TOM Group Limited — Capital/Financing Update 2006

Jul 3, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in TOM Group Limited , you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, 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 circular.

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(Stock Code: 2383)

DISCLOSEABLE TRANSACTION

Proposed acquisition of the entire issued share capital of Gainfirst Asia Limited

• for identification purpose

3 July 2006

CONTENTS

		Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
A.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
B.	THE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
	1. Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
	2. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
	3. Assets to be acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
	4. WFOE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
	5. Transfer of equity interest in Beijing Infomax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
	6. Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
	7. Structure chart of Gainfirst and Beijing Infomax immediately
	before Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
	8. Structure chart of Gainfirst Group immediately after Completion . . . . . . . . . . . . . . . .	9
	9. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
	10. Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
	11. Contractual Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
C.	INFORMATION ON GAINFIRST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
D.	INFORMATION ON BEIJING INFOMAX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
E.	REASONS FOR ENTERING INTO THE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . .	13
F.	GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		15

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

“Acquisition” the proposed acquisition by TOM Online Media of the entire issued share capital of Gainfirst from the Vendors in accordance with the terms and conditions of the Agreement “Agreement” a conditional sale and purchase agreement entered into on 12 June 2006 between TOM Online Media, the Vendors, Ms. Sun and Mr. Wang in respect of the Acquisition “associates” has the same meaning as ascribed to it under the Listing Rules “Beijing Infomax” 北京博訊融通信息科技有限公司 (Beijing Bo Xun Rong Tong Information Technology Company Limited), a domestic company established in Beijing, the PRC. As at the date of the Agreement, Ms. Sun and Mr. Wang beneficially own 50% and 50% of the equity interest in Beijing Infomax, respectively “Board” the board of directors of the Company “Business Day” a day (excluding Saturday) on which banks are generally open for business in the PRC “BVI” the British Virgin Islands “Company” TOM Group Limited, a company incorporated in the Cayman Islands with limited liability, whose shares are listed on the Main Board of the Stock Exchange “Completion” completion of the Acquisition upon the terms and subject to the conditions set out in the Agreement “Consideration” the consideration for the Acquisition “Gainfirst” Gainfirst Asia Limited, a company incorporated in the BVI with limited liability and whose principal business is investment holding, which is independent from the Directors, chief executive, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company. As at the date of the Agreement, Gainfirst is owned as to 50% by Grandmetro and 50% by Valuenet “Gainfirst Group” Gainfirst, WFOE and Beijing Infomax

“GEM” the Growth Enterprise Market of the Stock Exchange

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DEFINITIONS

“Grandmetro”

Grandmetro Group Limited, a company incorporated in the BVI with limited liability and is wholly-owned by You Susheng (尤肅生 ), whose principal business is investment holding. Grandmetro and You Susheng (尤肅生) are independent of and not connected with any of the Directors, chief executives, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company

“Group” the Company and its subsidiaries “HK$” Hong Kong dollars

“Latest Practicable Date” 26 June 2006, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Mr. Wang” Wang Yutian (王玉田 ), who holds 50% of the equity interest in Beijing Infomax. Mr. Wang is independent of and not connected with any of the Directors, chief executives, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company “Ms. Sun” Sun Weijing (孫維靜 ), who holds 50% of the equity interest in Beijing Infomax. Ms. Sun is independent of and not connected with any of the Directors, chief executives, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company “PRC” the People’s Republic of China “Pre-IPO Share Option Plan” the pre-IPO share option plan adopted by the Company on 11 February 2000

“Registration” registration of the transfer of equity interest in Beijing Infomax between Ms. Sun and Mr. Wang and the Two Nominees with the competent administration for industry and commerce in the PRC “RMB” Renminbi “Sale Shares” the entire issued share capital of Gainfirst as at the date of the Agreement and as at Completion “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

2

DEFINITIONS

“Share Option Scheme” the share option scheme adopted by the Company on 11 February 2000 (as amended) “Shareholders” the shareholders of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “TOM Online” TOM Online Inc., a company incorporated in the Cayman Islands with limited liability and whose shares are listed on GEM

“TOM Online Group” TOM Online and its subsidiaries “TOM Online Media” TOM Online Media Group Limited, a company incorporated in the BVI with limited liability, which is a non wholly-owned subsidiary of the Company “TOM WFOE” Beijing Lahiji Technology Development Limited (北京雷系科技發展 有限公司 ), an indirect non wholly-owned subsidiary of the Company

• “Two Nominees” Zhang Yingnan (張穎楠 ) and Chang Cheng (常承 ), the individual nominees to be designated by TOM Online Media to acquire the entire equity interest in Beijing Infomax from Ms. Sun and Mr. Wang. Ms. Zhang and Mr. Chang are employees of TOM Online Group and not connected persons (as defined in the Listing Rules) of the Company prior to Completion

• “US$” United States dollars “US GAAP” the accounting principles generally accepted in the United States of America

