CCME Investor Day Conference 7Sept2010

8/8/2019 CCME Investor Day Conference 7Sept2010

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media *xfi"'expres$


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u u u u u u u u u uAgenda

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Background of CCME - Chairman and CEOSalesand Marketing- CMO

Network Coverageand Technology - COOFinancial Highlights - CFO

CME CorporateStrategy Chairman and CEOrcruffiffnd


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Agendauuuuguguuuu

@,4"$?d;u

Backgroundof CCME - Chairman and CEOF Salesand Marketing - CMO

) Network Coverageand Technology COO) FinancialHighlights - CFO

> CMECorporateStrategy ChairmanandCEO2 rcilffi'ffiffHpg


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uu u uu u u u u uu u uExecutiveSummary @t39dd?e3

CCME is the market leader n television advertising on inter-city and airport expressbuses n China.The annual passenger low is over 1 billionFounded n 2003,CCME is now one of the top ten outdoor media companies and one ofthe top one hundred media companies n ChinaCCME was listed on AMEX in 2009and transfer ts listing status o the NASDAQGlobal SelectedMarket in Tune2010

Inter-cirybus

L5,26010,053

CAGR,o,ru, 22,339 svo55 z1oto

1-6'1270/o

Airportbus

Jun-10

0nillion)$120$100$80$60$40$20

$-'1,L2

2006 2007 2008 2009 Jun-102006 2007

x Revenue $ million)3 Net Profit ($ million)

2008 2009 1H'10CAGR = 1490/oCAGR= 2080/oof Buses --r- # ofBus Operators * # ofRegions

3


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Mission and Goal @ g9$?

Provide excellent travelling experience o business travelers and touristsAllow eachpassenger o receive advertisers' messagesn an easy manner

. Provide right target demographics and effective saleschannels to advertisers

' To be the largest new media company in China; to allow all the passengers earCCME's voice in all transportation means

' Enhance he value of CCME, nnovate and develop diversified and multi-dimensionmedia platforms, n order to provide an economicyet effectivemedia platform, andbecome he best new media group in Chinarcilffi'Fe#ffEffi


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. u u u u u u u u u u uu uuuu uInvestmentHighlights @ E{iii,a'*aout-of-homemedia s thesecondarges.[ -edia latform n China. t is rapidlygrowrngand CAGR is expected o be over 201/on the nelxt hree years . ' "Themarket eader or televisiondvert is ing n inter-ci ty ndairporlexpress usesnChina; ominantmarketposit ionProvide advertisementsand entertainmentprograms that enhancemedia effectivenessstrongadvert is inggency nddirect ales hannel overs 6municipal i t ies rprovrnces Over30advert is ing genciesndover500advertiserst:Slgwledged by various multipre international brands and large nationar bandsover the vearsstable and sustainable growth during the track record and in the futureEffective execution capability of the management eam


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Competitive Advantages @S .ii$?.,,Media Company ffi*i,'x s.i."""j.rt FOCUS t iililEFlEt iH *[Network Platform Inter-city Bus AirpoltBus lntra-cityBus Subway Airlines Airports Building Home TVCost - CPM aso/oofLocal TV CPM -3% -50% "r0%-20% -207, '10% -10% -55% 100%Rate Card ($'000, 0sec,monthly,Beiiine)

$49 $491 $247Opelating Malgin(TTM as of Jun-10) 62 % -4.6% -22.1,% -8.6%With non-adPrograms (Y/N) Y Y Y Y Y N N NAve. ContactDuration (min) 150 60 30 30 150 80 2 VariousNo. of Passengels(milliony'day) 2.7 0.2 25 15

'l 1, 250-300 BroadestLevel of Captivity H H M M H M M H

Souh.e:Canpa V stinat!

