TOM Group Limited — Interim / Quarterly Report 2016

Aug 29, 2016

INTERIM REPORT 2016

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1

Contents

• 2 Definitions

• 4 Corporate Information

• 5 Chairman’s Statement

• 6 Management’s Discussion and Analysis

• 11 Independent Review Report

• 12 Interim Financial Information

• 19 Notes to the Condensed Consolidated Interim Financial Information

• 38 Disclosure of Interests

• 42 Corporate Governance

• 43 Other Information

TOM Group Limited

Interim Report 2016

2

Definitions

“Associates”

has the meaning ascribed to it in the Listing Rules

• “Board”

means the board of Directors

• “China Post”

means China Post Group Limited, a state-owned enterprise of the PRC, and its subsidiaries (its subsidiary Telpo Philatelic Company Limited is the entity that is the shareholder of Ule)

• “CKH”

means Cheung Kong (Holdings) Limited, a company incorporated in Hong Kong with limited liability, whose listing status on the Stock Exchange was replaced by CKHH on 18 March 2015

• “CKHH”

means CK Hutchison Holdings Limited, an exempted company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange on 18 March 2015 (Stock Code: 0001)

“Company” or “TOM”

means TOM Group Limited, an exempted company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 2383)

• “Corporate Governance Code”

means the Code sets out in Appendix 14 to the Listing Rules

• “Director(s)” means the director(s) of the Company

• “Friendsurance”

means a German-based peer-to-peer insurance platform with its investment holding entity being an UK incorporated company namely Mysafetynet Limited

• “GMV”

• means Gross Merchandise Value, the total value of all orders handled or processed through Ule Group’s platform which include multiple websites, mobile applications and PC applications, regardless of whether the orders are consummated, goods and services returned or not

• “Group” or “TOM Group”

• means the Company and its subsidiaries

TOM Group Limited

Interim Report 2016

3

Definitions

“HWL” means Hutchison Whampoa Limited, a company incorporated in Hong Kong with limited liability, whose shares ceased to be listed on the Stock Exchange on 3 June 2015

“Listing Rules” means the Rules Governing the Listing of Securities on the Stock Exchange “Main Board” means the main board of 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

“Rubikloud” means Rubikloud Technologies Inc., a corporation incorporated in Canada

“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

• “Ule” or “Ule Group” means Ule Holdings Limited and its subsidiaries

• “WeLab” means WeLab Holdings Limited, a BVI business company incorporated in the British Virgin Islands with limited liability

TOM Group Limited

Interim Report 2016

4

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

Rooms 1601-05, 16/F China Resources Building 26 Harbour Road Wanchai 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 Industrial and Commercial Bank of China (Asia) Limited Bank of China (Hong Kong) Limited DBS Bank Ltd., Hong Kong Branch Citibank, N.A., Hong Kong Branch United Overseas Bank Limited

Website Address

www.tomgroup.com

Stock Code

2383

* Mrs. Chow Woo Mo Fong, Susan has retired and was replaced by Mr. Lai Kai Ming, Dominic as alternate to Mr. Frank John Sixt on 1 August 2016

TOM Group Limited

Interim Report 2016

5

Chairman’s Statement

For the six months to 30 June 2016, the Group focused on realigning its cost structure to match strategic priorities in e-commerce, “fintech” and big data analytics sectors. The Group reported revenue of HK$515 million against operating expenses reduced by 18% from the previous year. Operating loss, including share of loss from associates, narrowed by 6% year-on-year to HK$96 million. Loss attributable to shareholders was HK$129 million.

Ule (www.ule.com), a joint venture with China Post, continued to benefit from the Mainland government’s policies directed towards boosting rural income and stimulating rural consumption. During the review period, Ule maintained its growth momentum with GMV reaching RMB28.2 billion, a 327% year-on-year growth, achieved last year’s full year GMV in six months. More than 190,000 of China Post’s branded franchised stores in rural China have joined Ule’s e-commerce platform.

In 2016, Ule launched multiple initiatives to drive revenue. These initiatives are directed towards meeting the daily needs of rural villagers and creating opportunities for brand owners to reach rural customers via Ule’s unique offline-to-online/mobile platform.

The Publishing Group reported revenue of HK$409 million and increased segment profit by 59% to HK$44 million principally due to effective cost savings and the strong growth in its digital business.

The weak advertising market in Mainland China adversely affected the traditional media businesses. The Outdoor Media Group reported revenue of HK$44 million and segment loss was HK$13 million. The Television and Entertainment Group reported revenue of HK$45 million with segment loss narrowed to HK$15 million.

The Mobile Internet Group supports and creates synergies with the Group’s strategic investments. During the review period, the Mobile Internet Group reported revenue of HK$14 million and segment loss narrowed to HK$12 million.

Going forward, TOM Group will continue to streamline its cost with prudent financial and operating discipline and focus on the continuing growth of Ule in the second half of 2016.

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, 4 August 2016

TOM Group Limited

Interim Report 2016

6

Management’s Discussion and Analysis

Financial Highlights

Financial Highlights
	For the six months ended
	30 June 2016	30 June 2015
	HK$’000	HK$’000
Consolidated revenue	514,572	641,825
Loss(1)before disposal gains(2)	(95,865)	(101,551)
Disposal gains(2)	–	56,460
Loss attributable to equity holders of the Company	(129,067)	(77,749)
Loss per share (HK cents)	(3.32)	(2.00)

(1) Loss before net finance costs and taxation (including share of results of investments accounted for using the equity method)

(2) 2015: Gain on disposal of an investment accounted for using equity method (HK$50,147,000) and an available-for-sale financial asset (HK$6,313,000) of the Publishing Group

Business Review

During the reporting period, the Group focused its resources on strategic investments in the technology-centric and high growth e-commerce, “fintech”, big data analytics and social insurance sectors, tapping the fast growing opportunities arising from the Mainland government’s “rural integrated development” strategy and attained remarkable achievements. Meanwhile, the Group continued to optimise its business portfolio and rationalise its cost structure, making improvements on the Group’s operating results. Gross margin expanded 3 percentage points year-on-year to 38%. Operating expenses were reduced by 18% from the same period last year.

E-Commerce: launch myriad of services and continue rapid rollout of outlets

During the review period, Ule maintained rapid growth momentum in its rural e-commerce business and delivered stellar performance. Ule rural e-commerce platform currently has covered more than 190,000 rural outlets, which jumped 90% from the end of last year. GMV jumped 327% year-on-year to RMB28.2 billion and achieved last year’s full year GMV in six months. The tremendous scale of Ule’s nation-wide rural outlet network as well as its fast growing transaction volume in rural villages have laid a solid foundation for Ule to generate value for its partners and shareholders.

