01 - clear media

01

CONTENTS

04 Corporate Profile

05 Financial Highlights

06 Fact Sheet at a Glance

07 Letter from the Chairman

10 CEO’s Report

14 Management Discussion and Analysis

• Industry Review

• Operations Review

• Financial Review

28 Corporate Governance Report

44 FAQ

46 The Power of Our Network

47 Biographies of Directors

51 Report of the Directors

66 Report of the Auditors

67 Consolidated Profit and Loss Account

68 Consolidated Balance Sheet

69 Consolidated Summary Statement ofChanges in Equity

70 Consolidated Cash Flow Statement

71 Balance Sheet

72 Notes to Financial Statements

98 Notice of Annual General Meeting

101 Glossary

103 Financial Summary

104 Corporate Information

C O R P O R A T E P R O F I L E04 C O R P O R AT E P R O F I L E04

F I N A N C I A L H I G H L I G H T S 05

Results (HK$’000) 04 03Turnover 538,434 488,175

EBITDA 242,652 208,694

Operating profit 129,308 111,865

Net profit 95,128 81,784

Basic EPS (HK cents) 18.96 16.30

Balance Sheet Data (HK$’000)

Cash and bank balances 337,233 224,830

Total assets 1,956,173 1,624,054

Total liabilities 566,179 325,715

Total shareholders’ equity 1,384,773 1,288,373

Cash Flow Data (HK$’000)

Cash generated from operations 212,453 157,765

Free cash flow (129,294) 49,998

Financial Ratios

Current ratio 3.01 times 2.18 times

EBITDA margin 45% 43%

Net profit margin 18% 17%

Gearing ratio 23% 1%

Return on equity 7% 6%

HK$’000 HK$’000 HK$’000

TURNOVER

488,175

426,916

355,004260,038169,782

040302010099

53

8,4

34

100,000

200,000

300,000

400,000

600,000

500,000

EBITDA

208,694

180,222

153,556

110,63672,758

040302010099

24

2,6

52

0

50,000

100,000

150,000

250,000

200,000

NET PROFIT

81,78471,10658,906

41,69027,483

040302010099

95

,12

8

0

20,000

40,000

60,000

100,000

80,000

06 F A C T S H E E T A T A G L A N C E

Shareholder Information as at 31 December 2004

— Clear Channel KNR Neth Antilles NV 48.1%

— The Public 31.2%

— The Capital Group Companies, Inc. 14.1%

— FMR Corp 6.6%

Nominal Value: HK$0.1

Listing: Main Board of

The Stock Exchange of Hong Kong Limited

Listing Date: 19 December 2001

Ordinary Shares

— Share outstanding as at 31 December 2004 501,608,500 shares

— Free Float 156,513,400 shares

Market Capitalization

— as at HK$7.45 per share (based on closing price on 31 December 2004) HK$3.7 billion

Stock Code

— Hong Kong Stock Exchange 100

— Reuters 0100.HK

— Bloomberg 100 HK

Financial Year End 31 December

Clear Channel KNR Neth Antilles NV

The Public

The Capital Group Companies, Inc.

FMR Corp

As of 31 December 2004

SHAREHOLDING STRUCTURE

48.1%

31.2%

14.1%

6.6%

F A C T S H E E T AT A G L A N C E

07C L E A R M E D I A A N N U A L R E P O R T 2 0 0 4

L E T T E R F R O M T H E C H A I R M A N08

Dear Fellow Shareholders,

Our theme this year is love — and while we present it in a light-hearted way, it is a serious part of who we

are as a company. We continue to do our best for everyone whose lives we touch. Without a love for who we

serve and a passion for what we do, we would not be the success we are today. We are the matchmaker who

brings consumers and brands together, and because we do it so well, it is a love affair that will last forever.

2004 was another exciting and rewarding year for China and Clear Media. The Chinese economy continued

to evolve from “investment-led” to “consumption-driven,” and our singular “consumer-focus” business

model benefited from, and contributed to, the country’s strong 9.5% GDP growth in 2004. We capitalized

on this positive momentum with our largest post-IPO acquisition – 3,000 additional advertising panels in

Beijing that dramatically increased our leadership and set the stage for us to welcome the 2008 Olympics!

Seven years in a row

It gives me great pleasure to see the strides we have made since launching our IPO in 2001. We have

exceeded the goals of our initial three-year plan and are embarking on a new long-term plan to ensure that

we continue to lead our market sector and build a consistent high-growth, high-return track record as a

publicly-traded company.

Our 2004 earnings were $0.19 per share, which is 16% over last year. These results were led by our strong

revenue growth in our three locomotive cities of Beijing, Shanghai and Guangzhou. And the average selling

price of our total network has increased 8%, validating the strength of our pricing power. Consistent revenue

growth, together with an efficient cost-base, delivered a strong and sustainable EBITDA margin of 40+%

and a net profit margin of 15+%. Double-digit growth for the seventh year in a row!

Right idea at the right time

Our original concept – to develop a standardized mainstream media network across China’s key cities that

reaches the country’s most affluent consumers – is as powerful today as it was when we launched Clear

Media. Advertising is all about change, but our world-class network remains a reassuring constant that

advertisers can count on to connect with their target consumers.

It’s always showtime on Clear Media because our messages are 24/7. Our “Always On” mass media network

of choice reaches people where they work, live and play. Just as important, it reaches them when they are

receptive. Commercial messages in traditional media are interruptions to their entertainment – our messages

are the entertainment.

The great outdoors will always be larger than the great indoors, especially in China. More people are

spending more of their time outside the home and experiencing life in the big cities. And that’s where we

meet. We connect consumers with brands in 24,000 of the best locations in the 30 key cities!

Powering ahead

Our growth strategies for 2005 are

• To reach China’s most affluent and influential consumers... setting trends and leading the Brand Revolution

• To offer innovative packages... matching the rapidly growing needs of leading advertisers

• To increase the occupancy of our panels... improving the overall yield of our assets

• To seize profitable growth opportunities... increasing per capita penetration of our network

• To lead the consolidation of our industry... building the ultimate media company


We will accomplish these strategies by

• Expanding our fully-illuminated panels throughout the network

• Increasing the quality and quantity of our best-in-class sales and marketing professionals

• Adding eight new sales centers in mid-tier cities to tap “drill-down” growth opportunities that

complement our core hubs in Beijing, Shanghai and Guangzhou

• Strengthening our research and development team so we lead industry innovation

• Acquiring earning-accretive assets to complement our solid organic growth

Outdoor advertising continues to be a fast-growing medium in China and the only media sector in which

foreign ownership is allowed. With our local knowledge of China complementing the global expertise of our

largest shareholder, Clear Channel Worldwide (NYSE: CCU), we continue to thrive as we lead the

transformation of our industry.

The 2008 Olympics in Beijing, the 2010 Asian Games in Guangzhou, and the 2010 Shanghai Expo will

provide external fuel for our organic growth and Clear Media is uniquely positioned to benefit from this

once-in-a-lifetime opportunity.

Corporate commitment

In 2004, we were honored for “Best Corporate Governance” (Media Category) and “Best Investor Relations”

(Media Category) in a survey by the renowned Institutional Investor Research Group. Our 2003 annual

report “The Age of Consumers” was also awarded “Grand Award in Hong Kong” in the International ARC

Competition in New York. To further our lead in Corporate Governance practice, our Board has established

committees for Audit, Remuneration, Nomination and Capex to monitor internal control, increase

transparency and enhance effectiveness.

Building on our proven business model, we will continue to leverage our competitive advantages to bring

sustainable value to all our stakeholders - shareowners, advertisers, employees, consumers and the

communities that we serve. That is what we said when we launched Clear Media and it is still our compass

for the future, because the idea of everyone winning is timeless!

People with passion

Many people are responsible for our success today. I would like to thank each member of TEAM Clear Media

for their love of what they do and their passion for doing it well. Success hasn’t just happened – you have made

it happen. And to our shareholders, thank you for your trust and partnership during this exciting journey.

Love is our theme this year because love never fails. When you follow your heart, the rewards will follow.

Transforming our market... helping to shape China’s future... building a new generation of brand-loyal

consumers. We will do it all. Together.

Steven Yung

Chairman of the Board

Clear Media Limited

C E O ’ S R E P O R T10


2004 marked the third year since Clear Media was listed on the Stock Exchange in Hong Kong.

Looking back on the past three years, China has enjoyed tremendous growth in many areas, including the economy,sports and culture. Accompanying the rapid development of China’s economy, Clear Media not only overcamechallenges that arose due to the changing business environment, but also took advantage of opportunities madeavailable in the advertising market. We accomplished the goals of our initial three-year plan and continued to leadwithin the outdoor advertising market in China.

Clear Media had over 24,000 12-sheet-equivalent panels, spanning 30 cities across China, as of 31 December2004. This represents more than twice the number of panels as compared to three years ago. With the country’smost extensive bus shelter network, our “always-on” standardized advertising network effectively differentiates usfrom other media players in assisting our advertisers in reaching their target audiences. Turnover, EBITDA andprofit for the year ending 31 December 2004, registered an increase of 52%, 58% and 61% respectively, ascompared to that three years ago.

Leveraging on its nationwide standardized outdoor advertising platform, Clear Media continued to develop itsclient base - both in terms of quantity and quality. The number of clients with orders over RMB5 million alsoincreased satisfactorily in the past three years, and client mix remained, with the top three advertising industriesbeing telecommunications, beverages, and cosmetics and toiletries. As a result of China’s entry into the WTO, theentertainment and leisure goods sectors also recorded satisfactory growth. We continued to record veryencouraging performance, particularly in our three key cities - Beijing, Shanghai and Guangzhou - which grew byan average of 20%. Comparatively, performance in mid-tier cities has been less satisfactory. We will continue tostrengthen our sales centers and sales forces in mid-tier cities to tap more local and regional clients. We believeperformance in these cities will improve in 2005.

Last year, we dramatically increased the coverage of our advertising network. The 2008 Olympics will certainly placeBeijing in the spotlight internationally and we expect major consumer-product companies will substantially increasetheir advertising spending in Beijing and throughout China. We set the stage for our growth in Beijing bypurchasing 3,000 advertising panels, the largest acquisition by the Company so far as a publicly traded company. Wespent the past few months streamlining and refurbishing the newly acquired advertising panels, therefore the newpanels did not record any contribution last year. We plan to launch these new advertising panels gradually into themarket in the second quarter of this year. We will try our best to accelerate returns from these panels but theaverage occupancy rate and average pricing in Beijing for the coming year may be under slight short-termpressure. However, the returns from these panels will most likely pick up towards the 2008 Olympics.

To tap the business opportunities created by rapid economic development and the upcoming 2008 Olympics,Clear Media will continue to strengthen its core business, while closely monitoring new opportunities andchallenges in China’s outdoor advertising market.

Our objective remains the same - to enhance our leadership position in China’s outdoor advertising market byimproving operational efficiency, increasing the coverage of the network, and exploring new business opportunities.

From the sales orders-on-hand at the beginning of this year, we anticipate another satisfactory year in 2005. Meanwhile,we will closely monitor and control costs and expenses to further enhance our operational efficiency. We will continueto strive to increase value for our shareholders and to provide better and more effective services to clients.

Han Zi JingChief Executive OfficerClear Media Limited

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S14

I N D U S T R Y R E V I E W

This has been another year of strong growth for the People’s Republic of China (“China” or “PRC”).

Despite measures taken to cool down China’s economy, China’s GDP for 2004 showed a strong 9.5%

growth. Consumer spending in the world’s fastest growing economy has risen along with the increase in

China’s GDP, leading to increased competition among companies to boost awareness of their products

through advertising and brand-building in China. More businesses are realizing the importance of

publicity for their products and services, and the value of brand-recognition amongst consumers.

Advertising has become an indispensable key to boosting sales and brand-building.

The fast economic growth since the economic reforms in China in the eighties has made a vast

selection of brands of consumer products available to consumers in China. However brand-loyalty is

yet to be developed amongst consumers in China. With a wide selection of brand names available to

them, consumers are eager to try out new and different brands to find their preferred product brands.

Therefore, companies are increasing their expenditure on advertising so as to establish their market-

presence and to promote their brand-names. Outdoor advertising offers such companies a cost-efficient

means to reach consumers on the move.

Outdoor advertising is an effective way of advertising as it is not an intrusive method of advertising,

but provides a round-the-clock backdrop to the outdoor activities of consumers. Outdoor advertising

meets people when they are close enough to the stores to buy the products.


030201009998979695

11

,39

0

9,9

90

8,0

40

7,4

305

,77

04,7

30

4,0

702,7

00

2,5

30

0

2,000

4,000

6,000

8,000

10,000

12,000

GROWTH OF OUTDOOR ADSPENDRMB (million)

ADSPEND GROWTH IN CHINA

10

7.9

030201009998979695

90

.3279

.49

71

.27

62

.21

53

.7846

.2

36

.66

27

.33

0

30

60

90

120

RMB (billion)

15C L E A R M E D I A A N N UA L R E P O R T 2 0 0 4

Although the outdoor advertising market remains fragmented, recent trends show a decrease in the

number of outdoor advertising companies while the total expenditure spent on outdoor advertising is

increasing. This suggests consolidation in the industry. Advertisers wishing to launch nationwide

advertising campaigns, will realize that such campaigns are difficult to implement when dealing with

different companies operating within selected cities with outdoor panels of different sizes. As demand

increases for greater geographical coverage, outdoor advertisers will be looking for standardized panels,

comprehensive packages and the convenience of one-stop shopping that only larger companies like

Clear Media can offer, we expect to see further mergers and acquisitions of companies engaged in the

outdoor advertising industry.

CHINA OUTDOOR ADVERTISING INDUSTRY

Billboard

Street Furniture

Transit

Others

20%

1%

29%

50%

2004

18%

7%

19%

56%

2003


O P E R A T I O N S R E V I E W

As at 31 December 2004, Clear Media has the country’s most extensive standardized bus shelter

advertising network, with a total of 23,740 12-sheet-equivalent panels spanning 30 cities across China.

Traditionally, the top three contributors to Clear Media’s turnover have been telecommunications,

beverages and cosmetics and toiletries industries, respectively, mirroring the emergence of an

increasingly consumer-focused economy in the PRC. This continued to be the case in 2004. In

addition, we also saw other advertisers increasing their advertising expenditure as a result of the market

liberalization brought about by China’s access to the WTO. Pharmaceutical companies, that used to

spend substantial amounts on TV advertising, increased their spending in our network. They were

joined by other companies (for example, in the home appliance industry) who are adopting professional

advertising strategies to boost their market performance.

The Group’s core bus shelter advertising business continued to perform well in 2004. Total bus shelter

sales increased by 12% from HK$476 million in 2003 to HK$533 million in 2004. The increase in

sales was driven mainly by an 11% increase in the average time-weighted number of advertising panels.

Even though the average selling price was increased by 8%, there was a 5% drop in occupancy rate,

mainly occurred in the mid-tier cities as a result of our pricing strategy. Although our major customers

continued to demonstrate their loyalty to our network, some of our smaller customers were not able to

afford our premium pricing. As a result, we have further strengthened our sales force and plan to set up

more sales centres to enhance our customer support services.

City Highlights: by Contribution toBus Shelter Advertising Revenue (2004)

% ofCity Turnover

1 Guangzhou 18

2 Beijing 17

3 Shanghai 14

4 Chengdu 5

5 Hangzhou 5

6 Nanjing 5

7 Shenzhen 5

8 Xi’an 3

9 Wuhan 3

10 Kunming 2


Key cities:

The Group’s bus shelter advertising panels in key cities in China, Beijing, Shanghai and Guangzhou,

accounted for 44% of the Group’s total number of bus shelter panels in 2004 (2003: 32%).

Sales in three key cities remained buoyant in 2004, with a growth of 20% and with an aggregate value of

HK$262 million (2003: HK$217 million). This accounted for 49% of our total sales in 2004 (2003: 45%).

Beijing

As part of our preparations to welcome the 2008 Olympics in Beijing, we purchased about 3,000 bus

shelter advertising panels at a consideration of HK$138 million (HK$46,000 per panel). This

dramatically increased our total number of advertising panels in Beijing to over 5,000 and significantly

increased our market share in Beijing - this acquisition reaffirmed our leadership position in outdoor

advertising in China’s three major cities. Sales of bus shelter advertising panels in Beijing (excluding

those 3,000 advertising panels acquired during the year) in 2004 were HK$89 million, representing an

encouraging 19% increase over the 2003 figure of HK$75 million. The increase was driven mainly by

the increased number of advertising panels available for sale during the year with no significant changes

to average selling price and occupancy rate as compared to 2003.

Clear Media was also awarded the exclusive right to operate all the advertising panels in Terminal One

of Beijing Capital International Airport.

Shanghai

Shanghai is another key city where the Group is actively looking for new business opportunities. In

2004, the Group’s presence in Shanghai continued to be the market leader since 2003, indicating our

significant presence in the outdoor advertising business in this important city.

Sales in Shanghai increased by 16% to HK$74 million in 2004 from HK$64 million in 2003. This is

mainly the result of the increase in occupancy rate from 75% in 2003 to 80% in 2004 and the increase

in the average number of bus shelter advertising panels by 9%. The average selling price of our outdoor

advertising space in Shanghai however remained unchanged compared to that in 2003.

Guangzhou

The Group maintained its position as a market leader in Guangzhou in 2004.


The Group also experienced the highest increase in sales in Guangzhou with a 26% increase from 2003.

This is mainly the result of a 5% increase in the average selling price, and an 18% increase in the

average number of bus shelter advertising panels of which we hold concession rights to when additional

bus shelters were installed after the bus routes relocation scheme in Guangzhou at the end of 2003. The

occupancy rate also improved marginally from 70% in 2003 to 71% in 2004.

CLEAR MEDIA’S CLIENT MIX IN 2004 (BY INDUS’S CLIENT MIX IN 2004 (BY INDUSTRY)

21.4%

17.1%

8.4%

7.6%

4.8%4.5%

4.0%3.3%

15.2%

7.0%

6.7%

BeveragesTelecommunicationHome AppliancesFoodPharmaceuticalsCosmetics & ToiletriesInformation TechnologyLeisure & EntertainmentBusiness & Consumer ServicesTransportationOthers

Mid-tier cities

The Group continued its efforts in tapping available opportunities in these cities in 2004. During the

year, we built and acquired 1,300 new advertising panels in the 27 mid-tier cities across China,

reaching a total of more than 13,000 advertising panels at year-end with sales from those cities

accounting for 51% of the Group’s bus shelter sales in 2004 (2003: 55%). The most outstanding

performers in this mid-tier sector are Nanjing and Hangzhou. We will continue to strengthen our sales

centres in the mid-tier cities to further enhance our sales performance in these cities.

New advertising formats

Revenues from point-of-sale advertising and unipole advertising decreased from HK$12 million in

2003 to HK$4 million in 2004 as we subcontracted those businesses to third parties. The new airport

advertising business has generated sales of HK$1.7 million in the two-month period towards the year-

end. The Company expects these three business segments to remain small in relation to our core bus

shelter business as it is currently concentrating its efforts in building and expanding its core business of

bus shelter advertising.


F I N A N C I A L R E V I E W

Turnover

Turnover of the Group in 2004 showed solid growth. In 2004, turnover of the Group was HK$538

million, representing an increase of 10% compared with the fiscal year 2003. This is mainly due to the

increase in the revenue from the Group’s core bus shelter advertising business. All of the Group’s

turnover was derived in China.

EBITDA

The Group’s earnings before interest, tax, depreciation and amortization (“EBITDA”) has increased to

HK$243 million in 2004 from HK$209 million in 2003. The Group’s EBITDA margin further

increased to 45% in 2004 (2003: 43%). It is noteworthy that the EBITDA margin for the Group’s core

bus shelter advertising business continued to improve slightly to 49% (2003: 48%) despite the increase

in costs associated with the large number of advertising panels built and acquired in 2004.

Expenses

In 2004, direct operating costs, which included electricity, rental and maintenance, increased by 6% to

HK$155 million (2003: HK$146 million) despite the average number of bus shelters increasing by

11%. The Group had also successfully implemented various cost-saving measures, including the re-

negotiation of rentals of new panels and electricity prices, as well as employing electricity-saving

measures on advertising panels to control increases in direct costs.

17%

18%

51%14%

TURNOVER BY GEOGRAPVER BY GEOGRAPHICALLOCATION IN 2004

Beijing

Shanghai

Guangzhou

Others

TURNOVER BY OPERATION IN 2004

1%

99%Bus Shelter

New Formats

2003 COST BREAKDOWN % SALES 2004

38%

21%

19%

78%

36%

21%

19%

76%

Direct operating costs

Amortisation of concessionrights and depreciation

Total

SG&A


Rental remained the biggest item in direct operating costs which accounted for 18% of sales

(2003:19%). Maintenance costs continued to account for 6% of sales in 2004 (2003: 6%). Electricity

costs represented about 4% of sales in 2004 (2003: 5%). Sales and cultural levies stood at 8.5% of sales

in 2004 (2003: 8.5%) Amortization of concession rights and depreciation of fixed assets represented

about 21% of total sales in 2004 (2003: 21%). The Group continued to invest in strengthening our

sales capability and provide better services to our increasing clientele, and in particular, the Group has

set up a dedicated sales team to handle the sales work in Beijing for the newly acquired bus shelter

panels. The Group has employed an additional 81 sales and marketing staff, bringing the total sales and

marketing headcount to 298 in 2004 (2003: 217). The Group also increased the salary packages of staff

with good performance in the past few years. Tighter monitoring of older receivables resulting in less

doubtful debts written off. Coupled with control on travelling and entertainment expenses and gains

on other investments, SG&A expenses managed to stay at 19% of sales in 2004 (2003: 19%).

