TOM Group Limited — Earnings Release 2004

Mar 23, 2005

Listed Company Information

Listed Company Information
TOM GROUP<02383> - Results Announcement TOM Group Limited announced on 23/03/2005: (stock code: 02383 ) Year end date: 31/12/2004 Currency: HKD Auditors' Report: Unqualified (Audited ) (Audited ) Last Current Corresponding Period Period from 01/01/2004 from 01/01/2003 to 31/12/2004 to 31/12/2003 Note ('000 ) ('000 ) Turnover : 2,595,245 2,089,234 Profit/(Loss) from Operations : 1,016,882 92,349 Finance cost : (34,902) (19,919) Share of Profit/(Loss) of Associates : 13,069 1,823 Share of Profit/(Loss) of Jointly Controlled Entities : (367) (6,387) Profit/(Loss) after Tax & MI : 859,822 12,598 % Change over Last Period : +6,725 % EPS/(LPS)-Basic (in dollars) : 0.2212 0.0035 -Diluted (in dollars) : 0.2076 0.0035 Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : 859,822 12,598 Final Dividend : Nil Nil per Share (Specify if with other : N/A N/A options) B/C Dates for Final Dividend : N/A Payable Date : N/A B/C Dates for (-) General Meeting : N/A Other Distribution for : N/A Current Period B/C Dates for Other Distribution : N/A Remarks: 1. Basis of preparation The accounts have been prepared in accordance with accounting principles generally accepted in Hong Kong and comply with accounting standards issued by the Hong Kong Institute of Certified Public Accountants (" HKICPA"). They have been prepared under the historical cost convention except that certain investment securities are stated at fair value. The HKICPA has issued a number of new Hong Kong Financial Reporting Standards ("HKFRS") and Hong Kong Accounting Standards ("HKAS") ( collectively referred as "new HKFRSs") which are effective for accounting periods beginning on or after 1 January 2005. With effect from 1 January 2004, the Group has early adopted HKFRS 3 "Business Combinations", HKAS 36 "Impairment of Assets" and HKAS 38 "Intangible Assets". The early adoption of these standards has resulted in a decrease in cost of sales of HK$1,365,000, decrease in other operating expenses of HK$45,802,000, increase in the share of profits of associated companies of HK$2,086,000, leading to an increase in the profit attributable to shareholders of HK$ 50,477,000 for the year ended 31 December 2004. The Group has not early adopted other new HKFRSs except for those mentioned above in the accounts for the year ended 31 December 2004. The Group has already commenced an assessment of the impact of these new HKFRSs but is not yet in a position to state whether these new HKFRSs would have a significant impact on its results of operations and financial position. 2. Profit on deemed disposal of a subsidiary On 10 March and 11 March 2004, the shares of TOM Online Inc. ("TOM Online "), previously a wholly-owned subsidiary of the Company, were listed and traded on the National Market of National Automated Systems Dealership and Quotation ("NASDAQ"), United States of America and the Growth Enterprise Market ("GEM") of the Stock Exchange of Hong Kong Limited (the "Stock Exchange") (the "Global Offering") by the issuance of new ordinary shares. As a result of the Global Offering, the Company's shareholding in TOM Online has been diluted to 71.86%, which resulted in a gain of HK$875,775 ,000 arising from this deemed disposal. On 10 March 2004, US$18,500,000 (approximately HK$144,300,000) worth of TOM Online shares were issued and allotted to Cranwood Company Limited at HK$1.5 per share to satisfy part of the consideration for the acquisition of the entire share capital of Puccini International Limited. This share allotment by TOM Online resulted in a deemed disposal gain of HK$103,701, 000. 3. Provision for impairment of assets Provision for impairment of assets represents provision for impairment of fixed assets of HK$29,432,000, other intangible assets of HK$2,397,000 and goodwill of HK$53,299,000. The impairment provision was mainly the result of certain internal restructuring initiatives in connection with the Group's operations. Among which, a provision of HK$46,838,000 has been made for impairment of goodwill arising from the acquisition of a subsidiary engaged in the audio and video products distribution business. The subsidiary has been excluded from consolidation since 1 January 2004 as the Group has ceased to have the ability to control or significantly influence the subsidiary's operation. 4. Provision for contracts termination Provision for contracts termination included a one-time charge of HK$108, 715,000 for the early termination of China Entertainment Television Broadcast Limited's analogue transponder agreement, in preparation for migration to digitalised transmission and distribution platform. 5. Listing expenses On 4 August 2004, the listing shares of the Company have been migrated from GEM to the Main Board of the Stock Exchange. The associated expenses for the migration amounted to HK$19,812,000. 6. Earnings per share (a) Basic The calculation of the basic earnings per share is based on consolidated profit attributable to shareholders of HK$859,822,000 (2003: HK$12,598, 000) and the weighted average of 3,886,250,185 (2003: 3,583,805,272) ordinary shares in issue during the year. (b) Diluted The calculation of diluted earnings per share for the year ended 31 December 2004 is based on the adjusted consolidated profit attributable to shareholders of HK$880,207,000, after adding back the borrowing costs of the convertible bonds, and the weighted average of 4,239,411,657 ordinary shares, after adjusting for the effects of all dilutive potential ordinary shares, as if all the outstanding share options and convertible bonds issued by the Group had been exercised and converted into ordinary shares at the date of issuance. The calculation of the diluted earnings per share for the year ended 31 December 2003 is based on the consolidated profit attributable to shareholders of HK$12,598,000 and the weighted average of 3,606,757,274 ordinary shares, after adjusting the effects of all dilutive potential ordinary shares, as if all the outstanding share options granted by the Company had been exercised at the date of issuance and the consideration shares for acquisition of subsidiaries had been issued at the date of acquisition. Since all potential ordinary shares arising from the convertible bonds, if converted into ordinary shares, would increase profit attributable to shareholders per share as a result of savings on the interest and redemption premium payable and amortisation of borrowing costs, the effects of anti-dilutive potential ordinary shares have not been taken into account in calculating diluted earnings per share.