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SCMP Reporter

GOLDEN Harvest plans to spin off its film distribution arm as a separate listing on the Hong Kong stock exchange, with the film-making side remaining private.

  The company that made Jackie Chan famous in hit flicks like Drunken Master and Police Story will use the funds to build cinemas across Southeast Asia.

  Details of the offer size and pricing have not been released, but it is believed the company will be seeking around $150 million for its cinema-building programme.

  The distribution arm, known as Golden Harvest Entertainment, operates 69 screens with 54,753 seats in Hong Kong, Macau, Malaysia, Singapore and Thailand.

  It made a $69.2 million profit in the 1994 financial year, up from $54.7 the year before. Turnover for the year was $361.7 million, compared with $274.6 million in 1993.

  The company plans to build more cinemas in Malaysia and Thailand, but has not yet released details.

  However, one market not on the agenda is China.

  Last year, company director Peter Tam seemed confident Golden Harvest would build more than 100 cinemas on the mainland, but yesterday backed away, saying that at this stage the company was just test-marketing some films.

  In addition to operating cinemas, Golden Harvest Entertainment will continue to distribute United Picture films, as well as all future films made by Golden Harvest Private Group.

  One asset that will not be included in the listed company is Golden Harvest's film library, reputedly the largest collection of contemporary Chinese films in the world.

  Earlier this year, STAR TV paid an undisclosed sum to acquire the rights to some of the library.

  The demand for Chinese-language programming has seen prices for films skyrocket as cable firms and satellite television stations vie for the best shows.

  Yesterday the company refused to comment on the size of the film library or its worth, saying it was not relevant to the distribution company.

  Ho Shun-yun, chief executive officer for Golden Harvest, confirmed the listed vehicle would have no distribution rights for titles in the film library.

  Mr Ho said the film production side would remain private.

   The decision to exclude it from the listing company was because revenues and profits were unstable due to the nature of the business, he said.

  Although full details of the issue, including pricing, have not been released, analyst response has been mixed.

  'It will probably succeed as an issue because the retail interest is there,' said a British analyst.

  However, Lehman Brothers head of research, Kirk Sweeney, said the company could encounter strong competition from home video and cable and satellite television, as all would compete for viewer dollars in the next few years.

      'In the United States cinema admissions are flattish,' said Mr Sweeney.

  'The burst of supply in distribution windows has to have an effect on cinema admissions.'   Countering that was the rise in disposable incomes and a young market, he said.



Golden Harvest shooting for $150m from listing to finance new cinemas