Interim Report
| 01 |
| CONTENTS |
| 2 Definitions |
| 3 Chairman’s Statement |
| 8 Management’s Discussion and Analysis |
| 10 Independent Review Report |
| 11 Interim Financial Statements |
| 15 Notes to the Condensed Consolidated Interim Financial Statements |
| 35 Disclosure of Interests |
| 45 Corporate Governance |
| 46 Other Information |
02
TOM GROUP LIMITED
DEFINITIONS
“Associates” has the meaning ascribed under the Listing Rules
“Beijing Lei Ting” means Beijing Lei Ting Wan Jun Network Technology Limited
“CKH” means Cheung Kong (Holdings) Limited
“Company” means TOM Group Limited
“Director(s)” means the director(s) of the Company
“Greater China” means Mainland China, Hong Kong, Macau and Taiwan
“Group” means the Company and its subsidiaries
“HWL” means Hutchison Whampoa Limited
“Listing Rules” means the Rules Governing the Listing of Securities on the Stock
Exchange
“Main Board” means the main board of the Stock Exchange
“New Option Scheme” means the share option scheme adopted by the Company on 23 July
2004
“Old Option Scheme” means the share option scheme adopted by the Company on 11 February
2000 (as amended) and terminated with effect from 4 August 2004
“Pre-IPO Share Option Plan” means the Pre-IPO Share Option Plan adopted by the Company on 11
February 2000
“SFO” means the Securities and Futures Ordinance, Chapter 571 of the laws
of Hong Kong
“Stock Exchange” means
Scope of Review
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, “Review
of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong
Kong Institute of Certified Public Accountants. A review of interim financial report consists of making
inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical
and other review procedures. A review is substantially less in scope than an audit conducted in accordance
with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim financial
report is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34
“Interim Financial Reporting”.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 21 August 2007
Interim Report 2007
11
INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Profit And Loss Account
For the six months ended 30 June 2007
Unaudited
Six months ended 30 June
2007 2006
Note HK$’000 HK$’000
(As restated)
Continuing operations
Turnover 3 1,347,010 1,473,140
Cost of sales (877,495) (876,220)
Interest income 50,204 49,544
Selling and marketing expenses (160,728) (151,610)
Administrative expenses (118,177) (128,534)
Other operating expenses (135,062) (132,262)
Provision for goodwill impairment 4 (53,283) –
Share of losses of jointly controlled entities (54,030) (327)
Share of profits of associated companies 8,435 5,014
Operating profit before net gain on deemed disposals of
interests in subsidiaries 6,874 238,745
Net gain on deemed disposals of interests in subsidiaries 5 – 24,601
Operating profit 6 6,874 263,346
Finance costs 7 (68,792) (66,818)
(Loss)/profit before taxation (61,918) 196,528
Taxation 8 (24,412) (20,542)
(Loss)/profit for the period from continuing operations (86,330) 175,986
Discontinued operations
Loss for the period from discontinued operations 9 (1,780) (13,938)
(Loss)/profit for the period (88,110) 162,048
Attributable to:
Minority interests (15,764) 70,786
Equity holders of the Company (72,346) 91,262
(Loss)/earnings per share for (loss)/profit attributable to
the equity holders of the Company during the period 11
From continuing operations
Basic HK(1.81) cents HK2.69 cents
Diluted N/A N/A
From discontinued operations
Basic HK(0.05) cents HK(0.34) cents
Diluted N/A N/A
12
TOM GROUP LIMITED
Condensed Consolidated Balance Sheet
As at 30 June 2007
30 June 31 December
2007 2006
Unaudited Audited
Note HK$’000 HK$’000
ASSETS AND LIABILITIES
Non-current assets
Fixed assets 12 275,119 302,314
Goodwill 13 2,637,585 2,719,455
Other intangible assets 14 70,843 104,316
Interests in jointly controlled entities (36,454) 14,171
Interests in associated companies 231,146 231,093
Available-for-sale financial assets 1,745,743 1,986,388
Loans and receivables 2,112 2,091
Deferred tax assets 45,521 42,896
Other non-current assets 21,823 19,501
4,993,438 5,422,225
------------------- -------------------
Current assets
Assets classified as held for sale 15 210,384 93,973
Inventories 128,145 130,068
Trade and other receivables 16 1,056,579 988,133
Restricted cash 17 35,575 37,546
Bank balances and cash 1,650,696 1,618,778
3,081,379 2,868,498
------------------- -------------------
Current liabilities
Liabilities classified as held for sale 15 11,011 7,920
Consideration payables 134,330 129,220
Trade and other payables 18 803,983 816,689
Taxation payable 45,165 56,858
Long-term bank loans – current portion 745,060 265,786
Short-term bank and other loans 351,810 727,569
2,091,359 2,004,042
------------------- -------------------
Net current assets 990,020 864,456
------------------- -------------------
Total assets less current liabilities 5,983,458 6,286,681
------------------- -------------------
Non-current liabilities
Deferred tax liabilities 14,650 11,617
Other non-current liabilities 19 1,612,467 1,953,286
1,627,117 1,964,903
------------------- -------------------
Net assets 4,356,341 4,321,778
EQUITY
Capital and reserves attributable to
equity holders of the Company
Share capital 21 389,328 389,328
Reserves 23 2,547,430 2,544,673
Own shares held (6,244) (6,244)
Shareholders’ funds 2,930,514 2,927,757
Minority interests 24 1,425,827 1,394,021
Total equity 4,356,341 4,321,778
Interim Report 2007
13
Condensed Consolidated Statement of Recognised Income and Expense
For the six months ended 30 June 2007
Unaudited
Six months ended 30 June
2007 2006
HK$’000 HK$’000
Revaluation surplus/(deficit) on available-for-sale financial assets 9,844 (19,552)
Exchange translation differences 99,657 61,725
Net income recognised directly in equity 109,501 42,173
(Loss)/profit for the period (88,110) 162,048
Total recognised income and expense for the period 21,391 204,221
Attributable to:
Minority interests 23,087 86,785
Equity holders of the Company (1,696) 117,436
14
TOM GROUP LIMITED
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2007
Unaudited
Six months ended 30 June
2007 2006
HK$’000 HK$’000
Net cash from operating activities 8,697 273,977
Net cash from/(used in) investing activities 266,780 (221,663)
Net cash (used in)/from financing activities (243,559) 557,315
Net increase in cash and cash equivalents 31,918 609,629
Cash and cash equivalents at the beginning of the period 1,618,778 1,081,506
Cash and cash equivalents at the end of the period 1,650,696 1,691,135
Interim Report 2007
15
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1 Basis of preparation and accounting policies
These unaudited condensed consolidated financial statements have been prepared in accordance with Hong Kong
Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified
Public Accountants and applicable disclosure requirements of the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited.
These condensed consolidated financial statements should be read in conjunction with the 2006 annual financial
statements of the Group.
The accounting policies and methods of computation used in preparation of these condensed consolidated financial
statements are consistent with those used in the annual financial statements for the year ended 31 December 2006.
The following new standards, amendments to standards and interpretations are mandatory for financial year ending
31 December 2007:
Amendment to HKAS 1 “Presentation of Financial Statements: Capital Disclosures”
HKFRS 7 “Financial Instruments: Disclosures”
HK(IFRIC)-Int 7 “Applying the Restatement Approach under HKAS 29, Financial Reporting in
Hyperinflationary Economies”
HK(IFRIC)-Int 8 “Scope of HKFRS 2”
HK(IFRIC)-Int 9 “Reassessment of Embedded Derivatives”
HK(IFRIC)-Int 10 “Interim Financial Reporting and Impairment”
All the new standards, amendments to standards and interpretations above are either not relevant or do not have
material impacts to the Group.
2 New standards not yet effective
The Group has not early adopted the following new standards or interpretations that have been issued but are not yet
effective for 2007:
HKAS 23 (Revised) “Borrowing Costs”
HKFRS 8 “Operating Segments”
HK(IFRIC)-Int 11 “HKFRS 2 – Group and Treasury Share Transactions”
HK(IFRIC)-Int 12 “Service Concession Arrangements”
The Group has commenced an assessment of the impacts of these new standards or interpretations and they are not
expected to have a significant impact on the Group’s results and financial position.
3 Segment reporting
Primary reporting format – business segments
The Group is organised into the following business segments:
Continuing operations
• Internet Group – provision of wireless internet services, online advertising, commercial enterprise solutions,
and internet access.
• Publishing Group – magazine and book circulation, sales of publication advertising and other related products.
• Outdoor Media Group – advertising sales of outdoor media assets and provision of outdoor media services.