TOM Group Limited

Interim Report 2016

7

Management’s Discussion and Analysis

Leveraging on big data intelligence and China Post’s logistics resources, Ule revamped rural supply chain, saving delivery time, marketing and logistics costs and mitigating inventory risks for both brand suppliers and rural outlet owners. The data driven rural supply chain streamlines the role of various stakeholders in the rural supply chain, creating value for brand owners, rural outlets and consumers. By leveraging the revamped rural supply chain, Ule’s extensive rural outlet and logistics network created a direct route for farmers to sell their produces back to urban area, helping farmers to increase their income.

In overcoming the limitations of limited floor space and SKUs (stock keeping units) for offline physical store, Ule expanded the store SKU by offering store owner the ability to order a wide range of consumers durables via Ule online marketplace for sale to their customers. This online concierge service is further enhanced by customer loyalty programme and mobile marketing tools offered by Ule platform to the store owners. Majority of the stores have now participated in the online concierge services.

Ule’s unique rural e-commerce model of combining offline outlets with online capabilities, integrating the selling of manufactured products to rural with the selling back of agricultural produce to urban has invigorated and modernised the rural economies, thus winning endorsement from several local governments. Going forward, Ule will continue to rapidly roll out outlets in the rural villages and simultaneously launch more value-added services to bridge the gap between rural and urban areas of China, creating value for consumers, outlet shop owners, merchants and suppliers, and investors.

Strategic investments: rapid growth and synergies with the Group

During the review period, the Mobile Internet Group continues to play a key role as a technology landing platform and hub for advanced technologies and services introduced to China, creating synergies among the Group’s existing businesses and investments.

The Group invested in WeLab, a Hong Kong-based online consumer finance company, in 2014. Currently, WeLab has 6 million members and US$4 billion in loan applications. Loan volume jumped 4 times year-on-year in Hong Kong and more than doubled on a quarter-on-quarter basis in Mainland China. During the reporting period, WeLab worked closely with Ule on the debut of the loan services to Ule’s rural outlet owners to support their business growth. Driven by its proprietary WeDefend risk management technology, WeLab reported zero percentage of fraud loss in Hong Kong and China.

In 2015, the Group invested in Rubikloud, a Canadian-based company specialising in retail intelligence. Rubikloud and Ule have partnered to bring valuable real-time big data analytics and intelligence to brand owners and personalised product recommendation to Ule’s buyers during the review period.

In February 2016, the Group and Ule severally invested in German-based peer-to-peer insurance platform Friendsurance. Going forward, the Group will work closely with its strategic partner to bring social insurance service to China.

TOM Group Limited

Interim Report 2016

8

Management’s Discussion and Analysis

Digital publishing: steady growth

The digital business of the Publishing Group recorded an accelerating growth during the review period. Digital revenue grew 26% year-on-year, and accounted for 16% of the overall publishing revenue, up from 12% a year earlier. Social media portal Pixnet, Taiwan’s most popular website, achieved 77% year-on-year revenue growth as its unique visitors increased 29% from a year earlier. Meanwhile, the traditional publishing business maintained its market leading position in Taiwan and showed resilience amid tough operating environment during the review period. The Publishing Group’s overall revenue was HK$409 million and segment profit increased by 59% from a year earlier to HK$44 million on improved gross margin and effective cost savings.

Traditional media: continued rationalisation under tough operating environment

The sluggish economy has adversely impacted advertisers’ spending in China. During the review period, the Outdoor Media Group’s revenue was HK$44 million and segment loss amounted to HK$13 million. The Television and Entertainment Group continued to operate under a tough regulatory environment and reported revenue of HK$45 million. Segment loss narrowed by 15% to HK$15 million with focus on operating efficiency.

For the six months ended 30 June 2016, the Group’s revenue was HK$515 million. Including share of loss from associates amounted to HK$70 million, the Group’s operating loss was HK$96 million, narrowed by 6% from a year earlier. Loss attributable to shareholders was HK$129 million.

Liquidity and Financial Resources

As at 30 June 2016, TOM Group had cash and bank balances, excluding pledged deposits, of approximately HK$439 million. A total of HK$3,444 million financing facilities were available, of which HK$2,657 million had been utilised as at 30 June 2016, to finance the Group’s investment, capital expenditures and for working capital purposes.

Total borrowings of TOM Group amounted to approximately HK$2,657 million as at 30 June 2016, of which HK$2,460 million and HK$197 million equivalent is denominated in Hong Kong dollar and New Taiwan dollar respectively. This included long-term bank loans of approximately HK$2,562 million (including portion repayable within one year) and short-term bank loans of approximately HK$95 million. All bank loans bore floating interest rates. The gearing ratio (Debts/(Debts + Equity)) of TOM Group was 96% as at 30 June 2016, compared to 91% as at 31 December 2015.

As at 30 June 2016, the Group had net current assets of approximately HK$415 million, 4% higher than balance of approximately HK$399 million as at 31 December 2015. As at 30 June 2016, the current ratio (Current assets/Current liabilities) of TOM Group was 1.56, higher than 1.50 as at 31 December 2015.

TOM Group Limited

Interim Report 2016

9

Management’s Discussion and Analysis

For the first six months of 2016, net cash used in operating activities amounted to HK$29 million, 46% lower than HK$53 million in the same period of 2015. Net cash used in investing activities was HK$57 million, mainly included capital expenditures of HK$57 million and a share subscription in an available-for-sale investment of HK$17 million; partially offset by recovery of a receivable previously written off of HK$11 million, disposal of a former subsidiary of HK$3 million and dividends received of HK$3 million.

Charges on Group Assets

As at 30 June 2016, the Group had restricted cash amounting to HK$7 million, being bank deposits mainly pledged in Taiwan in favour of certain publishing distributors as retainer fee for potential sales return, and banks as security for credit card and advance receipt, and quality assurance for government projects, and the courts for legal proceedings in Mainland China.

Contingent Liabilities

As at 30 June 2016, the Group had no significant contingent liabilities.

Subsequent Events

There is no subsequent event after the reporting period which has material impact to the condensed consolidated interim financial information of the Group.

Foreign Exchange Exposure

The Group’s operations principally locate in Mainland China and Taiwan, with transactions and related working capital denominated in Renminbi and New Taiwan dollar respectively. In general, it is the Group’s policy for each operating entity to borrow in their local currencies, where necessary, to minimise currency risk. Overall, the Group is not exposed to significant foreign exchange risk; however, the Group will monitor this risk on an ongoing basis.

