and mobile platforms will make a meaningful contribution to Bona’s theatre business this year and are expected to generate 20% of total ticket sales in 2014. First quarter net revenues from the movie theatre segment increased 25% year-over-year to US$17.7 million, with a total of 22 theatres and 182 screens owned and operated by Bona as of 31st March 2014.

We are planning to open six to ten new theatres by the end of this year. As an important part of our overall strategy, we believe that our investment in this segment will allow us to maintain a strong competitive position in China’s rapidly growing theatre industry in the long run, and most importantly provide us with a more stable and predictable cash flow.

Let’s turn to our film production business. China’s first 3D IMAX war epic, The Taking of Tiger Mountain, director Tsui Hark’s interpretation of one of the most well-known Chinese stories from the revolutionary period, completed filming in April and aims for a December release. We have great confidence in this film and believe it will be well received by the Chinese audience with box office potential exceeding our blockbuster, Flying Swords of Dragon Gate.

The latest instalment in our popular Overheard franchise, Overheard 3, was just released in mainland China with a strong showing yesterday. First day domestic ticket sales exceeded RMB35 million.

The following films have finished principal photography and gone into post-production. They are: The White Haired Witch, a 3D epic drama directed by Jacob Cheung and starring Bingbing Fan and Xiaoming Huang; My Geeky Nerdy Buddies, formerly titled Daydream Believer, directed by Chu Yen-Ping and features Jam Hsiao; Insanity, a thriller directed by Guangyao Li and starring Xaoming Huang and Sean Lau; I Am Somebody, directed by Derek Yee and featuring film extras in Hengdian; The Dead End, formerly titled The Sunspot, a crime thriller directed by Baoping Cao and starring Deng Chao, Duan Yihong and Wang Luodan; a comedy, Bride Wars, of Bona-Fox Corporation and directed by Tony Chan and starring Angelababy and Ni Ni, two of China’s most popular young actresses today; Sword Master, directed by Derek Yee and his first film in 3D; and Mekong River Operation, a crime movie and directed by Dante Lam; and a science fiction film, Secret Treasure, directed by Gordon Chan and Ronald Cheng, will start shooting this year.

The rapid growth of China’s film industry has witnessed the rise of a generation of young directors. We are working hard to capture this trend and have made significant progress in working with the new generation of Chinese directors as well as maintaining our competitive advantages and producing and distributing Hong Kong films.

Of note, we signed China’s writer-celebrity Han Han’s directorial debut, Duckweed. This film features a young and prominent mainland Chinese cast, including Shaofeng Feng, Berlin Chen, Joe Chan and Wallace Chung, and tells a collection of stories and adventures about growing up. This film has nearly finished production and is tentatively slated for a late July release. We look forward to cooperating with more domestic Chinese talents like Han Han in the future and bringing a more diversified film genre to the Chinese audience.

With regard to our talent agency segment, Bona’s brand and high quality projects have attracted more and more outstanding actors and actresses. Earlier this year, we signed two famous young male actors, Yan Yikuan and Nie Yuan, making our talent team stronger than ever, Yikuan’s first role after joining Bona in The White Haired Witch. Nie Yuan, China’s leading period drama performer, also recently joined Bona. He plays a leading actor in the famous 40-episode TV series under the same title as Tsui Hark’s wuxia film, Flying Swords of Dragon Gate.

In April, Bona’s The Grandmaster and Unbeatable together won a record-breaking 13 top awards at the 33rd Hong Kong Film Awards, a groundbreaking achievement for any film company in this prestigious award’s history. The Grandmaster, directed by Wong Kar-Wai and featuring famous Hong Kong actor Tony Leung and well-known actress Zhang Ziyi, claimed 12 of the 14 awards for which it was nominated, including Best Film, Best Director and Best Actress. In addition, Nick Cheung was named Best Actor for his performance in the mixed martial arts film Unbeatable.

