2018 Annual Report - Focus Media05,28,072.pdfThe profit distribution proposal reviewed and approved by the Company’s Board of Directors is as follows: based on the total share capital

2018 Annal Report of Focus Media Information Technology Co., Ltd.

1

Focus Media Information Technology Co., Ltd.

2018 Annual Report

April 2019


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Section I Important Notes, Contents and Definitions

The Board of Directors, Board of Supervisors, directors, supervisors and senior

management of Focus Media Information Technology Co., Ltd. (hereinafter referred to as the

“Company”) hereby guarantee the authenticity, accuracy and completeness of the information

presented in this report and that it is free of any false records, misleading statements or material

omissions, and will undertake individual and joint legal liabilities.

Jason JIANG Nanchun, the Company’s legal representative, KONG Weiwei, the person

in charge of accounting work, and WANG Lilin, the person in charge of the accounting

department (accounting officer), hereby declare and warrant that the financial report within

the Annual Report are authentic, accurate and complete.

All directors have attended the board meeting approving the Annual Report.

Pursuant to relevant requirements under the Detailed Rules for Implementation of the

Shenzhen Stock Exchange on the Share Repurchase by Listed Companies, “If a listed company

uses cash as consideration and adopts the method of offering or centralized bidding to

repurchase shares, the amount of repurchased shares already implemented during that year

shall be regarded as the amount of cash dividend and shall be calculated as a relevant

proportion of the cash dividends for that year”. As of December 31, 2018, the Company had

repurchased 99,612,604 shares through centralized bidding and paid a total amount of

RMB700,298,352.98.

The profit distribution proposal reviewed and approved by the Company’s Board of

Directors is as follows: based on the total share capital as at the equity registration date for the

implementation of profit distribution plan in future less the number of repurchased shares in

the repurchase special account of the Company at that date, a cash dividend of RMB1

(including tax) per 10 shares will be distributed to all the shareholders, and there will be no

bonus share(including tax) or conversion of equity reserve into share capital. If there is any

change in the total share capital of the Company or the number of repurchased shares in the

repurchase special accounts of the Company before the implementation of profit distribution

plan, the profit distribution will be conducted based on the total share capital as at the equity

registration date for the implementation of the profit distribution plan in future less the number


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of repurchased shares in the repurchase special account of the Company, and the distribution

ratio will remain unchanged.

Note:

This document is a translated version of the Chinese version of 2018 Annual Report (“2018 年年度

报告”), and the published announcements in the Chinese version shall prevail. The complete

published Chinese 2018 Annual Report may be obtained at www.cninfo.com.cn.


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CONTENTS

Section I Important Notes, Contents and Definitions .............................................. 2

Section II Corporate Profile and Key Financial Indicators .................................... 8

Section III Business Overview .................................................................................. 13

Section IV Operation Discussion and Analysis ....................................................... 22

Section V Significant Events ..................................................................................... 44

Section VI Changes in Shares and Information about Shareholders ................... 68

Section VII Preferred Shares .................................................................................... 77

Section VIII Directors, Supervisors, Senior Management and Employees ......... 78

Section IX Corporate Governance ........................................................................... 89

Section X Corporate Bonds ...................................................................................... 95

Section XI Financial Report (Excerpt) .................................................................... 95

Section XII Documents Available for Reference .................................................. 118

2018 Annual Report of Focus Media Information Technology Co., Ltd.

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DEFINITIONS

Term Definition

The Company, our company, Focus Media,

Focus Focus Media Information Technology Co., Ltd.

Focus Multimedia Focus Multimedia Technology (Shanghai) Co., Ltd. (分众多媒体技术(上

海)有限公司))

Hedy Holding Hedy Holding Co., Ltd. (七喜控股股份有限公司)

The Company Law the Company Law of the People’s Republic of China

The Securities Law the Securities Law of the People’s Republic of China

CSRC China Securities Regulatory Commission

SZSE Shenzhen Stock Exchange

the Reporting Period, the year the period From January 1, 2018 to December 31, 2018

RMB, RMB10,000 and RMB100 million Renminbi 1 Yuan, Renminbi 10,000 Yuan and Renminbi 100 million Yuan,

respectively

Media Management (HK) Media Management Hong Kong Limited

Jason Jiang Nanchun JIANG NANCHUN

Alibaba Technology, Alibaba Alibaba (China) Technology Co., Ltd. (阿里巴巴(中国)网络技术有限公

司)

Power Star (HK) Power Star Holdings (Hong Kong) Limited

Glossy City (HK) Glossy City (HK) Limited

Giovanna Investment (HK) Giovanna Investment Hong Kong Limited

Gio2 (HK) Gio2 Hong Kong Holdings Limited

HGPLT1 (HK) HGPLT1 Holding Limited

CEL Media (HK) CEL Media Investment Limited

Flash (HK) Flash (Hong Kong) Limited

Zhuhai Rongwu Zhuhai Rongwu Equity Investment Partnership (Limited Partnership) (珠

海融悟股权投资合伙企业(有限合伙))

Zhengjing Investment Shanghai Zhengjing Investment Management Partnership (Limited

Partnership) (上海筝菁投资管理合伙企业(有限合伙))

Jinhui Chuangfu Zhuhai Jinhui Chuangfu No. 3 Investment Corporation (Limited

Partnership) (珠海晋汇创富叁号投资企业(有限合伙))

Kunyu Jincheng Suzhou Kunyu Jincheng Equity Investment Corporation (Limited

Partnership) (苏州琨玉锦程股权投资企业(有限合伙))

Rongxin Zhiming Ningbo Rongxin Zhiming Equity Investment Partnership (Limited

Partnership) (宁波融鑫智明股权投资合伙企业(有限合伙))

Jiaxing Huiling Jiaxing Huiling No. 1 Investment Partnership (Limited Partnership) (嘉兴


6

会凌壹号投资合伙企业(有限合伙))

Shanhong Investment Shanghai Shanhong Investment Management Center (Limited Partnership)

(上海赡宏投资管理中心(有限合伙))

Honglian Investment Shanghai Honglian Investment Management Center (Limited Partnership)

(上海宏琏投资管理中心(有限合伙))

Hongqian Investment Shanghai Hongqian Investment Management Center (Limited Partnership)

(上海鸿黔投资管理中心(有限合伙))

Hongying Investment Shanghai Hongying Investment Management Center (Limited Partnership)

(上海鸿莹投资管理中心(有限合伙))

Huijia Hexing Huijia Hexing (Beijing) Investment Co., Ltd. (汇佳合兴(北京)投资有限

公司)

Nalande Shenzhen Jinhai Nalande Equity Investment Partnership (Limited

Partnership) (深圳市金海纳兰德股权投资合伙企业(有限合伙))

Beingmate Group Beingmate Group Co., Ltd. (贝因美集团有限公司)

Xinheng Zhongrun Taizhou Xinheng Zhongrun Fund (Limited Partnership) (泰州信恒众润投

资基金(有限合伙))

Jingfu Investment Jiaxing Jingfu Investment Partnership (Limited Partnership) (嘉兴景福投

资合伙企业(有限合伙))

Development Center II Beijing Equity Investment and Development Center II (Limited

Partnership) (北京股权投资发展中心二期(有限合伙))

Youxin Investment Shanghai Youxin Investment Management Center (Limited Partnership)

(上海优欣投资管理中心(有限合伙))

Joyland Assets Joyland Assets Management (Shanghai) Co., Ltd. (钜洲资产管理(上海)

有限公司)

Hunan Culture

Hunan Cultural&Tourist Venture Capital Fund (Limited Partnership) (湖南

文化旅游创业投资基金企业(有限合伙)), formerly known as Hunan

Cultural&Tourist Investment Fund (Limited Partnership) (湖南文化旅游

投资基金企业(有限合伙))

Yuxin Investment Nanjing Yuxin Investment Center (Limited Partnership) (南京誉信投资中

心(有限合伙))

Huashi Pengyi Shenzhen Huashi Pengyi Investment Partnership (Limited Partnership) (深

圳华石鹏益投资合伙企业(有限合伙))

Daode Yuantai Shanghai Daode Yuantai Investment Management Partnership (Limited

Partnership) (上海道得原态投资管理合伙企业(有限合伙))

Jujin Jiawei Hangzhou Jujin Jiawei Investment Mangement Partnership (Limited

Partnership) (杭州聚金嘉为投资管理合伙企业(有限合伙))

Tianjin Chengbai Tianjin Chengbai Equity Investment Partnership (Limited Partnership) (天

津诚柏股权投资合伙企业(有限合伙))

Detong Zhongmei Shanghai Detong Zhongmei Equity Investment Fund Center (Limited


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Partnership) (上海德同众媒股权投资基金中心(有限合伙))

Beijing Wuyuan Beijing Wuyuan Equity Investment Management Corporation (Limited

Partnership) (北京物源股权投资管理企业(有限合伙))

Frontsea Shenzhen Frontsea Qinfei No.1 Equity Investment Corporation (Limited

Partnership) (深圳上善若水钦飞壹号股权投资企业(有限合伙))

Zhezhong Group Shanghai Zhezhong Group Co., Ltd. (上海柘中集团股份有限公司)

Xianyou Investment Hangzhou Xianyou Investment Management Partnership (Limited

Partnership) (杭州贤佑投资管理合伙企业(有限合伙))

Yichang Investment Shanghai Yichang Investment Management Partnership (Limited

Partnership) (上海益畅投资管理合伙企业(有限合伙))

Xizheng Value Chongqing Xizheng Value Equity Investment Fund Partnership (Limited

Partnership) (重庆西证价值股权投资基金合伙企业(有限合伙))

Qianhai Furong Shenzhen Qianhai Furong Asset Management Co., Ltd. (深圳市前海富荣

资产管理有限公司)

Parkland Group Shenzhen Parkland Group Co., Ltd. (深圳鹏瑞集团有限公司, formerly

known as 深圳市鹏瑞集团有限公司)

Fengzhong Investment Shanghai Fengzhong Investment Partnership (Limited Partnership) (上海

枫众投资合伙企业(有限合伙))

Development Center I Beijing Equity Investment and Development Center (Limited Partnership)

(北京股权投资发展中心(有限合伙))

All counterparties involved in the Company's

major asset restructuring in 2015

FMCH, Media Management (HK), Power Star (HK), Glossy City (HK),

Giovanna Investment (HK), Gio2 (HK), HGPL T1 (HK), CEL Media (HK),

Flash (HK), Zhuhai Rongwu, Zhengjing Investment, Jinhui Chuangfu,

Kunyu Jincheng, Rongxin Zhiming, Jiaxing Huiling, Shanhong

Investment, Honglian Investment, Hongqian Investment, Hongying

Investment, Huijia Hexing, Nalande, Beingmate Group, Xinheng

Zhongrun, Jingfu Investment, Development Center II, Youxin Investment,

Joyland Assets, Hunan Cultural, Yuxin Investment, Huashi Pengyi, Daode

Yuantai, Jujin Jiawei, Tianjin Chengbai, Detong Zhongmei, Beijing

Wuyuan, Frontsea, Zhezhong Group, Xianyou Investment, Yichang

Investment, Xizheng Value, Qianhai Furong, Parkland Group, Fengzhong

Investment, Development Center I

Shuhe Technology Shanghai Shuhe Information Technology Co., Ltd. (上海数禾信息科技有

限公司)

Focus Hongyi Shanghai Focus Hongyi Information Technology Co., Ltd. (上海分众鸿意

信息技术有限公司)

Focus Xinsheng Shanghai Focus Xinsheng Information Technology Co., Ltd. (上海分众鑫

晟信息技术有限公司)

Focus Benefits Ningbo Focus Benefits Information Technology Co., Ltd. (宁波分众福利

直送信息科技有限公司)


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Section II Company Profile and Key Financial Indicators

I. Company Profile

Stock Abbreviation Focus Media Stock Code 002027

Stock exchange where the shares of the Company

are listed Shenzhen Stock Exchange

Name of the Company in Chinese 分众传媒信息技术股份有限公司

Abbreviation of the Company name in Chinese 分众传媒

Name of the Company in English (if any) Focus Media Information Technology Co., Ltd.

Abbreviation of the Company name in English (if

any) Focus Media

Legal representative

of the Company Jason JIANG Nanchun

Registered address Room 2130, Building 2, 8 Fenghuang 3rd Road, Sino-Singapore

Knowledge City, Huangpu District, Guangzhou

Postal code of the registered address 510700

Office address 28/F, Zhao Feng World Trade Building, 369 Jiangsu Road, Changning

District, Shanghai

Postal code of the office address 200050

Company website www.focusmedia.cn

E-mail [email protected]

II. Contacts and Contact Information

Board Secretary Securities Affairs Representative

Name KONG Weiwei LIN Nan

Address 28/F, Zhao Feng World Trade Building, 369

Jiangsu Road, Changning District, Shanghai

28/F, Zhao Feng World Trade Building, 369 Jiangsu

Road, Changning District, Shanghai

Tel. 021-22165288 021-22165288

Fax 021-22165288 021-22165288

E-mail [email protected] [email protected]

III. Information Disclosure and Place Where Information is Available for Inspection

Newspaper designated by the Company for information

disclosure Securities Times


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Website designated by the CSRC for release of the Annual

Report www.cninfo.com.cn

Place where the Annual Report is available for inspection Office of the Board of Directors of the Company

IV. Company Registration and Alteration

Organization code 914401016185128337

Changes in main businesses since the

Company’s listing (if any)

The Company conducted material asset restructuring in 2015. As of December 29, 2015,

the listing registration for items including the settlement of relevant assets and the issuance

of shares for asset purchase has been completed, and as of April 15, 2016, the listing

registration for the non-public offering of shares for ancillary fund raising has also been

completed. The main businesses of the Company changed from whole-set computer

manufacturing; computer parts manufacturing; manufacturing of electronic equipment for

computer application; television manufacturing; audio equipment manufacturing;

manufacturing of computer peripheral equipment; manufacturing of communication

system equipment; manufacturing of communication terminal equipment; information

technology consulting services; retail of computers, software and supporting equipment;

property management; house leasing; wholesale of computers, software and supporting

equipment; venue leasing (except for storage); wholesale of communication and broadcast

television equipment; retail of communication equipment; software development;

manufacturing of video recording equipment; import and export of technologies; import

and export of goods (except for commodities under special control) to information

technology consulting services; software development; computer network and system

engineering services; research and development of network technologies. There was no

change during the Reporting Period.

Changes in Previous Controlling

Shareholders (if any)

The Company’s former controlling shareholder was Mr. YI Xianzhong (易贤忠). In 2015,

as approved by the Approval on the Material Asset Restructuring of Hedy Holding Co.,

Ltd. and Share Issuance to Media Management Hong Kong Limited and Others for Asset

Purchase and Ancillary Fund Raising (Permit [2015] No. 2937) issued by China Securities

Regulatory Commission, the Company issued 3,813,556,382 RMB-dominated common

shares to 43 counterparties including Media Management Hong Kong Limited for

purchase of relevant assets. Upon the completion of the above transactions, the Company’s

controlling shareholder changed to Media Management Hong Kong Limited. There was

no change during the Reporting Period.

V. Other Relevant Information

Accounting firm engaged by the Company

Name of the accounting firm BDO China Shu Lun Pan CPAs LLP

Office address of the accounting firm 4/F, 61 Nanjing East Road, Shanghai


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Name of the signing accountants YANG Jingxin, XU Lirong and SHEN Songtao

Sponsor institution engaged by the Company to perform continuous supervision duties during the

Reporting Period

□ Applicable √ Not applicable

Financial advisors engaged by the Company to perform continuous supervision duties during the

Reporting Period

√ Applicable □ Not applicable

Name of the financial advisor Office address of the financial advisor Sponsors of the

financial advisor

Continuous supervision

period

Huatai United Securities Co.,

Ltd.

22/F, Building E, Poly Plaza, 18 Dongfang

Road, Pudong New Zone, Shanghai

TIAN Lai, PENG

Songlin

December 16, 2015 –

December 31, 2018

GF Securities Co., Ltd.

Rooms 4301-4316, 43/F, Metro Plaza, 183-

187 Tianhe North Road, Tianhe District,

Guangzhou

WU Caiyu, CHENG

Yan

December 16, 2015 –

December 31, 2018

VI. Key Accounting Information and Financial Indicators

Whether the Company need to retrospectively adjust or restate its accounting information in previous

years □ Yes √ No

2018 2017 YoY change 2016

Operating revenue (RMB) 14,551,285,132.73 12,013,553,185.42 21.12% 10,213,134,291.73

Net profit attributable to shareholders of the

Company (RMB) 5,822,974,766.98 6,004,706,786.08 -3.03% 4,451,211,722.61

Net profits attributable to shareholders of the

Company before non-recurring profits and losses

(RMB) 5,025,532,327.24 4,851,996,085.18 3.58% 3,631,698,548.22

Net cash flow from operating activities (RMB) 3,782,842,145.12 4,156,254,605.06 -8.98% 4,800,012,042.70

Basic earnings per share (RMB/share) 0.40 0.41 -2.44% 0.30

Diluted earnings per share (RMB/share) 0.40 0.41 -2.44% 0.30

Weighted average ROE 46.92% 67.65% -20.73% 70.73%

As at the end of

2018

As at the end of

2017 YoY change

As at the end of

2016

Total assets (RMB) 19,021,510,376.18 15,554,602,846.85 22.29% 12,129,059,829.52

Net assets attributable to shareholders of the 14,201,141,091.65 10,372,574,413.65 36.91% 7,990,926,198.40


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Company (RMB)

Note: The calculation of the basic earnings per share, diluted earnings per share and net assets per share in 2017 has taken into account

the impact of the implementation of profit distribution plan by the Company on June 29, 2018, pursuant to which the Company allocated

2 more shares per 10 shares to all shareholders from its capital reserves.

VII. Differences in Accounting Data between Domestic and Overseas Accounting Standards

1. Differences in the net profits and net assets disclosed in the financial reports prepared under China

Accounting Standards (CAS) and International Financial Reporting Standards (IFRS)


There was no difference between the net profits and net assets in the financial report disclosed according to

International Accounting Standards and t China Accounting Standards during the Reporting Period.

2. Differences in the net profits and net assets disclosed in the financial reports prepared under CAS and

Overseas Accounting Standards


There was no difference between the net profits and net assets in the financial report disclosed according to Overseas

Accounting Standards and China Accounting Standards during the Reporting Period.

VIII. Quarterly Key Financial Indicators

Unit: RMB

First Quarter Second Quarter Third Quarter Fourth Quarter

Operating revenue 2,959,582,128.62 4,150,393,486.56 3,766,616,105.16 3,674,693,412.39

Net profit attributable to shareholders of

the Company 1,207,460,164.00 2,139,499,868.42 1,462,800,794.87 1,013,213,939.69

Net profits attributable to shareholders of

the Company before non-recurring profits

and losses

1,067,590,682.80 1,750,868,422.36 1,379,929,465.98 827,143,756.10

Net cash flow from operating activities 683,465,998.97 563,546,995.59 313,786,826.94 2,222,042,323.62

Whether there is significant difference between the above individual or aggregate financial indicators and

those disclosed in the Company’s quarterly reports and semi-annual reports

□ Yes √ No

IX. Items and Amounts of Non-recurring



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Unit: RMB

Item 2018 2017 2016

Profits or losses from the disposal of non-current assets

(including the write-off for the impairment provision of

assets)

-21,891,085.06 113,621,218.11 -1,272,545.13

Government grants included in the current profits and

losses (excluding the government grants closely related

to the Company’s business operations and based on the

quota or quantitative amounts according to unified

national standards)

854,450,230.60 735,607,758.11 1,036,645,852.32

Capital occupancy fee received from non-financial

enterprises and included in the current profits and losses 26,103,945.13

Revenue generated where investment cost of the

Company’s acquisition of its subsidiaries, associates and

joint ventures is less than the fair value of the investee’s

identifiable net assets obtained at the time of acquisition

of investment

103,655,136.11 563,031,084.48

Profits and losses from the entrusted investment or

management of assets 102,628,776.82 74,780,861.38

Other non-operating income and expenditures except the

items above -11,355,538.65 -12,419,664.14 -20,996,019.84

Less: Impact of income tax 256,069,654.39 322,346,197.34 191,385,857.28

Impact of the minority interests (after tax) 79,370.82 -435,640.30 3,478,255.68

Total 797,442,439.74 1,152,710,700.90 819,513,174.39

Explanations shall be given if the Company defines a non-recurring profit or loss item according to the

“Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the

Public No. 1 – Non-recurring Profits and Losses”, or defines any non-recurring profit or loss items listed in

the “Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the

Public No. 1 – Non-recurring Profits and Losses” as recurring profit or loss items


In the Reporting Period, the Company did not classify any non-recurring profit or loss items defined or listed in the

“Explanatory Announcement on Information Disclosures for Companies offering Their Securities to the Public No.

1 – Non-recurring Profits and Losses” as recurring profit or loss items.


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Section III Business Overview

I. Main Business Engaged by the Company during the Reporting Period

Focus Media operates the largest network of life-style media in mainland China. Its main products include

inner building advertising (e.g. inner-building LCD display ad and elevator poster frame ad), movie theatre ad

network and hypermarket ad network, which cover the most prevailing consumer engagement scenarios in the city

from workplace to shopping and entertainment. Together they make up a powerful ecosystem of life-style media.

As of the end of 2018, Focus’ life-style media network covered over 300 cities in China, and had established

its holding subsidiaries in Korea and Indonesia and joint ventures in Singapore to expand its overseas network

resources. For inner-building LCD display ad, the Company had approximately 724,000 self-operated displays

(including 23,000 displays from its overseas subsidiaries) covering about 150 cities in China and 17 major cities in

Korea, Singapore and Indonesia; and had approximately 25,000 franchised displays covering 74 cities and regions

in China. For elevator poster frame ad, the Company had approximately 1.938 million self-operated advertising

frames covering about 220 cities in China; and had approximately 85,000 outsourced -poster frames covering about

165 cities in China. For movie theater ad network, the Company had more than 1,900 signed movie theatres and 37

cinema chains as partners, with over 12,700 movie screens covering about 308 cities at all levels in China.

In 2018, the Company focused on enlarging its media network. In order to achieve the medium and long-term


14

strategic goals, the Company has been significantly expanding its network resources for elevator LCD display and

elevator poster frames since the second quarter of 2018. As of the end of 2018, the Company’s self-operated elevator

LCD display covered about 150 cities in China and its self-operated elevator posters covered about 220 cities in

China, with details below:

Product Type Cities covered by

tiers

Number of self-operated media resources in

China (in 10 thousand units)

Changes at the end

of year compared

with the end of last

year (in 10

thousand units)

Change (%) 2018-12-31 2017-12-31

Inner-building

LCD display ad

First-tier cities 19.6 11.3 8.3 73.45%

Second-tier cities 40.2 13.9 26.3 189.21%

Third-tier and

below cities 10.3 3.6 6.7 186.11%

Elevator poster

frame ad

First-tier cities 49.7 38.3 11.4 29.77%

Second-tier cities 102.3 67.6 34.7 51.33%

Third-tier and

below cities 41.8 15.1 26.7 176.82%

As China's largest life-style media platform, Focus provides a core network platform for the life of consumers

and is omnipresent in the everyday life of consumers. Focus has prime media resources and advertiser access, and

has an indisputably leading market share in the fields of inner-building LCD display ad, elevator poster frame ad

and movie theatre ad network in China. Focus has strong cash flow, high credit rating, low leverage ratio, and lots

of funding sources available. Going forward, it will accelerate expansion to strengthen the life-style media network

and further consolidate its position as a market leader.

II. Significant Changes in Major Assets

1. Significant changes in major assets

Major assets Significant changes

Equity assets

The balance of long-term equity investment at the end of the period was RMB792.535 million, representing a net

increase of RMB58.875 million from the beginning of the year, of which:

1) After disposing part of the equity of the originally acquired subsidiary Focus Benefits and losing the control,

the remaining investment cost of Focus Benefits as an associate was recorded at its fair value of

approximately RMB83.727 million;


15

2) The original associate Shanghai Gemii Technology Co., Ltd. and Suzhou Qingyu Intelligent Technology Co.,

Ltd., reduced the long-term equity investment of RMB36.464 million due to the passive dilution of the next

round of financing, and changed it to available-for-sale financial assets;

3) During the Reporting Period, the Company invested SGD1.248 million in Singapore joint venture Target

Media Culcreative PTE LTD., equivalent to RMB6.257 million, accounting for 30% of the subscribed

capital; the Company had subscribed for 8% of shares in Beijing 180 Digital Technology Co., Ltd. at

RMB41.6 million, and paid a consideration of RMB33.28 million in equity transfer in 2018, accounting for

80% of the subscription.

Fixed assets

The balance of net fixed assets at the end of the year was RMB1,785.276 million, representing an increase of

approximately RMB1,434.031 or 408.3% from the beginning of the year, mainly due to an increase in the coverage

of Inner-building LCD display ad and elevator poster frame ad in 2018. The cost of network equipment purchase

for the year was approximately RMB1,620.931 million.

Intangible assets

The balance of intangible assets at the end of the year was RMB46.958 million, representing an increase of

RMB13.403 million or 39.9% compared with the beginning of the year, mainly due to the purchase of the map

system's license right at RMB18.868 million during the year.

Construction in

progress No material changes.

Notes receivable and

accounts receivable

The net amount of notes receivable and accounts receivable at the end of the year was RMB5,019.623 million,

representing an increase of 62.5% from the end of the previous year, mainly due to an increase of 21.1% in revenue

of the main business and an increase in the balance of notes receivable and accounts receivable resulting from

slowdown in the core customer return cycle in 2018 affected by the macroeconomic situation.

Prepayments

The balance of prepayments at the end of the year was RMB1,373.774 million, representing an increase of 89.0%

from the end of the previous year. Among which, the balance of prepaid media resource rent at the end of the year

was RMB1,186.104 million, representing an increase of RMB545.285 million or 85.1% from the beginning of the

year; the prepayment for equipment purchase increased to RMB131.489 million at the end of the year from

RMB53.093 million at beginning of the year, representing an increase of 147.7%. In 2018, the Company's media

resource spots saw rapid expansion; since in most cases the media resource rents were prepaid quarterly or

semiannually, and the Company had to purchase a large number of media equipment to meet the demands of the

expansion, there was a sharp rise in prepayments for media resource rents and corresponding media equipment

procurement.

