Clear Media : ANNUAL REPORT 2020

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Financial Highlights

*  Net loss attributable to owners of the parent.

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Fact Sheet at a Glance

Shareholder Information as at

31 December 2020

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Chairman's Statement

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CEO's Report

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Management Discussion and Analysis

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Management Discussion and Analysis

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Management Discussion and Analysis

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Management Discussion and Analysis

We operate more than 59,000 bus shelter advertising panels in

C I T I E S

across China

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Management Discussion and Analysis

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Management Discussion and Analysis

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Management Discussion and Analysis

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Management Discussion and Analysis

Capital Commitments

As at 31 December 2020, the Group had capital commitments contracted but not provided for in relation to the construction of bus shelters amounting to RMB134.8 million (31 December 2019: RMB139.7 million).

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Management Discussion and Analysis

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Management Discussion and Analysis

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Management Discussion and Analysis

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Biographies of Directors

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Corporate Governance Report

Clear Media is committed to ensuring high standards of corporate governance at all times and in all areas of its operations. The board of directors of the Company (the "Board" or the "Board of Directors") believes that good corporate governance is an essential element in enhancing the confidence of current and potential shareholders, investors, employees, business partners and the community as a whole.

CORPORATE GOVERNANCE

The Group is committed to achieving high standards of corporate governance which we believe are crucial to the development of the Group and to the safeguarding of the interests of our shareholders.

The Audit Committee comprises four non-executive Directors, three of whom are independent. The Audit Committee has reviewed the accounting principles and practices adopted by the Group and has also discussed the year end closing and internal audit process, internal control and financial reporting matters for the year ended 31 December 2020 with management, the internal auditor and the external auditor. The Audit Committee has also reviewed the annual results for the year ended 31 December 2020.

The Company has adopted the terms of the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules.

During the period from 1 January 2020 to 31 December 2020, the Company has adopted the code provisions set out in the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules.

In the opinion of the Board, the Company has complied with the code provisions set out in the Corporate Governance Code and Corporate Governance Report set out in Appendix 14 to the Listing Rules during the year ended 31 December 2020. Upon specific enquiry with all Directors, the Board is not aware of any non-compliance with the Model Code throughout the fiscal year ended 31 December 2020.

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Corporate Governance Report

THE BOARD

Member attendance of Board, Committee and Annual General Meetings during 2020:

1. Mr. William Eccleshare resigned as a non-executive director, a deputy chairman and a member of each of the Remuneration Committee and Nomination Committee with effect from 18 May 2020
2. Mr. Michael Saunter resigned as a non-executive director and a member of each of the Audit Committee, Capital Expenditure Committee and Risk Committee with effect from 18 May 2020
3. Mr. Adam Tow resigned as an alternate director with effect from 18 May 2020
4. Mr. Zhu Jia resigned as a non-executive director and a member of the Directors' Security Dealing Committee with effect from 3 June 2020
5. Mr. Thomas Manning resigned as an independent non-executive director, the chairman of the Remuneration Committee and a member of the Nomination Committee with effect from 10 July 2020
6. Ms. Li Ping was appointed as an independent non-executive director and as a member of each of the Remuneration Committee and a Nomination Committee with effect from 25 September 2020
7. Mr. Chen Liang, Mr. Stephen Hon Chiu Wong and Ms. Shum Fei Fei were appointed as non-executive directors with effect from 27 October 2020

Since the Directors' Securities Dealing Committee was established with the principal function of handling the notification and clearance of our directors' dealing in our Company's securities pursuant to Appendix 10 (Model Code for Securities Transactions by Directors of Listed Issuers) to the Listing Rules, regular committee meetings are not considered necessary for its principal function. There was no Directors' Securities Dealing Committee meeting during the year.

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Corporate Governance Report

THE BOARD (continued)

As of the date of this report, the Board comprises 11 members. There are three executive directors, including the Chairman, the Chief Executive Officer (the "CEO") and the Chief Operating Officer; four non-executive directors and four independent non- executive directors. Throughout the year ended 31 December 2020, not less than one-third of the Board was represented by independent non-executive directors. Detailed biographies outlining each director's range of specialist experience and suitability for the successful long- term management of the Group can be found on pages 17 to 22.

CHAIRMAN AND CEO

The Group insists on a clear division of responsibilities among its top management. To this end, the Group adopts a dual leadership structure in which the role of the Chairman is kept separate from that of the CEO and the two roles are exercised by different individuals. The Board is responsible for the overall direction and strategy of the Company while the CEO and the senior management are responsible for the day-to-day management of the Group's businesses.

The Group believes that the Board of Directors comprises a good mix of local and overseas advertising and promotional experts and other diversified industry experts, and that they actively bring their valuable experience to the Board for promoting the best interests of the Company and its shareholders. The Board also believes that such a group is ideally qualified to advise the management team on future strategy development, finance, and other statutory requirements, and to act as guardians of shareholders' interests.

Each director is requested to disclose to the Company the number and nature of offices held in public companies or organisations and any other significant commitments annually. The Board evaluates the independence of all independent non-executive directors on an annual basis and has received written confirmation from each independent non-executive director regarding his/her independence. As at the date of this report, the Board considers all independent non-executive directors to be in full compliance with the independence guidelines as laid down in the Listing Rules.

During the year ended 31 December 2020, the Board maintained the directors' and officers' liability insurance for all directors and officers of the Company against any legal liability arising from the performance of their duties.

BOARD PROCEEDINGS

The Board meets at least four times each year at approximately quarterly intervals to discuss the Group's overall strategy, operations and financial performance. The Chairman also at least annually holds meetings with the non- executive directors (including the independent non-executive directors) without other executive directors present. The Board also ensures that its members are supplied with monthly update on the necessary information in a form and of a quality appropriate to enable the Board to discharge its duties. All Board meetings adhere to a formal agenda in which a schedule of matters is specifically addressed to the Board for its decision. Specific topics discussed at these quarterly Board meetings include overall strategy, major acquisitions and disposals, annual budgets, interim and annual results, recommendations on directors' appointment(s) or reappointment(s), approval of major capital projects, dividend policies, and other significant operational and financial matters. All quarterly Board meetings are scheduled about one year in advance in order to ensure maximum attendance by the directors. All Board members have access to the advice and services of the Group's company secretary. If necessary, directors also have recourse to external professional advice at the Group's expense. During the intervals between Board meetings, individual directors are kept appraised of all major changes that may affect the Group's businesses.

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Corporate Governance Report

BOARD PROCEEDINGS (continued)

The minutes of Board meetings are prepared by the Group's company secretary with details of the matters considered by the Board and the decisions reached, including any concerns raised by directors or dissenting views expressed. The draft minutes are circulated to all directors for their comments within a reasonable time after the meeting, and the final minutes are adopted in the next meeting. Some Board decisions are made via written resolutions authorised by all directors. However, the Board acknowledges that if a substantial shareholder or a director has a conflict of interest in a matter to be considered by the Board which the Board has determined to be material, the matter shall be dealt with by a physical board meeting rather than a written resolution. Independent non-executive directors who, and whose close associates, have no material interest in the transaction should be present at that board meeting. Minutes of the Board meetings are maintained by the company secretary and available for inspection by all directors at the Company's registered and head offices.

APPOINTMENT, RE-ELECTION AND REMOVAL OF DIRECTORS

Shareholders of the Company in general meeting, or the Board upon recommendation of the Nomination Committee of the Company, can appoint any person as a director of the Company at any time. Directors who are appointed by the Board must retire at the first annual general meeting after their appointments, but they are eligible for re-election at that general meeting, and such election is separate from the normal retirement of directors by rotation. In accordance with the Group's Bye-laws and related Board resolutions, one-third of the Board members who have served the longest on the Board, including the Chairman and the CEO, are required to retire by rotation at each Annual General Meeting. Directors are eligible for re-election at the same Annual General Meeting. All non-executive directors are appointed for a fixed term of three years and are subject to retirement by rotation and re-election at least once every three years. The Company has maintained on its website and on the Hong Kong Stock Exchange website an updated list of its directors identifying their role and function and whether they are independent non-executive directors.

All newly appointed directors are briefed by the Company's lawyers about their duties and obligations as a director of a listed company. Newly appointed directors are also encouraged to discuss with the Chairman on any additional information or training they feel they require to discharge their duties more effectively.

ROLES OF THE BOARD

The Board decides on corporate strategies, approves overall business plans, and supervises the Group's financial performance, management and organisation on behalf of the shareholders. Specific tasks that the Board delegates to the Group's management include preparing annual and interim accounts for the Board's approval, implementing strategies approved by the Board, monitoring the operating budgets, implementing internal control procedures, and ensuring compliance with relevant statutory requirements and other rules and regulations.

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Corporate Governance Report

DIRECTORS' TRAINING

The Company provides monthly updates to the directors relating to the Group's business.

During the year, the company secretary provided directors with updates on latest development and changes in the Listing Rules and the regulatory environment. All directors have confirmed that such updates were reviewed by them.

During 2017, the Company arranged and funded a formal training session on inside information and disclosure of false or misleading information, Directors' duties in corporate transaction valuations, mandatory electronic filing - disclosure of interests online system and environmental, social and governance report. Mr. Joseph Tcheng, Mr. Peter Cosgrove, Mr. Han Zi Jing, Mr. Teo Hong Kiong, Mr. Zhang Huai Jun, Mr. Zhu Jia, Mr. Cormac O'Shea, Ms. Leonie Ki Man Fung, Mr. Wang Shou Zhi, Mr. Thomas Manning and Mr. Robert Gazzi attended the training session.

All directors have provided written records of the training they received during 2020 to the Company.

BOARD COMMITTEES

The Board has established seven Committees to oversee particular aspects of the Group's affairs. The main roles and responsibilities of the Audit, Remuneration and Nomination Committees, including the authority delegated to them by the Board, are published on the Group's website at www.clear-media.net. The independent views of the different Committees and their recommendations not only ensure proper control of the Group but also the continual achievement of the high corporate governance standards expected of a listed company. Except for the Directors' Securities Dealing Committee of which regular meetings are not considered necessary for its principal function, the chairman of each Committee reports the outcome of the Committee's meetings to the Board for further discussion and approval.

BOARD OF DIRECTORS

AUDIT COMMITTEE

The responsibilities and authorities of the Audit Committee include the review of the Group's financial controls and internal control systems; and the details of its responsibilities and authorities are set out in the terms of reference a copy of which is published on the Hong Kong Stock Exchange's and the Group's websites. The Committee consists of four non-executive directors, with the majority of them being independent non-executive directors. The Audit Committee is chaired by an independent non-executive director, Mr. Robert Gazzi, a former audit partner from PricewaterhouseCoopers in Hong Kong, who possesses extensive experience in, and knowledge of, finance and accounting. All members of this Committee have the relevant industry and financial experience necessary to advise on Board strategies and other related matters. None of the Committee members is a partner or former partner of Ernst & Young, the Company's external auditors. The Chief Financial Officer, the Group's company secretary, the internal auditor, and representatives of the external auditors of the Company are expected to attend meetings of the Committee.