• “Valuenet” Valuenet Holdings Limited, a company incorporated in the BVI with limited liability and is wholly-owned by Nie Xialing (聶筱玲 ), whose principal business is investment holding. Valuenet and Nie Xialing (聶 筱玲 ) are independent of and not connected with any of the Directors, chief executives, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company

• “Vendors” Grandmetro and Valuenet

• “WFOE” 北京東葵林信息技術有限公司 , a wholly foreign owned enterprise established by Gainfirst in Beijing, the PRC

HK$1 = RMB1.03 US$1 = HK$7.8

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LETTER FROM THE BOARD

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(Stock Code: 2383)

Directors: Frank Sixt (Chairman) Tommei Tong (Chief Executive Officer) Angela Mak Henry Cheong # Anna Wu # James Sha # Debbie Chang Susan Chow Edmond Ip Angelina Lee * Wang Lei Lei*

• Non-executive Directors

• Independent non-executive Directors

Registered office: P.O. Box 309 Ugland House South Church Street George Town Grand Cayman Cayman Islands British West Indies

Head office and principal place of business: 48th Floor, The Center 99 Queen’s Road Central Central Hong Kong

3 July 2006

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

Proposed acquisition of the entire issued share capital of Gainfirst Asia Limited

A. INTRODUCTION

On 12 June 2006, the Company announced that TOM Online Media, the Vendors, Ms. Sun and Mr. Wang had entered into the Agreement, under which, among other things, TOM Online Media conditionally

• for identification purpose

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LETTER FROM THE BOARD

agreed to acquire the Sale Shares (representing the entire issued share capital of Gainfirst as at the date of the Agreement and as at Completion) at an aggregate consideration of not more than RMB600 million (approximately HK$582.52 million).

The Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

The purpose of this circular is to provide the Shareholders with further information relating to the Acquisition. This circular also contains information in compliance with the Listing Rules.

B. THE AGREEMENT

Set out below is a summary of the principal terms of the Agreement.

1. Date:

12 June 2006

2. Parties:

Purchaser: TOM Online Media Vendors: (1) Grandmetro (2) Valuenet Other parties: (1) Ms. Sun (2) Mr. Wang

3. Assets to be acquired

The Sale Shares, representing 100% of the issued share capital of Gainfirst as at the date of the Agreement and as at Completion.

WFOE is a wholly-owned subsidiary established by Gainfirst.

Under the Contractual Arrangements (as described below), Gainfirst and WFOE will be able to enjoy the economic interest in Beijing Infomax. Subject to confirmation by the auditors of TOM Online, Beijing Infomax will be accounted for as a wholly-owned subsidiary of TOM Online and a non wholly-owned subsidiary of the Company.

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LETTER FROM THE BOARD

4. WFOE

Gainfirst has established WFOE in Beijing, the PRC. The corporate structure of WFOE is as follows:

(a) Registered capital: US$100,000 (approximately HK$780,000) (b) Shareholder: Gainfirst (100%)

• (c) Scope of business:

research, development and sale of computer software; providing technology consultation and services in respect of computers and the sale of self-manufactured products

(d) Date of establishment: 8 June 2006

5. Transfer of equity interest in Beijing Infomax

Ms. Sun and Mr. Wang will transfer all of their respective equity interest in Beijing Infomax to the Two Nominees at an aggregate consideration of RMB10 million (approximately HK$9.71 million) (being part of the Consideration) no later than the fifteenth Business Day after completion of the Registration, which completion shall occur no later than the fifth Business Day after Completion.

6. Consideration

• 6.1 The Consideration comprises three instalments as described below, the aggregate amount of which will not be more than RMB600 million (approximately HK$582.52 million).

• 6.2 The first instalment is a sum in HK$ or US$ equivalent to RMB150 million (approximately HK$145.63 million) (the “First Instalment”), which will be paid in cash within 15 Business Days after the Registration, which Registration shall be completed no later than the fifth Business Day after the date of Completion. A sum of RMB10 million (approximately HK$9.71 million) of the First Instalment will be allocated as the consideration to be paid by the Two Nominees to Ms. Sun and Mr. Wang for the transfer of equity interest in Beijing Infomax.

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LETTER FROM THE BOARD

• 6.3 The second instalment (the “Second Instalment”) is an amount in HK$ or US$ equivalent to the amount calculated by the following formula:

A = (B – C + D) x E1 – F

where:

• A = the amount of the Second Instalment (in RMB)

• B = the amount of the audited combined after-tax profit (in RMB) under the US GAAP of the Gainfirst Group for the year ending 31 December 2006

• C = the amount of the balance of accounts receivable as at 31 December 2006 (in RMB) minus the amount of provision for doubtful accounts receivable as at 31 December 2006 (in RMB) (if any)

• D = the amount of accounts receivable as at 31 December 2006 (in RMB) which has been collected during the period from 1 January 2007 to 30 June 2007

• E1 = 2.5 if (B – C + D) is less than RMB35 million or 3.5 if (B – C + D) is equal to or more than RMB35 million

• F = the amount of the First Instalment (i.e., RMB150,000,000)

If A is greater than 0, the Second Instalment will be paid by TOM Online Media in cash on or before 21 July 2007.