• Television and Entertainment Group – advertising sales, provision of broadcasting post production services,
event organisation and sponsorship sales.
Discontinued operations
• Sports Group – event organisation, advertising and sponsorship sales in relation to sports events and
programmes.
Since 1 January 2007, Sports Group has ceased to participate in or organise any sports events. Further details
of the discontinuation of the Sports Group segment are set out in note 9 to the condensed consolidated
interim financial statements.
16
TOM GROUP LIMITED
Unaudited
Six months ended 30 June 2007
Discontinued
Continuing Operations Operations
Television
Outdoor and
Internet Publishing Media Entertainment Sports
Group Group Group Group Sub-total Group Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Total gross segment
turnover 564,859 482,298 212,987 87,942 1,348,086 – 1,348,086
Inter-segment turnover – (116) – (960) (1,076) – (1,076)
Turnover 564,859 482,182 212,987 86,982 1,347,010 – 1,347,010
Segment profit/(loss)
before amortisation
and depreciation 98,593 80,857 31,463 1,090 212,003 (1,808) 210,195
Amortisation and
depreciation (42,093) (8,854) (17,162) (14,978) (83,087) (48) (83,135)
Segment profit/(loss) 56,500 72,003 14,301 (13,888) 128,916 (1,856) 127,060
Provision for goodwill
impairment (53,283) – – – (53,283) – (53,283)
Share of losses of jointly
controlled entities (54,030) – – – (54,030) – (54,030)
Share of profits of
associated companies 229 8,206 – – 8,435 – 8,435
Unallocated (costs)/
income (23,164) 76 (23,088)
Operating profit/(loss) 6,874 (1,780) 5,094
Finance costs (68,792) – (68,792)
Loss before taxation (61,918) (1,780) (63,698)
Taxation (24,412) – (24,412)
Loss for the period (86,330) (1,780) (88,110)
Attributable to:
Minority interests (15,764) – (15,764)
Equity holders of the
Company (70,566) (1,780) (72,346)
Segment capital
expenditure 10,978 3,878 12,292 18,693 45,841 – 45,841
Unallocated capital
expenditure 467
Total capital expenditure 46,308
Interim Report 2007
17
Unaudited
As at 30 June 2007
Television
Outdoor and
Internet Publishing Media Entertainment Sports
Group Group Group Group Group Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Segment assets 4,067,142 1,269,259 1,010,310 289,185 26,428 6,662,324
Assets classified as held
for sale 97,967 – – – 112,417 210,384
Interests in jointly
controlled entities (36,454) – – – – (36,454)
Interests in associated
companies 1,973 229,173 – – – 231,146
Unallocated assets 1,007,417
Total assets 8,074,817
Segment liabilities 309,675 335,019 138,684 66,594 5,150 855,122
Liabilities classified as
held for sale 11,011 – – – – 11,011
Unallocated liabilities 2,852,343
Total liabilities 3,718,476
18
TOM GROUP LIMITED
Unaudited
Six months ended 30 June 2006
Discontinued
Continuing Operations Operations
Television
Outdoor and
Internet Publishing Media Entertainment Sports
Group Group Group Group Sub-total Group Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Total gross segment
turnover 781,881 467,739 184,728 44,198 1,478,546 49,482 1,528,028
Inter-segment turnover – (1,452) – (3,954) (5,406) (625) (6,031)
Turnover 781,881 466,287 184,728 40,244 1,473,140 48,857 1,521,997
Segment profit/(loss)
before amortisation
and depreciation 244,581 75,511 27,583 (3,950) 343,725 (14,012) 329,713
Amortisation and
depreciation (36,979) (9,823) (15,575) (20,943) (83,320) (291) (83,611)
Segment profit/(loss) 207,602 65,688 12,008 (24,893) 260,405 (14,303) 246,102
Share of losses of jointly
controlled entities (327) – – – (327) – (327)
Share of (losses)/profits
of associated companies (108) 5,122 – – 5,014 – 5,014
Unallocated (costs)/
income (26,347) 233 (26,114)
Operating profit/(loss)
before net gain on
deemed disposals 238,745 (14,070) 224,675
Net gain on deemed
disposals of interests
in subsidiaries – – 24,601 – 24,601 – 24,601
Operating profit/(loss) 263,346 (14,070) 249,276
Finance costs (66,818) – (66,818)
Profit/(loss) before taxation 196,528 (14,070) 182,458
Taxation (20,542) 132 (20,410)
Profit/(loss) for the period 175,986 (13,938) 162,048
Profit/(loss) attributable
to Minority interests 71,331 (545) 70,786
Profit/(loss) attributable to
Equity holders of the
Company 104,655 (13,393) 91,262
Segment capital
expenditure 34,917 7,745 11,921 18,923 73,506 64 73,570
Unallocated capital
expenditure 777
Total capital expenditure 74,347
Interim Report 2007
19
Audited
As at 31 December 2006
Television
Outdoor and
Internet Publishing Media Entertainment Sports
Group Group Group Group Group Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Segment assets 3,974,986 1,261,094 1,024,608 217,596 221,646 6,699,930
Assets classified as held
for sale 93,973 – – – – 93,973
Interests in jointly
controlled entities 14,171 – – – – 14,171
Interests in associated
companies 1,246 229,847 – – – 231,093
Unallocated assets 1,251,556
Total assets 8,290,723
Segment liabilities 287,538 358,022 155,795 38,182 45,650 885,187
Liabilities classified as
held for sale 7,920 – – – – 7,920
Unallocated liabilities 3,075,838
Total liabilities 3,968,945
Secondary reporting format – geographical segments
The Group’s business segments are operated in three main geographical areas:
Hong Kong – Internet Group, Publishing Group and Television and Entertainment Group
Mainland China – Internet Group, Publishing Group, Outdoor Media Group, Sports Group (discontinued operations)
and Television and Entertainment Group
Taiwan and other Asian countries – Internet Group and Publishing Group
There are no significant sales between the geographical segments.
20
TOM GROUP LIMITED
Unaudited
Turnover
Six months ended 30 June 2007 Six months ended 30 June 2006
Continuing Discontinued Consolidated Continuing Discontinued Consolidated
Operations Operations Total Operations Operations Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Hong Kong 7,704 – 7,704 8,152 – 8,152
Mainland China 866,819 – 866,819 994,779 48,857 1,043,636
Taiwan and other
Asian countries 472,487 – 472,487 470,209 – 470,209
1,347,010 – 1,347,010 1,473,140 48,857 1,521,997
Unaudited
Operating profit / (loss)
Six months ended 30 June 2007 Six months ended 30 June 2006
Continuing Discontinued Consolidated Continuing Discontinued Consolidated
Operations Operations Total Operations Operations Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Hong Kong (5,547) – (5,547) (399) – (399)
Mainland China 130,349 (1,808) 128,541 269,814 (14,012) 255,802
Taiwan and other Asian
countries 87,201 – 87,201 74,310 – 74,310
212,003 (1,808) 210,195 343,725 (14,012) 329,713
Amortisation and
depreciation (83,087) (48) (83,135) (83,320) (291) (83,611)
Provision for goodwill
impairment (53,283) – (53,283) –––
Share of losses of
jointly controlled
entities (54,030) – (54,030) (327) – (327)
Share of profits of
associated companies 8,435 – 8,435 5,014 – 5,014
Net gain on deemed
disposals of interests
in subsidiaries –––24,601 – 24,601
Unallocated (costs)/
income (23,164) 76 (23,088) (26,347) 233 (26,114)
Operating profit/(loss) 6,874 (1,780) 5,094 263,346 (14,070) 249,276
Interim Report 2007
21
4 Provision for goodwill impairment
In May 2007, China Mobile Communications Corporation (“China Mobile”) began the operational practice of displaying
a service fee reminder to Wireless Application Protocol (WAP) service users when they requested for the download of
a WAP page onto their mobile handsets and seeking their confirmation before processing the download request. In
addition, China Mobile started to place links to only its own Wireless Value-added Services (WVAS) offerings on the
embedded menus of mobile handsets with customized software for China Mobile users. In the past, such embedded
menus on handsets featured links to all popular products on China Mobile’s networks, including the products of the
Group. The Group believes the above changes by China Mobile could have an adverse impact on the Group’s WVAS
business, in particular the WAP business.
In view of the adverse impact and the uncertainties in future operating environment, the Group tested the carrying
value of goodwill in relation to the wireless internet business for impairment as at 30 June 2007 and recorded an
impairment charge of HK$53,283,000 for the six-month period ended 30 June 2007. The valuation was arrived at after
using a combination of a market value approach (with comparisons to selected publicly traded companies operating
in the same industry) and an income approach (discounted cash flows). Any continued adverse changes in mobile
operators’ policies or in the competitive environment could lead to additional impairment charges and the Group is
continually monitoring such changes to assess their impact on the Group.
