2019 Annual Report of Focus Media Information Technology Co., Ltd.
Focus Media Information Technology Co., Ltd.
2019 Annual Report
April 2020
1 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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”. In 2019, the Company had repurchased 143,767,950 shares through centralized bidding and paid a total amount of RMB829,850,648.72.
Save for the above, the profit distribution proposal reviewed and approved by the Company’s
Board of Directors is as follows:
The capital reserves of the Company were not transferred to share capital and no bonus share was distributed this year. Based on the share capital (i.e. 14,434,499,726 shares) upon deducting the
2 2019 Annual Report of Focus Media Information Technology Co., Ltd. repurchased shares in the then repurchase special accounts of the Company from the total share capital as of December 31, 2019, the Company shall distribute RMB0.70 (including tax) in cash per 10 shares to all shareholders, i.e. RMB0.07 (including tax) in cash per share. The above profit distribution proposal shall distribute a total of RMB1,010,414,980.82 in cash dividends. The remaining undistributed profits are reserved for future distribution.
Note: This document is a translated version of the Chinese version of 2019 Annual Report (“2019 年年度 报告”), and the published announcements in the Chinese version shall prevail. The complete published Chinese 2019 Annual Report may be obtained at www.cninfo.com.cn.
3 2019 Annual Report of Focus Media Information Technology Co., Ltd.
CONTENTS
Section I Important Notes, Contents and Definitions ...... 2
Section II Company Profile and Key Financial Indicators ...... 6
Section III Business Overview ...... 13
Section IV Operation Discussion and Analysis ...... 23
Section V Significant Events ...... 49
Section VI Changes in Shares and Information about Shareholders ...... 74
Section VII Preferred Shares ...... 81
Section VIII Convertible Corporate Bonds ...... 81
Section IX Directors, Supervisors, Senior Management and Employees ...... 82
Section X Corporate Governance ...... 94
Section XI Corporate Bonds ...... 104
Section XII Financial Report (Excerpt) ...... 105
Section XIII Documents Available for Reference ...... 146
4 2019 Annual Report of Focus Media Information Technology Co., Ltd.
DEFINITIONS
Term Definition
The Company, our company, Focus Media, Focus Focus Media Information Technology Co., Ltd.
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 January 1, 2019 – December 31, 2019
Renminbi 1 Yuan, Renminbi 10,000 Yuan and Renminbi 100 million Yuan, RMB, RMB10,000 and RMB100 million respectively
Media Management（HK） Media Management Hong Kong Limited
Alibaba Technology, Alibaba Alibaba (China) Technology Co., Ltd.
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
Jason JIANG Nanchun JIANG NANCHUN
Ningbo Rongxin Zhiming Equity Investment Partnership (Limited Rongxin Zhiming Partnership) (宁波融鑫智明股权投资合伙企业(有限合伙))
Shanghai Shuhe Information Technology Co., Ltd. (上海数禾信息科技有 Shuhe Technology 限公司)
Shanghai Junzhong Network Technology Co., Ltd. (上海骏众网络科技有 Junzhong Network 限公司)
FM Korea, FMK Focus Media Korea Company Limited
5 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Section II Company Profile and Key Financial Indicators
I. Company Profile
Stock Abbreviation Focus Media Stock Code 002027
Stock exchange where the shares of Shenzhen Stock Exchange the Company are listed
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 分众传媒 in Chinese
Name of the Company in English (if Focus Media Information Technology Co., Ltd. any)
Abbreviation of the Company name Focus Media in English
Legal representative of the Company Jason JIANG Nanchun
Room 2130, Building 2, 8 Fenghuang 3rd Road, Sino-Singapore Knowledge City, Huangpu Registered address 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]
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II. Contacts and Contact Information
Board Secretary Securities Affairs Representative
Name KONG Weiwei LIN Nan
28/F, Zhao Feng World Trade Building, 369 Jiangsu 28/F, Zhao Feng World Trade Building, 369 Jiangsu Address Road, Changning District, Shanghai 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 Securities Times information disclosure
Website designated by the CSRC for release of the www.cninfo.com.cn Annual Report
Place where the Annual Report is available for Office of the Board of Directors of the Company inspection
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IV. Company Registration and Alteration
Organization code 914401016185128337
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 Changes in main businesses since the communication terminal equipment; information technology consulting services; Company’s listing 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.
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) Changes in Previous Controlling issued by China Securities Regulatory Commission, the Company issued Shareholders 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
Name of the signing accountants YAO Hui, XU Lirong and SHEN Songtao
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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
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VI. Key Accounting Information and Financial Indicators
Whether the Company need to retrospectively adjust or restate its accounting information in previous years
□ Yes √ No
2019 2018 YoY change 2017
Operating income (RMB) 12,135,948,050.91 14,551,285,132.73 -16.60% 12,013,553,185.42
Net profits attributable to shareholders of the Company 1,875,276,692.44 5,822,974,766.98 -67.80% 6,004,706,786.08 (RMB)
Net profits attributable to shareholders of the Company 1,282,022,237.62 5,025,532,327.24 -74.49% 4,851,996,085.18 before non-recurring profits and losses (RMB)
Net cash flows from operating activities (RMB) 3,429,869,870.39 3,782,842,145.12 -9.33% 4,156,254,605.06
Basic earnings per share (RMB/share) 0.13 0.40 -67.50% 0.41
Diluted earnings per share (RMB/share) 0.13 0.40 -67.50% 0.41
Weighted average Return on Equity (ROE) 13.76% 46.92% -33.16% 67.65%
As at the end of As at the end of As at the end of 2019 YoY change 2018 2017
Total assets (RMB) 18,687,079,233.62 19,021,510,376.18 -1.76% 15,554,602,846.85
Net assets attributable to shareholders of the Company 13,778,408,776.65 14,201,141,091.65 -2.98% 10,372,574,413.65 (RMB)
In calculating the basic earnings per share, diluted earnings per share and net assets per share in 2017, the impact of the implementation of profit distribution proposal 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 has been taken into account. In calculating the basic earnings per share and diluted earnings per share in 2018, the weighted average number of shares of 99,612,604 treasury shares repurchased by the Company in 2018 have been deducted. In calculating the basic earnings per share and diluted earnings per share in 2019, the weighted average number of shares of 99,612,604 treasury shares repurchased by the Company in 2018 and 143,767,950 treasury shares repurchased by the Company in 2019 have been deducted.
VII. Differences in Accounting Data between Domestic and Overseas Accounting Standards
1. Differences between net profits and net assets disclosed in the financial reports in accordance with Chinese Accounting Standards (CAS) and International Financial Reporting Standards (IFRS)
□ Applicable √ Not applicable There was no difference between the net profits and net assets disclosed in the financial reports in accordance with CAS and IFRS for the Reporting Period.
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2. Differences between net profits and net assets disclosed in the financial reports in accordance with CAS and Overseas Accounting Standards
□ Applicable √ Not applicable There was no difference between the net profits and net assets disclosed in the financial reports in accordance with CAS andOverseas Accounting Standards for the Reporting Period.
VIII. Quarterly Key Financial Indicators
Unit: RMB
First Quarter Second Quarter Third Quarter Fourth Quarter
Operating revenue 2,610,958,669.84 3,105,786,344.31 3,189,102,224.17 3,230,100,812.59
Net profit attributable to shareholders of the Company 340,378,444.93 437,545,528.53 582,423,522.51 514,929,196.47
Net profits attributable to shareholders of the Company 115,644,582.47 266,377,300.36 496,916,667.27 403,083,687.52 before non-recurring profits and losses
Net cash flow from operating activities 581,559,068.68 495,985,619.54 1,006,378,419.43 1,345,946,762.74
Whether there was 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
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IX. Items and Amounts of Non-recurring
√ Applicable □ Not applicable
Unit: RMB
Item 2019 2018 2017
Profits or losses from disposal of non-current assets (including the write-off for -20,479,112.11 -21,891,085.06 113,621,218.11 the impairment provision of accrued assets)
Government grants included in current profits and losses (excluding the government grants closely related to the Company’s business operations and 722,900,777.89 854,450,230.60 735,607,758.11 government grants based on standard quota or quantitative amounts according to unified national standards)
Capital occupancy fee received from non-financial enterprises and included in 26,555,957.66 26,103,945.13 0 the current profits and losses
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 27,462,764.78 103,655,136.11 563,031,084.48 investee’s identifiable net assets obtained at the time of acquisition of investment
Profits and losses from entrusted investment or management of assets 0 102,628,776.82 74,780,861.38
Gains or losses attributed to change in fair value for held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, and derivative financial liabilities; and investment income in disposal of held-for- 36,952,713.42 0 0 trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investments, excluding the effective hedging business related to the normal operation of the Company
Other non-operating income and expenditures except the items above -17,850,713.29 -11,355,538.65 -12,419,664.14
Less: Impact of income tax 182,305,689.54 256,069,654.39 322,346,197.34
Impact of the minority interests (after tax) -17,756.01 79,370.82 -435,640.30
Total 593,254,454.82 797,442,439.74 1,152,710,700.90
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 aforementioned Explanatory Announcement as a recurrent profit or loss item
□ Applicable √ Not applicable
During 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.
The Company’s life-style media network covers over 300 cities in China (including HKSAR, China), and had established its holding subsidiaries in Korea, Thailand and Indonesia and joint ventures in Singapore to expand its overseas network resources. As of the end of 2019, for inner-building LCD display ad, the Company had set up approximately 709,000 self-operated displays (including 41,000 displays from its overseas subsidiaries) covering about 170 cities and regions in China (including HKSAR, China) and 25 major cities in
Korea, Singapore, Indonesia and Thailand, and approximately 24,000 franchised displays covering about 60 cities and regions in China. For elevator poster frame ad, the Company had set up approximately 1.78 million self-operated advertising frames covering over 190 cities in China, and approximately 114,000 outsourced- poster frames covering over 200 cities in China. For movie theater ad network, the Company had established partnership with more than 1,700 contracted movie theatres and 37 cinema chains, with over 11,000 movie screens in about 300 cities of various tiers in China.
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During the Reporting Period, while increasing quality resource spots, the Company also organized and optimized the resource spots of inner-building LCD display ad and elevator poster frame ad. As of the end of
2019, the details of the Company’s self-operated elevator LCD displays and elevator poster framesare as follows:
Number of self-operated media resources in Changes at the end of China (in 10 thousand units) year compared with Product Type Cities covered by tiers Change (%) 2019-12-31 2018-12-31 the end of last year (in 10 thousand units) First-tier cities 19.3 19.6 -0.3 -1.5% Inner-building Second-tier cities 38.3 40.2 -1.9 -4.7% LCD display ad Third-tier and 9.2 10.3 -1.1 -10.7% below cities First-tier cities 43.6 49.7 -6.1 -12.3% Elevator poster Second-tier cities 95.8 102.3 -6.5 -6.4% frame ad Third-tier and 38.6 41.8 -3.2 -7.7% below cities 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.
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II. Significant Changes in Major Assets
1. Significant changes in major assets
Major assets Significant changes
At the end of the Reporting Period, the total balance of long-term equity investment, other equity instruments investment and other non-current financial assets was RMB3,809.225 million, representing an increase of RMB114.331 million or 3.1% from the total balance of available-for-sale financial assets and long-term equity investment of RMB3,694.894 million at the beginning of the period. The changes mainly include: (1) According to the new financial instrument standards implemented from January 1, 2019, as for equity investment, the original available-for-sale financial assets are reclassified into other non-current financial assets and other equity instruments investment according to the characteristics of the managed business model and contract cash flow. At the same time, other non-current financial assets and other equity instruments investment at the beginning of 2019 were measured at fair value, which reduced by RMB34.014 million compared with the balance at the end of 2018; (2) The Company’s associates, Shuhe Technology, etc. introduced new investors which led to passive dilution of the Company’s equity ratio. The difference between the share of net assets after the capital increase of the invested unit calculated based on the new shareholding ratio and the changes in shareholders’ equity in addition to the net profit of the invested unit Equity assets calculated based on the original shareholding ratio increased the long-term equity investment by RMB185.821 million to be included in capital reserve; (3) The net profit attributable to the associates such as Shuhe Technology recognized by the equity method during the Reporting Period, which was investment income, totaled RMB96.232 million; (4) During the Reporting Period, the formerly merged subsidiary Junzhong Network changed to an associate as a result of the introduction of a new round of passive dilution of investors to increase the long-term equity investment of RMB31.406 million; (5) Additional long-term equity investment by RMB 11.059 million was made during the Reporting Period; (6) For other equity instruments investment, during the Reporting Period, purchase: RMB34.515 million, recovery of investments: RMB30 million, change in fair value included in other comprehensive income: -RMB209.021 million, translation change in foreign currency statements: RMB8.363 million; (7) For other non-current financial assets, during the Reporting Period, additional purchase: RMB124.000 million, recovery of investments: RMB32.373 million, change in fair value included in profit and loss: -RMB82.757 million, translation change in foreign currency statements: RMB10.904 million. At the end of the Reporting Period, the balance of fixed assets was RMB1,580.744, representing a decrease of approximately RMB204.532 million or 11.5% from the beginning of the year, mainly due to: Fixed assets (1) Purchase of displays of RMB305.490 million during the Reporting Period; (2) Provision for depreciation of RMB484.781 during the Reporting Period; (3) Fixed assets were damaged and scrapped at RMB25.825 million during the Reporting Period. At the end of the Reporting Period, the balance of intangible assets was RMB44.706 million, representing a decrease of Intangible assets approximately RMB2.252 million or 4.8% from the beginning of the year, of which new intangible assets amounted to RMB13.15 million and amortization amounted to RMB15.053 million during the Reporting Period.
Construction in At the end of the Reporting Period, the balance of construction in progress was RMB6.87 million, representing a decrease of progress approximately RMB7.402 million or 51.9% from the beginning of the year, mainly due to the use and consumption.
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2. Main overseas assets
√ Applicable □ Not applicable Unit: RMB’0000
The proportion of Significant Cause of Operating overseas assets in Specific content of assets Asset size Location Revenue risk of formation mode the Company's net impairment assets
Focus Media Development Co., Ltd. Incorporation Wholly- Loss of RMB5.858 Outdoor advertising business in 100% 60,470.8 Hong Kong owned 4.39% No million HKSAR, China shareholding subsidiary
Profit of RMB2.218 Focus Media Korea Co., Ltd Incorporation Holding million Advertising business for inner- 50.4% 17,714.5 Korea 1.29% No subsidiary Focus obtained profit building LCD display ad in Korea shareholding of RMB1.118 million
Loss of RMB8.852 PT Target Media Nasantara Incorporation Holding million Advertising business for inner- 51% 2,276.8 Indonesia 0.17% No subsidiary Focus suffered loss of building LCD display ad in Indonesia shareholding RMB4.515 million
Target Media Hong Kong Limited Loss of RMB3.886 Incorporation Advertising business for inner- Holding million 61% 1,282.2 Hong Kong 0.09% No building LCD display ad in HKSAR, subsidiary Focus suffered loss of shareholding China RMB2.37 million
Focus Media (Thailand) Co., Ltd. Incorporation Wholly- Loss of RMB0.516 Advertising business for inner- 100% 247.5 Thailand owned 0.02% No million building LCD display ad in Thailand shareholding subsidiary
Target Media Culcreative PTE LTD., Loss of RMB6.905 Incorporation Advertising business for inner- million 30% 2,220.0 Singapore Associates 0.16% No building LCD display ad in Focus suffered loss of shareholding Singapore RMB2.072 million
Equity Changes in fair value Focus Media FountainVest Sports JV, investment Cayman Limited 62,085.8 Loss of RMB52.322 4.51% No L.P. 50% Islands Partnership million shareholding
III. Analysis of Core Competitiveness
1. The Company makes use of the key scenario of “elevators in building” to reach the middle-class
consumers in major cities passing through elevators every day with high frequency and low
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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 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.
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 China’s largest life-style media platform, Focus has now covered more than 310 million Chinese urban middle-class consumers, and gradually developed into an essential media network that is omnipresent in the everyday life of consumers.
Through analysis of property information (age of property, property price, geographical location, household type, etc.) as well as cooperation with search engines companies and e-commerce companies such as Alibaba, the Company gains insight into the demand for various categories of consumer goods and brand preferences for consumers in different buildings and communities, all of which constantly help the advertisers achieve precise targeting, thus turning the Company’s device into an important offline traffic portal.
3. The Company’s intelligent and digital marketing capabilities present significant advantages.
Since the strategic investment by Alibaba and its related parties in Focus, both parties have been committed to jointly exploring innovation in digital marketing models under the new overall retail trend. Since then, the Company has begun its digital transformation and exploration in its media business to prepare for the future. Focus has now implemented online content push via cloud, and most of its screens have incorporated
Internet of Things during the Reporting Period, achieving remote online monitoring of the playback status of the screen. With mutual access to back-office functions due to cooperation with Alibaba, Focus has acquired
17 2019 Annual Report of Focus Media Information Technology Co., Ltd. data flow, which has played an important role in the accumulation of digital assets of consumer brands.
Meanwhile, via Focus’s digital screens all over the city, the preferences of consumers in different buildings are analyzed through big data, thus achieving the broadcast of different ads in different buildings based on the specific conditions of the buildings.
4. The Company has access to high-quality customer resources, and continuously optimized the structure of customers.
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 constant advertising budget, which is increasing steadily. Focus customer group proves that the competitive advantage of the Company has been recognized by customers, and the Company has a stable source of income.
Meanwhile, during the Reporting Period, the Company’s media value has increasingly been recognized by customers in traditional industries (such as FMCG), and its revenue from such customers continues to increase, fostering continuous optimization of the overall customer structure.
5. The Company enjoys 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.
6. Information-based management advantages provide significant support for product differentiation strategies.
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 advertisement broadcasting information system management platform, continuously improving the
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Company’s management efficiency and targeted advertising.
7. The Company consistently receives broad recognition from international authorities and industry associations for its network media value.
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 diversified and overloaded information, the network media value becomes increasingly prominent and is recognized by more and more international authorities and industry associations.
In 2018, the Company received the prestigious New York Festivals (NYF) Top Valuable Media Award, the China’s Most Influential Communication Company of the Year at the Macau International Advertising
Festival and the London International Awards (LIA) Marketing Innovation Award. In April 2019, in the 40th
Anniversary Awards for Excellence Presentation Ceremony in Media, Advertising and Branding for the
Reform and Opening up and Resumption of Advertising Industry, Focus, WeChat and Baidu, among others, were awarded Top 10 Outstanding New Media Awards; in June 2019, the Company won the “Actual Combat
Case Gold Award of ADMEN International Awards”; in August 2019, the Company won the Ad Stars
“Innovative Digital Media Award” in Busan; in November 2019, the Company was awarded “Excellent and
Precise Communication Innovative Enterprise” in the “Moving Towards Modern Approach:
Conversion · Finding Opportunities - Tribute to the Founder 2019 Innovation Summit Meeting” organized by the Economic Observer.
8. The employees resonates with the corporate culture, making up an industry-leading powerhouse team.
In its long journey of growing and learning, the Company has established clear value priorities captured in four aspects: Passion, Compliance, Integrity and Win-win partnership. The employees resonate with these values and look upon them for inspiration and motivation, thereby helping the Company achieve constant, stable and healthy growth.
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
19 2019 Annual Report of Focus Media Information Technology Co., Ltd. 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.
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Section IV Operation Discussion and Analysis
I. Overview
1. In 2019, the Company recorded operating revenue of RMB12,135.948 million, representing a year-on- year decrease of 16.6% compared with the operating income of RMB14,551.285 million in 2018. Affected by the macro economy, the demand in the advertising market of China was weak and the industry's situation was not good in 2019. Internet advertisers in the Company's customer structure reduced their advertising budgets due to changes in market financing environment and other reasons. The sharp drop in advertising revenue derived from the Internet industry was the primary cause of the decline in the Company's operating revenue during the Reporting Period. During the Reporting Period, more advertisers in traditional industries such as daily consumer goods industry recognized the Company’s media value. The revenue from customers in traditional industries continued to grow. Since the second half of 2019, the decline in operating income has narrowed.
2. Due to the significant expansion of elevator advertising resources since the second quarter of 2018, the costs of the Company's main businesses in 2019 increased by 35.3% compared with 2018, of which the costs of the inner building advertising increased by 45.3% compared with 2018. During the Reporting Period, the
Company optimized and streamlined the inner building advertising network resources while increasing the quality resource sites. Compared with the end of 2018, 33,000 and 158,000 inefficient sites were removed for the Company's self-operated elevator LCD display advertising and elevator poster advertising, respectively, at the end of 2019.
3. During the Reporting Period, due to the impact of the macroeconomy, the customer’s payment rate generally slowed down, resulting in the deterioration of ageing structure and an increase in credit risk.
Therefore, the accrual and provision of the Company’s credit impairment loss increased 85.0%.
4. In summary, the Company achieved an operating profit of RMB2,366.016 million, representing a decrease of 66.0% from RMB6,953.288 million compared with 2018.
5. In July 2018, Alibaba and its related parties strategically invested in Focus. The digital Focus empowered by Alibaba realized content push (enabled) via internet, real-time monitoring, and dynamic feedback. Focus is not only a preferred advertising platform to boost brand awareness, but also a core platform integrating brand uni-marketing and enhancing brand consumer assets through digital transformation. Under
21 2019 Annual Report of Focus Media Information Technology Co., Ltd. the empowerment of Ali, Focus has continuously built a big database of the Focus-Ali building portraits to achieve precise positioning of different ads in different buildings, assisting the brands to achieve more accurate and effective distribution of ads and coordination with Tmall to help the brands increase sales conversion rate in the digital era. During the shopping festivals, Focus provided customers with a better experience and media value based on the LBS business circle package and category interest package accurately customized via Ali
Big Data, and received positive feedback from customers.
6. The Company considered and approved the Proposal of the Company on the Share Repurchase through
Centralized Bidding (《公司关于以集中竞价交易方式回购股份的预案》) in 2018. As of the end of 2019, the Company repurchased a total of 243,380,554 shares through centralized bidding with the highest purchase price of RMB8.64/share and the lowest price of RMB5.04/share. The actual accumulated payment was
RMB1,530,149,001.70 (including transaction fees), which was included in the treasury shares of
RMB1,530,149,001.70, of which 143,767,950 shares were repurchased in 2019, totaling RMB829.851 million.
II. Core Business Analysis
1. Overview
For details, please refer to “I. Overview” in “Operation Discussion and Analysis”.
22 2019 Annual Report of Focus Media Information Technology Co., Ltd.
