TOM Group Limited — Capital/Financing Update 2006

Mar 21, 2006

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)

CONNECTED TRANSACTION

Proposed disposal of 50% of the issued share capital of Yazhou Zhoukan Holdings Limited

The Board announces that on 20 March 2006, the Company, Energetic and YZZK, being subsidiaries of the Company, have entered into the Agreement with Skyland and Ming Pao pursuant to which, among other things, Energetic has agreed to sell the Sale Shares (representing 50% of the issued share capital of YZZK) to Skyland.

The total consideration for the Disposal is HK$16,200,000 which will be satisfied by the issue and allotment by Ming Pao to Energetic or its nominee of 12,000,000 ordinary shares of Ming Pao at an issue price of HK$1.35 per share.

YZZK is beneficially owned as to 50% by Energetic and 50% by Skyland. YZZK is treated as a subsidiary of the Company. As Skyland is a substantial shareholder of YZZK, the signing of the Agreement therefore constituted a connected transaction of the Company under Chapter 14A of the Listing Rules. However, pursuant to Rule 14A.32(1) of the Listing Rules, as each of the applicable percentage ratios (other than the profits ratio) calculated according to Rule 14.07 of the Listing Rules is less than 2.5%, the transactions contemplated under the Agreement are only subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules and no independent shareholders’ approval is required.

The Directors (including the independent non-executive Directors) are of the view that the transactions contemplated under the Agreement are fair and reasonable and in the interests of the Company and its shareholders as a whole and in the ordinary and usual course of business of the Company and the terms of the Agreement are on normal commercial terms.

THE AGREEMENT

Date

20 March 2006

Parties

Vendor: Energetic Purchaser: Skyland Other parties: The Company, Ming Pao and YZZK

Assets to be disposed The Sale Shares, representing 50% of the issued share capital of YZZK.

Major terms of the Agreement Pursuant to the Agreement, Energetic has agreed to sell the Sale Shares to Skyland. Upon Completion, the Group will cease to have any shareholding interest in YZZK.

Subject to Completion having taken place, Skyland, with effect from 1 January 2006, shall be:

1. entitled to the entire economic benefits of and arising from the business operations of YZZK Group; and

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1. liable for all liabilities incurred by and claimed against the YZZK Group and all outgoings and expenses of whatever nature of the YZZK Group.

Pursuant to the Agreement, each of Energetic, Skyland and YZZK shall procure the capitalisation of the aggregate sum of HK$9,000,000, representing the sum of such shareholder’s loan of HK$4,500,000 provided by each of Energetic and Skyland to YZZK, in the share capital of YZZK on Completion.

Consideration

The total consideration for the Disposal is HK$16,200,000 which will be satisfied by the issue and allotment by Ming Pao to Energetic or its nominee of 12,000,000 ordinary shares of Ming Pao (representing approximately 3.05% of the existing issued share capital of Ming Pao and approximately 2.96% of then issued share capital of Ming Pao as enlarged by the allotment of the Consideration Shares) at an issue price of HK$1.35 per share, credited as fully paid and shall rank pari passu with the existing ordinary shares of Ming Pao.

The Consideration was arrived at after arm’s length negotiation between the parties and being a price acceptable to the parties with reference to the respective financial performance and asset value of Ming Pao and the YZZK Group.

Conditions precedent

Completion is conditional upon the granting by the Listing Committee of the Stock Exchange of an approval for the listing of, and permission to deal in, the Consideration Shares and, unless otherwise agreed in writing between Energetic and Skyland, in the event that the condition shall not have been satisfied on or before 20 April 2006, the Agreement shall lapse and no party to the Agreement shall make any claim against any other in respect thereof, save for any antecedent breach.

Completion

Completion shall take place on the Business Day after the day upon which the above condition shall have been satisfied or deferred or such date as the parties to the Agreement may agree in writing, but in any event, no later than 30 April 2006.

Information on YZZK

YZZK is an investment holding company. A wholly-owned subsidiary of YZZK is engaged in the publishing of Yazhou Zhoukan , an authoritative Chinese current events weekly magazine. The Group acquired 50% of the issued share capital of YZZK for a cash consideration of HK$60,000,000 on 2 March 2001.

Based on the management accounts of YZZK, the unaudited consolidated net revenues of YZZK prepared in accordance with HK GAAP for the years ended 31 December 2004 and 2005 were approximately HK$50,350,000 and approximately HK$48,142,000, respectively. The unaudited consolidated losses both before and after taxation of YZZK prepared under HK GAAP for the years ended 31 December 2004 and 2005 were approximately HK$7,453,000 and approximately HK$5,544,000, respectively. As at 31 December 2005, the unaudited consolidated net liabilities of YZZK prepared in accordance with HK GAAP was approximately HK$60,838,000.

There will be a disposal gain estimated to be approximately HK$14,000,000 arising from the Disposal based on the Consideration less the carrying value of the investment.