TOM Online Media will not be required to pay the Second Instalment if A is equal to or less than 0.

• 6.4 The final instalment (the “Final Instalment”) is an amount in HK$ or US$ equivalent to the amount calculated by the following formula:

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where:

B and C have the same meanings as defined in the formula for the calculation of the Second Instalment above.

• W = the amount of the Final Instalment (in RMB)

• H = the amount of the audited combined after-tax profit (in RMB) under the US GAAP of the Gainfirst Group for the year ending 31 December 2007

• I = the amount of the balance of accounts receivable as at 31 December 2007 (in RMB) minus the amount of provision for doubtful accounts receivable as at 31 December 2007 (in RMB) (if any)

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LETTER FROM THE BOARD

• Y = the amount of accounts receivable as at 31 December 2007 (in RMB) which has been collected during the period from 1 January 2008 to 30 June 2008

• J = 3 if (H – I) is less than RMB65 million or 4 if (H – I) is equal to or more than RMB65 million

• X = the amount of accounts receivable as at 31 December 2006 (in RMB) which has been collected during the period from 1 January 2007 to 30 June 2008

• E2 = 2.5 if (B – C + X) is less than RMB35 million or 3.5 if (B – C + X) is equal to or more than RMB35 million

• Z = the aggregate amount paid by TOM Online Media up to the Final Instalment, i.e.,

• (i) if A is equal to or greater than 0, then Z = F + A;

• (ii) if A is less than 0, then Z = F.

If W is greater than 0, the Final Instalment will be paid by TOM Online Media in cash on or before 21 July 2008.

TOM Online Media will not be required to pay the Final Instalment if W is equal to or less than 0.

The Consideration was reached at after arm’s length negotiations between the Vendors and TOM Online Media and being a price acceptable to the Vendors and TOM Online Media with reference to the past, present and future performance and the strategic value of the Gainfirst Group (as mentioned in the section headed “Reasons for entering into the Agreement” below).

The Consideration will be funded by the internal resources of TOM Online.

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LETTER FROM THE BOARD

7. Structure charts of Gainfirst and Beijing Infomax immediately before Completion

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----- Start of picture text -----

You Susheng Nie Xialing
100% 100%
Grandmetro Valuenet
50% 50%
Gainfirst
Ms. Sun Mr. Wang
50% 50%
Beijing Infomax
----- End of picture text -----

8. Structure chart of the Gainfirst Group immediately after Completion

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----- Start of picture text -----

Company
65.74%
TOM Online
100%
TOM Online
Media
100%
Gainfirst
100%
Contractual WFOE
Arrangements
Contractual
Two Nominees
Arrangements
(Note)
100%
Beijing Infomax
100%
----- End of picture text -----

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LETTER FROM THE BOARD

Note: Upon Completion, Beijing Infomax will be accounted for as a wholly-owned subsidiary of TOM Online and a non wholly-owned subsidiary of the Company (subject to confirmation by the auditors of TOM Online). Notwithstanding the aforesaid, each of the Two Nominees and his/her associates (which do not include Beijing Infomax) will be deemed as connected persons of the Company by virtue of his/her being a substantial shareholder of a subsidiary of the Company. Any transaction (other than the Contractual Arrangements) between any of the Two Nominees or his/her associates and any member of the Company will be deemed a connected transaction of the Company and subject to the requirements of Chapter 14A of the Listing Rules.

9. Conditions Precedent

Completion is conditional upon, among other things, the following conditions (“Conditions”) having been fulfilled or waived on or before 7 July 2006 (or such other date as the parties to the Agreement may agree):

1. a PRC legal opinion opining on the legality of the establishment of WFOE and the transactions contemplated under the Agreement (including the Contractual Arrangements) having been issued by such PRC legal counsel approved by TOM Online Media;

2. an employment contract in such form and substance satisfactory to TOM Online Media having been duly executed between WFOE and each member of the management team and other essential staff members (including Ms. Sun and Mr. Wang) of WFOE;

3. the Contractual Arrangements in such form and substance satisfactory to TOM Online Media having been duly entered into by the relevant parties;

4. the 2005 annual review of the national license for value-added services 《中華人民 共和國增值電信業務經營許可證》 and the telecom and information services license

《中華人民共和國電信與信息服務業務經營許可證》 currently held by Beijing Infomax having been passed;

1. the board of directors of TOM Online Media and the board of directors and/or shareholders of TOM Online (if required under the GEM Listing Rules) having approved on terms of the Agreement and the transactions contemplated thereunder;

2. the Board and/or the Shareholders (if required under the Listing Rules) having approved on the terms of the Agreement and the transactions contemplated thereunder; and

3. TOM Online Media having been satisfied with the result of the due diligence exercise carried out by it on the assets and liabilities, business and prospects of the Gainfirst Group.

As at the Latest Practicable Date, except for Conditions (1), (4) and (7), all the above Conditions have been fulfilled.