2. Revenues and Costs
(1) Breakdown of operating revenue
Unit: RMB
2019 2018
As percentage of As percentage of YoY Change (%) Amount Amount operating income operating income
Total operating 12,135,948,050.91 100% 14,551,285,132.73 100% -16.60% income
By industry
FMCG 4,196,555,158.78 34.58% 3,455,361,750.76 23.75% 21.45%
Internet 2,490,799,136.48 20.52% 5,605,000,477.45 38.52% -55.56%
Transportation 1,568,126,381.76 12.92% 1,676,650,858.11 11.52% -6.47%
Business and 1,085,300,893.86 8.94% 713,974,220.01 4.91% 52.01% services
Entertainment and 991,364,896.79 8.17% 1,005,823,955.20 6.91% -1.44% leisure
Real estate and home 765,866,684.80 6.31% 946,425,284.28 6.50% -19.08% decoration
Telecommunication 359,934,445.81 2.97% 599,713,195.71 4.12% -39.98%
Miscellaneous 678,000,452.63 5.59% 548,335,391.21 3.77% 23.65%
By product
Building media 10,049,430,049.66 82.81% 12,075,911,151.93 82.99% -16.78%
Cinema media 1,982,712,837.80 16.34% 2,381,757,656.89 16.37% -16.75%
Other Media and 103,805,163.45 0.86% 93,616,323.91 0.64% 10.88% Others
By region
North China 2,310,578,703.15 19.04% 3,082,088,247.60 21.19% -25.03%
East China 4,252,010,385.25 35.04% 5,296,244,219.43 36.40% -19.72%
South China 2,561,653,803.44 21.11% 2,881,783,497.74 19.80% -11.11%
Southwest China 1,377,132,522.21 11.35% 1,526,951,049.49 10.49% -9.81%
Central China 984,579,092.35 8.11% 1,053,874,395.93 7.24% -6.58%
Others 649,993,544.51 5.35% 710,343,722.54 4.88% -8.50%
Note: As a result of the continuous development and improvement of Internet technology and ecology, advertisers in various traditional industries achieved deep integration with the Internet. In view of the obvious differences in the profit model and sales channels between advertisers in such industries and those in other traditional industries, in order to more objectively and truly reflect the industry nature of the Company’s customers in the current economic structure, the Company adjusted the industry classification of the operating
23 2019 Annual Report of Focus Media Information Technology Co., Ltd. income to adjust the Company’s customers who are highly dependent on the Internet in other traditional industries to the "Internet" sector, and adjusted the comparative figures for the same period of last year according to the new industry classification.
(2) Industries, products or regions accounting for more than 10% of the Company’s operating revenue or operating profit
√ Applicable □ Not applicable
Unit: RMB
YoY Change (%) YoY Change YoY Change (%) Operating revenue Operating cost Gross margin of operating (%) of gross of operating cost revenue margin
By product
Building media 10,049,430,049.66 5,249,587,651.26 47.76% -16.78% 45.32% -22.33%
Cinema media 1,982,712,837.80 1,314,566,002.38 33.70% -16.75% 7.39% -14.90%
The Company’s adjusted core business data for the latest year at the end of the Reporting Period in the event that the reporting period of the Company’s core business data were adjusted
□ Applicable √ Not applicable
(3) Whether the revenue from sales of physical products is greater than that from service provision
□ Yes √ No
(4) Fulfillment of signed significant sales contracts as at the end of the Reporting Period
□ Applicable √ Not applicable
24 2019 Annual Report of Focus Media Information Technology Co., Ltd.
(5) Breakdown of operating cost
Unit: RMB
2019 2018
Industry Item As percentage of As percentage of YoY Change (%) Amount Amount operating cost operating cost
Advertising Media rental cost 4,695,013,279.08 70.61% 3,537,807,089.14 71.96% 32.71%
Employee Advertising 883,156,723.45 13.28% 603,350,936.43 12.27% 46.38% compensation
Equipment Advertising depreciation 466,900,668.29 7.02% 207,403,097.21 4.22% 125.12% expense
Other operating Advertising 604,533,457.05 9.09% 567,930,917.24 11.55% 6.44% cost
Notes:
1. Media rental cost increased by 32.71% compared to 2018. In particular, the rental cost of building media
increased by 46.75% compared to 2018, and the rental cost of cinema media increased by 7.80%. In order
to achieve its medium- and long-term strategic goals, the Company has been extensively expanded its
network resources for elevator LCD displays and elevator posters since the second quarter of 2018. At the
end of the second quarter and the beginning of the third quarter of 2019, both the number of media resource
sites and the estimated annual rental cost reached the peak. After the initial optimization and streamlining
during the second half of 2019, the inefficient sites of the Company’s self-operated inner-building LCD
display ad and elevator poster frame ad in the PRC decreased by 33,000 and 158,000, respectively, during
the Reporting Period.
2. Employee compensation increased by 46.38% compared with 2018, mainly due to the significant increase
in the front-end media developers and the middle- and back-end media operators in various cities in
response to the expansion of media resources in these cities.
3. Equipment depreciation expense increased by 125.12% compared to 2018. From the second quarter of
2018, in order to achieve the medium- and long-term strategic goals, the Company has significantly
expanded the media resources of inner-building LCD display ad and elevator poster frame ad, and
gradually replaced the original LCD elevator TVs with 21-inch high-definition screens as the main ones
25 2019 Annual Report of Focus Media Information Technology Co., Ltd.
with primarily LCD elevator TVs with 27-inch screens supplemented by 21-inch smart interactive
machines; the original 20-inch and 21-inch vertical digital posters were replaced by 32-inch and 25-inch
smart screen integrated machines; the original 424mm x 570mm elevator posters were mainly replaced by
590mm x 790mm elevator posters with aluminum alloy frames. In 2018 and 2019, the purchase of media
equipment was RMB1,620.931 million and RMB280.426 million, respectively. The basic update and
replacement were completed in the first half of 2019; therefore, the media depreciation expenses increased
significantly compared to 2018.
4. Other operating cost mainly includes printing costs for elevator posters, transportation and outsourcing
installation costs for media equipment, material consumption costs for installation and maintenance, media
publishing costs for purchase from local elevator TV and elevator poster operators in third-, fourth-, and
fifth-tier cities and the telecom operator's data charges for the 4G push of elevator TV advertising contents.
Due to the expansion of media resource since the second half of 2018, other operating cost in 2019
increased by 6.44% compared to 2018.
(6) Whether there are any changes in the scope of the consolidated financial statements for the Reporting Period
√ Yes □ No
For details, please refer to VIII. Changes in the scope of the consolidated financial statements under Section
XII. Financial Report
(7) Significant change or adjustment of the Company’s business, products or services during the Reporting Period
□ Applicable √ Not applicable
(8) Major customers and suppliers
Major customers of the Company
26 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Total sales to top five customers (RMB) 1,959,783,207.50
Total sales to top five customers as a percentage of the total 16.15% sales for the year (%)
Total sales to related parties in top five customers as a 4.64% percentage of the total sales of the year (%)
Information on top five customers of the Company
No. Name of Customer Sales Amount (RMB) Percentage of total sales for the year
1 1st 563,443,225.03 4.64%
2 2nd 424,718,684.11 3.50%
3 3rd 397,549,346.37 3.28%
4 4th 328,623,898.42 2.71%
5 5th 245,448,053.57 2.02%
Total -- 1,959,783,207.50 16.15%
Major suppliers of the Company
Total purchases from top five suppliers (RMB) 600,369,765.81
Total purchases from top five suppliers as a percentage of the total 12.42% purchases for the year
Total purchases from related parties in the top five suppliers as a percentage 0.00% of the total purchases for the year
Information on top five suppliers of the Company
No. Name of Supplier Purchase Amount (RMB) Percentage of total purchase for the year
1 1st 133,817,127.96 2.77%
2 2nd 131,625,673.00 2.72%
3 3rd 119,306,999.00 2.47%
4 4th 111,425,201.43 2.30%
5 5th 104,194,764.42 2.16%
Total -- 600,369,765.81 12.42%
27 2019 Annual Report of Focus Media Information Technology Co., Ltd.
3. Expenses
Unit: RMB 2019 2018 YoY Change (%) Sales expenses 2,256,255,903.67 2,331,004,250.64 -3.21% General and administrative expenses 576,072,150.24 412,197,245.38 39.76% Financial expenses -19,689,880.97 -93,655,308.74 - R&D expenses 147,971,437.22 228,938,370.62 -35.37%
Description of material changes:
Sales expenses: mainly include sales business expenses, sales staff remuneration and benefits and other sales expenses (including market research and travel expenses, business entertainment expenses, sales training expenses, business promotion expenses, etc.). The sales business expenses accounted for approximately 77.85% of the total sales expenses in 2019, representing a decrease of 9.74% compared with 2018. Such decrease was due to the decline in revenue from the core businesses, to which the sales business expenses were closely related.
General and administrative expenses: Mainly due to an increase in the back-end management staff and administrative costs resulting from the increase in media resources sites.
Financial expenses: 1) The interest income decreased by 44.91% as compared to 2018 to RMB63.847 million.
This part of interest income comes from the earnings of the Company's current and fixed bank deposits and non- fixed-term bank wealth management products; 2) interest expenses increased by RMB7.914 million from 2018, representing an increase of 16.42%, mainly due to an increase in the effective interest rate of the Company's overseas long-term loans in 2019 as compared to 2018 affected by the gradual interest rate hikes of US$ starting from the first quarter of 2018.
R&D expenses: R&D expenses decreased by RMB80.967 million as compared to the previous year, representing a decrease of 35.37%, mainly because 1) no outsourcing R&D expenses incurred in 2019, while in
2018 outsourcing R&D expenses of various smart-screen-related systems newly invested amounted to RMB62.31 million; 2) during the Reporting Period, with a decrease in the number of R&D personnel, the corresponding remuneration expenses decreased by RMB26.027 million.
28 2019 Annual Report of Focus Media Information Technology Co., Ltd.
4. R&D
√ Applicable □ Not applicable
R&D spending of the Company
2019 2018 Change Percentage Number of R&D personnel 213 250 -14.80% R&D personnel as a percentage of total headcount 1.94% 1.96% -0.02% Amount of R&D spending (RMB) 147,971,437.22 228,938,370.62 -35.37% R&D spending as a percentage of operating revenue 1.22% 1.57% -0.35% Amount of capitalized R&D spending (RMB) 0.00 0.00 0.00% Capitalized R&D spending as a percentage of R&D 0.00% 0.00% 0.00% spending 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 the rationality for the significant change of the capitalization rate of R&D spending □ Applicable √ Not applicable
29 2019 Annual Report of Focus Media Information Technology Co., Ltd.
5. Cash flow
Unit: RMB
Item 2019 2018 YoY Change (%)
Subtotal of cash inflows from operating activities 14,037,083,642.10 14,727,146,487.30 -4.69%
Subtotal of cash outflows from operating activities 10,607,213,771.71 10,944,304,342.18 -3.08%
Net cash flow from operating activities 3,429,869,870.39 3,782,842,145.12 -9.33%
Subtotal of cash inflows from investing activities 10,790,319,709.99 12,773,774,112.07 -15.53%
Subtotal of cash outflows from investing activities 12,372,031,636.21 14,156,609,845.76 -12.61%
Net cash flow from investing activities -1,581,711,926.22 -1,382,835,733.69 -
Subtotal of cash inflows from financing activities 174,441,030.80 87,691,101.16 98.93%
Subtotal of cash outflows from financing activities 2,508,916,780.15 2,749,638,890.84 -8.75%
Net cash flow from financing activities -2,334,475,749.35 -2,661,947,789.68 -12.30%
Net increase in cash and cash equivalents -489,746,322.03 -256,760,939.16 90.74%
Explanation of major factors influencing material changes in relevant data year-on-year
√ Applicable □ Not applicable
1. In 2019, the net cash flows from operating activities was RMB3,429.870 million, representing a decrease of
RMB352.972 million or 9.33% as compared to RMB3,782.842 million in 2018. Among them:
(1) In 2019, the cash inflows from operating activities was RMB14,037.084 million, representing a decrease of RMB690.062 million or 4.69% as compared to RMB14,727.146 million in 2018.
① In 2019, the cash received from sales of goods or rendering of services was RMB13,219.778 million, representing a decrease of RMB137.993 million or 1.03% as compared to RMB13,357.771 million in 2018. Despite the decrease of 16.60% in operating revenue, receipts of sales payment only decreased by 1.03%, primarily because the Company concentrated on the collection of advances from customers of newly signed sales contracts and subsequent payments;
② Other cash receipts relating to operating activities mainly include government grants and interest income received. In 2019, other cash receipts relating to operating activities were RMB817.305 million, representing a decrease of RMB552.070 million as compared to RMB1,369.375 million in 2018, mainly because: a) the high- interest and large-amount time deposits with a term of five years of the Company expired in 2018, and the Company received a total of interest of RMB385.913 million for the period of five years after the expiration of the deposits in
October 2018; while the interest income in 2019 mainly included interest on demand deposits and short-term time deposits and gains from bank wealth management products without fixed terms, and the rate of return continued to
30 2019 Annual Report of Focus Media Information Technology Co., Ltd. decrease; b) the government grants received in 2019 also decreased by RMB162.081 million as compared with 2018 due to the adjustment of local government policies.
(2) In 2019, the cash outflows from operating activities was RMB10,607.214 million, representing a decrease of RMB337.090 million or 3.08% as compared to RMB10,944.304 million in 2018. Among them:
① Cash paid to and on behalf of employees increased by RMB471.417 million or 40.42% as compared with
2018, mainly due to the expansion of the scale of media resources which in turn increased the staff renumeration of each department;
② Payments of various types of taxes decreased by RMB712.254 million or 32.96% as compared with 2018, mainly due to the decrease in pre-tax profits on operating revenue.
2. In 2019, the cash inflows from investing activities was RMB10,790.320 million, representing a decrease of
RMB1,983.454 million or 15.53% as compared to RMB12,773.774 million in 2018. During the Reporting Period, the cash outflows from investing activities was RMB12,372.032 million, representing a decrease of RMB1,784.578 million or 12.61% as compared to the outflows of RMB14,156.610 million in 2018. The net cash outflows from investing activities was RMB1,581.712 million, representing an increase of RMB198.876 million or 14.38% as compared to RMB1,382.836 million in 2018. Among them:
(1) The cash payments to acquire or construct fixed assets, intangible assets and other long-term assets in 2019 were RMB342.638 million, representing a decrease of RMB1,366.193 million or 79.95% as compared to
RMB1,708.831 million over the same period of 2018. Such decrease was mainly because the Company had updated the original equipment while extensively expanded its network resources for elevator LCD displaysand elevator posters since the second quarter of 2018 and the cost for purchasing the network equipment in 2018 and 2019 was
RMB1,620.931 million and RMB280.426 million, respectively;
(2) The cash paid for external investment in 2019 was RMB798.474 million, representing a decrease of
RMB442.782 million or 35.67% as compared to RMB1,241.256 million in 2018. Such decrease was mainly because the cash paid for external investments in 2019 included a three-year certificate of deposits of RMB600 million (2018:
RMB0 million) and the Company also decreased its external equity investments in 2019;
(3) Other cash receipts relating to investing activities primarily refer to the principal repaid after the bank wealth management products were on maturity, and other cash payments relating to investing activities primarily refer to the principal utilized to purchase bank wealth management products. In 2019, a great amount of the cash surplus was to fund the Company’s acquisition of bank wealth management products of RMB602.182 million.
3. The net cash outflows from financing activities in 2019 was RMB2,334.476 million, representing a decrease
31 2019 Annual Report of Focus Media Information Technology Co., Ltd. of RMB327.472 million or 12.30% as compared to the net cash outflows from financing activities with amount of
RMB2,661.948 million in 2018.
(1) Other cash payments relating to financing activities comprised the funds of RMB829.851 million used to repurchase a total of 143,767,950 shares of the Company through bidding, and in 2018, RMB700.298 million was used to fund the repurchase of a total 99,612,604 shares of the Company through bidding. The net cash outflows from financing activities used for repurchase in 2019 increased by RMB129.553 million compared with 2018;
(2) Save as the above repurchase amount, based on the total share capital of 14,434,499,726 shares (netting of shares repurchased), a cash dividend of RMB1.00 (tax inclusive) will be distributed for every 10 shares held by each shareholder, and a total of RMB1,443.45 million of cash dividends for 2018 was distributed; in 2018, based on the total share capital of 12,231,566,900 shares (netting of shares repurchased), a cash dividend of RMB1.00
(tax inclusive) will be distributed for every 10 shares held by each shareholder, and a total of RMB1,223.157 million of cash dividends for 2017 was distributed. The aforementioned cash dividends paid in 2019 increased by
RMB220.293 million compared with 2018;
(3) In 2019, the net cash outflows from loan financing increased by RMB140.008 million compared with 2018, of which, the net cash outflows from borrowings and debt repayment of RMB23.553 million were due to the
Company’s partial repayment of principal of the existing overseas loans, and the restricted outbound guarantee of
RMB69 million for the Korean subsidiary was deposited in the Bank, and therefore the net outflows were approximately RMB92.553 million. In 2018, the Korean subsidiary of the Company obtained a cash inflow from borrowings of approximately RMB47.455 million;
(4) At the beginning of 2018, the Company paid RMB776.327 million for the final sum of agent collection and payment received at the end of 2017 in connection with the asset restructuring for the Company’s back-door listing in 2015. There were no relevant matters in 2019.
In conclusion, the net decrease in cash and cash equivalents in 2019 was RMB489.746 million. Netting of the impacts of 1) the certificate of deposits of RMB600 million as a cash outflow from investing activities; and 2) the outbound guarantee of RMB69 million provided for the Korean subsidiary as a cash outflow from financing activities, the actual net cash increase of all activities in 2019 was RMB179.254 million, which was more positive than the net decrease of RMB256.761 million in 2018.
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
32 2019 Annual Report of Focus Media Information Technology Co., Ltd.
III. Non-core Business Analysis
√ Applicable □ Not applicable Unit: RMB
As percentage Amount Reason Whether sustainable of total profit 1) Long-term equity investment revenue calculated by the equity method was RMB96.232 million; 2) Bank wealth management revenue derived from disposal of held-for-trading financial assets was Investment revenue 218,134,401.99 9.29% Uncertain RMB92.016 million; 3) Investment income of RMB27.463 million was recognized due to passive dilution resulting in loss of control over subsidiaries. 1) Revenue from the increase in the fair value of the held-for-trading financial assets (i.e. the revenue Profits and losses from the unmatured fixed-term bank wealth from changes in fair -57,487,154.14 -2.45% management products) of RMB25.27 million; Uncertain value 2) Other non-current financial assets, namely, the losses from changes in fair value of fund investments, were RMB82.757 million. Non-operating income 995,180.69 0.04% - Uncertain Non-operating Mainly include donation expenditures of RMB15.55 18,845,893.98 0.80% Uncertain expenses million. In 2019, the customer’s payment rate generally slowed down, resulting in the deterioration of Credit impairment ageing structure and an increase in credit risk. loss -739,926,918.51 -31.51% Therefore, the Company’s credit impairment loss Uncertain (Losses are indicated which was present as asset impairment loss in 2018 by “-”) increased from RMB400.04 million in 2018 to RMB739.927 million in 2019. 1) Government grant of RMB686.918 million; 2) Deductible input tax from VAT of RMB31.296 Other revenue 722,900,777.89 30.79% million; Uncertain 3) Withholding individual income tax fees of RMB4.686 million. Gains from disposal of Including losses from disposal of fixed assets of -20,479,112.11 -0.87% Uncertain assets RMB20.479 million.
IV. Analysis of Assets and Liabilities
1. Material changes in asset composition
The first implementation of the new financial instrument standards, new revenue standards or new lease
33 2019 Annual Report of Focus Media Information Technology Co., Ltd. standards in 2019 and adjustments to applicable items of the financial statements at the beginning of 2019 √ Applicable □ Not applicable
Unit: RMB
Year end of 2019 Year beginning of 2019 Change in As percentage of As percentage of Amount Amount percentage total assets total assets
Cash and cash equivalents 3,860,521,939.04 20.66% 3,677,691,398.76 19.37% 1.29%
Accounts receivable 4,169,529,889.65 22.31% 4,822,447,319.81 25.40% -3.09%
Inventories 4,190,856.88 0.02% 2,909,944.51 0.02% 0.00%
Long-term equity 1,117,250,673.84 5.98% 792,534,760.28 4.17% 1.81% investments
Fixed assets 1,580,744,018.10 8.46% 1,785,275,925.19 9.40% -0.94%
Construction in progress 6,870,330.14 0.04% 14,272,142.52 0.08% -0.04%
Short-term borrowings 50,609,581.06 0.27% 47,455,135.66 0.25% 0.02%
Long-term borrowings 802,310,355.11 4.29% 892,216,000.00 4.70% -0.41%
Held-for-trading financial 2,341,983,125.78 12.53% 1,714,250,000.00 9.03% 3.50% assets
Other equity instruments 849,464,175.16 4.55% 1,045,607,976.96 5.51% -0.96% investment
Other non-current financial 1,842,510,202.69 9.86% 1,822,736,792.80 9.60% 0.26% assets
Deferred tax assets 917,600,832.45 4.91% 662,492,073.09 3.49% 1.42%
Explanations of material changes:
Cash and cash equivalents: Please refer to the detailed description in 5. Cash flow under II. Core Business
Analysis of Section IV Operation Discussion and Analysis.
Long-term equity investments:
(1) The introduction of new investors by the Company’s associate, Shuhe Technology (数禾科技), resulted in a passive dilution of shareholding ratio of the Company, and the difference between the share of the net assets after the capital increase of the investee calculated according to the new shareholding ratio and the change amount in the shareholder's equity other than the net profit of the investee calculated according to the original shareholding ratio increases the long-term equity investment by RMB185.821 million, and is included in the capital reserve;
(2) The net profit attributable to Shuhe Technology (数禾科技) and other associates as confirmed by the
34 2019 Annual Report of Focus Media Information Technology Co., Ltd. equity method during the Reporting Period, i.e., investment income, was RMB96.232 million;
(3) During the Reporting Period, the long-term equity investment of the original merged subsidiary
Shanghai Junzhong Network Technology Co., Ltd. (上海骏众网络科技有限公司) changed to an increase of
RMB31.406 million in the long-term equity investment of an associate due to the passive dilution resulting from the introduction of a new round of investors;
(4) During the Reporting Period, the Company made new investments of RMB11.059 million in long- term equity investment.
Fixed assets: at the end of the Reporting Period, the balance of fixed assets was RMB1,580.744 million, representing a decrease of approximately RMB204.532 million or 11.5% from the beginning of the year. The changes mainly included:
(1) After significantly expanding the scale of media resources and updating smart screens and interactive screen equipment, and replacing elevator poster frames in 2018, there is no large-scale purchase of media equipment needed in 2019 except for the normal replacement of original equipment. The fixed assets, primarily media equipment, purchased for the year was RMB305.490 million, a decrease of 81.8% as compared to that of RMB1,676.654 million in 2018;
(2) The total amount of depreciation accrued for the year was RMB484.781 million, an increase of 120.8% as compared to that of RMB219.591 million in 2018;
(3) Net loss on write-off of fixed assets for the year decreased by RMB25.825 million and was charged in non-operating expense.
Construction in progress: At the end of the reporting period, the balance of construction in progress was
RMB6.87 million, a decrease of approximately RMB7.402 million or 51.9% as compared to the beginning of the year, primarily for use and consumption.
Short-term loans: There was a short-term loan of KRW10 billion, borrowed by the overseas subsidiary,
Focus Media Korea Company Limited, from the Seoul Branch of the Bank of China Limited.
