股份編號 00623

SinoMedia Holding Limited (the “Company” or “SinoMedia”) and its subsidiaries (collectively the “Group”) is a leading media corporation in China, with a focus on structuring and developing four businesses, namely “media resources management, integrated brand communication services, creative production of advertisement and content, and new media investment and integration”.

中視金橋國際傳媒控股有限公司（「本公司」或「中視金橋」）及其子公司（合稱「本集團」）是中國領先的傳媒運營集團，重點構建和發展媒體資源運營、品牌整合傳播服務、廣告與內容創意製作以及新媒體投資與整合運營四大板塊。

Financial Summary	2
Corporate Information	3
2011 Year in Review	4
Awards and Recognition	6
Chairman’s Statement	9
Management Discussion and Analysis	12
Directors and Senior Management	22
Corporate Governance Report	30
Corporate Social Responsibility Report	37
Directors’ Report	42
Independent Auditor’s Report	49
Consolidated Income Statement	51
Consolidated Statement of
Comprehensive Income	52
Consolidated Statement of
Financial Position	53
Statement of Financial Position	55
Consolidated Statement of
Changes in Equity	56
Consolidated Cash Flow Statement	57
Notes to the Financial Statements	59
Five Year Summary	139

Financial Summary

	For the	For the
	year ended	year ended
	31 December	31 December
	2011	2010	Change (%)
	*RMB’000*	RMB’000
Revenue	1,617,800	1,373,173	+18%
Prof t from operations	352,292	208,979	+69%
Prof t attributable to equity shareholders
of the Company	238,945	158,064	+51%
Earnings per share (RMB)
— Basic	0.424	0.279	+52%
— Diluted	0.419	0.278	+51%
Proposed dividends per share (HK cents)
— Final	10.6	6.6	+61%
— Special	10.6	6.6	+61%
Revenue:
	For the	For the
	year ended	year ended
	31 December	31 December
	2011	2010	Change (%)
	*RMB’000*	RMB’000
Media resources management	1,605,435	1,378,316	+16%
Integrated brand communication services	18,613	9,875	+88%
Creative production of advertisement	39,255	18,467	+113%
and content
Others	638	—	N/A
Sales taxes and surcharges	(46,141)	(33,485)	+38%
Revenue	1,617,800	1,373,173	+18%
		As at	As at
		31 December	31 December
		2011	2010
Total assets		1,851,158	1,284,248
Equity attributable to equity shareholders of the Company		1,018,875	849,140

2 SinoMedia Holding Limited

Corporate Information

EXECUTIVE DIRECTORS

Mr. Chen Xin Ms. Liu Jinlan Mr. Li Zongzhou

NON-EXECUTIVE DIRECTORS

Mr. Zhu Jia Mr. He Hui David

INDEPENDENT NON-EXECUTIVE

DIRECTORS

Mr. Ding Junjie Mr. Qi Daqing Mr. Lian Yuming

COMPANY SECRETARY

Mr. Chan Oi Nin Derek

AUTHORISED REPRESENTATIVES

Mr. Chen Xin Mr. Chan Oi Nin Derek

REGISTERED OFFICE OF THE COMPANY

Room 1505, 15th Floor, World-wide House, 19 Des Voeux Road Central, Hong Kong

CORPORATE HEADQUARTERS

Unit 15D, Xintian International Plaza, No. 450 Fushan Road, Pudong New District, Shanghai, PRC

AUDIT COMMITTEE

Mr. Qi Daqing (Chairman) Mr. Ding Junjie Mr. He Hui David

AUDITORS

KPMG

SHARE REGISTRAR

REMUNERATION COMMITTEE

Mr. Chen Xin (Chairman) Mr. Ding Junjie Mr. Lian Yuming

COMPLIANCE COMMITTEE

Mr. Li Zongzhou (Chairman)

Computershare Hong Kong Investor Services Limited Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong

INVESTOR RELATIONS CONSULTANT

iPR Ogilvy Ltd.

Mr. Chan Oi Nin Derek

WEBSITE

www.sinomedia.com.hk

Annual Report 2011 3

January

==> picture [425 x 10] intentionally omitted <==

----- Start of picture text -----

■ Acquisition of the exclusive underwriting rights to “Weather Forecast” on CCTV-5 (Sports).
----- End of picture text -----

==> picture [24 x 14] intentionally omitted <==

In addition to the current underwriting rights to channels and programmes, SinoMedia entered into a cooperation agreement with Beijing Huafeng Meteorological Audio & Video Technology Center and acquired the exclusive underwriting rights to the advertising resources of “Weather Forecast” in Sports News on CCTV-5 (Sports). This programme is the only weather services programme on CCTV-5 (Sports).

■ Acquisition of the master advertising agency rights of MediaCorp TV channels in China

SinoMedia entered into a media agency agreement with a wholly-owned subsidiary of MediaCorp Pte Ltd (“MediaCorp”), and became the master advertising agent of MediaCorp TV channels (including Channel NewsAsia and other TV channels) in China.

==> picture [32 x 47] intentionally omitted <==

----- Start of picture text -----

2
----- End of picture text -----

==> picture [32 x 46] intentionally omitted <==

----- Start of picture text -----

4
----- End of picture text -----

==> picture [32 x 47] intentionally omitted <==

----- Start of picture text -----

6
----- End of picture text -----

==> picture [32 x 47] intentionally omitted <==

----- Start of picture text -----

7
----- End of picture text -----

February

■ Winning the honour of First Class Advertising Enterprise of China again

SinoMedia won the honour of First Class Advertising Enterprise of China in the media service category again. The accreditation of First Class Advertising Agency of China is organised and initiated by China Advertising Association (Committee of Enterprise Accreditation), to fully recognise the contributions of enterprises to advertising industry and social welfare, highlighting the infl uence and credibility of enterprises. SinoMedia gains unanimous recognition from industry associates and all sectors of the society by virtue of its positive development momentum and operation results. This is not only an affi rmation of its economic strength and operation capacity, but also an assurance for developing long-term strategic cooperative partnership between the enterprise and clients.

April

May

==> picture [33 x 46] intentionally omitted <==

----- Start of picture text -----

5
----- End of picture text -----

SinoMedia acquired the creative, fi lming and production project of the promotional video for the luxurious “Royal Ruyi” products of Shandong Ruyi Science & Technology Group

■ Entering into a strategic cooperation with the magazine “Global Brand Insight”

■

SinoMedia signed a strategic cooperative framework agreement with the magazine “Global Brand Insight” of China Advertising Association of Commerce, which further expands and extends SinoMedia into the fi eld of enterprise brand marketing.

June

Image video of Everbright Bank was included in the IAI Annual Book

■

After competitive presentation, SinoMedia entered into a creative advertising and graphic design agreement with China Everbright Bank. The series of overall image advertisement for Everbright Bank which were aired on CCTV during 2010–2011, and was included in the IAI 2011 Annual Book of Chinese Advertising Works (中國廣告作品年鑒).

July

■ Winning the media agency business of China Life

In the bidding of the media agency project held by China Life, after two rounds of competitive presentations among various media agencies, SinoMedia was fi nally appointed the service provider for advertising services procurement projects under the media agency category of China Life for the year 2011–2012. The winning of the bid fully demonstrated the overall strengths of SinoMedia in providing comprehensive media services to large enterprises.

■ Establish a Foothold in Mobile Internet Industry to Explore Mobile TV Market

SinoMedia has entered into agreements to invest in cash for the acquisition of the equity interests of two mobile TV operators, 100 TV and CNLive and became an important strategic investor for the two companies. SinoMedia establishes a solid foothold in the mobile Internet media operations.

==> picture [32 x 46] intentionally omitted <==

----- Start of picture text -----

8
----- End of picture text -----

August

■ Entering into a creative, fi lming and production agreement with Henan Provincial Tourism Bureau for the creative production of microfi lm by the Company

■ SinoMedia becomes CNBC’s Exclusive Advertising Sales Representative in China

SinoMedia entered into a cooperation agreement with CNBC Asia Pacifi c, which authorises SinoMedia to be the exclusive advertising sales representative for CNBC TV and Internet in Mainland China.

4 SinoMedia Holding Limited

==> picture [33 x 47] intentionally omitted <==

----- Start of picture text -----

9
----- End of picture text -----

September

■ The contract for SinoMedia and THE PLACE

project signed in Beijing

On 19 September 2011, SinoMedia entered into a cooperation agreement with THE PLACE INVESTMENT (BEIJING) CO., LTD and held a signing ceremony for the offi ce building project of SinoMedia and THE PLACE. This project will provide a versatile working environment for the future strategic development of SinoMedia which is benefi cial to the overall future management of the Group.

■ SinoMedia was named Asia’s 200 Best Under A Billion by Forbes

SinoMedia was named as one of the 200 “Best Under A Billion” by Forbes (Asia) in the September 2011 issue. The ranking was made from a selection of approximately 15,000 companies with active stock dealings and annual sales between USD5 million to 1 billion in the Asian-Pacifi c region, and other indicators such as enterprise profi t margin, growth rate, analysis of enterprise’s assets and liabilities and future development potential of enterprise. A total of 65 enterprises in mainland China and Hong Kong were named while SinoMedia was the only named domestic media operation group focusing on integrated media operation and underwriting.

==> picture [33 x 47] intentionally omitted <==

----- Start of picture text -----

11
----- End of picture text -----

Won the competitive presentation for the production and fi lming contract on the promotional video of Zhengzhou Municipal Tourism Administration

■

November

■ SinoMedia doubled its tendering business and brand service improved rapidly

In the presale tender for 2012 CCTV primetime advertisement resources, SinoMedia achieved a record of RMB1.4 billion of contract value, doubling that of 2011. This signifi ed that SinoMedia’s integrated brand communication services are taking shape as SinoMedia acquired higher market recognition for its extensive experience in integrated brand communication services.

■ Being appointed the service provider for procurement project under the media agency category of the People’s Insurance Company (Group) of China

After several rounds of the agency selection procedures and competitive presentations, leveraging on years of professional experience in fi nance and insurance industries as well as its capabilities of media planning and purchasing, SinoMedia was fi nally appointed the service provider for advertising services procurement project under the media agency category of the People’s Insurance Company (Group) of China for the year 2011–2012.

==> picture [33 x 47] intentionally omitted <==

----- Start of picture text -----

12
----- End of picture text -----

December

■ The award ceremony of China 4A Gold Seal Awards was successfully held

On 9 December 2011, SinoMedia, as the vice-director unit of China 4A, successfully organised the award ceremony of the sixth China 4A Gold Seal Awards. It was highly acclaimed in the settings of auditorium, overall creativity, program rundown and on-spot arrangement. SinoMedia fully demonstrated its high level of professionalism in the planning and implementation of public relations activities.

■ “WGOOL” carried out internal test within the Group

In December 2011, an agricultural portal website, “www.wgool.com”, was newly established by CTV Golden Bridge Culture Development (Beijing) Company Limited, a wholly-owned subsidiary of SinoMedia. Internal test within the Group was then commenced and the website was launched online in February 2012. It is an important milestone signifying the Group’s expansion from downstream media sales operation to upstream media content production. It is also an important move of the Group towards establishing a versatile industry chain and interactive media operating system.

Annual Report 2011 5

==> picture [596 x 112] intentionally omitted <==

----- Start of picture text -----

Awards and Recognition
----- End of picture text -----

Company I. Award: Outstanding Media Organisation for Innovation and Integrity Time: February 2011 Awarded by: China Association of National Advertisers Award Description: Awarded by China Association of National Advertisers in the 2010 Annual Meeting and Summit of Marketing Innovation and Brand Image Improvement in the “12th Five-Year” period, and the award aims at advocating advertiser enterprises’ core values of innovation and integrity and encouraging Chinese advertisers in promoting the sustainable and sound development of the China’s advertising industry with the synergy of innovation in terms of technology, management and marketing network. II. Award: China Advertising Gold Medal Award for Comprehensive Strategy Time: October 2011 Awarded by: China International Advertising Festival Award description: China International Advertising Festival is the most infl uential industrial platform in China, aiming to promote the communication and interaction between media and enterprises, and encourage the crosspromotion between media and enterprises. The award was granted at China Advertising Underwriter Commendation Congress during the 18th China International Advertising Festival, which was co-hosted by Television Branch of China Advertising Association, Newspaper and Magazine Branch of China Advertising Association and Ad Men Magazine Publishing House. The candidates for the award were nominated by mainstream media such as CCTV , Hunan Satellite Television, Youku and Sohu. The winner will be chosen according to the published articles on authoritative media like R3, CTR, New Era and the evaluation criteria include service reputation, resource integration, marketing precision, technology matching and new media brand. III. Award: 2011 Top 10 CCTV Advertising Agency Time: February 2012 Awarded by: China Central Television Station Advertising Center Award Description: “Top 10 CCTV Advertising Agency” is the annual award presented by CCTV to its advertising agency partners and it is the highest recognition granted by CCTV to its advertising agencies. It has been the sixth consecutive year for SinoMedia to receive such an award.

Creative design I.

Annual Report: SinoMedia 2010 Annual Report Award: Cover Design Gold Award (media and advertising companies) of ARC Awards Time: June 2011 Awarded by: MerComm, Inc. Award description: The ARC Awards, established by MerComm, Inc. in 1987, is one of the world’s largest and the most authoritative competitions for honoring excellence in annual reports. The award is considered highly respected and prestigious in the industry, and is called “Oscar Award of Annual Report” by the fi nance media. II. Annual Report: SinoMedia 2010 Annual Report Award: League of American Communications Professionals LLC (LACP) the Vision Awards — the Listed Company Annual Report Gold Award, Top 50 in the Asia-Pacifi c Region and Top 20 Chinese companies Time: June 2011 Awarded by: League of American Communications Professionals LLC (LACP) Award description: League of American Communications Professionals LLC is committed to creating professional display platform in public relations section to set good examples around the world. III. Advertisement: “NEET-China National Committee on Ageing” graphic design Award: Silver Award (Corporate image) of the Chinese Classics Communication Awards Time: June 2011 Award by: Chinese Classics Communication Awards Committee Award description: Organised by “Advertising Panorama Magazine”, the Chinese Classics Communication Awards is one of the most authoritative and infl uential awards in the commercial advertising industry in China. IV. Film Advertisement: “From Capital Bank to Humanism Bank -China Everbright Bank” fi lm advertisement Award: Bronze Award (Financial) of the Chinese Classics Communication Awards Time: June 2011 Award by: Chinese Classics Communication Awards Committee Award Description: Organised by “Advertising Panorama Magazine”, the Chinese Classics Communication Awards is one of the most authoritative and infl uential awards in the commercial advertising industry in China.

6 SinoMedia Holding Limited

==> picture [228 x 112] intentionally omitted <==

V.

Advertisement: “Seeking — WWF” graphic design Award: Bronze Award (Corporate Image) of the Chinese Classics Communication Activities Awards Time: June 2011 Awarded by: Chinese Classics Communication Awards Committee Award description: Organised by “Advertising Panorama Magazine”, the Chinese Classics Communication Awards is one of the most authoritative and infl uential awards in the commercial advertising industry in China.

VI.

Advertisement: “Protect the Breast — Pink Ribbon” Award: Silver Award (Conference & Events) of the Chinese Classics Communication Activities Awards in 2010 Time: June 2011 Awarded by: Chinese Classics Communication Activities Awards Committee Award description: Organised by “Advertising Panorama Magazine”, the Chinese Classics Communication Awards is one of the most authoritative and infl uential awards in the commercial advertising industry in China.

VII.

Advertisement: “National Public Relations in the Sincere Context — APP” Award: Silver Award (Offi ce Supplies) of the Chinese Classics Communication Activities Awards Time: June 2011 Awarded by: Chinese Classics Communication Awards Committee Award description: Organised by “Advertising Panorama Magazine”, the Chinese Classics Communication Awards is one of the most authoritative and infl uential awards in the commercial advertising industry in China.

VIII.

Advertisement: “Wu Song Feeding Tigers” Award: Finalist (Graphic Design) of the Chinese Element Creative Award Time: September 2011 Awarded by: Organising Committee of the Chinese Element Creative Award Award description: It is an international creative award hosted by the China Association of National Advertisers and directed and directly organised by the Organising Committee of the Chinese Element Creative Award with a view to inheriting and carrying forward the vitality and creativity of the native cultural elements in China, promoting the formation of China’s unique advertising creative culture in the advertising and advertising creative industries, and initiating and advocating the popularization and application of Chinese elements all over the world as well as commending the advertising creators worldwide for the achievements they have accomplished.

IX.

Advertisement: Lu Zhishen Planting Trees Award: Finalist (Graphic Design) of the Chinese Element Creative Award Time: September 2011 Awarded by: Organising Committee of the Chinese Element Creative Award Award description: It is an international creative award hosted by the China Association of National Advertisers and directed and organized directly by the Organizing Committee of the Chinese Element Creative Award with a view to inheriting and carrying forward the vitality and creativity of the native cultural elements in China, promoting the formation of China’s unique advertising creative culture in the advertising and advertising creative industries, and initiating and advocating the popularization and application of Chinese elements all over the world as well as commending the advertising creators worldwide for the achievements they have accomplished.

Management

I.

Winner: Ms. Liu Jinlan Award: 2011 Outstanding Figures of Innovation and Integrity Time: February 2011 Awarded by: China Association of National Advertisers Award Description: Awarded by China Association of National Advertisers in the 2010 Annual Meeting and Summit of Marketing Innovation and Brand Image Improvement in the “12th Five-Year” period, and the award aims at advocating advertiser enterprises’ core values of innovation and integrity and encouraging Chinese advertisers in promoting the sustainable and sound development of the China’s advertising industry with the synergy of innovation in terms of technology, management and marketing network.

II.

Electee: Ms. Liu Jinlan Position: Practice Tutor for Graduate School of Management of Communication University of China Time: September 2011 Organization: Communication University of China Description: MBA course of Communication University of China is the fi rst national MBA education project with “cultural media” features, focusing on developing new generation talents for highranking management positions with media knowledge and management quality.

Annual Report 2011 7

Chairman’s Statement

Chen Xin

8 SinoMedia Holding Limited

Chairman’s Statement

2011 was a year of exceptional excellence for Sinomedia, and the year of development of its different business sectors in the vertical media industry chain. The Group has made remarkable progress with the development on its four core businesses, namely media resources management, integrated brand communication services, creative production of advertisement and content, and new media investment and integration. The Group has thus moved closer to the strategic goal of becoming “the leading media corporation with video media management as its core business”.

While continuing to consolidate its strength in media resource management notably with China Central Television Station (“CCTV”) as the core platform, the Group also focuses on enhancing the integrated band communication service, and increasing its investments in upstream channels, content and technological platforms. Meanwhile, the Group speeds up the international communications of clients’ brands by cooperating with international media in agency business.

Media resource management is currently the core business which contributes the most revenue of the Group. During the year, the Group managed advertising time resources of programmes from channels including CCTV-1 (General)/CCTV-News (Chinese), CCTV-2 (Finance), CCTV-4 (Chinese International, including Europe and US), CCTV-5 (Sports), CCTV-7 (Military and Agriculture) and CCTV-NEWS (English). This allows the fl exibility in the creative presentation of ideas, and opens up a wider demographic of the client.

The Group also offers a full range of campaign strategy and execution services that target our clients’ different brand communication needs. A comprehensive advertising procurement system that covers TV, the Internet and mobile Internet, radio, print and outdoor media resources is in place. During the year, the Group was appointed by numerous national and largescale corporations to be their media procurement agent. At the 2012 CCTV Prime Time Resources Bidding, by adopting highly cost-effective media strategies, the Group purchased on behalf of its clients advertising resources that doubled in value from the previous year. The above achievements symbolise that the Group’s integrated brand communication services have already established and widely recognised by the clients’ market.

The Group conquered the geographic limitation during the year under review, entered into cooperation agreements with MediaCorp from Singapore, and CNBC, the fi nancial TV station from the United States of America, to become their business partner, expanding steadily into the international media domain. In line with the strategy of business globalisation, the Group has formally established its subsidiary in Hong Kong to provide advertising services to Hong Kong and overseas clients to promote their corporate and product brands in the China market. The Group will continue its efforts in gaining more national and international media resources, in order to provide our clients with more vivid and diverse communication schemes.

The group has actively promoted the business segment of creative production of advertisement and content in 2011. During the year under review, revenue from this business signifi cantly increased and plenty of notable awards were won, both globally and domestically. In addition, the Group produced creative microfi lms which are applicable for interactive new media communications, providing clients with creative and abundant communication videos. The nationwide public service advertising broadcast network further expanded to cover a total of 150 regional television channels.

The Group successively completed key strategic investments, including the mobile video operators 100TV and CNLive, and a tourism portal www.lotour.com. Besides, preparation for the establishment of the agricultural portal www.wgool.com was kicked off in the second half of the year. The website was offi cially online in early 2012, aiming to integrate Internet and mobile terminals and become the largest and the most authoritative agricultural website for the vast Chinese rural users and agriculture-related enterprises, to provide various product information and a promotion platform.

In 2011, the growth of China’s economy experienced a steady slowdown, while the advertising market still retained a higher growth rate than that of the overall economy. The Group will closely monitor the current uncertainties of the decelerating economic growth and the industry development, while still remains cautiously positive to the outlook of whole year of 2012. We believe that under the rapid integration of the media industry, the ability to effectively collaborate television, the Internet and mobile Internet platforms and to create synergy among the various links of the industry value chain, is the key to success — and is also the long-term goal of the Group. With the Group’s well-established four core businesses, we will continue to consolidate its unique strengths to gradually increase the synergy and ensure the medium and long-term sustainable development of the Group. In order to facilitate the operational system of the Group, we will continuously improve our internal organisational structure, enhance the talent introduction and training system, and provide competitive remuneration packages for our staffs, to help prepare the Group, in respect of its human resources needs, for rapid development.

Last but not least, on behalf of the Board, I would like to take this opportunity to express my appreciation to our shareholders, clients and commercial partners for their unyielding trust and support, and to our management team and staffs for their professionalism and contribution. Along with the ongoing development of China’s economy and the rapid growth of the media industry in the mainland, we will continue to strive for excellence and greater returns for our shareholders.

Chairman

Chen Xin

Hong Kong, 16 March 2012

Annual Report 2011 9

All-round Development in Business Segments

Maintaining its Edges in Media Resources

ABOUT THE GROUP

Since 2011, according to the strategic goals of becoming “the leading media corporation with video media management as its core business” set out by the Board of Directors, the Group has made remarkable progress on developing four core businesses, namely, “the media resources management, integrated brand communication services, creative production of advertisement and content, and new media investment and integration”.

While continues to consolidate its notable advantage on China Central Television Station (“CCTV”) for the core media resource management, the Group focuses on the increase of its investments in upstream channels, content and technological platforms, including making active expansion in the fi eld of mobile video and preparation for building agricultural new media platform. Meanwhile, the Group speeds up the international communications of clients’ brands and the cooperation with international media, and is actively engaged in video management service and content production including that of microfi lms.

With regard to internal management, the Group continues to adjust its organisational structure to adapt for group management, and has improved its systems of the recruitment, promotion and training of staff so as to ensure that human resource supply can keep up with the sustained rapid expansion of the Group, thereby having taken the fi rst strategic step to upgrade the Group from a media advertising company to a media corporation.

BUSINESS REVIEW

I. Media Resources Management

The Group enjoys notable advantages in the media resources management. It is one of the leading operators for CCTV in terms of the long partnership, the abundance of underwriting resources, the form of cooperation and the scale of operations, and has been awarded one of the “CCTV’s Top Ten Advertising Agencies” for consecutive years.

During the year under review, the Group renewed its current exclusive underwriting contracts and acquired additional exclusive underwriting rights, which consolidated and strengthened the Group’s position as a leading underwriter of CCTV’s programme advertisements. The Group had approximately 41,209 minutes of advertising time resources for a total of 46 programmes on channels including CCTV-1 (General)/CCTV-News (Chinese), CCTV-2 (Finance), CCTV-4 (Chinese International, including Europe and US), CCTV-5 (Sports), CCTV-7 (Military and Agriculture) and CCTV-NEWS (English). We have advertising resources of the “Night News (晚間新聞)” on CCTV-1 (General), “News 30’ (新聞30分)” joint broadcast on CCTV-1 (General)/CCTV-News (Chinese), “Make More Money” (生財有道) on CCTV-2 (Finance), “China News (中國新聞)”, “Across the Strait (海峽兩岸)”, “AllDay Package (全天時段套)”, “Exposition of Chinese Culture Relics (國寶檔案)” and “China Showbiz (中國文藝)” on CCTV-4 (Chinese International, including Europe and US), “Weather Forecast” during “Sports News” programmes on CCTV-5 (Sports), seven programmes including “Zhi Fu Jing (致富經)”, “Focus on the Three Agricultural Issues (聚焦三農)” and “Daily Agricultural News (每日農經)” on CCTV-7 (Military and Agriculture), and all programmes on CCTV-NEWS (English).

12 SinoMedia Holding Limited

II. Integrated Brand Communication Services

In addition to recommending advertisement placement on our exclusive underwritten media resources, the Group also offers a full range of campaign strategy and execution services that target our clients’ different brand communication needs. A comprehensive advertising procurement system that covers TV, the Internet and mobile Internet, radio, print and outdoor media is in place. This system includes brand positioning, media strategy and procurement execution.

During the year under review, the Group successively acquired the businesses of omni-media procurement agency services of China Life Insurance (Group) Company, Postal Savings Bank of China and The People’s Insurance Company (Group) of China Limited in the year of 2011 through 2012. Once again, the Group delivered impressive results in the 2012 CCTV Prime Time Resources Bidding. By adopting highly cost effective media strategies, it purchased on behalf of its clients advertising resources worth over RMB1.4 billion, which was more than double of 2011. The above achievements symbolise that the Group’s integrated brand communication services have already established and are widely recognised by the market.

Additionally, the Group is the fi rst domestic company in the industry to strategically expand into the international media domain. In 2011, we entered into cooperation agreements with MediaCorp from Singapore and CNBC, the world’s largest fi nancial TV station, from the United States of America, becoming their master advertising agent and exclusive advertising sales representative respectively in Mainland China. Expansion into the international media domain at the right time and pace not only demonstrates the Group’s strategic development towards internationalisation, but also enables Chinese clients to develop global business with effective brand and advertising exposure in overseas markets through our abundant and high quality domestic and international media resources. This also allows the Group to gain fi rsthand experience from international communication services, winning the initiative for further development.

In line with the strategy of business globalisation, the Group has formally established its subsidiary in Hong Kong in September 2011. Currently, the Hong Kong subsidiary is mainly engaged in providing Hong Kong and overseas clients with advertising services of the Group’s exclusive media resources which would help Hong Kong and offshore clients promote their corporate and product brands in Chinese market through the strongest media platform in the mainland. The Group is one of the few domestic advertising agencies that have overseas sales offi ces. We consider the establishment of the Hong Kong subsidiary as an important strategic deployment for the gradual expansion of the Group’s overseas business.

III. Creative Production of Advertisement and Content

1. Creative production services for commercial advertisements and microfi lms

Since establishment, the Group has produced numerous cases of successful advertisements. We have extensive execution experience in campaign strategy, brand creativity, visual design and fi lming of advertisements and won several prestigious awards both domestically and internationally. At the same time, the Group’s client volume and contract amounts had also reached a record high. During the year under review, the Group acquired new business from Everbright Bank to provide annual service of creative advertisement and graphic design, as well as the domestic luxury brand “Royal Ruyi” to provide creative production of its image fi lm.

Annual Report 2011 13

Management Discussion and Analysis

In addition, the Group produced several microfi lms applicable for interactive new media communications for clients. This particular service provides clients with creative production service for videos of longer duration and more vivid and rich content, so as to satisfy consumers’ changing habit of watching video online and on mobile Internet.

2. Creative production and syndication of public service advertisements

The Group’s wholly owned subsidiary Beijing Taihe Ruishi Culture and Media Company Limited is the only operator in China that has a nationwide public service advertising broadcast network of 150 regional television channels which not only helps SinoMedia to increase its infl uence in the creative production sector, but also supplements the Group’s existing advertising media resources.

With the standardisation of the broadcasting of domestic commercial TV advertisements by the State Administration of Radio Film and Television, TV media increased the promotion of public service advertisements and the trend of using public service advertisements for building corporate brands become more prominent. Hence, the Group expects that through the independent creativity, fi lming and production of public service advertisements and their syndication to a wide range of regional television channels, this platform will attract more interest of clients, bringing in more sponsorship revenue from corporate clients for the Group.

3. Video dynamic management service

During the year under review, the Group set up the only media asset management system in advertising industry to provide clients with dynamic management services of gathering, collating, editing and the application of video information. It would help clients manage their video advertising more effectively and systematically. At the same time, the Group can signifi cantly improve the effi ciency of its production team which helps to improve the quality of video production service. This system is currently in service and enquiries are also received from interested clients.

IV. New Media Investment and Integration

The Group strongly believes that the increase in Internet population and the development of mobile smart terminals, the Internet, especially mobile Internet, will accelerate the change in the media industry and promote the consolidation and development of various media in the next decade. During this process, content production with creativity and communications capacity will be the core competitiveness of the media. Accordingly, during its process of developing into a leading media corporation in China, the Group will continue to pay particular attention to the development of content platforms in the new media and, leveraging on its own edges, it will focus on the development of video-related business.

In 2011, several key strategic investments were made or completed, including the investments in www.lotour.com, FoneNet Inc. (“100TV”) and Beijing Zhongtoushixun Cultural Media Co., Ltd. (“Zhongtoushixun”), and the preparation for the establishment of the agricultural Internet portal www.wgool.com was started off in the second half of the year. The details are as follows:

1. 100TV

With the investment in 100TV completed in July 2011, the Group became the third largest shareholder of 100TV and appointed a member with preferred voting rights to join its board of directors. 100TV is one of the largest mobile TV platforms and service providers in China, focusing on the development of

14 SinoMedia Holding Limited

mobile TV technology and video players, and has obtained business licenses for telecommunications and information services and value-added telecommunications services.

2. CNLive

The Group’s acquisition of 5% stake in Zhongtoushixun was completed in July 2011. With the China Internet Information Center holding the controlling stake, Zhongtoushixun is a mobile TV operator that is responsible for the production of audio and visual content for CNLive’s mobile TV platform, as well as mobile TV services through the mobile communication network. The company also provides video services to its subscribers through the Internet.

3. www.lotour.com

In December 2010, the Group entered into an agreement with Beijing Lotour Internet Technology Co., Ltd. to establish a joint venture for the exclusive operation of www.lotour.com, the largest Internet portal for the travel industry. During the year under review, the Group successfully completed its investment in this joint venture.

4. www.wgool.com

In August 2011, the Group started to build the Internet portal www.wgool.com which aims to becoming the largest and the most authoritative agricultural website in China. This website has been offi cially online in early 2012. This project demonstrates the Group’s determination to develop its new media investment and integration business, and represents a critical initiative for the Group to expand its business to upstream content production of the media value chain and to establish a complete and three-dimensional media operation system. Moreover, it shows that the Group is optimistic towards the unprecedented opportunities arising from the informationalised development in the Chinese agriculture and the brand development of agricultural products.

During the year under review, the above projects as a whole did not yet make contribution to the profi t of the Group. The Group expects to nurture the market with the project partners and develop the Group’s integration and operation capability in the related new media sector in the next one to two years. Given the promising outlook of the aforementioned projects and our good expectation on the increasing synergy of our operations in the future, the Group believes that these sectors will soon become new revenue drivers of the Group after one to two years, and will play a positive role in the Group’s growth in the long run.

FINANCIAL REVIEW

Revenue and Profi t Attributable to the Equity Shareholders of the Company

For the year ended 31 December 2011, the Group recorded a revenue of RMB1,617,800 thousand, representing a 18% increase from RMB1,373,173 thousand recorded in 2010. The increase of the revenue was mainly attributable to (1) the increase of the average selling prices and the utilisation rates of the advertising time of the key programmes of the Group’s core business, media resources management; (2) the continuous expansion of the scale of operation

Annual Report 2011 15

Management Discussion and Analysis

of the integrated brand communication services; and (3) the increase of the revenue of creative production of advertisement and content business driven by its continuously improving standard of work.

Details of the revenue are as follows:

I. Before the deduction for sales taxes and surcharges, revenue recorded from the media resources management was RMB1,605,435 thousand, up 16% from RMB1,378,316 thousand last year. The sustained growth of revenue from this business was attributable to the increase in the advertising time of exclusive underwritten resources sold, as compared with the last year. The Group managed to promote sales by enhancing sales efforts, offering a more diversifi ed product portfolio and strengthening regional sales and promotional initiatives. Besides, the Group continued to enhance our professional services provided for clients.
II. Before the deduction for sales taxes and surcharges, turnover recorded from the integrated brand communication services was RMB849,943 thousand, up 54% from RMB552,619 thousand year-on-year. Under the International Accounting Standards, the Group’s revenue shall be recognised on a net basis with the related procurement costs deducted from the turnover if the Group procures media resources in the capacity of an agency for clients, and pursuant to which, revenue from the business was RMB18,613 thousand, signifi cantly increased 88% from RMB9,875 thousand last year. The increase was mainly due to the fact that the Group enhanced its promotion efforts and increased resource allocation to this business, thereby increasingly expanding the scale of this business and gaining higher recognition from clients.
III. Before the deduction for sales taxes and surcharges, revenue from creative production of advertisement and content was RMB39,255 thousand, up 113% from RMB18,467 thousand last year. This revenue included the revenue from production services for commercial advertising and revenue from the production and distribution of advertisements by the nationwide public service advertising broadcast network.
The Group provided full range of high-quality creative production of advertisement and content services for its clients. This year, the Group successfully won several large commercial advertisement production projects through creative proposals and competitive presentation, and achieved a signifi cant increase in client volume and contract amounts compared with the last year.
The nationwide public service advertising broadcast network, which comprises numerous local TV stations, continued to maintain a favorable growth momentum after dedicated nurturing, and recorded an increase of revenue compared with the last year. The Group will continue to provide clients with opportunities to build their brands and corporate image on social responsibility at a cost lower than that of ordinary television commercials, with an aim to achieving the Group’s goal of expanding to the upstream of the media value chain and developing innovative business models.

As the revenue recorded from all the above businesses grew signifi cantly, while the cost of services and operating expenses were maintained at reasonable levels, the profi t attributable to equity shareholders of the Company for the year ended 31 December 2011 rose to RMB238,945 thousand, representing a signifi cant increase by 51% from RMB158,064 thousand year-on-year.

Operating Expenses

For the year ended 31 December 2011, the Group’s overall operating expenses were RMB156,126 thousand, increased RMB19,813 thousand year-on-year, and accounted for 9.7% of the Group’s revenue (year ended 31 December 2010: 9.9%).

16 SinoMedia Holding Limited

The operating expenses include the followings:

I. Selling and marketing expenses amounted to RMB66,778 thousand, showing a slight decrease from RMB67,493 thousand last year, and accounted for 4.1% of the Group’s revenue (year ended 31 December 2010: 4.9%). The decrease in selling and marketing expenses was mainly due to the fact that: (1) following the sharp increase in revenue, performance-based payroll of sales personnel rose by approximately RMB3,001 thousand year-on-year; (2) With the Group’s measures on further control over expenses showing effect and the agency for some of the Group’s exclusive underwritten TV programs approaching the maturity phase of their product life cycles, promotion and marketing expenses for activities including promotion fairs, market research and industry analyses decreased by approximately RMB5,874 thousand compared with the last year.
II. General and administration expenses amounted to RMB89,348 thousand, representing an increase of RMB20,528 thousand from the last year (year ended 31 December 2010: RMB68,820 thousand). The increase of the general and administration expenses was mainly due to:
In line with business expansion, additional offi ce space and offi ce equipment were needed. Lease and property management fees, offi ce expenses and depreciation increased by approximately RMB10,175 thousand compared with the last year.
Provision for bad and doubtful debts and impairment on long-term investment for the year increased by approximately RMB4,892 thousand compared with the last year. Among them, provision for bad and doubtful debts signifi cantly decreased by RMB14,060 thousand compared to last year under strict control over delayed payments for advertisements and our extra effort in managing the recovery of the receivables; but due to the drastic changes in market environment, for prudence and having taken into consideration of the evaluation results of the recoverability analysis, the Group made an one-off full impairment on an equity investment in a group purchase website for the year, which amounted to RMB18,952 thousand.

Before provision for bad and doubtful debts and impairment loss on long-term investment, general and administration expenses amounted to RMB71,212 thousand, representing 4.4% of the Group’s revenue (year ended 31 December 2010: 4.0%). Despite the continuous expansion of the scale of the Group’s operation, the amount of expenses as a percentage of the Group’s revenue still remained at a relatively low level, which indicated that the Group maintained a satisfactory control over the general and administration expenses.

Signifi cant Investments and Acquisitions

Major investments and acquisitions took place during the year are as follows:

I. The Group has completed the strategic equity investment in www.lotour.com, 100TV and CNLive respectively. The details are set out in section headed “New media investment and integration” of Business Review.

Annual Report 2011 17

Management Discussion and Analysis

II. In July 2011, the Group entered an agreement with Life Media Limited acquiring the minority interest of Life Media Limited and began business cooperation with it. Life Media Limited operates the domestic group purchase website “F-tuan”. The group purchase business of F-tuan began in 2010. Currently, it is one of the leading brands in the highly competitive group purchase market in China.
III. In September 2011, the Group entered into a framework agreement with an independent third party to acquire a building for offi ce premises purposes, located at the 12 Dongdaqiao Road, Chaoyang District which is at the heart of Beijing, at a consideration of RMB258 million.

To facilitate future development of the Group, the Group sees the need of consolidating current offi ce locations of various subsidiaries and departments and preparing offi ce for the operation of new projects. The acquisition will enhance the Group’s general operation effi ciency and increase the edges of overall internal coordination.

Liquidity and Financial Resources

During the year under review, the Group maintained adequate working capital and a strong fi nancial position.

As at 31 December 2011, the Group’s cash and bank balances amounted to RMB913,179 thousand (as at 31 December 2010: RMB795,791 thousand), up 15% compared to the last year, of which 97% was denominated in Renminbi and 3% in US dollar and other currencies.

The Group strengthened liquidity management to maintain adequate cash fl ows. During the year under review, the net cash infl ow from operating activities amounted to RMB526,983 thousand (year ended 31 December 2010: RMB504,392 thousand). The Group reinforced the management of receivables and imposed strict control over delayed payments for advertisements. As a result, while the Group’s revenue increased signifi cantly year-on-year, its receivables remained at a low level. As at the end of the year, the Group’s outstanding accounts receivables (excluding notes receivables) after provision for bad and doubtful debts amounted to RMB74,811 thousand.

As at 31 December 2011, the Group’s total assets amounted to RMB1,851,158 thousand, which were fi nanced by equity attributable to equity shareholders of the Company of RMB1,018,875 thousand, and non-controlling interests of RMB6,359 thousand. As at year end, there were no bank borrowings or assets held under fi nancial lease.

The majority of the turnover, expenses and capital investments of the Group were denominated in RMB.

Human Resources

As at 31 December 2011, the Group had over 380 employees in total, increased by approximately 15% from the beginning of the year. We implement a remuneration policy that is competitive in the industry, and pay commissions to our sales people and discretionary bonuses to our other employees in view of the performance of the Group and individual employees. In order to align the interests of employees with those of shareholders, share options were granted to employees under the Company’s share option schemes. Share options that have been granted and remained unexercised as at the end of the year amounted to 36,780,000 units. We also continued to provide employees with benefi ts like insurance, medical check-ups and various training courses with a view to maintaining the Group’s competitiveness.

18 SinoMedia Holding Limited

INDUSTRY AND GROUP OUTLOOK

In 2011, China’s economy growth was slowing down steadily. The Group considers that it is the expected outcome of PRC government curbing over-investment and restructuring industry. On the contrary, the news of “the once rapidly rising Consumer Price Index (CPI) turned around in the fourth quarter of 2011” and “the government decided to offer preferential treatment on corporate income tax for small and medium-sized enterprises” laid a foundation for the strong recovery of the economy in the second half of 2012. As to the industry, according to the latest release of China’s advertising spending data compiled by an authoritative research institution, CTR Marketing Research, the total income of China’s advertising market (measured by standard rate card) grew by 13% in 2011, higher than the 9.2% growth rate of China’s gross domestic product (GDP) for the year. Therefore, the Group will closely monitor the current uncertainties of the decreasing economic growth and the industry development, while still remains cautiously positive to the outlook of whole year of 2012.

We consider that driven by capital, technology and policy, consolidation in the industry will be further accelerated and the “Matthew effect” will appear among media and advertising companies. Whoever integrates various media platforms of television, the Internet and mobile Internet better and coordinates the various sectors of the industry value chain will continue to lead the race.

The “opinions on further strengthening the management of television programmes of general satellite channels” (commonly called “cutback on TV entertainment”) and the “notice of further strengthening the management of the advertisement broadcasting on radio and television” (commonly called “cutback on TV commercials”) issued by the State Administration of Radio, Film and Television have been put into effect, which would slow down the migration of television audience to the Internet media, and also shrink the TV advertisement resources of entertainment shows and TV dramas, resulting in the improvement of the viewing experience of television audience. Hence, the Group fi rmly believes that having news programmes as its core, the media resources management business that accounts for the majority of the Group’s businesses will continue to grow consistently and rapidly.

However, the rapid increase in the number of users of new media will cause a profound change in media industry. According to the “29th Statistical Report on Internet Development in China” published by the China Internet Network Information Center (CNNIC), as of the end of December 2011, China had a total of over 500 million Internet users, including 325 million online video users and 356 million mobile Internet users. The Group expects that the increasing smartphone population in China will trigger a wave of innovative developments just like that happened on desktop computers.

Leveraging on its competitive edges and upholding the principle of “video media operation as its core”, the Group will integrate various terminals like television, the Internet and mobile Internet. In particular, we will assure that operation of the agricultural Internet portal, www.wgool.com, will be stable in the fi rst half of 2012, and at the same time we will strive to complete one to two investment projects on video platforms during the year in order to lay a foundation for diversifying source of income and sustainable development of the Group. During the process, the Group will continue to increase its investment on human resources and management to maintain its core competencies.

From the perspective of clients, we reckon that the “one-stop” service concept covering creative and production, advertising strategy and procurement, public relations activity is a general trend. Therefore, we will accelerate our cooperation with overseas media to cater to the increasing communication needs of domestic brands, and at the same time get in touch with clients proactively in various aspects of the above so as to satisfy clients’ multiple demands.

We believe that with the continued growth of China’s economy and the opportunities in the vibrant domestic media industry, the Board of Directors, the management and the Group’s entire staff will all aim at realising the mission of becoming a leading media corporation in China and worldwide. With the Group’s concerted efforts and proactive attitude, we will continue to deliver the good investment returns to our shareholders.

Annual Report 2011 19

Signifi cant Progress in Integrated Communication

SinoMedia invested substantially in integrated brand communication for providing “one-stop” integrated brand communication services. In the 2012 CCTV Primetime Advertisement Resources Presale Tender, the total value of sales contracts signed by SinoMedia exceeded RMB1.4 billion, representing an increase of more than 100% over the previous year. It signifi ed SinoMedia’s initial success in the integrated brand communication services and that its extensive experience in this area was widely recognised by the clients’ market. The integrated brand communication services has become another growth segment of the Group.

Global Setting and Integrated Communication

Since 2011, SinoMedia has been steadily promoting the setting for branding communication globalisation by establishing branches overseas and signing cooperation agreement with internationally renowned media magnates in order to provide the best support to both China and overseas clients in branding communication. At present, the Group has already set up cooperation agreements with renowned international media groups such as MediaCorp Pte Ltd (新加坡新傳媒) and CNBC fi nance television channel and (美國CNBC財經電視台), CTV Golden Bridge International Media (Hong Kong) Co., Ltd., a subsidiary of SinoMedia, was officially established as a vital division to strategically deploy international business and gradually expand the overseas business of the Group. SinoMedia has thus become the fi rst domestic media operation group mainly acting as an agent for television advertisement that has overseas branches.

DIRECTORS

MR. CHEN XIN (陳新)

aged 45, has been our executive director since November 2006. He was appointed as our Chairman in December 2007. He is primarily responsible for the strategic development, fi nancial planning and overall management of the Group. Mr. Chen has over 20 years of experience in the media industry. He was previously a reporter for the overseas service department and the Australian branch of Xinhua News Agency. He was also a director of the economic news offi ce, central news offi ce and news distribution offi ce of the overseas service department of Xinhua News Agency from 1988 to 2004. He is also the standing vice-president of the Magazine Publishing House, which publishes the periodical “China Radio Film and Television” (中國廣播影視), under the supervision of the State Administration of Radio, Film and Television. Mr. Chen received his Bachelor of Science degree in Biology and Genetics from Fudan University in 1986, completed a Master’s course in International News from Fudan University in 1988 and received an EMBA degree from the Cheung Kong Graduate School of Business in 2006. Mr. Chen is the husband of Ms. Liu, our Chief Executive Offi cer and executive director.

MS. LIU JINLAN (劉矜蘭)

aged 43, has been our Chief Executive Offi cer since she founded the Group in 1999. She has served as a director since 24 October 2001. She is primarily responsible for the management of the overall business operation and customer development. Ms. Liu previously worked at CCTV as a news broadcaster, a reporter and then a director from 1995 to 1998. Since she founded our Group, she was instrumental in designing and executing advertising campaigns which have infl uenced the TV media industry, for which she was jointly recognised as one of the “Top Ten Female Advertising Professionals in China” (中國十大最具風采女性廣告人) by CCTV, Advertising School of the Communication University of China (中國傳媒大學廣告學院), “Advertising Guidance” (廣告導報) and “Business” magazine (經營者雜誌社) in 2006. She was elected chairman of The Association of Accredited Advertising Agencies of China (中國4A協會) in January 2008, and jointly recognised as one of the “2008 Top Ten People in Media Advertising in China”(2008中國十大傳媒廣告人物) by School of Journalism and Communication of Renmin University of China (中國人民大學新聞學院), Journalism School of Fudan University (復旦大學新聞學院) and other institutions in December 2008. In 2009, in a celebration marking the 60th founding of New China, she was jointly recognized as the “2009 China’s Advertising Industry’s Outstanding Woman” (2009年度中國廣告行業傑出女性) by China Advertising Association of Commerce (中國商務廣告協會), Beijing Advertising Association (北京廣告協會), 21st Century Advertising Magazine (21世紀廣告雙週刊), and the organizing committee of the 21st AD International Summit (21世紀廣告國際峰會組委會). She was also elected a vice-chairman of the fi rst Media Committee of China Association of National Advertisers (中國廣告主協會) in 2009. She was jointly recognised for two successive years as one of the 2009/2010 and 2010/2011 “Top Ten Infl uential Female Advertising Professionals in China” (中國最具影响力十大女性廣告人) by “Advertising Guidance” magazine (廣告導報雜誌社) and MBA School of the Communication University of China (中國傳媒大學MBA學院) in September 2010 and April 2011 respectively. Ms. Liu graduated from the Beijing Broadcast Institute with a certifi cate in Linguistics, and received an EMBA degree from the Cheung Kong Graduate School of Business in 2006. Ms. Liu is the wife of Mr. Chen, our Chairman and executive director.

22 SinoMedia Holding Limited

MR. LI ZONGZHOU (李宗洲)

aged 44, joined the Group in 2000 as fi nancial supervisor and had been our General Accountant from 2007 to 2008. He was then a Vice-president and is currently our Chief Internal Control Offi cer. He was appointed as a director in November 2006. Mr. Li is responsible for fi nancial audit, risk management, legal affairs and human resources management of the Group. He was previously the chief accountant and head of the fi nancial department of Dunhua Forest Bureau from 1987 to 2000. Mr. Li received his Bachelor of Arts degree in Economics from Renmin University of China in 1990. Mr. Li is the husband of Ms. Liu’s niece.

==> picture [36 x 199] intentionally omitted <==

Annual Report 2011 23

MR. ZHU JIA (竺稼)

aged 49, has been our non-executive director since November 2006. He is currently also a Managing Director of Bain Capital, LLC. Prior to joining Bain Capital, LLC in 2006, Mr. Zhu was a Managing Director of investment banking department of Morgan Stanley Asia Limited and Chief Executive Offi cer of its China business. Mr. Zhu has ample and extensive experience in a broad range of cross border mergers and acquisitions and international fi nancing transactions of PRC companies. Mr. Zhu received a Bachelor of Arts degree from Zhengzhou University in 1982, a Master of Arts degree from Nanjing University in 1984 and a Juris Doctorate from Cornell Law School in 1992.

Mr. Zhu currently holds directorships in the following publicly listed companies: Gome Electrical Appliances Holding Limited (Hong Kong Stock Exchange), Sunac China Holdings Limited (Hong Kong Stock Exchange), Greatview Aseptic Packaging Company Limited (Hong Kong Stock Exchange), Clear Media Limited (Hong Kong Stock Exchange) and Youku.com (New York Stock Exchange).

MR. HE HUI DAVID (何暉)

aged 51, was appointed as our non-executive director in August 2011. He is currently an Executive Vice President of Bain Capital Asia, LLC. He has more than 20 years of experience in engineering, sales and marketing and general business management in the United States of America and Asia. Before joining Bain Capital Asia, LLC in 2007, Mr. He had spent over 13 years with General Electric (GE) in various capacities. Mr. He received his Ph.D. degree in Physics from the University of Michigan in Ann Arbor, the United States of America. He obtained a Master Degree in Business Administration from Kellogg School of Business at the Northwestern University and was a graduate of the Peking University in the PRC.

MR. DING JUNJIE (丁俊杰)

aged 48, has been our independent non-executive director since May 2008. Mr. Ding has over 20 years of experience in the media and advertisement industry. He is a professor and a supervisor of Ph.D. candidates of the Communication University of China (中國傳媒大學) (formerly known as the Beijing Broadcasting Institute (北京廣播學院)) and served as the deputy head of the Advertising Teaching and Research Offi ce, the deputy head of the Advertising Department, and the vice dean and the dean respectively of the News and Communication School (新聞傳播學院), and vice principal of the Communication University of China. Currently, he also serves as the deputy head of the academic committee of the Communication University of China, a director of the Research Base of Capital Media Economics (首都傳媒經濟研究基地) and the Asia Media Research Centre (亞洲傳媒研究中心) respectively, and a vice president of the China Advertising Association (中國廣告協會), the Chinese Association for History of Journalism and Mass Communication (中國新聞史學會), and the China Advertising Association of Commerce (中國商務廣告協會) respectively. Mr. Ding is also a chief editor of Media Magazine (媒介雜誌), International Advertising (國際廣告) and the Annual Book of Chinese Advertising Works (中國廣告作品年鑒) respectively. Mr. Ding received a Bachelor of Arts degree in Journalism in 1987 and a Ph.D. degree in Journalism in 2003, both from the Beijing Broadcasting Institute.

==> picture [149 x 175] intentionally omitted <==

24 SinoMedia Holding Limited

MR. QI DAQING (齊大慶)

aged 47, has been our independent non-executive director since May 2008. He taught as an assistant professor and then an associate professor in accounting at the Chinese University of Hong Kong between 1996 and 2002. Mr. Qi joined the Cheung Kong Graduate School of Business in July 2002 where he currently serves as a professor of Accounting and associate dean. He serves as an independent director and a member of audit committee of Sohu.com Ltd., Focus Media Holding Limited and Honghua Group Limited respectively, and serves as an independent director, the chairman of audit committee and a member of remuneration and nomination committee of China Huiyuan Juice Group Limited. He also serves as an independent director of China Vanke Co., Ltd., DaQo New Energy Corp., AutoNavi Holdings Limited and Bona Film Group Limited respectively. Mr. Qi obtained a Bachelor of Science degree in biological physics in 1985 and a Bachelor of Arts degree in international mass communication in 1987, both from Fudan University in Shanghai. He received an MBA degree from the

==> picture [149 x 174] intentionally omitted <==

University of Hawaii at Manoa in 1992 and then a Ph.D. degree in accounting from the Michigan State University in 1996.

Mr. Qi currently holds directorships in the following publicly listed companies: Sohu.com Ltd. (NASDAQ), Focus Media Holding, Ltd. (NASDAQ), Honghua Group Limited (Hong Kong Stock Exchange), China Huiyuan Juice Group Limited (Hong Kong Stock Exchange), China Vanke Co., Ltd. (Shenzhen Stock Exchange), DaQo New Energy Corp. (NYSE), AutoNavi Holdings Limited (NASDAQ) and Bona Film Group Limited (NASDAQ).

Through his roles as an independent director in various companies and as a result of his overall professional experience, Mr. Qi has obtained expertise in accounting and fi nancial management. In addition to lectures and presentations in accounting issues at various professional settings, he has authored research papers on accounting, fi nancial reporting, capital market and other related topics that are published in leading academic journals. Mr. Qi is experienced in reviewing and analysing fi nancial statements of public companies.

MR. LIAN YUMING (連玉明)

aged 48, was appointed as our independent non-executive director in May 2011. Mr. Lian graduated from the Shanxi University (山西大學) in 1987 with a bachelor of laws degree. He currently serves as the President of the International Institute for Urban Development, Beijing (北京國際城市發展研究院), a researcher of the Research Center of National Conditions and Policies of the Party School of the Central Committee of Communist Party of China (中共中央黨校國情國策研究中心), the Chairman of the International Cities Forum Foundation (國際城市論壇基金會) and a committee member of the Expert Consultative Committee of the Beijing Municipal Government (北京市政府專家諮詢委員會). He has a number of publications including the Report on Competitiveness of Chinese Cities (中國城巿綜合競爭力報告), the Report on the Living Quality of Chinese Cities (中國城巿生活質量報告), the Report on the Brand Value of Chinese Cities (中國城巿品牌價值報告), the Report on the Core Problems of the 11th Five-Year Plan of Chinese Cities (中國城巿「十一五核心問題研究報告) and the Report on the Core Problems of the 12th Five-Year Plan of Chinese Cities (中國城巿「十二五」核心問題研究報告). Mr. Lian has received various awards from government bodies and communities in recognition of his achievement and contribution to society, including the Beijing Municipal Committee of the Chinese People’s Political Consultative Conference (政協北京市委員會).

Annual Report 2011 25

==> picture [36 x 385] intentionally omitted <==

SENIOR MANAGEMENT

MR. LIU XUMING (劉旭明)

aged 44, was our Senior Vice President from 2005 to 2010, and has been our Chief Operation Offi cer since 2011. Mr. Liu is in charge of the Group’s overall operation management. He joined the Company in November 1999. Mr. Liu has over 10 years of experience in city branding management, TV media operation and management, and advertisement design and market development, and has a strong understanding of the positioning, design and operation of TV programmes. He was the president of Dunhua Cable TV Station in Jilin Province from 1997 to 1999. Mr. Liu received an MBA degree from California University of Management and Sciences in 2003.

MR. CHAN OI NIN DEREK (陳凱年)

aged 44, has been our Qualifi ed Accountant and Company Secretary since May 2008, and was appointed as our Chief Financial Offi cer in June 2010. Mr. Chan has over 15 years of experience in accounting and auditing and was the fi nancial controller and qualified accountant of TCL Multimedia Technology Holdings Limited before joining us. He is a fellow member of the Association of Chartered Certifi ed Accountants and an associate member of the Hong Kong Institute of Certifi ed Public Accountants. Mr. Chan received a Bachelor of Science degree from the Chinese University of Hong Kong in 1989 and an MBA degree from Monash University in 1995.

MS. JIN LANXIANG (金蘭香)

aged 33, had been our Senior Vice President since April 2008, and was appointed as the Group’s Chief Marketing Offi cer in 2011, in charge of the advertising sales of programs of CCTV to which the Group has exclusive underwriting rights. She joined the Group in 2001 and was the General Manager of our City Branding Centre in 2006 and 2007. Ms. Jin has worked in media industry for more than ten years and has extensive media sales experience and systematic media sales idea, providing a strong and solid customer base for the Group. Ms. Jin has successfully provided services to over 100 city and travel-related clients and participated in the provision of communication services for more than 200 large and medium-size enterprises. Ms. Jin majored in fi nance at Beijing Construction University from 1996 to1999.

==> picture [430 x 304] intentionally omitted <==

MS. SHEN HONGYAN (沈鴻雁)

aged 41, joined the Group as our Chief Media Offi cer in August 2011. She is primarily responsible for the relations and execution management of media resources, and the management of our CCTV bidding business and integrated communication services business. Ms. Shen has rich experience in media and market research, media advertisement operation and media investment management. She served as the Managing Director of Maxus under GroupM from 2008 to 2011 and the Account Director of the Advertising Department of CCTV from 2001 to 2008, before which, Ms. Shen held an important post in research of CTR Market Research Co. Ltd. Ms. Shen obtained a bachelor’s degree from Capital Normal University in 1992 and an EMBA degree from China Europe International Business School in 2008.

MR. HUANG PING (黄平)

aged 48, joined the Group as a Senior Vice President in December 2011, and is responsible for the strategic development of media contents and channel platforms. Mr. Huang has extensive media-related work experience. He worked for MTV as its Senior Vice President and General Manager for Greater China from 2009 to 2011. From 2006 to 2009, he was Vice President in STAR China Co., Ltd. Before that, Mr. Huang was Associate Director for the Satellite Channel under Shanghai Media Group and has accumulated extensive experience in programme production and distribution. Mr. Huang obtained a bachelor’s degree from the Journalism Department of Fudan University in 1986 and fi nished his postgraduate study in International News in Fudan University in 1988.

Annual Report 2011 27

Contemporary Creative Production

Up to the end of 2011, SinoMedia has provided creative advertisement and video content production services to more than 40 business sectors, various corporate brands and cities and regional governmental institutions, by producing dozens of advertisements, features, fi lms for image building and microfi lms, and more than 40 nationwide and worldwide awards were won. From the second half year of 2011, SinoMedia started creative production services for mobile handset-adaptable short features and has undertaken corresponding marketing promotions.

Strategic Setting in New Media

Through diversifi ed investment strategies, SinoMedia actively involved in but not limited to the businesses of the vertical portal for travel industry, mobile television programmes and videos, electronic commerce, and also other Internet and mobile Internet application businesses, with good growth potential. In early 2011, SinoMedia invested in lotour.com, which is a portal for travel industry in China. In July 2011, SinoMedia invested in two distinguished mobile video operations, 100TV and CNLive so as to make further expansion into the industry chain of new media operations.

CORPORATE GOVERNANCE PRACTICES

The Company is committed to attaining and upholding a high standard of corporate governance practices to protect the interests of shareholders and the Company as a whole. The Company has made continuous efforts to constantly review and improve its corporate governance system in light of changes in regulations and developments in best practices and to ensure that the Group is under the leadership of an effective board to maximise return for shareholders.

During the year ended 31 December 2011, the Company has complied with all the applicable code provisions of the Code on Corporate Governance Practices (the “CG Code”) as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), except for the deviation from the CG Code as mentioned in the paragraph headed “Remuneration Committee” below.

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding directors’ securities transactions.

Having been made specifi c enquiry, the directors of the Company (the “Directors”) confi rmed that they have complied with the required standard set out in the Model Code during the year ended 31 December 2011.

THE BOARD OF DIRECTORS

The board of directors (the “Board”) steers the Group’s business direction. It is responsible for formulating the Group’s long-term strategies, setting business objectives, monitoring the management’s performance, and ensuring strict compliance with relevant statutory requirements and effective implementation of risk management measures on a regular basis. The biographical details of the Directors and the relationship between members of the Board are set out in Directors and Senior Management section on pages 22 to 27 of this annual report.

The non-executive Directors, more than half of whom are independent, play an important role in the Board. They possess extensive academic, professional and industry expertise and management experience and have provided their professional advice to the Board. Accounting for the majority of Board members, they are providing adequate checks and balances for safeguarding the interests of the shareholders and the Group as a whole.

The Company has arranged directors’ and offi cers’ liability insurance for all Directors and senior offi cers against legal liability arising from performance of their duties.

30 SinoMedia Holding Limited

1. Composition of the Board

During the year ended 31 December 2011, the Board comprised the following directors:

Executive Directors:

Mr. Chen Xin (Chairman) Ms. Liu Jinlan Mr. Li Zongzhou

Non-executive Directors:

Mr. Zhu Jia Mr. Huang Jingsheng (resigned on 25 August 2011) Mr. He Hui David (appointed on 25 August 2011)

Independent non-executive Directors:

Mr. Ding Junjie Mr. Qi Daqing Mr. Chen Tianqiao (retired on 20 May 2011) Mr. Lian Yuming (appointed on 20 May 2011)

Save and except that Mr. Chen Xin is the spouse of Ms. Liu Jinlan and that Mr. Li Zongzhou is the husband of Ms. Liu Jinlan’s niece, there are no relationships (including fi nancial, business, family or other material or relevant relationships) among members of the Board.

2. Chairman and Chief Executive Offi cer

The positions of the Chairman of the Board and the Chief Executive Offi cer are held by separate individuals to ensure that a segregation of duties and a balance of power and authority are achieved. The Chairman is responsible for overseeing all Board functions in accordance with good corporate governance practice, developing strategies and instilling corporate culture. The Chief Executive Offi cer is responsible for formulating detailed plans for implementation of the objectives set by the Board and mainly focuses on day-to-day management and operation of the Group’s business. Currently, the Chairman of the Board is Mr. Chen Xin and the Chief Executive Offi cer of the Company is Ms. Liu Jinlan.

3. Non-executive Directors

The non-executive Directors of the Company are appointed for a term of three years and are subject to the re-election at the Company’s annual general meetings upon retirement in rotation at least every three years in accordance with the Articles of Association of the Company.

Annual Report 2011 31

Corporate Governance Report

The Company has received annual written confi rmation from each independent non-executive Directors of his independence pursuant to the requirements of the Listing Rules. The Company considers all independent non-executive Directors to be independent in accordance with the independence guidelines set out in the Listing Rules.

4. Board Meetings

The Board meets regularly to discuss the overall strategy as well as the operation and fi nancial performance of the Group. Directors may participate in person or through electronic means of communication. Five meetings were held by the Board during the year. Its composition and the attendance of each Director were set out as follows:

	NUMBER OF MEETINGS
DIRECTORS	ATTENDED AND HELD
Executive Directors:
Chen Xin	5/5
Liu Jinlan	5/5
Li Zongzhou	5/5
Non-executive Directors:
Zhu Jia	5/5
Huang Jingsheng (resigned on 25 August 2011)	3/5
He Hui David (appointed on 25 August 2011)	2/5
Independent non-executive Directors:
Ding Junjie	5/5
Qi Daqing	5/5
Chen Tianqiao (retired on 20 May 2011)	1/5
Lian Yuming (appointed on 20 May 2011)	4/5

All Directors are provided with relevant materials in relation to the matters brought before the meetings. Reasonable notices of meetings are given to the Directors and the Directors are encouraged to propose new items as any other business for discussion at the meetings. The Board and each Director have separate access to the Company’s senior management for information at all times and may seek independent professional advice at the Company’s expenses, if necessary. All minutes are kept by the company secretary and are open for inspections by all Directors at any reasonable time. Procedures for convening meetings of the Board and Board committees and preparing minutes of the meetings have complied with the requirements of the Articles of Association of the Company and the applicable rules and regulations.

32 SinoMedia Holding Limited

5. Nomination of Directors

As the Company had not yet set up a nomination committee for the year under review, the Board as a whole was responsible for considering the suitability of a candidate to act as Director, approving the appointment of a Director and nominating a Director for election and re-election by the shareholders of the Company.

Each of the Directors has entered into a service contract with the Company for a specifi c term and is subject to his/her re-election upon retirement at an annual general meeting in rotation every three years. In accordance with the Articles of Association of the Company, three Directors shall retire at the next following annual general meeting of the Company and shall be eligible for re-election.

Having been made specifi c enquiry, the Directors confi rmed that the terms of their respective service contracts have been complied with and they had no interest in any company or business which competed either directly or indirectly with the Group’s business.

6. Remuneration of Directors

The executive Directors and the non-executive Directors did not receive any allowance for service provided as directors throughout the year ended 31 December 2011. Executive Directors who are also the Company’s staff are entitled to receive salaries according to their respective positions taken on a full-time basis in the Company.

Each independent non-executive Director had a remuneration of RMB122 thousand for service provided for the year under review.

Information relating to remuneration of each Director for 2011 is set out in note 12 to the fi nancial statements on page 86 of this annual report.

7. Board Committees

The Board has established three board committees with defi ned terms of reference, namely Audit Committee, Remuneration Committee, and Compliance Committee. The terms of reference of Audit Committee and Remuneration Committee are on terms no less exacting than those set out in the CG Code.

Audit Committee

The Audit Committee comprises the chairman Mr. Qi Daqing and the other members Mr. Ding Junjie and Mr. He Hui David. It is responsible for the review and supervision of the Group’s fi nancial reporting process and internal controls and the review of the Company’s fi nancial statements.

Annual Report 2011 33

Corporate Governance Report

The Audit Committee met three times during the year. At the meetings, the committee:

discussed with management the fi nancial reporting process of the Group and reviewed the 2010 annual report and the 2011 interim report;
reviewed the Group’s accounting policies and practices, statutory and Listing Rules compliance, other fi nancial reporting matters and internal controls; and
reviewed the terms of appointment of external auditors, and ensured the continuing independence of external auditors and the effectiveness of their audit process adopted.

Remuneration Committee

The Remuneration Committee was established to make recommendations to the Board on the Company’s policy and structure for remuneration of Directors and senior management and on the establishment of a formal and transparent procedure for developing policy on such remuneration. The committee is chaired by Mr. Chen Xin, and the members include Mr. Ding Junjie, Mr. Chen Tianqiao (who ceased to be a member on 20 May 2011), and Mr. Lian Yuming (who was appointed on 25 August 2011).

After the retirement of Mr. Chen Tianqiao from being an independent non-executive Director and a member of the Remuneration Committee of the Company and before the appointment of Mr. Lian Yuming as a member of the Remuneration Committee, the committee has only two members, one of whom is an independent nonexecutive Director. It led to a deviation from code provision B.1.1 of the CG Code, which provides that a majority of the members of remuneration committee should be independent non-executive directors, during the period from 20 May 2011 to 24 August 2011.

During the year, one meeting was held to review the reasonableness as well as competitiveness of the 2011 remuneration packages of the Group’s executive Directors and senior management members.

Compliance Committee

The Compliance Committee was established to oversee the Group’s compliance with regulatory requirements and make recommendations to the Board on improvement of corporate governance of the Group. It comprises Mr. Li Zongzhou as the chairman and Mr. Chan Oi Nin Derek as member.

Two meetings were held during the year. Strategies for tax planning and compliance with the new PRC valueadded tax law had been reviewed by the committee.

34 SinoMedia Holding Limited

FINANCIAL REPORTING AND INTERNAL CONTROL

1. Financial Reporting

Management provides explanation and information to the Board to facilitate an informed assessment of fi nancial statements and other information put before the Board for approval. The Board acknowledges its responsibility in the preparation of fi nancial statements to give a true and fair view of the Company’s state of affairs. In the preparation of fi nancial statements, the International Financial Reporting Standards have been adopted and appropriate accounting policies have been consistently used and applied.

The Board is not aware of any material uncertainties relating to events or conditions which may cast signifi cant doubt over the Group’s ability to continue as a going concern. Accordingly, the Board has been continuing to adopt the going concern basis in preparing the fi nancial statements.

The reporting responsibilities of the Group’s external auditors, KPMG, are set out in the Independent Auditor’s Report on page 49 of this annual report.

2. External Auditors

Management performs a review of remuneration to external auditors on an annual basis. The fees for audit services have been reviewed by the Audit Committee, and the fees for non-audit services, if any, are approved by management.

3. Auditors’ Remuneration

The total fee charged by the auditors generally depends on the scope and volume of the auditors’ work. During the year, RMB3,100 thousand was charged by the Group’s external auditors for annual audit services.

INTERNAL CONTROL

The Board has overall responsibility for maintaining sound and effective internal control system in the Group. The system of internal control has been designed to safeguard assets from unauthorised use or disposition, and to ensure maintenance of proper accounting records and compliance with relevant laws and regulations, thereby providing reasonable assurance regarding effective operation of the Group’s business.

The Group has established a clear organisational structure, including the delegation of appropriate responsibilities from the Board to the board committees, members of senior management and the heads of operating divisions.

Annual Report 2011 35

Corporate Governance Report

An internal audit department was established to review major operational and fi nancial systems of the Group on a continuing basis and it aims to cover all signifi cant functions within the Group on a rotational basis. The scope of the internal audit department’s review and the audit programmes have been approved by the Audit Committee. The department reports directly to the Audit Committee and the Chairman of the Company, and submits regular reports for their review in accordance with the approved programmes. The department submits a detailed report at least once a year to the Board for their review of and monitors the effectiveness of the system of internal control of the Group.

External auditors will also report on weaknesses in the Group’s internal control and accounting procedures which have come to their attention during the course of audit.

COMMUNICATION WITH SHAREHOLDERS

The Company has set up and maintained various channels of communication with its shareholders and the public to ensure that they are kept abreast of the Company’s latest news and development. Information about the Company’s fi nancial results, corporate details and major events are disseminated through publication of announcements, circulars, interim and annual reports and press release. All published information is promptly uploaded to the Company’s website at www.sinomedia.com.hk .

At the annual general meeting, shareholders can raise any questions relating to performance and future direction of the Group with the Directors. Press conferences and analysts briefi ngs are held at least twice a year subsequent to the interim and fi nal results announcements in which the Directors and management are available to answer questions about the Group. Shareholders can also submit enquiries to management by sending emails to [email protected] or making phone calls to our investor hotline at 86-10-59180628. In addition, the Company’s dedicated investor relations team takes a proactive approach to communicate with existing and potential investors in a timely manner by making regular face-to-face meetings and conference calls with investors.

36 SinoMedia Holding Limited

Being the leading mainstream media corporation in China, Sinomedia regards the fulfi llment of social responsibility as its inescapable duty. Over the years, Sinomedia has created wealth for the society, and strived to reciprocate the society at the same time, sparing no effort to advocate the building of social morality, disseminating respectable ideas, actively promoting public welfare, and strongly boosting the harmonious development of the society, the economy and the environment.

INDEPENDENT CREATIVITY

Sinomedia owns a creative and content production team of over 60 employees, and the team is responsible for providing comprehensive, professional and exquisite creative services in respect of advertisement and video programs for more than 40 industries, various corporate brands and city governmental institutions and regions. The team has won more than 40 awards home and abroad: In 2010, Sinomedia was awarded China 4A Innovation Gold Seal Award (Great Work Award); In 2011, Sinomedia’s graphic design “NEET — China National Committee on Ageing” was awarded Silver Award of Chinese Classics Communication Awards (Corporate Image Category); the graphic design “Searching — WWF” was awarded Bronze Award of Chinese Classics Communication Awards (Corporate Image Category).

Over the years, Sinomedia has strived to forge Chinese creative culture with outstanding creative production, promoted the development of the advertising creative industry in China, and initiated city branding communication in China which made signifi cant contribution to development of Chinese cities. In 2003, Sinomedia published the “Research Report on the Communication of City — Tourism Brands through TV Advertisements” and took the lead in setting the industrial standards for city branding. In 2006, the branding advertisement “Hospitable Shandong” created a brand new model of cluster advertising for the tourism brands in China. It drew extensive attention from the tourism industry in China. The effect of this successful model contributed signifi cantly to the global promotion of city brands and tourism brands of China.

EMPLOYEES’ WELFARE

Sinomedia advocates the “family culture” centered around “caring, responsibility and accommodation”. Sinomedia also attaches importance to the enhancement of the employees’ sense of belonging and achievement to create a good corporate ambience. In addition to providing the opportunity of training and development for every employee, Sinomedia also pays sincere attention to the physical and mental health of the employees and holds “Sinomedia Sports Day” every year to help employees stay healthy both physically and mentally.

Sinomedia cares about every employee and their families and arranges various theme activities centered around family culture. In April every year, Sinomedia organizes a series of “Parents Day” activities and invites the parents of outstanding employees to visit its headquarters in Beijing in person. Sinomedia pays for accommodation and transportation expenses. Various theme activities are provided so that the employees can reunion with their families

Annual Report 2011 37

Corporate Social Responsibility Report

thus enhancing the families’ understanding of and the trust in the company. On 9 September 2011, Sinomedia held the fi rst “Weddings in Sinomedia” activity. A massive group wedding ceremony for ten newly-wed couples of the Group during the year. This demonstrated the sincere concern of the Group on the happiness of the employees’ family life.

PUBLIC SERVICE ADVERTISEMENT

A public service advertisement is an advertisement for the benefi ts of the public. Its functions are to bring a macro effect on the society and the public; build good morals through the communication of the concepts benefi cial to the society; and promote the civilization and advancement of the society. Sinomedia owns a public service advertising broadcast network — the only public service advertising television media network in China which covers over 150 television channels, reaching 900 million audiences in China. In the Global Advertiser Conference jointly held by

==> picture [456 x 399] intentionally omitted <==

38 SinoMedia Holding Limited

the World Federation of Advertisers and China Association of Advertisers in 2011, Sinomedia was awarded the “Outstanding Social Responsibility Award” due to its outstanding contributions to the promotion of the public service advertisement and agriculture-related brands in China. In the future, Sinomedia will remain dedicated to promoting the development of the public service advertisement in China.

ECONOMIC CONTRIBUTIONS

The Group employs over 380 employees and provides them with the opportunity of promotion, training and development. In 2011, the Group promulgated and implemented certain documents, including the “Cultivation Measures on Selecting Outstanding Employees for Further Study” and the “Convenient Promotion Solutions for Professional Technicians”, and organized various trainings for 57 times, such as “Construction of the Corporate Strategy-based Corporate Management System in China”, “Improvement of Sale Capabilities — Sales Elite and Sales Behavior”, and “Manager’s Skills for Beautiful Commercial Speech and Presentation”. The Group also implemented a new mechanism where outstanding employees can be sent abroad for further study and a pilot program for the cultivation of oversea talents, so as to provide professional and systematic growth channels for the employees with capabilities, potential and diligence and foster a substantial number of professionals for the society.

The Group has been operating in China for many years and has always made consistent contributions to the development of the local economy. In 2011, Sinomedia offi cially established a branch company in Hong Kong to actively develop oversea businesses and strive to make a greater contribution to the development of the global economy.

Annual Report 2011 39

Expanding its Edges in Finance Sector

Being the research centre of China Advertising Association of Commerce (中國商務廣告協會) for fi nancial brands, SinoMedia performed prominently in the aspect of brand communication services for fi nance and insurance industries. Currently, SinoMedia has established steady business cooperation with many fi nance and insurance companies in China. In 2011, SinoMedia was the service provider for advertising services procurement projects under the media agency category of The People’s Insurance Company (Group) of China Limited for the year 2011–2012.

Continue to lead the City Branding Communication

In 2011, SinoMedia published “Growth Strategies for City Brands in China”《中國城市品牌成長攻略》and continued to dominate the city brand communication sector. According to authoritative statistics, SinoMedia has more than 80% of the market share among the clients of city tourism who utilize the services of CCTV platform.

The directors have pleasure in submitting their annual report together with the audited fi nancial statements for the year ended 31 December 2011.

PRINCIPAL PLACE OF BUSINESS

SinoMedia Holding Limited (the “Company”) is a company incorporated and domiciled in Hong Kong and has its registered offi ce at Room 1505, 15th Floor, World-wide House, 19 Des Voeux Road Central, Hong Kong, and principal place of business at Unit 15D, Xintian International Plaza, No. 450 Fushan Road, Pudong New District, Shanghai, PRC.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding, the subsidiaries of which are providing nationwide TV advertising coverage and campaign planning, and TV advertisement production services for advertisers and advertising agents.

The analysis of the principal activities and geographical locations of the operations of the Company and its subsidiaries (the “Group”) during the fi nancial year ended 31 December 2011 are set out in note 1 and note 18 to the fi nancial statements.

MAJOR CUSTOMERS AND SUPPLIERS

The information in respect of the Group’s sales and purchases attributable to the major customers and suppliers respectively during the year ended 31 December 2011 is as follows:

	Percentage of
	the Group’s
	total purchases
The largest supplier	92%
Five largest suppliers in aggregate	99%

The Group’s fi ve largest customers accounted for less than 15% of the Group’s revenue.

At no time during the year had the directors, their associates and any shareholder of the Company (who or which to the knowledge of the directors owned more than 5% of the Company’s issued share capital) had any interest in these major suppliers and customers.

FINANCIAL STATEMENTS

The profi t of the Group for the year ended 31 December 2011 and the state of the Company’s and the Group’s affairs as at that date are set out in the fi nancial statements on pages 51 to 55.

42 SinoMedia Holding Limited

TRANSFER TO RESERVES

Profi ts attributable to equity shareholders of the Company, before dividends, of RMB238,945 thousand (2010: RMB158,064 thousand) have been transferred to reserves. Other movements in reserves are set out in the Consolidated Statements of Changes in Equity on page 56.

A dividend of approximately RMB62,224 thousand (2010: RMB17,786 thousand) was paid in June 2011. The directors now recommend the payment of a fi nal dividend of HKD10.6 cents per share (2010: HKD6.6 cents per share) and a special dividend HKD10.6 cents per share (2010: HKD6.6 cents per share) for the year ended 31 December 2011.

PROPERTY, PLANT AND EQUIPMENT

Movements in property, plant and equipment of the Group are set out in note 17 to the fi nancial statements.

SHARE CAPITAL

Details of the movements in share capital of the Company during the year are set out in note 24 to the fi nancial statements.

The Company acquired its own listed securities of 10,218,000 shares in 2011. Other than this, there were no sales or redemption of the Company’s listed securities by the Company or any of its subsidiaries during the year.

DIRECTORS

The directors during the year ended 31 December 2011 were:

Executive directors

Chen Xin Liu Jinlan Li Zongzhou

Non-executive directors

Zhu Jia Huang Jingsheng (resigned on 25 August 2011) He Hui David (appointed on 25 August 2011)

Independent non-executive directors

Ding Junjie Qi Daqing Chen Tianqiao (retired on 20 May 2011) Lian Yuming (appointed on 20 May 2011)

In accordance with Article 105 of the Company’s Articles of Association, Li Zongzhou, Zhu Jia, and Ding Junjie shall retire at the forthcoming annual general meeting (“AGM”) of the shareholders of the Company. All of them and the newly appointed non-executive director, He Hui David, being eligible, will offer themselves for re-election or election respectively at the AGM.

No director proposed for re-election or election at the forthcoming AGM has an unexpired service contract which is not determinable by the Company or any of its subsidiaries within one year without payment of compensation, other than normal statutory obligations.

Annual Report 2011 43

Directors’ Report

DIRECTORS’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at 31 December 2011, the interests and short positions of the directors and the chief executives of the Company in the shares, underlying shares and debenture of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”)), which were required to be (a) notifi ed to the Company and The Stock Exchange of Hong Kong Limited (“Stock Exchange”) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have taken under such provisions of the SFO); or (b) recorded in the register required to be kept by the Company under Section 352 of the SFO; or (c) as otherwise notifi ed to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 of the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”) were as follows:

(i) Interests in the Company — Long Positions

			Number of
			underlying		Approximate
			shares held		percentage
		Number of	under equity		of issued
		ordinary shares	derivatives		share capital of
Name of director	Nature of interest	held	(Note 1)	Total	the Company
Liu Jinlan	Founder of discretionary	251,428,169	4,400,000	255,828,169	45.93%
	trust, benef ciary of trust	(Note 2)
	and benef ciary interest
Chen Xin	Founder of discretionary trust	251,428,165	—	251,428,165	45.14%
	and benef ciary of trust	(Note 3)
Li Zongzhou	Benef cial interest	—	2,500,000	2,500,000	0.45%
He Hui David	Benef cial interest	—	600,000	600,000	0.11%
Qi Daqing	Benef cial interest	—	260,000	260,000	0.05%
Ding Junjie	Benef cial interest	—	200,000	200,000	0.04%
Lian Yuming	Benef cial interest	—	200,000	200,000	0.04%

Notes:

Details of the underlying shares are set out in the section headed “Share Option Schemes” in this report.
Liu Jinlan is deemed to be interested in 251,428,169 shares of the Company. These shares are held by three discretionary trusts, namely UME Trust, DFS (No. 2) Trust and CLH Trust, all founded by Liu Jinlan. In respect of 203,941,513 shares therein held by CLH Trust, Liu Jinlan is also a benefi ciary of the trust.
Chen Xin is deemed to be interested in 251,428,165 shares of the Company. These shares are held by three discretionary trusts, namely MHS Trust, DFS (No. 1) Trust and CLH Trust, all founded by Chen Xin. In respect of 203,941,513 shares therein held by CLH Trust, Chen Xin is also a benefi ciary of the trust.

44 SinoMedia Holding Limited

(ii) Interests in associated corporations of the Company — Long Positions

			Approximate
			percentage of
			issued share
			capital of the
Name of			associated
director	Name of associated corporation	Nature of interest	corporation
Liu Jinlan	CLH Holding Limited	Founder of discretionary trust	100%
	Golden Bridge International Culture Limited	Corporate interest	100%
	Golden Bridge Int’l Advertising Holdings Limited	Corporate interest	100%
	CTV Golden Bridge International Media Group Co., Ltd.	Corporate interest	0.3%
Chen Xin	CLH Holding Limited	Founder of discretionary trust	100%
	Golden Bridge International Culture Limited	Corporate interest	100%
	Golden Bridge Int’l Advertising Holdings Limited	Corporate interest	100%

Apart from the foregoing, as at 31 December 2011, none of the directors and the chief executives of the Company had any interests or short positions in the shares, underlying shares and debenture of the Company and its associated corporations (within the meaning of Part XV of the SFO), which were required to be (a) notifi ed to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have taken under such provisions of the SFO); or (b) recorded in the register required to be kept by the Company under Section 352 of the SFO; or (c) as otherwise notifi ed to the Company and the Stock Exchange pursuant to the Model Code.

SHARE OPTION SCHEMES

The Company has adopted share option schemes on 29 June 2007 (the “Pre-IPO Scheme”) and 27 May 2008 (the “Post-IPO Scheme”), respectively, whereby the directors of the Company are authorised, at their discretion, to invite any full time employee, director or any person approved by the board or shareholders of the Company to take up options (the “Pre-IPO Options” and the “Post-IPO Options”, respectively) to subscribe for shares of the Company. No further options will be granted under the Pre-IPO Scheme. The Post-IPO Scheme shall be valid and effective for a period of ten years ending on 7 July 2018.

The total number of securities available for issue under both the Pre-IPO Scheme and the Post-IPO Scheme as at 31 December 2011 was 36,780,000 shares which represented approximately 7% of the issued share capital of the Company at 31 December 2011.

Annual Report 2011 45

Directors’ Report

Movements of the share options under the share option schemes for the year ended at 31 December 2011 are as follows:

	No. of
	options	No. of	No. of	No. of	No. of
	outstanding	options	options	options	options
	at the	granted	exercised	forfeited	outstanding
	beginning	during	during	during	at the end	Exercise	Exercise
	of the year	the year	the year	the year	of the year Date of grant	price	period
Directors
Liu Jinlan	3,200,000	—	—	—	3,200,000 10 July 2007	RMB1.56	Note 2
	1,200,000	—	—	—	1,200,000 2 July 2010	HKD1.84	Note 4
Li Zongzhou	1,600,000	—	—	—	1,600,000 10 July 2007	RMB1.56	Note 1
	900,000	—	—	—	900,000 2 July 2010	HKD1.84	Note 4
He Hui David	600,000	—	—	—	600,000 2 July 2010	HKD1.84	Note 4
Qi Daqing	260,000	—	—	—	260,000 17 September 2009	HKD1.49	Note 3
Ding Junjie	200,000	—	—	—	200,000 17 September 2009	HKD1.49	Note 3
Lian Yuming	—	200,000	—	—	200,000 29 August 2011	HKD2.62	Note 4
Employees
in aggregate	9,608,000	—	—	(48,000)	9,560,000 4 July 2007 to	RMB1.56	Note 1
					7 March 2008
	200,000	—	—	—	200,000 17 September 2009	HKD1.49	Note 3
	16,640,000	—	(405,000)	(1,115,000)	15,120,000 2 July 2010	HKD1.84	Note 4
	1,300,000	—	—	(800,000)	500,000 22 November 2010	HKD2.82	Note 4
	1,060,000	—	—	(160,000)	900,000 6 December 2010	HKD2.88	Note 4
	—	2,340,000	—	—	2,340,000 29 August 2011	HKD2.62	Note 4

Notes:

A Pre-IPO Options holder may exercise a maximum of 25% of the total number of the Pre-IPO Options granted after the elapse of 365 days from the acceptance of the Pre-IPO Options. Subsequently, for every full year of continuous service with the Company, the holder may exercise a maximum of another 25% of the total number of the Pre-IPO Options granted, up to eight years from the date of grant.
Pre-IPO Options granted to Li Zongzhou are exercisable from 8 January 2009 to 9 July 2015, subject to the vesting requirement mentioned above. Exercisable period of the Pre-IPO Options granted to employees of the Group commenced on 8 January 2009 and will expire on a date ranging from 3 July 2015 to 6 March 2016 (depending on their respective dates of grant of the option), also subject to the vesting requirement mentioned above.
An exception to the vesting requirement mentioned in note (1) above is that Liu Jinlan may exercise a maximum of 50% of the total number of the Pre-IPO Options granted after the elapse of 365 days from the acceptance of the options. Subsequently, for every full year of continuous service with the Company, Liu Jinlan may exercise a maximum of another 25% of the total number of the options granted, up to eight years from the date of grant.
Pre-IPO Options granted to Liu Jinlan is exercisable from 8 January 2009 to 9 July 2015, subject to the vesting requirement mentioned above.
A Post-IPO Options holder may exercise a maximum of 25% of the total number of the Post-IPO Options granted from his acceptance of the Post-IPO Options. Subsequently, for every full year of continuous service with the Company, the holder may exercise a maximum of another 25% of the total number of the Post-IPO Options granted, up to eight years from the date of grant.
A Post-IPO Options holder may exercise a maximum of 25% of the total number of the Post-IPO Options granted after the elapse of one full year from the date of grant of the Post-IPO Options. Subsequently, for every full year of continuous service with the Company, the holder may exercise a maximum of another 25% of the total number of the Post-IPO Options granted, up to eight years from the date of grant.

SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SHARES AND UNDERLYING SHARES — LONG POSITIONS

As at 31 December 2011, so far as known to the directors and chief executive of the Company, the following corporations (other than a director or chief executive of the Company) had, or were deemed or taken to have

46 SinoMedia Holding Limited

interests or short position in the shares or underlying shares of the Company, which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

		Total number of
		ordinary	% of total
Substantial shareholder	Nature of interest	shares held	issued shares
Equity Trustee Limited	Trustee_(Note 1)_	298,914,821	53.66%
CLH Holding Limited	Corporate interest_(Note 2)_	203,941,513	36.61%
Bain Capital CTVGB Holding L.P.	Corporate interest_(Note 3)_	117,624,579	21.12%

Notes:

Equity Trustee Limited is deemed to be interested in 298,914,821 shares of the Company as it is the trustee of CLH Trust (shares held by Golden Bridge International Culture Limited), MHS Trust (shares held by Merger Holding Service Company Limited), UME Trust (shares held by United Marine Enterprise Company Limited), DFS (No. 1) Trust (shares held by Digital Finance Service Company Limited) and DFS (No. 2) Trust (shares held by SinoMedia Investment Ltd.).
These shares are directly held by Golden Bridge International Culture Limited which is a wholly owned subsidiary of Golden Bridge Int’l Advertising Holdings Limited which in turn is a wholly owned subsidiary of CLH Holding Limited. CLH Holding Limited is deemed to be interested in 203,941,513 shares of the Company held by Golden Bridge International Culture Limited.
These shares are directly held by Bain Capital CTVGB Holding Ltd. which is a wholly owned subsidiary of Bain Capital CTVGB Holding L.P. Bain Capital CTVGB Holding L.P. is deemed to be interested in 117,624,579 shares of the Company held by Bain Capital CTVGB Holding Ltd..

Save as disclosed above, so far as known to the directors and chief executive of the Company, as at 31 December 2011, there was no other persons or corporations (other than a director or chief executive of the Company) who had any interests or short position in the shares or underlying shares of the Company, which would fall to be disclosed to the Company and the Stock Exchange under the provisions of the Divisions 2 and 3 of Part XV of the SFO.

SUFFICIENCY OF PUBLIC FLOAT

Based on the information that is publicly available to the Company and within the knowledge of the directors of the Company as at the date of this annual report, the Company has maintained the prescribed public fl oat under the Listing Rules.

CONNECTED TRANSACTIONS

During the year ended 31 December 2011, the Group entered into the following connected transactions (other than connected transactions that are exempted under Rule 14A.31 of the Listing Rules) and continuing connected transactions (other than continuing connected transactions that are exempted under Rule 14A.33 of the Listing Rules):

(i) Second Supplemental agreement and option agreement

CTV Golden Bridge International Media Group Co., Ltd. (“CTV Media (Shanghai)”), a 99.7% owned subsidiary of the Company, previously owned a 60% equity interest in Beijing Golden Bridge Senmeng Media Advertising Co., Ltd. (“Golden Bridge Senmeng”). On 17 November 2010, CTV Media (Shanghai) entered into a supplemental agreement and an option agreement respectively with the minority shareholder and the benefi cial owner of Golden Bridge Senmeng in respect of the arrangement for acquisition of the remaining 40% equity interest in Golden Bridge Senmeng. Pursuant to the agreements, CTV Media (Shanghai) shall acquire in total 30% equity interest in Golden Bridge Senmeng by 2011 and, subject to certain conditions, acquire the last 10% equity interest in Golden Bridge Senmeng in 2014, by payment of cash consideration and grant of share

Annual Report 2011 47

Directors’ Report

options of the Company to the vendor and the vendor’s benefi cial owner, respectively. Upon completion of the acquisitions, Golden Bridge Senmeng will become a wholly-owned subsidiary of the Group.

Following the above mentioned second supplemental agreement and option agreement, CTV Media (Shanghai) held a 90% equity interest in Golden Bridge Senmeng as at 31 December 2011.

(ii) Lease Agreement of Xinzhou Commercial Building

On 28 September 2009, Golden Bridge Senmeng and Liu Jinlan entered into a lease agreement to lease from the latter offi ce premises at Xinzhou Commercial Building, 58 Fucheng Road, Haidian District, Beijing. The lease agreement is for a term of 3 years from 11 September 2009 to 10 September 2012 with an annual rental of RMB972,099. During the year ended 31 December 2011, rental of RMB972,099 was paid for the lease.

The independent non-executive directors have reviewed the continuing connected transaction as set out in ii above and confi rmed that it has been entered into (a) on normal commercial terms; (b) in the ordinary course of the business of the Group; and (c) on terms that are fair and reasonable and in the interests of the shareholders of the Company as a whole.

The Company has applied to the Stock Exchange for, and the Stock Exchange has agreed to grant a waiver pursuant to Rule 14A.42(3) of the Listing Rules from strict compliance with the announcement requirement set out in Chapter 14A of the Listing Rules for each of the continuing connected transactions set out above.

DIRECTORS’ INTERESTS IN CONTRACTS

Save for the above, no contract of signifi cance to which the Company, or any of its holding company, subsidiaries or fellow subsidiaries was a party, and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at 31 December 2011 or at any time during the year.

FIVE YEAR SUMMARY

A summary of the results and of the assets and liabilities of the Group for the last fi ve fi nancial years is set out on pages 139 of the annual report.

PROVIDENT AND RETIREMENT FUND SCHEMES

The Group’s employees in the PRC participate in various defi ned contribution schemes stipulated by the relevant municipal and provincial governments under which the Group is required to make monthly contributions to these plans. The Group’s subsidiaries in the PRC contribute funds to the retirement schemes, which are calculated on a stipulated percentage of the average employee salary as agreed by the relevant municipal and provincial government. The Group has no further obligations for the actual payment of post-retirement benefi ts beyond the contributions.

Details of the Group’s contributions to the retirement benefi t schemes are shown in note 9 to the fi nancial statements.

AUDITORS

KPMG shall retire and, being eligible, will offer themselves for re-appointment. A resolution for the re-appointment of KPMG as the Company’s auditors will be proposed at the forthcoming AGM.

By order of the Board Chen Xin Chairman

48 SinoMedia Holding Limited

Independent auditor’s report to the shareholders of SinoMedia Holding Limited

(Incorporated in Hong Kong with limited liability)

We have audited the consolidated fi nancial statements of SinoMedia Holding Limited (“the Company”) and its subsidiaries (together “the Group”) set out on pages 51 to 138, which comprise the consolidated and company statements of fi nancial position as at 31 December 2011, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash fl ow statement for the year then ended and a summary of signifi cant accounting policies and other explanatory information.

DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of consolidated fi nancial statements that give a true and fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and the Hong Kong Companies Ordinance and for such internal control as the directors determine is necessary to enable the preparation of consolidated fi nancial statements that are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these consolidated fi nancial statements based on our audit. This report is made solely to you, as a body, in accordance with section 141 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certifi ed Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the consolidated fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated fi nancial statements.

Annual Report 2011 49

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion, the consolidated fi nancial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2011 and of the Group’s profi t and cash fl ows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the Hong Kong Companies Ordinance.

KPMG

Certifi ed Public Accountants 8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong

16 March 2012

50 SinoMedia Holding Limited

For the year ended 31 December 2011 (Expressed in Renminbi)

==> picture [469 x 549] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Revenue 6 1,617,800 1,373,173
Cost of services (1,116,620) (1,033,979)
Gross profi t 501,180 339,194
Other income 7 7,238 6,098
Selling and marketing expenses (66,778) (67,493)
General and administration expenses (89,348) (68,820)
Profi t from operations 352,292 208,979
Finance income 10 17,068 20,960
Finance costs 10 (728) (7,406)
Net fi nance income 16,340 13,554
Share of loss of equity-accounted investees (7,169) (584)
Profi t before taxation 361,463 221,949
Income tax 11 (119,132) (55,598)
Profi t for the year 242,331 166,351
Attributable to:
Equity shareholders of the Company 238,945 158,064
Non-controlling interests 3,386 8,287
Profi t for the year 242,331 166,351
Earnings per share 16
Basic earnings per share (RMB) 0.424 0.279
Diluted earnings per share (RMB) 0.419 0.278
----- End of picture text -----

The notes on pages 59 to 138 are an integral part of these fi nancial statements. Details of dividends payable to Equity shareholders of the company attributable to the profi t for the year are set out in note 25(b).

Annual Report 2011 51

For the year ended 31 December 2011 (Expressed in Renminbi)

==> picture [469 x 261] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Profi t for the year 242,331 166,351
Other comprehensive income for the year (after tax) (5,669) (1,270)
Exchange differences on translation of fi nancial statements
of the Company and overseas subsidiary (5,669) (1,270)
Total comprehensive income for the year 236,662 165,081
Attributable to:
Equity shareholders of the company 233,276 156,794
Non-controlling interests 3,386 8,287
Total comprehensive income for the year 236,662 165,081
----- End of picture text -----

The notes on pages 59 to 138 are an integral part of these fi nancial statements.

52 SinoMedia Holding Limited

At 31 December 2011 (Expressed in Renminbi)

==> picture [469 x 584] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Assets
Property, plant and equipment 17 56,229 54,601
Investment property 17 3,899 —
—
Prepayment for acquisition of a property 230,000
Investments in equity-accounted investees 19 47,722 6,000
Other non-current fi nancial assets 20 30,447 —
Deferred tax assets 21 3,643 8,748
Non-current assets 371,940 69,349
Trade and other receivables 22 566,039 419,108
Cash and cash equivalents 23 913,179 795,791
Current assets 1,479,218 1,214,899
Total assets 1,851,158 1,284,248
Capital and reserves
Share capital 24 171 174
Reserves 1,018,704 848,966
Equity attributable to equity shareholders
of the Company 1,018,875 849,140
Non-controlling interests 6,359 6,904
Total equity 1,025,234 856,044
Liabilities
Other non-current fi nancial liability 20 14,245 13,657
Deferred tax liability 21 — 4,041
Non-current liabilities 14,245 17,698
Trade and other payables 26 742,860 369,185
Current taxation 11(c) 68,819 29,450
Other current fi nancial liability 20 — 11,871
Current liabilities 811,679 410,506
----- End of picture text -----

Annual Report 2011 53

At 31 December 2011 (Expressed in Renminbi)

==> picture [469 x 141] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Total liabilities 825,924 428,204
Total equity and liabilities 1,851,158 1,284,248
Net current assets 667,539 804,393
Total assets less current liabilities 1,039,479 873,742
----- End of picture text -----

Approved and authorised for issue by the board of directors on 16 March 2012.

Chen Xin

Chairman

He Hui David

Director

The notes on pages 59 to 138 are an integral part of these fi nancial statements.

54 SinoMedia Holding Limited

At 31 December 2011 (Expressed in Renminbi)

==> picture [469 x 451] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Assets
Investments in subsidiaries 18 223,515 210,854
Investments in equity-accounted investees 19 34,846 —
Other non-current fi nancial assets 20 6,609 —
Non-current assets 264,970 210,854
Trade and other receivables 22 272,803 319,199
Cash and cash equivalents 23 20,701 33,550
Current assets 293,504 352,749
Total assets 558,474 563,603
Capital and reserves
Share capital 24 171 174
Reserves 25 556,028 552,442
Total equity 556,199 552,616
Liabilities
Trade and other payables 2,275 10,987
Current liabilities 2,275 10,987
Total liabilities 2,275 10,987
Total equity and liabilities 558,474 563,603
Net current assets 291,229 341,762
Total assets less current liabilities 556,199 552,616
----- End of picture text -----

Approved and authorised for issue by the board of directors on 16 March 2012.

Chen Xin

Chairman

He Hui David

Director

The notes on pages 59 to 138 are an integral part of these fi nancial statements.

Annual Report 2011 55

For the year ended 31 December 2011 (Expressed in Renminbi)

==> picture [469 x 412] intentionally omitted <==

----- Start of picture text -----

Attributable to equity shareholders of the Company
Capital Non-
Share Share redemption Capital Statutory Translation Other Retained controlling
capital premium reserve reserve reserve reserve reserves earnings Total interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note 24) (note 25(c)) (note 25(c)) (note 25(c)) (note 25(c)) (note 25(c))
Balance at 1 January 2010 173 461,741 18 17,414 37,735 2,776 (11,151) 227,767 736,473 5,465 741,938
Share-based payments (note 27) — — — 3,362 — — — — 3,362 19 3,381
— — — — — —
Acquisition of non-controlling interests 1,813 (35,436) (33,623) (6,867) (40,490)
— — — — — — — —
Dividends (note 25(b)) (17,786) (17,786) (17,786)
— — — — — — — — —
Appropriation to reserves 17,482 (17,482)
Exercise of share option 1 6,665 — (2,746) — — — — 3,920 — 3,920
— — — — — —
Total comprehensive income for the year (1,270) 158,064 156,794 8,287 165,081
Balance at 31 December 2010 174 468,406 18 18,030 55,217 1,506 (9,338) 315,127 849,140 6,904 856,044
— — — — — — — —
Share-based payments (note 27) 4,645 4,645 4,645
Purchase of own shares (3) — 3 — — — — (19,722) (19,722) — (19,722)
— — — — — —
Acquisition of non-controlling interests (note 5) 9,842 3,301 13,143 (3,301) 9,842
— — — — — — —
Dividends (note 25 (b)) (62,224) (62,224) (630) (62,854)
— — — — — — — — —
Appropriation to reserves 5,435 (5,435)
Exercise of share option — 803 — (186) — — — — 617 — 617
— — — — — —
Total comprehensive income for the year (5,669) 238,945 233,276 3,386 236,662
Balance at 31 December 2011 171 469,209 21 32,331 60,652 (4,163) (9,338) 469,992 1,018,875 6,359 1,025,234
----- End of picture text -----

The notes on pages 59 to 138 are an integral part of these fi nancial statements.

56 SinoMedia Holding Limited

For the year ended 31 December 2011 (Expressed in Renminbi)

==> picture [469 x 532] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Cash fl ows from operating activities
Profi t for the year 242,331 166,351
Adjustments for:
Depreciation 8 6,799 5,012
Loss on sale of property, plant and equipment 434 303
Income tax expense 11(b) 119,132 55,598
—
Impairment loss on other unlisted equity investment 18,952
Finance costs 10 579 7,373
Finance income 10 (17,068) (20,889)
Share of loss of equity-accounted investees 7,169 584
Equity-settled share-based payments 27 4,645 3,381
382,973 217,713
Change in trade and other receivables (151,899) 97,083
Change in trade and other payables 374,608 232,668
605,682 547,464
Income tax paid 11(c) (78,699) (43,072)
Net cash from operating activities 526,983 504,392
Cash fl ows from investing activities
Interest received 10,589 3,835
Proceeds from sales of property, plant and equipment 377 755
Acquisition of property, plant and equipment (9,148) (3,571)
—
Prepayment for acquisition of a property (230,000)
Payment for purchase of equity-accounted investees (51,880) (6,000)
—
Payment for purchase of other unlisted equity investments (38,952)
Net cash used in investing activities (319,014) (4,981)
----- End of picture text -----

Annual Report 2011 57

For the year ended 31 December 2011 (Expressed in Renminbi)

==> picture [469 x 264] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Cash fl ows from fi nancing activities
Shares issued under share option scheme 617 4,172
Acquisition of non-controlling interests 5(a) (3,583) (11,820)
Purchase of own shares 24 (19,722) —
Dividends paid (62,224) (17,786)
Net cash used in fi nancing activities (84,912) (25,434)
Net increase in cash and cash equivalents 123,057 473,977
Cash and cash equivalents at the beginning of the year 795,791 323,084
Effect of exchange rate fl uctuations on cash held (5,669) (1,270)
Cash and cash equivalents at the end of the year 23 913,179 795,791
----- End of picture text -----

The notes on pages 59 to 138 are an integral part of these fi nancial statements.

58 SinoMedia Holding Limited

(Expressed in Renminbi unless otherwise indicated)

1. REPORTING ENTITY AND CORPORATE INFORMATION

SinoMedia Holding Limited (the “Company”) is a company domiciled in Hong Kong. The address of the Company’s registered offi ce is Room 1505, 15th Floor, World-wide House, 19 Des Voeux Road Central, Hong Kong. The consolidated fi nancial statements of the Company as at and for the year ended 31 December 2011 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interest in associate. The Group primarily is involved in providing nationwide TV advertising coverage and campaign planning, and TV advertisement production services for advertisers and advertising agents.

The Company’s shares were listed on the Main Board of the Stock Exchange of Hong Kong Limited on 8 July 2008.

2. BASIS OF PREPARATION

(a) Statement of compliance

These fi nancial statements have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (IASs) and Interpretations issued by the International Accounting Standards Board and the requirements of the Hong Kong Companies Ordinance. These fi nancial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.

The fi nancial statements were authorised for issue by the Board of Directors on 16 March 2012.

(b) Basis of measurement

These fi nancial statements have been prepared on the historical cost basis except for the following:

derivative fi nancial instruments are measured at fair value
non-derivative fi nancial instruments at fair value through profi t and loss are measured at fair value

The methods used to measure fair values are discussed further in note 4.

(c) Functional and presentation currency

The functional currency of the Company and its overseas subsidiary is HKD and the functional currencies of other entities in the Group are RMB. These fi nancial statements are presented in RMB. All fi nancial information presented in RMB has been rounded to the nearest thousand unless otherwise indicated.

Annual Report 2011 59

(Expressed in Renminbi unless otherwise indicated)

2. BASIS OF PREPARATION (CONTINUED)

(d) Use of estimates and judgments

The preparation of fi nancial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Judgements made by management in the application of IFRSs that have signifi cant effect on the fi nancial statements and major sources of estimation uncertainty are discussed in note 31.

(e) Changes in accounting policies

The IASB has issued a number of amendments to IFRSs and one new interpretation that are fi rst effective for the current accounting period of the Group and the Company. Of these, the following developments are relevant to the Group’s fi nancial statements:

IAS 24 (revised 2009), Related party disclosures
Improvements to IFRSs (2010)
IFRIC 19, Extinguishing fi nancial liabilities with equity instruments
Amendments to IFRIC 14, IAS 19 — The limit on a defi ned benefi t asset, minimum funding requirements and their interaction — Prepayments of a minimum funding requirement

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

The above amendments and new interpretation have had no material impact on the Group’s fi nancial statements as they were consistent with policies already adopted by the Group, or these changes will fi rst be effective as and when the Group enters into a relevant transaction and there is no requirement to restate the amounts recorded in respect of previous such transactions.

60 SinoMedia Holding Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these fi nancial statements, and have been applied consistently by Group entities.

(a) Basis of consolidation

(i) Subsidiaries and non-controlling interests

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

An investment in a subsidiary is consolidated into the consolidated fi nancial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions and any unrealised profi ts arising from intra-group transactions are eliminated in full in preparing the consolidated fi nancial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in respect of which the Group has not agreed any additional terms with the holders of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the defi nition of a fi nancial liability. For each business combination, the Group can elect to measure any non-controlling interests either at fair value or at their proportionate share of the subsidiary’s net identifi able assets.

Non-controlling interests are presented in the consolidated statement of fi nancial position within equity, separately from equity attributable to the equity shareholders of the Company. Noncontrolling interests in the results of the Group are presented on the face of the consolidated income statement and the consolidated statement of comprehensive income as an allocation of the total profi t or loss and total comprehensive income for the year between non-controlling interests and the equity shareholders of the company.

Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and noncontrolling interests within consolidated equity to refl ect the change in relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.

Annual Report 2011 61

(Expressed in Renminbi unless otherwise indicated)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Basis of consolidation (continued)

(i) Subsidiaries and non-controlling interests (continued)

When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognised in profi t or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a fi nancial asset or, when appropriate, the cost on initial recognition of an investment in an associate or jointly controlled entity.

In the Company’s statement of fi nancial position, an investment in a subsidiary is stated at cost less impairment losses (see note 3(g)), unless the investment is classifi ed as held for sale (or included in a disposal group that is classifi ed as held for sale).

(ii) Investments in equity-accounted investees and jointly controlled entities (equity-accounted investees)

Associates are those entities in which the Group has signifi cant infl uence, but not control, over the fi nancial and operating policies. Signifi cant infl uence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic fi nancial and operating decisions.

Investments in equity-accounted investees and jointly controlled entities are accounted for using the equity method (equity-accounted investees) and are recognised initially at cost. The cost of the investment includes transaction cost.

The consolidated fi nancial statements include the Group’s share of profi t or loss and other comprehensive income, after adjustments to align the accounting policies with those of the Group, from the date that signifi cant infl uence or joint control commences until the date that signifi cant infl uence or joint control ceases.

When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

62 SinoMedia Holding Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Basis of consolidation (continued)

(iii) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated fi nancial statements. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currencies

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profi t or loss, except for differences arising on the retranslation of available-for-sale equity investments, a fi nancial liability designated as a hedge of the net investment in a foreign operation that is effective, or qualifying cash fl ow hedges, which are recognised in other comprehensive income.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Renminbi at exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinfl ationary economies, are translated to Renminbi at exchange rates at the dates of the transactions.

Annual Report 2011 63

(Expressed in Renminbi unless otherwise indicated)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Foreign currencies (continued)

(ii) Foreign operations (continued)

The income and expenses of foreign operations in hyperinfl ationary economies are translated to Renminbi at the exchange rate at the reporting date. Prior to translating the fi nancial statements of foreign operations in hyperinfl ationary economies, their fi nancial statements for the current year are restated to account for changes in the general purchasing power of the local currency. The restatement is based on relevant price indices at the reporting date.

Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity.

(c) Financial instruments

(i) Non-derivative fi nancial assets

The Group initially recognises loans and receivables and deposits on the date that they are originated. All other fi nancial assets (including assets designated at fair value through profi t or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a fi nancial asset when the contractual rights to the cash fl ows from the asset expire, or it transfers the rights to receive the contractual cash fl ows on the fi nancial asset in a transaction in which substantially all the risks and rewards of ownership of the fi nancial asset are transferred. Any interest in transferred fi nancial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of fi nancial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

64 SinoMedia Holding Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(c) Financial instruments (continued)

(i) Non-derivative fi nancial assets (continued)

The Group has the following non-derivative fi nancial assets:

Financial Assets at fair value through profi t or loss

A fi nancial asset is classifi ed as at fair value through profi t or loss if it is classifi ed as held for trading or is designated as such on initial recognition. Financial assets are designated as at fair value through profi t or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Attributable transaction costs are recognized in profi t or loss as incurred. Financial assets at fair value through profi t or loss are measured at fair value and changes therein, which takes into account any dividend income, are recognized in profi t or loss.

Financial assets designated as at fair value through profi t or loss comprise equity securities that otherwise would have been classifi ed as available for sale.

Loans and receivables

Loans and receivables are fi nancial assets with fi xed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise trade and other receivables (see note 22).

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.

Available-for-sale fi nancial assets

Available-for-sale fi nancial assets are non-derivative fi nancial assets that are designated as available for sale or are not classifi ed in any of the above categories of fi nancial assets. Available-for-sale fi nancial assets are recognized initially at fair value plus any directly attributable transaction costs.

Annual Report 2011 65

(Expressed in Renminbi unless otherwise indicated)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(c) Financial instruments (continued)
(i) Non-derivative fi nancial assets (continued)

Available-for-sale fi nancial assets (continued)

Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 3(g)(i)) and foreign currency differences on available-for-sale debt instruments (see note3(b)(i)) are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognized, the gain or loss accumulated in equity is reclassifi ed to profi t or loss.

Available-for-sale fi nancial assets comprise equity securities and debt securities.

Investments in equity securities that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are recognised in the statement of fi nancial position at cost less impairment losses (see note 3(g)).

(ii) Non-derivative fi nancial liabilities

The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other fi nancial liabilities (including liabilities designated as at fair value through profi t or loss) are recognized initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a fi nancial liability when its contractual obligations are discharged, cancelled or expire.

The Group classifi es non-derivative fi nancial liabilities into the other fi nancial liabilities category. Such fi nancial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these fi nancial liabilities are measured at amortised cost using the effective interest method.

Non-derivative fi nancial liabilities comprise trade and other payables.

66 SinoMedia Holding Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(c) Financial instruments (continued)

(iii) Share capital

Ordinary shares

Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

Purchase of share capital

When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity.

(iv) Derivative fi nancial instruments

Derivative fi nancial instruments are recognised initially at fair value. At the end of each reporting period the fair value is remeasured. The gain or loss on remeasurement to fair value is recognised immediately in profi t or loss, except where the derivatives qualify for cash fl ow hedge accounting or hedge the net investment in a foreign operation, in which case recognition of any resultant gain or loss depends on the nature of the item being hedged.

Derivative fi nancial instruments comprise options, warrants, and other fi nancial liabilities (see note 20).

(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Annual Report 2011 67

(Expressed in Renminbi unless otherwise indicated)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d) Property, plant and equipment (continued)

(i) Recognition and measurement (continued)

Gain and loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognised net within other income/other expenses in profi t or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefi ts embodied within the component will fl ow to the Group and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profi t or loss as incurred.

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Signifi cant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.

Depreciation is recognised in profi t or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

The estimated useful lives for the current and comparative years are as follows:

Buildings	30 years
Fixtures, f ttings, and computer equipment	3–5 years
Motor vehicles	5 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

68 SinoMedia Holding Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Investment property

(i) Recognition and measurement

Items of investment property are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the investment property.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profi t or loss.

(ii) Depreciation

Depreciation is based on the cost of an investment property less its residual value.

Depreciation is recognised in profi t or loss on a straight-line basis over the estimated useful lives of investment property.

The estimated useful live for the current year is as follows:

Buildings 30 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(f) Goodwill

Goodwill represents the excess of

(i) the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the group’s previously held equity interest in the acquiree; over
(ii) the group’s interest in the net fair value of the acquiree’s identifi able assets and liabilities measured as at the acquisition date.

When (ii) is greater than (i), then this excess is recognised immediately in profi t or loss as a gain on a bargain purchase.

Annual Report 2011 69

(Expressed in Renminbi unless otherwise indicated)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(f) Goodwill (continued)

Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating unit, or groups of cash generating units, that is expected to benefi t from the synergies of the combination and is tested annually for impairment.

On disposal of a cash generating unit during the year, any attributable amount of purchased goodwill is included in the calculation of the profi t or loss on disposal.

(g) Impairment

(i) Non-derivative fi nancial assets

A fi nancial asset not carried at fair value through profi t or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A fi nancial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss events had an impact on the estimated future cash fl ows of that asset that can be estimated reliably.

Objective evidence that fi nancial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a signifi cant or prolonged decline in its fair value below its cost is objective evidence of impairment.

(ii) Available-for-sale fi nancial assets

Impairment losses on available-for-sale fi nancial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profi t or loss. The cumulative loss that is reclassifi ed from equity to profi t or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profi t or loss. Changes in cumulative impairment losses attributable to application of the effective interest method are refl ected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profi t or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.

70 SinoMedia Holding Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g) Impairment (continued)

(ii) Available-for-sale fi nancial assets (continued)

For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the fi nancial asset and the estimated future cash fl ows, discounted at the current market rate of return for a similar fi nancial asset where the effect of discounting is material. Impairment losses for equity securities carried at cost are not reversed.

(iii) Non-fi nancial assets

The carrying amounts of the Group’s non-fi nancial assets, other than deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash infl ows from continuing use that are largely independent of the cash infl ows of other assets or CGU.

Impairment losses are recognised in profi t or loss. Impairment losses recognised in respect of CGUs are allocated fi rst to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Annual Report 2011 71

(Expressed in Renminbi unless otherwise indicated)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(h) Employee benefi ts

(i) Defi ned contribution plans

A defi ned contribution plan is a post-employment benefi t plan under which an entity pays fi xed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defi ned contribution pension plans are recognised as an employee benefi t expense in profi t or loss in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defi ned contribution plan that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.

(ii) Short-term employee benefi ts

Short-term employee benefi t obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profi t- sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(iii) Share-based payment transactions

The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to refl ect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to refl ect such conditions and there is no true-up for differences between expected and actual outcomes.

72 SinoMedia Holding Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(h) Employee benefi ts (continued)

(iv) Termination benefi ts

Termination benefi ts are recognised as an expense when the Group is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefi ts as a result of an offer made to encourage voluntary redundancy. Termination benefi ts for voluntary redundancies are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefi ts are payable more than 12 months after the reporting date, then they are discounted to their present value.

(i) Cash and Cash equivalents

Cash and cash equivalents comprise cash at bank and on hand.

(j) Provisions and contingent liabilities

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outfl ow of economic benefi ts will be required to settle the obligation. Provisions are determined by discounting the expected future cash fl ows at a pre-tax rate that refl ects current market assessments of the time value of money and the risks specifi c to the liability. The unwinding of the discount is recognised as fi nance cost.

Where it is not probable that an outfl ow of economic benefi ts will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outfl ow of economic benefi ts is remote. Possible obligations, whose existence will only be confi rmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outfl ow of economic benefi ts is remote.

Annual Report 2011 73

(Expressed in Renminbi unless otherwise indicated)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(k) Revenue

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefi ts will fl ow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in the income statement as follows:

(i) Media resources management

Revenue from media resources management is primarily derived from the sale of advertising time owned by the Group. Revenue from services rendered is recognised in profi t or loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to reports issued by an independent third party with relevant qualifi cation and experience on a monthly basis, which evidence the advertisement actually broadcast.

(ii) Integrated brand communication services

Revenue from integrated brand communication services is primarily derived from commissions received for assisting advertising clients in obtaining advertising time on media platforms, primarily television stations. When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net amount of commission made by the Group in proportion to the stage of completion of the transaction on a monthly basis. The stage of completion is assessed by reference to service performed to date as a percentage of total services to be performed.

(iii) Creative production of advertisement and content

Revenue from creative production of advertisement and content is primarily derived from designing and developing advertisement production. The revenue is recognised when advertisement production is delivered to the customer which is taken to be the point in time when the customer has accepted the advertisement production and the related risks and rewards of ownership.

(iv) Rental income from operating leases

Rental income receivable under operating leases is recognised in profi t or loss in equal instalments over the periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefi ts to be derived from the use of the leased asset. Lease incentives granted are recognised in profi t or loss as an integral part of the aggregate net lease payments receivable. Contingent rentals are recognised as income in the accounting period in which they are earned.

74 SinoMedia Holding Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(l) Government grants

Government grants are recognised in the statement of fi nancial position initially when there is reasonable assurance that they will be received and that the Group will comply with the conditions attaching to them. Grants that compensate the Group for expenses incurred are recognised in profi t or loss as other income on a systematic basis over the periods necessary to match them with the related expenses. Government grants that become receivable as compensation for expenses already incurred are recognised in profi t or loss as other income of the period in which they become receivable.

(m) Finance income and costs

Finance income comprises interest income on cash deposits in bank and changes in the fair value of fi nancial instruments at fair value through profi t or loss. Interest income is recognised as it accrues in profi t or loss, using the effective interest method.

Finance costs comprise changes in the expected consideration to be paid for the acquisition of noncontrolling interests.

Foreign currency gains and losses are reported on a net basis as either fi nance income or fi nance cost depending on whether foreign currency movements are in a net gain or net loss position.

(n) Operating lease charges

Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profi t or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefi ts to be derived from the leased asset. Lease incentives received are recognised in profi t or loss as an integral part of the total lease expense, over the term of the lease.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confi rmed.

(o) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profi t or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Annual Report 2011 75

(Expressed in Renminbi unless otherwise indicated)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(o) Income tax (continued)

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for fi nancial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profi t or loss;
temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

In determining the amount of current and deferred tax the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profi ts will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefi t will be realised.

76 SinoMedia Holding Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(p) Earnings per share

The Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profi t or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted earnings per share is determined by adjusting the profi t or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.

(q) Related parties

(a) A person, or a close member of that person’s family, is related to the group if that person:
(i) has control or joint control over the group;
(ii) has signifi cant infl uence over the group; or
(iii) is a member of the key management personnel of the group or the group’s parent.
(b) An entity is related to the group if any of the following conditions applies:
(i) The entity and the group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

Annual Report 2011 77

(Expressed in Renminbi unless otherwise indicated)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(q) Related parties (continued)

(b) An entity is related to the group if any of the following conditions applies: (continued)
(v) The entity is a post-employment benefi t plan for the benefi t of employees of either the group or an entity related to the group.
(vi) The entity is controlled or jointly controlled by a person identifi ed in (a).
(vii) A person identifi ed in (a)(i) has signifi cant infl uence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

Close family members of an individual are those family members who may be expected to infl uence, or be infl uenced by, that individual in their dealings with the entity.

(r) Segment reporting

Operating segments, and the amounts of each segment item reported in the fi nancial statements, are identifi ed from the fi nancial information provided regularly to the group’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the group’s various lines of business and geographical locations.

Individually material operating segments are not aggregated for fi nancial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

In a manner consistent with the way in which information is reported internally to the group’s most senior executive management for the purposes of resources allocation and performance assessment, the Group has determined and presented a single reportable segment to disclose information as a whole about its services, geographical areas, and major customers.

78 SinoMedia Holding Limited

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(s) New standards and interpretations not adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2011, and have not been applied in preparing these consolidated fi nancial statements. None of these is expected to have a signifi cant effect on the consolidated fi nancial statements of the Group, except for IFRS 9 Financial Instruments, which becomes mandatory for the Group’s 2013 consolidated fi nancial statements and could change the classifi cation and measurement of fi nancial assets. The Group does not plan to adopt this standard early and the extent of the impact has not been determined.

4. DETERMINATION OF FAIR VALUES

(a) Employees share options

The fair value of the employee share options is measured using the binominal lattice model (see note 27).

(b) Derivatives

The fair value of the redemption option and conversion option recorded in other non-current fi nancial assets are measured using equity allocation method.

Where discounted cash fl ow techniques are used, estimated future cash fl ows are based on management’s best estimates and the discount rate is a market related rate for a similar instrument at the end of the reporting period. Where other pricing models are used, inputs are based on market related data at the end of the reporting period.

(c) Non-derivative fi nancial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash fl ows, discounted at the market rate of interest at the reporting date.

(d) Trade and other receivables

The fair value of trade and other receivables, excluding construction work in progress, but including service concession receivables, is estimated at the present value of future cash fl ows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes or when acquired in a business combination.

Annual Report 2011 79

(Expressed in Renminbi unless otherwise indicated)

5. ACQUISITION OF NON-CONTROLLING INTERESTS AND ESTABLISHMENT OF SUBSIDIARIES

(a) Acquisition of non-controlling interests

(i) Acquisition of non-controlling interests of Beijing Golden Bridge Senmeng Media Advertising Company Limited

Beijing Golden Bridge Senmeng Media Advertising Company Limited (“Golden Bridge Senmeng”) is a subsidiary within the Group, which CTV Golden Bridge International Media Group Company Limited, a 99.7% owned subsidiary of the Company, and Beijing Senmeng Media Advertising Company Limited (“Beijing Senmeng”) hold 80% and 20% of its equity interest as at 31 December 2010, respectively.

Pursuant to the supplementary agreement signed by CTV Golden Bridge International Media Group Company Limited and Beijing Senmeng and benefi cial owner of Beijing Senmeng on 17 November 2010, CTV Golden Bridge International Media Group Company Limited purchased 10% equity interest of Golden Bridge Senmeng by cash payment of RMB3,114 thousand and 3,726,073 share options of the Company in May 2011, which was based on the audited net profi t of Golden Bridge Senmeng in 2010. As at 31 December 2011, CTV Golden Bridge International Media Group Company Limited held the 90% equity interest of Golden Bridge Senmeng.

The following summarises the effect of changes in the Group’s (parent) ownership interest in Golden Bridge Senmeng from 80% to 90%:

==> picture [402 x 124] intentionally omitted <==

----- Start of picture text -----

2011
RMB’000
Parent’s ownership interest at 1 January 20,090
Effect of acquisition of non-controlling interests 3,301
Share of comprehensive income 14,795
Parent’s ownership interest at 31 December 38,186
----- End of picture text -----

80 SinoMedia Holding Limited

5. ACQUISITION OF NON-CONTROLLING INTERESTS AND ESTABLISHMENT OF SUBSIDIARIES (CONTINUED)

(b) Establishment of subsidiaries

(i) CTV Golden Bridge International Media (Hong Kong) Company Limited

On 31 May 2011, CTV Golden Bridge International Media (Hong Kong) Company Limited was established with an initial registered and paid-up capital of HKD10,000,000, which was 100% directly contributed by the Company.

(ii) CTV Golden Bridge Culture Development (Beijing) Company Limited

In order to comply with applicable PRC laws and regulations, CTV Golden Bridge International Media Group Company Limited, a subsidiary of the Company, entered into a series of contractual arrangements with CTV Golden Bridge Culture Development (Beijing) Company Limited (“Golden Bridge Culture Development”) and its shareholders, which are the key employees with PRC citizens of CTV Golden Bridge International Media Group Company Limited on 27 October 2011. The main business of Golden Bridge Culture Development is video content production. CTV Golden Bridge International Media Group Company Limited does not have legal ownership in equity of Golden Bridge Culture Development. Nevertheless, those contractual arrangements allow CTV Golden Bridge International Media Group Company Limited to effectively control Golden Bridge Culture Development and to derive substantially all of the economic benefi ts from it. Accordingly, the Group treats Golden Bridge Culture Development as a subsidiary of the Group (see note 18).

(iii) Beijing Taihe Ruishi Advertising Company Limited

On 8 July 2011, Beijing Taihe Ruishi Advertising Company Limited was established with an initial registered and paid-up capital of RMB1,000,000, which was 100% contributed by Beijing Taihe Ruishi Culture and Media Company Limited, a subsidiary of the Company.

6. REVENUE

==> picture [446 x 144] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Media resources management 1,605,435 1,378,316
Integrated brand communication services 18,613 9,875
Creative production of advertisement and content 39,255 18,467
Others 638 —
Less: Sales taxes and surcharges (46,141) (33,485)
1,617,800 1,373,173
----- End of picture text -----

Annual Report 2011 81

(Expressed in Renminbi unless otherwise indicated)

7. OTHER INCOME

==> picture [446 x 109] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Government grant (i) 6,675 5,982
Others 563 116
7,238 6,098
----- End of picture text -----

(i) It is the unconditional discretionary grants received from a local government authority in recognition of the Group’s contribution to the development of local economies.

8. EXPENSES BY NATURE

The following expenses are included in cost of services, selling and marketing expenses and general and administration expenses.

==> picture [446 x 138] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
(Reversal of)/impairment losses on bad and doubtful accounts (816) 13,244
—
Impairment losses on available-for-sale equity security 18,952
Depreciation 6,799 5,012
Professional fee 3,219 2,397
Auditors’ remuneration 3,100 2,800
Operating lease rental charges 6,514 3,477
----- End of picture text -----

9. PERSONNEL EXPENSES

==> picture [446 x 124] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Salaries, wages and other benefi ts 46,131 44,845
Contribution to defi ned contribution plan (i) 9,448 6,110
Equity-settled share-based payments 27 4,645 3,362
60,224 54,317
----- End of picture text -----

82 SinoMedia Holding Limited

9. PERSONNEL EXPENSES (CONTINUED)

(i) Defi ned contribution plan

As stipulated by the regulations of the PRC, the Group participates in a defi ned contribution retirement plan organised by municipal and provincial governments for its employees. The Group is required to make contributions to the retirement plans at rates ranging from 20% to 22% of the salaries, bonuses and certain allowances of the employees. A member of the plan is entitled to a pension equal to a fi xed proportion of the salary prevailing at the member’s retirement date. The Group has no other material obligation for the payment of pension benefi ts associated with these plans beyond the annual contributions described above.

10. FINANCE INCOME AND COSTS

==> picture [446 x 260] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Interest income on bank deposits 9,610 4,813
Changes in fair value of derivative fi nancial assets 20 7,458 16,076
Net foreign exchange gain — 71
Finance income 17,068 20,960
Changes in the expected consideration to be
paid for the acquisition of non-controlling interests 20 (579) (7,373)
—
Net foreign exchange loss (149)
Others — (33)
Finance costs (728) (7,406)
Net fi nance income 16,340 13,554
----- End of picture text -----

Annual Report 2011 83

(Expressed in Renminbi unless otherwise indicated)

11. INCOME TAX IN THE CONSOLIDATED INCOME STATEMENT

(a) Taxation in the consolidated income statement represents:

==> picture [423 x 154] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Current tax expense
Provision for PRC income tax 118,068 52,841
Deferred tax expense
Temporary differences 1,064 2,757
Total income tax expense 119,132 55,598
----- End of picture text -----

(i) No provision has been made for Hong Kong profi ts tax as the Company and its overseas subsidiary did not earn any income subject to Hong Kong profi ts tax during the year.
(ii) The provision for PRC income tax is based on the respective applicable rates on the estimated assessable income of the Group entities in the PRC as determined in accordance with the relevant income tax rules and regulations of the PRC.

On 16 March 2007, the Fifth Plenary Session of the Tenth National People’s Congress passed the Corporate Income Tax Law of the People’s Republic of China (the “New Tax Law”) which became effective on 1 January 2008. The New Tax Law adopts a uniform tax rate of 25% for all enterprises including foreign investment enterprises.

Pursuant to the transitional arrangement by the 19[th] Tax Offi ce of the State and Local Tax Bureau of Pudong New District, CTV Golden Bridge International Media Group Company Limited enjoyed a reduced income tax rate of 24% in 2011 (2010: 22%).

Except for the Company and its overseas subsidiary and CTV Golden Bridge International Media Group Company Limited, applicable income tax rate of other Group entities in the PRC is the uniform tax rate of 25%.

84 SinoMedia Holding Limited

11. INCOME TAX IN THE CONSOLIDATED INCOME STATEMENT (CONTINUED)

(b) Reconciliation between income tax expense and accounting profi t at applicable tax rates:

==> picture [423 x 245] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Profi t before income tax 361,463 221,949
Notional tax on profi t before taxation,
calculated at the statutory tax rates
applicable to the respective tax jurisdictions 90,577 48,920
Non-deductible expenses 10,020 6,424
Withholding tax on profi ts retained
by PRC subsidiaries 16,896 1,726
Tax losses not recognised as deferred tax assets 47 —
—
Tax effect of unused tax losses not recognised (i) 2,192
Non-taxable income (600) (1,472)
Income tax expense for the year 119,132 55,598
----- End of picture text -----

Note:

(i) It represents tax effect of unused tax losses recognised in previous years from a subsidiary of the Company as there is no available taxable profi t in the foreseeable future (see note 21(a)).

(c) Current taxation in the statement of fi nancial position represents:

==> picture [423 x 154] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
PRC income tax
Balance at the beginning of the year 29,450 19,681
Provision for the year 118,068 52,841
Tax paid (78,699) (43,072)
Balance of tax provision at the end of the year 68,819 29,450
----- End of picture text -----

Annual Report 2011 85

(Expressed in Renminbi unless otherwise indicated)

12. DIRECTORS’ REMUNERATION

Directors’ remuneration disclosed pursuant to section 161 of the Hong Kong Companies Ordinance is as follows:

For the year ended 31 December 2011

==> picture [446 x 379] intentionally omitted <==

----- Start of picture text -----

Salaries,
allowances Contribution Equity
and other to defi ned settled
Directors’ benefi ts Discretionary contribution share-based
fees in kind bonuses plan payment Total
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Chen Xin — 1,020 960 66 — 2,046
Liu Jinlan — 1,020 960 66 234 2,280
Li Zongzhou — 744 372 — 234 1,350
Non-executive directors
Zhu Jia — — — — — —
— — — — — —
Huang Jingsheng (i)
He Hui David (i) — — — — 117 117
Independent
non-executive directors
Ding Junjie 124 — — — 15 139
Qi Daqing 124 — — — 19 143
Chen Tianqiao (ii) 52 — — — 15 67
LianYuming (ii) 73 — — — 24 97
373 2,784 2,292 132 658 6,239
----- End of picture text -----

Notes:

(i) Mr. Huang Jingsheng, non-executive director, resigned on 25 August 2011 and replaced by Mr. He Hui David.

(ii) Mr. Chen Tianqiao, independent non-executive director, retired on 20 May 2011 and replaced by Mr. Lian Yuming.

86 SinoMedia Holding Limited

12. DIRECTORS’ REMUNERATION (CONTINUED)

For the year ended 31 December 2010

==> picture [446 x 349] intentionally omitted <==

----- Start of picture text -----

Salaries,
allowances Contribution Equity
and other to defi ned settled
Directors’ benefi ts Discretionary contribution share-based
fees in kind bonuses plan payment Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Chen Xin — 864 — 62 — 926
Liu Jinlan — 864 — 62 164 1,090
Li Zongzhou — 600 200 — 227 1,027
Non-executive directors
Zhu Jia — — — — — —
— — — — — —
Huang Jingsheng
Independent
non-executive directors
Ding Junjie 128 — — — 32 160
Qi Daqing 128 — — — 41 169
Chen Tianqiao 128 — — — 32 160
384 2,328 200 124 496 3,532
----- End of picture text -----

During the year, no amount was paid or payable by the Group to the directors or any of the fi ve highest paid individuals set out in note 13 below as an inducement to join or upon joining the Group or as compensation for loss of offi ce. Also there was no arrangement under which a director waived or agreed to waive any remuneration during the year.

Annual Report 2011 87

(Expressed in Renminbi unless otherwise indicated)

13. INDIVIDUALS WITH HIGHEST EMOLUMENTS

Of the fi ve individuals with the highest emoluments during the year ended 31 December 2011, two (2010: one) are directors whose emoluments is disclosed in note 12. The aggregate of the emoluments in respect of the other three (2010: four) are as follows:

==> picture [446 x 124] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Salaries, allowances and other benefi ts in kind 4,160 3,929
Contribution to defi ned contribution plan 139 192
Equity-settled share-based payment transactions 623 630
4,922 4,751
----- End of picture text -----

The emoluments of the three (2010: four) individuals with the highest emoluments are within the following bands:

==> picture [446 x 76] intentionally omitted <==

----- Start of picture text -----

2011 2010
— —
Nil to RMB1,000,000
RMB1,000,001 to RMB1,500,000 — 4
RMB1,500,001 to RMB2,000,000 3 —
----- End of picture text -----

14. PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE COMPANY

The consolidated profi t attributable to equity shareholders of the Company for the year ended 31 December 2011 includes a loss of RMB15,125 thousand (2010: loss of RMB4,278 thousand) and dividends of RMB112,661 thousand (2010: dividends of RMB75,772 thousand) from subsidiaries attributable to the profi t of previous fi nancial years, which have been dealt with in the fi nancial statements of the Company.

88 SinoMedia Holding Limited

14. PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE COMPANY

(CONTINUED)

Reconciliation of the above amount to the Company’s profi t for the year:

==> picture [446 x 139] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Amount of loss attributable to equity shareholders
dealt with in the Company’s fi nancial statements (15,125) (4,278)
Dividends from subsidiaries attributable to the profi t of
previous fi nancial years, approved during the year 112,661 75,772
Company’s profi t for the year (note 25) 97,536 71,494
----- End of picture text -----

Details of dividends paid and payable to equity shareholders of the Company are set out in note 25(b)(i).

15. OTHER COMPREHENSIVE INCOME

There are no tax effects relating to the exchange differences on translation of fi nancial statements of the Company during the year (2010: nil).

16. EARNINGS PER SHARE

(a) Basic earnings per share

The calculation of basic earnings per share is based on the profi t attributable to ordinary equity shareholders of the Company of RMB238,945 thousand (2010: RMB158,064 thousand) and the weighted average of 563,649 thousand ordinary shares (2010: 565,716 thousand shares) in issue during the year, calculated as follows:

==> picture [423 x 94] intentionally omitted <==

----- Start of picture text -----

Profi t attributable to 2011 2010
ordinary equity shareholders RMB’000 RMB’000
Profi t for the year 238,945 158,064
Profi t attributable to ordinary equity shareholders 238,945 158,064
----- End of picture text -----

Annual Report 2011 89

(Expressed in Renminbi unless otherwise indicated)

16. EARNINGS PER SHARE (CONTINUED)

(a) Basic earnings per share (continued)

==> picture [423 x 154] intentionally omitted <==

----- Start of picture text -----

Weighted average number 2011 2010
of ordinary shares Note ’000 ’000
Issued ordinary shares at 1 January 566,838 564,310
Effect of issues of ordinary shares
upon exercise of share options 24 181 1,406
Effect of purchase of own shares 24 (3,370) —
Weighted average number of ordinary shares
at 31 December 563,649 565,716
----- End of picture text -----

(b) Diluted earnings per share

The calculation of diluted earnings per share is based on the profi t attributable to ordinary equity shareholders of the company of RMB238,945 thousand (2010: RMB158,064 thousand) and the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares of 570,921 thousand shares (2010: 569,298 thousand shares), calculated as follows:

==> picture [423 x 220] intentionally omitted <==

----- Start of picture text -----

Profi t attributable to 2011 2010
ordinary equity shareholders (diluted) RMB’000 RMB’000
Profi t attributable to ordinary
equity shareholders (basic and diluted) 238,945 158,064
Weighted average number 2011 2010
of ordinary shares (diluted) ’000 ’000
Weighted average number of ordinary shares (basic) 563,649 565,716
Effect of share options on issue 7,272 3,582
Weighted average number of ordinary shares
(diluted) at 31 December 570,921 569,298
----- End of picture text -----

90 SinoMedia Holding Limited

17. PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY

==> picture [446 x 550] intentionally omitted <==

----- Start of picture text -----

Fixtures,
fi ttings and
computer Motor Investment
Buildings equipment vehicles Sub-total property Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Original cost
—
Balance at 1 January 2010 50,162 3,457 12,912 66,531 66,531
Additions — 1,005 2,604 3,609 — 3,609
— — —
Disposals (1,452) (1,452) (1,452)
Balance at 31 December 2010 50,162 4,462 14,064 68,688 — 68,688
—
Balance at 1 January 2011 50,162 4,462 14,064 68,688 68,688
Additions — 2,221 6,927 9,148 3,988 13,136
— —
Disposals (925) (2,927) (3,852) (3,852)
Balance at 31 December 2011 50,162 5,758 18,064 73,984 3,988 77,972
Depreciation
Balance at 1 January 2010 3,461 805 5,203 9,469 — 9,469
Depreciation for the year 2,218 834 1,960 5,012 — 5,012
— — —
Disposals (394) (394) (394)
Balance at 31 December 2010 5,679 1,639 6,769 14,087 — 14,087
—
Balance at 1 January 2011 5,679 1,639 6,769 14,087 14,087
Depreciation for the year 1,048 2,780 2,882 6,710 89 6,799
— —
Disposals (922) (2,120) (3,042) (3,042)
Balance at 31 December 2011 6,727 3,497 7,531 17,755 89 17,844
Carrying amounts
At 31 December 2010 44,483 2,823 7,295 54,601 — 54,601
At 31 December 2011 43,435 2,261 10,533 56,229 3,899 60,128
----- End of picture text -----

Annual Report 2011 91

(Expressed in Renminbi unless otherwise indicated)

18. INVESTMENTS IN SUBSIDIARIES

==> picture [446 x 78] intentionally omitted <==

----- Start of picture text -----

The Company
2011 2010
RMB’000 RMB’000
Investment, at cost 223,515 210,854
----- End of picture text -----

As at 31 December 2011, the Company had direct and indirect interests in the following subsidiaries:

==> picture [446 x 64] intentionally omitted <==

----- Start of picture text -----

Proportion of ownership interest
Place and date Registered Group’s Held Held
of incorporation/ and fully effective by the by a Principal
Name of company Note establishment paid capital interest Company subsidiary activities
----- End of picture text -----

Sino-foreign equity joint venture	Sino-foreign equity joint venture	enterprise established in the PRC	enterprise established in the PRC
CTV Golden Bridge	(i)	Shanghai, the PRC	USD30,000,000	99.7%	99.7%	—	Provision of nationwide
International Media	(vii)	23 June 2005					TV advertising coverage
Group Company							and campaign planning,
Limited							and TV advertisement
中視金橋國際傳媒							production services for
集團有限公司							advertisers and
							advertising agents
Foreign venture enterprise established in the Hongkong
CTV Golden Bridge	(ii)	Hong Kong	HKD10,000,000	100%	100%	—	Provision of nationwide
International Media	(vi)	31 May 2011					TV advertising coverage
(Hong Kong)	(vii)						and campaign planning,
Company Limited							and TV advertisement
中視金橋國際傳媒							production services for
（香港）有限公司							advertisers and
							advertising agents

92 SinoMedia Holding Limited

18. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

As at 31 December 2011, the Company had direct and indirect interests in the following subsidiaries: (continued)

==> picture [446 x 60] intentionally omitted <==

Domestic companies	established in the PRC	established in the PRC
CTV Golden Bridge	(iii)	Jiangsu, the PRC	RMB2,000,000	99.7%	—	100%	Provision of nationwide
International Media	(vii)	30 January 2007					TV advertising coverage
Jiangsu Company							and campaign planning,
Limited							and TV advertisement
中視金橋國際傳媒							production services for
江蘇有限公司							advertisers and
							advertising agents
Beijing Taihe Ruishi	(iii)	Beijing, the PRC	RMB3,000,000	99.7%	—	100%	Investment holding
Culture and Media	(vi)	4 November 2008
Company Limited	(vii)
北京太合瑞視文化傳媒
有限公司
Beijing Golden Bridge	(iii)	Beijing, the PRC	RMB28,000,000	89.7%	—	90%	Provision of nationwide
Senmeng Media	(vi)	6 November 2008					advertising coverage and
Advertising Company	(vii)						campaign planning, and
Limited							advertisement production
北京金橋森盟傳媒							services for advertisers
廣告有限公司							and advertising agents
Beijing Jinqiao	(iii)	Beijing, the PRC	RMB3,000,000	99.7%	—	100%	Provision of nationwide
Yunhan Advertising	(vi)	19 October 2009					advertising coverage
Company Limited	(vii)						and campaign planning,
北京金橋雲漢廣告							and advertisement
有限公司							production services
							for advertisers and
							advertising agents

Annual Report 2011 93

(Expressed in Renminbi unless otherwise indicated)

18. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

As at 31 December 2011, the Company had direct and indirect interests in the following subsidiaries: (continued)

==> picture [446 x 64] intentionally omitted <==

----- Start of picture text -----

Proportion of ownership interest
Place and date Registered Group’s Held Held
of incorporation/ and fully effective by the by a
Name of company Note establishment paid capital interest Company subsidiary Principal activities
----- End of picture text -----

Beijing Laite Laide	(iii)	Beijing, the PRC	RMB5,000,000	99.7%	—	100%	Provision of nationwide
Management	(vi)	19 October 2009					advertising coverage
Consultancy	(vii)						and campaign planning,
Company Limited							and advertisement
北京萊特萊德管理							production services
諮詢有限公司							for advertisers and
							advertising agents
CTV Golden Bridge	(iii)	Shanghai, the PRC	RMB50,000,000	99.7%	—	100%	Provision of nationwide
Advertising	(vii)	19 January 2010					advertising coverage
Company Limited							and campaign planning,
中視金橋廣告有限公司							and advertisement
							production services for
							advertisers and advertising
							agents
Beijing Bozhiruicheng	(iii)	Beijing, the PRC	RMB25,000,000	99.7%	—	100%	Investment holding
Information	(v)	23 November 2010
Consultancy	(vi)
Company Limited	(vii)
北京博智瑞誠信息
諮詢有限公司
Beijing Taihe	(iv)	Beijing, the PRC	RMB1,000,000	99.7%	—	100%	Provision of nationwide
Ruishi Advertising	(vi)	8 July 2011					advertising coverage
Company Limited	(vii)						and campaign planning,
北京太合瑞視廣告							and advertisement
有限公司							production services
							for advertisers and
							advertising agents

94 SinoMedia Holding Limited

18. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

As at 31 December 2011, the Company had direct and indirect interests in the following subsidiaries: (continued)

Name of company	Note	Place and date of incorporation/ establishment	Registered and fully paid capital	Proportion of ownership interest Group’s effective interest Held by the Company Held by a subsidiary	Proportion of ownership interest Group’s effective interest Held by the Company Held by a subsidiary	Proportion of ownership interest Group’s effective interest Held by the Company Held by a subsidiary	Principal activities
CTV Golden Bridge	(iii)	Beijing, the PRC	RMB10,000,000	99.7%	—	100%	Advertisement design
Culture Development	(v)	24 November 2011					production, agency
(Beijing) Company	(vi)						and publishing services
Limited	(vii)						sales of computer
中視金橋文化發展							software and ancillary
（北京）有限公司							equipment

Notes:

(i) This entity is invested by the Company and Shanghai CTV Golden Bridge International Culture and Communication Company Limited.

(ii) This entity is invested by the Company

(iii) These eight entities are invested by CTV Golden Bridge International Media Group Company Limited.

(iv) This entity is invested by Beijing Taihe Ruishi Culture and Media Company Limited.

(v) These two entities are controlled by CTV Golden Bridge International Media Group Company Limited through contractual arrangements. (see note 5(b))

(vi) Entities not audited by KPMG.

(vii) The English translation of the names of the above companies is for reference only. The offi cial names of the companies are in Chinese.

Annual Report 2011 95

(Expressed in Renminbi unless otherwise indicated)

19. INVESTMENTS IN EQUITY—ACCOUNTED INVESTEES

==> picture [446 x 124] intentionally omitted <==

----- Start of picture text -----

The Group The Company
2011 2010 2011 2010
RMB’000 RMB’000 RMB’000 RMB’000
— — —
Unlisted shares, at cost 34,846
Share of net assets 47,722 6,000 — —
—
47,722 6,000 34,846
----- End of picture text -----

The following list contains particulars of equity-accounted investees which principally affected the results or assets of the Group:

==> picture [446 x 64] intentionally omitted <==

----- Start of picture text -----

Proportion of ownership interest
Group’s Held Held
Place of Registered effective by the by a
Name of company Note Incorporation capital interest Company subsidiary Principal activities
----- End of picture text -----

Dongfang Kaishi Media	(i)	Beijing, the PRC	RMB5,000,000	18.9%	—	19%	Provision of nationwide
Advertising (Beijing)		29 July 2008					advertising coverage
Company Limited							and campaign planning,
東方凱視傳媒廣告							and advertisement
（北京）有限公司							production services
							for advertisers and
							advertising agents
Beijing Lotour Huicheng	(i)	Beijing, the PRC	RMB5,000,000	37.9%	—	38%	Provision of nationwide
Internet Technology		21 December 2010					advertising coverage
Company Limited							and campaign planning,
北京樂途匯誠網絡							advertisement production
技術有限責任公司							conference service and
							exhibition design
							service for advertisers
							and advertising agents

96 SinoMedia Holding Limited

19. INVESTMENTS IN EQUITY—ACCOUNTED INVESTEES (CONTINUED)

The following list contains particulars of equity-accounted investees which principally affected the results or assets of the Group: (continued)

Name of company	Note Place of Incorporation	Registered capital	Proportion of ownership interest Group’s effective interest Held by the Company Held by a subsidiary	Proportion of ownership interest Group’s effective interest Held by the Company Held by a subsidiary	Proportion of ownership interest Group’s effective interest Held by the Company Held by a subsidiary	Principal activities
FoneNet Inc.	Cayman Islands,	USD180,000	12.5%	12.5%	—	Provision of development
風網股份有限公司	7 July 2004					and production of
						software; undertake
						network engineering,
						technical services,
						technical training and
						consulting ; sales of
						own products

Note:

(i) The English translation of the name of the companies above is for reference only. The offi cial name of the companies is in Chinese.

(a) Dongfang Kaishi Media Advertising (Beijing) Company Limited

Although the Group owns less than 20% of the voting power of Dongfang Kaishi Media Advertising (Beijing) Company Limited, it has signifi cant infl uence over the fi nancial and operating policies by virtue of an agreement with Ms. Gehong who holds 81% of the equity interest in Dongfang Kaishi Media Advertising (Beijing) Company Limited. Pursuant to the agreement, the Group has the power to appoint one of the three directors on the board and to appoint the fi nancial director.

(b) Beijing Lotour Huicheng Internet Technology Company Limited (“Lotour Huicheng”)

Beijing Bozhiruicheng Information Consultancy Company Limited (“Bozhiruicheng”), a subsidiary controlled by the Group through contractual arrangements, owns 38% of the voting power of Lotour Huicheng and has signifi cant infl uence over the fi nancial and operating policies of Lotour Huicheng. Lotour Huicheng was established by Bozhiruicheng and Beijing Lotour Internet Technology Company Limited (“Beijing Lotour”), with registered capital of RMB5,000 thousand as at 31 December 2010, among which Bozhiruicheng holds 38% equity interest of Lotour Huicheng, and Beijing Lotour holds 62% equity interest.

Annual Report 2011 97

(Expressed in Renminbi unless otherwise indicated)

19. INVESTMENTS IN EQUITY—ACCOUNTED INVESTEES (CONTINUED)

(c) FoneNet Inc.

The Company invested in FoneNet Inc. by USD6 million in 2011 and took 12.5% interest in FoneNet Inc. at 31 December 2011. Although the Group owns less than 20% of the voting power of FoneNet Inc., it has signifi cant infl uence over the fi nancial and operating policies through appointing one of the seven directors on the board.

Summary fi nancial information for the equity-accounted investees:

==> picture [423 x 154] intentionally omitted <==

----- Start of picture text -----

Assets Liabilities Equity Revenue Expenses Gain/(Loss)
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
2011
Group’s effective
interest 162,147 (41,079) (121,068) 109,867 (103,185) 6,682
2010
Group’s effective
interest 10,285 (7,669) (2,616) — (6,506) (6,506)
----- End of picture text -----

98 SinoMedia Holding Limited

20. OTHER FINANCIAL ASSETS AND OTHER FINANCIAL LIABILITY

(a) Other non-current fi nancial assets

==> picture [423 x 395] intentionally omitted <==

----- Start of picture text -----

The Group The Company
2011 2010 2011 2010
Note RMB’000 RMB’000 RMB’000 RMB’000
Available-for-sale
equity securities
Ftuan.com (i) — — — —
CNLive (ii) 20,000 — — —
Derivative fi nancial assets
Options
FoneNet Inc.
— Conversion option (iii) 381 — 381 —
— —
— Redemption option (iv) 2,803 2,803
Lotour Huicheng
— Option to purchase
— — —
equity interests (v) 3,838
— —
7,022 3,184
Warrants (vi) 3,425 — 3,425 —
— —
30,447 6,609
----- End of picture text -----

Annual Report 2011 99

(Expressed in Renminbi unless otherwise indicated)

20. OTHER FINANCIAL ASSETS AND OTHER FINANCIAL LIABILITY (CONTINUED)

(a) Other non-current fi nancial assets (continued)

Notes:

(i) The Company invested USD3 million on Ftuan.com, an internet contents provider, and took 5% of equity interest. The company provided 100% impairment to the investment on Ftuan.com by the end of year due to the loss on Ftuan.com fi nancial performance of 2011 and a negative fi nancial forecast for future years.

==> picture [401 x 124] intentionally omitted <==

----- Start of picture text -----

The Group The Company
2011 2010 2011 2010
RMB’000 RMB’000 RMB’000 RMB’000
Original cost 18,952 — 18,952 —
Impairment to the investment
on Ftuan.com (18,952) — (18,952) —
Carrying value at
31 December 2011 — — — —
----- End of picture text -----

(ii) It represents 5% equity investment in CNLive, a mobile TV platforms and service provider.
(iii) The conversion option represents the right to convert preferred shares to common shares of FoneNet Inc. based on a conversion price determined by the fi nancial performance of FoneNet Inc. according to the agreement signed by the Company and FoneNet Inc. in 2011.
(iv) The redemption option represents the right to require FoneNet Inc. to redeem its preferred shares under certain conditions according to the agreement signed by the Company and FoneNet Inc. in 2011.
(v) It represents the rights to obtain 10% of interest of Lotour Huicheng based on the fi nancial performance of Lotour Huicheng according to the term in purchase agreement signed by the Company and Beijing Lotour.
(vi) The warrant represents the right of the Company to purchase approximately 1.25% additional interests of FoneNet Inc. at a certain price according to the agreement signed by the Company and FoneNet Inc. in 2011.

100 SinoMedia Holding Limited

20. OTHER FINANCIAL ASSETS AND OTHER FINANCIAL LIABILITY (CONTINUED)

(a) Other non-current fi nancial assets (continued)

The movements of options and warrants during the year are set out below:

==> picture [423 x 154] intentionally omitted <==

----- Start of picture text -----

The Group The Company
2011 2010 2011 2010
RMB’000 RMB’000 RMB’000 RMB’000
At 31 December 2010 — — — —
Acquisition of other fi nancial
— —
assets in current year 2,989 2,989
— —
Changes in fair value 7,458 3,620
At 31 December 2011 10,447 — 6,609 —
----- End of picture text -----

(b) Other fi nancial liability

Other fi nancial liability as at 31 December 2011 accounted for the present value of the expected consideration to be paid for the acquisition of remaining 10% equity interests in Golden Bridge Senmeng based on the fi nancial performance of Golden Bridge Senmeng according to the agreement signed by CTV Golden Bridge International Media Group Company Limited and Beijing Senmeng and benefi cial owner of Beijing Senmeng in 2010 (see note 5(a)).

The expected consideration to be paid was a derivative fi nancial liability and made based on management’s best estimation and the discount rates were based on the government bond yield curve at the measurement dates.

Annual Report 2011 101

(Expressed in Renminbi unless otherwise indicated)

20. OTHER FINANCIAL ASSETS AND OTHER FINANCIAL LIABILITY (CONTINUED)

(b) Other fi nancial liability (continued)

The movements of other fi nancial liability during the year are set out below:

==> picture [423 x 124] intentionally omitted <==

----- Start of picture text -----

The Group
Note RMB’000
At 31 December 2010 25,528
Exercised of the agreement (i) (11,862)
Net changes in fair value of fi nancial liability 579
At 31 December 2011 14,245
----- End of picture text -----

Note:

(i) The Group purchased 10% equity interest of Golden Bridge Senmeng by cash payment and a certain number of share options of the Company in May 2011 (note 5(a)).

102 SinoMedia Holding Limited

21. DEFERRED TAX ASSETS AND LIABILITIES

(a) Recognised deferred tax (assets) and liabilities

The components of deferred tax (assets)/liabilities recognised in the consolidated statement of fi nancial position and the movements during the year are as follows:

==> picture [424 x 230] intentionally omitted <==

----- Start of picture text -----

Accrual for Tax on
cost of undistributed
services deductible profi ts of Tax loss
Deferred tax arising from in future PRC subsidiaries carry-forwards Totals
RMB’000 RMB’000 RMB’000 Note RMB’000
At 1 January 2010 (3,470) 2,315 (6,309) (7,464)
Charged/(credited) to profi t or loss (3,086) 1,726 4,117 2,757
At 31 December 2010 (6,556) 4,041 (2,192) (4,707)
At 1 January 2011 (6,556) 4,041 (2,192) (4,707)
Charged/(credited) to profi t or loss 3,127 (4,041) 1,978 (i) 1,064
At 31 December 2011 (3,429) — (214) (3,643)
----- End of picture text -----

Note:

(i) Included in this balance, RMB2,192 thousand represents unused tax loss recognised in previous years from a subsidiary of the Company as there is no available taxable profi t in the foreseeable future.

Annual Report 2011 103

(Expressed in Renminbi unless otherwise indicated)

21. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)

(a) Recognised deferred tax (assets) and liabilities (continued)

==> picture [423 x 139] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Net deferred tax asset recognised on the statement
of consolidated fi nancial position (3,643) (8,748)
Net deferred tax liability recognised on the statement
—
of consolidated fi nancial position 4,041
(3,643) (4,707)
----- End of picture text -----

(b) Unrecognised deferred tax liability

At 31 December 2011, temporary differences relating to the undistributed retained earnings of PRC subsidiaries amounted to RMB481,491 thousand (2010: RMB323,314 thousand). Deferred tax liability of RMB48,149 thousand (2010: RMB16,166 thousand) have not been recognised in respect of the tax that would be payable on the distribution of these retained earnings as the Company controls the dividend policy of these subsidiaries and the Directors have determined that those retained earnings are not likely to be distributed in the foreseeable future.

104 SinoMedia Holding Limited

22. TRADE AND OTHER RECEIVABLES

==> picture [446 x 335] intentionally omitted <==

----- Start of picture text -----

The Group The Company
2011 2010 2011 2010
RMB’000 RMB’000 RMB’000 RMB’000
Trade and bills receivables 151,953 134,654 — —
Less: Impairment losses on bad
and doubtful accounts (58,216) (60,115) — —
— —
93,737 74,539
Amounts due from subsidiaries — — 272,387 318,163
Loans and receivables 93,737 74,539 272,387 318,163
Prepayments and deposits to
— —
media suppliers 465,381 334,546
Advances to employees 2,398 3,804 291 905
Other debtors 4,687 5,240 125 131
Less: doubtful accounts of
other receivables (164) — — —
Interest receivables — 979 — —
566,039 419,108 272,803 319,199
----- End of picture text -----

Annual Report 2011 105

(Expressed in Renminbi unless otherwise indicated)

22. TRADE AND OTHER RECEIVABLES (CONTINUED)

(a) Ageing analysis

Included in trade and other receivables are trade and bills receivables with the following ageing analysis as of the reporting date:

==> picture [423 x 214] intentionally omitted <==

----- Start of picture text -----

2011 2010
Gross Impairment Gross Impairment
RMB’000 RMB’000 RMB’000 RMB’000
Current 69,816 — 71,923 —
—
Less than 6 months past due 23,137 6,682 4,066
More than 6 months but less
than 12 months past due 2,132 1,348 1,365 1,365
More than one year past due 56,868 56,868 54,684 54,684
Total amounts past due 82,137 58,216 62,731 60,115
151,953 58,216 134,654 60,115
----- End of picture text -----

Credit terms are granted to the customers, depending on credit assessment carried out by management on an individual basis. The credit terms for trade receivables are generally from nil to 90 days.

The Group’s exposure to credit risks related to trade and other receivables are disclosed in note 31.

106 SinoMedia Holding Limited

22. TRADE AND OTHER RECEIVABLES (CONTINUED)

(b) Impairment of trade and bills receivables

Impairment losses in respect of trade and bills receivables are recorded using an allowance account unless the Group is satisfi ed that recovery of the amount is remote, in which case the impairment loss is written off against trade and bills receivables directly.

The movement in the allowance for impairment in respect of trade and bills receivables during the year is as follows:

==> picture [423 x 139] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Balance at 1 January 60,115 46,871
—
Reversal of impairment loss (2,455)
Uncollectible amounts written off (919) —
Impairment loss recognised 1,475 13,244
Balance at 31 December 58,216 60,115
----- End of picture text -----

At 31 December 2011, the Group’s trade and bills receivables of RMB58,216 thousand (2010: RMB60,115 thousand) were individually determined to be impaired. The individually impaired receivables related to customers that were in fi nancial diffi culties and management assessed that only a portion of the receivables is expected to be recovered. Consequently, specifi c allowances for doubtful debts of RMB58,216 thousand (2010: RMB60,115 thousand) were recognised. The Group does not hold any collateral over these balances.

Annual Report 2011 107

(Expressed in Renminbi unless otherwise indicated)

22. TRADE AND OTHER RECEIVABLES (CONTINUED)

(c) Trade and bills receivables that are not impaired

The ageing analysis of trade and bills receivables that are neither individually nor collectively considered to be impaired are as follows:

==> picture [423 x 169] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Current 69,816 71,923
Less than 6 months past due 23,137 2,616
More than 6 months but less than 12 months past due 784 —
Total amount past due 23,921 2,616
93,737 74,539
----- End of picture text -----

Receivables that were not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a signifi cant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral over these balances.

108 SinoMedia Holding Limited

23. CASH AND CASH EQUIVALENTS

==> picture [446 x 78] intentionally omitted <==

----- Start of picture text -----

The Group The Company
2011 2010 2011 2010
RMB’000 RMB’000 RMB’000 RMB’000
Cash at bank and on hand 913,179 795,791 20,701 33,550
----- End of picture text -----

Cash at bank and cash on hand are denominated in

==> picture [446 x 154] intentionally omitted <==

----- Start of picture text -----

The Group The Company
2011 2010 2011 2010
RMB’000 RMB’000 RMB’000 RMB’000
RMB 884,321 762,241 — —
USD 13,026 32,444 12,217 32,444
AUD 8 9 8 9
HKD 15,824 1,097 8,476 1,097
913,179 795,791 20,701 33,550
----- End of picture text -----

Annual Report 2011 109

(Expressed in Renminbi unless otherwise indicated)

24. SHARE CAPITAL

(a) Authorised and issued share capital

==> picture [423 x 290] intentionally omitted <==

----- Start of picture text -----

2011 2010
Nominal Nominal
No. of value of No. of value of
ordinary ordinary ordinary ordinary
shares shares shares shares
HKD HKD
Authorised:
At 1 January and 31 December 1,800,000,000 562,500 1,800,000,000 562,500
Issued and fully paid
At 1 January 566,838,400 177,137 564,310,400 176,347
Shares issued under share
option scheme 405,000 126 2,528,000 790
Purchase of own shares (10,218,000) (3,193) — —
At 31 December 557,025,400 174,070 566,838,400 177,137
RMB equivalent 171,376 173,872
----- End of picture text -----

110 SinoMedia Holding Limited

24. SHARE CAPITAL (CONTINUED)

(b) Purchase of own shares

During the year, the company repurchased its own ordinary shares on The Stock Exchange of Hong Kong Limited as follows:

==> picture [423 x 184] intentionally omitted <==

----- Start of picture text -----

Number
of shares Highest price Lowest price Aggregate
repurchased paid per share paid per share price paid Equivalent to
Month/year HKD HKD HKD’000 RMB’000
June 2011 851,000 2.70 2.39 2,151 1,761
July 2011 402,000 2.70 2.68 1,085 888
August 2011 1,711,000 2.62 2.35 4,273 3,498
September 2011 6,754,000 2.58 2.00 15,609 12,779
October 2011 500,000 1.97 1.92 972 796
24,090 19,722
----- End of picture text -----

The repurchased shares were cancelled and accordingly the issued share capital of the Company was reduced by the nominal value of these shares. Pursuant to section 49H of the Hong Kong Companies Ordinance, an amount equivalent to the par value of the shares cancelled of HKD3,193 (equivalent to approximately RMB2,601) was transferred from retained profi ts to the capital redemption reserve.

(c) Terms of unexpired and unexercised share options at the end of reporting period

(i) Pre-IPO Scheme

A pre-IPO share options holder may exercise a maximum of 25% of the total number of the preIPO share options granted after the elapse of 365 days from the acceptance of the pre-IPO share options. Subsequently, for every full year of continuous service with the Company, the holder may exercise a maximum of another 25% of the total number of the pre-IPO share options granted, up to eight years from the date on which the pre-IPO share options are granted.

Exercisable period of the pre-IPO share options granted to employees of the Group commences on 8 January 2009 and expires on a date ranging from 3 July 2015 to 6 March 2016 (depending on their respective date of grant of the option), subject to the vesting requirement mentioned above.

At 31 December 2011, there were 14,360,000 unexercised pre-IPO share options (2010: 14,408,000) at an exercise price of RMB1.56.

Annual Report 2011

111

(Expressed in Renminbi unless otherwise indicated)

24. SHARE CAPITAL (CONTINUED)

(c) Terms of unexpired and unexercised share options at the end of reporting period (continued)

(ii) Post-IPO Scheme

The Company has adopted share option schemes on 27 May 2008 (the “Post-IPO Scheme”)

==> picture [423 x 424] intentionally omitted <==

----- Start of picture text -----

Exercise period Exercise price 2011 Number 2010 Number
17 September 2009 to 16 September 2017 HKD1.49 165,000 165,000
17 September 2010 to 16 September 2017 HKD1.49 165,000 165,000
17 September 2011 to 16 September 2017 HKD1.49 165,000 165,000
17 September 2012 to 16 September 2017 HKD1.49 165,000 165,000
2 July 2011 to 1 July 2018 HKD1.84 4,835,000 4,835,000
2 July 2012 to 1 July 2018 HKD1.84 4,835,000 4,835,000
2 July 2013 to 1 July 2018 HKD1.84 4,835,000 4,835,000
2 July 2014 to 1 July 2018 HKD1.84 4,835,000 4,835,000
22 November 2011 to 21 November 2018 HKD2.82 325,000 325,000
22 November 2012 to 21 November 2018 HKD2.82 325,000 325,000
22 November 2013 to 21 November 2018 HKD2.82 325,000 325,000
22 November 2014 to 21 November 2018 HKD2.82 325,000 325,000
6 December 2011 to 5 December 2018 HKD2.88 265,000 265,000
6 December 2012 to 5 December 2018 HKD2.88 265,000 265,000
6 December 2013 to 5 December 2018 HKD2.88 265,000 265,000
6 December 2014 to 5 December 2018 HKD2.88 265,000 265,000
29 August 2012 to 28 August 2019 HKD2.62 635,000 —
29 August 2013 to 28 August 2019 HKD2.62 635,000 —
29 August 2014 to 28 August 2019 HKD2.62 635,000 —
29 August 2015 to 28 August 2019 HKD2.62 635,000 —
24,900,000 22,360,000
----- End of picture text -----

112 SinoMedia Holding Limited

24. SHARE CAPITAL (CONTINUED)

(c) Terms of unexpired and unexercised share options at the end of reporting period

(continued)

(ii) Post-IPO Scheme (continued)

Each option entitles the holder to subscribe for one ordinary share in the Company. Further details of these options are set out in note 27 to the fi nancial statements.

At 31 December 2011, there were 22,420,000 unexercised post-IPO share options (2010: 22,360,000).

(iii) Purchase of non-controlling interests

On 4 July 2011, the Company has granted options to subscribe for total 4,286,970 shares to Mr. Yang Linshan, the benefi cial owner of Beijing Senmeng, as part of the consideration to purchase non-controlling interests of Golden Bridge Senmeng owned by Beijing Senmeng (see note 5(a) and 27(c)). Each option entitles the holder to purchase one ordinary share of the Company.

At 31 December 2011, there were 4,286,970 unexercised share options for purchasing of noncontrolling interests of Golden Bridge Senmeng.

Annual Report 2011 113

(Expressed in Renminbi unless otherwise indicated)

25. RESERVES AND DIVIDENDS

(a) Movements in components of reserves

The reconciliation between the opening and closing balances of each component of the Group’s reserves is set out in the Consolidated Statement of Changes in Equity. Details of the changes in the Company’s individual components of reserves between the beginning and the end of the year are set out below:

==> picture [423 x 395] intentionally omitted <==

----- Start of picture text -----

Capital
Share redemption Capital Translation Retained
premium reserve reserve reserve earnings Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note 25(c)) (note 25(c)) (note 25(c))
Balance at 1 January 2010 461,741 18 17,414 (4,494) 33,247 507,926
Changes in equity for 2010:
— — — —
Share-based payments (note 27) 3,362 3,362
— — —
Exercise of share option 6,665 (2,746) 3,919
Dividends — — — — (17,786) (17,786)
Total comprehensive income
— — —
for the year (16,473) 71,494 55,021
Balance at 31 December 2010 468,406 18 18,030 (20,967) 86,955 552,442
Balance at 1 January 2011 468,406 18 18,030 (20,967) 86,955 552,442
Changes in equity for 2011:
— — — —
Share-based payments (note 27) 14,487 14,487
Exercise of share option 803 — (186) — — 617
Purchase of own shares — 3 — — (19,722) (19,719)
Dividends — — — — (62,224) (62,224)
Total comprehensive income
— — —
for the year (27,111) 97,536 70,425
Balance at 31 December 2011 469,209 21 32,331 (48,078) 102,545 556,028
----- End of picture text -----

114 SinoMedia Holding Limited

25. RESERVES AND DIVIDENDS (CONTINUED)

(b) Dividends

(i) Dividends payable to equity shareholders of the Company attributable to the year

==> picture [401 x 214] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Final dividend proposed after the end of reporting
period date of approximately RMB8.6 cents per
ordinary share (2010: approximately RMB5.6 cents
per ordinary share) 48,002 31,472
Special dividend proposed after the end of reporting
period date of approximately RMB8.6 cents per
ordinary share (2010: approximately RMB5.6 cents
per ordinary share) 48,002 31,472
96,004 62,944
----- End of picture text -----

The fi nal dividend and the special dividend proposed after the end of reporting period have not been recognised as a liability at the end of reporting period.

(ii) Dividends payable to equity shareholders of the Group attributable to the previous fi nancial year approved during the year

==> picture [401 x 109] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Dividends to equity shareholders of the Company 62,224 17,786
Dividends to non-controlling interests of a subsidiary 630 —
62,854 17,786
----- End of picture text -----

Pursuant to the board resolutions dated 20 May 2011, the Company declared dividends at an aggregate amount of HKD74,823 thousand (equivalent to approximately RMB62,224 thousand at an exchange rate of 0.83162) to the equity shareholders from the distributable reserve. Such dividends were fully paid in June 2011.

Annual Report 2011 115

(Expressed in Renminbi unless otherwise indicated)

25. RESERVES AND DIVIDENDS (CONTINUED)

(c) Nature and purpose of reserves

(i) Share premium and capital redemption reserve

The application of the share premium account and the capital redemption reserve is governed by Sections 48B and 49H respectively of the Hong Kong Companies Ordinance.

(ii) Capital reserve

The capital reserve comprises the portion of the grant date fair value of unexercised share options granted to employees and directors of the Group that has been recognised in accordance with the accounting policy adopted for share-based payments in note 3(h)(iii).

(iii) Statutory reserve

Pursuant to applicable PRC regulations, certain PRC subsidiaries are required to transfer 10% of their profi t after income tax (after offsetting prior year’s losses, if applicable) to statutory reserve until such reserve reaches 50% of the registered capital. The transfer to the reserve must be made before distribution of dividends to equity holders. The statutory reserve can be utilised, upon approval by the relevant authorities, to offset accumulated losses or to increase registered capital of the subsidiary, provided that the balance after such issue is not less than 25% of its registered capital.

(iv) Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the fi nancial statements presented in any currencies other than RMB which are dealt with in accordance with the accounting policies as set out in note3(b).

(v) Other reserves

Other reserves comprise the following parts:

the offsetting entry of the present value of the expected consideration to be paid for the acquisition of the non-controlling interests of a subsidiary (note 20); and
the difference between the carrying amount of the net assets received and the consideration paid, as a result of the reorganization during which the Company acquired subsidiaries from the ultimate controlling shareholders of the Group in 2006 and 2007.

116 SinoMedia Holding Limited

25. RESERVES AND DIVIDENDS (CONTINUED)

(c) Nature and purpose of reserves (continued)

(vi) Distributability of reserves

At 31 December 2011 the aggregate amount of reserves available for distribution to equity shareholders of the Company was RMB102,545 thousand (2010: RMB86,955 thousand).

26. TRADE AND OTHER PAYABLES

==> picture [446 x 230] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Trade and bills payables (i) 432,475 130,949
Payroll and welfare expenses payables 14,681 11,266
Other tax payables (ii) 11,726 18,801
Other payables and accrued charges 8,301 6,548
Dividends payable due to non-controlling
interest of a subsidiary 646 16
Financial liabilities measured at amortised cost 467,829 167,580
Advances from customers (iii) 275,031 201,605
742,860 369,185
----- End of picture text -----

(i) An ageing analysis of trade and bills payables is as follows:

==> picture [423 x 124] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Due within three months 94,925 130,949
Due after three months but within six months 105,235 —
—
Due after six months but within one year 232,315
432,475 130,949
----- End of picture text -----

Annual Report 2011 117

(Expressed in Renminbi unless otherwise indicated)

26. TRADE AND OTHER PAYABLES (CONTINUED)

(ii) Other tax payables mainly comprised business tax payable and surcharges payable.
(iii) Advances from customers represented the down-payments received from customers, which are expected to be recognised as revenue within one year.

The Group’s exposure to liquidity risk related to trade and other payables is disclosed in note 30.

27. SHARE-BASED PAYMENTS

(a) Pre-IPO Share Option Scheme

On 1 July 2007, the Group granted share options to employees of the Group, including directors of any companies in the Group, to subscribe for shares of the Company. Each option entitles the holder to purchase one ordinary share of the Company. The consideration for the acceptance of the option is RMB0.1 per option.

Pursuant to the written resolutions of the directors of the Company passed on 24 April 2008, each of the share option granted was sub-divided into 3.2 share options and the exercise price of share option was divided by 3.2 accordingly. The number and exercise price of share option granted have been retrospectively adjusted for the effects of the share subdivision as if the share option subdivision had took place as at the grant date.

The share options granted vest in instalments over 4 years. Each instalment is accounted for as a separate share-based payment arrangement.

(i) The terms and conditions of the grants that exist during the years are as follows:

==> picture [401 x 123] intentionally omitted <==

----- Start of picture text -----

Contractual
Number of life of
Grant date options Vesting conditions options
1 July 2007 4,400,000 One year’s service 8 years
1 July 2007 3,472,000 Two years’ service 8 years
1 July 2007 3,584,000 Three years’ service 8 years
1 July 2007 2,904,000 Four years’ service 8 years
----- End of picture text -----

118 SinoMedia Holding Limited

27. SHARE-BASED PAYMENTS (CONTINUED)

(a) Pre-IPO Share Option Scheme (continued)

(ii) The number and weighted average exercise prices of share options are as follows:

==> picture [401 x 229] intentionally omitted <==

----- Start of picture text -----

2011 2010
Weighted Weighted
average average
exercise Number of exercise Number of
price options price options
Outstanding at the
beginning of the year RMB1.56 14,408,000 RMB1.56 17,920,000
Exercised during the year RMB1.56 — RMB1.56 2,528,000
Forfeited during the year RMB1.56 48,000 RMB1.56 984,000
Outstanding at the end
of the year 14,360,000 14,408,000
Exercisable at the end
of the year 14,304,000 11,456,000
----- End of picture text -----

The options outstanding as at 31 December 2011 had an exercise price of RMB1.56 per share and a weighted average remaining contractual life of 3.5 years.

Annual Report 2011 119

(Expressed in Renminbi unless otherwise indicated)

27. SHARE-BASED PAYMENTS (CONTINUED)

(a) Pre-IPO Share Option Scheme (continued)

(iii) Fair value of share options and assumptions

The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. The estimate of the fair value of the share options granted was measured based on a binominal lattice model, with following input:

==> picture [402 x 124] intentionally omitted <==

----- Start of picture text -----

1 July 2007
Share price RMB2.31
Exercise price RMB1.56
Expected volatility 34.39%
Option life 8 years
Expected dividends 0.00%
Risk-free interest rate 4.17%
----- End of picture text -----

The expected volatility is based on average implied volatility of comparable companies in the media industry as at 1 July 2007 used in modelling under binomial option pricing model. Expected dividends are based on management estimate. Changes in the subjective input assumptions could materially affect the fair value estimate.

Share options are granted under a service condition. The condition has not been taken into account in the grant date fair value measurement of the services received. There was no market condition associated with the share option grants.

During the year ended 31 December 2011, equity-settled share-based payments expenses of RMB430 thousand (2010: RMB602 thousand) in respect of the Pre-IPO Share Option Scheme were recognised in the consolidated income statements.

120 SinoMedia Holding Limited

27. SHARE-BASED PAYMENTS (CONTINUED)

(b) Post-IPO Share Option Scheme

Pursuant to the ordinary resolutions of the shareholders of the Company passed on 27 May 2008, the Company has adopted a share option scheme (the “Post-IPO Scheme”) whereby directors of the Company may, at their discretion, invite any full time employee, director or any person approved by the Board or shareholders of the Company to take up options which entitle them to subscribe for shares of the Company.

Up to 31 December 2011, the Company granted fi ve tranches of share option under Post-IPO Scheme.

(i) The terms and conditions of the grants that exist during the years are as follows:

(1) Post-IPO 1[st] tranche

On 17 September 2009, the Group granted share options to three independent non-executive directors of the Group, to subscribe for shares of the Company. Each option entitles the holder to purchase one ordinary share of the Company.

The share options granted vest in instalments over 3 years. Each instalment is accounted for as a separate share-based payment arrangement.

The terms and conditions of the grants that exist during the years are as follows:

==> picture [378 x 123] intentionally omitted <==

----- Start of picture text -----

Contractual
Number of life of
Grant date options Vesting conditions options
17 September 2009 165,000 On the date of grant 8 years
17 September 2009 165,000 One year’s service 8 years
17 September 2009 165,000 Two years’ service 8 years
17 September 2009 165,000 Three years’ service 8 years
----- End of picture text -----

Annual Report 2011 121

(Expressed in Renminbi unless otherwise indicated)

27. SHARE-BASED PAYMENTS (CONTINUED)

(b) Post-IPO Share Option Scheme (continued)

(i) The terms and conditions of the grants that exist during the years are as follows: (continued)

(2) Post-IPO 2[nd] tranche

On 2 July 2010, the Group granted share options to full time employee and two directors of the Group, to subscribe for shares of the Company. Each option entitles the holder to purchase one ordinary share of the Company.

The share options granted vest in instalments over 4 years. Each instalment is accounted for as a separate share-based payment arrangement.

The terms and conditions of the grants that exist during the years are as follows:

==> picture [378 x 123] intentionally omitted <==

----- Start of picture text -----

Contractual
Number of life of
Grant date options Vesting conditions options
2 July 2010 4,835,000 One year’s service 8 years
2 July 2010 4,835,000 Two years’ service 8 years
2 July 2010 4,835,000 Three years’ service 8 years
2 July 2010 4,835,000 Four years’ service 8 years
----- End of picture text -----

(3) Post-IPO 3[rd] tranche

On 22 November 2010, the Group granted share options to full time employee of the Group, to subscribe for shares of the Company. Each option entitles the holder to purchase one ordinary share of the Company.

The share options granted vest in instalments over 4 years. Each instalment is accounted for as a separate share-based payment arrangement.

122 SinoMedia Holding Limited

27. SHARE-BASED PAYMENTS (CONTINUED)

(b) Post-IPO Share Option Scheme (continued)

(i) The terms and conditions of the grants that exist during the years are as follows: (continued)
(3) Post-IPO 3[rd] tranche (continued)

The terms and conditions of the grants that exist during the years are as follows:

==> picture [378 x 123] intentionally omitted <==

----- Start of picture text -----

Contractual
Number of life of
Grant date options Vesting conditions options
22 November 2010 125,000 One year’s service 8 years
22 November 2010 125,000 Two years’ service 8 years
22 November 2010 125,000 Three years’ service 8 years
22 November 2010 125,000 Four years’ service 8 years
----- End of picture text -----

(4) Post-IPO 4[th] tranche

On 6 December 2010, the Group granted share options to full time employee of the Group, to subscribe for shares of the Company. Each option entitles the holder to purchase one ordinary share of the Company.

The share options granted vest in instalments over 4 years. Each instalment is accounted for as a separate share-based payment arrangement.

The terms and conditions of the grants that exist during the years are as follows:

==> picture [378 x 124] intentionally omitted <==

----- Start of picture text -----

Contractual
Number of life of
Grant date options Vesting conditions options
6 December 2010 225,000 One year’s service 8 years
6 December 2010 225,000 Two years’ service 8 years
6 December 2010 225,000 Three years’ service 8 years
6 December 2010 225,000 Four years’ service 8 years
----- End of picture text -----

Annual Report 2011 123

(Expressed in Renminbi unless otherwise indicated)

27. SHARE-BASED PAYMENTS (CONTINUED)

(b) Post-IPO Share Option Scheme (continued)

(i) The terms and conditions of the grants that exist during the years are as follows: (continued)

(5) Post-IPO 5[th] tranche

On 29 August 2011, the Group granted share options to full time employee of the Group, to subscribe for shares of the Company. Each option entitles the holder to purchase one ordinary share of the Company.

The share options granted vest in instalments over 4 years. Each instalment is accounted for as a separate share-based payment arrangement.

The terms and conditions of the grants that exist during the years are as follows:

==> picture [378 x 123] intentionally omitted <==

----- Start of picture text -----

Contractual
Number of life of
Grant date options Vesting conditions options
29 August 2011 635,000 One year’s service 8 years
29 August 2011 635,000 Two years’ service 8 years
29 August 2011 635,000 Three years’ service 8 years
29 August 2011 635,000 Four years’ service 8 years
----- End of picture text -----

124 SinoMedia Holding Limited

27. SHARE-BASED PAYMENTS (CONTINUED)

(b) Post-IPO Share Option Scheme (continued)

(ii) The number and weighted average exercise prices of share options are as follows:

==> picture [381 x 270] intentionally omitted <==

----- Start of picture text -----

Post-IPO Option Post-IPO Option Post-IPO Option Post-IPO Option Post-IPO Option
1 [st] tranche 2 [nd] tranche 3 [rd] tranche 4 [th] tranche 5 [th] tranche Total
Average Average Average Average Average
exercise No. of exercise No. of exercise No. of exercise No. of exercise No. of No. of
price options price options price options price options price options options
At 1 January 2010 HKD1.49 660,000 — — — — 660,000
Granted — HKD1.84 19,580,000 HKD2.82 1,300,000 HKD2.88 1,060,000 — 21,940,000
Exercised — — — — — —
Lapsed — HKD1.84 240,000 — — — 240,000
At 31 December 2010 HKD1.49 660,000 HKD1.84 19,340,000 HKD2.82 1,300,000 HKD2.88 1,060,000 — 22,360,000
At 1 January 2011 HKD1.49 660,000 HKD1.84 19,340,000 HKD2.82 1,300,000 HKD2.88 1,060,000 — 22,360,000
Granted — — — — HKD2.62 2,540,000 2,540,000
Exercised — HKD1.84 405,000 — — — 405,000
Lapsed — HKD1.84 1,115,000 HKD2.82 800,000 HKD2.88 160,000 — 2,075,000
At 31 December 2011 HKD1.49 660,000 HKD1.84 17,820,000 HKD2.82 500,000 HKD2.88 900,000 HKD2.62 2,540,000 22,420,000
Currently exercisable as
at 31 December 2011 HKD1.49 495,000 HKD1.84 4,395,000 HKD2.82 125,000 HKD2.88 225,000 — 5,240,000
----- End of picture text -----

The options of Post-IPO 1[st] tranche outstanding as at 31 December 2011 had an exercise price of HKD1.49 per share and a weighted average remaining contractual life of 5.75 years.

The options of Post-IPO 2[nd] tranche outstanding as at 31 December 2011 had an exercise price of HKD1.84 per share and a weighted average remaining contractual life of 6.5 years.

The options of Post-IPO 3[rd] tranche outstanding as at 31 December 2011 had an exercise price of HKD2.82 per share and a weighted average remaining contractual life of 6.9 years.

The options of Post-IPO 4[th] tranche outstanding as at 31 December 2011 had an exercise price of HKD2.88 per share and a weighted average remaining contractual life of 6.95 years.

The options of Post-IPO 5[th] tranche outstanding as at 31 December 2011 had an exercise price of HKD2.62 per share and a weighted average remaining contractual life of 7.33 years.

Annual Report 2011 125

(Expressed in Renminbi unless otherwise indicated)

27. SHARE-BASED PAYMENTS (CONTINUED)

(b) Post-IPO Share Option Scheme (continued)

(iii) Fair value of share options and assumptions

==> picture [401 x 199] intentionally omitted <==

----- Start of picture text -----

Share Option life
price at (expressed Risk-free
Date of grant Exercise Expected as weighted Expected interest
grant date price volatility average life) dividends rate
Post-IPO 1 [st] tranche 17 September HKD1.49 HKD1.49 43.77% 8 years 2.49% 2.16%
2009
Post-IPO 2 [nd] tranche 2 July 2010 HKD1.74 HKD1.84 46.17% 8 years 1.61% 2.09%
Post-IPO 3 [rd] tranche 22 November HKD2.82 HKD2.82 45.72% 8 years 1.30% 2.02%
2010
Post-IPO 4 [th] tranche 6 December HKD2.88 HKD2.88 45.70% 8 years 1.30% 2.16%
2010
Post-IPO 5 [th] tranche 29 August HKD2.60 HKD2.62 41.47% 8 years 2.94% 1.74%
2011
----- End of picture text -----

The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected change to future volatility based on publicly available information. Expected dividends are based on historical dividends. Changes in the subjective input assumptions could materially affect the fair value estimate.

Share options are granted mainly under a service condition. The condition has not been taken into account in the grant date fair value measurement of the services received. There was no market condition associated with the share option grants.

During the year ended 31 December 2011, equity-settled share-based payments expenses of RMB4,215 thousand (2010: 2,760 thousand) in respect of the Post-IPO Share Option Scheme were recognised in the consolidated income statements.

126 SinoMedia Holding Limited

27. SHARE-BASED PAYMENTS (CONTINUED)

(c) Purchase of non-controlling interests

On 4 July 2011, the Company has granted options to subscribe for total 4,286,970 shares to Mr. Yang Linshan, the benefi cial owner of Beijing Senmeng, as part of the consideration to purchase non-controlling interests of Golden Bridge Senmeng owned by Beijing Senmeng (see note 5(a)). Each option entitles the holder to purchase one ordinary share of the Company.

The term and condition of the grant that exist during the year is as follows:

==> picture [423 x 63] intentionally omitted <==

----- Start of picture text -----

Number of Contractual life
Grant date options Vesting conditions of options
4 July 2011 4,286,970 On the date of grant 5 years
----- End of picture text -----

28. COMMITMENTS AND CONTINGENT LIABILITIES

(a) Capital commitment

Capital commitment outstanding at 31 December 2011 not provided for in the fi nancial statements is as follows:

==> picture [423 x 64] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Contracted for 28,000 —
----- End of picture text -----

(b) Operating commitments

As at 31 December 2011, non-cancellable rentals payable by the Group are as follows:

==> picture [423 x 109] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Within one year 5,745 1,757
After one year but within fi ve years 4,362 1,088
Total 10,107 2,845
----- End of picture text -----

Annual Report 2011 127

(Expressed in Renminbi unless otherwise indicated)

28. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)

(b) Operating commitments (continued)

As at the reporting date, non-cancellable contracts for purchasing advertisement resources payable by the Group are as follows:

==> picture [423 x 109] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Within one year 106,180 117,766
After one year but within fi ve years 700 18,594
Total 106,880 136,360
----- End of picture text -----

(c) Contingent liabilities

As at 31 December 2011, the Group and the Company did not have any signifi cant contingent liabilities.

29. MATERIAL RELATED PARTY TRANSACTIONS

(a) Transactions with the ultimate controlling shareholder of the Group

The Group had the following transactions with the ultimate controlling shareholder of the Group that were carried out in the normal course of business:

==> picture [423 x 63] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Rental of offi ce (i) 972 972
----- End of picture text -----

Note:

(i) Golden Bridge Senmeng rented the offi ce in Xinzhou Commercial Building from Ms. Liu Jinlan, the ultimate controlling shareholder of the Group, at a price of RMB972 thousand for the year ended 31 December 2011 and 2010.

128 SinoMedia Holding Limited

29. MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)

(b) Transactions with other related parties

==> picture [423 x 78] intentionally omitted <==

----- Start of picture text -----

2011 2010
Note RMB’000 RMB’000
Rental of offi ce (i) 650 578
Purchase of media inspection reports (ii) 750 700
----- End of picture text -----

Notes:

(i) CTV Golden Bridge International Media Group Company Limited, a subsidiary of the Company, rented an offi ce from Shanghai CTV Golden Bridge International Culture and Communication Company Limited, which was effectively controlled by the ultimate controlling shareholder of the Group for the period from 1 January 2011 to 31 December 2011 at a price of RMB650 thousand per annual. The amount of rent charged under the lease was determined with reference to amounts charged by Shanghai CTV Golden Bridge International Culture and Communication Company Limited to third parties.
(ii) CTV Golden Bridge International Media Group Company Limited purchased the media inspection reports from Beijing Zhongguang Chuanhua Film Culture Consultancy Company Limited, an entity under the control by Mr. Chen Xin and Ms. Liu Jinlan, executive directors of the Company, at a price of RMB750 thousand in 2011 (2010: RMB700 thousand).

(c) Outstanding balance with related parties

==> picture [423 x 64] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Rental of offi ce 1,974 1,646
----- End of picture text -----

The balance represents non-cancellable rentals payable by the Group to Ms. Liu Jinlan and Shanghai CTV Golden Bridge International Culture and Communication Company Limited for the rentals of 2012 and 2013.

Annual Report 2011 129

(Expressed in Renminbi unless otherwise indicated)

29. MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)

(d) Key management personnel remuneration

Remuneration for key management personnel of the Group is as follows:

==> picture [423 x 109] intentionally omitted <==

----- Start of picture text -----

2011 2010
RMB’000 RMB’000
Short-term employee benefi ts 5,581 3,036
Equity-settled share-based payment transactions 658 496
6,239 3,532
----- End of picture text -----

Total remuneration is included in “Personnel expenses” (see note 9).

30. FINANCIAL INSTRUMENTS

Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the Group’s business.

The group’s exposure to these risks and the fi nancial risk management policies and practices used by the group to manage these risks are described below.

(a) Credit risk

Credit risk is the risk of fi nancial loss to the Group if a customer or counterparty to a fi nancial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

(i) Trade and other receivables

The Group’s credit risk is primarily attributable to trade and other receivables. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

130 SinoMedia Holding Limited

30. FINANCIAL INSTRUMENTS (CONTINUED)

(a) Credit risk (continued)

(i) Trade and other receivables (continued)

In respect of trade and other receivables, individual credit evaluations are performed on all customers requiring credit over a certain amount. These evaluations focus on the customer’s past history of making payments when due and current ability to pay, and take into account information specifi c to the customer as well as pertaining to the economic environment in which the customer operates. Trade receivables are normally due within 90 days from the date of billing. Debtors with overdue balances are requested to settle all outstanding balances before any further credit is granted. Normally, the Group does not obtain collateral from customers.

The Group’s exposure to credit risk is infl uenced mainly by the individual characteristics of each customer. The default risk of the industry in which customers operate also has an infl uence on credit risk but to a lesser extent. The Group has no signifi cant concentrations of credit risk. At 31 December 2011, 2.63% (2010: 3.43%) and 8.13% (2010: 11.07%) of the total current trade and other receivables was due from the group’s largest customer and the fi ve largest customers in term of outstanding balance respectively.

The maximum exposure to credit risk without taking account of any collateral is represented by the carrying amount of trade and other receivables in the statement of fi nancial position after deducting any impairment allowance. The Group does not provide any other guarantees which would expose the Group to credit risk.

Further quantitative disclosures in respect of the Group’s exposure to credit risk arising from trade and other receivables are set out in note 22 and 30.

(ii) Cash and cash equivalents

The Group mitigates its exposure to credit risk by depositing in fi nancial institutions in Hong Kong with high credit ratings assigned by international credit-rating agencies and state-controlled fi nancial institutions with good reputations in mainland China.

Annual Report 2011 131

(Expressed in Renminbi unless otherwise indicated)

30. FINANCIAL INSTRUMENTS (CONTINUED)

(b) Liquidity risk

Individual operating entities within the Group are responsible for their own cash management, including the short term investment of cash surpluses and the raising of loans to cover expected cash demands, subject to approval by the parent company’s board when the borrowings exceed certain predetermined levels of authority. The group’s policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains suffi cient reserves of cash and readily realisable marketable securities and adequate committed lines of funding from major fi nancial institutions to meet its liquidity requirements in the short and longer term.

The following tables show the remaining contractual maturities at the end of reporting period of the Group’s and the Company’s fi nancial liabilities, which are based on contractual undiscounted cash fl ows at the earliest date the Group and the Company can be required to pay:

The Group

==> picture [423 x 379] intentionally omitted <==

----- Start of picture text -----

2011
Contractual undiscounted cash outfl ow
More than More than
Within 1 year but 2 years but
1 year or less than less than More than Carrying
on demand 2 years 5 years 5 years Total amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and
— — —
other payables 467,829 467,829 467,829
Other
— — —
fi nancial liability 15,513 15,513 14,245
2010
Contractual undiscounted cash outfl ow
More than More than
Within 1 year but 2 years but
1 year or less than less than More than Carrying
on demand 2 years 5 years 5 years Total amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and
— — —
other payables 167,580 167,580 167,580
Other
— —
fi nancial liability 12,064 15,652 27,716 25,528
----- End of picture text -----

Excludes advances from customers

132 SinoMedia Holding Limited

30. FINANCIAL INSTRUMENTS (CONTINUED)

(b) Liquidity risk (continued)

The Company

==> picture [423 x 153] intentionally omitted <==

==> picture [423 x 154] intentionally omitted <==

----- Start of picture text -----

2010
Contractual undiscounted cash outfl ow
More than More than
Within 1 year but 2 years but
1 year or less than less than More than Carrying
on demand 2 years 5 years 5 years Total amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and
— — —
other payables 10,987 10,987 10,987
----- End of picture text -----

Annual Report 2011 133

(Expressed in Renminbi unless otherwise indicated)

30. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Foreign currency risk

The Group has foreign currency risk as certain cash and cash equivalents are denominated in Australia Dollars and United States Dollars, representing approximately 1% of the total cash and cash equivalents of the Group. Major business operations of the Group are carried out in Renminbi.

(i) Exposure to currency risk

The following table details the Group’s and the Company’s exposure at the end of reporting period to currency risk arising from recognised assets or liabilities denominated in a currency other than the functional currency of the entity to which they relate. For presentation purposes, the amounts of the exposure are shown in Renminbi, translated using the spot rate at the year end date. Differences resulting from the translation of the fi nancial statements of foreign operations into the Group’s presentation currency are excluded.

==> picture [401 x 199] intentionally omitted <==

----- Start of picture text -----

The Group The Company
2011 2010 2011 2010
RMB’000 RMB’000 RMB’000 RMB’000
Trade and
other receivables 983 1,036 416 1,036
Cash and
cash equivalents 13,034 32,453 12,225 32,453
— in USD 13,026 32,444 12,217 32,444
— in AUD 8 9 8 9
Trade and other payables (949) (1,285) (1,295) (1,285)
Gross exposure 13,034 32,453 12,225 32,453
----- End of picture text -----

The following signifi cant exchange rates applied during the year:

==> picture [401 x 93] intentionally omitted <==

----- Start of picture text -----

Average rate Reporting date spot rate
RMB 2011 2010 2011 2010
USD 6.4618 6.7255 6.3009 6.6227
AUD 6.5616 6.4217 6.4093 6.7139
----- End of picture text -----

134 SinoMedia Holding Limited

30. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Foreign currency risk (continued)

(ii) Sensitivity analysis

The following table indicates the instantaneous change in the Group’s profi t after tax (and retained earnings) that would arise if foreign exchange rates to which the Group has signifi cant exposure at the end of reporting period had changed at that date, assuming all other risk variable remained constant.

The Group and the Company

==> picture [401 x 183] intentionally omitted <==

----- Start of picture text -----

2011 2010
Increase/ Effect on Increase/ Effect on
(decrease) profi t (decrease) profi t
in foreign after tax in foreign after tax
exchange and retained exchange and retained
rates profi ts rates profi ts
RMB’000 RMB’000
USD 10% 1,303 10% 3,244
(10%) (1,303) (10%) (3,244)
AUD 10% 1 10% 1
(10%) (1) (10%) (1)
----- End of picture text -----

Results of the analysis as presented in the above table represent an aggregation of the instantaneous effects on each of the Group entities’ profi t after tax measured in the respective functional currencies, translated into Renminbi at the exchange rate ruling at the end of reporting period for presentation purposes.

The sensitivity analysis assumes that the change in foreign exchange rates had been applied to remeasure those fi nancial instruments held by the Group which expose the Group to foreign currency risk at the end of reporting period, including inter-company payables and receivables within the Group which are denominated in a currency other than the functional currencies of the lender or the borrower. The analysis excludes differences that would result from the translation of the fi nancial statements of foreign operations into the Group’s presentation currency. The analysis is performed on the same basis for 2010.

Annual Report 2011 135

(Expressed in Renminbi unless otherwise indicated)

30. FINANCIAL INSTRUMENTS (CONTINUED)

(d) Fair values

(i) Financial instruments carried at fair value

The following table presents the carrying value of fi nancial instruments measured at fair value at the end of reporting period across the three levels of the fair value hierarchy defi ned in IFRS 7, Financial Instruments: Disclosures, with the fair value of each fi nancial instrument categorised in its entirety based on the lowest level of input that is signifi cant to that fair value measurement. The levels are defi ned as follows:

Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical fi nancial instruments
Level 2: fair values measured using quoted prices in active markets for similar fi nancial instruments, or using valuation techniques in which all signifi cant inputs are directly or indirectly based on observable market data
Level 3 (lowest level): fair values measured using valuation techniques in which any signifi cant input is not based on observable market data

2011

==> picture [401 x 198] intentionally omitted <==

----- Start of picture text -----

The group
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Assets
Other non-current
fi nancial assets
— Available-for-sale
— —
equity securities 20,000 20,000
— —
— Redemption option 2,803 2,803
— Conversion option — — 381 381
— —
— Other option 3,838 3,838
— Warrants — — 3,425 3,425
----- End of picture text -----

136 SinoMedia Holding Limited

30. FINANCIAL INSTRUMENTS (CONTINUED)

(d) Fair values (continued)

(i) Financial instruments carried at fair value (continued)

2010

==> picture [401 x 198] intentionally omitted <==

----- Start of picture text -----

The group
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Assets
Other non-current
fi nancial assets
— Available-for-sale
— — — —
equity securities
— — — —
— Redemption option
— — — —
— Conversion option
— — — —
— Other option
— Warrants — — — —
----- End of picture text -----

2011

==> picture [401 x 109] intentionally omitted <==

----- Start of picture text -----

The group
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Liability
Other non-current
— —
fi nancial liability 14,245 14,245
----- End of picture text -----

2010

==> picture [401 x 108] intentionally omitted <==

----- Start of picture text -----

The group
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Liability
Other non-current
— —
fi nancial liability 25,528 25,528
----- End of picture text -----

Annual Report 2011 137

(Expressed in Renminbi unless otherwise indicated)

30. FINANCIAL INSTRUMENTS (CONTINUED)

(d) Fair values (continued)

(i) Financial instruments carried at fair value (continued)

During the year there were no signifi cant transfers between instruments in Level 1 and Level 2.

The movement during the year in the balance of Level 3 fair value measurements is disclosed in note 20.

(ii) Fair value of fi nancial instruments carried at other than fair value

The carrying amounts of the Group’s and the Company’s fi nancial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 December 2011 and 2010.

31. ACCOUNTING JUDGEMENTS AND ESTIMATES

(a) Critical accounting judgements in applying the Group’s accounting policies

Accounting judgements made by management in the process of applying the Group’s accounting policies is included in note 3(d), 3(g), 3(h), 3(o) and 4.

(b) Sources of estimation uncertainty

Notes 20, 27 and 30 contain information about the assumptions and their risk factors relating to fair value of other fi nancial asset, share options and fi nancial instruments.

32. ULTIMATE HOLDING COMPANY

At 31 December 2011, the directors of the Company consider the parent and the ultimate holding company to be Golden Bridge International Culture Limited and Golden Bridge International Advertising Holdings Limited respectively, both of which are incorporated in Cayman Islands. These two entities do not produce fi nancial statements available for public use.

33. SUBSEQUENT EVENTS

There were no signifi cant events took place subsequent to 31 December 2011.

138 SinoMedia Holding Limited

(Expressed in Renminbi’000)

==> picture [469 x 550] intentionally omitted <==

----- Start of picture text -----

2011 2010 2009 2008 2007
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Results
Revenue 1,617,800 1,373,173 766,804 558,356 364,702
Profi t from operations 352,292 208,979 120,907 159,712 79,630
Net fi nance income (expense) 16,340 13,554 5,646 (7,159) (23,608)
—
Share of loss equity accounted investees (7,169) (584) (259) (107)
Profi t before taxation 361,463 221,949 126,294 152,446 56,022
Income tax (119,132) (55,598) (37,407) (31,343) (13,247)
Profi t for the year 242,331 166,351 88,887 121,103 42,775
Attributable to:
Equity shareholders of the Company 238,945 158,064 97,245 120,800 42,316
Non-controlling interests 3,386 8,287 (8,358) 303 459
Profi t for the year 242,331 166,351 88,887 121,103 42,775
Assets and liabilities
Property, plant and equipment 56,229 54,601 57,062 54,182 48,266
— — — —
Investment property 3,899
— — — —
Prepayment for acquisition of a property 230,000
Investment in equity-accounted investees 47,722 6,000 584 843 —
— — —
Other non-current fi nancial assets 30,447 11,031
Deferred tax assets 3,643 8,748 9,779 6,350 3,268
Net current assets 667,539 804,393 683,952 617,976 338,087
Total assets less current liabilities 1,039,479 873,742 762,408 679,351 389,621
— —
Deferred tax liability (4,041) (2,315) (1,286)
Other non-current liabilities (14,245) (13,657) (18,155) — —
NET ASSETS 1,025,234 856,044 741,938 678,065 389,621
----- End of picture text -----

Annual Report 2011 139

(Expressed in Renminbi’000)

==> picture [469 x 261] intentionally omitted <==

----- Start of picture text -----

2011 2010 2009 2008 2007
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Capital and reserves
Share capital 171 174 173 173 137
Reserves 1,018,704 848,966 736,300 670,473 388,556
Total equity attributable to
equity shareholders of the Company 1,018,875 849,140 736,473 670,646 388,693
Non-controlling interests 6,359 6,904 5,465 7,419 928
TOTAL EQUITY 1,025,234 856,044 741,938 678,065 389,621
Earnings per share
Basic earnings per share (RMB) 0.424 0.279 0.172 0.243 0.098
Diluted earnings per share (RMB) 0.419 0.278 0.172 0.243 0.096
----- End of picture text -----

NOTE TO THE FIVE YEAR SUMMARY

As a result of the sub-divisions of ordinary shares in 2007 and 2008, fi gures for the year of 2007 have been adjusted for comparison purposes.

140 SinoMedia Holding Limited

==> picture [161 x 80] intentionally omitted <==

AI assistant

SinoMedia Holding Limited — Annual Report 2011

49347_rns_2012-04-18_cd79ce2e-93fa-47ce-90ca-f1200562071a.pdf

股份編號 00623

Contents

Financial Summary

Corporate Information

EXECUTIVE DIRECTORS

NON-EXECUTIVE DIRECTORS

INDEPENDENT NON-EXECUTIVE

DIRECTORS

COMPANY SECRETARY

AUTHORISED REPRESENTATIVES

REGISTERED OFFICE OF THE COMPANY

CORPORATE HEADQUARTERS

AUDIT COMMITTEE

AUDITORS

SHARE REGISTRAR

REMUNERATION COMMITTEE

COMPLIANCE COMMITTEE

INVESTOR RELATIONS CONSULTANT

WEBSITE

January

■ Acquisition of the master advertising agency rights of MediaCorp TV channels in China

February

April

May

■ Entering into a strategic cooperation with the magazine “Global Brand Insight”

June

Image video of Everbright Bank was included in the IAI Annual Book

July

■ Establish a Foothold in Mobile Internet Industry to Explore Mobile TV Market

August

■ Entering into a creative, fi lming and production agreement with Henan Provincial Tourism Bureau for the creative production of microfi lm by the Company

September

■ The contract for SinoMedia and THE PLACE

project signed in Beijing

■ SinoMedia was named Asia’s 200 Best Under A Billion by Forbes

Won the competitive presentation for the production and fi lming contract on the promotional video of Zhengzhou Municipal Tourism Administration

■

November

■ SinoMedia doubled its tendering business and brand service improved rapidly

■ Being appointed the service provider for procurement project under the media agency category of the People’s Insurance Company (Group) of China

December

■ “WGOOL” carried out internal test within the Group

Creative design I.

V.

VI.

VII.

VIII.

IX.

Management

I.

II.

Chairman’s Statement

Chen Xin

Chairman’s Statement

Chairman

Chen Xin

All-round Development in Business Segments

Maintaining its Edges in Media Resources

ABOUT THE GROUP

BUSINESS REVIEW

I. Media Resources Management

II. Integrated Brand Communication Services

III. Creative Production of Advertisement and Content

1. Creative production services for commercial advertisements and microfi lms

Management Discussion and Analysis

2. Creative production and syndication of public service advertisements

3. Video dynamic management service

IV. New Media Investment and Integration

1. 100TV

2. CNLive

3. www.lotour.com

4. www.wgool.com

FINANCIAL REVIEW

Revenue and Profi t Attributable to the Equity Shareholders of the Company

Management Discussion and Analysis

Operating Expenses

Signifi cant Investments and Acquisitions

SinoMedia Holding Limited Annual Report 2011