EBIT

EBIT improved by 20% from HK$106 million in 2003 to HK$127 million in 2004 as a result of

higher EBITDA. The EBIT margin improved slightly from 22% in 2003 to 24% in 2004.

Finance costs

The increase in finance costs to HK$10 million (2003: HK$8 million) was largely due to the provision

of a HK$2.4 million redemption premium for the zero coupon convertible bonds issued by the

Company in the second half of 2004. However, if the holders of convertible bonds choose to convert

their bonds into equity, the relevant provision will be written back at that stage.

Taxation

The Group’s taxation charge reached approximately HK$14 million, which was similar to the level

recorded in 2003.

Net profit

Net profit grew by 16% to HK$95 million in 2004 from HK$82 million in 2003 despite the necessity

to provide for a redemption premium on the new convertible bonds. Net profit margin managed to

improve slightly to 18%. (2003: 17%)

Liquidity and financial resources

The Group continued to have strong financial position, with cash and cash equivalents amounting to

HK$337 million as at 31 December 2004 (2003: HK$225 million).

In 2004, the Group financed its operations and investing activities with internally generated cash flow,

balanced with proceeds from the Company’s IPO and bank loans, as well as the issue of convertible bonds.


Cashflow

Net cash generated by operating activities continued to improve substantially to HK$189 million as of

31 December 2004 from HK$135 million as of 31 December 2003, largely due to the increase in

operating profits, despite the fact that the profit has been placed to secure some acquisitions.

Net cash outflow from investing activities amounted to approximately HK$347 million in 2004

compared to an outflow of HK$137 million in the previous year as the Group continued to expand its

bus shelter network in 2004, including the major acquisition in Beijing to consolidate our market

presence to prepare for the business opportunities presented by the 2008 Beijing Olympic Games.

Net cash inflow from financing activities amounted to HK$271 million in 2004 (2003: HK$40 million

outflow), largely due to the issue of zero coupon convertible bonds in October 2004.

Accounts receivable

The Group’s accounts receivable balance due from 3rd parties increased to HK$195 million in 2004

from HK$168 million in 2003. None of the accounts receivable balance is due from connected persons,

as defined in the Rules Governing The Listing of Securities (the “Listing Rules”) on the Stock Exchange

of Hong Kong Limited (the “Stock Exchange”). Average accounts receivable outstanding days were 133

days in 2004 (2003: 129 days). The collection of accounts receivables remains a priority for

management. The increase in days outstanding was a result of a general increase in sales during the 2nd

half of 2004 and the timing of repayment by certain major customers at the year-end.

Amounts due from Guangdong White Horse Advertising Company Limited (“GWH”) were reduced

substantially from HK$26 million in 2003 to HK$20 million in 2004. The percentage of the Group’s

business from GWH dropped to 3% in 2004 (2003: 8%).

Prepayments, deposits and other receivables

Total prepayments, deposits and other receivables as of 31 December 2004 were HK$105 million as

compared to HK$82 million as of 31 December 2003. The increase in prepayments, deposits and other

receivables was due mainly to higher direct costs prepayment.

Other payables and accruals

Total other payables and accruals as of 31 December 2004 were HK$202 million, compared with

HK$143 million as of 31 December 2003. The increase was mainly due to the final installment due on

the acquisition of the operating rights for 3,000 bus shelter advertising panels in Beijing and was paid

in January 2005. It would be inappropriate to give turnover days against sales as the payable is more

closely related to capital expenditure incurred in bus shelters.

Free cash flow

The Group experienced negative free cash flow of HK$129 million from its operations in 2004 (2003:

positive free cash flow of HK$50 million), defined as EBITDA less capital expenditure, less income tax

and net interest expense. The negative free cash flow was a result of the Group acquiring 3,000 bus

shelter advertising panels in Beijing in addition to the Group’s other organic and acquisition expansion.


Assets and liabilities

As at 31 December 2004, total assets amounted to HK$1,956 million (2003: HK$1,624 million),

whereas total liabilities and minority interests amounted to HK$571 million (2003: HK$336 million).

Net assets amounted to HK$1,385 million (2003: HK$1,288 million), representing an increase of 7.5%.

At 31 December 2004, the Group had pledged time deposits of US$4.5 million (equivalent to

approximately HK$35 million) (2003: US$6 million (equivalent to approximately HK$47 million))

and HK$30 million (2003: HK$126 million) to banks as securities for short-term bank loans of

RMB40 million (2003: RMB173 million).

At 31 December 2004, the Group had pledged deposits of RMB30 million (equivalent to approximately

HK$29 million) to bank as security for bills payable of RMB36 million (equivalent to approximately

HK$34 million). All of the Group’s bank borrowings were repayable within one year. In addition, the

Group also issued five- year zero coupon convertible bonds to raise a total proceeds of HK$312 million.

Share capital and shareholders’ funds

During the year, the Company’s issued and fully paid share capital remained unchanged. Shareholders’

funds as of 31 December 2004 increased by 7% to HK$1,385 million from HK$1,288 million in

2003. The Group’s reserves amounted to HK$1,335 million compared to HK$1,238 million in 2003.

During the year under review, there was no share repurchase.

The debt-to-equity ratio, defined as a percentage of net interest bearing borrowings over shareholders’ fund,

of the Group was 23% as of 31 December 2004 compared to 1% in 2003. The increase in the gearing ratio

was due to the issue of convertible bonds in October 2004. This reflects the Group’s intention to better

leverage on its balance sheet to finance future expansion. The interest cover was 12.5 times (2003: 13.0

times).

Exposure to foreign exchange risk

Our only investment in China is the operating vehicle of the Group, the WHA Joint Venture, which

conducts business only within China. Apart from interest payable, repayment of foreign currency loans

obtained to finance our operating vehicle’s operations, and any potential future dividend to be declared

by our operating vehicle to its shareholders, most of our turnover, capital investment and expenses are

denominated in Renminbi. As of today, we have not experienced difficulties in obtaining government

approvals to make foreign exchange purchases when the need arises. During the period under review,

we did not issue any financial instruments for hedging purposes.

Capital expenditure

To strengthen the Group’s leading position in the outdoor media sector in China, the Group actively

acquired concession rights to build bus shelters so as to expand its network. For the year ended 31

December 2004, HK$378 million (2003: HK$99 million) was incurred on addition of bus shelter

concession rights and HK$4 million (2003: HK$5 million) on fixed assets.


Use of initial public offering (“IPO”) proceeds

The proceeds from the IPO and over allotment after deducting related expenses paid were HK$648

million and HK$9 million, respectively. For the year ended 31 December 2004, the remaining

approximately HK$117 million has been fully utilized to finance the further development of the

Group’s bus shelters.

Material acquisitions and disposals

During the year under review, the Group acquired 3,000 bus shelter advertising panels in Beijing from

an existing operator at a consideration of approximately HK$138 million. Further investment will be

made in these bus shelter advertising panels for refurbishment, relocation and upgrading. Other than

this, there was no material acquisition or disposal of any subsidiary, associate or joint venture of the

Group.

Employment, training and development

As of 31 December 2004, the Group had a total of 385 employees, an increase of 90 employees over

the same period in 2003, and total staff costs amounted to 8.8% of total turnover, compared to 8.5%

in 2003. The major increase is the number of sales and marketing staff, which grew from 217 in 2003

to 298 in 2004. This is in line with the Group’s policy to improve sales support to our expanding

outdoor media network in China. Training courses and conferences were regularly organized for

employees throughout the year to improve and update their knowledge of their specific job

requirements. Employees are remunerated based on their performance, experience and the prevailing

industry practices, with compensation policies and packages being reviewed on a regular basis. Bonuses

were linked to both the performance of the Group and to individual performance as recognition of

value creation.FULL TIME EMPLOYEES IN 2004

Concession Relations

Operations

Sales & Marketing

Management & Administration

298

38

27

22

77%

10%

7%

6%

Charge of the group assets

There is no charge on the Group’s assets during the year under review other than time deposits of

US$4.5 million (approximately HK$35 million) and HK$30 million pledged to secure short-term bank

loans of RMB40 million (approximately HK$37 million) and time deposits of RMB31 million

(approximately HK$29 million) pledged as securities for bills payable of RMB36 million

(approximately HK$34 million).


Contingent liabilities

On 10 August 1999, Advertasia Street Furniture Limited (“Advertasia”), an independent third party,

commenced an action against China Outdoor Media Investment (Hong Kong) Company Limited

(“China Outdoor Media (HK)”) (an indirect wholly owned subsidiary of the Company) in the High

Court of Hong Kong pursuant to an agreement dated 21 April 1999 entered into by them for the sale

of the entire issued share capital of four Hong Kong private companies by Advertasia to China Outdoor

Media (HK) for the sum of HK$68 million (the “Agreement”). Advertasia alleged that China Outdoor

Media (HK) had wrongfully, and in breach of the Agreement, refused to purchase the shares held by

Advertasia in the four private companies and/or failed to tender a payment of HK$50 million in

relation to the Agreement.

On 8 October 2004, the High Court, acting as a court of first instance, made an order in favour of

Advertasia. The Company had made an appeal against the judgement of the High Court.

In January 2005, China Outdoor Media (HK) paid to the High Court the sum of HK$100 million in

respect of the aforementioned Advertaisa claim, and this amount of money will remain at the High

Court until the result of the appeal to the Court of Appeal. The Group is still entitled to the deposit

and will receive interest at market deposit rates during the period. Moreover, under a Deed of

Indemnity between the Company, Outdoor Media China, Inc., Han Zi Jing, Clear Channel Outdoor,

Inc. and China Outdoor Media (HK), the Company and China Outdoor Media (HK) will be fully

indemnified against all damages, penalties, liabilities, legal fees, enforcement costs and expenses

incurred by them in respect of this claim.

Outlook

The advertising industry in China is expected to expand at a double-digit growth rate in 2005.

Advertising retains its potential for further growth as per capita advertising expenditure remains

comparatively low. With developing brand awareness in the PRC and several important events like the

2008 Olympics in Beijing, the 2010 Asian Games in Guangzhou, and the 2010 Shanghai Expo on the

horizon – the near- and long-term future for advertising in China looks very promising.

The 2008 Beijing Olympics will bring enormous investment and business opportunities to the PRC,

especially in Beijing and undoubtedly represents the best time for companies to advertise their products

to consumers in the PRC and overseas.

In support of Amway’s 2004 Olympics advertising campaign, Clear Media launched the first electronic

panels in Beijing, Shanghai and Guangzhou. These innovative panels provided the public and passers-by

with the most up-to-date information on the Olympic gold medal count in Athens, Greece. The list of

Olympic winners of the Chinese national team as well as teams of other nations was updated three times a

day. It was the first time in China that an outdoor advertising network was used to provide updates on a

sports event in a timely manner daily. Our experience and success with these electronic panels indicates

that we are prepared for the business opportunities offered by the 2008 Beijing Olympic Games.


The Group has a clear vision as how to capitalize these opportunities in the next few years as set out

below:

Continue to focus on our core business – Bus shelter advertising panels

Bus shelter advertising panels will continue to be the core business in our future development. We

expect the number of our bus shelter advertising panels will increase at a rate of 2,000 – 3,000 panels

per year. We believe this can be achieved with the current cash flow of the Group.

Develop our client mix and the outdoor advertising business in mid-tier cities

We will continue to strengthen our sales and marketing efforts to enrich our clientele and optimize our

portfolio of clients. We will also further invest in enhancing our presence in the mid-tier cities.

Currently, we have already set up eight sales centres in major mid-tier cities to work with our sales hubs

in Beijing, Shanghai and Guangzhou.

Well-equipped for the business opportunity brought by 2008 Olympics

The Group will continue to consolidate its advertising network and penetration in the key cities,

especially in Beijing. In 2004, we have acquired 3,000 advertising panels and obtained the exclusive

adverting right in Terminal One of Beijing Capital International Airport. To cope with our expansion,

we will further strengthen our sales and marketing force.

We believe from our past experience, and with a strategy that matches market development, Clear Media

will maintain its leading role in the industry. Clear Media continually strives to increase value for its

shareholders and to provide better and more effective services to clients.

C O R P O R A T E G O V E R N A N C E R E P O R T28

Clear Media believes voluntary commitment to a high standard of corporate governance is important

for enhancing the confidence of current and future shareholders, investors, employees, businesspartners and the public.

The Board regularly reviews and adopts corporate governance guidelines and developments. We believethe Company has endeavoured to comply with the Code of Best Practice set out in the formerAppendix 14 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong

Limited (the Listing Rules) applicable to us in the financial year 2004.

As a result of our commitment and continuous efforts in maintaining a high level of corporate

governance, Clear Media was voted in a survey by Institutional Investor Research Group as theCompany with the Best Corporate Governance and the Best Investor Relations in the MediaCategory in Asia in 2004.

The Board and the Management:

The Board lays down corporate strategies, approves overall business plans and, on behalf of theshareholders, supervises the company’s financial performance, its management and organization. TheBoard is also responsible for overseeing the preparation of financial statements of each financial period,

which give a true and fair view of the state of affairs the Group and of the results and cash flow of thatperiod. The Board defines the scope within which the management team carries out day-to-daymanagement tasks. Each of the executive directors oversees specific areas of our business.

The Board determines the company’s overall objectives, strategies and business plans based on therecommendations of the management team and approves the key figures underlying the budgetsprepared by the management team.

The Board reviews and approves the Company’s budgets and checks to see if the targets are beingachieved. It also monitors the company’s liquidity and cash positioning. It approves the Company’s

significant transactions.

The Board and management team handle material price information with strict confidence. Public

announcements are made in a timely manner to keep shareholders and the public abreast with the latestdevelopments.

Board Composition:

The Board comprises four executive directors one of whom is the chairman of the Board, five non-

executive directors (two of whom are deputy chairmen and one of whom is related to the CEO) andthree independent non-executive directors (INEDs). Please refer to pages 47 to 50 of the annual reportfor the names, details and qualifications of the Directors. We believe the non-executive directors,

consisting of a good mix of advertising and promotional experts in China and the internationalmarkets, financial and business consultants and other diversified industry experts, are well qualified toadvise us on business strategy, finance and management issues.

The INEDs are explicitly identified in all corporate communications, and one of them has seniorfinancial and accounting expertise. Moreover, the Board also reviews the independence of INEDs on an

annual basis and each INED has confirmed their independence as at the end of 2004.

C O R P O R AT E G O V E R N A N C E R E P O R T

C L E A R M E D I A A N N UA L R E P O R T 2 0 0 4 29

The Company has a clear division for responsibilities for its top management, and adopts a dualleadership structure where the role of Chairman is separate from that of CEO. The Chairman is

responsible for leading and overseeing the functions of the board, while the CEO, together with theexecutive directors and management team, is responsible for the day-to-day management of the Group’sbusiness.

When a new director joins the Board, he or she will be provided with documents setting out his dutiesand obligations, such as “Guidelines for Directors” published by the Institute of Directors in Hong

Kong, as well as documents setting out the various relevant disclosure requirements such as “Guide onDisclosure of Price Sensitive Information” published by Hong Kong Exchange and Clearing Limited.We also make arrangements for our company counsel to explain certain obligations and responsibilities

of directors of listed companies set out in the Listing Rules. Each newly appointed director will discusswith the Chairman any additional information or training he or she may require in order to dischargehis/her duties as our director.

At every annual general meeting, one third of the Directors (other than the Chairman and CEO), orthe nearest number to one third, shall retire and be eligible for re-election.

In the past three years, the Company has in force an insurance policy to ensure our directors and seniormanagement from any liability arising from the performance of their duties.

Communication between the Board and the Management

All Board members have full access to information concerning the Company. To ensure that the

Board is well apprised of matters concerning the Company, relevant, complete and accurateinformation is transmitted in a timely manner to our Directors. We also hold regular meetings toupdate our Board. Our Company Secretary is responsible for communications with our board

members.

Meetings

The Board met six times in 2004 to discuss issues affecting the general development of the Company,including strategies, acquisitions and disposals, annual budgets, annual and interim results,

appointment of directors and senior management, major capital expenditure, and other significantoperational and financial matters.

Most of the Board meetings are scheduled one year in advance to ensure maximum director attendance.In case additional board meetings are needed, an average prior notice of 1 month is given. The agendaof each board meeting is set by the Chairman after consultation with the management team and other

board members. The agenda and other supporting documents to be presented to the Board areforwarded to the members at least 5 days prior to each board meeting.


Directors with potential conflicts of interest declare the conflict and abstain from the relevant meeting.Minutes of meetings are normally circulated within two weeks after the meeting and directors are givenopportunity to amend the minutes. Any director who disagrees with a decision carried out by the Board

is entitled to have his or her opinion included in the minutes of the meeting. The opinions of theindependent non-executive directors, particularly in relation to connected party transactions, are alsoincluded in the minutes. Independent non-executive directors seek external professional advice as

necessary. The independent non-executive directors engaged independent financial advisors to giveprofessional advice on some on-going related party transactions disclosed previously in 2004.

The Chairman of the Board maintains an on-going dialogue with CEO about the Company’soperations and assesses the need for any information to be passed to the whole Board. All directors arekept informed in a timely manner regarding major changes affecting our businesses. When there is no

meeting, the Board members can access the Company Secretary for advice and comments through outthe year. If necessary, any board member or Group director may contact the Chairman to request for aBoard meeting to be convened.

Directors’ Attendance in 2004

Board Meetings attended/held

Executive DirectorsSteven Yung (Chairman) 6/6

Han Zi Jing (CEO) 6/6Teo Hong Kiong 6/6Zou Nan Feng 4/6

Non-executive DirectorsMark Mays 0/6

Lenna Chin (alternate to Mark Mays) 5/6Roger Parry 3/6Tim Maunder (alternate to Roger Parry) 2/6

Peter Cosgrove 6/6Jonathan Bevan 4/6Han Zi Dian 0/6

Zhang Huai Jun (alternate to Han Zi Dian) 5/6

Independent Non-executive DirectorsDesmond Murray 6/6Wang Shou Zhi 4/6Leonie Ki Man Fung (appointed on 15 September 2004) 1/1


Board Committees:

As an integral part of good corporate governance, the Board established the following committees, each

provided with defined written Terms of Reference: The Audit Committee, Remuneration Committee,Nomination Committee and Capital Expenditure Committee. Their independent views andrecommendations provide proper control of the Company and ensure continual achievement of high

corporate governance standards as a listed company.

Audit Committee

The Audit Committee was established in 2001 with written Terms of Reference posted on theCompany’s web site to provide advice and recommendations to the Board. The Committee hascurrently four members, and majority of the Committee members are independent non-executive

directors, and is chaired by an independent director with in-depth financial and accounting knowledge.All committee members have appropriate industry and financial experience to contribute to thebusiness of the Audit Committee.

The functions of the Audit Committee are to review with senior management and internal and externalauditor teams the internal and external audit findings, accounting principles, and practices adopted by

the Group, listing rules and statutory compliances, internal control, related party transactions, riskmanagement and financial reporting matters, including interim and annual financial statements andprovide recommendations to the Board. Minutes of the meeting are kept by the Secretary, and draft

and final versions of minutes are sent to all members of the Committee within 14 days of the meeting.The Audit Committee met three times in 2004.

Every year, the Audit Committee meets with external auditors to discuss the annual audit plan. TheAudit Committee meetings were attended by the members of the Committee and when necessary, theexternal auditors and the internal auditors.

In addition, the external audit partner is subject to periodic rotations and the ratio of annual fees fornon audit services and for audit services is subject to close scrutiny by the Audit Committee.

Composition of the Audit Committee

Desmond Murray, Independent Non-executive Director (Chairman)Peter Cosgrove, Non-executive DirectorWang Shou Zhi, Independent Non-executive DirectorLeonie Ki Man Fung, Independent Non-executive Director

Members Attendance in 2004

Members Audit Committee meeting attended/held

Desmond Murray 3/3Peter Cosgrove 3/3

Wang Shou Zhi 2/3Leonie Ki Man Fung (appointed on 15 September 2004) 1/1


Internal Control and Internal Audit

The Board through the Audit Committee is responsible for maintaining proper internal controls within

Clear Media.

The internal control systems are designed to provide reasonable assurance of the company’s assets,

safeguarding them against unauthorized use or disposition by making sure transactions are executed inaccordance with management’s authorization and that the accounting records are reliable for thepreparation of financial information used for the business and publication. The Company has adopted

proper procedures with duly assigned levels of authority in areas of financial, operational andcompliance controls and risk management to ensure the Company’s assets and resources aresafeguarded.

The Board approved a 5-year rotational internal audit plan, launched in 2004, covering differentdepartments with the objective of reducing potential risks and improving operational efficiency. The

Company has outsourced the completion of this work to a suitably qualified consultant. The Internalauditors report findings and recommendations to the Board. The internal auditors report directly to theAudit Committee and internal auditors have the right to consult the Audit Committee without

referring to management. The Audit Committee reports to the Board at each board meeting theprogress of work plan and related findings.