Long-term loans: In 2017, Focus Media Overseas Investment Limited entered into a long-term loan contract with DBS BANK LTD. HONG KONG BRANCH. The credit limit was USD130,000,000.00 or HKD equivalent fixed-term loan. The loan term was 36 months from the date of the loan agreement, and it can be extended up to 60 months from the date of the loan agreement. The decrease in the balance for the period was primarily due to: 1) reclassifying the principal and interest of loans due within one year of RMB68.753 million
35 2019 Annual Report of Focus Media Information Technology Co., Ltd. as non-current liabilities due within one year; 2) a portion of the principal was repaid in 2019.
Investment in other equity instruments: The balance at the end of 2019 decreased by RMB196.144 million, primarily due to an increase of RMB34.515 million in investment, the return of investment of RMB30.000 million, the change in fair value through other comprehensive income of RMB-209.021 million, and changes in foreign currency statements conversion of RMB8.363 million in 2019.
Other non-current financial assets: primarily refers to all types of equity investment funds invested by the
Company. These equity investment funds expired more than one year from the balance sheet date, and are expected to be held for more than one year at fair value through profit and loss. The Company newly purchased an equity fund of RMB124.000 million and recouped an investment of RMB32.373 million for the year, with a change in fair value through profit and loss of RMB-82.757 million and a change in foreign currency statements conversion of RMB10.904 million.
Deferred tax assets: At the end of 2019, deferred tax assets increased by RMB255.109 million as compared to 2018, primarily because: 1) bad debt provision increased by RMB650.438, which resulted in an increase in deferred tax assets of approximately RMB160.999 million due to bad debt provision; 2) the future deductible loss of the loss-making subsidiary increased by RMB303.761 million, which resulted in an increase in the deferred tax assets of approximately RMB59.903 million.
36 2019 Annual Report of Focus Media Information Technology Co., Ltd.
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable Unit: RMB
Changes in fair Provision Profits and Other changes value of equity Accumulated fair for losses from Amount of (foreign included in the value changes impairmen Amount of sales in Item Opening balance changes in fair purchase in the currency Closing balance current period included in t in the the current period value in the current period statements equity current current period conversion) period
Financial assets
Held-for-trading financial assets 1,714,250,000.00 25,270,255.74 0.00 0.00 0.00 11,195,487,170.88 10,593,305,239.27 280,938.43 2,341,983,125.78 (excluding derivative financial assets)
Other equity instruments 1,045,607,976.96 0.00 -209,021,422.10 -302,849,752.52 0.00 34,514,561.02 30,000,000.00 8,363,059.28 849,464,175.16 investment
Financial assets - other non-current 1,822,736,792.80 -82,757,409.88 0.00 0.00 0.00 124,000,000.00 32,373,295.35 10,904,115.12 1,842,510,202.69 financial assets
Total 4,582,594,769.76 -57,487,154.14 -209,021,422.10 -302,849,752.52 0.00 11,354,001,731.90 10,655,678,534.62 19,548,112.83 5,033,957,503.63
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 Closing balance Year-end balance last year Locked-up capital (Note 1) 13,917,050.00 13,917,050.00 Performance bond (Note 2) 390,000.00 Time deposits or notice deposits for security (Note 3) 69,000,000.00 Total 83,307,050.00 13,917,050.00 Note 1: Affected by the incident of Jinyirong (Beijing) Network Technology Co., Ltd. (Namely “Ezubao”), as of December 31, 2019, the bank deposits of Chizhong Advertising Co., Ltd. of RMB13,917,050.00 in the account 121911359510302 was frozen by the competent authority. Note 2: The subsidiary, Shanghai Defeng Advertising Communication Co., Ltd., paid performance guarantees and guarantee pledges for the advertising business, which totaled RMB390,000. Note 3: The subsidiary, Shanghai Defeng Advertising Communication Co., Ltd. and Bank of China Limited Shanghai Changning Branch (hereinafter referred to as “BOC Shanghai Changning Branch”) signed the “Opening Guarantee/Standby Letter of Credit Contract” to provide guarantee for the overseas subsidiary, Focus Media Korea Company Limited (hereinafter referred to as “FM
37 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Korea”), on the financing amount of KRW10 billion from the Bank of China Limited Seoul Branch through onshore guarantees for offshore loans. The Company provided a bank deposit of RMB69 million in Bank of China Limited Shanghai Changning Branch as a guarantee pledge with the guarantee period up to June 26, 2021.
V. Analysis of Investments
1. Overview
√ Applicable □ Not applicable
Investment during the Reporting Period Investment in the same period of last year Change (RMB) (RMB)
798,473,732.48 1,241,255,729.77 -35.67%
2. Significant equity investment during the Reporting Period
□ Applicable √ Not applicable
3. Significant non-equity investment during the Reporting Period
□ Applicable √ Not applicable
38 2019 Annual Report of Focus Media Information Technology Co., Ltd.
4. Financial assets measured at fair value
√ Applicable □ Not applicable
Unit: RMB
Profits and
losses from Accumulated fair Purchase Sales Accumulated Initial investment Source of Asset type changes in fair value changes during the during the investment Closing balance cost funds value during included in equity Reporting Period Reporting Period revenue the period
Non-
guaranteed The
wealth 2,316,431,931.61 25,270,255.74 11,195,487,170.88 10,593,305,239.27 92,015,818.15 2,341,983,125.78 Company’s
management own fund
products
The
Fund 1,954,115,462.17 -82,757,409.88 0.00 124,000,000.00 32,373,295.35 2,424,049.41 1,842,510,202.69 Company’s
own fund
The
Equity 1,143,950,868.40 -302,849,752.52 34,514,561.02 30,000,000.00 849,464,175.16 Company’s
own fund
Total 5,414,498,262.18 -57,487,154.14 -302,849,752.52 11,354,001,731.90 10,655,678,534.62 94,439,867.56 5,033,957,503.63 -
5. Use of proceeds
□ Applicable √ Not applicable
The Company did not use the proceeds during the Reporting Period.
VI. Sale of Major Assets and Equity
1. Sale of major assets
□ Applicable √ Not applicable
The Company did not have any sale of significant assets during the Reporting Period.
2. Sale of major equity
□ Applicable √ Not applicable
39 2019 Annual Report of Focus Media Information Technology Co., Ltd.
VII. Analysis of Major Holding and Joint Stock Companies
√ Applicable □ Not applicable
Major subsidiaries and joint stock companies that contribute more than 10% of the Company’s net profit
Unit: RMB
Company Primary Registered Company name Total assets Net assets Operating revenue Operating profit Net profit type business capital
Focus Multimedia Technology Holding (Shanghai) Co., Ltd. Subsidiary 291,278,214.05 15,083,205,905.48 6,170,705,132.13 7,524,065.25 5,729,592,723.72 5,726,883,706.47 company (分众多媒体技术 (上海)有限公司) Shanghai Focus Digital Information Holding Subsidiary 100,000,000.00 4,000,465,579.52 448,578,030.23 0.00 311,291,575.97 306,292,866.06 Technology Co., company Ltd. Chizhong Advertisin Advertising Co., Subsidiary 50,000,000.00 2,674,623,218.26 635,834,587.44 4,350,312,091.72 554,804,198.86 319,040,660.33 g Ltd. Technolog Shanghai Focus y Software Subsidiary developme 1,840,980.00 818,228,045.53 29,262,793.64 328,375,555.00 298,664,897.85 262,701,122.98 Technology Co., nt and Ltd. sales Shanghai Defeng Advertising Advertisin Subsidiary 10,000,000.00 1,879,256,915.00 217,003,932.41 2,211,525,834.56 610,498,371.40 472,368,167.10 Communication g Co., Ltd. Technolog Shanghai Fenze y Shidai Software Subsidiary developme 10,000,000.00 2,082,957,378.75 99,261,431.81 595,348,265.00 466,949,926.90 414,721,987.78 Technology Co., nt and Ltd. sales
40 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Acquisition and disposal of subsidiaries during the Reporting Period
√ Applicable □ Not applicable
Acquisition and disposal of subsidiaries Impact on overall production operations and Company name during the Reporting Period performance
The acquirer’s income from the purchase date to the Guangzhou Yingrong Computer Acquisition of subsidiaries not under the end of the Reporting Period was RMB7,912,250.76 Technology Co., Ltd. (广州英 same control The acquiree’s net profit from the purchase date to the 融计算机科技有限公司) end of the Reporting Period was RMB1,388,562.36
Shanghai Junzhong Network 1) The recognized investment revenue was Technology Co., Ltd. (上海骏 Loss of control due to passive dilution RMB27,462,764.78 众网络科技有限公司)
Explanations on major holding and joint stock companies:
Focus Multimedia Technology (Shanghai) Co., Ltd. and Shanghai Focus Digital Information Technology Co.,
Ltd. are holding companies. The above indicators include their shareholdings in subsidiaries under the group and their dividends distributed by the subsidiaries.
VIII. Structured Entities Controlled by the Company
□ Applicable √ Not applicable
IX. Prospects of the Company
In the past three decades, China’s advertising industry has developed rapidly and has become the world’s second largest market after the United States. In its report “The Trend of Chinese Brand Communication”,
CTR pointed out that the current media ecosystem can be divided roughly into three sectors, 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 good reach and high match rate with the mainstream urban demographics in cities. Based on such industry background and development landscape, as the largest urban life-style media network in China, Focus Media may face the following development opportunities and challenges:
41 2019 Annual Report of Focus Media Information Technology Co., Ltd.
1. The Company continues to gain market awareness and customer recognition for its media value, further strengthening its position as the industry leader.
At present, the concentration of brands in the Chinese market is continuing to increase. The companies have come to focus on how to move from homogenization to differentiation, from price war to value war and from traffic to brand has. More and more companies have realized that building a good brand is the only way to achieve breakthroughs. Under this background, the media value of Focus Media continues to gain wider and deeper recognition.
Meanwhile, in the era of mobile internet with diversified and fragmented communication models, overload information and extensive choices at the fingertips of urban consumers, Focus Media’s media network of buildings and movie theatres have reached 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, not only have Eleme, Liepin, Kuaigoudache (“快狗打车”) and other emerging brands chosen Focus Media as the offline core media, more and more leading brands in traditional Chinese industries such as Langjiu, Bosideng and Feihe Milk Powder have also chosen Focus Media to place ads, which has 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, in order to further strengthen its position as the industry leader.
2. the Company's customer structure will continue to be optimized to provide long-term growth drivers.
In 2019, the proportion of customers from traditional industries represented by FMGC kept growing, revenue from customers from traditional industries continued to increase, and the Company’s media value got more extensive recognition. As an important brand advertising platform for the core consumer group, Focus
Media creates a solid value for advertisers of consumer products. Under the media environment that the information mode is continuous fragmentation, the media value and the approach to boosting brand recognition of a major portal to offline advertising are recognized by more customers.
In the long run, the continued and substantial growth of traditional consumer goods customers will
42 2019 Annual Report of Focus Media Information Technology Co., Ltd. effectively help the Company to further optimize its customer structure and usher in more growth drivers. The media value of Focus will shine through under the demonstration effect of traditional consumer goods customers.
3. The Company has actively responded to “the Belt and Road Initiatives” national development strategy, planned overseas business, and introduced the Chinese original model to the world.
The Company was a global pioneer in the elevator media model. 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 Initiatives” 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.
Since 2017, the Company has also opened up overseas markets such as Korea, Singapore and Indonesia to bring the Chinese original business model of building elevator media to the rest of the world.
4. Relevant risks.
(1) Risk of uncertain demand in the Chinese advertising market
In 2019, with the deterioration of the financing environment in the primary market, things turned grim for a large number of Internet and new economic companies, and the investment in advertising has shown a vertiginous drop. At the same time, the occurrence of the new coronary pneumonia epidemic this year has brought various degrees of challenges to the survival and development of most enterprises, especially SMEs.
The uncertainty of the macro economic environment made the advertising market subject to volatility risks, which might have an impact on the Company’s operating performance.
(2) The risk of further intensifying market competition in the media industry
The Company is mainly engaged in the development and operation of life-style media. In recent years, with the rise of Internet media, mobile media and other emerging forms, media platforms and advertising means have become more diverse. As the media structure gradually changes, the market competition in the media industry is becoming increasingly fierce, which may affect the Company's operating performance.
43 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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
√ Applicable □ Not applicable
Reception Date Investor Type Index of basic information of the research Method Please refer to www.cninfo.com.cn (http://www.cninfo.com.cn) for details March 5, 2019 Site Research Institution Record Form of Investor Relations Activities of Focus Media on March 5, 2019 (No. 2019-001) Please refer to CNINFO (http://www.cninfo.com.cn) for details April 25, 2019 Site Research Institution Record Form of Investor Relations Activities of Focus Media on April 25, 2019 (No. 2019-002) Please refer to CNINFO (http://www.cninfo.com.cn) for details August 22, 2019 Site Research Institution Record Form of Investor Relations Activities of Focus Media on August 22, 2019 (No. 2019-003) Please refer to CNINFO (http://www.cninfo.com.cn) for details October 31, 2019 Site Research Institution Record Form of Investor Relations Activities of Focus Media on October 31, 2019 (No. 2019-004) Please refer to CNINFO (http://www.cninfo.com.cn) for details November 27, 2019 Site Research Institution Record Form of Investor Relations Activities of Focus Media on November 27, 2019 (No. 2019-005)
44 2019 Annual Report of Focus Media Information Technology Co., Ltd.
2. Participations in investor relations meetings during the Reporting Period
Date Location Meeting attended Investor Type Reception Method
Guosheng Securities Capital Market Annual All kinds of One-on-one, one-to-many, January 2019 Hangzhou Meeting 2019 investors group meeting
All kinds of One-on-one, One-to-many, January 2019 Shanghai 19th UBS Greater China Conference 2019 investors group meeting
Hong Morgan Stanley Ninth Annual Hong Kong All kinds of One-on-one, One-to-many, March 2019 Kong Investor Summit investors group meeting
All kinds of One-on-one, One-to-many, May 2019 New York CICC New York Investor Conference investors group meeting
All kinds of One-on-one, One-to-many, May 2019 New York UBS China A-Share Seminar investors group meeting
Hong All kinds of One-on-one, One-to-many, May 2019 CICC A-Share Forum Kong investors group meeting
All kinds of One-on-one, One-to-many, May 2019 Shenzhen HSBC Sixth China Seminar investors group meeting
All kinds of One-on-one, One-to-many, June 2019 London Goldman Sachs Focus on Asia Conference investors group meeting
September CICC Internet Media Senior Management All kinds of One-on-one, One-to-many, Hangzhou 2019 Investment Summit investors group meeting
November All kinds of One-on-one, One-to-many, Shenzhen Goldman Sachs China Conference 2019 2019 investors group meeting
November All kinds of One-on-one, One-to-many, Shenzhen Credit Suisse 2019 China Investment Forum 2019 investors group meeting
November China Merchants Securities 2020 Annual All kinds of One-on-one, One-to-many, Shenzhen 2019 Conference for Capital Market investors group meeting
November CITIC Securities 2020 Annual Conference for All kinds of One-on-one, One-to-many, Shenzhen 2019 Capital Market investors group meeting
45 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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 □ Not applicable
The 2nd meeting of the Seventh Session of Board of Directors of the Company held in April 2019 has reviewed and approved the 2018 Profit Distribution Proposal of the Company: 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 RMB1.00 (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 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 proposal, the profit distribution will be conducted based on the total share capital as at the equity record date for the implementation of the profit distribution proposal in future less the number of repurchased shares in the repurchase special account of the Company, and the distribution ratio will remain unchanged. Meanwhile, it was agreed to submit this proposal to the 2018 Annual Shareholders’ General Meeting of the Company for consideration. The independent directors made the following independent opinions on this proposal: the 2018 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 (2018-2020). This proposal is conducive to the long-term development of the Company without prejudice to the interests of the Company and the shareholders, thus its content was agreed upon and it was agreed to be submitted to the Shareholders’ General Meeting of the Company for consideration.
The 2018 Annual Shareholders’ General Meeting of the Company held in May 2019 has reviewed and approved the 2018 Profit Distribution Proposal of the Company.
The Company disclosed the Announcement on the Implementation of the Company's Annual Equity
46 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Distribution for 2018 in July 2019: based on the total share capital of 14,434,499,726 shares after deducting the repurchased shares, the Company distributed RMB1.00 (including tax) in cash per 10 shares to all shareholders. A total of RMB1,443,449,972.60 in cash dividends was distributed. The Company completed the implementation of the above profit distribution proposal on July 19, 2019.
During the Reporting Period, the formulation and implementation of the profit distribution proposal of the Company 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 Yes resolutions of the shareholders’ meeting:
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 Yes and appeals, and whether their legitimate interests are fully protected:
For the adjustments or changes in the cash dividend policy, whether the conditions and Not applicable procedures are compliant and transparent:
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 2019 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". In 2019, the Company has repurchased 143,767,950 shares by centralized bidding with total payment amount of RMB829,850,648.72.
(2) Based on the share capital (i.e. 14,434,499,726 shares) upon deducting the repurchased shares in the then repurchase special accounts of the Company from the total share capital as of December 31, 2019, the
Company distributed RMB0.70 (including tax) in cash per 10 shares to all shareholders, i.e. RMB0.07
47 2019 Annual Report of Focus Media Information Technology Co., Ltd.
(including tax) in cash per share. The above profit distribution proposal distributed a total of
RMB1,010,414,980.82 in cash dividends. The remaining undistributed profits are reserved for future distribution. The capital reserves were not transferred to share capital and no bonus share was distributed for this distribution.
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 (i.e. 14,434,499,726 shares) 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 RMB1.00
(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.
The 2017 Profit Distribution Proposal:
Based on the total share capital of 12,231,566,900 shares as of December 31, 2017, the Company distributed RMB1.00 (including tax) in cash dividends per 10 shares to all shareholders, i.e. a cash dividend of RMB0.10 (including tax) per 1 share, with no bonus share distributed. From the capital reserves, conversion was made on a basis of 2 shares per 10 shares for all shareholders. Upon the completion of this conversion of capital reserves into share capital, the Company’s total share capital was changed from 12,231,566,900 shares to 14,677,880,280 shares.
The Company’s cash dividend payouts on common shares in the past three years (including this Reporting Period) Unit: RMB
48 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Percentage of cash dividend Ratio of total amount Net profit Ratio of cash amount in other of cash dividend attributable to the dividend amount in forms in the net (including other common the net profit Cash dividend profit Total amount of forms) in the net Cash dividend shareholders of attributable to the Dividend amount in other attributable to cash dividend profit attributable to amount the listed common year forms (such as the common (including other the common (including tax) Company in the shareholders of the repurchasing shares) shareholders of forms) shareholders of the consolidated listed Company in the listed listed Company in statements during the consolidated Company in consolidated the dividend year statements (%) consolidated statements (%) statements (%)
2019 1,010,414,980.82 1,875,276,692.44 53.88% 829,850,648.72 44.25% 1,840,265,629.54 98.13%
2018 1,443,449,972.60 5,822,974,766.98 24.79% 700,298,352.98 12.03% 2,143,748,325.58 36.82%
2017 1,223,156,690.00 6,004,706,786.08 20.37% 0.00 0.00% 1,223,156,690.00 20.37%
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
□ Applicable √ Not applicable
49 2019 Annual Report of Focus Media Information Technology Co., Ltd.
II. Profit Distribution and Conversion of Capital Reserves into Share Capital for this Reporting Period
√ Applicable □ Not applicable
Numbers of bonus share per 10 shares (share(s)) 0
Dividend distribution per 10 shares (RMB) (including tax) 0.7
Conversion of capital reserves into share capital per 10 shares 0 (share(s))
Share capital base of the distribution proposal (share(s)) 14,434,499,726
Cash dividend amount (RMB) (including tax) 1,010,414,980.82
Cash dividend amount (RMB) in other forms (such as repurchasing 829,850,648.72 shares)
Total amount of cash dividend (including other forms) (RMB) 1,840,265,629.54
Distributable profits (RMB) 10,429,985,371.26
Percentage of total amount of cash dividend (including other forms) 100% in the total amount of profit distribution
Conditions on the cash dividend
For profit distribution of companies which are in a mature stage and without significant capital expenditure arrangement, the percentage of cash dividend shall represent at least 80% of the profit distribution.
Particulars of the proposal for profit distribution or conversion of capital reserves into share capital
The 2019 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, 2019, the Company has repurchased 143,767,950 shares by centralized bidding with total payment amount of RMB829,850,648.72. (2) Based on the share capital (i.e. 14,434,499,726 shares) upon deducting the repurchased shares in the then repurchase special accounts of the Company from the total share capital as of December 31, 2019, the Company shall distribute RMB0.70 (including tax) in cash per 10 shares to all shareholders, i.e. RMB0.07 (including tax) in cash per 1 share. The above profit distribution proposal distributed a total of RMB1,010,414,980.82 in cash dividends. The remaining undistributed profits are reserved for future distribution. The capital reserves were not transferred to share capital and no bonus share was distributed for this distribution.
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
√ Applicable □ Not applicable
50 2019 Annual Report of Focus Media Information Technology Co., Ltd.
(1) Share Reform Commitments
Committed YI Xianzhong by
Commitment Shareholding reduction commitment type
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 Commitment price shall be subject to the corresponding ex-rights calculation when the shareholders' interests change). The details 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.
Time of November 10, 2005 commitment
Commitment Long-term period
Fulfillment Fulfilling status
Committed YI Xianzhong by
Commitment Other commitments type
In the event that the number of the shares listed for sale through a stock exchange reaches one percentage of the Commitment total number of the shares of the Company, the timely performance of the obligation of announcement shall be details made within two business days from the date on which such fact takes place.
Time of November 10, 2005 commitment
Commitment Long-term period
Fulfillment Fulfilling status
Note: Upon receipt of the notice from the shareholder Mr. YI Xianzhong in March 2020, the Company disclosed the “Announcement on Changes in Shares of the Company’s Shareholders”. From January 16, 2018 to the closing of March 23, 2020, the shareholding of the Company’s shares was reduced by 1.1302% cumulatively (for details, please refer to 2020-002 “Announcement on Changes in Shares of the Company’s Shareholders” published on the “Securities Times” and CNINFO (www.cninfo.com.cn) on March 26, 2020). As of the closing of March 23, 2020, Mr. YI Xianzhong held 23,977,638 shares of the Company, accounting for 0.1634% of the Company’s total share capital, which was less than 1%. As such, the above commitments have been fulfilled.
51 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Committed GUAN Yuchan by
Commitment Other commitments type
In the event that the number of the shares listed for sale through a stock exchange reaches one percentage of the Commitment total number of the shares of the Company, the timely performance of the obligation of announcement shall be details made within two business days from the date on which such fact takes place.
Time of November 10, 2005 commitment
Commitment Long-term period
Fulfillment Fulfilling status
52 2019 Annual Report of Focus Media Information Technology Co., Ltd.