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LETTER FROM THE BOARD

10. Completion

Completion will take place on the date on which the last of the Conditions is fulfilled (or waived) or such other date as the parties may agree.

11. Contractual Arrangements

As PRC regulations currently restrict foreign ownership of companies engaged in the provision of the telecommunications value-added services (such as Beijing Infomax). To comply with the relevant PRC regulations, TOM Online Media will not have direct equity interest in Beijing Infomax but it will designate the Two Nominees to acquire the entire equity interest in Beijing Infomax. Prior to Completion, the following contractual arrangements (“Contractual Arrangements”) have been/will be entered into between the relevant parties:

• (a) an exclusive technical and consultancy services agreement to be entered into between TOM WFOE (before the establishment of WFOE) or WFOE (after its establishment) and Beijing Infomax, under which TOM WFOE (before the establishment of WFOE) or WFOE (after its establishment) will provide certain technical and consultancy services to Beijing Infomax. Beijing Infomax will pay TOM WFOE (before the establishment of WFOE) or WFOE (after its establishment) service fees on a monthly basis, which fees will be an amount equal to 65% of the total number of subscribers of the month multiplied by the net average charge per subscriber for that month (after deduction of business tax). The former exclusive technical and consultancy services agreement has been entered into between TOM WFOE and Beijing Infomax on 1 June 2006 and it will lapse on the effective date (i.e., the date of completion of the Registration) of the latter exclusive technical and consultancy services agreement;

• (b) a business operation agreement to be entered into between TOM WFOE (before the establishment of WFOE) or WFOE (after its establishment), Beijing Infomax and the shareholders of Beijing Infomax (it refers to Ms. Sun and Mr. Wang before completion of the Registration; it refers to the Two Nominees after completion of the Registration), under which TOM WFOE (before the establishment of WFOE) or WFOE (after its establishment) agreed to act as a guarantor for any obligations undertaken by Beijing Infomax and in return for which, Beijing Infomax will pledge to TOM WFOE (before the establishment of WFOE) or WFOE (after its establishment) their accounts receivable and assets. No consideration is payable under the aforesaid business operation agreement. The former business operation agreement has been entered into between TOM WFOE, Ms. Sun and Mr. Wang on 1 June 2006 and it will lapse on the effective date (i.e., the date of completion of the Registration) of the latter business operation agreement;

• (c) an exclusive option agreement to be entered into between TOM WFOE (before the establishment of WFOE) or Gainfirst (after the establishment of WFOE) and each of the shareholders of Beijing Infomax (it refers to Ms. Sun and Mr. Wang before completion of the Registration; it refers to the Two Nominees after completion of the Registration), pursuant to which the shareholders of Beijing Infomax (it refers to Ms. Sun and Mr. Wang before completion of the Registration; it refers to the Two Nominees

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LETTER FROM THE BOARD

after completion of the Registration) will grant an exclusive right to TOM WFOE (before the establishment of WFOE) or Gainfirst (after the establishment of WFOE) to purchase all or part of the shareholders’ equity interest in Beijing Infomax at an aggregate exercise price of RMB10,000,000. The option is exercisable at the discretion of TOM WFOE or Gainfirst. The former exclusive option agreement has been entered into between TOM WFOE, Ms. Sun and Mr. Wang on 1 June 2006 and it will lapse on the effective date (i.e., the date of completion of the Registration) of the latter exclusive option agreement;

• (d) an equity pledge agreement to be entered into between TOM WFOE (before the establishment of WFOE) or WFOE (after its establishment) and each of the shareholders of Beijing Infomax (before completion of the Registration, it refers to Ms. Sun and Mr. Wang; after completion of the Registration, it refers to the Two Nominees), pursuant to which the shareholders of Beijing Infomax will pledge their respective interest in Beijing Infomax to TOM WFOE (before the establishment of WFOE) or WFOE (after its establishment) for the performance of Beijing Infomax’s payment obligations under the aforesaid exclusive technical and consulting services agreement. No consideration is payable under the aforesaid equity pledge agreement. The former equity pledge agreement has been entered into between TOM WFOE, Ms. Sun and Mr. Wang on 1 June 2006 and it will lapse on the effective date (i.e., the date of completion of the Registration) of the latter equity pledge agreement;

• (e) a transfer agreement of the equity interest in Beijing Infomax to be entered into between Ms. Sun, Mr. Wang and the Two Nominees whereby Ms. Sun, Mr. Wang will transfer their respective equity interest in Beijing Infomax to the Two Nominees at an aggregate consideration of RMB10 million (approximately HK$9.71 million);

• (f) an irrevocable power of attorney to be entered into between the shareholders of Beijing Infomax (it refers to Ms. Sun and Mr. Wang before completion of the Registration; it refers to the Two Nominees after completion of the Registration) in favour of the two designated persons as designated by TOM WFOE before completion of the Registration or by WFOE after completion of the Registration so that the two designated persons have full power and authority to exercise all of the shareholder’s rights with respect to the shareholders’ interests in Beijing Infomax. The former irrevocable power of attorney has been executed by each of Ms. Sun and Mr. Wang on 1 June 2006 and they will lapse on the effective date (i.e., the date of completion of the Registration) of the latter irrevocable power of attorney to be executed by the Two Nominees; and

• (g) a loan agreement to be entered into between Gainfirst and the Two Nominees so that loans (the aggregate amount of which will be equal to the amount of the registered capital of Beijing Infomax (i.e., RMB10 million)) will be provided by Gainfirst to the Two Nominees for the exclusive purpose of Beijing Infomax’s business operations.

