Creative China Holdings Limited (Creative China or the Group; HKG: 8368) today announced that it and its wholly-owned subsidiary CCH Film Production Limited have entered into a cooperation agreement with consideration at around RMB30 million (equivalent to about HK$36 million), with its Cooperation Partners and Guarantor for the distribution of six foreign imported films (the Target Films) in Mainland China. The consideration will be settled by the allotment and issue of consideration shares by the Group to the partners or their designated nominee(s) at the issue price of HK$1 per share proportionally according to the allocation of the consideration shares of each Target Films. The entire consideration shares represent approximately 9.8% of the total allotted and issued share capital of the Group.
The other parties in this cooperation agreement are Truth Pictures (Hong Kong) Limited (Truth Pictures), Yuanxin Pictures (Beijing) Limited (Yuanxin Pictures) (Truth Pictures and Yuanxin Pictures, collectively (the Cooperation Partners) and Mr. Liang Long Fei (Mr Liang, the Guarantor). Pursuant to the cooperation agreement, the parties are to distribute the Target Films through cinemas, television stations and/or the new media (as the case may be) on an income sharing basis. The cooperation partners have been granted an exclusive right and license (with the right to sublicense) for film distribution in Mainland China and are eligible to obtain the License for Public Screening of Films.
The agreement entitles Creative China to (i) 82% of the total net income for one target film imported from Taiwan; and (ii) 100% of the total net income for each of the remaining target films respectively within the Licensing Period. The cooperation partners guarantee the actual income will not be less than RMB35 million by 31 December 2022. Otherwise, the cooperation partners are to compensate the Group for the amount equivalent to the shortfall in cash which is to be settled no later than 31 January 2023. If the amount of the Total Net Income in aggregate (the Aggregate Net Income”) does exceed RMB35 million and not exceed RMB60 million, apart from receiving RMB 35 million, the Group is entitled to 50% of the excess balance. If the amount of the Aggregate Net Income exceeds RMB60 million, in addition to the above-mentioned income, the Group is entitled to 25% of the excess balance.
Truth Pictures is wholly-owned by Mr Liang. It is a limited liability company established in Hong Kong with extensive resources principally engaged in the distribution, development and production of films and television programmes in Mainland China, Hong Kong and Taiwan. Yuanxin Pictures, 90% owned by Mr Liang, is a limited liability company established in the PRC. It is principally engaged in the distribution, development and production of films and television programmes in Mainland China. The cooperation partners bring industry expertise and experience and a well-established business network boosted by Mr Liang’s over 20 years of management in the film industry. Particularly noteworthy is the in-depth cooperation of both companies with Sony Pictures, Paramount Pictures, DreamWorks Animation, Warner Bros. Movies, Maoyan Entertainment, Alibaba Pictures, Tencent Pictures, Iqiyi Pictures, China Film and Huaxia Film Distribution. Equally important is the involvement of both companies in landmark projects including, among others, Transformers: Age of Extinction, Mission: Impossible – Rogue Nation, Spectre, Terminator: Genisys, Angry Birds, XXX: Return of Xander Cage, Baby Driver, Peter Rabbit, The Current War, and Dance with Me. Mr Liang was also the co-producer of Transformers: Age of Extinction, Mission: Impossible – Rogue Nation, Terminator: Genisys, The SpongeBob Movie: Sponge Out of Water, and Peter Rabbit in Mainland China.
According to China Film Administration and ENDATA, the annual box office of Chinese movies was approximately RMB60.9 billion, RMB64.2 billion and RMB20.4 billion, respectively from 2018 to 2020. The annual box office receipts of imported films accounted for approximately 38%, 36% and 16% (approximately RMB23.1 billion, RMB23.1 billion and RMB3.3 billion) of the total movie box office revenue respectively. According to industry data from DengTa Professional APP, approximately 121,136, and 61 imported films were released respectively. In terms of revenue, Mainland China is one of the world’s two largest cinema markets. The nation’s film industry continued to recover from the pandemic in 2020. According to PriceWaterHouse Coopers’ “Global Entertainment and Media Industry Outlook 2021” China Summary, apart from a few cinema closures due to local COVID-19 outbreaks in the second half of last year, there was an 8.3% year-on-year increase in the number of screens to a total of 75,581. The box office revenue of films released during the Chinese New Year in 2021 also hit a record high. Mainland China’s box office continues to significantly increase its portion of global box office revenues. The number of moviegoers in the country has rebounded sharply to about 1.4 billion in 2021, and is projected to reach 1.8 billion by 2025, exceeding pre-pandemic levels. Mainland China’s film revenue in 2025 is expected to account for 23.5% of the world’s total of US$47 billion, second only to the United States at 24.1%. The compound annual growth rate of Mainland China’s film revenue is estimated to be 8.25% between 2021 and 2025.
Mr. Philip Yang, Chairman and Executive Director of Creative China, said, “We are very pleased to co-distribute six foreign imported films. This does not only enhance the Group’s position and brand awareness in the industry and expands our income sources, but also allows Chinese audiences to more conveniently enjoy films from other countries and better understand and appreciate foreign culture and cinematic art and techniques. We are confident that the cooperation can advance our further development in the film industry while enlarging our market share. Looking ahead, we will continue to prospect for more overseas productions so that Chinese audiences can more easily enjoy foreign films and generate higher returns for our shareholders.”
About Creative China Holdings Limited (HKG: 8368)
Creative China is dedicated to turning creativity into wealth and fostering the development of the creative industry with innovation. The Group mainly engages in program production, film and television program pre-production, distribution and related services, concert and event organisation, mobile live broadcasting and e-commerce, and artist management. The original creative cultural products of the Group included television singing concerts, movie premieres and award presentation ceremonies, multimedia musicals and star-hosted television shows. Such first-of-their-kind productions has served as guidepost for the industry. Having organised many creative and high-standard international activities and afforded creative stage designs, creative visual and public relations efforts, it boasts great influence and communication capability in Mainland China.
For more information of Creative China, please visit: http://www.ntmediabj.com/index.php.