In 2004, internal auditors covered the following matters:

1. assessed and reviewed the capital expenditure and approval procedures;2. reviewed purchasing procedures and contracts with suppliers; and

3. reviewed the creative work process.

The annual internal audit plan is reviewed and approved by the Audit Committee on a risk-assessment

basis, recognising the Company’s business risks. Issues reported by internal auditors are monitoredclosely by the management, until appropriate measures are taken to address the issues.

External Audit

During the year, the fees paid to the Company’s external auditors are set out as below:

2004 2003HK$’000 HK$’000

Audit fees 880 820Non-audit fees — taxation services fees 78 64

Nomination Committee

The Nomination Committee was formed in 2003 with written Terms of Reference posted on theCompany’s web site to make recommendations to the Board on the appointment of directors and the

management of Board succession based on criteria endorsed by the Board. These include professionalknowledge, commercial experience and personal ethics.


Criteria for candidates:

The Board adopted certain criteria for new director candidates. These include the candidates’

background especially their experience in advertising and promotions, financial and commercialexperience, and relevant experience with any listed company.

Procedure:

The Committee gathers information on candidates from various sources including the database of theInstitute of Directors in Hong Kong and recommendations from the management team and others.Candidates are short-listed by the Chairman and Secretary of the Committee based on the above

criteria and tabled for the Committee. The Committee meets to select the final candidates andrecommend them to the Board for final approval. The Committee met once in 2004 to appoint a newindependent non-executive director.

Composition of the Nomination Committee

Steven Yung, Executive Director (Chairman)Roger Parry, Non-executive DirectorPeter Cosgrove, Non-executive DirectorWang Shou Zhi, Independent Non-executive Director

Desmond Murray, Independent Non-executive DirectorLeonie Ki Man Fung, Independent Non-executive Director


Members Nomination Committee meeting attended/held

Steven Yung 1/1

Roger Parry 1/1Peter Cosgrove 1/1Wang Shou Zhi 1/1

Desmond Murray 1/1Leonie Ki Man Fung (appointed on 15 September 2004) 0/0

Capital Expenditure Committee

The Capital Expenditure Committee, formed in 2003, is responsible for reviewing and recommendingnew projects involving capital expenditure, higher than HK$10m to the Board for approval. Its

members include the national sales director, our CFO and a non-executive director with internationaloperational experience.

The Capital Expenditure Committee met three times in 2004 to review new projects and maderecommendations to the Board.


Composition of the Capital Expenditure Committee

Teo Hong Kiong, CFOZhang Huai Jun, National Sales DirectorJonathan Bevan, Non-executive Director


Members Capital Expenditure Committee meeting attended/held

Teo Hong Kiong 3/3Zhang Huai Jun 3/3Jonathan Bevan 3/3

Special Independent directors Committee

The Board, from time-to-time, will appoint directors to perform specific functions and report findings

to the Board for decision.

In 2004, a committee formed by two independent non-executive directors was appointed to review on-

going transactions related to maintenance services, creative services, and framework arrangement forsales and commission paid to related parties. Independent financial advisors were appointed by theBoard, to provide professional advice to this committee and the independent shareholders on thesetransactions.

Remuneration Committee

The Remuneration Committee was formed in 2001 with written Terms of Reference posted on theCompany’s web site, to formulate remuneration policy and approve remuneration for all directors andsenior management team, including grant of share options and annual review of remuneration

packages. All members are non-executive directors and the number of independent directors accountfor half of the Remuneration Committee.

The Remuneration Committee met two times in 2004 to review and approve directors’ remuneration.

Composition of the Remuneration Committee

Roger Parry, Non-executive Director (Chairman)Peter Cosgrove, Non-executive DirectorJonathan Bevan Non-executive Director

Desmond Murray, Independent Non-executive DirectorWang Shou Zhi, Independent Non-executive DirectorLeonie Ki Man Fung, Independent Non-executive Director (appointed on 15 September 2004)



Members Remuneration Committee meeting attended/held

Roger Parry 1/2Peter Cosgrove 2/2Jonathan Bevan 1/2

Desmond Murray 2/2Wang Shou Zhi 1/2Leonie Ki Man Fung (appointed on 15 September 2004) 0/0

Executive Directors’ Remuneration:

Remuneration Policy:

The primary objective is to retain and motivate executive directors by linking their compensation withperformance and measure it against corporate goals. No director can approve his or her own

remuneration.

Basic salary

The Remuneration Committee reviews annually and approves the basic salary of each executivedirector. In 2004, the Remuneration Committee engaged Watson Wyatt, a renowned compensationspecialist to carry out an external benchmarking exercise in 2004 on the directors’ salary packages to

ensure they were compensated appropriately.

Share option

The Remuneration Committee approves all grants of share options under the Company’s approvedshare option scheme for executive directors based on their individual performance and achievements ofcertain Company goals.

Please refer to pages 58 to 63 of Directors’ Report for details of directors’ stock options holdings.

Executive directors’ emoluments:

Salariesallowances and Performance Pension Total

Fees benefits in kind related bonuses contributions emoluments2004 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Executive directors:Steven Yung — 1,700 — 12 1,712Han Zi Jing — 2,691 — 12 2,703Teo Hong Kiong — 2,037 — 12 2,049Zou Nan Feng — 867 — 10 877

— 7,295 — 46 7,341


Non Executive Director and Independent non-executive directors’ Remuneration

The fees paid to the non-executive directors and the independent non-executive directors are subject toannual review and approval by the Remuneration Committee. Reimbursement is allowed for out-of-pocket expenses, upon production of invoices, incurred in connection with the performance of theirduties including attending meetings.

Non-executive directors:

Salariesallowances Pension

and benefits Performance scheme TotalFees in kind related bonus contribution emoluments

2004 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Peter Cosgrove — 1,027 — 12 1,039Mark Mays — — — — —Roger Parry 60 — — — 60Coline McConville 60 — — — 60Han Zi Dian — 22 — — 22Chin Oi Ling Lenna 120 — — — 120Tim Maunder 60 — — — 60Jonathan Bevan 60 — — — 60Zhang Huai Jun — 977 — 9 986

360 2,026 — 21 2,407

Independent non-executive directors

The fees paid to independent non-executive directors were as follows:2004

HK$’000

Leonie Ki Man Fung 35Wang Shou Zhi 120Desmond Murray 237

392

Code of Conduct and Business Ethics

We believe our corporate reputation is important to the Company’s success. All directors, executivesand employees are expected to comply with the requirements stipulated in the Company’s Code ofConduct handbook.

The directors have a duty and responsibility to act honestly and with due diligence and care in carryingout their duties. Every director has received the latest version of the Guidance on the Disclosure ofPrice Sensitive Information published by the Hong Kong Exchange and Clearing Limited, andGuidelines for Directors published by the Hong Kong Institute of Directors, and updates on ListingRules prepared by the Company lawyers.


The Company’s Code of Conduct contains the same terms set in the Model Code of Appendix 10 ofthe Listing Rules regarding directors’ securities transactions. Directors have to give prior written noticeto Chairman of the Board regarding their transactions in the Company’s shares, and approval fromChairman is needed before such transaction can be effected. Specific enquiries were made to all thedirectors on whether they had complied with the Company’s Code of Conduct during the financialyear, and all replied in the positive.

Social responsibility and sustainability

Clear Media has specific purchasing requirements observed by approved suppliers and vendors,requiring them to abide by national labor laws and health and environmental standards. Vendors arenot allowed to employ child or involuntary labor, or practice any form of discrimination. On the

environmental side, vendors are not allowed to use materials hazardous to human health and busshelters are constructed according to safety standards in compliance with relevant laws in China.

In addition, to demonstrate our commitment to the well being of the community, our networkcontributes, upon availability, around 10% of its display panels to local municipal governments to helppromote community events. The Company also participated in the “Project Hope” in 2004 to support

education of children in China.

Open Communication

Clear Media acts in good faith and in the best interest of its shareholders. The Company promotesopen communication and full disclosure of information to protect shareholder interests and tomaximize the returns enjoyed by our shareholders. Clear Media is committed to providing adequate

channels for communication between shareholders and the Company.

Communications with shareholders

Shareholders’ role and dialogue with management

Clear Media communicates with shareholders via the telephone, e-mail, annual reporting, information

on stock exchange, corporate website, general and investor meetings, either face to face or telephoneconferences. The Company welcomes enquiries from its shareholders by the same methods. TheCompany reports to its shareholders twice a year. Annual and interim results are announced as early as

possible, to keep shareholders informed of the Company’s performance and operations. Clear Mediapublishes its financial results on a semi-annual basis to enhance transparency about its performance andto give details of the latest development of the Company in a timely manner. The Company also

announced its annual results and interim results in a timely manner within the limits of 3 monthsrespectively after the end of the relevant periods.

General Meetings

The general meeting constitutes the supreme authority of the Company. It is convened by a minimum

21 days notice for annual shareholder meeting and 14 days for special shareholder meeting. The noticeconvening the meeting together with any proposals to be discussed in the general meeting, arepublished in newspapers. In addition, notice convening the general meeting, with details on the venue,

date and time as well as the agenda of the annual general meeting is sent by letter to all registeredshareholders. Shareholders who request the printed annual report receive it at the same time as theletter convening the annual general meeting, at least 21 days prior to the annual shareholder meeting.


Voting Rights

Clear Media shares are all ordinary shares with total issued outstanding shares amounting to

501,608,500. Shareholders are entitled to vote if their shares are registered in the company’s register ofshareholders before record dates published by the Company in the shareholders meeting notice. Votingnormally takes the form of a show of hands, except on the related party transaction, where poll will be

taken. In the future, the Company is considering using more the poll form in its shareholder meetings.Results of shareholder meetings are reported to the public through newspaper announcements and onthe Company’s website.

The right to vote may be exercised through proxy, who must present a written and dated instrumentappointing the proxy. The letter convening the general meeting includes a proxy form appointing the

board as proxy. This instrument appoints the board as proxy for each proposal separately. Allshareholders may present proposals for discussion or ask questions.

Shareholders’ Rights

Members, as defined in the Company’s Bye-laws, holding at the date of deposit of the requisition not

less than one-tenth of the paid up capital of the Company carrying the rights of voting at generalmeetings of the Company shall at all times have the right, by written resolution to the Board or theCompany Secretary, to require a special general meeting to be called by the Board for the transaction of

any business specified in such requisition. Such meeting shall be held within two months after thedeposit of such requisition. If within twenty-one days of such deposit the Board fails to proceed toconvene such meeting the requisitionists themselves may do so in accordance with the provisions ofSection 74(3) of the Act.

Details of last AGM & SGM

Major Items Voting

AGMTime: 10:00 a.m. – To receive and consider the audited financial statements and – passedDate: 27 May 2004 the Reports of the Directors and Auditors for the year endedVenue: 31 December 2003;Mandarin – To re-elect retiring Directors who retired by rotation and to – passedHotel, Hong Kong authorize the Board of Directors to fix Directors’ remuneration;

– To appoint auditors and to authorize the Board of Directors – passedto fix their remuneration;

– To approve the Company’s share repurchase; and – passed– To approve Company allotment, issue and dealing in – passed

additional shares and to make or grant offers.


Major Items Voting

SGMsTime: 10:20 a.m. – To grant share option to Mr. Han Zi Jing, CEO, Executive – 91.34%Date: 27 May 2004 Director of the Company. Since Mr. Han is also in control approvedVenue: of Outdoor Media China, Inc., a substantial shareholder ofMandarin the Company under the Listing Rules, thus constituting aHotel, Hong Kong connected party transaction needing approval of the shareholders.

– To amend Company Bye-laws to take into account recent – 100%changes in the Listing Rules and Companies Ordinance as well approvedas the Securities and Futures Ordinance.

Time: 10:30 a.m. – To approve the Maintenance Service Agreement and related – 98.13%Date: 27 May 2004 Continuing Connected Transactions and Propose Caps approvedVenue: on these transactions.Mandarin Hotel, – To approve the Framework Agreement and related – 100%Hong Kong Continuing Connected Transactions and Propose Caps approved

on these transactions.

Capital Structure, Public Float and Shareholder Base

As at 31 December 2004, Clear Media had 501,608,500 shares in issue, each with a par value of

HK$0.10. Market capitalization of Clear Media at 31 December, 2004, was HK$3.74 billion. Thefollowing table shows the distribution of share ownership by category and by geographical distribution.Based on the information that is publicly available to the Company and within the knowledge of theDirectors, as at the date of this report, there is sufficient public float of the Shares as required under the

Listing Rules. As ownership of Clear Media shares can be through nominees, investment funds and theCentral Clearing and Settlement System of Hong Kong, the actual ownership numbers may vary withthe ratios.

Shareholding:

By category:Clear Channel KNR Neth Antilles NV 48%Institutional Investors 50%

Retail Investors 2%

By Geographical distribution:Local 31%

Overseas 69%

Dividend Policy

The Company has not paid any dividend since its listing in December 2001. China’s market hasbrought numerous opportunities for growth and we see it in the interest of our shareholders to reinvestthe retained earnings, for generating higher returns in the future. Therefore, we do not foresee the

Company paying dividends in the near future.

Share Repurchase

The Company did not undergo any share repurchase in 2004 as there were vast growth opportunities inits businesses, generating better returns for shareholders.


Investor Relations

Clear Media regards communicating with existing and potential investors as an important activity. The

Company has set policies of open communication and full disclosure in an open, honest and timelymanner to ensure efficient communication between the Company and the investment community, onissues affecting the development of the Company.

As a result of our unwavering commitment to investor communications, Clear Media has now becomea widely covered listed company with key local and international research houses regularly publishing

research reports on the Company. In addition, Clear Media is also followed by a wide range ofinternational fund managers and buy-side analysts. The Company is dedicated to developing evencloser ties with the investment community and our senior management team is actively involved in

meetings with analysts and fund managers as well as investors conferences organized by securitieshouses in Hong Kong, Singapore, Tokyo, USA and Europe.

The Company also values the interests of retail shareholders. We believe the press acts as an effectivecommunication channel between the Company and its retail shareholders, therefore we maintainfrequent contacts with the local and regional press, disseminating news about the Company

developments in news conferences, press interviews and paid statutory announcements.

The Company also provides regular updates on the latest developments through e-newsletters to

shareholders, investors and media. Two e-newsletters were sent in 2004.

Apart from the above channels, the Company’s corporate web site also provides an effective platform in

communicating with the public and investor community with rapid and easy access to up-to-dateinformation on the Company.

Clear Media’s efforts in cultivating high investor relations standards, has won the support andrecognition of the investment community. The Company was ranked in a survey by the renowned USInstitutional Investor Research Group as the “Best Investor Relations in the Asia Media Category” in

2004. In recognition of the Company’s efforts in communication with stakeholders through highquality annual reports, the Company’s 2003 Annual Report “The Age of Consumers” won the GrandAward in Hong Kong, and the Gold Medal in the Media category at the International ARC Awards

in New York organized by the International Academy of Communications Arts and Sciences.

Key Shareholder Information

Financial calendar 2005

Results Announcement 2004 10 MarchAnnual Shareholder Meeting 27 MayInterim Results Announcement 2005 SeptemberFinancial Year End 31 December

Substantial shareholders

Clear Channel KNR Neth Antilles NV 48.1%The Capital Group Companies, Inc. 14.1%FMR Corp. 6.6%Public float 31.2%


Share Price Performance

90 million shares were traded on HKEX in 2004. The highest trading price for the share was HK$8.35on 9 November 2004 and the lowest was HK$5.35 on 29 July 2004.

(20%)

(10%)

0%

10%

20%

30%

40%

50%

60%

Dec 04Nov 04Oct 04Sep 04Aug 04Jul 04Jun 04May 04Apr 04Mar 04Feb 04Jan 04

Clear Media

HSI

(Source: Bloomberg)

Employees:

As China’s leading outdoor advertising company, Clear Media recognizes the importance of humancapital as a key asset to the Company’s growth and profitability.

As of 31 December 2004, the Group had a total of 385 employees, an increase of 90 over the sameperiod in 2003 and total employee cost amounted to 8.8% of the total turnover, as compared to 8.5%in 2003. There was a major increase in number of sales and marketing employees, which grew from 217

in 2003 to 298 in 2004. This was in line with the Company’s policy of improving sales support for ourexpanding outdoor media network in China, especially a new sales team was set up to focus on the salesand marketing work for the newly acquired bus shelters in Beijing, late 2004.

Training courses and conferences are regularly organized for employees throughout the year to improveand update their knowledge regarding their respective job requirements. A regular annual retreat for

the sales team is organized rotationally throughout the country to give sales teams the on-the-groundupdate while devising sales strategies. The senior management team also takes part in these retreats tocommunicate with employees on company strategies while employees take the opportunity to express

their opinions on various topics. To keep abreast of latest trends in international outdoor advertisingand in recognition of senior sales staff performance, selected senior sales staff were sent to attend theClear Channel Worldwide Annual Conference held last year in South Africa, where senior sales staff

from Clear Channel group worldwide met to discuss and share global outdoor advertising trends.

Employees are remunerated based on their performance, experience and prevailing industry trends,

with compensation policies and packages being reviewed on a regular basis. Bonuses are linked to boththe Group’s performance and to individual performance as recognition of value creation, usuallyaccounting for a substantial part of the sales team total take-home pay. In addition, to align individual

interests with the Group, share options are granted to senior management.

F A Q44

A

Q Why is Clear Media the choice of advertisers?

Standardization – our advertising panels all of the same size, which means that advertisers can

produce one size of posters to advertise across the network. Coverage – we’re in the 30 key cities, so

we can offer advertisers a mix-and-match approach for their messages. They can choose the cities they

want and often the locations within each city. Quality – we professionally maintain our street

furniture so that our advertising always looks its best. Innovation – we are always looking for new

ways to get our advertising messages across. Always-on – advertisers know that their messages are

visible 24/7/365.

Q How do you measure the effectiveness of Clear Media’s outdoor advertisingnetwork?

Our sales teams conduct after-sales studies for our customers. This tells us and our customers how

effective their advertising and placement are, as well as giving us a competitive edge over media

companies not offering this service. Continued support from a wide range of domestic and

international brands have proved the effectiveness of our network and contributed to our strong

business track record.

Q What is your target occupancy rate and what are your strategies for boosting

occupancy in the future?

Our target is an average occupancy rate of 60+%, where efficiency of operations will be

demonstrated. Right now, our occupancy rates are satisfactory and given the strong industry outlook

we are confident that we can achieve even higher occupancy rates in the future. There are three

factors to achieving this goal:

• Better customer service based on understanding and anticipating the needs of advertisers and

consumers;

• Effective creative products that help brands stand out in the market; and

• Flexible booking policies that allow advertisers to book for the entire year. This shows us trends in

occupancy rates so that our sales people will know where they need to focus their attention.

All in all, our focus is to optimise the three key growth drivers — panels number, average selling

price, and occupancy to maximise overall yield of our network of panels.

Q What are your key competitive advantages?

We combine local knowledge of China and the global expertise of our largest shareholder – Clear

Channel. Our management team and staff are all very experienced in the outdoor advertising

industry. Our nationwide network spans the 30 key cities of China, offering the convenience of a

one-stop shop. We have a “pioneer market player” advantage and enjoy a leading market share in the

top ten cities. And the longer we maintain our leadership role in the outdoor advertising industry, the

more we are trusted by advertisers and city governments.

Q Why is Clear Media attractive to investors?

Profitability – The first thing they see is our proven track record of seven consecutive years of

double-digit growth and continued profitability. Transparency – investors can see how we operate.

Independence – all media companies in China, except the outdoor segment, are state-owned.

Responsibility – we are committed to monitoring internal control and in 2004 we were named for

“Best Corporate Governance” in the Asia Media Category of a survey by the renowned Institutional

Investor Research Group. Because we are a publicly traded company, investors know they can get

answers to their questions before committing themselves.

A

A

A

A


Q Had Clear Media’s long-term goal changed?

Our goal today remains what the same as when we began our journey – To be the largest and most

successful outdoor media company in China. We continue to make great strides in that direction.

Q Why is Clear Media’s focus on China?

Our focus is really on profit and growth potential rather than country. But because China is the

country with the largest consumer population in the world, it makes good business sense to focus

100% of our attention on China. The pace of China’s economic growth is outstripping all other

nations and we believe this is just the beginning of a brand revolution that will have a long-term and

lasting impact on the country’s future and our own.

Q Why did Clear Media choose outdoor advertising over other media?

First, outdoor advertising is the only media that allows direct foreign investment. Secondly,

television, radio, and the print media face the demanding challenge and expense of creating content

in order to carry their advertising. For us, content is advertising. Thirdly, all other media are very

fragmented, making it difficult for advertisers to launch national campaigns. Also, although the

advertising message may reach a large number of people, only a fraction of those people will actually

be part of the target audience. Outdoor advertising on the other hand is designed to target specific

audiences, thereby making it a more effective form of advertising.

Q What is the impact of the potential acquisition of 20% shareholdings in theoperating joint venture — Hainan White Horse Advertising MediaInvestment Company Limited, if allowed by related rules and regulations inChina?

Under current arrangement, the joint venture partner provides subsidies to our maintenance costs

incurred. If we exercise the option to acquire the 20% shareholdings in the joint venture in 2006, the

abovementioned subsidies to us will be terminated. This may result in an increase in our maintenance

costs which would in turn off-set any increase in dividend income from the joint venture that may

result from our exercise of the option.