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Corporate Governance Report

MEMBERS OF THE AUDIT COMMITTEE

Robert Gazzi, Independent Non-Executive Director (Chairman)

Peter Cosgrove, Non-Executive Director

Wang Shou Zhi, Independent Non-Executive Director

Christopher Thomas, Independent Non-Executive Director

Michael Saunter, Non-Executive Director*

• Mr. Michael Saunter resigned as a non-executive director and a member of each of the Audit Committee, Capital Expenditure Committee and Risk Committee with effect from 18 May 2020

The Audit Committee met four times in 2020 to review the internal audit review work on bus shelter inspection, human resources function, continuing connected transactions, sales function, local branches, financial management and compliance with the Code of Business Conduct and Ethics. The interim review plan, the interim review report, the audit findings and the annual results were discussed with the external auditors of the Company. The engagements of the external auditors for non- audit services were reviewed by the Audit Committee. The key findings and the related recommendations arising from these works were reported to the Board. The meetings of the Audit Committee are attended by members of the Committee, the company secretary and, when necessary, the external auditors and internal auditors. At the discretion of the Committee, other people may also be invited to the meetings.

Apart from considering the issues arising from the audit process, the Audit Committee also discusses matters raised by the external auditors. The Audit Committee also regularly reviews the effectiveness of the Company's financial control and internal control systems. The Audit Committee subsequently reports any findings and recommendations to the Board for review and approval. All issues reported by the internal auditors are monitored closely by the Group's senior management until such time as appropriate measures can be taken to address and resolve the issues in question. The Chairman of the Audit Committee summarises the activities of the Audit Committee and highlights issues arising therefrom to the Board after each Audit Committee meeting.

The Audit Committee is also entrusted with monitoring and assessing the independence and objectivity of the external auditors and the effectiveness of the audit process. All external audit partners are subject to periodic rotation and the ratio of annual fees for non- audit services to those for audit services is subject to close scrutiny by the Audit Committee.

The Audit Committee has conducted a review of the effectiveness of the Group's internal control systems for the financial year ended 31 December 2020.

During the year under review, the fees paid or payable to the Group's external auditors Ernst & Young were as follows:

The Audit Committee has reviewed the findings of the audit and non-audit service fees, process and effectiveness, and independence and objectivity of Ernst & Young. During 2020, non-audit services include various tax services and the preparation of environmental, social and governance report.

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Corporate Governance Report

REMUNERATION COMMITTEE

The responsibilities and authorities of the Remuneration Committee are set out in the terms of reference a copy of which is published on the Hong Kong Stock Exchange's and the Group's websites. The Committee has adopted the model where it performs an advisory role to the Board, with the Board retaining the final authority to approve executive directors' and senior management's remuneration. The Remuneration Committee currently has four non- executive directors, with a majority of them being independent non-executive directors.

The Remuneration Committee met four times in 2020 to review the remuneration level and the bonus for the executive directors and made the related recommendations to the Board.

MEMBERS OF THE REMUNERATION COMMITTEE

Christopher Thomas, Independent Non-Executive Director (Chairman)

Thomas Manning, Independent Non-Executive Director*

Peter Cosgrove, Non-Executive Director

William Eccleshare, Non-Executive Director**

Wang Shou Zhi, Independent Non-Executive Director

Li Ping, Independent Non-Executive Director***

• Mr. Thomas Manning resigned as an independent non-executive director, the chairman of the Remuneration Committee and a member of the Nomination Committee with effect from 10 July 2020
• Mr. William Eccleshare resigned as a non-executive director, a deputy chairman and a member of each of the Remuneration Committee and Nomination Committee with effect from 18 May 2020
• Ms. Li Ping was appointed as an independent non-executive director of the Company and a member of each of the Remuneration Committee and the Nomination
  Committee with effect from 25 September 2020

REMUNERATION POLICY

The primary objective of the Group's remuneration policy is to retain and motivate executive directors by linking their compensation to the Group's performance and evaluating their compensation against corporate goals, so that the interests of the executive directors and the senior management team are aligned with those of our shareholders. No director can, however, approve his or her own remuneration.

EXECUTIVE DIRECTORS' REMUNERATION: BASIC SALARY

The Remuneration Committee annually reviews the basic salary of all executive directors of the Group. When considered necessary, the Remuneration Committee also reviews the bonus amounts and bonus schemes for the executive directors. Details of each executive director's salary and bonus are in the "Notes to Financial Statements" on pages 97 to 98.

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Corporate Governance Report

SHARE OPTIONS AND LONG-TERM INCENTIVES

The Remuneration Committee may from time to time recommend grants of share options under the Group's approved share option scheme for executive directors. Details of the share options granted to executive directors and the management team to date are published on page 57 of the "Report of the Directors."

The Remuneration Committee may from time to time recommend the award of shares under the share award scheme approved by the Board on 31 May 2017. Details of the shares awarded and held by the trustee under the share award scheme for the executive directors are set out on page 58 of the "Report of the Directors".

Apart from share options and share awards, the Remuneration Committee may from time to time review and recommend other forms of long-term incentive for the executive directors.

NON-EXECUTIVE DIRECTORS' REMUNERATION

All fees paid to non-executive directors for their services to the Group are subject to annual review by the Remuneration Committee. The Group also offers its non-executive directors reimbursement of invoices for out-of- pocket expenses incurred by them while discharging their duties as directors, such as attending meetings on behalf of the Group. Full details of all such fees paid to non-executive directors during 2020 can be found on pages 96 to 97 of the "Notes to Financial Statements". The non-executive directors, together with the other directors of the Company, are subject to retirement by rotation and reelection in accordance with the Company's Bye-laws at each annual general meeting.

NOMINATION COMMITTEE

The responsibilities and authorities of the Nomination Committee are set out in the terms of reference a copy of which is published on the Hong Kong Stock Exchange's and the Group's websites. The Nomination Committee reports to the Board and makes recommendations regarding the appointment of directors, its evaluation of the Board's composition (in which board diversity would be considered from a number of aspects, including but not limited to gender, age, cultural and education background, ethnicity, professional experience, skills, knowledge and length of services), and the management of Board succession with references endorsed by the Board itself. The Nomination Committee currently has one executive director and five non-executive directors, with the majority of them being independent non-executive directors.

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Corporate Governance Report

NOMINATION PROCESS

1. Appointment of New Director
2. 1. The Nomination Committee and/or the Board should, upon receipt of the proposal on appointment of new director and the biographical information (or relevant details) of the candidate, evaluate such candidate based on the criteria as set out above to determine whether such candidate is qualified for directorship.
   2. If the process yields one or more desirable candidates, the Nomination Committee and/or the Board should rank them by order of preference based on the needs of the Company and reference check of each candidate (where applicable).
   3. The Nomination Committee should then recommend to the Board to appoint the appropriate candidate for directorship, as applicable.
   4. For any person that is nominated by a shareholder for election as a director at the general meeting of the Company, the Nomination Committee and/or the Board should evaluate such candidate based on the criteria as set out above to determine whether such candidate is qualified for directorship.
      Where appropriate, the Nomination Committee and/or the Board should make recommendation to shareholders in respect of the proposed election of director at the general meeting.
3. Re-electionof Director at General Meeting
4. 1. The Nomination Committee and/or the Board should review the overall contribution and service to the Company of the retiring director and the level of participation and performance on the Board.
   2. The Nomination Committee and/or the Board should also review and determine whether the retiring director continues to meet the criteria as set out above.
   3. The Nomination Committee and/or the Board should then make recommendation to shareholders in respect of the proposed re-election of director at the general meeting.

Where the Board proposes a resolution to elect or re-elect a candidate as director at the general meeting, the relevant information of the candidate will be disclosed in the circular to shareholders and/or explanatory statement accompanying the notice of the relevant general meeting in accordance with the Listing Rules and/or applicable laws and regulations.

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Corporate Governance Report

MEMBERS OF THE NOMINATION COMMITTEE

Joseph Tcheng, Executive Director (Chairman)

Peter Cosgrove, Non-Executive Director

Robert Gazzi, Independent Non-Executive Director

Christopher Thomas, Independent Non-Executive Director

Wang Shou Zhi, Independent Non-Executive Director

Li Ping, Independent Non-Executive Director*

• Ms. Li Ping was appointed as an independent non-executive director of the Company and a member of each of the Remuneration Committee and the Nomination
  Committee with effect from 25 September 2020.

The Board also approved the adoption of the board diversity policy. Such policy aims to achieve diversity in the Board in the broadest sense in order to have a balance of skills, experience and diversity of perspectives appropriate to the business nature of the Company. Under such policy, selection of candidates to the Board is based on a range of diversity perspectives, including but not limited to gender, age, cultural and education background, ethnicity, professional experience, skills, knowledge and length of service.

Hence, the Nomination Committee adopts certain criteria and procedures in the nomination of new directors with due regard to the benefits of diversity in the Board that would complement the existing Board. The criteria include a candidate's professional background, especially advertising, financial and commercial experience, and track record with other listed companies. The Nomination Committee also considers information on candidates available from various sources, including the database of the Institute of Directors in Hong Kong, as well as recommendations from the management team and other knowledgeable individuals. Candidates who satisfy all of the relevant criteria are then short-listed by the Chairman and the Secretary of the Nomination Committee before their nominations are proposed to the Nomination Committee. The Nomination Committee subsequently meets to select the final candidate and submit its recommendation to the Board for approval.

The Nomination Committee had a meeting in 2020 to review the structure, size and composition of the Board, directors' service contracts and the election/re-election of directors; and made the related recommendation to the Board.

CAPITAL EXPENDITURE COMMITTEE

The Capital Expenditure Committee is in charge of reviewing and recommending new projects involving capital expenditures greater than RMB10,000,000 to the Board for its approval in order to ensure more efficient usage of the Group's capital resources. The members of this Committee include the Group's Chairman, the Chief Financial Officer and the Chief Operating Officer.

MEMBERS OF THE CAPITAL EXPENDITURE COMMITTEE

Joseph Tcheng, Chairman of the Board, Executive Director (Chairman)

Zhang Huai Jun, Chief Operating Officer, Executive Director

Lam Bin Kim, Chief Financial Officer

The Capital Expenditure Committee met four times in 2020 to review the Group's strategic development, capital expenditure budget, refurbishment needs, renewal of certain bus shelter concession rights, acquisitions and construction of bus shelters; and made the related recommendations to the Board.

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Corporate Governance Report

CASH COMMITTEE

The Cash Committee was established, with the main roles and responsibilities clearly defined in its terms of reference, for reviewing the adequacy of and the options for utilization of the Group's cash on hand with a view to enhance shareholders' interests, and making related recommendations to the Board. The options to be considered by the Cash Committee, from time to time, include, but are not limited to, the following:

1. significant capital investment for the organic expansion of the Group's businesses;
2. significant mergers and acquisitions;
3. recommendation for various forms of dividends;
4. share repurchase by the Company; and
5. repayment of any significant borrowing, if any.