As a result of the Contractual Arrangements, the TOM Online Group will be able to govern the financial and operating policies of Beijing Infomax and enjoy all of the economic benefits of the Gainfirst Group.

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LETTER FROM THE BOARD

C. INFORMATION ON GAINFIRST

Gainfirst is a company incorporated in the BVI with limited liability. As at the date of the Agreement, Gainfirst is owned as to 50% by Grandmetro and 50% by Valuenet. TOM Online Media will acquire the entire issued share capital of Gainfirst upon the terms and subject to the conditions set out in the Agreement. Pursuant to the Agreement, Gainfirst has established WFOE in Beijing, the PRC. Under the Contractual Arrangements, Gainfirst and WFOE will be able to enjoy the economic interest in Beijing Infomax. Subject to confirmation by the auditors of TOM Online, Beijing Infomax will be accounted for as a wholly-owned subsidiary of TOM Online and a non wholly-owned subsidiary of the Company. As Gainfirst is dormant since its incorporation, therefore no financial information for the past two years is available.

D. INFORMATION ON BEIJING INFOMAX

Beijing Infomax is a domestic company established in the PRC on 27 February 2003. The amount of the current registered capital of Beijing Infomax is RMB10 million (approximately HK$9.71 million), which has been fully paid up. Beijing Infomax is primarily engaged in the telecommunication valueadded services and the research and development on computer software. Before Completion and at the date of the Agreement, Beijing Infomax is held as to 50% by Ms. Sun and 50% by Mr. Wang, respectively. Ms. Sun and Mr. Wang will transfer their respective equity interest in Beijing Infomax to the Two Nominees pursuant to the Agreement.

Based on the unaudited management account prepared in accordance with US GAAP of Beijing Infomax, the unaudited profit both before and after tax of Beijing Infomax for the year ended 31 December 2004 were approximately RMB6.01 million and approximately RMB6.01 million, respectively. Based on the unaudited management account prepared in accordance with US GAAP of Beijing Infomax, the unaudited profit both before and after tax of Beijing Infomax for the year ended 31 December 2005 were approximately RMB6.9 million and approximately RMB6.9 million, respectively. The unaudited net asset of Beijing Infomax as at 31 December 2005 was approximately RMB11.57 million.

The Board does not expect the Acquisition will have any immediate material impact on either the earnings or the assets and liabilities of the Group, upon Completion.

E. REASONS FOR ENTERING INTO THE AGREEMENT

Beijing Infomax is a wireless Internet service provider focusing on delivering entertainment content to users via SMS and other wireless Internet services in cooperation with major TV broadcasters in China. Beijing Infomax has an exclusive relationship with China’s national broadcaster CCTV2 for the provision of wireless Internet services. Through the Acquisition, TOM Online intends to further strengthen its leading market position in the wireless Internet sector in terms of market share and distribution channels.

The Acquisition is expected to create significant synergies between Beijing Infomax and TOM Online in the coming years. TOM Online has a proven track record in integrating TV and wireless media to inform and entertain Chinese consumers. With the addition of Beijing Infomax’s relationships with CCTV2 and other TV broadcasters and TOM Online’s leading position in the wireless Internet sector, TOM Online believes there are significant synergies in product diversification, operational efficiency and content sharing that can be gained through the Acquisition.

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LETTER FROM THE BOARD

The Directors consider that the Agreement is entered into on normal commercial terms in the ordinary and usual course of business of the Company and that the terms of the Agreement are fair and reasonable and in the interests of the Company so far as the Shareholders are concerned.

If there is any material change to the terms of the Agreement (including the Contractual Arrangements), the Company will re-comply with the relevant requirements of the Listing Rules.

F. GENERAL

The Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

The Company is listed on the Main Board of the Stock Exchange. A leading Chinese-language media group in the Greater China region, the Group has diverse business interests in five key areas: Internet (TOM Online) (Hong Kong GEM Stock code: 8282, Nasdaq stock symbol: TOMO), outdoor media, publishing, sports television and entertainment across markets in Mainland China, Taiwan and Hong Kong.

Your attention is drawn to the additional information set out in the Appendix to this circular.