Other receivables

The balance of other receivables at the end of the period was RMB101.262 million, representing a decrease of

RMB359.11 million or 78.0% from RMB460.372 million at the beginning of the year, mainly due to the expiration

of the large-amount time deposits in bank and the recovery of interests in 2018.

Available-for-sale

financial assets

The balance of available-for-sale financial assets at the end of the period was RMB2,902.359 million, representing

a net increase of RMB833.245 million or 40.3% from the beginning of the year, mainly due to:

1) A total of about RMB907.113 million was invested in the 8 funds participating in the subscription during the


16

year, including a contribution of approximately RMB343.733 million to Focus Media Fountain Vest Sports

JV,L.P., and the subscription of RMB300 million of fund share from Shanghai Yunfeng Qitai Investment

Center (Limited Partnership) under Yunfeng Fund and invested RMB198 million;

2) As a cornerstone investor, the Company invested about RMB208.825 million to Inke Limited (3700.HK);

subscribed for 3.15% of shares in Qiancheng Digital (Beijing) Network Technology Co., Ltd at the price of

RMB50 million; and subscribed for 2.07% of shares in Beijing Pinxin Media Culture Co., Ltd. (36 krypton)

at the price of RMB30 million;

3) the Company redeemed the money fund purchased at the end of the previous year to reduce the available-

for-sale financial assets measured at fair value of approximately RMB289.546 million;

4) the Company increased the full impairment provision of investment in Mirror Group Limited and its

subsidiary Shanghai Weidian Information Technology Co., Ltd. by RMB68.632 million.

Other current assets

The balance of other current assets at the end of the year was RMB1,865.044 million, representing a decrease of

RMB1,084.942 million or 36.8% from the beginning of the year. Other current assets mainly include unexpired

bank wealth management products of RMB1,714.25 million and pending deduct VAT on purchase of RMB150.794

million, of which:

1) The bank wealth management products at the end of the period decreased by RMB1,209.45 million compared

with the beginning of the year, mainly due to the redemption of bank wealth management. The profit

distribution for 2017 was approximately RMB1,223.157 million; the payment and prepayment of rent,

equipment purchase and repurchase of the Company's shares were RMB700.298 million;

2) The amount of pending deduct VAT on purchase increased by approximately RMB124.508 million compared

with the beginning of the year, mainly due to an increase in network spots coverage during the year and the

substantial purchase of media equipment.

2．Main overseas assets


Unit: RMB’0000

Specific content of

assets

Cause of

formation Asset size Location Operating mode Revenue

The proportion

of overseas

assets in the

Company's net

assets

Significant

risk of

impairment

Focus Media

Development Co.,

Ltd.

Engages in outdoor

advertising business

Incorporation

100%

shareholding

53,156.0 Hong

Kong

Wholly-owned

subsidiary

Loss of RMB5.171

million 3.74% No


17

in Hong Kong

Focus Media Korea

Co., Ltd

Advertising business

for Inner-building

LCD display ad in

Korea

Incorporation

56%

shareholding

12,867.1 Korea Holding

subsidiary

Loss of RMB37.792

million

Focus suffered loss of

RMB21.164

0.91% No

PT Target Media

Nasantara


for Inner-building

LCD display ad in

Indonesia

Incorporation

45%

shareholding

581.3 Indonesia Holding

subsidiary

Loss of RMB2.231

million


RMB1.004 million

0.04% No

Target Media Hong

Kong Limited


for Inner-building

LCD display ad in

Hong Kong

Incorporation

61%

shareholding

1,658.1 Hong

Kong

Holding

subsidiary

Loss of RMB947,000


RMB578,000

0.12% No

Target Media

Culcreative PTE

LTD.


for Inner-building

LCD display ad in

Singapore

Incorporation

30%

shareholding

539.8 Singapore Associates

Loss of about

RMB2.914 million


RMB874,000

0.04% No

Focus Media

Fountain Vest Sports

JV,L.P

Focus-FountainVest

Partnership Funds

Equity

investment 48,211.6

Cayman

Islands

Limited

Partnership

Received dividends

of about RMB3.697

million

3.39% No

III. Analysis of Core Competitiveness

1. The Company makes use of “elevators in building” to reach the middle-class consumers in major cities

passing through elevators every day with high frequency and low distraction.

Elevators are the part-and-parcel of urban infrastructure. As the most common daily life scenario, elevators

represent four words: mainstream demographics, must traveled pathways, high frequency visits, and low-

interference, which are the keys for brand recognition today. Focus Media thereby has created numerous classic


18

cases of brand recognition, and was awarded "The Preferred Advertising Platform in China to Boost Brand

Awareness".

The important significance of the passive network provided by Focus is infiltrating brands into the daily lives

of the middle-class consumers in cities through the inevitable scenario, thereby achieving the mandatory access to

users. The Company has become the major portal to offline advertising, and will increasingly become the core way

of brand recognition in the era of network fragmentation to make a concentrated impact on the middle-class

consumers in cities.

2. The network resources are large in scale, wide in coverage and high in penetration rate.

To achieve the medium and long-term strategic goals, the Company expanded its network resources massively

during the Reporting Period; the centralized brand recognition abilities through scale and mass effect provided

advertisers with more effective and accurate advertising, to enhance the recognition of advertisers on the Company’s

network value.

As of the end of 2018, the Company operated the life-style media network in approximately 300 cities of China,

and had established its holding subsidiaries in Korea and Indonesia and joint venture in Singapore to expand its

overseas network resources. Specifically, for inner-building LCD display ad, the Company had approximately

724,000 self-operated displays (including 23,000 displays from its overseas subsidiaries) covering about 150 cities

in China and 17 major cities in Korea, Singapore and Indonesia, and had approximately 25,000 franchised displays

covering 74 cities and regions in China; for elevator poster frame ad, the Company had approximately 1.938 million

self-operated advertising frames covering about 220 cities in China, and had approximately 85,000 outsourced

digital frames covering about 165 cities in China; and for movie theater ad network, the Company had more than

1,900 signed movie theatres and 37 cinema lines as partners, with over 12,700 movie screens in more than 308 cities

at all levels in China.

As the largest life-style media platform in China, Focus provides a core network platform for the life of

consumers and is omnipresent in their everyday life.

3. Business continues to expand vertically to create new growth space.

Since 2018, the Company are steadily moving towards the unwavering mid-term strategic goal of “5 million

terminals across 500 cities to target the 500 million new middle class”. On the one hand, first- and second-tier cities

have large consumption potential; on the other hand, the consumption power and willingness of residents in third-


19

and fourth-tier cities are rapidly increasing, and the value of advertising in low-tier cities has increased substantially.

Based on this, the Company is proactively expanding into the peripheral areas of first- and second-tier cities while

thoroughly cultivating their core areas, as well as accelerating distribution in third- and fourth-tier cities, to bring

strong and lasting growth drivers to the Company and create room for further growth.

4. Advantages of intelligent and digital marketing capabilities.

In July 2018, Alibaba and its related parties made strategic equity investment in Focus for approximately

RMB15 billion for joint innovation of digital marketing in the context of new retail trends. Alibaba’s new retail

infrastructure and big data capabilities will generate great chemistry with Focus’ extensive network of offline reach,

delivering new experiences and unique values to users and businesses.

At present, the Company has realized content push via internet, real-time monitoring, data feedback and results

evaluation. Through digital transformation, the Company has become the core platform integrating brand uni-

marketing and enhancing the brand consumer assets, to promote the accurate brand launch and traffic interaction

between screen and end users, and help the brands to increase sales conversion rate in the digital age.

5. High-quality customer resources.

Thousands of companies such as Ali, Tencent, Jingdong, Procter & Gamble, Unilever, Nongfu Spring,

Arowana, Mercedes-Benz, BMW and General Motors choose Focus for advertising their bands. During its long-

term operation, the Company has established longstanding and stable cooperative relations with large-scale and

high-quality customers. Such customers, in particular global top 500 and domestically-renowned companies, set

rigid conditions for selecting advertising operators, requiring advertising operators to have sound service outlets,

efficient operation systems, rich industry experience, successful cases, strong brand reputation, professional service

teams and comprehensive service support. Such customers often have high competence, good reputation, high

visibility, and strong risk resistance capacity. They have large and contant advertising budget, which is increasing

steadily. Our customer group proves that the competitive advantage of Focus Media has been recognized by

customers, and the Company has a stable source of income.

6. Network resource spots have natural geographical features.

Through analysis of property information (age of property, property price, geographical location, household

type, etc.), cooperation with search engines, and e-commerce companies such as Ali, the Company understands

different consumption demand and brand preferences of different building and community consumers to promote


20

accurately targeted advertising. At the same time, the Company makes an access to the Internet and the mobile

Internet through putting Wi-Fi, iBeacon, NFC and other technologies into the device to achieve accurate cloud-to-

screen and screen-to-end interaction, becoming an important offline traffic portal.

7. The Company has high brand awareness and strong market leadership.

With years of experience in the advertising industry and comprehensive service capabilities, the Company has

a good reputation and high brand awareness in the industry. As a leader in the industry, the Company has a high

market share and fully grasps the dominant position in the industry.

8. Information-based management advantages significantly support product differentiation layout.

With a wide coverage and rich advertising broadcast network and management platform, the Company

launches different regional or media platform mix play packages according to different advertising needs of

advertisers, providing advertisers with flexible and differentiated advertising strategies program. The Company uses

computer information processing technology with independent intellectual property rights to build an efficient

advertisment broadcasting information system management platform, continuously improving the Company’s

management efficiency and targeted advertising.

9. Network value continues to be fully recognized by international authorities and industry associations.

The Company’s unique value proposition lies in making high-frequency, effective impressions on middle-class

consumers in major cities passing through elevators every day. In the era of information model diversified and

fragmented, information overload, and excessive selection of mobile Internet, this value becomes increasingly

prominent and is recognized by more and more international authorities and industry associations.

In 2017, the Company received the prestigious New York Festivals (NYF) China Brand Communication Award,

the Ad Stars Innovative Digital Media Award in Busan, the London International Awards (LIA) Effective Media

Award, and the Chinese Advertisers International Contribution Award of the China Advertising Association. In

March 2018, the Company won the China Advertising Value Media Award of the Year. In May 2018, the Company

won the NYF’s Top Valuable Media Award. In June 2018, the Company won the China’s Most Influential

Communication Company of the Year at the Macau International Advertising Festival. In October 2018, the

Company won the LIA Marketing Innovation Award.

10. The corporate culture is highly recognized by employees and the team’s strength is leading the


21

industry.

In the long-term growth process, the Company has formed clear values—passion, compliance, integrity and

win-win partnership. It is highly recognized by employees and forms effective incentives to promote the enterprise

to develop constantly, stably and healthily.

Passion --- We must keep the entrepreneurial drive and give our best in everything we do. This relates to our

original intention and relentless pursuit as a company. Setback, adversity, failure and frustration make up the ladder

to our growth. Passion, courage, persistence, and dedication speak to unyielding attitude. Compliance --- We must

ensure compliance through norms and encourage innovation through our processes. Through a fair, just and

transparent management system, we inspire passion and potential in our people so that every diligent and dedicated

employee could fuel our progress. Integrity --- Honesty is the foundation of what we do and how we interact with

others. Trust is the common language of communication. We must treat others with sincerity, think from customers’

perspective, and collaborate with trust. Integrity is the key to creating harmony and reinforcing a virtuous cycle.

Win-win partnership --- We encourage inclusion, collaboration and sharing among our people and a service

mentality towards our customers and partners. We seek common success among individual employees, the company

and our customers. We prioritize service above all else and strive for balanced and win-win outcomes of media

value, social impact, employee growth and customer gains.


22

Section IV Operation Discussion and Analysis

I. Overview

1. As the Company’s core business had a sound development, its operating revenue increased steadily by 21.1%

to RMB14.55 billion. In 2018, the Chinese advertising market became steady at the end of the year after a rapid

growth, closing the whole year with a mild increase of 2.9%. Of which, elevator ads continued to maintain a steady

growth while movie theater ads’ growth slowed down. As the largest life-style media network in China, the

Company has greatly expanded the scale of media resources during the Reporting Period. With such scale and

network effect, Focus Media was able to leverage brand recognition abilities to provide advertisers with more

efficient and accurate advertisement placement, thus enhancing their recognition of the Company’s value as a media

company.

2. The Company’s media resources expanded rapidly, with costs rose sharply. In order to achieve its medium

and long term strategic goals, the Company has been significantly expanding its elevator ads resources since the

second quarter of 2018. As of the end of 2018, the Company’s self-operated LCD display increased substantially to

around 724,000 from around 308,000 at the end of 2017, representing an increase of 134.6%. The self-operated

elevator posters increased from approximately 1.21 million as at the end of 2017 to 1.938 million as at the end of

2018, representing an increase of 60.2%. The expansion of media resources led to a surge in rents of media resources,

depreciation of equipment, labor costs and operational and maintenance costs in the second quarter as compared

with the same period last year, which in turn resulted in slight decline of operating profit, total profit and net profit

attributable to shareholders of the listed company despite that the Company achieved a growth of 21.12% in

operating revenue in 2018. The above factors are expected to have an ongoing effect on the relevant financial

indicators such as operating profit, total profit and net profit attributable to shareholders of the listed company.

3. During the Reporting Period, due to the decrease of equity disposal, operating profit edged down on a year-

on-year basis. In 2017, Focus completed the transfer of some equity stake in Shanghai Shuhe Information

Technology Co., Ltd. and an increase of capital of the later via the introduction of investors, achieving investment

returns of RMB680 million. In 2018, Focus’ revenue from equity disposal plunged sharply, leading to a

corresponding decline in Focus’ operating profit.

4. During the Reporting Period, Alibaba and its related parties strategically invested in Focus and became the

second largest shareholder, to jointly explore the new digital marketing model under the new retail trend. The digital

Focus empowered by Alibaba has realized content push (enabled) via internet, real-time monitoring, data feedback


23

and results evaluation. Focus is not only a media for quick buildup of brand awareness, but also a core platform

integrating brand uni-marketing and enhancing brand consumer assets through digital transformation. It can assist

brands in the accurate distribution of ads, coordination with Tmall, and traffic interaction between the screen and

the terminal to help brands increase sales conversion rate in the digital age.

5. The Company adopted the share repurchase plan in 2018. As of the end of 2018, a total of 99,612,604 shares

had been repurchased through centralized bidding, with the consideration of RMB700.298 million.


24

II. Core Business Analysis

1. Overview

For details, please refer to “I. Overview” in “Operation Discussion and Analysis”.

2. Revenues and Costs

(1) Breakdown of operating revenue

Unit: RMB

2018 2017

YoY Change (%) Amount

As percentage of

operating revenue Amount

As percentage of

operating revenue

Total operating

revenue 14,551,285,132.73 100% 12,013,553,185.42 100% 21.12%

By industry

FMCG 3,412,807,277.01 23.45% 2,373,354,604.80 19.76% 43.80%

Internet 2,884,027,740.63 19.82% 2,745,654,163.50 22.85% 5.04%

Transportation 2,172,501,105.20 14.93% 1,723,802,741.08 14.35% 26.03%

Telecommunication 2,169,338,621.43 14.91% 1,513,597,467.77 12.60% 43.32%

Miscellaneous 928,908,368.23 6.38% 1,042,882,763.58 8.68% -10.93%

Real estate and home

decoration 1,039,971,578.76 7.15% 1,034,928,478.08 8.61% 0.49%

Entertainment and

leisure 1,022,719,880.36 7.03% 867,504,984.77 7.22% 17.89%

Business and

services 921,010,561.11 6.33% 711,827,981.84 5.93% 29.39%

By product

Building media 12,075,911,151.93 82.99% 9,383,457,076.50 78.11% 28.69%

Cinema media 2,381,757,656.89 16.37% 2,333,135,373.83 19.42% 2.08%

Other media 93,616,323.91 0.64% 296,960,735.09 2.47% -68.48%

By region

North China 3,082,088,247.60 21.19% 2,509,591,685.85 20.89% 22.81%

East China 5,296,244,219.43 36.40% 4,324,139,126.23 35.99% 22.48%

South China 2,881,783,497.74 19.80% 2,401,166,438.10 19.99% 20.02%

Southwest China 1,526,951,049.49 10.49% 1,200,124,498.96 9.99% 27.23%

Central China 1,053,874,395.93 7.24% 830,100,863.85 6.91% 26.96%


25

Other 710,343,722.54 4.88% 748,430,572.43 6.23% -5.09%

(2) Industries, products or regions accounting for more than 10% of the Company’s operating revenue or

operating profit


Unit: RMB

Operating revenue Operating cost Gross margin

YoY Change (%)

of operating

revenue

YoY Change (%)

of operating cost

YoY Change (%)

of gross margin

Classified by product

Building media 12,075,911,151.93 3,612,396,146.13 70.09% 28.69% 65.24% -6.61%

Cinema media 2,381,757,656.89 1,224,129,777.45 48.60% 2.08% 23.79% -9.02%

(3) Whether the revenue from physical products sales is greater than that from service provision □ Yes √ No

(4) Fulfillment of signed significant sales contracts as at the end of the Reporting Period


Contracted

customer Contract amount (RMB) Main content of the contract

Performance as

of 2018.12.31

No. 1 1,200,000,000.00 Publishing building videos and frame media ads Properly fulfilled

No. 2 600,000,000.00 Publishing building videos, frame ads and cinema ads Properly fulfilled

No. 3 600,000,000.00 Publishing building videos and frame media ads Properly fulfilled

No. 4 600,000,000.00 Publishing building videos and frame media ads Properly fulfilled

No. 5 593,487,064.99 Post frame media ads Properly fulfilled

(5) Breakdown of operating cost

Unit: RMB

Industry Item

2018 2017

YoY Change (%) Amount

As percentage of

operating cost Amount

As percentage of

operating cost

Advertising Media rental cost 3,537,807,089.14 71.96% 2,466,359,245.14 75.27% 43.44%

Advertising Employee

compensation 603,350,936.43 12.27% 428,730,685.39 13.08% 40.73%

Advertising

Equipment

depreciation

expense

207,403,097.21 4.22% 119,380,639.75 3.64% 73.73%


26

Advertising Other operating

cost 567,930,917.24 11.55% 262,260,395.92 8.01% 116.55%

Notes:

1. Media rental cost increased by 43.44% compared to 2017. The rental cost of elevator TVs and elevator posters

increased by 58.33% compared to 2017, and the rental cost of cinema media increased by 24.39%. In 2018, the

Company was committed to expanding the resources capacity. In order to achieve its medium and long term

strategic goals, the Company has been significantly expanding its network resources for elevator TVs and

elevator posters since the second quarter of 2018.

As of the end of the Reporting Period, the Company’s self-operated elevator TVs covered about 150 domestic

cities. In terms of the number of elevator TVs:

The number of elevator TVs in first-tier cities increased from approximately 113,000 at the end of 2017 to

196,000 at the end of 2018, representing an increase of 73.5%;

The number of elevator TVs in second-tier cities increased from approximately 139,000 at the end of 2017 to


The number of elevator TVs in third-tier cities and below increased from approximately 36,000 at the end of

2017 to 103,000 at the end of 2018, representing an increase of 186.1%.

As of the end of the Reporting Period, the Company’s self-operated elevator posters covered more than 220

domestic cities. In terms of the number of elevator posters:

The number of elevator posters in first-tier cities increased from approximately 383,000 at the end of 2017 to


The number of elevator posters in second-tier cities increased from approximately 676,000 at the end of 2017

to 1,023,000 at the end of 2018, representing an increase of 51.3%;

The number of elevator posters in third-tier cities and below increased from approximately 151,000 at the end

of 2017 to 418,000 at the end of the 2018, representing an increase of 176.8%.

2. While the scale of media resources has been expanded significantly, the Company has upgraded elevator TV

equipment, replaced elevator poster frames, and published and monitored ads by using 4G network push,

resulting in the year-on-year increase of equipment depreciation expense, labor cost and other operation and

maintenance costs by 73.7%, 40.7% and 116.6%, respectively.


27

(6) Whether there are any changes in the scope of the consolidated financial statements for the Reporting

Period

√ Yes □ No

Please refer to VIII. Changes in the scope of the consolidated financial statements for the Reporting Period

(7) Significant change or adjustment of the Company’s business, products or services during the Reporting

Period


(8) Major customers and suppliers

Major customers of the Company

Total sales to top five customers (RMB) 2,877,011,907.18

Total sales to top five customers as a percentage of the total sales

for the year (%) 19.77%

Total sales to related parties in top five customers as a percentage

of the total sales of the year (%) 0.06%

Information on top five customers of the Company

No. Name of Customer Sales Amount (RMB) Percentage of total sales for the

year

1 1 683,544,117.46 4.70%

2 2 663,626,452.64 4.56%

3 3 582,741,852.15 4.00%

4 4 479,696,677.36 3.30%

5 5 467,402,807.57 3.21%

Total -- 2,877,011,907.18 19.77%

Major suppliers of the Company

Total purchases from top five suppliers (RMB) 1,508,709,524.94

Total purchases from top five suppliers as a percentage of the total

purchases for the year 24.37%

Total purchases from related parties in the top five suppliers as a

percentage of the total purchases for the year 0.00%


28

Information on top five suppliers of the Company

No. Name of Supplier Purchase Amount (RMB) Percentage of total purchase for the year

1 1 1,054,065,111.37 17.03%

2 2 130,872,355.42 2.11%

3 3 114,296,254.72 1.85%

4 4 104,795,585.85 1.69%

5 5 104,680,217.58 1.69%

Total -- 1,508,709,524.94 24.37%

3. Expenses

Unit: RMB

2018 2017 YoY Change (%)

Sales expenses 2,331,004,250.64 1,997,531,387.85 16.69%

General and administrative

expenses 412,197,245.38 301,668,563.09 36.64%

Financial expenses -93,655,308.74 -128,343,374.78 -27.03%

R&D expenses 228,938,370.62 224,301,481.60 2.07%

Description of material changes:

Sales expenses: Mainly include: 1) Sales business expenses; 2) Sales staff remuneration and benefits; 3) Market

research and business promotion expenses. The sales business expense accounted for approximately 83.49% of the

total sales expenses in 2018 (82.68% in 2017), and 13.37% of operating revenue (13.75% in 2017). In 2018, the

sales staff remuneration and benefits amounted to approximately RMB290.238 million (RMB287.252 million in

2017).

General and administrative expenses: Mainly due to the increase in the Company’s back-stage management

cost brought about by the expansion of media resources in the second quarter.

Financial expenses: Mainly due to the increase in interest expenses and the decrease in interest income.

R&D expenses: Mainly due to the increase in the remuneration of technicians.

4. R&D


R&D spending of the Company

2018 2017 Change Percentage

Number of R&D personnel 250 141 77.30%


29

R&D personnel as a percentage of total headcount 1.96% 1.68% 0.28%

Amount of R&D spending (RMB) 228,938,370.62 224,301,481.60 2.07%

R&D spending as a percentage of operating revenue 1.57% 1.87% -0.30%

Amount of capitalized R&D spending (RMB) 0.00 0.00 0.00%

Capitalized R&D spending as a percentage of R&D spending 0.00% 0.00% 0.00%

Reasons for the significant change of total R&D spending as a percentage of operating revenue as

compared to the previous year □ Applicable √ Not applicable

Reasons and explanation of its rationality for the significant change of the capitalization rate of R&D

spending □ Applicable √ Not applicable

5. Cash flow

Unit: RMB

Item 2018 2017 YoY Change (%)

Subtotal of cash inflows from operating activities 14,727,146,487.30 13,215,229,517.47 11.44%

Subtotal of cash outflows from operating activities 10,944,304,342.18 9,058,974,912.41 20.81%

Net cash flows from operating activities 3,782,842,145.12 4,156,254,605.06 -8.98%

Subtotal of cash inflows from investing activities 12,773,774,112.07 13,668,194,458.88 -6.54%

Subtotal of cash outflows from investing activities 14,156,609,845.76 15,705,168,264.65 -9.86%

Net cash flows from investing activities -1,382,835,733.69 -2,036,973,805.77 -32.11%

Subtotal of cash inflows from financing activities 87,691,101.16 2,006,469,805.15 -95.63%

Subtotal of cash outflows from financing activities 2,749,638,890.84 4,573,932,609.11 -39.88%

Net cash flows from financing activities -2,661,947,789.68 -2,567,462,803.96 3.68%

Net increase in cash and cash equivalents -256,760,939.16 -451,277,944.26 -43.10%

Explanation of major factors influencing material changes in relevant data year-on-year


Net cash flows from operating activities: 1) in 2018, affected by the macroeconomic situation, the payment

cycle of the Company’s core customers generally extended. Although operating revenue increased by 21.12%

compared with last year, cash received from sales of goods and services only increased by 8.0%, resulting in the

YOY increase of the subtotal of cash inflows from operating activities lower than that of operating revenue in 2017;

2) the Company has been significantly expanding its media resources since the second quarter of 2018, with the

corresponding rental cost, the remuneration of development and maintenance personnel, and operation and

maintenance costs and 4G network push and monitoring costs increasing significantly, leading to an increase of

20.81% in cash outflows from operating activities.


30

Cash inflows and outflows from investing activities include the purchase and redemption of bank wealth

management products, and the net redemption of wealth management products in 2018 amounted to RMB1,209.45

million (net purchase of wealth management products was RMB901.1 million in 2017). Excluding the above, the

cash paid by the Company for the purchase of media equipment and other fixed assets during the Reporting Period

was RMB1,708.831 million (RMB263.318 million in 2017); the cash paid by the Company for external investment

was RMB1,241.256 million (RMB971.71 million in 2017), including a total of about RMB907.113 million invested

in the subscription of eight funds during the year.

Cash outflows from financing activities in 2018 include: 1) cash dividends distributed to shareholders of

RMB1,223.157 million (RMB3,564.628 million in 2017); 2) asset disposal payment of RMB776.327 million (the

amount was received as cash inflow in 2017); 3) repurchase of shares of RMB700.298 million (no repurchase of

the Company’s shares was made in 2017).