Q How would the new accounting standards and the issue of zero coupon 5 yearsconvertible bonds affect Clear Media’s operation results?

a) Clear Media will adopt the new guidelines in Hong Kong Financial Reporting Standards

starting from 2005 and the said adoption will result in the recognition of share option

expenses in the Profit and Loss Account.

b) The redemption premium of the convertible bonds will be accrued on a straight-line basis

from the date of issuance to the final date of redemption. However, if holders of the

convertible bonds choose to convert their bonds on maturity, the provision made will be

written back accordingly.

Both these items are however non-cash in nature.

A

A

A

A

A

The Power of Our Network46

We focus on the present while we plan for the future.

For the 2004 Olympics, we created China’s first electronic display

panels for bus shelters. Our innovation provided the public with

regularly updated gold medal standings of China’s Olympics

team in Athens. We expect these displays to be even more popular

with advertisers when the 2008 Olympics

comes to Beijing.

THE POWER OF OUR NETWORK46


Chairman of the Board, and Executive DirectorChairman of the Nomination Committee

Mr. Yung, aged 55, brings extensive experience from multinational

companies and the media sector. Before joining Clear Media as

Chairman, Mr. Yung was President of ACNielsen Media

International and, earlier, as Regional Managing Director for

North Asia. Prior to that, Mr. Yung also held senior management

positions with The Coca-Cola Company in the U.S. and in Asia.

Deputy Chairman and Non-Executive DirectorChairman of the Remuneration Committee

Mr. Parry, aged 51, has been the Chief Executive Officer of Clear

Channel International, which runs Clear Channel Communications’

businesses in Europe, Asia and Africa since 1998. Prior to that, he

was a management consultant at McKinsey & Co. He is also Non-

Executive Chairman of Johnston Press Plc and Future Network Plc;

Non-Executive Director of iTouch Plc, and a Trustee of

Shakespeare’s Globe. He was educated at Oxford University and

Bristol University. Since March 2004, Mr. Parry has been

Deputy Chairman of Clear Media.

Deputy Chairman and Non-Executive Director

Mr. Cosgrove, aged 51, has over 20 years’ experience in the outdoor

advertising industry. He is serving as Chairman of the Outdoor

Division of APN News & Media Limited, the largest outdoor

advertising business in Australia and New Zealand, and Buspak

Advertising (Hong Kong) Limited. For the past ten years, Mr.

Cosgrove has been a director of Independent News & Media Plc, the

largest newspaper group in Ireland, South Africa and New Zealand. In

2004, Mr. Cosgrove was appointed as a

director of APN News & Media Limited, a company

listed on the Australian Stock Exchange.

B I O G R A P H I E S O F D I R E C T O R S

48 B I O G R A P H I E S O F D I R E C T O R S

Chief Executive Officer and Executive Director

Mr. Han, aged 49, has been with Clear Media since 1998. Before

that, he was General Manager of Guangdong White Horse Group

Corporation, a diversified company with interests ranging from

property to medical equipment. Mr. Han was also Director of the

Hong Kong Overseas Representative Office of China Science and

Technology Association, a liaison body between the PRC

Government and the international science and technology

communities. Mr. Han has a Bachelor’s degree and graduated from a

post-graduate course at the South China Normal University. He is a

brother of Mr. Han Zi Dian.

Chief Financial Officer and Executive Director

Mr. Teo, aged 40, joined Clear Media in 1999 from

PricewaterhouseCoopers in Singapore and Beijing, where he held

senior positions. He graduated from the National University of

Singapore and is a Certified Public Accountant in Singapore.

Director of Business Development and Executive Director

Mr. Zou, aged 52, has been Head of the Business Development

Department of Clear Media since 1999. Before that, he was the

Deputy General Manager of Guangdong White Horse Group

Corporation. Mr. Zou graduated from the Guangdong Shaoguan

Education College.


Non-Executive Director

Mr. Mays, aged 41, is the President and Chief Executive Officer of Clear

Channel Communications Inc., a global leader in the out-of-home

advertising industry with presence in over 60 countries around the world.

In addition to his executive role, Mr. Mays is active in a variety of

professional and civil activities. He has taken a leadership role with the

Greater San Antonio Chamber of Commerce and Junior Achievement San

Antonio Chapter. Nationally, he has served as a Director on the Radio

Board of the National Association of Broadcasters. Mr. Mays holds a B.A.

in Economics and Mathematics from Vanderbilt University and an

M.B.A. from Columbia University.


Mr. Bevan, aged 33, is Chief Operating Officer of Clear Channel

International, which runs Clear Channel Communications’

businesses in Europe, Asia and Africa. Prior to joining Clear

Channel in 1998, he worked in Coopers & Lybrand (now

PricewaterhouseCoopers) and trained as a Chartered Accountant. He

graduated in Economics and Accounting from Bristol University in

the United Kingdom.


Mr. Han, aged 41, is one of the founders of the bus shelter

advertising business acquired by Hainan White Horse Advertising

Media Investment Company Limited in April 1998. He is also the

General Manager of White Horse Advertising, one of China’s leading

domestic advertising agencies, and is an honorary lecturer at the

Design Faculty of the Guangzhou Art College. He has 16 years’

experience in the advertising industry and was voted by News

Weekly as one of the “Top 10 Advertising Persons from 1979-1999”

in China. Mr. Han is the Vice Chairman of the China International

Advertising Association. He graduated from the Design Faculty of

Guangzhou Arts College. He is the brother of Mr. Han Zi Jing.

50 B I O G R A P H I E S O F D I R E C T O R S

Independent Non-Executive Director

Chairman of the Audit Committee

Mr. Murray, aged 50, brings years of experience in audit and corporate

advisory. He was an audit partner in the PricewaterhouseCoopers

Hong Kong, most recently focused on internal auditing and corporate

governance. Mr. Murray has extensive experience in advising boards

and audit committees of companies listed in Hong Kong, China, as

well as throughout the region.


Mr. Wang, aged 58, has over 20 years experience in researching

design history and has been a professor in the Department of Liberal

Arts & Sciences in Art Center College of Design in Pasadena,

California, since 1998. He has acted as Chief Advisor to China’s

Industrial Design Association, China’s National Advertising

Association and the National Graphic Design Association. He

obtained his post-graduate degree from the Graduate School of

Wuhan University.


Ms. Ki, aged 57, has been appointed as Independent Non-executive

Director in September 2004. Ms. Ki has over 30 years of experience

in integrated communication and marketing services. She was the

Founder and Chairman of Grey Hong Kong Ltd. and Grey China

Advertising Ltd. Currently, Ms. Ki also serves as a Managing

Director of New World China Enterprises Projects Ltd. and is a

Non-executive Director of Kunming New World First Bus Services

Ltd. in the PRC. She is a Council Member of the Open University

of Hong Kong, as well as a member of the Consultative Committee

of the Yunnan Province in the PRC.

R E P O RT O F T H E D I R E C T O R S 51

The directors of Clear Media Limited (the “Company”) are pleased to present their report together with the audited financial

statements of the Company and its subsidiaries (collectively referred to as the “Group”) for the year ended 31 December 2004.

Principal Activities

The principal activity of the Company is investment holding. Details of the principal activities of the subsidiaries are set out in

note 14 to the financial statements. There were no significant changes in the nature of the Group’s principal activities during the

year.

Results and Dividends

The Group’s profit for the year ended 31 December 2004 and the state of affairs of the Company and the Group at that date are

set out in the financial statements on pages 67 to 97.

The directors do not recommend the payment of any dividend in respect of the year.

Use of Proceeds from the Company’s Initial Public Offering

Upon the listing of the Company’s shares on the Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 19 December

2001 and the subsequent issue of shares on 11 January 2002, the proceeds, after the netting of related expenses paid and

payable, were approximately HK$648 million and HK$9 million, respectively. As at 1 January 2004, a total amount of approximately

HK$540 million was utilised. For the year ended 31 December 2004, the remaining approximately HK$117 million was fully

utilised to finance further development of the Group’s bus shelters.

Summary Financial Information

The following is a summary of the published combined results and of the assets, liabilities and minority interests of the Group

prepared on the basis set out in the note below:

Year ended 31 December

2004 2003 2002 2001 2000

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

RESULTS

Turnover 538,434 488,175 426,916 355,004 260,038

Profit before tax 119,131 103,736 87,575 70,843 46,318

Tax (13,735) (13,502) (8,772) (6,579) (2,433)

Minority interests (10,268) (8,450) (7,697) (5,358) (2,195)

Net profit from ordinary

activities attributable

to shareholders 95,128 81,784 71,106 58,906 41,690

R E P O RT O F T H E D I R E C T O R S52

Summary Financial Information (Continued)

2004 2003 2002 2001 2000

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

ASSETS, LIABILITIES AND

MINORITY INTERESTS

Non-current assets 1,197,085 913,222 915,498 707,419 477,902

Current assets 759,088 710,832 609,554 1,139,174 403,779

Current liabilities (251,779) (325,715) (299,270) (700,562) (515,494)

Non-current liabilities (314,400) — (2,936) (2,936) (2,433)

Minority interests (5,221) (9,966) (13,096) (13,297) (8,776)

1,384,773 1,288,373 1,209,750 1,129,798 354,978

Note: The summary of the combined results of the Group for the year ended 31 December 2000 and the combined balance sheets of the Group asat 31 December 2000 has been extracted from the Company’s prospectus dated 10 December 2001. The results and of the assets, liabilitiesand minority interests of the Group for the years ended 31 December 2001, 2002, 2003 and 2004 are extracted from the published auditedfinancial statements and presented on the basis set out in note 3 to the financial statements.

Fixed Assets and Concession Rights

Details of movements in the fixed assets and concession rights of the Group for the year ended 31 December 2004 are set out in

notes 13 and 15 to the financial statements respectively.

Share Capital and Share Options

There were no movements in either the Company’s authorised or issued share capital during the year. Details of movements in

the Company’s share options for the year ended 31 December 2004, together with the reasons therefor, and details of the

Company’s share option schemes are set out in note 24 to the financial statements.

Reserves

Details of movements in the reserves of the Company and the Group during the year are set out in note 25 to the financial

statements.

Distributable Reserves

As at 31 December 2004, the Company’s share premium account, contributed surplus and retained profits accounts available

for cash distribution and/or distribution in specie amounted to HK$1,101,798,000 (2003: HK$1,099,596,000). In accordance

with the Bermuda Companies Act 1981, the Company’s contributed surplus may be distributed in certain circumstances.

Pre-emptive Rights

There are no provisions for pre-emptive rights under the Company’s bye-laws or the laws of Bermuda, being the jurisdiction in

which the Company was incorporated, which would oblige the Company to offer new shares on a pro rata basis to existing

shareholders.


Purchase, Redemption or Sale of Listed Securities of the Company

The Company’s shares were listed on the Stock Exchange on 19 December 2001. Neither the Company, nor any of its subsidiaries,

purchased, redeemed or sold any of the Company’s listed securities during the year and up to the date of this report.

During the financial year ended 31 December 2004, there was an issue of zero coupon Convertible Bonds due 2009 in the

aggregate principal amount of HK$312,000,000 (the “Bonds”) by the Company. Each Bond is convertible, at the option of the

holder on and after 26 November 2004 up to and including 28 September 2009 into fully paid ordinary shares with a par value

of HK$0.10 each in the Company at an initial conversion price of HK$9.585.

Charitable Contributions

During the year, the Group did not make any charitable contributions (2003: Nil).

Major Advertisers and Suppliers

Sales to the Group’s five largest customers accounted for less than 30% of the Group’s turnover for the year. Payment to the

Group’s five largest suppliers who provide goods and services specific to the Group’s businesses and which are required on a

regular basis to enable the Group to conduct its business accounted for less than 30% of the Group’s total payment to suppliers

for the year.

None of the directors or any of their associates, or any shareholders (which, to the best knowledge of the directors, own more

than 5% of the Company’s issued share capital) had any beneficial interest in the Group’s five largest advertisers and/or suppliers.

Connected Transactions

The Group entered into the following continuing connected transactions during the year ended 31 December 2004:

(a) On 30 November 2001, the Group entered into a Framework Agreement (the “Framework Maintenance Agreement”)

with Hainan White Horse Advertising Company Limited (“Hainan White Horse”), a company established in the People’s

Republic of China (the “PRC”) with a 20% shareholding in one of the Group’s subsidiaries, Hainan White Horse

Advertising Media Investment Company Limited (the “WHA Joint Venture”) and maintenance services agreements

(the “Maintenance Services Agreements”) with 24 companies (collectively referred to as the “White Horse Companies”)

to outsource the provision of maintenance and other related services.

The White Horse Companies are connected persons of the Company due to the fact that one of the directors of the

Company, Mr. Han Zi Dian, can exercise, or control the exercise of, over 30%. of the voting power at general meetings

or is able to indirectly exercise influence over the management of such White Horse Companies.

Under the Framework Agreement, Hainan White Horse has agreed to procure the White Horse Companies to perform

cleaning, maintenance and other related services to the WHA Joint Venture. The Maintenance Services Agreements are

for a fixed term of 10 years.


Connected Transactions (Continued)

(a) (Continued)

In order to comply with the continuing connected transactions provisions of the Rules Governing the Listing of Securities

on the Stock Exchange (the “Listing Rules”), the Maintenance Services Agreements were terminated on 11 May 2004.

On the same day, the WHA Joint Venture entered into new maintenance services agreements with the White Horse

Companies on substantially the same terms as the old agreements for a fixed term of three years. Pursuant to the new

maintenance services agreements, the WHA Joint Venture continues to outsource to White Horse Companies the provision

of maintenance and the related services, in respect of bus shelters operated by the WHA Joint Venture, in 15 cities in the

PRC. The maintenance fees payable consist of a pre-determined base cost and an incentive payment which is based on

the Group’s discretion and awarded to those White Horse Companies that meet certain quality and performance criteria

set by the WHA Joint Venture.

(b) A portion of the advertising revenue generated by the WHA Joint Venture was booked through Guangdong White

Horse Advertising Company Limited (“GWH”). GWH is a connected person of the Company because one of the

directors of the Company, Mr. Han Zi Dian, is able to exercise influence over the management and day-to-day operations

as director and general manager of GWH and controls the composition of a majority of the board of directors of GWH

from an indirect interest of 14.2% in GWH. In 2001, the WHA Joint Venture and GWH entered into an agreement

which documented an arrangement between the parties relating to advertising commission which has been in place

since January 1999 and under which GWH would be entitled to agency commission at a standard rate of 15%. Under

this agreement, notwithstanding the terms and conditions of the advertising agency agreements between them, to the

extent that GWH does not settle the amounts due from it relating to any advertising agency agreements within 12

months, GWH would not be entitled to retain any agency commission.

On 11 May 2004, the WHA Joint Venture and GWH entered into a Framework Agreement (the “Commission Framework

Agreement”), which formalised the advertising commission arrangement between both parties.

(c) On 23 April 2004, WHA Joint Venture and GWH entered into a creative services agreement pursuant to which GWH

agreed to provide to the WHA Joint Venture creative design services for posters, sales and marketing materials and

company profiles for a consideration of approximately RMB3,000,000 (equivalent to approximately HK$2,825,000),

such consideration represented approximately 0.52% of the Group’s revenues for the year ended 31 December 2004.

Under the agreement, WHA Joint Venture shall pay to GWH the fees for such services on or before the 25th day of each

calendar month.

The independent non-executive directors confirmed that all the connected transactions:

(a) had been entered into and the agreements governing those transactions were entered into by the Group in the ordinary

and usual course of business;

(b) had been conducted either (i) on normal commercial terms (which expression shall be applied by reference to transactions

of a similar nature and to be made by similar entities); or (ii) if there are not sufficient comparable transactions to judge

whether they are on normal commercial terms, on terms no less favourable than terms available to or from independent

third parties, as appropriate; and

(c) had been entered into either (i) in accordance with the relevant agreements governing them on terms that are fair and

reasonable and in the interests of the Group’s shareholders as a whole; or (ii) (where there are no such agreements) on

terms no less favourable than those available to or from independent third parties, as appropriate.



The independent non-executive directors further confirmed that:

(a) the maintenance fees payable by the Group to the White Horse Companies in relation to the Maintenance Services

Agreements did not exceed HK$18 million; and

(b) the value of sales from GWH and the advertising commission payable by the Group to GWH in relation to the advertising

commission arrangement did not exceed HK$100 million and HK$15 million, respectively.

The auditors of the Group have reviewed the connected transactions and confirmed to the directors that:

(a) the transactions have received the approval of the board of directors;

(b) the transactions were entered into in accordance with the pricing policies as stated in the Company’s financial statements;

(c) the transactions were entered into in accordance with the relevant agreements governing those transactions or if there

are no such agreements, on terms no less favourable than those available to or from independent third parties; and

(d) have not exceeded the caps set out in the respective paragraphs above.

The Group also had the following connected transactions during the year ended 31 December 2001:

(a) Trademark Licence Agreement

(i) The WHA Joint Venture entered into a Trademark Licence Agreement with Guangdong White Horse Development

Parent Company (“Guangdong White Horse”) dated 30 November 2001 whereby Guangdong White Horse

agreed to grant to the WHA Joint Venture a licence to use the “White Horse” trademark in whole or in part or

to display any patterns, words, logos or marks of the trademark for outdoor advertising in the PRC. Provided

that Outdoor Media China Inc. (“OMC”), a shareholder of the Company and an international company incorporated

under the laws of Western Samoa, and/or Mr. Han Zi Jing, a director of the Company and his associates has at

least a 10% direct or indirect interest in the Company, the licence shall be on an exclusive basis and Guangdong

White Horse will not have any termination rights. Upon OMC and/or its associates reducing its/their interests

to less than a 10% direct or indirect interest in the Company, the licence will become non-exclusive and be

limited to a period of five years starting from the date OMC and/or Mr. Han Zi Jing and his associates cease to

hold at least a 10% direct or indirect interest in the Company. The licence is renewable at the option of Guangdong

White Horse at the expiry of the licence. The grant of the licence was for RMB1.00 but otherwise was royalty-

free.

On 1 December 2004, Guangdong White Horse entered into an Addendum to the Trademark Licence Agreement

agreeing to lower the terms to 1% direct or indirect interest in the Company with all other terms and conditions

remaining unchanged.

(ii) The WHA Joint Venture entered into a Trademark Licence Agreement and a Transfer Agreement with GWH

dated 30 November 2001 whereby GWH assigns the “Feng Shen Bang”, “Qing Tian Bang” and “Ming Deng

Bang” trademarks to the WHA Joint Venture. The annual licence fee is RMB1.00. The agreement will remain in

force until all the trademarks are registered in the name of the WHA Joint Venture.



(a) Trademark Licence Agreement (Continued)

(iii) The Company entered into two Trademark Licence Agreements with Clear Channel Communications, Inc. and

Clear Channel International Limited both on 28 November 2001 whereby the Company and members of the

Group are granted the licence to use the “Adshel” and “Clear Channel” names, logos, symbols, emblems, insignia

and other identifying materials for use in the outdoor advertising business in the PRC. The licence is for a term

of five years. Upon the expiry of the licence, it is renewable at the option of Clear Channel Communications,

Inc. and Clear Channel International Limited. The licence was granted for a consideration of HK$1.00.

(b) Option agreement

On 30 November 2001, China Outdoor Media Investment (Hong Kong) Company Limited (“China Outdoor Media

(HK)”) and Hainan White Horse entered into an option agreement which would provide China Outdoor Media (HK)

an option to purchase the whole or part of Hainan White Horse’s 20% interest in the WHA Joint Venture. The option

may only be exercised when PRC laws and regulations permit China Outdoor Media (HK)’s shareholding in the WHA

Joint Venture to be higher than 80%. The price to be paid on the exercise of the option is RMB5,000,000 for the entire

20% interest or a proportionate amount if the option is exercised in respect of a smaller percentage interest in the WHA

Joint Venture. The agreement is for a term of 30 years.

Please refer to note 30 to the financial statements for a summary of the connected transactions.

Directors

The directors of the Company during the year were:

Executive directors:

Steven Yung (Chairman)

Han Zi Jing (CEO)

Teo Hong Kiong

Zou Nan Feng

Non-executive directors:

Peter Cosgrove

Mark Mays

Roger Parry

Jonathan Bevan

Han Zi Dian

Chin Oi Ling Lenna (alternate director to Mark Mays)

Tim Maunder (alternate director to Roger Parry)

Coline McConville (alternate director to Jonathan Bevan, resigned on 26 January 2005)

Zhang Huai Jun (alternate director to Han Zi Dian)

Independent non-executive directors:

Desmond Murray

Leonie Ki Man Fung (appointed on 15 September 2004)

Wang Shou Zhi


Directors (Continued)

On 26 January 2005, Ms. Coline McConville resigned as an alternate to Mr. Jonathan Bevan, a non-executive director of the

Company.

In accordance with clause 87 of the Company’s bye-laws, one-third of the directors (other than the Chairman and CEO) will

retire by rotation and, being eligible, will offer themselves for re-election at the forthcoming annual general meeting.

The directors of the Company, including the independent non-executive directors, but excluding the chairman of the board of

directors and chief executive of the Company, are subject to retirement by rotation and re-election in accordance with the

provisions of the Company’s bye-laws.