We continue to take pride in our belief in the highest artistic standard of our films and the appreciation and recognition that critics and audience alike feel towards the Bona brand name. Looking ahead at the remainder of 2014, we continue to consolidate all the available resources and enhance the development of the overall industry change.

Yu Dong

[Foreign Language]

Brandi Piacente

And to leverage our advantages in film production and continue to make progress in the TV drama business, we aim to produce 100-episode high quality Internet drama every year, aim to develop Bona into a content provider in the multi-stream era.

Our operating strategy is to integrate production and marketing and to use our theatres as our solid foundation to create economies of scale, thus developing Bona as one of the most influential film corporations in the world by improving Bona’s brand awareness, achieving across the board profitability and increasing ticket sales.

Finally, I would like to thank our shareholders for their support. And we look forward to sharing the progress of our growth initiatives in the coming quarter.

Now I would like to read the prepared remarks on behalf of Jeffrey Chan, our COO.

Yu Dong

Thank you, Brandi. [Foreign Language]

Brandi Piacente

Oh, hi everyone. This is our CEO, Mr Yu Dong.

Yu Dong

[Foreign Language]

Amy Xu

Brandi, over to you.

Brandi Piacente

Thank you, Mr Yu. And everyone, I apologise for jumping ahead of Mr Yu’s translation. I really appreciate his voice in having prepared his remarks in Chinese for everyone and for the Chinese audience.

So now I would like to read the prepared remarks on behalf of Jeffrey, our COO, to give you more operational highlights. Jeffrey’s prepared this script himself and asked us to read this for him while he is unfortunately on a plane from Europe that could not be changed. So I appreciate everyone’s patience.

As Mr Yu just mentioned, we had a strong first quarter which provides a strong foundation for our continued growth in 2014. With respect to film production, we will continue to ride on our advantages and our advantageous position in producing high quality commercial blockbusters while at the same time cultivating long-term working relationships with young up-and-coming mainland producers and directors, especially on modern day mainland stories.

As Mr Yu mentioned, we have just signed Han Han’s directorial debut, Duckweed. For those of you who may not be entirely familiar with him, he is a best-selling writer, professional rally racer, singer, lyricist, one of China’s most popular bloggers and now a film director. In May 2010 he was named one of the most influential people in the world by Time Magazine. In June of the same year, Han was interviewed by CNN as China’s unofficial voice for his generation.

His large group of fans, the majority in their 20s and 30s, are among the major cinemagoers in China. His directorial debut is a road movie that tells a story of three young men yearning for their ideals in life. Although being an original story instead of an adaptation of his past novels, the characters as archetypes of youth dissent as well as the ironic dissatisfaction with reality will all resonate with his fans, if not the younger generation at large. In addition to Han, we will continue to collaborate with more young and talented Chinese directors such as Cao Baoping and Min Hui, to bring more diversified and indigenous stories to the Chinese audience.

The Taking of Tiger Mountain successfully completed principal photography in April. The film is directed by Tsui Hark and based on a well-known novel named Tracks in the Snowy Forest, published in the late 1950s. The novel influenced generations of people in China and appeals to a wide audience. We adapted the story into film with the most advanced 3D technology and some of the most famous young actors in China today to make the film captivating to all ages. We believe The Taking of Tiger Mountain is going to be one of the greatest films in Bona’s history.

We have a very good list of future films that we are working on and I believe there is going to be something for everyone in this diversified selection. Among those high profile films, The Sword Master started principal photography in the first quarter. The film is directed by Derek Yee, produced by Tsui Hark and based on wuxia novelist Gu Long’s classic work. It is not only being developed as a movie but we are also preparing a TV series under the same title. The film will be shot entirely in 3D and is Derek’s first 3D film. I believe that these projects will create synergies and bring audiences up to wuxia world with splendidly burnished imagery of scenes as well as their favourite characters in the original book.