5 Net gain on deemed disposals of interests in subsidiaries
On 28 March 2006, TOM Outdoor Media Group Limited (“TOM OMG”), a then wholly-owned subsidiary of the
Company, issued a total of 35 new shares to an independent third party at a total consideration of US$26 million
(approximately HK$202.8 million). As a result of this share issuance, the Group’s shareholding in TOM OMG has
been diluted to 65%, and resulted in a gain on deemed disposal of HK$24,601,000.
6 Operating profit
Operating profit is stated after charging / crediting the following:
Unaudited
Six months ended 30 June
2007 2006
HK$’000 HK$’000
Charging:
Continuing operations
Depreciation of fixed assets 60,012 57,818
Amortisation of other non-current assets 24,317 27,729
Amortisation of other non-current assets included in
interests in associated companies 2,448 2,449
Discontinued operations
Depreciation of fixed assets 48 291
Crediting:
Continuing operations
Gain on disposal of a subsidiary (Note) – 14,698
Gain on disposal of available-for-sale financial assets (Note) 5,193 –
Dividend income from available-for-sale financial assets – 543
Discontinued operations
Dividend income from available-for-sale financial assets – 377
Note: On 20 March 2006, the Group disposed of its 50% equity interests in Yazhou Zhoukan Holdings Limited, a
then subsidiary of the Company, to Ming Pao Enterprise Corporation Limited (“Ming Pao”), a listed company
on the Main Board of A gain
on this disposal of HK$14,698,000 was recorded by the Group. During the period ended June 2007, all Ming
Pao Shares were sold which resulted in a profit of approximately HK$5,193,000.
22
TOM GROUP LIMITED
7 Finance costs
All finance costs were incurred in continuing operations and are shown as follows:–
Unaudited
Six months ended 30 June
2007 2006
HK$’000 HK$’000
Interest and borrowing costs on bank loans 63,489 39,368
Interest and borrowing costs on convertible bonds 5,001 27,041
Interest on other loans, wholly repayable within five years 302 409
68,792 66,818
8 Taxation
Hong Kong profits tax has been provided at the rate of 17.5% (2006: 17.5%) on the estimated assessable profits for the
period. Taxation outside Hong Kong has been provided for at the applicable rates on the estimated assessable profits
less available tax losses.
The amount of taxation charged in the consolidated profit and loss account represents:
Unaudited
Six months ended 30 June
2007 2006
HK$’000 HK$’000
Continuing operations
Overseas taxation 25,660 20,816
Over-provision in prior years (2,139) –
Deferred taxation 891 (274)
24,412 20,542
Discontinued operations
Over-provision in prior years – (132)
For the periods ended 30 June 2007 and 2006, no taxation has been included in the consolidated profit and loss
account as share of profits of associated companies.
9 Discontinued operations
Since 1 January 2007, the Group has ceased to participate in any sports related events and is in the process of selling
the core assets in relation to the China Open tennis tournament event in Beijing (“China Open”). On 18 March 2007,
pursuant to a series of agreements with an independent third party, the Group agreed to dispose of its 49% equity
interest in the Beijing China Open Promotion Company Limited (“COL”), and 100% equity interests in Champion
Will International Limited (“Champion Will”) and Swidon Enterprises Limited (“Swidon”) for a total consideration
of US$15.5 million (approximately HK$121 million). COL is mainly engaged in the organisation of the China Open,
while Champion Will and Swidon are the holders of the ATP and WTA licences, respectively. The completion of the
disposal is subject to, among others, the approval of the relevant authorities.
In addition, ??S"! and ?8"! (collectively “Yangcheng”) which were mainly
involved in sports events organisation in prior years, also commenced to focus their operations in non sports-related
activities since 1 January 2007. As a result, the results and assets and liabilities of Yangcheng have been included in
the Television and Entertainment Group in the current period.
Interim Report 2007
23
(i) Loss for the period from discontinued operations is analysed as follows:
Unaudited
Six months ended 30 June
2007 2006
HK$’000 HK$’000
Turnover – 48,857
Interest income 76 233
Operating expenses (1,856) (63,160)
Operating loss (1,780) (14,070)
Taxation – 132
Loss for the period (1,780) (13,938)
Attributable to:
Minority interest – (545)
Equity holders of the Company (1,780) (13,393)
(ii) Net cash flows of discontinued operations are summarised as below:
Unaudited
Six months ended 30 June
2007 2006
HK$’000 HK$’000
Net cash inflows from operating activities 6,451 2,264
Net cash inflow from investing activities 54 313
Net increase in bank balances and cash 6,505 2,577
Bank balances and cash at the beginning of the period 5,460 30,210
Bank balances and cash at the end of the period 11,965 32,787
10 Dividend
No dividend has been paid or declared by the Company for the periods ended 30 June 2007 and 2006.
11 (Loss)/Earnings per share
Basic
Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to equity holders of the Company
by the weighted average number of ordinary shares in issue during the period, excluding own shares held.
Unaudited
Six months ended 30 June
2007 2006
(Loss)/Earnings from continuing operations
(Loss)/profit attributable to equity holders of the Company (HK$’000) (70,566) 104,655
Weighted average number of ordinary shares in issue 3,893,270,558 3,893,270,558
Loss from discontinued operations
Net loss attributable to equity holders of the Company (HK$’000) (1,780) (13,393)
Continuing operations
Basic (loss)/earnings per share (HK cents per share) (1.81) 2.69
Discontinued operations
Basic loss per share (HK cents per share) (0.05) (0.34)
24
TOM GROUP LIMITED
Diluted
No diluted (loss)/earnings per share is presented for the six months ended 30 June 2007 and 2006 as the exercise
prices of the outstanding share options granted by the Company were higher than the average market price of the
shares of the Company during the respective periods, and the conversion of the convertible bonds would have an
anti-dilutive effect during these periods.
12 Fixed assets
HK$’000
At 1 January 2006 315,592
Additions 48,578
Acquisition of subsidiaries 1,083
Disposals (4,579)
Depreciation charge (58,109)
Exchange adjustment 3,673
At 30 June 2006 306,238
Additions 49,969
Acquisition of subsidiaries 4,451
Transfer to other intangible assets (2,721)
Reclassification to assets held for sale (1,082)
Disposals (1,206)
Depreciation charge (57,786)
Exchange adjustment 4,451
At 31 December 2006 302,314
Additions 28,091
Acquisition of a subsidiary (note 27(a)) 395
Disposals (2,763)
Depreciation charge (60,060)
Exchange adjustment 7,142
At 30 June 2007 275,119
13 Goodwill
HK$’000
At 1 January 2006 2,514,896
Additions 129,952
Consideration adjustments for acquisition of subsidiaries 665
Disposal of a subsidiary (27,493)
Exchange adjustments 45,351
At 30 June 2006 2,663,371
Additions 113,011
Consideration adjustments for acquisition of subsidiaries (8,465)
Transferred to assets held for sale (note 15(a)) (72,997)
Provision for impairment (11,000)
Exchange adjustments 35,535
At 31 December 2006 2,719,455
Additions (note 27(a)) 7,026
Consideration adjustments for acquisition of subsidiaries (3,961)
Provision for goodwill impairment (53,283)
Transferred to assets held for sale (note 15(b)) (85,117)
Exchange adjustments 53,465
At 30 June 2007 2,637,585
Interim Report 2007
25
14 Other intangible assets
Purchased Customer
Licence programme base and
Concession rights and Publishing and film technical
rights royalties rights rights Software know-how Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 January 2006 36,115 29,882 9,180 8,243 6,725 1,728 91,873
Additions 3,716 – 3,926 18,127 – – 25,769
Acquisition of subsidiaries – 890 – – 85 20,036 21,011
Amortisation charge (4,697) (816) (2,334) (17,469) (1,085) (1,328) (27,729)
Exchange adjustment 1,498 101 183 – 100 87 1,969
At 30 June 2006 36,632 30,057 10,955 8,901 5,825 20,523 112,893
Additions 2,797 – 489 4,896 – – 8,182
Acquisition of subsidiaries 5,941 – – – – – 5,941
Transfer from construction
in progress 2,721 – – – – – 2,721
Amortisation charge (5,195) (902) (3,614) (10,275) (1,014) (3,860) (24,860)
Reclassification to assets
held for sale – – – – – (951) (951)
Exchange adjustment (148) 46 (2) – 111 383 390
At 31 December 2006 42,748 29,201 7,828 3,522 4,922 16,095 104,316
Additions 364 – 281 17,572 – – 18,217
Amortisation charge (5,284) (928) (1,822) (11,498) (1,042) (3,743) (24,317)
Disposal (657) – – – – – (657)
Reclassification to assets
held for sale (note 15(b)) – (27,300) – – – – (27,300)
Exchange adjustment (19) 47 (29) – 138 447 584
At 30 June 2007 37,152 1,020 6,258 9,596 4,018 12,799 70,843
15 Assets and Liabilities Held for Sale
Unaudited Audited
30 June 31 December
2007 2006
HK$’000 HK$’000
Assets held for sale
Indiagames Limited (note a) 97,967 93,973
COL (note b) 112,417 –
210,384 93,973
Liabilities held for sale
Indiagames Limited (note a) 11,011 7,920
26
TOM GROUP LIMITED
(a) Indiagames Limited (“Indiagames”)
In December 2006, TOM Online Inc. (“TOMO”), a non wholly-owned subsidiary of the Company, committed
to a plan which was approved by the TOMO’s Board of Directors on 29 December 2006 to sell its entire equity
interests in Indiagames in order to focus on the China market and initiated actions to locate a buyer. As a
result, the assets and liabilities of Indiagames were classified as held for sale and presented separately as
current assets and liabilities on the consolidated balance sheet as at 31 December 2006 and 30 June 2007.
