TOM Group Limited — Interim / Quarterly Report 2014

Aug 21, 2014

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INTERIM REPORT 2014

Contents

• 2 Definitions

• 3 Corporate Information

• 4 Chairman’s Statement

• 5 Management‘s Discussion and Analysis

• 8 Independent Review Report

• 9 Interim Financial Information

• 16 Notes to the Condensed Consolidated Interim Financial Information

• 32 Disclosure of Interests

• 37 Corporate Governance

• 38 Other Information

TOM Group Limited 1

Definitions

“Board”	means the board of Directors
“CKH”	means Cheung Kong (Holdings) Limited
“Company” or “TOM”	means TOM Group Limited
“Director(s)”	means the director(s) of the Company
“Group” or “TOM 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
“Mainland” or “PRC”	means The People’s Republic of China, excluding Hong Kong,
	Macau and Taiwan
“Model Code”	means Model Code for Securities Transactions by Directors of
	Listed Issuers contained in Appendix 10 to the Listing Rules
“Option Scheme”	means the share option scheme adopted by the Company on
	23 July 2004
“SFO”	means the Securities and Futures Ordinance, Chapter 571 of
	the Laws of Hong Kong
“Stock Exchange”	means The Stock Exchange of Hong Kong Limited

2

Interim Report 2014

Corporate Information

Board of Directors

Chairman Frank John Sixt

Executive Directors Yeung Kwok Mung Mak Soek Fun, Angela

Audit Committee

Cheong Ying Chew, Henry (Committee Chairman) James Sha Lee Pui Ling, Angelina Ip Yuk-keung, Albert

Principal Share Registrar

Maples Corporate Services Limited P.O. Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands

Remuneration Committee

Non-executive Directors Chang Pui Vee, Debbie Ip Tak Chuen, Edmond Lee Pui Ling, Angelina

Independent Non-executive Directors Cheong Ying Chew, Henry James Sha Ip Yuk-keung, Albert

Alternate Director

Chow Woo Mo Fong, Susan (Alternate to Frank John Sixt)

Company Secretary Mak Soek Fun, Angela

Authorised Representatives

Yeung Kwok Mung Mak Soek Fun, Angela

Cheong Ying Chew, Henry (Committee Chairman) Frank John Sixt Ip Yuk-keung, Albert Chow Woo Mo Fong, Susan (Alternate to Frank John Sixt)

Auditor

PricewaterhouseCoopers

Registered Office

P. O. Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands

Head Office and Principal

Place of Business

48/F., The Center 99 Queen’s Road Central Central Hong Kong Tel: (852) 2121 7838 Fax: (852) 2186 7711

Branch Share Registrar

Computershare Hong Kong Investor Services Limited Rooms 1712–1716, 17/F. Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

Principal Bankers

The Hongkong and Shanghai Banking Corporation Limited Bank of China (Hong Kong) Limited DBS Bank Limited Industrial and Commercial Bank of China (Asia) Limited

Website Address

www.tomgroup.com

Stock Code

2383

TOM Group Limited 3

Chairman’s Statement

I am pleased to announce the results of TOM Group Limited and its subsidiaries for the six months ended 30 June 2014.

For the six months to 30 June 2014, the Group reported HK$727 million revenues and operating loss of HK$106 million. Profit attributable to shareholders, including disposal gain, was HK$29 million.

During the reporting period, the Group continued to invest in our fast growing e-commerce joint venture with China Post, Ule (www.ule.com). In January 2014, subscription by investors in Ule was completed and the Group recognised a disposal gain attributable to shareholders of HK$157 million. With the support from new investors and various new initiatives developed by the operation team, Ule achieved an encouraging 354% year-on-year growth in its gross merchandise value (GMV), and in only the first six months of this year recorded GMV of RMB2,311 million, exceeding last year’s full year GMV of RMB1,432 million.

The Mobile Internet Group reported revenues of HK$47 million, down from HK$207 million a year earlier, as a result of the exit from the 2.5G wireless value-added services market at the end of 2013. The Group will continue to implement cost control measures to rationalise the operations and to develop new products and services to offer our users.

During the review period, TOM Group invested in WeLab Holdings Limited (“WeLab”), a Hong Kong based Internet and technology based consumer finance company. The Group will work closely with WeLab to launch its credit scoring and fraud control technology and services throughout Greater China region and Asia.

The Publishing Group maintained a stable performance during the reporting period, recording segment revenues and profit of HK$455 million and HK$24 million respectively.

The Outdoor Media Group reported stable revenues of HK$116 million from its continuing operations, whilst the Television and Entertainment Group maintained its revenues at HK$108 million in the reporting period.

Going forward, TOM Group will maintain financial and operating disciplines while expanding the Group’s core businesses.

I would like to take this opportunity to thank the management and all the staff of TOM Group for their hard work and dedication.

Frank John Sixt Chairman

Hong Kong, 30 July 2014

4

Interim Report 2014

Management’s Discussion and Analysis

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS
	For the six months ended
	30 June 2014	30 June 2013
	HK$’000	HK$’000
Revenue	726,679	975,106
Operating loss#before disposal gain	(105,556)	(85,823)
Gain on disposal of interests in joint ventures	174,995	–
Profit/(loss) attributable to equity holders of the Company	29,458	(113,465)
Earnings/(loss) per share (HK cents)	0.76	(2.91)

# Including share of results of investments accounted for using the equity method

Business Review

During the reporting period, the Group focused on driving the growth of Ule, the e-commerce joint-venture with China Post and has embarked an exponential growth via its unique offline-toonline/mobile platform. This has been the growth engine for the Group and Ule will unveil more new product and service offerings to tap the huge business opportunities in the fast growing China e-commerce market. During the reporting period, the Group recorded a disposal gain attributable to shareholders of HK$157 million due to the new investors’ subscription of Ule’s shares, which helps speed up Ule’s business development. The Group’s profit attributable to shareholders amounted to HK$29 million. Operating expenses reduced by 16% on a year-onyear basis with enhanced operating efficiency. Gross profit margin increased from 28% the same period last year to 33%.