There is also Bride Wars, our cooperation with Fox. It borrows the proven story structure of the successful 2009 Fox comedy of the same title, but it is tailored to the taste of today’s young domestic Chinese audience. Directed by Tony Chan of Hot Summer Days and starring Angelababy and Ni Ni, two of China’s most popular young actresses, this new take is expected to ride on the growing popularity of the genre in China today to become a big crowd pleaser. Principal photography is targeted for late next month and the tentative mainland theatrical release scheduled for early 2015.

As Mr Yu mentioned, in our strong production pipeline there are also exciting titles such as My Geeky Nerdy Buddies by Taiwan director, Chu Yen-ping; The Dead End, formerly titled Sunspot by mainland director, Cao Baoping; Insanity, by first time Hong Kong director Kuan Yew Lee, and a number of other exciting titles with high box office potential scheduled all the way until mid next year.

With respect to our distribution business, we have excelled in China’s 2014 New Year season with the box office success of The Man from Macau. Because the story was so welcomed, we decided to pursue the success with The Man from Macau 2 with producer Andrew Lau and director Wong Jing. Chow Yun Fat will remain as a lead together with the 2013 Shanghai Film Festival Best Actor Nick Jeung.

In the second quarter we will release two films. On 16th May, we released a small budget romance, To Love Somebody, directed by Francis Sung and starring an up-and-coming mainland Chinese cast including Tong Yao, Tong Lei and Lan Ching Lung. And Overheard 3, the latest instalment in Bona’s popular Overheard franchise, was just released yesterday. Our trial on comprehensive cooperation with New Media Platforms has performed effectively in Overheard 3 and we are pleased to announce that we have achieved almost 40% of total screens throughout mainland China on the first day of the film’s public release. We will maintain cooperation with New Media Platforms and bring our audience more blockbusters.

And now, I would like to turn the call to Amy, our Chief Financial Officer. Please go ahead.

Amy Xu

Thank you Brandi, and thanks to Jeffrey for preparing that remark. And hello to everyone on the call. I would now like to provide a brief overview of our financial results for the first quarter of 2014. Please note that all numbers I will discuss today are in US dollars unless otherwise noted.

Net revenue for the first quarter of 2014 increased 30.7% year-over-year to US$56.6 million. The increase in net revenues was primarily attributable to net increase in revenues from the company’s movie theatre and film distribution segment due to the strong box office performance of the film The Man from Macau.

First quarter 2014 total net revenue from our distribution segment was US$40 million, an increase of 64% compared with US$24.2 million in the first quarter of last year. First quarter 2014 total net revenue from our investment and production segment was US$13.8 million, a decrease of 16.3% compared with US$16.5 million in the same period a year ago.

Total net revenue for the movie theatre segment amounted to US$17.7 million in the first quarter of 2014, an increase of 25% compared with net revenue of US$14 million in the first quarter last year. Gross profit for the first quarter of 2014 was US$23.1 million, an increase of 56.2% year-over-year. This increase in gross profit was primarily attributable to strong performance from the company’s film distribution segment and the expansion of the movie theatres.

Gross margin for the first quarter of 2014 was 40.8% compared with 34.1% in the first quarter of 2013. Total operating expenses, including participation expenses, general and administrative expenses and selling and marketing expenses, for the first quarter of 2014 were US$21.4 million, an increase of 45.5% year-over-year. The year-over-year increase in operating expenses was primarily due to an increase in film participation expenses, selling and marketing expenses for the promotion and advertising of the company’s distributed films in the first quarter of 2014 as well as an increase in general and administrative expenses due to the company’s expansion in the movie theatre segment.

Operating income for the first quarter of 2014 was US$3.6 million compared with US$0.7 million in the same quarter a year ago. Operating margin for the first quarter of 2014 was 6.3% compared with 1.5% in the first quarter of 2013. The improvement in operating margins in the first quarter of 2014 was primarily due to the strong performance of The Man from Macau.

