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HONG KONG — Hong Kong producer and distributor Universe International Holdings (UIH) last year suffered a combination of stagnating production and rising distribution costs. Company Monday announced net losses of $3.5 million for the year to end June.

Revenue for its video distribution business dropped 30% to $3.1 million, while its film exhibition interests showed a decline of 12% to $1.4 million.

The poor results were blamed on continuing contraction of the Hong Kong exhibition market and losses from Internet video piracy.

Bright spot was rights licensing business in China where revenues grew 13% to $12.2 million, but group profit margins were affected by rising production costs.

UIH has had a turbulent year. In June 2008, a proposed sale of its major shareholder Goldcrest Enterprises was called off when both parties could not come to an agreement on price and structure of the disposal.

Globalcrest, which owns 54% of UIH, is controlled by a trust whose beneficiaries include Universe chairman Daneil Lam (sic, second ref: Lam) and his wife Chiu Suet-ying (second ref: Chiu), also a Universe exec director. Local Hong Kong newspapers have reported widely that the proposed sale arose from a marital dispute between Lam and Chiu.