Employee Information

As at 30 June 2016, TOM Group had approximately 1,630 full-time employees. For the first six months of the year, employee costs, including Directors’ emoluments, totalled HK$185 million. The Group’s employment and remuneration policies remained the same as detailed in the Annual Report for the year ended 31 December 2015.

TOM Group Limited

Interim Report 2016

10

Management’s Discussion and Analysis

Past Performance and Forward-looking Statements

The performance and the results of operations of the Group contained in this 2016 Interim Report are historical in nature, and past performance is no guarantee of the future results of the Group. Any forward-looking statements and opinions contained in this 2016 Interim Report are based on current plans, estimates and projections, and therefore involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements and opinions. The Group, the Directors, employees and agents of the Group assume (a) no obligation to correct or update the forward-looking statements or opinions contained in this 2016 Interim Report; and (b) no liability in the event that any of the forward-looking statements or opinions do not materialise or turn out to be incorrect.

Disclaimer:

Non-GAAP measures

Certain non-GAAP (generally accepted accounting principles) measures, such as profit/(loss) before net finance costs and taxation including share of results of investments accounted for using the equity method and segment profit/(loss) excluding gain on disposal of long-term investments, 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

Interim Report 2016

11

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 12 to 37, 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 2016 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, 4 August 2016

TOM Group Limited

Interim Report 2016

Interim Financial Information

Condensed Consolidated Interim Income Statement

For the six months ended 30 June 2016

12	Note	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000
	Revenue 5 Cost of sales Selling and marketing expenses Administrative expenses Other operating expenses Other gains, net Gain on disposal of long-term investments 6 Share of profits less losses of investments accounted for using the equity method 15 Loss before net finance costs and taxation 7 Finance income 8 Finance costs 8 Finance costs, net 8 Loss before taxation Taxation 9 Loss for the period Attributable to: – Non-controlling interests – Equity holders of the Company Loss per share attributable to equity holders of the Company during the period Basic and diluted 11	514,572 (319,114) (75,494) (55,448) (91,984) 1,941 (25,527) – (25,527) (70,338) (95,865) 1,944 (28,458) (26,514) (122,379) (11,520) (133,899) (4,832) (129,067) HK(3.32) cents	641,825
			(420,458) (92,764) (72,928) (107,026) 1,251
			(50,100) 56,460
			6,360 (51,451)
			(45,091) 3,431 (35,534)
			(32,103)
			(77,194) (9,314)
			(86,508)
			(8,759)
			(77,749)
			HK(2.00) cents

TOM Group Limited

Interim Report 2016

13

Interim Financial Information

Condensed Consolidated Interim Statement of Comprehensive Income

For the six months ended 30 June 2016

Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000 (133,899) (86,508) – (13,514) (14,868) 1,137 (14,868) (12,377) (148,767) (98,885) (4,992) (5,799) (143,775) (93,086)

Loss for the period Items that may be subsequently reclassified to income statement: Gain previously in exchange reserve related to an associated company disposed during the period recognised in income statement Exchange translation differences Other comprehensive expense for the period, net of tax Total comprehensive expense for the period Total comprehensive expense for the period attributable to: – Non-controlling interests – Equity holders of the Company

(133,899) – (14,868) (14,868) (148,767) (4,992) (143,775)

TOM Group Limited

Interim Report 2016

Interim Financial Information

Condensed Consolidated Interim Statement of Financial Position

As at 30 June 2016

14	Note	Unaudited Audited 30 June 31 December 2016 2015 HK$’000 HK$’000	Unaudited Audited 30 June 31 December 2016 2015 HK$’000 HK$’000
	ASSETS AND LIABILITIES Non-current assets Fixed assets 12 Goodwill 13 Other intangible assets 14 Investments accounted for using the equity method 15 Available-for-sale financial assets Advance to an investee company Deferred tax assets Other non-current assets Current assets Inventories Trade and other receivables 16 Restricted cash 17 Cash and cash equivalents Current liabilities Trade and other payables 18 Taxation payable Long-term bank loans – current portion 19 Short-term bank loans 19 Net current assets Total assets less current liabilities	83,204 640,008 77,672 1,303,735 81,612 2,191 37,559 12,623 2,238,604 105,229 610,827 6,843 438,912 1,161,811 560,312 36,423 54,241 95,481 746,457 415,354 2,653,958	97,465 641,612 75,087 1,372,311 66,480 2,191 35,678 14,717
			2,305,541
			106,316 620,605 7,669 466,728
			1,201,318
			619,415 33,310 51,133 98,884
			802,742
			398,576
			2,704,117

TOM Group Limited

Interim Report 2016

15

Interim Financial Information

Condensed Consolidated Interim Statement of Financial Position

As at 30 June 2016

Note	Unaudited Audited 30 June 31 December 2016 2015 HK$’000 HK$’000 11,357 8,318 2,507,461 2,420,293 35,528 34,843 2,554,346 2,463,454 99,612 240,663 389,328 389,328 (668,432) (530,753) (6,244) (6,244) (285,348) (147,669) 384,960 388,332 99,612 240,663
Non-current liabilities Deferred tax liabilities Long-term bank loans – non-current portion 19 Pension obligations Net assets EQUITY Equity attributable to the Company’s equity holders Share capital 20 Deficits Own shares held Non-controlling interests Total equity	11,357 2,507,461 35,528 2,554,346 99,612 389,328 (668,432) (6,244) (285,348) 384,960 99,612

TOM Group Limited

Interim Report 2016

16

Interim Financial Information

					Total	equity	HK$’000	240,663		(133,899)		(14,868)			(148,767)			6,773			943	99,612
				Non-	controlling	interests	HK$’000	388,332		(4,832)		(160)			(4,992)			677			943	384,960
				Total	Other Accumulated shareholders’	reserve losses deficits	HK$’000 HK$’000 HK$’000	– (4,936,769) (147,669)		– (129,067) (129,067)		– – (14,708)			– (129,067) (143,775)			6,096 – 6,096			– – –	6,096 (5,065,836) (285,348)
					Exchange	reserve	HK$’000	737,064		–		(14,708)			(14,708)			–			–	722,356
Unaudited	Attributable to equity holders of the Company	Available-	for-sale	Capital financial	Capital redemption General assets	reserve reserve reserve reserve	HK$’000 HK$’000 HK$’000 HK$’000	(124,596) 776 155,774 11,017		– – – –		– – – –			– – – –			– – – –			– – – –	(124,596) 776 155,774 11,017
					Share	premium	HK$’000	3,625,981		–		–			–			–			–	3,625,981
				Own	shares	held	HK$’000	(6,244)		–		–			–			–			–	(6,244)
					Share	capital	HK$’000	389,328		–		–			–			–			–	389,328
								Balance at 1 January 2016	Comprehensive income:	Loss for the period	Other comprehensive income:	Exchange translation differences	Total comprehensive expense	for the period ended	30 June 2016	Share of other reserve of	an investment accounted	for using the equity method	Transactions with equity holders:	Contribution from non-controlling	interests	Balance at 30 June 2016