On 5 March 2007, the Group signed a binding term sheet with a potential buyer for the disposal of Indiagames
and the definitive agreement was still under finalisation as at 30 June 2007. The Group expects the disposal
will be completed in the second half of 2007.
The major classes of assets and liabilities classified as held for sale were as follows:
Unaudited Audited
30 June 31 December
2007 2006
HK$’000 HK$’000
Cash and cash equivalents 14,863 23,049
Trade and other receivables 31,257 30,382
Goodwill (note 13) 72,997 72,997
Other non-current assets 8,904 3,517
128,021 129,945
Less: Provision for impairment (note (i)) (36,044) (36,044)
Exchange adjustment 5,990 72
Assets held for sale 97,967 93,973
Trade and other payables 11,011 7,920
Liabilities held for sale 11,011 7,920
(i) A provision for impairment of assets held for sale of HK$36,044,000 with reference to the expected
disposal value of the assets less costs to sell.
(b) COL
The assets and liabilities in relation to the disposal of the Group’s interest in COL, Champion Will and
Swidon as disclosed in note 9 were classified as held for sale and presented separately as current assets on
the consolidated balance sheet as at 30 June 2007.
HK$’000
Goodwill (note 13) 85,117
License right (note 14) 27,300
Assets held for sale 112,417
Interim Report 2007
27
16 Trade and other receivables
Unaudited Audited
30 June 31 December
2007 2006
HK$’000 HK$’000
Trade receivables, net of provision 567,480 555,227
Prepayments, deposits and other receivables 489,099 432,906
1,056,579 988,133
The ageing analysis of the Group’s trade receivables is as follows:
Unaudited Audited
30 June 31 December
2007 2006
HK$’000 HK$’000
1-30 days 206,643 204,232
31-60 days 133,916 133,722
61-90 days 86,037 74,707
Over 90 days 220,264 222,204
646,860 634,865
Less: Provision for impairment (79,380) (79,638)
567,480 555,227
Represented by:
Receivables from an associated company – 9,360
Receivables from related companies 261 598
Receivables from third parties 567,219 545,269
567,480 555,227
(a) The carrying values of trade and other receivables approximate their fair values.
(b) Majority of the Group’s turnover is on open account terms and in accordance with terms specified in the
contracts governing the relevant transactions.
17 Restricted Cash
As at 30 June 2007, bank deposits and cash of the Group totalling of US$2,344,000 (approximately HK$18,280,000)
(31 December 2006: US$2,344,000 or approximately HK$18,280,000), NT9,200,000 (approximately HK$2,194,000)
(31 December 2006: NT9,515,000 or approximately HK$2,273,000) and RMB618,000 (approximately HK$637,000) (31
December 2006: RMB618,000 or approximately HK$618,000) were pledged to banks for securing banking facilities
granted to certain subsidiaries of the Company and RMB14,043,000 (approximately HK$14,464,000) (31 December
2006: RMB14,043,000 or approximately HK$14,043,000) were pledged to banks for securing banking facilities granted
to an associated company respectively.
In addition, included in the restricted cash of the Group as at year ended 31 December 2006 was an amount of
US$300,000 (approximately HK$2,332,000), representing money held in escrow pursuant to tax warrants provided
by the founder of Indiagames.
28
TOM GROUP LIMITED
18 Trade and other payables
Unaudited Audited
30 June 31 December
2007 2006
HK$’000 HK$’000
Trade payables 222,662 271,402
Other payables and accruals 581,321 545,287
803,983 816,689
The ageing analysis of the Group’s trade payables at end of the period is as follows:
Unaudited Audited
30 June 31 December
2007 2006
HK$’000 HK$’000
1-30 days 85,831 123,629
31-60 days 38,042 47,324
61-90 days 20,461 27,737
Over 90 days 78,328 72,712
222,662 271,402
Represented by:
Payable to an associated company – 3,116
Payable to related companies 1,174 286
Payable to third parties 221,488 268,000
222,662 271,402
The carrying values of trade and other payables approximate their fair values.
19 Other non-current liabilities
Unaudited Audited
30 June 31 December
2007 2006
HK$’000 HK$’000
Non-current portion of long-term bank loans 1,388,310 1,733,436
Convertible bonds 195,522 191,023
Pension obligations 28,635 28,827
1,612,467 1,953,286
Interim Report 2007
29
20 Movements in borrowings
Convertible
Short-term Loans from bonds-
bank and Long-term minority liability
other loans bank loans shareholders portion Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
As at 1 January 2006 75,213 1,577,415 9,946 1,032,803 2,695,377
Borrowings 294,317 73,842 6,021 – 374,180
Repayments (74,241) (37,236) – – (111,477)
Convertible bonds interests,
net of payments of coupon
interests – – – 24,194 24,194
Exchange adjustments 27 5,185 – – 5,212
As at 30 June 2006 (unaudited) 295,316 1,619,206 15,967 1,056,997 2,987,486
As at 1 January 2007 727,569 1,999,222 – 191,023 2,917,814
Borrowings 33,659 – – – 33,659
Repayments (135,115) (142,990) – – (278,105)
Reclassification upon loan
extension (274,662) 274,662 – – –
Convertible bonds interests,
net of payments of coupon
interests – – – 4,499 4,499
Exchange adjustments 359 2,476 – – 2,835
As at 30 June 2007 (unaudited) 351,810 2,133,370 – 195,522 2,680,702
21 Share capital
No. of ordinary
shares of
HK$0.1 each HK$’000
Authorised:
As at 1 January and 30 June 2006, and 1 January and 30 June 2007 5,000,000,000 500,000
Issued and fully paid:
As at 1 January and 30 June 2006, and 1 January and 30 June 2007 3,893,270,558 389,328
30
TOM GROUP LIMITED
22 Share option schemes
(a) Details of share options granted by the Company
Six months ended 30 June
2007 2006
Pre-IPO Old Pre-IPO Old
Share Option Share Option
Option Plan Scheme Option Plan Scheme
Number of share options:
At the beginning of the period 16,196,000 150,648,000 16,196,000 164,682,000
Lapsed during the period – (5,000,000) – (10,096,000)
Cancelled during the period – (77,546,000) – (1,450,000)
At the end of the period (unaudited) 16,196,000 68,102,000 16,196,000 153,136,000
Terms of the share options outstanding as at 30 June 2007 are:
Unaudited
No. of share options
30 June 30 June
Expiry date Subscription price per share 2007 2006
10 February – 14 November 2010 HK$1.78 – HK$11.30 39,656,000 48,402,000
6 February 2012 HK$3.76 – 20,000,000
8 October 2013 HK$2.505 39,642,000 90,930,000
15 February 2014 HK$2.55 5,000,000 10,000,000
84,298,000 169,332,000
For detailed information of the Pre-IPO Share Option Plan and Old Option Scheme of the Company, please
refer to the 2006 annual report of the Company.