Explanation of reasons for significant difference between the net cash flow from operating activities and the

net profit of the year during the Reporting Period □ Applicable √ Not applicable


31

III. Non-core Business Analysis


Unit: RMB

Amount

As

percentage of

total profit

Reason Whether sustainable

Investment

revenue 168,343,627.00 2.43%

1) The investment revenue of wealth management products

was RMB107.188 million;

2) After the loss of control in the former consolidated

subsidiary Focus Benefits, the pre-tax gains from the re-

measurement of the remaining equity at fair value was

RMB81.688 million;

3) Long-term equity investment revenue calculated by the

equity method was RMB-27.94 million, etc.

The wealth management product

investment revenue and the long-term

equity investment revenue calculated

by the equity method were sustainable.

After the loss of control in the former

consolidated subsidiary, the gains

from the re-measurement of the

remaining equity at fair value were not

sustainable

Impairment of

assets 400,040,488.12 5.76%

1) Bad debt provision and loss of RMB330.408 million;

2) Provision for full impairment of the investment in

Mirror Group Limited and its wholly-owned subsidiary

Shanghai Weidian Information Technology Co., Ltd. Of

RMB68.632 million

Bad debt provision and loss were

sustainable, while provision for

impairment of investment was

uncertain.

Non-operating

income 4,493,112.46 0.06% Others Uncertain

Non-operating

expenses 15,848,651.11 0.23% Mainly include external donations of RMB8.79 million Uncertain

Other revenue 872,485,667.18 12.57% Mainly due to the receipt of government financial support

related to daily operations during the period Uncertain


32

IV. Analysis of Assets and Liabilities

1. Material changes in asset composition

Unit: RMB

Year end of 2018 Year end of 2017

Change in

percentage Amount As percentage of

total assets Amount

As percentage

of

total assets

Cash and cash equivalents 3,671,590,986.10 19.30% 3,930,262,816.10 25.27% -5.97%

Notes receivable and accounts

receivable 5,019,622,640.28 26.39% 3,089,913,884.01 19.86% 6.53%

Including: notes receivable 196,539,343.76 1.03% 109,668,421.97 0.71% 0.32%

accounts receivable 4,823,083,296.52 25.36% 2,980,245,462.04 19.16% 6.2%

Inventories 2,909,944.51 0.02% 6,997,845.32 0.04% -0.02%

Long-term equity investment 792,534,760.28 4.17% 733,660,143.69 4.72% -0.55%

Fixed assets 1,785,275,925.19 9.39% 351,244,838.56 2.26% 7.13%

Construction in progress 14,272,142.52 0.08% 6,851,326.85 0.04% 0.04%

Short-term borrowings 47,455,135.66 0.25% 0 0.00% 0.25%

Long-term borrowings 892,216,000.00 4.69% 849,446,000.00 5.46% -0.77%

Prepayments 1,373,773,800.40 7.22% 726,786,839.16 4.67% 2.55%

Other current assets 1,865,044,049.87 9.80% 2,949,985,647.87 18.97% -9.17%

Other receivables 101,262,188.03 0.53% 460,372,298.26 2.96% -2.43%

Available-for-sale financial assets 2,902,358,986.81 15.26% 2,069,114,199.00 13.30% 1.96%

Other payables 1,568,267,708.52 8.24% 2,192,777,363.26 14.10% -5.86%

Explanations of material changes:

Reasons for the reduction of cash and cash equivalents: 1) cash received increased by 8.0% compared with the

previous year as payment cycle extended; 2) cash outflows from operating activities increased by 20.8% compared

with the previous year due to media resource expansion; 3) cash paid for the purchase of media equipment and

external investment increased by 138.9% compared with the previous year.

The net amount of notes receivable and accounts receivable at the end of the year was RMB5,019.623 million,

an increase of 62.5% from the end of the previous year. In addition to the 21.1% increase in revenue from the core

business, due to the macroeconomic slowdown in 2018, the payment cycle of the Company’s core customers

generally extended, leading to an increase in the balance of notes receivable and accounts receivable.

The closing balance of long-term equity investment was RMB792.535 million, a net increase of RMB58.875

million compared with the beginning of the year, of which: 1) after disposing part of the equity and the loss of


33

control in the former consolidated subsidiary Focus Benefits, the remaining investment cost of Focus Benefits as an

associate was accounted for approximately RMB83.727 million at its fair value; 2) the former associate company

Shanghai Gemii Information Technology Co., Ltd. And Suzhou Qingyu Intelligent Technology Co., Ltd. Reduced

the long-term equity investment by RMB36.464 million due to the passive dilution of the next round of financing,

and changed the accounting basis to the available-for-sale financial assets; 3) during the Reporting Period, the

Company contributed SGD1.248 million to Target Media Culcreative PTE LTD., its joint venture in Singapore,

which was equivalent to RMB6.257 million, accounting for 30% of the subscribed capital contribution; the

Company subscribed for 8% of shares in Beijing 180 Digital Technology Co., Ltd. For RMB41.6 million, of which

the consideration of RMB33.28 million for equity transfer was paid by the Company in 2018, accounting for 80%

of the subscribed capital contribution.

The year-end balance of net fixed assets was RMB1,785.276 million, an increase of approximately

RMB1,434.031 million or 408.3% from the beginning of the year, mainly due to the increase in the coverage of

elevator TVs and elevator posters in 2018. The media equipment purchased for the year was approximately

RMB1,620.931 million.

Short-term borrowings were mainly liquidity loans borrowed locally by the Korean subsidiary.

The year-end balance of prepayments was RMB1,373.774 million, an increase of 89.0% from the end of the

previous year. Among them, the year-end balance of pre-paid media resources rental was RMB1,186.104 million,

an increase of RMB545.285 million or 85.1% from the beginning of the year. Equipment purchase prepayments

increased by 147.7% from RMB53.093 million at the beginning of the year to RMB131.489 million at the end of

the year. In 2018, due to the rapid expansion of the Company’s media resources, most of the media resources rental

prepaid quarterly or semi-annually, and a large amount of media equipment purchased, the pre-paid media resources

rental and the corresponding prepayments for media equipment purchase rose sharply.

The year-end balance of other current assets was RMB1,865.044 million, a decrease of RMB1,084.942 million

or 36.8% from the beginning of the year. Other current assets mainly included unmatured bank wealth management

products of RMB1,714.25 million and deductible input tax of RMB150.794 million, of which: 1) the bank wealth

management products at the end of the period decreased by RMB1,209.45 million compared with the beginning of

the year, mainly due to the redemption of bank wealth management. The profit distribution for 2017 was

approximately RMB1,223.157 million and payments and prepayments for ground rental, equipment purchase and

repurchase of company shares were RMB700.298 million; 2) the deductible input tax increased by approximately


34

RMB124.508 million compared with the beginning of the year, mainly due to the increase in media coverage and

the substantial purchase of media equipment during the year.

The year-end balance of other receivables was RMB101.262 million, a decrease of RMB359.11 million or

78.0% from RMB460.372 million at the beginning of the year, mainly due to the maturity of large fixed deposits in

bank deposits in 2018 and the receipt of interest.

The closing balance of available-for-sale financial assets was RMB2,902,359 million, a net increase of

RMB833.245 million or 40.3% from the beginning of the year, mainly due to: 1) a total of about RMB907.113

million invested in the subscription of 8 funds during the year, including the contribution of approximately

RMB343.373 million to Focus Media FountainVest Sports JV, L.P., the subscription for the fund share of RMB300

million in Shanghai Yunfeng Qitai Investment Center (L.P.) under Yunfeng Fund and a contribution of RMB198

million; 2) the investment of approximately RMB208.825 million as a cornerstone investor in Inke Limited

(3700.HK); the subscription for 3.15% of the shares of Qiancheng Shuzhi (Beijing) Network Technology Co., Ltd.

For RMB50 million; the subscription for 2.07% of the shares of Beijing Pingxin Media Culture Co., Ltd. (36Kr) for

RMB30 million; 3) redemption of the money fund purchased at the end of last year to reduce the available-for-sale

financial assets measured at fair value by approximately RMB289.546 million; 4) increase in the provision for full

impairment of the investment in Mirror Group Limited and its wholly-owned subsidiary Shanghai Weidian

Information Technology Co., Ltd. Of RMB68.632 million

The other payables as at the end of 2017 include asset disposal payment of RMB776.372 million, which was

paid in early 2018.

2. Assets and liabilities measured at fair value


Unit: RMB

Item Opening balance

Profits and

losses from

changes in fair

value during the

period

Accumulated

fair value

changes

included in

equity

Provision for

impairment

in the current

period

Amount of

purchase in the

current period

Amount of sales

in the current

period

Closing balance

Financial assets

Available-for-sale

financial assets 289,546,171.00 -10,453,729.00 -99,566,078.51 0.00 258,825,474.67 339,546,171.00 109,259,396.16


35

Total 289,546,171.00 -10,453,729.00 -99,566,078.51 0.00 258,825,474.67 339,546,171.00 109,259,396.16

Whether there were any material changes in the measurement attributes of the Company’s major assets

during the Reporting Period □ Yes √ No

3. Assets with restricted rights as of the end of the Reporting Period

Unit: RMB

Item Book value at the end of period Reason for restriction

Cash and cash equivalents 13,917,050.00 Being frozen (Note 1)

Other current assets 80,850,000.00 Being pledged (Note 1)

Total 94,767,050.00 --

Note 1: Affected by the incident of Jinyirong (Beijing) Network Technology Co., Ltd. (Namely “Ezubao”), as of December 31, 2018,

the bank deposit of Chizhong Advertising of RMB13,917,050.00 in the account 121911359510302 was frozen by the competent

authority.

Note 2: Among the wealth management products, there was deposit pledge of RMB80.85 million of the Company to provide

outbound guarantee for its overseas subsidiary Focus Media Korea Company Limited.

V. Analysis of Investments

1. Overview


Investment during the Reporting Period

(RMB)

Investment in the same period of last year

(RMB) Change

1,241,255,729.77 971,710,296.00 27.74%


36

2. Significant equity investment during the Reporting Period


Unit: RMB’0000

Name of

invested company

Principal

business

Investment

method

Investment

amount

Amount of

contribution

during the

Reporting Period

Sharehol

ding

ratio

Sources

of funds Partner

Investmen

t period

Product

type

Progress as of

the balance sheet

date

Profit and loss

of

current

investment

Date of

disclosure Disclosure index

Focus Media

FountainVest Sports

JV, L.P.

Equity

investment

fund

Capital

increase 132,332.00 30,023.54 50.00%

Self-

owned

fund

FountainVest China

Growth Partners

GP2 Ltd.

- Equity

investment

Funding

completed 369.75

2017-6-8

2017-8-19

2018-1-31

CNINFO

(http://www.cninf

o.com.cn)

Shanghai Yunfeng

Qitai Investment

Center (L.P.)

Equity

investment

fund

New

investment 30,000.00 19,800.00 3.73%

Self-

owned

fund

Shanghai Yunfeng

Xinchuang Capital

Management Center

(L.P.) and others

5+5+1 Equity

investment

Partial funding

completed -

2018-4-25

2018-6-14

2019-3-13

Ningbo Dachen

Chuangjing

Investment

Management

Partnership (L.P.)

Equity

investment

fund

Capital

increase 25,000.00 100.00 50.00%

Self-

owned

fund

Shenzhen Fortune

Caizhi Venture

Capital

Management Co.,

Ltd. And others

3+4+1+1 Equity

investment

Partial funding

completed -

2016-7-26

2018-7-27

Lanxi Focus

Hengying

Investment

Partnership (L.P.)

Equity

investment

fund

New

investment 15,000..00 10,500.00 50.00%

Self-

owned

fund

Beijing Hengying

Yuanze Investment

Management Co.,

Ltd. And others

3+2+1+1 Equity

investment

Partial funding

completed -

2017-4-28

2018-4-19

Ningbo Meishan

Bonded Port Area

Zhichun Equity

Investment

Equity

investment

fund

Capital

increase 5,000.00 5,000.00 6.85%

Self-

owned

fund

Ningbo Meishan

Bonded Port Area

Xiamu Investment

Management

4+3+1 Equity

investment

Funding

completed -

2018-4-25

2019-2-16

http://www/


37

Partnership (L.P.) Partnership (L.P.)

and others

Total -- -- 207,332.00 65,423.54 -- -- -- -- -- -- 369.75 --


38

3. Significant non-equity investment during the Reporting Period


4. Financial assets measured at fair value


Unit: RMB

Asset type Initial

investment cost

Profits and

losses from

changes

in fair value

during the

period

Accumulated fair

value changes

included in

equity

Purchase

during the

Reporting

Period

Sales

during the

Reporting

Period

Accumulated

investment

revenue

Closing balance Source of

funds

Money fund 350,000,000.00 -10,453,729.00 0 50,000,000.00 339,546,171.00 0.00 0

The

Company’s

own fund

Others 208,825,474.67 0.00 -99,566,078.51 208,825,474.67 0.00 0.00 109,259,396.16

The

Company’s

own fund

Total 558,825,474.67 -10,453,729.00 -99,566,078.51 258,825,474.67 339,546,171.00 0.00 109,259,396.16 --

5. Use of proceeds


VI. Sale of Major Assets and Equity

1. Sale of major assets


2. Sale of major equity



39

VII. Analysis of Major Holding and Joint Stock Companies


Major subsidiaries and joint stock companies that contribute more than 10% of the Company’s net profit

Unit: RMB

Company name Company type Primary business Registered capital Total assets Net assets Operating revenue Operating profit Net profit

Shanghai Focus Digital Information

Technology Co., Ltd. Subsidiary Holding company 100,000,000.00 3,152,240,865.03 1,053,510,980.85 702,771,673.60 687,942,103.46

Chizhong Advertising Co., Ltd. Subsidiary Advertising services 50,000,000.00 2,375,574,453.63 973,386,547.92 4,308,151,812.03 884,708,360.35 878,075,085.67

Shanghai Focus Software Technology

Co., Ltd. Subsidiary

Technology

development and sales 12,266,600.00 914,491,300.90 37,026,161.41 1,051,736,500.00 898,868,241.10 829,570,156.22

Shanghai Fenze Shidai Software

Technology Co., Ltd. Subsidiary

Technology

development and sales 10,000,000.00 2,323,139,375.78 1,644,176,268.67 1,879,263,488.00 1,689,515,215.36 1,683,072,333.72

Focus Multimedia Technology

(Shanghai) Co., Ltd. Subsidiary Holding company 291,272,860.00 11,419,071,949.75 6,377,290,499.78 17,581,827.04 5,858,530,152.93 5,846,891,052.23

Acquisition and disposal of subsidiaries during the Reporting Period


Company name Acquisition and disposal of subsidiaries during the Reporting

Period Impact on overall production operations and performance

Focus Benefits Loss of control due to passive dilution 61,265,775.33


40

Explanations on major holding and joint stock companies:

1. The time, price, proportion and method of equity disposal by Focus Benefits in the current period:

According to the Investment Agreement entered into by Focus Benefits and existing shareholders (including:

Shanghai Shizhong Information Technology Co., Ltd. (hereinafter referred to as “Shizhong Information”),

Minggang Enterprise Management (Shanghai) Co., Ltd., Ningbo Fengqi Investment Management Partnership (L.P.),

Nuoxin Food (Shanghai) Co., Ltd. (collectively referred to as “Existing Shareholders”)) and Shanghai Fengqi

Enterprise Management Partnership (L.P.) (hereinafter referred to as “Shanghai Fengqi”), Zhuhai Guangkong

Zhongying Industrial Investment Fund Partnership (L.P.) (hereinafter referred to as the “Investors of this Round” in

February 2018, Shanghai Fengqi increased its capital as an option pool for Focus Benefits and subscribed for the

newly registered capital of RMB2,898,551 to obtain 22.47% of the equity of Focus Benefits. After the expansion of

the option pool, investors of that round contributed a total of RMB30 million to Focus Benefits to increase the

capital at a premium and obtain 14.29% of the equity of Focus Benefits. At this point, the shareholding ratio of

Shizhong Information in Focus Benefits was passively diluted from 60% to 39.87%, and the control was lost. On

March 20, 2018, Focused Benefits obtained the business license after the expansion of the option pool; on April 10,

Focus Benefits received the investment of RMB30 million from investors of that round and obtained the

corresponding business license on May 8, 2018.

2. Reasons for various transactions constituting a package deal in the process of the step-by-step passive dilution

of equity to the loss of control:

Given that the two-step disposal in the loss of control on Focus Benefits: a) is established at the same time or

after the consideration of each other’s influence; b) these transactions may only achieve a complete business result

as a whole; c) the occurrence of a transaction depends on the occurrence of at least one other transaction; d) a

transaction alone is uneconomical, but it is economical when considered together with other transactions. Therefore,

it constitutes a package deal.

VIII. Structured Entities Controlled by the Company


IX. Prospects of the Company

In the past three decades, China’s advertising industry has developed rapidly, and has become the world’s


41

second largest market after the United States. In its report “The Trend of Chinese Brand Communication”, CTR

pointed out that the current media ecosystem is basically split into three parts, with the traditional media represented

by CCTV having the advantages of high coverage and high credibility, the Internet media represented by Baidu,

Alibaba and Tencent having high connectivity and strong interactivity, and the living space media represented by

Focus Media having high arrival and high match with the middle-class consumers in cities. Based on these industry

backgrounds and development landscape, Focus Media, as the largest urban life-style media network in China, may

face the following development opportunities and challenges:

1. The Company’s media value continues to gain market awareness and customer recognition, further

strengthening its position as the industry leader.

In the era of diversified information models, information overload, and excessive selection of mobile Internet,

urban consumers have too many choices. Focus Media’s building network and movie theatre network reach the

mainstream urban population frequently and effectively, with its media value continuously gaining high awareness

and recognition from the market and customers. According to KANTAR MEDIA’s BRANDZ TOP100 Most

Valuable Chinese Brands, 81 of China’s Top 100 brands such as Alibaba, Tencent, JD.com, Didi and Mengniu have

selected Focus Media to place ads.

In recent years, emerging brands such as CAR Inc., Eleme, Luckin coffee and GoGoVan have chosen Focus

as the core media for offline promotion; Uxin, Liepin, Xiaomi, Meituan Dianpin, Inke, 51 credit card, Duoyi

Network, Tongcheng Elong and other companies that have been successfully listed or are intended to go public, as

pioneers of different industries, have chosen Focus Media to conduct saturation strike in the time window and gain

an advantageous position in the users’ mind and a leading share in the market. This trend will continue into the

future.

Meanwhile, more leading brands in traditional Chinese industries such as Langjiu, Bosideng and Feihe Milk

Powder have also chosen Focus Media to place ads, which greatly improved their brand strength. In the future, the

Company will continue to seize the opportunity arising from the upgrade trends of traditional industries’ evolution

to high-end products, brand rejuvenation and e-commerce, focus on expanding the proportion of advertising in

traditional industries, and actively expand into liquor, medicine, building materials, home decoration, home

appliances, food and beverage and other industries, in order to further strengthen its position as the industry leader.

2. The Company is advancing rapidly to new targets of covering 500 cities, 5 million terminals and 500 million

new middle class.


42

While further developing the core areas in first- and second-tier cities, the Company has actively expanded

into the peripheral areas of first- and second-tier cities and enhanced distribution in third- and fourth-tier cities,

advancing rapidly towards the med-term goal of “5 million terminals across 500 cities to target the 500 million new

middle class” to meet the customers’ increasing demand of nationwide advertising.

Meanwhile, the Company will continue to upgrade its media products. In 2018, the Company upgraded its

elevator TVs to high-definition smart screens mainly of 27-inch and 32-inch, upgraded its elevator posters to 3.0

edition with doubled area, and launched a new generation of smart screens; the new elevator TV high-definition

smart screens were equipped with real-time monitoring of advertising effects, with accurate distribution of big data

behind elevator posters, which realized the distribution of different ads in different buildings. In the future, the

Company will go further in digitalization, providing advertisers with more optimized media values and services.

3. The Company has actively responded to “the Belt and Road” national development strategy, planned

overseas business, and exported the Chinese original model to the world.

The Company pioneered the building elevator media model globally. After years of development, this Chinese

model with local innovation and its value of brand promotion has been well recognized internationally.

The Company is actively responding to “the Belt and Road” national development strategy, planning overseas

business, and contributing Chinese wisdom and providing a Chinese solution to the world in the context of the

challenges faced by the global media industry in the mobile Internet era.

Following the investment in the establishment of a Korean subsidiary in 2017 and its operation, in 2018, the

Company has successively deployed in overseas markets such as Singapore and Indonesia to export the Chinese

original model of building elevator media to the world.

4. Relevant risks.

(1) Risk of uncertain demand in the Chinese advertising market

In 2015, the Chinese advertising market fell by 2.9%. In 2016, the Chinese advertising market fell by 0.6%. In

2017, the Chinese advertising market grew by 4.3% after two consecutive years of decline. In 2018, growth of the

advertising market started with high momentum but later slowed down. The growth was relatively strong in the first

half of 2018, but the annual growth closed at a mild 2.9%, diluted by tampered development in the second half. The

uncertainty of the macroeconomic environment makes the advertising market subject to volatility risks, which may

have an impact on the Company's operating performance.


43

(2) The risk of further competition in the media industry market

The Company is mainly engaged in the development and operation of life-style media. In recent years, with

the rise of emerging media such as Internet media and mobile Internet media, the forms of media platforms and

advertising devices have become more diverse, and the media structure is gradually changing, which has made the

market competition in the media industry increasingly fierce. In the competitive environment, some media may

compete for market share by continuously reducing the price, which may affect the Company's operating

performance.

X. Reception of Research, Communication, Interviews and Other Activities

1. Registration form for reception of research, communication, interviews and other activities during the

Reporting Period

Date Reception Method Investor Type Index of basic information of the research

January 24, 2018 Field research Institution

See CNINFO (www.cninfo.com.cn) for details

Record Form of Investor Relations Activities of Focus Media on January 24,

2018" (No. 2018-001)

August 29, 2018 Field research Institution

See CNINFO (www.cninfo.com.cn) for details

Record Form of Investor Relations Activities of Focus Media on August 29,

2018" (No. 2018-002)

2. Participation in investor relations meetings during the Reporting Period

Date Location Meeting attended Investor Type Reception Method

September

2018 London The 6th CICC London Forum

Various

investors

One-on-one, one-to-many,

group meeting

September

2018

Hong

Kong 25th CLSA Investors’ Forum

Various

investors


group meeting

November

2018 Shenzhen

9th Credit Suisse China Investment

Conference

Various

investors


group meeting

November

2018 Shenzhen Goldman Sachs China Conference 2018

Various

investors


group meeting

November

2018 Shenzhen

CITIC Securities 2019 Annual Conference for

Capital Market

Various

investors


group meeting

November

2018 Beijing CICC 2018 Investment Forum

Various

investors


group meeting

http://www.cninfo.com.cn/



44

Section V Significant Events

I. Profit Distribution of Common Shares and Conversion of Capital Reserves into Share

Capital of the Company

Profit distribution policy of common shares during the Reporting Period, especially the formulation,

implementation or adjustment of cash dividend policy √ Applicable □ Inapplicable

The 21th meeting of the Sixth Session of Board of Directors of the Company held on April 23, 2018 has

reviewed and approved the 2017 Profit Distribution Proposal of the Company: no bonus share of the Company

would be distributed for the current year. Based on the total share capital of 12,231,566,900 shares as of December

31, 2017, the Company shall distribute RMB1.00 (including tax) in cash per 10 shares to all shareholders, i.e.

RMB0.10 (including tax) in cash per share. The above profit distribution plan shall distribute a total of

RMB1,223,156,690 in cash dividends. The remaining undistributed profits are reserved for future distribution. Also

from the capital reserves, 2 additional shares per 10 shares shall be converted to all shareholders, with additional

2,446,313,380 shares converted in total. Upon the completing of this conversion, the Company’s total share capital

shall be increased to 14,677,880,280 shares. It was agreed to submit this proposal to the 2017 Annual Shareholders’

General Meeting of the Company for consideration.The independent directors made the following independent

opinions on this proposal: the 2017 Profit Distribution Proposal of the Company was formulated according to the

Company’s actual situation, which complies with the relevant provisions of the Company Law, the Articles of

Association and the Dividend Distribution Plan for Shareholders of the Company (2015-2017). This proposal is

conducive to the long-term development of the Company without prejudice to the interests of the Company and the

shareholders, thus it was agreed to be submitted to the Shareholders’ General Meeting of the Company for

consideration. The 2017 Annual Shareholders’ General Meeting of the Company held on May 17, 2018 has

reviewed and approved the 2017 Profit Distribution Proposal of the Company. The Company disclosed the 2017

Equity Distribution Implementation Announcement of the Company on June 22, 2018, and completed the

implementation of the above profit distribution plan on June 29, 2018.

The twenty-first meeting of the sixth session of Board of Directors of the Company held on April 23, 2018 and

the 2017 Annual Shareholders’ General Meeting of the Company held on May 17, 2018 both have reviewed and

approved the Dividend Distribution Plan for Shareholders of the Company (2018-2020), and carried out planning

for the returns on the dividend distribution to the Company’s shareholders in the future three years.


45

During the Reporting Period, the formulation and implementation of the profit distribution proposal of the

Company and the planning for the returns on the dividend distribution to the shareholders in the future three years

conformed with the Articles of Association and the requirements of relevant review procedures , which have fully

guaranteed the legitimate rights and interests of all investors.