TOM Group Limited

Interim Report 2016

17

Interim Financial Information

For the six months ended 30 June 2016 Unaudited Attributable to equity holders of the Company Available- for-sale Own Capital financial Total Non- Share shares Share Capital redemption General assets Exchange Accumulated shareholders’ controlling Total capital held premium reserve reserve reserve reserve reserve losses funds interests equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Balance at 1 January 2015 389,328 (6,244) 3,625,981 (11,186) 776 152,423 11,017 780,237 (4,716,866) 225,466 305,535 531,001 Comprehensive income: Loss for the period – – – – – – – – (77,749) (77,749) (8,759) (86,508) Other comprehensive income: Gain previously in exchange reserve related to an associated company disposed during the period recognised in income statement – – – – – – – (13,514) – (13,514) – (13,514) Exchange translation differences – – – – – – – (1,823) – (1,823) 2,960 1,137 Total comprehensive expense for the period ended 30 June 2015 – – – – – – – (15,337) (77,749) (93,086) (5,799) (98,885) Transactions with equity holders: Dividend paid to non-controlling interests – – – – – – – – – – (4,289) (4,289) Contribution from non-controlling interests – – – – – – – – – – 941 941 Acquisition of additional interests in a subsidiary – – – 9 – – – – – 9 (392) (383) Dilution of non-controlling interests upon capital injection in a subsidiary – – – (113,419) – – – – – (113,419) 113,419 – Transactions with equity holders – – – (113,410) – – – – – (113,410) 109,679 (3,731) Balance at 30 June 2015 389,328 (6,244) 3,625,981 (124,596) 776 152,423 11,017 764,900 (4,794,615) 18,970 409,415 428,385

TOM Group Limited

Interim Report 2016

Interim Financial Information

Condensed Consolidated Interim Statement of Cash Flows

For the six months ended 30 June 2016

18	Note	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000
	Cash flows from operating activities Net cash outflow from operations Interest paid Overseas taxation paid Net cash used in operating activities Cash flows from investing activities Capital expenditures Acquisition of additional interests in a subsidiary Proceeds from disposal of fixed assets Recovery of a receivable previously written off Disposal of a former subsidiary 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 19 Loan repayments 19 Loan arrangement fee paid Dividends paid to non-controlling interests Decrease/(increase) in restricted cash 17 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	(6,443) (16,016) (6,202) (28,661) (56,785) – 131 10,844 3,361 (17,040) 2,982 (56,507) 793,152 (709,290) (22,855) – 826 61,833 (23,335) 466,728 (4,481) 438,912	(22,029) (22,767) (8,455)
			(53,251)
			(66,599) (383) 2,531 – – (15,600) 2,887
			(77,164)
			150,120 (83,467) (5,742) (4,289) (145)
			56,477
			(73,938) 535,505 2,282
			463,849

TOM Group Limited

Interim Report 2016

19

Notes to the Condensed Consolidated Interim Financial Information

1 Basis of preparation

This unaudited condensed consolidated interim financial information for the six months ended 30 June 2016 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 Listing Rules.

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2015, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”).

2 Accounting policies

The accounting policies and methods of computation used in the preparation of this condensed consolidated interim financial information are consistent with those used in 2015 annual financial statements, except for the adoption of amendments to standards which are relevant to the operations of the Group and mandatory for annual periods beginning 1 January 2016.

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

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

3 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 2015.

TOM Group Limited

Interim Report 2016

20

Notes to the Condensed Consolidated Interim Financial Information

4 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).

The 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 2015.

There have been no changes in the risk management policies since the year ended 31 December 2015.

(b) Fair value estimation

The table below analyses financial instruments carried at fair value. The different levels have been defined as follows:

• 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).

TOM Group Limited

Interim Report 2016

21

Notes to the Condensed Consolidated Interim Financial Information

4 Financial risk management (Continued)

(b) Fair value estimation (Continued)

Fair value estimation (Continued)	Fair value estimation (Continued)
The following table presents the Group’s assets and liabilities that are measured at fair value: Level 1 HK$’000 As at 30 June 2016(Unaudited) Assets Available-for-sale financial assets – Equity securities 14,879 Total assets 14,879 Total liabilities – As at 31 December 2015(Audited) Assets Available-for-sale financial assets – Equity securities 14,879 Total assets 14,879 Total liabilities –
As at 30 June 2016(Unaudited) Assets Available-for-sale financial assets – Equity securities Total assets Total liabilities As at 31 December 2015(Audited) Assets Available-for-sale financial assets – Equity securities Total assets Total liabilities
	14,879 14,879 –
	14,879 14,879 –

TOM Group Limited

Interim Report 2016

Notes to the Condensed Consolidated Interim Financial Information

5 Segment information

The Group has five reportable operating segments:

• E-Commerce Group – provision of services to users using the mobile and Internetbased marketplace and provision of technical services for e-commerce operations.

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

• 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.

22

TOM Group Limited

Interim Report 2016

23

Notes to the Condensed Consolidated Interim Financial Information

5 Segment information (Continued)

The segment results for the six months ended 30 June 2016 are as follows:

				Unaudited Six months ended 30 June 2016	Unaudited Six months ended 30 June 2016	Unaudited Six months ended 30 June 2016	Total HK$’000
		E-Commerce Group HK$’000	Mobile Internet 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 item: 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		2,610 – 2,610 (2,516) – (2,516) (70,030) 1 – 1 (72,545) –	14,384 – 14,384 (10,796) (1,025) (11,821) 63 1,366 – 1,366 (10,392) 85	409,475 – 409,475 99,129 (54,946) 44,183 (371) 2,801 (1,674) 1,127 44,939 56,082	43,602 – 43,602 (3,853) (8,829) (12,682) – 291 – 291 (12,391) 82	44,681 (180) 44,501 (13,267) (1,921) (15,188) – 61 (10,505) (10,444) (25,632) 536	514,752 (180) 514,572 68,697 (66,721) 1,976 (70,338) 4,520 (12,179) (7,659) (76,021) (46,358) (122,379) 56,785 – 56,785

Note (a): Inter-segment interest income and inter-segment interest expenses amounted to HK$2,622,000 and HK$9,562,000 were included in the finance income and finance expenses respectively.