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Otganizational Chartu u uuu u u u u u

Imedia *n r 'iexpress

Internal Audit(ChendeXIAO)

Vice GM

Board

GM(Zheng CHENG)

cFoWeiiiLIN)FinancialController (Finance)(Zhuofeng ZHEN)

AcountingDepartment

Vice GMVice GM (Admin.)(t Jeisheng LU) (Techmology)(Biaoxing CIIEN) (Mark,:ting)(]inlong DU)Vice GM(Customer Ser:vice& Purchase)flian YU)

Customel'J:i::'x.1!'-: serviceDepartmentNo*h China PurchasingSales Office Depa*mentSouth & 5WChina SalesOffice

Admin.DepartmentHRDepartment

CEO Office

ProductionDepa*mntPlanningDepa*ment

EngineeringDepartrnenireroffiffnffi


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Growth Strategy @;Bi$?H;

Further expand the network coverage hrough both organic growth and dcquisitionsProvide diversified media products: increaseembedded advertisement and developother fypes of productsExtend advertising media plafforms: improve airport expressmedia network andestablish tour buses media networkImprove customer servicesand technical support to enhancecustomer oyaltyFurther strengthen relationship with bus opelatorsPromote nternational management standard, development an elite managementteamEnhancecorporate core value


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Agenda @8i$?ri;,} Background of CCME - Chairman and CEO

) Network Coverageand Technology COO)' Financial Highlights - CFO

> CMECorporateStrategy ChairmanandCEO

,} Salesand Marketing - CMO

9 rcilffi'ffiEHruffi


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BusinessOvervrew Imediatrr'"expressr CCME operatesan advertising media network targeting the havelling

population Network Target AudienceInter-city Buses. Connecting ier 1, 2,and 3 cities. Average ourney timearound 2.5 hours

Airport ExpressBuses. Connectingairport andthe cities. Average ourney timearound t hour

Average age30 male is themajorityFor businessor tourism purposeMid-to-high income group

PMEB group (Professional,Management,Executives,Businessman)s majorityHigh education evelHigh income and consumptionlevel grouprwryffitrnd


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Ad Format @ts 3i$?H5r We provide three formats: regular ad, embedded ad, theme ad

RegularAd. BroadcastFrequency:10 minutesadvertisementtime slots after every 30 minutes program. Ad slot:5, 10,15,30,60 econds. 20.5minutes regular ad sold everymonthEmbeddedAd. BroadcastFrequency:blended n the 30 minutesprogram broadcast. Type: hamelenti t lemenl,pecial jointenti t lement,creen witching nt i t lement,tudiobackground entitlement. Ad slot: 5, 10, 15,30, 60 seconds.6.7 minutes embeddedad sold every month

aTheme Ad-BroadcastFrequency:Broadcastonce he busengine startsAd slot: 60 seconds5 minutes themead sold every month

By multiple adformats, weProvide multipleproduct selectionsProvide tailor-madeproducts andservlcesImprove mediareachand adawarenessIncrease evenuewhile ensuring the30 minutesbroadcastingofnon-ad program

11 rcilffiffiedAtrAFg


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u uuuu u u uu u u uuu uu u uu u u u u u u uSalesModel @ si$?a-J3

r Our sales model is to not only develop and maintain agent channel, butalso actively develop our direct saleschannel . Developclients hatdo regiornl mediabuy, such as AierOphthalmology ,Haier and ChinaTelecomprovincialsubsidiaries. Sell21 minutesadvertising time

evpnr n.rnnth

i;;;;; Ii+-:"*:1 iSales Team. 113salesmen re stationed n 14sales enteras of June2010. Provide service o agencies,manwhileactively seekingdirectaovefflsefs

"".:tdf;hr,*-.""P;1"+1""{$s+o*"

+zhou&*g"n".Develop clients whodo national mediabuy, such as ndustrybank, Micoe,AlibabaSell11.2minutesadvertising,timeevery monrn

SalesAgencies. Over 30 agencies s of june 2010,2-4agenciesn each egion. Ihe average ear n co-operdtions.z.5 ears. All aggncies re major regionalaovertrsmgcompames. Annual media purchasecontract,monthly settlementSerwe gentse.g., eedbackonbroadcastingmonitoringVisit eachasent2-3 imes