Net income attributable to Bona Film Group Limited for the first quarter of 2014 was US$1.4 million compared with US$0.5 million in the same year – same period a year ago. Net income attributable to Bona Film Group Limited per ADS for the first quarter of 2014 was US$0.02, basic and diluted, compared with US$0.01 in the same year – same period a year ago.

Excluding share-based compensation of US$0.9 million, our non-GAAP net income for the first quarter 2014 was US$2 million. Non-GAAP net income attributable to Bona Film Group Limited per ADS for the first quarter of 2014 was US$0.04, basic and diluted. Excluding interest, tax, depreciation and amortisation, our adjusted non-GAAP EBITDA was US$4.2 million for the first quarter of 2014, which compares with US$3.1 million for the same period last year.

Cash and cash equivalent and restricted cash as of 31st March 2014 totalled US$90.1 million. Net cash used in operating activity for the first quarter of 2014 was approximately US$23 million compared with a net cash generated from operating activities of US$2.5 million for the first quarter of 2013.

Now turning to our guidance, based on current market and operating conditions we expect non-GAAP net income for the second quarter of 2014 to be between US$2.5 million to US$3 million.

This concludes my remarks. Brandi, over to you.

Brandi Piacente

And we now, operator, would like to open the call to our questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions. Your first question comes from the line of Doug Creutz from Cowen. Please ask your question.

Doug Creutz – Cowen

Yeah, thank you. I was just wondering if you could comment on how much revenue Man from Macau contributed to the quarter? Obviously it was a big upside performance for you guys. And presumably, Q2 is going to be driven by Overheard 3. You talked a lot about some of the pipeline; can you talk about anything major you expect to come in Q3 or there's going to be more in the Q4 for the holiday period? Thanks.

Yu Dong

[Foreign Language]

Amy Xu

[Foreign Language]

Brandi Piacente

Hey, Doug, just hang in there for the translation.

Amy Xu

[Foreign Language]

Yu Dong

[Foreign Language]

Amy Xu

Good evening, Doug. Thank you for your questions. I will take a crack on the Man from – your first question, Man from Macau, what is the revenue contribution. As Mr Yu mentioned, the box office for Man from Macau is RMB520 million.

Based on the revenue sharing or the revenue split model – allocation model for distribution –

Yu Dong

[Foreign Language]

Amy Xu

Doug, sorry I got cut off. Mr Yu elaborated more on the film slate, which I will translate shortly. Back to my – Man from Macau. As you know, the box office is RMB520 million and the split based on what we communicated with you before is roughly about 37% of that box office number. So what's coming to us is roughly about US$30 million coming into Bona as a distribution revenue and then we will then split into production revenue and then give it to the – all the parties involved in the Man from Macau. This is the general summary for the Man from Macau.

In terms of the pipeline, the important pipeline that's coming up, we will release a film slate shortly to encompass at least ten to 15 films for the next nine to 12 months of the – of the exhibition for the 4D films. We plan to have at least one if not two big films in each quarter. For this quarter – for the second quarter, we have Overheard 3. And for third quarter we plan to have, as we said before, the directorial debut by Han Han, the Duckweed, and of course the other big ones, The White Haired Witch, we have communicated many times before, those will all be shown in third quarter, in July and August, and in fourth quarter the big 3D IMAX, war epic, The Taking of the Tiger Mountain, which will be in the fourth quarter at this moment we plan.

For next quarter – 2015, the Chinese New Year holiday season, we plan to put on Man from Macau 2 as we have seen the success this year. Doug, over to you.

Doug Creutz – Cowen

Great. That's very helpful. Thank you.

Operator

Your next question comes from the line of Stanley Huang from China Galaxy Securities. Please ask your question.

Stanley Huang - China Galaxy Securities

Thank you operator. Thank you Yu Zong, thank you Amy. Congratulations on the solid results. And so last year, Tiny Times, series films directed by another young director, Guo Jingming, who received overall RMB75 million box office. I think Guo Jingming and Han Han enjoys many similarities as directors. I want to know, what's your box office target of Han Han's new films in quarter three – in this quarter and do you have any new plans to cooperate with more young directors and do you have any candidates now?

