Final Results

RedHot Media International Limited

('RedHot' or the 'Company')

Audited Financial Results

Year Ended 31 December 2011

20 June 2012

RedHot Media International Limited is pleased to announce its audited results for the 12 months ended 31 December 2011.

The Annual Report and Accounts of the Company and its subsidiaries (the "Group") will be posted to shareholders in due course and will be available shortly on the Company's website (www.redhot.asia).

Commending on the performance for the year, the Company's Chairman, Datuk Oh Chong Peng said:

 "The Group continued to thrive with an upbeat impetus of double-digit growth in both revenue and net profit for fiscal year 2011. Surpassing 2010's performance, revenue climbed by 33%, while net profit continued to maintain a healthy margin with a growth of 11%.

In 2011, the Group focused on expanding its market share in the advertising sector, which evidently flourished. The advertising business made up 97% of the total revenue of the Group, with a growth of 36% compared to 2010. On the other hand, the financial services business underwent a restructuring of its business units, and streamlined focus on selectivity of business, causing a decline of 22% and contributing to 3% of the total Group revenue.

Our strategies in securing more advertising business in China faired well and gained traction in growth with a 42% increase, representing 44% of total Group revenue, whilst Malaysia's segment contributed the balance of 56%, as business steadily grew by 27%.

I am pleased to mention that the Group will issue its first scrip dividend to shareholders this year. The Board has approved and will propose a bonus issue of 1 new ordinary share for every 10 ordinary shares held by each shareholder which shall be tabled for shareholders' approval at our upcoming AGM.

Following the above mentioned scrip dividend, the Board has also approved in principle a quantum equivalent to a further 20% of the enlarged share capital to be tabled for shareholders' approval in full or tranches later in the year.

I take great pleasure in praising our management team and employees for their persistence and determination to unconditionally strive in contributing to the growth of the Group.

Also deserving admiration are our clients and partners who continue to exhibit faith in our culture of delivering the quality and effective services.

I believe the combination of these factors will empower the Group to continue to prosper."

DATUK OH CHONG PENG

Non-Executive Chairman

20 June 2012

Group Managing Director, Mr. Cheong Chia Chieh summarized the operations of the Group as follows:

Our performance continued to improve and we increased our market share in Malaysia and China for 2011, despite advertising expenditure forecasts by experts in the region for 2011 marginally missing expectations.

2011 was a year of interesting developments for the Group. The management's strategies from 2010 of integrating resources in Malaysia and China to enhance its service offerings in the industry within the region continued to garner positive results. In doing so, Malaysia has also expanded its service offerings with creative services and events management which led to the double-digit growth rate in both revenue and net profit.

It is the establishment of this strong fundamental foundation that has allowed the Group to persistently renew and acquire new key accounts from advertisers.

During the year, the Group secured engagements with renowned international brands including Canon, Mazda, York and Sime Darby Motors on its campaigns for distribution of renowned car brand - Porsche.

Also, strategic clients in the insurance & financial advisory, white goods, property and education sectors include AmBank Group, AmLife Insurance, Joven, Andaman Property Group, Fujihome Global Berhad, Giant Ace Hardware, Celmonze, Acson Malaysia Cosmopoint Group and Must Ehsan Development of Encorp Group.

The Group's financial services division, Ausscar Group continues to contribute to the Group, albeit at a slower pace compared to 2010. During the year, the management has formulated new plans in restructuring its business units and leverage on the core strengths of its people to focus on more streamlined services. With this in place, 2012 will be an interesting year for Ausscar.

The Group's financial highlights for fiscal year 2011 are as follows :-

·; Total revenue for 2011 increased by 33% to RM58.9 million (2010: RM44.3 million)

·; Gross profit improved by 7% to RM18.8 million (2010: RM17.6 million)

·; Gross margin was lower at 32% (2010: 40%)

·; Profit before tax was RM10.4 million representing a 13% increase (2010: RM9.2 million)

·; Net profit improved by 11% to RM10.2 million (2010: RM9.2 million)

·; Basic earnings per share increased by 10% to 28.17 sen per share (2010: 25.32 sen per share)

·; Cash balances available for use after deducting bank overdraft at 31 December 2011 was RM 0.2 million (31 December 2010: RM 0.9 million)

·; Net assets of RM50.5 million at 31 December 2011 (31 December 2010: RM38.2 million)

The Group's strategy to increase market share turned out well albeit having to lower creditor days, which in turn lowered cash balances. Reduction in cash balances were also attributable to payment of deferred considerations.