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uuuuAdvertisers @ml8i$?aH'r Our advertisersare nationalbrands mainly in F&B, telecomand apparel

sectorsAdvertisers (Selected) Top Ten AdvertisersRar-rk 2009 1H', 0

Brand Sector Ad minutes Brand Sector Ad minutes1 CMCC Telecom 40.28 ChinaTelecom Telecom 602 Cokecola F&B 36.33 cMcc Telecom 58.53 Unit?resent F&B 36.08 Coke cola F&B 52.54 ChinaTelecoli Telecom 36.08 Unit-present T&B 5L.755 Pepsi F&B 33.33 Pepsi F&B 496 MasterKong F&B 27.42 Eratat Appalel 477 Eratat Apparel 20.25 Xiduoduo F&B 39.58 Xiduoduo F&B 18.00 Master Kong F&B9 GuJingcong F&B 17.83 CuJingcong F&B 29.510 Rejiaman Health careDroducts L7.33 Seven wolf Apparel 28.5

3nr*}3,",*E@iiif,s.fetm#)*t

SIEMENS9"{"Sgi@ft*rli xqns(+aOnE

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Advertiser's VoicePepsl;ChinaMediaExpIess@byitslargescaleinte1-citybusnetwoIk,whichishighly helpful to our sales exparsion.CMCC: China MediaExpress' network penetrate large target audience precisely. It fits our products very well.Leaozo:ChinaMediaExpress' media cost is much lower than traditional media, which is the main reason that we chose CME

L3 Iremffiffnd


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u uu u u u uu u u u u u u u u u uMedia Advantages Imediarrr"rexpressr High media reach and ad awareness

> Media reachof inter-citv bus TV is 1.28 imes of ftaditional TV and 2.18 imes ofintra-citybusTV> Media reachof airport bus TY is 90%, .e.,90%of surveyed passengeis laimedthat they watch advertisementson airport bus TV in the previous month> TakeChina Mobile for example,82%ol suweyed passengers laimed that theywatch China Mobile's advertisementson CME airport bui TV in the one morrih

r LowCPM> CME's CPM of 15secondsad timeslot on inter-city buses s $0.5 -RMB3.5) n first half 2010,which is -3% ofCPM of local TV station

Source:CTR research;managetnenl stimate

CME airport shuttle

L4 remffitrnd


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Agenda @ Big?Hs,} Background of CCME - Chairman and CEOP Salesand Marketing - CMO

)> Financial Highlights - CFOF CVIECorporateStrategy ChairmanandCEO

Network Coverageand Technology- COO

15 rcilffi,F$kfEHnffi


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Inter-city Bus Network @ i:..',,i,.':,s,,,# of inter-cify buses Established national inter-city bus

media network

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6ao/^CP,GY?20,161 22,23915,26010,053

Jun-10

# of regionscoveredCAGR=4I

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Airport Shuttle BusNetwork @ gl$'.agg# of airport shuttle buses

Jan'10 Feh'I0 Nlor'l0 .\pr'I0 NIaS'IOJun'ltt# of regionscovered

Jan'10 Feb'10 Mar'10 Apr'10 Vay'10 fun'10 @ Expanded n Sept2010

expandin airport shuttle busmedia network

As ofJune 010rcilrc'ffitrnHeffi


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u u uBus OperatorCo-operationModel @B:8i$?ffiiCopyrightProsramr Copyright programsandself-madeprograms oimprove our credibility

lF th ! jif.

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r Long-termrelationship10,0008,0006,0004,0002,0000

# of busesbv vearsof co-opg!44e48,010

4,562602 524

5 Yeals 4Yeals 3 Yearc 2Yars lYear


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Technology Advantages @Ei$?aJ;Startup withVehicleMemoryPlayingMandatoryCommercialBreaksInvalidationRemoteControllerUSBPasswordProtection

Tl-Ie ideo port is directly comectedwith the power switch of electricaldoorlock on eachbus,and the programmingstartswhen the bus engine s tumed on.When d1e us enters heserviceand thebus dnver turns the engineofl the videowill stop playing. The program andadvertisementwill resumeas soonas heengine s tuined on again o ensurecontlnulry,Eachadvertising ime slot sprogrammed duoug ll a passwordprotectedelectronic hip.