TOM Group Limited

Interim Report 2016

Notes to the Condensed Consolidated Interim Financial Information

5 Segment information (Continued)

The segment results for the six months ended 30 June 2015 are as follows:

24

				Unaudited Six months ended 30 June 2015	Unaudited Six months ended 30 June 2015
		E-Commerce Group HK$’000	Mobile Internet Group HK$’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 items: Gain on disposal of long-term investments Share of profits less losses of investments accounted for using the equity method Finance costs: Finance income 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		7,607 – 7,607 4,696 – 4,696 – (50,756) (50,756) 4 – 4 (46,056) –	22,510 – 22,510 (15,474) (2,537) (18,011) – 191 191 2,676 – 2,676 (15,144) 2,065	454,427 – 454,427 86,443 (58,723) 27,720 56,460 (886) 55,574 193 (2,254) (2,061) 81,233 52,432	84,238 – 84,238 22 (10,666) (10,644) – – – 504 – 504 (10,140) 3,183	73,172 (129) 73,043 (14,357) (3,549) (17,906) – – – 54 (10,064) (10,010) (27,916) 3,177	641,954 (129)
							641,825
							61,330 (75,475)
							(14,145)
							56,460 (51,451)
							5,009
							3,431 (12,318)
							(8,887)
							(18,023) (59,171)
							(77,194)
							60,857 5,742
							66,599

Note (a): Inter-segment interest expense amounted to HK$9,123,000 was included in the finance expenses.

TOM Group Limited

Interim Report 2016

25

Notes to the Condensed Consolidated Interim Financial Information

5 Segment information (Continued)

The segment assets and liabilities at 30 June 2016 are as follows:

	Unaudited As at 30 June 2016	Total HK$’000
	Television Mobile Outdoor and E-Commerce Internet Publishing Media Entertainment Group Group Group Group Group HK$’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	104,993 432,910 1,137,402 224,319 133,025 1,297,537 3,999 2,199 – – 25,215 79,627 296,905 76,182 32,718	2,032,649 1,303,735 64,031 3,400,415 510,647 85,193 36,423 11,357 2,657,183 3,300,803

The segment assets and liabilities at 31 December 2015 are as follows:

	Audited As at 31 December 2015
	Television Mobile Outdoor and E-Commerce Internet 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	107,142 450,190 1,146,335 254,064 126,923 1,363,776 3,994 4,541 – – 25,754 80,379 330,388 84,314 33,455	2,084,654 1,372,311 49,894
		3,506,859
		554,290 99,968 33,310 8,318 2,570,310
		3,266,196

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

Interim Report 2016

26

Notes to the Condensed Consolidated Interim Financial Information

6 Gain on disposal of long-term investments

Gain on disposal of long-term investments
	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000
Gain on disposal of investments accounted for using the equity method Gain on disposal of an available-for-sale financial asset	– – –	50,147 6,313
		56,460

Note:

In May 2015, a subsidiary of the Publishing Group entered into an agreement to dispose its entire interests in China Popular Computer Week Management Company Limited (“PCW”), an associated company, and Chongqing Zhongkepu Media Development Joint Stock Company Limited (“ZKP”), an available-for-sale financial asset, at consideration of approximately RMB14,354,000 (approximately HK$17,943,000) and approximately RMB6,451,000 (approximately HK$8,063,000) respectively, totalling approximately RMB20,805,000 (approximately HK$26,006,000). Upon the disposal of equity interests in PCW and ZKP, a consideration payable of RMB30,000,000 (approximately HK$37,500,000) was written back. As a result, gains on disposal of PCW amounting to approximately HK$50,147,000 (includes the write-back of consideration payable) and of ZKP of approximately HK$6,313,000 were recognised in the condensed consolidated interim income statement.

TOM Group Limited

Interim Report 2016

Notes to the Condensed Consolidated Interim Financial Information

27

7 Loss before net finance costs and taxation

Loss before net finance costs and taxation is stated after charging/crediting the following:

	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000
Charging: Depreciation of fixed assets (note 12) Amortisation of other intangible assets (note 14) Loss on disposal of fixed assets Provision for impairment of an available-for-sale financial asset Exchange loss, net Crediting: Dividend income from available-for-sale financial assets Gain on disposal of a former subsidiary (note) Gain on disposal of fixed assets	18,809 49,000 329 574 991 474 3,361 –	22,867 53,070 – – 964
		387 – 1,828

Note:

In January 2016, the Group completed the disposal of its entire equity interest in a former subsidiary (deconsolidated in 2013) engaging in outdoor media business at a consideration of RMB3,060,000 (approximately HK$3,611,000).

TOM Group Limited

Interim Report 2016

28

Notes to the Condensed Consolidated Interim Financial Information

8 Finance costs, net

Finance costs, net
	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000
Interest and borrowing costs on bank loans Interest on other loans Less: Bank interest income	27,515 943 28,458 (1,944) 26,514	34,593 941
		35,534 (3,431)
		32,103

9 Taxation

Hong Kong profits tax has been provided for at the rate of 16.5% (2015: 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 charged to the condensed consolidated interim income statement represents:

	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000
Overseas taxation Under-provision in prior years Deferred taxation Taxation charge	9,106 706 1,708 11,520	8,415 178 721
		9,314

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

TOM Group Limited

Interim Report 2016

Notes to the Condensed Consolidated Interim Financial Information

10 Dividends

No dividends had been paid or declared by the Company for the six months ended 30 June 2016 (2015: Nil).

11 Loss per share

(a) Basic

The calculation of basic loss per share is based on consolidated loss attributable to the equity holders of the Company of HK$129,067,000 (2015: HK$77,749,000) and the weighted average of 3,893,270,558 (2015: 3,893,270,558) ordinary shares in issue during the period.

(b) Diluted

Diluted loss per share is equal to the basic loss per share for the period ended 30 June 2016 (2015: Same).

12 Fixed assets

During the period, major fixed assets acquired by the Group were computer equipment amounting to HK$4,569,000.