The members of this Committee include a non-executive director, the Group's Chairman and the Chief Operating Officer.

PRINCIPLES TERMS OF THE DIVIDEND POLICY ADOPTED BY THE COMPANY ARE AS FOLLOWS:

1. The board of directors (the "Board") of the Company adopt the policy that, in recommending or declaring dividends, the Company shall maintain adequate cash reserves for meeting its working capital requirements and future growth as well as its shareholder value.
2. The Company intends to distribute 20%-40% of its annual net profits as dividends to its shareholders, subject to the conditions and factors as set out below.
3. The Board has the discretion to propose, declare and distribute dividends to the shareholders of the Company, subject to the Bye-Laws of the Company and all applicable laws and regulations and the factors set out below.
4. The Board shall also take into account the following factors of the Company and its subsidiaries (collectively, the "Group") when considering the declaration and payment of dividends:
5. • financial results;
   • cash flow situation;
   • business conditions and strategies;
   • future operations and earnings;
   • capital requirements and expenditure plans;
   • interests of shareholders;
   • any restrictions on payment of dividends;
   • recommendation from the Cash Committee; and
   • any other factors that the Board may consider relevant.

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Corporate Governance Report

PRINCIPLES TERMS OF THE DIVIDEND POLICY ADOPTED BY THE COMPANY ARE AS FOLLOWS: (continued)

1. Depending on the financial conditions of the Company and the Group and the conditions and factors as set out above, dividends may be proposed and/or declared by the Board for a financial year or period:
2. • interim dividend;
   • final dividend;
   • special dividend; and
   • any distribution of net profits that the Board may deem appropriate.
3. The Cash Committee of the Company makes recommendations to the Board regarding the adequacy of cash on hand and the options for utilization of the Company's cash on hand on top of the Company's distribution of cash dividend.
4. The Company in general meeting may from time to time declare dividends in any currency to be paid to the Members but no dividends shall be declared in excess of the amount recommended by the Board subject to the Bye-Laws of the
   Company and all applicable laws and regulations.
5. The Company may declare and pay dividends by way of cash or warrant or by other means that the Board considers appropriate.
6. Any dividend unclaimed shall be forfeited and shall revert to the Company in accordance with the Company's Bye-Laws.

MEMBERS OF THE CASH COMMITTEE

Peter Cosgrove, Non-Executive Director (Chairman)

Joseph Tcheng, Chairman of the Board, Executive Director

Zhang Huai Jun, Chief Operating Officer, Executive Director

The Cash Committee had three meetings in 2020 to review the adequacy of and various options for utilization of the Group's cash on hand and made the related recommendations to the Board.

DIRECTORS' SECURITIES DEALING COMMITTEE

The Directors' Securities Dealing Committee was established with the main roles and responsibilities clearly defined in its terms of reference and the principal function of handling the notification and clearance of directors' dealing in the Company's securities pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out under Appendix 10 to the Listing Rules. The members of this Committee include the Chairman of our Board and an independent non-executive director.

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Corporate Governance Report

MEMBERS OF THE DIRECTORS' SECURITIES DEALING COMMITTEE

Joseph Tcheng, Chairman of the Board, Executive Director (Chairman)

Robert Gazzi, Independent Non-Executive Director

Given the nature of the Committee's principal function, regular meetings are not considered necessary and there was no Committee meeting during the year.

During the year, the Committee received one notification letter and the related clearance letter was issued pursuant to Appendix 10 of the Listing Rules.

RISK COMMITTEE

The Risk Committee was established on 27 May 2016. The Risk Committee currently comprises two executive directors and the Chief Financial Officer. The Risk Committee is chaired by the Chairman of the Board, Mr. Joseph Tcheng. The principal functions of the Risk Committee include:

• to assist the Board in evaluating and determining the extent of the risks it is willing to take in achieving the Company's strategic objectives, and ensuring that the Company establishes and maintains appropriate and effective risk management system;
• to assist the Board in overseeing management in the design, implementation and monitoring of the risk management system;
• to review the Company's risk management system;
• to discuss the risk management system with management to ensure that management has performed its duty to have effective system;
• to consider major investigation findings on risk management matters as delegated by the board or on its own initiative and management's response to these findings;
• to advise the Board on the Group's risk appetite statement(s), risk principles and other risk-related issues including corporate actions and proposed strategic transactions such as mergers, acquisitions and disposals;
• to approve the Group's risk policies and risk tolerances;
• to consider emerging risks relating to the Group's business and strategies to ensure that appropriate arrangements are in place to control and mitigate the risks effectively;
• to review risk reports and breaches of risk tolerances and policies; and
• to review and assess regularly the adequacy and effectiveness of the Group's risk management framework and risk management policies and procedures in identifying, measuring, monitoring and controlling risk, and oversee their effective operation, implementation and maintenance.

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Corporate Governance Report

MEMBERS OF THE RISK COMMITTEE

Joseph Tcheng, Chairman of the Board, Executive Director (Chairman)

Zhang Huai Jun, Executive Director

Lam Bin Kim, Chief Financial Officer

The Risk Committee held four meetings in 2020 to review, based on the Group's risk management system, the risks relevant to the Group. In the review, the Risk Committee considered:

1. the changes in the nature and extent of the significant risks and the associated procedures designed to address the risks;
2. the scope and quality of management of the various departments' ongoing monitoring of risks system; and
3. the extent and frequency of communication of risk monitoring results to the Board.

The following highlights the top 4 risks to the Group based on the annual risk assessment conducted in 2020.

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Corporate Governance Report

RISK MANAGEMENT, INTERNAL CONTROLS AND INTERNAL AUDIT

The Board is entrusted with the overall responsibility for establishing and maintaining the Group's risk management and internal control systems and reviewing their effectiveness. The role of the Group's management is to implement all Board policies on risk and internal control.

Risk Management and Internal Control Systems

Risk Management System

The Group has in place an internal risk identification, assessment and management system. Regular surveys are conducted with the management of all operating departments to identify the key (i) operation risks, (ii) financial risks, (iii) compliance risks and (iv) strategic risks of the Group. Key risks identified are assessed and ranked according to the likelihood of occurrence and extent of impact to the Group.

Identified risks are then mapped to relevant control procedures and are allocated to the relevant departments according to their functions for risk management on an ongoing basis. For instance, the business development department is responsible for addressing the operation risk of loss of existing major concession rights whereas the human resources department focuses on maximizing talent retention within the Group. The departments entrusted with risk management responsibilities give regular update and report on the risk control status to the Risk Committee, who then reports to the Board.

Internal Control System

The Group has internal control systems which are designed to provide reasonable protection of the Group's assets, and to safeguard these assets against unauthorised use or disposition by ensuring that all such transactions are executed in accordance with management's authorisation. The systems are designed to ensure that accounting records are sufficiently accurate for the preparation of financial information used for operational and reporting purposes.

The Group has adopted comprehensive procedures with duly assigned levels of authority in areas of financial, operational and compliance controls, and risk management to ensure that its assets and resources remain secure at all times. Key internal control procedures have been designed for safeguarding assets against unauthorised use or disposition; for maintaining proper accounting records; and for ensuring the reliability of financial information used within the business or for publication. The procedures are designed to provide reasonable but not absolute assurance against material errors, losses or fraud. Procedures have also been designed to ensure compliance with applicable laws, rules and regulations.

The Group also has in place procedures and internal controls for handling and dissemination of inside information whereby the Chairman of the Board, the Chief Financial Officer and the Company Secretary work closely, seeking advice from our legal advisor from time to time, if needed, with proper reporting to and approval from the Board for proper handling and dissemination of inside information in accordance with relevant laws and regulations.

While the Board is committed to mitigating risks and maximizing internal controls, the Group's risk management and internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

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Corporate Governance Report

RISK MANAGEMENT, INTERNAL CONTROLS AND INTERNAL AUDIT (continued)

Internal Audit

The Group has an internal audit function. In 2010, the Board approved a 3-year rotational internal audit plan covering several different departments. The objective of this plan is to reduce potential risks and improve operational efficiency. This policy has been refreshed every 3 years and the 3-year internal audit plan is renewed and reviewed on an annual basis. The Group has outsourced the internal audit function to a leading international audit firm. The Group's internal auditor report their findings and make their recommendations directly to the Audit Committee on a regular basis and have the right to consult the Audit Committee without first referring to the management. The Audit Committee reports the progress of the work plan and related findings to the Board at each meeting during the year.

Material internal control defects identified are reported to the Audit Committee who shall supervise the management's design and implementation of rectification measures. The Audit Committee also keeps the Board informed of the rectification process.

Review of the Risk Management and Internal Control Systems

The Group's risk management and internal control systems are reviewed on an annual basis at the end of each year and covers the systems in place during that full financial year.

At the annual review of the risk management system, risk levels of the key risks identified during the year are re- assessed to evaluate the sufficiency and effectiveness of the existing procedures implemented to address the risks.

The Board, through the Audit Committee, has conducted a review of the effectiveness of the Groups' internal control system and effectiveness of internal audit function for the financial year ended 31 December 2020. The Board, through the Risk Committee, has conducted a review of the effectiveness of the Group's risk management system for the financial year ended 31 December 2020. Such reviews cover all material financial, operational and compliance controls and the risk management function. The Board considers the risk management and internal control systems of the Group is effective and adequate.

The directors acknowledged their responsibility for preparation of financial statements which give a true and fair view of the Group's state of affairs of the results and cash flow for the year. The Directors are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern.

The Independent Auditor's Report on pages 60 to 64 of this annual report has set out the responsibilities of Ernst & Young, the external auditors of the Company.

CORPORATE GOVERNANCE FUNCTIONS

During the year ended 31 December 2020, the Board reviewed the policy for the corporate governance of the Company, and performed the duties under Code Provision D.3.1. In particular, the Board conducted a general review of the Company's policies and practices on corporate governance and compliance with legal and regulatory requirements, as well as the Company's compliance with the Corporate Governance Code and disclosure in the Corporate Governance Report.

For work done in respect of training and continuous professional development of directors and senior management and the review and monitoring of code of conduct and compliance manual applicable to employees and directors, please refer to the sections headed "Directors' Training" and "Code of Conduct and Business Ethics" in the Corporate Governance Report.

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Corporate Governance Report

CODE OF CONDUCT AND BUSINESS ETHICS

The directors of the Group have a duty and responsibility to act honestly and with due diligence and care when carrying out their duties on behalf of the Group. During 2012, all directors were provided with the latest version of the "Guidance on the Disclosure of Price Sensitive Information" published by Hong Kong Exchanges and Clearing Limited, the "Guidelines for Directors" published by the Hong Kong Institute of Directors and the "Guidelines on Disclosure of Inside Information" published by the Securities and Futures Commission. During 2013, the Company arranged and funded a formal training session on the new inside information disclosure regime and the related changes to the Listing Rules. During 2014, the Company updated the directors on the effect of the amendments to the Listing Rules and arranged and funded a formal training session on connected transactions, fair and equal treatment to shareholders and directors' fiduciary duties. During 2015, the Company updated the directors on the effect of the amendments to the Listing Rules. During 2016, the Company Secretary updated the directors on the effect of the amendments to the Listing Rules and the Company funded a formal training session on connected transactions, key changes to the ESG reporting and disclosures of interests under Part XV of the Securities and Futures Ordinance. During 2017, the Company arranged and funded a formal training session on inside information and disclosure of false or misleading information, Directors' duties in corporate transaction valuations, mandatory electronic filing - disclosure of interests online system and environmental, social and governance report.