(b) Details of the share options granted by TOMO
Six months ended 30 June
2007 2006
Pre-IPO Share Pre-IPO Share
Share Option Share Option
Option Plan Scheme Option Plan Scheme
Number of share options:
At the beginning of the period 181,247,231 18,000,000 220,457,181 18,000,000
Exercised during the period ––(35,034,719) –
Lapsed during the period (385,921) – (616,685) –
At the end of the period (unaudited) 180,861,310 18,000,000 184,805,777 18,000,000
Terms of the share options outstanding as at 30 June 2007 are:
Unaudited
No. of share options
30 June 30 June
Expiry date Subscription price per share 2007 2006
15 February 2014 HK$1.50 180,861,310 184,805,777
10 May 2015 HK$1.204 18,000,000 18,000,000
198,861,310 202,805,777
For detailed information of the Pre-IPO Share Option Plan and Share Option Scheme of TOM Online, please
refer to the 2006 annual report of the Company.
Interim Report 2007
31
23 Reserves
Available-
Share Capital for-sale
premium Capital redemption General financial Exchange Convertible Accumulated
account reserve reserve reserve assets reserve difference bonds reserve losses Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 January 2006 3,625,981 96,567 776 99,839 (50,195) 4,462 174,327 (1,445,055) 2,506,702
Investment revaluation deficit – – – – (16,097) – – – (16,097)
Exchange difference – – – 182 (16) 42,105 – – 42,271
Profit for the period – – – – – – – 91,262 91,262
Employee share option schemes
– value of employee services – 8,972 – – – – – – 8,972
At 30 June 2006 3,625,981 105,539 776 100,021 (66,308) 46,567 174,327 (1,353,793) 2,633,110
At 1 January 2007 3,625,981 114,508 776 111,285 (43,823) 84,077 30,879 (1,379,010) 2,544,673
Investment revaluation surplus – – – – 8,485 – – – 8,485
Reserve realised upon disposal – – – – (756) – – – (756)
Exchange difference – – – (32) – 62,197 – – 62,165
Loss for the period – – – – – – – (72,346) (72,346)
Employee share option schemes
– value of employee services – 5,209 – – – – – – 5,209
At 30 June 2007 3,625,981 119,717 776 111,253 (36,094) 146,274 30,879 (1,451,356) 2,547,430
24 Minority interests
Unaudited Audited
30 June 31 December
2007 2006
HK$’000 HK$’000
At 1 January 1,394,021 1,017,497
------------------ ------------------
(Loss)/profit for the period/year attributable to minority interests (15,764) 87,654
Exchange difference 37,492 45,082
Revaluation surplus on available-for-sale financial assets 1,359 1,264
Actuarial loss on defined benefit plan – (1,125)
Recognised income and expense attributable to minority interests 23,087 132,875
------------------ ------------------
Acquisition of interests in subsidiaries 2,771 10,560
Dividend paid by subsidiaries to minority interests (3,737) (31,425)
Exercise of share options of a subsidiary granted to employees – 32,990
Reclassified from loans from a minority shareholder – 15,967
Deemed disposal of interests in subsidiaries – 177,198
Contribution from minority shareholders 7,185 –
Disposal of a subsidiary/interests in subsidiaries – 31,188
Employee share option scheme – value of employee services
attributable to minority interests 2,500 7,717
Other reserves shared by minority interests – (546)
At 30 June/31 December 1,425,827 1,394,021
32
TOM GROUP LIMITED
25 Pledge of assets
Save as disclosed in note 17, the Group has the following pledge of assets:
(a) At as 30 June 2007, available-for-sale financial assets with a total market value of approximately
HK$1,614,065,000 (31 December 2006: HK$1,758,646,000) were pledged to banks for securing bank loans
totaling HK$1,488,909,000 (31 December 2006: HK$1,628,071,000).
(b) As at 30 June 2007, concession rights and properties with net book values of approximately HK$5,173,000
(31 December 2006: HK$7,588,000) and HK$835,000 (31 December 2006: HK$11,003,000), respectively, were
pledged to banks for securing banking facilities granted to certain subsidiaries of the Company.
26 Contingent liabilities
As at 30 June 2007 and 31 December 2006, the Group had no significant contingent liabilities.
27 Business combinations
(a) Acquisition of Pixnet Digital Media Corporation (“Pixnet”)
On 14 February 2007, the Group, through a 82.5% owned subsidiary, Cite Publishing Limited, entered into a
Sale and Purchase Agreement with the shareholders of Pixnet for the acquisition of 90% equity interests in
Pixnet at a total consideration of NT$135 million (approximately HK$31,968,000), of which NT$35 million
(approximately HK$8,288,000) is for the acquisition of existing shares of Pixnet from the existing shareholders,
and NT$100 million (approximately HK$23,680,000) is to be injected into Pixnet for subscription of new
Pixnet shares. Pixnet is principally engaged in the operation of popular online community and social
networking websites in Taiwan.
The allocation of the consideration is as follows:
HK$’000
Fixed assets (note 12) 395
Trade and other receivables 38
Bank balances and cash 27,321
Trade and other payables (41)
Minority Interests (note 24) (2,771)
24,942
Cost of acquisition
Purchase consideration 31,968
Goodwill (note 13) 7,026
The acquiree’s book values of net assets at the date of acquisition approximate their fair values as disclosed
above.
The goodwill is attributable to the significant synergies with existing publishing business in Taiwan expected
to arise after the Group’s acquisition.
The Group’s share of Pixnet’s net assets as at 30 June 2007, post acquisition turnover and loss for the period
ended 30 June 2007 amounted to approximately HK$19,131,000, HK$227,000 and HK$1,599,000 respectively.
The unaudited proforma financial information in relation to the acquisition of Pixnet is not presented as the
management considered it is not material to the Group.
Interim Report 2007
33
(b) TOM Eachnet
Pursuant to a joint venture deed signed between TOMO and eBay International AG (“eBay”) on 20 December
2006, a joint venture, TOM Eachnet, has been formed on 1 February 2007 to carry on the business of owning
and operating a mobile and Internet-based marketplace in China. TOM Eachnet is jointly controlled and
owned by TOMO and eBay as to 51% and 49% respectively.
eBay provided an initial funding of US$40,000,000 (equivalent to approximately HK$312,000,000) cash to
TOM Eachnet and TOMO will provide a shareholder’s loan in the amount of US$20,000,000 (equivalent to
approximately HK$156,000,000), bearing interest at 1.3% over London Inter-Bank Offered Rate (“LIBOR”), to
TOM Eachnet when the remaining cash balance of TOM Eachnet is only enough to finance no more than six
months of its operation. If the funding from eBay and the shareholder’s loan from TOMO have been fully
utilised, additional funding in the form of shareholders’ loans of not exceeding US$10,000,000 (equivalent to
approximately HK$78,000,000) will be provided by TOMO and eBay in equal proportions if additional funding
is required by TOM Eachnet and as mutually agreed by eBay and TOMO. In addition, eBay injected its
subsidiary engaging in the business of operating an online auction and marketplace site in China to TOM
Eachnet while TOMO contributes its expertise in the Internet and mobile industries in China and its leadership
and management services to TOM Eachnet.
The Group accounts for this joint venture using the equity method of accounting since 1 February 2007. As at
30 June 2007, the Group had a negative investment in TOM Eachnet of US$6,426,000 (equivalent to
approximately HK$50,224,000), representing its investment cost of US$527,000 (equivalent to approximately
HK$4,114,000), being contribution of services to TOM Eachnet by the Group, less the Group’s share of TOM
Eachnet’s losses for the five months ended 30 June 2007 of US$6,877,000 (equivalent to approximately
HK$53,733,000) and currency translation adjustment of US$76,000 (equivalent to approximately HK$605,000).
28 Commitments
(a) Capital commitments
Unaudited Audited
30 June 31 December
2007 2006
HK$’000 HK$’000
Acquisition of new investments
– Contracted but not provided for (Note) 156,000 176,814
Acquisition of fixed assets and other intangible assets
– Contracted but not provided for – 1,196
– Authorised but not contracted for 252,906 295,892
408,906 473,902
Note: Included in the balance as at 30 June 2007 and 31 December 2006 was the commitment of
US$20,000,000 (approximately HK$156,000,000) for financing the joint venture, TOM Eachnet. For
details, please refer to note 27(b).
(b) As at 30 June 2007, the Group had no commitment in respect of contributions of registered capital of
investments in Mainland China (31 December 2006: HK$10,583,000).
(c) Except for the Group’s commitments to pay 2007 earn-out consideration of an unknown amount in relation to
the Group’s acquisition of Gainfirst Asia Limited (For details, please refer to Note 41(b) and 45(c) of the
Company’s 2006 annual report), the Group did not have any material contingent liabilities as at 30 June 2007.