(2) Commitment Made During Asset Restructuring Committed Jason JIANG Nanchun; Media Management (HK); Power Star (HK); Glossy City (HK); by Giovanna Investment (HK); Gio2 (HK); FMCH; Rongxin Zhiming Commitment Commitments on the horizontal competition, related party transactions, occupation of funds type 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 Commitment relevant laws, regulations and regulatory documents and perform information disclosure obligation in accordance details 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. Time of August 29, 2015 commitment Commitment Long-term period Fulfillment Fulfilling status
Committed Jason JIANG Nanchun; Media Management (HK); FMCH; Rongxin Zhiming by Commitment Commitments on the horizontal competition, related party transactions and occupation of funds type 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 Commitment taken to procure other companies, enterprises and other economic organizations controlled by me/the Company details 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. Time of August 29, 2015 commitment Commitment Long-term period Fulfillment Fulfilling status
53 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Committed Jason JIANG Nanchun; Media Management (HK); FMCH; Rongxin Zhiming by Commitment Other commitments type 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 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 Commitment enterprises controlled by the Company. (4) Ensure that the listed company makes independent financial decisions, details 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 to minimize the related party transactions between the Company and other enterprises controlled by the Company and the listed company, and if the related party 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 the independence of the listed company 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. Time of August 29, 2015 commitment Commitment Long-term period Fulfillment Fulfilling status
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
□ Applicable √ Not applicable
54 2019 Annual Report of Focus Media Information Technology Co., Ltd.
IV. Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Parties for Non-Operating Purposes
□ Applicable √ Not applicable
During the Reporting Period, the Company’s capital was not occupied 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
□ Applicable √ Not applicable
VI. Changes in Accounting Policies, Accounting Estimation, and Calculation Methods as Compared to the Financial Report of the Previous Year
√ Applicable □ Not applicable
(I) Explanations on Changes in Accounting Policies
1. The Ministry of Finance revised and issued Accounting Standards for Business Enterprises No. 22 -
Recognition and Measurement of Financial Instruments (Cai Kuai [2017] No. 7), Accounting Standards for
Business Enterprises No. 23 - Transfer of Financial Assets (Cai Kuai [2017] No. 8), and Accounting
Standards for Business Enterprises No. 24 - Hedging Accounting (Cai Kuai [2017] No. 9) on March 31,
2017, and revised and issued Accounting Standards for Business Enterprises No. 37 - Presentation of
Financial Instruments (Cai Kuai [2017] No. 14) on May 2, 2017 (collectively referred to as the "new financial instruments standards"), which require domestic listed companies to implement the new financial instruments standards from January 1, 2019. Therefore, the Company held the 2nd meeting of the seventh session of the Board of Directors and the 2nd meeting of the seventh session of the Board of Supervisors on
April 23, 2019, at which the Resolution of the Company on Changes in Accounting Policies was considered and approved. It was agreed that the Company should change its accounting policies in accordance with the relevant provisions and requirements of the Ministry of Finance. The major changes of the revised new financial instruments standards are as follows:
55 2019 Annual Report of Focus Media Information Technology Co., Ltd.
(1) All recognized financial assets will be measured at amortized cost or fair value subsequently under the new financial instruments standards.
(2) Financial assets are changed from the current “four categories” to “three categories”. According to the business model and the contractual cash flow characteristics of managed financial assets, financial assets are divided into three categories including financial assets measured at amortized cost, financial assets measured at fair value through other comprehensive income, and financial assets measured at fair value through current profit and loss.
(3) The accounting treatment for financial assets impairment is changed from the “loss incurred model” to the “expected loss model”, requiring enterprises to consider the future expected credit loss of financial assets, so as to make more timely and full provision for impairment of financial assets.
The Company has implemented the new financial instrument standards since January 1, 2019.
According to the provisions on transition of the new financial instruments accounting standards, the
Company does not need to retrospectively adjust the comparative statements for 2018 and comparable periods. It only needs to reclassify and measure the financial assets and financial liabilities stipulated in the new financial instruments standards held by the Company at the beginning of 2019, and correspondingly adjust the amounts of retained earnings or other comprehensive income at the beginning of the year and make corresponding disclosures in this section as required.
2. On September 19, 2019, the Ministry of Finance released the Notice on Revising and Issuing the
Format of Consolidated Financial Statements for 2019 (Cai Kuai [2019] No. 16) (hereinafter referred to as the “Cai Kuai Notice [2019] No. 16”), which makes amendments to the format of consolidated financial statements and requires that all enterprises that have implemented the new financial standards shall make corresponding adjustments to the consolidated financial statement items in accordance with Cai Kuai Notice
[2019] No. 16 and its annexes, which will be applied to the consolidated financial statements of enterprises for 2019 and subsequent periods. Therefore, the Company held the 5th meeting of the seventh session of the
Board of Directors and the 5th meeting of the seventh session of the Board of Supervisors on October 29,
2019, at which the Resolution of the Company on Changes in Accounting Policies was considered and approved. It was agreed that, in accordance with the relevant provisions of Cai Kuai Notice [2019] No. 16 issued by the Ministry of Finance, the Company should change its accounting policies accordingly and adjust the format of the financial statements as follows:
(1) According to the new lease standards, the new financial standards and other provisions, the line
56 2019 Annual Report of Focus Media Information Technology Co., Ltd. items such as “right-to-use asset” and “leasing liabilities” were added to the original consolidated balance sheet, and the line item “including: gains on derecognition of financial assets measured at amortized cost” was added under the line item “investment income” in the original consolidated income statement.
(2) Some items have been adjusted in accordance with the implementation of enterprise accounting standards, and the line item of "notes receivable and accounts receivable" in the original consolidated balance sheet is split into three line items “notes receivable", "accounts receivable" and "receivables financing", the line item of "notes payable and accounts payable" is split into two line items “notes payable" and "accounts payable", the presentation of line number of line items "impairment losses of assets" and
"credit impairment losses=" in the original consolidated income statement has been adjusted, and the line items "net increase in financial assets held for trading purposes" and "cash receipts from issuance of bonds " in the original consolidated cash flow statement have been deleted. Line item and column item "special reserves" are added to the original consolidated balance sheet and consolidated statement of changes in owner's equity respectively.
(II) Explanation on Changes in Accounting Estimation
According to the requirement under Accounting Standards for Business Enterprises No. 4 - Fixed Assets stating that “enterprises shall reasonably determine the useful life and estimated net residual value of fixed assets based on the nature and utilization of fixed assets”, in order to more fairly and truly reflect the
Company’s asset situation and operating results, the Company shall make the depreciation period of fixed assets closer to their actual useful life and make the period of depreciation more reasonable. Therefore, the
Company held the 3rd meeting of the seventh session of the Board of Directors and the 3rd meeting of the seventh session of the Board of Supervisors on August 20, 2019, at which the Resolution of the Company on
Changes in Accounting Estimates for the Depreciation Period of Certain Fixed Assets was considered and approved, agreeing that, pursuant to the Accounting Standards for Business Enterprises, the depreciation period for certain fixed assets shall be adjusted as follows:
Asset type Depreciation period before adjustment Depreciation period after adjustment Office equipment 5 years 3 years
According to the relevant requirements under Accounting Standards for Business Enterprises No. 28 -
Accounting Policies, Changes in Accounting Estimation and Correction of Errors, the changes in accounting estimation have been applied prospectively and no retrospective adjustments should be made to the
57 2019 Annual Report of Focus Media Information Technology Co., Ltd. previously disclosed financial reports. The changes in accounting estimation will not affect the financial position and operating results of previous years and are not expected to have a significant impact on the financial reports in 2019 and in the future. The change in depreciation period of fixed assets of the Company was adjustment made based on the relevant national standards and the actual situation of the Company. The changed accounting estimation is able to more objectively and truly reflect the Company's financial position and operating results.
VII. Explanation for Retrospective Restatement due to Correction of Material Accounting Errors during the Reporting Period
□ Applicable √ Not applicable
The Company had no correction of material accounting errors that need to be retrospectively restated during the Reporting Period.
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 .
58 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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) 320
Consecutive years of the audit service provided by the domestic 19 CPA firm
Name of the certified public accountants from the domestic CPA YAO Hui, XU Lirong, SHEN Songtao firm
Consecutive years of audit services provided by the certified 1, 4, 3 public accountants from the domestic CPA firm
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
The Company did not have any bankruptcy and reorganization related matters during the Reporting Period.
XII. Significant Lawsuit or Arbitration
□ Applicable √ Not applicable
The Company had no significant lawsuit or arbitration during the Reporting Period.
59 2019 Annual Report of Focus Media Information Technology Co., Ltd.
XIII. Punishment and Rectification
□ Applicable √ Not applicable
There were no punishments and rectifications during the Reporting Period.
XIV. Integrity of the Company and its Controlling Shareholders and Actual Controllers
□ Applicable √ Not applicable
XV. Implementation of Equity Incentive Plan, Employee Stock Ownership Plan, or other Employee Incentive Policies by the Company
√ Applicable □ Not applicable
The Company held the first meeting of the seventh session of the Board on February 14, 2019 and the second extraordinary general meeting for 2019 on March 5, 2019, at which the First Employee Stock
Ownership Plan of the Company (Draft) and Summary and related resolutions were considered and approved, agreeing that the Company shall implement the first employee stock ownership plan. (For details, please refer to the announcements number: 2019-017, 2019-021, 2019-026)
According to relevant requirements under the Guidelines on the Pilot Implementation of Employee Stock
Ownership Plans by Listed Companies issued by the securities regulatory authority of the State Council and
Guidelines for Information Disclosure of Listed Companies No. 4 - Employee Stock Ownership Plan issued by Shenzhen Stock Exchange, the Company disclosed the relevant progress of its first employee stock ownership plan monthly during the six months after the approval at the shareholders’ general meeting (for details, please refer to the announcements number: 2019-028, 2019-031, 2019-047, 2019-050, 2019-053, 2019-
056) and completed the stock purchase under its first employee stock ownership plan in the secondary market
(including bidding transactions and block transactions) (for details, please refer to the announcement number:
2019-061).
During the Reporting Period, two employees withdrew from the Company's first employee stock ownership plan due to retirement/resignation. As of the end of the Reporting Period, the total number of employees participating in the Company's first employee stock ownership plan was 94, including 2 employees
60 2019 Annual Report of Focus Media Information Technology Co., Ltd. that were directors (excluding independent directors), supervisors or senior management, and 92 other core employees. A total of 52,562,385 effective shares were held under the employee stock ownership plan, accounting for approximately 0.36% of the Company's total share capital. The fund sources of the employee stock ownership plan include the legal salary of the Company's employees, the self-raised funds, the borrowings provided by Mr. Jason JIANG Nanchun who is the actual controller of the Company, and the funds obtained through other means permitted by laws and administrative regulations.
XVI. Significant Related Transactions
1. Related transactions relevant to routine operations
□ Applicable √ Not applicable
The Company did not have any related transactions relevant to routine operations during the Reporting
Period.
2. Related transactions arising from purchases and sales of assets or equity
□ Applicable √ Not applicable
The Company did not have any related transactions arising from purchases and sales of assets or equity during the Reporting Period.
3. Related transactions arising from joint investments on external parties
□ Applicable √ Not applicable
The Company did not have any related transactions arising from joint investments on external parties during the Reporting Period.
4. Credits and liabilities with related parties
□ Applicable √ Not applicable
The Company did not have any credits and liabilities with related parties during the Reporting Period.
61 2019 Annual Report of Focus Media Information Technology Co., Ltd.
5. Other significant related transactions
□ Applicable √ Not applicable
The Company did not have any other significant related transactions during the Reporting Period.
XVII. Significant Contracts and their Execution
1. Trusteeships, Contracting and Leasing
(1) Trusteeships
□ Applicable √ Not applicable
The Company did not have any trusteeship during the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
The Company did not have any contracting during the Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
The Company did not have any leasing during the Reporting Period.
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
62 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Unit: RMB’0000
Guarantees provided by the Company to subsidiaries
Disclosure date Guarantee of relevant Maximum Actual for a announcement Actual Period of Performed Guaranteed party guaranteed guaranteed Type of guarantee related on maximum occurrence date guarantee or not amount amount party or guaranteed not amount
The Company and its Joint liability 2018-04-25 0 - No No subsidiaries guarantee
Focus Media Overseas Joint liability 2017-11-21 2017-11-23 2017-11-21 87,106.30 No No Investment Limited guarantee ~2020-11-21 2,500,000 Joint liability 2018-6-26 Focus Media Korea Co., LTD 2018-06-29 2018-6-27 5,942.48 Yes No guarantee ~2019-7-25
Joint liability 2019-6-27 Focus Media Korea Co., LTD 2019-06-29 2019-6-28 5,060.96 No No guarantee ~2021-6-26
Total maximum amount of guarantees for subsidiaries Total actual amount of guarantees for subsidiaries 2,500,000 98,109.74 reviewed during the Reporting Period (B1) during the Reporting Period (B2)
Total maximum amount of guarantees for subsidiaries Total balance of actual amount of guarantees for 2,500,000 92,167.26 approved at the end of the Reporting Period (B3) subsidiaries at the end of the Reporting Period (B4)
Total guaranteed amount provided by the Company (i.e. total amount of the first three items)
Total maximum amount of guarantees reviewed Total actual guaranteed amount during the 2,500,000 98,109.74 during the Reporting Period (A1+B1+C1) Reporting Period (A2+B2+C2)
Total maximum amount of guarantees approved at the Total balance of actual guarantees at the end of the 2,500,000 92,167.26 end of the Reporting Period (A3+B3+C3) Reporting Period (A4+B4+C4)
Proportion of the actual total guaranteed amount (A4+B4+C4) to the 6.69% Company's net assets
Of which:
Balance of guarantees for shareholders, actual controller and their related parties (D) 0
Balance of debt guarantees directly or indirectly provided for guaranteed parties with asset- 0 liability ratio of over 70% (E)
Total amount of guarantee exceeding 50% of the net assets (F) 0
Total of the above three guarantee amounts (D+E+F) 0
Explanation for undue guarantees, liability for guarantees occurred during the Reporting No Period, or potential joint liability for repayment (if any)
Explanation for providing guarantees for external parties in violation of prescribed procedures No (if any)
Specific descriptions of composite guarantees
Nil
63 2019 Annual Report of Focus Media Information Technology Co., Ltd.
(2) Illegal provision of guarantees for external parties
□ Applicable √ Not applicable
The Company did not illegally provide guarantees for external parties during the Reporting Period.
3. Entrusting others to execute any cash asset management
(1) Entrusted wealth management
√ Applicable □ Not applicable
Overview of entrusted wealth management during the Reporting Period
Unit: RMB’0000
Funding source for Amount under entrusted Overdue outstanding Type entrusted wealth Undue balance wealth management amount management
Wealth management products provided by The Company’s own fund 424,185.00 234,198.31 0.00 banks
Total 424,185.00 234,198.31 0.00
Details about of entrusted wealth management that are individually significant or with low security level, low liquidity, and high risk without principal guaranteed
□ Applicable √ Not applicable
Entrusted wealth management that is projected to be impossible to recover principal, or involving other situations that could possibly lead to decline in value
□ Applicable √ Not applicable
(2) Entrusted loans
□ Applicable √ Not applicable
The Company did not have any entrusted loans during the Reporting Period.
64 2019 Annual Report of Focus Media Information Technology Co., Ltd.
4. Other significant contracts
√ Applicable □ Not applicable
Subject Book value of the Related Execution as of Name of the Date of Related Name of the company matter of assets involved in Pricing party the end of the counterparty to contract party entering into contract the the contract (in principles transaction Reporting contract entered into relationship contract RMB’0000) or not Period
Focus Media Overseas Market Normal DBS Bank Ltd. Bank loans 2017-11-21 87,969.88 No Nil Investment Limited pricing execution
XVIII. Social Responsibilities
1. Fulfillment of social responsibilities
For details, please refer to the 2019 Corporate Social Responsibility Report published on the Company's
designated information disclosure media the Securities Times and “CNINFO” (www.cninfo.com.cn) on April
28, 2020.
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 2019 Corporate Social Responsibility Report published on the Company's
designated information disclosure media the Securities Times and “CNINFO” (www.cninfo.com.cn) on April
28, 2020.
65 2019 Annual Report of Focus Media Information Technology Co., Ltd.
XIX. Other Significant Events
√ Applicable □ Not applicable
Name(s) and page(s) of Announcement Publication newspaper on Internet website for Events No. date which the publication announcements were published
2019-001 Announcement of the Company on the Progress of Share Repurchase 2019-1-3 Securities Times http://www.cninfo.com.cn B62
2019-002 Announcement of the Company on the Progress of Repurchase of the 2019-1-16 Securities Times http://www.cninfo.com.cn Company’s Shares up to 1% B48
2019-003 Announcement on Resolutions of the 26th Meeting of the Sixth Session of 2019-1-23 Securities Times http://www.cninfo.com.cn the Board of the Company B62
2019-004 Statement of the Company’s Nominee for Independent Director (1) 2019-1-23 Securities Times http://www.cninfo.com.cn B61
2019-005 Statement of the Company’s Nominee for Independent Director (2) 2019-1-23 Securities Times http://www.cninfo.com.cn B61
2019-006 Statement of the Company’s Nominee for Independent Director (3) 2019-1-23 Securities Times http://www.cninfo.com.cn B61
2019-007 Statement of the Company’s Nominee for Independent Director (4) 2019-1-23 Securities Times http://www.cninfo.com.cn B61
2019-008 Statement of the Company’s Candidate for Independent Director (1) 2019-1-23 Securities Times http://www.cninfo.com.cn B61
2019-009 Statement of the Company’s Candidate for Independent Director (2) 2019-1-23 Securities Times http://www.cninfo.com.cn B62
2019-010 Statement of the Company’s Candidate for Independent Director (3) 2019-1-23 Securities Times http://www.cninfo.com.cn B62
2019-011 Statement of the Company’s Candidate for Independent Director (4) 2019-1-23 Securities Times http://www.cninfo.com.cn B62
2019-012 Notice of the Company on Matters Relating to the Holding of 2019 First 2019-1-23 Securities Times http://www.cninfo.com.cn Extraordinary General Meeting B62
2019-013 Announcement of the Company on Election of Employee Supervisors of 2019-1-23 Securities Times http://www.cninfo.com.cn the Seventh Session of the Board of Supervisors B62
2019-014 Announcement on Resolutions of the 23rd Meeting of the Sixth Session 2019-1-23 Securities Times http://www.cninfo.com.cn of the Board of Supervisors of the Company B61
2019-015 Announcement of the Company on the Progress of Share Repurchase 2019-2-1 Securities Times http://www.cninfo.com.cn B84
2019-016 Announcement of the Company on Resolutions of 2019 First 2019-2-15 Securities Times http://www.cninfo.com.cn
66 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Extraordinary General Meeting B27
2019-017 Announcement on Resolutions at the 1st Meeting of the Seventh Session 2019-2-15 Securities Times http://www.cninfo.com.cn of the Board of Directors of the Company B27
2019-018 Announcement on Resolutions at the 1st Meeting of the Seventh Session 2019-2-15 Securities Times http://www.cninfo.com.cn of the Board of Supervisors of the Company B27
2019-019 Announcement of the Company on the Change of the Legal 2019-2-15 Securities Times http://www.cninfo.com.cn Representative B27
2019-020 Announcement of the Company on the Adjustment of the Share 2019-2-15 Securities Times http://www.cninfo.com.cn Repurchase B27
2019-021 Summary of the Company’s First Employee Stock Ownership Plan 2019-2-15 Securities Times http://www.cninfo.com.cn (Draft) B27
2019-022 Notice of the Company on Matters Relating to the Holding of 2019 2019-2-15 Securities Times http://www.cninfo.com.cn Second Extraordinary General Meeting B27
2019-023 Announcement on the Progress of the Company’s Participation in 2019-2-16 Securities Times http://www.cninfo.com.cn Investment Funds B38
2019-024 Announcement o 2019-2-27 Securities Times http://www.cninfo.com.cn f the Companyon Preliminary Annual Results for 2018 B59
2019-025 Announcement of the Company on the Progress of Share Repurchase 2019-3-2 Securities Times http://www.cninfo.com.cn B12
2019-026 Announcement of the Company on Resolutions of 2019 Second 2019-3-6 Securities Times http://www.cninfo.com.cn Extraordinary General Meeting B35
2019-027 Announcement on the Progress of the Company’s Participation in 2019-3-13 Securities Times http://www.cninfo.com.cn Investment Funds B40
2019-028 Announcement on the Progress of the Company’s Implementation of the 2019-3-16 Securities Times http://www.cninfo.com.cn First Employee Stock Ownership Plan B35
2019-029 Forecastof the Company’s First Quarter Results for 2019 2019-3-29 Securities Times http://www.cninfo.com.cn B43
2019-030 Announcement of the Company on the Progress of Share Repurchase 2019-4-3 Securities Times http://www.cninfo.com.cn B58
2019-031 Announcement on the Progress of the Company’s Implementation of the 2019-4-3 Securities Times http://www.cninfo.com.cn First Employee Stock Ownership Plan B58
2019-032 Announcement of the Company on Completion of Change of Legal 2019-4-17 Securities Times http://www.cninfo.com.cn Person and Renewal of Business License B62
2019-033 Announcement on Resolutions at the 2nd Meeting of the Seventh Session 2019-4-25 Securities Times http://www.cninfo.com.cn of the Board of Directors of the Company B82
2019-034 Summary of the Company’s2018 Annual Report 2019-4-25 Securities Times http://www.cninfo.com.cn B82
2019-035 2018 Annual Final Financial Report of the Company 2019-4-25 Securities Times http://www.cninfo.com.cn B83
2019-036 Announcement of the 2018 Profit Distribution Proposal of the Company 2019-4-25 Securities Times http://www.cninfo.com.cn B82
2019-037 2018 Internal Control Self-evaluation Report of the Company 2019-4-25 Securities Times http://www.cninfo.com.cn
67 2019 Annual Report of Focus Media Information Technology Co., Ltd.
