TOM Group Limited — Capital/Financing Update 2005

Jun 7, 2005

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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(Stock Code: 2383)

UPDATE ON DISCLOSEABLE TRANSACTION

Proposed payment in cash and Cité shares in lieu of the IPO shares in respect of the acquisition of the entire issued share capital of Sharp Point Publishing Co., Ltd.

The Board refers to the acquisition of the entire issued share capital of Sharp Point, which was completed on 6 February 2002 as mentioned in the Company’s announcement dated 6 February 2002.

As mentioned in the Company’s announcement dated 21 November 2001 and the circular dated 12 December 2001, the consideration for the Acquisition (as adjusted) was NT$369,813,000 (equivalent to approximately HK$90,530,222), of which the Deferred Consideration (being a sum of NT$95,000,000 (equivalent to approximately HK$23,256,000)) would be satisfied by the issue and allotment of the IPO Shares.

The Board is pleased to announce that the relevant parties have reached an agreement that, in lieu of the issue and allotment of the IPO Shares, the Deferred Consideration will now be paid partly in cash and partly in Cité Shares.

PROPOSED PAYMENT OF THE DEFERRED CONSIDERATION IN CASH AND CITÉ SHARES IN LIEU OF THE IPO SHARES

The Board refers to the acquisition of the entire issued share capital of Sharp Point, which was completed on 6 February 2002 as mentioned in the Company’s announcement dated 6 February 2002.

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As mentioned in the Company’s announcement dated 21 November 2001 and the circular dated 12 December 2001, the consideration for the Acquisition (as adjusted) was NT$369,813,000 (equivalent to approximately HK$90,530,222), of which the Deferred Consideration (being a sum of NT$95,000,000 (equivalent to approximately HK$23,256,000)) would be satisfied by the issue and allotment of the IPO Shares.

The Board is pleased to announce that the parties to the Stock Purchase Agreement and TOM Print Media have agreed that, in lieu of the issue and allotment of the IPO Shares, the Deferred Consideration will now be satisfied by (i) an aggregate of NT$31,350,000 (equivalent to approximately HK$7,674,480) to be paid in cash; and (ii) an aggregate of NT$63,650,000 (equivalent to approximately HK$15,581,520) by way of transfer of a total of 38,205 Cité Shares by TOM Print Media to the SP Shareholders (in proportion to their respective shareholding interest in Sharp Point as at the date of the Stock Purchase Agreement) in the following manner:

1. TOM Print Media will pay each SP Shareholder in cash such sum set against his or her name in the second column of the table set out below; and

2. TOM Print Media will transfer to each SP Shareholder such number of Cité Shares set against his or her name in the third column of the table set out below at a consideration of NT$1,

on or before 30 June 2005 (or such other date as TOM Print Media and the SP Shareholders may agree).

The SP Shareholders Mr. Huang CHEN Shi-Fang (陳希芳) CHEN Jih-Hsiao (陳日曉) HSIEH Shao-Chi (謝紹琦) YANG Chia-Hua (楊加樺) CHEN Jih-Sheng (陳日陞) CHEN John-Kun (陳重焜) CHEN Ching-Wen (陳慶文) YANG Der-Hsien (楊德顯) KO Li-Yin (葛麗英) HUANG Yueh-Hsia (黃月霞) KAO Ho-Tsung (高和宗) YANG Chih-Hsiung (楊志雄) HSU Li-Jung (許麗容) CHANG Wei-Ming (張偉銘) JUAN Chien-I (阮倩儀) CHANG Yuan-Ching (張苑青) CHEN Ching-Yuan (陳清淵) YEN Feng-Chu (嚴鳳珠) TSENG Tai-Li (曾黛莉) HSIAO Pao-Chu (蕭寶珠) Total:	Amount to be paid by TOM Print Media (NT$) 5,973,526.92 1,325,161.70 5,868,338.78 2,462,342.15 1,818,476.60 6,203,521.31 2,141,662.34 301,253.53 567,561.06 366,843.11 517,070.99 3,079,750.80 31,130.77 144,832.37 65,428.21 42,542.95 97,457.21 97,457.21 89,269.55 90,024.68 66,347.76 31,350,000.00	Number of Cité Shares to be transferred by TOM Print Media 7,279 1,615 7,151 3,001 2,216 7,559 2,610 367 692 447 630 3,753 38 177 80 52 119 119 109 110 81
		38,205

The Consideration Shares represent approximately 0.76% of the existing issued share capital of Cité as at the date of this announcement.