E-Commerce

The Ule joint venture has been performing well during the reporting period. For the first six months this year, Ule achieved an encouraging 354% year-on-year growth in its GMV and in only the first six months of this year recorded GMV of RMB2,311 million, exceeding last year’s full year GMV of RMB1,432 million. Repeated buyers accounted for 45% of the total buyers in the second quarter this year, demonstrating strong users’ loyalty. Orders placed through mobile phone accounted for 10% of the total number of transactions, demonstrating the fast development of mobile commerce.

Leveraging on China Post’s extensive outlets in the rural villages, Ule has kicked off its rural e-commerce initiative to drive sales, with its unique online, offline and mobile channels, and capture the huge business opportunities in the rural market. A province has been selected for the pilot scheme, and more provinces will join later this year to engage more rural store owners and villagers to shop and trade via the Ule platform at these outlets. These outlets can also offer various services, enhancing the quality of life among the villagers.

5

TOM Group Limited

Management’s Discussion and Analysis

The rural e-commerce service is helping more than tens of thousands China Post’s franchised stores in the rural villages to bring their business operations online. Data generated from the rural e-commerce system will be analysed with advanced big data technology to deepen Ule’s understanding on the demand for rural e-commerce. Ule then can offer more new services to assist merchants to tap the rural market.

Moreover, Ule’s Anhui online agriculture transaction platform has made its debut in the reporting period. The platform was supported by Anhui provincial government and key enterprises in the province to boost the growth of the agricultural sector.

Mobile Internet

The Mobile Internet Group has been incubating series of new businesses including music and game services. The Group has implemented a streamlined and focused operation and will explore new business models and leverage on popular distribution channels to bring in popular mobile games and services from developers in China and overseas.

Publishing

The Publishing Group maintained stable performance during the reporting period, with revenue reached HK$455 million and segment profit amounted to HK$24 million.

Outdoor Media

The Outdoor Media Group’s revenue amounted to HK$116 million, while segment loss reduced by 34% as a result of cost control initiatives and benefit from the high value LED assets.

Television and Entertainment

Television and Entertainment Group saw its revenue maintained at HK$108 million in the reporting period with a segment loss narrowed on efficient use of resources.

The Group is making good progress in rationalising its business operations in Mobile Internet, Publishing, Outdoor Media and Television and Entertainment respectively. During the reporting period, the Group has invested in WeLab, a Hong Kong based Internet finance company. The Group will work closely with WeLab to launch its Internet and technology based consumer finance platform throughout Mainland China, Greater China region and Asia.

Liquidity and Financial Resources

As at 30 June 2014, TOM Group had cash and bank balances, excluding pledged deposits, of approximately HK$620 million. A total of HK$3,468 million financing facilities were available, of which HK$2,468 million had been utilised as at 30 June 2014, to finance the Group’s investment, capital expenditures and for working capital purposes.

Total borrowings of TOM Group amounted to approximately HK$2,468 million as at 30 June 2014. These included long-term bank loans of approximately HK$2,289 million and short-term bank loans of approximately HK$179 million. The gearing ratio (Debts/(Debts + Equity)) of TOM Group was 79% as at 30 June 2014, same level as 31 December 2013.

6

Interim Report 2014

Management’s Discussion and Analysis

As at 30 June 2014, the Group had net current assets of approximately HK$374 million, compared to balance of approximately HK$366 million as at 31 December 2013. As at 30 June 2014, the current ratio (Current assets/Current liabilities) of TOM Group was 1.32, compared to 1.30 as at 31 December 2013.

For the first six months of 2014, net cash used in operating activities amounted to HK$91 million, compared to HK$17 million in the same period of 2013. Net cash outflow used in investing activities was HK$96 million, mainly included an investment of HK$31 million and capital expenditures of HK$68 million.

Charges on Group Assets

As at 30 June 2014, the Group had restricted cash amounting to HK$4 million, being bank deposits pledged in favour of certain publishing distributors in Taiwan as retainer fee for potential sales return.

Foreign Exchange Exposure

In general, it is the Group’s policy for each operating entity to borrow in local currencies, where necessary, to minimise currency risk.

Contingent Liabilities

As at 30 June 2014, TOM Group had no significant contingent liabilities.

Employee Information

As at 30 June 2014, TOM Group had approximately 2,060 full-time employees. For the first six months of the year, employee costs, including Directors’ emoluments, totalled HK$251 million. The Group’s employment and remuneration policies remained the same as detailed in the Annual Report for the year ended 31 December 2013.

Disclaimer:

Non-GAAP measures

Certain non-GAAP (generally accepted accounting principles) measures, such as operating profit/(loss) including share of results of investments accounted for using the equity method and segment profit/(loss) excluding gain on disposal of interests in joint ventures, are used for assessing the Group’s performance. These non-GAAP measures are not expressly permitted measures under GAAP in Hong Kong and may not be comparable to similarly titled measures for other companies. Accordingly, such non-GAAP measures should not be considered as an alternative to operating income as an indicator of the operating performance of the Group or as an alternative to cash flows from operating activities as a measure of liquidity. The use of non-GAAP measures is provided solely to enhance the overall understanding of the Group’s current financial performance. Additionally, since the Group has historically reported certain non-GAAP results to investors, it is considered the inclusion of non-GAAP measures provides consistency in the Group’s financial reporting.

TOM Group Limited 7

Independent Review Report

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REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION TO THE BOARD OF DIRECTORS OF TOM GROUP LIMITED (incorporated in the Cayman Islands with limited liability)

Introduction

We have reviewed the interim financial information set out on pages 9 to 31, which comprises the condensed consolidated interim statement of financial position of TOM Group Limited (the “Company”) and its subsidiaries (together, the “Group”) as at 30 June 2014 and the related condensed consolidated interim income statement, interim statement of comprehensive income, interim statement of changes in equity and interim statement of cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting”. Our responsibility is to express a conclusion on this interim financial information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

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 information 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 information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting”.