Yours faithfully,

By Order of the Board

TOM GROUP LIMITED Tommei Tong Chief Executive Officer and

Executive Director

14

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company 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 and 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 Companies (the “Model Code”), to be notified to the Company and the Stock Exchange, were as follows:

A. The Company

• (a) Long positions in shares of the Company

		Number of shares	Number of shares	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

15

GENERAL INFORMATION

APPENDIX

• (b) Rights to acquire shares of the Company

Pursuant to the Pre-IPO Share Option Plan and/or the Share Option Scheme, certain Directors were granted share options to subscribe for the shares of the Company, details of which as at the Latest Practicable Date were as follows:

		Number of
		share options		Subscription
		outstanding as at		price per
Name of	Date of	the Latest		share of the
Directors	grant	Practicable Date	Option period	Company
				HK$
Tommei Tong	9/10/2003	15,000,000	9/10/2003-8/10/2013	2.505
Angela Mak	11/2/2000	3,026,000	11/2/2000-10/2/2010	1.78
	9/10/2003	6,000,000	9/10/2003-8/10/2013	2.505
James Sha	15/11/2000	15,000,000	15/11/2000-14/11/2010	5.30
Wang Lei Lei	11/2/2000	9,080,000	11/2/2000-10/2/2010	1.78
	9/10/2003	6,850,000	9/10/2003-8/10/2013	2.505

B. Associated Corporations (within the meaning of the SFO)

• (a) Long positions in shares of TOM Online

		Number of shares	Number of shares	Number of shares	of TOM Online
								Approximate
Name of		Personal		Family	Corporate	Other		percentage of
Directors	Capacity	Interests	Interests		Interests	Interests	Total	shareholding
Angela Mak	Beneficial	2,488		–	–	–	2,488	Below 0.01%
	owner

16

GENERAL INFORMATION

APPENDIX

• (b) Right 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 the Latest Practicable Date were as follows:

		Number of
		share options		Subscription
		outstanding as at		price per
Name of	Date of	the Latest		share of
Director	grant	Practicable Date	Option period	TOM Online
				HK$
Wang Lei Lei	16/2/2004	139,264,000	16/2/2004-15/2/2014	1.50

• (c) 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 Wan Jun Network Technology Limited (“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 herein, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in any shares of the Company, underlying shares of the Company or debentures of, the Company or any 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.

17

GENERAL INFORMATION

APPENDIX

3. INTERESTS AND SHORT POSITIONS OF SHAREHOLDERS

So far as is known to any Director or chief executive of the Company, as at the Latest Practicable Date, the following persons/companies (not being a Director or chief executive of the Company) who have interests or short positions in the shares or underlying shares of the Company as recorded in 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 of the	percentage of
Name	Capacity	Company held	shareholding
Li Ka-shing	Founder of discretionary	1,429,024,545 (L)	36.71%
	trusts & interest of	(Notes 1 & 2)
	controlled corporations
Li Ka-Shing Unity Trustee	Trustee & beneficiary	1,429,024,545 (L)	36.71%
Corporation Limited	of a trust	(Notes 1 & 2)
(as trustee of The Li Ka-Shing
Unity Discretionary Trust)
Li Ka-Shing Unity	Trustee & beneficiary	1,429,024,545(L)	36.71%
Trustcorp Limited	of a trust	(Notes 1 & 2)
(as trustee of another
discretionary 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)	Interest of controlled	1,429,024,545 (L)	36.71%
Limited	corporations	(Notes 1 & 2)
Cheung Kong Investment	Interest of controlled	476,341,182 (L)	12.24%
Company Limited	corporations	(Note 1)
Cheung Kong Holdings	Interest of controlled	476,341,182 (L)	12.24%
(China) Limited	corporations	(Note 1)
Sunnylink Enterprises Limited	Interest of a controlled	476,341,182 (L)	12.24%
	corporation	(Note 1)
Romefield Limited	Beneficial owner	476,341,182 (L)	12.24%
		(Note 1)

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GENERAL INFORMATION

APPENDIX

			Approximate
		No. of shares of the	percentage of
Name	Capacity	Company held	shareholding
Hutchison Whampoa Limited	Interest of a controlled	952,683,363 (L)	24.47%
	corporation	(Note 2)
Hutchison International Limited	Interest of a controlled	952,683,363 (L)	24.47%
	corporation	(Note 2)
Easterhouse Limited	Beneficial owner	952,683,363 (L)	24.47%
		(Note 2)
Chau Hoi Shuen	Interest of controlled	935,433,351 (L)	24.03%
	corporations	(Note 3)
Cranwood Company Limited	Beneficial owner &	935,433,351 (L)	24.03%
	interest of controlled	(Note 3)
	corporations
Schumann International Limited	Beneficial owner	580,000,000 (L)	14.90%
		(Note 3)
Handel International Limited	Beneficial owner	348,000,000 (L)	8.94%
		(Note 3)
Lehman Brothers Holdings Inc.	Interest of controlled	338,906,691 (L)	8.70%
	corporations	121,000,000 (S)	3.11%
		(Note 4)
Lehman Brothers U.K.	Interest of controlled	285,436,105 (L)	7.33%
Holdings (Delaware) Inc.	corporations	121,000,000 (S)	3.11%
		(Note 4)
Lehman Brothers Spain	Interest of controlled	285,436,105 (L)	7.33%
Holdings Limited	corporations	121,000,000 (S)	3.11%
		(Note 4)
Lehman Brothers Luxembourg	Interest of controlled	285,436,105 (L)	7.33%
Investments Sarl	corporations	121,000,000 (S)	3.11%
		(Note 4)
Lehman Brothers UK	Interest of controlled	285,436,105 (L)	7.33%
Holdings Limited	corporations	121,000,000 (S)	3.11%
		(Note 4)