The Group is committed to ethical business conduct. The Group has adopted a Code of Business Conduct which applies to all of the Group's employees. With the help from a law firm, the Group typically arranges professional training for its employees on the Code of Business Conduct and Anti-Corruption matters at least annually. The written material of such professional training can readily be accessed by any employee at the Company's corporate website. During the year ended 31 December 2020, the Board reviewed the Group's compliance with the Code of Business Conduct on a quarterly basis and did not find any material non-compliance.

SOCIAL RESPONSIBILITY AND SUSTAINABILITY

The Group is committed to being a good corporate citizen and contributes to the well-being of the communities in which it operates its bus shelter network. To this end, subject to availability, the Group donates approximately 10% of its advertising panels to local municipal governments to help promote community events. The Group is also a donor of sponsored advertising spaces for various charitable causes.

DIRECTORS' SECURITIES TRANSACTIONS

The Group has adopted strict procedures that require all directors to confirm that their securities transactions are fully compliant with the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules. In 2020, all directors confirmed their compliance with the Model Code. Specified employees who are likely to be in possession of inside information related to the Group and its activities must also comply with guidelines as exacting as those set out in the Model Code. No non-compliance report was received from any such employee during 2020.

DIRECTORS' INTERESTS

Full details of individual director's interests in the shares and share options of the Company are set out on pages 53 to 58 of the "Report of the Directors."

OPEN COMMUNICATION

The Group is committed to acting in good faith and in the best interests of its shareholders at all times and in all areas of its operations. The Group actively promotes open communication and full disclosure of all information needed to protect and maximise returns for its shareholders.

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Corporate Governance Report

COMMUNICATION WITH SHAREHOLDERS

Effective communication with shareholders has always been one of the Group's priorities. The various channels by which the Group communicates with its shareholders include interim and annual reports, the Company's websites, and general investor meetings held either face-to-face or via telephone conference calls. The Group reports to its shareholders twice a year and maintains a regular dialogue with investors. Interim and annual results are announced as early as possible to keep shareholders informed of the Group's performance and operations in a timely manner. The publication of the Group's financial results on a semi-annual basis enhances transparency regarding its performance and ensures that details of new developments affecting the Group are made available in a timely manner. The Group typically announces its interim and annual results no later than two months and three months, respectively after the end of the relevant periods. An Annual General Meeting is generally held no later than 6 months after the financial year-end, and all shareholders are encouraged to attend the Annual General Meeting to discuss the progress of the Group's businesses.

The shareholders' communication policy is published on the Group's website at www.clear-media.net.

SHAREHOLDERS' RIGHTS

Right to convene a special general meeting

The procedures for shareholders to convene a special general meeting in accordance with the Company's Bye-laws, the Bermuda Companies Act 1981 and applicable legislation and regulation are set out as follows:

1. Members of the Company ("Members") holding at the date of deposit of the requisition not less than 10% of the paid-up capital of the Company carrying the right to vote at general meetings of the Company shall at all times have the right, by written requisition sent to the Company's registered office in Bermuda at Clarendon House, 2 Church Street, Hamilton,
   HM11 Bermuda and its principal office in Hong Kong at Suite 1202, 12th Floor, Lee Garden One, 33 Hysan Avenue,
   Causeway Bay, Hong Kong, for the attention of the company secretary of the Company ("Company Secretary"), to require a special general meeting ("SGM") to be called by the board of directors of the Company ("Board") for the transaction of any business specified in such requisition.
2. The written requisition must state the purposes of the general meeting, signed by the Member(s) concerned and may consist of several documents in like form, each signed by one or more of those Members.
3. If the requisition is in order, the Company Secretary will ask the Board to convene a SGM by serving sufficient notice in accordance with the statutory requirements to all the registered Members. On the contrary, if the requisition is invalid, the Members concerned will be advised of this outcome and accordingly, a SGM will not be convened as requested.
4. The notice period to be given to all the registered Members for consideration of the proposal raised by the Member(s) concerned at a SGM varies according to the nature of the proposal, as follows:
5. • at least twenty-one (21) clear days' notice in writing if the proposal constitutes a special resolution of the Company, which cannot be amended other than to a mere clerical amendment to correct a patent error; and
   • at least fourteen (14) clear days' notice in writing if the proposal constitutes an ordinary resolution of the Company.

Members who have enquiries about the above procedures or have enquiries to put to the Board may write to the Company Secretary at Suite 1202, 12th Floor, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong.

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Corporate Governance Report

SHAREHOLDERS' RIGHTS (continued)

Right to propose resolutions at general meetings

The procedures for shareholders to make proposals at general meeting other than a proposal of a person for election as a director according to the Company's Bye-laws, the Bermuda Companies Act 1981 and applicable legislation and regulation are set out as follows:

1. The Company holds an annual general meeting ("AGM") every year, and may hold a general meeting known as a SGM whenever necessary.
2. Member(s) holding (i) not less than 5% of the total voting rights of all Members having the right to vote at the general meeting of the Company; or (ii) not less than 100 Members, can submit a written request stating the resolution intended to be moved at the AGM; or a statement of not more than 1,000 words with respect to the matter referred to in any proposed resolution or the business to be dealt with at a particular general meeting.
3. The written request/statements must be signed by the Member(s) concerned and deposited at the Company's registered office in Bermuda at Clarendon House, 2 Church Street, Hamilton, HM11 Bermuda and its principal office in Hong Kong at Suite 1202, 12th Floor, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong, for the attention of the
   Company Secretary, not less than six weeks before the AGM in the case of a requisition requiring notice of a resolution and not less than one week before the general meeting in the case of any other requisition.
4. If the written request is in order, the Company Secretary will ask the board of directors of the Company ("Board") (i) to include the resolution in the agenda for the AGM; or (ii) to circulate the statement for the general meeting, provided that the Member(s) concerned have deposited a sum of money reasonably determined by the Board sufficient to meet the Company's expenses in serving the notice of the resolution and/or circulating the statement submitted by the Member(s) concerned in accordance with the statutory requirements to all the registered Members. On the contrary, if the requisition is invalid or the Member(s) concerned have failed to deposit sufficient money to meet the Company's expenses for the said purposes, the Member(s) concerned will be advised of this outcome and accordingly, the proposed resolution will not be included in the agenda for the AGM; or the statement will not be circulated for the general meeting.

Members who have enquiries about the above procedures or have enquiries to put to the Board may write to the Company Secretary at Suite 1202, 12th Floor, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong.

Right to nominate directors for election at general meetings

The procedures for shareholders to propose a person for election as a director of the Company are published on the Group's website at www.clear-media.net.

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Corporate Governance Report

VOTING RIGHTS

All shares in the Company are ordinary shares. The total number of outstanding shares issued at the date of this annual report was 541,700,500. All shareholders whose shares are registered in the Company's register of shareholders on the record date published in the Company's shareholders' meeting notice are entitled to vote at the meetings. In accordance with the Listing Rules, any votes of shareholders at the Company's general meetings are taken by poll. Results of shareholders' meetings are reported to the public via announcements published on the Hong Kong Stock Exchange's and the Group's websites.

Shareholders who wish to exercise their rights to vote by proxy may do so upon presentation of a written and dated instrument appointing their proxy. The letter convening each shareholders' meeting includes a proxy form which appoints the Chairman of the Board as proxy for each specific proposal. All shareholders are welcome to ask questions or present proposals for discussion at these meetings.

CONSTITUTIONAL DOCUMENTS

There is no change in the Company's Bye-laws during the year ended 31 December 2020.

INVESTOR RELATIONS

The Group regards open communication with both existing and potential investors as being vital to its continued success. To this end, the Group insists on full, honest, equal and timely disclosure of all essential information regarding its business to the investment community. The Group is committed to transparent communication and is determined to maintain close ties with the investment community. Our senior management team regularly attends investor conferences organised by securities houses in Hong Kong, China and overseas.

The Group's corporate website also provides an effective communication platform where the public and investor community have fast and easy access to up-to-date information regarding the Group.

Investors with queries are encouraged to direct their enquiries to the following:

Jeffrey Yip

Director of Investor Relations and Company Secretary Suite 1202 Lee Garden One

33 Hysan Avenue Causeway Bay Hong Kong

Telephone: (852) 2235 3977

Fax: (852) 2235 3911

Email: jeffrey.yip@clear-media.net

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Corporate Governance Report

FINANCIAL CALENDAR 2021

SHARE PRICE PERFORMANCE

Sources: (Bloomberg)

243.3 million shares were traded on the Main Board of the Hong Kong Stock Exchange in 2020. The highest trading price for the share was HK$7.48 on 26 May 2020 and the lowest was HK$4.40 on 28 February 2020.

Trading in the Shares on the Stock Exchange has been suspended with effect from July 14, 2020 and will remain suspended until further notice.

44

Report of the Directors

The directors of the Company are pleased to present their report together with the consolidated financial statements of the Group for the year ended 31 December 2020.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. Details of the principal activities of the subsidiaries are set out in note 1 to the financial statements. There were no significant changes in the nature of the Group's principal activities during the year.

BUSINESS REVIEW

The business review for the year ended 31 December 2020 is set out in the management discussion and analysis section from pages 6 to 17.

RESULTS AND DIVIDENDS

The Group's profit for the year ended 31 December 2020 and the state of affairs of the Company and the Group at that date are set out in the financial statements on pages 65 to 70.

At the Board meeting held on 17 March 2021, the directors resolved not to pay any dividend to the shareholders in respect of the year ended 31 December 2020 (2019: nil).

SUMMARY FINANCIAL INFORMATION

A summary of the published results and assets, liabilities and minority interests of the Group for the last five financial years is set out on page 131. This summary does not form part of the audited financial statements.

The following is a summary of the published consolidated results and of the assets, liabilities and minority interests of the Group prepared on the basis set out in the note below:

FIVE YEAR FINANCIAL SUMMARY

45

Report of the Directors

PROPERTY, PLANT AND EQUIPMENT AND CONCESSION RIGHTS

Details of movements in the property, plant and equipment and concession rights of the Group for the year ended 31 December 2020 are set out in notes 14 and 15 to the financial statements, respectively.

SHARE CAPITAL AND SHARE OPTIONS

Details of movements in the Company's share capital and share options during the year together with the reasons therefor, and details of the Company's share option schemes are set out in notes 22 and 23 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 33 to the financial statements and in the consolidated statement of changes in equity, respectively.