PricewaterhouseCoopers Certified Public Accountants

Hong Kong, 30 July 2014

8

Interim Report 2014

Interim Financial Information

Condensed Consolidated Interim Income Statement

For the six months ended 30 June 2014

Note

Unaudited Six months ended 30 June 2014 2013 HK$’000 HK$’000 726,679 975,106 (489,983) (701,850) (108,594) (125,021) (79,894) (86,956) (120,760) (157,937) 1,610 13,368 174,995 – (34,614) (2,533) 69,439 (85,823) 4,939 6,878 (34,830) (32,711) (29,891) (25,833) 39,548 (111,656) 927 (8,973) 40,475 (120,629) 11,017 (7,164) 29,458 (113,465) HK0.76 cents HK(2.91) cents

Revenue 4 Cost of sales Selling and marketing expenses Administrative expenses Other operating expenses Other gains, net Gain on disposal of interests in joint ventures 13(b) Share of profits less losses of investments accounted for using the equity method 13 5 Finance income 6 Finance costs 6 Finance costs, net 6 Profit/(loss) before taxation Taxation 7 Profit/(loss) for the period Attributable to: – Non-controlling interests – Equity holders of the Company Earnings/(loss) per share attributable to equity holders of the Company during the period Basic and diluted 9

726,679 (489,983) (108,594) (79,894) (120,760) 1,610 174,995 (34,614) 69,439 4,939 (34,830) (29,891) 39,548 927 40,475 11,017 29,458 HK0.76 cents

TOM Group Limited 9

Interim Financial Information

Condensed Consolidated Interim Statement of Comprehensive Income

For the six months ended 30 June 2014

	Unaudited Six months ended 30 June 2014 2013 HK$’000 HK$’000	Unaudited Six months ended 30 June 2014 2013 HK$’000 HK$’000
Profit/(loss) for the period Items that may be subsequently reclassified to income statement: Revaluation surplus on available-for-sale financial assets Exchange translation differences Other comprehensive (expense)/income for the period, net of tax Total comprehensive income/(expense) for the period Total comprehensive income/(expense) for the period attributable to: – Non-controlling interests – Equity holders of the Company	40,475 2,899 (26,199) (23,300) 17,175 7,349 9,826	(120,629) 111 34,489
		34,600
		(86,029)
		(8,026)
		(78,003)

10

Interim Report 2014

Interim Financial Information

Condensed Consolidated Interim Statement of Financial Position

As at 30 June 2014 Note	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000
ASSETS AND LIABILITIES Non-current assets Fixed assets 10 Goodwill 11 Other intangible assets 12 Investments accounted for using the equity method 13 Available-for-sale financial assets Advance to an investee company Deferred tax assets Other non-current assets Current assets Inventories Trade and other receivables 14 Restricted cash 15 Cash and cash equivalents Current liabilities Trade and other payables 16 Taxation payable Long-term bank loans – current portion 17 Short-term bank loans 17 Net current assets Total assets less current liabilities	126,525 644,623 89,970 1,561,999 58,160 2,180 34,706 11,340 2,529,503 113,810 791,833 4,025 619,677 1,529,345 865,792 37,290 73,701 178,434 1,155,217 374,128 2,903,631	142,315 646,914 88,023 1,435,970 24,137 2,180 34,421 6,725
		2,380,685
		114,096 793,169 3,105 695,179
		1,605,549
		945,806 48,836 73,901 171,138
		1,239,681
		365,868
		2,746,553

TOM Group Limited 11

Interim Financial Information

Condensed Consolidated Interim Statement of Financial Position

As at 30 June 2014

Note	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000
Non-current liabilities Deferred tax liabilities Non-current portion of long-term bank loans 17 Pension obligations Net assets EQUITY Equity attributable to the Company’s equity holders Share capital 18 Deficits Own shares held Non-controlling interests Total equity	7,517 2,215,617 37,435 2,260,569 643,062 389,328 (56,966) (6,244) 326,118 316,944 643,062	6,398 2,075,718 37,120
		2,119,236
		627,317
		389,328 (66,792) (6,244)
		316,292 311,025
		627,317

12

Interim Report 2014

Interim Financial Information

Condensed Consolidated Interim Statement of Changes in Equity

For the six months ended 30 June 2014

				Unaudited	Unaudited	Unaudited	Unaudited			Total shareholders’ funds HK$’000	Non- controlling interests HK$’000	Total equity HK$’000
				Attributable to equity holders of the Company
	Share capital HK$’000	Own shares held HK$’000	Share premium HK$’000	Capital reserve HK$’000	Capital redemption reserve HK$’000	General reserve HK$’000	Available- for-sale financial assets reserve HK$’000	Exchange reserve HK$’000	Accumulated losses HK$’000
Balance at 1 January 2014 Comprehensive income: Profit for the period Other comprehensive income: Revaluation surplus on available-for-sale financial assets Exchange translation differences Total comprehensive income/(expense) for the period ended 30 June 2014 Transactions with equity holders: Dividend paid to non-controlling interests Contributions from non-controlling interests Transactions with equity holders Balance at 30 June 2014	389,328 – – – – – – – 389,328	(6,244) – – – – – – – (6,244)	3,625,981 – – – – – – – 3,625,981	(11,186) – – – – – – – (11,186)	776 – – – – – – – 776	150,542 – – – – – – – 150,542	8,012 – 2,899 – 2,899 – – – 10,911	790,965 – – (22,531) (22,531) – – – 768,434	(4,631,882) 29,458 – – 29,458 – – – (4,602,424)	316,292 29,458 2,899 (22,531) 9,826 – – – 326,118	311,025 11,017 – (3,668) 7,349 (2,368) 938 (1,430) 316,944	627,317
												40,475 2,899 (26,199)
												17,175
												(2,368) 938
												(1,430)
												643,062