The broadcasting ystem s anaulomdted-) -tem whiclldocsnol dl o!.the ddver to manually tum it off or fast-forward when adveftisements are shown.A11 rogramsand advertisementsuploaded n the broadcasting ystemaresafelyplotectedby a unique password.

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Customer Service @S"olAi;. Daily on-sitemonitoring. Monitoring dataprovided by third-party institution(CTR):CTR providesad broadcastingmonitoring report tocustomerson the 10thof every month.Industry standardsampling approach oensurevalid results

B0engineeringstaffsare stationedat 16operation centersacross he nationUpload programsmanually; piloting thewirelessuploadingtechnology, n order toFAchieve real-timeprogram updateFlmprove efficiencyFSave abor cost.800/400 hot lines, website eedback

. Professionalafter salesservicestaffs

20 Ireffirffiffaffi


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,Agenda u u u u u u u uu@ !ldrii.'.' u

) Backgroundof CCME - Chairman and CEO) Salesand Marketing - CMO

,} Network Coverageand Technology COO) Financial Highlights - CFO> CME CorporateStrategy Chairmanand CEO

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uugguuu uuuuCCME Historical Income Statements @mt8fi$?H:

WTEEEEEE63.037.9(i0%o(2.8)35.137.9)6'

120/rt

95.963.0660/0(6.4)56.659.847.7130/o "lo/o

I='tol I"- ' " IIL;oo/oII60/oII1290/oI

6-lo/o58%590/o

:-*t

98,068.770%(6.2)62.564.546.7Jt]0/o 6%

15s"/"1I'1920/oI*^l22(ir/rl

1"890/oL79o/o-1980/o

37.8

(;2%(1.e)27.623.775.7

Io.rr..r.r""I Gross rofitIcros"r't*ginIoperatingExpensesIop."utirlg IncomeIru,-o[*.r rr,"o*.Iu.,lut**i'

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u u uu uu u u r u rrrCCME Historical BalanceSheets @a"Farc'

Cnshmul Ctsh Equk'tlentsAccttttrrt RcceirableTottl Cut'etrt AssetsTottl Assets

Liabilities(:tt 'r'erttLitlt ilit ies

tqq6.1

36.149.7

7.8-t4.735.049.7

57.2'12.670.o83.028.635.347.783.0

139.320.7

1.63.4188.7

/ . / .J37.7

150.9I rnt"t Litttitities 1fShareholders'Equity 1rlITotal Liabi l i t iesand Shareholders ' quity .-__'*- .--- ' ' -, 188.7

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uuuu uuuu uuCCME Key Financialsuuuu uu uu uu uuu@L3e$?ss3r CCME has exhibited strong revenue growth and profitability

$100.0$80.0$60.0$40.0$20.0$0.0

Net Revenue($ million) Net Income ($ million)

$4L.7

2008 2009 1H'10 2010E

$100.0$80.0$60.0$40.0$20.0$0.0

$26.2

1H'09 1H',10

$46.7

$15.7

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Income StatementAnalysis - Revenue @lsi$?a'ii'RevenueBreakdown by Revenue Breakdown by

Bus Type Channel1000/o90o/o80%700/o60%50%4U/o300/o200/ol0o/ooo/o

Inter-city BusesI Airport Express uses

2007 2008 2009 1H10AgentSales

I DfuectSales

Revenue Breakdown byAd Format

700%9ln/o80%7On/o5lo/a500/o4Do/o300/o200/o100/oOo/o

100%900/o800/o700/o600/o50o/o40n/o300/omok100/o0o/o

2007 2008Regr:larAd

I ThemeAd2009 1H10

I EmbeddedAd

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,Income StatementAnalysis - Revenue @r39$?K$Average Monthly Revenue($million) & YoY Growth