DISTRIBUTABLE RESERVES

As at 31 December 2020, the Company's retained earnings and other components of equity available for cash distribution and/or distribution in specie amounted to RMB1,013,542,000 (2019: RMB1,041,291,000). 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, SALE OR REDEMPTION OF SHARES

The Group has not redeemed any of its listed shares during the year. Except for the sale of the 705,800 shares in the Company previously held by the Trustee for two executive director under the share award scheme of the Company, neither the Company nor any of its subsidiaries has purchased or sold any of the Company's listed shares during the year.

CHARITABLE CONTRIBUTIONS

During the year, the Group did not make any charitable contributions (2019: Nil).

MAJOR CUSTOMERS AND SUPPLIERS

Sales to the Group's five largest customers accounted for 29% of the Group's turnover for the year while sales to the Group's single largest customer accounted for approximately 8% of the Group's turnover for the year. Payment to the Group's five largest suppliers who provide goods and services which are specific to the Group's businesses and which are required on a regular basis to enable the Group to continue to supply or service its customers accounted for 39% of the Group's total payment to suppliers for the year while payment to the Group's single largest supplier accounted for approximately 13% of the Group's total payment to suppliers for the year.

None of the directors, or any of their close 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 customers and/or suppliers.

46

Report of the Directors

CONNECTED TRANSACTIONS AND CONTINUING CONNECTED TRANSACTIONS

Certain related party transactions as disclosed in note 29 to the financial statements also constituted connected transactions under the Listing Rules, and are required to be disclosed in accordance with Chapter 14A of the Listing Rules. The following transactions between certain connected persons (as defined in the Listing Rules) and the Group have been entered into and/ or are ongoing for which relevant announcements, if necessary, had been made by the Company in accordance with the requirements of the Listing Rules. The Group entered into the following continuing connected transactions during the year ended 31 December 2020:

1. CONTINUING CONNECTED TRANSACTIONS

1. On 11 March 2013, WHA Joint Venture entered into a new three-year framework agreement (the "Framework
   Agreement") with Guangdong White Horse Advertising Company Limited ("GWH") in respect of the advertising commission arrangement (as described below) for the years 2013, 2014 and 2015 on substantially the same terms as the previous framework agreement signed on 8 February 2010 by WHA Joint Venture and GWH. The Framework Agreement provides that GWH may, with the consent of WHA Joint Venture, assign part or all of the said agreement to an affiliated company or to such other company over which Mr. Han Zi Dian may exercise influence over the management and day-to-day operations. The assignee will assume the obligations and rights of GWH under the Framework Agreement and the applicable annual caps for the transactions under the Framework Agreement will remain unchanged. The underlying transactions pursuant to the Framework Agreement constitute continuing connected transactions of the Company under the Listing Rules. At the Special General Meeting held on 12 April
   2013, the independent shareholders approved the Framework Agreement and the annual cap amounts of the transactions under the Framework Agreement for the years 2013, 2014 and 2015.
   WHA Joint Venture is an indirect 80% owned subsidiary of the Company. Mr. Han Zi Dian, a non-executive director from April 2001 to October 2012 and the brother of Mr. Han Zi Jing, an executive director of the Company, 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 his indirect 14.2% interest in GWH. As such, GWH is an associate of Mr. Han Zi Jing (a director) and Mr. Han Zi Dian (an individual who was then a director of the Company within the last 12 months), and hence a connected person of the Company under Chapter 14A of the Listing Rules.

Customers of WHA Joint Venture can be classified into two categories, namely (i) advertisers or end-customers and

1. advertising agencies. Under the advertising commission arrangement, GWH, as an advertising agency engaged by end-customers for planning and implementing advertising campaigns, assists WHA Joint Venture in procuring advertising sales. In return, WHA Joint Venture pays an advertising commission to GWH for successful sales.

All sales contracts entered into by WHA Joint Venture, including those contracts booked through GWH, are based on its standard terms and conditions and its standard price list, which are also applicable to sales contracts with other third party advertising agencies. The amount of advertising commission payable to GWH for procuring the sales contracts is no more than the applicable standard advertising commission rate payable to the advertising agencies from time to time. The current applicable rate is 8%.

As with the arrangement with other advertising agencies, the value of sales (net of commission) is settled in cash as and when the end-customers settle the gross sales amounts with GWH, who in turn settles with WHA Joint Venture.

47

Report of the Directors

1. CONTINUING CONNECTED TRANSACTIONS (continued)

1. (continued)
   The initially approved annual caps for the gross value of sales from GWH for the financial years ended on 31 December 2013, 2014 and 2015 were HK$260.0 million, HK$285.0 million and HK$315.0 million, respectively. At the Special General Meeting held on 16 July 2014, the independent shareholders approved a supplemental framework agreement dated 30 May 2014 and the annual caps for the gross value of sales from GWH for the financial years ended on 31 December 2014 and 2015 were revised to HK$374.0 million and HK$404.0 million, respectively. The total gross value of sales from GWH and WHM (as defined below) for 2015 was approximately HK$347.6 million. The initially approved annual caps for the advertising commission payable to GWH for each of these financial years shall not exceed HK$21.0 million, HK$23.0 million and HK$25.0 million, respectively. At the same Special General Meeting held on 16 July 2014, the independent shareholders approved the revised annual caps of HK$30.0 million and HK$32.5 million, respectively, for the advertising commission payable to GWH for each of 2014 and 2015. The total advertising commission payable to GWH and WHM for 2015 was approximately HK$20.4 million.
   On 22 December 2015, WHA Joint Venture entered into a new three-year framework agreement ("2015 Framework
   Agreement") with GWH, Hainan White Horse Media Advertising Co., Ltd ("WHM") and White Horse (Shanghai) Investment Company Limited ("WSI") (GWH, WHM and WSI, together the "Service Providers") for the years 2016,
   2017 and 2018 on substantially the same terms as the Framework Agreement, save for the addition of WHM and WSI as signing parties to the Framework Agreement. Similar to GWH, Mr. Han Zi Dian (brother of Mr. Han Zi Jing, an executive director of the Company), is able to exercise influence over the management and day-to-day operations of each of WHM and WSI. Accordingly, WHM and WSI are associates of Mr. Han Zi Jing (a director) and hence are connected persons of the Company under Chapter 14A of the Listing Rules. The Framework Agreement provides that the Service Providers may, with the consent of the WHA Joint Venture, assign part or all of the said agreement to an affiliated company or to such other company over which Mr. Han Zi Dian may exercise influence over the management and day-to-day operations. The assignee(s) will assume the obligations and rights of the relevant Service Provider(s) under the Framework Agreement and the applicable annual caps for the transactions under the Framework Agreement will remain unchanged. The underlying transactions pursuant to the Framework
   Agreement constitute continuing connected transactions of the Company under the Listing Rules. At the Special
   General Meeting held on 28 January 2016, the independent shareholders approved the Framework Agreement and the annual cap amounts of the transactions under the Framework Agreement for the years 2016, 2017 and 2018.
   The approved annual caps for the gross value of sales from the Service Providers for the financial years ended on 31 December 2016, 2017 and 2018 are HK$414.0 million, HK$424.5 million and HK$435.0 million, respectively. The total gross value of sales from WHM and WSI for 2018 was approximately HK$408.1 million. The approved annual caps for the advertising commission payable to the Service Providers for each of these financial years are HK$33.0 million, HK$34.0 million and HK$35.0 million, respectively.

48

Report of the Directors

1. CONTINUING CONNECTED TRANSACTIONS (continued)

1. (continued)
   On 10 January 2019, WHA Joint Venture entered into a new three-year framework agreement ("2019 Framework Agreement") with GWH, WHM and WSI (GWH, WHM and WSI, together the "Service Providers") for the years 2019, 2020 and 2021 on substantially the same terms as the 2015 Framework Agreement. The 2019 Framework Agreement provides that the Service Providers may, with the consent of the WHA Joint Venture, assign part or all of the said agreement to an affiliated company or to such other company over which Mr. Han Zi Dian may exercise influence over the management and day-to-day operations. The assignee(s) will assume the obligations and rights of the relevant Service Provider(s) under the 2019 Framework Agreement and the applicable annual caps for the transactions under the 2019 Framework Agreement will remain unchanged. The underlying transactions pursuant to the Framework Agreement constitute continuing connected transactions of the Company under the Listing
   Rules. At the Special General Meeting held on 26 April 2019, the independent shareholders approved the 2019 Framework Agreement and the annual cap amounts of the transactions under the 2019 Framework Agreement for the years 2019, 2020 and 2021.
   The approved annual caps for the gross value of sales from the Service Providers for the financial years ending on 31 December 2019, 2020 and 2021 are HK$457.0 million, HK$480.0 million and HK$504.0 million, respectively. The approved annual caps for the advertising commission payable to the Service Providers for each of these financial years are HK$36.5 million, HK$38.5 million and HK$40.3 million, respectively. The total gross value of sales from the service providers in 2020 was approximately HK$450.5 million and the total advertising commission payable to the Service Providers for 2020 was approximately HK$29.9 million.
2. On 3 March 2011, WHA Joint Venture and GWH entered into a creative services agreement pursuant to which GWH agreed to provide to WHA Joint Venture creative design services for posters, sales and marketing materials and company profiles, for a term from 1 January 2011 to 31 December 2013. 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.
   On 28 January 2014, the Board resolved that WHA Joint Venture shall enter into a creative services agreement with GWH to renew the terms under the previous creative services agreement entered into on 3 March 2011. The terms of such new creative services agreement are substantially the same as the terms under the previous creative services agreement entered into on 3 March 2011, and it has a fixed term of three years which took effect on 1 January 2014 and will expire on 31 December 2016. These transactions were entered into on terms no less favourable than those available to or from independent third parties. The annual cap for the consideration for each of the financial years ended on 31 December 2014, 2015 and 2016 will be no more than RMB3,000,000.
   On 24 October 2016, the Board resolved that WHA Joint Venture shall enter into a new creative services agreement with WHM on substantially the same terms as the creative services agreement entered into on 28 January 2014 with GWH. The new creative services agreement has a fixed term of three years which took effect on 1 January 2017 and it will expire on 31 December 2019. The annual cap for the consideration for each of the financial years ended on 31 December 2017, 2018 and 2019 will be no more than RMB4,000,000.
   On 18 December 2019, the Board resolved that WHA Joint Venture shall enter into a new creative services agreement with WHM on substantially the same terms as the creative services agreement entered into on 24 October 2016 with GWH. The new creative services agreement has a fixed term of three years which took effect on 1 January 2020 and it will expire on 31 December 2022. The annual cap for the consideration for each of the financial years ending on 31 December 2020, 2021 and 2022 will be no more than RMB4,000,000. The total consideration for 2020 was approximately RMB3,774,000.