Directors’ and Senior Management’s Biographies

Biographical details of the directors of the Company and the senior management of the Group are set out on pages 47 to 50 of

the annual report.

Directors’ Service Contracts

Each of the Executive Directors entered into a service agreement with the Company for an initial term of three years commencing

30 November 2001, which on expiry continues until terminated by not less than three moths ’ notice in writing served by either

party to the other.

Apart from the foregoing, no director proposed for re-election at the forthcoming annual general meeting has a service contract

with the Company which is not determinable by the Company within one year without payment of compensation, other than

statutory compensation.

Directors’ Interests in Contracts

No director had a significant beneficial interest, either directly or indirectly, in any contract of significance to the business of the

Group to which the Company, or any of its subsidiaries was a party during or at the end of the year.


Directors’ and Chief Executive’s Interests and Short Positions in Shares

At 31 December 2004 the interests and short positions of the directors, the chief executive or their associates in the share capital

of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the

“SFO”)), as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise

notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed

Issuers, were as follows:

Long positions in ordinary shares of the Company as at 31 December 2004:

Number of shares held, capacity and nature of interest

Through Percentage of

Directly spouse or Through the Company’s

beneficially minor controlled Beneficiary issued

Name of director owned children corporation of a trust Total share capital

Han Zi Jing — — 15,090,000 — 15,090,000 3.0%

Note: The 15,090,000 shares are held by Outdoor Media China, Inc. (“OMC”), a company incorporated in Western Samoa of Offshore Chambers.As at 31 December 2004, Mr. Han Zi Jing held approximately 98% of the issued share capital of Golden Profits Consultants Limited, whichis the beneficial holder of 100% of the shares in OMC. The effective interest of Mr. Han Zi Jing in OMC is therefore 98%.

Save as disclosed above, none of the directors and chief executive had registered an interest or short position in the shares,

underlying shares of the Company or any of its associated corporations that was required to be recorded pursuant to Section

352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities

Transactions by Directors of Listed Issuers.

Directors’ Rights to Acquire Shares

Apart from as disclosed under the headings “Directors’ and chief executive’s interests and short positions in shares” above and in

the “Share option schemes” below, at no time during the year were rights to acquire benefits by means of the acquisition of

shares in the Company granted to any director, or their respective spouse or minor children, or were any such rights exercised by

them; nor was the Company, or any of its subsidiaries a party to any arrangement to enable the directors to acquire such rights

in any other body corporate.

Share Option Schemes

The Company operates a share option scheme (the “Scheme”) for the purpose of providing incentives and rewards to eligible

participants who contribute to the Group’s operations. Under the Scheme, the directors may, at their discretion, invite any

employees, directors or consultants of any company in the Group to acquire options. The Scheme became effective on 28

November 2001 and, unless otherwise cancelled or amended, will remain in force for seven years from that date.

The maximum number of shares in respect of which options may be granted under the Scheme and under any other share

option scheme of the Company pursuant to which options may from time to time be granted to directors, consultants, and/or

employees of any company in the Group, shall initially not exceed 10% of the relevant class of securities of the Company in

issue excluding, for this purpose, shares issued on the exercise of options under the Scheme and any other share option scheme

of the Company. Upon the grant of options for shares up to 10% of the relevant class of securities of the Company and subject

to the approval of the shareholders of the Company in general meetings, the maximum number of shares to be issued under this

scheme when aggregated with securities to be issued under any other share option scheme of the Group, may be increased by the

board of directors provided that the number of shares to be issued upon the exercise of all outstanding options does not exceed

30% of the relevant class of securities in issue from time to time.


Share Option Schemes (Continued)

No option may be granted to any person such that the total number of shares issued and to be issued upon the exercise of

options granted and to be granted to such person in any 12-month period up to the date of the latest grant exceeds 1% of the

issued share capital of the Company from time to time.

An option may be exercised in accordance with the terms of the Scheme at any time during the option period (and not more

than seven years after the date of grant). The option period will be determined by the board of directors and communicated to

each grantee. The board of directors may provide restrictions on the period during which the options may be exercised. There

are no performance targets which must be achieved before any of the options can be exercised except for the share options

granted on 28 May 2003 and 19 November 2003. For the share options granted on 28 May 2003 and 19 November 2003, the

options will not become vested at the end of the third year after the grant date unless the Company has achieved an average

annual earnings per share growth of 5% each year for the first three full financial years after the grant date. However, the board

of directors retains discretion to accelerate the vesting of fixed term options in the event that certain performance targets are

met.

The subscription price for the Company’s shares under the Scheme will be a price determined by the board of directors and

notified to each grantee. The subscription price will be the highest of: (i) the nominal value of a share; (ii) the closing price of

the shares as stated in the Stock Exchange’s daily quotation sheet on the date of grant, which must be a business day; and (iii) the

average closing price of the shares as stated in the Stock Exchange’s daily quotation sheets for the five business days immediately

preceding the date of grant. An option shall be deemed to have been granted and accepted by an eligible participant (as defined

in the Scheme) and to have taken effect when the acceptance form as described in the Scheme is completed, signed and returned

by the grantee with a remittance in favour of the Company of HK$1.00 by way of consideration for the grant.

As at 31 December 2004, the number of shares issuable under share options granted under the Scheme was 24,016,000, which

represented approximately 4.8% of the Company’s shares in issue as at that date. The maximum number of shares issuable

under share options may be granted to each eligible participant in the Scheme within any 12-month period up to the date of the

latest grant, is limited to 1% of the shares of the Company in issue at any time. Any further grant of share options in excess of

this limit is subject to shareholders’ approval in a general meeting.

On 28 November 2001, the Company also adopted a pre-IPO share option scheme (the “Pre-IPO share option scheme”)

conditionally as described in the Company’s prospectus dated 10 December 2001. The principal terms of the Pre-IPO share

option scheme are substantially the same as the terms of the Scheme except that:

(a) Employees, directors and consultants of the Group who have contributed substantially to the growth of the Group and

to the initial public offering or full-time employees and directors of the Group are eligible to participate in the Pre-IPO

share option scheme;

(b) The subscription price for the shares under the Pre-IPO share option scheme shall be equal to the offer price; and

(c) The Pre-IPO share option scheme will remain in force for a period commencing on the date on which the Pre-IPO share

option scheme is conditionally adopted by the shareholders of the Company and ending on the day immediately prior

to 19 December 2001, after which period no further options will be granted but in all other respects the provisions of

the Pre-IPO share option scheme shall remain in full force and effect.



As at 31 December 2004, the number of shares issuable under share options granted under the Pre-IPO share option scheme

was 18,034,000, which represented approximately 3.6% of the Company’s shares in issue as at that date. The maximum number

of shares issuable under share options to each eligible participant in the Pre-IPO share option scheme within any 12-month

period is limited to 1% of the shares of the Company in issue at any time. Any further grant of share options in excess of this

limit is subject to shareholders’ approval in a general meeting.

The share options granted under the Pre-IPO share option scheme at the beginning of the year and the Scheme during the year

for a consideration of HK$1.00 per grant are set out below:

Price of the

Company’s

Number of share options shares ***

At the Date of At

Name or beginning Granted Exercised Lapsed Cancelled At the grant of Exercise At grant exercise

category of Type of share of during during during during end of share Exercise price per date of date of

participant option scheme the year the year the year the year the year the year options * period share ** options options

HK$ HK$ HK$

DirectorSteven Yung Pre-IPO share 2,500,000 — — — — 2,500,000 28/11/2001 29/11/2004 to 5.89 — —

option scheme 28/11/2008

The Scheme 1,250,000 — — — — 1,250,000 29/06/2002 30/6/2005 to 5.51 5.3 —

29/06/2009

The Scheme 1,400,000 — — — — 1,400,000 28/05/2003 29/05/2006 to 3.51 3.5 —

27/05/2010

5,150,000 — — — — 5,150,000

Peter Cosgrove Pre-IPO share 1,250,000 — — — — 1,250,000 28/11/2001 29/11/2004 to 5.89 — —


The Scheme 625,000 — — — — 625,000 29/06/2002 30/06/2005 to 5.51 5.3 —

29/06/2009

The Scheme 704,000 — — — — 704,000 28/05/2003 29/05/2006 to 3.51 3.5 —

27/05/2010

2,579,000 — — — — 2,579,000



Price of the

Company’s


At the Date of At

Name or beginning Granted Exercised Lapsed Cancelled At the grant of Exercise At grant exercise

category of Type of share of during during during during end of share Exercise price per date of date of

participant option scheme the year the year the year the year the year the year options * period share ** options options

HK$ HK$ HK$

Director (Continued)

Han Zi Jing Pre-IPO share 3,334,000 — — — — 3,334,000 28/11/2001 29/11/2004 to 5.89 — —


The Scheme 1,666,000 — — — — 1,666,000 29/06/2002 30/06/2005 to 5.51 5.3 —

29/06/2009

The Scheme 1,900,000 — — — — 1,900,000 28/05/2003 29/05/2006 to 3.51 3.5 —

27/05/2010

The Scheme 1,000,000 — — — — 1,000,000 19/11/2003 20/11/2006 to 5.35 5.35 —

19/11/2010

7,900,000 — — — — 7,900,000

Teo Hong Kiong Pre-IPO share 1,200,000 — — — — 1,200,000 28/11/2001 29/11/2004 to 5.89 — —


The Scheme 600,000 — — — — 600,000 29/06/2002 30/06/2005 to 5.51 5.3 —

29/06/2009

The Scheme 670,000 — — — — 670,000 28/05/2003 29/05/2006 to 3.51 3.5 —

27/05/2010

2,470,000 — — — — 2,470,000

Zou Nan Feng Pre-IPO share 800,000 — — — — 800,000 28/11/2001 29/11/2004 to 5.89 — —


The Scheme 400,000 — — — — 400,000 29/06/2002 30/06/2005 to 5.51 5.3 —

29/06/2009

The Scheme 666,000 — — — — 666,000 28/05/2003 29/05/2006 to 3.51 3.5 —

27/05/2010

1,866,000 — — — — 1,866,000



Price of theCompany’s


At the Date of AtName or beginning Granted Exercised Lapsed Cancelled At the grant of Exercise At grant exercisecategory of Type of share of during during during during end of share Exercise price per date of date ofparticipant option scheme the year the year the year the year the year the year options * period share ** options options

HK$ HK$ HK$

Director (Continued)Zhang Huai Jun Pre-IPO share 350,000 — — — — 350,000 28/11/2001 29/11/2004 to 5.89 — —


The Scheme 175,000 — — — — 175,000 29/06/2002 30/06/2005 to 5.51 5.3 —29/06/2009

The Scheme 666,000 — — — — 666,000 28/05/2003 29/05/2006 to 3.51 3.5 —27/05/2010

1,191,000 — — — — 1,191,000

OthersMembers of Pre-IPO share 8,600,000 — — — — 8,600,000 28/11/2001 29/11/2004 to 5.89 — —

senior option scheme 28/11/2008managementand otheremployees ofthe Group

The Scheme 4,300,000 — — — — 4,300,000 29/06/2002 30/06/2005 to 5.51 5.3 —29/06/2009

The Scheme 5,994,000 — — — — 5,994,000 28/05/2003 29/05/2006 to 3.51 3.5 —27/05/2010

The Scheme 2,000,000 — — — — 2,000,000 19/11/2003 20/11/2006 to 5.35 5.35 —19/11/2010

20,894,000 — — — — 20,894,000

In aggregate Pre-IPO share 18,034,000 — — — — 18,034,000option scheme

The Scheme 9,016,000 — — — — 9,016,000

The Scheme 12,000,000 — — — — 12,000,000

The Scheme 3,000,000 — — — — 3,000,000

42,050,000 — — — — 42,050,000



* The vesting period of the share options is from the date of the grant until the commencement of the exercise period except:

(i) For the share options granted under the Pre-IPO share option scheme, 33.3% of the options granted will vest at the end of the firstfull financial year (the “Period”) after the grant date if the Company achieves a compounded 20% growth in its earnings beforeinterest, tax, depreciation, and amortisation (the “EBITDA”) during the Period. The remaining 66.7% of the options granted willvest at the end of the second full financial year after the grant date if the Company achieves a compounded annual growth rate of20% in its EBITDA during the first two full financial years after the grant date.

(ii) For the share options granted on 28 May 2003 and 19 November 2003, the options will not become vested at the end of the thirdyear after the grant date unless the Company has achieved an average annual earnings per share growth of 5% each year for the firstthree full financial years after the grant date.

** The exercise price of the share options is subject to adjustment in the case of rights or bonus issues, or other similar changes in the Company’sshare capital.

*** The price of the Company’s shares disclosed as at the date of the grant of the share options is the Stock Exchange closing price on the tradingday immediately prior to the date of the grant of the options. The price of the Company’s shares disclosed as at the date of the exercise of theshare options is the weighted average of the Stock Exchange closing prices over all of the exercises of options within the disclosure line.

The financial impact of the share options granted is not recorded in the Company’s or the Group’s balance sheet until such time

as the options are exercised, and no charge is recorded in the profit and loss account or balance sheet for their cost. Upon the

exercise of the share options, the resulting shares issued are recorded by the Company as additional share capital at the nominal

value of the shares, and the excess of the exercise price per share over the nominal value of the shares is recorded by the Company

in the share premium account. Options which are cancelled prior to their exercise date are deleted from the register of outstanding

options.

During the year, no share options were granted by the Company.

Apart from the foregoing, at no time during the year ended 31 December 2004 was the Company, or any of its subsidiaries, a

party to any arrangement to enable the directors or any of their respective spouse or minor children to acquire benefits by means

of the acquisition of shares in or debentures of the Company or any other body corporate.


Substantial Shareholders’ and Other Persons’ Interests and Short Positions in Shares and

Underlying Shares

As at 31 December 2004, the following interests and short positions of 5% or more in the issued share capital and share options

of the Company were recorded in the register of interests required to be kept by the Company pursuant to Section 336 of the

SFO:

Long positions:

Percentage of

the Company’s

Number of issued share

Name Note shares held capital

Clear Channel KNR Neth Antilles NV (a) 241,337,500 48.1%

The Capital Group Companies, Inc. 70,659,000 14.1%

FMR Corp 33,098,600 6.6%

Note:

(a) The Company has been informed by its ultimate controlling shareholder, Clear Channel Communications, Inc. (“CCI”), a corporationincorporated under the laws of the State of Texas in the United States of America, that as a part of the restructuring of CCI and certain of itsinternational subsidiaries, the immediate controlling shareholder of the Company, Clear Channel Outdoor, Inc. (“CCO”), has transferred itsentire shareholding interest in the Company, comprising 241,337,500 ordinary shares of HK$0.10 each in the Company and representingapproximately 48.1% of the voting rights of the Company, to Clear Channel KNR Neth Antilles NV (“CCKNR”), a corporation incorporatedunder the laws of the Netherlands Antilles and a wholly owned subsidiary of CCI.

CCO and CCKNR are both ultimately wholly owned by CCI. There was no change in the ultimate beneficial ownership of the approximately48.1% shareholding interest in the Company as a result of the restructuring. Furthermore, there was no change to the Company’s business.

Save as disclosed above, no person or corporation, other than the directors and chief executive of the Company, whose interests

are set out in the section “Directors’ and chief executive’s interests and short positions in the shares above, had registered an

interest of short position in the shares or underlying shares of the Company that was required to be recorded pursuant to

Section 336 of the SFO.

Post Balance Sheet Event

Details of the significant post balance sheet event of the Group are set out in note 29 to the financial statements.

Code of Best Practice

In the opinion of the directors, the Company complied with the Code of Best Practice (the “Code”), as set out in Appendix 14

of the Listing Rules throughout the accounting period covered by the annual report, except that the independent non-executive

directors of the Company are not appointed for a specific term as required by paragraph 7 of the Code, but are subject to

retirement by rotation and re-election at the annual general meeting of the Company in accordance with the Company’s bye-

laws.

The Company will also adopt a Code of Conduct regarding securities transactions by directors and appoint an additional

independent non-executive director in due course in order to be in compliance with the Amendments to the Listing Rules

Relating to Corporate Governance Issues and Consultation Conclusion on Proposed Amendments to the Listing Rules Relating

to Initial Listing Criteria and continuing Listing Obligations released by the Stock Exchange.


Model Code for Securities Transactions

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules (the

“Model Code”) as the Company’s code of conduct for dealings in securities of the Company by the directors. Based on specific

enquiry of the Company’s directors, the directors complied with the required standard set out in the Model Code, throughout

the accounting period covered by the annual report.

Material Legal Proceedings

As at 31 December 2004, the Company was not involved in any material litigation or arbitration and no material litigation or

claim was pending or threatened or made against the Company as far as the board of directors was aware of, except for the

litigation mentioned in note 28 to the financial statements.

Auditors

Ernst & Young retire and a resolution for their reappointment as auditors of the Company will be proposed at the forthcoming

annual general meeting.

On Behalf of the Board

Steven Yung

Chairman and Executive Director

Hong Kong

10 March 2005

R E P O RT O F T H E AU D I T O R S66

To the members

Clear Media Limited

(Incorporated in Bermuda with limited liability)

We have audited the financial statements on pages 67 to 97 which have been prepared in accordance with accounting principles

generally accepted in Hong Kong.

Respective Responsibilities of Directors and Auditors

The Company’s directors are responsible for the preparation of financial statements which give a true and fair view. In preparing

financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and

applied consistently. It is our responsibility to form an independent opinion, based on our audit, on those financial statements

and to report our opinion solely to you, as a body, in accordance with Section 90 of the Bermuda Companies Act 1981, and for

no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Basis of Opinion

We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified

Public Accountants. An audit includes an examination, on a test basis, of evidence relevant to the amounts and disclosures in

the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the

preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s and the

Group’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in

order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from

material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the

financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion the financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31

December 2004 and of the profit and cash flows of the Group for the year then ended and have been properly prepared in

accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

Ernst & Young

Certified Public Accountants

Hong Kong

10 March 2005

C O N S O L I D AT E D P R O F I T A N D L O S S A C C O U N TYear ended 31 December 2004

67

2004 2003Notes HK$’000 HK$’000

TURNOVER 5 538,434 488,175

Cost of sales (304,472) (282,140)

Gross profit 233,962 206,035

Other revenue 5 1,932 6,066Selling and distribution costs (51,374) (37,621)Administrative expenses (55,212) (62,615)

PROFIT FROM OPERATING ACTIVITIES 6 129,308 111,865

Finance costs 9 (10,177) (8,129)

PROFIT BEFORE TAX 119,131 103,736

Tax 10 (13,735) (13,502)

PROFIT BEFORE MINORITY INTERESTS 105,396 90,234

Minority interests (10,268) (8,450)

NET PROFIT FROM ORDINARY ACTIVITIES 11ATTRIBUTABLE TO SHAREHOLDERS 95,128 81,784

EARNINGS PER SHARE 12

Basic 18.96 cents 16.30 cents

Diluted 18.56 cents 16.26 cents

C O N S O L I D AT E D B A L A N C E S H E E T31 December 2004

68

2004 2003Notes HK$’000 HK$’000

NON-CURRENT ASSETSFixed assets 13 95,002 51,261Concession rights 15 1,087,039 861,612Deferred tax assets 23 3,671 349Other long term asset 16 11,373 —

1,197,085 913,222

CURRENT ASSETSAccounts receivable 17 195,225 167,794Prepayments, deposits and other receivables 105,405 82,185Due from a related party 18 19,807 26,174Short term investments 19 7,042 10,349Pledged time deposits 20 94,376 199,500Cash and cash equivalents 337,233 224,830

759,088 710,832

CURRENT LIABLITIESInterest-bearing bank borrowings 21 37,229 171,718Other payables and accruals 202,117 142,686Deferred income 3,723 3,147Tax payable 8,710 8,164

251,779 325,715

NET CURRENT ASSETS 507,309 385,117

TOTAL ASSETS LESS CURRENT LIABILITIES 1,704,394 1,298,339

NON-CURRENT LIABILITIESConvertible bonds 22 314,400 —

MINORITY INTERESTS 5,221 9,966

1,384,773 1,288,373

CAPITAL AND RESERVESIssued capital 24 50,161 50,161Reserves 25 1,334,612 1,238,212

1,384,773 1,288,373

Steven Yung Han Zi Jing

Director Director

C O N S O L I D AT E D S U M M A RY S TAT E M E N T O F C H A N G E S I N E QU I T YYear ended 31 December 2004

69

2004 2003Note HK$’000 HK$’000

TOTAL EQUITY

Balance at beginning of year 1,288,373 1,209,750

Exchange differences on translation ofthe financial statements of a foreign entity,and net gains and losses not recognisedin the consolidated profit and loss account 25 1,272 (3,161)

Net profit for the year from ordinary activitiesattributable to shareholders 95,128 81,784

Balance at end of year 1,384,773 1,288,373

C O N S O L I D AT E D C A S H F L OW S TAT E M E N TYear ended 31 December 2004

70

2004 2003Notes HK$’000 HK$’000

CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax 119,131 103,736Adjustments for:

Realised gain on disposal of short term investments 6 (696) —Unrealised gain on revaluation of short term investments 6 (706) (1,852)(Gain)/loss on disposal of fixed assets 6 (56) 588Depreciation of owned assets, excluding point-of-sale 6 6,228 7,193Amortisation of concession rights and depreciation of point-of-sale 6 109,048 95,703Foreign exchange (gains)/losses, net 6 (315) 587Interest on bank loans 9 7,357 8,129Amortisation of convertible bonds issue expenses 9 420 —Provision for convertible bonds redemption premium 9 2,400 —Interest income 5, 6 (1,932) (6,066)

Operating profit before working capital changes 240,879 208,018Increase in accounts receivable (27,820) (54,182)Increase in prepayments, deposits and other receivables (24,865) (27,211)Decrease in an amount due from a related party 6,367 25,243(Increase)/decrease in short term investments 4,709 (8,497)Increase in other payables and accruals 12,607 20,454Increase/(decrease) in deferred income 576 (6,060)

Cash generated from operations 212,453 157,765Interest paid (7,374) (8,072)Income taxes paid (16,511) (14,216)

Net cash from operating activities 188,568 135,477

CASH FLOWS FROM INVESTING ACTIVITIESPurchases of fixed assets, excluding point-of-sale and construction in progress 26(a) (4,134) (5,451)Proceeds from disposal of fixed assets 75 —Additions to concession rights 26(b) (345,832) (137,682)Interest received 2,569 5,876

Net cash outflow from investing activities (347,322) (137,257)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of convertible bonds 312,000 —Issue cost of convertible bonds (11,793) —New bank loans 93,635 181,102Repayment of bank loans (228,124) (161,585)(Increase)/decrease in pledged time deposits 105,124 (59,478)

Net cash inflow/(outflow) from financing activities 270,842 (39,961)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 112,088 (41,741)

Cash and cash equivalents at beginning of year 26(c) 224,830 267,158Effect of foreign exchange rate changes, net 315 (587)

CASH AND CASH EQUIVALENTS AT END OF YEAR 26(c) 337,233 224,830

B A L A N C E S H E E T31 December 2004

71

2004 2003Notes HK$’000 HK$’000

NON-CURRENT ASSETSInterests in subsidiaries 14 1,151,255 938,452Other long term asset 11,373 —

1,162,628 938,452

CURRENT ASSETSPrepayments, deposits and other receivables 7,710 4,061Cash and cash equivalents 296,156 207,263

303,866 211,324

CURRENT LIABILITIESOther payables and accruals 135 19

NET CURRENT ASSETS 303,731 211,305

NON-CURRENT LIABILITIESConvertible bonds 22 314,400 —

1,151,959 1,149,757

CAPITAL AND RESERVESIssued capital 24 50,161 50,161Reserves 25 1,101,798 1,099,596

1,151,959 1,149,757

Steven Yung Han Zi Jing

Director Director

N O T E S T O F I N A N C I A L S TAT E M E N T S31 December 2004

72

1. Corporate Information

The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

The principal activity of the Company is investment holding. Details of the principal activities of the Company’s subsidiaries

are set out in note 14 to the financial statements. There were no significant changes in the nature of the subsidiaries’

principal activities during the year.