TOM Group Limited 13

Interim Financial Information

Condensed Consolidated Interim Statement of Changes in Equity

For the six months ended 30 June 2014

				Unaudited	Unaudited	Unaudited	Unaudited			Total shareholders’ funds HK$’000	Non- controlling interests HK$’000	Total equity HK$’000
				Attributable to equity		holders of the Company
	Share capital HK$’000	Own shares held HK$’000	Share premium HK$’000	Capital reserve HK$’000	Capital redemption reserve HK$’000	General reserve HK$’000	Available- for-sale financial assets reserve HK$’000	Exchange reserve HK$’000	Accumulated losses HK$’000
Balance at 1 January 2013 Comprehensive income: Loss for the period Other comprehensive income: Revaluation surplus on available-for-sale financial assets Exchange translation differences Total comprehensive income/(expense) for the period ended 30 June 2013 Transactions with equity holders: Contributions from non-controlling interests Transfer to general reserve Transactions with equity holders Balance at 30 June 2013	389,328 – – – – – – – 389,328	(6,244) – – – – – – – (6,244)	3,625,981 – – – – – – – 3,625,981	28,021 – – – – – – – 28,021	776 – – – – – – – 776	144,464 – – – – – 1,183 1,183 145,647	4,109 – 111 – 111 – – – 4,220	731,064 – – 35,351 35,351 – – – 766,415	(4,117,767) (113,465) – – (113,465) – (1,183) (1,183) (4,232,415)	799,732 (113,465) 111 35,351 (78,003) – – – 721,729	321,903 (7,164) – (862) (8,026) 938 – 938 314,815	1,121,635
												(120,629) 111 34,489
												(86,029)
												938 –
												938
												1,036,544

14

Interim Report 2014

Interim Financial Information

Condensed Consolidated Interim Statement of Cash Flows

For the six months ended 30 June 2014

Note

Unaudited Six months ended 30 June 2014 2013 HK$’000 HK$’000 (61,577) 16,011 (21,026) (16,948) (8,870) (15,672) (91,473) (16,609) (67,726) (78,523) 428 676 (31,152) – 2,477 2,199 (95,973) (75,648) 338,440 188,256 (190,532) (112,869) (16,904) (4,679) (2,368) – (920) 106 127,716 70,814 (59,730) (21,443) 695,179 797,115 (15,772) 4,401 619,677 780,073

Cash flows from operating activities Net cash (outflow)/inflow from operations Interest paid Overseas taxation paid Net cash used in operating activities Cash flows from investing activities Capital expenditure Proceeds from disposal of fixed assets Capital investment in an available-for-sale financial asset Dividends received Net cash used in investing activities Cash flows from financing activities New bank loans 17 Loan repayments 17 Loan arrangement fees paid Dividends paid to non-controlling interests (Increase)/reduction of restricted cash 15 Net cash from financing activities Decrease in cash and cash equivalents Cash and cash equivalents at 1 January Exchange adjustment Cash and cash equivalents at 30 June

(61,577) (21,026) (8,870) (91,473) (67,726) 428 (31,152) 2,477 (95,973) 338,440 (190,532) (16,904) (2,368) (920) 127,716 (59,730) 695,179 (15,772) 619,677

TOM Group Limited 15

Notes to the Condensed Consolidated Interim Financial Information

1 Basis of preparation and accounting policies

This unaudited condensed consolidated interim financial information for the six months ended 30 June 2014 has been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”).

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The accounting policies and methods of computation used in the preparation of this interim financial information are consistent with those used in 2013 annual financial statements, except for the adoption of amendments to standards and new interpretation which are relevant to the operations of the Group and mandatory for annual periods beginning 1 January 2014.

The adoption of these amendments to standards and new interpretation does not have a material impact on the Group’s accounting policies.

2 Critical accounting estimates and judgements

The preparation of this condensed consolidated interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial information, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2013.

16

Interim Report 2014

Notes to the Condensed Consolidated Interim Financial Information

3 Financial risk management

(a) Financial risk factors

The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including cash flow interest rate risk, currency risk and price risk).

This condensed consolidated interim financial information do not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at 31 December 2013.

There have been no changes in the risk management policies since the year ended 31 December 2013.

(b) Fair value estimation

The financial instruments that are measured at fair value require disclosure of fair value measurements by level of the following fair value measurement hierarchy.

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The following table presents the Group’s assets and liabilities that are measured at fair value.

Level 1 HK$’000

At 30 June 2014

Assets

Available-for-sale financial assets – Equity securities Total assets	14,770
	14,770

Total liabilities –

TOM Group Limited 17

Notes to the Condensed Consolidated Interim Financial Information

3 Financial risk management (Continued)

• (b) Fair value estimation (Continued)

Level 1 HK$’000

At 31 December 2013

Assets Available-for-sale financial assets – Equity securities Total assets Total liabilities	11,874
	11,874
	–

The fair values of all financial assets and liabilities approximate their carrying amounts.

4 Segment information

The Group has five reportable operating segments:

• Mobile Internet Group – provision of mobile Internet services, online advertising, commercial enterprise solutions and online communication services.

• E-Commerce Group – provision of services to users using the mobile and Internetbased marketplace and provision of technical services for online trading platform.

• 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 in relation to satellite television channel operations, production of broadcasting programmes and provision of media sales, event production and marketing services.

Sales between segments are carried out at arm’s length.

18

Interim Report 2014

Notes to the Condensed Consolidated Interim Financial Information

4 Segment information (Continued)

The segment results for the six months ended 30 June 2014 are as follows:

				Unaudited Six months ended 30 June2014	Unaudited Six months ended 30 June2014	Unaudited Six months ended 30 June2014	Total HK$’000
		Mobile Internet Group HK$’000	E-Commerce Group HK$’000	Publishing Group HK$’000	Television Outdoor and Media Entertainment Group Group HK$’000 HK$’000
Gross segment revenue Inter-segment revenue Net revenue from external customers Segment profit/(loss) before amortisation and depreciation Amortisation and depreciation Segment profit/(loss) Other material non-cash items: Gain on disposal of interests in joint ventures Share of profits less losses of investments accounted for using the equity method Finance costs: Finance income (note a) Finance expenses (note a) Segment profit/(loss) before taxation Unallocated corporate expenses Profit before taxation Expenditure for operating segment non-current assets Unallocated expenditure for non-current assets Total expenditure for non-current assets		46,799 – 46,799 (31,685) (4,884) (36,569) – (140) (140) 3,705 – 3,705 (33,004) 785	1,870 – 1,870 (3,768) (57) (3,825) 174,995 (19,203) 155,792 44 – 44 152,011 –	454,960 – 454,960 79,524 (55,683) 23,841 – (15,271) (15,271) 9,565 (5,147) 4,418 12,988 55,049	115,810 – 115,810 3,437 (10,298) (6,861) – – – 561 – 561 (6,300) 6,733	107,579 (339) 107,240 (10,909) (5,696) (16,605) – – – 37 (9,353) (9,316) (25,921) 5,154	727,018 (339) 726,679 36,599 (76,618) (40,019) 174,995 (34,614) 140,381 13,912 (14,500) (588) 99,774 (60,226) 39,548 67,721 5 67,726

Note (a): Inter-segment interest income and inter-segment interest expenses amounted to HK$9,261,000 and HK$9,883,000 were included in the finance income and finance expenses respectively.