	HK$’000 122,337 18,073 (703) (22,867) 11 116,851
Net book value At 1 January 2015 Additions Disposals Depreciation charge Exchange adjustment At 30 June 2015 (unaudited) Net book value At 1 January 2016 Additions Disposals Depreciation charge Exchange adjustment At 30 June 2016 (unaudited)
	97,465 5,765 (460) (18,809) (757) 83,204

29

TOM Group Limited

Interim Report 2016

30

Notes to the Condensed Consolidated Interim Financial Information

13 Goodwill

Interim Financial Information Goodwill
	HK$’000 644,778 148 644,926
Net book value At 1 January 2015 Exchange adjustment At 30 June 2015 (unaudited) Net book value At 1 January 2016 Exchange adjustment At 30 June 2016 (unaudited)
	641,612 (1,604) 640,008

14 Other intangible assets

	Concession rights HK$’000	Trademarks Programme and Publishing and film domain rights rights names HK$’000 HK$’000 HK$’000	Trademarks Programme and Publishing and film domain rights rights names HK$’000 HK$’000 HK$’000	Trademarks Programme and Publishing and film domain rights rights names HK$’000 HK$’000 HK$’000	Total HK$’000 81,129 48,526 (53,070) 1,225 77,810
Net book value At 1 January 2015 Additions Amortisation charge Exchange adjustment At 30 June 2015 (unaudited) Net book value At 1 January 2016 Additions Amortisation charge Exchange adjustment At 30 June 2016 (unaudited)	6,101 – (534) (22) 5,545	72,349 45,937 (50,487) 1,235 69,034	2,097 2,589 (2,010) – 2,676	582 – (39) 12 555
	4,809 – (509) (103) 4,197	68,796 50,491 (47,772) 662 72,177	996 529 (682) – 843	486 – (37) 6 455	75,087 51,020 (49,000) 565 77,672

TOM Group Limited

Interim Report 2016

31

Notes to the Condensed Consolidated Interim Financial Information

15 Investments accounted for using the equity method

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

	Unaudited Audited 30 June 31 December 2016 2015 HK$’000 HK$’000	Unaudited Audited 30 June 31 December 2016 2015 HK$’000 HK$’000
Associated companies	1,303,735	1,372,311

The amounts recognised in the condensed consolidated interim income statement are as follows:

	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000
Associated companies	(70,338)	(51,451)

Interests in associated companies

Movement in interests in associated companies during the period:

	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000
At 1 January Carrying value of interest in an associated company disposed of (note 6) Share of profits less losses Share of other reserve of an associated company Dividend paid Advance to an associated company Exchange adjustment At 30 June (unaudited)	1,372,311 – (70,338) 6,773 (2,508) 473 (2,976) 1,303,735	1,520,101 (18,357) (51,451) – (2,500) – (23)
		1,447,770

TOM Group Limited

Interim Report 2016

32

Notes to the Condensed Consolidated Interim Financial Information

15 Investments accounted for using the equity method (Continued)

Note:

In June 2016, the shareholders of Ule Holdings Limited (“Ule Holdings”), a material associated company of the Group, resolved the launch of share incentive options of Ule Holdings (“Ule Share Incentive Options”). Under the Ule Share Incentive Options, a total of 100,000,000 ordinary shares (based on the current par value of US$0.00001 each) are reserved, of which 43.71% of the Ule Share Incentive Options representing 43,711,860 shares (“Ule Major Shareholder Options”) are approved to be granted to one of Ule Holdings’ major shareholders (“Ule Major Shareholder”), subject to the completion of a deed (“Deed”) signed by Ule Holdings and all of its shareholders, and the remaining 56.29% of the Ule Share Incentive Options representing 56,288,140 shares (“Ule Other Options”) are approved to be granted to directors, employees and consultants of Ule and such other persons contributing to Ule, subject to determination of the details of Ule Other Options by a share incentive committee (“Ule Committee”).

In June 2016, the Deed was signed by Ule Holdings, the Ule Major Shareholder and remaining shareholders of Ule Holdings, under which it is mutually agreed that Ule Holdings granted Ule Major Shareholder Options to the Ule Major Shareholder for its contributions to Ule’s business over the past years. The Ule Major Shareholder Options granted to the Ule Major Shareholder are only exercisable upon the completion of a qualified initial public offering (“Qualified IPO”) of Ule Holdings. The exercise price of each Ule Major Shareholder Option is at the par value of each share on the exercise date. The Deed will be terminated if the Qualified IPO of Ule Holdings is not completed within 10 years from the date of the Deed. As at 30 June 2016, Ule Major Shareholder Options is not yet exercisable as the Qualified IPO has not occurred. During the period ended 30 June 2016, Ule Holdings recognised the share-based compensation expense in relation to the Ule Major Shareholder Options of approximately RMB13,784,000. The Group’s share of this expense amounted to approximately HK$6,773,000.

Up to date, no option under the Ule Other Options has been granted.

TOM Group Limited

Interim Report 2016

Notes to the Condensed Consolidated Interim Financial Information

16 Trade and other receivables

Trade and other receivables
	Unaudited Audited 30 June 31 December 2016 2015 HK$’000 HK$’000
Trade receivables Prepayments, deposits and other receivables	293,021 317,806 610,827	300,016 320,589
		620,605

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 150 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 2016 2015 HK$’000 HK$’000 73,249 90,403 84,304 65,643 45,466 41,788 154,541 168,263 357,560 366,097 (64,539) (66,081) 293,021 300,016 50 50 292,971 299,966 293,021 300,016
		33
Current 31-60 days 61-90 days Over 90 days Less: Provision for impairment Represented by: Receivables from related companies Receivables from third parties	73,249 84,304 45,466 154,541 357,560 (64,539) 293,021 50 292,971 293,021

TOM Group Limited

Interim Report 2016

Notes to the Condensed Consolidated Interim Financial Information

34

17 Restricted cash

As at 30 June 2016, NT$22,707,000 (approximately HK$5,434,000) (31 December 2015: NT$17,885,000 or approximately HK$4,221,000) was pledged in Taiwan in favour of certain publishing distributors as retainer fee for potential sales return, and banks as security for credit card and advance receipt, and quality assurance for government projects, and RMB1,204,000 (approximately HK$1,409,000) (31 December 2015: RMB2,873,000 or approximately HK$3,448,000) was pledged in favour of the courts for legal proceedings in Mainland China.

