A8 Achieved Record High Revenue and Profits in 2009

USA - English

• USA - English

HONG KONG, March 24 /PRNewswire-Asia/ -- Leading integrated digital music company in China A8 Music Holdings Limited ("A8 Music" or the "Group") (Stock Code: 00800.HK) today announced its audited annual results for the year ended 31 December 2009.

    Results Highlights:
    -- Strong sequential revenue growth of 43% in 2H09 from 1H09, 2H09 YoY up
       11%
    -- 2009 full year revenue amounted to approximately RMB707 million,
       representing a slight increase from RMB706 million in 2008
    -- Excluding one-off event held in 2008, revenue increased by
       approximately 8%, which is in line with the industry growth
    -- Profit attributable to owners of the Company increased by 27% amounted
       to approximately RMB102 million
    -- Strong balance sheet, with cash balances and highly liquid short term
       assets of approximately RMB402 million and net assets of approximately
       RMB483 million as of 31 December 2009
    -- The Board has proposed a final dividend of HKD0.05 per share

The Group recorded a strong sequential revenue growth of 43.2% in 2H09 from 1H09, YoY up by 10.5%. Full year turnover increased slightly to RMB707 million. Excluding the revenue contribution of RMB48.6 million from a one-off event held with a mobile operator in 2008, the revenue of the Group of the year 2009 represented an increase of approximately 8% compared with 2008. The Group strived to tighten expenses in line with the stable growth in turnover which helped contribute to a 2% growth in gross profit to RMB270 million. Profit attributable to owners increased substantially by 27% over 2008 to approximately RMB102 million. Basic earnings per share were RMB0.23 (2008: RMB0.20). The Board has recommended payment of a final dividend of HKD0.05 per share for the year ended 31 December 2009.

The Group enjoyed a strong financial position with no debt and a cash balances and highly liquid short term assets of RMB402 million as at 31 December 2009 (2008: RMB317 million).

Mr. Liu Xiaosong, Chairman of A8 Music, said, "The Group has made powerful strides forward through our successful launching of the extended UGC model, and expanding our marketing and sales channels which in turn will accelerate our future business development. More importantly, we have well defined our long term B2C strategy and have been exploring prospects for extending the Group's footprint through mergers and acquisitions."

In 2009, revenue generated from UGC amounted to RMB189 million, increased from 38% to 42% of total revenue compared with 2008. A8 Music has successfully enriched its UGC, notably by signing a two-year exclusive contract with HIM, one of Taiwan's largest music labels which added the famous S.H.E. and Fahrenheit's popular works. In addition, A8 Music's Fourth Original Music Award Contest attracted more than 1,000 participants and contributed around 10,000 exclusive UGC songs to the Group, including for the first time a Hong Kong division. Three of our UGC songs, "Cheng Fu", "Ren Cuo" and "Zhan Chi Tian Kong", were on Baidu's Top 50 Billboard Chart and achieved high positions on China Mobile Wireless Billboard, while "Cheng Fu" ranked top 10 on both billboards. In 2009, the Group's top five songs recorded over 45 million downloads. We also collaborated with Shenzhen Media Group (SMG) as the co- organiser of the Pop Music Contest for the China Golden Bell Award.

Another major area of progress was A8 Box being selected as the only one music player by world handset brands as well as top domestic brands. In November 2009, A8 Box was selected as the exclusive music solution for Nokia's Ovi Store, users in China have been able to download and install A8 Box through logging into the Ovi Store or by a CD-ROM coming with the handset packaging. In addition, A8 Music has been providing music related service to all Samsung mobile users through Samsung Fun Club since July 2009, and starting from October 2009, all Gionee Music Phones will be pre-installed with A8 Box.

During 2009, A8 Music strategically consolidated all the music and related business operations into one single business "Music Cloud", which is a B2C model based on cloud computing technology. Music Cloud is a long term strategy of the Group, aiming to provide a central virtual space for users to store their music which can be retrieved or listened to through any devices, anywhere. Music Cloud will not only provide basic streaming, download and search functions, but also other advanced services such as smart radio, music community, high fidelity music downloads and multi-device applications, etc. Music Cloud will reach consumers directly, achieving the Group's strategic objectives of providing services to end-users anytime and anywhere through desktop PC as well as mobile devices.