B83
2019-038 2018 Corporate Social Responsibility Report of the Company 2019-4-25 Securities Times http://www.cninfo.com.cn B83
2019-039 Announcement on Purchase of Amount of Wealth Management Products 2019-4-25 Securities Times http://www.cninfo.com.cn by the Company with Self-owned Unutilized Funds B82
2019-040 Announcement on the Amount of Venture Capital Investment by the 2019-4-25 Securities Times http://www.cninfo.com.cn Company with Self-owned Unutilized Funds B82
2019-041 Announcement of the Company on Changes in Accounting Policies 2019-4-25 Securities Times http://www.cninfo.com.cn B83
2019-042 Text of the First Quarter Report for 2019 of the Company 2019-4-25 Securities Times http://www.cninfo.com.cn B82
2019-043 Notice of the Company on Matters Relating to the Holding of 2018 2019-4-25 Securities Times http://www.cninfo.com.cn Annual General Meeting B82
2019-044 Announcement on Resolutions at the 2nd Meeting of the Seventh Session 2019-4-25 Securities Times http://www.cninfo.com.cn of the Board of Supervisors of the Company B83
2019-045 Announcement of the Company on Holding of the 2018 Public 2019-4-25 Securities Times http://www.cninfo.com.cn Performance Briefing B83
2019-046 Announcement of the Company on the Progress of Share Repurchase 2019-5-7 Securities Times http://www.cninfo.com.cn B92
2019-047 Announcement on the Progress of the Company’s Implementation of the 2019-5-7 Securities Times http://www.cninfo.com.cn First Employee Stock Ownership Plan B92
2019-048 Announcement of the Company on the Progress of Share Repurchase and 2019-5-17 Securities Times http://www.cninfo.com.cn Completion of Repurchase B17
2019-049 Announcement on the Resolutions of the Company's 2018 Annual 2019-5-25 Securities Times http://www.cninfo.com.cn General Meeting B123
2019-050 Announcement on the Progress of the Company’s Implementation of the 2019-6-10 Securities Times http://www.cninfo.com.cn First Employee Stock Ownership Plan B96
2019-051 Announcement on the Reply to the Inquiry Letter concerning the 2019-6-11 Securities Times http://www.cninfo.com.cn Company's 2018 Annual Report by the Management Department of the A35 SZSE SME Board
2019-052 Announcement of the Company on Providing Onshore Guarantees for 2019-6-29 Securities Times http://www.cninfo.com.cn Offshore Loans for Overseas Subsidiaries B60
2019-053 Announcement on the Progress of the Company’s Implementation of the 2019-7-5 Securities Times http://www.cninfo.com.cn First Employee Stock Ownership Plan B21
2019-054 Announcement on the Implementation of the Company's Annual Equity 2019-7-15 Securities Times http://www.cninfo.com.cn Distribution for 2018 B24
2019-055 Announcement of the Company on Preliminary Interim Result for 2019 2019-7-30 Securities Times http://www.cninfo.com.cn B37
2019-056 Announcement on the Progress of the Company’s Implementation of the 2019-8-9 Securities Times http://www.cninfo.com.cn First Employee Stock Ownership Plan B41
2019-057 Announcement on Resolutions at the 3rd Meeting of the Seventh Session 2019-8-22 Securities Times http://www.cninfo.com.cn of the Board of the Company B20
68 2019 Annual Report of Focus Media Information Technology Co., Ltd.
2019-058 Summary of the Interim Report for 2019 of the Company 2019-8-22 Securities Times http://www.cninfo.com.cn B20
2019-059 Announcement of the Company on Changes in Accounting Estimates for 2019-8-22 Securities Times http://www.cninfo.com.cn the Depreciation Period of Certain Fixed Assets B20
2019-060 Announcement on Resolutions at the 3rd Meeting of the Seventh Session 2019-8-22 Securities Times http://www.cninfo.com.cn of the Board of Supervisors of the Company B20
2019-061 Announcement of the Company on the Completion of Share Purchase 2019-8-31 Securities Times http://www.cninfo.com.cn under the First Employee Stock Ownership Plan B78
2019-062 Announcement on Resolutions at the 4th Meeting of the Seventh Session 2019-9-27 Securities Times http://www.cninfo.com.cn of the Board of the Company B5
2019-063 Announcement of the Company on the Financial Support Provided to its 2019-9-27 Securities Times http://www.cninfo.com.cn Associates B5
2019-064 Announcement of the Company on Extending the Investment Period and 2019-9-27 Securities Times http://www.cninfo.com.cn Duration of Funds B5
2019-065 Announcement on Resolutions at the 4th Meeting of the Seventh Session 2019-9-27 Securities Times http://www.cninfo.com.cn of the Board of Supervisors of the Company B5
2019-066 Announcement on Resolutions at the 5th Meeting of the Seventh Session 2019-10-31 Securities Times http://www.cninfo.com.cn of the Board of the Company B95
2019-067 Announcement of the Company on Changes in Accounting Policies 2019-10-31 Securities Times http://www.cninfo.com.cn B95
2019-068 Text of the Third Quarterly Report for 2019 of the Company 2019-10-31 Securities Times http://www.cninfo.com.cn B95
2019-069 Announcement on Resolutions at the 5th Meeting of the Seventh Session 2019-10-31 Securities Times http://www.cninfo.com.cn of the Board of Supervisors of the Company B95
2019-070 Announcement of the Company on the Progress of Participation in the 2019-12-24 Securities Times http://www.cninfo.com.cn Establishment of Investment Funds B104
2019-071 Announcement of the Company on Obtaining Government Subsidies 2019-12-27 Securities Times http://www.cninfo.com.cn B21
69 2019 Annual Report of Focus Media Information Technology Co., Ltd.
XX. Significant Events of the Subsidiaries of the Company
√ Applicable □ Not applicable
Name(s) and page(s) of newspaper on Announcement Publication Internet website for Events which No. date publication the announcements were published
2019-023 Announcement on the Progress of the Company’s Participation in 2019-2-16 Securities Times http://www.cninfo.com.cn Investment Funds B38
2019-027 Announcement on the Progress of the Company’s Participation in 2019-3-13 Securities Times http://www.cninfo.com.cn Investment Funds B40
2019-052 Announcement of the Company on Providing Onshore Guarantees for 2019-6-29 Securities Times http://www.cninfo.com.cn Offshore Loans for Overseas Subsidiaries B60
2019-063 Announcement of the Company on the Financial Support Provided to its 2019-9-27 Securities Times http://www.cninfo.com.cn Associates B5
2019-064 Announcement of the Company on Extending the Investment Period and 2019-9-27 Securities Times http://www.cninfo.com.cn Duration of Funds B5
2019-070 Announcement on the Progress of the Company's Participation in the 2019-12-24 Securities Times http://www.cninfo.com.cn Establishment of Investment Funds B104
2019-071 Announcement of the Company on Obtaining Government Subsidies 2019-12-27 Securities Times http://www.cninfo.com.cn B21
70 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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 New shares Bonus transferred Sub- Percentag Shares Percentage Others Shares issued issue from capital total e reserve
I. Shares subject to trading 0 0.00% 0 0 0 0 0 0 0.00% restrictions
1. State-owned shares 0 0.00% 0 0 0 0 0 0 0.00%
2. Shares held by state- 0 0.00% 0 0 0 0 0 0 0.00% owned legal persons
3. Shares held by other 0 0.00% 0 0 0 0 0 0 0.00% domestic investors
Including: Shares held by 0 0.00% 0 0 0 0 0 0 0.00% domestic legal persons
Shares held by 0 0.00% 0 0 0 0 0 0 0.00% domestic natural persons
4. Foreign shares 0 0.00% 0 0 0 0 0 0 0.00%
Including: Shares held by 0 0.00% 0 0 0 0 0 0 0.00% foreign legal persons
Shares held by 0 0.00% 0 0 0 0 0 0 0.00% foreign natural persons
II. Shares without trading 14,677,880,280 100.00% 0 0 0 0 0 14,677,880,280 100.00% restrictions
1. RMB-denominated 14,677,880,280 100.00% 0 0 0 0 0 14,677,880,280 100.00% common shares
2. Domestically listed 0 0.00% 0 0 0 0 0 0 0.00% foreign shares
3. Foreign shares listed 0 0.00% 0 0 0 0 0 0 0.00% overseas
4. Others 0 0.00% 0 0 0 0 0 0 0.00%
III. Total 14,677,880,280 100.00% 0 0 0 0 0 14,677,880,280 100.00%
71 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Reasons for changes in shares
□ Applicable √ Not applicable
Approval of share changes
□ Applicable √ Not applicable
Transfer of share ownership
□ Applicable √ Not applicable
Progress of any share repurchase
√ Applicable □ Not applicable
The Company held the 21st meeting of the sixth session of the Board of Directors and the 2017 Annual
General 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 shares held by the public, which are expected to be approximately 230,760,000 shares (representing approximately 1.89% of the Company’s total share capital currently issued), 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 2017 annual equity distribution plan, and the Company’s share repurchase price limit was adjusted to not more than RMB10.75 per share (inclusive) correspondingly.
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).
During the Reporting Period, the Company has implemented and completed the share repurchase. The
72 2019 Annual Report of Focus Media Information Technology Co., Ltd. actual repurchase of shares commenced from September 3, 2018 to May 9, 2019. The Company cumulatively repurchased 243,380,554 shares, accounting for 1.658% 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 RMB5.04. In total, the Company paid RMB1,529.8889 million (excluding transaction fees) for the repurchase.
Implementation process of reducing the repurchased shares through centralized bidding
□ Applicable √ Not applicable
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
√ Applicable □ Not applicable
The number of shares for calculating the basic earnings per share and net assets per share for 2019 is the number of shares of the Company which has taken into account the impact of the share repurchase in 2019.
Inclusive of the share repurchase Exclusive of the share Changes in 2019 repurchase in 2019
Earnings per share (RMB/share) 0.1296 0.1286 0.0010
Diluted earnings per share 0.1296 0.1286 0.0010 (RMB/share)
Other information that the Company considers necessary or the securities regulatory authorities require to be disclosed
□ Applicable √ Not applicable
2. Changes in restricted shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
1. Issuance of securities (excluding preferred shares) during the Reporting Period
□ Applicable √ Not applicable
73 2019 Annual Report of Focus Media Information Technology Co., Ltd.
2. Explanation on changes in the total shares, structure of shareholders and the structure of assets and liabilities of the Company
□ Applicable √ Not applicable
3. Existing staff-held shares
□ Applicable √ Not applicable
III. Shareholders and Actual Controllers
1. Number of shareholders and their shareholdings
Unit: Share
Total number of common shareholders at the end Total number of common shareholders at the end of the Reporting 170,298 of the previous month before the disclosure of the 199,951 Period annual report 5% or greater shareholders or top 10 shareholders Number of Pledged or Shareholdi Changes shares held Number of Number of non- frozen shares Nature of ng during the Name of shareholder at the end of restricted restricted shares shareholder percentage Reporting Amou the Reporting shares held held Status (%) Period nt Period Foreign legal Media Management Hong Kong Limited 23.34 3,425,818,777 0 0 3,425,818,777 person Hong Kong Securities Clearing Company Foreign legal 8.98 1,318,594,653 0 0 1,318,594,653 Limited person Domestic non- Alibaba (China) Technology Co., Ltd. state-owned legal 5.28 774,401,600 0 0 774,401,600 person Foreign legal Gio2 Hong Kong Holdings Limited 1.68 247,236,384 0 0 247,236,384 person Domestic non- Zhuhai Jinhui Chuangfu No. 3 Investment state-owned legal 1.20 176,455,053 0 0 176,455,053 Corporation (Limited Partnership) person Domestic natural GUAN Yuchan 1.10 161,885,813 0 0 161,885,813 person Domestic non- Zhuhai Rongwu Equity Investment state-owned legal 1.10 161,042,000 0 0 161,042,000 Partnership (Limited Partnership) person Domestic non- Shanghai Hongying Investment Management state-owned legal 1.09 159,969,322 0 0 159,969,322 Center (Limited Partnership) person
74 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Domestic non- Shanghai Shanhong Investment Management state-owned legal 1.09 159,969,322 0 0 159,969,322 Center (Limited Partnership) person Domestic non- Shanghai Hongqian Investment Management state-owned legal 1.09 159,969,322 0 0 159,969,322 Center (Limited Partnership) person Domestic non- Shanghai Honglian Investment Management state-owned legal 1.09 159,969,322 0 0 159,969,322 Center (Limited Partnership) person Strategic investor or general legal person as the top 10 shareholders due to the No placement of new shares (if any) Among the above shareholders, Alibaba and Gio2 Hong Kong Holdings Limited are parties acting in concert; Shanghai Hongying Investment Management Center (Limited Partnership), Shanghai Shanhong Explanation on the associated relationships or Investment Management Center (Limited Partnership), Shanghai Hongqian Investment Management Center concerted actions among the above (Limited Partnership) and Shanghai Honglian Investment Management Center (Limited Partnership) are shareholders controlled by the same subject. 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 Number of shares without trading Type of shares Name of shareholder restrictions held at the end of the Reporting Period Type Number Media Management Hong Kong Limited 3,425,818,777 RMB common shares 3,425,818,777 Hong Kong Securities Clearing Company Limited 1,318,594,653 RMB common shares 1,318,594,653 Alibaba (China) Technology Co., Ltd. 774,401,600 RMB common shares 774,401,600 Gio2 Hong Kong Holdings Limited 247,236,384 RMB common shares 247,236,384 Zhuhai Jinhui Chuangfu No. 3 Investment Corporation 176,455,053 RMB common shares 176,455,053 (Limited Partnership) GUAN Yuchan 161,885,813 RMB common shares 161,885,813 Zhuhai Rongwu Equity Investment Partnership (Limited 161,042,000 RMB common shares 161,042,000 Partnership) Shanghai Hongying Investment Management Center 159,969,322 RMB common shares 159,969,322 (Limited Partnership) Shanghai Shanhong Investment Management Center 159,969,322 RMB common shares 159,969,322 (Limited Partnership) Shanghai Hongqian Investment Management Center 159,969,322 RMB common shares 159,969,322 (Limited Partnership) Shanghai Honglian Investment Management Center 159,969,322 RMB common shares 159,969,322 (Limited Partnership) Among the above shareholders, Alibaba and Gio2 Hong Kong Holdings Limited are parties acting in concert; Shanghai Hongying Investment Management Center (Limited Partnership), Shanghai Related-parties or acting-in-concert parties among the Shanhong Investment Management Center (Limited Partnership), Shanghai Hongqian Investment top ten non-restricted shareholders and between the top Management Center (Limited Partnership) and Shanghai Honglian Investment Management Center ten non-restricted shareholders and the top ten (Limited Partnership) are controlled by the same subject. The Company does not know whether shareholders 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》). Explanation on the top 10 common shareholders' participation in the No securities margin trading business (if any)
75 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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
Legal Organization Name of the controlling shareholder representative/company Date of establishment Main Business Code principal
Investment Media Management Hong Kong Limited Jason JIANG Nanchun March 30, 2015 2218001 holding
Equities held by the controlling shareholder in other listed companies at home or Nil overseas by holding shares or participating in shares during the Reporting Period
Change of the controlling shareholder during the Reporting Period
□ Applicable √ Not applicable
There was no change of the controlling shareholder during the Reporting Period.
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
Whether or not obtained the right of Relationship with the Name of the actual controller Nationality residence in other countries or actual controller 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 FMCN.NASDAQ controller in the past 10 years
76 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Change of the actual controller during the Reporting Period
□ Applicable √ Not applicable
There was no change of the actual controller during the Reporting Period.
Ownership and control relations between the Company and the actual controller
The actual controller controls the Company by trust or other asset management methods
□ Applicable √ Not applicable
4. Other corporate shareholders with shares over 10%
□ Applicable √ Not applicable
77 2019 Annual Report of Focus Media Information Technology Co., Ltd.
5. Limitations on shareholding decrease by the controlling shareholder, actual controller, reorganizer and other commitment makers
□ Applicable √ Not applicable
Section VII Preferred Shares
□ Applicable √ Not applicable
There was no preferred share during the Reporting Period.
Section VIII Convertible Corporate Bonds
□ Applicable √ Not applicable
There was no convertible corporate bond during the Reporting Period.
78 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Section IX Directors, Supervisors, Senior Management and Employees
I. Changes in Shareholding of Directors, Supervisors and Senior Management
Number of Number of Increase in Decrease Commenceme Termination shares held Other shares Tenure shares in shares Name Title Gender Age nt of term of of term of at the changes held at the status during the during the office office beginning of (shares) end of the period period the period period
Jason Chairman, President, January 28, February 14, JIANG Incumbent Male 47 0 0 0 0 0 CEO 2016 2022 Nanchun
KONG Deputy Chairman, Vice February 14, February 14, Incumbent Female 38 0 0 0 0 0 Weiwei President, CFO 2019 2022
JI Director, Vice President, February 14, February 14, Incumbent Male 49 0 0 0 0 0 Hairong CMO 2019 2022
February 14, DU Min Independent Director Incumbent Male 52 March 8, 2016 0 0 0 0 0 2022
January 28, February 14, GE Jun Independent Director Incumbent Male 48 0 0 0 0 0 2016 2022
January 28, February 14, GE Ming Independent Director Incumbent Male 69 0 0 0 0 0 2016 2022
ZHUO January 28, February 14, Independent Director Incumbent Male 69 0 0 0 0 0 Fumin 2016 2022
HE Chairman of the Board January 28, February 14, Incumbent Female 37 0 0 0 0 0 Peifang of Supervisors 2016 2022
HANG January 28, February 14, Supervisor Incumbent Female 36 0 0 0 0 0 Xuan 2016 2022
December 28, February 14, LIN Nan Supervisor Incumbent Female 33 0 0 0 0 0 2016 2022
KONG February 14, Board Secretary Incumbent Female 38 June 29, 2017 0 0 0 0 0 Weiwei 2022
Former Deputy January 28, January 28, SHEN Jie Resigned Male 50 0 0 0 0 0 Chairman 2016 2019
Former Director, Kit Leong January 28, January 28, President, Person Resigned Male 50 0 0 0 0 0 LOW 2016 2019 in charge of finance
Total ------0 0 0 0 0
79 2019 Annual Report of Focus Media Information Technology Co., Ltd.
II. Changes of Directors, Supervisors and Senior Management of the Company
√ Applicable □ Not applicable
Name Position Type Date Reasons
Retirement upon SHEN Jie Deputy Chairman expiry of the February 14, 2019 Expiry of the term term
Retirement upon Director, President, Person Kit Leong LOW expiry of the February 14, 2019 Expiry of the term in charge of finance term
III. Positions and Incumbency
Professional background, major working experiences of current directors, supervisors and senior management and their current main responsibilities in the Company
Mr. Jason JIANG Nanchun, with Singaporean nationality, aged 47, is currently the Chairman of the Company.
After graduating from the Chinese Department of the East China Normal University, Jason founded Focus
Media in 2003and he was the first Chinese to put forward the idea of life-style media.
Mrs. KONG Weiwei, with Chinese nationality, aged 38, is currently the Deputy Chairman, Vice President,
CFO and Board Secretary of the Company. She received her BA in management from Renmin University of
China and MA in Economics from the Chinese Academy of Social Sciences. She successively worked at the head office of China Merchants Bank, Bank of China Investment Management, China Merchants Securities, and ICBC Credit Suisse Asset Management. She joined the Company in 2016 and served as Vice President.
Mr. JI Hairong, with Chinese nationality, aged 49, is currently a Director, Vice President and CMO of the
Company. He received his BA from the East China Normal University and MA from the Ehime University in
Japan. He was a lecturer in Shanghai Jiao Tong University. He joined the Company in 2005 and had served as
Director, Vice President and Senior Vice President of the Marketing and Public Relations Department of the
Company.
Mr. DU Min, with Chinese nationality, aged 52, is currently an Independent Director of the Company. He studied at Renmin University of China and Wuhan University and received his Ph.D. He is currently an
Executive Vice President of Beijing Media Corporation Limited, an Independent Director of Jinzhou Jixiang
Molybdenum Co., Ltd. and the Chairman of Beijing Media Investment Co., Ltd.. He was an Editor/Reporter at China Business Times and Head of Sanlian Life Weekly, Deputy Editor and Vice President of China Business
80 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Journal, Vice President of International Data Group (IDG) China, Vice President of Shanghai Meining
Computer Software Co., Ltd., General Manager of China Open Promotions Limited, and Independent Director of Inmyshow Digital Technology (Group) Co., Ltd.
Mr. GE Jun, with Chinese nationality, aged 48, is currently an Independent Director of Focus Media without overseas permanent right of residence. He has a BS in Physics and Chemistry from Xiamen University. He is currently an independent director of Health 100 Industry Holdings Co., Ltd. (美年大健康产业控股股份有限
公司), an independent director of Shanghai Fumed Tianjian Co., Ltd., an independent director of CIFI
Holdings (Group) Co. Ltd., a director of Leader Technology Co., Ltd., and a supervisor of Shanghai Bicong
Culture Communication Co., Ltd. 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, and Associate Dean of Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University.
Mr. GE Ming, with Chinese nationality, aged 69, 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 currently serves as
General Manager of Beijing Huaming Fulong Finance Consulting Co., Ltd., an independent director of China
Ping An Group and an independent non-executive director of AsiaInfo Technologies Limited. 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.
Mr. ZHUO Fumin, with his registered residence in Hong Kong, the PRC, aged 69, is currently an Independent
Director of Focus Media. He received his MA in Economics from Fudan University. He is current Chairman
Managing Partner of V Star Capital, non-executive director of Besunyen Holdings Company Limited, independent director of DAQO New Energy Co., Ltd., independent non-executive director of SRE Group
Limited, Independent director of Arcplus Group PLC, independent non-executive director of Sinopharm Group
Company Limited, independent director of Shanghai Shine-Link International Logistics Co., Ltd, and independent director of Dazhong Transportation (Group) Co., Ltd. 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
81 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Investment Co., Ltd., Chairman and CEO of Vertex Ventures, Founder and Chairman of SIG Venture Star, and
Managing Partner of GGV Capital.
Ms. HE Peifang, with Chinese nationality, aged 37, is currently the Chairman of the Board of Supervisors of
Focus Media. She served as a Sales Manager at MPI Group (HK), and has joined Focus Media since July 2004.
She currently serves as the account director.
Ms. HANG Xuan, with Chinese nationality, aged 36, is currently a Supervisor of Focus Media. She received
a BA from Tianjin Foreign Studies University. She worked at Focus Media since November 2006. She
currently serves as the Chief Marketing Officer at Shanghai Defeng Advertising Communication Co., Ltd.