Specific Explanation of Cash Dividend Policy

Whether it complies with the requirements of the Articles of Association or the resolutions

of the shareholders’ meeting:

Yes

Whether the dividend standards and proportions are unequivocal and clear: Yes

Whether the relevant decision-making procedures and mechanisms are complete: Yes

Whether the independent directors performed their duties and played their due role: Yes

Whether the minority shareholders have the opportunity to fully express their opinions and

appeals, and whether their legitimate interests are fully protected: Yes

For the adjustments or changes in the cash dividend policy, whether the conditions and

procedures are compliant and transparent: N/A

The Company’s plan (proposal) for dividend distribution of common shares and plan (proposal) for

conversion of capital reserves into share capital for the past three years (including this Reporting Period)

The 2018 Profit Distribution Proposal:

(1) Pursuant to the Implementation Rules on the Share Repurchase of Listed Companies of Shenzhen Stock

Exchange, "if a listed company repurchases shares by taking cash as consideration and adopting the manner of offer

or centralized bidding, the amount of the repurchased shares already realized in that year shall be regarded as the

amount of cash dividend and shall be included proportionally in the calculation of cash dividend in that year ". As

of December 31, 2018, the Company has repurchased 99,612,604 shares by centralized bidding with total payment

amount of RMB700,298,352.98.

(2) Based on the share capital upon deducting the repurchased shares in the then repurchase special accounts

of the Company from the total share capital on the equity record date for the implementation of the distribution plan

in the future, the Company distributed a cash dividend of RMB1 (including tax) per 10 shares to all shareholders,

and the capital reserves were not transferred to share capital and no bonus share was distributed for this distribution.

If the total share capital of the Company or the number of repurchased shares in the repurchase special accounts of

the Company changes prior to the implementation of the profit distribution plan, the profit distribution shall be made

based on share capital upon deducting the repurchased shares in the then repurchase special accounts of the

Company from the total share capital of the Company on the equity record date for the implementation of this


46

distribution plan in the future, and the distribution proportion shall remain unchanged.

The 2017 Profit Distribution Proposal: Based on the total share capital of 12,231,566,900 shares as of

December 31, 2017, the Company shall distribute RMB1.00 (including tax) in cash per 10 shares to all shareholders,

i.e. RMB0.10 (including tax) in cash per share, with no bonus share distributed. From the capital reserves, 2

additional shares per 10 shares shall be converted to all shareholders. Upon the completion of this conversion of

capital reserves into share capital, the Company’s total share capital shall be changed from 12,231,566,900 shares

to 14,677,880,280 shares.

The 2016 Profit Distribution Proposal: Based on the total share capital of 8,736,833,500 shares as of December

31, 2016, the Company shall distribute RMB4.08 (including tax) in cash per 10 shares to all shareholders, i.e.

RMB0.408 (including tax) in cash per share, with no bonus share distributed. From the capital reserves, 4 additional

shares per 10 shares shall be converted to all shareholders. Upon the completion of this conversion of capital reserves

into share capital, the Company’s total share capital shall be changed from 8,736,833,500 shares to 12,231,566,900

shares.

The Company’s cash dividend payouts on common shares in the past three years (including this Reporting

Period)

Unit: RMB

Dividend

year

Cash dividend

amount (including

tax)

Net profit

attributable to the

common

shareholders of

the listed

Company in the

consolidated

statements during

the dividend year

Ratio of cash dividend

amount in the net

profit attributable to

the common

shareholders of the

listed Company in the

consolidated

statements (%)

Cash dividend

amount in other

forms (such as

repurchasing

shares)

Percentage of cash

dividend amount in

other forms in the

net profit

attributable to the

common

shareholders of the

listed Company in

consolidated

statements (%)

Total amount of

cash dividend

(including other

forms)

Ratio of total

amount of cash

dividend (including

other forms) in the

net profit

attributable to the

common

shareholders of the

listed Company in

consolidated

statements (%)

2018 1,450,590,684.80 5,822,974,766.98 24.91% 700,298,352.98 12.03% 2,150,889,037.78 36.94%

2017 1,223,156,690.00 6,004,706,786.08 20.37% 0.00 0.00% 1,223,156,690.00 20.37%

2016 3,564,628,068.00 4,451,211,722.61 80.08% 0.00 0.00% 3,564,628,068.00 80.08%

Explanation: The above 2018 cash dividend amount (including tax) was calculated by distributing dividend of

RMB1 (including tax) per 10 shares, on the basis of the share capital upon deducting the repurchased shares in the

repurchase special accounts of the Company from the total share capital of the Company as of the disclosure date.

In view of the fact that the profit distribution proposal drawn up by the Company shall be based on the share capital

upon deducting the repurchased shares in the then repurchase special accounts of the Company from the total share


47

capital on the equity record date for the implementation of the distribution plan in the future, thus the actual cash

dividend amount (including tax) shall be subject to the amount determined in the 2018 Equity Distribution

Implementation Announcement of the Company.

The Company made a profit during the Reporting Period and the profit distributable to the common

shareholders of the parent company was positive, but it did not put forward a proposal for cash dividend

distribution of common shares


II. Proposal for Profit Distribution and Conversion of Capital Reserves into Share Capital for this

Reporting Period


Numbers of bonus share per 10 shares

(share(s)) 0

Dividend distribution per 10 shares (RMB) (including tax) 1

Conversion of capital reserves into share capital per 10 shares

(share(s)) 0

Share capital base of the distribution proposal (share(s)) 14,505,906,848

Cash dividend amount (RMB) (including tax) 1,450,590,684.80

Cash dividend amount (RMB) in other forms (such as repurchasing

shares) 700,298,352.98

Total amount of cash dividend (including other forms) (RMB) 2,150,889,037.78

Distributable profits (RMB) 6,280,864,549.13

Percentage of total amount of cash dividend (including other forms)

in the total amount of profit distribution 100%

Conditions on the cash dividend

For profit distribution of companies whose development stage are in the growth period and with significant capital expenditure

arrangement, the percentage of cash dividend shall represent at least 20% of the profit distribution

Particulars of the proposal for profit distribution or conversion of capital reserves into share capital

The 2018 Profit Distribution Proposal:

(1) Pursuant to the Implementation Rules on the Share Repurchase of Listed Companies of Shenzhen Stock Exchange, "if a

listed company repurchases shares by taking cash as consideration and adopting the manner of offer or centralized bidding, the amount

of the repurchased shares already realized in that year shall be regarded as the amount of cash dividend and shall be included

proportionally in the calculation of cash dividend in that year". As of December 31, 2018, the Company has repurchased 99,612,604

shares by centralized bidding with total payment amount of RMB700,298,352.98.


48

(2) Based on the share capital upon deducting the repurchased shares in the then repurchase special accounts of the Company

from the total share capital on the equity record date for the implementation of the distribution plan in the future, the Company

distributed a cash dividend of RMB1 (including tax) per 10 shares to all shareholders, and the capital reserves were not transferred to

share capital and no bonus share was distributed for this distribution. If the total share capital of the Company or the number of

repurchased shares in the repurchase special accounts of the Company changes prior to the implementation of the profit distribution

plan, the profit distribution shall be made based on share capital upon deducting the repurchased shares in the then repurchase special

accounts of the Company from the total share capital of the Company on the equity record date for the implementation of this distribution

plan in the future, and the distribution proportion shall remain unchanged.

Explanation: The above distribution proposal’s share capital base (share(s)), cash dividend amount (including tax), total amount

of cash dividend (including other forms) (RMB), and the above percentage of total amount of cash dividend (including other forms) in

the total amount of profit distribution, were only calculated correspondingly by simulating the basis of the share capital upon deducting

the repurchased shares in the repurchase special accounts of the Company from the total share capital of the Company as of the

disclosure date, and the actual data may vary accordingly due to the changes in the total share capital of the Company or the number

of shares repurchased in the repurchase special accounts of the Company prior to the implementation of the profit distribution plan.

III. Fulfillment of Commitments

1. Commitments made by the Company’s actual controllers, shareholders, related parties, purchasers, the

Company and other related parties for the commitments that were fulfilled during the Reporting Period and

those not fulfilled as of the end of the Reporting Period

(1) Share Reform Commitments

Committed by YI Xianzhong

Commitment

type

Shareholding reduction commitment

Commitment

details

Only when the price of the Company’s share in the secondary market is not less than RMB10, can it be listed for

sale through a stock exchange, and the price of the commissioned sale shall be not less than RMB10 (the above

price shall be subject to the corresponding ex-rights calculation when the shareholders' interests change). The 2005

distribution plan of the Company: based on the total share capital of 223.95 million shares, 3.5 additional shares

per 10 shares shall be converted, the ex-right date was April 11, 2006, and it committed that the sales price shall

be adjusted to not less than RMB7.41 after the ex-rights.

Committed

time

November 10, 2005

Commitment

period

Long-term

Fulfillment Fulfillng


49

status

Committed by GUAN Yuchan

Commitment

type

Other commitments

Commitment

details

In the event that the number of the shares listed for sale through a stock exchange reaches one percentage of the

total number of the shares of the Company, the timely performance of the obligation of announcement shall be

made within two business days from the date on which such fact takes place.

Committed

time

November 10, 2005

Commitment

period

Long-term

Fulfillment

status

Fulfillng

Committed by YI Xianzhong

Commitment

type

Other commitments

Commitment

details

In the event that the number of the shares listed for sale through a stock exchange reaches one percentage of the

total number of the shares of the Company, the timely performance of the obligation of announcement shall be

made within two business days from the date on which such fact takes place.

Committed

time

November 10, 2005

Commitment

period

Long-term

Fulfillment

status

Fulfillng

(2) Commitments Made During Asset Restructuring

Committed

by

Media Management (HK)

Commitment

type

Commitment on restricted sale of shares

Commitment

details

The consideration shares of Hedy Holding obtained through this issuance note 1 shall not be transferred from the

date of listing of consideration shares to the expiration date of 36-month period and before the date on which the

obligation of performance compensation (if any) of this enterprise is fulfilled (if there is no obligation of

performance compensation, it is the date of the announcement on the special audit report on the committed

performance, whichever is later).

Committed December 29, 2015


50

time

Commitment

period

December 29, 2018

Fulfillment

status

Fulfilled

Committed by FMCH; Media Management (HK); Jason JIANG Nanchun; Rongxin Zhiming

Commitment

type

Commitments on the horizontal competition, related transactions, occupation of funds

Commitment

details

I/The Company currently do(es) not control or manage, directly or indirectly, in any form within China or abroad,

or jointly control or manage with other natural persons, legal persons, partnerships or organizations any economic

entity, institution or economic organization that has engaged in any competition with the listed company. I/The

Company do(es) not engaged in any horizontal competition with the listed company. From the date of issuing

this letter of commitment, I/the Company will not control or manage, directly or indirectly, in any form (including

but not limited to separate operation, through joint ventures or holding shares and other interests of another

company or enterprise) within China or abroad, any economic entity, institution or economic organization that

has engaged in any competition with the listed company. I/The Company guarantee(s) that legal and effective

measures will be taken to procure other companies, enterprises and other economic organizations controlled by

me/the Company not to directly or indirectly control or manage in any form any economic entity, institution or

economic organization that is identical or similar to the listed company /Focus Media and has or may have

engaged in any competition with the business of the listed company. If the relevant company and enterprise

controlled by me/the Company directly or indirectly controls and manages the economic entity, institution or

economic organization that competes with the products or business of the listed company, I/the Company and

the relevant company and enterprise controlled by me/the Company will put a halt on the production or operation

of competing business or products, or integrate the competing business into the operation of the listed company,

or transfer the competing business to a third party unconnected with me/the Company, or take other ways to

avoid horizontal competition.

Committed time August 29, 2015

Commitment

period

Long-term

Fulfillment

status

Fulfillng

Committed by FMCH; Media Management (HK); Jason JIANG Nanchun; Rongxin Zhiming

Commitment

type

Other commitments

Commitment

details

1. Independence of the personnel (1) Ensure that the general manager, deputy general manager, Head of Finance,

Board Secretary and other senior management of the listed company work on a full-time basis for the listed

company, and do not hold other positions other than directors and supervisors in the Company and other enterprises

controlled by the Company, and do not receive remuneration from the Company and other enterprises controlled

by the Company. (2) Ensure that the financial staff of the listed company are independent, and do not work on a


51

part-time basis for or receive remuneration from the Company and other enterprises controlled by the Company.

(3) Ensure that the listed company has a complete and independent labor, HR and remuneration management

system, and these systems are completely independent from the Company and other enterprises controlled by the

Company. 2. Independence of the assets (1) Ensure that the listed company has independent and complete assets.

The assets of the listed company are all under the control of the listed company and are independently owned and

operated by the listed company. (2) Ensure that the Company and other enterprises controlled by the Company do

not illegally occupy the funds and assets of the listed company in any way. (3) Ensure that the assets of the listed

company are not used for illegal provision of guarantee for the debts of the Company and other enterprises

controlled by the Company. 3. Financial independence (1) Ensure that the listed company establishes an

independent financial department and an independent financial accounting system. (2) Ensure that the listed

company has standardized and independent financial accounting systems and financial management systems for

subsidiaries. (3) Ensure that the listed company opens a bank account independently and does not share the bank

account with the Company and other enterprises controlled by the Company. (4) Ensure that the listed company

makes independent financial decisions, and the Company and other enterprises controlled by the Company do not

interfere with the use and dispatch of the funds of the listed company in violation of laws and regulations. (5)

Ensure that the listed company pays taxes independently according to law. 4. Independence of the institutions (1)

Ensure that the listed company establishes a sound corporate governance structure of the joint-stock company

according to law, and has an independent and complete organizational structure. (2) Ensure that the shareholders’

general meeting, the Board of Directors, the independent directors, the Board of Supervisors and senior

management of the listed company independently exercise their functions and powers in accordance with laws,

regulations and the Articles of Association. (3) Ensure that the listed company has an independent and complete

organizational structure, and there is no institutional confusion between the Company and other enterprises

controlled by the Company. 5. Independence of the business (1) Ensure that the listed company has the assets,

manpower, qualifications and capabilities to carry out independent business activities, and is capable of operating

in the market in an independent and continuous manner. (2) Ensure that the related transactions between the

Company and other enterprises controlled by the Company and the listed company are minimized, and if the related

transactions cannot be avoided or are carried out on reasonable grounds, such transactions shall be carried out

legally in accordance with the principle of “openness, fairness and impartiality”. 6. Ensure that the listed company

maintains independence from the Company and other enterprises controlled by the Company in other aspects. If

the listed company suffers economic losses due to violation of the above commitments, the Company shall make

a compensation to the listed company.

Committed

time

August 29, 2015

Commitment

period

Long-term

Fulfillment

status

Fulfillng

Committed by Beingmate GroupNote 2, Development Center II, Honglian Investment, Hongqian Investment, Hongying

Investment, Huijia Hexing, Jiaxing Huiling, Jinhui Chuangfu, Jingfu Investment, Joyland Assets, Kunyu

Jincheng, Nalande, Rongxin Zhiming, Shanhong Investment, Xinheng Zhongrun, Youxin Investment, Zhengjing

Investment, Zhuhai Rongwu, Beijing Wuyuan, Daode Yuantai, Detong Zhongmei, Development Center I,

Fengzhong Investment, Hunan Cultural, Huashi Pengyi, Jujin Jiawei, Pengrui Investment, Qianhai Furong,


52

Frontsea, Tianjin Chengbai, Xizheng Value, Xianyou Investment, Yichang Investment, Yuxin Investment and

Zhezhong Group

Commitment

type

Commitment on restricted sale of shares

Commitment

details

1. If the Company has any shareholding in Focus Media for less than 12 months from the date of completion of

business registration when the Company acquires the consideration shares, such consideration shares shall not

be transferred until the expiry of the 36-month anniversary from the date of listing of consideration shares and

the date on which the obligation of performance compensation of the Company (if any) is fullfilled (if there is

no obligation of performance compensation, it is the date of the announcement on the special audit report on

committed performance, whichever is later). 2. If the Company has any shareholding in Focus Media for 12

months or more from the date of completion of business registration when the Company acquires the

consideration shares, such consideration shares shall not be transferred within the 12 months from the date of

listing. Upon the expiry of the aforementioned terms, the consideration shares in Hedy Holding held by the

Company will be relieved in phases according to the following arrangements. Specific arrangements are as

follows:(1) Phase 1: 30% of the total number of consideration shares acquired at this occasion (after deducting

compensation portion, if any) can be relieved upon the expiry of the 12-month anniversary from the date of

listing of consideration shares and the date on which the obligation of previous annual performance

compensation of the Company (if any) is fufilled (if there is no obligation of performance compensation, it is

the date of the announcement on the special audit report on committed performance, whichever is later); (2)

Phase 2: 30% of the total number of consideration shares acquired at this occasion (after deducting compensation

portion, if any) can be relieved upon the expiry of the 24-month anniversary from the date of listing of

consideration shares and the date on which the obligation of previous annual performance compensation of the

Company (if any) is fufilled (if there is no obligation of performance compensation, it is the date of

announcement on special audit report on committed performance, whichever is later); (3) Phase 3: 40% of the

total number of consideration shares acquired at this occasion (after deducting compensation portion, if any) can

be relieved from the date when the performance compensation obligation (if any) of the year or previous years

for relieving Phase 1 and 2 shares of the Company is fufilled (if there is no obligation of performance

compensation, it is the date of announcement on special audit report on committed performance). Within six

months after completion of the transaction, if the closing price of shares of Hedy Holding is lower than the

current issue price for 20 consecutive trading days, or the closing price at the end of the six months after the

completion of the transaction is lower than the current issue price, the lock-up period of the shares in Hedy

Holding held by the Company is automatically extended for six months (if ex-dividends and ex-rights actions

including dividend distribution, distribution of bonus shares, conversion into share capital or share allotment

take place on the part of Hedy Holding during the abovementioned periods, the aforesaid issue price shall be

calculated based on the prices adjusted by factors including ex-dividends and ex-rights). 3. If there is any non-

compliance between the agreements regarding the abovementioned lock-up periods of shares of the Company

and the latest regulatory opinions issued by the CSRC and the SZSE and other securities regulatory authorities

or the requirements or requests as provided by Ministry of Commerce and other relevant governmental

authorities, the Company shall adjust accordingly the lock-up periods of shares in accordance with the regulatory

opinions of then relevant securities regulatory authorities or the requirements or requests of relevant

governmental authorities. Note 3

Committed time December 29, 2015

Commitment December 29, 2018


53

period

Fulfillment

status

Fulfilled

Committed

by

FMCH;Gio2 (HK); Giovanna Investment (HK); Glossy City (HK); Media Management (HK); Power Star (HK);

Jason JIANG Nanchun; Rongxin Zhiming

Commitment

type

Commitments on the horizontal competition, related transactions, occupation of funds

Commitment

details

In the event that related party transactions are carried out between me/the Company and other companies controlled

by me/the Company and the listed company and the companies controlled by it for inevitable or reasonable reasons

in the future, I/the Company and other companies controlled by me/the Company shall trade at a fair and reasonable

market price in accordance with the principles of openness, fairness and justice upheld by market transactions, and

perform the decision-making procedures for related party transactions in accordance with the requirements of

relevant laws, regulations and regulatory documents and perform information disclosure obligation in accordance

with law. I/The Company guarantees that I/the Company and other companies controlled by I/the Company will

not obtain any improper interests through the related party transactions with the listed company and the companies

controlled by it, or impose any improper obligation on the listed company and the companies controlled by it. If

I/the Company trades with the listed company and the companies controlled by it in the violation of the

abovementioned commitments, and it causes losses to the listed company and the companies controlled by it, I/the

Company shall bear the corresponding liability for compensation.

Committed

time

August 29, 2015

Commitment

period

Long-term

Fulfillment

status

Fulfillng

Note 1: This issuance refers to the issuance of shares by the Company in 2015 and matters in relation to the purchase of assets by cash.

Note 2: Hangzhou Botong Asset Management Company Limited – Botong Quantification No. 2 Private Equity Investment Fund (杭

州泊通资产管理有限公司－泊通量化 2 号私募投资基金) (hereinafter referred to as “Hangzhou Botong”) undertook some restricted

shares of the Company held by Beingmate Group Co., Ltd. (hereinafter referred to as “Beingmate”) due to participation in judicial

auction. These two parties completed the transfer and delivery of share in October 2018. Upon the completion of the deal, Hangzhou

Botong held 65,972,465 tradable shares subject to trading moratorium of the Company, accounting for 0.45% of the total share capital

of the Company. As the undertaker, Hangzhou Botong succeeded the commitments made by Beingmate in respect of restricted sale of

shares and such commitments will expire on December 29, 2018.

Note 3: The commitments on restricted sale of shares made by Zhuhai Rongwu; Zhengjing Investment; Jinhui Chuangfu; Kunyu

Jincheng; Rongxin Zhiming; Jiaxing Huiling; Shanhong Investment; Honglian Investment; Hongqian Investment; Hongying

Investment; Huijia Hexing; Nalande; Beingmate Group; Xinheng Zhongrun; Jingfu Investment; Development Center II; Youxin

Investment; Joyland Assets; Hunan Cultural; Huashi Pengyi; Jujin Jiawei; Daode Yuantai; Tianjin Chengbai; Detong Zhongmei;

Beijing Wuyuan; Frontsea; Zhezhong Group; Xianyou Investment; Yichang Investment; Xizheng Value; Qianhai Furong; Pengrui


54

Investment; Fengzhong Investment; Development Center I and Yuxin Investment: as the equity held by above companies in Focus

Multimedia was less than 12 months from the date of completion of industrial and commercial registration when such companies

acquired the consideration shares, they committed on restricted sales that such consideration shares shall not be transferred from the

date of listing of consideration shares to the expiration date of 36-month period thereafter and the date on which the performance

compensation obligation (if any) of the Company is fulfilled (if there is no obligation of performance compensation, it is the date of

the announcement on the special audit report on the committed performance, whichever is later).

2. Where there had been profit forecast for an asset or project of the Company, and it was still within the

profit forecast period during the Reporting Period, the Company shall explain whether such asset or project

reaches the original profit forecast and the reason therefor


IV. Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Parties

for Non-Operating Purposes


V. Explanations Provided by the Board of Directors, the Board of Supervisors, and the

Independent Directors (if any) Regarding the “Non-standard Audit Report” Issued by the

Accounting Firm during the Reporting Period


VI. Changes in Accounting Policies, Accounting Estimation, and Calculation Methods as

Compared to the Financial Report of the Previous Year

√Applicable □ Not applicable

On June 15, 2018, the Ministry of Finance released the Notice on Revising and Issuing the Format of Financial

Statements of General Enterprises for 2018 (Cai Kuai [2018] No. 15) (hereinafter referred to as the "Notice"), which

makes amendments to the format of financial statements of general enterprises. The Company shall prepare its

financial statements in accordance with the format of financial statements of general enterprises stipulated in the

Notice (applicable to enterprises that have not yet implemented the new financial standards and new revenue

standards). Therefore, the Company held the 25th meeting of the Sixth session of the Board and the 22nd meeting

of the Sixth session of the Board of Supervisors on October 28, 2018, at which the Proposal on Changes in

Accounting Policies of the Company was considered and approved. The Proposal agreed that the Company should

change its accounting policies according to the Notice, adjust the presentation of the following financial statements,


55

and make corresponding adjustment to the comparative data of comparable accounting periods:

1. Original items “notes receivable” and “accounts receivable” are combined into the new item “notes

receivable and accounts receivable”.

2. Original items “interests receivable”, “dividends receivable” and “other receivables” are combined into the

item “other receivables”.

3. Original items “disposal of fixed assets” and “fixed assets” are combined into the item “fixed assets”.

4. Original items “engineering material” and “construction in progress” are combined into the item

“construction in progress”

5. Original items “notes payable” and “accounts payable” are combined into the new item “notes payable and

accounts payable”.

6. Original items “interests payable”, “dividends payable” and “other payables” are combined into the item

“other payables”.

7. Original items “specific payables” and “long-term payables” are combined into the item “long-term

payables”.

8. By adding a new item “research and development expenses”, research and development expenses originally

included in the item “General and administrative expenses” are separately presented as the new item “research and

development expenses”.

9. Breakdown items “interest expense” and “interest income” are presented under the item “finance expenses”.

Except for the impact from changes in the above items, the changes in the accounting policies will not have an

effect on the total assets, total liabilities, net assets and net profit of the Company during the current period and

before the changes in accounting policies.

VII. Explanation for Retrospective Restatement due to Correction of Material Accounting

Errors during the Reporting Period

□ Applicable √Not applicable

VIII. Explanation for Changes in Scope of the Consolidated Financial Statements as Compared

to the Financial Report for the Prior Year

√Applicable □ Not applicable

For details, please refer to Section XI. Financial Report/ VIII. Changes in consolidation scope


56

IX. Details regarding Engagement and Disengagement of the CPA Firm

CPA firm engaged at present

Name of the domestic CPA firm BDO China Shu Lun Pan CPAs LLP

Remuneration for the domestic CPA firm (RMB’0000) 450

Consecutive years of the audit service provided by the domestic

CPA firm 18

Name of the certified public accountants from the domestic CPA

firm YANG Jingxin, XU Lirong, SHEN Songtao

Consecutive years of audit services provided by the certified

public accountants from the domestic CPA firm 2, 4, 2

Whether the CPA firm was changed in the current period □Yes √No

Engagement of internal control audit CPA firm, financial advisor or sponsor □Applicable √Not

applicable

X. Listing Suspension and Termination after Disclosure of this Annual Report

□ Applicable √Not applicable

XI. Bankruptcy and Restructuring

□Applicable √Not applicable

XII. Significant Lawsuit or Arbitration


XIII. Punishment and Rectification


XIV. Integrity of the Company and its Controlling Shareholders and Actual Controllers


XV. Implementation of Equity Incentive Plan, Employee Stock Ownership Plan, or other

Employee Incentive Policies by the Company

√Applicable □Not applicable

During the reporting period, the Company did not have equity incentive plans, employee stock ownership plan


57

or other employee incentive policies.

Upon consideration and approval at the first meeting of the seventh session of the Board held on February 14,

2019 and the second extraordinary general meeting for 2019 held on March 5, 2019 of the Company, the

implementation of the first employee stock ownership plan by the Company was approved. The details are as follows:

1. Scope of participants: directors (excluding independent directors), supervisors and senior management of

the Company, and other core employees of the Company and its subsidiaries, with the total number of employees

of no more than 100, of which two are directors (excluding independent directors), supervisors or members of senior

management, and no more than 98 are other core employees. The specific number of participants is determined

based on the actual payment of the employees.