Shareholder value

RHM was ranked 2nd and 4th most traded AIM stock in Asia in January 2012 and March 2012 respectively, according to Allenby Capital Limited's market reports during 2012. This is a testimony of investors' confidence towards RHM's value which has evidently increased its presence amongst the investment community in AIM.

This year, the Board has approved and will propose a dividend to shareholders by way of a bonus issue of 1 new ordinary share to every 10 shares held by shareholders, followed by a further scrip dividend issue equivalent of 20% of the enlarged share capital throughout the year.

We also believe that this exercise will increase liquidity and marketability of the shares, and ultimately greater shareholder value.

Strategic corporate developments

On 16 November 2010 the Company announced that it entered into a conditional Sale of Shares Agreement with PUC Founder (MSC) Berhad ("Founder"), listed on the Malaysian Stock Exchange Bursa Malaysia Securities Berhad) for the proposed disposal of the entire issued share capital of its subsidiary, Red Media Asia Limited, including all operating subsidiary companies to Founder.

The completion of this exercise will result in the Company holding a 67.95% stake in Founder, and signifies an important milestone which will provide the Group with a strategic empowerment to realise its business growth and expansion plans in Malaysian and especially in China.

The Group has submitted the application to the Bursa Malaysia Securities Berhad ("Bursa") for their approval, and are confident in completion of the exercise in 2012. We wish to remind readers of our Annual Report that we believe that the proposed disposal will be advantageous to the Company in the following principle ways:

• enhanced financial performance by way of an enlarged asset base and profit contributions from the consolidation of Founder's assets and earnings;

• enable strategic leverage on Founder's significant shareholder base and business network in China which includes a Peking University-backed conglomerate operating in Greater China with business investments worldwide ("Founder Group");

• potential of advertising income as a result of Founder Group's positioning as the second largest IT manufacturer and one of the largest healthcare and pharmaceutical enterprises in China; 

• media network penetration via Founder Group's established business network as a supplier of Chinese printing and publishing systems which account for 85% of China's domestic market, and 90% of the international market;

• being an Asian-based business, the Company will have a better opportunity to access the local Malaysian capital markets where the investor community as a whole has a better understanding and awareness of the Group's existing business. This should provide increased prospective opportunities for new investment into the Group's business from Asian-based investors which in turn we believe should provide greater opportunities for the realisation of shareholder value; and

• recognised business affiliation through Founder Group's strong branding and reputation throughout China.

2012

Outlook for the year has shown clear signs of optimism with strong developments in the beginning of the year. The focus continues to remain in improving market share and client retention within the region.

Cultivation of talent within the Group is always a key element of our business, as our business culture revolves around people and a discipline of quality results. 2012 will see our people flourish in their individual capacities.

Merger and acquisitions opportunities for new lucrative business avenues which add value to the Group still remains on track. Several out-of-home advertising businesses and interactive advertising technologies are on the watch-list for the year. Following these plans, the Group plans to emerge as a significant out-of-home media player in Malaysia. 

The Board is confident that 2012 will be yet another successful year for RHM.

We thank shareholders for their continued belief in the value and potential in the Group since its flotation in 2008.

CHEONG CHIA CHIEH

Group Managing Director

20 June 2012

Notes to editors:

Exchange rate: £1 = RM4.80

RedHot Media International Limited (AIM: RHM), is a Cayman Islands incorporated holding company. Its primary activity is that of a media broking group, including an innovative barter sales trading activity, in Malaysia and the major cities of the People's Republic of China ("PRC"), namely Shanghai, Beijing and Guangzhou.

A media broker conventionally purchases advertising space on behalf of its clients and earns commissions from the media providers based on the amount of advertising purchased. The AxChange business model adopts a pull marketing approach by aggregating demand from advertisers and consumers/merchants to generate additional sales for both the media owners and advertisers respectively.

RedHot also acts, to a lesser extent, as a non-stockholding distributor for certain clients (for whom it also acts as a media broker) with the intention of generating higher margins for the Group than would be obtained in conventional media buying.