18 Trade and other payables

Trade and other payables
	Unaudited Audited 30 June 31 December 2016 2015 HK$’000 HK$’000
Trade payables Other payables and accruals	117,376 442,936 560,312	121,424 497,991
		619,415

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 2016 2015 HK$’000 HK$’000	Unaudited Audited 30 June 31 December 2016 2015 HK$’000 HK$’000
Current 31-60 days 61-90 days Over 90 days Represented by: Payables to third parties	37,253 16,265 5,083 58,775 117,376 117,376	38,203 17,820 8,316 57,085
		121,424
		121,424

TOM Group Limited

Interim Report 2016

35

Notes to the Condensed Consolidated Interim Financial Information

19 Movements in borrowings

19	Movements in borrowings
20		Short-term bank loans HK$’000		Long-term bank loans HK$’000	Total HK$’000 2,470,716 150,120 (83,467) 4,442 2,541,811
	As at 1 January 2015 Borrowings Repayments Exchange adjustment As at 30 June 2015 (unaudited) As at 1 January 2016 Borrowings Repayments Exchange adjustment As at 30 June 2016 (unaudited) Share capital	127,816 75,120 (75,120) 2,142 129,958		2,342,900 75,000 (8,347) 2,300 2,411,853
		98,884 131,615 (136,401) 1,383 95,481		2,471,426 661,537 (572,889) 1,628 2,561,702	2,570,310 793,152 (709,290) 3,011 2,657,183
			Ordinary shares of HK$0.1 each No. of shares HK$’000 5,000,000,000 500,000 3,893,270,558 389,328
	Company – Authorised: As at 1 January and 30 June 2015 and 1 January and 30 June 2016 Company – Issued and fully paid: As at 1 January and 30 June 2015 and 1 January and 30 June 2016		5,000,000,000 3,893,270,558

21 Pledge of assets

Save as disclosed in note 17, the Group had no pledge of assets as at 30 June 2016 (31 December 2015: Nil).

TOM Group Limited

Interim Report 2016

Notes to the Condensed Consolidated Interim Financial Information

36

22 Contingent liabilities

As at 30 June 2016, the Group had no significant contingent liabilities.

23 Capital commitments

The Group’s maximum capital commitments are as follows:

	Unaudited Audited 30 June 31 December 2016 2015 HK$’000 HK$’000	Unaudited Audited 30 June 31 December 2016 2015 HK$’000 HK$’000
Capital injection for an investment – Contracted but not provided for	191	681

24 Related party transactions

A summary of significant related party transactions, in addition to those disclosed in note 16 to the condensed consolidated interim financial information, is set out below:

(a) Sales of goods and services

Sales of goods and services
	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000
Sales to – HWL and its subsidiaries and joint ventures – A subsidiary of CKHH – Non-controlling interests of subsidiaries and their subsidiaries – Associated companies	– 1,249 – 2,694	21,854 – 370 7,255

TOM Group Limited

Interim Report 2016

37

Notes to the Condensed Consolidated Interim Financial Information

24 Related party transactions (Continued)

(b) Purchase of goods and services

Purchase of goods and services
	Unaudited Six months ended 30 June 2016 2015 HK$’000 HK$’000
Purchase of services payable to – Non-controlling interests of a subsidiary Rental payable to – A subsidiary of CKH – Non-controlling interests of subsidiaries and their subsidiaries Service fees payable to – HWL and its subsidiaries – CKHH and its subsidiaries Property reinstatement costs payable to – A subsidiary of CKH Interest expenses payable to – Non-controlling interests of a subsidiary	4,445 – 1,082 – 2,128 – 943	6,517 6,136 1,232 1,139 242 4,564 941

A substantial shareholder (2015: Two substantial shareholders) of the Company granted guarantees to the Company at a guarantee fee equivalent to 0.5% per annum (2015: Same) for aggregate principal amount outstanding under loan facilities of HK$3,200 million (2015: HK$2,900 million). During the period, guarantee fee amounted to approximately HK$6,098,000 was paid by the Company (2015: HK$5,619,000) to the substantial shareholder (2015: Two substantial shareholders).

(c) Key management compensation

During the period ended 30 June 2016, 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) (2015: Nil).

25 Approval of interim financial information

The condensed consolidated interim financial information was approved by the Board of Directors on 4 August 2016.

TOM Group Limited

Interim Report 2016

38

Disclosure of Interests

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

As at 30 June 2016, 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:

Long positions in the shares of the Company

Long positions in the shares of the	Company
Name of Director Capacity	Number of shares of the Company Approximate Personal Family Corporate Other percentage of interests interests interests interests Total shareholding
Frank John Sixt Beneficial owner Yeung Kwok Mung Interest of spouse Mak Soek Fun, Angela Beneficial owner	492,000 – – – 492,000 0.01% – 30,000 – – 30,000 Below 0.01% 44,000 – – – 44,000 Below 0.01%

Save as disclosed above, as at 30 June 2016, none of the Directors or chief executive of the Company had any interests or short positions in any shares, underlying shares 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.

TOM Group Limited

Interim Report 2016

Disclosure of Interests

Interests and Short Positions of Substantial Shareholders

As at 30 June 2016, 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
CKHH	Interest of controlled	1,430,120,545 (L)	36.73%
	corporations	(Notes 1, 2 & 3)
CKH	Interest of controlled	1,430,120,545 (L)	36.73%
	corporations	(Notes 1, 2 & 3)
Cheung Kong Investment	Interest of controlled	476,341,182 (L)	12.23%
Company Limited	corporations	(Note 1)
Cheung Kong Holdings	Interest of controlled	476,341,182 (L)	12.23%
(China) Limited	corporations	(Note 1)
Sunnylink Enterprises	Interest of a controlled	476,341,182 (L)	12.23%
Limited	corporation	(Note 1)
Romefield Limited	Beneficial owner	476,341,182 (L)	12.23%
		(Note 1)
CK Hutchison Global	Interest of controlled	952,683,363 (L)	24.47%
Investments Limited	corporations	(Note 2)
HWL	Interest of controlled	952,683,363 (L)	24.47%
	corporations	(Note 2)
Hutchison International	Interest of a controlled	952,683,363 (L)	24.47%
Limited	corporation	(Note 2)
Easterhouse Limited	Beneficial owner	952,683,363 (L)	24.47%
		(Note 2)

39

TOM Group Limited

Interim Report 2016

40

Disclosure of Interests

	Disclosure of	Interests
			Approximate
		No. of shares of	percentage of
Name	Capacity	the Company held	shareholding
Chau Hoi Shuen	Interest of controlled	1,003,432,363 (L)	25.77%
	corporations	(Notes 4, 5 & 6)
Composers International	Interest of controlled	1,003,432,363 (L)	25.77%
Limited	corporations	(Notes 4, 5 & 6)
Cranwood Company	Beneficial owner &	995,078,363 (L)	25.55%
Limited	interest of controlled	(Notes 4 & 6)
	corporations
Schumann International	Beneficial owner	580,000,000 (L)	14.90%
Limited		(Notes 4 & 6)
Handel International	Beneficial owner	348,000,000 (L)	8.94%
Limited		(Notes 4 & 6)
Lin Tian Maw	Beneficial owner,	526,518,000 (L)	13.52%
	interest of child
under 18 and/or spouse &
	interest of
	controlled corporations

• (L) denotes a long position

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. CKH is a wholly-owned subsidiary of CKHH.