TOM Group Limited 19

Notes to the Condensed Consolidated Interim Financial Information

4 Segment information (Continued)

The segment results for the six months ended 30 June 2013 are as follows:

				Unaudited Six months ended 30 June2013	Unaudited Six months ended 30 June2013
		Mobile Internet Group HK$’000	E-Commerce Group HK$’000	Publishing Group HK$’000	Outdoor Media Group HK$’000	Television and Entertainment Group HK$’000	Total HK$’000
Gross segment revenue Inter-segment revenue Net revenue from external customers Segment profit/(loss) before amortisation and depreciation Amortisation and depreciation Segment profit/(loss) Other material non-cash items: Share of profits less losses of investments accounted for using the equity method Finance costs: Finance income (note a) Finance expenses (note a) Segment profit/(loss) before taxation Unallocated corporate expenses Loss before taxation Expenditure for operating segment non-current assets Unallocated expenditure for non-current assets Total expenditure for non-current assets		207,278 – 207,278 (12,450) (6,475) (18,925) 283 283 5,392 – 5,392 (13,250) 2,816	2,592 – 2,592 (34,195) (2,777) (36,972) 5,591 5,591 36 – 36 (31,345) 269	485,047 – 485,047 89,987 (55,201) 34,786 (8,407) (8,407) 11,045 (6,050) 4,995 31,374 59,109	178,172 – 178,172 8,278 (18,600) (10,322) – – 496 – 496 (9,826) 6,417	102,364 (347) 102,017 (10,549) (7,761) (18,310) – – 52 (11,528) (11,476) (29,786) 9,407	975,453 (347)
							975,106
							41,071 (90,814)
							(49,743)
							(2,533)
							(2,533)
							17,021 (17,578)
							(557)
							(52,833) (58,823)
							(111,656)
							78,018 505
							78,523

Note (a): Inter-segment interest income and inter-segment interest expenses amounted to HK$10,658,000 and HK$12,123,000 were included in the finance income and finance expenses respectively.

20

Interim Report 2014

Notes to the Condensed Consolidated Interim Financial Information

4 Segment information (Continued)

The segment assets and liabilities at 30 June 2014 are as follows:

	Unaudited As at 30 June2014	Total HK$’000
	Television Mobile Outdoor and Internet E-Commerce Publishing Media Entertainment Group Group Group Group Group HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Segment assets Investments accounted for using the equity method Unallocated assets Total assets Segment liabilities Unallocated liabilities: Corporate liabilities Current taxation Deferred taxation Borrowings Total liabilities	595,261 129,918 1,213,275 312,308 160,675 4,404 1,535,436 22,159 – – 222,881 39,469 360,101 103,209 53,990	2,411,437 1,561,999 85,412 4,058,848 779,650 123,577 37,290 7,517 2,467,752 3,415,786

The segment assets and liabilities at 31 December 2013 are as follows:

	Audited As at 31 December 2013
	Television Mobile Outdoor and Internet E-Commerce Publishing Media Entertainment Group Group Group Group Group HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	Total HK$’000
Segment assets Investments accounted for using the equity method Unallocated assets Total assets Segment liabilities Unallocated liabilities: Corporate liabilities Current taxation Deferred taxation Borrowings Total liabilities	649,427 115,280 1,265,206 322,273 143,766 4,623 1,390,709 40,638 – – 242,223 51,123 405,215 109,608 57,409	2,495,952 1,435,970 54,312
		3,986,234
		865,578 117,348 48,836 6,398 2,320,757
		3,358,917

The unallocated assets represent the corporate assets. The unallocated liabilities represent the corporate liabilities in addition to operating segment taxation payable, deferred tax liabilities and borrowings which are managed on a central basis.

TOM Group Limited 21

Notes to the Condensed Consolidated Interim Financial Information

5 Operating profit/(loss)

Operating profit/(loss) is stated after charging/crediting the following:

	Unaudited Six months ended 30 June 2014 2013 HK$’000 HK$’000	Unaudited Six months ended 30 June 2014 2013 HK$’000 HK$’000
Charging: Depreciation of fixed assets (note 10) Amortisation of other intangible assets (note 12) Amortisation of other intangible assets included in interests in associated companies Loss on disposal of fixed assets Crediting: Exchange gain, net Dividend income from available-for-sale financial assets Gain on disposal of fixed assets	27,209 49,772 – – 1,127 314 169	34,151 56,974 1,356 49
		13,085 332 –

6 Finance costs, net

Finance costs, net
	Unaudited Six months ended 30 June 2014 2013 HK$’000 HK$’000
Interest and borrowing costs on bank loans Interest on other loans Less: Bank interest income	33,892 938 34,830 (4,939) 29,891	31,773 938
		32,711 (6,878)
		25,833

22

Interim Report 2014

Notes to the Condensed Consolidated Interim Financial Information

7 Taxation

Hong Kong profits tax has been provided at the rate of 16.5% (2013: 16.5%) on the estimated assessable profits for the period. Taxation on overseas profits has been calculated on the estimated assessable profits for the period at the rates of taxation prevailing in the countries in which the Group operates.

The amount of taxation (credited)/charged to the condensed consolidated interim income statement represents:

	Unaudited Six months ended 30 June 2014 2013 HK$’000 HK$’000 7,078 10,569 (8,906) (1,793) 901 197 (927) 8,973
Overseas taxation Over-provision in prior years Deferred taxation Taxation (credit)/charge	7,078 (8,906) 901 (927)

Income tax expense is recognised based on management’s estimate of the weighted average annual income tax rate expected for the full financial year.