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Report of the Directors

1. CONTINUING CONNECTED TRANSACTIONS (continued)

1. On 20 April 2007, WHA Joint Venture entered into maintenance services agreements with various branches of
   Hainan White Horse Holding Company Limited ("White Horse Holding") for a fixed term until 31 December 2008 and such agreements were subsequently renewed until 31 December 2012.
   Following a capital injection into White Horse Holding in November 2009, Mr. Han Zi Dian became interested in more than 50% of the voting power of White Horse Holding. Mr. Han Zi Dian was a non-executive director of the Company from April 2001 to October 2012 and is the brother of Mr. Han Zi Jing, an executive director of the Company. As such, White Horse Holding has been an associate of a director since November 2009, and hence a connected person of the Company under Chapter 14A of the Listing Rules. It follows that all the transactions between the Group and White Horse Holding thereafter constitute continuing connected transactions under
   Chapter 14A of the Listing Rules.
   The Board resolved to enter into a framework maintenance services agreement (the "Framework Maintenance Services Agreement") on 24 January 2013 with White Horse Holding in place of the maintenance service arrangements between WHA Joint Venture and White Horse Holding. Pursuant to the Framework Maintenance Services Agreement, White Horse Holding will provide cleaning, maintenance and related services to the bus shelters of WHA Joint Venture through its branches. Under the Framework Maintenance Services Agreement, the maintenance fees payable by WHA Joint Venture to White Horse Holding would be settled by WHA Joint Venture on a monthly basis before the tenth day of every month.
   On 28 January 2014, the Board resolved that WHA Joint Venture shall enter into a maintenance services agreement with White Horse Holding to renew the terms under the Framework Maintenance Services Agreement. The terms of such maintenance services agreement are substantially the same as the terms under the Framework Maintenance Services Agreement, and it has a fixed term of three years which took effect on 1 January 2014 and will expire on 31 December 2016. The annual caps for the consideration for each of the financial years ended on 31 December 2014, 2015 and 2016 will not exceed HK$55,000,000, HK$60,000,000 and HK$65,000,000, respectively.
   On 24 October 2016, the Board resolved that WHA Joint Venture shall enter into a new maintenance services agreement with White Horse Holding to renew the terms under the maintenance services agreement entered into on 28 January 2014. The terms of the new maintenance services agreement are substantially the same as the terms under the maintenance services agreement entered into on 28 January 2014, and it has a fixed term of three years which took effect on 1 January 2017 and will expire on 31 December 2019. The annual caps for the consideration for each of the financial years ended on 31 December 2017, 2018 and 2019 will not exceed HK$52,000,000, HK$60,000,000 and HK$66,000,000, respectively.
   On 18 December 2019, the Board resolved that WHA Joint Venture shall enter into a new maintenance services agreement with White Horse Holding to renew the terms under the maintenance services agreement entered into on 24 October 2016. The terms of the new maintenance services agreement are substantially the same as the terms under the maintenance services agreement entered into on 24 October 2016, and it has a fixed term of three years which took effect on 1 January 2020 and will expire on 31 December 2022. The annual caps for the consideration for each of the financial years ending on 31 December 2020, 2021 and 2022 will not exceed HK$60,000,000 annually. For the year ended 31 December 2020, the maintenance fee paid or payable by WHA Joint Venture for the services provided by White Horse Holding was RMB38,094,000 (equivalent to approximately HK$42,711,000).

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Report of the Directors

2. CONNECTED TRANSACTIONS

During the year 2015, WHA Joint Venture entered into certain arrangements with Beijing YiHong Media Company Limited ("BYH") and a third party company whereby BYH agreed to act as agent and represent WHA Joint Venture to rent certain shelters from the third party company for the display of WHA Joint Venture advertising campaign and provide advertising display and other services to WHA Joint Venture. BYH is a subsidiary of WHM and also a related party of the Company because Mr. Han Zi Dian is the brother of Mr. Han Zi Jing, an executive director of the Company, and Mr. Han Zi Dian is able to influence over the management and day-to-day operations of WHM. In the opinion of the directors, these transactions were entered into on terms similar to those available from independent third parties. The total consideration for 2015 was HK$723,000 and there was no such transaction in 2016 or 2017 or 2018 or 2019 or 2020.

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

1. had been entered into, and the agreements governing those transactions were entered into, by the Group in the ordinary and usual course of business;
2. 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
3. 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.

Ernst & Young, the Company's auditor, was engaged to report on the Group's continuing connected transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 Assurance Engagements Other Than Audits or Reviews of Historical Financial Information and with reference to Practice Note 740 Auditor's Letter on Continuing Connected Transactions under the Hong Kong Listing Rules issued by the Hong Kong Institute of Certified Public Accountants. A copy of the auditor's letter on the continuing connected transactions of the Group for the year ended 31 December 2020 has been provided by the Company to the Stock Exchange.

Extracts of the auditor's letter are as below:

Based on the foregoing, in respect of the disclosed continuing connected transactions:

1. nothing has come to our attention that causes us to believe that the disclosed continuing connected transactions have not been approved by the Company's board of directors.
2. for transactions involving the provision of goods or services by the Group, nothing has come to our attention that causes us to believe that the transactions were not, in all material respects, in accordance with the pricing policies of the Group.
3. nothing has come to our attention that causes us to believe that the transactions were not entered into, in all material respects, in accordance with the relevant agreements governing such transactions.
4. with respect to the aggregate amount of each of the continuing connected transactions set out in the attached list of continuing connected transactions, nothing has come to our attention that causes us to believe that the disclosed continuing connected transactions have exceeded the maximum aggregate annual value disclosed in the previous announcements dated 24 October 2016 and 10 January 2019 made by the Company in respect of each of the disclosed continuing connected transactions.

51

Report of the Directors

DIRECTORS

The directors of the Company during the year and up to the date of this report were:

Executive Directors:

Joseph Tcheng

Han Zi Jing

Zhang Huai Jun

Non-Executive Directors:

William Eccleshare 1

Peter Cosgrove

Zhu Jia 4

Michael Saunter2

Chen Liang 7

Stephen Hon Chiu Wong 7

Shum Fei Fei 7

Independent Non-Executive Directors:

Christopher Thomas**

Wang Shou Zhi

Thomas Manning 5

Robert Gazzi

Li Ping 6

Alternate Directors:

In accordance with clause 87 of the Company's Bye-laws and board resolution, one-third of the directors will retire by rotation and, if eligible, will offer themselves for re-election at the forthcoming annual general meeting. The directors of the Company, including the independent non-executive directors, the Chairman and the Chief Executive Officer are subject to retirement by rotation and re-election in accordance with the provisions of the Company's Bye-laws at each annual general meeting.

1. Mr. William Eccleshare resigned as a non-executive director, a deputy chairman and a member of each of the Remuneration Committee and Nomination Committee with effect from 18 May 2020
2. Mr. Michael Saunter resigned as a non-executive director and a member of each of the Audit Committee, Capital Expenditure Committee and Risk Committee with effect from 18 May 2020
3. Mr. Adam Tow resigned as an alternate director with effect from 18 May 2020
4. Mr. Zhu Jia resigned as a non-executive director and a member of the Directors' Security Dealing Committee with effect from 3 June 2020
5. Mr. Thomas Manning resigned as an independent non-executive director, the chairman of the Remuneration Committee and a member of the Nomination Committee with effect from 10 July 2020
6. Ms. Li Ping was appointed as an independent non-executive director and as a member of each of the Remuneration Committee and a Nomination Committee with effect from 25 September 2020
7. Mr. Chen Liang, Mr. Stephen Hon Chiu Wong and Ms. Shum Fei Fei were appointed as non-executive directors with effect from 27 October 2020
8. Mr. Jérôme Lucien Joseph Marie d'Héré was appointed as an alternate director with effect from 15 March 2021

52

Report of the Directors

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 18 to 23 of the annual report.

DIRECTORS' SERVICE CONTRACTS

Each of the executive directors has entered into a service agreement with the Company for a term of three years and terminable by not less than three months' 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' REMUNERATION

The directors' fees are subject to shareholders' approval at general meetings. Other emoluments are determined by the Company's board of directors with reference to directors' duties, responsibilities and performance and the results of the Group.

DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF SIGNIFICANCE

Save as disclosed in note 29 to the financial statements, no director or an entity connected with a director had a material interest, either directly or indirectly, in any transaction, arrangement or 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.

PERMITTED INDEMNITY PROVISION

Pursuant to Article 166 of the Bye-Laws of the Company, the directors and other officers of the Company shall be indemnified out of the assets and profits of the Company against all actions, costs and losses incurred or sustained by such director or officer in or about the execution of his duty. In addition, the Board maintains the directors' and officers' liability insurance for all directors and officers of the Company against any legal liability arising from the performance of their duties.

53

Report of the Directors

DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

As at 31 December 2020, 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 Hong Kong Stock Exchange pursuant to the Model Code, were as follows:

1. Long Positions in Ordinary Shares of the Company as at 31 December 2020:
   On 31 May 2017, the Board of Directors adopted the share award scheme (the "Share Award Scheme"). Under the Share Award Scheme, the Board of Directors may select any employee of the Group (the "Selected Employee") and make an award of Shares and cash (if any) ("Award") to such Selected Employee and determine the reference awarded sum ("Reference Awarded Sum") for the purchase and/or allocation of Awarded Shares. The Company has appointed an independent trustee ("Trustee") for the administration of the Share Award Scheme.
   On 31 May 2017, the Board of Directors resolved to grant three Awards comprising an aggregate Reference Awarded Sums of HK$9,600,000 for the purchase of Shares and an aggregate amount of HK$4,800,000 in cash to be awarded to the following three Executive Directors under the Share Award Scheme.

54

Report of the Directors

DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES (continued)

1. Long Positions in Ordinary Shares of the Company as at 31 December 2020: (continued)
   Under the Share Award Scheme, the Company paid the sum of HK$9,600,000 (being the Reference Awarded Sum) to the Trustee from the Company's resources. The Trustee then applied the Reference Awarded Sum towards the purchase of the maximum number of board lots of Shares from the market and had been holding such Shares for the benefit of the relevant Selected Employees in accordance with the Share Award Scheme and the underlying trust deed.
   Vesting of the three Awards granted is subject to the fulfilment (or waiver) of vesting conditions (including the EBITDA performance of the Group for the years ended 31 December 2017, 2018 and 2019) specified in the Grant Letters. The actual number of Awarded Shares (and their Related Income as mentioned in the Share Award Scheme) and the amount of cash award to be vested is subject to the performance of the Group prior to vesting and may be reduced accordingly.
   On 20 March 2018, one of the Selected Employees passed away. On 29 May 2018, the Board of Directors resolved to cancel the 352,900 Awarded Shares granted to him under the Share Award Scheme. As at 31 December 2020, these Awarded Shares had already been sold off.
   On 18 March 2020, the Board of Directors resolved to cancel and sell the Shares for the two Executive Directors as the vesting conditions were not satisfied. As at 31 December 2020, these Awarded Shares had already been sold off.
   The interests of the directors in the share options of the Company are separately disclosed on pages 55 to 57.
2. Long Positions in the ordinary shares of City Lead Developments Limited as at 31 December 2020: (Note 1)

1. Ever Harmonic Global Limited, a controlling shareholder of the Company, is wholly owned by City Lead Developments Limited, which is held as to 40% by Forward Elite Holdings Limited. Forward Elite Holdings Limited is wholly owned by Mr. Han Zi Jing.