In short to medium terms and in order to continuously increase market share on mobile Internet, A8 Box will extend its reach to becoming a "platform" to provide users an integrated entertainment services, focusing on music but also providing interactive entertainments, information, wallpapers/pictures and news/weather, etc.

The rollout of 3G services has spurred the dramatic growth of mobile Internet applications. According to the China Internet development status report published by China Internet Network Information Center in January 2010, the number of mobile Internet subscribers in China has risen to approximately 230 million. In addition, based on iResearch China Digital Music Report 2009- 2010, the growth of mobile Internet will be from 34% to 48% annually and reached RMB14.8 billion in 2012. It further stated that by riding on this exponential growth and the deployment of 3G, wireless music will be one of the most sought after applications on the mobile internet. Wireless music is forecasted to grow at a double digit rate to reach RMB39.3 billion in 2011.

In 2009, the recent announcement of China to accelerate the Tripe Play, the plan to converge telecommunications, TV and radio and Internet network as well as migrate these functions to wireless in the near future would indeed boost the cultural content where music represents a key and sizable element. Our advances here should enable the Group to seize opportunities created by the favorable macro-economic environment as well as meeting the increasing demand for wireless music on mobile devices. Thus, creating and maximizing the best value of our Music Cloud strategy.

Mr. Liu concluded, "A8 Music's long term strategy is to establish a B2C model to own user directly. Through Music Cloud and integrated entertainment platform of A8 Box, the Group will be offering diversified products with focus on music and music related products. This strategy will provide a very solid foundation for the Group's future growth and ensuring the Group to achieve a higher than average industry growth rate. We are pleased to celebrate our 10th anniversary this year and strive to extract the best value of the Group in the next 10 years and becoming the biggest digital music service provider in China, enroute to generating promising profit and returns for our shareholders."

                      A8 Digital Music Holdings Limited
                        Consolidated Income Statement

                                               For the Year ended 31 December
                                                  2009                2008
                                                 RMB'000             RMB'000
    Revenue                                      707,148             706,079
    Business tax                                 (11,292)            (14,196)
    Net revenue                                  695,856             691,883
    Cost of services provided                   (425,723)           (425,806)
    Gross profit                                 270,133             266,077
    Other income and gains, net                   11,543               7,624
    Selling and marketing expanses              (112,852)           (115,281)
    Administrative expenses                      (50,145)            (44,180)
    Other expenses                                   (87)            (17,257)
    Finance costs                                     --              (2,015)
    Profit before tax                            118,592              94,968
    Income tax expenses                          (16,423)            (14,168)
    Profit for the year                          102,169              80,800

    Attributable to:
    Owners of the Company                        102,008              80,170
    Minority interests                               161                 630

                                                 102,169              80,800
    Dividends (HKD 0.05 per share)                20,140                 Nil
    Earnings per share
    Basic (RMB per share)                           0.23                0.20
    Diluted (RMB per share)                         0.22                0.19

About A8 Digital Music Holdings Limited

A8 Music is a leading integrated digital music company that sells music content through mobile phones, sourced from its highly successful interactive UGC platform http://www.a8.com , as well as from international and domestic record labels, and promoted through traditional and new media such as Internet and wireless network. Led by a team of experienced top executives with foresight and vision, the Group is able to capitalise on its integrated marketing and sales multi-channel network to acquire insights into consumer preferences in different regions and thus customize its marketing strategies. The Group was listed on the Main Board of the Hong Kong Stock Exchange in June 2008. In 2009, the Group was awarded "Gold Winner of The Asset Corporate Award 2009" and selected as "Deloitte Technology Fast 500 Asia Pacific".

    For press enquiries:

    A8 Music Holdings Limited
     Ms. Coco Gao
     Tel:   +86-755-3332-6316
     Email: [email protected]

    Strategic Financial Relations (China) Limited
     Ms. Esther Lau
     Tel:   +852-2864-4845
     Email: [email protected]

     Mr. Marcus Keung
     Tel:   +852-2114-4967
     Email: [email protected]

     Ms. Janice Au
     Tel:   +852-2864-4874
     Email: [email protected]

     Mr. Theo Lau
     Tel:   +852-2114-4949
     Email: [email protected]

SOURCE A8 Digital Music Holdings Limited