2. The total amount of funds raised by the employee stock ownership plan would be no more than RMB300

million, with “shares” as the unit for subscription and RMB1.00 for each share and the maximum number of shares

would be 300 million. The source of funding of the employee stock ownership plan would be generated from the

lawful remuneration of the Company's employees, the self-raised funds, the loans provided by Mr. Jason JIANG

Nanchun, the actual controller of the Company, and the capital obtained through other sources as permitted under

the laws and administrative regulations. The specific total amount and shares of the employee stock ownership plan

shall be determined based on the actual amount paid.

3. The employee stock ownership plan will purchase and hold the shares of the Company through purchases

made on the secondary market (including but not limited to bidding transactions and block trade), shares repurchase

of the Company and other means as permitted under laws and regulations.

4. The duration of the employee stock ownership plan is 48 months, with effect from the date when the plan is

considered and approved at the general meeting. The Board may, following implementation of the procedures

stipulated in this draft, carry forward the extension of this plan according to the market conditions. The lock-up

period of the underlying shares acquired through non-tradable transfer or other means permitted by laws and

regulations shall be 36 months starting from the date on which the Company announces the last transfer of the

subject shares to the name of the employee stock ownership plan.

5. The employee stock ownership plan was managed by the Company itself. The Company has established an

ESOP Management Committee to act as the manager of the ESOP and exercise the rights of shareholders on behalf

of the ESOP.

Up to now, the bank and securities accounts of the first employee stock ownership plan of the Company have

been opened, and the follow-up work is still in steady progress. Currently, no shares of the Company have been


58

purchased for the plan. For details, please refer to the website of CNINFO (www.cninfo.com.cn).

XVI. Significant Related Transactions

1. Related transactions relevant to routine operations


2. Related transactions arising from purchases and sales of assets or equity


3. Related transactions arising from joint investments on external parties


4. Credits and liabilities with related parties


5. Other significant related transactions


Power Star (HK) and Glossy City (HK), which are shareholders of the Company, signed a Share Transfer

Agreement (《股份转让协议》) and a Supplemental Agreement of the Share Transfer Agreement (《股份转让协

议之补充协议》) with Alibaba Technology on July 17, 2018 and August 9, 2018, respectively. A total of

774,401,600 tradable shares without trading restrictions, accounting for 5.28% of the total share capital, of the

Company held by Power Star (HK) and Glossy City (HK) was transferred to Alibaba Technology through agreement.

Alibaba Investment Limited (hereinafter referred to as "Alibaba Investment") and New Retail Strategic

Opportunities Fund, L.P. (hereinafter referred to as "New Retail"), which are related parties of Alibaba Technology,

signed Share Transfer Agreement with Giovanna Investment Cayman Limited (hereinafter referred to as "Giovanna

Cayman") and Gio2 Cayman Holdings Ltd (hereinafter referred to as “Gio2 Cayman”) on July 16, 2018, respectively,

pursuant to which, they acquired 100% equity of Giovanna Investment (HK) held by Giovanna Cayman and 100%

equity of Gio2 (HK) held by Gio2 Cayman. After completion of the above equity transfer, Alibaba Investment and

New Retail, being related parties of Alibaba Technology, indirectly hold 398,074,142 tradable shares without

trading restrictions of the Company, accounting for 2.71% of the Company's total share capital.

Jason JIANG Nanchun and Media Management Holding Limited (hereinafter referred to as “MMHL”), which


59

is an indirect holding company of Jason JIANG Nanchun, signed an Equity Subscription Agreement (《股权认购

协议》 ) with Alibaba Investment Limited (hereinafter referred to as the “Investor”), agreeing that Alibaba

Investment Limited intends to subscribe for new shares of MMHL (the "Capital Increase") with a price of

US$511,116,918.20, which will be delivered on or after December 31, 2018. After completion of the Capital

Increase and delivery, the Investor will hold 10% equity of MMHL, and Jason JIANG Nanchun will indirectly hold

90% equity of MMHL.

For details, please refer to relevant announcements including the Holding Announcement on Changes in

Shareholders' Equity (I) (《关于股东权益变动的提示性公告（一）》) and the Holding Announcement on Changes

in Shareholders' Equity (II) (《关于股东权益变动的提示性公告（二）》) disclosed by the Company on July 19,

2018.

Given that Alibaba Technology and the parties acting in concert with it will hold (directly or indirectly) more

than 5% of the Company's equity in total after the completion of the above equity transactions, according to the

Stock Listing Rules of Shenzhen Stock Exchange Alibaba Technology and its related parties are related legal

persons of the Company. Therefore, the Company convened the 23rd (extraordinary) meeting of the sixth session

of the Board of Directors and the first extraordinary general meeting for 2018 on July 25, 2018 and August 13, 2018,

respectively, for consideration and approval of the Proposal of the Company on Signing Business Cooperation

Framework Agreements and Transactions with Related Parties (《公司关于与关联方签署业务合作框架协议暨

关联交易的议案》) and the Proposal of the Company on Related Transactions (《公司关于关联交易的议案》).

For details, please refer to relevant announcements disclosed by the Company on July 27, 2018 and August 14,

2018.

In December 2018, the Company fulfilled its information disclosure obligations in a timely manner after

receiving the notice that relevant registration procedures for the above-mentioned share transfer related to its

shareholders was completed. For details, please refer to the Progress Announcement of the Company on the Changes

in Shareholders' Equity (《公司关于股东权益变动的进展公告》) disclosed by the Company on December 25,

2018.

Disclosure websites for enquiries on provisional reports on significant related transactions

Title of provisional announcement Disclosure date of

provisional announcement

Disclosure website for provisional

announcement

Holding announcement of the Company on changes in

shareholders' equity (I) July 19, 2018 CNINFO (www.cninfo.com.cn)


60

Holding announcement of the Company on changes in

shareholders' equity (II) July 19, 2018 CNINFO (www.cninfo.com.cn)

Announcement of the Company on resolutions at the 23rd

(extraordinary) meeting of the sixth session of the Board of

Directors

July 27, 2018

CNINFO (www.cninfo.com.cn)

Announcement of the Company on signing business cooperation

framework agreement and transactions with related parties

July 27, 2018 CNINFO (www.cninfo.com.cn)

Announcement of the Company on related transactions July 27, 2018 CNINFO (www.cninfo.com.cn)

Supplementary announcement of the Company on the transfer of

shares by shareholders through agreement August 11, 2018 CNINFO (www.cninfo.com.cn)

Announcement of the Company on resolutions at the first

extraordinary shareholder’s meeting for 2018 August 14, 2018 CNINFO (www.cninfo.com.cn)

Progress Announcement of the Company on the Changes of

Shareholders' Equity December 25, 2018 CNINFO (www.cninfo.com.cn)

XVII. Significant Contracts and their Execution

1. Trusteeships, Contracting and Leasing

(1) Trusteeships


(2) Contracting


(3) Leasing


2. Significant guarantees


(1) Guarantees

Unit: RMB’0000

External guarantees provided by the Company and its subsidiaries (excluding guarantees for subsidiaries)

Guaranteed party Disclosure date

of relevant

Maximum

guaranteed

Actual

occurrence date

Actual

guaranteed

Type of

guarantee

Period of

guarantee

Due

or not

Guarantee

for a


61

announcement

on maximum

guaranteed

amount

amount amount related

party or

not

Shuhe Technology 2017-11-18 100,000 2016-06-08 0 Joint liability

guarantee

2016-6-8

~2018-8-1 Yes Yes

Shuhe Technology 2017-11-18 50,000 2016-12-09 50,000 Joint liability

guarantee

2017-12-19

~2018-12-19 Yes Yes

Total maximum amount of external guarantees

reviewed during the Reporting Period (A1) 150,000

Total actual amount of external guarantees during

the Reporting Period (A2) 50,000

Total maximum amount of external guarantees

approved at the end of the Reporting Period (A3) 150,000

Total balance of the actual amount of external

guarantees at the end of the Reporting Period (A4) 0

Guarantees provided by the Company for its subsidiaries

Guaranteed party

Disclosure date

of relevant

announcement

on maximum

guaranteed

amount

Maximum

guaranteed

amount

Actual

occurrence date

Actual

guaranteed

amount

Type of

guarantee

Period of

guarantee

Due

or not

Guarantee

for a

related

party or

not

the Company and its subsidiaries 2018-04-25

2,500,000

- 0 Joint liability

guarantee - No No

Focus Media Overseas Investment

Limited 2017-11-23 2017-11-21 89,221.60

Joint liability

guarantee

2017-11-21

~2020-11-21 No No

Focus Media Korea Co., LTD 2018-06-29 2018-06-26 4,745.51 Joint liability

guarantee

2018-6-26

~2019-7-25 No No

Total maximum amount of guarantees for subsidiaries

reviewed during the Reporting Period (B1) 2,500,000

Total actual amount of guarantees for subsidiaries

during the Reporting Period (B2) 93,967.11

Total maximum amount of guarantees for subsidiaries

approved at the end of the Reporting Period (B3) 2,500,000

Total balance of actual amount of guarantees for

subsidiaries at the end of the Reporting Period (B4) 93,967.11

Total guaranteed amount provided by the Company (i.e. total amount of the aforesaid items)

Total maximum amount of guarantees reviewed

during the Reporting Period (A1+B1) 2,650,000

Total actual guaranteed amount during the

Reporting Period (A2+B2) 143,967.11

Total maximum amount of guaranteeds approved at

the end of the Reporting Period (A3+B3) 2,650,000

Total balance of actual guarantees at the end of the

Reporting Period (A4+B4) 93,967.11

Proportion of the actual total guaranteed amount (A4+B4) to the Company's net assets

attributable to the parent company 6.62%

Of which:

Balance of guarantees for shareholders, actual controller and their related parties (D) 0


62

Balance of debt guarantees directly or indirectly provided for guaranteed parties with asset-

liability ratio of over 70% (E) 0

Total amount of guarantee exceeding 50% of the net assets (F) 0

Total amount of the above three guarantees (D+E+F) 0

Specific descriptions of guarantees by compound method Nil

(2) Illegal provision of guarantees for external parties


3. Entrusting others to execute any cash asset management

(1) Entrusted wealth management


Unit: RMB’0000

Type

Funding source

for entrusted

wealth management

Amount under

entrusted wealth

management

Undue balance

Overdue

outstanding

amount

Wealth management

products provided by

banks

Self-owned fund 499,165.00 161,425.00 0

Others Self-owned fund 30,656.31 10,000.00 0

Total 529,821.31 171,425.00 0

(2) Entrusted loans


4. Other significant contracts


Name of the company

entering

into contract

Name of the counterparty to

contract

Subject matter of

the contract

Date of

contract

entered into

Book value

of the assets

involved in

the contract

(in

RMB’0000)

Pricing

principles

Related

party

transaction

or not

Related

party

relationship

Focus Media Overseas DBS Bank Ltd., Bank loans 2017-11-21 89,221.60 market No Nil


63

Investment Limited Hong Kong Branch pricing

Focus Media Holding

Ltd. (分众传媒有限公

司)

China Minsheng Banking

Corp., Ltd. Banking facility 2018-03-05 50,000.00

market

pricing

No Nil

XVIII. Social Responsibilities

1．Fulfillment of social responsibilities

For details, please refer to the 2018 Corporate Social Responsibility Report published on the Securities

Times and the Company's designated information disclosure website “CNINFO” (www.cninfo.com.cn) on April

25, 2019.

2. Fulfillment of the social responsibility of targeted poverty alleviation

The Company did not conduct any targeted poverty alleviation during the Reporting Period and had no future

arrangement for targeted poverty alleviation.

3. Environmental protection

Whether the listed company and its subsidiaries are considered as the major pollutant discharging units

announced by environmental protection department No

For details, please refer to the 2018 Corporate Social Responsibility Report published on the Securities

Times and the Company's designated information disclosure website “CNINFO” (www.cninfo.com.cn) on April

25, 2019.

XIX. Other Significant Events

√Applicable □ Inapplicable

Announcement

No. Events

Publication

date

Name(s) and

page(s) of

newspaper on

which the

announcements

were published

Internet website for

publication

2018-001 Announcement of the Company on the Revised 2017 Annual

Results Forecast 2018-1-11

Securities

Times B18 http://www.cninfo.com.cn


64

2018-002 Announcement of the Company on Changes in Shares of the

Shareholders 2018-1-18

Securities


2018-003

Announcement of the Company on the Progress of Participation

in the Establishment of Investment Funds and Related Party

Transactions

2018-1-31 Securities


2018-004

Announcement of the Company on the Progress of Participation

in the Establishment of Investment Funds and Related Party

Transactions

2018-2-6 Securities


2018-005 Announcement of the Company on Preliminary Annual Result

for 2017 2018-2-28

Securities


2018-006 Announcement of the Company on the Progress of Participation

in the Establishment of Investment Funds 2018-4-19

Securities


2018-007 Announcement on Resolutions at the 21st Meeting of the Sixth

Session of the Board of the Company 2018-4-25

Securities


2018-008 Summary of the Company's 2017 Annual Report 2018-4-25 Securities


2018-009 2017 Annual Final Financial Report of the Company 2018-4-25 Securities


2018-010 2017 Internal Control Evaluation Report of the Company 2018-4-25 Securities


2018-011 2017 Corporate Social Responsibility Report of the Company 2018-4-25 Securities


2018-012 Proposal of the Company on the Share Repurchase through

Centralized Bidding 2018-4-25

Securities


2018-013 Announcement on Purchase of Amount of Wealth Management

Products by the Company with Self-owned Unutilized Funds 2018-4-25

Securities


2018-014 Announcement of the Company on Adjustment of Guarantee

Amount 2018-4-25

Securities


2018-015 Announcement of the Company on Estimated Ordinary

Transactions with Related Parties for 2018 2018-4-25

Securities


2018-016 Announcement of the Company on the Financial Support

Provided to its Holding Subsidiaries 2018-4-25

Securities


2018-017 Announcement on the Amount of Venture Capital Investment by

the Company with Self-owned Unutilized Funds 2018-4-25

Securities


2018-018 Text of the First Quarterly Report for 2018 of the Company 2018-4-25 Securities


2018-019 Announcement of the Company on the Proposal to Participate in

the Investment Funds (I) 2018-4-25

Securities



the Establishment of Investment Funds (II) 2018-4-25

Securities



the Investment Funds (III) 2018-4-25

Securities


2018-022 Notice of the Company on Matters Relating to the Holding of

2017 Annual General Meeting 2018-4-25

Securities



65

2018-023 Announcement on Resolutions at the 19th Meeting of the Sixth

Session of the Board of Supervisors of the Company 2018-4-25

Securities


2018-024 Announcement of the Company on Holding of the 2017 Public

Performance Briefing 2018-4-25

Securities


2018-025 Announcement on the Company's First Quarter Report for 2018

and Amendment to Its Text 2018-5-4

Securities


2018-026 The Text on the Company's First Quarter Report for 2018

(Revised Version) 2018-5-4

Securities


2018-027 The Announcement on the Progress of the Company's

Participation in the Establishment of Investment Funds 2018-5-10

Securities


2018-028 Announcement of the Company on Shareholdings of the Current

Top 10 Shareholders 2018-5-12

Securities


2018-029 Announcement on the Resolutions of the Company's 2017

Annual General Meeting 2018-5-18

Securities


2018-030 Announcement on Resolutions at the 22nd Meeting of the Sixth

Session of the Board of Directors of the Company 2018-5-18

Securities


2018-031 Announcement of the Company on the Provision of External

Financial Support 2018-5-18

Securities


2018-032 Announcement on Resolutions at the 20th Meeting of the Sixth

Sesssion of the Board of Supervisors of the Company 2018-5-18

Securities


2018-033 Announcement on the Progress of the Company's Participation


Securities


2018-034

Announcement on the Reply to the Inquiry Letter concerning the

Company's 2017 Annual Report by the Management Department

of the SZSE SME Board





Securities


2018-036 Announcement on the Implementation of the Company's Annual

Equity Distribution for 2017 2018-6-22

Securities


2018-037 Announcement of the Company on Providing Onshore

Guarantees for Offshore Loans for Overseas Subsidiaries 2018-6-29

Securities


2018-038

Announcement of the Company on Adjustment to the Price Caps

on Repurchasing Shares through Centralized Bidding Upon the

Implementation of 2017 Profit Distribution Plan

2018-7-7 Securities


2018-039 Announcement on a Notice Made by the Company to the

Creditors of the Repurchased Shares 2018-7-7

Securities


2018-040 Holding Announcement of the Company on Changes in

Shareholders' Equity (I) 2018-7-19

Securities


2018-041 Holding Announcement of the Company on Changes in

Shareholders' Equity (II) 2018-7-19

Securities


2018-042

Announcement on Resolutions at the 23rd (Extraordinary)

Meeting of the Sixth Session of the Board of Directors of the

Company




66

2018-043

Announcement of the Company on Entering Into Business

Cooperation Framework Agreements and Related Party

Transactions Between the Company and Related Parties



2018-044 Announcement of the Company on Related Party Transactions 2018-7-27 Securities


2018-045 Notice of the Company on Matters Relating to the Holding of

2018 First Extraordinary General Meeting 2018-7-27

Securities




Securities


2018-047 Announcement of the Company on Preliminary Interim Result

for 2018 2018-7-31

Securities


2018-048 Report on the repurchase by the Company 2018-8-3 Securities


2018-049 Announcement on the Progress of Repurchase by the Company 2018-8-3 Securities


2018-050 Supplementary Announcement of the Company on Transfer of

Shares by Shareholders’ Agreement 2018-8-11

Securities


2018-051 Announcement of the Company on Resolutions of 2018 First

Extraordinary General Meeting 2018-8-14

Securities


2018-052 Summary of the Interim Report for 2018 of the Company 2018-8-29 Securities


2018-053 Announcement on the Progress of Repurchase by the Company 2018-9-4 Securities


2018-054 Announcement of the Company on the First Repurchase of

Shares 2018-9-4

Securities


2018-055 Announcement of the Company on Obtaining Government

Subsidies 2018-10-9

Securities


2018-056 Announcement on the Progress of Share Repurchase by the

Company 2018-10-9

Securities


2018-057 Announcement on Resolutions of the 25th Meeting of the Sixth

Session of the Board of the Company 2018-10-30

Securities


2018-058 Announcement of the Company on Changes in Accounting

Policies 2018-10-30

Securities


2018-059 Text of the Third Quarterly Report for 2018 of the Company 2018-10-30 Securities


2018-060 Announcement on Resolutions of the 22nd Meeting of the Sixth

Session of the Board of Supervisors of the Company 2018-10-30

Securities


2018-061 Announcement of the Company on the Progress of Share

Repurchase 2018-11-3

Securities


2018-062 Announcement of the Company on the Progress of Share

Repurchase 2018-12-4

Securities


2018-063 Announcement of the Company on the Progress of Changes in

Shareholders' Equity 2018-12-25

Securities



67

2018-064 Holding Announcement of the Company on the Listing and

Circulation of Restricted Shares 2018-12-27

Securities


XX. Significant Events of the Subsidiaries of the Company

√Applicable □Not applicable

Announcement

No. Events

Publication

date

Name(s) and

page(s) of

newspaper on

which the

announcements

were published

Internet website for

publication

2018-003

Announcement of the Company on the Progress of

Participation in the Establishment of Investment Funds

and Related Party Transactions

2018-1-31 Securities Times

B135 http://www.cninfo.com.cn

2018-004

Announcement of the Company on the Progress of

Participation in the Establishment of Investment Funds

and Related Party Transactions

2018-2-6 Securities Times B49 http://www.cninfo.com.cn

2018-006 Announcement of the Company on the Progress of

Participation in the Establishment of Investment Funds 2018-4-19 Securities Times B39 http://www.cninfo.com.cn

2018-016 Announcement of the Company on the Financial Support

Provided to its Holding Subsidiaries 2018-4-25 Securities Times B91 http://www.cninfo.com.cn

2018-019 Announcement of the Company on the Proposal to

Participate in the Investment Funds (I) 2018-4-25 Securities Times B90 http://www.cninfo.com.cn


Participate in the Establishment of Investment Funds (II) 2018-4-25 Securities Times B90 http://www.cninfo.com.cn


Participate in the Investment Funds (III) 2018-4-25 Securities Times B90 http://www.cninfo.com.cn







2018-037

Announcement of the Company on Providing Onshore

Guarantees for Offshore Loans for Overseas

Subsidiaries

2018-6-29 Securities Times B94 http://www.cninfo.com.cn



2018-055 Announcement of the Company on Obtaining

Government Subsidies 2018-10-9 Securities Times B95 http://www.cninfo.com.cn


68

Section VI Changes in Shares and Information about Shareholders

I. Changes in Shares

1. Changes in shares

Unit: Share

Before the change Changes (+, -) After the change

Shares Percentage

New

shares

issued

Bonus

issue

Shares

transferred from

capital reserve

Others Subtotal Shares Percentage

I. Shares subject to

trading restrictions 6,427,492,848 52.55% 0 0 1,285,498,570 -7,712,991,418 -6,427,492,848 0 0.00%

1. State-owned shares 0 0.00% 0 0 0 0 0 0 0.00%

2. Shares held by

state-owned legal

persons

79,984,596 0.65% 0 0 15,996,919 -95,981,515 -79,984,596 0 0.00%

3. Shares held by

other

domestic investors

3,492,659,271 28.56% 0 0 698,531,855 -4,191,191,126 -3,492,659,271 0 0.00%

Including: Shares held

by domestic

legal persons

3,492,659,271 28.56% 0 0 698,531,855 -4,191,191,126 -3,492,659,271 0 0.00%

Shares held

by domestic

natural

persons

0 0.00% 0 0 0 0 0 0 0.00%

4. Foreign shares 2,854,848,981 23.34% 0 0 570,969,796 -3,425,818,777 -2,854,848,981 0 0.00%

Including: Shares held

by foreign

legal persons

2,854,848,981 23.34% 0 0 570,969,796 -3,425,818,777 -2,854,848,981 0 0.00%

Shares held

by foreign

natural

persons

0 0.00% 0 0 0 0 0 0 0.00%

II. Shares without

trading restrictions 5,804,074,052 47.45% 0 0 1,160,814,810 7,712,991,418 8,873,806,228

14,677

,880,2

80

100.00%

1. RMB-denominated

common shares 5,804,074,052 47.45% 0 0 1,160,814,810 7,712,991,418 8,873,806,228

14,677

,880,2100.00%


69

80

2. Domestically listed

foreign shares 0 0.00% 0 0 0 0 0 0 0.00%

3. Foreign shares

listed overseas 0 0.00% 0 0 0 0 0 0 0.00%

4. Others 0 0.00% 0 0 0 0 0 0 0.00%

III. Total 12,231,566,90

0 100.00% 0 0 2,446,313,380 0 2,446,313,380

14,677

,880,2

80

100.00%

Reasons for changes in shares


On June 29, 2018, the Company implemented the equity distribution plan for 2017. Upon completion, the total

share capital of the Company increased to 14,677,880,280 shares.

Approval of share changes


On April 23, 2018, the Company held the 21st meeting of the sixth session of the Board of Directors, at which

the Profit Distribution Proposal for 2017 was considered and approved: based on the total share capital of

12,231,566,900 shares as of December 31, 2017, a cash dividend of RMB1.00 (tax inclusive) will be distributed for

every 10 shares held by each shareholder, and 2 more shares will be allocated for every 10 shares held by each

shareholder from the Company’s capital reserves. On May 17, 2018, the Company held the 2017 Annual General

Meeting with on-site voting combined with online voting, and the above distribution proposal was considered and

approved.

Transfer of share ownership


The implementation of the equity distribution plan for 2017 was completed on June 29, 2018, with the

relevant shares listed and traded on the Shenzhen Stock Exchange.

Progress of any share repurchase


The Company held the 21st meeting of the sixth session of the Board of Directors and the 2017 Annual General


70

Meeting on April 23, 2018 and May 17, 2018, respectively, at which the Proposal on the Share Repurchase through

Centralized Bidding was considered and approved, thereby the Company would repurchase its A Shares and public

shares, which are expected to be approximately 230,760,000 shares (representing approximately 1.89% of the total

currently issued share capital of the Company), through centralized bidding on the stock exchange, with its own

funds of not exceeding RMB3.0 billion (inclusive) and at a price of not more than RMB13 per share (inclusive)

within 12 months from the date of approval. On June 29, 2018, the Company implemented the equity distribution

plan for 2017, and the maximum price for the share repurchase was accordingly adjusted to not exceeding

RMB10.75 per share (inclusive).

As of December 31, 2018, the Company cumulatively repurchased 99,612,604 shares, accounting for 0.679%

of its total share capital, through centralized bidding with its designated securities account for share repurchase. The

highest transaction price was RMB8.64 per share while the lowest was RMB5.68. In total, the Company paid

RMB70,017,930,000 (excluding transaction fees) for the repurchase.

Pursuant to the requirements under the Implementation Rules on the Share Repurchase of Listed Companies

of the Shenzhen Stock Exchange, the Company held the first meeting of the seventh session of the Board of

Directors and the second extraordinary general meeting for 2019 on February 14, 2019 and March 5, 2019,

respectively, at which the Resolution on the Adjustment of the Share Repurchase was considered and approved,

thereby changing the usage of the share repurchase to employee stock ownership plan or share incentive, and

adjusting the total funds for the share repurchase to not less than RMB1.5 billion (inclusive) and not more than

RMB2.0 billion (inclusive).

Implementation process of reducing the repurchased shares through centralized bidding


Impact of the changes in shares on financial indicators including the basic earnings per share, diluted

earnings per share and the net assets per share attributable to the common shareholders of the Company for

the latest year and the latest period


The number of shares for calculating the basic earnings per share and net assets per share for 2018 is the

number of shares of the Company as at the beginning of the period, which has taken into account the impact of the

implementation of the 2017 profit distribution plan in 2018, pursuant to which the Company allocated 2 more shares

per 10 shares to all shareholders from its capital reserves.