By virtue of the SFO, CKHH, CKH, 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.

TOM Group Limited

Interim Report 2016

41

Disclosure of Interests

• (2) Easterhouse Limited is a wholly-owned subsidiary of Hutchison International Limited, which in turn is a wholly-owned subsidiary of HWL. HWL is a non wholly-owned subsidiary of CK Hutchison Global Investments Limited, which in turn is a wholly-owned subsidiary of CKHH. 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, CKHH, CKH, CK Hutchison Global Investments Limited, HWL and Hutchison International Limited are deemed to be interested in the 952,683,363 shares of the Company held by Easterhouse Limited.

• (3) A company Casaurina Investments Limited, an Associate of CKH, which in turn is a wholly-owned subsidiary of CKHH, holds 1,096,000 shares of the Company.

By virtue of the SFO, CKHH and CKH are all deemed to be interested in the 1,096,000 shares of the Company held by Casaurina Investments Limited.

• (4) Schumann International Limited and Handel International Limited are companies controlled by Cranwood Company Limited (“Cranwood Company Limited (Liberia)”, incorporated in Liberia), which in turn is a wholly-owned subsidiary of Composers International Limited. Composers International Limited is wholly owned by Ms. Chau Hoi Shuen.

By virtue of the SFO, Ms. Chau Hoi Shuen, Composers International Limited and Cranwood Company Limited (Liberia) are all deemed to be interested in the 580,000,000 and 348,000,000 shares of the Company held by Schumann International Limited and Handel International Limited respectively. Also, Ms. Chau Hoi Shuen and Composers International Limited are all deemed to be interested in 67,078,363 shares of the Company held by Cranwood Company Limited (Liberia) directly.

• (5) A company Cranwood Company Limited (“Cranwood Company Limited (BVI)”, incorporated in British Virgin Islands), a wholly-owned subsidiary of Composers International Limited, which in turn is wholly owned by Ms. Chau Hoi Shuen, holds 8,354,000 shares of the Company.

By virtue of the SFO, Ms. Chau Hoi Shuen and Composers International Limited are all deemed to be interested in 8,354,000 shares of the Company held by Cranwood Company Limited (BVI) directly.

• (6) Cranwood Company Limited (Liberia), Schumann International Limited, Handel International Limited and Cranwood Company Limited (BVI) have charged 67,078,363, 580,000,000, 348,000,000 and 8,354,000 shares of the Company respectively in favour of CKHH on 21 December 2015.

Save as disclosed above, as at 30 June 2016, 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.

TOM Group Limited

Interim Report 2016

42

Corporate Governance

Audit Committee

The Company has established an audit committee (“Audit Committee”) in January 2000. The Audit Committee currently consists of three Independent Non-executive Directors and one Nonexecutive Director. The Chairman of the Audit Committee has the appropriate professional qualifications, accounting or related financial management expertise. It is chaired by Mr. Cheong Ying Chew, Henry and the other members include Mr. James Sha, Mrs. Lee Pui Ling, Angelina and Mr. Ip Yuk-keung, Albert. Written terms of reference in compliance with the Listing Rules have been adopted for the Audit Committee.

The principal duties of the Audit Committee include, among other things, oversight of the relationship with external auditor, review of the Group’s financial information and monitoring the corporate governance of the Group including compliance with statutory and Listing Rules requirements, reviewing of scope, extent and effectiveness of the activities of the Group’s financial reporting system and internal audit function, engages independent legal and other advisors and conducting investigations as it so determines to be necessary.

The unaudited condensed consolidated interim financial information of the Group for the six months ended 30 June 2016 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 2016, save and except Code Provision A.5 which is with respect to the nomination committee.

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, experience and expertise appropriate for the requirements of the businesses of the Group, with due regard to the benefits of diversity on the Board, 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 2016.

TOM Group Limited

Interim Report 2016

43

Other Information

Purchase, Sale or Redemption of Securities

During the six months ended 30 June 2016, 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.

Public Float

On 30 September 2015, the Board made an announcement regarding the public float of the Company being below the minimum 25% of the total issued share capital of the Company required to be held by the public pursuant to Rule 8.08(1)(a) of the Listing Rules, details of which are as set out in the announcement dated 30 September 2015.

As at the date of this report, based on information available to the Company and within the knowledge of the Directors, the issued share capital of the Company held by the public remains below the minimum public float percentage.

The Company is still in the process of considering steps to restore the public float to 25% so as to be in compliance with the Listing Rules.

TOM Group Limited

Interim Report 2016

Other Information

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 2015 Annual Report of the Company are set out below:

Name of Director

Ip Tak Chuen, Edmond

Ip Yuk-keung, Albert

Details of the Changes

Retired as non-executive director of Real Nutriceutical Group Limited on 2 June 2016

Appointed as a council member of Hong Kong University of Science and Technology on 1 April 2016

Appointed as an adjunct professor of Hang Seng Management College on 1 April 2016

44

Chow Woo Mo Fong, Susan

Retired as executive director and group deputy managing director of CKHH on 1 August 2016

Retired as executive director of Cheung Kong Infrastructure Holdings Limited (“CKI”) and ceased to act as alternate director to Frank John Sixt, executive director of CKI, on 1 August 2016

Retired as non-executive director of Hutchison Telecommunications Hong Kong Holdings Limited on 1 August 2016

Retired as director of Hutchison Telecommunications (Australia) Limited (“HTAL”) and ceased to act as alternate director to three directors of HTAL, namely Fok Kin Ning, Canning, Frank John Sixt and Lai Kai Ming, Dominic, on 1 August 2016

Ceased to act as alternate director to Frank John Sixt, Non-executive Director and the Chairman of the Company, on 1 August 2016

Lai Kai Ming, Dominic

Appointed as alternate director to Frank John Sixt, Nonexecutive Director and the Chairman of the Company, on 1 August 2016

TOM Group Limited

Interim Report 2016