On 21 December 2004, the Company was informed by its ultimate controlling shareholder, Clear Channel Communications,

Inc. (“CCI”), a corporation incorporated under the laws of the State of Texas in the United States of America, that as a

part of the restructuring of CCI and certain of its international subsidiaries, the immediate controlling shareholder of

the Company, Clear Channel Outdoor, Inc. (“CCO”), had transferred its entire shareholding interest in the Company,

comprising 241,337,500 ordinary shares of HK$0.10 each in the Company and representing approximately 48.1% of

the voting rights of the Company, to Clear Channel KNR Neth Antilles NV (“CCKNR”), a corporation incorporated

under the laws of the Netherlands Antilles and a wholly owned subsidiary of CCI.

CCO and CCKNR are both ultimately wholly owned by CCI. Accordingly, there was no change in the ultimate beneficial

ownership of the approximately 48.1% shareholding interest in the Company as a result of the restructuring. Furthermore,

there was no change to the Company’s business.

2. Impact of Recently Issued Hong Kong Financial Reporting Standards (“HKFRSs”)

The Hong Kong Institute of Certified Public Accountants (the “HKICPA”) has issued a number of new Hong Kong

Financial Reporting Standards and Hong Kong Accounting Standards, herein collectively referred to as the new HKFRSs,

which are generally effective for accounting periods beginning on or after 1 January 2005. The Group has not early

adopted these new HKFRSs in the financial statements for the year ended 31 December 2004.

The Group has already commenced an assessment of the impact of these new HKFRSs but is not yet in a position to

state whether these new HKFRSs would have a significant impact on its results of operations and financial position.

3. Summary of Significant Accounting Policies

Basis of preparation

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (which

also include Statements of Standard Accounting Practice (“SSAPs”) and Interpretations) issued by the HKICPA, accounting

principles generally accepted in Hong Kong and the Companies Ordinance. They have been prepared under the historical

cost convention, except for the periodic remeasurement of equity investments, as further explained below.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year

ended 31 December 2004. The results of the subsidiaries acquired or disposed of during the year are consolidated from

or to their effective dates of acquisition or disposal, respectively. All significant intercompany transactions and balances

within the Group are eliminated on consolidation.

Minority interests represent the interests of outside shareholders in the results and net assets of the Company’s subsidiaries.


3. Summary of Significant Accounting Policies (Continued)

Subsidiaries

A subsidiary is a company whose financial and operating policies the Company controls, directly or indirectly, so as to

obtain benefits from its activities.

The results of subsidiaries are included in the Company’s profit and loss account to the extent of dividends received and

receivable. The Company’s interests in subsidiaries are stated at cost less any impairment losses.

Joint venture companies

A joint venture is a company set up by contractual arrangement, whereby the Group and other parties undertake an

economic activity. The joint venture company operates as a separate entity in which the Group and the other parties

have an interest.

The joint venture agreement between the venturers stipulates the capital contributions of the joint venture parties, the

duration of the joint venture and the basis on which the assets are to be realised upon its dissolution. The profits and

losses from the joint venture company’s operations and any distributions of surplus assets are shared by the venturers,

either in proportion to their respective capital contributions, or in accordance with the terms of the joint venture agreement.

A joint venture company is treated as:

(a) a subsidiary, if the Company has unilateral control, directly or indirectly, over the joint venture company;

(b) a jointly-controlled entity, if the Company does not have unilateral control, but has joint control, directly or

indirectly, over the joint venture company;

(c) an associate, if the Company does not have unilateral or joint control, but holds, directly or indirectly, generally

not less than 20% of the joint venture company’s registered capital and is in a position to exercise significant

influence over the joint venture company; or

(d) a long term investment, if the Company holds, directly or indirectly, less than 20% of the joint venture company’s

registered capital and has neither joint control of, nor is in a position to exercise significant influence over, the

joint venture company.

Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party, or exercise

significant influence over the other party in making financial and operating decisions. Parties are also considered to be

related if they are subject to common control or common significant influence. Related parties may be individuals or

corporate entities.


74


Impairment of assets

An assessment is made at each balance sheet date of whether there is any indication of impairment of any asset, or

whether there is any indication that an impairment loss previously recognised for an asset in prior years may no longer

exist or may have decreased. If any such indication exists, the asset’s recoverable amount is estimated. An asset’s recoverable

amount is calculated as the higher of the asset’s value in use and its net selling price.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. An impairment

loss is charged to the profit and loss account in the period in which it arises, unless the asset is carried at a revalued

amount, when the impairment loss is accounted for in accordance with the relevant accounting policy for the revalued

asset.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine

the recoverable amount of an asset, however not to an amount higher than the carrying amount that would have been

determined (net of any depreciation/amortisation), had no impairment loss been recognised for the asset in prior years.

A reversal of an impairment loss is credited to the profit and loss account in the period in which it arises, unless the asset

is carried at a revalued amount, when the reversal of the impairment loss is accounted for in accordance with the relevant

accounting policy for that revalued asset.

Fixed assets and depreciation

Fixed assets are stated at cost less accumulated depreciation and any impairment losses. The cost of an asset comprises its

purchase price and any directly attributable costs of bringing the asset to its working condition and location for its

intended use. Expenditure incurred after fixed assets have been put into operation, such as repairs and maintenance, is

normally charged to the profit and loss account in the year in which it is incurred. In situations where it can be clearly

demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained

from the use of the fixed asset, the expenditure is capitalised as an additional cost of that asset.

Depreciation is calculated on the straight-line basis to write off the cost of each asset over the following estimated useful

lives:

Leasehold improvements 5 years

Furniture and equipment 5 years

Motor vehicles 5 years

Point-of-sale 10 years

The gain or loss on disposal or retirement of a fixed asset recognised in the profit and loss account is the difference

between the net sales proceeds and the carrying amount of the relevant asset.

Point-of-sale represents advertising light boxes installed in shopping malls and other public areas. Expenditure incurred

after point-of-sale has been put into operation, such as repairs and maintenance, is normally charged to the profit and

loss account in the year in which it is incurred. In situations where it can be clearly demonstrated that the expenditure

has resulted in an increase in the future economic benefits expected to be obtained from the use of point-of-sale, the

expenditure is capitalised as an additional cost of such point-of-sale.

Construction in progress is stated at cost less any impairment losses, which includes the cost of construction and other

direct costs attributable to the construction of bus shelters, unipoles and point-of-sale. No provision for depreciation is

made for construction in progress until such time as the assets are completed and put into use. Construction in progress

is transferred to concession rights or fixed assets when it is capable of producing rental income on a commercial basis.



Concession rights

Concession rights are stated at cost less accumulated amortisation and any impairment losses. Concession rights represent

the cost of acquiring operating rights for the placement of advertisements in bus shelters and unipoles in the PRC and

include any directly attributable costs of bringing bus shelters and unipoles to their present condition and location for

their intended use.

Expenditure incurred after bus shelters and unipoles have been put into operation, such as repairs and maintenance, is

normally charged to the profit and loss account in the year in which it is incurred. In situations where it can be clearly

demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained

from the use of bus shelters and unipoles, the expenditure is capitalised as an additional cost of the concession rights.

Concession rights are amortised on a straight-line and individual basis over the period of the rights, which range from 5

to 20 years. The average operating period is 10 years.

Leased assets

Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title, are

accounted for as finance leases. At the inception of a finance lease, the cost of the leased asset is capitalised at the present

value of the minimum lease payments and recorded together with the obligation, excluding the interest element, to

reflect the purchase and financing. Assets held under capitalised finance leases are included in fixed assets and depreciated

over the shorter of the lease terms and the estimated useful lives of the assets. The finance costs of such leases are charged

to the profit and loss account so as to provide a constant periodic rate of charge over the lease terms.

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as

operating leases. Where the Group is the lessor, assets leased by the Group under operating leases are included in non-

current assets and rentals receivable under the operating leases are credited to the profit and loss account on the straight-

line basis over the lease terms. Where the Group is the lessee, rentals payable under the operating leases are charged to

the profit and loss account on the straight-line basis over the lease terms.

Short term investments

Short term investments are investments in equity securities held for trading purposes and are stated at their fair values

on the basis of their quoted market prices at the balance sheet date, on an individual investment basis. The gains or

losses arising from changes in the fair value of a security are credited or charged to the profit and loss account in the

period in which they arise.

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group, and when the revenue can

be measured reliably, on the following bases:

(a) Rental revenue for outdoor advertising spaces, including point-of-sale, on a time proportion basis over the terms

of the agreements; and

(b) Interest income, on a time proportion basis taking into account the principal outstanding and the effective

interest rate applicable.


76


Deferred income

Cumulative billings in excess of revenue attributable to the current year are recorded as deferred income.

Income tax

Income tax comprises current and deferred tax. Income tax is recognised in the profit and loss account, or in equity if it

relates to items that are recognised in the same or a different period directly in equity.

Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the

tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences:

• except where the deferred tax liability arises from goodwill or the initial recognition of an asset or liability in a

transaction that is not a business combination and, at the time of the transaction, affects neither the accounting

profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in

joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is

probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carryforward of unused tax assets and unused

tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary

differences, and the carryforward of unused tax assets and unused tax losses can be utilised:

• except where the deferred tax asset relating to the deductible temporary differences arises from negative goodwill

or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the

time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests

in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary

differences will reverse in the foreseeable future and taxable profit will be available against which the temporary

differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no

longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Conversely, previously unrecognised deferred tax assets are recognised to the extent that it is probable that sufficient

taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is

realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the

balance sheet date.



Foreign currencies

Foreign currency transactions are recorded at the applicable rates of exchange ruling at the transaction dates. Monetary

assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of

exchange ruling at that date. Exchange differences are dealt with in the profit and loss account.

On consolidation, the financial statements of overseas subsidiaries are translated into Hong Kong dollars using the net

investment method. The profit and loss accounts of overseas subsidiaries are translated into Hong Kong dollars at the

weighted average exchange rates for the year. The balance sheets of overseas subsidiaries are translated into Hong Kong

dollars at the exchange rates at the balance sheet date. The resulting translation differences are included in the exchange

fluctuation reserve.

For the purpose of the consolidated cash flow statement, the cash flows of overseas subsidiaries are translated into Hong

Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas

subsidiaries which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange

rates for the year.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that

necessarily take a substantial period of time to get ready for their intended use, are capitalised as part of the cost of those

assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use.

Discounts or premiums relating to borrowings, ancillary costs incurred in connection with arranging borrowings and

exchange differences arising from foreign currency borrowings, to the extent that they are regarded as adjustments to

interest costs, are recognised as expenses over the period of the borrowing.

Convertible bonds

Convertible bonds are regarded as liabilities until conversion actually occurs. The finance cost, including the premium

payable upon the final redemption of the convertible bonds, recognised in the profit and loss account in respect of the

convertible bonds are calculated so as to produce a constant periodic rate of charge on the remaining balances of the

convertible bonds for each accounting period. When the convertible bonds are redeemed, purchased and cancelled, or

converted prior to their maturity, any excessive provision of redemption premium will be recognised as income in the

profit and loss account.

The costs incurred in connection with the issue of convertible bonds are deferred and amortised on a straight-line basis

over the lives of convertible bonds from the date of the issue of the bonds to their final redemption date. If any convertible

bonds are purchased and cancelled, redeemed or converted prior to the final redemption date, an appropriate portion of

any remaining unamortised costs will be charged immediately to the profit and loss account.


78


Pension schemes and costs

The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the “MPF Scheme”)

under the Mandatory Provident Fund Schemes Ordinance, for all of its employees in Hong Kong. Contributions are

made based on a percentage of the employees’ basic salaries, limited to a maximum of HK$1,000 per month, and are

charged to the profit and loss account as they become payable in accordance with the rules of the MPF Scheme. The

assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The

Group’s employer contributions vest fully with the employees when contributed into the MPF Scheme except for the

Group’s employer voluntary contributions, which are refunded to the Group when the employee leaves employment

prior to the contributions vesting fully, in accordance with the rules of the MPF Scheme.

According to the relevant PRC regulations, Hainan White Horse Advertising Media Investment Company Limited,

commencing from 1 July 2001, is required to participate in the employee retirement scheme operated by the relevant

local government bureau in the PRC and to make contributions for its eligible employees. The contributions to be

borne by the Group are calculated at certain percentage on the annual average salary in Guangzhou announced by the

Guangzhou Social Labor Insurance Administration Bureau.

Share option schemes

The financial impact of share options granted is not recorded in the Company’s or the Group’s balance sheet until such

time as the options are exercised, and no charge is recorded in the profit and loss account or balance sheet for their cost.

Upon exercise of the share options, the resulting shares issued are recorded by the Company as additional share capital at

the nominal value of the shares, and the excess of the exercise price per share over the nominal value of the shares is

recorded by the Company in the share premium account. Options which are cancelled or which lapse prior to their

exercise date are deleted from the register of outstanding options and have no impact on the profit and loss account or

balance sheet.

4. Segment Information

Segment information is required by SSAP 26 “Segment reporting” to be presented by way of two segment formats: (i)

on a primary segment reporting basis, which the Group has determined to be by business segment; and (ii) on a secondary

segment reporting basis, which the Group has determined to be by geographical segment.

Outdoor media sales is the only major business segment of the Group, and comprises the display of advertisements on

bus shelters, unipoles and point-of-sale. Accordingly, no further business segment information is provided.

In determining the Group’s geographical segments, revenues and results are attributed to the segments based on the

location of the customers, and assets are attributed to the segments based on the location of the assets. As the Group’s

major operations and markets are located in the PRC, no further geographical segment information is provided.


5. Turnover and Revenue

Turnover represents the contract value for the displaying of advertisements on bus shelters, unipoles and point-of-sale,

net of commission and discounts, in the PRC.

An analysis of the Group’s turnover and revenue is as follows:

2004 2003HK$’000 HK$’000

Turnover 538,434 488,175Interest income 1,932 6,066

Revenue 540,366 494,241

6. Profit from Operating Activities

The Group’s profit from operating activities is arrived at after charging/(crediting):

2004 2003HK$’000 HK$’000

Cost of services provided 97,567 93,813Operating lease rentals on bus shelters, unipoles and point-of-sale 97,857 92,624Amortisation of concession rights and depreciation of point-of-sale 109,048 95,703

Cost of sales 304,472 282,140

Provision for doubtful debts 6,020 8,505Bad debts written off — 10,018Auditors’ remuneration 880 820Depreciation of owned assets, excluding point-of-sale 6,228 7,193(Gain)/loss on disposal of fixed assets (56) 588Operating lease rentals on buildings 9,067 8,870Staff costs (including directors’ remuneration (note 7))

Wages and salaries 47,398 41,487Pension scheme contributions 242 165Less: Forfeited contributions — —

Net pension contributions 242 165

47,640 41,652

Unrealised gain on revaluation of short term investments (706) (1,852)Realised gain on disposal of short term investments (696) —Foreign exchange (gains)/losses, net (315) 587Interest income (1,932) (6,066)

The Group’s profit from operating activities represents media sales in the PRC.


80

7. Directors’ Remuneration

The remuneration of the directors of the Company for the year disclosed pursuant to the Rules Governing the Listing of

Securities (the “Listing Rules”) on the Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and Section 161

of the Hong Kong Companies Ordinance is analysed as follows:

Group

2004 2003HK$’000 HK$’000

Fees: 752 687

Other emoluments:Salaries, allowances and benefits in kind 9,321 7,352Pension scheme contributions 67 58

9,388 7,410

10,140 8,097

(a) Independent non-executive directors

The fees paid to independent non-executive directors were as follows:

2004 2003HK$’000 HK$’000

Desmond Murray 237 158Leonie Ki Man Fung 35 —Wang Shou Zhi 120 120Pedro Man (resigned on 28 May 2003) — 49

392 327

There were no other emoluments payable to the independent non-executive directors during the year (2003:

Nil).


7. Directors’ Remuneration (Continued)

(b) Executive directors and non-executive directors

Salaries, Performance Pensionallowances and related scheme Total

Fees benefits in kind bonuses contributions emolumentsHK$’000 HK$’000 HK$’000 HK$’000 HK$’000

2004Executive directors:

Steven Yung — 1,700 — 12 1,712Han Zi Jing — 2,691 — 12 2,703Teo Hong Kiong — 2,037 — 12 2,049Zou Nan Feng — 867 — 10 877

Non-executive directors:Peter Cosgrove — 1,027 — 12 1,039Mark Mays — — — — —Roger Parry 60 — — — 60Coline McConville 60 — — — 60Han Zi Dian — 22 — — 22Chin Oi Ling Lenna 120 — — — 120Tim Maunder 60 — — — 60Jonathan Bevan 60 — — — 60Zhang Huai Jun — 977 — 9 986

360 9,321 — 67 9,748

2003Executive directors:

Steven Yung — 1,600 — 12 1,612Han Zi Jing — 2,250 — 12 2,262Teo Hong Kiong — 1,683 — 12 1,695Zou Nan Feng — 763 — 10 773

Non-executive directors:Peter Cosgrove — 1,027 — 12 1,039Mark Mays — — — — —Roger Parry 60 — — — 60Coline McConville 120 — — — 120Han Zi Dian — — — — —Chin Oi Ling Lenna 120 — — — 120Tim Maunder 60 — — — 60Jonathan Bevan — — — — —Zhang Huai Jun — 29 — — 29

360 7,352 — 58 7,770

There was no arrangement under which a director waived or agreed to waive any remuneration during the year.

During the year, discretionary bonuses paid to or receivable by the directors amounted to HK$98,000 (2003:HK$43,000). No directors waived or agreed to waive any remuneration during the year (2003: Nil). In addition,no emoluments were paid by the Group to the directors as an inducement to join, or upon joining the Group, oras a compensation for loss of office (2003: Nil).

During the year, no share options were granted to the directors.


82

8. Five Highest Paid Individuals

During the year, all of the five highest paid individuals were directors (2003: five) and the details of whose remuneration

are set out in note 7 above.

During the year, the discretionary bonuses paid to or receivable by the five highest paid individuals of the Group

amounted to HK$98,000 (2003: HK$43,000). No emoluments were paid by the Group to any of the five highest paid

individuals as an inducement to join, or upon joining the Group, or as compensation for loss of office (2003: Nil).

During the year, no share options were granted to the five directors.

