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China Problems Push Orange Sky Golden Harvest Into Loss

Orange Sky Golden Harvest, the pan-Asian cinema operator, remains unable to make a profit in China despite booming box office.

The group, which saw profits drop in 2014, shifted into the red in 2015. For the last financial year the group reported losses of US$23.2 million (HK$180 million) compared with profits of $1.68 million (HK$13 million). Revenues across the group rose by 18% to US$165 million (HK$1.28 billion).

The company blamed “increased operating costs of newly opened cinemas for the year and other operating cost in Mainland China.” It pointed to “price sensitive consumers” and said that it needs to “improve the performance efficiency of existing mature cinemas by boosting box and non-box office revenue, as well as implementing cost controls.” It reported only 19% growth in mainland Chinese revenues – from HK$859 million to HK$1.02 billion – at a time when box office growth in China grew by 49%.

Its China operations finished 2015 by selling 21.5 million tickets from its 474 screens at 67 complexes. It finished 2014 with 16.5 million ticket sales from 420 screens at 59 locations.

(Since year’s end, the company has found investors including Tencent’s Weiyang unit and Bison Capital, that will inject US$61.5 million (RMB400 million) into its Chinese theater business, ahead of a possible spin-off of the operation within four years.)

OSGH’s six wholly owned multiplexes in Hong Kong, in contrast, saw exhibition revenues climb from US$27.7 million (HK$215 million) to $33.2 million (HK$257 million). Singapore, where it holds 50% of market leading chain Golden Village, saw exhibition and distribution revenues edge slightly down. But Singapore profits increased to US$7.90 million (HK$61.2 million), from US$6.75 million (HK$52.3 million).

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