2013-8-22-SinoMedia Announces 2013 Interim Results

SinoMedia Holding Limited

2013 Interim Results Announcement

22 August 2013, Page 1 of 3

Financial Highlights

(22 August 2013 - Hong Kong) - SinoMedia Holding Limited ("SinoMedia" or the "Company", together with its subsidiaries, collectively known as the "Group"; stock code: 623), a leading media corporation in China, is pleased to announce its unaudited interim results for the six months ended 30 June 2013. As the overall revenue and gross profit margin of the core businesses achieved remarkable growth, the profit attributable to equity shareholders of the Company amounted to RMB170.3 million, representing a substantial increase of 115% over the same period last year.
In the first half of 2013, China's economy experienced a slowdown in growth caused by the domestic and overseas economic landscape as well as the structural adjustments to the economy. Nevertheless, the media advertising industry, and the TV advertising market in particular, experienced an upturn from the corresponding period last year. The Group once again set an example for the industry with a brilliant performance achieved in the midst of the positive momentum, and recorded revenue of RMB863.9 million, representing an increase of 23% over the same period last year.
Commenting on the first half year results, Chairman of the Group, Mr. Chen Xin said, "As the Group strove to develop content creation and new media platform to support our long-term growth, we spared no effort in cultivating our integrated brand communication services business to enhance our brand influence in customer service. Meanwhile, we further consolidated our notable market advantage in managing resources for China Central Television and other core media. In face of various challenges posed by the unpredictable market and the frequently varying client appetites, we further enhanced our professional capabilities in the media services domain."
During the period under review, media resources management revenue, before sales tax and surcharge deductions, was RMB833.3 million, up 24% over the same period last year. The Group controlled effectively over the pace of sales, enhanced promotional efforts for advertising resources and strove to develop potential clients. These efforts

SinoMedia Holding Limited

2013 Interim Results Announcement

22 August 2013, Page 2 of 3

contributed to a satisfactory year-on-year growth in the sales of core advertising resources in terms of increases in minutes sold, average sales rate, and average selling price. The Group had approximately 19,607 minutes of advertising time resources on a total of 50 programs on the TV channels of China Central Television ("CCTV"), including CCTV-1 (General)/CCTV-News (Chinese), CCTV-4 (Chinese International, including Europe and the US), CCTV-5 (Sports), CCTV-7 (Military and Agriculture) and CCTV-NEWS (English).
Centered on "customer service", integrated brand communication services business delivered comprehensive, full-dimensional services. We worked with clients to formulate branding strategies and subsequently assist them in developing various communication solutions, including brand management, product positioning, communication strategy, media procurement, advertisement placement monitoring, advertising outcome evaluation, and off-line public relations, that covered the various media platforms. During the period under review, this business turnover, before sales tax and surcharge deductions, was RMB613.3 million, representing a slight decrease of 3% over the same period last year. Under the International Accounting Standards, the Group's revenue from this business was RMB18.0 million, a drop of 38% over the same period last year. The decrease in revenue was mainly due to a lag in the confirmation of media accounts settlement. Commission income receivable from TV stations in 2013 will not be recognised until the second half of the year. The Group will continue to exert significant effort in brand building, enhance our professional service capacity, and expand the scale of our business. Our aim is to increase this business segment's contribution to the Group's overall revenue, thereby achieving a balanced development of our business structure.
In view of the complex situation facing the media industry, "content" is becoming more and more important amidst massive information. The Group catered to the "tri-network integration" stimulation policy and implemented a strategic deployment plan of "content + media platforms". During the period under review, revenue recorded from the creative production of advertisement and content business, before sales tax and surcharge deductions, was RMB14.7 million, representing a growth of 96% over the same period last year. Revenue from this business primarily involved commercial advertisement production and the production and distribution of promotional videos by the nationwide public service advertising broadcast network. This business continued its good development with further enhancements to our creative service capacity and continuing increases in revenue contribution.
Speaking about the expectation towards the second half of 2013, Mr. Chen commented, "The Group will leverage the advantages of its media resources, cater to market needs, work out more popular media products and explore more communication channels to provide choices for clients, in order to keep up our growth momentum. With respect to building clientele, the Group will focus on enhancing customer loyalty with our strategic services and expertise, increasing market share, and emphasising the power of brand influence and professionalism. For emerging business segments in their developmental stages, we will increase our investment in media platform construction and creative content production, and stick to our development approach after fully taking stock of market prospects and the economic environment. Meanwhile, the Group remains cautious about the economic and market environment for the second half of the year and the year of 2014. The Group will closely monitor the situation and continue to leverage on its competitive edge to respond any changes in a timely manner. We remain prudently optimistic about achieving the targets of this year."