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The parties have through negotiations reached an agreement that as there is no imminent listing of the publishing business in Taiwan, the Deferred Consideration will be satisfied such that one-third of the Deferred Consideration be satisfied in cash and the remaining two-third of the Deferred Consideration by the issue and allotment of Cité Shares. The number of Consideration Shares to be transferred to the SP Shareholders is reached by the parties making a reference to the value per Cité Share (being approximately NT$1,666, which is the same valuation used in restructuring the minority interests in Taiwan publishing group in 2002, details of which have been disclosed in the circular of the Company dated 16 January 2003).

As at the date of this announcement, Cité is owned as to approximately 83.19% by TOM Print Media and approximately 16.81% collectively by a number of minority shareholders, each of which owns less than 2.5% of the existing issued share capital of Cité.

After completion of the transfer of the Consideration Shares (assuming that no further issue and allotment of Cité Shares will take place before completion of such transfer), Cité will be owned as to approximately 82.43% by TOM Print Media and approximately 17.57% collectively by a number of minority shareholders (including the SP Shareholders), each of which owns less than 2.5% of the existing issued share capital of Cité.

Mr. Huang, one of the SP Shareholders, is a connected person of the Company under the Listing Rules by virtue of his being a director of each of Cité and Sharp Point, two non wholly-owned subsidiaries of the Company. The payment of cash and transfer of Cité Shares to Mr. Huang will constitute a connected transaction of the Company under Chapter 14A of the Listing Rules. However, as each of the applicable percentage ratios is less than 0.1%, such transaction will fall within the exemption under Rule 14A.31(2) of the Listing Rules, and is exempt from the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Directors (including the independent non-executive Directors) are of the view that the aforesaid connected transaction is to be entered into on normal commercial terms and the relevant terms are fair and reasonable and in the interest of the shareholders of the Company as a whole.

REASONS FOR THE PROPOSED PAYMENT OF THE DEFERRED CONSIDERATION IN CASH AND CITÉ SHARES IN LIEU OF THE IPO SHARES

As the Company has no imminent plan to spin-off its Taiwan publishing business, the Directors consider that by consolidating the SP Shareholders into Cité, which is the holding company of the Company’s Taiwan publishing business, the proposed payment of the Deferred Consideration in cash and Cité Shares in lieu of the IPO Shares as mentioned in this announcement will align the interests of the SP Shareholders with those of the Company.

The Directors consider that the proposed payment of the Deferred Consideration in cash and Cité Shares in lieu of the IPO Shares as mentioned in this announcement is on normal commercial terms and in the ordinary and usual course of business of the Company, and that the terms of such payment are fair and reasonable and in the interests of the Company so far as the shareholders of the Company are concerned.

INFORMATION ON CITÉ

Cité was established in August 2002 as the flapship company for the Company’s publishing business (“TOM Publishing Group”). TOM Publishing Group is one of the leading publishers in the Greater China, with operations in the People’s Republic of China, Taiwan and Hong Kong. TOM Publishing Group is primarily engaged in magazine and book circulation, sales of publication advertising and other related products.

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The unaudited consolidated profit before and after tax of Cité for the year ended 31 December 2003 prepared in accordance with HKGAAP were NT$225.1 million and NT$208.1 million, respectively. The unaudited consolidated profit before and after tax of Cité for the year ended 31 December 2004 prepared in accordance with HKGAAP were NT$484.7 million and NT$321.6 million, respectively. The unaudited consolidated net assets of Cité prepared in accordance with HKGAAP as at 31 December 2004 was NT$3,331.8 million.