71

Exclusive of the shares

transferred from capital reserves

Inclusive of the shares

transferred from capital reserves

Changes

Earnings per share

(RMB/share)

0.48 0.4 0.08

Diluted earnings per share

(RMB/share)

0.48 0.4 0.08

Other information that the Company considers necessary or the securities regulatory authorities

require to be disclosed


2. Changes in restricted shares


Unit: Share

Name of shareholder Opening

restricted shares

Unlocked in

current period

Increased in

current period

Closing

restricted

shares

Reasons for

restrictions Date of unlocking

Media Management Hong

Kong Limited 2,854,848,981 3,425,818,777 570,969,796 0

Additional

issuance of

restricted

shares

December 29, 2018

Zhuhai Rongwu Equity

Investment Partnership

(Limited Partnership)

399,923,306 479,907,967 79,984,661 0

Additional

issuance of

restricted

shares

December 29, 2018

Shanghai Zhengjing

Investment Management

Partnership (Limited

Partnership)

266,615,538 319,938,645 53,323,107 0

Additional

issuance of

restricted

shares

December 29, 2018

Zhuhai Jinhui Chuangfu No.

3 Investment Corporation


239,746,044 287,695,253 47,949,209 0

Additional

issuance of

restricted

shares

December 29, 2018

Ningbo Rongxin Zhiming

Equity Investment


Partnership)

198,641,273 238,369,528 39,728,255 0

Additional

issuance of

restricted

shares

December 29, 2018

Suzhou Kunyu Jincheng

Equity Investment 193,295,981 231,955,177 38,659,196 0

Additional

issuance of December 29, 2018


72

Corporation (Limited

Partnership)

restricted

shares

Jiaxing Huiling No. 1



133,307,768 159,969,322 26,661,554 0

Additional

issuance of

restricted

shares

December 29, 2018

Shanghai Hongying


Center (Limited Partnership)

133,307,768 159,969,322 26,661,554 0

Additional

issuance of

restricted

shares

December 29, 2018

Shanghai Shanhong



133,307,768 159,969,322 26,661,554 0

Additional

issuance of

restricted

shares

December 29, 2018

Shanghai Hongqian



133,307,768 159,969,322 26,661,554 0

Additional

issuance of

restricted

shares

December 29, 2018

Shanghai Honglian



133,307,768 159,969,322 26,661,554 0

Additional

issuance of

restricted

shares

December 29, 2018

Other restricted shareholders 1,607,882,885 1,929,459,461 321,576,576 0

Additional

issuance of

restricted

shares

December 29, 2018

Total 6,427,492,848 7,712,991,418 1,285,498,570 0 -- --

II. Issuance and Listing of Securities

1. Issuance of securities (excluding preferred shares) during the Reporting Period


2. Explanation on changes in the total shares, structure of shareholders and the structure of assets and

liabilities of the Company


During the Reporting Period, the Company implemented the 2017 Profit Distribution Plan as follows: based

on the total share capital of 12,231,566,900 shares as of December 31, 2017, a cash dividend of RMB1.00 (tax


73

inclusive) per 10 shares, i.e. RMB0.10 (tax inclusive) per share, was distributed to all shareholders. The total cash

dividends distributed amounted to RMB1,223,156,690 with no bonus issue. The Company also allocated 2 more

shares per 10 shares to all shareholders from its capital reserves, totaling 2,446,313,380 shares. After that, the total

share capital of the Company increased from 12,231,566,900 shares to 14,677,880,280 shares.

3. Existing staff-held shares


III. Shareholders and Actual Controllers

1. Number of shareholders and their shareholdings

Unit: Share

Total number of common

shareholders at the end of

the Reporting Period

180,780

Total number of common shareholders at the

end of the previous month before the

disclosure of the annual report

248,542

5% or greater shareholders or top 10 shareholders

Name of shareholder Nature of

shareholder

Shareh

olding

percen

tage

(%)

Number of

shares held at

the end of the

Reporting

Period

Changes

during the

Reporting

Period

Number

of

restricte

d shares

held

Number of

non-restricted

shares held

Pledged or frozen

shares

Status Amount


Kong Limited

Foreign legal

person 23.34 3,425,818,777 570,969,796 0 3,425,818,777

Alibaba (China)

Technology Co., Ltd.

Domestic non-

state-owned

legal person

5.28 774,401,600 774,401,600 0 774,401,600

Hong Kong Securities

Clearing Company

Limited

Foreign legal

person 4.46 654,080,799 567,974,353 0 654,080,799




Domestic non-

state-owned

legal person

3.27 479,907,967 79,984,661 0 479,907,967 Pledged 333,129,164

Shanghai Zhengjing



Partnership)

Domestic non-

state-owned

legal person

2.18 319,938,645 53,323,107 0 319,938,645 Pledged 319,938,645

Zhuhai Jinhui Chuangfu

No. 3 Investment

Domestic non-

state-owned 1.96 287,695,253 47,949,209 0 287,695,253


74


Partnership)

legal person

Gio2 Hong Kong

Holdings Limited

Foreign legal

person 1.68 247,236,384

-

231,884,405 0 247,236,384


Equity Investment


Partnership)

Domestic non-

state-owned

legal person

1.62 238,369,528 39,728,255 0 238,369,528 Pledged 45,175,181


Equity Investment


Partnership)

Domestic non-

state-owned

legal person

1.58 231,955,177 38,659,196 0 231,955,177

GUAN Yuchan Domestic

natural person 1.49 219,149,107 8,487,213 0 219,149,107

Explanation on the

associated relationships or

concerted actions among

the above shareholders

Among the above shareholders, Alibaba (China) Technology Co., Ltd. and Gio2 Hong Kong Holdings

Limited are parties acting in concert. The Company does not know whether there is any associated

relationship among the other shareholders or whether they are parties acting in concert under the

Measures for the Administration of Acquisition of Listed Companies (《上市公司收购管理办法》).

Shares held by the top 10 holders of shares without trading restrictions

Name of shareholder

Number of shares without trading

restrictions held at the end of the

Reporting Period

Type of shares

Type Number


Kong Limited 3,425,818,777 RMB-denominated common shares 3,425,818,777

Alibaba (China)

Technology Co., Ltd. 774,401,600 RMB-denominated common shares 774,401,600

Hong Kong Securities

Clearing Company

Limited

654,080,799 RMB-denominated common shares 654,080,799





Shanghai Zhengjing



Partnership)


Zhuhai Jinhui Chuangfu

No. 3 Investment


Partnership)


Gio2 Hong Kong

Holdings Limited 247,236,384 RMB-denominated common shares 247,236,384


Equity Investment 238,369,528 RMB-denominated common shares 238,369,528


75


Partnership)


Equity Investment


Partnership)


GUAN Yuchan 219,149,107 RMB-denominated common shares 219,149,107

Related-parties or acting-

in-concert parties among

the top ten non-restricted

shareholders and

between the top ten non-

restricted shareholders

and the top ten

shareholders

Among the top 10 holders of tradable shares without trading restrictions, and between the top 10

holders of tradable shares without trading restrictions and the top 10 shareholders, Alibaba (China)

Technology Co., Ltd. and Gio2 Hong Kong Holdings Limited are parties acting in concert. The

Company does not know whether there is any associated relationship among the other top 10 holders

of tradable shares without trading restrictions or between them and the top 10 shareholders, or whether

they are parties acting in concert under the Measures for the Administration of Acquisition of Listed

Companies.

Whether the top 10 common shareholders or the top 10 holders of common shares without trading

restrictions of the Company carried out any agreed repurchase during the Reporting Period

□ Yes √ No

Neither did the top 10 common shareholders nor the top 10 holders of common non-restricted shares of

the Company carry out any agreed repurchase during the Reporting Period.

2. Particulars about the controlling shareholder

Nature of the controlling shareholder: foreign-holding

Type of the controlling shareholder: legal person

Name of the controlling shareholder Legal representative/

company principal

Date of

establishment

Organization

Code Main Business

Media Management Hong Kong Limited Jason JIANG Nanchun March 30, 2015 2218001 Investment

holding

Equities held by the controlling shareholder in other listed companies at

home or overseas by holding shares or participating in shares during the

Reporting Period

Nil

Change of the controlling shareholder during the Reporting Period


There was no change of the controlling shareholder during the Reporting Period.


76

3. Actual controller and parties acting in concert of the Company

Nature of the actual controller: overseas natural person

Type of the actual controller: natural person

Name of the actual controller Relationship with

the actual controller Nationality

Whether or not obtained the right

of residence in Other Countries or

Regions?

Jason JIANG Nanchun Himself Singapore No

Major occupations and jobs Chairman of Focus Media

Equities of the other listed companies at

home or overseas controlled by the actual

controller in the past 10 years

FMCN.NASDAQ

Change of the actual controller during the Reporting Period


There was no change of the actual controller during the Reporting Period.

Ownership and control relations between the Company and the actual controller:


77

The actual controller controls the Company by trust or other asset management methods


4. Other corporate shareholders with shares over 10%


5. Limitations on shareholding decrease by the controlling shareholder, actual controller, reorganizer and

other commitment makers


Section VII Preferred Shares


There was no preferred share during the Reporting Period.


78

Section VIII Information about Directors, Supervisors, Senior

Management, and Employees

I. Changes in Shareholding of Directors, Supervisors and Senior Management

Name Title Tenure status Gender Age

(years)

Commencement of

term of office

Termination of

term of office

Number

of shares

held at the

beginning

of the

period

Increase in

shares

during the

period

Decrease

in shares

during the

period

Other

changes

(shares)

Number

of shares

held at the

end of the

period

Jason

JIANG

Nanchun

Chairman/President/CEO Incumbent Male 46 January 28,

2016

February 14,

2022 0 0 0 0 0

KONG

Weiwei

Deputy Chairman /Vice

President /CFO Incumbent Female 37

February 14,

2019

February 14,

2022 0 0 0 0 0

JI Hairong Director/Vice President/CMO Incumbent Male 48 February 14,

2019

February 14,

2022 0 0 0 0 0

SHEN Jie Former Deputy Chairman Resigned Male 49 January 28,

2016

January 28,

2019 0 0 0 0 0

Kit Leong

LOW

Former Director Resigned Male 49

January 28,

2016

January 28,

2019 0 0 0 0 0

DU Min Independent

Director Incumbent Male 51 March 8, 2016

February 14,

2022 0 0 0 0 0

GE Jun Independent

Director Incumbent Male 47

January 28,

2016

February 14,

2022 0 0 0 0 0

GE Ming Independent


January 28,

2016

February 14,

2022 0 0 0 0 0

ZHUO

Fumin

Independent


January 28,

2016

February 14,

2022 0 0 0 0 0

HE

Peifang

Chairman of the Board of

Supervisors Incumbent Female 36

January 28,

2016

February 14,

2022 0 0 0 0 0

HANG

Xuan

Supervisor Incumbent Female 35

January 28,

2016

February 14,

2022 0 0 0 0 0

LIN Nan Supervisor

Incumbent Female

32 December 28,

2016

February 14,

2022 0 0 0 0 0

KONG

Weiwei Board Secretary Incumbent

Female 37 June 29, 2017

February 14,

2022 0 0 0 0 0

Total -- -- -- -- -- -- 0 0 0 0 0


79

II. Changes of Directors, Supervisors and Senior Management of the Company


Name Position Type Date Reasons

SHEN Jie Deputy Chairman

Retirement upon

expiry of the

term

February 14, 2019 Expiry of the term

Kit Leong LOW Director, President, Person

in charge of finance

Retirement upon

expiry of the

term

February 14, 2019 Expiry of the term

III. Positions and Incumbency

Professional background, major working experiences of current directors, supervisors and senior

management and their main responsibilities in the Company

Mr. Jason JIANG Nanchun, of Singapore nationality, aged 46, is currently the Chairman of the Company. After

graduating from the Chinese Department of the East China Normal University, Jason founded Focus Media in 2003

and he was the first Chinese to put forward the idea of life-style media.

Mrs. KONG Weiwei, of Chinese nationality, aged 37, is currently the Deputy Chairman, Vice President, CFO and

Board Secretary of Focus Media. She received her BA in management from Renmin University of China and MA

in Economics from the Chinese Academy of Social Sciences. Before joining Focus, she was a product manager in

the Corporate Banking Division of China Merchants Bank, research analyst at Bank of China Investment

Management, Senior Analyst at China Merchants Securities and Senior Analyst at ICBC Credit Suisse Asset

Management.

Mr. JI Hairong, of Chinese nationality, aged 48, is currently the Director, Vice President and CMO of Focus Media.

He received his BA from the East China Normal University and MA from the Ehime University in Japan. Before

joining Focus, he was a Lecturer in Shanghai Jiao Tong University. He had served as Director, Vice President and

Senior Vice President of the Marketing and Public Relations Department of the Company.

Mr. DU Min, of Chinese nationality, aged 51, is currently an Independent Director of Focus Media. He studied at

Renmin University and Wuhan University and received his Ph.D. He was an Editor/Reporter at China Business

Times and Head of Sanlian Life Weekly, Deputy Editor and Vice President of China Business News, Vice President

of IDG China, Vice President of Shanghai Meining Computer Software Co., Ltd., and General Manager of China

Open Beijing Sports Promotion Co., Ltd. He is currently the Executive Vice President of Beijing Media Corp. an

Independent Director at Guangxi Fortune Technology Co., Ltd. and an Independent Director at Jinzhou Jixiang

Moly Co., Ltd.

Mr. GE Jun, of Chinese nationality, aged 47, is currently an Independent Director of Focus Media. He has a BS in


80

Physics and Chemistry from Xiamen University. He was an Engineer Associate at the Shanghai Academy of

Building Sciences and served as Executive Manager, Deputy Director of Corporate and Public Relations, Director

of the President’s Office, Assistant to the President and Secretary General of the CEIBS Foundation at the China

Europe International Business School. He also served as the Dean of the Pudong Innovation Research Institute. He

is currently the Vice President of Shanghai Advanced Institute of Finance at the Shanghai Jiao tong University, and

an Independent Director at Health 100 Industry Holdings Co., Ltd., Leadbank Financial Services Co., Ltd., Shanghai

Fumed Tianjian Co., Ltd. and CIFI Group.

Mr. GE Ming, of Chinese nationality, aged 67, is currently an Independent Director of Focus Media. He received

his MA in Western Accounting from the Chinese Academy of Fiscal Sciences of the Ministry of Finance and is a

Certified Accountant under the Chinese and Australian CPA programs. He was Deputy General Manager of China

Financial Accounting Consulting Co., Ltd., Chairman of Ernst & Young Hua Ming LLP, Managing Partner, Chief

Accountant and Senior Advisor at Ernst & Young Hua Ming LLP, and an Independent Director at Shanghai Zhenhua

Heavy Industries Co., Ltd. He currently serves as Chairman of Beijing Huaming Fulong Finance Consulting Co.,

Ltd., an Independent Director at China Ping An Group and an Independent Director at AsiaInfo Technologies

Limited.

Mr. ZHUO Fumin, with his registered residence in Hong Kong, the PRC, aged 68, is currently an Independent

Director of Focus Media. He received his MA in Economics from Fudan University. He was the Division Chief and

Assistant to Director at Shanghai Municipal Government Economic System Reform Office, CEO and Vice

Chairman at Shanghai Industrial Holdings Limited (HKSE: 0363), Chairman of Shanghai Industrial Pharmaceutical

Investment Co., Ltd., Chairman and CEO of Vertex Ventures, Founder and Chairman of SIG Venture Star, and

Managing Partner of GGV Capital; He currently serves as Chairman and Managing Partner of V Star Capital,. a

Non-executive Director at Besunyen Holdings, an Independent Director at DAQO New Energy Co., Ltd., an

Independent Non-executive Director at SRE Group Limited, an Independent Director at Arcplus Group PLC, an

Independent Non-executive director at Sinopharm Group Co., Ltd., an Independent Director at Shanghai Shine-

Link International Logistics Co., Ltd. and an Independent Director at Dazhong Transportation (Group) Co., Ltd.

Ms. HE Peifang, of Chinese nationality, aged 36, is currently the Chairman of the Supervisory Committee of Focus

Media. She served as a Sales Manager at MPI Group (HK) (梅迪派勒广告有限公司), and has joined Focus Media

since July 2004. She currently serves as an Assistant to Vice President at Focus Multimedia Technology (Shanghai)

Co., Ltd.

Ms. HANG Xuan, of Chinese nationality, aged 35, is currently a Supervisor of Focus Media. She received a BA

from Tianjin Foreign Studies University. She has joined Focus Media since November 2006. She currently serves

as the Chief Marketing Officer at Shanghai Defeng Advertising Communication Co., Ltd. (上海德峰广告传播有

限公司).

Ms. LIN Nan, of Chinese nationality, aged 32, is currently a Supervisor of Focus Media. She obtained a double

bachelor's degree in Economics and Management and was recognized as an Intermediate Economist. She served as


81

a Securities Affairs Representative of the Board of Shanghai Hi-tech Control System Co., Ltd. She currently serves

as the Securities Affairs Representative of the Board of Focus Media Information Technology Co., Ltd.

Positions held in shareholders’ entities


Name Name of the shareholder's entity

Position in

shareholders’

entities

Start date End date

Compensation

and

allowance from

the

shareholders'

entity

Jason JIANG

Nanchun Media Management Hong Kong Limited Director March 1, 2015 Present No

Positions held in other entities


Name Name of other Entities Position in other

entities Start date End date

Compensation

and

allowance from

other ' entities

Jason JIANG

Nanchun JJ Media Investment Holding Limited

Director April 1, 2003

Present No

Jason JIANG

Nanchun JAS Investment Group Limited

Director May 1, 2011

Present No

Jason JIANG

Nanchun JJ Capital Investment Limited

Director July 1, 2014

Present No

Jason JIANG

Nanchun Media Global Group Limited

Director December 1,

2014

Present No

Jason JIANG

Nanchun Top New Development Limited

Director June 1, 2010

Present No

Jason JIANG

Nanchun Top Notch Investments Holdings Ltd

Director May 1, 2005

Present No

Jason JIANG

Nanchun Media Management Hong Kong Limited

Director March 1, 2015

Present No

Jason JIANG

Nanchun Media Global Management Limited

Director January 1, 2015

Present No

Jason JIANG

Nanchun Media Management Holding Limited


Present No

Jason JIANG Giovanna Group Holdings Limited Director May 1, 2013 Present No


82

Nanchun

Jason JIANG

Nanchun Giovanna Intermediate Limited

Director August 1, 2013

Present No

Jason JIANG

Nanchun Giovanna Parent Limited

Director August 1, 2013

Present No

Jason JIANG

Nanchun Focus Media Holding Limited


Present No

Jason JIANG

Nanchun Target Media Holding Ltd.

Director January 1, 2015

Present No

Jason JIANG

Nanchun Giovanna Newco 1 Limited


Present No

Jason JIANG

Nanchun Giovanna Newco 2 Limited


Present No

Jason JIANG

Nanchun Appreciate Capital Limited

Director February 1,

2015

Present No

Jason JIANG

Nanchun MODERN MEDIA HOLDINGS LIMITED

Independent non-

executive director

September 1,

2013

Present Yes

Jason JIANG

Nanchun Shanghai Vision Investment Management Co., Ltd.


Present No

Jason JIANG

Nanchun UCCA Holdings (BVI) Limited

Director January 10,

2017

Present No

Jason JIANG

Nanchun Century Pinnacle Limited

Director January 10,

2017

Present No

KONG Weiwei Focus Sports (Shanghai) Co., Ltd. Director June 4, 2018 Present No

KONG Weiwei Focus Entertainment (Shanghai) Co., Ltd. Director June 1, 2018 Present No

JI Hairong Shanghai Gemii Information Technology Co., Ltd. Supervisor April 2, 2018 Present No

DU Min Beijing Media Corporation Limited Executive Vice

President October 1, 2002

Present Yes

DU Min Guangxi Fortune Technology Co., Ltd. Independent

director

January 25,

2017

Present Yes

GE Jun CEIBS Education Foundation Director June 1, 2006 February 1, 2017 No

GE Jun Pudong Innovation Research Institute Dean

September 1,

2015 February 1, 2017

Yes

GE Jun Rosefinch Investment

Independent

director May 1, 2015 May 1, 2018

Yes

GE Jun Health 100 Industry Holdings Co., Ltd.

Independent

director October 1, 2015

Present Yes

GE Jun Leadbank Financial Services Co., Ltd.

Independent

director

November 1,

2015

Present Yes

GE Jun Shanghai Fumed Tianjian Co. Ltd.

Independent

director

December 1,

2015

Present Yes

GE Jun CIFI Holdings (Group) Co. Ltd.

Independent

director July 1, 2016

Present Yes

GE Jun Shanghai Advanced Institute of Finance, Shanghai

Jiao tong University Deputy dean

February 1,

2017

Present Yes


83

GE Jun Shanghai Bicong Cultural Communication Co., Ltd. Supervisor October 1, 2017 Present No

GE Ming Ping An Insurance (Group) Company of China, Ltd.

Independent

director June 1, 2015

Present Yes

GE Ming Beijing Huaming Fulong Finance Consulting Co.,

Ltd. Chairman

December 1,

2001

Present No

ZHUO Fumin Shanghai V Star Equity Investment Management

Co., Ltd. Chairman August 1, 2011

Present Yes

ZHUO Fumin Suzhou GGV Kexing Equity Investment

Partnership (L.P.)

Representative of

executive partner June 1, 2011

Present No

ZHUO Fumin Suzhou Jiyuan Yuanxing Equity Investment

Partnership (L.P.)

Representative of

executive partner June 1, 2014

Present No

ZHUO Fumin Shanghai Yuanxing Yinshi Equity Investment

Partnership (L.P.)

Representative of

executive partner January 1, 2016

Present No

ZHUO Fumin GGV III (BC pharma) Limited Director July 1, 2008 Present No

ZHUO Fumin Besunyen Holdings Company Limited

Non-executive

director October 1, 2009

Present Yes

ZHUO Fumin DAQO New Energy Co., Ltd.

Independent

director July 1, 2010

Present Yes

ZHUO Fumin Dazhong Transportation (Group) Co., Ltd.

Independent

director May 15, 2018

Present Yes

ZHUO Fumin SRE Group Limited

Independent non-

executive director

November 1,

2010

Present Yes

ZHUO Fumin Arcplus Group PLC

Independent

director

September 1,

2015

Present Yes

ZHUO Fumin Sinopharm Group Co., Ltd.

Independent non-

executive director March 1, 2016

Present Yes

ZHUO Fumin Shanghai Shine-Link International Logistics Co.,

Ltd.

Independent

director

September 1,

2016

Present Yes

Punishments imposed by the securities regulator on the incumbent directors, supervisors and senior

management as well as those who left during the Reporting Period in the recent three years


In 2017, due to the fact that part of interim information of the Company was not disclosed or the disclosure

was not timely and complete, and there was omission in the information disclosed in the 2015 annual report, Mr.

Jason JIANG Nanchun (the chairman of the Company) and Mr. SHEN Jie (the former Board Secretary) received a

warning letter from the CSRC Guangdong Bureau. For details, please refer to the Decisions on Received a Warning

Letter Regarding JIANG Nanchun and SHEN Jie Issuing by the CSRC Guangdong Bureau (2017-039) (《关于收

到广东监管局<关于对江南春(JIANG NANCHUN)、沈杰采取出具警示函措施的决定>》) on the website of

CNINFO (http://www.cninfo.com.cn).



84

In 2017, due to the omission of the Company’s periodic report and the purchase of bank wealth management

products beyond the authorization granted by the general meeting, Mr. Kit Leong LOW (the Company’s senior

executives) received a warning letter from Guangdong Bureau. For details, please refer to the Announcement of

Decisions on Received a Warning Letter Regarding Kit Leong LOW of the Company Issuing by the CSRC

Guangdong Bureau (2017-040) (《公司关于收到广东监管局<关于对刘杰良采取出具警示函措施的决定>的公

告》) on the website of CNINFO (http://www.cninfo.com.cn).

IV. Remuneration of Directors, Supervisors and Senior Management

The decision-making program, determination basis and actual remuneration payment of directors,

supervisors and senior management

The Remuneration and Appraisal Committee of the Board of Directors shall confirm and formulate the

compensation plan or scheme according to the main scope, responsibilities, and importance of the management

positions of directors and senior management, as well as the remuneration level of other relevant corporate positions,

and in combination with the Company's business plan for the next year.

The annual remuneration of the senior management of the Company shall be examined and approved by the

Remuneration and Appraisal Committee of the Board of Directors according to the actual operation of the Company

in the year, and then submitted to the Board of Directors for deliberation upon review and approval; while the

allowances for the Company's independent directors is reviewed and determined by the general meetings.

Remuneration of Directors, supervisors and the senior management of the Company during the Reporting

Period

Unit: RMB ’0000

Name Title Gender Age Tenure status

Total before-tax

remuneration

received

from the

Company

Whether or not

received

remuneration

from the related

parties of the

Company

Jason JIANG

Nanchun Chairman Male 46 Incumbent 600 No

SHEN Jie Former Vice Chairman Male 49 Former 185.47 No

Kit Leong LOW Former Director, President

and Male 49 Former 444 No


85

Chief Financial Officer

DU Min Independent

Director Male 51 Incumbent 85

No

GE Jun Independent

Director

Male 47

Incumbent 85

No

GE Ming Independent

Director

Male 67

Incumbent 85

No

ZHUO Fumin Independent

Director

Male 68

Incumbent 85

No

HE Peifang Supervisor Chairman Female 36 Incumbent 29.04 No

HANG Xuan Supervisor Female 35 Incumbent 43.58 No

LIN Nan Supervisor Female 32 Incumbent 56.78 No

KONG Weiwei Board Secretary Female 37 Incumbent 406 No

Total -- -- -- -- 2,104.87 --

Equity incentives awarded to directors and the senior management of the Company during the Reporting

Period


V. Employees of the Company

1. Statistics of employees, professional structure of the staff, and educational background

Number of in-service employees in the parent company 1

Number of in-service employees of major subsidiaries 12,735

Total number of in-service employees 12,736

Total number of paid employees in the Reporting Period 12,736

Number of retirees to whom the parent company or its major

subsidiaries need to pay retirement pensions 0

Functions

Function Employees

Production staff 0

Sales staff 2,274

Technical staff 216

Financial staff 230

Administrative staff 10,016

Total 12,736


86

Educational backgrounds

Category Employees

Doctorate 2

Master’s degree 98

Bachelor’s degree 1,944

Junior college 3,170

High school/ technical secondary school/ vocational

school/technical school 5,613

Junior high school and below 1,909

Total 12,736

2. Remuneration policy

With the aim to effectively retain and motivate talents, the Company has formulated a remuneration system in

light of fairness and competitiveness, as well as the characteristics of various positions to determine the general

remuneration level.