Reasons for entering into the Agreement

By swapping the shares in the YZZK Group into the shares of Ming Pao, the Company is able to have interests in a wider range of publications (including newspaper, magazines and books) in the Greater China Region and have a broader scope of cooperation with this reputable publishing group. In addition, the Directors are of the view that it would be a benefit to the Company to reallocate more resources to publishing business in the PRC and Taiwan.

The Directors (including the independent non-executive Directors) are of the view that the transactions contemplated under the Agreement are fair and reasonable and in the interests of the Company and its shareholders as a whole and in the ordinary and usual course of business of the Company and the terms of the Agreement are on normal commercial terms.

CONNECTED TRANSACTION

YZZK is beneficially owned as to 50% by Energetic and 50% by Skyland. YZZK is treated as a subsidiary of the Company since the Group has financial and operational control of YZZK Group. As Skyland is a substantial shareholder of YZZK, the signing of the Agreement therefore constituted a connected transaction of the Company under Chapter 14A of the Listing Rules. However, pursuant to Rule 14A.32(1) of the Listing Rules, as each of the applicable percentage ratios (other than the profits ratio) calculated according to Rule 14.07 of the Listing Rules is less than 2.5%, the transactions contemplated under the Agreement are only subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules and no independent shareholders’ approval is required.

GENERAL

The Company (HKSE stock code: 2383) is listed on the main board of the Stock Exchange. A leading Chinese-language media group in the Greater China region, the TOM 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.

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DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings:

DEFINITIONSIn this announcement, unless the context otherwise requires, the following expressions shall have thefollowing meanings:	DEFINITIONSIn this announcement, unless the context otherwise requires, the following expressions shall have thefollowing meanings:	DEFINITIONSIn this announcement, unless the context otherwise requires, the following expressions shall have thefollowing meanings:
“Agreement”a sale and purchase agreement entered into between the Company,Energetic, Skyland, Ming Pao and YZZK on 20 March 2006 in respectof the Disposal“Board”the board of directors of the Company“Bi D”d ldi Std Sd hih lid bk i H
usness ay“Completion”“Company”“Consideration”“Consideration Shares”“Director(s)”“Disposal”“Energetic”“Group”“HK$”“Hong Kong”“HK GAAP”“Listing Rules”“Ming Pao”	a ay (excung auray or unay) on wc cense ans n ong
	Kong are open for business
	completion of the sale and purchase of the Sale Shares pursuant to theAgreementTOM Group Limited, a company incorporated in the Cayman Islands,whose shares are listed on the main board of the Stock Exchangethe total consideration of HK$16,200,000 to be satisfied by the issue andallotment by Ming Pao to Energetic or its nominee of the ConsiderationShares at an issue price of HK$1.35 per share12,000,000 new ordinary shares of Ming Pao to be issued and allottedto Energetic or its nominee to satisfy the Considerationthe director(s) of the Companythe proposed disposal by Energetic of the Sale Shares to Skylandpursuant to the AgreementEnergetic Assets Limited, a company incorporated in the British VirginIslands, which is a wholly-owned subsidiary of the Company. As at thedate of the Agreement, Energetic owns 50% of the issued share capitalof YZZKthe Company and its subsidiariesHong Kong dollars, the lawful currency of Hong Kongthe Hong Kong Special Administrative Region of the PRCthe generally accepted accounting principles in Hong Kongthe Rules Governing the Listing of Securities on the Stock ExchangeMing Pao Enterprise Corporation Limited, a company incorporated inBermuda, whose shares are listed on the main board of the StockExchange. The principal business of Ming Pao is the publication ofChinese newspapers, periodicals and books, provision of travel and related
services, and property investment“PRC”The People’s Republic of China“Sale Shares”the 6,000 Shares, representing 50% of the issued shares in the capitalof YZZK“Shares”the shares of HK$1 each in the share capital of YZZK“Skyland”Skyland International Investment Limited, a company incorporated in theBritish Virgin Islands, which is an indirect non wholly-owned subsidiaryof Ming Pao. The principal business of Skyland is investment holding.As at the date of the Agreement, Skyland owns 50% of the issued sharecapital of YZZK“Stock Exchange”The Stock Exchange of Hong Kong Limited“YZZK”Yazhou Zhoukan Holdings Limited, a company incorporated in the BritishVirgin Islands, which is beneficially owned as to 50% by Energetic and50% by Skyland. YZZK is treated as a subsidiary of the Company“YZZK Group”YZZK and its subsidiaries

By Order of the Board TOM GROUP LIMITED Angela Mak Executive Director

Hong Kong, 20 March 2006

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As at the date hereof, the Directors are: Executive Directors: Ms. Tommei Tong Ms. Angela Mak

Non-executive Directors: Mr. Frank Sixt (Chairman) Ms. Debbie Chang Mrs. Susan Chow Mr. Edmond Ip Mrs. Angelina Lee 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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