9. Finance Costs

Group

2004 2003HK$’000 HK$’000

Interest on bank loans wholly repayable within five years 7,357 8,129

Other finance costs:Amortisation of convertible bonds issue expenses 420 —Provision for convertible bonds redemption premium 2,400 —

10,177 8,129

10. Tax

Hong Kong profits tax has not been provided at the rate of 17.5% (2003: 17.5%) on the estimated assessable profits

arising in Hong Kong during the year. Taxes on profits assessable elsewhere have been calculated at the rates of tax

prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in

respect thereof.

Group

2004 2003HK$’000 HK$’000

Group:Current — Hong Kong profits tax — —Current — PRC corporate income tax 17,057 16,787Deferred (note 23) (3,322) (3,285)

Total tax charge for the year 13,735 13,502


10. Tax (Continued)

A reconciliation of the tax expense applicable to profit before tax using the statutory rates for the countries in which the

Company and its subsidiaries are domiciled to the tax expense at the effective tax rates is as follows:

Group

2004 2003HK$’000 HK$’000

Profit before tax 119,131 103,736

Calculated at a tax rate of 15.0% (2003: 15.0%) 17,870 15,560Higher income tax rates for Hong Kong at 17.5% (2003: 17.5%) 75 150Income not subject to tax (3,918) (2,676)Expenses not deductible for tax 1,316 3,318Utilisation of previously unrecognised tax losses — (17)Tax loss not recognised 1,714 452Deferred tax (note 23) (3,322) (3,285)

At effective income tax rate of 11.5% (2003: 13.0%) 13,735 13,502

According to the Income Tax Law of the PRC on Enterprises with Foreign Investment and Foreign Enterprises, the

WHA Joint Venture, a subsidiary of the Company established in the Hainan Special Economic Zone of the PRC, is

subject to corporate income tax at a rate of 15%, and is exempt from PRC corporate income tax for the first profitable

year of its operations, and thereafter, is eligible for 50% relief from PRC corporate income tax for the following two

years. As the current year was the fifth statutory profitable year of the WHA Joint Venture, corporation income tax for

the current year has been calculated at the rate of 15% on its assessable profits arising in the PRC.

11. Net Profit from Ordinary Activities Attributable to Shareholders

The net profit from ordinary activities attributable to shareholders dealt with in the financial statements of the Company

for the year ended 31 December 2004 was approximately HK$2,202,000 (2003: HK$4,193,000) (note 25).

12. Earnings per Share

The calculation of basic earnings per share is based on the net profit from ordinary activities attributable to shareholders

for the year of HK$95,128,000 (2003: HK$81,784,000) and the weighted average of 501,608,500 (2003: 501,608,500)

ordinary shares.

The calculation of diluted earnings per share is based on the net profit from ordinary activities attributable to shareholders

for the year of HK$95,128,000 (2003: HK$81,784,000). The weighted average number of ordinary shares used in the

calculation is the 501,608,500 (2003: 501,608,500) ordinary shares, as used in the basic earnings per share calculation;

and the weighted average of 10,855,831 (2003: 1,341,933) ordinary shares assumed to have been issued at no consideration

on the deemed exercise of all share options with dilutive effect during the year.

In the current year, the effect of the Group arising from the exercise of the convertible bonds was anti-dilutive.


84

13. Fixed Assets

Group

Leasehold Furniture and Motor Point-of- Constructionimprovements equipment vehicles sale in progress Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Cost:At beginning of year 9,730 19,781 12,363 31,167 7,195 80,236Additions 172 830 3,132 127 74,840 79,101Transfer to concession

rights — — — — (26,041) (26,041)Disposals — — (377) — — (377)Exchange realignment 15 36 15 60 (23) 103

At 31 December 2004 9,917 20,647 15,133 31,354 55,971 133,022

Accumulated depreciation:At beginning of year (8,149) (9,760) (5,473) (5,593) — (28,975)Provided during the year (687) (3,124) (2,417) (3,134) — (9,362)Disposals — — 358 — — 358Exchange realignment (7) (21) (4) (9) — (41)

At 31 December 2004 (8,843) (12,905) (7,536) (8,736) — (38,020)

Net book value:At 31 December 2004 1,074 7,742 7,597 22,618 55,971 95,002

At 31 December 2003 1,581 10,021 6,890 25,574 7,195 51,261

Construction in progress represents bus shelters, unipoles and point-of-sale under construction.


14. Interests in Subsidiaries

Company

2004 2003HK$’000 HK$’000

Unlisted shares, at cost 487,273 487,273Due from subsidiaries 663,982 451,179

1,151,255 938,452

The amounts due from subsidiaries are unsecured, interest-free and have no fixed terms of repayment, except for loans

to subsidiaries which amounted to HK$526 million (2003: HK$260 million) and bear interest at a rate of 5% per

annum.

Particulars of the subsidiaries of the Company as at 31 December 2004 were as follows:

Place of Nominal value of Percentage ofincorporation/ issued and fully equity attributableregistration and paid-up share/ to the Company Principal

Name operations registered capital Direct Indirect activities

China Outdoor Media British Virgin Ordinary 100 — InvestmentInvestment, Inc. Islands HK$34,465 holding

China Outdoor Media Hong Kong Ordinary InvestmentInvestment (Hong Kong) HK$1,000 100 — holdingCompany Limited(“China Outdoor Media(HK)”)

Hainan White Horse People’s Republic US$21,850,000/ 80 — Operation ofAdvertising Media of China (“PRC”) US$60,000,000 (Note) outdoorInvestment Company advertisingLimited (the “WHA businessJoint Venture”)


86

14. Interests in Subsidiaries (Continued)

Note:

The WHA Joint Venture was established in the PRC on 24 March 1998 as a Sino-foreign equity joint venture in the PRC with a tenure of 30years. Under the terms of the original joint venture agreement, China Outdoor Media (HK), Ming Wai Holdings Limited (“Ming Wai”), awholly-owned subsidiary of Clear Channel Outdoor, Inc. (“CCO”), which is a shareholder of the Company, and Hainan White HorseAdvertising Co., Ltd. (“Hainan White Horse Advertising”) were the joint venture partners of the WHA Joint Venture. China Outdoor Media(HK), Ming Wai and Hainan White Horse Advertising were entitled to 90%, 5% and 5%, respectively, of the profits of the WHA JointVenture.

Pursuant to a reorganisation which took place before the listing of the Company on the Stock Exchange, Ming Wai transferred its 5% interestin the WHA Joint Venture to China Outdoor Media (HK). Accordingly, the minority interest of the WHA Joint Venture represented thecapital contributed by Hainan White Horse Advertising and its 5% share of the profit of the WHA Joint Venture.

China Outdoor Media (HK) and Hainan White Horse Advertising entered into a revised joint venture agreement on 6 April 2001. Accordingto the revised joint venture agreement, the WHA Joint Venture changed its legal structure from a Sino-foreign equity joint venture to a Sino-foreign co-operative joint venture. The registered capital of the WHA Joint Venture was increased from HK$100,000,000 to US$60,000,000with Hainan White Horse Advertising and China Outdoor Media (HK) sharing 20% and 80% interests in the WHA Joint Venture, respectively.It was agreed that for the fiscal years 2001 to 2005 (both years inclusive), China Outdoor Media (HK) would be entitled to 90% of the profitafter tax of the WHA Joint Venture. For the fiscal year 2006 and onwards, China Outdoor Media (HK) would only be entitled to 80% of theprofit after tax of the WHA Joint Venture. The revised joint venture agreement was approved by the State Foreign Economic and TradeCommission of Hainan Province on 27 June 2001. According to the agreement entered into by China Outdoor Media (HK) and HainanWhite Horse Advertising on 3 September 2001, their shares in the profits of the WHA Joint Venture for the period from 1 January 2001 to30 June 2001 were 95% and 5%, respectively.

15. Concession RightsGroup

HK$’000

Cost:At beginning of year 1,195,922Additions 303,615Transfer from construction in progress 26,041Exchange realignment 2,081

At 31 December 2004 1,527,659

Accumulated amortisation:At beginning of year (334,310)Provided during the year (105,914)Exchange realignment (396)

At 31 December 2004 (440,620)

Net book value:At 31 December 2004 1,087,039

At 31 December 2003 861,612


16. Other Long Term Asset

Other long term asset represents expenditure incurred in connection with the issue of the convertible bonds, which is

stated at cost less accumulated amortisation. Amortisation is charged to the profit and loss account on the straight-line

basis over the term of the convertible bonds.

17. Accounts Receivable

The Group’s trading terms with its customers are mainly on credit, except for new customers, where payment in advance

is normally required. The credit period is generally for a period of 90 days. Each customer has a maximum credit limit.

The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by

senior management.

An aged analysis of the accounts receivable as at the balance sheet date is as follows:

Group

2004 2003HK$’000 HK$’000

Outstanding balance aged:Current to 90 days 99,278 96,85591 days to 180 days 50,702 31,151Over 180 days 54,171 48,293

204,151 176,299Less: Provision of doubtful debts (8,926) (8,505)

Total accounts receivable, net 195,225 167,794

18. Due from a Related Party

Group

Maximum amount31 December outstanding during 31 December

2004 the year 2003Name HK$’000 HK$’000 HK$’000

Guangdong White Horse AdvertisingCompany Limited (“GWH”) 19,807 26,174 26,174

The balance with the related party is unsecured, interest-free and has no fixed terms of repayment.


88

19. Short Term Investments

Group

2004 2003HK$’000 HK$’000

Listed equity investments, at market value:Hong Kong 7,042 10,349

The market value of the Group’s short term investments at the date of approval of these financial statements was approximately

HK$8 million.

20. Pledged Time Deposits

At 31 December 2004, the Group had pledged time deposits of US$4,500,000 (equivalent to approximately HK$35,014,000)

(2003: US$6,067,000 (equivalent to approximately HK$46,750,000)) and HK$30,347,000 (2003: HK$125,910,000)

to banks as securities for short term bank loans of RMB39,600,000 (2003: RMB173,000,000).

At 31 December 2004, the Group had pledged deposits of RMB30,863,000 (equivalent to approximately HK$29,015,000)

to bank as securities for bills payable of RMB36,403,000 (equivalent to approximately HK$34,223,000).

At the balance sheet date, the cash and bank balances of the Group denominated in Renminbi (“RMB”) amounted to

HK$55,655,000 (2003: HK$43,285,000). The RMB is not freely convertible into other currencies, however, under

Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign

Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to

conduct foreign exchange business.


21. Interest-Bearing Bank Borrowings

Group

2004 2003Notes HK$’000 HK$’000

Bank loans repayable within one year:Secured (i) 37,229 162,334Unsecured (ii) — 9,384

37,229 171,718

Notes:

(i) As at 31 December 2004, the Group’s short term bank loans of RMB39,600,000 (equivalent to approximately HK$37,229,000)were secured by time deposits of US$4,500,000 (equivalent to approximately HK$35,014,000) and HK$30,347,000 and weresubject to interest rates ranging from 4.5% to 5.3% per annum.

As at 31 December 2003, the Group’s short term bank loans of RMB173, 000,000 (equivalent to approximately HK$162,334,000)were secured by time deposits of US$6,067,000 (equivalent to approximately HK$46,750,000) and HK$125,910,000 and weresubject to interest rates ranging from 4.8% to 5.3% per annum.

(ii) As at 31 December 2003, the Group’s short term bank loan of RMB10,000,000 (equivalent to approximately HK$9,384,000) boreinterest at a rate of 5.3% per annum and was unsecured.

22. Convertible Bonds

Group

2004 2003HK$’000 HK$’000

Convertible bonds due 2009 312,000 —Provision for convertible bonds redemption premium 2,400 —

314,400 —

On 25 October 2004, the Company issued HK$312,000,000 zero coupon convertible bonds due 2009, which were

listed on the Stock Exchange. Each bond will, at the option of the holder, be convertible on and after 26 November

2004 up to and including 28 September 2009 into fully paid ordinary shares with a par value of HK$0.10 each of the

Company at an initial conversion price of HK$9.585 per share. Unless previously redeemed, converted or purchased

and cancelled, the bonds will be redeemed at 121.899% of their principal amount on 27 October 2009. The net proceeds

from the issue of the bonds will be used for general corporate and working capital purposes, including financing possible

strategic acquisitions.

As at 31 December 2004, none of the convertible bonds had been converted into ordinary shares of the Company.


90

23. Deferred Tax

Deferred tax liabilities

Group

Accelerated Acceleratedtax tax

depreciation depreciation2004 2003

HK$’000 HK$’000

Balance at beginning of year (1,436) (2,936)Deferred tax credited to profit and loss account

during the year — note 10 1,436 1,500

Gross deferred tax liabilities at end of year — (1,436)

Deferred tax assets

Group

Deductible Deductibletemporary temporarydifferences differences

2004 2003HK$’000 HK$’000

Balance at beginning of year 1,785 —Deferred tax credited to profit and loss account

during the year — note 10 1,886 1,785

Gross deferred tax assets at end of year 3,671 1,785

Net deferred tax assets 3,671 349

Deferred tax assets of the Group represent the deferred tax on temporary differences arising from the different basis

adopted for depreciation and amortisation of fixed assets and concession rights, provision for doubtful debts and bad

debts written off, which lead to differences in the accounting and tax bases.

The Group has tax losses arising in Hong Kong of HK$37,870,000 (2003: HK$18,539,000) that are available indefinitely

for offsetting against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been

recognised in respect of these losses due to the unpredictability of future profit streams.


24. Share Capital

Shares

2004 2003HK$’000 HK$’000

Authorised:700,000,000 ordinary shares of HK$0.10 each 70,000 70,000

Issued and fully paid:501,608,500 ordinary shares of HK$0.10 each 50,161 50,161

Share options

The Company operates a share option scheme (the “Scheme”) for the purpose of providing incentives and rewards to

eligible participants who contribute to the Group’s operations. Under the Scheme, the directors may, at their discretion,

invite any employees, directors or consultants of any company in the Group to acquire options. The Scheme became

effective on 28 November 2001 and, unless otherwise cancelled or amended, will remain in force for seven years from

that date.

The maximum number of shares in respect of which options may be granted under the Scheme and under any other

share option scheme of the Company pursuant to which options may from time to time be granted to directors, consultants,

and/or employees of any company in the Group, shall initially not exceed 10% of the relevant class of securities of the

Company in issue excluding, for this purpose, shares issued on the exercise of options under the Scheme and any other

share option scheme of the Company. Upon the grant of options for shares up to 10% of the relevant class of securities

of the Company and subject to the approval of the shareholders of the Company in general meetings, the maximum

number of shares to be issued under this scheme when aggregated with securities to be issued under any other share

option scheme of the Group, may be increased by the board of directors provided that the number of shares to be issued

upon the exercise of all outstanding options does not exceed 30% of the relevant class of securities in issue from time to

time.

No option may be granted to any person such that the total number of shares issued and to be issued upon the exercise

of options granted and to be granted to such person in any 12-month period up to the date of the latest grant exceeds

1% of the issued share capital of the Company from time to time.

An option may be exercised in accordance with the terms of the Scheme at any time during the option period and not

more than seven years after the date of grant. The option period will be determined by the board of directors and

communicated to each grantee. The board of directors may provide restrictions on the period during which the options

may be exercised. There are no performance targets which must be achieved before any of the options can be exercised.

However, the board of directors retains discretion to accelerate the vesting of fixed term options in the event that certain

performance targets are met.


92

24. Share Capital (Continued)

Share options (Continued)

In addition, on 28 November 2001, the Company adopted a Pre-IPO share option scheme conditionally as described in

the Company’s prospectus dated 10 December 2001. The principal terms of the Pre-IPO share option scheme are

substantially the same as the terms of the Scheme except that:

(a) Employees, directors and consultants of the Group who have contributed substantially to the growth of the

Group and to the initial public offering or full-time employees and directors of the Group are eligible to participate

in the Pre-IPO share option scheme;

(b) The subscription price for the shares under the Pre-IPO share option scheme shall be equal to the offer price;

and

(c) The Pre-IPO share option scheme will remain in force for a period commencing on the date on which the Pre-

IPO share option scheme is conditionally adopted by the shareholders of the Company and ending on the day

immediately prior to 19 December 2001, after which period no further options will be granted but in all other

respects the provisions of the Pre-IPO share options scheme shall remain in full force and effect.

The movements in the number of share options to subscribe for shares in the Company during the year were as follows:

Number of Number of Number of Number ofshare options share options share options share options Exercise

Share option outstanding at granted during lapsed during outstanding at price Exercisescheme 1 January 2004 the year the year 31 December 2004 HK$ period

Pre-IPO share 18,034,000 — — 18,034,000 5.89 29/11/04 tooption scheme 28/11/08

The Scheme 9,016,000 — — 9,016,000 5.51 30/06/05 to29/06/09

The Scheme 12,000,000 — — 12,000,000 3.51 29/05/06 to27/05/10

The Scheme 3,000,000 — — 3,000,000 5.35 20/11/06 to19/11/10

42,050,000 — — 42,050,000

At the balance sheet date, the Company had 42,050,000 share options outstanding. The exercise in full of the remaining

share options would, under the present capital structure of the Company, result in the issue of 42,050,000 additional

ordinary shares of HK$0.10 each in the Company and proceeds, before relevant share issue expenses, of approximately

HK$214,068,000.


25. Reserves

Group

Share Contributed Exchangepremium surplus fluctuation Retained

account (Note(a)) reserve profits TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 January 2003 644,427 351,007 585 163,570 1,159,589Translation exchange

differences arisingon consolidation ofa subsidiary — — (3,161) — (3,161)

Net profit for the year — — — 81,784 81,784

At 1 January 2004 644,427 351,007 (2,576) 245,354 1,238,212Translation exchange

differences arisingon consolidation ofa subsidiary — — 1,272 — 1,272

Net profit for the year — — — 95,128 95,128

At 31 December 2004 644,427 351,007 (1,304) 340,482 1,334,612

Company

Share Contributedpremium surplus Retained

account (Note(b)) profits TotalHK$’000 HK$’000 HK$’000 HK$’000

At 1 January 2003 644,427 449,773 1,203 1,095,403Net profit for the year — — 4,193 4,193

At 1 January 2004 644,427 449,773 5,396 1,099,596Net profit for the year — — 2,202 2,202

At 31 December 2004 644,427 449,773 7,598 1,101,798

Notes:

(a) The contributed surplus of the Group represents the difference between the nominal value of share capital of the subsidiariesacquired pursuant to the Group Reorganisation on 28 November 2001, over the nominal value of the shares in the Company issuedin exchange therefor.

(b) The contributed surplus of the Company represents the difference between the then combined net asset value of the subsidiariesacquired pursuant to the same reorganisation over the nominal value of the shares of the Company’s shares issued in exchangetherefor.

Under the Bermuda Companies Act 1981, the Company may make distributions to its shareholders out of the contributed surplusunder certain circumstances.


94

26. Notes to the Consolidated Cash Flow Statement

(a) Fixed assets

During the current year, the Group paid HK$4,134,000 (2003: HK$5,451,000) to acquire fixed assets.

(b) Concession rights

During the current year, the Group paid HK$324,673,000 to acquire concession rights and to settle the outstanding

liability for the acquisition of concession rights brought forward from the prior year of HK$21,159,000.

During the prior year, the Group paid HK$101,829,000 to acquire concession rights and to settle the outstanding

liability for the acquisition of concession rights brought forward from the prior year of HK$35,853,000.

(c) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and balances with banks. Cash and cash equivalents included

in the consolidated cash flow statement comprise the following balance sheet amounts:Group

2004 2003HK$’000 HK$’000

Cash on hand and balances with banks 337,233 224,830

27. Commitments

(a) Capital commitments

Group

2004 2003HK$’000 HK$’000

Contracted, but not provided for:The construction of bus shelters for

which concession rights are held 35,177 16,420

(b) Commitments under operating leases

The Group leases certain of its office buildings and concession rights under operating lease arrangements. Leases

for office buildings are negotiated for terms ranging from 1 to 9 years, and those for concession rights are

negotiated for terms ranging from 5 to 20 years.

At the balance sheet date, the Group had total future minimum lease payments under non-cancellable operating

leases falling due as follows:Group

2004 2003HK$’000 HK$’000

Within one year 143,437 119,940In the second to fifth years, inclusive 537,931 412,133After five years 672,101 262,813

1,353,469 794,886


28. Contingent Liabilities

(a) At the balance sheet date, contingent liabilities not provided for in the financial statements were as follows:Group

2004 2003HK$’000 HK$’000

Bills discounted with recourse 2,820 —

(b) On 10 August 1999, Advertasia Street Furniture Limited, an independent third party (“Advertasia”) commenced

an action against China Outdoor Media (HK) in the High Court of Hong Kong pursuant to an agreement

dated 21 April 1999 entered into by them for the sale of the entire issued share capital of four Hong Kong

private companies by Advertasia to China Outdoor Media (HK) for the sum of HK$68 million (the “Agreement”).

Advertasia alleged that China Outdoor Media (HK) had wrongfully, and in breach of the Agreement, refused to

purchase the shares held by Advertasia in the four private companies and/or failed to tender a payment of

HK$50 million in relation to the Agreement. China Outdoor Media (HK) contended the claim on a number of

grounds, including, that a required condition precedent of the Agreement was not met (in that the joint venture

contracts attached to the Agreement were not valid) and that a number of misrepresentations were made in

respect of the four private companies. China Outdoor Media (HK) also counterclaimed for damages for all

reasonably incurred costs and expenses in respect of the misrepresentation.