Save as disclosed above, none of the directors nor the chief executive had registered an interest or short position in the shares and 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 Hong Kong Stock Exchange pursuant to the Model Code.

55

Report of the Directors

DIRECTORS' RIGHTS TO ACQUIRE SHARES

Apart from as disclosed under the headings "Directors' and Chief Executive's Interests and Short Positions in Shares and Underlying Shares" above and the "Share Option Schemes" and "Share Award Scheme" 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 his or her respective spouse or minor children, or were any such rights exercised by them; or was the Company, or any of its holding companies, subsidiaries or fellow subsidiaries, a party to any arrangement to enable the directors to acquire such rights in any other body corporate.

SHARE OPTION SCHEMES

Prior to 28 November 2008, the Company operated, among others, a share option scheme (the "Old Scheme") for the purpose of providing incentives and rewards to eligible participants who contributed to the Group's operations. The Old Scheme became effective on 28 November 2001 and expired on 28 November 2008, after then no further options had been granted under the Old Scheme. Options which were granted during the life of the Old Scheme shall continue to be exercisable in accordance with their terms of issue and the last remaining batch of such options expired on 29 June 2014. Accordingly, there are no outstanding options under the Old Scheme.

At the annual general meeting of the Company on 13 May 2009, an ordinary resolution was passed to approve and adopt a new share option scheme (the "New Scheme"). The New Scheme was subsequently amended in the Annual General Meeting on 1 June 2012. The purpose of the New Scheme is to enable the Company to grant options to eligible participants of the Company or any subsidiaries of the Company, as determined by the board of directors in recognition of their contributions to the Group. Under the New Scheme, the directors may, at their discretion, offer to grant options to any employees, directors or consultants of any company in the Group. The New Scheme became effective on 19 May 2009 and, unless otherwise cancelled or amended, will remain in force for 10 years from that date.

The total number of ordinary shares which may be issued upon exercise of all options to be granted under the New Scheme shall be subject to a maximum limit of 10% of the shares in issue as at 13 May 2009 (excluding shares which may be issued upon exercise of options granted under the Old Scheme, whether such options are exercised, outstanding, cancelled or lapsed), unless the Company obtains an approval from shareholders in a general meeting to refresh such 10% limit in accordance with the Listing Rules. Options lapsed in accordance with the terms of the New Scheme will not be counted for the purpose of calculating such 10% limit. The limit on the number of shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Scheme and any other share option schemes of the Company and/or any of its subsidiaries must not exceed 30% of the shares of the Company in issue from time to time, and no options may be granted under the New Scheme or any other share option schemes of the Company and/or any of its subsidiaries if that will result in such 30% limit being exceeded.

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.

56

Report of the Directors

SHARE OPTION SCHEMES (continued)

An option may be exercised in accordance with the respective terms of the New Scheme or Old Scheme at any time during the option period. The option period was 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 29 June 2007. Share options granted on 29 June 2007 (the "2007 Options") would not become vested unless the Company achieved an average annual earnings per share growth of 5% each year in the first three full financial years after the grant date. As the vesting condition was not met, the share option expenses of the 2007 Options recognised amounting to HK$20 million were reversed in 2010.

The subscription price for the Company's shares under the New Scheme and the Old Scheme was a price determined by the board of directors and notified to each grantee. The subscription price was the highest of: (i) the nominal value of a share; (ii) the closing price of the shares as stated in the Hong Kong 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 Hong Kong 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 respective schemes) and to have taken effect when the acceptance form as described in the respective schemes 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.

On 10 June 2015, 5,000,000 share options were granted to certain eligible participants under the New Scheme. Such eligible participants included three Executive Directors and one alternate Director. The terms of such grant are set out on pages 57.

On 31 May 2017, the Company granted an aggregate of 1,929,000 share options to certain eligible participants under the New Scheme. Among these 1,929,000 share options, 905,000 options were granted to three Executive Directors and an Alternate Director. The details of such grant are set out on pages 57.

As at 31 December 2019, the aggregate number of shares issuable under share options granted under the New Scheme was 5,283,000, which represented approximately 1.0% of the Company's shares in issue as at that date. The exercise in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of 5,283,000 additional ordinary shares of HK$0.10 each in the Company and proceeds, before relevant share issue expenses, of approximately HK$49,584,170.

57

Report of the Directors

SHARE OPTION SCHEMES (continued)

The maximum number of shares issuable under share options which may be granted to each eligible participant under the New 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. The share options granted under the New Scheme for a consideration of HK$1.00 per grant are set out below:

• The vesting period of the share options is from the date of grant until the commencement of the exercise period.
• 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's share capital.
• The price of the Company's shares disclosed as at the date of the grant of the share options is the Hong Kong Stock Exchange closing price on the trading day 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 the share options is the weighted average of the Hong Kong Stock Exchange closing prices over all of the exercises of options within the disclosure line.

58

Report of the Directors

SHARE AWARD SCHEME

On 31 May 2017, the Board of Directors adopted the share award scheme (the "Share Award Scheme"). Under the Share Award Scheme, the Board of Directors may select any employee of the Group (the "Selected Employee") and make an award of ordinary shares of the Company and cash (if any) ("Award") to such Selected Employee and determine the reference awarded sum for the purchase and/or allocation of Awarded Shares. The Company has appointed an independent trustee for the administration of the Share Award Scheme.

The purposes of the Share Award Scheme are (i) to retain and motivate the Selected Employees; (ii) to align the interest of the Selected Employees with the long-term success of the Company; (iii) to provide fair and competitive compensation to the Selected Employees; and (iv) to drive the achievement of strategic objectives of the Company.

Under the Share Award Scheme, the Board shall not make any further Award which will result in the number of the Shares awarded by the Board under the Share Award Scheme exceeding 3% of the number of Shares in issue as at the date of adoption of the Share Award Scheme (i.e. 31 May 2017). The maximum number of Shares which may be awarded to a Selected Employee shall not exceed 1% of the number of Shares in issue as at the adoption date.

Details of awards granted under the Share Award Scheme are set out on pages 53 and 54.

At no time during the year ended 31 December 2020 was the Company, or any of its subsidiaries, a party to any arrangement to enable the directors or any of their respective spouses 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 2020, 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:

Notes:

1. Mr. Han Zi Jing notified the Stock Exchange that as at 13 July 2020, 477,755,526 shares of the Company were held by Ever Harmonic Global Limited. Ever Harmonic Global Limited, a controlling shareholder of the Company, is wholly owned by City Lead Developments Limited, which is held as to 40% by Forward Elite Holdings Limited. Forward Elite Holdings Limited is wholly owned by Mr. Han Zi Jing.
2. Aimia Inc. notified the Stock Exchange that as at 13 May 2020, 58,774,450 shares of the Company were held by it.

Save as disclosed above, as at 31 December 2020, 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 and Underlying 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.

59

Report of the Directors

SUFFICIENCY OF PUBLIC FLOAT

Trading in the shares of the company has been suspended since 14 July 2020. Please refer to the Company's announcements dated 14 July 2020, 13 August 2020, 29 October 2020, 12 November 2020, 26 November 2020, 14 January 2021 for details.

The Company will make further announcement to inform its shareholders and potential investors of the development as and when appropriate pursuant to the Listing Rules.

CODE OF CORPORATE GOVERNANCE PRACTICES

In the opinion of the Directors, the corporate governance practices adopted by the Group during the period from 1 January 2020 to 31 December 2020 were in line with the code provisions set out in the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out under Appendix 10 to the Listing Rules 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 Company confirmed that 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

Save as disclosed in note 28 to the financial statements, as at 31 December 2020, the Group was not involved in any material litigation or arbitration and no material litigation or claim was pending or threatened or made against the Group as far as the board of directors was aware of.

OTHERS

Please also refer to the sections headed "Chairman's Statement", "CEO's Report", "Management Discussion and Analysis" and "Corporate Governance Report" in this annual report (which form part of this Report of the Directors) for further details.

ON BEHALF OF THE BOARD

Joseph Tcheng

Chairman

Hong Kong

17 March 2021

60

Independent Auditor's Report

Independent auditor's report

To the shareholders of Clear Media Limited (Incorporated in Bermuda with limited liability)

OPINION

We have audited the consolidated financial statements of Clear Media Limited (the "Company") and its subsidiaries (the "Group") set out on pages 65 to 130, which comprise the consolidated statement of financial position as at 31 December 2020, and the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAs") issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the HKICPA's Code of Ethics for Professional Accountants (the "Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

61

Independent Auditor's Report

62

Independent Auditor's Report

OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT

The directors of the Company are responsible for the other information. The other information comprises the information included in the Annual Report, other than the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

63

Independent Auditor's Report

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors of the Company either intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.

The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group's financial reporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Our report is made 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.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

64

Independent Auditor's Report

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

• Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is TJEN, Michael.

Ernst & Young

Certified Public Accountants

Hong Kong

17 March 2021

65

Consolidated Statement of Profit or Loss

Year ended 31 December 2020

66

Consolidated Statement of Comprehensive Income

Year ended 31 December 2020

67

Consolidated Statement of Financial Position

31 December 2020

68

Consolidated Statement of Changes in Equity

Year ended 31 December 2020

• These reserve accounts comprise the consolidated reserves of RMB1,903,882,000 (2019: RMB2,146,342,000) in the consolidated statement of financial position.

69

Consolidated Statement of Cash Flows

Year ended 31 December 2020

70

Consolidated Statement of Cash Flows

Year ended 31 December 2020

71

Notes to Financial Statements

31 December 2020

1. CORPORATE AND GROUP INFORMATION

Clear Media Limited is an exempted company incorporated in Bermuda on 30 March 2001 under the Companies Act 1981 of Bermuda. The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

The Group is engaged in the operation of outdoor advertising business. There were no significant changes in the nature of the Group's principal activities during the year.

In the opinion of the directors, the parent and the ultimate holding company of the Company is Ever Harmonic Global Limited which is incorporated in the Cayman Islands.

Information about subsidiaries

• • Limited ("WHA Joint Venture")
• The People's Republic of China (the "PRC") excludes, for the purpose of these financial statements, Hong Kong, Macau and Taiwan.

The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

WHA Joint Venture was established in the PRC on 24 March 1998 as a Sino-foreign equity joint venture with a tenure of 30 years. On 4 April 2001, WHA Joint Venture changed its legal structure from a Sino-foreign equity joint venture to a Sino-foreignco-operative joint venture. At the same time, the registered capital of WHA Joint Venture increased from HK$100,000,000 to US$60,000,000 with Hainan White Horse Advertising Co., Ltd. ("Hainan White Horse") and China Outdoor Media (HK) sharing 20% and 80% of interests, respectively.