DEFINITIONS

DEFINITIONS
“Acquisition”	the acquisition by the Company of the entire issued
	share capital of Sharp Point, which was completed on
	6 February 2002
“associates”	has the meaning ascribed to it in the Listing Rules
“Board”	the board of Directors
“Cité”	Cité Publishing Holding Limited, a company incorporated
	in the BVI with limited liability and a non wholly-
	owned subsidiary of TOM Print Media
“Cité Share(s)”	ordinary share(s) of US$0.01 each in the capital of Cité
“Company”	TOM Group Limited, a company incorporated in the
	Cayman Islands with limited liability, whose shares are
	listed on the Stock Exchange
“Consideration	3 8 , 2 0 5 C i t é S h a r e s t o b e t r a n s f e r r e d b y
Shares”	TOM Print Media to the SP Shareholders in the manner
	set out in the section headed “Proposed Payment of the
	Deferred Consideration in Cash and Cité Shares in lieu
	of the IPO Shares” in this announcement
“Deferred	ap p r o xi mat el y 25% of t he cons i derat i on for
Consideration”	the Acquisition, being a sum of NT$95,000,000
	(equivalent to approximately HK$23,256,000)
“Director(s)”	the director(s) of the Company
“HKGAAP”	the generally accepted accounting principles in Hong
	Kong
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“IPO Shares”	the shares in a company to be listed on the Stock
	Exchange, which shares would be issued to the SP
	Shareholders within 7 business days after the first day
	of trading of such shares on the Stock Exchange in
	satisfaction of the payment of the Deferred Consideration
	pursuant to the Stock Purchase Agreement
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Mr. Huang”	Mr. HUANG Chen-Lung (alias Michael HUANG) (黃鎮
	隆), who is a director of each of Cité and Sharp Point
	as at the date of this announcement. Accordingly, Mr.
	Huang is a connected person of the Company under the
	Listing Rules
“NT$”	New Taiwan dollars, the lawful currency of Taiwan. For
	the purposes of this announcement, the conversion rate
	between NT$ and HK$ is NT$0.2448 = HK$1

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“Right Charm” Right Charm International Limited, a company incorporated in the BVI with limited liability and a non wholly-owned subsidiary of the Company “Sharp Point” 尖端出版股份有限公司 (Sharp Point Publishing Co., Ltd.), a company incorporated in Taiwan with limited liability and a non wholly-owned subsidiary of the Company

“SP	Shareholders”	1. 2.	Mr. Huang CHEN Shi-Fang (陳希芳)
		3.	CHEN Jih-Hsiao (陳日曉)
		4.	HSIEH Shao-Chi (謝紹琦)
		5.	YANG Chia-Hua (楊加樺)
		6. 7.	CHEN Jih-Sheng (陳日陞) CHEN John-Kun (陳重焜)
		8.	CHEN Ching-Wen (陳慶文)
		9.	YANG Der-Hsien (楊德顯)
		10.	KO Li-Yin (葛麗英)
		11.	HUANG Yueh-Hsia (黃月霞)
		12. 13.	KAO Ho-Tsung (高和宗) YANG Chih-Hsiung (楊志雄)
		14. 15. 16.	HSU Li-Jung (許麗容) CHANG Wei-Ming (張偉銘) JUAN Chien-I (阮倩儀)
		17. 18.	CHANG Yuan-Ching (張苑青) CHEN Ching-Yuan (陳清淵)
		19. 20.	YEN Feng-Chu (嚴鳳珠) TSENG Tai-Li (曾黛莉)
		21.	HSIAO Pao-Chu (蕭寶珠)

each of whom (save and except for Mr. Huang) is independent of and not connected with any of the Directors, chief executives or substantial shareholders of the Company or any of their respective associates and is not a connected person (as defined in the Listing Rules) of the Company

“Stock Exchange”

• “Stock Purchase Agreement”

• “TOM Print Media”

The Stock Exchange of Hong Kong Limited a s t o c k p u r c h a s e a g r e e m e n t d a t e d 2 1 November 2001 (as amended by a supplemental agreement dated 27 December 2001) entered into between Right Charm, Mr. Huang, the SP Shareholders and Sharp Point TOM Print Media Group Limited, a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of the Company

By Order of the Board TOM GROUP LIMITED Angela Mak Company Secretary

Hong Kong, 7 June 2005

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As at the date hereof, the Directors are: Executive Directors: Non-executive Directors:

Non-executive Directors:

Mr. Sing Wang Mr. Frank Sixt (Chairman) Ms. Tommei Tong Ms. Debbie Chang Mrs. Susan Chow Mr. Edmond Ip Mrs. Angelina Lee Mr. Holger Kluge Mr. Wang Lei Lei

Independent non-executive Directors: Mr. Henry Cheong Ms. Anna Wu Mr. James Sha

• for identification purpose

Please also refer to the published version of this announcement in The Standard.

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