And the second question is the biggest two online piracy video websites, Baidu Video and Qvod have been punished recently and the latter one had even been shut down by the government. And we raised the content sales price from video websites. And do you have any new plan to you monetise the online contents more aggressively? Thank you.

[Foreign Language]

Yu Dong

[Foreign Language]

Amy Xu

Stanley, let me – yeah, let me just translate this for other people on the call who speaks English.

With respect to Stanley's first question in terms of the impact of the Han Han, Han Han is a very influential writer, blogger, and he has over 40 million fan base. Yesterday, we launched the – the Duckweed, a signing ceremony yesterday. And yesterday morning, Han Han put out his trailer for the Duckweed in the morning. And in the afternoon, by 14;00 in the afternoon, there were 1.5 million of forwardings – 1.5 million of forwardings by 14:00. And as of this morning, there were more – a lot more than that. And in his Weibo, within five hours, they were forwarding about – yeah, about 190,000 forwarding. And as of this morning, there were – during the 370,000 forwarding. And this breaks the record of Guo Jingming – as Stanley says, to the other director Guo Jingming by a lot.

As you can see, the new generation of directors, writers, influential people will make a difference in – in our future films. We have high hopes that Duckweed will out-beat the two films of Tiny Times, the two films – the Tiny Times 1 and the Tiny Times 2 probably combined around RMB700 million box office. We hope to out-beat that number.

In terms of the second question that Stanley asked in terms of the new media online, how to materialise further with the anti-piracy, besides the – besides the price that we can ask for in the – in our copyright, another important thing that we look for is cooperation and bundle with the resources of advertisement from this new media. With the Overheard 3 as an example, we sold the – the online distribution rights to Xunlei, however, we work with Youku to have it as a joint name as an investor for the Overheard 3 and they have provided to us over 90 million of assets in terms of advertisement in their Youku website and they have over 400 million users. So this – they have given us two days of resources. This is a tremendous value to us. And going forward, we will work actively and closely work with these new media companies.

Besides Youku, we will also work with Tencent and WeChat to further our cooperation in terms of promoting our films in the future. Stanley, over to you. [Foreign Language]

Stanley Huang - China Galaxy Securities

Oh thank you Amy. I think I have one more questions. I think Film Fund has helped a lot to leverage our production capability of the films and do we have any – do you have any new plans to raise more money? [Foreign Language].

Yu Dong

[Foreign Language]

Stanley Huang - China Galaxy Securities

I understand that. Thank you.

Yu Dong

[Foreign Language]

Amy Xu

With respect to potentially raising another film fund, as everyone know that the – the film fund that we have raised with Nuoya has been a very successful one. We see that the channel – the investors are happy and we will materialise or to further piggy back on the success story to raise a US dollar – potentially US dollars plus Renminbi film fund. And the purpose of this US dollar-Renminbi film fund is to invest with Hollywood to cooperate or to co-produce with Hollywood to work on Hollywood projects. At this time we are putting together the Hollywood projects, and when we have further information on this we will let everyone know.

Over to the operator; any more questions? Yeah, next question please.

Operator

Your next question – your next question comes from the line of Na You from ICBC International. Please ask your question.

Na You - ICBC International

Good morning Mr Yu, Amy. Congratulations on the strong quarter and thanks for taking my questions. I have two questions here for quick follow-up. First of all, regarding to your second quarter's guidance, can you give us a slate of what is the – for business segments, how should we expect the growth for this business and also how should we expect the operating margins going forward? Thank you.

Amy Xu

You Na, you have two questions. Do you want to finish all your questions?