34
TOM GROUP LIMITED
29 Related party transactions
A summary of significant related party transactions, in addition to those disclosed in notes 16 and 18 to the interim
financial statements, is set out below:
(a) Sales of goods and services
Unaudited
For the six months ended
30 June
2007 2006
HK$’000 HK$’000
Sales to
– Hutchison Whampoa Limited (“HWL”) and its subsidiaries 6,215 4,149
– minority shareholders of subsidiaries and their subsidiaries 993 –
(b) Purchase of goods and services
Unaudited
For the six months ended
30 June
2007 2006
HK$’000 HK$’000
Cost of sales payable to
– minority shareholders of subsidiaries and their subsidiaries 6,442 7,554
Office and warehouse rental and service fees payable to
– an associated company of CKH 4,263 4,859
– a subsidiary of CKH 3,165 2,070
– minority shareholders of subsidiaries and their subsidiaries 240 903
Services fees payable to
– HWL and its subsidiaries 4,376 5,461
– minority shareholders of subsidiaries and their subsidiaries 216 243
Interest expenses payable to
– minority shareholders of subsidiaries and their subsidiaries 302 409
(c) Key management compensation
During the periods ended June 2006 and 2007, no transactions have been entered with the directors of the
Company (being the key management personnel) other than the emoluments paid to them (being key
management personnel compensation).
30 Subsequent event
On 9 March 2007, the Company and TOMO made a joint announcement regarding a proposed conditional privatisation
of TOMO by the Company by way of scheme of arrangement (the “Proposed Privatisation Plan”). Pursuant to the
Proposed Privatisation Plan, the Company intended to propose that the issued shares of TOMO held by parties other
than Cranwood Company Limited, Handel International Limited, Schumann International Limited and Devine Gem
Management Limited are to be cancelled in exchange for HK$1.52 per share in cash payable by the Company. Upon
the completion of the cancellation, TOMO will apply for the withdrawal of the listing of its shares.
On 10 August 2007, the Proposed Privatisation Plan was duly approved at a court meeting and an extra-ordinary
general meeting by the shareholders of TOMO. Subject to the fulfillment or waiver of certain other conditions, the
Proposed Privatisation Plan is expected to be become effective on 31 August 2007. In this respect, the Company is
estimated to pay a total of HK$1,577 million for 1,033,766,075 shares of TOMO to be cancelled. The Company is in
the process of assessing the detail concrete financial impacts of the Proposed Privatisation Plan to the Group’s financial
statements.
31 Approval of interim financial statements
The condensed consolidated interim financial statements have been approved by the Board of Directors on 21 August
2007.
Interim Report 2007
35
DISCLOSURE OF INTERESTS
Directors’ interests and Short Positions in Shares, Underlying Shares and Debentures
As at 30 June 2007, the interests or short positions of the Directors in the shares, underlying shares and
debentures of the Company or any of its associated corporations (within the meaning of Part XV of the
SFO) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part
XV of the SFO (including interests or short positions which they are taken or deemed to have under such
provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the
register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions
by Directors of Listed Issuers (“Model Code”), to be notified to the Company and the Stock Exchange, were
as follows:
A. The Company
(a) Long positions in the shares of the Company
Number of shares of the Company
Approximate
Name of Personal Family Corporate Other percentage of
Directors Capacity Interests Interests Interests Interests Total shareholding
Angela Mak Beneficial 44,000 – – – 44,000 Below 0.01%
Owner
Wang Lei Lei Beneficial 300,000 – – – 300,000 0.01%
owner
36
TOM GROUP LIMITED
(b) Rights to acquire shares of the Company
Pursuant to the Pre-IPO Share Option Plan and/or the Old Share Option Scheme, certain Directors
were granted share options to subscribe for the shares of the Company, details of which as at 30
June 2007 were as follows:
Number of Subscription
share options price per
outstanding as at share of the
Name of Directors Date of grant 30 June 2007 Option period Company
HK$
Tommei Tong 9/10/2003 15,000,000 9/10/2003-8/10/2013 2.505
(Note 1)
Angela Mak 11/2/2000 3,026,000 11/2/2000-10/2/2010 1.78
(Note 2)
9/10/2003 6,000,000 9/10/2003-8/10/2013 2.505
(Note 3)
James Sha 15/11/2000 15,000,000 15/11/2000-14/11/2010 5.30
(Note 4)
Wang Lei Lei 11/2/2000 9,080,000 11/2/2000-10/2/2010 1.78
(Note 2)
9/10/2003 6,850,000 9/10/2003-8/10/2013 2.505
(Note 5)
Notes:
1. The options have vested in three tranches in the proportion of 1/3:1/3:1/3 on 17 March 2004, 17 March 2005
and 17 March 2006 respectively.
2. The options have vested in three tranches in the proportion of 20%:30%:50% on 11 February 2001, 11 February
2002 and 11 February 2003 respectively.
3. The options have vested in four tranches. The first tranche of 2,700,000 options and the second, third and
fourth tranches of 1,100,000 options each have vested on 10 October 2003, 1 January 2004, 1 January 2005
and 1 January 2006 respectively.
4. The options have vested in three tranches in the proportion of 20%:30%:50% on 15 November 2001, 15
November 2002 and 15 November 2003 respectively.
5. The options have vested in four tranches. The first tranche of 850,000 options, the second, third and fourth
tranches of 2,000,000 options each have vested on 10 October 2003, 1 February 2004, 1 February 2005 and 1
February 2006 respectively.
Save as disclosed above, during the six months ended 30 June 2007, none of the Directors or their
Associates was granted options to subscribe for shares of the Company, nor had exercised such
rights. No option granted to the above Directors was lapsed or cancelled during the six months
ended 30 June 2007.
Interim Report 2007
37
B. Associated corporations (within the meaning of the SFO)
(a) Rights to acquire shares of TOM Online
Pursuant to the pre-IPO share option plan adopted by TOM Online, a Director was granted share
options to subscribe for the shares of TOM Online, details of which as at 30 June 2007 were as
follows:
Number of share options
Subscription
Outstanding Outstanding price
as at Granted Exercised Lapsed Cancelled as at per share
Name of Date of 1 January during the during the during the during the 30 June Option of TOM
Director grant 2007 period period period period 2007 period Online
HK$
Wang Lei Lei 16/2/2004 139,264,000 – – – – 139,264,000 16/2/2004– 1.50
(Note) 15/2/2014
Note: The options will vest in five tranches in the proportion of 10%:15%:20%:25%:30%. The first, second, third
and fourth tranches of the options have vested on 12 April 2004, 16 February 2005, 16 February 2006 and 16
February 2007 respectively. The fifth tranche of the options will vest on 16 February 2008.
(b) Short positions in associated corporations
Mr. Wang Lei Lei has as of 12 June 2001 (as supplemented on 26 September 2003) granted an option
to a subsidiary of the Company in respect of his 20% (RMB20,000,000) equity interest in Beijing Lei
Ting whereby such subsidiary of the Company has the right at any time within a period of 10 years
commencing from 26 September 2003 (which may be extended for another 10 years at the option of
such subsidiary of the Company) to acquire all of Mr. Wang Lei Lei’s equity interest in Beijing Lei
Ting at an exercise price of RMB20,000,000.
Save as disclosed above, as at 30 June 2007, none of the Directors or their Associates had any interests or
short positions in any shares, underlying shares or debentures of, the Company or any of its associated
corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company
and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short
positions which they are taken or deemed to have under such provisions of the SFO), or which were
required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which
were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.
38
TOM GROUP LIMITED
Share Option Schemes
A. The Company
As at 30 June 2007, options to subscribe for an aggregate of 84,298,000 shares of the Company
granted pursuant to the Pre-IPO Share Option Plan and the Old Option Scheme were outstanding.
Details of which were as follows:
(a) Pre-IPO Share Option Plan
As at 30 June 2007, options to subscribe for an aggregate of 16,196,000 shares of the Company were
outstanding and these options relate to the options granted to 3 persons who were employees of the
Group at the date of grant. Details of which were as follows:
Number of share options
Outstanding Outstanding Subscription
as at Exercised Lapsed Cancelled as at price per
Date of 1 January during the during the during the 30 June Option share of the
grant 2007 period period period 2007 period Company
HK$
Directors 11/2/2000 12,106,000 – – – 12,106,000 11/2/2000 – 1.78
(Note) 10/2/2010
Employee 11/2/2000 4,090,000 4,090,000 11/2/2000 – 1.78
(including (Note) 10/2/2010
ex-employee)
Total: 16,196,000 – – – 16,196,000
Note: The options have vested in three tranches in the proportion of 20%:30%:50% on 11 February 2001, 11 February
2002 and 11 February 2003, respectively.