On 28 November 2001, (i) Outdoor Media China, Inc. (“OMC”), a company incorporated under the laws of

Western Samoa with limited liability and a substantial shareholder with a 3% interest in the Company, (ii) Han

Zi Jing, one of the directors of the Company, (iii) Clear Channel Outdoor, Inc. (“CCO”), one of the substantial

shareholders of the Company, (iv) China Outdoor Media (HK) and (v) the Company, entered into a Deed of

Indemnity (as amended, the “Deed of Indemnity”). Under the terms of the Deed of Indemnity, OMC and

CCO have covenanted and undertaken to indemnify the Company and China Outdoor Media (HK) against all

claims (including this claim), whether or not successful, compromised or otherwise settled, and any actions,

damages, penalties, liabilities, legal fees, enforcement costs and expenses incurred by the Company and China

Outdoor Media (HK) in respect of the claims.

On 8 October 2004, the High Court, acting as a court of first instance, made an order of specific performance of

the Agreement in favour of Advertasia pursuant to which China Outdoor Media (HK) will be required to complete

the purchase of the aforementioned four private companies for a consideration of HK$68 million. In addition,

China Outdoor Media (HK) was ordered to pay to Advertasia (i) HK$1,216,404 in equitable damages, (ii)

interest at the rate of 1 percent over prime rate on the sum of HK$50 million from 5 May 1999 to the date of

judgement and on the sum of HK$18 million from 30 June 2000 to the date of judgement; and (iii) interest on

the respective sums of HK$144,122, HK$706,967 and HK$365,285 at the rate of 1% over prime rate from

dates to be agreed between Advertasia and China Outdoor Media (HK) to the date of judgement. China Outdoor

Media (HK) was also ordered to pay the costs of the action. As China Outdoor Media (HK) has the benefit of

the indemnity provisions under the Deed of Indemnity against the claim by Advertasia, the Company believes

that the said judgement will not have a material impact on its business. Under the terms of the judgment, China

Outdoor Media (HK) has been granted the right to appeal against the judgement. China Outdoor Media (HK)

has already filed an appeal to the Court of Appeal in Hong Kong against the judgement of the High Court.

Save as disclosed above, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration

of material importance and, so far as the directors are aware, no litigation or arbitration of material importance

is pending or threatened against the Company.


96

29. Post Balance Sheet Event

In January 2005, China Outdoor Media (HK) paid to the High Court the sum of HK$100 million in respect of the

aforementioned Advertasia claim (note 28), and this amount of money will remain at the High Court until the result of

the appeal to the Court. The Group is still entitled to the deposit and will receive interest at market deposit rates during

the period. Moreover, under the Deed of Indemnity reached between the Company, OMC, Han Zi Jing, CCO and

China Outdoor Media (HK), the Company and China Outdoor Media (HK) will be fully indemnified against all

damages, penalties, liabilities, legal fees, enforcement costs and expenses incurred by them in respect of the claims.

30. Related Party Transactions

In addition to those transactions and balances detailed elsewhere in these financial statements, the Group had the

following significant transactions with related parties (which falls under the definition of “continuing connected transactions”

under the Listing Rules) during the year:

2004 2003Notes HK$’000 HK$’000

Agency commission paid to GWH (i) 2,677 4,602

Sales to GWH (ii) 15,168 38,546

Bus shelter maintenance and display fees (iii) 8,156 21,623

Creative services fees payable to GWH (iv) 2,825 810

Notes:

(i) The agency commission paid to GWH was based on the standard percentage of gross rental revenue for outdoor advertising spacespayable to other major third party agencies used by the Group. On 11 May 2004, the WHA Joint Venture entered into a frameworkagreement for a fixed term of three years, which formalised the terms and conditions in the advertising commission agreementbetween the two parties. GWH is a related party of the Company because one of the directors of the Company, Mr. Han Zi Dian,is able to exercise influence over the management and day-to-day operations as director and general manager of GWH and controlsthe composition of a majority of the board of directors of GWH from an indirect interest of 14.2% in GWH.

(ii) The sales to GWH were made according to published prices and conditions similar to those offered to the major customers of theGroup.

(iii) The WHA Joint Venture has entered into various agreements for the maintenance of bus shelters and the display of posters in thePRC with the White Horse Companies. White Horse Companies are considered to be related parties of the Company due to thefact that one of the directors of the Company, Mr. Han Zi Dian, can exercise influence over the management of such White HorseCompanies.

In order to comply with the continuing connected transactions provisions of the Listing Rules, the Maintenance Services Agreementswere terminated on 11 May 2004. On the same day, the WHA Joint Venture entered into new Maintenance Services Agreementswith the said companies on substantially the same terms as the old agreements for a fixed term of three years.

(iv) The WHA Joint Venture entered into a creative services agreement on 23 April 2004 with GWH, whereby GWH agreed to provideposter design service, the design of sales, marketing materials and company profiles and other related creative services to the Group.These transactions were entered into on terms no less favourable than those available to or from independent third parties.


30. Related Party Transactions (Continued)

Notes: (Continued)

Other than the above, the Group entered into various trademark licence agreements and an option agreement (which constitute connectedtransactions under the Listing Rules) in 2001 as follows:

(i) The WHA Joint Venture entered into a Trademark Licence Agreement with Guangdong White Horse Development Parent Company(“Guangdong White Horse”) dated 30 November 2001 whereby Guangdong White Horse agreed to grant to the WHA JointVenture a licence to use the “White Horse” trademark in whole or in part or to display any patterns, words, logos or marks of thetrademark for outdoor advertising in the PRC. Provided that OMC, and/or Mr. Han Zi Jing, a director of the Company and hisassociates has at least a 10% direct or indirect interest in the Company, the licence shall be on an exclusive basis and GuangdongWhite Horse will not have any termination rights. Upon OMC and/or its associates reducing its/their interests to less than a 10%direct or indirect interest in the Company, the licence will become non-exclusive and be limited to a period of five years startingfrom the date OMC and/or Mr. Han Zi Jing and his associates cease to hold at least a 10% direct or indirect interest in theCompany. The licence is renewable at the option of Guangdong White Horse at the expiry of the licence. The grant of the licencewas for RMB1.00 but otherwise was royalty-free.

On 1 December 2004, Guangdong White Horse entered into an Addendum to the Trademark Licence Agreement agreeing to lowerthe terms to 1% direct or indirect interest in the Company with all other terms and conditions remaining unchanged.

(ii) The WHA Joint Venture entered in to a Trademark Licence Agreement and a Transfer Agreement with GWH dated 30 November2001 whereby GWH is to assign certain trademarks to the WHA Joint Venture. The annual licence fee is RMB1.00. The agreementwill remain in force until all the trademarks are registered in the name of the WHA Joint Venture.

(iii) The Company entered into two Trademark Licence Agreements with Clear Channel Communications, Inc., the holding companyof a shareholder of the Company, and Clear Channel International Limited, a subsidiary of Clear Channel Communications, Inc.,respectively dated 28 November 2001 whereby the Company and members of the Group are granted the licence to use certainnames, logos, symbols, emblems, insignia and other identifying materials for use in the outdoor advertising business in the PRC.The licence is for a term of five years. Upon the expiry of the licence, it is renewable at the option of Clear Channel Communications,Inc. and Clear Channel International Limited. The licence was granted for a consideration of HK$1.00.

(iv) On 30 November 2001, China Outdoor Media (HK) and Hainan White Horse Advertising, a company with a 20% shareholdingin the WHA Joint Venture, entered into an option agreement which would provide China Outdoor Media (HK) an option topurchase the whole or part of Hainan White Horse’s 20% interest in the WHA Joint Venture. The option may only be exercisedwhen PRC laws and regulations permit China Outdoor Media (HK)’s shareholding in the WHA Joint Venture to be higher than80%. The price to be paid on exercise of the option is RMB5,000,000 for the entire 20% interest or a proportionate amount if theoption is exercised in respect of a smaller percentage interest in the WHA Joint Venture. The agreement is for a term of 30 years.

Further details of the transactions are also included in notes (a) and (b) in the section headed “Connected transactions”

in the Report of the Directors on pages 53 to 56.

31. Approval of the Financial Statements

The financial statements were approved and authorised for issue by the board of directors on 10 March 2005.

N O T I C E O F A N N UA L G E N E R A L M E E T I N G98

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Clear Media Limited (the “Company”) will be held at

Chater Room 1, Function Room Level, The Ritz Carlton, 3 Connaught Road, Central, Hong Kong at 10:00 a.m. on 27 May

2005, for the following purposes:

As ordinary business:

1. To receive and consider the audited financial statements and the Reports of the Directors and of the Auditors for the

year ended 31 December 2004.

2. To re-elect retiring Directors who retire by rotation and to authorize the Board of Directors to fix the Directors’

remuneration.

3. To appoint auditors and to authorize the Board of Directors to fix their remuneration.

And as Special Business, to consider and, if thought fit, to pass the following as ordinary resolutions:

4. “THAT:

(a) subject to paragraphs (b) and (c) below, the exercise by the Directors during the Relevant Period (as hereinafter

defined) of all the powers of the Company to purchase shares of HK$0.10 each in the capital of the Company

(“Shares”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or any other stock exchange

recognized for this purpose by the Securities and Futures Commission of Hong Kong and the Stock Exchange in

accordance with all applicable laws including the Hong Kong Code on Share Repurchases and the Rules Governing

the Listing of Securities on the Stock Exchange (the “Listing Rules”) as amended from time to time be and is

hereby generally and unconditionally approved;

(b) the aggregate nominal amount of Shares which may be purchased or agreed conditionally or unconditionally to

be purchased by the Directors pursuant to the approval in paragraph (a) above shall not exceed 10 per cent of the

aggregate nominal amount of the share capital of the Company in issue at the date of passing this Resolution,

and the said approval shall be limited accordingly;

(c) for the purposes of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until the earliest of:

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiry of the period within which the next annual general meeting of the Company is required by

the Company’s bye-laws (the “Bye-laws”) or the Companies Ordinance to be held; and

(iii) the revocation or variation of the authority given to the Directors under this Resolution by ordinary

resolution of the Company’s shareholders in general meeting.”

5. “THAT:

(a) subject to paragraph (c) below, the exercise by the Directors during the Relevant Period (as hereinafter defined)

of all the powers of the Company to allot, issue and deal with additional Shares and to make or grant offers,

agreements and options which might require the exercise of such powers be and are hereby generally and

unconditionally approved;


(b) the approval in paragraph (a) shall authorize the Directors during the Relevant Period to make or grant offers,

agreements and options which might require the exercise of such powers after the end of the Relevant Period;

(c) the aggregate nominal amount of share capital allotted, issued and dealt with or agreed conditionally or unconditionally

to be allotted, issued and dealt with (whether pursuant to an option or otherwise) by the Directors pursuant to

the approval in paragraph 5(a) above, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined), (ii)

the exercise of options granted under any share option scheme adopted by the Company or (iii) any scrip dividend

or similar arrangement providing for the allotment of Shares in lieu of the whole or part of a dividend on Shares

in accordance with the Bye-laws of the Company, shall not exceed the aggregate of 20 per cent of the aggregate

nominal amount of the share capital of the Company in issue at the date of passing this Resolution and the said

approval shall be limited accordingly; and

(d) for the purposes of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until the earliest of:

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiry of the period within which the next annual general meeting of the Company is required by the

Bye-laws or the Companies Ordinance to be held; and

(iii) the revocation or variation of the authority given to the Directors under this Resolution by ordinary

resolution of the Company’s shareholders in general meeting; and

“Rights Issue” means an offer of shares open for a period fixed by the Directors to holders of Shares on

the register of members on a fixed record date in proportion to their then holdings of such Shares (subject

to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to

fractional entitlements or having regard to any legal or practical restrictions or obligations under the laws

of, or the requirements of, any recognized regulatory body or any stock exchange in any territory applicable

to the Company) and an offer, allotment or issue of shares by way of rights shall be construed accordingly.”

6. “THAT subject to the passing of Resolutions 4 and 5 set out in this notice of Annual General Meeting, the aggregate

nominal amount of shares which are to be purchased by the Company pursuant to the authority granted to the Directors

under Resolution 5 set out in this notice of Annual General Meeting shall be added to the aggregate nominal amount of

share capital that may be allotted or agreed to be allotted by the Directors pursuant to Resolution 4 set out in this notice

of Annual General Meeting.”

7. “THAT the authorized share capital of the Company be increased from HK$70,000,000 divided into 700,000,000

shares of par value HK$0.10 each to HK$100,000,000 divided in 1,000,000,000 shares of HK$0.10 each.”

By Order of the Board

Gary Ng Pui Wah

Company Secretary

Hong Kong, 10 March 2005

N O T I C E O F A N N UA L G E N E R A L M E E T I N G100

Principal Place of Business in Hong Kong:

3205 Windsor House

311 Gloucester Road

Causeway Bay

Hong Kong

Notes:

1. Any member of the Company entitled to attend and vote at the above Annual General Meeting is entitled to appoint one or more proxies toattend and, on a poll, vote in his stead. A proxy needs not be a member of the Company.

2. In order to be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notariallycertified copy thereof, must be deposited at the Company’s branch share registrar in Hong Kong, Tengis Limited, Ground Floor, Bank of EastAsia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time for holding the above AnnualGeneral Meeting. Completion and return of a form of proxy will not preclude a member from attending and voting in person if he issubsequently able to be present.

3. In relation to the Ordinary Resolution set out in item 4 of the Notice, the Directors wish to state that they will exercise the powers conferredthereby to repurchase Shares in circumstances which they deem appropriate or for the benefit of the shareholders. The Explanatory Statementcontaining the information necessary to enable the shareholders to make an informed decision on whether to vote for or against the resolutionto approve the repurchase by the Company of its own Shares, as required by the Listing Rules will be set out in a separate letter from theCompany to be enclosed with the 2004 Annual Report.

4. In relation to the Ordinary Resolution set out in item 5 of the Notice, the Directors wish to state that they have no immediate plans to issueany new shares of the Company. Approval is being sought from the shareholders as a general mandate for the purposes of Section 57B of theCompanies Ordinance and the Listing Rules.

5. For the purposes of holding the Annual General Meeting of the Company on 27 May 2005, the Register of Members of the Company will beclosed from 25 May 2005 to 27 May 2005 both days inclusive, during which period no transfer of shares will be effected. All transfersaccompanied by the relevant shares certificates must be lodged with the Company’s branch share registrar in Hong Kong, Tengis Limited,Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not later than 4:00 p.m. on 24 May2005.

G L O S S A R Y 101

accounts payable Money owed to vendors.

accounts receivable Money owed by customers.

average accounts receivable The weighted average number of days for which the balance owing by customer

outstanding days is outstanding.

accounts receivable turnover The ratio of net credit sales to average accounts receivable, a measure of how

quickly customers pay their bills.

unipoles Large-format advertising displays intended for viewing at extended distances, generally

more than 50 feet. Unipole displays include, but are not limited to, 30-sheet

posters, 8-sheet posters, vinyl-wrapped posters, bulletins, wall murals, and stadia

or arena signage.

bus shelter Refers to a bus shelter, taxi stand or road sign. These three are grouped together

because their operational requirements, and the marketing and sales efforts for

them, are essentially the same.

CAGR Compounded annual growth rate. The formula for calculating CAGR is (Current

Value/Base Value)^(1/# of years) — 1.

concession rights Bus shelter concessions are granted by entities authorised by local governmental

agencies in China which have control over the construction and management of

bus shelters. Companies granted concession rights pay an annual fixed rental fee

to these entities.

cost-per-thousand Cost-per-thousand (CPM) impressions refers to the cost of reaching a thousand

people and is a standard measure of the cost-effectiveness of advertising.

display panel An advertising display unit within a bus shelter upon which the same advertisement

is posted on both sides.

EBITDA Earnings before interest, tax, depreciation or amortisation.

EBITDA margin Equal to EBITDA divided by turnover. EBITDA margin measures the extent to

which cash operating expenses use up revenue.

Group Clear Media Limited and its subsidiaries.

IRR Internal Rate of Return (also called dollar-weighted rate of return). The present

value of future cash flows plus the final market value of an investment or business

opportunity equal the current market price of the investment or opportunity.

liquidity current assets/current liabilities.

Listing Rules Rules governing the listing of securities on the Stock Exchange of Hong Kong

Limited.

G L O S S A R Y102

media Advertising outlets for advertising – including radio, outdoor, television, Internet,

magazines, newspapers and direct mail.

medium The industry term used to describe one of the media advertising outlets, e.g. “television

is usually the most expensive advertising medium,” or, where the context requires,

an individual product offered in respect of such media.

outdoor advertising One of the advertising media that communicates to people when they are outside

their homes, and includes advertising on billboards, advertising on and in public

transportation vehicles and terminals, advertising panels in airports and malls,

and advertising on street furniture.

point-of-sale A form of advertising at retail locations that is designed to reduce or eliminate the

time between a consumer’s awareness of advertising and his decision to make a

purchase, e.g. putting the offer right next to the product so purchase decisions

(and sales) can be made immediately. Advertisers distinguish point-of-sale advertising

in their promotional budget.

price earnings (P/E) ratio market price as at balance sheet date/earnings per share. reach An industry-accepted

term which describes the potential effectiveness of a media advertising schedule

by reflecting the number of different people who hear or see a commercial campaign.

return on asset (net profits attributable to the shareholders/average assets) x 100%

return on equity (net profits attributable to the shareholders/total equity) x 100%

SDI Ordinance The Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of

Hong Kong).

street furniture/street furniture displays Includes such forms of outdoor advertising as bus shelters, taxi stands, road signs,

phone kiosks, information and newspaper stands, public toilets, free-standing

information panels, benches and street lights.

transit Advertising displays affixed to moving vehicles or positioned in the common areas

of transit stations, terminals and airports.

12-sheet equivalent One actual 12-sheet panel, or two 6-sheet panels, or three 4-sheet panels.

frequency An industry-accepted method of judging the potential effectiveness of a medium.

Frequency reflects the average number of times that an individual is exposed to

an advertising message during a specific period of time.

gearing ratio The ratio of a company’s net debts to its total equity. (net debts/total equity) x

100%

F I N A N C I A L S U M M A R Y 103

2004 2003 2002 2001 2000 1999

RESULTS (HK$’000)

Turnover 538,434 488,175 426,916 355,004 260,038 169,782

EBITDA 242,652 208,694 180,222 153,556 110,636 72,758

EBIT 127,376 105,799 86,295 86,315 61,021 36,223

Net profit 95,128 81,784 71,106 58,906 41,690 27,483

CONSOLIDATED BALANCE

SHEET DATA (HK$’000)

Current assets 759,088 710,832 609,554 1,139,174 403,779 327,859

Current liabilities 251,779 325,715 299,270 700,562 515,494 417,192

Shareholders’ equity 1,384,773 1,288,373 1,209,750 1,129,798 354,978 312,441

CASH FLOW DATA (HK$’000)

Operating cashflow 212,453 157,765 100,577 247,894 122,274 52,895

FINANCIAL RATIOS

Return on equity (%) 6.9 6.3 5.9 5.2 11.7 8.8

Current ratio (times) 3.01 2.18 2.04 1.63 0.78 0.79

EBITDA margin (%) 45.1 42.7 42.2 43.3 42.5 42.9

Net profit margin (%) 17.7 16.8 16.7 16.6 16.0 16.2

C O R P O R AT E I N F O R M AT I O N104

Business Area

Outdoor Media

DirectorsExecutive Directors:

Steven Yung (Chairman)

Han Zi Jing (CEO)

Teo Hong Kiong

Zou Nan Feng

Non-Executive Directors:

Peter Cosgrove

Mark Mays

Roger Parry

Jonathan Bevan

Han Zi Dian

Zhang Huai Jun (alternate to Han Zi Dan)

Lenna Chin (alternate to Mark Mays)

Tim Maunder (alternate to Roger Parry)

Independent Non-Executive Directors:

Desmond Murray

Leonie Ki Man Fung

Wang Shou Zhi

Company Secretary

Gary Ng, FCS, FCIS

Head Office

Room 3205

32/F Windsor House

311 Gloucester Road

Causeway Bay

Hong Kong

Registered Office

Clarendon House

2 Church Street

Hamilton HM 11

Bermuda

Legal Advisors

Hong Kong and United States Law

Freshfields Bruckhaus Deringer

PRC Law

King & Wood PRC Lawyers

Bermuda Law

Conyers Dill & Pearman

Auditors

Ernst & Young

Principal Bankers

HSBC

Shanghai Pudong Development Bank

Principal Share Registrar

Butterfield Corporate

Services Limited

11 Rosebank Centre

Bermudiana Road

Hamilton Bermuda

Hong Kong Share Registrar

Tengis Limited

G/F Bank of East Asia

Harbor View Center

56 Gloucester Road

Wanchai

Hong Kong

Authorized Representatives

Steven Yung

Gary Ng

Investor Relations Contact

Gary Ng

PR Consultant

iPR ASIA LTD

Corporate Website

www. clear-media. net

CO

-OR

DIN

AT

OR

: iP

R A

SIA

LT

DC

ON

CE

PT &

DE

SIG

N: Y

ELL

OW

CR

EA

TIV

E (

HK

) LI

MIT

ED

PRIN

TE

R: E

LEG

AN

CE

FIN

AN

CE

PR

INT

ING

SE

RV

ICE

S LI

MIT

ED

01 - clear media

Documents