Ms. LIN Nan, with Chinese nationality, aged 33, 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 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
√ Applicable □ Not applicable
Compensation Position in and allowance Name Name of the shareholder's entity shareholders’ Start date End date from the entities shareholders' entity
Jason JIANG Media Management Hong Kong Limited Director March 1, 2015 Present No Nanchun
Explanation of positions held in Nil shareholders’ entities
Positions held in other entities
√ Applicable □ Not applicable
Compensation Position in and allowance Name Name of other entities Start date End date other entities 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
82 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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 Director March 1, 2015 Present No Jason JIANG Nanchun Giovanna Group Holdings Limited Director May 1, 2013 Present No 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 Director July 1, 2013 Present No Jason JIANG Nanchun Target Media Holding Ltd. Director January 1, 2015 Present No Jason JIANG Nanchun Giovanna Newco 1 Limited Director July 1, 2013 Present No Jason JIANG Nanchun Giovanna Newco 2 Limited Director July 1, 2013 Present No Jason JIANG Nanchun Appreciate Capital Limited Director February 1, 2015 Present No Independent non- Jason JIANG Nanchun MODERN MEDIA HOLDINGS LIMITED September 1, 2013 Present Yes executive director Shanghai Vision Investment Jason JIANG Nanchun Director March 1, 2016 Present No Management Co., Ltd. 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 Entertainment (Shanghai) Co., Ltd. Director June 1, 2018 Present No Shanghai Gemii Information JI Hairong Supervisor April 2, 2018 Present No Technology Co., Ltd. Executive Vice DU Min Beijing Media Corporation Limited October 1, 2002 Present Yes President Inmyshow Digital Technology Independent DU Min January 25, 2018 February 5, 2020 Yes (Group) Co., Ltd. Director Independent DU Min Jinzhou Jixiang Molybdenum Co., Ltd. January 25, 2019 Present Yes Director DU Min Beijing Media Investment Co., Ltd. Chairman April 16, 2019 Present Yes Independent GE Jun Health 100 Industry Holdings Co., Ltd. October 1, 2015 Present Yes Director Independent GE Jun Shanghai Fumed Tianjian Co. Ltd. December 1, 2015 Present Yes Director Independent GE Jun CIFI Holdings (Group) Co. Ltd. July 1, 2016 Present Yes Director Shanghai Advanced Institute of Finance, GE Jun Deputy dean February 1, 2017 November 1, 2019 Yes Shanghai Jiao Tong University Shanghai Bicong Cultural GE Jun Supervisor October 1, 2017 Present No Communication Co., Ltd. GE Jun Leadbank Financial Services Co., Ltd. Director December 1, 2017 Present Yes Ping An Insurance (Group) Independent GE Ming June 1, 2015 Present Yes Company of China, Ltd. Director
83 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Beijing Huaming Fulong Finance Consulting GE Ming General manager December 1, 2001 Present No Co., Ltd. Independent non- GE Ming AsiaInfo Technologies Limited December 19, 2018 Present Yes executive director Shanghai V Star Equity Investment ZHUO Fumin Chairman August 1, 2011 Present Yes Management Co., Ltd. Suzhou GGV Kexing Equity Investment Representative of ZHUO Fumin June 1, 2011 Present No Partnership (L.P.) executive partner Suzhou Jiyuan Yuanxing Equity Investment Representative of ZHUO Fumin June 1, 2014 Present No Partnership (L.P.) executive partner Shanghai Yuanxing Yinshi Equity Investment Representative of ZHUO Fumin January 1, 2016 Present No Partnership (L.P.) executive partner ZHUO Fumin GGV III (BC pharma) Limited Director July 1, 2008 Present No Non-executive ZHUO Fumin Besunyen Holdings Company Limited October 1, 2009 Present Yes director Independent ZHUO Fumin DAQO New Energy Co., Ltd. July 1, 2010 Present Yes Director Independent ZHUO Fumin Dazhong Transportation (Group) Co., Ltd. May 15, 2018 Present Yes Director Independent non- ZHUO Fumin SRE Group Limited November 1, 2010 Present Yes executive director Independent ZHUO Fumin Arcplus Group PLC September 1, 2015 Present Yes Director Independent non- ZHUO Fumin Sinopharm Group Co., Ltd. March 1, 2016 Present Yes executive director Shanghai Shine-Link International Logistics Independent ZHUO Fumin September 1, 2016 Present Yes Co., Ltd. Director Explanation of the positions held in other entities Nil
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
√ Applicable □ Not applicable
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 Receipt of
Decisions on a Warning Letter Regarding JIANG Nanchun and SHEN Jie Issued 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).
In 2017, due to the omission of the Company’s periodic report and the purchase of bank wealth
84 2019 Annual Report of Focus Media Information Technology Co., Ltd. management products beyond the authorization granted by the general meeting, Mr. Kit Leong LOW (the
Company’s former senior executive) received a warning letter from Guangdong Bureau. For details, please refer to the Announcement of Receipt of Decisions on a Warning Letter Regarding Kit Leong LOW of the
Company Issued 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.
85 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Remuneration of Directors, supervisors and the senior management of the Company during the Reporting
Period
Unit: RMB’0000
Whether or not Total before-tax received Tenure remuneration Name Title Gender Age remuneration from status received from the the related parties of Company the Company Jason JIANG Chairman, President, CEO Male 47 Incumbent 600 No Nanchun Deputy Chairman, Vice President, CFO and KONG Weiwei Female 38 Incumbent 477.69 No Secretary of the Board Director, Vice President, Chief Marketing JI Hairong Male 49 Incumbent 180.7 No Officer DU Min Independent Director Male 52 Incumbent 85 No GE Jun Independent Director Male 48 Incumbent 85 No GE Ming Independent Director Male 69 Incumbent 85 No ZHUO Fumin Independent Director Male 69 Incumbent 85 No HE Peifang Chairwoman of the Board of Supervisors Female 37 Incumbent 33.12 No HANG Xuan Supervisor Female 36 Incumbent 51.36 No LIN Nan Supervisor Female 33 Incumbent 69.22 No SHEN Jie Former Vice Chairman Male 50 Former 0 No Kit Leong LOW Former Director, President, Head of Finance Male 50 Former 123.02 No Total ------1875.11 --
Equity incentives awarded to directors and the senior management of the Company during the Reporting
Period
□ Applicable √ Not applicable
86 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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 11,004 Total number of in-service employees 11,005 Total number of paid employees in the Reporting Period 11,005 Number of retirees to whom the parent company or its major 0 subsidiaries need to pay retirement pensions Functions Function Professional composition number Production staff 0 Sales staff 2,136 Technical staff 223 Financial staff 236 Administrative staff 721 R&D personnel 966 Operation staff 6,723 Total 11,005 Educational backgrounds Category Employees Doctorate 1 Master’s degree 110 Bachelor’s degree 2,016 Junior college 3,023 High school/ technical secondary school/ vocational 4,249 school/technical school Junior high school and below 1,606 Total 11,005
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.
87 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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 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 + telephone and online training
Training content: systematic professional trainings to new sales staff, including the introduction of the
Company's media resources, trends in media environment, basic N questions of Focus and introduction to the use of sales systems, 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.
②Media classroom
Training objects: all sales staff
Training cycle: once every two weeks
Training form: face to face training in Beijing, Shanghai, Guangzhou and Shenzhen, telephone and online training in other cities
Training content: Focusing on media content, media trends and industry trends to enhance media expertise
88 2019 Annual Report of Focus Media Information Technology Co., Ltd. of sales staff
③ 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 telephone and online training
Training content: speech videos 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
④ 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.
⑤ Sales skills training
Sales skills training is provided to sales staff.
⑥Sales team management training
Sales team management skills training is provided for sales team managers to help team leaders better lead the team.
⑦ 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 are emailed to all sales staff on Fridays biweekly.
(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.
89 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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
□ Applicable √ Not applicable
90 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Section X Corporate Governance
I. Corporate Governance Overview
During the Reporting Period, 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》) and relevant laws and regulations and regulatory documents, the Company constantly improved its corporate governance structure, in order to establish a sound internal control system and improve corporate governance based on the actual situation of the Company. 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.
(1) Particulars about the shareholders and general meeting of shareholders
The Company standardizes the procedures for convening, holding, deliberation and voting of general meeting of shareholders in strict accordance with the relevant regulations and requirements of the Articles of
Association and Rules of Procedure for General Meeting of Shareholders. During the Reporting Period, the
Company held a total of three shareholders' meetings and hired a law firm to issue legal opinions to ensure that the Company's shareholders, especially small and medium shareholders, can fully exercise their rights.
(2) Particulars about the Company and the controlling shareholder
The controlling shareholder of the Company strictly follows the requirements of the Company Law and exercises the rights and obligations of the investor according to law. The Company is independent from the controlling shareholder with respect to personnel, assets, finance, institutions, business, accounting, responsibility and risk. During the Reporting Period, the controlling shareholder did not directly or indirectly interfere with the Company's decision-making and operating activities beyond the shareholders' general meeting, nor did the controlling shareholder damage the legitimate rights and interests of the listed company and other shareholders.
(3) Particulars about directors and the board of directors
The Company elects directors in strict accordance with the relevant laws and regulations such as the
Company Law and Articles of Association, and the number and composition of the board of directors meet the
91 2019 Annual Report of Focus Media Information Technology Co., Ltd. requirements of laws and regulations. The Company's board meetings are convened and held in strict accordance with the Articles of Association and the Rules of Procedure of the Board of Directors and other relevant regulations. All directors of the Company are diligent, carefully consider various proposals, make scientific and reasonable decisions on major issues of the Company, and effectively safeguard the Company's interests and the legal rights of shareholders. The Company's board of directors has a Strategy Committee, an
Audit Committee, a Nomination Committee, and a Remuneration and Appraisal Committee. Each committee has a clear division of labor, clear powers and responsibilities, and operates effectively. It has fully exerted its professional advantages and functional roles and provided scientific and professional advice for the board's decision-making.
(4) Particulars about supervisors and the board of supervisors
The Company elects supervisors in strict accordance with the relevant laws and regulations such as the
Company Law and Articles of Association, and the number and composition of the Board of Supervisors meet the requirements of laws and regulations. The Company's meetings of board of supervisors are convened and held in strict accordance with the Articles of Association and the Rules of Procedure for Board of Supervisors.
All the Company's supervisors perform their duties conscientiously and supervise and express opinions on the
Company's major events and financial status to safeguard the legitimate rights and interests of the Company and all shareholders.
(5) Particulars about the relevant stakeholders and social responsibilities
The Company fully respects and maintains the legitimate rights and interests of relevant stakeholders, continuously strengthens the sense of social responsibility, strengthens communication and exchanges with all parties in strict accordance with the Company Law, the Securities Law, the Governance Guidelines of Listed
Companies and other relevant regulations to realize the coordination and balance of the interests of the society, government, shareholders, the Company, employees and other parties, to jointly promote the harmonious and stable development of the Company in accordance with the principle of mutual benefit and win-win situation for relevant stakeholders.
(6) Particulars about the information disclosure and investor relationship management
The Company strictly follows the requirements of laws and regulations such as Stock Listing Rules of
Shenzhen Stock Exchange, the Information Disclosure Management System and the investor Relations
Management System, and fulfills its information disclosure obligations in a true, accurate, timely and complete manner. During the Reporting Period, the Company continued to strengthen the management of investor
92 2019 Annual Report of Focus Media Information Technology Co., Ltd. relations, earnestly received various investors' research activities, and answered various issues of concern to investors in a timely manner through telephone, email, interactive exchange, and online performance briefings to realize the timely communication and contact between the Company and investors and fully guarantee the investors' right to know.
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.
2. Personnel independence: the president, vice president, head of finance, 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
93 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Company’s general meeting, Board of Directors, independent Directors, Board of Supervisors 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
□ Applicable √ Not applicable
IV. Annual General Meeting and Extraordinary General Meeting Convened during the Reporting Period
1. General meetings convened during the Reporting Period
Percentage of Session Conference type participating Convening date Disclosure date Disclosure index investors
2019 First Extraordinary Extraordinary 38.39% February 14, 2019 February 15, 2019 www.cninfo.com.cn General Meeting General Meeting
2019 Second Extraordinary Extraordinary Tuesday, March 5, Wednesday, March 6, 28.08% www.cninfo.com.cn General Meeting General Meeting 2019 2019
Annual General Saturday, May 25, 2018 Annual General Meeting 31.34% Friday, May 24, 2019 www.cninfo.com.cn Meeting 2019
2. Extraordinary general meeting convened at the request of preferred shareholders whose voting rights have been restored
□ Applicable √ Not applicable
94 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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
Presence due in Presence by Presence Independent Presence Absence for two General meetings the reporting telecommunicatio through a Absence (times) Director on site (times) consecutive times attended period （times) n (times) proxy (times)
DU Min 6 1 5 0 0 No 3
GE Jun 6 1 5 0 0 No 3
GE Ming 6 1 5 0 0 No 3
ZHUO Fumin 6 1 5 0 0 No 3 Absence for two consecutive times None
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 There is no objection raised by independent directors on relevant issues of the Company during the Reporting Period
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
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
95 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Independent Directors' Debriefing Report for 2019 (《公司2019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. During the Reporting Period, each of the 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. The specific performance of duties is as follows:
(1) Strategy Committee
During the Reporting Period, the Strategy Committee under the Board of Directors conducted in-depth analysis on the future development trend of the domestic advertising market, the Company's mid- and long- term development strategies and new business plans, competitors and related countermeasures, management structure and talent echelon training based on the domestic and international economic conditions and the industry characteristics to provide strategic support for the Company’s sustainable and steady development.
(2) Audit Committee
During the Reporting Period, the Audit Committee under the Board of Directors held four meetings in
2019, at which it learned in detail of the financial situations and operating conditions of the Company; conscientiously performed their duties in accordance with the principle of due diligence; deliberated the periodic reports of the Company, internal audit reports on major events of the internal audit department; supervised the Company to constantly improve the establishment of the internal control system; and conducted effective guidance over the financial situations and operating conditions of the Company.
(3) Nomination Committee
During the Reporting Period, in accordance with the requirements of the relevant laws and regulations such as the Company Law, Governance Guidelines of the Listed Companies and the Articles of Association, the Nomination Committee of the Board of Directors strictly performed its duties, carefully studied the selection criteria and appointment procedures of directors and senior executives, and conducted a cautious inspection of the qualifications and performance abilities of the relevant directors and senior executives in
96 2019 Annual Report of Focus Media Information Technology Co., Ltd. various aspects and channels, and nominated to the board of directors candidates for non-independent directors and candidates for independent directors for the seventh board of directors.
(4) Remuneration Committee
During the Reporting Period, 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 senior management and believed that the remuneration standards of the
Company's directors and senior management and the determination and payment of the total annual remuneration in combination with the performance of their respective positions complied with the
Company's salary management regulations, and the assessment plan was reasonable and effective, which was in line with the development status of the industry and the Company.
VII. Performance of Duties by the Board of Supervisors
Whether the Board of Supervisors discovered any risks in the Company in their supervisory activities during the Reporting Period
□ Yes √ No
The Board of Supervisors raised no objection against the matters under supervision during the Reporting
Period.
VIII. Assessment and Incentive Mechanisms for Senior Management
The Company has established a fair and reasonable performance appraisal and evaluation system. 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 assessment and incentive mechanism is in line with the current status of the Company and in compliance with the requirements of relevant laws, regulations and the Articles of Association, pushing for the integration of senior management compensation with the Company's operating benefits and operating results to ensure the stability of the management and the Company's sustainable development.
97 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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 Tuesday, April 28, 2020 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 100.00% total assets in the consolidated financial statements of the Company Proportion of the operating revenue under the scope of evaluation to the operating revenue in the consolidated financial statements of the 100.00% Company Recognition criteria for deficiencies Category Financial reports Non-financial reports Material deficiency: a combination of one or more control deficiencies that may cause serious deviation of an enterprise from its Material deficiency: a combination of one or more control objectives. Specific to the internal control deficiencies that may cause serious deviation control for non-financial reports, a material of an enterprise from its control objectives. Specific deficiency refers to a combination of one or to the internal control for financial reports, a material more control deficiencies in internal control deficiency refers to a combination of one or more that may cause the failure of preventing or control deficiencies in internal control that may cause detecting and correcting an obstacle in the failure of preventing or detecting and correcting a realizing the operating management and material misstatement in the financial statements on a control for objectives other than financial timely basis. Significant deficiency: a combination of statements on a timely basis. Significant one or more control deficiencies, which has inferior deficiency: a combination of one or more Qualitative Criteria severity and economic consequences to a material control deficiencies, which has inferior deficiency, but still may cause the deviation of an severity and economic consequences to a enterprise from its control objectives. Specifically, a material deficiency, but still may cause the significant deficiency refers to a combination of one deviation of an enterprise from its control or more control deficiencies in internal control that objectives. Specifically, a significant has inferior severity to a material deficiency, but is deficiency refers to a combination of one or important enough to draw the attention of the more control deficiencies in internal control personnel for supervising the financial reports of an that has inferior severity to a material enterprise. General deficiency: deficiencies other deficiency, but is important enough to draw than material deficiencies and significant the attention of the personnel for deficiencies. supervising the financial reports of an enterprise. General deficiency: deficiencies other than material deficiencies and significant deficiencies.
98 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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. The deficiencies are recognized with the Significant deficiency: (1) 0.25% of the consolidated amount of direct property losses caused by total assets ≤ potential misreported amount of the potential risk events as the criteria after total assets < 0.5% of the consolidated total assets; taking into account the compensation (2) 0.5% of the consolidated owners’ equity ≤ control measures and actual deviation rates potential misreported amount of the owners’ equity < and with reference to the recognition of 1% of the consolidated owners’ equity; (3) 0.5% of deficiencies in internal control for financial Quantitative Criteria the consolidated operating revenue ≤ potential reports. Material deficiency: the amount of misreported amount of the operating revenue < 1% of direct property losses ≥ 5% of the total the consolidated operating revenue; and (4) 2.5% of profit; significant deficiency: 2.5% of the the consolidated total profit ≤ potential misreported total profit ≤ the amount of direct property amount in total profit < 5% of the consolidated total losses < 5% of the total profit; General profit. General deficiency: (1) potential misreported deficiency: the amount of direct property amount of the total assets < 0.25% of the losses < 2.5% of the total profit. 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. Number of material deficiencies 0 in financial reports Number of material deficiencies 0 in non-financial reports Number of significant 0 deficiencies in financial reports Number of significant deficiencies in non-financial 0 reports
X. Audit Report or Authentication Report on Internal Control
Authentication Report on Internal Control
The review opinions on the internal control authentication report
We believe that the Company has maintained effective internal control related to the financial statements in all major aspects in accordance with the Basic Standards for Enterprise Internal Control and related regulations issued by the Ministry of Finance and other five ministries on December 31, 2019.
Disclosure of internal control Disclosure authentication report
Disclosure date of full text of the Tuesday, April 28, 2020 authentication report on internal control
99 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Disclosure index of full text of the www.cninfo.com.cn authentication report on internal control
Types of opinions on internal control Standard unqualified opinion authentication report
Whether there are any material No deficiencies in non-financial reports
Whether the accounting firm issued an internal control authentication report with non-standard opinions
□ Yes √ No
Whether the internal control authentication report issued by the accounting firm is consistent with the
Board's self-evaluation report
□ Yes √ No
Section XI 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
100 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Section XII Financial Report (Excerpt)
I. Auditor’s report
Type of Audit Opinion Standard unqualified opinion Auditor’s report Signing Date April 26, 2020 Audit Organization Name BDO China Shu Lun Pan CPAs (LLP) Auditor’s report No. Xin Hui Shi Bao Zi [2020] No. ZA11754 Names of Certified Public Accountants Yao Hui, Xu Lirong, Shen Songtao
Contents of Auditor’s Report
Xin Hui Shi Bao Zi [2020] No. ZA11754
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, 2019, 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, 2019, 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
101 2019 Annual Report of Focus Media Information Technology Co., Ltd. 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.
Key audit matters How the matter was addressed in our audit （I） Provision for bad debts for accounts receivable As mentioned in Note III. (X) and Note V. (IV) to the Our audit procedures for the provision of bad debts for financial statements, as of December 31, 2019, the book accounts receivable mainly included: value of the accounts receivable of Focus Media was (1) In connection with the work of our internal RMB4,170.1659 million, accounting for 22.30% of the information technology experts, the design and amount of total assets. The balance of the above operational effectiveness of the internal control accounts receivable is material, and the accrual of related to credit policy and accounts receivable provision for bad debts involves major management management were evaluated and tested; judgments and assumptions. All reasonable and valid (2) For the receivables that the management has information should be considered, including the accrued for provision for bad debts according to the customers’ historical repayment condition, credit combination of credit risk characteristics, taking into status, industry condition and forward-looking account the credit risk characteristics, aging analysis, information. Therefore, we consider such matter as a determination of the expected credit loss rate and test key audit matter. of the amount of money returned after the period in respect of receivables, evaluated the reasonableness of the management’s accrual of the provision for impairment losses of accounts receivable; (3) 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; (4) Analyzed and calculated the ratio between the amount of provision for bad debts and the balance of
102 2019 Annual Report of Focus Media Information Technology Co., Ltd.
accounts receivable on the balance sheet date, and analyzed whether the accrual of the provision for bad debts of accounts receivable was sufficient; (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 As mentioned in Note III. (XX) and Note V. (XXXVII) Our audit procedures for revenue recognition and to the financial statements, the consolidated operating measurement issues included, but were not limited to: revenue for the year 2019 of Focus Media was (1) Understood, evaluated and tested the revenue RMB12.136 billion, decreased by RMB2.415 billion or process and key internal controls; 16.6% as compared to RMB14.551 billion for the year (2) Made use of the work of our internal information 2018. technology experts to evaluate the design and Focus Media's revenue incurred from advertisement execution effectiveness of the general control and placement is confirmed after the following conditions application control of the information system are met: environment and the reliability of the system to (1) There is strong evidence to prove that an agreement accurately and completely process transaction data has been reached with the customers; (2) The based on business logic advertisement has been played according to the terms (3) Tested the authenticity and accuracy of revenue on the type of media, quantity, area, sites, period, from release of advertisement, including overall duration of advertisement and number of cycles; (3) verification of business system data and financial The economic benefits related to the transaction can system data, verifying certificates, checking contracts flow into the Company; (4) The amount of revenue can and customer confirmation documents, and checking be reliably measured. bank receipt procedures through random sampling Since revenue is one of Focus Media's key performance methods; indicators, there is inherent risk that the management (4) Performed alternative tests on customers who had will manipulate revenue recognition points in order to not replied the letter; achieve specific goals or expectations, so we (5) Conducted random sampling of the advertisement considered revenue recognition as a key audit matter. 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.
103 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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 2019 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.
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.
104 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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.