Na You - ICBC International

Yeah, sure. Second question is a broader question for Mr Yu, and it's a broader question regarding for the competition landscape. We'd like to know what is Mr Yu's comments on the competitive landscape, and we noticed that there are Huayi, Enlight as your competitors, but we also noticed that Wanda is aggressively investing in the film business. How would we say we’ve lost the advantage in this area? Thank you.

Amy Xu

[Foreign Language]

Na You - ICBC International

[Foreign Language]

Yu Dong

[Foreign Language]

Amy Xu

I will translate Mr Yu's – You Na's second question and Mr Yu's response. In terms of Bona's advantages, we are a vertical – vertically integrated from upstream to midstream to downstream industry-focused company. So far Huayi and Enlight does not have the capability of a downstream. They are – their weakness is in the – working with the downstream distribution business with the theaters.

As far as the WandaWanda concern, Wanda – this is their advantage to Wanda. However, Wanda's shortcoming is that they do not have strong production capability. In China, currently there's only one company which is Bona which has this kind of advantage with the fully integrated vertically-focussed film company. The other company that has this kind of capability is China Film Group. However, China Film Group is a state-owned company. Not only do they have vertically integrated, they also have the import quota rights. So we cannot compete with them, but we will closely working with them to – on all future possibilities. This is with respect to You Na's second question on competitive landscape.

In terms of You Na's first question, the second quarter guidance, You Na, we probably can see the second quarter we have at this moment, we have two films – one is the Overheard 3 and the other one is the To Love Someone – which is a small film, To Love Someone. At this moment, we do not have the final goal for the late June release of a foreign film yet. So therefore, based on this, we feel that the second quarter will be somewhat similar to first quarter. You Na, any other questions? Back to you.

Amy Xu

Operator – back to the operator.

Operator

Your next question comes from the line of Yang Zhao from CICC. Please ask your question.

Yang Zhao – CICC

Hello Yu Dong and Amy. And I have a couple of questions. The first is regarding our pipeline schedule. I found that we have about over ten films to be released in the next – in the next seven months in 2014. And do we have any schedules about the – I’ll add that maybe a little positive for us to read that. Do we have any comments on that?

And then the second question is regarding our online cooperation with Youku, and you also said that Youku has sponsored advertisement so with value in the Overheard 3 and can we – do we – shall we expect that as well will dilute our box office in 2014? Thanks.

Amy Xu

[Foreign Language]

Yang Zhao – CICC

[Foreign Language]

Yu Dong

[Foreign Language]

Amy Xu

[Foreign Language]

Yang Zhao – CICC

Yu Dong

[Foreign Language]

Amy Xu

Thank you for your question. The ten films that are – ten-plus films that we will be releasing shortly for the next nine to 12 months, including three of the approved imported foreign films, the Non-Stop, Pompeii and 12 Years a Slave, we have received approval to import, to distribute in China.

Every quarter, we plan to have one or – if not two major films as a – as our blockbuster, and for the second quarter as we said before is Overheard 3. For the third quarter for July, we want to exhibit Duckweed by Han Han which is one week after the Tiny Time. For the August, early August which is the traditional Chinese Valentine period, we will put The White Haired Witch. And for September/October, we have the other film, the Dead End. For the fourth quarter, the big blockbuster the Taking of the Tiger Mountain. With respect to the cooperation with Fox on the on the Bridal War, we will start shooting in June and hope to release in the next Valentine, 2015 Valentine's.

This year, Bona is probably one of the most competitive and the strongest film slates ever when you compare with either the domestic film company or the state-owned film company. We have the most advantage and most competitive year for us.

Over to operator.

Operator

There are no further questions at this time. I would now like to hand the conference back to Ms Brandi Piacente. Please continue.

Brandi Piacente

Alright everyone, that concludes our call today. Thank you again for joining us. If you have any further questions, you can feel free to contact Bona's Investor Relations or the Piacente Group. Thank you very much and have a great evening and morning.

Operator

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

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First Quarter 2014 Earnings Conference Call Friday, 30th May 2014

13

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