Interim Report 2007
39
(b) Old Option Scheme
As at 30 June 2007, options to subscribe for an aggregate of 68,102,000 shares of the Company
which were granted to certain Directors, continuous contract employees and ex-employees of the
Group were outstanding. Details of which were as follows:
Number of share options
Subscription
Outstanding Outstanding price per
as at Granted Exercised Lapsed Cancelled as at share of
Date of 1 January during the during the during the during the 30 June Option the
grant 2007 period period period period 2007 period Company
HK$
Directors 15/11/2000 15,000,000 – – – – 15,000,000 15/11/2000 – 5.30
(Note 1) 14/11/2010
9/10/2003 27,850,000 – – – – 27,850,000 9/10/2003 – 2.505
8/10/2013
Employees 23/3/2000 1,784,000 – – – 146,000 1,638,000 23/3/2000 – 11.30
(including (Note 2) 22/3/2010
ex-employees)
26/6/2000 674,000 – – – 82,000 592,000 26/6/2000 – 5.89
(Note 3) 25/6/2010
30/6/2000 3,000,000 – – – 3,000,000 – 30/6/2000 – 5.27
29/6/2010
8/8/2000 10,226,000 – – – 3,996,000 6,230,000 8/8/2000 – 5.30
(Note 4) 7/8/2010
7/2/2002 20,000,000 – – – 20,000,000 – 7/2/2002 – 3.76
6/2/2012
9/10/2003 62,114,000 – – – 50,322,000 11,792,000 9/10/2003 – 2.505
(Note 5) 8/10/2013
16/2/2004 10,000,000 – – 5,000,000 – 5,000,000 16/2/2004 – 2.55
(Note 6) 15/2/2014
Total: 150,648,000 – – 5,000,000 77,546,000 68,102,000
Notes:
1. Details of the options granted to the Directors are set out in the section headed “Directors’ Interest and Short
Positions in Shares, Underlying Shares and Debentures” above.
2. The options have vested in two tranches in the proportion of 50%:50% on 23 March 2005 and 23 March 2006
respectively.
3. The options have vested in two tranches in the proportion of 50%:50% on 26 June 2005 and 26 June 2006
respectively.
4. The options have vested on (i) 8 August 2001 or (ii) 8 August 2001 and 8 August 2002.
5. (i) For certain grantees, all the options have vested on 10 October 2003.
(ii) For certain grantees, the options have vested in two tranches. The first tranche of the options has
vested on 10 October 2003 and the second tranche of the options has vested on the anniversary of
their respective joining dates with the Group in 2004.
(iii) For certain grantees, the options have vested in three to four tranches. The first tranche of the options
has vested on 10 October 2003 and the remaining tranches of the options will vest on the anniversaries
of their respective joining dates with the Group in 2004 and 2005 or 2004, 2005 and 2006 (as the case
may be).
40
TOM GROUP LIMITED
(iv) For certain grantees, the options have vested in three tranches in the proportion of 1/3:1/3:1/3. The
first tranche of the options has vested on the anniversaries of their respective joining dates with the
Group in 2004, the second and third tranches of the options will vest on the anniversaries of their
respective joining dates with the Group in 2005 and 2006.
6. The options have vested on 16 February 2005 and 16 February 2006.
(c) New Option Scheme
No option has been granted pursuant to the New Option Scheme since its adoption.
B. TOM Online
As at 30 June 2007, options to subscribe for an aggregate of 198,861,310 shares of TOM Online
pursuant to the pre-IPO share option plan and the share option scheme of TOM Online were
outstanding. Details of which were as follows:
(a) Pre-IPO share option plan of TOM Online
As at 30 June 2007, options to subscribe for an aggregate of 180,861,310 shares of TOM Online
which were granted to a Director, continuous contract employees and ex-employees of the Group
were outstanding. Details of which were as follows:
Number of share options
Subscription
Outstanding Outstanding price per
as at Granted Exercised Lapsed Cancelled as at share of
Date of 1 January during the during the during the during the 30 June Option TOM
grant 2007 period period period period 2007 period Online
HK$
Director 16/2/2004 139,264,000 – – – – 139,264,000 16/2/2004 – 1.50
(Note 1) 15/2/2014
Employees 16/2/2004 41,983,231 – – 385,921 – 41,597,310 16/2/2004 – 1.50
(including (Note 2) 15/2/2014
ex-employees)
Total: 181,247,231 – – 385,921 – 180,861,310
Notes:
1. Details of the options granted to the Director are set out in the section headed “Directors’ Interests and Short
Positions in Shares, Underlying Shares and Debentures” above.
2. For certain grantees, the options have vested in 4 tranches in the proportion of 10%:30%:30%:30% on 12
April 2004, 16 February 2005, 16 February 2006 and 16 February 2007 respectively.
For certain grantees, the options have vested on (i) 12 April 2004 or (ii) 12 April 2004 and 16 February 2005.
Interim Report 2007
41
(b) Share option scheme of TOM Online
As at 30 June 2007, options to subscribe for 18,000,000 shares of TOM Online which were granted
to a continuous contract employee of the Group were outstanding. Details of which were as follows:
Number of share options
Subscription
Outstanding Outstanding price per
as at Granted Exercised Lapsed Cancelled as at share of
Date of 1 January during the during the during the during the 30 June Option TOM
grant 2007 period period period period 2007 period Online
HK$
Employee 11/5/2005 18,000,000 – – – – 18,000,000 11/5/2005 – 1.204
(Note) 10/5/2015
Note: The options will vest in 4 tranches in proportion of 15%:25%:30%:30%. The first and second tranches of the
options have vested on 11 May 2006 and 11 May 2007 respectively. The third and fourth tranches of the
options will vest on 11 May 2008 and 11 May 2009 respectively.
Valuation of Share Options
The Group accounts for share-based employee compensation arrangement in accordance with provisions of
Hong Kong Financial Reporting Standards (“HKFRS”) 2 “Share-based Payments” issued by the Hong Kong
Institute of Certified Public Accountants. Pursuant to the provisions in the HKFRS2, the fair value of the
employee services received in exchange for the grant after 7 November 2002 and not yet vested on 1
January 2005 (the “Relevant Share Options”) is recognised as expenses. The total amount to be expensed
over the vesting period is determined by reference to the fair value of the options granted at the grant date.
The following weighted average assumptions were included in the estimated grant date fair value calculations
for the Relevant Share Options, calculated using the Black-Scholes model. Key assumptions are:
Risk free interest rate (%) 2.07 – 4.22
Expected life (years) 1 – 7.01
Expected dividend 0
Volatility (%) 46 – 64
Weighted average estimated grant date fair value (HK$) 0.55 – 1.16
Share-based compensation cost, calculated by applying the above model and assumptions, charged to the
condensed consolidated interim financial statement of the Company for the six months ended 30 June
2007, net of minority interests, was HK$3,369,000.
42
TOM GROUP LIMITED
Interests and Short Positions of Shareholders
As at 30 June 2007, the persons or corporations (not being a Director or chief executive of the Company)
who have interests or short positions in the shares and underlying shares of the Company as recorded in
the register required to be kept under Section 336 of the SFO or have otherwise notified to the Company
were as follows:
Approximate
No. of shares percentage of
Name Capacity of the Company held shareholding
Li Ka-shing Founder of 1,429,024,545 (L) 36.71%
discretionary (Notes 1 & 2)
trusts &
interest of
controlled
corporations
Li Ka-Shing Unity Trustee Trustee & 1,429,024,545 (L) 36.71%
Corporation Limited beneficiary (Notes 1 & 2)
(as trustee of The Li Ka-Shing of a trust
Unity Discretionary Trust)
Li Ka-Shing Unity Trustcorp Limited Trustee & 1,429,024,545 (L) 36.71%
(as trustee of another beneficiary (Notes 1 & 2)
discretionary trust) of a trust
Li Ka-Shing Unity Trustee Trustee 1,429,024,545 (L) 36.71%
Company Limited (Notes 1 & 2)
(as trustee of The Li Ka-Shing
Unity Trust)
Cheung Kong (Holdings) Limited Interest of 1,429,024,545 (L) 36.71%
controlled (Notes 1 & 2)
corporations
Cheung Kong Investment Interest of 476,341,182 (L) 12.24%
Company Limited controlled (Note 1)
corporations
Interim Report 2007
43
Approximate
No. of shares percentage of
Name Capacity of the Company held shareholding
Cheung Kong Holdings (China) Interest of 476,341,182 (L) 12.24%
Limited controlled (Note 1)
corporations
Sunnylink Enterprises Limited Interest of a 476,341,182 (L) 12.24%
controlled (Note 1)
corporation
Romefield Limited Beneficial 476,341,182 (L) 12.24%
owner (Note 1)
Hutchison Whampoa Limited Interest of a 952,683,363 (L) 24.47%
controlled (Note 2)
corporation
Hutchison International Limited Interest of a 952,683,363 (L) 24.47%
controlled (Note 2)
corporation
Easterhouse Limited Beneficial 952,683,363 (L) 24.47%
owner (Note 2)
Chau Hoi Shuen Interest of 928,006,363 (L) 23.84%
controlled (Note 3)
corporations
Cranwood Company Limited Beneficial 928,006,363 (L) 23.84%
owner & (Note 3)
interest of
controlled
corporations
Schumann International Limited Beneficial 580,000,000 (L) 14.90%
owner (Note 3)
Handel International Limited Beneficial 348,000,000 (L) 8.94%
owner (Note 3)
(L) denotes a long position
44
TOM GROUP LIMITED
Notes:
(1) Romefield Limited is a wholly-owned subsidiary of Sunnylink Enterprises Limited, which in turn is a wholly-owned
subsidiary of Cheung Kong Holdings (China) Limited. Cheung Kong Holdings (China) Limited is a wholly-owned
subsidiary of Cheung Kong Investment Company Limited, which in turn is a wholly-owned subsidiary of Cheung
Kong (Holdings) Limited.