8 Dividends

No dividends had been paid or declared by the Company for the six months ended 30 June 2014 (2013: Nil).

9 Earnings/(loss) per share

(a) Basic

The calculation of the basic earnings/(loss) per share is based on consolidated profit attributable to the equity holders of the Company of HK$29,458,000 (2013: loss of HK$113,465,000) and the weighted average of 3,893,270,558 (2013: 3,893,270,558) ordinary shares in issue during the period.

(b) Diluted

Diluted earnings per share is equal to the basic earnings per share for the period ended 30 June 2014 as all the outstanding share options granted by the Company were lapsed. For the period ended 30 June 2013, diluted loss per share is equal to the basic loss per share as the exercise price of the outstanding share options granted by the Company were higher than the average market price of the shares of the Company.

TOM Group Limited 23

Notes to the Condensed Consolidated Interim Financial Information

10 Fixed assets

During the period, major fixed assets acquired by the Group were computer equipment amounting to HK$6,563,000 and construction in progress for outdoor media assets amounting to HK$5,344,000.

11		HK$’000 205,983 22,414 (725) (34,151) 424 193,945
	At 1 January 2013 Additions Disposals Depreciation charge Exchange adjustment At 30 June 2013 (unaudited) At 1 January 2014 Additions Disposals Depreciation charge Exchange adjustment At 30 June 2014 (unaudited) Goodwill
		142,315 14,512 (259) (27,209) (2,834) 126,525
		HK$’000 2,154,471 21,226 2,175,697
	At 1 January 2013 Exchange adjustment At 30 June 2013 (unaudited) At 1 January 2014 Exchange adjustment At 30 June 2014 (unaudited)
		646,914 (2,291) 644,623

24

Interim Report 2014

Notes to the Condensed Consolidated Interim Financial Information

12 Other intangible assets

	Concession rights HK$’000	Programme Publishing and film rights rights HK$’000 HK$’000	Programme Publishing and film rights rights HK$’000 HK$’000	Customer base and technical know-how HK$’000	Total HK$’000 92,594 56,109 (56,974) (1,452) 90,277
At 1 January 2013 Additions Amortisation charge Exchange adjustment At 30 June 2013 (unaudited) At 1 January 2014 Additions Amortisation charge Exchange adjustment At 30 June 2014 (unaudited)	11,330 – (3,518) 176 7,988	66,631 52,846 (45,242) (1,966) 72,269	5,421 3,263 (6,628) 196 2,252	9,212 – (1,586) 142 7,768
	7,324 – (537) (204) 6,583	75,769 48,884 (45,172) (429) 79,052	3,592 4,330 (4,006) (820) 3,096	1,338 – (57) (42) 1,239	88,023 53,214 (49,772) (1,495) 89,970

13 Investments accounted for using the equity method

The amounts recognised in the statement of financial position are as follows:

	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000 1,561,999 45,261 – 1,390,709 1,561,999 1,435,970
Associated companies Joint ventures	1,561,999 – 1,561,999

The amounts recognised in the income statement are as follows:

	Unaudited Six months ended 30 June 2014 2013 HK$’000 HK$’000 (30,507) (8,124) (4,107) 5,591 (34,614) (2,533)
Associated companies Joint ventures	(30,507) (4,107) (34,614)

TOM Group Limited 25

Notes to the Condensed Consolidated Interim Financial Information

13 Investments accounted for using the equity method (Continued)

(a) Interests in associated companies

Movement in interests in associated companies during the period:

	Unaudited 2014 2013 HK$’000 HK$’000	Unaudited 2014 2013 HK$’000 HK$’000
At 1 January Transfer from interests in joint ventures (note) Increase in share capital of an associated company Share of profits less losses Dividend paid Exchange adjustment At 30 June (unaudited)	45,261 1,203,075 347,512 (30,507) (2,163) (1,179) 1,561,999	223,772 – – (8,124) (1,867) 1,455
		215,236

(b) Interests in joint ventures

Movement in interests in joint ventures during the period:

	Unaudited 2014 2013 HK$’000 HK$’000	Unaudited 2014 2013 HK$’000 HK$’000
At 1 January Share of (losses)/profits Carrying value of certain interests in joint ventures disposed Transfer to interests in associated companies (note) Exchange adjustment At 30 June (unaudited)	1,390,709 (4,107) (183,527) (1,203,075) – –	8,798 5,591 – – 165
		14,554

Note:

On 16 January 2014, a joint venture, held as to 49% by a non-wholly owned subsidiary of the Group, signed a shareholders’ agreement and a subscription agreement with several investors. Pursuant to the subscription agreement, the joint venture agreed to allot and issue and the investors agreed on a several basis to subscribe for certain Series A Preferred Shares representing 13.25% of the total share capital of the joint venture on a fully diluted basis at the aggregate investors’ subscription price of US$110 million. Following completion of the investors’ subscription, the former joint venture became an associated company of the Group, held as to 42.51% by a non-wholly owned subsidiary of the Group, 44.24% by the joint venture partner and 13.25% by investors on a fully diluted basis. The Group recognised a dilution gain of HK$174,995,000 in the consolidated income statement for the period on this disposal. Net gain attributable to equity holders of the Company amounted to HK$157,499,000.

26

Interim Report 2014

Notes to the Condensed Consolidated Interim Financial Information

14 Trade and other receivables

Trade and other receivables
	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000
Trade receivables Prepayments, deposits and other receivables	398,494 393,339 791,833	397,111 396,058
		793,169

The Group has established credit policies for customers in each of its businesses. The average credit period granted for trade receivables ranges from 30 to 120 days. The Group’s turnover is determined in accordance with terms specified in the contracts governing the relevant transactions. The carrying values of trade and other receivables approximate their fair values.