19

GENERAL INFORMATION

APPENDIX

			Approximate
		No. of shares of the	percentage of
Name	Capacity	Company held	shareholding
Lehman Brothers Holdings Plc.	Interest of controlled	285,436,105 (L)	7.33%
	corporations	121,000,000 (S)	3.11%
		(Note 4)
Lehman Brothers	Beneficial owner	285,436,105 (L)	7.33%
International (Europe)		121,000,000 (S)	3.11%
		(Note 4)

• (L) denotes a long position (S) denotes a short position

Notes:

• (1) Romefield Limited is a wholly-owned subsidiary of Sunnylink Enterprises Limited, which in turn is a whollyowned 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 KaShing 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 whollyowned 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 7,433,351 shares of the Company held by itself.

20

GENERAL INFORMATION

APPENDIX

By virtue of the SFO, Ms. Chau Hoi Shuen is deemed to be interested in 7,433,351 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.

• (4) Lehman Brothers International (Europe) is a wholly-owned subsidiary of Lehman Brothers Holdings Plc. which in turn is a wholly-owned subsidiary of Lehman Brothers UK Holdings Limited. Lehman Brothers UK Holdings Limited is a wholly-owned subsidiary of Lehman Brothers Luxembourg Investments Sarl which in turn is a wholly-owned subsidiary of Lehman Brothers Spain Holdings Limited. Lehman Brothers Spain Holdings Limited is a wholly-owned subsidiary of Lehman Brothers U.K. Holdings (Delaware) Inc. which in turn is a whollyowned subsidiary of Lehman Brothers Holdings Inc. By virtue of the SFO, Lehman Brothers Holdings Inc., Lehman Brothers U.K. Holdings (Delaware) Inc., Lehman Brothers Spain Holdings Limited, Lehman Brothers Luxembourg Investments Sarl, Lehman Brothers UK Holdings Limited and Lehman Brothers Holdings Plc. are deemed to be interested in the 285,436,105 shares of the Company and short position in 121,000,000 shares of the Company held by Lehman Brothers International (Europe).

By virtue of the SFO, Lehman Brothers Holdings Inc. is also deemed to be interested in the 21,705,882 shares of the Company, 31,764,704 shares of the Company held by its subsidiaries, namely, Lehman Brothers Finance S.A. and Lehman Brothers Commercial Corporation Asia Limited.

So far as is known to any Directors or chief executive of the Company, as at the Latest Practicable Date, the following companies/persons were interested in 10% or more of the equity interests of the subsidiaries of the Company:

		No. and class of	Percentage of
Name of subsidiaries	Name of shareholders	shares held	shareholding
YCP Advertising Limited	Yangcheng Enterprise	2 ordinary shares	20.00%
	Limited
Beijing GreaTom United	Great Wall Technology	Registered capital	10.00%
Technology Company	Company Ltd.	RMB2,500,000
Limited
Guangdong Yangcheng	Yangcheng Evening News	Registered capital	20.00%
Press Sports Development	Economic Development	RMB1,000,000
Limited	Corporation
Guangdong Yangcheng	Yangcheng Evening News	Registered capital	20.00%
Advertising Company	Economic Development	RMB1,000,000
Limited	Corporation
Cernet Information	Cernet Network Company	Registered capital	49.00%
Technology	Limited	RMB29,400,000
Company Limited
Nong Nong Magazine	Barbizon Interculture	431,000 ordinary shares	17.24%
Company Limited	Publication Company
	Limited
TOM Outdoor Media	SPH AlphaOne Pte Ltd.	35 ordinary shares	35.00%
Group Limited

21

GENERAL INFORMATION

APPENDIX

		No. and class of	Percentage of
Name of subsidiaries	Name of shareholders	shares held	shareholding
Wuhan TOM Outdoor	Chen Gang	Registered capital	15.00%
Information & Media		RMB750,000
Company Limited
CNPIT TOM Culture	CNPIT Information	Registered capital	30.00%
Company Limited	Technology Company	RMB1,500,000
	Limited
China Entertainment	Turner Broadcasting System	10,778 ordinary	35.93%
Television Broadcast	Asia Pacific, Inc.	shares
Limited
Cite (H.K.) Publishing	Wong Shun Hing	500,000 ordinary	11.91%
Group Limited		shares
Cite (Malaysia) SDN. BHD.	Chew Kim Ming	40,000 ordinary	10.00%
		shares
Cite (Malaysia) SDN. BHD.	Brain Network (M) SDN. BHD.	60,000 ordinary	15.00%
		shares
Taiwan Cable Holdings	CDIB Venture Investment	19.99 ordinary	19.99%
Limited	(Asia) Limited	shares
Taiwan Cable Holdings	CDIB & Partners Investment	20.02 ordinary	20.02%
Limited	Holding (Cayman) Ltd.	shares