(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 Media to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, 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
105 2019 Annual Report of Focus Media Information Technology Co., Ltd. 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 (LLP)
Chinese CPA: Yao Hui (Engagement Partner)
Chinese CPA: Xu Lirong
Chinese CPA: Shen Songtao Shanghai, the People’s Republic of China
April 26, 2020
106 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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. Unit: RMB Item December 31, 2019 December 31, 2018 Current Assets: Cash and cash equivalents 3,860,521,939.04 3,671,590,986.10 Balances with clearing agencies Lendings with banks and other financial institutions Held-for-trading financial assets 2,341,983,125.78 0.00 Financial assets at fair value through profit or loss Derivative financial assets Notes receivable 196,539,343.76 Accounts receivable 4,169,529,889.65 4,823,083,296.52 Accounts receivable financing 141,291,042.36 Prepayments 867,147,461.42 1,373,773,800.40 Premiums receivable Amounts receivable under reinsurance contracts Reinsurer’s share of insurance contract reserves Other receivables 60,278,220.01 101,262,188.03 Including: Interests receivable 6,100,412.66 Dividends receivable Financial assets held under resale agreements Inventories 4,190,856.88 2,909,944.51 Contract assets Held-for-sale assets Non-current assets due within one year Other current assets 65,685,752.61 1,865,044,049.87 Total Current Assets 11,510,628,287.75 12,034,203,609.19 Non-current Assets: Loans and advances to customers Debt investments
107 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Available-for-sale financial assets 2,902,358,986.81 Other debt investments Held-to-maturity investments Long-term receivables Long-term equity investments 1,117,250,673.84 792,534,760.28 Other equity instruments investment 849,464,175.16 0.00 Other non-current financial assets 1,842,510,202.69 0.00 Investment properties Fixed assets 1,580,744,018.10 1,785,275,925.19 Construction in progress 6,870,330.14 14,272,142.52 Productive biological assets Oil and gas assets Right-to-use assets Intangible assets 44,706,301.47 46,957,739.45 Development expenditures Goodwill 168,868,626.63 149,108,937.20 Long-term prepaid expenses 25,186,395.39 12,681,131.58 Deferred tax assets 917,600,832.45 662,492,073.09 Other non-current assets 623,249,390.00 621,625,070.87 Total Non-current Assets 7,176,450,945.87 6,987,306,766.99 Total Assets 18,687,079,233.62 19,021,510,376.18 Current Liabilities: Short-term borrowings 50,609,581.06 47,455,135.66 Borrowings from central bank Capitals taken from banks and other financial institutions Held-for-trading financial liabilities Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes payable Accounts payable 570,893,194.71 419,364,642.31 Advance from customers 513,870,704.33 375,458,029.30 Contract liabilities Financial assets sold under repurchase agreements
108 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Customer deposits and deposits from banks and other financial institutions Funds from securities trading agency Funds from underwriting securities agency Employee benefits payable 233,268,937.40 260,337,871.25 Taxes payable 637,461,933.58 856,385,469.78 Other payables 1,595,994,935.76 1,568,267,708.52 Including: Interests payable 0.00 647,058.99 Dividends payable 5,920,703.99 5,920,703.99 Fees and commissions payable Amounts payable under reinsurance contracts Held-for-sale liabilities Non-current liabilities due within one year 68,752,639.75 Other current liabilities Total Current Liabilities 3,670,851,926.59 3,527,268,856.82 Non-current Liabilities: Insurance contract reserves Long-term borrowings 802,310,355.11 892,216,000.00 Bonds payable Including: Preferred shares Perpetual bonds Leasing liabilities Long-term payables Long-term employee benefits payable 4,186,187.58 1,709,175.67 Provisions Deferred income 900,000.00 1,565,892.84 Deferred tax liabilities 202,479,198.83 200,765,993.33 Other non-current liabilities Total non-current liabilities 1,009,875,741.52 1,096,257,061.84 Total liabilities 4,680,727,668.11 4,623,525,918.66 Owners’ Equity: Share capital 333,658,271.10 333,658,271.10 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 388,046,005.12 186,207,960.23
109 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Less: Treasury shares 1,530,149,001.70 700,298,352.98 Other comprehensive income -235,207,978.35 -50,924,488.44 Special reserves Surplus reserves 269,230,308.61 192,094,989.12 General risk reserves Retained earnings 14,552,831,171.87 14,240,402,712.62 Total owners’ equity attributable to owner of the 13,778,408,776.65 14,201,141,091.65 Company Minority interests 227,942,788.86 196,843,365.87 Total owners’ equity 14,006,351,565.51 14,397,984,457.52 Total liabilities and owners’ equity 18,687,079,233.62 19,021,510,376.18
Legal representative: Jason JIANG Nanchun Person in charge of the accounting work: KONG Weiwei Person in charge of the accounting institution: WANG Lilin
110 2019 Annual Report of Focus Media Information Technology Co., Ltd.
2. Balance Sheet of the Parent Company Unit: RMB Item December 31, 2019 December 31, 2018 Current Assets: Cash and cash equivalents 1,532,251.46 237,729,631.27 Held-for-trading financial assets 0.00 Financial assets at fair value through profit or loss Derivative financial assets Notes receivable Accounts receivable Accounts receivable financing Prepayments Other receivables 9,223,056,808.79 4,985,984,354.44 Including: Interests receivable Dividends receivable 8,990,722,718.79 4,970,810,264.44 Inventories Contract assets Held-for-sale assets Non-current assets due within one year Other current assets 1,668,494.33 82,234,631.18 Total Current Assets 9,226,257,554.58 5,305,948,616.89 Non-current Assets: Debt investments Available-for-sale financial assets Other debt investments Held-to-maturity investments Long-term receivables Long-term equity investments 46,346,241,416.09 46,343,684,245.22 Other equity instruments investment Other non-current financial assets Investment properties Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-to-use assets Intangible assets Development expenditures Goodwill Long-term prepaid expenses Deferred tax assets Other non-current assets Total Non-current Assets 46,346,241,416.09 46,343,684,245.22 Total Assets 55,572,498,970.67 51,649,632,862.11
111 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Current Liabilities: Short-term borrowings Held-for-trading financial liabilities Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes payable Accounts payable Advance from customers Contract liabilities Employee benefits payable 224,665.75 223,932.38 Taxes payable 35,297,684.52 51,727,644.23 Other payables 23,479.18 1,395,072.66 Including: Interests payable Dividends payable Held-for-sale liabilities Non-current liabilities due within one year Other current liabilities Total Current Liabilities 35,545,829.45 53,346,649.27 Non-current Liabilities: Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Leasing liabilities Long-term payables Long-term employee benefits payable Provisions Deferred income Deferred tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 35,545,829.45 53,346,649.27 Owners’ Equity: Share capital 14,677,880,280.00 14,677,880,280.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 30,441,144,477.48 30,441,144,477.48 Less: Treasury shares 1,530,149,001.70 700,298,352.98 Other comprehensive income Special reserves Surplus reserves 1,518,092,014.18 896,695,259.21 Retained earnings 10,429,985,371.26 6,280,864,549.13 Total owners’ equity 55,536,953,141.22 51,596,286,212.84
112 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Total liabilities and owners’ equity 55,572,498,970.67 51,649,632,862.11
Legal representative: Jason JIANG Nanchun
Person in charge of the accounting work: KONG Weiwei
Person in charge of the accounting institution: WANG Lilin
113 2019 Annual Report of Focus Media Information Technology Co., Ltd.
3. Consolidated Income Statement Unit: RMB Item 2019 2018 I. Total operating revenue 12,135,948,050.91 14,551,285,132.73 Including: Operating revenue 12,135,948,050.91 14,551,285,132.73 Interest income Premiums earned Fee and commission revenue II. Total operating costs 9,893,074,349.39 8,226,895,047.99 Including: Operating costs 6,649,604,127.87 4,916,492,040.02 Interest expenses Fee and commission expenses Surrender charge fees Net claims paid Net change in insurance liability contract reserves Policyholder dividend expenses Expenses for reinsurance Taxes and levies 282,860,611.36 431,918,450.07 Selling expenses 2,256,255,903.67 2,331,004,250.64 General and administrative expenses 576,072,150.24 412,197,245.38 Research and Development (R&D) expenses 147,971,437.22 228,938,370.62 Financial expenses -19,689,880.97 -93,655,308.74 Including: Interest expenses 56,111,184.55 48,197,112.27 Interest income 78,309,143.64 142,156,448.99 Add: Other income 722,900,777.89 872,485,667.18 Investment income (Losses are indicated by 218,134,401.99 168,343,627.00 “－”) Including: Income from investments in 96,231,769.65 -27,940,285.93 associates and joint ventures Gains on derecognition of financial assets measured at amortized cost Foreign exchange profits (Losses are indicated by “－”) Profits from hedging of net exposure (Losses are indicated by “－”) Gains from changes in fair values (Losses are -57,487,154.14 indicated by “－”) Credit impairment losses (Losses are indicated -739,926,918.51 by “－”) Impairment losses of assets (Losses are -400,040,488.12 indicated by “－”) Gains from disposal of assets (Losses are -20,479,112.11 -11,891,085.06 indicated by “－”) III. Operating profit (Loss is indicated by “－”) 2,366,015,696.64 6,953,287,805.74 Add: Non-operating revenue 995,180.69 4,493,112.46 Less: Non-operating expenses 18,845,893.98 15,848,651.11 IV. Total profit (Total losses are indicated by “－”) 2,348,164,983.35 6,941,932,267.09 Less: Income tax expenses 493,085,869.93 1,149,705,092.58 V. Net profit (Net loss is indicated by “－”) 1,855,079,113.42 5,792,227,174.51
114 2019 Annual Report of Focus Media Information Technology Co., Ltd.
(1) Classified by business continuity 1. Net profit from continuing operations (Net loss is 1,867,591,123.24 5,806,192,175.90 indicated by “－”) 2. Net profit from discontinued operations (Net loss -12,512,009.82 -13,965,001.39 is indicated by “－”) (2) Classified by ownership 1. Net profit attributable to owners of the Company 1,875,276,692.44 5,822,974,766.98 2. Profit or loss attributable to minority interests -20,197,579.02 -30,747,592.47 VI. Other comprehensive income, net of income tax -191,775,229.83 -59,427,776.84 Other comprehensive income attributable to owners of -191,896,237.25 -61,252,850.93 the Company, net of tax (I) Other comprehensive income that will not be -196,845,525.32 101,929.80 reclassified subsequently to profit or loss 1. Changes in re-measurement of defined -334,209.49 101,929.80 benefit plan 2. Other comprehensive income that cannot be transferred into profit or loss under equity method 3. Changes in fair value of other equity -196,511,315.83 instruments investment 4. Changes in the fair value of the
Company’s own credit risk 5. Others (II) Other comprehensive income to be reclassified 4,949,288.07 -61,354,780.73 subsequently to profit or loss 1. Other comprehensive income that are able to be transferred into profit or loss under equity method 2. Changes in fair value of other debt investments 3. Gain or loss from changes in fair value of -89,112,249.51 available-for-sale financial assets 4. Amount of financial assets reclassified into other comprehensive income 5. Gain or loss from reclassification of held- to-maturity investments into available-for-sale financial assets 6. Credit impairment provisions for other debt investments 7. Cash flow hedge reserve 8. Translation difference of financial 4,949,288.07 27,757,468.78 statements denominated in foreign currencies 9. Others Other comprehensive income attributable to minority 121,007.42 1,825,074.09 shareholders, net of tax VII. Total comprehensive income 1,663,303,883.59 5,732,799,397.67 Total comprehensive income attributable to owners 1,683,380,455.19 5,761,721,916.05 of the Company Total comprehensive income attributable to minority -20,076,571.60 -28,922,518.38 shareholders VIII. Earnings per share: (I) Basic earnings per share 0.13 0.4 (II) Diluted earnings per share 0.13 0.4
115 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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. Legal representative: Jason JIANG Nanchun Person in charge of the accounting work: KONG Weiwei Person in charge of the accounting institution: WANG Lilin
116 2019 Annual Report of Focus Media Information Technology Co., Ltd.
4. Income Statement of the Parent Company Unit: RMB Item 2019 2018 I. Operating revenue 0.00 0.00 Less: Operating costs 0.00 0.00 Taxes and levies 0.00 20.00 Selling expenses General and administrative expenses 17,516,817.75 6,779,813.03 Research and Development (R&D) expenses Financial expenses -634,115.69 -1,058,785.48 Including: Interest expenses Interest income 644,897.17 1,800,840.10 Add: Other income 276,529,866.12 468,575,900.00 Investment income (Losses are indicated by “－”) 6,022,803,535.00 2,180,517,254.20 Including: Income from investments in associates and -2,442,829.13 -2,608,592.84 joint ventures
Gains on derecognition of financial assets measured at amortized cost (Losses are indicated by “-”) Profits from hedging of net exposure (Losses are indicated by “－”) Gains from changes in fair values (Losses are indicated by “－”) Credit impairment losses (Losses are indicated by “－”)
Impairment losses of assets (Losses are indicated by “－”) Gains from disposal of assets (Losses are indicated by “－”) II. Operating profit (Loss is indicated by “－”) 6,282,450,699.06 2,643,372,106.65 Add: Non-operating revenue Less: Non-operating expenses 3,500,000.00 100,000.00 III. Total profit (Total losses are indicated by “－”) 6,278,950,699.06 2,643,272,106.65 Less: Income tax expenses 64,983,149.36 117,083,266.03 IV. Net profit (Net loss is indicated by “－”) 6,213,967,549.70 2,526,188,840.62 (I) Net profit from continuing operations (Net loss is indicated by “－”) 6,213,967,549.70 2,526,188,840.62 (II) Net profit from discontinued operations (Net loss is indicated by “－”) V. Other comprehensive income, net of income tax (I) Other comprehensive income that will not be reclassified subsequently to profit or loss 1. Changes in re-measurement of defined benefit plan 2. Other comprehensive income that cannot be transferred into profit or loss under equity method
3. Changes in fair value of other equity instruments investment 4. Changes in the fair value of the Company’s own credit risk 5. Others (II) Other comprehensive income to be reclassified subsequently to profit or loss
1. Other comprehensive income that are able to be transferred into profit or loss under equity method 2. Changes in fair value of other debt investments 3. Gain or loss from changes in fair value of available-
117 2019 Annual Report of Focus Media Information Technology Co., Ltd. for-sale financial assets 4. Amount of financial assets reclassified into other comprehensive income 5. Gain or loss from reclassification of held-to- maturity investments into available-for-sale financial assets 6. Credit impairment provisions for other debt investments 7. Cash flow hedge reserve 8. Translation difference of financial statements denominated in foreign currencies 9. Others VI. Total comprehensive income 6,213,967,549.70 2,526,188,840.62 VII. Earnings per share: (I) Basic earnings per share (II) Diluted earnings per share Legal representative: Jason JIANG Nanchun Person in charge of the accounting work: KONG Weiwei Person in charge of the accounting institution: WANG Lilin
118 2019 Annual Report of Focus Media Information Technology Co., Ltd.
5. Consolidated Cash Flow Statement Unit: RMB Item 2019 2018 I. Cash flows from operating activities: Cash received from sale of goods or rendering of 13,219,778,408.34 13,357,771,387.90 services 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 Cash received from interests, fees and commissions Net increase in placements from other banks Net increase in capital from repurchase arrangements Net cash received from trading securities for customers Receipts of tax refunds Other cash receipts relating to operating activities 817,305,233.76 1,369,375,099.40 Sub-total of cash inflows from operating activities 14,037,083,642.10 14,727,146,487.30 Cash payments for goods purchased and services 4,492,202,141.26 4,479,481,592.37 received 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 Net increase in lending to banks and other financial institutions Cash paid for interests, fees and commissions Cash payments for insurance policy dividends Cash paid to and on behalf of employees 1,637,587,271.96 1,166,170,413.15 Payments of various types of taxes 1,448,464,980.80 2,160,718,724.02 Other cash payments relating to operating activities 3,028,959,377.69 3,137,933,612.64 Sub-total of cash outflows from operating activities 10,607,213,771.71 10,944,304,342.18 Net Cash Flow from Operating Activities 3,429,869,870.39 3,782,842,145.12 II. Cash flows from investing activities: Cash receipts from recovery of investments 69,773,295.35 340,971,270.67 Cash receipts from investment income 125,575,436.91 129,660,961.49 Net cash receipts from disposals of fixed assets, 1,665,738.46 6,771,879.91
119 2019 Annual Report of Focus Media Information Technology Co., Ltd. intangible assets and other long-term assets Net cash receipts from disposals of subsidiaries and other business units Other cash receipts relating to investing activities 10,593,305,239.27 12,296,370,000.00 Sub-total of cash inflows from investing activities 10,790,319,709.99 12,773,774,112.07 Cash payments to acquire or construct fixed assets, 342,638,318.42 1,708,830,799.68 intangible assets and other long-term assets Cash paid to acquire investments 798,473,732.48 1,241,255,729.77 Net increase in pledged loans Net cash payments to acquire subsidiaries and other 15,572,398.43 business units Other cash payments relating to investing activities 11,215,347,186.88 11,206,523,316.31 Sub-total of cash outflows from investing activities 12,372,031,636.21 14,156,609,845.76 Net Cash Flow from Investing Activities -1,581,711,926.22 -1,382,835,733.69 III. Cash flows from financing activities: Cash receipts from capital contributions 90,742,082.32 40,235,965.50 Including: cash received by subsidiaries from capital 90,742,082.32 40,235,965.50 contributions from minority shareholders Cash receipts from borrowings 83,698,948.48 47,455,135.66 Other cash receipts relating to financing activities Sub-total of cash inflows from financing activities 174,441,030.80 87,691,101.16 Cash repayments of borrowings 107,252,129.40 Cash payments for distribution of dividends or 1,488,208,866.03 1,268,213,098.29 profits or settlement of interest expenses Including: dividends and profits paid by subsidiaries 2,118,572.01 to minority shareholders Other cash payments relating to financing activities 913,455,784.72 1,481,425,792.55 Sub-total of cash outflows from financing activities 2,508,916,780.15 2,749,638,890.84 Net Cash Flow from Financing Activities -2,334,475,749.35 -2,661,947,789.68 IV. Effect of Foreign Exchange Rate Changes on Cash -3,428,516.85 5,180,439.09 and Cash Equivalents V. Net Increase in Cash and Cash Equivalents -489,746,322.03 -256,760,939.16 Add: Opening balance of cash and cash equivalents 3,657,673,936.10 3,914,434,875.26 VI. Closing Balance of Cash and Cash Equivalents 3,167,927,614.07 3,657,673,936.10
Legal representative: Jason JIANG Nanchun Person in charge of the accounting work: KONG Weiwei Person in charge of the accounting institution: WANG Lilin
120 2019 Annual Report of Focus Media Information Technology Co., Ltd.
6. Cash Flow Statement of the Parent Company Unit: RMB Item 2019 2018 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 720,174,763.29 851,102,037.81 Sub-total of cash inflows from operating activities 720,174,763.29 851,102,037.81 Cash payments for goods purchased and services received Cash paid to and on behalf of employees 3,492,244.68 3,471,001.74 Payments of various types of taxes 90,732,556.22 84,448,431.77 Other cash payments relating to operating activities 670,030,630.66 398,962,682.76 Sub-total of cash outflows from operating activities 764,255,431.56 486,882,116.27 Net Cash Flow from Operating Activities -44,080,668.27 364,219,921.54 II. Cash flows from investing activities: Cash receipts from recovery of investments Cash receipts from investment income 2,005,333,909.78 1,894,315,835.31 Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets Net cash receipts from disposals of subsidiaries and other business units Other cash receipts relating to investing activities 80,850,000.00 940,000,000.00 Sub-total of cash inflows from investing activities 2,086,183,909.78 2,834,315,835.31 Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets Cash paid to acquire investments 5,000,000.00 100,000,000.00 Net cash payments to acquire subsidiaries and other business units Other cash payments relating to investing activities 250,850,000.00 Sub-total of cash outflows from investing activities 5,000,000.00 350,850,000.00 Net Cash Flow from Investing Activities 2,081,183,909.78 2,483,465,835.31 III. Cash flows from financing activities: Cash receipts from capital contributions Cash receipts from borrowings Other cash receipts relating to financing activities Sub-total of cash inflows from financing activities Cash repayments of borrowings Cash payments for distribution of dividends or 1,443,449,972.60 1,223,156,690.00 profits or settlement of interest expenses Other cash payments relating to financing activities 829,850,648.72 1,476,625,792.55 Sub-total of cash outflows from financing activities 2,273,300,621.32 2,699,782,482.55 Net Cash Flow from Financing Activities -2,273,300,621.32 -2,699,782,482.55
121 2019 Annual Report of Focus Media Information Technology Co., Ltd.
IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents V. Net Increase in Cash and Cash Equivalents -236,197,379.81 147,903,274.30 Add: Opening balance of cash and cash equivalents 237,729,631.27 89,826,356.97 VI. Closing Balance of Cash and Cash Equivalents 1,532,251.46 237,729,631.27
Legal representative: Jason JIANG Nanchun Person in charge of the accounting work: KONG Weiwei Person in charge of the accounting institution: WANG Lilin
122 2019 Annual Report of Focus Media Information Technology Co., Ltd.
7. Consolidated Statement of Changes in Owners’ Equity
Amount for the current period Unit: RMB
2019 Owner’s Equity Attributable to owners of the Company Other equity Speci Item Other General Minority Total owners’ instruments Less: Treasury al Other Share capital Capital reserves comprehensive Surplus reserves risk Retained earnings Sub-total interests equity Preferre Perpetu Othe shares reserv s income reserves d shares al bonds rs es I. Closing balance of the preceding 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 14,201,141,091.65 196,843,365.87 14,397,984,457.52 Add: Changes in accounting policies 5,737,748.09 -40,387,941.85 -34,650,193.76 -34,650,193.76 Correction of errors in the preceding period Business merger under common control Others II. Opening balance of the current period 333,658,271.10 186,207,960.23 700,298,352.98 -45,186,740.35 192,094,989.12 14,200,014,770.77 14,166,490,897.89 196,843,365.87 14,363,334,263.76 III. Increase or decrease in the current period 201,838,044.89 829,850,648.72 -190,021,238.00 77,135,319.49 352,816,401.10 -388,082,121.24 31,099,422.99 -356,982,698.25 (Decrease is indicated by “-”) (I) Total comprehensive income -191,896,237.25 1,875,276,692.44 1,683,380,455.19 -20,197,579.02 1,663,182,876.17 (II) Owners’ contributions and reduction in capital 201,838,044.89 829,850,648.72 -628,012,603.83 51,297,002.01 -576,715,601.82 1. Common shares invested by owners 16,016,808.13 829,850,648.72 -813,833,840.59 61,269,833.87 -752,564,006.72 2. Capital contribution from other equity instrument holders 3. Share-based payment recognized in owners’ equity 4. Others 185,821,236.76 185,821,236.76 -9,972,831.86 175,848,404.90 (III) Profit distribution 77,135,319.49 -1,520,585,292.09 -1,443,449,972.60 -1,443,449,972.60 1. Transfer to surplus reserves 77,135,319.49 -77,135,319.49 2. Transfer to general risk reserves 3. Distributions to owners (or shareholders) -1,443,449,972.60 -1,443,449,972.60 -1,443,449,972.60 4. Others (IV) Internal transfer of owners’ equity 1,874,999.25 -1,874,999.25 1. Transfer capital reserves to paid-in capital (or share capital) 2. Transfer surplus reserves to paid-in capital (or 123 2019 Annual Report of Focus Media Information Technology Co., Ltd. share capital) 3. Surplus reserves to make up for losses 4. Changes in defined benefit plans to retained earnings 5. Other comprehensive income to retained 1,874,999.25 -1,874,999.25 earnings 6. 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 333,658,271.10 388,046,005.12 1,530,149,001.70 -235,207,978.35 269,230,308.61 14,552,831,171.87 13,778,408,776.65 227,942,788.86 14,006,351,565.51 Legal representative: Jason JIANG Nanchun Person in charge of the accounting work: KONG Weiwei Person in charge of the accounting institution: WANG Lilin Amount for the preceding period Unit: RMB
2018 Owner’s Equity Attributable to owners of the Company Other equity instruments Speci Item Other General Minority Total owners’ Less: Treasury al Other Share capital Preferre Perpetu Other Capital reserves comprehensive Surplus reserves risk Retained earnings Sub-total interests equity shares reserv s d shares al bonds s income reserves es 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 10,372,574,413.65 185,307,828.73 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 10,372,574,413.65 185,307,828.73 10,557,882,242.38 III. Increase or decrease in the current period 700,298,352.98 -61,252,850.93 35,353,239.75 4,554,764,642.16 3,828,566,678.00 11,535,537.14 3,840,102,215.14 (Decrease is indicated by “-”) (I) Total comprehensive income -61,252,850.93 5,822,974,766.98 5,761,721,916.05 -28,922,518.38 5,732,799,397.67 (II) Owners’ contributions and reduction in capital 700,298,352.98 -700,298,352.98 40,235,965.50 -660,062,387.48 124 2019 Annual Report of Focus Media Information Technology Co., Ltd.