By virtue of the SFO, Cheung Kong Investment Company Limited, Cheung Kong Holdings (China) Limited and
Sunnylink Enterprises Limited are all deemed to be interested in the 476,341,182 shares of the Company held by
Romefield Limited.
Li Ka-Shing Unity Holdings Limited, of which each of Mr. Li Ka-shing, Mr. Li Tzar Kuoi, Victor and Mr. Li Tzar Kai,
Richard is interested in one-third of the entire issued share capital, owns the entire issued share capital of Li Ka-
Shing Unity Trustee Company Limited. Li Ka-Shing Unity Trustee Company Limited as trustee of The Li Ka-Shing
Unity Trust, together with certain companies which Li Ka-Shing Unity Trustee Company Limited as trustee of The Li
Ka-Shing Unity Trust is entitled to exercise or control the exercise of more than one-third of the voting power at their
general meetings, hold more than one-third of the issued share capital of Cheung Kong (Holdings) Limited.
In addition, Li Ka-Shing Unity Holdings Limited also owns the entire issued share capital of Li Ka-Shing Unity
Trustee Corporation Limited (“TDT1”) as trustee of The Li Ka-Shing Unity Discretionary Trust (“DT1”) and Li Ka-
Shing Unity Trustcorp Limited (“TDT2”) as trustee of another discretionary trust (“DT2”). Each of TDT1 and TDT2
hold units in The Li Ka-Shing Unity Trust.
(2) Easterhouse Limited is a wholly-owned subsidiary of Hutchison International Limited, which in turn is a wholly-
owned subsidiary of Hutchison Whampoa Limited. By virtue of the SFO, Hutchison Whampoa Limited and Hutchison
International Limited are deemed to be interested in the 952,683,363 shares of the Company held by Easterhouse
Limited.
In addition, subsidiaries of Cheung Kong (Holdings) Limited are entitled to exercise or control the exercise of more
than one-third of the voting power at the general meetings of Hutchison Whampoa Limited. By virtue of the SFO, Mr.
Li Ka-shing, being the settlor and may being regarded as a founder of each of DT1 and DT2 for the purpose of the SFO,
Li Ka-Shing Unity Trustee Corporation Limited, Li Ka-Shing Unity Trustcorp Limited, Li Ka-Shing Unity Trustee
Company Limited and Cheung Kong (Holdings) Limited are all deemed to be interested in the 476,341,182 shares of
the Company and 952,683,363 shares of the Company held by Romefield Limited and Easterhouse Limited respectively.
(3) Schumann International Limited and Handel International Limited are companies controlled by Cranwood Company
Limited and Ms. Chau Hoi Shuen is entitled to exercise more than one-third of the voting power at the general
meetings of Cranwood Company Limited.
By virtue of the SFO, Cranwood Company Limited is deemed to be interested in the 580,000,000 shares of the Company
and 348,000,000 shares of the Company held by Schumann International Limited and Handel International Limited
respectively in addition to 6,363 shares of the Company held by itself.
By virtue of the SFO, Ms. Chau Hoi Shuen is deemed to be interested in 6,363 shares of the Company, 580,000,000
shares of the Company and 348,000,000 shares of the Company held by Cranwood Company Limited, Schumann
International Limited and Handel International Limited respectively.
Save as disclosed above, as at 30 June 2007, the Directors are not aware of any other person or corporation
having an interest or short position in the shares and underlying shares of the Company representing 5%
or more of the issued share capital of the Company.
Interim Report 2007
45
Directors’ Interests in Competing Business
Mr. Frank Sixt and Mrs. Susan Chow, the Chairman of the Company and a non-executive Director
respectively, are executive directors of HWL, Cheung Kong Infrastructure Holdings Limited (“CKI”) and
directors of certain of their respective Associates (collectively referred to as “HWL Group” and “CKI
Group” respectively). In addition, Mr. Frank Sixt is also a non-executive director of CKH and Hutchison
Telecommunications International Limited (“HTIL”) and director of certain of their Associates (collectively
referred to as “CKH Group” and “HTIL Group” respectively). Mrs. Susan Chow is an alternate director of
HTIL and director of certain of its Associates. Mr. Edmond Ip, a non-executive Director, is the deputy
managing director of CKH, the senior vice president and chief investment officer of CK Life Sciences Int’l.,
(Holdings) Inc. (“CK Life”), the deputy chairman of CKI and a non-executive director of Excel Technology
International Holdings Limited (“Excel Technology”). HWL Group is engaged in e-commerce and general
information portals and broadband content. CKH Group, CKI Group, CK Life and Excel Technology are
engaged in information technology, e-commerce or new technology where applicable. HTIL Group is engaged
in providing mobile and fixed-line telecommunications services, including broadband data services,
multimedia services and mobile and fixed-line Internet services and Intranet services. The Directors believe
that there is a risk that such businesses may compete with those of the Group.
Ms. Tommei Tong, an executive Director and Chief Executive Officer of the Company, is a beneficial owner
of less than 1% of the equity interest in Qin Jia Yuan Media Services Company Limited (“Qin Jia Yuan”)
whose principal business engaged in the provision of media services in the PRC. The Directors believe that
there is a risk that the business of Qin Jia Yuan may compete with those of the Group.
Save as disclosed above, during the six months ended 30 June 2007, none of the Directors or their respective
Associates have any interests in a business which competes or may compete with the business of the
Group.
CORPORATE GOVERNANCE
Audit Committee
The Company has established an audit committee (“Audit Committee”) in January 2000. Written terms of
reference in compliance with the Listing Rules has been adopted for the Audit Committee.
The primary duties of the Audit Committee are to review and supervise the financial reporting process and
internal control procedures of the Group. The Audit Committee comprises three independent non-executive
Directors, namely, Mr. Henry Cheong, Ms. Anna Wu and Mr. James Sha and a non-executive Director,
namely, Mrs. Angelina Lee. Mr. Henry Cheong is the chairman of the Audit Committee.
The unaudited consolidated results of the Group for the six months ended 30 June 2007 have been
reviewed by the Audit Committee.
46
TOM GROUP LIMITED
Code on Corporate Governance Practices
The Company has complied with the code provisions set out in the Code on Corporate Governance Practices
contained in Appendix 14 to the Listing Rules during the six months ended 30 June 2007.
Model Code for Securities Transactions by Directors
The Company has adopted the Model Code contained in Appendix 10 to the Listing Rules. Having made
specific enquiry of the Directors, all the Directors confirmed that they have complied with the required
standard as set out in the Model Code during the six months ended 30 June 2007.
OTHER INFORMATION
Purchase, Sale or Redemption of Securities
During the six months ended 30 June 2007, neither the Company nor any of its subsidiaries purchased,
sold or redeemed any of the Company’s listed shares.
As at the date hereof, the directors of the Company are:
Executive Directors: Non-executive Directors: Independent non-executive Directors:
Ms. Tommei Tong Mr. Frank Sixt (Chairman) Mr. Henry Cheong
Ms. Angela Mak Ms. Debbie Chang Ms. Anna Wu
Mrs. Susan Chow Mr. James Sha
Mr. Edmond Ip
Mrs. Angelina Lee
Mr. Wang Lei Lei