15.0

10.0

qj t

2007

Inter-citv Bus Media

c*9P fiLz.9

2009 1H'10Average Monthly Sales $ million) +Growth

2007"150%

5.0"100%50%0%

2008 1H'10

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Income StatementAnalysis - Revenue @8,.FauRevenue Driver I -# of Buses End f Period)Inter-city Bus Media

2007 2008 2009 1H'10# of buses '000units)-*- # of regions

Revenue Driver 2 -Ad Rateper Minute per Bus ($)$19 $20

$19 $20$2.5 $2.4a-..*

Revenue Driver 3 -Ad Minutes Sold @ndof reriod)252015105

20151050

t520151002007 2008+Regular Ad

-FTheme Ad2009 1H'10+-Embedded Ad 2007 2008+Regulai Ad

..r-Theme Ad2009 1H',10+-Embedded Ad

500400300200100

Airport ExpressBus Media

1H',10# of buses units) 1H'10^ EmbeddedAd 1H'10^ EmbeddedAd

40 030 020010 0

0

20t51050

. Regular Ada Thene Ad

o RegularAdt Theme AdF # of reremffiffnd uuu u u u u u u u u u u u u uuu u .


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Income StatementAnalysis - Profit Margin@i3'$?eT3r CCME has enjoyed high margins

Gross Profit & Margin Operating Profit & Margin$80.0

$60.0968.7

2008 2009 1H'09 1H'10GrossProfit ($ million)

-.* GrossMargin (%)

90%

80y.

70%607.

$80.0

$60.0

$40.0

$20.0

2008 2009 1H'09 1H'10Operating Profit ($ million)

* oPerating Margin (%)

$40.0

$20.0

$0.0 $0.00%

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@isi$?H;perating Cash Flow and Net Income

$50.0$40.0$30.0$20.0$10.0$0.0

Operat ingCashFlow and Net Income $mil l ion)

$46.3$41"7$27.4 fi26.2

$38.2

fi12.1$7.0

2007 2008OperatingCashFlow

2009I Net Income

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CCME Capital Structure @t8e$?asiTotal Common SharesOutstanding: 34.3M

Chairrnan andInsidersI Public Flow

* Founders ayeamup to 7M Shares nd 7M Sharcsf theadjusted et ncomen 2010and2011reached3.5Mand 130.2 . reso ctiztelu.

30 reruffiff4d u uuu u u u u u


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Comparisonof Financials @l8idd?a$'(Forsix months endedJune30,2010) CCME FocusMedia Vision China Air MediaRevenue $ million) 98.0 283.1 55.2 102.9EBITDA ($million) 64.5 60.1 (18.e) (14.3)Net Income($ million)

Net Income Margin

Diluted EPS $)

46.7

1,.07

24.4

0.16

(104.8)

-190%

(1.28)

(11..2)

(0.17)P/E (1H',10) 6.3x n/a n/a n/a

Sour.e: Matket Wdtch

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@rst$augenda) Background of CCME - Chairman and CEO.} Salesand Marketing - CMOF Network Coverageand Technology COOP FinancialHighlights - CFO) CVtf CorporateStrategy Chairman and CEO

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CME CorporateStrategyBrandingStrategy

BusinessStrategy

ResourceSfrategy

@8eg?asTo focus our resourcesand energy on building thebrand of China MediaExpress,and make ChinaMediaExpress he major brand name in the out-of-home media sector n ChinaTo use expressbuses asour foundation to establish amore complete media chain businessmodel. ToenhanceChina MediaExpress'value through verticaland horizontal approaches,and build CME into asaleskind of mediaTo fully explore and utilize the media resources,policy and partnersresources n sales, echnologyand media plafform to improve corporation's overallstrength

J.' rcnffiffiSnruffiffi

Documents

CCME Investor Day Conference 7Sept2010