1. Common shares invested by owners 700,298,352.98 -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 -1,232,856,885.07 222,090.02 -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 -1,223,156,690.00 -2,118,572.01 -1,225,275,262.01 4. Others -9,700,195.07 -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. Changes in defined benefit plans to retained earnings 5. Other comprehensive income to retained earnings 6. 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 14,201,141,091.65 196,843,365.87 14,397,984,457.52 Legal representative: Jason JIANG Nanchun Person in charge of the accounting work: KONG Weiwei Person in charge of the accounting institution: WANG Lilin
125 2019 Annual Report of Focus Media Information Technology Co., Ltd. 8. Statement of Changes in Owners’ Equity of the Parent Company
Amount for the current period Unit: RMB
2019 Other equity instruments Other Item Less: Treasury Special Total owners’ Share capital Preferred Perpetual Capital reserves comprehensive Surplus reserves Retained earnings Others Others shares reserves equity shares bonds income I. Closing balance of the preceding 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 Add: Changes in accounting policies Correction of errors in the preceding period Others II. Opening 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 III. Increase or decrease in the current period 829,850,648.72 621,396,754.97 4,149,120,822.13 3,940,666,928.38 (Decrease is indicated by “-”) (I) Total comprehensive income 6,213,967,549.70 6,213,967,549.70 (II) Owners’ contributions and reduction in 829,850,648.72 -829,850,648.72 capital 1. Common shares invested by owners 829,850,648.72 -829,850,648.72 2. Capital contribution from other equity instrument holders 3. Share-based payment recognized in owners’ equity 4. Others (III) Profit distribution 621,396,754.97 -2,064,846,727.57 -1,443,449,972.60 1. Transfer to surplus reserves 621,396,754.97 -621,396,754.97 0.00 2. Distributions to owners (or shareholders) -1,443,449,972.60 -1,443,449,972.60 3. Others (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
126 2019 Annual Report of Focus Media Information Technology Co., Ltd. share capital) 3. Surplus reserves to make up for losses 4. Changes in defined benefit plans to retained
earnings 5. Other comprehensive income to retained
earnings 6. 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 14,677,880,280.00 30,441,144,477.48 1,530,149,001.70 1,518,092,014.18 10,429,985,371.26 55,536,953,141.22 Legal representative: Jason JIANG Nanchun Person in charge of the accounting work: KONG Weiwei Person in charge of the accounting institution: WANG Lilin Amount for the preceding period Unit: RMB
2018 Other equity instruments Other Item Less: Treasury Special Othe Total owners’ Share capital Preferre Perpetua Other Capital reserves comprehensive Surplus reserves Retained earnings shares reserves rs equity d shares l bonds s income 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 Add: Changes in accounting policies Correction of errors in the preceding period 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 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 (Decrease is indicated by “-”) (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
127 2019 Annual Report of Focus Media Information Technology Co., Ltd.
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 1. Transfer to surplus reserves 252,618,884.06 -252,618,884.06 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 2,446,313,380.00 -2,446,313,380.00 share capital) 2. Transfer surplus reserves to paid-in capital (or share capital) 3. Surplus reserves to make up for losses 4. Changes in defined benefit plans to retained earnings 5. Other comprehensive income to retained earnings 6. 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 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 Legal representative: Jason JIANG Nanchun Person in charge of the accounting work: KONG Weiwei Person in charge of the accounting institution: WANG Lilin
128 2019 Annual Report of Focus Media Information Technology Co., Ltd.
III. Changes in significant accounting policies and accounting estimates
Add: Changes in significant accounting policies
√ Applicable □ Not applicable
1) Implementation of the Notice of the Ministry of Finance on Revising and Issuing the Format of
Financial Statements of General Enterprises for 2019 and Notice on Revising and Issuing the Format of
Consolidated Financial Statements (2019 Version)
The Ministry of Finance released the Notice on Revising and Issuing the Format of Financial Statements
of General Enterprises for 2019 (Cai Kuai [2019] No. 6) and Notice on Revising and Issuing the Format of
Consolidated Financial Statements (2019 Version) (Cai Kuai [2019] No. 16) on April 30, 2019 and September
19, 2019, respectively, which makes amendments to the format of financial statements of general enterprises.
The major impact of the implementation of the above regulations by the Company is as follows:
Name and amount of affected items Contents and reasons for the changes in Approval Parent accounting policies procedures Consolidated Company “Notes receivable and accounts “Notes receivable and accounts receivable” are split into “notes receivable” in the balance sheet are split receivable” and “accounts receivable”, into “notes receivable” and “accounts the balance of “notes receivable” at the Approved by the receivable”; “notes payable and accounts end of the previous year was No Board payable” are split into “notes payable” RMB196,539,343.76and the balance of and “accounts payable”; comparative data “accounts receivable” at the end of the will be adjusted accordingly. previous year was RMB4,823,083,296.52.
2) Implementation of the Accounting Standard for Business Enterprises No. 22 -Recognition and
Measurement of Financial Instruments, Accounting Standard for Business Enterprises No. 23 – Transfer of
Financial Assets, Accounting Standard for Business Enterprises No. 24 - Hedge Accounting and Accounting
Standard for Business Enterprises No. 37 - Presentation of Financial Instruments (Amended in 2017)
The Ministry of Finance amended the Accounting Standard for Business Enterprises No. 22 -Recognition
and Measurement of Financial Instruments, Accounting Standard for Business Enterprises No. 23 – Transfer
of Financial Assets, Accounting Standard for Business Enterprises No. 24 - Hedge Accounting and Accounting
Standard for Business Enterprises No. 37 - Presentation of Financial Instruments in 2017. The revised standard
stipulates that for financial instruments that have not been derecognized on the first implementation date, if
the previous recognition and measurement are inconsistent with the requirements of the revised standard,
129 2019 Annual Report of Focus Media Information Technology Co., Ltd.
retrospective adjustments shall be made. If the comparative data of the financial statements in the previous
period is inconsistent with the requirements of the revised standard, no adjustment is required. The Company
will adjust the retained earnings and other comprehensive income at the beginning of the year due to the
cumulative impact of retrospective adjustments.
Based on the balance at the end of the previous year adjusted in accordance with Cai Kuai [2019] No. 6
and Cai Kuai [2019] No. 16, the major impact of the implementation of the above new financial instruments
standard is as follows:
Contents and reasons for the Approval Name and amount of affected items changes in accounting policies procedures Consolidated Parent Company Other current assets: decreased by RMB1,714,250,000.00; Held-for-trading financial assets: increased Other current assets: (1) Available-for-sale equity by RMB1,714,250,000.00; decreased by instruments investment is Approved by Available-for-sale financial assets: RMB80,850,000.00; reclassified as “financial assets at the Board decreased by RMB1,862,488,757.94; Held-for-trading financial fair value through profit or loss”. Other non-current financial assets: assets: increased by increased by RMB1,822,736,792.8; RMB80,850,000.00. Retained earnings: decreased by RMB39,751,965.14. (2) Non-held-for-trading Available-for-sale financial assets: available-for-sale equity decreased by RMB1,039,870,228.87; other instruments investment is Approved by equity instruments investment: increased No designated as “financial assets at the Board by RMB1,045,607,976.96; other fair value through other comprehensive income: increased by comprehensive income”. RMB5,737,748.09. (3) Accrual of provision for Retained earnings: decreased by expected credit losses for Approved by RMB635,976.71; accounts receivable: No “financial assets measured at the Board decreased by RMB635,976.71. amortized cost”. Based on the balance at the end of the previous year adjusted in accordance with Cai Kuai [2019] No. 6
and Cai Kuai [2019] No. 16, the financial assets and financial liabilities are classified and measured according
to the provisions of the recognition and measurement standards for financial instrument before and after the
amendments and the results are compared as follows: ① Consolidated Unit: RMB Original Financial Instruments Standard New Financial Instruments Standard Item Category Book value Item Category Book value Cash and cash Cash and cash Amortized cost 3,671,590,986.10 Amortized cost 3,677,691,398.76 equivalents equivalents Notes receivable Amortized cost 11,000,000.00 Notes receivable Amortized cost 196,539,343.76 Accounts receivable At fair value through 185,539,343.76 financing other comprehensive
130 2019 Annual Report of Focus Media Information Technology Co., Ltd.
income Accounts receivable Amortized cost 4,822,447,319.82 Accounts At fair value through Amortized cost 4,823,083,296.52 Accounts receivable receivable other comprehensive financing income Other receivables Amortized cost 101,262,188.03 Other receivables Amortized cost 95,161,775.37 Debt investments At fair value (Including other Amortized cost through other current assets) comprehensive income Other debt investments At fair value through (Debt other comprehensive instruments) (Including other income current assets) Held-for-trading
At fair value financial assets At fair value through Available-for-sale through other Other non-current profit or loss financial assets comprehensive financial assets (Including other income current assets) (Equity Other equity At fair value through instruments) instruments other comprehensive investment income Held-for-trading 1,714,250,000.00 financial assets At fair value through Measured by cost Other non-current profit or loss 1,822,736,792.80 (Equity 4,616,608,986.81 financial assets instruments) Other equity At fair value through instruments other comprehensive 1,045,607,976.96 investment income Other payables Amortized cost 1,568,267,708.52 Other payables Amortized cost 1,567,620,649.53 Non-current Non-current liabilities due Amortized cost liabilities due within Amortized cost 647,058.99 within one year one year ② Parent Company Unit: RMB Original Financial Instruments Standard New Financial Instruments Standard Item Category Book value Item Category Book value Cash and cash Cash and cash Amortized cost 237,729,631.27 Amortized cost 237,729,631.27 equivalents equivalents Other receivables Amortized cost 4,985,984,354.44 Other receivables Amortized cost 4,985,984,354.44 Debt investments (Including other Amortized cost At fair value through current assets) Available-for-sale other comprehensive Other debt financial assets income (Debt At fair value through investments (Including other instruments) other comprehensive (Including other current assets) income current assets) At fair value through Held-for-trading At fair value through
other comprehensive financial assets profit or loss
131 2019 Annual Report of Focus Media Information Technology Co., Ltd.
income (Equity Other non-current
instruments) financial assets Other equity At fair value through instruments other comprehensive investment income Held-for-trading 80,850,000.00 financial assets At fair value through Other non-current profit or loss Measured at cost 80,850,000.00 financial assets (equity instruments) Other equity At fair value through instruments other comprehensive investment income 3) Implementation of the Accounting Standard for Business Enterprises No. 7 – Exchange of Non-
monetary Assets (2019 Revision)
On May 9, 2019, the Ministry of Finance released the Accounting Standard for Business Enterprises No.
7 – Exchange of Non-Monetary Assets (2019 Revision) (Cai Kuai [2019] No. 8). Since the implementation of
the revised standard on June 10, 2019, the exchange of non-monetary assets occurred between January 1, 2019
and the date of implementation of this standard shall be adjusted in accordance with this standard. For exchange
of non-monetary assets occurred before January 1, 2019, retrospective adjustments are not required in
accordance with the provisions of this standard. There was no significant impact of the implementation of the
above standard by the Company during the Reporting Period.
4) Implementation the Accounting Standard for Business Enterprises No. 12 – Debt Restructuring (2019
Revision)
On May 16, 2019 the Ministry of Finance released the Accounting Standard for Business Enterprises No.
12 – Debt Restructuring (2019 Revision) (Cai Kuai [2019] No. 9). Since the implementation of the revised
standard on June 17, 2019, the debt restructuring occurred between January 1, 2019 and the date of
implementation of this standard shall be adjusted in accordance with this standard. For debt restructuring
occurred before January 1, 2019, retrospective adjustments are not required in accordance with the provisions
of this standard. There was no significant impact of the implementation of the above standard by the Company
during the Reporting Period.
(2) Changes in significant accounting estimates
√ Applicable □ Not applicable
Contents and reasons for the changes in Approval Effective time Remarks
132 2019 Annual Report of Focus Media Information Technology Co., Ltd.
accounting estimates procedures Depreciation period of fixed assets in General and administrative expenses and Approved by respect of office equipment changed from August 20, 2019 depreciation of fixed assets increased by the Board 5 years to 3 years RMB88,365.29.
(3) Details of adjustment of implementation of the relevant items of the financial statements at the
beginning of the year since the implementation of the new financial instruments standard, new revenue
standards or new lease standards from 2019
√ Applicable □ Not applicable
133 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Consolidated Balance Sheet Unit: RMB Item December 31, 2018 January 1, 2019 Adjusted amount Current Assets： Cash and cash equivalents 3,671,590,986.10 3,677,691,398.76 6,100,412.66 Balances with clearing agencies Lendings with banks and other financial institutions Held-for-trading financial assets 0.00 1,714,250,000.00 1,714,250,000.00 Financial assets at fair value through current profit or loss Derivative financial assets Notes receivable 196,539,343.76 11,000,000.00 -185,539,343.76 Accounts receivable 4,823,083,296.52 4,822,447,319.81 -635,976.71 Accounts receivable financing 185,539,343.76 185,539,343.76 Prepayments 1,373,773,800.40 1,373,773,800.40 0.00 Premiums receivable Amounts receivable under reinsurance contracts Reinsurer’s share of insurance contract reserves Other receivables 101,262,188.03 95,161,775.37 -6,100,412.66 Including: Interests receivable 6,100,412.66 Dividends receivable Financial assets held under resale agreements Inventories 2,909,944.51 2,909,944.51 0.00 Contract assets Held-for-sale assets Non-current assets due within one year Other current assets 1,865,044,049.87 150,794,049.87 -1,714,250,000.00 Total Current Assets 12,034,203,609.19 12,033,567,632.48 -635,976.71 Non-current Assets: Loans and advances to customers Debt investments Available-for-sale financial assets 2,902,358,986.81 0.00 -2,902,358,986.81 Other debt investments 0.00 Held-to-maturity investments Long-term receivables Long-term equity investments 792,534,760.28 792,534,760.28 0.00 Other equity instruments investment 0.00 1,045,607,976.96 1,045,607,976.96 Other non-current financial assets 0.00 1,822,736,792.80 1,822,736,792.80 Investment properties Fixed assets 1,785,275,925.19 1,785,275,925.19 0.00 Construction in progress 14,272,142.52 14,272,142.52 0.00
134 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Productive biological assets Oil and gas assets Right-to-use assets Intangible assets 46,957,739.45 46,957,739.45 0.00 Development expenditures Goodwill 149,108,937.20 149,108,937.20 0.00 Long-term prepaid expenses 12,681,131.58 12,681,131.58 0.00 12,681,131.58 Deferred tax assets 662,492,073.09 662,492,073.09 0.00 Other non-current assets 621,625,070.87 621,625,070.87 0.00 Total Non-current Assets 6,987,306,766.99 6,953,292,549.94 -34,014,217.05 Total Assets 19,021,510,376.18 18,986,860,182.42 -34,650,193.76 Current Liabilities: Short-term borrowings 47,455,135.66 47,455,135.66 0.00 Borrowings from central bank Capitals taken from banks and other financial institutions Held-for-trading financial liabilities Financial liabilities at fair value through current profit or loss Derivative financial liabilities Notes payable Accounts payable 419,364,642.31 419,364,642.31 0.00 Advance from customers 375,458,029.30 375,458,029.30 0.00 Contract liabilities Financial assets sold under repurchase agreements Customer deposits and deposits from banks and other financial institutions Funds from securities trading agency Funds from underwriting securities agency Employee benefits payable 260,337,871.25 260,337,871.25 0.00 Taxes payable 856,385,469.78 856,385,469.78 0.00 Other payables 1,568,267,708.52 1,567,620,649.53 -647,058.99 Including: Interests payable 647,058.99 0.00 Dividends payable 5,920,703.99 5,920,703.99 Fees and commissions payable Amounts payable under reinsurance contracts Held-for-sale liabilities Non-current liabilities due within one year 647,058.99 647,058.99 Other current liabilities Total Current Liabilities 3,527,268,856.82 3,527,268,856.82 Non-current Liabilities: Insurance contract reserves Long-term borrowings 892,216,000.00 892,216,000.00 Bonds payable Including: Preferred shares Perpetual bonds Leasing liabilities
135 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Long-term payables Long-term employee benefits payable 1,709,175.67 1,709,175.67 Provisions Deferred income 1,565,892.84 1,565,892.84 Deferred tax liabilities 200,765,993.33 200,765,993.33 Other non-current liabilities Total non-current liabilities 1,096,257,061.84 1,096,257,061.84 Total liabilities 4,623,525,918.66 4,623,525,918.66 Owners’ Equity: Share capital 333,658,271.10 333,658,271.10 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 186,207,960.23 186,207,960.23 Less: Treasury shares 700,298,352.98 700,298,352.98 Other comprehensive income -50,924,488.44 -45,186,740.35 5,737,748.09 Special reserves Surplus reserves 192,094,989.12 192,094,989.12 General risk reserves Retained earnings 14,240,402,712.62 14,200,014,770.77 -40,387,941.85 Total owners’ equity attributable to owner of the 14,201,141,091.65 14,166,490,897.89 -34,650,193.76 Company Minority interests 196,843,365.87 196,843,365.87 Total owners’ equity 14,397,984,457.52 14,363,334,263.76 -34,650,193.76 Total liabilities and owners’ equity 19,021,510,376.18 18,986,860,182.42 -34,650,193.76
136 2019 Annual Report of Focus Media Information Technology Co., Ltd.
The adjustments of each item are explained as follows:
1. According to the new financial instruments accounting standards, from January 1, 2019, the Company has classified the non-guaranteed wealth management products into financial assets at fair value through profit or loss, which are adjusted from “other current assets” to “held-for-trading financial assets” in the financial statements.
Since all of the wealth management products purchased by the Company are short-term wealth management products, and the bank’s quotation is consistent with the book value, the book value of
RMB1,714,250,000.00 is deemed as the basis for reclassification into the book value.
2. The Company discounts part of bank acceptance bills as its daily capital management. The business model for managing bank acceptance bills includes both collection of contract cash flow and sale. Therefore, on January 1, 2019, the Group reclassified the above bank acceptance bills of RMB185,539,343.76 into financial assets at fair value through other comprehensive income to be presented as accounts receivable financing.
3. According to the new financial instruments standard, the Company reclassifies the accrued interests from fixed deposit and long-term loan (presented as “other receivables (interests receivable)” and “other payables (interests payable)”) into “cash and cash equivalents” and “non-current liabilities due within one year”, and the adjusted amounts are RMB6,100,412.66 and RMB647,058.99, respectively, while reducing the amounts of “other receivables” and “other payables”.
4. The provision for bad debt for accounts receivable remeasured by the Company according to the new financial instruments standard increased by RMB635,976.71 as compared to the provision for bad debt for accounts receivable measured according to the original financial instruments standard. The difference between the book value of accounts receivable at the beginning of 2019 and the book value of accounts receivable at the end of 2018 adjusts the retained earnings at the beginning of the year by -RMB635,976.71.
5. According to the new financial instrument accounting standard, from January 1, 2019, the Company has classified the original available-for-sale financial assets into 1) financial assets at fair value through other comprehensive income to be presented as other equity instruments investment in the financial statements; and
2) financial assets at fair value through profit or loss to be presented as other non-current financial assets in the financial statements.
The difference between the fair value of financial assets at the beginning of 2019 and the available-for-
137 2019 Annual Report of Focus Media Information Technology Co., Ltd. sale financial assets at the end of 2018 adjusts the amount of other comprehensive income and retained earnings at the beginning of the year by RMB5,737,748.09 and RMB-39,751,965.14, respectively, reducing the net assets at the beginning of the year by RMB34,014,217.05.
138 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Balance Sheet of the Parent Company Unit: RMB Item December 31, 2018 January 1, 2019 Adjusted amount Current Assets： Cash and cash equivalents 237,729,631.27 237,729,631.27 Held-for-trading financial assets 0.00 80,850,000.00 80,850,000.00 Financial assets at fair value through current profit or loss Derivative financial assets Notes receivable Accounts receivable 0.00 Accounts receivable financing Prepayments Other receivables 4,985,984,354.44 4,985,984,354.44 Including: Interests receivable Dividends receivable 4,970,810,264.44 4,970,810,264.44 Inventories Contract assets Held-for-sale assets Non-current assets due within one year Other current assets 82,234,631.18 1,384,631.18 -80,850,000.00 Total Current Assets 5,305,948,616.89 5,305,948,616.89 Non-current Assets: Debt investments Available-for-sale financial assets Other debt investments Held-to-maturity investments Long-term receivables Long-term equity investments 46,343,684,245.22 46,343,684,245.22 Other equity instruments investment Other non-current financial assets Investment properties Fixed assets Construction in progress Productive biological assets Oil and gas assets Right-to-use assets Intangible assets Development expenditures
139 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Goodwill Long-term prepaid expenses 12,681,131.58 Deferred tax assets Other non-current assets Total Non-current Assets 46,343,684,245.22 46,343,684,245.22 Total Assets 51,649,632,862.11 51,649,632,862.11 Current Liabilities: Short-term borrowings Held-for-trading financial liabilities Financial liabilities at fair value through current profit or loss Derivative financial liabilities Notes payable Accounts payable Advance from customers Contract liabilities Employee benefits payable 223,932.38 223,932.38 Taxes payable 51,727,644.23 51,727,644.23 Other payables 1,395,072.66 1,395,072.66 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 53,346,649.27 Non-current Liabilities: Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Leasing liabilities 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 53,346,649.27 Owners’ Equity: Share capital 14,677,880,280.00 14,677,880,280.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 30,441,144,477.48 30,441,144,477.48 Less: Treasury shares 700,298,352.98 700,298,352.98 Other comprehensive income Special reserves Surplus reserves 896,695,259.21 896,695,259.21 Retained earnings 6,280,864,549.13 6,280,864,549.13
140 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Total owners’ equity 51,596,286,212.84 51,596,286,212.84 Total liabilities and owners’ equity 51,649,632,862.11 51,649,632,862.11 The adjustments of each item are explained as follows:
According to the new financial instruments accounting standards, from January 1, 2019, the Company
has classified the non-guaranteed wealth management products into financial assets at fair value through profit
or loss, which are adjusted from “other current assets” to “held-for-trading financial assets” in the financial
statements.
Since all of the wealth management products purchased by the Company are short-term wealth
management products, and the bank’s quotation is consistent with the book value, the book value of
RMB80,850,000.00 is deemed as the basis for reclassification into the book value.
141 2019 Annual Report of Focus Media Information Technology Co., Ltd.
Section XIII Documents Available for Reference
1. Financial report signed and sealed by the Company’s legal representative, person in charge of accounting work and person in charge of accounting institution.
2. Original copy of audit report sealed by the accounting firm, and signed and sealed by the certified public accountants.
3. Original copy of all the Company’s documents and announcements published on the websites of the stock exchanges and the media that meets the criteria stipulated by CSRC within the Reporting Period.
4. The above documents are accessible at the Company’s Board of Directors’ office.
Focus Media Information Technology Co., Ltd.
Legal representative: Jason JIANG Nanchun
April 28, 2020
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