The ageing analyses of the Group’s trade receivables were as follows:

	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000
Current 31-60 days 61-90 days Over 90 days Less: Provision for impairment Represented by: Receivables from related companies Receivables from third parties	96,322 108,001 65,405 221,710 491,438 (92,944) 398,494 30,228 368,266 398,494	94,622 114,330 64,569 217,843
		491,364 (94,253)
		397,111
		9,432 387,679
		397,111

TOM Group Limited 27

Notes to the Condensed Consolidated Interim Financial Information

15 Restricted Cash

As at 30 June 2014, NT$15,565,000 (approximately HK$4,025,000) (31 December 2013: NT$10,800,000 or approximately HK$2,800,000) was pledged in favour of certain publishing distributors in Taiwan as retainer fee for potential sales return. As at 31 December 2013, RMB238,000 (approximately HK$305,000) was also pledged in favour of certain contractors as performance guarantee.

16 Trade and other payables

Trade and other payables
	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000
Trade payables Other payables and accruals	269,243 596,549 865,792	280,640 665,166
		945,806

The carrying values of trade and other payables approximate their fair values.

The ageing analyses of the Group’s trade payables were as follows:

	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000
Current 31-60 days 61-90 days Over 90 days Represented by: Payable to third parties	48,408 24,878 10,697 185,260 269,243 269,243	60,700 28,045 15,521 176,374
		280,640
		280,640

28

Interim Report 2014

Notes to the Condensed Consolidated Interim Financial Information

17 Movements in borrowings

Movements in borrowings
	Short-term bank loans HK$’000	Long-term bank loans HK$’000	Total HK$’000 2,215,958 188,256 (112,869) (13,810) 2,277,535
As at 1 January 2013 Borrowings Repayments Exchange adjustment As at 30 June 2013 (unaudited) As at 1 January 2014 Borrowings Repayments Exchange adjustment As at 30 June 2014 (unaudited)	140,389 113,256 (76,190) (4,997) 172,458	2,075,569 75,000 (36,679) (8,813) 2,105,077
	171,138 103,440 (95,682) (462) 178,434	2,149,619 235,000 (94,850) (451) 2,289,318	2,320,757 338,440 (190,532) (913) 2,467,752

18 Share capital

Share capital
	Number of ordinary shares of HK$0.1 each	HK$’000
Authorised: As at 1 January and 30 June 2013 and 1 January and 30 June 2014 Issued and fully paid: As at 1 January and 30 June 2013 and 1 January and 30 June 2014	5,000,000,000 3,893,270,558	500,000
		389,328

19 Pledge of assets

Save as disclosed in note 15, the Group has no pledge of assets as at 30 June 2014 (31 December 2013: Nil).

20 Contingent liabilities

As at 30 June 2014, the Group had no significant contingent liabilities.

TOM Group Limited 29

Notes to the Condensed Consolidated Interim Financial Information

21 Capital commitments

The Group’s capital commitments as at 30 June 2014 are as follows:

	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000	Unaudited Audited 30 June 31 December 2014 2013 HK$’000 HK$’000
Acquisition of investments – Contracted but not provided for Acquisition of fixed assets and other intangible assets – Authorised but not contracted for	7,440 70,397 77,837	7,680 90,350
		98,030

22 Related party transactions

A summary of significant related party transactions, in addition to those disclosed in note 14 to the condensed consolidated interim financial information is set out below:

(a) Sales of goods and services

Unaudited For the six months ended 30 June 2014 2013 HK$’000 HK$’000	Unaudited For the six months ended 30 June 2014 2013 HK$’000 HK$’000	Unaudited For the six months ended 30 June 2014 2013 HK$’000 HK$’000
Sales to – HWL and its subsidiaries – non-controlling interests of subsidiaries and their subsidiaries – associated companies/an associated company – a joint venture	29,001 127 721 –	20,384 5,457 1,088 1,008

30

Interim Report 2014

Notes to the Condensed Consolidated Interim Financial Information

22 Related party transactions (Continued)

(b) Purchase of goods and services

Unaudited For the six months ended 30 June 2014 2013 HK$’000 HK$’000	Unaudited For the six months ended 30 June 2014 2013 HK$’000 HK$’000	Unaudited For the six months ended 30 June 2014 2013 HK$’000 HK$’000
Purchase of services payable to – non-controlling interests of subsidiaries and their subsidiaries Rental payable to – a subsidiary of CKH – non-controlling interests of subsidiaries and their subsidiaries Service fees payable to – HWL and its subsidiaries	6,541 7,363 610 2,253	6,981 5,829 842 1,845

• (c) Two substantial shareholders of the Company granted guarantees to the Company at an guarantee fee equivalent to 0.5% per annum (2013: Same) for loan facilities amounting to HK$2,900 million (2013: HK$2,200 million). During the period, guarantee fee amounted to approximately HK$5,234,000 was paid by the Company (2013: HK$4,653,000) to these substantial shareholders.

(d) Key management compensation

During the period ended 30 June 2014, no transactions have been entered into with the directors of the Company (being the key management personnel) other than the emoluments paid to them (being key management personnel compensation) (2013: Nil).

23 Comparative figures

Certain comparative figures have been reclassified to conform to current period’s presentation.

24 Approval of interim financial information

The condensed consolidated interim financial information was approved by the Board of Directors on 30 July 2014.

TOM Group Limited 31

Disclosure of Interests

Directors’ Interests and Short Positions in Shares, Underlying Shares and Debentures

As at 30 June 2014, the interests or short positions of the Directors and chief executive 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, to be notified to the Company and the Stock Exchange, were as follows:

(a) Long positions in the shares of the Company

Name of Directors Capacity	Number of shares of the Company Approximate Personal Family Corporate Other percentage of Interests Interests Interests Interests Total shareholding
Yeung Kwok Mung Interest of spouse Mak Soek Fun, Angela Beneficial owner	– 30,000 – – 30,000 Below 0.01% 44,000 – – – 44,000 Below 0.01%

Save as disclosed above, as at 30 June 2014, none of the Directors or chief executive 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.

32

Interim Report 2014

Disclosure of Interests

Interests and Short Positions of Substantial Shareholders

As at 30 June 2014, the persons or corporations (not being a Director or chief executive) who had 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 had otherwise notified to the Company were as follows:

			Approximate
		No. of shares of	percentage of
Name	Capacity	the Company held	shareholding
Li Ka-shing	Founder of	1,429,024,545 (L)	36.70%
	discretionary	(Notes 1 & 2)
	trusts &
	interest of
	controlled
	corporations
Li Ka-Shing Unity	Trustee &	1,429,024,545 (L)	36.70%
Trustee Corporation Limited	beneficiary	(Notes 1 & 2)
(as trustee of	of a trust
The Li Ka-Shing Unity
Discretionary Trust)
Li Ka-Shing Unity	Trustee &	1,429,024,545 (L)	36.70%
Trustcorp Limited	beneficiary	(Notes 1 & 2)
(as trustee of another	of a trust
discretionary trust)
Li Ka-Shing Unity Trustee	Trustee	1,429,024,545 (L)	36.70%
Company Limited		(Notes 1 & 2)
(as trustee of The
Li Ka-Shing Unity Trust)
CKH	Interest of	1,429,024,545 (L)	36.70%
	controlled	(Notes 1 & 2)
	corporations
Cheung Kong Investment	Interest of	476,341,182 (L)	12.23%
Company Limited	controlled	(Note 1)
	corporations
Cheung Kong Holdings	Interest of	476,341,182 (L)	12.23%
(China) Limited	controlled	(Note 1)
	corporations

TOM Group Limited 33

Disclosure of Interests

			Approximate
		No. of shares of	percentage of
Name	Capacity	the Company held	shareholding
Sunnylink Enterprises Limited	Interest of a	476,341,182 (L)	12.23%
	controlled	(Note 1)
	corporation
Romefield Limited	Beneficial owner	476,341,182 (L)	12.23%
		(Note 1)
HWL	Interest of	952,683,363 (L)	24.47%
	controlled	(Note 2)
	corporations
Hutchison International Limited	Interest of a	952,683,363 (L)	24.47%
controlled		(Note 2)
	corporation
Easterhouse Limited	Beneficial owner	952,683,363 (L)	24.47%
		(Note 2)
Chau Hoi Shuen	Interest of	995,078,363 (L)	25.55%
	controlled	(Notes 3 & 4)
	corporations
Cranwood Company Limited	Beneficial	995,078,363 (L)	25.55%
owner & interest		(Notes 3 & 4)
	of controlled
	corporations
Schumann International Limited	Beneficial owner	580,000,000 (L)	14.90%
(Notes 3 & 4)
Handel International Limited	Beneficial owner	348,000,000 (L)	8.94%
(Notes 3 & 4)
Lin Tian Maw	Beneficial	311,502,000 (L)	8.00%
	owner, interest
	of child under
	18 or spouse &
	interest of
	controlled
	corporations

(L) denotes a long position

34

Interim Report 2014

Disclosure of Interests

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 CKH.

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 Mr. Li Ka-shing and Mr. Li Tzar Kuoi, Victor are respectively interested in one-third and two-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 CKH.

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 holds 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 HWL. By virtue of the SFO, HWL 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 CKH are entitled to exercise or control the exercise of more than one-third of the voting power at the general meetings of HWL. 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 CKH 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 67,078,363 shares of the Company held by itself.

By virtue of the SFO, Ms. Chau Hoi Shuen is deemed to be interested in 67,078,363 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.

TOM Group Limited 35

Disclosure of Interests

(4) Cranwood Company Limited, Schumann International Limited and Handel International Limited have charged 67,078,363 shares of the Company, 580,000,000 shares of the Company and 348,000,000 shares of the Company respectively in favour of HWL on 16 December 2013.

Save as disclosed above, as at 30 June 2014, 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.

Outstanding Share Options

Option Scheme

No option has been granted pursuant to the Option Scheme since its adoption.

36

Interim Report 2014

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 have 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. Cheong Ying Chew, Henry, Mr. James Sha and Mr. Ip Yuk-keung, Albert and a Non-executive Director, namely, Mrs. Lee Pui Ling, Angelina. Mr. Cheong Ying Chew, Henry is the chairman of the Audit Committee.

The unaudited condensed consolidated interim financial information of the Group for the six months ended 30 June 2014 has been reviewed by the Audit Committee.

Corporate Governance Code

The Company has complied with all the code provisions of the Corporate Governance Code contained in Appendix 14 to the Listing Rules throughout the six months ended 30 June 2014, save and except Code Provision A.5 of the Corporate Governance Code.

The Company has considered the merits of establishing a nomination committee but is of the view that it is in the best interests of the Company that the Board collectively reviews, deliberates on and approves the structure, size and composition of the Board and the appointment of any new Director. The Board is tasked with ensuring that it has a balanced composition of skills and experience appropriate for the requirements of the businesses of the Group and that appropriate individuals with the relevant expertise and leadership qualities are appointed to the Board to complement the capabilities of the existing Directors. In addition, the Board as a whole is also responsible for reviewing the succession plan for the Directors.

Model Code for Securities Transactions by Directors

The Company has adopted the Model Code as the Group’s code of conduct regarding Directors’ securities transactions. In response to specific enquiry made with the Directors, all Directors confirmed that they have complied with the required standard as set out in the Model Code during the six months ended 30 June 2014.

TOM Group Limited 37

Other Information

Purchase, Sale or Redemption of Securities

During the six months ended 30 June 2014, neither the Company nor any of its subsidiaries has purchased or sold any of the Company’s listed shares. In addition, the Company has not redeemed any of its listed shares during the period.

Change in Other Information of Directors

Pursuant to Rule 13.51B of the Listing Rules, the changes in information of Directors of the Company subsequent to the date of the 2013 Annual Report of the Company are set out below:

Name of Directors

Details of the Changes

Ip Tak Chuen, Edmond

Resigned as a director of ARA Trust Management (Suntec) Limited as the manager of Suntec REIT on 17 April 2014

Ip Yuk-keung, Albert

Appointed as:

• an independent non-executive director of Lifestyle International Holdings Limited on 22 April 2014

• an executive director and chief executive officer of LHIL Manager Limited as the trustee-manager of Langham Hospitality Investments and Langham Hospitality Investments Limited with effect from 9 June 2014

Re-designated from an independent non-executive director to non-executive director of Eagle Asset Management (CP) Limited as the manager of Champion Real Estate Investment Trust on 9 June 2014

Ceased as a council member of Cornell University on 30 June 2014

38

Interim Report 2014