Using this distribution based business model (AxChange), which the Directors aim to grow, RedHot enters into a contract to draw down various lines of inventory and then, as the inventory is sold through RedHot's distribution network, the proceeds from the sales are used to purchase media space for the same client.

The AxChange business model has been designed to free up working capital; allowing RedHot's customers to pay for advertising and assist new entrants into Malaysia & China (where capital controls are still in place) in selling their products using RedHot's established distribution network. RedHot also believes the model provides benefits to its distributors; providing them with lower unit prices and access to credit facilities to which they otherwise would not have access.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2011

The results shown above relate entirely to continuing and acquired operations.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2011

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2011

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2011

The group's other reserves comprise the following:

COMPANY STATEMENT OF CHANGES IN EQUITY

Notes to the Results for the Financial Year Ended 31 Dec 2011

1.1 Basis of preparation and parent company income statement

The financial statements are prepared under the historical cost convention and on a going concern basis.

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, as adopted by the European Union ("IFRS") and in accordance with applicable company law. The parent company's financial statements have also been prepared in accordance with IFRS.

The financial statements are presented in Malaysian Ringgits and all values are rounded to the nearest thousand Ringgits (RM'000) except when otherwise indicated. The exchange rate of Malaysian Ringgit to Pounds Sterling at 31 December 2011 was £1: RM4.80 (RM1: £0.20) (2010: £1: RM4.76, RM1: £0.21)

1.2 Segmental reporting

The activities of the group are divided into operating segments in accordance with the requirements of IFRS 8 'Operating Segments'. Operating segments are identified on the same basis that is used internally to manage and report on performance and takes account of the organizational structure of the group based on the various services of the reportable segments. The activities of the group are broken down into three operating segments: advertising, financial services and other entities. The advertising segment is involved in the advertising brokerage business. The financial services segment focuses primarily on the provision of financial planning and insurance agency businesses. Holding companies are included in the other entities segment. Eliminations comprise the effects of eliminating business relationships between the operating segments.

Internal management and reporting segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the group financial statements. There was no change in accounting policies compared to previous periods. Inter-segment receivables and payables, provisions, income, expenses and profits are eliminated in the column "Eliminations". Inter-segment sales take place at arm's length prices.

Operating segments are reported in a manner consistent with the internal reporting provided to the 'chief operating decision-maker' who is responsible for allocating resources and assessing performance of the operating segments and which has been identified as the Board of Directors that make strategic decisions. In order to assist the decision making process, various measures of segment result and of segment assets have been set for the different operating segments. The advertising, financial services and other entities segments are managed on the basis of the profit after taxation. Capital expenditure on non-current assets is the corresponding measure of segment assets used to determine how to allocate resources.

2 Segmental reporting

The segment results for 2011 were as follows:

The Company regards the customers who contributing more than 10% of the segmental revenue as major customers. During the financial year 2011, major customer/s of advertising and media segment contributed approximate to 23% (2010: 14%) of the segment's total revenue.

The segment results for 2010 were as follows:

Geographical information

3 Goodwill

Group

2011 2010

RM'000 RM'000

Cost

At 1 January 13,890 14,569

Additions 19,351 -

Exchange adjustments - (679) ________ ________

At 31 December 33,241 13,890

======= =======

No acquisitions took place in 2011. Additions to goodwill in 2011 arose from the additional deferred contingent consideration on the acquisition of CMAD and CMIT and IMM Businesses.

Goodwill acquired in business combinations is allocated, at acquisition, to the cash generating units ("CGUs") that are expected to benefit from the business combinations. The carrying amount of goodwill has been allocated as follows:

RM'000

CMAD and CMIT businesses 9,370

IMM Business 17,849

Ausscar Group 2,990

RedHot Media Sdn Bhd 2,123

RH Media Group Sdn Bhd 909

_______

33,241

======

The group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of the CGU's are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the forecast period. Management estimated the discount rates of 15% that reflect current market assessments of the time value of money and the risks specific to the CGU's. The growth rates of 3% are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

The directors have applied sensitivities to the goodwill impairment test and increasing the discount rate by 3% and removing the 3% growth rate does not result in any impairment of the goodwill for the CGUs.

-ends-