Changes in total remuneration for each segment of the Company are linked to the growth of operating results

of this segment, while individual remuneration of employees is linked to quarterly and annual performance

assessment, ensuring the remuneration is fair and provides incentive to employees.

The Company takes the position, ability and performance of employees as the basis of remuneration, and

decides the fixed remuneration range of the employees according to the post grade and market value, thus forming

a consistent remuneration structure at the same level. The variable salary incentive value is determined based on

individual performance, team performance and the performance contribution to ensure the incentive of the

remuneration. The Company enters into performance assignment with employees of major business units every year,

which will be the reasonable basis for the payment of performance salary.

3. Training plans

(1) New employee training

Training objects: new employees within one month

Training cycle: once a month

Training form: video conference + test

Training content: the Company's history; corporate culture – Video on Focus’ Ten Years; Focus’ charity

activities; different functional departments of the Company; Employee Handbook; introduction of the Company’s


87

media.

(2) Systematic sales training

① New sales staff training

Training objects: new sales staff training within one month

Training cycle: once a month

Training form: face-to-face training in subsidiaries and video call training

Training content: systematic professional trainings to new sales staff, including the introduction of the

Company's media resources, trends in media industry, basic N questions of Focus and other contents, helping them

quickly grasp the Company's resource products and related media knowledge, as well as understand the workflow

and scope of work of each supporting department.

② Focus University

Training objects: frontline sales staff within three years

Training cycle: once a month, 12 times a year with a 2-day course each time

Training form: face-to-face training in subsidiaries and video call training

Training content: speech video of the Company’s senior management; professional speaking tours of the

Company; media professional training; basic N questions of Focus; trends in media industry and successful cases.

Graduation assessment: assess performance through PK Competitions.

Admission: the sales staff individually makes a voluntary application for the training department to review and

approve based on the standards

③ Focus elite 100 reading club

The reading club aims to cultivate 200 business elites for Focus within three years. The reading club comprises

the partner reading club and the elite reading club. The sales staff with strong desire to learn and good performance

are admitted to the elite reading club on a voluntary basis.

④ Sales skills training

Sales skills training is provided to sales staff.

⑤ Focus online learning system

Focus Guidelines for Best Sales Practices: Provides our media expertise, sales Q&A and other contents. One

key point for each article. Emailed to all sales staff every Tuesday and Thursday.

Sharing Sessions by Focus Sales: Sales skills, one topic at a time, emailed to all sales staff on Fridays biweekly.

Focus online learning: contents include media vocabularies, investigation report cases and media trends, which


88

are emailed to all sales staff on Fridays biweekly.

Knowledge management website: Focus’ online learning platform, sale staff can log in to the knowledge

management website to learn the latest media trends, successful cases and other media expertise.

(3) General staff training

① Focus Talks: inspirational articles or stories, as well as uplifting self-help articles are emailed to all staff on

Monday every week.

② Team development and building: cultivating team cohesion and team culture, improving team morale,

helping the team become more positive, and inspire the team to know themselves, challenge themselves, overcome

themselves, and grasp efficient working skills through experience training and development.

4. Labor outsourcing



89

Section IX Corporate Governance

I. Corporate Governance Overview

In strict accordance with the requirements of the Company Law, Securities Law, Code of Corporate

Governance for Listed Companies (《上市公司治理准则》), Rules Governing the Listing of Shares on Shenzhen

Stock Exchange (《深圳证券交易所股票上市规则》), Guidelines of Shenzhen Stock Exchange for Standardized

Operation of Companies Listed on the SME board (《深圳证券交易所中小企业板上市公司规范运作指引》) and

other relevant laws and regulations issued by the CSRC and Shenzhen Stock Exchange, the Company has been

continuously deepening the corporate governance activities and constantly improving its corporate governance

structure, in order to establish a sound internal control system and standardize the operation. As of the end of the

Reporting Period, the actual situation of the corporate governance structure basically conformed to the requirements

of regulatory documents with respect to the corporate governance of listed companies issued by the CSRC.

During the Reporting Period, the Company revised the Articles of Association, Dividend Distribution Plan for

Shareholders of the Company (2018-2020) (《公司股东分红回报规划(2018年度-2020年度)》) and other relevant

governance documents in due time, which ensured the standard operation and stable development of the Company

in an effective manner.

Whether there is any material difference between the actual situation of the corporate governance and the

regulatory documents with respect to the corporate governance of listed companies issued by the CSRC

□ Yes √ No

There is no material difference between the actual situation of the corporate governance and the regulatory

documents with respect to the corporate governance of listed companies issued by the CSRC.

II. The Company’s Independence from the Controlling Shareholder with Respect to Business,

Personnel, Assets, Institutions and Finance

The Company and the controlling shareholder are independent from each other with respect to business,

personnel, assets, organization and finance. The Company is able to operate and conduct its business independently.

1. Business independence: the Company has adequate assets, personnel, qualification and capacity to carry

out independent operations, which enables it to operate in the market independently and on an on-going

basis, without reliance on the controlling shareholder or other related parties.


90

2. Personnel independence: the president, vice president, finance manager, board secretary and other senior

management of the Company are employed and remunerated by the Company, and do not hold any

positions other than directors and supervisors in and accept remuneration from the controlling shareholder

and its subsidiaries. The Company has a complete and independent management system for labor, human

resources and remuneration.

3. Asset independence: the Company has independent and integrated assets, which are fully under the control

of the Company, and are independently owned and operated by the Company.

4. Organization Independence: The Company has established and improved its shares and corporate

governance structure according to law and has an independent and complete institutional framework. The

Company’s general meeting, Board of Directors, independent Directors, Supervisory Committee and

senior management exercise their functions and powers independently in accordance with laws,

regulations and the Articles of Association.

5. Financial Independence: The Company has established an independent financial department and an

independent financial accounting system with a standard and independent financial accounting system and

a financial management system for its subsidiaries, and has independent bank accounts to pay taxes

independently, which makes it capable of making independent financial decisions.

6. To make sure the independence of the Company from the parent company and other companies controlled

by the parent company in other aspects.

III. Horizontal Competition


IV. Annual General Meeting and Extraordinary General Meeting Convened during the

Reporting Period

1. General meetings during the Reporting Period

Session Type

Percentage of

participating

investors

Convening date Disclosure date Disclosure index

2017 Annual General

Meeting

Annual General

Meeting 35.05% May 17, 2018 May 18, 2018 www.cninfo.com.cn

2018 First Extraordinary Extraordinary 11.79% August 13, 2018 August 14, 2018 www.cninfo.com.cn


91

General Meeting General Meeting

2. Extraordinary general meeting convened at the request of preferred shareholders with resumed voting

rights


V. Performance of Duties by Independent Directors during the Reporting Period

1. Attendance of independent directors at board meetings and general meetings

Attendance of independent directors in board meetings and general meetings

Independent

director

Presence due

in the

reporting

period

（times)

Presence on site

(times)

Presence by

telecommunication

(times)

Presence

through a

proxy

(times)

Absence

(times)

Absence for

two

consecutive

times

General

meetings

attended

DU Min 5 2 3 0 0 No 2

GE Ming 5 2 3 0 0 No 2

GE Jun 5 2 3 0 0 No 2

ZHUO

Fumin 5 2 3 0 0 No 1

2. Objections raised by independent directors on relevant issues of the Company

Whether there are any objections raised by independent directors on relevant issues

□ Yes √ No

3. Other details about the performance of duties by independent directors

Whether there are any suggestions from independent directors adopted by the Company

√ Yes □ No

Explanation on the adoption or rejection of relevant suggestions from independent directors to the Company

During the Reporting Period, the independent directors of the Company conscientiously exercised their

functions and powers by carefully considering every issue at board meetings and actively raising professional


92

suggestions and opinions, which promoted the standard operation and scientific decision-making of the Board of

Directors.

During the Reporting Period, the independent directors of the Company, with their rich knowledge and

industrial experience, put forward a number of guiding opinions and rational suggestions on the Company’s

operating management, standard operation and development strategies.

During the Reporting Period, the independent directors of the Company raised their prudent and objective

independent opinions on major issues reviewed by the Board of Directors. For details, please refer to the

Independent Directors' Debriefing Report for 2018 (《公司2018年度独立董事述职报告》 ) published on

www.cninfo.com.cn on the same day as this report.

VI. Performance of Duties by Special Committees under the Board of Directors during the

Reporting Period

The Company has set up Strategy Committee, Audit Committee, Nomination Committee and Remuneration

and Appraisal Committee under the Board of Directors. In 2018, each of the special committees performed their

own functions, giving full play to their professional advantages and functions to provide good support for the

decision-making of the Board of Directors.

During the Reporting Period, the Strategy Committee under the Board of Directors conducted in-depth analysis

on the current operating conditions and development prospect of the Company, as well as the risks and opportunities

in the industry where the Company carried out its business based on the domestic and international economic

conditions and the industry characteristics, and provided valuable suggestions in respect of the implementation of

development strategies of the Company, which ensured the scientificity of the Company’s development plan and

strategic decision-making, and thus provided strategic support for the Company’s sustainable and steady

development.

The Audit Committee under the Board of Directors held four meetings in 2018, at which it learned in detail of

the financial situations and operating conditions of the Company; deliberated the periodic reports of the Company,

internal audit reports on major events of the internal audit department in the quarter, etc.; reviewed the development

and implementation of the Company’s internal control system; and conducted effective guidance and supervision

over the financial situations and operating conditions of the Company.

The Remuneration and Appraisal Committee under the Board of Directors conscientiously debriefed the

operating management of the Company on the operating results, and conducted appraisal on the remuneration of


93

senior management and considered that the remuneration of the Directors and senior management of the Company

was reasonable and was in line with the development status of the industry and the Company.

VII. Performance of Duties by the Supervisory Committee

Whether the Supervisory Committee discovered any risks in the Company in their supervisory activities

during the Reporting Period

□ Yes √ No

The Supervisory Committee raised no objection against the matters under supervision during the Reporting Period.

VIII. Assessment and Incentive Mechanisms for Senior Management

The Remuneration and Appraisal Committee under the Board of Directors makes decisions on the preparation

of remuneration plans or proposals based on the main areas, duties and importance of management positions of the

Company’s senior management, as well as the salary level of relevant positions in other relevant enterprises, and

the operating plan of the Company for the next year; the remuneration of the Company’s senior management for

the current year is reviewed and determined by the Remuneration and Appraisal Committee under the Board of

Directors based on the actual operating conditions of the Company for the year, and after the approval, it will be

submitted to the Board of Directors for consideration and approval.

The Company’s assessment and incentive mechanism for senior management is in line with the current status

of the Company and in compliance with the requirements under relevant laws, regulations and the Articles of

Association, which fully enhances the sense of belonging of the Company’s management team, and effectively

combines the interests of the shareholders, the Company and the employees.

IX. Evaluation Report on Internal Control

1. Material deficiencies found in the internal control during the Reporting Period □ Yes √ No

2. Self-evaluation report on internal control

Disclosure date of full text of the evaluation report on internal control April 25, 2019

Disclosure index of full text of the evaluation report on internal control www.cninfo.com.cn

Proportion of the total unit assets under the scope of evaluation to the

total assets in the consolidated financial statements of the Company 100.00%

Proportion of the operating revenue under the scope of evaluation to the

operating revenue in the consolidated financial statements of the

Company

100.00%


94

Recognition criteria for deficiencies

Category Financial reports Non-financial reports

Qualitative criteria

Material deficiency: a combination of one or more

control deficiencies that may cause serious deviation

of an enterprise from its control objectives. Specific

to the internal control for financial reports, a material

deficiency refers to a combination of one or more

control deficiencies in internal control that may

cause the failure of preventing or detecting and

correcting a material misstatement in the financial

statements on a timely basis. Significant deficiency:

a combination of one or more control deficiencies,

which has inferior severity and economic

consequences to a material deficiency, but still may

cause the deviation of an enterprise from its control

objectives. Specifically, a significant deficiency

refers to a combination of one or more control

deficiencies in internal control that has inferior

severity to a material deficiency, but is important

enough to draw the attention of the personnel for

supervising the financial reports of an enterprise.

General deficiency: deficiencies other than material

deficiencies and significant deficiencies.

Material deficiency: a combination of one or more

control deficiencies that may cause serious

deviation of an enterprise from its control

objectives. Specific to the internal control for

non-financial reports, a material deficiency refers

to a combination of one or more control

deficiencies in internal control that may cause the

failure of preventing or detecting and correcting

an obstacle in realizing the operating management

and control for objectives other than financial

statements on a timely basis. Significant

deficiency: a combination of one or more control

deficiencies, which has inferior severity and

economic consequences to a material deficiency,

but still may cause the deviation of an enterprise

from its control objectives. Specifically, a

significant deficiency refers to a combination of

one or more control deficiencies in internal

control that has inferior severity to a material

deficiency, but is important enough to draw the

attention of the personnel for supervising the

financial reports of an enterprise. General

deficiency: deficiencies other than material

deficiencies and significant deficiencies.

Quantitative criteria

Material deficiency: (1) potential misreported

amount of the total assets ≥ 0.5% of the

consolidated total assets; (2) potential misreported

amount of the owners’ equity ≥ 1% of the

consolidated owners ’ equity; (3) potential

misreported amount of the operating revenue ≥

1% of the consolidated operating revenue; and (4)

potential misreported amount of the total profit ≥

5% of the consolidated total profit. Significant

deficiency: (1) 0.25% of the consolidated total assets

≤ potential misreported amount of the total assets

< 0.5% of the consolidated total assets; (2) 0.5% of

the consolidated owners ’ equity ≤ potential

misreported amount of the owners’ equity < 1% of

the consolidated owners’ equity; (3) 0.5% of the

consolidated operating revenue ≤ potential

misreported amount of the operating revenue < 1%

of the consolidated operating revenue; and (4) 2.5%

of the consolidated total profit ≤ potential

misreported amount in total profit < 5% of the

consolidated total profit. General deficiency: (1)

potential misreported amount of the total assets <

0.25% of the consolidated total assets; (2) potential

misreported amount of the owners’ equity < 0.5%

of the consolidated owners’ equity; (3) potential

misreported amount of the operating revenue < 0.5%

of the consolidated operating revenue; and (4)

potential misreported amount of the total profit <

2.5% of the consolidated total profit.

The deficiencies are recognized with the amount

of direct property losses caused by potential risk

events as the criteria after taking into account the

compensation control measures and actual

deviation rates and with reference to the

recognition of deficiencies in internal control for

financial reports. Material deficiency: the amount

of direct property losses ≥ 5% of the total

profit; significant deficiency: 2.5% of the total

profit ≤ the amount of direct property losses <

5% of the total profit; General deficiency: the

amount of direct property losses < 2.5% of the

total profit.

Number of material

deficiencies in financial

reports

0

Number of material

deficiencies in non-financial

reports

0


95

Number of significant

deficiencies in financial

reports

0

Number of significant

deficiencies in non-financial

reports

0

X. Audit Report or Authentication Report on Internal Control

Not applicable

Section X Corporate Bonds

Whether there is any corporate bond publicly issued and listed on an exchange, which was not matured or

matured but failed to collect the full payment as at the approval date for issuing the annual report?

No

Section XI Financial Report (Excerpt)

I. Auditor’s report

Type of Audit Opinion Standard unqualified opinion

Auditor’s report Signing Date April 23, 2019

Audit Organization Name BDO China Shu Lun Pan CPAs (LLP)

Auditor’s report No. Xin Hui Shi Bao Zi [2019] No. ZA12719

Names of Certified Public Accountants Yang Jingxin, Xu Lirong, Shen Songtao


96

Contents of Auditor’s Report

Xin Hui Shi Bao Zi [2019] No. ZA12719

To the Shareholders of Focus Media Information Technology Co., Ltd.,

1. Opinion

We have audited the financial statements of Focus Media Information Technology Co., Ltd. (hereinafter

referred to as Focus Media), which comprise: the consolidated and parent company balance sheets as of December

31, 2018, the consolidated and parent company income statements for the year then ended, the consolidated and

parent company cash flow statements for the year then ended, the consolidated and parent company statements of

changes in owners’ equity for the year then ended and the notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated

and parent company’s financial position of Focus Media as at December 31, 2018, and their financial performance

and cash flows for the year then ended in accordance with the requirements of the Accounting Standards for

Business Enterprises.

2. Basis for Opinion

We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities

under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial

Statements section of our report. We are independent of Focus Media in accordance with the Code of Ethics for

Professional Accountants of the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have

fulfilled our other ethical responsibilities in accordance with the CICPA Code. We believe that the audit evidence

we have obtained is sufficient and appropriate to provide a basis for our opinion.

3. Key Audit Matters

Key matters are matters we deem the most significant to the financial statements audit for the current period

based on our professional judgment. These matters were addressed in the context of our audit of the financial

statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have identified the following items as key audit matters that need to be communicated in our report.


97

Key audit matters How the matter was addressed in our audit

（I） Provision for bad debts for accounts receivable

As of December 31, 2018, the book balance of accounts receivable

in the consolidated financial statements was RMB5.97 billion, and

the balance of provision for bad debts was RMB1.14 billion. Focus

Media confirms the provision for bad debts based on the

recoverability of accounts receivable. When there is objective

evidence that the receivables are impaired, the management

accrues the provision for impairment of the bill of lading based on

the difference between the present value of the estimated future

cash flow and the book value. For receivables that do not have

objective evidence of impairment, the management, based on the

characteristics of credit risk, divides them into several portfolios

for evaluation, and based on the actual loss rate and age analysis of

the receivables portfolio with similar characteristics of credit risk

in previous years, determines the provision for bad debts that

should be accrued based on the current situation. Due to the

significant book value of accounts receivable, there is inherent

uncertainty of management's use of significant accounting

estimates and judgments, which we believed to be a key audit

matter.

Our audit procedures for the provision of bad debts for accounts

receivable mainly included: (1) In connection with the work of our

internal information technology experts, the design and operational

effectiveness of the internal control related to credit policy and

accounts receivable management were evaluated and tested; (2)

Analyzed the reasonableness of the accounting estimates for

provision for bad debts of accounts receivable, including the basis

for determining the portfolio of accounts receivable, the judgment

of significant amount, and the judgment of separate accrual of

provision for bad debts; (3) Analyzed and calculated the ratio

between the amount of provision for bad debts and the balance of

accounts receivable on the balance sheet date, and analyzed

whether the accrual of the provision for bad debts of accounts

receivable was sufficient; (4) Obtained the statement of accrual of

provision for bad debts to check whether the accrual method was

implemented in accordance with the bad debt policy, and

recalculated whether the accrual amount of bad debts was accurate;

(5) In connection with revenue, evaluated the reasonableness of the

accrual of the provision for bad debts of accounts receivable in

respect of the accounts receivable letter of credit procedures

executed by major customers and the amount of money returned

after the inspection period through the random sampling method.

（II） Revenue recognition

The consolidated operating revenue for the year 2018 of Focus

Media was RMB14.551 billion, increased by RMB2.538 billion or

21.12% as compared to RMB12.013 billion for the year 2017.

Focus Media's revenue incurred from advertisement placement is

confirmed after the following conditions are met: (1) There is

strong evidence to prove that an agreement has been reached with

the customers; (2) The advertisement has been played according to

the terms on the type of media, quantity, area, sites, period,

duration of advertisement and number of cycles; (3) The economic

benefits related to the transaction can flow into the Company; (4)

The amount of revenue can be reliably measured.

Since revenue is one of Focus Media's key performance indicators,

there is inherent risk that the management will manipulate revenue

recognition points in order to achieve specific goals or

expectations, so we considered revenue recognition as a key audit

Our audit procedures for revenue recognition and measurement

issues included, but were not limited to:

(1) Made use of the work of our internal information technology

experts to evaluate the design and operational effectiveness of key

internal controls related to the general information technology

environment in which the business systems operate, including the

completeness and accuracy of the transaction details contained in

the information system;

(2) Executed inspection procedures for revenue from release of

advertisement, including overall verification of business system

data and financial system data, selecting sample execution

certificates, checking contracts and customer confirmation

documents, and checking bank receipt procedures through

statistical sampling methods;

(3) Performed alternative tests on customers who had not replied


98

matter. the letter;

(4) Conducted random sampling of the advertisement release

details across the balance sheet date during advertising period, and

checked the customer confirmation document to evaluate whether

the revenue was recorded in the appropriate accounting period.

（III） Government grants

The total amount of government grants recognized by Focus

Media in other incomes in 2018 was RMB854 million, accounting

for 12.28% of the total profit. Due to the large amount of

government grants, the authenticity of government grants and the

nature of subsidies are identified to have a significant impact on

the operating results of Focus Media. As such, we determined that

government grants were a key audit matter.

For government grants, the main audit procedures we had

implemented included:

(1) Checked the receipts of the government grants, checked the

date of receipt, the collection amount, the basic information of the

payer, and checked against the bank's deposit and withdrawal

transaction record to confirm the collection of government grants to

evaluate the authenticity of the government grants and whether it

was recorded in the appropriate accounting period;

(2) Reviewed the apportionment method and amount of deferred

income

(3) Executed the procedures for verification of letters for

significant government grants.

4. Other Information

Management of Focus Media (hereinafter referred to as the management) is responsible for the other

information. The other information comprises all of the information included in 2018 Annual Report of Focus Media

other than the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form

of authentication conclusion thereon on the other information.

In connection with our audit of the financial statements, our responsibility is to read the other information

and, to consider whether the other information is materially inconsistent with the financial statements or our

knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact. We have nothing to report in this regard.

5. Responsibilities of Management and Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in

accordance with the CASs, and for such internal control as management determines is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud or error.


99

In preparing these financial statements, management is responsible for assessing the going-concern ability of

Focus Media, disclosing matters related to going-concern (if applicable) and using the going-concern basis of

accounting unless management either intends to liquidate Focus Media or to cease operations, or has no realistic

alternative.

The governance are responsible for overseeing Focus Media’s financial reporting process.

6. Responsibilities for Certified Public Accountants on Audit of the Financial Statements

Our objective is to obtain reasonable assurance about whether overall financial statements are free from

material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

normally considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with CSAs, we exercise professional judgement and maintain professional

skepticism. Meanwhile, we also perform the following work:

(1) Identify and evaluate the risks of material misstatement of the financial statements due to fraud or error,

design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and

appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud

is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations or the override of internal control.

(2) Understand the internal control relevant to the audit 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 internal control.

(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates

and related disclosures made by the management.

(4) Conclude on the appropriateness of management use of the going concern basis of accounting and, based

on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast

significant doubt on Focus Media’s ability to continue as a going concern. If we conclude that a material uncertainty

exists, we are required by CSAs to draw attention in our auditor’s report to the related disclosures in these financial

statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause Focus


100

Media to cease to continue as a going concern.

(5) Evaluate the overall presentation, structure and content of the financial statements (including the

disclosures), and whether the financial statements represent the underlying transactions and events in a manner that

achieves fair presentation.

(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business

activities within Focus Media to express an opinion on the financial statements. We are responsible for the guidance,

supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including the communication of any notable deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other matters that may

reasonably be thought to bear on our independence and related safeguards (if applicable).

From the matters communicated with those charged with governance, we determine those matters that were

of most significance in the audit of the financial statements of the current period and are therefore the key audit

matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about

the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our

auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public

interest benefits of such communication.

BDO China Shu Lun Pan Certified Public Accountants Chinese CPA: Yang Jingxin (Engagement

Partner)

(LLP)

Chinese CPA: Xu Lirong

Shanghai, the People’s Republic of China Chinese CPA: Shen Songtao

April 23, 2019


101

II. Financial Statements

All units used in the notes to financial statements are stated in RMB Yuan

1. Consolidated Balance Sheet

Prepared by: Focus Media Information Technology Co., Ltd. As at December 31, 2018

Unit: RMB

Item Closing balance Opening balance

Current Assets:

Cash and cash equivalents 3,671,590,986.10 3,930,262,816.10

Balances with clearing agencies

Lendings with banks and other financial institutions

Financial assets at fair value through profit or loss

Derivative financial assets

Notes receivable and Accounts receivable 5,019,622,640.28 3,089,913,884.01

Including: Notes receivable 196,539,343.76 109,668,421.97

Accounts receivable 4,823,083,296.52 2,980,245,462.04

Prepayments 1,373,773,800.40 726,786,839.16

Premiums receivable

Amounts receivable under reinsurance contracts

Reinsurer's share of insurance contract reserves

Other receivables 101,262,188.03 460,372,298.26

Including: Interests receivable 6,100,412.66 390,845,359.04

Dividends receivable

Financial assets held under resale agreements

Inventories 2,909,944.51 6,997,845.32

Held-for-sale assets

Non-current assets due within one year

Other current assets 1,865,044,049.87 2,949,985,647.87

Total Current Assets 12,034,203,609.19 11,164,319,330.72

Non-current Assets:

Loans and advances to customers

Available-for-sale financial assets 2,902,358,986.81 2,069,114,199.00

Held-to-maturity investments

Long-term receivables

Long-term equity investments 792,534,760.28 733,660,143.69

Investment properties

Fixed assets 1,785,275,925.19 351,244,838.56

Construction in progress 14,272,142.52 6,851,326.85

Productive biological assets

Oil and gas assets

Intangible assets 46,957,739.45 33,554,444.45

Development expenditures

Goodwill 149,108,937.20 149,083,646.11

Long-term prepaid expenses 12,681,131.58 3,739,298.24

Deferred tax assets 662,492,073.09 541,511,038.75

Other non-current assets 621,625,070.87 501,524,580.48

Total Non-current Assets 6,987,306,766.99 4,390,283,516.13

Total Assets 19,021,510,376.18 15,554,602,846.85


102

Current Liabilities:

Short-term borrowings 47,455,135.66

Borrowings from central bank

Customer deposits and deposits from banks and other financial institutions

Capitals taken from banks and other financial institutions

Financial liabilities at fair value through profit or loss

Derivative financial liabilities

Notes payable and Accounts payable 419,364,642.31 234,720,133.86

Advance from customers 375,458,029.30 413,978,714.84

Financial assets sold under repurchase agreements

Fees and commissions payable

Employee benefits payable 260,337,871.25 306,521,529.05

Taxes payable 856,385,469.78 767,285,307.01

Other payables 1,568,267,708.52 2,192,777,363.26

Including: Interests payable 647,058.99 957,497.95

Dividends payable 5,920,703.99 5,920,703.99

Amounts payable under reinsurance contracts

Insurance contract reserves

Funds from securities trading agency

Funds from underwriting trading agency

Held-for-sale liabilities

Non-current liabilities due within one year

Other current liabilities

Total Current Liabilities 3,527,268,856.82 3,915,283,048.02

Non-current Liabilities:

Long-term borrowings 892,216,000.00 849,446,000.00

Bonds payable

Including: Preferred shares

Perpetual bond

Long-term payables

Long-term employee benefits payable 1,709,175.67 386,092.62

Provisions

Deferred income 1,565,892.84 2,996,576.60

Deferred tax liabilities 200,765,993.33 228,608,887.23

Other non-current liabilities

Total non-current liabilities 1,096,257,061.84 1,081,437,556.45

Total liabilities 4,623,525,918.66 4,996,720,604.47

Owners’ Equity

Share capital 333,658,271.10 333,658,271.10

Other equity instruments


Perpetual bond

Capital reserves 186,207,960.23 186,207,960.23

Less: Treasury shares 700,298,352.98

Other comprehensive income -50,924,488.44 10,328,362.49

Special reserves

Surplus reserves 192,094,989.12 156,741,749.37

General risk reserves

Retained earnings 14,240,402,712.62 9,685,638,070.46

Total owners' equity attributable to owner of the Company 14,201,141,091.65 10,372,574,413.65

Minority interests 196,843,365.87 185,307,828.73

Total owners' equity 14,397,984,457.52 10,557,882,242.38

Total liabilities and owners' equity 19,021,510,376.18 15,554,602,846.85

Legal representative: Jason JIANG Nanchun


103

Person in charge of the accounting work: KONG Weiwei

Person in charge of the accounting institution: WANG Lilin

2. Balance Sheet of the Parent Company

Unit: RMB

Item Closing balance Opening balance

Current Assets:

Cash and cash equivalents 237,729,631.27 89,826,356.97

Financial assets at fair value through profit or loss

Derivative financial assets

Notes receivable and Accounts receivable

Including: Notes receivable

Accounts receivable

Prepayments

Other receivables 4,985,984,354.44 4,682,024,342.71

Including: Interests receivable

Dividends receivable 4,970,810,264.44 4,682,000,252.71

Inventories

Held-for-sale assets

Non-current assets due within one year

Other current assets 82,234,631.18 771,172,178.05

Total Current Assets 5,305,948,616.89 5,543,022,877.73

Non-current Assets:

Available-for-sale financial assets

Held-to-maturity investments

Long-term receivables

Long-term equity investments 46,343,684,245.22 46,246,292,838.06

Investment properties

Fixed assets

Construction in progress

Productive biological assets

Oil and gas assets

Intangible assets

Development expenditures

Goodwill

Long-term prepaid expenses

Deferred tax assets

Other non-current assets


104

Total Non-current Assets 46,343,684,245.22 46,246,292,838.06

Total Assets 51,649,632,862.11 51,789,315,715.79

Current Liabilities:

Short-term borrowings

Financial liabilities at fair value through profit or loss

Derivative financial liabilities

Notes payable and Accounts payable

Advance from customers

Employee benefits payable 223,932.38 223,312.05

Taxes payable 51,727,644.23 19,092,774.02

Other payables 1,395,072.66 776,447,214.52

Including: Interests payable

Dividends payable

Held-for-sale liabilities

Non-current liabilities due within one year

Other current liabilities

Total Current Liabilities 53,346,649.27 795,763,300.59

Non-current Liabilities:

Long-term borrowings

Bonds payable


Perpetual bond

Long-term payables

Long-term employee benefits payable

Provisions

Deferred income

Deferred tax liabilities

Other non-current liabilities

Total non-current liabilities

Total liabilities 53,346,649.27 795,763,300.59

Owners’ Equity

Share capital 14,677,880,280.00 12,231,566,900.00



Perpetual bond

Capital reserves 30,441,144,477.48 32,887,457,857.48

Less: Treasury shares 700,298,352.98

Other comprehensive income

Special reserves

Surplus reserves 896,695,259.21 644,076,375.15

Retained earnings 6,280,864,549.13 5,230,451,282.57

Total owners' equity 51,596,286,212.84 50,993,552,415.20

Total liabilities and owners' equity 51,649,632,862.11 51,789,315,715.79



105




106

3. Consolidated Income Statement

Unit: RMB

Item Amount for the current

period

Amount for the prior

period

I. Total operating revenue 14,551,285,132.73 12,013,553,185.42

Including: Operating revenue 14,551,285,132.73 12,013,553,185.42

Interest income

Premiums earned

Fee and commission income

II. Total operating costs 8,626,935,536.11 6,251,124,475.21

Including: Operating costs 4,916,492,040.02 3,276,730,966.20

Interest expenses

Fee and commission expenses

Surrender charge fees

Net claims paid

Net change in insurance contract reserves

Policyholder dividend expenses

Expenses for reinsurance

Taxes and levies 431,918,450.07 398,232,001.35

Selling expenses 2,331,004,250.64 1,997,531,387.85

General and administrative expenses 412,197,245.38 301,668,563.09

Research and Development (R&D) expenses 228,938,370.62 224,301,481.60

Financial expenses -93,655,308.74 -128,343,374.78

Including: Interest expenses 48,197,112.27 20,924,853.55

Interest income 142,156,448.99 153,556,153.88

Impairment losses of assets 400,040,488.12 181,003,449.90

Add: Other Income 872,485,667.18 735,607,758.11

Investment income (Loss is indicated by “－”) 168,343,627.00 748,797,400.51

Including: Income from investments in associates and joint

ventures -27,940,285.93 -5,325,411.62

Gain (loss) from changes in fair values (Losses are indicated

by “－”)

Foreign exchange gains (Losses are indicated by “－”)

Gains from disposal of assets (Losses are indicated by “－”) -11,891,085.06 -2,689,647.80

III. Operating profit (Loss is indicated by “－”) 6,953,287,805.74 7,244,144,221.03

Add: Non-operating income 4,493,112.46 3,853,461.45

Less: Non-operating expenses 15,848,651.11 16,273,125.59

IV. Total profit (Total losses are indicated by “－”) 6,941,932,267.09 7,231,724,556.89

Less: Income tax expenses 1,149,705,092.58 1,258,329,392.71

V. Net profit (Net loss is indicated by “－”) 5,792,227,174.51 5,973,395,164.18

（1） Net profit from continuous operations (Net loss is indicated

by “－”) 5,798,740,519.55 6,029,628,475.10

（2） Net profit from discontinued operations (Net loss is indicated

by “－”) -6,513,345.04 -56,233,310.92

Net profit attributable to owners of the Company 5,822,974,766.98 6,004,706,786.08

Profit or loss attributable to minority interests -30,747,592.47 -31,311,621.90

VI. Other comprehensive income, net of income tax -59,427,776.84 -32,699,854.01

Other comprehensive income attributable to owners of the Company,

net of tax -61,252,850.93 -32,699,854.01


107

(1) Other comprehensive income that will not be reclassified

subsequently to profit or loss 101,929.80

1. Change in re-measurement of defined benefit plan 101,929.80

2. Other comprehensive income that cannot be transferred

into profit or loss under equity method

(2) Other comprehensive income to be reclassified subsequently to

profit or loss -61,354,780.73 -32,699,854.01

1. Other comprehensive income that are able to be

transferred into profit or loss under equity method

2. Changes in fair value of available-for-sale financial assets -89,112,249.51 -10,453,829.00

3. Gain or loss from reclassification of held-to-maturity

investments into available-for-sale financial assets

4. Effective portions of hedged profit or loss of cash flows

5. Translation difference of financial statements denominated

in foreign currencies 27,757,468.78 -22,246,025.01

6. Others

Other comprehensive income attributable to minority shareholders, net

of tax 1,825,074.09

VII. Total comprehensive income 5,732,799,397.67 5,940,695,310.17

Total comprehensive income attributable to owners of the Company 5,761,721,916.05 5,972,006,932.07

Total comprehensive income attributable to minority shareholders -28,922,518.38 -31,311,621.90

VIII. Earnings per share:

（1） Basic earnings per share 0.40 0.41

（2） Diluted earnings per share 0.40 0.41

In case of merger of enterprises under the same control in the current period, the net profit realized by the merged party before the

merger is: RMB0.00, and the net profit realized by the merged party in the previous period is: RMB0.00.




4. Income Statement of the Parent Company

Unit: RMB

Item Amount for the current period Amount for the prior period

I. Operating revenue 0.00 0.00

Less: Operating costs 0.00 0.00

Taxes and levies 20.00

Selling expenses

General and administrative expenses 6,779,813.03 8,346,416.90

Research and Development (R&D) expenses

Financial expenses -1,058,785.48 -893,046.81

Including: Interest expenses

Interest income 1,800,840.10 904,379.37

Impairment losses of assets -597,317.79

Add: Other Income 468,575,900.00 130,300,000.00

Investment income (Loss is indicated by “－”) 2,180,517,254.20 4,500,312,625.85

Including: Income from investments in associates

and joint ventures -2,608,592.84 -393,828.94


108

Gain (loss) from changes in fair values (Losses are

indicated by “－”)

Gains from disposal of assets (Losses are indicated

by “－”)

II. Operating profit (Loss is indicated by “－”) 2,643,372,106.65 4,623,756,573.55

Add: Non-operating income

Less: Non-operating expenses 100,000.00

III. Total profit (Total losses are indicated by “－”) 2,643,272,106.65 4,623,756,573.55

Less: Income tax expenses 117,083,266.03 31,113,355.69

IV. Net profit (Net loss is indicated by “－”) 2,526,188,840.62 4,592,643,217.86

（1） Net profit from continuous operations (Net loss

is indicated by “－”) 2,526,188,840.62 4,592,643,217.86

（2） Net profit from discontinued operations (Net loss

is indicated by “－”)

V. Other comprehensive income, net of income tax 0.00 0.00

(1) Other comprehensive income (loss) that will not be

reclassified subsequently to profit or loss 0.00 0.00

1. Change in re-measurement of defined benefit

plan

2. Other comprehensive income that cannot be

transferred into profit or loss under equity method

(2) Other comprehensive income to be reclassified

subsequently to profit or loss 0.00 0.00

1. Other comprehensive income that are able to

be transferred into profit or loss under equity method

2. Changes in fair value of available-for-sale

financial assets

3. Gain or loss from reclassification of held-to-

maturity investments into available-for-sale financial assets

4. Effective portions of hedged profit or loss of

cash flows

5. Translation difference of financial statements

denominated in foreign currencies

6. Others

VI. Total comprehensive income 2,526,188,840.62 4,592,643,217.86

VII. Earnings per share:

（1） Basic earnings per share

（2） Diluted earnings per share





109

5. Consolidated Cash Flow Statement

Unit: RMB

Item Amount for the current

period

Amount for the prior

period

I. Cash flows from operating activities:

Cash received from sale of goods or rendering of services 13,357,771,387.90 12,369,216,727.90

Net increase in customer deposits and deposits from banks and other

financial institutions

Net increase in borrowings from central bank

Net increase in capitals taking from other financial institutions

Cash received from premiums under original insurance contract

Net cash received from reinsurance business

Net increase in deposits and investment funds from insurance

policyholders

Net increase in disposals of financial assets measured at fair value for

which changes in fair value would be recognized in the current profit or

loss

Cash received from interests, fees and commissions

Net increase in capitals taking from other banks

Net increase in capital from repurchase arrangements

Receipts of tax refunds

Other cash receipts relating to operating activities 1,369,375,099.40 846,012,789.57

Sub-total of cash inflows from operating activities 14,727,146,487.30 13,215,229,517.47

Cash payments for goods purchased and services received 4,479,481,592.37 3,275,556,431.51

Net increase in loans and advances to customers

Net increase in balance with the central bank and due to banks and

other financial institutions

Cash payments for claims and policyholders' benefits under original

insurance contracts

Cash paid for interests, fees and commissions

Cash payments for insurance policy dividends

Cash paid to and on behalf of employees 1,166,170,413.15 939,377,376.61

Payments of various types of taxes 2,160,718,724.02 2,017,450,841.87

Other cash payments relating to operating activities 3,137,933,612.64 2,826,590,262.42

Sub-total of cash outflows from operating activities 10,944,304,342.18 9,058,974,912.41

Net Cash Flow from Operating Activities 3,782,842,145.12 4,156,254,605.06

II. Cash flows from investing activities:

Cash receipts from recovery of investments 340,971,270.67

Cash receipts from investment income 129,660,961.49 74,780,861.38

Net cash receipts from disposals of fixed assets, intangible assets and

other long-term assets 6,771,879.91 839,330.35

Net cash receipts from disposals of subsidiaries and other business

units 23,534,267.15

Other cash receipts relating to investing activities 12,296,370,000.00 13,569,040,000.00

Sub-total of cash inflows from investing activities 12,773,774,112.07 13,668,194,458.88

Cash payments to acquire or construct fixed assets, intangible assets

and other long-term assets 1,708,830,799.68 263,317,968.65

Cash paid to acquire investments 1,241,255,729.77 971,710,296.00

Net increase in pledged loans

Net cash payments to acquire subsidiaries and other business units

Other cash payments relating to investing activities 11,206,523,316.31 14,470,140,000.00


110

Sub-total of cash outflows from investing activities 14,156,609,845.76 15,705,168,264.65

Net Cash Flow from Investing Activities -1,382,835,733.69 -2,036,973,805.77

III. Cash flows from financing activities:

Cash receipts from capital contributions 40,235,965.50 33,286,617.58

Including: cash received by subsidiaries from capital contributions

from minority shareholders 40,235,965.50 33,286,617.58

Cash receipts from borrowings 47,455,135.66 1,196,855,748.00

Cash receipts from issuance of bonds

Other cash receipts relating to financing activities 776,327,439.57

Sub-total of cash inflows from financing activities 87,691,101.16 2,006,469,805.15

Cash repayments of borrowings 960,073,006.95

Cash payments for distribution of dividends or profits or settlement of

interest expenses 1,268,213,098.29 3,586,969,215.16

Including: dividends and profits paid by subsidiaries to minority

shareholders 2,118,572.01 2,280,784.48

Other cash payments relating to financing activities 1,481,425,792.55 26,890,387.00

Sub-total of cash outflows from financing activities 2,749,638,890.84 4,573,932,609.11

Net Cash Flow from Financing Activities -2,661,947,789.68 -2,567,462,803.96

IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents 5,180,439.09 -3,095,939.59

V. Net Increase in Cash and Cash Equivalents -256,760,939.16 -451,277,944.26

Add: Opening balance of Cash and Cash Equivalents 3,914,434,875.26 4,365,712,819.52

VI. Closing Balance of Cash and Cash Equivalents 3,657,673,936.10 3,914,434,875.26




6. Cash Flow Statement of the Parent Company

Unit: RMB

Item Amount for the current period Amount for the prior period

I. Cash flows from operating activities:

Cash received from sale of goods or rendering of services

Receipts of tax refunds

Other cash receipts relating to operating activities 851,102,037.81 131,849,788.38

Sub-total of cash inflows from operating activities 851,102,037.81 131,849,788.38

Cash payments for goods purchased and services received

Cash paid to and on behalf of employees 3,471,001.74 3,678,850.51

Payments of various types of taxes 84,448,431.77 12,986,884.92

Other cash payments relating to operating activities 398,962,682.76 200,908,430.03

Sub-total of cash outflows from operating activities 486,882,116.27 217,574,165.46

Net Cash Flow from Operating Activities 364,219,921.54 -85,724,377.08

II. Cash flows from investing activities:

Cash receipts from recovery of investments

Cash receipts from investment income 1,894,315,835.31 3,541,286,644.08

Net cash receipts from disposals of fixed assets, intangible assets

and other long-term assets


111

Net cash receipts from disposals of subsidiaries and other

business units

Other cash receipts relating to investing activities 940,000,000.00 217,600,000.00

Sub-total of cash inflows from investing activities 2,834,315,835.31 3,758,886,644.08

Cash payments to acquire or construct fixed assets, intangible

assets and other long-term assets

Cash paid to acquire investments 100,000,000.00 30,000,000.00

Net cash payments to acquire subsidiaries and other business

units

Other cash payments relating to investing activities 250,850,000.00 770,000,000.00

Sub-total of cash outflows from investing activities 350,850,000.00 800,000,000.00

Net Cash Flow from Investing Activities 2,483,465,835.31 2,958,886,644.08

III. Cash flows from financing activities:

Cash receipts from capital contributions

Cash receipts from borrowings

Cash receipts from issuance of bonds

Other cash receipts relating to financing activities 776,327,439.57

Sub-total of cash inflows from financing activities 776,327,439.57

Cash repayments of borrowings

Cash payments for distribution of dividends or profits or

settlement of interest expenses 1,223,156,690.00 3,564,628,068.00

Other cash payments relating to financing activities 1,476,625,792.55

Sub-total of cash outflows from financing activities 2,699,782,482.55 3,564,628,068.00

Net Cash Flow from Financing Activities -2,699,782,482.55 -2,788,300,628.43

IV. Effect of foreign exchange rate changes on Cash and Cash

Equivalents

V. Net Increase in Cash and Cash Equivalents 147,903,274.30 84,861,638.57

Add: Opening balance of Cash and Cash Equivalents 89,826,356.97 4,964,718.40

VI. Closing Balance of Cash and Cash Equivalents 237,729,631.27 89,826,356.97





112

7. Consolidated Statement of Changes in Owners’ Equity

Amount for the current period

Unit: RMB

Item


Owner’s Equity Attributable to owners of the Company

Minority interests Total owners’

equity Share capital

Other equity instruments Capital reserves

Less: Treasury share

Other

comprehensive

income

Special reserves

Surplus reserves

General risk

reserves

Retained

earnings Preferred shares

Perpetual bond

Others

I. Closing balance of the preceding period 333,658,271.10 186,207,960.23 10,328,362.49 156,741,749.37 9,685,638,070.46 185,307,828.73 10,557,882,242.38

Add: Changes in accounting policies

Correction of errors in the preceding period

Business merger under common control

Others

II. Opening balance of the current period 333,658,271.10 186,207,960.23 10,328,362.49 156,741,749.37 9,685,638,070.46 185,307,828.73 10,557,882,242.38

III. Increase or decrease in the current period (Decrease is indicated by “-”)

700,298,352.98 -

61,252,850.93 35,353,239.75 4,554,764,642.16 11,535,537.14 3,840,102,215.14

(I) Total comprehensive income -

61,252,850.93 5,822,974,766.98 -28,922,518.38 5,732,799,397.67

(II) Owners’ contributions and reduction in capital

700,298,352.98 40,235,965.50 -660,062,387.48

1．Common shares invested by owners 700,298,352.98 40,235,965.50 -660,062,387.48

2．Capital contribution from other equity instrument holders

3．Share-based payment recognized in owners’ equity

4．Others

(III) Profit distribution 35,353,239.75 -1,268,210,124.82 222,090.02 -1,232,634,795.05

1．Transfer to surplus reserves 45,053,434.82 -45,053,434.82

2．Transfer to general risk reserves

3．Distributions to owners (or shareholders) -1,223,156,690.00 -2,118,572.01 -1,225,275,262.01

4．Others -9,700,195.07 2,340,662.03 -7,359,533.04

(IV) Internal transfer of owners’ equity

1．Transfer capital reserves to paid-in capital (or share capital)

2．Transfer surplus reserves to paid-in capital (or share capital)

3．Surplus reserves to make up for losses

4．Set the benefit plan change amount to carry forward retained earnings


113

5．Others

(V) Special reserves

1．Transfer in the current period

2．Use in the current period

(VI) Others

IV. Closing balance of the

current period 333,658,271.10 186,207,960.23 700,298,352.98

-50,924,488.44

192,094,989.12 14,240,402,712.62 196,843,365.87 14,397,984,457.52




Amount for the preceding period

Unit: RMB

Item


Owner’s Equity Attributable to owners of the Company

Minority interests

Total owners’ equity Share capital

Other equity instruments Capital reserves

Less: Treasury

share

Other

comprehensive

income

Special reserves

Surplus reserves

General risk

reserves

Retained

earnings Preferred shares Perpetual

bond Others

I. Closing balance of the preceding period 333,658,271.10 182,938,120.05 43,028,216.50 145,639,107.03 7,285,662,483.72 162,660,495.72 8,153,586,694.12



Business merger under common control

Others

II. Opening balance of the current period 333,658,271.10 182,938,120.05 43,028,216.50 145,639,107.03 7,285,662,483.72 162,660,495.72 8,153,586,694.12

III. Increase or decrease in the current period (Decrease is indicated by “-”)

3,269,840.18 -

32,699,854.01 11,102,642.34 2,399,975,586.74 22,647,333.01 2,404,295,548.26

(I) Total comprehensive income -

32,699,854.01 6,004,706,786.08 -31,311,621.90 5,940,695,310.17


3,269,840.18 -29,000,489.00 56,075,727.78 30,345,078.96

1．Common shares invested by owners 34,597,106.58 34,597,106.58




114

4．Others 3,269,840.18 -29,000,489.00 21,478,621.20 -4,252,027.62

(III) Profit distribution 40,103,131.34 -

3,604,731,199.34 -2,116,772.87 -3,566,744,840.87


2．Transfer to general risk reserves

3．Distributions to owners (or shareholders) -

3,564,628,068.00 -2,116,772.87 -3,566,744,840.87

4．Others

(IV) Internal transfer of owners’ equity

1．Transfer capital reserves to paid-in capital (or share capital)



4．Set the benefit plan change amount to carry forward retained earnings

5．Others




(VI) Others

IV. Closing balance of the

current period 333,658,271.10 186,207,960.23 10,328,362.49 156,741,749.37 9,685,638,070.46 185,307,828.73 10,557,882,242.38




8. Statement of Changes in Owners’ Equity of the Parent Company


Unit: RMB

Item


Share capital


Capital reserves Less: Treasury

share

Other

comprehensive

income

Special

reserves Surplus reserves

Retained

earnings Total owners’ equity Preferred

shares

Perpetual

bond Others


115

I. Closing balance of the preceding period 12,231,566,900.00 32,887,457,857.48 644,076,375.15 5,230,451,282.57 50,993,552,415.20



Others

II. Opening balance of the current period 12,231,566,900.00 32,887,457,857.48 644,076,375.15 5,230,451,282.57 50,993,552,415.20

III. Increase or decrease in the current period

(Decrease is indicated by “-”) 2,446,313,380.00 -2,446,313,380.00 700,298,352.98 252,618,884.06 1,050,413,266.56 602,733,797.64

(I) Total comprehensive income 2,526,188,840.62 2,526,188,840.62

(II) Owners’ contributions and reduction in capital 700,298,352.98 -700,298,352.98

1．Common shares invested by owners 700,298,352.98 -700,298,352.98

2．Capital contribution from other equity instrument

holders

3．Share-based payment recognized in owners’

equity

4．Others

(III) Profit distribution 252,618,884.06 -1,475,775,574.06 -1,223,156,690.00


2．Distributions to owners (or shareholders) -1,223,156,690.00 -1,223,156,690.00

3．Others

(IV) Internal transfer of owners’ equity 2,446,313,380.00 -2,446,313,380.00

1．Transfer capital reserves to paid-in capital (or

share capital) 2,446,313,380.00 -2,446,313,380.00

2．Transfer surplus reserves to paid-in capital (or

share capital)


4．Set the benefit plan change amount to carry

forward retained earnings

5．Others




(VI) Others

IV. Closing balance of the current period 14,677,880,280.00 30,441,144,477.48 700,298,352.98 896,695,259.21 6,280,864,549.13 51,596,286,212.84





116


Unit: RMB

Item


Share capital


Capital reserves Less: Treasury

share

Other

comprehensive

income

Special

reserves Surplus reserves

Retained

earningss Total owners’ equity Preferred

shares

Perpetual

bond

Other

s

I. Closing balance of the preceding period 8,736,833,500.00 36,382,191,257.48 184,812,053.36 4,661,700,454.50 49,965,537,265.34



Others

II. Opening balance of the current period 8,736,833,500.00 36,382,191,257.48 184,812,053.36 4,661,700,454.50 49,965,537,265.34

III. Increase or decrease in the current period (Decrease is

indicated by “-”) 3,494,733,400.00 -3,494,733,400.00 459,264,321.79 568,750,828.07 1,028,015,149.86

(I) Total comprehensive income 4,592,643,217.86 4,592,643,217.86


1．Common shares invested by owners



4．Others

(III) Profit distribution 459,264,321.79 -4,023,892,389.79 -3,564,628,068.00


2．Distributions to owners (or shareholders) -3,564,628,068.00 -3,564,628,068.00

3．Others

(IV) Internal transfer of owners’ equity 3,494,733,400.00 -3,494,733,400.00

1．Transfer capital reserves to paid-in capital (or share capital) 3,494,733,400.00 -3,494,733,400.00



4．Set the benefit plan change amount to carry forward retained

earnings

5．Others





117

(VI) Others

IV. Closing balance of the current period 12,231,566,900.00 32,887,457,857.48 644,076,375.15 5,230,451,282.57 50,993,552,415.20



Person in charge of the accounting institution: WANG Li


118

Section XII Documents Available for Reference

1. The financial report was signed by the Company’s legal representative.

2. The financial report was signed and sealed by the person in charge of the Company, the person in charge of

accounting work and person in charge of accounting organization.

3. Original copy of all the Company’s documents and announcements were published on the newspaper

designated by CSRC within the Reporting Period.

The above documents are completely placed at the Company’s Board of Directors’ office.

Focus Media Information Technology Co., Ltd.

Chairman: Jason JIANG Nanchun

April 25th, 2019