Save as disclosed above, as at the Latest Practicable Date, the Directors are not aware of any other person who has an interest or short position in shares of the Company or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

22

GENERAL INFORMATION

APPENDIX

4. 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 Hutchison Whampoa Limited (“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 a non-executive director of Cheung Kong (Holdings) Limited (“CKH”) and Hutchison Telecommunications International Limited (“HTIL”) and director of certain of its 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 and a director of certain of its associates. HWL Group is engaged in e-commerce and general information portals, event production, broadband content, sports-related content, event management and advertising and outdoor media. Both the CKH Group and the CKI Group are engaged in information technology, e- commerce and new technology. 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, 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.

23

GENERAL INFORMATION

APPENDIX

5. OUTSTANDING SHARE OPTIONS

As at the Latest Practicable Date, options to subscribe for an aggregate of 170,548,000 shares of the Company granted pursuant to the Pre-IPO Share Option Plan and the Share Option Scheme were outstanding. Details of which were as follows:

(a) Pre-IPO Share Option Plan

As at the Latest Practicable Date, options to subscribe for an aggregate of 16,196,000 shares of the Company at a subscription price of HK$1.78 per share of the Company were outstanding. These options were granted to 3 persons who are employees of the Group at the date of grant. All of these options have a duration of 10 years from 11 February 2000, but shall lapse where the grantee ceases to be employed by the Group or the HWL group of companies.

(b) Share Option Scheme

Options to subscribe for an aggregate of 154,352,000 shares of the Company (which includes the options granted to the Directors as disclosed above) were outstanding as at the Latest Practicable Date, breakdown of which are set out below:

				Option period*
				(commencing from
			Subscription	date of grant and
	No. of share	No. of	price per share	terminating ten
Date of grant	options	employees	of the Company	years thereafter)
			HK$
23/3/2000	1,876,000	49	11.30	23/3/2000-22/3/2010
26/6/2000	778,000	25	5.89	26/6/2000-25/6/2010
30/6/2000	3,000,000	1	5.27	30/6/2000-29/6/2010
8/8/2000	12,258,000	95	5.30	8/8/2000-7/8/2010
15/11/2000	15,000,000	1	5.30	15/11/2000-14/11/2010
7/2/2002	20,000,000	1	3.76	7/2/2002-6/2/2012
9/10/2003	91,440,000	41	2.505	9/10/2003-8/10/2013
16/2/2004	10,000,000	1	2.55	16/2/2004-15/2/2014

• Those options that have been vested may be exercised within the option period, unless they have been cancelled. Generally, the options are vested in different tranches (subject to conditions set out in the offer letters).

24

GENERAL INFORMATION

APPENDIX

6. LITIGATION

As at the Latest Practicable Date, save as mentioned below, no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group.

Two wholly-owned subsidiaries of the Company, being (1) York Island (Guangzhou) Limited as plaintiff; and (2) York Island (Chengdu) Limited as claimant, have been involved in two separate proceedings initiated in 2003 before the Guangzhou Intermediary People’s Court and China International Economic and Trade Arbitration Commission (“CIETAC”) in the PRC respectively, concerning disputes in connection with agreements entered into by the respective subsidiaries relating to the leasing, construction or delivery of (i) bus shelter with light boxes; and (ii) street name light boxes respectively by the respective defendant or respondents. In June 2005, the CIETAC handed down a judgement ruling that York Island (Chengdu) Limited was successful in its claim. As at the Latest Practicable Date, no decision has been made for the proceeding initiated by York Island (Guangzhou) Limited.

In addition, a 65% owned subsidiary of the Company, being TOM Outdoor Media Group Limited as plaintiff, has initiated a legal proceeding before the PRC court claiming for the repayment of HK$10,849,057 under the loan agreement dated 10 April 2002 entered into between the parties. As at the Latest Practicable Date, no decision has been made for the aforesaid proceeding.

7. SERVICE CONTRACTS

None of the Directors has any service contract with any member of the Group which is not terminable by the Company within one year without payment of compensation (other than statutory compensation).

8. GENERAL

• (a) The registered office of the Company is at P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, British West Indies.

• (b) The head office and principal place of business of the Company is at 48th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong. The share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17 Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (c) The Qualified Accountant of the Company as required under Rule 3.24 of the Listing Rules is Ms. Tommei Tong. She holds a Bachelor of Social Sciences Degree from the University of Hong Kong in 1986. She is also a Fellow of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants.

• (d) The Company Secretary of the Company is Ms. Pessy Yu. Ms. Yu holds a Master of Arts degree in Jurisprudence from the Oxford University and has been admitted as a solicitor in Hong Kong, and England and Wales.

• (e) The English text of this circular shall prevail over the Chinese text.

25