According to the agreement entered into by China Outdoor Media (HK) and Hainan White Horse on 3 September 2001, for the fiscal years 2001 to 2005 (both years inclusive), China Outdoor Media (HK) would be entitled to 90% of the after-tax profits of WHA Joint Venture. According to the subsequent agreements entered into by China Outdoor Media (HK) and Hainan White Horse, the term of China Outdoor Media (HK)'s entitlement of 90% of the after-tax profits of WHA Joint Venture has been extended to 31 December 2016 at a consideration of HK$250,000 payable to Hainan White Horse each year for the fiscal years 2006 to 2017 (both years inclusive). The agreement was renewed on 28 October 2016 on substantially the same terms as the previous agreement for the years 2017 and 2018. The latest agreement was renewed on 10 January 2019 for the years 2019 and 2020.

72

Notes to Financial Statements

31 December 2020

2.1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention. These financial statements are presented in RMB and all values are rounded to the nearest thousand except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries (collectively referred to as the "Group") for the year ended 31 December 2020. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

1. the contractual arrangement with the other vote holders of the investee;
2. rights arising from other contractual arrangements; and
3. the Group's voting rights and potential voting rights.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group's share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

73

Notes to Financial Statements

31 December 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the Conceptual Framework for Financial Reporting 2018 and the following revised HKFRSs for the first time for the current year's financial statements.

The nature and the impact of the Conceptual Framework for Financial Reporting 2018 and the revised HKFRSs are described below:

1. Conceptual Framework for Financial Reporting 2018 (the "Conceptual Framework") sets out a comprehensive set of concepts for financial reporting and standard setting, and provides guidance for preparers of financial statements in developing consistent accounting policies and assistance to all parties to understand and interpret the standards. The Conceptual Framework includes new chapters on measurement and reporting financial performance, new guidance on the derecognition of assets and liabilities, and updated definitions and recognition criteria for assets and liabilities. It also clarifies the roles of stewardship, prudence and measurement uncertainty in financial reporting. The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The Conceptual Framework did not have any significant impact on the financial position and performance of the Group.
2. Amendments to HKFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the amendments prospectively to transactions or other events that occurred on or after 1 January 2020. The amendments did not have any impact on the financial position and performance of the Group.
3. Amendments to HKFRS 9, HKAS 39 and HKFRS 7 address issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative risk-free rate ("RFR"). The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the introduction of the alternative RFR. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedging relationships.

74

Notes to Financial Statements

31 December 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

1. Amendment to HKFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the covid-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendment is effective for annual periods beginning on or after 1 June 2020 with earlier application permitted and shall be applied retrospectively.
   During the year ended 31 December 2020, certain monthly lease payments for the leases of the Group's bus shelters and office buildings have been reduced or waived by the lessors upon reducing the scale of production as a result of the pandemic and there are no other changes to the terms of the leases. The Group has early adopted the amendment on 1 January 2020 and elected not to apply lease modification accounting for all rent concessions granted by the lessors as a result of the pandemic during the year ended 31 December 2020. Accordingly, a reduction in the lease payments arising from the rent concessions of RMB33,099,000 has been accounted for as a variable lease payment by derecognising part of the lease liabilities and crediting to profit or loss for the year ended 31 December 2020.
2. Amendments to HKAS 1 and HKAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information, or both. The amendments did not have any significant impact on the financial position and performance of the Group.

75

Notes to Financial Statements

31 December 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements.

1. Effective for annual periods beginning on or after 1 January 2021
2. Effective for annual periods beginning on or after 1 January 2022
3. Effective for annual periods beginning on or after 1 January 2023
4. No mandatory effective date yet determined but available for adoption
5. As a consequence of the amendments to HKAS 1, Hong Kong Interpretation 5 Presentation of Financial Statements - Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause was revised in October 2020 to align the corresponding wording with no change in conclusion
6. As a consequence of the amendments to HKFRS 17 issued in October 2020, HKFRS 4 was amended to extend the temporary exemption that permits insurers to apply HKAS 39 rather than HKFRS 9 for annual periods beginning before 1 January 2023

Further information about those HKFRSs that are expected to be applicable to the Group is described below.

Amendments to HKFRS 3 are intended to replace a reference to the previous Framework for the Preparation and Presentation of Financial Statements with a reference to the Conceptual Framework for Financial Reporting issued in June 2018 without significantly changing its requirements. The amendments also add to HKFRS 3 an exception to its recognition principle for an entity to refer to the Conceptual Framework to determine what constitutes an asset or a liability. The exception specifies that, for liabilities and contingent liabilities that would be within the scope of HKAS 37 or HK(IFRIC)-Int 21 if they were incurred separately rather than assumed in a business combination, an entity applying HKFRS 3 should refer to HKAS 37 or HK(IFRIC)-Int 21 respectively instead of the Conceptual Framework. Furthermore, the amendments clarify that contingent assets do not qualify for recognition at the acquisition date. The Group expects to adopt the amendments prospectively from 1 January 2022. Since the amendments apply prospectively to business combinations for which the acquisition date is on or after the date of first application, the Group will not be affected by these amendments on the date of transition.

76

Notes to Financial Statements

31 December 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

(continued)

Amendments to HKFRS 9, HKAS 39, HKFRS 7, HKFRS 4 and HKFRS 16 address issues not dealt with in the previous amendments which affect financial reporting when an existing interest rate benchmark is replaced with an alternative RFR. The Phase 2 amendments provide a practical expedient to allow the effective interest rate to be updated without adjusting the carrying amount when accounting for changes in the basis for determining the contractual cash flows of financial assets and liabilities, if the change is a direct consequence of the interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis immediately preceding the change. In addition, the amendments permit changes required by the interest rate benchmark reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued. Any gains or losses that could arise on transition are dealt with through the normal requirements of HKFRS 9 to measure and recognise hedge ineffectiveness. The amendments also provide a temporary relief to entities from having to meet the separately identifiable requirement when an RFR is designated as a risk component. The relief allows an entity, upon designation of the hedge, to assume that the separately identifiable requirement is met, provided the entity reasonably expects the RFR risk component to become separately identifiable within the next 24 months. Furthermore, the amendments require an entity to disclose additional information to enable users of financial statements to understand the effect of interest rate benchmark reform on an entity's financial instruments and risk management strategy. The amendments are effective for annual periods beginning on or after 1 January 2021 and shall be applied retrospectively, but entities are not required to restate the comparative information.

The Group had no interest-bearing bank and other borrowings denominated in RMB and foreign currencies based on various Interbank Offered Rates as at 31 December 2020. The amendments are not expected to have any significant impact on the Group's financial statements.

Amendments to HKFRS 10 and HKAS 28 (2011) address an inconsistency between the requirements in HKFRS 10 and in HKAS 28 (2011) in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor's profit or loss only to the extent of the unrelated investor's interest in that associate or joint venture. The amendments are to be applied prospectively. The previous mandatory effective date of amendments to HKFRS 10 and HKAS 28 (2011) was removed by the HKICPA in January 2016 and a new mandatory effective date will be determined after the completion of a broader review of accounting for associates and joint ventures. However, the amendments are available for adoption now.

Amendments to HKAS 1 clarify the requirements for classifying liabilities as current or non-current. The amendments specify that if an entity's right to defer settlement of a liability is subject to the entity complying with specified conditions, the entity has a right to defer settlement of the liability at the end of the reporting period if it complies with those conditions at that date. Classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement of the liability. The amendments also clarify the situations that are considered a settlement of a liability. The amendments are effective for annual periods beginning on or after 1 January 2023 and shall be applied retrospectively. Earlier application is permitted. The amendments are not expected to have any significant impact on the Group's financial statements.

77

Notes to Financial Statements

31 December 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

(continued)

Amendments to HKAS 16 prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling any such items, and the cost of those items, in profit or loss. The amendments are effective for annual periods beginning on or after 1 January 2022 and shall be applied retrospectively only to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments. Earlier application is permitted. The amendments are not expected to have any significant impact on the Group's financial statements.

Amendments to HKAS 37 clarify that for the purpose of assessing whether a contract is onerous under HKAS 37, the cost of fulfilling the contract comprises the costs that relate directly to the contract. Costs that relate directly to a contract include both the incremental costs of fulfilling that contract (e.g., direct labour and materials) and an allocation of other costs that relate directly to fulfilling that contract (e.g., an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract as well as contract management and supervision costs). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are effective for annual periods beginning on or after 1 January 2022 and shall be applied to contracts for which an entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments. Earlier application is permitted. Any cumulative effect of initially applying the amendments shall be recognised as an adjustment to the opening equity at the date of initial application without restating the comparative information. The amendments are not expected to have any significant impact on the Group's financial statements.

Annual Improvements to HKFRSs 2018-2020 sets out amendments to HKFRS 1, HKFRS 9, Illustrative Examples accompanying HKFRS 16, and HKAS 41. Details of the amendments that are expected to be applicable to the Group are as follows:

• HKFRS 9 Financial Instruments: clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other's behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendment is effective for annual periods beginning on or after 1 January 2022. Earlier application is permitted. The amendment is not expected to have a significant impact on the Group's financial statements.
• HKFRS 16 Leases: removes the illustration of payments from the lessor relating to leasehold improvements in Illustrative Example 13 accompanying HKFRS 16. This removes potential confusion regarding the treatment of lease incentives when applying HKFRS 16.

78

Notes to Financial Statements

31 December 2020

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly

Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Impairment of Non-Financial Assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than financial assets and deferred tax assets), the asset's recoverable amount is estimated. An asset's recoverable amount is the higher of the asset's or cash-generating unit's value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the statement of profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.

79

Notes to Financial Statements

31 December 2020

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of Non-Financial Assets (continued)

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but 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 such an impairment loss is credited to the statement of profit or loss in the period in which it arises.

Related Parties

A party is considered to be related to the Group if:

1. the party is a person or a close member of that person's family and that person:
2. 1. has control or joint control over the Group;
   2. has significant influence over the Group; or
   3. is a member of the key management personnel of the Group or of a parent of the Group;

or

1. the party is an entity where any of the following conditions applies:
2. 1. the entity and the Group are members of the same group;
   2. one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);
   3. the entity and the Group are joint ventures of the same third party;
   4. one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
   5. the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;
   6. the entity is controlled or jointly controlled by a person identified in (a);
   7. a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and
   8. the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

80

Notes to Financial Statements

31 December 2020

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property, Plant and Equipment and Depreciation

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment 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 items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the statement of profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the statement of profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Construction in progress represents bus shelters under construction, which are stated at cost less any impairment losses, and are not depreciated. Cost comprises the direct costs of construction during the period of construction. Construction in progress is reclassified to concession rights when completed and ready for use.

Concession Rights

Concession rights represent the cost of acquiring operating rights for the placement of advertisements on bus shelters in the PRC. Concession rights are stated at cost less accumulated amortisation and any impairment losses. Amortisation is calculated on the straight-line and individual basis over the shorter of the rights and the useful lives of the bus shelters which range from 5 to 15 years.

In addition, expenditure incurred on the construction of bus shelters is capitalised only when the Group can demonstrate that it is probable the future economic benefits will flow to the Group and the cost can be measured reliably. Capitalised construction costs are stated at cost less any impairment losses and are amortised using the straight-line basis over the estimated useful lives.

81

Notes to Financial Statements

31 December 2020

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases